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Plus ça change, plus c’est la meme chose?

Heather Smith

“Two o’clock” said Mr Bunner …” Ten am in little old New York. You don’t know Wall Street, Mr Trent. Let’s hope we never see anything nearer hell than what’s loose in the Street this minute.” – From “Trent’s Last Case” (1913) by E.C. Bentley.

Edmund Clerihew Bentley, like friend and admirer G.K. Chesterton, was a critic of the financial system. His fictional detective Philip Trent discovered that corruption was behind the murder of a financial magnate, while Chesterton sometimes expressed his deep concerns through his sleuth Father Brown. Long before the Bankers’ Panic (the “Knickerbocker crisis”) of 2007, there had been a series of crises sending Wall Street financiers into various stages of desperation. In February 1913, French paper “Le Matin” exposed a scandal affecting politicians and bankers connected with the Asquith Government. G.K’s brother, Cecil Chesterton along with Hilaire Belloc (another literary figure who condemned the financial system) bravely pursued evidence connecting public men with insider trading of Marconi shares.

Another author, also publishing in 1913, used the novel genre to expose corruption. The American writer Owen Johnson wrote “The Sixty-First Second” which strongly suggested that John Pierpont Morgan engineered the liquidity crisis of 1907 before rescuing the floundering banks by injecting his own and others’ private funds into the system. However Morgan was not to witness the passing of the Act setting up the privately owned Federal Reserve System in December 1913, as he had died just on nine months earlier.

Here we are one century later, and one must ask – has anything changed? The answer is – not fundamentally. Officially there is no longer a gold standard, even though its price was linked to the post-Breton Woods U.S. dollar and is still regarded as an indicator of investment confidence, or lack of it, in the share markets. Hedge funds have now exploded with a plethora of derivatives which make the “virtual wealth” concept of the late Nobel Prize winner Prof F. Soddy look miniscule by comparison. As for central banks, most countries have ostensibly “independent” reserve banks which actually take their orders from the IMF and/or the BIS (Bank of International Settlements).

The important question remains – has the culture of Wall Street changed? If the Oscar-winning documentary “Inside Job” is any indication, the arrogance and hubris of those financiers is greater now than it ever was – not that it will protect them from eventual disaster. So this writer feels compelled to conclude with a Bentley-type “clerihew”, the name given to his four-line verse pattern, useful for satirical comment:

J.P. Morgan breathed his last
Now a century has passed
But Wall Street’s hardly changed
Just got more deranged!

Heather Smith is an ERA member living in New Zealand. She holds a degree and post- graduate diploma in Economics (Massey University), was Economics Convener for the NZ National Council of Women and a Secondary School teacher, and is currently on the Executive of the NZ Democrats for Social Credit.

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