Harry Truman (15 page)

Interstate Commerce was largely involved with transportation, and Dad’s intensive study of the Kansas City region’s transportation problems, as presiding judge of the Jackson County Court, was an ideal preparation for tackling the transportation woes of the nation as a whole. He was already keenly aware there was something fatally wrong with the backbone of our national transportation system - the railroads. Before he became senator, the Missouri Pacific, one of the great railroads of the nation, had gone into bankruptcy.

But in the order of urgency, Dad and his fellow committee members decided the nation’s airlines needed the most help. Dad took charge of a subcommittee that began holding hearings on the mess in that department.

As both an ex-soldier and a civilian, my father saw the vital importance of the airplane to the country’s future. It was one more example of his ability to peer into the future, and begin planning for it. His hearings brought out the appalling fact that $120,000,000 in private capital had been invested in air transport, and $60,000,000 lost. Addressing the Senate, on July 2, 1937, Senator Truman told them:

Unfortunately, his bill was not passed immediately. It took another year of battling over details in the Senate. One of the big arguments brought on the first - but not the last - of Dad’s clashes with strong-willed Senator Pat McCarran of Nevada. My father wanted to create a Civil Aeronautics Authority Board on which the President would have the right to appoint or remove members at his pleasure. McCarran wanted the President’s powers limited, a typical senatorial attitude. He insisted a commissioner could only be dismissed for inefficiency, neglect of duty, or malfeasance in office. Even then, my father did not believe in tying the President’s hands unnecessarily. Dad won the argument.

When the law was finally passed in June 1938, Arthur Krock praised it lavishly in
The New York Times
as “the product of unremitting and intelligent toil by legislators of ability and character intent upon working out difficult national problems.” He singled out my father’s efforts as especially praiseworthy, noting his hundreds of hours of listening to witnesses from dozens of different interested groups, from the Reconstruction Finance Corporation to the Airline Pilots Association. Only a handful of experts also appreciated the exquisite care with which Dad had drafted the bill, using terminology already defined by the Supreme Court in its interpretations of the Interstate Commerce Act. An immense amount of time-consuming litigation was thus saved, in advance. Some members of the airline industry were almost stunned by the high quality of the legislation. Edgar Gorrell, president of the Air Transport Association, said: “. . . Now and then democracy takes a great stride forward to catch up with the times.”

While my father was writing this law and defending it in the Senate, he was simultaneously conducting hearings on the chaotic state of the nation’s railroads. President Roosevelt had called the railroads “the most serious problem of the administration,” in 1937. The statistics of their catastrophic decline made this an understatement. In 1926, American railroads employed 1.78 million men with a payroll of $2.95 billion. By 1938, 840,000 of these men were out of work and a staggering 10,000 miles of track had been abandoned, with destructive effects on business in uncounted small towns and medium-sized cities. As Dad tried to find out why a business that was handling 75 percent of the nation’s traffic (in 1926) could now be tottering into bankruptcy, he became more and more convinced the answer lay in the manipulations of a small group of greedy men, largely operating in and around Wall Street.

These were not conclusions based on preconceived radical theories. They were reached after endless hours of hearings, and even longer hours of struggling through immensely complex reports on railroads and the holding companies that owned them and played games with their stock. Scarcely a month went by without a new struggle with another group of recalcitrant railroad or investment bank executives. Some railroads tried to refuse Dad’s committee access to their books. Others actually presented phony records, under the imprint of some of the nation’s biggest accounting firms.

I still remember the grim pleasure my father expressed over a victory he won in an exchange with George O. May, senior partner of Price Waterhouse and Company. In certifying the books of the Missouri Pacific, Price Waterhouse had allowed the company to carry as assets a debt of $3.2 million. This gambit enabled the railroad’s executives to misrepresent its financial condition to the public, when it was on the brink of receivership. May haughtily informed Dad the assets statement was “misleading in effect but not misleading in intent.” My father angrily declared it was misleading in both respects and reported the matter to the Interstate Commerce Commission. This body, whose word is law in railroad matters, immediately ordered the account transferred from special deposits on the assets side to “unadjusted debt.”

“That is the way it ought to have been handled in the first place,” Dad snapped.

“That is right,” May replied.

It was my father’s investigation of the Missouri Pacific that really enraged him and convinced him for all time that “the wrecking crew,” as he called Wall Street’s financiers, were a special interest group constantly ready to sacrifice the welfare of millions for the profits of a few. The Missouri Pacific was a huge railroad system with no less than seventy-nine subsidiaries under its control. In 1930, the Alleghany Corporation, a holding company formed by some Cleveland manipulators using money supplied by J. P. Morgan, acquired control of the entire eighty-company system. The holding company bosses then proceeded to loot the railroad. They declared dividends out of capital instead of earnings, fired thousands of workers to cut the payroll, reduced maintenance, and abandoned badly needed improvements in the road and equipment. In a few short years, the Missouri Pacific was in bankruptcy.

Digging into this mess required considerable political courage for a senator from Missouri. To obtain permission to buy the Missouri Pacific, the Alleghany Corporation had twisted arms and cajoled Democrats and Republicans in the state legislature, as well as almost every other public official in Missouri. One state senator received $1,000 “covering services in the Alleghany-Missouri Pacific matter” which he was never able to satisfactorily explain.

Once more Senator Truman was deluged by telegrams and telephone calls from powerful politicians and businessmen in his home state, urging him to abandon the investigation or at least make it as superficial as possible. My father called Max Lowenthal, general counsel for the investigating committee, and said, “I don’t want you to ease up on anything. You treat this investigation just as you do all the others.” Not long afterward, he received an anonymous note, warning him he would die on the Senate floor. Over the next several weeks, the Senate police had extra men on duty in the gallery because, from their analysis of the note, they feared the would-be assassin would try to shoot Dad from there.

Max Lowenthal told a St. Louis
Post-Dispatch
reporter he did not know a half-dozen senators who could have resisted the kind of political pressure Dad withstood.

Lowenthal was a disciple of Louis D. Brandeis, the great liberal dissenter on the Supreme Court. To be invited to the Justice’s apartment on California Street was regarded by many New Dealers in Washington during these days as a great honor. To be invited back was an even greater honor. My father was invited back again and again because, almost on sight, both men recognized they were spiritual brothers. Brandeis had denounced “the curse of bigness” and inveighed against the manipulation of American business to line the pockets of a few financiers. But simply sharing these beliefs was not enough to win a coveted membership in the Brandeis circle. You had to share his patience, skill, and determination to unravel the intricate frauds being perpetrated on the people by the Wall Street bankers. For hours at a time, while other politicians stood watching enviously, Justice Brandeis would talk with Dad about his committee’s latest discoveries in railroad wrecking and looting.

Dad agreed wholeheartedly with Justice Brandeis’s contention that a company’s size should be limited by one man’s capacity. Dad proved this point conclusively in his investigation of the Alleghany Corporation. Questioning the man who had bought it, George A. Ball, my father was able to show that Ball did not even know the names of several major companies, employing thousands of workers, which he theoretically controlled.

Almost two and a half years after he came to the Senate, Dad was ready to make some major speeches. They were in a style that should have made those with good memories less surprised by his 1948 “give ‘em hell” performance.

“Some of the country’s greatest railroads have been deliberately looted by their financial agents,” he said. Speaking of the Rock Island Railroad, he reminded his fellow senators:

Dad bluntly accused the Alleghany Corporation of the same kind of railroad robbery.

Later that year, in another speech on the same topic, he inveighed against the curse of bigness and the impersonal financial racketeering it encouraged: “I believe the country would be better off if we did not have 60 percent of the assets of all insurance companies concentrated in four companies. I believe that a thousand insurance companies with $4 million each in assets would be just a thousand times better for the country than the Metropolitan Life with $4 billion in assets. The average human brain is not built to deal with such astronomical figures.

Above all, he was worried by the erosion of the nation’s moral sense, by the awe and brutality engendered by over-concentrated financial power: “One of the difficulties as I see it is that we worship money instead of honor. A billionaire in our estimation is much greater in the eyes of the people than the public servant who works for the public interest. It makes no difference if the billionaire rode to wealth on the sweat of little children and the blood of underpaid labor. . . .”

Reading these forgotten words, perhaps readers can appreciate a little more the sincerity of the President who fought for his reelection in 1948 against a Congress that was trying to give the country back to the control of these same special interests.

At the same time, my father made it clear again and again, during the hearings and in his speeches, that he was not against all businessmen. He went out of his way to praise the courage of many of the executives of the operating railroads, who fought to maintain efficiency and quality while the financial blood was being sucked out of their companies. His answer to the abuses of the Wall Street manipulators was not government ownership, either. More than a few New Deal senators were inclined to see this as the only solution. But Dad insisted more stringent regulation and severe restrictions on the size of the holding companies would correct most of the abuses.

My father also believed the time had come for the big financiers on Wall Street to realize they had better start thinking and acting in the public interest: “It is a pity that Wall Street with its ability to control all the wealth of the nation and to hire the best brains of the country has not produced some statesmen, some men who could see the dangers of bigness and of the concentration of the control of wealth. Instead of working to meet the situation, they are still employing the best law brains to serve greed and selfish interest.”

He also sounded a note he was to repeat again and again in later years, in his struggle to attract talented men into the government: “The ordinary government mine-run bureaucratic lawyer is no more a match for the amiable gentlemen who represent the great railroads, insurance companies and Wall Street bankers than the ordinary lamb is a match for the butcher.”

His distaste for the way the railroads were being run inclined him to side emphatically with railroad workers in their struggle against their employers. In 1938, the big operating companies asked for the right to cut wages by 15 percent. My father went before a fact-finding board that was conducting hearings and blasted the proposal. He told the board that, as a result of his investigations, he was convinced the railroads were wasting approximately $667,000 a day: “Banker management should not be permitted to sacrifice railroad labor for their inability to control a situation of their own creation.” For the first time, but not the last, union leaders awoke to Harry S. Truman’s existence. While other senators opposed the wage cut, no one else could speak with Dad’s authority on railroads and their mismanagement.

One amusing by-product of my father’s growing fame as a corporate taskmaster was a public confusion between him and Thurman Arnold, the trust-busting assistant attorney general and author of several scathing books on corporate mores, most notably
The Folklore of Capitalism.
Thurman and Truman were similar enough to get even the Washington
Star
confused. The paper once ran a picture of Dad and identified him as Arnold. There was a constant intermingling of their mail. Since they shared a common philosophy, the two of them decided it was funny and became good friends.