Fifty years in Wall Street
gain from it, and should welcome the lime-light of this new era of
publicity. Secrecy is only the defence of the weak.
The recent decision of the Supreme Court of the United States in the
Tobacco and Paper Trust cases, that corporations cannot take refuge in
secrecy, but must give testimony as to all their transactions, when
required, even where it is self-incriminating, is a great victory of the
people. It marks the beginning of a new departure in corporate
management by enforcing existing laws, and requiring that publicity of
accounts, which large industrial, railway, and other corporations, and
most notably the large industrial trusts, have hitherto so strictly
guarded against and avoided, after the blind pool fashion.
The decision is that the law as it stands, giving a witness the
constitutional privilege of refusing to give testimony tending to
incriminate himself, does not extend to or cover his refusal to produce
books and papers that would incriminate his, or any other corporation,
the immunity being wholly personal. He cannot, therefore, assert it
either in behalf of a third person or a corporation, yet strange to say
this clear and convincing reasoning has never been put forward by
lawyers opposing the trusts. But it will make the way of the corporation
transgressor harder in the future.
It opens the door and clears the way for a thorough, complete, and
public examination of the affairs and accounts of the trusts. It removes
the first loophole for their escape from the consequences of their
unlawful acts, and from the exposure of their methods of opposing and
crushing competitors. They will, therefore, become liable to prosecution
under the Sherman Anti-Trust Law, and all unlawful combinations,
schemes, and conspiracies will be effectually and permanently broken up.
This decision is pf such vast and far-reaching importance, not only to
all directly concerned, but to the whole country, that its legal effect
and its moral influence can hardly be overestimated. It will probably
become as famous in the history of the Supreme Court as the Dred Scott
decision; and it will prevent in future the miscarriage of justice for
want of evidence against corporations, which has so frequently occurred
in the past. It will also raise the moral tone of corporate management
by enforcing publicity before refused, for the decision not only applies
to all railway and industrial corporations, but banks, trust companies,
and insurance companies of all kinds. It shows that a rigid enforcement
of existing laws is alone necessary to correct many abuses of long
standing.
The temptation that secret acts and secretive general management present
to those disposed to wrongdoing and chicanery, malfeasance,
misappropriation, and graft can easily be imagined; and it can also be
as easily inferred that such management is apt to give rise to
suspicions and rumors detrimental to the interest of the corporations
concerned, and indirectly injurious to others. Honesty is not only the
best polity, but a moral duty, and should be as much the watchword of
corporations as of individuals, and no man should betray his trust for
either love or money, whether acting in or out of a corporate capacity.
There is more permanent prosperity, as well as honor, to be secured by
honest than dishonest means, and to quote the Bible, “What does it
profit a man if he gain the whole world, and lose his own soul?” Yet
unscrupulousness in high places of trust is often forced upon public
attention. This should all be swept away as a debasing element in
business life, for dishonesty, like the upas tree, casts a blighting
influence wherever it is.
The corruption of judges and juries and the bribing of legislators
should be more abhorrent than larceny itself to every captain of
industry and all corporate officials, who should have equal respect for
the truth and their own honor. Great wrongdoers should be no more exempt
from punishment than small offenders and mere millions should furnish no
protection to them.
Great fortunes accumulated by monopoly and oppression, and other
dishonest means, are no credit to their possessors, but really a
reproach, and the abuse of power by them is a great national evil. Every
business man should take pride not only in his regard for honesty,
truth, and fair dealing, but in his own personal honor, whether he is
acting for a corporation or himself. We are now on the highroad to the
correction of a multitude of abuses and the country is to be
congratulated upon this salutary movement for improvement and reform in
our business methods. Our great remedy is PUBLICITY, and the enforcement
of the law.
The immensity and grandeur of our national progress and achievements
justify us in looking forward to a still greater and grander development
in the future and still more splendid triumphs of mind over matter than
we have already accomplished. I do not say with the spread-eagle Fourth
of July orator:
“No pent up Utica controls our powers,
But the whole boundless continent is ours.”
Yet it cannot be ignored that no other nation has such a magnificent
career of expansion, development, and progress before it as the United
States, united as it is by telegraph and telephone and our vast network
of railways, from the Atlantic to the Pacific, and Maine to Florida, in
unbroken continuity.
With the growth of our population, which even now exceeds eighty
millions, we shall grow more and more in national importance and wealth,
not only in material wealth but in the higher products of an advancing
civilization, in the arts and sciences and literature, and all that
embellishes and glorifies mankind. Therefore we should, as we go along,
constantly endeavor to correct errors, shortcomings, and abuses, and
prune away rotten and unsound timbers in our public and business life,
and make the whole machinery of business and activities of all
kinds—trade, banking, insurance, manufacturing, legislative, and the
various professions and mechanical industries, work as legitimately,
honestly, smoothly, and harmoniously as possible. The way to do this can
be best paved by promoting public spirit, and sweeping away the
opportunities for business wrongdoing in secret, such as rebating, by
wise laws properly enforced, and backed by public opinion, yet laws not
oppressive, unjust or too inquisitorial. This would compel the “crooks,”
“grafters,” “rebaters” and “competition crushers” of the business world,
who have schemed in darkness, and shunned the light, to come out into
the open view, and this publicity alone would be a perfect cure for many
great evils. So let us have more light—the light of PUBLICITY.
------------------------------------------------------------------------
CHAPTER LXXV.
THE MONETARY SITUATION AND ITS REMEDIES.[3]
Footnote 3:
An address to the West Virginia Banking Association at their 13th
Anniversary Meeting, at Elkins, West Virginia, June 19, 1906, by Henry
Clews.
The rapid growth of our population, the great activity of all our
industries, the general prosperity of the country, apart from the
terrible calamity at San Francisco, and the immense speculation going on
in land and mining ventures, especially in the West, are the underlying
causes of the severe monetary stringency that New York has lately
experienced. These influences have kept money to a much larger extent
than usual active in the interior and prevented its concentration not
only in New York and the other Eastern monetary centres, but at the
Western centres.
Chicago in particular found that money, instead of returning there from
the interior in good volume, as it usually does in January, February,
and March, continued this year to be sent to the interior by the banks
there at an average rate of $12,000,000 a month during these three
months. This movement was not so much owing to the land and mining boom
as to the immense absorption of money in the various manufacturing,
mercantile, and other expanding business interests all over the West and
South. So great was, and still is, the activity in these directions that
speculation in grain, provisions, and stocks has been more neglected in
the West than for several years, as the narrowness of the markets there
has shown.
To show more precisely the effect on the money markets of this unusually
great speculative and industrial activity it is only necessary to say
that, during this first quarter of the year 1906, the Chicago banks
steadily and heavily lost in deposits, while their loans kept
increasing. A comparison of the condition of the national banks in that
city on April 6th, as reported to the Comptroller of the Currency, with
their condition at the date of their previous report on January 29th,
showed an increase in their loans of $8,625,237 (or 4.11 per cent) and a
decrease in their deposits of $6,773,490 (or 2.11 per cent) and a
decrease in cash resources of $14,628,960, or 10.38 per cent. These
figures explain why money was so scarce in New York. The West had none
to send us, although there is more money in circulation than ever
before. If we go back to the condition of the same Chicago banks on
March 14th, 1905, and compare it with their report referred to, we still
find that their deposits decreased $8,687,117 and their cash resources
$7,970,318, while their loans increased $1,599,774; and in their reduced
cash resources the Chicago banks reflected the condition of the banks in
all the other large cities of the West, Northwest, and Southwest. There
has been a rapidly rising volume of trade and land and mining
speculation there for more than a year, and enormous activity in new
industrial enterprises. In the Southwest, particularly, the growth of
banking has been not only unprecedented but enormous. I include in this
designation the States of Missouri, Arkansas, Louisiana, Texas, and
Kansas and the Territories of Oklahoma, Indian, New Mexico, and Arizona.
The last decade has witnessed in this section of our country more
extensive and rapid material development than was ever before seen
anywhere, either in the United States or elsewhere, and this expansion
in banking was in response to that material development, and therefore
had a legitimate foundation in business requirements. American spirit
and enterprise, and Western push, overcame all obstacles in spreading
civilization and creating trade, especially in the new settlements.
In the five years ending with 1900, 101 new national and other banking
institutions were established in these nine States and Territories—with
a consequent increase of $94,500,000 in individual deposits and
$150,300,000 in aggregate resources, and in the next five years ending
with 1905 no fewer than 1,415 new banks and banking institutions were
added to the number—a resulting increase of $73,400,000 in capital and
surplus, $383,750,000 in individual deposits and $670,350,000 in
aggregate resources. Thus, in ten years, there was an increase of 1,516
in the number of banks, of $137,000,000 in capital and surplus, of which
$79,000,000 was surplus, of $478,000,000 in individual deposits, and of
$820,750,000 in aggregate resources.
This enormous banking development reflected and stimulated the enormous
development of the country, and aided trade fully as much as trade
helped the banks. The one kept pace with the other, and marvelous
progress in both was the result; and this progress continues, and will
continue indefinitely long under the stimulus of the rapidly increasing
population of that still sparsely settled section.
This banking development is of incalculable benefit, both locally and