Lords of Finance: 1929, the Great Depression, and the Bankers Who Broke the World (73 page)

Finally, I would like to thank my family. My constant companion while writing has been our dog Scout, who took over the armchair in my study. My two daughters, Shabnam and Tara, have now flown the coop, but from afar have humored—and also encouraged—their father in his endeavor to transform himself from investment manager to writer. No one has been a greater champion of that change than my darling wife, Meena. For thirty years, she has been my anchor. It is to her that this book is dedicated.

¹
"Read no history": Disraeli,
Contarini Fleming
, 141.

²
"I feel I want a rest": "Norman Sails Unexpectedly for a Vacation in Canada,"
New York Times
, August 16, 1931.

³
"monarch of [an] invisible empire": Kathleen, Woodward. "Montagu Norman: Banker and Legend,"
New York Times
, April 17, 1932.

⁴
"the citadel of citadels" and "Montagu Norman was the man": Monnet,
Memoirs
, 95.

⁵
"the most exclusive club":
New York Herald Tribune
, July 10, 1927.

⁶
"We are today": Keynes, J. M., "An Economic Analysis of Unemployment?" June 22, 1931, in
Collected Writings
, 13: 343.

⁷
"In 1931, men and women": Toynbee,
Survey of International Affairs
, 1.

⁸
"Unless drastic measures are taken": "Ein' Feste Burg."
Time
, July 27, 1931, and Howe,
World Diary
, 111.

⁹
It was rumored: Taylor,
English History
, 290.

¹⁰
"the wisest man": Letter from Lamont to Norman, December 4, 1946, cited in Schuker,
The End of French Predominance in Europe
, 291.

¹¹
"might have stepped out": Snowden, Philip, "The Governor of the Bank of England,"
The Banker
, February 1926.

¹²
"Everyone I meet": Hassall,
Edward Marsh
, 570.

¹³
"second rate people," "the Jew is always a Jew": Chernow,
The House of Morgan
, 215, 310.

¹⁴
The pound sterling: There were 480 grains to a troy ounce, a measure of weight some 10 percent greater than a conventional ounce.

¹⁵
The totality of gold: The total amount of gold mined until 1913 was calculated to be 750 million ounces, or 22,500 tons. See Triffin.
The Evolution of the International Monetary System
, Table 17, 79. Because a cubic foot of gold is estimated to weigh about half a ton, this would amount to 45,000 cubic feet, equivalent to a cube with sides of about 35 feet.

¹⁶
"You came to tell us": Bryan,
The First Battle: A Story of the Campaign of 1896
, 199–206.

¹⁷
"What an extraordinary episode": Keynes,
Collected Writings: The Economic Consequences
, 2: 6.

¹⁸
"a magnificent stupid honesty": Wells,
The Work, Wealth, and Happiness of Mankind
, 398.

¹⁹
Even Kaiser Wilhelm: "Successful War No Advantage to Victor Says Angell,"
New York Times
, June 15, 1913.

²⁰
In February 1912: Committee of Imperial Defense, Testimony of Sir John H. Luscombe, Chairman of Lloyds,
Report and Proceedings of the Standing Sub-Committee for the Committee of Imperial Defense on Trading with the Enemy
, 1912, paragraphs 120–143.

²¹
"new economic factors," "commercial disaster": Esher,
Journals and Letters
, 211–28 and 229–261, quoted in Tuchman,
Guns of August
, 10.

²²
"Anybody who goes": Samuel Goldwyn quote from
Bartlett's Familiar Quotations
, 695

²³
"feeling far from well": Letter to Caroline Brown from Boyle,
Montagu Norman
, 98.

²⁴
"I feel a different person": Clay,
Lord Norman
, 44.

²⁵
He would end up embracing: Boyle,
Montagu Norman
, 87.

²⁶
"with tears in his eyes": McEwen,
The Riddell Diaries
, 85.

²⁷
"the coming conflict": Geiss,
July 1914: The Outbreak of the First World War
, Document 162.

²⁸
"acute anxiety": Wilson and Hammerton,
The Great War
, 26.

²⁹
"stood nervously fingering their notes": "London Exchange Closes Its Doors."
New York Times
, August 1, 1914.

³⁰
"although many hundreds of people," "traditionally phlegmatic and cool":
Times
, August 1, 1914.

³¹
Nevertheless, just in case: "English Bank Act to Be Suspended."
New York Times
, August 2, 1914.

³²
"in case of an outbreak": Memorandum by Sir Felix Shuster, director of the Union Bank of London, circulated to the Clearing Bankers' Gold Reserves Committee quoted in Kynaston,
The City of London: Golden Years
, 588.

³³
"European prospects very gloomy": Clay,
Lord Norman
, 81.

³⁴
"Financiers in a fright": Lloyd George,
War Memoirs
, 111.

³⁵
"shook his fist": Sayers,
The Bank of England
, 75.

³⁶
"I have been at work": Boyle,
Montagu Norman
, 98.

³⁷
One of those who: Chernow,
The Warburgs
, 153.

³⁸
The famously indiscreet kaiser: Ferguson,
The Pity of War
, 191.

³⁹
There was also talk: Wilson and Hammerton,
The Great War
, 68.

⁴⁰
"considerably outshone his fellow directors": Somary,
The Raven of Zurich
, 71.

⁴¹
"curiously stiff gait": Bonn,
Wandering Scholar
, 303.

⁴²
"a restless wanderer": Schacht,
My First Seventy-six Years
, 24.

⁴³
"sentimental, gay and full of feeling": Goldensohn,
The Nuremberg Interviews
, 231.

⁴⁴
"Germany's steady advance": Schacht,
My First Seventy-six Years
, 129.

⁴⁵
a large "howling mob": Tuchman,
The Guns of August
, 129.

⁴⁶
Bizarre rumors spread: Wolff,
The Eve of 1914
, 524.

⁴⁷
"The next time": Charles A. Conant, "How Financial Europe Prepared for the Great War,"
New York Times
, August 30, 1914.

⁴⁸
"a tremendous solemnity": Schacht,
My First Seventy-six Years
, 60.

⁴⁹
"Show me a hero": F. Scott Fitzgerald quote from
The Yale Book of Quotations
, 274.

⁵⁰
Strong had been elected president: "E. C. Converse Drawing Out,"
New York Times
, January 9, 1914.

⁵¹
He had left the United States: "Cloud and Rain Mar Berlin Season,"
New York Times
, June 14, 1914.

⁵²
Finished from floor to ceiling: "No Morgan Bower atop Bankers Trust,"
New York Times
, May 16, 1912.

⁵³
In 1912, during the Pujo Committee hearings: "Five Men Control $368,000,000 Here,"
New York Times
, December 11, 1912.

⁵⁴
Anxious to avoid: "Bankers Here Confer on War,"
New York Times
, July 31, 1914.

⁵⁵
"The credit of all Europe": Chernow,
House of Morgan
, 185.

⁵⁶
In later years: Nicolson,
Dwight Morrow
, 111.

⁵⁷
In May 1905: "Mrs. Strong Kills Herself,"
New York Times
, May 11, 1905.

⁵⁸
"And to think": Strouse,
Morgan
, 15.

⁵⁹
they were exactly the type of young men: Strouse,
Morgan
, 576.

⁶⁰
Besides Davison himself: The only two participants who wrote about the Jekyll Island meeting were Frank Vanderlip in his autobiography
From Farm Boy to Financier
and Paul Warburg in a communication to Thomas Lamont reproduced in Thomas W. Lamont,
Henry P. Davison
, 97–101. The first contemporary description, though secondhand, appeared in an article by Bertie Charles Forbes, who later founded
Forbes
magazine, in
Current Opinion
, December 1916, 382. An account is also given in Stephenson,
Nelson Aldrich.
Recent descriptions are in West,
Banking Reform and the Federal Reserve
, 222–224; Chernow,
The Warburgs
, 133–134; and Michael A. Whitehouse, "Paul Warburg's Crusade to Establish a Central Bank in the United States" in
The Region
, Federal Reserve Bank of Minneapolis, May 1989.

⁶¹
"the highest pitch of intellectual awareness": Vanderlip,
From Farm Boy to Financier
, 216

⁶²
Reports were rife: "Army of Refugees Flees to London,"
New York Times
, August 3, 1914.

⁶³
He immediately organized: "Exiles Meet in London,"
New York Times
, August 4, 1914.

⁶⁴
Strong persuaded: "Gold Cruiser to Sail Today,"
New York Times
, August 6, 1914.

⁶⁵
"Wherever he sat": Chandler,
Benjamin Strong
, 48.

⁶⁶
"Jekyll and Hyde personality": Interviews with Leslie Rounds,
Committee on the History of the Federal Reserve System
, Washington: Brookings Institution, 1954–55

⁶⁷
If the Aldrich Plan of a single central bank: Interviews with William McChesney Martin Sr.,
Committee on the History of the Federal Reserve System
, Washington: Brookings Institution, 1954–55.

⁶⁸
The salary he would receive: "Bank Head's Pay $30,000,"
Chicago Daily Tribune
, October 27, 1914.

⁶⁹
"Ben is not going to live": Federal Reserve Bank of New York, "Biography of Benjamin Strong by his Son, Benjamin Strong." 1978

⁷⁰
Only the year before: Details of Strong's apartment at 903 Park Avenue from "The Real Estate Field,"
New York Times
, January 15, 1914.

⁷¹
"There isn't a bourgeois alive": Gustav Flaubert quote from
Bartlett's Familiar Quotations
, 527

⁷²
It was the latest in a long chain: Berenson,
The Trial of Madame Caillaux
, 2.

⁷³
the École Libre des Sciences Politiques: Zeldin,
French Passions: Intellect and Pride
, 343.

⁷⁴
His family, minor gentry: Dutron de Bornier from Pierre Lyautey, "Eloge de M. Moreau,"
Comptes Rendus Mensuels de L'Académie des Sciences Coloniales, Séance du 15 Octobre 1954
, Paris, 1954. Joseph Marie-François Moreau from "Leur Vacances,"
Le Petit Parisien
, September 4, 1927.

⁷⁵
Although the examination system had made: Zeldin,
French Passions: Ambition and Love
, 118.

⁷⁶
To be
chef de cabinet
: For role of
cabinets ministériel
, see Keiger,
Raymond Poincaré
, 34.

⁷⁷
"increased abnormally": Brogan,
France Under the Republic
, 128.

⁷⁸
"moral collapse": Moreau,
The Golden Franc: Memoirs
, 17–18.

⁷⁹
Over the next eight years: Moreau's career at Banque d'Algérie from Pierre Lyautey, "Eloge de M. Moreau,"
Comptes Rendus Mensuels des L'Académie des Sciences Coloniales, Séance du 15 Octobre 1954
, Paris, 1954.

⁸⁰
When he thought back: Moreau,
The Golden Franc: Memoirs
,12.

⁸¹
It was there: Jacques Rueff. "Preface to the French Edition," in Moreau,
The Golden Franc: Memoirs
, 2.

⁸²
In any other year: Adam,
Paris Sees It Through
, 15.

⁸³
"to keep it exciting": "Leur Vacances,"
Le Petit Parisien
, September 4, 1927, and Giscard D'Estaing, Edmond, "Notice sue Emile Moreau,"
Comptes Rendus Mensuels de L' Académie des Sciences Coloniales: Séance du 1 Decembre 1950
, Paris, 1950.

⁸⁴
"Brawls were now breaking": Adam,
Paris Sees It Through
, 12–13.

⁸⁵
At the first sign: "French Gold Famine,"
Times
, July 30, 1914.

⁸⁶
That afternoon:
Le Figaro
, July 31, 1914

⁸⁷
"All classes of society": "Vanished Gold,"
Times
, August 1, 1914.

⁸⁸
"immense and perilous duties," "formidable test," "calmness, vigilance, initiative," and "all [his] authority": "Circulaire Bleu" from the Banque de France,
Le Patrimonie
, 423.

⁸⁹
An hour later: "Paris Has Given Up All Hope of Peace,"
New York Times
, August 2, 1914.

⁹⁰
Within days of the outbreak: Cronin,
Paris on the Eve
, 441–42, and Adam,
Paris Sees It Through
, 21.