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BY THE TIME he died last week, Richard Whitney '11 had almost passed out of the folklore of American capitalism. As we look ahead to the worst financial crisis the United States has faced since the thirties, Whitney's ironic career as the symbol of the best and the worst in American capitalism is worth remembering.
Descended from immigrants who arrived on The Arabella (the ship that followed The Mayflower). Whitney was the younger son of the president of a large Boston bank. He attended Groton, where he was the captain of the baseball and football teams, and Harvard, where he was a member of the Porcellian Club. At the age of 23, he bought himself a seat on the New York Stock Exchange and began a rapid rise to prominence on the Street as the bond dealer for the firm of J.P. Morgan.
Whitney was the responsible executive of the Exchange when the Market crashed in September 1929, and he quickly took the role of the Exchange's chief public spokesman. It was Whitney who walked out onto the Exchange floor the morning after Black Thursday and placed the most famous order in Exchange history, "205 for Steel," a half-hearted attempt by the big banks to put a floor under the Market. It was Whitney who, in the years after the Crash, bore the chief brunt of the Congressional investigations into stock market practices. As he grew more and more ultraconservative and self-confident about the financial world of Wall Street's Old Guard (at one point he told a Congressional committee the Stock Exchange was "a perfect institution"), Whitney's personal affairs deteriorated to the point where he embezzled money from the estate of his father-in-law. In 1938 his financial position finally collapsed in one of the largest personal bankruptcies in American history, and later in the same year he went to jail. His self-possession never failed him; he wore his Porcellian chain prominently at his trial. In the last weeks before his indictment, Whitney asked hundreds of people for loans--usually requesting "a hundred" meaning $100,000--even from lower-grade Stock Exchange employees who had nowhere near that kind of money to lend.
At Sing Sing the prison barker called out "All men who came Thursday, Friday, Saturday and Mr. Whitney please step out of their cells!" and fellow convicts as well as guards asked for his autograph. He distinguished himself on the baseball and football teams and the prison psychiatrist reported that Whitney never showed the slightest signs of self-criticism. His brother made good on all his debts and after his release from prison in 1941, Whitney lived a comfortable, secluded life.
IT IS TEMPTING to see in Whitney's personal failings some reflection of the failings of the system he represented in the press and in the public mind. Whitney's image as the White Knight of American capitalism was so ingrained that members of the SEC seriously considered letting him replace the embezzled money quietly and resign, in order to preserve public confidence. And, after an initial orgy of gloating in the press, public reaction swung sharply to Whitney's side, and began to see a stoic martyr where there was really only a self-deluded man who believed--until the last minute his world collapsed--that Jersey Lightning applejack would sweep the nation and make his enormous investment in applejack distilleries pay off. These two elements--an unthinking crossing of the line between the legal and the illegal in the search for solvency, and a never-ending faith in speculation--are what make Whitney a prototype of American financiers, and prove the identity between the two-bit racketeer in the social club on the corner and J.P. Morgan down at 23 Wall Street. Criminality is part of the system and the system's true children, like Whitney, pass swiftly and effortlessly over the line from legal to illegal exploitation.
It's also instructive to remember that, in the end, Whitney got sent to jail not for any of the shady speculative devices he sanctioned as President of the Exchange during the early thirties, which may have ruined nearly as many small investors as the Great Crash itself, but for stealing money from the New York Yacht Club. The closed circle of the financial elite were willing to forgive Whitney almost anything but stealing from the Yacht Club meant Sing Sing and an end to his membership on Harvard's Ec department Visiting Committee.
It's silly to condemn Whitney's stealing, compared to the huge size of the kind of "legal" stealing that goes on all the time; silly to laugh at or pity Whitney's faith in his worthless distilleries when this is the kind of faith so many successful capitalist ventures have been built on. It's only that Whitney demonstrates the last stages of personal disintegration for the capitalist, and may warn us, on a larger scale, of the no-holds-barred rapaciousness combined with childlike faith in the impossible that may surface in American capitalism's coming death-rattle.
AS THE NATION'S prosperous scent another Depression in the wind, people like Whitney, the golden boys of the financial world who've always had it easy, are beginning, again, to jump from high windows along Wall Street, and when they do, they take pension funds and life savings with them. If their demise meant the demise of the system in which they've failed, that would be one thing--and might be applauded as leading to genuine change. But even after the fall of a capstone as central, as public, as Whitney, the system managed to regroup and restore its shattered power and image.
The fall of individuals like Whitney can serve only one purpose: to remind people, in the middle of a more drawn out but no less extensive stock market crash than that of 1929, of the dangers and iniquities of a system in which economic control lies in the hands of a hereditary oligarchy, a system whose basic criminality is never very far from the surface.
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