The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-11-08
AN APOLOGY FOR PRIVATE
BANKERS.

]
people, but nothing more unusual than the
transformation which has come over its pro-
fessor of business history DR.. N. S. B. Gras.
When this scholar established himself as
one of our leading economic historians at the
University of Minnesota he was known as a
robust liberal. Now he appears in Current His
tory with an apologize article on the private
bankers. This reads as though he had never
gone beyond the testimony of Messrs. Morgan
and Dawson in the Pujo investigation and of the
younger Morgan and Mr.. Otto Kahn in the re-
cent hearings He seems to accept unquestion-
ingly the formal statements made by the House
of Morgan in 1912 and 1888 as to the benevolent
intent and beneficial achievements of finance
capitalism in this country.
According to Professor Gras, our great pri-
vate bankers are deeply altruistc and profoundly
socially minded gentlemen who have been ap-
palled by the incompetence, waste and avarice
of the average independent industrialist and
railroad and mine operator.
The sensitive souls of these men have been
outraged when a corporation passed its divi-
dends or defaulted on is interest. They simply
could not stand this state of affairs.
So, at great expense, they bought up and uni
fled the various industries transportation lines,
mines and the like to give the public the benefit
of cheaper and more efficient service and to as
sure steady payment of dividends and interest
to the investors in these businesses. Where
private business fails, these super-business men
step in to control and direct"
More recently the public utilities have profited
by the intrusion of the benign influence of the
private bankers. That eager and self-sacrifcing
public servant, the Power Trust" has emerged
to give us better heat, light and power at lower
rates. Our private bankers have always been
in the vanguard of economic progress. ''It
stands out as a beacon of truth that Wall Street
was economically progressive"
There is no evidence that the private bankers
have exacted more for their service than they
have been worth to the American public.
DR.. Gras concludes with his conception of
Utopia. 1t is an America in which each indus
try would be dominated by one or two great
units such as the United States Steel Corpora
ton and the General Electric Company Then
over these would be set two great groups of pri-
vate bankers such as the House of Morgan and
its closest competitor.
DR.. Gras ought to have been reasonably con-
tented up to the end of the Hoover administra-
ton, since what he portrays as Utopia is es-
| Sentially what he enjoyed at the time Our
economic life then primarily in the hands
of a few great corporations controlled by Nor
gan and other leading private bankers
Perhaps the kindeSt thing would be to sus-
pect DR.. Gras of the use of irony and satire.
His article may have been intended as a re-
ducto ad absurdum of the case for the bankers
something after the fashion of De Foes IA
nous brochure on THE Shortest Way With Dis
senters." 1t is hardly possible that so well in
formed business historian could have expected
his article to be taken seriously by readers in
| command of the facts.
An old adage tells us that the proof of the
pudding lies in the eating. Finance capitalism.
dominated by the great private banking houses,
held the United States in its grip for a quarter
of a century. The end product of its appIica-
ton of the Golden Rule to industry was March
3, 1888. Here was just where these "super-busl-
ness men" of Wall Street brought US
DR.. Gras stands the facts on their head. The
reign of speculative finance has not improved
industry. transportation or utilities These lat
ter have been defective enough, but their COL
lapse mas been due TO the fact that they havS
been Quilted by the speculative moguls for tenn
porary financial profits. Industry has a far
better record than finance.
Take, for example. the influence Of the bank
erS on the International Mercantile Marine
Company, the New York New Haven & Hart
ford Railroad the Chicago Milwaukee & St.
Paul Railroad and the like to mention only a
few conspicuous examples of their intervention.
Consider how they have jeopardized the public
utility industry of the country through their
giant holding companies and paper pyramids
These carry with them no important social
service and yet skim OF the cream from the
profits OF the operating companies, make the
public pay high prices for electrical services and
threaten to neceSsitate public ownership of the
electric utilities.
And remember that the great private bank
ers played the largest single part in putting US