High Finance

What is High Finance? Exaplained

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.

What, then, can and should finance do on its own part in order to gain and preserve for itself that repute and status with the public to which it is entitled, and which in the interest of the country, as well as itself, it ought to have?

1. Conform to Public Opinion

It must not only do right, but it must also be particularly careful concerning the appearance of its actions.

Finance should "omit no word or deed" to place itself in the right light before the people.

It must carefully study and in good faith conform to public opinion.

2. Publicity

One of the characteristics of finance heretofore has been the cult of silence, some of its rites have been almost those of an occult science.

To meet attacks with dignified silence, to maintain an austere demeanor, to cultivate an etiquette of reticence, has been one of its traditions.

Nothing could have been more calculated to irritate democracy, which dislikes and suspects secrecy and resents aloofness.

And the instinct of democracy is right.

Men occupying conspicuous and leading places in finance as in every other calling touching the people's interests, are legitimate objects for public scrutiny in the exercise of their functions.

3. Service

Every man who by eminent success in commerce or finance raises himself beyond his peers is in the nature of things more or less of an "irritant" (I use the word in its technical meaning) to the community.

It behooves him, therefore, to make his position as little jarring as possible upon that immense majority whose existence is spent in the lowlands of life so far as material circumstances are concerned.

It behooves him to exercise self-restraint and to make ample allowance for the point of view and the feelings of others, to be patient, helpful, conciliatory.

It behooves him to remember that many other men are working, and have worked all their lives, with probably as much effort and assiduous application, as much self-abnegation as he, but have not succeeded in raising themselves above mediocre stations in life, because to them has not been granted the possession of those peculiar gifts which beget conspicuous success, and to which, because they are very rare and because they are needed for the world's work, is given the incentive of liberal reward.

He should beware of that insidious tendency of wealth to chill and isolate; he should be careful not to let his feelings, aspirations and sympathies become hardened or narrowed; lest he become estranged from his fellow men; and with this in view he should not only be approachable but should seek and welcome contact with the work-a-day world so as to remain part and parcel of it, to maintain and prove his homogeneity with his fellow men.

And he should never forget that the advantages and powers which he enjoys are his on suffrance, so to speak, during good behavior, the basis of their conferment being the consideration that the community wants his talents and his work, and grants him generous compensation—including the privilege of passing it on to his children—in order to stimulate him to the effort of using his capacities, since it is in the public interest that they should be used to their fullest extent.

He should never forget that the social edifice in which he occupies so desirable quarters, has been erected by human hands, the result of infinite effort, of sacrifice and compromise, the aim being the greatest good of society; and that if that aim is clearly shown to be no longer served by the present structure, if the successful man arrogates to himself too large or too choice a part, if, selfishly, he crowds out others, then, what human hands have built up by the patient work of many centuries, human hands can pull down in one hour of passion.

The undisturbed possession of the material rewards now given to success, because success presupposes service, can be perpetuated only if its beneficiaries exercise moderation, self-restraint, and consideration for others in the use of their opportunities, and if their ability is exerted, not merely for their own advantage, but also for the public good and the weal of their fellow men.

4. Stand up for Convictions and Organize

In the political field, the ways not only of finance but of business in general have been often unfortunate and still more often ineffective.

It is in conformity with the nature of things that the average man of business, responsible not only for his own affairs, but often trustee for the welfare of others, should lean towards that which has withstood the acid test of experience and should be somewhat diffident towards experiment and novel theory.

But, making full allowance for this natural and proper disposition, it must, I believe, be admitted that business, and especially the representatives of large business, including high finance, have too often failed to recognize in time the need and to heed the call for changes from methods and conceptions which had become unsuitable to the time and out of keeping with rationally, progressive development; that they have too often permitted themselves to be guided by a tendency toward unyielding or at any rate apparently unyielding Bourbonism instead of giving timely aid in a constructive way toward realizing just and wise modifications of the existing order of things.

Apart from these considerations and leaving aside practices formerly not uncommon, but which modern laws and modern standards of morality have made impossible, it may be said generally that business is doing too much kicking and not enough fighting.

In fact, almost the only instance which I can remember of business asserting itself effectively on a large scale and by a genuine effort for its rights, its legitimate interests and its convictions was during the McKinley-Bryan campaign, in saying which I do not mean to endorse some of the methods used in that campaign.

And yet, the latent political power of business is enormous. Wisely organized for proper and right purposes it would be irresistible. No political party could succeed against it.

If this country is to take full advantage of the unparalleled opportunities which the developments of the last two years have opened up to it, if, in the severe competition which sooner or later after the close of the war is bound to set in for the world's trade, it is to hold its own, it must not only not be hampered by unwise and antiquated laws, as it now is, in certain respects, but it must be intelligently aided and fostered by the legislative and administrative powers.

Business in the leading European countries has been backed up by the respective governments in the past and will be backed up, more than ever, in the postbellum period.