J. P. Morgan & Co. declare, in their letter to the Pujo Committee, that “practically all the railroad and industrial development of this country has taken place initially through the medium of the great banking houses.” That statement is entirely unfounded in fact. On the contrary nearly every such contribution to our comfort and prosperity was “initiated” without their aid. The “great banking houses” came into relation with these enterprises, either after success had been attained, or upon “reorganization” after the possibility of success had been demonstrated, but the funds of the hardy pioneers, who had risked their all, were exhausted.
This is true of our early railroads, of our early street railways, and of the automobile; of the telegraph, the telephone and the wireless; of gas and oil; of harvesting machinery, and of our steel industry; of the textile, paper and shoe industries; and of nearly every other important branch of manufacture. The initiation of each of these enterprises may properly be characterized as “great transactions”; and the men who contributed the financial aid and business management necessary for their introduction are entitled to share, equally with inventors, in our gratitude for what has been accomplished. But the instances are extremely rare where the original financing of such enterprises was undertaken by investment bankers, great or small. It was usually done by some common business man, accustomed to taking risks; or by some well-to-do friend of the inventor or pioneer, who was influenced largely by considerations other than money-getting. Here and there you will find that banker-aid was given; but usually in those cases it was a small local banking concern, not a “great banking house” which helped to “initiate” the undertaking.