Hostname: page-component-848d4c4894-nr4z6 Total loading time: 0 Render date: 2024-05-01T11:45:54.827Z Has data issue: false hasContentIssue false
  • English
  • Français

The Failure of the Foreign Bondholders Protective Council Experiment, 1934–1940

Published online by Cambridge University Press:  13 December 2011

Michael R. Adamson
Michael R. Adamson
Affiliation:
MICHAEL R. ADAMSON is a visiting scholar in the Office for History of Science and Technology at theUniversity of California, Berkeley.
Get access Rights & Permissions [Opens in a new window]

Extract

This article explores the contentious U.S. State Department–Foreign Bondholders Protective Council relationship in the context of interwar foreign economic policy and bureaucratic competition. U.S. officials created the council in 1933 to represent the interests of U.S. investors in the settlement of the numerous dollar bond issues that had gone into default. The article shows why the council failed to perform as U.S. officials expected and outlines the process by which they increasingly interposed themselves in debt negotiations. In doing so, it considers the limitations of using private organizations to accomplish the objectives of public policy.

Type
Articles
Information
Business History Review , Volume 76 , Issue 3 , Autumn 2002 , pp. 479 - 514
Copyright
Copyright © The President and Fellows of Harvard College 2002

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Eichengreen, Barry and Portes, Richard, “After the Deluge: Default, Negotiation, and Readjustment during the Interwar Years,” in The International Debt Crisis in Historical Perspective, eds. Eichengreen, Barry and Iindert, Peter H. (Cambridge, Mass., 1989)Google Scholar; idem, “Settling Defaults in the Era of Bond Finance,” World Bank Economic Review 3 (May 1989): 211–39; idem, “Foreign Lending in the Interwar Years: The Bondholders' Perspective,” University of California, Department of Economics, Working Paper no. 88–86 (Berkeley, Calif., 1988); idem, “How the Bondholders Fared: Realized Rates of Return on Foreign Dollar Bonds Floated,” University of California, Department of Economics, Working Paper no. 88-69 (Berkeley, Calif., 1988); idem, “Dealing with Debt: The 1930s and the 1980s,” in Dealing with the Debt Crisis, eds. Ishrat Husain and Ishac Diwan (Washington, D.C., 1989); Erika Jorgensen and Jeffrey Sachs, “Default and Renegotiation of Latin American Foreign Bonds in the Interwar Period,” in The International Debt Crisis in Historical Perspective, 48–85; Fishlow, Albert, “Lessons from the Past: Capital Markets during the 19th Century and the Interwar Period,” International Organization 39, no. 3 (summer 1985): 417–30CrossRefGoogle Scholar.

2 See, for instance, Sessions, Gene A., Prophesying Upon the Bones: J. Reuben Clark and the Foreign Debt Crisis (Urbana, Ill., 1992)Google Scholar; Roorda, Eric Paul, The Dictator Next Door: The Good Neighbor Policy and the Trujillo Regime in the Dominican Republic, 1930–1945 (Durham, N.C., 1998)Google Scholar.

3 Eichengreen, Barry, Golden Fetters: The Gold Standard and the Great Depression, 1919–1939 (New York, 1992), 3–25Google Scholar, 222–286; Clarke, Stephen V. O., Central Bank Cooperation, 1924–1931 (New York, 1967), 144–219Google Scholar; Pauly, Louis W., Who Elected the Bankers?: Surveillance and Control in the World Economy (Ithaca, N.Y., 1997)Google Scholar.

4 Leffler, Melvyn P., The Elusive Quest: America's Pursuit of European Stability and French Security, 1919–1933 (Chapel Hill, N.C., 1979), 64–81,127–50,178–91Google Scholar.

5 Tulchin, Joseph S., The Aftermath of War: World War I and U.S. Policy Toward Latin America (New York, 1971)Google Scholar; Drake, Paul W., The Money Doctor in the Andes: The Kemmerer Missions, 1923–1933 (Durham, N.C., 1989)Google Scholar; Abrahams, Paul Philip, The Foreign Expansion of American Finance and Its Relationship to the Foreign Economic Policies of the United States, 1907–1921 (New York, 1976)Google Scholar. From 1900 to 1913, the volume of foreign issues floated on Wall Street was one-sixth of the volume of the City of London. U.S. bankers largely constrained their activity to Mexico and the countries of the Caribbean basin, where loans could be secured by direct U.S. financial administration, involving the pledging of specific tax revenues for foreign creditors and, if necessary, gunboats and marines. To ensure their successful distribution, banks offered securities simultaneously in European markets and New York, thus making them payable in multiple currencies (Thomas W. Lamont, “Foreign Government Bonds,” The Annals of the American Academy of Political and Social Science [Mar. 1920]; Jones, Grosvenor, “Our Stake in Latin America,” American Bankers Association Journal 21 [Feb. 1929]: 765–6Google Scholar; Rosenberg, Emily S., Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy [Cambridge, Mass., 1999], 41–96)Google Scholar.

6 For an overview, see Trani, Eugene P., “Dollar Diplomacy,” in Encyclopedia of American Foreign Policy, vol. 1, eds. DeConde, Alexander, Burns, Richard Dean, and Logevall, Fredrik, 2d. ed. (New York, 2002), 543–9Google Scholar.

7 Feis, Herbert, The Diplomacy of the Dollar: First Era, 1919–1932 (New York, 1966), 7–10Google Scholar; Tulchin, The Aftermath of War, 169–70; Cleveland, Harold van B. and Huertas, Thomas F., Citibank, 1812–1970 (Cambridge, Mass., 1985), 386 n.24Google Scholar.

8 Lamont to Hughes, 31 Mar. 1922, Thomas W. Lamont Collection, Baker Library, Harvard Business School (hereafter TWL), box 94, folder 18 (hereafter in the form: box number-folder number, that is, 94–18).

9 Hughes, quoted in Feis, The Diplomacy of the Dollar, 6.

10 Tulchin, The Aftermath of War, 200–4; Drake, The Money Doctor of the Andes, 21–6, 179–81; Rosenberg, Financial Missionaries to the World, 247–8; Monnet, Jean, Memoirs, trans. Mayne, Richard (Garden City, N.Y., 1978), 102–6Google Scholar; Swaine, Robert T., The Cravath Firm and Its Predecessors, 1819–1948, vol. 2: The Cravath Firm Since 1906 (New York, 1948), 505–6Google Scholar.

11 Eichengreen, Golden Fetters, 150–2,187–221.

12 Lamont, Edward M., The Ambassador from Wall Street: The Story of Thomas W. Lamont, J. P. Morgan's Chief Executive (Lanham, Md., 1994), 223Google Scholar.

13 U.S. Congress, Senate, Committee on Finance, Hearings on S.R. 19: Authorizing the Financial Committee of the Senate to Investigate the Sale, Flotation, and Allocation by Banks, Banking Institutions, Corporations or Individuals of Foreign Bonds or Securities in the United States, 72d Cong, 1st sess. (Washington, D.C., 1931–1932Google Scholar) (hereafter Hearings on the Sale of Foreign Bonds), Part 1: 159–61, tables facing page 184; Part 2: 505–6, 1263–4; Lamont to Lippmann, “Memo upon two Articles under ‘Today and Tomorrow,’ respectively entitled “The Investigation of Private Bankers,’ 26 May 1933, and “The Morgan Inquiry,' 31 May 1933,” undated [1933], Walter Lippmann Papers, Manuscripts and Archives, Yale University Library, New Haven, Conn, (hereafter WL), box 83; Cleveland and Huertas, Citibank, 72–88, 139, 145–53.

14 See, for instance, Meyer, Richard H., Bankers' Diplomacy: Monetary Stabilization in the Twenties (New York, 1970)Google Scholar; Schuker, Stephen A., The End of French Predominance in Europe: The Financial Crisis of 1924 and the Adoption of the Dawes Plan (Chapel Hill, N.C., 1976)Google Scholar; Leffler, The Elusive Quest.

15 Anderson to Lamont, 7 Oct. 1932, WL, box 83.

16 Lamont to Lippmann, “Memorandum upon two Articles,” undated (1933), WL, box 83.

17 Quoted in “Hoover and Lamont Would Limit Loans,” New York Times (hereafter NYT), 3 May 1927.

18 See, for instance, the views of J. P. Morgan, in Lamont to the editor of The American Banker, 1 June 1927, TWL, box 149–23; and Leffingwell to Lamont, 20 July 1927, TWL, box 103–12.

19 “Money Seeks Its Own Level,” 5 May 1927.

20 Sherwell, G. Butler, “Future Loans to Latin America,” American Bankers Association Journal 19 (Aug. 1926): 130Google Scholar; Swan, Joseph R., “Report of Foreign Securities Committee,” Proceedings of the Sixteenth Annual Convention of the Investment Bankers Association of America (Chicago, 1927): 81–3Google Scholar; Winkler, Max, “The Rush to Make Foreign Loans,” American Bankers Association Journal 20 (July 1927): 9–10Google Scholar; Traylor, Melvin A., “Foreign Investments Are the Concern of Every Banker,” American Banking Association Journal 20 (Nov. 1927): 301–3Google Scholar.

21 Eichengreen, Golden Fetters, 222–30; Díaz-Alejandro, Carlos F., “Latin America in Depression, 1929–1939,” in The Theory and Experience of Economic Development: Essays in Honor of Sir W. Arthur Lewis, eds. Gersovitz, Mark et al. , (London, 1982), 335–8Google Scholar.

22 Schuker, Stephen A., “America's ‘Reparations’ to Germany, 1919–1933: Implications for the Third World Debt Crisis,” Princeton Studies in International Finance, no. 61 (July 1988): 125–6Google Scholar.

23 Eichengreen and Portes, “Dealing with Debt.”

24 Drake, Paul W., “Debt and Democracy in Latin America, 1920s–1980s,” in Debt and Democracy in Latin America, ed. Stallings, Barbara and Kaufman, Robert (Boulder, Colo., 1989), 38–59Google Scholar.

25 FBPC, Annual Report for Nineteen Thirty-Four (New York, 1935), 218–26Google Scholar.

26 Roorda, The Dictator Next Door, 65–6.

27 U.S. military intervention in Nicaragua, beginning in 1927, sparked widespread criticism, persuading Stimson to forswear overt intervention in the Americas. See Wood, Bryce, The Making of the Good Neighbor Policy (New York, 1961), 13–47Google Scholar.

28 See, for instance, Rosenberg, Financial Missionaries to the World, 122–9, 138–50, 230–40.

29 Johnson, quoted in “‘Betrayal’ on Bonds Charged to Banks,” NYT, 16 Mar. 1932.

30 Roorda, The Dictator Next Door, 65–6.

31 Lamont to Pani, draft of a letter sent on 7 Dec. 1932, TWL, box 200–2.

32 Sessions, Prophesying Upon the Bones, 22–4.

33 Schuker, “America's ‘Reparations’ to Germany,” 76.

34 James W. Gantenbein, “The Dollar Bond Situation in the East Coast Countries of South America,” 3 Apr. 1940 (125.0032 Conferences/59), Record Group (hereafter RG), 59, Decimal File, 1940–44, National Archives II, College Park, Md. (hereafter NAII).

35 Feis to the Secretary of State, 15 Mar. 1933, U.S. Department of State, Foreign Relations of the United States, 1933, vol. 1 (Washington, D.C., 1950Google Scholar) (hereafter FRUS, followed by year and volume number), 934.

36 Roosevelt, quoted in “The Government and Private Loans,” NYT, 22 Aug. 1932.

37 Drummond, Ian M., “London, Washington, and the Management of the Franc, 1936–1939.” Princeton Studies in International Finance, no. 45 (Nov. 1979): 42–6Google Scholar; Boughton, James M., “Harry Dexter White and the International Monetary Fund,” Finance and Development 35 (Sept. 1998): 39–41Google Scholar; Rees, David, Harry Dexter White: A Study in Paradox (New York, 1973), 31–6Google Scholar.

38 Under the Gold Reserve Act, Congress created a $2 billion exchange stabilization fund and gave the treasury secretary broad powers to use it to stabilize the exchange rate of the dollar. Harry Dexter White, the Treasury's top monetary expert, saw in this the basis of an ambitious foreign assistance program (White to Haas, 15 June 1935, RG 56, Chronological File of Harry Dexter White, Nov. 1934–Apr. 1946 [hereafter HDWCF], NAII, box 1). On the Gold Reserve and Silver Purchase acts, see Everest, Allan Seymour, Morgenthau, the New Deal, and Silver: A Story of Pressure Politics (New York, 1950), 21–46Google Scholar; Blum, John Morton, From the Morgenthau Diaries: Years of Crisis (Boston, 1959), 62–74Google Scholar, 120–5,183–8.

39 “The United Nations Monetary and Financial Conference: Address by the Secretary of the Treasury,” Department of State Bulletin, vol. 11, no. 266 (30 July 1944), 113Google Scholar, reprinted in Baldwin, David A., Foreign Aid and American Foreign Policy: A Documentary Analysis (New York, 1966), 47ffGoogle Scholar.

40 Adams, Frederick C., Economic Diplomacy: The Export-Import Bank and American Foreign Policy, 1934–1939 (Columbia, Mo., 1976), 68–73Google Scholar; Arey, Hawthorne, History of Operations and Policies of Export-Import Bank of Washington (Washington, D.C., 1953), 4–9Google Scholar.

41 Warren Lee Pierson, Address, Buenos Aires, 15 Sept. 1938 (033.1120 Pierson, Warren Lee/18), RG 59, Decimal File, 1930–39, NAII.

42 W. L. B., memos, 15 May 1935 (811.516 Export-Import Bank/99); memo, “Conference on the Policy of the Department toward Extension of Credits of the Export-Import Bank to Liquidate American Blocked Funds Abroad,” 23 May 1935 (811.516 Export-Import Bank/99); Kelley to McGurk, 12 July 1935 (811.516 Export-Import Bank/153 1/2); Heath to Welles and McGurk, 13 July 1935 (811.516 Export-Import Bank/153 1/2); Kelley to Welles, Sayre, Heath, McGurk, and Moore, 20 July 1935 (811.516 Export-Import Bank/153 1/2); Duggan, memo, 11 Oct. 1935 (812.151/107) (all found in RG 59, Decimal File, 1930–39, NAII).

43 Heath to Packer and Duggan, 4 Nov. 1935, RG 59, Decimal File, 1930–39, NAII.

44 Latin American economies were recovering on the strength of import-substituting industrialization. In this context, the region's governments subsidized improvements in infrastructure to sustain economic growth. See Díaz-Alejandro, “Latin America in Depression, 1929–1939,” 345–50.

45 McHale, James Michael, “The New Deal and the Origins of Public Lending for Foreign Economic Development, 1933–1945” (Ph.D. diss., University of Wisconsin, 1970), 158–63Google Scholar.

46 See, for instance, Dulles, Allen W., “The Protection of American Foreign Bondholders,” Foreign Affairs 10 (Apr. 1932): 477–82CrossRefGoogle Scholar.

47 Founded in 1868, the British corporation was established by investment houses and securities brokers. To distance it from banker control, an 1898 act of Parliament reorganized it to remove the representatives of issuing houses from the governing Council of Foreign Bond-holders (Eichengreen and Portes, “After the Deluge,” 15–16).

48 Feis to the Secretary of State, 15 Mar. 1933, FRUS, 1933,1: 934, 936.

49 “Statement on the Formation of an Organization to Protect Holders of Foreign Securities,” 20 Oct. 1933, The Public Papers and Addresses of Franklin D, Roosevelt (New York, 1938–1950)Google Scholar, CD-ROM version, vol. 2, item 154. On the formation of the FBPC, see Freidel, Frank, Franklin D. Roosevelt, vol. 4Google Scholar: Launching the New Deal (New York, 1973), 349–50Google Scholar; Roorda, , The Dictator Next Door, 72–3Google Scholar; Sessions, Prophesying Upon the Bones, 22–31.

50 Roosevelt, Speech, 1 Oct. 1936, reprinted in NYT, 2 Oct. 1936, 4.

51 Phillips to Diplomatic and Consular Officers, 3 Jan. 1934, FRUS, 1933,1: 939.

52 Hull, memo of conversation, 22 Sept. 1933; Hull, memo of conversation, 5 Oct. 1933 (all found in Cordell Hull Papers, microfilm edition, Library of Congress, Washington, D.C., reel 31).

53 Sessions, Prophesying Upon the Bones, 32–7.

54 Ibid., 42–54.

55 White quoted in Drake, Money Doctor of the Andes, 15.

56 Clark, J. Reuben, “The Foreign Bondholders Protective Council,” Proceedings of the Twenty-Second Annual Convention of the Investment Bankers Association of America (Chicago, 1934), 68–75Google Scholar; Sessions, Prophesying Upon the Bones, 66–9, 74–7.

57 FBPC, Annual Report for Nineteen Thirty-Six (New York, 1937), 7, 8, 6–11Google Scholar.

58 Eichengreen and Portes, “After the Deluge,” 17–18.

59 FBPC, Annual Report for Nineteen Thirty-Six, 11.

60 White to Morgenthau, 12 May 1939, RG 56, HDWCF, NAII, box 3; “Argentina Bonds on Market Today,” NYT, 22 Apr. 1937.

61 Dawson to the Secretary of State, 10 Dec. 1936 (821.51/2055), RG 59, Decimal File, 1930–39, NAII.

62 Fishlow, “Lessons from the Past,” 383–416. See also Wynne, William H., State Insolvency and Foreign Bondholders, vol. 2: Selected Case Histories of Governmental Foreign Bond Defaults and Debt Readjustments (New Haven, Conn., 1951)Google Scholar; McGrane, Reginald C., Foreign Bondholders and American State Debts (New York, 1935)Google Scholar; Ratchford, B. U., American State Debts (Durham, N.C., 1941), 72–259Google Scholar; Roberts, Richard, Schroders: Merchants and Bankers (Basingstoke, U.K., 1992), 81–92CrossRefGoogle Scholar; Ziegler, Philip, The Sixth Great Power: Barings, 1692–1929 (London, 1988), 100–11Google Scholar,149–56, 207–43.

63 FBPC, Annual Report for Nineteen Thirty-Four, 26–9, 36–9, 57–67; Sessions, Prophesying Upon the Bones, 37–41, 57–61, 65.

64 FBPC, Annual Report for Nineteen Thirty-Six, 202–54.

65 Sessions, Prophesying Upon the Bones, 72–4.

66 Welles to Feis, 21 Apr. 1937 (832.51/1131), RG 59, Decimal File, 1930–39, NAII.

67 Machado's rule had evolved into a de facto dictatorship. On the role of the U.S. government in ousting Machado and the political machinations that followed, see Gellman, Irwin F., Roosevelt and Batista (Albuquerque, N.M., 1973)Google Scholar; Dallek, Robert, Franklin D. Roosevelt and American Foreign Policy, 1932–1945 (New York, 1979), 60–5Google Scholar; Wood, The Making of the Good Neighbor Policy, 47–117; Schmitz, David F., Thank God They're On Our Side: The United States and Right-Wing Dictatorships, 1921–1965 (Chapel Hill, N.C., 1999), 73–83Google Scholar.

68 Chase National Bank, “Cuban Public Works Financing,” undated [1935), Francis White Papers, Special Collections and Archives, The Johns Hopkins University (hereafter FW), series IV, box 20; Chase National Bank, Foreign Department, “Cuban Government Indebtedness,” Winthrop W. Aldrich Collection, Baker Library, Harvard Business School, Boston, Mass, (hereafter WWA), box 110; Moody's Manual of Investment and Security Rating Service: Foreign and American Government Securities, ed. in chief, John Sherman Porter (hereafter Moody's) (New York, 1928), 451Google Scholar; Moody's (New York, 1930), 552Google Scholar, 554; Moody's (New York, 1931), 585–6Google Scholar; Smith, Robert F., The United States and Cuba: Business and Diplomacy, 1917–1960 (New York, 1960), 118–33Google Scholar; Guggenheim, Harry F., The United States and Cuba: A Study In International Relations (New York, 1934), 124–9Google Scholar; Johnson, Arthur M., Winthrop W. Aldrich: Lawyer, Banker, Diplomat (Boston, 1968), 129–35Google Scholar, 157–61.

69 Moody's (1928): 449–51; Moody's (1931): 583–5.

70 “Cuba Will Default on $4,718,000 Bonds,” NYT, 28 Dec. 1933; Smith, The United States and Cuba, 125. These operations came under the scrutiny of Senators Hiram Johnson of California and William King of Utah during the 1931–32 Senate Finance hearings (Hearings on the Sale of Foreign Bonds, Part 4:1944ff).

71 Quoted in “$60,000,000 Loans Made to Machado Are Held Illegal,” NYT, 20 June 1934, I.

72 Chase National Bank, “Cuban Public Works Financing,” undated [1935], FW, series IV, box 20; “Cuban Treasury Head Asks Bond Repudiation,” New York Herald Tribune, 9 Feb. 1935; “Aldrich Asks Cuba to Pay on Bonds,” NYT, 22 Mar. 1935; NYT, 18 Apr. 1935, 33; NYT, 29 June 1935, 20; NYT, 12 July 1935, 31; NYT, 25 July 1935, 31; NYT, 27 July 1935,19; NYT, 30 Aug. 1935, 25.

73 White, memo of telephone conversation, 1 Apr. 1935; White, memo of telephone conversation, 2 Apr. 1935 (all found in FW, series IV, box 20).

74 Welles to Caffery, 15 Feb. 1936, Sumner Welles Papers, Franklin D. Roosevelt Presidential Library, Hyde Park, N.Y (hereafter SW), box 145.

75 Caffery to the Secretary of State, 3 July 1936 (837.51 Chase National Bank/376); Matthews to the Secretary of State, 8 July 1936 (837.51 Chase National Bank/381); Matthews to the Secretary of State, 11 July 1936, with enclosure, Walter del Río to Rosenthall, 9 July 1936 (837.51 Chase National Bank/383); Matthews to the Secretary of State, 17 July 1936 (837.51 Chase National Bank/386) (all found in RG 59, Decimal File, 1930–39, NAII).

76 White, memo of conversation, 8 Apr. 1936; White, memo of telephone conversation, 17 June 1936; White, memo of conversation, 17 Aug. 1936; and White, memo of telephone conversation, 24 Aug. 1936 (all found in FW, series IV, box 17); Caffery to Welles, 8 Aug. 1936; and Caffery to Welles, 20 Aug. 1936 (all found in SW, box 144); Matthews to the Secretary of State, 20 Aug. 1936 (837.51 Chase National Bank/407); Duggan, memo of conversation, 20 Aug. 1936 (837.51 Chase National Bank/413) (all found in RG 59, Decimal File, 1930-39, NAII); White, memo of conversation, 2 Apr. 1937, FW, series IV, box 18.

77 Duggan, memo of conversation, 20 Aug. 1936 (837.51 Chase National Bank/413); and Duggan, memo of telephone conversation, 24 Aug. 1936 (837.51 Chase National Bank/411) (all found in RG 59, Decimal File, 1930–39, NAII); White, memo of conversation, 21 Aug. 1936; White, memo of telephone conversation, 24 Aug. 1936; White, memo of conversation (with Williams), 2 Sept. 1936 (quote); White, memo of conversation, 3 Sept. 1936 (all found in FW, series IV, box 17).

78 Morgan and Geiger to Chase National Bank, 19 Aug. 1936, WWA, box 109; Caffery to the Secretary of State, 20 Aug. 1936 (837.51 Chase National Bank/408), RG 59, Decimal File, 1930-39, NAII; Welles, memo of conversation, 25 Aug. 1936, SW, box 170.

79 Welles, memo of conversation, 25 Aug. 1936, SW, box 170; Caffery to Welles, 29 Aug. 1936, SW, box 144; Caffery to Welles, 8 Sept. 1936, SW, box 144.

80 Morgan and Geiger to Chase National Bank, 1 Sept. 1936; Morgan and Geiger to Chase National Bank, 3 Sept. 1936; Morgan and Geiger to Chase National Bank, 4 Sept. 1936; Morgan and Geiger to Chase National Bank, 8 Sept. 1936 (quote) (all found in WWA, box 109).

81 Welles to Caffery, 8 Sept. 1936, SW, box 145.

82 White, memo of conversation (with Williams), 2 Sept. 1936 (quote); White, memo of conversation, 3 Sept. 1936; and White, memo of telephone conversation, 8 Sept. 1936 (FW, series IV, box 17).

83 White, memo of conversation, 11 Sept. 1936, FW, series IV, box 17.

84 Morgan and Geiger to Chase National Bank, 10 Sept. 1936; Morgan and Geiger to Chase National Bank, 14 Sept. 1936; Morgan and Geiger to Chase National Bank, 18 Sept. 1936; Morgan and Geiger to Chase National Bank, 21 Sept. 1936; Morgan and Geiger to Chase National Bank, 22 Sept. 1936; and Morgan and Geiger to Chase National Bank, 23 Sept. 1936 (all found in WWA, box 109); Matthews to the Secretary of State, 9 Sept. 1936 (837.51 Chase National Bank/419); Matthews to the Secretary of State, 15 Sept. 1936 (837.51 Chase National Bank/420); Matthews to the Secretary of State, 16 Sept. 1936 (837.51 Chase National Bank/421); Matthews to the Secretary of State, 17 Sept. 1936 (837.51 Chase National Bank/422); Matthews to the Secretary of State, 18 Sept. 1936 (837.51 Chase National Bank/423); Matthews to the Secretary of State, 21 Sept. 1936 (837.51 Chase National Bank/424); Matthews to the Secretary of State, 23 Sept. 1936 (837.51 Chase National Bank/425); Matthews to the Secretary of State, 24 Sept. 1936 (837.51 Chase National Bank/426) (all found in RG 59, Decimal File, 1930–39, NAII); White, memo of telephone conversation, 12 Sept. 1936; White, memo of telephone conversation, 17 Sept. 1936 (all found in FW, series IV, box 17).

85 Gellman, Roosevelt and Batista, 147–62. Gómez provoked a constitutional crisis when he tried to secure congressional support for a veto of legislation to finance a popular rural education plan. The plan was the pet project of Col. Fulgencio Batista, the army chief of staff. Gómez objected to giving the army formal control over rural education. Neither he nor the Congress would compromise. Gómez vetoed the bill; Congress impeached him.

86 White, memo of conversation, 2 Apr. 1937, FW, series IV, box 18.

87 “E. G. T.,” memo, “Cuban Public Debt Comparison of the Montoulieu with the del Rio proposals,” undated [received 2 Apr. 1937] (837.51 Chase National Bank/521); Duggan to Welles and Feis, 27 Mar. 1937 (837.51 Chase National Bank/519) (all found in RG 59, Decimal File, 1930–39, NAII).

88 White, memo of conversation, 2 Apr. 1937; White, memo of conversation, 15 June 1937; White, memo of conversation, 23 June 1937; White, memo of telephone conversation, 8 Apr. 1937; White, memo of telephone conversation, 10 Apr. 1937 (all found in FW, series IV, box 18).

89 “Solution Drawn for Cuba's Debts,” NYT, 5 July 1937; “Cuban Debt Plan Cancels Interest,” NYT, 9 July 1937; “Cuba to Settle Debt by One Loan,” NYT, 10 July 1937; Morgan to Aldrich, 19 July 1937, WWA, box 109; FBPC, Annual Report for Nineteen Thirty-Seven (New York, 1938), 262–3.

90 Duggan, memo of telephone conversation, 28 June 1937 (837.51 Chase National Bank/585); Heath to Welles, 29 June 1937 (837.51 Chase National Bank/579); Heath to Welles, 1 July 1937 (837.51 Chase National Bank/580); Matthews to the Secretary of State, 5 July 1937 (837.51 Chase National Bank/583); Duggan, memo of telephone conversation, 9 July 1937 (837.51 Chase National Bank/603); Duggan to Welles, 12 July 1937 (837.51 Chase National Bank/611); Duggan, memo of telephone conversation, 13 July 1937 (837.51 Chase National Bank/612); Duggan, memo of telephone conversation, 14 July 1937 (837.51 Chase National Bank/604); Duggan, memo of telephone conversation, 14 July 1937 (837.51 Chase National Bank/613); Duggan, memo of telephone conversation, 15 July 1937 (837.51 Chase National Bank/615); Duggan, memo of telephone conversation, 16 July 1937 (837.51 Chase National Bank/617); Duggan to Welles, 20 July 1937 (837.51 Chase National Bank/622) (all found in RG 59, Decimal File, 1930–39, NAII); White, memo of telephone conversation, 14 July 1937; White, memo of telephone conversation, 16 July 1937; White, memo of telephone conversation, 22 July 1937 (all found in FW, series IV, box 18).

91 White, memo of telephone conversation, 22 July 1937, FW, series IV, box 18; Feis, memo of telephone conversation, July 26, 1937 (837.51 Chase National Bank/623), RG 59, Decimal File, 1930–39, NAII; White, memo of telephone conversation, 29 July 1937, FW, series IV, box 18.

92 Duggan, memo of telephone conversation, 13 Aug. 1937 (837.51 Chase National Bank/642); Duggan, memo of telephone conversation, 13 Aug. 1937 (837.51 Chase National Bank/643); Duggan, memo of telephone conversation, 19 Aug. 1937 (837.51 Chase National Bank/648); and Welles, memo of conversation, 23 Aug. 1937 (837.51 Chase National Bank/648 1/2) (all found in RG 59, Decimal File, 1930–39, NAII); Rosenthall to Aldrich, 17 Sept. 1937; and Rosenthall to Aldrich, 1 Oct. 1937 (all found in WWA, box 109); White, memo of telephone conversation, 26 July 1937; White, memo of telephone conversation, 27 July 1937; White, memo of telephone conversation, 29 July 1937; White, memo of conversation, 18 Aug. 1937; White, memo of conversation (with Martínez Fraga), 27 Aug. 1937; White, memo of conversation (with Duggan), 27 Aug. 1937; White, memo of conversation, 8 Sept. 1937; White, memo of conversation, 21 Sept. 1937; White, memo of conversation (with Duggan), 22 Sept. 1937; White, memo of conversation (with Martínez Fraga), 22 Sept. 1937 (all found in FW, series IV, box 18).

93 Rosenthall to Aldrich, 17 Sept. 1937, WWA, box 109.

94 White, memo of telephone conversation, 29 July 1937; White, memo of telephone conversation, 6 Aug. 1937; White, memo of conversation, 18 Aug. 1937 (FW, series IV, box 18).

95 Welles to Wright, 30 Oct. 1937, SW, box 44.

96 Clark to Feis, 1 Dec. 1937 (837.51 Chase National Bank/692); Feis, memo of telephone conversation, 2 Dec. 1937 (837.51 Chase National Bank/697); Feis, memo of telephone conversation, 2 Dec. 1937 (837.51 Chase National Bank/701); Wright to the Secretary of State, 3 Dec. 1937 (837.51 Chase National Bank/693: Telegram); Briggs, memo of conversation, 17 Dec. 1937 (837.51 Chase National Bank/709) (all found in RG 59, Decimal File, 1930–39, NAII); “Cuba Plans Bonds to Meet Default,” NYT, 11 Dec. 1937; “Americans Accept Cuban Debt Offer,” NYT, 24 Dec. 1937; “Cuba's President Asks Bonds Be Paid,” NYT, 5 Feb. 1938; “Cuba to Pay Debt in $85,000,000 41/2s,” NYT, 8 Feb. 1938. The contractors fared worse. Warren Brothers, which was offered fifty cents on the dollar, declined it. Purdy & Henderson was left out of the deal entirely. For the registration statement, prospectus, and other documentation relating to the issue, see FBPC, Annual Report for Nineteen Thirty-Eight (New York, 1939), 387–488Google Scholar.

97 See Blum, John Morton, From the Morgenthau Diaries: Years of Crisis, 1928–1938 (Boston, 1959), 183–228Google Scholar, 452–528; Blum, John Morton, From the Morgenthau Diaries: Years of Urgency, 1938–1941 (Boston, 1965), 36–64Google Scholar; Everest, Allan Seymour, Morgenthau, the New Deal, and Silver: A Story of Pressure Politics (New York, 1973)Google Scholar.

98 See McHale, The New Deal and the Origins of Public Lending, 140–207; Adams, Economic Diplomacy, 175–210.

99 See, for instance, Morgenthau to Roosevelt, 10 Oct. 1938, draft of letter, not sent, Harry Dexter White Papers, Seeley G. Mudd Manuscript Library, Princeton University Library, Princeton, N.J., box 1; Morgenthau to Roosevelt, 17 Oct. 1938, RG 56, HDWCF, NAII, box 2; White and Oliphant, “Proposal for Economic Assistance to Brazil,” 5 Nov. 1938, RG 56, HDWCF, NAII, box 2; Scotten to the Secretary of State, 17 Sept. 1938, with enclosure, Pierson, memo of conference, undated (832.77/523); Leroy D. Stinebower, memo, “The Pierson Mission,” 23 Sept. 1938 (832.77/524) (all found in RG 59, Decimal File, 1930–39, NAII); Blum, From the Morgenthau Diaries: Years of Crisis, 523–8. The Johnson Act precluded U.S. lending to much of Europe, since it prohibited lending to governments in default on debts to the U.S. government.

100 Schwarz, Jordan A., Liberal: Adolph A. Berle and the Vision of an American Era (New York, 1987), 118–28Google Scholar.

101 See, for instance, Woodward, memo of conversation, 16 Jan. 1939 (821.51/2289), RG 59, Decimal File, 1930–39, NAII.

102 Duggan, memo, 19 June 1939 (821.51/2352), RG 59, Decimal File, 1930–39, NAII.

103 Braden to the Secretary of State, 15 May 1939, FRUS, 1939, vol. 5, 469–71.

104 FBPC, Annual Report for Nineteen Thirty-Eight, 273.

105 FBPC, Annual Report for Nineteen Thirty-Seven, 229.

106 Feis to Welles, 14 Nov. 1938 (821.51/2282), RG 59, Decimal File, 1930–39, NAII; Feis to Steinhardt, 10 Feb. 1939, Herbert Feis Papers, Manuscript Division, Library of Congress, Washington, D.C. (hereafter HF), box 26.

107 Meeting of the Executive Committee, 13 Jan. 1939, RG 275, Minutes of Meetings, box 4, NAII; Woodward, memo of conversation, 16 Jan. 1939 (821.51/2289), RG 59, Decimal File, 1930–39, NAII; Meeting of the Executive Committee, 3 Feb. 1939, RG 275, Minutes of Meetings, box 4, NAII.

108 Livesey, memo, “British Interest in Colombian Bonds,” 9 Dec. 1938 (821.51/2275), RG 59, Decimal File, 1930–39, NAII.

109 Hull to Braden, 1 July 1939, FRUS, 1939, vol. 5, 481–3.

110 The Reminiscences of Spruille Braden, 2693, in the Oral History Collection of Columbia University.

111 Feis to Braden, 6 July 1939, HF, box 11; Braden to Duggan, 12 July 1939, SW, box 50; Braden to the Secretary of State, 13 July 1939, FRUS, 1939, vol. 5, 484–7; Braden, Spruille, Diplomats and Demagogues: The Memoirs of Spruille Braden (New Rochelle, N.Y., 1971), 226–7Google Scholar.

112 Livesey to Feis, 27 July 1939, HF, box 21; Feis to White, 11 Aug. 1939 (821.51/2374A), RG 59, Decimal File, 1930–39, NAII.

113 Duggan, memo of conversation, 4 Aug. 1939 (821.51/2367), RG 59, Decimal File, 1930–39, NAII.

114 Feis to White, 11 Aug. 1939 (821.51/2374A), RG 59, Decimal File, 1930–39, NAII.

115 Feis, memo of conversation, 16 Aug. 1939 (821.51/2370 1/2), RG 59, Decimal File, 1930–39, NAII.

116 A so-called Group of Three, including Treasury Secretary Henry Morgenthau, Under Secretary of State Welles, and RFC Chairman Jesse Jones, negotiated a temporary debt agreement with representatives of the Colombian government. The Group of Three was formed to bring about interdepartmental cooperation on foreign economic policy matters. The effort, however, failed to survive the Colombian negotiations. See Adamson, Michael R., “Inventing Foreign Aid: From Private to Public Funding of Economic Development, 1919–1941” (Ph.D. diss., University of California, Santa Barbara, 2000)Google Scholar, ch. 10.

117 For the communications between the State Department and the U.S. embassy in Brazil, see FRUS, 1939, vol. 5, 372–9; FRUS, 1940, vol. 5, 559–83. On State Department relations with the FBPC during the negotiations with Brazil, see FRUS, 1940, vol. 5, 583-95; Feis to Caffery, 23 Feb. 1940, HF, box 12; Livesey, memo, “Council's Attitude on Latest Aranha Proposal,” 2 Mar. 1940 (832.51/1766); Briggs, memo, undated (832.51/1767); Feis, memo, 6 Mar. 1940 (832.51/1771); Duggan to Welles, 28 Mar. 1940 (832.51/1831) (quote) (all found in RG 59, Decimal File, 1940–44, NAII).

118 Clark quoted in Roorda, The Dictator Next Door, 217.

119 Roorda, The Dictator Next Door, 210–17.