FDR: Corporate Promoter

The meshes of our banking laws have been woven so loosely as to permit the escape of those meanest of all criminals who squander the funds of hundreds of small depositors in reckless speculation for private gain. The entire Banking Law is in need of revision and the Banking Department needs immediately far more adequate inspection facilities.
Franklin Delano Roosevelt, Annual Message to New York State Legislature, January 1, 1930.

Quite apart from floating speculative enterprises in the field of international finance, FDR was intimately involved in domestic flotations, at least one of which was of some substance. The most important of these ventures was organized by a prominent group including Owen D. Young of General Electric (the ever-present Young of the Young Plan for German reparations described in the last chapter) and S. Bertron of Bertron Griscom, investment bankers in New York. This syndicate created the American Investigation Corporation in 1921. In 1927 followed Photomaton, Inc. and in 1928 the Sanitary Postage Service Corporation. Then Roosevelt became a director of CAMCO, Consolidated Automatic Merchandising Corporation, but only briefly, resigning upon his election as Governor of the State of New York. As we read in the above epigraph, by 1930 FDR has had second thoughts about playing with other peoples' money.


German scientists and engineers made an early and successful start in the use of lighter-than-air vehicles or airships for passenger and freight transportation. As early as 1910 Germany operated scheduled airship passenger services. Patents for airships were seized in World War I by the U.S. Government under the 1917 Trading with the Enemy Act, and after the war Germany was forbidden by the Reparations Commission to construct airships. This left the field open to American enterprise. The opportunities presented by German work and development restrictions in Germany were observed by a group of Wall Street financiers: S.R. Bertron of Bertron, Griscom & Co. (40 Wall Street) and not surprisingly, since he was intimately involved in German reparations, by Owen D. Young of General Electric (120 Broadway). This group was particularly interested in the profitable opportunities for development of airship transportation in the United States. On January 10, 1921, as FDR was unpacking his bags in the offices of the Fidelity & Deposit Company at 120 Broadway, he received a letter from Bertron which read in part:

My dear Mr. Roosevelt:
Representing the small group of prominent men here who are becoming greatly interested in the question of air transportation, I had a long conference with Army officials in Washington last week in regard to it. I am advised that you, as Assistant Secretary of the Navy, are very familiar with this subject and I should like immensely to discuss it with you....

FDR and Bertron met to discuss air transportation over lunch at the Down Town Association. We can surmise that Bertron filled in Roosevelt on technical developments up to that time. We know from the files that there was also a meeting between Owen D. Young, S.R. Bertron, and engineer-attorney Fred S. Hardesty, representing the German patent holders, who had good connections in Washington where the seized patents were in the custody of the Alien Property Custodian and had yet to be released.

This second meeting yielded a preliminary compact dated January 19, 1921 known as the Hardesty-Owen-Bertron agreement that planned the road to development of commercial airship operations in the U.S. A syndicate was subsequently formed by Owen-Bertron to "investigate all phases of aerial navigation, legislation required and methods of fund raising." Hardesty and his associates turned over to the syndicate all their data and rights in exchange for a refund of their out-of-pocket expenses of $20,000 incurred to that date and an interest in the syndicate. FDR's role was that of fund raiser, using his numerous political contacts throughout the United States. On May 17, 1921

Bertron wrote FDR that he had been trying to raise funds from people in St. Louis, Cincinnati, and Chicago, while Stanley Fahnestock, a partner in his firm, had been making the rounds in California and Chicago. Lewis Stevenson, another syndicate member, was at work among his contacts in the mid-West. So Bertron appealed to FDR for a set of personal introductions to potential contributors:

Stevenson is very anxious for you to give him a line to Edward Hurley, E. F. Carey and Charles Piez, all of whom you know. He would like a letter also to Edward Hines, R.P. Lamont, and H.C. Chatfield-Taylor. I am afraid this is a large order. Won't you do your best?

FDR acknowledged Bertron's request, to the effect that he was sending letters to Stevenson "introducing him to Edward Hurley and to Charles Piez and E.F. Carey. I am afraid I don't know the others." Charles Piez, president of Link-Belt Company in Chicago, excused himself from participation on the ground that "... I am practicing the most rigid economy, bending a deaf ear to the most inviting and alluring prospects," and citing the "deplorable shape" of the industry. (This plea of poverty was supported by Piez's letter to FDR, on old stock stationary, with the new address printed over the old one—hardly becoming a president of a major corporation such as Link-Belt Company). Edward N. Hurley wrote that he was "not very active in business," but when next in New York "I am going to make it a point to call on you and check up the past."

On June 1st, Lewis Stevenson reported to Roosevelt on his fundraising progress in the mid-West. He confirmed the fact that Piez was short of funds and that Hurley wanted to talk later, but that Carey might have some interest:

Charles Swift, Thomas Wilson, both packers, are now considering the proposition, as are Potter Palmer, Chauncey McCormick and a dozen others. Since securing Marshall Field I have added to our list C. Bai Lehme, a zinc smelter of very large means; Mr. Wrigley, junior member of the great chewing-gum firm; John D. Black, of Winston, Strawn & Shaw; B.M. Winston and Hampton Winston, of Winston & Company, and Lawrence Whiting, president of the new Boulevard Bridge Bank. Gradually I am getting together a desirable group but I must confess it is discouragingly slow and hard work. My experience has been I can convince an individual of the feasibility of this scheme but as soon as he discusses it with his friends, who know nothing whatever of the proposition, they develop a serious doubt in his mind which I have to combat all over again. As a result of my observation abroad I am firm in my belief it can be made a success.

Stevenson concluded by requesting a letter of introduction to prominent Chicago attorney Levy Meyer. It is clear that by the end of June 1921 Stevenson had induced a number of prominent Chicago citizens,
including Marshall Field, Philip N. Wrigley, and Chauncey McCormick, to sign on the dotted line.

So far as FDR is concerned, his sales letters on this project would do credit to a professional salesman. Witness his letter to Colonel Robert R. McCormick, of the Chicago newspaper empire:

Dear Bert:
As you happen to be a progressively minded person I am asking Mr. Lewis G. Stevenson to have a talk with you about something which at first blush may seem a perfectly wild idea. However, it is really something very different and all I can tell you is that a good many of us here, such as Young of the General Electric Company, Bertron of Bertron Griscom & Co, and a number of other perfectly respectable citizens have shown enough interest to look into the question further. All of this relates to the establishment of commercial dirigible lines in the United States...

Similar letters went to Chauncey McCormick, Frank S. Peabody of Peabody Coal, and Julius Rosenwald of Sears, Roebuck. These initiatives were followed up with personal dinners. For example, on April 21, 1921 FDR wrote to Frank Peabody:

... is there any possibility you may be able to dine with Mr. Bertron, Mr. Snowden Fahnestock and several others of us at the Union Club next Monday evening at 7:30? Bertron is just back from the other side and has some very interesting data in regard to these commercial dirigibles, which have proved successful in Germany.

FDR added that the group "will promise not to hold you up against your will." To which a reluctant Peabody telegraphed, "Impossible to be there, would not be at all afraid of being held up would have enjoyed visit with you immensely."

To Edsel B. Ford FDR wrote, "I am sending this note by Mr. G. Hall Roosevelt, my brother-in-law, who is familiar with the whole matter." G. Hall Roosevelt, who happened to work for General Electric as a division manager, proved himself to be an alert negotiator, but not sufficiently so to win Ford during the early stages.

However, by February 18, 1922 the American Investigation Corporation had compiled a very healthy list of subscribers, as the following partial list confirms:1

W.E. Boeing President, Boeing Airplane Co. Seattle
Edward H. Clark President, Homestake Mining Co. New York
Benedict Crowell Crowell & Little Construction Co. Cleveland
Arthur V. Davis President, Aluminum Co. of America Pittsburgh
L.L. Dunham Equitable Building Association New York
Snowden A. Fahnestock Bertron, Griscom & Co. New York
Marshall Field, III Capitalist Chicago
E.M. Herr President, Westinghouse Electric & Mfg. Co. Pittsburgh
J.R. Lovejoy Vice President, General Electric Company New York
John R. McCune President, Union National Bank Pittsburgh
Samuel McRoberts Capitalist New York
R.B. Mellon President, Mellon National Bank Pittsburgh
W.L. Mellon President, Gulf Oil Co. Pittsburgh
Theodore Pratt Standard Oil Company New York
Franklin D. Roosevelt Vice President, Fidelity & Deposit Co. New York
Philip N. Wrigley Vice President, Wm. Wrigley Co. Chicago
Owen D. Young Vice President, General Electric Co. New York

The initial board of directors included National City Bank vice president Samuel McRoberts,2 William B. Joyce, president of National Surety Company—one of FDR's competitors in the bonding and surety business—and Benedict Crowell, former Assistant Secretary of War and chairman of the board of the Cleveland construction company Crowell & Little Construction. Snowden A. Fahnestock of Bertron, Griscom was the son of New York financier Gibson Fahnestock and a partner in the stock brokerage firm of Fahnestock & Company. Gibson's brother William Fahnestock, a partner in the same firm, was director of several major corporations including Western Union and, with Allen Dulles, of Gold Dust Corporation. David Goodrich, another subscriber, was chairman of the board of B.F. Goodrich Company and a director of American Metals Company of New Mexico.
It should be noted with care that this enterprise was a private venture where the risk and the rewards were taken by experienced and clear-sighted capitalists. No criticism can be made of the financing of this venture; the criticism lies in the manner in which it acquired its main asset, the German patents.

The president's report for the year 1922, issued on January 8, 1923, summarizes the A.I.C. achievements to that date.

The German Reparations Commission refused to allow construction of large airships in Germany, and there was a delay in the completion and test of the new apparatus designed by the U.S. Bureau of Mines for the economical manufacture of helium gas, but it was considered that A.I.C. was within a few months of the time to appeal to the public for financial support. According to this report, the first stage of the work had been brought to a close by signing a contract on March 11, 1922 between the American Investigation Corporation and the Schuette-Lanz Company whereby the American Investigation Corporation secured the world patent rights on the Schuette designs and methods of construction for rigid airships. The contract provided for installment payments and included an agreement with Schuette-Lanz either to construct an airship or to provide the services of the experts to undertake construction in the U.S.

The company had "definitely determined through the Department of State that the Reparations Commission and Council of Ambassadors would not consent to the construction in Germany of the full sized ship considered by the American Investigation Corporation," and so Dr. Schuette was requested to visit the U.S. to reach a final agreement. The ultimate object, continues the report, is the establishment of the airship industry in the U.S. and "is never lost sight of; nevertheless obtaining the first ship from Germany at less cost and built by the best experts is highly desirable."

The importance of ensuring a supply of helium gas for airships was highlighted by the destruction of the British R. 38 and the Italian Roma airships. After consultation with the Helium Board and the chief chemist of the Bureau of Mines, a decision on the helium question was deferred until completion of the improved apparatus the Bureau was designing for the production of commercial helium. Under the terms of the agreement between the American Investigation Corporation and Washington engineer Hardesty and his associates, in addition to the $20,000 provided to cover their work before the formation of the American Investigation Corporation, certain actual out-of-pocket expenses were to be repaid for assistance in organizing the corporation. The final agreement was, however, conditional upon the signing of a contract regarding the share which Mr. Hardesty and his associates were to receive in the American Investigation Corporation and any of its subsidiary companies in return for their promotion work: above all, it required that the German patents held on behalf of the American public by the Alien Property Custodian be released to the A.I.C.


Consequently, the A.I.C. syndicate had a major hurdle to overcome before work could begin on commercial development of airships in the U.S. This political hurdle—to acquire the rights to the Schuette-Lanz airship construction patents—required the astute political assistance of FDR. These rights were German, but under the control of the U.S. Government. By U.S. law, seized alien property can be disposed of only by auction sale and competitive bidding. However, we find in the report of the president of A.I.C. dated May 26, 1922 that A.I.C. was then "the owner of the present Schuette-Lanz patents" and listed 24 patents and 6 patent applications originating in Germany, 6 applications originating in England, and 13 patents and 6 applications originating in the United States. The report continued: "In the U.S. 7 patents are subject to return by the Alien Property Custodian. Through filing assignments all new U.S. patents are being issued directly in care of A.I.C." How, then, did the A.I.C. syndicate obtain the German patents held in trust by the U.S.? This is particularly important because no record exists of auctions or competitive bidding. The A.I.C. report notes only:

The interests of A.I.C. were protected by the collaboration in drawing the contracts and assignments of Mr. J. Pickens Neagle (Solicitor of the Navy Department) Franklin Roosevelt, Mr. Howe and Blackwood Brothers.

This certainly raises the question of the propriety of a U.S. Navy Department solicitor acting on behalf of a private syndicate. The German patents were sprung loose from the U.S. Government for A.I.C. by the personal intervention of Franklin D. Roosevelt. Let's see how he went about the job.

Franklin D. Roosevelt was former Assistant Secretary of the Navy, one of a series of Roosevelts to hold the job, and consequently had good political contacts in the Navy Department. In mid-1921 FDR began to probe among his old Navy friends on two questions: (1) the position of the Schuette patents and (2) the possibility of acquiring private use for the A.I.C. syndicate of the Lakehurst naval base for A.I.C. airships. On May 4, 1921 Admiral R.R. Byrd in the Office of Naval Operations acknowledged an invitation to visit FDR's estate at Campobello. Nine months later, on May 23, 1922, Commander E.S. Land, of the Navy Bureau of Aeronautics, also acknowledged an invitation to visit FDR when next in New York. Land added that there "appears to be little likelihood of my going to New York during the next three or four weeks. If you could advise me relative to the nature of your inquiries, I might be able to give you some information along the lines desired."

FDR replied to Commander Land in a letter marked Personal, but sent to the Navy Department, to the effect that his inquiry could not be made by telephone or letter. FDR then briefly reviewed the position of A.I.C. and stated that the company "is about to go ahead with the actual construction and operation of dirigibles," but needed to know more about the U.S. government's program for such craft: "I am not looking for any confidential information but merely such facts as I feel sure I could obtain without much difficulty were I able to go to Washington myself."

This information is, wrote FDR to Land, "for the good of the cause generally," and he then offered to defray Commander Land's expenses if he would visit New York. This apparently had little success because on June 1 FDR again requested the information and pushed even further: "Incidentally would there be any objection to our getting a copy of the Zeppelin contract? Theoretically they are all public documents."

In the final analysis, it was Pickens Neagle of the Judge Advocate Generals Office in the Navy who was the prime mover in obtaining the required German patents for A.I.C.; Neagle was obviously making himself useful to FDR in other areas, as well. On May 15, 1922 FDR wrote Neagle about Hardesty, the engineer-attorney handling the patent negotiations in Washington:

Both Mr. Fahnestock and I passed without question the very modest sum that Hardesty put in for you, [Neagle] and I feel sure that the Directors will approve of this when they meet, which will not be long now.

Navy Solicitor Neagle replied to this on June 16 to give FDR information about possible bonding business:

I am ashamed to mention so small a thing as the bond that would accompany a contract for $29,000 but things are very dull in the Government contracting line just now. The Midvale Steel and Ordnance Company just received an award of contract for 8" gun forgings totaling a trifle under $29,000. The bond will be for an amount equal to something like 15 to 20 percent of the amount of the contract.

Again, on August 9, 1922 Neagle wrote to Louis Howe and referred to FDR's Navy papers, which were apparently undergoing the customary examination within the department before release to FDR. FDR's problem was to stop the papers "going through the hands of file clerks or inquisitive people with little sense of responsibility or meddlesome novices." The Navy Department would not release the papers without proper examination, even after Neagles' personal intervention. Writes Neagle to FDR:

I didn't see any way in which I could induce Mr. Curtis to change his view on the subject so I left it in that condition with the mental reservation however that you will be down here soon yourself and perhaps shake him loose.

The file to this point suggests that Pickens Neagle, Solicitor in the office of the Judge Advocate General of the Navy was working more on behalf of FDR than the taxpayer and the Navy Department. The contents of this file then shift to the attempt to acquire use of the German patents for A.I.C.; these letters are no longer on navy stationery, but on plain paper, without a printed address but signed by Neagle. On February 16, 1922 a letter to Howe from Neagle relates that

our office this aft. (sic) returned to Aeronautics Bureau that suggested form of contract with endorsement saying the station might be leased to the A.I.C. and [Navy] employees furloughed for the corporation to employ.

Neagle added that, although navy officers could not direct and supervise A.I.C. employees, they could be detailed into private industry to learn the business of building airships. This private information is followed by a formal letter to Fahnestock of A.I.C. from Neagle (now wearing his official hat as Solicitor in the U.S. Navy) to confirm the fact that the navy was willing to lease the station and plant at Cape May, a permission revocable without notice. Another dated January 6, 1923 reports that Hardesty has signed a contract that "ought to be acceptable to the Corporation."

It is clear that the Schuette patents were transferred without public auction and competitive bidding, but by private agreement between the U.S. government and attorneys acting on behalf of a private company. This was a violation of the Trading with the Enemy Act.

The files also record another Navy Department employee rushing to the aid of FDR. A letter dated March 31, 1923 from M.N. McIntyre, head of the Navy News Bureau, to Louis Howe suggested that A.I.C. get hold of the "German airship being built for the Navy," as well as access to the naval base at Lakehurst. McIntyre is refreshingly open about his proposed political assistance: "If you will let me know where you stand on the Lakehurst proposition there may be something I can do to help 'grease' the ways. The same applies to the other suggestion."

We can establish from the files that FDR and his syndicate were able to call on sources of information and assistance within the Navy Department. Precisely how then did A.I.C. get control of the Schuette-Lanz patents? These were supposedly public property to be disposed of by competitive bidding. The Hardesty report of February 1921 explains the legal status of the patents and throws more light on their transfer.

The patents had been seized by the Alien Property Custodian and up to that time licensed only to the War and Navy Departments. An application was submitted January 10, 1921 by Fred Hardesty, submitting

the information that a corporation (presumably A.I.C.) was to be formed that needed the patents, but Hardesty denied "that the patents themselves are of great intrinsic value." In other words, Hardesty walked a tightrope. The A.I.C. had absolute need of the patents to protect themselves from outsiders. At the same time, argues Hardesty, the patents really had no great value. They are required, he wrote to the Alien Property Custodian, "to form a moral bulwark for us against aggression of outside parties." Hardesty argued that the public interest was vitally involved and that he would be "pleased to receive information as to the value that has been set on the patents, if their value has been appraised, and as to the terms of and conditions on which they might be sold to us."

Attached to this letter in the FDR files is a "Memorandum for Mr. Hardesty" on the Johann Schuette patents that appears to have originated in the Alien Property Custodian's Office. The memorandum confirms the fact that the patents were held under the Trading with the Enemy Act of 1917, that the only right remaining to the German holder was the right to claim release, and that such claims must be settled as directed by Congress. It is unlikely, states the memorandum, that the patents would be sold by the Alien Property Custodian but, if the patents were offered for sale, "there would be little or no competition, as there are probably very few companies in existence or proposed that contemplate using them, and that therefore the prices offered would not be very high."
The memorandum then gets to the crux of the problem facing A.I.C.:

The A.P.C. makes sales of patents, other than sales to the Government, only to American citizens at public sale to the highest bidder after public advertisement unless the President shall otherwise determine. Purchasing property from the A.P.C. for an undisclosed principal or for re-sale to a person not a citizen of the United States, or for the benefit of a person not a citizen of the United States is forbidden under severe penalty.

This leaves open the possibility that the Secretary of War or the Secretary of the Navy might recommend immediate sale to the President "as a matter of sound business policy in the public interest."

The syndicate then attempted to go the Presidential route, apparently with success. On February 4, 1921 FDR in New York wrote Hardesty in Washington, D.C., "I agree with you that we should do something immediately in regard to the Schuette patents, and at least make the try before the present administration goes out."

Then a memorandum of services rendered in the files records that on both February 9 and 17, 1921 FDR went to Washington and at least met with the Alien Property Custodian. Subsequently, Schuette granted power of attorney to Hardesty, and the patents were released by the Alien Property Custodian, although not immediately. The FDR files do not contain original signed documents on the release, only drafts of documents, but as the patents were ultimately released to A.I.C. it can be assumed that these working drafts are reasonably close to the final signed document. One document signed by both the Alien Property Custodian and German patentee Johann Schuette reads as follows:

It is hereby further understood and agreed by and between the parties hereto that the price or prices at which the above enumerated patents of Johann Schuette may be sold to the American Investigation Corporation by the Alien Property Custodian are and shall be considered only a nominal value of said patents fixed and agreed on by and between the parties hereto and the actual value thereof; and that the said agent shall give, execute, and deliver to the Alien Property Custodian an unqualified release by and on the part of the said Johann Schuette and his said agent and their and each of their heirs and assigns and legal representatives of all claims, demands, etc.

It is clear from this document (1) that the Alien Property Custodian sold the patents to A.I.C., (2) that it charged A.I.C. only a "nominal price," (3) that there was no competitive bidding for the patents, and (4) that the former German holder Schuette was granted an interest either directly or indirectly. All four actions appear to be contrary to the requirements of the Trading with the Enemy Act of 1917 (see p. 000), even if there was Presidential authority for procedures (1) and (2).

Subsequently, on May 9, 1922 a contract was drawn between American Investigation Corporation and Johann Schuette. This paid Schuette $30,000 in cash, with a further $220,000 payable in monthly installments, with the last payment due not later than July 1, 1923. In the event of failure to pay by A.I.C., all rights in the patents would be turned over to Schuette. A stock allowance was granted Schuette, who in turn was to provide cooperation and technical assistance to A.I.C. There is also in the FDR files an internal memorandum that appears to be written on the typewriter normally used for FDR's letters; therefore, it is possibly a memo drawn up either by FDR or more probably by Louis Howe. This memorandum summarized the A.I.C. strategy. It lists "What we have to sell" and answers this question as follows:

1. The Schuette-Lanz patents, described as fundamental and needed by Ford's engineers also working on airship construction.
2. "A tentative contract to the Navy whereby over a million dollars in construction of a plant and building hangar are saved. This is our property as contract proposed is in exchange for license to use the Schuette patents by the Navy." In other words, A.I.C. not only was able to acquire the patents without public bidding in behind-the-scenes political maneuvers, but also acquired the right to sell them back to the Navy. This is the kind of deal most poor taxpayers don't even dream about, although they foot the bills in the end.
3. All the data, designs, and tests of the Schuette-Lanz patents.
4. An arrangement for production of helium.
5. "A list of stockholders comprised of men of public spirit and considerable means."
6. This wasn't enough, because the next section is headed "What we Need" and lists (1) funds and (2) work. The memo then proposes an amalgamation of A.I.C. work with that of Ford engineers.

We can summarize the FDR's American Investigation Corporation deal as follows:

First, the A.I.C. was able through the personal intervention of Franklin D. Roosevelt to obtain seized patents as a gift or at a nominal price. The law required that such seized patents be offered for public bidding and not for the advantage of the former German owner. In practice, they were released behind closed doors as a result of private understanding between FDR and the Alien Property Custodian, possibly with Presidential intervention, although no trace of such assistance can be found. These patents, previously described as of no value, then became the subject of a contract involving payment of $250,000 to German citizen Schuette and the main asset of a company to promote airship construction in the U.S. On the face of the documents in the files, there is a prima facie violation of the law both by FDR and the Alien Property Custodian.

Second, these patents appear to have been released for the indirect benefit of a foreign party, a procedure subject to severe penalties under the law.

Third, the A.I.C. was able to obtain use of navy facilities valued at $1 million and official information from within the Navy Department.

Fourth, the only risk taken by the Wall Street operators was to put the enterprise together. The patents were obtained nominally, the funds came from outside New York City, and the expertise was German or that of the Ford Motor Company. Franklin Delano Roosevelt provided the political leverage to put together a deal that was on the face of it illegal and certainly a long way from the "public trust" FDR and his associates were fond of promoting in their writings and speeches.


Automatic postage stamp machine sales started in 1911, but were not really efficient outlets until development of the Shermack machine in the 1920s. In 1927 the Sanitary Postage Stamp Corporation was formed to market Shermack machines for the automatic dispensing of postage stamps, previously sold in stores in loose form that exposed the user, according to the firm's sales literature, to transmission of disease. The firm's board of directors consisted of the inventor Joseph J. Shermack, Edward S. Steinam, J.A. de Camp (120 Broadway), banker George W. Naumburg, A.J. Sach, Nathan S. Smyth, and Franklin D. Roosevelt.

By April 1927 the company was selling about 450 machine installations a week. According to a letter written by FDR to A.J. Sach, vice president of the company, there were major problems with collections; in fact, ten stamp locations had not been heard from in over six months, and cash was short. FDR made the eminently sensible suggestion that salesmen should stop selling for a week and spend the released time on cash collections. Apart from such occasional suggestions, FDR's role in Sanitary Postage Stamp was nominal. Henry Morgenthau, Jr. got him into it originally and even paid the original subscription of $812.50 for FDR's initial 100 shares: "You can send me a check for the same at your leisure." FDR mailed his check the same day. The sponsors issued FDR 3000 shares of common stock "in consideration of the services you have rendered," obviously for use of his name as a bait for investors.

FDR resigned in late 1928 upon his election as Governor of New York.

FDR also was director of CAMCO (Consolidated Automatic Merchandising Corporation), but never took an active part in its flotation. CAMCO was a holding company designed to take over 70 per cent of the outstanding capital stock of a number of companies, including Sanitary Postage Stamp Corporation, and is notable because the board of directors included, not only FDR, but Saunders Norwell, who from 1926 to 1933 was president of the Remington Arms Company. In 1933 Remington Arms was sold to the Du Pont Company. In Chapter 10 we will probe the Butler Affair, an abortive attempt to install a dictatorship in the White House. Both Remington Arms and Du Pont are named in the suppressed testimony of the Congressional investigation committee. Yet in 1928 we find FDR and Saunders Norvell as co directors in CAMCO.


FDR's personal and highly commendable struggle to regain use of his legs after a 1921 polio attack led him to the mineral waters of Georgia Warm Springs. Regaining some strength, FDR decided to convert the springs, derelict and almost unused, into a business proposition to aid other polio victims.

Unfortunately, the precise source of the major funds used to develop Georgia Warm Springs cannot be determined from the FDR files as they exist today. The FDR folder on Georgia Warm Springs is relatively skimpy, and it is exceedingly unlikely that it contains all the papers relating to development of the project. The folder gives the appearance of having been screened before release to the Hyde Park archives. There is no public record of the funding for Georgia Warm Springs. Given FDR's tight personal finances during the 1920s, it is unlikely that the funds came from his personal resources. We do have some evidence for three sources of funds. First, it is more than likely that his mother, Mrs. James Roosevelt, was one. In fact, Eleanor Roosevelt wrote FDR, "Don't let yourself in for too much money and don't make Mama put in much, for if she lost she'd never get over it!"3 Second, Edsel B. Ford is reported to have contributed funds to build the enclosure of the swimming pool, but was not a trustee of the foundation. Third, and most important, the original property was owned by corporate socialist, George Foster Peabody. According to FDR's son, Elliott Roosevelt, there was a sizeable personal note on the property itself, and this note was probably held by Peabody:

On April 29, 1926, he acquired the derelict property, where Loyless was running ever deeper into debt. At the peak of his obligations as the new proprietor, Father had precisely $201,667.83 invested in the place in the form of a demand note, which was not completely paid off until after his death, and then only from a life insurance policy he had taken out in Warm Springs' favor. The $200,000-plus represented more than two thirds of everything he owned. It was the only time he took such a monumental risk. Mother was terrified that if this went the way of so many of his business ventures, none of us boys could go to college, a fate which I, for one, was more than ready to face.4

It is significant that Elliott Roosevelt reports the existence of a $200,000 demand note that was not paid off until FDR's death. It is a reasonable supposition, moreover, that the funds were put up by some or all of the trustees. This places FDR in the same position as Woodrow Wilson, beholden to his Wall Street creditors. As these trustees were among the most powerful men in Wall Street, the charge that FDR was "in the grip of the bankers" is at least plausible.
It is therefore reasonable to suppose that the funds for Georgia Warm Springs were put up, or were under the control of, the trustees of the Georgia Warm Springs Foundation and the associated Meriweath
er Reserve. The trustees of the foundation in 1934 and their main business affiliations are listed below:

Georgia Warm Springs Foundation: Trustees in 19345

Name of Trustee6 Chief Affiliations
Franklin D. Roosevelt President of the United States of America
Basil O'Connor Attorney, 120 Broadway, former law partner of FDR
Jeremiah Milbank Director, Chase National Bank of N.Y.
James A. Moffett Vice President & director, Standard Oil of New Jersey
George Foster Peabody Original owner of the property and holder of the note on Georgia Warm Springs
Leighton McCarthy Director of Aluminum, Ltd (Canadian subsidiary of ALCOA)
Eugene S. Wilson President, American Telephone & Telegraph (195 Broadway)
William H. Woodin Secretary of the Treasury under FDR
Henry Pope Director of Link-Belt Company
Cason J. Callaway President of Callaway Mills, Inc. of New York

The trustees of Georgia Warm Springs obviously tie FDR to Wall Street. The most prominent of these were Eugene Smith Wilson (1879-1973), a vice president of American Telephone and Telegraph of 195 Broadway, New York City. Wilson also held directorships in numerous other telephone companies, including Northwestern and Southwestern Bell and the Wisconsin Telephone Company. In 1919 he was attorney for Western Electric, then became counsel for A. T. & T. before appointment as vice president in 1920. Wilson had a long association with the campaign against polio, became associated with Franklin D. Roosevelt, and in the mid-1930s was a member of the investment committee of the Georgia Warm Springs Foundation. His fellow directors on A. T. & T. included John W. Davis, who turns up in the Butler Affair (see Chapter 10).

Another of the Georgia Warm Springs trustees was James A. Moffett, a vice president of Standard Oil of New Jersey. Walter Teagle of the same company was one of the key administrators of NRA.

Trustee Jeremiah Milbank was director of the Rockfeller-controlled Chase National Bank and the Equitable Trust Company.

Trustee William H. Woodin was a director of the Federal Reserve Bank of New York from 1926 to 1931 and was appointed Secretary of the Treasury by Franklin D. Roosevelt after strongly supporting FDR's 1932 election bid. Woodin resigned within six months, but because of ill health, not for any lack of interest in holding the Treasury position.

Trustee George Peabody has been identified in the previous volume7 and was prominently associated with the 1917 Bolshevik Revolution in Russia and the Federal Reserve Bank of New York.

7. Sutton, Bolshevik Revolution, op. cit.



1. List dated Feb. 18, 1922 in FDR files.

2. Samuel McRoberts figures prominently in Sutton, Bolshevik Revolution, op. cit.

3. Elliott Roosevelt, The Untold Story, op. cit., p. 232.


5. Taken from letter dated March 5, 1932 from Fred Botts, Business Manager at Warm Springs, to FDR at The White House.

6. Trustees also included Frank C. Root, of Greenwich, Conn., Keith Morgan of New York City, and resident trustee Arthur Carpenter.

7. Sutton, Bolshevik Revolution, op. cit.