Fifty years in Wall Street
Economy in the University of Pennsylvania eighteen months ago. I saw
then what was going on in corporate corruption and grafting, and
railroad rebating, but, of course, had no tangible evidence or legal
proof of these misdoings.
During the intervening time, however, so much of this came to light that
there was no alternative for the national government, as well as many of
the states, but to take drastic action to stop these evils, and probe
right and left to locate and convict those responsible for them.
President Roosevelt led the way to this laudable end. He is not in favor
of persecution, however; but he is in favor of the prosecution of those
known to be guilty; and I firmly believe that his courageous stand in
this movement to correct and punish corporate abuses will overshadow, in
the history of his Presidency, all his other achievements.
Remember: he would punish only the guilty and protect property interests
in every way possible, so that the innocent may not suffer with the
guilty, or at least suffer as little as possible.
The lawyers engaged to defend wealthy corporate wrongdoers may sometimes
prevent their conviction and punishment; but the people are entitled to
the protection which comes from an equal administration of justice.
In these days the truth of the biblical saying, that “the wicked
flourish like a green bay tree, but they shall be cut down,” has become
evident to us in certain instances applicable to corporations.
Some ancient cities and empires, including the great Roman Empire, were
ruined by the lawlessness and unscrupulousness of their rich men—the
great oppressors of those days—and our America was fast falling too much
under control of large corporations and corporation capitalists; but,
the plain people of this country are for equality, equal rights, and
fair play for all, and opposed to a plutocracy.
In his address at Memphis, this year, President Roosevelt said:
“I will no more stay my hand because a wrongdoer masquerades as a labor
leader than if he masquerades as a captain of industry.
“I am against undesirable citizens when they are great capitalists who
win a fortune by chicanery and when they are men who, under the guise of
standing for labor, preach and encourage violence and murder.”
To show that he recognized the sensitiveness of certain corporation
capitalists who are cast into a frenzy by his most common sense remarks,
he once said: “It has come to a point where my saying that honesty is
the best policy is liable to lead to a run on the banks.”
In discussing the cause of the present panicky contraction and
disturbance in the business and financial world, nothing, however, could
be further from the truth than to charge it all to the great corporation
exposures and prosecutions.
There were many other things that contributed to bring about this year’s
depression and disturbance, and to cast over the brightest sky that ever
shone the heavy clouds of distrust, reaction, and panic.
The clouds in the financial sky can remotely be attributed in a large
measure to the effect of the tremendous railroad, industrial and
commercial development of the last ten years, which brought about
capital requirements in excess of the ability of the country to supply
them.
Naturally and necessarily, this resulted in precautionary steps being
taken by bankers and others to limit demands that capital could not
supply.
This conservatism and consequent contraction of the overwhelming volume
of business, will, it is believed, prove the strongest force in averting
further trouble and disaster. I have for some time been urging the
application of this brake, or safety valve, of conservatism, and it is
really imperative.
In an effort to meet the demands of the enormous business offered them,
the great railway and industrial corporations sought to enlarge their
equipment at vast expense. In this they acted unwisely. They overtraded.
To use a common saying, “they bit off more than they could chew.” It
was, perhaps, excusable, not very long ago, when confidence was in its
zenith and credit superabundant, to attempt the financing of mammoth
undertakings. But unexpectedly and like a bolt out of a clear sky, came
the startling insurance and other exposures, and gradually timidity took
the place of confidence. Then capital, which is always more timid than
usual at such times, began to contract, and many railway and industrial
corporations found themselves unable to borrow the large sums needed to
meet their extraordinary expenditures.
The banks in many instances, having already over-extended credits, were
unable to provide the necessary funds, and new securities, owing to
excessive supplies and other causes, ceased to find the ready market
that they had enjoyed for so long a period. Investors took wing.
Curtailment, therefore, in every direction became a necessity, so
President Roosevelt can no more be blamed for the existing depression
and panicky disturbance than he can be credited with all the great
prosperity that preceded the crisis.
That this reaction, culminating in a panic so severe, came just at the
time it did, is largely if not wholly coincidental. It cannot be denied,
however, that the startling disclosures of wholesale wrongdoing on the
part of many of the great railway and industrial corporations disturbed
the confidence of the public to the core and paved the way to it.
The indictment and prosecution of the rich and powerful corporations
that had been violators of the law were but the necessary and legal
consequences of their own guilty conduct.
Article II, Section 1, of the Constitution of the United States requires
that before he enters on the execution of his office the President shall
take the following oath: “I do solemnly swear that I will faithfully
execute the office of the President of the United States, and will to
the best of my ability preserve, protect and defend the Constitution of
the United States.”
Section 3 of the same Article of the Constitution, in enumerating the
duties of the President, says: “That he shall take care that the laws
shall be faithfully executed.”
As at the time of his inauguration as President of the United States,
Theodore Roosevelt solemnly swore that he would faithfully execute its
laws, all of you, I know, will agree with me when I assert that he was
bound to loyally and fearlessly keep that oath.
As an honest man, he has only tried to do his duty. He has attacked the
law-breaking corporations, and those in control who have amassed large
fortunes out of them dishonestly, and these only. Not to have prosecuted
and to have let these corporations, and their officers, go on, unchecked
and unpunished, would have been to violate his oath of office and to
neglect the duty imposed upon him.
It would certainly make a farce of this great republic, and cast a
stigma upon our integrity, if the laws of the land were not enforced
against the rich and the poor alike! No such reflection as that upon our
national honor will ever be tolerated by Theodore Roosevelt! He has been
ready at all times to uphold the national honor. It has been well said
that the honor of the nation is the soul of the nation.
President Roosevelt’s resolute and unyielding stand for the rights of
the people, against the powerful corporate wrongdoers who had thrived so
long upon their secret misdeeds, has commanded the attention and
admiration of the world. His excess of earnestness and denunciation at
times, we can forgive.
Victor Hugo, in speaking of one of the world’s greatest “Immortals,”
truly said: “When a man is a glory in the face of his nation, that
nation which does not perceive the fact astounds the human race around.”
President Roosevelt has proved himself a successful crusader against
successful corporate dishonesty, involving violations of law; and it is
doubtful, as he says, whether his policies have had any material
influence in bringing about the severe depression and banking crisis of
this memorable year. But whether they have or not, he declares, with the
courage of his convictions, that during the remainder of his term he
will not swerve from these policies, but persevere in them
unflinchingly. Yet all that his administration has done has been to
unearth the wrongdoing. It is impossible to cut out a cancer without
making the patient feel temporarily worse than before.
It is a mistake, or a slander, to say that Theodore Roosevelt has made
war against capital. He is only opposed to dishonest corporate methods,
and dishonestly acquired wealth. He respects the possessors of honorably
acquired and honestly used fortunes, and would protect their property
interests in every way possible, and guard them against injustice, and
be resolute in defending their rights; for their success leads to the
inference that they are good citizens. But he will assuredly stand
against crimes of unscrupulous cunning in the management of railway,
industrial or financial corporations as resolutely as he would against
crimes of brutal violence, and equally punish the rich man and the poor
man, for crime is crime whether committed by a plutocracy or capitalist,
a poor wage earner, or a mob. These are his avowed principles and
policies.
He would regard a man who builds a railway where it is needed, and
operates it fairly and honestly, as a public benefactor; but if that man
manipulated the stock and bonds of that railway so as to swindle the
stockholders or bondholders, or the public, or gave rebates or otherwise
favored one shipper over another, he would regard that man as an enemy
of our institutions who should be punished for his wrongdoing. All this
goes to answer the question: Is President Roosevelt’s policy towards
capital sound? I say that it is, when rightly understood!
Furthermore, the regulation of corporations by the Federal Government
should be made absolute, and taken away from the States, where they do
an Interstate business, like the railways and express companies. This
would be better for the corporations, themselves, as well as the people
than present conditions. They should be placed under National control,
just as the National Banks are.
This central undivided control would do away with the confusion of
Federal and State authority now existing. Moreover, I would favor the
extension of this Federal control to all interstate corporations, and it
will come in time. Meanwhile President Roosevelt is paving the way for
it, and to him let us give all honor for his long step in the right
direction.
But, now that Mr. Roosevelt has substantially achieved his purpose, he
can well afford to rest satisfied that his work will continue to bear
good fruit without any further public addresses on the subject.
The people are already familiar with his views, and their continued
reiteration by him in his speeches, especially during this period of
financial and industrial distrust, depression and unsettlement, would
tend to inspire fresh uneasiness as to the situation and the value of
corporate stocks and bonds. It would do this, owing to the extreme
nervousness and timidity of capital that prevails.
It is this abnormally sensitive and apprehensive condition of public
feeling that led to the recent senseless run upon certain New York trust
companies, and in a minor degree upon banks and savings banks, and that
caused very many of the depositors, after withdrawing their money, to
hoard it in safe deposit vaults, and various less safe receptacles,
instead of depositing it in other institutions.
Their hoarding it, naturally made conditions all the worse, through very
seriously increasing the stringency of the money market. So great became
the scarcity of loanable funds that from the 23d to the 31st of October,