Background
Sosthenes Behn was born on January 30, 1882, in St. Thomas, Virgin Islands. His father, William Behn, was Danish and served as French consul; his mother, Louise Monsanto, was French.
Sosthenes Behn was born on January 30, 1882, in St. Thomas, Virgin Islands. His father, William Behn, was Danish and served as French consul; his mother, Louise Monsanto, was French.
Sosthenes was educated in St. Thomas; Ajaccio, Corsica; and at the Ste. Barbe College in Paris.
In 1898 Sosthenes came to New York City, where he worked as a clerk for the International Express Company. He then moved to the Morton Trust Company (later Guaranty Trust Company) and soon rose to the post of foreign exchange manager. In 1904, with his brother Hernand, he established Behn Brothers, a sugar brokerage house in Puerto Rico. In 1914 the firm purchased the Puerto Rican Telephone Company from a friend who had allegedly acquired it as payment for a bad debt. The system was connected to the United States mainland by submarine cables. In 1916 Behn Brothers acquired the Cuban Telephone Company and proceeded to negotiate a contract with the American Telephone and Telegraph Company (A. T. &T. ) that provided for laying cable between Cuba and Key West, Florida.
During World War I, Behn was commissioned captain in the Army Signal Corps. He served from June 1917 to February 1919, rising to the rank of lieutenant colonel and participating in the Château Thierry, St. Mihiel, and Argonne campaigns.
On June 16, 1920, the Behn brothers initiated what was to be their most successful venture. Using as a nucleus their Puerto Rican and Cuban telephone companies, and their half-interest in the Havana-Key West cable, they incorporated in Maryland as the International Telephone and Telegraph Corporation (I. T. &T. ), issuing 50, 000 shares of stock at $68. 50. It has been argued that the lofty title for the new venture was chosen primarily with the hope that the initials would be confused with the established and prestigious A. T. &T.
In 1924 the firm was awarded a contract to rehabilitate and operate the Spanish telephone system. Behn's wartime contacts, knowledge of Spanish, residence in Madrid (1923), and diplomatic skill were probably instrumental in securing the contract against strong competition from Swedish and German firms. Although American engineers were brought over to do the work, operation of the system was ultimately left to Spanish nationals.
Aided by a $30 million loan from J. P. Morgan and Company, Behn Brothers in 1925 acquired the International Western Electric Company (later renamed International Standard Electric) from A. T. &T. , thereby gaining manufacturing facilities in nine countries. Since that time, I. T. &T. has not faced competition from A. T. &T. outside the United States or challenged it within the United States. I. T. &T. expanded rapidly throughout the 1920's as Behn built an international communications empire through negotiation, acquisition, and merger that reached into Argentina, Australia, Belgium, China, England, France, Italy, Japan, Norway, and Romania. I. T. &T. was essentially engaged in absorbing the world's communications systems. Between 1924 and 1930 the value of its plant and property increased from $26 million to $297. 7 million, while total assets soared from $38. 3 million to $535. 2 million. In less than a decade I. T. &T. had grown from obscurity to the world's second largest communications corporation. This growth was facilitated to a large extent by Behn's skill in handling international currency.
The firm's international character was reflected in its New York City headquarters, at 67 Broad Street. Inside the thirty-three-story skyscraper, completed in 1928, Behn worked in a Louis XIV, oak-paneled chamber, and behind his desk hung a painting of Pope Pius XI. Banquets for 200, featuring French cuisine, were unmatched in other corporate headquarters. Behn delighted in entertaining guests by telephoning subsidiaries around the world and showing off his command of several foreign languages.
I. T. &T. was imperiled by the stock market crash of 1929, as its debt reached $122 million. Behn responded by cutting costs and instituting his "Shanghai formula": encouraging subsidiaries to go into their own money markets to raise funds to pay off the parent company's debt. In addition, some debt was eradicated in 1933 when the dollar went off the gold standard, thereby effectively raising the value of the foreign currencies in which most of I. T. &T. 's business was transacted. The economic and political turmoil of the 1930's did little to dampen Behn's interest in acquisition. In 1930 he created a holding company in Germany, the Standard Elektrizitäts Gesellschaft, and three months later he purchased the Lorenz Company. These developments placed him in competition with Siemens and Ericsson, European giants in the fields of electrical equipment and telecommunicationssystems. In December 1931 he purchased 27 percent of Ericsson's stock shortly before Ivar Kreuger, the financier who controlled the Swedish telephone company, committed suicide rather than face charges of fraud uncovered by auditors.
Behn and I. T. &T. were left with stock in the badly shaken firm. Political complications on the Continent were particularly severe in Spain, where civil war raged from 1936 to 1939. I. T. &T. 's Spanish subsidiary, headquartered in Madrid, was caught in the middle during the siege of the capital in 1936. According to Time, "Telefonica headquarters was shelled 184 times by Franco gunners, while retreating Loyalists threatened to blow it up as a suspected spy center. " Behn went to Madrid and temporarily resolved matters, but in April 1945 he was forced to sell the company to the Franco government and private Spanish investors for $88 million.
With the spread of Nazi influence in Europe, Behn developed a dual strategy. First, he transferred holdings, so that at the outbreak of World War II, 56 percent of I. T. &T. 's assets were in the United States and Latin America. Second, he pursued a policy of accommodation in an effort to protect those interests which could not readily be sold or relocated. Accommodation was in no way a departure for the company, as it had always been Behn's policy to get along with the government of any nation in which he had dealings. Stockholders had to be protected against the specter of nationalization, and profits frequently were dependent on rate structures for telephone service approved by the national governments. How far was "getting along" carried? Detractors claim that accommodation included directions, as late as 1938, to Lorenz (a German subsidiary) to purchase a 28 percent interest in Focke-Wulf, a German firm that made bombers. I. T. &T. insists that the company lost all practical contact with their German subsidiaries years before they were eliminated from I. T. & T. 's accounts in 1939.
During World War II the company made direction finders for American vessels, and Behn won the confidence of United States military intelligence by providing information that only an international communications network could offer. In 1945 I. T. &T. opened a research and development facility known as International Telecommunications Laboratories, Incorporated. The following year Behn won acclaim for negotiating a cash settlement reportedly worth $95 million when Argentina nationalized I. T. &T. property. The firm's efforts to expand United States operations led to the purchase of Capehart-Farnsworth (radio and television sets) and Colderator (refrigerators) - acquisitions that proved unfortunate.
In the late 1940's Behn worked to block the expropriation of property by Communist regimes in Hungary, Poland, East Germany, Czechoslovakia, and Yugoslavia. These efforts may well explain the arrest and showcase trial of three I. T. &T. executives in Budapest in 1950. Whether Behn had encouraged them to spy, or United States intelligence used I. T. &T. as a front for spying operations, is unclear. In any case, Behn was unable to prevent the loss of the company's property in eastern Europe. Faced by criticism and pressure from stockholders, Behn retired in June 1948 as president of I. T. &T. and became chairman of the board, a position from which he continued to exert influence until his retirement in May 1956. He died in New York City.
Sosthenes Behn was one of the most outstanding figures of the 20th century who earned the title of global businessman for building a $760 million worldwide communications empire - I. T. &T. It reached into Argentina, Australia, Belgium, China, England, France, Italy, Japan, Norway, Spain, Germany and Romania. Possessing an international information network second to none, Behn was frequently able to keep I. T. &T. and its properties one step ahead of imminent disaster.
Sosthenes - the word means "life strength" in Greek.
On March 31, 1921, Sosthenes Behn married Margaret Dunlap; they had three children.
