Not by Greed Alone New York Times Book Review
20 TRIUMPHS OF GREED
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April 28, 1985
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Department 7 , Folio
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FAMOUS Fiscal FIASCOS By John Train. Illustrations by Pierre Le-Tan. 112 pp. New York: Clarkson N. Potter/Crown Publishers. $8.95.
JOHN Railroad train is a rarity amidst professional money managers. He has a sense of history as well as a sense of humor, and his style leavens the serious stuff of financial history into a humorist'southward holiday. In ''Famous Fiscal Fiascos'' he has improvised a new art class ingeniously crafted to mix laughs and nuggets for suspicious students of the coin game anxious for the lowdown on the shams and scams behind past and present productions of ''The Fiscal Follies.''
Mr. Train has pulled off the stunt of the decade in financial show biz past supplying the substance spiced with the scandal. He has compressed 20 frenzied triumphs of greed over prudence into ane slim reader easier and quicker to blot than Masterpiece Theater. The horror stories range from the South Sea Bubble in Newton'southward time - it suckered the master-mathematician, even so his reputation for financial composure equally Master of the Mint! - to the bosom on the State of kuwait stock exchange in ours. They are guaranteed to control the interest and fortify the conversation of readers on the run who may have heard of Charles Ponzi, but never knew precisely what he did. Mr. Train's chapter catches Ponzi in the act: paying out 50 pct dividends overnight by engineering plenty publicity to bring enough new suckers swarming in with enough new money to keep the greenbacks moving through a revolving door. Paying dividends on the greenbacks ''take'' beat investing it until the word spread virtually his racket. With a direct face up, Mr. Train recalls that in 1920 Ponzi christened his securities and exchange company the SEC. Talk nearly prophets without honor!
So far as Mr. Railroad train's own bounds and prejudices go, this book marks an credible conversion to skepticism on his part from the beast faith which has been hyping Wall Street. While the 1984 conviction was at its height, professional person portfolio managers, presumed to know improve, were freezing billions into stocks that have proved easier to buy than to sell. Back then, Mr. Train was writing every bit a truthful laic most market place antics that have since lost their magic. Even so the moral his volume drives home is that such excesses of confidence offering irresistible come up-ons to the conviction men who destroy markets. Sad to chronicle, the judgment Mr. Train supplies in his brief afterword is, however, stodgy and simplistic, and it is fortified past a portentous foreword from C. Northcote Parkinson, the British historian defended to the Spenglerian suggestion that the W is through. Mr. Train's sequence of subjects, alternate low-grade, back-room swindlers with loftier-minded government swindles, unveils a tableau of history displaying chivalrous governments and malevolent adventurers taking turns exploiting herd psychology. In both cases, Mr. Train argues, the aggrandizement of newspaper guaranteed a bad finish for the villainies and the villains.
This is an orthodox view. It may besides explain why Mr. Train wrote about the market with persuasive bullishness when President Reagan was withal expected to residue the budget, and is writing about information technology with ominous overtones of bearishness now that the same President is presiding over deficits no Democrat would dare tolerate. Mr. Railroad train's inclination to moralize about the evils of inflation (in the confront of our oncoming deflation) also reveals the one flaw in this encyclopedic digest of market debacles: his credible lack of confidence in comedy to transport its ain bulletin, equally sermonizing never can. I RONICALLY, Mr. Railroad train ends one of his most rewarding chapters - on John Police force'south failed 18th-century experiment in monetizing government debt by converting it into claims on country - by quoting the standard obituary on it by Voltaire, ''Paper money has now been restored to its intrinsic value.'' Voltaire was a shrewd man of affairs able to see opportunity, besides equally a rational thinker able to see through the pretensions of absolutism. But he could not foresee the problems arising from the circumstances of our era.
Whether Mr. Railroad train likes it or not, paper money - specifically, the dollar unbacked by gold - is the simply standard the globe now has for measuring its immense store of productive values. Voltaire's quip drops the curtain on the revealing chapter of history the author has brought to life. Just it does not change the fact that governments, though able to print coin, cannot print land and, therefore, that John Law, rogue though he was, had a point that Mr. Train does not allow for when he turns serious. But that is a consideration to be argued over, and John Train's book is to exist enjoyed.
THE Fall OF A CONFIDENCE Human
In Jan 1720 two courtiers shut to the throne, the Prince de Conde and the Prince de Conti, demanded greenbacks for thousands of their shares of Compagnie des Indes stock. To accommodate the princes, [John] Law had to produce whole wagons of gold. Others caught fear and hastened to redeem in plough. Then to replace the bullion paid out to meet redemptions, Constabulary had to print rivers of new paper coin. Nine presses churned for weeks, producing over 1.v billion in new paper livres. . . . Compagnie des Indes stock fell in sympathy, from nine,000 to five,000. The way speculators think, it matters not that a stock has risen from an upshot price of 500 once to 5,000 today; what counts is that it has fallen from an intermediate height of 20,000. Saint-Simon wrote, ''The uproar was general and frightful. Every rich man idea he was ruined; every poor human being believed himself reduced to beggary.'' Law, once fawned upon past royalty, became an object of universal execration. Guards had to protect him from furious mobs trying to pause into his house, to injure him whose notice they formerly sought. . . . Law, his life in danger, fled to exile in The netherlands. His properities in France were seized. Gone, gone the happy days of ''Boyfriend'' Law, let lonely the proud times of ''O More than Man!'' ''Concluding twelvemonth I was the richest individual who always lived,'' he lamented. ''Today I accept nothing, not even enough to keep alive.'' Afterward subsisting in various countries, essentially as a gambler, he settled in Venice, and there died, alone, in poverty, and forgotten. -- From ''Famous Financial Fiascos.''
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Source: https://www.nytimes.com/1985/04/28/books/20-triumphs-of-greed.html
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