Buy the Book: Ferdinand Pecora was the counsel for the Senate Committee on Banking and Currency investigation in 1933. His book lays out its findings on the widespread speculative, and manipulative, stock market practices leading up to 1929 and the market crash that followed.
The Notes
- The investigation took place from January 1933 to July 1934.
- “For weeks and sometimes months after a security issue was launched, the bankers carefully maintained a “trading account” to keep up the price on the Stock Exchange, until it was all safely and firmly disposed of—after which it was unceremoniously allowed to drop as it pleased.”
- “In your hands or in the writer’s hands, a dollar is only a dollar. It can buy a dollar’s worth of bread, or a dollar’s worth of merchandise, or a dollar’s worth of corporate stock. The skilled financier, however, would not go very far in his profession if he could not do better than that. In his hands, a dollar goes a long way: it frequently buys control of ten, or twenty, or even one hundred times as much money as the financier himself invests.”
- “The Exchange was in reality neither more nor less than a glorified gambling casino where the odds were heavily weighted against the eager outsiders. On this “free and unrestricted market” there were operating in 1929 pools, syndicates, joint accounts, or the like—however one terms them—in not less than 105 public stocks listed on the New York Stock Exchange.”
- The anticipated repeal of the 18th Amendment led to a bull market in “repeal stocks” — companies that would benefit from alcohol sales — in the spring of 1933.
- Over $25 billion in worthless stock was sold to the public in the 10-year period prior the investigation.
- Stock Pool Operations
- Matched Sales: one person offered to sell a stock at a given price, while working with another person who offered to buy it at that given price. The process would then repeat in reverse. The buyer becomes the seller, the seller the buyer at a different price — higher or lower price depending on if they were trying to push the stock price higher or lower.
- Wash Sales: one person would sell a stock at a given price while also buying the same stock at that given price through a different broker. The process is repeated at higher or lower prices depending on whether they intended to drive the stock price higher or lower.
- J.P. Morgan and Company
- J.P. Morgan held the final say over the direction of the company, could dissolve the partnership at any time, and may compel any partner to withdraw.
- Half the profits went to the partner accounts. Morgan decided if/when the other half of the profits were distributed.
- Consisted of 20 partners.
- It had a conservative mandate. It prohibited partners from using firm money to speculate in stocks or anything else. Though, partners could use their own money to do so, which they did.
- The partners were also partners in Drexel and Company (Philadelphia), Morgan, Grenfell and Company (London), and Morgan and Cie (Paris), all banks. Essentially, extensions of J.P. Morgan and Company.
- The goal of J.P. Morgan was to create a network of influence over corporate America. Partners held directorships in other banks, trust companies, railroads, utilities, insurance companies, and industrial companies, which put them in contact with fellow directors who held directorships in other companies, thus extending the company’s reach further.
- “In grand total, they held 126 directorships in 89 corporations with total assets of twenty billions — incomparably the greatest reach of power in private hands in our entire history.”
- Clients had to be recommended to use the bank.
- The bank issued over $6 billion in new securities from 1919 to May 1932.
- “All told, J. P. Morgan and Company had deposits at the end of 1927 of over half a billion dollars, and even at the end of the depression year 1932, of $340,000,000.”
- Its main business was commercial banking for the largest corporations through deposits, loans, and credit.
- It was also the leading investment bank in the U.S. It mainly dealt with bonds. That changed in 1929.
- It set up the United Corporation, Alleghany Corporation, and Standard Brands Inc.. The stock was offered privately to its preferred list of buyers — prominent men in finance, business, politics, etc. Stock was offered at cost, no strings attached.
- United Corporation
- Promoted by J. P. Morgan and Company in January 1929.
- It was a holding company. The sole purpose was to hold and vote on the stock in order to control other companies.
- J.P. Morgan contributed stock in Mohawk Hudsen, United Gas Improvement, and Public Service, plus $10.7 million cash. It got back 600,000 preferred shares, 1.2 million common, and 1,714,200 perpetual option warrants at $27.50 in United. The warrants were acquired at $1 per warrant. The common stock was acquired at $22.50.
- Within a few months of issue, the stock was above $70 and the warrants sold on the open market at $47.
- J.P. Morgan and Company sold several 100k warrants for more than an $8 million profit and distributed the rest to Morgan partners.
- United controlled a network of electric power companies in 12 states east of the Mississippi, producing 20% of the power in the country for 15% of the population.
- Units — 1 common share and 1 preferred share — were offered to the preferred list at $75 per unit, with a market price trading between $92 and $99.
- Alleghany Corporation
- Van Sweringen Brothers
- Built a railroad empire consisting of 8 Class I railroads and several smaller subsidiaries, with over 29,000 track miles, valued at over $2 billion with an original investment of $1 million and a lot of other people’s money.
- Bought a controlling interest in Nickel Plate Railroad Company in 1916 from New York Central for $8.5 million using $2 million borrowed from a bank. The remainder was a 10-year $6.5 million promissory note to New York Central.
- Formed Nickel Plate Securities Corporation, turned over the Nickel Plate Railroad stock, plus $2 million bank loan and $6.5 million promissory note. Nickel Plate Securities sold $2 million in preferred stock, $1 million to the Van Sweringens and $1 million to other people, then used it to pay off the $2 million bank loan. The Van Sweringens got all the common and control of Nickel Plate Securities.
- Nickel Plate railroad was merged with two other railroads using a similar process using debt and no money from the Van Swearingens.
- Nickel Plate Securities was one of several holding companies used by the Van Sweringens to buy railroads, coal mines, and real estate. It was dissolved in 1924 with all assets shifted to the Vaness Corporation.
- In 1929 all the assets shifted again to the Alleghany Corporation
- Promoted by J. P. Morgan and Company in January 1929 for the Van Sweringen brothers.
- A holding company to control and combine several railroad companies.
- Stock was offered to the preferred list at $20 per share, while shares sold on a when-issued basis for about $35 to $37. The price rose to over $50 in a few months.
- Van Sweringens contributed $52 million in stock to Alleghany and received cash/stock in return valued at $84 million, which grew to $145 million before the market crashed.
- Alleghany was then used to acquire the Missouri Pacific and other railroad and real estate assets.
- Van Sweringen Brothers
- Standard Brands, Incorporated
- Promoted by J. P. Morgan and Company in September 1929.
- Another holding company used to control and combine large food companies — Fleischmann Company, Royal Baking Powder Company, Chase and Sanborn Company, and E. W. Gillette Company.
- Stock was offered to the preferred list at $32, but the stock opened at $41.
- Kuhn, Loeb and Company
- Consisted of 11 partners.
- Investment bank for corporations specializing in railroad financing.
- Played a role in the 1907 Northern Pacific takeover attempt with Harriman.
- Originated over $1.6 billion in bonds from 1927 to 1931 — $1.1 billion were railroad bonds.
- Pennroad Corporation
- Set by Pennsylvania Railroad in 1929 on advice and help from Kuhn, Loeb and Company to acquire other railroads key to Pennsylvania’s growth before its competition.
- Stock was offered to the stockholders of Pennsylvania Railroad at $15 per share — 96% took the offer.
- Stockholders held no voting rights. They held voting trust certificates. 3 trustees held voting power.
- The primary acquisition was Pittsburg and West Virginia Railroad Company
- Controlled by Frank Taplin since the early 1920s, who recognized its strategic importance to 4 other railroads.
- Taplin bought it at $52.50 per share. Refused to sell for less than $200.
- Eventually sold for $170 per share — $38 million cost to Pennroad.
- The stock exceeded $30 before falling to $1⅝.
- Kuhn, Loeb profited off the sale of the stock issue and stock options in Pennroad. It was an option to buy at $16 and $17 per share, with stock selling at $25 on the open market.
- National City Bank
- One of the largest banks in the country.
- Charles E. Mitchell was the Chairman.
- The bank was founded in 1812 and began as a short-term lender for businesses and farmers. It stayed out of stocks and bonds. Money was lent to farmers before planting season to be repaid once they sold their crops.
- By the late 1920s, National City sold securities — between $1-2 billion in securities per year over the 10-year period prior to the investigation. It not only manufactured new issues, but Mitchell also built a sales force to sell them door to door.
- “National City grew to be not merely a bank in the old-fashioned sense, but essentially a factory for the manufacture of stocks and bonds, a wholesaler and retailer for their sale, and a stock speculator and gambler participating in some of the most notorious pools of the ‘wild bull market’ of 1929.”
- The bank skirted the national bank regulations to engage in such activity through the use of a “banking affiliate” known as National City Company.
- National City Bank stock was purposely delisted by its officers because of “signs of manipulation.” Yet, the stock went from $785 in January 1928 to $1,450 in January 1929 to a peak of $2,925 later that year because National City Company was the primary trader.
- A management fund — 20% of the Company’s profits — was created to divvy up as bonuses to management, in addition to their salary. It incentivized profits at the expense of ethical behavior.
- Mitchell was paid over $3 million — about one-third — of the management fund for the Bank and Company from 1927 to 1929.
- Officers of National City got caught in the October 1929 market crash. The Bank set up a “morale loan fund” for uncollateralized loans at no interest for “embarrassed officers.” About $2.4 million was loaned to 100 officers. Only 5% of the money was repaid by February 1933. The unpaid loans were written off.
- A stock purchase plan was started for higher employees and officers of National City Bank in 1927. In late 1929, while officers were taking morale loans, the stock purchase plan was extended to rank-and-file employees to purchase stock on a four-year installment plan at $200 per share (book value per share never exceeded $70). The installment plan locked them in at $200 per share even though the stock fell on the open market to $40 at the time of the investigation.
- “Under the terms of the installment purchase, the employees could escape their obligations only by resigning—which was practically equivalent, in those years of depression, to voluntarily enlisting in the ranks of the unemployed.”
- “Legal chicanery and beneficent darkness were the banker’s stoutest allies.”
- National City Company
- Created in 1911 by National City Bank.
- It was controlled by the exact same stockholders, in the same proportion, that controlled National City Bank. Though, stockholders could not sell their interest in the Company without also selling interest in the Bank. Stock certificates of the Company and Bank were printed on opposite sides of the same piece of paper.
- A trust agreement was also set up to pass voting control of all stockholders to three people — the Chairman, President, and Director of National City Bank. Successors to the three trustees could only be chosen from the Banks officers or directors.
- It was initially funded with a $10 million special 40% dividend from National City Bank.
- The two — Company and Bank — were one. Mitchell eventually admitted to it under oath.
- The salesforce went door to door selling stocks and bonds, many either underwritten by the Company or the Company traded in, and oftentimes pushing them to use the maximum margin allowed.
- “Liberal prizes were offered to the salesmen who sold the most stocks and bonds, and especially high premiums were awarded for the sale of foreign bonds, which the National City was anxious to dispose of.”
- On underwriting, prospectuses were scant, purposely misleading, and devoid of any potential risks to hide poor quality.
- The Company participated in three separate pools to manipulate and profit off of three stocks of subsidiaries of Anacodona Copper in 1929.
- “Finding ourselves often in what would be termed stock-market operations, is unfortunate, and I would not do it again. As a matter of fact, I would rather look to the time when we would be completely out of that sort of thing.” — Charles Mitchell
- “Perhaps the most extraordinary of its activities during those frenzied years was the orgy of trading by the Company in the stock of the Bank itself. It is, of course, strictly against the law for a national bank to purchase its own stock.”
- The Company not only traded the Bank shares in its own account, it incentivized its salesforce to sell Bank stock, and partnered with over-the-counter brokerage houses to sell the Bank stock too.
- “Altogether, in the three-and-a-half-year period ending December 31, 1930, the National City Company sold almost 2,000,000 shares of the stock of its Bank, and even then it had about 100,000 shares left over. In the single year 1929 it sold more than 1,300,000 shares. For the proud privilege of owning these shares, worth $140,000,000 at their highest book value, the public paid the stupendous sum of $650,000,000. Most of this inflated value was, of course, wiped out during the years of depression, when National City fell from 585 to 21.”
- A management fund — similar to the Bank — was created to divvy up as bonuses to management, in addition to their salary. It incentivized profits at the expense of ethical behavior. The management fund came to end after 1929.
- Boeing Airplane and Transportation Corporation
- Was organized in October 22, 1928, as a holding company controlling three subsidiaries that manufactured airplanes and carried mail/passengers.
- The name was changed to United Aircraft and Transportation, Inc. in January 1929.
- National City Company floated its shares as a private offering to its “preferred list” and bought a $5 million block for itself. A public offering was vetoed by National City insiders.
- National City requested the listing of Boeing stock on the New York Curb Exchange on Oct. 31. Trading began on Nov. 2, 1928. Within 5 months, National City made a $2.4 million profit from its block of stock plus warrants.
- Late January, National City bought another block of common and preferred for $13 million, then sold it for a $1.4 million profit. They bought the common for $70 per share, solid it to their preferred list at $80, with the stock selling on the open market at $96.
- Chase National Bank
- Merged with Equitable Trust Company (controlled by Rockefeller) in 1930 and became the largest bank in the world.
- Chase Bank followed a similar path as National City during the 1920s market mania.
- Set up Chase Securities Corporation in 1917 as an affiliate corporation to skirt national bank regulations to follow activities of investment banking, market pools, market manipulation, and other questionable operations. Chase Securities Corporation set up Metpotan Corporation to also manipulate stock in the market.
- Similar “management funds” were set up for management as bonuses to incentivize profits above all else.
- The average Chase bank teller earned $4,000 per year.
- 8 pools were set up to manipulate the bank stock from Sept. 1927 to July 1931, using Chase Security and Metpotan. In total, it bought and sold over $860 million in Chase Bank stock. The stock went from $575 per share in 1927 to $1,415 (split adjusted) in 1929, to $89 (split adjusted) in 1933.
- Was involved in the Cutten pool, created to manipulate Sinclair Consolidated Oil Corporation on shares floated by Chase. The syndicate made $12 million in profit. It was one of many pools the bank was involved in.
- “The public which frantically bought all these shares had little thought of such things as earnings, business practices, book value or dividend record. They bought because there was magic—in those days —in the name of Cutten, and in the blind hope that a stock in which he and his associates were interested, was going to go up.”
- Albert H. Wiggin, Chairman of Chase
- Pulled in over $220,000 in salary, $100,000 in bonus, directorship pay, and committee fees per year. In addition, Wiggin earned over $8.6 million (after a $4 million loss) in “income” from trading stocks through his six family-owned corporations (three were Canadian corps. to avoid U.S. taxes) from 1928 to 1932.
- Used the six family corporations to trade Chase National Bank stock.
- His family corporations borrowed millions from Chase Bank, which was used to trade Chase Bank stock.
- He made $10 million profit trading Bank stock while the 8 pools ran from Sept. 1927 to July 1931.
- $4 million, of the $10 million, was made shorting Chase Bank stock from Sept. 19, 1929 to Dec. 11, 1929. He bought bank shares from Metpotan to cover his short.
- He made $600,000 in the Cutten pool syndicate.
- He resigned in December 1932 with a $100,000 annual pension.
- Wiggin’s trading habits led to the “Anti-Wiggin” provision in the Securities Exchange Act of 1934, which required officers, directors, or other corporate insiders to account for profits made from trading in the company’s stock.
- Income Tax Avoidance
- A chapter is dedicated to how J.P. Morgan, Otto Kahn, and other bank execs paid little to no taxes from 1930 to 1932 because of loopholes in the tax laws.
- A common technique at the time was to sell stock at a loss in order to deduct the loss for tax purposes — only the stock was often sold to a family member (wives, sons, daughters, keeping the stock in the family) only to be bought back later from that family member for the same price. The investigation unearthed this practice and the Board of Tax Appeals and courts ordered taxes paid.
- Partnerships were used too, but the tax laws allowed any new partnership to revalue assets, even those with a loss. If a new partner was added or an old partner retired, then a partnership was considered a new entity and any stock holdings were revalued without selling it. Any revaluation that results in a loss could be deducted for tax purposes. None of the partners at J.P. Morgan paid taxes for 1931 or 1932 because of this. They added/retired a partner, revalued the assets, used losses to offset income, and paid zero taxes.
- A dummy Canadian Corporation was used — i.e. Albert Wiggins — to avoid taxes. Rather than selling stock in the open market, Wiggin exchanged stock he wanted to sell, with the stock of one of his family-owned Canadian corporations. There was no gain or loss on the transfer of assets. The Canadian Corporation then sold the stock.
- Investment Trusts
- United States and Foreign Securities Corporation
- Created by Dillon, Read and Company in 1924.
- Issued three share classes — first preferred, second preferred, and common. The first preferred and 25% of the common were sold to the public for $25 million. The second preferred and 75% of the common was kept by Dillon, Read to maintain control of the corp.
- United States and International Securities Corporation
- Created by Dillon, Read and Company following a similar script of the above.
- Issued three share classes — first preferred, second preferred, and common. Only this time United States and Foreign Securities Corporation held all the common, selling the preferred for $50 million.
- Prices of both corporations soared through 1929, when Dillon, Read decided it was an opportune time to let the public share in their fortune.” They sold enough common to maintain control but make $7 million in profit.
- United States and Foreign Securities Corporation
- Insull Companies
- Was the 3rd largest utility holding company in the country at its peak.
- Samuel Insull was the mastermind behind it.
- “The main elements of the system consisted of five holding companies in each of which the Insulls owned a minority interest. These five holding companies in turn owned controlling interests in numerous subsidiaries which were directly engaged in the business of marketing gas and electricity.”
- “Great numbers of operating utilities, with holding companies superimposed on the utilities, and holding companies superimposed on those holding companies, investment companies and affiliates, which made it, as I thought then and think now, impossible for any man, however able, really to grasp the real situation.” — Owen Young, Chairman of GE
- Middle West Utilities Company was the largest of the holding companies at over $1.2 billion with 111 subsidiaries.
- Commonwealth Edison Company was the second largest holding company at over $450 million with 6 subsidiaries.
- Midland United Company was the third largest holding company at $352 million with 30 subsidiaries.
- People’s Gas, Light and Coke Company was the fourth largest at over $211 million with 8 subsidiaries.
- Public Service Company of Northern Illinois was fifth at $210 million with 1 subsidiary.
- The stock of all these companies traded publicly on exchanges. Since the Insulls held a minority interest in the holding companies, their control was at risk of rivals seizing control. This set them on a path of ridiculous complexity to protect their interests.
- The Insulls needed to acquire more shares so they created a super-holding company to control the 5 holding companies. Insull Utility Investments, Inc. was created, $150 million in securities were issued to buy controlling interest in the 5 holding companies. The Insulls traded their interest in the 5 holding companies for a minority interest in Insull Utility Investments — creating the same problem they had before, the moment Insull Utility Investment was listed on the exchange.
- The Insulls repeated the process again with Corporation Securities Company of Chicago. They got a minority interest again in exchange for their stock in Insull Utility Investments. Corporation Securities bought control of Insull Utilities with money raised from selling shares to the public.
- The Insulls “owned only 46.9 percent of the stock of the Corporation Securities Company of Chicago, and only 19.2 percent of the stock of Insull Utility Investments (Incorporated). By causing the former corporation to acquire 25.7 percent of the stock of the latter, and by causing the latter corporation to acquire 11.5 percent of the stock of the former, the Insulls were able effectively to control both corporations, and through them, the entire pyramidic structure.”
- “In all, by January 31, 1932, the Insulls had formed more than ninety-five holding companies and two hundred and fifty-five operating companies. The investment which the Insulls had made to secure the direction of this pyramid was something less than one million dollars. If we consider the market value of their holdings in March, 1930, it amounted to more than $100,000,000. This $100,000,000, in turn, now controlled $2,500,000,000. For every dollar that the Insulls originally invested, they now controlled $2,500 of the public’s money.”
- Halsey, Stuart and Company worked with the Insulls to distribute stock in all the holding companies. They created a radio program, hosted by a University of Chicago professor, to sing the praises of stock sponsored by Halsey, Stuart and Company to help sell the stock.
- Bank Holding Companies
- Were promoted as being sounder than individual banks due to size. Except, reckless dividend policies weakened the group by paying dividends with money that would have strengthened the group of banks.
- It lead to a “too big to fail” argument since they were the first to go under in 1933.
- Guardian Detroit Union Group
- Organized in 1929 in connection with Henry Ford and his son Edsel
- Known as the automobile bank since so most people connected to it had ties to auto companies.
- Controlled 20 banks in 16 Michigan communities and 13 other companies.
- “The group was a boomtime project, conceived in a boomtime mood, and it was managed with boomtime nonchalance. The vaunted “autonomy” of the individual banks which formed the units of the group covered a shocking laxity in the supervision of their activities by the central institution. These units had been permitted to become enmeshed in bad loans of huge amounts which were not charged off as losses, and in many “slow and doubtful” assets… Further millions were loaned on the security of shares of the Guardian Detroit Union Group, Incorporated, itself. It is, of course, illegal, for a bank to loan money on the security of its own stock.”
- Guardian essentially milked its group of banks dry with a high dividend policy.
- Distress broke out in February 1933 in one of its banks.
- They turned to the Reconstruction Finance Corporation, set up by President Hoover, for a $49.5 million loan (they already got a $16 million loan earlier) to strengthen the banks.
- Reconstruction Finance Corporation was only willing to lend $36.5 million, adding “Why should we bail out Mr. Ford?”
- Ford refused to add any of his own money. Instead, he threatened to withdraw $18 million of his own money in deposits from the group’s banks.
- “I think it is up to the Government to save these institutions by making them loans.” — Henry Ford
- The stalemate between Ford and the Reconstruction Finance Corporation led to the statewide bank closure in Michigan in 1933, and the panic spilled over to other states.
- Detroit Bankers Company
- Julius Haass organized the company.
- Two share classes were issued: 2.5 million common shares at $20 each and 120 trustee shares at $10 each. The trustee shares had the voting rights. Haass and 11 friends bought the trustee shares for $1,200. The common was issued to the public.
- Bought five Detroit banks either with the funds or by asking shareholders of each bank to exchange their shares for shares in Detroit Bankers Company. A promise of high dividends — 17% lured in shareholders.
- The 1929 market crash and the continued decline of the holding company stock lead to depositor apprehension and withdrawals.
- A stock pool was formed to prevent the stock from falling further. Dividends were declared to reassure the public. Nothing worked.
- The 17% dividend policy milked the banks dry. Dividends were paid through 1930 and 1931 and finally reduced to 16% in 1932. To maintain the payout more money was pulled from the strongest banks in the group.
- “Loan after loan in sizable amounts was made to persons who had no license whatever to borrow money and who are so badly involved that it is useless to even consider that they can ever attempt to pay.” — 1932 bank examiner report
- Legislative Results of the Senate Investigation
- Banking Act of 1933
- Passed June 16th.
- Separated commercial banks and investment banks.
- Prevented officers of commercial banks from serving as officers of investment banks.
- The heads of the great banks proclaimed it would be disastrous for the country. It wasn’t.
- “If we, for instance, should be deprived of the right to receive deposits which clients wish to leave with us, we should very probably have to disband a large part of our organization, and thus should be less able to render in the future that important service in the supply of capital for the development of the country which we have rendered in the past.” — J.P. Morgan
- Securities Act of 1933
- The Truth in Securities bill
- Gave the public full disclosure of the facts tied to new securities.
- “The proposal adds to the ancient rule of caveat emptor, the further doctrine: ‘Let the seller beware.’ It puts the burden of telling the whole truth on the seller. It should give impetus to honest dealing in securities, and thereby bring back public confidence.” — President Roosevelt
- It was condemned by bankers, claiming it would hurt “legitimate” business.
- Securities Exchange Act of 1934
- Amended the Securities Act
- Regulated the NYSE and other exchanges.
- Created the SEC.
- Restricted borrowing by brokers and dealers.
- Prohibited manipulation of security prices.
- Gave the Federal Reserve Bank the power to regulate margin limits.
- Added the uptick rule for short sales.
- Public Utility Holding Company Act of 1935
- Required utility holding companies to register with the SEC.
- The structure of the holding companies had to be as simplified as possible.
- Voting power had to be fairly distributed and eliminate speculative control.
- Heads of utility companies pushed back.
- “Would destroy every instrumentality by which the use of electricity has been made more dependable, economic and efficient, and more widespread in this country than in any other country in the world.” — Wendell Wilkie, Commonwealth and Southern
- Federal Deposit Insurance Corporation
- Protected deposits of banks in the event of bank failure.
- The heads of U.S. banks fought against it.
- “The American Bankers’ Association fights to the last ditch against the guaranty provisions of the Glass-Steagall bill, as unsound, unscientific, unjust, and dangerous. Overwhelming opinions of experienced bankers are emphatically opposed to deposit guaranties which compel strong and well managed banks to pay the losses of the weak.” — Francis Sisson, President of the American Bankers’ Association
- Banking Act of 1933
- Testimony Quotes
- “I state without hesitation that I consider the private banker a national asset and not a national danger. As to the theory that he may become too powerful, it must be remembered that any power which he has comes, not from the possession of large means, but from the confidence of the people in his character and credit, and that that power, having no force to back it, would disappear at once if people thought that the character had changed or the credit had diminished—not financial credit, but that which comes from the respect and esteem of the community.” – J.P. Morgan
- “The raiding of the stock market, the violent marking up and down of other people’s possessions is in my opinion a social evil. — Otto Kahn
- “We have learned much. We have all made mistakes, and a man that cannot profit by it certainly is not very worthy. We are trying to blaze the way for investment finance into a higher ground than it has been.” – Charles Mitchell
- “An investment that is unsuccessful is usually called a speculation.” — Albert Wiggin
- “The Exchange is a market place… If a market place for securities is to fulfill its function in the economic order of things, it must fairly and honestly permit the forces of supply and demand to determine prices. The Exchange, as an institution, must be impartial.” — Richard Whitney
- “With respect to the future, and on market prices, and on the economics of the situation, there are so many factors over which the men in finance have no control, and really have comparatively little knowledge, that it is just as impossible for them to predict a definite future, as it is for anybody else.” — Charles Mitchell
