Long ago it was recognized that “a man who is his own lawyer has a fool for a client.” The essential reason for this is that soundness of judgment is easily obscured by self-interest. Similarly, it is not the proper function of the banker to construct, purchase, or operate railroads, or to engage in industrial enterprises. The proper function of the banker is to give to or to withhold credit from other concerns; to purchase or to refuse to purchase securities from other concerns; and to sell securities to other customers. The proper exercise of this function demands that the banker should be wholly detached from the concern whose credit or securities are under consideration. His decision to grant or to withhold credit, to purchase or not to purchase securities, involves passing judgment on the efficiency of the management or the soundness of the enterprise; and he ought not to occupy a position where in so doing he is passing judgment on himself. Of course detachment does not imply lack of knowledge. The banker should act only with full knowledge, just as a lawyer should act only with full knowledge. The banker who undertakes to make loans to or purchase securities from a railroad for sale to his other customers ought to have as full knowledge of its affairs as does its legal adviser. But the banker should not be, in any sense, his own client. He should not, in the capacity of banker, pass judgment upon the wisdom of his own plans or acts as railroad man. Such a detached attitude on the part of the banker is demanded also in the interest of his other customers--the purchasers of corporate securities. The investment banker stands toward a large part of his customers in a position of trust, which should be fully recognized. The small investors, particularly the women, who are holding an ever-increasing proportion of our corporate securities, commonly buy on the recommendation of their bankers. The small investors do not, and in most cases cannot, ascertain for themselves the facts on which to base a proper judgment as to the soundness of securities offered. And even if these investors were furnished with the facts, they lack the business experience essential to forming a proper judgment. Such investors need and are entitled to have the bankers’ advice, and obviously their unbiased advice; and the advice cannot be unbiased where the banker, as part of the corporation’s management, has participated in the creation of the securities which are the subject of sale to the investor. Is it conceivable that the great house of Morgan would have aided in providing the New Haven with the hundreds of millions so unwisely expended, if its judgment had not been clouded by participation in the New Haven’s management? CHAPTER X THE INEFFICIENCY OF THE OLIGARCHS We must break the Money Trust or the Money Trust will break us. The Interstate Commerce Commission said in its report on the most disastrous of the recent wrecks on the New Haven Railroad: