jpmorgan testmony 1912

8/10/2019 JPMorgan Testmony 1912

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The

Justification

of

all

Street

Compliments o


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Testimony of

J. P

Morgan

Before the

ank

and Currency Committee of the

House of Representatives, at

Washington,

D.

C.

Appointed for the Purpose of Investigating

an

Alleged Money Trust in

"Wall Street."

Cross-Examined by Samuel Untermyer, Attorney

for the Committee.

December

18

and 19 1912.


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,

morgan Epigrams

have absolute faith in the patriotism and public spirit of the

Stock Exchange.

The moral responsibility has to be defended as long as you live.

Securities do not always prove good.

I t is difficult to get stockholders to take active interest in their

companies.

do not believe could carry any question through any board

against the views of the other directors.

like a little competition but I should rathe r have co-operation.

Without actual control you can do nothing.

I want to control nothing.

There is nothing in the world by which you can make a money

trust.

do not feel that I nave vast power.

I

do not think have

power in any department of industry; am not seeking it either.

All the money and all the banks in Christendom cannot control

credit.

My firm is not run by me;

I

am not the final authority.

I believe in divided as against concentrated responsibility.

do not compete for deposits.

do not care whether they

ever come but they do come.

A bank if it transacts its business right will get its share of

the business.

Nobody wants to put money into a new railroad in these times.

I always assist young men.

If it is good business for the interests of the count ry I do it.

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If

I should attempt t o tell where the money is in every transac-

tion

I

make, I shou d have a ha rd time of it.

I

did it because I though t it was the thing t o do.

I

should not allow a man to be associated with me that

I

thought was a fraud, simply because he owned a bank which at

that moment was solvent.

Money is gold, and nothing else.

If a man had the credit, and

I

had the money, his customer

would be badly off.

I have given a man a check for a million when I knew he had

not a cent in the world.

The first thing is character, before money or property or any-

thing else.

man

I

do not trust could not get money from me on all the

bonds in Christendom.

never heard of a ban k being controlled by anyb ody who gave

it business.

The first thing is to get the business, and the next thing is the

way you transact your business.

I

think manipulation is always bad.

never sold short in my life that know of, but do not see

how you will get along without it.

I t is a principle of life, think.

I would not favor legislation that would reduce the volume of

speculation.

You cannot prevent the public buying a thing that

they think is low, or selling a thing that they think is high

You cannot in a bank in which you are a director, not in any

first-class bank, at any rate, go and find out how much

I have got

in that bank.

You can get combinatio ns that can control business, but you

cannot control money.


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PREFACE

A

C ' O l l l l

IT l liIC

of

Co ng ress , chasing w ha t soi ile, folks say

is a c l i imera , has e l ic itet l f ro m ~ )e r l la ps he m ost re~ iow net l

\ \ : i t l less in the country 's his tory the most vi ta l tcs t i inony.

\\'a ll S t r e e t w a s o n t ri al . S u n d r y r e p u ta t io n ~ ? l i t ~ ~ e s s e s

liatl nlatle a fee ble showitig. 'L'lie l iun tcr s of t l ie m ys teri ou s m oney

t r u s t w e r e e la te d . T h e i r l ~ r i l l ' a n tcounsel , wlio coul t l say with

-2eneas that l ie olice l iatl 11een part ~vliereofhe spoke , wa s mou ld ing

the case as a sc r~ lp tor -1:lays tt-icks with clay . scjuatl of ex p er t

acco~in tants ) i l e t l

u p

tables

of

mill ions ant1 bi ll ions, l ike Ja l~ a n e se

jugglers .

'I 'lle s ta r witn ess hat1 I>eeii s t~ m m on se t l . Chief serv i tor of the

t emple of t h e ~no ney-c hang e r swa s he-a f igure of lo v ia n m ajes ty ,

magnificetlt , inscrutable, si lent.

lc

r iva led t he S l~ l i i t ix . O nly twice .

in t l ic nlemol-y of t l ie marl te t , hat1 he casual ly ta lked of current

tl ii ~ lg s. I'acll tim e

h c

gru ff iy eni it te t l a n epigram . I I e c liagnosetl

t lie ailm ent of th e rich m en 's panic of 9 as a ca se of untligested

secu ri ti es . A f t e r t he Su pre m e Co ur t had s t a r t ed i t s a l l ti - tru s t

vivisection,

l ie tersely suggestetl the t lifficulty of un scr am bli ng eggs.

(7t l ier~ \ l isc , e l -p et~ia l i lence.

Tl i is unc ro~ viiet l


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\ \ a s per ional antl au thor i ta t ive ,

T h e m oney-k ing , vho hat1 \early

dealt in liuntlretls of millioas of tlollars ant1 not even a hanclful of

words , now d~ scu sse d ree ly an d f rank ly the technique , the code, the

e th ic s ant1 t h e ~ l ~ o r a l s ,f m oney mark et and s tock market .

What he said of private vs. public banking, of inter locked

I

t l irectorates, of m erg ers, of vo ting t ru sts , of spectulation, of cret11t

and of money, ha d behind i t his own prest ige ant1 personal i ty. I l is

yes or

11

meant pages in themselves.

Going fur ther , Mr . Morgan la id down wi th the force of unt l i s -

puted authori ty some of t l ie basic tei lets of f inance. H is t lef int t~on

I

f credit alone sufficetl to lay th e gho st of the "n ~ o n ey rus t li5

observat ions on the funct ions and the faul t s o ic banker and broker

i

set fo rth the essent ial service, while no t bl i i lki~lg the incit lental

blemishes, of the country 's ap pa ratu s f o r invest i llent an d speculat~o n.

I

H e appra iset l an d expla ine t l W al l S t ree t . H e d id not have to tle fend

i t ; he just if ied i t. I

The last ing v alue of h is s taten lent an d i ts ful l s ignificance were

i

n o t t o b e hat1 f r o l l ~ f ir st ca su al r e a d ~ n g n cont lensed and hu~-r ie( l

press not ices. I n the bel ie f tha t i t deserves a w ider an d lnore ca re fu l

at tent ion, this coinpi lat ion of Mr. Morgan's test imony is here pre-

sen ted in a m ore com plete and p e rm anen t f a r m .

I

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T I - I E J q O Y S E

OF

L I O R G X N

Q

IVl-lere

d o

you res ide , Mr . RIo rgan?

A . S e w Y ork .

Q A re you sei iior m em l~ e r f the pa r tne r sh ip o r f irm of J P.

h l o r g a n 8r Co. , bankers , o f New York C i ty?

A . I am, s i r .

Arc you a l so a pa r tne r in o the r bank ing houses in th i s

coun t ry an t l e l sewhere?

A. K O , I a m n o t.

Q A re you not i ii terestet l in the Philat lelphia f ir i l l?

A . T h a t

is the same th ing .

Q That is the same fir111 with the same membership? A . Yes .

Q

Is that t ru e a lso o f th e L,ontlon an t l Pa r is hou ses ?

A .

T h e

firm in K ew Yo rk ar e pa rtn er s in the I 'ar is hous e ant1 in the Loilt lon

house.

Q W i l l y o ~ i a m e t h e p a r tn e r s i n t h e X e w Y o r k a n d P li il ad e l-

1 )h ia hou ses ?

A . I d o n ot k n o w ; I th ink you have them.

A I R . S1co1.1.:

I f you wi ll rea tl tl lem over , l l r . Un te rm eyer , M r .

R ' l o r g a ~ ~i l l te l l you whether they are correct o r no t .

AIR.hlor


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4.

They are not there as ind iv i t l t~a ls .

The fir111 of

J. 1

l l o r g a n

Co. ant1 the firm of D re xe l

Co.

are p ar tner s as such , as a firm

Q

In both the London house an ti the P ar i s h ou se?

\ 111

both

the Lond on house ant1 the Pa ris house, yes.

2

i \ n t l at l t le t l to that , I suppose, are other par tners , i esldents

in T,ontlon or l'aris?

A .

Yes, tha t i s so .

Q.

Does you r S e w Y ork ho use ( lo a genera l banking l )us iness?

A. W e t ry to , s i r.

Q

Do you take t l epos i ts ? A . W e do .

I

Yl;u t lo the business that is done by a banker?

Exactly,

as fa r as we can .

Q

And you honor cl iecks against t leposi ts , just as a bank

tloes?

A .

\ I re do, excep t with u s checks d o not go throl lgli the

Clearing Iouse

11s

Dr-srx~ssMIITHOLIS

2. You c l ea r t hem ove r your coun te r , do you?

A .

W e d ra w

checks on the banks and then check through-

Q (In terr up t ing . ) Checks against yo ur fir111 ar e presentet l a t

your of f ice?

A. They n lus t be presented a t our of f ice .

Q

And you g ive checks on banks in r e tu rn?

A .

a bank

f o r t he m .

O

your fore ign houses a l so ac t as bankers in tha t sa lne

way and accept depos i t s?

A .

T he y d o ; not t o any g r e ~ t xtent 1)llt

they (lo whenever necessary.

Q Is t he re a ny business th at y o u r fir111 do es no t (lo in the biay

of the banking bus i t le i s tha t i s done by any Sta te or Kat iona l bank,

except to receive Government t leposi t i? A . K O , w e tlo not lsslle

Q

But apart from your inabili ty to issue bank notes ant1 yoL1r

inabi li ty t o receive Go vernm ent d eposi ts , you a ct as a bank with the

same power as any banking ins t i tu t ion organized under a corpora te

l a w ?

A

W e

do.

Q. Ant1 you rece ive a s ban kers in tha t way depos it s of in te r -

S ta t e co rpora t ions , do you no t?

A. Any co rpora t ion .

Q

You mean you have among your t leposi tors large t lepoyi ts

of

inter-St-ate corporat ions- that is , corpo rat ions engaged in ~ n t e r -

8

j

I

I

I

I

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I

L

1

I

I

I

i t a t e c o i i i m c ~ - c e ?

A

Yes; T s u l ~ l n s e \re t lo ./ l (lo ~ i o t emelii1,er

;ui \ t l ii t ll ict lon 11etwcenthem .

2 'I'hc b e t n e c n thciii i, th a t c e r ta in ~ i t ~ ~ l c t i o n corl)oi-ations

a re eng aged in co111111el-cehetw een th e Sta te5 ant1 othel-ie ng age d in

c o l i ~ m e ~ - c e F o r in i ta n ce , t h e In te rbo roughlily \v ith itl the S ta te s

C o ~ i i l~ a l l yngages in h ~ i s ~ n e i s t h e S t a t e of N ew Y or k ? n l y \ > ~ t h i ~ i

ii

Yes

*)

\\'lille t h e S o ut he l- n R a il \v a y e n ga ge s i n b u si ne ss h e tw e e n

tlic S t a t e i ?

A .

T h a t is it .

(2

1 OLI tleposits f ro m b oth clai,es of c o rp o r at io n i ?ecelve

\

\Ye r eceive de l) o si ts f r om an y co r l~o r a t lo n ha t we t li lnk good .

2

You have p repa red , have yo11not , a s ta teme nt of the a in oun t

of

mane o n

t l e l ~ o s ~ tv ~ th ou 11y ~n te r - S ta te o rpo r a t ions a t a glven

( l a te? >I

I

t1111ik

\ V C

have.

1

h a v e ~ i ' t h a t , h o \ \ e v e r .

I . T I 1 h a \ c it .

I I I

I

\ \

ill J 011 pro t luce i t , 111-.I , in t la l~ ur y?

I

I T I I

( lo not pro tl~ ice t , hut 1 ou apl)arel it ly have

it

haven ' t i t, with me.

2 .

C a n ) o u tell 11 r e fe r en c e t o t h is p a pe l-, 1 l r 1 10 1- ga ll,h o w

In an y s uc h a cc o un t5 of ~ i i t e r - S t a t e c o r l ~ o r a t i o ~ ~ s o u r fir111 hat1 at

your Sexz York ~ an k ii ighouse on the 1s t of Jan ua ry , 1912 , ant1 how

m aiiy j o u h a d 0x1 th e l \ t of N ov em ber , 1 91 2? A . I woult l l ike to

ask 11etIie1-th a t cannot l ~ c l \en b y s om e o n e m o r e f am i li ar w i th

the ac co u~ i ts han 1an1

( lo iio t k n o w a ~ l y t l i ln g l ~ o u t h e ~ n . A n y

i ta te m e nt t ha t t he) s ~ l b n l ~ to4011, 1 \ \i ll accept.

MIrosr1s

~ I I oration selects t l ie t le-

pository of the cor11o1-atic:n

4 7'he finailce committee.

Q

1\,-11o p11t All-. Frick on kinance committee.

A 1

(l id,

1

\\'ho

pu t M r. f 'erkins at heat1

o f

t l ie f inance comm it tee?

l ie t l i t l i t h imsel f .

1

can ' t reca ll a ll these th ings , M org an

conti i luecl i r r i ta l~ly.

Q

\Yho tlecitletl that

J.

T .

M organ Co . shou ld be the deposi -

tory of the ITni te t l S ta tes S tee l Cor l )ora t ion?

.\. 'Tha t w as ra the r

ex-officin, I thinlc.

2.

You ineali you tleci(led it

1)oth

w a y s ?

.\.

W h e n t h e c o m -

11ally wa sffo i-m et1 1. I f o r g a n

Co.

hat1 th e wl io le com pany a t th a t

t i n ~ e ,a n d 1 t l iink tha t i s th e way it came.

I_ .

Y o u t hough t i t was gootl I~us ine s s , nt1 so you thoug h t you

woultl talce i t?

N o ;

I

(lit1 no t know \v l~ e th e r t was go ing to he

g o ~ i l )usiiiess

or

no t a t t ha t t ime .

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Q I t t ur n ed o u t p r et ty g o o d ?

A . I t did. I 'ery good, intleetl,

s ir .

Q

You clicl not think you were taking any chances on it being

g o o d b u s ~ n e s sw h e n y o t ~ o o k i t

up ,

t h e n ? A . K O ; b ut

I

began to

have doubts when the s tock went to 8 a share .

Q Your doubts c l id no t in ter fere wi th your buy ing I leav i ly?

A .

K o ; I bought a l l I could.

2. Yo u d ~ t l o t have any doub t , clitl you ?

A . Never , no t fo r

one m oment .

2.

You were ge t t ing the advan tage of other people 's t loubts at

t h a t t i m e ? A

Yob ody e ver solt l i t at m y suggest ion, s ir .

Q

K O , I clid not meail

to assu m e that . I t only implies your

collfi tlence in the company at that t im e ? A. I always had i t , s ir .

A3 r . Alorgail coultl not tell w he the r or n ot the Steel Corpora t ion

h a s p ow er t o deal in ~ t s wn shares . H e (lid no t think the co rpora -

t ion actual l j ha t i car r ied on deal ings o f th is character . H e had no

knowledge of the re having been buying an d iel l ing syndicates in steel

stock.

Mr . Un te rmqer t l i sc l a imed any in te~~ t ionf in t imat ing tha t N r .

M~I-gan 's i rm ever had par t ic ipated in any pools o f th is character .

I s . Un te rm yer took u p the matter of untlerwrit ing syutl icates

by the M orga n f i r r i .

Q.

A n d y o u h a v e a l is t of those people whom you invite in to

these syn t lica te part icipations , hav e you no t? A Yei , s i r .

Q.

If you we re is suing an intlustrial se cur ity, you \zlotiltl prob-

ably offer participation to a tlifferent class of untleruriters fro111

that you would o ffer i t to i f you were i s iu ing ra l l road bont l i?

A

Exac t ly ; tha t i s wha t I wan ted to say.

Q I s i t no t a fac t tha t som et imei , when an i ssue i s evi tlen tly

go ing to be ve ry popu la r , you make you r a l lo tn~en t swi thout any

previou s application an d sometim es, whe n you hav e difficulty in

mak ing a synd ica te , you inv i t e app l i ca t~ons?

11

That i s wha t I

wanted to say .

2. Th ere a re lnai ly banks and t r u s t compan ies ill S e w Y ork

wh ich you permi t t o pa r ti c ipate in these un t l e rw r i t~n gs , r e the re

n o t ? A . Y e s , a g r e a t m a n y .

Q.

But 110

~ n su ra nc ecompanies, s ince the law of 190h? A K O .

Q. A nd does your l is t o f un t lerwri ters ex tend t o the o ther

g rea t c i ti e s o f the c oun t ry?

A. All of them

Q.

As a participations haveeneral

t h i n g

t h e s e u n t l e r ~ ~ l i t i u g

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been profitable?

taken.

A . Yes, otherwise you could not get any of them

Q. H av e you a vas t m arke t fo r your secu r it i e s? A . Ve ry o f ten .

Q.

T h e more people you have se ll ing a secur ity , th e worse i t i s?

A .

Yes. T h e ma rket is very ap t to be dead .

/ y . D o you d is t r ibu te these par tic ipations in Ne w Yo rk City to

all the bankin g f irms or only to some of them tha t a r e f r iends of

y o u r s ? A .

Oh

n o Of course i t var ies very much, bu t we d is -

tr ibu te to those w e think will help th e issue.

D o you not 1t11ow that there ar e some in Ne w Y ork w ho a re

never invi ted to par t ic ipate? A. V ery few , s i r .

Do yot i no t know that some of the leading banking f i rms

in N ew Yo rk Ci ty do no t part ic ipate in your unde rwr i t ing ?

A

Yes ,

sir . A g rea t many of them re fuse it .

Mr. U nte rm yer declared tha t Lee , Higginson Co. , o f Boston ,

Firs t Xat ional Bank of Chicago and o ther ins t i tu t ions of ten wanted

to participate.

"The y don ' t wo rk with us , bu t take or refu se an offer we make,"

s a id M r . M o r g an.

Q Th ey don 't o f ten r e fuse , do they . A. Oh, yes , o f ten .

Q.

T he n you of fer them another opportuni ty . A. Yes , s i r .

Mr . Morgan tes t i f ied that h is f i rm always a l lo t ted a par t o f

every la rge i s sue to Eng land , F ran ce and Germany . M r . Morga n

did not believe this wide distr ibution of securit ies necessarily made

a marke t fo r them. O n the con t ra ry , h e though t i t wa s likely to

re ta rd the marke t .

Q Have you a ; iast m arket fo r your secur i ties? A . V e r y o f t en .

Q.

T h e m ore people you ha ve se l ling a secur i ty the worse i t i s?

A . Yes. T h e m ar k e t i s ve ry a p t t o b e d ead .

The New Srork f inancier coultl not give

a

total of the securit ies

tha t we re m arketed on the average by h is f i rm in a year .

Q. H ow many secur it ies

d o

y ou m ar k e t in a y e a r ? A s m u ch a s

billion dollars?

A .

I

th ink the f igures are very much overes t i -

mated .

I can ' t reinember all of them.

I l r . M o r g an ad d ed th a t h e d id n o t th in k i t am o u n ted to fiv e o r

s ix hundred mil l ion dol lars a year , bu t he would have the f igures

prepared.

IN R E L A T I O NO I ~ A N I C S

T h e commit tee then took u p the jo int operat ions between G eorge

F.

Baker , of the F i r s t Na t iona l Bank , and M r . M organ . Mr .

LIorgan testif ied that he was a director and member of the executive

19


22/60

commit tee of the Firs t Nat ional

Bank ant1 tha t he and Sl r . Baker

were o ld and c lose f r i ends . T he i r f r i en tl sh ip da ted a t l east

f r o m 1873.

Q.

D ur in g t ha t t ime your house has been o f g r e a t aid t o t he

Fi rs t Nat iona l E an k in bui ld ing up the i r grea t prosper ity an d they

have been o f g r ea t aid t o yo u?

A . I

hope so.

Q.

Ts thc re any d atu m obtainable tha t would show t he exten t

of jo in t o r par tnership t ransac t ions be tween t he F i r s t N at iona l

B a n k a n d y o u r f i r m ?

A. I

do not th ink the re i s any wa y of ge t ting

a t t ha t .

Mr . Morgan would not l ikd to say tha t h i s f i rm and the Fi r s t

Nat ional Bank had been associated in near ly every big enterpr ise .

H e could not reca ll any in which th e Fi r s t Nat iona l Hank had been

omit ted, but he fel t sure thcre were some.

M R . RiJoiiclz.

1

al t tavs offered them

any thin^

I had.

Q A n d t he y th e s a m e to y o u ?

I

think they woult l," said M r. Mo rgan , wh o hastened to explain,

however , tha t the Fi r s t Nat ional Ea nk i tse lf cann ot of course go

into s tock operat ions, a l though M r. Baker intl ividually could.

M r . Tn t e rm ye r con ten tl ed , however , tha t bo th t he F i r s t Na-

tional Bank ant1 Mr . Raker were impor tant fac tors in the under -

writ ing of the Steel Corporation securit ies.

/iQ \? 'as not the Fi r s t Nat iona l Ran k an imp or tant fac tor in

underwr i t ing Stee l s tock?

A

Yes,

I

presum e so . ,

Counsel cal led the witness ' a t tent ion to the organizat ion of the

Fi rs t Secur i ty Company and the Ci ty Secur i ty Company, but Mr .

M orga n insis ted th at h e kne w no thing of the details .

M r . Morgan ' s throa t became husky, and he turned to h i s daugh-

te r , M rs . Sa t te r lee , an d asked for a throa t t ab le t. M rs . Sa t te r lee

produced i t f rom a handbag.

"D o you w ant a g lass of wa ter?" asked M r . Vnterm yer .

"No, thanks ," sa id Mr . Morgan.

"If you get t i red," suggested M r. Un terniye r , "don't hesi ta te to

say so.' '

"I 'm not t ired," retu rne d the financier.

RQ You are a l a rge shareholder in the Nat iona l Ci ty Bgnk, a re

you not

A . No, s i r ; not very large .

Q.

You hav e a mil lion dol lars or so in s tock, haven' t y o u ? A. I

think so, bu t

I

do not remem ber exac t ly how m uch.

I

think the f i rm

has more tha n I have. 1wish I had it all./ .

Q. H ave they a n~ i l l i on r so a l so?

A.

No t "a lso." W e have

i t among us .

A4r. M or ga n could not tell w he the r o r not his sot1 was a m em be r

of the execut ive commit tee of the Ci ty Eank.

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nlerce, have

y o u

n o t ? A . I (lo n ot ~ - e ~ ~ i e ~ i i l ) e r ,o t very large, about

a

million dollars,

At th is the crowd i l l the rooin \ \hero the hear ing was held had

a good laugh.

Q You ha\,e a large in teres t in the Sa t io na l Rank of Comm erce,

h av e y o u n o t?

A .

do no t r emember. No t very la rge . Ab ou t a

mill ion dol lars . Y ou hav e th e s ta tem ent there .

2. Y o u h av e $ 1,6 86 ,0 00 . A . H o w mu ch is d o w n th e r e f o r m e ?

Q

T h e f i rm a s a f i rm ant1 th e i i ldiv it lual rne ~n be rs ave $1 ,686,-

000

T h e f irm ha s one m illion a nd the i i ldividual m em bers S686,OOO.

h l r .

I T n t e r m y c r \ ? an t ed t o kn ow if M r . X l o r g ~ n ad n o t m a d e

a considerable purchase in th is bank recent ly ill addi t ion to th e

figure5 which th e coii lmittee Ilacl obtained. Counse l fo r the c om -

m it tee ma de ~ t apparen t h e wa s -eelc ing to find ou t whe ther M r .

h lo rgan ha t1 ob ta ine0 any s tock f rom the Equ i tab le L i fe Assurance

Society af te r he lac1 bou ght into th at insti tution. T h e witness said

Ile coul tl no t tel l anyth ing about the m at te r , as h e was l io t in th is

cou ntry a t the t ime. M r . Alorga1-1 re~i ia i -ketl hat he spent fo u r or

f ive mon th5 ahroatl eac h year ant1 m em bers of his f irm lool


24/60

Q Yo u do no t wa tch the de ta il s a s to the managemen t of any

of these ba nk s?

A.

No.

Q

T o w h om d o yo u r e f e r t h a t in y o u r f i r m ?

'4.

Jl ihoever

hapeens to be the re . Th ey do no t run i t .

Q

You a re do ing every th ing you can to p ro tect the p rosper ity

of thes e inst itu t ions in which the mem bers of your f irm a re directors,

a r e you n o t ?

A .

W e do no t bo ther ou rse lves much abou t tha t .

Th ey look a f t er themselves .

Q

W h y do n iembers o f your f irm, in sol lie ins tances tw o

m e m b e rs , g o o n t h e b o a r d ?

A

nec aus e we l iave a large in teres t to

protect .

Q.

In the p rotect ion of yo ur large in tere i t do you no t look af te r

t h e ba n ks a t a l l ?

A

Not to any ex ten t .

Q

I t t akes the t ime o f you r pa r tne r s , does it no t?

A.

Yes,

I

have a lready remarked on tha t a g rea t many t imes . I t t akes too

much tiine.

Q.

But when they a re the re

I

suppose they do the i r u t n~ os t o

add t o the p rosperi ty o f the in s t i tu t ion?

A.

T h e y a lw a y s d o t h a t ,

I

hope.

Mr. M orga n denied he had been consulted in rega rd t o the estab-

lishment of a vo t ing t ru s t f o r the G l iaran ty T ru s t Company . I t was

done by h is par tners .

Q.

You know , do 17ou no t , tha t tw o of the th ree vo t ing t rus tees

a r e members of you r f i rm? A .

I

do no t know who they a re .

Mr.

M organ tes ti fied he had no knowledge of the fo rm at ion of

the vo ting t ru s t of the Ean kers T ru s t Company .

C O N F I D E N C E

N

PARTNERS

A t th is po in t M r. M org an tu rne d once o r twice towar tl E lenry

P.

Dav ison , hi s pa r tne r , to ask fo r in fo rmat ion .

I bel ieve any th ing M r. Davison says , rem arked M r. h lo r gan ,

and a m wi l ling to sw ear by i t .

Mr. Morgan could not tel l in how many corporat ions he ant1 the

m em bers of 111s firm w ere voting tru ste es .

H e thought the re mere

on ly tw o o i th ree now ou ts t and ing .

M r . Morga n sa id when ques -

t ioned in r egard to the vo t ing t ru s t fo r the In te rna t iona l H arves te r

Company tha t he never had known the re was one un t i l a f ew days

ago when he read i t i n the newspapers . M r . Un te rm yer r ecal led

also th e vo t ing of the In terna t ional Agr icu l tu ra l Corporat ion , o f the

Chicago, Grea t TVestern a nd of th e E rie , Reatl ing ancl Souther11

Rai lways . M r . Un te rm yer contended the re

had

been

a

Bal t imore

and O hio vo t ing t rus t in which M r. Mo rga n h imsel f w as one of the

vo t ing t rus tees , bu t M r. M org an d id no t recal l i t.

7 3


25/60

In speal


26/60

~ JOT INGT n n s - r s

FOR

SAPI.:TY

M r. RiIorgan added tha t in the inf anc y of a corporat ion o.r in i ts

incipiency a voting trust , in his opinion, is necessary for the pro-

tection of t he prop erty.

Q B L I ~ou ld you call the f if teen years the incipiency of th e

S o u t h e r n R a i l w a y ?

A.

No.

Q.

Bu t when does it ge t ou t of swaddl ing c lo t lies? A W e have

been trying to g et r id of i t , but they wil l not ta ke i t .

Q.

You mean the s tockholclers wilI no t tak e i t ?

A .

Yes.

Q.

D o you n o t rea lize that these vo t ing t rus ts , pu t t ing in to the

hands o f one o r a few men these g reat sys tems, tends toward enor-

mous concentrat ion and control A . No, s i r .

Q. D o you no t th ink tha t

i f

fo r ins tance , you are the vo t ing

trustee of all the systems of railroads in the 'I 'nitecl States it con-

cen t ra tes a g reat deal

of

contro l in yo u? A . K o, s ir , i t would no t .

T ha t canno t he .

You woult l not have any more control t l ien than

i f

you were

no t vo t ing t ru s tee?

A .

Ko t in t l ie ~ n l l. I t would be a concen tra-

t ion in my han ds, bu t the board of d irectors a re th e control ling force

an d you (lo not ptlt the san le boa rd in every com pan y.

2.

S ~ i n e t i n i e shey

oni

pret ty near i t .

A .

N o,


27/60

Tho se i ns ti tu t ions a ll appeal fo r t he same k ind of busi tle ss ,

do t h e y no t ?

A . No, bu t t hey a re a l l banks o r t rus t companies .

Q . R u t they a re all appealing f or deposits, a r e th ey n o t?

A .

Yes,

2. An d they a r e a ll supposed to be co il lpe ti ng fo r i t ? A. No,

not necessar ily.

Q

Do you see no th ing improper in hav ing the same men look-

ing in to one another ' s bus iness in compet ing ins t i tu t ions?

A

They

a r e no t look iilg i n to e ach o the r's bus ines s.

T h e d i r e c t o r s d o n o t

see all the de ta il s, a ll the books.

Q I s it no th is bus iness to knoww ha t i s go ing o n ?

A I t may

be h i s business , bu t he canno t do it.

Q

Then he i s a so r t o f f ig t ir ehead?

A . Call h im a f igurehead

if you l ike .

The o f f i ce r s o f t he banks run them, no t t he d i r ec to r s .

1 h a v e b e en i n

a

good ??zany b a ~ z k s nd corporatiojzs, said M Y .

LVorgalz, a ~ z d I e f y any walz to go in to atzy of t lzose boards-even

m y s e l f ,

I

zcrill sa y tha t for tlze sa ke of argum ent-I do n o t belie ve

I could car ry a n y one ques tion tlz~*ouglzi ny one board i n wlzich I \

zvas a dir ec tor , aga ins t tlze viezels of tlze ot he r di re ct or s. I Izave a

g r ~ a t uaizt ity o f cases zuhere

I

could bring in po ofs of this. , T11ere.j

is ~ z o ~tcst iolz o f control unlcss you lzave got a m aj or i t y o f the

d i ~ e c t o r s ll all the banlzs.

C ~ R PORAT I ONETTER

TIIAN

COMPETITION

M r . Un t e rmye r po in te d ou t t h a t s ome of t h e meiilb ers of t h e

Mo rg an firm w e re n ot only n ~ e n ~ b e r s f t h e bo a rd of d ir ec to rs o f

o t her banks bu t of t h e execu ti ve cotnmitte es a s well. M r . Morgan

finally s aid t ha t even a s suming t ha t t hey d id know t he busines s of

compet i tors he coulcl see no objec tion to i t.

Q Do you t hi nk t h a t p romo te s c ompe ti ti on ? A.

It

does no t

prevent it.

Q You a re oppoced to compe ti ti on , a r e you n o t? A. No, I do .

no t mind compe ti ti on .

Q You ~ v o u l d r at he r h av e combinations, would you n o t ?

A .

I

would.

Q You w ould ra th er hav e com bination th an c om pe ti t io n?

A

Yes

Q You a r e a n a dv oc ate of co ru bin atio n a nd c oo pe ra tio n a s

agai ns t compet it ion , a r e you no t ? A. Yes . C oop era tio n I s ho uld

favor .

Q

Combinat ionas agains t compet i t ion? A. I donot objec t to

compet i tion ei ther .

I l ike a l it tle compet i tion.

25


28/60

Q You l ike a l i t t le if i t does not hu rt you. Competi t ion t ha t

h r ~ r ts ou you d o not bel ieve in ,?

A I do no t mind i t .

N o w ,

anot her point . T h is may be a sensit ive subject .

I do not wail t to

talk of it , T h is is probably th e oilly chance

I

will 'have to speak

'of it, but without yod have control you can do nothing.

Q

LTnless you have control cannot do w h at ? A . Unless you

have got actual control you callnot coil trol anything.

Q W el l , I guess tha t i s r igh t. 1s tha t the rea$on you w ant to

c o i f t r o l e ' v e r y t l ~ i t ~ ~ ?. I want tO control nothing.

MONEYTRUST

IMPOSSIRI~E

Q W h a t i s t h e po in t, M r . M o r g a n , y ou w a n t t o m a k e ?

A .

W h a t

1

say is this

T h a t t h e r e

is

nothi lzg

i z

t h e w o r l d

by

7uhich

yozt calz ~ ~ a k e l~z l s t

~ ~ z o n e y

Q 1ZThat you meal1 is th at the re is no wa y on e mail can get

i t a l l ?

A O r any of i t , or coiltrol of i t .

Q

He can make a try o f i t ?

A.

N o , s i r ; h e c an no t. H e m a y

have a l l the i lloney in Chris tendom , bu t he canno t d o i t .

f you owned a l l the banks of New York wi th a l l the i r

resources would you not Fonle pret ty nea r having a coiltrol of cre dit ?

'A.

No, s ir , not a t a l l .

Q

Supposed you owned a ll the banks and t ru s t com panies, o r

controlled them, and somebody wanted to s tart up in the s teel busi-

ness , you unders tand, against the United Sta tes Steel Corporation.

You would be u 'ilder a du ty , would you no t , to th e Uni ted S ta tes

Steel Corporation to see that i t was not subjected to ruinous com-

pe t i t ion? A . No, s i r .

I t ha s no th ing to do with it .

Q

You would ~ve lco ine com pet i t ion? .A.

I

would ~ ~ e l c o ~ n e

competition.

Q T he n io re'o f it the be t t e r?

A.

Yes.

MR. UNTERMY~R :

h e t h e r t h i s c om p e ti to r w ~ u l d e a ble t o

ge t the money f rom the banks tha t Mr. I forga l l contro l led . '

Yes , he would, sa id M r. Morg an ve ry positively./

.

Tha t i s wha t you wou ld be the re fo r?

A Yes.

Q

Solqe other map who might cotz tro1, inight not take the view

,

you have?

A.

Be

would not have the contro l .

Q Y ou r idea is tha t when a man has got a vas t pow er s ;icb as

you have-you adm it you have, do you n o t?

A . I do no t know

it, s ir.

9

Yo u,aclm it you ha;e, do you n o t?

A. I do not th ink I

have,

Q Y O Udo not feel it a t 411?

4.

No,

I

do not fee l it

26


29/60

I^_ .

\ \.e ll , asqunling tha t qou hav e i t , ? o u r i tlea is that whet: a

m an a l luse< i t he loses i t '

A . Yes, ant1 l ie never gets i t back again

c i ther

Q

t I a ve you any in s tance in you r n i in tl o f an y such m an w ho

h a s h a d a n y s u c h p o w e r a n d c o n t r o l t o e x p e r i m e n t w i t h ?

A .

N o ,

bu t know f r o m expe rience .

Q

E x p e r i en c e of y o u r o w n ?

A. N o , w h a t I ' m e a n t o s a y i s

th is : the ques t ion of contro l , in th is country a t leas t , in lnoney is

pcrqonal

C AXSOT CONTROL

RI:DIT

Q

TTow about cretlit?

A .

111credit a lso.

Pe r son a l to whotn -to the r nan wh o co n t r o l s ?

A .

S o , no.

I I e ] leve r ha s i t.

E-Ie cann ot buy i t . All the m on ej in Ch ris tcnd oni

ant1 a l l the banks in Chris tendom cannot control i t .

Q

R u t h a v e y o u no t s een m any in s tances

in

th e h is tory of th is

coun t r y of f inancia l men ge t t ing vas t con t ro l and abus ing i t th r ough

n lon g perio tl o f y ears before they lost i t ?

11

K o .

Q I do no t wan t to be i~ id iv idousby s ta t ing i l lu s t ra t ions , bu t

h a v e y o u k n o w n

of

men in some pa r t i cu la r depa r tmen ts , such a s

the r a i lr oad , ge t t ing con t r o l and abus ing tha t con t r o l f o r a s e r ie s of

years before they los t i t ? A. I have , hu t I say tha t I am no t d i s -

cuss ing the ques t ions of ra i l roads or merchant l i se . I am ta!king

about money ant1 credit .

Q

You ad m it tha t men n iay ge t contro l of ra i lroa tls o r bus iness

enterprises

and monopol ize them ant1 so abuse the i r p r iv i lege?

A . Yes.

Q

211d retain that control

A

Yes

Q B y t h e f or ce of t h ei r p o ~ e l - ? \ . Yes .

Q A n d you 5ay tha t so f a r as the con tro l of c re tl i t is concerned

they canno t do the s ame th ing '

1\ f

money , no .

T h e y c a n n o t

contro l i t .

S ~ M I

COMPI-TITIOX

OOD

Q Gu t do you th ink t ha t a compet it ive cont li t ion in the ban k

and t r u s t compan ie s o f K ew Yor k i s m or e o r le s s p r e f e rab le th an

a concentra te t l contro l over those banks ' A . I would r a the r have

competi t ion.

Q W o u l d y o u r a t h e r h a v e i t f r e e r, a n d t h e f r e e r t h e b e t te r '

A . p to a ce r t a in ex ten t

I

woulr l have i t f ree .

Q Le t us see if th e sal iie g ro ups conv erge an d com e toge ther in

C3 Cl~ f the g r ea t banks. Does no t tha t in te r f e r e wi th co~ npe t i t ion

between t h e m ?

A.

K O ,

I

do no t th ink so .

7


30/60


31/60

P

\

'I

t he d ir ec to rs of t he G u a r a n ty T r u s t C o m p a ny w e r e in t he B ~ n k f

Com merc e ; a l so a l a rge num ber of the d i rec to r s o f the G uaran ty

T r u s t Co m p an y wer e i n t h e Ban k e r s T r u s t Co m p an y , an d v i ce

versa . W ith those three ins t i tu t ions located in the same sect ion of

the ci ty R3r. Untermyer wanted to know how there could be com-

peti t ion among them untler such circumstances.

Mr. Morgan content letL that they did not do the same kind of

business, ant1 he ra ther doubted w hether they competed for deposit s .

I have been in business a great many years in Kew York ,

said he, and I do not coi l lpete for any deposi ts .

I

do no t ca re

whether they ever come,

h u t

t hey do con~e .

Rut , said RIr . U nte rm ye r, everqbocly is not so fortuna te.

The par t ies that have thei r money to deposi t decide that ques-

t ion, sa id M r. h lorg an .

EVEI~Y

GETS

ITSSIIARE. \ X I ~

Q

You r idea i s that the Rank of Comm erce, or any o ther great

inst i tut ion, shoult l not t ry to get business, but just s i t down an?

wai t for i t

to

c o m e ?

A .

T h e Eank of Comm erce, if

i t

t ransacts

its business right, will get i ts share of the business.

Q.

Sul j lmse i t wants more than i t s share? A I t canno t ge t i t .

Q I t o f t en does, does it no t? A . Th en i t ough t no t to have ir.

Q

\ \11at determ ines 1~11at s i ts shar e of th e bu $in ess ?

A T h e

public \\rill decide that./

RTr. I \ lorgan said he had never known of a case of this kind

to

run to excess.

Q

L e t

u s

take

a

cas e li ke t h e Ban k e rs ' T r u s t Co ~ n p a n y , h a t

wen t f r o m

S5

of tleposits to

S168

of deposits i t

nine years.

111tl they get th ere by si t ting th ere ant1 wa it ing fo r t he

business?

A . Th ey g o t i t because peo l~ lewan ted t o send money to

them.

2.

Do you not bel ieve they got i t by going out af ter i t? A. I

do not bel ieve they did.

Q

You d id not help them get i t , d id you?

A.

I

have clone

everytlling I could to help them.

Q

And the sa iue i s t rue wi th r e fe rence to the Guaran ty Trus t

C o m p a n y ?

A. Ycs , bu t that hat1 a l ready grown before I was--

Q. It had g ro ~ v n s co .npared wi th the way i t g rew af t e r you

took holtl of i t , had it?

A .

I helped the banks, yes.

T h e wi tness a t tr ibu te t l t he g rea t g rowth o f the Bankers ' T ru s t

Co. , to the act iv i t ies of a few young men who made the ar range:

men t s .

29


32/60

Q

Did you he lp them?

A .

I don't know as they neede.1 hclp,

hu t I always assist young men.

Q

I - low about In ternat ional Harves ter?

A .

I n e ve r k n e ~ u n y-

th ing abou t tha t . Pe rk in s managed tha t .

I

did not know 'that ther e

was a voting trust in that corporat ion organized in my office unti l

I

read i t in the papers a shor t t ime ago .

B A N K

~ I CRGERSGOODITOR PUBLIC

Q D o y o u kn o w t h a t t he R a nk e rs ' T r u s t C o ~ n p a n yhas taken

in tw o l arge t ru s t com pan ies?

A

Yes.

Q

S o these tw o insti tu tio i ls represent to-( lay wh at were

formerly nine large, prosperous inst i tu t ions.

You approve of

t h a t

k i n d of c o n c e n t r a t ~ o n ?

A.

Yes.

Q Carrying that on to i ts logical outcome, would you approve

of the i r gather ing in a ll the res t of these banks a nd t r us t com panies?

A.

Certainly not .

Q

H o w m any of the111 would you think they ou ght to ga th er ?

A.

I

th ink they have about enough .

2.

They may have to t ake in some more?

A. Yes .

Q

In o rder to ge t more bus iness? A . N o .

Q They did not take in any of t l ieqe companies ~ I Io r d e r t o

pro tect them, d id they?

A . I

do no t know.

2.

Th ey w ere a ll so lven t ins ti tu tions , were they n o t ?

A .

T l ~ e y

were al l solvent inst i tu t ions at the t ime, yes.

Q

A nd they paid well fo r a ll of th em ?

A . They 17ligEit not

be he rea f t e r .

Q

What would p reven t so lven t ins t i tu t ions , fo r which seven

or e igh t hundret l do l lars a share was paid , to take them in as these

were taken in, fro111 continuing solvent?

A .

I t was p rof i tab le .

Q

ProfitabIe to tak e the111 i n ?

A Yes, and profi table for the

stockholders of the old one, too.

Q You say that they migh t have to take them for some reason

of public policy.

1

a m t ry ing to f ind ou t in what ins tance they have

ever taken in a bank or t rus t company , excep t fo r the p rof i t there

was in i t. W ould you l ike to s top here , 14r . M organ .

A

I do no t

want to stop at al l . I am ready to go r igh t 011

I would like to get

30


33/60

FOREIGN

ANKS

At the beginning of the aft&-noon session Mr . Un te r~ny er egan

his examination of Mr. Morgan on the system of cumulative voting

of stock in European banks.' In the case of the Bank of England,

each stoclcholder holding 500 shares od stock or more has but one

vote, regardless of the aiuount of his holding. Limitations, more

or less extensive, are imposed on bank stockholders in other Eurcj-

pean countries.

Mr. Morgan, when asked

i

he was familiir with English and

continental laws restricting the voting powers of banks over stocks,

replied that he thought he was. Untermyer, wishing ta refresh his

rncmory, read the regulations of the national banks of England,

I;rance, Scotlantl, Russia and Belgium, which limit the number of

$hares one person niay vote and restrict the classes of stockholders

I

froin which the directors may be chosen. The counsel fo r the

corn~nittee hen asked

Q. Do

they permit cumulative voting op the Pennsylvania rail-

road? A

I

don't know./

2.

Do you

k n ow

tlrat minority representation on boards is hard

to get?

A

Yes.

Don't you think such representation is desirable?

A I

should think so.

a

To a question

by

R4r. IJntermyer,

In your judgment, cumu-

lative voting would be an iinprovenlent upon the present system,

~vould t not?

hlr. Morgan replied.

I

do not think it makes

much difference.


34/60

Q You coult l only vote on a small proport ion of them.

T h e

people who did not choose to give you a voting trust 11 their s tock

would have represen ta t ion in the Board , would they no t?

A .

I d o

not want to suggest such a plan, but they could very easi ly transfer

the shares in to d if feren t nam es so that they could a cco n~p l ish he

salne purpose.

Q

But you know th at over there th is so r t o f hocus pocus does

not go, do you n ot ? A. I th ink the records will show otherwis e, s ir .

Q

DO y o ~ i o t know tha t the l aws the re p reven t the conso l ida -

t ion an t1 concen tra t ion of banking con tro l by p roh ib i t ing d i rect~rs

in one bank f rom be ing d i rec to r s in an o ther ban k?

A .

Y e s ; h u t

I would like to say in reply to that that there is no place xvliere

mergers and consolidat ions and al l that have talren place to the same

ex ten t tha t they have

in

England dur ing the las t twenty years .

Q Xot in the bank ing wor ld , have they? A. In the bank ing

Q D o you know that , qu ite in con tras t wi th o ur sys tems, those

groups over there are absolutely independent of one at lo ther, that

they I iave not any comriion Directors at al l , and are not al lowed to

h a v e ?

A .

I did no t know that tha t wa s so.

CAPITALT O O SCARCE

OR

N E WROADS

Q Is i t not the fact that in th is coti i i t ry there has been a

consistent and continuous and increasing cetneil t ing and concentra-

t ion and conso l idat ion of the g reat ra i l road sys tems? A I thinlt

that i s t rue .

Q D o you a t tr ib ute the absence of com peting rai lroad building

as aga in s t the g rea t s y~ te n i s o the c lo~n inanceof the banking in-

teres ts in those g rea t ra i l road sys te m s? A . I do not .

2.

And do you no t k i io \v that un l ike our own s i tuat ion , i f a

inan has a good pro ject in England and he goes to one g roup ancl

cannot get h is bus iness done, the o ther g ro ups take i t up very read ily ,

and that they have no connec tion w i th one ano ther ? A . O h , tha t is

very possible.

Q

Is no t that a very much m ore heal th fu l condi tion of th ings

than to have the groups in terlocking so tha t if one re fuses the busi-

ness , you cannot get i t ( lone a t a no the r? A. I do no t th ink that

ex i s ts to any e x ten t he re .

Is i t no t a fac t that in th is country there has no t been in

the last ten years , any rai lro ad construct ion of parallel or com peting

ines to any g re a t sy s tem ex i s t ing he re ? A . I unders tan t l tha t to

be s o ; yes.

32


35/60

Q A I I ~

s

i t no t t he f ac t t ha t i n t h i s coun t ry t he r e ha s been a

coni i s ten t an t l con t inuous and increas ing , cement ing an t l co t icen t ra -

t ion a nd conso li dat ion o f t he g r ea t sy s t ems ?

A . I

t h ink t ha t i s t r ue .

Q. D o you a t t r ib u te th e absence of co inpe ting ra i l road bu i ld ing

t o t h e f a c t th a t

in

th i s co inpara t ive ly new an t1 growing count ry there

iq no t any need fo r any m ore r a i l r oads? A . I t lo not.

Q.

D o you a t t r ibu te i t to the d i ff iculty o f ge t t ing new cap i ta l?

A .

I do.

I th ink it i s ow ing in l a rge tueasure to the fac t o f th e

wa nt o f p ro tec tio i i aga ins t ra i l roa t ls th a t has been cur re n t in th i s

coun t ry f o r t he l a s t ten yea r s .

Q Yo11 mean the want of protect ion to the ra i l roat l5?

.A .

T o

th e r a i l r o a d s ; y ~ s obo (ly wan t s

to

put money into a new rai l roacl

in t l iese t imes.

T h e ra il l-oads a re c lo ing pre t ty wel l , a r e they n o t?

4.

S o m e

of t hem a re . T h e o ld ones a r e . Yes .

? ~ I o R ; \ N

SI:I a r t ~ i i e n tof

in t lus t ry in th i s count ry , (lo y o u ?

A .

1 do no t.

Q. N o t t h e s l i g h t e s t ? A . Not t l ie s l ightes t .

A

Q A nd you a r e not l ook ing for a n y ? A .

T

an1 not seeking

i t . e i ther .

Q l his co11solit lat ion ant1 a n ~ a lg am at io nof sys tem s and in -

d ~ ~ s t r i e s n o t to a n y c on ce nt ra tio n , d oe < i t ?nt1 ba nk s does look

A. No. s i r .

Q I t l ookc, I su l~ po se o a d i spe r sal o f i n t e re s t s athe her t h a n

t o a c o n c e n t r a t i o n ?

-4. O h , n o ; it dea l s w i th t h ings a s t hey ex i s t .

Q.

t

i s fo r the purp ose of co ncen t ra t i i ig the in te res t s tha t you

do a tna lgama te , i s i t no t ?

A . f i t i s desi ra ble yes . I f i t i s good

bus ine s s fo r t he i n t e re s t s of t he co un t ry t o d o it , 1 do i t .

Q. Bu t , M r . M organ , i s no t a ma n l ike ly , qu i t e subconsc ious ly ,

to imagine th a t th ing s a re fo r the i li te l-es ts o f the count l -y when they

a re , good bus ine s s ?

A . No, s i r .

Q

Y o u t h i n k t h a t

y o u

are able to j t i s t ly and impart ia l ly t l i f fer-

en t i a te , whe re you r ow n in t e r e s ts a r e conce rned , j u s t a s c l ea r l y a s

though you had no i n t e r e s t a t s t ake , d o y o u ? A . Exac t ly , s i r .

33


36/60

Q. A nd y ou ar e ac t ing on tha t assuin1)t ion a ll the t ime, a re

y o u n o t ? A . I always do, s i r .

Q

O f c ou rse t he re is a pos sibility of yo ur juclgment be ing 1111s-

t a k e n , i s t h e r e n o t ?

A .

O h ,

I

m ay be w rong in m y judgm ent , bu t

I d o not th ink i t l ies in tha t d i rec t ion .

I_ .

D oes i t no t go som ew ha t on the theory tha t t he wish m ay

b e f a t h e r t o t h e th o u g h t ?

A .

I

do not th ink so .

TIIEEQUIPMEKT

O M P

M r. LJntermyer seemed to ques t ion th is .

took one case as

an il lustration.

A ssum ing , sa id he , t ha t you and M r . R aker and you r f e w

par tners and associa tes doni ina tcd the grea t ra i l road sys tems of the

count ry and you were in teres ted in the Amer ican 1 ,ocomot ive Com-

pany an d the Ealdwin 1 ,ocomot ive C oi i ipan j~ , v l ia t hance woul tl a

new loconiot ive works have ?

They woulcl have plenty of busi~icss, replietl hlr. R'lorgan.

We would not g ive a l l the bus iness to one company. '

Q.

T h a t is t he r eason you have tw o , is i t no t? A . Y es , and i f

t h e r e w a s a n o t h e r o n e w e w o u ld p r o l ~ a h l y s e th a t . W e c a n n o t g et

our locomot ives now.

Q

You is\ued the securities of the Baltlwin 1,ocomotive \Vorks

-your

f irm?

A. Yes. it was (lone in I'hilailelphia. I ( lo not know

the d r t a i l s .

Q. Y o u r N e w Y o r k h o u s e p a r t i c i p a t e d ?

A . Tt is th e s am e

A.

I

d o no t comp lain of anytl .l ing, sir .

Q

The locor l lo t ive m anufac tu re r s o f t he U ni t ed S ta t e s had

con~bine r l nd fo rm ed th e A m er ican 1 ,ocom ot ive C om pany , and the

B a ldw in C om pany w as no t in i t ?

A I t wa s not in tha t combinat ion .

Q Th en you took ho ld of t he B a ldw in C o m p any ?

4

Y e < .

Q A re the re any o the r con ipan ies? A I d o n o t k n o w

Q

D O you know of any tha t ge t any bus iness in ca r s o r l oco-

~ n o t i v e s ?

A .

I

do not know anything about the t ie ta i l s , hut

we

cer ta in ly would not g ive the bus iness a l l to one company or to two

companies.

Q D o you th ink i t is a h ea l t h f~ i l ondit ion ti- , have indu5tr ies

so concent ra te t l tha t the in teres ts in the supply company are a l ike

or s imi lar to the in teres ts in the ra i l road company? rl B u t they

2

Let us see i f they are not .

A re no t t he in t e res t s o f t he

4


37/60

Baldwin Locomot ive Com pany dominated by th e same in teres ts th at

dominate the ra i l road s i tuat ion?

A

No.

Q. You are responsib le fo r the secur i t ies i ssued?

A .

Morally ,

yes.

Q

W he n t rouble comes, do you no t consider that , a s the i squing

louse of these sec uri t ies , you a re under the du ty to protect the

secur i t ies? A Yes, if they get into trouble.

Q

Suppose they should get in to t rouble th rough threatened new

con ~p e t i t i o n ; o you th ink you ~ vou ld e under no du ty to them

to

t h ro t t l e i t ?

A. No, I do no t . ,

THEREADINGASE

.

A re you fami l iar wi th the ev idence in the Tem ple I r on Com-

pany case, which wa s decided a few days ago-the Re ading road

c a s e ? A . know there was someth ing of that k in t l , bu t I do no t

remember the detai ls

of

it now.

Q D o you renielnber the decis ion a day o r two a go ?

A.

Yes.

D o you remember tha t a t that t ime M r. Bacon conducted the

negotiat ions by which these part ies were taken in and the rai l road

was no t bu i l t? 4. I do not .

Q D o you know those fa cts were proven in that ca se?

I

do not know anyth ing about the case .

Q. You were no t fami l iar wi th the facts in that case? A. N o ,

sir.

A s TO S T I F L I N GC O M P E T I T I O N

Q. Th en you consider your f i rm, as f iscal agents, and as prom ot-

ing and being responsible for securities of the railroad system under

no sort of obl igat ion to discourage or prevent a competing rai l road?

A .

No, sir .

Q You know a compet ing ra i l road might ru in you?

I

could not help that.

Q You wou ld no t t ry to he lp i t ?

A . Som eth ing might occur

that might necessitate i t . I cannot say what

I

would d o, but on

general principles I should not .

I would ra ther have a concrete case , fo r ins tance, l ike the

W est S hor e Road paral le l ing the New York Cent ra l, you thought

the best pol icy was to buy up that competi t ion, did you not?

A.

Yes.

Q These concrete cases are occurr ing f rom t ime to t ime, are

t h e y n o t ?

A The New York Cent ra l wanted to lease i t .

5


38/60

Q That meant doing away t i i t11 compet i t ion , d id i t n o t ?

Q.

The same pol icy would d ic ta te , woul t l i t no t , buying con-

pe ting indus t r i a ls , o r indus tr i es , and p u t t ing them toge the r?

A .

No.

of record.

Ta ke , fo r in s tance , t he Un i t ed S ta t es S tee l Corpora t ion .To-( lay

I would not buy anyth ing .

Q. I

know, because you have go t en ou g l ~ ow to have a very

cominan t l ing power , have you no t?

A

No, no t tha t , e i the r .

Q.

Yo u d id engage in buy ing up co ~npe t i t ion here in o r tl e r to

fo rm a company , d id you no t?

A .

N o ; I b o u g h t it u p f o r t h e p u r -

pose of having a corporat ion which in i tself could manufacture al l

kinds of steel.

M r . U n t e r n ~ y e r h en b egan t o qu est io n M r . M o r g an ab o u t t h e

TIT

T

T FQ~~ITABT.E

S l

OCK

Q.

You bought the cont ro l of the Eclu i tab le Li fe Insurat ice

Co m p an y , d id y o u n o t ?

A . I

did, sir.

Q. Fro111 w ho m ? A F r o m M r . R y a n a nd M r . H a r r im a n .

Q And what was the amoun t o f the par va lue o f the stock

wh ich y o u b o u g h t ?

A . Five hundred thousand dol lars .

Q

N o , i t w a s 5 1 , 0 0 0 . A. Yes, 51,000.

Q. T h e to ta l cap i ta l o f the company was 100,000, was i t no t '

A I have no t the books wi th me .

Whatever i t was , i t i s

a

m at t e r

6


39/60

Fifty-one thousand dollars. There were 510 shares of stock?

A. Yes.

Q What is the amount of dividentls to which that stock is

entitled?

4.

The regular dividend is 7 per cent.

Q. That is all it ever has paid-that is, 3,570 a year?

A. Yes.

Q. And you paid how' much for that?

A. I do not k n o ~he

amount.

Q

About 3,000,000, was it not-two and a half millions and

the intereit that had accruetl? A. Somewhere in that neighborhood.

Q. -About 3,000,000. On that investment of 3,000,000 the

return in dividends is 3,570. I t yields a return of about one-eighth

or one-ninth of 1 per cent. a year? A. I believe so.

Q. Are Messrs. Stillman ailtl Eaker as5ociatetl with you or

interested

in

that purchase?

A .

Not as it stands to-(lay.

Q.

Have they never had any interest in that purchase?

A . It

has never been consumn~atetl.

Q

What was the untlerstanding as to their being interestetl \vitli

you in that purchase?

2.

1 cannot tell you that, sir. That is private

business of my clients.

Q. Gut it seems to me that t h e question of whether you had or

have associates in that purchase in the form of hl r. Jalnei Stillman

ant1 NIr. George

F.

llaker is not a matter of private business. Did

they not agree to partleipate with you in that business? A.

I

should

like to consult my counsel.

MR. i \ l o ~ ~ . i \ ~af te r consulting with counsel) Mr. Chairman,

neither Mr. Raker nor Mr. Stillman has ever hat1 any interest in i t

but it is understootl that i I want to they will take half of it at any

time I say so.

Q. 1Trhen was that untlerstanding reached?

A.

I

10 not know

;

I think it has practically been so from the beginning.

Q.

F r o n ~he tirue you took it? A. Yes.

Q.

And they a re under obligation, then, to take half of the

interest off your hands? A. If I wish it.

Q

Is there any writing on the subject?

A .

I

tlo not know

wl~ether ny writing has passed on the subject or not. (Af ter con-

sulting with counsel.)

There is a writing on

that subject.

Q. May \ye have it?

A . You

may have

a

copy

of

it ye\, sir.

T:orrc~r,rITOR Goor, O

SITU~TION

Q. You may explain, i you care to, Mr. Morgan, why you

bought from Messrs Ryan and I-Iarriman 51,000 par value of stock

that paid only 3,570 a year for approximately 3,000,000 that could

7


40/60

yield you only one-eighth or one-ninth of one per cent .

A .

Cecause

I thought it was a des irab le th ing for the s i tua t ion t o do tha t .

T h a t i s v er y g e n e r a l, M r . M o r g a n .

Wil l you speak of the

s i tua t ion? W as no t t ha t s tock sa fe enough in Mr . Ryan s han ( l s ?

A . I

suppose i t was.

I

thought i t was great ly i inproved by being in

the han ds of myself an d these two gent letnen, provided I asked them

H o w

would tha t improve the s i tua t ion over the s i tua t ion

tha t ex is ted when M r . Ry an ant1 XIr. Harr i i l l an he ld the s to ck?

A.

Mr. Ryan d id not have i t a lone .

Q

Yes , bu t do you no t know tha t M r . Ry an o r iginal ly bought

i t a lone , and M r . I3ar r iman ins is ted on having h im give h ltn ha l f ?

A .

I

thought i f he could pay for i t that pr ice,

I

could.

I

t h o u g h t

tha t w as a fa i r pr ice .

Q

170u thou gh t it w as good bus iness , d id y ou ? A . Yes.

Q

You thou ght i t was good bus iness t o buy a s tock tha t pa id

only one-n in th o r one-ten th of one per cent. a ye ar ?

A I

thought so.

Q.

T h e no rma l r a t e o f i n t e re s t t ha t you can ea rn o n money is

abou t five pe r c en t , i s it n o t ? A .

N ot a lways , no .

I

a m n o t t a l ki n g

about i t as a ques t ion of money.

Q. The

norma l r a t e of i n t e re s t wou ld h e f ro m fou r t o five pe r

cent . o rd inar i ly , would i t no t?

I l here is the good busin ess, th en.

in buying a securi ty that oi l ly pays one-ninth of one per cent?

A.

Because

I

t hough t it was be t t e r t he re than i t was w here i t was .

T ha t is a l l .,

Q.

I n w hat respec t would it be be t te r w here i t

is

t h an w i th h i m ?

A. T h a t i s t he way i t s t ruck me .

Q.

I s t ha t a l l you have to s ay abou t i t ? A

That i s a l l I have

to say about i t .

Q

Y o u c a r e t o m a k e n o o t h e r e x p l a n a t io i ~a b o u t i t ? A . N o .

Q.

T h e a s se ts of t he Equ i t ab l e L i f e w ere

504,465,803.01

o n

December

31, 1911.

Did Mr . Ryan o f f e r t h i s s tock to yo t i ? A . I

asked him to sell i t to me.


41/60

2. Ile also soltl the Morton Trust Coinpany, did he not, to the

Guaranty Trust?

A.

I

do not know.

I suppose the stockholders

sold that.

Q

Do you not lcilow that he had control

of

the Morton Trust?

4.

I do not thinlc he had it.

Q. He

was in control at the time of the sale, was he no t?

A

l i e

may have been the negotiator.

I do not know.

I had nothing to do

with those negotiations, so far as he was concerned.

Q. You had nothing to do with the acquisition of the Morton

Trust stock? A. All that I did was to buy Morton's.

Q.

You bought ;\lorton's interest?

A

Yes.

Q IYho bought Mr. Ryan's interest?

A. I do not know. Th e

Guaranty people, I suppose.

Q. After you bought the Morton interest, did you put it into

the Guaranty? A

I

put it in with the others-those who bought the

stock put it into the Guaranty. I have never hat1 any question about

the tlisposition of the Equitable 1,ife stock. My idea has always been

to have it turnetl over to the policyholders.

Q.

Let see about that.

You mean turned over, providetl you

got the

3,000,000

back?

A

Just what I paid for it.

That is all.

Q. You know wliat that means, (lo you not-turning over an

insurance company to policyholdeys?

A

1

do not know how it could

he donc-the ternis of it, at all

IVhatever was to be tloile was to be

done by trustees. The stock was in the hands of the trustees; I have

no c,?ntrol over it, in any way, shape or manner.

Q. IhThatI want to know is this:

Do you not kn o~v , Ir. Mor-

gan, fro111 your experience with life insurance companies, with

inutual companies, that the men who are in the sadtlle are the men

who continue to control a life insurance company, whether it is

mutual or stock? A Ko, not necessarily that.

Q.

Ha ve you ever heard of a case in which the po1ic)~holtlers

have ever been able to take it out of the hands of the men who

control it?

A

Th at has always been my idea.

Q.

IIave you ever heard of a case in which they have been able

to do that? A I do not know.

2. Do you not Icnow the case, for instance, of the AIutual

Iieserve, where the men went to jail, and they could not change the

control of the company? A I do not know anything about that.

am not seeking that occupation.

39

I


42/60

I

Q.

D o you not know that the policyholtlers control amounts to

nothing, as against the n~anagemcni, vlio have the agent

Force

under their domination?

A.

I

(lo not know anyt111ng about that.

think the T,egislature of the State of

Kew

York coultl ix that..

Q.

You a re living in hopes of getting back your mo ney? A. S o ,

I do not care any thi t~g bout the money.

Q.

I

do not ~mtlerstandwhy you bought this company A . For

It was the thing to tio for whom A . That is tlie only reason

I

can give. Tha t is the only reason

I

have, in other uortls.

I

am

not t r y~n go keep anything back, you untlerstantl

Q. I understand.

111

other wortli, you have no season at alli

A . That i\ the way you look at it.

I think it ii a very gootl reason.

Some of these days you will agree with me.

Q. You can never tell what may liayl,en. Sonne of these (lays

you may agree with me. l l r . Morgan. 4. \-ery ~vel l. That may he.

If

I

do,

I

shall wait for a good reason.

Q. In the meantime, T wish you would give me a g-ootl reason.

or any reason, why you shoultl have bought that stock, except tlie

fact that you thought it was the thing to (10 4. That is the only

reason

I

hare. The reaion I callctl it u p agaln wa i that 1 wantetl to

call the attention of the inembers of tlie corntniittee ant1 yourself to

the fact that I ditl not buy it to make money

I

did it because

T

thought it was better in tlie Iiantls of these three gentlemen.

STC) .I.ou d o i t n o \ v ?

:\

Y e s ;

I

lano\v. I h a t is all rig ht.

70u

lcnd i t at the 1 ,oan Stand on t l ie Excli ;~nge? \ Yes.

2. ) >

yo11

lino\\r

anything allout to \\-11o11i

rot

l c ~ l tl t ?

:I I

t lo ; a t least , alw ays t li tl .

5


53/60

1)o

~ o um ean to say tha t \ i~l ien 1)eol) le lentl , a s loan s ni-c

i ~ ~ a t l e Stock l i \ c l iange col la tera l, to tl lc exten t of liunt lre t li ofn

i r i l l io t i s of t lo l la rs , they look to anj t l i~ngexcep t t he co l l a t e ra l ?

A .

I ' es , the) do r ight on tha t point . what

1

d i d , w h a t 1 usetl to (lo,

ant1

I

th in lc i t i s pre t ty wel l (lone n o n , 1s th i s . I f a m an co:~ les n

ant1 T i e e t h e re is a lo an t o l l r . S m i th , T sa y , "Yo11 call th at loa n

r ~ g h t w ay."

I ~ jo u l t l o t have t ha t l oan in t he Imx.

I ~ v o u l t l o t

have tha t l oan .

'1-hat is not the way money is loaned on t l ie Stock

Ex-

c h a n g e ' ,A 'That i i t l le way T loan i t . T f Ixe is not satisfactory to

me, 1 call tlie loan at once, personal ly T a in n o t t a l k ~ n g f a n y -

1~ ot l j lse ' s w a j of c lo ing l )us i~icss , n it

I

t e l l you what I think is the

13asis

o f

1)ui;iness

wan t to k i iow~ f jo u rea l ly \ \ an t us t o ti ii tl ersta ii tl tha t the

great inass ant1 voltlme

o f

loans mat le on Stock Exchange col la tera l

i ron1 (la! to ( lay a rc not mat le ent i rely u ~ )o i i he co l l a te ra l s? Xo ,

Sll-,

Q.

I t lo not \ \ an t to Iznov w hat you ( lo , bu t T \ \ an t t o know t l ie

cou rse of business. 4 O t h e r s

do

i t a l so ; t ha t

I

k i ~ o u r

Q E v e r y b a n k 111 N e w Y o r k , e v e r y g r e a t n a t i o n a l b a n k d o w n

t o ~ v n ,ent15 money on the Stock Exchange, ant1 the th ing they look

to

IS

t h e c o ll at er al . D o y o u t h i n k th e y e v e r l oo k a t t h e n a m e ?

A .

I (lo not kno~zrw h a t t h e b a n k i d o

T k n o w ~ t l i a t ( l o .

Q. I an1 ask ing a l l ou t t he l~anks .

I d o no t kn ow wh a t t lie

IIanki (lo.

13 \ z KS

Sor

I O M I \

\TI.I

y

Or- S I ~ F

N T F R T S T S

Q. 1s i t 01 not a fact that t i iai iy o f t h e g r e a t c o r p o r at io n s a r e

tlominatetl

1 y

m e n n h o h a v e ~ i e i t h e r t oc k n o r o flic es in t h e c o m -

1)any 4 'They ought no t to I )c I tlo not th ink they ar e to any

g r e a t e x t e n t .

2

l l a v e y o ~ i ot a ny instan ces in nl intl in 117hicl1 thev are so

t loininated'

-I 1

(lo not kiio~zrof a l l ) n o ~ z .

_)

s not the b an k 's 1,rosl)erl tj 11el)entlent m or e la rg ely 11poii

p e o l ~ l cn l i o c an g ~ v c t l ~ u s i n e s s h a n u l)o n a n y o t h er o n e f a ct o r

excep t th a t of n ianagement

I.

I

never heart1 of a case of this sor t .

I ne1.e~- ieart l of a case of a n j ba nk being control let l 1)y any bo dy

nllio gave i t burinecs.

Q.

7 ha t a r e t li e l ~ a n k s ook ing fo r-la rge business, l a r g e

t l e p o s ~ t s ?

\ .Yes , t h a t 1s t rue , 1 )u t t hey w an t t o kno w f ihe re i t

com e5 fr on l. T h e f i rs t t h ~ n gs t o ge t th e 1111sineisa n d t h e n e x t t h i n g

is t l le way you t ransact your 1~usine.s .

Q. T h e p eo ple \\rho g iv e la rg e b u s i n e ~ s o a h an k a i ~ t lvho prac-

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t ica lly supply i t s bus iness ant1 a re not s tockho1tle1-s, h a ~ chcy any

TIIESTOCKXCII~INGE

q

Q

H a v e yo u cotlsi tleret l th e q:lestion a s to w h e t l ~ e r r not the

Stoclc TCxcllange ought to

be

put under some sor t of C;ovcrnnie i~ t ;~ l

c o n t r o l ?

A .

I

ha ve neve r consit leretl i t , but oflhan tl

1

slloultl say

n o .

2. If you have not consit lered i t ,

1

(lo n ot thi11lc I ve ca re m uc li

abou t an o f fhand op in ion . A . T h e n

T

do n o t makc any ans\vcv- t o

yo ur ques t ion .

y. Do you not real ize that i t i s important that those Stc:cl ;

Ex ch an ge c luota tions sho111tl represent genuine t ra ~is ac t io ns ?

\.

T

think generally they (lo.

Q

You neve r hea r t1 o f such a t h ing a s ma t~ i l ) i~ l a t i onn Stoclc

Ex cha ng e? A . 011 , yes .

2.

Y o u

d o

not th ink tha t is genuine ,

d o you A.

No, not a t a l l.

Doun.rl;t ~

r ;

Gov~ien.o~~iro.r~iesROPITS SLIOL I.I)E DISCI ,OSIST)

Q You know how r igid the rules are in ISnropean count l - ics a s

t o t l is c losu res of I~a nk e r s an d p romote r s p ro f i t s ? A. Yes.

Q You know in those count r ies the I ) ro8s l )ec tus as to s ta tc a l l

the col l t racts hetween the or iginal vent loi - a n d right tlo\vn t o tlic

sel l ing publ ic?

A .

Yes .

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2. You t li ink tha t i s a wise ant1 \v l io lesome th ing , ( lo yo11n o t ?

A. I t l i ink so , yes , as a ru le .

; Q.

You kno\ v, ( lo you no t, t h a t i n t h is c oun t r y tlie amoun t of

t ha t banker s o r p romo te r s ~ i la l ce n a n en te rp r i se t z~hich hey

o f fe r t o the pub li c a r e cons it le re tl a ma t t e r o f t he i r p r iva t e I~u s in es s?

I ) o you no t t l i i nk t h a t i s w rong? 14 I t h i nk t l i e o t he r way i s I ~ e t t e r .

i \ 'l i e tl ie r youcan ( lo i t in th is cou nt ry ,

I

rathertloul)t. , . i

0

Do

vou no t t h i nk i t wou ltl go p r e tt y f a r i n t h a t t lir ec ti on if

t h e S t o ck E x c h a n g e w e r e recjuired t o h av e t h e c o'n tra cts o n file

before they \voul t l l i s t the secur i t ies?

A .

N o

bu t

T

th in k they ~ ~ ~ u l t l

ge t

u p

ano the r S t ock Exchange .

Q You thinlc i t is a whole som e t h in g , b u t if i t is clone t he y

woult l get

u p

a n o t h e r e x ch ange ?

A 1

( lonot thi t ik yon co ~i l t l lo it .

I ( l o no t t li ink yot i c o ~ ~ l t l a r ry i t out if you t r ied i t .

Q.

Yo u say it is r ig ht an tl o ug h t t o b e clone?

A. I shoult l

fa vo r soi i~ ethi i lg f th at k ind , ant1\zlo~ilt l ss is t i t , 11ut

T

s l~o ul t l h ink

t h e r esu lt wa s r a t he r t l oub t f~ i l .

Q. Have you no f a i t h i l l t h e p a t r i o t i sm a n t l ~ ~ub l i c p i r it of t lie

S t o c k E x c h a n g e ?

I

have , absolute ly .

Q. \Yhy ( lo y o u t h i nk t h ey woult l no t (l o i t ? A. I : ec a ~ ~ sehey

wo uld say i t in terfer et l wit11 th eir 1)usiness.

Q

Do

yo11he l icve th a t t lie secur i ties of a n y c omp an y. o v e r a

p erio d of five o r s ix y e ar s. \ re

\ \ , i l l

s ay , a r e l eg it ima t el y s oltl ove r

f r o i ~ w e nty t o th ir ty t im es a y e a r ?

ij

I shoultl no t h e a t a ll

surpriset l .

9 You

mean t o s p ec t il at or s? A . Spe cul at or s, e it h er l o ng o r

shor t .

(2.

r ln t l so ii ie t imes both way. ;?

.\. Ant1 so1i2c times1)oth.

S ~ ~ ~ c r r . . \ r o ~ s

l


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con t r a r y , ii lie pu t \ up the 10 per cent. , aiitl I hat1 soltl hiin the stocli,

I uoult l se l l l i ly i tock back agaln and get the 10 per cent

S I I O R T

SI I

,TSG

A

NIICESSITY

Q Y o u

me an jo t1 can sel l so i i ie t l~ ing ou have not go t ? D o you

appi-ove of sllo rt sellin g? A .

I

never ditl it ill

m y

life tha t I

k n o ~ v f .

_)

110 4011 app rove o i ~ t ?

2. I

do not l ike i t-not th at

I

wish to criticlsc it at all , beca use

I

do not see h o w you wil l get

a long \vi thout i t .

2

\Vhy

can ?roll not get a long \vi thout a mall ie l l ing some-

thing he ha s not got , in t lie \ \a \ of s toclc 14 That i s a p r inc ip le

of life,

I

th ink .

\Vocr.n SOT SPECUI.I .DUCE ITION

2 D o e i \\ all S t r e e t s l ~ e c u l a t i o n , l r . M o r g a n , d r a w a g r e a t

dea l o f money i r om tllc cotintrq ?

A . th ink they ( lo , yes .

Vould you fa \ ,or any legii lat iori th at wo uld reduce the

volume of specula t ion3 A N o

Q You \voultl let 5j)eculatlorl run riot?

A .

Y e s ; p rov it le tl the

Q Y ou can prevent them , ho \ \~ eve r , ro in nanl ing f ic ti tious o r

ruanipula te t l t r ansac t ions

A. T h a t is ano the r po in t.

Q. I say , there woul t l be less specula t ion? A . S o t a t a ll.

Th ey ou ld ge t the money .

Q.

They \\7ould get the money if they h a d t o d r a w it i r o m t h e

c o un t ry a n j \ \ ~ a y

A . O r f r o m E u r o p e .

Q T h e y ~ v o u l d l o t h a t by paying l i igl i ra tes

A .

Yes .

Q 4

111-ohibit ive ra te nould not s top money iroin coniing

A. Kot in t l ie leas t .

Q

f 4011 had a usury law that wozll t l apply to colla teral loans

54


57/60

Q

Suppose M r. Mo rgan you or one of your par tners wanted

to ascer ta in the co~umitmentsof a big opera tor on the Street and

the collateral that he had into how m any banks and tru st com-

panies could you delve through your own partners holding connec-

t ion wi th them as d i rectors? A . None of thetn. I do not th ink

they would be al lowed to look at them.

Q They would not be al lowed to know the name.

A No sir .

Q

A director would not?

A.

No you cannot in a bank in

which you a re a director not in any firs t-class bank a t any rate

go and find out how much

I

have got in that bank.

~ U N T E R M Y E R :Wel l M r . Morgan I think th at is al l .

I

am

very much obliged to you.

M r. Morgan had been on the s tand more than three hours when

he finally was excused and the chairman announced that the com-

mittee would take a recess unti l January

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jpmorgan testmony 1912

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