Charles Dawes
by Jon Krumdick
Jon Krumdick, a student at the College of St. Joseph in Rutland, Vermont, worked as intern at the foundation for the first five weeks of the summer of 2001. Jon, who is from Athol, Massachusetts, is currently seeking a degree in American Studies, the study of America’s culture, history, and heritage through American literature and history.
“We must not fear the consequences of truth, only the failure to tell it completely.”
—Charles Dawes
Charles Dawes, Calvin Coolidge’s Vice President, developed a life-long interest in banking and finance into a prominent political career. From his beginnings as a lawyer in Nebraska and a successful career in real estate and investment to his political and governmental career, Dawes left his mark on the nation.
Charles Gates Dawes was born in Marietta, Ohio on August 27, 1865 the son of Mary G. and Rufus R. Dawes. Dawes followed a long line of adventurous and patriotic men dedicated to the service of their nation. His father fought in the Civil War achieving the rank of brevet brigadier general. He later served a term in Congress. An uncle also served during the Civil War and gave his life for the cause. William Dawes rode with Paul Revere on April 18, 1775 to warn the colonists of Massachusetts of British advancement, an act signaling the beginning of the American Revolution. Seven generations earlier venturing from England to America in 1628, the first William Dawes was among the first Puritans.
Dawes’s family also had prominent businessmen among its lineage. His father owned and managed a successful lumber company in Marietta, Ohio. An uncle was a prosperous banker. The experiences and influences of his family members shaped his life. In his autobiography Calvin Coolidge noted the importance of one’s ancestors by recalling the comments of a New England sage “reported to have said that the education of a child should begin several generations before it is born.” Given the contributions of the Dawes family heritage to the American experience, these words definitely applied to Dawes’s life.
Dawes attended Marietta College receiving his degree in 1884. He then obtained his law degree from the University of Cincinnati Law School in 1886. Dawes felt that Marietta did not hold much promise for his dreams. He left Ohio for Nebraska with dreams of a successful law practice on his mind. At twenty-one, he passed the bar in Lincoln, Nebraska.
In the seven years in Lincoln, he earned a reputation as a successful, intelligent, and alert member of the bar, while also forging many lasting friendships. Two would prove very important later on in his life: William Jennings Bryan, a fellow attorney, and Lieutenant John J. Pershing, professor of military science at the University of Nebraska. Dawes also married his college sweetheart Caro Blymer in Lincoln. They had two children, Rufus Fearing and Carolyn.
Dawes experienced much success as a lawyer. An earnest opponent of monopolizing railroad companies, he spent many hours in courtrooms fighting discriminatory railroad freight rates. He successfully represented the Lincoln Board of Trade in the fight against these rates. Even in light of this success, Dawes found himself in banking and finance, lending his help to friends and family members in real estate, finance, and investment ventures. Many of the people whom he assisted included prominent businessmen of Lincoln and the surrounding areas. These financial activities helped lead to his own investments in gas and electric companies in and around Chicago. During the Panic of 1893, Dawes suffered some financial setbacks, but soon recovered. He never forgot the lesson that a “ninety day note falls due.” That same year he moved to Chicago to be closer to some of these investments. In 1894, he acquired manufactured gas plants in Lacrosse, Wisconsin and in Evanston, Illinois. Dawes brought in his three brothers, Beman G., Henry M., and Rufus C. Dawes, to assist in the management of these businesses. He and his brothers prospered quickly, eventually controlling 28 gas and electric plants in 10 different states. In 1902, he turned the reigns of his utility companies to his brothers.
In 1894, Dawes published The Banking System of the United States and Its Relation to the Money and Business of the Country based on his studies of banking matters from his elected position as a director of the Lincoln Bank.
In 1895, Dawes, with his financial position steadily rising, moved to a lakefront home in Evanston, Illinois. By 1896, Dawes threw his hat into the ring of politics. Dawes saw public service as one’s highest calling. For the rest of his life he would use his business experience to attempt to increase the wealth of the United States. During William McKinley’s 1896 presidential campaign, he became a member of the Republican executive committee. Dawes, who knew McKinley through family connections in Ohio, worked to secure Ohio support for McKinley. He also served as McKinley’s western campaign treasurer. Illinois was a very crucial state in the electoral process, a great position for Dawes’s first political foray. McKinley won and rewarded Dawes with the position of Comptroller of Currency where he served from 1897 to 1901 and was regarded as one of McKinley’s most trusted advisors.
After McKinley’s assassination, Dawes left Washington, but ran for the United States Senate in 1902 losing the Republican nomination. Upon this defeat, he moved back to Illinois where he organized the Central Trust Company of Illinois. He would later become the president of this company. He gained a reputation as a prominent banking figure and leading philanthropist.
In 1912, tragedy struck the Dawes family. Young Rufus died in a swimming accident in Lake Geneva, Wisconsin. The family was devastated. The family later adopted two other children, Dana and Virginia.
In 1917, during World War I, Dawes received a commission as Major of the 17th Engineers. Among the first 20,000 troops to arrive in France, he was later named General Purchasing Agent of the American Expeditionary Force and would rise to the rank of Brigadier General. He received a variety of decorations for his contributions to the war effort, including the French Legion of Honor. He exuded the courage that many of his ancestors left on the battlefields and in the history books.
After his military service, President Warren Harding appointed him the first director of the United States Bureau of the Budget. Dawes implemented a piece of Harding’s election pledge working to trim government spending wherever possible. All government-purchasing requests were sent through the Budget Bureau to increase efficiency and productivity. During his tenure, Dawes cut expenditures by one-third. In 1922, Dawes returned to Chicago where he entered local politics. He created the patriotic Minutemen of the Constitution, a group ardently opposed to radicalism in organized labor.
In 1923 and 1924, Dawes chaired the international committee to deal with Germany’s post-war reparation payments. The commission devised a five-year plan, the “Dawes Plan”, to stabilize the German economy and establish a more reasonable payment scheme. The plan set a system of payments that would be used by Germany. The plan also provided for foreign loans, mainly from United States investors, to help Germany meet its scheduled payments. Payments were to begin at one billion gold marks in the first year and rise to 2.5 billion marks by 1928. The plan also provided for the reorganization of the Reich bank. The plan was accepted by the Allies and by Germany on August 16, 1924. Dawes had help from England’s Sir Austen Chamberlain, a former member of the House of Commons, secretary of state in India, and Chancellor of the Exchequer. These two men received the Nobel Peace Prize of 1925 for their combined efforts on the plan. The “Dawes Plan” worked so well that by 1929 it was believed that Germany’s payments could be set on a fixed rate and that many of the controls on Germany could be removed. In 1929, the “Dawes Plan” was replaced by the Young Plan, which reduced the amount of Germany’s reparation payments.
From 1925 to 1929, Dawes served as Vice President under Calvin Coolidge, but he was not the first choice of the Republican Party. It had nominated Governor Frank O. Lowden, a close friend to Dawes, to be Vice President. Upon the news of this nomination, President Coolidge sent Ted Clark, an assistant, to take a brief note of congratulations to Lowden. Unknown to Coolidge, Lowden had turned down the nomination. The party then selected Dawes. Coolidge felt that he did not necessarily balance the ticket, with respect to his views and values, but he was an acceptable running mate due to his business savvy and record of success. Coolidge now needed to send Dawes a congratulatory note. Coolidge told Clark to send the same one he sent to Lowden, but Clark composed another message and sent it on its way. Many saw that the Coolidges, especially Mrs. Coolidge, were not very enthusiastic about Dawes. She later told Joel T. Boone, the President’s physician, that she did not like Dawes, but one needed to work with the tools (Dawes) at hand.
Dawes traveled the nation and its many roads “roaming” for Coolidge’s election while the president grieved the loss of his own son Calvin, Jr. Democrat William Jennings Bryan said of Dawes: “The Republican candidate for Vice-President was a successful business man, a man of character, patriotism, and civic enthusiasm. In all public positions, which he had held, beginning with Comptroller of the Currency, he had acquitted himself creditably. He went into the campaign a more active factor then the Vice-President candidate usually was. He was a more rigorous personality than the President.” During Dawes’s campaign travels he spoke on the problem of the Ku Klux Klan and against the radicalism of Robert M. La Follette, the Progressive Party candidate.
During the Coolidge administration, Dawes and Coolidge had many negative discussions. They disagreed on the appointment of Frank O. Lowden to the Department of Agriculture. Coolidge felt that Lowden would not agree with him on farm policies and might use the disagreement to further his own political ambitions. Dawes had favored Lowden’s ideas on subsidized dumping of farm surpluses abroad in hope that the act would bolster market prices in the country. Dawes also promoted the passage of the McNary-Haugen farm relief bill. Coolidge greatly disapproved of this bill.
Dawes always spoke his mind, even in light of pending negative criticism. Dawes had received the nickname “Hell and Maria” for one of his tirades. The nickname came from words that he had uttered at a congressional hearing investigating charges of waste and extravagance during World War I. A committee member’s question to Dawes on the truth behind excessive prices paid for mules in France prompted a response from Dawes: “Helen Maria, I’d have paid horse prices for sheep if sheep could have pulled artillery to the front.” Dawes always spoke his mind and told the truth. He did not fear the consequences of telling the truth, but feared the failure of not telling it completely. A man of his word, he spoke on numerous issues that many individuals had avoided keeping their image intact. Dawes suffered humiliation, hate, and disgust for many of his actions. He was a strong man, one that believed in all that he said and had no regrets in conveying it. Dawes was criticized by many of Coolidge’s opponents and was also resented by many of the President’s allies. Senators hated him and saw him as a liability to the Coolidge Administration, despite his excellent service record. In his inaugural address, he upset many senators by his blunt expression of views on Senatorial rules, stating that they were “inimical to the principles of our constitutional government.” He called for restructuring the rights of unlimited debate and filibustering. Dawes was even accused of sleeping through the tie vote of presidential cabinet nominee Charles Warren. Warren’s nomination was defeated thanks to Dawes’s absence. President Coolidge was extremely upset. Dawes became the laughing stock of Washington after this incident. A sign placed at the new Willard, Dawes’s hotel, said, “Dawes slept here.” In another instance, Dawes was escorting a friend through Washington shortly after this incident. On their travels they stopped at the Supreme Court. Chief Justice Taft sent down a note reading: “Come up here. This is a good place to sleep.” The press held Dawes in a low regard for the rest of his political career, even in light of his contributions to the war effort, his fiscal responsibility in the Bureau of Budget, and his work on the reparations question.
Coolidge did not seek re-election, and Dawes did not attempt to succeed him. Herbert Hoover ran for and won the presidential election. In 1929, Dawes headed a commission to improve the financial operations of the government of the Dominican Republic. His recommendations on reform were later adopted and implemented. President Hoover appointed Dawes Ambassador to Great Britain in 1929. There, Dawes participated in pre-conference discussions for the London Naval Armaments Conference in 1930 and later served on the U.S. delegation to this conference. In 1932, Hoover appointed Dawes chair of the American delegation to the Disarmament Conference in Geneva, but he would later resign to become the president of the Reconstruction Finance Corporation (RFC). He sought a large loan from the RFC to help the Central Republic Bank and Trust Company, the former Central Trust Company in which he held a financial interest. Dawes was severely criticized heavily for his actions. Nevertheless, he managed to stabilize Chicago’s banking problems during the year of 1932. His bank would survive and would repay its loan. He resigned this post after he felt that the bank could stand on its own feet. He left to continue business and charitable interests. He wrote three books between the years of 1935 and 1939. He wrote Notes on Vice President (1935), A Journal of Reparations (1939), and Journal as Ambassador to Great Britain (1939). He wrote nine books in all.
Dawes would spend the remaining years of his life at his lakefront home in Evanston, Illinois. He spent time perfecting skills on the flute and the piano. He even composed a melody that Fritz Kreisler, the noted violinist, often played as an encore at his performances. He also worked to establish a grand opera in Chicago. Dawes died at the age of 85 on April 23, 1951 in the library of his home in Evanston.
Charles Dawes was a very active Vice-President. Many Vice-Presidents live in the shadow of the President, but not Dawes. Dawes spoke out for what he believed in, the country and its people, even in light of opposition from Coolidge and many other government officials. Dawes made a career that started in law and business into a strong record of public service, even in light of many derogatory opinions of his career. His work at the Bureau of the Budget set a standard for fiscal responsibility. Any discussion of the subject of German reparations would be incomplete without the plan that bears his name. Dawes stands out among all others of his day in the areas of national and international finance.
Bibliography
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