Wall Street Under Oath


By Ferdinand Pecora,
chief counsel for the investigation,
Senate Banking and Currency Committee,
book copyright 1939



Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the “wild bull market” of 1929 still give evidences of their existence and influence.  Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back into pernicious activity.

Frequently we are told that this regulation has been throttling the country’s prosperity.  Bitterly hostile was Wall Street to the enactment of the regulatory legislation.  It now looks forward to the day when it shall, as it hopes, reassume the reins of its former power.

That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt.  Indeed, if you now hearken to the Oracles of The Street, you will hear now and then that the money-changers have been much maligned.  You will be told that a whole group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few.  You will be assured that they had nothing to do with the misfortunes that overtook the country in 1929-1933; that they were simply scapegoats, sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims.

These disingenuous protestations are, in the crisp legal phrase, “without merit.”  The case against the money-changers does not rest upon hearsay or surmise.  It is based upon a mass of evidence, given publicly and under oath before the Banking and Currency Committee of the United States Senate in 1933-1934, by The Street’s mightiest and best-informed men.  Their testimony is recorded in twelve thousand printed pages.  It covers all the ramifications and phases of Wall Street’s manifold operations.

The public, however, is sometimes forgetful.  As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the persuasive voices of The Street subtly pleading for a return to the “good old times.”  Forgotten, perhaps, by some are the shattering revelations of the Senate Committee’s investigation; forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in those good old days.

After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempt be made to abolish the post.

It is in the hope of rendering this service, especially for the lay reader unfamiliar with the terminology and conduct of The Street, that the author has endeavored, in the following pages, to summarize the essential story of that investigation—an inquiry which cast a vivid light upon the unhabitated mores and methods of Wall Street.



Working with heavy industry gave me a profound appreciation of the central dynamic of capitalism.  “Creative destruction” is an idea that was articulated by the Harvard economist Joseph Schumpeter in 1942.  Like many powerful ideas, his is simple: A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and then reallocating resources to newer, more productive ones.  I read Schumpeter in my twenties and always thought he was right, and I’ve watched the process at work through my entire career.

—Alan Greenspan,
The Age of Turbulence




1942 was in the era in which conservative economists would have responded to all those whiners who cared about what happened during the Great Depression, by saying that realists will simply have to accept economic destruction.  The versions of this that we might hear when people will loudly protest the financial meltdown of 2008, and Wall Street tries to justify what happened, would be “protective risk-taking,” and “responsible overlooking.” “Protective risk-taking” would be an economic theory that would say that sure, we’d naturally feel very uncomfortable with investment houses, which are supposed to advise clients not to risk more than they could afford to lose, risking what they did leading up to the Crash of 2008.  Yet in order for businesses to use their money as efficiently as possible, they might have to take such risks.  At the very least, we couldn’t afford government interference with risk-taking, since this would have the sort of unintended consequences that we care about.  “Responsible overlooking” would say that not to hold people responsible for certain problems they’d caused, such as Wall Street causing this crisis, could be the responsible thing to do, since it happened in the past, it could be called “just a bunch of mistakes,” now they’re completely helpless to undo it, they’ve learned their lesson, an unforgiving approach has its oppressive and whiny costs, etc.  Greenspan testified before Congress on October 23, 2008, “And what I’m saying to you is, yes, I found a flaw [in my ideology].  I don’t know how significant or permanent it is, but I’ve been very distressed by that fact,” which implies that, in the future, the “Now they’ve learned their lesson,” excuse would make this problem seem temporary and therefore irrelevant to the present.  Of course, overlooking and inadequate regulation would also have unintended consequences, but these are the kind that we consider to be “just the way that life goes sometimes.”  Both “protective risk-taking” and “responsible overlooking” could be seen in Phil Gramm’s 2001 statement, “Some people look at sub-prime lending and see evil.  I look at sub-prime lending and I see the American dream in action.”




If a business is destroyed, that might have been “creative destruction” or it might have been unfair, but well-adjusted productive optimists will accept that it was creative destruction.  In the same way, unusual risk-taking might be “protective risk-taking” or it might be recklessness, but, at the very least, well-adjusted productive optimists will figure that government shouldn’t interfere.  Also, not all overlooking is responsible, but if what you’re overlooking could be called “business as usual,” then chances are that overlooking it would seem synonymous with responsibility.

As any self-help book for people victimized by others (i.e. those considered codependent) would tell you, no matter how morally bankrupt this may sound, the approaches to do what needs to get done, that are most likely to work, are those that most rely on people doing what their own self-interests naturally make them want to do.



As any woman in a relationship considered codependent (especially a violent one) could tell you, nothing else can matter, other than what would work the most effectively and reliably.  We all simply must accept that motivation is everything.  The victims would always be the ones who’d have the profit motive, since they’d be the ones who’d profit if their problems got solved.  Both “protective risk-taking” and “responsible overlooking” get their power, and their realistic essentiality, from the profit motive, irrespective of any moral bankruptcy, resulting chaos, etc.





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My Story

  To The [Abuse] Survivors ♥♥♥♥♥

Men Dying for Love

On Doping

Index of “Oh, Yeah?

Victim Correction as a Panacea, the Summary (Top of Page 1)

(Page 2)(Main Page 3)

Cancer Victims Corrected Too

The Main Victim Correction as a Panacea

 Documentation On the Social Problem of Unnaturally Rampant Depression

 Standard Rationales for Victim Correction as a Panacea

 Schopenhauer on Predators

 Emphasis on Victim-Self-Blaming

Darwinist Lehman Brothers’ INSIDE Sales Tips

Darwinist Lehman Brothers’ INSIDE Introduction to Management Book

Out of the Same Mold as the Great Crash of 2008

Message for Intellectuals in the Islamic World

Candace Newmaker’s Experience

Breaking Important Confidences for Your Own Good

A Glimpse Into the Soul of Victim Correction

Cigarette Industry and Victim Correction

Niebuhr’s Ideas on Our Nature and Destiny

Herbal Experiences for Women

Some Ideas for Rapport