I
The term "high finance" derives its origin from the French "haute
finance," which in France as elsewhere in Europe designates the most
eminently respectable, the most unqualifiedly trustworthy amongst
financial houses.
Why has that term, in becoming acclimated in this country, gradually
come to suggest a rather different meaning?
Why does there exist in the United States, alone amongst the great
nations, a widespread attitude of suspicion, indeed in many quarters, of
virtual hostility, toward the financial community and especially toward
the financial activities which focus in New York, the country's
financial capital?
There are a number of causes and for some of them finance cannot be
absolved from responsibility. But the primary underlying and continuing
cause is lack of clear appreciation of what finance means and stands for
and is needed for. And from this there has sprung a veritable host of
misconceptions, prejudices, superstitions and catch-phrases.
Never was it of more importance than in the present emergency that the
people should have a clear and correct understanding of the meaning and
significance of finance, indeed of "high finance," and that they should
approach the subject calmly and dispassionately and with untroubled
vision, for when the European war is over and the period of
reconstruction sets in, one of the most vital questions of the day will
be that of finance and financing.
The handling and adjustment of that question, although it primarily
concerns Europe, cannot fail to affect America favorably or unfavorably,
according to the wisdom or lack of wisdom of our own attitude and
actions.
A great many things are being and have been charged in the popular view
against finance, with which finance, properly understood, has nothing to
do.
The possession of wealth does not make a man a financier--just as little
as the possession of a chest of tools makes a man a carpenter.
Finance does not mean speculation--although speculation when it does not
degenerate into mere gambling has a proper and legitimate place in the
scheme of things economic. Finance most emphatically does not mean
fleecing the public, nor fattening parasitically off the industry and
commerce of the country.
Finance cannot properly be held responsible for the exploits, good, bad
or indifferent, of the man who, having made money at manufacturing, or
mining, or in other commercial pursuits, blows into town, either
physically or by telephone or telegraph, and goes on a financial spree,
more or less prolonged.
Finance means constructive work. It means mobilizing and organizing the
wealth of the country so that the scattered monetary resources of the
individuals may be united and guided into a mighty current of fruitful
co-operation--a hundredfold, nay ten-thousandfold as potent as they
would or could be in individual hands.
Finance means promoting and facilitating the country's trade at home and
abroad, creating new wealth, making new jobs for workmen.
It means continuous study of the conditions prevailing throughout the
world. It means daring and imagination combined with care and foresight
and integrity, and hard, wearing work--much of it not compensated,
because of every ten propositions submitted to the scrutiny or evolved
by the brain of the financier who is duly careful of his reputation and
conscious of his responsibility to the public, it is safe to say that
not more than three materialize.
For the financial offspring of which he acknowledges parentage, or
merely godfathership, he is held responsible by the public for better or
for worse, and will continue to be held responsible notwithstanding
certain ill-advised provisions of the recently enacted Clayton
Anti-Trust Act which are bound to make it more difficult for him to
discharge that responsibility.
Amongst other functions and duties, it is "up to him" to look ahead, so
that such offspring may always be provided with nouriture, _i.e._, with
funds to conduct their business. If for one reason or another they find
themselves short of means in difficult times, it is his task and care to
find ways and means to obtain what is needed, sometimes at great
financial risk to himself.
It is perhaps significant that almost all the railroad companies now in
receivers' hands were among those for whose financial policy no one
amongst the leading banking houses had a continuous and recognized
responsibility, though I must not be understood as meaning to suggest
that there were not other contributory causes for such receivership,
involving responsibility and blame, amongst others, also on members of
the banking fraternity.