Brown Brothers and Company
Brown Brothers Harriman, Union Banking Corporation, and Prescott Bush
Early in 1924, Hendrick J. Kouwenhoven, the managing director of Bank voor Handel en Scheepvaart, traveled to New York to meet with George Herbert Walker and the Harriman brothers. Together, they established The Union Banking Corporation. The UBC's headquarters was located at the same 39 Broadway address as Harriman & Co.
As the German economy recovered through the mid to late '20s, Walker and Harriman's firm sold over $50,000,000 worth of German bonds to American investors, who profited enormously from the economic boom in Germany. In 1926, August Thyssen died at the age of 84. Fritz Thyssen was now in control of one of the largest industrial families in Europe. He quickly created the United Steel Works (USW), the biggest industrial conglomerate in German history. Thyssen hired Albert Volger, one of the Ruhr's most influential industrial directors, as director General of USW.
Thyssen also brought Fredich Flick, another German family juggernaut, on board. Flick owned coal and steel industries throughout Germany and Poland and desperately wanted to invest into the Thyssen empire. One of the primary motivations for the Thyssen/Flick massive steel and coal merger was suppressing the new labor and socialist movements.
Also in 1924 in New York, George Walker decided to give his new son in law, Prescott Sheldon Bush, a big break. Walker made Bush a vice president of Harriman & Co. Prescott's new office employed many of his classmates from his Yale class of 1917, including Roland Harriman and Knight Woolley. The three had been close friends at Yale and were all members of Skull & Bones, the mysterious on-campus secret society. Despite the upbeat fraternity atmosphere at Harriman & Co., it was also a place of hard work, and no one worked harder than Prescott Bush.
In fact, Walker hired Bush to help him supervise the new Thyssen/Flick United Steel Works. One section of the USW empire was the Consolidated Silesian Steel Corporation and the Upper Silesian Coal and Steel Company located in the Silesian section of Poland. Thyssen and Flick paid Bush and Walker generously, but it was worth every dime. Their new business arrangement pleased them all financially, and the collective talents of all four men and their rapid success astonished the business world.
The great depression also rocked Harriman & Co. The following year, Harriman & Co. merged with the London firm Brown/Shipley. Brown/Shipley kept its name, but Harriman & Co. changed its name to Brown Brothers Harriman. The new firm moved to 59 Wall St. while UBC stayed at 39 Broadway. Averell Harriman and Prescott Bush reestablished a holding company called The Harriman 15 Corporation. One of the companies Harriman had held stock in was the Consolidated Silesian Steel Company. Two thirds of the company was owned by Friedrich Flick. The rest was owned by Harriman.
According to New York Times reporter Charles Higham, Hitler and the Fraternity of American businessmen "not only sought a continuing alliance of interests for the duration of World War II, but supported the idea of a negotiated peace with Germany that would bar any reorganization of Europe along liberal lines. It would leave as its residue a police state that would place the Fraternity in postwar possession of financial, industrial, and political autonomy."
Six days after Pearl Harbor and the US declaration of war at the end of 1941, President Franklin D. Roosevelt, Secretary of the Treasury Henry Morgenthau and US Attorney General Francis Biddle signed the Trading With the Enemy Act, which banned any business interests with US enemies of war. Prescott Bush continued with business as usual, aiding the Nazi invasion of Europe and supplying resources for weaponry that would eventually be turned on American solders in combat against Germany.
On October 20, 1942, the U.S. government had had enough of Prescott Bush and his Nazi business arrangements with Fritz Thyssen. Over the summer, The New York Tribune had exposed Bush and Thyssen, whom the Tribune dubbed "Hitler's Angel." When the US government saw UBC's books, they found out that Bush's bank and its shareholders "are held for the benefit of ... members of the Thyssen family, [and] is property of nationals ... of a designated enemy country."
The list of seven UBC share holders was:
E. Roland Harriman - 3991 shares
Cornelis Lievense - 4 shares
Harold D.Pennington - 1 share
Ray Morris-- 1 share
Prescott S. Bush - 1 share
H.J. Kouwenhoven - 1 share
Johann G. Groeninger - 1 share.
The UBC books also revealed the myriad of money and holding companies funneled from the Thyssens and the government realized UBC was just the tip of the iceberg. On November 17, 1942, the US government also took over the Silesian American Corporation, charged Prescott Bush with violating the "Trading With the Enemy Act", but did not prosecute Bush for the reasons Higham noted earlier. The companies were allowed to operate within the Government Alien Property custodian office with a catch - no aiding the Nazis. In 1943, while still owning his stock, Prescott Bush resigned from UBC and even helped raise money for dozens of war-related causes as chairman of the National War Fund.
After the war, the Dutch government began investigating the whereabouts of some jewelry of the Dutch royal family that was stolen by the Nazis. They started looking into books of the Bank voor Handel en Scheepvaart. When they discovered the transaction papers of the Silesian American Corporation, they began asking the bank manager H.J. Kounhoven a lot of questions. Kouwenhoven was shocked at the discovery and soon traveled to New York to inform Prescott Bush. According to Dutch intelligence, Kouwenhoven met with Prescott soon after Christmas, 1947. Two weeks later, Kouwenhoven apparently died of a heart attack.
1950s: Bush Sells UBC Stock. By 1948, Fritz Thyssen's life was in ruins. After being jailed by the Nazis, he was jailed by the Allies and interrogated extensively, but not completely, by US investigators. Thyssen and Flick were ordered to pay reparations and served time in prison for their atrocious crimes against humanity. On February 8, 1951, Fritz Thyssen died bitterly in Argentina at the age of 78. Thyssen was angry at the way he was treated by Europe after the war and how history would remember him as Hitler's most important and prominent financier. When Thyssen died, the Alien Property Custodian released the assets of the Union Banking Corporation to Brown Brothers Harriman. The remaining stockholders cashed in their stocks and quietly liquidated the rest of UBC's blood money.
Prescott Bush received $1.5 million for his share in UBC. That money enabled Bush to help his son, George Herbert Walker Bush, to set up his first royalty firm, Overby Development Company, that same year. It was also helpful when Prescott Bush left the business world to enter the public arena in 1952 with a successful senatorial campaign in Connecticut. On October 8th, 1972, Prescott Bush died of cancer and his will was enacted soon after.