Nothing Resounding

(See front cover)

For hours at a time a lot of important international bankers locked themselves in a room in Basle last week. Eventually they would emerge, saying nothing, and repeat the process on the following day. They were:

Dr. Karl Melchior, of the Warburg banking firm (Germany).

Alfredo Beneduce. President of the Consortium on Public Works Credit (Italy).

Emile Francqui, Vice-Governor of Societe Generate de Belgique.

Dr. R. G. Brindschedlar of the Credit Suisse (Switzerland).

T. Tanaka, London representative of the Bank of Japan.

0. Rydbeck of the Svenska Bank-foreningen (Sweden).

C. E. ter Meulen, Financial Committee of the League of Nations (Holland).

Sir Walter Thomas Layton, editor of The Economist (Great Britain).

Emile Moreau, former Governor of the Bank of France.

And the President of the Committee,

Albert Henry Wiggin, Chairman of the Governing Board of Chase National Bank (U. S. A.).

Quickly reporters began calling this assemblage the Wiggin Committee. What the Wiggin Committee was supposed to be doing was investigating, under the auspices of the Bank for International Settlement, 1) Germany's credit needs and 2) the likelihood of changing Germany's present short-term credits into long-term ones. On the first point, the Committee approached agreement that what Germany needed was renewal for six months of 5,000,000,000 marks ($1,187,500,000) which she already owed her creditor nations. It was soon seen that there was little likelihood of the committee doing much about the second point.

The Wiggin Committee seemed satisfied with trying to arrange what German editors called a "Stillstand Consortium," a formal agreement to leave all present foreign credits untouched in Germany for six months. France as usual objected. She thought three months was long enough, said French law does not permit a six months extension, but since France owns only about 5% of the foreign credits in Germany her objections this time did not carry the weight that they usually do. France finally agreed to a special formula for a three months renewable prolongation.

Stillstand Moves. First step was to listen to a long elaborate explanation of Germany's present financial position from Dr. Karl Melchior. This led to a few hard words, for Dr. Melchior either did not know or would not say just what assets Germany holds abroad. Moreover, the political situation in Germany was so improved (TIME, Aug. 17) that everyone felt more free to handle the Germans firmly. There was much criticism of German domestic extravagance. From the Wall Street point of view no financial diplomat could better express the hard truth which Germany had yet to be told than Banker Wiggin. As head of the Committee he could say these things privately or call as he did upon other speakers. Sir Walter Layton was loud in demanding German fiscal reform; he pointed proudly to the drastic economies that Britain is considering (see p. 16).

Next move was to invite representatives of twelve creditor nations to appear before the committee. Most important of these gentlemen was, of course, the U. S. representative, the Committee's president, Mr. Wiggin, who was empowered to act not only for Chase National, but for all New York banks.

Wall Street's AL. It is part of a Wall Street runner's ABC that Albert Henry Wiggin is the head of the biggest bank in the world and that he is known as Al, "the man with a million friends." Innumerable people ''Al" Mr. Wiggin.

Tall, heavy, slightly pop-eyed Mr. Wiggin belongs to many clubs, has a modest collection of etchings, a wife who sculps from time to time in a MacDougall Alley studio. He is jovial with acquaintances. He plays excellent poker with fierce intensity. As a golfer, he is never more dangerous to his opponent than when behind. He has a large collection of locker-room anecdotes.

But as the biggest banker in the U. S. he is usually the quietest. He makes few pronunciamentos. When he does speak as a banker his words carry world weight. Banker Wiggin's address to Chase stock holders last January was front-page news round the world. Said he :

"The most serious of the adverse factors affecting business is the inability of foreign countries to obtain dollars in amounts sufficient both to make interest and amortization payments on their debts to us and to buy our exports in adequate volume. From the middle of 1924 to 1929 we delayed the adverse effect of our high tariffs upon our exports by heavy buying of foreign bonds. . . . Our alternative today is therefore either a reduction of our tariffs, or readjustment to our greatly reduced volume of exports.

"Cancellation or reduction of the interallied debts has been increasingly discussed throughout the world. ... I am firmly convinced it would be good business to initiate a reduction of these debts at this time." The attack on the tariff did Mr. Wiggin no good with the Hoover Administration. Since his remarks on the War debts, France has viewed him with suspicion as a probable believer in revision of the Treaty of Versailles.

Banking has always been Al Wiggin's trade. The son of a Unitarian minister in Massachusetts, he went to work in the local bank at 17. At 26 he could really call himself a banker: he was made assistant cashier. In 1899 ne went to New York and became vice president of National Park Bank. In 1904 he went to the Chase as a vice president, became its president seven years later.

The panic of 1907 showed his mettle. In those steep days the elder J. P. Morgan discovered two young bankers on whom he could rely: Henry Pomeroy Davison and Albert Henry Wiggin. Morgan's friend, old George Fisher Baker, agreed that they were mighty useful fellows. Davison, as the world knows, was received into the Morgan fold. Wiggin acquired a rarer distinction. True or false, legend in New York calls him the only man who ever refused a Morgan partnership.

In Basle last week several U. S. bankers assisted him, but they were Chase men, not Morgan men.* Two of Chase's 79 vice presidents, James H. Gannon and Joseph C. Rosensky, traveled to Basle with him. Shepard Morgan, another Chase vice president and an expert on Reparations (he was Seymour Parker Gilbert's assistant during the operation of the Dawes Plan) was in Germany, reporting to Mr. Wiggin separately.

In addition, heavy-set Gates W. Mc-Garrah, president of the Bank for International Settlements, is one of Mr. Wiggin's old friends. Often have they dined, motored, played golf together. Together they present the perfect embodiment of a pair of U. S. bankers as an anti-capitalist cartoonist would draw them. But about their minds, of course, there is nothing cartoonish. Nor are they hereditary exponents of Capitalism, but self-made representatives and leaders of a system in which all their countrymen have a stake.

Per Jacobsson. When the Wiggin Committee reached a tentative agreement on freezing foreign credit in Germany last week, it was promptly rejected by the German delegates for various reasons, the most important being that it left out of consideration the reichsmark balances in cash of foreign firms in Germany. This item totals nearly $140,000,000. If these balances were suddenly withdrawn, Germans believe they would be as badly off as ever. This point remained unsettled last week. The Wiggineers went back into their huddle. In the meantime the B. I. S. made an important move. Per Jacobsson, Swedish economist and budgetary expert, was given a job new to international banking. He was made Economic Adviser to the B. I. S.--an international financial bellwether, to study the statements of the central banks of various countries from month to month in an effort to spot future crises long before they can occur.

French Maneuvers. All this time Emile Moreau of the Bank of France sat at his end of the table smiling amiably, saying very little. But Wall Street suddenly perceived a curious maneuver which the Bank of France has been executing in New York. Ever since June 20 when the Hoover Moratorium was announced, the Bank of France has been converting its holdings of U. S. commercial bills into cash, holding the cash on deposit in the Federal Reserve Bank. Between June 17 and last week foreign bill holdings dropped from $378,717,000 to $220,174,000; foreign bank deposits swelled from $5,676,000 to $180,483,000. The Federal Reserve announced last week that gold earmarked for foreign account since June 29 increased $61,700,000. All of these changes have been attributed to the Bank of France.

Was France preparing a grandstand play to show the power of the French franc by causing a great withdrawal of gold from New York? Unlike the drain on the Bank of England it could be nothing but a grandstand play for the U. S. has still twice as much gold in its vaults as France. Still, the moral effect of the move would be great.

A few Wall Street bankers suggested a more charitable explanation. At the time the French franc was in danger the French Government passed an emergency law putting a tax of 1% on cash balances held outside France. The law is still in effect though the reason for it has passed. Conversion of the bills into cash and the cash into gold (which does not pay the tax) might just possibly be part of a move to have this old law annulled.

Sick Norman. One person not available for the conferences of the Wiggin Committee last week was grey-bearded Montagu Collet Norman, Governor of the Bank of England. Since Britain's crisis his star has been in the descent in London. There was talk of forcing his resignation fortnight ago. Last week he quietly slipped on board the Duchess of York and sailed for Canada. "I feel I want a rest," said he, "because I have had a very hard time lately." Loyal subordinates at the Bank amplified this with a bulletin:

"The Governor of the Bank of England has been indisposed as a result of the exceptional strain to which he has been subjected in recent months. ... He is assured a period of complete quiet and entire freedom from work which should be sufficient to enable him to resume his full normal duties at the bank."

*Wall Streeters gave two reasons last week why Hanker Wiggin and not a Morgan Partner was sent to represent the U. S. at the Basle conference, 1) The Chase, world's biggest bank, is also the biggest U. S. holder of German bonds, with an estimated investment of $120,000,000 in Germany. 2) Ever since the War, the House of Morgan has been France's banker in the U. S. French banks have enormous deposits with Morgan, could make things very awkward for a Morgan Partner who opposed their wishes.

This file is automatically generated by a robot program, so reader's discretion is required.