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High Finance - II

1. I

2. II

3. III

4. IV

5. V

Without going into shades of encyclopedic meaning, I would define, for
the purpose of this discussion, a financier as a man who has some
recognized relation and responsibility toward the larger monetary
affairs of the public, either by administering deposits and loaning
funds or by being a wholesale or retail distributor of securities.

To all such the confidence of the financial community, which naturally
knows them best, and of the investing public is absolutely vital.
Without it, they simply cannot live.

To provide for the thousands of millions of dollars annually needed by
our railroads and other industries, would vastly overtax the resources
of all the greatest financial houses and groups taken together, and
therefore the financier or group of financiers undertaking such
transactions _must_ depend in the first instance upon the co-operation
of the financial community at large. For this purpose such houses or
groups associate with themselves for every transaction of considerable
size, a large number of other houses, thus forming so-called syndicates.

But even the resources thus combined of the entire financial community
would fall far short of being sufficient to supply the needed funds for
more than a very limited time, and appeal must therefore be made to
the absorbing power of the country as a whole represented by the
ultimate investor.

Now, let a financial house, either through lack of a high standard of
integrity in dealing with the public, or through lack of thoroughness
and care, or through bad judgment, forfeit the confidence of its
neighbors or of the investing public, and the very roots of its being
are cut.

I do not mean to claim that high finance has not in some instances
strayed from the highest standard, that it has not made mistakes, that
it has not at times yielded to temptation--and the temptations which
beset its path are indeed many--that there have not been some
occurrences which every right thinking man must deplore and condemn.

But I do say and claim that practically all such instances have occurred
during what may be termed the country's industrial and economic pioneer
period, a period of vast and unparalleled concentration of national
energy and effort upon material achievement, of tremendous and turbulent
surging towards tangible accomplishment, of sheer individualism, a
period of lax enforcement of the laws by those in authority, of
uncertainty regarding the meaning of the statutes relating to business
and, consequently, of impatience at restraint and a weakened sense of
the fear, respect and obedience due to the law.

In the mighty and blinding rush of that whirlwind of enterprise and
achievement things were done--generally without any attempt at
concealment, in the open light of day for everyone to behold--which
would not accord with our present ethical and legal standards, and
public opinion permitted them to be done.

To quote one instance out of many: Campaign contributions by
corporations were a recognized and almost universal practice. The
acceptance of such contributions did not shock the most tender political
conscience. Now they are rightly forbidden, and what up to a few short
years ago was not only not prohibited but sanctioned by the custom of a
generation and more, is now made and considered a crime.

Then suddenly a mirror was held up by influences sufficiently powerful
to cause the mad race to halt for a moment and to compel the
concentrated attention of all the people. And that mirror clearly
showed, perhaps it even magnified, the blemishes on that which it

With their recognition came stern insistence upon change, and very
quickly the realization of that demand. That is the normal process of
civilization in its march forward and upward.

And I claim that Finance has been as quick and willing as any other
element in the community to discern the moral obligations of the new era
brought about within the last ten years and to align itself on their

As soon as the meaning of the laws under which business was to be
conducted had come to be reasonably defined, as soon as it became
apparent that the latitude tacitly permitted during the pioneer period
must end, finance fell into line with the new spirit and has kept in

I say this notwithstanding the various investigations that have since
taken place, nearly all of which have dealt with incidents that occurred
several years ago.

And in this connection I would add that it is difficult to imagine
anything more unfair than the theory and method of these investigations
as all too frequently conducted.

The appeal all too often is to the gallery, hungry for sensation; the
method--to wash as much soiled linen as possible in public (even, if
necessary, to make clean linen appear soiled), and to use a profusion of
soap and water quite out of proportion to the actual cleaning to be

To innocent transactions it is sought to give a sinister meaning; what
lapses, faults or wrongs may be discovered are given exaggerated portent
and significance.

The Chairman is out to make a record, or to fortify a preconceived
notion or accomplish a preconceived purpose.

Counsel is out to make a record. The principal witnesses are placed in
the position of defendants at the bar without being protected by any of
the safeguards which are thrown around defendants in a court of law.

To complete the picture, I must--saving your presence--add this other
patch of black: The reporting is very frequently, if not generally, done
by young men not very familiar with matters of finance and in search of
incident and of high light rather than of the neutral tints of a sober
and even record; and the job of headlining seems somehow to be entrusted
always to a mortal enemy of the particular witnesses of each session,
selected with great care for his ingenuity in compressing the maximum of
poison gases into a few explosive words.

It may all be legitimate, according to political standards, but it is
not justice, and what of benefit is accomplished could equally well be
obtained, whatever of guilt is to be revealed could equally well and
probably better be disclosed, without resorting to inflammatory appeal
and without, by assault or innuendo, recklessly and often
indiscriminately besmirching reputations and hurting before the whole
world the good name of American business.

I do not know of any similar method and practice and spirit of
conducting investigations in any other country.

By all means let us delve deep wherever we have reason to suspect that
guilt lies buried. Let us take short cuts to arrive at the truth, but
let us be sure that it is the truth that we shall meet at the end of our
road, and not a mongrel thing wearing some of the garments of truth, but
some others, too, belonging to that trinity of unlovely sisters,
passion, prejudice and self-seeking.

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