Wall Street’s genesis in a nutshell: Property acquired by wiles, a wall of defenses that proved useless, a financial system built on bail-outs at taxpayers’ expense. It’s not exaggeration. It’s history, though it might as well have been prophecy.
Before Wall Street was cobblestoned in 1699 there really was a wall there, 12 feet high, made of wooden posts and running about a mile between Lower Manhattan’s two flanking rivers. It was the New World’s first gated community.
Dutch merchants had slaves and Indians build the wall—the same Indians from whom they’d swindled the island. No, not for $24 or $26. That’s a myth. Indians got paid in handsome strings of beads. But they had no concept of an ownership society. They thought they were merely giving the Dutch the right to use the real estate, not take it away from them. They didn’t read the New World’s first line of fine print.
The Dutch would themselves be outwitted soon enough. They had pointed guns at the land to the north of their wall, from where they thought British colonists would attack. The Brits attacked from the harbor waters around the tip of the island instead and literally walked over the Dutch settlement without firing a shot. Then the Brits ditched New Amsterdam and rebranded it New York, adding two touches to Wall Street that would turn it into booty central, with God’s blessing: Manhattan’s very first gambling parlor and Manhattan’s biggest house of worship at the time, Trinity Church.
There you had it. God and Mammon, setting the stage for the holiest trinity once the New York Stock Exchange opened.
The first stockbrokers, when not betting on the weather, sports or politics, put bets on the first colossal bailout in the nation’s history—Alexander Hamilton’s nationalization of individual states’ debts after the Revolutionary War, which he paid for, as the Hank Paulson of his day (Hamilton was his George’s treasury secretary) by raising taxes and putting the federal government in the business of banking, lending and paying dividends. Speculators went wild, pumping money into Hamilton’s gambit. He smelled a rat race: “There is at the present juncture a certain fermentation of mind,” Hamilton wrote, “a certain activity of speculation and enterprise, which, if properly directed, may be made subservient to useful purposes; but which, if left entirely to itself, may be attended with pernicious effects.”
He, too, said the country had no choice but to nationalize the debt if the United States was to be capitalism’s next frontier. (And you thought the battle between free marketeers and regulators was born yesterday.) Jeffersonians, the liberals of their day, loathed Hamilton for his bank grab, which partly helped Jefferson win the presidency in 1800 while promising to look after the public’s money, not gamble it. (Thankfully, Jefferson knew when to double-talk, otherwise we wouldn’t have Louisiana.) From that foundation, and specifically from the few blocks around Wall Street and its amen corner in Washington, the same story has been playing out since, punctuated by three great periods of crony capitalism.
The first, the Gilded Age of 1873 to 1900, produced the most wanton state-sponsored repression of labor the country has ever known. The second gave us the Great Depression. And the third, which ended at 1:36 p.m. last Monday, after a pretty impressive 26-year run—well, we don’t know what the third will bring specifically. We can only be sure that the uncertainty that Wall Street’s swindlers and their Men Friday in Congress have been warning us about for the past few days will shift from them to us once they get their trillion.
But we already had uncertainty. We’ve had seven years of declining wages, two years of declining home values, nine months of job losses and many more to come. Even if for the wrong motives, the House was right to reject the bailout the first time; Congress was wrong to cave. Columnist Thomas Friedman summed up the prevailing swindler wisdom: “You have to focus on saving the system, even if it means bailing out people who don’t deserve it.” But why save the system when the system is the problem?
And why $700 billion, or $1 trillion, or any other irrational figure to plug up a hole no one can see over depths no one can gauge in an ocean of derivatives no one can control? And if this is, as Friedman claimed, scarier than 9/11, where are the calls for a 9/11-like commission? Where’s the congressional outrage to re-evaluate the system that had the Treasury secretary on his knees pleading for help? Where’s our Jefferson in a presidential race of Hamilton twins?
More of us might’ve supported the bailout if it was attached to a little more than strings of beads stretching the length of Trinity Church’s shadow on Wall Street at sunset. Not that it would have made a difference. We’re all Indians now.