Wall Street and FDR: Chapter 2

"Bonding" with Politics


In early 1921 Franklin D. Roosevelt became vice president of the Fidelity & Deposit Company of Maryland and resident director of the company's New York office at 120 Broadway. Fidelity & Deposit of Maryland was an established insurance company specializing in the bonding and surety policies required on government and corporate contracts and a range of individual employments ranging from secretary of a trade union to employees of stock brokerage houses. In fact, a potential for bonding business exists wherever a contractor or employee can violate a fiduciary trust or fail to complete a contract, as in construction projects. In brief, bonding is a specialized field of insurance covering the risk of noncompliance. In 1921 Fidelity & Deposit was the fourth largest such bonding house in the United States, but not to be confused with the Fidelity and Casualty Company of New York, another insurance company, which incidentally had W. Emlen Roosevelt, FDR's cousin, on its board of directors.
The question is why was FDR hired as vice president of this important New York office, despite not having any experience? Answer: his last name is Roosevelt and the bonding business is politically dependent. He was hired  by Van-lear Black, who also owned the Baltimore Sun, and paid FDR a handsome salary of $25,000 per year, quite a princely sum in 1920s money. What happened here was he used his family connections, as there were a whole lot of Roosevelts working the Street, and is basically how he got bond business traffic to flow to Fidelity.



The labor unions were a real gravy train:


Trade unions were a special FDR target for business; as each union local secretary and treasurer is required to have a bond, this was a lucrative field. On December 13, 1921 general secretary treasurer E. C. Davison of the International Association of Machinists wrote FDR:


We are now carrying the bulk of our bonding business with your company, which we were influenced to do in a great measure by the fact of your connection with this concern.


Then on January 26, 1922 Joseph F. Valentine, president of the International Molder's Union of North America, wrote to FDR that he was most appreciative of all FDR's efforts for the union while acting as Assistant Secretary of the Navy and


I have a desire to give the Fidelity and Deposit Company of Maryland as much of our business as possible ... as soon as our existing bonds have lapsed, it will be a personal pleasure to have your Company handle our business in the future.


Union officials in Washington and elsewhere were prompt to request their locals to divert business to their old friend FDR and away from other bonding companies. In turn, local union officials were prompt to report on their diverting actions, information in turn promptly conveyed to FDR. For example, the president of the International Association of Boilermakers wrote to Secretary Berres of the Metal Trades Department, A. F. of L., in Washington, D.C.:


. . . You may rest assured that anything that I can do to be of service to Mr. Roosevelt in his new position will be a pleasure on my part, and I am today writing Mr. Roosevelt.
FDR also peddles his "wares" with Congressmen:
Dear Congressman Maher,

Howe [Louis Howe, FDR's right-hand man] told me of his conversation over the telephone with you and I am inclosing a more formal letter for exhibition purposes. This is a little friendly note lest you think I have suddenly grown formal since I have adopted Wall Street as my business address.Do come over and see me. I know it will do your soul good to hear the language which Brother Berres and various others connected with the Labor Bureau, are using in regard to the present administration in general and Congressmen in particular. If the Missus happens to be out of hearing when you arrive I will repeat some of the more quotable extracts.
This was the friendly letter, the real letter to show at the office was as follows:


I am going to take advantage of our old friendship and ask you if you can help me out any in an effort to get fidelity and contract bonds from the powers that be in Brooklyn. There are a large number of bonds needed in connection with the city government work, besides the personal bonds which every city official has to give, and I am in hopes that some of my old friends will be willing to remember me. Unfortunately, I cannot take this matter up with them myself at the present time, but as all my friends are your friends I feel that if you have the time and inclination, you can be of real help to me. I assure you the favor will not soon be forgotten.
Looks like us deep-down reality diggers aren't the only ones to use the TPTB moniker. FDR earns a reputation for being the go-to guy at Fidelity to get some political influence. Polticization of the bond business was not just limited to the big municpalities, but went Federal:



Politicization of the surety business, so obvious in Chicago and New York, extended also to the Federal government contract arena in Washington D.C. On May 5, 1926 F & D second vice president F. A. Bach in Baltimore wrote FDR about a $11/4; million Veterans Bureau building projected for construction that spring:

Dear Franklin,Among other projects of the Veterans Bureau this spring is one involving approximately a million and a quarter dollars at Bedford, Mass., and I am secretly hoping that through influence such as knowing Mrs. Rogers, Representative of Massachusetts, that we might have some chance of getting a piece of that business although, of course, the biggest project will be at North Port, Long Island.
Similarly, to a contact in a "firm holding Navy contracts" FDR wrote:

A casual reference in a letter from one of my old friends in the Navy Department to the award of some 8-inch gun forgings to your company, brought to my mind the very pleasant relations we held during my term as Assistant Secretary of the Navy, and I wondered if you would feel like letting my company write some of the contract bonds that you are obliged to give the government from time to time. I would like very much to have one of our representatives call.
In case you don't remember, FDR was Assistant Secretary of the Navy. From what I've learned, the people you ought to watch are these 2nd and 3rd tier cabinet people, as they seem to be the ones really pushing the government envelope. And here is the money quote from this chapter that explains what is wrong with our country and explains why when conservatives clamor "free market", they beclown themselves, as we haven't had a truly free market in a long time, because of this endemic corruption:


These political methods of doing business are, of course, a long way from the competitive market place of the college textbooks. It would be naïve to think that political preference and personal friendship have no role, or only a minor role, in business relationships. In reviewing FDR's bond business, however, it is difficult to visualize another business in which politics plays such an all-encompassing role as it did in the bonding and surety business in the 1920s. The morality of kickbacks and of the use of political office to generate personal business is questionable, and the legality is definitely doubtful. Much less obvious is the consequent loss of economic efficiency and loss to society as a whole. If purchase and sale of such bonds is determined by price and past performance—and personal acquaintance can be a legitimate factor in judging past performance—then the market place will yield maximum economic benefits and efficiency for society. In a politicized business atmosphere these impartial competitive factors are eliminated, economic efficiency is foregone, and benefits are reduced. We have, in effect; a microcosm of a socialist economy in which all decisions are politicized to the detriment of society as a whole. In brief, FDR's bonding operations were to some degree antisocial.

When FDR finds out that state architect Sullivan Jones has a plan to outlaw the bond business in New York and the Governor Al Smith is favorable, he moves swiftly to put the kibosh on it. He writes to his man Towner that "I hope to see the Governor in the next couple of weeks and will then talk to him like a Dutch uncle about Jones' plan." Needless to say, they killed the Jones plan. FDR's employer, F & D blew off the Better Business Bureau and any other consumer groups stating that they had no use for them.


What this chapter tells you is that FDR honed his skills in wheeling and dealing, merging business and politics seamlessly as a microcosm of a socialist state.  You'll notice that "going political" is extremely profitable:



Surety Company Bonds in the State of New York
	Jan. 1, 1923	Jan. 1, 1924	Gain/loss
Fidelity & Deposit Co.	$ 7,033,100	$10,184,600	+$3,151,500
National Surety Co.	$14,993,000	$15,677,550	+ 684,550
Fidelity & Casualty Co. Surety Co. of New York	$ 3,211,900	$ 3,215,150	+ 3,250
Aetna Casualty & Surety Co.	$ 5,517,200	4,799,500	- 717,700
U.S. Fidelity & Casualty Co.	$ 8,064,500	$ 6,817,000	- 1,247,500
American Surety Co.	$13,263,125	$12,127,400	- 1,125,725
It's important to note that there was nothing "free market" whatsoever in how FDR did business. This is a point that many conservatives fail to grasp. They here the word business and in Pavlovian-form think "good", and when a liberal points out that there is injustice in business, the conservative thinks, 'oh boy, here we go..." This keeps the two diverse groups from seeing a bigger picture. There are businesses with an inside track to regulation, tax structure and law, the extent of which the average conservative voter is completely ignorant of. The talk radio circuit and talking heads never reveal what is going on behind the scenes of this quasi-socialist America because they work for companies that are all tied up in the politics of preserving the status quo. Food for thought.

Wall Street and FDR may be read in its entirety at Reformation Theology.


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Wall Street and FDR: Chapter 1

Roosevelts and Delanos


The real truth of the matter is, as you and I know, that a financial element in the larger centers has owned the Government ever since the days of Andrew Jackson—and I am not wholly excepting the Administration of W.W.* The country is going through a repetition of Jackson's fight with the Bank of the United States—only on a far bigger and broader basis.President Franklin Delano Roosevelt to Col. Edward Mandell House, November 21, 1933, F.D.R.: His Personal Letters (New York: Duell, Sloan and Pearce 1950), p. 373.
******

We're continuing our odyssey of discovery of the history of Wall Street. In this book, we'll be focusing on the man that Newt Gingrich wants to put on Mount Rushmore, a real hero of his. So pay attention and get your notebook out!


So let's start with some things you don't know about FDR, he was a banker and speculator in the '20s and had his office at 120 Broadway, NYC. How about that? You could say that high finance was a family tradition with him, going back to before the Founding. During the 1932 election, his campaign tried to pin Hoover as a bankster boy having chummy ties with international bankers. Back then, it was a bad thing. Of course, FDR never mentioned the gobs of money he made from working Wall Street himself. Listen in as FDR gives a speech in Columbus on August 20, 1932:
Appraising the situation in the bitter dawn of a cold morning after, what do we find? We find two thirds of American industry concentrated in a few hundred corporations and actually managed by not more than five human individuals.We find more than half of the savings of the country invested in corporate stocks and bonds, and made the sport of the American stock market.We find fewer than three dozen private banking houses, and stock selling adjuncts of commercial banks, directing the flow of American capital.






In other words, we find concentrated economic power in a few hands, the precise opposite of the individualism of which the President speaks
My, my the more things change the more they stay the same, no?


Hoover, the Republican, was a J. P. Morgan puppet; Smith his democratic opponent, was in the pocket of the Du Ponts, for whom J. P. Morgan & Company was the banker.         -Ferdinand Lundburg, The Rich and the Super-Rich
Why didn't the banksters stick by their boy Hoover? The answer comes in the form of the Swope Plan, named after the president of General Electric.

 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.
Let's step aside a moment and note that of all the volumes written on Franklin Delano Roosevelt, this is the only one that deeply delves into his career as a Wall Street financier. The "official" biographies give it a mere paragraph or so and totally gloss over the real issue. Our country's economy had recently been savaged by speculation (a contraction in the NY money supply actually) and you don't want to talk about where this FDR guy was during all that?



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.
Meet Uncle Fred

FDR's favorite uncle, Frederick Delano, was a big-time playa in the New York banking world. Need to know how much national banks are holding in foreign securities? Uncle Fred will hook you up.


Hon. F. A. Delano
Federal Reserve Board, Washington, D.C.
December 11, 1916
My Dear Fred: Would it be possible for you to send me in strict confidence the figures obtained by the Comptroller as to holdings of foreign securities by national banks? I would be a good deal influenced in my opinion in regard the present situation if I could get hold of these figures, which would be treated with such confidence as you suggest.
If the time ever comes when you are able to slip away for a week or so for a bit of a change and rest, why not take a look at Denver and incidentally pay me a visit? There are a thousand things I would like to talk over with you.
Faithfully yours,
Benjamin Strong


Did I mention he was in the Fed? Oh wait, there's more:


1925 - Chairman of the League of Nations International Committee on opium production
1927 -  chairman of the Commission on Regional Planning in New York
1934 - chairman of the National Resources Planning Board, appointed by FDR. This group was a bunch of socialists, just so you know
1931-1936 - Chairman of Federal Reserve Bank of Richmond




Uncle Fred was down with socialist planning:


A big problem in planning is that of educating the people. If the public only realized that there can be social gains from directed effort, and that the time to accomplish most by planning comes before the need of making changes are manifested, the other problems of planning could be more easily solved.
The above brief classification of the problem involved in planning serves as a basis for indicating the need for both direct and indirect social control. Very few people really know the best use of land for their own advantage, to say nothing of planning its use for the common good. Institutions have done a great deal in educating farmers how to plan individual farms, and yet many of the farms in this country are poorly organized.


---Frederic A. Delano, What About the Year 2000? Joint Committee on Bases of Sound Land Policy, 1929
(It's past 2000 and now the feds own a third of the United States and lets the land lay fallow to catch fire. Is that what you wanted Fred?)


I'll let you read this chapter for yourself if you want to see how far back and how totally intertwined the Roosevelt family was with big banksterism. It totally boggles the mind, but there it is. I will instead conclude with this tremendous summary:


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:

One cannot move about Washington without bumping into the fact that we are running two wars—a foreign war and a domestic one.The domestic war is in the various war boards. Every great commodity industry in this country is organized nationally and many of them, perhaps most of them are parts of great national organizations, cartels, agreements, which function on both sides of the battle front.Here in Washington every industry is interested in saving its own self. It wants to come out of the war with a whole hide and with its organization unimpaired, legally or illegally.One is surprised to find men representing great commodity trusts or agreements or syndicates planted in the various war boards. It is silly to say New Dealers run this show. It's run largely by absentee owners of amalgamated industrial wealth, men who either directly or through their employers control small minority blocks, closely organized, that manipulate the physical plants of these trusts.For the most part these managerial magnates are decent, patriotic Americans. They have great talents. If you touch them in nine relations of life out of ten they are kindly, courteous, Christian gentlemen.But in the tenth relation, where it touches their own organization, they are stark mad, ruthless, unchecked by God or man, paranoics, in fact, as evil in their design as Hitler.They are determined to come out of this war victorious for their own stockholders—which is not surprising. It is understandable also for Hitler to desire to come out of this war at any cost victorious for the German people.But this attitude of the men who control the great commodity industries, and who propose to run them according to their own judgment and their own morals, do not make a pretty picture for the welfare of the common man.These international combinations of industrial capital are fierce troglodyte animals with tremendous power and no social brains. They hover like an old silurian reptile about our decent more or less Christian civilization—like great dragons in this modern day when dragons are supposed to be dead.




Wall Street and FDR by Antony Sutton is available in its entirety at Reformed Theology


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