Mr. RAUSHENBUSH. Are they totaled?

Mr. WOHLFORTH. They are totaled on my chart over there [indicating].

The CHAIRMAN. On what number chart?

Mr. WOHLFORTH. On chart no. 5, "Exhibit No. 2153", Mr. Chairman. In the British contract records, we totaled each ledger and give a grand total footing at the end.

Before we go on, I would just like to offer chart 6 for the record, without any comment.

(The document referred to was marked "Exhibit No. 2159" and is included in the appendix on p. 8091.)

'The CHAIRMAN. Chart 6 is what?

Mr. WOHLFORTH. The outstanding private indebtedness of the Allies in the United States, 1914 to 1920, including the British Government loans by J. P. Morgan & Co.

I would like to offer it at this time so that the witnesses may have ample opportunity to study it and give us the benefit of any of their data that they may have with them.

The CHAIRMAN. That is inclusive of all indebtedness of the Allies owing to the United States Government, itself?

Mr. WOHLFORTH. No, not to the Government; private indebtedness, Mr. Chairman.

The CHAIRMAN. This includes all but what was owing to the Government?

Mr. WOHLFORTH. Yes; the Anglo-French loan, the three United Kingdom loans, the French loan of April, the Brown Brothers acceptance credits, the French industrial credit D by Bonbright & Co., and the demand loan, taking the general position as from the figures which J. P. Morgan & Co. have furnished us.

We might point out at this time that at the bottom of the chart the line begins with the National City Bank credit of $10,000,000, and the allied indebtedness gradually increases from then on until we entered the war. The first big rise is the Anglo-French loan of $500,000,000, then the industrial credits and acceptances, I think, come in there, and we get a little reduction. Then the United Kingdom loans and the French loan, and they are all piled up on the chart.

I would like to offer that chart 6 for the record at this time, to be made available for checking.

Mr. LAMONT. Mr. Chairman, I would like to call attention to a very trifling point in the title of that chart. It says "Including the British Government loans by J. P. Morgan & Co."

I would not want to have anybody get the impression that the British Government loans were all made by J. P. Morgan & Co. alone, because, of course, as we all know, thousands of investors. and hundreds of banks all over the country joined in those loans. It is quite true that what Mr. Wohlforth has put there probably means made under the leadership of J. P. Morgan & Co., as head of the syndicate, but the title is a little misleading, perhaps. The CHAIRMAN. Very well.

Mr. WOHLFORTH. Chart 4, "Exhibit No. 2152", which is the second from the right, is simply the amount of loans and discounts (the top line), demand deposits (the second line), the ratio of investments to demand deposits (the third line), and the investments (the bottom

line) of national banks on certain call dates as reported by the Comptroller of the Treasury.

The CHAIRMAN. What is your authority for that chart and study? Mr. WOHLFORTH. The authority is the reports of the Comptroller of the Currency, Mr. Chairman. I have a copy of that here. Mr. WHITNEY. All national banks?

Mr. WOHLFORTH. Yes; all national banks and the call dates. Mr. RAUSHENBUSH. Are you offering that for the record? Mr. WOHLFORTH. I will offer the figures for the record.

(The document referred to was marked "Exhibit No. 2160" and is included in the appendix on p. 8091.)

Mr. WHITNEY. Do you remember how many national banks there were in that period?

Mr. WOHLFORTH. I do not know whether I have that figure right here, but I will be glad to get it.

The CHAIRMAN. Does it matter?

Mr. WHITNEY. I do not think so. I was just thinking of it as between the national banks and State banks, that is all.

Mr. WOHLFORTH. They will be used later. I might point out the general rise in the credit situation at that time, the rise in demand deposits and in loans and discounts and the rise in the bank investments, with the second line from the bottom being the ratio between the investments and the demand deposits.

Senator VANDENBERG. Can you tell me, just speaking generally, at what point do the loans and credits start which are now in default? Mr. WOHLFORTH. The after-the-war period is coming later, Senator, if I may defer an answer to that. I would like to discuss only the export department of J. P. Morgan & Co. and the warexpansion data this morning.

Senator VANDENBERG. Did any of this private indebtedness ever default?

Mr. WHITNEY. No; except Russia.

Senator VANDENBERG. I mean, Great Britain or France.

Mr. LAMONT. No.

Mr. WHITNEY. It has all been paid, every one of them.

Mr. RAUSHENBUSH. I wonder if, before you go on, Mr. Wohlforth, you could go back and give an explanation again of what that 84 percent is supposed to cover? I am a little lost on that, myself.

Mr. WOHLFORTH. On "Exhibit No. 2154", already in the record, is shown the total exports of specified commodities to the allied countries during selected 3-year pre-war and war periods.

Compared to the business in the same commodities handled by J. P. Morgan & Co. and shipped to the Allies by the export department of J. P. Morgan & Co. during similar periods, the 84 percent is the amount of these war commodities that went through J. P. Morgan & Co. In other words, of all the exports of the essential implements of war to the Allies during 1915, 1916, and 1917, J. P. Morgan & Co. had 84 percent of that business.

Mr. RAUSHENBUSH. What relation does that have to the three billion figure we have seen somewhere around here; in some of the statements put into the record?

Mr. WOHLFORTH. The rough total of all of J. P. Morgan & Co.'s business with the Allies is roughly 3 billion dollars, and in the trade

in munitions and implements of war was $1,843,000,000. Roughly, Morgan's business was 60 percent essential war materials.

The CHAIRMAN. What was that balance, generally speaking? Mr. WOHLFORTH. The balance there would be raw materials and other more or less commercial articles, about $2,200,000,000.

Mr. RAUSHENBUSH. Wait a minute. Did that go through Morgan & Co., too?

Mr. WOHLFORTH. We are discussing Morgan's war business, and the balance of that business handled by J. P. Morgan, as I have said, would be brass, oil, and articles of a commercial nature.

Mr. LAMONT. Was steel included?

Mr. WOHLFORTH. Steel is included in this figure here.
Mr. OLDS. In munitions?

Mr. LAMONT. In munitions?

Mr. WOHLFORTH. I have arms, ammunition, iron, and steel and manufactures of, in this general classification.

Mr. LAMONT. But you include iron and steel, raw material?

Mr. WOHLFORTH. Yes; as far as possible, including both raw and manufactured.

Mr. LAMONT. That is interesting, because America has always exported all the raw material in iron and steel that she could, quite aside from war years.

Mr. RAUSHENBUSH. To that extent in the pre-war years that would explain that $125,000,000 exports.

Mr. WOHLFORTH. Yes.

Mr. RAUSHENBUSH. So your earlier statement, Mr. Wohlforth, that there was little export of those commodities, should be qualified to that extent, that about $125,000,000 was exported in the 3-year period?

Mr. WOHLFORTH. Yes.

Mr. LAMONT. I should think that the standards upon which you based your calculations of what are war materials might have to be compared a little bit, Mr. Wohlforth, because not all might agree on the same standard.

Mr. WOHLFORTH. I appreciate that, and in this case we base the comparison on the Department of Commerce figures and their classifications.

Mr. LAMONT. Oh, yes; but there might be an argument on iron and steel right away.

Mr. WOHLFORTH. A difference of opinion.

Mr. LAMONT. Yes; quite.

Mr. RAUSHENBUSH. But you are simply bringing out that was not your own judgment, that was the way it was listed by the Department of Commerce?

Mr. WOHLFORTH. Exactly.

Mr. LAMONT. But you did not mean to intimate that the Department of Commerce listed iron and steel as implements of war?

Mr. WOHLFORTH. Oh, no; they changed classifications in various years. Iron and steel and manufactures of were selected by me in preparing this study.

Mr. LAMONT. This is iron and steel.

ORGANIZATION OF THE COMMERCIAL AGENCY 1

Mr. WOHLFORTH. Yes; and the whole list is right there. I would like to go ahead from this point and discuss the commercial agency agreement, if it is satisfactory with the Chairman.

You have a copy of this print of July 26, 1935. In this memorandum furnished the committee, dated July 26, 1935, the first paragraph explains in general how the commercial agency agreement was secured and the general situation during the early war years.

If it is convenient with the witnesses, we might go right along from here on and put in such cables as we think are pertinent.

I would like to offer for the record the first paragraph of that memorandum.

Mr. LAMONT. You are not putting the whole memorandum into the record?

Mr. WOHLFORTH. I do not see any reason for it, do you?

Mr. WHITNEY. This memorandum was prepared at your request after the discussion which I had with Mr. Brown, so this is the document that we turned into you.

Mr. WOHLFORTH. You want it all to go into the record, every bit of it? There is a lot in there that is not pertinent.

Mr. WHITNEY. I think we would a little rather have it all go in, if you do not mind.

Mr. RAUSHENBUSH. We are putting it in in another place, are we

not?

Mr. WOHLFORTH, Yes; part of it has gone in already. We are putting it in in other places.

Mr. WHITNEY. The agency agreement itself has gone in. The mere agreement went in yesterday.

The CHAIRMAN. Why do we not wait until we have finished, and if there are portions of it that have not been put in the record in the meantime, call it to our attention.

Mr. WHITNEY. That is fine, Senator, but the only reason I suggested it was wondering if we were putting it all in, because this we prepared at the request of the investigator. I do not care whether It goes in.

The CHAIRMAN. If we were to put it all in now, it is certain that we would be reading parts of it, and we can avoid that.

Mr. LAMONT. Mr. Wohlforth, what about the first 10 pages?
Mr. WHITNEY. That is all I meant.

Mr. LAMONT. That really is the covering memorandum.

Mr. WOHLFORTH. Suppose we go ahead and maybe we can traighten this out later, because there is a great deal of material in here concerning the commercial agency business which is purely routine.

Mr. LAMONT. No, no; I say the first 10 pages, just the memorandum here. Mr. Whitney says that that is all he had in mind. Mr. WHITNEY. Just the first 12 pages.

Mr. LAMONT. The first 12 pages is not bulky.

The CHAIRMAN. Yes.

See also "Exhibits Nos. 3431 through 3450", Hearings, Part XXX. "Exhibit No. 2068", see Hearings, Part XXV, appendix, p. 7675.

$3876-37-pt. 26- -2

Mr. WOHLFORTH. I think that might properly go in.

The CHAIRMAN. Let the first 12 pages of the memorandum be received for the record and properly identified at this time.

(The document referred to was marked "Exhibit No. 2161" and is included in the appendix on p. 8092.)

Mr. WOHLFORTH. Just to go along, we have a cable, no. 214, on page 213 of this memorandum, from H. P. Davison to E. C. Grenfell, under date of November 16, 1914. It states that Mr. Morgan was planning to go abroad, and that he would probably talk about the commercial agency agreement when he got abroad. Whose idea was this?

Mr. WHITNEY. Could not the cable be read, rather than have it interpreted?

Mr. WOHLFORTH. I was going to offer the whole thing in the record, anyway, if you wish it.

Mr. LAMONT. But this is a public hearing, of course.
Mr. WOHLFORTH (reading from "Exhibit No. 2162"):

Referring to your 232 and others exchanged on same subject. Jack having few days shooting but within night's ride from New York. We have all been very much impressed with very large amount of business which must be done here by various countries and have conviction that we could really render most valuable service to the Allies if our position and attitude were fully understood. It was largely with this in view that some of us felt it very important that Jack should visit you and Herman believing that his presence there would result in some plan being formulated which would serve an excellent purpose and be profitable to us.

Just for the record, "Jack" is Mr. Morgan, and "Herman" is Mr. Harjes?

Mr. MORGAN. That is right.

(The document referred to was marked "Exhibit No. 2162" and appears in full in the text.)

Mr. WOHLFORTH (reading):

We fully appreciated his feeling that he could not be put in the position of drumming and that he could therefore only go at this time if desire was expressed by some authorities that he should. I am still hoping that this may eventuate as am confident his presence there under proper circumstances would be of great value to us all.

I do not see any need of reading the rest, and I offer that cable for the record.

Mr. LAMONT. Wait a minute.

Mr. WHITNEY. I will read it, if you want.

Mr. WOHLFORTH. All right, go ahead and read it.

Mr. WHITNEY (continuing reading “Exhibit No. 2162”) :

If this should not eventuate, I am strongly of opinion that one of the partners should visit you and Herman hoping and expecting that our presence there in a quite unofficial capacity would result in our making clear way in which we could render service and therefore some plan might be developed to accomplish results desired. This idea is emphasized by Blackett

Basil P. Blackett was a British Treasury official who was over here. at the request of the Secretary of the Treasury to discuss some means of stabilizing exchange. He and Sir George Paish came over. That is just parenthetical.

This idea is emphasized by Blackett, who has just made us a long call and who says that purchasing matters here for all Allies so completely lack organization that he looks upon it as immediate necessity that for all Allies and