Fifty years in Wall Street
end, prove beneficial to the country; for it will purify it by
eliminating the unlawful evils complained of. This will inspire foreign
capitalists as well as our own with confidence; and they will invest
heavily in American securities, just as soon as they feel assured that
the surplus earnings of our railway and industrial companies will be
fairly divided among the stockholders under honest management, regulated
by law, and subject to Federal and State supervision.
Recent events have shown that drastic action was necessary to insure a
square deal for all. Mr. Roosevelt is not attacking capital, but he is
attacking those in control of corporations who have misused their power
and position to do illegal acts and presumably for their personal
profit. Confidence received blow after blow from this source, before
getting another rude shock through the exposures resulting from the
Metropolitan Securities investigation, and the action of the New York
Clearing House with regard to the Heinze and Morse banks.
It is now over two years since public disclosures of this kind as well
as of railway rebating began, followed by the collapse of the copper
manipulation and, very recently, by the scandals connected with the New
York Traction situation. No wonder, therefore, that confidence is
seriously disturbed. And who is responsible? Not President Roosevelt and
Mr. Hughes, the famous life insurance investigator, who have been
instruments of exposure, but the individuals who conceived and conducted
these unlawful operations. Of course the guilty protest against
financial house cleaning; and they endeavor to ward off official
investigations on the plea that these disturb confidence, and make the
innocent suffer. But the whole responsibility should be placed where it
belongs—upon the perpetrators of misdeeds, and not upon those who, in
the discharge of the duties of their high office, have been the means of
turning on the light and preventing future operations of the kind. Those
who have trifled with the public interest, and displayed a blind
disregard of the people’s rights, are the real transgressors.
It becomes daily more evident that when all our railway and industrial
corporations are known to be honestly managed, and when stockholders and
investors get their due, values will be more stable, and American
credit, which is now at a low ebb in all the great financial centers of
the world, will be restored to its rightful place.
Throughout all these disclosures of illegal methods and wholesale graft
there is one gleam of encouragement, and that is, that public opinion is
aroused and will insist upon clean as well as capable corporate
management in the future, and thus these disclosures will result in the
raising of the moral standard of corporate management. Meanwhile, the
public is disturbed by these revelations, and wonders what financial
irregularity will be brought to light next. The action of many corporate
managers has seemed to indicate that they think little of violating the
laws, and that, if they are broken by one high in authority, or in
social life, immunity must be granted; or some subordinate be made to
suffer instead of themselves. If a poor man commits a crime, he is sent
to jail. Sympathy for his family may sometimes make the judge lenient as
to the time of his incarceration, but, however short the term, it
generally brings sorrow and want to the family for which he is the sole
provider. Thus, the innocent have to suffer with the guilty in such
cases.
In corporate matters, if a manager or controlling capitalist breaks the
law, justice should punish him, as it would anyone else. The law should
be no respecter of persons.
Sodom and Gomorrah were destroyed because the people broke Nature’s
laws; and this government, although the best known to man, would be
destroyed in the course of time, if the rich and unscrupulous were
permitted to break the laws with impunity, while the poor were punished
for much less serious offenses. This invidious distinction has caused
those who have suffered by the corrupt and illegal practices of
corporations and their managers to unload their grievances upon the
President. In their communications they tell him that, while many from
their ranks are being sent to prison, they fail to see any of the rich
being sent there, although the evidence against them is unquestionable.
This unjust distinction, if it continues, I repeat, cannot fail to have
an unsettling effect upon the American people, and may finally result in
something more, as this is a government of the people, for the people
and by the people, and a discrimination in favor of the wealthy—whether
corporations or individuals—will not be very long permitted by the plain
people, who are largely in the majority.
President Roosevelt took the oath at his inauguration to be guided by
the Constitution, and as the Constitution requires that the Executive of
the nation shall enforce the laws, he would have been derelict in his
duty and unfaithful to his oath if he had not taken the action he has,
to compel corporations to conform to the Interstate Commerce and Sherman
Anti-Trust laws and their amendments. Whenever evidence has reached him,
through the complaints of people who have suffered in consequence of the
violation of these laws, he has very properly handed the material
received over to the Attorney General to make the necessary
investigation, and as in every case thus prosecuted the results have
justified all he has done as to these, he deserves great credit. The
so-called indiscriminate attacks that are claimed to have been made by
him upon corporations and business interests have no sound basis. So far
as his intentions go, he has only attacked dishonesty and law-breaking.
While I fully approve of what Mr. Roosevelt has done in the way of
reform, I confess I do not fully approve of his too oft repeated
passionate utterances on the subject during the recent period of
distrust. It undoubtedly has helped to unsettle the minds of timid
investors and weak-minded depositors. The President has probably been a
little too outspoken at a time when silence would have been golden.
There are periods when the least said the better; still, I applaud his
good intentions and his excellent deeds, which cannot fail to prove
fruitful in the end. We should all be willing, therefore, to overlook
his recent volubility and frequent reiterations.
A short time ago France stood ready to invest large sums in American
bonds and stocks. But just after her first venture in Pennsylvania
Railroad bonds our corporation scandals filled the air with their
unpleasant odor and French capital was locked at once against everything
American.
When all the old evils have been exposed, and wrongs righted, and
foreign as well as home investors again seek investments for their funds
in our securities, we may rest assured that, having undergone rigid
investigation, they will be looked upon as the best in the world.
That President Roosevelt should be blamed in any way for the banking
troubles, business failures and losses that have been made in the stock
market is unfair; but it is always the case that the Executive in office
bears the brunt of whatever disasters of the kind occur during his
administration.
Those of us whose hair is no longer black, brown, sandy or red,—or very
abundant,—can well remember the calumny and evil reports that were
heaped upon the broad shoulders of the well beloved Abraham Lincoln. The
noble cause he fought for cost millions of lives and billions of
dollars, and of course there were very many who suffered at that time by
the war. Of these many were most bitter in their denunciation of
President Lincoln, and this nearly broke the heart of that great man,
but did not for a moment cause him to desist in the work he saw it was
his duty to perform to the end. To-day, those who traduced him join
freely with the whole nation in doing honor to his memory. President
Roosevelt may be severe in the frankness with which he reiterates his
intention to punish those who break the law; but, in the distant future,
the world at large will remember him as one who dared to suffer under
unjust denunciation for the sake of right, and even now the great mass
of the people are with him in his efforts to improve and purify business
conditions.
Those capitalists who have lost money largely by this year’s decline in
prices of stocks, and the monetary disturbance, are naturally bitter and
resentful; but even the majority of such, down in their hearts, grant
that in principle President Roosevelt is doing his plain duty, though in
his speeches he may have said too much too often. If what he has done is
wrong, it is the fault of the law, for he has urged no greater
punishment than the enforcement of the law. But the man would be daring,
indeed, in the face of the exposures already noted, who would presume to
say that the law is unjust. It aims at equal justice for all, and we are
a law abiding people.
In view of all the wrong doing in corporation management it must not,
however, be forgotten that the majority of our corporations are ably and
honestly managed in the interest of the stockholders. It is not
surprising that black sheep have crept into some of them, for a certain
percentage of people in every walk of life and every association, church
or social club, are bad at heart, and show up in their true colors, when
subjected to the temptation to commit wrongs which will tend to their
personal advantage. The assumption that now prevails, that all
corporation management is dishonest, is, therefore, unjust and has been
causing much of the hysteria that has prevailed in Wall Street and
elsewhere.
To protect minority stockholders, especially in the Interstate
Railroads, they should have at least one representative in the board of
directors, and he should be elected by the minority at each annual
meeting. If such a director was a cool-headed, honest business man,
certain abuses, which have been prevalent in the past, could not have
occurred and would be prevented in the future.
It is much to be regretted that to aid personal schemes, some of the men
in power, even in some of our large National Banks, have resorted to
methods which have caused loss of confidence in them, which resulted in
their retirement, practically under compulsion, as officers and
directors. It is almost needless to say that, of all corporations, our
National Banks should be the last to be used for illegal purposes, or to
promote personal gain or speculations.
When a man in power imperils the solvency and good reputation of one of
our banks, he is a public enemy, and as mean and guilty as one who
attacks the virtue of a virtuous woman. To destroy confidence in that
woman and her good name is to do her an irreparable wrong. Destroy
confidence in a bank and you destroy that which is one of the
corner-stones of business prosperity. Those who invest in railroad
stocks, or stocks of Industrial corporations, risk only the cost of
their investment, but the holder of record of a National Bank stock is
liable for an additional amount equal to the par value of his holdings.
Publicity is the greatest safeguard of the prosperity of any corporate
enterprise, and the best preventive of irregularities and frauds. Many
men will do in secret what they would fear and refuse to do under the
public eye; and if hitherto secret ways are, in the future, made known,
and seen of all men, there will be less breaking and unfaithfulness
among many classes of business men in high places.
This doctrine of publicity I have preached for years, and it was the
topic of an address I delivered before the Wharton School of Political