Pujo Committee
Categories: Regulations
It’s a bird...it’s a plane! No, it’s the Pujo Committee, saving the day like Indiana Jones.
In the early 1910s, there was a conspiracy theory that a group called the “money trust,” made up of Wall Street bankers and financiers, was controlling all of the nation’s finances: the economy, monetary system, and finance sector. All of it.
How did this happen? The seemingly endless growth of railroads, industry, and financial giants (banks, insurance, brokerages) funneled a whole lot of money into the hands of a few wealthy dudes living the high life in NYC.
Charles Lindbergh Sr., whose fruit bore the aviation-man whose baby was...well, let’s not get into that. Anyway, Sr. was a Congressman who said “Hey guys, we should probe this.” Fellow Congressman Arsène Pujo said “Already on it,” and created what came to be called the Pujo Committee.
The Pujo Committee found that the money trust was not just a conspiracy theory, but an actual conspiracy. These wealthy dudes were working together to stifle competition (which was kinda against the Sherman Act of 1890), scratch each other’s backs, and even conduct predatory practices towards clearing houses and on stock exchanges.
Remember the Panic of 1907 when everyone tried to take their money out of their banks all at the same time? That was because a member clearing bank refused to act as a clearing agent for Knickerbocker Trust Co., which then closed. This was done because the money trust was leveraging power, stifling competition by choosing what member banks decided to act as a clearing agent for who. This freaked out the public enough to cause a run on the banks.
The Pujo committee uncovered an empire headed by J.P. Morgan, who controlled a lot of money, credit, NYSE price manipulation, and clearing house bullying. All this hubbub led to a few things: the Clayton Antitrust Act (getting more specific this time), the Federal Reserve (which didn’t exist before), and a ratification of the 16th amendment, which created federal income tax (bet you didn’t see that one coming).
