Professional Documents
Culture Documents
AND
PEOPLE'S
HOW
MONEY
THE
BANKERS
USE
IT
OTHER
AND
PEOPLE'S
BANKERS
THE
HOW
MONEY
USE
BY
LOUIS
D.
BRANDEIS
YORK
NEW
FREDERICK
A.
STOKES
PUBLISHERS
Mb
COMPANY
IT
1913,
Copyright,
The
McClure
Publications
Copyright,
1914,
A.
Frederick
All
March,
1914
Stokes
rights
#7!-
"
1914,
by
by
Company
reserved
if
ft
PREFACE
While
Louis
the
on
Brandeis's
D.
trust
money
Weekly
many
in
accessible
permanent
urgence
through
more
such
inquiries
have
would
clear
been
constituted
analysis and
the
industrial
great
in
expert
most
that
meant
here
was
published
which,
of
story
of
he
comprehends
which
to
followed
the
the
uses
inquiries
scholar
era
business
harnessing
of
ever
other
time
the
wise
greatest
is the
will
future
authority
and
the
was
the
our
that
ment
develop-
and
of
with
expansion
of the
Here
constitute
No
that
great
to
our
The
on
is the
era,
treatment
our
story
describe
able
an
which,
our
history.
The
industry.
be
of
Wilson
come
problems.
our
of
President
as
said, has
have
men
part
embodied
mind
profound
that
it
ably
inevit-
public recognized
to
most
on
that
States.
attentive
contribution
and
clearest
United
out
with-
articles
they
movements
the
the
these
by
Even
mail, however,
since
narrative
the
Harper's
publication
form.
that
book,
about
came
articles
in
running
was
of
series
unless
concentration
of steam
change, and
and
the
tricity,
elec-
great
PREFACE
vi
historian
No
excesses.
so
went
look
economics, the
of
time.
our
While
how
widespread
trust
money
is
"Great"
loosely,and
man.
In
of the
most
I look
the
of
figures.
As
in
belief among
diagnosis of
important
in many
I do not
that
Brandeis
of his
as
use
great
one
intellect,
is his comprehension
of the
one
bution
contri-
years.
elements
ciers
leading finan-
Brandeis'
"Mr.
My
indicated
sufficiently
are
were
the
said to me,
lawyer
mathematician."
to
composition
important
as
ample opportunity
Mr.
upon
of the country
greatness
in
of the words
one
mind
sound
brilliant
thought
the field of
running
the most
was
to current
and
was
this
that
intelligentmen
our
had
who
many
having, in
as
his articles
I
concentration
among
inventive
most
Harper's Weekly
know
one
Brandeis
Mr.
upon
but
am
ion,
opin-
my
documents
contemporary
our
analysis of why
an
astray.
future,in
of the
this
s
as
views
on
in the
rial
following edito-
subject
Harper's Weekly.
AEITHMETIC
About
Company
Mr.
five
of New
Brandeis
Cooper
Union
before
years
came
York
down
went
the
into the
from
prophesied
Metropolitan
that
hands
Boston, and
that
company
of
in
a
a
Traction
receiver,
speech at
must
fail,
PREFACE
Leading bankers
recommending
made
his
in New
York
the stock
prophecy
merely by
did
controversy?
In various
would
record
that
the
he
Boston
win
Mr.
analyzing
in the
heartily-
were
Brandeis
the
published
Pinchot-Glavis-Ballinger
doubt;
but
perhaps the
critical step was
when
he calculated just how long it
take a fast worker
to go through the Glavis-Ballinger
and
make
a
judgment of it;whereupon he decided
Mr.
Wickersham
time
it
have
must
and
to their customers.
figures. How
most
vii
Most
of
could
stated
was
ways,
predated.
Mr.
Brandeis's
have
not
to have
been
no
been
other
made
his report at
made, and
therefore
contributions
it
to current
When
arithmetic.
he succeeded
history have involved
in
preventing a raise in freight rates, it was through an exact
When
he got Savings Bank
Insurance
analysis of cost.
started
in
Massachusetts, it was
insurance
between
a
ought
definite grasp
gas
business
the wisdom
with
He
statesman.
he made
public utilitythat
of the
of course,
a
When
to cost.
cityand
by being able
could
idea
not
had
conditions
before
the
the
to
figurewhat
best
necessary
less upon
that make
originality
have invented
the preferential
founded
not been
a
on
precise
in the garment
United
States
displayed of
they
are
the
on
Mr.
trades.
which, while
"
not
to
wrote
to the
'
New
he
edge
of knowlwhen
women
arithmetic, is built
Haven
years
before
Railroad, Mr.
paper a private
he said:
the New
resigns,the
the
the
only,
the amount
actually happens
resigned from
letter in which
"When
upon
When
Court
Supreme
same
Mellen
Brandeis
what
overworked
than
reason
bined,
com-
"
and
constitutionalityof legislationaffectingwomen
relied much
contract
Decline
Haven
of New
reduces
Haven
its dividends
and
and
Mellen
Fall of Mellen'
will
viii
PREFACE
make
dramatic
story of human
interest with
moral
or
"
not
includingthe evils of privatemonopoly. Events canbe long deferred,and possiblyyou may
want
to prepare
for their coming.
I suggest the following
"Anticipating the future a little,
as
an
epitaph or obituary notice:
two
"
"Mellen
broad
was
masterful
of view.
He
resourceful,courageous,
man,
impunity
on
with
delusion
the
victim
last,a
that
'"Remember,
The
of
other
the
work
is
won.
honest
country
Haven
leaders
He
for he knew
odds
any
long
time
of finance
Haven
kept
came,
the work
is the
first of the
than
methods
and
of
that
almost
He
of
exposure
who
person
soon
as
the
fight
respectableand
said
ahead.
ness
busi-
it is necessary
very
were
big
prehension
com-
single-handed
is
while
any
and
exposure
stops fightingas
For
crash
the
was
Brandeis.
Mr.
arithmetic.
financial management
the
the
to
wasteful
fight and
five,he fell,at
"
of the
fights against
to
make
two
obsessed
was
railroad, more
Haven
over
of
he
with
safety.'
of
thing, led
New
and
of the bad
New
all
divine;but, as
two
the mother
one
he trampled
Stranger, Arithmetic
exposure
the
and
while
to
sciences and
For
its
England;
judgment
that
his
unsound
A
year
charges
and
before
excusab
inthe
been
carried far
enough
PREFACE
to
complete
to
take
before
little
some
asked
someone
me
longer.
any
him
controversy shortly
collapse,he replied,"That
need
not
itself. When
part in
the
ix
Time
fight does
and
arithmetic
Brandeis
bearing
with
and
notable
those
rests
his
life,the
together.
the
Company
of the
one
life,that
not
advantageous
his
understanding
and
insurance
man
lay
from
classes
through
could
most
been
the
City
methods
the
vast
important
it.
of
by
which
thus
Mr.
that
is
Behind
obtaining
laboring
advantage
community
fives and
elaborate
tween
be-
of Boston
good
is
themselves
make
Armstrong Committee
his
cost of it to the
of the
their whole
given him
partiesto
the proper
as
In
arrangement
contract
devising methods
unnecessary
The
The
of the
is
business.
guiding principlesof
no
of
two
to both
energy
have
and
philosophy of
which
worked
Gas
of
understanding
American
Brandeis'
in Mr.
equally distinguishedgrasp
an
accomplishments
on
is combined
concrete
significance.His imagination
as
place in
have
of the
grasp
to
that would
the laboring
comfortable
perhaps
ing
mak-
ideas
Report
put
on
previously suggested by
forth
in
insurance
Mr,
the
had
Brandeis,
PREFACE
acting
holders.
which
of
in
the
and
Mr.
to
most
most
and
he
the
also
about
to
takes
up
limitation
their hours
down
from
be
State
the
heard
what
In
women.
is
before
his
employer
constitute
to
to
to the
up
all the
to
solve,
Supreme
Oregon,
and
the
Minimum
lishing
estab-
of
Oregon,
the
Wage
Supreme
which
hours
be
in certain
futile
allow
then
the
and
understanding
of
once
said: "No
since Lincoln
people
as
with
them.
Louis
to limit
to be
cut
industrial activities
growing sympathy
man
industries,
their wages
expression of
an
he
of the
performance
These
is
Court,
really a logicalsequence
of women's
large part
common
welfare
have
we
ever
the
The
to
States, from
in consequence.
in
tions
condi-
of specialprotective
constitutionality
it would
since
York,
improve
today,
coming
case,
in the
New
it does
as
thinkers
United
legislationfor
case,
in
relation
Brandeis,
the
won
combined
to
important question
of the
Court
are
his
competent
the
much
so
policy
important
more
clothing industry.
laborer
seems
the
Protocol
the
done
has
Equitable
intimately
were
management
the
and
Business
statesmanship
of the
for
counsel
as
his
deep
and
working people
Florence
Kelley
has understood
Brandies
does,"
PREFACE
While
the
xi
progressive achievements
with
the industrial
in
through
the
saw
never
system,
limited
more
about
he
think
and
Senate
of the
the
by
The
that
the
space
for
I do not
good
are
have
you
much
as
as
do."
the
was
but
tell the
from
truth
coming
in
constantly haunted
side, was
there
and
protect Secretary
to
Brandeis,
In
of the administration
power
prevent
about
mystery,
to
Brandeis
you.
that
today
ment
Depart-
said: "Mr.
and
knows
He
Mr.
and
knew
who
agitation
mystery
solved
more
Mr.
conservation
the idea
and
brilliantly
Interior
me
say
combined
were
light.
him
ethical
by
this
Department
Ballinger and
to
ical
polit-
with
man
of the
to
controversy, the
that
the
by
in
I want
lawyer.
Interior
been
more
respect for
no
motives
your
motives, but
the
After
down
sat
I have
wonderful
connected
I worked
cross-examined
and
Hapgood,
have
of detail
details
the
been
came
some
high constructive
with
had
been
sense.
grasp
politicalthinking.
most
have
great
Ballinger-Pinchotcontroversy,
a
combined
Brandeis's
of Mr.
majority
hints
it would
other
somewhere.
at
how
he
require much
sides,the
iasm
enthus-
PREFACE
xii
in
higher standards
for
of
conspiracy
this
needs.
moved
the
is
Seldom
it
as
with
the
at
Brandeis's
Mr.
hearing
final
plea
so
to
committee.
Possiblyhis
work
on
the most
significant
among
Brandeis
has
before
the
done.
the
His
the way
Interstate
be
more
idea.
It
is
that
the
this
will be
in 1910-11
Commission
Commerce
to be
for railroads
things Mr.
many
arguments
country's larger
audience
an
by
was
office,the connection
on
the
ground
made
efficient,
efficiencya
cardinal
in his
point
real progress
was
prosperous
more
toward
that
national
philosophy
tional
higher nalife will come
in all our
through efficiency
activities. The seventy-eightquestionsaddressed
Commerce
to the railroads
by the Interstate
Commission
in December, 1913, embody
what
is probably the most comprehensive embodiment
of his thought on the subject.
On nothing has he ever
worked
harder than on
his diagnosisof the Money Trust, and when
his
life comes
to be written (Ihope many
years hence)
only
its effect in
is indeed
of the
more
ranked
with
his railroad
work
for
acceleratingindustrial changes.
than
things he
has
coincidence
been
that
so
contendingfor
It
many
have
PREFACE
to
come
before
It is seldom
pass.
idea,
one
the
that Mr.
not
to
say
Brandeis
the
effectively
no
one
ideas, effectively
exaggerationto
inherent
the
the firstperson
was
puts
man
is responsible
for the
recognition of
He
that
many
it is
world, but
great size.
xiii
say
spread
wide-
now
weakness
who
of
set forth
doctrine
is
that
truth
subjectof
powerfully put
Senate
Committee
The
demonstration
testimony before
his
in
1911, and
tion
contribu-
profound
trusts.
In
was
efficiency
in
is
it is
powerfully
delusion
destroying the
incident
common
the
of
size,he
of efficiency
through
emphasized the possibility
intensive
development of the individual,thus
with his whole study of
connecting this principle
to industrial
efficiency,and pointing the way
democracy.
Not
less notable
constructive
Brandeis'
than
intellect
the
and
the
into Mr.
ability that have gone
the exceptionalmoral qualiwork
ties.
are
much
in
sacrifice much.
in money,
in
Mr.
happiness.
has sacrificed
agreeableness of
human
Brandeis
life,
principleand for
of intensive work,
it for
His power
social
PREFACE
XIV
his sustained
been
have
could
Nor
devote
to
should
The
in
in the
bill has
and
But
Of the truths
essays
printedin
before
there
if
as
day.
out
the
now,
whole
the
his
which
idea
can
be made
many,
not
are
ied
embod-
are
book,
these
of trust
some
it will be many,
but
system
as
group
cently
re-
undermined.
systems
this
will,therefore, be
during which
have
passed,and
been
passed.
be
being carried
years
others
changes, that
written, it looks
bills would
ended
and
was
are
making
mistake, because
the
Brandeis
of Mr.
currency
words
his life to
make
anyone
brought about
which
without
done
has
he
true.
come
labors
the
what
done
being willing
dreams
for
necessary
have
and
interest
are
many
effective;
many
years
strugglingfor
which
here
clearly,so
so
are
principles
eloquently,so conclusivelyset forth.
all written
articles reprintedhere were
The
those
1913.
"The
appeared
in
before November,
Management"
Aug.
22, 1913
and
Dec.
other
Failure
Harper's Weekly
between
articles,
17, 1914.
Norman
March,
1914.
of Banker
Hapgood.
Nov.
CONTENTS
CHAPTER
PAGE
Our
II
How
III
IV
V
VI
Financial
Oligarchy
Combiners
the
Interlocking
Combine
28
Directorates
Serve
One
What
Publicity
Where
Master
Only!
Can
Banker
the
51
69
Do
92
Superfluous
is
.109
.
VII
Big
Men
Little
and
Business
.135
.
VIII
IX
A
The
Curse
of
Bigness
Failure
of
162
Banker-management
189
.
The
Inefficiency
of
the
Oligarchs
201
.
xv
determination
to
with
themselves
address
must
men
MONEY
PEOPLE'S
OTHER
future
long
the
serve
earnest
an
and
the
liberties of men."
true
Pujo
The
Committee
in
appointed
"
1912
"
found:
"Far
to
of
banks
under
in
resources
is
banks
our
by
all the
bankers
and
been
the
as
here
the
every
very
vitals
of
of
in the hands
which
if
or
of these
who
allies,
policiesof
acts
most
of this
nevertheless
competition than
they
thing
any-
strike
potential competition
condition
be competition
The
.
or
continue
raisingmoney
described,have
destructive
more
should
financial
existingsystems.
group,
there
greater
they
accomplished by
at
if
group."
of bonds
together dominate
inner
be
would
small
system
currency
facilities for
sellinglargeissues
of the
our
different
impossible that
with
few
comparatively immaterial
controlled
"It
over
groups
industries."
"Whether
to be
pened
hap-
of elimination
of these
the domination
and
less is
has
in
the
all that
us
competition
through
than
dangerous
more
their
permitted
to
in
protection,a
continue, will
OUR
render
FINANCIAL
OLIGARCHY
all attempts
impossible
conditions
competitive
to
in
restore
the
mal
nor-
industrial
world.
.
choking by
to
the control
be
may
the
obstructions
of these groups
conducted
to the tribute
they
their
possibleand
its merits
on
that
so
important
system, competition in large
become
enterpriseswill
and
the
self-constituted
of
opened
are
through
created
clogged well-nigh
now
business
of
instead
being
can
ject
sub-
ful
will of this hand-
good
of
trustees
the
national
prosperity."
The
promise
proclaimed
The
myer,
the
joyously
was
mittee
Pujo InvestigatingComUnterand its able Counsel, Mr. Samuel
have laid before the country, show
clearly
by
the
which
which
will
called upon
promise some
be
to
few
The
America.
of
what
Freedom
New
in 1913.
facts which
means
How
of
control
men
ness
the busi-
report proposes
relief
ures
meas-
Additional
dies
reme-
proposed. Congress
will
soon
be
act.
shall the
lines shall
emancipation
we
proceed?
us.
be
wrought?
The
On
facts, when
DOMINANT
THE
dominant
The
service
industrial
bestride
bankers
that
world, so
course,
but
most
business
the
wealth.
Combination
concentration
"
advancing
First: There
banks
and
"
and
and
their
of
key
companies;
control
to their power
three
obvious
are,
of
of
extraordinary
intensive
interlockingdirectorates
and
distinct
prehensive
com-
lines:
consolidation
the
less
is
of
obvious
are
"
of
banking
tutions
insti-
legally connected;
not
and
Second:
into
on
pation
partici-
which
the
is the
trust
affiliations
in
The
their
large fortunes;
of
possession
abilityor huge
business
bankers
factor
potent
these
large enterprisecan
possessed
is not
"
America's
These
approval.
men
his subjects.
middlemen,
without
successfully
able
the
but
panies
com-
railroads,
public
corporations are
practicallyno
be undertaken
or
life insurance
and
masters
as
Associated
banker.
properly
Though
garchy
oli-
financial
our
Controlled
his tools.
and
in
investment
companies
trust
are
ELEMENT
element
is the
banks,
MONEY
PEOPLE'S
OTHER
huge
the investment
There
is the
systems,
bankers.
consolidation
the
of railroads
large combinations
of
OUR
FINANCIAL
OLIGARCHY
local,independent banking
alone
cannot
created
York
the
supply
dependence
the
lines
only,
Trust
Money
"
of combination
Third:
associated
however
could
another
Investment
New-
classes of
in
have
produced
and
more
potent factor
bonds,
stocks
functions
into
in
and
which
Morgan
notes,
three
of bonds
and
stocks.
became
which
conducted
the
life insurance
and
great
our
the
"
became
They
the
makers
directing
and
companies,
other
of bonds
directingpower
and
life blood
others
They
also in banks
of
depositaries
the
stocks.
and
carried
the
of
on
and
became
trust
business,with
the
the
companies
quick capitalof
the
which
try
coun-
they
operations. Thus
essential to business,
their
croached
en-
other
railroads,public service
operations are
buyers
the
their business
They
contact.
business
in the
J. P.
of the
companies through
industrial
power
not
corporationswith
brought them
directing power
intensive,along
bankers, like
the
upon
"
has
added.
was
Co., dealers
the
so
concerns
funds,
necessary
upon
combination,
these
"
of
bankers.
But
"
the formation
that
"big"
by
exercised,originally,
each
and
of business
It is to this union
of the
existence
of
development
The
banker.
functions
is
Trust
Money
distinct set of
investment
the
in
united
became
men,
MONEY
PEOPLE'S
OTHER
that
mainly due.*
financial
our
the
oligarchy
which
the
us
ment
usurpation, proceeding by gradual encroachthan
rather
by violent acts; subtle and
"
functions, which
when
beneficent
are
of
concentration
long-concealed
often
separately
these
as
Rome.
had
Caesar
The
makers
like
by
was
of
our
dangers
to
combined
of
master
Constitution
own
our
such
processes
became
Augustus
that
in mind
politicalliberty
when
of
It
persons.
same
distinct
governmental
powers.
PROPER
THE
OF
SPHERE
THE
INVESTMENT
BANKER
The
originalfunction
that
was
of dealer
buying mainly
*
Obviously
only
system,
at
in
of the investment
bonds,
wholesale
few
of
the
stocks
from
investment
but many
others perform
hereinafter described.
as
and
banker
notes;
corporations,
bankers
cise
exer-
tions
important func-
OUR
FINANCIAL
OLIGARCHY
states
municipalities,
need
and
money,
The
function
useful
very
conducted
those
ments.
seeking invest-
performs,in
this respect,the
and
merchant;
Large
one.
which
governments
sellingto
banker
of
and
the
function
business
is
enterprisesare
generallyby corporations.
The
manent
per-
and
stocks.
important corporationsare
more
part, by small
investois,who
of the
in the management
the
require
for
and
bonds
The
they
to
owned, in large
do
participate
not
Corporations
banker-middleman,
company.
a
the
sellingtheir
bonds
own
Investors
investor.
and
The
middleman.
is very
but
about
are
For
New
different
$26,500,000,000,and
made
averaging
to
thirty-three
a
an
to
these
pass
many
an
banker-
Stock
comprise
issues
each
about
curities
se-
change;
Exabout
aggregating
year
two
of
an
the
part of these
York
amount
to make
small investor
from
listings alone
hundred
sixteen
and
its
the
on
stocks
of securities upon
number
large. Only
is listed
tele
clien-
in corporate
of the
lack
essential to
direct
of
aid
stocks
ings
list-
new
hundred
$1,500,000,000.
tion
intelligentselec-
corporate securities
judgment
intelligent
"
upon
deed,
ina
PEOPLE'S
OTHER
singleone
MONEY
is ordinarily
impossible. He
"
trainingand
the
ability,the facilities,
to
purchase
is to be little better
needs
proper
advice
the
of
and
This
since
years,
of
of
and
stockholders
and
Company
the
Haven
and
the
of
has grown
who
have
Hartford
valuable
and
Railroad
sellingbonds
relies
This
customers
so
and
very
confidential
"
and
bonds
of the
the
of
York,
women.
"
of
is
erous
num-
always
But
merchandising.
in
stocks, it is
largelyupon
customers'
the
Refining
dealer
small
investor
half
are
regular customers
in
ticipate
par-
become
of the New
the
to
do not
of the stockholders
exceptionalvalue, for
banker
ities
facil-
in recent
Sugar
possession by
element
of
business
American
Railroad
the
"
important
judgment.
the
corporationsand
others
nearly half
"
Good-will
an
the
Pennsylvania
New
has
corporations. Over
of
he
combining
so
his
thorough investigation.
management,
great
our
the banker
women
in the
owners
dependence, both
of investors, upon
time
gamble,
judgment,
to make
incentive
than
expert, who,
an
with
special knowledge
the
investigation.Unless
essential
lacks the
that
reason
of
the
the banker's
relation
knowledge
of
the
of the
privateaffairs acquiredincidentally
"
PEOPLE'S
OTHER
10
formed
Company
and
Trust
the
of
duties
the
Shipping
undertaker
Trust.
those
to
bankers
investment
MONEY
of
directors.
Morgan
associates
the
midwife,
they participatedas
in the reincarnation
"Reorganization Managers"
became
of
tective
security-holders'"Pro-
then
Committees";
unsuccessful
the
disaster, members
of the
And, adding
corporations and
It
ultimately
in this way
was
that
their hold
acquired
the
the
upon
Pacific, the
Railway, the Northern
Reading, the Erie, the Pere Marquette, the
Chicago and Great Western, and the Cincinnati,
Southern
"
Hamilton
of such
continuance
"
Co.
in the
and
But
hold
of
became
extensive
need
sufficient
reason
excuse
"
of
the
not
directors.
the
Often
investment
organizati
re-
Kuhn,
Pacific
An
to
cases
urgent
considered
banker's
without
banker
ment
manage-
limited
was
money
for
was
Ohio.
participationin the
new
of the
upon
also that
reorganization.
of
the
voting trust
acquired
was
corporations was
or
device
banker's
promotion
board
no
the
in this way
was
Baltimore
the
of
where
insured
they
by
control
even
secure
It
Loeb
Often
Dayton.
has
entering
even
or
a
a
such
secured
OUR
place
FINANCIAL
the
upon
Board
powerful influence
Such
proxies.
then
banker
have
The
entered
the
Board
the
for
its
properly
called
where
controlling influence
decides
the
that
the
and
sell them,
securities
other
to
on
directors
cious
tena-
and
he
the
on
stocks.
buy
becomes
his
rector
di-
occupies a position
which
by
being
from
Can
there
is
on
he
be
both
real
sides
the
of Directors,
Board
price at
the
decides
besides
may
for he
to
corporation shall
himself.
naturally
man
same
decides
securities,
once
proves
securities
investment
The
trade?
grip
wants
bargain.
the
"
whatever
"
when
corporate
of
Haven
When
transaction
the
prevents
New
bonds
in
corporation,he
acquires
of
But
cheap.
bargaining
is
he
merchants,
trance
en-
money.
good bargains
merchandise
of
new
banker
investment
fatal
usually supreme;
of
supply
his
"
his influence
other
which
occasion
the
management
York,
1892.
the
lookout
Like
New
the
in
been
controls
into
[Morgan
his
of his customers'
been
Railroad,
has
and
have
to
11
Directors,through
the control
or
prosperous
Hartford
of
seems
of Mr.
the
OLIGARCHY
that
it
The
fact
the
banker
issue and
which
shall
that
on
sell
it shall
sell the
there
are
the Board
PEOPLE'S
OTHER
12
does not, in
holds the
dominant
usually the
beingthe
becomes
purse-strings,
executive
votingagencies, membership
financial
finance
or
committees,
J. P. Morgan
directorships,
mere
associates, held
result.
spirit. Through
trusteeships,exclusive
on
this
practice,
prevent
banker, who
The
MONEY.
such
"
financial
or
by-
power
least
for
Mainly
J. P. Morgan
marketing
in ten
"
any
marketed,
Loeb
Kuhn,
bankers
other
many
bankers
an
not
But
huge
gating
aggre-
does
sum
privately,nor
of
intra-state
and
similar
SECURITY
of
few
not
any
porations.
cor-
other
control
over
ample supply of
merchandise
these
disposed to
bond
take
BTJYEKS
railroads,public service
corporations assures
prices; and
sold.
trolled,
con-
corporations.
control
industrial
so
Co.
"
exercise
COXTEOLLESTG
Such
panies
com-
"
security issues
issues marketed
issues, however
investment
Co.
This
11,950,000,000.
include
corporations
of
years
companies
capitalizationof 817,-
aggregate
an
273,000,000.
industrial
even
to
and
a
the investment
securities
well
stock
and
at attractive
bought
is half
merchants
slightrisk
as
are
to their
OUR
market
abilityto
could
they
the
FINANCIAL
OLIGARCHY
their
control
goods.
the
13
They
that
saw
well
as
security-buyers,
security-makers,investment
made
The
it
the
upon
small
be
and
prominent
their
their
fluence
in-
stocks
bought by the
are
corporate investors;and
nent
promi-
most
companies,
the lifeinsurance
are
of the
strongly to
The
purchase
only relieves
not
the
believes
investor, who
small
dependence
being duly
the banker
it
cannot, in the
the trust
of
insures
these
among
investors
controlled;but
banker
A
issued
they
so.
numerous
strict sense,
as
banking would,
if
wiselymanaged.
are
corporate investors
only large
not
are
These
be
dating
particularlyaccommoIndividual
investors
are
moody.
ones.
They
They buy only when they want to do so.
customers,
but
sometimes
are
may
be
investors, if controlled,may
buy
when
natural
well
bankers
need
get control
as
the
as
porate
Cor-
inconveniently reluctant.
market.
bankers
companies
made
It
to
was
proceeded to
companies,
and
the banks.
PEOPLE'S
OTHER
14
The
field thus
for
institutions
companies
No
stream
or
from
of
$55,000,000
if
1904
they
"
did
just
The
331,738.18 of
issue
before
the
They
assets.
York
legislature
placed in
since
has
three per
aggregate
the last
growth;
1906
that
assets
of what
it
of these
eightyears
to
tion
investiga-
together$1,247,-
had
issued
in that
was
New
certain restrictions
their
business
new
averaged $547,384,212,or
cent,
over
policy.
policies. The
new
so
singlenew
had
of
annually,
Armstrong
companies
$1,025,671,126 of
their
great
have
invest
to
money
est
inter-
Mutual
would
"
year
upon
perennial
three
Life, the
Equitable
not
these three
"
York
new
the
and
existingpolicies
on
the
shortage
money
money
New
the
"
York, and
In
new
premiums
companies
even
panic
leading
our
existing investments.
on
New
are
savings. Their
investment.
rich.
uncommonly
augmented daily,are
reserves,
for
is
occupied
fife insurance
The
MONEY
only fifty-
in 1904.
companies
But
the
increased
in
$1,817,052,260.36. At the
of these three
companies
The
growth of assets
half as
large as
fifty-sixyears.
was
fifty-six
years.
three
was
about
preceding
companies
must
OUR
FINANCIAL
OLIGARCHY
15
invest
and
are
bond
investments
It
should
seek
of
of the
companies.
made
in
serves
re-
aggregate
on
investment
these
New
bankers
reservoirs
never-failing
Perkins
Vice-
was
York
Life,the largestof
remaining such he was
While
"
the
securities.
Co., and
Armstrong
York
New
Life
York
in
gation,
investi-
$38,804,
Life
is
supposed to be controlled by
policy-holders. But, as the Pujo Committee
mutual
its
the
preceding
his firm
and
companies
partner in J. P. Morgan
918.51
three
capital. George W.
President
the
that
control
to
The
$1,019,153,268.93.
was
natural
was
surplus
bonds.
in
of these
January 1, 1913,
be reinvested.
funds
company,
"the
panies
com-
through mutualization
by policy-holders
"its only result is to keep in
is a farce" and
office a self-constituted,
agement."
manself-perpetuating
The
stock
stock.
law
to
Equitable
and
company
The
seven
Life
dividend
per
is controlled
on
Society is
Assurance
by $100,000
this stock
is limited
Mr.
of
by
Morgan
PEOPLE'S
OTHER
16
about
paid
this
stock,
return
amount
stock
to
especialvalue
an
the
bankers; namely,
"
in banks
stock
The
and
insurance
company
holdings of bank
to
dispose of
to that
effect
extended.
part
but,
their
the
the
by
sold
and
insurance
bank
companies
the time
then
trust
trust
law
later
was
of
disposed
stocks;
company
bankers,
and
trust
five years.
companies
investment
the
within
companies
bank
and
insurance
enacted,but
was
The
of
as
the stock
the
the
recommended
Committee
legislationcompelling
the
through
exerted
power
The
of
large holdings
investigation disclosed
stock.
company
for investment
financial
of
certain
companies.
trust
Armstrong
extent
one-
controlled
And
$500,000,000.
had
dividend
The
the assets
of
value
is less than
investment
over
assets
share.
cent. ; but
per
one
now
of these
$5,882.35
or
the
on
eighth of
MONEY
controlled
were
these
gentlemen
stocks
company
to
themselves.
such
Referring to
Life, as
Committee
well
as
from
the
from
the
Equitable,
Mutual
the
Pujo
found:
"Here, then,
were
companies
and
trust
purchases
stocks
one
of
of
our
five
important
largest national
18
OTHER
golden
eggs
The
laid
people'sown
the
And
doubt
no
they
of
wealth
in amount
of
America,
or
liberty.
wealth
growth
is
of power
dynamic.
of
our
its
In
others.
companies
their
two
the
of the
influence
associates
investment
The
power
financial
in the
actual
and
three
The
the
only
Astor
Morgan
and
the
oligarchscomes
quick capital of
of J. P.
them
It lacks
have
owners
of
is exerted
by
insignificant
City.
wealth
from
It is
wealth.
own
The
is static.
associates
and
their
from
income
But
endanger
not
York
largelybecause
significance
the
when
with
of New
even
social.
un-
increment.
does
Astors
compared
as
are
peculiarlyunjust
seem
industrial
or
political
their
like those
They
democracy.
the
ers'
bank-
regrettable. They
people
with
fortunes
Vast
with
inconsistent
are
only
now
relativelylittle influence
have
are
the
If the
money.
business.
American
of the
control
commensurate
were
power
on
their associates
and
privilege. They
enjoy that
else's goose.
somebody
by
bankers
investment
through
MONEY
PEOPLE'S
Morgan
without
whatsoever.
"
Co.
any
dividua
in-
Even
OUR
FINANCIAL
investment
amounts
of
cent,
one
The
per
bind
people'sown
But
the
which
their
greatest
the
of
nation.
of
They
invested.
which
controlled
bankers
the
life insurance
the
reallyquick capital
the
companies.
life blood
nesses.
of busi-
of wealth
permanently
banks
and
abilityto
companies,
trust
to be
declared
Committee
directly
held $1,983,associates,
of these institutions
the
draw
now
the trust
are
the Morgan
by
people's money,
and
amount
34
Pujo
company.
greater than
The
the
one-half
equal
an
of the
other
is not
the banks
Their
than
investment
depositsrepresent
of the
that
the
power,
companies, but
assets
19
gold.
reservoir
from
Bank
to little more
of the
fetters which
the
OLIGARCHY
lend
to themselves; and
funds, directlyand indirectly,
what
to
is often
prevent
even
the
funds
being lent
huge
deposits can,
These
of those
When
bonds
permanently
can,
in
in
needs
temporary
important,
more
and
these
stocks
in
to
power
terests
rival in-
to any
control, be used
of their
the
the
meet
cretion
disthe
subject corporations.
are
issued
corporations,the
largepart, be loaned
by
to
bank
finance
its
depos-
the investment
OTHER
bankers
in control
to themselves
securities
that
so
MONEY
PEOPLE'S
80
bought
by them, until
sold to investors.
deposits
be
may
loaned
to
or
jobbers in securities,
to
the bonds
or
them
to carry
to
Tight
money
control
over
the
and
banks
pricesin
bonds
affect the
to
power
and
banks
or
money
market.
the
fall.
them
bankers
great,
so
time, the
ket
mar-
and
the
a
on
ity
secur-
against
when
companies,
trust
of
over
Its sale
whether
upon
trend
power
greater.
on
others,
among
general
discriminated
or
the
to
even
depend
may
is favored
offered
Easy
Their
stocks.
particularsecurityis
the market
In this way,
Exchange.
have
stocks.
for money
they
bankers,
speculators,to enable
they can
the Stock
allied
leading investment
trust companies is
the
by
bank
these
The
that
Or
ciates;
asso-
carried
be
may
securities rise in
make
tends
their
and
as
Furthermore,
access
banks
any
to
other
people's
and
trust
companies
individual
part of the
The
soon
it is the
banker's
be
banking
annual
own
exhausted.
investment
banker's
in
controlled
money
which
to take
concern
output
alone
of bonds
capital,however
And
even
and
enables
so
large
stocks.
large,would
the
loanable
OUR
funds
but
FINANCIAL
of the
for the
banks
OLIGARCHY
would
often
21
be
exhausted,
in those
banks
corporations which
control.
On
December
bankers
the
also
ing
31, 1912, the three lead-
life insurance
of
able
are
and
railroads
our
to direct where
thus
to
people'smoney,
to
are
interested
are
the
funds
companies
shall be
and
kept
who
in
are
tap those
they
such
these
create
industrial
and
to
prevent
position
in which
their
being
of which
purposes
world."
TOUK
HAVING
But
other
the
than
achieve
and
the
trust
AND
EATING
IT
of the investment
people's money
effective
banks
power
CAKE
that
is often
exerted
companies.
TOO
banker
more
over
direct
and
through controlled
J. P.
Morgan
supposedly impossiblefeat
of
"
Co.
having
their cake
and
of controlled
and
concerns,
do
eatingit too.
and
stocks
the
by
their money.
of
of
having
controlled
buy
an
instead
retained
be
drawn
the
in
upon
only
the bank
becoming
corporations,instead
all spent
until
the balances
Thus
merely
some
funds
are
needed
the securities
as
are
by
issued
money
remaining
J. P.
in the banker's
Morgan
Philadelphia house,
November
the
as
on
plished
accom-
in whose
corporation. And
huge.
of
deposit in
company
is
This
still
operationothers have
share.
When
J. P. Morgan " Co.
some
issue of securities the purchase money,
of being paid over
to the corporation,is
for the corporation,to
by the banker
least
at
bank
industrial
and
purchase price;and
simple device
the
the bonds
They buy
railroads
the
pay
part with
not
MONEY
PEOPLE'S
OTHER
called
1, 1912,
"
Co.
Drexel
hands
of
are
(includingtheir
"
Co.)
held
deposits aggregating
$162,491,819.65.
POWER
The
of
operations of
AND
so
PELF
comprehensive
system
concentration
bankers
power
necessarilydeveloped in the
And
the bankers'
overweening power.
grows
by what
it feeds
on.
Power
begets
OUR
FINANCIAL
wealth; and
added
for the
The
wealth
that
for the
in
would,
even
service
wealth
bankers
are
reasonable
very
23
new
tunities
oppor-
and
power.
vast
so
and
tion
compensa-
the
to result in
largeas
so
these
ever
opens
acquisitionof
operations of
numerous
OLIGARCHY
huge
accumulations
But
capital.
the
bear."
of
"Rule
the
this is true
And
The
sinister motive.
prevents
there
of human
weakness
is
no
nature
of their
deservings.
own
syndicate formed
The
to
where
even
traffic will
from
men
the
the
underwrite
$62,500,000
States
United
"
cash.
in
Co.
$12,500,000 in
were
J. P.
took
Morgan
by
entitled
this
Of
huge
sum
netted
J.
P.
receive
as
of $62,500,000 was
This
sum
paid
syndicate members.
only a part of the fees
monopolizing
OTHER
24
addition
In
dustry.
MONEY
PEOPLE'S
commissions
the
to
taken
Steel
than
Corporation
issued
was
underwriting
or
one-seventh
nearly
of the
Steel
issued
services.
of
the
Corporation
directly
or
directl
in-
directly or
for
(through exchange)
of the
mere
In
tion
promo-
other
total
words,
capital stock
have
to
appears
indirectly to
been
promoters'
services."
The
the
so-called
bankers
of
launched
and
the
large. But
fees and
even
commissions
associates
trusts
have
upon
been
the exactions
taken
by
the organization
exceptionally
are
successfully
of the bankers
are
often
26
OTHER
new
issue,as
soon
that
demand
the
Company
680,000
to be
THE
These
in
in
the
their
bank
should
the
not
they
themselves
so
Business'?"
do
To
the
from
so
temptation
the
by
was
the banks
was
trol
con-
deposits
essential
profits.
companies
trust
Why
field?
should
investment
business
into
followed
by
making
the realm
the
of
'Big
parture
de-
the
of temporary
But
concerns.
to
involve
is the
not
bankers
incident
would
banker
into
tionary
revolu-
that
huge
these
under-
leading
our
an
irresistible. The
was
investment
operation
to
legitimate sphere
to
of the
functions
new
$1,-
BANKERS
of
and
become
all the
Co.
the
banks
profitablea
in
"
obvious
was
securing
for
which
promotions,
bankers
officers
share
too, with
It
such
at par.
companies
trust
in
then
was
Morgan
conduct
investment
and
the
and
the
And
in
INVESTMENT
institutions.
banks
element
take
BECAME
change
by
J. P.
pay
large profitsfrom
writings and
banking
was
bonds
106
at
willingto
BANKS
offered
public
to
were
MONEY
announced,
as
willingto buy
months
WHY
PEOPLE'S
the
invasion
banks'
counter
of the
of
field of
invasion
investment
OUR
banker.
Most
the
were
of
FINANCIAL
OLIGARCHY
prominent
National
New
York.
invasion.
But
The
joined
forces
and
country,
was
control
cemented
by
directorates
There
ever
resulted
more
and
complete
the
industrial
subjection.
fullest
public
railroads,
concerns
met
allies,
as
business
voting
by
hostile
of
by
trusts,
joint
the
The
spoils."
the
and
National
not
was
the
"divide
to
First
forces
contending
to
the
theirs
banks
the
among
and
City
27
liance
allocking
inter-
ownerships.
"cooperation";
service
were
and
corporations,
brought
into
II
CHAPTER
the
Among
"
been
has
the
the
National,
of
the
are
about
Morgan
appears
of
those
its
The
firm
that
have
they
also, huge
deposits reported
not
have
been
Each
Bank
are
88
about
Bank
company)
disclosed.
But
$162,500,000.
is
The
of
deposits from
as
and
resources
for
of
(including
National
available
in
Stillman;
security
$200,000,000.
the
Co.,
Directors.
First
Siamese-twin
"
President,
of
gan
Morof
Baker.
F.
City
the
P.
combination.
security company)
$300,000,000;
(including
J.
James
Board
National
Siamese-twin
is
formerly
of the
Chairman
resources
it
George
was
like
in
the
Money
Morgan
genius
City
gentlemen
now
its
by
National
the
Each
of J. P.
"
with
of
resources.
firm
dominated
First
these
the
banks,
two
huge
like
banks,
two
has
Co.,
group
"
National
First
constitute,
inner
of the
Each
Trust.
the
They
the
firm,
Morgan
banks
York
New
two
and
City
preeminent.
stand
In
allies,
National
the
COMBINE
COMBINERS
THE
HOW
their
their
the
it
tions,
opera-
subjects;
HOW
The
THE
COMBINERS
private fortunes
combination
have
of
possibilities
of "other
use
wealth
29
been
not
sporadic evidence
COMBINE
indicates
in the
ascertained.
how
accumulation
great
are
the
one
has
the
when
Mr.
people's money."
But
Morgan's
became
Of
as
Baker's
Mr.
testified
he
in the
shares
investments
on
National
His
$20,000,000.
least
banks
York
about
worth
and
trust
the
which
and
in six other
be
at
New
together
are
vestmen
of his in-
scale
inferred from
his
of New
Railroad
so
large
largeststockholder
with a few friends he held a majority of
$27,436,800 par value of outstanding stock,
Jersey. .He
He
may
20,000
worth
are
companies
former
the
stocks
$3,000,000. The
in railroads
that
Bank
more,
His
subjects.
many
First
know
we
is
was
its
"
bought
Reading
director
presumably
in 28
a
other
at
$160
railroad
stockholder
in,
share.
companies;
at
least, as
30
OTHER
many.
The
PEOPLE'S
full extent
that
saw
not
was
of
was
issue
an
not
in the
surprisingthat Mr.
When
laws.
new
asked:
world, do
in this
of his fortune
it is not
little need
think
"You
MONEY
as
it is
not?"
you
answered:
He
"Pretty nearly."
KAMIFICATIONS
But
OF
wealth
in
in
of the
It
allies
must
we
Baker
having, with
or
resources
But
the
National
extends
comprehend
try
with
resources
First National
in
22
the ramifications
corporations
subsidiaries,
aggregate
$7,272,000,000.
visible power
which
further.
the power
visualize
capitalizationof
and
expression
director
Bank,
in
to
Their
by geniuses
To
their many
direct
its directors
directors
is
wielded
its proper
through which
Mr.
allies' power.
finds
of control.
means
POWER
Mr.
Baker
of
the
First
dominates,
The
that
Pujo report shows
(including Mr. Baker's
son) are
at
of
is
least
27
other
$4,270,000,000.
represented in
49
corporations
That
is, the
corporations,
HOW
with
THE
COMBINERS
aggregate
COMBINE
resources
31
capitalizationof
or
$11,542,000,000.
It may
help
to
appreciation of
an
few
of
corporations in which,
for
influence
visibly
to
power
name
is
exerted
"
the
and
National
Bank
of
Bank
"
committee
of
Mutual
Company;
Companies:
National
and
Loan
Insurance
York
Central
Haven,
Pacific,
Lehigh
3. Public
"
Trust
Company.
[Companies:New
2. Railroad
Lines; New
Life
as
or
man
York;
New
Farmers'
Commerce;
Baker's
directly
simple director.
1. Banks, Trust, and LifeInsurance
First
allies'
prominent
more
instance,Mr.
executive
voting trustee,
the
graph
Tele-
Corporations:American
Service
Adams
Telephone Company,
Express
Company.
4. Industrial
Corporations:United
Corporation, Pullman
Mr.
Stillman
with
but
which
other
the
he
is
aggregate
directors
in
dominates,
States
Steel
Company.
director
are
corporationswhich,
only
tions,
corpora-
of
$2,476,000,000;
National
City Bank,
assets
the
in
directors
with
in at least 41
their subsidiaries,
have
or
aggregate capitalization
an
$10,564,000,000.
J. P.
of the
forces,hold
allied
of
members
The
of
resources
of
firm
the
"
Morgan
of the
MONEY
PEOPLE'S
OTHER
S2
directorshipsin
72
47
The
Pujo
of J. P.
"
Morgan
controlled
trust
and
National
and
Co.
members
the
that
finds
Committee
and
of
City
Bank
companies
the National
the
First
together
hold:
banks
34
and
eighteen directorshipsin
and
hundred
"One
trust
companies having
total
$2,679,000,000 and
of
total
sources
re-
deposits of
$1,983,000,000.
"Thirty directorshipsin
having
"One
of
total assets
hundred
and
five
companies
panies
com-
$2,293,000,000.
directorshipsin
transportationsystems having
of $11,784,000,000 and a
express
insurance
10
total
32
tion
capitaliza-
total
mileage (excludin
steamship lines)
and
of 150,200.
"Sixty-three
and
directorshipsin
tradingcorporationshaving
of
24
a
producing
total
ization
capital-
$3,339,000,000.
in
"Twenty-five directorships
corporations having
$2,150,000,000.
total
12
public-utility
capitalization of
OTHER
34
PEOPLE'S
MONEY
represented according
are
the
Morgan
the
to
allies
directories
of
directors.
Second:
schedule
Pujo
The
corporation with
any
does
of
resources
But
shown
their
humility by becoming
many
such.
City
Bank
directors
and
Co.,
and
in
directors
of
such
158
The
corporations in
include
by
those
by dummies,
have
Terminal
marketed
others)
But
the
name
1910
issues
the
only the
associates
they
represented
are
For
It does
instance, the
to the Kansas
for which
(in connection
they
with
aggregating $41,761,000.
of J. P.
on
also
are
directors.
Railway Company,
since
J.
National
Bank
Morgan
as
City Bank,
appears
P.
includes
otherwise.
member
no
National
Bank
four
of
the
in
aggregate $78,669,375.
in which
or
directors
capitalizationof only
schedule
which
actually appear
not
38
Pujo
than
corporations. Available
the
these,but those
Third:
in
publications disclose
38
financial
instance, members
For
"
less
giants have
$5,000,000.
Morgan
these
include
not
or
"
Morgan
of the
Kansas
Co., of
First
City
the
National
Terminal
directorate.
Fourth:
The
Pujo schedule
does
not
include
HOW
all the
THE
COMBINERS
subsidiaries
instance,
For
is
New
the
Haven
System
bond
and
balance
Railroad
sheet.
also;
and
holding
while
to
is
New
New
New
outstanding securities.
Only
part
held
be
in
will
balance
company's
000,000
schedule
that
and
"
System,
only
sum
by
shown
as
Thus,
sidiaries
subof
the
the
the
small
holding
the
New
as
clear,therefore,that
the
over
the
in the
New
great;
Pujo
Haven
submitted
chart
twice
is
Committee,
company
while
appears
capitalization of
the
"
sheet.
like
Railroad's
Haven
represented
Haven
part
latters'
so
cluded
in-
control
small
of
Haven
Haven,
may
but
capital
holding
company
owning
That
slightextent
The
large corporations,
New
corporations
indirectly in the
most
the
controlled
capitalizationis only
directly or
the
stock
But
many
of
$385,000,000.
as
Railroad.
comprises
whose
given
35
corporations scheduled.
capitalization
the
represents
sum
of the
the
System
Haven
COMBINE
to
the
namely,
$849,000,000.
It is
referred
the
group
extent
by
to
the
Pujo
Committee,
of concentration
of the
Money
$22,000,000,000,
Trust.
effected
understates
by
the
inner
OTHER
36
PEOPLE'S
THE
CEMENTING
Care
that
power
has
It
taken
was
and
builders
on
are
ephemeral
and
Morgan
and
by joint
stockholdings,as
end
may
his
with
well
as
stock
and
$6,000,000 investment
made
of the National
of the
City
First
Bank.
Then
City, and
dominant
officers
their
Mr.
Baker) acquiredtogether,by
and
with
Commerce,
in the
J. P.
stock
Morgan
(or
"
election.
new
acquired oneNational
Bank,
partners
sixth of the
of
enduring.
side
every
imperial
for directorships
personal relationships;
close
"
of
be
should
structure
mutual
by
Mr.
ALLIANCE
these
buttressed
been
ownerships
TRIPLE
by
their
MONEY
Mr.
of the
Stillman
stock
and
purchases
National
$190,000,000 of
Bank
resources;
of the Chase
Guaranty
of the Bankers'
000; and
of
Trust
number
financial institutions.
trustees
in
great railroad
systems;
(as if the
allies were
loyaland
rendered
by
the
united
Mr.
First National
Davison
"
was
into
and
rewarded
and
finally
singleconcern)
Mr.
"
like that
Lamont
in
by promotion
HOW
COMBINERS
membership
to
"
THE
in
the
COMBINE
firm
of
P.
J.
37
Morgan
Co.
THE
Thus
"
bankers,
York;
be
to
restraint
three
for the
In
"
Kidder, Peabody
rich;
"
the
each
to
"
Morgan
there
in
two
are
America,
both
investors
of these
firms
about
100
greater interstate
of each
over
in bonds
has
and
chased
pur-
in conjunction
(principally
bankers)
of the
issues
aggregate
of
1907
"
underwritten
security issues
held
long established
extensive,
possessing an
Co.
Since
other
were
large international
Lee, Higginson " Co., and
stocks.
with
important
two
clientele of eager
or
is J. P.
But
are
each
and
other
centers
wealthy
the
Co.
name.
there
houses
banking
and
"
of Drexel
Boston
First
financial
mentioned,
important money
and Chicago.
Boston
the
P.
"gentlemen's" agreements.
dominated
Philadelphia too;
another
under
other
by
and
America's
certain
hereafter
allies
firm
for
together, J.
City
easily dominated
center, New
Co.
bound
National
The
ALLIES
and
equipped
Morgan
in
PROVINCIAL
banker
different
tions,
corpora-
amounting
in
tration
$1,000,000,000. Concen-
even
PEOPLE'S
OTHER
38
in Boston
further
in New
than
consolidations
banks
been
has
in 1913.
York.
number
the
from
reduced
There
MONEY
in 1898
19
to
also 23
now
cessive
suc-
national
of
58
in Boston
are
By
trust
companies.
The
National
National
Bank
Shawmut
Trust
Co., which
houses
and
aggregate
city.
These
which
their
90
1/2
per
whose
control, alone
and
consolidations,
of the
total
banking
And
linked
to them
are
9 other
banks
and
the
interlocked.
are
and
7
aggregate
trust
1/2
not
per
all
banking
But
even
companies,
cent,
the
which
of Boston
independent
resources
of
one
about
of 42
Thus
resources
of
together
cent,
per
remaining
banking
trust
aje
total.
Boston,
9 banks
hold
resources,
another.
sources
re-
locking
inter-
by
resources
of Boston's
in
directors,hold
also
are
companies,
have
of the
resources
trust
aggregate
cent,
banking
which
banking institutions,
cent,
directorates
Colony
Boston
two
banking
directors
per
Old
$288,386,294, constituting
banks
of Boston.
companies
the
other
21
together
of the
great
themselves
the
of
resources
one-half
and
these
their associates
about
are
and
of Boston
First
the
Bank,
but
are
Three
are
HOW
THE
linked
together; so
COMBINERS
six banks
only
interlocking
that
there
in all Boston
that
directorate
but
represent
banking
resources.
whether
all of
to the
is
also
other
linked
least 42
35
other
body
so
but
"
in many
other
Co.
were
some
both
are
which
with
proper,
as
"Greater
inner
Boston's
33
only
above
and
Boston's
respects, within
as
it
municipalities,and
banks
and
banking
of
the
42
trust
companies
in
active
small,
or
devoted
Co.
and
purely
has
been
with
interstate
the
actions;
trans-
these
great Boston
cemented
by mutual
houses
local matters;
co-operators
banking
Boston
municipalities.
still in
Morgan
limited
Once
from
them, by interlockingdirectorships,
with
at
is not
known
suburban
of Boston
banks
Boston's
city. Around
interlocked, not
has
group
of the
of influence."
"sphere
gether
to-
groups.
concentration
important
Springfield,
are,
of
entirelyfree
are
popularly
These
Boston."
They
well be doubted
thirty suburbs,
over
what
form
the other
banking
are
it may
be
to
free from
are
cent,
per
those
legalconfines
proper
39
appear
relations.
And
even
affiliation with
Boston's
COMBINE
PEOPLE'S
OTHER
40
stockholdings
concentration
MONEY
co-directorships.Financial
and
found
to have
seems
pression
highestex-
its
in Boston.
Somewhat
triplealliance
"
First
Commercial
control
relations
doubtless
would
leading bankers
the
Committee
of the other
to
as
prevented by
was
Continental
which
be found
America,
of
centers
"
Illinois
together
$561,000,000. And
of
resources
the
Bank
National
the
Bank,
National
and
Trust
the
tutions
Chicago's great financial insti-
and
its
"
similar
similar
to exist with
important
which
lack
cial
finan-
the
Pujo
of time
from
making investigation.
THE
Such
these
the
are
which
powers
are
such
as
"
Co.,
smaller
these
but
and
groups,
Harvey
lucrative
and
are
distributors of
the
Money
forces of
secondary
Trust;
but
magnitude.
principalgroups,"
says
"and
closelyaffiliated with
important banking houses,
Kissel, Kinnicut
large and
or
from
Pujo Committee,
them
the
supplemented by
are
such
primary,
comprise
"Radiating
the
AUXILIARIES
Fisk
"
Co., White,
"
Sons, who
patronage from
used
by
Weld
receive
ing
the dominat-
the latter
as
jobbers
the issuingof
securities,
which
"Beyond
and
sub-groups are
bankers
and
banks
MONEY
PEOPLE'S
OTHER
42
co-operate with
and
also act
as
distributors of such
public,
securities.
was
underwriters,but
of their
justify the
of the
cities
there
throughout
this and
to
least
at
are
into
they extend
that
and
names
sufficient appears
that
statement
of them
hundreds
many
to disclose the
members
foreign
countries.
"The
inner
to
by
may
group
these
and
banks
its
and
regarded
organization.
bankers, who
the great
self-interest to
be
patronage
as
Such
and
without
facilitiesof the
thus
issuing houses
much
tied
and
financial
yields no
siderable
incon-
of these banks
and
patronage
are
risk
on
account
of the
for placingissues
principal
groups
of securities through their domination
of great
mestic
banks
and trust companies and their other doaffiliations and their foreign connections.
The underwriting commissions
issues made
on
by
earned and do
this inner group are usually easily
HOW
THE
COMBINERS
COMBINE
ordinarilyinvolve the
purchase of the underwritten
not
interest
unless
in the
they
by
There
the
take
inner
invited
do
them
should
that
In
thereafter
other
be
to
transactions
so,
the
Their
commission.
which
on
as
Bankers
quired
re-
and
permitted
to
under
lead
rule
lest
the
ticipate
par-
of
their
regardlessof
approval
of
by refusing they
to be invited."
cease
words,
this is
then
are
securities.
particular business,
the
of
underwriters
the
group
to
securities.
occasions
anxious
so
are
in
is
to
The
in these
the
to
payment
case.
underwriters
generallyadjusted
ties,
purchase part of the securi-
however,
to
brokers
choose
the
are,
not
transaction
43
invitation
an
from
these
As
royal bankers is interpretedas a command.
great bankers frequentlyget huge
a result,these
themselves
without
commissions
distributingany
of the
bonds,
or
ever
any
actual
subway
ing
financ-
having taken
risk.
"In
of
"
Co.
the
case
York
$170,000,000 of bonds
and
their
Pujo
Committee
were
from
were
of the New
100
by
Messrs.
reports]estimated
125
apparently glad
such
to
[as the
Davison
associates,Mr.
to
Morgan
that
underwriters
agree
that
there
who
Messrs,
PEOPLE'S
44
OTHER
Morgan
City Bank
National
"
equal
would
the bonds
their share
take
The
other
to render
it
is
cate,
syndi-
all
being required to
portion."
Money
to make
its
necessary
dynamic
freedom
and
be
or
it is believed
The
longing for
It will express
against servitude
tensive
is in-
Trust
recognized as
sanction.
liability,
comprehensive; but
vulnerable, unless
is ineradicable.
for
this
Despotism, be it financial
moral
the
was
stable,and
cent.,
PSETJDO-ETHICS
combination
element
irresistible.
upon
OF
per
of
of the unsold
organization of
the
one
realize and
PROTECTION
THE
from
assumed
the underwriters
forming
for
"
the
Bank, and
receive
relievingthemselves
thus
whilst
should
$5,100,000
to
MONEY
force
cal,
politito
rest
freedom
itself in protest
ing
inaction, unless the strivmade
to
invented, as
fiction of "The
seem
immoral.
preservative
divine right of
preciousrule
it is declared
of another
of so-called
cently
re-
"Ethics," by
unprofessionalto
come
corporationwhich
to the
is already
"reputable" banker.
of competition between
possibility
these
HOW
THE
banking
the
by
that
in
the
purchase
Pujo Committee,
will not
one
"is
theretofore
where
further
in
have
bringing out
also
subsequent
issue
of the
is described
as
it
by corollaryof this,
shall
This
others,
which
customer
corporation, they
any
removed
and
given bankers
united
satisfactorily
out
securities,"
them
another, a
served, and
that
of
45
from
away
namely,
a
COMBINE
understanding between
to take
has
houses
the
says
COMBINERS
an
once
issue of
join in bringing
same
tions.
corpora-
principleof banking
ethics."
The
the
"Ethical"
interests
superior
to
basis of the
of
the
by
which
are
upon
alliance,and
accorded
the
among
"
banking
subordinate
that
such
lesser
New
of great
munity.
com-
the
be
bitious
am-
position
suppressed,
of influence"
the rule of
banking
Most
prominent
Kuhn,
faithfullyobserved.
Co., of
house
too
concerns,
"sphere
financial
of
are
ences.
adjusting differ-
are
powerful to
understanding
ethics will be
Loeb
too
take
one
that
ample "hinterlands"
rapacious nations
Important banking
willingto
of the
rest
reminds
with
be
bankers
of the
attitude
influence"
to be
in the
combined
interests
Their
"spheres of
the
rule must
potentates
York,
an
are
international
wealth,with largeclientele
OTHER
46
and
PEOPLE'S
MONEY
They
accorded
connections.
of influence"
"sphere
including
Baltimore
"
Southern
few
business
the
But
are
through
the
City
and
Commerce
have
The
THE
These
their excessive
whole
leave
and
to
invest
industrial
money
Co.
of
other
charge
"which
are
the
not
ports
re-
of the inner
relations
with
Bank
with
common
large
the
joint-
them."
RESULTANT
levy, through
owners
upon
toll upon
of
money
the
for
railroads,public service
corporations,upon
"The
in
exactions,a heavy
it; upon
of
the National
banker-barons
community;
banking
financial institutions"
other
EVILS
group
Pujo Committee
and
Bank
operationswith
First:
the
"
associates, conducting
account
the
railroads
their "close
interests
"many
Morgan
and
"qualifiedallies
group"; and
of
the
Morgan
Loeb
Kuhn,
even
they
National
the
important
wholly independent.
that
systems
Pacific
and
They
roading,
rail-
American
other
Union
tant
impor-
an
exceptionspreempted
of
country.
in
among
Ohio, the
Pacific.
with
have
are
to
use
this
these
consumers.
of
capital,"says
of
course
enters
the
Pujo
mittee,
Com-
universallyinto
HOW
the
THE
price of
COMBINERS
commodities
in effect determined
supplying
COMBINE
it and
If there
and
the check
under
not
of
fundamental
so
supplying
of the
the
in other
ways.
the
performance
function
the
as
petition.
directlysuppressingcom-
suppressionenables
monopoly
profits;but
of the
burden
the monopolist
Monopoly
more
even
consumer
arrests
development;
and
through
that
coal railroads
potent
conditions
in
the
take
the
among
Morgan
them?
prevailing,what
Nashville, and
and
the
when
all of
expected between
Great
Northern,
between
otherwise
competition exist
full
Can
would
which
distribution
the
in
excessive
extort
increases
and
principleof
Trust
That
are
tion.
competi-
arrangement
or
commercial
More
Money
to
those
capitalis peculiarlyinjurious."
of
Second:
plan
operation in
its
of
virtue in the
be any
prevents
service,is thus
by agreement amongst
competition, certainlyany
which
of
47
And
associates
with
Pacific
Southern, the
the
cite
anthra-
competition is
Northern
the
place.
Atlantic
Coast
Pujo Committee
finds:
to be
and
the
Louisville
Line;
Westinghouse Manufacturing
Electric
the General
Company?
the
like
or
pany
ComAs
PEOPLE'S
OTHER
48
affiliations tend
"Such
for
banking
And
the
of
agency
situated."
other
through
in
understandings
existingconditions
under
conduit
and
cover
and
thus
house
relief
competition through
restriction of
the
as
arrangements
secret
MONEY
tion,
combina-
of
houses
banking
is
precluded.
"It
would
be
likelyto
that
would
And
would
be
the
so
members
safest
protectionthat
of
the
refuge of
against future
these
inner
the
But
far
of
or
The
more
ter
charac-
latter
prestige.
by
the
the
powerful grip
the
or
or
combinations
throttle
that
upon
their
credit, and
will turn
are
group
constitutes
group
is upon
wheels
that
be afforded
can
competition.
plans
great industrial
our
gentlemen
controls
their
of
the
displeasingto
with
interfere
banks,
this inner
in business
engage
the
institutions
from
seeking participation
thus
of
other
and
companies,
trust
that
hardly be expected
can
stop."
serious
than
even
the
this
liberty, indeed
"the
institutions
manhood
overweening financial
intimidation
beyond
of
which
banks,
trust
power
it effects
itself,
entails.
extends
companies,
seeking participationfrom
and
far
other
this inner
OTHER
50
nothing
have
they
political
desire
they
not
and
fight
and
for
may
find
the
only
the
hero,
against
find
will
"
martyr,
who
dared
and
in
But
content
with
martyr
more
who
resisted
good
or
red"
to
"
Here
won.
greatest
the
tive,"
locomo-
manhood
resignation.
be
shows
hero,
loving
security,
and
"the
cannot
times
Some-
business."
you
or
but
sell,
to
or
Experience
buck
to
is
with
seeks
buy
peace.
independence
number,"
fit
advancement.
healthy
place
suffered
which
social
courageous,
wealth,
than
to
merely
there
and
blooded,
MONEY
either
"Business
and
Here
or
want
is
"it
that
you
PEOPLE'S
of
silence
America,
the
conditions
the
there
slave.
greatest
that
CHAPTER
III
INTERLOCKING
The
root
DIRECTORATES
evils.
many
divine.
Applied
the
suppression
the
Sherman
deal
with
violation
two
serve
soundness
of
it
the
rejects
favors,"
of the
exercised
the
by
banks,
and
long
of
attainment
The
used
term
in
is the
the
sense
and
to
can
tends
to
destroys
field
most
potent
the
for
and
no
and
have
over
so
roads,
rail-
corporations,
trust
been
ment
instru-
control
bankers
industrial
companies,
taken
toward
Freedom.
New
"Interlocking
broad
and
man
it
fair
investment
will
which
undemocratic,
Break
Trust.
and
of
life insurance
step
is
to
violation
no
event
"A
the
It
public-service
over
It
platform:
Money
that
incentive
judgment.
manhood.
of
push
either
removes
substituting
"
it tends
disloyalty
to
law
In
to
and
corporations
to
fundamental
it
and
it tends
masters.
human
corporations,
Applied
other,
inefficiency; for
laws
competition
law.
of the
offends
rival
to
of
each
It
is the
directorates"
including
as
51
is here
all intertwined
PEOPLE'S
OTHER
52
MONEY
effected.
device
whatever
of
alike to contracts
of its directors
one
he is a
of which
director
or
likewise
to
of director
financial
J. P.
New
Co.
borrow
New
Mr.
of
"
to
with
which
Trust
Company,
(or
is
partner)
spends
the
proceeds
of which
director.
of which
of the
The
bonds
Co.
to the Penn
director.
"
Morgan
to pay
"
Morgan
Company,
Life Insurance
a
our
Railroad,
J. P.
P.
J.
(or a partner) is
Co.
which
Hartford
sell to
bonds.
Guaranty
Morgan
Morgan
"
Haven
the money
the
from
through
"
Morgan
issue
an
actually
not
operates:
that company
causes
tions,
corpora-
CHAIN
chain
oligarchynow
York,
position
the endless
"
or
objection extends
inconsistent
ENDLESS
singleexample
of control
officer
an
corporationsdo
THE
firm
other.
each
with
with
tion
corpora-
potentiallycompeting
if those
even
deal
holding the
in two
as
The
stockholder.
men
another
with
is interested
he
with
individually,or
or
by
objectionextends
The
corporation whether
member,
which
in
form, and
the
interests,whatever
conflicting
J. P.
Mutual
Mr.
Morgan
New
Haven
in
purchasing
INTERLOCKING
steel rails from
the United
of which
director.
DIRECTORATES
Mr.
The
States Steel
Morgan
United
Steel
supplies
from
Company,
of which
Mr.
is
director.
the
to
The
Western
subsidiary
Union
the
of
(or
partner)
has
Company
The
director.
the
from
(or
Pullman
Company
of which
The
director.
The
Company,
and
and
Morgan
Telegraph
with
the
(or a partner) is
its passenger
of
a
(for
cars
which
Mr.
director.
The
local
Locomotive
use)
motives
loco-
Company,
Electric,the
General
the
New
Corporation and
buy locomotives
Pullman,
Company.
The
Morgan
buys
the
Mr.
wire contract
Company,
partner) is
Morgan
Reading,
in both
and
the Baldwin
Mr.
supplies
Telephone
Reading buys
Morgan
sells
Telegraph Company,
Mr.
Pullman
from
Electric
exclusive
an
of which
Reading,
a
is
Electric
(or a partner)
American
Telegraph Company;
purchasing
General
Morgan
Corporation
rails in
the
General
tion,
Corpora-
(or a partner) is
States
electrical
53
Steel
the
the
Haven,
from
the
Corporation,
New
Haven,
Baldwin
the
like
Steel
the
Baldwin
the
phone
Tele-
Reading,
Companies,
like
the
Pullman
the
Western
the
General
Electric.
The
Baldwin,
the
Pull-
PEOPLE'S
OTHER
54
the
man,
the
and
New
the
General
Electric
steel
buy
Each
Corporation.
enters
it
and
times
many
with
of
our
is in
with
of
funds
operations.
tious;
part suppositi-
men
Haven
example,
to which
the
New
the interests
Instead
railroad
the
as
be multiplied
permutations
many
intertwined.
are
it must
Only
to
New
through
interlockingdirectorates.
few
these
further
upon
specific illustration
but
the
with
and
Co.;
panies
com-
Co.; each
"
Morgan
Steel
of the
its securities
markets
"
Morgan
the
from
one
every
the
like
companies,
products
and
last named
J. P.
Reading,
Haven,
J. P.
MONEY
York
of
taking
startingpoint
in
Great
Western,
might
Guaranty
any
trust
one
of
instead
dozen
as
other
instead
bonds,
of the
the
or
Pere
quette
Mar-
selected;instead
Company
companies;
purchaser of the
Erie
been
have
Trust
the
the
other
General
banking
important
of the
of the
Penn
banks
Mutual
insurance
The
or
as
nies;
compa-
Electric,its qualified
Company.
voir,
reser-
chain
is indeed
facturing
Manuend-
INTERLOCKING
less;for
with
each
controlled
55
corporation is entwined
others.
many
As
DIRECTORATES
the
of
nexus
Business"
"Big
the
Steel
the
Steel
Corporation, itself an
important railroads,are
nine
other
of line
railroad
(more
United
than
States),
companies.
influence
mileage of the
and
few
men
street
in
all these
carriers
for
steel.
companies;
similar
and
in
many
largest
influence
further.
with
These
in twelve
oil
gas,
of
aggregate
corporations through
"
United
its
the
panies^
com-
same
steel-using
of
some
the
users
The
companies.
exert
the
and
water
panies,
com-
products; and
great wire-using telephone and telegraph
extensive
the
And
as
machinery
and
steamship
but
"
also directors
are
alliances
and
only
much
in
important steamship
railroad
of steel extends
users
also in twenty-
as
customers
of
owner
126,000 miles
pervades
not
"
who
systems, with
Through
traffic it
huge
directors
The
their
influence
States
"
exceeds
over
iron
assets
of these
which
these
the
sixteen
business
ent
differ-
few
men
of the
billion dollars.
OTHER
56
PEOPLE'S
MONEY
Obviously, interlockingdirectorates,and
that
before
of American
the freedom
fundamental
that
nature:
The
of morals
law
"No
man
can
serve
is that
surprisingfact
firmly rooted
should
two
masters."
principleof equity so
been
have
of human
departed from
dealing with
of law
applied,than
occupying
with
corporations. For
that which
inconsistent
himself,
or
from
holding
similar
or
association,
called
have
obviously a
as
positions in
in
private
specifically
by
ously
rigor-
more
prohibitsa
using
And
trustee
ing
deal-
fiduciary
director
trustee
as
of
persons
unincorporated
an
trust
that
his
at
rule
no
positions,from
positionfor personalprofit.
corporation is
novatio
in-
an
and
all in
from
be
not
be
can
It will
to the
business
prohibition will
The
regained.
effectuallyprohibited
be
implies,must
term
all
estate, who
The
name.
are
Courts
important
an
"While
of
not
Appeals
subject
to
were
the
York
clared
de-
case:
technicallytrustees, for
itself,they
of New
charged
was
in the
with
liabilities of
the
title
corporation
the
trustees.
duties
and
Clothed
of
between
contract
contract
only
election
the
beneficiaryis
and
that
well
as
of
that
the
domination
two
men;
in
and
of the
The
in the
of directors
so
cooperation"
for
secures
each, in his
own
of
effective
taken, subtly,
minority
has
And
dominated,
there
one
sentation
repre-
resulted
one
in
or
all criticism
where
even
is too
often
directors
among
corporation'sfavors.
second
limitation
making
of which
of
absolutelyvoid
which
by
"
the
participatesactively, are
instead
act
corporationsby
power.
action
in-
the influence
the
practicallybanishing
dominant
is not
of
denial
of most
"harmonious
which
to
is
vote
by
ignored,also,the
the most
that
any
the
boards
on
that
knows
one
some;
know
the board
It
from
his trust
is confined
before
without
of the
action.
director
is done
should
merely
not
that
advice
voting. Every
work
rule of law
disinterested
to
violate
may
by
as
of human
laws
and
entitled
trustee
voidable
corporation.
ignored the
from
corporations, the
two
of the
first limitation
The
making
the
not
was
at
MONEY
participatedactivelyin
director
mon
PEOPLE'S
OTHER
58
interested
held
"
contracts,
merely
director
voidable
INTERLOCKING
of
DIRECTORATES
experience.
voidable
them
has
resulted
valid.
It
that
board
with
would
be
and
directors
there
occurrence,
nor
dominant
avoided.
Philip sober
and
the
effective
an
the
the
to
or
is
avoid
Pujo
with
of the
board's
Committee
"None
bankers
frequent
lack
we
and
the
not
course,
stockholders
which
body
to any
to interfere
contracts
unfair,
have
is essential
it be made
to
of stockholders,
of individual
attempt
with
existingmanagement
an
membership
a
by
directors
brought, except
in
of
appeal, whether
courts.
stockholders
here
Directors
minority
and
of
not
would,
to
reason
into
But
control
Appeals from
are
fruitful.
very
stockholders
appeal;
who
is little
appealing party.
an
declaring
director,however
subsequently
to
merely
contracts
practicallyin
the
fellow
such
contract, entered
any
Philip drunk
even
is
action;
corporate
expect
hold
To
59
after
board.
membership
are,
radical
And
are
to
dom
therefore,sel-
change
radical
in the
changes
Indeed
rare.
the
reports:
of the witnesses
was
testified)
able to
name
an
instance
in
OTHER
60
the
PEOPLES
the
history of
in
succeeded
of
that
it appear
does
in
in any
management
so
in
country
succeeded
had
MONEY
to
as
have
the
secure
of
Xor
ever
even
investigation
corporation
been
it has
whether
ascertain
ing
exist-
an
largecorporation.
stockholders
far
holders
stock-
the
overthrowing
existing management
an
which
well
to
honestly
or
managed."'
Mr.
Harvard
to
aid
the
that
state
by
the
company
that
States
federal
the
aside
and
disaffirmingthe
from
interested
therefrom.
National
And
Bank
of every
be
bank,
the
trust
to
take
suffered; or
to
recover
profitsderived
State
examine
State
and
ents
Superintend-
Interstate
company,
United
contracts
also,that
Examiners,
directed
such
the
to this end
made
and
same
contracts
directors
of Insurance, and
Commission
of the
damages
any
without
the
all
set
quired
re-
ested;
is inter-
director
any
investigatethe
recover
urged
contract
Attorney-General
to
He
stockholders,and
officials every
proceedings
proper
to the
in which
the State
or
come
corporation be
of every
report annually
and
April, 1913,
minority stockholders.
president
to
to
of
the
in
the government
that
Review,
Law
the
proposed
Pam
Max
Commerce
the
insurance
records
com-
INTERLOCKING
railroad
pany,
and
company
in interstate
engaged
views
DIRECTORATES
careful
to
he had
for years
advantages
full
Pam's
the
As
are
nently
promi-
counsel
organizationof trusts,
opportunity of weighing
the
and
conviction
practiceof interlocking
the
that
publicand demands
much
is significant. And
can
legislation,
directorates
drastic
is a
to the
menace
be
said in support
he
proposes.
to
fundamental
be
to
remedy
effective,the
be
comprehensive.
and
PEOTECTION
OF
ESSENTIALS
Protection
which
measure
specific
of the
But
THE
that
tion
corpora-
Mr.
commerce.
study.
identified with
must
other
every
entitled
His
61
minority
stockholders
demands
making
in
contracts
not
voidable
which
that
director
all such
merely,
has
contracts
but
be
absolutely
void.
In
the
case
of
railroads
and
public-service
to
private
For
and
interlocking interests
disloyalty;and
the
breed
efficie
in-
public pays,
PEOPLE'S
OTHER
62
in
higher
the
rates
whether
be
rates
contracts
does
sides,the
prevail.
not
And
railroading,where
effective
the
But
this
the
competition
in its
is
own
particularly
field.
for
reason
prohibiting
of
protection of
from
the
the
incidents
Conclusive
of
evidence
the
and
For
even
and
the
directorates must
end
to the
not
most
the
be
the
remove
Money
than
practicein
and
Trust.
the
Trust
graft.
that
benefited
without
the
all
of
objections.
efficiencyare
because
'prohibited,
Money
public
efficient form
politicalliberty;
imperiled by
to break
the
important
more
the
(if obtainable)
was
organization, would
protection
inefficiencyand
practice of interlockingdirectorates
stockholders
true
often lacks
so
is neither
nor
are
properly spent
interlockingdirectorates
stockholders,
who
tion
presump-
company
compelling
important
common
been
the
properly
are
directors
through
cannot
whether
known
company's
spent has
money
excessive
corporation
when
both
on
that
the
made
are
interested
in
of
or
it is
until
For
expended.
adequate
are
earnings
and
graft
determined
gross
in poor
or
for
penalty
MONEY
these
dustria
inare
Interlocking
it is
sible
impos-
putting an
largercorporations.
INTERLOCKING
BANKS
AS
The
DIRECTORATES
PUBLIC-SERVICE
CORPORATIONS
peculiarlyobjectionablewhen
because
of
the
institutions.
part of
as
be
factor in
treated
business,but
recognizing it
and
right than
should
be
the
law
not
The
to loan
money.
granting
the
private
And
already regulates
to
of
bank
a
no
more
its powers
use
destroy other
to
withholding
or
determined, so
borrower, solelyby
therefrom
It has
or
up
railways.
as
function
carrier
build
almost
public services.
ways.
The
businesses.
loans
making
those
are
our
common
specificallyto
as
of
important
an
They
commerce
of the
to be
it in many
is to receive
by
one
as
are
far
is
banks,
to
functions
system.
applied
deposits
currency
a
and
nature
Bank
our
essential
loan
63
of
the
concerns
as
interest rate
the risk
and
siderations
involved; and not by favoritism or other conforeign to the banking function.
Men
safelybe allowed to grant or to deny
may
of
loans
see
bank
their
own
are, in the
resources
fourths
nor
to
by
main,
may
not
the directors.
of the aggregate
resources
they
whomsoever
their motive
fit,whatsoever
stockholders
money
But
be.
owned
by
Nearly
of the
the
three-
thirty-
PEOPLE'S
OTHER
64
four
hold
industry
of
reservoir
common
that
of
the
interest."
And
the
be
should
be
applied to
Senator
"My
Chairman
utilityinstitution
is
and
the
to
unjust
banks.
the
Committee
bank
be
cannot
the
simple
invited, under
government,
making
such
of
is that
and
private affair,for
public
forbids
and
judgment
own
the
with
have
the
logicof
this is
United
beyond
of
treated
as
receive
public deposits."
must,
of
and
bank,
course,
be
The
private, should
officers of
banking
entrusted
the
in the
where
public-utility
institutions,
directors
the
its interests
All banks
escape.
as
that
safeguards
right to
public-
treated
reason
public has
is
The
as
preferenceshould
operationsof
Owen,
Banking
on
the
the
public
which
rule
general
merce
com-
complete,
so
with
"affected
giving undue
or
resented
rep-
recognized
public-servicecorporations from
discriminations
are
deposits,as
quick capitalis
businesses
Morgan
influence
bank
upon
the
dependence of
The
deposit banking
one
which
predominant
by deposits.
and
in
institutions
banking
associates
MONEY
be
they
tions
institu-
with
wide
"We
cannot
which
public
the
that
say
adverted, and
have
we
MONEY
PEOPLE'S
OTHER
66
others,
business
of
banking
contrary
we
,are
it may
opinion that
of
regulationto prohibitionexcept
it may
prescribe."
as
would
make
interest
refrain from
has
from
ditions
con-
It
make
might
shall
private
restrictions
or
bank
of his investments
some
making others;but
holding of
banks
hardships
directors.
dispose of
director
director
undue
impose
bank
upon
in which
loan
no
such
upon
that
requirement
the
on
go
the
PRECEDENTS
OFFICIAL
Nor
whole
On
its control.
under
not
are
taking the
the State in
sufficient to warrant
to
interests
that
the
from
holding another,
it often
office
one
happens
precludes a
compels
or
and
him
man
dispose
to
judge
in which
case
interest;and
act
in any
upon
disqualifiedfrom
he
has
the
even
judges, in
most
arisingin
matters
sittingin
order
could
in any
matter
Interstate
conceivably
that
Commerce
owning
any
might
or
free to
all investments
their
before
Commissioner
bonds
to be
bias
come
any
financial
smallest
which
from
is
stocks
judgment
them.
is
An
prohibited
in any
corpora-
INTERLOCKING
tion
subjectto
It is
officer
the
serious
of
DIRECTORATES
of the
jurisdiction
criminal
the
offence
federal
pecuniary profits of
indirectlyinterested.
And
the
directors
exercise
today
which
of
function
country's welfare
than
departmental
SCOPE
In the
four
1.
executive
to
transact
corporation in the
is
directly or
stituti
great banking in-
our
judges
less
no
of bank
credit,
important
of the
judges
to the
of
our
commissioners,
commerce
heads.
OF
THE
PROHIBITION
this
subject,
directorates
potentially competing
corporations be applied to
as
2. Shall
or
well
from
applied to
banking
to
the
tutions,
insti-
banking
state
the national
as
it be
only
3. Shall
banks?
all kinds
of corporations
institutions?
principleof prohibitingcorporations
management
both
for any
he
that
any
the ultimate
as
Commission.
government
business with
government
67
has
directors and
applicationto
private interest
officers
officers
only?
or
be
be
the
applied to
confined
in its
OTHER
68
4.
Shall
prohibit
which
PEOPLE'S
the
principle
transactions
one
stockholder?
of
its
with
directors
MONEY
be
applied
another
is
interested
so
as
corporation
merely
to
in
as
CHAPTER
SERVE
The
that
the
Combination,
shown
of
cure
measures
aid
in
remedies
is
not
advise;
required
is
by
alleviate
the
proposed
are
Indeed,
' '
Serve
69
ment
enact-
framed
to
and
Pujo
legislation
present
suffering
But
"local"
major
of
many
and
ones;
which
is
operation
is
treatment
one
dustry,
in-
provisions.
has
fundamental
the
the
freeing
evidence;
the
Committee
the
although
of
the
disease.
possible, without
simple
vice
to
the
adopted
arresting
This
necessary.
to
disclosed
were
fundamental.
"
wisely
are
effected.
interests,
recommends
undoubtedly
would
of
view
is
specific remedial
abuse
some
if all of these
the
With
Committee
these
it
which
Their
tion
concentra-
all-pervading
twenty-one
of
Most
inevitable.
intertwining
the
system.
the
and
the
clearly
so
financial
by
the
presented
Trust
intense
be
to
has
Money
means
"
ONLY
appear
discloses
and
meet
the
conclusions
the
present
MASTER
Committee
concerning
diagnosis
is
ONE
Pujo
facts
IV
Master
hesitated
treatment
only.
' '
PEOPLE'S
OTHER
70
The
incident
evils
of
are,
in
have
are
stricted
re-
that
recognizes
Committee
First: The
respect
sphere.
narrow
very
that
the
but
fully recognized;
course,
ates
interlocking director-
to
prohibitions proposed
to
MONEY
tentiall
po-
not
this
"
prohibition
of
directors
to
national
banks,
saying:
"No
officer
shall be
officer
an
of any
or
director
or
trust
under
director
or
in the business
in
buying
loaning
privatebanker
of bankers
and
no
of any
or
that
person
national
member
is
of
engaged
trust
company,
financial
firm
of bankers
is located
that
or
in the
in which
engaged
in
same
such
business:
or
ganized
or-
that is engaged
on
money
receiving deposits:Provided,
at
financial
collateral
sellingsecurities except
director
or
bank
ized
law, that is author-
depositor
on
provided;
section
officer
and
of
other
other
federal
or
to receive money
of any
institution,whether
or
state
bank
national
or
company
corporation
other
of
shall
bank
firm
as
or
in this
be
who
such
or
engaged
city,town,
national
Provided
bank
or
is
of
bank,
institution,
banker,
at
an
ship
partner-
in the business
That
or
or
in business
villageas
is located
further, That
or
SERVE
director
such
of
the
bank
laws
is
at the
be
may
than
more
or
partner of
officer
an
71
director
or
organized
company
in which
in business
and
of
such
national
doing
business
place."
Second:
The
Committee
corporation should
one
of the
but
it restricts
has
national
credit
that
in which
contract
private interest;
prohibition(1) to
the officers,
saying:
national
bank
advance
this
(2) to
or
recognizes
make
not
management
and
money
bank
the state
engaged
"No
ONLY
trust
one
of
same
banks,
MASTER
national
director
not
by
ONE
shall
lend
purchase
or
or
discount
or
any
of its officers
such
of which
of
indirectly,or
or
officer
such
stock,
for
or
lend
or
on
owns
of
upward
of
behalf
partnershipor
from
any
officer is
ten
or
has
advance
of any
member
as
or
herein
of
such
officer or
officer
in which
or
of
which
capital
credit
of any
purchase
he is
or
specified,
interest
the
or
money
partnershipor corporation of
is
beneficial
corporation,or
such
ship
partner-
centum
per
of any
member, directly
corporation in which
any
or
or
or
such
such
any
from
to,
curity
se-
any
officer
ested,
financiallyinter-
of any
corporation
PEOPLE'S
OTHER
72
of
which
time
of its officers is
any
of
Prohibitions
intertwining relations
will
killed.
not
director
common
should
companies,
it should
snake
Trust
Money
financial
end
not
in
well
as
apply
to
as
and
The
prohibitionof corporate
one
of the
should
and
to
apply
to
other
national
such
to
classes
banks.
broad
directors,as
banks
state
and
and
industrial
porations
cor-
trust
porations
cor-
in which
private interest
well
as
to
officers,
companies
trust
of
institutions.
contracts
has
be
banks; and
banking
to
management
banks
national
to
railroad
fully as
as
prohibition
to state
visions,
pro-
most,
potentiallycompeting
apply
stricted,
re-
concentration.
will, at
The
so
other
supplemented by
however
scotched,
officer at the
an
transaction."
of such
The
MONEY
and
of
corporations,as well as to
And, as will be hereafter shown,
legislationis
within
the
of
power
Congress.
Let
THE
us
examine
PROHIBITION
this further:
OF
COMMON
COMPETING
1. National
Banks.
DIRECTORS
IN
TENTIALLY
PO-
CORPORATIONS
The
objection
to
mon
com-
as
directors,
applied to banking institutions,
is clearlyshown by the Pujo Committee,
OTHER
74
PEOPLE'S
of Scotland
banks
who
persons
board
all exclude
no
The
of
with
designed
ago
the
through
wealth
enacted
laws
Massachusetts
of
curb
to
savings
by deposits in
in 131
banks, located
These
only
banks
the
banks
194
in
Massachusetts
bank
can
bank.
years
hold
That
ago
could
hold
the
savings banks.
These
different
194
In
by
few
provides that
(director)of
office in any
passed
was
towns.
distinct;not
order
a
great
is represented
and
officers of
office in any
attempted
of the individual
discernible.
Of
that
the
financiers,
no
tive
execu-
any
savings
other
savings
in 1876.
A few
similar
Massachusetts
tion
concentra-
separate
of the executive
none
tion
genera-
cities and
law
statute
large part
in fact.
any
it was
than
among
in
wealth
Common-
different
trustee
or
the
banks.
be controlled
not
officer
are
are
but
form,
may
its
distributed
are
bank.
one
financial
the
on
is also
by
more
of Massachusetts
deposits
be
to
than
more
By
banks.
recommendation
Committee's
harmony
other
is allowed
person
of management
their boards
from
in
directors
are
law, in Russia
MONEY
thus
and
financier;
When
aggregate deposits
in
that
savings
national
to curb
no
Act
bank
bank.
the power
disadvantages
was
passed the
were
SERVE
ONE
MASTER
ONLY
75
of deposit accounts
$243,340,642; the number
739,289; the average
deposit to each person
the
the
deposits
aggregate
the
number
of
has
the
deposit
few,
least
at
consistent
with
of the whole
banks
and
to
state
which
York
there
15
those
are
of
resources
Trust
and
of
banks
members
of the
November
on
has
one
former.
If
in
banks
directors
common
or
national
of which
clearinghouse;
Indeed
of
resources
Trust
Money
trust
In New
companies
but
the Bankers'
$205,000,000,
with
Company,
are
the
among
Trust.
to
in
2, 1912, aggregate
$827,875,653.
of the
The
Companies.
banks.
essentially
are
$232,000,000,
the country
state
of
prosperity
including those
37 trust
tools
only
the
appliesequally
with
Company
the
Guaranty
useful
with
common
are
had
15
the power
respect, is entirely
Trust
prohibiting
companies
only
sachusett
Mas-
$381.04.
curbing
this
and
institutions
City
2,200,917; the
account
and
efficiency
Banks
for
banking
in
$838,635,097.85;
were
that
1, 1912,
people.
2. State
reason
shown
November
accounts
each
deposit to
average
and
On
population $144.
of
No
the
sources
re-
most
bank
in
latter;
trust
companies, the
76
OTHER
charters
of
leading national
would
elude
under
state
laws.
prohibition
trust
one
same
place.
door
to
The
bank
with
has
directors.
one
can
as
be
in
of
is
than
from
of New
York.
each
trust
would
are
The
has
in
the
the
place the
first
of
board
the
director
of
and
thus
be interlocked
with
who
trust
38
no
rector
is di-
directors
in
of 38
ent
differ-
of Commerce
Bank
in the
bill
company,
of the
National
a
Pujo
director
companies
Thirty-seven
company:
bank
opens
director
such
one
becoming
York
national
the
prevent each
to
37 trust
become
under
bank
national
nothing
the
In
while
trust company.
There
tentiall
po-
interlockingof any
with one
trust company
only,
trust companies as the bank
For
more
bank
the
the
permit
many
one
concession
proposed
not
but
in
doing business
dangers.
grave
national
director
company
provision would
there
directorships in
common
be
to
man
and
apply
even
same
of
failed to
has
Pujo Committee
The
institutions
the
by re-incorporating
control
federal
less
doubt-
would
banks
surrendered; and
be
soon
MONEY
PEOPLE'S
directors.
City
directors
of New
might
different
New
37
companies
the
trust
National
York
Bank
of
SERVE
ONE
Commerce,
the
unless
Pujo
the
also
bill
would
still be
Committee
different
by
national
actually conducted
least
in
classes
the
of
makes
loans
different
by
bank; but
business
bill
of
is
from
from
by
private
that
is of "a
acted
trans-
business
company
is, at
have
a
the
as
the
its
that
the
banker
the
these
bank
also transact
may
character
Committee's
the
each
common:
private banker
of
trust
sion
conces-
properly
But
institutions
banking
each
and
that
to
business
in
elements
of the
to
as
bank
company
bank.
by
of
so
It is true,
trust
from
character"
number
amended
were
by"
of
adopted.
doubtful.
be transacted
may
the
the wisdom
company,
77
recommendation
possible interlockingof
singletrust
Pujo
ONLY
limiting
were
if the
even
limit
the other
Committee
directors to 13
But
MASTER
of
two
vital
deposit,
deposits.
business
some
properly
ducted
con-
of
the
terms
engaged
receiving deposits
would
in
be
OTHER
78
MONEY
PEOPLE'S
The
developed the Money Trust.
interlockingof other corporations has been an
And
the prohibition
equally important element.
be exshould
of interlockingdirectorates
tended
to
potentially competing corporations
whatever
the class;to life insurance
companies,
railroads and
industrial
companies, as well as
has
The Pujo Committee
banking institutions.
shown
that Mr.
George F. Baker is a common
which
have
which
cent,
all anthracite
associates
are
the
competing
Pacific
the
and
the
Louisville
Coast
marketed
of all anthracite
cent,
per
Line,
industrials
and
railroads
Northern;
between
Money
PROHIBITING
the
Southern,
the management
Atlantic
Electric
tric.
Elec-
be
severed,
broken.
IN
PRIVATE
has
and
large potentially
WHICH
THE
INTEREST
principleof prohibitingcorporate
in which
posedly
sup-
Northern
the General
CONTRACTS
HAS
gan
Mor-
the
the
all the
is to be
COEPORATE
MANAGEMENT
The
Trust
88
own
such
per
partiallycompeting
and
between
nexus
and
Westinghouse
Manufacturing Company
The
as
80
The
between
Nashville
like the
and
deposits.
nexus
Great
"
haul
contracts
private interest
SERVE
is
ONE
in
applied,
the
only
only
to officers.
permitted
national
have
of bank
banks, and
in them
to be
corporationsare
the
practice;and
directors
owners
be
to
are
in
even
free
thereon:
in which
in his
after
that
nor
be interested
lenders
transactions
to
in syndicates,
participate
underwriting of securities in which
may
or
be made
funds
or
their banks
the
All other
mendations,
recom-
not
promotions
only
79
conflictingprivate interest,except
must
loan
to national
the
ONLY
Committee's
Pujo
continue
to
banks
they
MASTER
; and
ample notice
facts shall be
underwriters
spread
shall
shall be authorized
and
co-directors;
to
or
other
or
director is interested
name
own
as
of the
the records
upon
that
corporation.
The
Money
would
Trust
be disturbed
not
be
exercised
impairment;
through
officers
but
by
the
the
somewhat
a
are
the
resign
financial
as
would
continue
power
would
ordinarilytheir obedient
are
who, as bank officers,
in
without
appointees
of
the
be
become
of
exerted
Bank
directors; and
Individuals
important factors
concentration,would
officers and
law
substantial
channel.
servants.
now
Under
few
different
by
merely
doubtless
directors.
OTHER
80
The
loss
PEOPLE'S
No
the
"
Morgan
of
directors
they
one
of
aggregate
affect the
not
banking
these
as
operations.
to officers would
operations with
boards
of
any
with
their vast
on
carry
If there
bank
firm
prohibitionlimited
Morgan
officer in
an
institutions
banking
thirteen
resources
is
Co.
of the
member
be
could
involved
official salaries
of
easily compensated.
J. P.
MONEY
tions.
institu-
minority representationon
were
the
(which
Committee
Pujo
wisely
of the
directors
using their
minority stockholders.
would
primary
not
to
purpose
But
safeguard
of
to
through
the
their
prevent
intertwined
prohibitionlimited
the
vision
pro-
public; and
the
is
legislation
ers;
injuringstockhold-
injuring the
control
to
the
injury of
then, the
even
Trust
Money
but
No
not
the
to
power
of
officers will
public
the
banks.
materially
prohibition of interlockingdirectorates,
if
applied only
would
to
all banks
practicallycompel
to resign from
representatives
the thirteen
and
banking
trust
the
panies,
com-
Morgan
the directorates
institutions
with
which
of
they
the
corporations,which
as
use
if
it
fit.
sees
all
applied to
affect
even
proposed prohibition,
banking institutions,would not
The
of
source
well
J. P.
"
PRIVATE
THE
industrial
should
apply
conflict
the
where
second
corporationin
is also
that
merely
of interests
serious
as
another
with
if his interest
even
is
corporation
TO
ing
corporation enter-
its directors
of
from
INTERESTS
into transactions
one
of
PROHIBITION
INTEREST
prohibitionagainst one
which
tions,
corpora-
of directors.
STOCKHOLDING
The
include
to
quickly retire
will
Co.
substantiallyall boards
APPLY
power.
members
banking institutions,
as
Morgan
Morgan
made
prohibition is
the
and
railroad, public-service,
as
is free to
firm
Morgan
directlythis great
If,however,
MONEY
PEOPLE'S
OTHER
82
in
he
the
be
may
corporation, as
if he
just
only
stockholder
second
stockholder.
director
is
of
in
interested,
in
also
were
director.
One
of the
which
exclusive
Committee,
is the
the American
Bank
York
Exchange.
Stock
issue of New
York
taken
was
Note
City bonds
the
Pujo
privilegegranted
Company
A
by
cerning
con-
recent
was
to
by the New
$60,000,000
denied
listing
SERVE
the
on
ONE
Exchange, because
submit
to
exaction
an
for
Company
New
York
work
this
explain
shown
that
the
with
but
was
there
when
in
the
No
director
do
it
the
American
to
was
Company.
Mr.
was
Morgan,
of the
American
sufficient influence
was
the
tending
American
member
of the
the
largeststockholders
give
to
As
to
the American
would
$44,500.
prominent
men
refused
bonds,
Company
for
6,000 shares.
firm
the
by
83
extraordinary monopoly,
stockholders
Among
city
of $55,800
Note
well
ONLY
the
engraving
Bank
equally
were
MASTER
Morgan
Company;
exerted
how
some-
the
Company
stock
exchange monopoly.
The
Pujo Committee,
that
be
a
as
as
direct
potent
mend
recom-
has
prohibited,recognizesthat
of
interest
stockholder's
may
be
failingto
in which
transactions
private interest
while
an
than
more
director
of
instrument
personal interest;for
certain
size
influence
it recommends
that:
"Borrowings, directly or
indirectly by
permitted, on
condition
that
notice
shall have
given
been
loan
if it
affords
did,
lesser
fix
of
low
so
Bank
Certainly
"
even
be
extended
terest
stockholdinginthan
smaller
effective
most
10
in
$6,000,000 investment
cent,
per
undoubtedly
if it had
election of his
been
not
of
City
the
have
of
Bank
bank's
been
J. P.
sented
repre-
stock;
effective,
supplemented
to the board
son
SPECIAL
The
be
only 6
would
public; but
inducing
Morgan's
stockholdings in the
Note
was
only three
Company
The
cent.
and
to
singledirector,much
Mr.
American
Morgan
such
it is difficult to
financial
that
cent., might
favors.
per
applicationought
its
action.
influence
per
which
at
the
protection to
no
stock-holdings. Indeed
limit
entered
be
shown
notice
meeting
full
authorized."
was
As
to
of the
that
shall
transaction
the
the minutes
upon
and
his co-directors
to
of
statement
MONEY
PEOPLE'S
OTHER
84
by
the
of directors.
DISQUALIFICATIONS
Stanley Committee,
were
after
of
investigation
serious
industries which
that
are
sentatives
repre-
largely
SERVE
dependent
ONE
railroads
upon
prohibited from
officers
MASTER
serving
ONLY
should
85
be
absolutely
railroad
as
directors,
employees. It,therefore,proposed to
officer or employee
disqualifyas railroad director,
any
or
person
railroad
selling
or
rail
ing
engaged in the business of manufactur-
structural
or
coal.
The
is the
in
drastic Stanley
desire to do away
of the
life-insurance
of
Armstrong
investigation showed
in financial
factor
exercised
was
ownership
their
and
in 1905
they
legislationdirected
the
Equitable
of
the
banks
bankers
did
bought
associates
so
the
life-insurance
and
trust
control
the most
power
banks
controlled
by
The
in part.
stocks.
Mutual
But
And
and
stock
strong
Arm-
life-insurance
The
The
potent
Their
the
or
surance
life-in-
that
huge deposits.
banking
provision,be
concentration.
which
of
companies.
largely through
companies
trust
and
directors,officers
as
employees
were
great
Trust.
similar
selling
how
employees
acting
companies
and
present abuses
Money
should, by
disqualifiedfrom
mining
shows
bill,
with
Directors,officers,and
institutions
locomotives,railroad
or
steel,or
to
cars
panies
com-
Life and
the
Morgan
now,
instead
companies controllingthe
companies,
the
the fife-insurance
latter and
companies.
the
OTHER
86
Trust
Money
of
all classes
MONEY
MAT
PROHIBITION
THE
HOW
The
PEOPLE'S
be
cannot
LIMITED
BE
destroyed unless
directors
prohibition
of
transactions
by corporationsin which
has
follow
that
interlocking
prohibitionmust
the
corporation of each
are
class.
entirelyconsistent
with
ethics
demand
that
from
has
universal
making
in
its
305,336.
of
(other than
Of
or
their
these
either
could
interest
1610
$5,000,000.
Few
also be
poration
cora
should
number
Dec.
rector
dibe
of
31, 1912,
have
capital
corporations
capital of
less than
affiliations.
statute
The
States
Corporations (other
of less than
of the
every
business
in which
only
to
not
exceptions
and
contracts
with
agement
man-
prohibitinga
application.
banks)
$5,000,000 could
conditions
rule
the United
than
more
Certain
private financial
corporationsin
was
the
of
it does
apply
stockholders
minority
and
merely protectingthe
Trust; although protection
the
the
But
private interest.
in
included
corporations are
for the
limited
present.
so
as
not
from
The
to
than
$5,000,the scope
prohibition
apply
to
any
SERVE
ONE
industrial concern,
capital and
MASTER
ONLY
regardlessof the
doing only
resources,
are
This
would
local
jobbers
excluded
exclude
and
from
banks
of less than
manufacturers
the
and
trust
less than
for
the
smaller
the
any
in
some
the
otherwise
wise
Like-
act.
in cities
might, if thought
the
present if their
In
their
resources
larger cities
the
cities,
directorates
community
of bank
would
all the
through
exclude
ject
subcome
over-
able
fear of
from
business
the
of
men
losing the
tunity
oppor-
accommodations.
and
even
objection which
directorates
bank
and
concerns
smaller
porations
cor-
commerce.
located
$500,000, and
less
to
industrial
the
companies
100,000 inhabitants
intrastate
not
operation of
advisable, be excluded,
capitalis
retail
of
amount
an
in interstate
some
87
its proper
subsidiaries.
And
as
a
to
poration
cor-
the
ment
prohibitionof transactions in which the managehas a privateinterest should,of course, not
apply to contracts, express or implied, for such
services as
performed indiscriminatelyfor
are
whole
the
service
community
POWER
question
to
power
conduct
of
banks?
And
asked:
other
if the power
banks
into
state
escape
from
bank
banks
ample
Congress
the
upon
national
than
Congress is
ited,
lim-
so
the
financiers,upon
law,
their national
convert
trust
or
companies,
and
congressionalcontrol?
both
to
answer
of
dominant
the
Has
limitations
business
of such
has
be
impose these
enactment
questions is
to
power
impose
gress
Con-
clear.
prohibitions
such
upon
banks,
trust
and
While
evasion
Congress
insurance
and
companies
has
been
not
companies,
life insurance
be
may
of
CONGRESS
OF
may
any
will not
The
to
depositors.
The
thus
public
services,common
for
ordinary service
like the
THE
the
and
railroads
by
corporations,or
all customers,
for its
MONEY
PEOPLE'S
OTHER
88
made
or
commerce,
it may
by
or
through
the
power
trust
or
to
life
railroad,public-service
industrial corporations,except
interstate
impossible.
granted
banks, and
panies;
com-
do
in respect to
indirectly
so
of the mail
privilege
taxing power.
Practicallyno business
in the United
States
can
PEOPLE'S
OTHER
90
has
no
the
issue
prohibit,or
to
power
MONEY
of bank
to
by
notes
regulate directly
banks, but
state
it
tax
a
state
bank.
The
power
of
has
of
and
Law;
of
instrumentalities
telegraph and
such
the
for
as
not
its exercise
is
dent
inci-
an
enacted
commerce,
and
the
full power
over
like
commerce,
of
the
has
congressionalpower
for, at least,half
should
cidents
ac-
telephone.
exercise
common
merce
com-
directly to
has,
it has
by
Congress
Employers' Liabilitylaw
Slave
As
it
regulating interstate
Railroad
White
undertake
or
prostitution;but
suppress
been
interstate
over
similarly utilized.
employees
to
the
issued
note
ordinarilyprovide compensation
cannot
the
Congress
been
bank
any
hesitate
now
to
gress
century, Con-
employ
urgently needed.
For
it where
hensive
compre-
prohibitionof interlockingdirectorates
an
essential
Freedom.
change
condition
Such
in the
to
other
purpose
of
Money
law
relation
bankers
our
of
our
attaining the
would
of the
businesses.
Trust
involve
New
great
leading banks
But
it is the
legislationto
unless it does
oligarchycannot
so, the
be broken.
is
and
very
effect
power
of
SERVE
But
the
though
essential
not
ONE
alone
supplemented
to
the
restore
by
MASTER
ONLY
of
enactment
such
of
industrial
liberty.
remedial
law
business,
emancipation
other
91
measures.
It
it
must
is
will
be
CHAPTER
is justlycommended
Publicity
to
and
be
the
best
already played
the
important part in
an
toward
The
charted.
counted
provisionsin
to be made
securities would
stock
be
That
remedial
been
a
towards
bill
have
New
and
located,
necessary
relief.
The
concerning the
and
with
a
the
surveyed
was
exchanges
doubtless
the statement
the
listingof
beneficent
effect.
publicity
pending
potent force must, in the im-
struggle,be
continuous
"
in connection
should
for service.
one
the Committee's
incorporation of
there
long
important
of
have
appraised. That
and
"
forces
concerning
most
attainment
hostile
and
first step
struggle
Committee
facts
The
Freedom.
the
Pujo
the
of
disclosure
contribution
But
The
Trust.
concentration, made
financial
for
remedy
Sunlight is said
electric light the
of disinfectants;
publicity has
policeman. And
as
diseases.
industrial
efficient
most
DO
CAN
PUBLICITY
WHAT
social
utilized
measure.
92
in many
ways
as
WHAT
PUBLICITY
CAN
DO
93
WEALTH
Combination
and
money
are
and
of other
the main
Money
control
banker
in the
But
is also
the
the
relative
in
financial
factor
steadily.
It
of
value
Insurance
of
eighth
of
control
which
was
one
per
of
cent,
the
the
traordinar
ex-
recent
wealth
as
has
grown
enabled
of
Mr.
Equitable
the
direct income
by
a
law
to
year;
Morgan
from
but
one-
it gave
It
legal
wealth
was
associates to
Life
this
less than
of $504,000,000, of assets.
enabled
ment
invest-
His
limited
of the
in
wealth
which
stock
Society.
investment
with
concentration
wealth
the
These
of the
And
his
in 1910, to pay
Morgan,
par
wealth
importance
was
people's
development
factor.
growth
years,
other
people's businesses.
factors
Trust.
of
from
buy
Life Insurance
Equitable and the Mutual
stituti
the stocks in the several banking inCompany
which, merged in the Bankers' Trust
and
the Guaranty Trust
Company,
Company
control
of $357,000,000 deposits.
them
gave
the
It
wealth
was
acquire
his
which
shares
in
enabled
the
National
which
cemented
he
institutions.
the
Mr.
First
Morgan
National
to
and
$21,000,000,through
triplealliance with
those
OTHER
94
PEOPLE'S
how
Now,
has
Some
of
Some
the
to
Then
was
of
toll
mulated?
accu-
accretion.
bankers'
by
operations.
wealth
as
of these
cause
of it is due
Some
wealth
capitaland
as
of.
the
tolls taken
exacted
been
to
main
huge
to
been
natural
it
breeds
But
avenues
of
extent
power
is the
wealth
wisely availed
vast
power.
this great
it is due
investment
MONEY
those
largefortunes
who
control
the
There
has
to investors.
"all
literally
breeds
that
the
traffic
will bear."
BANKEES'
EXCESSIVE
The
Pujo Committee
by
lack
by
the
unfortunately prevented
was
of time
COMMISSIONS
from
covering the
bankers
investment
as
underwriting commissions
could
exercised
have
by
bankers, as
years.
the
collect
Money
these
disclosed
have
so
taxes
Trust
data.
some
taken
amounts
ing
profits. Noth-
clearlythe
schedule
levied
be well worth
showing
within
while
power
now
recent
to
investigationmerely
But
the
promoters' fees,
and
demonstrated
the
presenting to
earlier
open
re-
to
investigations
illuminating,though
adic
spor-
facts.
The
syndicate which
promoted
the Steel
Trust,
WHAT
took,
compensation
as
securities
J. P.
PUBLICITY
CAN
for
DO
few
95
weeks'
work,
yielding$62,500,000 in cash;and
"
Morgan
Co. received
for their
of
this,
as
services,
promoting
stock
The
of
out
Tube
issue
limited
to
for
And
in cash.
sum
Nor
of the
cash
have
Nor
to
floatingpreferred
been
considerable
these
1/2
often
like burdens.
heavy charges
Even
concerns.
of
supposedly
took
cash
concerns,
to 10 per
exacted.
On
bankers'
10
points
common.
have
was
stocks
preferred stock
manufacturing
are
stances
in-
one-third
concerns,
issued,besides
raised
More
in many
of
industrial
credit
monster
were
high-classindustrial concerns,
of from
commissions
5 to
(or profits)
bonds
common
promotions.
commissions
for
$80,000,000 stock
of well established
cent,
of
trust
recapitalized industrial
stock
took
$20,000,000
syndicates have,
received
of all common
syndicate
common).
recently,bankers'
of
Trust
total
(preferred and
commissions
Morgan
railroad
high grade,have
At
time
been
when
been
confined
securities,
subjected to
the New
Haven's
the New
York, Westchester
"
Boston
"
Co.
Rail-
PEOPLE'S
OTHER
96
way
first mortgage
New
Haven
1/2; and
at 92
took
Railroad
credit
they
the
at
"
Terminal
Maine
about
these
88, and
marketed
were
92.
at
the
by
sions
underwriting commisgreat banking houses, not
these
of
large part
is taken
sellingthe bonds,
in
and
boro
"
tral
Cen-
corporation of unquestionable
"
marketed
were
Portland
the
bonds, guaranteed by
Company
the
bonds, guaranteed by
1/4. They
96
at
MONEY
Railway
most
"
its recent
financed
J. P.
risks.
incur
Morgan
that
that
"
Thus
the
Inter-
corporation
bond
$170,000,000
3 per
issue,
cent,
mission,
com-
others
suming
as-
sell the
to
when
prosperous
received
Co.
in
nor
underwrite
and
ranging
ar-
sell
the bonds.
The
aggregate commissions
houses
by leading banking
the
as
has
been
not
or
full amount
profit varies
has
issues
bearing
of
only, J.
P.
upon
of their
securities
Morgan
very
the
of
"
taken
transactions
rate
widely.
supplied
the
profitsso
only be conjectured,
can
disclosed,and
Pujo Committee
data
or
some
of
mission
com-
But
interesting
subject: Counting
interstate
Co.
the
the
corporations
directlyprocured
the
OTHER
98
agreements
creatinga
securities of interstate
supervision
the
Commission;
and
disposed of only
that
of
Some
be wise
with
Railroad
the contrary.
by
to
the
railroad
York
Stock
the
in
bidding.
public-servicecommissions
and
power;
this power
But
it may
possibly
the interstate
upon
recommendation
of the
Commission
Committee
have
or
the
the
on
New
aggregated in
$4,525,404,025,which
jailroad
security
new
corporations listed
Exchange
posed
pro-
be confined
would
the
to
are
corporations;and
issues of other
of investigation
tions
punish combina-
and
Securities
Pujo
be
prescribed
full powers
competition
be
regulationsto
such
to confer
Commerce
upon
state
exercise
the
that
prevent
the
of
placed under
be
Interstate
will discover
which
dispose
issue
the
railroads
the
Commission
the
now
of
under
bids, or
by
MONEY
their
of
PEOPLE'S
is
more
municipal
the
than
issues.
Publicityoffers,
however, another
and
even
promising remedy:
of
regulating
bankers'
charges
which
method
would
apply
and
railroad,public-service
corporations alike.
to
more
tically
automa-
industrial
WHAT
The
PUBLICITY
question
excessive
which
be
may
asked:
been
charges
CAN
DO
have
Why
submitted
to?
bear
of
banker-control;
kindred
investors
the
these
so
far
charges
of
borne
the
the
upon
small
by
of all
control
bankers
to
avenues
knew
buys
capital.
it
Is
not
the
the
from
the
But
to
be
exactions?
entirelyfree
fact
extent
banker
to
strike of
is
do
they
as
investor's
his
that
doubtedly
un-
the
recognizedly safe
if
which
is diluted
and
the
the
servility
ignorance
probable that,
underwritings, commissions
would
to
army
substantial
are
the
fully
as
large
submission
to
avenues
partly, also,
due
facts.
the
almost
investments
is
The
security buyers,
due, in part,
all
shifting the
in
succeed
Their
have
why
investors,except
community?
control.
banker
among
ultimately
investors, constituting
majority
from
since
corporations
as
burden
submitted,
are
relations,
But
competition.
to suppress
because
combinations
indirectly through
bankers
charges
directly through
interlocking directorates,or
and
these
tions,
Corporathe
for
exercised
99
of
each
the
vestor
in-
security he
by
excessive
profits, there
capitalagainst
these
unjust
PEOPLE'S
OTHER
100
STRIKE
THE
British
recent
view.
In
brief
MONEY
OF
CAPITAL
nine
issues,aggregating $135,840,000,
the London
by syndicates on
taken
was
but
about
only
average
the
by
the rates
no
well
supplied
presented an
long
hands
of
remain
and
the
that
that
which
afford,by
to
sell
issue
begun
in the
reason
climax
in
issue.
are
of
loan
become
they believe
that
to realize the
the
It
ill
will
for many
issuing and
discussed
loth to
lower
Stock
is
subscribe
the underwriters
of the commission
at
the
expressing the
question being
have
at the
revolutionary effect
system
subsequently
price, and
Daily
loans
new
city
have
The
public
were
London
Rothschild
great
present
the
for stock
to
reached
it may
underwriting.
liberal,
investors
The
series of rebuffs
many
the
upon
funds.
very
opinion
the
that
loans
"tight,"
was
were
the
on
explanation:
of investors
success
days,
public. Money
with
offered
were
of these
cent,
per
doubted
one
"The
10
ent
differ-
market, and
of interest offered
and
this
experience supports
can
they receive,
price
than
the
Exchange
has
public'sattitude.
The
public
WHAT
in the underwriter
sees
that
the
loan
has
were,
lower
may
it off at
to
of
if,when
be
would
high
the
issues
one
more
less need
to
await
to
it
as
at
that
an
he
tunity
oppor-
protest is
that
were
price,there
underwriters
the
pay
It is another
which
sures
in-
in return
in order
so
practicalprotest,
existence
middleman,
who
obtaining stock
of
public
were
commissions.
if
much
101
profitsubsequently. They
at
DO
middleman, who,
dividing that
them
CAN
subscribed
subscribe, but
these
offered
as
than
price
prefer not
so
opportunity
an
pass
not
shall be
its commission
for
PUBLICITY
of
the
of the features
one
present-dayfinance."
of
Compel
AS
bankers
when
public the
make
receiving.
or
PUBLICITY
Let
services, and
the
of
issuing securities
what
or
circular
a
bond
or
received
banker
the
what
REMEDY
commissions
every
advertisement
the
which
both
the
is
are
letter,prospectus
show
stock
and
is
clearly
middlemanstocks
knowledge
existingsecurityholder
prospectivepurchaser
bankers'
profitsthey
for his
bonds
to
fairlyentitled.
and
net
to
the
If the
OTHER
102
ing
PEOPLE'S
skill and
the
objection
risk
Such
it known.
in
the
investment.
there
In
classes
two
are
whether
issue
get
chieflyin
investor
price.
buying
knowledge
of the
security;and
the
present, the
at
and
to
the
investor
of the
investor
the banker
to the
as
investment
with
commission
(that is
the
quality
makes
banker
that
his
of
or
But
occupies
relation.
course,
Where
assumes.
small
of confidence.
one
promptly
security
The
it is this which
risk he
will
is interested
article.
judgment
banker
at the
chieflyin getting it
compensation should,
according
is
The
stock
exclusivelyupon
position inconsistent
bankers'
risk
is the
or
maker
good
for his
to
safety of
of securities
the
whether
The
relies almost
relation
bonds
interested
are
of the
marketing
for the
good article.
It
reason:
of risks: One
other
price; the
or
the banker
ready purchasers
judging
the
vestors
in-
commissions
profitsis demanded
investor
not
"strike," as
of bankers'
disclosures
it is
no
recentlyin England.
done
to have
be
can
If
will
investor
reasonable, the
seem
involved, there
making
to
MONEY
stock
The
vary
there
will not
be
price,the underwriting
insurance
premium)
WHAT
should
be
ought
not
to
PUBLICITY
CAN
be
to
paid
largerrisk.
for
more
is greater.
And
and
railroads
fix bankers'
prevent
it should
profits. And
that
there
archaic
The
law
fair
dealing.
begun
has
connection
to
to
bargains.
chandising,
simplest mer-
the
emptor is vanishing.
requirepublicityin
Federal
The
seek
not
be full disclosures.
should
doctrine of caveat
The
should
law
bad
making
from
recognized in
now
his
public-service
corporations)to
investors
it is
But
the
(exceptincidentallyin
undertake
with
induce
to
Now
risk
own
security,the
incentive
him.
relieve
to
banker
underwriting the
the
weaker
banker's
greater is the
customers
the
for
the
security,on
getting investors
practicethe
In
not
103
assume
weaker
DO
Food
Pure
aid of
does
Law
to
guarantee
be
learned
security
And
for
is
any
for
the
full disclosure
to
and
commissions
be
of
amount
excessive
marketing
investors
put
paid
security is
the
investor
to
their
the
of the
guard,
banker
Require
water.
profitspaid; and
on
it contains.
water
amount
of
amount
not
but
only
of
will
bankers'
OTHER
104
PEOPLE'S
will
compensation
tend
what
to
will in
"
EEAL
But
be
with
a
the
would
required a
with
the
instead
Nor
would
Stock
by
in
be
to
advertisement
which
public
the
be
is interested
the
provided
the
investor,and
could
in
facts
invitingthe
with
this
this
to
be
something
For
an
investor
requirement
not
waive.
putting
be
lar,
notice,circu-
in every
obligatory, and
investor
with
as
by requiring the
also
story.
bill,be adequate.
purchase. Compliance
should
deposit
to
tell the
to
incorporated,
home
done
Food
ingredients,
full statement
letter and
to
of
the
effective,
knowledge
best
merely
label
if
That
if the Pure
as
statement
with
or
state.
requiring the
filingof
suffice
of facts
Corporations
of
it must
statement
manufacturer
actuallybrought
stated
of
filing
Pujo Committee
be
To
And
It will not
ineffective
as
Exchange,
the
can
the
Department
of
quired
ac-
cease.
federal and
officials,
be almost
Law
unjustly
be real.
must
Commissioner
of other
score
large part
to the investor.
requiremerely
to
of
cessive
Ex-
DISCLOSURE
the disclosure
disclosure
reasonable.
this form
"
itself automatically
adjust
to
is fair and
commissions
wealth
MONEY
the whole
end
to
the
PEOPLE'S
OTHER
106
Not
long
house
was
taken
by
undertaking
his firm
stock
bankers
about
of the
been
asked
been
had
what
shrugged
know,
stock.
stock
We
to teach
he
might
had
give
of
B.
"
Investment
the
have
today secured
successful
the
give
dent
presi-
the business
he
have
If he
didn't
customer
for
$10,000 of the
his shoulders."
with
icans
practicalAmer-
like this:
statement
A.
We
said
a
him
shrug
to
of the effectiveness
Think
and
lost many
not
to
of the stock.
thought
to
fifty-
day
some
We
were
even
citywhere
his shoulders
him
There
had
in the
might have
we
couldn't.
we
we
could have
(naming
located). He
was
if we
much
to
leading bank
The
concern.
course," he said,
"Of
too
ferred
pre-
$250,000 in cash,
large part.
$10,000 of stock
of
favorite
ing
stock, amount-
ourselves;but
up
commission
now
common
participants. Why,
seven
the
floatinga
manufacturing
have
divide
leading banking
justifya
to
$2,000,000.
it all for
to
of
would
kept
for
one-third
to
had
of
took
besides
"that
member
ago
MONEY
machinery
Co.
Bankers
substantial
business
control
of
heretofore
WHAT
conducted
has
by
been
of the
name
with
capital
$5,000,000 is Preferred
which
customers,
we
were
owners
agreement
we
an
stock
able
$95
marketing
stock
to you
commission
little
over
$5.00 per
stock,which
commission
from
the
the
ferred
Pre-
shall net
or
at
$100.75
profitwill
share,
or
say,
received
we
confiding
share.
own
secure
Our
share.
of
price which
only
to
for
fix
to
we
"
clientele
large
in cash
owners
We
and
the
Manufacturing Company
be
which
Illinois,
have
per
107
$5,000,000 Common.
As
the
DO
at
$10,000,000,of
and
CAN
incorporated under
Excelsior
of
PUBLICITY
we
as
are
bonus.
to divide
This
cash
in various
in
proportionswith the following participants
underwriting syndicate:
C. D.
"
I. K.
"
bankers
Co., Philadelphia
Co., Chicago
such
notices
would
only reasonable
be
York.
Co., New
"
O. P. "
Were
York
Co., New
Co., Boston
E. F. "
L. M.
the
taken,
"be
the
common,
worthy
of
their
compensation would
investment
hire,"
for
ordinarily
of
case
make
an
many
be
that
is
only
for
financial
and
as
service.
useful
stock,
Co.
bankers
investment
essential,
can
preferred
Manufacturing
Excelsior
above,
to
the
marketing
For
MONEY
PEOPLE'S
OTHER
108
But
they
excessive
where
altogether
economy's
concentration.
should
sake,
be
but
ever,
how-
are,
services
and
with;
eliminated,
to
position
strong
banker's
the
dispensed
he
performed
There
charge.
cases
possible
their
to
doubtless
they
used
the
referred
were
middlemen
in
as
break
where
not
up
CHAPTER
WHERE
The
BANKER
abolition
greatly
end
THE
curtail
to
of
the
associates,
will
of
them
will
far
toward
go
But
concentration.
within
his
as
his
where
the
of.
availed
which
of
means
proper
can
be
legislation,
to
to
Committee
business
and
is
and
simple
he
where
practically
hand:
is
power
conducted.
"
every
be
must
remedy,
without
even
Eliminate
new
the
superfluous.
all governments,
109
welfare,
attained,
effective
applied,
at
near
be
has,
control
public
that
lessening
financial
banker
properly
to
ing
bank-
acquired
the
is
details)
arrest
investment
menace
widely
lies
banker-middleman
Today
the
specific
technical
tend
Freedom
New
the
Pujo
the
legitimate province,
extensive
even
of
correcting corporate
thus
and
aid, particularly by
with
dealing
and
abuses;
profits
Many
by
an
Publicity
commissions,
effective
will
by putting
power
exactions.
(some
directorates
combinations.
recommended
measures
If
bankers'
lend
undue
SUPERFLUOUS
interlocking
bankers'
concerning
so
IS
improper
many
curbing
VI
states
and
municipalitiespay
toll
sold.
should
bonds
Why
the banker
which
the
of taxes
levied
the
of
loan
bidder
on
such
some
sealed
sold
The
our
that levied
few
states
where
the
people
middleman,
at
though
even
upon
issues
the
of
highest
syndicates
bonds
which
considerable
city
every
on
to the
bankers'
of
the
cities escape
new
public auction, or
large blocks
to
and
him
by
or
the
proposals,the
dinarily
or-
rata
pro
to the banker
tax
Even
usually secure
are
But
can
has become
banker
state
sold at
are
stocks
by
it makes.
bonds
through
avenue
and
upon
cause
be-
It is because
the
him
all
on
is not
gatherer. True,
corporations.
payment
It
only
The
is less than
governments
they?
needed.
the
be reached.
tax
banker
in bonds
investor
universal
the
to
always
is
controls
banker
the
MONEY
PEOPLE'S
OTHER
110
profit.
unnecessary,
lects
col-
his tribute.
There
is
legitimatefield for
Investors
other
merchants.
already owning
such
bonds
must
through
And
holdings.
lack
investors,
there
are
they
or
established
an
or
which
those, states
which
in state
for
medium
which
dealers
as
municipal bonds,
and
many
must
banker
can
municipalities
and
among
distant
more
to distribute
states
sell their
reputation
seek
have
new
cities which
issues.
have
SUPERFLUOUS
established
an
market
at
direct
to investors
And
without
111
have
should
These
the intervention
bonds
and
The
not
business
The
functions
nothing
with
with
two
that
often
are
limited
very
with
to do
the
buyer and
seller
compensation,
of
per
one
the
par
cent.
value
banker
is
and
stock
He
The
has
of
or
of
he
the
broker
properly
securities,
sale
as
He
exercises
method
together,or
He
agent for
of
no
bringing
executing orders.
receives
moderate
also is
an
cents
for each
securitysold.
of the
not
principal,
must
the
service
his humble
For
in
the
possible.
banker
originalissue
specificorders.
discretion,except
is
combined; but
service.
their introduction
under
that
of the bond
financial
BROKER
essentiallydifferent.
are
performs
nor
Both
of the investment
be confused
broker.
AND
should
stocks
industrial
BANKER
of
prevailwith
libertydemand
toll be abolished,where
that
bankers'
home
like conditions
as
corporations,their
some
and
reputation
hand.
middleman.
BANKERS
mere
agent.
The
is also
on
ment
investBut
middleman.
He
$100)
merchant
he
112
OTHER
in bonds
and
PEOPLE'S
stocks.
MONEY
compensation received
The
accurately described
more
So
far
he
acts
securities
at wholesale
the
to
the
but
even
the
be
services
On
purchases
of
cially,
espe-
selling
risk and
rate
corpo-
large;
very
entirelyproper;
needed
are
and
of great value.
are
of government,
and
state
ipal
munic-
small
very
mission.
com-
sellingat retail
often
profits are
banker's
securities the
and
purchases of
are
even
issues
merchant's
the
for when
the
new
and
profits. On
securities
as
buying
the maker
investors;taking
merchant's
profitthan
behalf;buying commonly
own
from
cases
municipal bonds,
and
merchant,
as
his
on
as
concerns
as
state
government,
is in many
transaction
be
profit cannot
if
justified,
unnecessary.
THE
HOW
The
banker's
functions,and
First:
banker
BANKER
services
retailer to
SERVE
include
three
distinct
only three:
Specificallyas
has
CAN
the
sell
expert.
The
investment
responsibilityof the
only that merchandise
But
his
ordinary
which
in
responsibility
is
this
he deals in
an
banker
stock, the
in
By carrying securities
a
MONEY
PEOPLE'S
OTHER
114
enabled
buy securities
to
thereby
are
times
such
at
forms
per-
they
as
desire.
require all
of
these
banker
is
needed, and
compensation
such
no
him
to
need,
the
and
municipal bonds,
and
state
there
is
clearlysuperfluous.
originalissue
in respect to the
And
is
of
payment
Where
is proper.
banker
investors
or
services,the
three
any
or
investment
securities
of
makers
Whenever
of
of
of many
our
corporate
some
It needs
of Massachusetts
Boston, Philadelphia or
of lesser American
The
are
city whose
reside in the
bonds
are
are
not
simple,that they
by
any
interpretationby
can
in
to
such
most
question.
Where
Bankers
the
they
easilysummarized
expert.
sible
pos-
particular state
prospective investor
an
bonds
of many
generally known,
be
scores
investments.
knowledge
common
who
financial facts
understood
of
investors;and, certainly,of
investors
so
regard
us
York, of
and
safe
tell
to
New
Baltimore
cities,are
part of the
American
or
or
NOT
SERVES
experts in value
banker
no
bonds
that
BANKER
THE
WHERE
are
and
without
often
SUPERFLUOUS
BANKERS
115
their own
employ, before purchasing securities,
accountants
to verifythe statements
suppliedby
the makers
of the security,
and use these accountants'
certificates as an aid in selling. States and
of the
municipalities,the makers
securities,
might for the same
employ independent
purpose
of high reputation,who would
public accountants
give their certificates for use in marketing the
securities.
Investors
banker-aid
sound.
that
Bankers,
the basic
before
invited
are
the
should
the
supplement
their
which
legality,
if states
It would
and
opinion
Neither
the
legalityof
should
to find investors
a
issue
new
of
a
willingto
its
at the
tors
invesanswer
of
their
legal
counsel
would
banker
take
of New
be needed
in small
up,
York
or
lots,
chusetts,
Massa-
own
cities. A
American
municipality seeking
investor
own
the issue.
investment
of bonds
other
hundred
an
of
municipalities
are
issue
an
from
examine.
to
purpose,
same
purchasing
to its
opinion as
an
out
with-
legalconditions
obtain
securities,customarily
counsel
also be assured
could
bonds
outset, some
to
market
would
direct
state
to
or
the
naturally experience,
in marketing a
difficulty
PEOPLE'S
OTHER
116
large issue.
in
And
MONEY
of
there is littleaccumulation
it might be
Investors
issue.
and
impossibleto
they
have
been
them, would
in
usually have
banker-fed
avoiding the
responsibleborrowers.
would
concerns,
this
the bankers.
others could,
as
the
of
advantage
dealingdirectlywith
like
to do educational
be much
less
private
work
are
; but
expensive and
that undertaken
investors
Many
trance
En-
monopolized by
be struggled for.
well
productive than
more
bankers
services.
Governments,
have
publicitywould
much
to
and
vention
inter-
attempt of states
to realize
middleman
the
The
their
as
investors,
time, be brought
conservative;
necessary.
market, hitherto
large
any
regard
to
dispense with
upon
But
as
be
to
naturallydiscourageany
cities to
and
buyers for
trained
of the banker
would
unemployed capital,
find
apt
are
where
community,
newer
by
already impatient
of banker
the
bankers
and
who
The
opening of
in
wider
now
some
than
never
this
have
now
unable
buy
state
new
field would
respects more
that
been
or
by
interest,
municipal bonds.
desirable
reached
to
furnish
and
ket,
mar-
certainly
the bankers.
SUPERFLUOUS
Neither
do
BANKERS
states
cities
or
bonds
pending
Where
there
and
states
should
"
quite as
well
of their
the
with
not
as
the
older
their
the
banks.
from
banker-control,and
people'smoney
should
other
the
no
people's
because
institutions
applicantto
cities.
not
preferential
these
will be received
large
our
people's
banks, often
Free
ing
await-
investor.
the
other
have
the
control
communities
while
to
of
use
investor.
largefunds,
Why
own.
their
temporarily,
with
Bankers
deposits in
than
bonds
bonds
they
favor
for
do now,
temporary
well?
of the
the
need
the bankers
as
carry
cities get
use
the
to
at least the
"
the
to carry
Bankers
money
banker
is immediate
distribution
money,
ordinarilyneed
distribution
cities
117
with
Boston,
borrow
greater
with
its
net
do
not,
of money
require large sums
does
need
of large sums
Such
time
met,
or
is to be
to time
when
some
taken
over
issues of bonds
where
risk
as
even
or
ordinarily cities
from
at
or
should
not
time.
one
any
not,
arise except
maturing loans
are
to be
existingpublic utilityplant
from private owners.
Large
for any
other purpose
are
usually
PEOPLE'S
OTHER
118
made
to
in
anticipationof
future
than
needs, rather
necessities.
present
meet
MONEY
efficient
Modern
remove
been
obligatory)will,in time,
made
need
of
large sums
at
each
for
time
one
ties
year'smaturi-
Purchases
paid from the year'staxes.
of existingpublic utility
rence,
plants are of rare occurand are apt to be preceded by long periods
of negotiation. When
they can, if
they occur
usually be financed without
foresightbe exercised,
will be
full cash
at
payment
Today,
when
time.
one
largeissue
of bonds
city,actuallypays
money
which
Then
the banks
the
banker
for
has the
getting from
investors
on
the money
bankers
from
of the money
so
is returned
the
banks.
to
the
The
city.
the
pay.
as
And
process
The
bank,
it
much
then
the
again
results
city loses by
for its bonds
in
not
as
it loses interest
And
received.
opportunity of borrowing
the banks
would
to
money
borrowed
operations.
loss to
the
own
posits,
get back, through the city'sde-
money
other
double
has
largepart
when
he
to
his
is made, the
For
the
citybonds bearingrarely
SUPERFLUOUS
less than
4 per
deposited
are
than
more
BANKERS
interest;while
cent,
in
119
banks
the
which
proceeds
rarely allow
interest
cent,
per
the
the
on
daily
balances.
HELPED
THAT
CITIES
necessityto help
was
and
the
by
then
were
But
had
to
to be
"borrowit
the
from
cities which
the
led
by
market
tight
Bankers
ties
Municipali-
high
cities
many
ordinance
sellingon
money
made
or
issues.
pay
rates
manded
de-
ited
prohib-
were
than
paying more
good municipal bonds
from
interest; while
cent,
4 per
of
law
to
And
of them.
bond
reluctant.
bond
new
unwilling
been
uncertain, money
was
investor
ordinary
were
The
themselves.
loth to take
were
cities have
some
Business
poor.
THEMSELVES
1/2
to 5 per
raised,and
direct from
basis.
the attempt
was
Among
banker-middleman.
raised money
cent,
in this way
were
the
delphia,
Phila-
Utica, New
York.
Blankenburg's
Mayor
Philadelphia, under
inspiration,sold nearly $4,175,000 in about two
days
on
4 per
counter"
with
sale
has
been
the assistance
another
made
of the
since.
"over-theIn
more,
Balti-
Sun, $4,766,000
the counter"
sold "over
were
basis.
Utica's
And
since
have
had
The
other
cities
experienceof Utica, as
G.
interest
sale two
Reusswig,
and
former
of the
sinking
funds.
there
that
About
been
I had
does
the
our
devise
unable
make
it would
that
there
the
means,
that
they
copy
if I could
laws
sale attractive
to
under
small
successful.
to interest
did not
their
plenty of
was
prove
The
restrict the
vicinityand
undoubtedly
bonds.
our
not
our
for
of Baltimore
our
the first
attention.
my
of small
for
unsold,
was
'popular sales'
law and
realized
local bidder
sell
to
I could
investors
by
of
The
cent.
per
bidders,which
no
in this immediate
money
I had
were
1/2
for
the other
left $90,000
in effect in those
methods.
I advertised
at par
Philadelphia attracted
officials as
which
general
purchased $10,000
we
That
this time
laws
sales.
of
prove
at 4
purchased
was
and
must
small
ler,
its Control-
by
of $100,000, and
issues,one
latter issue
time
and
bond
stated
which
1/2
June
"In
of
large
"over-the-counter"
their
Fred
sales"
cent,
largely"over-subscribed."
were
then
1/2 per
on
"popular
two
bonds
cent,
per
MONEY
PEOPLE'S
OTHER
120
understand
people
the
PEOPLE'S
OTHER
122
believe that
"I
citywho
in every
if the
had
been
for
We
would
easier
of
program
had
successful
been
sales
able
bonds
on
cities which
have
followed
houses
have
bond
to 5 per
our
cent.
such
sold, instead
the
too
each
different
THE
St. Paul
the
have
lines.
keep
of
the
relying
increase
the rate
amending
the law
Common
Council,
and
tionment,
Appor-
bonds
which
pricesat
shall
on
will pay
values
law,
to
of
as
PAUL
price.
The
graded according
different
have
make
basis of par
the
be
we
it,conditions
sale
maturities.
practicable
bids."
EXPERIMENT
wisely introduced
democratic
both
plan
of Estimate
issue should
ST.
to
came
complicated
except upon
more
of
who
the present
Under
are
of
one
any
pricesupon
to
in favor
office to
the old
to
fix the
of which
had
the Board
may
Then
Syracuse
to
means
at 4
that
manner
approved by
be
am
bonds
similar
along
this
by
of persons
way,
and
procedure
interest rate
in
law.
by
unable
have
upon
largenumber
buy their own
the
since
are
made
were
way
and
me
there
MONEY
into its
feature,which
Tom
experiment
L.
Johnson,
SUPERFLUOUS
Cleveland's
which
Editor-in-Chief
it
was
of the
savings of
the
necessary
not
at
only
He
sinking fund
Johnson's
in
agree
an
prove
them
to
deposits are
savings
be
to
have
to
was
largeblocks
the
sioners
commis-
purchase
to
and
at par
experience,he insisted,
bank
redemption
withdraw
them
certificates in
power
embarrassment;
wishing
those
the
take
(under their
the
in
combine
to
plan
have
Savings
that
showed
to make
obstacle
$10, and
to buy
securities)
bonds
tions,
large denomina-
an
commissioners
of
denominations
the
that
municipal bonds
fact that
interest.
concluded
with
$1,000, presented
son
John-
reaching the
of
sought
say,
Mayor
not
Colver, now
Mayor
to issue
ordinarilyonly
of the
and
people; and
issuable
overcome.
the
B.
officials.
investment
privilege. The
(but did
par.
practically,bond
are
W.
redeemable
bank
123
out
small
very
his friend
attention
small
thought
great mayor,
and
utilize),
had
BANKERS
as
feature
the
would
percentage
their money
nearly always
not
far in
is
of
small;
of
excess
withdrawals.
The
St. Paul
City Attorney
sinking fund
O'Neill
commissioners
approved
the
and
Johnson
4 per
net
in the face of
and
plan;
a
PEOPLE'S
OTHER
124
during September,
sales
net
average
to the
$150,000, the
over
about
being
$5,700
Colver, reportingon
on
of $502,300;
000; and
rates, sold
high money
cent,
amount
Mr.
MONEY
day.
experience,
said:
"There
have
been
about
the
average
making
There
or
$360.
to
banks.
deposit about
been
have
represented
the
banks, from
hiding places
these
month
and
dollars,so
that
deposithas
fallen very
and
every
the
indication
to
goes
As
are
various
the
once
ten
the
city.
twice
or
twenty
or
individual
the number
increase
from
rapidlyduring September
is that
of
ings
postal sav-
with
coming
average
considerable
the
deposited them
making deposits of
reason
savings which
of
from
people are
same
$350
deposits
for this
regularbanks,
the
and
the
had
accumulation
their money
time, withdrew
Now
people who
cases
many
chasers
pur-
certificates sold
no
first month
the
During
2,000 individual
and
less
of small
the
tively
rela-
frequent
as
on.
matter
stable,far
of
more
the
depositsand
invest-
SUPERFLUOUS
of richer
ments
BANKERS
people who
reinvestments
about
four
rather
and
freely.
hundred
dollars
watch
who
The
savings
believe that
deposits every
that
net
and
that
almost
fund.
We
in
of all the
care
gain for
net
or
to take
stillleave
three
will suffer
will disturb
withdrawals
with
man
he
and
for advantageous
anything before
the
125
the
day,
$5,700
day."
cities
Many
are
prevented from
now
bonds
which
compel
or
to
the
bonds
to be issued in
highest bidder.
be
should
These
promptly
as
success
largely due
to
the
has
to
limitations
legislative
EDUCATION
already
unpaid
teaching "the
people"
the
buyers
salesmanship.
Sellingbonds
the
to
of the bonds.
first of
to
of
confined
be
have
legislators
must,
is
tional
the educa-
But
not
work
educational
must
"
attained
been
done
be
nations
large denomi-
issue to be offered
leading progressivenewspapers.
work
laws
removed.
AND
SALESMANSHIP
Such
investors,through
require the
which
selling
quite as
all,study
people
is
OTHER
126
PEOPLE'S
The
art,stillundeveloped.
new
have
problems
there
will
be,
problems
which
which
must
in
nearly
be
time.
before
that had
doubtless
distributor
in
take
Cities must
problems and
to
even
It
to
bonds
have
was
from
ready
won.
these
for
Future
citybonds
important, because
direct
And
proper
an
of the
than
market
the
licity
pubomy,
econessary,
nec-
ers
bankfor
operationswould
the
is
rate
great
study
to
end, prove
higherinterest
be secured.
lions
mil-
spent
where
allow,on particularissues,
preparing
market
the
exact, if thereby
could
large sums
ultimatelyreaped
the
might, in
periments
ex-
overcome
the
somewhat
would
to
have
be
siderable
con-
of merchandise
had
their lessons
distributors.
work.
he
concerns
profits when
must
take
opening and
and
publicity;
tion
solu-
proper
attained; and
Individual
immense
Cities
will have
to be invested
in wise
The
which
local
local difficulties
to be many
was
market.
solved,and
There
and
cities,
community,
every
must
obstacles
success
besides
and
all states
overcome.
Every great
the
And
generalproblems
made;
failures.
be
must
generalproblems
out.
to
common
of the
even
knows
worked
yet been
not
these
MONEY
obtaining of
growing
huge
increase
ever
more
in loans
SUPERFLUOUS
which
attend
must
municipal
BANKERS
the
functions.
127
expansion
constant
In
1898
the
ipal
munic-
new
issues
aggregated $103,084,793; in
$380,810,287.
SAVINGS
In
New
sixteen
BANKS
AS
where
savings banks
and
of
system
1912,
CUSTOMEES
York, Massachusetts
states
of
the
purely
other
mutual
is
general, it is possible,with
little organization,to develop an important market
for
bonds
the
issued
have
direct
purchaser
by Massachusetts
averaged recentlyabout
and
those
of the state
Massachusetts
of
assets
about
$3,000,000.
000
are
invested
increasingat
year.
towns, and
the
Massachusetts
have, within
few
in the hands
classes
of bonds
subject to
state
years,
of
notes
the
over
and
come
year,
The
194
31,
of states
$60,000,of Massachusetts
$8,000,000 in
savings banks
$30,000,000 a
municipal
to be
bonds
issued
tax
holder,whereas other
usually held by savings banks
exempt
are
rate
notes
about
depositsin
The
issues.
and
aggregate
about
sum
towns
October
on
and
this
in bonds
cities and
are
with
$902,105,755.94, held
municipalities. Of
The
cities and
savings banks,
and
bonds.
$15,000,000
state
of
tax
of the
of one-half
of
one
per
cent.
PEOPLE'S
OTHER
128
of
the
banks, therefore,will
the
ies
cit-
cooperation of
easilydevelop a
"over-the-counter"
savings banks.
bond
And
offer similar
states
an
might, with
towns
Commonwealth,
for
to
Certainly Massachusetts
investments.
and
savings
lect
increasingextent, semunicipal issues for high-grade
Massachusetts
bond
Massachusetts
value.
market
MONEY
"home
market"
business
with
savings banks
the
the
the
of other
their municipalities.
opportunitiesto
coOpekation
obtained
Bankers
should
Why
by
of
means
the
municipal
bonds
with
over
could
hundred
and
aggregate
Every
are
year
issued
net
by
from
the
direct
eight
marketing
of
greatlyfacilitated.
each with a popucities,
lation
33
12,000
71
persons;
less than
of these
indebtedness
towns
5,000; and
over
indebtedness
about
states
be
population of
funded
have
has
population of
each with
and
free themselves
state, the
Massachusetts
cities
bination.
com-
by cooperation between
For
cities and
through
power
not
cooperation
the bankers?
of
their
250
5,000.
each
towns
Three
municipalitiesnow
outstanding. The
is about
$180,000,000.
$15,000,000 of bonds
the Massachusetts
and
cities and
notes
towns
PEOPLE'S
OTHER
130
under
regulation of,
proper
state, would
And
in another
serve
Massachusetts
354
the
balance
carried
of loans.
of
by
On
should
pended
unex-
unexpended
balances
2 per
banker, and
common
cent,
interest.
like those
The
of other
another
all of these
not
ceeds
pro-
they usually
farmers
and
supply
laborers
each
cities
Then
cities would
their
balances,all
cent,
on
other
with
cooperate through
credit unions?
per
in
towns
as
the
Sometimes
Why
with
city represents
municipalities
vary
is in need.
funds
balances.
these
the banks
from
depositors;one
and
the
important respect.
sometimes
revenues;
balances
from
municipalitiescarry
the
receive
aid
cooperationamong
These
and
cooperate.
might
state
MONEY
get, instead
their
of
money
worth.
was
The
Commonwealth
now
in its sinkingand
000
of Massachusetts
of
Massachusetts
other funds
funds.
nearly $30,000-
constituting
municipal securities,
nearly three-fourths
in these
Its annual
purchases aggregate
nearly $4,000,000.
Its
cities and
already exceeded
this year.
towns
have
It would
holds
purchases
be but
direct
from
$1,000,000
simple extension
of
SUPERFLUOUS
the state's function
a
BANKERS
to
cooperate,
joint,Municipal Bond
Union.
It would
efficiencyof
and
what
toward
is
the
even
indicated,in
as
SellingAgency
be
distinct
and
state
131
advance
municipal
important,
more
emancipation
of
dCredit
an
in the
financing;
long step
people from
the
banker-control.
COEPOEATE
SELF-HELP
from
Public-service
cities could
home
the banker
by
for
their
in this
by
by
corporations would
in the
from
money
In
of
some
manner.
leading
our
such
and
being
the
over
only
not
be followed
safetyhe
as
in
exactions,but
local support.
of valuable
and
be
corporations. Such
gain thereby
would
would
commissions
things economic,
wisdom
political,
and
supervisionnow
banker-control
winning
investor's
emancipate
similar
bonds;
the
state
some
of securities
freedom
in
tions,
reputa-
greatlyaided
issue
nationally, could
corporationsin
markets
exercised
established
well
by
as
in direct
The
his sympathy.
in
things
appeals to
the
people.
The
Pennsylvania Railroad
upon
its stockholders
for
new
now
relies
capital.
largely
But
MONEY
PEOPLE'S
OTHER
132
and
the banker
eliminate
should
the
2,700 stations
altogether. With
system, the Pennsylvania could, with
create
expense,
which
nearly as
be
would
money
BANKEE
be
It may
reputationsare
such
Was
Haven?
community
England?
Six years
of
were
laid bare.
called
to
the
there
the
railroad
ever
investors
dangers
Proof
The
more
than
New
The
were
was
pointed
out
furnished
to
of
disaster-breeding
cies
polibankers
Repeatedly, thereafter,the
was
the
banker-experts.
rottingtimbers.
be-bankered
more
banker-led
the
have
when
pitfalls?
ever
New
guard him
to
littlesatellites protected
[their
people from
the
is needed
banker
or
there
outlived
big bankers
these
its
meet
that
justifythem,
such
than
to
that
which
investment
Was
through
PKOTECTORS
urged
the conditions
from
slight
needs.
growing
the
obtainable
its
on
avenues
many
wider
took
bankers'
no
action.
attention
steady deterioration
of
the
SUPERFLUOUS
The
structure.
481
BANKERS
New
stockholders
Haven
books
are
residents
who
5,682 stockholders
in Rhode
Island; and
the New
Of
such
one
Haven
the
New
modest
to
sorelyin need
disclose
357
with
those
in
pen
New
Haven
of that
public of
the
disaster?
their
stock
eyes
and
own
to
England
it by
avert
the
voice
warned
or
Some
favored
the
of the
houses
Haven
were
But
to open
impending
timely measures.
New
or
customers
stock.
to the
"cooperate"with
Interstate
ment
mismanage-
sought
who
ceded
pre-
holdings. Some
Haven
joined those
of New
to
few
dispose of New
banker
the
continuous
impending
whispered
which
either
bankers
one
raised
againstthe
sold
to
Hartford,
years
investigationof
bankers
advice
and
in
26
Commission,
in protest
Boston,
York
recent
Commerce
were
citydirectories
in
from
investors
The
of
were
holdingswere
houses
New
Of
women.
10,222
The
protection.
33
in New
their
chusetts;
Massa-
York.
10,474 were
only.
banking
146
Providence,
and
of
of
3,510 in New
that
shares
disclose 11,-
Connecticut; 735
stockholders
means
ten
in
stockholders
Haven
133
not
the
disaster
New
ready
management
to
in
PEOPLE'S
OTHER
134
taking
endless
bankers
blind?
will
of
Perhaps
needs
of
supply
to
the
commissions
generous
nothing
the
it
New
Or
P.
is
for
securities;
new
protect
J.
MONEY
the
investors.
were
they
Morgan
the
Freedom.
banker
"
marketing
the
but
did
they
Were
afraid
to
these
oppose
Co.?
who,
most
of
all,
CHAPTER
BIG
J. P.
the
railroad
with
these
been
attained,
possibility
risked
funds
their
is
This
early
our
street
gas
true
had
success
of
the
of
hardy
'of
and
their
after
aid.
relation
had
success
after
demonstrated,
who
pioneers,
had
and
of
telephone
of
of
early railroads,
our
the
of
contrary
into
been
is
exhausted.
railways,
and
medium
"reorganization"
upon
industry;
industries;
branch
of
either
try
coun-
comfort
our
came
oil; of harvesting
and
steel
or
all, were
telegraph,
the
of
enterprises,
the
without
houses"
banking
the
statement
On
to
"initiated"
was
"great
fact.
contribution
such
every
the
in
the
That
to
all
of this
development
houses."
banking
letter
"practically
The
but
that
unfounded
prosperity
BUSINESS
declare, in their
industrial
taken
entirely
the
Co.
Committee,
great
nearly
"
and
has
LITTLE
AND
Morgan
Pujo
of the
MEN
VII
the
nearly
manufacture.
The
135
of
automobile;
the
and
the
wireless;
machinery,
textile, paper
even*
our
other
initiation
and
and
of
shoe
important
of
each
PEOPLE'S
136
OTHER
of these
enterprisesmay
financial
the
contributed
gratitudefor
what
the instances
are
by investment
such
by
to
banker-aid
it
cases
a
was
Here
the
the
nal
origi-
It
business
or
and
But
undertaken
small.
or
by
was
man,
well-to-
some
pioneer, who
there
our
other
was
than
will
you
find
was
small
"great banking
where
rare
considerations
largelyby
are
inventors,in
common
inventor
agement
man-
accomplished.
taking risks;or
money-getting.
business
enterpriseswas
some
of the
influenced
been
who
men
introduction
bankers, great
done
accustomed
has
extremely
financingof
friend
their
ized
character-
the
and
share,equally with
entitled to
usually
aid
for
necessary
that
properly be
"great transactions";and
as
do
MONEY
local
house"
banking
which
concern,
helped
not
ate"
to "initi-
undertaking.
RAILROADS
We
have
with
railroads.
in the
and
But
associate
the
their part
was
Middle
West
extent, similar.
Railroad
a
great bankers
not
in the
some
it is
to
come
owns
and
composite
the
The
railroads;
experience was,
Boston
166
ous
conspicu-
"
of
to
Maine
line; but
separate railroad
OTHER
138
all the
great
floated
the
and
the first
The
paid.
It
Mercantile
which
selling
that
ferred
(pre-
dividend
no
of transatlantic
founded
Co.
Marine
justsixty-twoyears
was
was
"
"
Morgan
on
regular line
Cunard
P.
$100,000,000 of stock
common)
been
ever
International
60, and
about
at
developed practically
lines,J.
ocean
$52,744,000 of
its
MONEY
enterpriseshad
individual
with
PEOPLE'S
has
after
steamers
Mr.
"
Morgan
Trust.
TELEGRAPH
The
story of the
for
money
developing
his
supplied by
Vail.
The
built with
P.
the
Western
Morgan
by
"
an
Co.
Union
the
is similar.
invention
was
more)
to Balti-
appropriationof $30,000
Sixty-sixyears
became
bankers
American
The
co-worker, Alfred
(from Washington
in 1843.
by Congress
J.
Morse's
partner and
initial line
was
made
telegraph
later
for
chase
pur-
Company.
HARVESTING
Next
to
machinery
railroads
has
factor in the
MACHINERY
and
steamships,harvesting
BIG
MEN
AND
BUSINESS
LITTLE
McCormick's
to increase
fold.
the
No
machines
was
made
it
That
reaper.
harvest
grain
twenty-
banker
investment
had
McCormick
Butler
Ogden,
which
the
factory
the
of
$3,000,000.
as
the
The
huge
preceding
financed
in
business
year9
after
interest
back
for
in 1884,
in
as
the
in
paid
family had
one
any
him
interest
with
been
power,
viously
pre-
only
at
aggregate,
that
formed
per-
had, despite
in
the
all
had
banker
as
was
$25,000 for
of the
able
Two
invention.
a
half
bought
thereafter,until
members
Co.
five great
business, McCormick
but
1847.
Company,
investment
mechanical
in
consolidated
then
evidence
$50,000; and
no
and
commission
Indeed, McCormick
Odgen
the
the
received
earning
no
years
them.
William
"
$120,000,000,
strong
"
but
there
combining
capitalized,in
$10,500,000
invention.
Morgan
Harvester
and
assets
P.
concerns
of
stock
built
was
and
International
capital
their
of
service
companies,
harvester
thirty-
or
builder,ex-Mayor
later,J.
Fifty-fiveyears
possible
of
first
man's
Cyrus
troduci
part in in-
any
means;
railroad
citizen
leading
without
was
139
his death
McCormick
in the business.
it
PEOPLE'S
OTHER
140
THE
be
It may
introduced
urged
before
capital had
and
been
had
would
had
the
that, consequently,it
in connection
firm
services
with
Kidder, Peabody
years;
and
had
the great
almost
Co.
Co.
over
in
Co.
fiftyfifty
forty-eight
banker
little part
as
to
seems
"initiating"
improvements
did bankers
"
"
Morgan
and
bankers
later industrial
of J. P.
years;
have
banker,
investment
fifty-five
years
six years
as
of investment
inquire what
The
were
established;and
development.
is
the accumulation
be fairer to
steamships,
harvesting machinery
America's
rendered
and
that railroads
developed
before
ERA
BANKER
telegraph and
the
MONEY
in the earlier
period.
STEEL
The
modern
old.
five years
in
a
steel
it.
initiating
of
man
in
process
1868.
iron
1898
had
America
"great bankers"
Andrew
large means,
steel and
we
The
industry of
In
had
Carnegie, then
introduced
the
is
the
no
fortypart
already
Bessemer
thirtyyears our
industry increased greatly. By
far outstrippedall competitors.
next
BIG
MEN
America's
of
reduced
AND
LITTLE
BUSINESS
141
"American
much
so
Peril."
that
It
Europe
talked
1898, when
was
of the
J.
P.
$20,000,000 of
time
stock.
common
the consolidation
About
of the
bridgeand
structural works, the tin plate,the sheet steel,
the
hoop and other mills followed;and finally,in
zation
1901, the Steel Trust was formed, with a capitalisame
of
$1,402,000,000. These
thirty years
came
after the
steel
combinations
industryhad
"initiated".
been
THE
TELEPHONE
The
old.
' '
had
to
man
to
warm-hearted, business
simple,enthusiastic,
of Haverhill,
Massachusetts,who was willing
risk his
own
money.
H.
in
this,most interestingly,
Telephone":
N.. Casson
his
tells of
"History of
the
"The
only
it
stake
business
reasons.
attached
to
he
Both
and
was
had
that
first,
would
not
that
of
was
not
much
at
thousand
the
And
dragged by
before
his
he
and
inch
an
the
ten
judgment,
of the
until he
thousand
dollars.
1878,
that
made
againsthis
stretch
to
he
total of
If the
he often
to
with
will and
his
credit
faced
toy'succeeded,which
which
were
telephone. Desperately
after note
and
any
was
long,expensive months
relief came
to Sanders,
compelled, much
was
business
within
many
He
first five
The
telephone.
so
1874
of the money
more,
ders'
San-
thirty-
than
Yet, from
telephones,and
Bell
manufacturers,
more
nine-tenths
his money.
that
worth
dollars.
on
be needed.
business, which
entire
time
any
advanced
spent
were
expectation,at
no
cutting out
had
was
His
rich.
five thousand
he
money
for
Hubbard's
to marry
soon
was
Hubbard
and
to
was
mainly
primarilyby sentiment, as
from
the blight of dumbness
little son,
so
telephone
Bell
removed
had
the
he
dared
and
money
of
future
the
on
had
who
man
Sanders, and
Thomas
MONEY
PEOPLE'S
OTHER
142
new
signed note
one
hundred
'scientific
doubted, he would
BIG
MEN
AND
Sanders
and
by two,
to business
BUSINESS
LITTLE
Hubbard
leasingtelephonestwo
were
who
men
private lines of
This
Telegraph Company.
this
at
was
It had
enemy.
and
that
was
buy
reaching
out
by
Union
Western
and
In
others.
they
offered the
had
wire.
refused
had
Orton
'
pleasantly, could
it.
The
and
might
for
to
ment
discouragePresident
$100,000; and
use/
this company
Hubbard
already bought
of
'What
all
rosiest
conclude
telephone to
Union,
tors,
competi-
monopolize
to
moment
one
inevitable
of its
many
Union
corporation
great
in front of Sanders
shone
the
Western
most
of communication
that
the
natural
swallowed
was
methods
hope
their
time
been
previouslyhad
the
using
143
he
of
make
asked
an
trical
elec-
toy?'
"But
besides
Western
Union
the
of which
These
minute.
believed,could
oddity
believe
"the
as
this until
Gold
its machines
and
had
with
customers
could
accurate
be
never
the
wires,the
own
printing-telegraphsand
of
telegraphs,some
words
its
supplying
was
kinds
various
operationof
Stock
been
of its
"
sixty
instruments, it
displacedby
telephone,and
one
transmit
dial-
such
tific
scien-
it continued
to
subsidiarycompanies
reported
that
several
of
superseded by telephones.
OTHER
144
"At
PEOPLE'S
the
once
Even
business
be
and
this
the
three electrical
Dolbear,
great wealth
and
his
upon
Bell's patent
ant's
Bell, it coolly
when
he
down
upon
It
trampled
concern
as
an
an
upon
complete bewilderment
and
made
of its
tramples
that
that
it
it had
by
the
all
of
the
ready
was
and
bulk
all the
little
as
announced
originaltelephone,
quickly,
phone
Speaking-Tele-
body-guard.
the
To
its
at
$300,000 capital,and
With
with
have
nest.
its
inventors,Edison, Gray,
little
can
from
action
prestige,it swept
and
Bell
elephant
with
its staff.
on
It took
'American
and
Company,'
awoke
tiny nibbling
stopped.
organized
with
Union
Western
indifference.
must
MONEY
only
to
the
ply
sup-
latest
originalinventors
"
result
Bell group,
were
at
world.
instead
once
of
lifted to
And
being driven
a
from
higher level
the Western
Union,
'
bell-wether
of the
'
to lead
The
the
field,
in the business
in the endeavor
to
a
was
involuntarily
in the direction
capitalists
telephone."
Even
then, when
it was
enterprise,
and
among
financial aid
from
these
came
not
capitalists,
was
capitalists
to the Bell
from
ers,
bank-
William
H.
PEOPLE'S
OTHER
146
MACHINERY
ELECTRICAL
The
business
thirty
interested
early
dominance
J. P.
in
of the
and
small
some
and
to their
other
Thomson
and
ton,
Thomson-Hous-
in many
formed
things,important
inventions
Prof. Houston.
of Prof. Elihu
is
Lynn
ten
Thomson's
used
to
investors;men
taking
Prominent
a
shoe
miles of State
was
manufacturer, who
and
Mr.
with
them
the Thomson-Houston
Morgan
formed
of America.
Street,Boston;
from
not
came
but
from
business
Lynn
their
became
company
money.
A.
Coffin,
connected
its
upon
the General
that
own
Charles
Company
presidentof
of the
one
active,energetic,and
risks
among
of
introduce,among
to
It is within
men
besides
respects the
principalshoe-manufacturing centers
Boston
three
Thomson-Houston
then
were
bination,
com-
Electric
Westinghouse,
The
ones.
effectinga
General
the
There
the
became
Co.
of
over
business
1892.
little
"
branch
one
organizing
in
Company
only
Morgan
"initiating"it,but
their
is
apparatus
old.
years
electrical
manufacturing
of
and
machinery
MONEY
with
zation
organi-
Electric when
in
1892, by
BIG
MEN
combining
his
To
AND
LITTLE
BUSINESS
the Thomson-Houston
continued
and
147
the Edison.
service,supported by
Thomson-Houston
other
in
high positions,the
is,in largepart,
great prosperityof the company
due.
The two companies so combined
controlled
probably one-half of all electrical patents then
than
existingin America; and certainly more
half of those
In
which
absorbed
the
Electric
In
thus
1903
the
in the world.
amount
In
1912
of
$89,182,185.
Steel Trust.
"
Electric
Company,
became
the
its
largest
machinery
of the Company
resources
It billed sales to
$131,942,144.
60,000 persons,
the
the
its patents
General
Electric
Stanley
value.
competition was
manufacturer
were
pooled
and
other
over
considerable
any
Westinghouse,
restricted.
further
as
had
the General
1896
with the
men
It
employed
more
than
And
it is
fourth
the
directly
as
many
protected against
of the Morgan
competition; for one
partners has been a director,since 1909, in the
Westinghouse, the only other large electrical
"undue"
"
machinery
in America.
company
THE
The
years
automobile
old.
It is
now
AUTOMOBILE
industry is about
America's
most
twenty
prosperous
PEOPLE'S
OTHER
148
When
business.
Packard
what
the
Car
the
extent
B.
Henry
Motor
Company,
is the observable
facts of
He
has
believes
he
business
to
"initiating"
as
business
conceives
seer
do
can
"
Company,
is also
man,
tunity.
oppor-
sight.
develop
"
build
industry
an
an
second
something
Falls Power
Niagara
or
history,it
construct
"
"
railroad
and
make
pay!
the
"Now
human
"A
raised
man
built
beet
said it
the
chance
with
factory (and
abilityto
do
his friends
He
there
was
not
were
successful.
financially
private individuals
trust
of
companies.
of
built
it pay.
the
sugar
of his
The
next
built,and
were
These
take
doubt
any
factories
sugar
would
only
acres
Wise-
gathered together
who
never
two
face
'make it pay'!
He
year
the
actual
factory in Michigan.
him.
more
the
nonsense.
from
money
the
the money
sugar
was
is not
measure
physical construction,but
in
in
of the
asked
was
aided
bankers
experience of thirtyyears
my
it
Joy, President
automobile, he replied:
"It
"
MONEY
were
built
by
cries of
doubting
bankers
and
MEN
BIG
"Once
sound
would
which
the necessary
of
banks
and
older
business
of
the
operate.
same.
in my
me
business, the
the
in the main
(who
men
trust
large part
followed
gentlemen
companies
and
was
was
and
sugar
to construct
of
possibilities
the
soon
money
"Private
it
backs
new
149
industry
the
first establishes
capitalat
when
success
banks
industry,
an
troubles,and,
its
through
financial
wins
the
business
few
vision
be
funds
motor-car
"When
to
lend
speedily organized
were
"The
the
then bankers
and
financially
companies
BUSINESS
that
demonstrated
one
were
LITTLE
AND
if
would
possible,
not
lend
dollar of aid.
having proved to
financially successful,then
business
"The
and
also
Such
the
industry
"
HOW
But
failed
have
the
was
financial
many
the
Ford
BANKERS
experienceof
do
the
Motor
ARREST
initiate
automobile
Company.
DEVELOPMENT
houses"
industrial
the greatest of
in the
successes
"great banking
to
be practicable
lend
banks
once
have
not
merely
development; they
definitelyarrested development
because
to
PEOPLE'S
OTHER
150
creation
the
them
The
in
recital
MONEY
of the
the
Memorial
largely due.
addressed
Guild
by the Investors'
President
is
trusts
in
the
to
November,
1911, is significant:
is
"It
well-known
combinations
tend
opposed
are
to
modern
strongly toward
products, and
and
process
that
fact
new
processes
and
nature
very
products
new
to
thought, to
and
competition in
restrain
to
with
the
hence
development
patent rights;and
discourage independent
injusticeto
inventors
especially intended
of the
whom
to
of
constancy
their
by
trade
sequently
con-
tive
inven-
nation,
the
stitution
Conand
encourage
And
specificwas
more
the
of
testimony
the
Engineering News:
"We
are
in iron and
Germany
innovations
and
today something
as
are
"We
do
lead
not
set
believe
are
behind
metallurgy, and
being introduced
steel manufacturers
followingthe
steel
most
by
of them
by foreignersyears
this is because
our
such
iron
merely
ago.
American
BIG
MEN
AND
engineers are
those
of
scientific education
of
is the
wholesale
consolidation
place in
American
industry.
closelycontrolled
standard
do
and
pared
com-
believe
the
up
With
who
bother
the
be
the
which
A
huge
ment
develop-
the
market
profitscertain by following
methods, those
want
not
to take
original idea.
an
We
Germany.
indeed
may
those
cause
taken
151
ingenious or originalthan
trainingand
with
has
less
any
BUSINESS
deficient in
main
LITTLE
of
control
trusts
our
developing anything
new.
instance
"We
metallurgy only by
There
where
same
try
plenty of other fields of indus-
are
exactly the
building
are
the
methods
as
in the art
inventors
and
machines
dozen
are
years
and
using
and
ago,
being made
We
exists.
the
the real
by European
manufacturers."
President
which
condition
same
same
advances
To
of illustration.
way
Wilson's
statement
may
be added:
"I
am
not
stopped by
saying
the
that
growth
all invention
of trusts, but
had
I think
been
it is
fields has
have
been
PEOPLE'S
OTHER
152
MONEY
reaping
the
full fruits of
and
that
from
prevented
well
as
lower
at
the
as
their
mankind
has
and
comforts
veniences,
con-
opportunity of buying
prices.
"Do
have
know,
you
occasion
had
you
to
hospitalityfor invention,
no
now-a-days?"
AND
TRUSTS
The
that
fact
is
development
burden
direct
But
prices.
the
industrial
imposed
financing of
of
of many
illustrated
by
trusts; that
huge
business.
in
is,the
the
Thus
York,
houses.
Trust, which
Steel
Trust
the
company
different
the
and
Tube
of
some
it has
this
usually
This
is well
is
trusts
Trust
stroyed
de-
of whole
trust
combines
branches
centration.
con-
has
large part
of
money
properties;for
banking
the Steel
holding
formed
in New
few
the
independence
centered
one
financial
created
trust
and
with
the
extortionate
feed
trusts
communities
lines of business
of
promotion
financial
the
than
even
through
Practicallyevery
the
arrest
harm-bearing incident
the most
Industrial
trust.
monopolies
serious
more
is their
trusts
CONCENTRATION
FINANCIAL
in
of
one
previously
of
the
combined
steel
17
PEOPLE'S
OTHER
154
New
Stock
York
stock
securities listed
be
the New
on
agent and
of
is to be held
by
York
Stock
Exchange,
registrarin
New
York
securitycan
no
offices of the
But
the
of the
tend
listingof
the
stock, once
the
subjectof
feeds the
It draws
The
York
money
members
of
amounts
from
are
ending
stock
the
the
on
the
Exchange
enhances
another
Stock
handle
the
power
An
way.
dustria
in-
the loans
York.
of other
Stock
Exchange; and
Exchange receive large
commissions.
For
of United
outstanding.
so
concentration.
bankers
December
was
That
City.
speculation;and speculation
Trust indirectly
in many
ways.
5,084,952 shares
stock
financial
active
Money
people's
in
the
listed,frequently becomes
the money
New
stock
more,
Further-
contributed
York
financial
to
Trust
Money
of
in New
trusts
would
alone
establishment
the
to
transfer
City.
banker-directorships have
largely
their
Exchange.
corporationhas
the
listed unless
so
had
Promoters
public,and
Under
few of them
York.
New
large corporations,whose
the
and
Exchange;
offices in
financial
MONEY
But
instance:
There
States Steel
mon
com-
in
the
five years
extensive
an
that
average
of
there
were
sold
on
29,380,888 shares
BIG
a
MEN
is
Steel
the
Exchange
five cents
sold;
Thus
that
twelve
traded
and
The
in; and
largely trusts,
by
by
the
Steel
are
listed
on
other
138
the
New
buyer.
millions
is also much
preferred stock
there
the
common
averaging many
revenue
Steel
the
of stock
cents
cents
from
of twenty-
share
one-half
one-half
commission
afforded
year.
and
where
brokers, sales
the payment
for each
there
as
Except
for the
or
involve
is, twelve
the
alone
by
155
much
as
existence.
in commission
seller and
in
are
BUSINESS
times
six
common
transactions
the
on
LITTLE
nearly
or
year;
AND
industrials,
Stock
York
Exchange.
HAMIFICATIONS
TEUST
But
is illustrated
This
the
has
United
"The
is not
sheet.
now
extent
Bureau
of the
of
General
fullyrevealed by its
A very
large number
connected
with
it
the General
through
in
an
Electric
companies
water-power
disclosed
been
States
of
ways;
ramifying operations.
forciblyby
control
Company's
which
their
through
factor in financial
in still other
is manifested
concentration
notably
as
able report of
Corporations:
Electric
consolidated
of
influence
balance
corporationsare
its subsidiaries
and
OTHER
156
corporations controlled
through
affiliated with
or
circle of
wider
and
officers
and
Co.
whose
of
General
Electric
Electric
Bond
through
these
General
Electric
These
18
General
States
the
h.
of
in the
is found
p.
in
in three
in the
security
Securities
Co.
and
Directly and
large part
of
the
in
the
States.
companies
found
in
States.
18
2,325,757 commercial
developed
amount
companies
have
holds
Corporation,
are
group
of this total
greatest
Share
controls
939,115
State
and
Electric
horsepower
and
or
of
some
the
Electric
Securities
water-power
General
the United
of the United
power
.
stock
corporationsand
"The
.
Electrical
the
Company
common
holding companies
water
that
officers
corporations,
by
still
Electric
also
owned
are
fact
General
are
other
many
the
to
the
is
There
Company.
"The
the
of
subsidiaries
securities
Electric
due
sidiarie
sub-
these
by
them.
influence
directors
its
directors
Co.,
MONEY
PEOPLE'S
under
or
General
or
power
General
construction,
Electric
40.4
per
group
Electric
The
cent.
controlled
group
cludes
in-
by
the
in any
BIG
the
MEN
States
shown
in the
50
The
percentage of power
the
General
control
72
cent. ; in
55
58
in
per
Electric group
of
under
construction.
the
from
ranges
Michigan
In
mercial
com-
nearly
to
Colorado
in
cent. ; and
in
little
80
they
Hampshire
cent.; in New
Oregon
water-power
cent,
Pennsylvania.
per
the
157
group
cent,
per
in
cent,
per
Electric
per
developed and
power,
less than
table
in the General
than
more
BUSINESS
LITTLE
included
companies
control
AND
61
per
Washington
cent.
per
Besides
the
developed
power
water-power
Electric
General
water
Electric
to
group
enables
control
power
the
shown
undeveloped."
struction
con-
in
States
in the
own
under
included
concerns
group
and
control
General
the
public
other
service
:
corporations
"The
Electric
General
railways in
at
least
with
towns.
in 19
the
Though
particularlythose
cities and
towns;
light and
many
served
the
of
and
to
street
towns;
the
towns;
gas
cities and
in 78
cities and
electric
16
subject
control
influence
plants
electric-light
plants
companies
water-power
are
affiliated
plants in other
these
communities,
gas
with
light only,
are
PEOPLE'S
OTHER
158
States
the
The
operate.
the most
are
these
and
Great
Falls, Mont.;
Y.; Asheville
and
the
owned
or
Astoria, and
and
other
other
Raleigh, N.
St.
and
in
towns
other
Colorado
in
towns
Raleigh, N. C.
practically every
controlled
to General
to
the
by
Montana;
Springs
in
Colorado;
in fact
Racine
and
Hudson
one
or
several
and
selaer,
Rens-
Asheville
more
where
the water-power
purchase
in other
from
in
developed
In
thus
companies subject
influence,there
power
and
towns
by this group.
public-servicecorporations
corporations
public-service
that
in
community
Electric
are
Great
is controlled
power
addition
gas)
towns
Wisconsin;
; and
in
towns
Portland, Salem,
N.
water
The
Oregon; Bellingham
small
in
other
Washington; Butte,
and
Falls, Bozeman
Leadville
C., and
towns.
include
in
towns
are
Winona,
or
relativelyless important
which
the
Wash.;
Louis, Mo.;
St.
in
railways
street
Ore.; Spokane,
and
Milwaukee
Minn.;
N.
Salem,
control,
own,
group
in
companies
companies
important
water-power
water-power
Electric
General
MONEY
the
are
numerous
municipalities
hydroelectric
BIG
MEN
AND
developments
General
controlled
Electric
which
Colo.,
"
which
namely,
Co.,
sells
of
the entire
city.
The
Denver,
the
lightand
to
In
in
concern
the
Pennsylvania
20,000 h.
power
the
discussed.
controls
that
of
is true
water-power
159
affiliated with
or
already been
Power
Consolidated
BUSINESS
This
Electric group,
Water
by
Co.
has
Baltimore, Md.,
General
LITTLE
the
to
p.
Power
Co.,
business
power
all
operate
the
electric street
and
375
of the
Niagara
And
the
the
Falls Power
General
like influence
no
water
subsidiary
Co."
Electric
financing of public
a
is
miles,is suppliedthrough
Company,
service
through
companies,
in communities
where
cises
exer-
there
power:
of
an
interest
public-service
corporations
cities where
numerous
connection,and
virtue
in the
of
network
of
there is
machinery
This
.
relationshipbetween
of the
and
stillothers
directors.
corporations through
directors
water-power
no
it is affiliated with
common
prominent
suppliesin
.
the
by
vast
hydro-electric
largestmanufacturer
highly significant.
of
officers
and
of electrical
United
States
is
OTHER
160
is
"It
Electric
Co.
not
the
particular disadvantage of
is not
concern
power
such
THE
The
used
rival
any
to
water-
as
be
might
SHERMAN
Trust
Money
allow
its power
break
the
its
at
power
used
so
at
effective
Sherman
Law
providing
and
be
by creating a
functions
When
taken
that
toward
restrictive
should
is
bear
industrial
feeders.
prevented.
be
to
in
done, another
securing the
alone
legislation
in mind
the
To
Those
are
which
creation
this end
of
the
both
by
judicial machinery,
commission
aid
The
trusts
supplemented
efficient
more
we
stop that
must
we
dissolved.
should
if
broken,
constantly augmented.
The
be
be
Trust,
source.
should
ones
be
Money
illegalshould
new
LAW
cannot
to
its most
among
are
that it
been
or
time."
any
To
Whether
has
power
important
so
exists and
power
through
place rivals
may
corresponding disadvantage.
advantage that
an
such
relationshipto
officers and
common
MONEY
this
possiblethat
largenumber
at
PEOPLE'S
with
tive
administra-
enforcing
the
law.
been
Freedom.
will not
admonition
But
suffice.
with
We
which
VIII
CHAPTER
CURSE
has
Bigness
rise
Big
of
the
Big
Big railroad
of
instruments
urge
financial
for
what
is
of
needs
Big Business
"simply
further
result
call
of
but
demands
to
business";
and
that
would
mean
would
Atlantic
to
meaning
Leading
during
the
the
in
The
the
bankers
have
15
banks
162
shall
country's
along
phrase
bankers
this
progress
from
the
"great
apparently
security issues.
undoubtedly
years
country
industrial
Pacific."
large corporate
last
those
wage-earner
by
for
larger individual
every
is used
"the
step backward
halt
that
necessity
that
the
justification
efficiently the
"a
a
affect
transactions"
as
that
Co.
"cooperation"
the
that
also
perform
cooperate
line
only
not
"
declare
They
euphemistically
they
banks
Morgan
the
as
concentration.
panies;
com-
Pujo Committee)
the
to
the
systems,
Big
these
J. P.
companies.
trust
in
service
public
trusts, Big
as
factor
important
an
Trust:
Money
and
and
been
industrial
BIGNESS
OF
in
floating
cooperated
some
very
CURSE
OF
largesecurityissues,as
BIGNESS
well
as
163
small
many
ones.
But
made
relativelyfew large issues were
by great improvements undertaken
or
necessary
by industrial development. Improvements and
development ordinarily proceed slowly. For
where
the enterpriseinvolves
them, even
large
expenditures,a series of smaller issues is usually
This is
more
appropriate than singlelargeones.
particularlytrue in the East where the building
of new
railroads
has
The
practicallyceased.
"great" security issues in which bankers have
cooperated were, with relativelyfew exceptions,
of effectingcommade
either for the purpose
binations
or
as
the
Furthermore,
made
the
the
both
in most
we
main,
which
to laws
mended
recom-
sion,
Commis-
Commerce
which
it is
the
a
noxious
least, become
through
not
it
put.
was
And
and
concentration
they
against
told, is
are
which
or
either contrary
cases,
Interstate
financial
combinations
the
which
or
So
combinations
tions.
combina-
these
necessary
underwritingswere,
to
of such
consequence
served
have
crime.
by
But
or
it is size
the
in
Size,
size may,
of the
reason
attained
were,
interest.
public
the
at
means
uses
to
attained
by
nation^jnstead of
combi
Has"^ontributed
Let
which
growth,
so
largely to
our
financial
us
examine
few
cases:
and
centration.
con-
PACIFICS
"
Morgan
large banks
natural
HAREIMAN
THE
J. P.
MONEY
PEOPLE'S
OTHER
164
of
cooperation of bankers,"
the
said:
"The
on
This
made
to
capital.
enable
On
the contrary
Pacific stock
disposedof
problem
what
"
the
with
Sherman
Law.
Southern
Pacific stock
of the
Court
It had
United
cease.
illegality
been
another
the
Pacific
This
had
proceeds?
that
the
of
amount
the
Supreme
that
illegalpurchase
same
years
"great transaction,"
"
Pacific
solely
violated
finallydecreed
occasion, twelve
$100,000,000 of Union
with the
the
and
illegally;
States
that
it had
when
necessary
acquired
secure
its Southern
confronted
to do
Union
to
guaranty
And
amount.
stock,it was
that
because
had
was
This
the
it
not
was
disposing of
in
that
to
$126,000,000."
Pacific
Union
the
succeed
it would
of
mitment
singlecom-
"commitment"
$126,000,000
serious
calls for
Pacific settlement
the Union
of
approval
Attorney-General's recent
the
bonds,
of
earlier,
issue
of
which
were
CURSE
OF
sold to
provide funds
Pacific
and
Bankers
other
The
Union
Navigation
issues of securities
$46,500,000
but the
for
the
Oregon
were
redeemed);
or
additions
a
high
of
state
the
and
And
straightened,grades
were
note
additions
and
acquired, increasing
miles
of
line, and
betterments
were
how
the
great
Tracks
lowered, bridges
were
laid,old equipment
the
the
still other
made
from
were:
cost
of these
Pacific
efficiencywere
earnings
net
were
replaced by
or
extraordinary improvements
its railroads.
improvements
to supply
illegalcombinations
in
engaging
and
to
and
Railway
The
operation of
was
auxiliarylines (the
years,
provided mainly by
the
its
speculation.
Railroad
law.
accomplish that.
funds
stock
also to
of
Oregon-Washington Railroad)
in the fourteen
which
violation
and
Line,
the
in
IMPROVEMENTS
Pacific
and
165
stocks
PACIFIC
Short
Oregon
made,
for
"cooperated"
UNION
BIGNESS
and
system
was
Additional
were
by
built
3524
improvements and
charged to capital
PEOPLE'S
OTHER
166
account.
These
512,328.
But
issues"
without
made
than
$1,000,000
paid six
rate
cent,
per
year
the
on
earnings and
on
the
For
while
year
SECURITY
about
the
PROCEEDS
available
redemptions)
bonds
stocks
WERE
the amounts
for
raising
SPENT
(except
to
so
further
purchases,
available
companies.
acquired
the
provemen
im-
ing
applied for refund-
were
of other
profits,providing
in stock
net
yielded,on
and
and
surplus
securityissues.
new
$375,000,000 securities
stocks
Cost
to
additions, without
The
and
that
(when
have
THE
of
have
$13,679,452
the
would
$12,750,982
more
securities for
charged
was
funds
and
average
after 1906
HOW
extent
pended.
ex-
have
still could
Equipment,
improvements
money
dividends
other
average,
wisely
could
of additional
average,
and
Road
additions
the company
adopted).
was
year,
of
and
issuingon
money," and
"new
the
capital thus
the
improvements
been
"large security
no
net
railroads
of these
of
needed
it
The
these
provide
to
MONEY
were
sums
sold
to be
to
And
at
buy
some
large
employed
The
CURSE
OF
BIGNESS
$375,000,000 Union
167
Pacific Lines
security
not
improvements; nor
for the improvement
these issues
of the
any
Pacific
supply
funds
companies
needed
in which
invested
(except
advanced
later to aid in
that
supply
to
the Union
certain
were
Southern
from
one
set
Here
1.
purpose
save
are
of persons
stocks
to another.
of the
some
of
Pacific
amounts
financing the
did
principalinvestments:
financing the
Southern
Pacific.
2.
stock
of the Northern
Securities
Pacific
and
Co.
3.
4.
5.
6.
York
stock
" Ohio
stock.
stock.
Central
stock.
"
Santa
Fa
stock.
7.
8.
"
St. Paul
stock.
9.
10.
The
Commission
stated
in
Co.
stock
stock.)
effect of these
immediate
as
Securities
stock.
by
the
1907, was
stock
Interstate
merely this:
tions,
acquisi-
Commerce
Harriman
"Mr.
from
to New
the
Francisco, across
San
to
by steamship
Orleans, thence by rail
journey
may
York
New
MONEY
PEOPLE'S
OTHER
168
Pacific
States,may
United
rail
three
without
Omaha,
of
leaving
what
has further
miles
thousand
two
the
controls
the Pacific
Gulf
that
the
of the
west
about
fiftythousand
in the
State
the
not
Oregon
and
the
developed.
companies
are
of
Oregon
Company,
is
taken
which
and
other
Line
be used
lines
of territory
by
Navigation
Company,
funds
of
for that
like the
the
pany,
Com-
Railroad
Pacific
the
in stocks
parallel to
miles
and
Southern
While
Mississippi
surrounded
Railroad
could
being invested
Central
Short
the
hearing shows
square
Oregon,
to
this
at
running
the Colorado
border.
testimony
dominant
MississippiRiver;
fines of the
without
of Mexico
"The
or
platform
Railroad
line of railroad
only
to the Mexican
River
City
or
to be
appears
Illinois Central
in the
control
deck
of
one
any
duplicatingany
"He
the
Kansas
to
the
to
controls, and
he
which
carrier
thence
lines,and
to
route
Ogden by
to
go
Ocean
purpose
New
having only
those
York
remote
PEOPLE'S
OTHER
170
acquired control.
passed again into
Harriman's
Mr.
the
Supreme
the
Northern
Court
Pacific
Union
the
of the United
his
Pacific to reap
Union
in
transactions
Pacific
has
investments"
in
Stocks
which
cost
991.72, had
of
on
the
Union
November
Southern
only $87,851,500;showing
only about
panies
com-
$129,894,-
15, 1913,
average
losses.
other
Pacific
the
held
large
and
of $42,043,491.72 and
illegal
stocks
entailed
Illinois Central
the
its
and
other
have
the
permitted the
Pacific
many
preme
Su-
dissolved.
largeprofitsfrom
But
the
ordered
Pacific merger
Northern
stocks.
Northern
death,
States
United
illegal,and
Company
after
declared
States
Pacific-Great
years
had
stock, because
Pacific
Pacific-Southern
Union
value
death
of the
Court
"as
Long before
Northern
Three
merger.
has
Marquette
receiver's hands.
Securities
the
dissolved
By
Pere
The
of its Northern
disposed
MONEY
market
shrinkage
income
4.30
from
cent,
per
their cost.
on
Kuhn,
bankers.
Mr.
Jacob
Loeb
It
was
H.
BANKEBS'
"
Co.
PAKADISE
were
in pursuance
Schiff
"
the
the
of
Union
a
senior
Pacific
promise which
partner
"
had
CURSE
given, pending
Harriman
in
and
bankers
and
their
Thereafter
combinations
and
were
there
for
associates
received
holds
have
"
the investment
for
the
Supreme
received
of
securities
the
commissions
controlled
thus controlled
were
have, of
after years,
decree
combination, these
perform
the
further
bankers
same
services
commissions
to
retained
them.
them.
while
"
of law
"
and
Finally when,
to
bankers
of
buy
holds to have
companies
is entered
ties
securi-
which
in violation
retained
course,
have
missions
com-
acquired
The
Court
The
which
underwriting the
illegallyacquired,and
bankers
been
with
centration
con-
the
stocks
them.
the
to have
retained
commissions
issued
receive
tudes
vicissi-
received
purchasing
Supreme Court
they
Mr.
of the Executive
speculations. But
illegally and
to
member
1897.
paid
The
171
bankers
been
BIGNESS
reorganization, that
crumbled,
in stock
the
the
first became
Committee
grew
OF
end
are
the
illegal
hand
on
undertaker
"
and
before
and
after Mr,
PEOPLE'S
OTHER
172
Harriman's
Co.
were
of
committee
in
Kuhn, Loeb
of the
members
or
responsiblewith
"
executive
Pacific;and
Union
the
be deemed
must
MONEY
such
as
acts.
illegal
bankers
Indeed, these
commissions
have
underwritingsof
for the
accomplished, though
commissions
underwrite
authorities
The
also for
would
on
J. P.
Morgan
"
"the
Attorney
General's
the
having
being
approval
never
Service
called for
of the
by
Union
became
effective;
Commission
of California
the terms
to approve
which
of settlement.
Union
been
ready
and
opportunity arise:
commission
stock
of
as
to
Pacific,nevertheless,paid the
Loeb Syndicate a largeunderwritingfee for
Kuhn
the
the
accomplished.
refer
because
the
to be
Co.
settlement")
refused
which
part of bankers"
Pacific
But
transaction"
the
Public
ceived
re-
$126,000,000
commitment
have
merely agreeing to
permit
not
received
transactions
illegal;they
"great
only
not
was
paid
and
another
when
underwriting
the Southern
Pacific
Court's
Southern
decree.
Pacific
Thus
stock
the
illegalpurchase
of
yielded directlyfour
A
of
crops
CURSE
OF
commissions;
two
the
intervening period
Southern
Pacific
For
Committee
Pujo
marketed,
above
securities
Southern
between
The
and
and
1903
commissions
have
Union
Pacific
Co.
Pacific
of
securities
been
finds
"great";
that
Union
closed.
dis-
large; for
very
The
paid
is not
transactions
liberal.
were
with
connection
transactions
Commission
but
Interstate
bankers
not
the
merce
Com-
received
about
the
"
of the commissions
Pacific
the
were
Loeb
the
to, $334,000,000
Central
in
It must
filed with
1911.
bankers
Pacific-Southern
only
the
to
aggregate amount
these
during
commissions
more
Kuhn,
referred
Pacific
And
illegallycontrolled
that
addition
acquired,
was
of.
the schedules
show
in
the
173
it
disposed
was
yielded many
bankers.
to the
to
it
when
two
and
when
BIGNESS
and
5 per cent,
the
on
the
underwriting commission
on
the
first
the
large
which
severance
and
the
Furthermore
two
of this
illegal
merger,
bankers
the
have
declined
Interstate
to
Commerce
disclose.
Com-
MONEY
PEOPLE'S
174
OTHER
mission
while
showed, clearly,
Pacific's
Union
purchase
public far
bankers'
system of
involved
and
theretofore
The
subjectsor
passing of
1901,
thy
the
to
strikingexample
After
Pacific
the
the Union
stock
fine.
The
recognized
or
great
railroad
has
to
who
thereby
Money
Trust.
men,
associates,presents
Morgan
of this process.
Pacific
acquired
Northern
Union
the Southern
sought control,also,of
"
Quincy,
"
railroad,having then
that
in
in 1901, it
Great
tax
independence
satellites of the
Chicago, Burlington
prosperous
into
independent
loss of financial
the
heavy
profits. For
absorption
community, property
become
in
the
case
the
serious than
more
commissions
every
produce injury
combinations
railroad
Such
some
means
no
BURLINGTON
THE
nearly
by
to commissions.
confined
of
of the
profitswere
to the
investigatingthe
and
7912
Northern
Pacific
control
most
miles
of
Pacific
of
the
exclude
them
from
of
much
Burlington would
Missouri, Wisconsin, Kansas, Nebraska,
Illinois,
Iowa, and
South
Dakota.
The
two
northern
CURSE
roads,
each
which
other
OF
with
for
purchased
175
were
and
BIGNESS
J. P.
Morgan
"
with
upon
Co., there-
$215,227,000, of
their
joint
4 per cent, bonds, nearly all of the $109,324,000
A
(par value) outstanding Burlington stock.
Pacific ensued
which
struggle with the Union
to "harmonious
yielded soon
cooperation." The
Northern
Securities
Company
formed
was
with
Northern,
and
the
the
of
issue
of $215,000,000
was
Securities
for
in these
the
of the
Northern
evil done
Burlington
had
Boston
"large
transactions."
remain
set
one
of securities
of
with
operation"
co-
the government
the dissolution
But
combination.
The
passed
in control.
ended
to
persons
Securities Company.
outlived
owners
stock
great railroad
interruptedby
proceedings,which
neither
four
resulting "harmonious
soon
with
improvements of,
ton,
Burling-
the issue
joint4's,nor
of the
to, any
was
who
the
Obviously
dollar of funds
concerned
another.
the
and
Northern
$400,000,000
additions
systems
The
interests.
Morgan-Hill
the
Pacific
supplied one
or
Northern
the
forever
to
the
from
Morgan
pendent
its inde-
allies,
The
Burlington
He
was
of
wizard
at
America's
with
and
shipping
of
patience
broad
the
and
perseverance
the
courage
view
of the
he
of
chances,
to
success.
He
great
adventurer.
which
later
"
and
of
of
those
burdens
the
facturer;
manu-
the
sea-farer;and
Bold, but
of
other
due
never
people's
of
weighing
enterprisespromising
of the
sense
equipped,
those
term,
Forbes
Mr.
railroad
enterprises
Largely
friends
panic
in
own
upon
Quincy.
that
the
had
He
great
after
Thus
entered, in 1852,
connected
of
in the best
was
among
merchant;
statesman.
risk his
working
hard-
great
the
ready,
was
was
been
had
trade
or
merchant
manufactures.
with
imagination
the
He
banker,
or
been
China's
when
business.
big
had
He
Forbes.
M.
simple,
was
man.
time
John
combiner,
He
finance.
business
in China
of
creation
builder; not
ments
finest achieve-
of Boston's
one
"
the
was
"
MONEY
PEOPLE'S
OTHER
176
'57, when
days
of
staggering under
with
who
his
confided
in
he
through
the
carried
the
"great banking
courage
struggling
financial
to
money
him,
and
lacked
them
own
houses"
assume
ill-constructed
difficulties.
the
line,
then
in
lacked
who
men
his
MONEY
PEOPLE'S
OTHER
178
builders, though
were
and
wisdom,
some
his character.
some
Her
enterpriseand
Union
the
railroads
these
in the
the
control
of
In
railroad
New
the
19
Beach
"
Lynn,
THE
The
another
in
is
left
West
the
begun
of
AlbanyMorgan
Morgan
control
control
of
NEW
HAVEN
and
Grafton
the
South,
line
"
"
Boston,
road
of
Upton
Revere
13 miles
long.
MONOPOLY
Haven
striking example
Boston's
of the railroads
to the
passenger
of
Railroad
Kentucky
her
"
acquired
the
of line and
"
into
is limited
miles
Boston
"
"
out
railroads
Central,
nothing
long; and
had
later,another
Haven
Eastern
Massachusetts
York
years
dominion
except the
with
few
Now
England.
36 miles
one
Before
the
over
the
1900
other
every
railroad
by
passed
allies.
even,
to the New
a
nearly
railroads
Morgan
dominion,
property; and
"
One
surrendered, Boston
England.
leased
was
southern
the
was
lose her
New
South.
other
24
Burlington
to
and
West
and
western
of Boston
Central, and
Wisconsin
Central, the
Monopoly presents
of
combination
as
developer
CURSE
of
OF
financial
are
put.
1892,
when
Haven
BIGNESS
and
concentration;
to which
use
Mr.
179
"large security
Morgan
directorate,it
was
it
entered
very
the New
prosperous
littlerailroad with
paying
10
508
miles
had
grown
mileage
or
capitalliabilitiesof $25,000,000
cent,
dividends, and operating
per
of
line.
also grown
leases of other
later,in 1913,
Mellen
20
in
lines)to
when
Mr.
in
1899; but
those
to
of the
fourteen
died
Morgan
less than
business
the
had
the
years;
new
much
needed, also,
were
out
of
in
the
dividends
because
capital increase,over
expended
securities
in the
of
street
acquisitionof
some
121
other
largely
proved,
im-
was
tracks
the
Mr.
course
added,
for all
additional
than
more
Of
road-bed
and
needed;
and
grown
capital was
years
bilitie
capital lia-
$425,935,000.
railroad
merger
1997, just
was
bridges built,additional
and
aggregate
Fourteen
mileage
increased
the
2017.
the
miles
capitalization
(mainly through
resigned,
had
the
the
1899
$80,477,600, but
to
had
By
issues
paid
company
it
But
earned.
$200,000,000
the stock
or
It
was
was
other
ships,
railroads,steam-
railway-, electric-light-,
gas-
water-companies.
this,
these
outside
and
proper-
ties,which
made
$67,000,000, 6
other
of those
cost,
year.
which
companies
121
the
tion
acquired had, prior to their absorp"
by it, been financed by J. P. Morgan
New
Haven
needs
The
Co.
Maine
Central
of
member
of the
those
companies.
the
"
New
York,
largestof
next
been
had
"
The
financed
banking
had
of Directors
Board
been
of
Ontario
"
acquired
the
in New
allies.
Morgan
now
had
The
combined
been
done
the
in the
financed
by independent
financing of
smaller
York,
New
street
but
mainly
York
in
New
by
roads,
rail-
land,
Eng-
Connecticut,
bankers.
railway companies
largely by individual
roads
rail-
of the
Connecticut
Central
of either
apparently entirelyindependent
persons
their
through
banker
investment
No
for
had,
"
Boston
through
and
Maine
group
mainly
or
houses.
Western
largest
met
stockholders
own
"
Boston
the
the
"
generations, been
been
on
BANKEES
HAVEN
NEW
have
equipment
as
For
improvements
only $10,000,000
THE
or
the
years
including new
Few, if any,
well
issue, as
the average,
on
discussed
much
bond
cent,
per
fourteen
the railroad
the
necessary
large and
these
in
MONEY
PEOPLE'S
OTHER
180
The
had
financiers,or
CURSE
by
small
or
cities where
the
and
BIGNESS
independent
the
street
these
Haven
and
tributary to
independent
satellites.
in the
been
Some
these
121
in
companies,
corporations, was
"
Morgan
Co.;
eliminated
were
and
violation
or
Act
will
either
the state
of
Enforcement
doubtless
'
of
in
result
or
the
the
became
or
this
of both.
law,
by
panies
com-
financialconcentration
proceeded with, although practically every
of these 121 companies was
acquired by the
Haven
of
other
J. P.
bankers
And
states
financed
railroads,steamship
railways,
made
had
absorption of
bankers
some
of
181
companies operate.
steamship companies
their owners,
As
OF
was
one
New
federal
Sherman
dissolving this
combination.
unwieldy illegal
THE
of the
Proof
railroads
of
F.
control
well
as
the
by
on
"
the
ubiquitous presence
the
Board
of Directors
Jersey Central,
Western
nearly all
anthracite
the
Susquehanna
as
Baker
Reading,
the
MONOPOLY
"cooperation" of
is furnished
George
of the
COAL
the
the New
wanna,
Lacka-
York,
railroads,which
the unmined
These
gether
to-
anthracite
roads have
OTHER
182
been
the
an
PEOPLE'S
Trust.
They
are
with
fundamental
of the Sherman
the
of
railroad
indirect.
Nearly
in the
by
years
of the
anthracite
trade, any
of these
any
or
The
railroads
roads
rail-
in connection
been
of combination.
act
some
prohibits a
interest,direct
an
Commodity
every
last 14
of the
interstate
it has
the Department
violations
Act, which
carrying,in
in which
charged by
and
Law
Hepburn
from
commodity
made
development of
factor
of Justice
clause
in the
important
Money
both
MONEY
to
tion
combinathe
suppress
coal
competing
the
illegal
by
States.
Kanawha
Court
has
combination
Chesapeake
"
already
Court
bituminous
the
"
Appeals
has
Supreme
the
District
of
similar
in
And
road,
field
coal
recently
decreed
Ohio, and
Lake
the
the
"
States
the
clared
de-
of the United
United
by
been
Circuit
that
Shore, the
Hocking
Valley,
be dissolved.
OTHER
The
Haven
cases
are
RAILROAD
COMBINATIONS
of the Union
typical
"
historypresents
security issues made
not
Pacific and
of the New
exceptional.
instances
numerous
wholly
or
mainly
Our
of
to
road
rail-
large
effect
CURSE
combinations.
been
of
Some
as
proper
feeders
them
have
Thus
Island
of main
and
14,000 miles
have
been
by
But
the
have
natural
far
more
desire
the
by
with
of
and
San
line is
to
by
mistaken
size.
combination
St. Louis
over
lines.
greed; or
or
monstrous
the
securing
dictated
efficiency
grows
the
183
potential competition; or
or
personal ambition
belief that
of
means
been
active
BIGNESS
of these combinations
extensions
or
suppress
OF
of the Rock
Francisco
recognized
with
to
now
of
result
Both
of
from
soon
defects,if
proceedings under
systems
this
inherent
combination;
Sherman
from
sufferingnow
are
unwise
the
the
expressive of
Rock
Island
the
"
law.
effects
in
penalty
name
efficiencyand
railroad
as
Frisco, itself
the
not
once
stability
"
and
has, through its excessive recapitalizations
football of speculators,
combinations, become
a
and
of great
source
investors.
Hamilton
The
and
led to several
There
which
combination
of the
and
the PSre
Dayton,
to
confiding
Cincinnati,
Marquette
receiverships.
are,
have
apprehension
not
of
been
course,
other
disastrous
to
combinations
the
owners
of
OTHER
184
PEOPLE'S
railroads.
the
combination
But
has
the
is
power
burden
be
placed
For
of
those
instance,
Railroad
Railroad
of
system
acquisition;and
which
twice
as
those
The
legality of
largeas
investigationby
has been
Milton
the
After
been
Coast
Line
"
ville
Nash-
years
many
wise
Smith
had
before the
earnings nearly
gross
combination
Senator
Interstate
the
Coast
Line.
has
been
Lea;
Commerce
and
an
mission
Com-
ordered.
reports from
1898
H.
of the Atlantic
this
THE
is not
has
ties
$50,000,000 of securi-
has
recently challenged by
railroad
should
of President
inquirywhether
combination
of the Louisville
prospered continuouslyfor
The
of power,
"
combination
as
Atlantic
to issue
5000
management
and
public good
acquire control
to
not
by allowing the
Company
does
concentration
who
what
railroad
justifyinga
upon
subserved
The
such
that
disastrous
obvious;
necessarilyinvolves
the
fact
been
not
necessarilyjustifyit.
of
MONEY
PENNSYLVANIA
the
in
large amounts,
MONEY
coal
of other
itself also
the
PEOPLE'S
OTHER
186
Cambria
of
business
extended
stock
which
include
to
not
in
companies (like
to
the
policy should
be
extraneous
of
dispositionalso
the
Pacific
and
the
all
" Western,
(likethe Norfolk
railroads
Southern
are
Company)
railroading. This
in other
the
holdings
Steel
it will divest
that
New
Haven)
Six years
ago
after
the
Commerce
investigating the
above
transaction
Interstate
referred
the
legislationto remedy
mission,
Com-
Union
Pacific
to, recommended
evils there
disclosed.
the
Haven,
Commission
the
and
repeated
doubt
student
that
been
to
the
the
railroad
problem
can
of financial
prolificsource
complication to railroads in the past
most
disaster and
has
of
the
desire and
engage
in
abilityof railroad
enterprisesoutside
the
agers
man-
mate
legiti-
securities.
The
evil which
results,first,to
the
the
general
transaction
has
taken
CURSE
OF
place; it
prohibited.
In
lie at the
BIGNESS
be
187
easilyand
effectively
our
opinion the followingpropositions
foundation
of all adequate regulation
can
of interstate railroads:
1.
interstate
Every
from
railroad
spending money
should
be
hibited
pro-
incurringliability
or
2. No
lease
the
stocks
to
nor
the
stocks
No
in
the
price at
be
which
stocks and
two
by
the
an
tioned
sanc-
and
preceding paragraphs,
unwise
and
the
attempt
approval of
may
be issued and
realized
to
the
those
railroad
the
for which
it is
they
expenditure of
purpose."
recommendations
with
specifythe
disposedof;but
confine
to that
to
in which
manner
and
the money
to
securities shall be
easy
accord
be issued
government.
It may
These
should
be issued without
should
federal
bonds
government.
interstate
none
or
railroad,
indirectly,
or
of the federal
acquire
to
other
directl
same,
approval
permitted to
nor
railroad,
securities of any
or
guarantee the
without
3.
other
purchase any
or
be
adopted
are
by
in
the
substantial
National
PEOPLE'S
OTHER
188
of
Association
MONEY
Commissioners.
Railway
be enacted
into law.
supplemented by
amendments
should
of the
Clause
Hepburn
will be
1. Railroads
they should be
And
of the
Act,
They
Commodity
that:
so
prohibited from
effectually
products
owning stock in corporations whose
they transport;
2. Such
corporations will be prohibited from
owning important stockholdingsin railroads;and
3. Holding companies will be prohibited from
road
controlling,as does the Reading, both a railand
corporations
whose
it
commodities
transports.
If laws
such
international
from
escape
the
like
potent
shall,by
in
will
find
units
will
needs
without
And
But
such
financial
what
duly
recurrence
of
domestic
and
of
shall also
We
is attendant
is far
portant,
im-
more
remove
legislation,
concentration.
begin. The
liberated
centrali
Desmaller
in financing their
difficulty
lords.
bowing the knee to money
no
attainment
Alton,
which
inefficiency
size.
factor
and
that
we
Haven,
Chicago
ones
excessive
upon
New
and
enacted
are
protected from
the
tragedies like
scandals
these
shall be
enforced, we
of
as
of the
New
been
Freedom.
taken
toward
CHAPTER
THE
FAILURE
There
from
OF
is not
of Mellen.
BANKER-MANAGEMENT
moral, but
one
the Decline
IX
of the New
That
history
sermons.
It illustrates
the
Curse
of
the
Pitfalls of
investors
was
to
gave
attention
that
J. P.
the
perhaps
teach
to
CONTROL
"
Morgan
New
Co.
of the
the
were
For
Haven.
other
to any
meetings
cal
fisMr.
years
He
Company.
when
Mr.
director.
Morgan
of other
But
it
189
of his many
interests.
rarely interestingor
are
indeed
few
meeting
was
But
and
important; and
occasions
Monopoly,
banker-management.
the director
than
Stockholders'
the Fall
for many
it should
that
lesson
agents of the
Morgan
of
Evils
Law-Breaking.
is the failure of
years
and
offers texts
the
BANKER
For
Haven
impressive
most
to be drawn
many,
must
have
attended
his
any
the
holders'
stock-
in which
he
habit, when
in
companies
was
been
OTHER
190
America,
be
to
In
Haven.
expansion
first
was
the
policyof monopolistic
challenged,and
its sanction
merger),
large
the
Mr.
Of
which
he
course,
President
Mellen
before
statement
while
Prouty,
York, Westchester
terminal
New
Haven
"
in
the
this
in
Commerce
New
the
"
York,
a
mile
New
railroad
which
out
with-
cost
"I
in
the
acquire, and
to
interest
his
missioner
Com-
then
was
was
discussing the
Boston
$1,500,000
mously
unani-
will
His
"
moved
were
indicated
Interstate
wisely
un-
attended
the
Boston
himself
Morgan
at
had
the
to
of stock
increases
voted.
law.
again
(afterMassachusetts
1909
accorded
Maine
MONEY
1907, when
in
meeting
PEOPLE'S
and
embarrassing position,Mr.
chester
Commissioner, regarding the New
York, Westam
"
or
immediate
very
Boston.
at all
for
was
our
company
future; but
wise and
indeed, I
much
been
never
greater confidence
it
I have
don't
difference
than
in the
tic
enthusias-
ment
good invest-
present,
or
people in whom
I have
in the
I
had
in
myself thought
I yielded my
desirable;
judgment;
know
whether
that
I
it would
yielded or
have
not."
made
BANKER-MANAGEMENT
BANKERS'
THE
Bankers
in the
force
that
RESPONSIBILITY
credited
are
191
with
being a
The
community.
tradition
yet, the
railroad
managed
fault
"
losses
to
that
supposed
New
this
And
bankerness
reckless-
small
investors
bankers
for whom
stocks
In
have
the New
Maine
dividends
record
of
after
of the
unbroken
an
generations
munity
com-
ments,
invest-
and
Haven
are
for generations
absolutely safe
deemed
passing of
"
of
guardians.
natural
been
dividend
has
its railroad
where
the
sane."
its financial
England
be
to
been
thousands
many
throughout
Boston
has
lingers
and
grievous fault
most
conservative
as
comes
disaster.
disaster is due
This
mainly
to
side
enterprisesout-
the
for
no
Haven
in the
outside
enterprises. But
that
any
neither
other
of Directors.
should
the
manager
without
the
of its
extravagance
it must
remembered,
be
the New
could
Haven
engage
nor
in such
sanction
of the
Board
directors,not
Mr.
Mellen,
the
It is the
bear
and
presidentof
railroad
transactions
who
quantity
responsibility.
scrutinyof
Close
make
Not
discloses
merely
the
gravity of
in mad
the financiering
in
engage
which
of
found
too
of directors
curb
calm
by
ambitious
from
right to expect
judgment
have
in
right
to
important
most
the
test
the
conclusions
zeal
excessive
while
have
we
from
matters;
them
prudence,
straightforwardaccounting.
And
it is
lack
New
Haven
to
Interstate
qualitiesin
which
Commerce
the
no
do
we
and insistence
reasonably good financiering,
of these
of
exceptionallygood
business
expect
be
the
bankers
ordinary
errors
should
But
managers.
to
directors
is to
counsel
pay
worth,
enterprises,are
conservative
no
function
and
grossly unwise
To
it is
what
times
of
pursuit
errors
travagant
recklessly ex-
were
made
acquisitions
for property
no
clear the
more
committed.
transactions
the
the
justification.On
only to
MONEY
PEOPLE'S
OTHER
192
the
criticism
severe
Commission
is
upon
just the
agement
man-
of
the
particularly
directed.
Conmissioner
increase
Prouty
calls
attention
to
the
of
years
New
York, New
vast
Haven
"
Hartford
Railroad
convertible
stock
into
issue
to
eager
at
J. P.
cent,
underwriting
"
be
financieringto
the
Indeed,
it committed
of
market
their
to
due
not
to
180,364; by June
to
in 1913
of
rate
to
largely.
very
And
improvements
Boston
"
Maine
either to pay
money
sell at par
to
of the
tem
Sys-
notes
amount
these
on
loans
loans
of
were
two
only $10,had
grown
course
the
increased
also
were
represent, in
the
New
Railroads,but
for stocks
or
on
unnecessarily. They
not
"tight"
$70,000,000. Of
over
for
error;
They
short-term
interest
an
June
$30,759,959; by June
and
larly,
particu-
unexpected emergencies
On
in
owed
companies
"tight"
40-year bonds.
conditions.
monetary
gradual growth.
such
borrowings
huge short-time
bad
very
for the
it had
cent.
per
long expected?
in the
one
per
not
to
money
management,
1907-1908, when
were
it
per
as
1/2
True,
been
avoided
have
$39,000,000 of its 6
These
had
similar
is
Haven's
to
Co.
unprepared
so
New
ought
But
which
market
money
"
so
into stock
commission.
then.
tight"
was
$67,500,000 of its
Morgan
to
share, was
convertible
agree
pay
$150
at
par
20-year bonds
cent.
MONEY
PEOPLE'S
OTHER
194
in other
incurred
the
main,
Haven
or
money
borrowed
on
the
companies which
BANKER-MANAGEMENT
these
dividends
pay
which
In five years
Railroad
in
could
companies
had
its
of the
excess
if proper
for
charges
steamships had
last three
had
the
latter
of
excess
been
control
of
out
in
earnings
that
paid
into
in
facts
can
have
few
integrityof
pursuitof
"The
fact
dividends
the
annual
much
larger
which
the
In each
the
dividends
Haven
"
Boston
before
the
of the
New
Maine,
much
so
in
April, 1913,
had
earlier years
the
been
least, an
at
ordinary
extra-
prudence.
banker-
failure
of
the
Haven
be
explained?
few
to
the
the
Prouty
Commissioner
bankers.
Company's
transportationmonopoly.
reason,"
itself.
Company
the
the mistakes
attributed
Haven
FAILED
of the New
management
A
made.
BANKER-MANAGEMENT
how
Now,
earned.
been
show,
lack of financial
WHY
to
or
deficit.
Surely these
buy,
depreciationof equipment
surplus accumulated
converted
have
during
years,
absolute
been
not
year's earnings;and
would
of
to
showing, paid
own
deficits disclosed
and
afford
not
out
has, on
195
The
started
says
he, "is
as
apparent
present management
out
with
the
purpose
as
of
of
the
that
con-
PEOPLE'S
OTHER
196
transportation
trolling the
In
England.
must
bought
be
paid.
what
be traced
it still remains
But
bad
in
management
out
the
in
monopoly
the
by
Company's
The
For
in
Haven
which
cannot
there
of the
It
natural
and
policy of
the
detail which
the
passing
ultimatelyimpaired
the
be
comings
short-
not
was
result
of
business
banker
for which
This
as
of the
detachment
should
he
explained
The
the
as
failure
the
not
was
exceptional.
confusing
It
was
functions
of
man.
UNDIVIDED
The
were
banker-management
individuals.
accidental.
banker
carrying
credit.
of
the
banker-
eminent
failure of the
New
cial
finan-
of the
cause
and
execution
the
and
what
attempted
of these
of
aggregation of important errors
compelled first the reduction, then
of dividends
pose
pur-
paid
its
the
entering upon
in its
as
and
find
policy of monopoly.
errors
grave
to
exercised
judgment
of that
and
one
every
New
derelictions."
and
misfortunes
be had
must
this purpose
To
can
facilities of
accomplishment
the
it
execution
MONEY
LOYALTY
be
detached
from
the business
in
desirable,
the
first
place,
BANKER-MANAGEMENT
in order
avoid
to
conflict of interest.
of banker-directors
they finance
197
has
been
The
lation
re-
corporationswhich
to
cism.
subject of just critiTheir conflicting
interests necessarily
vent
presingle-minded devotion to the corporation.
When
railroad
then
banker-director
that
man
sells them
price
which
at
railroad
of
it shall issue
they
suffer
from
to the
sellingthem
it is
For
than
company
director
best
bargains
best
not
the
rest
ought
at
of
not
through
to be
price less
have
Even
for
of
when
made
are
the
issued,
obtained.
banker-
the
not
importance of
The
company.
buyer and
seller
different persons.
AN
ESSENTIAL
does
detachment
in
conduce
objectionto banker-management
wholly,
poration
cor-
succeeded
would
suing
is-
favorable
been
if he
relation
interests
DETACHMENT
But
interests
suffer both
"
should
himself.
representedby
are
is
to
being impartial,the
the
the
ordinarily impossible
and
to
there
taken,
danger that
may
and
securities,
be
to
as
banker, fixingthe
as
are
of securities which
and
railroad decides
to himself
necessarilygrave
the
or
of the banker
from
the
the
plete
com-
corpo-
PEOPLE'S
OTHER
198
is necessary
ration
railroad
for
judgment;
of
financial
clearest
be
will
judgment
participation in
by
the
cial
It is outside finan-
advice
needs.
is his
it
ago
is
Similarly,it
to
or
obscured
is not
the
credit
to refuse
or
and
concerns;
The
customers.
demands
that
from
are
to
proper
the
the
under
to
function
banker
concern
enterprises.
is to
other
to
other
to
of this function
be
wholly
credit
consideration.
to
securities from
should
whose
give
concerns;
sell securities
exercise
of the
roads,
operate rail-
or
purchase
of
self-interest.
by
banker
from
The
soundness
industrial
of the
who
man
client."
proper
in
engage
"a
is that
easily
withhold
other
this
for
function
proper
purchase
fool for
construct, purchase,
to
to
recognized that
was
reason
judgment
The
the railroad
lawyer has
own
banker
by
or
which
essential
His
or
tached
de-
ties
securi-
decision
to
withhold
grant
or
on
soundness
to
the
responsibilityfor
Long
to
the
for
secure
ultimate
management
or
to
banker's
the
necessarily clouded
the
order
in
benefit
the
MONEY
occupy
to
the
of
efficiency
of the
a
the management
enterprise;and
positionwhere
in
he
so
or
ought
doing
he
the
not
is
BANKER-MANAGEMENT
passing judgment
does
The
banker
just as
loans
to
his other
his
sense,
of
of his
Such
banker
its affairs
But
the
own
client.
plans
banker
customers
securities.
the
"
The
are
small
an
investors
proper
do
of
their
not, and
judgment
offered.
furnished
of
with
of his
corporate
stands
in
And
the
as
even
the facts
to the
buy
who
which
if these
small
the
certain
as-
to base
ties
of securi-
investors
lack
our
the
cannot,
cases
on
of
on
The
soundness
facts,they
tion
posi-
women,
bankers.
in most
ward
to-
fullyrecognized.
securities, commonly
for themselves
a
interest
proportion
ever-increasing
recommendation
pacity
ca-
part of the
customers
be
any
man.
banker
should
legal
be, in
the
the
its
as
the wisdom
purchasers
of his
to have
not, in the
the
investors,
particularly
holding
corporate
in
railroad
upon
on
make
to
not
railroad
investment
of trust, which
The
as
also
large part
full knowledge.
does
should
attitude
is demanded
other
knowledge,
as
should
He
acts
or
detached
full
ought
own
knowledge.
undertakes
customers
of
knowledge
adviser.
who
of
only with
act
tachmen
de-
course
or
for sale to
full
should
banker
with
only
act
Of
lack
imply
should
The
himself.
on
not
lawyer
199
were
business
OTHER
200
PEOPLE'S
essential
experience
have
unbiased
advice;
where
the
and
sale
Is
to
it
the
the
securities
Haven
the
expended,
management?
that
have
with
clouded
by
of
be
the
in
participated
are
their
cannot
part
which
to
the
biased
un-
tion's
corpora-
the
tion
crea-
subject
of
investor.
conceivable
would
as
entitled
obviously
advice
banker,
ment.
judg-
proper
are
and
the
has
and
advice,
management,
of
need
bankers'
the
forming
to
investors
Such
MONEY
aided
the
great
in
providing
hundreds
if
its
participation
house
of
the
millions
judgment
had
in
New
the
of
gan
MorNew
so
not
wisely
un-
been
Haven's
PEOPLE'S
OTHER
202
of
limitations:
human
the
at
First,that
two
serve
time
same
do
There
Of
are
course,
have
time,
because
they
to
have
oneself,has
give, and
can
bear."
And
of
success
with
by
the
test
of
a
a
for
it
even
such
where
one
before
difficult
has
the
advantages privilege
all the
competitive
traffic will
the
business
ness
long-established,
well-organizedbusiwidely extended good-will,must continue
considerable
intertwined
time; especiallyif
tressed
but-
relations
preference over
efficiencycomes
when
charges
sold
or
natural
which
service
railroads
managed
to
shorter
constantlygiving
real
competitors. The
the
goods
for
It is not
"charge
in
ones.
long time,
attained
impetus
all the
may
the
to
properties
public; some
field to
of
for
some
banker-managed.
were
real
banker-managed
of the
expense
cannot
man
relatively few
prosperous;
the
at
can
seeming exceptions
many
been
man
SUCCESSES
numerous
rules; and
no
things well.
many
SEEMING
these
MONEY
test, and
have
may
has
success
legal conditions
or
be
rendered.
made
Our
recently been
they
have
to be
for
the
banker-
subjected
failed to pass
it.
THE
"It
is
OLIGARCH
only," says
INEFFICIENT
Goethe,
limitations,that
"when
the master
WHY
203
working
within
is disclosed."
OLIGAKCHY
FAILS
undermines
because
banker
(and
location
directors
often
fails
It
loyalty.
led
are
even
by
from
the
partly, also,
by their occupation
the
fact of their
mere
operated properties)
to apply a false test in making their decisions.
Prominent
in the banker-director
mind
is always
this thought: "What
will be the probable effect
of
our
upon
is
so
remote
action
upon
stock
and
stock
value
bonds,
indeed, generally
exchange
much
life,that
the market
part
he
values?"
of
stock
market
with
the
to
decisions
best
such
in the
the
of
stock market
affected
disinterested
street"
Facts
or
often
often
are
by
are
effort to prevent
led
this
be.
may
investors.
intentions,directors
influences
deferred
by
he
to
ceptible
sus-
unwise
tions.
misinterpreta-
pany's
com-
investment-banker's
is sensitive.
misinterpreted "by
And
the
The
help being
cannot
consideration, however
The
or,
of the
for
a
tenance,
main-
property
by banker-directors,because
of
belief
the
MONEY
PEOPLE'S
OTHER
204
that
the
of
making
them
now,
suspension would
in
judgment
that
is best in the
of which
of his
reason
But
is
there
banker-management
The
cannot
banker,
with
and
the
mind
study
of
judgment
why, ordinarily,
TIME
multiplicityof interests,
time
essential to proper
who
superintends,governs
in any
can
his environment.
exercise
Century Dictionary
is "one
man
whose
distortion
OF
his
to
no
is,
fail.
must
ELEMENT
supervision and
Director
sound
banker-director
reason
ordinarilygive the
The
of
The
such
to
further
THE
And
long run
occupation
or
value
excerise
function
director?"
am
peculiarlyliable
by
To
innocently,from
diverted,however
of,"what
is
the market
upon
operation.
successfullyperform
is
reduction
the
delicate
best,a
at
have
securities.
company's
the
it is believed
effect which
of the
business
of sound
tells
directs;one
and
who
manages."
in which
us
of
ment.
judgthat
guides,
Real
conditions
ficienc
efare
THE
OLIGARCH
changing
ever
measure,
INEFFICIENT
ultimately depend,
must
the
upon
problems
of the
correctness
from
exercised,almost
205
day
they
as
to
large
judgment
day,
arise.
in
on
And
the
how
portant
imcan
get time
and
to know
so
other
many
Besides,they
When
created
the
Mr.
Perkins
is the
industry, on
who
do not
New
complex
cerning
con-
businesses?
signed which
of the lawyers (as
Steel Trust, one
ture
signafrankly tells us) said: "That
last paper
the
last
a
one
necessary
was
put the
to
know
AVOCATIONS
The
the facts
start
particularbusiness
direct.
correlate
to
Haven
anything about
OF
THE
System
of
Steel
men
it."
OLIGAECHS
is not
railroad,but
should
of
decade
were:
Baker,
and
F.
Morgan
head
of
the
world.
Mr.
of
Yet
years.
Each
of his
vast
own
Board
of
besides
business,and
rectors
Di-
(the
Standard
advanced
well
was
in
feller
Rocke-
Mr.
of the
of these men,
each
house
dent
1909, Presi-
and
1911, President
Company.
Oil
1913, the
leading banks
York),
of New
until
was,
the
of
of America's
National
in
until
was,
Chairman
one
Rockefeller.
largest banking
the
the
Pierpont Morgan,
William
Baker
then
during
system
J.
rectors
di-
managing
was,
perhaps
and
First
Haven
New
of its decline
George
Mr.
the
real
The
judgment.
pass
MONEY
PEOPLE'S
OTHER
206
in
the duties
important private
interests, undertook
to
"guide, superintend,
and
not
only
govern
but
manage,"
also the
of
which
48
following other
at
least
insurance
of
least
158
Mr.
gan,
Mor-
subsidiary
line; 3 banks
15
industrial
Baker,
Mr.
railroad
and
trust
or
48
porations,
corpanies,
com-
and
and
porations,
cor-
corporations,
and
subsidiaries,
track; 18 banks,
15
100
companies;
including
at
corporations,some
of
16,000 miles
public-servicecompanies.
with
Haven
corporations,including40 railroad
and
or
New
similarly complex:
were
with
trust
the
37,400 miles
insurance
public-servicecorporations
and
panies;
com-
in-
THE
dustrial
OLIGARCH
INEFFICIENT
Mr.
concerns.
including 23
least
at
miles
207
Rockefeller,37
railroad
tions,
corpora-
corporations
with
117
of
9
concerns.
SUBSTITUTES
It has
burdens
been
which
the
leaders
of finance
directingBusiness- America,
of
be
refrain from
and
error
deterred
from
A
public service.
said
report
"It
is believed
and
fill,
Indeed
will have
be
to
them
in
being
But
American
daily
on
some
the board
there
is
people
wreck:
the
more
paid
in
McChord's
New
Haven
make
quite undesirable
it may
no
have
even
a
the leaders
respectableBoston
frequency will
and
patient
this
that
director
more
be
should
lest
criticism,
Haven
some
in
continuing to perform
very
the North
on
of railroad
men.
we
heavy-
assume
few
repeated with
to
of the
avoided
degree for
the part
and
hard
by responsible
become
substantial
pillory
so
that
salary to
men
pensate
com-
of directors."
occasion
as
for
little need
alarm.
of
The
oligarchy
in business
of
the
New
better
and
because
performed
task
the
Mr.
time
which
under
done
give
its difficult
to
with
than
business
Americans
us
that
Athenians
were
neighbors;
but
while
strength
the
no
when
tion
atten-
demand.
And
be
could
dered
ren-
nesses.
important busi-
our
the
they,
There
sessing
pos-
singlenessof
is great
problems
guide
Mr.
average
conditions.
There
to
more
competent
the
better
proper
only.
to
of thousands
otus
Herod-
better
fightersthan their
freed, they immediately
If industrial democracy
absolutism, there
"
be
substituted
would
be
no
for industria
lack
of
leaders.
England's
big
business
and
though
ability,even
have
master
one
industrial
of
Morgan.
For
strength in serving
having
tens
did
than
would
working
purpose
stockholders
native
man
is great
have
could
Rockefeller.
Mr.
less
business
who
thousands
are
manages,"
Baker
MONEY
politics.There
Haven
"who
one
in
as
in America
men
for
in
PEOPLE'S
OTHER
208
is the
But
Cooperative Wholesale
her
big
Society,
mark
Sweden.
and
between
It
and
Continental
and
property
of these
one
respectivelines
its
manufactures
scattered
is at
all
over
England;
libertyto buy
it
from
chooses;
or
not,
the
Cooperative Wholesale
This
as
the
in
tive
Coopera-
purchases, and
order
but
the
and
each
supply
to
societies
local
society
wholesale
society,
they buy
only
sells at market
The
its
petition
com-
in their
cooperative
distributive,
local
1399
products,
in
concerns
Britain.
Society makes
Wholesale
the
in Great
the
Every
is conducted
efficient
the most
it insures
its members.
departments
with
It has
English ports.
of
person
plying
steamers
owns
an
on
MONEY
PEOPLE'S
OTHER
210
to the local
and
if
prices.
it is
fair dividend
purchases.
INDUSTRIAL
Now,
how
are
the
DEMOCRACY
by England's leadingbankers,
other notabilities,
or
supposed to possess unusual
wisdom; but democratically,
by all of the people
interested in the operations of the Society. And
the number
of such persons
who
have directlyor
indirectlya voice in the selection of the directors
of the English Cooperative Wholesale
Society is
chosen?
Not
THE
OLIGARCH
2,750,000.
Society are
1399
For
INEFFICIENT
the
elected
directors
by
the
of the
vote
retail societies.
of
And
the
local
the
on
regardlessof
delegates of
Note
kind
what
"
executive
Not
but
who
have
of
confidence
elected for
year
only; but
W.
two
directors
the
business
thirty-two is less
in
single executive
directors
these
each
for
The
is the
But
of
the
similar
years.
Thirty-
manner.
Each
that
wholesale
whole
of many
corporations;for
$1500
largest of
rarely
aggregate salaries
American
about
are
president of
Society his
than
Cooperative Wholesale
and
is
salary of
oldest
service
directors
was
21
of
respect and
director
in this
of the
attention; and
and
time
of
the
to
selected
are
The
Mitchell
the
gives
their dummies,
the ranks
the
won
fellows.
J. T.
unseated.
vote,
democrats
or
risen from
their
one
sumers,
con-
of their vast
control
in the
the
who, by conspicuous
cooperation; men
the
capitalcontributed.
all-wise bankers
organization.
the
bers
mem-
one
man,
these industrial
men
select to exercise
one
of
amount
of
men
the
by
principleof
the
Wholesale
delegatesof
211
serve
year.
Society of England
these
institutions.
OTHER
212
countries.
The
has
Maxwell
for
PEOPLE'S
thirtyyears
week)
year.
has
at
REMEDY
of Reviews
the
Shoe
Society forced
this memorable
in
presented a
wholesale
ago,
Dr.
Those
eyes
Hans
Minister
the
were
lighted up,
hand,
(compelling
crowns
Switzerland
the
dissolution of the
the
He
tells also
international
an
by
which
of State
was
delegate,
international
an
be created.
movement,
congress
Swiss
Muller, a
societyshould
of
who
at
resolution
zatti,Italian
member
in
how
incident:
years
Cremona,
Sugar Trust;
Association.
Manufacturers
Swedish
lost 2,300,000
how
the
Review
the
Combine
having
struggle);and
"Six
how
the
Margerine
dissolve after
Wholesale
Secretary of
Society curbed
it crushed
$50,000,000
TRUSTS
April, 1913,
for
Wholesale
the
than
more
FOE
Cooperative League,
in
of
Sonnichsen, General
Albert
it to
President
as
efficiently
exceeding $38
salary never
most
turn-over
William
Society (which
Scotch
served
MONEY
Luigi Luz-
and
in
an
the
ardent
chair.
paused, his
then, dramaticallyraising his
proposes
to the assem-
THE
bly
OLIGARCH
great idea
trusts, the
INEFFICIENT
that
"
of
Rockefellers
opposing
of the
America
able to
grapple with
Michigan,
to
its members
high
recent
interest
about
cost
and
reports that
is
In
affiliated.
other
the
or
ment
move-
states, many
through
and
are
City
There
Minnesota,
the zealous
his associates
83
in
of the
some
ways
organizations
federated
central
the
seat
In
into the
of Northern
Alliance
California,long
cooperative work,
already
The
in
John
Cooperative League.
Cooperative
In
and
progressing.
Jersey.
The
years.
have
we
Northwestern
York
New
affiliated with
American
23
cooperative stores
Tousley and
of Mr.
in dividends
societies.
organizedby
were
some
Tamarack
cooperativemovement;
Right RelationshipLeague
New
it has
federation
100
over
of which
are
But
distributed
local distributive
350
Wisconsin
work
of
Brooks
toward
are
Cooperative Society
$1,144,000 in
in the
Graham
has
so
' "
the trusts.
which
wide
world-
AMERICA
Wholesale
no
great
shall become
like the
strong retail societies,
very
of
has
IN
the
to
world,
213
New
of effective
management
com-
MONEY
PEOPLE'S
OTHER
214
progressiveWisconsin
is developing. And
mittee
has
has
The
federal government
especiallykeen.
ment
just established a separate bureau of the Departopment
of Agriculture to aid in the study, develis
introduction
and
cooperationin
of
and
in
working
to
in which
complete
America's
credits
farm
Continental
and
success,
to
direct
German
banking.
to
now
field of cooperation
has
Europe
which
David
has, among
savings
farmer
The
"
is
achieved
Lubin,
Institute
others, done
attention.
our
people's
The
farms, in buying,
the International
delegateto
Agricultureat Rome,
much
of
methods
best
specialattention
and
distribution;
being given
of
the
of the
has
banks
achieved
democratic
associations,with
membership of
about
90 persons,
are
truly banks of the people,
by the people and for the people.
First: The
banks' resources
are
of the people.
These
aggregate
an
about
average
$500,000,000.
Of
this
THE
OLIGARCH
INEFFICIENT
215
rent
of these
that
large resources
Second:
that
"
The
banks
is, the
share
up
of the
The
committees
of the
and
farmer
The
6 per
borrowers
the
of
the
that
so
the
of
officers.
often
(and
:
$5 per
amount
elect the
pay
paid-
regardless
vote
or
even,
the
penses
ex-
about
average,
is loaned
low
by
the
rate
same
their
are
The
to
the
(usually4
per
receiving,
shareholders
cent.);the
on
people.
farmer
of interest
rate
pay
the
for
are
of all farmers
resources
people
membership is
one
on
are,
on
has
trustees
banks
money
at
to
cent,
the
without
banks
"
year.
Third:
farmers'
in
by
amount
members
These
treasurer)serve
And
of his shares
number
deposits.
$150
managed
the average
member
Each
his
the
are
capitalwas,
member.
farmers
of the banks.
members.
easilyattained;for
to the
belong
of interest that
made
the
Thus
loans.
available
to
each
to
Germany.
book
on
As
Henry
cooperativebanks:
W.
Wolff
not
says
confined
in his
PEOPLE'S
OTHER
216
MONEY
by
their
have
themselves
"Propagating
Germany,
Italy,Austria, Hungary,
Belgium.
Russia
is
France
of
Canada
its
have
has
credit.
made
Africa
is
has
bank.'
full of
more
Only
on
Ireland
own.
the road
has
substantial
economic
sowings.
way
to
discovered
the
necessity
by
even
India
promise.
has
And
and
the
the
side
made
even
Raffeisen.
girdled with
the
United
ring
States
The
of
and
to
Jamaica, have
even
same
of
of
Lord
cultural
'agrining
begin-
in far
Delitzsch
seems
their
Cromer's
and
groping its
cooperative banks,
the
and
of her
show
goal. Egypt
in
possession
credit
such
first start.
first-fruits to
and
for the
their
"South
countries;
Servia, Roumania,
acquisition. Cyprus,
made
overspread
Switzerland,
those
followingup
strivingstrenuously
cooperative
Bulgaria
is
merits,
own
Japan,
acclimatize
of
Schulze-
entire
world
cooperative credit.
Great
Britain
still
saving banks
SAVINGS
BANKS
of America
to these democratic
present
banks.
Our
striking
savings
MONEY
PEOPLE'S
OTHER
218
citizens.
extent, public-spirited
them
Among
Thus
directors.
of
Boston
those
Of
directors
the
these, 52
have
exceed
together
81
bankers
or
banks
Massachusetts
in other
bank
deposits
investment
are
largestsavings banks
three
(whose aggregate
other 18 banks)
of the
trustees.
bankers, and
of investment
predominance
be
to
trust
or
companies.
Second:
The
funds
(whether stock
the
for
allowed
interest
In
the
all the
in these
reservoirs
of
productively persons
the
deposits.
earners,
salaried
tradesmen's
used
The
savings
the
persons
rare,
small
used
classes
banks
would
needs
are
moneys
of
seldom
would,
the
be
any
aid
make
of
small
is
money
for the
instances
the
loaned
to
vance
ad-
depositor class.
able
to
it is doubtful
in
to
largely wage
it is used
are
mately
ulti-
money
who
members
or
indeed,
required security;and
their
is not
Staticallythe
productivelyone
Such
the
Dynamically
capitalist.For
when
But
depositors are
families.
for them.
the
people,
receive
they
are
cent.).
3 to 4 per
earnings.
net
used
not
are
depositors
(usuallyfrom
savings banks
mutual
gathered
The
people.
banks
savings
our
purely mutual)
or
mainly
of
provide
whether
event, receive
OLIGARCH
THE
consideration.
mutual
In
savings
1912
banks
savings
for
INEFFICIENT
"
which
bank
America
of
the
largest of Boston's
the
Provident
is the
Savings,
pioneer
invested
was
$53,000,-
in bank
banks
($20,764,770)
estate
($7,566,612)
security; and
the
loaned
was
Obviously,
$54,830.
among
the
large-scale
investments
do
individual
depositor
not
conspicuous
bank
pays
than
the
its
Savings Bank
the
are
in
the
people's
national
These
money
banks.
for
rate
our
serves
catch-basins
effect
Even
system
capitalist.
"small
sources
re-
loans
man"
borrowers;
not
of
the
of these
and
even
the
for
of interest
admirable
is
these
serve
especially well;
depositors
average.
the
real
personal
on
of each
average
the
on
of
One-seventh
$52,569.
was
of
amount
average
"
in national
loaned
were
the
telephone
Two-fifths
the
and
mortgages;
loan
was
deposited
was
or
companies.
trust
or
resources
stock;
of
in bonds
mutual
one-half
Nearly
($24,262,072)
resources
tion
Institu-
managed
"
of people's money.
000
219
this
lower
Postal
productively mainly
postal saving
stations
which
collect
merely,
distribution
among
the
MONEY
PEOPLE'S
OTHER
220
PROGRESS
Quebec,
has demonstrated
associations
of the
man
impressed
not
were
people. Many
with
branches
and
savings bank,
three
chanced
He
of
read
to
and
in
For
in
loans
averaging $120
had
not
1/2
met
the
seven
"
the people
rural banks.
idea
for
there
years
this
he
in
use
the
first
watched
little bank.
accumulated
in
It had
resources.
to
out
had
union
loans
rate
deposit
thinking,he
European
operations of
period $80,000
its
much
established
1900
carefully the
pioneer
the
work
to
"credit-union."
The
of
Levis
After
served.
proceeded
Levis;
in
incorporated"loaners"; but
not
were
the
people productively
located
ordinary banks
of three
mutual
people'ssavings
aid the
then
were
he became
ago
the
primarily to
There
the
on
of
years
utilized
least
at
Quebec, is a
Desjardins himself is
inhabitants.
city of 8,000
to
Levis,situated
St. Lawrence
cooperativecredit
that
communities.
of
Province
applicable, also,
are
urban
some
Levis,
of
Desjardins
Alphonse
made
that
2900
per
cent.
with
in amount,
In
and
the interest
singleloss.
Then
the
bank
Desjardins
THE
OLIGARCH
concluded
that
other
and
of
later
in
the
Province
also
credit-unions
his
aid; and
last
the
Province
in
of
merely the
not
was
through
the
121; and
to
grown
established
jardins
In
credit-unions
has
Quebec
have
after year
this
small
that
aid
has
who
means,
lives
And
mechanic.
has
it is
without
government
services
his
given
having
expenses
been
the
in
now
Year
him.
without
pay
the
as
and
nary
ordi-
established
been
All
large family
simply
as
of
Des-
established
from
given
man
public-spirited
been
Ontario.
been
been
of
have
19
applicationsare
24
the
years
pioneer.
hand
221
banking was
cable
appliproceeded to establish
he
credit-unions.
number
by
democratic
Canada;
to
INEFFICIENT
in Canada
wholely
paid by
those
seeking his
assistance.
In
1909, Massachusetts,
guidance, enacted
credit-unions.
The
law
and
then
the
names
25
other
for the
first union
in 1910, was
Springfield,
Myrick" a strong advocate
Since
under
named
of
unions
of the unions
Desjardin's
incorporationof
established
after
in
Herbert
cooperativefinance.
been
have
formed;
and
of their officers
disclose that
and
11
Italian
is
that
and
will
and
wage-earners
the
have
"
Massachusetts, where
35
years,
their
salary-earners,who
in many
have
they
has
success
been
farmers, workingmen,
learningto
to
help
and
notable
for
the
"
their aggregate
not
one
to
another
instead
of
be themselves
to
and
how
to
help
another, and
thus
for all?
When
learn this
from
their
ings
sav-
And
cooperative
farmers
and
and
over
ing,
keepmay
ment
movefacturers
manu-
working-
themselves
joinin
by helping one
dom
attainingthe New Free-
merchants
lesson,money
swollen
are
for safe
exploited.
the
clerks
turning
and
states.
existed
use
their money
men
ship
owner-
nearly $75,000,000.
assets
we
the
aged
manassociations,
prospered
In
United
For
mocracy
dethese
that
succeed.
loan
the
financial
spread rapidly in
they
that
to believe
reason
cooperativebuilding and
by
for
unprepared
will
people's banks
indication
strong
"
There
States
Jewish, 8 French-Canadian,
are
is not
immigrant
MONEY
PEOPLE'S
OTHER
222
fortunes
and
kings
may
manufacturers
will lose
subjects,
shrink;but industries
OLIGARCH
THE
will
because
flourish,
liberated
and
Wilson
country
originated
the
faculties
of
will
men
does
of
have
its
lie
not
men
in
now
It
prosperity
class.
controlling
enterprises.
in
the
depends
of
unknown
unknown
men,
Every
men.
of
of
the
already
men,
not
and
ambitions
is renewed
country
unknown,
famous
the
upon
the
upon
out
powerful
THE
END
of
out
the
in
The
brains
control
of
of
the
the
upon
...
inventions
be
wisely:
to
small
body
said
afford
America
small
great
has
can
by
of
treasury
the-
223
developed.
President
"No
INEFFICIENT
originations
of
unknown
of
the
ranks
control."
ranks
of
the