Draft Version – Echols
What follows are excerpts from my forthcoming book, Shortfall: A Hidden History of 20th-Century American Capitalism, which will be published by the New Press in fall 2017. I’ve included the introduction as well as excerpts from two chapters in the book’s second half.
It would seem that this seminar usually features journal articles or those in the making. This book doesn’t really lend itself to being capsulized. What I have done here –cobbling together different pieces of the book ends up sacrificing core elements of the book. Still, I hope that my effort to distill those parts I thought would be of greatest interest – class & conservatism – will give folks some sense of this part of my argument and the supporting evidence. Just keep in mind that the richness of the material about loan sharking, the B&L business (particularly how it remakes itself in the interwar years), and the four B&L operators whose wrecks are at the center of the narrative—is lost. Also missing is the family story, which provides much of the narrative drive, as is the all-important context of Colorado Springs, and Colorado and its labor wars. It turns out that de-braiding Shortfallwas harder than I had imagined!
Prologue: Captain Nothing
George Bailey. It’s a name that most Americans, or those of a certain age, recognize in a flash. With just a bit of prodding (“You know, Jimmy Stewart…It’s a Wonderful Life”) even those who have never watched the 1946 movie in its entirety usually know who it is you’re talking about. To recap the film, George Bailey is the small-town banker at the center of Frank Capra’s classic Hollywood movie. A man filled with dreams of a big and exciting life, he finds himself, when his father dies suddenly, stuck in his hometown of Bedford Falls. This untimely death shackles George to his father’s struggling building and loan association. Consigned to what he disparagingly calls this “business of nickels and dimes,” he struggles to make the best of it, albeit grumpily at first. Kind-hearted, altruistic, and willing to take on Henry Potter, the town’s evil banker, George is the sort of person most Americans have rarely if ever encountered in the world of financial services.
At the same time that the fictional George Bailey was doing his best to bring the American dream of home ownership to the working people of Bedford Falls, Walter Clyde Davis was operating a different kind of building and loan association in Colorado Springs, Colorado. While George Bailey was admired for his trustworthiness and generosity, Walter Davis was respected for his financial acumen and feared for his ruthlessness. He was a loner, not a joiner, and his B&L—the biggest in central Colorado with 3,600 depositors--enabled him to buy into a tony neighborhood, drive luxury cars, and finance summer-long European vacations for his family. In another telling difference, while George stayed true to his wife, the Coloradan had a mistress, whom he supported lavishly.
Each man faced financial calamity during the Depression. But George Bailey selflessly handed out his own honeymoon money to satisfy fearful customers participating in a bank run engineered by his nemesis, Potter. By contrast, Walter Davis went on the lam before news of his association’s failure hit the papers. Back home in Colorado Springs, investigators discovered that the town’s “financial wizard” had left his business with a jaw-dropping $1.25 million shortfall. When detectives arrested him that December, newspapers across America carried the news. Journalists knew the scandal would resonate with Americans who had come to see themselves through a paradigm of precarity and to view bankers as a species of gangster or “bankster,” as they were sometimes then called. A journalist at the Milwaukee Sentineldubbed Walter Davis “Captain Nobody” because he had passed himself off as a captain of finance when he was just a pretender, “a cabin boy, strutting the bridge in a captain’s uniform, during the fair weather before the slump.”[1]
Over the years George Bailey has become a fixture in books about the Depression, home ownership, and banking and finance. As for Walter Davis, well, he’s pretty much gone missing from our history books.[2] You certainly won’t find him in the standard histories of the “thrift industry,” the term used for the building and loan industry and the modern savings and loan business that succeeded it. According to these books, the vast majority of building and loans survived the Great Depression, and those that didn’t failed because of the collapse of the country’s real estate market, not because of any financial impropriety.[3] Indeed, a number of scholars who have written about building and loan associationsdepict them as noble institutions -- “banks with a soul” -- and write as though the fictional Bailey Brothers Building and Loan Association is representative of the actual industry.[4] Histories of the Great Depression in America sometimes mention building and loan failuresand the dodgy practices that in some cases brought them down, but there exists no systematic treatment of the cratering of the B&L business during the 1930s.[5] And yet as I will detail shortly, among building and loan men of that period Walter Davis was hardly anomalous. Neither was his failure or the circumstances surrounding it. It turns out that the history of the American thrift industry during the inter-war years isn’t just hidden; it’s buried in the bowels of under-staffed state archives and local libraries.
If this story is largely missing from the history books how did I come to learn about it, especially when my scholarly bailiwick is the 1960s? The truth is -- pretty much by accident. Nearly twenty years ago during a visit with my parents my father and I had an almost chance conversation. Had it not been for a dinnertime drama one evening I doubt that he would have ever have shared with me the story that enabled me to write this book. In an effort to explain the roots of my mother’s cellophane-thin sensitivity he spoke at length about her family, particularly her terrible cad of a father. A banker who indulged himself in a long-running and indiscreet affair with his secretary, her father caused his family untold grief. Then the Depression descended and his bank, like so many others, failed. Fleeing his hometown, he headed for New York where the police eventually arrested him. His was not a story with a Capra-like happy ending. Our conversation that night was my introduction to the man at the center of this book, a man whose name I did not yet even know. Within our family everything about him -- stories, photographs, and memorabilia -- had been banished. Walter Clyde Davis, my grandfather, scrubbed as clean from my family as he was from the history books.
It’s embarrassing to admit but until that evening it had never occurred to me that it was weird how little I knew about my mother’s past. Even though I grew up surrounded by her parents’ possessions, I don’t recall ever inquiring about them or how they came by all their swanky stuff. The room-sized Oriental rugs, the salmon-colored Art Deco chaise lounge, the mahogany furniture, all of it was strikingly at odds with the mid-century blondeness of my friends’ homes and the functional department store purchases of my parents. And so it was with our pantry, crowded with variously sized Wedgewood plates, cups, saucers, and bowls, not to mention an array of delicate stemware for every conceivable kind of alcoholic drink. Others who have written about family secrets sometimes report a disjuncture between the accepted family narrative and their own perceptions, and others still of being haunted by an unknown knowledge, what psychoanalysts have dubbed nescience.[6] For example, in another book about real estate and lending that pivots on a family story, historian Beryl Satter writes that as a child she often felt as though she was “living in the aftermath of an explosion whose source was obscure.”[7] Admittedly, the shattering events in her family’s story were not at a generational remove, still, how was it that I never registered as strange our home’s faded, antique opulence or our family’s conversational voids?
Perhaps it was incuriousness that kept me from asking questions as a child, but there were other reasons -- the muddle of my own life, my sullen, teenager-like alienation from my family and my annoyance at having been kept in the dark – that kept me from peppering my father with questions that night. It would take several more years before a friend, another historian, persuaded me to start digging. Even then, it was she who did the first bit of spadework by searching for my grandfather in a bound volume of the New York Times index at the Santa Monica Public Library, then copying and mailing me the relevant articles. That was how I learned that Walter Davis was generally understood to have been an embezzler rather than the victim of the Depression that my father’s account had led me to believe.
Making sense of my grandfather then, in 1999,was much harder than it would have been even a few years earlier. By this juncture, my father was dead and my eighty-nine-year-old mother was struggling with an unnamed neurological condition and an uncertain memory. Moreover, I had not yet broached the subject of the scandal to my mother, who was unaware I knew anything about it. I could think of only one person--my father’s sister, a former nun--who might provide some useful information. What she had to offer was a vague memory of having been told that her sister-in-law’s father had once owned large chunks of Wyoming. As for my mother’s relatives -- or those who had lived through the scandal -- they had all passed away. A few years ago a tiny collection of letters, diaries and memorabilia belonging to my great uncle, Roy Davis, a prominent local politician, found its way to the local Colorado Springs history museum. This tiny bundle represented a sliver of what was once his archive, which had been tossed into a dumpster after his death.
As it happened, I was just getting interested in investigating the scandal when my mother’s decline forced her to move into an assisted living facility. That meant putting our house on the market. We had moved to Chevy Chase Village from an adjacent Maryland suburb in the mid-1950s. Over the years, many of the houses in our neighborhood had been McMansioned. Ours, however, looked exactly as it did when we moved in. Little of what we accumulated in the subsequent forty-three years had been given away or junked. After a serious attempt at culling, my sister arranged for the remaining stuff in our basement to be hauled away. In the process, several mildewed trunks, whose contents our mother had described as worthless, became part of the junk heap. In the end, my sister unearthed several boxes of family memorabilia and I gathered up a handful of my mother’s designer clothes from the 1920s and a batch of family photographs, allof it from the sole surviving trunk--a beautiful, slightly worn Louis Vuitton that for decades sat closed, but likely unlocked, in one of the few dry spots in our basement.
The woman who bought our house, realizing that our mother was unable to clear it out, that her daughters were unlikely to do so, and believing the house could do with a makeover, bought it “as is.” A year later, my sister and I were on the phone talking about our old neighborhood. She had recently spoken to neighbors who told her that the new owner was gutting the house. In passing, my sister mentioned the seventy or so boxes she had told the movers to leave behind in our attic. She had no idea I was thinking I might research the scandal so there was no reason she should have shared with me what was now a galvanizing detail.
Of course, the boxes would be in our attic, a space that had always made me uneasy. It was where we stored our Christmas decorations, and when air-conditioning was finally installed, where some crucial bit of that system was located. Twice a year my father hauled a ladder in from the garage, and made his way up it to retrieve and store again the unwieldy boxes that held our tree ornaments and Styrofoam Santa Claus. The combination of the wobbly ladder and my less than totally nimble father always made this a nerve-wracking exercise. But I now wonder if some of my nervousness reflected my parents’ anxiety about what else was stored up there.
Whatever the source of that old anxiety, I was now fixated on those cardboard boxes. As it happened, the renovation on our former house was proceeding so slowly that the contractor had yet to clear out the attic. After I explained the outlines of the scandal to the new owner she promised that once the boxes were downstairs she would open up each box and look inside to see which boxes contained family papers and memorabilia. I would have preferred going through them myself, but I did not have the chutzpah to ask. A few weeks later we spoke again on the phone. Most of the boxes contained absolutely nothing worth keeping, she reported, but a few looked to her as though they contained material I might find useful.
In those boxes were a 70-page transcript of subpoenaed family telegrams, newspaper clippings, diaries, scrapbooks, correspondence, and photographs…including very many of my self-regarding grandfather. Some of this material, including a bookstore clerk’s scribbled message to put aside a copy of Theodore Dreiser’s American Tragedy for Mrs. Walter Davis, seemed almost too spot-on. Often the most telling scraps had been tucked away inside diaries and books, one of them a copy of Poems That Have Helped Me, a gift that my grandfather sent to my grandmother while he was on the lam.[8] All along there had been, cached inside our house, an intimate archive of the scandal. My mother held onto it all, even though doing so risked the possibility that one of her daughters might eventually discover her family’s secret. Why hadn’t she thrown it all away when she had moved east?
The material inside those boxes was indispensable, as was my grandfather’s 200-page FBI file, acquired through a Freedom of Information request. Just as important were my mother’s contributions. The floodgates may not have opened when she first spoke about the scandal, but she was remarkably forthcoming. Several weeks into our talks she announced that she was granting me “permission” to write a book about the scandal. Sometimes, particularly after lengthy discussions that touched on parts of the story that had long since faded from her memory, I felt she regretted having given me her okay. Yet she continued talking to me about it. Indeed, over a period of two-and-a-half years the scandal became a conversational staple. These were not structured interviews recorded on tape, but rather informal conversations. Her memory often failed her when it came to the details of the scandal, but parts of that experience remained un-budgeably with her. She often told me about coming downstairs for breakfast one morning and finding her father in a panic about the bad news in that day’s newspaper. “He saw it all coming,” she said. And then invariably she would add, “He blamed it all on Bubbles!”
My mother never could tell me who this Bubbles character was, but quite a lot of what she did tell me was borne out by my research. Was she really almost the victim of a kidnapping at the hands of depositors desperate to force her father’s return? Yes, that story made the front page of the local papers. Had her father’s grave been left unmarked out of fear that it might be desecrated or dug up in the hope that some part of his fortune had been buried with him? When my wife and I visited the cemetery where the Davis family is buried we found that both of my grandparents’ graves were without headstones. Sometimes my mother’s memories were self-contradictory or at odds with what I discovered elsewhere. And I would not rule out the possibility that she sometimes tailored her story to fit what she believed were my expectations. But her recollections of her feelings were fairly consistent. In a book such as this, which tries to impart a sense of the emotional textures of that time and place, and of the feelings of those most intimately connected to the scandal, this is no small thing.
***
Shortfall uses the building and loan scandal, particularly as it played out in Colorado Springs, in order to explore the relationship between capitalism, class and conservatism in America.
That I became less interested in what happened to the missing million and more intrigued by what the scandal might tell us about our country owes a lot to both our current economic and political landscape, and to the nature of research itself. For me the shift began as it so often does for historians: squinting at a microfilmed copy of an old newspaper and finding myself drawn to a nearby article, one with no apparent relation to my topic. From these semi-distracted glances I would sometimes recognize a name, which occasionally led to unanticipated connections, be it to the Ku Klux Klan which successfully “kluxed” Colorado in the 1920s or to the violent labor wars that preceded Klan activism there. As my research expanded into seemingly disparate corners of our country’s past, this book became not only my excavation of a buried financial history or of a long-forgotten chapter in the history of a small western city, or for that matter my own family’s history, it also became a timely, on-the-ground history of 20th-century American capitalism.