The Moneychangers is Upton Sinclair's indictment of the national economy, particularly the events that caused the Panic of 1907. His book, along with calls from other reformers, almost certainly impacted the Pujo hearings of 1912, where the House Banking and Currency Committee investigated the Money Trust. One of the big issues of the 1912 Presidential Election was the reform of trusts, which were seen in the novel as corrupt and controlled by a few powerful men, led by the all-powerful Wall Street financier, J. Pierpont Morgan. The New Nationalism of Theodore Roosevelt and the New Freedom of Woodrow Wilson were similar, with one big difference on how trusts were viewed. Roosevelt wanted the government to control bad trusts and monitor good trusts while protecting the rights of workers and consumers, while Wilson wanted all trusts broken up to promote competition. Wilson and Roosevelt did agree in using strong executive leadership, and promoting Initiative, Referendum, and Recall to induce more involved citizen participation in government.
The third candidate, Republican Incumbent William Howard Taft, had angered Roosevelt after being his hand-picked successor to the presidency in 1908. The popular Roosevelt regretted his 1904 campaign promise that he would not run again in 1908, but Taft seemed a reasonable choice. Taft then fired Gifford Pinchot, Roosevelt's trusted ally in issues of conservation, shortly after his election. Taft also abrogated an agreement that Roosevelt made with J.P. Morgan: that Morgan's U.S. Steel Corporation could gobble up the Tennessee Coal & Iron Company, a prize normally unavailable to him for anti-trust reasons, for saving a speculative brokerage firm whose failure would have caused huge financial ripples in an already faltering economy. The Taft administration prosecuted U.S Steel for a violation of anti-trust clauses. Of course, Taft had to deal with the public outcry when this bargain with J.P. Morgan was exposed, while Roosevelt was insulated from the criticism, in Africa for his widely-promoted safari.
Upton Sinclair exposed this deal in the Moneychangers, changing the name of the participants enough to avoid a libel suit while keeping the facts similar enough to real life so that the public understood Sinclair was making a statement against the Money Trust - and actually, all trusts in general. Dan Waterman had a lot in common with J.P. Morgan, an active Episcopalian church officer, and an avid collector of the arts who also owned a lavish yacht named the Corsair. Morgan was a married man with several mistresses, including the famous actress Maxine Elliot, and possibly his librarian Belle de Coste Greene. In his book about the Morgan empire, Ron Chernow mentioned that Greene was discrete about her affairs so as not to anger a jealous J.P. Morgan.
The stock market crash of October 21-25, 1907 occurred when an attempt to corner the United Cooper market failed, and its stock price fell. Alarmed depositors of the Knickerbocker Trust Company, whose president was associated with speculators trying to corner the market of United Copper, began a run on the bank which could not possibly be sustained. When Knickerbocker Trust failed, other trusts, such as the Trust Company of America, were on the edge of financial collapse. In the Moneychangers, the failure of the Gotham Trust Company set off a run on the Trust Company of the Republic.
The famous steel magnet Andrew Carnegie and his assistant at the Homestead Works, Harry Frick, are also represented by fictional doppelgangers. Their famous story occurred in 1891, when Carnegie left the country for his annual trip to his homeland of Scotland, leaving Frick in charge when the labor contract at the Homestead Works was about to expire. Carnegie had modernized the equipment at Homestead, which no longer required skilled workers at the plant, and the salaries that they demanded. Carnegie let Frick handle his upcoming labor contract, which called for cuts in wages that the strong union at Homestead would not accept.
Before the workers could strike, Frick declared a lockout, but workers still managed to occupy the Homestead plant. A platoon of Pinkerton security guards were sent to break-up the strike, but their efforts failed. A boat was arranged to gain access to the plant via the river adjacent to it, but the employees prevented any sort of amphibious operation. They even pushed barges of explosives toward the Pinkerton boats in an attempt to remove the threat suddenly. The Pinkertons finally surrendered, but the frustrated workers indiscriminately killed some of the Pinkertons after their surrender.
An anarchist named Alexander Berkman, boyfriend of radical Emma Goldman (Emma the Red), tried to kill Frick. His assassination attempt failed. Carnegie earned millions more in the steel industry until he sold out to J. Pierpont Morgan for a staggering amount - which Morgan admitted was not the full amount he was willing to pay for Carnegie's business. Carnegie then became a notable donor of libraries and other cultural institutions across America.
The Ice King mentioned in the story is probably Charles Morse, who was involved in the attempted corner of the copper trust by Otto Heinze. One can also see some of Rockefeller in Jim Hegan, the railroad magnate that Montague went to see about selling Lucy's shares in the Northern Mississippi Railroad. Hegan's daughter, who was involved in many charitable causes, had a lot in common with Anne Morgan, the daughter of Pierpont. Unfortunately, she would have been a poor match for Allen Montague, considering that she liked girls. Charles T. Barney was the president of Knickerbocker trust. Elements of Barney can be seen in Stanley Ryder, the president of the Gotham Trust who is more than a minor character in the Moneychangers.
Sinclair's story isn't meant to be an actual account of the Panic of 1907. Personal vendettas did play into business decisions, but probably not here. Morgan did lose over $20 million from his efforts to stop the Panic of 1907, so there was some altruism at play in his actions. Of course, his businesses relied on a strong economy, so Morgan's altruism had a motive. People were probably angrier about his purchase of government bonds during the Cleveland administration. The Panic of 1893 was caused by a run on gold, and the Cleveland administration had to sell 4 waves of government bonds, payable in gold, to shore up dangerously low reserves. The level of reserves dropped so quickly after the second issue of bonds that the Cleveland administration didn't have time to sell the third issue of bonds publicly. In fact, the day Morgan bought the bonds, the New York Federal Reserve branch had less than $10 million in gold in its holdings, and a check for $10 million was said to be outstanding and ready to be cashed. Grover Cleveland was forced to act with alacrity. Public scorn occurred after Morgan bought the bonds for 103-1/2 but sold them over 110. In fact, the bonds were trading at 120 shortly afterwards in the secondary market.
The Aldrich commission, established to investigate the Panic of 1907, recommended the creation of a central bank. After the Pujo hearings of 1912, Congress did organize the Federal Reserve Act to create a national bank to handle liquidity issues and maintain the money supply. President Wilson promptly signed the bill. The Clayton Antitrust Act of 1914 was passed to give the government extra power to break up trusts. Books such as The Moneychangers convinced the public that Woodrow Wilson's position, that all trusts were bad, was better than Theodore Roosevelt's position, that some trusts were bad. While the connection isn't as direct as with Sinclair's book, the Jungle, and the Meat Packing Acts of 1906, the Moneychangers did affect public policy. It is another one of Sinclair's recommended works.