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July 6, 1955 Internal Memorandum Interview with Mr. Samuel Reyburn Mr. Reyburn vas a director of the Federcl Reserve benk of Hew ¥ork for three tenns, serving in all from January 1, 1927 to December 31 > 1933• He came in at the instance of Bcnjfjrin Strong, served through the rest of Strong1 s life and for five years under George Harrison who succeeded Strong after the letter's denfth. He must also hs.ve served under Gates McGarrfih, although this was not mentioned, This interview, which vas not strictly an interview but rather the listening to s virtual monologue, took place in the President's privnte dining 9 room of the Federal Reserve Benk of New York, where Mr. Reyburn was the guest of Mr, Sproul. The fourth person at the table was Dr. John Willlpjns who looked very much better than he did last year. The: men had been talking when I c&ue in, and Mr. Sproui said that Mr. Reyburn was telling them how Mr, Strong and Mr. McAdoo first met in connection with the financing of the Hudson and Manhattan Railroad. Tnis was the tunnel under the Hudson of which someone (Mr. Rhoa.ds ?) spoke just recently. The incident should be looked up, for there seems to be an overtone of distrust with everyone who mentions it* Mr. Reyburn said that it was not that Mr. Strong'thought that McAdoo vas right but that he was an able man. He did not explain further what he might have been right about. It may be that the Bankers1 Trust participated in the financing of the railroad and that Mr. Strong was of service in that capacity. At eny rate, the story is that when the Federal Reserve System was being set up, McAdoo remembered Strong as an able banker end persuaded him to come in. Or it may run the other vay, that when the System was set up and Mr. McAdoo, then Secretary of the Treasuiy/ asked Strong to come to Washington, the latter remembered the promoter of the Hudson and Manhattan as an able man and decided to go. Mr. Reyburn jumped from that incident to 1932 when he told Georae -2- Harrison that the continuing depression called for some such thing ss the country did in 1907> when the bankers got together and persuaded the -President to declare a moratorium (?)• He also told William hotter, a fellow director of the Federal Reserve Bank of flew York. Governor Roosevelt invited him to Albany to a meeting which represented the first tine that presidents of commercial banks had been invited there, but Reyburn did not go. Mr. Harrison went to Washington with a group of Chicago men at the invitation of President Hoover, They held conferences and organized a "company of banks11 to take care of the weak banks. Reyburn1 s comment was that the bankers had foigotten their knowledge of psychology, for no bank would admit it was a weak bank, and therefore no bank would borrow from this company of banks which was meant to save the day. The eventual outcome was that Congress organized the RFC, Mr. Reyburn believed that if Benjamin Strong had lived, something would have been done in the late f 20 ! s which would have saved the situation, presumably before the crash of 1929* From this incident, Mr. Rsyburn was reminded of the German Moratorium t which was declared the previous, year. Early in that year he asked Mr. Harrison when the first instalment was due on the Young Plan and was told, "Next July." His reply was, "Germany can11 pay. Let's have a moratorium on these debts." He was quite sure that the way to have this done was to have France to announce the moratorium. He tried to interest Eugene Meyer in the plan, but Meyer, who was not a German Jew but a French Jew, said he thought the Germans had plenty of money, and would have none of it. Mr. Reyburn then tried to interest Clarence Woolley, a guest and friend of Herbert Hoover, but Hoover was relying on Meyer and refused to listen to Woolley. He was, according to Mr. Reyburn, extremely intolerant of any criticism of his opinions or his plans (Hoover, that is). In this opinion Mr. Sproul heartily concurred. -3Apparentiy, t»ie concern continued rll spring, and Mr. Rsyburn tried various vmys of getting to Hoover with some kind of a messenger who could persurde him a) that there must be v. moratorium and b) that it r.iust be declared by toe French. Mr. Harrison1 s next suggestion was, "Why not get Theodore Vtiitnmrsh? Ted could get awry with it." Mr. Vhitencroh w.s <»n expert on food who had been with Hoover at the time of the feeding of Belgium and who carried on, or so they thought, the same worship of Hoover that had characterized tart operation. As a minor detail in the situation, Mr* Reyburn ocid that ftr. Whitmarsh had bought Celanese at toe time under the influence of Mr, Voolley. He told Mr* Heyburn of this, and Reyburn, vho had sold his Celanese, told Whitmarsh to sell at once. He did sell on** made $15*000. Of this he took $10,000 to buy a Cadillac and c&Ued it "our automobile." Apparently, he end Mr. Reyburn had gay times vith that cor. However, fven this did not have the desired effect. Mr. Reyourn told Vhitmsrsh thfit he wanted him to go to see Hoover. To Mr. Reyburn1 s astonishment, Whitn&rsh answered, "I canft. I don't speak to that damned rascal any more." Tne reason for this decision and this anger on the part of a former disciple of Mr. Hoover w.s not told. About this time, Mr. Eugene Meyer ^ent to Mt. Kisco to rest and cut off his telephone. That very night Mr. Hoover called Mr. Harrison to come down and confer on the subject of the German debts. He had been convinced by one of these messengers (perhaps Mr. Woolley ?) that there must be e moratorium and moreover that France must declare it. He wanted Mr. Harrison to go and talk to him on the subject. Mr. Harrison said, nuite understandably, that he could not go without permission of his board of directors. At that time the Federal Reserve Bank of New York had a series of cocimittees which were appointed when Mr. Strong became ill and which had survived. Mr. Reyburn was on the Committee on Relations with the Board of Governors* He recalled incidentally that the Board -was so angry at Carl Snyder thst they refused to approve his pay* Mr. Harrison and Mr. Reyburn decided that, -while this must be kept a deep secret, they could tell Mr. Oven Young and Mr. Woolley about it and the board could decide that Mr. Harrison vas entitled to go on a European vacation. That plan vas set -when the Credit Anstalt vent to the vail and the vhole of European public finance vas upset. Mr. Thomas Laiaont vent straight to Hoover, and vithout more ado, Hoover declared the moratorium himself. This upset the carefully made diplomatic plan to have the French call for a moratorium and came as a shock and a deadly insult to France. Meanwhile, Senator Joe Robertson vas on a camping party in the vilds. Word vas got to him in such fashion that he agreed not to make the business of the moratorium a political party matter. Thomas Laraont of Morgan end Company vas in daily telephonic conversation vith Europe. Word vas spread through the nevspapers, and the vhole press both in England and the United States vas set to spread the nevs that the French vere going to declare a moratorium. The Hoover action, vithout any consulting of France, therefore came as a shock both to Morgan and to the English. Asked vhy Mr. Hoover failed to call the French, vhether this vas obtuseness or intention or a mistake, Mr. Reyburn and Mr. Sproul both thought that it vas obtuseness. Mr. Reyburn said that Hoover did not knov his international politics, and most men agree that he vas singularly blind at certain moments. Smaller incidents folloved. During World War I William Woodin vas Fliel Commissioner of Nev York and, in that capacity, told Mr. Reyburn that department stores vere not essential and that he vas going to close them up to save fuel. Mr# Reyburn argued vith Mr. Baruch that department stores Kffiffi had an educational function and moreover that they acted as a cheerful element in popular life and should -5be continued. They were not closed* From there Mr. Reyburn jumped to the decora (?,) Committee and the examination of Mr. Morgan. He said that Pecora had 9 or 10 men working on the Morgan files for six weeks. They were not able to turn up more then a single dubious letter. In this letter a member of the Morgan firm had wiitten to Mr. William Woodin in regard to the allocation to him of stock of the Allegheny Corporation. Tne point at issue was the way in which the Morgan concern worked with a list of key men to whom new underwriting of stock vas allocated* George Wnitney was on the stand from Tuesday through Friday, and every morning the newspapers had a new list of men who had taken part in underwritings, as though this were a proof of bribery. Thanks to the letter, Woodin1 s name was on one of these lists. Reyburn was repeatedly mentioned. Reyburn asked the press for half a column to reply* He said that he could not handle the matter in a "yes" or "no" fashion. Finally William Dewart of the Sun said, "Write me a letter about it." Reyburn did so and came forth with a defense of the underwriting system for the promotion of risky and possibly important ventures. The letter was published and greatly cheered the Morgan firm* Mr. Woodin, who felt that his reputation had been tarnished, was suitably grateful at this attempt to restore it. Mr. Reyburn said that Mr. Woodin was not only a musician (a concert of his music was given at the then-new Waldorf Astoria: Hotel when it was opened), but he was also an expert on jewels, and on them made $50,000 to $100,000 a year. Ttie manner of this was that he acted in wealthy circles somewhat as a pawnbroker would act in less imposing sectors of the population. The jewelers like Tiffany and Cartier would not loan on jewels they had sold nor would they re-purchase them when bankers, financiers and important business men found themselves pressed for cash. However, if the pressure was great enough, some clerk would say, "Why donft you see William Woodin?" Woodin would thereupon advance the money either as a loan or as a re-purchase, and his knowledge of jewels was such that he would always manage to re-sell them at more than he, had bought them for or loaned on them. -6Mr.. Woodin was, if I understood Mr. Reyburn correctly, also an expert on Cruikshank and the second best collector of Cruiksnank items in the world. An important collection came on the market, and he thought that he had not enough money to bid on it. However, Reyburn encouraged him to bid, and he got the collection for almost nothing. Thereupon he turned it over for a great deal more than it had cost him* Woodin had always been a Republican, but he got interested in Ai Smith, and through Smith in Roosevelt* "Thus," said Mr. Reyburn, "like Farley, he changed masters." Mr. Reyburn said that he came to.New York in July 3> 1914-* He got a wire from Thomas Cochran, then of the Astor Trust, saying, "Morgan and Co. wants to use you for the next six months to save Lord and Taylor," and would he come for a week-end conference* Mr. Coohranfs house on Long Island had at that time burned, and he was living on a couple of barges off the shore. He took Reyburn up to Norfolk, Connecticut to a twoday conference at which George Case, H* P. Davison and Cochran, then of the Astor Trust, were present. This was July of 1914* Tae men played golf, tennis and bridge. They talked about the New Haven Railroad which had gone into a receivership. Tney also talked about the Federal Reserve Act which had been passed but not yet put into effect. They agreed it was a poor act and that bankers everywhere were being schooled against it. In spite of the fact that Davison was a representative of Morgan and Company, England's closest friend among American bankers, not a word was said about the looming war except that Germany was selling securities. This did not in the least frighten' anybody© Mr* Reyburn, looking back, is convinced that Morgan did not know that a war was looming, and that England herself did not know at the time. He said incidentally that J. P. Morgan finished his education in Germany, and he guessed that it might have been because at that time the condition in British public schools was so closely held that strangers such as. this American banker would not have had power to get his son into the best of them. -7- The last incident which Mr. Reyburn recounted had to do with Russian funds after the Bolshevik Revolution of 1917. Mr. Reyburn was asked by Mr. Thomas Lamont to go on the board of the Guarantee Trust. He was put on the Examining Committee* His job was to look over all the credits outstanding. He found that there was $5 1/2 million of American money in Russia when the Bolsheviks came in, and this was siezed. At the same time, there wes §5*600,000 worth of Russian money in the United States. The Bolsheviks demanded their $5 1/2 million, and the Guarantee (which must have been holding it if the stoiy stands up) refused. "When this was examined, Mr. Reyburn, . "having been a jack-legged lawyer once,11 S8id that the American refusal to pay had fjf> started the Statute of Limitations to work, and that the banks need no longer keep reserves against a loan which was outlawed by that statute. However, this idea was generally refused by the Guarantee Board, and the reserves continued to be held. Eveiything .lay quiet until Franklin Roosevelt came to power and recognized the Communist government of Russia. As a consequence of that recognition, he accepted the Russian plea for payment, and the Russians sued the Guarantee. It was suggested that the officers in charge see Mr. Reyburn who earlier had a good deal to do with this. Search revealed the Reyburn memorandum, but the case was taken to the Supreme Court, end the opinion of that court upheld the Guarantee's position* The $5,600,000 of Russian money did not have to be paid back. Mr. Reyburn has promised to write more of his memoirs for his grandson, a flier, who hopes to go into banking, and for us. He will write on yellow paper and send material to us to be typed. No commitDient was made about regularly extending this courtesy, but it was m clear that Mr. Sproul was pleased to have this particular offer m?de at this particular time. One might have reservations about going very much further with this or'making it a precedent. It may not, of course, have any effect, and we may get no further memoirs. MA:IB
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