a bankers' world -- 7/19/21

19 Jul 2021

a bankers' world -- 7/19/21

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Today's selection -- from The Last American Aristocrat by David S. Brown. During the so-called “gilded age,” the banking industry ascended to a position of unequaled influence in the halls of Congress. Henry Adams, scion of a family of presidents, became one of its fiercest critics:

"'The world, after 1865,' Henry once wrote, 'became a bankers' world,' and he confessed without apology to finding 'the banking mind ... obnoxious.' The era’s omnipotent financier, J.P. Morgan, mastered the art of moneymaking, bringing industry, communication, and transportation into a vast empire of enterprises and trusts. One year older than Adams, the rotund Pierpont dominated the landscape of American business; his banking house, J.P. Morgan and Company (established in 1871), organized or underwrote dozens of firms and railroads, including General Electric, United States Steel, and American Telephone & Telegraph. More broadly, Morgan embodied a new monopolistic age in the nation's economy, for which Henry accused him of 'trying to swallow the sun.' Following the Civil War, a great industrial renaissance transpired, predicated upon the availability of land and labor, technology and capital. The opening of the West, freeing of southern slaves, and influx of immigrants mainly in the North all came together to make possible the continent's commercial conquest. This process dominated, as Henry noted, 'the world,' and its legacy remains to this day contested. Undeniably, the House of Morgan replaced the House of Adams as a historical focal point, embodying the ascendance of corporate consolidation over a waning political class.

Henry Adams

"Henry by no means stood alone in his skepticism of the period's fluid political and moral mood. 'The great cities reek,' Walt Whitman complained in 1871, 'with ... robbery and scoundrelism,' while the economist Henry George wrote in Progress and Poverty (1879), an influential study of inequality in the United States, 'Where population is densest, wealth greatest, and the machinery of production and exchange most highly developed -- we find the deepest poverty, the sharpest struggle for existence, and the most enforced idleness.' More than an American circumstance, this radically altered economic environment produced a series of dislocations encapsulated in the Panic of 1873, a financial crisis that first hit Europe and quickly spread to the United States, South Africa, the West Indies, and Australia. Prompted in part by rampant speculation in railroad stock, the downturn -- lasting some six years in America, where it caused the bankruptcy of several thousand businesses -- demonstrated conclusively the increasingly integrated nature of world markets.

"Henry came of age during this profound process, eager to trace its impact on his family and his country. He took up the money question shortly after arriving in Washington, clearly interested in finance capitalism's power to impose itself on both politics and culture. His earliest published work on the subject responded to the controversy surrounding the greenback dollars, the irredeemable paper currency made lawful by the Legal Tender Act of 1862. Regarded as a critical wartime measure to pay for the Union effort, the Act put over $400 million of greenbacks into circulation. Henry, a hard-money man like his father (who sternly declared any other kind of currency 'gambling'), feared the inflationary potential of paper notes and began to focus his writing on monetary management. The fruits of these researches included 'The Argument in the Legal Tender Case' (Nation, December 1868) and 'American Finance, 1865-1869' (Edinburgh Review, April 1869). Combined with 'The Session' and 'Civil Service Reform,' his essays were beginning to attract notice in the nation's capital. 'So I come on,' he informed Gaskell with no little satisfaction, 'and the people here are beginning to acknowledge me as some one to be considered.'

"A potent blend of pedigree and ripening talent brought Henry to the attention of those in a position to aid his diagnosis of American finance. The Adams name, if somewhat discounted, still counted for something -- a convenience Henry happily acknowledged when deadpanning to Gaskell, 'I ... am held up solely by social position and a sharp tongue.' The sharp tongue made him a favorite of the reformers, for his essays were not merely lucid pieces, they were also decidedly pungent, devilishly cutting, and occasionally 'wicked' -- they flirted, that is, with borderline libelous descriptions of the principals he sought to skewer."