The Go-Go Years (30 page)

Among the weaknesses of youth is intolerance, and the youth takeover brought with it a new intolerance toward the very qualities Wall Street had always most revered, age and experience. No imaginable social change could have rocked the traditional Wall Street order more profoundly. How, then, did this sudden reversal of values come about, and was it a good thing? As to the first question, we have already noted the effect of Wall Street's missing generation, the vacuum left by the disinclination of young men of talent and energy to go there to work between 1930 and 1950. But surely something else was involved—the confluence of great worldwide trends during the late nineteen sixties toward youth-fear and youth-worship; toward allowing and even urging students to set attitudes and fashions for their elders; toward a belief that only the young were equipped to understand and master the new world that the old had created but could not control; and, finally, toward rejection of irrelevant experience and uncritical acceptance of intuition unsullied by fact. Wall Street, which lives on dreams and fashions, was, for all of its pretensions to rational practicality, precisely the milieu within which the new gospel of youth could proliferate.

Wall Street provided a climate that permitted a trend to
feed on itself; the quite traditional levers of Wall Street success, personal contacts and the possession of privileged information, now worked in favor of the young money manager or brokerage deal-maker and against the old one. Would the thirty-year-old president of a fast-moving franchising or computer-leasing firm prefer to break bread or close deals with a Wall Streeter of sixty, or with a self-anointed swinger of thirty very much like himself? When it came to the hot stocks that were the darlings of the 1968–1969 market, the Street's elder statesmen were all out to lunch. They could still get through promptly to GM or to Telephone whenever they wanted to, but that wasn't where the action was.

And yet, did it work? Did the intuition and kindred spirit of youth, as instruments of security analysts, do well by the broad mass of investors? Not judging by results. In 1970 most of the glamour stocks would fall out of bed and many of the gunslingers who had touted them would leave, or be fired from, the securities business. As John Kenneth Galbraith remarked in the spring of 1970, “Genius is a rising market.” The look of eagles became a vacant stare once the ever-rising market began to plunge. But the revolution in Wall Street faiths and values that the youth binge briefly produced was a necessary corrective to some venerable shibboleths, an antithesis that might later lead to a synthesis. It taught Wall Street that old men make mistakes, too.

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Meanwhile, the financial community had somehow, for the first time in this century, reversed its tightly held tenet that war is bullish and that peace is for the bears. This pragmatic hawkishness had become firmly established at the time of World War I, which changed the United States from the world's leading debtor nation to the world's leading creditor nation, and gave
rise to the famous munitions profits so scathingly exposed by the Nye Committee during the time of the New Deal. World War II failed to produce a major bull market in large part due to the excess-profits tax, but it certainly did not produce a bear market, either; the Dow industrials on V-J Day stood some 50 percent higher than they had stood the week before Pearl Harbor. The Korean conflict, in Dow terms, was modestly bullish. The fact is, as Eliot Jane way wrote in
The Economics of Crisis,
that “America's wars seem to have paid not only somebody but usually almost everybody.” International conflict was good business-page news because war, or the threat of it, kept people and machinery busy; conversely, international reconciliation or its illusion raised specters of idleness and overcapacity. Just as the Communists were always saying, finance capitalism seemed inherently to thrive on war. Or—if the matter is regarded from a moral rather than a political stance—the reaction of the Dow to peace and war over the years provides the most dramatic possible demonstration of the fact that the market, although a product of human psychology, lacks anything resembling a human soul.

The disheartening attitudes of the late nineteen fifties—those edgy years of Cold War confrontations, competitive nuclear tests, and the stockpiling of unthinkable weapons, when it had become routine for Wall Street to treat the slightest, most transient breath of international reconciliation, not to mention international amity, as a signal for panic—carried over far into the nineteen sixties. The hair-raising Cuban missile crisis in October of 1962 passed with only a momentary stock drop, apparently because investors realized with shock that while war may be good for the market, enjoyment of a good market depends on being around to enjoy it. In 1966, when demonstrations against the Vietnam War first came to Wall Street, it reacted in general with a measure of disdain. That April 12, a group of about a dozen boys and girls calling themselves Youth Against War and Fascism briefly disrupted Stock Exchange trading by throwing antiwar leaflets onto the floor from the visitors' gallery. They were dragged from the gallery by armed
guards, and Exchange officials commented, no doubt justifiably, “We don't want the gallery used as a political platform.” Needless to say, the stock market averages were unaffected. Two days later there was a small, acrid pitched battle on Broad Street outside the Exchange, in which Y.A.W.F. kids traded punches and insults with members of a right-wing group, American Patriots for Freedom. Official Wall Street took no notice, but open controversy over the war had invaded its precinct at last. Then, a bit more than a year later, Abbie Hoffman and his friends threw their dollar bills on the floor and elicited the response they desired.

At first I thought throwing out money at the Stock Exchange was just a minor bit of theatre [Hoffman wrote later]. … We didn't even bother to call the press. About eighteen of us showed up. When we went in the guards immediately confronted us. “You are hippies here to have a demonstration and we cannot allow that in the Stock Exchange.” “Who's a hippie? I'm Jewish and besides we don't do demonstrations, see we have no picket signs,” I shot back. The guards … agreed we could go in. We stood in line with all the other tourists, exchanging stories. When the line moved around the corner, we saw more newsmen than I've ever seen in such a small area. We started clowning. Eating money, kissing and hugging, that sort of stuff. … We were ushered in and immediately started throwing money over the railing. The big tickertape stopped and the brokers let out a mighty cheer. The guards started pushing us and the brokers booed. When I got out, I carried on in front of the press. … We danced in front of the Stock Exchange, celebrating the end of money. I burned a fiver.

The event was entirely without explicit antiwar content; but hippies were associated in Wall Street minds with the antiwar cause, and perhaps the summer day of 1967 when the ticker stopped and the brokers cheered for the hippies marked the moment when Wall Street began to reverse itself on the war. In any case, the change had been fully accomplished by the following spring. The astonishing market of the first two weeks of April 1968, when prices rose wildly on record volume to usher in the manic phase of the go-go era, was manifestly a peace
market, in response to President Johnson's abdication speech of March 31 and the accompanying prospect of Vietnam peace talks in Paris. The portents of peace were to prove false. But to one who happened, as I did, to be inside the Exchange on April 3—a day of all-time record volume, and incidentally a soul-stirring spring afternoon—Wall Street response was heartfelt and very nearly inspiring. By ten minutes before closing, the day's trading volume had passed the 19-million share mark, easily breaking all previous records, and the Dow was up half a dozen points. The quotation figures were dancing a jig across the lighted screens above the floor. The brokers were giving vent at intervals to shouts and loud whistles. One of them had devised some sort of launcher from which, now and again, he sent a paper airplane rocketing almost to the room's lofty ceiling. As the last five minutes of trading ticked off, the noise grew louder and more boisterous; in the last thirty seconds all of the brokers moving around the floor speeded up to just short of a run. When the closing gong sounded, the cheering almost drowned it out, and a corona of shredded paper flew up from each trading post to produce a festive semblance of fireworks. Everyone, it seemed, was happy.

If so, it seems fair to assume that the happiness was attributable not just to the prospect of peace but rather more to the fact that everyone was making money hand over fist. To be sure, a strain of genuine pacifist idealism is discernible in Wall Street in 1968. (For one example, a young fund manager named Fred Mates—third and last of the Freds—went so far as to decline to invest in companies making armaments because he did not choose to profit from the war.) But generally speaking, the coming of doveishness to Wall Street does not appear to have been causally related to the triumph of youth. For all of their sartorial flamboyance and other field marks of superficial rebelliousness, the young swingers as a group were apolitical, unsentimental, and unself-consciously single-minded in their devotion to profit. In this sense, as opposed to their investment techniques and their personal style, they were throwbacks to earlier American
generations rather than exemplars of their own. Such antiwar idealism as Wall Street mustered came largely from their elders, an idealism that reached its peak on Moratorium Day, October 15, 1969, when Wall Street leaders by turns took part in a daylong reading of the names of forty thousand American soldiers killed in Vietnam from the two stone pulpits in Trinity Church; and the readers, with a few notable exceptions, were not the young Turks but rather the old pillars of respectability like J. Sinclair Armstrong, executive vice president of the U.S. Trust Company of New York and the former chairman of the S.E.C.; Robert V. Roosa, Brown Brothers partner and former Under Secretary of the Treasury; John R. Lehman, of Lehman Brothers; Amyas Ames, of Kidder Peabody; and Roswell Gilpatric, partner in the Cravath law firm and former Deputy Secretary of Defense.

The old cold war establishment had done a flip-flop and was now leading Wall Street toward peace; and the reasons were almost certainly chiefly practical. Just as Britain, back in 1910, led by the eloquent Norman Angell, had suddenly realized that the Empire was no longer a paying proposition, so the Wall Street leadership in 1967 and 1968 suddenly realized that wars like the one in Vietnam were simply no good for business. The practical considerations had changed; mounting labor costs and federal deficits had made government contracting far less profitable than it had formerly been (if profitable at all), and the mounting drain of dollars abroad put the dollar constantly in trouble on the international markets. Foreign wars, it suddenly became clear, were now a national liability.

Hard heads and a soft currency had made Wall Street doveish. Being soulless, the market cannot be congratulated on a spiritual conversion. Still, those wild days in April 1968 were a time and place when human self-interest appeared to be more than customarily enlightened. It was a time when Wall Street accordingly took on a new and unaccustomedly attractive aspect.

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At a more down-to-earth level, Wall Street's conscience was, however, as bad as or worse than ever. And by the way this fact was identified hangs a tale.

In 1966, a young, vigorous, handsome clergyman, Francis C. Huntington, who in appearance and manner rather strikingly resembled New York City Mayor Lindsay, was working as a curate at Wall Street's Trinity Church. He was not happy in his job; he conceived his mission there very specifically, as a means to explore the work-related moral problems of people employed at a professional level in Trinity's immediate vicinity, the financial district. To this end, he began having discussions with brokers, bankers, financial lawyers, and the like, at which he encouraged them to tell, as Huntington put it, “What was bugging them about their jobs.” The program did not flourish, because Trinity at the time still adhered largely to its traditional policy of tending to its spiritual knitting and leaving the worldly marketplace outside to its own devices—of rendering unto Caesar what was Caesar's and unto God what was God's. Frustrated by lack of encouragement from his superiors, Huntington left Trinity and, in January 1967, with only himself and a secretary in a little office on Liberty Street, he set up an interdenominational organization called the Wall Street Ministry, to carry on the programs he had begun at Trinity.

Modest financing came from various financial firms and industrial corporations—and from Trinity itself, which, while unwilling to foster Huntington's project as an in-house activity, was glad enough to encourage it as an independent project. The Wall Street Ministry immediately began holding regular luncheon seminars of Wall Street professionals at which they were urged to air their problems of conscience. In 1968, having acquired the services of the dropout executive John Faison, it
conducted the survey of back-office life that I have described earlier; and in 1969 and 1970 it found itself in a unique position to study the effect on financial workers' morale and morality of a full-scale market crash. As Huntington described his organization's purpose, “We are aiming at a value-structure within the securities business.”

The seminars, at first, were disappointing. They did not attract the kind of people who are inclined to bring up what Huntington called the gutsy problems, and when those who came did present problems, the problems always seemed to be someone else's rather than their own. Apart from this evasiveness, Huntington found anger and disappointment, particularly among the lawyers, when he would decline to give a clearcut moral answer to their questions. Why wouldn't Huntington lay down God's law the way the Supreme Court lays down man's? Thus confronted, Huntington would smilingly deny his identity with God. But the lawyers remained unsatisfied.