They are being questioned by a small, frail-looking Jewish lawyer named Samuel Untermyer. All his life he has been one of them, he has been in the game with them and made his millions; he knows every trick and turn of their minds, every corner where their money is hidden—and now he turns against them and exposes them to the world. They hate him, but he has them at his mercy, and step by step he shows us the machinery of our industrial and financial life, the thing which he calls the Money Trust, and which I call the plutocratic empire.
There is one phrase which makes the whole argument of the Pujo Report, and that phrase is “interlocking directorates.” Interlocking directorates are the device whereby three great banks in New York, with two trust companies under their control, manage the financial affairs and direct the policies of a hundred and twelve key corporations of America. The three banks are J. P. Morgan and Company, the First National Bank, and the National City Bank; and the two trust companies are the Guaranty and the Equitable. Please fix these five concerns in your mind, for we shall come back to them in almost every chapter of this book. Their directors sit upon the boards of the corporations, sometimes several on each board, and their orders are obeyed because they control credit, which is the life-blood of our business world. Said George M. Reynolds, in his testimony, speaking of the control of American finance: “I believe it lies in the hands of a dozen men; and I plead guilty to being one, in the last analysis, of these men.”
Such was the situation in 1913; and now, America has fought and won a war, and become the financial master of the world. The wealth of America was estimated in 1912 at a hundred and twenty-seven billions; in 1920 it was estimated at five hundred billions, greater than the combined wealth of the British Empire, France, Italy, Russia, Germany, and Japan. At the same time that wealth has increased, so has the concentration of its control. If the Pujo Committee were to conduct another inquiry in the year 1922, it would find exactly the same interlocking directorates, only more of them; and it would find that the financial empire controlled by three great banks and two trust companies has grown from twenty-two billions to not less than seventy-five, and probably close to a hundred billions of dollars.