The Mainstream Media Is Running Scared, Again

Yesterday afternoon, a major TV news outlet solicited an op ed from me. I agreed, though it was brutally inconvenient, because it seemed pretty wide open. Here is what the editor wrote: "Would you be interested in writing a piece for ... on the changing image of Wall Street and the financial industry over the past several years? It could be pegged to the Occupy Wall Street protests and the books and films that have focused on the topic since the financial crisis began – and could put that into the context of history. Our readers would appreciate your perspective.

The editor REFUSED to publish the piece I came up with, which I copy below, because he said that he was afraid that it would incite violence. I of course think the claim utterly ridiculous unless the editor believes that we are actually sitting on a powder keg of civil unrest and violence. The last time an editor refused to publish a SOLICITED op ed by me was back in 2005 or 2006 when I suggested that bank stock prices would suffer when housing prices stopped rising, as they inevitably would. The editor didn't want to "go there" because she would get into a lot of trouble if my little piece turned out to be the straw that broke the camel's back/the pin that pricked the bubble. So while the piece below is merely the musings of an historian conversant with the violence of our collective past, I am now worried that I hit too close to home. Allow me to reiterate, therefore, that I am not condoning violence, just warning that it may be around the corner due to deficient government policies. That the mainstream media (this left vs. right media argument misses the point, imho) is running scared again has me running scared! Here is the piece in question. Judge for yourselves.

Will Wall Street Burn?

In 1792, a mob of defrauded creditors would have lynched failed financial speculator William Duer had he not taken refuge in New York’s debtor prison. Adroit policy maneuvers by Treasury Secretary Alexander Hamilton quelled the subsequent financial panic and quickly righted the economy, diffusing tensions. But in 1835 Baltimore suffered one of the worst riots in antebellum American history because the city government failed to create a sense of social justice in the aftermath of the bankruptcy of the fraudulent Bank of Maryland. The lesson is clear: When tensions run high, how leaders respond to financial crises can make the difference between a peaceful return to prosperity and carnage.

We may be at another such crossroads today. Why Don’t American Cities Burn? asks University of Pennsylvania history professor Michael B. Katz in a forthcoming book. Other scholars have also been wondering why violence has not yet returned to American politics. Finance, politics, and explosions, after all, share a long history in America.

Some think that most Americans are too affluent and doped up on video games to risk life and limb for a cause. Others believe, Dylan-like, that revolution is in the air. The Occupy Wall Street protests, the increasingly negative portrayal of financiers in documentaries and the media, and renewed interest in movies like Fight Club, the 1999 flick in which Ed Norton/Brad Pitt sabotages credit card companies, suggest the Dylanites may know which way the wind blows.

Historical precedent is also flashing warnings. When they feel financially wronged, Americans traditionally complain to the authorities first but some turn violent when their concerns are not adequately addressed. After the French and Indian War, for example, a burst housing bubble and restrictions on international trade and money creation initiated scores of formal petitions of remonstrance. When British authorities responded to colonists’ concerns with new taxes, some Americans violently resisted the Stamp Act, the bailout of the East India Company, and other imperial policies. During the riot in Baltimore in 1835, at least five people died as the mansions of bankers and other moneylenders were looted and destroyed. Not everyone joined in the violence but thousands of bystanders stood by, cheering the rioters as they seized control of the city. The complicity of some militia units and fire brigades, members of which had been injured by the bank’s failure or subsequent downturn in the city’s economy, added to the carnage.

By the late nineteenth century, frustrated labor activists and anarchists frequently sabotaged corporate property and tried to take out anti-union business leaders and pro-bank politicians. In July 1892, Alexander Berkman shot and stabbed industrialist Henry Clay Frick in a failed assassination attempt. In 1901, Leon Czolgosz assassinated President William McKinley because “I didn't believe one man should have so much service, and another man should have none.” By staunchly supporting the gold standard, McKinley had aligned himself with banks and other creditors against the interests of indebted farmers and industrial workers like his assassin.

Attacks on anti-labor newspapers, mines, and other corporations, assassinations, and other forms of physical violence continued over the next few decades, culminating in the Wall Street bombing of September 16, 1920, which killed 38 people and wounded hundreds. Thereafter, however, class violence abated. Ostensibly, Americans were too busy to spend much time plotting, too busy sidestepping Prohibition and consuming new gadgets in the 1920s, too busy looking for employment in the depressed 1930s, too busy fighting fascism in the 1940s, and too busy getting busy during the baby boom of the 1950s. Riots rooted in socioeconomic injustices struck many major cities in the 1960s and 1970s but were more race than class based. More recent acts of extreme violence, from Oklahoma City to 9/11, were perpetrated by foreigners or directed at the U.S. government or vague notions of “capitalism.”

That could change, however, especially if banks continue to seek deficiency judgments against borrowers who lost their homes and jobs due to the subprime mortgage debacle and subsequent financial panic and recession. Many Americans still find it difficult to swallow the bailouts of 2008-9 and if the economy continues to wilt as bankers’ paychecks gain new heights they may find violence, particularly Hogan’s Heroes-style sabotage, palatable. So far most protests against the perceived injustices of the last half decade have been nonviolent and the authorities have used much more force than the protestors. If history is any guide, however, policymakers should consider the sustained protests as a warning. Nonviolent confrontations can and often have escalated into violence. Social instability is the last thing the economy or the government’s budget needs right now. Attention must be paid.

Robert E. Wright is the Nef Family Chair of Political Economy at Augustana College in South Dakota and the author of 14 books on financial history and policy, including Fubarnomics (2010).

****UPDATE****
A different publisher, Bloomberg, ran my updated version of the above on its blog last week. To read, click here.