This book1 portrays Franklin Delano Roosevelt as a Wall Street financier who, during his first term as President of the United States, reflected the objectives of financial elements concentrated in the New York business establishment. Given the long historical association—since the late 18th century—of the Roosevelt and Delano families with New York finance and FDR's own career from 1921 to 1928 as banker and speculator at 120 Broadway and 55 Liberty Street, such a theme should not come as a surprise to the reader. On the other hand, FDR biographers Schlesinger, Davis, Freidel, and otherwise accurate Roosevelt commentators appear to avoid penetrating very far into the recorded and documented links between New York bankers and FDR. We intend to present the facts of the relationship, as recorded in FDR's letter files. These are new facts only in the sense that they have not previously been published; they are readily available in the archives for research, and consideration of this information suggests a reassessment of FDR's role in the history of the 20th century.
Perhaps it always makes good politics to appear before the American electorate as a critic, if not an outright enemy, of the international banking fraternity. Without question Franklin D. Roosevelt, his supporters, and biographers portray FDR as a knight in shining armor wielding the sword of righteous vengeance against the robber barons in the skyscrapers of downtown Manhattan. For instance, the Roosevelt Presidential campaign of 1932 consistently attacked President Herbert Hoover for his alleged association with international bankers and for pandering to the demands of big business. Witness the following FDR blast in the depths of the Great Depression at Hoover's public support for business and individualism, uttered in the campaign address in Columbus, Ohio, August 20, 1932:
This statement makes Franklin Delano Roosevelt appear as another Andrew Jackson, contesting a bankers' monopoly and their strangle-hold on American industry. But was FDR also an unwilling (or possibly a willing) tool of the Wall Street bankers, as we could infer from his letter to Colonel Edward House, cited in the epigraph to this chapter? Clearly if, as Roosevelt wrote to House, a "financial element in the larger cities has owned the Government ever since the days of Andrew Jackson," then neither Hoover nor Roosevelt was being intellectually honest in his presentation of the issues to the American public. The gut issues presumably were the identity of this "financial element" and how and by what means it maintained its "ownership" of the U.S. Government.
Putting this intriguing question temporarily to one side, the pervasive historical image of FDR is one of a President fighting on behalf of the little guy, the man in the street, in the midst of unemployment and financial depression brought about by big business speculators allied with Wall Street. We shall find, on the contrary, that this image distorts the truth to the extent that it portrays FDR as an enemy of Wall Street; this is simply because most historians probing into Wall Street misdeeds have been reluctant to apply the same standards of probity to Franklin D. Roosevelt as to other political leaders. What is a sin for Herbert Hoover or even 1928 Democratic Presidential candidate Al Smith is presumed a virtue in the case of FDR. Take Ferdinand Lundberg in The Rich and the Super-Rich.3 Lundberg also looks at Presidents and Wall Street and makes the following assertion:
Now the Du Ponts were indeed heavy, very heavy, contributors to the 1928 Al Smith Democratic Presidential campaign. These contributions are examined in detail in this volume in Chapter 8, "Wall Street Buys the New Deal," and no quarrel can be made with this assertion. Lundberg then moves on to consider Smith's opponent Herbert Hoover and writes:
Lundberg omits the financial details, but the Du Ponts and Rockefellers are certainly on record in Congressional investigations as the largest contributors to the 1928 Hoover campaign. But Wall Street withdrew its support of Herbert Hoover in 1932 and switched to FDR. Lundberg omits to mention this critical and pivotal withdrawal. Why did Wall Street switch? Because, as we shall see later, Herbert Hoover would not adopt the Swope Plan created by Gerard Swope, long-time president of General Electric. By contrast, FDR accepted the plan, and it became FDR's National Industrial Recovery Act. So while Hoover was indebted to Wall Street, FDR was much more so. Arthur M. Schlesinger Jr. in The Crisis of the Old Order: 1919-1933 comes closer to the point than any establishment historian, but like other Rooseveltophiles fails to carry the facts to their ultimate and logical conclusions. Schlesinger notes that after the 1928 election the Democratic Party had a debt of $1.6 million and "Two of the leading creditors, John J. Raskob and Bernard Baruch, were philanthropic Democratic millionaires, prepared to help carry the party along until 1932".5 John J. Raskob was vice president of Du Pont and also of General Motors, the largest corporation in the United States. Bernard Baruch was by his own admissions at the very heart of Wall Street speculation. Schlesinger adds that, in return for Wall Street's benevolence, "they naturally expected influence in shaping the party's organization and policy."6 Unfortunately, Arthur Schlesinger, who (unlike most Rooseveltian biographers) has his finger on the very pulse of the problem, drops the question to continue with a discussion of the superficialities of politics—conventions, politicians, political give-and-take, and the occasional clashes that mask the underlying realities. Obviously, the hand on the purse ultimately decrees which policies are implemented, when, and by whom.
A similar protective attitude for FDR may be found in the four-volume biography by Frank Freidel, Franklin D. Roosevelt.7 Discussing the shattering failure of the Bank of the United States just before Christmas 1930, Freidel glosses over FDR's negligence while Governor of the State of New York. The Bank of the United States had 450,000 depositors, of which 400,000 accounts held less than $400. In other words, the Bank of the United States was a little man's bank. A report by Senator Robert Moses on the condition of an earlier banking failure—City Trust—had been ignored by Governor F. D. Roosevelt, who appointed another commission that produced milder recommendations for banking reform. Freidel poses the question:
Freidel concludes that the answer lies in FDR's "personal confidence in the banking community." Why did FDR have this complete confidence? Because, writes Freidel,
This is something like saying that, if your banker is a liberal and loses your money, that's OK, because after all he is a liberal and a supporter of FDR. On the other hand, however, if your banker loses your money and happens not to be a liberal or a supporter of FDR, then he is a crook and must pay the price of his sins.
The four-volume Freidel biography has but a single chapter on FDR as "Businessman," the most space given by any major FDR biographer. Even Freidel reduces important ventures to a mere paragraph. For example, while the American Investigation Corporation venture is not named, an associated venture, General Air Service, is mentioned, but dismissed with a paragraph:
We shall see that there was a lot more to General Air Service (and more importantly the unmentioned American Investigation Corporation) than this paragraph indicates. In particular, exploration of the Freidel phrase "and other notables" suggests that FDR had entree to and worked in cooperation with some prominent Wall Street elements.
Why do Schlesinger, Freidel, and other lesser FDR biographers avoid the issue and show reluctance to pursue the leads? Simply because, when you probe the facts, Roosevelt was a creation of Wall Street, an integral part of the New York banking fraternity, and had the pecuniary interests of the financial establishment very much at heart.
When the information is laid out in detail, it is absurd to think that Wall Street would hesitate for a second to accept Roosevelt as a welcome candidate for President: he was one of their own, whereas businessman Herbert Hoover had worked abroad for 20 years before being recalled by Woodrow Wilson to take over the Food Administration in World War I.
To be specific, Franklin D. Roosevelt was, at one time or another during the 1920s, a vice president of the Fidelity & Deposit Company (120 Broadway); the president of an industry trade association, the American Construction Council (28 West 44th Street); a partner in Roosevelt & O'Connor (120 Broadway); a partner in Marvin, Hooker & Roosevelt (52 Wall Street); the president of United European Investors, Ltd. (7 Pine Street); a director of International Germanic Trust, Inc. (in the Standard Oil Building at 26 Broadway); a director of Consolidated Automatic Merchandising Corporation, a paper organization; a trustee of Georgia Warm Springs Foundation (120 Broadway); a director of American Investigation Corporation (37-39 Pine Street); a director of Sanitary Postage Service Corporation (285 Madison Avenue); the chairman of the General Trust Company (15 Broad Street); a director of Photomaton (551 Fifth Avenue); a director of Mantacal Oil Corporation (Rock Springs, Wyoming); and an incorporator of the Federal International Investment Trust.
That's a pretty fair list of directorships. It surely earns FDR the title of Wall Streeter par excellence. Most who work on "the Street" never achieve, and probably never even dream about achieving, a record of 11 corporate directorships, two law partnerships, and the presidency of a major trade association.
In probing these directorships and their associated activities, we find that Roosevelt was a banker and a speculator, the two occupations he emphatically denounced in the 1932 Presidential election. Moreover, while banking and speculation have legitimate roles in a free society— indeed, they are essential for a sane monetary system—both can be abused. FDR's correspondence in the files deposited at the FDR Library in Hyde Park yields evidence—and evidence one reads with a heavy heart—that FDR was associated with the more unsavory elements of Wall Street banking and speculation, and one can arrive at no conclusion other than that FDR used the political arena, not the impartial market place, to make his profits.11
Given this information, how do we explain FDR's career on Wall Street? And his service to Wall Street in creating, in partnership with Herbert Hoover, the trade associations of the 1920s so earnestly sought by the banking fraternity? Or FDR's friendship with key Wall Street operators John Raskob and Barney Baruch? To place this in perspective we must go back in history and examine the background of the Roosevelt and Delano families, which have been associated with New York banking since the 18th century.
THE DELANO FAMILY AND WALL STREET
The Delano family proudly traces its ancestors back to the Actii, a 600 B.C. Roman family. They are equally proud of Franklin Delano Roosevelt. Indeed, the Delanos claim that the Delano influence was the predominant factor in FDR's life work and accounts for his extraordinary achievements. Be that as it may, there is no question that the Delano side of the family links FDR to many other rulers and other politicians. According to the Delano family history,12 "Franklin shared common ancestry with one third of his predecessors in the White House." The Presidents linked to FDR on the Delano side are John Adams, James Madison, John Quincy Adams, William Henry Harrison, Zachary Taylor, Andrew Johnson, Ulysses S. Grant, Benjamin Harrison, and William Howard Taft. On the Roosevelt side of the family, FDR was related to Theodore Roosevelt and Martin Van Buren, who married Mary Aspinwall Roosevelt. The wife of George Washington, Martha Dandridge, was among FDR's ancestors, and it is claimed by Daniel Delano that Winston Churchill and Franklin D. Roosevelt were "eighth cousins, once removed."13 This almost makes the United States a nation ruled by a royal family, a mini monarchy.
The reader must make his own judgment on Delano's genealogical claims; this author lacks the ability to analyze the confused and complex family relationships involved. More to the point and without question, the Delanos were active in Wall Street in the 1920s and 1930s and long before. The Delanos were prominent in railroad development in the United States and abroad. Lyman Delano (1883-1944) was a prominent railroad executive and maternal grandfather of Franklin D. Roosevelt. Like FDR, Lyman began his career in the insurance business, with the Northwestern Life Insurance of Chicago, followed by two years with Stone & Webster.14 For most of his business life Lyman Delano served on the board of the Atlantic Coast Line Railroad, as president in 1920 and as chairman of the board from 1931 to 1940. Other important affiliations of Lyman Delano were director (along with W. Averell Harriman) of the Aviation Corporation, Pan American Airways, P & O Steamship Lines, and half a dozen railroad companies.
Another Wall Street Delano was Moreau Delano, a partner in Brown Brothers & Co. (after 1933 it absorbed Harriman & Co. to become Brown Brothers, Harriman) and a director of Cuban Cane Products Co. and the American Bank Note Company.
The really notable Delano on Wall Street was FDR's "favorite uncle" (according to Elliott Roosevelt), Frederic Adrian Delano (1863-1953), who started his career with the Chicago, Burlington and Quincy Railroad and later assumed the presidency of the Wheeling & Lake Erie Railroad, the Wabash Railroad, and in 1913 the Chicago, Indianapolis and Louisville Railway. "Uncle Fred" was consulted in 1921 at a critical point in FDR's infantile paralysis attack, quickly found Dr. Samuel A. Levine for an urgently needed diagnosis, and arranged for the special private train to transport FDR from Maine to New York as he began the long and arduous road to recovery.15
In 1914 Woodrow Wilson appointed Uncle Fred to be a member of the Federal Reserve Board. Intimate Delano connections with the international banking fraternity are exemplified by a confidential letter from central banker Benjamin Strong to Fred Delano requesting confidential FRB data:16
Following World War I Frederic Delano devoted himself to what is euphemistically known as public service, while continuing his business operations. In 1925 Delano was chairman of the League of Nations International Committee on opium production; in 1927 he was chairman of the Commission on Regional Planning in New York; he then became active in sponsoring the National Park Commission. In 1934 FDR named Uncle Fred Delano as chairman of the National Resources Planning Board. The Industrial Committee of the National Resources Planning Board, which presumably Frederic Delano had some hand in choosing, was a happy little coterie of socialist planners, including Laughlin Currie, Leon Henderson, Isador Lublin (prominent in the transfer of industrial technology to the USSR in the pre-Korean War era), and Mordecai Ezekiel. The advisor to the Board was Beardsley Ruml.
Then from 1931 to 1936, while involved in socialist planning schemes, Delano was also chairman of the board of the Federal Reserve Bank of Richmond, Virginia. In brief, Frederic Delano was simultaneously both capitalist and planner.
Delano left a few writings from which we can glean some concept of his political ideas. There we find support for the thesis that the greatest proponents of government regulation are the businessmen who are to be regulated, although Delano does warn that government ownership of railroads can be carried too far:
However, in another book, written about 20 years later, Delano is much more receptive to government planning:
In brief, the Delano side of the family has undertaken capitalist enterprises and has Wall Street interests going well back into the 19th century. By the 1930s, however, Frederic Delano had abandoned capitalist initiative for socialist planning.
THE ROOSEVELT FAMILY AND WALL STREET
Franklin Delano Roosevelt was also descended on the Roosevelt side from one of the oldest banking families in the United States. FDR's great-grandfather James Roosevelt founded the Bank of New York in 1784 and was its president from 1786 to 1791. The investment banking firm of Roosevelt & Son of New York City was founded in 1797, and in the 1930s George E. Roosevelt, FDR's cousin, was the fifth member of the family in direct succession to head the firm. So the New York City banking roots of the Roosevelt family extend without interruption back into the late 18th century. In the industrial sphere James Roosevelt built the first American sugar refinery in New York City in the 1740s, and Roosevelts still had connections with Cuban sugar refining in the 1930s. FDR's father, also named James Roosevelt, was born at Hyde Park, New York in 1828 into this old and distinguished family. This James Roosevelt graduated from Harvard Law School in 1851, became a director of the Consolidated Coal Company of Maryland and, like the Delanos in subsequent years was associated with the development of transportation, first as general manager of the Cumberland & Pennsylvania Railroad, and then as president of the Louisville, New Albany & Chicago Railroad, the Susquehanna Railroad Co., Champlain Transportation Co., Lake George Steamboat Co., and New York & Canada Railroad Co. James Roosevelt was also vice president and manager of the Delaware & Hudson Canal Co. and chairman of the Maritime Canal Company of Nicaragua, but most significantly was an organizer of the Southern Railway Security Company, established in 1871 and one of the first of the security holding companies formed to buy up and consolidate railroads. The Southern Railway Security Company was a consolidation or cartelization scheme similar in its monopolistic principle to the trade associations formed by Franklin D. Roosevelt in the 1920s and to the National Recovery Act, another cartelization scheme, of the New Deal. James Roosevelt's second wife was Sara, daughter of Warren Delano, and their son was Franklin Delano Roosevelt, later President of the United States.
Franklin was educated at Groton and Harvard, then went on to Columbia Law School. According to his son Elliott,20 FDR "never graduated or took a degree, but he was able to pass his New York State bar examination."21 FDR's first job was with the old established downtown law firm of Carter, Ledyard and Milburn, whose principal client was J. Pierpont Morgan, and in three years FDR worked his way up from minor legal research posts to the firm's municipal court and admiralty divisions. We should note in passing that, when FDR first went to Washington D.C. in 1916 to become Assistant Secretary of the Navy, it was Thomas W. Lamont—international banker and most influential of the Morgan partners—who leased the FDR home in New York.22
There were other Roosevelts on Wall Street. George Emlen Roosevelt (1887-1963) was a cousin of both Franklin and Theodore Roosevelt. In 1908, George Emlen became a member of the family banking firm Roosevelt & Son. In January 1934, after passage of FDR's Banking Act of 1933, the firm was split into three individual units: Roosevelt & Son, with which George Roosevelt remained as a senior partner, Dick & Merle-Smith, and Roosevelt & Weigold. George Emlen Roosevelt was a leading railroad financier, involved in no fewer than 14 railroad reorganizations, as well as directorships in several important companies, including the Morgan-controlled Guaranty Trust Company,23 the Chemical Bank, and the Bank for Savings in New York. The full list of George Emlen's directorships at 1930 requires six inches of small print in Poor's Directory of Directors.
Another Morgan-associated Roosevelt was Theodore Roosevelt, 26th President of the United States and the grandson of Cornelius Roosevelt, one of the founders of the Chemical National Bank. Like Clinton Roosevelt, whom we shall discuss later, Theodore served as a New York State Assemblyman from 1882-1884; he was appointed a member of the U.S. Civil Service Commission in 1889, Police Commissioner of New York City in 1895, and Assistant Secretary of the Navy in 1897; and was elected Vice President in 1900 to become President of the United States upon the assassination of President McKinley in 1901. Theodore Roosevelt was reelected President in 1904, to become founder of the Progressive Party, backed by J. P. Morgan money and influence, and so launched the United States on the road to the welfare state. The longest section of the platform of the Progressive Party was that devoted to "Business" and reads in part:
The only really significant difference between this statement backed by Morgan money and the Marxian analysis is that Karl Marx thought of concentration of big business as inevitable rather than "necessary." Yet Roosevelt's Progressive Party plugging for business regulation was financed by Wall Street, including the Morgan-controlled International Harvester Corporation and J. P. Morgan partners. In Kolko's words:
There is, of course, a long Roosevelt political tradition, centered on the State of New York and the Federal government in Washington, that parallels this Wall Street tradition. Nicholas Roosevelt (1658-1742) was in 1700 a member of the New York State Assembly. Isaac Roosevelt (1726-1794) was a member of the New York Provincial Congress. James I. Roosevelt (1795-1875) was a member of the New York State Assembly in 1835 and 1840 and a member of the U.S. House of Representatives between 1841 and 1843. Clinton Roosevelt (1804-1898), the author of an 1841 economic program remarkably similar to Franklin Roosevelt's New Deal (see Chapter 6) was a member of the New York State Assembly in 1835. Robert Barnwell Roosevelt (1829-1906) was a member of the U.S. House of Representatives in 1871-73 and U.S. Minister to Holland 1888-1890. Then, of course, as we have noted, there was President Theodore Roosevelt. Franklin continued the Theodore Roosevelt political tradition as a New York State Senator (1910-1913), Assistant Secretary of the Navy (1913-1920), Governor of the State of New York (1928-1930), and then President (1933-1945).
While FDR was in office, other Roosevelts assumed minor offices. Theodore Roosevelt, Jr. (1887-1944) was a member of the New York State Assembly from 1919 to 1921 and then continued the virtual Roosevelt Navy monopoly as Assistant Secretary of the Navy from 1921 to 1924, Governor of Puerto Rico from 1922 to 1932, and Governor General of the Philippines from 1932 to 1933. Nicolas Roosevelt was Vice Governor of the Philippines in 1930. Other Roosevelts have continued this political tradition since the New Deal era.
An alliance of Wall Street and political office is implicit in this Roosevelt tradition. The policies implemented by the many Roosevelts have tended toward increased state intervention into business, desirable to some business elements, and therefore the Roosevelt search for political office can fairly be viewed as a self-seeking device. The euphemism of "public service" is a cover for utilizing the police power of the state for personal ends, a thesis we must investigate. If the Roosevelt tradition had been one of uncompromising laissez-faire, of getting the state out of business rather than encouraging intervention into economic activities, then our assessment would necessarily be quite different. However, from at least Clinton Roosevelt in 1841 to Franklin D. Roosevelt, the political power accumulated by the Roosevelt clan has been used on the side of regulating business in the interests of restricting competition, encouraging monopoly, and so bleeding the consumer in the interests of a financial élite. Further, we must consider the observation conveyed by Franklin D. Roosevelt to Edward House and cited in the epigraph to this chapter, that "a financial element in the large centers has owned the government ever since the days of Andrew Jackson." Consequently, it is pertinent to conclude this introductory chapter with the 1943 observations of William Allen White, an honest editor if ever there was one, who made one of the best literary critiques on this financial establishment in the context of World War II; this, it should be noted, was after ten years of FDR and at the peak of Roosevelt's political power:
*W.W. is Woodrow Wilson—editor's not.
1. A previous volume, Antony C. Sutton, Wall Street and the Bolshevik Revolution, (New Rochelle, N.Y., Arlington House, 1974), hereafter cited as Sutton, Bolshevik Revolution, explored the links between Wall Street financiers and the Bolshevik Revolution. In great part, allowing for deaths and new faces, this book focuses on the same segment of the New York financial establishment.
2. The Public Papers and Addresses of Franklin D. Roosevelt, Volume 1 (New York: Random House, 1938), p. 679.
3. New York: Lyle Stuart, 1968.
4. Ibid., p. 172.
5. Boston: Riverside Press, 1957, p. 273.
7. This series is: Frank Freidel, Franklin D. Roosevelt: The Apprenticeship. (1952), hereafter cited as Freidel, The Apprenticeship; Freidel, Franklin D. Roosevelt: The Ordeal (1954), hereafter cited as Freidel, The Ordeal; Freidel, Franklin D. Roosevelt: The Triumph (1956), hereafter cited as Freidel, The Triumph; Freidel, Franklin D. Roosevelt, Launching The New Deal (1973). All four volumes published in Boston by Little, Brown.
8. Freidel, The Triumph, op. cit., p. 187.
9. Ibid., p. 188.
10. Freidel, The Ordeal, op. cit., p. 149.
This raises a legitimate question concerning the scope of this book and
the nature of the relevant evidence. The author is interested only in
establishing the relationship between Wall Street and FDR and drawing
conclusions from that relationship. Therefore, episodes that occurred
in 1921, while FDR was on Wall Street, but not associated directly with
his financial activities, are omitted. For example, in 1921 the Senate
Naval Affairs Committee issued a report with 27 conclusions, almost all
critical of FDR, and posing serious moral questions. The first conclusion
in the Senate report reads:
12. Daniel W. Delano, Jr., Franklin Roosevelt and the Delano Influence (Pittsburgh, Pa.: Nudi Publications, 1946), p. 53.
13. Ibid., p. 54.
14. See Sutton, Bolshevik Revolution, op. cit., pp. 128, 130-3, 136 on Stone & Webster.
15. Elliott Roosevelt and James Brough, An Untold Story: The Roosevelts of Hyde Park (New York: Putnam's, 1973), pp. 142, 147-8.
16. United States Senate, Hearings before the Special Committee Investigating the Munitions Industry, 74th Congress, Second Session, Part 25, "World War Financing and United States Industrial Expansion 1914-1915, J. P. Morgan & Company" (Washington: Government Printing Office, 1937), p. 10174, Exhibit No. 3896.
17. Frederic A. Delano, Are Our Railroads Fairly Treated? Address before the Economic Club of New York, April 29, 1913, p. 11.
18. Frederic A. Delano, What About the Year 2000? Joint Committee on Bases of Sound Land Policy, n.d., pp. 138-9.
19. Ibid., p. 141.
20. Elliott Roosevelt, An Untold Story, op. cit., p. 43.
21. Ibid., p. 67.
22. See Sutton, Bolshevik Revolution, for numerous citations to Thomas Lamont's connections with the Bolshevik Revolution in 1917, while residing in FDR's leased house in New York.
It is important to note as we develop the story of FDR in Wall Street
that Guaranty Trust is prominent in the earlier Sutton, Bolshevik Revolution.
25. Quoted from George Seldes, One Thousand Americans (New York: Boni & Gaer, 1947), pp. 149-150.