Business should be a big brawling jungle so that the Paul Bunyans will emerge, and with them will emerge new and better industries that aren't based on sentiment.
But in these days of cynicism about corporate America, is it possible to make even the robber barons fashionable again? Thomas Kessner, a historian at the City University of New York, is giving it a shot in a new book on the subject that reads like a Horatio Alger throwback: those guys in the 19th century, he says, were BOLD, VIGOROUS, SELF-SUFFICIENT, and they MADE US STRONG. You can almost hear Marv Albert saying "Yes!"
You certainly can't accuse Kessner of trying to be trendy. In the 1990s, it suddenly became fashionable among American businessmen to quote Adam Smith again -- which doesn't say much for Smith, since the decade ended with dot-com bubbles, Enrons and recession. But there was one Big Gorilla philosopher, Kessner points out, who was even more uncompromising than Smith.
Nobody much reads him anymore, but there was a 19th century English philosopher named Herbert Spencer who applied Charles Darwin's theories of evolution to morality. Actually he decided that there WAS no morality, only "survival of the fittest," and that when people are too weak to survive, or the unemployed starve to death, well, too bad, that's the way the universe works and it's nature's way of keeping humanity strong.
The businessmen of America's Gilded Age -- Carnegie, Rockefeller, Morgan, Vanderbilt, Gould -- weren't the kind of guys who normally read philosophy, but they loved Spencer, and they feted him like a king when he showed up in New York in 1873, the panic year, when a lot of the unfit ended up on the scrap heap of history. Andrew Carnegie, who wasn't known as a bookish man at the time, idolized Spencer and said his writings proved that anyone who tampers with society -- or, heaven forbid, the markets! -- is trying to turn us back to the dark ages.
In other words, greed is the engine of our salvation. So they believed, so they acted, and so, remarkably, Kessner pretty much backs them up in his new book, "Capital City: New York City and the Men Behind America's Rise to Economic Dominance, 1860- 1900," (Simon & Schuster, 396 pages, $27).
In a way it's refreshing to find someone who is willing to boldly sing the praises of the old coots in the swallow-tail coats. It hasn't been fashionable to do that for about, oh, 90 years now. But Kessner is convinced that J. Pierpont Morgan, the architect of the modern monopoly, is the savior of the country.
He makes a good case for the modern Wall Street corporation being basically Morgan's invention and says the rules haven't changed very much. He goes even further to say that, if Morgan had not stepped in with various schemes to combine industries and prop up the gold supply, the whole edifice of American capitalism might have come tumbling down. (No matter that Morgan's commissions on all those deals were exorbitant even by the standards of contemporary CEOs. This is the man who built ships for the Spanish-American War that he sold to his country at breathtaking markups.)
The problem with ALL books about the robber-baron era, though, is that there's just no way to make any of these guys sympathetic. In a way, Kessner proves as much by making the absolute best case for the achievements of the business titans -- they brought us back from the devastation of the Civil War, they brought order out of chaos by inventing new kinds of securities, bonds, futures and corporate paper, they propelled us past Europe in manufacturing and finance, and they created capital in such vast amounts that the country was able to leap forward in one generation from provincial backwater to world economic leader. And yet ...
OK, fine, all of that's true. But how do you get around the fact that the biggest liars, cheats and charlatans tended to win all these "survival of the fittest" battles? Some indication of just how suspicious and conniving they were is that NONE of them were friends. Morgan disliked Rockefeller, and vice versa. Vanderbilt hated everybody. Carnegie was so aloof he referred to other companies as "the enemy." Jay Gould was probably a sociopath.
When they went to the legislature, or the city council, they took satchels full of greenbacks to pay for whatever legislation they needed. When they were challenged in court, they bought the judges. Jay Gould, when he was trying to corner the gold market, paid The New York Times for a series of editorials that supported his views. (And they say Jayson Blair was a low point.)
By strict Spencerian principle, I suppose all this is perfectly fine. They win because they're more devious than the next guy. They spoke publicly of the virtues of competition, but in back rooms they fixed prices. (Kessner somehow manages to praise the practices of the 1860s and 1870s, when there was more or less unbridled cut-throat competition, AND the 1890s, when Morgan started corraling every industry into trusts in order to maintain high prices. It seems to me you have to be in favor of either one or the other.)
I'll use just one example, though, of why I think it's wrong-headed to glamorize that pugilistic era. Kessner mentions it in passing, but I think it goes to the essence of why that sort of monopoly capitalism ultimately undermines us.
Before the railroad came to the Midwest, the United States produced the greatest wheat in the world. We didn't just produce one type of wheat. Every farm produced different varieties, from different seeds, which had to be bagged in individual sacks and labeled precisely as to its type, quality and cleanliness before being shipped through the river systems to national and international markets.
The railroads changed all that. One train could carry more wheat than a hundred riverboats. So when the farmer took his grain to market, he took it, not to the river port, but to the rail terminal -- and because of those titans of industry back in New York, the railroad refused to transport it in little individually marked sacks. They decreed that henceforth there would be just a few grades of grain, and once yours was weighed and assessed, it would be assigned a grade and dumped into a rail car with all the other grains of the same grade, and you'd be given a receipt for the amount and quality. The receipt no longer had anything to do with your own grain. It's essentially a futures contract, entitling you to grain of a certain grade. You, Mr. Farmer, now own a certificate of exchange value that has nothing to do with what you sold.
Here's how Kessner describes this miracle of commerce:
"Separating the value of the wheat from its clumsy, hard-to-handle physical reality and creating paper proxies for these cereals brought wheat into the orbit of capital. No longer confined to its physical form, grain could be easily sold and transferred in a new economic world where railroads and the telegraph brought together goods, buyer, and seller in a virtual market of shared information and instantaneous exchange. Grain became a paper commodity, bid upon, traded, and speculated over."
The problem here is that the "hard-to-handle physical reality" of the grain is what creates its quality. Before the Civil War we had hundreds of thousands of varieties of bread in the United States. The cereals of one farm might not even taste the same as the neighboring farm. After the war we had several "grades" and a single commodity. It might be the most efficient way to generate money, but it's not the best way to grow wheat.
Kessner neglects to point out that most native varieties of American wheat had disappeared forever by the turn of the century. The seeds are extinct. This seems to me a paradigmatic example of the tail wagging the dog so vigorously that the pooch becomes a stuffed animal. (Ever taste Wonder Bread?)
Even though New York was a manufacturing center, and a refining center, and a railroad center, those weren't the things that made it the financial capital of the country. New York was the place where people weren't afraid to use the brutal power of capital itself as an end in itself. The far-flung industries affected by various Wall Street speculations, then as now, had no meaning to New York except their relative value as paper trades.
Morgan would simply wait until a company -- any company -- had cash flow problems, then buy it at a fire sale, combine it with another company or sell its assets, and pocket the change. That's still the way it's done, but it doesn't result in better corn in Illinois.
Kessner also gives short shrift to labor movements. He talks of Samuel Gompers and the cigar factories and the Haymarket riot, but he doesn't really look into the reasons that the robber barons were so callous toward workers. As one of them once said, there was no difference between wages paid to a laborer and money spent on a shipment of pig iron; in both cases, the corporation just wants the lowest price. That, too, is unchanged today, but most CEOs would be afraid to say it out loud. The fruit of that attitude was labor unrest and violence that lasted well into the 1950s and created a legacy of mistrust that caused many Americans to flirt with communism in the 1920s and '30s.
Another thing Kessner fails to speculate about is, why did Rockefeller and Carnegie suddenly turn to philanthropy in their old age? Why would you spend a lifetime insisting that anyone who gets in your way deserves to be crushed by the force of your money, and then use the last few years of your life figuring out new and inventive ways to give all your money away to people who, if given a chance, would probably get in your way? How many foundations, libraries, buildings and schools still have the names Rockefeller and Carnegie on them? Were they just building Egyptian-style mausoleums for their mummified remains?
Judged by the standards of this book, the businessman par excellence is actually Cornelius Vanderbilt. The Commodore was a profane anti-social womanizer who didn't much care for his own family, never gave away a nickel, and believed charity was for wimps. (For some reason he did give money at the end of his life for one thing and one thing only: he founded and endowed my alma mater, Vanderbilt University, in Nashville. His reasons for doing so remain mysterious. During my tenure there, I was a part of a student movement to rename the team mascot "The Robber Barons," but we were blocked by the administration and denied a referendum. The teams remain "The Commodores.")
Finally, as Kessner ties up his 40-year history into a neat bundle, with J.P. Morgan amalgamating and consolidating all the industries of the nation into trusts and combinations and monopolies, you have to ask the question: Okay, to what end?
If the answer is, "So that J.P. Morgan could prosper," then they were deals well conceived, even as members of his immediate staff were dropping dead all around him from the stress of their jobs. But shouldn't we look deeper than that?
What happened to U.S. Steel, the first billion-dollar monopoly? Faded into oblivion on world markets because it refused to compete, and now asks for tariff protection.
What happened to the railroad trust? Mostly all bankrupt by the 1960s.
What happened to the Standard Oil trust? Broken up into four companies by 1912, and those four companies later recombine in various ways in the 1970s and 1980s to avoid competing with one another. (How is that even legal? Why were they broken up in the first place if they're allowed to merge back together?)
What happened to the sugar trust? A pathetic non-player today.
What happened to the Duke tobacco trust? This is one that
Morgan didn't have much to do with, but it survives to the present despite almost constant harassment for the past 40 years by government regulators, taxing authorities, punitive legislation, lawsuits and public opinion. The one trust that DID work, in other words, is the one America is trying to destroy.
Then there's Jay Gould, the universally hated speculator and shyster. He's not much remembered today, except as a sort of cartoon villain, but he could actually be said to be the ultimate Spencerian capitalist. He died rich and despised. Just a Big Gorilla doing his job, like Nature intended.
(John Bloom writes a number of columns for UPI.)
Aaron Carter is still in love with Hilary Duff
NBC reportedly holds celebs hostage to Jimmy Fallon's show