Other People's Money and How The Bankers Use It

Book Excerpt: ...le men possessed of large fortunes; but the most potent factor in their control of business is not the possession of extraordinary ability or huge wealth. The key to their power is Combination -- concentration intensive and comprehensive -- advancing on three distinct lines: First: There is the obvious consolidation of banks and trust companies; the less obvious afhliations -- through stockholdings, voting trusts and interlocking directorates -- of banking institutions which are not legally connected; and the joint transactions, gentlemen's agreements, and "banking ethics" which eliminate competition among the investment bankers. Second: There is the consolidation of railroads into huge systems, the large combinations of public service corporations and the formation of industrial trusts, which, by making businesses so "big" that local, independent banking concerns cannot alone supply the necessary funds, has created dependence upon the associated New York bankers. But combination, however...