INDEX
378Abbott, Lawrence, 152
accounting, 108–10, 111–12, 310n.43. See also disclosure
Adams, Alton, 128
Adams, Henry Carter, 20, 21, 87–88
Addams, Jane, 118
advertising securities, 110, 180. See also brokers and brokerage firms; investment
AEA. See American Economic Association Ahnfelt, W.P., 238
Aldrich, Nelson, 114, 155, 172, 218;
and Rockefeller family, 156–57
Aldrich-Vreeland Act of 1908, 168
Allison, William B., 114
Amalgamated Association of Iron, Steel, and Tin Workers, 100
American Bankers’ Association, 260
American Bar Association, 101
American Chicle Company, 72
American corporate capitalism. See corporate capitalism
American Economic Association (AEA), 39, 213;
Saratoga Springs platform, 20–21
American Law Institute, 276
American Law Review, 97
American Smelting and Refining Company, 50, 51
American Sugar Refining Company, 200. See also Havemeyer & Elder; Sugar Trust
American Telephone and Telegraph, annual reports, 111
American Tobacco case, 45
Andrews, Benjamin, 21
anthracite coal miners’ strike of 1902, 148–49
anticipated earnings. See prospective profit
antitrust concerns, 43, 76–77, 97–98, 114
antitrust reform, 115, 121–24, 176–77
311n.2. See also Chicago Conference
on Trusts; federal incorporation;
Hepburn bill of 1908; Littlefield
bill of 1903; railroads, regulation of;
Sherman Antitrust Act of 1890
asset-for-stock transfers, 293n.33, 294n.36. See also mergers
Audit and Appraisement Company of America, 84
Babson, Roger, 249
“baby bonds,” 204
Bacon, Robert, 148
379Badger, Ralph, Valuation of Industrial Securities, 7, 81–82
Baker, George, 168
Baker, Ray Stannard, 92
banking: dealing in securities through affiliates, 5, 93, 245–47, 254;
instability of, and Panic of 1907, 167, 168;
investment banking, 204, 271, 309n.28;
national banks, 101
Banking Committee, jurisdictional fight with Post Office Committee, 228–29.
See also Owen bill of 1914
bank reserves, 198
of Claflin Co., 208, 209, 228, 239, 240;
of Pennsylvania Railroad, 275–76
Baring Magoun & Co., 302-3n.35
Barney, Charles T., 169
Baruch, Bernard, 257
Beef Trust litigation, 158
Belmont, August, Jr., 118
Berle, Adolph, and Gardiner Means, The Modem Corporation and Private Property, 272
“Bill to Provide a Remedy for the Relief of Wronged and Defrauded Shareholders, A” (1915), 263
Bishop, Joseph Bucklin, 132, 153
Bituminous Coal Trade Association, 171
Blue Sky Laws, 264, 326n.17
Bonbright, James C, 300n.13, 304n.44;
and Gardiner C. Means, 293n.33
bonds and bond trading, 106, 245–46, 262;
bondholders as owners of corporations, 83, 181;
and corporate capitalization, 12;
and railroad capitalization, 11, 67, 282-83n.9. See also railroad bonds
bonus stock, 67
borrowing capacity, 198
Boston, 235
Boston News Bureau, 109
Boston Stock Exchange, 11
Boyesen, Hjalmar, 233
Brandeis, Louis D., 50, 126, 234;
British Companies Act of 1900, 175, 179
brokers and brokerage firms, 5, 254–55, 334n.40;
sales techniques of, 204, 245, 247, 252. See also installment plan for selling securities; investment; investment banks
Bryan, William Jennings, 90, 120
Building Material Men’s Exchange, 171
bull markets, 3, 93, 249, 307-8n.10;
Burch, Robert, 271
Bureau of Corporations, 5, 106, 123, 133, 139, 148, 151–52, 154–55, 171;
corporate communications to, 171–72;
Report of 1904, 25, 158, 162–65. See also Nelson amendment
Burton, Theodore, 74
Business Roundtable, 1
Butler, Nicholas Murray, 172
Camden and Amboy Railroad Company, 34–38
campaign contributions, 275
Cannon, Joseph, 140
capital asset pricing model (CAPM), 274–75
Capital Issues Committee (CIC), 6, 255, 257–61, 266
capitalist class, 10
capitalization: dividend rate and, 311n.49; idle capital, 92, 287;
of industrial combinations, 12–13, 47–48, 58 67, 71–72, 284n.12;
versus real capital, 74–75. See also overcapitalization
capitalized earnings approach, 207, 306n.54;
critique of, 82–83, 87, 301n.28;
Meade’s concept of, 81–82, 85, 87, 191, 206. See also valuation of corporate securities
capital markets. See bonds and bond trading; investment; New York Stock Exchange; securities; stock market; stock ownership 380
CAPM. See capital asset pricing model
Carnegie, Andrew, 16, 69, 92, 100, 118;
as industrialist, 10;
as speculator, 282n.8
Carnegie Steel, 9
Carosso, Vincent, 257
cash value of assets approach, 87. See also valuation of corporate securities
CEO turnover rates, 277
CFC. See Civic Federation of Chicago
Chamber of Commerce. See United States Chamber of Commerce
Chandler, Alfred D., Jr., 108, 281n.2, 282-83n.9, 291n.26, 296-97n.3
Charles River Bridge case, 33
Chase, Salmon P., 251
Chicago Board of Trade, 91
Chicago Conference on Trusts: 1899, 117–21, 122; 1907, 172–73
Chicago Daily Tribune, 140, 238
Chicago Exposition of 1893. See World’s Columbian Exposition of 1893
CIC. See Capital Issues Committee
Civic Federation of Chicago (CFC), 118, 121. See also Chicago Conference on Trusts; National Civic Federation
Claflin, H.B., Co. bankruptcy, 208, 209, 228, 239, 240
Clark, John Bates, 20, 21–22, 178, 305n.49
Clayton Antitrust Act of 1914, 115, 139, 243, 262, 266
Columbian Exposition. See World’s Columbian Exposition of 1893
Columbia Straw Paper Co., 52, 332n.24. See also See v. Heppenheimer
Commager, Henry Steele, 81
commerce clause. See interstate commerce
Commerce Department. See Department of Commerce and Labor
Commercial Ó Financial Chronicle, 75, 106, 109
common carriers, ensuring financial viability of, 190. See also Hadley Commission: railroads; Railroad Securities Commission
Commons, John R., 81, 86, 206, 305n.49, 306nn. 53–54
common stock, 4, 72, 92, 196, 262. See also capitalization; investment; overcapitalization; speculation; stock market; stock ownership; stocks; valuation of corporate securities; watered stock
common stockholders, 4, 7, 95–99, 166–67;
prevalence of, 192, 200–203, 250, 253, 255. See also investment; investor protection; middle class; speculation; stock ownership
competition: damaging effects perceived, 3, 9, 16–19, 24–27, 287n.32, 287n.35;
Conant, Charles, 69, 284n.12, 295n.1
conglomeration movement (1960s), 275. See also mergers
Congress, U.S. See United States Congress; United States House of Representatives; United States Senate
conservation of principal, 93. See also investment advice
Consolidated Stock Exchange, 233
Constitution, U.S., 32;
proposed Sixteenth Amendment to, 129, 130. See also antitrust reform; federal securities regulation; interstate commerce; tax
construction companies, 282-83n.8. See also railroads
381Cooper, Francis, 299n.10
cooperation: collective society, 216–17;
Wilson and economic cooperation, 214. See also principle of cooperation
corporate capitalism, 98, 270, 274, 275. See also corporate ownership; finance; speculation; stock market
corporate ownership: cross-holdings of stock, 27, 272, 291-92n.28;
private equity, 343n.16;
securities, 14, 93–94, 191, 195, 279;
separated from control, 274–75, 311-12n.3. See also bonds and bond trading; common stock; holding companies; investment; stock market; stock ownership; stocks; trusts
corporate regulation. See antitrust reform; federal incorporation; securities regulation
corporate responsibility, Wilson’s views on, 216
corporate scandals, 269
corporate structures outside of the United States, 278–79
corporations, boards and interlocking directorates, 271–72;
boards of directors and valuation of, 45–46;
corporate form, 25–27, 123, 214;
giant modern corporation defined, 2–3, 12, 15, 134–35;
ownership of securities by, 26, 28, 31, 42–45;
origins of current system, 6, 8–11, 31–32, 38, 45–47, 57;
short-term focus developing in, 272–73, 275, 277–78;
trusts distinguished from, 123, 293, 312-13n.9. See also holding companies; industrial combinations; mergers; merger wave; New Jersey corporate law; trusts
corporations as persons, 43–44, 292n.31
Corporation Trust Company of New Jersey, 40–41, 46, 54
Cortelyou, George, 168
courts and valuation, 50–54, 85–86. See also Supreme Court, U.S.
Coxey, Jacob, 118
Croly, Herbert, 212, 321n.36
Crozier, Alfred Owen, 224
culture, corporate, 98. See also corporate capitalism
Cummins, Albert, 187
currency reform, 218. See also Aldrich-Vreeland Act of 1908; Federal Reserve Act of 1913
Curti, Merle, 286n.25
Danbury Hatters’ case, 172
Dawes, Charles G., 98
Debs, Eugene, 126
Delano, Frederick, 258
Delaware, State of, 30–31, 38, 40–41;
chartermongering, 125;
corporate franchise tax revenues of, 30
Delaware and Raritan Canal Company, 35. See also Camden and Amboy Railroad Company; Philadelphia and Trenton Railroad
Democratic Party, 128–30, 143–44, 210, 218, 236;
Southern influence on, 129–30, 210–11
Department of Commerce and Labor, 133, 151
Department of Commerce bill, 139, 151–52;
Nelson amendment, 139, 148, 151–52, 154
Depew, Chauncey, 200
depression periods, 41, 169, 193, 200, 235, 237;
foreign dumping of American securities during, 287n.31;
policy shifts and, 237, 238–41;
Dewing, Arthur S., 302nn. 32–33
Dill, James B., 39–42, 53, 74, 160, 294n.36;
on disclosure, 144;
on federal incorporation, 127–28;
Industrial Commission testimony of, 124, 127–28, 144382
disclosure: advocated, 6, 53, 84, 108–9, 133–34, 144–45, 152, 189–90;
inadequate, 106–9, 180, 309n. 35;
proposed requirements for, 125–26, 174, 175, 227–28;
voluntary reporting of, 111, 179. See also accounting; Bureau of Corporations; federal securities regulation; Hepburn bill of 1908; Owen bill of 1914; Taylor bill
dividend rates, and capitalization, 311n. 49
and Benjamin Graham, 205–6, 249
Dodd, Samuel C.T., 28
Donald v. American Smelting and Refining Company, 50–52, 58, 66
Dorfman, Joseph, 286n. 25
Dos Passos, John R., 10, 69–71, 107–8, 124
Dow Industrials, 167
Drew, Daniel, 59
earnings capacity, 305n. 49
Easley, Ralph, 118
E. C. Knight case, 129, 311n. 2. See also interstate commerce
economic growth, 17–19, 90–91, 284;
economic shifts: market bubbles, 3, 269;
prosperity, 41, 90, 92, 114, 219, 242–43, 248, 249. See also bull markets; depression periods
Economic Vigilance Committees, 260
Edwards, George, 281-82n. 4
Elkins Anti-Rebate Act of 1903, 151, 154–55, 322n. 42
Ely, Richard T., 20–23, 285-86n.16, 305-6n.53;
An Introduction to Political Economy, 22–23
employment: by economic sector, 11–12, 92, 283n.11;
increase in, 308n.13; merger wave effect on, 12
Esquerre, Paul-Joseph, 82
European investment in American securities, 70, 199, 282-83n.9. See also foreign securities exchanges; railroad bonds
exchange self-regulation, 179, 227, 259. See also Hughes Committee; New York Stock Exchange
exports, U.S., 91, 243, 249–50
Farrar, James, 223
federal chartering, 163–64. See also federal incorporation
federal franchising, 64–65, 163. See also federal incorporation
federal government, fear of centralized power of, 115–17, 230–31. See also states’ rights
federal incorporation: bills that would enact, 123, 180, 220, 227–28, 324n.57;
corporate inquiries regarding, 171–72;
debate over, 160–61, 186, 234–35;
models of, 115;
movement and advocacy for, 39, 113–15, 127–28, 136–39, 169, 174, 316n.1;
reforms of rejected, 127, 163–64. See also Hepburn bill of 1908; Littlefield bill of 1903; Taft-Wickersham bill of 1910
federal licensing, 163, 164–65. See also federal incorporation
Federal Reserve Act of 1913, 168, 177, 209, 218, 230, 235, 263
Federal Reserve Board, and Capital Issues Committee, 258
Federal Reserve system, 217–18, 243, 258;
and Liberty loan committees, 252
federal securities regulation, 5–6, 56, 261, 262–63, 264–67;
anti-speculation phase of, 5–6, 138, 166, 174, 177–80, 227–28, 263;
antitrust phase of, 5, 115, 121–24, 176–77, 183;
consumer protection phase of, 6, 174–75, 179–85, 189–90, 227–28, 264–65;
and Dennison bill, 265;
and Jones bill, 264;
jurisdiction issues, 175–76, 228–29;
use of postal control, 227–28383
Federal Trade Commission (FTC), 115, 126, 139, 158, 230, 262, 264
Federal Trade Commission Act of 1914, 115, 139, 209, 213, 220–21, 230, 234–35, 238, 257, 262, 266
filing requirements, 174. See also disclosure
finance: dominating business and industry, 12–13, 269, 274–75, 278;
efforts to subordinate to industry, 137–38, 143, 163, 182, 184–85;
rise within industrial capitalism, 44, 60, 163. See also banking; corporate capitalism; mergers; speculation; stock market; stocks
finance capitalism. See corporate capitalism; finance; modern stock market development
financial accounting. See accounting
financial disclosure. See disclosure
financiers, 62. See also investment banks; Morgan, J.P.; promoters
First National Company, 246
Flagler, Henry, 28
Flint, Charles, 10, 58, 74, 306n.55
Forbes, B.C., 142
Ford Franchise Tax Act, 131, 132
foreign securities exchanges, 168
franchise fees and taxes, 38, 290n.19
“franchise value” of railroads, 87–88. See also valuation of corporate securities
Frank Leslie’s Popular Monthly, 39
Frick, Henry, 69, 325n.5
FTC. See Federal Trade Commission
“fusion,” 293n.33. See also industrial combinations; mergers
future earnings. See prospective profit
future profits. See prospective profit
futures contracts, 334n.39
futures trading, 179
Garfield, James R., 158, 161, 171, 323n.44
Garfield Plan. See Bureau of Corporations, Report of 1904; federal incorporation; Roosevelt-Garfield Plan
Gary, Elbert, 118, 124, 196, 325n.5
general incorporation laws, 33
giant modern corporation, 2–3, 12, 15, 134–35. See also corporate capitalism; industrial combinations
Glass-Steagall Act of 1933, 168, 246, 254
Goldman Sachs and Company, 72
“good faith” rule, 49–50. See also New Jersey corporate law; stock-for-property provision; valuation of corporate securities
goodwill: valuation of, 52, 72, 75, 83–84, 86, 303n.38. See also New Jersey corporate law; stock-for-property provision; valuation of corporate securities
Graham, Benjamin, and David Dodd, Security Analysis, 205, 207, 249, 299n.9
Grandy, Christopher, 289n.9, 289n.14
Grange movement, 288n.41
Great Crash of 1929, 7, 268, 269
Grosscup, Peter S., 97–98, 100
Guggenheimer and Untermyer firm, 220
Hadley, Arthur, 23, 82, 133, 282-83n.9, 306n.54;
Economics, 188;
Railroad Transportation, 188
Hadley, Morris, 188
384Hamilton, Alexander, 34
Hamlin, C.H., 258
Hanna, Marcus, 114, 132, 140, 153
Harrison, Benjamin, 121, 143–44
Havemeyer, Henry O., 28, 62–64, 106, 108, 124, 299–300n.12. See also Sugar Trust
Havemeyer & Elder, 62, 64. See also Sugar Trust
Head, Franklin H., 119
Heinze, F. Augustus, 168
Hepburn bill of 1908, 157, 169–70;
origins of, 172–73, 325-26n.10;
Hewitt, Abram, 100
Hill, James J., 193
Hilt, Eric, 311-12n.3
Hitchcock, Gilbert, 228
Hoar, George, 151
Hofstadter, Richard, 96
holding companies, 31–32, 43–45, 47;
holding company act of 1892, 56, 293n.33. See also corporations; mergers; New Jersey corporate law; trusts
House Banking and Currency Committee, 217
House Resolution 405, 222, 223. See also Pujo Committee
Hovenkamp, Herbert, 289n.6, 293n.33, 311n.2
Howe, William, 121
Hughes, Charles Evans, 177, 220
Hughes Committee, 167, 177–80, 229, 230
IBA. See Investment Bankers’ Association
ICC. See Interstate Commerce Commission
indirect securities ownership, 203–4. See also institutional investors; investment; stock ownership
individualism, 10–11, 16–17, 18–19, 216;
Jeffersonian ideal of, 97–99, 215–16;
Woodrow Wilson’s ideal of, 214–16
industrial capitalism: competition viewed as damaging, 3, 9, 17–19, 24–27;
overbuilding, 24–25, 57. See also competition; industrialization; industry
industrial combinations, 12–13, 288n.41. See also holding companies; mergers; trusts
Industrial Commission, U.S., 46, 86–88, 96–97, 106, 117, 123;
report of, 25, 125–28, 136, 291n.26, 294n.36;
role in corporate regulation, 124–26
industrialization, 8, 11–12, 204, 285-86n.16. See also capitalization
industry: health and growth of, 182;
instability: of banking system, 167, 168;
of securities markets, 3, 6, 61, 206, 248
installment plan for selling securities, 106, 204, 252, 253. See also brokers and brokerage firms; investment
institutional economics, 305n.49
institutional investors, 101, 102, 203–4
insurance companies, 101, 102, 203–4, 309n.25, 330n.19
intangible assets, 299n.10, 304n.47. See also goodwill; prospective profit; valuation of corporate securities
intangible value. See goodwill; prospective earnings
intercorporate investments, 27
International Paper Co., 74
interstate commerce: limitations on federal control, 113, 129, 146;
securities regulation and, 175. See also E. C. Knight case; federal securities regulation; Supreme Court
Interstate Commerce Act of 1887, 183
385Interstate Commerce Commission (ICC), 23, 139–41, 185, 190, 209, 235, 237, 241–42, 263
interstate commerce tax, 190
interstate corporations, 32, 137, 175, 291n.27
investment: advocacy of broad-based, 99–101;
as antidote to socialism, 99–103;
as civic ideal, 99;
increase in small investors, 204–5;
and individual initiative, 97–99;
on installment plan, 204, 252, 253;
and labor theory of value, 98–99;
prewar, 330n.23;
shift to capital gains, 205–8;
short-term approach, 272–73, 275, 277–78;
as solution to labor problem, 100;
speculation distinguished from, 93–94, 105–6, 193–96, 205;
worker participation in industry, 96–97. See also bonds and bond trading; brokers and brokerage firms; insurance companies; national banks; speculation; stock ownership
investment advice, 93, 110, 195, 197–98;
pundits and columns, 197, 238, 249, 255, 340n.22
Investment and Speculation column, 197
Investment Bankers’ Association (IBA), 237, 257, 267
investment banks, 204, 247, 251–52, 259. See also brokers and brokerage firms
investor protection, 6, 43, 175, 180–84, 190, 261, 263–64, 303n.38;
Wilson and, 217, 229, 266. See also federal securities regulation; securities regulation
James, E. J., 20
Jeffersonian ideal, 97–101, 104;
Wilson and, 214–15. See also investment
Jenks, Jeremiah Whipple, 84, 120, 133, 154, 175, 311n.2;
The Trust Problem, 62
Joint Companies, 35. See also Camden and Amboy Railroad Company
Jones, John Marvin, 264
J.P. Morgan and Company, 31–32, 235–6;
fee paid for U.S. Steel deal, 32, 69. See also Morgan, J. P.
judicial methods of valuation, 78–80, 85–86, 304n.44. See also New Jersey corporate law; valuation of corporate securities
Kansas City Gas Company, 109
Kelsey, Henry, 40
Keynes, John Maynard, 16, 270–71, 342n.1
Kidder, Peabody & Co., 204, 227
Kitchin, Claude, 143
Knickerbocker Trust Company, 168
Knox, Philander, 88, 127, 135, 146, 149, 150–51, 163, 316n.47, 320n.27; on capitalizing earnings, 88. See also Littlefield bill of 1903; Roosevelt, Theodore
Kohlsaat, Hermann, 131
Kolko, Gabriel, 282n.6, 302n.32, 324-25n.3
labor: anthracite coal miners’ strike of 1902, 148–49;
“harmony” of capital and, 100;
Laffan, William, 153
laissez-faire, 15–17, 20, 285n.16
Lamont, Thomas, 236
Lamoreaux, Naomi, 296n.3
Landis, Kenesaw Mountain, 168
Larner, Robert, 272
Lee, Higginson & Co., 204, 227
legislative approaches to valuation, 86–88. See also valuation of corporate securities
Lehman Brothers, 72
Leventritt, David, 178
Lewisohn, Leonard, 51
386Liberty Bonds, 5, 7, 247, 250–54, 267, 339n.6, 339n.12;
spurring securities sales, 252–57. See also World War I
life insurance as savings, 330n.19
Lippincott’s Monthly Magazine, 105–6
Littlefield, Charles Edgar, 135, 140–41, 151–52, 157, 170, 175
Littlefield bill of 1903 (H.R. 17), 135, 139–40, 141–44;
anti-rebate provisions, 321n.36;
Committee Report on, 88, 129–30, 141, 144–45;
as federal incorporation, 139–40;
issues and debate over, 142–46, 175;
political shifts away from, 146–52;
Roosevelt’s shifting position on, 146–52, 157;
and Standard Oil, 156–57, 321n.39;
Livermore, Shaw, 61, 298n.8
Lodge, Henry Cabot, 148, 151, 315n.38
Los Angeles Times, 238
Lough, William T., 304n.47
Low, Phillip, 123
Low, Seth, 170, 172–75, 325nn. 9–10
Luce, Cyrus G., 121
Lyon, Hastings, 302n.49
Madison, James, 32
managers, corporate: attitudes of CFOs, 1, 278;
CEO turnover, 277;
managerial era of, 271–74, 275;
short-term incentives, 277–78;
stock options, 277
Mann-Elkins Act of 1910, 177, 180, 185–86;
corporate finance provisions, 186–88
Manning, Bayless, and James J. Hanks, 300n.16
market behavior: long-term investment, 270, 272;
periods of instability, 3, 6, 61, 206, 248;
short-term investment focus, 1–2, 92–93, 272–73, 275, 277–78. See also bonds and bond trading; investment; Panic of 1907; stock market
“Marriage Act” of 1831, 35
Massachusetts corporate law, 41–42, 56, 127, 158
matched orders, 326n.22
McAdoo, William Gibbs, 70, 211, 218, 242, 250–52, 257, 260, 267
McClure’s Magazine, 98
McCormick, Cyrus, 118
McDermott, Allan L., 40
McKinley, William, 90, 117–18, 121, 127, 153;
antitrust effort and, 121–22, 313n.10, 314n.25
Meade, Edward, 12, 64, 69, 92;
on capitalized earnings, 81–82, 85, 87, 191, 206, 302n.33;
on stock promotion, 100–101, 302n.33;
on types of investment, 104–5. See also capitalized earnings approach; overcapitalization; valuation of corporate securities
Mellon, Andrew, 167
and capitalization of industrial combinations, 12–13, 26, 47–48, 67, 71–72, 284n.12;
efficiency gains from, 85, 284n.12;
prohibition of interstate, 44;
transactions distinguished from, 292-93n.33. See also asset-for-stock transfers; conglomeration movement; industrial combinations
merger wave: causes of, 295-97n.3;
overcapitalization and, 57, 71–72, 93–94;
period of, 12–13, 94–95, 283-84n.12;
rise of finance and, 2–3, 11–13, 41, 44, 45, 56, 93, 192, 261. See also watered stock
middle class, 9–10, 93–94, 96–98, 103, 191, 193, 200–202, 204, 247, 250, 255. See also common stockholders; investment; investment advice; investor protection; stock ownership
387Mill, John Stuart, 20
misleading disclosure, 109–11. See also disclosure
Mitchell, Charles E., 5, 245–47, 252–53, 254–55, 260, 338-39n.6
modern stock market development: emergence, 2–5, 92–95, 100–101;
merger wave phase, 11–13, 41, 44, 45, 56, 192;
shift to a capital gains orientation, 105, 194–97, 199–200. See also federal incorporation; investment; middle class; stock market; stock ownership
Money Trust, 167, 193, 219, 223, 226, 264. See also Pujo Committee
elimination of advocated, 120–21;
finance as the cause of, 145;
goal of controlling, 134–35, 137, 162;
natural monopolies, 138, 183, 304n.43;
overcapitalization and, 61, 68–69, 77–78. See also antitrust concerns; trusts
Moody, John, 41, 109, 197, 296n.3;
The Truth About the Trusts, 12
Moore & Schley, 169
Morawetz, Victor, 173
Morgan, J.P., 69, 73, 271–72, 282n.8, 295n.2;
contrasted with industrialists, 10;
disclosure efforts of, 111;
efforts during Panic of 1907, 168–69;
Money Trust and, 219;
New York Sun and, 153;
New York Times and, 161;
and response to Northern Securities litigation, 127, 153;
Roosevelt’s relationship with, 127, 153, 318-19n.21, 319n.22;
shipping trust failure and, 168;
speculation and, 57, 282n.8;
U.S. Steel and, 31–32. See also J. P. Morgan and Company; U.S. Steel
Morse, Charles W., 168
mutual funds, 278
Nasaw, David, 282n.8
National Association of Blue Sky Commissioners, 260
National Association of Manufacturers, 288n.41
National Banking Act, 102, 138, 224, 246
National Bank of Commerce, 168
national banks: as investors, 101;
securities affiliates of, 245–46. See also institutional investors
National Business Men’s League, 119
National Civic Federation (NCF), 118, 170, 172;
and Chicago Conference on Trusts (1907), 172–73;
data on distribution of shareholdings, 202–3;
Distribution of Ownership in Investments Subcommittee, 201;
and Hepburn bill of 1908, 170, 172–73. See also Civic Federation of Chicago
national incorporation law. See federal incorporation
natural monopolies, 138, 183, 304n.43
Navin, Thomas R., and Marian V. Sears, 281n.2, 284n.12, 294n.36, 299-300n.12, 300n.18, 301n.29
NCR See National Civic Federation
Nelson, Knute, 71
Nelson, Ralph, 12, 292n.3, 297n.3
Nelson amendment, 139, 148, 154;
Roosevelt’s support of, 151–52, 155–57, 322n.42. See also Littlefield bill of 1903
historiography and Rockefeller, 321n.39
New Deal securities acts, 7, 106, 112, 234, 341n.33. See also federal securities regulation; Securities Act of 1933; Securities Exchange Act of 1934
“New Era,” 194
New Jersey, State of: chartermongering, 125, 160;
and corporations, 34–42. See also New Jersey corporate law
New Jersey corporate law, 31–32, 34–38, 56, 291n.27, 2920.32, 294n.36;
1896 revision, 42, 46, 48, 50, 54;
holding company act, 42, 43, 53, 290n.22;
law protecting stockholders, 54–55;
registered offices of corporations, 54;
“Seven Sisters Act” of 1913, 86;
stock-for-property act, 45–48. See also Corporation Trust Company of New Jersey; Dill, James B.388
New Jersey courts and corporate valuation, 48–54;
Court of Errors and Appeals, 39
New Jersey Railroad and Transportation Company, 36. See also Camden and Amboy Railroad Company
New York, as world’s financial capital, 200, 249
New York Business Companies Act of 1900, 154
New York Central Railroad, 200
New York Governor’s Committee on Speculation in Securities and Commodities. See Hughes Committee
New York Stock Exchange (NYSE): assets of, 233;
closing and reopening during World War I, 5, 241–43;
data on, 343n.14;
enforcement issues regarding, 167, 178–79, 233–34;
financial disclosure requirements, 68, 108–9, 126;
opposition to the Owen bill, 229–31, 232–34;
proposed incorporation of, 229–34;
turnover rate on, 1, 277–78. See also Hadley Commission; Owen bill of 1914; Pujo Committee
New York Sun, 153
New York Times, 99–100, 103, 119, 149, 151;
on federal incorporation, 149, 151, 158, 160–61;
and J. P. Morgan, 161
New York University, school of accounting, 109
nonvoting stock, 272
no-par stock, 64, 300n.13
North, S.N.D., 124
Northern Pacific Railroad, 193
Norihern Securities case, 44–45, 149, 153, 163
Northern Securities Holding Company, 127
Norton, J. Pease, 107
not-for-profit corporations, 174, 335-36n.50
Noyes, Alexander D., 73, 90–91, 109, 110, 267;
on investment history, 194, 198–99, 249;
on reform history, 219
NYSE. See New York Stock Exchange
Ochs, Adolph, 161
Ohio corporate regulation, 28, 287-88n.38
Ohio Supreme Court, 29
O’Sullivan, Mary, 298n.9
overbuilding, 24–25, 57, 287n.32
overcapitalization, 56, 58–61, 88–89, 298nn. 7–8;
antitrust and, 76–78, 123–24, 137–38;
damaging aspects identified, 76–77, 181, 189–90, 302n.32;
idle capital and, 92;
as legitimate problem, 61;
and merger wave, 57, 71–72, 93–94;
monopoly power and, 61, 68–69, 77–78;
prevention efforts, 127, 137–38, 144–45, 186;
as principal trust “evil,” 144;
promoters’ incentives and, 69, 73–74;
retained earnings to reduce, 72;
valuation and, 298-99n.9. See also antitrust concerns; capitalization; federal incorporation; federal securities regulation; finance; merger wave; promoters; valuation of corporate securities; watered stock
overcapitalization tax proposal, 141–42
Owen bill of 1914, 201, 219, 341n.33;
exchange incorporation provisions, 227–33;
support shift away from, 209, 235, 236, 239–41. See also federal securities regulation; New York Stock Exchange; Pujo Committee; Untermyer, Samuel389
Pacific Stock Exchange, 167
paid-in-capital, 65, 85–86. See also par value of stock
Palmer, A. Mitchell, 266
Palmer, Bradley, 264
Panic of 1893, 41
Panic of 1903, 4
Panic of 1907, 4, 6, 76, 95, 102–3, 136, 262, 324-25n.3;
extent and effects of, 167–69;
securities regulation spurred by, 166, 175, 263. See also securities regulation
Parker-Gwin, Rachel, and William G. Roy, 291n.27
Parrish, Michael, 341n.33
par value of stock, 64–66, 190, 300nn.13–14, 300n.16
patents, as cause of trusts, 122–23
Pennsylvania coal strike, 148–49
Pennsylvania Railroad, 95, 105
Perkins, George, 118, 153, 325n.5
petroleum industry, 27. See also Standard Oil Company
Philadelphia and Trenton Railroad, 36. See also Camden and Amboy Railroad Company
physical valuation. See tangible assets; valuation of corporate securities
Pillsbury, Charles A., 75
Platt, Orville, 114, 321n.39
Populist movement, 288n.41
portfolio managers, 277
portfolio theory, 274
Post Office Committee, jurisdictional fight with Banking Committee, 228–29. See also Owen bill of 1914
preferred stock: decline in relation to common stock, 203;
as investment, 105, 192, 195, 205;
tangible assets represented by, 67, 71–73, 74–75;
as used in acquisitions, 67, 71–73. See also investment; overcapitalization; stock ownership; valuation of corporate securities
principle of cooperation, 19–25
private equity, 343n.16
profit-sharing plans, 100
Progressive Era, 6, 56, 96, 209–11, 241
progressive ideals of stock ownership, 95”99
progressivism, 6, 95–99, 118, 126, 153–54, 189, 209, 211–15, 31, 235, 265–66;
promoters, 47, 51, 57, 62, 64, 68, 306n.55;
property: rights derived from social organization, 21;
stock as replacing land, 97–99, 104, 215;
Taft’s belief in the sanctity of, 181–82. See also Jeffersonian ideal
property rights, 21. See also property
prospective earnings: earnings capacity, 305n.49;
shift to capital gains orientation, 105, 194–97, 199–200. See also valuation of corporate securities
prospective profit, 52, 78, 270–71, 276;
methods of valuation, 79, 80, 86. See also prospective earnings; valuation of corporate securities
prosperity, 41, 90, 92, 114, 219, 242–43, 248, 249
publicity. See disclosure
Pujo Committee, 167, 193, 219, 221–22, 224–26. See also Owen bill of 1914; Untermyer, Samuel
Pure Food and Drug Act, 265
pyramiding, 272. See also holding companies
390railroad bonds, 18, 67, 70, 93, 182, 190, 192
railroad rates, 24–25, 26, 80, 146, 235, 242, 306n.54
railroads: construction and overbuilding of, 18, 24–25, 287n.32;
and construction companies, 282-83n.8;
corporate forms of, 26–27, 35;
disclosure by, 108;
as natural monopolies, 138, 183, 304n.43;
and rebates and tax exemptions, 146, 289n.14;
regulation of, 108, 114, 138, 142, 151, 165, 180, 183–91, 209, 236–38;
and trusts, 25, 287n.33. See also Elkins Anti-Rebate Act of 1903; Rayburn bill
Railroad Securities Commission, 188. See also Hadley Commission
railroad stocks, 59, 79, 92, 93, 167, 283n.9;
capitalized earnings and, 87;
control and, 11;
Raum, John, 36
Rayburn bill, 209–10, 232, 236, 237–38, 242. See also railroads, regulation of
Reed, Robert, 267, 341n.35
reinvesting earnings, “squeezing out the water,” 303n.39
Report on the Littlefield bill, House Judiciary Committee, 129–30, 141, 144–45. See also antitrust reform; federal incorporation; Littlefield bill of 1903
reproduction cost method of valuation, 87. See also valuation of corporate securities
Republican Party, 114, 150, 211, 318n.14
Ricardo, David, 20
Rich Man’s Panic. See Panic of 1903
Ripley, William Z., 111;
critique of capitalized earnings approach, 82–83
Rockefeller, John D., 9, 27–28, 124;
efforts during Panic of 1907, 169;
federal incorporation and, 127, 159–60;
Industrial Commission testimony, 159, 160;
opposition to antitrust reform, 156–57;
trust creation, 27–29. See also Standard Oil Company; trusts
Rockefeller, William, 225
Rogers, H.H., 51
Roosevelt, Franklin D., 219, 267;
New Deal securities acts, 7, 106, 112, 341n.33;
and Untermyer, 219
Roosevelt, Theodore: and anthracite coal miners’ strike, 148–49;
appointment of Garfield, 323n.44;
and “best men” theory of leadership, 148;
criticism of, 166;
and Hepburn Act of 1906, 169;
and Hepburn bill of 1908, 170, 172–74;
and investor protection, 176, 183;
and Mann-Elkins Act, 185;
Pittsburgh speech (Knox), 320n.27;
political pressure on, 152–53, 155;
position on trusts, 127, 130–33, 170, 325n.9;
pursuit of executive power, 115, 116, 155, 157–58, 173, 315n.38, 319n.24;
regulatory policy of, 133–35, 170;
and relationship with Mark Hanna, 132, 140;
and relationship with Littlefield, 146, 149–51;
and relationship with Morgan, 127, 153, 318-19n.21, 319n.22;
and relationship with Wall Street, 153, 318-19n.21;
and Rockefeller telegrams, 156–57;
self-identification with Lincoln, 148, 170, 319n.21;
shifting position on Littlefield bill, 146–52, 157, 320n.28, 322n.42;
supporting the Nelson amendment, 151–52, 155–57, 322n.42;
Roosevelt-Garfield Plan, 161–62. See also Bureau of Corporations
Rubber Goods Manufacturing Co., 74, 306n.55
rule of reason, 209, 267. See also Sherman Antitrust Act of 1890; Supreme Court
391savings banks, 101.
See also institutional investors
Schiff, Jacob, 198
Scott, Tom, 27
Seager, Henry R., and Charles A. Gulick, Jr., 71, 73, 293n.33, 301n.28
Sears, Marian V., 298n.8, 300n.18
Sears, Roebuck & Company, 72–73, 204
“Second New Era,” 207
securities, corporate ownership and, 93–94. See also bonds and bond trading; holding companies; New Jersey corporate law; preferred stock
Securities Act of 1933, 263. See also New Deal securities acts
Securities and Exchange Commission, 6, 197, 275–76
Securities Exchange Act of 1934, 6, 197, 234. See also New Deal securities acts securities regulation, 5–6, 176–77, 183, 229, 262–63;
speculation as accepted aspect of, 264–68. See also antitrust reform; federal incorporation; federal securities regulation; investor protection; Owen bill of 1914
securities sales, spurred by Liberty bonds, 250, 252–57. See also brokers and brokerage firms; installment plan for selling securities; investment; Liberty bonds; promoters
security capitalism, 281-82n.4
See v. Heppenheimer, 52–54, 58, 86
Seligman, Edwin R.A., 19, 20, 21, 23, 201, 329n.15
seller of securities, 47
“Seven Sisters Act” of 1913, 86. See also New Jersey corporate law; valuation of corporate securities
Sharpe, William, 274
Sherman Antitrust Act of 1890, 5, 26, 38;
commerce clause, 130;
rule of reason under, 209, 267;
suits brought under, 127;
Supreme Court interpretations of, 44–45, 113, 117, 135, 172, 209, 267, 311n.2. See also antitrust reform; E. C. Knight case; federal incorporation; interstate commerce
Shiller, Robert, 342n.1; Irrational Exuberance, 271
short selling, 179
short-term investment focus, 1–2, 92–93, 272–73, 275, 277–78
Sinclair, Upton, 39
Sixteenth Amendment (proposed), 129–30, 317n.4
Sklar, Martin, 172, 213, 215, 282n.6
small stockholders. See common stockholders; investment; stock market
Smiley, Gene, 285n.14
Smith, Charles Sprague, 178
Smith, Herbert Knox, 171
Sobel, Robert, 193
socialism, stock ownership and the antidote to, 101–3
Society for the Establishment of Useful Manufactures, 34, 41
South Dakota, State of, chartermonger, 41
South Improvement Company, 27
speculation, 3, 94, 104–5, 279;
increase in common stockholding and, 200–205, 270, 277;
linked with instability, 167;
perfection of techniques during the 1920s, 247;
postwar transition (“Second New Era”), 205–8, 261–62;
sell-off fears, 248;
shift to capital gains orientation, 105, 194–97, 199–200. See also Hadley Commission; Hughes Committee; Owen bill of 1914;
Panic of 1907
Spooner, John C., 114
Standard Oil case, Standard Oil Co. of New Jersey v. United States, 45, 136
Standard Oil Company, 9, 28, 29, 38, 117;
anticompetitive tactics, 287-88n.38;
Ohio court antitrust ruling regarding, 29;
opposition to Littlefield bill, 156;
railroads and, 16;
reorganization of, 44;
state antitrust laws, 38, 311n.2
state corporate chartering: charter-mongering, 41, 55–56, 125;
regulatory power, 26, 32–33, 38;
special charters, 32–33. See also by state (e.g., New Jersey corporate law)
state securities regulation. See Blue Sky Laws
states’ rights, 130, 161–62, 215–16, 230–31, 312n.5;
antitrust reform and, 116–17, 128–30, 161. See also interstate commerce
Steffens, Lincoln, 39, 55, 128
Stetson, Francis Lynde, 124, 173
Stigler, George J., and Claire Friedland, 297n.3
Stillman, James, 168
stock, no-par stock, 64, 300n.13
stock-for-property provision, 45–48, 68;
judicial interpretation of, 48–54. See also New Jersey corporate law; valuation of corporate securities
stock-for-services, 68, 294n.36
stockholder: limited liability of, 48–49;
shareholder voting, 196, 272, 276, 328n.4. See also investment; stock ownership
stock market: emergence of the modern, 2–5, 92–95, 100–101, 103, 200–204;
incorporation of exchanges proposed, 229–34;
trading volume and swings, 13, 159, 167, 237, 248, 254. See also brokers and brokerage firms; investment; modern stock market development; New York Stock Exchange; stock ownership; stocks
stock options, 273
stock ownership: advocacy of broad-based, 99–103, 104 (see also common stockholders); corporate cross-holdings, 27, 272 (see also corporations; holding companies); institutional investors, 101, 102, 203–4;
short-term stockholdings, 277–78;
wealth concentration and, 101–2, 273. See also investment
stock promoter. See promoters
stocks: growth stocks, 207;
as primary corporate concern, 276;
separate from industrial concerns, 274;
stock options, 68;
trading in unlisted, 243. See also common stock; investment; preferred stock; stock ownership; valuation of corporate securities
Stockton, Robert Field, 35
stock watering. See overcapitalization; watered stock
stratification of wealth, 101–2
Street, The, 247, 340n.22
Strouse, Jean, 301n.21
Sugar Trust, 28, 55, 122, 299-300n.12;
valuation of, 62–64. See also Have-meyer, Henry O.
Sumner, William Graham, What Social Classes Owe to Each Other, 16
“Sunshine Charley.” See Mitchell, Charles E.
super-voting stock, 272
Supreme Court, U.S.: American Tobacco case, 45;
court rulings, 16, 33, 49, 130, 164, 209, 285n.16;
E. C. Knight case, 129, 311n.2;
Northern Securities case, 44–45, 149, 153, 163;
sanctioning value of goodwill, 86–87, 303n.38;
on the Sherman Antitrust Act, 44–45, 113, 117, 135, 172, 311n.2;
Standard Oil case, 45, 136. See also interstate commerce
Swaine, Robert, 287n.32
393Taft, William Howard, 180–81, 191, 224–25, 237, 326-27n.24;
antitrust efforts of, 182, 327n.28;
on bondholders as corporate owners, 181;
on finance versus industry, 182;
on investor protection, 181–83;
on securities regulation, 182;
Taft-Wickersham bill of 1910, 180, 182
tangible assets, 299n.10, 305-6n.53. See also valuation of corporate securities
tariffs, 314n.20; as cause of trusts, 122–23, 144, 146
tax, federal power to, 129, 146
taxation of corporations, 30, 38, 54, 122;
interstate commerce tax, 190;
tax exemptions for corporations, 34–35
Taylor, Edward Thomas, 264
Taylor bill, 265, 341n.35
Teapot Dome scandal, 267
Temporary National Economic Committee, 272
Tennessee Coal, Iron & Railroad Company, 169, 325n.5. See also Panic of 1907; U.S. Steel
Thompson, Huston, 264, 265, 266–67
Thorelli, Hans, 12, 286n.25, 322n.42
“tipster reports,” 110
transparency. See disclosure
“true-value” rule, 48–49, 51. See also New Jersey corporate law; valuation of corporate securities
trust companies, investments of, 101–2
“trust fund doctrine,” 49
trust promoter. See promoters trusts, 9, 12, 23, 27–29, 31, 38, 44, 55, 62, 82–83, 117–121, 122, 130–31, 144–45, 162, 187, 312-13n.9;
corporations distinguished from, 123, 293n.33, 312-13n.9;
defined, 312n.9;
federal power to regulate, 128–30, 146, 175 (see also interstate commerce); holding companies distinguished from, 31, 44, 293n.33, 312-13n.9;
monopolies distinguished from, 23, 120;
railroads and, 25, 287n.33;
Standard Oil and, 27–29. See also antitrust concerns; Chicago Conference on Trusts; federal incorporation; interstate commerce; Littlefield bill of 1903;
McKinley, William; Money Trust; Roosevelt, Theodore; Standard Oil Company; Sugar Trust; Supreme Court
Truth-in-Securities Act of 1933, 341n.33. See also Securities Act of 1933
Tsuk Mitchell, Dalia, 328n.4
turnover rates of stock, 1, 277–78, 308n.11. See also CEO turnover rates
underwriters, 302-3n.35, 306n.55
Union Pacific Railroad, 167
United Copper Company, 168
United Fruit Company, disclosure reports, 111
United Railroads and Canal Companies. See Camden and Amboy Railroad Company
United States Chamber of Commerce, 260
United States Congress, 86, 88, 116, 128–30, 210–11. See also specific bills, committees, reports and acts
United States Constitution. See Constitution, U.S.
United States Flour Milling Co., 74–75
United States government. See specific bodies and agencies
United States House of Representatives, challenge for speakership by Little-field, 140. See also House Resolution 405;
Littlefield bill of 1903;
Pujo Committee; United States Congress
United States Senate, leadership of, 114, 150. See also Banking Committee; Hepburn bill of 1908; Owen bill of 1914; United States Congress
United States v. E. C. Knight Company, 129, 311n.2
394Untermyer, Samuel, 50, 52, 70–71, 160, 218, 267;
as counsel to the Pujo Committee, 221–25, 233;
on exchange incorporation, 229–30;
and Franklin D. Roosevelt, 219;
on Morgan resignations, 236;
personal characteristics of, 220–24;
press coverage of, 225;
as trust promoter, 52, 70, 220;
Wilson and, 221, 332n.20. See also Donald v. American Smelting and Refining Company; federal incorporation; federal securities regulation; Owen bill of 1914; Pujo Committee; See v. Heppen-heimer
U.S. Steel, 31, 39, 92, 167, 303n.39;
acquisition of Tennessee Coal & Iron, 169;
disclosure reports, 111;
overcapitalization of, 68–69, 303n.39;
profit-sharing plan, 100
valuation of corporate securities, 13, 45–50, 61–62, 126, 299n.6;
economic approaches to, 81–85, 301n.28; “good faith” rule, 49–50;
of individual companies, 72–75;
legislative approaches to, 86–88; “true value” rule, 48–49, 52;
valuation theory, 206–7, 298-99n.9, 299n.10 (see also Fisher, Irving; Meade, Edward; Veblen, Thorstein). See also capitalized earnings approach; goodwill; New Jersey corporate law; overcapitalization; par value of stock; prospective profit; stock-for-property provision
Vanderbilt, Cornelius, 59
Vanderlip, Frank, 99, 245, 253, 256
Veblen, Thorstein, 13–15, 62, 194, 196, 206, 305n.49, 306n.54
Villard, Oswald Garrison, 178
Virginia Editorial Association, Wilson’s speech to, 239–41
voting trusts, 272
Wall Street, 247, 248–49, 258, 259, 318-19n.21. See also Morgan, J.P.; New York Stock Exchange; stock market
Wall Street Journal, 99, 109, 199, 201, 235, 249, 301n.21;
editorial positions, 238;
Investment and Speculation column, 197;
Untermyer’s criticism of, 225–26
War Finance Act, 251
War Finance Corporation, 257, 259
War Loan Organization, 252
Warshow, H.T., 103
wash sales, 326n.22, 335n.46
watered stock, 58–61, 64–68, 93, 190–91, 302n.33;
as cause of instability, 3, 61;
recommended prohibitions against, 127;
“squeezing out” the water, 72. See also overcapitalization
Watergate investigation, 275
Weinstein, James, 282n.6
Westinghouse Electric and Manufacturing Company, 168
Weston, J. Fred, 296n.3
West Virginia, State of, chartermonger-ing, 38, 40, 125, 160
wheat prices, 91
Wheeling (West Virginia) Register, 160
White, Andrew, 20
White, Horace, 178
Wickersham, George, 53–54, 185, 225
Wiebe, Robert, 96, 282n.6
Williams, John Sharp, 143, 324n.2
Wilson, Woodrow, 6, 20, 22, 123, 126, 211–12, 267;
and abandonment of business regulation, 238–41;
and pragmatic progressivism, 213–16;
psychologizing economy, 238–41;
regulatory approach of, 16, 22, 31, 190, 210, 217, 229, 265–66;
securities regulation and, 209–10, 235–37;
Virginia Editorial Association, speech to, 239–41;
What Jefferson Would Do, 215395
Wood, Howard K., 54
Wooten, Dudley G., 120
world commodity prices, 91–92, 249–50
World’s Columbian Exposition of 1893, 8, 36
World War I, 250;
NYSE closing and reopening during, 5, 241–42. See also Capital Issues Committee; Liberty Bonds; McAdoo, William Gibbs