The day after he took the oath of office, Roosevelt called Congress into an emergency session in four days’ time, suspended gold convertibility and gold exports, and declared a four-day banking holiday to stop a run on the banks. On March 9, Congress passed the Emergency Banking Act of 1933, which let the relatively healthy financial institutions reopen their doors, boosted the public’s confidence in the banking system, and bought Washington the time it needed to enact legislation. Over the next one hundred days, from March to the middle of June, Congress would pass a raft of bills that would make sweeping changes in the banking industry, most notably the Glass-Steagall Act, which stabilized the country’s banks by guaranteeing deposit insurance. Many of Senator Glass’ measures took direct aim at the Wall Street giants and, to many in the industry, seemed designed as much with an eye toward punishment as toward reform. Loomis had been right when he had told Stimson that that weekend would be “the critical one.” It proved to be the turning point in the country’s fortunes. Roosevelt appealed for calm in the first of his famous “fireside chats” over the radio, and when the reorganized banks opened the following Monday, the lines of panicked investors were gone.
Despite the fact that they were from opposing political parties, Roosevelt asked the outgoing Republican secretary of state to brief him, and the two met and talked on several occasions. On March 28, Stimson went to see the new Democratic president at the executive office. Winthrop Aldrich, president of the Chase Bank, was present and engaged in a talk about the new restrictions on commercial banks and trust companies and how they should probably apply to private bankers as well. After Aldrich left, Stimson congratulated Roosevelt on his success in stopping the financial panic thus far and warned him against the damage that might be done if the further necessary legislation was taken up “by the leadership of the senatorial investigation rather than the direct executive leadership of himself.” It is impossible not to detect Stimson’s concern that the public was in a rush to blame bankers and exact revenge for Black Thursday. High finance was on trial:
I said that in the ticklish situation of public confidence today such an investigation might do serious damage to public confidence as well as injustice to the bankers who had already put their houses in order, because it would make no discrimination between the innocent and the guilty. Roosevelt very warmly agreed in this and said it must always be borne in mind that most of the bankers were conscientious and were doing their duties. . . . We took up the subject of foreign affairs. I praised his banking bill, pointing out the importance of the final paragraph suggested by Loomis and congratulating Roosevelt on the fact that the bill had stopped withdrawals and had produced an immediate return of gold and hoarded currency. . . .
Loomis, although politically conservative, was able to look past party loyalties to the candidate and his positions. He was sympathetic to some of the economic measures Roosevelt was trying to implement, particularly fixing the gold standard, which he told Stimson he “strongly believed in.” Loomis participated in a series of “serious talks” among Stimson, Ogden Mills, economic adviser Herbert Feis, and Senator F. W. Walcott regarding Roosevelt’s inflation bill, to which the Republicans were organizing an opposing statement. Loomis had been drawn into the matter after he received a telegram from Senator Francis Townsend asking for his views on inflation. After consulting Stimson, Loomis prepared a memorandum on his views of the gold bullion standard, in which he argued that “the old Peel view of currency standard,” based upon a fixed amount of gold in the dollar or pound, was now obsolete in England. He sent the memorandum to Stimson, along with a hasty note:
Landon and I had a most interesting talk at lunch with Mr. Fred Kent, who, as you know, is the Foreign Exchange authority through which the Secretary of the Treasury is acting in controlling all foreign exchange operations of the country. He feels the same way we do about the proposed emergency gold bill, namely, that it probably offers the best method of solving our international situation at the present time.
Over the telephone, Loomis told Stimson he thought that “the legislation was pretty good in its final form.” After reading Loomis’ memorandum, Stimson passed it around:
I showed his memorandum to Feis, who said he agreed with every line in it except that he [Feis] might have gone a little further than Loomis in warning against the misuse of the powers granted in the bill. I told Mills over the telephone that Loomis had expressed approval to a certain extent of legislation and that I was a little sorry that Mills had not seen him or learned of his views before he advised the Republican statement in opposition to it. Mills was much surprised at Loomis’ position. The issue in general seems to be that Loomis and Feis and Roosevelt’s advisors are in favor of a controlled money standard. . . . I talked over Loomis’ views with Walcott, and Walcott said he agreed with them all except he did not approve of the provision in the bill which gave the President Power to fix the gold content of the dollar. . . .
On April 9, exactly one month after the Emergency Banking Act was passed, Loomis and Thorne announced that they would be stepping down as chief executives of Bonbright. Their “retirement” had essentially been forced by the bill, which prohibited investment bankers from being directors of Federal Reserve Member Banks. By leaving Bonbright, they would be free to hold their many bank directorships without conflict with the new stricter provisions. Loomis and Thorne’s abrupt departure made headlines and was hailed as a seismic shift in the structure of the financial world. In the peerage of American businessmen, they were among the sharpest players, distinguished for building companies of rock-bottom strength and rapidly increasing capital girth. They were the young and restless forces behind the giant new power companies, and their impeccable credentials had allowed them to pool money from a dozen of the greatest private fortunes in the country—Morgan money, Mellon money—with the money invested by millions of working-class people. Bonbright, thanks to their efforts, was now one of the “Big Six” Wall Street investment houses, and their handpicked successors, Sidney A. Mitchel and Pearson Winslow, could be counted on as loyal allies in any future ventures. Most of their peers predicted Loomis and Thorne would give up the securities business to move aggressively into commercial banking, and as the New York Journal reported, there was considerable need for men of their proven ability:
[They] are two of the small group of younger leaders who have come to the front in Wall Street in the last two years. It was in the 1920 depression that they took hold on Bonbright & Co. and steered it from the shoals of bankruptcy, toward which it was heading. . . . They did and, in effecting a reorganization, among those to retire were Senator Walcott of Connecticut, who started the recent stock market probe. Now another depression has rolled around and again Thorne and Loomis find themselves the gainers. . . . Both have done exceptionally well in this depression.
But that spring, Loomis informed Thorne that he was through. There was a certain finality about this announcement so that Thorne knew it was pointless to object. “They really did everything together, so when Alfred decided he wanted out, that was it,” said his daughter-in-law, Betty Loomis Evans. “Alfred just totally lost interest in business. He felt he had enough money to do whatever he wanted, and what he wanted to do was science. In the end, I think Landon understood. They never had any words over it, or any kind of falling-out. Landon knew that was just who Alfred was.”
Loomis was not someone you could argue with. He would listen patiently to an opposing opinion, reflexively patting his shirt pocket where he kept his Lucky Strikes and then lighting one up. But his consideration was nothing more than that—an act of politeness on his part. “He would always just shrug and walk away,” said Evans. “I never once knew him to change his mind about anything.”
According to Henry’s first wife, Paulie Loomis, “Alfred was always set on being a scientist, right from the beginning. But he had responsibilities—he had to take care of his mother, his sister, his family. He helped Henry Stimson, and made him a lot of m
oney. Stimson could never have had the career in politics he did without it. Alfred was a very premeditated person. He had it all figured out. He did what he had to do, and the first real chance he had, he took all his money and invested it in his own firm and got the hell out.”
Over the next few months, Loomis and Thorne resigned from a succession of bank directorships and utility boards, including the Commonwealth & Southern Corp. and the Public Service Corporation of New Jersey. By Christmas of 1934, the only title Loomis retained was president of the recently formed American Superpower Corp. He and Thorne sold out virtually all their holdings with the exception of United Power, which was the one stock they would never part with. They sold all their shares in Bonbright and put the proceeds into a holding company that Loomis entrusted Thorne to manage as a personal investment company. Without so much as a backward look, Loomis quit Wall Street for good.
Loomis had discovered early in life where his talents lay and had twice set off in the direction of a more reliably profitable future, first in law and then in finance. His life had now come full cycle, with his enormous wealth enabling him to recapture his schoolboy’s love of invention. “It was a counterattraction—he always liked the other girl better,” observed William Golden, a wealthy investment banker who also turned to a career in science after World War II. “He was a very active, creative man. He had already been very successful in two different professions. He didn’t just want to double his money and be the richest man in the graveyard. What would be the point in that?”
Loomis never once expressed any regret at leaving the business world. In some ways, he seemed to have no regard for money. “Having made it that way, and so quickly, it became impersonal with him,” said Caryl Haskins. “He wasn’t interested in it. When he needed it to buy things—new instrumentation, new technology—he bought them. That was all he really cared about. And of course, he gave a lot of it away. But he never talked about that with me. I don’t think he thought his past accomplishments were worth mentioning.”
Thorne continued to keep one foot in the financial world and ran the Thorne Loomis investment company, operating out of a large office in the law firm of White & Case at 14 Wall Street. He remained one of the largest shareholders in the First National and exercised considerable influence in banking affairs. He was already much wealthier than Loomis, and in the coming years his assets would far outstrip those of his brother-in-law. Thorne had always known that this day would come and had long strived to keep Loomis interested in their joint ventures, even if it had often meant shouldering more than his share of the work. He had felt fortunate to have someone of Loomis’ brilliance as his business partner, if only on borrowed time. Although they went their separate ways, according to Henry Loomis, their partnership lasted to the end of their lives. “In a sense, they never really stopped working together. Alfred was always in the background. He just spent more time doing what he wanted to, which was physics.”
There were some hurt feelings on Thorne’s part that Loomis did not invite him to participate in his scientific work—“as if he were somehow not smart enough,” said Evans. Loomis acted as though he were engaged in some exclusive activity at Tower House, and while this provoked some jealousy, nothing was ever said about it to her knowledge. Thorne was always very supportive of Loomis’ scientific work and on more than one occasion contributed substantial sums to his research projects.
The changing climate on Wall Street undoubtedly hastened Loomis’ departure. Fear and cynicism had turned the American public’s mood ugly, and their favorite target was New York’s banking elite. Loomis was shaken by the imputations of self-serving dishonesty. He had been among a small group of men with enormous private power, and now the public and Washington were holding them accountable and seeking to curb their influence. Like most of his fellow club members and board directors, he did not trust Roosevelt. He did not believe in initiatives like the Industrial Recovery Act, which put the state in partnership with big business, and he put his faith in private enterprise over politicians and their blundering bureaucracies any day of the week. He strongly believed the corporate form was by far the simplest and most efficient way to raise capital to build dams and power plants and modernize old industries. In his view, Washington could never have raised the money and planned the expansion of the public utility industry half as well as Bonbright and other investment companies had done in the twenties. But Loomis had no stomach for the endless infighting and no intention of spending his time colluding with Republican malcontents like Ogden Mills, “mounting assaults on the fortresses of the New Deal.”
Loomis saw the Tennessee Valley Authority (TVA), established in May 1933, as a symbol of the worst of the New Dealers’ tactics. “He thought it would destroy the business world,” recalled Paulie Loomis. The TVA undertook a massive program of construction, engineering, and education to harness the Tennessee River, improve navigation, and supply low-cost electricity to the rural South. The utilities industry naturally resented this form of direct government competition and claimed that the TVA enjoyed an unfair advantage while they were being forced to reduce their rates. The TVA works program became such a source of bitter controversy that the law firm of Winthrop & Stimson was called on to file a nineteen-company suit on behalf of Commonwealth & Southern (the holding company whose board of directors had until only recently included Loomis and Thorne), which had interests in Tennessee and ten other states. The suit challenged the constitutionality of the TVA, which they argued was “the entering wedge” for the eventual “government ownership of all essential industries.” The case was lost on the ground that the plaintiffs lacked the right to sue.
Loomis was appalled by all the litigation and wanted no part of the endless and complex regulatory proceedings. Stimson, who had returned to his law practice, became embroiled in related litigation and later was retained by Wendell Willkie, then president of Commonwealth & Southern, to negotiate the sale of one of its subsidiaries to the TVA. For Loomis, though, the final affront came a few years later, when Congress held hearings on banking practices and Bonbright came under scrutiny for its huge profits. Though never accused of any wrongdoing, he adamantly refused to testify and defend himself against questions about the greedy design of big holding companies, which essentially allowed for an unlimited chain of acquisitions. The attack on his honor turned Loomis permanently away from politics and left him with the profound sense that it was a game whose rules he neither liked nor fully understood. He continued to support Stimson’s political career loyally and hoped he would one day run for president. But more and more, Loomis felt a revulsion for public life and preferred the sanctuary of his laboratory. “He didn’t want to have to fight the world,” said Paulie Loomis. “He was happy to let Henry Stimson fight for him.”
In the end, Thorne went to Washington alone, though he spoke for both of them when he preached strongly against too much government interference, warning, “Legislation which restricts the management of such companies unduly or limits their investments arbitrarily cannot fail to hurt the economic developments of the country.”
“Alfred hated all that,” said Ed Thorne. “He was very private, and he was not all that comfortable with controversy. He didn’t want any public role. It was the only time I ever heard my father complain about him.”
Loomis retreated to his scientific Valhalla in Tuxedo. His business associates were shocked by his self-chosen exile, which ended one of the bluest of blue-ribbon careers. From time to time, whenever a prestigious board seat came vacant, his name would be mentioned in connection with the plum job. When Loomis was honored by the American Association for the Advancement of Science in March 1933, a New York Sunday writer observed that his “growing fortune” had clearly become “secondary to his scientific preoccupations,” and the transition from finance to physics, long in coming, was now complete: “He is chosen as one of 250 American scientists, listed as foremost in their different fields of research. He is a physicist.”
/> As the Journal wistfully concluded a few years later in a story on new business leaders, there was little chance that Loomis and Thorne would ever be lured back to “active duty” on Wall Street: “Shortly after the depression started, they went into retirement with their fortunes. Thorne spending more time fishing and hunting and Loomis with scientific work at his place up the Hudson. Loomis is now one of the top ranking scientists of the country. . . .”
GIVEN their spectacular success, it was only natural that Loomis and Thorne extended their partnership to include many projects outside business, based no doubt on their compatibility, mutual confidence, and shared appetite for new challenges and adventures. Although the country was in a depression, they were both vastly enriched, emboldened, and in high spirits and began to indulge in many of the luxurious pastimes enjoyed by their fellow millionaires. “Landon was always the instigator in those years,” said Paulie Loomis. “Landon could talk anybody into anything, and Alfred would always make it happen. They were made for each other, and they had a ball together.”
While Loomis certainly enjoyed living well, and maintained two large mansions in Tuxedo staffed by a dozen or more servants, along with a twenty-room duplex penthouse at 21 East 79th Street off Fifth Avenue, his primary interest was comfort and convenience, not the pursuit of stylish social ostentation, which was always more in Thorne’s line. Like many of New York’s gilded aristocrats, Thorne liked everything on a grand scale. He went on gaudy buying sprees, collecting art, antiques, and horses, all of which came with fancy pedigrees and even fancier price tags. His magnificent 230-acre Long Island estate, which he named Thorneham, boasted its own indoor and outdoor swimming pools, indoor tennis court, athletic house, and stables. Thorne maintained several large trout ponds on the property, which he kept well stocked, so the fishing was always good. He commissioned the famous landscape architect Umberto Innocenti to design the estate’s ornate gardens, which for many years were considered among the finest in the country.
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