In 1629, King Charles I granted the Massachusetts Bay Company a standard commercial charter containing a clerical slip that changed the world. The document charged the stockholders with duly electing a board of management – a governor and 18 assistants – and holding them to account at quarterly meetings. However, crown officials failed to specify where the company headquarters should be (London would have been the usual assumption) and the wily leaders of the company absconded to New England, where they transformed quarterly meetings into government sessions, stockholders into freemen, assistants into magistrates, the governor into a Governor, and then piously declared their new regime to be ‘a city on a hill’ ready to serve as a model of divinely inspired governance for the rest of the world (well, for England, which came to the same thing). All freemen could vote once they proved that God had preordained them to enter heaven. Here was a symbol for the ages: early Americans turning a business charter into a constitution and voting stockholders into saints.
When it came to sorting the saved from the damned, New England Puritans took wealth to be a most propitious sign. The fortune you amassed here below testified to your fortunes in the hereafter. No culture has ever found a better spur to hard work – the Puritan ethos famously makes for a spirited form of capitalism. The United States would soon develop a frenzied economics smacking of religious mania.
By the 19th century, the race to get ahead had turned fast and reckless. ‘Go ahead is our maxim and our password,’ the New York politician Philip Hone wrote in 1837. ‘We go ahead with a vengeance, regardless of the consequences and indifferent about the value of human life.’ Most contemporaries were more exuberant about the American ‘passwords’: get ahead, go ahead, ascend, succeed and prosper. Even very wealthy presidential candidates began boasting about their rise from rude origins – the log cabin was an American cliché by 1840.
The quest to get ahead inspired unusual moral priorities. Americans treat sins against marriage, Tocqueville wrote in 1835, ‘with a severity unknown in the rest of the world’, yet attach no stigma to ‘base cupidity’. Greed was – and is – just fine. Take the celebrated land grab of 22 April 1899. Thousands of people lined up along the Oklahoma border and at high noon, as federal agents sounded trumpets, surged into the territory and snatched whatever land they could. Today Oklahoma proudly calls itself ‘the Sooner state’ – a homage to the scallywags who snuck in and grabbed their plots before the official land rush began. Still, not all standards crumbled: public officials primly prohibited alcohol during the free-for-all.
Today, the great economic race even expiates vices like drinking. When a public relations firm recently faced the delicate task of marketing hangover cures, it appealed directly to the prime virtue. ‘You have to entertain clients,’ reads the advertisement. ‘Or go on the road with the boss.’ Well, the hangover pills are your secret path to success. When they see you ready for work the next morning, ‘your clients will be impressed. Your boss will be impressed. And you’ll be on the fast track.’ Beneath which striving lies the same old Calvinist presumption: success reveals virtue.
Abraham Lincoln famously recited the market credo when he declared that any man who was ‘industrious and honest and sober’ would win riches. He left the inevitable corollary to preachers such as Henry Ward Beecher: ‘If men have not enough it is from want of provident care, and foresight, and industry and frugality. No man in this land suffers from poverty unless it be more than his fault – unless it be his sin.’
This moral economy nourishes a distinctive literary genre. Americans adore success manuals, and the more they sound like religious tracts, the better. The 19th-century classics energetically enumerated the deadly snares on the path to riches: bad companions, dissolute habits or – that classic trap – the extravagant wife. Purity, hard work and virtue offered the only sure route to Victory. Horatio Alger, a Unitarian minister (who had been accused of molesting children), became an American icon by publishing more than a hundred books for boys, every one of them with the same trusty plot. Thanks to his pluck and virtue, a young fellow rises from rags to riches; on his way up he passes the lazy, the overprivileged and the boys who smoke, drink or lie. To this day, business groups sponsor Horatio Alger awards honouring local exemplars of the familiar plot. The real political message lies not in the platitudes about winning wealth but in the celebration of the race itself. Never mind the yawning differences in education, class, or life prospects; any talented American who works hard will grow rich. And always the cold corollary: if you failed, you’re a loser and have only your inadequate self to blame.
Scott Sandage has written a splendid book about this American madness. He takes his chorus from Emerson: ‘There is always a reason, in the man, for his good or bad fortune.’ Talented workers grow rich. Sandage contends that this myth – he’ll catch hell from right-wing reviewers for alternately calling it a myth and a lie – developed into its modern form during the 19th century and has clung to the culture ever since. He makes the story fresh by focusing on the losers. Failure, he concludes, ‘is not the dark side of the American dream; it is the foundation of it.’
On the face of it, the great myth of success and failure appears to be flat nonsense. After all, Sandage argues, 19th-century economics offered entrepreneurs a wild ride punctuated by terrible panics in 1819, 1837, 1857, 1873 and 1893. Each crisis saw the same cycle: banks failed, merchants lost their savings and couldn’t pay their creditors, the creditors defaulted in their turn and another crash raced across the economy, wiping out even the largest fortunes. When the Civil War began in 1861, no one honoured debts from the other side. Sandage reports that 240 of the 256 dry goods firms in New York went under within a year; and after the panic of 1893, the national unemployment rate reached 18.4 per cent. Surely, one sensible observer wrote, ‘there must be some great and fundamental error at the basis of the system . . . the effect being general, not individual, the cause must also be general.’
Most Americans disagreed. They stuck to their economic fable even during national crack-ups. The poor could be rich, insisted the publisher and presidential candidate Horace Greeley, ‘if they would make the needful sacrifice of ease and mortification of appetite’. Poor men left the mills and shops, he explained, and immediately plunged into ‘the groggery, the cigar store, the gambling den or some other haunt of vileness’. ‘Inordinate expenditure’ always caused the misery.
Foreign observers were startled at the raucous cycles of boom and bust, but some were more impressed than Sandage at the unusual tolerance shown to losers. Tocqueville thought the United States showed a ‘singular indulgence’ to bankrupt traders. His travelling companion, Gustave de Beaumont, explained why. ‘Among all the wealthy people to whom I was presented there was not one who had not failed once or twice before making his fortune.’ However, foreign reporters invariably testified to the main theme: the race for wealth – that great 19th-century test of personal virtue – never slackened, and ended, as both Tocqueville and Beaumont observed, only with death.
Economic development eventually threatened the myth. When Americans began to work in mills and factories their independence vanished in a flurry of rules, clocks, managers, discipline and intrusive moral regulation. How could wage earners – wage slaves, as they were called – test themselves in the crucible of economic competition? These men and women were entirely dependent on the success and failure of their employers. For this reason, some 19th-century radicals rejected the very idea of wage labour as a violation of such republican principles as autonomy and independence. Slavery’s advocates set off a storm when they mischievously repeated the complaint. The wretched wage workers in Boston or Birmingham, argued the apologist George Fitzhugh, would be better off if we enslaved them all, for then their masters would have some incentive to clothe them, feed them and see them through hard times.
Abraham Lincoln came up with a famous rejoinder when he insisted that working for wages was only a temporary condition. Among us, he said, nobody with talent languishes permanently at the bottom. ‘The man who laboured for another last year, this year labours for himself, and next year he will hire others to labour for him.’ Even the meanest wage earner – Lincoln himself had started out by splitting rails – could rise to independence, success and wealth.
Lincoln may have been peddling a myth, Sandage observes, but no nation ever came closer to realising it than the United States in the first half of the 19th century. Vast open lands (open, that is, once the natives had been pushed off) offered extraordinary opportunities for the ambitious and resourceful. At the start of the century, only one in ten white men worked for someone else. As late as 1860, when Lincoln was touting the promise of upward mobility for all, only 40 per cent worked for wages. Ironically, the Civil War – America’s great battle cry of freedom – wrecked the republican idyll. The imperatives of total war raised a great industrial leviathan and by 1870 as much as 85 per cent of the workforce toiled for wages.
The most astonishing part of the American story is that the great myth never flagged. Even as Brobdingnagian corporations changed the nature of capitalism, Americans clung to their pieties about hard work and wealth. Despite all the evidence, success and failure would remain unshakably rooted ‘in the man’ – with harsh consequences for our own day.
In the most original and interesting part of his book Sandage turns to the rise of the modern credit system. The central character in that story, Lewis Tappan, was a wealthy merchant and an evangelical reformer who joined the crusade to uphold the Sabbath against the rising tide of secular modernity, threw himself into the fight for temperance (in the 1820s), co-founded the American Anti-Slavery Society (in 1833), and then split it (in 1840) when the majority elected a woman to the executive board (it would be ‘promiscuous’, Tappan declared, as he and his followers stomped out of the annual meeting, ‘for a lady to sit behind closed doors with gentlemen’). Tappan lived the wild life of a 19th-century evangelical businessman: he went broke in 1827, saw anti-abolitionist mobs sack his store and burn his mansion in 1834, and failed again in 1837 (losing a million dollars and helping to spark a national panic). After going bust a second time, he took action.
Tappan deployed the national network of reformers to gather information on merchants and rated them for their credit-worthiness. After all, he reasoned, good men failed because dubious merchants defaulted on their debts. Now Tappan’s Mercantile Agency ledgers would impose ‘moral regulation’ by rating men as risks: ‘Good for 1000 dollars’, ‘Good for small amounts’ or – a category that soon spread into popular use – ‘good for nothing’. For a fee, a businessman could subscribe and learn all about potential trading partners. The meticulous information, Tappan declared, ‘checks knaves and purifies the mercantile air’.
Here Sandage becomes a master sleuth. For example, he introduces us to Dr William Henry Brisbane, who enters the Mercantile Agency’s books in 1844 as a go-ahead fellow with $22,000 and 100 acres of land. Two years later, a second entry dramatically revises the bottom line. Brisbane, it turned out, had inherited $100,000 and quickly run through all but $20,000: ‘has never succeeded at anything and probably never will’, the rating book concluded. Sandage digs up Brisbane’s diary and fills us in on the lost $80,000. Brisbane, we discover, had inherited a South Carolina slave plantation, bought his slaves’ freedom and then sent them all north to safety. The lousy businessman was a high-minded visionary. Tappan’s two great principles – abolition and sound business – clashed but, in the pages of his ledger, only creditworthiness counted and Brisbane went down as good for nothing.
Misleading information could wreck a business. In 1848, John Beardsley sued the Mercantile Agency for slander in a case that lasted 23 years, went all the way to the Supreme Court, and undercuts American privacy rights to this day. The story began with a routine entry: Beardsley’s wife was about to file for divorce, and between court proceedings and alimony, his dry goods store in Norwalk, Ohio would probably fail. Suddenly strapped for credit – courtesy of Tappan’s black mark – Beardsley took the Agency to court, where the lascivious details came tumbling out. Mrs Beardsley had indeed moved out of the house, filed for divorce, and accused her husband of adultery with seven women, including a mother-daughter pair. When Beardsley’s witnesses (including Mrs Beardsley’s brother) took the stand they testified that Mrs Beardsley was given to ‘wild fits of phrenzy’; when she saw women speaking to her husband she denounced them as ‘whores and strumpets’; she repeatedly stabbed and struck her husband. The Norwalk neighbours all testified that John seemed extraordinarily long-suffering – when things got rough at home he simply slept at the store. Even the divorce had been filed by a third party without direct participation by either Mr or Mrs Beardsley. The trial transcript portrays a respectable man who went to extraordinary lengths to honour a marriage contract. Had the Mercantile Agency done him wrong? Who was their informant in the first place?
Sandage uncovers letters that Tappan wrote to his local informer, a lawyer named Jairus Kennan, who had himself gone broke in the dry goods business. Tappan’s letters make it clear that Kennan had fed the Mercantile Agency dubious information and might even have had a hand in the divorce filing. Tappan and his heirs covered up their mistake – questionable informants would threaten the entire credit-rating enterprise – and continued to fight. The agency lost the case (a $10,000 judgment), lost again on appeal in a federal court, and after more than two decades finally won a technical decision from the Supreme Court, which charged poor, ageing Beardsley some $20,000 in lawyers’ fees. By then Tappan had sold to R.G. Dun (who later merged with a competitor, John Bradstreet, to form the well-known contemporary credit-rating agency). The federal courts came to accept an argument that had been worked out by Tappan’s lawyers right at the start of the Beardsley affair: credit reports were ‘privileged communications’ and should be accorded ‘copyright protection’. Individuals did not have the right to see or dispute their ratings. The jurisprudence, worked out over the next three decades, flatly privileged the agencies and their files. The United States prides itself on individualism yet tolerates extensive prying in the name of judging credit. In the 19th-century courts, the gospel of success routed faith in individualism. To this day, Americans sacrifice privacy rights in the quest to separate good credit from bad, the virtuous from the failed, the saved from the damned.
The 19th-century trope of success as virtue negotiated the 20th century and enters the 21st more formidable – and more menacing – than ever. How? Far from his 19th-century territory, Sandage offers only a rough sketch. A fuller story turns on the long, fierce and ultimately failed challenge to the gospel of success.
The contest began during the great crash of the 1930s, when the national government moved to rein in free-market economic competition. ‘If I read the temper of our people correctly,’ Franklin Roosevelt announced as he took office in 1933, ‘we now realise as we have never realised before our interdependence on one another.’ Real success, he claimed, ‘lies in the extent to which we apply social values more noble than mere monetary profit . . . We cannot merely take but must give as well.’ A host of social programmes – pensions, work relief, unemployment insurance – put the thought into practice. Each speech, each programme, and each subsequent election seemed to further diminish the gospel of individual success. In 1935, the sociologist W.E.B. Du Bois wrote a eulogy for the American assumption that any hard worker could become rich: the old lie, he wrote, ‘died with a great wail of despair, not so much from bread lines and soup kitchens as from poor and thrifty bank depositors’, who lost their savings as the banks went bust.
If the first challenge came from hard times, the second came from the children of plenty. Sandage introduces the gospel of push-ahead by describing how the 19th century buried Thoreau. ‘I cannot help counting it a fault in him that he had no ambition,’ eulogised Emerson; ‘He was the captain of a huckleberry-party.’ In the 1960s, young people suddenly heard Thoreau’s subversive call to go pick berries; Americans disinterred his pastoral essays and renewed his tough-minded indictment of ambition, wealth and business.
Everywhere, the popular culture disdained the old canons of success. Sandage counts 12 pop hits celebrating losers, from Frank Sinatra (‘Here’s to the Losers’) to the Beatles (‘I’m a Loser’) and Judy Collins (‘Hard Loving Loser’). And all before Bob Dylan’s long line of angry ballads indicting the very idea of ambition itself. An entire generation sniggered as fatuous Mr Robinson took the graduate aside, in Mike Nichols’s film, and whispered the one-word secret to success: ‘Plastics.’
However, Americans turned cynical in response to something much deeper than cultural style or youthful anomie. In 1954, the Supreme Court declared racial segregation unconstitutional. A decade of ferocious white resistance followed. Southerners attacked civil rights marchers, burned their buses, arrested their leaders and murdered dozens of men and women. Local leaders led the resistance, national leaders (especially in Congress) ducked the issue. Black people were overwhelmingly poor (only one in twenty lived above the poverty line when the agitation first began after World War Two). Now, all the attention to legal segregation seemed to boomerang on the American dream itself. The causes of black poverty clearly didn’t lie ‘in the man’. As the fight over black rights continued, the subversive thought grew: perhaps the entire social and economic system was biased?
Black leaders like Martin Luther King fuelled the rebellion by striking out at bare-knuckled capitalism. ‘The agony of the poor,’ Dr King wrote, ‘impoverishes the rich. The betterment of the poor enriches the rich. We are inevitably our brother’s keeper because we are our brother’s brother.’ When King won the Nobel Peace Prize he delivered a dazzling sermon repeatedly interrupted by cheers; outside the hall, hundreds of college students silently held torches in the snow. The new spirit of the era ran from the students in Oslo saluting the brave civil rights marchers in Birmingham, Alabama, whose leaders, in turn, invoked Mahatma Gandhi and non-violence in India, which itself, King said as he accepted his prize, symbolised poor people around the globe rising up against colonial oppression. The chase for riches seemed ugly and lost in time.
Once the indictment began, the challenge to the economic system spread. The capitalist machinery seemed to lie behind every social problem – from poverty to pollution, to the increasingly incoherent war in Vietnam. In that framework – in that era – Thoreau seemed prophetic when he advised his readers to reject ‘merchants and banks’ and to invest, instead, in ‘sandbanks, solid and warm. Let your capital be simplicity and contentment.’
I recently attended a reunion at my university. The graduates gathered in the beautiful old chapel, seated in rows by the year in which they graduated. Representatives from each class announced ‘the gift’ – the financial contribution – the class had raised for the alma mater. The older the class, and the more established the graduates, the larger the gift – the proffered funds rose easily into millions of dollars – until we reached the ageing students of the late 1960s. Suddenly, the big numbers evaporated. The class of 1973, my class, managed just 5 per cent of the total raised by the class of 1998. The children of the 1960s had maintained their contempt for the great race by becoming poets, professors and organic farmers. By the 1990s, however, the old order had been fully restored and the graduates were hustling off to squeeze money from careers in investment banking.
Those recent graduates testify to the great cultural counter-revolution. American conservatives, frightened by the 1960s, have worked hard to restore the old Puritan verities about success and failure. They have funded an elaborate intellectual infrastructure: think-tanks and university chairs (mainly in law and economics), books and magazines, radio and television stations. Their political leaders tirelessly invoke the familiar mantra: talented men and women rise and prosper, poor people have only themselves to blame. The collectivist ideas about ministering to your brothers – self-evident when Roosevelt or King was promoting them – now provoke only scorn for being soft-minded and naive.
The political result is an increasingly harsh economic regime that stands alone among developed nations. A spirit of solidarity runs through many Western European countries; governments bring that spirit to life when they buffer their citizens from economic storms by providing generous pensions, national healthcare programmes, housing subsidies and public assistance. In the United States, competition eclipses solidarity, promises of opportunity erode the old social programmes, and an increasingly unfettered economy produces a yawning gap – unmatched among wealthy nations – between winners and losers, rich and poor.
Precisely like our 19th-century predecessors, we are now debating tough new bankruptcy laws. Leftists argue, as they did a century ago, that the bankrupt are not scoundrels but hardworking citizens facing hard times. Sandage quotes the age-old riposte from contemporary conservatives: ‘People have to take personal responsibility for the money they spend.’ As it happens, a full half of American bankruptcies follow ill health – hospitals regularly sue families into ruin. However, the classic ideology – anyone can be rich if they work hard – leaves no purchase for programmes that might help the poor. The myth erodes those left over from a more generous era. Welfare programmes have been cast aside, pension programmes (like social security) are scheduled to go next, and the prospect of national health insurance evaporates as a leftist fantasy.
Moreover, increasingly confident conservatives now trumpet the inevitable spread of their tough-minded liberalism. The business press disdainfully reports the anachronistic habits of fat ‘old Europe’ – endless vacations, unsupportable pensions, unaffordable health benefits and insufferable unions. They’ll have to lose all that, the conventional wisdom runs, if they hope to compete with the hardworking American puritans who get by on brief vacations, dubious retirement plans, few unions and no health benefits.
A new American generation pushes its economic faith about the world. Everyone ought to race for success and let the devil take the hindmost (as the original Puritans quite literally expected him to). Sandage has done a marvellous job exploring the dark side of this peculiar American gospel: the blithe judgment that failure reflects a personal defect, that want is a species of sin, and the insistence that the sources of wealth and poverty lie entirely ‘in the man’.