You may have noticed a somewhat curious wording about Hillary Clinton’s historic nomination yesterday. Most media outlets are reporting that she is the first woman to win the nomination of a major political party, not the first woman to win a nomination. Continue reading A Historic Nomination…with a Precedent
The sociology of money provides an illuminating discussion about the connections between uncertainty, trust, and stability; a trio that is particularly relevant as we think about Greece and its current battle with the Euro zone. For Georg Simmel, considered one of the founders of sociology, money has important implications for society. To become a base for economic exchange, money requires a “civilized social order” with stable social relationships that provide protection of value.
Recently the Gilded Age has been cropping up in economic and social discourse as a parallel to today’s wealth inequality and ostentatious elite. So it seems quite timely to review a biography of a woman living in this very era.
The author of The Richest Woman in America, Janet Wallach, describes the Gilded Age as an era of “avarice, opulence, and easy credit, [one which] burst from gluttony” (p. 201). But the biography focuses on a woman whose critics would not dare mention opulence and easy credit alongside her name: Hetty Green.
A Savvy Investor
Hetty was thoughtful, astute investor who never strayed from her own advice: buy when everyone is selling and sell when everyone is buying. She was a one-woman example of how to resist herd behavior: trust your instincts and don’t worry other people’s decisions. When it came to how she did business, Hetty did not care in the least what people thought about her. In his classic, The General Theory, Keynes would write of the long-term investor, “worldly wisdom teaches that it is better for reputation to fail than to succeed unconventionally” (as cited in Scharfstein and Stein, 1990). It is almost as if he is describing the public reaction to Hetty a half century earlier.
Hetty succeeded – well beyond the wildest dreams of most men – and yet, because her approach was so unconventional, her reputation suffered. She was often vilified and mocked in the press and became known as the Witch of Wall Street (though oddly, Wallach chooses not to mention this moniker in her book; perhaps this indicates a soft spot for Hetty). A 2001 article in The New Yorker noted that this nickname was not fully derogatory – there was a certain awe that came with Hetty and her approach. And indeed, as a lone woman succeeding in a man’s world, Hetty should inspire awe. Continue reading Book Review: The Richest Woman In America
I’ve been reading The Richest Woman in America, a biography of Hetty Green and her money-centered life during the Gilded Age in America. I’m just about a third of the way in, and Ms. Green is already showing her true colors – and by that, I mean an extreme obsession with money.
This obsession is not unique to Ms. Green. In the latter half of the 19th century, there was a widespread American fascination with getting rich quick. The Gold Rush propelled people west to find their fortunes, and speculators were flooding the new and evolving financial market. I came across an 1887 article by Henry Clews, a notable financier of the era, where he writes that “every fool who has a few hundred dollars” tried their luck on the market, most without success (p. 415).
Aldrich’s visits to Europe to study their central banking systems had a profound impact on him. Originally opposed to the idea of a central system, he returned from Europe an advocate for the same. However, the political climate was not one to accept such a system. American bankers did not want government interference, and politicians thought that the US was too large with too many diverse business practices to have the same set up (Whitehouse, 1989). E.R. Francher goes so far as to say that “throughout the history of the country, it is apparent that the people have been opposed to placing in one single institution the financial power which a central bank might exercise” (p 137). Aldrich’s conviction that the United States would benefit from a single central bank would be a tough sell.
On a personal level, Aldrich faced additional difficulties: with such a partisan Congress, no Democrat would vote for anything he proposed and, as discussed in Part Two, his personal connections to bankers could be strained if they didn’t like his proposal. Even Paul Warburg, a fervent advocate for reform and a central banking expert, thought Aldrich’s plan for central banking based on the European model would be defeated unless it could be crafted delicately and with modifications. Continue reading The Origins of the Federal Reserve System: Part Three