The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1913-12-12
The Endless Chain.

Endless Chain" 1t is an exceedingly interesting
exposition Of the system of lnterlocklng d1rec-
torates which seems to be the chief means by
which the Money Power controls the industry and
credit of the nation. He shows how one member
of the firm of J. P. Morgan & Co., may be con-
trolling influence in dozens of corporations popu-
larly supposed to be in competition with each 9TH
err. In this way one banking house becomes own
er, selling and distributor thus effectually de
stroying competition among these various con-
under its control.
Not only does the interocking directorate
make competition impossible, writes Mr. Bran
deis, it removes the incentive to development IN
these firms and makes them pensioners of a
mighty system that is able to guarantee to them
their business. More than that it undermines
the breed of manhood itself and fosters ineffi-
cheney. For when corporation monopolizes its
market it finds it easier to conduct its business
in cheap and soveny way and charge the pub
lie up with the waste. This is one of the unde-
niable causes of the high cost of living.
"Interlocking directorates breed inefficiency
and dsloyalty; and the public pays in higher
rates for poor service, large part of the pen
atty for graft and inefficiency"
How it is possible for firm to absorb
control of many others supposed to be free is
illustrated by the Steel Trust, the very MENUS
of Big Business. The few men who control this
monopoly also own number of railroads and con-
troll twenty -nine others with 10000 miles of
track, this being more thap one-half of the total
railway mileage of the country.
Mr. Brandeis points out how this
mon practice of having the same man in control of
two competing concerns strikes at the very prin-
ciple on which modern business methods and NOR
ais are supposed to rest If city engineer lets a
contract to concern of which he is part owner,
he is Immediately accused of graft and usually
dscharged: why asked Mr. Brandes, does not
this same principle apply when director in one
corporation is part owner in another with which
it is supposed to compete?
But this very unbusness like practice has
been made possible and even upheld by the
courts. They have decided that a contract is
valid when drawn between two corporations
when man is member of both boards of d-
rectors providing his vote is not decisive. And
they also have held that even a contract for
which such director has actively worked is not
void unless the stockholders so elect.
The fallacy of both these positions is appar-
ent, points out Mr.. Brandes, the moment the
quiet influence of man who does not formally
vote is taken into consideration. If it is merely
known among the others that director, a
representative of the Money Power and conse-
quently dictator of a corporations financial pol
icy, is opposed to measure, the voting direc-
tors will not dare to advocate it, And as for the
second he emphasizes that the contract is not
declared VOID but merely VOIDABLE, which is
quite a different matter for it usually is impos-
sible for the many stockholders of big corpora
ton to know enough about its internal affairs to
be able to vote one way or the other and thus as
a rule contract will not be voided, however I'M
desirable it may be- Protection to the stockhold-
would dictate that EVERY contract entered
into with a concern in which director was in
terested be void.
So fatal to business development and indus
trial liberty is this pernicious system of inter-
locking directorates Mr. Brandeis insists that
the Presidents New Freedom will never be real
lied until it is destroyed.
Even more important than Efficiency he
says, ARE industrial and political liberty; and
these imperiled by the Money Trust IN
TERLOCKING DIRECTORATES MUST BE
PROHIBITED, BECAUSE IT IS IMPOSSIBLE
TO BREAK THE MONEY TRUST WITHOUT
PUTTING AN END TO THE PRACTICE IN
THE LARGER CORPORATIONS" What is a
criminal offense in the Federal government must
be made equally criminal offense in business
practice.
What it is necessary to do in order to uproot
this system, Mr.. Brandeis promises to discuss in
his next article of the series
1t would be a good thing if every member of
the state legislatures and the national congress
could somehow be made to learn every one of
these remarkable articles by heart
Mr.. Gray: A Good Political Joke
Mr. Finly Gray, who may be known to some
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