Insider from Overseas

Despite the denunciations of demagogues, shrewd international bankers are a commodity of which the U. S. has never had an adequate supply. Most costly evidence of the fact is the $1,175,000,000 of defaulted bonds outstanding which foreigners (Germany: 26.4%) owe U. S. investors. This week, however, the U. S. acquired a very competent specimen of the breed--a present from Adolf Hitler. He is Otto Jeidels (pronounced Yi-dels), a tall handsome man with a twinkle in his eye, who habitually talks so fast that no one else can get in a word. Before teller purged German banking he was only one size smaller than Hjalmar Schacht himself; now he is a partner of the Manhattan banking firm of Lazard Freres & Co.

Lazard Brothers & Co. of London is Aryan and aristocratic, a member of the Bank of England coterie, helps back the appeasement movement in London, favors the theory that concessions to Hitler will bring Dr. Schacht and his orthodox economics back to Berlin. It has a highly lucrative and increasingly important sideline in helping frightened European capitalists put their money into good safe American dollars. On the receiving end of this flood of gold from Europe is Lazard Freres of Manhattan, not entirely Aryan, not a Wall Street insider, still correspondent (but no longer a partner) of the highly political London and Paris Lazard banks. Lazard's of Manhattan underwrites securities and, above all, does a big business in foreign exchange. Invaluable to this clearing house of news, bullion and foreign capital will be Jeidels, who is a friend of Montagu Norman, has access to choice Continental pipelines into Hitlerland.

Jeidels was born an insider, the son of an old Frankfurt Jewish banking family. Thirty-four years ago when he was in his twenties he began his career by writing ponderous, respectable tomes on Germany's growing steel industry. Later he worked in the very unerudite Manhattan brokerage shop of art-collecting Jules Bache. By 1908 he was back in Germany with its Metal Trust (whose presiding genius, Dr. Alfred Merton, was one of the German sponsors of Dictator Franco's rebellion).

In Germany there is a cynical saying that Schacht has managed to doublecross all save two of his intimates: one of the two is Hitler; the other is Jeidels. Schacht gave Jeidels the high sign in time for him to leave Germany with his family before the great pogrom of 1938 began.

In the twenties Jeidels, as boss of Germany's No. 1 investment bank, the Berliner Handels Gesellschaft. was one of Schacht's closest cronies. No chain store bank with a branch on every other street corner was the Handels Gesellschaft. Only the biggest of big businesses were its customers, and they went to it in Berlin.

One stockholder of the Handels Gesellschaft was Paul M. Warburg, pioneer sponsor of the U. S. Federal Reserve system, who tried to help Germany's post-war comeback, and whose financing of U. S. cotton exports dovetailed neatly with Jeidels' directorship in Germany's greatest textile company. In addition to financing German industry, Jeidels' bank took advantage of Republican Germany's many foreign trade and loan deals to do a prodigious currency exchange business, buying Norwegian kroner for Greek drachmas, selling unfamiliar Soviet rubles for pounds and dollars. The bank's profits ranged from a fraction of a drachma per pound of raisins, to millions of marks on the distribution of hundreds of millions of dollars by foreigners, particularly Americans, in Germany.

To Jeidels, the replacement of the Kaiser by the Social-Democrats did not mean socialism. It simply guaranteed that Germany's long delayed democratic revolution would be carried through "benevolently." So benevolent did the Social-Democrat Government become in response to diplomatic handling by big business that it pussyfooted on reforms, kowtowed to right-wing opposition on social services, etc., became a pushover for Hitler in 1933. Although the Third Reich's reversion to authoritarianism was anything but benevolent, Jeidels made his peace with it, took no offense from its anti-Semitism because "every revolution must persecute a minority." So, while good Aryan banks were closely regulated by Commissar Schacht, Jeidels' Handels Gesellschaft operated with relative freedom and Jeidels himself got by.

Schacht was able to protect Jeidels because his contact with British Bank Boss Montagu Norman was useful to Hitler (Jeidels was in India during the depression on a British Government banking commission). Hitler let Jeidels be his delegate on the famous Standstill Committee for negotiating the very still British and U. S. commercial credits caught in Germany when Hitler padlocked the exchanges. Until the spring of 1938 Jeidels functioned perfectly, as much of an insider as Hitler could let any Jewish banker be. He satisfied the British by keeping the debts unrepudiated, the Nazis by keeping them frozen, served as middleman between the Nazis and the British. Last spring Hitler decided that he didn't have to butter the British any more. So Banker Jeidels, aged 57, slipped away to London to start a new career. After a glance at the European outlook, he kept on going till he reached the U. S.

When Jeidels first worked in the U. S., T. R. was busy trustbusting. After being steeped for 25 years in the continental economic viewpoint, he regards the U. S. as still naive, believes that "bigness" is still the rabble-rousing equivalent of anti-Semitism in U. S. politics, that the U. S. must adapt itself to world competition by centralizing its industries. Anti-Semitism he sees as the century's No. i overrated issue, now at the height of its overestimation.

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