Sooner or later, one of the members inevitably becomes dissatisfiedwith his agreed-upon piece of the pie. He decides to compete onceagain and seeks a greater share of the market. It was quicklyrecognized that the only way to prevent this from happening wasto use the police power of government to enforce the cartelagreement. The procedure called for the passage of laws disguisedas measures to protect the consumer but which actually worked toensure the elimination of competition. Henry P. Davison, who wasa Morgan partner, put it bluntly when he told a Congressionalcommittee in 1912: "I would rather have regulation and controlthan free competition."1 John D. Rockefeller was even more to thepoint in one of his often repeated comments: "Competition is asin.
This trend was not unique to the banking industry. Ron Pauland Lewis Lehrman provide the historical perspective:
After 1896 and 1900, then, America entered a progressive and predominantly Republican era. Compulsory cartelization in the name of "progressivism" began to invade every aspect of American economic life. The railroads had begun the parade with the formation of the ICC in the 1880s, but now field after field was being centralized and cartelized in the name of "efficiency," "stability," "progress," and the general welfare.... In particular, various big business groups, led by the J.P. Morgan interests, often gathered in the National Civic Federation and other think tanks and pressure organizations, saw that the voluntary cartels and the industrial merger movements of the late 1. Quoted by Gabriel Kolko,
2. Quoted by William Hoffman,
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1890s had failed to achieve monopoly prices in industry. Therefore, they decided to turn to governments, state and federal, to curb the winds of competition and to establish forms of compulsory cartels, in the name, of course, of "curbing big business monopoly" and advancing the general welfare.1
The challenge no longer was how to overcome one's adversaries, but how to keep new ones from entering the field. When JohnD. used his enormous profits from Standard Oil to take control ofthe Chase National Bank, and his brother, William, bought theNational City Bank of New York, Wall Street had yet one moregladiator in the financial arena. Morgan found that he had nochoice except to allow the Rockefellers into the club but, now thatthey were in, they all agreed that the influx of competitors had to bestopped. And that was to be the hidden purpose of federallegislation and government control. Gabriel Kolko explains: The sheer magnitude of many of the mergers, culminating in U.S.
