Today’s Wall Street Journal Op/Ed section contains a piece titled, “Washington Has Always Demonized Wall Street.” It’s a fantastic read–if you’ve already thrown out today’s paper, dig through the trash and pick it up…or just read it here.
‘Wall Street, as we knew it, is dead. The system that allowed the U.S. economy to be a dynamic innovator has been fundamentally broken and the implications of these structural changes have yet to be fully felt.”
Essentially, the above quote was set forth to make a statement: everyone becomes outraged with Wall Street in the down-times; however, in the good times, you’ll hear less grumbling.
From the 19th century to the present day, denunciation of financiers has gone hand in hand with each recession, speculative bust and depression. Each time the economy falls, the chattering classes announce that the old ways have brought the country to the brink of ruin and that the riches of society will no longer remain in the hands of the greedy few.
Again, this represents the feelings held by many non-streeters (those unfamiliar with the financial system).
I would argue, though, that the title of the piece profoundly elongates the apparent disenchantment with Wall Street’s greed. The title of the piece is, “Washington Has Always Demonized Wall Street.”
This isn’t true.
Wall Street was once a fully democratic exchange. It was once a place unaffected by the noise of bells, screaming traders in suits bulls, bears and sweaty CNBC personalities.
The founders of the New York Stock Exchange would be shocked and confused if they saw what it looks like today. In fact, they wouldn’t even recognize the name, New York Stock Exchange; rather, they knew themselves as “Curbstone Brokers.” They traded out in the street in all kinds of weather – in the rain and snow, and in the dog days of summer.
The curbstone brokers were open and inclusive, independent and tough. They took a chance on emerging industries, invested in smaller companies, and seized new investment opportunities. They provided a robust market for entrepreneurial growth companies.
Today, however, things are different. Freedom has been replaced with regulation and process. The young, tough, independent traders have been replaced by old farts and Harvard MBA’s.
Was the piece in the Wall Street Journal right? Yes; however, there once was a Wall Street that was un-scrutinized. Yet, ironically, when the government stepped in and regulated exchange (in order to bring order to it), corruption flooded the markets.
Bottom line: Washington began demonizing Wall Street only after they attempted to regulate it.