Baruch, Bernard M. 1870-1965

BARUCH, BERNARD M. 1870-1965

Financier, chairman of the war industries board

Elder Statesman

Bernard M. Baruch began his career as a Wall Street gambler and evolved into one of the nation's most respected elder statesmen. His skill at predicting stock market fluctuations made him untold millions, but he transcended the financial world using his money and personality to gain political favor with a string of presidents. At the end of his career Baruch gained notoriety for setting up his "office" on a park bench in Lafayette Square across the street from the White House. Baruch's political reputation was solidified in the 1910s when President Woodrow Wilson named him chairman of the War Industries Board (WIB). The speculator's skill at organizing and coordinating the nation's businesses for the First World War won him national acclaim. He parlayed the early success into a cherished position among the country's political elite.

Background

Baruch was born in Camden, South Carolina, and spent the first ten years of his life there. It gave him a taste of country living that would influence his outlook for the rest of his life. No matter how cosmopolitan Baruch became, he still retained his roots in South Carolina. While Baruch was still a child his parents moved the family to New York City, where his mother became a society figure and his father established a medical practice. Baruch attended the City College of New York and had a mediocre academic record. He was intelligent but deathly afraid of public speaking and intellectually lazy. But Baruch excelled in the social aspects of college life, was elected senior class president, and was an outstanding athlete, particularly in baseball and lacrosse. He initially wanted to follow in his father's footsteps and become a doctor, but he felt that business would offer more opportunities.

Wall Street Speculator

Baruch's first two jobs both came from his mother's social connections. The first job was with retired clothing merchant Julius A. Kohn. Baruch was hired to do office tasks and become a student of Wall Street speculation. Kohn taught him well, and Baruch used his own uncanny natural ability to speculate on arbitrage, foreign exchange, and business reorganizations. Baruch liked the gambling aspects of Wall Street, testing his nerve and knowledge on a regular basis. In 1891 he began working for A. A. Houseman and Company in the midst of a depression. This taught Baruch many lessons on the tumultuous nature of the stock market, but he was successful enough to be made a junior partner at age twenty-five. When signs of recovery appeared, Baruch bought a seat on the New York Stock Exchange and married Annie Griffen in 1897, starting a family and a wildly successful career on Wall Street. Baruch spent the next decade increasing his fortune by speculating and gambling on the short-term value of stocks and selling quickly. Baruch's techniques were asocial and disreputable, and many moguls frowned upon public association with him. Instead of investing and building, Baruch was gambling and hustling to make a quick buck. However, the financier's affable personality and charm watered down his competitive nature. An anomaly among Wall Street tycoons because he was not from the Ivy League or old money, Baruch never completely fit in. His standing as an outsider was further enhanced by the anti-Semitism found on Wall Street. Baruch became a symbol of success and the most famous American Jew of his time, but his wealth, fame, and power did not isolate him from the racism in America.

The War Industries Board

World War I changed people's priorities. Baruch and other notable businessmen flocked to the nation's capital to help in the effort. They became known as "dollar-a-year men" because they did not accept a regular salary from the government for their services. President Wilson announced the formation of the WIB on 28 July 1917 to mobilize the nation's economy and resources for the war. Baruch was named the chairman on 4 March 1918. Wilson called Baruch "Dr. Facts" because of his vast business knowledge and stood behind him with the power and the authority of the presidency. Baruch immediately began overhauling the WIB and sought to achieve its ends, whether that meant cajoling, threatening, or intimidating businesses into co-operation. In fact, Baruch was the perfect choice to head the WIB. He knew many industrialists but was not one of them himself, thus avoiding the charge that he was illegally improving his own fortune masked behind the agency. As a self-made millionaire Baruch commanded the respect of businessmen, and Wilson's support forced the military to succumb to the WIB's goals. Baruch was able to exert leadership in converting the economy for the war, but he did not overstep his bounds and create a system that could not revert to a peacetime economy, although his critics accused him of forming an economic dictatorship. Baruch took deliberate steps to maintain economic order and a stable market.

Legacy

The achievements of the WIB were the high point of Baruch's career as a government adviser. Although his influence and reputation gained him the ear of presidents from Franklin D. Roosevelt to Lyndon B. Johnson, Baruch did not move in and out of government positions like his high-profile contemporaries, such as Robert S. Lovett and W. Averell Harriman. Baruch, however, played as crucial a role as any other American during the war years of the 1910s. He was the perfect person to run the WIB, and he exemplified the spirit of public service and public sacrifice needed to run the war effort.

Sources:

Robert D. Cuff, The War Industries Board: Business-Government Relations during World War I (Baltimore: Johns Hopkins University Press, 1973);

Jordan A. Schwarz, The Speculator: Bernard M. Baruch in Washington, 1917-1965 (Chapel Hill: University of North Carolina Press, 1981).