Unprecedented Power: Jesse Jones, Capitalism, and the Common Good
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Unprecedented Power: Jesse Jones, Capitalism, and the Common Good
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Overview
President Herbert Hoover had established the RFC in 1932 to make loans to banks, railroads and insurance companies and appointed Jesse Jones—Houston’s preeminent developer and a former finance chair of the Democratic National Committee—to the bi-partisan board. With clear implications today, Jones complained the RFC was slow and a year late and said if it had judiciously loaned five to seven billion dollars in 1931 and ’32, economic collapse would have been prevented.
Soon after his inauguration, President Franklin Roosevelt supercharged the RFC, made Jones chair and the government agency began buying preferred stock in banks to stabilize and help them lend again. Jones knew capital rather than debt was needed to save the banks and revive the flow of credit, just as it was when the program was duplicated in 2008 as the Troubled Asset Relief Program, better known as TARP. Under Jones’s leadership, the RFC became the largest investor in the nation and rescued banks, businesses, homes and farms; saved the railroads; rebuilt communities after environmental calamities; built bridges, dams and aqueducts across the nation; and brought electricity and appliances to rural America. The RFC helped people and saved businesses during the Great Depression through judicious lending, not spending, and remarkably returned a profit to the government and its taxpayers.
As war spread, Jones and FDR shifted the RFC’s focus from domestic economics to global defense. In its second cover story about Jones, TIME magazine reported, “In all the U.S. today there is only one man whose power is greater: Franklin Roosevelt … The President knows Congress will give more to Jones without debate than he can get after a fight … Emperor Jones is the greatest lender of all time.”
Accordingly, after Germany’s European victories, Congress on June 25, 1940, gave Jones and the RFC the authority to build, buy and lease plants to develop and manufacture metals, ships, airplanes, tanks and guns; to train aviators; and, with FDR’s approval, to do anything required to arm the Allied Forces. Almost half of its outsized investments went to corporations to help convert their production to war-time needs. One of its largest new plants—the Dodge-Chicago plant—covered 145 acres and took in raw metal at one end and produced finished airplane engines at the other. Like all its new factories, the plant was built and owned by the federal government’s RFC, leased to corporations to operate and sold to private interests after the war. Likewise, coordinated national large-scale efforts and government investments can be made to address today’s daunting challenges.
Unprecedented Power dramatically describes how Jesse Jones and the RFC used every option to save life, democracy and capitalism during two of the 20th century’s most threatening events. Unprecedented Power provides models for today by looking at successes from the past.
Product Details
| ISBN-13: | 9781603445719 |
|---|---|
| Publisher: | Texas A&M University Press |
| Publication date: | 09/01/2011 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 480 |
| File size: | 17 MB |
| Note: | This product may take a few minutes to download. |
About the Author
In addition to producing books and films, Fenberg writes articles, editorials and lectures, primarily about embracing and using the power of good government to address today’s daunting challenges. He frequently uses Jesse Jones and the Reconstruction Finance Corporation—the New Deal agency Jones chaired that saved the US economy during the Great Depression and militarized industry expeditiously to fight and win WWII—as models for today.
Read an Excerpt
Unprecedented Power
Jesse Jones, Capitalism, and the Common Good
By Steven Fenberg
Texas A&M University Press
Copyright © 2011 Houston Endowment, Inc.All rights reserved.
ISBN: 978-1-60344-571-9
CHAPTER 1
Houston
1650–1898
We Had a Good Table
TOBACCO AND WHISKEY fueled the economy of Robertson County, Tennessee. In 1886, a noted historian wrote, "In nothing is Robertson County more distinguished than in the making of whiskey. From an early period in the history of the State, this brand has been sought after, and it now has a worldwide reputation." The first settlers in the area—Jesse Jones's ancestors included—knew how to distill whiskey and likely were thrilled with resources they found in Robertson County. Jones's family first arrived in North America from Wales in the 1650s, settling in Virginia. They joined a group of pioneers who settled on the Chowan River in North Carolina, and for more than a hundred years, the family prospered there.
In 1774, brothers Eli and Jesse Jones headed west and stopped at an elevated plateau in northwest Tennessee called the Highland Rim, where they found fertile soil and cool, dry air. The brothers bought land, began to farm, helped build a community in what became Robertson County, and raised their families on the Tennessee frontier. Two of Eli's children, William and Nancy, stayed on in Tennessee.
William Jones had been born in 1829, and a year after the Civil War ended, he married Laura Anna Holman, a girl who lived on the farm next door. The Joneses and Holmans were self-sufficient farmers. With help from their slaves before the war, they grew their own food, wove their own cloth, and made their own bricks. Farming families in the area were independent, but if anyone in the community was in need, neighbors helped. If the man of the house was sick and needed to till his soil, his neighbor plowed his field. If a birth was imminent, women kept food on the table and stayed to help with the delivery. Self-reliance was the norm, yet help was readily available and reciprocated. Intermarriage among the large families of the close-knit community was common.
William and Laura raised five children on their hundred-acre tobacco farm. Their fourth child, Jesse Holman Jones, named for his pioneer great-uncle, was born on April 5, 1874. Jesse and his siblings (John, Elizabeth, Ida, and Carrie) grew up in the midst of Reconstruction when blacks and whites were struggling with old ways in a new world. A banking panic the year before Jesse was born ushered in a severe national depression.
Cultivating tobacco, as William Jones did, was a year-round, hands-on industry that had always depended on slave labor for its survival and growth, so abolition of slavery brought change. After the war, many freed slaves in Robertson County became laborers and sharecroppers, and, as the county's black population rapidly expanded, a few eventually bought land of their own. Black men had won the right to vote and by the time Jesse was born, a few had been elected to the state legislature. On the Jones farm, shacks belonging to black families dotted the rolling hills behind Jesse's house, giving the rural landscape a greater density of people and buildings than it has today. The black children who lived there in comparative poverty were Jesse's playmates and he called them his best friends even though he did not know their last names. Still, segregation and the poll tax had also become law, the Ku Klux Klan was growing, and lynching "kept order," most notably in 1880 when six black men accused of murder were hanged from the second-floor balcony of the county courthouse in Springfield, the closest town to the Jones farm.
Springfield was the social center of the area. On Saturdays families and their horses and wagons packed the robust little town as people came from surrounding farms to shop, to see friends, and to take care of business, whether personal, commercial, or political. The hubbub of town linked the county's citizens, especially those visiting from farms, to a larger world. Stores were busy, saloons were popular, and the only bank in town boomed with business from the quality tobacco and whiskey produced in the county. The bank, Springfield's first, had opened only two years before Jesse's birth, and as abolition of slavery had earlier, this commercial conduit dramatically changed the way things worked in Robertson County. The most immediate improvement was that people needing a bank's services no longer had to ride to Nashville, traveling in defensive groups on horseback or in wagon trains, and risking run-ins with bandits, hostile Native Americans, or bands of Confederate guerillas. Besides providing a safe, convenient place to transact business, the bank also extended credit to the distillers and tobacco farmers, whose high grade products enjoyed international acclaim. Easy access to credit and the ability to conduct business safely helped area industries grow, which offset the economic panic that gripped the region and nation at the time of Jesse's birth.
By the time Jesse was five, Springfield's prosperity was apparent to anyone who approached—a new, towering county courthouse was being built in the center of the square at a cost of $21,000 ($478,000 in current dollars, which reflect 2009 values). The first institutions of higher education had also opened in the area. And resorts advertising warm mineral water and a drier, cooler climate attracted people from lower-lying cities, bringing with them everything from musical ensembles to croquet.
As a young boy, Jesse knew there was a world beyond the farm. The new bank surely must have been a topic of discussion at home as his father's tobacco business flourished, and riding into Springfield on the back of his family wagon, Jesse would have seen the town's newest building growing toward the sky. It is easy to imagine that he was touched by the poverty and injustice he saw and was aware of the contrast between his life and that of others. Those early experiences may have influenced Jones's later life, but what is certain is that his mother's death dramatically changed his childhood. On April 22, 1880—just seventeen days after Jesse's sixth birthday—Laura Anna Holman Jones died from tuberculosis at the age of thirty-eight. She was buried in the family cemetery down the dirt road from their home. William's widowed sister, Nancy Jones Hurt, moved in to take charge of the house and five motherless children. Including her own two sons, "Aunt Nancy" now had seven rowdy children to care for. She was a small woman without much education, but her shrewd, loving personality gave her stature.
Aunt Nancy, whose husband had died fighting for the Confederacy during the Civil War, was the "guide, physician, and clothes-maker of all the Jones children, who paid her the tribute of saying no children ever had a better mother. She was a famous cook, preparing all sorts of edibles without benefit of cookbook; set a much-talked-of table for the family and friends who dropped in; and exported the products of her culinary art to neighbors for miles around when sickness overtook them. Of all the members of the family, it was Aunt Nancy for whom [Jesse] manifested the greatest affection."
Jones would later recall life on the farm, saying, "My jobs included looking after the chickens and turkeys, feeding the pigs, wiping the dishes, helping with the churning, bringing in wood and kindling, building fires, taking out the ashes, sweeping and doing generally the things necessary to farm life where there was no hired help for housework." He continued, "In summer we liked to 'go washin'—more properly stated 'in swimming.' We also went barefoot in summer and the woe of my existence was having to wash my feet every night before going to bed. I would sit up as long as I could, because I liked to hear the grown people talk. There were no bathtubs in the country homes, and all the bathing we got was in washtubs or in large wash pans. By the time I was ready to go to bed, I was usually sleepy enough to try to skip the foot-washing chore, and sometimes succeeded, only to get a scolding the next day from Aunt Nancy."
Jesse tried to get away with whatever he could at home and at school. As J. B. Farthing, one of Jesse's teachers, remembered, "Jesse Jones in school as a youngster was not particularly bright nor did he differ greatly from the boys of the countryside who attended old Hopewell. If I was impressed by any different trait of Jesse Jones as a youngster, it was his genius for getting into scraps which his brother, John, always seemed to pull him safely out of." Farthing went on, "He never seemed to study very hard nor did he seem to need to. His lessons were always fair and his grades averaged high enough not to cause him any worry from me. It can be said with truth and without discredit to the man that Jesse H. Jones was a typical example of the rural boy of his time who was not without a goodly amount of devilment in him." Farthing concluded, "So far as I have been able to learn, Jesse Jones missed grammar and its use completely. Although a victim of the rural school system, which prevailed at that time, in so far as grammar was concerned, he was to later develop the art of self-expression to a fine degree."
Jones recalled, "I attended Howard School one session, then old Hopewell, another one-room school near home, for two years. I did not learn very easily. The children were punished for slight infractions of the rules, sometimes with the switch, but more often by standing in the corner of the schoolroom, facing the wall. I had my share of this kind of punishment, largely as a result of playing pranks on the other children when I should have been studying."
Everyone knew school was about to resume in the fall when they smelled tobacco. At summer's end, bundled leaves of burley tobacco hung upside down in the old, weathered barns that lined the sides of the roads. Smoldering fires on the floors of the closed-up barns cured the fresh leaves, and smoke escaped through the split wood, shrouding the structures in a fragrant haze. The scent of curing tobacco did not mean the same thing to all the children, though, because only half of them went to school, and for those who got to go, schools were not that good. The public school system, which was divided by race into separate black and white schools, had been established only a year before Jesse's birth and had next to no money. For a good time after, schools were locally run with no coordinated requirements or accreditation. There were, however, pockets of improvement: Neophogen College opened in Robertson County in 1873, and Vanderbilt University and Peabody State Normal School opened in Nashville in 1875. Even so, primary education out in the country was patchy, and the pupils less than healthy. Jones remembered, "Almost every day the teacher told some pupil to stay at home next day for a delousing."
William and Nancy wanted more for their children. Their brother, Martin Tilford (M. T.) Jones, had moved from Tennessee to Illinois, and then to the town of Terrell, Texas, where he established what would become an exceptionally successful lumber business. With M. T.'s encouragement, William and Nancy moved to Dallas in 1883. Jones remembered, "When I was nine, my father sold the little farm for, I think, about $5,000 [$114,000] and took the family to Dallas, Texas. He thought the five children could get better schooling there than in the country schools where we lived. Moreover, M. T. Jones had been urging my father to come to Texas and go into business with him."
He recalled the day clearly, saying, "When the man who bought Father's farm went with him around the fence lines to see where the boundaries were, I went along. There were no abstracts of title in those days in the country where we lived. When we got back to the house, my pet pig greeted us as he always did when I came into the yard."
Jones continued, "Father said to the man, 'I cannot sell you the farm unless you buy Jesse's pig.' The man looked at the pig, then looked at me and asked, 'What do you think your pig is worth?' I told him, 'About $4.25.' He then asked what I thought it would weigh, and I told him, 'About eighty-five pounds.' The market price of hogs was five cents a pound, which made $4.25. The gentleman replied, 'I think you are about right, and I will buy your pig.'"
Jones concluded, "It was my biggest money transaction up to that time. I was very proud to have $4.25 all my own. But a great shock and sorrow came to me when I realized that the friendly pig had gone from me forever." Much later, he would feel that way about skyscrapers in Texas.
The large family moved into a home on Leonard Street near Ross Avenue in Dallas. 1883, about 19,000 people lived in the city, which was a growing cotton, rail, and manufacturing center with four banks, not one. A few of the city's dirt roads were being paved, and new buildings were going up. Homes and business spaces were rented or bought almost as soon as material to build them touched the ground. The city's population would nearly triple in ten years.
M. T.'s lumber business was growing, too. Since settling in Terrell in 1875, he had opened lumberyards in other towns, acquired large tracts of east Texas timberland, and moved his family to Houston to be closer to his southerly holdings. He wanted William to look after his northeast Texas interests. Once William got the family settled, he moved to Terrell to help run the M. T. Jones Lumber Company; meanwhile, Aunt Nancy enrolled the children in school in Dallas.
Dallas had four new four-room schoolhouses, two for whites and two for blacks. Jesse attended the Third Ward School, where he formed an enduring bond with Blanche Aldehoff Babcock, his third grade teacher. "Miss Blanche" had been born in Tennessee and was related to John Sevier—the state's first governor and a comrade of Jesse's pioneer grandfather and great-uncle, Eli and Jesse. Miss Blanche was a link to home and was a mother figure as well. Long after Jesse was grown, he and Miss Blanche corresponded frequently and at length.
From one of the many letters Jones wrote to her, it appears he still struggled at school. He called her "one of the strictest [teachers] that I ever had punish me. That's the only kind I ever had. Some threw books; others used the switch." He wrote her, "All you ever did was redden my hand with a ruler. I still love you for it, but would like a chance of bloodying the nose of one or two professors." Jesse was rowdy, restless, bright, and bored. He excelled in arithmetic, the only subject that interested him. As a result he drifted toward the bottom of the class. In another letter to Miss Blanche, he recalled, "There was an examination of the third grade. They were divided about fifty-fifty ... I was placed in the lower [half] and, being of such mature years, I knew I belonged in the upper half instead of the lower. It was probably the best thing that could have happened to me, but I never did learn easily at school, and was glad when I was permitted to quit and go to work."
Summers let Jesse escape school. "One of the two summers when we lived in Dallas," he recalled, "I worked in cotton fields near town and got forty cents [$9.40] a day for chopping the weeds. However, in picking cotton we were paid by the pound, and I was able to make as much as a dollar [$24] a day." He continued, "During the next summer, when I was twelve, I herded and looked after a small bunch of cattle, between thirty and forty head, on a small ranch about thirty miles from Dallas. At the ranch, I lived alone in a one-room ranch house most of the time and did my own cooking, which was not much—meat, bread, and coffee. Aunt Nancy had taught me a little, but my enthusiasm for it was not very strong, and I have never cooked anything since."
Jesse and his family stayed in Dallas for only two years. William missed his life as a farmer and when a 600-acre farm on the Tennessee-Kentucky border became available, he bought it with money he had made from investing in M. T. Jones Lumber Company stock. In 1886, when Jesse was twelve, William and Aunt Nancy took the family back to Robertson County. The region's economy, like that of the Texas city they had just left, was growing vigorously. Springfield's second bank opened the year the Joneses returned, and the 30 or so blacksmiths in the area hustled to keep the horses, donkeys, and oxen shoed to meet the needs of the businesses and population.
The Joneses' two-story brick home on a hilltop overlooking the farm and rolling countryside was said to be the finest house outside of Nashville. The imposing house, with its ornate trim and grand columns, looked like the proverbial southern mansion on a hill. It was built in the 1860s by one of the largest distillers in the area. Jones recalled, "The house was modern, with the exception of plumbing and electricity. All the outbuildings, servant quarters, barns, stables, and the like were brick. It was one of the few homes that had an icehouse." He also remarked on his family's good fortune, noting, "Father unfailingly had a plentiful supply of meat in the smokehouse, from which less-thrifty neighbors would borrow a ham or a side of bacon during the summer months. There were always ample fruits, vegetables, and berries in season, and they were canned and preserved for the winter. We had a good table."
(Continues...)
Excerpted from Unprecedented Power by Steven Fenberg. Copyright © 2011 Houston Endowment, Inc.. Excerpted by permission of Texas A&M University Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Contents
Acknowledgments,Introduction: The Most Powerful Person in the Nation,
HOUSTON,
1650–1898: We Had a Good Table,
1898–1914: The Town Pump,
THE NATIONAL STAGE,
1914–1919: Give Until It Hurts,
1919–1924: The Family Won't Discuss It,
1924–1928: Draped and Drowned in Decorations,
THE GREAT DEPRESSION,
1928–1932: Never Rope a Steer Going Downhill,
1933: At the End of Our String,
1934: Go Directly to the RFC,
1935: Friendly, Industrious, Intelligent Dollars,
1936: No Actual Ultimate Cost,
1937: We Are Not Going Haywire,
1938: Spenders and Lenders,
WORLD WAR II,
1939: An Avalanche of Orders,
1940: Just Another Loan,
1941: You'd Better See Jesse,
1942: A Material More Precious than Gold,
1943: Ask God to Stop Him from Lying,
1944: Jump When the Gong Sounds,
1945: A Very Difficult Letter to Write,
HOME,
1946–1956: It Has Grown Out of Bounds,
Bibliography,
Index,
What People are Saying About This
“If ever a man personified the word titan, it was Jesse H. Jones. His influence was felt around the nation and the world when he was a chief architect of the plans that restored the U.S. economy during the Great Depression and militarized industry in time to win World War II. Steven Fenberg’s biography, “Unprecedented Power: Jesse Jones, Capitalism, and the Common Good,” is a compelling story of a Houstonian who wielded power in ways that helped build his city and his country into powerhouses. It is a must read for those wanting to learn how a great nation -- and a great man -- can respond to difficult challenges.--James A. Baker, III; 61st U.S. Secretary of State
"Jesse Jones is one of those vital figures who has inexplicably slipped into the historical shadows. Now Steven Fenberg has given us a wonderful new biography of a man who played a critical role in the most tumultuous years of the American Century, bringing Jones back to vivid life."--Jon Meacham, author of the Pulitzer Prize winning American Lion: Andrew Jackson in the White House and the bestselling Franklin and Winston: An Intimate Portrait of An Epic Friendship