Bernard Baruch: The Adventures of a Wall Street Legend Page 3

  The Baruchs lived near the northernmost populous fringe of Manhattan. The future site of the Plaza Hotel, at Fifth Avenue and 59th Street, was occupied by a squatter and a mean little dog. There was a blacksmith nearby whom Baruch envied for his muscles. Except for the village of Yorkville, at 86th Street, the Upper East Side was sparsely settled. In 1884, a new apartment building at Central Park West and 72nd Street was called the Dakota, for its inaccessibility. Harlem was known as Goatville, for a still common Manhattan quadruped. The Bronx was exurbia; the Brooklyn Bridge had opened just the year before.

  The family’s first northern winter was cold, cramped, and anxiety-ridden. At the boardinghouse Baruch remembered huddling against a wall for the sake of the warmth that radiated from a chimney behind it. Sleeping quarters were allocated one room to Harty and Baruch and another to Sailing and Herman and their parents. Baruch remarked on the kindness of their landlady, a Miss or Mrs. Jacobs, who gave his brothers and him sweets.[2] Not long after their arrival the doctor took sick. He consulted a colleague who diagnosed a heart condition and warned him that his days were probably numbered. For a while there was sad talk of a return to South Carolina. Then a second opinion was sought. The welcome (and accurate) diagnosis was indigestion.

  Soon the family found its urban bearings. Baruch was entered in Public School 69, on 54th Street between Sixth and Seventh Avenues. He recalled vividly being led to class the first day by the principal; being introduced to his teacher, Katherine Devereux Blake; and being shown the way home by Clarence Housman, a fat boy who was to become Baruch’s senior partner in Wall Street fourteen years later. At the end of the term he received a gift copy of Oliver Twist from Miss Blake in which she had written the inscription, “Awarded to Bernard Baruch for Gentlemanly Deportment and Excellence.” (Baruch later did his best to reciprocate. In 1923, when Miss Blake’s name came up for promotion to district superintendent, he put in a good word with Mayor John F. Hylan.) Harty gained new stature by facing down a gang that had taunted him and Baruch with the name “sheenie,” challenging any two of its members to a fight and whipping the boy who did step forward.

  As Baruch and Harty distinguished themselves, each in his own way, their father advanced professionally. In 1884 he was named physician in chief of Montefiore Home for Chronic Invalids, and he played an advisory role in the development of the appendectomy. A consummately general practitioner who attended lectures and clinics on subjects ranging from gynecology to ophthalmology, he developed a special interest in the curative power of water. He wrote the first English-language text on the subject, The Uses of Water in Modern Medicine, in 1892, taught hydrotherapy at the Columbia University College of Physicians and Surgeons, became a chronic writer of letters to newspaper editors, and was the chief exponent of public baths in the United States.

  For the would-be reformer in health and sanitation, Manhattan of the 1880s was so much unformed clay. Dr. Baruch appositely described the city as a “body of land surrounded by sewage.” The Census Office commented in 1886: “The method of disposal of sewage in New York is to conduct it by the most convenient course to the bulkhead of the nearest river, and to leave the rest of the operations to nature.” Every year fifteen thousand beasts, mostly horses, were hauled, dead, from city streets. There was a great manure pile surrounded by breweries at the foot of East 46th Street, and the East Forties were lined with slaughterhouses. (In June 1881 a thousand-pound steer escaped from a pen near First Avenue and 47th Street. Before a brave butcher dispatched it near First Avenue and 30th Street, the animal had knocked down two pedestrians and gored a black mare.) The city’s medical establishment, which soon included Dr. Baruch, pleaded for reform. Early in 1881, the president of the New York Academy of Medicine warned that the streets, come the thaw, would yield enough filth to start an epidemic. The Police Department, which was responsible for the cleanliness of the streets, countered that they were not nearly so vile as the drinking water, and within a month, in fact, in an area south of the Baruchs’ boardinghouse, the water tasted strongly of fish. The autumn brought a drought.

  Appalled by these conditions, Dr. Baruch began to apply himself to the propagation of municipal baths. He made some headway in 1891 when the New York Association for Improving the Condition of the Poor opened the People’s Baths on the Lower East Side, but he wanted action by government, not charity. As progressive ideas and politicians gained sway in the 1890s, the bath forces made strides in Albany and Tammany Hall, but the increase in public bath and shower facilities coincided with improvements in apartment-house plumbing. According to a historian of the movement, the baths so ardently championed in the event enjoyed only a limited patronage. However, declared Dr. Baruch, “I consider that I have done more to save life and prevent the spread of disease in my work for public baths than in all my work as a physician.” Under his father’s influence Baruch became a lifelong patron and advocate of spas and water cures. Late in the 1920s, when the governor of New York, Alfred E. Smith, wanted to enlist Baruch’s help in restoring the spa at Saratoga, he knew that his surest talking point was to invoke the memory of Simon Baruch.

  In New York Mrs. Baruch found a feast of ladies’ clubs and churches and synagogues. On Sundays she made the trip to Brooklyn Heights to hear the sermons of the evangelist Henry Ward Beecher. At the top of her form she belonged to thirty-two different organizations, including the Daughters of the American Revolution, Daughters of the Confederacy, Drama Comedy Club, Eclectic Club, Washington Headquarters Association, and Widowed Mothers Association. In 1914, lightening up, she resigned from seven simultaneously.

  As her sons grew up (to anticipate our story), and as her husband’s practice improved and her second son struck it rich in Wall Street, she accumulated some servants. In the past she had received her boys in the morning for inspection and instruction. Now she saw her laundress, chauffeur, maid, and cook. After the turn of the century, at the family’s spacious home at 51 West 70th Street, she entertained in a living room done all in red. Her clubs and charitable work brought her a large correspondence for which she retained a secretary, a favorite niece from Chicago, Virginia Wolfe (later Epstein). One day Virginia confessed that she was a socialist. “Yes,” said her aunt without rancor, “and you’re not nearly as sweet and lovely as you used to be.”

  Mrs. Baruch, who had a vast Wagnerian bust and who regarded the camera lens imperiously, held definite opinions. She repudiated women’s suffrage, feminism, and socialism, as her husband did, and she made speeches in favor of domesticity. Once she was hissed by suffragists. In 1914 she gave her views on sex and the family, as follows:

  Not long ago, out of the purest curiosity, I looked in at an afternoon dance at one of the big hotels. There I saw several melancholy sights.

  Among them was that of a lovely young woman whom I know smoking a cigarette in a public room filled with strange men. I may be an old fogy, but I feel sure that if that was a possibility, almost anything is a possibility.

  It was half after 6. Presently I saw the mother of another young lady whom I know, evidently unescorted, but dancing now and then.

  It troubled me. I might take more privileges than many women might because my life and age would warrant it, but I would not remain unescorted in the public room of a hotel after 6 o’clock at night, much less there participate in the prevailing gayeties. . . .

  There is too little chaperonage. . . .

  Of the widely criticized dances I have seen nothing. My objection to the dance craze is that it is too absorbing. I have seen the tango and found it beautiful. Some steps in the maxixe seem questionable to me. Of course I have never visited second-rate places. . . .

  I believe the modern woman’s aim in life should be to bring the modern man back home. To do that she must stay at home herself.

  Mrs. Baruch deplored the New Woman in the abstract but made no enemies of individuals. On social matters her advice was always to remember names. When her husband let pass an occasional ad hominem remark, sh
e chided him gently, “Now, Doctor, we all have our faults.”

  Her educational hopes for her second son were ambitious but limited by geography. She wanted him home with her. In the days before public high schools were established, it was customary for college-bound youth to get an early start in higher education. Baruch announced that he had his heart set on Yale and that he was prepared to wait on tables to help pay his way. But his mother pronounced him too young, and in the fall of 1884, at the age of fourteen, he enrolled in the College of the City of New York.

  In the 1880s, City College was a small municipal meritocracy. It had no playing fields, no dormitories, no fraternity houses, and no extra pedagogical baggage. The faculty totaled thirteen professors and thirty-seven instructors. The campus comprised a single turreted building at the corner of Lexington Avenue and 23rd Street (site of the present Bernard M. Baruch College of the City University). Students were plentiful in the first, or sub-freshman, year, but scarce at the collegiate finish line five years later. Several hundred were entered with Baruch in the fall of 1884; fifty were graduated with him in June 1889. “When we first came here we were large in number but small in intelligence,” said the class history; “now—behold us—we are small in number but large in intelligence.” Baruch’s classmates were young, boisterous, optimistic, and patriotic. In its yearbook the Class of 1889 identified the nation’s centenary “under our noble flag and glorious constitution” as the foremost event of the year. However, in another respect it was not so different from the more cynical classes that followed it late in the twentieth century. The yearbook also contained a facetious essay on “cribology,” or the science of cheating.

  Baruch put down the high rate of attrition among his classmates to financial as much as to scholastic causes. Tuition was free, but many students fell by the wayside under the burden of working to feed and clothe themselves. According to Baruch his own finances were straitened. He said that he worked part time as a collection agent and medical bookkeeper for his father and that he walked to school to save the dime he would have spent on the elevated. His allowance was twenty-five cents a week until his senior year, when it was munificently doubled. Possibly this raise reflected the family’s improved economic circumstances. Their address at the time of Baruch’s graduation from grammar school was 158 West 54th Street. By the spring of 1885, they had moved to 43 East 59th Street. By the spring of his junior year in college they had pushed to 47 East 60th Street. It was perhaps from this address that Baruch set out for school on foot on the morning of the blizzard of 1888. He made it, half frozen, only to find that there was hardly anyone there to appreciate his zeal.

  In the 1880s, under its president, General Alexander Stewart Webb, City College stood aloof from the elective-system “nonsense” that was fashionable at Harvard. Only one important choice was available to Baruch and his classmates, the Scientific Course or the Classical Course. After a false start in science, Baruch took up the classics. In his autobiography he made himself out to be a rather poor student, but this was either faulty memory or the dissembling of a man who had little use for eggheads and college professors. Out of a class of fifty, he was graduated thirteenth, and his strongest grades were in Greek, Latin, English, and French. As a grown man Baruch was famously fluent with numbers but inarticulate. In college, however, he did better with languages than he did with mathematics. He had four years of math (which took him into calculus), five years of Latin, four of English and Greek, three of history, two of chemistry, and not quite two of physics. He struggled with drawing and what was called “aesthetics.”

  He did worse than he remembered in political economy, which he studied in the second semester of his junior year under Professor George Benton Newcomb. For the full year’s course, which included a semester of philosophy, he finished thirty-fifth out of fifty-four students (his only worse showing that year was in applied math, in which he ranked thirty-seventh), but at least one lesson sank in. He recited it later, quoting Newcomb:

  When prices go up, two processes will set in—an increased production and a decreased consumption. The effect will be a gradual fall in prices. If prices get too low, two processes will set in—decreased production, because a man will not continue to produce at a loss, and, second, increased consumption. These two forces will tend to establish the normal balance.

  Newcomb was no believer in the sanctity of natural processes, and if his lectures followed the lines of his writing, he condoned an interventionist role for government in the economy. For instance, he wrote in 1885: “[T]he economic end is ever subordinate to the higher social ends, notably the ethical end, and wherever the pursuit of the former prevents the attainment of the latter and superior ends, the social conscience and will may and does interfere. . . .” Although he might have put it in different words, Baruch too believed that society had a will and a conscience and that the individual owed fealty to the mass of his fellows. There is no telling whether he got that from Newcomb, or what impression the economic textbook that he was assigned to read might have made. On the one hand, Political Economy, by Francis A. Walker, was defensive about moneymaking and cool to slightly hostile toward Baruch’s future vocation, stock trading. On the other hand, it stated some things that Baruch might have advocated himself a few decades later. Thus, concerning capital: “It arises solely out of saving. It stands always for self-denial and abstinence.” Many years later, when John Maynard Keynes floated the idea that the way out of a depression was through spending instead of self-denial and abstinence, Baruch rejected both the idea and the economist.

  In college Baruch was as thin as he had once been fat, and he recalled being among the last of his friends to get a date. At six feet three inches (an inch short of his final topping out), he was the tallest man in school his senior year. He weighed only 170 pounds, had beanpole legs, and was slow afoot. In May of his senior year there was an ambiguous note in The College Journal: “Baruch is greatly improved in his lacrosse playing.” His being a Jew debarred him from college fraternities, but he was president of the senior class for a term and chaired the Class Day Committee. He belonged to the Senior Secret Society and was one of a three-man body to represent CCNY at a convention of the Intercollegiate Athletic Association in 1889. His deportment was flawless except in his sophomore year, when he took a swing at a classmate who called his mother “a vile name.” Baruch related this episode colorfully. President Webb suspended him, he said, but softened the blow by suggesting that a boy as likely as he ought to apply to West Point. Webb was a West Point man himself, and he had won the Congressional Medal of Honor at Gettysburg by repulsing Pickett’s charge at Bloody Angle. Unfortunately, Baruch’s application got no further than the discovery that he was almost deaf in his left ear—the result, he said, of a whack he sustained across the side of his head with a bat in a college baseball game. (Furthermore, said Baruch, he won the game with a ninth-inning home run.) Except for that blow, he liked to say in the company of military men, he would have been a general, as indeed he probably would have been.

  Baruch was graduated without academic honor, but his practical credentials—budding good looks, amiability, a calculating intelligence, and a sharp memory for faces and names—were impeccable. The College Journal reported that on Class Day, 1889, he received a special gift from his classmates: “As an evidence of the survival of the fittest, ‘Shorty’ Baruch was given a pair of knee trousers suitable for a small eight-year-old. . . .” Thus equipped and accoutered, Bernard M. Baruch set out into the world.

  2. Their austere domestic arrangements suggest that the Baruchs were prepared to go to some lengths before they stooped to live on capital. They had brought $18,000 from South Carolina, which at the prevailing savings rate of 4 percent would have yielded $720 a year. Seven hundred twenty dollars was a reasonable sum of money, but rents in New York were characteristically unreasonable. Apartments that had been let for $600 to $1,000 a year in 1880 fetched $660 to $1,100 in 1881. Furnished houses commanded $2,
500 to $5,000. Rents in 1881 were the highest since the Civil War, a fact explained by a real-estate agent in The New York Times: “You see the great majority of newcomers in this City have plenty of money and their willingness to pay liberally for comfortable accommodations has helped to advance prices.” However, overcoat prices, thanks to improved manufacturing techniques, had fallen. Mrs. Baruch probably outfitted her sons for less than $100.

  Two

  Three Dollars a Week

  “’89—Baruch is in Wall Street.”

  —From The College Journal, September 23, 1889

  In college Baruch entertained medical ambitions, but after graduation followed them no further than to haunt some dissecting rooms and dip into a few textbooks. His father was noncommittal on the subject of a career, but his mother actively steered him toward business. Among other things, she invoked phrenological evidence.

  Phrenology, a pseudoscience then in vogue, was the practice of deducing human aptitudes by an examination of the bumps and ridges of the skull. Shortly after they arrived in New York, Baruch and his mother had paid a call on a practitioner named Fowler. The phrenologist asked Mrs. Baruch what she intended to do with her son.

  “I am thinking of making him a doctor.”

  “He will make a good doctor,” Fowler agreed, passing his hands appraisingly over the boy’s glabella, “but my advice to you is to take him where they are doing big things—finance or politics.”

  In the spring or summer of 1889, Baruch began his career in the small way of answering help-wanted advertisements. Nothing happened. Then he began to call on his father’s patients, among who was Daniel Guggenheim, second son of a family that was getting out of the lace trade and into metals and mining. Baruch was a foot taller than his would-be employer, but the awkwardness of their meeting was dispelled by a smile of Guggenheim’s. The applicant must have made a favorable impression, because Guggenheim offered him a job as an ore buyer in Mexico. To this Baruch said yes, but his mother, decisively, said no.