Wall Street 1950 - 2000 | The Stock Market | Stock Market History

Donald Regan served in the Marine Corps from 1940 - 1945. Right after the war, he went to Merrill Lynch to ask for a job. They asked him if he had "any specialties he could bring to the firm." He responded, "I only have one specialty now. I kill people. If you want people killed I've been doing that for five and a half years and I've gotten pretty good at it. Otherwise I could use some training." He ended up being chairman of Merrill Lynch, which says something about necessary ingredients for getting to the top on Wall Street.

In later years, Regan came up with an idea of how brokerage houses could get into banking. Such connections had been outlawed in the Glass-Steagall Act of 1933 ... a reaction to the stock market excesses of 1926 - 1929. Regan compared himself to Willie Sutton. He said he wanted to get into banks because "that was where the money was." In banks, he said in interview, "there was just oodles of money and they had a monopoly on it, protected by the government. If anything happened to a bank did it go out of business? No. The Federal Reserve ran right in and propped it up."

Later, when he was working in the Reagan administration, speaking of the management disaster of the huge Continental of Illinois Bank, "We should let the bastards fail. Why not? They're competitors, they're bankers. Bankers should have a right to fail."

Much of What Goes Up is in form of a series of dialogues between the editor and the stars and villains of Wall Street. Weiner has collected the words of some 200 stockbrokers, CEOs, regulators, spectators and speculators who were the movers and shakers of Wall Street between 1960 and the present.

Of them all, Regan comes across as one of the most cynical and funny commentators on the business. He's a person who is experienced enough, and old enough, and rich enough to express himself directly --- no bullshit --- in interview.

Likewise, when author Bryan Borough interviewed the controversial Ross Johnson about the proposed RJR Nabisco leveraged buy-out (the scheme of choice for acquiring corporations in the 1980s --- which included taking on heavy debt, issuing junk bonds), Johnson responded that everyone would win. Shareholders, his friends. "I'll get rich. My investment bankers will get rich." He figured there would be a chicken in every pot.

The only people who would get screwed in all this were the bondholders. And nobody really cares about bondholders anyway --- you can always buy them off for millions of dollars when all this is long said and done.

Speaking of junk bonds, reporter James Grant is quoted here claiming that they have been around for centuries. "Debt securities of the revolutionary American government were speculative-grade instruments, or junk bonds. Before there was a constitution, the revolutionary government was raising money in Holland in speculative circumstances. So the idea that Michael Milliken invented this thing is not at all historically accurate."

Jerome Kohlberg, the man who essentially invented LBOs, says here, "What we were really doing, in my view, and I've thought about this a lot, was taking earnings or value that should've gone to the shareholders and bringing it unto ourselves."

Speaking of shafting stockholders, value investor Walter Schloss tells us that "when companies have problems they often like to have their annual meetings in cities and states where there aren't too many stockholders."

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Author Weiner not only cooks up interviews, he goes to direct sources, quoting articles, speeches and books by the Wall Street Mavens, their critics, enemies, and admirers. Some are famous (or infamous), names well-known to those of us who hang out at the dark edge of the stock market: Alan Greenspan, Charlie Merrill, Michael Milliken, David Rockefeller, Donald Regan, Jerry Tsai. Then there are those we never heard of, but who changed drastically the way the market worked: Jerome Kohlberg who may have invented "the leveraged buy-out;" Richard Jenerette, co-founder of Donaldson, Lufkin and Jenerette, the upstart brokerage firm of the 1960s that specialized in "researching and trading in shares of growing young companies;" Jack Golsen who singlehandedly almost caused the largest stock brokerage firm failure in the history of Wall Street --- that of Hayden Stone, in 1970. (In the process, he even refused a supplicating call from President Nixon: "I'm not going to talk to him."

If the president asks me to do something for the good of the country, how am I going to refuse? If I don't talk to him, I don't have to refuse him.)

Some of the people interviewed are pedantic, arrogant, or gilding of the black lily that is essentially naked manipulation --- of prices, of the public, of reporters, of regulators, of would-be buyers of stock. Cases such as National Student Marketing and Enron are but cases of those who got all too enthusiastic about what is, after all, a fool's game for the little guy. Adam Smith once said that great gobs of money are there to be made on Wall Street, but not for the lowly trader with his 100 shares of AT&T. Rather, it falls like a golden rain on the heads of the financiers, the bankers, and the lawyers who are floating some silly new stock issues.