Frank A. Vanderlip and the National City Bank During the First World War

Abstract

This essay focuses on the First World War policies of the National City Bank of New York, drawing attention to the internal disputes within the bank over war financing. Some historians have suggested that during the First World War New York banks associated with the National City Bank favored fierce competition with the Allied powers for markets and overseas investment opportunities, whereas those linked to J. P Morgan and Company preferred cooperation with the Allied powers, concentrating upon handling the massive war financing the Allied war effort required. In reality the picture was more complex. The National City Bank participated substantially in Allied war loans and, with the First National Bank and Morgan’s, was one of the “Trio” of leading New York banks that handled such financing. Simultaneously, Frank A. Vanderlip, the National City president and a long-time advocate of the expansion of American foreign trade and investment, launched a major initiative to expand the National City’s overseas activities, through the establishment of foreign branches around the world and the creation of the American International Corporation, a foreign investment trust. Although Vanderlip suggested that he wished to cooperate with British financial interests in these activities, they generated conflict between the National City and the fiercely pro-Allied Morgan firm. Within the bank, they also created substantial tension between the broadly neutral Vanderlip and his staunchly pro-Allied patron, the bank’s chairman, James Stillman, who died in 1918, and other strongly pro-Allied National City officers. Shortly after the war, Vanderlip proposed a massive and visionary scheme to provide American financing for European economic regeneration, causing the National City’s directors, who considered it impractical and outside their bank’s remit of maximizing profits, to dismiss him.