Bill Burgess was an associate of mine when boutique investment banks like Hambrecht & Quist and Alex Brown prospered and he and I ‘played’ on the IPO stage. He posted his thoughts on LinkedIn recently. It started me thinking.
Bill’s post: “What do you think? Do you trust Zuckerberg, Musk, Bezos, et al? Front seats at the inauguration. Close to a trillion dollars in net worth. They seem to be turning their financial power into political power. Are their actions and intents guided by a moral compass for greater good or are they guided by personal wealth creation, profit maximization and self-preservation?
They seem markedly different from how folks like Gates or Buffet have wielded their financial power in the past. Is this a good thing? Are we reaching the apex of political-industrial complex or is this just the beginning? The corrosive impact of money in politics is real, leads to questionable decision making, weakens our faith in democracy, and consumes the time and focus of elected officials”.
As my readers will know, my tag line is ‘learn from history or repeat it’ and this post immediately made me think of the Robber Barons of the ‘Gilded Age’. Andrew Carnegie, JP Morgan, Cornelius Vanderbilt, John D Rockefeller and less well-known but equally avaricious and unprincipled, Jay Gould and Jim Fisk who caused a financial crisis in 1869 when they sought to corner the market for gold, which could have collapsed the economy had it succeeded.
While they grew vast fortunes in the late 19th century akin to those of the three billionaires today, 40% of the American working population was living in penury.
Carnegie was a poor Scottish immigrant who built his fortune on the manufacture of steel. JP Morgan, likewise rose from humble beginnings to amass a fortune through banking, Vanderbilt – the Commodore – gained his fortune through controlling the railroad industry and Rockefeller built the behemoth, Standard Oil. Gould and Fisk manipulated the stock market.
Their modus operandi was to create a monopoly allowing them to control what we would today call the Supply Chain and, in the process, dictate prices and eliminate competition. Their business practises also saw them exploiting the workforce – long hours, low wages, unsafe working conditions. They unashamedly exerted significant political influence with substantial campaign donations and the bribery of politicians, shaping regulations (or lack thereof) and laws to reinforce their dominance. Sound familiar?
They were helped by a general belief in the right of the individual to make his own way, an underlying characteristic of American life that places the interests of the one ahead of the interests of the many. People were critical of progressives. Like today’s MAGA view of ‘liberals’ today, most considered progressive politicians as being weak supporters of a ‘nanny’ state – even though, arguably, it worked against their own interests.
Eventually, however, the Robber Barons’ conspicuous display of wealth tipped opinion against them. Growing public anger, fuelled by investigative ‘muckraking’ reporters and the campaigning of political progressives eventually led to antitrust laws and regulation in the early 20th century to counter the unfettered power of the few. Standard Oil, for example, was forcibly broken up into 39 different entities following a Supreme Court ruling in 1911 (although one wonders how the politically-leveraged SCOTUS today would act).
It has been argued that the Gilded Age implosion began with the assassination of President McKinley in 1901. He was a popular two-term president (after leading the USA to victory in the Spanish-American war) when he was assassinated.
His vice president, Teddy Roosevelt, was considered a moderate when he took up residence in the White House but he is actually remembered as a progressive legislator with a reputation as a “trust buster.” Despite his philosophy, nobody could ever accuse Roosevelt of being weak! He cultivated a ‘strong man’ image but acted for the good of the many – pushing a ‘square deal’ for all (no branded golden sneakers or bibles promoted to generate personal wealth) and, in time, over decades, society clawed back control of the engines of societal wealth and well-being through progressive legislation such as Roosevelt’s Pure Food and Drug Act and enforcement of laws that countered the rampant corruption and anti-competitive tendencies of the ultra-wealthy.
I’ve seen it time and time again. History repeating itself. Like a pendulum, things swing from one extreme to another, passing through a period of balance and ‘normality’ on its way. I wonder if we are now in another ‘Robber Baron’ period of US history and wonder, too, where is the next Teddy Roosevelt going to appear to bring the country back from the precipice. I fear we still have further to fall before the pendulum begins to swing back.
As Bill concluded with his piece, lamenting where America stands today, I totally endorse his cry, “Come on America, we can do better!”.