Prelude to Sullivan & Cromwells Only Casual Friday The United States had embarked from WWI with its currency and industry stronger than ever before , a long as Britain and other debtors continued to pay their bill. The 1920s boom, driven by imperialism, cheap oil, and the emerging automobile economy in the US, created enormous pools of investment funds in the banks of New York and Boston. (8) This led to an international financial situation that was similar, in some respects, to the Middle East oil crisis of the 1970s.... ... During the second half of the 1920s, the most important international market for recycling the new private US wealth was Germany. This investment was carried out mainly though loans to German industry, direct US investment in German companies, development loans to German cities, and millions of dollars worth of Dawes Plan credits that indirectly financed German war reparations(10) ... ....Specialized banks, law firms, and trading companies that focused on opening the German market to US capital sprang up on both side of the Atlantic. Practically without exception, the giant US-German capitals flows were administered by a small group of specialists at the very top of the social structure of both countries. A number of institutions and individuals who were prominent in this trade went on to play powerful roles in US-German affairs over the next five decades(17) Dillon, Read & Co., private US investment bankers specialized in loans to Deutche Bank, Siemens, and Flick interests. Between 1925 and the stock market crash in 1929, these loans amounted to more than a quarter of a billion dollars. Freidrich Flick built his fortune during the 1920s using bonds sold by Dillon, Read to finance what today might be called leveraged buyouts of German and Polish coal and steel companies. Most of Dillon, Reads own capital was oil money, including substantial sums from Rockefeller, Draper, and Dillon families. The bulk of the money lent to Germany,however , was raised via limited partnership bond syndications in US markets. This meant that when Germany defaulted on a series of loans in the early 1930s, Dillon, Read and its major partners had already taken their share of the spoils, while smaller investors who had bought these bonds lost tens of millions of dollars (18) Key Dillon, Read executives during this period included the companys president, James Forrestal, (later Secretary of Defense), William Draper (later economics chief of the US Military Government during the US occupation of Germany and Japan), Paul Nitze (prominent US diplomat and national security advisor [and staunchest opponent of JFK during the Cuban Missile Crisis Excom meetings and also during the radical shift in US NATO policy for West Germany during the Summer of 1963-N.H.]), Ferdinand Eberstadt (later vice chair of the War Production Board and central figure in the creation of the CIA) and C. Douglas Dillon (US diplomat and later secretary of the treasury) (19) Another Wall Street firm that specialized in US-German trade was Brown Brothers, Harriman, a private investment bank dominated by W. Averell Harriman, whose family fortune rivaled that of the Rockefellers. Harriman went on to become one of the most influential figures in US foreign affairs over the next fifty years. His key political allies who also served as senior executives of the bank included Robert Lovett (later US secretary of defense ) and Prescott Bush (prominent legislator and father of the US president) (20) And, of course, Sullivan and Cromwell acted as agent for US companies investing in Europe. -- from The Splendid Blond Beast : Money, Law, and Genocide In the Twentieth Century by Christopher Simpson (More Later )
Posted on: Sun, 21 Dec 2014 23:07:24 +0000
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