Fifty years in Wall Street

by Henry Clews

Those capitalists who have lost money largely by this year’s decline in prices of stocks, and the monetary disturbance, are naturally bitter and resentful; but even the majority of such, down in their hearts, grant that in principle President Roosevelt is doing his plain duty, though in his speeches he may have said too much too often. If what he has done is wrong, it is the fault of the law, for he has urged no greater punishment than the enforcement of the law. But the man would be daring, indeed, in the face of the exposures already noted, who would presume to say that the law is unjust. It aims at equal justice for all, and we are a law abiding people.

In view of all the wrong doing in corporation management it must not, however, be forgotten that the majority of our corporations are ably and honestly managed in the interest of the stockholders. It is not surprising that black sheep have crept into some of them, for a certain percentage of people in every walk of life and every association, church or social club, are bad at heart, and show up in their true colors, when subjected to the temptation to commit wrongs which will tend to their personal advantage. The assumption that now prevails, that all corporation management is dishonest, is, therefore, unjust and has been causing much of the hysteria that has prevailed in Wall Street and elsewhere.

To protect minority stockholders, especially in the Interstate Railroads, they should have at least one representative in the board of directors, and he should be elected by the minority at each annual meeting. If such a director was a cool-headed, honest business man, certain abuses, which have been prevalent in the past, could not have occurred and would be prevented in the future.

It is much to be regretted that to aid personal schemes, some of the men in power, even in some of our large National Banks, have resorted to methods which have caused loss of confidence in them, which resulted in their retirement, practically under compulsion, as officers and directors. It is almost needless to say that, of all corporations, our National Banks should be the last to be used for illegal purposes, or to promote personal gain or speculations.

When a man in power imperils the solvency and good reputation of one of our banks, he is a public enemy, and as mean and guilty as one who attacks the virtue of a virtuous woman. To destroy confidence in that woman and her good name is to do her an irreparable wrong. Destroy confidence in a bank and you destroy that which is one of the corner-stones of business prosperity. Those who invest in railroad stocks, or stocks of Industrial corporations, risk only the cost of their investment, but the holder of record of a National Bank stock is liable for an additional amount equal to the par value of his holdings.

Publicity is the greatest safeguard of the prosperity of any corporate enterprise, and the best preventive of irregularities and frauds. Many men will do in secret what they would fear and refuse to do under the public eye; and if hitherto secret ways are, in the future, made known, and seen of all men, there will be less breaking and unfaithfulness among many classes of business men in high places.

This doctrine of publicity I have preached for years, and it was the topic of an address I delivered before the Wharton School of Political Economy in the University of Pennsylvania eighteen months ago. I saw then what was going on in corporate corruption and grafting, and railroad rebating, but, of course, had no tangible evidence or legal proof of these misdoings.

During the intervening time, however, so much of this came to light that there was no alternative for the national government, as well as many of the states, but to take drastic action to stop these evils, and probe right and left to locate and convict those responsible for them. President Roosevelt led the way to this laudable end. He is not in favor of persecution, however; but he is in favor of the prosecution of those known to be guilty; and I firmly believe that his courageous stand in this movement to correct and punish corporate abuses will overshadow, in the history of his Presidency, all his other achievements.

Remember: he would punish only the guilty and protect property interests in every way possible, so that the innocent may not suffer with the guilty, or at least suffer as little as possible.

The lawyers engaged to defend wealthy corporate wrongdoers may sometimes prevent their conviction and punishment; but the people are entitled to the protection which comes from an equal administration of justice.