Chapitre 1
When Wall Street Ruled America
In December 1900, a private dinner at New York's University Club changed the course of American economic history. John Pierpont Morgan, the nation's most powerful financier, sat beside Charles M. Schwab, whose persuasive after-dinner speech convinced Morgan to organize the United States Steel Corporation-an entity that would define American financial life for the next three decades. The timing was perfect: the depression following the 1893 panic had ended, prosperity had returned, and McKinley's business-friendly administration provided stability. America stood at the threshold of a new economic era that would see unprecedented consolidation of power in the hands of a few financial titans.
Frederick Lewis Allen's "The Lords of Creation" has remained a cultural touchstone since its publication in 1935, influencing generations of financial thinkers and reformers. Warren Buffett reportedly keeps it on his nightstand, while economist Thomas Piketty cited it extensively in his groundbreaking work on wealth inequality. The book's enduring relevance speaks to how the fundamental tensions between financial power and democratic governance continue to shape our economic landscape today.
Chapitre 2
The Birth of Corporate Titans
The late 19th century marked a profound transformation in American business. In the 1870s and 1880s, free competition had been the guiding principle, with most enterprises remaining small and laissez-faire economics prevailing. However, this unregulated competition often led to destructive outcomes-railroads engaged in ruinous price wars, oil wells proliferated until prices collapsed. The need to limit competition gave rise to agreements among competitors to maintain prices and restrict cutthroat tactics.
John D. Rockefeller exemplified this trend, using ruthless efficiency and secret railroad rebates to dominate the oil industry. But the legal innovation that truly revolutionized American business came in 1888, when New Jersey's governor, seeking additional state revenue, consulted lawyer James B. Dill, who suggested permitting companies incorporated in New Jersey to hold stock in other corporations. This seemingly minor legal change, enacted before the Sherman Antitrust Act of 1890, created the holding company structure that would transform American capitalism.
Unlike the awkward trust arrangement, the holding company allowed entrepreneurs to centralize control of multiple companies by exchanging their shares for those of a New Jersey-incorporated holding company. After the depression of 1893 lifted in 1897, a rush to form such companies began. This development spawned a new type of financier-the promoter-who specialized in consolidating competing businesses, arranging generous terms for existing owners, selling shares to eager investors, and manipulating stock prices for personal profit.
The steel industry consolidation epidemic struck in 1898. John Gates combined wire and nail companies into American Steel and Wire Company of New Jersey, while he and Morgan formed Federal Steel. Morgan independently created National Tube and American Bridge, while the Moore brothers assembled American Tin Plate, American Steel Hoop, American Sheet Steel, and National Steel. By 1900, eight powerful groups had reorganized much of the industry-except for one glaring exception: Andrew Carnegie.
The sharp-eyed Scotsman who rose from bobbin-boy to richest man in the world remained fiercely independent. Controlling his own mines, coke, transportation, and crude steel production, Carnegie dominated the industry's foundation. When competitors threatened to produce their own crude steel, Carnegie prepared for war, authorizing a twelve-million-dollar tube plant to challenge Morgan's National Tube Company. At nearly 65, Carnegie was contemplating retirement but would first either force competitors to buy him out or crush them completely.
The Schwab dinner became the catalyst for Morgan's steel consolidation plan. After carefully orchestrated meetings, Morgan enlisted Gates to help approach Carnegie through Schwab. Following an "accidental" encounter, Schwab met with Morgan, Bacon, and Gates at Morgan's Madison Avenue home, where they hammered out details late into the night. Carnegie, though initially melancholy at the prospect of retirement, soon provided his price, which Morgan accepted immediately.
Chapitre 3
The Titans Clash: Harriman vs. Morgan
By 1901, the American financial landscape was dominated by titanic figures whose ambitions and rivalries would shape the nation's economic destiny. One such figure was E.H. Harriman, who rose from humble beginnings as a fourteen-year-old Wall Street messenger to become a railroad magnate of extraordinary vision. After outmaneuvering Jacob Schiff to secure a position in the Union Pacific's reorganization, Harriman revealed himself not merely as a Wall Street operator but as a railroad genius.
Three major transcontinental railroads dominated the western landscape: Harriman's Union Pacific in the south (backed by Kuhn, Loeb & Co.), the Northern Pacific in the middle, and James J. Hill's Great Northern along the Canadian border. Though the Northern Pacific and Great Northern served similar regions and were close competitors, both were allied with the House of Morgan, with Hill influential in both operations.
In 1900, both railroad factions coveted the Chicago, Burlington, and Quincy (the Burlington), which offered valuable access to Chicago. Harriman tried first but failed to acquire it. Meanwhile, he successfully purchased the Southern Pacific to secure access to San Francisco. By early 1901, Hill and Morgan succeeded where Harriman had failed, securing the Burlington. Undeterred, Harriman devised an audacious plan: to buy control of the Northern Pacific itself through open market purchases, thereby gaining indirect control of the Burlington.
This bold move triggered one of the most dramatic financial battles in American history. As Northern Pacific stock prices soared from 101 to an astonishing 1000, Wall Street plunged into chaos. Desperate short sellers frantically tried to cover positions, selling everything else to raise cash. Money became almost unobtainable with interest rates jumping to 75% as Steel Corporation shares plummeted from 5434 to 26. By noon Thursday, half the brokerage firms were technically bankrupt.
Finally, Morgan and Kuhn, Loeb agreed not to demand immediate delivery from shorts, while banks formed a relief pool lending at 6%. The cornered shorts were allowed to settle at $150 per share. Though markets recovered, thousands of families lost everything in what newspapers called "an exhibition of vast power for private ends unrestrained by any sense of public responsibility."
The peace treaty gave Morgan control of Northern Pacific's directorate but required including Harriman and William Rockefeller on the board. To secure this arrangement, they formed the Northern Securities Company as a holding company for Northern Pacific and Great Northern shares. However, this arrangement would soon face a new challenge from an unexpected quarter: the White House.
Chapitre 4
The Rise of the Money Trust
By 1905, the financial titans had resumed expanding their influence after recovering from the "rich men's panic" of 1903. Rising prices, European investment, bumper crops, and climbing corporate profits renewed optimism throughout the country. The financial overlords were consolidating their power through holding companies, bringing more businesses under Wall Street's influence. Investment bankers who promoted combinations and commercial bankers who financed operations spoke with authority in countless boardrooms, creating an immense, pervasive network of financial influence.
What kind of men were these financial titans? The ten most representative Wall Street powers-Morgan, Baker, Stillman, Harriman, John Rockefeller, William Rockefeller, Rogers, Schiff, Vanderbilt, and Keene-commanded far less public attention than politicians of their day, despite their enormous influence. Most were self-made men without college educations, though they later sent their sons to prestigious universities and showered benefactions upon educational institutions. Only Morgan and Vanderbilt began with inherited wealth; the others rose from modest beginnings through ambition, frugality, and financial acumen.
Remarkably, these financial overlords were predominantly pious men. Morgan, a prominent Episcopal layman, began his will with a passionate declaration of Christian faith. The Rockefeller brothers were devout Baptists, with John famously donating nearly a tenth of his income from youth and eventually giving away over half a billion dollars. Schiff attended synagogue religiously, read daily prayers, observed the Sabbath strictly, and balanced his Wall Street activities with significant philanthropic work.
Yet a striking paradox existed between their religious devotion and business practices. These church-going men engaged in stock-watering operations, maintained slush funds for bribing politicians, and showed hardness toward unprotected investors and laborers. Their religion was diluted with Old Testament justice, Franklin's frugality philosophy, Puritan sobriety, and laissez-faire competition. The damage they caused was often remote and impersonal, with victims unseen across ticker tapes and boardroom tables.
The social ascension of these wealthy financiers followed a predictable pattern. By 1905, nine of our ten financiers appeared in the New York Social Register, belonging to an average of 9.4 clubs each. Morgan led with 19 club memberships, followed by Vanderbilt with 15 and Harriman with 14. Their social arrival was complete when they occupied boxes at the Metropolitan Opera's opening night, which the New York Times noted was "more of a social than a musical event."
American aristocracy remained unsure of itself, developing social patterns with frequent glances toward Europe-especially England-for validation. Entertaining visiting European nobility scored points in the social game, while arranging marriages between American daughters and foreign noblemen represented the ultimate triumph. By 1909, over five hundred American women had married titled foreigners, taking approximately $220 million abroad with them.
Chapitre 5
The Panic of 1907: Morgan's Finest Hour
The financial panic of 1907 began with a seemingly minor event-a speculative battle over United Copper stock that would prove as consequential to the financial crisis as the assassination at Sarajevo was to World War I. By mid-October 1907, the business climate was already ominous after a year of financial strain. Railroad expansions and stock market speculation had drained capital, foreign lenders were pulling back, and President Roosevelt's regulatory efforts were alarming Wall Street.
F. Augustus Heinze and his associates made their fateful move to corner United Copper stock. When their corner attempt failed, the stock plunged from 60 to 10 in just two days. The crisis deepened when depositors, learning that Heinze was president of the Mercantile National Bank, began withdrawing their funds. As the bank faced a run on deposits, it turned to the Clearing House for assistance, moving the crisis into its second stage.
With J. Pierpont Morgan attending the Episcopal Church Convention in Richmond when the crisis began, the banking panic deepened rapidly. Returning to New York on Sunday, Morgan initially refused to help the Knickerbocker Trust when approached Tuesday morning. By that morning, panic had fully erupted-lines of desperate depositors stretched outside the Knickerbocker's marble building on Fifth Avenue. By noon, its $8 million in cash was gone, forcing suspension.
The financial battle raged on multiple fronts simultaneously. On Wednesday, when Morgan declared the Trust Company of America the place to stop the trouble, runs hit several banks, Westinghouse teetered, the Pittsburgh Exchange closed, and call-money rates soared to 125 percent. By Thursday, the Stock Exchange crisis peaked with securities plummeting and transactions nearly halting from cash scarcity. When Exchange President Thomas sought help, Morgan decisively pledged $25 million, instantly calming the panic and dropping rates to 6 percent.
The most dramatic moment came when Morgan gathered the financial elite at his library-Stillman, Baker, Perkins, Gary and countless bankers-while devising an ingenious solution to save both the Trust Company of America and broker Grant Schley, whose Tennessee Coal & Iron shares couldn't be sold without crashing prices. Morgan's ultimatum demanded trust company presidents raise another $25 million to save imperiled institutions. Exhausted bankers, locked inside the library by Morgan who kept the key, debated for hours amid Renaissance paintings and priceless artifacts. Near dawn Sunday, Morgan confronted the reluctant trust presidents with a subscription document. When no one stepped forward, Morgan gently pushed his friend Edward King to sign first, breaking the ice.
As the panic gradually subsided, several outcomes became clear. First, an economic depression followed, though not severely. Second, the crisis revealed the need for systematic bank reserve mobilization, eventually leading to the Federal Reserve System. Third, financial power became dramatically centralized. Morgan now reigned supreme, with Stillman aligning his National City Bank with Morgan enterprises, Harriman weakened by illness, and Rogers and William Rockefeller diminished by financial losses. "Where there had once been many principalities, there was now one kingdom, and it was Morgan's."
Chapitre 6
The Reform Movement Challenges Wall Street
The reform movement that would eventually challenge Wall Street's power between 1907 and 1915-16 had deep roots stretching back decades. Western farmers formed the movement's backbone, caught between mounting debts from mechanization, deflation in the 1890s, high prices for supplies, and exploitative railroad freight rates. Though property owners not opposed to capitalism itself, these farmers fiercely fought big business interests that threatened them.
The reform movement found its champions in various public figures-governors like LaFollette in Wisconsin, mayors like "Golden Rule" Jones of Toledo and Tom Johnson of Cleveland, President Theodore Roosevelt, and unexpectedly, magazine publisher Samuel S. McClure. Not a natural reformer, McClure was simply a shrewd editor seeking popular content for mass-market magazines. Recognizing public interest in unflinching accounts of contemporary business, he commissioned Ida M. Tarbell's five-year investigation of Standard Oil and published Lincoln Steffens' expose of municipal corruption in St. Louis. When these pieces appeared in late 1902, shortly after Roosevelt's arrival at the White House, the muckraking era officially began.
Throughout the reform movement, Theodore Roosevelt's evolution was significant as its chief spokesman and barometer. Though not much of a "trust-buster" in practice-bringing only twenty-five anti-trust proceedings compared to Taft's forty-five-his rhetoric became increasingly bold. Roosevelt's thundering phrases like "malefactors of great wealth" and "the tyranny of a plutocracy" echoed throughout the land, amplified by his enormous popularity.
The reform movement wasn't fundamentally radical. Most reformers didn't wish to overturn capitalism but to limit the unprecedented powers of industrial captains, remove their political influence, and prevent the cruel results of unregulated commerce. As Roosevelt's term ended and Taft took office, Wall Street hoped for relief from governmental interference, but the reform movement continued advancing. The political landscape shifted dramatically with Roosevelt's return from Africa, his break with Taft, and the eventual election of Woodrow Wilson in 1912.
The question of how to handle corporate power remained unresolved. The Sherman Anti-Trust Law's interpretation was problematic-what exactly constituted "restraint of trade"? By 1908, business combinations had reached a staggering $31 billion in capitalization. The Supreme Court's "rule of reason" in 1911 only created more confusion by failing to define what "unreasonable" restraint meant. Even when combinations were legally dissolved, they often continued operating as virtual units.
Chapitre 7
The Pujo Committee Exposes the Money Trust
When the House of Representatives authorized its Banking and Currency Committee to investigate whether a "money trust" existed in 1912, the Pujo subcommittee under counsel Samuel Untermyer assembled staggering statistics. They found that representatives of the Morgan-Baker-Stillman interests held 341 directorships across 112 major financial institutions, controlling over $22 billion in resources. The committee concluded that a well-defined "money trust" existed through stock holdings and interlocking directorates.
The Pujo Committee hearings in winter 1912-13 became dramatic theater when J.P. Morgan testified. The 75-year-old financier commanded the stage from the moment he was sworn in. Initially guarded, he grew increasingly animated-striking the table for emphasis, chuckling at crowd reactions, and delivering responses with flat-footed authority. Morgan obstinately denied having any power, even claiming he didn't control his own firm. Throughout his testimony, Morgan maintained that character, not money or property, was the basis of financial power and credit, famously declaring that "a man I do not trust could not get money from me on all the bonds in Christendom."
George Baker's testimony proved more revealing than Morgan's. Though often vague, Baker possessed an analytical mind that yielded important admissions. When pressed by Untermyer, he acknowledged that the concentration of credit had "gone about far enough." When Untermyer asked if that was "a comfortable situation for a great country to be in," Baker slowly replied, "Not entirely"-a climactic admission that left spectators sighing in recognition of its significance.
On March 4, 1913, Woodrow Wilson became President, declaring in his inaugural address: "There has been a change of government." The reformers were now in power. Wilson, believing a President should lead Congress, called for tariff reduction, banking system revision, and regulation of big business. Meanwhile, the old financial order was passing-Harriman dead, Stillman semi-retired, Rockefeller fully retired, Rogers gone, William Rockefeller failing, and Morgan himself dying in Rome on March 31, 1913, less than a month after Wilson's inauguration.
Chapitre 8
The Seven Fat Years: 1922-1929
Between autumn 1922 and autumn 1929 stretched seven years of American business ascent. During this period, though presidents changed from Harding to Coolidge to Hoover, one man remained constant: Andrew Mellon, Secretary of the Treasury-banker, multi-millionaire, and exponent of Wall Street's philosophy. Business, especially financial business, reigned supreme, with most Americans believing businessmen knew what was best for the country and government should keep hands off.
Despite regulatory legislation remaining on the books, enforcement weakened dramatically. Officials were selected for party loyalty rather than vigilance. Some were ignorant of the industries they supervised; others became so indoctrinated by industry leaders they saw little need for oversight. The public's zeal for enforcement had waned, leaving conscientious officials without support against constant pressure for lax administration.
By 1928, public discontent had seemingly evaporated, with Socialist votes plummeting to 267,000 (compared to 897,000 in 1912) and Communists gathering fewer than 50,000 votes. Even Al Smith carefully signaled business-friendly policies while campaigning. Herbert Hoover rode an overwhelming 21-million-vote landslide as big business basked in unprecedented public approval. This approval was partly manufactured by "public relations counsel" who flooded newspapers with favorable stories, ghost-wrote articles for executives, and subsidized academics. Publishers, dependent on advertising revenue, found it profitable to praise business leaders and risky to criticize them.
The business propaganda succeeded largely because Americans wanted to believe in the business cornucopia. Local social pressure reinforced this orthodoxy-questioning real estate developments, utility rates, or supporting unions could make one "un-American" and lead to credit difficulties, job problems, and social ostracism. Bruce Barton's "The Man Nobody Knows," depicting Christ as "a startling example of executive success," became a bestseller for two years, reflecting how eagerly Americans embraced business values.
The seven fat years accelerated the concentration of economic power that Morgan's Steel Corporation formation had initiated in 1901. Business was increasingly organized into larger corporate units, with the 200 largest non-financial corporations controlling nearly half of all corporate wealth and conducting over two-fifths of non-financial business by 1929. The financial sector showed similar concentration, with just 250 giant banks (1% of all banks) controlling 46% of total banking resources by 1930, while small banks failed at roughly fifty per month.
Chapitre 9
Building the Pyramids: The Insull Empire
In 1878, Samuel Insull was a humble London clerk earning five shillings weekly at an auctioneer's office. Fifty-one years later, he controlled hundreds of utility companies across America and was worth $170 million. Five years after that, he became a fugitive from justice, fleeing across the Mediterranean. Insull's extraordinary rise and fall perfectly illustrates the unchecked financial devices that flourished in the 1920s.
Samuel Insull's rise reads like a Horatio Alger tale. After losing his job at an auctioneer's office, the nineteen-year-old stenographer answered an advertisement from Edison's London manager. His abilities so impressed that when Edison needed a secretary, Insull was summoned to America. Beyond this initial luck, his meteoric rise stemmed from extraordinary ability and determination. Still in his twenties, he became important in Edison's business management. In his thirties, he became president of Edison's Chicago electric company, brilliantly absorbing rivals until he monopolized the city's electric light business.
In 1905, Insull began acquiring electric plants outside Chicago, and by 1912 formed Middle West Utilities Company to fund his acquisitions. Here he executed his first masterful stock-watering operation: selling his properties to Middle West for $330,000, then issuing himself 40,000 preferred shares and 60,000 common shares for $3,600,000. He then sold the preferred shares and 10,000 common shares to the public for exactly $3,600,000-recouping his entire investment while retaining 50,000 common shares for free, plus control of the company.
By 1929, the Insull pyramid had reached mind-boggling complexity. At its peak sat Insull Utility Investments, Inc., which controlled four massive concerns. The system wasn't symmetrical or static-properties constantly shifted between entities at rising prices. Following control lines revealed dizzying depth: the Tidewater Power Company in North Carolina was controlled through four successive layers of holding companies before reaching Middle West Utilities. Most bewildering was how control lines ran in all directions-Corporation Securities Company ("Corps") owned 28.9% of Insull Utility Investments, while Insull Utility Investments owned 12.5% of "Corps." Each super-holding company gripped the other in a corporate structure that defied conventional metaphors.
Despite the incomprehensible complexity of his empire, Insull's prestige in 1929 remained colossal. He chaired 65 different concerns and presided over 11 others. His wealth seemed vast-a cynical reporter claimed being seen talking to Insull in front of Continental Bank was worth a million dollars. Yet beneath this grandeur, the monarch sat uneasily, his control dependent on minority stock holdings vulnerable to hostile takeover.
After the crash, Insull's empire began disintegrating. The financing had reached "complete unreality" with speculative prices, values, and even dividends. As business slackened, operating companies' earnings deteriorated, undermining the holding companies that depended on them. The bank loans and credit built on 1928-29 speculative values began crumbling. On April 8, 1932-two and a half years after the crash-Owen D. Young and New York bankers confronted Insull with the inevitable receivership. "I wish my time on earth had already come," said the devastated magnate.
Chapitre 10
The Crash and Its Aftermath
When a wave breaks, it's the top that crashes first. Like a great roller surging toward shore that may threaten to break several times before finally toppling, America's economic system broke first at its crest-the inflated structure of stock values built during the Bull Market's speculative madness. Previous market breaks in June 1928, December 1928, and March 1929 had temporarily cascaded prices downward before recovering to new heights. When autumn 1929 brought another cascade, most observers expected the same pattern to repeat.
The wave finally broke on Thursday, October 24, 1929, shortly after ten in the morning. What triggered the avalanche wasn't coordinated short-selling, which remained minimal, but the inexorable mechanics of margin trading itself. When prices declined, speculators who had borrowed heavily to buy stocks couldn't meet margin calls, forcing brokers to sell automatically to recover loans. This simultaneous selling without matching buyers created a vicious cycle of plunging prices and panic selling.
Shortly after noon, Wall Street bankers including Thomas Lamont, William Potter, Seward Prosser, Albert Wiggin, and Charles Mitchell met at the House of Morgan to form a market support pool. News of their intervention briefly rallied prices as Wall Street still believed in "the omnipotence of its gods." The illusion quickly faded. After barely holding for two days, the avalanche resumed Monday with such force that the bankers could only prevent complete demoralization. Tuesday, October 29th saw sixteen million shares traded with enormous losses. By November 13th, thirty billion dollars in capital-almost equal to America's entire cost for the war against Germany and greater than the national debt-had vanished.
President Hoover responded by summoning bankers, industrialists, and labor leaders to the White House, urging them to maintain business as usual-no wage cuts, no abandoned construction, no labor agitation. He requested income tax cuts to encourage the rich to spend again and advocated public works to absorb unemployment. The administration's chorus that prosperity was "just around the corner" became deafening.
Despite a market rally in early 1930, actual business barely held its ground at levels below 1929. By May 1930, the market collapsed again, beginning a grinding, inexorable disintegration that would continue through early 1932. The depression's causes were complex and interconnected: our foreign trade depended on lending Europe money to buy our goods-an unsustainable arrangement; farmers had never recovered from post-war market collapses; and the crisis was global, with debt-burdened Europe drifting into fresh economic troubles.
By July 1932, the nation's economic devastation was staggering. Stock values had plummeted to shocking lows-U.S. Steel from 262 to 22, AT&T from 310 to 72, and General Motors from 91 to 8. The mighty corporate structures of the twenties were wobbling. Insull's pyramid had fallen, the Van Sweringens were deeply indebted to Morgan, and Transamerica Corporation traded at a mere 218. Investment trusts showed staggering losses, while banks teetered on collapse.
Chapitre 11
All Change: The New Deal and the End of an Era
If the banking collapse on Inauguration Day was tragic for Hoover, it was staggering for Franklin Roosevelt. The country he inherited was prostrate-financial machinery halted, institutions teetering on insolvency, business slumping to 1932's panic lows, with widespread unemployment and destitution among farmers and industrial workers.
Yet Roosevelt turned this crisis into opportunity. His Inaugural Address was clear, strong, and confident, thrilling citizens who had longed for action with his pledge to wage "war against the emergency." He acted immediately-issuing a bank holiday proclamation, calling Congress into emergency session, and addressing the American people directly through radio with remarkable clarity. The banks reopened without panic, and Roosevelt maintained the nation's support, even from Wall Street financiers shaken by recent events.
Roosevelt's economic recovery prescription was multifaceted and sometimes contradictory. He likened himself to a quarterback always ready to try a new play-though sometimes his team seemed simultaneously engaged in conflicting maneuvers. His approach included controlled inflation to lessen debt burdens, the AAA program to raise agricultural prices, public works spending to stimulate the economy, and the NRA as his primary industrial recovery vehicle.
While stimulating business, Roosevelt simultaneously reformed finance-a paradox to many observers who considered reform inherently deflationary. The reforms included: separating commercial and investment banking through the Glass-Steagall Act; requiring securities registration and full disclosure; mandating public reporting of insider stockholdings and salaries; placing stock exchanges under government supervision; and considering legislation to regulate utility holding companies.
Roosevelt's approach differed fundamentally from Hoover's. While Hoover thought first of owners and managers, believing prosperity would filter down, Roosevelt thought first of the less fortunate, believing their prosperity would seep up-even if owners faced some restraint. Most significantly, the Roosevelt program deliberately recognized the end of laissez-faire, with government assuming responsibility for the functioning of the American economy for the first time in history.
By mid-1935, America's economic recovery remained fragile and uneven. Big business had moved into profitability, with corporate profits up nearly 22% from the previous year. The wealthy showed noteworthy income gains. Yet small businesses remained precarious, while conditions at the bottom of the economic scale were appalling. At least ten million Americans remained unemployed, with over twenty million people-one in six Americans-dependent on public relief.
The economic initiative had definitively shifted from Wall Street to Washington. The House of Morgan could no longer issue securities, becoming simply a deposit bank. Other private banking houses like Kuhn, Loeb & Co. and Dillon, Read & Co. chose securities over deposits. Commercial banks lost their investment affiliates. The Securities Exchange Act of 1934 hampered traditional stock manipulation, while insider trading faced new disclosure requirements.
The age of American finance that began with the twentieth century had clearly closed. Whatever might come next would bear little resemblance to the era ushered in by Morgan the Elder in 1900-not merely because of the New Deal or changing political sentiment, but primarily due to economic forces beyond the control of bankers, collectivists, or presidents. The fundamental challenge facing the United States was immense: how to adjust institutions to effectively multiply and fairly distribute the products of earth, labor, and science-all without destroying human liberty.
