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University of California • Berkeley
John L. Simpson
ACTIVITIES IN A TROUBLED WORLD: WAR RELIEF,
BANKING, AND BUSINESS
Regional Oral History Office
The Bancroft Library
Regional Oral History Office University of California
Tne Bancroft Library Berkeley, California
John L. Simpson
ACTIVITIES IN A TROUBLED WORLD: WAR RELIEF,
BANKING, AND BUSINESS
With an Introduction by
Donald H. McLaughlin
An Interview Conducted by
Suzanne B. Riess,
in 1978
Copy no.
1978 by The Regents of the University of California
TABLE OF CONTENTS -- John L. Simpson
INTRODUCTION, by Donald H. Mclaughlin i
INTERVIEW HISTORY, by Suzanne B. Riess iv
INSCRIPTION IN AN ALBUM vii
I FAMILY AND EARLY EDUCATION 1
[Interview 1: April 28, 1978] 1
Gertrude Pendegast Simpson 1
John Lowrey Simpson 2
Mother and the Girls 5
Lola Jean Simpson 8
Influences of Youth 11
Summary: the Woodland Days 14
II UNIVERSITY OF CALIFORNIA 16
[Interview 2: May 4, 1978] 16
Joining a Fraternity 16
Two Campus Jobs 17
Student Activities, Clubs, and Friends 17
Some Unusual Professors 20
University Medalist, 1913 21
The Telephone at the Exposition 23
Law Education and Plans 24
Carl Parker and the Wheatland Riots 25
Three Months Become Seven Years 28
III HOOVER AND THE COMMISSION FOR RELIEF IN BELGIUM 29
Staffing of the CRB 29
[Interview 3: May 11, 1978] 32
John Simpson's Meetings with Herbert Hoover 32
Working For and With The Chief 34
The Role of the Neutral 36
A Look at the Style of Hoover 39
Later Meetings with Hoover 41
Hoover and the People 43
Hoover and Mother 45
The Hospitality of the Belgians 46
IV THE YEARS FROM 1919 to 1921 48
The Private Grain Enterprise 48
Illness 49
V FOOD RESEARCH INSTITUTE 52
[Interview 4: May 19, 1978] 52
Alsberg, Taylor, and Davis 52
Methods of Compiling Agricultural Statistics 56
VI CALIFORNIA RAISIN GROWERS ASSOCIATION 60
To Turkey, Spain and London 60
Problems of Grower Cooperatives 62
VII CRETE MANDEL SIMPSON 64
In Search of a German Teacher 64
Crete's Academic Career, Especially Work With Children 66
And Her Role as Hostess 68
A Friendship with Josef Krips 70
VIII EARLY YEARS WITH SCHROBANCO 72
Looking for a Job 72
[Interview 5: May 24, 1978] 74
Schroder, New York and London 74
Simpson Accepts 77
International Railways of Central America 78
English Banking Style 79
Prent Gray in Action 81
Introducing the Dulleses 82
IX PERILS OF THE BANKING WORLD 85
[Interview 6: June 1, 1978] 85
The Lowenstein Business 85
German Acceptance Financing 87
A Pyramid Collapses: Crash 89
Roosevelt's New Deal 91
Washington Contacts 93
The Gold Standard: John Laylin 94
Pre-War Business with Germany 97
South America and the State Department 100
[Interview 7: June 9, 1978] 101
The Price of Refinancing Germany 101
X PEOPLE AND ORGANIZATIONS 110
John Foster Dulles, Informally 110
The Allied Control Commission: Henry Grady 111
[Interview 9: June 22, 1978] 113
Bill Donovan 113
Allen Dulles 115
Adlai Stevenson 117
Nixon, and the Presidents Preceding Him 119
The Marshall' Plan 121
Council on Foreign Relations 124
Foreign Policy Association 126
World Affairs Council 127
The Introduction of McCone to Dulles 131
Two Meetings With Kerensky 132a
XI OTHER SCHRODER ORGANIZATIONS 133
[Interview 10: June 28, 1978]
The New York-London Contacts 133
The Fishing Judge 135
A Little Unpleasantness 136
English Country Weekends 137
Schrotrust, Schrorock 139
Nearly a Good Thing: Polaroid Venture 141
XII BECHTEL 143
Bechtel Notes 143
Two Companies 146
The Committee on World Economic Practices 148
[Interview 11: July 27, 1978] 154
W.A. Bechtel, Sr. 154
Steve Bechtel, Sr., Daring and Caution 155
Divisional Organization 156
Research, and Current Concerns 158
Organizational Function of Finance Committee 159
Lines of Credit, Dun and Bradstreet 161
Steve, Sr. , The Last Word 164
[Interview 12: August 3, 1978] 166
"By John L. Simpson" 166
Bechtel Associates, New York 168
The Mother Jones Issue 170
XIII SOCIAL GROUPS
The Disputers
Isle of Aves 179
XIV FROM A BOOKPLATE TO A BOOK'S END 181
A SKETCH - John L. Simpson 183
LL.D. AWARD 184
APPENDICES 186
INDEX 253
INTRODUCTION, by Donald H. Mclaughlin*
All participants in the Oral History series have had experiences of some
special sort that warrant the recording of their activities and associations.
John Simpson is no exception, and, equipped as he is with a cultivated mind
and an ability to make sound appraisal of people and events, his memories will
be especially valuable in revealing the significance of many of the dramatic
changes of the times. His warm personality will make his comments particularly
human and engaging.
The intellectual ability that was apparent in his college years was well
demonstrated throughout his long career, and the University of California is
to be congratulated on bestowing upon him both of its highest honors: the
first, the gold medal granted to the outstanding scholar of the graduating
class, he received at Commencement in 1913; the second, the LL.D. degree, was
awarded to him on Charter Day in the spring of 1960 in recognition of his
achievements of far wider range.
Very few, if any, have received both of these high honors, one expressed
in an enduring metal that denotes special confidence in a promising young
fellow, and the other affirming the institution's earlier good judgment. Even
the certificate, spelling out the rights and privileges of the ultimate doctor
ate, has more enduring quality when backed by gold. The University's
discernment is to be commended.
With his good foundation of a liberal education in the best sense of that
abused term, John Simpson went on to gain a much wider knowledge of men and
*Donald H. McLaughlin was himself the subject of an oral history, Careers in
Mining Geology and Management, University Governance and Teaching, Regional
Oral History Office 1975. He is a 1914 graduate of the University of Califor
nia, from which institution he received an LL.D. in 1966.
ii
affairs, starting with his work in the war years on the staff of Herbert
Hoover's Commission for the Relief of Belgium, and continuing in a sequence of
subsequent engagements that provided familiarity with European life and with
international problems. This background, supplemented with legal training,
enabled him to enter the world of banking and finance well prepared to render
service of special value.
My only association with him of a professional nature was limited to the
period when the mining company with which I have long been associated had the
good fortune to persuade him to accept election to its Board of Directors. In
this capacity, he brought a well-balanced judgment of financial realities that
was most helpful to us and occasionally seriously needed. His comments left
no doubt whatever with regard to where he stood, yet they were always presented
in a quiet and firm manner with a courtesy that rarely offended those with whom
he might disagree.
I doubt if mining or geology, however, had much appeal for him. Once in
my enthusiasm about our operations I lured him with his fellow directors into
the depths of the Homestake Mine and thoughtlessly made them climb a few lad
ders and clamber over rough piles of broken ore and I heard him murmur, "There
ought to be an easier way to earn a living."
My close friendship with John was, however, firm enough by that time to
survive this unfortunate incident. It really dates from the early 1940s in
New York when I was invited to join a small group of Calif ornians in exile
who met for luncheon every three weeks or so and expressed their opinions on
affairs of the world by bets of one dollar. He undoubtedly has had something
to say about this very special group, for it brought a few of us together in a
way that not only preserved old friendships but promoted a lively exchange of
ideas.
In those years, too, I had many opportunities to become acquainted with
Crete Simpson. To know her gave me an appreciation of the devotion that existed
between the couple and an understanding of the extraordinary degree to which
they supplemented each other's lives. Her understanding of young people was
especially perceptive; it enabled her at times to see promise in them that was
concealed from parents annoyed by the adolescent behavior of their offspring.
The small dinners with the Simpsons at their house in New York, and in later
years at their lofty apartment in San Francisco, were memorable for the skill
ful selection of guests and the thoughtful and warm hospitality John and Crete
extended together.
John's capacity for being a good companion was based not only on the range
of his interests and his intelligent criticism of current affairs — both
political and scholarly as well as down to earth — but also on his subtle wit.
He had frequent occasion to expose it in the small camp at the Bohemian Grove
to which we both belonged. It was and still is a pleasantly diverse company,
where each member has special competence in one field or another, though such
qualities are apt to be disrespectfully treated if too frequently exposed.
iii
John, taking advantage of his prerogatives as camp historian, enlivened the
dull facts with verses and limericks about each member, none of which he
would probably allow me to repeat in an unexpurgated form.
Even more revealing, both of John's light touch and his thoughtful side,
are his many short essays. A number of these he published for private cir
culation. Some are based on early adventures in Europe; a few in France, I
suspect, are a bit autobiographical, though he denies it. Others, in the
form of dialogues, become involved in matters of more profound nature such
as a confrontation between the Ruler of the Universe and an inquisitive man, in
which God himself doesn't get by too well in attempting to adjust his
doctrines to modern revelations.
Another of John's writings that I found quite hilarious was his response
to a trusting friend who sought a little help in understanding the plot of
Der Ring des Nibelungen before coming to Vienna where he planned to attend a
performance of the entire Cycle. He surely got it from John in good measure
in a long letter that would immensely enliven conventional program notes.
Everything is described in matter-of-fact terms from the skin-diving Rhine
maidens to Brunhilde's final immolation, the only known example, as John puts
it, of a widow's suttee on horseback. Nearly every leading character is put
in his place with a revealing phrase or two. Wotan's philandering and his
indifference to genetic consequences receive the criticism it deserves, as
does Siegfried's shocking behavior toward his aunt Brunhilde, who, of course,
is also his bride. All this is accomplished with no lack of appreciation of
the greatness of the musical drama, but at the close, as Valhalla burns and
the Rhine maidens display their ultimate charms by singing under water as
they rejoice over the recovery of the ring, John urges his friends to hasten
on to Sacher's just behind the Opera House, where a repast that he has
ordered for them will fully restore the spirit of "alt Wien."
In the Oral History, the many serious and successful episodes of John
Simpson's life will necessarily receive first attention. They alone — and
especially the personalities that are involved — make a record that will sus
tain a reader's steady interest. I am sure that under the skillful direction
of the interviewer his many sharp perceptions and his ability to deflate
solemn nonsense will be revealed in an entertaining way.
John Simpson's command of the intricacies of contemporary financial
problems and of their bearing on the practical world of business and indus
try has won admiration for him that is widespread among those who are aware
of the value of his contributions. Even more important, however, are the
gentle and kindly traits that have bound so many to him in warm friendship.
To know him has been a rewarding experience.
Donald H. Mclaughlin, Emeritus Professor of
Mining, University of California
18 December 1978 Honorary Chairman, and Chairman of the
Berkeley, California Executive Committee, Homestake Mining Co.
iv
INTERVIEW HISTORY
The John Simpson Oral History is one of a series of oral history memoirs
with distinguished alumni of the University of California. As Donald Mclaughlin
points out in his introduction, the University did very well in giving to
John Simpson in 1913 the Distinguished Scholar award and in 1960 the LL.D,
thus acknowledging both promise and achievement. The oral history, with its
unique format for retrospection, adds measurably to the meaning of the earlier
acclaim.
When the idea of the interviews was presented to Mr. Simpson in April,
1978, he agreed to the proposition and from the start brought to the task an
agreeable mix of knowing what he wished to say and yet, with genuine interest
and enjoyment, being willing to abondon his agenda for the less predictable
directions of the oral history.
The interviews took place in the three-month period from May to July 1978,
and as they proceeded, Mr. Simpson and his secretary, Marie Thomson, would
betweentimes prepare some small outline that afforded a cue to areas and anec
dotes of special interest. Often a few papers or writings of Mr. Simpson's
were modestly provided to look over. I also had at hand the Random Notes,
Mr. Simpson's chronicle of the years from 1915 to 1922, and copies of two
volumes of prose by this investment banker and financial consultant who was
so strongly drawn to writing.
It was important in the interviews for John Simpson to introduce and
speak fully and precisely of the individuals who were the heart of his life;
the main editorial work on his part was done where he felt he had failed to
express the qualities of a good friend or loved one. It would seem that his
world view is of people; the events were fabric, often amusing, seldom
shattering.
We met for the interviews in the Simpson apartment on Sacramento Street
in San Francisco, just north of the Pacific Union Club. The taping took place
in a library which ran strongly to current history, but included editions of
Shakespeare, volumes of Gibbon, Proust, Lincoln, and many dictionaries and
reference works on art and on America. On the walls were etchings from Austria,
signed photographs of Herbert Hoover and John Foster Dulles, and a large fine
etching of the Joaquin Quartet, as well as a portrait in oils of John Simpson
done one summer at the Bohemian Grove, and cherished despite critical murmur-
ings from friends. It was a pleasant place to meet and work. From there we
adjourned for a bef ore-lunch aperitif in the classically Rococco pink, green
and gold living room — a trip down a hall where art and artifacts gathered by
John and Crete Simpson were effectively displayed.
Lunch was served in the dining room, oriented to a northwest-facing view
of Russian Hill, the Bay, and the Golden Gate Bridge. Around us were flowers
from Mr. Simpson's niece Laura Bechtel, and on the table fine porcelain or
silver pieces to admire and reminisce about. To all this was brought Maria's
souffles, sole in lemon sauce, quiches, grilled salmon, curries, all beauti
fully done and followed often with four-star desserts. Conversation was
about books, the progress of the interview, or the small dramas of my life.
One visit, after the interviewing was over, substituted for taping an extra
ordinarily pleasant hour listening to a recording of "Der Rosenkavalier."
For some time John Simpson has been troubled with Parkinson's Disease.
But with the help of his household he has made of the exigencies of the disease
so little as to be truly remarkable. Esther and Maria, who care for and cook,
are part of the air of warmth and well and pleasantly ordered life, all making
a continuity from the years when Mrs. Simpson was living that one knows is of
great importance to Mr. Simpson. The reminders of the nuisance and frustration
of the disease serve to underscore the vigor and humor of the man. There were
comments on what women were coming to when I, hardly wishing to put my host to
any trouble, seated myself at lunch. I learned I was in a place where manners
would not bow to inconvenience, and so subsequently I waited to be seated.
After the taping was completed and the transcribing under way, Mr. Simpson
gave close attention to editing. I sent the transcript to him in three
sections and he read it carefully, changing few words or phrases, but occa
sionally excising passages that appeared too harsh or unnecessarily
judgmental. Throughout the session, decisions were made regarding photographs
and writings to be included in the oral history text or appendices.
Mr. Simpson cared to have a correct and a handsome oral history and he did
his part beautifully.
As Donald McLaughlin said in the introduction, his friend John wrote
limericks, and once before lunch he quoted a few favorites to me. I then
elicited two quite printable ones by starting off, and letting the master
finish the job. One went:
There once was a Phi Beta fellow,
In experience wise and so mellow -
He could tell a good joke
With a wink and a poke
And a laugh that was more like a bellow.
vi
That laugh was heard often in the interviews. The message in the second
limerick I think harks back to a successful career and good times:
There was once a remarkable scholar,
Who with only a good-tempered holler,
Could gather a crowd
Both lusty and loud
And wrassel them all for a dollar.
In both verses, if John Simpson will pardon all the "interpretation,"
there is a happy sense of self that made it most pleasant to be on the
receiving end of this oral history.
The Regional Oral History Office was established to tape record auto
biographical interviews with persons prominent in recent California history.
The Office is under the administrative supervision of James D. Hart, the
Director of The Bancroft Library. The department head is Willa K. Baum.
Suzanne B. Riess
Interviewer
January 1979
Berkeley, California
vii
INSCRIPTION IN AN ALBUM
Presented by J.N. Pendegast to Ris Wife, Mrs. Jane Pendegast
At John L. Simpson's request we are
prefacing his oral history memoir
with the following words written
some time before April 20, 1862, by
Mr. Simpson's grandfather, J.N.
Pendegast, to his wife Jane, and
presented as an inscription in an
album.
Vlll
To Mrs. Jane Pendegast.
A tribute of merited praise, coming from one whose good opinion we
value, and whose candor we do not call in question, is ever a very
acceptable offering. In presenting this little manual to you, I take the
opportunity to make you such an offering. And surely I may do so without
resorting to either flattery or exaggeration.
In your sunny girlhood, when hope, with its rainbow colors, painted
for you a future all radiant with pleasing anticipations - then with
generous trustfulness you confided your all to my keeping. In the struggles
which poverty imposed you nobly bore your part. When a thousand voices
within and without urged you to oppose my wishes - wishes that to many did
seem unreasonable - you rose above the ties of home and kindred, and above
your own womanly fears, and dared the dangers, and encountered the labors
and privations of a tedious and perilous journey to this far off sunset land.
When, on that journey, by a fearful casualty, my life was put in
peril, and my prostrate and suffering condition devolved on you a triple
load of care, anxiety and toil, you met and bore it bravely and uncomplain
ingly. Here, in this land of strangers, when sore affliction seized, and
long and sternly held us in its grasp - then with a patience, a fortitude,
and affection, such as none but one of earth's noble women could exhibit,
you ministered to my wants, and alleviated my sufferings. The physician's
skill was not so effective - his nostrums were not so potent to baffle
disease and restore health - as were the kind, gentle, hopeful attentions
which, day and night, for long months, I met from your hand.
And now the most earnest, most cherished wish of my life is that your
remaining days may entail upon you less of toil and privation and care,
and more - much more - of comfort and ease and quietude than have thus far
marked your way.
But, I am reminded that soon this earthly scene will close, be it
illumined with sunlight or o'erspread with gloom. To the "Great Future"
then let us ever direct our thoughts. So that when our earthly union
shall be dissolved - the separation shall be but temporary - while the
re-union shall be eternal.
In life and death I am and ever will be your devoted husband
J. N. Pendegast
I FAMILY AND EARLY EDUCATION
[Interview 1: April 28, 1978]
Gertrude Pendegast Simpson
Riess: I'd like to open with some questions about your own history,
your family background. I have a note that your mother's parents
came from Kentucky.
Simpson: As a matter of fact they didn't actually come from Kentucky.
They came from Tennessee. And could I tell you a little incident
regarding my mother in that connection? She always said that she
came from Kentucky, but when she was about seventy I arranged for
her to go to Europe. When it came to making a declaration for a
passport, she declared that she was born in Tennessee. I and my
sisters said, "Well, Mother, what in the world does this mean?
You always said you came from Kentucky! Why didn't you say you
came from Tennessee?"
"Oh," she said, "I thought Kentucky was a little fancier
state. And," she said, "we lived mostly in Kentucky. It was
only an accident I was born in Tennessee." [Laughter] So,
she came from Tennessee in an ox wagon.
Riess: And why did the family come out west?
Simpson: My maternal grandfather, John Pendegast, was a minister, and they
came, as many did, because they thought the west was the land of
opportunity. My grandfather founded the Christian Church in
Woodland.
I'm still affected by my wife's amazement, when we first met
and she asked me what my religion was and I said, "My family belongs
to the Christian Church." She said, "We're all Christians.' What
do you mean by that?" So I had to explain to her that the
Christian Church is a sect within Christianity.
Riess: Did you know those grandparents?
Simpson: I knew my grandmother, not my grandfather. She related stories
of crossing the Plains; that was the expression always used,
"crossing the Plains." It was apparently quite an ordeal.
Riess: Do you know what year that would have been?
Simpson: Yes. My mother was born in '51 and that trip was in '53. They
arrived in California in '53.
Riess: Did they tell you why they went to Woodland?
Simpson: No. 1 don't know why they chose Woodland rather than Marysville
or Colusa or someplace else. I don't know.
Riess: Were they following anyone else they knew who had already settled
out here?
Simpson: I don't know if that was the case but they did have very good
friends with them when they settled in Woodland. I think they
chose it more or less by chance. They got over this long trip
over the mountains and found this an attractive place.
I believe there were really two motives in coming west:
one, to found a church--both my grandfather and my grandmother
were very sincere in their religion--and two, to better them
selves, because they did better themselves. My grandfather
evidently had quite a bit of business sense, along with his
religion, and he acquired property; along one side of what is
now College Street in Woodland he acquired a considerable amount
of property and built a number of quite good-looking houses,
simple and good-looking, which stand today.
Riess: Your mother was educated in Woodland?
Simpson: What education she had was in Woodland. How much formal education
she had I don't know. She was far from uneducated but beyond
grammar school I don't really know. The early settlers founded
a school called Hesperian College which was later converted into
the high school and my mother may have gone to Hesperian College
after grammar school.
Those pioneers were remarkable people, you know. I found
an album that my grandfather had given my grandmother. (People
were great at having albums and writing things in them.) And
he had written her a letter in this album thanking her for all
Simpson: the support she'd given him through times of trial.* And the
English was beautiful, although perhaps a little flowery from
our present standpoint. I gave it to The Bancroft Library.
Riess: Was your mother the only child?
Simpson: Oh no, she had a lot of brothers.
Riess: Did they get more education do you think?
Simpson: I didn't mean to imply that my mother was uneducated. She
functioned as a very educated person. How she got it is what I
don ' t know.
Riess: I wondered if the sons had been sent off to college, because
more was expected of sons.
Simpson: No, and I tell you frankly most of my uncles were not very
successful, though some did better than others. There was only
one who really made a name for himself and he was a lawyer in
Napa and very successful and recognized beyond his immediate
locality.
John Lowrey Simpson
Riess: And your grandparents on the paternal side, did you know anything
of who they were?
Simpson: Not much. My father died shortly after my birth in 1891. He
came from Indiana, but communications being what they were in
those days, I really know very little about his background. I
know about him from things related by my mother, sisters, and
family friends, but that's information from Woodland , not
Indiana.
Riess: He didn't have a diary or that sort of thing?
Simpson: Not that I know of. From all I've learned, he was a highly
respected man in the community and certainly dearly beloved
and honored by my mother. He was a widower when he married
her, about twenty years her senior. His first wife's name was
Laura and that name has been handed down in the family ever since.
*See introductory pages.
Riess:
Simpson:
Riess :
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess :
What did your father do?
Frankly, I do not know, but cudgeling my wits and talking
recently with Mrs. S.D. Bechtel, Laura Bechtel,* our best
speculation is that he was a teacher, because he was obviously
a man given to literary pursuits.
Why is that obvious?
From his library. And he was known as a churchgoer and sang in
the choir and seemed to be associated with that kind of thing
rather than business.
You say the only knowledge you have of him is from your mother.
Did she quote from him: "Your father used to say..."? What
kind of knowledge of him did you get from her?
Her great emphasis was that he was a very good man. I think
she used the expression "one of nature's noblemen." She was
obviously quite a bit younger, twenty years, but as well as
love, she had great honor and respect for him.
And the marriage was approved?
Oh, yes.
You would gather from that that he must have been a man of
some intellectural background because your mother's own parents
would have had high standards for their daughter?
Yes, I think that's right. I think it's very curious that I
didn't probe into that. Maybe I did and have forgotten. I
don't know.
Was there a sense of mystery and tragedy surrounding his
death?
Simpson: No.
*Mrs. S.D. Bechtel is the daughter of Mr. Simpson ' s half -sister
Lela.
John Lowrey Simpson, Sr.
1831-1892
Gertrude Pendegast Simpson
1851-1935
Woodland :
John Simpson's new bicycle
Very young John Simpson
Mother and the Girls
Simpson: There's every evidence that my father was a man of fine qualities,
but he obviously was not a money maker because he died leaving my
mother no financial means at all, and I would like to tell you
how she handled that.
One of the houses that my grandfather [Pendegast] had owned
belonged to my grandmother, and my grandfather gave a house to
my mother as a wedding gift—that's the house where I was born--
but that's all she had. On the death of my father, my mother had
the house, which incidentally had a mortgage on it--I don't
know why and how--and she had the responsibility for three girls,
one boy (me) , and my grandmother.
But she inherited one thing that was priceless; she was
indomitable. How often have I heard her say, "I'm not going to
let this get me. I'm not going to let this get me." And she
never let anything get her. So, what did she do?
Well, she put the girls to work. They had an extra room
and she took a lodger, usually a high school teacher, and took
some boarders in addition.
The eldest girl, Lela, was really her stepdaughter, but
nobody paid any attention to that [distinction]. The household
was all of us. Indeed my mother said that Lela seemed to her
more like a younger sister than a stepdaughter, and she was a
lovely character. She was quite a bit older than the other
girls and not so much younger than my mother. And as soon as
she was able [probably 1890] she got a job teaching in the
grammar school and made her contribution.
When I was still very young, young enough to have tantrums,
she married a man named Barkley Peart [married 1894]. He was
manager or superintendent of a very large ranch at Knight's
Landing. I was utterly unwilling to tolerate the idea that she
was going to be taken away." I called her Teetee--! bestowed
names on all my sisters and hers was Teetee. I loved her dearly.
I loved them all.
Riess: It seemed like a real desertion when she left?
Simpson: Yes, and a very wicked man who would take her away from me.
Riess: Does that mean that she really did leave your lives? Or if
she was only ten miles away, did you see her often?
Simpson: Well, you know, ten miles in those days--we had a horse and
surrey and occasionally we would drive over for the day, but it
was a day's trip, you see, going and returning. They came
similarly to Woodland occasionally. But she was no longer in
the household.
Irma, whom I named Mamie for some reason, helped in the
house-running until she married a man who was also a rancher,
but of a more modest status, named Charles Adams. I think he
came from Michigan.
Riess: And then did they stay in the area?
Simpson: Well, no, they didn't stay permanently, they moved to San
Francisco. They had a rather sad life, the saddest thing being
the death of a lovely little five-year-old girl that they had,
one of the most charming children imaginable. He, Adams, was
not very successful.
Now, Toto--Lola was named Toto, and that was a name which
stuck with her through life. Most of her friends here and in
New York, where she later lived, called her Toto. The name that
she was originally given by her parents was Lola Jane Simpson,
but she hated "Jane," so she changed it to Lola Jean Simpson.
So, she was either Lola Jean or Toto.
Riess: She sounds very strong-minded.
Simpson: She was a marvelous person.
Riess: How much older than you was she?
Simpson: She was born in '78 and I was born in '91. [Born February 18, 1891]
Mother realized that she [Lola Jean] had talent and could
go places, and insisted that she go to the University of California.
And I think it must have been in that connection that we moved to
San Francisco. I was, I think, only about five years old and
have a dim recollection of San Francisco. But I think it was
probably for Toto to have a place to still be at home and go to
college.
Riess: Oh, so were you in San Francisco for four years, then?
Simpson: No. In a year or two, for some reason, we went back to Woodland.
Perhaps Toto found other ways of taking care of herself. But
we did spend about a year or two in San Francisco and again
Mother took boarders.
Riess: That means that she purchased a house, or rented a house?
Simpson: Rented a house. And I suppose rented our house in Woodland
to provide some income. Maybe that was a way of increasing
cash income then.
Riess: That's interesting. You say you have a dim recollection of
the time in San Francisco?
Simpson: I recall one thing clearly: there was a snowfall and I was
taken to the window to see the snow. And I remember another
thing; I was taken to see Santa Claus at the Emporium and he
asked me whether 1 had been a good boy and I said, "Yes, Sir."
[Chuckles] I have only a few slight childhood memories of
that time.
Another recollection--in my boyhood, the hobo was still an
American institution, and in small towns, such as Woodland,
they came through. I don't know whether they put crosses on the
fences of the people who were easy marks, but, anyway, every
once in a while one would turn up. He'd clean up the yard and
get a cup of coffee and a piece of pie.
And once in a while one of them would suggest that he could
find some more work to do around "the yard," and "there was a
cot in the woodshed, and couldn't he stay on?" Well, sometimes
he did. He stayed maybe a few days, maybe a couple of weeks.
One fellow's name was Tom. He was an English sailor, and
he stayed quite a while. He went on some awful binges but he
was very contrite afterwards and he did two things: he begged
forgiveness from my mother, and joined some religious sect. By
the time he'd been with us a couple of weeks, he had joined
practically every church in town. [Chuckles]
One day, after a bad night out, he came to plead with my
mother for forgiveness. The back porch overlooked a little
brick walk, and the culprit stood below on the walk and my
mother had a strategic position of looking down on him from the
porch. On this particular occasion Tom made his plea for mercy.
He had enormous respect for my mother. And he said, 't>h , Mrs.
Simpson, I was a stranger and you took me in."
And my mother said, "Yes, Tom, and I was a stranger and
you took me in." [Laughter]
My mother was thoroughly at home with the world. She was
unimpressed by grandeur and she was tolerant of the opposite.
Riess: Did she make a lesson of that for you, or was it just a lesson
by example?
Simpson: Well, I would say the latter.
I think of how wonderful my mother was and I don't see how
anybody could have had a better one.
Lola Jean Simpson
Riess: You gave me a copy of a letter that Lola had written to the
editor of the Woodland paper when she was about ten years old.*
Simpson: I think it's additional evidence that my father was a cultivated
man with good taste. And whether he was professionally a teacher
or not, I think he probably was a good teacher to her.
Riess: The letter gives some of the spirit of the home life: [Reading
from letter] "While we were sitting at the breakfast table this
morning, the subject of writing a letter to the Mail came up,
and I said, 'Oh, dear, I don't know how to write that letter to
the MailJ ' Papa said for me to go out to the barn and see what
I could find there, and maybe that would give me some inspiration."
Simpson: I think that's sophisticated.
Riess: Yes, very. On both parts.
Simpson: Yes. Too bad. I don't know why in my later days I didn't think
enough to dig up more about my father.**
Riess: Tell me more about Lola.
Simpson: Well, she was in the Class of '99 and I believe she had the
leading part in the Senior Play. She had a very successful
college career and a number of suitors. She went back to Woodland
and got a job teaching English and French in the high school and
taught there for eighteen years.
Riess: You said she had suitors. Did she renounce marriage?
'•Following.
**See Appendix A. Between the April 28 interview and June 21,
Mr. Simpson and Mrs. Bechtel pursued further information on his
father, her grandfather , J.L. Simpson. After finding the date of
death in a family Bible, Mr. Simpson wrote to the Wgod_land Daily
Democrat and was sent the obituary that is appended.
Lola Jean Simpson
ca. 1930
Woodland: John next to his mother
Lola standing, Irma, and Lela on
the right.
Gertrude Pendegast Simpson,
ca. 1920
Crete Mandel Simpson
8a
LOLA SIMPSON'S LETTER.
A Lively Little Lassie's Story of Her Mishaps.
Editor Mail: Dear Sir:- While we were sitting at the breakfast
table this morning, the subject of writing a letter to the "Mail"
came up. And I said "Oh dear I don't know how to write that let
ter to the "Mail." Papa said for me to go out to the barn and see
what I could find there, and maybe that would give me some in
spiration. Well I went out and what do you think I found under
the manger in the hay, "I found four great big, white, eggs." I
guess that did inspire me especially after cooking and eating one
of the eggs, so I'll start right in and do my very best. I am a
little girl ten years old, and go to the "Walnut St. School." I
guess I wont say anything about my teacher for she is my sister
you know. But our principal, Mr. Coin is very strict and has
very good order in his room. And it makes my hair stand straight
up on my head from the description of his punishments, those who
have been up there have told me. Whenever I hear of anybody going
away from Woodland I think they must be crazy for I -think this is
the most beautiful town on the globe. They have such nice houses,
schools, churches, and such lovely flowers that I dont see how
after coming here the people can ever tear themselves away. The
St. Car railroad is progressing nicely, but I think that it spoils
the streets for riding and driving. The ice factory and woolen
mill are going up very fast and though I have not seen them I can
imagine how they look. Sometime ago my cousin and I started a
paper named the "Weekly Journal" but we gave it up in despair it
was so hard to write nine or ten numbers, and besides we were
8b
afraid that if we had kept it up the "Mail" would have lost nearly
all of its subscribers. I guess I will tell you about the runaway
I had the other day. There was a horse in front of mine (I was in
a-lone) and he started to go on, but my horse didn't like that and
he began to run. I tried to stop him but that must have made him
madder for he began to gallop and then he reared up. Mamma happen
ed to be by the window reading when she saw me coming lickety split
up the street and she ran and succeeded in stopping him. The people
on the street said that I bounced up and down like an India-rubber
ball. I guess that I will tell you about another little accident
that happened to me. I was up in a pear tree getting some of the .
blossoms and I would to jump down instead of climbing down. I drew
my clothes very tightly and jumped, but instead of going to the
ground as I intended to do, I found myself suspended in the air in
a very embarrassing position and if some neighbors had not come to
the rescue I am afraid this letter would never have been written.
Well this is all I can write for this time, and I will close with
the following sentiment "If you don't take the "Mail" you dont get
the news."
Yours respectfully,
Lola J. Simpson
Woodland, April 14, 1888
Simpson: Well, I think she may have fallen in love with somebody, but
apparently not with the right person, and those that fell in
love with her to the extent of wanting to marry her, I guess she
didn't care enough for. There was one quite wealthy fellow who
wanted very much to marry her, but she just didn't want him.
She liked teaching at the beginning, I think. She was very
fond of young people and was an excellent teacher. She loved
it. She loved literature and threw herself into it and loved
to bring young people forward. She coached the school plays and
all that sort of thing. She was bubbling over with enthusiasm.
Riess: Was she one of your teachers?
Simpson: Yes.
I've seen lots of Shakespeare and I never saw Julius Caesar,
Macbeth, or The Merchant of Venice without thinking of her
because those were the three that I studied under her. And she
brought everything alive. She was a gifted teacher and so kind
and so determined to let those who had talent have an opportunity
to bring it out and make use of it.
But she got very fed up. There's a seamy side to it, you
know; correcting composition papers is evidently a deadly task
for teachers. And at a certain point she gave up the high school
and went to Berkeley and got a job with the University Extension.
That was after I had finished college; she and my mother moved
to Berkeley.
Riess: When she was teaching in the high school then was she supporting
your mother? Or did your mother continue taking in boarders and
roomers?
Simpson: There was a period when she was really supporting my mother.
I, too, was earning something from a very early age. I
sold the Saturday Evening Post, and I worked at odd jobs, took
care of people's gardens--"yards" we called them. And during
summer vacations I worked on ranches. Aside from having the
home as a place to live, I took care of myself financially from
a fairly early age.
I think my sister enjoyed the work for the Extension in
adult education. And she wrote and published a couple of novels
and she wrote articles.
Riess:
When was that?
10
Simpson: I'm sure she started that during the time she was with the
Extension, but then in New York that was what she was doing
and she was selling enough stories and even novels to support
herself.
Riess: When did she go to New York?
Simpson: She went to New York—well, honestly, I don't know. I guess I
went to New York before she did. I went to New York in 1925.
Riess: Yes. Well, that seems like a fairly adventurous move. I take
it that she just quit her job at Extension and felt that she
would be able to support herself by writing?
Simpson: She had already had enough accepted so that she wasn't taking
entirely a leap in the dark. The two novels were published by
Macmillan. One was called Backfire and the other Treadmill .
Treadmill was about the Woodland High School. She did not think
much of the board of education there and I don't think she was
as popular in Woodland after the publication of that book as
she had previously been.
Riess: She didn't return to Woodland?
Simpson: Well, she didn't return to live. She did visit there and some
of her former pupils received her in some hall that they had
rented. They put up desks and these fellows, who were by that
time middle-aged men, or thereabouts, were sitting at their
desks.
Riess: Oh, isn't that charming! [Laughter] Do you think that it would
be appropriate to see her as a liberated woman, with this move
to New York and this determination to pursue the literary life?
Simpson: Well, I don't think she thought in terms of a movement. I think
she had enough of a problem taking care of herself. She was a
liberated woman, as far as that's concerned.
Riess: Well, like Virginia Woolf, A Room of One 's Own, things like that.
Did she do it with a vengeance?
Simpson: I don't think she was motivated by a reforming spirit.
Riess: Was she motivated by a need to get away?
Simpson: Yes. That, definitely. A need to get away. A need to express
herself. There was a great cliche at that time that you don't
hear now of people wanting to "express themselves."
11
Riess:
Simpson:
You said she died at, I guess, a rather early age also.
Yes, she was fifty-seven. It was terrible. She died a
lingering death of cancer. And my wife and I looked after her,
had her in a hospital and in homes and various places. She
had three operations. I think it was terrible. She died
before my mother.
My mother used to come to visit us in New York, in the
winter especially. I always wanted to get her out before the
heat. And my mother was there when my sister died. My mother
died not so very long afterward.
Influences of Youth
Riess: I'd certainly like to learn as much as I can from you about that
upbringing with those strong and interesting women.
Simpson: Well, you mean just describe their characteristics?
Riess: No, I'm thinking that it would be inevitable that they would
focus on you, the heir to all of this, and all that you could
be for them in the way of success, and all that you could be for
yourself, in a way that could be a great burden. Perhaps that
wasn't the feeling, but I'm interested in what you recall-
grandmothers, mothers, sisters, all pushing John a little bit.
Simpson: Well, of course, I worshipped my mother, and she and the others
all did many things for me. They tried to impress on me a good
way of life.
There's no doubt in my mind that a boy, no matter how fine
his womenfolk are, does miss a father. I think I was rather
nervous, sensitive. I got into quite a bit of trouble, minor
trouble--quarrels , sent home from school with my books, and that
sort of thing. I think a boy needs a father.
Riess: Oh, indeed. And yet if you got sent home from school, at least
it means that you weren't so retiring as to not have entered
into the fray.
Simpson: Oh, I wasn't so retiring.
Riess: When you say "sensitive," to me that suggests retiring.
Simpson: Well, I didn't mean it in exactly that sense.
12
Riess:
Simpson:
Riess:
Simpson;
Riess:
Simpson:
Riess:
Simpson;
Riess:
Simpson;
Riess:
Were there teachers in the school who took you in hand and did
some fathering that you recall?
Not exactly fathering, but there were some splendid teachers.
My sister was one. The principal, who was a Jewish gentleman,
was a splendid man and did a great deal for me, and he was a
good teacher. He taught mathematics, physics, and chemistry.
And as I look back at it, it's amazing to me what a good job he
did and ran the school too.
And was it his influence that sent you to the University of
California?
His and my sister's. My sister became a great enthusiast for
the University of California.
The principal encouraged me greatly to go on. He was
responsible for my getting the scholarship, which was a Bonn-
helm Scholarship. Mr. Bonnheim was a merchant in Sacramento
and he established scholarships and the principal was instrumental
in my getting one.
What were some of the other childhood influences?
Did you hear much of that?
Politics?
Politics centered around the courthouse and the saloons, and my
mother's great advice to me was: "John, never get mixed up in
politics"--small town politics you know. And I must say one can
understand why the women voted for Prohibition because the
saloons in a town like that were a terrible menace. There was
so little to do--no moving pictures, but plenty of saloons—and
there was an awful lot of drunkenness. Some of my uncles were
ruined by it. And I'm sure that happened over the country to a
considerable extent and I think that's why the women voted for
Prohibition.
I suppose in a community like Woodland a farmer who had his
hand to the plow all the time wouldn't be so tempted, but the
more urban residents would be.
That's right, but I decided early on that I wanted to be a
lawyer.
How early did you decide that?
In high school.
Was there a lawyer in town with whom you had some contact?
13
Simpson: Yes, the next-door neighbor was probably the most successful
lawyer in town, a very good friend.
Riess: He was a counselor to you?
Simpson: Not particularly. My mother and sister both counseled me to
that end.
Riess: What do you think law symbolized for them or for you?
Simpson: Well, my family was what you might call on the intellectual side.
By that I mean that they were readers and writers. The whole
bent of the family was in that direction. Besides which, I wasn't
very good with my summer ranch jobs. 1 was not a real country
boy.
You know, there were three kinds of boys. There were city
boys, there were country boys, and there were small-town boys.
I was a small-town boy, and not highly regarded by the boss of
the haystack.
Riess: Is that your own view of the world--the "Three Boys" view-or
is that a well known fact?
Simpson: I never heard anybody else say it. I think it's true. A mule
is always a terrible animal. Country boys knew how to handle
them. I didn't.
Riess: Did you know any city boys?
Simpson: Oh yes, because my sister Irma married and lived in San Francisco.
And I used to come to San Francisco occasionally to visit. I
envied the city boys very much. I thought that was hot stuff.
Riess: I guess the best way for a small-town boy to become a city boy
is to become a lawyer.
Simpson: Yes.
Riess: Had you considered going east to college?
Simpson: That would have been too monumental an undertaking. You see it
was quite an accomplishment to put me through college. And going
east, I wouldn't have a home to fall back on at vacation time.
It would have been more expensive. And I didn't have any high
school principal with contacts. The idea of going to college
at Berkeley was so important and such a big step that it never
occurred to me to think further.
14
Simpson: Furthermore, you know, now we think of going east between
two meals, but then it was a four-day train trip. When ycu
went east you went way, way off from home.
Summary; the Woodland Days
Simpson: In recalling those days, I remember that the Woodland Opera House
was in my time a place for theatrical performances, concerts, and
functions of various sorts. It went completely to pieces and has
recently been rehabilitated. There's been an organization up
there that's made quite a thing of rehabilitating the Opera House
and it's now again used for its original purposes.
When I saw that some time ago, it recalled to me that that
was where I gave the valedictory at my graduation from high
school and the announcement was made that I had received a
Bonnhe 1m Scholarship to take me through the University of California
and it was a big evening for me. I didn't realize then, but I do
now, that that was really my good-bye to Woodland.
I have one thing in the notes I made here which I'd rather
like to give you.* There is still a street in Woodland named
Pendegast. I realize that it's a leftover from the role that he
played in the early days of the town, but when I see it, and I
have seen it a couple of times in connection with putting Crete's
ashes in the cemetery, "Pendegast" means to me Gertrude Pendegast
Simpson.
Riess: I'd like you to summarize your life up to your high school years,
as you volunteered to earlier.
Simpson: Well, to summarize very briefly. I was born and brought up in
a small town. I had no father, which was a great loss. I had
a wonderful mother and some very fine sisters who did a lot for
me. I wasn't especially strong. I wasn't very good at athletics.
I was a good student, good in grades, but had a good many troubles,
partly from lacking a father and partly because I was rather
nervous and sensitive by nature.
*There will be reference at intervals in these interviews to
"notes" or "an outline" which Mr. Simpson prepared and revised
concurrent with the interviews and which served as a guide to
issues he particularly wished to cover in the meetings.
15
Simpson: In that way I changed a great deal. For instance, I was
very self-conscious, and to introduce anybody at a meeting or
anything of that sort was difficult for me. Later on, when I
was president of the World Affairs Council here, I enjoyed
presiding at a big meeting. I enjoyed introducing somebody to
a thousand people and didn't feel a bit bothered by it. I
think being away from home for a long time really did me much
good.
Riess: When you decided to go to college and become a lawyer, how did you
expect to pay for it?
Simpson: Well, I had the scholarship and I intended to work, probably on
ranches during vacations , and then there was a well-to-do family friend
named Robert Belcher who offered to lend me what I needed in addition.
I did in fact take advantage of his offer and obtained a number of
loans from him. Unfortunately, this friend was killed in an accident
in the Sierras. Neither he nor I had kept an adequate record of the
amounts borrowed, but I settled with the executor or executors and
during the post World War I period, when I was making some money, I
repaid the full amount agreed upon, with interest. I have always been
grateful for this assistance.
16
II UNIVERSITY OF CALIFORNIA
[Interview 2: May 4, 1978]
Joining a Fraternity
Riess: When you came to Berkeley, where did you live?
Simpson: I first lived at a boarding house. And then I was invited to
join a fraternity. And the common sense of the matter seemed
to suggest to my mother and sister and anybody else who was
interested in the subject that a boarding house would have been
cheaper and more conducive to quiet, studious hours than a
fraternity. But I was invited to join a fraternity and was very
anxious to do so. And so after the first term I moved into the
fraternity house.
Riess: Because you wanted more of the socializing experience.
Simpson: Yes. That's right.
Riess: What fraternity was it?
Simpson: Delta Upsilon.
Riess: And was it a very social fraternity?
Simpson: Yes. But the fact that you saw that medal [distinguished scholar
1913] indicates that I did study. The fraternity didn't have
any adverse effects in that respect.
It had a very fine effect in another respect. It put me
in a male community. I had lived in a female community, wonderful
females, but the fraternity put me in a male environment. I
still had some troubles but I think it did me good on the whole.
I made life-long friendships of course, and unfortunately most of
those friends have passed on. But I did enjoy wonderful companion
ships and I'm sure that the fears my mother and sister had — that
the fraternity might be too distracting—those fears were not realized.
17
Two Campus Jobs
Riess: Did you work on campus?
Simpson: Well, I think the only thing of that sort that I did was, in
my undergraduate years, to represent the Santa Fe railroad
trying to boost student trade with the Santa Fe. I talked to
people about the virtues of the Santa Fe as contrasted with the
Southern Pacific, and tried to get teams routed over the
Santa Fe when they were going somewhere else to play, that
sort of thing. I don't think I accomplished very much.
My graduate year I was secretary of the Alumni Association.
At that time the Alumni Association was nothing like as developed
as it is now. It was customary for a law student to be secretary.
Herman Phleger was secretary. I guess he went to Harvard,
didn't he? When he left and went to Harvard, he passed the job
on to me and that paid big pay--$80 a month, which was a bonanza.'
Riess: Was it a lot of work?
Simpson: No, not a lot. It was mostly getting out a weekly bulletin.
Riess: It was the Alumni Association for the entire University or was
It the law Alumni Association?
Simpson: Entire University.
Student Activities. Clubs, and Friends
Riess: It strikes me that you were very busy with things other than your
distinguished scholarship over the years. 1 have a list from the
Blue and Gold and I would like to know what significance the
activities really had.* For example, Skull and Keys?
Simpson: Well, that was just a social gathering, secret society, which Is
a lot of nonsense. We had meetings every so often, I don't
know how often. But it was really a social interfraternity.
I think you had to belong to a fraternity to belong to Skull and
Keys. Skull and Keys had lost somewhat in prestige by the time
I got there because Golden Bear had become the thing.
Riess: And you were also a member of that.
Simpson: Yes. We prized Golden Bear. If you had your choice of just one
thing, you'd rather be Golden Bear than Phi Beta Kappa or Skull
and Keys or anything else.
*Yearbook of the University of California
18
Riess: Was it also secret?
Simpson: Not in the nature of Skull and Keys, or the fraternities, with
a "grip" and that sort of thing. But you didn't talk about it.
It was supposed to be the inner-council. It was the male
section of the University where troubles were discussed and
dealt with and it would have been very bad form for you then to
go out and talk about that with people who were not Golden Bear.
So it was, I'd say, not exactly secret but...
Riess: Discreet.
Simpson: Yes.
Riess: Did they then counsel President Wheeler? How did they use
their sessions ultimately?
Simpson: (Incidentally, it's changed greatly now.) Well, it met every
so of ten--evenings of course. I don't know whether once a
month or oftener, certainly no less. And one thing I happen
to remember--there 'd been some fighting in the football games
between Berkeley and Stanford, and the question was who did it
first? So that would be discussed, and a consensus, not a
motion, reached that California fellows should never be the
first to land a punch on the other fellow's jaw. We would form
an opinion and let it be known that that was Golden Bear's
opinion.
Benjamin Ide Wheeler was President, and while he was a
member of the Golden Bear, he didn't attend. But his secretary,
Farnham Griffiths, would carry the message back to him, and
his message to us. We thought we were much more important
than we were. We thought we were really helping the administration
to run the University.
Riess: Well, I'm sure Wheeler would make you feel that way because that
was the sort of thing he believed in very firmly, wasn't it?
Simpson: Yes.
Riess: Winged Helmet was the junior honorary society. Was that
comparably significant for the junior year to Golden Bear in
the senior year?
Simpson: Yes. And I tell you, I've been very fortunate and I've received
some nice recognitions, but I think the greatest thrill of that
kind I ever had was when my roommate came home late at night
and said, "John, you've been elected Winged Helmet," because I
didn't expect it. I was still a small-town boy in a big
university. And I looked upon people wearing that silver helmet
as just utterly beyond my reach.
19
Simpson: I felt entirely differently the next year because, having
made Winged Helmet, I really expected I would be elected to
Golden Bear. But I've never forgotten the Winged Helmet surprise.
Of course I never slept another wink that night.
Riess: So in your freshman and sophomore years your activities then
were your schooling and your fraternity membership, and then
the secret societies and honorary things came in the junior
and senior years?
Simpson: Yes.
Riess: Why did you take on the Daily Cal? Did you just want a chance
at every sort of experience?
Simpson: Well, we were prestige-seekers--at least those who took it
seriously. The fraternity wanted you to achieve Golden Bear.
Riess: So it wasn't enough then to have become Winged Helmet — the
more the better?
Simpson: Winged Helmet was fine for the junior year but for the senior
year it no longer counted for much.
There were two things: there was scholarship and college
activities. And the fraternities were very anxious to have
their members occupy important positions in college activities.
They were much more interested in that than they were in a
fellow being a good student. The captain of the football team,
he was a great guy.
Riess: But when you made Phi Beta Kappa...
Simpson: That was all right, but nobody...
Riess: Nobody toasted you for that one? The entree into the world was to
be a big man on campus, rather than a distinguished scholar.
Simpson: Yes. But you know there were a lot of disappointments. The
big men on campus didn't necessarily become big men in the
big world .
Riess: Was the John Marshall Law Club an honorary group?
Simpson: 1 don't remember it at all. There was a law fraternity, the
Greek letters of which I've forgotten.
Riess: Yes. There was a Phi Beta Phi and there was a Delta Sigma.
One of them must have been a law fraternity that you belonged
to.
20
Riess: What was Sphinx?
Simpson: I don't remember. I think that was a new one to sort of take
some of the glory away from the Order of the Golden Bear. I
think it was perhaps possibly more serious with regard to
discussing public affairs. I'm not sure. Are there any names
of individuals connected with it?
Riess: No, it seems an enigma.
Simpson: The name is vaguely familiar.
Riess: Well, I would be interested if there was a place where the
affairs of the world were discussed and what you recall of that
aspect of your life.
Simpson: There was nothing like the World Affairs Council here. We were
more interested in making Golden Bear, I think. In that sense
I think we were much more provincial than the corresponding
students today.
Riess: When you went to University Meetings , for instance, and Benjamin
Ide Wheeler would get up and speak to the assembled students,
that would have been an opportunity for him to have brought the
affairs of the world to the University. But I would gather from
what I've read of him that he would be more exhorting you to
greater achievements in terms of "the big man on campus" image.
He didn't play a role of bringing the world to the students?
Simpson: No, he didn't. The people that did that were people who were
radical and trying to break through the establishment.
Some Unusual Professors
Riess: And who were they?
Simpson: Well, Carl Parker had a great influence on me,
Riess: Who else?
Simpson: Herbert Corey, teacher of English.
Riess: What was his view?
Simpson: Oh, I don't know.
21
Riess: Were these socialists?
Simpson: They were New Dealers before the New Deal.
Riess: Who were the other influential professors for you?
Simpson: Well, I had some excellent professors and some pretty poor. I
consider on the whole I had a very good education in the sense
that it has given me a good education. Galey in English,
Flaherty in English, Wells in English. I had excellent English
teachers. If I don't know the language, it isn't their fault.
Reed, I guess, in political science, and Miller in economics,
and of course Henry Morse Stephens. And they gave me a great
deal.
The great mistake I made was to try to take what I considered
pre-law courses and I got into philosophy and psychology and
logic and they were not so good. Arthur Pope, does his name
mean anything to you? Arthur Pope was a wonderful fellow and
of course he and his wife did this stupendous thing on Persia.
But he was not a good teacher of logic. Achilles and the Tortoise-
that famous race between Achilles and the Tortoise.'
There was a dull textbook course on psychology, but I beat
that by reading Freud on my own.
And then there was a man who was considered very fine in
philosophy. His name I have forgotten. I got nothing out of
the course and had no interest in philosophy until I read Will
Durant's book, The Story of Philosophy, later and was fascinated
by it. Donald McLaughlin said an interesting thing about that.
He said everybody in the Harvard Philosphy Department said this
was a popular book of no consequence. And everyone wished he'd
written it.1
University Medalist, 1913
Riess: In 1913 you won the University's medal as the most distinguished
scholar, and that was quite an achievement. Did it come as a
surprise to you?
Simpson: I knew that I was a contender.
Riess: How is that awarded?
Simpson: I don't know.
22
Riess: I mean, how would you know that you were a contender?
Simpson: Well, I'd been elected to Phi Beta Kappa in my junior year
and I knew my marks were very high. I didn't give much
thought to it, though. It wasn't on my mind at all. And I
really was surprised, not overwhelmed with surprise, but I
had not expected it.
You know, I don't believe in the University Medal. I don't
think it's sensible to pick out one individual. I think Phi
Beta Kappa's all right and corresponds to graduating with
honors. I think that is good; there should be some distinction
between a student who has done very well, exceptionally well,
and those who have not. But to pick out one...
Riess: Was it designed to intensify competition, do you think?
Simpson: Oh, I don't know. I don't know.
I was very good at taking examinations. I studied the
problem of an examination carefully and I planned every
examination as a general might plan a battle. And I think I got
the maximum benefit as to marks out of what I knew. I had the
feeling that two or three people in law school were really better
than I. We had the honor system. We could leave the room during
an examination, to go downstairs or smoke a cigarette or do
whatever we wanted, and I would notice some fellow who was
absolutely tops in class walking around in the washroom with
perspiration bubbling off his face, and I was cool as a cucumber.
I think I made the most in marks of whatever I had in my head
and I think I deserved Phi Beta Kappa.
But "most distinguished!" What in the world does that mean?
How could a student just doing his college work be "distinguished?"
Who's the Polaroid fellow? Land? I don't know how he did
at college, but h_e was distinguished.
Riess: As a matter of fact, if you were to think of somebody else who
should have gotten it, are there any obvious contenders in the
year 1913?
Simpson: Yes. Barbara [Nachtrieb] Armstrong. If I hadn't got it, I think
she would have.
Speaking of grades, do you want an anecdote?
Riess:
Yes.
23
Simpson: Well, a friend who had taken his Ph.D in Germany had come back
about the time I was in my second year in law. (I had two
years of law. I took law in my senior year, as you could do,
and then one graduate year.) He took an interest in me because
we were old family friends--his family was from Vacaville--
and I'll tell you more later on about him.
He said, "You are studying too hard, John. You're not
taking enough time out. You're not having enough fun. This
is no good. Fellows burn themselves out. What's the use?
Let me see your card."
Well, I think I had four courses. I had three A's and a
B in contracts. And he said, "Now look at that card: Why do
you have to have that kind of a card?" Then he looked at it
some more and said, "What was the matter with the contracts,
John?" [Laughter] I'd fallen down.
That man [Carleton Parker] played a very important role in
my life, which in some way or other you would want me to tell
you. But I think it's probably premature now.
Riess: All right. Was Woodrow Wilson a charismatic figure as far as
you were concerned?
Simpson: Rather, yes. I voted for him, incidentally. Woodrow Wilson
spoke in the Greek Theater and Theodore Roosevelt did also.
But I wasn't really very interested in politics. As I think we
mentioned last time, the students then in general were less
interested in national and state politics than they are now.
The Telephone at the Exposition
Riess: The Panama-Pacific International Exposition [1915], was that
something that you took yourself to?
Simpson: Yes, I loved it. I went very often. It was beautiful, you
know, a beautiful exposition.
The Telephone Company had a hook-up there and a fellow
in charge of it, and people clustered around the thing. This
fellow was a friend of mine and when he selected somebody from
the crowd to telephone to Atlantic City he selected me.
[Chuckles] I went to the telephone and heard the waves of the
Atlantic beating on the beach at Atlantic City.
24
Riess: That was a rare period in American history, in a way.
Simpson: Yes, it was. The automobile came into being.
Riess: There hadn't been any wars for a long time.
Simpson: No.
Riess: The spirit when you were at the University was fairly upbeat.
Simpson: Oh, yes. Oh, yes. We thought all we needed to do was to
behave ourselves and work hard and nothing bad could happen.
Law Education and Plans
Riess: What aspect of law were you particularly interested in and what
did you expect to do in your career in law?
Simpson: Well, I think all bright law students are interested in
constitutional law. Otherwise, 1 don't think I was more
interested in any one phase of law than another.
Riess: Why are "all bright students interested in constitutional law?"
Simpson: It's so basic. The decisions of the court are so important
and oftentimes so controversial. And constitutional law goes
back to the foundation of the republic and those great early
decisions of Marshall. Oh, I still am interested in it.
Riess: Who taught you constitutional law? Do you recall?
Simpson: No, I don't. I'm sorry.
Riess: Were you well grounded in history, did you feel, before you
entered law school?
Simpson: Reasonably so, yes. I took the standard history courses in
high school and had a very good history teacher. And in
college I had Henry Morse Stephens in English history and
Frederick Teggart.
I was greatly shocked, I think it was by Teggart. who said
that the colonies were very obstreperous, that they were well
treated by England and on the whole had no provocation to make
a revolution at all. Nobody in Woodland had told me that.
Riess: Well, that was very provocative.
25
Simpson: Probably that's why he said it, to shake us up a little.
Riess: How about international law?
Simpson: Max Thelen gave a course in international law which was very
interesting at the time. It dealt mainly with the two Hague
Conferences. You recall there were two.
Riess: Had you aspirations to a particular kind of practice or career?
Simpson: No. I had at that time aspirations to go ahead and finish
my law courses and be admitted to the bar.
Riess: I would ask you to say something of where you were heading at
that point, because that point, of course, was just prior to
your very important decision to join Hoover and go off to the
CRB.
Simpson: Well, that was the time when I gave up finishing my law course,
which I did. I had had a very normal and, on the whole, very
satisfactory boyhood and college years and was headed to get
my J.D. and get a job with a law firm in San Francisco.
Carl Parker and the Wheatland Riots
Riess: How did this other decision come onto the horizon?
Simpson: Well, that was Carl [Carleton] Parker's doing and entirely
changed the course of my life. That's quite a story. I mean, I
can't dispose of it In a word.
Riess: I think that we're ready for that story.
Simpson: All right. Carl Parker took his degree in Germany, Heidelberg,
I think. And Germany at that time was an advanced country in
social matters, social insurance and workman's compensation and
all that sort of thing, and Carl Parker came back a New Dealer
before the New Deal. He wanted to be a reformer and he wanted
the young men with whom he had contact and influence to be
reformers.
There was a riot up near Marysville. Migrant workers clashed
with the sheriff. People were killed. They had a trial. And
Carl Parker persuaded several of us to take two or three weeks
off, which we had no business to do, from our law courses, and
to go up and learn all the social implications of the Wheatland
Riots. Henry Breck, Fred Mills, another fellow whose name I've
forgotten, and I went.
26
Riess: You had been his students?
Simpson: No, we hadn't been his students at all. He had been in Germany.
Riess: How did he light on this particular group of law students?
Simpson: Well, he was a most attractive fellow and he was a member of
Golden Bear. Oh, it was very easy for him to light on anybody
that he wanted to because he was really most attractive, nice.
And he began to talk to me about the terrible thing of becoming
a lawyer, and I'd be a corporation lawyer, and instead of that
I should go out and save the world.
Riess: That must have rung some bell in you.
Simpson: Yes, I suppose it did, although I don't think I would have
changed my course had it not been for him. But finally he
persuaded me to change my course entirely.
I had finished my second year of law, and instead of going
on and taking my third year, I quit law school but took a couple
of months to study for the California Bar examinations, which
were very easy at that time, and took my bar examinations and,
of course, passed them.
Then he had become director of the California Commission of
Immigration and Housing and I took a job with this commission in
San Francisco, but I could see that that wasn't much of a job.
Through Professor [Adolph C.] Miller, I guess it was, or in
some way, I got a job in Washington with the newly formed
Federal Trade Commission. I thought that was great because I
would go to Washington and in Washington I would be in a key
position to reform the world. I didn't realize that I had every
prospect of becoming a hack government bureaucrat.
I think it was really an irresponsible thing that Carl
Parker did.
Riess: You mean, to hold out this Utopian possibility?
Simpson: Yes. And I was poor. I didn't have any money. I had my mother
and I had every reason to get busy and begin taking care of my
responsibilities. But youth is youth, and my good fairy came
to my rescue because the war broke out and Hoover set up the
Belgian Relief.
Riess: Was Parker with you on that Marysville trip?
Simpson: Yes.
27
Riess: Did you interview people, or did you stay out of the way?
Simpson: I suppose we talked to the people. Yes, I think so. And we
witnessed the trial and stayed about a week, I suppose.
Riess: Was it a chance to see real oppression of people?
Simpson: You mean these migrant workers?
Riess: Yes.
Simpson: They didn't look very oppressed. There was a great deal of
talk about bad sanitation and that sort of thing. I think we
were more taken by the theory than by the facts.
Riess: What's the theory?
Simpson: The theory that the rich are too rich and the poor are too poor.
I don't hold it against Carl Parker. I think he did a very
wrong thing in principle, upsetting the careers of young men,
but I feel that as far as I was concerned [despite the change in
direction] I've had a very good life, I've done a lot of
interesting things, and I got my wife, which was the greatest
thing that ever happened to me. So, I think I came out all right,
probably as well as though I'd got a job with one of the law
firms.
Riess: In fact, if you are to think in terms of your Random Notes, a
point where you might have begun that history of yourself was
that one day a man suggested to you that you and your friends
should go and take a look at the Wheatland Riots...*
Simpson: Yes, that was perhaps the beginning.
Riess: You said, "upset the lives of young men." What about the lives
of your friends Henry Breck and Fred Mills?
Simpson: Henry Breck 's job was with the Federal Reserve Bank and he did
well in it and later went into private banking and proved to be
very successful. Fred Mills became an economist and had a very
distinguished career at Columbia.
*Random Notes, Recollections of My Early Life, by John L. Simpson,
is to be found in the Appendices.
28
Three Months Become Seven Years
Simpson: Although I had the job in Washington, I never worked at it. I
passed through Washington, checked in, and then I went to Belgium
for three months which turned into the duration of the war.
At first I had a bad conscience and felt that I should go
back to Washington and get paid a little something while I saved
the world. But one day I was asked--the director in Brussels,
William Poland, wanted to see me. I was taken to his office and
he said, "Pink..." (That was my nickname.)
Riess;
I've been wanting to ask you about that nickname.
Simpson: It's a college nickname. I had red hair, and there was a "Brick"
already.
"Pink, I understand that you feel that you have to leave on
account of your responsibilities."
"Yes, that's right."
"You feel a responsibility toward your mother."
I said, "Yes."
"Suppose we sent your mother $100 a month?" Remember, this
was 1915 and $100 was a lot of money, far more" than I could
have sent for I don't know what length of time.
I said, "Of course that would change everything,
I could stay on then."
"Veil," he said, "let's consider that settled." He said,
"You know, this is a delicate situation here. Some people come
and don't get along very well and have to be sent home. You do
get along and we'd like you to stay." So, I stayed.
Riess: That answers quite a few questions that I had about just that.
The arrangement was that they gave you a sort of cost of living
allowance?
Simpson: Yes. In general we didn't get any salary at all; we got an
allowance. And they upped my allowance because they wanted me
to stay.
Riess: They upped it in the form of sending money to your mother, or
did they in fact up your allowance also?
Simpson: No, no. The allowance was not changed.
29
III HOOVER AND THE COMMISSION FOR RELIEF IN BELGIUM*
Staffing of the CRB
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
You know about the nature of the Commission for Relief in
Belgium, I think, don't you?
Hoover had to have some neutrals, and the easiest thing was
to get some Americans from Oxford, and the next easiest thing was
to have the first set of recruits bring in some more. One of my
friends had been at Oxford and had been in the first group and
then came here on a visit and asked me whether I would like to
go to Belgium for two or three months.
I said yes. I had "ants in my pants." I arranged to have
a leave of absence from this "marvelous" job in Washington. And
they were terribly nice about it, I suppose they didn't care
whether I came or not, anyway, and so I went to Belgium.
Who recruited you from Oxford?
It was Tracy Kittredge and he recruited both Clare Torrey and
myself.
Tracy Kittredge was from California?
Yes.
Were these people drafted as it were from Oxford?
as you, go willingly?
Or did they,
*Mr . Simpson's acquaintance with Herbert Hoover and his years
abroad with the CRB and other Hoover organizations are chronicled
in his book, Random Notes. Readers are also referred to the
Henle interview (see note p. 36).
30
Simpson: Oh, they went willingly. There was no mention of the draft.
Hoover had no power to draft them.
f
Riess: Yes. And had you heard of Hoover anywhere along the way in
your life?
Simpson: No, I'd never heard his name.
Riess: With this system of people asking other people to come, what
happened to the ones who didn't fit in?
Simpson: Well, you know, it was a marvelous thing. They were "promoted."
There was an office in London, which was partly for financial
matters and partly for the direction of ships, and there were a
couple of volunteers there, like Mr. Hoover, and then some hired
accountants. But once in a while, if a fellow in Belgium wasn't
getting along very well, he would be ''promoted" to a position in
the London office. "There was a great gap there and they badly
needed somebody," and so he would receive that honor, and he'd go
to London. And after he'd been in London for a couple of weeks
with nothing whatsoever to do, he'd go home.
Riess: [Laughter] I see. Well, that's very nicely conceived, isn't it.
Simpson: Those of us who were on the in, one of us would say, "Did you
hear that so-and-so has been promoted?"
"No, but I knew he would be pretty soon."
Riess: Getting back to what characterized the men that Hoover chose, what
qualities were necessary? The problem was to get along with the
natives, so to speak, and the rest of the staff?
Simpson: And to get along with the Germans, because we were all anti-
German. While we naturally were permitted to harbor any ideas
and prejudices that we wanted, we were strictly ordered to act
as neutrals. We were there as neutrals, that's why we were
there, and that's why we could be there. Some just didn't get
along with the Germans. Some didn't get along with the Belgians.
Riess: So, it was important not to be a political person, then, in any
way?
Simpson: Well, the requirements were common sense, reasonable intelligence,
and ability to get along with people.
Riess: Did they do very well then, for the most part, in picking their
people?
31
Simpson: Yes. There were very few casualties.
Riess: Do you think that that system of people recommending friends
is a good way of handling just such a hiring situation?
Simpson: I think it handled that pretty well. Of course, others applied.
I think some heard there was such a thing and applied.
Riess: I wondered if you thought that your work for the Belgian Relief
really was as you said, "saving the world."
Simpson: We all thought it was a great adventure. We thought we were
doing a good thing in helping people that ought to be helped,
but we really were for the adventure. We didn't know whether
it was going to be dangerous or not, and indeed it was not.
Riess: Were you pacifist in your orientation, or neutral?
Simpson: Well, this matter had never come up until the war broke out. We
were so remote from the European countries that it wasn't a
question of being pacifist or not. As far as our emotion was
concerned we were practically all, with very, very few exceptions,
anti-German and pro-Allies.
Above all we were young and we were full of the spirit of
adventure and predisposed to be loyal to our leader. For at
that time Mr. Hoover managed to convey the feeling that he
liked us as much as we liked him, and we adored him. There was
a marvelous esprit de corps in the organization. We believed
that^we were doing an important job; we were very proud of being
members of the CRB ; we had a thing we wore in our buttonhole.
The Belgian organization for distribution was parallel, and
one Belgian, for reasons I don't know, was made a member of the
CRB. He was the only Belgian who wore the CRB badge and he was
just as proud as punch of that. We thought that there were two
kinds of people in the world: the members of the CRB and the
rest.
Riess: What you're saying in a way is that you rallied around Hoover as
much as the organization, in fact, more so than the organization.
Simpson: Oh, the two were the same, really. Hoover was the organization.
32
[Interview 3: May 11, 1978]
John Simpson 's Meetings with Herbert Hoover
Riess: I'd like to ask you when you first met Mr. Hoover.
Simpson: I had been appointed a delegate of the CRB and was on my way to
Belgium, which meant taking a ship from New York to Liverpool
and then proceeding to Rotterdam. I spent the night in Rotterdam
and left the next day for Belgium.
It so happened that Mr. Hoover, who made frequent trips
visiting all the belligerent powers (notably England, France,
and Germany, and, of course, including Belgium), was going to
Belgium at that particular time. So, we rode together by
automobile to the Belgian border. We naturally talked about the
CRB operation. I asked him questions and he gave me answers and
instructions.
I think I have mentioned that the instructions were very
strict. There were two notable things he emphasized: One was
to take no papers of any kind across the border; there should be
no semblance of communication of that sort. And the other general
command was that while I could think anything I wanted to regarding
the war and the belligerents and my preferences and so on, I
must act in strict neutrality. If I didn't, I risked the whole
feeding operation.
What was the risk? That you would be reported? By whom?
The risk to me would be that I would have to leave if I did not
act in a neutral fashion. The general risk was that if there
were a sufficient number of instances of violation of the
neutrality rule, the British might call off their permission to
put the food through the blockade.
The raison d'etre for the Commission for Relief of Belgium
was to supply the British with sufficient assurance that the
Germans were not taking the food, so that they would permit it
to go through the blockade.
Riess: When Hoover said that you would risk the success of the enterprise,
it seems to me that that puts it on fairly shaky grounds.
Simpson: Well, it would be a matter of degree. There was no hard and fast
rule, except that if the British thought the food was going to
the Germans, they'd call the deal off.
Riess :
Simpson:
33
Riess: Did it ever get close to that?
Simpson: No. I believe that the control worked very well.
Riess: It was lucky that you had a chance to talk to Mr. Hoover.
Generally speaking, one would have gained one's instructions
from whom?
Simpson: The director of relief in Brussels.
Riess: And that was Poland?
Simpson: Yes. Mr. Poland. Billy Poland.
Riess: Was Mr. Hoover chummy at all?
Simpson: No.
Riess: I wondered if he ever said something like, "Oh, Simpson, you're
doing what I'd like to do. Instead of being here at the top
worrying about things, I'd like to just be out there in the field."
Simpson: No. But he could be very pleasant. For instance, we had the
weekly meetings in Brussels. We were called in from our posts.
And his greeting was, "How are things down in your bailiwick,
Simpson?" He had his human side. But as the author of that
paragraph makes clear Hoover was very reserved.*
*Aggressive Introvert; Herbert Hoover and Public Relations
Management, 1911-1932, Craig Lloyd, Ohio State University Press,
Columbus, 0. 1972, pp. 3, 4.
"Henry Pringle's 1928 description is representative of many
accounts of Hoover's personality, a personality that—with
respect to its outstanding traits — does not seem to have altered
much from adolescence to old age:
'He is abnormally shy, abnormally sensitive, filled with an
impassioned pride in his personal integrity, and ever
apprehensive that he may be made to appear ridiculous. He
rises awkwardly as a visitor is shown to his desk, and extends
his hand only halfway, in a hesitant fashion. His clasp is
less than crushing. Then he sits down and waits for questions.
His answers are given in rapid, terse manner and when he is
finished he simply stops. Other men would look up, smile, or
round off a phrase. Hoover is like a machine that has run
down. Another question starts him off again. He stares at
his shoes, and because he looks down so much of the time, the
casual guest obtains only a hazy impression of his appearance. '"
34
Riess: Craig Lloyd also said that Hoover was "self-righteous in his
sense of superiority of judgment," and yet very "sensitive to
criticism," a touchy combination.
Simpson: I think that's correct.
Riess: You talked with Hoover when you were in the car going to the
border. And then the next time was at dinner in Brussels?
Simpson: Yes, and he talked quite freely all that evening, for a couple
of hours. He discussed American politics. I remember he
expressed great admiration for Wilson. I recall that he said
that he thought if Wilson was defeated this time, he would be
elected again some other time. And he was very outgoing and
very nice, quite different from his attitudes on many other
occasions.
Riess: His attitude generally was more reticent?
Simpson: Yes. He gave the impression generally that he was preoccupied
with large things and didn't have time for you.
Riess: And yet he knew your name.
Simpson: Oh, yes.
Working For and With The Chief
Riess: You called him "Chief." Had you gotten word ahead of time that
that was the way to address him?
Simpson: No. That was just in token of our loyalty and admiration. And
we were very loyal and very admiring.
Riess: Was it in any sense the idea of "Chief" as in a sort of military
structure?
Simpson: No, no. Not military.
Riess: Do you think that he was in general more open with people who
were his junior in some way?
Simpson: I don't know that he was more open, but I think you had a
better chance of getting along and staying in your job if you
were a junior. There was a saying that the office next to
Mr. Hoover's frequently changed its occupant. [Chuckles]
35
Simpson: The idea was that if you were close you might perhaps argue
about some policy matter, and Mr. Hoover did not like you to
disagree with him. He definitely did not like you to disagree
with him.
To jump ahead, when I was in Paris my boss--I had several
bosses seriatim and the last one did a very kind and thoughtful
thing for me. He took me out to lunch. This was after the
armistice. He said, "Simpson, I don't agree with Hoover on
certain matters of policy and I'm going home. Now, don't you
get mixed up in this."
Riess: The "office next to him" was occupied first by Poland and then
by Vernon Kellogg. Or was that a different relationship?
Simpson: No, that's right. I think Kellogg had occupied it even before
and had taken leave and then come back. I don't think Kellogg "s
vacating the office was a matter of disagreement with Mr. Hoover.
1 think he was one of those who came and went.
Riess: But Poland-
Simpson: Poland left before the end of the war and was succeeded by--
Riess: Millard Shaler?
Simpson: No. I'll tell you about him in a moment. No. Mr. Warren
Gregory, a lawyer, of San Francisco, succeeded him. He was
the last director.
Millard Shaler was an American who was in business in
Belgium. I guess mining interests. And he was a sort of a
guide, philosopher, and friend and wasn't one who would be
dismissed or released.
Riess: You mean, he had this role in relation to Hoover, "guide,
philosopher, and friend?"
Simpson: Yes, I think so. He had it in relation to all of us. He was a
resident of Brussels, an American who lived abroad. He didn't
have an administrative status. A very fine man.
Riess: In your interview with Mr. Henle, you said that Hoover had taken
on the responsibility for the food and life and general conditions
of 7,000,000 Belgians and 2,000,000 French in northern occupied
36
Riess: France.* Was this really Hoover's attitude, that it was he alone
against the famine, or something like that?
Simpson: I think it was. Mr. Hoover was not a modest man. Yes, I think
it was. I think he felt that he had this mission. As I said,
he traveled from one belligerent capital to another, being one
of the few who were in that position, and he negotiated with
the British, the French, and the Germans, and the Belgians,
because there was also a matter of Belgian negotiations. There
had to be a Belgian set-up, you see. I didn't hand out sacks
of flour; there had to be a Belgian organization to receive the
food and distribute it.
Our role was a supervisory one, supervision of that
operation, and also we were sort of tolerated spies. But our
range of espionage was very limited.
The Role of the Neutral
Riess: And that fit into the neutrality picture?
Simpson: Yes. We were neutrals allowed into a military situation, provided
we confined ourselves strictly to the matter of the arrival,
conservation, and distribution of the food. As long as we stuck
to that, we were all right.
Riess: But to the extent that you were good observers, how were your
observations used or gleaned when you got back to headquarters?
Simpson: We'd report to the director in Brussels.
Riess: You were reporting on the week's activities, but what if you
noticed somebody scurrying back and forth across a street
regularly at 10:00 p.m. and it looked suspicious?
Simpson: We would report it and if it seemed serious enough the director
would take it up with the Germans. Or, if we felt we could, we
would argue it out ourselves with the Germans. In Random Notes
*0ral History interview with Mr. John L. Simpson by Raymond Henle,
Sept. 20, 1967, for the Herbert Hoover Presidential Library, West
Branch, Iowa, and the Hoover Institution on War, Revolution and
Peace, Stanford, California, copy on deposit in The Bancroft
Library, UCB.
37
Simpson: I have an account of a big battle I had with my German officer
on that very point. Those German officers were really much
nicer fellows than we admitted at the time. They'd been German
bank representatives in London and New York, and before the
war they'd have been considered very pleasant people to know
and have relations with. The war had converted them into brutes.
Riess: But not yet.
Simpson: Well, they never were cruel men. They were a bit arrogant,
perhaps. But after the first invasion, when a lot of outrages
occurred, shooting of hostages and all that, after that period,
knowing what I know now about military matters (military matters
in the sense of invasions) , I think it was a rather moderate
military occupation. I didn't think so then.
Later on, when I crossed the Atlantic on the same liner
with one of these ex-accompanying officers, well, he was just
like anybody else. He didn't have any idea, except to have
friendly chats, dinner and so on.
Riess: Yes. But at the time it must have been a great burden to be
neutral.
Simpson: It was.
Riess: Were you able to confide in a diary or anything like that? Or
would that have come under Mr. Hoover's rule of never having a
scrap of paper cross the borders?
Simpson: You could have written a diary, but it would have been against
the rules to take it out with you.
Riess: So, what did you do when you were fit to be tied and you
couldn't do anything?
Simpson: You mean when you had a difference?
Riess: Yes.
Simpson: Well, you would argue. There's one incident I could recount.
The Germans, of course, furnished cars and we drove around to
the different regional headquarters and larger communes. In
one place we were so near the front that the German soldiers
were billeted with peasants. And both the soldiers and the
peasants were more interested in eating than they were in the
war. The German soldiers pooled their military rations with the
food that the peasants got from the Belgian Relief, and there
they were having- - there 's a marvelous expression in French for
when you throw everything into the pot and share it.
38
Simpson: "Well," I said, "This is terriblej The Germans are getting
the Commission food. And the Commission food has been moved
into a warehouse where there are German rations also, which
means that there's no distinction and the Germans are getting
CRB food."
Captain Weber, my accompanying officer, gave the explanation
that I mentioned. I said, "That's no good. That food ought to be
moved. The Commission food should be moved out of that house and
I'm going to report this."
The officer said, "Well, that's ridiculous. There's no
violation at all and there's nothing for you to report."
"But," I said, "I'm going to report it."
We then drove on somewhere else and turned back later in
the day to pass through the same village. Weber stopped the car
and got out and he came back a little later and said, "Well,
Mr. Simpson, I've ordered the food moved out of that shed to
please you, although I didn't have to."
I wouldn't take anything from anybody. [Chuckles] I said,
"You did have to. I'm glad you did , but you did have to."
He said, "I didn't."
So I went up to Brussels to a meeting--Kellogg was director
then—and I told him I wanted a private talk with him. I related
this incident.
He said, 'Veil, Simpson, he moved the food, didn't he?"
"Yes, but he said he didn't have to."
And Kellogg said, "But he did move it, didn't he?"
'Veil, yes, he did."
He said, "That's what you wanted, wasn't it?"
Riess: [Laughter] You could be a thorn in someone's side, couldn't you?
Simpson: So, I think that the leakage was very small, very small.
Riess: You said that Millard Shaler was a good adviser and a close
friend. Were there other people who had that relationship to
Hoover that you recall?
Simpson: Yes. Edgar Rickard.
39
A Look at the Style of Hoover
Riess: A quote from Hoover that I found in Lloyd's book that I thought
was interesting was: "We are only a group of glorified office
boys trying to get away with a tremendous job. No one has the
right to glory out of it."
It suggests a faceless modesty.
Simpson: Oh, well, I think that's a good way to talk. I think that's sort
of oratory for public consumption.
Riess: Lloyd says that Hoover was "acutely miserable at public acclaim."
Simpson: It is true that Hoover was shy and not very articulate and did
not express himself particularly well or particularly easily.
But the point was that he didn't like acclaim?
Riess: "Acutely miserable at public acclaim."
Simpson: I think that's kind of an exaggeration.
Riess: And he would focus on the work and not the man.
Simpson: Well, that was the correct thing to do, wasn't it?
Riess: You're saying that this is just good politics or good policy?
Simpson: Good manners.
Riess: Did you have any more direct contacts with him in your time in
Europe, for instance, when you then went into the Food Adminstration?
Did that involve any tete-a-tete?
Simpson: No. He was in Paris very little. He practically didn't come to
Europe till near the end of the war, because his job with the
Food Administration was not to enforce but to persuade people
here to support a military action rationing plan.
His problem during most of the time of our belligerency in
the war was at home. He did come to London towards the end; I
don't remember just when. I went over from Paris to London and
I saw him then and talked with him. I had nice relations and
occasional conversations, but I obviously was not--he didn't
ask me how to better run the Administration.
Riess: Was his campaign to get people to eat less in this country
practical, or was that more psychological?
40
Simpson;
Riess:
Simpson:
I think it was practical.
I enjoyed very much reading the story of the two food experts,
a wonderful example of, as you said, Hoover's ability to
persuade without bullying [ Random Notes, pp. 33-36] .
The boxcars full of salt in exchange for the grain was
another excellent example of the same kind of thinking [ Random
Notes, pp. 55, 56] .
Yes. Hoover said, "If we're ever going to get out of here, we've
got to get this restoration of trade and interchange." He
undoubtedly gave instructions to his top people to do everything
possible to get an interchange of goods started. And perhaps
it was my immediate boss, Warren Gregory, who may have had the
salt train idea. But it was Hoover's general policy of which
this was an instance.
Riess:
Simpson:
You see, just as Truman acquiesced in the over-hasty
demobilization of our forces after World War II, there was a
great wave of sentiment in this country wanting to go back to
normalcy: "Get those boys out of Europe 1 What are they doing
there anyway?" And that pressure of public opinion induced
Hoover and his lieutenants to resort to all sorts of means to
try to get trade started. And somebody had the bright idea--I
didn't—of moving that salt out of Austria, down to Belgrade.
Was Hoover a memo-writer, or did he communicate more by word of
mouth?
As he did not give me any direct instructions, I wouldn't really
know. But I did not have the impression that he was a great
fellow for paperwork.
John Simpson,
college photo
ca. 1914
Crete Simpson with
Mrs. Simpson, 1920s
John L. Simpson,
New York, ca. 1923
v v W
t^b k ** 'T
•9 ft. f ;l t ^
^ f ! >rv .«
-f *
H »
V »/
J" /;" ^ ,
Group Photograph of the members of the C.R.B.
'
41
Later Meetings with Hoover
Simpson
Riess:
Simpson:
Riess:
Simpson:
Riess:
For instance, in later years he had his apartment in the Waldorf
Towers in New York and he kept an apartment, or occupied an
apartment, in the Mark Hopkins Hotel when he was here. If I
was in New York or here, usually I tried always to pay a call
on him, a courtesy call. I'd go in and he would be courteous
but I could feel that he wasn't very interested and I would
make conversation and usually leave in about ten or fifteen
minutes.
One time I was very pleased. He had a lot of papers, which
were in a kind of a mess, and he said, "Simpson, would you--?"
I guess he called me "John." I don't know. "Would you straighten
these papers out for me? Would you take them home with you and
see if you can put them in good order?"
I said, "Yes, I'd be delighted to." I gave them to Mrs.
Thomson, my secretary, to put them in good order. [Chuckles]
And she did.
On another occasion, I stayed longer, and for a special
reason. He again complained that he was overloaded with papers
and documents and things, and he said he did wish he had an
assistant here, because his secretaries were in New York,
somebody who knew something about the subject who would help
him out. I said, and this is one of the worst gaffes I ever
made, "Well, Chief, Harold Fisher's around here. I don't know
what he ' s doing. "
Does the name mean anything to you?
No.
I guess he's an economist. And he'd been associated with the
Hoover organization in some way. I didn't know him well, but
I knew he was a very nice fellow and quite knowledgeable and
well received in the community. But what I did not know was
that he had been a New Dealer. That stay, that visit to Mr.
Hoover, lasted three-quarters of an hour, because it took him
that long to tell me what he thought of Harold FisherJ
And was it Harold Fisher whom he focussed on, or was it the New
Deal that he was really focussing on?
Well, he focussed on Harold Fisher as representing the New Deal.
The evils of it.
42
Simpson: He was very intolerant of anything like that.
Riess: He lived through so much history. He must have been intolerant
of a lot of it.
Simpson: He was. He was.
Riess: What kind of papers did he have that he needed work on? Were
these his memoirs?
Simpson: Yes.
Riess: So, he was essentially living in the past, then, in the times
that you saw him?
Simpson: I don't think he thought he was living in the past; he thought
he was living in the present and didn't like it very much. He
never, down to the very end, gave me the impression of being
a feeble old man.
Mr. Hoover, like all human beings, had his different sides.
And one thing which I feel that he did lack is the marvelous
concept which goes back to the common law of England: there are
points on which reasonable men may differ. Because a fellow
differs with you, it may not mean that he is utterly unreasonable.
Riess: Yes.
Simpson: But Mr. Hoover took a difference of opinion very personally.
And I kind of hate to say that, but it is true. He never would
have said, "I disagree with every word you say but I would
defend to the utmost your right to say it." He wouldn't have
said that.
Riess: He would prefer to wish you and your thoughts away.
Simpson: Yes.
Riess: Who did he have around him in those years?
Simpson: Well, I think one who was among the closest to him was Lewis
Strauss, whom you know of. And Hallam Tuck. Sidney Mitchell.
Perrin Galpin, until the terrible breach occurred. And a
fellow who was older than our generation, but I've forgotten
his name, who was a mining engineer, oh yes: Scott Turner.
Riess: How about the newspapermen? Did they fall away from him after
he fell from favor in this country, so to speak?
43
Simpson :
Riess:
Simpson:
Oh, I don't think so. I don't know anybody who had been close
to him, really close to him, who fell away. A man like Harold
Fisher had never been really close to him.
So, in that forty-five minutes in which he spoke of the sins
of Harold Fisher and the New Deal, he lectured and you listened,
That was not an opportunity for a kind of chat about the New
Deal, I take it.
I think not' [Laughter]
out of there.
My ambition at that point was to get
Hoover and the People
Simpson: Hoover was first a mining engineer, associated with British
interests, and then on his own. I really think he made the
money in Burma.
Riess: Do you think it set well with him, with his Quaker background,
to be a rich man?
Simpson: Yes, but having become a rich man, he didn't want to become just
richer. He wanted sincerely, I'm sure, to do public service
and help people, but in a wholesale way. I don't think he was
terribly sympathetic to the fellow selling lead pencils on the
corner, but I think he was very desirous to create a society
where that fellow wouldn't be selling lead pencils on the corner.
Riess: And how about a wish to improve international understanding?
Was that basic to it?
Simpson: Yes, of course. But, you know, despite the fact that he lived
abroad so much, he didn't like foreigners very much. He never
went native. Well, the only place where he might have gone
native was England, but he certainly didn't. He was just the
type of American who's made to order not to like the French.
And, you know, the French did the stupidest thing. At the
time when the renegotiation of the war debts was on and Hoover
was Secretary of Commerce, these crazy French sent a form letter
through all that area of Northern France where the 2,000,000
French had benefitted from the CRB. Hundreds or thousands of
letters were signed by people of those regions, and packed up in
a couple of trunks or boxes and sent to Hoover. He was fit to
be tied. How can you be so foolish?
44
Simpson: I wouldn't want to say that he was an uncultivated man,
but I don't think he ever tried to dig under the surface to
find out what a country was like. I don't think he made any
great effort to understand the French, or maybe even the English.
Riess: Or maybe even the Americans?
Simpson: No, I think he was an unreconstructed American.
Riess: And he gathered around himself many Californians.
Simpson: Well, I remember one time he said--this was in the days of
trains, before the airplane took over — that he always liked to
cross the continent best going West.
Riess: You mentioned once that Hoover could be rude to the extent of
not inviting a visitor to sit down. To what sort of people
would he behave so?
Simpson: I think if he did not ask the person to sit down, it was because
he didn't want to spend the time. I think it was a matter of
minimizing the time he was going to have to waste with a fellow,
rather than a deliberate attempt to be rude to him.
Riess: I see.
Simpson: I think Mr. Hoover was rude sometimes, but I don't think it was
a calculated rudeness. I think it was preoccupation and being
much more interested in his own matters.
Hoover could have done one thing which would have given
former members of the CRB an immense amount of pleasure. When
he was President, if he had taken two hours off and invited all
the former members of the organization to a reception in the
White House at five o'clock in the afternoon, stayed with them
for an hour and a half himself, and then left them to Lewis
Strauss and some of those people close to him, I don't know how
many people — 100 or 200-- would have been very, very happy and it
would have cost him two hours of his time. He didn't do it. And
I never was inside the White House.
Riess: Did he staff his administration with many people from those days?
Simpson: No, he didn't. The one who was closest to him from our group
was Lewis Strauss, who was indeed a very fine fellow and, I'm
sure, helpful to Mr. Hoover.
Riess: Strauss came into CRB as you did?
45
Simpson: No. He was Hoover's secretary in Washington during the war.
He never was really a member of the CRB, but he was made an
honorary member.
Riess: Did the CRB have reunions?
Simpson: Yes. We had a dinner every five years in New York.
Riess: And when Hoover was President and it was the reunion time-
Simpson: Oh, we had the dinner. I don't think he ever came. I don't
recall his having been at one.
Riess: I see. Those dinners must have been great fun.
I wonder if the original choice of people had in fact been
a selection of people who eventually were great or successful.
Simpson: I think the original choice was rather hit-or-miss, and I think
some were successful and some weren't, to varying degrees.
Hoover and Mother
Simpson: You asked me earlier of personal reminiscences regarding Mr.
Hoover.
My mother lived to quite an old age and one time I was
taking her by train to New York to spend the winter with my wife
and myself in that city. She had a compartment or drawing room
on the train and it happened that Mr. Hoover was on the same
train in another car.
I went back to call on him, we talked, and I told him I was
bringing my mother East. He said he would like to come and call
on her, and he did, and they had a nice chat.
As I told you, my mother at the age of two crossed the
Plains in a covered wagon with my grandparents from Kentucky to
California. And although she herself had no recollection of the
trip, but had heard of it from her father and mother, she often
reminisced about that. And one of the things that she mentioned
was that her parents told her they had taken her out of the wagon
to put her feet in the North Platte River and thereby go through
the motions of wading in the river.
46
Simpson: Well, the train had just crossed the North Platte River on
a bridge and, reminded of that incident, she told Mr. Hoover all
about it. Mr. Hoover said, "Well, Mrs. Simpson, I am very
familiar with the Overland Trail and I believe that the place
where you put your little feet in the water was just about two
miles from where we crossed the North Platte a moment ago."
That incident I think is a very touching one and shows Mr.
Hoover at his best.
The Hospitality of the Belgians
Simpson: I should say something about the hospitality of the Belgians.
During that period they could not have automobiles and there was
no telephone service—quite a few things like that — but otherwise
people lived quite a normal life in Belgium.
Riess: And their attitude towards the CRB?
Simpson: Oh, it was wonderful. The Americans were tin gods. You'd think
we were making a great sacrifice, and yet we enjoyed it all.
We were wonderfully entertained in Belgium, and I may have
mentioned the Antwerp family, the Bunges, and that picture that
I showed you was one of the then girls [a cousin, Alice Karcher] .
They thought we were marvelous, a curious lot, and they evidently
liked us pretty well because some of them married Americans.
They were very wealthy people, and the idea that I, for
instance, obviously a college graduate, that I had done menial
tasks--of course, they didn't believe it to begin with, that I
was a farm hand and pitched hay for a dollar a day, and so on.
And then I told them about selling the Saturday Evening Post.
I had my Saturday route to dispose of 150 copies of the Post--
bought at 3«(, sold at 5^--to make some pocket money.
And one of these girls would say to another, "Do you know
the latest from Pinkske? He now claims that he was a newsboy."
"Oh," the other one would say, "don't believe a word he says.
You can't believe anything he says."
Riess: Do you think they really thought it was just too absurd to
believe?
Simpson: Yes.
47
Riess: Interesting. I should think that that would have been part of
the reputation of America, just that kind of almost rough-edged
young entrepreneur.
Simpson: Yes, but I guess they thought we weren't particularly rough-
edged. And also their picture of a newsboy was some waif
standing on the Bowery in New York in a driving snow storm
peddling papers.
48
IV THE YEARS FROM 1919 TO 1921
The Private Grain Enterprise
Riess: After the war you began a business in Europe with Clare Torrey.
Simpson: Well, in the first place, we were very much wedded to Europe
and we didn't really want to come home. And also we thought
that we might be able to do business and develop something.
We didn't have any money, but we talked with Prentiss Gray [who
had been a few years ahead of us at the University] and made
a deal with him that we would undertake to develop a grain
business. (His company was a company dealing in grain.)
We thought that though we didn't know anything about the
business, we did know about Europe, and we felt that the
situation was such that somebody would supply the money. We
were right in that calculation. So, we made our deal with Gray
that he would stake us, pay us a salary, and commissions on
any business we'd develop, and that worked.
Riess: And you made contracts and contacts with the Austrian and
Polish governments?
Simpson: That's right.
Riess: There was a third partner in the Balkans? Who was that?
Simpson: His name was Dorsey Stephens, an old college friend of ours.
We brought him in as a third partner.
But unfortunately very shortly thereafter the trouble
started. The postwar depression in 1919 and 1920, while it
seemed very little in comparison with the Great Depression
ten years later, was pretty bad then. The Guaranty Trust
Company, which was one of the largest banks in the country,
was in serious trouble and had to be rescued.
49
Riess: The Guaranty Trust was directly involved in some way in your
business?
Simpson: No, no. It was a great business slump, almost a panic, that
caused the Gray Company to lose its money. The company had
made pretty good money and they lost it all and liquidated
honorably and gracefully. But Gray was right back where he
started and so were we.
Riess: You got word of it when you were in Europe?
Simpson: Oh, yes. We certainly did.1
Riess: Clare Torrey had gone home?
Simpson: The plan was that he'd go home to see his family, his mother,
in 1920, and when he'd come back, I'd go. And I did. I guess
it was also in "20. But by the time I got back the trouble
had started and pretty soon we just had to wind up the whole
thing. Gray naturally wasn't going to pay us our meal ticket
for nothing. [Chuckles]
Illness
Riess: And was your illness simultaneous with the rest of the chaos?
Simpson: That was after my trip home. My trip home was in 1920, and my
illness occurred shortly after I returned to Vienna. I guess
it was in 1921 that I went to Davos [Switzerland],
Riess: That was an important time for you? Were you able to re-think
your life or something like that?
Simpson: Yes. I read the Bible from cover to cover and Rabelais, the
entire works of Rabelais in old French. I was there, I think,
nine months. But I didn't have tuberculosis at all.
Riess: You had the "Balkan bug," you said in Random Notes.
Simpson: Yes.
Riess: And so it wasn't responding at all, then, to this treatment?
Simpson: Yes, it did respond because I led a very healthy life and I
guess the cold weather was good for me. I had lost about
twenty-five pounds and I gained my weight back, I thought I
was an arrested case of tuberculosis.
50
Riess: When was the problem diagnosed?
Simpson:
Riess :
Simpson:
Riess:
Simpson:
Riess:
Here. First in Paris. The Swiss told me I should be checked
up frequently, so I went to one of the leading specialists in
Paris. He was furious. He got up and paced the floor. He said,
"Half the doctors in Switzerland and Germany ought to be put in
jail. You haven't got any more tuberculosis than I have, and
that means none."
I didn't know whether to laugh or to cry. I went on to
New York. And at that time James Alexander Miller (I still
remember his name) was the outstanding name in New York. He
examined me and he said, "I don't think you did have tuberculosis;
anyway, you haven't got it now. But you did have something. You
say you're going to San Francisco. Try to have them find out
what is the matter with you."
So I did and they diagnosed amoebic dysentery and put me
in the hospital for three weeks. And that was that.
In Davos, were you reading the Bible because you felt you were
near death?
Oh , no .
all.
To improve my mind. I didn't think I was near death at
Simpson :
But it must not have made much sense to you, to be there.
It made sense to me because I thought I had tuberculosis.
I had kept a little money out of the debacle of the business
and I brought my mother over for a visit. She said that she was
sure I didn't have tuberculosis.
I said, "Well, Mother, what do you know about it? These
are eminent doctors and--." But she said, "I don't believe it."
I noticed that in Random Notes you wrote, "...Life had been too
hectic for me to continue the writing I had begun in France."
You were wondering whether you wanted to "act in or interpret
the world scene." Were you really keeping a journal?
No. I wrote about a dozen little stories when I was in France,
after I'd left Belgium. Lippincott was going to publish them
but the war ended and nobody wanted to read any war stories.
Later on, much later (I mean here), I picked out four that I
thought the best and had Lawton Kennedy do them in a little book.*
*A Holiday in Wartime and Other Stories, Episodes of Occupied
Belguim ana France, 1915-1917, by John L. Simpson, Lawton Kennedy,
1956.
51
Simpson: I would have liked very much to be a writer.* That's what
I really wanted. And if I'd had some money I think I would
have. But I had serious responsibilities. My mother was a
widow and my wonderful sister Toto had an illness, and I felt
I just had to bring in some income.
*John L. Simpson has published the following books of his
writings :
Random Notes, Recollections of my Early Life, or Europe Without
a Guidebook, 1915-1922, Lawton Kennedy, 1969.
A Holiday in Wartime and Other Stories, Episodes of Occupied
Belgium and France, 1915-1917, Lawton Kennedy, 1956.
Dialogues Today, After Lucian, James Printing Co., 1972.
Kaleidoscope "...a small tube in which patterns of color are
optically produced and viewed for amusement .. .a constantly changing
set of colors... a series of changing phases or events." James
Printing Co. , 1970.
52
V FOOD RESEARCH INSTITUTE
[Interview 4: May 19, 1978]
Alsberg, Taylor, and Davis
Riess:
Simpson;
Riess:
Simpson:
Now, you said that you had left Europe, come back to the
United States, and you described that [as] not in a blaze of
glory because you were in some doubt about your health and just
exactly what you were going to do.
That's right. But Alonzo Taylor had been one of Mr. Hoover's
economic assistants or associates and he was one of the original
directors of the Food Research Institute.
I think I must tell you what the Food Research Institute
was.
Yes, good.
During the war, the problem of food had been one of the great
problems, and it involved the study of food production and
distribution throughout the world. Fortunately, the resources
of this country and other food -producing countries were sufficient
to keep the Allies working and fighting to the ultimate victory.
Well, after the war Mr. Hoover felt that it was unfortunate
that this highly developed technique, you might call it, of
assembling statistical and other information regarding food,
should be lost. And he arranged for the establishment of the so-
called Food Research Institute at Stanford.
The Carnegie Foundation financed the Food Research Institute
originally and the direction of it was a remarkable thing. They
did something that I would suppose had very little chance of
succeeding. They put three eminent men in charge, no one having
seniority over the other two, and, believe it or not, it worked
marvelously.
53
Riess: That is remarkable.
Simpson: Yes, it is, isn't it. The reason was that these men were such
big men, really big men, that they could get along together
without anyone being super-boss. And the three men were Carl
Alsberg, Alonzo Taylor, and Joseph S. Davis.
Riess: Was the selection of these men made by Hoover?
Simpson: I do not know.
Riess: Taylor had worked for Hoover, hadn't he?
Simpson: Yes.
Riess: I'd like to know more about those three men.
Simpson: Alsberg was a descendent of those marvelous people who came
from Europe at the time of the revolution of 1848 and carried
on that very fine German-Jewish and American tradition. [Joseph
S. Davis edited a book about Carl Alsberg published by Stanford
Press in 1948.]
As a scientist he deliberately undertook to broaden his
scope over both the natural and social sciences rather than
concentrating on one particular limited field. He was generous.
He was helpful. He was fine in every way.
Now, Taylor was quite a different type. Alsberg was
moderate and cautious to a degree. Taylor was—well, I wouldn't
say boisterous, but he was very outgoing and very witty and
enjoyed wit very much.
Once in the postwar days when the American Relief Administration
was operating, we both happened to be in Trieste. There was some
meeting there and it came Friday afternoon and Taylor said, "John,
have you ever been in Venice?" I said, "No, I haven't."
"Well, let's go over to Venice for the weekend." So, we
rushed down to the station and bought a few things to eat on
the train, some bread and cheese and wine and a can of sardines.
We happened to be in a compartment with two very nice
ladies, either English or American, the kind of ladies who had
lived in Florence a long time. One of them, to her misfortune,
made some remark about Central Europe. Of course, we'd been
living in Central Europe day and night for, I suppose, weeks
if not months by that time, and Taylor knew every iota of
information that was available. And what this lady had said was
unfortunately a very foolish remark.
54
Simpson: Taylor--! always said he wiped a few shreds of sardines
off his moustache—but in any event he said, "Madam, I am very
sorry to say that you are entirely mistaken in that view." And
the poor woman looked startled. He was a black-haired, black-
eyebrowed, rather terrifying fellow anyway, in a sense. He
thereupon undertook to bring her up to date on conditions in
Central Europe, and if she didn't know anything about it when she
left Trieste, she was thoroughly informed by the time we got to
Venice!
Well, that was typical of Taylor. He was so frank and so
companionable and so witty and ironical, a wonderful man.
Riess: About train protocol, when you're in a compartment with strangers,
is the standard behavior to pretend not to overhear conversations?
Simpson: It depends on the circumstances and it depends on the individual.
I wouldn't have said a word to the woman, no matter how foolishly
she talked about Central Europe, because I'm rather retiring in
that respect. (Crete thought that I was too retiring.) But I
think it just depends on the circumstances and the individual.
If you're sitting next to somebody who seems companionable, and
he has a paper, he's been reading something, and he calls your
attention to the headline--! have done it both ways. I've gone
through a trip and not talked to anybody and I have talked.
The third man, Joe Davis, was a Harvard economist and
extremely reserved, meticulous in his writing. His writings
were not as interesting as they might have been, because in order
to be absolutely accurate, he printed all the possible exceptions,
and it would be hard to find an inaccurate statement in one of
his works. That doesn't make them such light reading.
Incidentally, he just managed to finish his book before he
died a short time ago and I was sent a copy with his dedication
in it, that his heirs had arranged, which I was very happy and
proud to have.
Riess: Yes. What is the name of the book?
Simpson: [Points to book on shelf.]
Riess: Here on the top. [Picking up book and reading title.] The World
Between the Wars, 1919-1939. 1975. [Reading dedication written in
book.] "To John and Crete Simpson, Warm friends for half a
century, With gratitude and affection, Joe."
Simpson: Davis also wrote a little brochure recounting what he considered
a considerable number of major political blunders that Hoover had
made in the course of his career, I think fifteen, like failing to
55
Simpson: veto the Smoot-Hawley Tariff in 1930, which I think is now
generally regarded as a great mistake on his part as it
contributed to the Depression worldwide. He had it printed
and it was in circulation and he gave me a copy.
I said, "Joe, this is very good and probably true, but
you know you're not going to be very popular with the 'old
guard' if they read this," the "old guard" being tried and true
Hooverites, no matter what.
And Joe said, "Well, my university was Harvard and the
motto of Harvard is, 'Veritas,' and I've tried to live by that
all my life."
Riess: When did Davis write it?
Simpson: He wrote it after the Second War. That doesn't date it very
accurately, does it? The Second War just seems to me like
yesterday. The "old war" was '14- '18, and then this "parvenu
war."
Riess: When were you with the Food Research Institute?
Simpson: I guess it was "22-'23.
Riess: It sounds like an excellent balance of people. Taylor and Davis
were rather extreme in a way, as you describe them. Alsberg
might have run the whole thing on his own, but neither of the
others.
Simpson: Yes, that's right. But he didn't run it. They all ran it.
They really did. You wouldn't believe it, but three outstanding
men without any impression of priority did run the Institute
and ran it well.
Riess: What was your work there?
Simpson: I didn't really do very much. I laid the groundwork for playing
a role if I'd stayed on, and Davis rather encouraged me to go
for an academic career in economics. I did not want to do that
for two reasons: one, I wasn't crazy about an academic career;
and secondly, I thought it would entail getting a Ph.D. in
economics and I was getting along too far in age.
56
Methods of Compiling Agricultural Statistics
Simpson: Now, I did do something very interesting before I ever saw the
Food Research Institute. Before I left Europe, they wrote me
that they were very interested in the way agricultural statistics
were compiled.
Riess: You mean the Food Research Institute wrote to you?
Simpson: Yes. Taylor, I suppose.
In saying the wheat crop in France in such a year was so
many tons, well, how does one know? And they asked me to visit —
I loved this, of course—a half a dozen countries: Italy,
Switzerland, France, Germany, England, and maybe one of the
Scandinavian countries. Five or six. And to investigate the
method that they use in each case to determine what their
production was, also to determine their forecasts.
Well, that was intensely interesting.
Riess: How did you do so?
Simpson: I visited the countries and located the place — it was usually
the Ministry of Agriculture or maybe some other ministry—where
the statistics were assembled and compiled and prepared for
publication. I talked with the people, read everything they
would give me to read, and formed my opinion as to how accurate,
how reliable, the job was. And you will be astonished to know
that the least reliable was Italy and the most reliable was
England. [Sarcastically]
Riess: I will be astonished? No, I won't be.
Simpson: No, and I wasn't either.
Riess: But it's interesting because the Italians probably didn't think
it was important.
Simpson: Oh, yes, they did. They thought it was important, that it was
important to show a very low output and that they needed a lot
of help.
Riess: [Laughter] I see. So, you sent a critical report back then?
Simpson: Yes, and then made an oral report to the Institute when I
arrived in Stanford. It was really very interesting and I think
rather useful.
57
Riess :
Simpson ;
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Was it of interest to the people that you spoke to in these
countries to realize that their methods were being studied?
Did they wonder why?
I don't think so, because I talked to the technical fellows.
I didn't indicate that this had any political aspect at all.
Oh, I see. That's wise. So, you didn't go to the "Ambassador
of Food" first of all?
Oh, no. I didn't want anything to do with him. I wanted to
talk to the chief clerk in the statistical bureau. I was very
interested in the German, I still remember. He was so typical
of a good well-trained German bureaucrat.
But, you see, they couldn't go out and count the haystacks
or warehouses, so the method used mostly was to estimate as well
as they could from the past the number of hectares or acres,
and then estimate what kind of a crop year it was, and multiply
the two. You can see the opportunities for enormous variations.
Yes. And how did the Germans do it?
The Germans amassed more figures than anybody else, but they
didn't mean anything more.
Well, I brought my report back and they said they liked it,
that it was what they wanted, and they thought I got as much as
I could. Nobody had any illusions that it was really going to
be very accurate. And I think that's about my story, as far as
the Food Research Institute was concerned.
Did they gather data as to the accuracy of statistics from all
over the world? Were they able to do the same thing in Asia?
No, I don't think they tried.
Was it an internationally-oriented group?
Well, I think these men were very well-grounded men in world
affairs, certainly. They were especially interested in
production and trade. In other words, what counts is not just
what is produced, but what is exported and what is imported,
and the trade is based on the grain-producing countries like
the United States, Canada, Australia, Argentina, and so on.
And they were interested in the commercial world of food
production and distribution.
58
Simpson: China didn't figure much in that respect, Burma and China
and the rice countries. But now that I say that, I realise
that while they started concentrating on wheat, as time
progressed they branched out and covered other commodities.
Riess: From the Davis book on Alsberg I gathered that after the wheat
studies the next studies were in fats and oils.
Simpson: Yes.
Riess: But you are saying that because it was an economic institution,
and because it really came out of needs that were understood
from World War I, that it always had an eye to food as power.
Simpson: That's right.
Riess: And who was most interested in that?
Simpson: I think that the knowledge of what was available and what would
be available or could be available had a strategic aspect and I
think the Institute had that in mind.
Riess: Were they advisory to various governments?
Simpson: No, I don't think so. They published publications, brochures.
Riess: Interesting. Food is a very basic way of looking at the world.
Simpson: Yes. I attended, in France, a conference, a very highbrow
affair--a friend of mine who was a writer got me invited--at a
place called Pontigny. And I met a girl who was highbrow of
the highbrows and she asked me what I'd been doing and I told
her. She said, "Un peu aride, n'est ce pas?" [Translating
remark] "A little dry, isn't it?" [Chuckles]
Riess: But, of course, it really isn't.
Simpson: I said, "No. What people have to eat and whether they get it
or not, well, that's not dry at all." But I didn't make any
great progress with that girl. "Just another American."
Riess: When you were at the Food Research Institute and working with
these men, did they relate a lot with the people who were working
there, or were they away in offices.
Simpson: Oh, they related completely. They were wonderful men.
Riess: And very available to the staff?
59
Simpson: Yes. It was a small organization then, all on one floor, and
you walked around from one office to another. You didn't
necessarily make an appointment.
Riess: Did Hoover have any particular connection with the Carnegie
Foundation?
Simpson: Not that I know of.
Riess: He just convinced them that this was an important piece of
work.
Simpson: Worthy of a donation.
Riess: Yes. I believe it was in Alfred Kroeber's introduction to the
[Davis-edited] Alsberg book that he described the three men in
very much 'the way you have.
Simpson: Did he?
Riess: Alsberg had the wisdom and the broad knowledge and the grasp
of ideas, and Taylor represented energy and contacts and wild
enthusiasm, and Davis1 s strong points were workmanship and
practicality and good judgment.
Simpson: What I said is not so very different, is it?
60
VI CALIFORNIA RAISIN GROWERS ASSOCIATION
Simpson: By that time my health was pretty well assured but my finances
were far from assured. And my sister Lola Jean, who had been
earlier on the financial mainstay of the family, and later,
when I assumed the financial responsibility, the moral mainstay
of my mother, went into a deep depression and not only did her
earning power vanish, but she became an expense. So, I felt
that I really had to make some money and I came to the conclusion-
well, no, my first idea was to be an economic and international
affairs consultant.
Riess: Were there such things?
Simpson: Yes, a few.
Ralph Merritt had become head of the California Raisin
Growers Association, which was in a bad way, and I think Taylor
was instrumental in suggesting to him that I might do an
investigation in the foreign field as to the competition and
marketing possibilities, I having told Taylor that I needed to
make some money and wanted to go into business.
Several people that I knew had made these consulting
arrangements, which sounded very good. I mean, to some people,
to me, it sounded good. So, to make a long story short, I was
hired by Sun Maid, by Ralph Merritt, to investigate the
competitive production in Turkey and Spain.
To Turkey. Spain and London
Riess: The competition was for the European market?
Simpson: It was for the European market. And they asked me first to go to
the spots and look at the production, and then secondly to make
another investigation of the marketing possibilities and
61
Simpson: possibilities of expansion and ways and means of meeting the
competition. So, I did that and was so employed for two years
approximately; maybe not all of two years, but approximately.
Riess: Did you stay abroad to do the job, or did you come back in
that period?
Simpson: No. I'm trying to think. I know what the end of it was. The
exact years are not so important. It was that period. I made
three trips to Europe. The first trip I went to Turkey and
Spain, Malaga.
Riess: Oh, of course. Yes, indeed. Great grapes.
Simpson: Sultana in Turkey, in Anatolia, the area near Smyrna. And
Malaga in Malaga.
Riess: Both of these grapes are now grown in this country. Were they
being grown here at that time?
Simpson: Yes. Thompson Seedless is the same thing as the so-called
Sultana. But there's no question that the quality of the
Turkish Sultana was then--I don't know what's happened in later
times--but was then a really better raisin. It looked better
and it tasted better.
The fascinating thing to me was discovering their method of
drying the grapes. We do that by pitching them on trays and
putting them out in the sun. These Turkish peasants were very,
very poor and did not have any trays, but they needed a smooth
clean surface free of dust on which they could lay their bunches
of grapes. So, they ingeniously took cow dung and mixed it with
water into a thick paste and found a nice smooth piece of ground
and swept it very, very clean, as well as they could, and then
painted it over with this cow dung paste; painted very thinly,
and in this intense broiling sun, the thing dried and, believe
it or not, it did look like a very thin mat on the ground and
achieved their purpose of producing a dustless area to dry the
grapes and make raisins.
Riess: They've been doing that since time immemorial?
Simpson: Yes.
Riess: Isn't that interesting.
Simpson: And they were convinced that it would do no harm whatsoever,
that this very thin coating of liquid cow dung had dried in the
broiling sun, and all unhealthy aspects had been burned away.
62
Riess :
Simpson;
Riess:
Simpson;
Riess:
Simpson;
Riess:
Simpson:
Yes, right. Probably not very many people knew about that
method other than you!
I don't think they did either. Taylor didn't take any stock
at all in the idea that there was a thorough sterilization.
I made my report, of course, to Merritt and the association,
and I never heard anything further on it.
Of course, this was over a half century ago, and drying
methods may have entirely changed in the meantime.
I made my first trip to Anatolia and Spain, and the second
trip to investigate the European markets, which were principally
North Europe, Germany and England. And then a third trip to
make some rearrangements in the operations of their sales effort
in those European countries.
Had Sun Maid had any European market until then?
Oh, yes. They were set up. They had an office but they didn't
think it was as well -organized as it might be and they thought
that I might have some ideas which would be helpful. I hope
they were.
Was it one central office, or was there an office in each
country?
Well, they had the office in London, and they had a head man
and a second man in London and one or the other of them made
trips around on the continent.
Were they using advertising techniques then to sell people on
raisins?
Yes. They had J. Walter Thompson.
"Sun Maid Raisins."
And you'd see on the buses:
Problems of Grower Cooperatives
Simpson: Thinking back on the Sun Maid Association, it had a basic problem
that occurs often in situations of that kind. If the Association
could hold together and maintain some control over prices, it
was to the interest of each individual to ignore the Association
and act for himself. That's a great human problem, isn't it, in
many, many fields.
63
Simpson: As long as a cooperative works, it's to the interest of
each individual to leave the cooperative and go out on his own.
And if enough do that, then the cooperative fails, and that, I
think, was the basic problem with the Sun Maid. It's a curious
thing. In general, nothing succeeds like success, but in this
case nothing fails like success. You see what I mean?
Riess: At the point when Merritt took over, he took over something
that was failing, I gather, in 1922. The price had dropped
tremendously. It had gone from something like $276 per whatever
the unit was down to $75, and Ralph Merritt came in and
organized the Sun Maid Raisin venture and began a national
campaign to eat raisin bread and so on. Now, was this a time
when people were departing from the co-op, or was he then trying
to reorganize the co-op?
Simpson: Well, there were independent raisin dealers, growers and dealers,
I guess, and they were taking advantage of the Sun Maid to
undersell them. And if there had been no Sun Maid, then their
competition, the competition of these independents amongst them
selves, would have driven the price down. Sun Maid, if it could
have been 100 percent would have been able to control the price.
Even not 100 percent it had and could have a considerable influence.
But the problem always was that as soon as Sun Maid had
improved conditions somewhat, the mavericks would go out for
themselves and tend to undermine the combined efforts of the
association.
Riess: And so what sort of persuasive powers did the association have
on its side then?
Simpson: Well, the powers of reasoning, trying to explain to people:
"If you do this, don't you see, you're cutting your own throat?"
But the individual thought, "If all my fellows keep the price
up, I'll sell 10 percent under it."
What Ralph Merritt tried to do was to preach the gospel
and make every effort to keep them together. It was a perfect
example of "united we stand, divided we fall," a perfect example.
That really is about all I know about it. I wasn't in on the
details of the financing.
Riess: Was Merritt a good man for the job, do you think?
Simpson: Well, I think he was. He was considered a very able man and at
one time was thought of for the presidency of the University. I
don't think he was as good a man as he and we thought he was, but
I think he did a pretty good job with Sun Maid. I don't know
what happened. I left, you see, and went to New York. I do not
know what caused his downfall.
64
VII CRETE MANDEL SIMPSON
In Search of a German Teacher
Riess: At this point in our chronological progression through your life,
I think I'd like to be introduced to your wife. Where did you
meet Crete?
Simpson: I met her in Vienna and I'll tell you exactly how I met her. I
wanted to learn some German and I put an advertisement in the
paper: "American wishes to learn German," or something to that
effect. I don't know just how I worded it, but it brought about
thirty replies.
Of course Vienna was in a bad state at that time. The
inflation had wrought havoc. (And after I finish what I've
started I'll tell you something about Crete's family and the
inflation.)
So, I had these thirty replies and I looked them over and
more or less hit or miss chose one and it was Crete Mandel, and
I ascertained that she had taught French in a very highbrow
private school run, and owned, I believe, by Frau Doctor
Schwarzwald, a very able and distinguished lady.
But Crete was not doing that at that time. She'd left to
help her brother, Fritz, who was a publisher of, and dealer in,
prints and etchings. She had given up her teaching job for
that.
Some years later, when he [Fritz] and I were great friends,
he told me it was a good thing she left him because otherwise
he would have gone broke. Just about the time it looked as
though he was going to get rid of some dog he had on his hands,
Crete would sidle over to the prospective customer and say, "I
wouldn't take that. It isn't really very good." [Laughter]
65
Riess:
Simpson;
Riess:
Simpson:
Riess:
Simpson :
Yes, that's not what you want in your sales personnel.
But that would be Crete. Crete never would give a present
unless it was something she liked herself.
In any case, that's how I met Crete.
Did she speak English?
Pretty well. Very English English. She didn't speak English
nearly as well as she spoke French, but pretty well.
And was she a strict teacher?
Well, she was a good teacher, although I never made as much
headway with German as I did in French.
My French was quite good at that time. I'd had a grounding
in French from my sister, Toto, who had me come from grammar
school to her French class at the high school. She (Toto) was
so anxious and did so much for me in every way, and she gave me
that head start. By the time I'd spent a year and a half in
Belgium and a year and a half in France, my French was pretty
good, if I do say so. I couldn't pass for a Frenchman, but I
was good. My German never amounted to much because I didn't
have a good grounding in it.
Where did Crete teach you? Where did you meet to have your
classes?
Five of us Americans had an apartment, a very nice eight or ten-
room apartment that the Austrian owner was very glad to have us
occupy because then no wandering troops could get into it.
And so she came to you there with the books and so on?
That's right.
Then how did the romance progress?
Well, everything was interrupted by my illness. That was the
time of trouble: financial trouble, the question of my health,
my sister's major depression, the dependence of my mother
dominating the situation.
I went back to America and, as I said in Random Notes, on
a later trip to Europe found Crete again and we got married.*
Riess: You were going to say something about her family.
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
*John Simpson and Margarete Mandel, married April 19, 1924.
66
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Oh, yes. The Austrian inf lation--and , of course, the German,
but I knew the Austrian, I'd lived in that—Crete 's father, who
was a businessman, had a dread of being impoverished in his old
age, and so he took out an endowment policy and paid on it all
his life. I've forgotten what the amount was, but it was a
substantial amount for Austria, several hundred thousand dollars,
so that he would be sure of something in his old age. And when
it matured and he got it, it was worth about a dollar and a
half!
Oh, what a nightmare J
over there.
And these wera the times that you were
Yes. In Germany that was one of the factors in the rise of
Hitler; the impoverishment of the middle class was unquestionably
one of the causes of the Hitler tragedy.
He offered solutions?
Yes. He not only offered solutions; he provided solutions. He
instituted mass programs of public work, as you know, and put
people to work. He bankrupted the nation financially, but he
put people to work.
Crete's Academic Career, Especially Work with Children
Riess: I remember when we first met you told me that Crete was part of
a coffeehouse group headed by Alfred Adler.
Simpson: Yes, that's right.
Riess: Did Adler teach at the university in Vienna?
Simpson: No. I think he was even less likely to be invited than Freud.
Riess: He was Jewish?
Simpson: Yes. I think they had no organization, but they all gathered
in a kaffeehaus, which is a typical Viennese custom, as you
know, and discussed matters. This occurred during the war and
they naturally discussed the war, but it was a psychological
group.
Adler made a trip to America in, I guess, 1929, right at
the heyday of the boom. We entertained him several times. But
he was a sort of celebrity for a while and hard to get.
67
Riess: Was he lecturing in New York?
Simpson: I don't know whether he was lecturing or just holding seminars
and having private sessions with people. But Crete saw something
of him and I saw a little something of him. Then the crash came
and people got less interested in Adler and were more interested
in saving their skins. Adler 's moment of glory didn't last very
long. I think he died in England [1937].
The timetable here is a little confused because the next
thing about Crete and psychology and so on is when we were in
New York, and we haven't quite gotten there yet, really.
When we moved to New York, Crete thought she would like to
do something. She played the piano, not very well, but she had
music in her soul and fingertips and could have been a good
pianist. But she was also very interested in psychology, and
especially psychology of children. We talked a great deal about
it--what should she do?--and she finally decided on psychology,
on the theory that it was more human and brought her more in
touch with life and people. And then, she loved children. It
was a great blow to her that we didn't have children, much more
so to her than to me.
I said, "Well, you've had Adler. That's fine. But Adler
is one among many. If you are going in for psychology, you'd
better go to Columbia and take a degree and know all the
psychologists." And that's what she did.
Unfortunately she could not do it at Columbia proper,
except in the evening, and that was no good. So, she had to
do it at Teacher's College. And I suppose you know that
Teacher's College is not as highly regarded as Columbia proper.
Riess: But it didn't affect her career.
Simpson: Well, it did in the sense that she ought to have been working
with, on the whole, a--well, I don't know what to say.
Riess: A more dynamic group?
Simpson: Yes. Of course, she in a way had a wonderful experience after
that as a consultant. She had some kind of magical gift with
children. She dearly loved them and found it hard to believe
there was a born bad child. Any child that was supposed to be
bad, she'd tame. It really was amazing. Her capacity to take a
completely impossible child and straighten him out was really
incredible.
Riess: Was she using psychological theories of a given name?
68
Simpson:
Riess :
Simpson:
She introduced the play interview to Columbia, when she consulted
there, the play interview being for children that were too small
to reason with. The trick was to get down on the floor and play
with them and find out what was biting them.
She never taught classes, but she had sort of seminars at
Columbia. They'd have a one-way vision screen with the students
in back of it, and she'd be down on the floor doing the play
interview with the child.
boy?
Yes.
May I tell you one incident of her dealing with a naughty
He was a boy old enough, about five or six or something, not a
tiny babe, and he was using foul language. He was punished and
bribed and nothing could be done about it. His parents couldn't
do anything and they brought him to Columbia and they couldn't do
anything there. He was sent to Crete; there was a period when
she'd given up responsibility, but they sent special cases to her,
to our home.
So, she said to this boy, "You know, I wasn't born in this
country. I don't know English as well as you do and there are
a lot of words that I don't know. You use some words that I'm
just not familiar with. I would like to make a dictionary.
Couldn't you and I make a dictionary so I would know the exact
meaning of everything?"
I don't know whether he gave in reluctantly or not, but
anyway she got his consent to make a dictionary of all the foul
words in the English language. [Chuckles] And pretty soon he
came and she said, "How is our dictionary getting along?" "Oh,"
he said, "that's all kids' stuff]"
Riess: Oh, that's very good.'
The children that she treated, then, were all psychologically
damaged and they had been brought by their parents to Columbia?
Simpson: Yes.
Riess: And she just did her work with the children rather than involving
the parents?
Simpson: Oh, she involved the parents. She involved the parents to the
extent of trying to get the parents to act in a way so that the
child could be helped.
68a
Simpson: Sometimes I would hear something about these cases and I
remember one time I said, "What's the matter with that kid
anyway?" "Oh," she said, "there's nothing much the matter with
the child. His parents are driving him crazy."
They had a lot [of cases] from the Bronx, Jewish from the
Bronx, and they were so ambitious. If the first child had an
I.Q. of 145 and the next one was 125, they were desperately upset
because the 125 couldn't keep up with the 145 in their classes.
And part of the trouble was the parents overpressuring the second
child. I know oftentimes she felt the trouble was mostly with
the parents rather than with the child.
Riess: Did your wife's study of psychology give her insights into people
and circumstances in your life that were helpful to you?
Simpson: Well, she was always very good at sizing people up. She was
usually pretty right in her estimates of people after one or two
contacts. I think she was very shrewd in her judgments of people.
But she was so good with small children.1 She'd be able to
handle a child that everybody else had given up. And, of course,
she said the first thing was love.
Once when a young mother was asking for her advice she
said, "I've been watching you with the children and it just
happens that you're a born mother. So, don't buy a book at all.
Just go right ahead. You are a born mother and you are very
lucky."
And Her Role as Hostess
Simpson: But psychology was only part of Crete's role. In a way she lived
a double life. She was working for her degree in psychology and
also, as I progressed and became a little more advanced in rank
and position, we did a great deal of entertaining, especially of
people from Europe and South America, and Crete was a perfectly
beautiful hostess. She managed to come home from Columbia, where
I'm sure she had had a busy day, and put on the nicest dinner
party you could imagine, everything perfect.
She proved to be a wonderful cook, for one thing. She had
never done anything of that sort at home in Vienna, but she
became a splendid cook.
Riess: She hadn't been taught at her mother's elbow?
John and Crete in the Adirondaks
John Simpson and Allan Sproul look on
as Crete Simpson christens a Liberty
Ship. Marinship Sausalito, World War
A summer in California, 1935
John and Crete returning
from a vacation.
Bechtel company plane
Steve Bechtel, Sr., left, and
Basil Jackson, chairman of
British Petroleum, congratulate
John Simpson on a "hole in one,"
1950s.
69
Simpson: No, they had help. And my mother was a good American-style
cook and Crete picked up from her and picked up from European
cookbooks and headwaiters on transatlantic liners and so on.
So, she produced beautiful dinners. The table always looked
lovely with the glass and silver and the food was marvelous.
Riess: Did you have someone to serve?
Simpson: Yes, we had two in help. We had a cook and a maid.
Riess: And she would do some of the cooking and the cook would do the
rest?
Simpson: Oh, she didn't really do the cooking for these parties. She
gave the directions and maybe she'd practice when we were alone
together or had just one couple. I didn't mean to say that she
did the cooking for a big dinner party. She couldn't do that.
But she put them on with a flourish.
I remember that Foster Dulles said—he was at a New Year's
party, and we didn't give such awfully big ones, but as big as
the dining room table would take, with maybe an extra card table,
maybe thirty people—Foster Dulles said it was the only New
Year's party he'd been to where he could sit down to a regular
dinner or supper.
And with the awful grief of losing Crete, one of the things
I remember is the wonderful role she played in taking a doctor's
degree in psychology and, at the same time, running the household
as she did.
Of course, there were quite a few radical people at Columbia
and they sort of held her in contempt in a way as the "capitalist's
wife," but she would go through that and come home and put on a
dinner and then go back and be palsy-walsy with the radicals.
But I was disappointed --when we went to New York, I said,
"Now, look. I'll go down to Wall Street and try to make us some
money if I can. You go out to Columbia and you be the intellectual
and higher level of our life." But after about six months or a
year, I said, "As far as I can make out, there's more in-knifing
in Columbia than there is in Wall Street."
70
A Friendship with Josef Krips
Riess: Does your friendship with Josef Krips date from Vienna?
Simpson: Well, that dates from Crete. We were staying at the Imperial
in Vienna during the music festival season and Krips was in
the same hotel. Krips 's first wife had died many, many years
ago, a couple of decades, and he had married again, and that
wife was very difficult. I don't know whether she was with him
at that time or not. In any event, that's not important.
The important thing was that we went to a concert that he
conducted and it was beautiful. I've forgotten what it was.
And Crete said, "I'm going to write a letter to Mr. Krips and
tell him we're from San Francisco and how much we enjoyed the
concert."
'Veil," I said, "they can't shoot you for that." He probably
got plenty of letters. But she did send the letter down to be
put in his box. In about twenty minutes we got a telephone call
saying that he'd received this beautiful note, and would we come
down and have a drink? Crete had gone to bed to rest, but I
went down and had a drink, and that was the beginning of our
friendship with him.
We found such a congenial companionship and he seemed to like
us, especially Crete. Of course, when we came back to San
Francisco we saw a great deal of him here.
Riess: At that time this was his home city?
Simpson: Yes. But it all started with Crete writing that note, which was
so typical of her.
Riess: Were there other friendships in music and the arts that were
particularly close?
Simpson: No, I don't think so in music and art. She maintained a pretty
close friendship with the Adlers who came over later.
That was the only time that I ever had any close contact
with anyone in the top rank of music. And I have to laugh at
myself. I thought it would be nice to have Mr. Krips to supper,
but I thought, "After a marvelous production of Don Giovanni
they'll be all agog and they'll be foregathering for a celebrating
supper. It would be presumptuous for us to try to interfere with
that." But finally I thought, 'Veil, maybe it might not be quite
that way. We'll take a chance."
71
Simpson: Of course I found out the one thing they wanted to do was
to get the hell out of that Opera House and get home to their
husbands and wives and children and mistresses and friends and
what have you. And the last thing in the world they had in
mind was having a gala supper for themselves I [Laughter]
Riess: What a disappointment.'
Simpson:
Riess:
And so we very often met Krips in the—there was music in the
restaurant of the Imperial until 11:00, Viennese waltzes and
so on, and neither Krips nor we wanted to hear that just after
finishing Don Giovanni, but in the kaffeehaus there wasn't any
evening music, so we very often foregathered afterward in the
kaffeehaus for a little supper, which he enjoyed very much.
And it was very interesting. Krips and Crete both knew
English, of course, very well. And we would start talking
English, but at a certain point, especially if they got into
something intimate, they would drop into German. They could do
that without any embarrassment as far as I was concerned, because
I knew enough German to understand what they were talking about
and participate the small part that I needed to. But it was
significant that, well as they knew English, when it came to
something really intimate it was a little more comfortable for
them to drop into German.
[Looking at Mr. Simpson's outline]
"Lifelong friendships: Fastlich."
You have a note here of:
What is that reference?
Simpson: Well, it's perhaps interesting as a human story. It has nothing
to do with any of the rest of it. It was in Vienna. There was
the Hoover organization, the ARA, American Relief Administration.
I was sort of running the office and I had to hire some doormen,
three doormen, who'd be messengers and so on. I had an Austrian
adviser and he rounded up some fellows and I hired a couple.
Then there was a third one and I interviewed him. My
Austrian counselor said when this fellow went out, "I wouldn't
hire him." I said, "Why not?" He said, "He's fresh."
"Well," I said, "he may be kind of fresh, but he stands up
and looks you in the eye and I think I'm going to hire him," and
I did. That was [Adelbert] Fastlich.
I hired him as doorman and found that he was a fellow who
could do anything. He was absolutely indomitable.
*See Random Notes, pp. 54, 69-71.
72
VIII EARLY YEARS WITH SCHROBANCO
Looking for a Job
Simpson: At the end of my third trip to Europe for Sun Maid I found there
was no further use for me there. Ralph Merritt had wanted the
so-called expertise which I was supposed to furnish, and that
had been done, and he never had had in mind a permanent position.
Well, all right.
At that point I decided, "Now I've got to find a real job."
I first looked around here in San Francisco. And it's
very interesting. I had done well in college. I had made a lot
of friends. I had done well with the Hoover organization. I
hadn't made a failure at anything. And yet nothing opened up
for me here.
Riess: You were looking for banking jobs?
Simpson: Yes.
I sat down to review the entire situation and I came to a
very wise conclusion: what I had to offer was Europe. I really
did know a lot about Europe. San Francisco and California were
not interested in Europe, but New York was, and therefore I would
go to New York. And I did.
Riess:
Simpson:
But not with a promise of a job.
No. Alsberg gave me four or five letters. I went to New York
with letters and my personal contacts, and within a week I had
offers of four jobs, a job with a New York investment company,
one to go to Switzerland representing another investment firm,
a job in Boston, and the Schroder job.
73
Riess:
Simpson:
Riess:
Simpson ;
Riess :
Simpson:
Riess:
Simpson:
You were right in your perception of what you could offer.
That's right. My wares were not of interest here, but they
were in New York. We were then on the threshold of the great
re-financing of Europe after the war and of course out here
there was then no Bank of America; it was still the Bank of
Italy, I guess.
Did you try to sell any of the western banking institutions
on the idea that they might be more internationally oriented?
I talked to one or two, but I made no headway at all.
When you were looking for a position out here, would you have
considered working for the Bank of America or Bank of Italy?
Yes, but I didn't have any entree. I had an entrSe to talk
to, and did talk to, others. There was the Mercantile Bank of
something-or-other, which was quite prominent then, but it later
merged.
It sounds like an agonizing time.
Quite a tough time. By that time I was married,
recovered, but I had my mother and my wife.
My sister had
So I just reasoned it out as I'd reason any problem and I
came to the conclusion: "This is the wrong place. These people
don't know what it's all about as far as the postwar period is
concerned. There's going to be a great wave of financing to
Europe and some people are going to do it and most Americans
don't know much of anything about Europe. I do know something
about Europe. I don't know anything about banking, but I know
something about Europe, and I'll go where people are interested
in what I've got to offer."
And, as I say, it proved to be pretty good reasoning
because within a week I had four offers.
Riess: It sounds like you kept the standards for what you wanted to do
high. I mean, you could have probably come in at some level in
some institutions around here.
Simpson: I don't know. Nobody offered me anything.
Riess: The "old boy" network didn't work here? When we first met, you
said that there was an "old boy" network in New York that tended
to favor easterners.
Simpson: Did I say that?
74
Riess: Well, you said that it took a while to break in if one were
not from Harvard or some such.
Simpson: Yes, that's right. The Ivy League. The graduates of the Ivy
League universities. It's perfectly natural.
Riess: Oh, yes, indeed.
Simpson: And to some extent— [ pauses to think] I was going to say that
to some extent it's true here. But the point was that I didn't
have — if a fellow wants to buy a motorcycle, it's awful hard to
sell him a —
Riess: Speedboat.
Simpson: A speedboat, yes. [Laughter] That was my trouble. I was selling
the wrong bill of goods for the market.
[Interview 5: May 24, 1978]
Schroder, New York and London
Riess: You decided to go to New York and look for work and you very
quickly were offered a position and that was with Schroder, I
take it. I notice that "P.N. Gray" is the first name that you
have under your Schroder notes here.
Simpson: Yes. He was the first president of J. Henry Schroder Banking
Corporation.
Riess: I see. So, by contacting Schroder you were looking up someone
you already knew.
Simpson: That's right. I did indeed know him. In fact, it was through
me--on a streetcar in Berkeley — that he learned of the Commission
for Relief in Belgium and got the idea of joining it himself.
And it was also his firm in New York which backed my partner and
me in our postwar business venture in Central Europe.
So I thought it over, had lunch with Gray and accepted his
offer, which was a very modest one. You remember I said in
Random Notes that I didn't start at the top of the ladder after
all, but they had to add an extra bottom rung to get me on the
ladder?
Riess: Yes. I wondered what that actually meant.
75
Simpson: I should tell you a bit about Schroder. The London firm was
formed in 1804 by Germans, come over from Hamburg, and they
always were a very fine and distinguished member of the banking
community in London and did what was called "merchant banking,"
which really meant, to a large extent, financing goods and
trade.
It's very interesting. They started endorsing the bills
of other merchants, and then the successful ones, and those
who had a reputation of integrity and ability, sold their own
bills in the market and became bankers instead of traders.
Baron Schroder, head of the bank at the time of the First
War, had retained his German citizenship. (They didn't think
anything of it, you know, any more than if we, as Americans,
went over and set up a business in France, we might stay there
indefinitely but remain Americans.)
But at the outbreak of World War I, the German assets in
England were put under sequestration, and that would have meant
that the firm J. Henry Schroder & Co would have been taken over
by the authorities. The English didn't want to let that happen,
so by special act of Parliament they made Baron Bruno Schroder
a British subject.
Riess: Why didn't the English want that to happen?
Simpson: Well, it was too important to banking in the city of London.
Riess: They had an important place?
Simpson: Oh, yes. They were in the class of Rothschild, Lazard, Baring,
and so on.
Riess: J. Henry and Baron Schroder are two different persons?
Simpson: The original German who came to London was J. Henry Schroder,
and that was the name of the firm and remained so. The head,
when I joined in New York, was Baron Bruno Schroder, and he
was followed by Helmut Schroder, who is not a baron, incidentally,
Riess: They then stayed in London through the war.
Simpson: And naturally were very inactive during the war. But after the
war there was a great flourish of activity and they decided,
very wisely, that the United States, to which they had not paid
much attention previously, was £ coming, if not the coming,
place, and how could they get a foothold there? So, they set
up a not very large bank in New York named J. Henry Schroder
Banking Corporation, and they were supposed to participate in
76
Simpson: the development of a bill market in New York similar to the one
in London, because in London these bankers' bill were a favorite
form of current investment, just as treasury bills are here.
They had originally had in mind that the business would be
mainly creating and dealing in bankers' bills. But by force of
circumstance and because the investment business became so
important, they got into that business as well. At that time
commercial banks were permitted to do investment business. (That
was changed by the New Deal legislation and is now no longer
possible.)
Riess: Were they a commercial bank also?
Simpson: Yes, but you might say it was a wholesale business, not a retail.
You or I would not have walked off the street and set up a
personal checking account of $1500. Their banking business was
closely aligned with their interest in international trade,
financing the movement of coffee to England and that sort of
thing.
Riess: I take it that foreign bankers are not looked upon as foreign,
then, in the way that Mr. Giannini, for instance, was "foreign"
in San Francisco.
Simpson: Of course, they [Schroder] weren't German; they were English.
And I think that the banking community wouldn't be so snobbish
to an English[man] as they would be to an Italian.
Riess: And toward people with German accents?
Simpson: After the First War, you know, we had a great change of attitude
towards Germans, and within a very short time they became fully
accepted. And, in fact, we even had a guilty feeling that
because we'd ruined the country we must rehabilitate it.
If you want a trivial wisecrack- -when my friend and I formed
our business in Europe, which I related to you, we wanted to
come home briefly to see our families, and he came ahead of me.
He wrote me, "I must give you some advice regarding your own
return to America. Don't let on at all who you are, but claim
that you are a German who changed his name to Simpson during the
war."
Riess: That's very telling, isn't it. And you'd be welcomed with open
arms.
Simpson: It's exaggerated, of course.
77
Simpson Accepts
Simpson: Well, I accepted the Schroder offer.
Riess: Since P.N. Gray was your contact, why did you have to start
on the bottom rung?
Simpson: P.N. Gray was my contact and my friend and certainly, of course,
in the end, one of the best friends I ever had. But in the first
place they wanted to start modestly and they already had some
personnel. And in the second place, the Schroder group in London,
meaning the family, were very skeptical about any American
knowing anything about banking. That's why they had chosen Gray
to be president, because he was not in banking, but had been in
business. They made him president and sent over a clerk from
the London firm to be the banking brains. Unfortunately, he had
no brains. I'm not alone in that view. He ran his course and
was fired.
Riess: And how much of a staff was there?
Simpson: Oh, I don't suppose more than fifty or sixty people in the
organization then. I didn't even have a title as "officer" when
I started, and then I was made "assistant secretary."
Riess: When you had your interview, what future did they hold out to
you?
The bank was just starting. It had a wonderful background in
banking, highly respected. Europe was going to require financing.
We were in an expanding period. And I knew Europe well and Prent
Gray knew me well.
"But, John," he said, "I have to go easy with these
Schroder people, and I have a great problem any time I take on
another member of the staff. I must sell him, John, every time,
and I'm going to have to do that with you. I think there's a
vice-presidency in it, but certainly not right away. And if you
like it on those terms, I would like to have you."
So I said to Crete, 'Veil, something is better than nothing.
This pay isn't as much as I made in the past, but something is
better than nothing. This is a splendid institution. I'm in
Wall Street, in very good auspices, and if I don't get along, I
ought to be able to make enough contacts to get something else."
Simpson:
Riess :
[Reading from notes]
Who is Beal?
"Schrobanco's early days: Gray, Beal."
78
Simpson: Jerry [Gerald] Beal, a Harvard graduate, four years younger than
I, and a very fine fellow and a very able fellow. He had been
taken on about a year before. He was always the second ranking
officer. I fairly quickly became the third ranking. He was
always one of my best friends. We got along fine.
As I mentioned, the company wasn't a bank, it was a banking
corporation. A clever lawyer had picked out a marvelous provision
in the New York banking code which permitted a banking corporation
to have greater latitude and more possibility of doing certain
transactions than a bank, so it was a banking corporation. But
it really was, for all intents and purposes, a bank with special
powers and privileges.
Well, the bill market didn't develop as fast as they expected,
but what did develop was the investment business, because not only
was there very active investment in this country, but Europe,
especially Central Europe, was an applicant for loans and credits
to assist in economic rehabilitation. Gray found quickly that
this type of investment business was a tremendously important field,
International Railways of Central America
Simpson: I could describe a few of the kinds of transactions that we were
involved in. There was, for instance, a kind of a promoter-
buccaneer named Minor C. Keith and he had been one of the founders
of the United Fruit Company and the International Railways of
Central America.
Now, Keith was quite a fellow in his day and really very
constructive, but he was old and semi-senile and he'd lost
control of the United Fruit Company, other people had that. He
had the railways but he'd allowed it to get into very insolvent
conditions. His finances were in very bad condition, consisting
of short-term liabilities and assets largely of a liquid character.
These were his personal finances.
Kuhn Loeb and Schrobanco consolidated Keith's liabilities
into five-year notes—I think there were $6 ,000,000--and arranged
with his creditors to accept these notes in lieu of their claims.
We did this consolidation of his debts, and the five-year note,
with the idea that we would liquidate enough assets within the
five years to get him out of debt with a handsome amount of money.
But, unfortunately, he was a stubborn old man. He said,
"You don't have any legal power to liquidate," and he wouldn't
let us liquidate. The crash came, and the bottom fell out of
Simpson;
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
79
the market, especially his assets. We finally liquidated the
fund and the notes, and the creditors got out just about even.
Not a penny left for Keith's estate, and his widow lived on
charity the rest of her life. It was a great lesson to me to
see how a man of wealth could ruin himself by unwillingness to
cash in.
Well, this led to a continuing banking relationship with
International Railways of Central America because Blyth, which
was an investment firm, became good friends of ours; Blyth and
Schrobanco did public financing for the Railways and continued
a relationship for many years.
Was that one your baby particularly?
Central America on that one?
Did you have to travel to
I went several times, pretty soon became a director, and ended
up by being chairman.
Of International Railways.
Yes.
So, that's how bankers become directors.
That's one way. Well, we had the responsibility to our clients
to whom we'd sold the securities, and therefore we were entitled
to a position to oversee the management. In fact, I had the job
of firing the president and finding a new one. That was somewhat
later.
English Banking Style
Simpson: An incident connected with International Railways gave me a
wonderful experience in dealing with the English, but it's kind
of off the subject.
Riess: I'd like to hear it.
Simpson: During the Depression, the railway had several million dollars
of bonds, which were maturing, and didn't have any money. And
at that time we couldn't do public financing because of the
Depression. Some of these bonds were held in England by the
investment companies of London, the famous English investment
trusts.
80
Simpson: The United Fruit Company, which was the largest supplier
of traffic to the railway, was willing to put up a certain amount
of money and also proposed to develop a large banana plantation
on the Pacific Coast if the English interest would extend these
maturing bonds. And if the United Fruit Company went ahead with
this expansion of the banana business, it would mean the railway
hauling the bananas from the Pacific Coast to the Atlantic,
over the hump, 5,000 feet--this, of course, would mean an
important additional source of revenue.
So, I was designated to go over to London and negotiate
with these British holders, and I did. The principal one was a
firm called Robert Fleming & Co., a good friend of Schroder,
and I went to call on them under the best auspices.
And it was so English. The room was like a rather simple
sitting room, a nice fire in the grate, and three of these
Fleming partners came in to talk with me.
I told them the story and said that if they and the other
British holders (because there were others) would extend the
bonds, prolong their maturity, the United Fruit Company would go
ahead with this large development on the Pacific Coast which would
supply a lot of new traffic for the company.
We discussed it. They said, "Would the United Fruit Company
give a firm legal guarantee that they would do this if we agree?"
I said, "No, they won't do that because there might be a
revolution, or there might be a hurricane," what used to be called
among financial people an "act of God." (Now they'd rather say
force majeure.)
They said, "Mr. Simpson, do you think that they would proceed
with their project if we were to extend these bonds?" I said to
myself, "Here you are, Simpson. Put up or shut up."
And I said, "Yes, 1 think they would. That's my opinion."
They said, "Would you excuse us for a few moments?" and
they stepped into an adjoining room and were gone about three
minutes and came back and said, "Mr. Simpson, we will extend the
bonds." I thanked them very much. I had it made then because
I knew the other English companies would do what Fleming did.
So, about a year and a half later I was down in Guatemala
staying with the president of the company. We were out walking
in the garden after dinner. All of a sudden I heard the most
terrific whistle. I said, "For God's sake, Charlie! What's that?"
81
Simpson: He said, "That's one of the banana trains coming up from
the Pacific."
And the thought that crossed my mind immediately: Well,
1 guess I can show my face in London after all.
But it was so nice dealing with those English. They sized
me up and decided the chance was that I knew what I was talking
about.
Riess: It's interesting because you really provided a link between
the world of the English and a Central American Republic. Was
Central America a hotbed, then, of revolution and so on?
Simpson: No, it was rather tranquil during my experience with it. Five
or ten years ago they had an incipient revolution that the CIA
is supposed to have engineered; the CIA is supposed to have
performed one of its covert operations and got rid of an ultra-
radical president. But at the time that I was active, things
were very tranquil and we had no trouble with the government.
Prent Gray in Action
Simpson: Another of our contacts was with the German steel industry,
and this, I think, is very important because this leads to the
great doings later on. The London house had been on friendly
terms with the German steel industry for a long time.
Dillon Read was one of our principal competitors and we
had a very hot tussle with them over a particular piece of
financing because, you know, the ordinary thing is people want
to borrow money, but the New York banks at that time were
competing with one another to sell their services and provide
money. Why? Well, there's a commission in it. You made money
by doing good; that's an ideal thing.
Gray took me with him for an evening meeting with Dillon
Read. You may wonder why in the evening? Because the prospectus
was being completed that night and would be published in the
papers the next morning, and the market was favorable, and it
was desirable not to waste a day in getting it to the market.
So, we were going to work all night if necessary.
We met in Dillon Read's office to settle some important
details and put the final touches on the prospectus. Dillon
Read were represented by one of their attorneys, Ferdinand
Eberstadt, who subsequently ceased to be a lawyer and became a
partner in Dillon Read.
82
Simpson: And parenthetically, I came to know Eberstadt very well
later on and found him to be one of the toughest human beings
I ever had contact with. We were together on a board. He
opened every meeting by making a motion that the president
resign. [Chuckles] I would say, "Now, Ferd, for goodness'
sake, let's not go through this again." And he'd say, "Oh,
Abraham Lincoln, the Great Reconciler J"
Riess: [Laughter] How funny!
Simpson: Oh, there are a lot of funny things in business.
Prent Gray could also be tough on occasion and he and
Eberstadt had some famous rows over the German steel business.
Once when Prent was on a safari in Africa I happened to be
sitting next to Eberstadt at a stag dinner. "Where is Gray?"
he asked, "and what's he doing?"
I replied, "He's in Africa and I suppose he's shooting
lions."
"OhJ No, he isn't," said Eberstadt, "he's choking them to
death with his bare hands." When I told Prent this on his return
he was delighted.
Introducing the Dulleses
Simpson: Anyway, we were battling out these last details. Ferd Eberstadt
knew much more about the whole thing than we did, really. We
were at a disadvantage. And Prent Gray said, "You know, at the
Paris Peace Conference I met a lawyer named Dulles and I think
he's a very smart fellow. And there's just a chance that he
might be working late on something. Let's go over to his office
and see if we can catch him in." We did and he was in his
office and we told him what our situation was and got his advice
and worked the thing out reasonably well from our standpoint.
That was our first contact with the Dulleses and from then
on we became closer and closer. They became general counsel
for the banking corporation and Allen came into the picture.
And that's the way it happened.
Riess: John Foster Dulles was in 1924 a senior partner with Sullivan &
Cromwell, but he was a young man, relatively, wasn't he?
Simpson: Yes.
83
Riess: You said that Ferdinand Eberstadt was one of the toughest
customers you'd ever dealt with. What was your first impression
of Dulles as a customer to deal with?
Simpson: Well, that's a very good question. He was a strange paradox.
We were an organization of relatively young people. Gray was
one of the youngest bank presidents in New York, he was only
seven years older than I. And when we would get into a fracas
and be pretty mad and ready to take an extreme position on
something, Foster would come down—we were in the same building,
they were on an upper floor—he would come down in a very quiet
way and say, "Well, what's all the shooting about, boys?" and
quiet us down.
He was a great moderator. I was astonished, when he was
Secretary of State, when he made his cracks about massive
retaliation, agonizing reappraisal, the brink.
You know, this "brinkmanship" is perfectly ridiculous. A
change of two or three words in that statement and you'd have
never heard of brinkmanship. He needn't have said we_ went to
the brink. He could have said, "They were so arbitrary they
almost pushed us toward the brink," and you never would have
heard the word "brinkmanship" in your life.
I was astonished at these what seemed to me to be slips
from this person who had been so helpful to us in keeping us
from doing and saying that kind of thing.
Well, we worked out matters that evening in a reasonably
satisfactory way. The deal was done. And so more American
financing of Germany occurred, which would provide plenty to
think about later.
Riess: You've introduced John Foster Dulles. What about Allen?
Simpson: Well, Allen did his law at George Washington University. And
one crack that was made in this book on Foster is that Douglas,
I think it was, or somebody who is very prominent now, graduated
with honors from either Yale or Harvard law school and was turned
down by Foster for a job because he didn't consider him adequately
prepared.* But Allen, who was not well known at all, was given
a job right away with Sullivan & Cromwell.
-Dulles, by Leonard Mosley, The Dial Press/ James Wade, 1978,
p. 76.
84
Simpson: Allen was never the lawyer that Foster was as a lawyer, or
Eustace Seligman, or Green. But he was an extremely able fellow;
as a lawyer he had a lot of common sense and balance. Foster
was our senior lawyer and Allen was also our lawyer. And in
matters where you had to take a chance, where you were about
90 percent certain that this was all right but there was a 10
percent possibility you might find some trouble, Allen would be
for taking the chance and he never was badly wrong that I can
remember.
Riess: Foster wouldn't be for it?
Simpson: Foster perhaps would want to play at 100 percent safe.
Riess: Of course, the lawyer takes no risk; I mean, the relationship
was always advisory.
Simpson: But he takes a risk of losing his prestige and reputation if
he's wrong too often.
Riess: Would that be generally known on the street, so to speak, or
just in the bank?
Simpson: Well, it would depend on the circumstances, whether it was a
big public matter or just private.
Riess: Were Sullivan & Cromwell particularly an international law firm?
Simpson: They didn't start by being an international law firm, but they
did develop a great expertise, let's say, in international law.
When the time came that that was a very important branch of the
practice of law, they took a leading role in it.
Riess: My little Who ' s Who sheet confirms Allen Dulles got an LL.B. from
George Washington University. John Foster Dulles did his law at
George Washington University too. Both of them went to the same
school.
Simpson: Well, it's not a bad law school.
Riess: But it's not Yale.
Simpson: No. I'd forgotten about Foster.
With the third member of the Dulles trio, Eleanor, I have
not had much contact, but I greatly admire her. She served
knowledgeably in charge of the Berlin desk but was obliged to
relinquish a State Department position when Foster became
Secretary of State. She is now active in a large and effective
organization (Youth for Understanding) for the international
exchange of students, and I am still in touch with her.
85
DC PERILS OF THE BANKING WORLD
[Interview 6: June 1, 1978]
The Lowenstein Business
Riess: Who was Lowenstein? [Referring to notes]
Simpson: It's a long story. Lowenstein was a Belgian, very wealthy,
and a client of Schroder, London, and we thereby came in
contact with him. He was a very theatrical man. He traveled
around with a galaxy of secretaries and a boxing trainer.
Oftentimes if you wanted to have a talk with him you had to go
up into the gymnasium and catch him between rounds. [Chuckles]
He believed in electric power and artificial silk, and he
formed two companies in Canada.
Riess: Artificial silk is nylon?
Simpson: Celanese.
He was a great fighter and he had terrific quarrels with
other financial concerns, individuals and concerns. His
companies were publicly owned, aside from his own ownership; I
mean, he formed the companies and obviously kept a considerable
interest in them, and then there was public financing.
He ended by either falling or jumping out of an airplane
over the English Channel. There was always a great argument
about whether he jumped or fell accidentally.
Riess: This was after the .crash?
Simpson: No, it was before the crash. He was reputed to be worth about
$100,000,000 before he jumped or fell, and about $50,000,000
afterward. The companies still exist now under another name
86
Simpson: and they are worth about $100,000,000, in which the family
has a substantial interest. So, he wasn't by any means a
big failure.
One reason why it's interesting to talk about Lowenstein
is that people compare him sometimes with Ivar Kreuger who was
an out-and-out crook. He forged bonds and borrowed money on
securities which did not exist and was a thorough rascal, but
a very clever one. He committed suicide in the end.
Lowenstein was theatrical and did prance around and
quarrel. But to link his name with Kreuger is completely unfair
to Lowenstein.
Well, the stock in Lowenstein 's companies went down after
his death because people suspected that there was something very
bad, but there wasn't at all. I was on the boards of his
companies for quite a while during the war when the British and
the Belgians, who were his chief owners, were out of touch, of
course, for war reasons. So, I knew really a great deal about
the affairs of the companies and their previous history, and
nobody had done anything crooked at all. But all these boxing
masters—he made people think that he was a wild man.
After his death, we (Schrobanco) were charged to settle up
his affairs, his accounts and indebtedness in the United States.
Bill after bill came in from this that and the other thing, and
we paid them all. We thought it was all over, and then finally
a bill for I think $1,600 came and the officer who was handling
it said, "Must have been a shuttle trip." You know, the shuttle
between Times Square and Grand Central Station. [Laughter]
Riess: And who was Lee Higginson? [Referring to notes]
Simpson: Lee Higginson was a very prominent and very fine investment firm
in New York and they had the Kreuger financing and, among other
things, International Match. (Indeed we were rather provoked
and disappointed because, having had a position in some of this
German business, we had invited them into one or two things, and
they did not invite us into International Match and their other
dealings with Kreuger. And that was supposed to be the creme
de la creme as far as financing was concerned.)
But, in the end it transpired, as I said, that Kreuger was
a complete fraud, and he persuaded Lee Higginson to do something
which no banker should agree to and it's astonishing that they
did. (It just shows the extent to which a clever crook can pull
the wool over your eyes.') He wouldn't let them have an
independent audit of his affairs! Now, one thing you always do
is to have on your prospectus: Audited by some firm like Price-
Waterhouse or Haskins & Sells. Kreuger said that would be a
reflection on his dignity.
87
Simpson: In retrospect, it's almost incredible that Lee Higginson
would have fallen for that, but we were living in a wild period
and people were doing all sorts of things that they had no
business to do. So, Lee Higginson did not insist, did omit the
independent audit, and there were some other Italian bonds
involved, many millions, and they didn't exist at all.
Kreuger did commit suicide, as I said, and Higginson went
bust. There is a more modest Lee Higginson today. It's very
interesting. Baring, one of the finest London houses, went
bust in the early '90s and it was called the Baring Crisis.
You'd think that the name would be finished forever, but they
managed to rehabilitate themselves. And Lee Higginson at that
time went broke, bankrupt, and now again, the firm exists.
German Acceptance Financing
Riess: When you said that people were doing "all sorts of things in
those days that they shouldn't be doing," are there any other
interesting examples? Did you, or you with Schrobanco, get
yourself into any positions that you barely got back from the
brink of?
Simpson: Not of that particular kind, but in another way we did indeed
get ourselves into a lot of trouble. I was going to tell you
about that a little later, but perhaps I might as well do it
now.
Schroder's, London, had always had a great many German
clients. So, when Schrobanco was formed in 1923, they naturally
put their new New York organization in touch with their German
clients and we did a lot of German acceptance financing, that
is to say financing German industries and banks by putting our
name on bankers' bills which were then bought by other banks
in the money market. That was the so-called bill business and
we did that to a very considerable extent.
Riess: To too great an extent?
Simpson: Yes, as it proved.
Riess: What was the profit in that?
Simpson: We charged a fee for putting our name on the bill.
Riess: And did they have a certain life, or duration?
88
Simpson: They were usually of short duration because they were for the
financing of the movement of goods in trade, and the arrival
of the goods at their destination and sale would liquidate the
bill. So, a typical one was the 90-days.
Riess: When did it get to be too great an extent?
Simpson: It got to be too great an extent when the Depression came.
In the spring of 1931 the Creditanstalt in Vienna failed.
I should tell about that.
A banker who was a director of one of the principal banks
in Vienna, the Wiener Bank Verein, was offered a directorship in
the other large bank, one of a slightly, but only slightly,
higher rank, the Creditanstalt, and very foolishly he accepted
it. I knew him well. I liked him very much. He was a first-
rate man.
In 1931 I was in Europe when he came to New York to
announce his change of position and to make the rounds of the
banks, the usual thing, dinners and lunches, handshaking, and
all that. He got on the ship to go home, and while he was in
mid-ocean the news came that the Creditanstalt had failed. His
explanation was that they had shown him a false balance; they
had falsified their balance sheet.
I mention that because certainly that was the beginning;
the stock market crash here was in '29, but that was the
beginning of the collapse of Central Europe which then fed the
Depression here. (I don't know whether a "crash" "feeds"
something; you must straighten out my curious metaphors.) But
those were the key dates, '29, the stock market crash, '31, the
failure of the Creditanstalt which precipitated the ruin of
Central Europe, and that contributed to the terrible depression
worldwide.
The repercussions were so great that both the Austrian
and German debtors, debtors not only to Schroder and Schrobanco
but to banks generally, were unable to meet their obligations,
and it resulted in a moratorium which meant simply non-payment
of their obligations as they fell due. (The British dreamed
up the name of "Standstill," which sounded more respectable than
"moratorium. ")
89
A Pyramid Collapses: Crash
Simpson:
Riess:
Simpson;
Riess:
Simpson:
Another piece of public financing or a flotation of securities
in which we participated was in connection with the formation
of a company called Electric Shareholdings, which was a creature
of a man named Harrison Williams. Harrison Williams was a sort
of tycoon who had played a great role in pyramiding holding
companies. The way you pyramided a holding company was to own
a small equity in it, issue securities to a large amount, and
then with the funds derived from those securities, form another
company with a small amount of initial capital, issue some more
securities, and so on, et ainsi de suite, as you'd say in French.
The result was that you had a huge structure of companies
with a very small base, like a pyramid turned upside down, and
we were arranging to float one of these companies, owned partly
by Harrison Williams and partly by European interests.
It sounds like a risky venture.
Oh, well, nothing was risky then because we were in the new
era, boundless prosperity; nothing we could ever do would go
down, only up and up. Well, with other bankers we formed a
group and I was delighted because I was in charge and it was
the first piece of financing that we were going to head; our
name would be first.
But Harrison Williams was a very hard trader and instead
of our receiving our remuneration in the form of a large fee,
we took it in options on the stock, which were worth quite a
large sum; we were going to make several millions of dollars
out of it.
Of course, what happened was that the crash came and the
prices of all these stocks went down and our options were worth
nothing. So, aside from a very modest cash remuneration, we got
nothing out of it at all.
Oh, dear.' But it didn't pull Schrobanco down?
enough operation to do that?
It wasn't a big
No. And, as a matter of fact, we didn't lose anything at all
because this was in the spring of 1929 and there was one last
fillip of the market before the October days and we got rid of
all those securities in that period. So, we didn't lose, but
we made practically nothing.
Riess: And did it damage your reputation?
90
Simpson:
Riess:
Simpson:
Riess :
Simpson:
Riess:
Simpson:
Riess:
Simpson;
Riess:
Simpson:
No. Oh, other people did so much worse things.1 [Chuckles]
And yet I'm impressed that you were a man with lots of foresight.
Where was your foresight before the Depression?
0-o-o-h! Where was our foresight? Where was the foresight of
all the bigwigs of the United States?
No, I mean just yours.
Well, I was a modest newcomer to the whole thing. I couldn't
believe that Charlie Mitchell, head of the National City Bank,
didn't know what it was all about. Even Paul Warburg, the very
wise Jewish banker, sounded only a mild note of caution. On
the whole, Mitchell, head of the National City Bank, Wigham, of
the Chase — these great names had no apprehension. Even Mr. Hoover,
who was President, didn't sound any note of warning.
How we could have been in that state of mind is incredible
because we did have examples: the tulip craze in Holland in the
18th century, the Mississippi Bubble, the South Sea Bubble.
They had happened a long time ago, it was true, but they had
happened when people had come to the belief that there could be
no_ end to a rising prosperity and rising prices.
Was there anything that Harrison Williams was doing that was at
all illegal?
No, not illegal. It might be illegal now because of the subsequent
legislation, but it wasn't then.
And that was the point of Schrobanco's having lawyers, that you
would investigate everything that you invested in?
Oh, yes, and we had an audit all right. We didn't make the
mistake that Lee Higginson made. No, there was nothing illegal
and nothing that at that time was considered unethical.
Kreuger convinces Lee Higginson that the audit would slander his
name, and Harrison Williams convinces you that you'd be better
off taking stock options rather than in money; it seems like
there are certain parallels there; in other words, these are
real con artists, both of them.
Well, Kreuger certainly was. I wouldn't call Harrison Williams
a con artist. He was very shrewd. He thought instead of paying
us in cash, he would pay in options. No, I think Harrison
Williams was very shrewd. He was cold as a fish. I used to have
to go over and talk to him. But he was never even charged with
having done anything dishonorable.
91
Simpson: There were people running stock pools and, to some extent,
rigging the market. But they themselves were taken in. I
coined a saying which I rather liked, that the trouble with Wall
Street was there were too many sheep in wolves' clothing.
[Chuckles]
Riess: But the market crashed.
Simpson: The great market crash, about which enough has been written, I
think.
Riess: Where were you and what were you doing that day?
Simpson: Looking at the report on the ticker for the extent to which the
market went down, and being astonished and upset. Of course, we
didn't realize at that time that there was going to be a
Depression. The market crash was one thing; the Depression, of
course, came later and extended over years.
The great impact of the market crash was extended over a
few days and weeks. Also, there was a very substantial recovery
in the stock market in the early part of 1930. It came back
about halfway from what it had lost.
Roosevelt's New Deal
Simpson: So, the Depression worsened and Roosevelt took office in 1933.
(I should reverse the order of that.) Roosevelt took office and
the Depression worsened.
Riess: How did the first hundred days of Roosevelt affect Wall Street?
Simpson: Well, Wall Street was being hit from all angles. Wall Street was
being hit by the economic financial situation and also by the
New Deal, because Roosevelt, having criticized Mr. Hoover, for
one thing, because he had not balanced the budget, pitched in
and unbalanced the budget as much as he could.
Here is a story. Roosevelt had a--I don't know that you'd
call him an economic adviser, but a political adviser, Judge [Samuel I.]
Rosenman, was it? And by the time the 1936 election came along,
Roosevelt and [Henry] Morgenthau, his Secretary of the Treasury,
had got the New Deal underway with full force and, of course, it
was running budget deficits heavily.
92
Simpson: Well, in the 1936 campaign he was scheduled to make a
speech in New Orleans. And it appeared that in 1932 he had
made a speech in New Orleans in which he had castigated Mr.
Hoover for unbalancing the budget. So he asked Judge Rosenman,
"What am I going to say in New Orleans about the budget?"
[Chuckles] Judge Rosenman said, "Deny that you were ever in
New Orleans."
Riess: [Laughter] My sense of history is that Roosevelt saved the day.
Yours is not?
Simpson: Well, that's a complicated matter. The popular view was that
Roosevelt saved the day. He saved the day in the sense that poor
Mr. Hoover, who had been at most only partly responsible for the
Depression, had become completely discredited, and when they
pitched tents and made shacks to live in they called it Hoovertown,
and so on. Roosevelt was a marvelous orator, had a great
political knack, coined a phrase like "nothing to fear but fear,"
and in that sense he did a great thing.
The legislation of the New Deal--I suppose I'm like most
people from Wall Street, prejudiced. But while undoubtedly there
had been many bad practices, and reforms were needed, I thought
that the manner and, to some extent, the substance of the reforms
were very unfortunate, because I always thought the awful
antagonism which was bred really retarded our recovery from the
Depression.
As a matter of fact, statistically, of the industrial
countries, we were the slowest to come out of the Depression and
never did come out of it till the war came. So, while I can see
the psychological service that Roosevelt gave the country, I
think that he really was pretty bad in his economics.
There was a most terrible bitterness between Washington and
New York at that time. A lot of people in New York had behaved
badly and legislation was passed hastily to try to prevent that
kind of behavior in the future. A great deal of that legislation
was declared unconstitutional by the Supreme Court, you know.
Riess: By the "people who had behaved badly in New York," you're
referring to what?
Simpson: Some people had acted fraudulently. There's no doubt there was
fraud. There had been a lot of bad things. There was an element
of vindictiveness on the part of the New Dealers. And, in general,
the bankers in New York opposed Roosevelt and the New Deal.
Washington Contacts
93
Simpson: Schroder was much smaller, of course, than the large banks, but
we said, "Well, this thing [New Deal] is here and we can't do
a thing about it, but hadn't we just as well learn all we can
about what's going on in Washington and make any contacts which
might prove useful to us and not just sit here in New York
twisting our thumbs?"
And we said, "Somebody ought to make a point of going down
to Washington frequently, every month or two, to get acquainted
with these people in Washington and to meet the new people and
try to foresee what was likely to happen and take any advantage
of it that we could."
I happened to be the one who had, on account of my war
experience, met quite a lot of the permanent government people
who didn't lose their jobs, so I was the one to go.
Riess: Who were those people?
Simpson: Oh, they were middle-rank bureaucrats. In the Commerce
Department, the head of the Finance Section. And the Federal
Reserve Bank had a fellow, I've forgotten his name.
I'd go down, and some of them I knew well enough to invite
to lunch. On others I called. I knew Dean Acheson and Henry
Grady and others.
Riess: Those sound like good contacts.
Simpson: They were good contacts, and I got the feeling. And when you
come to know people, talk with them, and exchange ideas, you are
less passionate.
So, I went down to Washington every month or two and spent
two or three days. I had some friends in the State Department.
I had one very good friend who was assistant secretary of state
and was later chairman of the Tariff Commission, Henry F. Grady.
Riess: And, in a way then you became a lobbyist from Wall Street.
Simpson: No, not in the least. I didn't do any lobbying or try to
influence anything. I just tried to find out what it was all
about and how we could best take care of ourselves, especially
from a financial standpoint.
Riess: And that was information that you brought back just to Schrobanco,
or did you represent a group of investment bankers in New York?
94
Simpson: No, it was just to Schrobanco. I didn't represent any group.
Riess: Yes. I wondered if you found out things that really were so
extremely helpful that you were able to get the jump on other
New York outfits.
Simpson: I don't know about getting the jump, but I did follow the money
aspect very carefully and that tied into our dealings in
government bonds. I suppose the most specific thing I got out
of it was talking of government bonds and interest rates and
money matters.
Riess: When you say "we decided," how did Schroder make their decisions?
Simpson: We were such a small group that we could be talking together all
the time.
Riess: What position did you hold in the company at that time?
Simpson: Well, in 1935 Prentiss Gray, who was president, was killed in
a guide-boat accident off the Florida Everglades, and certainly
it was the saddest event which occurred during my time with
Schroder. Gray was my boss and friend.
Jerry Beal then succeeded him as president, and I became
executive vice-president. (I also became chairman of International
Railways of South America.)
The Gold Standard; John Laylin
Riess: And was this country going off the gold standard a matter of
discussion at that time?
Simpson: That, I think, is a very interesting thing and it ties into
our adjusting ourselves to the New Deal.
England had gone off gold in September 1931. They didn't
call it "going off gold" — gold was re-valued in terms of Sterling.
Sterling was it and gold was a side issue.
I must be a little technical here. The United States bonds
in general contained a provision called the Gold Clause. And
the Gold Clause can be paraphrased something like this: "These
bonds will be paid in gold coin of the present value of weight
and fineness." Now, that had been traditional since I don't know
when. And that meant, on the face of it, that if the United States
95
Simpson: Government owed you some money on its bills or notes, it was
obliged to pay in gold coin of the present value of weight and
fineness.
Riess: That includes standard dollar denominations?
Simpson: Oh, yes. And, much more than that, practically all corporations
that issued bonds included the same clause, so that practically
everything of a substantial nature, government and corporate,
was payable in gold. Well, England did not have such clauses
in their obligations. They went off gold, and that was that.
Our London partners wrote and said, "If the United States
goes off the gold standard, what will happen to the gold clause?"
"Well," we said, "they've got gold on the brain over there.
They have the devalued Sterling and they think everybody's going
to devalue. But we're not going off the gold standard."
But we realized that we couldn't just say that, so we went
to Sullivan & Cromwell and said, "The London partners have asked
this question. Will you give us the answer?"
They said, "Certainly," and they put one of their juniors on
it, a fellow named John Laylin, who was working under a senior or
seniors. He did a monumental job of investigating the position
of gold clear back. There were a lot of cases after the Civil
War, the famous Greenback cases. And he finally came up with a
volume about as big as one of your oral history volumes with the
conclusion that if we did go off gold, it was quite possible that
the gold clauses would not be enforced.
We were shocked at this and Prent Gray told me to send this
thing to London and to write a covering letter taking the curse
off it somewhat. And I did.
I said, "Here's Sullivan & Cromwell's report which, of
course, we must give heed to, but we still do not think we're
going off gold. And the question, then, of the enforcement of
the gold clauses is a legal question. There can be different
points of view on that, and different judges take different
positions. So, on the whole, we don't think it's a matter to be
too concerned about."
Well, that was just 100 percent wrong.' We went off gold and
then a very curious situation developed. The new people in the
Treasury (and the old people too, for that matter) didn't know
what in the world to do. They had, for as far back as the memory
of man runs not to the contrary, been issuing prospectuses with
96
Simpson: this gold clause. And they had to do some financing immediately,
so they did some financing and put the gold clause in again,
although it already had been repudiated.
They realized that couldn't go on, so they sent--despite
the antagonism between the New Deal and Wall Street, there were
people who went back and forth--they sent word to New York that
somebody must come down, some lawyer must come down, and
straighten this out with them. But he should not be anybody of
any prominence. Wall Street was so utterly unpopular that he
should be somebody who was competent to straighten them out but
was of no prominence.
Well, there was just one obvious person. That was John
Laylin. He knew more about the subject than anybody in either
Washington or New York and so he went down to Washington and to
the Treasury. (Acheson was in the Treasury then, not secretary
but assistant secretary or something of that sort.)
The result was that when the question went to the Supreme
Court, the gold clauses were not upheld. Just why and how is
itself a complicated story and I don't think we need to go into
it, but the point was that the gold clauses were not upheld.
As a further result of that, John Laylin was involved in
the drafting of the Gold Reserve Act of 1934, which was the law
that governed our currency until recently.
Riess: I take it it was a good piece of legislation.
Simpson: Yes, I think it was. It served our purpose very well for quite
a while and perhaps could have continued to do so had we not
committed what I consider terrible errors in our trade and relief,
foreign aid, policies. That's another long story, of course.
Riess: Wouldn't you have thought that they would have figured out all
of the legal ramifications before they went off the gold standard?
Simpson: You'd think so, if everything was done by wise thoughtful men
who took plenty of time, but life isn't that way.
That's not quite the end of the story. John Laylin, of
course, participated in the cases before the courts and we in
New York, his friends, said we'd nourished a viper to our
bosom. [Laughter] Then he became close to Acheson and, after
serving about two years in the Treasury, he joined Acheson 's
firm and spent the rest of his career in Washington as a very
brilliant lawyer.
97
Pre-War Business with Germany
Riess: Sullivan & Cromwell sounds like an interesting firm. I gather
they had an office in Berlin?
Simpson: Not a permanent one. They had a close relationship with a
German firm, Albert & Westrick.
Riess: Townsend Hoopes says that Dulles was really blind to the threat
of Germany.*
Simpson: Well, Sullivan & Cromwell were lawyers for a lot of German-
American financial transactions. The only way they could serve
their American clients was to know the Germans very well and
deal with them. You must remember that at that time the way
to be nice was to help the Germans because they'd been very much
crippled by the war and also everybody by that time was reading
Keynes's book, The Economic Consequences of the Peace, about
all the injustice that had been done to Germany.
So, Sullivan & Cromwell at that time were playing what you
might call a very pious role in helping the American financial
interests help Germany to recover, and they undoubtedly saw a
great deal of both Albert and Westrick.
I met Albert and Westrick at that time. Later on in the
Hitler regime I am sure these men were Nazis. But in the heyday
when everybody was expected to be kind to the Germans, we had
Westrick to a Christmas Eve party, or New Year's, or something.
And he was a very attractive man. He'd been terribly wounded
in the war. He was, as a lawyer, helping to rehabilitate
Germany.
Later on in the Nazi time, before we were in the war, he
paid a visit to New York and Allen Dulles told me that he had
refused to see him. And if he had tried to get in touch with
me--I didn't know him so awfully well, but we had had him to a
dinner party--! wouldn't have seen him. But he didn't make any
attempt to see me.
Riess: In 1935 there was a partners' revolt apparently at Sullivan &
Cromwell and, according to Townsend Hoopes, they faced John Foster
Dulles with the fact that they were going to re-form the firm
unless he would sever his ties with Germany.
*Hoopes in The Devil and John Foster Dulles (p. 32) says: "This
perspective was later to make him slow to recognize the danger
of Hitler and Mussolini."
98
Simpson: I don't know anything firsthand of that, but it may have been.
I was on to the Nazis early and I have always been very
proud of that fact. But, you know, the vast majority of
American businessmen accepted the Nazis far too long. The vast
majority of American businessmen thought it was sort of like
Democrats and Republicans in Germany. What seems now so obvious,
that you should have hated the Nazis from the very first time
you ever heard the word, that was not at all the case then.
Riess: Why were the businessmen so blind?
Simpson: Partly because they wanted to do business, and partly because
they were still under the influence of saving Germany. I
suppose some of them were anti-Semitic. And I suppose they
believed that it was all exaggerated.
You raised this question with regard to Foster Dulles. I
think that Foster was just slow. Everybody hated Hitler in the
end, but not everybody saw it clearly at the beginning, and I
think Foster took a while to get on the boat.
Riess: It's very interesting. In a way It sounds as if because you did
have some anti-German--something residual from World War I--you
were more prone to see what was really happening.
Simpson: Well, I was there in 1937, about two years or so before war
broke out. I went out to Vienna after being in Germany. That
was before the Anschluss, before Austria was taken over.
And I sat down in a hotel room for a day and a half or so
and wrote a long memorandum and I said that I'd been in Germany,
seen everybody that I wanted to see, and they all assured me
that Hitler wanted nothing but peace and that the excitement
about possible war was overdone, and I said that I personally
didn't believe a word of it, and that I thought Germany was a
great menace. Did you read any of those memoranda?*
Riess: Yes.
Simpson: Well, you know what I thought and said.
Riess: Yes.
*File of John L. Simpson's wartime correspondence. See "What
This Country Faces if Germany Wins the War" in Appendices.
99
Simpson: I didn't actually predict war. I can't find any place where I
said, "I think there's going to be war." But 1 did say that I
thought there was a great risk of war.
Riess: You presented all the arguments for why war would come or
could come.
Simpson: I'll tell you, you can hold this against Foster, I guess. He
felt that the French and the English had acted so miserably
in their own interests, their politics had torn them apart,
and he said one time, "I don't see how the English and the
French can expect that every twenty years we're going to come
over and pull the Germans off their back."
Riess: That's interesting.
Simpson: I think he felt that the British and French had so deteriorated
in their moral force in the world of affairs that it was
just impossible for us to always redress the balance. I think,
to that extent, he can be criticized. But good lord, in a book
that I think I have up there, the author says, "Three Americans
did great damage." One was Lindbergh, who went to Germany and
came out with the report that it was impossible to cope with
Germany, that we'd just as well make terms.
Another was Bullitt, who was our ambassador to France and
who gathered a group of French politicians and statesmen, so-
called, to hear Lindbergh's story, further strengthening their
determination not to oppose Germany.
And the third was [Joseph] Kennedy, our ambassador in
London, who did the same thing in England. Well, those were
three respectable fellows, except Joe Kennedy. [Laughter]
This man who wrote this book, On Borrowed Time; The Year
Between Munich and the Outbreak of the War, was Joseph Davis.
So, while I think Foster was slow on the uptake, I think
that this fellow Hoopes is obviously very biased.
Riess: You thought America should have taken some stand, perhaps years
earlier. What might have been done?
Simpson: Oh, well, our failure to join the League of Nations was a
catastrophe. You can't say that it would have avoided the Second
War, but it might have. And unlike the majority of people, I
think Wilson was much to blame. Wilson could have had his League
of Nations by accepting a few fairly moderate modifications.
In the first place — this is_ getting off--he never should have
100
Simpson: gone to Paris at all. If he did go to Paris, he should have
taken a Republican or two with him. And when the issue came
up with the Senate and Lodge, he should have accepted some
minor concessions which would have got the thing passed.
South America and the State Department
Simpson: My main foreign experience while I was with Schroder was with
Europe, as you know, but I did make one extended trip around
South America in 1940 and visited clients whom we had in the
various countries. I had strongly the feeling that many
South Americans were waiting to see who was going to win the
war before they took sides very openly and strongly.
I was greatly impressed with Argentina as a country and
completely wrong in my foresight because I had no idea that
anything like Peron was going to happen. I participated with
one of our vice-presidents named Norbert Bogdan (Boggy to his
friends) in setting up a company in Argentina which did pretty
well for a time and later was sold. It wasn't really very
successful.
Riess: What kind of a company?
Simpson: Sort of a general finance company.
Riess: And what was the purpose of the trip to South America?
Simpson: The purpose of my trip was really to have a look at it and know
what it was all about and be in a better position to deal and
advise with other matters.
We had splendid relations with the Banco do Brasil. We
picked a fellow in New York to send down there who stayed for
many years as an agent and did a good deal for Schroder in two
senses, promoting deposits of the Banco do Brasil with Schroder
in New York, and also helping American businesses and companies
to work out their Brazilian problems and thereby establishing
friendly relations with them in this country. My trip was a
rather general one in that sense. I didn't expect to pull off
any particular deal and I didn't.
Riess: This was something that you had done over the years, going into
countries and sizing up the financial situation.
Simpson: Yes.
Riess:
101
Did you still look to middle echelon people in sizing up a
situation?
Simpson: Well, in those countries I was able to go to pretty much the
top people.
I had a marvelous experience in the State Department in
connection with South America. One of Schroder's clients
there was of considerable importance in the community, but
there was some question as to where he stood with regard to
the war. We determined to smoke the matter out with the State
Department and find out the official attitude toward our doing
business with him.
So, I went down to the State Department and I couldn't
get Acheson, but I did get to a middle-rank bureaucrat, and I
said we were in business contact with this man and we didn't
know how he stood and we were afraid perhaps he didn't stand
very well. "Could we refer to the State Department in cancelling
our relations?"
"Why," this fellow said, "of course everybody knows that
he's disloyal to the Allies and you ought to know that yourself."
"Well, then I can say that you--."
He said, "Yes, but if you like we might go in and see Mr.
[Herman] Geist."
Geist was a fellow whom I had known in Vienna, we'd been
good friends in the American Relief Administration. I asked him
the same question and he said, "Of course you cannot. We would
disown you, and I'm sure Mr. So-and-so told you so, too." [Laughter]
The Price of Refinancing Germany
[Interview 7: June 9, 1978]
Riess: This matter of financing Germany goes back to the early '30s,
does it?
Simpson: It goes back to the '20s.
The Treaty of Versailles imposed enormous financial burdens
on Germany.
Riess: 132 trillion gold marks.
102
Simpson :
Riess :
Simpson:
Riess:
Simpson;
Riess:
Simpson:
Riess:
Simpson:
Yes. I don't know where you got that, but--
I read that. It sounds enormous'
Yes, it was enormous. [John Maynard] Keynes wrote his famous
book, The Economic Consequences of the Peace.
Soon, however, something developed which had been un
anticipated but which played a great role, and that was that
the mood of the victorious Allied countries changed and they
began to have pangs of conscience. The Manchester Guardian
was particularly outspoken in criticizing our policies, and
other prominent publications and prominent people, and people
generally. So, something had to be done about it.
But, in the meantime, something else was working—not
directly associated in people's thought, but in actuality
working hand in hand with this guilt feeling. And that was:
lend money to Germany and contribute to its rehabilitation and
make a nice profit in doing so.
That was the feeling in Great Britain? Were they in a position
to be doing that kind of business?
They were. Great Britain and the United States and, to a somewhat
lesser degree, Holland were the principal suppliers of finance.
And that financing was done in two ways: one, the bond issues,
and two, commercial credits.
I think I did speak of Schroder and Dillon Read competing
for the German steel bond financing. These were the famous
foreign dollar bonds. They were foreign bonds, but they were
expressed in dollars. They were high-yield. They yielded about
8 percent, and it was expected that Germany, having been a fine
name in the past, was going to be similar in the future.
They were available to the public?
They were offered to the public. The bankers underwrote the
bonds and offered the bonds to the public, and the public
(Tom, Dick, and Harry) bought them.
And the public had no second thoughts about it?
was no public feeling one way or the other?
I mean, there
Well, the public feeling was they got a fine return on their
money and it was a good thing to get Germany rehabilitated
anyway. A profitable way to do a virtuous act.
103
Riess: Do you think that if the Treaty of Versailles had been less
punitive that there would have been this response? Or do you
think that there was a need to re-establish these relations
with Germany anyway?
Simpson: Well, I think there was a need to re-establish commercial
relations with one of the great trading countries of the world,
but I think the guilt feeling was greatly fostered by things
like Keynes's book. Keynes's book became a very popular book
and widely read. And I think the general public, not themselves
financial technicians (if there is such a thing)--! think the
generality of readers of the literature, both books and news
papers, were influenced.
If all the information and advice they received had been
to the contrary, I guess public opinion would have been far
less sympathetic to Germany. But having been told that the
Germans were barbarous people and cut off women's breasts and
stabbed babies, people now were told that the Germans were a
very fine nation; they were partly responsible for the war but
no more so than the French, and something ought to be done about
it.
Riess: Were propagandists really circulating this around the country,
or was it just a slowly dawning awareness?
Simpson: I think the latter. Well, I think all the Germans who came
here were propagandists, ipso facto, the consuls and ambassadors
and what have you, but I would say that it was just a general
th ing .
Riess: And do you think it represents also a need to see one's fellow
men as really decent human beings?
Simpson: Well, Germany had established a wonderful reputation during
most of the life of this country. They had participated in
the Revolutionary War, just as Lafayette did. What was his
name? Von Steuben?
Riess: That's right, yes.
Simpson: And there are many, many German-Americans who 99 percent became
loyal Americans during the war, but when the war was over and
it looked as though Germany was going to receive a pretty rough
deal on reparations, why, these German-Americans naturally
reverted to something like their previous state of mind.
104
Riess:
Simpson:
Simpson: (I had a fraternity brother whose name was Fenstermacher.
He changed it to Fenston during the war. But I met a hotel
clerk recently whose name is Fenstermacher. I said, "You
didn't change your name during the war, did you?" And he said,
"No, I wouldn't think of it.")
To get on with the story, Schroder, while British, had a
lot of German connections and did a lot of German financing
and went head over heels, both in London and in New York, in
the issuance of government bonds and in commercial financing--
that is to say, 90-day bills, supposedly against commodities
moving in trade.
You say "head over heels," like you sensed that they were
overdoing it.
Well, they didn't think so then, but it proved that they were
overdoing it. In London they were overdoing it and in New York
we were overdoing it. This was during the period of the Weimar
Republic, the great period of virtue going along with profit,
and the competition was very keen among the bankers to obtain
the position of supplying this credit to Germany.
Riess: And did Schroder have a majority of the business?
Simpson: Oh, no. It didn't have a majority of the business, but it had
a good share of it.
Riess: Compared to Dillon Reed, for instance?
Simpson: I don't know who did more. They both did plenty. I daresay
it's quite possible that Dillon Read did more in New York because
they were larger in New York. In London, Schroder, I suppose,
did about as much as anybody, maybe a little more than the average,
But, in any event, American and British bankers poured
money into Germany by way of issuing loans and financing trade
by short-term bills.
I think it was in 1930 that Schacht, president of the German
Reichsbank at that time, came over to New York and made a talk
that the American bankers were overdoing it; they were putting
too much money in Germany. He made this talk at the Council on
Foreign Relations. (I was one of the early members of the
Council on Foreign Relations in New York and was there at this
meeting.)
The American bankers were furious!
business.
He was spoiling their
Riess: Well, only insofar as they decided to heed his caution.
105
Simpson: Yes, but, you see, they were selling these bonds to the public.
And if Schacht tells all and sundry, including the public, that
this is unsound and overdone, why, the bankers are losing their
customers. Their customers are being discouraged.
Anyway we went ahead and did all the German financing we
could and then came the crash, beginning with two main events:
one, the crash in October of the New York stock market; and
two, the failure of the Creditanstalt in Vienna in 1931. The
crash occurred in 1929 and the beginning of the crumbling of
the commercial credit of Germany and Austria and others — they
were the conspicuous ones — that dramatic failure was in 1931.
Riess: I don't understand what motivated Schacht. I mean, certainly
it was to Germany's advantage to have the money come pouring
in. It was your risk, not theirs.
Simpson: Well, it was to their immediate advantage, but Schacht really
was a very wise man, even though he was later tried as a Nazi.
Schacht could foresee the consequences.
Riess: So, did it earn him friends here in later events?
Simpson: Well, later events were the Nazis and Hitler. Schacht was one
of Hitler's financial cohorts for quite a time; later on Hitler
put him in jail.
He was tried at Nurenberg. A friend of mine visited him
when he was awaiting trial. You know, Schacht was born in
Brooklyn, he was absolutely bilingual. And this friend of mine
called on him when he was sitting there in his cell and said,
"Well, Dr. Schacht, I'm very sorry to see you in this position."
Schacht said, "Oh, don't give a thought to it. They've got
to acquit somebody, as a matter of form, so it's sure to be me."
Riess: With the crash and the failure of the Creditanstalt, your
pouring money into Germany ceased?
Simpson: It began to slacken. Schacht "s speech had something to do with
it, and the market began to be exhausted. Huge numbers of these
securities had been floated, bonds. The rise of Hitler began
to frighten people.
Riess: Did you go over to visit Germany during this period to look at
things yourself?
Simpson: I went there a number of times in the "20s and the '30s, and the
last time I was there was in 1937, which was two years before
the outbreak of war, and then I went two or three times after
the war, after '45.
106
Simpson: In 1931, following the failure of the Creditanstalt , and
other failures following, the heyday of German financing was
over. Also the banks and industrial companies which were
being financed currently on 90-day bills — these credits began
not to be repaid and pretty soon you had not a great recipient
of funds for development which could easily be repaid out of
their earnings, but you had unpaid bills coming due. And
there were two kinds of sufferers: the people who bought the
bonds pretty soon found that this high rate of interest was not
being paid, and the banks who had poured money in in the form
of current financing, bills, found the bills were not being
paid or couldn't be paid.
So, largely under the leadership of London, and here
Schroder's in London had quite a bit to do with it, they said,
"Instead of everybody just struggling to get himself paid,
'devil take the hindmost," let's organize a--" well, it really
was a moratorium, but they called it a "Standstill" because it
was a nicer-sounding word than was "moratorium." "We will
stand still. Let us all agree to stand still with our claims,
not try to enforce them." (I mean, not enforce them suddenly
and cost what it may.) "We'll give Germany a chance to work out
of this, which they will be able to do in the course of time."
And that was the famous Standstill, which was participated
in by practically all large American and British banks. Of
course, all of the British banks were large.
Now, coming to my own story, Schroder's story, we had done
far too much of this financing, both as to bonds and as to the
commercial financing through bills. As far as the bonds were
concerned, there was little we could do about it. The bankers
formed committees to try to negotiate settlements.
As far as the bills were concerned, that was a very
difficult and dangerous matter because we had frankly over
extended ourselves. We had too many German claims in relation
to our capital and it was very worrisome.
Fortunately, we were able to make arrangements with two
of the largest banks in New York, who took the position that
our bills would be good in the long run and bought them and
supported them. And that was a very neighborly and broadminded
thing to do.
Riess: What banks were these?
Simpson: [Pauses] I would prefer not to mention names.
107
Simpson: The question was: What were we going to do about it? We
had a grant of time, but we had to pull up our socks and see
what we could do. Well, we opened up a Berlin office. And an
officer named Ernest Meili, one of our vice-presidents of Swiss
origin, a very, very able banker, went over to head it and took
others.
There was a way that you could get repayment, but at a
discount, and the way was: Find people who were buying things
from Germany and needed to pay in marks, and they would buy the
marks from us, but at a discount. So, we could get payment, but
at a loss. Our fellows were really marvelous in the way they
worked that out because they liquidated claims for others for
fees which partially offset the losses they took in liquidating
our own claims.
I think we had ten people in that Berlin office at one
time. And these different classes of marks were so complicated
that the ordinary person couldn't understand what it was all
about. The Germans worked out a most terrifically complicated
scheme of different kinds of marks. Some marks you could use
to buy a camera, but you couldn't use to buy a parrot's cage,
or something. Some were travel marks which you could use to pay
your hotel bill, but you couldn't use to buy a suit of clothes.
They were called blocked marks, "blocked" because they could
only be used for certain purposes.
Riess: It sounds like a terrible wonderful money game.
Simpson: It was. But, as I say, we determined to make a virtue of
necessity, and if that was the game, we'd play it. And, as I
say, some of our very able men moved to Berlin and liquidated
our own claims partially and did so for others.
Now, there was a policy question involved. We could
liquidate at a discount. The discount was widening. First we
had a 10 percent discount and then probably 50 percent. How
fast should we do it, and how much? If you believed that this
was a passing phase and Germany would pretty soon recover and
these obligations would be met, then you shouldn't liquidate
at a discount and take too heavy losses. But if you thought
that the Hitler regime was rising and going to rise, and Germany
was set on a course which might very well lead to war, you'd
better get out just as fast as possible, even taking heavy
losses.
Now, there's where there could be an honest difference of
opinion and there's where my good and close friend Ernest Meili
and I didn't entirely agree, because he believed that: "Oh, the
soup is not served as hot as it's cooked." That's sort of an
108
Simpson: English expression of how our London people felt,
not get too excited, this is a passing phase."
"We must
Here's where my letters, my general letters of political
analysis come in. I was very apprehensive about the Hitler
regime from the first. Everything is a matter of degree, but
I said, "It's all very well to do this operation in Berlin
which you're doing. That's fine. But we ought to move faster.
We ought to get curt of Germany. We should liquidate these
claims and take our losses and lick our wounds and go on to
something else."
But Ernest said, "Well, we should liquidate some, and
especially we should develop this operation for others with the
fee. But John was in Belgium during the German occupation.
He's been kind of anti-German ever since. And we shouldn't
get too excited. It's not at all certain there's going to be
a war, probably won't be."
Riess: Was that Swiss neutrality speaking?
Simpson: It wasn't so much neutrality as it was disinclination to get
excited.
Our German friends (we had many) all told us things were
going to be all right. I had one friend particularly whose
name was Mallinckrodt. He was himself an extremely nice person,
very intelligent, and he said, "John, what Hitler wants is
peace. And we've got to get these differences straightened out.
Of course these attacks on the Jews are absurd, but that's a
passing phase, and it's too bad. But, in the first place, the
reports are exaggerated, and in the second place, you know the
Germans aren't going to sink into barbarism."
I didn't believe him. I said to myself, "It just looks
very bad to me. The Germans are a peculiar people. They get
an obsession." When I was billeted with them in the First War--
and these were intelligent men and educated — they had an
obsession about England: England, from the time of the Battle
of Hastings, had been plotting the downfall of Germany.
Riess: That's their paranoid view?
Simpson: Yes. I felt they'd gone on the warpath, you might say, and
that they were coming to no good end. And that's what I said
in these letters and memoranda that you read. I was more
pessimistic about the future behavior of the Germans than my
friend Ernest Meili was; in many respects he knew much more
about them than I did and was a better banker, but I was just
109
Simpson: more skeptical. The way we settled it was a compromise: we'd
liquidate some more, not all but some more. But with our
pushing and hauling--! one way, and others another way--at the
outbreak of war in '39 we were out of Germany. We'd liquidated
all our German claims.
Riess: Yes. And closed the Berlin office?
Simpson: Yes.
The Standstill went into effect in '31 and while we didn't
immediately open an office, we must have opened one within
a couple of years after that. We closed it in "39.
110
X PEOPLE AND ORGANIZATIONS
John Foster Dulles, Informally
Riess: John Foster Dulles was counsel for Schroder throughout the war?
Simpson: Throughout its formative years and the war.
Riess: Was he a man you could have a discussion with? Or did you just
have to listen to him mostly?
Simpson: Oh, certainly you could have a discussion. Did I tell you about
his telling me about having attended the ordination of his son?
One time he was making a speech here to some organization and
his secretary telephoned me and told me that he was free in the
afternoon, and would I like to take him for a ride around? I
said, "Yes, delighted."
Well, we had a wonderful talk. Now, he's supposed to have
no sense of humor. We were followed by another car with a security
man and he laughed at that and said, "Isn't it fun to have a
bodyguard ."
Then he told me he had recently attended the ordination of
his son, Avery. "Of course, you know I'm a Presbyterian," he
said. "Our family is very definitely Presbyterian. And I was
sorry when I saw Avery taking the course which he had. But,"
he said, "I attended his ordination and I found so many things
in common with my own creed that I felt better about it and I
really am not upset."
I said, "Well, I think you're sitting pretty. You've got
a foot in both camps." [Chuckles] He laughed and said, "That's
pretty good! I think that's right."
Ill
Simpson: Then, on another occasion, I was president of the World
Affairs Council here for a couple of years and he was making
a noontime speech to the Lions, who were holding a convention.
I persuaded him to attend a dinner of the World Affairs Council,
and he said he would if I would hold it to a small number and
guarantee to get him out by 9:00.
Well, I arranged it for about 100 people—the trustees and
their spouses and a few people like Walter Haas who were
particularly strong supporters of the World Affairs Council--
and we had the meeting at the Mark [Hopkins Hotel] . And I
said, "We must see about setting up the receiving line. Is
there anybody you'd like particularly to have in it?"
He said, 't)h, let's not have a receiving line. Why don't
you give me a drink and you walk around with me and let me talk
to people in groups or individually."
And it worked out wonderfully. He couldn't have been
pleasanter and chattier. People liked him, apparently, gave
every evidence of it. He made a good talk. He was going to fly
back in Air Force Number One, so his time was flexible. I
couldn't get him out of there. He had made me guarantee to get
him out at 9:00; I had a hard time getting him out at 10:00. He
was having a good time. I think the people that evening liked
him very much.
The Allied Control Commission; Henry Grady
Riess: How did you get onto the Allied Control Commission?
Simpson: One of my best friends ever was Henry F. Grady, who was later
ambassador to India, Greece, and Iran, successively. He had held
various positions in the State Department, the Tariff Commission
and so on.
Riess: Was he a CRB acquaintance?
Simpson: No, no, he was really an old family friend.
Riess: A Californian?
Simpson: Yes. And, as I say, one of my very best friends, and I think he
considered me one of his best friends. He was a marvelous fellow
who had a great sense of humor.
112
Simpson: The Salerno landing had occurred, Naples and Bari were in
Allied hands. They were setting up the Allied Control Commission,
which was to supply a military-civil government pending the
complete liberation, the restoration, of Italy to its entire
independence. That was the Allied Control Commission.
Well, it was the most balled-up and worst-organized thing
I think I ever had anything to do with. Grady was joint chairman
with Lord Stansgate, whose son is now making all the trouble he
can in England, joint chairman of the economic section of the
Allied Control Commission.
This civil government--! hate to talk about it, it was so
terrible. They got fellows, businessmen, professional men, and
made them majors, lieutenant colonels, and full colonels, and
sent them over there with no adequate preparation for them. And
they went to a place in Algeria--! 'm going to give you the name
and if you ever mention it to one who was there, he'll walk out
on you--Tizi-Ouzou. Thank God I wasn't there. As far as I can
make out, it was a jumping-off place. They were billeted there
until they went into action. Well, there was no action for them
to go into.' The military had captured that part of Italy and
had Naples.
But, anyway, Henry Grady invited me to join his group. You
know, one person couldn't do anything at all; you had to have a
group, a team. So, I went. I was financial adviser to the
co-chairmen of the economic section of the Allied Control
Commission in Naples. Nobody knew who had any authority and,
if you did have any, what it was.
This whole thing was the conception of the British and American
governments who thought that they must be ready to administer
Italy as it was liberated?
Yes.
Do you think that the idea was a good idea?
Well, I guess it worked pretty well in Berlin. I think an
international partnership is extremely difficult. And while
apparently the British and the Americans in the combat units
got along well, they didn't get along very well in Naples.
Riess: What was the function of this economic section, and what was
your function as financial adviser?
Simpson: [Wryly] I don't know; I never did know.
Riess:
S imp son :
Riess:
Simpson:
113
Riess: So, you had a little junket to Italy?
Simpson: [Laughter] No. I performed my duties very well. I obeyed my
great friend Harry Grady, who was senior to me, and I carried out
his orders. And one of his orders involved Lord Stansgate, whose
name had been Captain Wedgewood Benn--he was in the British
Parliament and he had been made a Labor Peer, Lord Stansgate.
Lord Stansgate said that he had to have a walk for twenty
minutes after meals and he enjoyed it very much if he had company
to walk with him. So Harry Grady, that miserable fellow [chuckles],
said, "John, you've been in England and you're a great friend of
the English and all that, so you go and walk with Lord Stansgate
for twenty minutes after lunch." [Laughter]
"Is that an order?"
"Yes."
So, I walked with this fellow up and down for twenty minutes.
And Harry Grady and a couple of others of our group were sitting
grinning from ear to ear. [Laughter] Well, I shouldn't make fun
of it.
I made that contribution to the winning of the war, and also
another one. This was before Grady had received all the honors
he later got. And I told him that he'd be pushed around by the
military unless he held some real rank, and so he got the rank
of minister.
Perhaps I am too harsh on the Allied Control Commission.
After all, we did collect and bring back valuable information
on conditions in Southern Italy and the kinds of problems which
would have to be dealt with in the final post-war adjustment.
Bill Donovan
[Interview 9*: June 22, 1978]
Riess: I have read your essay, "What This Country Faces if Germany Wins
the War." Did you write that for publication?
Simpson: I wrote it for any effect it might possibly have on the thinking
of Americans who might read it.
*Interview 8 incorporated in earlier text.
114
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
And was it published anywhere?
It was unfortunately published in a not at all effective place.
A Boston paper picked it up.
I wrote it following a dinner I'd had with Bill Donovan,
whom I'd known for a long time. I had just completed my trip
around South America. It was in 1940. I happened to meet Bill
Donovan and he invited me to dinner for me to tell him about my
impressions of the South American trip.
Why did Bill Donovan want this intelligence from you?
Bill Donovan was an American military hero; he was a combat
officer in the First World War and I think he was the only one
who received all the three top military medals. He was obviously
a devoted patriot. He said at this dinner conversation, "People
don't realize. People think we can choose to help England but
steer clear of it ourselves, with impunity, but we cannot. If
Germany should win, it would mean that she would have extended
her realm to include Russia and we would be really in a very
serious predicament. Our very freedom would be at stake."
I agreed with that, with far less authority than Bill
Donovan, and I decided to sit down and write what I thought our
position would be should Germany win. And so I wrote this paper.
The New York Times said it would publish it if I'd shorten it,
and while I was considering whether I could shorten it or not,
a Boston paper--! think it was the Boston Herald, but I'm not
sure—picked it up and printed it. I had distributed the type
script around to various friends.
That killed it for the Times and it never was otherwise
published. I think it was pretty good at the time, but I do
think it is dull reading today.
Would you say that it represented a view of the banking establish
ment, or really a personal view?
The latter. I don't think it particularly represented the banking
establishment.
In fact was it running counter to the thinking around that time
about how we could really still work with Germany?
The thinking around that time was "all aid short of war." On
this there were two types of thinking. There was Lindbergh's
thinking, which was not only don't voluntarily enter the war,
but also don't get drawn into it. And the other thinking was
"all aid short of war."
115
Riess: Did you keep up that acquaintance with Donovan? Did you get
some insight into the formation of the OSS?
Simpson: No. He invited me to join the OSS when he was forming it. He
told me about it in its early formation and that he had
extracted from the President a promise that intelligence would
be centered with him and he'd set up an organization which would
cover the field. But I didn't accept the invitation.
Riess: Was it tempting?
Simpson: Somewhat, but I could see that it was--[ pauses] . He had Jimmy
Roosevelt in to have a talk and I thought that he was going to
move in directions regarding the selection of personnel and
that sort of thing that I wouldn't like very much. I really
have nothing to contribute regarding the OSS.
Allen Dulles
Riess: I was interested in whether, as you have gone back and forth
between countries, you have been asked to do anything that might
be seen as intelligence work?
Simpson: No, I haven't.
Riess: And yet Bill Donovan asked you to have lunch and kind of brief
him on the South American situation.
Simpson:
Well, I say "no." I had some very good contacts in the State
Department, especially Henry F. Grady, and of course I talked
to him about Europe and what was going on, and Allen Dulles
also. But I didn't have anything to tell him [Dulles] about
European intelligence. He told me. He told me all about the
U-2 incident at breakfast in London, but I found later he hadn't
told me anything more than he had told others.
Riess: Was that the morning after it had happened?
Simpson: It was very soon after, very soon after. We were both in London
and we made a date for breakfast. I came over to his hotel. And
I was very careful in my approach. I said, "Allen, I don't know
how much, if anything, it would be proper for you to tell me about
this U-2 and obviously you wouldn't relate anything if it is not
proper, and I wouldn't ask you."
116
Simpson: "Oh, no," he said, "I'd be glad to tell you. I think it's
a good thing for responsible people to know what happened."
And then he did tell me the story. It had been going on for
about four years. The Russians undoubtedly had known about it
for a long time. He placed great emphasis on the accuracy of
the photographs. He said, "It's amazing. They could get a
picture of this breakfast table. They could almost get a
picture of the orange on it."
But he said—and this never came out, as far as I know, I
never heard it publicly—he said, "The fact is, there are only
about thirty days in the year when the light is suitable so
that you can get these pictures."
I said, "Well, Allen, what about it? We were going to have
this conference here [Paris Peace Conference]."
'Veil," he said, "nobody called me off." And he said, "It
may seem odd now, but this was one of the good days and I just
went ahead and took our pictures as I always did."
I said, "Of course, I'll not mention this, our conversation."
"Oh," he said, "I don't mind at all, to responsible people."
He said, "There's just one exception." He had told me how many
of those U-2 planes they had and he said, "I'd just as soon you
wouldn't mention that." And I never have, from that day to this.
It's of no earthly value now, of course. I've even forgotten the
number.
Apparently, as a matter of policy, he had decided to make
the details known.
Riess: Did you feel that being CIA director changed him?
Simpson: Well, I couldn't understand how he could have lent himself to the
Bay of Pigs, and on that I never exchanged a word with him, I
felt that was too delicate.
I thought he was so able and wise that I didn't see how he
could have lent himself to an attack without air support, and I
still don't, because, you know, that's what happened. These
poor fellows got ashore and the munitions ship or ships which
were to come in support were sunk because they had no air support.
It was a ghastly thing.
Riess: Were there any other incidents that you had a chance to talk with
him about during the CIA period? Was he available to you, or
did he have to close himself off during that period?
117
Simpson: Oh, no. He was available for personal and social contacts. I
visited him in his office a few times and saw him at lunch.
Riess: That would be a hard line to toe, to conduct conversation and
stay short of what's indiscreet.
Simpson: Well, did I tell you about my wife's conversation with him?
Riess: No, I don't think so.
Simpson: Our families were really quite close. We had houses in the same
block on 61st Street. We visited back and forth a lot and Crete
knew Allen very well and was very fond of him. She said to him
one time, "Allen, you have the marvelous faculty of having a
conversation which is most interesting and one feels enlightened.
And then, on thinking it over, one realizes you haven't told us
a thing." She said that as a compliment, but he was rather
offended. [Chuckles]
Adlai Stevenson
Riess: Was your association with Adlai Stevenson during the same period?
Simpson: More or less. I met Adlai Stevenson through the Grady expedition
to the Allied Control Commission in Italy. Stevenson was on
another one of those economic organizations that were set up.
And we were told, "Look outj You'll run into a fellow named
Adlai Stevenson. You'll probably have a row with him." But we
didn't at all. We did meet him and his group, which was about
the same number as ours, half a dozen. We got along fine and
exchanged ideas.
Riess: "Probably have a row with him?" Why?
Simpson: Oh, all these different organizations were having internecine
warfare.
Riess: It was the organization. It wasn't that Stevenson was abrasive?
Simpson: Oh, no, no. He was anything but abrasive. And I maintained a
friendship with him, really, until his death. He knew I was a
Republican and I told him I'd voted for Eisenhower, but that did
not make any difference in our friendship. It was not an
intimate friendship, but a pleasant one. I had him to lunch here
in San Francisco two or three times.
118
Riess: To meet people?
Simpson: Yes. One time we had about a dozen. We sat down and I said,
"Adlai, I think you've got to realize that most of these
fellows are undoubtedly Republicans." And one of them said,
"Well, let's see if he can make some converts." It was a
good time because it was after his Russian trip, in between
political campaigns, and so it was a suitable time to have a
friendly meeting, and they liked him. He was so engaging,
you know.
Riess: Did he make any converts?
Simpson: I don't think so.
Riess: What sort of a group was it that you had to meet him?
Simpson: Businessmen and bankers.
At this particular luncheon we talked about Russia. We
didn't talk politics at all.
Did I fell you about his comment on the Nixon article?
Crete and I took him and Mrs. Lasker to lunch over at the
Spinnaker. I had read an article of Nixon's, which I thought
was very interesting. He said that a candidate for President
had to realize that there were (at that time, I guess) about
twenty million people who voted in a presidential election, but
who did not take the trouble to vote in the off-year in the
Congressional elections. And he said one really must think
over what kind of people they are.
Who are these people who come out only for presidential
elections? Well, they're probably people who read the comics
rather than the editorials, who read short articles rather
than long ones, who read about domestic matters rather than
foreign, and who are interested in stories of crime rather
than stories of educational advances, and so forth.
Riess: And this was as Nixon speculated in the article?
Simpson: This was Nixon speculating as to how a candidate had to recognize
these twenty million people who had the interests such as I've
mentioned .
And do you know what Stevenson said? He said, "I should
think that a candidate ought to state what he believes and let
it go at that."
119
Simpson: I thought to myself, "Well, Adlai, you are an awfully nice
fellow, but you are never going to be President," because it
seemed to me, obviously, that these fellows who are running
for office, the smart ones, are going to study things like that,
and they are going to try to get the vote of the people that
read the comics instead of the New York Times editorials.
Riess: And there was Stevenson being above politics.
Simpson: Yes. But you can't be above politics and win, can you?
Nixon, and the Presidents Preceding Him
Riess: You said when we first met that you thought that Nixon's
reputation, after all is said and done, wouldn't be so bad.
What is your view of Nixon and of how he'll come down through
history?
Simpson: I think Nixon is not a good man. But I think that down to
Watergate he was a pretty good President. Now, a man can be a
bad man and still be useful to his country, and the outstanding
example of that in history is Talleyrand, who was a very bad man
but of great use to France. I think the opening to China and
Nixon's handling of the Russian relations were very good. I
think if Nixon had not done the horrible things that he did and
ruined himself, he might have gone down as one of the better
presidents.
To use a vulgar word, I think Nixon was a stinker. I think
Talleyrand was a stinker also, but he managed to make a very
good deal for his country in the Congress of Vienna by playing
the Allies off one against the other and managed to get France
in a much better position than her military defeat might have
suggested. I think Nixon was something like that until he
committed political suicide.
Riess: To step back and look at the presidency before that, how about
[Lyndon Baines] Johnson?
Simpson: Oh, I never had much of a feeling about Johnson one way or the
other. I was afraid of Goldwater in that election because I
was afraid he was going to get us in too deep in Vietnam.
[Chuckles] That shows how smart I was regarding that one."
Riess: How have you felt about [Hubert H.] Humphrey over the years?
120
Simpson: I never liked Hubert Humphrey. I thought Humphrey didn't know
anything. He just couldn't learn, didn't really know anything
about economics and political economy. I thought he just felt,
"Appropriate so-and-so much money, and it will all be all right."
I think our extravagance and irresponsibility in Congress and
under such leaders as Humphrey has been one of the things that
has brought us into this plight which we are in.
Riess: How about to go back to [Dwight D.] Eisenhower? Do you think he
understood the economic angle?
Simpson: Oh, I knew Eisenhower was not a brilliant man, but somebody
said one time, "Ike had just enough savvy to decide between
golf matches that it wouldn't be a good thing to get into a land
war in Asia," and that's about the way I feel about Eisenhower.
Reverting to Stevenson, in one of my conversations with
him I said, "Adlai, your trouble was that it was like running
against Napoleon the morning after the Battle of Austerlitz."
Riess: That's a wonderfully apt description of the situation.
You've never broken your party ties, then?
Simpson: Yes, I voted for Wilson, a long time ago.'
Riess: I should think you would have been tempted by Stevenson.
Simpson: No, I wasn't. I regarded him highly as a friend, not an intimate
friend but a friend, and as a fine honorable man, but I still
would prefer Eisenhower.
Riess: How did you view Kennedy?
Simpson: I never liked any of the Kennedys.
I was president of the World Affairs Council for a couple
of years and they have a conference at Asilomar for four or five
days in the first part of May every year and usually have very
strong people. During my presidency the chairman of the
conference and I got Jack Kennedy, when he was Senator, got him
out and really put him on the key spot, which is the Saturday
evening, a nd I thought he acted in a kind of a cheap way.
The other man on the Saturday evening program was Art Dean.
You may not be familiar with his name. He was a partner of
Sullivan & Cromwell, but he carried on the Korean negotiations
for a long time, Arthur Dean.
121
Simpson: This is a small thing, but I think it is so indicative of
the Kennedys. Kennedy was to speak last, Dean first, and he did.
I asked Kennedy whether he was going to sit on the platform
while Dean spoke, as Dean would obviously have to do while
Kennedy spoke. He said no, he had some notes he wanted to make.
So Dean spoke and then Kennedy, accompanied by half a dozen
hangers-on, walked up the aisle--! mean, his entrance was like
a Conquering Hero's--and read his speech, which was a very good
one. But I felt that was so typical of the Kennedys.
Riess: The arrogance.
Simpson: And trickiness.
And Chappaquiddick. Just think of a man surviving
politically after Chappaquiddick! No, I was not ever a Kennedy
enthusiast.
Riess: You were saying that you were puzzled by Dulles 's role in the
Bay of Pigs incident. Really the Bay of Pigs always looked like
Kennedy's error.
Simpson: Certainly, on the record it was. But I must say, even though,
as you see, I don't like him or his memory, there had been an
awful lot of build-up for it. The thing was not a clean slate.
There was a great deal of preparation and a great many people
in high places were strongly committed to it.
While Kennedy was President, and it was his responsibility,
and he committed an awful blunder, I do think you have to realize
that he had a tough position. To have called it off would have
raised a rumpus with quite a lot of important people. You see,
while I'm a Republican I'm not entirely biased.
The Marshall Plan
Riess: Through the war, and post-war, you were already starting to observe
the things that led up to the need for the Marshall Plan?
Simpson: Yes. As you know, Berlin was in utter ruins and so were a great
many other German cities, and the economy was completely smashed.
The Russians were transporting as much machinery and equipment
out of Germany as they could get their hands on, or at least
trying to transport it, and then getting it out in the snow so
that it got fairly spoiled.
Simpson:
Riess:
Simpson:
Riess:
Simpson :
122
I didn't go to Europe or Germany immediately after the war,
but a couple of years later, in '47 it was, I made the first
trip. I had a good German friend, who was one of these Germans
who kind of sat the whole Nazi thing out. He had a farm and he
never became a Nazi and he wasn't a hero either. He was a
farmer and I saw him on this first trip I made after the war.
We made a trip together through the Rhineland, two weeks, and I
was perfectly amazed and staggered by the progress that they had
made in this short period, really only months, since the defeat.
People talked about "the miracle of Germany," and it was a
miracle; it seemed like a miracle.
Well, I'll backtrack a little, but it's all part of the same
story. In New York before the Marshall Plan had been put into
effect, but after it had been announced, Crete and I had dinner
with friends, and among other guests there was Goldschmidt, who
had been head of one of the largest and most powerful German
banks, the Darmstadter National Bank. He was Jewish and had got
out and was living in New York. Of course, we talked about the
Marshall Plan. This man said he thought it was the greatest
nonsense he ever heard of, that we would just pour a lot of
dollars down a drain in prostrate Europe. There was no idea at
all that just money was going to be able to really help the
situation.
Did he distinguish between the countries, or just all of Europe?
All of Europe. As a matter of fact, you know, France and Italy
were teetering on the edge of communism.
It wasn't that Goldschmidt was just embittered about Germany?
No. He was talking from an economic standpoint,
judgment.
That was his
There were prominent economists like Hazlitt who were
writing articles against the Marshall Plan. I wrote an article
in favor of it which got distribution of a few copies through
the Stimson-Patterson Committee—whereas my opponents were
getting their articles distributed by the millions through
magazines like the Reader 's Digest and so on.*
So, I've deviated, but I did it deliberately. I'm coming
back now to this trip to Germany. I called on Hermann Abs,
who was considered the outstanding banker in Germany, the head
of the Deutsche Bank. I called on him in Frankfurt.
*See Appendices for John L. Simpson's reprint, "Dollars Can Help
Save Europe. "
123
Simpson:
Riess:
I asked Mr. Abs, "This miracle of Germany. I've been
traveling around here a bit and I can see it. I see with my
own eyes what's going on in the way of reconstruction. How
did this miracle come about? You don't make miracles out of
teacups."
He said there were three principal causes. One was the
great influx of labor from the east [East Zone, now East Germany].
These people were so wretched and so miserable that they would
just work their hands off to get a living. "We had cheap labor
and very hard workers."
And another cause was the currency reform. They did a
major job of reforming the curreny and started afresh. It was
very tough on some people, but it gave many people confidence
in the new currency and put them into operation.
And the third reason is the Marshall Plan, without which
the other two would not have been enough, he thought.
Here were, respectively, the heads of two of the big banks,
and therefore two of the outstanding bankers of Germany, and
their views and attitudes were exactly opposite regarding the
Marshall Plan.
It sounds like one was a very bitter man.
Simpson: He was not only bitter, he was very foolish, I think. The
question was: Could you, by financial support, prevent France
and Italy going communist? And they were on the very brink of
it. I think the Marshall Plan was a great act of statesmanship
on Truman's part.
Riess: It must have taken a bit of statesmanship to convince America
that this was what we could be doing. How much of a selling
job did Truman have to do?
Simpson: [Pauses to think] I don't know. I remember the first conversation
I really had about it was with Allen Dulles on a steamer going
to Europe. Neither of us really understood just how it would work
with regard to the relationship between the dollars and the local
currencies. And were they going to be required to repay or offset
in marks, and francs, and lire, the dollar subsidies? There was
a lot of writing and talking about it. Very strong opposition.
I think [Henry L.] Stimson had a strong moral force. He
was a highly respected man and I think that his lending his name
to it helped quite a lot. [Robert P.] Patterson was a fine man
also. (It was the Stimson-Patterson Committee.) But, of course,
he wasn't nearly as well known as Stimson.
124
Riess: [Reading from a reprint of Mr. Simpson's article, "Dollars Can
Help Save Europe"] , Mr. Henry Hazlitt has expounded his view
in a book entitled Will Dollars Save the World?"
Simpson: I think his article was published in the Reader 's Digest,
which has a circulation of 15,000,000, and I think the Stimson-
Patterson Committee got about 30,000 copies of mine to put
into public hands.
But I just think the American people for once sensed the
danger and reacted to it. Obviously, as far as the written
documents were concerned, Hazlitt's had me completely crushed
to earth. But I guess that was not the answer; I guess that
maybe for once the public realized the grave danger of Western
European countries going communist.
Riess: And the press got behind it?
Simpson: Yes.
Riess: It sounds like it might have some parallels to some of Hoover's
efforts to awaken this country when he was raising funds for the
CRB.
Simpson: Yes. But that really was an easier job than the Stimson
Committee's job. Hoover was arranging benefits for our allies
and friends, and the promoters of the Marshall Plan were telling
us we had to go and help our enemies.
Council on Foreign Relations
Riess: Mr. Simpson, I see that you were a member of a number of groups
that interested themselves in foreign affairs, or world affairs.
The first noted is the Council on Foreign Relations. What was
its make-up?
Simpson: The Council on Foreign Relations is an organization in New
York which was formed shortly after World War I and had become
a very high-level, and I think the word nowadays is "prestigious,"
organization. I was never active in New York, never held an
office. But I was a member of it from very shortly after its
formation until recently.*
Riess: And what was the membership of it composed of?
Simpson: It was composed mostly of New York, Boston, and Philadelphia
lawyers, businessmen, diplomats, and so on. They have committees
throughout the country which are related to the parent organization
*See Wall Street Journal item on current status of the Council,
in Appc-r.dices.
125
Simpson: in New York, and there is an annual meeting to which these
local committees are requested to send their chairman or
secretary or somebody. I was chairman of the committee here
for a few years. They have about sixty people or so; you
are invited to membership; you can't just join.
Riess: Sixty people in the local group, you mean?
Simpson: Yes. Some hundreds of people in the New York parent organization.
The New York organization supplies local groups with some
speakers, and other speakers they dig up themselves. They meet
for dinner and they have no office or organization.
Riess: Are they advisory to some aspect of government?
Simpson: Well, the Council on Foreign Relations in New York has acquired
the reputation of being the "eastern establishment," an
organization which most nearly approaches being a semi-off icial--
although they would disclaim that—organization from which many
members go to Washington and occupy government positions, and
others come back from Washington and are members of the Council.
Riess: Isn't it just such an organization that Nixon resented so? He
wanted to surround himself with people who were not of that
"eastern establishment" group.
Simpson: Well, I suppose so. I don't believe he was a member of the
Council, but I wouldn't swear to it. Yet I think Nixon had more
support in the east than he had in the west.
Riess: Was the composition of the Council politically one way or the
other? Or would you say it was well balanced between Democrats
and Republicans?
Simpson: That was not a criterion of membership. I would guess that
there are probably more Republicans than Democrats, but it is
not particularly partisan in that way. It isn't a Republican
club.
Riess: If the Council on Foreign Relations really amounts to the
eastern establishment, at least in New York, what does it
amount to in terms of the San Francisco establishment?
Simpson: Well, it has a very good membership of people who are interested
in foreign affairs.
Incidentally, the Council on Foreign Relations is strictly
male, whereas the Foreign Policy Association is coeducational.
126
Riess: Oh. And no women have gotten into the Council on Foreign
Relations in the last few years?
Simpson: No, not so far as I know.
Riess: I just wondered if it was the same group that you would find
at the Pacific Union Club, or the same group that you would find
at the Bohemian Club. In a place as small as San Francisco,
if you have a membership of sixty, it may always be the same
sixty.
Simpson: Well, it's not like the Pacific Union Club; it is not a club,
for one thing. They're both very good organizations.
Foreign Policy Association
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Now, the Foreign Policy Association is very different. That's also
centered in New York. I was a director of that for several years.
Was that postwar?
I don't know just when it began. I don't think it is as old as
the Council on Foreign Relations, but it's been there quite a
while. And that's open to the public. You become a member by
paying your dues.
And what does it attempt to do?
It attempts to educate the American people in the realm of
foreign affairs and it does that mainly through meetings in
New York. It does not have any branches, such as the Council
on Foreign Relations, but it operates a program called "Great
Decisions." "Great Decisions" is a program they get out every
year based on a selection of about eight problems (Vietnam,
terrorists in Italy, and what have you). Discussion groups
are organized throughout the country, on a voluntary basis.
They rotate and meet at one another's houses. And this has
made a great deal of headway during recent years.
I think the Foreign Policy Association does not try or
pretend to be a prestige organization but is very active and, I
think, reasonably successful.
Is there a journal that they get out that keeps the members
informed?
They get out Headline books,
one over there.
[Looking at bookshelf] I have
127
Wo r Id Affairs Council
Simpson: Now, on my list here, the next is the World Affairs Council of
Northern California. That corresponds much more nearly to the
Foreign Policy Association because membership is open. There
are now about 6,000 members, male and female, and the dues are
moderate. (The dues in the Council on Foreign Relations are
fairly stiff --I've forgotten what they are now, about $200 or
$300--whereas the Foreign Policy Association you may join for
almost anything, according to your means.)
The World Affairs Council was formed here and it's very
self-conscious of that fact. They want no directions from New
York as to how they shall conduct their affairs or hold their
meetings or what have you. I mentioned Asilomar. They hold an
annual series of lectures and seminars at Asilomar.
Riess: When you say they want no direction from New York, why would they
be getting any?
Simpson: Well, they wouldn't. But I said that in contrast to the Council
on Foreign Relations, where the local committees are under the
aegis of the Council in New York.
Riess: The World Affairs Council of Northern California grew out of the
Institute for Pacific Relations?
Simpson: There was some relationship in the past and it was before I
moved here. I think there was some unpleasantness about it.
And didn't the Institute of Pacific Relations get into trouble
because it was supposed to be communist-oriented?
Riess: I believe so.
Simpson: When I was elected president of the World Affairs Council, which
was in the late '50s, one of my friends said to me, "John, how
in the world can you get mixed up with that 'Red' organization?"
I said, "Why, that's perfectly ridiculous.' It's not 'Red'
at all." That's clear in the past now, nobody thinks of such
a thing now, but twenty years ago they were still thinking about
it. I don't know what the Institute of Pacific Relations did
to get themselves in so wrong, but they were.
The World Affairs Council holds — too bad I didn't keep the
last bulletin.
Riess: Didn't they just entertain the New Prime Minister of India at the
Commonwealth Club?
128
Simpson: Yes.
Riess:
Simpson;
Riess:
Simpson:
Riess :
Simpson:
Now, I played a little role there, which I think was a
good one. In obtaining these foreign dignitaries as guests,
there's a certain competition between the Commonwealth Club
and the World Affairs Council. The World Affairs Council likes
the fellow because he's a_ foreigner, and the Commonwealth Club
likes him because he's a prominent man, so, there has been a
certain amount of competition. The Commonwealth Club had an
executive director who did not always get along well with the
Council and that tended to emphasize the differences between
the two.
Were you a member of the Commonwealth Club also?
Yes, but I played no role in it.
Well, when Dave Zellerbach, who was a very highly regarded
man here, as you undoubtedly know (ambassador to Italy), returned
here, both organizations wanted to have him as a speaker and to
give a dinner for him.
Gordon Johnson was at that time head of the Commonwealth
Club and a good friend of mine. We got together and said,
"Look, why do we have this competition? Both organizations
want Zellerbach. Why don't we do it jointly." We decided that
that was the sensible thing to do, and we did it. People have
forgotten it now, but I really think that was the beginning of a
better relationship between the World Affairs Council and the
Commonwealth Club because Gordon Johnson and I decided that
quarreling was no good.
Oh, that's interesting. And there have been other joint
endeavors?
Many since then, yes. I chalk that up as one little thing that
I had something to do with.
You noted here [referring to Mr. Simpson's outline] your efforts
to improve relations between the Foreign Policy Association and
the World Affairs Council.
Yes, I was placed in a very embarrassing position. The World
Affairs Council had an executive director who was a good
director in some respects, but in other respects he was
difficult. And the Foreign Policy Association wanted the
World Affairs Council to support their "Great Decisions" program
and put notice of it in the Council bulletins and encourage
Council members to form these informal groups; and the director
and a committee turned it down. I knew nothing about it, although
I was president.
129
Simpson:
Riess:
Simpson ;
Riess:
Simpson:
Riess :
Simpson:
Riess:
Simpson:
Riess:
Simpson :
The next time I went to New York, one of my good friends,
Eustace Seligtnan, who was chairman of the Foreign Policy
Association, said, "John, what's the matter with you? What
have you got against the Foreign Policy Association?"
I said, "I have nothing against the Foreign Policy
Association. I'm all for it."
"Well," he said, "you turned down our request to cooperate
in the 'Great Decisions' program."
I said, "I know nothing about that."
That's embarrassing.
Well, then I came back and I found out what had happened.
The director and a committee had decided that they wanted no
part of working with the Foreign Policy Association, that they
were free and twenty-one, and highly independent, and had been
formed by people here, and belonged to people here.
That's interesting, that attitude.
Well, I couldn't undo it immediately, but gradually other people
came into key positions and gained influence, and now I think
they work actually hand -in-hand.
Why do you think there is that terror of being absorbed on the
part of this uniquely Northern California group?
Chauvinism. I lived twenty-seven years in New York and really
became a New Yorker as well as a Californian. There is still
a kind of a feeling—much less, but a kind of a f eeling--that we
don't want to be snubbed out here.
Yes. So you set yourself so far apart that there was no danger
of it.
Yes.
Is there any government financial support for any of these
organizations?
There certainly is not for the Foreign Policy Association. I
don't think the Council on Foreign Relations gets any. They
get large donations from large private charities, but I don't
think they get anything from the government.
Riess: Nothing to influence them.
130
Simpson: No. Oh, no. No, I'm sure they don't because that would, of
course, be very dangerous.
There's one other thing I was going to tell you about
the World Affairs Council. They raised the money for a building
and realized an ambition of many years of having their own
building down on Sutter Street. It isn't all paid for yet,
but largely.
Oh, it's a fine organization. They do a fine job.
[Chuckles] When I was still a director of the Foreign
Policy Association, there was a board meeting and the World
Affairs Council was trying to get a grant or grants from the
Ford or other foundations. And, of course, these foreign policy
groups are much stronger in some parts of the country than in
others. In the meeting, one of the directors said, "Really,
these local organizations are not accomplishing anything except
maybe the one in San Francisco." (This is supposed to be one
of the best, the best, I think, this and Cleveland.) "Why don't
we take the attitude that: let the foundations give them
nothing at all, but give it all to us, and we'll distribute it
throughout the country in the best way."
I laughed. I said, "Oh, I don't believe I'd take that line
because they'll say, 'What did we tell you about New York!"'
[Laughter] "What did we always tell you about New York.'"
Riess: Mr. Simpson, would you like to add anything more on the work
of the World Affairs Council? While you were president there
may have been some meetings and people here that you'd like to
talk about.
Simpson: Well, I presided at dinners or meetings for the king of the
Belgians; for the president of Germany; for the king of Morocco;
for Norstadt and Taylor, who were both high-ranking generals;
Foster Dulles. That was my first--! think I mentioned that.
Riess: Yes, you described that evening.* In any of these cases was the
the World Affairs Council used as the forum for a major foreign
policy statement?
Simpson: Not in my time, but Kissinger, about a year or so ago, made an
important statement at a luncheon of the World Affairs Council.
There have been several occasions like that.
*See p. 111.
131
Simpson: They're all fine organizations, each in its way. Each one
is different. They're three different things, but they're all
headed in the same direction, and they're all good organizations.
I like to think that I did a little something for them when I was
active.
Riess: Yes, it sounds like you definitely did.
The Introduction of McCone to Dulles
Riess: I have a note that you introduced Allen Dulles and John McCone.
How and when did they meet?
Simpson: The occasion was the 1948 election when Dewey was supposed to
win and didn't. We were invited to an election dinner at the
Allen Dulleses', who, as I said, lived in the same block with us.
At that time we were seeing quite a bit of John McCone and
his then wife, who has since died, Rosemary McCone. I guess we
had invited them to dinner before we'd received the Dulleses'
invitation, because we had an engagement with them, and when we
received the Dulleses' invitation we said, "We'd love to come,
of course, but we have some guests from out of town."
And they said, "Oh, bring them along. It's going to be a
buffet. It makes no difference. Bring them along, by all
means. "
Well, the guests from out of town were John and Rosemary
McCone, and we went over to Allen and Clover Dulleses' house for
a gala dinner, and we had the dinner, but the gala got a little
tarnished .
Riess: [Laughter] Yes, when you got the news.
Simpson: In the course of the evening. But, in any event, that's how
Allen Dulles and John McCone met, and that's really all there
is to the story. It was just an amusing incident that we did
introduce them to each other and later each one successively
became head of the CIA.*
*Allen Dulles, Deputy Director, CIA, 1951-1953; Director, CIA,
1953-1961. John A. McCone, Chairman, U.S. Atomic Energy Commission,
1958-1960; Director, CIA, 1961-1965.
132
Simpson: John McCone , in the meantime, had become chairman of the
Atomic Energy Commission.
Riess: You've talked about your friend Lewis Strauss a couple of times.
Simpson: Yes, he was a very good friend.
Riess: How does that all fit together? McCone was chairman of the
Atomic Energy Commission at the same time that Dulles was head
of the CIA?
Simpson: I don't remember whether there was an exact overlap as to time.
Perhaps there was, I don't know.
Riess: Did Dulles have his eye on McCone for grooming for the CIA?
Simpson: Not so far as I know. Let's see. Strauss was head of the
Atomic Energy Commission preceding McCone, wasn't he [1953-1958]?
And then he was appointed Secretary of Commerce and was turned
down by the Senate.
Riess: Strauss comes out of the banking background. Wasn't he Kuhn Loeb
also?
Simpson: Yes.
Riess: And why does someone with that background become chairman of the
Atomic Energy Commission? It seems like a scientist's job.
Simpson: Well, it became a scientist's job. Glenn Seaborg succeeded
McCone .
I suppose there's an argument both ways. In some respects
a businessman is good for the qualities that he has; in other
respects, a scientist, because he'll know more about what the
physicists are talking about. I don't know. I didn't appoint
them.
132a
[The following section was added 12/12/78 by Mr. Simpson. Aware that the
interviewer was fond of good anecdotes, he volunteered the story below.]
Two Meetings with Kerensky
Twice in my life I came in contact with Kerensky. The first time was
in Paris in 1918, shortly after the October Revolution. I should have
mentioned it in "Random Notes," for it is a minor bit of history with a
somewhat comical twist.
Kerensky 's residence in Paris after his downfall presented a dilemma to
the United States and the Allies. If he was going to stage a comeback, as
some still hoped, it was important to maintain good relations. On the other
hand, if he was really through, he was nothing but a nuisance.
Playing it cautiously, the Americans gave a diplomatic dinner for
Kerensky and his entourage at one of the clubs. The guests were seated
about eight to a table, and Kerensky was not placed at the table of Mr.
Sharp, the American Ambassador, but was seated with Hugh Gibson, a
brilliant and influential member of our diplomatic corps and holding
ministerial rank.
Kerensky had a member of his entourage on his right, and I sat next
to that henchman. So although I knew no Russian, I was able to get a
fair idea as to what was going on between the two of them.
Kerensky was sullen and sulky from the start. He obviously inquired
as to the whereabouts of the American Ambassador and, when informed, he
asked who were at our table. My Russian presumably replied just some minor
bureaucrats, which would have fitted me all right. But he was no doubt
ignorant of the fact that Hugh Gibson was one of the outstanding younger
diplomats and destined for higher things.
However, apparently feeling insulted, Kerensky got up when the soup
was served and let it be known that he had a splitting headache and was
obliged to go home. Which he did. After his departure my Russian guest
and I continued talking in French and I naturally expressed my regret at
Mr. Kerensky 's illness. He said yes, it was too bad.
I said it was particularly too bad because this dinner had been
arranged partly so that he could become acquainted with Mr. Gibson next to
whom he had been sitting. He asked, "Who is Mr. Gibson?" I expressed
surprise and said that Mr. Gibson had overall diplomatic responsibility,
as a direct representative of President Wilson, for all our Embassies and
Legations in Europe and in that sense was of unique importance, and that
he had been disposed to have a thoroughgoing discussion with Mr. Kerensky
as the basis for his report to President Wilson.
132b
There was a basis of truth in what I said, but it lost nothing in
the telling. The poor fellow acted as though I had struck him and, foolish
man, said, "I don't believe Mr. Kerensky knew that.1"
Well, then, a few years ago, at a dinner party here in San Francisco,
we adjourned after dinner to a room where there was some sort of enter
tainment. In shifting around, the guests took places more or less hit or
miss, and I found myself seated next to Kerensky. He could not have been
a pleasanter companion. He insisted that he remembered me--which was
courteous although absurd. But I thought, as I sat there beside that
distinguished scholar and gentleman, had he had iron in his soul, might he
possibly, just possibly, have changed the history of the world?
J.L.S.
133
XI OTHER SCHRODER ORGANIZATIONS
[Interview 10: June 28, 1978]
The New York-London Contacts
Riess: You said that you wanted to pick up the history of Schroder.
Simpson: Yes, and I might summarize the origin of the New York affiliate
of the Schroder-London institution. After the First War,
when the Schroder people in London realized that the United
States was going to play an increasingly important role in
international trade, in 1923 they established a relatively small
banking corporation in New York to take advantage of this. We
were an affiliate of the London house, and a great deal of our
business, originally, was derived from clients of Schroder-
London.
That meant, naturally, that we needed frequent contacts,
and those contacts were partly our trips to England and Europe,
and partly visits of the London partners and other members of
the concern to New York. Of course, we got a great deal of
benefit; we had a big start through the London clients and
friends, and our own trips to Europe added to that.
There were two aspects to the London business. One was
the commercial business, the short term financing of goods in
overseas trade. The other was the investment business, and in
that connection Schroder had close contacts and friendships and
competitive positions sometimes with other bankers of that sort,
so-called "merchant bankers," in England. They were very
helpful to us in giving us a start with these foreign connections-
in fact, a little too helpful with regard to Germany and Austria
and Central Europe generally.
Riess: As a result of World War I, had they severed connections that
then were picked up by the New York branch rather than the
English branch?
134
Simpson: No, I wouldn't say that that's the case. During World War I,
they naturally broke off all their connections with enemy
clients and, along with everybody else, picked them up after
the war.
Riess: A gentleman's agreement?
Simpson: There was no agreement. When they were enemies, they were
enemies, and that was that.
Riess: And how is it that they were, as you say, almost too helpful
with regard to Germany?
Simpson: Well, because they encouraged us to take on a large amount of
German business, which got us into the trouble that I mentioned
earlier when the Depression came. *
But they had a wonderfully kind attitude toward us Americans,
They treated us beautifully when we were in London, both in the
office and by inviting us weekends.
The bank, in its physical aspect, reminded me just a little
bit—not much, but a little bit—of a Dickens scene. The
partners sat in a private room. It was a large room, and there
were about six partners then, and you went from desk to desk to
talk, you didn't raise your voice. We Americans had to learn
very quickly that you didn't holler in the private room when you
went in.
Riess: And did they dress in morning coats, that sort of formality?
Simpson: Some did and some didn't. They mostly wore ordinary business
suits. Some dressed occasionally in black coat and striped
trousers. It depended somewhat on the occasion. If one of the
partners was on the court — they didn't call it the board, but
the court— of the Bank of England, and if he was going to a
meeting there, he would probably wear striped trousers.
Riess: So, the rule was not to raise your voice. And how about the
language in which you would discuss things? Did it have to
be well-chosen terms, or could you be direct?
Simpson: Well, everybody did the best he could. We became a bit
Anglicized, and they became a bit Americanized. We got along
all right. But whereas they in general believed in us and
trusted us, once in a while they did backslide a little in
that respect.
*See pp. lOlff .
135
The Fishing Judge
Simpson: I recall one incident which I thought was very amusing in its
outcome and it illustrated a slight tinge of, "Oh, of course,
after all, they are newcomers." Two of their juniors came over
to New York and did a very bad transaction in selling some shares
that they represented against a one-year note, with the shares
up as collateral security. We were confident that the note was
not going to be paid at the end of the year; we'd never have
done the transaction ourselves. But these two juniors from
London thought they'd like to do a little business and show their
ability. The time came when the note was due and it wasn't
paid. Of course these young fellows had gone back to London by
then, so we and Sullivan & Cromwell were requested to collect
this note.
Well, one of our fellows was in London. (I'm going to tell
the rest of the story from the London standpoint.) We cabled
that the matter was in Sullivan & Cromwell's hands, and they
were taking it up with such-and-such court, and the trial would
be on such a day at such a place, and the place was Malone, New
York.
Riess: Where _i£ Malone?
Simpson: Well, that's what they found out. [Chuckles] Most unfortunately,
they had an atlas, and they looked up Malone, and they found that
Malone was a little bit of a place with about 300 inhabitants up
in the north woods on the Canadian border.
So, they said, "Well, for heaven's sake! These chaps! We
really thought they knew something by this time, and they've
allowed this case to get in the hands of a country justice of
the peace up on the Canadian border, and this is perfectly
preposterous!"
They were having a great time deploring the fact that we
hadn't learned much about banking after all, and it was time we
did. And to anybody who came in they told about this fiasco
that was going on in New York.
We replied, "The case is being heard by one of the justices
of the Circuit Court of Appeals located in Utica, New York. But
this is his vacation time and he has gone to Malone because the
fishing there is very good and he is going to fish during his
vacation, but has very kindly consented to hear this case."
136
Simpson: Well, our fellow in London told us they were sitting around
the lunch table when the cable came in and they said, "Why, this
judge is a fisherman.1 Of course he 's at Malone.' There's very
good fishing in that area. He must be quite all right."
And when anybody would come in, they'd say, "Oh, have you
heard about that judge? Why, he's splendidj He's a fisherman.
He's gone to Malone for his fishing and he's so kind as to hear
our case for us. So, we need give no further thought to it,"
and they didn't.
Riess: Oh, what a wonderful English attitude]
Simpson: [Chuckles] So, there'll always be an England.
Riess: But they did more or less think of you as country cousins, then?
Simpson: They did at first, but we got past that point pretty quickly,
and later it was quite the opposite. They took us with
seriousness.
A Little Unpleasantness
Simpson: Now, there is one thing I want to mention. As I've told you,
the Schroder background was of immense value. It did cause a
little unpleasantness during the war. The Schroder family, like
many European families, had relatives all over the map, and the
London Schroders had quite a number of relatives in Germany.
One of them was a man named Baron Kurt von Schroder. (He
spelled his name with an umlaut, which we had omitted in New
York.) This fellow, who always was a disagreeable man, even
before the Nazis were ever heard of, became a Nazi and got
publicity because he introduced Hitler to von Papen. Some
irresponsible publication referred to this, which, of course,
was news, and mentioned the "Anglo -German-American banking firm"
and linked Kurt von Schroder up with Schroder-London and Schroder-
New York.
Those things have a way of getting picked up, and this was
picked up over here by a sensational paper at that time called
P.M.
Riess: But it was not picked up by the more responsible papers?
Simpson: No. [Pauses to think] Well, I don't know. What are responsible
papers? The T ime s . I don't think the Times mentioned it, but
Tine magazine had a mention of it.
137
Simpson: But that got passed around by word of mouth then and caused
us a little chagrin, let's say.
Riess: Did it mean that people pulled some of their business away?
Simpson: No, I don't believe so. As a matter of fact, it did mean that
when it came to resuming business ties with Germany we were
probably one of the last rather than the first in New York to
resume German financing.
Riess: In the effort to bend over backwards?
Simpson: Yes. Responsible people who knew the picture, of course, knew
there was nothing in it. But it had been kicked around just
enough so that we didn't think we'd be the first ones to resume
German financing. I just thought I'd mention that.
English Country Weekends
Riess: You say the English entertained you when you were over there.
Did that mean the wonderful English country weekends that one
hears about?
Simpson: Yes. Yes, it really was a great pleasure.
Riess: Like sideboards covered with good things for breakfast, and then
walks on the estate? Describe an English country weekend.
Simpson: Well, you've read about them in books.
Riess: So, it was just like in the books?
Simpson: Very much like that. The breakfast was on a buffet. You helped
yourself. There were many things. And, yes, there were walks.
I recall the first time that I was in England for a weekend to
one of the partners'. (Crete was not with me. I think she had
gone to Vienna to see her family.) I'd heard that this was a
beautiful house, and it was, indeed—a Georgian-type house with
the interior decoration by Adam.
The principal guest bedroom was hand-painted, Chinese, and
it was noted by those other than the partners with whom we
talked in the office that that was a very special room and a
very special dignity to be lodged in it.
138
Simpson: So, I went out on Friday afternoon with Major Pam, the
partner, and we were met at the door by the butler. Pam said,
"Take Mr. Simpson's bag up."
"The hall room, Sir?"
And Pam said, "No. The Chinese room." So then I knew I'd
arrived .
Riess: How wonderful to know that you had arrived.
Simpson: Every morning the butler came in with tea and shaving water
because, while the house was beautiful, it didn't have the
plumbing that we are accustomed to. He was so dignified and so
stiff and formal that he rather overpowered me, and I thought,
"He thinks, 'This green American, what does he know about things?'"
He would come in with the tea and the water, and pick up
my clothes and shoes, and take them out and brush them and
polish them, and then one morning he started to go through his
usual routine but paused and turned to me and said, I beg your
pardon, Sir. Do you suppose that shares in the New York market
will ever recover their former highs?" [Chuckles] I knew that
he'd been speculating.
But they were fine, wonderful people, courageous, honorable,
and this was illustrated to me in dramatic fashion by two visits
to the Pam house. On the occasion described above I was taken
on a tour of the house and the premises and was told something
of their history. What was intensely interesting was the account
of how the house had been run as a convalescent home for wounded
soldiers during the First World War. All the beautiful trappings
that could be stored away were removed and the whole place was
filled with beds and nursing equipment.
Mrs. Pam, at that time a young middle-aged woman, ran the
whole thing with the aid of a staff of nurses. I have forgotten
how many beds there were, but every room was utilized to its
full capacity.
Mrs. Pam said she had accepted only privates and non-coms,
since she had better control than she would have had with
officers. There was practically no damage done to the beautiful
rooms.
The whole thing seemed like a phantasy as they related it,
a dream of the dim and distant past.
139
Simpson: Then in 1943, when I went to Italy with the Allied Control
Commission, I had another opportunity to visit the Pams. Henry
Grady very kindly arranged for me to depart for home a few days
ahead of his party in order that I might see my friends in
London.
I was invited on that occasion to spend the night at the
Pams' home, and what did I find? The house had again been
converted into a nursing home, exactly as during the First War.
Mrs. Pam, despite her advanced years, once more ran the whole
thing and repeated the arduous undertaking under much greater
difficulty and danger.
It was like reliving the past and also like witnessing
firsthand the qualities that make England what it is.
Schrotrust, Schrorock
Riess: I have a question more about Schroder. How do the names
Schrotrust and Schrorock relate to Schroder and Schrobanco?
Simpson: Yes, I should mention the creation and existence of those
organizations.
J. Henry Schroder Banking Corporation was, as the name
indicates, a banking corporation, limited in some respects and
with very broad powers in other respects. It could accept bills,
create bills of exchange, in excess of those of a regular bank.
On the other hand, it was restricted in the acceptance of
deposits. It couldn't take deposits at all. And that was a
very suitable kind of charter to have for its original business,
which was originally intended to be the financing of commodities
and materials in overseas trade.
But we wanted to have a place where deposits could be taken
and where trust functions could be performed, and therefore
Schroder Trust Company was formed in 1930 as a subsidiary, kind
of minor adjunct. Whereas J. Henry Schroder Banking Corporation
was oriented especially towards foreign business, Schroder Trust
Company was oriented towards domestic business. That was one.
Schrotrust.
The other, Schroder Rockefeller, was a result of the New Deal
legislation prohibiting commercial banks from being affiliated
with securities companies. That was a sad blow to the New York
banks because they all had their security affiliates and did
140
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
underwriting business. (In London they called it issues
business, which we adopted, but the American term is really
"underwriting. ")
The firm of Morgan took one of the Morgan partners and
divorced him entirely from J.P. Morgan & Company. He was
wealthy in his own right and he formed a firm called Morgan-
Stanley. Stanley was a securities man, very well known in
Wall Street, very highly regarded, and a man of means himself,
so they formed Morgan-Stanley, which then was and now is an
investment banking concern.
We decided we'd like to do the same thing. But when it
came to forming it, we had to give it a name. Stanley was
quite a well known man in financial New York, and Morgan-Stanley
was quite an impressive name. We had some able vice-presidents,
but we didn't have anybody of the stature of Stanley or Joe
Ripley, who went in with Harriman in a similar deal.
I had what I thought was a bright idea. Avery Rockefeller,
who is a cousin of John D. --there are three Rockefeller families,
you know.
Yes.
Old John D. had a brother and he had two sons, so there are
three lines. Avery is in one of those lines. And he was a
young officer in one of our departments.
In one of the departments of Schroder?
Yes. So I said, "Why don't we get Avery to move over to this
new company and become a stockholder and director, and call it
Schroder Rockefeller? What's the matter with that?"
I first sprang it on Allen Dulles,
good, wouldn't it, Allen?"
He said, "Almost too good."
I said, "That would be
I said, "Allen, not 'almost too good,' it's good." And the
upshot of it was that we formed the investment company and named
it Schroder Rockefeller.
And did Avery take over or was he only a name?
Oh, he didn't want to be president and he didn't want to take
the lead but he was very active in the company and I think he
liked it a lot. (As a matter of fact, he's today one of my very
best friends.) And it worked out fine from a personnel standpoint
Simpson: We were not able to do everything we had hoped the company
would do because New York passed some restrictive laws which
were even stiffer than the federal. And Sullivan & Cromwell
told us that we really were not divorced quite enough and we
were risking if we did the underwriting business in this vehicle,
we had not broken the link sufficiently. But the company did
other private financing, investing its own funds, and acted as
financial adviser to several companies, and altogether it had
a very successful career.
Avery withdrew two or three years ago on account of his
age and retirement. He didn't want to leave the name, so it's
changed its name now to Schroder Capital Corporation. But
for several decades it got started with a strong double name
and was able to make its place in the scheme of things, and it's
getting along very well now.
Riess: Nobody hinted that that was an unfair capitalization on a name
that had bigger implications than Avery?
Simpson: No. Why should anybody complain?
Riess: I don't know. Maybe some member of the Rockefeller family would--
Simpson: I'm sure he wouldn't have done it if they had.
Riess: So, he would have reviewed that idea with his family?
Simpson: No doubt. He would not have done it if he'd felt that it was
going to create an unpleasantness in the family. You must
remember that "Schroder" itself is a top name in London.
Nearly a Good Thing; Polaroid Venture
Riess: And also under the umbrella of Schroder in our talk here, you
have noted Carl Fuller.
Simpson: Carl Fuller was a vice-president of Schroder--Schrobanco, as we
called it, the bank—and president of Schroder Rockefeller. He
in some way or other came into contact with Edwin Land, who had
a brilliant idea: the idea was to lick the automobile headlight
glare by the use of Polaroid, in which he was an expert.
The way you licked the headlight glare was to have two
Polaroid screens, one that lies this way, and the other one
lying that way [gestures to indicate two different directions].
You put the screen with one direction of lines on the headlight
and the other on the windshield of the oncoming car.
142
Simpson: The result would be that these two screens crossed each
other, as it were, and in your car you would see from the
oncoming car two red blurs, which were the headlights, but no
glare. And, on the other hand, the illumination of the road
by your own headlights would be unimpaired.
Well, that looked like a blessing, didn't it?
Riess: It certainly did.
Simpson: We all went up to the Grand Central Exhibition Room in the attic
of Grand Central and there they had two automobiles, and we got
in and looked at the blur in the other car, and we realized that
we had a bonanza. We put some money in it.
Kuhn Loeb and Schroder Rockefeller were the bankers and
they went to England, and the English got very interested. But
then funny things began to happen because of what we call the
"crown" of the road—the English call it the "camber"--they
found these light rays weren't crossing at right angles. And
so there was a defect there. And also you were going to need
a stronger generator to generate more light.
Riess: Then what?
Simpson: For one reason and another nothing ever came of the brilliant
idea for which Polaroid was created by Land and financed by
Kuhn Loeb and Schroder Rockefeller. The headlight project
proved an utter fiasco and the company barely hovered in
existence for years on end. The stock became almost worthless
and many stockholders sold their shares to take tax losses.
Then one of those quirks of fortune occurred, which sometimes
transform a business picture. Polaroid began making instant
cameras. The rest of the story is common knowledge. From being
a despised "dog," Polaroid became a market leader. Those who
were foresighted enough—or lucky enough—to have held their
shares made enormous profits. While the stock behaves erratically
in the market, Polaroid has taken its place as the chief competitor
of Eastman Kodak in the photographic field.
143
XII BECHTEL
Bechtel Notes
Riess: During World War II you took some time away from Schroder and
came back to help the Bechtel Corporation. How did that come
about?
Simpson: That came about, first of all, because Crete and I made a visit
out here really as a vacation and, of course, saw Steve and Laura
[Bechtel]. Steve and others showed us around the ship-building
[Marinship] , which was going full tilt. It inspired enthusiasm.
You could see they were doing a whale of a job, a very big job,
in a field in which they had not had direct experience. Before
we left Steve said, "Why won't you take leave from Schroder and
come out and get into this thing?"
I said, "Well, I don't know why. I'm not an engineer."
"Oh," he said, "we have plenty of engineers. But you've
had broad experience and the very fact that you are different
makes it interesting."
At this point I should say something about Steve Bechtel,
because there's a saying that a construction company is the
"lengthened shadow of a man," and if ever that was true, it was
true in this case.
Steve Bechtel 's father, Warren A. Bechtel, was a fine man
and had a construction company which did, very competently,
medium-size construction jobs. He had a great break with the
Hoover Dam, and he died in 1933. There were three sons. All
three had grown up in the business. Steve was the second in age.
Steve's younger brother, Kenneth, participated in the construction
business and was head of the wartime shipyard in Sausalito. Ken
Bechtel headed Marinship, the shipbuilding operation in Sausalito
which was one of Bechtel 's important contributions to the war
144
Simpson: effort. But he devoted his main attention to insurance in his
capacity as director, president, and chairman of Industrial
Indemnity Company. I was on the Board of Industrial Indemnity
for several years.
Warren, the elder brother, retired from the business at
the end of World War II in order to devote himself to ranching.
I think the reason for Steve's great success, if you had
to sum it up briefly, was that he had great vision and, unlike
most visionaries, he had the capacity to put it into effect.
If somebody said, "Can you sum up Steve Bechtel's success in a
few words?", I would say that would just about do it.
Steve Bechtel must have got out of his crib determined to
do something active and important. First, there was W.A.
Bechtel & Company, which was a construction company, but Steve
said, "Why don't we add engineering to construction and be a
construction and engineering company instead of just a construction
company?" And that's where he brought in John McCone, and why
he brought in John McCone.
And then there were the two companies: W.A. Bechtel &
Company, and Bechtel -McCone Corporation.
Riess: He kept the W.A. Bechtel name. Was that because it had such a
good reputation?
Simpson: Yes, and because war contracts had been taken in that name.
Riess: From my reading about the philosophies and intentions of the
Bechtel Corporation, there always was a distinction between
providing goods and providing services, and it seems that they
were more oriented to providing services.
Simpson: Absolutely.1
Riess: And when was that first articulated?
Simpson: I think it was there from the beginning. And that was the great
difference between—this comes a little later — the Bechtel
development and the Kaiser development. Steve Bechtel was
determined to concentrate on service and to avoid fixed
investments.
Riess: Where did he get that instinct?
Simpson: I think he grew up with it. You see, by confining the activities
to service, it was not necessary to borrow any money except for
current turnover use, current bank loans. There was no incentive
145
Simpson: or reason for issuing public bonds, for instance, as Kaiser
did, or in any way becoming heavily engaged in debt. And that
was a very strong point with Steve.
Riess: This formula of providing services and leaving other people to
manage the goods—has that been argued time and time again in
the company, or has it always been accepted?
Simpson: Oh, the principle has not been departed from. They have more
recently taken an interest in some buildings. So perhaps one
must say that in later years, recently, that principle has not
been 100 percent adhered to, but it still is a basic principle.
The Bechtel Corporation--or the various companies in the
Bechtel group—are essentially service organizations; they do
things for other people.
Now another of Steve's big visions was not only to do
engineering and construction, but do the planning and organizing
of a project from the ground up.
Riess: What does that mean?
Simpson: It means that instead of some company figuring out that it wants
a certain kind of a structure and then engaging Bechtel to do
the engineering and construction, that the client will tell what
he generally has in mind to accomplish and Bechtel will plan
the whole thing to realize the objective the client wants. They
use the word "grassroots" a great deal.
So first came construction, and then engineering and
construction, and then — I'm trying to think of just the right
word— well, let's say and then planning, engineering and
construction.
His philosophy is: "Tell us your problem, and we'll
endeavor to give you the answer." And he's been so successful
at that that companies such as the oil and chemical companies
and utilities are glad to do it that way because they get good
results. Nothing works except success, you know, and if these
moves on Steve's part had not been successful, it would not have
continued.
Riess: That's where the major effort has been, with oil and chemical
companies?
Simpson: Also utilities.
146
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Another instance that I should mention of the vision and
the application is nuclear [development]. Steve sensed
immediately that the nuclear development was going to change
the utility industry.
You mean immediately postwar?
Well, not so long after the war, not too long,
just when.
I don ' t know
On an issue like the nuclear issue, with his vision, which
might have been in advance of the visions of the boards of
directors of the utility companies, would he initiate it?
I'm talking rather from the outside looking in, but from what
I know it was very cooperative. The utility managers and the
Bechtel people were talking together about it.
Members of the Bechtel Corporation would be on the boards of
the various utility companies so that there would be constant
contact?
Oh, I don't think so at all. A Bechtel member on a utility
board would have a divided interest. I don't see how it would
be possible.
You've mentioned Kaiser's differing development,
beginning was Kaiser competing with Bechtel?
From the
Well, they competed, but really their directions were so different
that there was not very sharp competition. During the war there
was plenty of work for all of them. After the war Kaiser went
his way with accumulating huge debt and going into steel,
aluminum, and cement.
Two Companies
Riess: Did Steve Bechtel have a financial consultant before you came on?
Simpson: He had some very good financial people, and this was one of my
points. I said, "You have excellent financial people." The
two who were outstanding were Bob Bridges, who was a lawyer but
extremely good at finance, and an accountant named George Walling.
And he said, "Yes, that's right, and you would work with
them, of course, but you've had a broader geographical experience.1
He was even then looking forward to foreign work after the war and
he thought I might have something to contribute in that respect.
147
Riess: During the war they were looking ahead to the peacetime
activities?
Simpson: Yes.
Riess: And you had been advising on that kind of growth?
Simpson: Well, I ask myself, "What did I really do?" But there always
seemed to be innumerable things which came up that we discussed.
Bridges, Walling, and I talked together a great deal.
Riess: You said you had had a role in the reorganization of the company
after the war. I'd like to hear about that.
Simpson: Well, after the war there had to be a new look, of course, and
several approaches were made to this reorganization and the
people who would be involved. I accompanied John McCone and,
I guess, Steve, to New York to talk corporate matters with
Sullivan & Cromwell. And the upshot was that John McCone went
off on his own, and Warren Bechtel retired, and Steve Bechtel,
with the association and the assistance of Kenneth, functioned
with the new company called Bechtel Corporation.
Riess: I see. Why were there two separate companies, the Bechtel -McCone
and the W.A. Bechtel?
Simpson: I suppose that was largely to give John McCone a large enough
role to enlist his cooperation. Furthermore, it may have been
convenient to have two companies. Bechtel-McCone Corporation
operated, I think, twelve or fourteen ways in Los Angeles.
Riess: Twelve or fourteen ways?
Simpson: Where you build a ship is a way.
Riess: OhJ McCone had his own successful engineering business up until
then?
Simpson: No, I don't think so. But Steve had known him well. They'd
been approximately the same time in college, in Berkeley.
Riess: When this Bechtel reorganization was completed, John McCone
went on his way. Was that an unhappy split?
Simpson: No. Very friendly. John had a company that he had a major
interest in, which did very well, and he soon became deeply
involved in government affairs.
148
Simpson: He and Tom Finletter wrote a memorandum pointing out the
dangers to us as a nation if we fell behind in the nuclear
development. And then John, I think, became assistant secretary
of air [1950-1951], and then Atomic Energy and CIA.
Riess: That's interesting. I wonder why he got into those jobs. I
mean, this was not business any more; this was patriotism or
something like that?
Simpson: Patriotism and ambition, the two combined. I am a great
believer in mixed motives. I think lots of things are done
partly for ambition and partly for the general good. [See
Churchill's "Life of Marlborough." J.L.S.]
The Committee on World Economic Practices
Riess: Was Steve Bechtel ever offered government positions?
Simpson: Yes. He was offered a job in Washington in—I've forgotten the
name. [Pauses to think] Well, it was one of the economic
organizations. And he made me go to Washington with him because
at that time—though it seems odd now, with Steve in the
tremendous position that he occupies—at that time I knew more
people in Washington than he did.
I did go with him. It was Ferdinand Eberstadt who offered
him the job. But it would have been a very foolish thing for
him to accept it, because Steve was not made to work in the
Washington bureaucracy. It would have been a terrible fiasco.
Riess: And then later on was he ever offered any major posts?
Simpson: Well, he's been on various panels, temporary panels, you know,
and special panels, and that sort of thing. In fact, I was
going to tell you something about a committee that I got mixed
up in, the Committee on World Economic Practices.
Riess: Oh, yes. That was a government committee?
Simpson:
Riess:
Simpson:
Riess:
Simpson:
149
No. It was a top-level businessmen's committee,
to interviewer.*]
[Hands document
This is a list of the members and the advisors. I see. It has
Steve Bechtel on it. [Reads names of other committee members and
advisors.] That's a very top-level committee. What did it do?
Was it convened by Eisenhower?
No. I don't know who in the government originated it, but
Harold Boeschenstein was the chairman of the committee and the
moving force. The idea was to get a group of top-level business
men and figure out ways and means to combat Russia on the trade
level.
What was our position vis-a-vis Russia at the time?
We were on pretty competitive and not very good terms.
I was in Washington because Harold Boeschenstein had asked
me to look into one particular organization called the Development
Loan Fund; he thought there were far too many different organiza
tions handing out foreign aid, and would I take a good look at
that one?
Riess: Now, what did you find when you looked into that?
*Report of the Committee on World Economic Practices, January 22,
1959. 17 pp.
Committee members;
Harold Boeschenstein, President, Owens-Corning Fiberglass Corp.
Henry C. Alexander, Chairman, J.P. Morgan & Co.
S.C. Allyn, Chairman, National Cash Register Co.
S.D. Bechtel, President, Bechtel Corp.
R. Gwin Follis, Chairman, Standard Oil Co. of California
Eugene Holman, Chairman, Standard Oil Co. of New Jersey
Philip D. Reed, Chairman, Finance Committee, General Electric Co.
Frank Stanton, President, Columbia Broadcasting System
A. Thomas Taylor, Chairman, International Packers, Ltd.
Advisors;
W.R. Herod, President, International General Electric Co.
John B. Hollister, Partner, Taft, Stettinius & Hollister
Herbert Hoover, Jr.
Theodore V. Houser, Chairman (retired), Sears Roebuck & Co.
John L. Simpson, Chairman, Finance Committee, Bechtel Corp.
Juan T. Trippe, President, Pan American World Airways, Inc.
Leo D. Welch, Vice President, Standard Oil Co. of New Jersey
Frederick M. Eaton (Counsel), Shearman & Sterling & Wright
150
Simpson: I found I had another job.
This panel, the Committee on World Economic Practices,
was in existence and had been holding meetings for a year or
so and had not produced any report. So I pitched in to have
a look at this Development Loan Fund and concluded that it was
superfluous and ought to be merged with something else, and
there were too many different organizations.
Then I was invited to attend the meetings of the entire
panel and one afternoon, after the adjournment of the meeting,
Steve Bechtel and Harold Boeschenstein got hold of me and said
they wanted to have a private talk. So we stepped into another
room and they said, "John, you've got to write the report for
the committee."
"I write the report for the committee? You must be out of
your minds.' You've got a drafting committee here of three of
these top-level people in the country."
They said, "Yes, that's just it. They're at top level and
they can't agree and we can't get a report out."
"Well," I said, "this is certainly the kiss of death. If
I'm to undertake to write a report for this group of men, you
might just as well take me and throw me down the drain right
now, because that will be the finish of me."
They said, "Well, you've got to do it anyway. We'll give
you all the help you want. You can have as many as you want
help you."
I said, "That will certainly put the kiss of death on it;
if I have to have a lot of help, then I am sunk."
They said, "What do you mean?"
I said, "Well, give me Mike Forrestal and Abe Katz and
nobody else and maybe we'll at least have a try at it." (Mike
Forrestal is James Forrestal's son.)
Riess: How did you pick these two names?
Simpson: Because I had seen something of them. We were all milling
around here in these various inquiries. This was under the
Eisenhower-Nixon-Anderson regime. Anderson was Secretary of
the Treasury. They were all close to these businessmen, you
see, so the businessmen were called in to advise and help them
out.
151
Riess: I had asked you whether this was convened by Eisenhower, but
you said really that essentially it was Boeschenstein who took
it on his own.
Simpson: Oh, [Douglas] Dillon was in the State Department also and they
were all on very friendly terms, in the government, and the
business heads.
Riess: Who were the three who would never ever agree?
Simpson: I knew you were going to ask me that. I don't think I'll tell
you.
Riess: How can disagreement be a bad thing?
Simpson: Well, the panel couldn't submit a report.
Riess: But I mean there's nothing wrong with going down in history as
somebody who couldn't agree.
Simpson: Yes, but, you see, they wanted to give President Eisenhower a
report signed by these nine men, and if they could not agree on
anything, they couldn't sign the report. What I saw was that I
was being asked to do what apparently was the impossible thing,
namely get something that they would all agree upon.
I saw that I couldn't refuse. And, as I say, I had seen
quite a bit of these two young men, Mike Forrestal, who was then
a young fellow (he isn't so young now), and Abe Katz. You
couldn't find two fellows with more different backgrounds, but
both of them were wonderful young men and the three of us worked
together fine.
Riess: How did you attack the problem?
Simpson: I said, "The trouble with these men has been that each one has
wanted to write his own report, and that meant that they couldn't
possibly ever get together. Now, what we will try to do, if
we can, is to write the committee ' s report. We must take all the
minutes of all the meetings they've had over the past year and a
half, and then all the special memoranda that different individuals
have written, and we must pore over all this material. And we'll
hold interim meet ings where we can discuss it and see whether out
of it all we can get something that the panel will agree upon."
And, believe it or not, we did. It took about six weeks.
We were first in Washington for two or three weeks, and then we
moved to New York, and we actually did get a report which, as
you see, is not very long.
152
Riess: Yes, I was thinking it was a model of brevity.
Simpson: President Eisenhower said, "This is wonderful. I can read this
myself."
And everybody agreed, with one exception. That was Henry
Alexander, who was certainly one of the ablest men there, the
head of [J.P.] Morgan. He was for doing something much more
radical, for making a clean sweep: "Abolish everything in the
way of foreign aid, every vestige of it, and then start with one
new thing." He stuck to that.
At one of the last meetings they discussed it and at a
certain point Steve Bechtel said, "John, what do you think?"
"Oh," I said, "no, no. I don't think. I don't think at all.
I'm a staff man putting down what you people think and trying to
reconcile your views so that you can get something that you all
agree to."
"No," they said, "that's right in principle, but you've been
in this thing deeper than almost anybody, and we want you to
express your view."
So I said, "Well, in principle I think Henry Alexander is
right, but to do that would take legislation, and there's not
a chance in the world of this administration getting legislation
to that effect, at least not in time, but they can do certain
things by administrative order. And while I agree with Henry
as to what really ought to be done, I think that I agree with the
rest of you as to what in the circumstances is the wisest way to
take advantage of such improvement as we can."
Riess: You certainly demonstrated that you were a good politician in
that statement.
Simpson: The report was finished and submitted. And I think the only
thing that happened was that this thing that I had originally
been sent to study, this Development Loan Fund, was abolished.
But unfortunately all this—I said to Mike Forrestal, "Mike,
we may not have written the best piece of literature, but we've
certainly written the most expensive." [Chuckles] If you
figured the rate of remuneration per hour of these corporate heads,
and the number of hours they put in on this, I think the cost
per word, considering the fact that we did a rather short report,
was fantastic^ [Laughter]
But there was, from my standpoint, a very pleasant aspect.
I expected that this was going to cause so much rumpus and so
much disagreement that nothing I could produce would really satisfy
them. But instead, those men could not have been more appreciative.
They were perfectly marvelous.
153
Simpson: You see, I got them a report!
Riess: You rescued them. You surely didj
Simpson: [Laughter] They were about to end up, after about a year and
a half, with many motions and no report'
Riess: Do you think this is the history of most of these gold-ribbon
committees that are pulled together?
Simpson: I do , I do.
Well, that was really part of my Bechtel experience, because
it was Steve Bechtel who got me into it.
Riess: And our discussion of it came out of my asking whether Steve
Bechtel had participated in government service. So that's one
time that he had.
When John McCone departed, was there ever another really
strong figure in the firm or was it Steve from then on?
Simpson: Well, the business expanded greatly, and the organization expanded
greatly, and obviously there were some strong men. But the next
really important thing, really important thing, was the growth
and development of Steve, Jr.
Now, Steve, Jr. started at the very bottom rung. He took
his wife and baby out on something like a camper--! don't know
if they had campers then, but anyway, something like that—and
worked on pipelining under a man named Van Rosendahl, who was a
very able man, one of the ablest. And Steve, Jr. from then on
developed and gradually went up through the ranks. He wasn't
pushed ahead of his capacities at all, but he was a tremendous
worker.
There always was a lot of discussion about organization and
that's one thing that I participated in. We got one of Steve,
Jr.'s professors from Stanford Business School in for occasional
consultation. But no important changes were made at that time.
Riess: Do you think that since we only have about ten minutes left this
might be a time to break, since I'm sure we'll need more than
ten minutes to finish this topic?
Simpson: You mean sign off for the day?
Riess: Yes. I don't mean to be abrupt in any way, but--
Simpson: No, I think you're right. It's getting around 1:00. We've been
at it for two hours.
154
W.A. Bechtel. Sr.
[Interview 11: July 27, 1978]
Riess:
Simpson:
Riess:
Riess:
Was the Six Companies arrangement to build Hoover Dam pulled
together by W.A. Bechtel, Sr.?
He played one of the leading roles, but I wouldn't say he
dominated it. They were all able men, Bechtel, Kaiser,
Morrison and others, but not widely known.
Crete and I then [1933] lived in New York. W.A. Bechtel
was coming through New York on his way to Russia and we invited
him to dinner. We knew him not well at all, but he accepted and
he said he had a friend traveling with him; he wondered whether
it would be an imposition if he brought him along. And we said,
"Not at all. We'd be delighted, of course." And that was
Henry J. Kaiser, who at that moment meant no more to us than a
friend of W.A. Bechtel.
Sadly enough, Mr. Bechtel died on that trip.
Russia.
He died in
Oh, yes, he was going to see some engineering project there,
some dam, I think.
Did you keep up the Kaiser acquaintance?
Simpson: No, not then.
The Six Companies group bid a fixed price for the job, which
was very dangerous, and then two things happened: one, the
Depression drove the cost of materials way down; and, secondly,
it was the lowest water in the Colorado River in a long time.
So, they had wonderful natural conditions in their favor and
cheap materials.
The company histories note the risk that W.A. Bechtel was taking
in this; he really could have lost the whole business on that
enterprise.
Simpson: That may be.
155
Steve Bechtel, Sr. , Daring and Caution
Riess: I was starting to ask you earlier, about the sense of adventure
and comradeship and "men making their mark" in the Bechtel
companies. Do you think that there's been a lot of risk-taking
by Bechtel since then?
Simpson: No, not a great deal of risk-taking. There's been great enterprise
and energy. But Bechtel, in its development and expansion, has
been very successful in limiting risks by [ pauses] --what 's the
expression that I want?--by cost-plus contracts rather than fixed-
price. Steve Bechtel has been very cautious. Daring as he has
been in taking on big projects and grappling with the forces of
nature and man, he has been extremely cautious with regard to
financial exposure.
And, incidentally, when I say that a construction company
is the "lengthened shadow of a man," that man is Steve Bechtel,
Sr. You can't say that the whole thing was the result of the
power and force of W.A. Bechtel; he was really a successful
businessman. But the man who dreamed great dreams and then woke
up and put them into effect was Steve Bechtel.
Riess: To get back to the issue of risk-taking, two things that came
out of my reading were the basic reluctance to risk indebtedness,
and also the system of keeping the company ownership in the hands
of the few.
Simpson: Yes, I said a while ago they were very successful in not assuming
the financial liability for the projects but arranging payment
terms such that usually the customer bore the financial burden.
And yes, they had a fixed policy of close ownership of the
stock, mainly by the family, and otherwise by people active in
the business.
Riess: What I wondered was whether these policies limited the enterprises
they might have taken on.
Simpson: I don't think so. The proof of the pudding is in the eating.
And you said, "Why was it possible?" Performance. The key word
is "performance." They established a splendid record of
performing well and on time, and thereby were able to negotiate
favorable financial terms.
156
Divisional Organization
Simpson:
Riess:
Simpson:
The Bechtel organization was a very loose one. It was based on
divisions. The divisions reflected the industries with which
the company was dealing. There was the refinery division, and
the power division, and the industrial division, and the pipeline
division.
These divisions were, of course, under the command and
control of Steve Bechtel, who was originally president and later
chairman. But they had a great deal of independence, and there
was no very well organized central power except Steve. For
instance, George Colley was a marvelous fellow and he was for
quite a long time in charge of the Middle East work, which was
the beginning of the refinery and pipeline developments in the
Middle East. George and I were very good friends and we were
talking about this very question.
I said, "Well, George, you know these divisions are kingdoms.
You've got an empire here, and the empire consists of some
kingdoms; the heads of the divisions are little kings."
George said, "Am I a little king, John?" And I said,
"Certainly, you are." He laughed.
George was a delightful fellow and a wonderful man.
killed by a militant mob in Iraq.
He was
Did the division organization work well? It might be that it
would be more logical to organize by areas, or by projects?
Yes, there was a great deal of discussion about the type of
organization. Another possibility would be to organize by type
of activity, that is to say: construction division, engineering
division, administrative division, and so on.
Steve, Jr., who had been to Stanford Business School, was
quite close to Paul Holden, one of his professors there. Steve,
Jr. participated in getting Paul Holden up on several occasions
to investigate this very question. In the end it seemed that
the system of division by type of activity was really the answer.
And now that the divisions have given place to companies--
as you know, there are three companies now in the Bechtel group,
Bechtel Power Corporation; Bechtel, Inc.; and Bechtel Corporation-
the basic differentiation is still type of work, type of subject.
Riess: What are Bechtel, Inc., and Bechtel Corporation1
157
Simpson: Well, they're names selected to designate three companies,
because they have found it, as they believe, advantageous to
split up what is now the vast collection of enterprises into
three separate units. They all have presidents, and Steve, Jr.
is chairman of all of them.
Riess: I am struck by how important it was for the company to keep
dealing with organizational matters. It seems like shuffling
a pack of cards. But you're saying that it's an essential issue,
that you can't get things done until you've got your organization
sorted out.
Simpson: That's right.
Riess: Is that because of matters of power? Various personalities need
to be able to sort of consolidate their own power?
Simpson: Yes, there's a certain amount of that. There was in the past,
and I suppose, human beings being what they are, there probably
is now. But it is mainly a matter of efficient operation.
Riess: When you came in was about at the same time that Steve, Jr. and
Paul Holden had worked on this new organization by divisions?
Simpson: The organization by divisions was not new; on the contrary, it
was traditional. After discussion with Steve, Jr. and Paul
Holden, I came to the conclusion that there probably would be
no important changes until a new generation came along.
I think, although I'm really not the best person to talk
about this because I've been away from it far too long, I think
that by breaking it up into three major segments and actually
having presidents of them, they have succeeded in smoothing out
the relationships better than if they had half a dozen divisions
all on more or less the same level.
Riess: Do you think that the more people that you can have at the top
of an organization, the better?
Simpson: Well, in an organization which is growing and which is extremely
dynamic, you must be developing personnel, and I think the
Bechtel Corporation did recognize that. Both Steves recognized
that and did a very good job of bringing personnel along. And
they've paid a lot of attention to it especially in the latter
time. They've had a psychologist holding group meetings and
trying to explain to them the best ways of dealing with
subordinates, that sort of thing. What's his name? John Turner.
Riess: I'm interested to hear that they would use the ideas of
industrial psychology.
Simpson: Yes. Oh, they've been by no means negligent of that.
158
Research, and Current Concerns
Simpson: One of the traditions that was established early and maintained
was the development of technology. In one of the company
histories there was an overenthusiastic chapter heading:
"Tomorrow's Technology Applied Today." They gave me the draft
to read and I sent it back with a note saying, "That is what
the New Yorker would certainly call the neatest trick of the
week."
Riess: [Laughter] Yes. Is that a division, research and technology
and development? How does that fit into the structure?
Simpson: Well, it fits in in each one of these categories.
Riess: There is a research department within each?
Simpson: A research group, perhaps not a department. But they're doing
research.
Riess: Do they have government support in this, or is it financed totally
from the company?
Simpson: Well, Steve Bechtel has always emphasized the desirability of
private work, but, on the other hand, has responded to government
calls when the occasion demanded. But the preferential emphasis
has been and is on private work.
Riess: I was thinking very specifically of research work which the
government often sponsors, certainly at universities and places
like that, pure research.
Simpson: I don't imagine that they're doing much, if any, pure research.
After all, their job is to apply and produce. I'm not really
in a position to talk about that. I don't know anything about it.
Riess: What has Steve, Sr. 's stand been, in the years you've known him,
on the environmental impact issues?
Simpson: Frankly, I never discussed it with him.
Riess: It just never would be likely to come up, or you're not interested?
Simpson: Oh, I'm interested.
Riess: So many people in this day and age in America really think that a
lot of such development as Bechtel engages in should be brought
to a screeching halt.
159
Simpson: I think that the answer is that the controversies occur between
clients, or prospective clients, and the public. Bechtel really
doesn't get into the controversial aspects of it; the controversy
is settled one way or the other before their turn comes.
Riess: Yes. And that brings up a point. I haven't really known how
many projects I should be associating with the Bechtel name. Is
there a deliberate low profile?
Simpson: There had been in general a low profile policy. That is becoming
less possible to follow, but Bechtel has traditionally not sought
publicity.
Riess: In fact I hadn't realized that every time I come into San Francisco
and head up here to see you I'm passing some new Bechtel corporate
buildings that are going up downtown.
Simpson: And there was a rather unpleasant article about that in the
[San Francisco] Chronicle the other day [July 24, 1978]. (Of
course, I personally think the whole modern development in business
architecture is--I don't like it at all—New York, San Francisco,
anywhere. I don't care for the Bank of America Building. I don't
think it has anything to do with Bechtel; I think it's just the
wave of the present and probably of the future.)
Organizational Function of Finance Committee
Simpson: You asked me for some examples of specific duties and activities
of the Finance Committee?
Riess: Yes.
Simpson: Before the committee was established it was not entirely clear
as to what officers could obligate the company, and for what
amounts. People were signing contracts, and though there was
never any difficulty, as far as I know, we realized that that
was something which should be corrected, and the board established
a scale of the amounts which officers of different ranks were
authorized to commit for. That's the kind of thing the Finance
Committee did.*
*Hembers: S.D. Bechtel, Jr., R.L. Bridges, W.E. Waste, J.L.
Simpson, Chairman, (R.D. Grammater, Secretary, but not a member).
160
Simpson: The committee also made suggestions tending to simplify
and regularize the board meetings' agenda. I was pleased at
the last board meeting that I attended as a director--! did
attend some later as a visitor--when one of my fellow directors
said a few very nice things about me, and I guess the principal
one was that he said, "John has brought something in the way of
order and regularity of procedures that we didn't have before,
and we must remember that he brought that to us." Coming from a
fellow director, it was a compliment that I appreciated.
Although it was a corporation in the formal sense, the
tradition of the conduct of affairs bore traces of a family
partnership.
For instance, the monthly financial report. Everybody who
had an idea about something that he might like to see in the
report turned his idea in. This had caused an accumulation over
the years and you had a report a couple of inches thick with the
likelihood that nobody was going to read it. The Finance Committee
tried to get out a report which would be simple and brief enough
so that it would be read.
There's something else that I would like to mention in this
connection. There had been no provision whatsoever for retirement
benefits, and Steve Bechtel told me that he wanted me to take
that question and develop or get developed some kind of profit
sharing to produce retirement benefits, and the Finance Committee
did that and brought it into effect.
Granted, we had some difficulty because there had been a
tradition that the construction business had not been a very
reliable one. There had been lots of failures in the past and
some of the directors were fearful of anything that smacked of
the nature of a pension. But, of course, profit sharing is not
a pension, and time after time I had to explain that we were
merely committing a portion of the profits to retirement benefits
and that it wasn't a fixed obligation as a pension is. And to
the people who were working with me on it I said, "I don't want
to ever hear the word 'pension.'
We finally got it over and put it into effect as Bechtel
Trust. Later on they formed another one in addition, Bechtel
Thrift, to which the employees contribute as well as the
corporation, and so on. I consider that one of the constructive
things which Steve Bechtel asked me specifically to do and which
the Finance Committee and I did.
Riess: This recapitalization which you have listed here--
161
Simpson: That was a recapitalization of technical and complicated legal
procedure, legal tax procedure, which permitted the bringing in
of new stockholders on a profitable basis to them, an opportunity
to buy stock at a low figure, because that has been one of the
policies to make it possible for comers to acquire stock at a
low enough figure so that they would benefit.
Riess: All of these things sound like they were absolutely essential.
It was amazing that they had gotten along without a retirement
plan.
Simpson: It was because it was like Topsy, it grew. You see, it wasn't
made out of whole cloth; it developed and grew. And therefore
these oddities were rather natural.
Now, what have I mentioned here? [Looking down at outline]
Riess: We've talked about retirement, recapitalization, and streamlining
the financial report.
Simpson: Steve, Jr. at that time was at the operating level and for a
considerable time he was with the pipeline division and very
interested in it. But also, from his Stanford Business School
experience, he had a sense of organization. And his membership
on the Finance Committee, which held meetings at fairly frequent
intervals (maybe once a month or perhaps a little of tener) , was,
I think, a good opportunity for him to start participating in
running the company while he was still out putting some pipe in
the ground.
L ines of Credit, Dun and Bradstreet
Riess: Would you go on with the changes in your term as chairman of the
Finance Committee.
Simpson: There had been no bank lines of credit. The company did not want
to use credit and had not needed it. But I felt that we should
have some lines of credit with our principal banks, even though
we didn't use them, as a safeguard and a backlog. So we did
establish lines of credit--I've forgotten how much--with the
three principal banks. And that was done at the instigation of
the Finance Committee.
Riess: And that was just in the nature of making it a sound business.
162
Simpson: Yes. It was kind of an insurance that in case you did need some
credit you wouldn't have to go and broach it as a new subject,
you had the line established.
Also, the question of supplying information. Everybody
wanted to know what the balance sheet looked like. Dun ft
Bradstreet is a service which collects financial information
from all companies in which there's any interest and then
supplies that information for a fee to its customers. Its
customers are people who--a bank or some other organization
which, for its own business reasons, would like to know about
the financial status of such-and-such a company. We had not
given any figures to Dun & Bradstreet. There had been no
occasion for it.
They came and said, "You were obliged by law in--" (I think
Massachusetts, or some state in the East) "--to supply certain
information, and you've done so, and it's very fragmentary.
Inasmuch as this is the only information on Bechtel Corporation
that we have, this is what we're going to hand out."
That seemed to me very unfortunate. I talked it over with
Steve and said, "We're up against it. We're going to be shot
at now from Dun & Bradstreet. Hadn't we better decide what we
don't mind giving out—there's considerable information we don't
mind giving out--and give it to them in an orderly fashion?"
He agreed, and that meant the board agreed.
So I set up a procedure by which we took the Dun & Bradstreet
form and filled in as much of it as we thought appropriate and
suitable. We did not give the earnings. We did give a balance
sheet. And that satisfied them and pleased them very much, and
the practice was established. I hope it's going on still.
There were a number of things like that, you see, of a
specific nature. I am a little fuzzy trying to remember things
that had happened a long time ago of a general nature, such as
centralizing—what does that mean? But these things that I've
noted were quite specific things and of some order of magnitude.
Riess: Why did Bechtel not want to disclose profits?
Simpson:
Riess:
It is a privately owned organization and most people in private
businesses don't care about disclosing their exact profits to
others or the public.
What are the consequences?
looking at the thing?
Is it a question of the government
163
Simpson: No. There's no secrecy as far as the government is concerned.
[Pauses] Well, I suppose, in negotiating contracts it's more
advantageous that your counter party is not aware of exactly
how much money you've made on other contracts. I think it's a
matter in the general category of trade secrets.
Riess: Is it a tradition of other private corporations not to disclose
their profits?
Simpson: Yes. I remember the Banking Act of the early New Deal, when
private banks were forced to reveal their earnings. Baron Bruno
Schroder, head of Schroder London, said, "Think of Jack Morgan
being obliged to produce his balance sheet!" He considered it
an outrage. People who have private enterprises feel that--[ pauses]
Riess: That that's an invasion of their privacy? Unconstitutional,
maybe? I'm trying to get into the mind of a big businessman.
[Laughter]
Simpson: Well, I don't know quite how to express it [pauses], but business
people in general feel that the less the public and outsiders know
about the entire inner workings and profitability of the business,
the better off they are. And I think that is generally true.
Riess: In your notes of responsibilities and activities you say [quoting
from Mr. Simpson's notes]: "Special financial studies, such as
analyses of results over past periods and currently." Is that
the same as a profitability study?
Simpson: Well, in the same general category.
Riess: And did things come to light that, when they were subjected to
analysis, changed the operation of the business?
Simpson: I don't think I can answer that because I don't remember enough.
Riess: [Quoting from Mr. Simpson's notes] "Volumes and trends."
Simpson: That's in this same category.
Riess: "The internal and external audit." Had that not been done before?
Simpson: No. Internal, but not external.
Riess: "Acquisition of new interests, companies or firms."
Simpson: Well, they didn't have any big merger, but they did acquire a few
firms, mainly to get the personnel. Where there was a fellow
who was particularly good, they felt, in some special field, they
might make a deal with him to acquire his company and him.
164
Steve. Sr.. The Last Word
Simpson: I enjoyed very much indeed my relations with Steve, Jr. in
this Finance Committee connection--in all connections, as far
as that's concerned. I thought he added a great deal to the
Committee and that he was getting something out of it himself,
as I say, because while he was still pipelining he was dealing
with the general policies of the company in a more intimate
way than he could have as a member of the board, because we
could sit and discuss for an hour or two any particular matter
that we thought was especially important or interesting.
Riess: And what would happen on the board that would preclude that
possibility?
Simpson: Oh, more people and more of a regular agenda.
Riess: You said earlier that if Steve, Sr. agreed to something that
that would mean that the board would agree. Were you implying
that it was kind of a rubber-stamp board?
Simpson: No question that Steve led the company, but that still left
lots of room for decisions on many things. There were lots of
things for discussion — technical matters and policy matters--
where Steve would want the advice of all of the others.
Riess: So, it wasn't a matter of disagreement. It was a matter of areas
of expertise.
Simpson: Yes. I didn't mean to say that the board was a rubber stamp. It
wasn't at all. There were many things that the board discussed
and decided. Let me say this. I don't think they decided many
things against Steve's will. But that still left plenty of room
for constructive reporting and discussion.
Riess: Were there major discussions about undertakings and whether to
take them on? Steve would take on everything?
Simpson: Oh, not necessarily, not necessarily. Steve is a businessman.
Riess: Was there a pattern of things that were turned down?
Simpson: No, I don't know of any pattern.
Riess: I mean, types of things that he had some distaste for.
Simpson: I think each thing was judged on its merits. In some cases the
demerits outweighed the merits and they didn't do it, but I
don't think there was any pattern.
165
Riess: Would there be countries that he would care not to deal with?
Simpson: [Pauses] Put it the other way: Were there countries that he
was especially interested to deal with? And in that case there
were. Canada was one. Saudi Arabia was one.
Riess: He had a long acquaintance with King Faisal, was it?
Simpson: Yes. He had and has very close acquaintanceship with the Saudis.
Riess: And so that was the Middle Eastern country that he was most
interested in dealing with.
Simpson: Well, that was the one that had the most opportunity.
Riess: In your other notes you included "High-level contacts." Certainly
in your years with Schroder you met fascinating people. What were
you referring to at Bechtel?
Simpson: I wasn't thinking so much of myself at that point. I was thinking
that that was the general policy of Steve Bechtel. He was very
alert to high-level contacts and extremely good at cultivating
them.
Riess: Kings and foreign ministers?
Simpson: And in the Business Council in Washington.
Riess: Oh. And what value would that have for him, the Business Council?
Simpson: Contacts with important men, heads of companies. You have that
list, the panel of the World Economic Practices Committee.
Riess: Yes, right. That certainly was high-level. He certainly didn't
need more business, though.
Simpson: Oh, yesJ You always--
Riess: You always need more business?
Simpson: Well, you see, this is entirely different from manufacturing
harvesters. This business—you're always working yourself out
of a job. You always have to put new business on the books
or pretty soon, no matter how prosperous you are, you'll be out
of work. The construction business is entirely different from
the manufacturing business in that respect.
Riess: And so for a period there Steve was the big salesman.
166
Simpson: Well, he still is.
Even though Steve, Jr. runs the company now (there's no
question about that), he is chairman--"companies, " I should
say, it's a group of companies now- -even though Steve, Jr. is
the executive head of the business, Steve, Sr. still plays a
very important role by making the rounds and maintaining
contact with his old friends.
His qualities, already described, make him almost unique.
Riess: There's no competition, really, for the Bechtel companies, is
there? There's never been anything like it.
Simpson: Oh, yes. Oh, yes.
Riess: I've never heard of them. I've only heard of Bechtel, despite
its low profile. [Laughter]
Simpson: Williams, Fluor, Stone & Webster, Kellogg. Oh, yes, there's a
lot of competition.
Riess: And, in fact, every job is bid?
Simpson: Or negotiated.
Riess: Or negotiated? Those people, though, that he knows personally
or shakes hands with don't put the job out to bid. They just
have Bechtel, don't they?
Simpson: Well, Bechtel tries to have it that way. They don't always
succeed.
"By John L. Simpson"
[Interview 12: August 3, 1978]
Riess: I have this paper which you gave me, "Some Impressions of the
Middle East." Now, it was when you were working for Bechtel
that you would have been traveling in that area?
Simpson: Yes. I made a trip to Aden. They were building the refinery
at Aden. You remember Mossadegh? He'd closed down the Abadan
refinery, and British Petroleum was having Bechtel do a crash
job of building a refinery at Aden, and I went out to visit
with them for a couple of days.
167
Simpson: They built this refinery absolutely from what they called
grassroots — there wasn't a thing there—about twenty miles from
the city of Aden. They had to do everything. They had to
provide water, roads, living quarters, mess halls, a power plant,
miles of pipe, storage tanks, a hospital, religious facilities,
a mortuary, sewage disposal— as well as the refinery itself.
It was very interesting to me, a layman.
And to some group here — the World Affairs Council, I guess,
yes — I gave this paper. But there's been so much written and
said before and after on the Middle East by people much more
authoritative than I.
Riess: And in 1960 you had been asked by the combined American Society
of Electrical and Mechanical Engineers to give a talk?
Simpson: Yes. They didn't select the topic, just "a talk."
Riess: I see. I'm interested that your paper on the dollar was presented
to that group.* I would think that it would be a topic for bank
managers, but I'm surprised at engineers.
Simpson: Well, they didn't select the topic.
Riess: You think they understood what they were being told?
Simpson: They asked some very intelligent questions, some of which I
couldn't answer. Oh, they could understand it all right. You
see, we were just beginning to run deficits. As somebody said
of Napoleon, "The first cloud came from Spain," the first cloud
on the horizon.
This paper was then reprinted, you see, by the bank, of
which I was still a director.
Riess: Yes. [Reading from paper] "During recent months, increasing
consideration has been given to our international balance of
payments. Mr. John L. Simpson, Finance Chairman of the Bechtel
Corporation and a director of our bank, gave a talk a few weeks
ago which we believe was an unusually clear exposition of this
subject. We have therefore obtained his permission to make the
following reprint of his remarks available to you."
*"Competition on the World Front, International Trade and Payments
and the Position of the Dollar," a talk presented to the American
Association of Electrical Engineers and the American Association
of Mechnical Engineers, San Francisco, Sept. 13, 1960. See
Appendices.
168
Simpson: It was very early in the period which now has developed into
a major problem. It was inconceivable at that time that the
dollar could be impaired, only they were imposing heavily on
the dollar. As Fred Searles, my assistant, said a couple of
months later, 'Veil, you certainly hit the jackpot with that
paper of yours because now everybody is beginning to talk about
it."
W.B. Wriston, who was an officer of the First National City
Bank, and subsequently chairman of it, had done an excellent
paper. I wouldn't have tackled the subject if I'd known how well
he had handled it. I think the First National City [Bank] must
have distributed Wriston 's paper widely and they had many clients.
Schroder's published, I think, two or three hundred.
B e ch tel Associates. New York
Riess: Could I ask you to explain how Bechtel Associates made its way
into engineering in New York? [Referring to a discussion
following Interview 11]
Simpson: Well, the Bechtel organization wished to practice engineering in
New York and needed to. But there was a difficulty, because
under New York state laws a corporation could not practice
engineering; it had to be a partnership. And the partnership
had to bear the name of an engineer licensed to practice in New
York. Efforts were made to acquire one of the rare corporations
with grandfather rights which still permitted them to practice,
but those efforts failed. The result was that a partnership was
formed, without the Bechtel name in it.
Riess: What was it called?
Simpson: George S. Colley, Jr. & Associates. Well, that was all right as
far as partnership was concerned, but it was not very impressive
as far as Bechtel was concerned, and a great deal of thought and
effort were given to ways and means of conquering and overcoming
this obstacle.
Steve, Jr., having graduated from college, married, with a
child, was working in the pipeline division, and was intensely
interested in it and anxious to proceed at the operating level.
But somebody-I don't know who first had the idea; it's possible
that it was I, but I'm not at all certain—suggested that if
Steve, Jr. would go to New York, sit down for two or three months
or whatever and refresh himself on his college engineering, and
169
Simpson: pass the New York State engineering examination, he would be
admitted to practice in New York. That would solve the problem,
because then in New York a practicing engineer would be one of
the partners, and his name would be Bechtel, and it could be
named Bechtel Associates.
Well, Steve, Jr., at the outset, was very indisposed to do
this because it interrupted the thing that he wanted very much
to do, which was to be on a job. He loved that. He traveled
around wherever the job took him with his wife and baby.
I took a very strong line that that was the solution, that
thereby you had an absolutely clean-cut situation, no if's, and's,
or but's: a Bechtel in a partnership, a Bechtel being a qualified
engineer. I don't think at that time I was at the height of
popularity with Steve, Jr., but in the end he realized the
importance of it and he went to New York.
It took several months. The examinations were evidently
very severe and graduate engineers get busy on certain practical
things they're working on and they get a little rusty. So it
did require several months1 preparation. But he did it and, of
course, he passed the examination and became an engineer in New
York State.
Riess: And then did he have to stay on the job there?
Simpson: No, no, not at all.
Riess: It just had to be in name only.
Simpson: The partnership became named Bechtel Associates and retains that
name. Now, that solved the problem at the time. The situation
is a little different now and the name of the entity now is
Bechtel Associates Professional Corporation, which reflects a
liberalization of the New York law, that there may be a corporation,
but the corporation's members must still be qualified engineers.
Riess: I see. Did you have anything to do with getting any of those
laws changed?
Simpson: No.
Riess: And were there other incidents in which that pattern then had
to be repeated, other states?
Simpson: No, not that I know of.
170
Riess: What actually prompted Steve Bechtel, Jr.'s elevation in the
firm? I know you said that he worked with you on the Finance
Committee and that gave him a lot of insight into workings,
but was there an event?
Simpson: No, there was no particular event. He progressed in the
organization just as others who were not Bechtels progressed.
He worked under Van Rosendahl, who was a very able man, and
he learned a lot of a practical nature and was promoted in
normal course.
The Mother Jones Issue
Riess: Mr. Simpson, since our last interview, on August 3rd, an
article about Bechtel Corporation has come out in the magazine
Mother Jones.* We talked a little by phone about this piece
and about Bechtel 's response. And now, given two months to
let it become "history," I'd like your answer to a few related
questions for the oral history.
What is your reaction to the line about "the mysterious
figure of John Simpson" and accompanying innuendos about your
ties with OSS and access to military information during WW II?
Simpson: I can answer briefly and categorically the reference to me. I was
indeed, as mentioned, a close friend of Allen Dulles and his
family. I never in any way, directly or indirectly, had anything
to do with any relations between Allen Dulles, or the CIA, and
the Bechtel organization. I have no knowledge whatsoever on this
subject.
You have in hand a statement issued by the Bechtel organization
on August 17, 1978, which explains my joining that organization.**
Inasmuch as the Bechtel organization has made its position
clear and since I have had no official connection with Bechtel
since 1973, it would be inappropriate for me to comment further
on the subject. [Subsequent questions unanswered. S.B.R.]
*:'The Bechtel File," How the Master Builders Protect Their Beach
heads, by Mark Dowie, Mother Jones. Sept. /Oct. 1978, pp. 29-38.
**"fyi" For Your Information, Bechtel Response to Mother Jones
Article, Vol. 4, No. 7, August 17, 1978. [See Appendices]
171
XIII SOCIAL GROUPS
The Disputers
Riess: Today we were planning to review the history of The Disputers.*
Simpson: The Disputers started because three of us, who happened to be
Californians, had lunch together and started talking about
world events. Somebody told a good story, we had a good time,
and we decided to have another lunch, just for fun, not because
we were Californians but because we had a good time. The names
of the three were Henry Breck, Clare Torrey, and John Simpson.
And the original group was called the California Luncheon Group.
Riess: Who was Henry Breck?
Simpson: Henry Breck was a classmate and an investment banker, at that
time with J. & W. Seligman, and later one of the directors and
managers of Tri-Continental Corporation.
In planning to have another lunch or two, or I don't suppose
at that time we even thought of a lunch £r_ two, another lunch,
we thought since we were all down here in Wall Street — this was
the Depression and things were very grim--"Why don't we get Turk
Mills down to lunch? He's outside this whirligig of Wall Street
that we're in and he may give us a little different view."
Turk Mills (Frederick C. Mills), an old friend, was a
professor of economics at Columbia and he was also on the staff
of the National Bureau of Economic Research, which was a
prestigious economic institute headed by Wesley C. Mitchell,
*See Appendices for a brief history of the group written by
John L. Simpson and Allan Sproul.
172
Simpson: one of the outstanding economists in the country. We had another
luncheon and included Mills, and again we had a very good time.
Allan Sproul had come from the Federal Reserve Bank in
San Francisco to the Federal Reserve Bank in New York, and we
thought it would be well to include him. This expansion of the
group was partly because we were Californians, but partly
because we were friends and knew each other and might have done
it in Cincinnati, if not in New York.
Riess: Yes. But at that point, then, it was obvious that it was
Californians and you didn't ask any New Yorkers to join.
Simpson: No. But we asked a New Englander to join. John Williams was
an economist at the Federal Reserve Bank, and we actually said,
"We ought to take the curse off this and not be all Californians.
Let's ask John Williams to join." And we did, and he joined.
So we always had a leaven of non-California.
Riess: Allan Sproul was unanimously elected to the office of scribe.
When did it occur to you that there was going to be something
happening worth having a scribe for?
Simpson: Well, we started betting, and that's the most interesting, amusing,
and important aspect of the whole thing. We started betting on
all sorts of things. I suppose we probably first started betting
on financial things—the stock market, interest rates, and the
gross national product. And we established the rule—about the
only rule we ever had --that a bet should be a dollar bet, and
that anybody could bet on anything he liked, provided he'd back
it with a dollar.
Riess: A dollar to what?
Simpson: Oh, there could be odds. In fact, I said in this memorandum
that you've read, or Allan Sproul said in one of his notes,
that I bet a dollar to a hundred dollars that Henry Kaiser would
be the next president of the United States [laughter], which was
a big laugh, of course.
Riess: [Laughter] Yes.1
Simpson: So, while it was Californian and was referred to in New York as
the California Luncheon Group, it was not chauvinistically
Californian. We got together not because we were unhappy about
New York— on the contrary, we all belonged to different clubs
and things in New York— but because we were old friends mostly,
and because we were congenial as individuals.
173
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson :
I like the phrase that you have here [quoting from Mr. Simpson's
paper]: "The field of disagreement was unlimited." Of course
you were old friends, and I wonder if basically you were people
who were in agreement, or were the politics and the thinking
actually as far apart as to really warrant some of these bets?
Was this a group of Republicans, in essence?
I don't know.
Possibly not.
as you know.
I don't know whether Turk Mills was a Republican.
The academics were not so unanimously Republican,
The quality of the disagreement was obviously not disagreeable.
We bet to win. Nobody bet according to his liking. You bet to
win. It was very important to win that dollar and not lose it.
We were much more interested in having a good score of winning
dollars than we were in advocating a cause—Republican, Democrat,
or what have you.
I see. So, the person you were betting on for President might
very well be the person who you were voting against.
Yes.
Well, it's certainly an interesting series of bets that were
recorded by Allan Sproul. Is this only a fraction of them?
Oh, yes. Only a fraction.
I notice that the second item that he includes in this "list
of events in the long and disorderly life of the luncheon group"
is the women who had come to the meetings.
Yes. That, perhaps, is not quite clear. I think Clare Boothe
Luce came twice, and I know Eleanor Dulles came once. I think
those were the only times women were there at the luncheons.
How and why?
No particular reason. Somebody said, "I think maybe I could get
Clare Luce to come." (I think she'd been in the Far East.) We
all said, "Fine." There was no formal set of rules.
You liked to have a guest each time you met?
Well, we couldn't each time, but we were glad when there was
somebody available, especially people from abroad.
174
Simpson: Lord [John Maynard] Keynes was the guest twice and he
participated in the pools. We had pools on the stock averages.
And he each time was high man. (When I say pools on the averages,
that is to say a guess as to what the average would be at a
certain time ahead.)
Keynes was high man in this each time and, of course, he
lost each time. And he said a very interesting thing. He said,
"You know, I sometimes am right in my judgments." (As a matter
of fact, he oftentimes was.) "But," he said, "very often I am
too fast in my timing, and I'm ahead of events in my timing." I
thought that was very interesting.
Riess: That is interesting.
Simpson: Then there was a sort of a ridiculous bet by Torrey, who liked
to make those, "That one year from today the country would be
in a hell of a mess." [Laughter]
Professor Ohlin, a Swedish economist, was a guest at the
luncheon one year later when that bet was decided. He decided
that Torrey lost his bet because the United States was filled
with rape, rapine, murders, midgets on J.P. Morgan's laps in
the Senate hearing [chuckles], and all that was perfectly normal,
and the country was not in a hell of a mess.
Riess: And did the bets basically relate to the informed conversation
at lunch, to the subject of the day?
Simpson: No, no. It was very informal and very sort of wild and woolly.
I bet Don McLaughlin a hundred dollars to one that there
would not be an earthquake before midnight. And, I must say,
I was kind of glad to see the hands of the clock pass twelve
that night, because I would have felt an awful fool if I had
lost a hundred dollars.
Riess: When someone like Keynes or Clare Soothe Luce came did the group
then really focus on them? The discussion was in their area?
Simpson: Well, they certainly focussed on Clare Boothe Luce. They all
were on their best behavior, both politely and intellectually.
Everyone was anxious to make a good impression on Clare Boothe
Luce.
Riess: Do you think that your group was known around New York and that
there was some curiosity after many years of doing this?
175
Simpson: I'll tell you, there was a great desire on the part of quite a
number of people to get into it. It had not a wide reputation,
of course, but those who knew what was going on realized what
a good time we were having.
There were a number of people who would have liked to join,
people who would have been fine members. We felt that it had to
be very small or it would lose its character, because the danger
would be that it would break up into individual conversations
between two here and two there, and we wanted it to be a general
conversation. We carried on that tradition here in San Francisco
too. For the same reason, a round table was much better than an
oblong table.
There were several people who hinted that they would like
to join, and maybe it would have been all right, but we didn't
want any more than — if we had seven or eight members, we'd have
about six at a lunch, and that was a good number.
I always thought that if people who were not members of
the group thought that it was so good and so interesting, why
didn't they form one themselves? All we had was three or four
fellows getting together for lunch and inviting a couple
more. Why couldn't anybody do that?
When you look back at the group in New York, did they have
something that you would say was uniquely Californian?
It may be merely because 1^ am different than I was in my youth,
when I thought the University of California was practically the
entire world and Stanford was something very much less, but I
think the development of transportation and communication has
greatly changed that idea. Think how many people now have their
children go to school in the east, and how many people in the
east have their children come out here. There's much more
interchange now throughout the country, I think.
The telephone — think of what telephoning across the continent
meant when I was young. Well, now I pick up my telephone and
think nothing of it and ring up somebody in Greenwich or New York,
and the fact that the fellow I'm talking to went to Yale and I
went to the University of California is of no particular importance.
I think the local chauvinism has been greatly diluted by the
modern means of communication and transportation.
Riess: I liked Wesley C. Mitchell's statement, when he was an honorary
member, that, "All professors of economics should be required
to back their opinions with bets. It would lead to less loose
academic talk." [Laughter]
Riess:
Simpson:
176
Simpson: He was very good company. At that time he was, I suppose, the
outstanding economist in the country on the business cycle,
which was his specialty. He seemed to enjoy the time or two
when we invited him, so we told him we considered him an honorary
member. He didn't have to give any lunch, but he was an honorary
member, and he liked that.
Riess: Did everybody have a different club?
Simpson: Well, I had a club, the Century Club, but I held my luncheons
in the Recess Club, which is a downtown luncheon club. The only
lunches which were held in the Century were Mills' s; he was a
member of the Century Club and he held his lunches there and we
met uptown. Breck's firm had a kitchen and dining room and he
held his in his place of business. Allan Sproul held his at the
dining room of the Federal Reserve Bank.
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
Riess:
Simpson:
I see. Was there a University of California Alumni Club group
in New York?
No, I don't think there's a California club in New York,
never--! 'm sure I would have known it if there was one.
I've
Now, from your notes, and from Loyall McLaren's interview,* and
from a conversation we had with Horace Albright, who was a member,
there are some other names here that came up. Maybe you can tell
me a little bit about them. Paul Penoyer?
Paul Penoyer was a member, but like Horace Albright rather late
in the game. The New York group dwindled in the course of time.
After all, this is a very long time; it's a half a century, you
know.
Indeed, yes.
Paul Penoyer was not in at the beginning, but at some stage of
the game he was invited and was a member, and a very fine and
good member too. But he was a member at the time when the
interest in New York was somewhat dying down.
You mean the interest in continuing the group?
Yes. People had moved away and some died, and a few new members
were taken in, like Paul Penoyer, but it was losing ground and
interest.
*N. Loyall McLaren, Business and Club Life in San Francisco,
Regional Oral History Office, University of California, Berkeley,
1978.
177
Riess: This is in the 'AOs or early '50s?
Simpson: The '50s, I would say.
When Allan Sproul and I moved out here, there were then
very few left in the New York group, and they weren't holding
meetings regularly, and it was obviously petering out. And
Allan said to me, "Why don't we try to revive the California
Luncheon Group here?"
I said, "Well, Allan, I don't know. Usually those things
just happen and it's very difficult to recreate."
"Veil," he said, "let's have a try at it. We've got Don
[McLaughlin] here and there are several Californians. "
Riess: How did you decide, since you were really now in home territory,
who you wanted in the group out here?
Simpson: There were certain Californians who were ever-welcome guests
when they came to New York. Loyall McLaren was one of those,
[along with] Marshall Madison and Nelson Hackett. So, either
Allan or I or both of us got hold of Don, and we three were the
nucleus, and then we told Loyall McLaren and Marshall Madison
about it. Marshall Madison was very enthusiastic about the idea.
And so there we had five, you see, and then we chose one or two
others and it caught on here with great enthusiasm.
Ken Monteagle--you wouldn't have thought that he would be
particularly interested in a thing like that, but he was,
tremendously.
Riess: Who was he?
Simpson: Kenneth Monteagle. The Monteagles are a rather well known
San Francisco family.
Riess: How about Morris Doyle?
Simpson: He's a lawyer, head of the McCutcheon firm.
Riess: And he was a regular?
Simpson: Yes, he was part of the newly formed group here, and a very good
one. He was a marvelous storyteller.
Riess: Bob Sproul? [Robert Gordon Sproul]
Simpson: Bob Sproul was an accepted guest in New York always. But I don't
know--
178
Riess: Did he join the group when it was out here?
Simpson: I don't quite remember. I don't remember him as being very much--
[Pauses to think] Yes, he did.1 Yes, he joined the group here.
Yes, I do remember now. He had his lunches at the Family Club.
Riess: Dudley Gates?
Simpson: Dudley Gates was an insurance man, a Californian.
Riess: And he was part of the group out here, or the New York group?
Simpson: The New York group. He died.
Riess: Oh, I see. Then there is a note about a man who was a telephone
company president, class of 1910, but no name.
Simpson: I've forgotten his name. Don [McLaughlin] would know his name.
I'll ask Don if he recalls his name. [Carl Whitmore. J.L.S.]
Riess: Wallace Sterling came as a guest or as a member?
Simpson: He became a member and a very fine one, a marvelous storyteller.
Riess: Did you have an initiation period when people were required to
show their stuff?
Simpson: We had n£ rules whatsoever, a strong no-rules rule.
When the students were having their uprising in the '60s
one of our old friends, whose name I shan't mention, who was not
a member of the group but a good friend, devised a statement
which he wished to issue widely, and thought would quell the
uprising. He needed a little money to finance this in order to
give it wide distribution and, having been a guest at one of our
lunches, he suggested that this group might be a suitable source
of funds, and he was turned down vociferously.
"This group doesn't do anything as a group." It's independence
personified. Everybody's got a different opinion from everybody
else, and nobody's interested in anyone's opinion unless he'll
back it with a dollar.
So we did not contribute for the publication of this paper,
and I'm sure it would not have done a bit of good if we had.
The lines following were written by Nelson Hackett in acceptance
of John Simpson's invitation to what was to be The Disputers
Last Luncheon, September 8, 1977.
178a
TELEPHONE ARJ1A415 547-5364
QQ LINCOLN AVENUE
PIEDMONT, CALIFORNIA 94611
(
tc,
- U-
178b
WALLACE MACGREGOR
P. O. BOX 66
TIBURON. CALIFORNIA 94920
TEL. (4IS) 439-2961
August 4, 1978
Dear John:
Herewith, unvarnished by titular baubles,
is the roster of the Isle of Avest
Brent M. Abel
C. Julian Bartlett
Robert J. Drewes
John Et Du Pont
Lyman Henry
Roger W. Heyns
Charles J. Hitch
Warren R, Howell
Wallace Macgregor
Dean E. McHenry
Donald H. Mclaughlin
Richard H. Peterson
Kenneth S. Pitzer
Alvin J. Rockwell
John L. Simpson
Willis S. Slusser
Charles H. Townes
Caspar W. Weinberger
Warm regards,
Mr. John L0 Simpson
1100 Sacramento Street
San Francisco
179
Isle of Aves*
Riess: On the subject of clubs, had you been a member of the Bohemian
and the Pacific Union when you were in New York, or was that a
move that you made when you came back here?
Simpson: I had been a member of the Bohemian Club for, I think, about
ten years before I moved here--a non-resident member—and of
the Pacific Union Club for two or three years.
Riess: Why did you join the Bohemian Club ten years before you were
going to use it?
Simpson: Oh, in my case it was the camp and encampment, because the
Bohemian Club consists, you know, of about 125 individual camps,
and the camps are really little clubs within the great Bohemian
Club.
Riess: And they choose their own members?
Simpson: Oh, yes. I was invited by Bob Sproul as a guest at his camp one
summer, and attended as a guest. Then they told me that there
was a rule that you could not invite the same person two years in
succession and not more than three times altogether; but they
felt sure I could join the Bohemian Club (at that time the waiting
time was short, now it's forever), and they would like me to join
the camp if I joined the club.
Well, the camp now is about twenty—at that time, fewer than
that, maybe twelve. Most of the camp members were old friends
from college days. So, there's no question that I joined the
Bohemian Club for the companionship of my friends in that camp.
If I hadn't been invited to join the camp, I wouldn't have joined
the club.
Riess: There are some club members who don't have a camp association?
Simpson: Yes. There's a club camp; it's a general camp.
Riess: And then you came out to the encampment each year?
Simpson: Most years. Sometimes I was in Europe.
Riess: Was there some political discussion that took place in your
camp, or was it really a vacation with entertainment?
Simpson: Mostly that. The mood is not very political. And also it depends
somewhat on the camp. Some are mostly for fun, and some are a
little more serious, perhaps.
*Roster on page preceding.
180
Riess: You swore off seriousness in the California Luncheon Group, and
the Disputers.
Simpson: Well, in the California Luncheon Group, and the Disputers, some
part of the lunch was usually devoted to a really serious
discussion of economic and political matters.
Riess: I would be interested in who the members were of your Bohemian
Club camp.
Simpson: And I will get that for you. [A complete camp history, The Pleasant
Isle of Aves, by co-historiographers John L. Simpson and Chaffee E.
Hall, written in January 1964 and updated to 1974, has been given
to The Bancroft Library by John Simpson.]
181
FROM A BOOKPLATE TO A BOOK'S END
Riess: When we first met we looked at the bookplate in the beginning
of Random Notes. * I would like you to tell me again who designed
it, and how that design was decided on, and what it means to you.
Simpson: It was designed by an artist in Vienna whose name I do not
recall. It was my wife, who was not then my wife, who arranged
to have it made for me as a bookplate. And what was the third?
Riess: What did it symbolize?
Simpson: That's what Ted Meyer, the regent, asked me. I said, "Ted, I'm
very sorry you flunked your Rorschach test because that
represents a little man looking at a very great and complicated
world."
Riess: And Crete put that idea in the artist's mind?
Simpson: Yes, yes.
Riess: And have you used that throughout your library?
Simpson: No.
Riess: No? Because you don't put bookplates in anyway?
Simpson: Yes. Well, I am glad to make some use of it. I'll be happy
that it did serve a purpose, because although practically nobody
understands what it means, I do, and it gives me a little
satisfaction.
1 have a little incident that I think would be suitable as
the wind up. Are we at that point?
Riess: Yes.
*See Random Notes in Appendices.
182
Simpson: After I retired from Bechtel Corporation, for the next ten years
Crete and I made trips to—well, we made a trip to Japan, but
what I particularly have in mind is that we made trips to Europe,
I think in ten successive years, and visited different countries,
but always spending at least a month or more in Vienna, for two
reasons: my wife's brother and his family were there, and also
the music festival.
We always stayed at the Imperial Hotel, which I think must
be one of the very best hotels in the world. I've stayed in
quite a number and I never saw anything to beat the Imperial, in
every way. And we always had the same room, Number 8, which was
reserved for us from one year to another. And we came to know
all the personnel from the manager down to the smallest bellboy.
The last time we were there I think was '70. When we were
leaving I had a terrible feeling that we would not be back. Crete's
brother was very ill then and died shortly thereafter, and Crete
wasn't well and didn't really get much out of that last stay in
Vienna. So, it was all rather emotional when I went around the
day before and told them all goodbye, a lot of kissing of the maids
and so on .
Then, the next morning, we packed up and went downstairs,
and the car was there, and we loaded it up and were ready to go
to the plane. Just then the manager came out—although I had
called on him and told him goodbye the day before—he came out
and he had somebody with him.
"Mr. and Mrs. Simpson," he said, "I want to introduce the
Chief of Police, who is visiting me. He was making a call on me
and I knew he'd want to meet you and tell you goodbye, as I do."
I said, "Well, that's very courteous, indeed," and we spoke
and said last words and shook hands. Then Crete and I took off.
It was the only time I was ever ushered out of a city by
the Chief of Police in personl
~ END ~
Transcriber : Marilyn White
Final Typist: Keiko Sugimoto
JOHN L. SIMPSON
MOO SACRAMENTO STREET
SAN FRANCISCO, CALIFORNIA
94IO8
May 24, 1979
Mrs. Suzanne B. Riess
The Bancroft Library
University of California
Berkeley, California 94720
Dear Mrs. Riess:
In our interviews for our Oral History I was guided
by events and happenings rather than by personalities.
This meant that while in many cases names occurred in asso
ciation with the narrative, this was not always the case.
For instance, Laura Bechtel, who has been a mainstay of
Steve Bechtel throughout his career, was scarcely mentioned,
A glaring defect of omission is the case of my secre
tary, Marie A. Thomson. Mrs. Thomson has been with me for
over 50 years, first in New York and later in San Francisco,
She moved her home from the East to the West to remain in
her secretarial capacity and adjusted her whole life to
accommodate me.
Mrs. Thomson is of a high degree of ability and is an
"executive secretary" in the best sense of the term. Her
handling of office duties and my business and personal
affairs has been as efficient as her relations with clients
and acquaintances have been tactful and friendly.
Certainly a half century of such loyalty and support
deserves and has my deep appreciation. I regret that this
was not mentioned in the text of the Oral History and hope
that this letter will, to some degree, make amends.
You have told me that it would be possible to include
this letter in, or attach it to, the copy of the History
which is lodged in The Bancroft Library, and I shall very
much appreciate that bel'ng arranged.
With many thanks again for all your own kindnesses,
Sincerely,
John L. Simpson and Laura Bechtel at the
Simpson Oral History Presentation at
University House, 2/22/79
183
John L. Simpson
184
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JOHN L. SIMPSON
CORPORATE DIRECTORSHIPS
BECHTEL CORPORATION
INDUSTRIAL INDEMNITY COMPANY
J. HENRY SCHRODER BANKING CORPORATION
SCHRODER TRUST COMPANY
SCHRODER ROCKEFELLER & CO. , INC.
INTERNATIONAL HOLDINGS, LTD.
INTERNATIONAL RAILWAYS OF CENTRAL AMERICA
HOMESTAKE MINING COMPANY
OFFICES AND/OR MEMBERSHIPS HELD IN PUBLIC INSTITUTIONS
HONORS
BELGIAN -AMERICAN EDUCATIONAL FOUNDATION
WORLD AFFAIRS COUNCIL OF NORTHERN CALIFORNIA
FOREIGN POLICY ASSOCIATION
COUNCIL ON FOREIGN RELATIONS
BONNHEIM SCHOLARSHIP
PHI BETA KAPPA '13
GOLD MEDALIST, U.C. '13
ORDER OF CROWN, BELGIUM
ORDER OF LEOPOLD II, BELGIUM
LEGION OF HONOR, FRANCE
LL.D. UNIVERSITY OF CALIFORNIA 1960
CLUBS
PACIFIC -UNI ON
BOHEMIAN
CENTURY ASSOCIATION
LINKS
METROPOLITAN
UNION INTERALLIEE
San Francisco
San Francisco
New York
New York
Washington, D.C.
Paris
12/5/78
186
APPENDICES
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
APPENDIX F
Obituary for J.L. Simpson, September 5, 1892, Woodland
Daily Democrat 187
Random Notes, Recollections of My Early Life, by John
L. Simpson, Designed and Printed by Lawton and Alfred
Kennedy, 1969 188
"What This Country Faces if Germany Wins" by John L.
Simpson 230
"Dollars Can Help Save Europe" reprinted from the Com
mercial and Financial Chronicle, February 5, 1948 238
"Witch Hunters Still Stalk a Club That is Ghost of Former
Self" from Wall Street Journal. November 1, 1978 243
"Competition on the World Front" by John L. Simpson, a
talk given September 13, 1960 244
The Disputers, A California Luncheon Group, Bets Recorded
by Sproul, Notes by Simpson 248
187
APPENDIX A
Woodland Daily Democrat, Monday Evening, September 5, 1892
A SAD DEATH
The Demise of J. L. Simpson Casts a Gloom Over the Community
A gloom vas cast over the entire community when the sad intelligence
of Prof. J. L. Simpson's death, which occurred in Dunnigan at 11 o'clock
Sunday morning, was received in this city a few minutes later.
Mr. Simpson was taken ill last week, and continued to grow weaker,
despite the efforts of the physician and the kind ministrations of his
family, until death relieved his sufferings.
Professor Simpson, as he was familiarly known in Woodland, was born
in Belford, Indiana, and was 6l years, 6 months and 1^ days of age.
In 1850 he located in Missouri, where he secured employment as an
accountant. Two years later he crossed the plains, and arrived in San
Francisco when he was Just 22 years of age. He found employment as
superintendent of a mine belonging to the late Ex-Governor Newton Booth.
In l853 he found himself in Grass Valley, a member of the firm of Lee &
Simpson, lumber dealers and quartz miners. A few years later he disposed
of his interest in this firm and located in Red Bluff, where he engaged
in the banking business, being one of the firm of Dow and Simpson. A
short time after his arrival in Woodland, in 1667, his wife died. He
was a member of the faculty of Hesperian College for two years, during
which time he was Professor of Mathematics. In 1869 he married Gertrude P.
Pendegast, who survived him. He afterwards engaged in the drug business,
and in 1885 he was a partner in the firm of Herling, Frazer & Co., which
succeeded Porter & Co. in the grocery business. A few months ago he
removed to Dunnigan with his family, where he assumed the duties of
cashier of the Langenour Banking Company.
He leaves a wife and three daughters to mourn his loss. Noah Simpson,
a brother of deceased, resides in Colusa.
He was a prominent member of Yolo Lodge, No. 22, A.O.U.W. , the Masons
and Knights Templar, and has also been a member of the Christian Church
for many years.
Professor Simpson was generous in impulse, genial in disposition and
upright and honorable in all his dealings. He was an honest, straight
forward and kind-hearted man of Christian character, and was deservedly
popular. His death is deeply mourned throughout the county, and the
bereaved family have the heartfelt sympathy of the Professor's many friends.
The remains arrived from Dunnigan on the afternoon train. The funeral
services will be held at the Christian Church, in Woodland, Tuesday,
September 6th, at 3:15 o'clock p.m. Interment in Woodland Cemetery.
Friends and acquaintances are respectfully invited to attend.
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never knew my father, he died too young. I had four mothers,
one biological and three elder sisters. They dressed me in a
Little Lord Fauntleroy costume, but I eventually forgave
them and loved them nevertheless. I went to school and col
lege, was obstreperous but a serious student, and finally grew
up (more or less).
That accounts for almost the first third of my life. After
that I went to Europe, without a guidebook.
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that I was en route to join the Hoover organization, the Cora-
mission for Relief in Belgium, and to serve in the Belgian
feeding program. It was 1915 and Americans, then neutrals in
World War I, were admitted to the German occupied territory
to supervise and control distribution of emergency food which
the British allowed to pass through their blockade.
Those two men were fascinated. They dwelt on all the pos
sibilities which lay ahead of me, especially the gratitude which
the Belgian girls were bound to feel and show toward us young
Americans. I was full of virtue and high purpose; their atti
tude seemed to me somewhat frivolous and slightly lecherous.
What puzzled me most was that they were men of position
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Grain from overseas was transported in ligh
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tals, and I was lucky in being assigned first
Wherever we lived, however, we forgathered in
weekly meeting. This was for the purpose of
ports, exchanging information and receiving in
effect on our esprit de corps was tremendous.
Mr. Hoover presided over these meetings v
Belgium and usually asked each of us how thi
"bailiwick." He said little but what he said <
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few words, one being "yes" and the other "no
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whole, I believe, reasonably circumspect and
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6 BELGIUM NORTHERN FRANCE GERMANY
that," he said, "just sit down and have some champagne and
a cigar." I did so, and we were great friends ever after.
* * *
The actual distribut ion of the food was handled by a highly
organized and efficient system of Belgian committees. The
Belgians, however, were restricted in their movements, for in
stance not allowed to operate or ride in automobiles. We
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were provided with automobiles and were privileged to move
freely in most parts of Belgium. It was our function to oversee
the working of the committee system and to deal with or re
port any diversion of food into German hands or other irregu
larities. We performed this duty with zest!
I promptly became a member of the "Young Turks" as we
called ourselves. The avant-garde. We were determined that
the Germans should get none of the Relief food and were pre
pared to snatch their own rations out of their mouths had it
been possible. Our chiefs' problem was to keep us within
bounds. But after all, I suppose they reasoned that you can
dampen spirit but you cannot ever put it where it isn't.
One of my colleagues was once halted by a German sentry
who demanded gruffly in German to see his pass. "Here it is,
you sonofabitch," said my friend. "Thanks, and same to you,
sir," replied the sentry, who had been a bartender in Mil
waukee.
The language problem with the Belgians was not a serious
one, mainly because the Belgians are such excellent linguists.
Occasionally there was a little amusement as when one of our
Flemish friends, having verified a set of figures, always an
nounced loudly : "The ciphers are just !"
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While I was trying next morning, by a succession of hot
and cold showers, to get myself in shape for the weekly meet
ing, the Dutchman of the night before walked into my bath
room where I stood stark naked. He said he would like to have
my opinion on two points which bothered him and regarding
which he thought he should have redress. The first was that
we had all persisted in calling him a "skipper" whereas in fact
he was a "shipper"— a distinctly higher station in life. His
second complaint, even more serious, was that the German
officer had made off with his girl.
Inasmuch as he had solicited my frank opinion I felt bound
to give it to him. I advised him that I presumed there would
be a peace conference at the end of the war, and that he
should try to get both those items on the agenda. He left, not
entirely satisfied. I still think the fellow was a skipper.
* * *
Belgians are naturally genial and cordial and it was easy to
have friends in all walks of life. In some way I met and be
came acquainted with an artist, a most peculiar man. He had
the utmost contempt for the bourgeoisie and painted only hu
man derelicts and workhorses. We got along well together
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BELGIUM NORTHERN FRANCE GERMANY 13
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and no desire whatsoever to go too near. If he managed to get
me shot it would be very embarrassing to him, and even more
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whether he would not select some Frenchman and assign him
to me as secretary and clerk.
After some reflection he agreed to make this exception to
the rule. I thus acquired a little old fellow with a black sailor
hat, right out of Anatole France. My guess was that he was
not in the German pay, but I acted on the assumption that he
might be and said nothing which I would have minded having
reported. He handled the papers and otherwise I refrained
from communication with him, except that I did get him to
teach me all the words of "Ail Clair de la Lune." I don't be
lieve that was an infraction. He had a round typewriter, the
like of which I never saw; I believe it was the one Benjamin
Franklin used when he was our envoy to France.
* * *
Another trip we made to Charleville was of a more serious
nature and produced an incident of much credit to at least
one German officer. The Germans were deporting Belgian and
French workmen to Germany. Not to concentration camps as
in the Hitler regime, but to be used as farm labor. However,
many of these deportations were handled harshly, by yanking
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* * *
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apcrback volumes was a book for idealists in the prewar pe-
iod, an author's plea for peace hetwecn France and Germany.
Lolland regarded them as the two great pillars on which Con-
inental Europe rested. The chief character was modeled on
lecthoven and the background was mainly the Paris scene of
he first decade of this century. The book thrilled me then but
ias dropped entirely out of sight. I suppose it would seem
lopelessly dated if one tried to read it now.
Anatole France was at the top of his vogue and I read him
is well as the nineteenth century novelists. I quite fancied my-
elf as a French scholar and was flattered if anyone compli-
nented me on my knowledge of French literature. That was
ill very well till one of my best friends, a writer himself, took
he wind out of my sails by asking me whether I had read
ilabelais and Montaigne. I had to reply no, I had not.'Then,"
ic said, "frankly, you do not know much about French litera-
ure." These two authors are not to be swallowed in a mouth-
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;o my huge amusement, Montaigne to my edification.
I myself had literary ambitions at that time and wrote a
'ew short stories and articles, some of which were published
n American magazines. Pressure of events and conflicts of in-
lerest prevented my pursuing that course.
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assistance during the meet
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Rosenkavalier. Long before the New York Metropolitan knew
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stunt, to be sure, but what a woman!
After a while, however, I discovered that as to symphonies
and chamber music as well as opera, Vienna was really a Mo
zart city. Beethoven, Haydn and Schubert were among the
chief contenders. If you wanted to make a hit with a pretty
girl of musical background, you did not talk about Lohen
grin, and certainly not about La Boheme, but did refer to
Don Giovanni and the Marriage of Figaro, or Fidelio.
In fact one also had to be careful with those goodlooking
highbrow girls in matters other than music. I once made a
real hit by letting it be known that I was reading "Wilhehn
Meister" in German. Then I spoiled everything by saying,
when asked whether I liked it, that I did indeed, "But why
doesn't he do something?" Just an American after all! Wants
everybody to do something.
Schnitzler in Austria, like Anatole France in France, was
considered avant-garde in those days, and his plays were pop
ular. He has fared the better of the two, for Schnitzler theater
is still to be seen in Vienna. Unfortunately many other amus
ing shows were in Viennese dialect, which sounds enormously
funny but was and is utterly incomprehensible to me.
So in spite of the grim political-economic situation, there
was much entertainment for those who could afford it. We
young Americans were naturally in better spirits than most of
the Austrians. For us the war was a thing of the past and we
looked forward to our own futures with confidence. H.G.Wells
222
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CENTRAL EUROPE & THEREABOUTS 63
"There was a little chicken and it had a wooden leg." I hope
he made his way in the new life which lay ahead of him.
My best and most lasting relationships were in the Govern
ment, professional and business worlds. Those were the peo
ple who saw the trend of events most clearly and who labored
most conscientiously on behalf of their country. In the child
feeding phase of the program the pediatricians gave generous
and indispensable help. During those troubled times of eco
nomic and political crises we had the cooperation and support
of many Austrians and I learned to hold them in esteem and
*
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the A.R.A. organization preparatory to getting out of Central
Europe. This was the worst news the Austrians had received
since the Peace Treaty terms. Despite their grievous disillu
sionment with Wilson they looked upon Americans as their
most reliable friends and were dismayed at the idea of our de
parture. The die was cast, however. There were some discus-
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tling all their operations and moving them physically toward
home was itself no small task. It was done, however, and soon
only a few of us composed the rear guard.
* * *
At that point I faced a personal problem. What was I going
to do? I had been saving the world for a number of years and
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CENTRAL EUROPE & THEREABOUTS 69
happiest of personal relations in fair weather and foul. I con
tinued to deal with Austria, making headquarters in Vienna
and many trips all over Europe. We handled millions of dol
lars of business and how we avoided ruining all concerned,
especially ourselves, I do not know. From Brentano's I or
dered books on the import and export business, with copies of
documents. Somehow, by the grace of God, we never had a
costly slip or serious trouble.
I do recall once receiving a cable from New York about
credit terms which I was sure would infuriate the head of the
Austrian Grain Department. I held up the cable all mornbg
and arranged for it to be on his desk after lunch, on the theory
that nobody is as angry on a full stomach as on an empty one.
Then I left town for two days with instructions that no one
was to know where I had gone or how to reach me. When I
returned the worst of the storm had blown over.
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engaged, not able to foresee that our tune was running out.
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my general factotum throughout the time I was in Vienna.
He was the premier natural-born "fixer" I ever knew. He had
an uncanny way of making the best possible arrangements
for me or for anyone he liked. But woe betide the man or
woman who incurred his disapproval. That unfortunate had
the middle seat facing backwards in the last compartment on
the train, in the restaurant the table next to the kitchen door,
theater seats in the last row on the side, a doctor's appoint-
68 CENTRAL EUROPE & THEREABOUTS
he would get it to the Food Mbister at once. He said he
would like to but had no means; it would have to go by official
messenger and that would take a day or two. I said, "Please
let me take it." Oh no, that would never do, it must go b the
hands of the Foreign Office messenger. "All right," I said,
"give it to the messenger and let me take the messenger." He
was a good chap and after a little thought he agreed.
So I packed the messenger bto an open sleigh, drove to the
Food Mbistry, had the messenger hand over the cable to the
Minister's functionary, and b a few mbutes I was ushered
into the Mbister's office ahead of the entire throng b the
anteroom. He blandly announced that he had just received a
cable from Washbgton and would like to discuss it with me.
So I had at least a foot b the door.
My partner returned from America shortly thereafter and
it was he who closed the Polish deal and from then on handled
our Warsaw busbess with conspicuous skill and success.
Throughout our whole relationship, b good tbaes and bad,
we never had a quarrel or a word of recrblination. He sup
ported me when I was b trouble and I tried to do likewise
forhbi.
Riding around in those open sleighs b Warsaw I acquired a
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occasionally to help me bathe it b lukewarm water and under
her gentle mbistrations I recovered.
* * *
About that time we included a third busbess associate, an
other old friend. He was to concentrate on the Balkans as part
of our long-term plan. With hba also we had nothing but the
227
CENTRAL EUROPE & THEREABOUTS 71
write this it seems mcredible, but one must remember that
we were still living in the aftermath of the war.
This loyal and ingenious assistant made contacts while he
was with me, later went to Panama, became a prosperous
merchant and a leading citizen, and was my lifelong friend. It
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he gave me, engraved with the date 1919 and our initials.
* * *
One of my vivid and happy memories of the later days in
Vienna is of a cozy picnic in the Wienerwald. A young lady
and I, having had our lunch, were sitting in a pleasant mead
ow overlooking one of the lovely valleys of that region. We
were reading "Thus Spake Zarathustra" in German. I still
had illusions of improving my mind and my German. The
young lady, I later discovered, did not really care much for
Nietzsche but she was willing to pamper me to that extent.
To our bewilderment we were suddenly approached by an
official-looking personage with a visored cap and a black
briefcase hanging over his shoulder. He was polite but firm as
he told us that by sitting in that meadow we were in flagrant
violation of the law. Just sitting in the meadow was illegal?
Yes, it certainly was.
I was most disconcerted, not only from my own standpomt
but especially at the thought of causing embarrassment to the
young lady. I asked the man what the penalty would be and
bo
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CENTRAL EUROPE & THEREABOUTS 73
ill and was carted off to a sanatorium in Switzerland. The
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In the meantime the 1 920-2 1 postwar depression hit Amer
ican business hard. The New York company, which was our
backlog, quietly paid off its creditors and went into voluntary
liquidation. That cut the ground out from under our Govern
ment contracts, which then lapsed. The whole structure we
had built with such pains collapsed. Nobody knew how long
the depression would last. My associates decided, with my
full concurrence, that it was not going to be possible to pick
up the pieces and put them together again. The game was up,
and when I was fit to travel I took ship to New York.
* * *
As we moved out to sea I stood gazing over the stern of the
vessel at Europe disappearing below the horizon. I wondered
whether I would ever return to what had come to seem as
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bing in the water:
A railway station miscalled Bovril. Lighters bringing grain
into Belgium. Sentries demanding military passes. German
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229
74 CENTRAL EUROPE & THEREABOUTS
fles in Vienna. Those freezing open sleighs in Warsaw. The
meadow where that girl and I read Nietzsche.
They and other images drifted in the waves, sometimes
distinct, sometimes lost in spray. And the dream too, the
great trading company embracing all Europe and even spread
ing to the Americas. That was out there also, but fast sinking
into the Atlantic. After a while it became dark and I could see
nothing, not even the wake of the ship.
* * *
So I had to start at the foot of the ladder after all. In fact
they were obliged to add a couple of rungs at the bottom to
get me on.
230
APPENDIX C
WHAT THIS COUNTRY FACES IF GERMANY WI1TS
by John Lowrey Simpson
Millions of Americans are still in a muddle regarding the
meaning of the Super-European War to the United States. At least
half of the current discussion on the subject assumes that we have
a real freedom of choice, that we can search our souls like Hamlet
and speculate whether to mix or not to mix. We are told by some
that we should preserve our "birthright by keeping afar from the
maelstrom, where we could only add to the chaos. Others urge us to
use the great force of this country to compel the belligerents to
conclude an armistice right now. All these thoughts and utterances
assume that the United States is itself far removed from the direct
issues; that we are secure in our continent; that our country is
free from entanglement and should remain so. To sympathize with
Britain is all very well, we hear, but the main thing to deplore is
that there is any war at all. And the greatest danger which we
face, runs the argument, is that our excess of sympathy may lead us
to risk our own involvement. Once more we might be duped into
participating in a "foreign war".
This is very fine talk, except that it happens to over
look most of the basic facts of life. It is out of line with
realities in general, notably with Twentieth Century realities. It
ignores such homely matters as vital statistics, geography and
economics. It is at odds with ordinary common sense.
For such reasoning supposes that while we may have our
sympathies and our likes, we Americans can live and make out well
enough whatever happens. Yet that is not the case. The false
sense of security is due solely to the fact that many of us have not
contemplated, coolly and factually, the state of things which this
country would face if Germany were actually to win the war against
England. We discuss vaguely the possibility of a final German
success. Possibilities sometimes become facts. Even vaguer than
the idea of German victory is the thought of the practical results
of that victory.
Why should this be so vague? The countries are there,
the lands, the peoples, the trade routes, the key positions. The
German plan is there: we have heard it expounded and seen it
shaped by the craftsmen of Nazidom, by the Itihrer and his companions.
Can we not take a map and a world almanac, and on the basis of
recent history construct a picture of the Greater German European
Empire?
231
- 2 -
We can. It is not so difficult. It requires a little
care in assembling and arranging the main facts. When this is done
the result ought to be shocking to any loyal straight-thinking
American. For if Germany wins the war, Germany dominates Europe.
If Germany dominates Europe, Germany replaces England on the sea.
If Germany, victorious on land, also replaces England on the sea,
the United States faces a combination of land and sea power unheard
of in the history of the world. All this force, both economic and
military, would be in the hands of the regime which Mr. Hitler has
so carefully and cunningly constructed. Nobody in this country
ever saw or dreamt of anything go menacing.
This is not a hymn of hate. Many Germans have migrated
to our country and made first-class Americans. It is entirely
conceivable that in other times and circumstances Germany may be
again, as it once was , a good neighbor of the United States. Not,
however, if Germany wins this war. For if Germany wins this war
we shall face a Greater German European Empire v/hose very size and
structure, not to speak of the ambitions and aspirations of its
rulers, will ensure conflict. Worse still, in such a conflict
between a German Super-Europe and the United States, the initial
odds would hardly be on our side.
If Germany wins this war it will control all Central and
Western Europe. That means the area west of Russia and north of the
Mediterranean, including the British Isles. The organization setup
would doubtless vary from region to region. Already we have seen
Bohemia, Lorraine and part of Poland, for instance, incorporated
outright into the Reich; while Holland is run by a Reich Adminis-
.trator and Norway by a German Commissioner and a Norwegian renegade.
France has for the moment a sort of "captive" national government
at Vichy. The form of domination can be adjusted to suit conditions
on the spot. The main thing is the subjugation of territories and
populations to the po7/er and policies of Berlin. We well know the
means by which German power and policies are imposed upon the
hapless subjects.
Great Britain, it is true, stands today a rock against
the onslaught, and German military might beats at the Channel cross
ing as the Turks centuries ago beat against the walls of Vienna.
But Britain defeated would be just another France. We should see
Winston Churchill shot against a wall or tortured for years in the
Schuschnigg manner. A government composed either of outright
Germanophiles, or of wretched patriots bargaining for a crumb,
would seek to arrange some endurable existence for their country
as a commercial and maritime outpost of the new order. Neither
the British nor ourselves can be so fatuous as to assume that the
Germans, as winners, would clamp down a fe7/ peace treaties and then
pack up and go home. They v/ould create a Greater German European
Empire" as they have already in large part succeeded in doing.
232
- 3 -
Its rulers would possess the phenomenal military power of
the German army plus much of the sea power of the British merchant
marine, and p rot ably some portion of the British navy. Most impor
tant of all, the new Germany vrould control by far the greatest
shipbuilding facilities in the world, estimated at four times our
own present shipbuilding capacity. In 1937 Europe, including Great
Britain, launched eight times the shipping tonnage launched by the
United States and Canada. With the resources of all Europe at the
disposal of its totalitarian machine, the German European Empire
would set about establishing its position on the Atlantic. A
logical move would be to enlist Japan as an active partner and to
threaten and distract us in the Pacific during the long years which
lie between the American people and their two-ocean navy. With a
tremendous head-start in the matter of shipyards the German Euro
pean Empire might well become invincible as a naval power while we
were still struggling to catch up.
How big would this Greater German European Empire really
be? Hi/hat would it have by way of resources, and what would it
need from the outside world?
The population, almost 400,000,000, would be about throe
times our 07,71. With two-thirds the area of the United States, the
Empire would have an average population psr square mile about five
times as great as ours. Europe is a densely populated region. Its
industrial capacity is greater than our own. Furthermore, these
hundreds of millions of German-led Europeans, highly developed in
technology and the art of war, would be largely self-sufficient in
a number of primary raw materials. These include notably coal and
iron ore, the basic materials for the all-important heavy industries.
The European Empire would be only partially self-suffi
cient in petroleum, and would lack natural rubber, tin, copper,
nickel, zinc, lead and phosphates. However, for reasons pointed
out below, the deficiencies would be as significant and ominous
as the resources. For, as we shall see, this mighty Empire would
inevitably reach out to procure in its own way and on its own terms
the foreign materials required for its economy.
As to agricultural products the Greater German European
Empire would be largely self-sufficient with regard to breadstuff s.
The total area (including the British Isles) at present obtains
from abroad 10# to 15$ of its grain requirements; but the Germans
could intensify cereal production at the expense of industry .in
such territories as France, Hungary and the Balkans. This would
give the Empire tremendous bargaining power in its dealings with
the agricultural exporting countries of the V/estern Hemisphere.
The Empire would be only partially self-sufficient as to sugar,
meat, fats and tobacco. Coffee and tea, which are not foods
strictly speaking but important consumption articles, are totally
233
- 4 -
lacking. Raw material for rayon would be available but cotton,
wool and silk would be largely deficient.
The United States would be confronted across the Atlantic
with a vast military Empire, containing inside its boundaries many
of the essential substances for peace and war and requiring others
from foreign sources. Where would this Empire turn for its re
quirements? What methods would it use to supply its needs? Would
it control materials and dominate markets of interest to us? Would
it open or close avenues of trade to North America? These are
hard-boiled questions which should appeal to the sense of reality
of American men and women of all walks of life. The answers, in
the event of a German victory, would touch and modify the lives of
every one of us and of our future generations.
Foreign trade figures disclose that almost all needs of
the German European Empire could be met outside North America.
(Two possible exceptions are nickel and tobacco.) In general it
may be stated with assurance that Africa, Asia, Australia and South
America could furnish nearly everything which Europe requires.
Africa was seized and subdivided by the European Powers during the
Nineteenth Century; its subservience to the Greater German European
Empire would be natural and inevitable. Today the appendage of the
various European nations, the Bark Continent would become the vassal
and economic reservoir of Germany's Super-Europe. It could supply
phosphates, copper, and some cotton, grains, sugar and wool to the
economic life-stream of the Empire. The Axis alliance with Japan
points the way to the German European Empire's policy with regard
to Asia. Japan as an ally of a victorious Germany, with England
off the seas, could furnish rubber, tin and perhaps petroleum,
offering in exchange some market outlet for European manufactures.
Australia, marooned, would be forced to deal with its strongest and
largest customer for grains, meat, dairy products and wool. Russian
grain and oil, obtained by pact or by force, might further augment
the Greater German economy.
When Latin America, which will be discussed shortly as a
separate topic, is included in the trade picture, the position of
our own country as a supposedly indispensable supplier of Europe
becomes crystal clear. There is, -in plain fact, absolutely nothing
to the popular idea that the Greater German Empire would be obliged
to trade with the United States.
Nevertheless the question may be asked why this Empire
should deliberately avoid us, why American business could not find
its opportunity in the new Europe as in the old. The answer to
this question is partly political and partly economic.
The unity of Europe achieved by Germany would be a unity
of conquest, lluch has already been said and written regarding the
dynamic force of that conquest and the inevitable clash between the
234
- 5 -
rampant tyranny of the New Germany and our free institutions. The
purpose here is to deal rather with the economic and everyday as
pects of a possible German victory. It is important to understand
?;hy material and economic forces, even apart from ideas and ideals,
would lead hot to cooperation "but to conflict.
There is every indication that victorious Germany would
form an economic Super-State based on conscript labor and pitiless
exploitation of subject groups, and that products of the regime
would be used cold-bloodedly at home and abroad for political ends.
It is naive beyond words to expect that such a German European Em
pire would be a decent customer of the United States. Its condi
tions' and principles of trade would be entirely different from
those which have generally prevailed since the birth of our country.
Throughout this period British, and latterly British-American,
naval power has held supremacy on the high seas. In the case of
neither Great Britain nor ourselves has this naval power been com
bined with important military power. Nor has Britain maintained
any foothold on the European Continent, with the single exception
of Gibraltar. Furthermore, British sea power as well as our own
has been used on the whole to sponsor a fairly liberal trade policy
and to encourage world-wide commerce through the medium of the
foreign exchanges. Recent German methods of developing trade have
differed radically from this. By means of regimented labor, con
trolled prices and subsidized exports, the Germans have been able
to obtain their supplies on the basis of bilateral barter deals.
This technique has been especially effective with the weaker raw
material countries, where Germany has been able, to a large extent,
to dictate its own terms without the use of foreign exchange and
regardless of standard market prices. The greater the Germany, the
tighter the system. It is not our system.
We enjoy in this country a relatively high standard of
living and maintain a policy of fair and open prices. We seek to
assure an adequate return to labor. We would be forced to deal
with a totalitarian industrial Europe employing low paid labor, and
to compete with the relatively undeveloped raw material countries.
We could not meet successfully those conditions and the Germans
know it. The Greater German European Empire would be in a position
to extend throughout most of the world the Germans1 cut-throat
barter methods. For they have found a means of making trade a sort
of blackmail levied by the strong against the weak.
One of the gravest threats to our economy and national
security would arise via Latin America. The German European
Empire would find it easy to reach from Africa across the Southern
Atlantic and the relative disadvantages of our position would become
immediately apparent. The United States usually purchases and
consumes about one-third of Latin America's total exports, while
Europe takes over one-half of them. The products sought by Europe
from that area are principally petroleum, coffee, meat, sugar,
235
- 6 -
copper, wool, cotton, hides, wheat and corn. Since the United
Stat«s normally produces a surplus of all these except coffee, sugar,
wool and hides, it would be practically impossible for us to absorb
the bulk of these materials from Latin America over any length of
time In other words, Latin America is by nature dependent on
Europe as an export market for raw materials, and correspondingly
receives many imported manufactured goods. Europe, under any flag,
is not only the star customer of Latin America, but Europe under
German domination would make payment in manufactured articles using
depressed labor standards and state control of trade and prices.
It" would be extremely difficult for us to meet this situation
without either materially lowering our own standards of wages and
wellbeing, or purchasing a flood of unwanted goods and materials.
The Empire's economic stranglehold on Latin America would
have strings on it, we may be sure. Markets would be closed to
our exporters. Political, naval and aviation concessions would be
linked to commerce. We should soon find a European "sphere of
influence" creeping up toward us from the south, and outposts of
the Empire appearing closer and closer to the Panama Canal.
At the same time that the German European Empire was
tightening its economic and political grip on South America and be
deviling Ss with boycotts from abroad, it would undoubtedly employ
the usual German tactics within our borders. Its destruction of
our foreign trade would be accompanied by offers of cooperation and
goodwill The objectives would be to befuddle our industrialists
into making "shrewd" deals, to break our price structure, to plunge
us into a business depression, to foment discord between employers
ard labor to set both groups against the Government, uo Suart
aSpeasers demanding an Snd to strife and contention, to thwart our
amSent program, to use all the well-tried devices for bringing us
t?5S. Thf HeAleins and Quislings would no doubt bear Anglo-
Saxon names.
Certain aspects of both the American and European econo
mies would make this far less difficult of accomplishment than EOS t
Seople suppose. The disruption of our export markets would affect
primarily such products as cotton, wheat and tobacco. Our Govern
ment could not expect to continue indefinitely buying and storing or
giving away surpluses of these and other agricultural commodities.
IriceS would eventually decline, with distressing and ^turbing
effects throughout agricultural areas, especially the South.
Moreover many of our largest manufacturing industries, notably the
automobile business and certain machine lines, depend considerably
s
difficulty in obtaining valuable imports such as rubber, tin, and
236
- 7 -
certain so-called "strategic" metals and substances. For many of
these we would compete directly or indirectly with Germany and would
be obliged to deal on adverse terms. Under a system of totalitar
ian costs and prices, based on a kind of modern industrial serfdom,
the Greater German European Empire would have opportunities for
economic ruthlessness never before encountered. There would be
almost no limit to the extent to which trade could be controlled
and directed to political and military objectives.
Canada, whose interests we are pledged to protect, would
be likely to intensify rather than lessen our economic problems.
Canada is itself a large producer of grain and other agricultural
commodities which depend on markets outside of the Western Hemis
phere. As to Canada's leading industrial raw materials, we al ready-
import from her the quantities of wood pulp, paper and nickel
necessary to make up our deficiencies; while her copper would only
add a surplus to our own.
It is not within the scope of this paper tc discuss all
the world-wide effects of a possible German victory. Not only
economic problems, but naval and military questions of the greatest
complexity would arise. Relations would change between the United
States and all the key points of the world: Gibraltar, Suez,
Singapore, Panama. Perhaps we might find ourselves waging a lonely
war against the German European Empire over some vital point in the
South Caribbean, — with Japan knocking at the back door. Indeed
Japan, which represents no serious danger as long as we are free
to operate with full force in the Pacific, would become a real
menace once we were at bay in the Atlantic.
We have heard all our lives about the Yellow Peril and
what might happen to us if 400,000,000 Asiatics should ever form a
modern military empire. How Japan is attempting to make that bad
dream a reality. At the same time Germany seeks to weld another
four hundred million — not Asiatics but Europeans — into a Greater
German Empire. The latter would be integrated as only the Germans
know how to integrate. It would have the greatest combination of
industrial resources and plant equipment in the world. It would
possess the amazing military genius of the Germans. And, for good
measure, a German alliance with Japan already exists.
A nation, like an individual, has a destiny which is a
product of land and people, of time and space. This national
destiny transcends the ordinary affairs of daily life, yet the
daily way of life is possible only vrhen the dictates of destiny are
observed, not flaunted. It has been British destiny to prevent the
whole of Continental Europe falling under a single military power.
English statesmen have always dreaded the complete supremacy of one
Continental nation and have waged many wars to forestall such a
disaster to their race. When Great Britain permitted Germany to
237
- 8 -
rearm it was a clear violation of British destiny, and Britons are
paying the penalty today with blood and anguish.
We are told that our destiny was defined by Washington
when he admonished Americans to beware of foreign alliances. This,
as commonly quoted, is surely not what Washington meant, for he
relied on his French alliance to help win the independence of his
country. He was more than glad to use an alliance, or an entangle
ment, which suited his ends.
What were his ends? What were Lincoln's ends? Were they
not the same?
We have it in Lincoln's own words that he did not wage
war against the South to abolish slavery. Ee declared that his
purpose was to preserve the Union, be it all "free", all "slave",
or part "free" and part "slave". He believed that the prospect of
two minor American nations on this continent, striving between
themselves and each the prey of the great European powers, was
worse than a civil war.
The destiny which Washington and Lincoln both saw was the
destiny of independence, union, strength, freedom from foreign
domination or interference. Under the conditions of news and
transportation which existed in those times they could pursue their
policies mainly in this hemisphere. Yet neither was a hide-bound
"isolationist". Each met }n « emergencies as time and fate dictated.
Each sought out the enemy where the enemy live<i Each followed
destiny where destiny led.
That is surely our real national tradition, obscured and
cluttered by the catch phrases of the 'twenties and 'thirties.
"Isolation", "foreign wars"; what meanings have these words? No
war is foreign if it touches our vital interests. We are already
in conflict with Germany, because a German victory would harm us.
We are already committed, no longer free to pick and choose, because
our very nature -- not to speak of our policies and sympathies --
sets us in the conqueror's path.
When Germany dismantled Czecho-Slovakia it struck down a
bastion of Britain. If Germany defeats Britain it will destroy an
outpost of American safety. The enemy will have cut through our ad
vance positions and will be able to concentrate on our vital points .
Our destiny, as every American leader worth his salt has
known, is to discover our enemy and forestall him before he strikes
us; and to use every appropriate weapon and every convenient
alliance to achieve that end. If we let Germany create its Greater
European Empire we can forget Yorktown and Gettysburg and start
fighting for our existence as a free nation all over again.
December 30, 1940. JOHN L. SIMPSON
238
APPENDIX D
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242
mainly In the reconstitution of a
healthier world.
Apart from the cssent'.-'ly pub
lic nature of the proposed loans
and grants, the private capital
markets as well as the Interna
tional Bank are obviously now In
capable of providing such funds in
such amounts. The record of long-
term foreign financing after the
first World War, while not so bad
as generally supposed, was suf
ficiently discouraging to dampen
investors' enthusiasm. The very
political considerations which
make a public program essential
would prevent the private sub
scription of these billions of dol
lars.
That Is not to neglect the pos
sibility of a gradual resumption
of private lending under the aus
pices of improved political-eco
nomic conditions. It is greatly to
be hoped that such resumption
will occur and that it will supple
ment the government's efforts. It
would be surprising, however, if
anyone actually engaged in the
business of banking or finance
should have the temerity to un
dertake to handle through private
channels any such large-scale
program as this. The idea seems
quite out of perspective, at least
at the present time.
The International Bank, by its
nature, size and dependence on
tlie capital markets, is also com
pelled to play a limited, though
extremely useful, role.
The fact of the matter is that
• this country is contemplating em
barking upon an international
economic program dictated by
high reasons of public policy. It
is the considered opinion of the
leaders of both political parties
who have sponsored the Plan that
it is essential to protect the Occi
dental civilization in which we
have our being. We are attempt
ing to avoid another cataclysm
and to preserve our order of
things by peaceful means. The
cost will be high in one sense but
small in comparison with the $330
billion we paid for World War II.
Thus regarded the price of the
Plan is not too great. There is
only one possible source from
which to find the money: the
United States Government acting
in its financial capacity.
• • *
Many words are being written
and spoken regarding the Euro
pean Recovery Program. Its every
facet will be discussed and redis-
cussed before this Congress takes
its final action. That is as it should
be. For the world stands at a
crossroads of destiny and today's
decisions will travel through long
future years.
It will be wise not to be blinded
in the heat of the argument to the
background against which the is
sues are displayed. There has been
a terrible war. A grave crisis is
smoldering. We are confronted
by a harsh dictatorship. These are
the basic circumstances and the
question is: what are we eoiua to
do about it all?
The Marshall Plan is the reply
to the circumstances and the ques
tion.
It is an attempt to brcalc through
vicious circles of want and weak
ness and to provide the needed
margin for economic revival.
Its central purpose is to tip the
balance of Europe in favor of the
forces of democracy and western
civilization.
It is an instrument of American
statecraft.
10
Witch Hunters Still
Stalk a Club That Is
Ghost of Former Self
• * •
Council on Foreign Relations,
Once Feared and Admired,
Strives to Regain Stature •
By BRIAN DICKERSON
Staff Reporter of THE WALL STREET JOCRNAL
NEW YORK - In Zionsville, Ind., re
cently, a visiting evangelist exhorted mem
bers of the First Baptist Church to stockpile
food and firearms in preparation for a war
with witches.
Parishioners were told that the witches
already were mustering for their first as
sault on the U.S. The preacher pinpointed
their operating base: the Council on Foreign
Relations, an exclusive private club in New
York whose members include some of
America's most influential corporate execu
tives, government officials and academic
leaders. j
It wasn't the first time the council has
been assailed. Since its founding 57 years
ago as a forum for candid discussion of
American foreign policy, the council at var
ious times has been called a sanctuary of in
ternational intrigue, a Communist front and
the headquarters of the so-called Eastern
Establishment. •:
A Measure of Its Success
But the criticism was also a measure of
its success. At its height, the council wielded
about as much influence as any private or
ganization ever has in foreign policy, keep
ing several U.S. administrations stocked
with fresh ideas and personnel for two de
cades after World War II.
"Whenever we needed a man, we just
thumbed through the roll of council mem
bers and put through a call to New York,"
says John McCloy, a foreign-policy'adviser
to six Presidents and former council chair
man. Henry Kissinger, who joined the coun
cil in 1956, first achieved national promin
ence with the council's publication of his
best seller, "Nuclear Weapons and Foreign
Policy."
But new and different criticism of the
council has emerged lately, coming mostly
from members or former members. They
are disenchanted not by what the council is
doing but by what It is failing to do. .
"I regard it as a nostalgic convocation of
people who are trying to recapture their
days of greatness," says economist John
Kenneth Galbraith. a council member for 24
years before he resigned "out of boredom"
in 1971. "If it had been as sinister as its crit
ics say, I think I would have found it more
interesting," he adds.
New Competition
Council staffer Catherine Gwin agrees.
"There's been a dearth of solid ideas here,"
she says. And council member Ray Cline
says of his colleagues. "Their views tend to
be pretty predictable."
The council's role has also been dimin
ished by new competition. Mr. Cline, for ex
ample, is director of world power studies at
Georgetown University's Cente^for Strate
gic and International Studies, one of the ri
vals. Other challengers include the Brook -
ings Institution, the American Enterprise In
stitute and even the Trilateral Commission,
a council of only 240 members. The commis
sion, in New York, has had members such
as Zbigniew Brzezinski and Jimmy Carter
long before their names were household
words.
"There are more watering holes for for
eign-policy bureaucrats now," says Richard
Falk, a Princeton University professor and
a member of the foreign-relations council.
But Mr. Falk is a staunch defender of the
old-line council. The organization, be says,
"is still critical for making a person credi
ble in the foreign-policy community." Says
another member, "The council is still the
only game in town."
Membership Drive
To try to make the game more exciting,
the council is recruiting hundreds of new
members, including some radical academ
ics, non-Easterners and women, who were
admitted for the first time in 1970. The drive
already has pushed membership up to 1,800
from 1,200 in 1970.
The council last year also brought in a
young and energetic new president, Winston
Lord, once an aide to Mr. Kissinger. His
goal, says one colleague, is to "shake things
up."
That isn't easy in an organization with a
lofty view of its place in history. In the
World War II era, the council practically be
came an arm of the State Department, pro
viding a reservoir of experts for the govern
ment. Council study groups are also credited
by some with providing the impetus for such
innovations as the World Bank and the In
ternational Monetary Fund.
So any change of image under Mr. Lord
will be difficult to achieve. The council con
tinues to conduct research into weighty
(critics use the word "dull") international
Please Turn to Page St. Column 6
APPENDIX E
243
matters. And its Foreign Affairs quarterly,
in which contributors write ponderously on
everything from Vietnam to dollar devalua
tion, isn't exactly lightweight reading.
"We don't publish anything to be cute or
provocative," says the quarterly's editor,
William Bundy, who was a foreign-policy ad
viser to President Lyndon Johnson. "It has
got to be serious. We never raise our voice."
The council's seriousness of purpose con
tinues to attract foreign heads of state to off -
the-record meetings to discuss international
relations. The audience, says one council
member, is still "the most influential in the
world." That may be overstatement, but the
council roster does include financial and
corporate luminaries, five Cabinet mem
bers, more than a dozen Senators, the pub
lishers of the New York Times and the
Washington Post, and numerous journalists.
With the new chairman, the new mem
bership drive and the attempt to shed the
stodgy image, some members see hope that
the council will regain its former preemin
ence. Some even see new attacks on the
council as evidence of its resurgence. Be
sides the outcry from the evangelist in
Zionsville, there is a book that concludes
that the Council on Foreigr. Affairs is en
gaged in a new plot- to merge the U.S. and
the U.S.S.R.
244
COMPETITION ON THE
WORLD FRONT
International Trade and Payments and the Position of the Dollar
A talk by
JOHN L. SIMPSON
At a meeting of the
AMERICAN INSTITUTE OF ELECTRICAL ENGINEERS
and
AMERICAN SOCIETY OF MECHANICAL ENGINEERS
San Francisco, September 13, 1960
During recent months, increasing consideration has
been given to our international balance of -payments.
Mr. John L. Simpson, Finance Chairman of the Bech-
tel Corporation and a Director of our bank, gave a
talk A few weeks ago which we believe was an un
usually clear exposition of this subject. We have, there
fore, obtained his permission to make the following
reprint of his remarks available to you.
— J. HENRY SCHRODER BANKING CORPORATION
"\7"OUR choice of subject, world competition and
JL its future implications for us, is typical of your
group. All business and all professions must look
ahead, but engineering, by its very nature, must be
particularly alert to foresee future things to design
and construct, in other words, things to do.
Many new things in many fields will come to pass
in our time and after us. This evening I am going to
try to discuss, rather superficially I am afraid, some
aspects of economic competition.
I have to start somewhere so I shall begin with
Western Europe, especially the so-called Inner Six
and Outer Seven, and try to lead from there to our
own problems.
When the Marshall Plan, which applied mainly to
Western Europe, was first proposed in 1 947 the prin
cipal argument used against it was, not its cost, but its
futility. It would be money down the drain. A popular
economist wrote a widely circulated brochure entitled
"Will Dollars Save the World?" in support of this
gloomy view.
Now the Marshall Plan was indeed very costly }
but, on the other hand, the prophets of fiasco were
quite mistaken. Our concern today is, not that the
money was spent uselessly, but that Europe, revived
and vigorous partly due to the Marshall Plan and
partly to its own efforts, is proving a tough competitor.
The believers in the Plan were right and now the ques
tion is, "Were they too right?"
The so-called "Miracle of Germany" has been
widely publicized and great progress has been made
elsewhere as well: in the United Kingdom, Italy,
Japan, for instance. France's story, however, has been
so clouded until recently by political instability and
currency weakness that it is less well known. Yet from
an economic standpoint France's recovery has been
one of the most remarkable.
I know you are interested in our own trade position,
loss of goldxaccumulation of foreign dollar claims, and
related matters; and I am coming to that shortly.
Meanwhile, and by way of background, I want to men
tion the French Balance of Payments, which I had
an opportunity to discuss recently at the Bank oi
France in Paris. (You recall of course that a Balance
APPENDIX F
of Payments reflects a country's net surplus or deficit
on international account, resulting from trade, serv
ices, loans, grants, capital flow and all other items.)
After a long period of deficits the French excess
or favorable balance in 1959 was actually the equiva
lent of $ i .7 billion. About $ i billion was used to retire
foreign debts of various sorts and the remainder to
build up exchange reserves. The surplus arose not
merely from current transactions with the rest of the
world in merchandise and services, but also from inflow
of capital from abroad and other "invisible" items,
that is those which do not show up in the trade figures.
This economic and financial improvement is all the
more striking in that it has occurred despite the drain
of the Algerian War.
I have spoken of France as an illustration and as
one of the leading members of the European Economic
Community, otherwise known as the Common Mar
ket, otherwise known as the Inner Six. The six are
France, Germany, Italy, Belgium, Holland and Lux
emburg.
This group of countries entered into an agreement
in 1957 to form a customs union and to reduce and
eventually eliminate tariff barriers and import restric
tions among themselves. They seek to achieve a closely
knit economic organization and actually propose sur
rendering certain of their sovereign rights to a supra
national authority; and they have already made con
siderable progress in that direction. Their aim is to
present a united front and a common tariff to the other
nations of the world. Fortunately the first move ap
parently will reduce external tariffs as well as those
within the Common Market; much will depend upon
whether and to what extent that policy is continued.
The Common market has presented serious prob
lems to the other European nations, notably Great
Britain. The British, when invited to join, politely de
clined, partly because of their traditional reluctance
to become involved in Continental political entangle
ments and partly for fear of being obliged to abandon
Commonwealth preference and thereby damage Com
monwealth trade. Later the Common Market coun
tries, especially France, became less desirous of having
Britain join.
So the British and six other nations formed the Eu
ropean Free Trade Association, referred to as EFTA
or the Outer Seven ; the other nations being Denmark,
Norway, Sweden, Switzerland, Austria and Portugal.
The Outer Seven program provides for the formation
of a flexible customs union, with each member retain
ing control of its own foreign economic policy includ
ing tariff arrangements with other nations.
Efforts are being made to bring these two groups
together in some fashion. Those in England who op
pose the merger argue, however, that it would be dam
aging not only to Commonwealth trade relations but
245
to relations with the United States. The distinguished
journal, The Economist, on the other hand is urging
Britain to join up. A member of the Macmillan Gov
ernment explained to me earnestly that we Americans
should not be apprehensive if Britain were to join the
Continental group, because Britain would be a liberal
izing and moderating influence — therefore we should
rather welcome it. The recent talks between Prime
Minister Macmillan and Chancellor Adenauer are
reported to have improved the chances of an amalga
mation.
Now of what should we be apprehensive, if at all?
Well, perhaps of a large compact European Woe
some 90 million people of the Outer Seven added to
165 million of the Inner Six— with low labor costs, a
great trading urge and tariff policies unfavorable to
us; in other words, a further threat to our already im
paired Balance of Payments.
And that brings me back to the United States and to
our problems here at home.
A counterpart of improvement in the trade and
payments position abroad, as for example in France, is
pur own international payments deficit. This shows up
in the accumulation of foreign short-term claims
against us and the drain on our gold stock — which has
dropped from a peak of $24 billion to slightly under
$19 billion today. Just how serious is this?
Fortunately you gentlemen are accustomed to fig
ures, as I must use some.
We require at present $ 1 2 billion gold as a primary
reserve for our currency and bank deposits and we now
possess, as mentioned, $ 1 9 billion. This is a surplus or
margin of $7 billion. At the same time foreign-owned
current claims, mostly bank balances and marketable
U. S. Government securities, amounted on last June
thirtieth to over $18 billion. (You see even higher
figures quoted, but these result mainly from the inclu
sion of dollar holdings of the International Monetary
Fund and the World Bank. Such holdings are of a
different sort and are not, practically speaking, among
our current liabilities.)
Of these $ 1 8 billion of foreign-owned liquid assets
a substantial part are of a business nature and are
needed by their owners to support commercial transac
tions or to produce income. Well over half, however,
are held by foreign central banks and other official bod
ies. These "official" claims could, in principle at least,
be presented for payment any day, thereby drawing
off our whole surplus gold stock and part of the gold
reserve underlying our entire banking and credit struc
ture. This would of course produce not only an Ameri
can but a world financial crisis of the first order; and
for that reason if for no other it is not likely to occur.
How did we get this way? one may ask. Well, the
O / £
fact is that we have been running Balance of Payments
deficits through almost all the 50'$. The famous "Dol
lar Gap" of the 40*5 is a thing of the past. In 1957 we
had a modest payments surplus, largely due to the
Suez crisis, but in 1958 and 1959 the deficit ran along
at the rate of between $3.5 billion and $4 billion per
year and we lost almost $3.5 billion of gold in those
two years alone.
It is no wonder that we are worried about becoming
non-competitive, being priced out of the market and
perhaps seeing our dollar undermined. If you are a
pessimist you can perceive plainly that we are going
broke. If you try to be an optimist you risk being com
pared to the man who fell off the roof and remarked,
as he passed the fifth floor, "I'm all right so far."
At this point, however, we had better have a look at
another aspect of the international accounting. The
Balance of Payments, which I have been discussing,
includes everything, tangible and intangible. Balance
of Trade reflects the exchange of goods, i.e. the differ
ence between exports and imports of physical products.
This is quite another story.
Just as we have had almost consistently an adverse
Balance of Payments over the past decade, we have
had in almost every month of that same period a fa
vorable Balance of Trade. We constantly, today as in
the past, export more than we import. The favorable
trade balance dropped sharply to under $ I billion in
1959 but this year exports are again up, with imports
stationary, and we shall probably have an export sur
plus in 1 960 of from $3 billion to $3.5 billion or more.
(The 1951-55 average was about $2.4 billion.)
Despite the wage-price spiral, featherbedding and
other handicaps to be deplored, we have not yet been
actually priced out of the market. And if American
skill, ingenuity and foresight play their traditional
parts I do not think we shall be.
The chief trouble is a somewhat different one. It is
not so much that we can no longer compete in trade. It
is rather that our position in the world today requires
a greater trade surplus than we have been producing,
.in order to meet all the demands of our various com
mitments and activities abroad. .
These demands fall mainly under the headings of
our own military expenditures in foreign countries, the
portion of foreign aid loans and grants not spent in
this country, the flow of private foreign investment,
and American tourist expenditures (which exceed ma
terially what foreign travelers spend here). The so-
called "services," such as transportation, etc., run both
ways and complicate the figures somewhat. From a
business standpoint, however, the above are the prin
cipal items causing our succession of Balance of Pay
ments deficits. •
Thus I am afraid I shall have to qualify what en
couragement I have offered you on the score of trade.
I seem to take away with the left hand what I give with
the right. We are not so feeble in competition as some
would have us believe. Yet we are also not sufficiently
strong in that field to cover all our political and mili
tary requirements and to satisfy our "Wanderlust."
So what is the answer? Of course if I really had it I
would be delivering this address in Madison Square
Garden to a packed house. The best I can do is to try
to put some of the elements of the problem and some
of the future possibilities in perspective.
To deal with obstacles first, we must recognize that
many of our competitor nations have higher rates of
industrial growth — starting from lower bases — than
we have. They also have lower wages and for some
products lower costs per unit. In addition, interest rates
in Europe at the moment are considerably higher than
they are here, as our central banking authorities ease
credit restraint in the interest of keeping business and
employment on an even keel. This tends to cause a
flow of liquid funds from our banking centers to Eu
rope, seeking the best return. While this is, from the
European standpoint, something in the nature of "hot
money," at the present time it represents a further
force working against us in the Balance of Payments.
These are all hard facts and they are part of the
problem. I hope however that they will not impel us
to seek certain remedies sometimes discussed but which
would seem to me gestures of desperation.
For instance, it has been suggested that we devalue
the dollar to give us an export advantage. Such advan
tage would, I believe, be temporary and illusory. Our
action would almost certainly lead to retaliatory meas
ures on the part of others and to a new period of com
petitive currency depredation with the usual disloca
tions of commerce. As the dollar is the anchor of Free
World currencies its devaluation would be destructive
of confidence in all currencies and a shock to the whole
international monetary system.
A high tariff policy would have some of the same
consequences, namely retaliation and trade conflict
with the impairment of the multilateral world trade
program which we have painstakingly developed over
the past decades. We should rather learn to live on
new terms with the Common Market and the Free
Trade Area, or even a union of the two; and if the
European nations form customs blocs we should deal
realistically with those blocs as such. We are a party
to the General Agreement on Tariffs and Trade and
are now meeting with the other parties to it in Geneva.
This Agreement, known as GATT, offers a medium
for negotiations with both European and non-Euro
pean nations. If we bargain constructively they doubt
less will too. Restrictions on American goods have
already been relaxed in a number of countries as their
247
reserves and currencies have strengthened; further
progress in this direction is both possible and highly
appropriate in the circumstances.
As I pointed out, the flow of private funds into for
eign investments is itself a negative item in our Balance
of Payments. It would, however, be most regrettable
if we were forced to discourage this. Capital is needed
in various parts of the world, including the less devel
oped countries — which represent a special problem too
complicated to be dealt with here. It is greatly to our
interest that such capital be, as far as possible and prof
itable, private capital, both in order to maintain and
stimulate the private enterprise system and to lighten
the burden on the American taxpayer.
Before leaving private investment I should men
tion that we are already witnessing, and shall continue
to witness, a substantial return flow of income from
private investments abroad, and this is a compensating
factor.
On the positive side there are a number of construc
tive possibilities which could and should alleviate our
difficulties. For one thing it is high time that the in
dustrial nations which benefited from our post-war aid
should participate more liberally in the present pro
gram of aid to the less developed countries. A number
of them are now in a position to pick up a larger share
of this burden. Another possibility is that of diminish
ing military expenditures on our part in foreign coun
tries. I am not sufficiently familiar with military affairs
to have an opinion on this, but I can conceive that in
the age of inter-continental ballistic missiles and mis
sile-equipped submarines our military establishments,
not in total but abroad, may become less extensive and
Jess expensive.
Here at home one of the essentials is control of our
national budget, with a sound credit policy and cor
responding control of the money factor in inflation.
This is basic. If we cannot keep our domestic financial
house in order our international accounts are not likely
to balance.
The word inflation leads immediately to considera
tion of the wage-price spiral which, to the extent that
•we are less competitive, is one of the principal causes.
If labor insists on pushing wages out of line with pro
ductivity, and if management acquiesces too readily in
wage and price increases, we shall certainly be at a price
disadvantage. At the same time it is quite likely that
wages in Europe and elsewhere will themselves rise,
which would help to narrow the gap. In a free enter
prise world there is some tendency for these discrepan
cies to iron themselves out in the long run — but the
run may be quite long.
One of our principal hopes lies in the field of tech
nology, a field with which you gentlemen here are es
pecially familiar. Advanced technology and a high
ratio of capital equipment per workman are two of our
traditional advantages, which we must endeavor to
maintain and utilize to the greatest possible degree.
The objective must be to increase productivity and cut
costs. You and your colleagues can help do that.
Incidentally, speaking of productivity, I may men
tion that a steel strike of nearly four months was cer
tainly no help. No more was the failure of the automo
bile companies to give the public compact cars until the
Europeans forced them to it.
There is probably to some extent a silver lining to
the cloud of industrial competition. It has historically
been the case that industrial development in a country
or area has led to expanded markets for the products
of other countries. The best markets are in highly de
veloped countries. Business creates business. We are
quite possibly going to witness this again and perhaps
are actually witnessing it, in a moderate way, with the
recovery of our exports from their 1959 lows.
To exploit this possibility fully we shall naturally
need aggressive marketing programs and the best avail
able information regarding market potentials. Our fel
low San Franciscan, Mr. Philip A. Ray, Under Secre
tary of Commerce, has pointed out that foreign mer
chants are in many cases more skilled than Americans
at competing for world trade and that they get more
assistance from their governments. He has urged the
development of the Foreign Trade sections of the
Department of Commerce in order to provide the
maximum of information and service to American
business interests. Export credit guarantees can also
play a role of importance.
Therefore, while I am by no means complacent re
garding this great problem, and while I realize fully
that the deficits of recent years in our Balance of Pay
ments cannot continue indefinitely without serious con-
r sequences, I do want to point out that we have not yet
heard the whole story. The future may hold good pos
sibilities as well as bad. The results will depend largely
upon how well and wisely American management,
labor and Government join forces to constructive ends
in the national interest. Also on how well our foreign
friends and allies cooperate in the common cause, ours
and theirs.
When I mentioned measures which I hope will not
be taken I omitted one with which I would like to con
clude. Some countries, in financial stringency, have
found it necessary to ration foreign exchange for for
eign travel. As I know that many of you may wish to
visit Mexico City, Paris, Hong Kong and other places
of your choice, I trust that you will never be restrained
by being limited to $5 or $10 per day for the trip. I
hope that you, like Americans before you, will be able
to move about the earth freely; and that you will not
only have a good time but will be able to look at some
of these foreign problems on the spot and bring back
some fresh ideas about them.
248
APPENDIX G
THE DISPUTERS
A California Luncheon Group
New York and San Francisco 1931 (?) to 1977*
.
The California Luncheon Group, predecessor of The Disputers,
originated casually in New York during the Depression. Breck,
Torrey and Simpson happened to lunch together, and despite the
prevailing gloom they had a good time. So much so that they de
cided to do it again in three weeks. They had no idea that they
were starting something which would last almost half a century.
These three were therefore the founding fathers. However,
they soon decided to take the curse off their Wall Street back-
Frederick C.
ground by including (Turk) Mills of Columbia and The National Bureau
of Economic Research. Also, Allan Sproul of the Fed soon joined
and was unanimously elected to the office of Scribe. No plan or
program was fixed, but by custom luncheons were held every third
Thursday, the members acting in turn as hosts at their clubs or
places of business.
What did we find to talk about? Plenty: The state of the
nation and the world, raunchy stories, and bets. And the bets,
recorded by Sproul, were mainly what kept the Group alive. Anyone
*
could offer a bet on any subject if he backed his opinion with a
dollar. The field of disagreement was unlimited and included poli
tics > economics, stock prices, interest rates, foreign relations,
wars, revolutions, sports, weather conditions and even earthquakes.
In the course of time a few additional members were invited to
join, but we realized it was essential to keep the number small,
around seven to nine, in order to assure general conversation and
argumentation. Occasional guests were welcome, especially visitors
* Bets recorded by Sproul following. These notes by Simpson.
249
-2-
from abroad, and we had some distinguished ones, including Lord Keynes,
Geoffrey Crowther of The Economist, and Wilfrid Baumgartner, who had
resigned as French Minister of Finance because he could not stand
De Gaulle. Only two lady guests attended, Clare Booth Luce and
Eleanor Dulles.
Two of our members, John Williams and Turk Mills, were candidates
for President of The American Economic Association. (Turk won.)
Professor Wesley C. Mitchell was an honorary member. He liked the
betting and said that all professors of economics should be required
to back their opinions with bets - it would lead to less loose aca
demic talk.
But all things change with time. Members died, moved away, re
tired. The Group diminished in both numbers and spirit. It began to
look like the end. However, just as the Omayyads went to Spain and
made Cordoba a new Damascus, so did the Group move westward to a re
vival in San Francisco under a new name, "The Disputers."
The membership included some returned California exiles plus a
few others who had been guests in New York. Those present at the
first San Francisco meeting are listed in the Sproul betting .
notes.
The Disputers disputed as vigorously as ever and expressed just
as much astonishment and disbelief when they lost their bets. Sproul,
however, would brook no dissent.
The outstanding characteristic of both regimes was that everyone
had a good time. Again, however, the years took their toll, and we
found ourselves getting older and facing the possibility of a fade-out
such as occurred in New York. Therefore, it was decided to terminate
in good order our companionship of amicable controversy.
250
-3-
Sproul has reviewed his betting notes and has selected a few
to remind us of past "disputes." His findings are presented here'
with as a memento of the last luncheon, September 8, 1977.
Present at last luncheon at The Pacific -Union Club:
Morris M. Doyle
W. Farmer Fuller III
C. Nelson Hackett
'N. Loyall McLaren
Donald H. McLaughlin
John L. Simpson
J. E. Wallace Sterling
Allan Sproul
Henry C. Breck
251
Some Events In the Long and Disorderly Life
of a Luncheon Group Created In New York in the Early 1930 B
by some Expatriate Calif ornians, and Recreated in San
Francisco in 1962, where it became known as
The Disputers.
1. Written records of the group, in the form of little
black books in which the bets made at the luncheons
on all manner of subjects were recorded, begin in 1941.
2. Women: Clare Booth Luce, one of the two women who
attended a lunchon of the Group (the other was Elsanor
Lansing Dulles) was a guest on December 19, 1941.
3. August 25, 19*2. Simpson bet Sproul |l to JlOO that
Henry J. Kaiser would be the next President of the U. s.
4. October 22, 1943. At a luncheon at which John Maynard
Keynes was a guest, a pool was arranged on the hifehest
point that would be reached by the Dow Jones Industrial
Stock Average during the next two years.
Keynes 265 Sproul 175
c Breck 220 "Williams 175
•p* Torrey 213 McLaughlln 175
'SSxo) Thornburg 200 'Mills 160.
gg^g Burland 195
P • > -g £ Simpson 186
£8 c g *John H. Williams, Brofesw of Economics at Harvard
§£o and Frederick C. (Turk) Mills, Professor of Economics
&•££ c at Columbia, were members of the group. Durin<?their
5 I £ C membership they were contestants for the office of
w OH -a - president of the American Economic Association. Mills
CO (L) rH *
CO (L) rH
3 won.
* S" On this same day, Keynes and Breck each bet Mills 2 to
'that the Dow Jones Industrial Average would reach 200
within six years.
e£ R November 24 1944. Witter (Jean) bet Graham Towers,
ll J 5* Gove?nlr of the ^nk of Canada, 2 to 1 that Russia
CD £ 5 $ would be at war with Japan within a year.
E 3 o
Oetober 26 1945. A pool on the peak of the Dow Jones
?ndS serial Avenge inP1946 was arranged, again including
Maynard Keynes.
*Keynes 265 Sproul 233
^Mitchell 251 3/8 Ridels (?) 231
Breck 250 Sinmson 220
Mills 240 Burland 218
Torrey 237.13 McLaughlin 200
* Keynes picked the same number he had picked two
yeras earlier.
** Wesley C. Mitchell, Professor of Economics at
Columbia; formerly on the faculty at U.C. Berkeley.
252
- 2 -
8. October 26, 19*5. Mitchell and Torrey bet Mills
and Sproul, 2 to 1, that the Republicans would win
the presidency In 1948.
9. December 14, 1945. Torrey bet Thornburg that one year
from today the country will be In a hell of a mess,
as evidenced by the headlines In the New York Times.
The bet was settled by Bertll Ohlin, a Swedish economist
who was a guest at the luncheon, In favor of Thornburg,
on the ground that averything was normal In the United
States on the appointed day — rape, rapine, murders,
midgets on J.P.Morgan1 a lap at a Senate hearing etc.
10. February 15, 1946. Torrey bet Brefck, Mills, Simpson
and Sproul that one year after the inauguration of the
next President (other than Truman) the grouu will agree
that he is worse than Truman.
11. April 21. 1950. Geoffrey Crowther, Editor of the Economist,
London, U guest) bet Torrey that there would be a
depression in the Bnited St4tes before January 1953, with
ei*ht million or more unemployed. (Nothing of the sort
happened. Torrey won the bet but was never paid, Crowther
pleading that the British exchange regulations prevented
him from sending money out of the country.
Crowther bet Breck,5 to 1, that there would be 6 million
unemployed in the United States *«*°« ^^yj^t to
Crowther lost again with the same result with respect to
payment of the bet.
12. The California restoration of the group, July 6, 1962,
following the return of Sproul Allan) .Simpson,
McLaughlin and Thornburg to California fro- New York
over a period of years. At the first San Francisco
luncheon, which was held at the Bohemian Club, Loyall
McLaren and Bob Sproul, who had often been guests of the
group in New York were included in the group.
13. Additions to the group in following years:
December 12, 1962. Marshall Madison.
June 20, 1963. Ken Monteagle.
February 6,1964. Morris P°yle»
March 26, 1964. Nelson Hackett.
September 2, 1965. Pedro Beltran.
October 28, 1969. Wally Sterling.
Auffiiat 14 1973. W. Partner Fuller III.
January 24, 1975. Robin Farquharson,
253
INDEX -- John L. Simpson
Abs, Hermann, 122, 123
Acheson, Dean, 93, 96, 101
Adams, Charles, 6
Adams, Irma Simpson, 6, 13
Adler, Alfred, 66, 67, 70
Albert & Westrick, 97
Alexander, Henry, 52
Allied Control Commission, 111-113, 117, 139
Alsberg, Carl, 53, 55, 58, 59, 72
American Relief Administration (ARA) , 53, 71, 101
American Society of Electrical and Mechanical Engineers, 167
Armstrong, Barbara Nachtrieb, 22
Banco do Brasil, 100
banking, 72ffl09:
bill market, 76, 78
banking corporations, 78
English banking, 79-81, 133-136
stock market crash (1929) , 88-91
New Deal, 91-94
gold standard, 94-16
See Schrobanco
Bay of Pigs, 116
Beal, Gerald, 78, 94
Bechtel Corporation, 143ffl70:
W.A. Bechtel & Co., 144, 147
Hoover Dam, 143, 154
Mar in ship, 143
Bechtel-McCone, 144, 147
Bechtel Power Corp., 156
Bechtel Inc. , 156
Bechtel Corporation, 156
Bechtel Finance Committee, 159-164
Bechtel Trust, 160
Bechtel Thrift, 160
projects in the Middle East, 156, 165-167
Bechtel Associates Professional Corp., 169
Bechtel, Kenneth, 143, 144
Bechtel, Laura Peart, 4, 143
Bechtel, Steve, 143ffl71
Bechtel, Steve, Jr., 153, 156, 157, 161, 164, 166ffl71
Bechtel, Warren A., 143, 147, 154, 155
Bechtel, Warren A. , Jr., 144
Blyth & Co. , Inc., 79
254
Boeschenstein, Harold, 149-151
Bogdan, Norbert, 100
Bohemian Club, San Francisco, 179, 180
Bonnheim Scholarship, 12, 14
Brack, Henry, 25, 27, 171, 176
Bridges, Bob, 146
Bullitt, William C., 99
Business Council. See United States Business Council
California Associated Raisin Co. , 60-63
California, Commission of Immigration and Housing, 26
California Luncheon Group, 171-178, 180
Carnegie Foundation, 52, 59
Gates, Dudley, 178
Central Intelligence Agency (CIA), 81, 116, 131, 132, 148, 179
Colley, George S., 156, 168
Commission for Relief in Belgium (CRB) , 26, 28-38, 43-46. See Random Notes
Commonwealth Club, San Francisco, 127, 128
co-operatives, problems of grower co-ops, 62, 63
Corey, Herbert, 20
Council on Foreign Relations, 124ffl31
Creditanstalt, 88, 105, 106
Davis, Joseph S. , 53-55, 58, 59, 99
Dean, Arthur, 120, 121
Depression, Central Europe, 88, 105
Depression, United States, 55, 88, 90, 91
Development Loan Fund, 149, 150, 152
Dillon, C.Douglas, 151
Dillon Read & Co., 81, 82, 102, 104
the Disputers. See California Luncheon Group
Donovan, William, 113-115
Doyle, Morris, 177
Dulles, Allen, 83, 84, 97, 115-117, 131, 132, 140, 170
Dulles, Avery, 110
Dulles, Eleanor, 84, 173
Dulles, John Foster, 69, 82-84, 97-99, 110, 111
Dun & Bradstreet, 162
Durant, Will (The Story of Philosophy), 21
Eberstadt, Ferdinand, 81, 82, 148
Eisenhower, Dwight D., 120, 150-152
Electric Shareholdings, 89
the English, 137, 138
255
Fastlich, Adalbert, 71
Federal Reserve System. See U.S. Federal Reserve System
Federal Trade Commission, 26, 28, 29
Finletter, Thomas K. , 148
Fisher, Harold, 41, 43
Robert Fleming & Co. , 80
(United States] Food Administration, 39
Food Research Institute, 52-59
Foreign Policy Association, 125ffl31
Forrestal, Mike, 150-152
Freud, Sigmund (The Interpretation of Dreams). 21
Fuller, Carl, 141, 142
Galpin, Perrin, 42
Geist, Herman, 101
the Germans, 30, 36, 37, 57, 76, 103
Germany, refinancing, 81, 82, 101-106
Gibson, Hugh, 132a, 132b
gold standard, 94-96
Goldschmidt, , 122, 123
Goldwater, Barry, 119
Grady, Henry F. , 93, 111-113, 115, 139
grapes, drying, 61, 62
Gray, Prentiss, 48, 49, 74, 77, 78, 81-83, 94, 95
Gregory, Warren, 35, 40
Griffiths, Farnham, 18
Guaranty Trust Co., New York, 48, 49
Haas, Walter, Sr., Ill
Hackett, Nelson, 177
Hazlitt, Henry, 122,124
Henle, Raymond. 29.35.36
Hitler. 105,107,108,136
rise to power, 66,98
Holden, Paul, 156, 157
Hoover Dam. See Bechtel
Hoover, Herbert, 29ff46, 52, 54, 55, 90-92
CRB, 29-38
Food Administration, 39, 40
in Washington, 43-45
out of office, 41, 42
Humphrey, Hubert, 119, 120
Industrial Indemnity Company, 144
Institute of Pacific Relations, 127
International Railways of Central America, 78-81
investment banking. See banking
Isle of Aves, Bohemian Club camp, 179
256
Johnson, Gordon, 128
Kaiser, Henry J. , 154, 172
Kaiser Industries, 144, 146, 154
Katz, Abe, 150, 151
Keith, Minor C., 78, 79
Kellogg, Vernon, 35, 38
Kennedy, JohnF., 120, 121
Kennedy, Joseph P., 99
Lawton Kennedy, Printer, 50
Kennedy, Edward, 121
Kerensky, Alexander, 132a, 132b
Keynes, John Maynard , 102, 103, 174
Kittredge, Tracy, 29
Kreuger, Ivar, 86, 87, 89
Krips, Josef, 70, 71
Kroeber, Alfred, 59
Kuhn Loeb, Bankers, 78, 132, 141
Land, Edwin, 22, 141, 142
Laylin, John, 95, 96
League of Nations, 99
Lee, Higginson & Co., 86, 87, 89
Lindbergh, Charles A., 99, 114
Lloyd, Craig, 33, 34, 39
Lowenstein, 85, 86
Luce, Clare Boothe, 173, 174
McCone, John, 131, 132, 144, 147, 148, 153
McLaren, N. Loyall, 176, 177
McLaughlin, Donald, 21, 174, 177, 178
Madison, Marshall, 177
von Mallinckrodt, Gustav W., 108
Mandel, Fritz, 64
Marshall Plan, 121-124
Meili, Ernest, 107, 108
Merritt, Ralph P., 60-63,72
Meyer, Theodore R. , 181
Miller, Adolph C., 21, 26
Mills, Frederick C., 25, 27, 171-173, 176
Mitchell, Charles, 90
Mitchell, Sidney, 42
Mitchell, Wesley C., 171, 175, 176
Monteagle, Kenneth, 177
J.P. Morgan & Co., 152, 163, 174
Morgenthau, Henry, Jr., 91
257
National Bureau of Economic Research, 171
New Deal, 21, 25, 41, 43, 91-96
Nixon, Richard M. , 118, 119, 125
Office of Strategic Service (OSS), 115
Pacific Panama International Exposition, 23
Pacific Union Club, San Francisco, 126, 179
Pam, Albert, 137-139
Parker, Carleton, 20, 23, 25-27
Patterson, Robert P., 123
Peart, Barkley, 5, 6
Peart, Lela Simpson, 5, 6
Pendegast, John, 1, 2, 3, 5
Penoyer, Paul, 176
Phleger, Herman, 17
Poland, William, 28, 33, 35
Polaroid, 22, 141, 142
Prohibition, 12
Random Notes. 29, 37, 40, 50, 71, 74, 181
Rickard, Edgar, 38
Rockefeller, Avery, 140, 141
Roosevelt, Franklin D. , 91
Rosendahl, Van, 153, 170
Rosenman, Samuel Irving, 91, 92
Santa Fe Railroad, sales promotion, 17
Saturday Evening Post. 9, 46
Saudi Arabia, 165
Schacht, Hjalmar, 104, 105
Schrobanco. See J. Henry Schroder Banking Co.
Schroder, Bruno, 75, 163
Schoder, Helmut, 75
Schroder, J. Henry, 75
J. Henry Schroder Banking Co., 72ffl09, 133ffl42. See table of contents,
VIII, IX, XI
von Schroder, Kurt, 136
Schrorock, 139-142
Schrotrust, 139
Searles, Fred, 168
Seligman, Eustace, 84, 129
Shaler, Millard, 35, 38
Sharp, William G. , 132a, 132b
Simpson, Gertrude Pendegast, Iffl6, 28, 45, 46, 50, 51, 60, 73
258
Simpson, Crete Mandel, 1, 11, 14, 27, 54, 64-71, 73, 77, 117, 118, 122,
137, 143, 154, 181, 182
Simpson, John Lowrey, Sr., 3-5, 8, 14
Simpson, John Lowrey:
childhood, 1-15
U.C. days, 16-25
law studies, 13, 14, 23-26
and Hoover, 26-47
grain merchant, 48, 49
illness, 49, 50
writings, 50, 51, 98, 113, 114
agricultural economics, 52-63
Simpson, Laura, 3
Simpson, Lola Jean, 6, 8-11, 16, 51, 60, 65, 73
the Six Companies, 154
Sproul, Allan, 172, 176, 177
Sproul, Robert Gordon, 177-179
"Standstill," 88, 106, 109
Stansgate, Lord [Wedgewood-Benn] , 112, 113
Stephens, Dorsey, 48
Stephens, Henry Morse, 21, 24
Sterling, J. Wallace, 178
Stevenson, AdlaiE., 117-120
Stimson, Henry L., 122, 123
Stimson-Patterson Committee, 122-124
stock market, crash, 1929, 88-91
Strauss, Lewis, 42, 44, 45, 132
Sullivan & Cromwell, 82-84, 95, 97, 120, 135, 141, 147
Sun Maid Raisin Growers, 60-63, 72
Teggart, Frederick, 24
Talleyrand, Charles Maurice, 119
Taylor, Alonzo, 53-56, 59, 60, 62
Thomson, Marie, 41
Torrey, Clare, 29, 48, 49, 76, 171, 174
Treaty of Versailles, 101-103
Truman, Harry, 40, 123
Tuck, Hallam, 42
Turner, Scott, 42
U-2 Incident, 115, 116
United Fruit Co., 78, 80
U.S. Business Council, 165
U.S. Federal Reserve System, 27, 172
U.S. State Department, 100, 101
259
University of California, 16ff25:
Alumni Association, 17
Delta Upsilon Fraternity, 16
Distinguished Scholar, 21, 22
Golden Bears, 17-20, 26
law studies, 23-26
Phi Beta Kappa, 17, 19, 22
Skull and Keys, 17, 18
Sphinx, 20
student life, 1909-1914, 16-25
Walling, George, 146
Warburg, Paul, 80
Wheatland Riots, 25-27
Wheeler, Benjamin Ide. 18,20
Williams, Harrison, 89
Williams. John. 172
Wilson, Woodrow, 23, 34, 99, 132a
Woodland, Ca. , Iff 15:
Hesperian College, 2
high school, 8ffl4
hoboes, 7
Opera House, 14
World Affairs Council of Northern California, 111, 120, 121, 127ffl31,
167
Committee on World Economic Practices, 148-153, 165
World War I:
the Belgians, 31, 46, 47
neutrality prior, 30, 32, 36
demobilization, 40
See Random Notes and other Simpson writings
WrTsTon, W.B., 168
Zellerbach, J.D. [Dave], 128
Suzanne Bassett Riess
Grew up in Bucks County, Pennsylvania.
Graduated from Goucher College, B.A. in
English, 1957.
Post-graduate work, University of London
and the University of California, Berkeley,
in English and history of art.
Feature writing and assistant woman's page
editor, Globe-Times , Bethlehem, Pennsylvania.
Free-lance writing and editing in Berkeley.
Volunteer work on starting a new Berkeley
newspaper .
Natural science docent at the Oakland Museum.
Editor in the Regional Oral History Office
since I960, interviewing in the fields of
art, cultural history, environmental design,
photography, Berkeley and University history.
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