Regulations can't make world safe from con men
When you find the old video of him on YouTube, the first thing you notice is the look of defiance and the arrogance in his voice. He was perhaps the most respected person on Wall Street, but already he was hiding a secret life that one day would land him in prison, stripped of his reputation and hated by a public that was struggling through tough economic times.
If you feel you have heard this story before and recently, think again. The man in the YouTube video is not Bernie Madoff, whose crimes were so enormous they may stand forever as an exclamation point at the end of a historic bull market. No, he is Richard Whitney, and his crimes are associated with the Great Depression.
Madoff had been chairman of the NASDAQ stock exchange. Whitney was president of the New York Stock Exchange. Both were regarded as expert investors who knew how to weather tough times. As it turned out, however, Whitney had no idea how to invest intelligently. He had been born into wealth and promoted because of pedigree. His brokerage made bad investments, and he kept borrowing from friends and relatives to cover his losses. He tried to take advantage of the end of Prohibition by investing in a liquor distribution company, but it lost almost all its value by 1937. That's when Whitney started to take money from his wife's trust, the New York Yacht Club and a gratuity fund for the New York Stock Exchange that was supposed to help widows and orphans, all to cover himself.
Everything unraveled like a cheap quilt in March of 1938, and within a few weeks Whitney was shipped off to Sing Sing, his departure watched by a farewell party of about 5,000 angry New Yorkers. The New York Times wrote about this in detail, right down to how he emptied his pockets of cash — $11.85 — before trading in his "well-tailored blue serge suit, polo coat and gray felt hat" for "a baggy suit of gray prison shoddy and an ill-fitting cap."
Why do I bring up this piece of long-gone history, other than that this month is the 71st anniversary of Whitney's arrest? Because I see some lessons in it, and they may not be the kind everyone else sees.
These days, it is popular to look on the recession as an argument against capitalism, or at least for a version of it that is kept on a shorter leash. The president spoke last week about the need to move away from an economy of boom and bust, as if there is a third way in a nation driven by inventiveness and the drive to succeed.
But Madoff and Whitney remind us that the only stuff we have with which to devise an economic system is human beings. That also is the only stuff we have to work from when forming a government.
Recent comments
Ultra Bob | 9:53 a.m.
You seem to look down your nose at
"those...
@ "Ultra Bob | 9:53 a.m." | March 30, 2009 at 1:56 p.m.
The Glass-Steagall Act wouldn't have prevented Madoff, but it...
Jim Janney | March 30, 2009 at 10:09 a.m.
Regulations can't make the world totally safe from Ponzi schemes, but...
Fix it | March 29, 2009 at 11:47 p.m.
- Millsap a surprise on ballot 10:57 p.m.
- Vatican looks to heavens for aliens 10:56 p.m.
- Sports brief 10:56 p.m.
- Leclaire turns aside 31 Oiler shots 10:54 p.m.
- Refinery neighbors want to feel safe 10:54 p.m.
- Hall would rather take a hit 10:54 p.m.
- Correction 10:54 p.m.
- Cougars' defensive hoops clinic 10:52 p.m.
- Utah Jazz gameday 10:51 p.m.
- Am.F. teen seeks to honor soldier 10:45 p.m.
- Utah group finds homes for orphans
- Pratt pleads not guilty to sex charges
- Y. tight ends talented tandem
- Jazz blow big lead, hang on
- Utes get extra motivation
- Senators want food tax restored
- Hair-pulling raises more questions
- BYU soccer incident still popular
- Lobo land like home for BYU lineman
- U. hopes to keep clicking
- House passes health care bill
263 - TCU showdown has big implications
188 - Lobo suspended
185 - Cougars crush hapless Cowboys
155 - Senators want food tax restored
148 - Utah Jazz fall apart against Kings
131 - TCU 4th in AP poll; U. 16th, Y. 22nd
119 - No 'backlash' for pioneers, gays analogy
105 - S.L. vote pending on gay protections
104 - RSL rallies to advance
103
Maybe someone out there can help me understand how raising the state...
A profoundly different standard exists between legal wrong doing and adequate...
and it is going to be played in the semi's... Does anybody else have a...
"Matheson is a DINO" "He needs to be gone Long gone" "Along with the rest of...
Federal law PROHIBITS anyone EVER convicted of a domestic violence...
Fair question. Here is what I consider ideal: 1) Stick to the enumerated...
The driver is unhurt physically, but lost his wife and unborn child. Who...
Each one of these men is a real hero! God bless the USA!
What COURAGE! For Mr. Gale to speak out in this way is what free speech is...
It may retain heat, but the fact is, ice records etc, show first warming then...
If Utah can keep the score in the 20's they have a real chance to win. ...

