Reed could have been referencing their song "Rock and Roll" which they wrote (invented) and was trying to persuade Trey and the guys to pull off a particularilly rocking version of said song that evening. I don't think he was referring the Velvet Underground inventing rock and roll. Rock was "invented" in the 50's, long before they were a band. More likely he meant that Americans invented rock and with him being born in Brooklyn and presumably he was able to deduce that Trey was American from his accent or prior knowledge of the band or possibly it came up in the discussion that Trey was in fact American born and bred. Seems sort of obvious and the whole story makes Trey seems sort of silly. Maybe he was really stoned.