Richard E. Farley - Wall Street Wars: The Epic Battles with Washington that Created the Modern Financial System

TO JOSEPH, CONOR, JAMES, AND CHELE

(in order of appearance)

65 Bleecker Street

New York, NY 10012

Copyright 2015 by Richard E. Farley

All rights reserved, including the right to reproduce this book or portions thereof in any form whatsoever. For information address Regan Arts Subsidiary Rights Department, 65 Bleecker Street, New York, NY 10012.

Photo credits, which constitute an extension of this copyright page, appear .

First Regan Arts hardcover edition, May 2015.

Library of Congress Control Number: 2014955525

ISBN 978-1-941393-00-0

eISBN 978-1-941393-84-0 (eBook)

Interior design by Kris Tobiassen of Matchbook Digital

Jacket design by Richard Ljoenes

Jacket art by Bettmann/CORBIS (top); The National Archives/Franklin D. Roosevelt Library (left); Corbis (middle left); Bettmann/CORBIS (middle right); The Library of Congress (right)

The past is never dead. It isnt even past.

William Faulkner

At the White House:

Franklin D. Roosevelt, 32nd President of the United States

Eleanor Roosevelt, First Lady

Raymond Moley, Roosevelt adviser, member of the brain trust; nominally, an Assistant Secretary of State

Louis McHenry Howe, Roosevelts Chief of Staff

At the Treasury Department:

William H. Woodin, Secretary of the Treasury (1933)

Henry J. Morgenthau Jr., Secretary of the Treasury (19341945)

F. Gloyd Awalt, Acting Comptroller of the Currency

J.F.T. OConnor, Comptroller of the Currency

Dean G. Acheson, Undersecretary of the Treasury

Tom K. Smith, Special Assistant to Treasury Secretary Woodin

At the Federal Trade Commission:

James M. Landis, Commissioner (previously, Harvard Law School professor; and later, Commissioner, Securities and Exchange Commission)

Huston Thompson, Former Commissioner; Special Adviser

At the Commerce Department:

Daniel C. Roper, Secretary of Commerce

John Dickinson, Assistant Secretary of Commerce (former partner, Sullivan & Cromwell)

At the Reconstruction Finance Corporation:

Jesse Jones, President

Thomas Tommy the Cork Corcoran, Assistant General Counsel

At the Post Office Department:

James A. Farley, Postmaster General; also Chairman of the Democratic National Committee

At the Securities and Exchange Commission:

Joseph P. Kennedy, Chairman

George C. Mathews, Commissioner

Robert E. Healy, Commissioner

John J. Burns, General Counsel and Director of the Legal Division

David Saperstein, Director of the Trading and Exchange Division

Baldwin Bane, Executive Administrator; later, Director of the Registration Division

Donald Montgomery, Director of the Registration Division

James A. Fayne, Director of the Regional Administration Division

William O. Douglas, Director of the Protective Committee Study

Abe Fortas, Assistant Director of the Protective Committee Study

Edward Moore, Personal Assistant to the Chairman

At the United States Senate:

Carter Glass, Senator from Virginia

Huey P. Long, Senator from Louisiana

Duncan U. Fletcher, Senator from Florida; Chairman, Banking and Currency Committee

Joseph T. Robinson, Senator from Arkansas; Senate Majority Leader

Key Pittman, Senator from Nevada; Chairman, Foreign Relations Committee

Hiram W. Johnson, Senator from California

Arthur H. Vandenberg, Senator from Michigan

Ferdinand Pecora, Chief Counsel, Subcommittee on Stock Exchange Practices, Banking and Currency Committee; later, Commissioner, Securities and Exchange Commission

At the House of Representatives:

Samuel Sam T. Rayburn, Representative from Texas; Chairman, Interstate and Foreign Commerce Committee

Henry B. Steagall, Representative from Alabama; Chairman, Banking and Currency Committee

Henry T. Rainey, Representative from Illinois; Speaker of the House of Representatives

Fred Bitten, Representative from Illinois

Middleton G. Beaman, Legislative Counsel

At the New York Stock Exchange:

Richard Whitney, President; Chairman, Richard Whitney & Co.

Edward A. Pierce, Member; Leader of the customers men broker faction; Chairman, E.A. Pierce & Co.

Charles R. Gay, President (succeeding Richard Whitney)

Frank Altschul, Chairman, Listing Committee; Partner, Lazard Frres & Company

Paul V. Shields, Member; Chairman, Shields & Co.; Leading Democrat among NYSE Members

At J.P. Morgan & Co.:

J.P. Morgan Jr., Managing Partner

George Whitney Jr., Partner

Russell C. Leffingwell, Partner

Thomas W. Lamont, Partner

S. Parker Gilbert, Partner

At National City Bank:

Charles E. Mitchell, Chairman

Gordon Rentschler, President

Hugh Baker, President of National City Company, National City Banks Securities Affiliate

At Chase National Bank:

Albert H. Wiggin, Former Chairman

At Kuhn, Loeb & Company:

Otto H. Kahn, Senior Partner

Elisha Walker, Partner

George W. Bovenizer, Partner

At Dillon, Read & Co.:

Clarence Dillon (Born Clarence Lapowski), Chairman

At M.J. Meehan & Co.:

Michael J. Meehan, Chairman

At W.E. Hutton & Company:

Bernard E. Sell Em Ben Smith, Partner

At Sullivan & Cromwell:

Arthur H. Dean, Partner

John Foster Dulles, Partner

Eustace Seligman, Partner

At Davis Polk & Wardwell:

John W. Davis, Partner

At Cravath, DeGersdorff, Swaine & Wood:

Alexander Henderson, Partner

At Carter Ledyard & Milburn:

Roland L. Redmond, Partner

At the Investment Bankers Association:

Frank M. Gordon, President

William Randolph Hearst, Publisher, Hearst Newspapers

Arthur B. Krock, The New York Times, Washington Correspondent and Bureau Chief

John T. Flynn, writer; contributor to The New Republic and Harpers Magazine; investigator for Ferdinand Pecora

Felix Frankfurter, Professor, Harvard Law School

Benjamin V. Cohen, attorney, private practice

Samuel Untermyer, attorney, private practice

Edward A. Filene, department store magnate; philanthropist; founder, Twentieth Century Fund

In March 1933, the United States economy was in a shambles. The nationwide unemployment rate stood at 25 percent. In certain areas of the country, the rate was twice thatthis in an era when single income households were the norm. The nations financial system, the lifeblood of the economy, had ceased functioning, and banks were failing at an astounding rate.

In New York City, things were so desperate that Parks Commissioner Robert Moses ordered the sheep removed from the Central Park Zoo and relocated to Prospect Park in Brooklyn, where they could be securely protected from hungry residents of a nearby Hooverville who had taken to stealing the sheep and cooking them on open trash can fires.

famously captured the candidates unbridled optimism and self-confidence. Few of his fellow citizens found his optimism contagious.

That winter, Bing Crosby had a number-one hit song with Brother, Can You Spare a Dime? capturing the mood of disillusionment and despair that enveloped the nation between Roosevelts election and inauguration: