The Decline of the Investment Banker

Abstract

T he growth of Big Business in the last quarter of the nineteenth century brought to the fore a new figure in American life, the invest ment banker. With the domineering elder J. P. Morgan as prototype, the American investment banker became internationally famous, re vered or reviled, feared or hated, as the very symbol of concentrated economic power. To the press, to congressional committees, to the public at large, it was the investment banker who was the overlord of the new economic order of trusts and banks and imperial adventure and international intrigue. The picture was, as all such pictures must be, somewhat over drawn; but it was not without a solid foundation in the bedrock of economic fact. The investment banker, combining the roles of pro moter, financier, and bond salesman, had been largely instrumental in building up, reorganizing, and consolidating the nation's vast railroad network in the 1880s and '90s. Entering the industrial field after the long depression of the '90s, he was the outstanding figure in the great wave of promotions and combinations that culminated in the crisis of 1907; he took the lead in financing the victors in the World War of 1914-18, during the prosperity of the '20s he again turned his hand to promoting mergers and combinations, with still unconcentrated fields like public utilities, automobiles, food processing, and retail distribu tion as his main sphere of activity, but without in the least neglecting the older fields of railroads and heavy industry. By 1929 he exercised sway over what were absolutely, if not relatively, larger aggregations of capital than ever before. The picture of the investment banker firmly seated on the throne of economic empire has become so deeply implanted in all our minds