Street of dreams BY DOUG HENWOOD
EVERY MAN A SPECULATOR: A History of Wall Street in American Life, by Steve Fraser. HarperCollins, 721 pp., $29.95.
Wall Street occupies a strange place in American life. It's thought to be central to our economy - one 1980s text described it as the "hub" of capitalism - but economists are strangely silent on the exact nature of that centrality. And outside economics, Wall Street has long occupied a central role in American politics and culture. But insufficient attention has been paid to that aspect of the financial markets in recent years. Sure, we've had some scandal-mongering books about Enron and the dot-coms, but the massive bull markets of the 1980s and 1990s and their unwinding in the early 2000s haven't really jogged Americans' famously weak historical memories.
Into that breach walks Steven Fraser with "Every Man a Speculator," his encyclopedic survey of Wall Street's role in American life, from Colonial days through what seems like the day before yesterday. The book is full of valuable information and analysis, but, sad to say, it could have done with some editing. It's about twice as long as it needs to be, which might scare off some readers. And that's a shame, because we really should be talking more about Wall Street's role in national and international life, and Fraser's book is rich with material that could start such a conversation.
We weren't always so reticent about Wall Street. From the first days of American nationhood through the early decades of the 20th century, Wall Street was at the heart of American politics. Thomas Jefferson clashed with Alexander Hamilton over what kind of economy the United States should have. Jefferson wanted a decentralized economy dominated by independent producers with a minimal role for financiers, while Hamilton pushed for a strong national economy with large industry and a centralized financial market. While Hamilton won that fight in the material sense, Jefferson's position held considerable appeal for much of the 19th century and still lingers in the politics of Ralph Nader and more radical Greens.
It would be tempting to map today's categories backward and identify Hamilton with the right and Jefferson with the left, but Fraser shows us that it's more complicated than that. Hamilton wasn't pleased with speculation but was willing to tolerate it because it greased the markets he thought necessary for the country's rise to greatness. But Jefferson's objections were stronger and more tinged with a provincial moralism. He hated New York and was repelled by the anonymity, fluidity and speed of life on the Street. He preferred the more "organic" life of the rural yeomanry, a small world of personal connections - a point of view that conveniently masked that society's dependence on slave labor (and white poverty) and its deep involvement in world trade and finance. Jefferson's patrician disdain for Wall Street was echoed in the north by Boston Brahmins, who held New York in equivalent disdain.
Jefferson's fantasy of a hearty yeomanry is a hardy perennial in American life. It depends on a myth of the country as authentic and virtuous and the city as artificial and corrupt. (Fraser emphasizes the identification, by both friends and foes, of Wall Street with sexual extravagance, as opposed to the upstandingness of the heartland.) That moral geography fueled a lot of 19th century populism, which by today's standards looks like a movement of the left. But it also fuels a lot of the 21st century right. What's the matter with Kansas has deeper roots than we may think.
Fraser nicely calls Wall Street a "bourgeois twilight zone." He applies this to the lure of immediate gratification on Wall Street - the lust for a quick buck that pays no mind to a proper work ethic. But it also applies to the social composition of the place, with the self-made jostling perpetually with those born to privilege. The Street has some right to claim a kind of democracy - a democracy of wealth, for sure, but it offers plenty of angles for the lucky and ambitious to make a fortune (and to lose a fortune as well). It's no accident that 19th century anti-Wall Street rhetoric was deeply anti-Semitic; Jews have long symbolized rootless cosmopolitans, people who can be transformed into the vessels of capitalism's faults and held responsible for them. That ugly side of populism is mostly gone today, but traces can be heard in Pat Buchanan's sneering references to Goldman Sachs.
Wall Street considerably raised its status in American society at the turn of the last century, as such financiers as J.P. Morgan created the modern large corporation out of the deflationary wreckage of the late 19th century. The decades after the Civil War were times of frequent financial panics and extended depressions; the large, professionally managed structures created out of a multitude of small, individually run ones during "Morganization" helped stabilize an extremely volatile economy. Populists hated this (though many socialists found it a welcome rationalization). But, as Fraser shows, Morganization also made Wall Street respectable; it became an epicenter of a new elite, replacing the planters and Brahmins of old.
That respectability was lost after the 1929 crash, and it would take the Street decades to regain it. The financial scene was pretty sleepy in the 1950s and early 1960s. There were some bubbly moments in the late 1960s, but it wasn't really until the 1980s that Wall Street returned to the center of American life, as takeover artists transformed the corporate landscape. Then, with the bull market of the 1990s, the public got involved in the stock market with an unprecedented intensity. When the bubble burst in 2000, savaging many of the market's newest players, you might have thought that some of the old populist condemnation of the malefactors of great wealth might return, but that hardly happened.
Why not? That's a good question. Part of the reason may be that very few of us really understand what Wall Street does. And while Fraser's concentration on the noneconomic aspects of Wall Street is admirable, a reader would close this book of more than 700 pages not all that much wiser on that issue than on first picking it up.
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Doug Henwood edits the Left Business Observer and is author of "After the New Economy."