John D. Rockefeller – Sinner or Saint?

A way to a man’s heart is through sex, food, and Ron Chernow books. The last one is probably particular to me, but thankfully my wife knows me very well; for Christmas last year she bought me Titan: The Life of John D. Rockefeller, Sr by – you guessed who – Ron Chernow. I first became interested in Rockefeller after watching the History Channel series The Men Who Built America which profiles the dominant imperialists of the Gilded Age. The History Channel usually churns out complete garbage, but this show was actually informative and entertaining – compared to the ubiquitous alien conspiracy theory shows. Rockefeller is one of the most complicated men I have ever read about and hence Chernow’s biography of him took up a mammoth 700 pages.

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Rockefeller, unlike Vanderbilt or JP Morgan, was not your typical Rober Baron who accumulated money for the sake of hedonism. Wealth and success to Rockefeller represented God’s blessings – blessings which could not be squandered. He lived a simple life relative to his fortune which in today’s money was worth 400 billion dollars. Oil was the foundation of that fortune and for decades his company, Standard Oil, dominated the global refining business. With vast wealth comes enormous controversy – Rockefeller was a ruthless businessman who negotiated unfair trade deals with the railroads – squeezing out small refiners in the process. These shady business practices were during a time when industry was mostly unregulated in America. Ida Tarbell, the famous Muckraker journalist, vilified Rockefeller – subsequently rallying public opinion and the US government to break up Standard Oil’s monopoly. Ironically, the break up of Standard Oil made Rockefeller even wealthier – he continued to own large shares of his stepchildren’s companies still known today: Exxon, Mobil, Amoco, Chevron, Sun, Conoco.

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Rockefeller stepped away from the oil business in his late 50’s and enjoyed a long retirement of philanthropy. Thanks to several Rockefeller foundations, the fields of education, medicine, and research were expanded. It can be argued that the United States world-renowned college system is a direct result of Rockefeller – he set the standard for medical research and founded the prestigious University of Chicago. Before Rockefeller, the state of medicine in the US was that of snake oil salesman – after Rockefeller medicine evolved into a rigorous scientific discipline. Some would question whether we should support philanthropy from “dirty” oil money? I would argue that Rockefeller made business decisions like a strict father; they were harsh but many times fair, as the oil business was in large part saved by Rockefeller’s big thinking principles. During the financial crises of the late 19th century, many small refiners went bust all while Standard Oil maintained record low prices for the consumer. Capitalism is tough and Rockefeller was one of the toughest. When we critique his decisions, we must look at things contextually. Rockefeller was not without blame, but I don’t think that his legacy is one of a sinner. I think his legacy is complicated and the fairest assessment should come from his opponents…

“The press, once hostile to him, formed his biggest cheering section. ‘It is doubful whether any private individual has ever spent a great fortune more wisely than Mr. Rockefeller,’ Pulitzer’s World editorialized in 1923, while the Hearst press, not to be outdone, states, ‘The Rockefellers have given away more money and to better advantage than anybody else in the world’s history since the ark stranded on Ararat.'”

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I believe that Rockefeller is no saint when compared to the world as a whole…but maybe a saint when compared to the wealthiest individuals in the history of the world. Excessive wealth usually corrupts and leaves no positive legacy. Rockefeller following his religious views used each penny wisely. Those pennies may have been tainted, but in the end, they were shined up for a noble purpose; a purpose which Rockefeller pursued until his death at 97 years old. So what’s your verdict? Was Rockefeller a sinner or a saint?

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The Last Founding Father vs. Donald Trump

It seems to be another hectic week for our President – Donald Trump. A government shut down never looks good for the leader of the government. I heard this news from my Dad who was quite upset – not at Donald Trump – but at Democrats. See, my Dad is not an anomaly. Whenever our views are attacked, our elephant instincts kick in. We “react” first and “rationalize” later – usually, that rationalization is far from sensical. My Dad and I like to bump chests politically, but in the end, we always just sit on the couch and watch sports. However, our discussions about politics are not zero-sum gains. Trying to understand another person’s views takes time, patience, and empathy. My Dad and I have learned a lot from each other and our conversations keep getting more civil – our tandem elephants are becoming more docile.

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As an extension of last week’s post about James Madison, I am going to further question what it means to be “presidential.” Time will tell how Trump does over the next years but how can we truly judge his performance? We need to know how other Presidents have done in the past so we can have rationale conversations into the future. To achieve this goal, I am reading every US President’s biography and writing about them for your enjoyment – here is a list of all the previous posts: George Washington, John Adams (coming next week), Thomas Jefferson, James Madison, Abraham Lincoln, Theodore Roosevelt, and Herbert Hoover. This week I read about America’s fifth president – James Monroe – The Last Founding Father: James Monroe and a Nation’s Call to Greatness by Harlow Giles Unger.

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James Monroe was the last founding father to be President and was actually born shortly before the American Revolution in 1758. Monroe was raised in Virginia, but unlike Washington, Jefferson, or Madison he did not own substantial plantation property. He fought in the Revolutionary War and was actually with Washington in the Battle of Trenton when the famous crossing of the Deleware River occurred; he was wounded in the battle but eventually recovered. The military at the time had a glut of officers, so Monroe was never able to receive a position of command. Upon National Independence, he took up law to begin supporting himself and his wife, Elizabeth Monroe.

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Throughout this time, Monroe was mentored by a fellow Virginian – Thomas Jefferson. Jefferson pushed Monroe to join him in politics and Monroe initially split his time between law and the Virginian House of Delegates. He would go on to serve in the Congress of the Confederation and help ratify Virginia’s Constitution. His political career took off when he became Ambassador to France during the French Revolution, Ambassador to Britain and Minister to Spain – negotiating the Louisiana Purchase, land treaties, and peace negotiations while overseas. He would go on to be the Governor of Virgina for four terms, US Secretary of State, and US Secretary of War. While Secretary of War, he virtually ran the government because Madison was inept during that period of conflict. He would go on to be the most popular President since George Washington.

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Monroe committed over 40 years of his life to public service and served in more public posts than any American in history. While President, he pushed for Western expansion and acquired more land from the Spanish in modern-day Florida. He protected American interests at a time in history when European powers could quickly take advantage of the young country. The Monroe Doctrine was a masterpiece of diplomacy for the Western Hemisphere and allowed independence for myriad nations in Central and South America. Monroe was described by friends and foes alike as having plain and gentle manners. He was a bold and robust leader in times of war and peace and fought for the Bill of Rights and against secrecy rules in Congress – opening the halls of Government for the first time in history.

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Monroe established the first state-supported public schools and pushed the development of public roads and canals to further commerce. Monroe was secretly an excellent President who accomplished more than I had ever thought. He transformed a fragile nation into a glorious empire – by making the United States impregnable to attack and rich in natural resources. He allowed Americans to expand westward and gain a democratic vote through the ownership of land; his Presidency saw the largest redistribution of wealth in the annals of history. Monroe was so popular that there were no political parties during his presidency; he was able to bring people together and put his country first. James Monroe indeed achieved “presidential” status during his Presidency – unfortunately, Trump is nowhere close to his level at this point…but I’m hoping he will pull through.

Pride and Prejudice

“It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife.”
-Jane Austin Pride and Prejudice

There are some books out there which never seemed imaginable for my reading list; one of which was always Pride and Prejudice by Jane Austin – my 6th classic. Jane Austin always seemed like the ultimate kryptonite to male ego. No man could dive into a Jane Austin book and come out with any remaining masculinity. It’s like accidentally using Vagisil Body Wash when taking a shower and then going through the day questioning the existence of your gender; requiring a impromptu Civil War reenactment to reverse any damage. I actually bought Pride and Prejudice at Barnes and Noble which was a big mistake. Buying this book was kinda like buying a dirty magazine – eye contact at checkout being a nonnegotiable. What made matters worse was the fact that I had to ask this little old lady to find a copy for me. Like a scene in some twisted comedy, she had to announce over the intercom, “I need help finding Pride and Prejudice for this nice young man.” We ended up spending the next 30 minutes navigating the store to find a copy that didn’t have a cover designed specifically for hipster feminists. I finally settled on a bright blue copy which was the closest thing to a “manly” version – the old lady quickly ruined this triumph with the words, “oh how cute, my daughter has the same one.” The shame I felt climaxed at the counter when the clerk asked me why I was reading it – my answer was that it was for an “all-female book club.”

Pride and Prejudice was written in 1813 and was a critique of the “Sentimental” novels of the mid-18th century. The Sentimental novels usually focused on the power of emotions over reason – many times in relation to marriage. Austen, in Pride and Prejudice, questions the advantages of marriage and questions the “pride” and “prejudice” between different classes of people. Early 19th century England was all about social distinction, manners, and status. The main characters of the novel continually are judging themselves in relation to others and questioning the proper ways to interact. Marriages are based not on love but rather upward mobility – women with small dowries seeking rich men and poor handsome men seeking wealthy-spinster women. The novel starts out like an episode of Keeping up with the Kardashians but actually ends up being pretty captivating by the end; the journey to becoming married is not straightforward and not always a sure thing. Many times, I found myself rooting for a couple but then being surprised by plot twists which totally changed my outlook – highlighting my own prejudices. This novel is not just about romance but rather our human nature to judge others. It also speaks to our stubbornness to accept wrong doing and the barriers that pride presents in our daily interactions. It was actually a great novel that dissolved my long standing pride and prejudice towards Jane Austin. We always need to be reminded to not judge a book by its cover – maybe I’ll go back to Barnes and Noble for the more feminine cover.

 

Lehman Brothers: From Superb Cotton to Sub-Prime Mortgages

Does the Financial Crisis of 2008 make you want to punch someone in the face or maybe go run to your cat for a good cry? I would like to punch the bankers, responsible for the world’s most recent economic collapse, right in the man sack. In 2008 I was 18 so naturally Wall Street’s meltdown was not on my radar screen. I have read a couple of books, including Lehman Brothers, 1844-2008: The Last of the Imperious Rich by Peter Chapman. My parents bought me this book for Christmas mainly because it was 70% off (similar to the Lehman Brothers stock in 2008) but I was appreciative because I knew very little about the storied history of this particular investment bank.

Henry Lehman came to America in 1844 from Bavaria and settled in Montgomery, Alabama where he ran a store that sold various goods. His brothers, Emmanuel and Mayer Lehman would join him and in 1850 the store was given the name Lehman Brothers. During the 19th century, cotton was king and the Lehman Brothers would many times accept cotton as a form of payment for their goods; eventually, through this practice, they became brokers-buying, storing, and selling cotton to interested entities. This cotton brokering led them to New York where most commodity trading was taking place. With one foot in the South and one foot in the North they were well placed to invest in both agriculture and industrial operations. This benefited the brothers greatly during and after the Civil War. The Lehmans eventually moved their entire operation to New York in 1870 and continued work in the commodities business until 1906.

In 1906, Phillip Lehman (Emmanuel’s son) brought Lehman Brothers into a new realm of business when he partnered with Goldman Sachs to make General Cigar a public company. Lehman Brothers would go on to underwrite several well known companies: Sears, Studebaker, Woolworth, Gimbel Brothers, Macy’s, Endicott Johnson, Goodrich, etc. Following in Phillip’s footsteps, his son Bobbie Lehman, beginning in 1925 would take the company in the direction of venture capitalism. Lehman Brothers survived the Great Depression by underwriting the first television manufacturer, the Radio Corporation of America (RCA), Halliburton, and the first commercial airlines. The company saw great success through Bobbie’s leadership and had a focus on family partners throughout the 30’s, 40’s, and 50’s. Bobbie died in 1969 which began the era of non-Lehmans running Lehman Brothers.

The 60’s, 70’s, and 80’s showed promising growth for the firm with a transition from underwriting companies to complex trading through newly introduced computers. By the 90’s Lehman Brothers was among the biggest traders on Wall Street and had been bought by American Express. The tangible commodities of the past were replaced in the tech age by extremely complex-virtual stocks. One of Lehman Brothers favorite investments were in bundled sub-prime mortgages. Lehman Brothers would end up leveraging almost all they had on these toxic investments and in the end they would fail because of them. In 2008, Lehman Brothers stock would plummet 90% and they would file the largest bankruptcy in history-613 Billion Dollars. This would, in large part, become the cause of the Financial Crisis of 2008 and send the world into a recession that is still felt today.