John Steele Gordon > Quotes

“This prosperity was widely shared among the population. Although in the 1770s the top 20 percent of the population owned about two-thirds of the wealth, while the bottom 20 percent owned only 1 percent, that raw datum gives a distorted picture because it does not take time into account. (Modern statistics do exactly the same thing, now usually for tendentious, political reasons.) The population of British North America was a very young one, and children usually do not possess significant wealth. As people get older they tend to get richer, and that was certainly true in the thirteen colonies. One economic historian has calculated that of the colonial population in their forties, only about 8 percent would have been considered poor by the standards of the day, and even fewer in their fifties.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“(One often overlooked, but highly favorable consequence of the persistent unemployment in the 1930s was the fact that children tended to stay in school longer. The number of people receiving high school diplomas almost doubled in the 1930s, while those receiving college degrees increased by 50 percent. In 1940 some 8.1 percent of twenty-three-year-olds received bachelor’s degrees.)”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“People with an economic advantage, however “unfair” that advantage may be, will always fight politically as hard as they can to maintain it. Whether the advantage is the right to benefit from another’s labor, or an unneeded tariff protection, or an exemption from taxation makes no difference. And because the advantage for the few is specific and considerable, while the cost to the disadvantaged many is often hidden and small, the few regularly prevail over the many in such political contests.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The biggest difference between the newspapers of the preindustrial world and those of today was politics. Most general-interest newspapers were the instruments of political factions, praising one party and excoriating all others. They were, in reality, little more than an editorial page wrapped in some highly tendentious news. A Scots immigrant to New York, James Gordon Bennett, changed all that. Born in 1795 into one of Scotland’s few Catholic families, Bennett was always a man apart, which can be an asset for a journalist. He was also remarkably ugly, with severely crossed eyes. When a young journalist interviewed him in the 1850s at his office across from New York’s City Hall, he reported that Bennett “looked at me with one eye, [while] he looked out at the City Hall with the other.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“MASTERPIECES CREATED BY A COMMITTEE are notably few in number, but the United States Constitution is certainly one of them. Amended only twenty-seven times in 215 years, it came into being just as the world was about to undergo the most profound—and continuing—period of economic change the human race has known. The locus of power in the American economy has shifted from sector to sector as that economy has developed. Whole sections of the country have risen and fallen in economic importance. New methods of doing business and economic institutions undreamed of by the Founding Fathers have come into existence in that time, while others have vanished. Fortunes beyond the imagination of anyone living in the preindustrial world have been built and been destroyed. And yet the Constitution endures, and the country continues to flourish under it.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“AS THE NINETEENTH CENTURY began to draw to a close, an ancient problem in corporate affairs became more and more acute: accounting. As enterprises became larger and more complex, accountants began devising more and more tools to keep track of the money and to enable managers to see exactly where and how it was being spent (or misspent). The great corporate enterprises of the Gilded Age were only possible because of these new accounting tools. And this evolution of accountancy continues unabated today. Cash flow, for instance, is now regarded as one of the most important indicators of corporate prospects. But the very phrase cash flow was coined only in 1954.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The record of legislation passed and signed into law is simply astonishing. March 9. Roosevelt signed the Emergency Banking Relief Act. March 20. Roosevelt signed the Economy Act, reorganizing the government and cutting salaries and the pensions of veterans—perhaps the most potent lobby in Washington at that time—to reduce expenses by $500 million. March 21. Roosevelt signed the Civilian Conservation Corps Reforestation Relief Act, to employ up to 250,000 young men in construction and environmental projects. March 22. Roosevelt signed the Beer-Wine Revenue Act, legalizing beer and wine with less than 4 percent alcohol and taxing it heavily to increase government revenue. April 19. Roosevelt took the country off the gold standard, demonetized gold by making gold coins no longer legal tender and recalling them to the Treasury, and forbidding citizens to hold bullion. The next year he devalued the dollar from $20.66 to an ounce of gold to $35.00. May 12. Roosevelt signed the Federal Emergency Relief Act to provide grants totaling $500 million to states to fund relief for the unemployed. May 12. Roosevelt also signed the Agricultural Adjustment Act to relieve farmers with measures to raise farm prices, limit production, and refinance farm mortgages. May 18. Roosevelt signed the bill authorizing the establishment of the Tennessee Valley Authority to develop the Tennessee River Valley by building dams that would provide electric power in seven states. May 27. Roosevelt signed the Federal Securities Act, which required full disclosure of pertinent information to investors, the first federal regulation of the securities business. June 5. Congress by joint resolution canceled clauses in contracts requiring payment in gold. June 6. Roosevelt signed the National Employment Act establishing the U.S. Employment Service to work with state employment agencies to help the unemployed find jobs. June 13. Roosevelt signed the Home Owners Refinancing Act establishing the Home Owners Loan Corporation, which was empowered to issue $2 billion in bonds to help nonfarm home owners keep their properties. June 16. Roosevelt signed the Banking Act of 1933, usually known as the Glass-Steagall Act after its congressional sponsors. It revolutionized American banking.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The Erie Canal, however, turned New York into the greatest boom town the world has ever known. Manhattan’s population grew to 202,000 in 1830, 313,000 in 1840, 516,000 in 1850, and 814,000 in 1860.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“With no need to take the risks and expenses of innovation, the industry had stagnated technologically. The last major technological advance had been automatic transmission, first introduced in 1948. Instead the automobile companies concentrated on appearance, size, and power. American cars in the postwar years became larger and larger and often sported such nonfunctional features as tail fins and much chrome. The evolution of American automobiles in these years is strikingly analogous to the tendency of living things isolated from competition on lush islands to evolve into giant and often grotesque forms. Just as markets are ecosystems, ecosystems are markets.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“It was people from these ranks, fleeing starvation or the sheriff, whom the Virginia Company recruited, together with gentlemen adventurers, often the younger sons of gentry families. In December 1606 three ships, the Susan Constant, the Godspeed, and the Discovery, left England and arrived in the Chesapeake Bay on April 26, 1607, with 105 men on board (39 had died at sea). Sailing some sixty miles up the James River to make their presence less obvious to the Spanish, the three ships anchored on May 13 at the site of what became Jamestown, named, like the river, for England’s king. But other than its relative security from Spanish assault, the chosen site, on the north bank of the James and beside a swamp, had very little to recommend it. The swamp, while perhaps providing some protection from Indians, bred mosquitoes by the millions in the spring and summer, and these spread malaria through the colonists. More, the water in the shallow wells the colonists dug was often brackish, especially when the river was running low. This caused salt poisoning among the colonists as they sweated in the fierce Virginia heat and drank copiously. And, when the river ran low, the garbage and sewage thrown into it did not pass out to sea, but festered and promoted such diseases as typhoid and dysentery. The result was a slaughter. Of the 105 original colonists, only 38 remained alive nine months later. The basic problem was that the Virginia Company was venturing into a brand-new business—American plantations—that had been made possible by a radically new technology—the full-rigged ship. As has so often been the case since—railroads in the early nineteenth century, the Internet in the late twentieth come to mind—there was a very steep and expensive learning curve to be mastered before steady profits could be achieved under these circumstances. The commercially savvy and often very wealthy London merchants who dominated the Virginia Company simply had no idea what it took to establish a successful colony on the edge of the American wilderness, three thousand miles and three months from home.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The war’s effect on federal finances was both great and permanent, just as the Civil War’s had been. Since 1865 the government had never spent more in one year than the $746 million it had spent in 1915. The national debt that year was a mere $1.191 billion ( John D. Rockefeller could have paid it off all by himself and still have been the richest man in the country). After the First World War, however, annual government outlays were never less than $2.9 billion, and the national debt rose to more than $25 billion in 1919.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“But Bryan, while losing (he would lose again in 1900 and 1908, dragging a cross of gold through the political wilderness) identified clearly the future of American national politics. “The sympathies of the Democratic Party,” he had told the delegates in his speech, “…are on the side of the struggling masses who have been the foundation of the Democratic Party. There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“While technically the economy had been in recovery for four years, in popular parlance the word depression was applied to the whole decade of the 1930s. So economists dubbed this new depression within a depression a “recession.” This has been the term for economic downturns ever since, and the word depression is now usually capitalized and refers exclusively to the uniquely dark days of the 1930s.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“TWO OF THE MOST SIGNIFICANT technological developments in human history had brought the European medieval world to an end by the beginning of the sixteenth century and made the settlement of the New World possible. The printing press had greatly reduced the cost of books, and thus of knowledge. In the mid-fifteenth century there had been only about fifty thousand books in all of Europe, most of them controlled by the Church, which ran the universities. By the end of the century there were more than ten million books in Europe, on an endless variety of subjects, many of them technical and agricultural. They were largely in the hands of the burgeoning merchant class and the landed aristocracy. The Church’s monopoly of knowledge was broken and, soon, so was its monopoly of religion, as the Protestant Reformation swept over much of northern Europe in the early sixteenth century, setting off more than a century of warfare as a result.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“Geopolitically, that situation resembled England’s, only on a much grander scale. Until the second half of the twentieth century, North America was largely immune from foreign attack, and the hand of government (and thus the tax man) lay very lightly indeed upon it for most of that time. And just as Great Britain was perfectly situated on the map to dominate the trade routes of northern Europe as that area began to dominate European and world affairs, the United States was perfectly positioned to take advantage of the emergence of a fully globalized economy. The United States is the only Great Power to front on both the Atlantic and the Pacific and the only one whose national territory sprawls across arctic, temperate, and tropical climate zones. It is at once both effectively an island, with all of an island’s military security, and a continent, with all of a continent’s resources.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The United States decided to fight this third Great Power confrontation of the twentieth century, soon dubbed the cold war, in a new way: with money instead of bullets. It would contain the Soviet Union with alliances and with sufficient forces to deter an attack, but would place most of the emphasis on reviving and enlarging the economies of potential victims of Soviet aggression. On March 12 Truman addressed a joint session of Congress and announced what quickly came to be called the Truman Doctrine. “I believe it must be the policy of the United States,” he told Congress, “to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressure.” And he said that this assistance would be “primarily through economic and financial aid.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“This willingness to accept present discomfort and risk for the hope of future riches that so characterized these immigrants, and the millions who would follow over the next two centuries, has had a profound, if unmeasurable, effect on the history of the American economy. Just as those who saw no conflict between worshipping God and seeking earthly success in the seventeenth century, those who sought economic independence in the eighteenth had a powerful impact on the emerging American culture. And while there was a growing elite, the British colonies also had a larger percentage of their population in the middle class (not that the term was known in the eighteenth century, which called them the “middling sort” instead) than any other area of the Western world. The prosperity was very widely shared. The native-born American soldiers in the Revolution, for instance, averaged a full two inches taller than their British counterparts, who were overwhelmingly of the same genetic stock and, indeed, were often closely related. That can only be attributed to a far better childhood diet.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“In 1907 the federal government took on the biggest “trust” of all, Standard Oil. The case reached the Supreme Court in 1910 and was decided the following year, when the Court ruled unanimously that Standard Oil was a combination in restraint of trade. It ordered Standard Oil broken up into more than thirty separate companies. The liberal wing of American politics hailed the decision, needless to say, but in one of the great ironies of American economic history, the effect of the ruling on the greatest fortune in the world was only to increase it. In the two years after the breakup of Standard Oil, the stock in the successor companies doubled in value, making John D. Rockefeller twice as rich as he had been before.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“In June, at a commencement address at Harvard, General George C. Marshall, Army chief of staff during the war, now the secretary of state, proposed what would be called the Marshall Plan, one of the most extraordinary, and extraordinarily successful, acts of statesmanship in world history. It called for European nations, including the Soviet Union, to cooperate in the economic recovery of the Continent, with the United States providing the capital necessary. Stalin quickly rejected the idea, as did the countries in eastern Europe under his control, but he inadvertently helped sell it to other European countries by engineering a coup in Czechoslovakia in early 1948.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“But there was no mechanism to provide oversight. The federal government was not thought to have any role in regulating markets at this time, and the state and city governments were cesspools of corruption. As early as 1857 George Templeton Strong wrote despairingly in his diary, “Heaven be praised for all its mercies, the Legislature of the state of New York has adjourned.” A few years later Horace Greeley in the New York Tribune wrote that it was not possible “that another body so reckless, not merely of right but of decency—not merely corrupt but shameless—will be assembled in our halls of legislation within the next ten years.” Greeley was wrong. In 1868 the New York State Legislature actually passed a law the effect of which was to legalize bribery. “No conviction [for bribery],” the act read, “shall be had under this act on the testimony of the other party to the offense, unless such evidence be corroborated in its material parts by other evidence.” In that preelectronic age, that meant that as long as the official took his bribe in private and in cash, there was no possibility of his being convicted.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The second thing to happen is that inflation takes off. As printing-press money flooded the Southern economy, inflation increased rapidly, more than 700 percent in the first two years of the war alone. As the war continued, the inflationary spiral deepened and the Southern economy began to spin out of control while the currency became essentially worthless. Hoarding, shortages, and black markets spread inexorably as support for the war effort eroded and living standards fell sharply. The movie of Gone With the Wind is not good history in many, many ways, but the scene of the black butler, hatchet in hand, pursuing a scrawny rooster through the pouring rain, saying it is going to be Christmas dinner for the white folks epitomizes the facts of life for hundreds of thousands of Southern households in the last, desperate years of the war.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“THE BIGGEST PROBLEM of the postwar economy turned out to be not unemployment but inflation. Although GNP dipped slightly in 1946, as military orders fell from an annual rate of $100 billion in early 1945 to $35 billion a year later, GNP had recovered by year’s end and grew strongly thereafter. The reason, clear in retrospect, was the vast pent-up demand for durable goods created by the war. Virtually no cars, no housing, and no appliances had been manufactured during the war. Those in use were nearing the end of their productive utility, and many were already far beyond that point. Further, the huge pool of personal savings that had accumulated during the war was there to pay for the goods demanded. But it required time for the country’s industry to shift back from war production to consumer goods, while irresistible political pressure brought wage and price controls to a premature end in 1946. The result was a roaring inflation, the greatest in the peacetime history of the country up to that point, as nongovernmental spending rose by 40 percent while the supply of goods did not rise nearly so quickly. Farm prices rose 12 percent in a single month and were 30 percent higher by the end of that year. Automobile production, virtually nonexistent since 1942, reached 2,148,600 in 1946, but wouldn’t top 1929’s production until 1949.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“Since the earliest days of civilization, politicians have faced tough choices between raising unpopular taxes and controlling popular spending. When they possessed the power to pay their bills with cheaper money, such as by debasing or short-weighting the coinage, all too often they did so.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“WHILE RONALD REAGAN is often given the credit for deregulation and lower taxes, they were, in fact, already under way when he took office, although he helped powerfully to continue and increase the restructuring of the American political economy. Much of the federal regulatory apparatus established as early as 1887, with the creation of the Interstate Commerce Commission, and greatly expanded under the New Deal, had evolved into cartels that protected the interests of the industries they regulated more than the interests of the economy as a whole.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The gold standard has one big advantage as a monetary system: it makes inflation nearly impossible. If a country increases its paper money supply beyond what the market will bear, holders of banknotes will begin turning them in for gold, and gold will move abroad as foreign central banks begin not to trust the currency and cash it in for what they do trust: gold.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The population of what are now the five boroughs of New York was more than twice the population of Philadelphia by the time of the outbreak of the Civil War. In 1800 about 9 percent of the country’s exports passed through the port of New York. By 1860 it was 62 percent, as the city became what the Boston poet and physician Oliver Wendell Holmes (the father of the Supreme Court justice) rather grumpily described as “that tongue that is licking up the cream of commerce and finance of a continent.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“A classically Darwinian competition ensued, just as in a natural ecosystem when a new body plan evolves or a new territory is reached. Whenever a major new technology becomes practical, there is always a large number of people and firms who will try to exploit it for profit. Most quickly fall by the wayside as they fail to compete successfully. Then, as the industry matures, the need for economies of scale and the huge capital needs often required to realize them cause the industry to consolidate into a few firms of great size. This was certainly true of the automobile. In 1903 alone, fifty-seven automobile companies came into existence in the United States, and twenty-seven went bankrupt. Today there are no more than two dozen automobile companies, all of them necessarily multibillion-dollar corporations, in the world. One of the American companies that opened for business in 1903 was the Ford Motor Company.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“The automobile also put a far greater stress on the country’s rural economy as a whole. In 1900 one-third of the nation’s farmland was devoted to fodder crops to feed the vast number of horses and mules that powered the local-transportation and agricultural industries. By 1929 most of that herd was gone, replaced by automobiles, and much of the land that had grown such crops as hay and oats had been switched over to crops for human consumption, causing food supplies to rise much faster than demand and prices to decline sharply. The result was hard times for many farmers, who never saw prices recover from the fall-off in European orders after the First World War. The depression in American agriculture, largely unnoticed by the urban-based media at the time, would slowly, inexorably both deepen and widen.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“At the same time, the Roosevelt administration began to cut public works spending to help bring the budget closer into balance. The result was a new depression. Unemployment soared back up to 19 percent the following year, while GNP dropped 6.3 percent. It was the first time in the history of the American economy, and the last time, so far, that the peak of the business cycle was lower than the previous peak had been, as the height in 1937 was well below the peak in 1929.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“A Scottish engineer named John McAdam, in the early part of the nineteenth century, would perfect the technology of road building using layers of stone and gravel and give his name (slightly misspelled as macadam) to the process, which was widely used in both the United States and Britain. Toward the end of the nineteenth century, when engineers began mixing the top layer of gravel with tar to provide a relatively waterproof surface, the roads were said to be tarmacadamized, or tarmacked.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power