The Family (8 page)

Justifiably proud of their illustrious reputation in financial circles, James and Thatcher Brown insisted their name be retained in the merger. Averell and Roland Harriman, who had invested over $10 million in the new partnership, were equally insistent that their name be included. Realizing the deal could fall apart over such a dispute, the Browns and the Harrimans finally agreed to put the matter before a committee composed of friends of both families. The result: Brown Brothers Harriman and Company. The news was announced December 12, 1930, on the front page of
The New York Times
.

Wall Street hailed the merger as extraordinarily good news in exceedingly bad times, especially since it was reported on the same day that the Bank of United States (no connection to the government, despite its name) closed its doors. The failure of the Bank of United States, a commercial bank with fifty-nine offices in New York, was the largest bank failure in American history at that point. So the merger of the Browns and the Harrimans was applauded on Wall Street. One financial journalist called it “a merger of financial aristocrats, a combination which unites the best of the old and new.” The alliance between the two families signaled an act of faith in the economic recovery of the nation, and the news excited everyone with its promise for the future. With the Harrimans’ capital, the Browns’ stature, and the energy and experience of the young partners, this was clearly going to be the gold standard of investment banking.

On the morning of January 1, 1931, the day the merger took effect, Prescott Bush woke up as a full-fledged partner in a venture that seemed destined to make him rich beyond his wildest dreams. Dorothy was pregnant again and expecting their fourth child, Jonathan, in 1931, so Prescott decided to buy an eight-bedroom house to accommodate his growing family. They moved to a spacious brown Victorian house on Grove Lane situated on two acres of wooded land with a rolling lawn, a grand driveway, and a separate carriage house for “the help.” Dotty financed the sale and the house remained in her name, but Prescott felt confident that he could now make sizable mortgage payments. He also joined a second country club, signing for a family membership in the Flossy Field Club so “Pressy” and “Poppy” could take swimming and tennis lessons and play field hockey. Young Nancy began piano lessons, and Dotty enrolled the two boys in the Greenwich Country Day School. The family gave thanks every Sunday at Christ Episcopal Church, where Prescott, determined to become a pillar of the community, joined the vestry. He remained on the best of terms with his father-in-law, despite Walker’s resignation from W. A. Harriman and Company.

Although Dotty’s father was rabidly anti-Catholic, he occasionally attended a Presbyterian church with his fervently religious wife, Loulie. “She’s quite a little Bible thumper,” he once said about her insistence on certain pieties, including a Sunday ban on dice games, cards, and movies. Dotty inherited her mother’s fierce religiosity and began each morning by reading personal devotions to her husband and children at the breakfast table.

“These were little moral stories, three to five minutes . . . about how to live your life,” said William H.T. “Bucky” Bush, Pres and Dotty’s youngest son. “Every Sunday, the whole family went to church. It wasn’t an option.”

During the week Prescott consecrated himself to his new position within Brown Brothers Harriman. “One of my activities was to help build up deposits, to bring new clients into this firm, corporate enterprises such as the International Shoe Co., the Columbia Broadcasting Co., the Prudential Insurance Co.,” said Prescott. “It required a lot of salesmanship, yes, and in the course of all this activity I became a director of a large number of American companies, including the Simmons Co. (that makes beds and bedding), the Dresser Industries Co., which is an oil well supply company, the Prudential Insurance Co., which is the second largest life insurance company, the U.S. Guaranty Insurance Co., which is a casualty company, now known as the Federal Insurance Co., Columbia Broadcasting System (radio and television), . . . the Pennsylvania Water and Power Co., and a company in New Haven called the Rockbestos Manufacturing Co. They were all in different fields.”

Once he brought new clients to the firm, he explained the investment advisory service that Brown Brothers Harriman had set up. They now counseled clients for a fee instead of managing their accounts for free. It was a precursor to the way today’s money-management firms work. “We set up a securities research department so that we could go more in an orderly way about advising the Harrimans, who had very substantial holdings in a great many different enterprises . . . [W]hen we’d talk to somebody who’d say, ‘Look, I have half a million dollars. I don’t know what to do about this market. What should I do?’ we’d say, ‘Well, why don’t you let us do this for you? We’re doing it for the Harrimans, our own partners, so and so’s wife, and the children, and my own wife’ and so on—‘We can do for you just what we’re doing for ourselves . . .’ That’s how we built up the investment business.”

Brown Brothers Harriman was a private investment bank for the very rich. “[An] account was hardly worth putting into this investment advisory department on a fee basis unless it could pay us a thousand dollars a year which is one half of one percent on $200,000 principal . . . I won’t say we were
the
pioneers. There were already a few investment counsel firms around. But . . . we were pioneers among people of our kind.”

In the spring of 1931 the German government issued a
Stillhalte
, or standstill, that froze all of the country’s foreign-exchange assets. This meant no payments of any debts to foreigners.

Such a move had not been anticipated and had never been tried before by the German nation, but its banks were in crisis and its reichsmarks worthless due to overinflation. The collapse of its economy had enormous international ramifications and led to the political unrest that brought Adolf Hitler to power in 1933.

For the partners of Brown Brothers Harriman, who shouldered unlimited liability for all the firm’s obligations, the German
Stillhalte
was devastating. The good ship BBH seemed in danger of capsizing under the weight of its German debts, and it faced financial ruin.

“Our new firm . . . was stuck for a total of almost $10,000,000—about the size of our capital,” said Knight Woolley.

“The reserve capital accounts of some of our partners got into the red,” said Prescott Bush. “In other words, the firm lost enough capital, at least on paper, so that we were below water. I was one of them.”

The “red partners,” including Woolley and Prescott, now owed the firm hundreds of thousands of dollars. They each took out term insurance for the amount they owed in the event they died. The firm then began selling off its German debts with a 20 percent net loss. Even so, the Harrimans still had to put up additional capital of $10 million to keep the firm solvent and strong enough to continue soliciting business.

“Averell and Roland then did a most generous thing,” said Woolley. “Averell said, and I quote, ‘It is perfectly ridiculous for Roland and me to try to run a banking firm with the principal working partners indebted to the firm. All of the earnings should go to the “red partners” in the same percentages they formerly had.’ In other words, they would simultaneously come out of the ‘red’ together.”

Relieved that incoming profits would first go to wipe out the deficit in their accounts, the “red partners” were still strapped for cash. “We had nothing to pay the rent or the grocer’s bills,” said Woolley. “At an important partners’ meeting this was all fully discussed. Averell and Roland Harriman suggested that we have salaries. As the only bachelor, I was asked what I thought I could live on within reason. I said $16,000 [$197,700 in 2004]. It was then agreed that the married partners should have twice this amount, $32,000 [$395,000 in 2004]. This arrangement was to continue for many years.”

For the next four years the “red partners” struggled to bring in enough business to pay off their debts. No one mentioned the firm’s financial difficulties for fear of starting rumors about insolvency that would surely put them all out of business. “There may have been some people who suspected it, but we never discussed our private affairs with anybody—still don’t,” said Prescott Bush in an interview that remained sealed until his death. “I’m probably talking more freely to you than I ever have to anyone about this thing, hoping I’ll be dead before anything happens.”

The firm had recovered its financial stability by 1935, and the partners’ debts were fully repaid, but Prescott did not feel financially secure for many years after that. In 1946, he refused to run for the House of Representatives because he was not yet financially independent. He had been elected moderator of the Representative Town Meeting, which was like being the unpaid Speaker of the House in Greenwich (population forty-one thousand), a position he held for seventeen years. He helped raise money for Republican presidential candidates Alf Landon in 1936 and Thomas Dewey in 1944, but it would be several years until he felt he had enough money to run for public office himself. His wife said if he hadn’t had so many children in private schools and such heavy financial obligations, he would have gone into national politics earlier. She reflected wistfully: “He would have been President of the United States.”

Whether it was the financial weight of being a “red partner” or natural midwestern frugality, Prescott and Dorothy lived rather simply compared with others in Greenwich who had homes with stables and swimming pools and tennis courts.

“We were well-off, but we weren’t considered rich. Not by Greenwich standards,” said Prescott Bush Jr. “We got an allowance of 10 cents a week growing up . . . We could buy a Good Humor for 10 cents. We used to hope we got a lucky stick because if you got a lucky stick you got another Good Humor for free.”

Depression mentality ruled the household. “Mother was a stickler for saving,” said Jonathan Bush. “They sold Cokes at the tennis club, but we weren’t allowed to buy any there. We had to get ours at home because they were cheaper . . . And we lived in hand-me-downs. I never got a new thing to wear until I was in college.”

Nancy Bush Ellis remembers “a very ordinary life” without luxuries or grand summer trips to Europe. “Father said it was too complicated to take all of us,” she said. “And our house? The press tries to build up all this Greenwich estate business. But have you seen the house? It’s a nice brown-shingled house. Period.”

“We never felt that Dad had any kind of wealth at all,” said Jonathan. “We had a cook and a maid and a chauffeur but other kids had a lot more.”

Prescott junior scoffed at his brother’s “pretentious” description. “To call Alec a chauffeur is the joke of all time . . . Johnny didn’t know what he was talking about. George and I would get in the back of Dad’s little Model A Ford and Dad would drive to the train. Then he’d get off and Alec would drive us to school. Alec was more of a gardener, really. We got a ride to school, yes, but it wasn’t like Alec waited all day for Mother to say, ‘Bring the car around.’”

The Model A Ford was eventually replaced by a big black Oldsmobile, but the morning ritual remained the same for the eight years the boys attended the Greenwich Country Day School. Their most vivid recollection of growing up seems to be the visceral fear they all had of their father.

“Dad was really scary,” George H.W. Bush told the television interviewer David Frost. “Remember Teddy Roosevelt’s ‘Speak softly and carry a big stick’? My dad spoke
loudly
and carried the same big stick. He got our attention pretty quick.” As an adult, George would frequently allude to his father’s beatings. “He was always talking to me about how his dad beat him—actually whipped him with a strap,” said Cody Shearer, a family friend who traveled with George throughout 1980. When the historian Garry Wills asked George if he ever found it hard to differ from his father, Bush was mystified. “It never occurred to me to differ. I mean, he was up here (lifts right hand as far as he can), and I was this little guy down here.”

George’s cousin Dr. Ray Walker, a psychiatrist, interprets George’s behavior as going along to get along. “He always placated his father. Then, later on, he placated his bosses. That is how he relates—by never defining himself against authority.”

Like many men of his generation, Prescott Bush believed in corporal punishment. He maintained his authority over his children with a belt, a razor strop, and even, on occasion, a squash racket.

“He was scary as hell,” said Ray Walker. “He intimidated my father—he intimidated everybody . . . He was kind of distant and tall and knowing and judgmental.”

Osborne Day, a classmate of George Bush’s at Andover and Yale, recalled Prescott vividly. “I was certainly afraid to not be very polite to him,” he said. “I guess you could say I was afraid of him. Not that I’d heard anything terrible about the man, but he was a serious guy, and if you were as young as I was at the time, you treated him as a serious senior person.”

“If we acted disrespectfully, if we did not observe the niceties of etiquette, he took us over his knee and whopped us with his belt,” said Prescott junior. “He had a strong arm, and, boy, did we feel it . . . He was a tough Joe bastard.”

“As children, we were all afraid of Dad,” said Jonathan Bush. “Every one of us . . . Dad was no laughing matter.”

“The boys were more scared of Dad than I was,” said Nancy Bush Ellis, who added that her brothers always sent her to their father to ask for things. “I was the messenger.

“I remember one morning Pres sassed my father and he was sent away from the table. As he was going up the stairs, I don’t know why, but he sassed my father again, and my father threw the newspaper, which was still folded up in three parts, at him. When Pres said, ‘Ha! You missed,’ my father jumped out of his chair to go for him, and I screamed, ‘But he’s going to kill him!’ Mother said, ‘No, he’s not.’”

Dorothy was as tough as her husband in disciplining the children. “Oh . . . She didn’t leave it up to him,” said Prescott junior. “She ran the show, but if she ever needed a backup or felt that she hadn’t made quite a strong enough impression on us, he would come in . . . We were scared to death of Dad when we were younger.”