Charity Case

The Felix Chronicles, #12

In which we ask: Who paid for those libraries?


“So," I ask the class in attempt to fight off post-lunch torpor, "what did you think of that Andrew Carnegie reading?”

“Well, I guess he’s the classic American Dream story. Immigrant comes over, works hard, gets rich,” Lisa says.

“To be sure.”

“And screws everyone else in the process,” Joey observes.

“Everyone else? What do you mean, Joey?”

“OK, maybe not everyone else. But what he did at Homestead, locking out those workers – that was cold.”

“Well yes. There was some unpleasantness there. But let’s not dwell on that now, shall we? Tomorrow we’ll talk about that horrid little man, Eugene Debs, who had some peculiar ideas about the role of capital and labor that you would apparently find attractive, Joey. But today I want to talk about charity, Carnegie style.”

“You keep saying ‘Car-nay-gee. Is that the right way to say it?” Kim asks.

“Yes. Car-nay-gee. Like Thorr-row.”

“Weird.”

“Maybe so. Anyway, as you know, Mr. Carnegie becomes the dominant figure in the American steel business. Which puts him right at the center of the industrial revolution. Because steel is absolutely crucial. A man-made material derived from iron – like crude oil, which has to be refined before it can be a workable fuel, iron must be manipulated at very high temperatures to become steel – it has all kinds of applications. It’s indispensable for the railroad business, for example. Steel was to the industrial revolution what fiber optic cable is to the Internet. You don’t always see it behind the walls, but you’re nowhere unless it’s there.”

“Isn’t it also important because it’s light?” Samantha asks. She’s writing her research essay on the skyscraper.

“That’s right. The fact that steel is both incredibly strong and relatively light makes it possible to erect really tall buildings, for example. Steel is so important, in fact, that it becomes a measure of a nation’s industrial prowess – a country’s place in the international pecking order was often ranked in terms of how much steel it produced. That was true well into the twentieth century, when the ruler of China, Mao Tse Tung, essentially starved his own people in a mad quest to boost steel production. But that’s another story. The point is that Carnegie is a very rich man, and he becomes even richer after J.P. Morgan buys him out in 1901 for something like a billion dollars.”

“Pocket change,” Joey interjects.

“Maybe so. But one thing you can do with that kind of money is charity. And Mr. Carnegie is a charitable man. But he’s not content simply to give money away. He thinks it’s important to help people help themselves.”

“That ‘give a man a fish versus teach him to fish' thing,” Susan says.

“Exactly.”

“So Carnegie makes an offer to small towns all around the country. He says that education was the key to his success, and that the key to his education were public libraries. That’s why he says he will – and does – build hundreds of libraries and stocks them with books. But he has a condition: the recipients of these gifts must promise to maintain the libraries and staff them appropriately. My question is this: Does this seem like a good deal to you?”

There’s a pause. A long one. At first I’m glad. Then I start to get a little nervous.

“Well, sure,” Susan finally says. “I mean, why not?”

“I agree,” Nate says.

“Yeah,” says Alec. “After all, it’s his money.”

Aha. My opening. “But is it?”

“Well, yeah,” Alec says. “I mean, he earned it, didn’t he?”

“Well, I dunno, Alec. What do you mean by ‘earn?’”

“What are you talking about, he ‘earned,’ it?” Joey says irritably. “He stole it!”

“Look: it was his company,” Nate says. “The whole thing was his idea. I mean, yes, he had people working for him, but without him the company wouldn’t have happened. He was a talented guy.”

“Yeah, he was talented at ripping people off.”

“It’s like he’s Alex Rodriguez,” Chris says. “Yes, he makes a lot of money. But he packs the stadium. Carnegie here sold a product that a lot of people wanted to buy. Some people are like unbelievably valuable.”

“It depends what you mean by valuable,” Susan replies. “I think I’m changing my mind on this. There’s a lot of people who do incredibly important things who don’t make a lot of money. Like policemen.”

“Or day-care workers, I say. They help make people who make money. But there’s not Hall of Fame for Day-care providers. No play-by-play for the incredible stroking technique – ‘Did you see that? The move she made with her wrist? That gentle turn. Let’s watch it again on the replay.’” Some smiles and laughter, which dies down into a pause.

“I don’t disagree with Joey,” Kim says. “Carnegie wasn’t really a nice guy. You don’t become as successful as he was without stepping on people along the way. Still, he was trying to help people here. I mean, not every rich person of the time did this kind of thing, did they?”

“No,” I answer. “Many did not. Carnegie was not alone. John D. Rockefeller, for example, also did a lot of philanthropic work. We still recognize those names today for the hospitals, research centers, and other institutions they founded. Then there were other people, like James J. Hill, who were scoundrels. And happy to be known as such. ‘At least I’m not a hypocrite,’ they would say.”

“Kim’s right,” Beth avers. At some point you have to be willing to say a good thing is a good thing. No one made Carnegie build those libraries. They surely did some people some good.”

There’s no quick rejoinder for this. But Lisa’s brow is furrowed. “You look like you’re struggling with something,” I observe.

“I am,” she replies. “I understand what Kim and Beth are saying, but it doesn’t quite sit right with me. There’s something about the way this guy gets to decide where and how he’ll do something, the way he can dictate his good deeds.”

“Well I can’t imagine what your problem is,” I reply. “I mean it’s not like this is a democracy or anything.”

“Exactly! That’s it. Why does he get to decide?”

“ Because it’s his money,” Chris replies. And yes, he’s rich, but that’s what rich people do – what they want.”

“Well maybe voters should get to choose,” Lisa replies, annoyance in her voice. “Taxpayers, right?”

“Yeah,” says Joey. “We should tax the hell out of people like Carnegie. Who’s looking out for the rest of us?”

Ted, who’s been quiet for the whole class – no doubt because he didn’t do the reading – looks puzzled by Joey’s vehemence, perhaps because he’s begun paying attention in the waning minutes of class. “What about unions?” he asks.

I seize on this. “Unions? What’s a union?”

Now Ted looks even more confused. “You know, unions. For workers.”

“Why Ted, I haven’t the faintest idea what you’re talking about. Fascinating concept, though. An organization that looks out for the interests of workers? Hmmmm. Let me look into that and get back to you. That’s all for today, people. When we meet again on Thursday, maybe we can have a little investigation into this union business.”

King's Survey: Charity Case

In which we follow a money trail—and ask whose it is

So, gang, what did you make of that Andrew Carnegie reading on the Gospel of Wealth? Let me read the key paragraph again:

This, then, is held to be the duty of the man of wealth: To set an example of modest, unostentatious living, shunning display or extravagance; to provide moderately for the legitimate wants of those dependent upon him; and, after doing so, to consider all surplus revenues which come to him simply as trust funds, which he is called upon to administer, and strictly bound as a matter of duty to administer in the manner which, in his judgment, is best calculated to produce the most beneficial results for the community-the man of wealth thus becoming the mere trustee and agent for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.

 —Sounds like Carnegie sees himself as the ultimate American Dream boy.

Explain what you mean, Ethan.

—I mean he sees himself as someone who starts with nothing, works hard and becomes rich.

—And screws everyone else in the process.

Everyone else, Brianna?

—OK. Maybe not everyone else. But a lot of people. Look at what he did at his factory at Homestead, locking out those workers. That was cold.

Well yes, there was some unpleasantness there. But let’s not dwell on that now, shall we? We don’t want to end up sounding like that horrid little man Eugene Debs, who has such peculiar ideas about the relationship between capital and labor.

—Yeah: that the workers make the capital.

Again: let’s talk about something more pleasant, shall we? Like charity, Carnegie style.

—You keep saying Car-nay-gee. Is that the right way to pronounce it?

Yes, Kylie. Like Henry David Thorr-Row.”

—Weird.

Maybe so. Anyway, as you know, Carnegie becomes the dominant figure in the new American Steel business in the closing decades of the 19^th century. Which puts him right smack in the middle of the Industrial Revolution. Because steel is absolutely crucial. A man-made material derived from iron—like oil, it has to be refined before it can be a useable fuel, iron must be manipulated at very high temperatures to become steel. Once you do that, though, it has all kinds of uses. It’s indispensable in the railroad business, for example. Steel is to the Industrial Revolution what fiber optic cable is to the Internet. You don’t always see it behind the walls, but you’re nowhere unless it’s there.

—Isn’t it also used in buildings?

Indeed it is, Kylie. The fact that steel is both incredibly strong and relatively light makes it possible to erect really tall buildings in cities like New York and Chicago. Steel is so important, in fact, that it becomes a measure of a nation’s industrial prowess—a nation’s place in the global pecking order was often ranked in terms of its steel production. That was true well into the 20^th century, when the leader of China, Mao Tse Tung, starved his own people in a mad quest to boost steel production in an initiative known as the Great Leap Forward. But that’s another story. The point is that Carnegie becomes a very rich man making steel, and becomes richer still when he sells his business to banker J.P. Morgan for something like a billion dollars.

—Pocket change.

Maybe so, Emily. But one thing you can do with that kind of money is charity. And Mr. Carnegie is a charitable man. But he’s not content to simply give the money away. He thinks it’s important to help people to help themselves.

—Give a man a fish, blah blah blah.

Just so. So Carnegie makes an offer to communities around the country. He says that education was the key to his success, and that the key to his education was public libraries. That’s why he offers—and in fact he does—build hundreds of libraries and stocks them with books. But he has a condition: the communities that receive these gifts must promise to maintain these libraries and staff them appropriately. My question is: Does this seem like a good deal?

—Well sure. I mean, why not?

—Jonah’s right. After all, it’s his money.

Hmmm. His money. But is it, Chris?

—Well, yeah. He earned it, didn’t he?

Well, I don’t know, Chris. What do you mean by “earn?”

—Right. He didn’t earn it. He stole it.

—Oh, c’mon, Brianna. It was his company. The whole thing was his idea. I mean, yes, he had people do work for him. But without him, the company would have never happened. He was a talented guy. And a guy who created jobs.

Bear's Market

In House of Cards, William Cohan offers a crystalline reading of the opaque business practices that brought down an investment bank -- and the U.S. economy

The following review was published earlier this week at the books page of the History News Network.

Darling," said Judy, "Daddy doesn't build roads or hospitals, and he doesn't help build them, but he does handle the bonds for the people who raise the money.”

“Bonds?”

“Yes. Just imagine that a bond is a slice of cake, and you didn’t bake the cake, but every time you hand somebody a slice of cake, a tiny little bit comes off, like a little crumb, and you get to keep that.”

--Tom Wolfe, Bonfire of the Vanities (1987)

Finishing this book, it's hard not to wish the financial crisis of 2008 wasn't worse. Given the ongoing wreckage it has caused, and the likelihood that an even worse disaster may well have destabilized the political no less than economic system, this perhaps cannot be a responsible opinion. On the other hand, given the resistance of the banking industry to structural reform and the U.S. government's inability to extricate itself from the implicitly embraced doctrine that some financial institutions are too big to fail, perhaps we need a few more stories like the one William Cohan tells here to shake sober people out of their complacency.

That's the real value of this book: that it tells a story -- more specifically, in the words of its subtitle, a "tale of hubris and wretched excess on Wall Street." By this point, names like John Mack, Jamie Dimon and Lloyd Blankfein, and institutions like Bank of America, Citibank and Lehman Brothers, are at least vaguely familiar to people whose eyes never cross the business pages of a newspaper. To a greater or lesser degree, we understand the situation in its broadest outlines, one of excessive speculation and inadequate supervision, which intersected in the housing bubble of this decade. What we get here is a close case study of the first domino to fall: the collapse of the once-mighty investment bank, Bear Stearns, in March of 2008.

Cohan renders his narrative in three concentric circles. The first is a gripping, novelistic account of the final days of the firm. We're thrust into the hurricane of its credit crisis, and the lurching terror, hope, anger and resignation of the bank's leaders as it is smashed into a shadow of its former self and geets handed off, with government aid, to JP Morgan Chase. The second section of the book traces the origins of the Bear Stearns in the early twentieth century, focusing on a trio of chief executives: "Cy" Lewis, "Ace" Greenberg, and the flambouyant, bridge-playing Jimmy Cayne. The final section situates Bear in the larger feeding frenzy of Wall Street, as the firm's never especially scrupulous practices edge toward fraud and the increasingly hapless Cayne (off playing cards and smoking $140 cigars) is forced from leadership.

This approach has real advantages in segmenting the saga into digestible chunks (which can in fact be appreciated separately), though it does have the effect of marginalizing the otherwise central Cayne -- whose arrogance and narcissism become increasingly tiresome -- in the crucial first third of the book. Some readers may also have trouble, as I did, in following, both as a matter of comprehension and interest, the intricacies of investment banking. Editing may have been a factor here: the book was published in March, a mere year after Bear fell and six months after the financial crisis became acute. A long epilogue traces the collapse of Lehman Brothers in September; one hopes a new afterword will be in the offing for the paperback edition.

One service House of Cards performs uncommonly well is demonstrate something critics of modern finance capitalism like Kevin Phillips have been asserting for some time now: that investment banks like Bear Stearns produce little of value -- a term I used advisedly here -- to society at large. Industrial titans of yore like Andrew Carnegie and John D. Rockefeller actually made things. More to the point, a banker like J.P. Morgan, who was hardly an hardly attractive human being, not only acted to stabilize the economy at crucial moments like the Panic of 1907 and in the creation of U.S. Steel, but had to work to gain the confidence of depositors over time. Investment banks like Goldman and Bear, by contrast, did not even bother to take responsibility for the earnings of ordinary people, but rather relied on extremely large loans of 24 hours duration to finance their operations and skim off cream from the churn of their transactions. Or, to switch metaphors, this game of musical chairs seemed safe -- what, after all, could go wrong in a day? -- until one firm with nowhere to sit threatened to out the entire economy with it. Ironically, the one time these banks arguably participated in improving society through loan programs designed to foster home ownership (here the Clinton no less than the Bush administrations share blame for some careless social engineering), they abused their opportunities by throwing money at people who had no business receiving it and slicing their loans into "tranches" that metasisized in the banking system as a whole.

Again: in its broadest outlines, this is a tale often told, and well understood (most recently by New York Times reporter Andrew Ross Sorkin in Too Big to Fail). What's remarkable here is the speed with which Cohan, former investment banker himself, was able to gain access to talk to the principals, talk with them at length, and render a first draft of history that will be of considerable value for some time to come.

Some may hear stories like these and react with outrage, as the so-called "tea-baggers" have and generalize it to cast a pox on any government intervention in the economy at all. Others may shrug with indifference: greedy bankers, ineptly monitored, is something new? Still others may find satisfaction in that people like Cayne really were punished for their actions in the only language they understand: financial loss. But we will all stand to pay the price for allowing business as usual to resume, and if in what follows we are swallowed in the deluge we will suffer a rough justice. Allowing such commissions constitues a crime of omission.

More than just the Benjamins

This is the second in a series of exploratory pieces on the myth of the self-made man in American cultural history. (See "The Self-Made Man in Hiding," two posts below.)

To a great degree, the erasure of the self-made man from common parlance reflects a shared understanding – or, more accurately, a shared misunderstanding – on the part of defenders and critics alike. This involved a narrowing of the concept to a single archetype: the businessman. Even those who invoked the self-made man in politics almost always credentialed themselves as self-made in the realm of commerce (which has been standard operating procedure in for Republicans in particular). Those who did not, like Bill Clinton and Barack Obama, were not taken seriously as such by their opponents or particularly cherished as such even by many of their supporters.  I’d venture to say Obama’s wonky credentials and slightly noblesse oblige background as a community organizer excites his core liberal supporters more than the fact his mother spent time on food stamps.

Yet even a cursory immersion in seventeenth, eighteenth, or nineteenth century U.S. history suggests that the conception of the self-made man was a good deal broader than business or politics. Yes, of course, John D. Rockefeller was considered an exemplar of the self-made man. But so Ralph Waldo Emerson. Benjamin Franklin is widely considered the patron saint of American capitalism. But he was also a self-made scientist, diplomat, and writer. The concept expands far beyond commerce to include the clergy (Charles Grandison Finney to Norman Vincent Peale), the military (Andrew Jackson to George Patton), and other domains.

The other problem with the prevailing economic conception of the self-made man is that it obscures changes in the nature of U.S. capitalism over 250 years. Initially, such capitalism was agricultural, represented by the self-sufficient farmer. Though he is not typically remembered on such a basis, this was an important part of George Washington’s identity and the basis of a fortune that came from far-sighted independence from mono-crop cultivation and British finance. The spokesman for the self-made man as farmer was Thomas Jefferson, who famously described the autonomous yeoman (who may or may not have owned slaves) as those “whose breasts [God] has made his peculiar deposit for substantial and genuine virtue.” Such figures were sometimes imagined as operating outside a global trade market, but it has been a long time since anyone has taken that idea very seriously. Nor do I.

By the late eighteenth century, a competing notion of the self-made man emerged, of which Franklin was widely – and properly – viewed as emblematic. This was a form of capitalism that was mercantile: a pre-industrial, but non-agrarian, basis of wealth creation. This was the self-made man as craftsman, merchant, and eventually manufacturer, albeit manufacturer of the small-scale sort. Such a vision was powerful and durable, so much so that it persisted long after it had been effectively become obsolete. As many scholars of novelist Horatio Alger have noted, his books for boys peddled an early 19th century mercantile vision in an era that had long since been overtaken by late 19^th century industrial capitalism.

Indeed, it is this phase – the phase of the industry titan, stretching from Andrew Carnegie through Henry Ford – that more than any other has survived most vividly in the American imagination. This was the self-made man as master of mass production: steel, oil, cars. Though sometimes a subject of scorn, even hatred in their day, Americans on the whole were fascinated by such figures and sought to emulate them – again, long after capitalism had moved on to a new phase.

The next phase, stretching between the 1920s and the 1970s, posed more of a problem for the myth of the self-made man. This was the age of managerial capitalism, in which values like planning, collaboration and coordination were central. In such an environment, the valorization of the self-made man centered on the corporate executive. Perhaps the most vivid examples of the archetype were the so-called movie moguls, with names like Fox and Warner and Disney, who created – but, more decisively in terms of their legacies, managed – enterprises in which they were able to generate a mystique of creativity. F. Scott Fitzgerald’s unfinished 1940 novel The Last Tycoon, inspired by the career of cinema legend Irving Thalberg, vividly evokes this particular variation on the self-made man.

The closing decades of the twentieth century witnessed a new valorization of the individual entrepreneur, from Sam Walton to Mark Zuckerberg, tirelessly upheld by boosters as role models worthy of emulation. To a great extent this post-industrial phase of U.S. capitalism focused more on services and consumption rather than production. Because of the increasing sophistication of the marketplace, the self-made archetype abandoned the autodidactic model of earlier times and avowedly embraced formal education as a means of upward mobility (even if mass access to such an education increasingly became a fantasy along the lines of an Alger character becoming a pastoral merchant in an industrial age).

I’ve made some effort to delineate phases in the economic model of the self-made man as part of a larger point that even this perceived dominant variation of the myth was itself subject to shifting currents and emphases and often marked by cultural lag.  But again, my larger point is that just as multiple versions of the self-made man jostled within the realm of commerce, multiple versions jostled outside it as well. At any given moment, an economic version, a political version, and a cultural version, among many others, were available and competing for allegiance in a U.S. population whose diversity whose attention united by little else. At the very moment Mark Zuckerberg was embodying the self-made myth of entrepreneurial pluck, Bruce Springsteen was tapping its cultural power and the evangelical minister Joel Osteen was preaching an ethos of self-help that burgeoned into a religious media empire.

 The fact that in an earlier age these men would have been explicitly lionized as self-made does not necessarily mean they (or their predecessors) began with nothing. As noted, Zuckerberg came from a background that was thoroughly bourgeois; Springsteen’s evocatively named hometown of Freehold was more suburban than ghetto; Osteen inherited the pastorate whose size he trebled. They were nevertheless seen, not altogether wrongly, as people who realized objectives that initially seemed unlikely and attributed to their unique talents. Luck was sometimes mentioned, though almost always as a secondary consideration. Almost never in American life has success been considered arbitrary; the implications of such an idea were too troubling to fully embrace.

Which is not to say that the honor rendered a self-made man was always rooted on a moral basis. For every Carnegie or Rockefeller who invoked a moral claim and accepted a moral obligation, there were scoundrels like the railroad magnate Jim Fisk, who was accepted, even honored celebrated, as such. Jessie James, Bonnie & Clyde, Vito Corleone, Tupac Shakur, Tony Soprano: the pantheon of self-made men has a full gallery of rogues, real and imagined (even if there was always some form of code of honor among such thieves, very often one of race or ethnicity that served as a foil for the white, Anglo-Saxon foundation of U.S. self-made mythology).

Mass-manufactured self-made men

The transformation of a myth in the industrial era.

The following post is part of an ongoing series on the self-made man in U.S. History.

“All over the land were thousands like them, self-made men quick to lay hands on opportunity if it knocked on the door, ready to seek it out if were slow in knocking, recognizing no limitations on their powers, discouraged by no shortcomings in their training.

 –Vernon Parrington, Main Currents in American Thought, 1927

It has long been understood, in economics as in so many other ways, that the Civil War marked a dividing line in American history. Before the war, the United States was an overwhelmingly agricultural nation with a small mercantile elite; after the war, it became a modern industrial society in which the factory steadily displaced the farm from the center of the nation’s consciousness, and the urban worker steadily displaced the yeoman as the embodiment of the nation’s working classes.

There was also a transformation within the world of commerce. Andrew Carnegie, who was born into one world but came of age in the other, described the difference in a famous 1889 essay that represented the conventional wisdom of the time – and ever since. “Formerly articles were manufactured at the domestic hearth or in small shops which formed part of the household,” he wrote. “The master and his apprentices worked side by side, the latter living with the master, and therefore subject to the same conditions. When those apprentices rose to become masters, there was little or no change in their mode of life, and they, in turn, educated in the same routine succeeding apprentices. There was, substantially, social equality, and even political equality, for those engaged in industrial pursuits had then little or no political voice in the State.” While some were inclined to affirm, even sentimentalize this vision, Carnegie was not among them. “The inevitable result of such a mode of manufacture was crude articles at high prices,” he asserted. Far better was the (inevitable) replacement of this regime with a more efficient, if less egalitarian, system of mass production.

Not everyone agreed such a system was better, of course. Indeed, a significant part of the history of the 19^th century involved focusing on the ravages of this new order, both in terms of the material deprivations it imposed on unskilled labor, as well as in the evisceration of social and political quality. But its reality rarely seriously questioned; nor was the role of the Civil War in bringing it about. Charles Francis Adams Jr., in the army, was struck in 1871 by the “greatly enlarged grasp of enterprise and the increased facility of combination” that characterized the U.S. economy in the years following 1865. “The great operations of war, the handling of large masses of men, the lavish expenditure of unprecedented sums of money, the immense financial operations, the possibilities of effective co-operation were lessons not likely to be lost on men quick to receive and to apply all new ideas.”

But, as Adams perceived, the vast new sense of scale in the American economy was marked by a paradox: the growing scale of the economy was managed by a shrinking number of individuals. Nowhere was this more obvious than in the definitive industry of the 19^th century: railroads, presided over by people with names like Vanderbilt, Drew, Gould, Fisk, and Huntington. “Single men have controlled hundreds of miles of railway, thousands of men, tens of millions of revenue, and hundreds of millions of capital,” he noted. “The strength implied in all this they wielded in practical independence of control both of governments and of individuals; much as petty German despots might have governed their little principalities a century or two ago.”  

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Railroads, along with other forms industrial capitalism, were springing up all over the world in the second half of the 19^th century, bringing with them great disparities of wealth and power from Brazil to China. But nowhere were such phenomena more obvious, even glaring, than in the United States, where equality had long been the hallmark of American society.  And yet this outcome was not simply a commercial coup d'état by the new breed of industrialists The fact that they imposed their will begs the question how they were be allowed to, and why the oppressions caused by their success, while often loudly protested, never resulted in a successful challenge to their right to run that they considered their business. Which leads us to an important reality of the post-Civil War order: it was governed by a cultural logic that took shape much earlier in the century. At the heart of this logic was a transformation in the understanding of the self-made man in the decades before the war.

 The key to understanding this transformation was a concept that had guided the Founding Fathers: natural aristocracy. Charles Francis Adams Jr.’s great-grandfather had used the term in a 1790 letter to Samuel Adams. “Nobles have been essential parties in the preservation of liberty, whenever and wherever it has existed,” John Adams wrote to his cousin. “By nobles, I mean not peculiarly an hereditary nobility, or any particular modification, but the natural and actual aristocracy among mankind. The existence of this you will not deny.” A generation later, Thomas Jefferson invoked the phrase in his own correspondence with Adams. “I agree with you that there is a natural aristocracy among men. The grounds of this are virtue and talents,” Jefferson explained, contrasting it with “artificial aristocracy, founded on wealth and birth, without either virtue or talents.” This elite was rooted in accomplishment, not privilege: it was self-made. For all their differences in temperament, experience, ideology, Adams, Jefferson, and other Founding Fathers had a deep personal investment in it as the basis of their careers (though Adams, it should be said, cast a skeptical eye that that it could be engineered as easily as Jefferson seemed to think it could be).

But the legitimacy was of this self-made aristocracy went far beyond that: its moral basis was civic. “May we not even say, that that form of government is the best, which provides the most effectually for a pure selection of these natural aristoi into the offices of government?” Jefferson asked Adams, noting that in general, the common people “will elect the really good and wise.” Adams was not so sure, lamenting the “Stupidity with which the more numerous multitude” tended to be tricked by fake aristocrats. But he never doubted the necessity of a natural aristocracy were the republic to survive.

As many subsequent observers have noted, the Founding Fathers were in an important sense victims of their own success. In crafting a remarkably tensile Constitution that checked some of the more venal impulses of their successors, and in bequeathing a nation with relatively secure boundaries and vast natural resources, they in effect made mediocrity possible (both Jefferson and Adams were appalled by Andrew Jackson, who wore his lack of refinement as a badge of honor). Or, to put it more charitably, they created the possibility for natural aristocracies whose primary impetus was not civic, the way it had been for Franklin, Clay, and Lincoln. The pursuit of happiness could take new forms.

Whether as a necessary evil or a positive good, the Founding Fathers believed that there had to be a place for the voice of the people in choosing natural aristocrats to be their leaders. But by the early decades of the nineteenth century, an imperative to create and maintain that channel of communication – evident in the steady recession of eligibility requirements for voting, especially in the new territories that rapidly became states – created democratic imperatives that took on a life of their own, in large measure because allowing cream to rise was an important premise of natural aristocracy itself. Today we’re very aware of the glaring limits of this vision – the way it excluded women, African Americans, Native Americans, and even many immigrants. But the expansion of the electorate, typified by the abandonment of property qualifications for voting, created a polity that was really striking in its relative scale and in the force of internal logic that would inexorably lead not only to the absorption of such outsiders, but also the possibility of liberty experienced and expressed outside the boundaries of traditional politics.

No one captured these dynamics more vividly than the early 20^th century cultural historian Vernon Parrington, whose three-volume history, Main Currents in American Thought, remains among the most lively chronicles of our national life. “Society of a sudden was become fluid,” he wrote of the early nineteenth century. “Strange figures, sprung from obscure origins, thrust themselves everywhere upon the scene. In the reaction from the mean and skimpy, a passionate will to power was issuing from unexpected sources, undisciplined, confused in ethical values, but endowed with immense vitality. Individualism was simplified to the acquisitive instinct.”  The hallmark of such figures, whether in the form of frontiersmen like Davy Crockett or showmen like P.T. Barnum, was the way their notion of the self-made man operated independently of – even defied – the logic of natural aristocracy. Mobility, literal and figurative, was becoming an end unto itself.

Next: the transformation of the corporation in 19th century national life.

God, mammon and the self-made man

The following is the last in a set of 3 exploratory posts on the place -- and lack thereof -- of the self-made man in American cultural life. (The other two posts ran on July 9 & 13, 2012.)

While I have said, and maintain, that the essence of the self-made man is plural and diverse at any given time, I also believe that at certain moments in U.S. history some domains of the archetype have been dominant and then have given way to others. In other words, there is a story here. Insofar as that story has been told to date, it has largely focused on tracing shifting currents in the blizzard of self-help literature that blanketed the British North America between the seventeenth and nineteenth centuries. In our time, however, the discourse has been less a matter of formal exhortation than illustration through specific (and sometimes fictive) characters and personalities whose stories in effect become fables of success, which like all good fables, are marked by countercurrents subject to multiple interpretations. I believe I can trace this story, peopling it with a series of biographical sketches, and explain how the self-made man emerged, proliferated, narrowed and appeared to disappear. This will be the heart of the book, whose outlines I will now trace.

As virtually all historians of the topic have noted, the origins of the self-made man in English North America are fundamentally religious. In the colonial era, the concept was, paradoxically, a godly imperative that emerged from the dialectics of Protestant Christianity. Reformation era sects in England marked their distance from corrupt Roman Catholic practices by emphasizing a personal relationship to God. While such sects rejected notions of free will that were later central to the conception of the self-made man, the primacy they placed on the individual conscience proved pivotal in the emergence of what would become an increasingly secular vision of the self in which moral considerations would long linger. Such dynamics can be well illustrated in the career of Roger Williams (above), the essence of the theological individualist and a man widely regarded as the founding father of religious liberty in America. They call also discerned in the philosophy of important evangelists like Jonathan Edwards and George Whitefield.

            Religious versions of the self-made man would remain important into the eighteenth century. But the coming of the American Revolution opened the possibility of a fundamentally political vision of the self-man, one vividly embodied by Founding Fathers like George Washington and John Adams (who was fond of describing himself as the son of a shoemaker). This model remained important through the development of ratification of the Constitution, receding in centrality thereafter, though there would continue be important figures (notably Abraham Lincoln) who found their calling, sometimes after periods of uncertainty and adversity, in politics.

The very success of the founding generation cleared a literal and figurative space in which millions of ordinary Americans could imagine new destinies for themselves. Some of these people, like Henry David Thoreau and Walt Whitman, flaunted their ordinariness even as their singular talents allowed them to write themselves into history. Others, like the powerfully inspiring Frederick Douglass, dramatized the way the concept could expand to encompass even the most unlikely of prospects.

By the second half of the nineteenth century, however, the durable link between the self-made man and economic success had become apparent, dominant, and widely celebrated. A series of figures born in the crucible years of 1835 to 1840 became the barons of their age, defining the imagination of their peers and subsequent generations well into the 20^th century. Perhaps more than other self-made men, they also dramatized the ambiguities, even contradictions, involved in such an identity. Crucial figures here stretch from Andrew Carnegie (archetype of the self-made man as immigrant) to Thomas Edison (the scientist as entrepreneur) and Henry Ford (whose rustic sensibilities made him a somewhat ironic godfather of consumer capitalism).

Over the course of the twentieth century, the measures of success steadily shifted from outward achievement to inner satisfaction, variously understood and achieved through a series of sub-cultural movements that have come to be collectively known as “New Thought.” In this psychological age, the terrain shifted back toward more cultural ground. Particularly important here is the new phenomenon of the celebrity, embodied by figures who ranged from Douglas Fairbanks to Clint Eastwood, who defined the parameters of what came to be known as “the good life.” There was tension, even paradox, built into a conception of an authentic self that was often commercially purveyed.  As a result, there was a partial rebellion against this model in the iconoclastic self-made men in the Beat era and the counterculture of the 1960s, both of which rejected the avowedly economic conception of the self-made man as hopelessly atavistic. The intentions of these iconoclasts notwithstanding, they failed to alter many of its underlying premises.

Indeed, for all their variety, the various iterations of the self-made man finally rested on a core premise that laced through them all. That premise is agency: the self-made man was the master of his own fate. Other societies had made similar claims – indeed, all societies, from Confucian China the Imperial Britain had self-made men – but no society had ever been quite so insistent on this point as the United States. As I began by saying, we have difficulty today taking this idea seriously at face value. And yet, in part because we are uncomfortably aware of the degree to which our lives are determined by factors beyond our control, a presumption, if not an obsession, with agency lingers even as it has receded from the foreground of public discourse, apparent everywhere from colleges we attend to the beverages we order at our local Starbucks.

This seems like a good moment to bring back people who have been missing since the start of this proposal: women. In an important sense, the agency of men was understood, even defined, when juxtaposed by the lack of agency for women. Of course, men’s agency was almost always partial by dictates of race, class, age and health, among other reasons. But in an important sense manliness correlated to the degree a man could call himself the master of his fate. Women, by contrast, were understood in terms of the way their lives were tethered to others, male and female. Sometimes this tethering was understood as chosen; sometimes it was imposed. Either way, it was understood as natural, a gendered default setting.

And yet from the very beginnings of American history there have been women who for various reasons found themselves in situations of perceived self-making. The wealthy widows of colonial Virginia, empowered by their inherited fortunes, are one example (though an example that also illustrates the way their autonomy was still circumscribed by the imperatives of marriage). Anne Hutchinson, articulating a libertarian theological vision far more challenging than that of Roger Williams, was another. The fictive Scarlet O’Hara, determined to maintain her family farm in the face of Yankee conquest, carried the torch of Jeffersonian yeomanry into the post-Civil War era. Madame C.J. Walker, an African American entrepreneur who built a cosmetics empire, became one of the great success stories of American business at the turn of the 20^th century. These and other examples will salt the text, providing counterpoint and context for understanding the possibilities and limits of the self-made man beyond its stated gender boundaries.

So while each chapter of the book will have a temporal locus (Founding generation, Industrial Revolution, etc.) each will include multiple examples of self-made men across a series of occupational domains. They will also include examples of self-made women, and sometimes discuss the legacies of these figures in subsequent generations. A particular figure may also surface more than once to illustrate different aspects of self-made man iconography (Washington, for example, was a self-taught military leader as well as an exemplar of the rural gentry.) In so doing, the book will have a clear sense of structure and a narrative arc, but also a sense of texture.  In effect, the self-made man will function as a kind of lens through which American history as a whole can be seen in a new and prismatic light.

To what end? At the simplest level, the purpose of this book is to recover a receding notion of our national identity and to restore its vitality by broadening it. Yet one may plausibly wonder if such recovery is all that useful, given the sometimes unsavory implications of self-made man mythology, like its tendency to inhibit, if not actually prevent, a communal approach toward solving communal problems and an impulse to blame victims for their own misfortunes. Yet a broader look at the historical record also shows that self-made men have been among the nation’s most imaginative and stalwart social reformers in terms of creating personal or protecting opportunity. (President Lincoln issued the Emancipation Proclamation with a very conscious understanding that he was making it possible for many future generations of self-made men.) A clear-eyed look at both the advantages and drawbacks of the self-made man mythology may become a useful instrument for charting a future course for ourselves and the nation at large.

Of course, because I’m still at an early stage of writing and research, there are as yet many unasked questions, let alone foreseeable answers. I will say, however, that I embark on this undertaking with a general sense of unease about the direction of the country. To some extent this is a matter of perceived collective denial, if not hypocrisy: while many of us consider the self-made paradigm dated and unrealistic, we continue to embrace many aspects of it. That might not be so bad – indeed, it is, as it often has been, an energizing notion that has spurred innovation and a salutary sense of confidence that generates self-fulfilling prophecies. But I suspect there are times when self-making becomes conflated with self-gratification. This concern is centuries old, and one reason why so much of the literature of the self-made man is rooted in religious discourse. The moral dimension of the equation has largely evaporated in the last century, in large measure because it has been rightfully viewed as unrealistic. Yet one must wonder, given the past and present of societies in which individual citizens are expected to orient their lives around something other than the self, how long the United States can maintain a sense of cohesion and purpose around the self-made man, especially in its narrowly economic formulation. It’s an idea that merits another searching look. 

Unwarranted speculation

In When Wall Street Met Main Street: The Quest for an Investors Democracy, Julia C. Ott describes the early 20th century moment when shareholding replaced stakeholding

The following review was posted recently on the Books page of the History News Network site. 

Once upon a time, Americans believed that economic success was a matter of hard work and thrift. The word "investment" was commonly understood to mean the expenditure of resources in an enterprise directly controlled by its owner. Even corporate titans like Andrew Carnegie and John Rockefeller understood their success in these terms (though not their critics). An avowed Social Darwinist like William Graham Sumner counterposed "the simple honest laborer, ready to earn his labor by productive work" with "the vicious, the idle, and the shiftless." In the popular imagination going back to the time of Alexander Hamilton, those who sought wealth through financial instruments like stocks and bonds were scarcely more than barroom gamblers. Such a view may have been simplistic, but it was certainly widespread, an article of faith in the Democratic party from the Age of Jackson to the Age of Roosevelt.

Ah, the good old days.

The story of how finance capitalism was transformed from a marginal element of modern industrial society to the inescapable imperative of contemporary life -- even after its demonstrable failure in 2007-2008 -- is the story Julia C. Ott tells in When Wall Street Met Main Street. The core of this story is a historical hinge, a crucible of about twenty years between the Progressive era and the stock market crash of 1929, when the logic of modern economic life snapped into place. It's a tale of contingent events and unexpected consequences of intended events, but it's also one of a determined elite successfully manipulating regulators and public opinion through the creation of a concept Ott dubs "an investor's democracy": the idea that replacing a nation of stakeholders with a nation of shareholders would stabilize and extend an American way of life in ways more meaningful than votes, unions, pensions, or self-governance. What's more astounding than the mere fact of this marketing strategy is the degree to which it succeeded.

One of the great ironies in the emergence of investor democracy ideology is that it was to a great extent the creation of those who presumably sought to contain and regulate capitalist excesses. The Pujo Committee of 1913 (a staple of SAT II U.S. History exams) made the first step in this direction, seeking to legitimate trading by reforming the market. Organizations like the New York Stock Exchange, which stood to benefit from such legitimacy, nevertheless parried a potential loss of prerogative by arguing that better results would be achieved through self-regulation and reporting. But it was Progressives themselves who demonstrated just what mass investment could do in the bond drives of the First World War, which used sophisticated marketing techniques (as well as less subtle ones of coercion) to finance the cost.

The federal government was strikingly good at this, and the early postwar featured even greater capital flows into the national state as well as proposals for nationalizing the rail system. But increasing impatience with Progressive policy as well as a full-bore mobilization of private interests led to a rejection of such approaches in favor of allowing capital to flow toward private enterprise. An emergent ideology of "New Proprietorship" promulgated by advocates like Thomas Nixon Carver and William Z. Ripley worked tirelessly to convince policymakers that mass investment by workers and consumers in private companies would serve as an excellent hedge against socialism as well as a modern incarnation of the family farm or small business that had previously been the core aspiration of republican ideology.

Such a version of history conveniently overlooked the fact of slavery, tenant farming, and wage labor, which always lacked such a stake in enterprises. By contrast, the boosters of New Proprietorship were very mindful that giving investors a piece of the action was hardly the same thing as control of a company, which remained firmly in the hands of corporate elites. Ott injects a gender motif into this analysis, contrasting a "feminized" vision of collective investment in instruments like pensions and social welfare with a "masculine"one of individuals empowered to amass wealth in the form of a diverse portfolio, typically in the service of a romanticized vision of retirement as a time of painless leisure. Even though women were in some cases important shareholders in AT&T -- known for decades as a blue-chip "widows and orphans" stock, a masculine, libertarian vision of trade and finance took root; hence the instinctive, dismissive description of liberalism as "the nanny state" by contemporary radio talk show hosts.

The truly astounding fact of the ideological regime that Ott limns here is how durable it has proven. The Great Depression shook it, but left the self-policing core of the NYSE intact. The primacy of the shareholder over the consumer, worker or even the manager, which first took shape early in the century, became increasingly central to the logical of modern business, achieving unquestioned supremacy in the Reagan era. Even now, when the literal and figurative bankruptcy of an investor-driven regime has saddled taxpayers with bills whose scale is only beginning to be felt, it seems almost impossible to imagine an alternative financial universe in which banks and other financial institutions are not too big to fail. As Ott notes, every major presidential candidate since Reagan has proposed some form of Social Security privatization, and even Barack Obama, who opposed the efforts of George W. Bush in this regard, nevertheless continues to insist that individuals should pursue higher risk investment strategies in order to achieve financial security.

The clarity and force of Ott's message is sustained by its medium: this is a sterling piece of scholarship. Its 225 succinct pages are buttressed by another 70 pages of notes, scaffolded into chapters that are sturdily framed with clear introductions and conclusions, as well as carefully chiseled topic sentences. The utter solidity of the volume is itself a form of force. The final irony is that it leaves you badly shaken.