Americans Just Don't Do Outrage the Way They Used to
Recent American history suggests not. The savings-and-loan failures in the late 1980s didn't sustain public interest. Neither did Whitewater in the 1990s. Commentators can't decide whether Americans are too complacent, too desensitized or too patriotic right now to care. Nobody expects the kind of mass protests seen recently in Argentina over that nation's financial disintegration. Former Enron employees ransacking Houston as Argentineans did Buenos Aires? Non-union white-collar workers do not throw rocks.
But from a longer historical vantage we see that Americans have sought economic justice in the streets. In the era of John Adams (who is so popular now among hardcover book buyers), tar and feathers, burned effigies and demolished houses awaited schemers who defrauded the public. These punishments enforced a"moral economy" and served alongside statutes to govern the developing capitalist marketplace.When flour merchants drove up prices during the American Revolution, crowds of women broke into their storehouses. Marching men surrounded courthouses to prevent foreclosures on farms so recently defended against British tyranny. Bankers, merchants and lawyers received rough treatment for transgressing the boundaries of legitimate commerce.
But by the end of Adams's life in 1826, politicians and judges were freeing incorporated businesses from their obligations under the old moral economy. In this first era of deregulation, the mismanagement of textile factories, canals and railroads imperiled working families. With new laws more likely to protect perpetrators than victims, disgruntled workers called strikes and threw stones in cities from Albany to Zanesville.
Speculation and deregulation even led to full-fledged rioting. Thousands of Baltimoreans took to the streets in 1835 to protest the collapse of the Bank of Maryland. As common people were losing their life savings, bank executives built new mansions, hid their account books from investigators and found sanctuary under the law."Where is the Justice," asked one newspaper editor, as scheming financiers drove"their chariot-wheels over the widows and orphans whom they have plundered, without ever having made restitution?"
Like the Enron retirement plan, the Bank of Maryland in flush times had allowed working people to see their fortunes rise. But as with Enron, workers and executives were not equally leveraged when hard times arrived. Once it became known in March 1834 that the bank had issued fifty times more paper money than was warranted by its gold and silver, the savings of working-class depositors instantly became worthless.
The directors of the Bank of Maryland had lobbied hard for the banking deregulation that legalized the issuance of unbacked paper money. Their task was made easier by their friendship with a Maryland politico, Roger B. Taney. Just as Enron had the ears of Texans in Congress and the White House, the Maryland bank directors trusted Taney, installed in 1833 by President Jackson as secretary of the treasury, to pull the plug on the centralized Bank of the United States and distribute federal deposits to the administration's"pet banks."
When the bubble burst for the Bank of Maryland, the directors emerged unscathed. Like Enron executives who received"loans" as compensation and repaid in stock, the Baltimore directors borrowed extensively from the bank. The collapse prevented small depositors from reclaiming their gold and silver, but allowed directors to repay their own loans with worthless paper money. No punishment awaited the directors, who hid their books from investigators. Under the laws of deregulated banking, the directors bore no personal liability for customers' losses. In contrast, working-class depositors faced the immediate consequences of being broke: evictions, soup lines and even imprisonment for overdue debts as small as $10.
Public outrage boiled over in Baltimore, and defrauded depositors took to the streets. They targeted the property of the bank's directors and lawyers. Exquisite houses came down, imported furniture burned in the streets, and personal property was claimed as compensation.
Seventeen months elapsed between the bank's collapse and the riots in summer 1835. Do present-day Americans have that attention span? Ideally, Americans will remember long enough to help remove corporate money from politics and stem self-serving deregulation. But let's also hope that an outraged public recalls the lessons of earlier centuries when bilked Americans asserted their right to regulate the marketplace -- through their legislatures preferably, but by the strength of their numbers when necessary.