Bernard Baruch

Bernard Baruch

Bernard Baruch, the second of four sons, was born in Camden, South Carolina on 19th August, 1870. His father, Simon Baruch, was a physician.

In 1881 the family moved to New York City, where Bernard and his brothers attended local schools. He studied at and graduated from the City College of New York.

Baruch became a broker and then a partner in A.A. Housman & Company. With his earnings and commissions, he bought a seat on the New York Stock Exchange. There he amassed a fortune before the age of 30 via speculation in the sugar market and become one of Wall Street's best-known financiers. Baruch became a close friend of Garet Garrett, who worked for the New York Evening Post. According to Carter Field, the author of Bernard Baruch: Park Bench Statesman (1944): "He (Garrett) would drop in frequently and talk with Baruch. The two men discussed their larger hopes and aspirations, their doubts, misgivings, and occasional despair."

In 1916, President Woodrow Wilson appointed Baruch to the Advisory Commission to the Council of National Defense and in 1918, became the chairman of the new War Industries Board. This was a United States government agency established to coordinate the purchase of war supplies. The WIB encouraged companies to use mass-production techniques to increase efficiency and urged them to eliminate waste by standardizing products. The board also set production quotas and allocated raw materials.

In 1918 Baruch met Brigadier General Hugh S. Johnson, the army representative on the WIB. According to John Kennedy Ohl, the author of Hugh S. Johnson and the New Deal (1985): "Johnson and Baruch first worked together in the interwar period in the planning for economic mobilization for future wars. The WIB alumni believed that the World War I mobilization showed that the military was incapable of handling the manifold problems of mobilizing a modern industrialized nation for war. Baruch, in particular, believed that it was too riddled with personal jealousies and selfish interests to procure its own supplies effectively and also that it simply did not appreciate the destablishing impact of military orders on the civilian economy."

In 1919, President Woodrow Wilson asked Baruch to serve as a staff member at the Paris Peace Conference. Baruch did not approve of the reparations France and Britain demanded of Germany, and supported Wilson's view that there needed to be new forms of cooperation between nations, and supporting the creation of the League of Nations.

Baruch continued to be a successful financier. He once commented: "A speculator is a man who observes the future, and acts before it occurs." He added: " If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he is wrong."

Winston Churchill asked Baruch if he could help his cousin Clare Sheridan. She had recently arrived back from Moscow where she had produced busts of of Lenin, Leon Trotsky, Lev Kamenev, Gregory Zinoviev and Felix Dzerzhinsky. When she arrived back she agreed a deal where The Times to publish her diaries. However, the establishment disliked her apparent sympathy for the Bolshevik government. Sheridan took the rejection from family and friends badly and decided to move to New York City.

Baruch later told Anita Leslie: "You can imagine what I expected when Winston asked me to look after a cousin who was lecturing on Russia and had got herself into hot water because of Bolshie propensities. I visualized some grim Communist school marm, and it was not with particular relish that I went to meet this lady whom Winston described as a poor girl. No one could have expected the swan in many coloured cloaks who swept into the Ritz and when I rang her up after she had been to Pittsburgh the voice that answered the phone vibrated like that of some diva at the height of a tragic scene. She needed help! I sent my car around to fetch her... Clare, a large, golden, tearful goddess began to pour out her woes and beg me to subdue her manager and end her contract... I was bowled over. Next day, of course, I saw her manager and settled things. Clare was released. But that was only the beginning of it. She then informed me that she had brought most of her sculpture over in packing cases. These were lying at the docks. It would be nice if I telephoned the Customs men and assured them there were no bombs in those crates labelled Lenin and Trotsky."

Baruch denied that he had an affair with Clare Sheridan: "Every man she met seemed ready to give her a job and run around at her beck and call. I did not have an affair with her-although everyone of course thought I did. You could not take her to a restaurant or to dine in a friend's house without giving that impression. She was wonderful looking, and exciting to have around, but so damn fatiguing. I'm sorry now, maybe, but I was happily married. I did not want upsets.... And she didn't get on with women. She wouldn't try. Something had got into her - energy-sex-drive - she ran around New York like a fire engine out of control, scandalizing high society by saying she couldn't think why women had to depend on men - it was a woman's privilege to bear a child to the lover of her choice and the State should support her financially... I couldn't really take to her - she was too wild."

In April 1927 Baruch invited Hugh S. Johnson to work for him as an "investigator of business and economic conditions" at an annual salary of $25,000. Baruch also promised to pay 10% of any profits from investments suggested by Johnson. Over the next few years he investigated the investment potential of firms. Baruch was very pleased with the work of Johnson. He claimed that his "investigations were quick, thorough, acute and accurate".

Johnson and Baruch jointly invested in several companies, including a chromium company, a rock asphalt company, and a automobile carpet company. By 1929 these investments, along with his salary from Baruch, brought Johnson annual earnings of $100,000. He also speculated on the stock market and according to his autobiography, he was able to make over $15,000 a day. Johnson also claimed that he tried to persuade Baruch to sell his shares just before the Wall Street Crash. This helped him preserve most of his fortune. In 1929 he was worth $25 million. Two years later it had fallen to $16 million.

In 1931 Baruch began a relationship with Clare Brokaw, a 28 year-old journalist. Her name often appeared in gossip columns written by Walter Winchell and the author of Clare Boothe Luce (1970) has pointed out: "In many of these reports there is a not too subtle suggestion that Clare was using her sex and beauty to attract men for the sake of publicity. If she did deliberately seek to be in the company of people of prominence and power, it must be conceded she was amazingly successful." Baruch later recalled: "When she comes into a room she attracts everybody's attention by the glow that emanates from her. Her extraordinary spirit shines out of her eyes. When courage was given out, she was sitting on the front bench." Clare's friend, Arthur Krock, admitted that Baruch wanted to marry her. However, according to Krock, although she was very fond of him she had no desire to become his wife.

Baruch was an active member of the Democratic Party and supported Newton Baker as the presidential candidate in 1932. When Franklin D. Roosevelt won the nomination he decided to give him his support. On 2nd July, Baruch and Johnson visited Roosevelt at the Congress Hotel. At the end of the meeting it was agreed that the two men would work closely with the Brains Trust in the campaign against Herbert Hoover during the 1932 Presidential Election. At the time the group included Raymond Moley, Rexford Guy Tugwell, Adolf Berle and Basil O'Connor. One historian, Jean Edward Smith, has described Johnson as "hard drinking and hard living... a flamboyant protege of Bernard Baruch, renowned for his can-do military spirit and robust invective." Roosevelt felt that this new spirit could help his campaign.

Patrick Renshaw, the author of Franklin D. Roosevelt: Profiles in Power (2004): "Politically, Tugwell was on the left with Berle on the right. Moley chaired regular meetings of the brains trust, which Samuel Rosenman and Basil O'Connor also attended. FDR was not an intellectual, but enjoyed their company and was in his element at the free-wheeling discussions which hammered out the New Deal." At meetings Johnson and Bernard Baruch urged retrenchment and budget balancing. Tugwell advocated national planning and social management whereas Felix Frankfurter and Louis Brandeis suggested a policy of trust-busting and government regulation.

Hugh S. Johnson went on a tour of the midwestern industrial centers in which he had discussed economic conditions with manufacturers and bankers. He was shocked by the large-scale unemployment he encountered. Conditions were so bad that he told a friend that the "government is going to have to provide between five and six billion dollars this winter for the relief of unemployed in nearly every industry." Johnson's report convinced Baruch, a fiscal conservative, to declare that the jobless were Washington's responsibility and to consider expansion of federal public works.

Baruch and Johnson turned their attention to industrial recovery. They joined with Alexander Sachs, an economist with Lehman Corporation, to draw up a proposal to help stimulate the economy. The central feature was the the provision for the legalization of business agreements (codes) on competitive and labour practices. Johnson believed that the nation's traditional commitment to laissez-faire was outdated. He argued that scientific and technological improvements had led to over-production and chronically unstable markets. This, in turn, led to more extreme methods of competition, such as sweatshops, child labour, falling prices and low wages.

Baruch and Johnson pointed out that they had leant a lot from his experiences with the War Industries Board (WIB) Baruch hoped that businessmen would cooperate out of enlightened self-interest, but discovered they had trouble looking beyond their own immediate profits. Despite appeals to patriotism, they had hoarded materials, charged exorbitant prices and given preference to civilian customers. Johnson explained that the WIB had dealt with these men during the First World War by threatening to commandeer their production or to deny them fuel and raw materials. These threats usually won co-operation from the owners of these companies.

On 9th March 1933, President Franklin D. Roosevelt called a special session of Congress. He told the members that unemployment could only be solved "by direct recruiting by the Government itself." For the next three months, Roosevelt proposed, and Congress passed, a series of important bills that attempted to deal with the problem of unemployment. The special session of Congress became known as the Hundred Days and provided the basis for Roosevelt's New Deal.

The draft legislation, based on the report of Baruch and Johnson and was finished on 14th May. It went before Congress and the National Industrial Recovery Act (NIRA) was passed by the Senate on 13th June by a vote of 46 to 37. The National Recovery Administration (NRA) was set up to enforce the NIRA. President Franklin D. Roosevelt named Hugh Johnson to head it. Roosevelt found Johnson's energy and enthusiasm irresistible and was impressed with his knowledge of industry and business.

Huey P. Long was totally opposed to the appointment. He argued that Johnson was nothing more than an employee of Baruch and would permit the most conservative elements in the Democratic Party to do as they pleased with American industry. Guy Tugwell also had his concerns about his relationship with Baruch: "It would have been better if he had been further from Baruch's special influence." He was concerned about other matters: "I think his tendency to be gruff in personal matters will be an handicap and his occasional drunken sprees will not help." However, overall he thought it was a good appointment: "Hugh is sincere, honest, believes in many social changes which seem to me right, and will do a good job." Surprisingly, Baruch himself had warned Frances Perkins against the appointment: "Hugh isn't fit to be head of the NRA. He's been my number-three man for years. I think he's a good number-three man, maybe a number-two man, but he's not a number-one man. He's dangerous and unstable. He gets nervous and sometimes goes away without notice. I'm fond of him, but do tell the President to be careful. Hugh needs a firm hand."

On 7th March, 1934, President Franklin D. Roosevelt created a National Recovery Review Board to study monopolistic tendencies in the codes. This was in response to criticism of the NRA by influential figures such as Gerald Nye, William Borah and Robert LaFollette. Johnson, in what he later said was "a moment of total aberration," agreed with Richberg that Clarence Darrow should head the investigation. Johnson was furious when Darrow reported back that he "found that giant corporations dominated the NIRA code authorities and this was having a detrimental impact on small business". Darrow also signed a supplementary report which argued that recovery could only be achieved through the fullest use of productive capacity, which lay "in the planned use of America's resources following socialization".

Johnson was furious with the report and wrote to President Roosevelt that it was the most "superficial, intemperate and inaccurate document" he had ever seen. He added that Darrow had given the United States a choice between "Fascism and Communism, neither of which can be espoused by anyone who believes in our democratic institutions of self-government." Johnson advised Roosevelt that the National Recovery Review Board should be abolished immediately.

Secretary of Labor Frances Perkins took this opportunity to try and get rid of Hugh S. Johnson and asked Bernard Baruch "to say to Hugh that you need him badly and want him back.... tell him you need him and have a good post for him". Baruch said this was impossible: "Hugh's got so swell headed now that he sometimes won't even talk to me on the telephone. I've called him up and tried to save him from two or three disasters that I've heard about. People have come to me because they knew that I knew him well, but sometimes he won't even talk to me. When he does talk to me, he doesn't say anything, or he isn't coherent... He's just pushing off. I never could manage him again. Hugh has got too big for his boots. He's got too big for me. I could never manage him again. My organization could never absorb him. He's learned publicity too, which he never knew before. He's tasted the tempting, but poisonous cup of publicity. It makes a difference. He never again can be just a plain fellow working in Baruch's organization. He's now the great General Hugh Johnson of the blue eagle. I can never put him in a place where I can use him again, so he's just utterly useless."

Johnson continued to make controversial attacks on those on the left. He accused Norman Thomas, the leader of the Socialist Party of America, of inspiring the United Textile Workers to carry out an illegal strike. The charge against Thomas was without foundation. It was also not an illegal strike and he was later forced to apologize for these inaccurate statements. Johnson also made a speech on the future of the NRA. He said it needed to be scaled back. Johnson added that Louis Brandeis, a member of the Supreme Court, agreed with him: "During the whole intense experience I have been in constant touch with that old counselor, Judge Louis Brandeis. As you know, he thinks that anything that is too big is bound to be wrong. He thinks NRA is too big, and I agree with him." Brandeis quickly told Roosevelt that this was not true. It also implied that Brandeis had prejudged NRA even before the Supreme Court had ruled on the NRA's constitutionality.

President Franklin D. Roosevelt decided that Johnson must now resign. He was unable to do it himself and asked Bernard Baruch to do it for him. Baruch contacted Johnson and bluntly told him he must go. He later recalled that "Johnson kicked up a bit" but he made it clear that he had no choice. "When the Captain wants your resignation you better resign." On 24th September, 1934, Johnson submitted his resignation.

In 1942 President Roosevelt arranged for Baruch to become a special adviser to the director of the Office of War Mobilization. Baruch advocated the creation of a permanent superagency similar to his old War Industries Board (WIB). His theory enhanced the role of civilian businessmen and industrialists in determining what was needed and who would produce it. Roosevelt was convinced by Baruch's ideas and in February 1943, Roosevelt appointed Baruch to head the War Production Board.

In 1946 President Harry S. Truman appointed Baruch as the United States representative to the United Nations Atomic Energy Commission (UNAEC). Later that year he presented his Baruch Plan, which proposed international control of the atomic energy. The Soviet Union rejected Baruch's proposal and instead proposed that the United States eliminate its nuclear weapons before a system of controls and inspections was implemented. Baruch commented: "Let us not deceive ourselves; we must elect world peace or world destruction." Baruch resigned from the UNAEC in 1947.

In 1957 Baruch wrote: "During my eighty-seven years I have witnessed a whole succession of technological revolutions. But none of them has done away with the need for character in the individual or the ability to think."

Bernard Baruch died on 20th June, 1965.

© , September 1997 - April 2014

Primary Sources

(1) John Kennedy Ohl, Hugh S. Johnson and the New Deal (1985)

Johnson and Baruch first worked together in the interwar period in the planning for economic mobilization for future wars. The WIB alumni believed that the World War I mobilization showed that the military was incapable of handling the manifold problems of mobilizing a modern industrialized nation for war. Baruch, in particular, believed that it was too riddled with personal jealousies and selfish interests to procure its own supplies effectively and also that it simply did not appreciate the destablishing impact of military orders on the civilian economy.

(2) Wilfrid Sheed, Clare Boothe Luce (1982)

Baruch was a self-made legend, and there was a lot to be learned from one of those. "Advisor to Presidents" he was called, a modest enough title when you consider the competition over the years. But what really distinguished him was his second title, "the man on the park bench." This took genius. While still fresh from his day's advising at the White House or wherever, Baruch would hold court from a bench in Lafayette Park to anyone who asked him. This was not only plumb in the lovable, no-airs American tradition, but it allowed him to embroider his own role a touch here and a touch there until at times he seemed the sole architect of everything good in the American economy. The mere clatter of dropped names ("As I said to Woodrow") was enough to do it.

Uniquely, Baruch managed to maintain a man-behind-the-scenes image throughout all this. Open to the public, yet privy to the President's ear, he must have been the first out-front eminence grise in history. As Dorothy Parker once said, there were two things she could never figure out: the theory of the zipper, and the precise function of Bernard Baruch. Yet everything about him told you he must have one, probably a mighty important one: he had what the French call I'arf de se faire valoir (the knack of writing your own price tag) to as high a degree as Clare was ever accused of; and precisely because he was willing to remain always a consort, never a battleship, he became a great one, a star in his own right-and a wonderful model for a woman.

Not that Clare set out to study him; she simply, insofar as one can apply the word from this distance, fell for him. It was not a strain: he was a striking-looking man, one of the few celebrities, according to the otherwise disrespectful J. K. Galbraith, whose real-life appearance did not let you down one bit. Tall, craggy, white-haired, all that kind of thing (Clare once told me that her physical "type" was Lee Marvin, the horse-faced one), Baruch, like Harry Luce later, was a catch even if he'd never made a dime. As to his vaunted intelligence, while nothing could have lived up to the Olympian press releases, it was quite good enough to satisfy Clare's love affair with brains. It was, oddly, for a man who talked so much, a laconic, quasi-rustic intelligence. Although Baruch had made millions in mining and speculation backing his own mysterious judgment, when I asked Clare quick quick for a phrase to remember him by, "Work and save" was the first thing she could come up with. A Vermont farmer could have said no less.

When Baruch was very old, he told Clare, "I can still be intelligent but I don't feel like it," and that I consider a bright remark. But otherwise he is not remembered for anything he said, even in his autobiography, which is a seamlessly banal and disingenuous work. But Clare hardly needed to learn verbal facility from him. Baruch was shrewd and tough, a living example of self-made self-reliance, heady confirmation of the things Clare's mother taught her. A father who did what a father was supposed to do, unlike her own.

Baruch could not marry Clare or anyone else, because of a mentally troubled wife at home. (He kept telling her to wait - but his wife didn't die until six months after Clare married Harry Luce.) Her interest in Baruch suggests that there would be no more Brokaws in her life. The frontal assault on Society was over; she had done what her mother wanted. Now the subject was politics. If you hung out with the advisor to Presidents, you had to expect some advice yourself. And for the first time, Clare learned how the world was run and paid for from a Baruch point of view... Baruch was a fiscal conservative but a lifelong Democrat (these terms were not as contradictory then as they became).

(3) John Kennedy Ohl, Hugh S. Johnson and the New Deal (1985)

Johnson was initially drawn to Baruch's side by the realization that Baruch's friendship and support could be of inestimable value as he tried to make a new career for himself after the war. Baruch could use his contacts to help him get a job or cement a business deal; Baruch could provide wise investment counsel and even funds for a good deal; and Baruch could help Johnson play an ongoing role in national affairs. Baruch was also widely known for his generosity toward his helpers and toward friends who were down on their luck. A man like Johnson, who had reached middle age without establishing himself in a permanent career, could do a lot worse than to attach himself to Baruch.

In addition to the prospect of aiding his career, Johnson was drawn to Baruch by his companionship and the chance to hobnob with important businessmen and politicians. Baruch, who liked to blend business and social relationships, showered pet names and endearments upon those in his circle; the humor, intimacy, and camaraderie used by the group also gave one a sense of belonging. Moreover, membership in Baruch's circle brought invitations to parties and dinners; the chance to travel in private railroad cars and stay in the finest hotels, often at the Chief's expense; and visits to Hobcaw, Baruch's South Carolina plantation for gambling, hunting, and conversation with wealthy and talented people. Being part of Baruch's circle was as close as Johnson could come to reliving his days of comradeship at West Point and in the First Cavalry mess.

Baruch could also gain from a relationship with Johnson. Here was a man with many talents and tremendous energy, just the type to be useful in Baruch's numerous activities. He could write; he could analyze; and he did not mince wqrds. Johnson was also good company. His masculine sense of humor, his well-told yarns about the West, and his aggressive manner all made him a joy to have around. Johnson had flaws, as Baruch would come to realize. But he was never boring, and in Baruch's opinion, to be boring was the worst crime.

The Johnson-Baruch relationship would never go the way of the Johnson-Peek relationship. Johnson had always regarded Peek as his equal and felt free to speak his mind, to raise his voice, and even to cross him. Baruch did not expect Johnson to be a mere mouthpiece, for he realized that was not Johnson's nature. Johnson liked to interject his ideas and to argue too much to be a yes man. But Baruch expected Johnson to remember that he was Baruch's employee, his representative, and was quick to chastize when Johnson forgot his place. Johnson appreciated the character of their relationship and dutifully played the loyal subordinate by regularly making flattering statements to the press about Baruch's "unmatched" business ability, generosity, and patriotism. These statements were not mere sycophantry. The Chief was everything Johnson wanted to be - a man of wealth and power - and said all the right things about duty, honor, and country. For these reasons, at least in Johnson's view, Baruch was a man deserving of respect and loyalty. He could do no wrong.

Baruch did not hold Johnson in similar esteem. He enjoyed Johnson's stories and wisecracks and heaped praise on him. However, he was too aware of Johnson's faults-his emotionalism, his impetuousness, and his tendency to drink to excess - to give him too much responsibility and was always careful to supervise him closely in important tasks.