Ohio History Journal

PHILLIP R. SHRIVER

A Hoover Vignette

Fifty years after his defeat for reelection by Franklin D.

Roosevelt, Herbert Hoover remains one of America's most tragic

presidents. For many, if not most, his name continues to conjure up

an aura of depression, of frustration, of failure. Arthur M. Schlesin-

ger, Jr., historian of "The Age of Roosevelt," recalls one of the

myriad jokes that fixed a nation's scorn upon FDR's unhappy prede-

cessor in the early 1930s. It has Hoover asking Andrew Mellon for

the loan of a nickel to call up a friend, with Mellon replying, "Here's

a dime, call up all your friends."¹

The centennial of Roosevelt's birth, the controversy over Ronald

Reagan's "New Federalism," and the deepening recession of our

time have combined to rekindle interest in both Hoover and

Roosevelt as well as the election of 1932, out of which emerged the

"New Deal" and a half-century of dramatic growth of federal power.

Ironically, though Hoover and FDR were poles apart in political

philosophy, a significant part of the Hoover economic program of

1931 and 1932 was carried over into the New Deal of 1933 and

beyond. Included was one of the very first of the "alphabet agen-

cies," the Reconstruction Finance Corporation, regarded by many as

perhaps the single most important weapon in Hoover's fight against

the depression.² In the midst of the banking crisis of July 1932 and

Phillip R. Shriver is President Emeritus and Professor of History at Miami Uni-

versity

1. Arthur M. Schlesinger, Jr., The Crisis of the Old Order, 1919 - 1933 (Boston,

1957), 244-45.

2. In what was called "the most important economic message he delivered to Con-

gress," Herbert Hoover on December 8, 1931, called for the establishment of a Recon-

struction Finance Corporation to restore confidence by furnishing "necessary credit

otherwise unobtainable" through loans aggregating up to $1,800,000,000 for "repro-

ductive public and semi-public and industrial works, slum clearance, etc., to states

and municipalities." There was great opposition to this proposal, particularly in the

Senate, and when it finally cleared Congress on January 16, 1932, the loan powers of

the RFC were effectively limited in the main to banks, building and loan associa-

tions, insurance companies, and railroads. The new agency began to function on

February 3, 1932, and continued to function throughout the Hoover and Roosevelt

administrations, though with significantly broader lending authority beginning with

Hoover Vignette                                                75

in response to sharp criticism that the RFC was "playing politics

with the miseries of the people" in making loans primarily to fa-

vored "Republican" banks and railroads, Hoover suddenly and un-

expectedly reorganized the agency, turning control of it over to the

Democrats. He did so on July 26 by naming former United States

Senator Atlee Pomerene of Ohio, that state's favorite son candidate

for the presidency in 1928 at the Democratic National Convention,

as the new chairman of the RFC, an action described by the New

York Times as a "surprise" and by the Washington Post as a

"bombshell."³

Pomerene, who earlier had gained widespread acclaim with Owen

J. Roberts for the successful prosecution of the Teapot Dome and Elk

Hills oil scandals in the 1920s,⁴ met with the beleaguered Hoover to

discuss the appointment on July 24, 1932, the day before he

accepted it. Out of that meeting came a personal, poignant memoir

by Pomerene⁵ which gives dramatic insight into an American presi-

dent's agony in the midst of our nation's worst depression. It pro-

vides sharp contrast with the caricature of insensitivity, indiffer-

ence, even callousness widely ascribed to the President by some of

his critics at that time and since. Unpublished until now, its content

was discussed by this author in conversation in June 1950 with Mr.

Hoover, who substantiated its essential accuracy and who affirmed

that his decision to appoint Pomerene was one of the most signifi-

cant of his administration. Hoover recalled that it had been his hope

that the Pomerene appointment would "protect" the RFC from the

"demagogic attack of men such as [House Speaker John Nance]

Garner of Texas, who had been clamoring for publication of all bank

loans made by the corporation."⁶

Pomerene's subsequent behind-the-scenes struggle with Garner,

the Democratic vice-presidential nominee, was to become one of the

the New Deal. Cf., William Starr Myers and Walter H. Newton, The Hoover Adminis-

tration: A Documented Narrative (New York and London, 1936), 152, 154, 158, 161-

66; also, Harris Gaylord Warren, Herbert Hoover and the Great Depression (New York

1967), 141-47.

3. New York Times, July 28, 1932; Washington Post, July 27, 1932.

4. Pomerene's role as prosecutor of the oil scandals of the Harding years is covered

in Phillip R. Shriver, "Atlee Pomerene." Dictionary of American Biography, vol. XI,

part 2, supp. 2 (New York, 1958), 535-36, and in Mark Sullivan, Our Times: The

United States, 1900-1925, vol. VI (New York, 1935), 272-349 passim.

5. The memoir was given to the author by Senator Pomerene's widow, Mrs. Mary

B. Pomerene, and is now in his possession.

6. Interview with Herbert C. Hoover, June 19, 1950, in the Waldorf Astoria Tow-

ers, New York City.

76                                                   OHIO HISTORY

great unwritten epics of the depression, as the Ohioan battled un-

successfully to prevent loan publicity which threatened, in

Pomerene's eyes as well as Hoover's, to undo much of the work

accomplished by the RFC in preserving the credit structure of the

nation.⁷ The near catastrophic "bank holiday" of February and

March 1933 was attributed by Pomerene, in private conversation, in

large part to Garner's insistence upon publication of the bank loans.

He never forgave the Texan for that.⁸

With the advent of the New Deal and its economic policies, which

were to him both strange and unreal, Pomerene left the RFC, to be

replaced as chairman by Jesse H. Jones, yet another Texan and the

most outspoken Democratic incumbent on the Board. Though he

assured FDR that he was "interested in the success" of his

administration,⁹ Pomerene would soon emerge as one of Roosevelt's

severest critics, particularly of his banking policies.¹⁰ As he pre-

pared to return to Ohio on March 4, 1933, his services with the RFC

at an end, Pomerene received a personal tribute from a grateful

Hoover, who wrote: "I know of no better example of American

citizenship than that which you have shown... ."11

July 25, 1932

On Sunday, July 24th, at the invitation of the President I went to

see him at his camp on the Rapidan River.¹² I had an hour's talk

with him before lunch and after lunch another hour's talk.

In substance he told me that Mr. Eugene Myers¹³ was Governor of

the Federal Reserve Board and President [sic, Chairman of the

Board-it was this position that Pomerene was to fill] of the

"R.F.C."; that he was working eighteen hours, or more, per day; was

broken down nervously; the doctor said that if he would continue for

7. Ibid. Also, cf. Myers and Newton, Hoover Administration, 324-28.

8. Cleveland News, November 13, 1937.

9. Atlee Pomerene to Franklin D. Roosevelt, March 20, 1933, Roosevelt Papers,

Hyde Park, New York.

10. Jesse H. Jones to author, September 27, 1951.

11. Herbert Hoover to Atlee Pomerene, March 3, 1933, in Pomerene Papers, Kent

State University Library.

12. Hoover's favorite weekend retreat was a wilderness area on the upper Rapidan

River near Cotoctin Furnace, Maryland. It is now part of the Shenandoah National

Park.

13. A native of California, Eugene Meyer had served as managing director of the

War Finance Corporation, an antecedent of the RFC, underWilson, Harding, and

Coolidge. Hoover had appointed him to the Federal Reserve Board in 1930 and to the

RFC in 1932. He had been serving simultaneously as governor of the former and

chairman of the latter when replaced by Pomerene.

78                                                   OHIO HISTORY

got to have two men on this Board in whom the country will have

confidence."

Miller of New York¹⁵ will be made President of the Board.

The President said: "I have prayed over this matter for a week; I

have canvassed the entire country to get a man to act as President

[sic, Chairman] of the Board; there is one man in California, Harry

Robinson,¹⁶ who would be an ideal man, but he fractured his spine

several months ago and has been in a plaster cast; he is coming East

soon on some very important matters, but is not able to act. I have

canvassed the mountain states and the central West. The only man

who will qualify for this place is Traylor of Chicago,17 but the bank-

ing situation there is so bad that he is the only man who can handle

it there. There is no one else in Illinois, Indiana, the southern states,

nor in the New England states. I will not go to New York for this

man, and I have come to the conclusion that you are the only man

who can be named for the position of Chairman of the Board in

whom the country would have confidence, because of your integrity

and your courage, and I want you to take this position as a patriotic

service."

I said to him, "Mr. President, this is a very great surprise to me

and I esteem it a very great compliment." He said: "There is no more

patriotic service to be rendered now. We must save the country."

I told him I doubted whether I had the necessary qualifications;

that I was not a banker and was not familiar with the details of

banking, but he said: "You know the general principles of banking;

you know industry; you know the financial situation; you can be

helped with the details, and what I want is to have you help to

formulate the general policies. We must get the banks and others to

see their relation to the country and the responsibilities which they

must undertake."

15. A lawyer as well as a banker, Charles A. Miller of Utica was a former vice

president of the New York State Bar Association and president of the Savings Bank

of Utica and the New York State Savings Bank Association.

16. A native of Ravenna, Ohio, Henry M.Robinson had practiced law in Young-

stown and New York before moving to California in 1906. There he became president

of the Pacific Southwest Realty Company and chairman of the board of the Security-

First National Bank of Los Angeles. In World War I he had served with the Council of

National Defense. Hoover had named him a member of the Economic Stabilization

Conference in 1929 and the President's Organization on Unemployment Relief in

1930.

17. Melvin A. Traylor was president of the First National Bank in Chicago. He had

represented the United States in the organization of the Bank for International

Settlements and was a past president of the American Bankers Association.

Hoover Vignette                                                   79

I urged him to think of somebody else, but he said: "No, I have

thought." I suggested Mr. S. P. Bush of Columbus, 18 whom I knew

to be a business man of very large experience and also a man of

large banking experience. The President said: "I have heard of him,

but he is not known outside of Ohio and we must have someone of

national reputation."

I further said to him that from a professional standpoint I doubted

whether I was in a position to serve; that our firm represented The

Federal Reserve Bank of Cleveland and also the Committee in

Cleveland that had charge of the Reconstruction Finance work; that

Mr. Sterling Newell,¹⁹ one of our partners, and three other men

were devoting almost their entire time to this matter and there

might be a conflict between the work here in Cleveland and the

general work of the "R.F.C." at Washington; also I said to him that I

was a stockholder and director in The Guardian Trust Company and

many members of our firm were interested in that bank, as well as

The Union Trust Company, and that Mr. Squire²⁰ was a director of

The Union Trust Company; also I was interested in the same way in

The George D. Harter Bank at Canton, which had just completed its

application for a loan from the "R.F.C." on Friday or Saturday; that

our firm had forty-one members and there might be other alliances

which would make my appointment inadvisable. The President

said: "No, that is provided for in the Act. Senator Glass²¹ and I both

recognized that if we were to get the right kind of man on this Board

we would have to name men of affairs, and if we were to have an

efficient Board, and accordingly provision was put in the bill under

which, if any member of the Board was interested in any matter

coming before the Board, an entry would be made to that effect upon

18. President of the Buckeye Steel Castings Company in Columbus from 1906

until his retirement in 1928, Samuel Prescott Bush had served as a director of the

Federal Reserve Bank of Cleveland and the Huntington National Bank of Columbus.

In 1931 he accepted appointment to a special presidential commission for mobilizing

and coordinating national, state, and local unemployment relief agencies. A Demo-

crat, he was organizer and first president of the Ohio Manufacturers Association.

19. Sterling Newell was a partner in the Cleveland law firm of Squire, Sanders &

Dempsey.

20. An outstanding specialist in corporation law, Andrew Squire had organized

Squire, Sanders & Dempsey in 1890. This was the firm with which Pomerene had

affiliated after he left the United States Senate.

21. One of the most influential members of Congress, Carter Glass of Virginia had

been in the capitol since 1902, as lawmaker and as secretary of the treasury in the

Wilson administration. He was a major figure in the drafting of the legislation

creating the Federal Reserve Bank, the Federal Farm Land Bank, and the RFC.

Hoover Vignette                                                       81

I said to the President that this matter would be a great sacrifice

to me financially and I felt I could hardly afford it; that I probably

would have to withdraw from our firm. "No," the President said,

"that is not necessary; that is a question to be determined by you

and your firm."

Again, he got back to the attitude of the banks; said they and

other people were doing things to hamper the country in its recov-

ery, and again his eyes filled with tears.

Many other details were gone into as to the financial situation.

The President also said that Dawes²³ was near the breaking point

when he resigned his position on the "R.F.C."; that at the time of his

resignation he had no intimation as to the condition of the Dawes

Bank in Chicago and that he was amazed when he reached Chicago

and found out what the situation was.

I said to the President that I felt I could not give him a final

answer without conferring with the members of my firm; that we

had our firm luncheon usually on Monday noon, and I would talk

with the members about it.

I asked the President if he would have any objections to my talk-

ing with General Dawes; I told him of my relations with Dawes,²⁴

and he said, "No."

scandals.After eight years of litigation, it was brought to a successful conclusion in

1935 with the cancellation of additional leases in the Elk Hills Reserve and a cash

settlement of $5,500,000 from Edward L. Doheny's Pan-American Petroleum Com-

pany. Cf., Shriver, "Atlee Pomerene," 536.

23. Born and raised in Marietta, Ohio, Charles Gates Dawes was the vice presi-

dent of the United States in the Coolidge administration. A brigadier general in the

first World War, he had authored the "Dawes Plan" for German reparations after

that war. Hoover had appointed him ambassador to Great Britain in 1929 and then

had called him back to Washington to serve as president of the RFC in January, 1932.

Earlier he had organized the Central Trust Company of Illinois in 1902 and had

served as its president until 1921 and chairman of the board, 1921-1925. Though his

position with the bank had been honorific after 1925, in June 1932 Dawes resigned

the presidency of the RFC to return to Chicago to take charge of what was still called

"the Dawes Bank" and to attempt to save it from collapse as a consequence of runs on

it by worried depositors. Fearful that the collapse of the Dawes Bank would precipi-

tate a wave of hysteria throughout the midwest, the RFC made a loan to it of

$92,000,000, which was almost as much as the bank's total deposits at that time.

Though the RFC eventually recovered all of its loan with about two percent interest,

public confidence in the lending policies of the RFC had been shaken. Cf., Warren, op,

cit., 145-46.

24. Pomerene and Dawes had been good friends since their student days in the

Cincinnati Law School in the 1880s when they both had been members of a small

discussion and debate group called the "Quiz Club." Cf., Charles G. Dawes, Pomerene

Memorial Address, September 30, 1939, in Pomerene Papers, Kent State University

Library.

82                                                    OHIO HISTORY

I said to the President: "I will let you know Tuesday evening, or at

the latest Wednesday morning, whether I can accept or not."

The President replied: "That will be all right, but I want you to

come prepared to accept this position and to qualify for service."

I returned to Washington with Secretary Lamont,²⁵ leaving the

President's camp at a quarter to four and reaching Washington

about seven o'clock.

ATLEE POMERENE

25. Secretary of commerce in the Hoover cabinet, Robert P. Lamont had been

president of American Steel Foundries, 1921-29, and had served as chief of the Pro-

curement Division of the Ordinance Department in World War I.