First-class business in a first-class way
“I have ventured to frame a brief statement of my views on the subject of duties and uses of bankers.
“The banker is a member of a profession practiced since the middle ages. There has grown up a code of professional ethics and customs, on the observance of which depend his reputa- tion, his fortune, and his usefulness to the community in which he works.
“Some bankers are not as observant of this code as they should be; but if, in the exercise of his profession, the banker disregards this code – which could never be expressed in legisla- tion, but has a force far greater than any law – he will sacrifice his credit. This credit is his most valuable possession; it is the result of years of fair and honorable dealing and, while it may be quickly lost, once lost cannot be restored for a long time, if ever. The banker must at all times conduct himself so as to justify the confidence of his clients in him and thus pre- serve it for his successors.
“If I may be permitted to speak of the firm of which I have the honour to be the senior part- ner, I should state that at all times the idea of doing only first-class business, and that in a first-class way, has been before our minds. We have never been satisfied with simply keeping within the law, but have constantly sought so to act that we might fully observe the profes- sional code, and so maintain the credit and reputation which has been handed down to us from our predecessors in the firm. Since we have no more power of knowing the future than any other men, we have made many mistakes (who has not during the past five years?), but our mistakes have been errors of judgment and not of principle.
“The banker must be ready and willing at all times to give advice to his clients to the best of his ability. If he feels unable to give this advice without reference to his own interest he must frankly say so. The belief in the integrity of his advice is a great part of the credit of which I have spoken above, as being the best possession of any firm.
“Another very important use of the banker is to serve as a channel whereby industry may be provided with capital to meet its needs for expansion and development. To this end the banker can serve well, since, as he has at stake not only his client’s interests but his own repu- tation, he is likely to be specially careful. If he makes a public sale and puts his own name at the foot of the prospectus he has a continuing obligation of the strongest kind to see, so far as he can, that nothing is done which will interfere with the full carrying out by the obligor of the contract with the holder of the security.”
J.P. Morgan, Jr., May 23, 1933
Excerpt from statement made before the Sub-Committee of the Committee on Banking and Currency of the U.S. Senate