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Chapter Four the 1920S CHAPTER FOUR THE 1920S: INTERNATIONAL HIGH FINANCE AND THE LAZARD FIRMS For Frank Altschul, back from the war, the 1920s were a time when he was consolidating his position in Lazard Frères, New York. This was something of a challenge for him. Still only thirty-three in 1920, he was overshadowed by the dynamic and vigorous George Blumenthal, then sixty-two, who had been with Lazard’s New York house since the 1890s, and despite long absences remained its dominant force until the end of 1925. In these years, Blumenthal found himself at odds on policy with the Paris partners, with whom ultimate control of the New York house rested. On the financial front, American and European bankers of the 1920s were extremely active participants in initiatives to regenerate the European economies as a functioning system. Some of their moves to do so were undertaken as part of the course of normal business. Others represented international efforts by American and European private bankers, usually with quiet backing from their own governments, to settle the problems of Europe and provide financing that would underpin the restoration of economic stability throughout Europe. The Lazard firms did not take the lead in these ventures, but throughout the 1920s their partners would participate in multiple aspects of international financial diplomacy. This was particularly true of the London firm, Lazard Brothers, two of whose partners, Sir Robert Kindersley and Robert Brand, were heavily involved in British efforts to resolve the controversial postwar issues of German reparations and Allied war debts. These activities sometimes gave rise to strains with their French partners, who largely followed their own government’s line. A recent historian of the Lazard firms argues that “Lazard was an American firm in the United States, a French firm in France, and a British firm in the U.K.”1 In broad policy, this was not always an advantage. By the 1920s, each bank had effectively gone native, making it extremely difficult for them to act as a united front, even though they could cooperate on particular issues. During the 1920s Lazard Brothers was extremely active in seeking international business and expanding its overseas profile, efforts which likewise sometimes brought it into conflict with the French house when they involved dealings on behalf of German firms. The ambitions of the London house also had the potential to affect the pattern of operations of Lazard Frères in New York. In the mid-1920s, Brand and Kindersley proposed that the New York house should radically change its own business profile, primarily as a means of boosting the standing of the British firm and facilitating its access to American financial resources, which were far more munificent than those available to them in London. As he gradually established himself as the leading partner in New York, Frank Altschul had to keep his own counsel while steering a complicated course among his battling colleagues. Only in the late 1920s did he really begin to come into his own. 1 William D. Cohan, The Last Tycoons: The Secret History of Lazard Frères & Co. (New York: Doubleday, 2007), 20. 1 For much of the 1920s, it seems, Frank Altschul found discretion the better part of valor. His father, now retired from business, faced fewer constraints upon the expression of his opinions, and until his death in 1927 commented extensively on international affairs. The disappearance of Woodrow Wilson from the political scene did much to reconcile Charles Altschul to the League of Nations whose supposed shortcomings he had previously roundly condemned. Interestingly, Charles Altschul, probably correctly, did not interpret the outcome of the 1920 presidential election as a repudiation of American membership in “ANY League of Nations.” He told Arthur Goodhart, his son Frank’s brother-in-law, that American voters had a “general desire for a change,” but that if a referendum had been held as to whether to join the League with the reservations the Republicans had attached to the covenant, “it would have been carried with enthusiasm.” By 1923, he believed that “the people of this country have grown tired of watchful waiting and want the Administration to do something constructive in Europe.” Replying to a query from Goodhart as to “why America is not equally bound to aid Asia if morally bound to assist Europe,” Charles Altschul made it clear that, in his view, American interests overseas were largely restricted to Europe, stating: This country is populated by the immigrants from Europe or their descendants; its civilization is principally Anglo-Saxon -- strictly so as far as the essentials are concerned; all other European countries have contributed to its customs and have exercised an influence on its development. We would be touched to the core if the nations of Europe should relapse into anarchy or become materially weakened morally and physically. It is of the greatest importance to this country to keep alive in Europe the respect for government and a condition of living which corresponds to our civilization. If either of these should disappear we would feel a terrible recoil. But if similar conditions should develop in Asia, they would not affect us because the conditions and the state of civilization there are not in immediate touch with our own. Europe stands in an entirely special position as regards our country. By early 1923, Altschul “believe[d] that there is growing in our country a very decided sentiment in favor of participation in European affairs, as a matter of self-protection and preservation, and in recognition of a high moral and ethical responsibility.” He believed that the American people had a “desire to do our bit in peace as well as in war; to bring some order out of confusion; to endeavor to cement and heal breaks; to bring our more normal temper to bear upon the distracted 2 peoples of Europe.” Regretfully, in 1924 Charles Altschul reported that American “antipathy against the League of Nations seems unabating, altho’ nourished on prejudice, ignorance, and party politics.”3 Charles 2Charles Altschul to Arthur Goodhart, January 8, 1923, File Arthur Goodhart, Charles Altschul Files, Altschul Papers. 3 Charles Altschul to Hammerschlag, January 29, 1924, File Paul Hammerschlag 1923-1924, Charles Altschul Files, Altschul Papers. 2 Altschul deprecated any proposals that might weaken the League of Nations and World Court, 4 which he continued to hope the United States would eventually join in some form or another. By 1924, he felt that the recent London conference on reparations and the Geneva conference to strengthen the League of Nations had “brought about a different atmosphere and may . be the beginning of a new era.”5 He likewise welcomed “the spread of the Locarno spirit,” named for the treaties of late 1925 whereby Germany accepted its 1919 frontiers with France in exchange for membership of the League of Nations and a complete Allied evacuation of the Rhineland. Altschul nonetheless displayed some apprehension as to what Benito Mussolini, Italy’s 6 increasingly assertive Fascist leader, was likely to do in the future. Charles Altschul’s reconciliation with the League of Nations could scarcely have been more complete. He was privy to and approved proposals, drawn up in 1923 by his old wartime associate Prof. James T. Shotwell of Columbia University, head of the Division of History and Economics of the Carnegie Endowment, to submit all disputes among states that were members of the League of Nations to compulsory arbitration, an initiative that provided the germ of the 1924 Geneva Protocol. A second scheme, drafted by Shotwell in 1925 and published in 1926, initially envisaged that the United States would join the International Court associated with the League of Nations, upon condition that the court then call an international conference of all its members, to negotiate a general treaty that would submit all disputes among the signatory nations to arbitration by the court, effectively outlawing war. Watered down, with all reference to the International Court removed, this proposal eventually became one of the impulses that propelled the United States government to move to negotiate the 1928 Kellogg-Briand Pact outlawing war.7 In November 1926 Altschul deplored President Calvin Coolidge’s acquiescence in Senate reservations that stymied the administration’s previous efforts to bring about United States membership in the World Court, “which many of us had been confident enough to consider an American conception.” He praised, moreover, the “excellent work done in the interest of the League by many unofficial Americans, in Austria, in Poland, in Greece, on the Dawes Committee,” and on legal and academic issues in Geneva. Altschul trusted, therefore, 8 that “the day will come when this country will realize that it owes a great duty to Europe.” 4Charles Altschul to James G. McDonald, March 16, 1925, File James G. McDonald, Charles Altschul Papers; Altschul to Goodhart, January 8, 1923, File Arthur Goodhart, Charles Altschul Papers. 5 Altschul to Hammerschlag, September 8,1924, File Paul Hammerschlag 1923-1924, Charles Altschul Files, Altschul Papers. 6Altschul to Simonds, September 12, 1926, File Frank H. Simonds, Charles Altschul Papers. 7 “Statement drawn up on June 19, 1925 by group meeting at the home of Professor James T. Shotwell, 257 West 86th Street, New York, File James T. Shotwell, Charles Altschul Files, Altschul Papers. On this proposal, see also Charles Altschul to Brand, December 21, 1926, File 73/1, Brand Papers; James T. Shotwell, The Autobiography of James T. Shotwell (New York: Bobbs Merrill, 1961), chs. 10-12; Harold Josephson, James T. Shotwell and the Rise of Internationalism in America (Cranbury, NJ: Associated University Presses, 1975), 116-132, 140-176; Patrick O. Cohrs, The Unfinished Peace after World War I: America, Britain and the Stabilisation of Europe 1919-1932 (Cambridge: Cambridge University Press, 2006), 451-455.
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