Full text of Committee on the History of the Federal Reserve System : Memoirs of Fred I. Kent (1955), Entry 169, Box 1, Folder 1

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The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

The attached material was dictated and read
by Mr. Fred I. Kent, beginning in the late Spring of
1954 and ending the first part of October 1954.
Mr. Kent prepared this work for the Bankers
Trust Company at the suggestion ofMr. Herbert Simms»

INDEX
Travelers Checks

1 to 7

Federal Reserve System

7 to 9

Senate Committee

9 to 10

Pujo Investigation

World War I - American Committee

11 to 23

Gold for England

23 to 33

Mr. Conversed Oil Painting

Summary of cablegrams between Mr. Kent
and Mr. Strong of B. T. Co.

35 to 38

Copy of letter from Ambassador Myron T. Herrick 39
Copy of Resolution passed by London Committee

Copy of London Resolution

Director of the Division of Foreign Exchange
of the Federal Reserve Board (1917)

Indian Rupee

Spanish Pesetas
Attempts to Break Regulations
Personality

50
50
51

Experience with a Politician

The Crooked Senator

Parker Willis Book Reference

Harry

Dexter White

Baron d'Neuflizes

Italian Lira

Paris Branch of Bankers Trust Company

Reparation Commission, Organization Committee

International Chamber of Commerce

INDEX

- page 2

Mussolini

Pope Pius X.

Poincare

Hungary

•

Financial Adviser to the War Department

Austria

Washington Conference

Other Japanese Matters

Mr. Araki

Philippine National Bank

Peru

England Went Off the Gold Standard

108

Siam

110

President Roosevelt

111

Advisory Committee of the New York Stock Exchange

116

Robert Dollar Award

119

Chamber of Commerce of the United States

122

Cotton Bill of Lading Committee

125

National Foreign Trade Council

126

Conference of National Organizations

129

National Industrial Conference Board

131

American Arbitration Association

134

Transportation Association of America

135

American Bankers Association

136

American Institute of Banking

140

Mr. Prosser

141

New York University
Copy of Citation from New York University

142
144

INDEX

- page 3

Business Advisory Council, Dept, of Commerce

145

Merchants* Association now called
Commerce and Industry Association of New York

146

Chamber of Commerce, State of New York

148

Honorary Diplomas and Crosses Awarded following
World War I
Copy of translation of letter from Henry Berenger,
French Ambassador to United States

149
153

Copy of letter from Brianz of France

154

Copy of letter from Albert Strauss of Federal
Reserve Board

156

Copy of letter from W. P. G. Harding, Governor
of Federal Reserve Board

157

Copy of letter from J. B« Bruingate of India
Office, London

158

In the fall of 1908 while I was manager of the Foreign Department of the First National Bunk of Chicago I became associated
with the American Bankers Association and was made Chairman of the
Committee on Express Companies1 travelers checks and money orders.
The banks were complaining of the competition of the Express
Companies which put out travelers checks and issued money orders and
did a competitive banking business without being subject to banking
laws or taxes.

In carrying on this work it soon became evident that

the bankers themselves in order to be able to compete must be in position to issue travelers checks and that it might have great advantages
to the bankers if those in small towns and cities also had this ability.

Therefore, as Chairman of the Committee of the American Bankers

Association I worked out a system under which bankers, members of the
American Bankers Association, could arrange to issue travelers checks
over their own names that were protected by a central office with
whom they made arrangements.
The idea of this system and the detail of its handling were
worked out by the Committee of which I was Chairman and passed upon
and approved by the American Bankers Association Executive Council.
Mr. Henry Davison, Mr. Thomas Lamont and Mr. Benjamin Strong,
Directors of Bankers Trust Company of New York, went over the system
and decided that as the Bankers Trust Company was a bankers bank, it
would be in line for them to apply to the American Bankers Association
for appointment to handle its travelers check system.

It is my under-

standing that Mr. Lamont handled the whole matter although I was in
the First National Bank of Chicago at the time.

In any event, the

Bankers Trust Company obtained the authority from the American Bankers

Association to develop the traveler cli'i-jk system.
One day in the fall cf 1908 I received a telegram from Mr.
Lamont asking me if I could come to New York immediately.
As I knew of no reason w'.iy I should go to New York I showed
the telegram to Mr. James 3. Forgan: president of the First National
Bank of Chicago, and asked him if 1'u knew what the purpose was back
of the telegram.

He said, "No, but T think you had better go."

And

I therefore wired Mr. Lamont that I would do so.
That afternoon I left on the Twentieth Century for New York
and went immediately to Mr. Lamont!s office in the Bankers Trust Company which at that time was situated at No. 1 Wall Street.

Mr. Lamont

told me that Mr. Henry P. Davison who was then Vice President of the
First National Bank of New York wanted to see me and that he would
telephone when he was ready, probably around ten o f clock.

Mr. Davison

telephoned about that time and Mr. Lamont and I went over to see him*
Mr. Davison told me that the first of January he was going
to resign from the First National Bank of New York and become a partner of J. P. Morgan & Company and that Mr. Lamont was to leave the
Vice Presidency of the Bankers Trust Company and become Vice President
of the First National Bank of New York in his place.

Then he stated

that he would like to have me come on from Chicago and go into the
Bankers Trust Company as a Vice President, organize and put in a
foreign department and develop the travelers check system of the
American Bankers Association which Mr. Davison had advised the American Bankers Association he would like to have the Bankers Trust Company undertake and carry out.

Told Mr. Davison that I would like to

give him my decision after returning to Chicago with which he
agreed.

Then Mr. Lamont took me over and introduced me to Benjamin
Strong, Jr., who arranged a meeting at one of the clubs with Mr.Daniel
E. Pomeroy and we three discussed conditions at a dinner that night.
On this day I established what has proved to be the greatest friendships of my life with Mr = Henry Davison, Thomas Lamont., Benjamin
Strong, Jr. and Daniel Pomeroy.

Of these men only Mr. Pomeroy is

still living and I have had a great respect and affection for him
from the moment we first met*
Following this meeting I returned to Chicago and saw Mr.
Forgan, the president of the First National Bank of Chicago*

Told

him that Mr. Davison, whom he knew well, wanted me to go to New York
and organize a foreign department for the Bankers Trust Company as a
vice president.

Mr. Forgan, a dour Scotsman, after hearing what I

had to say, asked me point blank:
you?"

"How much are they going to pay

This was quite a shock because the subject of salary had never

come up between any of us in New York and when I told him that I did
not know he said, "Well, then, how am I going to bid for you?"

replied, "I do not know how you can bid for me."
Then I said to him, "My connection with the First National
Bank of Chicago has been a most wonderful one.

I came into the bank

in 1886, have never had any friction or complaints and have made many
friends, and I am really very sorry to leave.

However, the work

which I am doing in the foreign department as manager has given me an
insight into the whole development of foreign trade from the grass
roots side.

In New York with this knowledge I can go forward and

learn the intricacies of our trade with foreign countries and it
should be most interesting."

He then said, "But Fred, ycu are going to a strange institution and you do not know what they are going to pay you.
heard of such a thing."

I never

I replied, "Mr. Forgan, I have every con-

fidence in the men in the Bankers Trust Company whom I have seen -Mr. Davison, Mr. Lament and Mr* Strong and Mr« Pomeroy —

and I can-

not conceive of any one of tliem doing anything that is not right.

the first of the year 1909 when I go to New York I find they do not
pay me what I feel they should pay then without loss of time I can
develop what I wish to do next in my life work and it will be to my
advantage to know immediately whether I am with the high class kind
of people which I believe these gentlemen to be or not.11
Needless to say my first check was satisfactory and further I wish to record that never once in my connection with the
Bankers Trust Company have I mentioned the question of salary.
Mr. Forgan gave a dinner for me kt the First National Bank
of Chicago when I left and in responding to his toast I was able to
make the statement that my banking life had been with an institution
where the utmost integrity was their first principle in all their
operations and that I felt I was going to another institution where
the same thing was true.

Having been with the Bankers Trust Company

as a Vice President for many years following 1909 and a Director
since 1914 I can now say with the conviction of experience that the
Bankers Trust Company is founded upon a basis of integrity, the same
kind of integrity that impressed me while I was with the First
National Bank of Chicago.
In January 1909 when I entered the Bankers Trust Company I
had two duties to perform, one was to build up a foreign department

and the other to establish the American Bankers Association travelers check system.

Mr. Lamont went to Europe with me while I es-

tablished the banking connections of the Bankers Trust Company in
the cities and countries where it seemed desirable and where I
arranged for protection of the travelers checks of the American
Bankers Association.
All of this work had to be accomplished in the small
offices of the Bankers Trust Company atNo. 1 Wall Street but I never
had a moment of friction with any of the officers of the new bank
and enjoyed a most wonderful support.

Memo to Mr. Simms to be attached to page 5:
From Mr • Fred I• Kent
It seems to me that this report on the American Bankers Association
travelers checks should be filled out with statistics showing the
number of banks which used the checks and some of the balances held
by the Bankers Trust Company to meet the checks, a few statistics,
and possibly the total outstanding at the time that we notified the
ABA that we did not wish to go on with the system. If you agree
with me- will appreciate it if you will have these statistics looked
up and placed in the space which I have left for them.

When World War I started a group of French crooks succeeded
in stealing some travelers checks of the American Express Company and
also of the American Bankers Association.

They were arrested,

Mr.

Fargo, head of the American Express Company and I had a conference in
London about this situation.

Mr. Fargo said:

"These crooks say if

we do not allow them to go on stealing these checks, both you and I
will be assassinated,
now."

We have got to decide what course to take riglt

Naturallys there was only one answer and we decided right

there to prosecute these men and fight for protection of the checks*
They were later arrested by the French government and
thrown into the front lines of the War and all killed in the early
battles, so the problem of these particular men vanished.
Some years later conditions in Europe began to be very
difficult «fc: first where the travelers checks were mostly used.

Mr*

Prosser and Mr* Tilney studied the situation for some months and
finally decided that it might be in the interest of the Bankers Trust
Company to advise the American Bankers Association that they did not
care to continue the travelers check system.

This was done.

The

National City Bank of Now York, the First National Bank of Chicago,
and other banks carried on their own personal systems on the basis of
allowing country banks to issue the checks themselves but not over
their own names as had been carried on by the Bankers Trust Company
in handling the Association system*
There is no question but there is an important element of
risk involved in such a system because banks all over the country if
they are going to sell travelers checks in their own offices must
h*«rTe sufficient blanks on hand to take care of their customers and so

the total liability is very great.
However, the Foreign Department of the Bankers Trust Company has developed in a wonderful way and with its London office and
under its present able management it has become a tremendous force in
Bankers Trust Company business even under conditions of hot and cold
wars which make trading most difficult.

In December 1313 Benjamin Strong asked me to go to Washington with him in connection with the work that the Senate was carrying
on in the building of the Federal Reserve System.
Mr. Strong introduced me to Senator Theodore E. Burton of
Ohio who was doing an important part of the work for the Republicans.
After a day or so Mr. Strong returned to New Yorlf and left me with
Senator Burton to carry on.

Worked with the Senator every day and

dictated for him about 500 pages in speeches many of which he made
before the Senate, all of which hdd a bearing upon the new FedeiBl
Reserve System.

V/e also went over the speeches of the Democrats that

were being made in the Senate in order that I might prepare answers
for them.

This was very interesting work and took about two weeks1

time as I recall it*
During the period .Senator Elihu Root came to me and wanted
to know what caused the Eanic of 1907.

I explained it to him and

told him that it came about in important part because the banks of
the south had called upon their New York correspondents for cash in
amounts far greater than that required for their reserves due to the
fact that they were fearful that they would not have enough currency

-t;

to meet fall cotton demands.

The banks involved not only drew their

balances down in cash but in addition borrowed from the New York
banks and had the proceeds sent to them in cash.
The strain upon the New York banks was so great that they
finally had to go upon a clearing house basis•

Actually as I recall

it the banks in Georgia had 180^ of their reserve requirements in
their banks in cash which was indicative of the whole situation. All
of this matter I remembered well enough to write an address for
Elihu Root which he delivered in the Senate.

After doing so he came

out and said to me, "Well, Fred, did I deliver it all right?"

said, "Yes, and it pleased me very much."
It so happened that I remembered the circumstances sufficiently well to write the address for him because in 1907 when I had
charge of the Foreign Department of the First National Bank of Chicago I had anticipated the condition which developed and had my
full line with the London City Midland Bank of London open.

The re-

sult was that I was in position to buy bills in the south and middle
west on London and order gold without waiting for their arrival on
advice that they were on their way and after securing discount.

The

situation was such that I went to Washington and saw Ridgely, the
Comptroller of the Currency while waiting for Cortelyou who was
Secretary of the Treasury and who was in New York.
Explained to Ridgely that the sub-treasury in Chicago had
a tremendous amount of gold and that I would like to arrange with
the United States government to insure gold for its account that was
being shipped from London to this country against gold which the

sub-treasury in Chicago would give to the First National Bank of
Chicago to buy sterling, cotton and wheat bills.

Told him that I

felt that we could break the money panic immediately if the government would do this because the position of the First National Bank of
Chicago with the London City Midland was such that our whole line of
credit was open and that we could obtain gold on the same day that we
bought the bills.

What I wanted to do was to turn the gold in London

over to the government and insure it for shipment to the United
States and have them give the First National Bank of Chicago gold
from the sub-treasury for the amount involved at once.
Later George Roberts of the Commercial National Bank of
Chicago and afterward the National City Bank of New York went over
the papers that I left with Ridgely and stated that the whole plan
was sound and should have been carried out.

I went back to Chicago

and drew up telegrams offering to buy wheat and cotton bills on that
basis so that if Cortelyou upon his return to Washington Monday morning gave permission I would be ready to do the business.
Much to my disgust the New York banks advised Cortelyou not
to carry out the idea because they naturally realized that it would
give Chicago a wonderful position in the country if through its activities it broke the situation when the New York banks had gone on a
clearing house basis because they could not meet conditions.
Senate Committee
In 1913 Senator Robert F. Wagner was chairman of the Committee in the Senate which had to do with international exchange. He

••->

;

•(.!•••

invited me at the suggestion of Benjamin Strong to appear before
this Senate Committee and answer questions which they might have on
the manner in which the international exchange is carried on.

Sena-

tor Wagner, whom I knew very well, told me that this committee would
have to pass upon many foreign problems and that the members were
not at all familiar with international financing.
I told him thatl would be very glad indeed to give his committee all the time that it desired and I was quizzed for about half
a day as I recall it.

There was no criticism involved of any kind,

it was merely a quiz for educational purposes.
Pujo Investigation
J. P. Morgan Sr. was attacked by a committee in Congress
of which Congressman Pujo was chairman and it became necessary for
Mr. Morgan to make an answer to the committee covering a tremendous
amount of detail.
At that time Mr. Morgan had for his private office the top
floor in the Bankers Trust Company building.
that it was the 40th floor.

It is my recollection

Mr. Strong recommended to Mr. Morgan

that he discuss the situation with me and an appointment was made
for me to see Mr. Morgan for that purpose.
At the first conference we had in his offices he went over
all the detail of the matters that the Pujo Committee had put up to
him.

We discussed various phases of the situation and then I went

back to my office in the Bankers Trust Company, undertook a research
of the whole situation end wrote a report for Mr. Morgan which I

understand was made a part of his reply to the Pujo Committee.
This experience with Mr. Morgan was a wonderfully enlightening one and I found him clear-headed and completely familiar with
our banking and industrial situation.

It was a great privilege to

have this discussion with him.

The summer of 1914 Mrs. Kent, my son and myself made the
trip on the Victoria Louise (formerly The Deutschland) from England
to Iceland to Spitzbergen and back among the fjords of Norway to
Hamburg, Ge rmany•
There were many Germans and Austrians on board and when
we reached one of the Norwegian fjords on the return trip they were
all called home by cable because it was felt that there was every
prospect of Germany and Austria going to war.
We could obtain no information from anyone on the boat
as to just what had happened but did realize that the Germans and
Austrians had left.
We stayed on the boat until it landed at Hamburg on July
30 I believe it was.

We found the streets of the city crowded with

people in a very excited state of mind seemingly going everywhere
and nowhere•
As the Bankers Trust Company was responsible for the
American Bankers Association travelers checks I felt it important
for me to go to Berlin to find out what it was all about and what
it might be necessary to do in order to protect Americans carrying
the travelers checkso

• ' J.'C'1'

The officers of the banks ir.. Hamburg I did not know personally well enough to ask for confidential information but Hugo
Schmidt of the Deutsche Bank and I had been very close friends for
many years and I knew that he would give me all the facts confidentially.

Left Mrs. Kent and my son in Hamburg and took the first

train to Berlin.

Fortunately I found Hugo Schmidt back from one of

his trips and in the Deutsche Bank of Berlin.

V/e spent two fcours

going over the situation.
He told me that Germany was going to declare war on Russia
probably the next day and that they were going to hold the Russian
line without trying to make headway in that direction until they had
taken Paris and could bring Prance to her knees.
were going to attack through Belgium.
^

Further, that they

He said that there was just

time for me to get back to Hamburg and take Mrs. Kent and my son to
London before war wa3 declared.
We then arranged about the travelers checks of the America*
Bankers Association and he agreed to circularize the hotels in Germany and also the branches of the Deutsche Bank.

Before taking the

train back to Hamburg I arranged with the Directione der Discounto
Gesellschaft where I saw Mr. Hdrina and made similar arrangements
with his bank for the payment of American Bankers Association checks.
Explained to both Hugo Schmidt and Mr. Hdrina that I would take up
the checks by remittances accomplished in London through Italy under
an arranged plan.

This was later carried out.

On July 29 Benjamin Strong sent me the following cablegram
care of the Deutsche Bank, Hamburg:

•.,}'

"Exchange market demoralised. No trading possible.
Over 26,000,000 bars and coins shipped within last few days.
Insurance premiums almost prohibitive. Our continental balances in good condition. Mark loans wore not renewed. Will
require all for Travelers* Cheques and International^ documentary credit. Travelers1 Cheques reducing our London balances rapidly. Have no commitments for the immediate future.
Will require about £50,000 in London about August 5 for Travelers1 Cheques. Market quoted nominally. Cable transfers
London 496, Berlin 97, Paris 495, demand 491.95^, 505. Rouble
cable transfers about 5120 here. Can we resell Roubles in
London to make Sterling? Am cabling London for a rate. Have
received no discount or arbitration rates of any kind since
last Friday. Please endeavor to arrange with London for overdraft in our account or to give temporary advance to cover
Travelers* Cheques, if necessary, in case we cannot ship gold.
Keep us posted on all developments. Am figuring on gold coin
shipments for Travelers1 Cheques. Keep us informed of itinery
for cable messages to you."
and the following cable on July 30:
"Go at once to London and read our cables in regard to cover
for Travelers1 Cheques and report at once with advice."
To this I replied from Hamburg on my way to London July 31 in the
following cablegram:
"Received telegram. Have telegraphed London and will wire
you again. Left today for London by way of Deutsche Bank,
Berlin. Arrive at destination Sunday morning. Made arrangements to protect fully Travelers1 Cheques. Don't worry, am
on job."
While at Hamburg I sent a very long cablegram explaining
many things that I had arranged asking for gold and containing other
matter.

This cablegram was apparently censored although it may have

been received and through oversight not have been placed with the
other cablegrams.

As the cable correspondence developed during the

following days running up to September 23 quite a number of my cablegrams are missing undoubtedly due to the censorship.

For instance,

in many of the cables included in those listed from the Bankers Trust
Company, New York, to me, detailed questions are asked.

These were

all answered in return cablegrams but an important number of them are
missing.

Of course all of the cablegrams -sent from the Bankers Trust

Company are given because copies were kept.

Copies were also kept of

cabled replies but they were delivered to the London City Midland
Bank with other papers that had accumulated while I was in London
covering all of the different matters where I had been carrying on
negotiations and this package of papers apparently never reached the
Bankers Trust Company, New York, as they made no record of them in
the Gold Syndicate Book, although that might have been merely an
oversight.
While in Berlin I also saw the Hotel Adlon and arranged
with them to cash American Bankers Association travelers1 checks and
explained how I had arranged with the two German banks to honor them.
Also requested them to get in touch with other important German hotels in Berlin and explain the situation.

Apparently they did be-

cause later I had word from Hugo Schmidt as shown in one of the
cablegrams that up to the time he sent word to me the Deutsche Bank
had cashed $100,000 in such checks even though the National City Bank
ofNew York according to one of its cables had word that they were not
being cashed.

This was proved to be an error as I actually received

from Germany later checks which had been cashed and also remitted for
them through Italy before that country entered the war and later in
other ways.
After sending the missing cablegram from Hamburg that gave
full details of what I thought would be required in gold remittances
I took Mrs. Kent and my son to the train at Hamburg for Bremen and
the Hook of Holland.

We were on the last train thc'\t was allowed to leave Germany
but were stopped several hours at Bremen while it was being determined whether they would let the train go through.

They finally de-

cided that it was better to get rid of the Americans and English who
wanted to go to London than have them stranded in Germany,

So fin-

ally the train was allowed to leave Bremen for the Dutch line.

There,

however, the passengers were all dumped out into the scenery with no
place to go.

After waiting around for an indefinite time some third

class Dutch cars with straight wooden backs were switched through
the station and then the whole crowd got into them for as uncomfortable a ride as one could imagine.

We were bound for Hook of Holland

where I had reservations on the boat for England.

During the night

I drew up a plan of campaign for taking care of the situation in England when I got there.

This included notices for the newspapers

notifying Americans that I v/as calling a meeting at the Hotel Waldorf
the next day, that we would organize a committee and do the needful,
whatever we found out it might be»
After sitting up most of the night we reached Hook of
Holland/in the early morning, found the boat loaded from stem to
stern with people lying on their backs on every deck end to end, but
fortunately for some reason or other our staterooms were held for u s .
Mrs. Kent and I used ours but my son, Warner, let two lady school
teachers from Indiana have his and he sat up the rest of the night
with the mob that literally covered the boat so that you had to step
over people when you walked the decks•

Upon reaching England we v/ert straight to London and I put
out the notices of the meeting I was calling at the Waldorf for Monday
afternoon and also drew up some card forms for Americans to sign that
gave the detail about each American that I felt we would need in order
to handle the situation intelligently.

The card provided among other

things for the names of the people signing them, their homes in
America, their hotels in London and the steamships on which they expected to return home, the amount and kind of money which they
carried, and information as to other Americans whom they had left on
the Continent.

These cards were printed that afternoon and were reacty"

for the meeting in the Waldorf the next day.
There were about two thousand people who came to this meeting and I stood upon a round table and addressed them.

Told them

that we were going to organize an American Committee which would take
all responsibilities for their needs which had to do with hotels,
money, steamships, etc.

William Porter of J. P. Morgan and Company

was one of those present, also James Cannon, president of the Fourth
National Bank of New York, Theodore Hetzler of the Fifth Avenue Bank,
New York, William C. Breed, the New York lawyer, Joseph P. Day of
New York, and many other high class men whom I could draw upon to
form the committee.

Mr. Porter approved it all but did not wish to

serve on the committee himself*
The London banks were all on holiday for an indefinite time
depending upon how conditions developed.

Therefore I determined to

open a bank in the Hotel Savoy in order to cash American Bankers
Association travelers checks and if it proved to be possible other

checks depending upon the amount of money that proved to be available.
In order to accomplish this I went to Mr. Wise of the Guaranty Trust
Company and asked him for some of his employees who would be competent
to cash checks for Americans.

He stated that because of the war and

as England was seemingly going to be in it at once because the Germans were going to attack Belgium and Great Britain had agreed to
protect Belgium, his employees would not be available to him more
than a few hours or days.

Then he said, "But you can't get any money

because all the banks are closed."
will you give me the clerks?"

I said, "If I can get the money,

As he was very positive that I could

not get the money he said yes, that he would furnish clerks if I
could get the money.
Then I went over to the London City Midland Bank, Ltd. and
saw Sir Edward Holden, hedd of the bank, who was a close personal
friend of mine of many years. Told Sir Edward that I was going to
open a bank in the Hotel Savoy to cash American Bankers Association
checks and others if I could for Americans while the bank holidays
were on.

He said, "Where are you going to get the money?"

My answer

was that I had made arrangements with one bank for some of my requirements to open a bank in the Hotel Savoy and that at the moment I would
like 15,000 pounds from him in gold, silver and pennies.

He held up

his hands and said, "Is another bank going to help you out?" and I
said, "Yes, in part."
"Well," he said, "I will give you the 15,000 pounds."

had it brought up to me from the vaults and I put it on the floor of
a taxicab.

It was so heavy that I was afraid it would go through the

boards in the floor but fortunately it did not and I got it to the

Hotel Savoy without difficulty.

ThsxM I arranged five tables in a

semi-circle around the wall in the ballroom and put the money up
against the wall.

Had men from the hotel watch the money while I

telephoned to Mr. Wise of the Guaranty Trust Company and told him
that I had the money and that I wanted his clerks.

He said, "Well,

a promise is a promise and I will send five men right over."

As soon

as they got there we began paying Americans not to exceed $40.00 a
day for American Bankers Association Travelers1 Checks.
We did not set any closing hour but paid Americans at whatever time they came in up to nearly seven o'clock, when no one else
called, undoubtedly because everyone was at dinner.
Mr. Cannon of the Fourth National Bank of New York came in
while we were making the payments on the Travelers1 Checks and said
to me, "Fred, do you consider this conservative banking?"

I replied,

"No, but this is not a conservative war."
After the committee was formed it was divided into several
parts each with special duties to perform.

For instance, one subcom-

mittee contacted the steamship companies and arranged with them to
fill their ships as they went out including steerage with Americans
who were in London whose boats were not available, taking the place
of those who were on the Continent and could not get to London in
time for their regular sailing reservations.

As a result every ship

went out full which left space in later ships for others as they
came in and were able to get to London from the Continent.

Because we were successful in arranging with the steamship

companies along these lines ws did not require the ships for which I
asked in earlier cables when requesting the shipments of gold.

When

I cabled for the ships it was because of information given me by the
British government that in their opinion they felt that the regular
ships which carried on the traffic between England and America would
not be able to function.

As the days went on, however, I found that

enough ships were taking their place to take care of this situation
and therefore later cabled to the Bankers Trust Company that the ships
would not be needed.

This cablegram is probably one of those censored.

Before this cable was sent I got Mr. Anderson head of the Foreign
Department of the London Midland City Bank to go with me to the Censor
Bureau so that I could find out exactly what principles they were
using in their censorship with the hope thatl could avoid wording any
cables in such manner that they would be held up.
Another committee had to do with the hotels and advised
them of the work of the Committee in arranging for cashment of checks.
The hotels were very cooperative because of such arrangements and we
found no real difficulty in keeping Americans until we had a ship
for them to sail home on.
The London bankers were so busy with the problems that came
before them that they appointed me chairman of the London Bankers
Committee having in charge payments to Americans not only in England
but in the other countries in Europe.
This was fortunate as otherwise it would have been impossible to get quick replies to inquiries that came from America and also
it would have slowed up the arrangements that we had to make with

other countries.

This London doircnittes was made up of important exo-

cutive officers in the principal banks in London and I called them
together several days before I was appointed chairman as advised to
New York in one of the cablegrams.

In spite of this we succeeded in

making all the arrangements which my cablegrams to New York disclosed.
The whole situation was worked out with very little delay
because the London bankers after we had worked together a little were
willing to accept my advice and trust me to carry out the operations
agreed upon.

It was a hectic period but with surprisingly little loss

of time as soon as I obtained proper authority from the London Bankers
Committee.

The men on this committee were wonderfully fine to me and

they stood up under the terrible conditions of war in an amazing way.
Practically every one of them had a son or sons killed during the
first days of the war as the first Englishmen mobilized included the
pick of British young men.

It was because of this that following the

war Great Britain found itself with a great shortage of men of understanding and intelligence upon whom to depend for solving the postwar problems •
Because the London bankers wished me to act as chairman for
their committee I told Mr. Porter that I felt I should not be chairman of the committee which I had organized and asked him if he knew
any one there who would be willing to take it with the understanding
that he was to be guided by my requests.

While Mr. Porter felt that

possibly it might be better for me to take both chairmanships, yet in
view of my feeling about the matter he suggested Mr. Theodore Hetzler
of the Fifth Avenue Bank of New York.

After talking with Mr. Hetzler

I felt that we could work the situation cut together satisfactorily
from every point of view and he was therefore appointed chairman of
the American Committee.

He handled matters exceedingly well and we

never had the slightest friction or difficulty.

Meetings were held

every morning and after the sub-committee chairmen made their reports each took over his own work and prepared for his report the
following day.
We printed a daily paper giving information that tourists
might desire or need having to do with the sailing of ships, money
matters, etc.
Committee members and others who were willing to help sat
every day in the morning in the Savoy at a long table where American
tourists could ask them questions about any matters having to do
with hotels, money, sailing of ships, etc*
Without realizing the full importance of doing so I required that every one who was to answer questions must have a permit.
This was most fortunate because it resulted in uncovering one man
who was a British procurer and who sent girls who asked him questions
to a madam who was in the room*

Fortunately we uncovered this almost

immediately and called in a London policeman who advised us that the
people concerned were bad characters and they were never again
allowed in the rooms of the Hotel Savoy where the meetings were held
and the police took charge of them.

This was the only incident that

occurred that could have been harmful to Americans who were being
advised as to what they should do.

This difficulty was uncovered

before any American girl was misled insofar as we could ascertain*

One cockney came in every morning and approached different
people who were answering questions and tried to get money and transportation and all kinds of things that he could think of that might
get him a return in cash and my son whom I had made Chief Clerk of the
organization heard about it and gave instructions that he should not
be allowed in the room.

The next morning when he tried to get in he

was stopped at the door and was told that they had instructions not
to allow him to enter the room.
"Who gave those instructions?"

He spoke up very saucily and said,
My son who happened to be near and

overheard the remark went up to him quietly, looked him right in the
eye and said, "I did."
afterward.

The fellow then went out and we never saw him

It was really surprising that we had so few incidents of

this kind as naturally the underworld was watching for opportunities
to take advantage of the conditions which had developed.
The holiday of the London banks only lasted a short time
and I immediately closed the banking arrangements which I had made in
the Hotel Savoy as soon as money was obtainable in the London banks.
The cash that was left was turned back to the London City Midland
Bank for credit to the Bankers Trust Company.
Mr. Wise of the Guaranty Trust Company would not let me pay
the five men he had sent me from his organization to cash travelers
checks and so I gave each of them a wrist watch.

They were all al-

most immediately sent into the British army so Mr. Wise told me»
Without going into further detail Americans in London
through the activities of the committee and also because of the opening of the bank in the Hotel Savoy had no real friction of any kind

although many of them were at very greet loss of understanding as to
what they should do for their own protection before they called on
the committee.

Those who were allowed to talk with tourists and

others at the tables were given full instructions as to all of the
developing conditions every morning.

As the days went on fewer and

fewer Americans came over from the Continent and as ships sailed under
the plans which had been made there was no real accumulation of people
in London because they were able to get out almost as fast as they
arrived from the countries across the Channel.
Great numbers of people from all over the United States
cabled me to look up their friends.

Because of having arranged the

card system that gave complete information about every tourist and
included listing of friends whom they knew were in Continental
Europe I was able to get in touch with most of those who were inquired about and knew which ones had sailed on ships that had returned
to America.
The next phase of the situation had to do with the requests which I had made for gold to be sent to England.

My first

cable request was made on July 31 before I left Hamburg.
As the cablegrams among them, all give much of the detail
concerning the handling of gold, although there were cablegrams that
I sent from London that were censored and are therefore missing, I
will give the story of the developments as they occurred some of
which are confirmed by the cablegrams and some of which are not
covered by the cablegrams•

After New York had arranged for a shipment of $3 million in
gold upon the Tennessee from Bankers and $300 thousand in gold from
the State Department I arranged with the British government for troops
for protection of this shipment from the Tennessee to London.

Then

my son and I went to Palmouth which was the port finally selected by
the British government for the Tennessee

to make entry.

When we

arrived at Falmouth we took a 3mall boat and went out to watch for
the American ships, that is, the Tennessee and also the North Carolina
which was the accompanying ship.

The latter put into port first and

we went aboard and I obtained all the information possible from the
officers.

However, they knew very little as the Tennessee had on

board the American Committee mentioned in the cablegrams.

We had

dinner on the North Carolina before the Tennessee showed up over the
horizon.
As soon as the Tennessee was anchored we went on board and
I met with the American Committee.

It seems that there had been some

argument as to whether the gold should be taken to the Continent or
landed in England because Breckenridge an Assistant Secretary of War
was a pompous person who wanted to carry out his own ideas even
though he had no authority to divert the gold.

Harvey Gibson was a

member of the American Committee and I got him aside and explained
the situation and told him the gold must go to London.

He agreed

with me and was a help in making Breckenridge understand that he
could not divert it to the Continent.

As soon as the detail was

worked out I left my son on the Tennessee to accompany the gold to
London as I felt that I should go on the train with the American
Committee and make certain that we did not have any trouble in making

the gold effective for its purpose.

Had agreed with Breckenridge

that it was to be sent to the Bank of England.

He insisted, howevar,

that he might wish to have the $300,000 in gold sent by the State Department transferred to the Continent.

This of course was impossible

because I had borrowed the amount from the Guaranty Trust Company
London and had made payments to a great number of Americans who were
eligible under the regulations of the State Department.
When cable advices gave evidence that the $300,000 in gold
was certainly coming I went to Ambassador Page and told him that I
felt there were some people who should receive payments without waiting for the gold to arrive because of the serious situation that they
were in, and asked him whether if I could borrow $300,000 in London
he was willing to allow such payments to be made.
person and I became very fond of him.
slightest friction.

He was a cagey

We worked together without the

In this case, however, he said, "Well, whom do

you consider eligible to receive money from this fund?"

I said,

"Well, there is one woman here who came over as a secretary to an
American organization.
to stop business.

Because of the war this organization has had

This secretary has no money and the organization

has none to pay her.

She should be sent home in the first ship

available so as not to accumulate any greater debt than can be
avoided."

The Ambassador just to draw me out said, "Well, I would

consider her a victim of the war and not eligible for payments from
this fund."

I replied, "All right, Ambassador, I will not borrow

the money in London because there is no purpose in doing so if it is
not to be used."

He then turned to me and said, and I realized that before
he was just drawing me out, W I will appoint you and Counsel General
Skinner a Committee of two to pass upon every payment from this fund."
We, therefore, had been making payments to Americans who satisfied us
that they were entitled to them while the Tennessee

was on its way

over to England from the $500,000 which I had borrowed from the
Guaranty Trust Company for the purpose.

This being true when the

gold arrived on the Tennessee it had to go to the Bank of England to
meet the debt which had been incurred.

Therefore when Breckenridge

suggested taking it to the Continent I had to protest violently.

said that he was going to go to the Continent immediately and that
when he got there he would determine whether it should be shipped to
the Continent.

Therefore I saw Ambassador Page and told him not to

give Breckenridge any receipt for the gold which he had demanded.
The Ambassador who was a 100$ person with whom I worked in full
accord in every situation that came up refused to give the receipt
so that the gold which was deposited in the Bank of England could
not be taken out by Breckenridge.

He left for the Continent very

angry with both of us but as long as the gold did not go with him
that did not upset me in the slightest.

After he had gone Ambassa-

dor Page came over to the Hotel Savoy where the American Committee
was stationed and told me that Breckenridge had left without any receipt and then laughed heartily over it because he recognized the
pompousness of the man and had been glad to frustrate him»

When

Breckenridge came back from the Continent I refused to have the
Ambassador give him a receipt until he gave instructions that released the gold so that it could be utilized to pay back the loan,
and everything was in order.

The Embassy was naturally very busy as Americans were
coming in from the Continent in the early days following the declaration of war in great numbers.

Those who came to our committee first

did not need to bother the Embassy but many others did not know
about the Committee.

Then the passport situation became very diffi-

cult as the Embassy did not have enough people or enough space to
take care of the situation, so I arranged with the Ambassador to
have his passport division placed in the Hotel Savoy and we took
care of the whole problem which worked out without any friction.
The Ambassador wrote me a letter which possibly should
have a place in this statement which read as follows:

SEAL

Embassy of the
United States of America
London, November 6, 1914

My dear Mr. Kent:
I told you the other day in a very brief and imperfect way how
much I valued the service that you were good enough to do for this
Embassy in several of its most important activities during the time
of your stay in London, but I bhould like to put this expression of
my appreciation on paper. I therefore send you this note to carry
ray hearty thanks, and to remind you that I did not fail to make a
report of your kind activities to Washington*
I hope that you had a pleasant voyage. While I don't want any
more wars or convulsions, we should all here welcome anything else
that may happen if it would bring you over for another visit.
With great appreciation, I am
Sincerely yours,
(signed) Walter H. Page
Fred I. Kent, Esq.,
Bankers Trust Company
16 Wall Street,
New York, N.Y., U.S.A.

Ambassador Page was really a wonderful person to be in
such a critical position at such a time because he was big enough to
give power to and utilize men who were experts in some of the things
that had to be carried out.

For instance, Chandler Anderson one of

the best international lawyers in America was in London at the time
and Ambassador Page had him write all of his cablegrams that had to
do with international law.

Then he asked me as I had had banking ex-

perience to come to the Embassy every night after dinner and write
the cablegrams that had to do with financial transactions.
One such cablegram was to Secretary Bryan.

When we cabled

him for authority to borrow the $300,000 in London so that we could
begin shipping Americans back at once without awaiting the Tennessee,
he cabled that we could only do so if we took from every person to
whom any money was paid a positive statement that he would refund
the money later.

As some of the funds were to be used to pay for

ships to bring some Americans back from Belgium who were figuratively
speaking sitting on the beach with their feet hanging over waiting
for a boat to take them to England, his demand could not be carried
out so I wrote him a cablegram which the Ambassador sent giving the
wording that we required from him in order to make it possible to
borrow the $300,000from a London bank.
While Bryan and I were well acquainted yet because I came
from Wall Street he did not wish to have me take part in any of the
situations that were developing•

As Ambassador Page never notified

the State Department that I wrote the cablegrams for him, Bryan was
never aware of the fact that a Wall Street banker was giving him
instructions and he therefore complied.

Payments from this State Department fund were not made to
those having travelers checks or letters of credit but to Americans
who satisfied us that they were honorable and without money and who
needed to be shipped back immediately so that they would not create
an indebtedness that might be beyond their power to meet later.

The

whole matter worked out extremely well and the Counsel General and I
were able to make advances of money to many worthy Americans before
the gold arrived.
After Breckenridge got back from the Continent he finally
gave the Bank of England release on the gold and the loan made by
the Guaranty Trust Company was settled.
There v/ere men on the Tennessee who had been given funds by
the State Department that had been deposited with it to be paid to
Americans in Europe who had no travelers checks or credits.

Arrange-

ments v/ere made by Bryan with the Marines to make these payments because as he said he did not wish to have a Wall Street banker mixed
up in it.

They told me about the situation and said that they had

been instructed to do everything themselves.

Naturally I told them

that if I could help them in any way that it would be confidential
and that I would be glad to do so.

While Bryan and I were good

friends yet his antipathy to a Wall Street banker mixing into the
situation made these men feel that they could not ask me for advice.
However, after I met them as they were going up the steps of a bank
which I knew was unsound and told them that they should not take
such chances and that I would not let Bryan know in any way that I
had helped them, they decided to consult me on further proceedings.

One thing that came up was quite amusing.

The Portuguese

have complicated names and vhen Portuguese are going to the United
States from Portugal the bankers would sell them drafts and then notify the American bankers on which the drafts were drawn that the
maiden name of the mother of the bearer of the draft was so and so.
These were very, very complicated names and when the bearer of the
draft went into the New York bank to cash it and gave the mother 1 s
maiden name which had been sent to the New York bank payments were
made without question*
The Marines had heard about this method of identification
and therefore they told me that they were using it with the people to
whom they had to make payments.

That is, they would ask a party what

his mother* s maiden name was before they gave him money and even
though they had never heard it before and didn*t know whether it was
the maiden name or not, they made the payments.

When I explained to

them how the Portuguese development was handled and that they were•
paying people v/ithout any identification at all because they didn't
know what the mother' s maiden name was, they saw that they would
have to handle the payments on a different basis.

So I did have

some opportunities to be helpful to them and we were very friendly
and they realized that under no circumstances would I let Bryan know
that I had had any part in the proposition.
Later after the war Colonel Logan appointed me the only
representative of the United States government on the Organization
Committee of the Reparation Commission.

In order to prevent Bryan

from interfering I had to make all my reports on a basis that the
American Delegate to the Organization Committee of the Reparation
Commission makes the following report which Kent approves.

This

method proved to be effective and we never had any friction.
To return to the gold shipments on the Tennessee, the
$3 million in gold sent by the American banks was delivered to the
Bank of England and made available to the London City Midland Bank
for use in cashing American credits.
Only the gold that belonged to the Bankers Trust Company was
used solely for American Bankers travelers checks.

Gold that came

from other sources was used to pay any or all travelers checks as
agreed upon with those who had advanced the funds in America.
This brings us to another phase of the gold situation that
was interesting.

When the war emergency developed sterling was hard

to get and went up to over .$5.00 a pound.

While I realized that this

was only temporary yet I could not seem to convince others except Sir
Edward Holden who agreed with me.

New York City had maturing obliga-

tions in London of $88 million and it was being worked out in New York
There were, of course, other great obligations but there seemed to be
a lack of understanding that the exchange would turn eventually the
other way because of the things that Britain must have from us to
meet the war situation such as wheat and munitions and military
equipment•
Sir Edward Holden asked me to come to his home at 10:30
every night after he had gone to bed to discuss the day's events
with him so that he could keep up to date on everything.

This was

most fortunate and led to complete understanding between us.

b». tvh agreed that New York City would not have to pay a premium for
store-line exchange if they would wait.

However, this matter was

apparently handled in New York by J. P. Morgan & Company and conse-

quently the Bankers Trust Company was nobble to take any part in
it.

But I was right about the market.
The Gold Syndicate that Mr. Strong of the Bankers Trust

Company had built up in New York shipped some gold to Ottawa and
the idea was that sterling requirements would be taken care of by
making deposits of gold in Ottawa for credit of the Bank of England.
The Governor of the Bank of England made a rate on this
first lot of gold and I called upon him and objected as he was
clearly taking advantage of the situation.

Told him that the posi-

tion of Great Britain was such that with her positive requirements
for imports from the United States that he should allow a premium
for gold rather than a discount.
budge an inch.

He was adamant and refused to

As I had to come to an agreement with him on a rate

for the balance of the gold that had been collected in New York I
told him that I wanted to discuss the matter with Lloyd George.
Naturally I would not go to Lloyd George over his head without
letting him know.

He said he did not mind and I made an appointment

with Lloyd George for the next day.

Explained the situation to

Lloyd George as I saw it, namely, that the premium on sterling was
a temporary thing and that as the war developed with the demand by
Great Britain for imports from the United States of many things,
wheat in particular, as well as military supplies, that I did not
feel warranted in accepting a discount on gold that was to be
shipped to Ottawa, Canada, for credit to the Bank of England.
Lloyd George seemed to understand the matter perfectly and
t-cli. me that he would have a talk with Governor Cunliffe of the Bank
ul England and for me to see him again the next day.

This I did.

The only concession I could obtain from Cunliffe was c.iat in cass J he
gold had to be turned back to the United States beo&uso the exchange
had turned as I claimed it would was that he might not charge us the
cost of shipment from Ottawa to London•

He refused to make this

positive, however.
Therefore, I refused to accept any rate that he might make
and decided to send a cablegram to New York telling them not to deposit any more gold in Ottawa and letting them see I felt that it
would have to be turned back later in any event.

This cablegram I

prepared at once and sent over to the office of the censor.

Told the

messenger to wait around and find out if he could whether Lloyd George
had sent any one for a copy of the cablegram as I felt sure that he
would do so because I told him in effect what I was going to say.
Sure enough, the messenger told me afterwards that when he got to the
cable office a messenger from Lloyd George was waiting there for my
cable.
It is a source of great regret to me that this particular
cable is not among those with the Bankers Trust Company file in the
Gold Syndicate Book which they gave me.
censored.

Of course, it may have been

However, a copy was with the cablegrams and papers which

I gave to the London City Midland Bank to f orwarc^Lirect to the Bankers
Trust Company although they may have been received and filed without
making any note of them*
In effect my cablegram advised against sending any more
gold :o Ottawa because I believed that the rate was not fair and
iVrt'iGr that the exchange would turn in any event.

As Lloyd George

ht-.a sont for a copy of the cablegram he of course knew that I had

refused to accept the rate* sot up by Governor Cunliffe zn& had recommended that no more gold be shipped to Ottawa.
Mr. Converse's

Oil Painting

Mr. Converse, president of the Bankers Trust Company, asked
me to take up with Duveen & Co., London, a question about an oil
painting which he had purchased of them that he claimed was a forgery.
Had several meetings with Mr. Duveen and he came to the conclusion
that the painting was real but he was very glad to take it back to
save friction.

Then a little later after things had quieted down in

London somewhat, Mr. Converse wanted me to get his daughter Kettle
out of Germany and back to America.
She had married a German Lieutenant and until he was
killed was acting as a nurse for the German Army.

After her husband's

death Mr. Converse wanted his daughter with her three-year-old boy to
come back to America.

It proved to be quite a difficult process

getting her out of Germany and into England.

However, I accomplished

it but we all came very near being shot in the process as the threeyear-old boy talked all the time and of course in German and I was
arrested twice during the development.

Nevertheless I got them to

London as my diplomatic passport probably saved me and turned Nettie
and the baby over to Mrs. Strong, a daughter of Mr. Converse, and
arranged for them to sail for America from Liverpool.

The detail of

this development was very complicated and interesting but has no
placs here.
Upon my return to England with Mrs. Romberg (Mr. Conversed
d3.ngh.ter) and after delivering her at Liverpool with her sister, Mrs.
Sli'cng, for return to Americao I made a study of the situation in
London asit affected Americans.

The need for tho lord or. Ooarlttee had paired as
tourists on the Continent and :Ln England had all rsturned to the
United States except a very few who preferred for reasons of their
own to watch the war situation abroad.

Therefore I closed up the com-

mittee work in the Hotel Savoy3
The members of the committee had returned to America one at
a time until I was the only one left.

Arranged with the Post Office

Department in the Hotel Savoy to inform me of anything that might
arise that needed attention, and returned to America on the SS
Baltic which sailed November 4, 1914.
It might be well now to just summarize the developments
which are largely confirmed by the cablegrams that passed back and
forth between Mr* Strong of the Bankers Trust Company and myself
during this period•
July 31, 1914 arranged with Hugo Schmidt of the Deutsche
Bank Berlin and Hdrina of Directione der Discounte Gesellschaft to
cash travelers checks of the American Bankers Association for tourists,
and the methods under which in case of the war development that
seemed inevitable they would be redeemed.
August 1, 1914 cabled Bankers Trust Company, New York, requesting shipment of gold for protection of American Bankers Association travelers checks before taking the train for Hook of Holland.
Copy of this cablegram with all others later sent from London was
later given to the London City Midland Bank to be forwarded to the
Bankers Trust Company.
Upon my arrival in London Sunday morning I gave the newspapers notices about the meeting which I was calling in the Waldorf
Y.O'C3J

Monday afternoon at 4 o'clock of Americans in London.

Germany declared war on Russia while we were on the train
from Hamburg to Hook of Holland and it was stopped at Bremen for
several hours.
August 2 (Sunday) made all preparations for meeting of
Americans to be held on Monday at 4 o T clock.
August 3.

Meeting of 2,000 American tourists in London

held at 4 o1clock in the Waldorf where after addressing them I
formed the London Committee.

Asked New York for $5 million in gold

and transports to get Americans back to the United States if conditions made it necessary as the British government believed might be
true at that moment.
August 4.

Opened banking office in Hotel Savoy and

cashed American Bankers Association travelers checks that were presented on the basis of $40.00 a day.
August 9.

A committee of London bankers was formed and

as cabled August 9 I was elected chairman of that committee the purpose of which was to take care of the credits held by American
tourists•
August 11.

Opened money exchange office to take care of

discount on dollars by exchanging for sterling for Americans sailing*
On approval of the London Committee arranged with Rueff of
the Swiss Bankverein to deposit 20,000 pounds in gold with the Bank
of England for credit of the Swiss National Bank which under Swiss
law could issue currency for such deposits that Rueff agreed would
be used solely to pay American traveling credits of all kinds.
There was a great lack of currency in Switzerland on
account of hoarding because of the war.
The arrangement with the Swiss bank worked extremely well

•S7-

and met requirements of our tourists in Switzerland.

Also arranged

for credits in Italy and Spain and started developments which took
care of the Scandinavian situation*
August 16.

Met Cruiser Tennessee at Falmouth*

August 18.

Tennessee

gold in Bank of England.

During August 18 to 25 made arrangements for Lloyd 1 s Bank,
London City Midland, Swiss Bankverein and others to open accounts with
Bankers Trust Company, New York*

Before and during this time found

that the committee arrangement with the steamship companies to fill
their ships as they sailed with those who were in London even if they
had accommodations on later sailing ships, solved the whole shipping
problem so that it was not necessary to send transports from the
United States as was first suggested to me by the British government.
This whole matter, therefore, righted itself without any special ships*
August 9 was appointed President of the Committee of the
United States Red Cross in England and arranged for a ship to go to
Belgium to bring stranded Americans to England.
During the whole of this period Americans all over Europe
with few exceptions were being able to cash their American Bankers
Association travelers checks and in London they never had any trouble
at all because of the opening of the pay office by Bankers Trust Company in the Hotel Savoy.
After my return to America on November 4, 1914 I heard of
no case of an American having tried to apply to the London Committee
after the office was closed and I had sailed for home*
Enclose herewith copies of a few documents the originals

of which I hold that I thought might be helpful in understanding
the situation.
Mr. and Mrs. North Duane came over to London from Paris
where they were when the war broke out.

Had Mr. Duane attend the

meetings of the American Committee of which Mr. Hetzler was Chairman and he was most helpful.
Every night about 6:30 or 7:00 Mr. and Mrs. Duane called
for me at the Hotel Savoy and we walked together in the black-out
which prevailed in London to some restaurant half to three-quarters
of a mile from the Savoy in order to get a little change.

Then on

Sundays when it was possible Mr. and Mrs. Duand with their car took
me to different golf clubs for a round of golf and luncheon and
although he was not originally a right hand driver, we successfully
dodged everything on the road and Mr. and Mrs. Duane were able to
leave for New York as shown in the cablegrams.

-39Embassy of the
United States of America

SEAL

"I, the undersigned Ambassador of the United States of America at
Paris, by these presents hereby request all whom it may concern to
permit to pass safely and freely,
MR. FRED I. KENT
A Citizen of the United States, President of the Committee of the
United States Red Cross in England, #10 i s accompanied by Madame
Antoinette von Romberg with her maid and her son aged three, and by
Monsieur Leandro Mare (Italian) courrier, Mr. Fred I . Kent leaves
Paris on the date indicated below for the purpose of presenting himself at the United States Embassy in London, with the official d i s patches of this Embassy.
rl

It i s understood that t h i s passport is valid for this single
voyage and should be delivered, at the same time as the dispatches in
question, to the Ambassador of the United States in London.

SEAL

"Given under my hand and the Seal of the Qnbassy
of the United States at Paris the twenty-third
day of October in the year 1914 (23rd October
1914)
( s i g n e d ) MYRON T. HERRICK
Signature:-

Ambassador of t h e U n i t e d S t a t e s of America

COPY
COPY
1
NEW YORK BANKERS FUND LONDuN COMMITTEE
B a s i l d o n House
Moorgate S t r e e t ,
London, E . C .
COPY of a RESOLUTION passed at a Meeting of the Committee
held on 22nd December, 1914
CHAIRMAN:
Before bringing their work to a definite close, the Committee
desire to place upon record their appreciation of the valuable services rendered by Mr. Fred I. Kent. The time and energy devoted by
Mr. Kent to the affairs of the Committee were invaluable in enabling
them successfully to carry out the work for which the London Committee
was formed.
Certified a true copy.
(signed)
A. W. R. Lovering
Secretary

.AC-

LONDON RESOLUTION

ON THE MOTION of Mr* James G. Cannon, Seconded by Mr.
Theodore Hetzler, it was unanimously
R E S O L V E D
That the American Citizens Committee desire to record
their deep appreciation of the work done for this Committee as well
as for Americans stranded abroad by
M R .

F R E D E R I C K

K E N T

Vice President of the Bankers Trust Company of New York City*
Mr. Kent was one of the first to realize the deep distress
of all Americans holding Letters of Credit and money orders who were
unable to procure cash upon the same and it was due to him more than
anyone else that the stream of gold was started from America to relieve the strain of its citizens over here f
Mr. Kent by his untiring efforts has relieved the distress
of thousands of his fellow citizens and will long be remembered for
his kindly spirit in doing the work and the great wisdom displayed by
him in the trying situation.
R E S O L V E D
That a copy of this Resolution be shown upon the Minutes
and an engrossed copy sent to Mr. Kent*

1917

.41 Director of the Division of Foreign
Exchange of the Federal Reserve Board
Benjamin Strong left the Bankers Trust Company and was made

President of the Federal Reserve Bank in New York when conditions
were developing that finally led to World War I.

In 1917 Mr. Strong

felt that the international excnanges should be controlled by the
United States government and that it was the duty of the Federal Reserve System to take charge of the operation.

He therefore had me

appointed Deputy Governor of the Federal Reserve Bank in New York with
instructions to make a stady of the foreign exchange dituation.
It was then that Secretary of the Treasury "icAdoo asked me
to go to Washington to talk with him about the international exchange
control.

Secretary McAdoo asked me If I would be willing to take

charge of the situation and develop a system to meet the needs of the
country in this respectc

In giving him my consent, however, I told

the Secretary that the intricacies of the international exchange were
such that if they were handled politically it might cause endless confusion and on that account that I would not be willing to accept the
position if any politicians could give me instructions.
Secretary McAdoo said under such circumstances he could not
appoint me and I came beck to New York.

About two weeks later the

Secretary sent for me and told me that he had not been able to find
anyone else who seem?a able to develop a system to control foreign
exchanges and he would have to take me with the understanding that
no politicians could give me instructions.

Then I said to him,

Gf course, if politicians approach me I will treat them courteously

and -vi31 listen to wha^ tiiey have to say but when they have gone I

will handle the foreign exchanges entirely without reference to
what they may have said unless they had valuable suggestions to
make."

The Secretary felt that this would solve the problem and

Benjamin Strong was advised that his recommendation that I handle
this situation had been accepted.
Mr. Strong felt that the Department should be under the
Federal Reserve System and therefore recommended that my title be
Director of the Division of Foreign Exchange of the Federal Reserve
Board, and I was relieved of the position of Deputy Governor of the
Federal Reserve Bank in New York to assume this other position.
There wasno system of any kind in existence having to do
with control of the international exchanges and I returned to my home
in New York, called in my secretary and dictated the complete system
even to the last detail of the forms that should be used in carrying
it on.

Also dictated a form of executive order for President Wilson

to sign creating the department.

This proposed executive order was then discussed with Governor Harding and Paul Warburg of the Federal Reserve Board and also
with Albert Strauss who was financial advisor to the Treasury.

Prac-

tically no changes were made in the original draft and President Wilson signed the order cheating the position and I was given the title
of Director of the Division of Foreign Exchange of the Federal Reserve Board.
While 1c was understood that I would meet with the Board
and ch« system shovld oe carried on within the Board1s organization

-43yet that I was not subject to the direction of any momber of the
Board because of my arrangement with Secretary McAioo that I must hare
a free hand due to the complications in international buainass.
It seemed to me that safety required that everyone in the
United States doing a foreign exchange business should have to take
out a license and this arrangement was made as a part of the system.
Everyone receiving a license had a separate number and this number had
to be used by every licensee in all of his foreign correspondence,
mail and cable, and identified him as having the authority to carry
on foreign exchange transactions.
Under the system which I drew up every licensee had to
make a report to the Division by Monday morning of every week giving
his exact financial position with every country of the world as of
the close of business the previous Wednesday.
Then I built up a staff whose number proved to be 99 which
included in most part girls with typing machines who assembled the
figures which came in from all over the United States on each Monday
morning.

The totals were divided in such manner that I could tell

the character of transactions carried on by each licensee and the
balance which he owed or had coming to him from every separate
country in the world*
The result was thkt when I had these figures this was a
moving picture brought forward in a simple form of statement so that
I k.iew the exact position of the foreign exchange situation of the
Ui.i!-.ed States with every country of the world from week to week.
iT.dr ^ v e me an tunes-i-.W.y c'.oar picture of the going foreign exchange
nr-fca and made it )oasil)le to carry out such controls as were

•44-

ngcessary for the protection of the United States.
There were two particular things that had to be accomplished.
One was to make certain that the interests of those in the foreign exchange business in our country were protected in every v/ay possible
that would not favor Germany with whom we were at war.

The other pur-

pose was to prevent Germany from being able to utilize the funds which
it had or could accumulate in every country of the world by having
such funds transferred to countries where Germany had obligations or
could use them in other ways•
To accomplish this the censorship of all foreign transactions was placed in my hands and I had a small department that brought
together information which was given to me by the War Department, the
War Trade Board, the Treasury Department, the State Department and
other phases of the Federal Government where information passed
through that would be of value in assessing what should be done to
accomplish either one of the two purposes mentioned.

German trading

houses all over the world had cover names, one house I remember had
29 such names, and any transaction made under any one of these 29
names covered operations of this particular German organization.
The Research Department brought together and classified all
such information.

When a bank or foreign exchange house requested in-

formation as to whether they could carry out some transaction it was
first referred to the Research Department, the information was written
on the statement and it was referred to me for an answer.

Under the

system the banks would send an application for permission to carry out
a transaction in duplicate and the permission or refusal was returned

-45-

to them on the duplicate fora; 30 that no time was lost..
I had an office in the Treasury Building in "'^.rhington and
one in New York City and spent half my time in each, commuting back
and forth from Washington once a week.
Applications of the banks for permission to carry on transactions were also made by telephone when I was not in the place of tine
application and speed was necessary.

In great numbers of foreign

transactions rates made were only good for a very short time, sometimes even five minutes and it was therefore important that answers
be given immediately as to whether transactions could be carried out.
Such conditions made it necessary for me to give all of my time during
the day to the carrying out of executive orders so that in order to
check up my work and bring things together so that there could be
complete understanding I worked in my office at the Treasury Department in Washington until three o'clock every night and was up again
at 7 o1 clock in the morning and the same thing was true the days I
was in New York except that Saturdays and Sundays I did not have to
carry out this routine.
Of course, there were a tremendous number of different
kinds of operations but one situation which I had to watch very
carefully and where I was obliged to prohibit many transfers, that
should serve to clarify the general situation, was along the following lines.
ones arose.

Will take one positive transactions of which many similar
As an example, for instance, a German would go into a

bank in Sweden and ask the Swedish bank if it received a cablegram
from some itaierican bank that the Bank of the Nation in Buenos Aires
had Instructed this American bank to credit to the account of the

46-

Swedish bank, say one mi H i or. collars, if the Swedish hank would
transfer this credit to a German oank on its books*

Swedish banks

were then told for instance that the Banco Aleman Trans-Atlantico, a
German subsidiary of the Deutsch Bank of Berlin would collect funds
from German sources in South America, deposit them with the Bank of
the Nation and request the Bank of the Nation to advise an American
bank to credit a Swedish bank with say a million dollars without stat<
ing where it had come from or to whom it was to go*

When the Swedish

bank was willing to carry out such transactions mere advice from an
American Bank that it was crediting the account of the Swedish bank
at the request of the Argentina bank was sufficient to enable the
German customer of the Swedish bank to get the money•

Such transac-

tions had to be watched and prevented and great numbers of them were
not allowed to go through.
It was because of the prevention of such transfers from all
over the world that the head of the French High Commission said to me
the day we had notice the war had stopped, in the Treasury Department
in Washington before the Assistant Secretary of the Treasury:

"We

feel in France that you have saved the lives of 500,000 men because
you have prevented funds reaching Germany from all parts of the world
so that they could not carry on the war for the full time that they
otherwise could have done."
Having the balance of the United States for or against a
country with every other country of the world gave a -clear understand*
ing 8 3 transactions came up as to whether they might be harmful from
the standpoint of the foreign exchange economy.

'47-

It was found for Instance that when ~ter»llng became a drug
on the market at one tine tha;: irany countries were absorbing sterling
to an extent that helped to relieve the situation.
Knowing that the Germans would naturally and properly from
their standpoint resent the work which I was carrying on because of
the harm to Germany that could come from it, I made arrangements with
the switchboard that if I called up and began talking about a certain
transaction it meant that a policeman should be sent to my room immediately*

One day a German did come in for me with a gun but I was

fortunate enough to be quicker than he.

As a result Governor Harding

of the Federal Reserve Board had an iron gate put on the entrance to
my office in New York and had a watchman there throughout the period.
Other means of protection in the Treasury Department made my office
there safe from the necessity for any such development.
During the period it proved necessary to intern quite a
number of Germans for various reasons having to do with their trying
to break the regulations.
During the two years a number of special incidents came
up, some of which were of very great interest.
Indian Rupee
One day Lord Reading when he was at the British Embassy in
Washington telephoned me and asked me if I could come over to see
This I did and he introduced me to a man from India who had the full
story of what the Germans were trying to do in India to break the
value of the rupee.

Lord Reading felt that if they succeeded, it

would be a real catastrophe and we went over the whole situation $&

-48-

see what could be done to prevent the breakdown of the rupee.

The

gentleman from India had books with him that made it possible for him
to give me the full detail of the silver situation in India.
He told me of the methods Germany was pursuing to try and
break the people's confidence in the rupee.

One story had to do with

a German woman who went into one of the big department stores to make
a purchase.

The things she bought came to 2\ rupees and she gave the

clerk a 50 rupee note.
started for the door.

Then without waiting for her change she
The clerk called to her and told her that she

had not received her change.

She apparently didn't hear and the

clerk called louder and then called the floor walker.

The floor

walker called to the German woman that she had not received her
change.

When a crowd got around she said to the floor walker, "What

was the cost of my purchase?" and hs said, "Two and one half rupees."
She said, "What did I give you?"

He said, "50 rupees."

said, "never mind, I do not care for the change.

"Well," she

The rupee won't be

worth anything in a few days."
As she had succeeded in getting quite a crowd around her
before she gave out this information, naturally there were some
people who were affected by it.
The Indian government only had two redemption agencies and
the British opened up 300 more immediately without having the silver
to take care of any of thorn.

This was interesting in showing how

the British met emergencies.
This matter was worked out through obtaining from the
Treasury Department silver dollars that had been coined and were

-49-

being held and shipping them to India.

My recollection is that the

amount of this first shipment was valued at $100,000.

Then the Trea-

sury Department authorized me to allocate the silver production of
Mexico, Canada and United States with the idea of letting India have
all that could be made available to her.
In order to make such silver production as there was serve
world purposes I had to study the requirements in many countries in
order to determine what amounts they should be allowed.

It was ne-

cessary, of course, not to throw men out of work in countries where
it might re-act upon the allies.

Therefore, I gave some silver to

Portugal where they used it to make filigree silver.

Again I allowed

some silver to go to Switzerland to make Swiss watches and 300,000
ounces of silver I gave to France every week as it was required to
manufacture surgical instruments and things of that nature.
There was, of course, no law making it possible for me to
demand the silver from producers so that I had to take it up with them
individually to show them the necessity from the standpoint of the
interest of the United States to get their agreement to handle the
silver under my instructions.

This worked perfectly except in the

case of one producer who was a pretty clever person and realized I had
no authority.

He said, "Suppose I refuse to handle this silver the

way you request, what will you do then?"

I said, "The best way for

you to find out is to refuse and then I will show you."

He said,

"All right, all right, never mind, I will carry out your instructionsJf

Spanish Pesetas
We had difficulty in getting Spanish Peseta*? necessary to
purchase allied requirements in Spain and this problem was thrown
upon my shoulders and was worked out satisfactorily.
Attempts to Break the Regulations
Certain Germans who did business with Knauth Machod &
Kuhne made deposits with this firm for cable transfers to Sweden.
When the first of these cablegrams came to me for censorship I noticed that they were transferring by cable to a series of persons
kronen whose value came to only a few dollars.

The cablegrams were

long and there were sometimes maybe 15 or 20 transfers in each.

seemed to me that paying cable charges for sending two or three
dollars more or less in kronen to individuals in Sweden was a funny
operation that clearly partook of some code method.

The names of

the persons plus the amount of the kronen carrying special code information, therefore, I censored all of these cablegrams and later
found out I was right in my judgment as to their intention.
Again one day a cable transfer that seemed harmless had
two words "Father dead" at the end of the cablegram.

Thinking that

this might be a code but that I was not justified in changing father^
address I made the word "dead" "deceased" and sure enough a few days
later a cablegram came back from Denmark I believe it was saying "Is
father dead or deceased" and we interned the fellowsJ responsible.
As can "/ell be imagined there were many other interesting
situations of thi3 character which were constantly arising.

-51-

Many German Americans called upon mo 5.^ different times to
try to have transactions put through that had all the appearances of
being normal but that in many cases I found were for war purposes.
Personality
When I accepted this position I studied the conditions very
carefully and decided that the Germans naturally would try to abuse
me personally in any and every way they could in order to break the
effectiveness of regulations.

Further, that many cases would come up

where I might be criticized personally with the hope that it would
break my power in some manner.

Therefore, I came to a complete under-

standing with myself that I would in effect represent two entirely
different personalities, one myself and the other the officer of government that I filled and that I would never allow anything that came
up in connection with the 3econd situation to be reflected in the
first.
This proved of the utmost value and saved a tremendous amouit
of friction and heart burning.
the following:

One case that showed this clearly was

An importer was in cahoots with a United States Senator

trying to break the regulation in order that they might make some money
together.

Through the censorship I was aware of the whole situation.

One day I received a cablegram for censorship when President Wilson
was in Paris intended for him and sent by an American importer.

was two or three pages long and stated in effect that the importers of
the United States were extremely angry with me and realized that I
was working against their interests and other similar unpleasant
st^cements•

Immediately the question came into my ru?_nd as to whether I
should censor this cable or allow it to go through
was based upon the following consideration:

My determination

If such a cablegram was

about the officer who could censor it, it should go through but if it
was about any other officer of government it should not be allowed to
go through.

On that account I passed this cablegram.

This resulted

in the situation being put up to Carter Glass who was then Secretary
of the Treasury who took it up with President Wilson and I was protected from criticism of any kind.

It was also most effective because it

showed that I had not feared to allow a cable gram criticizing me
personally to go through.

As a matter of fact I was helped tremen-

dously because of this character of consideration of matters that
came before me.
Experience with a Politician
One day Governor Harding told me that a Democratic politician of very great power was in Washington after my scalp and you
could hear his feet rumbling all around the place.

He told me that

this politician would call upon me at my office in the Treasury Department some time that morning.

I immediately looked up his connec-

tions and found that he was a director of a bank in a large city.
Then I recalled that a few days earlier the head of the foreign department of this bank had called on me to ask for permission to put
through a number of transactions that were against regulations, in
order to make some profits.

Had refused to give him the authority to

do so and he went away very angry saying that he would see that I
paid foi- it.

This, of course, I realized he had taken up with the

di^cc^or who was in Washington to see me and get me fired*

That was

all the information that ".' needed.

I turned my elixir part way from

my desk so that I could see the door which went from diy office to the
corridor in the Treasury Department and the second I saw this man come
toward my door I jumped up and ran to him and grabbed him talking as
and
fast as I could/said in effect, flIt is certainly most fortunate that
you came in because if you had not done so you might have been criticized as wanting to help the Germans just so that your banking institution could make a little extra money and this of course would bo a
terrible thing for you."

He was the kind of character that I realized

if he started talking first I would not be able to get a word in edgeways.

But this statement shocked him so that he said, "Tell me all

about it,n so I had him sit down at my desk and explained to him
about his foreign exchange man having tried to get me to approve certain transactions which were against the regulations in order that he
could make money and I had to refuse him.

"He probably is trying to

get you to put yourself in a false position just so that he can make
this money."

What this politician said then as to what he would do

to this foreign exchange man is unprintable but he became most friendly to me immediately, thinking that I had put myself out to protect
him which of course was true although it was our country that I was
trying to protect.
One day when I wasdn my New York office Governor Harding
called me up and said an importer had just filed a letter with us
saying that "you were crooked and handling the exchanges for yourself"
and that the importers in the country were unanimously opposed to me,
and asked me what I wanted him to do.

Requested him to ask this

ter to go before the Federal Reserve Board and make his charges

before me on one of the days when I wa^ln Washington

'rovernor Hard-

ing agreed to this but called me up later and said that when he put it
up to the importer he had changed his mind and said that maybe he had
been mistaken but from the censorship I knew exactly what he was trying to do.
One interesting method the Germans tried to carry on showed
up in the trip of a Mexican to New York City,

He was trying to make

arrangements v/ith banks to have money transferred from New York to
points where the Germans wouldhave access to it that was raised in
Mexico City.

He had a habit of writing his wife every night and in

some manner the censorship happened to get these letters into ray hands
promptly.

He explained how he was fooling me in making arrangements

for separate amounts for different institutions and he was expecting
to be able to handle quite a sum.

From what I could learn none of the

money was in New York at the time so I let him go on fooling me until
the money reached New Yock and then I took over.
The Crooked Senator
One day an important Senator came to me with a letter from
President Wilson with whom he always kept in close contact.

This

letter said in effect that President Wilson felt that the Senator was
very anxious to help the foreign control in the Senate in every way
that he could and asked me to explain the whole system to him.

From

the censorship I knew that this Senator was in cahoots with an importer who was trying to break the regulations to make money so I asked
my secretary to leave the room and said to the Senator, again in
effect, "Now, Senator, you and I are here in Washington for the

duration of the war each with his own duties zo perform,

It doesn't

seem to me that we should have any friction between vg of any kind
whatsoever.

Now, referring to this letter of President Wilson, v/e

have a common ground on which to solve the problem.
are a crook and I know you are a crook.
show you how this department is fun?"
"No, never mind."

You know you

Now, do you wish to have me

He was very quiet and said,

And that was the end of that trouble.

One German called upon me one day whose transactions I had
been watching carefully through the censorship.

There was nothing in

them that I could find that appeared to be against the interest of
the country and yet I was suspicious of the whole situation.

There

was not a thing, however, that gave me the least excuse for calling
him in and asking him the purpose of his operations which I held up.
When he called he said that he thought I would be interested
in whathe was doing and so came in to tell me exactly in order that I
could see that it was in the interest of our country, he assuming that
because he was a German-American I would think that the American interest predominated.

So I let him explain his transactions and they

were all in accord with the cablegrams and letters which I had seen
and there was nothing in them thatseemed to be against the interest
of the country in any respect.

On the other hand I had a feeling

there was something wrong with them and I decided to take a long chanoe
to find out while he was there so I said to him, in effect, "It was
ver;f courteous of you to come in here and explain to me all these
transactions that you have been carrying on," and then I turned to
hira ^Larply, and said. "Now, tell me what you have been doing that
yea havs not disclosed<,"

He was terribly shocked and sort of

stuttering said, "I did not know that y xi had any idye what I was
doing/* and I said, "Now tell me all about it.

You should

that I was aware of what you were trying to accomplish."

knswn

XI^VH

After ha

finished I had him interned.
Naturally in the two years that I filled this position many
things of this character developed and on the part of some men because
they wished to make money by being able to break the regulations and
others who wished to favor Germany and break the regulations for
that purpose.
One day Paul Warburg who was vice chairman cf the Federal
Reserve Board came to me terribly excited and extremely angry.

said, "Have you seen Parker Willis1 new book?" and I said, "No, I
haven't any time to read books of that character."

"Well," he said,

"he claims in that book that he developed the whole foreign exchange
control when you know and I know he had nothing to do with it and
didn't even know what it was all about at first."
Knowing Parker Willis this did not surprise me although he
was Secretary of the Board, because I had seen many things that prevented me from having any confidence in him before, but I never looked
up the book and have no idea exactly what he said.

But Mr. Warburg

was outraged.
As a matter of fact Parker Willis tried his best to make it
di.fr*.cult for me to carry on my work because I never referred anything
to him cf any character whatsoever.

Later, after I retired Albert

Straus3 told me that thy Board had asked Willis to write up the
n Exchange control but I never saw his report.

Albert did say,

however, that the Board should not have dene. ;.t -i.a Fg.rlcor 7/ili^ s was
too far from knowing the proposition to writs j t up i n ^ o l l i ^ n U y

Harry Dexter White
The American Bankers Association put me on a special committee of bankers to go to the Treasury Department of the United Stat®
and discuss with them questions having to do with the monetary fund,
Harry Dexter White wasAssistant Secretary of the Treasury at the time
and he was the one we had to see•

In the course of the inquiries it

developed that I was opposed to the monetary fund in certain particulars as I made statements to that effect representing the American
Bankers•

Randolph Burgess was also a member of the committee and Mr»

Linn Heminway of St. Louis.

We were called to Washington several

times*
After one meeting the Treasury gave us a luncheon. One
young man who was connected with the Treasury Department and sat on
my right at this luncheon said to me, in effect,

Mr. Kent, I have

known all about you for a long time and I am going to tell you something confidentially."

He said, "Secretary White is having an investW

gation made of everything which you did when you were Director of the
Foreign Exchange of the Federal Reserve Board during World War I. He
hopes to find something that will discredit you and will therefore
kill your testimony before him regarding the monetary fund."
This, of course, interested me very much and I realized that
when I had had to render decisions all day long for nearly two years
that j.'j might be very simple to find something that I had said or
done tnat might be subject to criticism when considered at long range

and I was therefore quite anxious a.s t? vh*t ck~ ou.tcj.uj mi^ht bs*
Fortunately, White found nothing that ho could use against m* cind
therefore nothing came of the investigation
Later White asked me to arrange a meeting of foreign exchange men in New York at a dinner where he could speak afterwards.
This I did with the understanding that if I took exception to what he
said I would frankly say so after he finished.

The knowledge that I

was going to do this undoubtedly kept him within bounds because his
statements did not have within them the venom and dynamite that I expected.

In the American Bankers Association Committee we all realized

that he was untrustworthy but we did not know of his communist connections*
Baron d!Neufllzes
(1917)

Baron Jacques d'Neuflizes who represented the French

Treasury in Washington duringWorld War I was obliged to settle with
the American Treasury for francs which had been paid by France for
the United States in France in carrying out requirements of the United
States in preparation for the American entry into World Wai>t.

These

payment? covered altogether over -^500^000 over a period of a number of
months and many payments were made at different times on different
days by the French.

In the meantime the French franc was fluctuating

up and down very rapidly 3von during periods of a half hour or an
hour as well as on different days.

The French representative and the

American Treasury could not agree as to the amount owed to France
on, a-j 3B of these rapid fluctuations.

The French representative, Baron

d'"l*i-i\'Zl zes, therbupCxi t.dvisod the American Treasury that it would be
^Kree -.0.0 T.C France to liava rne ?.ct as arbiter to decide the amount

that must be paid to the French government ii the American Treasury
was satisfied to accept my figures as well-

The American treasury

agreed and I worked out the bill in detail and my figures were given
to and accepted by both governments and the bill was£aid to the
French government by the American government•
Lira
In 1917 or 1918 while I was Director of the Division of
Foreign Exchange of the Federal Reserve Board Lord Reading cabled
from Italy to the Secretary of the Treasury about the serious condition which existed in Italy because of the fall in value of the
Italian lira.

Since the war opened it had been going down and down

and when Lord Reading took it up with our government the quotation
^

was 9.15 to the dollar whereas the par of the lira was 19.3.
As a result the Italian government was unable to purchase
drachmas to pay soldiers in Greece, i t was unable to purchase Spanish
pesetas to buy copper in Spain, i t was unable to obtain foreign exchanges necessary to import raw materials for manufacture of munitions in South America and other countries.

Lord Reading said that

the Italian people realized that the munition factories would not be
able to run but a short time and Italy would then have to drop out of
the war.

He f e l t that something must be done immediately to re-estab-

l i s h the l i r a .
Our Treasury Department asked me what could be done about
thi iTiatter.

As the censorship which I controlled in so far as i t had

to Co with foreign exchanges made i t possible for me to see that a
traLnndous number of Italians v/ho had been in the habit of remitting
tc •/•• latives and friends in Italy had gone short on Italian exchange

be? ruse of

i t s growing weakness, I realized that we had a power there

-60*

that could be utillfedd bo restore tha lira in so far ag seemed advisable •
Advised our treasury that if I could be guarantee^ $1Q
million a month in order to carry on operations I felt certain that
I would not need to use any of it.

Explained that I would like to

have the head of the Bank of Italy, Mr. Gidony, come to America and
head the Italian division of the Foreign Exchange Department so that
I could have him as an Italian deal with the Italians direct in
order to give them confidence in the Italian government but all under
my secret personal instructions?
This arrangement was made and Mr. Gidony came to America.
Every morning I told him what rate he could sell lira to Italians
who had gone short and gave him a comparatively smallf igure for the
total that he could sell that day at the price made.

Each morning I

raised the rate until I hadbrought it up from 9.15 lira to the dollar
to 6.35 to the dollar.

By the time the rate had reached 6#35 to the

dollar we had sold over 400 million lira and had not had to buy any*
When it became evident that the lira was going up I made a few bluff
efforts to purchase lira by cable but was unable to buy any as I
hoped and expected at the rates made.

The result was that not a

dollar of the $10 million a month that had been guaranteed to me was
ever used.
When the price reached 6.35 lira to the dollar I felt that
we should not raise it any higher because it might be impossible to
maintain it and therefore we stopped at that point.

As the situation developed I was able to obtain drachmas

-61-

for the Italian government to pay its soldiers in Greece, to obtain
pesetas from the Spanish, etc. and Italy did not have to drop out of
the war asliOrd Reading feared.
One interesting incident in this connection was brought to
my attention after the rise in the lira had made some progress.

number of Italians and Americans were in a railway station in Italy.
Nitti, the Prime Minister of Italy was at one end of the room with
the Italians and the Americans who were in Italy looking after the
interests of the United States were at the other end of the room.
Nitti made a speech to the Italians expressing great satisfaction
over the rise in the price and the value of the lira whereas at the
other end of the room the American representatives were deploring the
rise because it meant they received less lira for their dollars when
they exchanged their salaries or wages in dollars for the lira which
they needed to pay their bills in Italy.
Naturally the rise in the value of the lira had the opposite effect on the Italians and the Americans under the circumstances.
This was a very interesting operation and it worked very
smoothly.

Of course, it cost Italy something as I had to have Mr.

Gidony sell a few lira daily at a price that was not going to prevail
the next day but it worked out to the advantage of the Italian situation in the war.

1919

-o2-

Paris Branch of the Bankers Trust Company
After ray release from Government by Carter Glass, Secretary
of the Treasury, in July, 1919, Mr. Prosser wanted me to go to Paris
and open a Paris office for the Bankers Trust Company.

Instead of

taking a vacation as planned I therefore went to Paris, studied the
situation and arranged to buy the Hotel Bristol for a Paris office,
rebuild it and open it up for American tourists.
The International Chamber of Commerce met in Paris in 1921
and our branch office was open.

The French government at the time was

very particular about passports and the Americans who attended the
International Chamber meeting were told from the platform at one meeting that their passports would have to be given up to an agent of the
French government and viseed.

Instead of allowing the vises to be

stamped by government agents when presented by American tourists they
were to be taken from them and returned in a week or two weeks or
such time as it happened to take.

It seemed to me that this was the

wrong way to handle the matter and I went to an officer of the French
government to whom I was able to get an introduction and arranged to
have Americans leave their passports at the Bankers Trust Company
office.

We then arranged to have the vises placed upon them and re-

turned them to the owners.

As a result I was able to have it announced

on the platform at the International Chamber meeting that all Americans who had to have their passports viseed could do so by leaving
then at the Paris branch of the Bankers Trust Company which would obtain ths vises from the French government and return them to the tourisca-

This gave a wonderful advertisement for the branch and American

-63-

tourists in great numbers came in immediately not only to have their
passports taken care of but also to obtain cash for letters of credit
and travelers checks•

Other American banks had branches in Paris

such as the National City Bank and the Guaranty Trus^fcompany but
they could not arrange for this service•
Before the Paris branch opened we arranged a new system
for the cashment of credits which took far less time than that which
had prevailed.

The day before the bank opened we had our clerks

come into the bank and gave them a training period in the new system
which proved most satisfactory.
When the bank opened we had a very satisfactory share of
the American tourist business almost from the start.
The bank remained open until World War II developed conditions that led the directors to feel that the complicated risks that
were developing warranted closing the office.
Organization Committee of the Reparation Commission
In 1919 a committee was named to organize the Reparation
Commission. It was made up of delegates from Great Britain, Prance,
Belgium, Italy and the United States.

Colonel Logan had the author-

ity of appointment for the United States representative and I was
selected.

Sir John Bradbury represented Great Britain and Colonel

Theunis, Prime Minister of Belgium, was made Chairman of the committee.
At that time it was expected the United States would go
into the League of Nations and therefore everyone on the committee
v-iahed to favor the iffierican delegate.

.64-

At the first meeting it was clearly evident that there was
such a division of opinion in certain ways that I invited the British
delegation to my apartment on Rue Prancais Premier for luncheon the
next day.

Mr. Henry Davidson had allowed me to take his/valet when he

was through with him who wasan extremely able person.

He provided a

cook and a maid of high class and as a result we were able to give the
British a wonderfully fine luncheon.
We discussed the whole question of organizing the Reparation Commission and came to a positive agreement between us as to how
it should be done.
Our point of view differed somewhat from that which had
been taken by the French representatives at the meeting and therefore
I invited that delegation to luncheon the next day.

After a long

discussion following the luncheon they finally agreed to the position
taken by the British and myself the day before.

Then the following

day and the day after I had the Belgian and Italian delegations to
luncheon and in both cases after discussion our final agreement was
along the lines of the first discussion with the British.
Then later came the meeting of the whole committee and to
the apparent surprise of everyone we were in full accord and the plan
for the organization of the Reparations Commission was agreed upon
and the Commission was immediately organized.

They asked me to act on

the Finance Committee of the Commission which I did with the understanding that when it was necessary for me to return to New York in
connection with my work with the Bankers Trust Company that I would
resign.

This was satisfactory to the appointed officers including

Assistant Secretary of the Treasury Albert Rathbone with whom I

worked very Closely.

While in Paris i at tend ej -.he meetings of the

Reparations-Commission and then when the tine came for me to return
to New York I resigned.
International Chamber of Commerce
In writing about the opening of the Paris office of the
Bankers Trust Company I referred to the International Chamber of Commerce which had just been organized.

As a member of this Chamber and

as a member of the Executive Committee in the International Chamber
of Commerce for the United States I worked very hard for this organization and attended their biennial meetings which were held in
different cities and countries of Europe with the exception of one
meeting in Washington which I also attended.

Had been asked to make

an address at the organization meeting in 1921 in Paris and also at
the meeting in 1923 in Rome and in Copenhagen in 1939.
At the meeting in Rome I was appointed Chairman of the
Economic Restoration Committee and was later re-appointed so that altogether I served in this capacity for four years representing the
Bankers Trust Company and the United States branch of the International Chamber.
The address which I made at the Rome meeting attracted
both Mussolini and Pope Pius X and they each asked me to call upon
them and discuss the statements which I had made.
My first call was upon Mussolini with whom I had a most interesting meeting.

He asked me in particular about Gompers of the

American Federation of Labor and what he was doing in the United
States.
The appointment with Pope Pius X was made for Palm Sunday

and I had to

be at the Cardinal's Room and meet Cardinal Gaspari at

nine o'clock.

When I presented myself a; the piopa? time he wished

me to sign a paper before going in to the tope.

As it was in a lan-

guage which I could not make out clearly even though I had studied
French, German and Spanish, I told the Cardinal that I did not like
to sign it as4i matter of principle.

He insisted as he said that it

was a courtesy matter only to meet tradition as carried on in connection with meetings with the Pope.

However, as chairman of the Com-

mittee on Economic Restoration I would be required to call upon the
Prime Ministers of many countries of Europe to discuss the situations
left by the treaty of peace, and I felt that I was not justified in
signing a document I could not read.

After considerable delay the

Cardinal told me that the Pope was waiting for me and that it was
really very discourteous to hold him up.

Then I agreed to sign the

paper if they would give it back to me if for any reason after I received the translation I found that I was not warranted in signing
it.

This the Cardinal finally agreed to.

Then I went in to see the

Pope.
He had been two years in Oxford and spoke English extremely
well.

He was a very fine person and was extremely courteous to me

and I enjoyed meeting him very, very much.
At first I excused myself for having delayed him and told
him why.

That is, that I had been asked to sign something that I

could not read and I did not feel justified in doing so as a matter
of principle.

However, that in order to save delaying him further I

had signed the paper with the understanding that I was to have it
back if after it was translated it seemed to me that it was something
that because of my connection with the International Chamber of Commerce I should not have signed.

The Pope was extremely nice and said

-57that he would have a translation made :Lmr;:8d3.ile!y f,nd 3*nd it to my
hotel and if I did not believe that I wcs justified in signing it,?
they would give the paper back to me.

Then we had quite a conversa-

tion about conditions in Europe and about my point of view as Chairman
of the Economic Restoration Committee.
had such an opportunity.

I felt highly honored to have

He fully approved my address.

Upon returning to the hotel I found the translation of the
paper I had signed and much to my regret was obliged to go back to
Cardinal Gaspari the next day and ask to have it cancelled.

It seems

that Gaspari was Secretary of State which was a political and not a
church office and he had thought that as I hac}/fco call upon the heads
of various governments it would be of value if I could represent the
Catholic church as well as the International Chamber of Commerce.

This

I did not feel warranted in doing and I checked it with the British
representative to the Chamber and he agreed with me.

It was there-

fore necessary for me to return to the Vatican and have the paper cancelled, which I did the following day.

However, my relations with the

Catholic Church were not affected by this episode as undoubtedly the
Pope realized as I did that his political representative had gone a
little far in asking me as Chairman of the International Chamber Restoration Committee to introduce myself also as representing the
Catholic Church.
The next day Hugo Stinnes who was in Rome asked to see me
and I went up to his room after dinner.
night until breakfast time.

Our conference lasted all

He told me the difficulty they were having

in Germany because the French were in the Ruhr and asked me if I would
as chairman of the Economic Restoration Committee see Poincare and

-es
carry to him a statement from Mr. Stinnos and certain other Germans
who were then in Rome.

After the discussion I agreed with Mr. Stinnes

to wait in Rome until certain men from Germany, one big industrialist
from the Ruhr, and the foreign minister, a member of the cabinet, came
over to Rome for the purpose of discussing this situation.

After two

or three conferences in the Grand Hotel in Rome Mr. Stinnes felt that
the newspaper reporters were getting curious and that we had better
separate for a week and then return and go on with the discussions
which were about a paper that the Germans wished to draw up that they
wanted me to present to Poincare*

During the week*s recess I went

down to Naples and upon my return found that the Germans were ready to
go on with their conferences.

Before we started I told them that the

statement which they wished me to present I did not care to have anything to do with as they did not agree to anything that I felt would
interest Poincare in any way.
When I pointed out this situation and told them some of the
things which they had left out that I felt must go in they re-wrote the
document.

When it was in such shape that I felt I would be warranted

in taking it to Poincare I agreed to do so and left for Paris.
Upon my arrival in Paris I made an appointment with Poincare
whom I knew very well because of having met him in connection with the
Reparation Commission in 1919 and 1920.
After telling him about the meeting with Hugo Stinnes and
the other Germansin Rome I showed him the document which they had prepared, and told him that in case he wished it I would be very glad to
go to Berlin and see the Prime Minister of Germany and try and bring
the paper into such form as he might wish to have it.

69-

Poincare seemed very much interested and asked me to call
back the following Monday I think it ves. The first thing which he
had to say at this meeting was that if it was discovered that "you
are going to Germany for me I will have to repudiate^iSu because I
could not have the French people feel that I had used an alien for a
serious negotiation of this character."

This I agreed to because

the situation w^s so difficult I felt that I was warranted in taking
that chance. ; Then he asked me to take down in my own handwriting
the things which he felt he must demand of the German government before withdrawal of troops in the Ruhr.
This paper I carried with me to Germany and upon arrival
in Berlin went directly to Mr. Houghton, Ambassador to Germany at
that time and who was a very close friend of mine.

(As a matter of

factl helped him on the address which he made to the British when he

was made Ambassador to Great Britain and before he was transferred
to Germany.)
Ambassador Houghton arranged a meeting with Prime Minister
Dr. William Carl Joseph Cuno of the German government.

Mr. Cuno

for the first meeting had Ambassador Houghton, the Foreign Minister
of Germany, and the Secretary of the Treasury and myself take
dinner with him.
We discussed informally the situation as outlined to me by
Poincare and then the next day I had an appointment with Prime Minister Cuno to talk over the whole situation.

Cuno wished me to write

out the whole matter together with my recommendations which I did in
a 500-odd page statement that took something like two weeks to prepare.

A copy of this was sent to Mr. Prosser and later the French

government, the British government and the German government were

http://fraser.stlouisfed.org/
Federal Reservefurnished
Bank of St. Louis

with copies.

Then upon my return to America I gave a copy

•70-

to Owen Young before he went to Europe to -,/oik on the Dawes plan and
the statements covered in this 500-odd page report formed the principal basis of the Dawes plan which I have always kept confidential as
I felt that Mr. Young would prefer not to have this known because it
might have depreciated his own position in working on this matter for
which he was highly complimented by European governments and our own
government.
Was in Germany about two weeks when one day Cuno said to
me "I would like to have you go over this whole situation with Wirth"
who had been the Socialist Prime Minister before Cuno, "and with von
Mahltzon" who was afterward Ambassador to the United States and who
was later killed in an automobile accident.

Told Cuno I would ar-

range to have these two gentlemen take luncheon with me at the Hotel
Adlon and would go into complete detail*

His purpose in having me

see these two gentlemen was because he feared he might be forced out
of government any day and he wanted the knowledge of Poincare!s point
of view in the hands of those who might follow him in government.
Just as we finished luncheon and before I had had an opportunity to do more than lay the groundwork for our discussion which I
could not carry on before the waiters, Cuno called me on the phone
and asked me if I could como right over to the Chancellor1s.

Told

him that/tfirth and von Mahltzon were with me at luncheon and that I
had not yet had an opportunity to explain the whole situation, as he
wanted me to do and asked him if it would be all right if I came over
later.

He said, "It will be all right but be sure and be here by

four o'clock."

So I agreed and then went over the detail of what

had happened with Wirth and von Mahltzon.

"--7"! ~
A little before four I left Ths Adlo-5. for Ciino1 s office and
went in to see him at Just four o!clock*
You can imagine my surprise when he handed me a document in
German and told me "I have just cabled this to Poincare and I want to
know what you think about it."

I read it carefully and then said to

him, and I recall the words perfectly that passed between us, "The
only reason you have asked me to read this document is because you
want my honest opinion."

He said, "Yea."

Then I replied, "The

United States, Great Britain and France will all know that it is not
a sincere document."
cere. 1 "

He said, "Mr. Kent, you do not mean ! not sin-

And I replied, "Yes, I mean 'not sincere.™
"The reason it cannot be accepted as being sincere is be-

cause there is only one purpose in sending the note and that is to
bring about accord with the French government and this note is so
worded that it will cause Poincare to feel that you are playing with
him because it is discourteous."
Then he said, "Tomorrow I will make a speech in the Reichstag and explain it all and Poincare will get the information and undertsand it."

I said, "No, any speech you make in the Reichstag

will be accepted by Poincare as having been made for home consumption."
We continued to discuss the situation until about 7 o'clock when
Cuno asked me if I would be willing to go back to Paris and explain
the situation to Poincare.
Told him that I was not certain that I would be personna
grata with Poincare in view of the fact he knew I was in Berlin
working on the note and that he had received a discourteous statement.

We continued to discuss the matter until about 10 ofclock
when Cuno said to me, "Are you willing to take the 11 o»clock train
to Paris and see Poincare?" I replied, "Suppose I go to Paris, suppose Poincare is willing to receive me, suppose he is willing to receive a new note, will that be a courteous note?" He got up out of
his chair, held out hisfoand, came over to me and said, !fI will promise
you asman to man that if Poincare will leave the door open the next
note will be a courteous note.11

Then I turned to him and said, "If

you will arrange to have your police let me out of Berlin without
having my passport viseed for which there is no time and you can get
accommodations on a train which has sleepers that will make it possible for me to rest some on the way, I will be glad to do what I can.
But Poincare may not be willing to see me."
Cuno then called up the proper people, arranged to have my
passport taken care of and also had reserved for me a complete second
class compartment for Amsterdam on the 11 o'clock train.
Had just time to go to The Adlon, and pick up my baggage
and get on the train before it started.

Pound the compartment filled

with Germans as the trains were terribly crowded those days for some
reason or other.

Did not make any move to take the compartment until

the conductor came around and then called his attention to the fact
that on the glass of the compartment was a sticker saying it was reserved for the Reich Kranzeller.

Then showed him a letter from the

Prime Minister to prove my identity.

He cleaned the Germans out much

to their dissatisfaction and I was able to move up the arms which
separated the different seats in the compartment and make it possible
to lie down. At five o'clock in the morning we stopped at a station

-73-

where I was able to get out and get some ccf.fce and then we went on to
Amsterdam where I was fortunate enough to make a transfer to a train
for Paris with very little loss of time.
As soon as possible after my arrival in Paris I notified
Poincare that I would like to see him.

When I found that he was will-

ing to do so I realized at once that probably the only purpose he had
in mind in seeing me was to dress me down for having allowed such a
discourteous note to be sent him.

To my mind that meant that if he

began to talk first I never would get a word in edgewise before I was
fired.

This meant that I would have to start the conversation before

he could get going.

It was fortunate that I knew him as well as I

did.
Just as soon as I crossed the threshhold into his room when
he sent for me I started talking as fast asl could to get his mind before he took over himself.

The first thing I said to him was:

"Mon.

Poinoare, you have most unfortunate things develop in your country at
times which you cannot control, don't you?"
and said, "Yes, of course, what do you mean?"

He jerked his head up
That gave me my opening

and I told him that Cuno and I had been working for two weeks on a
civil note along the lines Poincare desired.

Then one day the Ba-

varians came in and demanded that they see the note, that when they
read it they said if you send a note along these lines to Poincare,
Bavaria will leave the Reich.
the communists almost any day.
the German set-up.

Cuno was expecting to be thrown out by
Bavaria was a very strong element in

Cuno gave in, changing the wording as demanded by

tho Bavarians and sent the note.

Then he phoned me at the Hotel

A13.cn and asked me to come over and when I did he showed me the note

as already stated,
Cuno and I discussed the situation until just cirre i'j? me
to get the 11 o'clock train for Amsterdam and I agreed to see you and
explain the situation and he has agreed that if you would leave the
door open he would send a courteous note along the lines which we had
been discussing.
Poincare was interested and said:

"You allow me to study

the situation ajid come back Monday and I will give you my answer."
Naturally I kept the appointment and Poincare showed me the note which
he had sent to Cuno and he said:
open for another reply.

"You see that this leaves the door

Now," he said, "I don't want you to go back

to Berlin immediately because the nev/spapers may get on to this situation.

Instead, I wish to have you go to Hungary first.

Prance has

been asked to postpone reparations from Hungary until the $30 million
loan which Hungary is trying to obtain from the United States matures
and hasbeen paid.

My generals feel that I should not postpone the

Hungarian reparations and I do not blame them.

They have had a hard

time but I must have an unprejudiced report and I will appreciate it
if you will go to Hungary and look into the situation and give me
your opinion as to what I should do."
After a little further discussion I agreed to make the trip
to Hungary which I did.

The detail is covered in my statement on

Hungary.
Following the Hungarian trip Poincare and I went over the
second message from Cuno which satisfied him.

He then agreed in im-

portant part to the 500-odd page statement which I had dictated in
Berlin.

Then he made the arrangements that resulted in the conference

that came out with the Dawes Plan which covered ma^y of the conditions
that were incorporated in my report,

Poincare then turned to me and

said, "We have gone this far without the newspapers finding out that
you have been carrying on these negotiations for me.

When I am dead

but not before I would like to have you write your memoirs and include
in them the statement of these negotiations which you have carried on
and the reasons which I have given you why French soldiers are in the
Ruhr.

The newspapers and the diplomats all gave wrong reasons but I

do not wish them to know the real reasons while I am alive.

There-

fore take down in your own handwriting the real reasons and don*t
show them to your secretary, your family or to anyone until they are
in the memoirs which I have asked of you."
Then Poincare turned to me and said, and this was on a Monday I believe, "I wish to have you return to New York on the boat
which sails Thursday because it would be most unfortunate if the newspapers found out your position in this matter and I do not want the
negotiations to go on while you are in Paris."
As a result I took the Thursday boat for New York.

Gave

the full details of all that had happened to Mr. Prosser.
Roland Boyden was representative of the United States on
the Reparation Commission.

Later at a meeting in Boston he stated

that the work which I had carried on with Poincare nearly resulted
twice in peace between Germany and France but as it ultimately turned
out laid the groundwork for the Dawes Plan.

Mr. Lewis Pierson of the

Irving Trust Company was at the meeting and told me about it.

Later

when the United States refused to go in the League of Nations Mr. Boyden became a mere figurehead and had no power as the other countries
involved gave him no consideration.

Hungary
In 1923 while in Paris for the Bankers Trust Company I had
several consultations with M« Poincare, Prime Minister of Prance, the
detail of which is covered in another report•
At the time Hungary had applied for a $30 million loan
which she could not obtain unless reparations to which she had agreed
in connection with World War I were postponed.
Poincare had taken this matter up with his generals and tJoey
had all reported against it.

He felt, however, that they were pre-

judiced and he said to me, wMy generals feel that I should not postpone the Hungarian reparations and I do not blame them.

They have had

a hard time but I must have an unprejudiced report and I will appreciate it if you will go to Hungary and look into the situation and
give me your opinion as to what I should do.M
As I advised Mr* Prosser> I would make the trip by way of
Austria and hope to increase the value of our Austrian bank relations
at the same time.
As it turned out a vice president of one of the Austrian
banks asked permission to go with me to Hungary as he felt that he
could be of great value in helping me to make the study and that it
would be useful to the Austrian bank as well.
This was very fortunate because this gentleman was able to
arrange with a lady who had been known as the Belle Cf Budapest, Mrs.
Lanczy, (althougi I believe she was 65 years old at the time and was
still a very beautiful woman) to give a reception to me at which she
invited the principal members of the government which was in at the

-77time, th9i| #10 had been superseded by this government, ana those who
were fltpectod to take the places of those in the current government
vwhen

they would have to retire.
Of course at the reception I could not carry on any con-

ference in the nature of a study of the situation but I was able to
make appointments with a number of men who were in government, with
some who had just retired from government, and with others who were
expected to fill any new government that was later created.

proved possible further for me to make a number of appointments with
important industrial men.

The result was that I spent the next few

days in conference with some of the most important men in Hungary and
obtained a very clear idea of the conditions as they existed in that
country.
At that period all over Europe it was necessary when crossing a line from one country to another to give to an officer who went
through the train a statement of the amounts and different kinds of
money you had in your pocket.
get your money out again.

If you did not do this you could not

It would be confiscated or held for you

in the country concerned under conditions which would make it impossible for you to get it out.
In going to Hungary the Austrian banker who was with me
introduced me to some friends and we were engaged in a conversation
when we crossed the Hungarian line.

As a result I did not notice the

Hungarian agent who went through the train to obtain a statement as
to the funds which we carried.

The first time that I realized this

situation was on the train going back when we crossed the line into
Austria.

A man came into the compartment and fortunately asked me a

question about money in a way that made it possible for me to answer
without hesitation because I realized what he was after and also knew
that I had quite a large sum of American dollars in my pocket.
said, "Have you any American dollars?"
he wanted some.
dollars.

I replied as though I thought

Without hesitation I said,, "I may have a few American

How much do you want?"

He said, "Oh, no, I do not want any.

Am just checking up," and he went on.

There is no question but that

if I had hesitated any, my money would have been confiscated and I
considered that I was very fortunate as did also the Austrian banker
who was with me.
A careful checking of the situation in Hungary showed me
that the treaty as it applied to that country was most unfortunate
and unfair as was true in so many cases.

The original territory of

Hungary was sliced in every direction except toward Austria, that is,
some of its land was given to Czechoslovakia, some to Romania, and
some to Yugoslavia.

The situation that was left showed railroad

tracks going from new Hungary into old parts of Hungary which now belonged to other countries where there were no towns and no accommodations to arrange for trains to side track and customs to be arranged.
Further the lines handicapped Hungarians in many ways.

For instance,

in one case the waterfalls which supplied a Hungarian town were in
Romania and the town which they supplied was in new Hungary.

As a

result the Hungarians who had to look after the water situation were
obliged to get passports and were handicapped in every way possible.
Again in one case which I examined a coal mine which was in
o\o_ Hungary was now in Slovakia but the only entrance to the mine was

in the new Hungary.

This situation \>as of course or no /alu^ to cue

Czechoslovakians in any way except as it was utilized to increase the
costs of the Hungarians for getting coal out of their own mines.

a result it was cheaper for the Hungarian coal mine owners involved
to import coal from Yugoslavia 500 kilometers away than to obtain it
from their own mines which were only 30 kilometers away.
This whole situation was so absurd that I took it up with
the League of Nations and made a report to them on several situations.
I found that in both case3 mentioned the country which was given the
former Hungarian land where it was harmful to both countries was
willing to exchange such land for other land where it could be worked
out satisfactorily.

None of the countries along the Hungarian border

seemed willing to give up the land which hadbeen allotted them even
though it was of no value but they were willingto exchange it for
other land where it would not be detrimental to them.
The League of Nations reported to me that they hac^mt my
recommendations before the Military Strategy Board and this Board had
ruled that the lines would have to stay where they were regardless of
the harm which was done as the dividing lines would serve betted in
future wars.
Of course, this was absurd.

Nevertheless, it was the only

answer given me.
When I reached Budapest in Hungary it was very soon after
Bel?. Sun had been overcome by the Hungarian government and had been
thrown out.

While he was in control the League of Nations asked the

R'X •£•:,!axis to go into Hungary and help the Hungarians displace him.

All they did, however, was to steal the wonderful breeds of
horses which the Hungarians had and some cattle, put them on trains
and start them for Romania where they never arrived in important part
because they were not fed properly and died on the way.
In sending the Romanians into Hungary the League of Nations
had only succeeded in giving them an opportunity to stfeal and they
accomplished nothing toward overcoming Bela Kun which the Hungarians
succeeded in doing themselves.
Spent some time with one banker in Budapest who had succeeded in escaping Bela Kun 1 s torture when he refused to raise the
wages of his employees by an amount that would have bankrupted his
bank.

Instead of reporting to the Bolshevist government he managed

to escape into Austria.

Up to the time he was told that he must

raise the wages of his employees he had succeeded in getting along
without friction because all of his employees realized the impossibility of working under Bela Kun's regulations and therefore their
committees which were organized in the bank by the government allowed
the manager to instruct them as to how to proceed.
You can imagine my surprise when I discovered that the
head torturer in Budapest had come to the United States when Bela
Kun was overcome and aligned himself with the elder LaPollette as one
of his political hangers-on viien he was running for President of the
United States.
The Belle of Budape st of whom I have spoken owned a very
beautiful house.

The Bolsheviks forced her to allow a family from

tbe nXuins to take over the lower half of this house and she was only

-81-

able to retain the upper floor.

The stairway to the upper floor went

through a tremendous hall on the lower floor which she had to climb
every time she went into her own property and this was allowed to continue because of the force of Bolshevik feeling even after Bela Kun
had been defeated and forced out of the country.

Such have been the

difficulties that have prevailed in practically every country where
eommtaists or people of their ilk have temporarily taken control of
government and then been driven out.
One incident that was very interesting to me occurred while
I was in Budapest.

This Belle of Budapest of whom I have spoken in-

vited me to a big party that she was giving in a clubon one of the
islands in the Danube River.

She had been so courteous to me that I

accepted and I was to meet her at her house where I was to be taken by
auto with a number of other guests to the club.
the gentlemen to whom I was introduced said:
big bridge party.

Do you play bridge?"

While there one of

"This is going to be a

Realizing that the Hungarians

are tremendous gamblers I knew that I had no place in any bridge party
under such circumstances and so I replied:

"Oh, I have played but I

have never played for money because I am in a bank in New York and
some people there feel that it is wiser for bankers not to play for
money because of the effect it might have upon some of their clients•"
The gentleman said, "Well, I know plenty of American bankers who play
for money bat if you feel that way, it is quite all right for you not
to play."

When we got to the Club what should they do but organize

cno table where I was to play and where it was to be just for fun and
nor. I'or money.

One of the ladies who agreed to play at this table

said that she had never played without playing for money and she
thought it would be kind of fun to try it.

The other lady seemed to

feel the same way and so did the gentleman who made up the fourth.
What was my surprise to find out after we started that
those who were playing for money throughout the room dropped their
games and came to kibitz oiir game because '"<hey thought it was strange
that anyone would play bridge without playing for money and we had an
amazingly interesting time.
The Hungarians gave me a great dinner and I had to speak to
them about the general situation and they wore seemingly very much
pleased although I hadto criticize them in certain ways because I
the
felt that they were injuring themselves in/ way they were carrying
on because of having had their country cut up in such an unfortunate
way.

As a result many Hungarians who later escaped and came to the

United States before Russia took over the country have maintained
very friendly relationships with me in the United States.
Upon my return to Paris I reported to Poincare that I felt
that he was justified in postponing reparations and allowing the
$30 million loan to go through which Mr. Smith of the United States
was instrumental in developing.
the loan was made•

Poincare followed my advice and

1919

Financial Adviser to the War Department
When the War Department found out that I was going to Europe
at Mr. Prosserfs request in 1919 they appointed me Financial Adviser
to the War Department to pass upon all contracts which were to be
made in the sale of surplus war goods in European countries.

Fearing

that I might be drawn into some situation that would take my time
from the Bankers Trust Company I refused to take the salary which
they wanted to pay me.

However, Mr. Prosser was willing that I

should carry out the work which the Department wished me to handle
along with the work of the Paris office.
Under the regulations the War Department was selling surplus war supplies to many countries in Europe under contract.

Some

of the countries were not good pay and others were supposed to be.
My duties were to okay every contract before it became valid.

This

meant that I had to go over every contract that was being considered
and this I carried out and as far as I know none of the contracts
which I okayed was repudiated.
Confidentially it is interesting to note that a General of
the army in Romania tried to get me to sign a contract that would
£ive him some military supplies.
telephone.

This matter was discussed over the

The Romanian General called me up one morning and t o M

rr.e that he would like to buy some surplus goods and knew that I would
have to okay the contract and wanted to know if he could see me at
II o'clock and explain the matter.

It was my experience with Roman-

ians that when they were honest it was merely an oversight and so I
said to the General in effect, "If you wish to buy surplus war

supplies in order to sell for a profit instead of for your country
I would not okay the contract.

If on the other band it is a bona

fide transaction for the Romanian government I will be glad to lock
into the matter.

However, it would waste your time and mine if you

come to see me at 11 o!clock and were contemplating a contract that
would make it possible for you to sell the goods for profit for
yourself."

Of course, I was very courteous in my conversation but

he saw the handwriting on the wall and decided not to make the
appointment.
This incident gives a little understanding of the purpose
of my appointment as Financial Adviser of the Director of Sales of
the War Department.

Austria
1921
While on duty at the office in Paris of the Bankers Trust
Company, one day I received a telephone from Mr. Albert Rathbone who
was Assistant Secretary of the Treasury of the United States and had
an office in Paris where he carried on in connection with the Reparation s^Jommis si on and other matters that arose between the allies of
World War I.

He asked me if I could come over to his office immedi-

ately and I did.

He then told me about the situation in Austria

whore there seemed to be danger of starvation as conditions of great
difficulty were developing.
After he had explained the matter fuly he turned to me
and aaid, "Now, Fred, I would like to have you negotiate a loan for
Austria through the Bankers TrustCompany so that we can get food

Into the country quickly,"

I replied, "Albert, the clients c± tae

Bankers Trust Company like to choose their own charities and I do
not feel justified in arranging a loan for Austria, " and I returned
to my office.

Next day Rathbone called me up again and asked me if

I would come right over as he had received new information from
Austria.

When I got there he told me that Austria had food enough

for only two weeks and then the people would begin to starve and
that something must be done.
After thinking it over I said, "It is just as important
for the neutral nations to prevent the chaos that would develop from
a condition of starvation in Austria as it is to the allies.

There-

fore, I believe that an arrangement could be made with the neutral
nations and the allies to make advancesof certain things which
Austria requires in order to recover, countries such as Switzerland,
Holland and even the Scandinavian countries."
an arrangement I returned to my office.

After suggesting such

That afternoon Sir John

Bradbury, representative of the British Governmenton the Reparations
Committee, called me up and asked if Mrs. Kent and I could take
dinner with him that night and as we were free I agreed.
When the dinner was over and the ladies had retired, Sir
John took me into a room with the other Britishers who were there and
turned to me and said, "Secretary Rathbone has told us of your plan
for Austria.

He says that the United States cannot carry it out and

suggests that the British Government do it.

We are very much in-»

berested but must have complete detail before we undertake such a
proposition."

Of course, there was not any detail as I had jusc r-a^lc tho
suggestion to Rathbone in a general way.

However- I realized that if

Sir John felt thatl did not have any detail that he might lose interest.

So I made up the details as we discussed the situation*
The plan in principle was as follows:

We were to go to the

neutral nations and get them to loan money to Austria on the basis
that the payments were to be made to their own nationals for things
which Austria required that their nationals had in warehouses and
were unable to dispose of because of conditions that existed all
over the world.

Austria would receive no cash whatsoever but the

goods which were to be furnished against the loan would enable Austria
to employ men to process them where that was necessary, and meet
Austria's needs for raw material and for food.

I suggested that

Switzerland be asked for 25 million francs to furnish food, largely;
Holland 10 million guilders, and the Scandinavian countries krones
which were to be utilized in Sweden, for instance through supplying
copper which Austria needed, etc.; then that funds from Great Britain
be used for ships to transport goods, wool, and other things, and
that the United States furnish wheat, cotton, etc.
Sir John said that the British government would be willing
to undertake the operation but it would be very embarrassing to them
to go to the neutral countries and ask for loans and be turned down*
He therefore said that if I would obtain agreements from the neutral
nations and the others to make the loans that the British government
would handle the matter under my direction.

This I agreed to under-

take and I succeeded in getting Switzerland to agree to advance 25
million francs, Holland 10 million guilders, Denmark and Norway 17

million krones each and Sweden 10 million kj?oueo«

Great Bri.be* z

agreed to give half of what the United States would advance not to
exceed 4*15 million.
the
The proposition was put up to/Congress of the United States
and the Committee in the House turned it down.

Then I wrote a cable-

gram copy of which follows, to John McHugh, chairman of the Commerce
and Marine Commission of the American Bankers Association of which. I
was a member:
Paris, February 26, 1920
"During the past seven months since I have been in Europe I
have given a part of my time to studying conditions from the standpoint of the interests of American commerce and the people in my
capacity as member of the Committee on Commerce and Marine of the
American Bankers Association. My work has brought me into close relationship with representatives of many governments as well as those
of the banking and industrial world. While I am thoroughly convinced
that Europe for her own good should borrow as little from America as
is possible and provide herself with essentials for reconstruction and
for existence during the early period of reconstruction, yet I firmly
believe that the fifty million dollar credit now being asked of Congress for the countries of Central Europe should be granted immediately by special order. The situation is so pressing that every day's
delay is dangerous and the late spring, before the new crop is available, may be the crucial period that will determine the immediate
future of all Europe*
"The British Government has already agreed to advance half of any
amount that the United States will provide up to a total for Great
Britain of ten million sterling advance and France andttaly are studying the proposition. The governments of the neutral (countries) of
Europe have in several instances already signified their desire to
consider taking part in extending help, provided the United States
will do so and there is good reason to believe that practically all
may come in. Prompt and favorable action by Congress will therefore
release a large fund that should go far toward enabling the reconstruction of industry, which will make it possible for the countries
aided to help themselves. Should all of the nations interested join
in the plan, it is intended that a proper proportion of raw materials
and food will be purchased and the mistake of feeding people without
giving them something to enable them to earn their living at the same
time, will not be made.
"The funds advanced by each nation will be expended for goods and
service furnished by its own nationals. It would seem a great pity
for our country, which has done so much, to risk losing the results of

their past action by failing to meet the nee-Jiy :f the present ucar o
American interests in this movement through American trade and A^noi*!*
can need for peace throughout the world are just as great as thos*d of
the European nations which are ready to take part upon American initiative, even though their economic position has been seriously disorganized*
"The food in Austria today, together with all supplies which it
has been possible to purchase that are arriving, will feed the people
to about March 15 th. Certain food supplies that are available, if
shipped immediately from their present locations can reach Austria in
time, provided Congress acts immediately. Knowing the country (America) from ocean to ocean, I am certain that the hearts of the people
are right and that they would rise to meet any human emergency that
they felt required their help regardless of their personal interests.
But in the present emergency there is not time to wage a campaign of
education and it would seem necessary therefore for America to accept
the statement of their European representatives of today, governmental
and commercial, for various associations and personal, who are familiar with the situation and who unanimously agree that the loan should
be made. On the strength of such representation, I believe Congress
should be asked to abandon everything else for the hour necessary to
pass this appropriation immediately. The real need is now — tomorrow
may be too late."
"Believe important get this matter before Congress with full
power of American Bankers Association immediately and it should be
given widest possible publicity."
John took up the matter with the House Committee and read
the cablegram to them.

They decided to take part in the proposition,

but instead of giving wheat for instance that Austria had the mills
to grind and that would develop employment, they made the American
contribution 50,000 bushels of soft wheat flour that had been left
over from the war because our soldiers would not eat it.

However,

there was nothing I could do but work it out on that basis.

There-

fore, I used a part of the British contribution for transportation
which left less for wool and other things needed.
The situation in Austria was so serious that I had to borrow
300,000 bushels of wheat from Italy while we were working things out.

The only way anyone could buy milk in Vienna was for a

mother to take her baby into fchu street, ^vxth -i tin cup as -uhe oo^s
Walked by and have the cup filled with rrLlk aad given to the Wcy.
right Qn the spot.
Sir John Goode of the British government was appointed to
work with me and carry out my instructions.

He was very able and we

worked together without the least friction.

The Austrian situation

was saved and for a very small amount of money.

In three months even

the apprentices were working, and I went to Vienna and went through
some of the plants and saw what was going on.
At this period warehouses all over the world were full of
goods because shipments in excess had been made to meet the demands
of Europe following the war and they flowed in from all over the
world without the establishment of credits necessary to pay for them.
At first the shipments were sent on the basis of consignment because it was felt that prices would rise.

This proved to be

true and those who shipped on consignment at first made a tremendous
amount of money.

Europe, however, could not take the goods directly

and therefore in important part they were shipped to the United States
first and we forwarded them to Europe in many cases against loans.
This was the situation that developed i#l 1919-20.

Finally the accu-

mulation was so great that prices fell off and those who had shipped
to the United States from foreign countries expecting to receive big
premiums, for goods that were really needed in Europe, met with
great losses and often could not sell at any price.
The result was an accumulation in the warehouses of the
world of goods even when the war-torn countries needed them that
temporarily made a very serious situation.

It was to take advantage

of this that I worked out the scheme to bake care of Austria,

meant that each country taking part was paying its own nationals instead of Austria for things they could not get rid of that Austria
required and it solved the problem very quickly.

The whole detail I

gave to Colonel Logan•
It would seem well to follow this development in Austria
with my later work in this country in 1923 when Austria asked for
$130 million loan and Mr. Prosser wanted me to look into the condition
of the country.
I therefore went to Vienna and arranged to meet the principal officers of the Austrian government and the Mayor of Rotterdam
who had been selected by the League of Nations to rule the country
while the situation was being worked out.
Mr. Washburn was the Minister to Austria from the United
States.

He was very anxious to be present at the conferences I was

going to have with representatives of the Austrian government and of
Austrian industry and therefore invited me to his home to dinner
every night with the people with whom I had appointments.

This made

me a great deal of extra trouble because he naturally had to report
to his government whatever he might hear whereas some of the conferences were along lines that were confidential and did not belong to
government.

The result was, as in the case of the Mayor of Rotterdam

for instance, I had to make another appointment with him the next day
at his office to go over all the things that he did not feel justified in talking about before our Austrian Minister.

-90

The American government rented for the Austrian Minister
a palace that had previously belonged to Paul ofpoland and they also
rented a building for the service of the Austrian Minister.
tract was drawn in Austrian krones.

The con-

When the Austrian money depre-

ciated the inflation became very great and as a result our government
was able to purchase the Austrian krones needed to pay its rent for
$15.00 a year.

It seemed to me that this was unfair and I recommend-

ed that our government consider making our paymentin dollars on the
basis of the value of the krones when they made the contract but I
understand they never did so.
An officer of one of the Vienna banks told me that an
Austrian countess and her sister would like to invite me to dinner
with two Austrian gentlemen to give them an opportunity to show me
the effect of the depreciation of the Austrian krone.

We had dinner

at a restaurant on a high hill where we had a very beautiful view and
then tte Austrian countess wanted to take us through a building that
was a former castle but that she now owned.

After dinner we went to

this castle and entered in the basement and climbed a secret staircase that went up into the rest of the building.

It seems that the

countess had permission from those who rented the building because
they were to be out that evening.
One can imagine my surprise and embarrassment when upon
coming out of the secret stairway I found myself in the rooms of
Minister Washburn where I had been taking dinner every night and
where all the servants of course knew me.

However, there was nothing

for it and I let the countess and her friends show me around.

She

explained to me how it was impossible for her to carry on any re-

pairs in the building of any kind whatsoever* and that the few
she received fdi* i*ent that represented the cost of the krones that
the contract called for meant that the whole expense of the building
was upon her and that she had no income whatsoever from it»
While if I had known that we were going into Minister Washburn* s home I never would have done so, yet it was very interesting
to have the details of what happens under the kind of depreciation of
government monies which went on in many European countries at that
time.

Complete information on the whole situation was sent to Mr.

Prosser, in the form of a detailed special report.
One interesting situation that developed was due to the peculiarity of Senator Brookhart of Iowa who was in Hungary at the time.
It seems that Senator Brookhart went to Russia to obtain information
to take back to America as to how that country was being run, etc. He
had suggested to representatives of the Russian government that they
fix up some things in several industries along certain lines which he
wanted so that he could actually see the things that he was going to
report to America.

He apparently did not wish to lie about the things

that he saw but he was perfectly willing to have them fixed up in such
manner that while he would be telling the truth as to what he saw, it
would be far from the actual conditions that existed.
It seems that Senator Brookhart in his early days had been
a remarkable shot and he went to all of the county fairs in Iowa and
showed off his ability to the great delight of the growing generation.

As a result when he ran for Senator in later years all of the

boys who had watched him do the shooting at the fair, for instance
hitting two bullets that were thrown into the air when they crossed
each other

and things of that sort, voted for him for Senator.

What bothered Minister Washburn was that the Prime Minister
of Hungary had invited Brookhart to dinner.

After he had accepted

he told the Prime Minister that he never sat at a table where spiritous liquors were being drunk.

Of course in Hungary where wines are

always served with meals this made an embarrassing situation.

How-

ever, the Prime Minister was smart enough to work it out and he had
sideboards with wonderful liquors in a room just outside the dining
room.

He told his guests that this damfool American guest would not

sit at a table where spiritous liquors were being drunk and he had
arranged a special sideboard and whenever they wanted a drink they
could just step into the next room and get whatever they wanted.
Minister Washburn asked me how he was going to get out of the mess
when Brookhart came to Vienna and he was expected shortly.

Told him

that a person of that character in my opinion did not deserve any
consideration and that I felt that he should not arrange a special
dinner for him.
Mr.Washburn finally decided that this was the best way to
handle the matter but I was not in Vienna when Senator Brookhart
reached there.

-93Washington Conference
In 1922 Great Britain, Japan and the United States held a
conference in Washington for the purpose of arranging a relationship
between war vessels of the three nations•

The conference was seeming-

ly carried on in good faith and statements in the newspapers led to
the belief that the three countries were in agreement and would state
so over official signatures.
One day near what was supposed to be the end of the conference Elihu Root who represented the United States telephoned me from
Washington and asked if I could come over and see him at once.
the train for Washington and went right to Mr. Root1s home.

Took

He told

me that the Japanese after leading the British and Americans on had
refused to sign the agreement and that it would be most unfortunate
for the United States and would also be most embarrassing in view of
what had gone on before in connection with the conferences.

Mr. Root

said that he had been given to understand that I had great influence
with the Japanese and wanted to know if I would try and get them to
agree to sign.
After Mr. Root had given me the details of the situation I
told him that I would try and work it out provided no one interfered
with me in any way, shape or manner.

"Well, we will have to accept

your terms as there is nothing else which we can do," said Mr. Root.
Took the train for New York that night and arranged a luncheon with •
the Japanese at the Bankers Club in New York for the next noon at
which I had all of the important Japanese banking and commercial men
in New York City*

When the luncheon was over I addressed them on the

questions involved in the tripartite conference.

When I had finished

-94-

the head Japanese official who was present wanted to know what I
thought they should do and I told him I believed that he should send
a cablegram to their government immediately , and explained what wording I thought should be used.

After discussion the Japanese agreed

to do this and the cablegram was sent.
A reply was received in Washington and the Japanese government agreed to sign with the British and the United StatesMr. Root felt that this was a most fortunate outcome for
the United States and although I knew him well I had never seen him
so pleased over anything before.
This episode is mentioned in Mr. ^lihu Root1 s biography.

my request, however, the writer made the statement in effect that it
was not known what the results of my efforts had been although actually
the Japanese cable reply to the cablegram referred to authorized the
signing of the document of agreement.
My request to the writer of the biography was because the
luncheon to the Japanese where it was determined to send the cable to
the Japanese Government was confidential and I feared the Japanese
might resent it if it became public and I might lose their future
cooperation.
Other Japanese Matters
After the Tokyo earthquake in 1923 Kashiwagi of the Yokohama
Specie Bank called upon me at the Bankers Trust Company and said that
he would like to discuss the banking situation in Japan as it might
be affected by the earthquake and what could be done to take care of
the situation.

He said that he was talking with other bankers in

New York, among them J. P. Morgan Company, and was making a very
careful study of the development.

•••

9 5 -

After we had gone over the detail of what had happened up
to date because of the earthquake in the financial field I told him
that I would write out a cable for him and suggest how in my opinion
the Bank of Japan should meet the situation..
to him later that day.

This I did and gave it

He forwarded it to Japan and received a reply

that the plan which I suggested met the approval of the Bank of Japan
and that it would be carried out.
In the statement I said that I believed that if the plan
outlined was carried out that the Bank of Japan would have complete
control of the situation and that in one year* s time the whole financial situation cou?.d be worked out*
Just one year from that date I received a long cablegram
from Mr. Inouye, Governor of the Bank of Japan, saying that they had
carried out my suggestions, that they had worked out exactly as I had
anticipated, that it was one year from the date when they put them in
force and tha^he was able to resign as Governor of the Bank of Japan.
He then assumed the position of Minister of Finance in the government
because he considered the financial situation was sound.

Mr. Araki

When Japan decided to make war upon the United States
the government called back from this country all of itaxational3.
The representative of the Bank of Japan at that time was Mr. Araki
who following the re-establishment of normal relations between
Japan and the United States was made Ambassador to the United States
The day that Mr. Araki was called back to Japan he invited
me to luncheon to discuss the whole situation.

He knew about my

having advised the Bank of Japan following the Tokyo earthquake in
1923 as to how it should carry on and he ever afterward jokingly
called me his "boss" because he said he had learned so much about
banking from me.
It was a great disappointment to me when his health made
it necessary for him to resign as Ambassador to the United States
in 1954 as we were very friendly, as Mr. Murphy, Vice President in
the Foreign Department of the Bankers Trust Company is well aware.

The Philippine National Bank
(1928 - 1952")
When Mr. Henry L. Stimson was appointed Governor of The
Philippines he asked me to come over to his office

one day and bold

me that he had heard that the Philippine National Bank was in very
bad siiape.

He wanted t o know i f I would be willing to go to The

Philippines and straighten the bank out if he found i t
after he looked into the situation a l i t t l e .

important

Told him that I thought

i t could be arranged unless i t came in the rainy season, that I did
not like to make a t r i p like that without taking Mrs. Kent and that
I did not feel t h a t I was warranted in having her go to The Philippines in the rainy seaaor. 6

Mr. Stimson said that that would answer

he thought and th^t was the v:sy i t was l e f t .
Shortly aftei

he reached the Philippines he found the

bank was in such shape ^fcat i t xnutt be taken care of promptly and
that he must^iave his /•epcrb for the mooting of tiie legislative body*
Th^refoie, ho cabled mu and wantod in a to come over immediately even
though i t was tho rainy season.

This I really did not wish to do.

<)n tlie other hana I wanted to be helpful t o him.
Wrote t o Andrew Mellon who was Secretary of the Treasury
ai cho time and who was a close personal friend of mine, and asked
M* Jo rend us the records of the Philippine National Bank.

This he

^ici a:ic\ I locked 'die-n over very carefully.
Thr-n an luc> would have i t Mr. Earl Schwulst now with fc>3
3ow-r;- Favvi^ys Bank wiio waa extx»emely able at bank analysis was f r e e .

naAro luncheon with me and discussed ths matter of the

Philippine National Bank.

He said that he thought he would be glad

to go out to the Philippines and check the bank so I told M m that
before making the arrangement I would like to have him take the
papers that Mr. Mellon had sent me, go over them carefully and make
a statement to me as to how he would handle the situation*

This was

agreeable to him and his report to me showed his complete understanding of the situation*
Thereupon I cabled Mr. Stimson and told him that as I
was not webfooted I did not care to go to the Philippines in the
rainy season but that I had a man for him who was thoroughly able and
he was willing to make the trip.

Mr. Stimson accepted and Mr»

Schwulst went to the Philippines and did a wonderful job*
Then later I was asked to go to Si am while Mr* Schwulst
was still in the Philippines but after he was practically through
with his work in the Philippine National Bank I wrote him and suggested that he look after that situation also.
While handling the international exchanges during World
War I, I had discovered that the Philippine National Bank was not
handled properly and therefore when Governor Stimson took the matter
up with me I was quite well informed about the situation.
Mr. Schwulst did a remarkable job with the bank and Mr.
Stimson was tremendously pleased about it.

1928

Peru
In 1928 after I had arranged with Mr. Prosser to carry on
my work for the Bankers Trust Company as a Director and not as a
Vice President I went t o Florida to take a vacation.

After I had

been there two days I received a telegram asking me t o go to Peru
and try to straighten out the financial situation for the President
ofPeru.

I wired back that I preferred not t o do so as I had come

down to Florida to r e s t .

However, I received another telegram saying

there were seven million people in Peru who because of the financial
situation were having a very d i f f i c u l t l i f e and they thought I ought
to be willing to go down to help them out.
This, of course, put a different

light on the matter and I

telegraphed to have my secretary take the boat out of New York for
Havana and Mrs. Kent and I sailed from Miami to Havana, met her
there and took a British boat through the Panama Canal to Peru.
Naturally I had no papers on Peru with me but fortunately
had read i t s history rather carefully and therefore on the boat going
dowi I was able to bring together a f a i r l y good picture of the problems that I would have to meet.

I picked up a valet in Miami who

came with us so that there were four in the party*'
When we reached Calleo the representatives of the National
City Bank of New York in Peru met the boat and also Mr. Dennis who
was there for J. & W. Seligman & Co.

Then when we got to Lima we

met Mr. Bloomer who was the attorney for some of the American bankers
who wers interested in Peru.

I was told that the President of Peru had spies on everybody in the country and I figured that that meant he would have spies
on me.
club.

They gave me a room for an office in the tower of the golf
It seemed to me that I had better check on the spy business

immediately.

Therefore, when I v/ent downtown in Lima to start the

research necessary before I coul^fnake any recommendations, I left
some papers on a big round table that was in my office, marked and
spread in such a way that I could tell whether they had been disturbed while I was away.

My research required an examination of the

banks in Lima, the cotton and sugar houses, the petroleum industry,
the Federal Bank, etc. in order to obtain a complete picture of the
foreign trade of the country which was necessary before the domestic
situation could be straightened out»
In view of the fact that the President was supposed to have
spies on everybody I carried all papers that were confidential with
me in my brief case wherever I went and this first day as already
stated I left some papers on my table whose positions were marked*
Upon my return from a morning with certain Lima banks I found that
these papers had been handle^by somebody and were not at all in the
places where I left them.

This of course proved beyond denial that

the Presidents spies were already working upon me.
Some time a little later in my study I uncovered the fact
that a friend of the President had been abusing his position and
taking money from the government*

This was something that would be

very embarrassing to take up with the President so I wrote the
situation out in the form that I thought would be the best approach
to ;ho President and left it on my table.

The result was most

satisfactory as it was not necessary for me to bring up the matter to
the President personally when I next met him because he knew all
about it.
Prom this day on whenever any questions arose where I felt
it might be embarrassing to present them to the President I left
memoranda on my tables so that his spies would act as my messengers.
This proved most satisfactory and as a result I never had any friction
with the President whatsoever.
There were great numbers of engineering propositions undertaken in Peru at government expense all of which helped to develop
a deficit in government accounting.

Realizing that I could not per-

sonally investigate all of these propositions I joined the Engineers1
Club.

Then I asked the president of the Club if he would call a

meeting of the engineers who had in charge many of the operations and
give me an opportunity to discuss the situation with them.

The presi-

dent was kind enough to do this and one mornin@4t 10 o ! clock I think
it was, I went to the Engineers* Club and was introduced to quite a
number of Peruvian engineers.
Realizing that the President undoubtedly had a spy in the
meeting I stated to these men in effect, "The President of your country is anxious to have his financial house brought into order.

Among

other things this requires knowledge as to the practicability and advisability for the carrying out of many of the engineering projects
thai: have been undertaken in the country.

This is something that I

could not expect to accomplish personally except over a long period.
Therefore, I have come to you and would like to ask you to cooperate

•'..'•J

with me for the benefit of the President of your country.

Therefore,

I will appreciate it if you will forward to me in care>bf the president of the Engineers1 Club statements concerning the engineering
projects which are being carried on with your opinion as to whether
they will be of benefit to your country or not and such other detail
as you may care to give*
"As I realize that you would not be willing to do this if
I were to let the President know what your reports to me were I
agree not to let the President see them but to utilize them in my
report in such a way that they will be of value to him."
Knowing that he had spies in the meeting I felt that this
was the best way to let him see that I was not working behind his
back but at the same time I was arranging to obtain information that
was important to him.

The result was most satisfactory and in the

papers the next morning it said the President had called in the
president of the Engineers1 Club and told him that/foe was free to
carry out my wishes in the matter.
The members of the Club met the problem intelligently

and

their reports to me which were received in confidence and held in
confidence were very valuable.

Some of them were rather interesting.

One man, for instance, said, "I do not know why I should give a
foreigner information on any Peruvian engineering project but I feel
that it will not be used against me and may be of value to my country
and therefore I am going to make a report as requested."
The reason that I had confidence that the President would
on
allow a development of this kind to go/is because at my first
meeting with him I told him how I was going to approach the problem,

explained to him that I was going to obtain detailed information from
the banks, the sugar houses, the copper producers, and all others who
did an exporting or importing business in Peru and was going to bring
these figures together to ascertain the exact relationship between
Peru and the other countries of the world from a financial standpoint.

The President said in effect, "That will be wonderful, I have

always wanted to see those figures•"

Then I told him that I would

not ask any of the banks or industrial houses to give me their figures except on a confidential basis meaning that I would just use
the figures to build totals and that I would give them the benefit
of the totals exactly as I would the President.

At first the Presi-

dent shook his head and then when he saw that I would not obtain the
figures unless they could be held in confidence in this manner and
that the totals would be of value to him he said, M I will instruct
my people to cooperate with you in every way possible."
This was President Leguia.
country.

He had never been out of his

He was very anxious to be of value to his country.

smart but not too well educated in economics.

He was

There was one proposi-

tion which he was trying to put through that was very interesting.
Whenever it was possible for him to put his fingers upon a little
money he would use it to carry on the building of a tunnel through
the western cordilleras of the Andes at a point somewhere around
12,500 feet above sea level*

Between the eastern and western cor-

dilleras of the Andes was a great valley at an average of 12,500
feet above the sea.

The waters which fell in this valley from the

rains accumulated and flov/ed down through breaks in the mountains

on the east side and formed the head waters of the Amazon River.
Leguia was building this tunnel in the hope that the waters instead
of goingeast and into the Amazon could be turned onto the western
plains between the foot of the Andes and the Pacific Ocean.
Prom inquiries I found that Leguia was very partial to
this project and that everyone who had objected to it in the past
had been given short shrift.

Instead, therefore, of speaking to him

about it at once I looked into the situation and found that the
tunnel when it was completed would flood 600,000 acres of land around
Lambayeque which was the birthplace of Leguia.

It was clearly his

desire, therefore, to make a garden spot of the land around where
he had been born and where his neighbors had grown up with him and
therefore I did not approach this situation with him directly.
Many of the problems of Peru arose because of the effect
of the Humboldt Current which flows up from the Antarctic Ocean
along the western coast of Chile and Peru and on farther north.

This

Humboldt current arising in the Antarctic is a cold current just the
opposite from the Gulf Stream which is a warm current.

The effect

of this cold current through the Pacific Ocean along the shores of
Peru is to prevent its raining on the land between the foot of the
Andes and the Pacific Ocean,

The sun draws the water into the air

but not in sufficient quantities to enable a precipitation.

The

clouds so made at sunset look as though there was going to be a tre»
mendous fall of water but it never comes.

The re suites that all the

land between the foot of the Andes4nd the Ocean is a desert except
where a little water comes through cracks in the mountains in the

,• re-

form of waterfalls, etc. here and there which result in a growth of
vegetation along such areas.

Otherwise irrigation is the only-

possible way to develop vegetation.
They have a golf course just outside of Lima, 18 holes.
Every Sunday night it is flooded and is a lake for the next two or
three days when it is dried off.

In this manner the last few days of

the week they have a golf course with plenty of grass that is available from possibly Wednesday or Thursday until Sunday night.

It was

my privilege to play on this course a few Sundays and I found it most
interesting.
The irrigation system is tremendous*

It was established at

the time of the Incas before Cortez went to Mexico and before Pizarro
went to Peru.

It was very interesting to realize that these great

irrigation works were built during the time of the Incasor before,
when it cannot be supposed that there was engineering ability among
the people and yet they were created along scientific lines that
could hardly be improved upon with the scientific knowledge that
exists today.
It was necessary for me to make an examination of a railtfdad
which is broad gauge and at that time was the highest broad gauge
railroad in the world.

It was built by the British I think along

1876 and goes from Calleo through Lima and up the Andes crossing
some 60-odd bridges and going over great numbers of trestles which
cross valleys.

The road also had to have switch backs as it was run

on a side of a mountain as far as possible and then had to back up.
The President of the road let me take his Hudson Motor car which had

J. JO —

flange wheels to look over the railroad and it was most interesting.
We had to run on regular time so that we would be at switches when
copper trains came down the mountain.

We stopped at Rio Blanco

which was 11,000 feet above the sea for luncheon.

The air at 12,500

feet has only the same amount of oxygen that is true in Switzerland
at 19,000 feet.

As a result on the regular trains they have a nurse

with oxygen tanks to take care of casualties where people get mountain sickness.

After luncheon at Rio Blanco our valet saw some llama

in the distance and took his camera and went over to get pictures*
He moved a trifle too fast and as a result fell on his face and
could not get up for quite a period.

As our Hudson Motor car had to

arrive on train time we had to start when it was up and I was afraid
we would never see him again.

However, he showed up just about as

the train was ready to start much the worse for wear.
The copper pigs brought down from the Cerro de Pasco Mines
are loaded on flat cars and the pigs which weigh 500 pounds a piece
are put over the trucks with no pigs in the middle of the car, otherwise it would break the car in two in the middle*
Going back down the mountain there were places where there
were cracks in the mountain and the v/ater came through and wild
heliotrope grew many, many feet high.

We tried to stop the Hudson

Motor car to pick some but the driver had to try three times before
he could stop the car where the heliotrope was because of the grade.
When they were building the road workmen died in one of the
valleys because of poisonous bugs in the air but they did not go up
CLO far as the trestle that goes over the valley so that there was no

danger.

At one place where tli3 cas was stopped we were able to get

out and walk along where there wers quite ^ number of llama which is
a beast of burden in Peru to a certain extent.
Returning from Peru we stopped at one place where copper
pigs were being loaded on a ship.

They weigh 300 pounds a piece and

yet the men handling them did so apparently with the greatest of
ease •
One day at a meeting with Leguia he said to me, "I suppose. you think our taxes are too high/1

I said, "Yes, I do."

He said,

"Then you will be surprised to know they are not as high as they are
in Chile."
Then I said to him, "I presume the only way you measure
the relationship is on a per capita basis."

He said, "Yes."

"Well,"

I said, "you have great numbers of Indians in Peru who live in the
woods under trees, who buy nothing from anybody, who sell nothing to
anybody, and therefore take no part whatsoever in the economic life
of the country.

Are those Indians included in the population when

you measure the taxation?"

He said, "Yes, why not?

I said, "Do you count the monkeys in the trees?"
course not."

I said, "What's the difference?

They are people."

He said, "No, of

Neither of them take

any part in the economic life of the people in the towns, cities or
villages and therefore they should not be counted in measuring taxation."

He said, "Why didn't my economist tell me that?"

Only mention this to show the simplicity of mind.

?.O8

Examination of the Federal Reserve Bank was very interesting and helped me uncover many of the conditions that made it impossible for the government to carry on without getting into trouble
financially.

Attached hereto is a copy of the report which I made

after my examination of the finances of the country.
While I was not Vice President of the Bankers Trust Company
at this time yet I was a Director and therefore represented in a
sense the Company and feel that the prestige of its standing was of
great help in carrying on the operation.

1931

England Went Off the Gold Standard
When the Oesterreiche Kreditanstalt failed in Vienna in

1931 German banks and banking houses were so tied up with it that
it caused a crisis in Germany.

Following the war a number of coun-

tries (with the exception of France who extended very small credits
to Germany)including Great Britain, the Scandinavian countries, the
United States and others advanced money to the good German banks and
industrial houses.

German industry in general had its plants intact

and had the know-how of production.

However, following the war they

had no capital and capital was the only thing which they required*
The Deutsche bank took the matter up with the Bankers Trust
Company and we made some advances to the Deutsche bank which were for
the industrial houses which did business with them.
perfectly sound procedureo

It began as a

Howevar, such hugh amounts were loaned

altogether to German concerns that when the Austrian bank closed it

-109developed a very serious strain on the German economy.
* ^ ^Sorffe> of the loans made Germany were on demand and others on
time.

The demand loans were called first and it is interesting as

showing how strong the German position was to realize that something
like $900 million was repaid very promptly before the situation
reached toward bankruptcy.
Prom the British standpoint, however, conditions became
very serious because much of the money whic& had been loaned to Germany by British interests represented money which had been deposited
in England by clients throughout the world. As soon as the full extent of the Austrian debacle became known and as the loans which had
been made Germany upon demand were called depositors in British banks
and industries all over the world began asking for their money in
Great Britain. A representative of the British Treasury came to see
me and put up the whole situation as it affected the Bank of England.
In my work with the international exchanges in World War I,
I had become very well acquainted with Montague Norman, the Governor
of the Bank and with others in the British Treasury.

It was probably

due to this that they wished to discuss the matter with me.
As I recall it the Bank had something over $600 million in
gold in its vaults with which to meet the demands that were being
made upon it after a series of payments had been carried out. Their
representative told me, however, that in addition to drafts upon the
Bank!s gold that had already been made they had orders from different
parts of the world which altogether exceeded the $600 million in gold
which they then held.

After studying the conditions that faced the British with
knowledge of what was going on in Germany, Austria and other countries,
I advised the British Treasury to go off the gold standard while the
$600 million in gold was in their hands *

Told them that in my opinion

it would be more difficult for Britain to recover from the situation
if she had to start from scratch without any gold than if she went off
the gold standard with $600 million in hand.

It only meant repudiat-

ing demands made upon the Bank of England before the gold was exhausted
rather than after.

We discussed this matter in detail and the repre-

sentative of the Bank of England finally told me that he believed I
was right and that he would so advise his superiors in the Bank.

The

Bank of England followed my advice and went off the gold standard in
1931.
This was a very interesting episode and I was thoroughly
satisfied when England resumed the gold standard that it was able to
meet the situation better than it could have done provided it had had
no gold at all in the bank at that time.

Si am
When England went off the gold standard the King of Siam
sent the Prince to see me to ask me how to stabilize the "tical"
monetary unit of Siam.

—

I was just leaving for the train for Washing-

ton when the Prince called upon me and told me what he had in mind.
The Prince said he wanted to return to Washington in any event and
would like to go back with me on the train and explain the whole
situation.

This he did and we were fortunate enough to get seats

"Ill"
together.
It seems that Siam had arranged protection for its currency
in the form of sterling not gold in the Bank of England, but merely
bank accounts in sterling<

The result was that when England went off

the gold standard the value of the sterling which belonged to Siam
fell with sterling and as a result the currency of Siam depreciated
and the currency situation became very strainedc
After the Prince had explained the whole situation to me
carefully I wrote a cablegram for him to send to the King of Siam
with suggested plans for stabilization which I understand met the
requirements of the country at the time.

The King of Siam undoubtedly

had heard about me because of my having handled the foreign exchanges
during World War I.
1933

President Roosevelt
As I had had charge of the international exchanges in World

War I and the situation had been handled without friction or loss and
in the interest of the United States and the allies, when Roosevelt
became President in 1933 the Federal Reserve Bank of New York asked
me to take charge of the international exchanges during the crisis
that developed.

Mr. Jay Crane called me over to the Federal Reserve

Bank and made the necessary arrangements with me and I agreed to
take over.
Mr. Crane was the representative of the Federal Reserve
Bank who carried out all my transactions during World War I that went
through the Bank anc^ie had proved himself most intelligent and developed an understanding of foreign exchange very rapidly so that I

•112-

found him thoroughly dependable and efficient.
On this account it was only natural that Mr. Crane who had
moved forward into an important position in the Federal Reserve Bank
should have been the one to take it up with me about handling the
exchange situation under the Roosevelt regime.

Mr. Woodin was Secre-

tary of the Treasury at the time and after my appointment by the
Federal Reserve Bank of New York he called me to Washington to discuss the situation with him.
I asked him whether he wanted me to refer decisions on
policies to him or not.

His answer was, "Fred, you know this foreign

exchange situation and I don ! t.

You need not refer anything to me

whatsoever because I would not be able to be of help."

So I said,

"Mr. Woodin, am I to understand that I need not refer any decisions
I make to you in the future but that I may feel that I have your
okay on whatever I may do, of course working in harmony with the
officers of the Federal Reserve Bank of New York?"

He said, "Yes,

you need never refer anything to me on this matter because I have
all that I can do anyway and I know that I can trust you."

This was

the only conversation I ever had with Secretary Woodin about the
foreign exchanges.

However, I did try my best to stop him from allow-

ing conferences to go on in Washington in which he took part way into
the night lasting sometimes until three or four or five o!clock in
the morning.
When Roosevelt first went in as President such conferences
became the habit of many departments.
nothing but chaos.

They accomplished absolutely

Those who were in them could sometimes think up

J ^--'

to twelve or one oi clock but af tei» thao while they could at ill talk
they could not think and the conversation in the conferences in important part deteriorated into words without ideas and many of ths
men involved deteriorated from strong characters to persons without
real understanding of what they were doing.

Some of these men, like

Mr. Woodin and Mr. Melvin Traylor of the First National Bank of
Chicago for instance, could not stand the strain and died under it.
These long night conferences accomplished nothing because,
as already said, while men could talk all night they could not
think all night.
It was, of course, necessary to give decisions in connection with the foreign exchange operati on promptly, as oftentimes
cable offers were only good for a comparatively few minutes.

The

thing to be accomplished was tS> protect the business of importers,
exporters and foreign traders in the United States from loss of business or the making of losses.

Working under Mr. Crane this was com-

paratively simple because he, through his work with me in World War
I, had become very understanding and I made decisions all day long
without having to delay for reference.
President Roosevelt wanted to understand what was going
on in detail and asked me to write him every day to keep him informed.

This I did from early 1933 until the fall of 1936 when I

wrote him that I was getting hoarse and asked if it would be satisfactory to him if I wrote him only once a week.

This he agreed to

and from that day until he died I wrote him every Monday morning.
After Mr. Roosevelt died and Mr. Truman became President of the

-114-

United States he asked me to continue the weekly letters to him that
I had been in the habit of sending to President Roosevelt,

This I

did as long as he was President as it was clearly my duty as a citizen to give information to the President when he wanted it.

Further,

it represented an opportunity to stand up for sound procedure before
the President which was constantly made possible.
Since Mr. Eisenhower has been President I have had occasion
at his request to write him on a number of subjects that I have felt
important.

For instance I promised him before he was elected that I

would write him on how to reduce government expenditure with the
least harm to the economy.
pages.

This I believe covered about fifteen

Further I have had occasion to write on other special matters

and have been advised that he was much pleased and gave them attention.

This merely in passing but it does show that the Bankers Trust

Company because of its standing in the United States as an institution of integrity and intelligence has opportunities through its personnel to take important positions in connection with government.
President Roosevelt frequently called me to Washington to
take luncheon with him and discuss some of the various matters that
were coming up.

He had two servers brought in to his office with

three courses on eaoh.

They were put on his desk and we sat and ate

our luncheons and talked over the conditions that he wanted to discuss
with me without anyone else being present.
This was me at interesting of course and gave me an opportunity to discuss many things v/ith him in addition to those having a
bearing upon foreign i-rade.

Further, it put me in position to write

-115-

him in d e t a i l on many subjects that were also far frou foreign trade
problems and that covered many important domestic situations.
One of the problems which we went into in great d e t a i l had
tfe do with the New York Stock Exchange.

While i t was only necessary

for me to control the foreign exchanges during 1935 and 1934 as conditions affecting them straightened out, I s t i l l hadmuch to do with
the President because of my membership in the Business Advisory Counc i l which he had asked me to accept in 1933 (and has£ontinued to the
present) and also because of the years 1934-5-6 when I was chairman
of the Advisory Committee of the New York §tock Exchange.
As chairman of this committee i t became necessary for me to
carry on discussions with numerous heads of the SEC as this
tion developed*

organiza-

Mr. Kennedy was the f i r s t appointee and I spent con-

siderable time with him and very effectively because he was sound and
willing to have things go in a satisfactory manner.

Also had con-

ferences with Judge Landis but found him more under the influence of
President Roosevelt when he wished to have p o l i t i c a l matters carried
out.

My greatest disappointment, however, was in my conferences with

Judge Douglas when he was head of the SEC.

He knew nothing whatso-

ever about the stock exchange but was p o l i t i c a l l y minded.

Advisory Committee of the New York Stock Exchange
The Executive Committee of the New York Stock Exchange decided to have a committee appointed mostly outside of the Exchange
on a purely advisory basis and they picked me for chairman of the
committee.

This work I carried on for the three years of 1934-5-6.

In addition to the duties that fell to me as chairman to
consider matters with the committee I also was expected to and did
attend regularly the meetings of the Executive Committee of the Stock
Exchange, the meetings of the Public Relations Committee, and the Law
Committee and occasionally when it seemed advisable other committees.
In the developments that took place between the stock exchange and the government it became necessary for me to go to Washington quite often to discuss the matters with President Roosevelt, with
Mr. Kennedy when he was head of the SEC, Mr. Landis when the latter
became head of the SEC and with Mr. Douglas who is now a member of
the Supreme Court upon his appointment to the SEC.
While laws to regulate the stock exchange were being considered in the Congress some of the provisions that were being discussed if enacted into law would have been detrimental not only to
the stock exchange but to the country as well.

It became necessary

for me to discuss these laws with President Roosevelt for several
Senator
hours at different times. Finally/Carter Glass who was chairman of
the Senate Committee having these matters in charge went to Roosevelt and told him that the law that was being considered would be
very harmful to the country and I had several talks with Senator
Glass.

President Roosevelt told Senator Glass that if he would
draw up a bill covering the regulations that he had discussed with
the President, he, Roosevelt, would approve it.
did so.

Senator Glass then

The House Bill, however, was impossible and when the Senate

Bill was superseded by the bill that was drawn up by Senator Glass,
President Roosevelt gave Senator Glass a positive promise that he
would approve his bill.
Frankfurter who was an adviser to Roosevelt at the time was
in London and he cabled President Roosevelt he liked the House Bill
better than the Senate Bill and Roosevelt decided to switch back.
He then took a trip on the Caribbean Sea and I had no way to see him.
However, I wrote him a letter which I knew would be forwarded to him
because he had made arrangements with his secretarial staff that all
my letters when received would be put on top of hipmail and forwarded
to him whenever he was away.

He had asked me in April 1933 to write

him every day, as already stated.
The letter which I sent him about the stock exchange law
was forwarded to him by air mail and after reading it he switched
back to the Senate Bill regulating the stock exchange with just a few
of the unfortunate things that were in the House Bill added to it.
However, I felt that I had saved che stock exchange as I was certain
if the House Bill had gone through the New York Stock Exchange could
not have continued.

One situation that arose between us during this period had
to do with his determination to change the gold value of the dollar
from $20.67 an ounce t o op35»00 an ounce.

He called a meeting at the White House on a Sunday afternoor
of those to whom he wished to give the information.

Morgenthou, Secre-

tary of the Treasury, was there, also Jesse Jones, Dean Acheson,
Professor Rogers and Professor Warren (who had the President's ear
at the time as monetary advisers and who were thoroughly unsound
particularly Professor Warren), the President of the Federal Reserve
Bank of New York, and a few others including myself.
The first thing the President said when he opened the meeting^vas, as closely a^i can remember it, "If any of you gentlemen do
not like what is going to be done here, you had better get out.H
naturally did not leave much leeway for discussion.

That

Then the Presi-

dent told us that he was going to have the value of an ounce of gold
increased to $35.00.

He was going to do it in such a way that the

world would feel that the dollar was going to depreciate.

He said

that this would result in an increase of exports and a decrease of
imports.

I stated that the first effect would be just the opposite,

an increase in imports and a decrease in exports.

Professor Warren

said that all the books on economics said otherwise.

I admitted that

the principles aside from practice did so state.
However, at a later meeting speaking to those who were in
attendance all of whom agreed with the President I made the following
statement:

Suppose you gentlemen were on the Board of Directors of a

rubber importing company in New York and you saw that the value of
the dollar was going to decrease.

What would you do?

You would sup-

port your officers in importing rubber from London to the full extent
of your financial ability to do so even to the extent of borrowing*
The same thing would be true in many other lines of business, the

effect of which would be to increase imports.

Then I said -- sup-

pose you gentlemen were the directors of a French cotton mill in
Le Havre, Prance.

If you saw the value of the dollar was going to

fall you would advise your officers to postpone importing cotton
until the dollar became cheaper and you could get the cotton at less
cost.

Other foreign importers from the United States would be affect-

ed the same way and therefore American exports would decrease.
During the next few months, April to August, I gave the
President import and export figures and they worked out exactly as I
said they would.

Mitsui and Company imported so much rubber even

borrowing to do so that they developed a very serious strain on
their finances*
Then in talking to the President at one of the luncheons
heretofore mentioned I told him that after the effect of the fear of
the fall of the dollar had run its course and the dollar had become
fairly stabilized at the new price the principles advocated in the
books might take effect if nothing new in the situation developed to
prevent.
1945

Robert Dollar Award
When Robert Dollar #10 founded and was head of the Robert

Dol la p6t earn ship Company died his family established a memorial to
him through the National Foreign Trade Council of which Robert Dollar
had been a director for many years.
The memorial is in the form of a solid gold plaque worth
about $500 which is given to one man in the United States every year.

This man is picked out by a commitcee nominated by the National Foreign
Trade Council from its members/n such manner that the whole country
is well covered.

This committee after canvassing the situation in

the United States selects one person for the award for the year of
his appointment*
The purpose is to find someone each year who can be considered to have accomplished most for the foreign trade of our country
on some year.

The committee which was formed for the year 1945 was

made up as follows:

William K. Jackson, Chairman
United Fruit Company
Boston, Mass*
Theodore Brent,
Mississippi Shipping Co.
New Orleans, La.
Curtis E. Calder,
Electric Bond & Share Company,
New York, N.Y.Frederick C. Crawford,
Thompson Products Co.
Cleveland, Ohio.
Charles R. Hook,
American Rolling Mill Co.
Middletown, Ohio.
Joseph C. Rovensky,
Chase National Bank,
New York, N.Y.
Stanley Powell
California Packing Corpc
San Francisco, Calif.

This committee selected Frcdlo Kent, Director of tho
Bankers Trust Company, New York, for receipt of the memorial that
year.
This gold plaque was presented to me as i s customary at
the closing dinner of the Convention of the National Foreign Trade
Council by the Chairman of the committee and a speech of acceptance
i s made at t h i s Council dinner by the recipient*
Since the establishment of the memorial the following persons in the United States have been awarded the plaque:

1938

Cordell Hull

1939

James A. Farrell

1940

Thomas j ; Watson

1941

Eugene P. Thomas

1942

Sumner Welles

1943

Juan T. Trippe

1944

Eric A. Johnston

1945

Fred I. Kent

1946

William L. Clayton

1947

John Abbink

1948

Robert F, Loree

1949 . Christian A. Herter
1950

Pau^r. Hoffman

1951

James A* Farley

1952

Edward Riley

1953

Eugene Holman

1954

Clarence B. Randall

As in my work for foreign trade I had been a vice president
and/or director of the Bankers Trust Company of New York I felt that
the credit for the award also belonged to the Bankers Trust Company
as did everything else which I had been able to accomplish while
representing the Company.
Chamber of Commerce of the United States
As a member of the Chamber of Commerce of the United States
representing the Bankers Trust Company of New York I was appointed to
the Finance Committee and served upon it from 1921 to 1923, and then
became Chairman of the Finance Committee for the succeeding period
from 1923 to 1928, and again became a member of the Committee from
1928 to 1933.
The International Chamber of Commerce which was established
by many countries of the world in 1920 in London had its representation from the local Chambers of Commerce in each country and delegates
to the International Chamber were appointed from the members of the
local Chambers.
The United States Chamber of Commerce appointed me as
representing the Bankers Trust Company in the Chamber a member of
the Executive Committee of the American Branch of the International
Chamber of Commerce which position I held until the Executive Committee
was changed to the United States Associates of the International Chamber in 1946.

This change in the form of the organizati on made it seem

important to me to have an active officer of the Foreign Department
represent the Bankers Trust Company on the United States Associates
and therefore when my term expired I suggested that Mr. Frank Shepard,

Vice President of the Bankers Trust Company take my place. This was
arranged and has prevailed ever since.
The Executive Committee of the American Committee was made
up of the following members:
Eliott Wadsworth
Washington, D. C.
Winthrop W. Aldrich,
Chase National Bank of the
City of New York,
New York, N.Y.

Fred I. Kent,
Bankers Trust Company,
New York, N.Y.
Thomas W. Lamont,
J. P. Morgan & Co.
New York, N.Y.

Julius H. Barney,
New York, N.Y.

Clark H. Minor,
International General Elec.
New York, N.Y.

Willis H. Booth,
Guaranty Trust Company of NY
New York, N.Y.

Lewis E. Pierson
Wa?&avings Staff Hdqrs*
New York, N.Y.

John H. Fahey,
Federal HomeLoan Bank Board,
Washington, D. C.

George A. Sloan
New York, N.Y.

Robert V. Fleming
Riggs National Bank,
Washington, D. C.
W. A. Harriman,
Brown Brothers Harriman and Co.
59 Wall St.
New York, N.Y.
Eric Johnston,
C of C of the U.S.
Washington, D. C.

Silas H. Strawn
Winston Strawn and Shaw,
Chicago, Illinois.
Thomas J.Watson,
Intern11 Bus. Mach. Corp.
New York, N.Y.

During the time that I was on the Executive Committee of
the International Chamber of Commerce American Committee I attended
all of the Chamber meetings as a delegate. The meetings were held
biennially and I attended those representing the Bankers Trust Company
of New York in Paris in 1921, Brussels in 1923, Amsterdam in 1925,
Washington in 1927, Stockholm in 1929, Rome in 1931 and Copenhagen
in 1939.

At these meetings I made addresses in Paris, Rome and Copenhagen •
V/as appointed Chairman of the Economic Reparation Committee
of the International Chamber f ollowingftorld War I, a position which I
held for four years. During this period in carrying on the work of
the Committee I called upon and had conferences with the Prime Ministers of many of the European countries such as Great Britainf Prance,
Belgium, Holland, Germ any> Italy, Switzerland, Austria and Hungary.
There were representatives from 31 countries on my committee and we accomplished a great deal in alleviating the friction
which had developed among the European countries because of World War
I and the unfortunate peace treaties.

Due to this work I was appoint-

ed technical adviser to the International Chamber.
Following the Copenhagen Conference Hitler started the
second World War.
Confidential detailed reports were made of all of these
meetings to Mr. Prosser.
Copy of letter from Chamber of Commerce of the United States,
dated June 15, 1954:
Mr. Pred I. Kent
100 Broadway
New York, N.Y.
Dear Mr. Kentx
We are glad to send you information from the records of the
National Chamber concerning your long and distinguished service to
this organization.
The Chamber* s"records show that you were appointed as a member of
i t s Committee on Foreign Relations in 1918, and served as a member of
the Chamber's Committee on Foreign Affairs from 1921 to 1926.

Our records indicate that you served, also, on the Chamber's Pinance Department Committee from 1921 t o 1925, a?Chainnan of this Committee from 1923 t o 1928, and again as a member of the Committee from
1928 t o 1933.
In 1926 you accepted appointment to the Executive Committee on
Federal Reserve Inquiry.
You were honored, also, in 1926, by your election as Honorary Vice
President of the National Chamber.
Our records show that you served as a member of the Chamberfs
Committee on Special Banking and Currency Study from 1927 to 1930.
In 1943 — twenty-five years after your first appointment to a
Chamber committee — you were appointedas a member of the Chamber's
Committee on Economic Policy, and served on this Committee until 1949.
It is a genuine pleasure to give you this information from the
records of the National Chamber. You can be justly proud of the contribution you made to the work of the Chamber, and through it to the
progress of our nation.
Cordially,
(signed) Maurice A. Kramer
Maurice A. Kramer
Assistant to the
Executive Vice President
Cotton Bill of LadingCommittee
So many losses were incurred in handling bills of lading because
of irregularities in their issuance that bankers abroad and in the
United States got together and worked out a validation system for
their mutual protection.

Sir Edward Holden of the LondDn City Mid-

landBank came to New York to represent British bankers and he was
placed on the American Committee of which I was made chairman*
We took up the situation with the railroads and at one meeting in New York at which I presided the presidents of 52 railroad*
were in attendance and a complete agreement as to the form of validation was worked out and put into force.

National Foreign Trade Council
(1921)
James H. Parrell who was president of the United States
Steel Corporation organized a group which was namec^bhe National
Foreign Trade Council which he felt was necessary to check on all
matters having to do v/ith the foreign trade of the United States for
the benefit of importers. exporters, traders and others and also of
the trade of our country.

He became president of the organization,

a position which he held I believe until he died when Mr. E. S.
Thomas who had been one of his right hand men in the Steel Corporation took his place.
Mr* Farrell wanted me to go on the Board of Directors
which I did,.a position which I have held ever since and for which I
have been re-elected to continued and regular sequence.
The organization has held a convention every year, recent
ones being held in New York City at the Waldorf where there has
usually been an attendance of over three thousand people interested
in banking and foreign trade.
The committees of the organization have worked very hard
and the president and management are guided in their work by the
resolutions which are passed at every convention.

These resolutions

are built up carefully over a period and passed upon by the Board of
Directors until final consideration is given to the resolutions by a
Special Committee appointed at each Convention by the president.
Throughout the life of the National Foreign Trade Council I have always been a member of this committee and have attended its meetings

-- ?.27and studied the resolutions very carefully.
These resolutions are very different for instance from
those of the American Bankers Association which cover general principles having to do with banking, currency, etc.
Those doing a foreign business in the United States have so
many difficult problems, great numbers of which have to do with the
actions/bf the American and foreign governments, that the resolutions
while they have covered many principles such as that of private enterprise which has been developed very fully in many of these annual
statements in the different forms necessary to meet going conditions
have in effect been a book of instructions to the management and the
Board of Directors in their work between Conventions•
On this account these resolutions are studied and passed
upon in detail by the Board of Directors, then, as already stated,
finally approved by the special committee appointed at the convention.
Then the Chairman of this special committee reads the resolutions to
the Convention for its approval.
Have served as chairman or member of many of the important
committees of the Council, a great many of which have been created to
meet different problems of foreign traders that have arisen because
of the attitude of our government or foreign governments.
When the Export-Import Bank was formed a special committee
was named to study the whole set-up and try to hold the building of
the Export-Import Bank in such shape that it would not be harmful to
private enterprise.

The members of this committee, of which I was

the first chairman, w^re obliged to go to Washington constantly for

a time to discuss the creation of the bank with the member3 of Congress who were working out the detail.
Other committees which I have been on are as follows:
Executive Committee
International Committee
Post-War Planning Committee
Foreign Property-holders Protective Committee
Foreign Trade Reconstruction Committee
Plans and Operations.,
Sub-Committee on Monetary Policy and Exchange Stabilization
Committee on Education.
Today I am a member of the following committees:
Member Board of Directors
International Finance Committee
Point Four Program Committee (inactive)
Resolutions Committee for November ! 54 Convention
Since Robert Loree retired from the Guaranty Trust Company
as manager of its foreign exchange department he has been Chairman of
the National Foreign Trade Council and since the death of Mr. Thomas,
Mr. William Swingle has been president*
In my opinion this organization has done more and better
work in the interest of foreign trade of the country and those engaged in it than any other organization in the United States has
accomplished.

Conference of National Organizations
Officers of the National Association of Manufacturers, the
Chamber of Commerce of the United States and other national organizations in the country formed a special Conference having representatives
from twenty-three of the nost important business and labor organizati ons•
This body was termed when Lee Wiggin was president of the
American Bankers Association which was asked to participate.

Mr.

Wiggin appointed me as Chairman of the Commerce and Marine Commission
of the American Bankers Association to represent the American Bankers
as chairman of its committee on what is now called the Conference of
National Organizations (its name has been changed a trifle from that
used at the start).
Every member organization is allowed three representatives.
The meetings are held three times a year, mostly in Atlantic City although a few meetings have been held in Chicago.
The discussions are all off the record and the purpose is
to bring labor and management together for serious discussions of national problems.

At some of the early meetings I had Randolph Burgess

as one of the members of the Bankers1 Committee.

A few of the meetings

have been held at times when I had directors* meetings of the Bankers
Trust Company so that I could not attend but I have always had someone there to represent me in such cases.

All other meetings I have

attended for the several years that the conference has been in existence-

The discussions have proved to be of great value and have

. ,"; T.

enabled business men who have represented the Chamber of Commerce of
the United States,' the N.A.M., the American Bankers Association and
others to obtain an understanding of the point of view of the CIO.,
the AP of L, the railway unions and other groups of labor men because
all have talked off the record extemporaneously and without fear at
these meetings.

Some of the organizations represented on the Confer-

ence are the following:
Air Transport Association of America
American Bankers Association
American Farm Bureau Federation
American Federation of Labor
American Legion
American Trucking Associations
American Waterways Operators
Association of American Railroads
Association of Stock Exchange Firms
Chamber of Commerce of the United States
Committee for Economic Development
Congress of Industrial Organizations
Cooperative League of the USA
Disabled American Veterans
General Federation of Women's Clubs
Investment Bankers Association of America
Kiwanis International
Lions International
National Association of Manufacturers
National Association of Retail Grocers
National Council of Farmer Cooperatives
National Education Association of the United States
National Foreign Trade Council
National Grange
National Retail Dry Goods Association
Veterans of Foreign Wars of the United States

National Industrial Conference Bcard1
In 1920 so many problems were developing between capital and
labor and management and labor that a small group of men felt that
such problems should "be studied carefully by industry in order that
it mi^ht be able to intelligently meet them.

Frederick Fish, a very

able lawyer from Boston, was willing to give his time to help in the
original development.
Meetings were held once a month throughout the year except
in June, July and August and a research body was formed within the
National Industrial Conference Board that has proved to be one of the
most technically able and valuable research groups in the United State*
For a number of years I was Treasurer of the organization
representing the Bankers Trust Company following which I was appointed a trustee of the Board, a position which I hold at present as I
have been constantly re-elected.

Further, for one year I was chair-

man of the Board and had to preside over its meetings.
The program of the Board has been for the Board of Trustees
to hold a luncheon meeting monthly followed by general meetings where
discussions are h-alc1. on crucial subjects of the day having to do with
management, labor and government, and a dinner of board members and
guests at night with addresses on current national problems.

these dinners the audience has consisted of some 1500 to 1700 business
men.

Usually three addresses are made taking different sides of the

current important problem of the moment.

These addresses are off the

record except where tha speaker is willing to have them published.

The Board also has a small groip of 16 of the Councillors
whose terms run for five years.

Following are the present Coun-

cillors:
Sewell L.Avery, Chairman of the Board,
Montgomery Ward & Company, Inc.
Chicago, Illinois
Irenee du Pont,
E. I. duPont de Nemours & Company, Inc.
Wilmington, Del.
Frederick H. Ecker, Chairman of the Board,
Metropolitan Life Insurance Company,
New York, N.Y.
Eugene G. Grace, Chairman,
Bethlehem Steel Company, Inc.
New York, N.Y.

P a u l G. Hoffman,
Formerly Administrator,
Economic Cooperation Administration,
Washington, D. C.
Honorable Herbert Hoover,
Palo Alto, Calif.
Cornelius F. Kelley, Chairman,
Anaconda Copper Mining Company,
New York, N.Y.
Dr. Fred I. Kent, Chairman,
Council of New York University,
New York, N.Y.
Frederick J. Kosters President,
California Barrell Company, Ltd.,
San Franciscoj Calif.
W. L. Mellon, Director,
Gulf Oil Corporation,
Pittsburgh, Pa.
A. W. Robertson, Chairman of Board of Directors,
Westinghouse Electric Corporation,
New York, N.Y.

• • *

••-.•>

•

;

Alfred P. Sloan, Jr., Chairman,
General Motors Corp.
New York, N.Y.
Myron C. Taylor, Former Chairman,
United States Steel Corporation,
New York, N.Y.
Thomas J. Watson, PresidentsInternational Business Machines Corp.
New York, N.Y.
General Robert E. Wood, Chairman of the Board,
Sears, Roebuck and Co.
Chicago, Illinois.
Owen D. Young,
General Electric Company,
New York, N2f.
Last year I was re-appointed for another five-year term.

For a number

of years and at present I am a member of the Finance Committee of the
Board representing, of course,, the Bankers Trust Company, which is a
Board member.
Statistics are published weekly covering tremendous detail
that carries on the going relationships between industry and labor
and also statistical industrial developments.
For possibly some twenty years a so-called Yama Conference
has been held, so named because the first conference was held at Yama
Farms.

The president cf the National Industrial Conference Board in-

vites about fifty important business men covering the whole United
States to gather for Friday afternoon, Saturday and Sunday morning to
discuss off the. record without program all the problems of the moment
that are industrial or about labor and government*

These conferences I have attended since their inauguration
with the exception of the very few which have come when I have been
out of the country.
During recent years the meetings have usually been held in
November and Irenee DuPont has arranged for us to have the facilities
of the golf club at Absecon, New Jersey, where we can meet under
conditions that prevent publicity.
At present the membership of the National Industrial Conference Board consists of 3,381 presidents or other high officials
of the big and many of the small industries of the country*
In addition to the meetings held monthly in New York,
during recent years since Mr. Sinclair has been president, meetings
have been held in other parts of the country such as the south,
middle west and far west.

These special meetings are attended by

some 50 or 60 of the most important industrialists of the localities.
American Arbitration Association (1986)
An Association was formed some years ago aimed to arrange
an arbitration of differences that might arise between industries
and between labor and industry.

It was named the American Arbitra-

tion Association. Mr. Colt is a member of the Board as am I also
and I have worked very closely with the organization in many re*
spects.
In one large arbitration development where Holland was on
one side, its government requested me to serve as a member of the
special arbitration board but I felt that because of the conditions
that developed it would be unwise to do so althou^i I was able to

refuse without offense to the Dutch interests who had asked mz be go
on the arbitration panel.
This organization has proved most valuable and has accomplished the settlement of a vast number of disputes that otherwise
might have run into expensive law suits•
Transportation Association of America
(1935)
The strained conditions that developed between the railroads and carriers by water and later with the truck interests caused
a group of men to believe that something should be done to ameliorate
the frictions that were arising and also to put the railroads upon a
more sound basis.
The Transportation Association of America was organized by
thirty-seven outstanding leaders of agriculture, industry and finance
who were concerned with trends affecting transportation and the drift
of this great public service toward government ownership.

It has

been carrying on panel meetings made up of very important men with
technical understanding and experience of the problems covered in
each panel.
A division of panels has been made in such manner that
every live railroad problem and problems that developed between
water carrying interests, trucking and the railroads have had detailed considerations
Prank Rathje is president of the organization.

He was for-

merly a president of the American Bankers Association and is president of the Chicago City 3o.uk and Trust Company in Chicago.

James

L. Madden, Vice President of the Metropolitan Life Insurance Coirp
is Chairman of the Executive Committeec
For a number of years I have been a member of the Board of
Directors with the understanding that I could not attend the monthly
meetings in Chicago but that I would be present when possible at
annual meetings and also would work with men in other organizations
and advise them of the activities of the Transportation Association
of America•
This Association is personna grata with Congress and has
taken forward positions in connection with much railroad legislation
that has gone before Congress.
The Executive Vice President, Donald Conn proved to be an
extremely able person. Unfortunately he died suddenly in August 1954
and Mr. Rathje and the Board have a very serious problem to find anyone able to take his place because it required a tremendously broad
and technical understanding of the whole transportation system of the
United States, something that Mr. Conn held to a high degree.
American Bankers Association
When I was with the First National Bank of Chicago in 1898
they made me one of their representatives at the annual meeting of
the American Bankers Association.

In the Association they appointed

me a member of tho Express Money Order Committee and then I became
chairman of this ctai:ittee•

This matter is covered in my statement

about the American Fankers Association travelers checks so that I
will only refer to iry other connections with the American Bankers
Asscciation in th:ls pair I c i l a r statement.

When Bob Maddox was president of the American Bankers in
1918 he formed the Commerce and Marine Commission with John McHugh
of the Chase National Bank as chairman and I was one of the members.
When Mr. McHugh resigned the chairmanship in 1921 I was appointed
Chairman and have been re-appointed to the Commission as Chairman
constantly since, year by year, and am now Chairman of this Commission.
The duties of the Chairman are rather strenuous because he
is obliged to report to the Commission in detail twice a year at the
spring meeting of the Executive Council and at the Convention, developments in our national business and also foreign conditions,
that should be brought to the attention of the members of the Executive Council.

This is done confidentially for distribution by the

members of the Council to all the bankers of the country through
private channels.
Further the chairmen of the Commissions are all ex-officio
members of the Administrative Committee and have to meet with it»
Again they are members of the Executive Council*
In my own case I have also been appointed every convention
year as a member of the Resolutions Committee*

A number of

years I have been chairman of the drafting committee and one year
chairman of the Resolutions Committee itself.
When the Advisory Committee on Special Activities was
formed and Linn Hemingway was made chairman I was appointed to this
ever
committee and have been a member/since it was established. At the
Executive Council meetings and the Convention this committee meets

with the Committee on Government Bonds of which Bob Fleming has been
chairman for many years.
For many years I have also been on the Research Committee
of the Association,

Mr. Ardrey felt that it might be of value to have

Roy Reierson on this committee because of the nature of his work at
the Bankers Trust Company.

Therefore last year (1953) I resigned

from the Research Committee with the understanding that Mr. Reierson
was to be appointed.

This was carried out.

Then, however, as the

chairman of the Research Committee wished to have me attend the meetings so that he could refer matters to me when he considered it desirable, I was made a member of the Advisory group to the Research
Committee.
The result of this combination of developments has been
that I have had to attend the Administrative Committee meetings all
day Friday, and all day Saturday before the general meetings of the
American Bankers Association.

Then Sunday morningat 10 o'clock I

have had the meeting of the Committee on Special Activities and the
U. S. Bond Committee and at 2 o'clock Sunday afternoon the meeting of
the Commerce and Marine Commission of which I am chairman which has
lasted ordinarily two hours or more. Have also attended the meetings of the Research Committee on Sundays. Have had meetings of the
Resolutions Committee interspersed with other meetings one usually
being held the first thing Monday morning.
As Chairman of the Commerce and Marine Commission I have
hadoc read to the Coiranerco and #LJ?ine Commission the full report

which usually takes about two hours because members of the Commission
have to approve the report before it can go to the Executive Council.

Then at the Spring meeting of the Executive Council I have had

to report to the Council the action of the Commerce and Marine Commission members.
It has been my habit to do this extemporaneously and without notes because reading a report which might take two hours is
quite impossible.

Further by speaking extemporaneously and without

notes one can touch the high spots and give the members of the
Executive Council a clear idea of the important matters that should
be brought before them.

This report has usually been asked for at

the Council meetings Tuesday or Wednesday.

At the Convention meet-

ings, however, all reports to the Council are turned in to the Secretary without other presentation.
It seemed wise to give this detail here because when I
suggested to Mr. Prosser in 1928 that I resign as Vice President and
carry on my work for the Bankers Trust Company as a Director that
had to do with the American Bankers Association and the other organizations at which I represented the Bankers Trust Company he felt that
it would be of very great value to the Bankers Trust Company.

said we would have an important position in connection with such
activities and in the case of the ABA it would leave all the
officers of the Bank free to carry on their work with customers and

prospective customers and other activities that might be of benefit to
the Trust Company.
Bringing all these matters together one can see that beginning with every Friday morning when the Administrative Committee is
called I go from one committee to another throughout the whole period
of the Executive Council meetings and of the Convention,
All of these matters I am carrying on at present and I just
received advice from the Association that they want me to act on the
Resolutions Committee at the Convention to be held in Atlantic City
in October of this year 1954.
Further, in connection with the American Bankers Association
I have made a number of addresses for different divisions as well as
at some Conventions.
American Institute of Banking
The American Institute of Banking under a slightly different
name was developed in the form of numerous interrelated chapters in
different cities in the country with the headquarters in New York City,
Just previous to 1900 the Chicago chapter was formed and Mr. Forgan
who was president of the First National Bank of Chicago asked me to
organize it.

This I did and was made the first president of the

Chapter.
We had great success in developing a membership from practically all Chicago banks and the activities of the Chapter covered education in important part as well as entertainment.

Along the educa-

tional lines we had classes, one of which for instance Judge Mack
carried on in banking law and also meetings with important men as
speakers#

The Chicago Chapter of the American Institute of Eanlzing
made me an honorary member which holds today as is also true with
the New York Chapter which made me an honorary member in 1910 when
I came to New York,
Prom the New York office of the Institute which was carried
on under the auspices of the American Bankers Association they arranged to have representatives of the Chapters get together in Cleveland, Ohio, in 1903. We carried on in the form of a convention and
the consolidation of the chapters of the institute was brought about,
I was made first president and I have worked for the Institute in
many ways ever since as I have made addresses before various chapters
and also before annual conventions. Further, after I came to New
York with the Bankers Trust Company I wasAade a member of the Board
of Regents of the American Institute of Banking. Mention this particularly because my original commitments with the Institute were
while I was with the First National Bank of Chicago, but as Vice President of the Bankers Trust Company I carried on for the Institute in
different
many/ways one of which as already stated was membership on the Board
of Regents in New York City.
Mr. Prosser
In connection with all of the matters which are covered
would say that I discussed them in full detail with Mr. Prosser when I
was in the United States and when I was in foreign countries I made
special reports to him in full detail, sometimes as long as thirty
pages or more.

If he were able, therefore, t o read these notes, he would
recognize every one of the incidents covered.

operation which I had from him.

I t was wonderful co-

New York University
In 1928 Mr. Nichols, president of the Allied Dye & Chemical
Co. invited me to call on him at his office.

He told me that he was

Acting Chancellor of New York University but was^rn old man and he
needed advice.

He said, "I know, Fred, that you are extremely busy

but I cannot talk with you about the University unless you are a member
of the Council and I will appreciate it if you will come on the Council
solely for the purpose of advising me when I wish to discuss anything
with you."
Naturally, I could not refuse.

However, I had been on the

Council only a short time when Mr. Nichols died.

It was then my inten-

tion to resign as I felt that I was too busy to continue*

However, be-

fore I had an opportunity to do so I was appointed chairman of a committee to examine the educational and financial conditions prevailing
in the University.

When this report was made the Council elected me

President and I carried on for more than twenty years as President of
the Council.
This period covered the ten years of the depression and
realizing the difficulties that might develop I brought the University
into close form and saw that it balanced its budget every year for
that ten years.

We had small surpluses every year which totaled

$57,000 for the ten years of the depression.
Henry Cochran was a member of the Board of Trustees of
Princeton University and I talked with him about the situation.

The

University did business with the United States Trust Company as Mr.
Kingsley who was University treasurer was President of the United
States Trust, and also with the National City Bank and the Guaranty

http://fraser.stlouisfed.org/
Trust Company.
Federal Reserve Bank of St. Louis

In talking with Mr. Cochran I suggested that the Bankers
Trust Company find some way to do business with New York University
but he absolutely refused to approve on the basis that the nature of
the development was such that he felt the Bankers Trust Company
should have nothing to do with it in a financial way.
There was, of course, no doubt about it but that the financial situation was very precarious for this period as the student
body fees were not sufficient to meet all the needs of the University
and as a result many millions of dollars were borrowed every year for
a period from the three bankers of the University, that is, the United
States Trust Company, the National City Bank and the Guaranty Trust
Company.
When Chancellor Chase of the University retired we had
great difficulty finding a new Chancellor but finally succeeded in obtaining a man who is probably one of the best educators in the country and who also has great ability in University development. Mr.
Henry T. Heald.

When he came into the organization I resigned as

President of the Council and was elected to a new position as Chairman of the Council and George Roosevelt was named President.

This

situation prevails today#
Therefore, the Bankers Trust Company has a position in one
of the important Universities in the country and is able indirectly
to take part in this important field through a representative.

THE COUNCIL OP NEW YORK UNIVERSITY
recognizing that the year 1954 will mark
not only the eighty-fifth anniversary of the birth

of our esteemed fellow-member and Chairman
FRED I . KENT
but the twenty-fifth anniversary of his membership in
the University Council
during which time he occupied with singular distinction
for more than twenty years the office of
President of the Council
would now express to him the deepest gratitude
for manifold services hitherto which have impressed
the indelible stamp of his resourceful leadership upon
the fabric of New York University
and for the promise of his continued helpfulness
in guiding to ever-ascendant heights
the destiny of this institution.

Signed and sealed in the City of New York
this 25th day of January, 1954
John L. Raasch

George Roosevelt

President of the Council

Secretary of the/Jouncil

Henry T. HeaXd
Chancellor of the University
SEAL OP
NEW YORK UNIVERSITY

Business Advisory Council
Department of Commerce
In 1953 Mr. Daniel Roper who was Secretary of Commerce organized what was called a Business Advisory Council of the Department
of Commerce.

President Roosevelt asked me to go on as a member which

I did and I have been a member of the Council ever since and am today
in the form of what is now called a Graduate Member but with power to
vote.

This Council is made up of about fifty-odd men who are at the

heads of the big industries of the country.

At first men like Alfred

Sloan and others of his caliber were members and as the membership
changed each year because three or four new members were brought into
the organization it was still held to top executives in the industries of the country.
During the period that I have been a member I have been on
many important committees and chairman of some.

Reports are made to

the Secretary of Commerce and with his approval are carried to the
committees of Congress when that is thought advisable*
All statements made at the Council meetings are off the
record and as a result the officers of government outside of the Department of Commerce who speak before the meetings of the Council
frankly state the facts of the developments of their departments.
It is from such information that the members of the Council
decide on their point of view in connection with various recommendations that are put before it for consideration.

The meetings are

held once a month except during the summer, in Washington and in addition they usually have a spring meeting and a fall meeting outside of
Washington, usually in Hot Springs, West Virginia.

It has been of

very great value to be able to attend these meetings and with the
rotation of members that has been going on I have met many of the very
important business executives of the country.
Merchants' Association
Commerce and Industry Association of New York
When I came to the Bankers Trust Company it was a member of
the old Merchants1 Association of New York and the dues paid by the
Bankers Trust Company authorized it to have someone to represent it
on the Board.
The Directors of the Association elected me as a member and
I was made Chairman of the Banking and Currency Committee and Chairman
of the Committee on Education.

Worked with this organization for

several years and then the name was changed to the Commerce and Industry Association and I have been a board member throughout its life
and have served on a number of important committees.
One of these committees of which I was chairman carried on
a very extensive campaign to try and save private enterprise.

I had

a committee of very important men whose names appear in the booklet
attached.

We met constantly and discussed the points of view that

were being taken and I wrote the pamphlet embodying these points which
was approved by the committee.

Thousands of these books were sent out

in New York and throughout the country to Chambers of Commerce.

The

general reaction t o this pamphlet was excellent from members of Congress4nd others throughout the country.

The first pamphlet came out while the war was on and

when peace was attained I re-wrote i t t o carry the principles
forward for consideration under peace-time conditions.
Later when i t appeared as though there were going t o
be an important change in our tax system I was asked to head a
committee for i t s consideration.

This I undertook and I picked

out men whom I knew were extremely able in connection with taxa«
tion and we made a report t o Congress.
Have served on a number of other special committees
of the Commerce and Industry Association and have recently been
elected for a further three-year term as director.

-148Chamber of Commerce, State of New York
The Bankers Trust Company wanted me t o take out a membership in the Chamber of Commerce of the State of New York which I did
shortly after I came t o New York#

Served for a time on the Committee

on Education in 1928-1931, and I was made chairman of the Committee
on Finance and Currency in 1948-1950•

The members of my committee

were as follows:
Alexander C. Nagel
Charles E« Adams
John E. Bierwirth

Dudley H. Mills
Robert Lehman .
Walter E. Sachs

Joseph P. Ripley

J« Luther Cleveland

One member of the Chamber who for years has fought to have
gold restored by our government on the old basis had t h i s matter r e ferred to this committee.

We reported in favor of the gold standard

but against presenting i t t o our government with recommendation that
action be taken at once t o bring this about as the committee f e l t that
the time was not quite right to make such a change and we realized
that such a recommendation would be f u t i l e at that time in any event
as the administration that was in existence was absolutely opposed to
the restoration of the gold standard on i t s old b a s i s .
When my term as Chairman of t h i s committee ran out I was
elected a member at large on the Executive Committee of the Chamber
of Commerce and served there for three years, the f u l l time allowed by
the by-laws which I believe required that under such circumstances a
member has to be off a l l the Chamber• s^ommittees for two years before
he can be re-appointed.

!...

Honorary Diplomas and Crosses Awarded
Following World War I.

While as the representative of the Bankers Trust Company
these honors were conferred upon me personally yet I have always felt
that the Bankers Trust Company was justified in feeling that it had
been honored also.
Following World War I the French government made me a
Chevalier (Knight) of the Legion of Honor which was established by
Napoleon in 1815. This authorized me to wear the cross of the Legion
of Honor at foreign functions and the red ribbon in the lapel of my
coat. As I was constantly meeting Frenchmen I wore this ribbon. The
award was made because of work that I had carried on during World War
I in connection with the international Exchanges which the French considered had been of great value to them»
Later the French had occasion to make a report to the committee set up by the American government to consider the indebtedness
of the different governments to the United States and arrange for payment •
The French government realized that there was considerable
friction apt to occur because of the difficulties they realized they
would certainly have in making payments*
As I had had to work with the French government very closely
during the war and knew many important people in it, they requested
me to write the report for thenu

This I agreed to do with the under-

standing that they would furnish me with all the figures.

-150-

The introduction I felt was the crucial part of the statement and I wrote that originally in English in the hope of having it
develop a good feeling on the part of the members of the American
Committee who had shown some feeling against the French.

The balance

of the report I wrote in French and then made, a translation so that
it would not appear to be the statement of an American and took tlB
chance that the introduction even though it was written originally in
English would be accepted for what it said.
The French were much pleased with the statement and presented it to the American Debt-FundingCommission.

Two days after

this Assistant Secretary of the Treasury Dewey came to my desk in the
Bankers Trust Company (we had been friends for a long period) and
said, as near as I can recall it, "Fred, you have no idea what a
pleasant surprise it was to the Debt-Funding Commission to receive
the French statement on the debt.

It eliminated all friction at

once and was a great surprise to all concerned."
Of course, I did not let him know that I had written it
and I was glad to find out what had happened upon its presentation.
Before I turned it over to the French I let Mr. Prosser
read it and he was extremely pleased and wrote me a very nice letter
about it•
Brianz was Prime Minister of France at the time and he
cabled to Berenger the French Ambassador to the United States and
said that they would like to promote me from Chevalier (Knight) to an
Officer of the Legion ofHonor if there was no objection. Berenger

cabled approval and the promotion was made*

Instead of wearing the

red ribbon, as>6n Officer 1 was authorizsd to wear" a rosette in my
buttonhole and a different cross was sent me*

As I have had occasion

to meet a great many Frenchmen in my work which I have" been doing I
have worn the rosette constantly and have found that it was of great
value to do so. Mr. Prosser was very much pleased when I received
this promotion.

Following the war the Italian government also recognized
me for the work which I had accomplished for* them in raising the
price of the lira at a critical time, the details of which I have mentioned in the report on my work as Director of the Division of Foreign
Exchange of the Federal Reserve Board•'
The first diploma given me from the government of Italy
was/Commander of the Crown of Italy.
Officer.

Commander is one step higher than

The Crown of Italy was established for the purpose of recog-

nizing those who had accomplished something for the country in 1846
when King Humbert brought the whole of Italy into one country.
Later, however, Mussolini while he was working hard for
Italy and before he was broken under the power of: Hitler, felt that
I should have a higher honor• A diploma and Cross were therefore
sent me making me Commander of the Order of St.'Maurice and 5t.
Lazarus.

This was the highest honor the King of Italy could give a

civilian and there were only three people in the United States who received it.

One, General Harbord, was a director of the Bankers Trust

Company; two, Colonel Walsh, who was an employee of the Bankers Trust
Company; and three, myself, a vice president and director of the

Bankers Trust Company.

This always seemed to me extremely interesting

-152-

that the three men in the United States who v:ere given this high
honor were all in the Bankers Trust CompanyThis order was established in 1500 at the time of the
Crusades and was in two parts, the Order of St, Lazarus which I
believe was the first one, and the Order of St. Maurice.

They

handled hospitals during the Crusades and had tremendous wealth and
were later joined together and then the Order of St. Maurice and St.
Lazarus was determined upon as a special means to recognize things
that had been done by individuals for Italy.
It seems to me that the Bankers Trust Company is justified
in accepting the fact that this honor had been extended to three of
its representatives as something adding real prestige to the Bank's
position as a world bank.
The Cross for the Order of St. Maurice and St. Lazarus is
very beautiful.

It is a gold crown from which hangs an ivory cross

on a green ribbon.

TRANSLATION
The French Ambassador
United States

Washington, March 25, 1926

My Dear Mr. Kent,
At the moment we achieve the work on which we have
been working together, I want to thank you for the help you
so kindly gave us. in the name of the French Government and
myself.
Not only yeu:.^ influence enabled us to profit by
the technical services and personnel of the Bankers Trust
Company but you took into your hands with an extreme kindness
all matters that would have caused us a thousand difficulties.
Furthermore., net hesitating to put aside your
personal work, you have helped us with your good advice even
going into the smallest details, you have enabled us to profit
by your perfect knowledge of all economical and international
questions and by your knowledge of American opinion to such an
extent that if the pamphlet we submit to the War Debt Commission convinces the American people of the real situation
of France, we certainly will owe it to you.
I shall not fail to let the French Government know
about the new and important service you have rendered to the
cause of France in United States but I wanted to thank you
personally without waiting until it is possible for my Government to witness their appreciation.
I hope you will be able to have lunch with me on
April 1st, to which I am looking forward with pleasure and in
the meantime, I remain,

Very truly yours,
(signed) Henry Berenger,
French Ambassador,
Senator

c o p y
REPUBLIQUE FRAN£AIS
Ministere
Des .
Affaires etrangeres
Paris, le 20 Avril 1923
Direction
des
Affaires politiques
et commerciales
Cher Monsieur Kent,
J?ai appris le court se jour que vous faisiez
parmi nous, et je tiens a vous dire combien je regrette
qu f 11 ne me scit pas possible de vous recevoir.

JTaurais

tenu a vous dirs moi-rnene combien nous vous sommes reconnaissants de 1'action decisive que vous avez exercee
a Rome, a la reunion de la Chambre de Commerce Internationale.

Nous savons que vous etes du nombre de ceux

sur les sentiments de qui nous pouvons toujours compter»
Je vou3 sais un gre particulier d'avois fait
comprendre aux Allemands que vous avez rencontres a
Rome, que lTAmerique nfinterviendrait pas dans le differend franco-allemand.

II est indispensable, en effet,

que la France regie elle-meme et directement avec l'Al-.
lemagne, le conflit actuel.

II faut que le Gouvernement

allemand fasse directement et officiellement ses propositions au Gouvernement francais, sans que des pourparlers
plus ou moins officieux se fassent au paravant par intermediaires.

-155

Je pense q u ! i l s e r a i t t r e s dangereux de dire
autre chose aux Allemands:

toute negociation

officieuse

amenerait des mar chandage s e t p e r m e t t r a i t au Gouvemement
allemand de se derober a l a derniere minute, comme i l
de ja f a i t t r o p

lfa

souvent./.

Veuillez c r o i r e , cher Monsieur Kent, a mes senti<
ments l e s plus d i s t i n g u e s .

(signed)
BRIANZ
Monsieur KENT
aux soins de Monsieur de VAL-bOMBROSA
Bankers ? r u s t
Place Vendome
PARIS

C O P Y
FEDERAL RESERVE BOARD
Washington
PERSONAL

June 30, 1919

My dear Kent:
The sending in of your formal resignation marks the end
of our very pleasant association in connection with the Division of Foreign Exchange.

The job was well done from start

to finish and wa^., I think;, carried out with as little annoyance to the business community as due regard for the public
interest made possible»

The business community is, I think,

greatly indebted to you, probably more indebted than they will
ever know, for the fact that the transactions which they
thought were obstructed and interfered with were really
facilitated as much as circumstances permitted.
Personally I want to express to you the pleasure that I
have had in my association with you, and my appreciation of the
very effective work that you have done.

I hope your trip

abroad will be pleasant, and remain,
Very sincerely yours,
(signed) Albert Strauss
Mr. F. I-. Kent
New York, N.Y.

c o p y
FEDERAL RESERVE BOARD
Washington

Office of the Governor

My dear Mr. Kent:I have brought to the attention of the Board your
letter of June 2bth in which you state that as the need
for the maintenance of the Division of Foreign Exchange,
except in a minor way, no longer exists, you feel free to
tender your resignation as Director of that Division, to
take effect July 1, 1919. The Board feels that it should
meet your wishes in this matter, and therefore has accepted
your resignation effective as of the date named.
You have discharged the arduous duties of your position
with fidelity and zeal and with the highest order of
intelligence and efficiency; your work has been of the
greatest value to the Board, the Treasury Department, and
the country, and you have shown an ability to enforce the
rigid regulations made necessary by the war impartially and
effectively, but in such manner as to avoid friction and to
enlist the cooperation of those most affected by the restrictions imposed. You have declined to accept adequate
compensation for ycur services, but have rendered them for
the nominal amount prescribed by law as a minimum, thereby
making a patriotic contribution of your time and labor.
The Board desires to express its warm appreciation of
all that you have dons as well as its regret at the severance
of our official relations.
Sincerely yours,
(Signed)

W. P. G. Harding
Governor

Mr.Fred I. Kent, Director,
Division of Foreign Exchange,
15 Wall Street,
New York City

COPY

INDIA OFFICE
LONDON, S.W.I
26th June 1919.
My dear Mr. Kent,
Now that we have received the l a s t of our Pittman Act
silver and the control over exports of silver introduced in
connection therewith has been withdrawn I should like to write
and t e l l you - as perhaps I may be permitted to do - how
deeply indebted to you I f e e l myself to be, as indeed a l l of
us who are concerned in Indian matters, for the immense help
you gave throughout these transactions. The result has been
to tide India over a very grave situation at a most c r i t i c a l
moment of the war and afterwards to keep her currency system
effective for a considerable period, so that, in spite of the
d i f f i c u l t i e s and uncertainties which are s t i l l ahead of us,
there i s now much ground for hoping that she w i l l pull throu^i
altogether. All t h i s would have been impossible but for the
co-operation of the United States 1 Treasury and your friendly
exertions both in preparing the way at the outset and afterwards in working continuously to make the arrangements the
complete practical success which they have proved to be. I
suppose i t would not be correct to make this the subject of
an official l e t t e r but I know that in thus writing informally
and personally I am only expressing the views of a l l my colleagues on the Council of India.
I was very sorry that you did not after a l l get to
England as I had particularly hoped that we should meet again
here.
Please remember me very kindly, should you see them, to
Mr. Leffingwell and Mr. Baker, both of whom helped me so much
in Washington, and also to Sir Hardman Lever, who went back
before I could get an opportunity of saying good-bye.

Yours sincerely,
(signed)

J. B.Bruingate

Full text of Committee on the History of the Federal Reserve System : Memoirs of Fred I. Kent (1955), Entry 169, Box 1, Folder 1

FRASER