Today's Reading


In the cold dark of a premarket December morning in 1930, four clerks emerged from the service entrance of the office building at 39 Broadway, each with a cart loaded with documents. They hauled those carts for only a few blocks, to the newly refurbished and expanded offices at 59 Wall Street, the marbled site of one of the most storied firms on Wall Street, Brown Brothers. The carts contained stock and bond certificates that the Harriman family, whose fortune had been born in the railroad boom, had accumulated from Europe and the United States, tens of millions of dollars of notes that were themselves precious assets. The street was barely stirring, but each trip of several hundred yards was escorted by a security guard, armed and alert.

The day before, a small innocuous headline had explained why those clerks were transferring millions of dollars from one office to another: BIG BANKING HOUSES DECIDE ON MERGER. Though meriting a front-page mention in The New York Times, the announcement was dwarfed by the two major stories of that day in 1930: the collapse of the mammoth Bank of United States and the demand by President Herbert Hoover that Congress pass an emergency employment bill to stem the bleeding in the U.S. labor market. In the weeks and months ahead, stories of collapse and chaos would proliferate, but the new banking house survived and thrived. That was surprising, though it shouldn't have been. Brown Brothers had always survived, through crisis after crisis, as it still does today.

What we now call the Great Depression was in full force on December 12, 1930, the day of the announcement. More than 1,200 banks had already closed their doors, their deposits lost forever as vaults were drained by panicked customers who had watched the stock market collapse at the end of 1929 and who had then seen a brief false dawn followed by much worse. No federal deposit insurance covered those losses, and no safety net existed to cushion the fall. The panic infected every segment of society, from farming to banking, from manufacturing to retail, and then spread throughout the world.

Yet no outward sign of distress would have been noticed one fall day in 1930 when a group of nattily dressed young men chartered a railcar on the New Haven line to take them from Grand Central Station to their college reunion at Yale. They were a self-confident lot, in their midthirties, ambitious, all of them born to wealth, none of them having known a day of want. Among them was a tall and lanky man named Prescott Bush. He had married well, wedding the daughter of George Herbert Walker of St. Louis, who had started his own investment firm before becoming president of W. A. Harriman & Co., founded by Averell Harriman, the debonair yet tight-lipped eldest son of the pugnacious railroad baron E. H. Harriman. Prescott had gone from selling rubber flooring to working as a vice president at Harriman with his college friend Roland "Bunny" Harriman, Averell's younger and more easygoing brother. Roland wasn't on the train that day, but Ellery James and Knight Woolley were. Ellery was a partner at Brown Brothers, and Knight, who was rarely without a bespoke double-breasted suit, was managing partner of another one of the Harriman firms. These young men were entwined by professional and personal bonds, each having been sworn into Yale's exclusive Skull and Bones society before enlisting in the military for America's brief and bloody participation in World War I. Their tight circle included not only the Harriman brothers but also the wiry, intense Robert A. Lovett, whose father, Robert S. Lovett, had served as the elder Harriman's general counsel.

But while they had reveled in the prosperity of the 1920s, they were not immune to the storms outside in 1930. As they headed to their reunion, cosseted in their private car, playing poker for stakes well in excess of the average weekly wage for millions of Americans, they knew that all was not well in the world. Both Harriman and Brown Brothers were teetering under the weight of credit they had extended to businesses that could no longer repay. Given the deep personal connections between the partners of the firms, it must have seemed organic when the idea of a merger was broached over poker and scotch. Other firms weren't merging; they were collapsing, and both Harriman and Brown Brothers needed to shore up their business and preserve their capital.

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