No More Learning

Other people's money, and how the bankers use it,
Brandeis, Louis Dembitz, 1856-1941.
New York, Frederick A. Stokes company [1914]
http://hdl. handle. net/2027/uc1. 32106000978228
Public Domain, Google-digitized
http://www. hathitrust. org/access_use#pd-google
This work is in the Public Domain, meaning that it is not subject to copyright. Users are free to copy, use, and redistribute the work in part or in whole. It is possible that heirs or the estate of the authors of individual portions of the work, such as illustrations, assert copyrights over these portions. Depending on the nature of subsequent use that is made, additional rights may need to be obtained independently of anything we can address. The digital images and OCR of this work were produced by Google, Inc. (indicated by a watermark on each page in the PageTurner). Google requests that the images and OCR not be re-hosted, redistributed or used commercially.
The images are provided for educational, scholarly, non-commercial purposes.
? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ^LIBRARY
DIVERSITY OP
, CRUZ
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? Ha
B8
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? OTHER PEOPLE'S MONEY
AND HOW THE BANKERS USE IT
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? OTHER PEOPLE'S MONEY
AND HOW THE BANKERS USE IT
BY
LOUIS D. BRANDEIS
Author of
"Business--A Profession"
NEW EDITION
With Foreword by
NORMAN HAPQOOD
FREDERICK A. STOKES COMPANY
NEW YORK MCMXXXII
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? Copyright, 1913, 1914, by
The McClure Publications
Copyright, 1914, 1932, by
Louis D. Brandem
AM rights reserved. No part of this work may be repro-
duced without the written permission of the publishers.
Tenth Printing, December 5. 1934
Printed in the United States of America
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE TO
THE FIRST EDITION
By
Nokhah Hapgood
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
While Louis D. Brandeis's series of articles
on the money trust was running in Harper's
Weekly many inquiries came about publication
in more accessible permanent form. Even with-
out such urgence through the mail, however, it
would have been clear that these articles inevit-
ably constituted a book, since they embodied an
analysis and a narrative by that mind which, on
the great industrial movements of our era, is the
most expert in the United States. The inquiries
meant that the attentive public recognized that
here was a contribution to history. Here was the
clearest and most profound treatment ever
published on that part of our business develop-
ment which, as President Wilson and other wise
men have said, has come to constitute the greatest
of our problems. The story of our time is the
story of industry. No scholar of the future will
be able to describe our era with authority unless
he comprehends that expansion and concentration
which followed the harnessing of steam and elec-
tricity, the great uses of the change, and the great
Yii
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? viii
PREFACE
excesses. No historian of the future, in my opin-
ion, will find among our contemporary documents
so masterful an analysis of why concentration
went astray. I am but one among many who
look upon Mr. Brandeis as having, in the field of
economics, the most inventive and sound mind
of our time. While his articles were running in
Harper's Weekly I had ample opportunity to
know how widespread was the belief among
intelligent men that this brilliant diagnosis of
our money trust was the most important contri-
bution to current thought in many years.
"Great" is one of the words that I do not use
loosely, and I look upon Mr. Brandeis as a great
man. In the composition of his intellect, one
of the most important elements is his compre-
hension of figures. As one of the leading finan-
ciers of the country said to me, "Mr. Brandeis's
greatness as a lawyer is part of his greatness as
a mathematician. " My views on this subject
are sufficiently indicated in the following edito-
rial in Harper's Weekly.
ARITHMETIC
About five years before the Metropolitan Tractiofi
Company of New York went into the hands of a receiver,
Mr. Brandeis came down from Boston) and in a speech at
Cooper Union prophesied that that company must fail.
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
ix
Leading bankers in New York and Boston were heartily
recommending the stock to their customers. Mr. Brandeis
made his prophecy merely by analyzing the published
figures. How did he win in the Pinchot-Glavis-Ballinger
controversy? ? In various ways, no doubt; but perhaps the
most critical step was when he calculated just how long it
would take a fast worker to go through the Glavis-Ballinger
record and make a judgment of it; whereupon he decided
that Mr. Wickersham could not have made his report at
the time it was stated to have been made, and therefore it
must have been predated.
Most of Mr. Brandeis's other contributions to current
history have involved arithmetic. When he succeeded in
preventing a raise in freight rates, it was through an exact
analysis of cost. When he got Savings Bank Insurance
started in Massachusetts, it was by being able to figure what
insurance ought to cost. When he made the best contract
between a city and a public utility that exists in this country,
a definite grasp of the gas business was necessary--com-
bined, of course, with the wisdom and originality that make
a statesman. He could not have invented the preferential
shop if that new idea had not been founded on a precise
knowledge of the conditions in the garment trades. When
he established before the United States Supreme Court the
constitutionality of legislation affecting women only, he
relied much less upon reason than upon the amount of knowl-
edge displayed of what actually happens to women when
they are overworked? which, while not arithmetic, is built
on the same intellectual quality. Nearly two years before
Mr. Mellen resigned from the New Haven Railroad, Mr.
Brandeis wrote to the present editor of this paper a private
letter in which he said:
"When the New Haven reduces its dividends and Mellen
resigns, the 'Decline of New Haven and Fall of Mellen' will
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? X
PREFACE
make a dramatic story of human interest with a moral--or
two--including the evils of private monopoly. Events can-
not be long deferred, and possibly you may want to prepare
for their coming.
"Anticipating the future a little, I suggest the following
as an epitaph or obituary notice:
"Mellen was a masterful man, resourceful, courageous,
broad of view. He fired the imagination of New England;
but, being oblique of vision, merely distorted its judgment
and silenced its conscience. For a while he trampled with
impunity on laws human and divine; but, as he was obsessed
with the delusion that two and two make five, he fell, at
last, a victim to the relentless rules of humble arithmetic.
"'Remember, 0 Stranger, Arithmetic is the first of the
sciences and the mother of safety. '"
The exposure of the bad financial management
of the New Haven railroad, more than any
other one thing, led to the exposure and com-
prehension of the wasteful methods of big busi-
ness all over the country and that exposure of
the New Haven was the almost single-handed
work of Mr. Brandeis. He is a person who
fights against any odds while it is necessary
to fight and stops fighting as soon as the fight
is won. For a long time very respectable and
honest leaders of finance said that his charges
against the New Haven were unsound and in-
excusable. He kept ahead. A year before the
actual crash came, however, he ceased worrying,
for he knew the work had been carried far enough
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
xi
to complete itself. When someone asked him
to take part in some little controversy shortly
before the collapse, he replied, "That fight does
not need me any longer. Time and arithmetic
will do the rest. "
This grasp of the concrete is combined in Mr.
Brandeis with an equally distinguished grasp of
bearing and significance. His imagination is as
notable as his understanding of business. In
those accomplishments which have given him his
place in American life, the two sides of his mind
have worked together. The arrangement be-
tween the Gas Company and the City of Boston
rests on one of the guiding principles of Mr.
Brandeis's life, that no contract is good that is
not advantageous to both parties to it. Behind
his understanding of the methods of obtaining
insurance and the proper cost of it to the laboring
man lay a philosophy of the vast advantage to
the fibre and energy of the community that would
come from devising methods by which the labor-
ing classes could make themselves comfortable
through their whole lives and thus perhaps mak-
ing unnecessary elaborate systems of state help.
The most important ideas put forth in the
Armstrong Committee Report on insurance had
been previously suggested by Mr. Brandeis,
? ?
Users are free to copy, use, and redistribute the work in part or in whole. It is possible that heirs or the estate of the authors of individual portions of the work, such as illustrations, assert copyrights over these portions. Depending on the nature of subsequent use that is made, additional rights may need to be obtained independently of anything we can address. The digital images and OCR of this work were produced by Google, Inc. (indicated by a watermark on each page in the PageTurner). Google requests that the images and OCR not be re-hosted, redistributed or used commercially.
The images are provided for educational, scholarly, non-commercial purposes.
? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ^LIBRARY
DIVERSITY OP
, CRUZ
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? Ha
B8
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? OTHER PEOPLE'S MONEY
AND HOW THE BANKERS USE IT
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? OTHER PEOPLE'S MONEY
AND HOW THE BANKERS USE IT
BY
LOUIS D. BRANDEIS
Author of
"Business--A Profession"
NEW EDITION
With Foreword by
NORMAN HAPQOOD
FREDERICK A. STOKES COMPANY
NEW YORK MCMXXXII
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? Copyright, 1913, 1914, by
The McClure Publications
Copyright, 1914, 1932, by
Louis D. Brandem
AM rights reserved. No part of this work may be repro-
duced without the written permission of the publishers.
Tenth Printing, December 5. 1934
Printed in the United States of America
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE TO
THE FIRST EDITION
By
Nokhah Hapgood
? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? ? ? Generated for (University of Chicago) on 2014-06-10 03:27 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
While Louis D. Brandeis's series of articles
on the money trust was running in Harper's
Weekly many inquiries came about publication
in more accessible permanent form. Even with-
out such urgence through the mail, however, it
would have been clear that these articles inevit-
ably constituted a book, since they embodied an
analysis and a narrative by that mind which, on
the great industrial movements of our era, is the
most expert in the United States. The inquiries
meant that the attentive public recognized that
here was a contribution to history. Here was the
clearest and most profound treatment ever
published on that part of our business develop-
ment which, as President Wilson and other wise
men have said, has come to constitute the greatest
of our problems. The story of our time is the
story of industry. No scholar of the future will
be able to describe our era with authority unless
he comprehends that expansion and concentration
which followed the harnessing of steam and elec-
tricity, the great uses of the change, and the great
Yii
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? viii
PREFACE
excesses. No historian of the future, in my opin-
ion, will find among our contemporary documents
so masterful an analysis of why concentration
went astray. I am but one among many who
look upon Mr. Brandeis as having, in the field of
economics, the most inventive and sound mind
of our time. While his articles were running in
Harper's Weekly I had ample opportunity to
know how widespread was the belief among
intelligent men that this brilliant diagnosis of
our money trust was the most important contri-
bution to current thought in many years.
"Great" is one of the words that I do not use
loosely, and I look upon Mr. Brandeis as a great
man. In the composition of his intellect, one
of the most important elements is his compre-
hension of figures. As one of the leading finan-
ciers of the country said to me, "Mr. Brandeis's
greatness as a lawyer is part of his greatness as
a mathematician. " My views on this subject
are sufficiently indicated in the following edito-
rial in Harper's Weekly.
ARITHMETIC
About five years before the Metropolitan Tractiofi
Company of New York went into the hands of a receiver,
Mr. Brandeis came down from Boston) and in a speech at
Cooper Union prophesied that that company must fail.
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
ix
Leading bankers in New York and Boston were heartily
recommending the stock to their customers. Mr. Brandeis
made his prophecy merely by analyzing the published
figures. How did he win in the Pinchot-Glavis-Ballinger
controversy? ? In various ways, no doubt; but perhaps the
most critical step was when he calculated just how long it
would take a fast worker to go through the Glavis-Ballinger
record and make a judgment of it; whereupon he decided
that Mr. Wickersham could not have made his report at
the time it was stated to have been made, and therefore it
must have been predated.
Most of Mr. Brandeis's other contributions to current
history have involved arithmetic. When he succeeded in
preventing a raise in freight rates, it was through an exact
analysis of cost. When he got Savings Bank Insurance
started in Massachusetts, it was by being able to figure what
insurance ought to cost. When he made the best contract
between a city and a public utility that exists in this country,
a definite grasp of the gas business was necessary--com-
bined, of course, with the wisdom and originality that make
a statesman. He could not have invented the preferential
shop if that new idea had not been founded on a precise
knowledge of the conditions in the garment trades. When
he established before the United States Supreme Court the
constitutionality of legislation affecting women only, he
relied much less upon reason than upon the amount of knowl-
edge displayed of what actually happens to women when
they are overworked? which, while not arithmetic, is built
on the same intellectual quality. Nearly two years before
Mr. Mellen resigned from the New Haven Railroad, Mr.
Brandeis wrote to the present editor of this paper a private
letter in which he said:
"When the New Haven reduces its dividends and Mellen
resigns, the 'Decline of New Haven and Fall of Mellen' will
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? X
PREFACE
make a dramatic story of human interest with a moral--or
two--including the evils of private monopoly. Events can-
not be long deferred, and possibly you may want to prepare
for their coming.
"Anticipating the future a little, I suggest the following
as an epitaph or obituary notice:
"Mellen was a masterful man, resourceful, courageous,
broad of view. He fired the imagination of New England;
but, being oblique of vision, merely distorted its judgment
and silenced its conscience. For a while he trampled with
impunity on laws human and divine; but, as he was obsessed
with the delusion that two and two make five, he fell, at
last, a victim to the relentless rules of humble arithmetic.
"'Remember, 0 Stranger, Arithmetic is the first of the
sciences and the mother of safety. '"
The exposure of the bad financial management
of the New Haven railroad, more than any
other one thing, led to the exposure and com-
prehension of the wasteful methods of big busi-
ness all over the country and that exposure of
the New Haven was the almost single-handed
work of Mr. Brandeis. He is a person who
fights against any odds while it is necessary
to fight and stops fighting as soon as the fight
is won. For a long time very respectable and
honest leaders of finance said that his charges
against the New Haven were unsound and in-
excusable. He kept ahead. A year before the
actual crash came, however, he ceased worrying,
for he knew the work had been carried far enough
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? PREFACE
xi
to complete itself. When someone asked him
to take part in some little controversy shortly
before the collapse, he replied, "That fight does
not need me any longer. Time and arithmetic
will do the rest. "
This grasp of the concrete is combined in Mr.
Brandeis with an equally distinguished grasp of
bearing and significance. His imagination is as
notable as his understanding of business. In
those accomplishments which have given him his
place in American life, the two sides of his mind
have worked together. The arrangement be-
tween the Gas Company and the City of Boston
rests on one of the guiding principles of Mr.
Brandeis's life, that no contract is good that is
not advantageous to both parties to it. Behind
his understanding of the methods of obtaining
insurance and the proper cost of it to the laboring
man lay a philosophy of the vast advantage to
the fibre and energy of the community that would
come from devising methods by which the labor-
ing classes could make themselves comfortable
through their whole lives and thus perhaps mak-
ing unnecessary elaborate systems of state help.
The most important ideas put forth in the
Armstrong Committee Report on insurance had
been previously suggested by Mr. Brandeis,
? ? Generated for (University of Chicago) on 2014-06-10 03:28 GMT / http://hdl. handle. net/2027/uc1. 32106000978228 Public Domain, Google-digitized / http://www. hathitrust. org/access_use#pd-google
? zii
PREFACE
acting as counsel for the Equitable policy
holders. Business and the more important
statesmanship were intimately combined in the
management of the Protocol in New York,
which has done so much to improve condi-
tions in the clothing industry. The welfare
of the laborer and his relation to his employer
seems to Mr.