Business

Growing up in a family with many members who earned their livings on Wall Street and with many ancestors and relatives who had done the same, I—as might be expected—very early heard stories of business that I found as fascinating as the tales of military action I was soaking up at the same time. The novelist Thomas Hardy explained that “war makes rattling good history,” but it was James Gordon Bennett, the founder of the New York Herald, who explained why business makes the same. Since the Industrial Revolution, with all its new opportunities, Bennett wrote in 1868, “Men no longer attempt to rule by the sword, but find in money a weapon as sharp and more effective; and having lost none of the old lust for power, they seek to establish over their fellows the despotism of dollars.” The workings of democracy, of course, prevented any despotism from developing, but the battles for success and dominance in the marketplace can be as exciting as any battle for political or military dominance.

Unfortunately, it was Karl Marx who popularized the word capitalism, so it is perhaps not surprising that its history, until recently, has been largely written by its enemies. Indeed, many of the “classics” of American business and economic history suffer from a profound animus on the part of the authors toward the economic system of the United States. Among the books in this tradition are History of the Great American Fortunes by Gustavus Myers, History of the Standard Oil Company by Ida Tarbell, and The Rise of American Civilization by Charles A. and Mary R. Beard.

One of the most famous books of this ilk is The Robber Barons: The Great American Capitalists, 1861-1901 by Matthew Josephson, first published in 1934 (not a good year for capitalism) and still very much in print after 70 years. It is, to be sure, a great read, and it was the book that firmly established the previously obscure phrase robber barons in the American lexicon as the collective term for the capitalists of the Gilded Age. But it is deeply tendentious and dishonest, exhibiting just about every intellectual sin it is possible for a historian to commit, not to mention the fact that much of the “research” seems to have been lifted from Gustavus Myers.

However, there have always been books written by people who find business and economic history as fascinating as I do and have no ax to grind (or, perhaps, they grind the same axes I do, so I’m less apt to notice). Here are 10 books that have had a particularly big impact on me over the years.

Panic on Wall Street: A History of America’s Financial Disasters

by Robert Sobel (1968; Beard Books). This may have been the first book of explicitly business history I ever read, and I loved every page of it. Sobel’s book is the tale of 12 great panics that hit Wall Street between 1792 and 1962. He tells their stories with clarity and sets each clearly in the economic context of its time without burdening the reader with unnecessary theory. The book is still in print in paperback after more than 35 years, no small compliment to the author by the marketplace.

Morgan: American Financier

by Jean Strouse (1999; HarperCollins). J. P. Morgan was the most powerful banker in American history and arguably the most powerful banker who ever lived. As he didn’t suffer fools gladly and made little attempt at fostering good public relations, it is not surprising that he became the lightning rod for all who hated Wall Street in an era when the gold standard was an urgent political issue. For the first time in a full-length biography, Jean Strouse gives us not only the extraordinarily competent banker but also the passionate art collector, the father, the friend, and the man of his times. It is a masterpiece.

Commodore Vanderbilt: An Epic of the Steam Age

by Wheaton J. Lane (1942; Knopf; out of print). Written only eight years after The Robber Barons, Lane’s biography of the Commodore gives a completely different picture of this man, who fully deserves his more-than-life-size statue (commissioned by himself) in front of Grand Central Terminal in New York. Fiercely competitive, Vanderbilt went from Staten Island farm boy to one of the richest self-made men in New York City by providing safe, cheap transportation to the New York public. A contemporary perfectly captured Vanderbilt’s business ethics: “The Commodore’s word is as good as his bond when it is freely given. He is equally exact in fulfilling his threats.”

How the West Grew Rich: The Economic Transformation of the Industrial World

by Nathan Rosenberg and L. E. Birdzell, Jr. (1986; Basic). This was one of those books that had me saying to myself on almost every page, “Oh, of course, now I understand.” It explains in a relatively brief space, only 353 pages, the factors that allowed the West to surge ahead of the rest of the world in economic development. Let just one of these factors suffice for illustration: Because Europe was divided into many frequently warring nations, governments had not only to tolerate but to encourage economic innovation in order to gain an edge in the military competition. China, usually dominated by a unified elite, frequently suppressed innovation because it threatened the status quo.

Once in Golconda: A True Drama of Wall Street, 1920-1938

by John Brooks (1969; Wiley). John Brooks wrote wonderfully lucid business history for The New Yorker for many years (his history of the Ford Motor Company’s ill-fated Edsel is a classic). Here he tells the story of Wall Street between the wars, from the bear raid on the stock of the Stutz Motor Company of America to the fall of Richard Whitney, the former president of the New York Stock Exchange, sent to Sing Sing penitentiary for embezzlement. He brings one of the most exciting epics of Wall Street history to brilliant life. Curiously, the book did not do well when first published. The usual explanation is that the title, which the author insisted on, was too obscure (Golconda was a city in India where according to legend all who go there get rich). However, quality wins out in the end, and the book is still in print in both hardcover and paperback.

The Company: A Short History of a Revolutionary Idea

by John Micklethwait and Adrian Wooldridge (2003; Random House). The idea, of course, is the corporation, a legal “person” with limited liability. Institutional history is not usually very exciting reading, but Micklethwait and Wooldridge take the reader briskly through the surprisingly interesting history of an institution without which neither this country (Virginia and Massachusetts were both founded by corporations, not by the English government) nor the modern world could have come into existence.

Money of the Mind: Borrowing and Lending in America from the Civil War to Michael Milken

by James Grant (1992; Farrar, Straus and Giroux). A history of credit also seems an unlikely candidate for pleasurable reading, but Grant writes so well and lards his story with such fascinating examples and characters that the book is both entertaining and very instructive regarding how many of America’s financial crises came about.

The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin (1991; Simon & Schuster). It won the Pulitzer Prize and deserved it. If ever there was an example of James Gordon Bennett’s notion of men substituting money for the sword as the chosen instrument in the battle for supremacy, the history of the oil industry is it. In 1854 oil was skimmed off ponds with rags and sold as a patent medicine. By 1900 Standard Oil was one of the most powerful economic forces in the world, and its principal stockholders were rich beyond counting. By the midtwentieth century nation-states were going to war to acquire and defend oil, so central had it become to the world economy. This is indeed an epic in the true sense of the word.

The Chief: The Life of William Randolph Hearst

by David Nasaw (2000; Houghton Mifflin). Immortality is a fickle thing. Hearst’s public image will probably always be influenced by the overwhelming artistic and dramatic power of Citizen Kane. But while the movie is a masterpiece, it is not history, and Kane was no more than a grotesque caricature of the complex, brilliant, often pigheaded man who dominated the news media in the United States for half a century. Nor did Hearst’s real-life relationship with the film star Marion Davies in the least resemble Kane’s with the pathetically untalented Susan Alexander. When Hearst ran into deep financial trouble in the late 1930s, Davies lent him one million dollars. That is not, to put it mildly, the usual direction of the cash flow between mogul and mistress, and it’s evidence enough that Hearst must have been a far more interesting character than Kane was.

Railroad Transportation: Its History and Its Laws

by Arthur T. Hadley (1885; Johnson Reprint Corporation). This long-forgotten book is a gem, and its teachings are as applicable to today’s economy as they were to that of the late nineteenth century, when it was written. Hadley was a leading economist in his day (he later became president of Yale). He even discovered a flaw in the economic reasoning of David Ricardo, which must have been a satisfying moment. The book is clearly written and mercifully free of the ideologies of the day. And if you would like to understand why the airline business is so often one of feast or famine, with frequent price wars, Hadley will tell you exactly, because railroads and airlines operate with very similar economic constraints.