Money Power: Banking’s Iron Grip on America

Louis D. Brandeis’s piercing analysis of American finance, published in 1914, reads like a financial thriller with surprising modern relevance. In “Other People’s Money and How the Bankers Use It,” Brandeis, who later became a Supreme Court Justice, exposes how a small group of powerful investment bankers—what he calls the “Money Trust”—controlled vast portions of American industry and commerce.

The Puppet Masters

At the heart of Brandeis’s critique stands J.P. Morgan & Co., along with a handful of ally institutions that formed what we might today call the “one percent.” These financial giants didn’t simply lend money—they orchestrated America’s economic symphony. Through “interlocking directorates” (where the same people sat on multiple corporate boards), they created an elaborate web of control.

“The banker has become the universal tax gatherer,” Brandeis writes, explaining how these financial kingpins inserted themselves as middlemen in nearly every significant business transaction. When railroads needed money, bankers were there—collecting hefty fees. When industrial companies expanded, bankers arranged mergers—taking enormous commissions.

Their influence was staggering. The Morgan associates held “341 directorships in 112 corporations having aggregate resources or capitalization of $22,245,000,000”—a sum Brandeis noted was “more than three times the assessed value of all the property in New England” and “nearly three times the assessed value of all the real estate in New York City.”

The Conflict of Interest Problem

“No man can serve two masters,” Brandeis insists throughout his analysis. Yet investment bankers routinely tried to do exactly that. They sat on corporate boards while also selling those companies’ securities to the public. They represented both the sellers and buyers in enormous transactions. They used money from depositors to finance their own speculative ventures.

Brandeis powerfully demonstrates how this system inevitably produces corruption. Even well-intentioned bankers simply cannot fairly represent opposing interests simultaneously.

Big Isn’t Better

Brandeis challenges the notion that bigger always means more efficient. Many of the enormous combinations created by bankers were not driven by actual business needs but by the desire to collect transaction fees and control markets. These bloated giants often performed worse than their smaller predecessors.

The New Haven Railroad provides his most damning example. Under banker management led by J.P. Morgan, this once-profitable railroad expanded wildly, gobbling up competitors and unrelated businesses like steamship lines and trolley companies. The result? Skyrocketing debt, deteriorating service, and eventually financial collapse—and ordinary New England families who had considered the railroad’s stock as safe as government bonds lost their savings.

The Solution: Sunshine and Separation

Brandeis offers two main remedies that resonate remarkably with modern financial reforms:

First, mandatory publicity. “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman,” he writes. If banks had to disclose their fees, profits, and relationships, the public could judge whether they were being fairly treated.

Second, structural separation. Banks should stick to banking instead of controlling railroads, utilities, and manufacturing companies. People running businesses should not also control the credit needed to finance those businesses.

Seeds of Democracy

The book closes with a surprisingly hopeful note about cooperative alternatives flourishing in Europe. In England, a massive cooperative wholesale society operated successful businesses collectively owned by their members. In Germany, small cooperative credit unions helped ordinary farmers access affordable loans. Brandeis sees in these examples an “industrial democracy” where economic power is widely distributed rather than concentrated.

“The treasury of America,” Brandeis concludes, quoting President Wilson, “does not lie in the brains of the small body of men now in control of the great enterprises… It depends upon the inventions of unknown men, upon the originations of unknown men, upon the ambitions of unknown men.”

Over a century after its publication, Brandeis’s diagnosis of financial concentration remains startlingly relevant. The solutions he proposed—greater transparency, breaking up concentrations of power, and creating democratic economic alternatives—continue to inspire reformers seeking to tame Wall Street’s excesses. His core message that economic power, like political power, becomes dangerous when too highly concentrated stands as a timeless warning.