1929: Inside the Greatest Crash in Wall Street History--and How It Shattered a Nation - 7

On the day he was to be inaugurated as the thirty-first president of the United States, Herbert Hoover woke early at his family’s handsome redbrick mansion on S Street in Washington’s fashionable Kalorama neighborhood. The Hoovers had lived there for eight years, ever since the Californian had been sworn in as Warren G. Harding’s secretary of commerce.

It was Monday, March 4, a wet, overcast morning. By 7 a.m. Hoover was dressed casually and at the desk in his private study, taking a quick look through the newspapers before the festivities were set to begin. It was going to be a long day, ending with the inaugural ball at the Mayflower Hotel, which he knew was likely to last past midnight. The celebratory response by the press to his election had been gratifying, if not surprising. By one count more than three quarters of the nation’s nine hundred newspapers had endorsed him for president. Hoover was taking office “ at the moment when the strength and prosperity of his own country never stood higher. All the auguries are good for the Presidency which begins today,” The Times of London proclaimed.

As he mentally rehearsed his inauguration speech, he felt as confident as any incoming president probably ever had, and with good reason. At fifty-four, with pronounced jowls and thinning gray hair that he wore neatly combed back, Hoover had been tantalizingly close to power for the past eight years as secretary of commerce under both Harding and Coolidge—and now the presidency was his. Pitching himself as a substantive candidate with little patience for politics, the staunch Republican had defeated his Democratic opponent, the savvy New York politician Al Smith, in a landslide, amassing 58.2 percent of the popular vote, along with forty of the forty-eight states.

One thing was certain: Calvin Coolidge’s style of governance—taciturn, aloof, and minimal—was about to be retired, and the United States of America would get a chance to see what a president imbued with optimism, ideas, and energy could accomplish at a time when the rest of the nation seemed overflowing with them.

Just before 8 a.m. Hoover had his usual breakfast of ham and eggs with coffee. He normally hated eating alone, but not on this day. He was particularly enthused—even a bit bemused—by the positive reception he was getting from Wall Street, which he knew was skeptical of his view that the national economy ought to be managed rather than simply left to its own devices. “ Wall Street’s Hoover Boom is starting,” wrote the syndicated columnist Arthur Brisbane on the eve of Hoover’s swearing-in. “Heaven pity the poor bear, if any bear still survives.” After a brief swoon in mid-February, the Dow had jumped 8 percent to 319.

Bertie Charles Forbes echoed the sentiment that morning: “Isn’t this kind of funny? You will recall that all the newspapers told you before the presidential nomination that Wall Street didn’t want Hoover. Now Hoover’s inauguration is hailed by Wall Street as calling for a wild demonstration of bullish exuberance!”

No matter what they were saying in public, Hoover was well aware that New York bankers had reservations about him. Like them, he was immensely wealthy, having been a successful mining investor—so successful that he would become the first president in history to donate his salary to charity. But he was also an engineer and believed the economy could be operated like a machine, something that made Wall Street nervous. He had done his best to put their minds at ease: His decision to reappoint Andrew Mellon as secretary of treasury was seen as an obvious concession to business leaders. Hoover’s predecessor Coolidge had so relied on Mellon’s judgment that he had had a private telephone line installed to link their offices. The two men believed in protecting the wealth of the nation above all else.

But Mellon was not, in fact, universally popular. With his close ties to Northern industry, he had more than his share of detractors in the Senate, particularly representatives from rural states. Just a day earlier, Senator Kenneth McKellar, Democrat from Tennessee, said he would vote against Mellon’s confirmation, calling him an “unfaithful public servant.” Hoover, though concerned about expending political capital on a messy confirmation fight, had decided that since Mellon already held the position, the Senate would push him through.

The son of a wealthy Pittsburgh judge who founded a private bank, Mellon had taken over management of his father’s enterprise at the age of twenty-seven, investing heavily in such cutting-edge industries as aluminum and oil. After amassing one of the great industrial fortunes in American history, Mellon became involved in politics in the ramp-up to the 1920 election. Somewhat reluctant to enter government himself, he had been persuaded to do so by powerful friends who believed he would lend gravitas to the lightweight Warren G. Harding administration. He was so tied into American business that upon agreeing to serve as secretary of the treasury, Mellon had been compelled to resign from directorships in at least fifty-one corporations.

Though Mellon was not an admirer of Wall Street—he believed, as many industrialists of his generation did, that the stock market was a haven for speculators, not legitimate businessmen—he did not consider it Washington’s responsibility to officiate over or interfere in the essentially private matters of buying and selling. If Americans wanted to gamble, they should be allowed to do so without Uncle Sam sticking his nose in their affairs.

When Harding died of a stroke in 1923, at the age of fifty-seven, and Vice President Coolidge succeeded him, Mellon stayed on at Treasury, just as Hoover did at Commerce. Coolidge never cared much for Hoover’s opinions, once telling an aide that Hoover was “too much inclined to have his own solution of problems, frequently unsound,” a view that Mellon appeared to share.

During his eight years in Washington, Mellon had distinguished himself as the most resolute, unwavering advocate in government that American business had ever had. On his watch, the tax rate on capital gains, which had previously been the same rate as regular income, was lowered. This was a boon to Wall Street. Mellon was hailed as “ the greatest Secretary of the Treasury since Alexander Hamilton” by the likes of Durant, Owen Young of General Electric, and Senator Reed Owen Smoot of Utah.

Mellon is “ a symbol of prosperity,” wrote Collier’s . “On him the hopes of the conservative big business interests of the country converge.” Hoover, the article noted, was “almost compelled to retain Mr. Mellon.”

With his presidency coinciding with the roaring twenties, Coolidge—and his treasury secretary—remained popular among business interests through his second term. Hoover, though a loyal Republican, did not get the same warm embrace from business and Wall Street—and that included Andrew Mellon. One Rhode Island official had told journalist Clarence Barron that a possible Hoover win was alarming. “They do not want this country put in charge of an engineer with a pencil and pad before him. You cannot run a government that way.” Mellon had made no secret of his desire to see Coolidge run again in 1928. “I was of course sitting with him in the Cabinet twice a week,” Hoover later wrote. “I was aware he was constantly pressing the President [Coolidge] to run again and assuring his friends that his acceptance was a certainty.”

But when Coolidge surprised everybody by declining to stand for reelection, Hoover had his opening. Although he personally didn’t like Mellon—the treasury secretary had supported Al Smith until late in the election cycle—and would have preferred to bring in a fresh face at Treasury, Hoover recognized the value of keeping him on. Removing Mellon risked alienating many powerful people whose support he would need.

Thus it was that on January 8, 1929, the incoming president had invited Mellon to a lunch meeting at the Mayflower, where he had booked a suite to hold a series of private meetings. The treasury secretary arrived shortly before 1 p.m. and then, at about 2:30 p.m., slipped out the rear door of the Hoover suite to a back elevator and out of the hotel, avoiding the waiting reporters. He had agreed to become the first treasury secretary to serve three presidents.

By 10 a.m. on Inauguration Day, Hoover repaired to his bedroom to get dressed. The stock market, which had dipped at the day’s opening, began a strong midday surge ahead of his speech. Kosta Boris, Hoover’s Serbian valet, helped him into his formal morning clothes, with a high, stiff collar and a cravat. Hoover combed his hair, parting it just slightly to the left of center.

Hoover knew he would be changing clothes several times that day—once for the inauguration and at least one more time for the ball, which was black-tie. But even so, he knew Washington’s dress code would not be nearly as formal as the white-tie and costume balls taking place in Palm Beach, Florida, that week, where most of Hoover’s wealthiest donors had gone to escape the miserable Northeast weather—and to attend a party in honor of Al Smith, as well as one at Mar-a-Lago, the home of American financier E. F. Hutton.

Hoover returned downstairs, where his beaming wife, Lou, waited, swathed in a stylish deep-plum dress and matching cloche hat. The plan was for the Hoovers to have a private visit with Calvin and Grace Coolidge, after which the couples would proceed together to the Capitol for the swearing-in. At about 10:45 a.m., Senator George Moses of New Hampshire arrived to accompany the Hoovers on the short drive to the White House in an open-topped car. “I suppose you have read the papers, and if so you know you are the next president of the United States,” Moses joked as he grasped Hoover’s hand. “You’ve been tagged. You’re it.”

The morning was cool and misty. At the White House, they were ushered into the Blue Room to join Vice President–elect Charles Curtis and a handful of dignitaries.

The Hoovers waited. And waited. President Coolidge had yet to dress and was wandering through the White House rooms that had been his home for six years. The always-charming Grace Coolidge arrived and did her best to cover for her husband’s tardiness.

When he finally appeared in the Blue Room, about forty-five minutes after the Hoovers’ arrival, Coolidge’s mood seemed even darker than usual. He offered no small talk or ceremonial statement but merely greeted his guests with a brusque gesture and barked: “Time to go!”

As commerce secretary, Hoover had always had an uneasy relationship with his former boss. At one point Hoover seemed to be Coolidge’s preferred successor but when a rumor went around that Hoover was being considered for promotion to secretary of state—a rumor Coolidge assumed had been started by Hoover himself—Coolidge quashed it. Their relationship never recovered.

Coolidge’s personality was off-putting—gruff and often cryptic in responding to questions or making decisions. The peculiar way he handled his decision not to run for reelection was one such example: He wrote his enigmatic statement—“I do not choose to run for President in 1928”—on a piece of paper and handed it to his personal secretary to deliver to the world. Coolidge never saw fit to explain himself further. Grace, for her part, said to several friends of her husband’s decision to retire: “ Poppa says there’s a depression coming.”

In February 1928, with the Ohio primary approaching, prominent state Republicans began pressing Hoover to declare his candidacy. He went to Coolidge to secure his blessing. After confirming that the president had not suddenly reconsidered his own decision not to run, Hoover asked if he might put his own name forward. “Why not?” replied the president.

It was hardly a ringing endorsement. “That man has offered me unsolicited advice for six years,” Coolidge later complained privately about his commerce secretary. “All of it bad.” But there was also a whiff of envy in his grievances against Hoover, who had been lauded worldwide for his humanitarian efforts to feed starving Belgians after the Great War, his organization of rescue efforts during the Great Mississippi Flood, and his proclivity to attend to government business instead of napping for up to four hours a day, as Coolidge was inclined to do.

Coolidge’s dislike of Hoover had only intensified once Hoover became a candidate and he made no effort to assist his cabinet secretary in his pursuit of the Republican nomination. On the day Hoover won the nomination, a bitter Coolidge ordered a bottle of Green River whiskey from the White House cabinet of spirits and disappeared into his private room.

The period between the election and the inauguration in early March was a long four months. Coolidge took almost no action on the most pressing issues on the presidential desk during this period as a lame duck, effectively delegating them to his successor. As he joked to his closest allies, “We’ll leave it for the Great Engineer.” The only advice Coolidge offered Hoover of any value was a bit odd. “You have to stand every day three or four hours of visitors,” Coolidge told him. “Nine tenths of them want something they ought not to have. If you keep dead still, they will run down in three or four minutes. If you even cough or smile they will start up all over again.”

Led by a cavalry escort, Coolidge and Hoover sat together in the back seat of a black automobile, a blanket draped over their knees to keep the chill off. They exchanged not a word. “ I would have given much to be able to sketch their countenances,” observed Senator Hiram Johnson of California. “Every lineament was sour and disgruntled, and no human expression once illuminated those stony faces.” Their wives followed in a separate car, heads together, smiling. Grace and Lou, who had known each other for years, were more than happy to chat away.

Coolidge’s mood seemed to lift as the crowds cheered the man who had presided over unprecedented prosperity, and he frequently raised his silk top hat in acknowledgment. At the Capitol a large, covered pavilion, painted white and supported by classical columns, had been erected. Among the dignitaries invited to take seats on the platform was Hoover’s grade-school teacher from West Branch, Iowa, who had once sought to adopt him after he lost his father at six and his mother at nine.

The sprinkles of rain were developing into a steady drizzle. The crowd in the area around the Capitol was estimated to be in the tens of thousands, along with several motion picture crews, which were filming the presidential inauguration for the first time. When they left their car, Grace and Lou wandered off, missing the swearing-in of the new vice president altogether while they toured Capitol galleries and discussed Lou’s new responsibilities as first lady.

An irritated Hoover sent someone to look for them, but it was not until Grace heard the band strike up the first notes of “Hail to the Chief” that she seized Lou by the arm and they dashed toward the platform. At 1:07 p.m. the black-robed, walrus-mustachioed William Howard Taft, chief justice of the Supreme Court and a former president himself, ascended the platform and presided over Hoover’s oath of office.

Then Coolidge surprised everyone by turning to Hoover, shaking his hand, and beaming a warm smile. The spontaneous gesture triggered applause that grew as it spread through the crowd. When the new president stepped forward to address the nation, a speech that was broadcast live around the world on radio, also for the first time, the heavens opened.

Hoover mopped rain from his face, took his place in front of the podium under an umbrella, and spoke, barely looking up from the manuscript he had labored over for weeks. “There is nothing of the fire-eater about him,” one campaign reporter dryly observed of his oratory style. “There are no climaxes, no flights of eloquence, no biting sarcasm, no flattery, no extravagant compliments.”

In person this approach could come across as lackluster, but over the radio, the crispness of Hoover’s diction proved to be a major asset. An estimated sixty-three million listeners tuned in to his inaugural address. Hoover was the first major politician to understand that he was speaking to a far larger audience than the one assembled before him. In that regard he was the first president to recognize the awesome power of the mass market. He held forth for twenty-nine minutes, promising rigorous enforcement of the Eighteenth Amendment (Prohibition), extolling the virtues of world peace and the recent agreement among the developed nations of the world to outlaw war, and calling on Congress to help embattled farmers and to enact a modest program of tariffs to protect American industry. There was not a single word about the runaway stock market or the need to rein in speculation. If these were to be priorities of the new administration, he was keeping them under wraps for now.

Hoover closed his speech with a triumphant message. “Ours is a land rich in resources; stimulating in its glorious beauty; filled with millions of happy homes; blessed with comfort and opportunity,” he said. “In no nation are the institutions of progress more advanced. In no nation are the fruits of accomplishment more secure…I have no fears for the future of our country. It is bright with hope.”