Bernard Baruch

To the ordinary person of his time, Bernard Baruch was often regarded merely as an elderly financier, sitting on a park bench, doling out advice to nearly anyone who approached him and asked. He grew up in Camden, South Carolina and "Seventy years after he came to New York he still hadn't relinquished a trace of his Southern accent" (Grant 19). His father wanted young Bernard to follow in his medical footsteps, but the young man was determined to seek his fortune elsewhere. That elsewhere would result in his being a part of Wall Street.. His mother, ever eager to see her son advance, found him a job with a New York neighbor, a banker. Still earning $3 a week, now Baruch found himself "learning about speculation, arbitrage, and foreign exchange" (Grant 33). At the same time, he realized that Wall Street was just another gamble. "Moreover, he wanted to gamble...he had an urge to roam....Soon...he went West to find a fortune in the gold and silver mines of Colorado" (Schwarz 16)

Throughout the years of his working at menial wages, Baruch kept reading and studying the trends of the market-place. One thing he learned from the Depression of 1890, was that there was money to be made in a Bear market. While he was friendly to his superiors, often he was on his own. And, eventually became known as "The Lone Wolf of Wall Street ands that he took daring but creative risks." (Schwarz 19) He was quite different in his procedures from perhaps the leading man of Wall Street, J.P. Morgan. "Morgan invested; Baruch gambled. Morgan sought a sure return on his dollars; Baruch risked his. Morgan pyramided his money; Baruch sold short. Morgan created wealth, industry and jobs; Baruch played for big profits" (Schwarz 19)

It was Baruch's "gambling" instincts that led him to speculate in downtrodden firms. One of them was the Gulf Sulphur Company. When one of its principals found himself in financial trouble, Baruch and a partner bought him out for a net of about $11,800. "(t)he price per share amounted to $2.13 in 1915, In 1929, a share fetched as much as $341" (Grant 136)

It was the onset of the First World War that made Bernard Baruch not only world-famous, but extremely wealthy as well as powerful politically. "A war industries board, of which Bernard M. Baruch was the leading figure, coordinated purchases for the government and the Allies" (Morison 875) No doubt, his appointment to this enormous challenge was the result of the fact that "He warmed up with an $11,5909 contribution to the Wilson campaign in 1912" (Grant 141). Baruch had gambled in the early part of the Twentieth Century and had become rich, beyond even his expectations. "In 1914, when the Administration was trying to raise $135 million to lend to cotton farmers...Baruch offered, if necessary, to subscribe $3.5 million" (Grant 141). There is no doubt that Baruch took advantage of wartime economy to make a fortune, especially in buying and selling steel industry stocks. When he was asked to appear before a Congressional committee and was asked his profits, he answered "$476,168,47" (Grant 154). Actually, that was only part of his profits. In 1916, his income was a net of $2 million. At war's end, in 1919, President Wilson offered Baruch the job of Secretary of the Treasury. He turned it down, not only for the reasons that a Jew in a mainly Christian endeavor might be frowned upon, but also because of his reputation as gambler and speculator. Instead, Baruch went to Paris in 1919 where he "became a member of the Supreme Economic Council of the Peace Conference...and that year was appointed a member of the industrial conference in Washington" (Anon 299). These tasks made Baruch valuable to the American government, as well as to the victorious allies, but since he did not hold a political post, he could (and did) continue to speculate as the Roaring Twenties made fortunes for many. It is interesting to note that his small town Southern roots played a vital role in his getting involved in rescuing wheat and cotton farmers in the Twenties, investing in what today we know as "agri-business". Again, he made a lot of money. When the Market collapsed, Baruch, always a "Bear" did not lose his fortune as so many others did. "To have had $8.5 million in cash in 1931 was a rare and wonderful feat. Somewhere along the line he had obviously shifted large sums out of stocks. Just as plainly, however, he had borne a loss. At the top in 1929, his financial assets had been worth perhaps $22 to 25 million" (Grant 247).

It was his seemingly financial acumen that prompted the new president, Franklin Roosevelt, to name him to a peacetime form of the War Industries Board, shortly after his inauguration in 1933. While he served and became widely known and respected as "an adviser to Presidents" he often disagreed with some of the New Deal policies.

By the year 1944, Baruch and others confronted the inevitability of a conversion to peace time economics, while at the same time, Congress was eliminating many of the New Deal emergency economic powers of the early 1930s. "His task was to assure everybody that nothing drastic would be recommended or attempted...'No government in business' he said....The House of Representatives had begun considering a surplus property bill, but Baruch objected in any White House stance on it prior to his own public proposals" (Schwarz 457).

When Truman became President, there was a distinct lack of cordiality and friendship between the two men. In fact, Baruch complained to Eleanor Roosevelt that "They keep away from me as if I had the plague" (Schwarz 547). He often felt that Truman was playing politics with his economy legislation.

After the Eisenhower years, he returned to the Democratic fold. "The proposals for health insurance and Medicare stirred him" (Schwarz 574). Just weeks before his death at 94, in 1965, he again offered his services to the government. The question remains- just how influential was he, compared, for example, to a John Meynard Keynes or Kenneth Galbraith? Chances are he would always come out behind the more influential economists of the day. Today, he is merely a symbol of a highly successful speculator whose heyday has long since passed.

WORKS CITED:

Grant, James Bernard Baruch: The Adventures of a Wall StreetLegendNew York: Simon & Schuster (1983)

Morison, Samuel Eliot: The Oxford History of the American People

New York: Oxford University Press (1965)

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

Anonymous: "Bernard Baruch" Encyclopedia Americana Vol. 3. New York: Americana Press (156)