Wall Street: An American Dynasty
by Steven Malik Shelton
In the mid–seventeenth century in the Dutch town of New Amsterdam (now known as New York City) the people fearing an impending attack from its neighbors in New England built a massive log wall to protect them from a potential land assault by their adversaries. Spanning about 2,000 feet, the barricade ultimately proved futile when they were overrun not by land, but by sea. To the victors go the spoils and before the century ended the large wall was dismantled. Yet its memory was not so summarily destroyed or erased, and the area where it once stood has survived to the present day and is universally recognized by lay persons as well as securities wizards and investors as the financial Mecca, Wall Street.
From its inception African slaves were bought and sold on Wall Street along with commodities like lumber, fur, precious metals and firearms. And for decades after the issuance of the Emancipation Proclamation as well as the Thirteenth, Fourteenth and Fifteenth Amendments to the Constitution (which ostensibly guaranteed them rights as American citizens) Blacks were banned from participating as Wall Street financiers or speculators. The irony is that the stone building itself which is the focal point of the legendary street and houses the New York Stock Exchange was constructed with the minds, hands and backs of enslaved Blacks.
Beginning in the 1920’s African American financial speculators began to carve their niche on Wall Street. Some of them were the flamboyant H.R. George (who established offices in Harlem as well as Wall Street); Edward and George Jones (they owned over a half million dollars of stock in such trademark companies as General Motors and AT&T), Tavers J Bell (who co-founded the investment bank, Daniels and Bell, Inc.), Russell L. Goings Jr. (who became one of the first Black-owned member firms of the New York Stock Exchange), Garland Woods (the first Black partner at Goldman Sachs) and the indomitable Reginald Lewis, who crafted the billion dollar buy-out of Beatrice Foods in the 1980’s.
The boom and bust financial activities of Wall Street has exerted a seismic effect on America’s economic life. The stock market crash of 1929 devastated Wall Street and sent waves of economic fall-out plunging the nation into the most severe economic decline in its history and serves as a standard reference for financial melt-downs. Charles Geisst writes in his book, Undue Influence:
“As the depression worsened, many fingers were pointed at the stock market as the culprit that had destroyed so many jobs and livelihoods. The winter of 1932 was particularly extreme, only adding to the hardship of the unemployed. Hoovervilles were springing up around the country. They were named because many of their inhabitants blamed their plight on the president, who seemed incapable of reviving the economy.
In the aftermath of the Crash legislation was enacted to rein in the wild speculation and gambling by financial institutions which was believed to be the cause of the Great Depression. Emergency banking legislation was passed and restored a degree of confidence in the nation’s banking system. The Securities Act was pushed through Congress in 1933, and the Securities Exchange Act followed in 1934 requiring investment bankers and securities issuers to divulge full financial information to investors. And the Glass-Steagal Act was passed to put a firewall between depositors’ hard earned savings in commercial banks and the shoot-from-the-hip extravagancies of investment bankers.
For nearly 70 years these laws were effective in stabilizing the nation’s economy from the huge economic upheavals of the market crash of ‘29’. Finally in 1999, the Financial Service Modernization Act was hustled through Congress which reversed the most potent safeguards in the Glass-Steagal Act and provided the open window for the economic bubbles and collapses of the New Millennia and contributed to the dot-com, World Com and Enron financial tragedies.
“The market collapse of 2001 was caused by a successful collaboration with like-minded individuals in the Clinton Administration and Congress,” writes Geisst. “Many of whom with strong ties to the Street, to erase the Depression era laws constraining the markets. The move also helped revise American history, adding to the ideological fervor of free marketers, proving that the same Capitalist system that defeated Soviet Communism could certainly get rid of some cumbersome Roosevelt era laws. Unfortunately, the result was the market collapse of the new century.” 2
This would eventually (along with the unregulated trading of derivatives and credit default swap spreads) create the perfect storm that culminated in the global economic tsunami of 2008. Banking, insurance, and investing conglomerates like Citicorp, AIG, Morgan Stanley, Goldman Sachs, Merle Lynch and others were deemed “too big to fail” and Congress scrambled to provide bail-outs funded by tax payer money. Ironically the same corporate executives and CEOs that had religiously clung to legendary economist Milton Friedman’s doctrine of a market place free of government intrusion were standing with hands cupped to receive what amounted to (over a period of 4 years) some 16 trillion dollars in government welfare for the wealthy.
Yet it was not the activities of Wall Street financiers alone that created the conditions of the nation’s financial uncertainty and hardship. Over the last fifty years American companies have increasingly abandoned their allegiance to American workers and sought more profitable landscapes overseas in distant countries. Clyde Prestowitz writes in The Betrayal of American Prosperity:
“Over the past several decades, a host of U.S. corporations have gone multi-national and can thrive regardless of the performance of the United States. The orthodoxy insists that while corporations compete economically, countries do not, and, indeed, should not, in order to avoid distorting the efficient operation of international markets. Thus trade must be entirely in the hands of global corporations. Moreover, unlike in the past when corporate leaders were also expected to fulfill obligations to the larger society, the loyalty of today’s CEO’s is expected not to be their countries or local communities but only to the corporation’s share holders, and their sole mission is said to be to increase the value of the companies shares. While they may feel obligations to community and country as individuals , they do not, by and large as CEOs. As Intel’s former Chairman Craig Barrett has said, ‘Intel can move wherever it must to thrive, but I sometimes wonder how my grandchildren will earn a living.’ 3
Sadly, Wall Street investment banks have blended into commercial business enterprises with laughable government oversight and continue to wreak havoc on the American middle, poor and working classes. And with the sanction of the judiciary to allow corporations to contribute unlimited amounts of money to political campaigns, our election process has been further corrupted and compromised.
1. Charles R. Geisst, “Undue Influence,” Published by John Wiley & Sons, Inc.,(2005) p.60
2. Ibid p. 5
3. Clyde Prestowitz, “The Betrayal of American Prosperity,” Published by Free Press (2010) p. 5 * Gregory S. Bell, “In the Black: A History of African Americans on Wall Street,” Published by John Wiley & Sons, Inc., (2002)