Brown Brothers Harriman

Brown Brothers Harriman & Co. is a private banking partnership in New York. Effective January 1, 1931 the businesses of Brown Brothers & Co., Harriman Brothers & Co. and W. A. Harriman & Co., Inc. were united in the co-partnership firm of Brown Brothers Harriman & Co.¹ Its partners included Robert A. Lovett, W. Averell Harriman, E. Roland Harriman and Prescott Bush, and it appears in the record of the Nicaragua customs loans of 1911 and 1912, the Union Banking Corporation and the Cold War intelligence establishment.

Formation of the Firm

The Brown partnership descends from Alexander Brown, a Belfast linen merchant who emigrated to the United States in 1800. In 1818 he founded Alex. Brown & Sons, according to the finding aid for the firm's records at the New-York Historical Society.² Time dated the house differently, stating that it was "formed in 1825 by Alexander Brown, previously a linen merchant."³ The finding aid records that Alexander Brown's eldest son William founded William Brown & Co. in Liverpool in 1810, which became Brown Shipley & Co. in 1839 and separated from Brown Brothers as a distinct business in 1918.² The partner table in the firm's 1968 history lists Montagu Norman as a partner of the Brown Shipley house from 1900 to 1915, before he became Governor of the Bank of England.⁴ By 1929 only three of the twelve Brown Brothers partners were Browns: the senior partner James Brown and his cousins James Crosby Brown and Thatcher Magoun Brown.⁵

W. A. Harriman & Co., Inc. was organized on November 13, 1919 under the management of W. Averell Harriman, George Herbert Walker (president from 1920 until 1930) and Prescott Bush. The firm opened an office in Berlin in 1922, extended short-term credits to German industries, helped finance zinc mines in Silesia, and in 1928 financed the Aviation Corporation, which became Pan American World Airways.⁶ Time reported that in 1920 Averell Harriman "set out to make the U. S. great upon the sea" and formed an alliance with the Hamburg-American Line, that he was thwarted in it, and that the firm "made many a loan in Germany."³ On St. Patrick's Day, 1927, the Harrimans set up a partnership bank, originally called W. A. Harriman & Co. without the "Inc." and soon renamed Harriman Brothers & Co. Knight Woolley of the foreign department of the American Exchange National Bank became its general manager. The bank started with four employees, capital from the Harrimans and M. Samuel & Co., Ltd., and Averell Harriman's instruction, "Here's four million. Go ahead and run the bank."⁷ The firm's partner table gives October 30, 1926 as the date E. Roland Harriman and Averell Harriman became partners of the Harriman bank and describes Woolley as general manager "from its founding in 1926."⁴ The sources differ on the founding date. The Bankers Magazine of January 1931 wrote that Harriman Brothers & Co. "was formed on February 1, 1927," and listed the partners as W. A. Harriman, E. Roland Harriman, Woolley and Prescott S. Bush.⁸ Garry Wills wrote that the firm was "not founded until 1926" and that the Harrimans "put a classmate in as president," naming Woolley.⁹ The New York Times of May 5, 1929 listed a new partnership of Harriman Brothers & Co. as of May 1, 1929 at 39 Broadway, with W. A. Harriman, E. Roland Harriman, George H. Walker, Dale M. Parker and Woolley.¹⁰ The first bankers acceptance created by the bank, dated October 24, 1927, financed a German metal refining company's import of Chilean copper. The minute book of the bank's partners records for 1927 that Woolley accepted, through Ellery Sedgwick James, "the offer of a $250,000 participation" with Brown Brothers & Co. and two other banks in an acceptance credit for a Berlin metal firm.¹¹

The firm's 1968 history, written by John A. Kouwenhoven, quotes the 1950 firm history by Thatcher M. Brown that "it became clear to us, during the year 1930, that we were doing too large a business for our capital," after losses on securities underwritten before the 1929 crash and the withdrawal of capital by older partners.¹² The merger was announced on December 12, 1930, according to Zachary Karabell, who wrote that the announcement appeared on the front page of The New York Times on the day the Bank of United States collapsed, and that clerks carried the Harriman family's securities from 39 Broadway to 59 Wall Street under armed guard.¹³ The finding aid lists newspaper clippings announcing the merger and a clipping reporting Woolley's election as a director, dated December 12, 1930 to January 23, 1931.² Time reported on December 22, 1930 that the two houses had merged "last week," counting sixteen partners in the new firm of Brown Bros., Harriman & Co., eleven of them Yale graduates.³ The printed circular announcing the union is dated January 2, 1931 and states that the businesses were united "effective January 1, 1931."¹ The chronology in the finding aid to the W. Averell Harriman papers at the Library of Congress lists him as partner of Brown Brothers Harriman & Co. from 1931 to 1946.¹⁴ The firm's history page counts seventeen partners, twelve of them Yale graduates.¹⁵ Antony C. Sutton wrote that before 1933 the firm "consisted of two firms," W. A. Harriman Company and Brown Brothers, and gave 1933 as the year of the merger.¹⁶

Three accounts place the origin of the merger on a train to a Yale event. The firm's history page states that "according to firm lore" the idea was first floated among six partners in November 1930 on the train from New York to New Haven for the Yale-Harvard football game.¹⁵ Karabell described a railcar chartered on the New Haven line from Grand Central Station to a Yale reunion on a fall day in 1930, and wrote, "Roland wasn't on the train that day, but Ellery James and Knight Woolley were."¹³ Kouwenhoven placed the card game in the spring of 1930, with James, Woolley and Prescott Bush traveling to a Yale reunion with two other classmates, and called it a story "now current in various versions, as all good legends are." He recorded Thatcher Brown's recollection that James first suggested talking with the Harrimans, and Roland Harriman's recollection that James spoke to him about "working under one roof" before the crash of 1929.¹²

The firm's history page states that in 1931, a few months after the merger closed, Germany declared a Stillhalte (standstill) on debt payments to foreign private creditors, including over $10 million in credits from the firm, roughly the size of its entire capital, against liabilities of nearly ten times that amount, and that "an emergency infusion of $10 million from the Harrimans, Averell and Roland, staved off collapse."¹⁵ Karabell wrote, "Every Brown Brothers partner was personally exposed."¹³ The firm's 1968 history states that the Banking Act of 1933 required private banking houses to choose between underwriting and deposit banking, that Brown Brothers Harriman remained a bank of deposit, and that several partners resigned on June 9, 1934 to join Brown Harriman & Co., Inc. in the investment banking business.⁴¹⁷

The Partners

Time named the partners it considered most prominent. It described Ellery Sedgwick James as a Brown Brothers partner and a classmate of E. Roland Harriman, Prescott Bush and Knight Woolley. It described Robert A. Lovett as a partner and the son of Judge Robert Scott Lovett, "longtime personal attorney and close friend of the late Edward Henry Harriman and now chairman of his Union Pacific."³

The partner table in Kouwenhoven's history gives the dates. James was a partner of Brown Brothers from January 1, 1925 and died on November 25, 1932. Lovett became a partner on January 1, 1926 and left on December 16, 1940 for Washington, rejoining on June 1, 1946, April 1, 1949 and March 1, 1953. Woolley became a partner of Harriman Brothers on January 1, 1929 and of the merged firm on January 1, 1931. Bush became a partner of Harriman Brothers on January 1, 1930 and of the merged firm on January 1, 1931. Averell Harriman was a partner of the merged firm from January 1, 1931 to October 31, 1946, and a limited partner afterward. Ray Morris was a partner from January 1, 1921 to 1956, Charles J. Rhoads from January 1, 1921 to June 30, 1929, Thomas McCance from January 1, 1945 and Robert V. Roosa from January 1, 1965.⁴ Harold D. Pennington was a partner of Harriman Brothers during 1930, a manager of the merged firm, and a partner from January 1, 1945 to December 31, 1956. Kouwenhoven wrote that he was from the start manager in charge of operations for the new concern and that he walked behind the handcarts that moved the Harriman securities to the vault at 59 Wall Street with a pistol in his pocket.¹⁸ Moreau Delano (1877 to 1936) was a partner from 1907, and Thatcher M. Brown (1876 to 1954) from 1907 to May 2, 1954.⁴ The firm's anniversary advertisement of October 1943 listed the partners as Moreau D. Brown, Thatcher M. Brown, Prescott S. Bush, Louis Curtis, E. R. Harriman, W. A. Harriman, Ray Morris and Knight Woolley.¹⁹ The partner notices in Trusts and Estates for July 1956 list Woolley, Morris and Pennington, and those of January 1961 and The Economist of July 22, 1961 list Woolley and name neither Morris nor Pennington.²⁰²¹ The finding aid for the firm's records at the New-York Historical Society dates photographs of the senior partners W. Averell Harriman, Lovett, Bush and Woolley to July 1964 and May 19, 1967.²²

Karabell described Thatcher Brown, great-grandson of Alexander Brown, as managing partner of the Brown firm and Woolley as managing partner of "another one of the Harriman firms."¹³ The New-York Historical Society finding aid lists images of the Thatcher Brown and Moreau Delano partnerships, one dated January 1, 1907, and holds the Moreau Delano papers for 1931 to 1935. It lists Thatcher M. Brown's papers for 1890 to 1966 and his firm history Brown Brothers & Co. [and] Brown Brothers Harriman & Co., 1900-1950. The records were gathered in part to support Partners in Banking, which Kouwenhoven wrote after the firm hired him in 1964 as Director of the Historical Files and which Doubleday & Co. commissioned for the firm's 150th anniversary in 1968.²

Robert A. Lovett married Adele Quartley Brown, daughter of the senior partner James Brown, in 1919, joined Brown Brothers in 1921, was granted a power of attorney in January 1925 and was admitted to partnership in 1926. In that year he was also elected a director of the Union Pacific Railroad and member of its executive committee. The Defense Department biography says that he became a clerk at the National Bank of Commerce in 1921, and the biography printed in the Senate subcommittee record of 1960 gives the sequence as that bank from 1921 to 1923, then clerk at Brown Brothers Harriman & Co. from 1923 and partner in 1926, and records that he became chairman of the executive committee of the Union Pacific on May 28, 1953.²³²⁴ Kouwenhoven recorded that Roland Harriman and Lovett met as eight-year-old boys in 1903.²⁵ A November 1951 table of corporations whose officers belonged to the Council on Foreign Relations lists Brown Brothers Harriman with E. Roland Harriman, Ray Morris, Knight Woolley and Thomas McCance.²⁶ A 1981 North American roster of the Trilateral Commission lists Robert V. Roosa as a partner of the firm.²⁷ The Kennedy Library's biographical note records that Roosa was a director of the Council on Foreign Relations from 1966 to 1981.²⁸

Public Service of the Partners

Thatcher Brown wrote in 1950 that public service "was more or less expected of the leaders of our business." Kouwenhoven recorded that Averell Harriman chaired the Commerce Department's Business Advisory Council from 1937 to 1939, served with the National Recovery Administration, the National Defense Advisory Commission and the Office of Production Management, and went to Great Britain as President Roosevelt's special representative to coordinate lend-lease aid. During the war Roland Harriman managed the North Atlantic Area of the American Red Cross and Prescott Bush became national campaign chairman of the combined fund-raising drives of the USO and other wartime charities in 1942. According to the firm's history, Lovett was called to Washington in June 1940 as Special Assistant to the Secretary of War (the partner table dates the post from December 1940 to April 1941), while Stimson's memoir dates his arrival as air assistant to November 1940.²⁹ He served as Assistant Secretary of War for Air from 1941 to 1945. The firm's history reproduces the Distinguished Service Medal citation calling him "the eyes, ears, and hands of the Secretary of War in respect to the growth of that enormous American air power."³⁰ President Truman appointed Roland Harriman president of the American Red Cross in 1950. Bush served as United States Senator from Connecticut from 1952 to 1962, and Lovett served as Under Secretary of State from 1947 to 1949 and as Deputy Secretary and Secretary of Defense from 1950 to 1953.³¹ The United States Senate timeline for Connecticut records that Bush won election to the Senate on November 4, 1952, "following a defeat in the 1950 election," and that he "served until 1963."³²

Roosa, who had served in London with the Enemy Objectives Unit of the Office of Strategic Services in the Second World War, joined the Federal Reserve Bank of New York after the war, served as Under Secretary of the Treasury for Monetary Affairs under Presidents Kennedy and Johnson until 1964, and worked at the firm from 1965 to 1991. He was chairman of the board of trustees of the Brookings Institution from 1975 to 1986.²⁸ Kouwenhoven quoted the American Banker on Roosa's resignation from the Treasury: "one of the great innovators" in financial affairs.³³ The finding aid lists correspondence about the appointment of partner Charles J. Rhoads as Commissioner of Indian Affairs in 1929, donated to the American Philosophical Society in 1965.²

Robert A. Lovett and the Intelligence Establishment

Lovett's oral history at the Harry S. Truman Library, recorded July 7, 1971, describes his move from the firm to the State Department in 1947. He recalled that the President telephoned him early in the morning at a superintendent's cottage on his father's place in Locust Valley. The President told him, "I've got to get a new Secretary of State and I've signed up General Marshall on the condition which he made that you'd come down and be his Under Secretary." Lovett answered, "I've got to go and check with my partners; I've got to get permission to get out of the firm and the New York State Bank Department has to approve."³⁴ The library's biographical summary lists his posts as Under Secretary of State from 1947 to 1949, private law practice with Brown Brothers, Harriman and Company from 1949 to 1950, Deputy Secretary of Defense from 1950 to 1951, and later Secretary of Defense. The firm's partner table gives April 1, 1949 to October 3, 1950 as his second period as partner.⁴³⁴

In the Foreign Relations of the United States volume on the intelligence community, a memorandum of March 30, 1950 from George F. Kennan records that the National Security Council directive NSC 10/2 of June 1948 established an Office of Special Projects (later the Office of Policy Coordination) in the Central Intelligence Agency to plan and conduct covert operations, and that Kennan's designation as the State Department's representative for the purpose was made known to the Council by a letter signed August 13, 1948 by Lovett.³⁵ A State Department memorandum of October 15, 1952 recalls the "concept of General Marshall, Mr. Forrestal, Mr. Lovett and Mr. Kennan, when OPC was set up in the spring of 1948," that covert political warfare was of primary interest to the State Department.³⁶ The first meeting of the Psychological Strategy Board, held on July 2, 1951 in the Director of Central Intelligence's conference room, was attended by Walter Bedell Smith, Lovett as Deputy Secretary of Defense, Gordon Gray, Allen Dulles and Edward Barrett for the Under Secretary of State.³⁷ On October 24, 1952 President Truman addressed a memorandum on communications intelligence to Secretary of State Dean Acheson and Secretary of Defense Lovett, designating them a Special Committee of the National Security Council for the subject. The volume also prints a memorandum to Lovett from the Director of the National Security Agency and representatives of the Military Services and Joint Chiefs of Staff.³⁸ The volume lists Lovett as a member of the Strategic Missile Evaluation Committee (the "Teapot Committee") from June 16, 1953 to February 8, 1954 and of the President's Board of Consultants on Foreign Intelligence Activities from January 13, 1956.³⁹

A State Department memorandum of December 22, 1955 reported that Allen Dulles had said the White House would soon announce the appointment of a Board of Consultants on Foreign Intelligence Activities, and listed the expected members as John E. Hull, Richard Connolly, James Doolittle, James Killian, David Bruce, Benjamin Fairless and Morris Hadley. The board was established by Executive Order 10656 of February 6, 1956.⁴⁰ The Center for the Study of Intelligence newsletter of Spring 1995 states that David K. E. Bruce and Lovett prepared a report for President Eisenhower in the fall of 1956 and that they "had been charter members" of the board; the CIA History Staff searched the board's files, the Eisenhower Library, the National Archives and the Virginia Historical Society without finding it.⁴¹ Peter Grose wrote that Killian delegated Lovett and Bruce to investigate the covert action programs, and described Lovett as "a partner in the investment banking firm of Brown Brothers Harriman." Grose and Arthur M. Schlesinger Jr., who saw the report among Robert Kennedy's papers, quoted from it. Lovett told the Taylor board of inquiry on the Bay of Pigs in 1961 that Bruce "was very much disturbed" and that "instead of completing the report in thirty days we took two months or more." According to Schlesinger, the report found that "no one, other than those in the CIA immediately concerned with their day to day operation, has any detailed knowledge of what is going on," that a "horde of CIA representatives" was exerting "significant, almost unilateral influences" on the formulation of foreign policy, and asked whether anyone in an authoritative position was weighing "the long-range wisdom of activities which have entailed our virtual abandonment of the international 'golden rule.'"⁴² Schlesinger wrote that the full board's December 1956 statement on "the extremely informal and somewhat exclusive methods" used for clandestine projects was signed by another board member, Joseph P. Kennedy, and that in its January 1961 report the board stated, "We have been unable to conclude that, on balance, all of the covert action programs undertaken by CIA up to this time have been worth the risk or the great expenditure of manpower, money and other resources involved." Schlesinger also wrote that when Richard Bissell and others briefed the board on the Cuban project in late 1960, "its members, Lovett particularly, registered dismay."⁴²

Prescott Bush and the Union Banking Corporation

Karabell wrote that Bush had gone from selling rubber flooring to working as a vice president at Harriman with his college friend E. Roland Harriman, and that he had married the daughter of George Herbert Walker of St. Louis.¹³ Kouwenhoven's caption describes Bush as vice-president and a director of W. A. Harriman & Co., Inc. and a partner in Harriman Brothers & Co. at the time of the merger, and as secretary of the United States Golf Association in 1932 and its president from 1935.⁶

Bush appears in the records of the Union Banking Corporation, a New York company whose stock the Office of the Alien Property Custodian vested in 1942. Vesting Order Number 248, executed October 20, 1942, vested "all of the capital stock of Union Banking Corporation, a New York corporation," consisting of 4,000 shares of $100 par value stock. It listed the registered owners: E. Roland Harriman, 3,991 shares; Cornelius Lievense, 4; Harold D. Pennington, 1; Ray Morris, 1; Prescott S. Bush, 1; H. J. Kouwenhoven, 1; and Johann G. Groeninger, 1. The order says the shares were "held for the benefit of Bank voor Handel en Scheepvaart, N. V., Rotterdam," which it describes as "owned or controlled by members of the Thyssen family, nationals of Germany and/or Hungary." A second paragraph vested claims of that bank and of the August Thyssen-Bank, Berlin, Germany, against the corporation for indebtedness. The order was published in the Federal Register on November 7, 1942.⁴³ Of the seven holders, four (Harriman, Morris, Bush and Pennington) appear in the firm's partner table or staff records.⁴¹⁸

A Treasury Department memorandum of August 18, 1941 on the corporation records that it was wholly owned by the Bank voor Handel en Scheepvaart of Rotterdam. It records that the corporation's president, Cornelius Lievense, claimed no knowledge of the bank's ownership but believed it possible that Baron Heinrich Thyssen, brother of Fritz Thyssen, might own a substantial interest. It also records gold purchases of more than eight million dollars in 1931 to 1933, of which $3,085,000 was delivered to the Federal Reserve Bank on June 15, 1934. It records that in the fall of 1938 the corporation held two million dollars in currency in a New York safe deposit box, later deposited in its account with Brown Brothers Harriman.⁴⁴

Sutton wrote that the Union Banking Corporation was "a joint Thyssen-Harriman operation," and listed eight directors for 1932. He named E. Roland Harriman as a vice president of W. A. Harriman & Co., Ellery Sedgwick James as a partner of Brown Brothers, Prescott Sheldon Bush as a partner of Brown Brothers Harriman, Knight Woolley as a director of Guaranty Trust Company and of the Federal Reserve Bank of New York, and H. J. Kouwenhoven, Johann Groninger, Cornelius Lievense and J. L. Guinter as the remaining directors.⁴⁵ The Federal Reserve Bank of New York's annual report for 1939 lists Woolley as a member of the bank's foreign exchange committee, representing private banks and investment houses.⁴⁶ The bank's Circular No. 1015 of January 8, 1931 names Clarence M. Woolley of Greenwich, Connecticut, chairman of American Radiator and Standard Sanitary Corporation, as a Class C director of the bank for three years from January 1, 1931.⁴⁷ The 1942 vesting order lists Morris and Pennington among the registered holders. Kouwenhoven's partner table gives James's death as November 25, 1932.⁴⁴³

The Yale Concentration

Time counted eleven Yale graduates among the sixteen partners, and the firm's history page counts twelve among seventeen.³¹⁵ Sutton's catalogue of Skull and Bones members by class year, printed in the 2002 edition of his book, gives Prescott Sheldon Bush, Edward Roland Noel Harriman and Knight Woolley for the class of 1917, W. Averell Harriman for the class of 1913, and Robert Abercrombie Lovett for the class of 1918. It also lists William Ellery Sedgwick James for the class of 1917.⁴⁸ Sutton wrote that among the firm's 26 partners in the mid-1970s, no fewer than nine were members of the order, and listed Walter H. Brown (1945), Bush (1917), Granger Kent Costikyan (1929), E. Roland Harriman (1917), W. Averell Harriman (1913), Stephen Young Hord (1921), Lovett (1918), John Beckwith Madden (1941) and Woolley (1917).⁴⁹ Karabell wrote that James and Woolley had each been sworn into Skull and Bones before enlisting in the military and that Lovett belonged to their circle.¹³ Kouwenhoven's table gives Hord's partnership as beginning January 1, 1945 in Chicago and Madden's on January 1, 1955.⁴

Nicaragua, 1911 to 1912

The firm's loans to the Republic of Nicaragua are documented in the Foreign Relations of the United States for 1911 and 1912. The headnote to the loan convention records that the Nicaraguan assembly ratified it on June 15 and July 7, 1911, and that it was "Still pending in the Senate of the United States."⁵⁰ In a July 17, 1911 message the President proposed amending Article IV, under which the Nicaraguan government "will appoint from a list of names to be presented to it by the fiscal agent of the loan and approved by the President of the United States of America, a collector general of customs." The message proposed striking the words "who need not be a Nicaraguan and" from the article.⁵¹

Brown Brothers and J. and W. Seligman and Company wrote to the Secretary of State on November 2, 1911 that "on September 1, 1911, we entered into an agreement with the Republic of Nicaragua, by which we undertook to make a temporary loan of $1,500,000, which the Republic urgently needed." The two houses had nominated Clifford D. Ham, Surveyor of the Port of Manila, as Collector General of Customs, and wrote that he "has been recommended to us as a person qualified for the position and worthy of our confidence."⁵² On November 11, 1911 the Secretary of State told the Nicaraguan minister that he had approved the nomination.⁵³

The loans followed in a series of agreements. The houses reported the Ethelburga contract of December 9, 1911, which later failed.⁵⁴ They reported a supplemental agreement of March 26, 1912 for loans up to $775,000.⁵⁵ Their June 3, 1912 letter reported contracts dated May 25, 1912 with the Corporation of Foreign Bondholders.⁵⁶ On August 2, 1912 the houses wrote that the Republic had asked for an immediate loan of $100,000 "for the purpose of enabling it to reestablish order," and that they would make it through the National Bank of Nicaragua, which had opened at Managua on August 1. They wrote that "The entire capital stock of that Bank is pledged with us as security for the various loans which we have heretofore made to the Republic," and that "the Bank is under our management and control."⁵⁷ On November 13, 1912 they reported an agreement dated November 4, 1912 and a separate fund of $400,000.⁵⁸

In a February 14, 1912 letter the American Minister wrote that the Legation "did not wish to take any official part in the business negotiations between the Nicaraguan Government and Brown Brothers et al."⁵⁹ In 1914 the Senate Committee on Foreign Relations took testimony on the convention. Charles A. Douglas, who said that "I have represented Nicaragua for a little over a year," testified that Ham was "nominated and put there really by the bankers with the assent of the Secretary of State." He said that Brown Brothers and Seligman were the only bankers he knew in connection with the Nicaraguan affair, and that the treaty "was never ratified."⁶⁰ The same hearing volume prints a list of five agreements the committee received. Two of them were between the Republic and Brown Bros. & Co. and J. & W. Seligman & Co., one for the purchase of Treasury bills and one for the purchase of railroad and bank stock. The others were between the Republic and the National Bank of Nicaragua, the Ferrocarril del Pacifico de Nicaragua, and the United States Mortgage and Trust Company.⁶¹ The finding aid lists an excerpt from Senate Committee on Foreign Relations confidential hearings on Nicaragua from October 1912, a transcript from June 1914, and a Linton Wells memorandum on the involvement of Brown Brothers and Seligman in Nicaraguan affairs covering 1911 to 1929.²

The minister also reported that both currency experts read the clause that put the government's lake steamers under the Pacific railroad option to mean that Brown Brothers "will on the exercise of the option acquire a franchise to navigate the lakes and San Juan River."⁵⁹

Kouwenhoven reproduced a specimen of the 1912 Nicaraguan paper currency bearing the signature of James Brown, senior partner of Brown Brothers & Co., as "Presidente" of the Banco Nacional de Nicaragua. He recorded that Oswald Garrison Villard published an editorial entitled "The Republic of Brown Brothers" in The Nation on June 7, 1922, charging that the United States had reduced Haiti, Santo Domingo and Nicaragua "to the status of colonies." Kouwenhoven wrote that the firm's records, including James Brown's private diary and an unpublished account by Thatcher M. Brown, "suggest that it was quite the other way around," that the loan was made in 1911 at the request of the State Department, which "was anxious" for a one-year loan for currency reform and a bank headed by Americans. Thatcher Brown's account, quoted there, describes James Brown and Albert Straus of the Seligman firm before a Senate committee, Senator Williams's remark that "I always knew Wall Street bankers were crooks, but this is the first time I ever realized they were damn fools as well," and payment of the loans "principal and interest, in 1924." The J. G. White Engineering Corporation was employed by Brown Brothers and the Seligmans to put the country's railroads into operating condition.⁶²

Later Records

The Office of Government Ethics disclosure that Jay Clayton filed on his nomination to the SEC listed Brown Brothers Harriman among the clients from which he had earned more than $5,000 in a year.⁶³

Regulatory Record

The firm's FINRA registration record, CRD number 104487, classifies it as a partnership. It states that the firm "was formed in Pennsylvania," that its FINRA registration ran from January 4, 1933 to July 12, 2017, and that it ceased business on June 12, 2017. The record describes the bank as principally regulated by the New York State Department of Financial Services and the securities division as principally regulated by the Financial Industry Regulatory Authority.⁶⁴

The record lists three regulatory events. The first is a New York Stock Exchange Hearing Board decision dated November 13, 2006 (case HPD 06-200). It found that the firm violated NYSE Rule 342(a) and (b) by failing to establish and maintain adequate policies, procedures and controls. The firm consented, without admitting or denying guilt, to a censure and a fine of $170,000.⁶⁴

The second is an order of the Securities and Exchange Commission dated September 10, 2014, File No. 3-16076. The order records that BBH "also serves as the general partner" of the BBH Fund, and that "BBH designated certain of its partners to exercise voting and investment power over investments of the BBH Fund and to serve as directors of the BBH Fund." It found failures to timely file Section 16(a) reports concerning two corporations in which the firm held more than 10 percent, and failures to amend Schedule 13G filings. The firm consented without admitting or denying the findings and paid a civil penalty of $120,000.⁶⁵

The third is a FINRA Acceptance, Waiver and Consent, No. 2013035821401, accepted by FINRA on February 4, 2014. Respondents were the firm and Harold A. Crawford, its Global Anti Money Laundering Compliance Officer from May 2007 through December 31, 2013. The order states that in August 2007 the firm and the then-named New York State Banking Department entered into a written agreement requiring it to improve its system of internal controls, policies and procedures on verifying the identities of account holders and to devote resources to an effective anti-money laundering program. For January 1, 2009 through June 30, 2013, FINRA found that the firm directly executed sales or, as a custodian, delivered to other firms the securities underlying the sale of at least 6 billion shares of low-priced securities, generating at least $850 million in proceeds to the sellers, less than 20 percent of it through transactions where the firm acted as executing broker. The firm conducted penny stock transactions for omnibus accounts of banks in Switzerland, Guernsey and Jersey on behalf of undisclosed underlying customers. FINRA found that the firm and Crawford were aware its brokerage activity had expanded when its Swiss bank clients "realized they could offer their underlying clients anonymous access to U.S. Securities markets." It found that the anti-money laundering program failed to monitor and investigate suspicious penny stock activity, including delivery-versus-payment transactions, failed to conduct adequate periodic reviews of correspondent accounts for foreign financial institutions, failed to ensure that suspicious activity was reported, and that the firm lacked a supervisory system to prevent the distribution of unregistered securities. The firm was censured and fined $8,000,000, and Crawford was suspended for one month and fined $25,000, without admitting or denying the findings. The firm's corrective action statement states that equity brokerage accounted for less than 1 percent of annual revenues in 2013 and that it announced in December 2013 a decision to close the business effective June 2014. The BrokerCheck record states that the firm paid the fine on February 12, 2014.⁶⁴⁶⁶

The affiliated entities on the same record are Brown Brothers Harriman Investments, LLC, Brown Brothers Harriman Credit Partners, LLC, and the Brown Brothers Harriman Mutual Fund Advisory Department.⁶⁴