Other New York Groups The battle in Union Oil once again threw the spotlight on the hidden connections between Dillon, Read and Manufacturers Hanover Trust.. The latter was set up in 196
Trang 1Composition of the Dillon, Read Group
assets,
m i l l i o n dollars
Share of control
Total controlled assets, million dollars
Other groups partic- ipating in control
California
797 1/4 199 California, MellonsReynolds Metals 1,002 1/5 200 Reynolds
Goodyear Tire and
Rubber 1,186 1/6 198 Cleveland and othersAmerada Petroleum 233 1/2 116 British capitalLouisiana Land and
Exploration 71 3/4 53 Various groupsSouthwestern Pub-
Trang 2the Manufacturers Trust Company, Horace C Flanigan, re- mained a director of Union Oil (His son Peter is a partner and big stockholder in both Dillon, Read and the companies which are controlled by it and which profited on sales to Union Oil.) In 1963, another crushing blow was struck at the positions of Dillon, Read in this company: 15 per cent of its stock was bought by Daniel K Ludwig, a California multimillionaire shipowner
7 Other New York Groups The battle in Union Oil once again threw the spotlight
on the hidden connections between Dillon, Read and Manufacturers Hanover Trust The latter was set up in 1961 through the merger of two big New York commercial banks: Manufacturers Trust and the Hanover Bank Almost all the companies which Dillon, Read controlled in the past or served as investment bankers were linked through personal union with one of these two institutions and used them as their head banks
Manufacturers Trust was formed in the 1920s mostly from small banks which served a narrow circle of commercial and industrial companies in New York In 1929, Goldman, Sachs and Lehman Bros gained control of Manufacturers Trust Its directorate was then replenished by representatives of many large companies in the food, canning, textile, oil and building industries and of trading companies At that time the law firm of Simpson, Thatcher and Bartlett which served the Lehmans became the legal counsellor of the bank It has preserved both these clients to this day
Although direct representatives of Goldman, Sachs and Lehman Bros had to resign from the bank's directorate after new banking legislation came into force in the 1930s, leadership of Manufacturers Trust and its personal union remained practically unchanged for a long time A partner
of Simpson, Thatcher and Bartlett, who represented the Leh- mans, and Sidney Weinberg who under the law could not serve on the bank's directorate, were all the time on the bank's Business Development Committee Goldman, Sachs (jointly with Lazard Freres and others) headed syndicates which sold the bank's stock
292
Trang 3Early in the 1930s, the Hanover Bank was ruled by a coalition of old New York families (Roosevelts, Vanderbilts, Iselins, de Forests) and new banking houses (Dillon, Read; Brown Bros.; White, Weld) The second part of the coali- tion withdrew in the mid-1930s and the first disappeared in the 1940s Their places in the bank's directorate were taken
by executives of some large companies (Chrysler, Phelps- Dodge, Union Carbide, Continental Insurance, and others) Notwithstanding its fairly large trust department, the bank actually remained without a master Its merger with the Manufacturers Trust was a natural development
The biggest stockholders of the combined Manufacturers Hanover Trust Company are:1
Manufacturers Hanover Trust 8.10 per centContinental Insurance Co (close personal
union with this bank) 1.71 "Niagara Fire Insurance Co (controlled by
Continental Insurance) 0.60 "Bank directors 0.20 " "Helen Gibson (heiress of a former top
executive of Manufacturers Trust) 0.38 " "
Total within group 10.99 " "Morgan Guaranty Trust 1.32 "Bankers Trust 0.99 " "First National City Bank of New York 1.01 " "
Chase Manhattan Bank 0.64 " "
Charles J Stewart, who until then had been a partner of Lazard Freres for seven years, became the first chairman of the board of the Manufacturers Hanover Trust
Possibly, the merger of Manufacturers Trust and Hano- ver was an attempt to combine the interests of several groups: Goldman, Sachs and Co., Lehman Bros., Lazard Freres, Dillon, Read, and some others So far it is too early to say that such a coalition has crystallised, with the bank serving
as its basis We can only note that the Manufacturers Ha- nover Trust is the centre of an independent bank-industrial complex
1 Chain Banking , pp 135, 330.
293
Trang 4Composition of the Manufacturers Hanover Trust Group
assets, million dollars
Share of control Totalcontrolled
assets, million dollars
Other groups parti- cipating in control
Bank, HarrimansColgate-Palmolive , 392 1/3 131 Dillon, Read and
othersStandard Brands 264 1/6 44 Morgan Guaranty
Trust and othersReynolds Metals 1,002 1/3 334 Reynolds and Dil-
lon, Read1,525 1/4 381 Cleveland and othersNational Dairy 774 1/5 155 Various New YorkAtlantic Refining 908 1/6 151 groups
Morgan Guaranty Trust and others
J P Stevens 394 1/8 49 Morgan Guaranty
Trang 5Name of company Tola)
assets,
m i l l i o n dollars
Share of control controlledTotal
assets,
m i l l i o n dollars
Other groups parti- cipating in control
American Home
Products
E Dana Corp
General Baking
United States Lines
Sperry and Hutchin-
son
30214959191237
111/2 1/21
302 149
30 95237
Lehmans and others Various New York groups
of the 19th century from a trading company in the South (the latter supported the slave-owners in the Civil War) Since then the Lehman family has owned 60 per cent of its capital During the period of the Morgan dictatorship the Lehmans financed the food industry and retail trade Now they are equally active in the oil, aircraft, chemical, textile and other industries, in air transport, insurance and other spheres Partners or officials of Lehman Bros are directors in over
120 companies In recent years this banking house, as a rule, has held first or second place in the U.S.A in distrib- uting securities of industrial companies (except competitive bids) by way of "private placements" From 1958 to 1961, the bank organised 36 mergers of different firms, including such important ones as General Dynamics and Material Ser- vices Usually Lehman Bros acts in coalition with other big banking houses
Its alliance with Goldman, Sachs dates back to 1906 Prior
to 1924, their security operations on the public market were undertaken only jointly The community of interests was reinforced by daily meetings of Henry Goldman and Phillip
295
Trang 6Lehman This alliance was based on a combination of Leh- man capital with the energetic activity of the Goldman, Sachs partners Their traditional alliance in many spheres (trade, food industry, finance) has been preserved to this day As a rule, security syndicates arc organised jointly There is also an exchange of personnel The head of Gold- man, Sachs and Co., Sidney Weinberg, advanced General Lucius Clay to top leadership of the Continental Can Com- pany The latter became a director of the Lehman Corpora- tion, an investment institution, and at the beginning of 1963
a partner of Lehman Bros
Another alliance—the Lehman Bros and Lazard Freres— was established in the 1930s The banking house of the Lazards (who came from France) was first set up in California and moved to New York at the beginning of the 20th century The family which gave the bank its name has not been active in its affairs for a long time Its present head, Andre Meyer, is one of the most influential figures on Wall Street not only because of his personal fortune (estimated
at $30-40 million) but thanks to his outstanding financial abilities which attracted the capital of many representatives
of the old and even the new plutocracy and made Lazard Freres the financial adviser of many large corporations Although Andre Meyer acts in close contact with Robert Lehman, he is also close to the leaders of the Rockefeller group (David Rockefeller and John McCloy)
Lazard Freres is the financial trustee of Bell and Howell,
a Chicago company whose chief executive is close to David Rockefeller and is a director of Chase Manhattan Richard
H Mansfield, president of Lazard Freres, was an official
of the Chase National Bank for 15 years and a leading executive of the Rockefeller Centre for 10 years Albert
J Hettinger, Jr., a partner of Lazard Freres, is an adviser
of the council for administering trust property of the Chem- ical Bank New York Trust
Lazard Freres has regularly represented in the United States the interests of the French banks, and the financial in- terests of the French Government and the European Coal and Steel Community Lazard Freres of Paris is one of the biggest stockholders of the Banque de Paris et des Pays-Bas
In 1960, when the latter opened its investment branch in New York, the Paris Bas Corporation, it was headed by
296
Trang 7Robert Craft, vice-president of Chase International (a branch
of the Chase Manhattan Bank) This is natural because the directorate of Chase International includes Andre Meyer, George Woods (of the First Boston Corporation), John McCloy and David Rockefeller
The union of Lazard Freres with the Rockefellers, Mel- Ions and other groups on the international arena (and also
in the United States) places this banking house in a special position; on the other hand, it prevents the conversion of the Lehman-Weinberg-Meyer triangle into a financial group of the first order, equal in importance to the Morgan or Rocke- feller groups
A considerable part of this group is a monopoly associa- tion of retail merchants headed by the Lehmans and Gold- man, Sachs Hence, their natural gravitation towards light industry and cinema companies and towards big New York commercial banks whose resources are not fully taken up by serving heavy industry These above all are the Manufac- turers Hanover Trust and also the Irving Trust Company
We have singled out into a separate financial group banks and companies headed by the law firm of Sullivan and Cromwell The Dulles brothers were its chief partners in recent decades Its relative independence is explained by the select, super-rich clientele from the ranks of the plutocracy, representation of the interests of the West European financial oligarchy in America and, lastly, the wealth and business operations of Sullivan and Cromwell itself.1 As far back as the end of the 19th century its partners participated in creat- ing the Morgan and Rockefeller trusts and it itself organised and headed the American Cotton Oil Trust, the National Tube Company and other corporations
In the banking sphere Sullivan and Cromwell, thanks to its extensive ties with Western Europe, relied chiefly on the Schroder bank and subsequently on the Lazards In the 1930s
it captured strong positions in the Bank of New York Old ties with the Seligman banking house enabled the law firm
to gain influence in a number of big investment companies and in Union Securities, an investment bank At the end of
1
William Cromwell, one of the founders of the firm who died in
1948, left a fortune of $19 million (A.N Dean, William Nelson Crom-
well, New York, 1947, p 160)
297
Trang 8Composition of the Lehman-Goldman, Sachs Group
(with the participation of Lazard Freres)1
assets, million dollars
Share of control
Total controlled assets, millio n dollars
Other groups parti- cipating in control
Paris Bas Corp 12 1/4 3 Chase Manhattan
Bank, French bank
Climax
348 1/3 116 Sullivan and Crom-
well, British capital- ists
General Foods 602 1/2 301 Other New York
groupsContinental Can 807 1/2 404 Morgan Guaranty
TrustGeneral Dynamics 656 1/4 164 H Crown and othersNational Dairy 774 1/2 387 Various New York
groupsOwens-Illinois
Trang 9Name of company Total
assets, million dollars
Share of control
Total controlled assets,
m i l l i o n dollars
Other groups parti- cipating in control
Radio Corporation of
America
othersWhirlpool 212 1/3 71 Chicago and othersPan American Air-
industry, trade, transport .5,139
the 1930s, the Dulles law firm, together with Buffalo finan- ciers, participated in organising the Marine Midland Cor- poration; this bank holding company is headed by its place- men to this day Utilising this broad banking basis, the heads
of a number of industrial corporations created by Sullivan and Cromwell enjoy certain independence, which sets them apart from the placemen of other law firms What we have here is not relative or full control by Sullivan and Crom- well, but a specific coalition of corporations created under
299
Trang 10The Sullivan and Cromwell-Marine Midland Group
assets,
m i l l i o n dollars
Share of control
Total controlled assets,
m i l l i o n dollars
Other groups parti- cipating in control
American Radiator 373 1/3 124 Morgan Guaranty
Trust and othersAmerican Motors 393 1/6 66 Various groupsBabcock and Wil-
Trang 11Name of company Total
assets, millio n dollars
Share of control controlledTotal
assets, millio n dollars
Other groups parti- cipating in control
134
236 209760
11/31
1 11/6
1,129
105
134
236 209127Harrimans and others
its guidance which we, for the sake of convenience, name
after this law firm
If some industrial company is not placed within a definite New York financial group, this does not mean that it is not controlled from New York As regards some very large corporations we can speak only of the degree of joint con- trol of several New York financial groups without singling out any of them as the main one The group of companies where such joint New York control prevails over control of provincial groups includes 13 very large industrial, transport
or trading monopolies with controlled assets of $11,300 mil- lion This supplements the picture of the indisputable su- premacy of the New York oligarchy in control over the economy of the United States
8 Regional Financial Groups
Within the bounds of our study it is impossible to examine the regional groups in the same detail as those of New York
We shall limit ourselves to a list of the regional groups with brief comments
301
Trang 12The total assets controlled by all the regional groups are somewhat higher than the combined assets of the New York groups But while in New York three of the largest groups account for the overwhelming part of their total financial power, the regional forces are divided among many groups which, moreover, do not stand in opposition to New York
as a single whole Some of them, on the contrary, are con- nected by allied relations with New York to a greater extent than with other regional groups
Mellons-First Boston Corp This is one of the few major groups which has not lost its distinctly expressed family character The huge capital of the Mellons still includes big (though shrunken) blocks of stock in some large corpora- tions; family representatives have for a long time been at the helm of some of their large companies But even the Mellon group is no longer as monolithic as formerly In the past, too, it was joined by some other families along coali- tion lines, for example, the Pitcairns (Pittsburgh Plate Glass) and the Heinzes Now, however, a greater part is played
by leaders of the First Boston Corporation who brought with them participation in control over Phillips Petroleum and, consequently, the problem of co-ordinating its activity with Gulf Oil, the main Mellon oil trust The First Boston Cor- poration became the head banker of the Kaisers, which created similar problems as regards Mellon-controlled alu- minium and steel companies
The Mellon National Bank and Trust, having turned at the end of the 1950s into the head banker of Martin-Ma- rietta (guided missiles), began largely to control its affairs (with a certain participation of the Chase Manhattan Bank, which also has extensive interests in the aerospace industry) Companies of the Cleveland Humphrey-Hanna group have also become clients of the Mellon bank; their relationships could not be purely financial because both sides are deeply involved in the steel industry of one and the same or adja- cent areas Lastly, expansion of the sphere of interests of the Mellon family and its partners to Florida, the Bahamas, etc., introduces an entirely new trend in the activities of the main institutions of this group
Du Pont group Its weak spot has always been the absence
of really big independent banking facilities No Du Pont bank can lay claim to anything bigger than a local role
302
Trang 13Eighteen U.S Regional Financial Groups
Long-standing ties with the Chemical Bank New York Trust and with Morgan banks, far from strengthening the independence of the Du Pont financial group, weaken it At
303
Trang 14present, this group enjoys undoubted control over only one very large industrial monopoly—E.I Du Pont de Nemours
In the case of aircraft and rubber companies it shares con- trol with New York groups; moreover, the iniluence of the latter is undoubtedly greater
The biggest blow at the group in recent years has been struck by a court decision obligating the Du Ponts and their chemical company to dispose of all their holdings of General Motors stock The decision called for the sale of General Motors shares owned by E I Du Pont de Nemours, Christiana Securities, the directors and executives of the latter (that is, the Du Pont family and their placemen), the philanthropic Longwood Foundation and by members of the
Du Pont family whose capital is administered by the Wil- mington Trust Company Personal union in any form between these companies and General Motors was prohibited The stock of the automobile company was sold, through Morgan, Stanley The court decision, however, signified neither expropriation nor confiscation The Du Ponts and the companies they retain received colossal additional money capital, enabling them to gain control of many other companies As a matter of fact the Du Ponts have captured new firms; these are chiefly small plants which utilise the latest scientific and technological achievements, are swiftly growing and, as a rule, are working on military contracts Simultaneously, the Du Ponts are trying to reinforce their weakest spot—their positions in banking Francis I
Du Pont and Company, an investment brokerage house owned by them, bought up in 1963 all the assets of Allyn and Co., one of the largest Chicago investment banks, advancing to second place in the country for the scale
of brokerage activity At present the Du Ponts also hold about 7 per cent of the shares of the Mellon National Bank and Trust This is considerably less than the Mellons (about 33 per cent) Possibly closer coalition between the two families and even the merger of the two financial groups into one is contemplated On the other hand, in 1963 a representative of the Du Pont family was for the first time elected to the board of the Morgan Guaranty Trust Boston group The enumeration of banks and companies
of this group does not include all the enterprises controlled from Boston We refer only to the main Boston group which
304
Trang 15represents an organic entity because of the general gravita- tion towards the First National Bank of Boston and other banking institutions allied with it
The main strength of the Boston group lies in control over huge resources of loan capital In this respect Boston ex- ceeds any of the other 17 regional groups In contrast to other regional groups, Boston is noted not only for developed commercial banking but also for insurance, investment com- panies and law firms However, most of the Boston invest- ment houses, which at one time had been very strong and influential, moved to New York early in the 20th century and lost their independence The Lee, Higginson Corpora- tion declined in the 1930s under the blows of the crisis and lost control over the First Boston Corporation Paine, Web- ber, Jackson and Curtis, the only large bank of this kind surviving in Boston, is satisfied with its subordinate role and lays no claim to heading big syndicates
But the Boston financial group nevertheless exists as an independent coalition of monopolists The representation of Bostonians in New York banks does not signify that the latter control the Boston institutions The controlling blocks
of stock of all the biggest Boston commercial banks are held by Boston banking institutions themselves; represen- tatives of these institutions also prevail in Boston insurance companies The facts do not corroborate the claim that Bos- ton banking monopolies are controlled from New York What is true is something else: Bostonians predominate only in a few of the country's largest industrial corporations; they confine themselves to participation in joint control and
in many cases even give it up The American Telephone and Telegraph Company is a good case in point It was organised in Boston and up to World War I was controlled from there New England's shareholders still account for about 12 per cent of the entire stock (in 1920, 55 per cent) This is smaller than in the area gravitating towards New York (48 per cent), but is still bigger than in any other area.1 The participation of Boston banks in joint control over
A T and T is beyond doubt
The coalition of Boston monopolists is the most "coupon-
1 Ownership of A.T and T 1961 Treasury Department, American Telephone and Telegraph Company, p 8.
Trang 16clipping" in character among all the biggest U.S financial groups This is associated with the historical distinctions of Boston; the prevalence of merchant's capital, the early ad- ministering of inherited fortunes by banks, and divorce from surrounding industry The domination of the old "aristoc- ratic" families, which made their fortunes as far back as the mid-19th century, has been preserved to this day These are the Adamses (who head the Raythbon Company and are represented in the Sheraton Corporation), the Cabots (who singly rule Cabot Corporation, a chemical firm, one of the biggest investment trusts, etc.), the Lowells (who head the Boston Safe Deposit and Trust Company), and others Some archaic forms of alliance between these families have been preserved like the board of trustees of Harvard University which is called the headquarters of the old Boston oligarchy Boston tycoons seldom go beyond the bounds of usual com- petition with New York groups, being fully satisfied with the position of a junior partner But the rapid development
of the war electronic industry in the Boston area, the ap- pearance of new multimillionaires who are craving for power and the growing influence of the caste of banker- executives might spur on this group to extend its activities
Cleveland groups The unity of three family concerns in Cleveland (the Eatons, Mathers and Hannas) is a thing of the past The Mather family no longer heads the companies
it formerly dominated; Cleveland Cliffs Iron entered the Eaton group and Pickands Mather and Go plays a secondary role in other Cleveland coalitions
In the 1930s and 1940s, the Eaton group, after having been severely hit by the crisis, joined in a bloc with another group—Young-Kirby Young, acting with the support of Kirby (heir of a partner of F W Woolworth) settled down
in Cleveland in 1937 when he bought control of part of the former railroad empire of the Van Sweringens.1 The Eaton investment bank, Otis and Co., became the head bank of the Young-Kirby group In the mid-1950s Young, who captured from the Morgans control of the New York Central Railroad, moved to New York and control of the Chesapeake and Ohio Railroad went to Eaton This marked the revival
1 The Van Sweringen brothers, who built up this empire in the 1920s, went bankrupt not without the "help" of their banker, J P Mor- gan and Co
306
Trang 17of the Eaton group as an independent Cleveland monopoly association which now controls assets of $5,000 million Its latest big acquisition (early in the 1960s) was the Baltimore and Ohio Railroad, which Eaton succeeded in capturing despite the frenzied resistance offered by Wall Street and the Federal Government
We consider that the Kirby group stands close to the Cleveland Eaton group After the suicide of Robert Young early in 1958, a fierce struggle for control over the Young- Kirby empire flared up between Young's partner, the multi- millionaire Kirby, and the Murchisons, Texan oil industrial- ists That empire includes Alleghany, a large holding company; Investors Diversified Services, the biggest invest- ment company in the United States; the New York Central Railroad and partial control over another railway, the Mis- souri Pacific Control of this vast empire with assets of
$7,000 million changed hands several times But Kirby re- captured his positions at the end of 1963
The Kirby empire continues to maintain definite contacts with the Eaton group This is explained by the previous long alliance between Eaton and Young, community of interests
in the distribution of influence spheres in North-Eastern rail- ways and common ownership of stock of the Baltimore and Ohio Railroad As long as the New York Central was under temporary control of the Murchisons the group bought shares
of the Baltimore and Ohio to prevent Eaton from adding this railroad to his empire These attempts failed But now, the fact that Kirby holds 20 per cent of Baltimore and Ohio stock, far from weakening, reinforces Eaton's control What
is important is that the Murchisons enjoyed the support of powerful New York financial groups in their attempts to rob Kirby of his empire The ousting of the Murchisons from the Alleghany Corporation was thus a victory for Cleveland financiers and their ally Kirby over Wall Street
The Eaton group is one of the few regional groups which obstinately do not recognise New York's financial domina- tion and energetically fight against it Otis and Co., the Eaton investment bank, in the past refused to submit to the dicta- torship of the house of Morgan and, together with Halsey Stewart, a Chicago banking house, succeeded in getting a law passed which introduced competitive bids for the sale
of securities of power and transport companies In 1937, it
Trang 18snatched literally from under the noses of Morgan, Stanley and Kuhn, Loeb the issue of Chesapeake and Ohio Railway bonds At the end of the 1940s Wall Street had its revenge when the authorities forbade Otis and Co to engage in in- vestment banking
The Humphrey-Hanna group acts as an ally of Wall Street in the struggle against Eaton The name we use points
to the family character of the group which unites the heirs
to the large fortune of M A Hanna The most prominent member of this group, George Humphrey, was Secretary of the Treasury in the Eisenhower Administration In the past
he organised the Consolidation Coal Company, whipping it together from coal mines belonging to the Mellons and Rockefellers Since then the group's ties with the Mellons have become quite close The latest acquisition of the Humphrey-Hanna group was control over Chrysler, which provides this group with a guaranteed market for its main output, steel Another multimillionaire from Hanna's heirs, George H Love, has been placed at the head of the Chrys- ler Corporation
The Humphrey-Eaton rivalry goes back to the end of the 1920s When he became Secretary of the Treasury Humphrey used his office to hound his rival by tightening the taxation screws By the way, in 1962, Humphrey him- self, his son and other members of the group were questioned
by a Congressional committee which was investigating their abuse of government purchases of strategic raw materials Both groups also rely on different factions of the combined Cleveland group which in the last ten years has become a tangible factor owing to the reciprocal gravitation of large local banks and industrial companies which are neither in the Eaton nor in the Humphrey-Hanna group M A Hanna Company1 is represented on the board of the National City Bank of Cleveland and up to 1965 owned 3.3 per cent of its stock Eaton has a big block of shares in Cleveland Trust (owned by the influential and wealthy George Gund) and holds positions in Republic Steel, the biggest steel company
in Cleveland founded in the 1920s with his active partici-
1
In 1965, it was decided to liquidate this company and turn over its assets to the Hanna Mining Company and the Consolidation Coal Company which are part of the Hanna-Humphrey group.
308