Lords of Creation
Page 45
In Chapter VII (“War”) I draw heavily upon the mass of information carefully assembled and clearly set forth in Noyes’s admirable book on The War Period of American Finance. My chief sources on the beginnings of the Federal Reserve, aside from Noyes, were The Federal Reserve System, by Paul M. Warburg (Macmillan, 1930), and Lamont’s life of Davison (cited above); the latter book was of course a prime source on the Morgan war financing. The Bryan-Morgan letter is taken from Walter Millis’s Road to War (Houghton Mifflin, 1935). The war profit figures are from Moody’s and from annual corporate reports as published with the Commercial and Financial Chronicle, except that the government calculation of the Steel Corporation’s profits and the figures for Calumet & Hecla and Utah Copper are from the Nye Committee report of 1935, to accompany H. R. 5529 (To Prevent Profiteering in War: 74 Congress, 1st session, Senate Report 577). The Morgan quotation about “American principles of liberty” is from a letter to Gary, New York Times, Sept. 23, 1919. The labor union figures are from Recent Social Trends in the United States, The Report of the President’s Research Committee on Social Trends (McGraw-Hill Book Co., 1933), volume 2, the chapter on labor. The estimate of the increase in the number of stockholders is from Berle and Means, p. 56 and p. 368–9.
In Chapter VIII (“The Seven Fat Years”) my debt to Messrs. Berle and Means is heavy; they have contributed the best still picture, so to speak, of the process of which my book attempts to take a sort of moving picture, and I have used their figures and analyses at length. On the fortunes of the reform laws during the Seven Fat Years, my chief obligation is to Hacker and Kendrick. On codes of practice, to “Whose Child is the NRA?” by John T. Flynn, Harper’s Magazine, Sept., 1934. On corporate publicity, to The Propaganda Menace, by Frederick E. Lumley (Appleton-Century, 1933). On the lot of the economic heretic, to Middle-town, by Robert S. Lynd and Helen Merrell Lynd (Harcourt, 1929), a book which no historian of that period will be able to do without. On the nature and measurement of prosperity during the Seven Fat Years, to Recent Economic Changes, The Report of the Committee on Recent Economic Changes of the President’s, Conference on Unemployment (McGraw-Hill Book Co., 1929); to the highly useful chapter by Edwin F. Gay and Leo Wolman on “Trends in Economic Organization” in volume I of Recent Social Trends in the United States (see above), which was also valuable later on banking trends; and to America’s Capacity to Consume, by Maurice Leven, Harold G. Moulton, and Clark Warburton (Brookings Institution, 1934). The estimates of the workers’ share of the fruits of efficiency are derived from Recent Economic Changes, II, 653–654; for the cost of living meanwhile, see Recent Social Trends, II, 820. The figures on banking concentration are mostly from Concentration of Control in American Industry, by Harry W. Laidler (Crowell, 1931). The figures attributed to N. R. Danielian on holding-company domination of utilities are from an article in Harper’s Magazine, June, 1935. The data on Dodge financing and Cities Service stock are from Berle and Means, 75–76. The reference to Delaware corporation privileges is based on a pamphlet, “Pointers on the Formation of Delaware Corporations,” issued by the Delaware Registration Trust Co., 1931 edition. The data on the Milwaukee receivership are from The Investor Pays, by Max Lowenthal (Knopf, 1933).
In Chapter IX (“Building the Pyramids”) my best source on Insull was a series of articles by John T. Flynn in Collier’s, beginning Dec. 3, 1932. This is the basis of my account of the Middle West financing in 1912. The data on service contracts (Insull and other) are from “Certain Aspects of Utility Service Contracts,” by Norman S. Buchanan, reprinted from the Journal of Business of the University of Chicago, Apr., 1934; the “piano-rug” incident in the Insull system is from N. R. Danielian’s “From Insull to Injury,” Atlantic Monthly, Apr., 1933. The account of the stock market operations in Insull Utility Investments is based on the analysis in Flynn’s Security Speculation (cited above). On financial practices in the utility systems I am indebted also to William Z. Ripley’s Main Street and Wall Street (Little, Brown, 1932). Wherever possible I have gone back of these sources to the endless evidence in that Brobdingnagian Federal Trade Commission document which goes by the gentle title of Utility Corporations: Letter from the Chairman of the Federal Trade Commission transmitting in response to Senate Resolution No. 83 a monthly report on the electric power and gas utilities inquiry (71 volumes from 1928 to early 1935, and more coming!). As for the Van Sweringens, my principal source, aside from magazine articles in Fortune and elsewhere, is a document to which I shall refer from now on simply as SEP: namely, Stock Exchange Practices: Report of the Committee on Banking and Currency pursuant to S. Res. 84, 72d Congress, and S. Res. 56 and 97, 73d Congress: Report No. 1455, Senate, 73d Congress, 2d Session. This document, which is a compact report of what is now generally called the Pecora investigation, contains a clear account of the steps in the Van Sweringen financing. My analysis of the Van Sweringen pyramid is based on a chart in Berle and Means, 74; my source for the Cleveland bank incident is SEP, 319; for the Missouri Pacific financial incidents, “The Story of the Missouri Pacific,” by Max Lowenthal, Harper’s Magazine, Dec., 1934.
In Chapter X (“Bankers, Salesmen, and Speculators”) I have made much use of the above-mentioned chapter in Recent Social Trends (for the general changes in banking) and of SEP. For alterations in the national money supply, I drew upon Laughlin Currie’s The Supply and Control of Money in the United States (Harvard Economic Studies, vol. XLVII, Harvard University Press). The Barton article on Charles E. Mitchell appeared in the American Magazine for Feb., 1923. For security selling methods, see SEP, 167; and Scapegoats, by Julian Sherrod (Brewer, Warren, & Putnam, 1931). On the facts of banking developments in California my principal source was a mimeographed report on branch banking in California prepared by the Federal Reserve Committee on Branch, Chain, and Group Banking (1932). For Detroit group banking operations, SEP, 247. For the story of the Bank of United States, Little Napoleons and Dummy Directors, a well written and clear account by M. R. Werner (Harper, 1933). For Cleveland banks in real estate, SEP, 295, 317. For the Wiggin transactions in Chase stock, SEP, 188; for his testimony, SEP, 184.
In Chapter XI (“Into the Stratosphere”) most of the specific incidents are from SEP: the Pennroad financing, 113; Morgan tax payments, 321, gain in net worth, 223; U. S. and Foreign Securities, 334–348; United Corporation option warrants, 103–4, 117–8; Sinclair stock operation, 65–6; Radio, 47; General Asphalt, 67; Underwood-Elliott-Fisher, 193; brokers’ loans by corporations, 16. For data on the origin of common stock of corporations, Flynn’s Security Speculation is worth consulting; his views have been the target of much criticism, but they seem to me stronger on the admittedly partial evidence than his critics charge. For the details of the American Commercial Alcohol stock operation of 1933, I am indebted to this same book. I should have told the story of the rising bull market—and of the Panic of 1929—much more fully in these pages had I not already told it in Only Yesterday.
In Chapter XII (“The Overlords, 1929”) much of the information about the fifty men was collected for me by Sanderson Vanderbilt. (The arrangement of it and the generalizations are of course my own.) The quotation from Mr. Justice Stone may be found in the Harvard Law Review, Nov., 1934.
In Chapter XIII (“Downfall and Confusion”) I am under great obligation to George Soule for his acute analysis of the decline of 1929–33 and of Hoover’s policy in The Coming American Revolution (Macmillan, 1934). The figures on dividend payments in 1932 are from an article by Stuart Chase in the New Republic, Jan. 9, 1935, which in turn was based on Internal Revenue figures. The data on the trend of interest payments, dividends, wages, etc., are from “National Income, 1929–1932,” by Simon Kuznets, which is Bulletin 49 of the National Bureau of Economic Research; on the growth of internal debt, from The Internal Debts of the United States, edited by Evans Clark (published for the Twentieth Century Fund, Inc., by Macmillan, 1933); on liquid claims, from Liquid Claims and National Wealth, by Adolf A. Berle, Jr., and Victor
ia J. Pederson (Macmillan, 1934). Gardiner C. Means’s pamphlet on industrial prices was printed as Industrial Prices and their Relative Inflexibility: Letter from the Secretary of Agriculture transmitting in response to Sen. Res. 17, a report relating to the subject of industrial prices and their relative inflexibility, 74th Congress, 1st session, Doc. 13. As to the banking collapse of 1933, I found 28 days: A History of the Banking Crisis, by C. C. Colt and N. S. Keith (Greenberg, 1933), very helpful.
In the last chapter (“All Change”) I do not think there are any sources which require special mention—except perhaps that the quotation about the conflict between capital and labor, in my discussion of opinion on the Left, is from The Economic Consequences of the New Deal, by Benjamin Stolberg and Warren Jay Vinton (Harcourt, 1935). I have not attempted to carry the story beyond the Supreme Court’s decision at the end of May, 1935. Whatever was undetermined at that time—the fate of bills then pending, the results of the decision itself, and, indeed, the whole economic fate of America—is left, as it were, suspended in mid-air.
In closing this memorandum of obligations, I wish to express my particular gratitude to Anne Jones Richter for a long labor of copying; to Rollin Alger Sawyer and his aides at the New York Public Library for help at many points; and to various people for very kindly reading parts of my manuscript in first draft and suggesting corrections and revisions (they represent divergent points of view; I have not been able to carry out all their suggestions, and for this reason I am all the more anxious that none of them should be thought of as having approved what I have written): John T. Flynn, Stuart Chase, Guy Greer, N. R. Danielian, Max Lowenthal, C. C. Colt, Donald K. Evans, and W. Rufus Brent; Junius S. Morgan, Thomas W. Lamont, and other members of the firm of J. P. Morgan & Co.; and Cass Canfield, Ordway Tead, and other associates of mine at Harper & Brothers.
For helpful criticism and encouragement by my late mother, Alberta Lewis Allen, by my wife’s mother, Letitia C. Rogers, and above all by my wife, Agnes Rogers Allen, I cannot begin to express my gratitude.
FREDERICK LEWIS ALLEN
Scarsdale, New York
June 25, 1935
INDEX
Adams, Samuel Hopkins, 150
Adamson Act, 194
Addicks, J. Edward, 13
Addyston Pipe Co. case, 66
Agricultural Adjustment Administration, 435
Aldrich Bill, 198, 199
Aldrich, Nelson, 67, 198
Aldrich-Vreeland Act, 195, 198
Alleghany Corp., 298–303, 346, 360, 417
Amalgamated Copper Co., 60, 72, 116
Amalgamated union, 35
American Bankers Assn., 452
American Bridge Company, 14, 29
American Can Co., 177, 235, 417
American Commercial Alcohol Corp., 354–356
American Commercial Alcohol pool, 354–356, 444
American Federation of Labor, 146, 147, 152, 161, 228, 447
American Gas & Electric Co., 289
American Ice Co., 117
American Sheet Steel Co., 14, 28
American Steel & Wire Co. of Illinois, 11
American Steel & Wire Co. of New Jersey, 11, 14, 28, 29
American Steel Hoop Company, 14, 28
American Sugar Refining Co., 163
American Telephone & Telegraph Co., 177, 248, 249, 399, 417, 462
American Tin Plate Company, 14, 28
American Waterworks & Electric system, 272
Anaconda Copper Co., 317, 318, 358
Anderson, Arthur M., 368
Androscoggin Corporation, 279
Androscoggin Electric Co., 279
Appeal to Reason, The, 152
Archbold, John D., 66, 74
Associated Gas & Electric system, 272, 287–291
Astor, John Jacob, 104
Astor Trust Co., 177
Astor, Vincent, 368, 370, 375
Astor, Mrs. William, 99–101, 103, 109, 371
Atchison, Topeka, & Santa Fé R. R., 44
Atterbury, W. W., 368
Bacon, Robert, 24, 53
Baer, George F., 91
Baker, George F., 83–87, 89, 95, 99, 105, 106, 108, 125, 128, 129, 135, 136, 140, 174–180, 187, 188, 200, 297, 298, 367, 368, 373
Baker, George F., Jr., 368, 370, 375
Baker, Hugh, 318
Baker, Newton D., 195
Baker, Ray Stannard, 150
Baldwin Locomotive Co., 216
Balkan War, 169
Baltimore & Ohio R. R., 296
Bancitaly Corp., 322–324
Bank of America (in Los Angeles), 322
Bank of America (in New York), 323, 324
Bank of America N. T. & S. A., 323, 325
Bank of Commerce, 326
Bank of England, 113
Bank of Italy, 320–323, 350
Bank of United States, 328–332, 408
Bankers Trust Co., 79, 176, 177, 200, 396
Banking Panic of 1933 423–429
Bankus Corp., 329, 330
Barney, Charles T., 122, 126, 142
Barron, Clarence, 49, 71, 81, 172
Barton, Bruce, 304, 312, 314
Bartow, Francis D., 368
Baruch, Bernard M., 368
Behn, Sosthenes, 368
Bellamy, Edward, 147
Berenson, Bernard, 106, 108
Berle, Adolf A., Jr., 239, 240, 244, 300, 408, 462
Bernet, J J., 295, 299
Berwind, Edward J., 368
Bethlehem Steel Corp., 39, 197, 207 208
Beveridge, Senator Albert J., 3
Boom of 1919–20 216, 217, 220
Borah, William E., 152, 365
Boston & Maine R. R., 173
Bragg, Thomas, 354
Brice Committee, 45
Brooks, Phillips, 183
Brush, Matthew C., 368, 440
Bryan, William J., 3, 18, 19, 85, 145, 189, 203, 449
Buchanan, Norman S., 247, 289
Burlington R. R. (see Chicago, Burlington, & Quincy R. R.)
Burr, Anna Robeson, 108, 122
Burroughs, John, 154
Byllesby system, 272
Calumet & Hecla Mining Co., 209
Cannon, Joseph G., 85
Carlisle, Floyd L., 368
Carnegie, Andrew, 1, 14–21, 23, 26–29, 37–39, 4, 57, 367–380
Carnegie, Mrs. Andrew, 26
Carnegie Steel Co., 1, 15, 20, 21, 26–29
Cassatt, Mary, 106
Central Maine Power Co., 279
Central Pacific R. R., 45
Chamber of Commerce, U. S., 453
Chase National Bank, 176, 177, 259, 323, 326, 332–335, 356, 396, 440
Chase Securities Corp., 333–335, 356, 440
Chesapeake & Ohio R. R., 297, 299, 300, 350
Chesapeake Corp., 299, 300
Chicago & Alton R. R., 48, 77
Chicago, Burlington, & Quincy R. R., 50–52, 56, 64, 70, 81
Chicago, Milwaukee, & St. Paul R. R., 257, 258
Chrysler Corp., 243
Chrysler, Walter P., 357
Churchill, Lord Randolph, 105
Cities Service Co., 254, 272, 358
Clark, Evans, 403
Clayton Act, 190, 191, 194, 226
Clearing House, New York, 119–123, 128, 132, 133, 136, 142
Clews, Henry, 72, 83, 97, 98, 101
Cochran, Thomas, 345, 368
Commercial & Financial Chronicle, 53, 197, 359, 360
Commissioner of Corporations, U. S., 30
Commonwealth Edison Co., 278
Comstock, William A., 424
Conneaut, 16, 18
Consolidated Steel & Wire Company, 11, 29
Continental Trading Co., 261
Coolidge, Calvin, 222, 229, 297, 350, 360, 365, 391, 410
Corporation Securities Co., 247, 279, 280, 284, 285
Coughlin, Father, 449
Council of National Defense, 195
Courtelyou, George B., 125, 12
9–132
Couzens, James, 424
Creel, George, 195
Crocker, William H., 368
Crowninshield, Frank, 101, 102
Crucible Steel Co., 216
Currie, Lauchlin, 309
Curtis, Cyrus H. K., 368
Cutten, Arthur W., 356, 440
Czolgosz, 66
Danielian, N. R., 244, 277, 278, 289
Darrow, Clarence, 152
Davis, Arthur V., 368
Davison, George W., 368
Davison, Henry P., 127, 138, 176, 198, 200, 201, 203, 344
Dawes, Charles G., 365, 417
Day, Clarence, 92
Debs, Eugene V., 152, 161
Decies, Lord, 105
Delaware corporations, 254–257
Dennison, Henry S., 384
Depew, Chauncey, 151
Depression of 1921 216, 217, 219
Detroit Automobile Co., 22
Detroit Bankers Co., 325, 326
Dewey, Admiral George, 2
Dill, James B., 8
Dillon, Clarence, 342, 343, 346, 349, 368, 370
Dillon, Read & Co., 254, 342, 343, 358, 460
Dodd, Samuel C. T., 6, 7
Dodge Brothers, 254
Doherty, Henry L., 254
Doherty, H. L. & Co., 254
“Dooley, Mr.,” 33, 67, 95
Drew, Daniel, 12
Drexel & Co., 337
Dunne, Finley Peter, 33
du Pont, A. Felix, 368
du Pont, Eugene, 368
du Pont, Eugene E., 368
du Pont, E. I., de Nemours & Co., 207–209
du Pont, H. F., 368
du Pont, Irénée, 368
du Pont, Lammot, 368
du Pont, Pierre S., 365, 368, 370
Durant, William C., 170, 357
Duveen, Joseph, 108
Eaton, Cyrus S., 285
Ecker, Frederick H., 368
Edison, Thomas A., 267, 268, 370
Electric Boat Co., 197
Electric Bond & Share Co., 82, 171, 272, 288, 290, 358
Electric Management & Engineering Corp., 274, 275
Electrical Securities Corp., 171
Elkins, William L., 13, 83
Empire State Gas & Electric Assn., 291
Endicott, Henry B., 384
Equitable Life Assurance Society, 176, 184