Bernard Baruch: The Adventures of a Wall Street Legend Read online

  By late in the nineteenth century the Barony had been divided and subdivided, and the river swamps on its western side (the one facing Winyah Bay to the south and the Waccamaw River farther north) had been turned to rice cultivation. In 1875, Robert James Donaldson, a Scotsman, bought a good part of the place; and in 1904 his sons, John Henry and Sidney T., decided to sell. Baruch by then was an available buyer. At the time a local newspaper paid him the compliments of being “of fine address” and “widely traveled,” and of having “brains, youth, and genius.” The Donaldsons made good crops but were plagued by poaching and for that reason or another were prepared to let go of about three quarters of the original barony. In the negotiations to buy, Baruch bided his time. He took out an option to buy in Christmas week 1904 and had the option extended in February 1905. At last, in May, he bought the tract called Friendfield Plantation and a handful of enticingly named specks of land in Winyah Bay and Muddy Bay, including Big Marsh Island, My Lady Bush, and Pumpkin Seed; all in all, 10,000 acres for $20,000. In 1906 he added 2,522 acres just to the north of Friendfield (including the land known as Bellefield and Crab Hall) for $25,000; and in 1907 the next northerly tract (Alderly), which amounted to another 2,500 acres or so, for $10,000. When he was through he owned about 15,000 acres as well as the planter’s house and four tiny villages inhabited by former Hobcaw slaves or their descendants. The cost was $55,000, or less than the equivalent of about 1,200 shares of US Steel. In 1912 or 1913, Harry Payne Whitney, an awestruck guest of Baruch’s, bid $1 million for the place, which the host gracefully declined. Eventually he turned it over to Belle, who in turn established a foundation and willed the land for marine and biological research.

  One of Hobcaw’s charms for Baruch was its inaccessibility. The route from New York was by train to Georgetown, South Carolina, via Lane, South Carolina, then by boat across Winyah Bay. The boat discharged Baruch and his guests on a pier near the house that the Donaldsons had lived in, Friendfield House, which was of wood and had white columns, shuttered tall windows, and a wide porch. The house was framed by moss-draped live oak, and in the spring there were palettes of azalea and magnolia. At length there was a road, and guests arrived overland, but the trip still took time and determination. King’s Highway, the unpaved lane that connected Friendfield House and the public road, wound four and a half miles, all Baruch’s, through stands of virgin timber along a bleak cypress swamp. Mail and telegrams were delivered twice a day from Georgetown, but Baruch allowed no telephone lines to be strung. “How I miss the telephone!!!?” Annie once wrote in the guest book.

  The salt tidal marsh, fallow rice fields, forest, and creeks harbored a rich assortment of game and marine life. In early years Baruch trapped otters and saw bears and wildcats. There were deer (a guest book entry by Bernard M. Baruch Jr. in child’s hand: “I love my ducks but oh you, deer”), wild pigs, jacksnipe, quail, and woodcock. So profuse were the wild turkeys that they sometimes snarled traffic on King’s Highway. Offshore or in the creeks and inlets there were clams, oysters, terrapin, shrimp, sea bass, sheepshead, whiting, bluefish, shad, mullet, and crabs. An ecological complication was the litter of oyster shells on the floor of the marsh, which cut the paws of bird dogs. Once Belle shot an alligator. When, at the age of twelve, she killed her first deer, the New York Herald reported the news in connection with the account of the sentencing of a trio of poachers on the Baruch property to jail terms of eight months each.

  For outdoorsmen, the chief attraction of Hobcaw was its hunting, although not every friend of Baruch’s was an outdoorsman. (Heywood Broun, the newspaperman, declined a sporting invitation of Baruch’s explaining, “I do my hunting in bed.”) Hunters rose early and finished early. They set out the evening before the hunt by buckboard for shacks by Clambank marsh and awoke before dawn,[18] ate a breakfast of hot stew, grits, and coffee, were shown to boats, and rowed to blinds in the salt marsh. Presently black Vs appeared in the pink sky. Guides called, the birds dropped to the decoys, and shotguns blasted. Ducks flew in by the thousand and fell by the score. So big were the bags that they strained the credibility of non-guests or of guests who arrived after the quarry thinned out in the 1920s. (Ducks became thinner at roughly the same time as the stock market became more efficient and the income tax began to take an appreciable bite out of one’s income; all together, Baruch’s opportunities contracted.) Once Thomas W. Gregory, Wilson’s Attorney General, remarked skeptically to Jesse Jones, the future head of the Reconstruction Finance Corporation, in Baruch’s presence: “Jesse, keep quiet. Let’s sit back and hear Bernie lie about the ducks.”

  Hobcaw was very much Baruch’s, and he went so far as to remind a friend that it was he who issued invitations and that the status of his wife at the barony was that of guest. In general, Baruch took a sphere-of-influence approach to marriage. Hobcaw was his, as was the castle that he rented in Scotland for summer shooting later on. The four-story brownstone at 6 West 52nd Street at which they lived after 1905 was evidently Annie’s turf, except the top floor, which was his. Annie was apparently as detached from financial markets, ducks, and bridge (which he played seriously) as he was from the antique English silver and furniture that she collected. In one of the rare references to his wife in his correspondence, Baruch described her as “level headed.” Dorothy Schiff came away from a dinner party at which the Baruchs were present in the 1930s with the impression that she wasn’t his type. Certainly after her death, in 1938, he chose the company of very different women, and the weight of the circumstantial evidence in the years before her death is that he was unfaithful to her. The only known record of his amorous exploits was left by Helen Lawrenson, whose famous Esquire essay “Latins Are Lousy Lovers” was written with his encouragement. He was ten years dead when she wrote that he was a lousy lover too.

  Two more children came along after the birth of Belle in 1899: Bernard Jr. in 1903 and Renée in 1905. Baruch always accounted himself a parental failure, and his advice was to enjoy one’s children while they are young, as the trouble starts later on. He was an absentee father—besides business travel, golf, and nights out, he sailed to Europe in the summer with his wife but sometimes without a full complement of children—but the sorrow he expressed at his children’s bruises suggests that he loved them even if from a distance. The genesis of one such hard knock was the friendship of a daughter of Howard Page’s with Belle. Page was president of the Intercontinental Rubber Company and one of Baruch’s closest friends. The Page girl had attended the Brearley School in Manhattan, and she encouraged Belle to apply there. Belle did so in 1912, passed the entrance examination, but encountered resistance. According to Baruch, who reflected on it many years later, the trouble was that he was a Jew:

  That really was the bitterest blow of my life because it hurt my child and embittered my whole life for many years afterwards. The man and woman who were the cause of it were keeping the school pure from being injured by the presence of my daughter, because she was the daughter of B. M. Baruch. There was only one reason and that was the religious reason. While it was true that two other girls had gone through the school, they said they didn’t want any more. The man who was the cause of keeping her out rose to have a considerable position, and his wife was identified with Democratic politics. I had an opportunity to take my revenge but I never did. I am sure the man expected it, in fact I know he did. When he was being asked to consider a position in the Federal Bank [probably the Federal Reserve Bank] a man said to me, “You have a chance to be even with the _______ _______.” My first desire was to do so. He said, “All you have to do is to tell McAdoo [William G. McAdoo, Secretary of the Treasury under Woodrow Wilson] you don’t want his appointment,” but I felt I had no right to take revenge upon the man and abuse the use of public office, so I did nothing. His wife was connected with many political movements, but I never mentioned the matter to a single person, though I always refused to contribute to any committee of which I saw she was a member. The bitterness and hurt has [sic]
lessened but will never entirely be removed. I will forgive any man anything he does to me, but why make little children suffer?

  So little was Baruch a Jew except by birth, so disinclined was he to pick a fight if it could possibly be avoided and so much did he want to please, that he was never entirely alienated from Gentile society. To a notable degree, he was, in fact, in it. For one thing he moved freely in the downtown meritocracy. He belonged to the Recess Club, for instance, where Kuhn, Loeb partners, who were Jewish, lunched with Morgan men, who were not. For another thing, he had a share in Annie’s Protestant social credentials. It was on the strength of her name that the Baruchs were admitted to the Social Register in 1905, a book which in the first two decades of the century contained no Warburgs, Schiffs, Seligmans, or Guggenheims. From time to time the names of the Baruch daughters turned up in the papers on horsey topics (Belle became a champion equestrienne), and in the summer of 1911 the whole family, Baruch’s parents included, vacationed at the WASPy Adirondack colony of Kamp Kill Kare. As late as 1920 Baruch was the only Jewish trustee of City College, and in the 1930s, Frances Perkins, Franklin D. Roosevelt’s Secretary of Labor, didn’t think of him as Jewish at all. (What eventually changed her mind, she said, was the interest he displayed in spas and water cures.)

  It was equally true that socially Baruch could go so far but no farther. For a while he belonged to the Whist and Author’s clubs but not to the University and Metropolitan, of which his father-in-law, Benjamin Griffen, was a member. Thus he was wary when John Black, a business friend and golf partner, invited him to stand for membership at the patently restricted Oakland Golf Club, in Bayside, Queens. Baruch knew the Oakland, having played there in a foursome that was regular to the point of compulsion, and he knew the homogeneous cast of the membership. The quartet, besides Black and him, included Dick Lydon, Baruch’s college pal, and James Travers, who appears to have been a partner of Baruch Brothers, the brokerage firm that Harty and Herman set up with the help of their rich brother in 1903. According to Baruch, the foursome played eighteen holes in the morning and eighteen in the afternoon on Saturdays, Sundays, and holidays, in season, until the deaths of Travers and Black in the 1920s. It was about 1909 when Black offered to put up Baruch’s name for membership.

  Black assured him that religious bigotry was the furthest thing from the members’ minds. H. J. Pomroy, a former president of the New York Stock Exchange, repeated the assurances and offered to second him. Baruch agreed, but there was opposition after all. Embarrassed, he offered to withdraw, but Black and Pomroy said they wouldn’t hear of it. The nomination became a cause célèbre. Allies were marshaled—James Mabon, Baruch’s colleague on the Unlisted Committee, lined up on his side—and at last he was voted in.

  More than a decade later, much the same set-to was fought in another arena. In the early 1920s it went without saying that Jews were unwelcome at the Turf and Field Club and that only members were admitted to the track enclosure at Belmont Park. Baruch, a serious breeder and horseplayer, kept his counsel on this arrangement until August Belmont, the racing grandee, asked his opinion. Baruch answered that it was a destructive policy, that it was bound to throw racing into disrepute, and that, in an expression he was fond of, all men should be equal “above the turf as well as below it.” Belmont countered by asking why, if he felt as he did, he had anything to do with racing, to which Baruch rejoined, “I won’t as long as such men as you are in it.” For a while Baruch boycotted the Belmont track and turned over his stable to his racing friend Cary Grayson. In the long ensuing row he was elected to the club, declined membership, but was persuaded to accept when promises were made of a general lowering of discriminatory bars.

  By his forty-first year, Baruch was important enough and the stock market still small enough so that his whereabouts became a subject of speculation in the financial press. Now and then his itinerary was reported as if his mere absence from the floor would be the cause of some significant realignment of market forces. Thus on June 23, 1911: “The belief prevailed in some usually well-informed quarters that the heavy selling of stocks in the forenoon was for Baruch, who intends to leave for a prolonged vacation Saturday next.” And on March 6, 1912: “One of the things which made many of the room traders bearish was a rumor that B. M. Baruch was about to go away on a short vacation—those operators apparently thought the market was a part of Mr. Baruch’s personal belongings and that he would take it away with him.” On the tenth of March, the New York World, noting the departure of Baruch for Hobcaw, called him the “recognized leader in all great speculative movements in Wall Street.” On the twenty-sixth, the Herald related a lighthearted conversation ostensibly overheard downtown:

  “Barney Baruch is buying Reading,” said one trader to another.

  “Don’t believe it,” said the other. “He’s now South in his shooting box.”

  “Can’t help that,” said the first. “Barney has a stock ticker in his matchbox.”

  In the fall of 1912, when Baruch was probably worth less than $10 million, the tall tale was published that he had just “cleaned up” $20 million. Baruch, basking in the attention, uncharacteristically climbed out on a limb to make a projection. “The good features are so overpowering that they compel recognition,” he declared on October 8, 1912. The truth was that the good features were just then at their best. Not until the war boom of 1915 did the Dow Jones Industrial Average match its peak of October 8, 1912, which was 94.12. Not until 1927 did the Rails top their peak of October 5, which was 124.35. But Baruch’s reputation was unharmed by that errant judgment, and as he left for vacation in the summer of 1913, the New York Morning Telegraph wondered what the market would do without him:

  “Barney” Baruch has gone to Europe—having sailed yesterday. This more or less commonplace notice would, under ordinary conditions, attract little more than passing attention, except among his immediate relatives and intimate friends, but in the present instance it possesses more real significance, perhaps, than would appear at first blush.

  Baruch, as has been frequently pointed out of late in these columns, has been way in the forefront in the work of rejuvenating the stock market and bringing it out of the slough of despond into which it had drifted.

  Backed by the millions of several of the “big men” of the Street, that astute operator was selected for this task, and how well he performed the duties entrusted to him is amply attested by the fact that since he took hold of the market and started to move prices up, Union Pacific has risen about 14 points, Steel around 10 points, and all the other recognized leaders of the list in proportion.[19]

  Now that the “ablest and largest trader on the floor of the Stock Exchange” has gone abroad to enjoy a well-earned vacation, and in consideration of the very conspicuous part he has played during the past month or so in shaping the destinies of share speculation in general, the Street is very naturally asking itself the question: “Is the bull movement in stocks over?”[20]

  The adulation of Baruch as a speculator seemed to get under the skin of Paul Warburg and Jacob Schiff, bankers at Kuhn, Loeb & Company who found some of his market operations distasteful. (James P. Warburg, quoting his father, inaccurately insisted that Baruch was chronically short of stocks. In fact, he was long or short as circumstances required.) Baruch himself was of two views about his place in the financial world. On the one hand he maintained that speculation was necessary and honorable. On the other, he was partial to the word “constructive” to distinguish the creation of wealth, particularly in mining and agriculture, from its manipulation in the form of stock certificates. His place in that world was at all events hard to pinpoint. He worked for himself, kept his own office, picked and chose deals as they appealed to him, and corresponded on a letterhead that said simply “Bernard M. Baruch.” He was close to the Guggenheims and to Eugene Meyer Jr. and others, but he was not in the position of having to take business because he was under obligation to a large financial institution. In 1912, when Congress wa
s taking a hard look at Wall Street, a man sounding very much like Baruch unburdened himself to the journalist Garet Garrett, who happened to be one of Baruch’s close friends. The unnamed market operator was asked how the alleged concentration of financial power in the hands of a few rich men and large institutions affected him:

  It doesn’t affect me at all. Do you know why? . . . Well, in the first place, I never borrow any money from them, and, in the second place, I’m never as deeply committed in the stock market as they think I am. That is to say, I don’t trade as heavily as they believe I do. They have tried many times to get me. They think they have me in a corner, and I’m not there. One of them once said to a friend who told me: “Just when we think we’ve got him he’s loose again.” The man who said that holds it against me that I upset him once in a stock market campaign. Then they have tried to get me in with them on various things, and to take up sides with them, but I’m too cagey for any of that. I like to sit up here on my own crag and fly down when I please.

  If “they” were the financial establishment, Baruch was a member at least to the extent of his station as a governor of the Stock Exchange. There he was the diligent organization man, upholding tradition, serving on committees and falling in with policy with which he happened to disagree.[21] He was a “progressive” governor, holding the view that there was too much funny business on the floor and that it wouldn’t be such a bad thing if the Exchange were incorporated under the laws of New York State. The official line was there was very little funny business and the incorporation would dilute the disciplinary authority of the governors and bring the members under the regulatory thumb of the legislature. “Baruch,” said the Boston News Bureau, “is something of a philosopher, and he has what the Street regards as advanced views of the ethics and morals of business. He believes that the doctrine of ‘caveat emptor’ has been carried too far in finance, and that another generation will scorn to do the things that Wall Street gentlemen now consider fair in the struggle for gold.”