WHY BANKER-MANAGEMENT FAILED
Now, how can the failure of the banker-management of the New Haven be explained?
A few have questioned the ability; a few the integrity of the bankers. Commissioner Prouty attributed the mistakes made to the Company’s pursuit of a transportation monopoly.
“The reason,” says he, “is as apparent as the fact itself. The present management of that Company started out with the purpose of controlling the transportation facilities of New England. In the accomplishment of that purpose it bought what must be had and paid what must be paid. To this purpose and its attempted execution can be traced every one of these financial misfortunes and derelictions.”
But it still remains to find the cause of the bad judgment exercised by the eminent banker-management in entering upon and in carrying out the policy of monopoly. For there were as grave errors in the execution of the policy of monopoly as in its adoption. Indeed, it was the aggregation of important errors of detail which compelled first the reduction, then the passing of dividends and which ultimately impaired the Company’s credit.
The failure of the banker-management of the New Haven cannot be explained as the shortcomings of individuals. The failure was not accidental. It was not exceptional. It was the natural result of confusing the functions of banker and business man.