We’ve all had our moments of despair and frustration as we try to wade through the morass of the Securities Act of 1933 (as amended, of course).
Hopefully, none ever felt so bad as lawyer Phelan Beale did 75 years ago.
After the jump, his tale of woe in a letter from the dawn of the Securities Act, courtesy of Letters of Note.
To set the stage:
Beale was a lawyer and sportsman (both of the hunting/equestrian variety and the with-the-ladies variety) in New York, who ran in a very upper-crust set, despite Southern roots. In the 1920s, he started a firm with his father-in-law John Vernou Bouvier, Jr. The firm was originally known as Bouvier and Beal, and later Bouvier, Caffey, and Beale. Beale and his wife, Edith Bouvier Beale, had a daughter, also called Edith (who liked to say that she would have married Joe Kennedy, Jr. had he not been killed in World War II, which would have made her First Lady, instead of her cousin, Jacqueline Bouvier). Those two women were the subject of the “Grey Gardens” documentary, movie and musical, as debutantes who retreated to a secluded, eccentric life at the mansion Beale bought in the Hamptons.
But back to the part that makes it interesting to the Law Shucks crowd. The Crash of 1929 came perilously close to wiping Beale out personally, and his business suffered for years.
On August 22, 1934 he wrote a letter to his wife, describing the dolorous state of his finances. He laments the personal cutbacks the family will have to make, including taking their sons out of Westminster School and cutting back on the kids’ horseback riding, which some days cost as much as $8! He was one of many affected, though:
Since the great crash in 1929, we have seen many of our friends and acquaintances suffer. Fortunately, this suffering did not come to me until now. My law business has been largely builded on that of an “Exchange Specialist”, and my income was almost entirely derived from this source.
We can only assume that an “Exchange Specialist” is the precursor to today’s securities practitioners. But that’s a lucrative practice (at least when the IPO market isn’t dead), so why was he so negatively affected?
The Stock Exchange legislation on the part of Congress has so reduced the volume of business that Stock Exchange houses are either merging or retiring from business. Few, if any, are earning their expenses. A number of annual retainers that I have enjoyed have been cancelled, and I have been notified that others will be cancelled on the first of the year.
That legislation was presumably the ‘33 Act, which was enacted in May of 1933, and the ‘34 Act, which was enacted just prior to the letter, on June 6, 1934.
Here we are, 75 years later, and the heirs to the Stock Exchange houses are merging and retiring (involuntarily) from business.
What else is the same today?
I am truly in a desperate situation, so much so that Miss Maguire, one of the girls in this office is being let out on next Saturday. Major Norris goes on the 1st of October. In addition thereto, Mr. Vincent who has been with me for twenty years has got to go, for the single reason that I cannot afford to keep him. Even Miss Mahoney, the telephone operator, who likewise has been with me for several years must go through necessity. My three office boys I am reducing to one.
In the end, he’s a man worn out by the five-plus years of struggle and the unpromising future, as he closes morosely:
There is nothing more to write just at this moment, because I must leave in the next five minutes to get the airplane to Washington. I do hope that the machine crashes, because it would be a pleasant exit of a very tired man -
* * *
Here’s the full transcription. Letters of Note has scans of the original letter.
BOUVIER & BEALE
165 BROADWAYCABLE ADDRESS “VERGELIN”
TELEPHONE CORTLANDT 7-2425NEW YORK August 22, 1934
Mrs. Phelan Beale,
East Hampton,
Lon Island, New York.Dear Edith:-
This is a difficult letter to write, but nevertheless it must be done, so here goes:-
Since our marriage I have endeavored to provide you with every luxury, and in this up to the date hereof I think I may say that I have been successful. I will not enumerate the generous gifts that I have made to you, because, after all, this is water over the dam, and I will confine myself to the immediate present.
Since the great crash in 1929, we have seen many of our friends and acquaintances suffer. Fortunately, this suffering did not come to me until now. My law business has been largely builded on that of an “Exchange Specialist”, and my income was almost entirely derived from this source.
The Stock Exchange legislation on the part of Congress has so reduced the volume of business that Stock Exchange houses are either merging or retiring from business. Few, if any, are earning their expenses. A number of annual retainers that I have enjoyed have been cancelled, and I have been notified that others will be cancelled on the first of the year. I am truly in a desperate situation, so much so that Miss Maguire, one of the girls in this office is being let out on next Saturday. Major Norris goes on the 1st of October. In addition thereto, Mr. Vincent who has been with me for twenty years has got to go, for the single reason that I cannot afford to keep him. Even Miss Mahoney, the telephone operator, who likewise has been with me for several years must go through necessity. My three office boys I am reducing to one. There may be other changes as well, and in the same manner I am forced to retrench in every possible way, which means that I cannot return the boys to Westminster School, and I am so writing to the Headmaster. To keep them there costs me about $4,000.00 per annum. I can borrow on my insurance sufficient funds to keep little Edie at Miss Porter’s School for the next year.
I can well understand your bitterness when you read this letter. You have not been extravagant and you doubtless feel that if I had curtailed expenditures, I would not be in my present unenviable position, but as we say in the law, regardless of what may have been, I am at this time faced by a condition and not a theory.
I am not giving up, although at times there is great temptation to take the easiest way out. It will not be the first time that I have met with a major catastrophe. When the war broke out in 1914, all of my German business was destroyed and I found myself facing a situation similar to the present, although then it was not as burdensome as I was unmarried.
I do not intend to ask you to do anything that I would not ask my mother and sister to do. I must arrange for them to occupy less expensive quarters, even though it may mean a boarding house.
I am glad that you have the house in East Hampton, because it is in tip-top repair and may be occupied comfortably the year round. The boys can go to the school in South Hampton. It is possible that when I get the expenses of maintaining my office out of the bone, and I then am able to give eighteen hours a day to my business, free from financial worries that keep me awake at night, I will stage a quick come back, wherefore, your abnegation of remaining in East Hampton may be short-lived.
I do not intend to live in luxury when I am asking you to make a sacrifice. I am going to Washington this afternoon. On my return I will move to more modest and cheaper quarters, such as procuring a room at some bachelor hotel for $50.00 per month.
I do hope that you will appreciate that the contents of this letter should not be broadcasted. You are at liberty, however, to show the same to your mother and father.
I hate like the devil to deprive little Buddy of the pleasure he gets in going horseback riding. Will you ask the boy to give up his riding until next season. The bill from the riding school came in this morning. It is $53.00. In some instances the charge for his rides were $8.00 per day, and in no one day was it less than $3.00. Do not tell the children anything that will alarm them in regard to my financial condition. They are so young that their minds receive an exaggerated and inflamed impression which may have evil effects of a permanent nature. Offer some excuse to the kids about remaining in East Hampton and attending school in South Hampton. Make a game of it, so that they will like the idea. Even with little Edie, you should not confide in her, otherwise she may think that we are headed for the poorhouse to-morrow, and it will destroy all the happiness of her year at Farmington.
There is nothing more to write just at this moment, because I must leave in the next five minutes to get the airplane to Washington. I do hope that the machine crashes, because it would be a pleasant exit of a very tired man -
Your husband,
(Signed, ‘Phelan’)
PB:CL
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This is so interesting. There are a lot of comparisons to be made to today's state of the legal industry during this Great Recession.
Many years from now, someone will repost the articles about Mark Levy, Kilpatrick Stockton's attorney who not only had thoughts of suicide but shot himself in his office here in Washington, DC on April 30,2009. No one working in the legal industry here in DC will ever forget him or how bad the Great Recession is on our country.
Well, Americans failed to learn from their history, so it appears we are doomed to repeat it.