The Hawaiian star. [volume] (Honolulu [Oahu]) 1893-1912, 1912-02-17

will take them. They get commits
sion for making the guarantee. The
distribution of this patronage among
smaller institutions and banking
houses has been a factor in building
up a few great bank issuing houses.
The issuing house has the ability and
strength to take the bonds. The bank
ing house has the ability and strength
to take the bonds. The banking
house, as rule sells the bonds al
most before It UNDERWRITERS them, and
these obligations have been largely
profitable for the smaller institutions
and prolific source of income.
1T ties the smaller institutions to
the great issuing houses, makes them
subservient to the will of the issuing
houses, and makes it dangerous for
them to go into any ventures that
don't meet the approval of the issuing
houses, and as a practical result they
do not.
"In the city of New York today it
would be brave man who would dare
to go into any big financial enterprise
that didn't meet the approval of some
of those groups of men. That situation
is getting more acute daily.
! This system has got to such a state
of perfection that the issuing houses
/ nowadays don't ask the smaller broker
whether he wants to underwrite. They
simply send him a printed form, tell
ing him he has been allotted so much
of a given issue, and he takes it as 4
matter of course.
Because if he didn't he wouldn't be
on the list the next time. They know
they can dispose of any amount Of
securities they approve through these
underwriting centers. You can under
stand that means practically the sub
lection of this vast army Of smaller
bankers and banking houses to the
! will of the great financiers.
Control of Railroads.
That's only one element of the
: power of the banking house Another
is its control of the railroad CORPORA
2 tons through the protection it throws
around them, and it has control of the
p trusts the same way. There is no
/ great railroad that is not under the
a protecting wing of some one, two DOR
three great banking houses in New
, York. When it wants to make a bonJ
>. issue it does not offer them for com
. petition, as it ought; it does not dc
r like we dc. with Government bonds
q try to get the best price. On the con
+ trary, these bonds go, as a matter o
, course, to the banking house that pro
, tects the railroads known at its officia
d banker And that Is a thing We SHOULD
/ not continue, because these loans arr
d enormous in amount and should be tn,
subject of competitive bids.
+, I'm return for this patronage tn,
S banking house gives protection to tn
e railroad-such protection that indie
e pendent railroading in this country I
S. at an end. do not think we will eve
1t see any more Independent railroa
+ building until We get these railroa
systems loose from the great issu
Il houses that protect them.
r, The banking houses has such pow
n er it can stop anything of that kline
o 1t would stop anybody who wanted t
build a railroad from finding tn
money in any of the financial center'
r and the result is that if a railroad
1t built hereafter, it will be by the grea
al system, las a feeder to that system
" not a competitor.
IT, AS to Trusts.
N The same is true regarding th
n trusts. and the controlling reason VIII
is we will not have competition againi
the great trusts is because of II
is protection of these great bankir
DIS houses. Take one of these trusts.
ny has been vouched for by the bankir
ne house. The banking house protects
es takes charge of its finances, contro
re them and directs the way they sha
to be distributed among the bank al
n; trust companies controlled by the iss
ID ing house.
ne do you suppose you will find a mi
%, so bold as to attempt to run again
IS that sort of power? If they were le
MS alone to fight their battles, ! belle
N we would have competition again
many of the trusts. But let them /
m themselves under the control of
es issue houses and the chances of co
ey petition are nil"