The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-05-31

the investment / W nm
market. it is n M
abundantly clear ~
that it has con- NJ
trolled huge
pool Of capital Liupmann
and that by its
prestige and its connections it has
exercised a towering influence upon
American corporate financing.
It also has been made clear that
this great power is almost entirely
unregulated by law or by public
opinion All the essential decisions
have been private and, but for the
debacle of 1929 and the investiga-
ton which it now has produced,
the operation Of this financial sys-
tenn probably would have continued
to be private and largely undis-
closed.
The only check upon it has been
the conscience Of the firm and its
banking traditions.
Now, the possession Of such great
power by private individuals who
are not publicly accountable is a
principle irreconcilable with any
sound conception Of a democratic
state.
The only terms on which such a
vast private power could in prac-
tice be tolerable would be that it
was exercised in The spirit of the
most scrupulous trusteeship and
with a far-sighted conception OF
public policy.
THE testimony has shown that
4 at least in the period under
investigation, that is to say, in the
wears of the great boom, the House
of Morgan not only had exercised
a wise restraint upon the specula-
tive craze, but participated in it and
profited largely by it.
ANY one who looks only at the
record of the securities publicly
offered. and sees that out of six
billions OF bonds only three issues
even are now in default, would have
to concede that the House of Nor
gan has been exceptionally prudent
and successful in the issues which
it sponsored indirectly such as the
stock of the Allegheny Corporation
and of the United Corporation.
1t is here that one encounters
the preferred lists and the great
speculative profits.
thnCn Ncnpf iOnC Ufl1iPh
demonstrate the dangers and the
social injustice of such great power
without fun disclosure and complete
public accountability.
They demonstrate that no set of
men, however honorable they may
be and however good their tradi-
tons, can be trusted with so much
private power and the opportunities
for personal gain which it carries
with it.
TINE most discouraging aspect of
4 the testimony of MI Morgan
and Mr. Whitney is the assumption
that all these transactions can be
explained away and that no impor-
tant reforms are necessary or de-
sirable.
They might have taken quite
different line. They might have
said that in the mad materialism
of the tWenties. when the whole
nation was in a fever of acquisitive-
ness, when the national leaders
we're celebrating the greatness of
Mammon, when the people were
voting by huge majoritieS for poll
ticianS who promised that the
boom would continue, they, too, lost
their bearings.
n
TIME problem posed by this in
4 Quiry is as difficult as any
which the nation has to deal with.
The only thing which is entirely
clear about it as yet is that this
power is too great for private in
diyiduals.
At the same time it has to be
recognized that in any economic
system the flow Of capital into en-
terprise has to be directed, and
whoever directs it has the greatest
economic power in the land.
The great majority of the people
are thoroughly convinced that they
do not like the way Wall Street
has exercised this power. They are.
I believe, equally convinced that
they do not wish this power exer-
cised by washington.
1t follows that the line of ac-
ton must necessarily be to regulate
further by law the private direction
of capital investment.
Such regulation would have to
seek to prevent not only the spec
tacular evils which have been dis
closed, the huge profits the pyra-
miding Of stocks ana bonds. the
privileges of insiders and favorites.
1t would have also to reduce the
sheer power of so much privately
directed money. And finally. as I
believe the inquiry is bound event.
ually to demonstrate, the new leg
islatiOn will have to attempt TO
introduce a conception of invest
ment planned with a view to pub
lie service which would replace the
acQuisitive and highly competitive
method Of financing which now
prevails.
1t is not easy to conceive OF
measures which would achieve these