Men of Wealth (1944) - Ludwig von Mises Institute

510 MEN OF WEALTH
Apparently the simple and direct injunction of Jehovah who
said, "Thou Shalt Not Steal," and of Christ who said, "No man
can serve two masters," did not apply to this pious superman.
He would give praise to the Lord in the twenty-five hymns he
knew by heart but he would make his own rules of behavior.
The other weapon was even more reprehensible and has been
less understood. It is the preferred list. The House of Morgan
when putting out an issue of stocks could allot a few hundred
or a few thousand shares to exalted persons who were useful to
them. Then, when the shares were listed and manipulated into
good prices for distribution on the Exchange, these preferred
persons would reap swift, handy, and rich profits, usually without
putting up a cent. The men who enjoyed these favors were
the presidents of the corporations who had securities to issue
and the banks, trust companies, and insurance companies who
had direct control of funds. Subservience to the House of Morgan
meant continuous access to these pretty profits; disobedience
meant being cut off from them. It was, then, nothing less than
commercial bribery. The Steel Corporation was a Morgan client.
The officers of that corporation were its employees. When they
accepted money favors from Mr. Morgan they were not better
than any small-bore clerk who takes money from the man who
deals with his employer and who can be prosecuted for commercial
bribery.
Mr. Justice Brandeis, in his famous little volume, Other
People's Money, has made the best description of how this
worked:
J. P. Morgan (or a partner), a director of the New York, New Haven
& Hartford Railroad, causes that company to sell to J. P. Morgan &
Co. an issue of bonds. J. P. Morgan & Co. borrow the money with
which to pay for the bonds from the Guaranty Trust Company, of
which Mr. Morgan (or a partner) is a director. J. P. Morgan & Co.
sell the bonds to the Penn Mutual Life Insurance, of which Mr. Morgan
(or a partner) is a director. The New Haven spends the proceeds of
the bonds in purchasing steel rails from the United States Steel Corporation,
of which Mr. Morgan (or a partner) is a director. The United