OPINION:
GENTLEMEN BANKERS: THE WORLD OF J.P. MORGAN
By Susie J. Pak
Harvard University Press, $55, 368 pages
Writing a book that’s boring yet also hair-raising is a feat. Susie J. Pak’s “Gentlemen Bankers: The World of J.P. Morgan,” full of charts, graphs and the dry prose of a doctoral thesis, studies the ways of the financial and industrial moguls who built their wealth at the dawn of modern American capitalism.
It is a study in futility, according to Ms. Pak. The real protagonists of her book are those fighting capitalism’s excesses, the Progressives. She argues that Woodrow Wilson, Ferdinand Pecora, Louis Brandeis and the rest set themselves an impossible task, and she sees no better prospects for today’s small “p” progressives as they try to compel lawfulness and fairness from the private citizens sitting atop the U.S. financial system. Unless, that is, the “public” and the “private” as ordinarily conceived undergo a kind of postmodern makeover. That’s the wild part, muffled though it is by academic lingo.
Ms. Pak, assistant professor of history at St. John’s University, writes that “government reforms did not work because they ignored the personal and social ties that structured the cooperative culture, which was central to how the financial community conducted its business.”
Translation: Men like J.P. Morgan, his son Jack Morgan, Thomas Lamont, Andrew Carnegie and the Rockefellers withdrew into their sumptuously appointed athletic and business clubs, where a lot of deals were made, and where, in 1907, a financial panic was stopped. J.P. Morgan sat with his friends and associates, the big-money men, and their trust in him calmed fears and arrested a market collapse. The financiers responded to moral leadership in a crisis and acted selflessly for the common good.
That, anyway, was what Morgan told members of Congress when they brought him in for questioning. The Progressive reformers in Congress suspected that the trust Morgan talked about was really the basis of “a trust” — a corrupt monopoly on credit in the United States. However, they did not manage to substantiate their suspicion. Technically, writes Ms. Pak, “the Morgans’ network was not homogeneous or collusive,” at least not in ways that one could pin down.
Corruption usually happens behind closed doors, to be sure. Ms. Pak says the men engaged in international trade and investment — the “gentlemen bankers” — too often invoked their right to privacy to stave off scrutiny by the people’s representatives. Again, she may be right. She shows this pugnacity to be a natural defensive reflex given that businessmen were more on their own in those days. They risked much, and paid, if their decisions did not pan out, from their own pockets. There were neither federal bailouts to coddle them, nor many regulations to comply with as there are today.
Ms. Pak, though, draws the wrong conclusion from the unfettered capitalism of the past. She seems eager to lurch far in the other direction. When The Huffington Post ran an excerpt of “Gentlemen Bankers,” a reader responded in the comments section: “Put the NSA in charge of spying on and regulating Wall Street. Seems they already have the tools in place to do the job!” This is sarcasm — one assumes — yet it successfully teases out her message. Ms. Pak thinks the reformers were misguided in sharing to any degree the bankers’ “values with regard to the right of private association.”
Her chapter on “anti-Semitism in economic networks” is well-meaning. As with the chapters tallying up Social Register listings and mentions in Who’s Who, the analysis does not enhance what we knew about the Wall Streeters’ insularity and love of hierarchy. Jews, even cultured and wealthy ones such as Jacob Schiff, were disdained by the mostly WASP gentlemen bankers, even as Jew and Christian did business together.
In a way, it’s as American as apple pie to rant like a John Bircher against the Morgans and the Schiffs, or to protest the special interests like a Tea Party or Occupy Wall Street activist. Our Founders feared concentrations of power, as did the philosophers who influenced them. Men like James Madison and Adam Smith also saw that human beings have rights. They thought about how to channel selfish interests so they could be made to serve, or at least do less harm to, the public interest. Their thinking gave us our constitutional order.
Ms. Pak may be unimpressed by that order, but corruption-fighters must work within it. As the scholar William Schambra has pointed out, even Woodrow Wilson, who took Progressive ideas into the White House, stayed within the U.S. Constitution’s framework of separated powers of government.
The business scandals and banking disasters of 2008, and the Great Recession that followed, have left animosity toward the financial sector. It’s justified, but solutions unmoored from the Constitution — and even from common sense — will end up bringing more injustice than justice.
Lauren Weiner is a freelance writer in Baltimore.
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