Master of the Senate (51 page)

He saw the power of big money everywhere—in universities, whose investment portfolios were filled with railroad and oil stocks. (“Needless to say, the dependence of universities on these securities for their incomes influences their view of the economic problem”), and in the church. When a Methodist bishop publicly boasted about his stock market profits, the indignation of the idealist who had once become a minister to help the poor boiled over. The bishop’s financial speculations are “just another proof of the decay of the church as a religious institution and its transformation into a handmaiden of the capitalist system,” he wrote. Religions now preach “the principles of the exploiting class.” Pointing out that while securities given as gifts represented a substantial portion of colleges’ and church portfolios, they represented a very small portion of the wealth of those who made the gifts, he wrote bitterly: “Give till it hurts means nothing to the money princes who govern industry, endow education, and generally distribute royal gifts to the Glory of God and the admiration of the populace. They simply can’t give till it hurts. They have too much.”

And of course, he saw the power of big money in government. When a keynote speaker at the 1928 Republican convention boasted that the United States had achieved a 25 percent rise in gross national product at the same time that labor costs were falling by 10 percent, Olds said, the boast was “hollow … unless he shows what the party has done for the millions of workers laid off in the process. Never was it more clear that the Republican Party is the party of big business, the party which represents the closest alliance between industrial rulership and political administration.”

Not that the Democrats were much better, he wrote; the problem lay in the
political system as a whole. The belief that “a political system created in a much simpler economic era still affords the people effective control through their votes over the complex industrial state which has come into being” is a popular delusion. “Politicians must perpetuate this idea, for their jobs depend on it,” but “a true keynote speech would reveal the political government handling certain administrative details for an immensely powerful ruling class.”

Only a complete transformation of the American economic system—“the complete passing of the old order of capitalism” with its
laissez-faire
government and unfettered economic individualism—would cure the problems, Olds said. The old ideal of democracy had become perverted; the idea of political freedom had resulted in the loss of the economic freedom which alone could really insure political freedom. “Without such a transformation,” he wrote, “to millions of workers … the Fourth of July will loom as anything but the birthday of liberty.”

Such a transformation had already begun in other countries, Olds said, as was shown by the rise of unions in England—and the resultant general strikes there. Changes were coming from both the right and the left, Olds said. He detested Fascism, but even in Fascist Italy, “supposed bulwark of capitalism,” the state—Mussolini—had enacted laws against exorbitant rents and profits, and had begun jailing landlords and shopkeepers who violated them. “Here is certainly a breach which may widen until the sanctity of private property in the capitalist sense follows the divine right of kings into the discard. Inevitable changes in the economic organization of society are exposing it as just another myth….” As for Communism, he had always distrusted it; “in my opinion, the very theory of Russian communism represents a negation of democracy,” he was to say, and his distrust was reinforced by his religious convictions: “I rejected the approach of Karl Marx because I felt that the road to harmony must recognize spiritual values and that ambition for power was an unwholesome influence in human affairs.” Seeing—more clearly than many American liberals in the Twenties—the danger that Communist infiltration posed to American liberalism, and to the American labor movement, when he attempted briefly during this period to help form a new, progressive party in Illinois, he was so concerned “to keep Communists from infiltrating” that he wrote into the party’s “Qualifications for Membership” a statement that “no person who advocates the overthrow of the Government by force or violence or who supports organizations having that end in view will be accepted,” and into its constitution a statement that “The new party must… build on the fundamentally American tradition that all are entitled to the right to life, liberty, and the pursuit of happiness. Importation of theories and influences not germane to American life must be ruled out”—as must “slogans and formulas produced by the struggle in other lands.” Yet along with so many liberals of the time, he saw various innovations in Russia—vacations with pay, still relatively rare in America; improved working conditions for children—as significant social
advances. By reducing child labor, he wrote in 1926, Russia “leads the world in its attempt to guarantee every child a chance to flower.”

But whether the transformation of the American system came from the right or the left, Olds wrote, it was coming.

The changes in America would have to take a different form from those in other countries, Olds wrote, or the particular—and precious—values of the American democratic system would be lost. “Theories developed to meet European conditions fail to include the values the American worker is seeking,” he said. What democracy would evolve into was not yet clear, he wrote. “The new order will be a world order, but not the ideal world order envisioned either in capitalist America, Fascist Italy or Socialist Russia.” A “promise, answering the yearning of people in an American environment,” is needed—and “so far it has been lacking.” But evolve democracy must, he wrote in article after article—or democracy would die.

So vast were the social inequities in the present system that the changes in that system would have to be equally vast, he wrote. Despairing—as many liberals during the decade of outward prosperity under
laissez-faire
capitalism despaired—that government would ever rein in capitalism, so powerful had it become, he saw no solution in the case of giant industries but nationalization or some other drastic reorganization: since the power of the Coal Trust was effectively preventing the United Mine Workers from bargaining collectively, the miners have only “two alternatives: to develop, along with the rest of organized labor, political power sufficient to put over nationalization, or to seek control by the workers themselves under a worker government.” In the case of the giant utilities, Olds (again in conformance with the prevailing liberal theory of the 1920s; it was not Leland Olds but Governor Franklin Roosevelt of New York who said, “The water power policy of the Democratic Party is socialistic, if you like,” but “I want the government of this State to develop the power sites of this
state, because the Government can do it better than anybody else”) advocated nationalization or some more imaginative alternative such as operating utilities “as giant consumer cooperatives.”

D
URING HIS WARTIME YEARS
in Washington, Olds had met, and later married, Maud Spear. The daughter of a teacher in government schools for Indians, she had been raised on Indian reservations all over the West; then, at Oklahoma A&M, had become one of the first women in the United States to earn an advanced degree in civil engineering, and had been working in Washington with the War Department. During the 1920s, the Oldses had four children. They were quite poor, of course—their only income was his $3,600 salary—and when they moved to Northbrook, Illinois, a little working-class town near Chicago, for the Federated Press job, with his own hands Olds built a house for his family; until he could teach himself wiring, the house had no electricity. The only heat was that provided by a big kitchen stove; hanging blankets in a square around it, to keep its heat concentrated, Maud would gather the children inside the square.

The sacrifices they were making didn’t bother Lee or Maud, but increasingly they felt as if the sacrifices were for nothing. In working-class North-brook, Olds was to say, “I had an opportunity to observe the difficulties faced by many of my friends and neighbors as a result of protracted periods of unemployment which occurred even during the Golden Twenties.” He felt that the solutions he was advocating in his articles could have reduced unemployment, but the solutions were not adopted—nor, he felt, even listened to. His articles changed nothing. The strikes for which he did research and wrote bulletins were defeated. The labor movement in which he had believed so deeply, and to which he had dedicated so much of his life, was, as it grew steadily more conservative and more timid, no longer something he believed in very deeply. His voracious reading had convinced him that, as he was to tell a friend, “Even men supposed to have shaped history were in the hands of something stronger than they were, and that applies equally to Napoleon and the man in the ranks.” He had, he felt, been looking all his life for a cause worth fighting for, and he had not found one.

And then he did.

I
N THE SUMMER OF 1929
, with the Federated Press unable to continue paying its share of his salary, Olds accepted a lucrative offer with an economic consulting firm, but there was something he wanted to do first. He had come to feel, he was to say, that he was not sufficiently knowledgeable about a significant American business: the electric power industry. One of the country’s great business libraries was Chicago’s John Crerar Library. So, Olds decided, before
starting his new job, he would “take a month’s vacation” and spend it in that library, “studying the power and utility situation in all its aspects.”

That “situation” made clear the chasm between America’s dominant belief in Big Business and liberals’ conviction that the business ethos had degraded the nation they cared about. Most of America’s power was hydroelectric, generated by the water of its rivers; in the opinion of liberals, such a natural resource does not belong to any private interest. As the author John Gunther was to ask: “Who and what should own a river, if not the people as a whole?” In the America of the 1920s, however, not only did the people not own this power, they had to pay dearly for the use of it—and to much of America’s people, it was not available at any price.

Most of the nation’s hydroelectric power was controlled by a very few private companies, for the local operating electric companies had been absorbed into holding companies, and then the holding companies had been absorbed into other, larger holding companies, and then absorbed again—until by 1929, when Leland Olds sat reading in the Crerar Library, holding companies had been piled atop operating companies in layer after layer. Since holding companies were interstate, they were largely beyond the reach of state utility commissions, and in the pro-business atmosphere of the Twenties, the agency that had been created to provide federal regulation of interstate hydroelectric development—the Federal Power Commission—was notably unenthusiastic about doing so.

Effectively free of governmental restraint, the holding companies milked the operating companies, selling them materials and management and engineering services at grossly inflated prices, and watered their stocks until stock prices soared far beyond their real worth. These extra costs were passed back to the operating companies—and the operating companies passed them back to the consumers, in the form of rates so high that they deprived low-income urban and small-town families of money for other purposes. And for rural customers the consequences were far worse. Because holding companies saw little profit in rural electrification, which required the building of long power lines into sparsely populated areas, in 1929 more than 6 million of America’s 6.8 million farms did not have electricity. Decades after electric power had become part of urban life, farmers had to perform every farm chore by hand; their wives had to haul up endless buckets of water from wells, and, without the vacuum cleaners, dishwashers, washing machines, and electric irons that had freed city women from much of the drudgery of housework, worked from dawn to dark as if they were peasant women in the Middle Ages.

Insulating private utility companies from government regulation was an impenetrable financial structure. Owen D. Young of General Electric, a brilliant financial innovator in his own right, was to say that when “I begin to examine” the utilities’ complicated structure, “I confess to a feeling of helplessness.”

But Olds’ natural gift for mathematics had been honed by years of analyzing masses of statistical material for the AFL and the Federated Press; at the
end of his month’s “vacation” in the Crerar Library, he possessed a rare—in the opinion of men who worked with him later, a unique—understanding of holding companies’ financial complexities and manipulations. This understanding enabled him to determine the true cost to consumers—the rate they should, under state regulation, actually be charged—which meant he was finding formulas under which electric rates could be drastically lowered. Moreover, the refusal of utility companies to provide electrification in rural areas was based on their contention that farmers could not afford to buy electrical appliances; that farmers’ usage of electricity would therefore be low, and rural electric rates that would therefore have to be too high for farmers to afford.

Making detailed analyses of rural areas that
had
been electrified, Olds proved that this vicious circle could be broken—by lowering rates. In the rare instances in which they had been lowered, he demonstrated, farmers had invariably found that they could afford to use more electricity; they bought more appliances, used still more electricity, and rates could be reduced still further. The principle was not new, of course. Henry Ford had demonstrated it: the cheaper a company prices a needed product, the greater will be the company’s profit. All that was necessary, Leland Olds said, was to apply the principle to rural electrification. And if it was applied, he said, electricity would transform the lives of farm families: a farm wife would no longer have to do her wash by hand, stooping over washtubs, but could simply push a button on an electric washing machine.