The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-07-10

burgs connection began with Kuehn Loeb
Company. and what his views are
upon the methods OF financing railroads
and industrial enterprises and what OF
these enterprises have been financed by
kuehn. Loeb q Company since his con-
nection with the firm. What are his
views as to the legitimacy Of the fnanc-
ing OF the Alton system by Hartman,
Gould. Schff and Stilman; his views Of
the reorganization Of the Frisco. the Rock
Island. the New Haven. and the CONSOLE
dalton and financing of the steel trust
and similar concerns
And under date OF June % as follows :
I'm addition to tho information asked
YOU yesterday In regard to Mr.. Warburg
! would like to know how much money
the firm Of Kuehn Loeb & Company
has loaned the New York and New Jersey
Tube Company think that is the name
of the institution; how much. II any, It
has loaned Mr.. McAdoo and his business
associates when Mr.. warburg became a
citizen of the United States: how much
he or the firm Of kuehn. Loeb a Com
pany contributed to the last Democratic
campaign. IL any. r. ;. Also what are
his political affiliations and how many
times and where he has voted for Con-
gresham and President
THE committee will appreciate any in
i'm answer to the above quoted letters"
Mr. warburg replied as follows:
referring to your letter OF the cath
instant. submitting to me some questions
put by a member Of the sub committee
OF the Committee on Banking and Cur
rency OF the Senate. | beg to advise you
as follows:
I'm order to deal intellgently with
the questions 1t is necessary that they
should he subdivided
First question. 4 would like to know
when MIR Warburg's connection began
with Kuhn. Loeb q Company
Answer. I'm October. 1902. when
became q member OF the Arm. shortly
after coming to this country from Ham
burg. Germany. where ! had heretofore
resided
Second question - and what his
views are upon the methods OF financing
railroads and Industrial enterprises; and
what OF these enterprises have been
financed by Kuhn. Loeb & Company since
his connection with the firm What arc his
views a. to the legitimacy OF the fnanc-
ing of the Alton system by Hartman,
Gould. Schlff and Stillman his views Of
the reorganization of the Frisco. the Rock
Island. the New Haven. and the CONSOLE
dalton and financing of the steel trust
and similar concerns
Answer. III OTutr 10 klNt my WINS
upon the methods of financing railroads
and Industrial enterprises II would be
necessary for me to write lengthy es-
say While, broadly speaking. one might
say that In financing railroads and In
dustrial enterprises care must be taken
that fixed charges do not exceed safe
proportion OF the net earnings that the
obligations be well secured by actual
value and that due provision be made for
the future growth OF the properties, any
such statement, in order to he OF value.
would have to be reviewed from diff
ferent angle in each individual class or
cases Railroads in thickly settled sec
lions Of the country are different promo
sitions from railroads In undeveloped ter
ritories Industries In staple or well known
products require different point OF view
from Industries manufacturing untricd
products or articles OF luxury. coal
mine and an automobile factory cannot
be covered by one rule. Moreover. DIFF
ferent methods apply IN nations lie
during a period OF rapid development
than at a later stage OF settled condi-
tions
The Federal reserve bank system
cannot deal In nor grant advances upon
bonds aud stocks of corporations uond
and issuing houses cannot become mem
beers of the system, and | fan To see the
pertinency of the question and do not see
my way to answer II In more than this
general fashion. might add however,
that my general views are fairly well
known 20 leading business men ana
economists and that have publicly
stated them with regard TO some phases
OF this question as early as 1905 In an
article entitled 'Ams rican and European
Banking Methods Compared tpages l'3
to l47D, Of which | enclose three copies.
Most of the transactions specifically
mentioned by your associates tsuch az
the Chicago and Alton, the United states
Steel and the Rock lsland) were carried
through before ! came to this country.
and for none OF the transactions named
(other than the Chicago and Atom was
my firm the bankers: but quite apart
from these considerations ! would Tor
reasons which I am sure Will occur 10
YOU be unwilling to enter upon such a
discussion of the business transactions
of others as would be involved in an
swering your associates questions. or
course, with the aid OF hlndsight, which
is so much easier than foresight II would
not be difficult for me to give as my
Judgment what meanwhile may have
! become established I'm the case OF some ~
the enterprises by such events as receiver
! shps or reorganizatons, but ] should De
unwilling to have such an expression ~
1 judgment on my part used In connection
4 WIN the cDnSlutIdNlpl VI nv '"'' 80
| public ofhce--an office which ! have
not sought. which I am not seeking now
and the dignity OF which I am DESTROYS to
preserve. being Particularly mindful OF
| the important precedent that We are Gre
ating with regard to future members oil
the Federal Reserve Board
Third question Y would like to know
| how much money the firm OF Kuhn. Loci
| a. Company has loaned the New YORK
| and New Jersey Tube Company think
| that Is the name OF the institution
! how much. II any. it has loaned
/ Mr.. McAdoo and his business AS
I sociates.
"Answer-Ordnarily 7 would not b'
| free to answer question as to loans
which my firm has made to it's customers
| II happens. however, that ] am free to
! answer this question. inasmuch as my
| firm has never made any loans to the
/ corporations to which your associate re-
/ fers nor to Mr.. McAdoo, nor, as far as
! | know. to any OF his business asso-
| oiates. our only connection with the
| Hudson and Manhattan Tube enterprise
/ was as reimbursement managers with tive
| other banking firms. under the plan and
agreement dated January II. 1913; and
as syndicate managers with the same as
soclatcs under an agreeYent OF the same
| date. of both OF which agreements ] en-
| close printed copies. I feel free to FUR
nlsh these copies inasmuch as they are
practically public property. This reor
! ganiZation was undertaken by us at The