Bull Run
I
It’s 1792. Wall Street is experiencing its first panic. Speculators, betting recklessly on a rise in the newly issued bonds of the brand new federal government, are caught short and go under. One, William Duer, a merchant prince and ardent supporter of the American Revolution, is discovered to be trading on inside information, allegedly provided by Alexander Hamilton. Duer ends up in debtor’s prison. Public reaction to the panic is intense. Distress spreads from businessmen to “shopkeepers, Widows, orphans, Butchers, Cartmen, Gardeners, market women and even the noted Bawd, Mrs. McCarty.” A mob threatens to seize Duer and disembowel him. They’re dissuaded and he dies in prison in 1799.
But that’s not the half of it. The founding fathers, brothers in revolution, fall out in violent dispute over the virtues and evils of speculation. Hamilton, although he disapproves of the activities of people like Duer, places his hopes for jump-starting America’s underdeveloped economy in the country’s small circle of owners of liquid capital, a scarce commodity in the new nation. It’s that “monied interest,” he thinks, which, given the right kind of encouragement from the state, has both the wherewithal and the farsightedness to invest in the future commercial greatness that the treasury secretary envisions for the country.
Thomas Jefferson and James Madison, however, are appalled. The “knaves” and “gambling scoundrels” of Wall Street, they are convinced, are not only parasites but vital elements in a fiendish counterrevolutionary design. Speculators, by weakening the moral fiber of a frugal and industrious republican order, pave the way for the restoration of a licentious aristocracy and corrupt monarchy. Speculators are, in their eyes, Tories, British agents and monarchists. Because the Jeffersonians believe their old comrade, Hamilton--who at the same time accuses them of being fellow travelers of the Jacobin Terror in France--is the evil genius engineering this plot to install a new “monied aristocracy,” they show no mercy in circulating baseless rumors about the secretary’s financial peculations and the most sordid stories about his sexual misadventures.
How starkly different everything seems at the start of the new millennium. We are all Hamiltonians now. A Chilean candidate for president, and a socialist, spends his time campaigning less in Santiago and more on Wall Street, meeting with “constituents” like George Soros, David Rockefeller and Steve Forbes. Business Week reports that The Street’s “bonus bonanza has its beneficiaries worried about whether they have the right ‘personal jeweler.’ ” Prevailing economic wisdom proclaims shareholder value, shades of Vince Lombardi, the only value that matters.
The Street’s aura spreads far beyond the folkways of the financial district. “How the Stock Market Swallowed New York,” screams a magazine in mock horror. It describes ordinary people who dream about the market at night; one who says, “It’s given me a feeling of control over my life I’ve never had before”; another who remarks that her newest romantic interest has “tremendous up-side potential.” The obsession has become hair-raising, not to mention funny, as a dentist confesses he tracks his stocks between patient visits, sometimes even between X-rays and fillings. First there was class consciousness, then there was the royal road to the unconscious, now there’s “Dow consciousness.”
Even the Wall Street Journal is taken aback, observing that for millions the market has become “a living entity . . . ticking away, at the breakfast table, at the gym, at the office . . . calculations of net worth bleed into calculations of self-worth.” City streets are lit up like a 24-hour-a-day theater of numbers, tracking the rhythms of the global stock market on billboards, eye-level flat screens, atop towers of rotating digital cryptographs, a universal spectacle and nonstop economic EKG. The facade of the New York Stock Exchange shows up in ads for everything from National Public Radio to Lexmark laser printers. It is virtually impossible to turn on the TV or radio, plug into the Internet or even attend a baseball game without joining an all-day party hosted at Broad and Wall streets in Manhattan. Even cloistered academics check out the investment grade of their TIAA-CREF accounts before grading their papers.
America, apparently, has become a nation of traders; not old-fashioned street peddlers, to be sure, but rather a remarkable new subspecies, the “day trader”: mostly guys, so it seems, wearing T-shirts and baseball caps, moonlighting from their day jobs as construction workers and accountants, some in it for an occasional goof, some for the blood sport. And indeed a culture of risk, born and bred on Wall Street, is savored everywhere. Fueled by airborne speculation in the shares of virtual companies, it declares skepticism verboten and abandons itself to a lightheaded faith that the illusion of success breeds success. There’s a virile assertiveness in the air, nicely captured in a stark, full-page ad for a mutual fund depicting a lean iron signpost, marking the intersection of “Wall Street” and “Power Street.”
Power! For 200 years, and still counting, Wall Street has lived in its radiance. What’s changed, it would seem, is that once that power was feared and reviled, but now it’s embraced and revered. This migration of The Street from the dark side to the light side suggests a stunning tale of cultural revolution, a kind of global warming of the American psyche producing a decisive shift in the temperature and atmosphere of our public life. That story is at the heart of Wall Street’s rise to greatness.
In “The Great Game,” John Steele Gordon sets out to tell that story; at the outset he even compares the great power of The Street to the once all-powerful papacy. But “The Great Game” is a great disappointment. The letdown is all the more telling because Gordon has in the past shown himself to be a fine historian. His earlier “The Scarlet Woman of Wall Street” is a deeply researched and vivid account of the Erie Railroad wars of the 1860s. “The Great Game,” however, is thinly researched (its footnotes hardly deserve the name, they’re so sparse), analytically shallow and devoid of interesting ideas. Two reasons come to mind to account for this. “The Great Game” has all the telltale signs of a made-for-TV book, which in fact it is, serving as the companion volume to a CNBC docudrama about the history of Wall Street. It is amiable, with plenty of factoids and anecdotal nuggets, easily digested in bite-size chapters that all seem to be precisely the same length, as if scaled to fit a formula imposed by another medium. So the book goes down easily but leaves the reader famished, with nothing more to chew on than gaseous references to “great men, great themes, great powers.”
The second reason “The Great Game” fails to capture The Street’s greatness may be ideological. Gordon comes by his interest in Wall Street honestly; several generations of his family have made their living there. He thinks highly of The Street and, while acknowledging its lapses, sees it as exemplifying the many virtues of the free market. In that regard, the book is a perfect mirror of our millennial moment, taking a celebratory and triumphalist approach to the history of The Street. Although Gordon was as open about his ideological views in “The Scarlet Woman of Wall Street,” he didn’t allow them to interfere with that often darker story of stock market larceny. But in “The Great Game,” they get in the way, resulting in an often banal, small-minded book about a great subject. This shows up in silly ways, such as Gordon’s references to publications he deems too critical of The Street: He attaches some damning descriptive label, i.e., the “left-wing periodical, the Nation”; but he never adds such a characterization to a paper with a conservative bent like the Wall Street Journal.
More important, Gordon’s ideological bent spoils the clarity of his own message. He despises Jefferson for despising Wall Street and bemoans the Virginian’s long-lasting and pernicious influence, and he adores Hamilton. The confounding problem is that Gordon’s overriding belief, reiterated throughout the book, is in the free market, that is, a market free of government meddling, and it was Jefferson who, after all, was the avatar of limited government, while Hamilton came closer to advocating state capitalism than anyone in a position of power until the Roosevelts came along. As a matter of fact, during most of its first century, Wall Street lived off the largess of the state, trading in the securities of government-owned or government-subsidized enterprise: canals, turnpikes, railroads, banks. And, fatally, this obsession with the free market subverts Gordon’s own attempt to capture vital aspects of The Street’s greatness. That would have required him, among other things, to take seriously rather than to disdainfully dismiss all those reasons Wall Street was, for generations, an object of fear and loathing.
II
Greatness, the ostensible subject of Gordon’s study, by its very nature ought to be an easy enough object to locate. But it turns out instead to be elusive prey because the author is looking for it in all the wrong places. It’s not to be found by measuring piles of cash as they mount up over time from the thousands into the billions. It might be found, however, in the less tangible but awe-inspiring power of Wall Street to rename the world like some revolutionary cartographer, so that places once thought of as “colonies,” later as “underdeveloped countries,” later still as “developing nations” are now re-christened by The Street as “emerging markets,” their nationhood stripped away to reveal congeries of appetite. It is a sign of great power indeed to be able to dictate the fate of nations, as the Thais, Mexicans, Indonesians and others have learned over the last several years.
Nor will greatness be tracked down by reheating old war stories about how big deals got done; the glamour fades somewhere around the telling of the third merger-and-acquisition intrigue. It might be spied in its Washington lair, however, where rarely does the domestic or international economic agenda get formulated without consulting and incorporating the viewpoint of global finance. Shibboleths about the free market notwithstanding, Wall Street could hardly have become a Great Power without the power of the American government--and the inverse is true as well. So the “American Century” is inconceivable without the shifting of the world’s financial center of gravity from London’s Lombard Street to Wall Street. That too is a measure of greatness.
Nor will greatness be recorded by eavesdropping, as Gordon does, on the financial calculations of rather ordinary businessmen suddenly morphed into heroes and ogres by our culture’s unquenchable thirst for the sensational. However “colorful” and “larger-than-life” some of these predatory buccaneers were (like Jay Gould, known as “the Mephistopheles of Wall Street”; or the eccentric bag lady and speculator Hettie Green, known as the “witch of Wall Street”), yet another well-told account of their derring-do gets us no closer to The Street’s underlying magnetism and only signals how exhausted this particular literary conceit has become. Instead, greatness might be discovered in such unlikely places as major scientific research universities, where Wall Street has actually helped shape the contours, pace and outcome of basic as well as applied science, in biotechnology most portentously. The hunt then must take place as much off The Street as on it.
Coming to grips with the pervasive influence of Wall Street on our national life also means taking two ideas seriously. First, that the anti-Wall Street persuasion, originally articulated by the Jeffersonians and of which Gordon is so dismissive, has a lot to teach us. However archaic and self-righteous, its ideas and passions acted as a check on a self-destructive narcissism at the heart of the mania for speculation. But today those restraints lie buried beneath an avalanche of “irrational exuberance,” an esprit free of guilt or caution, at home in the land of the insubstantial where wealth appears as if by magic. Second is a notion even more foreign to Gordon’s book: that The Street’s often overpowering allure originates in desires strangely at odds with the intimidating image of Wall Street as a fortress of the Capitalist Establishment. The history of Wall Street’s impact on the nation is, at least in part, the story of how these two ideas were intertwined.
Within our collective consciousness, Wall Street lives in two psychic latitudes. One is temperate and signifies capitalist probity and caution, conservative financial orthodoxy, sound practice, rule-bound conventional morality and profound respect for the established order of things. The other is tropical and calls up a defiant set of instincts: to gamble recklessly, to break rules, to undermine all fixed and stable values, to revel in irreverence--in a word, to live by luck, not work. Though it would be wrong to label the latter “anti-capitalist,” this cultural splitting nevertheless has been deeply formative. When the Jeffersonians excoriated the evils of Wall Street, they did so in defense of the moral and political virtues of productive labor. However hypocritical it may seem for a slave-owning elite to prate on about the work ethic, it set in motion a long-lived tradition, picked up initially by Jacksonian Democrats and later by Populists, labor radicals, middle-class Progressive-era reformers and New Dealers. Most of these movements and social classes (with some exceptions at the socialist margins of the labor movement) were themselves committed to the elementary forms of the capitalist marketplace. They believed, however, that they could tell the difference between genuine investment on the one hand, and parasitic gambling on the other and rested their critique of Wall Street on that essential, if ambiguous, distinction.
III
On through the Great Depression, Wall Street’s iconic place in our political imagination derived its electric charge from this political culture of opposition. Though “The Great Game” is speckled with allusions to the government’s innate incompetence, Gordon scarcely notices that Wall Street’s real ability to wield power in Washington has gone largely unchecked; inbreeding between the State and Treasury departments and leading investment houses and Wall Street law firms through much of the 20th century is, for example, one mark of The Street’s weightiness. Still, there have been stunning moments when this oppositional culture has broken through the prevailing amiability: when Lincoln wished he could take those gold speculators betting on Union defeats at Gettysburg and Chancellorsville and “have their devilish heads shot off”; or when Teddy Roosevelt declaimed against “malefactors of great wealth”; or when J.P. Morgan was hauled before a Senate committee investigating the “money trust” and its nefarious manipulations of “other people’s money;” or when FDR promised to chase the “money changers from the temple.” It’s impossible to fully appreciate Wall Street’s stature without either taking the measure of its actual political power--as when Grover Cleveland pleaded with the mighty Morgan (whom he worked with during the interregnum separating his two presidencies) to bail the government out of an embarrassing gold shortage--or without recognizing its role as a densely packed symbol of all that struck people as unjust, inequitable and downright immoral about financial and corporate capitalism.
A whole demonology grew up around the image of the top-hatted, fat-fingered financier. Even when Wall Street wasn’t to blame, it attracted critics like moths to a flame. Some were drawn by the stench of “filthy lucre” and a medieval anti-Semitism; from the antebellum Mississippi governor who accused Wall Street “shylocks” of perpetrating the panic of 1857 to Henry Ford’s hatred of Wall Street, so notorious for its conspiratorial anti-Semitism. Others demonized The Street out of a legitimate fear that a handful of investment banks and brokerages could bring ruin to millions. Wall Street, then, is a classic case of the over-determined symbol, absorbing not only economic and political anxieties about finance capitalism but a far rangier set of fears and phobias about the city, about Jews, about the wickedness of the East and so on.
Nonetheless, though for generations Wall Street lived in cultural purgatory, it always had many admirers. Often, they’ve been small-timers, marginal players or spectators dazzled by Gordon’s “great game.” Oddly enough, for a place so identified with the high and mighty, The Street has also been a boulevard of plebeian ambition, attracting especially those less than enamored of the astringent pleasures of capitalism’s work ethic. To be “bullish on America” goes back a long way to the democratic mythos of the Yankee as a daring peddler of notions, a kind of benignly optimistic trickster, supremely confident about the future, his own and the country’s. In the age of the estimable J.P. Morgan, however, this all began to seem a bit disreputable and unbecoming. Wall Street emerged as the magnetic center of a true American ruling class, perhaps the only coherent one since the days of the Southern slavocracy and the Brahmin elite of mercantile New England. For a season, lasting roughly from 1900 to 1930, The Street not only seemed to take responsibility for the reorganization and consolidation of American industry but also volunteered to help run the country’s key law firms, foundations, political parties and institutions of high culture.
The manners and mores of this “class” were closely observed by Edith Wharton, among others (her “House of Mirth” was also a real “house,” scandalous at the time as the site of mercenary intrigues between financiers and New York politicians). In fact, our serious literature has returned again and again to Wall Street as an incubator of moral conundrums and social crises. Its presence was felt in the existential bleakness of Melville’s “Bartleby,” in the satire, moral melodrama and Darwinian naturalism of Twain, Howells and Dreiser, and more recently in Tom Wolfe’s sendup of the greed and vanities that luridly backlighted the Reagan era.
Gordon Gekko’s manifesto in the film “Wall Street”--”Greed is Good! Greed is Right! Greed Works! Greed Will Save the USA!”--reminds us that The Street has also infused our popular culture in innumerable ways; one thinks immediately of the gothic Gilded Age cartoons of Thomas Nast and Joseph Keppler, of D.W. Griffith’s early cinematic classic “Corner on Wheat” and naturally of the hero worship of our favorite financial titans, including the cultic following that now trails after Warren Buffet. Even the language we’ve used to describe life on The Street has fused with basal American myths about the frontier and about masculinity. For generations journalists have peopled The Street with gunslinging cowboys, merciless marauders and Napoleonic conquerors; or made of it an eroticized melodrama about control, seduction and addiction. So too the techno-jargon and mathematics deployed to describe the market’s mysterious inner mechanics and chaotic oscillations reassure the skeptical that The Street’s wildness can be tamed while exuding an intimidating aura of machismo.
No matter how pervasive Wall Street’s influence today, it would be going much too far to start thinking of it as Wall Street ‘R’ Us. Still, The Street’s cultural rehabilitation from the ignominy of the Great Depression is extraordinary. Ever since Charles Merrill’s “thundering herd” brought Wall Street to Main Street in the years after World War II, it has seeped deep into the pores of our common lives. The Street has indeed achieved a certain greatness, both imperial and intimate, reconfiguring the global balance of power, coloring the homelier details of our plans for retirement. For the moment at least, it’s won our confidence. But to find out whether “The Great Game” is really a confidence game, as so many of our ancestors believed, stay tuned.