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1 - The Trouble with Boards

Published online by Cambridge University Press:  04 August 2010

By
Lawrence E. Mitchell
Edited by
F. Scott Kieff  and
Troy A. Paredes
F. Scott Kieff
Affiliation:
George Washington University, Washington DC
Troy A. Paredes
Affiliation:
Washington University, St Louis
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Summary

On Tuesday afternoon, December 2, 1913, Thomas W. Lamont and Louis D. Brandeis met for a three-hour luncheon at the University Club in New York. The famous Pujo Committee hearings had reached their controversial end, convincing many Americans that the accusations of Brandeis and others as to the existence of a Money Trust were right. The Money Tust appeared as a small group of mostly New York bankers centered on the House of Morgan. It allegedly controlled corporate America and its access to capital by placing its members on the boards of many of the nation's largest corporations.

Lamont was a relatively new partner of J. P. Morgan and Co. Like his partners, he served as a director of a number of corporations in which interlocking bank directorates had been exposed by the Pujo investigations. Within just a few years, he would take effective leadership of the Morgan firm and become perhaps the most prominent financier of his generation.

The conversation was polite, as befitted both the setting and the character of the two men. Needless to say, they disagreed about much. The most interesting turn in the conversation came during Brandeis's remarks about the potential conflicts of interest created by the fact that many of the same men sat on the boards of competing corporations. Passing the point in complete disagreement with Lamont's response, Brandeis took a different tack, questioning Lamont as to the sheer physical ability of Morgan's men to do their work as directors:

ldb: Take your own house alone.[…]

Type
Chapter
Information
Perspectives on Corporate Governance , pp. 17 - 61
Publisher: Cambridge University Press
Print publication year: 2010

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