Read Online The last tycoons: the secret history of Lazard Frères & Co by William D. Cohan - Free Book Online Page A
Book: The last tycoons: the secret history of Lazard Frères & Co by William D. Cohan
Read Free Book Online
Authors: William D. Cohan
Tags: General, History, Biography & Autobiography, France, Biography, New York, New York (State), Economics, Banks & Banking, Business & Economics, Business, Corporate & Business History, Lazard Freres & Co - History, Bankers - France, Banks And Banking, Finance, Bankers, Corporate & Business History - General, History Of Specific Companies, Banks and banking - France - History, Banks and banking - New York (State) - New York - History, Bankers - New York (State) - New York
Ads: Link
happened in London and Paris in 1931 and 1932. Indeed, there is no correspondence between Altschul and his partners in Paris and London between March 30, 1931, and April 13, 1934.
There was one very cryptic cablegram, dated August 10, 1931, between New York and London addressed to Altschul that seemed to relate to the London crisis. The original cable was written in a secret code, where each nonsensical word was ten letters long. The translation of the cable, a few weeks after London's rescue by the Bank of England, conveys an air of desperation: "In view of what we must be prepared to do here not for sake of prestige but as a matter of necessity in the event of those extremely unfavorable developments which appear every day more likely[,] we feel it might be serious and fundamental mistake to disturb our present position which though comfortable is no better than it really should be. [M]oreover it seems to us Paris would be in far better position if they borrowed entire amount from Banque de France at the beginning when skies are clear than if they borrowed a lesser amount and then filled their line under stress of circumstances at a time when doing so might create most unfavorable impression."
AT THIS TIME, Altschul appeared to be far more preoccupied with what the consequences of the recently passed Banking Act of 1933, also known as the Glass-Steagall Act after its main congressional sponsors, would mean for Lazard. The act, which rose out of the bank failures of the Depression, sought to separate commercial banking--the taking of deposits--from investment banking, that is, the underwriting of securities. Wall Street firms were given a year to decide which business line to choose. For Altschul and Lazard the decision was simple, considering it had long before withdrawn from its commercial banking roots in San Francisco.
Pursuant to the decision to focus on investment banking, at the end of September 1934 Lazard opened Lazard Freres & Co. Inc., at 15 Nassau Street, to underwrite and distribute corporate and municipal securities. Altschul was named chairman of the board of the new company, and Stanley Russell was recruited from National City Company (today's Citigroup) to be the president. "In the development of such business, it is our hope that Lazard Freres & Co., Inc., may play an appropriate part," Russell said at the time. The new business started with $5 million of capital. Newsweek lauded the firm at the time, without even the slightest hint that it had almost been dissolved: "While investment bankers complained that the Securities Act of 1933 was stifling their business, Lazard Freres boldly formed Lazard Freres & Co. to underwrite and sell corporate and municipal bonds. Although a smaller star in the financial firmament than J. P. Morgan & Co., Kuhn Loeb & Co., and Dillon Read & Co., Lazard Freres is no less brilliant. Its prestige is enhanced by its affiliated firms in Paris and London."
While the near-disastrous events were unfolding in London and New York was focused on complying with Glass-Steagall, Andre Meyer was busy in Paris transforming himself from a currency trader into the then far more prestigious and respected role of investment banker and a man who provides counsel to governments and to corporate clients. The first opportunity he had to showcase his skills as a financial alchemist came in cooperation with Citroen, the French automobile manufacturer in which Lazard had previously bought an important stake, no doubt in part because Andre Citroen was the father-in-law of Pierre David-Weill's sister Antoinette. (Andre Citroen first met David David-Weill at his home in Neuilly, a wealthy suburb of Paris, where, after showing off his impressive art collection, David-Weill told the industrialist he must reorganize his company to make it more profitable.) Andre Meyer, in turn, also befriended Citroen and convinced him to sell to Lazard ownership of Citroen's finance subsidiary, known as Societe pour la
There was one very cryptic cablegram, dated August 10, 1931, between New York and London addressed to Altschul that seemed to relate to the London crisis. The original cable was written in a secret code, where each nonsensical word was ten letters long. The translation of the cable, a few weeks after London's rescue by the Bank of England, conveys an air of desperation: "In view of what we must be prepared to do here not for sake of prestige but as a matter of necessity in the event of those extremely unfavorable developments which appear every day more likely[,] we feel it might be serious and fundamental mistake to disturb our present position which though comfortable is no better than it really should be. [M]oreover it seems to us Paris would be in far better position if they borrowed entire amount from Banque de France at the beginning when skies are clear than if they borrowed a lesser amount and then filled their line under stress of circumstances at a time when doing so might create most unfavorable impression."
AT THIS TIME, Altschul appeared to be far more preoccupied with what the consequences of the recently passed Banking Act of 1933, also known as the Glass-Steagall Act after its main congressional sponsors, would mean for Lazard. The act, which rose out of the bank failures of the Depression, sought to separate commercial banking--the taking of deposits--from investment banking, that is, the underwriting of securities. Wall Street firms were given a year to decide which business line to choose. For Altschul and Lazard the decision was simple, considering it had long before withdrawn from its commercial banking roots in San Francisco.
Pursuant to the decision to focus on investment banking, at the end of September 1934 Lazard opened Lazard Freres & Co. Inc., at 15 Nassau Street, to underwrite and distribute corporate and municipal securities. Altschul was named chairman of the board of the new company, and Stanley Russell was recruited from National City Company (today's Citigroup) to be the president. "In the development of such business, it is our hope that Lazard Freres & Co., Inc., may play an appropriate part," Russell said at the time. The new business started with $5 million of capital. Newsweek lauded the firm at the time, without even the slightest hint that it had almost been dissolved: "While investment bankers complained that the Securities Act of 1933 was stifling their business, Lazard Freres boldly formed Lazard Freres & Co. to underwrite and sell corporate and municipal bonds. Although a smaller star in the financial firmament than J. P. Morgan & Co., Kuhn Loeb & Co., and Dillon Read & Co., Lazard Freres is no less brilliant. Its prestige is enhanced by its affiliated firms in Paris and London."
While the near-disastrous events were unfolding in London and New York was focused on complying with Glass-Steagall, Andre Meyer was busy in Paris transforming himself from a currency trader into the then far more prestigious and respected role of investment banker and a man who provides counsel to governments and to corporate clients. The first opportunity he had to showcase his skills as a financial alchemist came in cooperation with Citroen, the French automobile manufacturer in which Lazard had previously bought an important stake, no doubt in part because Andre Citroen was the father-in-law of Pierre David-Weill's sister Antoinette. (Andre Citroen first met David David-Weill at his home in Neuilly, a wealthy suburb of Paris, where, after showing off his impressive art collection, David-Weill told the industrialist he must reorganize his company to make it more profitable.) Andre Meyer, in turn, also befriended Citroen and convinced him to sell to Lazard ownership of Citroen's finance subsidiary, known as Societe pour la
Similar Books
