CHAPTER V INTERLOCKING DIRECTORATES The first step toward the intelligent study of American education is to consider the country in which this education grows. We are told upon good authority that men do not gather figs from thistles; we are also told that we cannot understand the cultural institutions of any country unless we know its economic and social conditions. If you want to learn about America, the plutocratic empire, come with me and meet the emperor and his princes and lords; come to the Customs House in New York City, early in the year 1913. The memory of our busy age is short, so perhaps it will mean nothing to you if I say that the Pujo Committee of the House of Representatives is in session. They sit in a solemn row, eleven solemn legislators; and into the witness chair step one after another the masters of this plutocratic empire: J. P. Morgan senior, a bulbous-nosed and surly-tempered old man whom everyone in the room knows to be the emperor; George F. Baker, president of the First National Bank of New York, the second richest man in the world; William Rockefeller, brother of the richest man in the world; George M. Reynolds, president of the Continental National Bank of Chicago, the second largest bank in America; Henry P. Davison, Jacob Schiff—so on through a long list. 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.”