and reparations
restructuring of
and translating sums of money
See also specific person or nation
War Guilt clause
War of the League of Augsburg
Warburg Bank
Warburg, James
Warburg, Max
Warburg, Paul
Warren, George
Wednesday Society (Berliner Mittwochgesellschaft)
Wells, H. G.
Wendel, François de
Whalen, Grover
White and Case
White, Harry Dexter
White, William Allen
Whitney, George
Whitney, Richard
Wiggin, Albert
Wilhelm II (kaiser of Germany)
Wilson, Daniel
Wilson, Woodrow
and Federal Reserve Board
health of
and isolationism
and Keynes
Meyer on staff of
at Paris Peace Conference
and plan for financial reconstruction of Europe
and reparations
and Strong’s internationalism
and Treaty of Versailles
Woodin, William
World Bank
World Economic Conference (London, 1933)
World War I
and balance of financial power
borrowing to pay for
casualties in
central banks role in
costs of
early months of
ending of
financial system as casualty of
funding for
legacy of
material destruction during
optimism about duration of
spending on
U.S. entry into
World War II
World War Foreign Debt Commission
Young Liberal Association
Young, Owen D.
appearance of
and Dawes Committee/Plan
and divisiveness within Fed System
and French-German relations
and German economy
and Norman-Lamont agreement
personal and professional background of
selling of stock positions by
strategy of
Young, Roy
Young Conference (Paris, 1929)
Young Plan
Zaharoff, Basil
1 The monopoly need not be complete. In Britain, while the Bank of England was granted a monopoly of currency in 1844, Scottish banks continued to issue currency and existing English banks with the authority to issue currency were grandfathered. The last private English banknotes were issued in 1921 by Fox, Fowler and Company, a Somerset bank.
2 Eventually the government would end up assuming the risk on all this unpaid trade debt until the end of the war.
3 The origins of the dispute were so arcane that Lord Palmerston famously remarked that only three men in the world fully understood them: Prince Albert, who was dead; a clerk in the Foreign Office, whom it had driven mad; and Palmerston himself, who had forgotten.
4 Many years later, when he was a prominent official, the libretto was much to his embarrassment made public. Schacht sued the man responsible.
5 On September 22, 1914, Captain von Romberg was killed in action, one of the first German officers to die in the war. See “Baron Von Romberg Killed,” New York Times, September 30, 1914.
6 Pierpont Morgan died in 1913 without ever occupying the apartment. It was until very recently a restaurant.
7 By the mid-1920s, the New York Fed was two and a half times as large as its nearest rival, Chicago, and some ten times greater than the smallest Federal Reserve bank, that of Minneapolis.
8 Then the equivalent of $400, 2,000 francs was well below the wage of a typical skilled American worker.
9 The gold standard was officially suspended in Germany and France in August 1914. In Britain, the government maintained the legal fiction that the gold standard was still in operation. Theoretically, British citizens could demand gold for their Bank of England notes and were, until May 1917, free to export gold. In reality the threat posed by German submarines made insurance prohibitively high and gold exports were never feasible.
10 That same ethos seems to have extended to the senior employees. Kenneth Grahame, the children’s author, joined the Bank of England in 1879 and rose through the ranks, eventually becoming secretary. In 1895, he published The Golden Age, a book not about bullion but childhood. In 1907 he retired, after having been shot during an unsuccessful robbery attempt at the Bank, and the following year published The Wind in the Willows.
11 By comparison, the Bank of the United States, the primary bank of issue for a country with one-sixth of France’s population, was capitalized at $10 million.
12 By comparison, Britain, with an economy about a third that of the United States, spent a total of $50 billion over a period of four years.
13 He was sufficiently flattered by the attention from cartoonists that, in 1937, he had a collection of cartoons privately published to commemorate his sixtieth birthday.
14 The actual phrase was coined by Sir Eric Geddes, first lord of the admiralty, who while campaigning in Cambridge on December 9, announced that “Germany was going to pay restitution, reparation and indemnity and . . . they would get everything out of her that you could squeeze from a lemon, and a bit more.”
15 In July 1929, he was jailed for passing dud checks and died in prison a year later.
16 Hill, a physiologist and a fellow of Trinity College, would win a Nobel Prize before he was forty.
17 There have been other bad episodes of inflation. Hungary in 1945-46 was worse. The Zimbabwean inflation is as of the writing of this book equally bad—on July 31, 2008, the Financial Times reported that the exchange rate of the Zimbabwean dollar reached 500 billion to the U.S. dollar. But Hungary in 1945 and Zimbabwe in 2008 were tiny economies. Germany in the 1920s was the third largest economy in the world.
18 The Family eventually acquired the house at 1718 H Street and established a tradition that only bachelors could stay the night on the premises.
19 This is roughly equivalent to $9 million today.
20 Fort Knox, where the Treasury gold is now held, was not constructed until 1936.
21 His premonition would eventually prove to be right. In 1931, as the Depression in Germany reached its nadir, the Danatbank would collapse, a victim of Goldschmidt’s risky business strategy. Goldschmidt himself would become a favorite target of Nazi propaganda about the “unwarranted power” and “sinister influence” of Jewish bankers.
22 There was, in addition, a highly potent symbolism to the rate selected. The Rentenmark would now have an exchange rate of 4.2 to the dollar, the rate that had prevailed under the gold standard before the war. This was designed to send a signal to the public, and to the world, that the new currency was to be as stable as the mark had been before the war.
23 He was also a self-taught composer. In 1911, he composed a piece entitled “Melody in A Major,” which, set to words in the 1950s, became the popular hit song “It’s All in the Game.”
24 In 1940, during the German occupation of Paris, the Astoria would be commandeered by the occupation forces. Subsequently, when the city was liberated in 1944 by the Allies, it would be taken over as General Eisenhower’s Paris headquarters. Torn down in the 1950s, its successor building became famous to visitors to Paris in the 1960s as Le Drugstore.
25 Between 1894 and 1914, six heads of state were assassinated by terrorists. See Barbara Tuchman, The Proud Tower (New York: Bantam Books, 1966), p. 72.
26 According to his wife, Clementine, the first time Churchill ever resorted to public transport was when he took the Underground during the 1926 general strike.
27 In old age, Churchill would remark that the only great issue on which they had agreed had been in support of Edward VIII during the abdication crisis and that perhaps
they were both wrong that time.
28 Gladstone held the record for the longest speech at four hours and forty-five minutes, in 1853.
29 Like so many politicians from the left, Painlevé was an intellectual, a brilliant mathematician from the Sorbonne with a particular expertise in nonlinear second-order differential equations.
30 Gerald and Sara Murphy were the models for Dick and Nicole Diver in F. Scott Fitzgerald’s book Tender Is the Night. They were introduced to the south of France in 1922 by their friends Cole and Linda Porter.
31 The mansion belonged to the family of the French politician Daniel Wilson, the son-in-law of President Grévy, who had been accused in 1887 of selling decorations, including nominations to the Légion d’Honneur, from his office in the Elysée Palace.
32 When the royal family was imprisoned at the Temple, the princess de Lamballe had accompanied them. She met a gruesome end in September 1791, when she was handed over to a lynch mob, who stripped her naked, gang-raped her in the streets, then mutilated her body before finally impaling her head upon a pike and parading it in front of Marie Antoinette’s prison window.
33 He made up for his apparent coldness by an obsessive love of animals. He and his wife, Henriette, had no children and lavished their affection on their pet cats and dogs. Poincaré is supposed to have been heartbroken both when his sheepdog Nino died in 1926 and when his favorite Siamese cat, Gris-gris, passed away in 1929.
34 Pierre Quesnay became a close friend of Moreau’s. He drowned in 1937 in a swimming accident in a lake on the grounds of La Frissonaire while staying with Moreau.
35 Édouard’s efforts to keep his family firmly out of the papers except for the society columns were not helped when his cousin Maurice, a flamboyant womanizer and the black sheep of the family, took it into his head to enter politics, ran for the National Assembly, and in early 1926, was found guilty of having bought his seat by offering his constituents cash handouts, ranging from twenty to a thousand francs. Expelled from parliament, he insisted on running again and won.
36 In this book I have chosen to use the Dow Jones Industrial Average as a measure of the average level of the stock market, for all its many deficiencies, the oldest and best known stock average. Introduced by the founder of the Wall Street Journal, Charles Dow, in 1896, it then comprised the average of twelve industrial stocks. The list was expanded to twenty in 1916 and to thirty in 1928. The only index of comparable repute is the S&P, but that was not introduced until 1923 and remained relatively obscure until after the war.
37 By comparison, during the great boom years from 1890 to 1910, it oscillated between 15 and 20. In 1929, it reached a peak of 32; at the height of the Internet bubble, it soared to 45.
38 He also argued that while the franc had been stabilized de facto but not de jure at 25 francs to the dollar, speculators could still harbor the hope that the franc would eventually be fixed at a higher exchange rate, providing those who held francs with windfall gains. Norman insisted that the only way to combat this form of destabilizing speculation was for the French government to fix its rate de jure. It finally did so in June 1928.
39 The Banco d’Italia, which had stabilized the lira in December 1926, only six months after the franc, somehow got the impression that it, too, would be asked to attend, and was much disappointed when no invitation arrived.
40 With his sister, Gladys Livingstone Mills Phipps and his polo-playing brother-in-law, Henry Carnegie Phipps, he owned the Wheatley Stable, which bred the legendary race-horse Seabiscuit.
41 For most goods, when a shortage emerges and demand exceeds supply, the price rises. Because under the gold standard, the price of gold was fixed in dollar terms, the first symptom of a gold shortage was not a rise in its price—that by definition could not happen—but a fall in the price of all other commodities.
42 Livermore’s own career belied his own statement. Sensing that the boom in 1907 was going to turn into a spectacular bust, he made his first millions by shorting the market just before the panic of that year. He reputedly made another fortune the same way in 1929—he would make and lose several such fortunes in his lifetime. In 1940, he shot himself in the cloakroom of the Sherry Netherlands Hotel in New York City. He had $5 million in his bank account.
43 She went on a hunger strike in jail, became a national folk heroine when she escaped the prison hospital by climbing down a rope made of bedsheets, was recaptured, and at her trial revealed the names of politicians she had bribed. She committed suicide in prison in 1935.
44 He was the founder of no less than three business colleges: Babson College in Massachusetts, Webber College in Florida, and the now defunct Utopia College in Eureka, Kansas. In 1940, he ran for president of the United States as the Prohibition Party’s candidate, receiving 57,800 votes In 1948, he formed the Gravity Research Foundation, an organization dedicated to combating the effects of gravity, including the quest for antigravity matter.
45 Meyer remained a Washington figure of some repute. After he retired from the Fed in 1933, he bought the near bankrupt Washington Post, which he successfully turned around. He was the father of the late Katharine Graham.
46 Many popular accounts of the Great Depression attribute a large weight to the protectionist Smoot-Hawley Act as a cause of the economic collapse. Tariffs shift demand from imports to domestic goods, so if anything, it should have had an expansionary effect. Retaliation by foreigners did hurt the U.S. economy, but exports were a small percentage of GDP—less than 4 percent—so the total effect would have been small. Changes in capital flows dwarfed the impact of trade.
47 Schacht liked to tell the story of how when he came to New York in the mid-1920s, Strong had taken him down into the vaults of the New York Fed to show him where the Reichsbank’s gold was stored. Much to Strong’s embarrassment, Fed officials were unable to find the pallet of bullion that had been specifically earmarked for the Reichsbank. See Hjalmar Schacht, My First Seventy-six Years (London: Allan Wingate, 1955), page 264.
48 See page 5 above.
49 It was a turning point with especially tragic consequences for Laval himself. Following the defeat of France in 1940, he joined the Vichy government and became one of the most active French collaborators with the Nazis. He was tried for treason after the war, and following a botched suicide attempt with cyanide, he was executed by firing squad, half conscious and vomiting, in October 1945.
50 The accusations of tax dodging resurfaced in 1934 when the Justice Department indicted him for having falsified his 1931 tax returns and sought more than $3 million in back taxes and penalties. He was cleared on appeal, but his estate eventually paid some $600,000 as a settlement.
51 German GDP in the 1920s was $15 billion, one-sixth the size of the U.S. economy. By comparison, Mexico in 1994 had a GDP of $450 billion, a little more than one-eighteenth that of a U.S. economy then of $7.5 trillion.
Lords of Finance Page 64