An Empire of Wealth 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

“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

“concentrate on the bad news, this was often perceived as a decline in American economic power, with the rust belt as its symbol. In fact, it was the beginning of a profound restructuring. Manufacturing had been declining as a percentage of the economy since the end of the Second World War. Then half the jobs in the country were manufacturing jobs. By the mid-1970s more than two-thirds of the jobs in the American economy were in services. But this restructuring, which is continuing after more than two decades, produced wrenching change and much individual and local economic pain. The official poverty rate, which had fallen from 22 percent in 1959 to 11 percent in 1973, rose to 15 percent by 1983. The amount of steel produced in the country remained constant at about 100 million tons a year, but the number of steel workers declined from 2.4 million in 1974 to less than a million in 1998.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“With the long period needed to redesign and retool, the American automobile industry would struggle for more than a decade to regain its footing. By the time it did, the automobile business had become one of the first heavy manufacturing industries to be thoroughly globalized. No car today is manufactured entirely in one country, and, increasingly, such words as “American,” “German,” and “Japanese” refer only to the location of corporate headquarters and the largest concentration of stockholders.”
― 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

“Wage and price controls have a long history, almost all of it bad. In a free market it is prices that signal, in their uncountable millions, where resources should be allocated and where opportunity lies, what is becoming scarce and what plentiful, allowing people to adjust their economic behavior accordingly. When prices are fixed, however, shortages and surpluses inevitably and quickly develop. That is why there is a permanent shortage of housing wherever there is rent control. Price controls also transfer power from free markets—in other words, the people—to politicians. Politicians, of course, are always tempted to use this power to benefit favored groups, while the disfavored continue to pursue their self-interests through black markets.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“Because the dollar was the currency of world trade and, under the Bretton Woods Agreement, was convertible into gold at a fixed price of $35 to the ounce, dollars accumulated in foreign central banks and financial institutions. They often circulated abroad without ever returning to the United States. As American inflation increased, these “eurodollar” holdings began to seem precarious, and gold began to flow abroad in quantity for the first time since the early 1930s. The international currency market, a growing force in the international economy, began betting against the dollar. On August 15, 1971, President Nixon acted decisively, if not necessarily wisely, to solve the increasing economic problems that confronted the country. First, he renounced the Bretton Woods Agreement and severed the link between the dollar and gold. The dollar would now float in value, and the gold standard, after 150 years, was dead. Second, he froze all wages, rents, and prices for a period of ninety days, to be followed by strict wage and price controls.”
― 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

“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

“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

“In 1948 he began to advertise—unprecedented on Wall Street—to acquaint the average person with Wall Street and the investment opportunities to be found there. The ads discussed the mechanics of how stocks are bought and sold and the risks involved. They often as well made a subtle political point. When President Truman, running for another term in 1948, made a rabble-rousing reference to “the money changers,” Merrill replied in an ad. “One campaign tactic did get us a little riled,” he admitted. “That was when the moth-eaten bogey of a Wall Street tycoon was trotted out…. Mr. Truman knows as well as anybody that there isn’t any Wall Street. That’s just legend. Wall Street is Montgomery Street in San Francisco. Seventeenth Street in Denver. Marietta Street in Atlanta. Federal Street in Boston. Main Street in Waco, Texas. And it’s any spot in Independence, Missouri [Truman’s hometown], where thrifty people go to invest their money, to buy and sell securities.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“And as with the first great war of the blood-drenched twentieth century, when the bombs stopped falling, geopolitical power would have been radically redistributed in favor of the United States.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“Recovery began again in 1938, but unemployment remained stubbornly high, being at 14.6 percent as late as 1940. In the end it was not the New Deal that cured what ailed the American economy. It was war. The dreadful peace devised at Versailles in 1919 turned out not to have been a peace at all, but merely a twenty-year truce, an interlude between the worst war in human history and one that would be far, far worse in terms of lives lost and treasure squandered.”
― 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

“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

“But Glass-Steagall also greatly weakened the largest and strongest banks by forcing those that had both a deposit and an investment business to choose one or the other. J. P. Morgan and Company, for instance, remained a depository bank and spun off Morgan, Stanley, and Company.”
― 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

“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 CONSTITUTION of the Roman Republic, its citizens fearful of executive authority after the overthrow of the kings, had divided it between two consuls, who served for a year and alternated daily in command of both the government and the army. But the Romans realized that, in an emergency, such a system wouldn’t work. And so the constitution allowed, when necessary, for one man to hold absolute power for six months. The term for this temporary official was dictator. For the first three months after his inauguration—the so-called Hundred Days—Franklin Roosevelt was the American dictator, in the very best sense of that term.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“Edison’s other unsung invention was the electric power system by which his lightbulb could be lit. Once the lightbulb was a working invention, he set about to build a generating plant and lay electric lines in a one-square-mile area of the Manhattan business district. In 1880 he secured from the city the right to “lay tubes, wires, conductors and insulation, and to erect lamp-posts within the lines of the streets and avenues, parks and public places of the City of New York, for conveying and using electricity or electrical currents for purposes of illumination.”
― John Steele Gordon, An Empire of Wealth: The Epic History of American Economic Power

“But two of Edison’s greatest inventions are seldom mentioned because, by their nature, they couldn’t be patented. One was perhaps his greatest invention of all, the industrial research laboratory. Edison established his own laboratory in Menlo Park, New Jersey, in 1876, and it was there that he created the phonograph (1877), the electric light (1879), and hundreds of other inventions. It was, in essence, an invention factory where engineers, chemists, and mechanics turned new technological possibilities into practical—and, most important, commercially viable—products. When General Electric was formed in 1892 by J. P. Morgan from the Edison General Electric Company and its major competitor, Thomson-Houston Electric Company, the new company almost immediately established a laboratory of its own at its headquarters in Schenectady, New York. It quickly became the model for a number of other corporate research labs that in the twentieth century would turn out an unending stream of inventions and practical applications of new technology. The list of the fruits of Edison’s seminal idea to industrialize the process of invention—to industrialize Yankee ingenuity—is nearly endless: cellophane, nylon, synthetic rubber, transistors, Teflon, and the microprocessor being but a few of the more important. In 2003 IBM alone would take out more than thirty-four hundred patents.”
― 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

“And the automobile began to change the country’s demographics. The shift from a predominantly rural population to an urban one had been going on almost since the dawn of the Republic and had reached the tipping point in the census of 1920, which was the first to record more urban dwellers than rural ones. But the automobile allowed the emergence of a whole new demographic region: the suburbs. A nineteenth-century demographic map of a typical American city would have resembled a daddy longlegs, with a dense urban core and long, thin strings of population along the railroad and trolley tracks. In between the tracks was deep country, for once a person disembarked from the train, he was again reduced to the speed of a horse. With the coming of the automobile, however, people could live miles from the railroad tracks and still be able to reach the city easily. More and more people began living in the country and working in the city.”
― 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

“Bond drives using techniques invented by Jay Cooke during the Civil War were quickly implemented, now with the addition of using movie stars such as Douglas Fairbanks, Mary Pickford, and Charlie Chaplin to entice citizens into buying Liberty Bonds. And the income tax, which had been a mere social-engineering device to get the rich to share more of the tax burden, began to bite into the middle class. The personal exemption, which had been at $3,000, was dropped to $1,000. The tax rate, a mere 7 percent on incomes more than $500,000 before the war, rose to 77 percent. The income tax thus became the most important source of federal revenues, as it has remained ever since. And this changed the nature of the endless debate over taxes.”
― 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

“The choice was clear, but the country, in fact, chose both approaches. American politics is the politics of the center, not the extremes, and this country is given to splitting differences or, when possible, having it both ways at once. Over the next hundred years, as political dominance was enjoyed by each party in turn, the country would employ both trickledown and trickle-up economic policies. The result has been nearly wholly salutary, if, as politics in a democracy always is, philosophically untidy.”
― 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

“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

“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