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Preface

This book is the outcome of studies which began in 1914 and have been carried through systematically since that date. As assistant professor of economics at Harvard University, the author taught money and banking from 1914 to 1918 and, both in his lectures and in published articles and books, recorded the significant economic and financial developments of World War I. A summary of these studies appeared in his Effects of the War on Money, Credit and Banking in France and the United States, published by the Carnegie Endowment for International Peace in 1919. From 1918 to 1939 he acted as economist for the National Bank of Commerce in New York (1918-20), and the Chase National Bank (1920-39). During these years he was in intimate contact with bankers, investment bankers, brokers, and industrialists throughout the country, and with bankers throughout the world, with the Federal Reserve System and with foreign central banks, with government officials and leading journalists of many countries, as well as with academic students in the United States and abroad.

He wrote down and published at the time—first (1919-20) in Commerce Monthly, issued by the National Bank of Commerce in New York, and second, in the Chase Economic Bulletin (1920-37), issued by the Chase National Bank of the city of New York—records and discussions of the period. And he recorded confidential memoranda for the use of his associates—many of which are still too confidential to be used except as background—the information that came to him from conferences in his own bank and from conferences as he traveled in Europe or to the leading cities of the United States. His banking contacts in the United States included not merely the chiefs of great banks, but also a multitude of American country bankers (an extraordinarily able group of men) who kept him informed regarding conditions in American agriculture and the industries of the smaller places.

As professor of economics at the University of California since 1939 he has retained close contact with American bankers and with men in public

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life and, to the extent that communication has been feasible during the war period, also with foreign bankers and men in public life. And he has continued to publish discussions of the developments of World War II and of postwar problems, particularly in the Economic Bulletin issued by the Capital Research Company, Los Angeles, the Commercial & Financial Chronicle, the Hearings of the Senate Finance Committee and the Senate Committee on Banking and Currency, and in documents issued by the Economists’ National Committee on Monetary Policy.

There is a great fraternity of bankers both in the United States and in the world outside. They trust one another. They tell one another the truth regarding highly confidential matters. They go far out of their way to be of service to one another and to one another’s customers. The author is grateful that they still include him in this great fraternity.

This book, therefore, represents, not the researches of a scholar remote from the field of activity, working primarily with the documents and the writings of other men, but rather, in very considerable measure, the records and recollections of a participant in the history.

The field of the drama which the present volume undertakes to present is too vast for any man to say (as Aeneas said to Dido regarding the events of the Trojan War), “All of which I saw and a great part of which I was.” Certainly the present writer could make no such statement. But he does feel justified in saying, “Much of which I saw and of which I was a small part.”

The volume contains a good many disclosures of information confidentially obtained, in cases where the author feels sure that no harm can be done to the sources from which he obtained the information. Where references are made to private conversations with men still living, either their names are not used or the author has reason to believe that they will not object.

The author is indebted to far too many men, for information and help, over the years, to make it possible to list them. He has tried to make such a list and has found it to be a vast catalog of names in New York, in Washington, in virtually every other major American city, and in the financial centers and capitals of Europe, Asia, and other parts of the world.

The author is deeply indebted to the president, vice presidents and junior officers of the National Bank of Commerce in New York (1918-20), who initiated him into practical banking, taking him into their intimate confidential relationships and having him sit with them in their conferences with important industrial and commercial customers and with important visiting American and foreign bankers.

His greatest debt, of course, is to the great Chase National Bank of the city of New York. For nineteen years (1920-39) this institution was his laboratory. The successive chiefs, the vice presidents, many of the directors, most of the junior officers, and men in virtually every department of the bank supplied him with information and opened their records freely to

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him. He could sample the routine or leave it alone. He was called into conferences where major questions of policy were to be determined. Its foreign offices also were his laboratories. He will always retain a deep affection for this great institution and for the men in it.

The author gratefully acknowledges the help of his wife, who has given a critical reading to every page of this book, through its several revisions, as she has done for virtually everything else he has written for over three decades, and who has saved him from many errors in form, tone, and substance.

He wishes to acknowledge the help of his colleague at the University of California at Los Angeles, Professor Warren Scoville, who has read critically every page of the manuscript of this book and has made very helpful suggestions regarding it, and of Melvin D. Brockie and Robert E. Smith, who, as graduate students in that institution, helped him assemble and check facts and figures. He is much indebted also to his associates in the Capital Research Company of Los Angeles and in the investment companies served by it, particularly Henry S. McKee, president of the Pacific American Investors, and Jonathan Bell Lovelace, president of the Investment Company of America, both of whom have read the manuscript and have given him the benefit of their criticisms. For the same service he wishes to thank Henry Hazlitt of Newsweek and Dwight W. Michener of the Chase National Bank. He thanks Dr. Ludwig von Mises, who has been good enough to give a critical reading to chapter 60, “Digression on Keynes.” He is grateful also to Dr. V. Orval Watts of the Foundation for Economic Education at Irvington-on-Hudson for a critical reading of the whole manuscript and for many helpful suggestions.

It goes without saying that none of those who have given him help and information and opinions and advice is responsible for the views expressed in this book or for errors which it may contain.

Errors it must contain. Thirty-four years is too short a time in which to achieve serene perspective on the financial and economic developments of this momentous period! Serene perspective, moreover, is not easily achieved by a man who lived through this period, not merely as an observer but also as a fighting man trying all too ineffectively to alter the course of events. But the author has been well aware of his duty to be objective in his evaluation of the events that he has recorded, and his friendly critics have helped him to perform this duty.

BENJAMIN M. ANDERSON

University of California, Los Angeles

November 1948