Men are only as great as the monuments they leave behind.
On October 2, 1929, John Raskob invited nine men to lunch in his book-lined suite in Carlton House. They were a disparate group, connected only by their friendship with Raskob and the billions of dollars all but one of them represented in the stock market.
At the table sat Billy Durant, whose diminutive size and shock of white hair belied the influence he had among traders. He had won and lost fortunes several times over and was now heavily leveraged in the market. Alongside him was the former grain trader Arthur Cutten, who had recently deemed himself “a bull on stocks—a bull on the United States.” Born penniless in Canada, the speculator had managed to put together a fortune by dominating the Chicago Board of Trade. Oris and Mantis van Sweringen were invited as well; the two only had eighth-grade educations, but through grit and common sense, these brothers from Wooster, Ohio, found success in Cleveland real-estate, then in railroads. That they reportedly slept in side-by-side twin beds in a colossal mansion was not Raskob’s concern. They had financial muscle. Percy Rockefeller and the du Pont brothers stood in for the social top end of the scale.
Before the others arrived, Raskob told James Riordan the purpose of the meeting: to rally confidence in the market, which had stumbled since its record high on September 3. Riordan, a former truck driver who went on to start the United States Trucking Corporation and the County Trust bank, also had a significant interest in seeing the market remain strong. The two were fast friends and closely linked with Al Smith, who served as a director at County Trust.
The only one at the lunch without a fortune was William Lamb, whom few of the others knew. There was something both formal and nervous about the architect. Everyone except his wife addressed him as “Mr. Lamb,” and she could never bring herself to refer to him as anything but “William.” His nervousness came out in his incessant smoking and the rapid movement of his eyes. Although he had no influence on the market itself, Raskob invited him for a reason that his guests would soon learn.
Raskob wore one of his signature colorful shirts, the collar tight around his tanned neck. Although he had personally pulled back on some of his investments, he pointed out to each of his guests that he believed in the bull market, that it still had much strength and potential. His orchestrated speech was given in a slow, steady voice; he watched each of the men’s faces as he said that the forces gathering to speak unfavorably about the market must be silenced; it was essential for all of them to project optimism in the market, much as Cutten had a few days before when he said that the amount of brokers’ loans was not unnecessarily large. Those around the table agreed.
More must be done. Investors needed to listen to someone other than financial advisor Roger Babson, who early last month announced “that sooner or later a crash is coming, and it may be terrific . . . factories will shut down . . . men will be thrown out of work . . . the vicious circle will get in full swing and the result will be a serious business depression.” His comments had caused such a decline in stock prices that editorial writers called the event the Babson Break. Since then there had been an uneasy feeling on the street. Many considered a crash to be a real possibility. The Wall Street Journal published a Mark Twain quote as its September 11 “Thought of the Day”: “Don’t part with your illusions; when they are gone you may still exist, but you have ceased to live.” The New York Times financial editor Alexander Noyes compared the present market circumstances to those of the panic in 1907 and warned of catastrophic consequences. The market had continued a slow downward spiral until September 24, when another serious break in share prices further darkened the mood. Investors by the thousands were selling off their portfolios. Gangsters in Chicago threatened their brokers if they dared make a margin call. The president of the New York Yankees, Ed Barrow, even held a special meeting to tell his players to abandon the market.
Raskob understood the danger of this mood. He stared into the eyes of each of his lunch guests as he slowly walked around the table. One of his guests grumbled that bankers were becoming too cautious. Another said that the previous day’s brief rally, led by U.S. Steel, was evidence that Wall Street still thought the economy had legs. Raskob disagreed; he thought the rally meaningless because it was used as another opportunity for investors to cash in on their holdings. Until he and his guests—and their powerful friends—gave the market some “snap and buoyancy,” the declines would continue. They must spread the message that stocks were destined to trade at “ten times their present price, and brokers’ loans will be billions more than they are now.” Raskob believed in this future, despite the current feeling in Wall Street.
“In a healthy market we prosper,” he said. “In a sick market we suffer.”
Stepping away from the table, he told William Lamb to follow him out of the dining room. Lamb trailed behind his client, limping noticeably. The architect had lost a leg while motorcycling through Italy after graduation from the Ecole des Beaux-Arts and now used an artificial leg. Riordan knew what Raskob was about to reveal; his friend had told him his strategy in advance. His final move was to express his vision of America’s greatness; a vision born out of poverty, but powerful in its effect.
“John Jakob Raskob, capitalist”—so he signed one of the many documents in the purchase of the two-acre plot west of Fifth Avenue between Thirty-third and Thirty-fourth Streets. Of the many who had won fortunes from the explosion of share prices on Wall Street, few had profited as handsomely as Raskob. His claim on the land underneath the Waldorf-Astoria Hotel signaled a sea change. Gone now were the blue-blood families from their mansions along Fifth Avenue, once deemed “the most elegant street in the city” where all the “great people” live. Gone were Mrs. Astor, her black wig, diamond brooches, rope of fake pearls, and her social yardstick, Ward McAllister, who explained, “There are only about four hundred people in fashionable New York society, don’t you know. If you go outside the number, don’t you see, you strike people who are either not at ease in a ballroom or else make other people not at ease. See the point.”
It was doubtful that Raskob, a former stenographer for the Worthington Pump Company in upstate New York, the great-grandson of an Alsatian immigrant, the son of a cigar-man, measured up to McAllister’s grade. He often talked of business and as a young man he used to scribble notes on the cuffs of his shirt when he ran short of paper.
Raskob came from squalor, born in the industrial town of Lockport, New York, in 1879. His mother was Irish and a devout Catholic. His parents had little money to spare on their four children. There were no private schools and summers in Europe. A roof overhead and a warm meal at night were luxury enough. After his father died when Raskob was nineteen, he needed to care for his mother, younger brother, and two sisters. Running his newspaper route and taking on boarders was not enough. It was once said by a distinguished judge that “the best education you can give a boy of fifteen to twenty is to put his widowed mother on his hands to support. If there is anything in that boy, it will come out, and education consists in bringing things out, not pouring them in.” This burden brought out in Raskob an intense, sometimes Machiavellian drive, but one bolstered by good intentions.
Only days after his father passed away, he went to his mother and asked her to tally up the family’s assets and liabilities. A week later she came back to her son and said that once they paid off their debts, they would have only twenty-five dollars left in the bank. Raskob gathered the family together, told them the situation, and then made one promise: “We are never going to be in this position again.”
He made true on his word, starting with a $7.50-a-week position as a stenographer for the chief engineer of a Worthington Pump Company subsidiary. After his boss denied Raskob a raise, he wrote a friend in Lorain, Ohio, to see if he knew of any better jobs. His friend told him about Pierre Samuel du Pont, who was serving as the president of a street railway company, and needed a secretary. The great-grandson of the E. I. du Pont de Nemours & Company’s founder offered pretty good coattails to ride. Raskob wrote du Pont for the job and asked for a thousand dollars a year salary, two and a half times his current income. Pierre du Pont appreciated this boldness and hired him, the first of two “fortunate accidents” that shaped Raskob’s life.
Although his ambition sometimes got him in hot water, like the time he tried to renegotiate a deal that du Pont had already consummated, the young secretary worked his way into his boss’s confidence. In many ways, du Pont became a surrogate father for Raskob, and in private he even referred to him as “Pop.” After two years, Raskob tripled his salary to three thousand dollars, and when Eugene du Pont died and Pierre and his two cousins purchased the gunpowder manufacturer outright, Raskob was on track to become the company’s treasurer. Despite never attending college, he mastered the nuances of finance and outplayed many an Ivy League graduate.
The second “fortunate accident” befell him when he decided that General Motors, which Durant was making into an automotive powerhouse, was a good investment. He persuaded du Pont of the company’s merits, and together they bought three thousand shares, a small position yet one that placed them in a decisive role between two conflicting groups on the General Motors board: Durant and his bankers. With Raskob’s guidance, du Pont maneuvered his way into the chairman’s seat and the stenographer-turned-secretary became a director. After World War I, he urged Pierre and the du Pont company’s thirty directors to invest an additional $50 million. Despite their hesitation, they agreed, having plenty of free cash from munitions sales. Then late in 1920, Raskob and du Pont negotiated with GM’s board for the reorganization of the company, and after a meeting that lasted through to the morning, they forced Durant out and took control.
By 1928 their investment was worth $800 million. The reserved, unassuming Raskob, who chewed on his cheek when nervous, now ran the finances of a company that employed three hundred thousand people and was valued at more than $3 billion. In the process, he managed to amass a personal fortune reported at $100 million. When Raskob boarded a liner to Europe in March 1928 and told a reporter that GM’s stock was underpriced—that it should be trading at fifteen times, not ten times, its earnings—the market listened, sending GM’s share price skyrocketing. Suddenly people no longer asked “What’s a Raskob?”
Although he loved his wife and children, donated a fortune to the Catholic Church, and was welcomed by the pope in Rome, he was no saint. He liked power, was known to run everything he undertook, held fast to his opinions, and remembered those who crossed him. He enjoyed the environs of the Tiger Club, an establishment run by the construction tycoon William Kenny on the top floor of a Twenty-third Street office building. There the rich and influential drank together, played poker (Raskob always donated his winnings to charity), and discussed politics amidst tiger statues and motifs. He met Al Smith at the club and fell under his considerable charms. When Democrats nominated Smith for president, Raskob decided to bankroll the four-term governor’s campaign. Soon thereafter he was named Democratic National Chairman, and General Motors forced him to resign from the board.
Some said that he was shooting to become the Secretary of Treasury, a position of great influence, by the end of the twenties. For the first time, he stepped into center stage and suffered its glare. Hooverites coined the term “Raskobism,” a slur that Time magazine said “contains the following ingredients: one part Roman Catholicism, one part wetness, one part political irregularity (Mr. Raskob used to be a Republican), one part big business.” The bid, and his commitment to it, was a risk and one that ended in failure. Like Smith, he retreated from New York after the defeat to salve his wounds. Since his rise had begun, Raskob had never endured such a loss of influence or direction in his career. The death of his nineteen-year-old son, William, in a car crash in Centreville, Maryland, in July that same year cast an even darker shadow over him. His friends rallied around him, Governor Smith included, but there was little they could offer except their condolences as Raskob buried William in the family mausoleum in Wilmington, Delaware.
As the Empire State development came together, he found a way to reinvent himself and renew his conviction that “there is a divinity which shapes our ends.” The day before the skyscraper’s official announcement, Raskob sent a letter to Louis Kaufman about the skyscraper’s financing. After he detailed his substantial personal investment in the project, he concluded the letter, thanking the banker for the opportunity of doing “something big and really worthwhile. I am sure it will be the most outstanding thing in New York and a credit to the city and state as well as to those associated with it.”
Raskob had long harbored the idea of building an epic skyscraper, but he shared this vision with very few. Although it was in his nature never to make a public move until the private dealings were finished, he revealed his dream to Eddie Dowling, an actor and close friend, who explained that it was “a small town boy’s idea. [Raskob] told me that the first time he came to New York, he wanted to see the Woolworth Building, and the Statue of Liberty. The Washington Monument had always impressed him, and pictures he had seen of the Eiffel Tower. When he became affluent, got to be head of General Motors and all of that, he went up in the Eiffel Tower. It burned him up to think that the French had built something, by hand, higher than anything we had in this great country of ours.”
Dowling said he was there when Raskob first told Smith about his plans. It was a few days after Smith’s loss to Hoover. A small group of Democratic supporters, twenty-eight in number, met for dinner at the Lotus Club in New York to celebrate Franklin Roosevelt’s victory in the governor’s race. Present were many of Smith’s friends, and the evening had a bittersweet air to it. They cheered Roosevelt, yet knew what his own loss meant to Smith, who sat up on the dais with Roosevelt. As the dinner trailed toward its end, Smith escaped to the men’s room. Dowling followed him inside.
“Eddie, I could cry,” Smith said.
Dowling tried to raise his spirits. “What about, Governor? You’ve had a wonderful career. You came up out of the sidewalks of New York . . . You’re the greatest Governor New York ever had. Most of the social legislation that our city and state are enjoying, you were father of. Your successors will pick up where you left off, Governor. You will be in the hearts of your people forever. Don’t worry about this.”
“I haven’t got a five-cent piece. But I’ve got children. I’m a poor man. My God!”
While Smith continued his rant, saying how “there’s nothing as dead as a defeated politician, not even yesterday’s newspaper,” Raskob came into the bathroom.
He stopped Smith and said, “Governor, I’ve got some news for you. I hope this will please you. I can understand your feeling the way you do. Some friends of yours and myself have assembled a plot at the corner of Thirty-fourth and Fifth Avenue. There we are going to build the tallest building in the world—You’re going to be the president—and it’s your job for life.”
Raskob and Smith never indicated that Dowling’s story was true, never gave their own version of events, and never admitted their involvement in securing the Waldorf-Astoria site prior to summer 1929. But there are reasons to believe Dowling’s story is true. Floyd Brown of Bethlehem Engineering Company was the one who secured the lease for the land, and Raskob was a close associate of several of the men in the syndicate that helped Brown get that lease. To sketch the site’s plans, Brown chose Shreve & Lamb, architects whom Raskob knew well from their design of the General Motors Building in New York. And Al Smith’s daughter revealed that her father knew of Raskob’s role in the skyscraper long before its announcement and that many of the plans had already been drawn before the “official” hiring of Shreve & Lamb in September. One account had Raskob showing a scale model of the building to James Riordan in April 1929, long before any written record of his involvement. After a toast that recalled both of their pauper upbringings—“The Past—May it never be repeated”—they raised glasses of champagne to the skyscraper’s future success.
Regardless of the exact moment Raskob devoted himself to the idea and brought Smith into the fold, he bore many risks to see it rise. The Empire State Building was to be a symbol of “what the poor are able to achieve in America,” and nobody—not George Ohrstrom, Walter Chrysler, a roomful of nervous investors, or anyone else—was going to get in the way of his making this symbol the greatest, tallest, most awe-inspiring structure ever built.
That early October afternoon in his apartment, Raskob was ready to reveal his vision to the city’s power brokers, who remained waiting around the dining table in the other room. No doubt they were curious to know why their host had excused himself during the height of his pitch, let alone brought an architect to a meeting ostensibly about the market. Finally, there was the sound of footsteps, and Raskob and Lamb returned, carrying with them a large model of the Empire State Building. They carefully set in on a nearby table.
“Gentlemen, this is part of what I have at stake. A monument to the future,” Raskob said proudly, returning to his seat to watch their reaction.
It was one he expected. A Van Sweringen brother called the skyscraper a “powerful piece of work.” Others nodded and murmured in agreement, amazed at what they saw, the sheer massiveness of the design.
Raskob told his guests that the planned structure represented the United States, “a land which reached for the sky with its feet on the ground.” Despite the millions needed to construct the Empire State, he expected to see it built because of a “faith in the future reflected in the stock market.”
He then turned the presentation over to William Lamb, who chronicled the enormity of the project, the amount of steel, limestone, brick, telephone cable, and windows needed to build such a skyscraper. It required millions of dollars and thousands of people working together in unison, toward one goal, to see it rise. The scale of the project was unlike anything the guests had known.
Pushing back his chair, Raskob moved toward the model. “Gentleman, a country which can provide the vision, the resources, the money and the people to build such an edifice as this, surely cannot be allowed to crash through lack of support from the likes of you and me.”
His guests left impressed with this symbol and motivated to bolster confidence in the market, but for Raskob, who had a fortune of his own on the line with the Empire State, there was much to be concerned about if stock prices fell through the floor. Numbers could be run by the finest of financial minds (of which his was one), but in the best of locations in the best of times, building a record-breaking skyscraper entailed tremendous risk. The location of the proposed Empire State at Thirty-fourth Street and Fifth Avenue was not even considered an office district by most building experts and managers. Stores and boutique shops dominated the area. Some feared the skyscraper would exist in the no-man’s-land between the Grand Central district on Forty-second Street and the financial heart of New York’s downtown.
If his lunch guests failed to prop up investor sentiment and the market crashed, then Babson’s doomsday warning might come to pass. Raskob’s hope of finding tenants for his skyscraper would fade if the economy busted, businesses failed, and unemployment rose. He’d be better hiding his millions in a large mattress.
Yet the skyscraper was already moving ahead. The demolition of the Waldorf-Astoria Hotel had officially begun two days before, when Al Smith stood in front of a crew of photographers and warned, “Gentleman, stand back while I start the real work of demolition.” He pulled a cable, bringing down a ten-foot section of copper ornament on the roof. “The northward march of progress has reached the heart of the city,” Smith said. “I feel sorry to see this historic old building torn down, but progress demands that it must go . . . On this site will rise the largest office building in the world—eighty stories tall.” The promise had been made. Raskob hid his reaction from the press after one of the men sawed into the “marble” column in the famed Peacock Alley and a cloud of plaster dust spit out. If this event augured doom, he either neglected the sign or decided to forge ahead nonetheless.
The Empire State Building project had begun.