Hearings on the Confirmation of Thomas Bayard Mccabe to Be A
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CONFIRMATION OF THOMAS B. McCABE HEARINGS BEFORE THE COMMITTEE ON BANKING AND CURRENCY UNITED STATES SENATE EIGHTIETH CONGEESS SECOND SESSION ON CONFIRMATION OF NOMINATION OF ^THOMAS BAYARD McCABE, OF PENNSYLVANIA, TO BE A MEMBER OF BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM MARCH 3, 10, 11, 24, AND 30, 1948 Printed for the use of the Committee on Banking and Currency UNITED STATES GOVERNMENT PRINTING OFFICE 73055 WASHINGTON : 1948 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis COMMITTEE ON BANKING AND CURBENCY CHARLES W. T ', New Hampshire, Chairman C. DOUGLASS BUCK, Delaware ROBERT F. WAGNER, New York HOMER E. CAPEHART, Indiana BURNET R. MAYBANK, South Carolina RALPH E. FLANDERS, Vermont GLEN H. TAYLOR, Idaho HARRY P. CAIN, Washington J. W. FULBRIGHT, Arkansas JOHN W. BRICKER, Ohio A. WILLIS ROBERTSON, Virginia JOSEPH R. MCCARTHY, Wisconsin JOHN J. SPARKMAN, Alabama BOWLES, Clerk II Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CONTENTS Statement of— Page Clayton, William L.. former Under Secretary of State for Economic Affairs, Washington, D. C 60 McCabe, Thomas B„ Philadelphia, Pa 49,149,192 McKenna, William F., former counsel for Field Commissioner for China, Foreign Liquidations Commission, East Greenwich, R. I ill Moody, Hubert R., investigator, United States Senate Committee on Expenditures, Subcommittee on Surplus Property, Washington, D. C 19 Patterson, Robert P., former Secretary of War 68 Bundle, Walter G., former manager. United Press, Shanghai, China 89 Schleiter, Walter B., vice president, Muller Phipps Asia, Ltd., New York, N. Y 75 Smith. Bruce M., president, Mark L. Moody Federal, Inc., Shanghai, China 82 Snyder. John W., Secretary of the Treasury 180 Exhibits, letters, statements, etc., submitted for the record by— Balderstoh, C. C, dean, Wharton School of Finance and Commerce, University of Pennsylvania, letter to Senator Tobey i 151 Cooke, Coleman P., telegram to Senator Tobey 138 Crabbs, George D., Cincinatti, Ohio, letter to Senator Bricker 18 Delano, Preston, Comptroller of the Currency: Letter to S. C. Beise, Bank of America National Trust and Sav ings Association 184 Letter to F. N. Belgrano, Jr., First National Bank of Portland, Ores 185 Dougherty, Col. Joseph S., Inspector General's Department, summary of investigation 36 Eccles, Marriner S., Chairman, Board of Governors, Federal Reserve System: Letter in response to Senator Tobey's letter of March 24, 1948 178 Letter in response to Senator Tobey's letter of March 29, 1948, enclosing list of correspondence 179 Letter to Preston Delano, Comptroller of the Currency, Novem ber 7, 19471 184 Letter to A. P. Giannini, Transamerica Corp., December 19,1942— 186 Letter to Secretary Snyder. April 15, 1947 187 Letter to Attorney General Clark, February 2(5, 1947 188 Geier, Fred V., Cincinnati, Ohio, letter to Senator Bricker 17 Greenman, Frederick F., letter to Senator Tobey 2 Lazarus. Fred, Jr., Cincinnati, Ohio, letter to Senator Bricker IS JJcCabe^Thomas B.: Biographical sketch 1 Statement 49 Administrative Order No. 9 146 McCandless. R. B., Deputy Comptroller of the Currency, letter in in response to Senator Tobey's letter of March 24, 1948 178 McKenna, William F., former counsel for Field Commissioner for China, Foreign Liquidations Commission: Exhibit A. Radiogram, consul general in Shanghai to Secretary Byrnes 112 Exhibit C. Objections to policy of FLC 132 Kvhibit H. Letter to General Johnson 136 HI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis IV CONTENTS Exhibits, letters, statements, etc.—Continued McKenna, William F—Continued Pas* Exhibit I. Telegram from Lieutenant Colonel Cook and letter from Colonel Dougherty regarding Lieutenant Colonel Cook and Major Cook 138 Exhibit J. Letter from W. L. Worden, the Texas Co. (China), Ltd., to FLC 137 Exhibit K. Letter from FLO to the Texas Co. (China), Ltd 137 Morrill, Chester, secretary, Federal Reserve Board, letter to Trans- Smeric*a"Cbrp., February 14, 1942 186 Patterson, Robert P., New York, N. Y., letter to Senator Bricker 18 Rundle, Walter G., former manager, United Press, Shanghai, China, invoice of material on Okinawa 91 Sinclajr^Jotm S., executive vice president, New York Life Insurance •--n5ff??(ewTork, N. Y., leter to committee 149 Tobey, Charles W., United States Senator from New Hampshire : Chart and statement, prepared by Virginia Bankers Corp., on Huntington-Milton holdings facing 158 Statement 3 Extract from joint memorandum 85 Extract from official reports of War Investigating Committee 126 Exhibit A. Regulation 15, Surplus Property Act 19 Exhibit B. Excerpt from North China Daily News, August 29, 1946, Alleged Sale of B-25's to Commercial Line 25 Exhibit C. Editorial, Shanghai Evening Post and Mercury, Sur plus Sales Need a Housecleaning 28 Exhibit D. Report, American Chamber of Commerce, Shanghai, Trade Practices of Chinese Government 30 Exhibit E. Telegram from General Johnson to Mr. McCabe 37 Exhibit F. Transcript of telephone conversation between General Connolly and Colonel Hunter 38 Letter from Secretary Snyder, May 23, 1947 182 Letter to Preston Delano, Comptroller of the Currency, March 24, 1948 177 Letter to Marringx.g. Eccles, Chairman, Federal Reserve Board, March 24,"T948 177 Letter to Marriner S. Eccles, March 23, 1947 179 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis CONFIRMATION OF THOMAS B. McCABE WEDNESDAY, MARCH 3, 1948 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D. G. The committee met, pursuant to call, at 10: 30 a. m., in room 301 Sen ate Office Building, Senator Charles W. Tobey, chairman, presiding. Present: Senators Tobey (chairman), Buck, Flanders, Cain, Bricker, McCarthy, Maybank, Taylor, Fulbright, Robertson, and Sparkman. Also present: Senator Myers. The CHAIRMAN. The committee will come to order. Gentlemen of the committee, we have met here this morning to con sider the nomination of Mr. Thomas B. McCabe as a member of the Board of Governors of the Federal Reserve System. We will insert in the record at this point a biographical sketch of Mr. McCabe. (The sketch is as follows:) Birth and background : Born in Whaleyville, Md., July 11,1893. Son of William Robbihs McCabe and Beulah Whaley McCabe. Father: banker, speaker of Dela ware's House of Representatives, and banking and insurance commissioner of State of Delaware. On maternal side seven generations resided in Maryland. On paternal side several generations settled and resided in Delaware. During boyhood resided in West Norfolk, Va., and Selbyville, Del. Education: Wilmington Conference Academy., Dover, Del., 1907-10. Swarth- more College, Swarthmore, Pa., A. B. in economics 1915; honorary LL. D. 1947. Marital: Married Jeannette Everett Laws of Swarthmore, Pa., 1924. Three sons, Thomas Jr., Richard Whaley, and James Laws. Home, 607 North Chester Road, Swarthmore, Pa. Business Career: With Scott Paper Co., Chester, Pa. since 1916, salesman, 1916-17; assistant sales manager 1919-20; sales manager 1920-21; director since 1921; secretary and sales manager 1922-27; vice president 1927; president since 1927. Company's plants are located in Chester, Pa., Glens Falls, N. Y., Fort Edward, N. T., Marinette, Wis., Coos Bay, Oreg., Anacortes, Wash., Brunswick, Ga., (half interest), Hoboken, N. J., and Sandusky, Ohio. Federal Reserve: Class C director, Federal Reserve Bank of Philadelphia since 1937, deputy chairman 1938, and chairman of the board and Federal Reserve agent since 1939. Former chairman of the chairmen's conference of the Federal Reserve System. Chairman of special committee for 2 years to study executive officers' positions and salaries in the 12 Federal Reserve banks. Government service: Member of Business Advisory Council for the Department of Commerce since 1940, chairman 1944-45. 1940: Executive assistant to E. It. Stettinius, Jr., Advisory Commission to Coun cil for National Defense. 1941: Deputy Director, Division of Priorities, Office of Production Management. 1941-42: Deputy Lend Lease Administrator. 1945: Army-Navy Liquidation Commissioner. 1945-46: Special assistant to the Secretary of State and Foreign Liquidation Commissioner. 1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis 2 CONFIRMATION OF THOMAS B. McCABE 1946: Awarded Medal for Merit. Military service: First World War, served as private, advancing to captain, United States Army 1917-19. Other public service: Committee for Economic Development, trustee and mem ber Research and Policy Committee. International Chamber of Commerce, United States Associates Council member, and delegate to first Postwar Congress at Montreux, Switzerland, 1947. Community Chest campaign, Chester, Pa., chair man, 1947. SwarthmOre College, board of managers, Swarthmore Presbyterian Church, formerly member of board of trustees. The CHAIRMAN. The position is one of great importance, especially in view of the fact that President Truman has signified his intention to name Mr. McCabe as Chairman of the Board of Governors of the Federal Reserve System. I have received many fine recommendations, from many sources, of Mr. McCabe, urging that I support this nomination. On the other hand, several persons, including three United States Senators, have brought to my attention matters that, if proven, would tend to reflect on Mr. McCabe's record as a public servant. I consider it my duty as chairman of this committee to present these matters to this committee, and to give Mr. McCabe ample opportunity to explain them when the presentation is through, in order that we may vote advisedly on his confirmation. I, for one, shall be glad to move his confirmation if his public record bears the test. With this brief introduction, I will ask the clerk, Mr. Bowles, to read the statement that I have prepared, and I would say for the bene fit of the committee, I have a letter which is very unusual, from a gentleman in New York, in tribute, and I would like to put that in the record in all fairness. After the hearing this morning, hearings will be resumed this after noon, with evidence from other witnesses, oral evidence, at 2:30 this afternoon.