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  Chronicles of American Wealth / Nr 30 / December 2006

<<  List of chronicles   

Content :

1 New historical list : “ Pujo List - Money Trust (1912)
2 Quiz around the telephone - the answers

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New
historical list : " Pujo List - The Money Trust (1912) "


When in 1907, a copper stock speculation scheme, initiated by the infamous Thomas-Heinze-Morse group, burst and caused a run on the trust companies and subsequent money shortage in the stock exchange, a banking consortium led by J. P. Morgan & Company, the First National Bank of New York and the National City Bank, set up an emergency fund to bail out the trust companies and support the stock market. Thanks to such quick action from the nation’s leading bankers, a widespread panic and ensuing recession was avoided.

Widely hailed as the saviors of the US economy, the great bankers, John Pierpont Morgan, George Fisher Baker and James Stillman, were nevertheless criticized by the muckracking press and their power increasingly viewed with suspicion by political economists and liberal congressmen. One of the deals concluded at the height of the money crisis was particularly questioned, as it blatantly violated the Sherman anti-trust laws, which were just then being enforced by the [Theodore] Roosevelt administration.

Fooled into the belief that one of the nation’s major financial institutions (The Trust Company of America) was at stakes, the president himself authorized the acquisition by the U. S. Steel Corporation of the smaller but strategically important Tennessee Coal, Iron & Railroad Company. The deal which was brokered by J. P. Morgan actually relieved the private banking and brokerage house of Moore & Schley, whose senior partner was the brother-in-law of George F. Baker, head of the First National Bank.

This abuse was denounced during the Taft administration, but without consequence neither to the deal itself nor to the persons of Elbert Henry Gary and Henry Clay Frick, who misrepresented the facts to President Roosevelt. Along with the creeping suspicion against the trusts, the increasing power of a small group of New York bankers and capitalists triggered the investigation of what was called “the Money Trust”, that is the control of the nation’s money supply through the banking system by a small number of extremely wealthy and influential people.

Headed by Louisiana congressman Arsène Pujo, a liberal Democrat, the Committee on Banking and Currency of the 62nd Congress investigated the ownership and control of the major U.S. financial institutions in 1912. The Pujo List – Money Trust (1912) is a result of these investigations and names the directors of the major U.S. national banks, trust companies and life insurance societies. As usually, the list includes all presently available information about these people in the AW database, with links to partial or full profiles, where applicable. It is ordered according to the estimated individual fortunes, in declining order from the largest.

The majority of the listed people (76 out of 138) were of course principally engaged in banking. But among the wealthiest fifteen, only three (George F. Baker, J. Pierpont Morgan and James Stillman) were bankers. The latter made up the triumvirate which clearly ruled Wall Street and the American banking business.

John Pierpont Morgan, the most successful US investment banker, was thereby the overall leader. He induced many of his wealthy customers to invest money in national banks and trust companies and join their board of directors. Thus railroad tycoons William Kissam Vanderbilt and James Jerome Hill are ranked among the fifteen richest capitalists on the Pujo list, as are U.S. Steel industrialists Henry Clay Frick, Daniel Gray Reid and Edmund Coggeswell Converse.

George Fisher Baker, the largest stockholder, president and later chairman of the First National Bank and a close ally of J. Pierpont Morgan, is the richest banker on the list. Much of his vast fortune was invested in railroads, notably Hill’s Great Northern and Northern Pacific. The Pujo Committee also unearthed the fact that Baker personally served on more boards of large corporations than any other member of the Money Trust (22 with an aggregate capitalization of $7’272’000’000)*.

James Stillman, the head of the National City Bank, then the nation’s largest commercial bank with resources of $300’000’000, also represented the interests of the immensely profitable Standard Oil Company, often called “the Mother of Trusts” of which John D. Rockefeller was the largest shareholder. The latter was not (in 1912) a director in a major US financial institution, but his brother William Rockefeller, whose sons married daughters of James Stillman, was. Charles William Harkness, another Standard Oil millionaire, also figures high on the Pujo list.

Altogether the partners of J. P. Morgan & Co and the directors of the First National Bank and the National City Bank (both of New York) then held 341 directorships in 112 of the leading U.S. corporations (banks, insurance companies, public utilities, railroads and industrial enterprises), with an aggregate capitalization of $22’245’000’000*. Such were the findings of the Pujo Committee in 1912 as to the capitalistic power structure which was then tagged “The Money Trust”.

Browse the
new historical list Pujo List - The Money Trust (1912) or other wealth classification lists (1650 to 1950) and read more about the wealthy Americans and wealthy American families of the past at "Encyclopedia of American Wealth ".


* Source of facts and figures : Louis D. Brandeis “Other People’s Money” Chapter II “How the Combiners Combine” (available online at the Louis D. Brandeis School of Law Library web site – courtesy of the University of Louisville : http://library.louisville.edu/law/brandeis/opm-ch2.html)


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Quiz around the telephone - the answers

These are the answers to the Quiz
published in Chronicles of American Wealth Nr 29
with short explanations.
 

1. Who was the inventor of the telephone in America ?

   
a.  Alexander Graham Bell
    b.  Gardiner Greene Hubbard
    c.  Thomas Alva Edison
    d.  Antonio Meucci
    e.  Elisha Gray

In this very controversial case of patent litigation, two conflicting court decisions actually prevented that one of the above (even Alexander Graham Bell) be definitely considered as “the” inventor of the telephone. Technically Antonio Meucci, an Italian immigrant, had developed a device which allowed voice communication at distance already in 1860. He continued to work on it during the 1860s and 1870s and would have probably been able to secure a patent before Alexander Graham Bell, or at least to prevent the latter from securing his. But he lacked the money to do so. Incidentally Bell’s patent was secured in his name by his wealthy father-in-law Gardiner Greene Hubbard. An interesting fact is that Bell worked on his invention in the same (Western Union) laboratory where Meucci before and where the latter’s work was stored. However, whether Bell actually had access to Meucci’s work and used that knowledge to perfect his invention, could never be definitely asserted. In the year 2001, the U.S. House of Representatives passed a resolution (269) which acknowledged Meucci’s role in the invention of the telephone, without actually calling him “the” inventor.

For more detailed explanations, see the article about Antonio Meucci at Wikipedia : http://en.wikipedia.org/wiki/Antonio_Meucci
 


2. Who was the first American telephone millionaire** ?
** Meaning the first to make one million dollars from the telephone business or any share in it.

    a.  Alexander Graham Bell
    b.  Mabel (Hubbard) Bell
    c.  Thomas Sanders
    d.  Elisha Gray
    e. William Hathaway Forbes
    f.  Theodore Newton Vail
    g. John Pierpont Morgan

When the Bell Telephone Company was organized in 1877, 5000 shares were issued to its founders. Alexander Graham Bell then transferred all but ten of his shares to his wife-to-be Mabel Hubbard. With 1497 shares each, she and Thomas Sanders were the largest shareholders, followed by Mabel’s father Gardiner Greene Hubbard (1387 shares) and Thomas A. Watson (499 shares). Thomas Sanders sold his shares for just under $1’000’000 a few years later, whereas Mabel Bell kept her shares which would be worth over $10 million by the 1890s. She was thus the first telephone millionaire, a privilege which could have as well been her husband’s. William Hathaway Forbes also made several million dollars by his investment in the successor firm American Bell Telephone Company. Elisha Gray became a millionaire thanks to his stake in the Western Electric Company that manufactured telephones for the Bell company, which leased them to the users. J.P. Morgan (probably) also made (several) million dollars through his role in introducing the American Telephone & Telegraph Company to the New York Stock Market.


T
hank you for your
interest. Enjoy reading.


D. C. Shouter
December 2006 

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