56 J. A. HOBSON 



reality. For this necessary work the financier takes his pay- 

 ment, sometimes a reasonable fee, sometimes an extravagant 

 sum which cripples the future of his industry derived in part 

 from the ignorance or over-confidence of shareholders, in part 

 from consumers in anticipation of the monopoly prices which 

 such a corporation hopes to impose by control of markets. 

 This is the work of the financier in construction or reconstruc- 

 tion, where he has no genuine continuous interest in the work- 

 ing of the business. 



His second function is as holder of and speculator in stocks 

 and shares. Here his legitimate or social function is that of 

 furnishing an intelligent registration of values, scaling them 

 up and down in accordance with the play of actual forces in 

 the industrial world. With this legitimate work is often asso- 

 ciated an illegitimate, anti-social process, not so much of 

 gambling (for pure gambling, or taking chances, does not 

 rightly belong to the class of financiers who rule in America), 

 as of the artificial manipulation of stocks and shares, bulling 

 and bearing, in order to make profits from forced oscillations 

 of values. These predatory practices appear to be playing 

 an ever larger part in the formation of recent trusts ; many of 

 these are promoted less by the industrial economies of large 

 production, or even the calculated profits of prospective 

 monopoly, than by the design of creating a large quantity of 

 marketable paper, which should serve the two purposes of 

 enabling the financial promoters to sell inflated stock to ignor- 

 ant investors, and of furnishing material wherewith to bull 

 and bear the market, and by such manipulations to fleece 

 minor gamblers. 



At various eras in the world's history supreme power has 

 passed into the hands of a little group of financiers, but never 

 has that power been greater, more strongly rooted in actual 

 control of industry, or more strongly concentrated in an able 

 personnel, than in the America of to-day. Had I space, I 

 ought to trace the origin of this financial control in the peculiar 

 monetary history of the United States, and the combination 

 of economic and political forces which have raised a few great 

 banking and insurance houses to a pinnacle of power. The 

 consolidation of the banking and insurance business has 



