EVERY MAN A SPECULATOR
A History of Wall Street in American Life
By Steve Fraser
HarperCollins. 721 pp. $29.95
Right off the bat, Steve Fraser lets readers know that his new book is an unconventional work of history. A former book editor, Fraser explains that the idea for producing "a cultural history of Wall Street" occurred to him years ago, and when he tried to interest prospective authors in writing it, he was repeatedly turned down. So having decided to do the book himself, he acknowledges his gratitude to those writers, since "were it not for their restraint and wisdom, I wouldn't be writing this preface."
That is an endearing start, so it is a pleasure to report that the rest of "Every Man a Speculator" hangs together remarkably well. The result is an illuminating tour of how the United States has perceived its financial center over two centuries through the eyes of its political leaders, novelists, moviemakers, preachers, cartoonists, ordinary citizens and a host of others. This exercise "is both a probe into the American character and an inquiry into the way the character of America has changed," Fraser writes. In the process of telling this sprawling tale, he sometimes goes on too long, and his attempt to draw sweeping conclusions about America's changed character is strained. But his prose is elegant, and his eye for historical detail is keen, carrying the reader through the many sagas that he entertainingly recounts.
The book's recurrent theme is ambivalence -- the esteem in which some Americans, some of the time, hold Wall Street as a fount of enterprise and prosperity, and the repugnance with which they react at other times to its get-rich-quick atmosphere and propensity to ruinous panics. During the 1830s, for example, Washington Irving, despite suffering heavy losses in railroads and land, defended financial titans such as John Jacob Astor, arguing that the nation's expansion westward and the building of its ports and commerce owed a great deal to "the extravagant schemes of land speculators." But, as Fraser notes, James Fenimore Cooper, who represented Jefferson-style agrarian idealism, wrote novels depicting Wall Street as a place "where virtually everything -- farms, villas, estates, whole towns, ancestral homesteads -- are up for grabs, turning over at ever escalating prices."
A few decades later, during the Gilded Age, some of the most famous robber barons were widely idolized. Consider the rotund "Jubilee Jim" Fisk, with his waxed mustache and penchant for wearing an admiral's uniform, who brazenly looted the Erie Railroad from an ostentatious headquarters that, Fraser writes, was "gaped at by passing throngs of Gothamites." Upon Fisk's death, thousands lined the tracks on which his funeral train passed, and a popular songwriter composed a ballad about his generosity to the poor.
But many Americans "knew in their hearts that these colossuses were first and last confidence men, and they loathed them for it," Fraser writes, citing widely read jeremiads against the moneyed class by authors such as Mark Twain. Among the most powerful indictments of the era were the novels of William Dean Howells, whose leading character in "A Hazard of New Fortunes" goes from being a conservative family man to a land and oil speculator -- becoming, Fraser writes, "a kind of vampire, sucking the poetry out of life, measuring everything, in his cold-eyed, merciless way, by its rate of return."
By Page 500, readers may well wonder where Fraser is heading, after he has marched them through the Progressive Era, the Roaring Twenties, the New Deal and the go-go 1960s. The answer comes in a concluding section in which Fraser scathingly reviews the Reagan years, the Roaring 1990s and the aftermath of the stock market bubble. His argument is that this period produced "an extraordinary reversal of the balance of power," because in contrast with the republic's first 150 years, when the American attitude toward Wall Street, though divided, "was usually a negative one," the zeitgeist is now much more favorable toward the market. In Fraser's view, one crucial reason is that a substantial portion of the population now has a stake (via pension funds and 401(k)s) in rising stock prices. Despite gargantuan swindles perpetrated in the selling of dot-com stocks and the scandals that implicated Wall Street in the collapse of Enron, WorldCom and other major corporations, Americans have responded with a collective shrug, the author suggests.
Here Fraser overreaches. He cites, for example, the scheme hatched in 2003 by John Poindexter for the Pentagon to run a futures market in terrorism, allowing experts to speculate on the prospects for mayhem, the idea being to help intelligence agencies supplement their bureaucratic forecasts with a market-based one. Although Fraser acknowledges that this proposal was squelched as soon as it surfaced publicly, the mere fact that it had been concocted by responsible policymakers, he maintains, was a manifestation of "the Wall Streeting of the American mind" that had taken hold in the 1980s and '90s.
This illustration is symptomatic of the problems with this section of the book. Fraser scorns the "timidity" of the Sarbanes-Oxley legislation that followed the Enron and other scandals, without explaining what was lacking. New York State Attorney General Eliot Spitzer may have soared to political prominence by vigorously prosecuting financiers who fleeced the public, but Fraser dismisses him as "the exception that proved the rule."
Fraser suggests that in economic terms, as well, the "New Gilded Age," especially the 1980s, was even worse than that of the late 19th century because it did not provide the sort of economic benefits -- the building of the transcontinental railroads, the development of the oil and steel industries -- that the robber barons managed to bequeath. The economy of the 1980s was marked by relatively low investment in plant and equipment, so it "relied on the heady vapors given off by the . . . financial-services sector," he asserts, and "the Reagan administration was staffed and supported by people who had no interest in entrepreneurial new technology." Even readers who share Fraser's hearty dislike for supply-side tax cuts may find such claims hard to swallow. Although the rate of investment in plant and equipment was exceptionally high in the late 1990s, Fraser barely mentions the point in passing.
For all these shortcomings, "Every Man a Speculator" provides provocative insights into the way the nation has evolved. And Fraser is surely right to marvel at the alacrity with which Americans have returned to speculation following the dot-com bust. This could be because in so many cases their stock-market losses were offset by gains on the value of their homes. Perhaps when the real estate market tanks, and the Dow gives up even more of the bloat it acquired in the late 1990s, the attitude of the American public will be adjusted appropriately.
