One Summer: America, 1927 (29 page)

No mainstream publisher would touch it, so Britton set up a special imprint, the Elizabeth Ann Guild, to produce it. Even then, Britton alleged, she received anonymous threats, her phone lines were cut, and a truck carrying the printing plates for the book was torched. When
The President’s Daughter
came out in July 1927, Harding’s reputation had already reached what seemed to be its nadir, but now the reading public rushed to find out what an unprincipled rascal he was.

The best-thumbed passages in every household were those dealing with their trysts in the White House. Britton did not want for candor.
She recorded how the president, consumed with lust, bundled her into “the one place where, he said, he thought we might share kisses in safety. This was a small closet in the ante-room, evidently a place for hats and coats, but entirely empty most of the times we used it, for we repaired there many times in the course of my visits to the White House, and in the darkness of a space not more than five feet square the President of the United States and his sweetheart made love.” They also convened in apartments that Harding borrowed from pals.

Britton’s book was a combination of wild improbabilities (that Harding wrote her love letters up to sixty pages long) and indubitably accurate descriptions of the interior of the White House (particularly when seen from floor level).

It was so scandalous that few publications reviewed it. Many bookstores provided it to customers only on request. Many others would not sell it at all. Even so, the book sold fifty thousand copies in its first six months at $5 a copy—at a time when $5 was a lot of money. (Half a day’s pay for Lindbergh as an airmail pilot, for instance.) One of the few publications to review it—though not until it had been out for three months—was
The New Yorker
. There, Dorothy Parker called it “the most amazing work that has yet found its way into these jittering hands.… For when Miss Britton gets around to revealing, Lord, how she does reveal.”

All this could not have come at a worse time for the memory of Warren Harding. A memorial in the shape of a mighty rotunda had been erected in Harding’s hometown, and dedication was set for July 4. As a sitting president of the same party, Calvin Coolidge was required by tradition and etiquette to perform the dedication, but with so much unsavory scandal swirling about he refused to go. In consequence, the dedication was postponed more or less indefinitely—a serious humiliation for the Harding family. (Eventually, in 1931, the dome was dedicated by Herbert Hoover, who would go, it was said, to the opening of a drawer.)

Coolidge chose to celebrate July 4—which also happened to be his fifty-fifth birthday—by remaining in South Dakota, where he was having the time of his life. In recognition of all the publicity he was generating with his trip, the state of South Dakota presented him on his birthday
with a cowboy outfit and horse. Named Kit, the horse was charitably described as “spirited.” It was in fact all but untamed. The president, who was by no means a horseman, was prudently kept well away from it. Instead his delighted attention was focused on his other main present—a cowboy outfit consisting of a ten-gallon hat, bright red shirt, capacious blue neckerchief, chaps, boots, and spurs. Coolidge retired to put it all on and emerged clankingly, and a little clumsily, in the full regalia a few minutes later. He looked ridiculous, but very proud, and posed happily for photographers, who could not believe their luck. “Here was one of the great comic scenes in American history,” wrote Robert Benchley in
The New Yorker
that week.

Coolidge loved that outfit and wore it for the rest of the summer whenever he could. According to lodge staff, he often changed into it in the evening after his more formal day’s duties were done, and for a few hours ceased to be the most important man in America and instead was just a happy cowpoke.

15

While President Coolidge amused himself as a cowboy in the Black Hills, across the country, and far beyond his present range of interests, four international bankers were quietly laying the groundwork for the collapse of the stock market and the Great Depression that followed. That wasn’t their intention or expectation, of course, but that was the effect of it.

The men in question were Benjamin Strong, governor of the Federal Reserve Bank of New York; Sir Montagu Norman, governor of the Bank of England; Hjalmar Schacht, head of the Reichsbank in Germany; and Charles Rist, deputy governor of the Banque de France. For men of such importance, they were a rather odd quartet. One was strange, one was dying, one was a future Nazi, and one was quite normal but of little consequence in the present circumstances.

They gathered at the Long Island estate of Ogden Livingston Mills, a rich Republican who had recently been beaten (indeed, heartily clobbered) by Al Smith in the race for the governorship of New York. As a kind of consolation prize, Mills had been made undersecretary of the treasury in Washington. He would eventually succeed Andrew Mellon as treasury secretary—ironically just in time to deal with the mess now being set in motion by his well-meaning but misguided houseguests.

The bankers must have felt quite at home, for Mills’s vast and blocky mansion looked more like a central bank than a comfortable residence. Surrounded by formal gardens, it occupied a prime spot on the Gold Coast, a privileged stretch of northwestern Long Island where some six hundred great estates commanded the rolling hills and deeply indented coastline of Nassau and western Suffolk counties. Nearly all of America’s wealthiest families—the Vanderbilts, Du Ponts, Astors, Whitneys, Morgans, Hearsts, Fricks—had weekend places there. Some of these homes were immensely grand. Otto Kahn, a banker, had a castle with 170 rooms, including a dining room that could seat two hundred. The grounds included an eighteen-hole golf course and a private zoo. Feeling his backdrop lacked grandeur, Kahn had his own small mountain built. Other Gold Coast owners bought and razed entire villages to improve their views, and at least one had a public highway gated to stop common people from wandering onto the beach at the foot of his grounds.

The Mills estate was only about ten miles from Roosevelt Field and more or less directly on the flight path of all the recent Atlantic flights. Commander Byrd and his team had flown over in the
America
just two days before the bankers arrived. News of Byrd’s splashdown at Ver-sur-Mer and triumphal reception in Paris devoured all the main news space in the papers for days, which pleased the bankers because it helped distract attention from them. They relished secrecy.

The host of the meeting was Benjamin Strong. Fifty-five years old, he was a tall, handsome man but one whose life was “packed with secret sorrows and ill health,” to quote the financial historian John Brooks. In the summer of 1927 he wore the tired and slightly haunted look of a man who has been fighting a long, losing battle with a fatal condition. His was tuberculosis.

Strong’s personal and professional lives made a poignant contrast. Born in 1872 into a genteel but financially diminished old upstate New York family, he could not afford college and so instead went to work in banking in Manhattan. Thanks to his personable manner and natural authority, he climbed steadily through the ranks, but his ascent was considerably accelerated after 1898 when he moved with his wife and young
family to Englewood, New Jersey, and became friends with several rising stars at J. P. Morgan & Co., notably Henry Davison, Thomas Lamont, and (later) Dwight Morrow. With the benefit of his new contacts, Strong became a director of the Bankers Trust Company, then its president, and finally head of the New York Federal Reserve Bank at the time of its founding in 1913.

His personal life, alas, did not achieve a parallel happiness. His wife, who suffered from chronic depression, killed herself in 1905, leaving him with four young children, one of whom died of scarlet fever the following year. Two years later, Strong remarried, but that marriage was not a success either: his second wife left him in 1916 and moved to California with two further children he had had with her. At the same time, he was diagnosed with tuberculosis and needed to spend extended periods convalescing in the clear air of Colorado. While there, he formed a relationship with a young woman, a fellow sufferer of TB, who killed herself horribly by drinking boot polish. This was not a man for whom life was a succession of joyous events. In the summer of 1927, he had just returned to work after a six-month leave of absence.

At least he had the companionship of his best friend, Montagu Norman of the Bank of England. Strong and Norman were so close that they frequently vacationed together, usually in Maine or the South of France. Norman made a rather odd friend but an even odder head of a central bank. Of a fragile and nervous disposition, he was “a strange and lonely man” who was “intensely neurotic and almost impossible to please,” in the words of two of his many biographers. He sported what
Time
magazine in 1927 called “a superbly pugnacious goatee” and had an affection for broad-brimmed hats and flowing capes that made him look like a cross between a Balkan spy and a second-rate stage conjuror. He was fiercely anti-Semitic, which was slightly unexpected because his own roots, it was said, led back to Sephardic Jews from southern Europe.

Among his many eccentricities, Norman always traveled in disguise, even when there was no plausible reason for doing so. Usually he adopted the name “Professor Clarence Skinner,” to the occasional consternation of the real Professor Clarence Skinner. Norman was
much given to extravagant nervous breakdowns. Whenever he was feeling “seedy,” as he called it, he would take to his bed for days or even weeks. He didn’t work at all from 1911 to 1913 after the Swiss psychiatrist Carl Jung diagnosed him, arrestingly and erroneously, as suffering from final-stage syphilis and gave him just months to live. It is more likely that he was at least mildly bipolar. When in ebullient mood, his confidence was boundless. “I don’t have
reasons
,” he once corrected a friend. “I have instincts.”

Norman lived alone (but attended by seven servants) in a rambling house in Holland Park in West London; Herbert Hoover was a near neighbor for several years. He almost never gave interviews or made speeches, and he rarely socialized. His house had a music room in which he sometimes held small concerts for himself alone. He came from a family of considerable accomplishment. His brother became chairman of the British Broadcasting Company. His father was a partner in Martin’s Bank, then one of the biggest in Britain, and both his grandfathers had been directors of the Bank of England, one of them later serving as governor.

Norman himself showed no particular promise as a young man. He worked capably enough in the family bank but took long periods off for travel and nervous collapses. During his longest stretch of healthfulness, he spent four years with a merchant bank in New York. During the Boer War he enlisted as a captain in the British Army and, to the presumed astonishment of everyone who knew him, served so gallantly that he was awarded the Distinguished Service Order, the highest honor available to an officer (but then collapsed, predictably, in ill health). In 1915, at the advanced age of forty-four, Norman joined the Bank of England and so distinguished himself with his fierce intellect and command of detail that within five years he was governor.

It would be safe to say that the Bank of England has never had a more erratic leader. Often, when feeling low, he took abrupt and lengthy leaves of absence—once for three months to South Africa—without explanation or farewell, leaving his subordinates to conduct the bank’s affairs as they supposed he would were he there. At other times he vanished with his mother to Switzerland or France to attend one of the many
clinics run by a small but charismatic Frenchman named Émile Coué. A pharmacist in Nancy, Coué became enormously popular in the 1920s through inventing a method of self-improvement that he called autosuggestion. Coué’s system, which he explained in a slim bestselling book called
Self Mastery Through Conscious Autosuggestion
, was based on the simple idea of thinking of oneself in exclusively positive terms and of repeating over and over the simple mantra “Every day in every way I am getting better and better.”
^*

Coué’s book was just ninety-two pages long, and the larger part of that was taken up with testimonials from his admiring clients. Followers of Coué’s technique—who eventually numbered in the millions—credited the great man with curing almost any malady you could name: Bright’s disease, sinusitis, neurasthenia, brain tumors, even nymphomania and clubfoot. One ecstatic client professed overcoming a lifelong difficulty in digesting strawberries. Another joyously renounced kleptomania. By the mid-1920s, Coué had clinics all over Europe and North America.

Unfortunately, in the summer of 1926 the little Frenchman dropped dead of a sudden heart attack, which rather underscored the point that positive thinking, however diligently applied, could take one only so far. The movement lost its momentum, and Norman returned to a state of chronic hypochondria, where he seemed more comfortable anyway. When not practicing Couéism, Norman was also a committed dabbler in spiritualism and the occult. He once claimed to a colleague that he could walk through walls. Perversely, all this merely enhanced his reputation for financial wizardry.

The third member of the group was Hjalmar Horace Greeley Schacht, president of Germany’s Reichsbank, who owed his memorable name to the fact that his father had resided for some years in America as a young man and had there developed an admiration for the crusading newspaperman Horace Greeley. Hjalmar Schacht later became a slavish
supporter of Adolf Hitler (even going so far as to adopt a comical postage-stamp mustache in the Hitlerian mode) and minister of economics under the Nazis. In the words of one observer, “Dr. Schacht conferred legitimacy on Hitler’s thugs.”

In 1927, he was a national hero, credited with bringing Germany through its greatest economic crisis. Four years earlier, in January 1923, the French, exasperated with Germany’s failure to keep up with reparations payments, had seized the Ruhr, Germany’s industrial heartland. The result was dizzying hyperinflation. The mark, which had traded at about 4 to the dollar before the war, now shot up to 600,000 to the dollar. By summer, the exchange rate was 630
billion
marks to the dollar and inflation was so rampant that prices were doubling daily, sometimes hourly. People needed wheelbarrows or baby buggies to carry enough paper money to conduct even the simplest transactions. Sending a letter cost 10 billion marks. A streetcar ride that had cost 1 mark in 1914 now cost 15 billion. Pensions became worthless. People found that savings carefully built up over a lifetime wouldn’t buy a cup of coffee. Eventually, at the peak of the madness, prices rose to 1,422,900,000,000 times their levels of ten years earlier.