BY JAMES P. PROUT
BOOK REVIEW
Americana: A 400-Year History of American Capitalism
By Bhu Srinivasan Penguin Press, 2017 560 pages. with notes, bibliography and index $ 30.00
“ When in the Course of human events …” Say that out loud just once, and you’ ll realize that Thomas Jefferson wasn’ t writing for only a 1776 audience. Our Founding Fathers wanted all to know that this new nation would be based on the highest philosophical and legal principles: Liberty. Freedom. Justice. These are our touchstones. And the path of our republic has been the expansion( too many times slowly and painfully) of the rights outlined in our founding documents to previously disenfranchised groups. We are a nation founded and steered by principles.
But you can’ t live on principles alone, no matter how high-minded. Among the list of grievances against the British Crown, Jefferson made sure to include“ For cutting off our trade with all parts of the world.” The Constitution never mentions the word slavery, while coinage, counterfeiting, interstate commerce, patents, taxes, trade and a host of other commercial issues are detailed. For Americans, the freedom to follow their business instincts( and the wealth that hopefully follows) are core to our country’ s establishment, its success and its history.
Entrepreneur Bhu Srinivasan, in Americana: A 400-Year History of American Capitalism, is out to make sure that we don’ t forget how central business and capitalism are to America. This is familiar ground for most readers of this magazine. But the writing is fresh, the pace is brisk and there are enough personalities and anecdotes to keep any business history enthusiast happy. In addition, there are two themes that recur in the book that I give him credit for discussing in the manner that he does— one is the historic role of government activity in the economic sphere, and the other is the issue of race.
The story begins in Holland in 1616, where English Pilgrims in exile decided to relocate to the New World. Securing the resources they needed meant navigating the tricky, quasi-official, never-quite-asit-seemed venture capital world of 16th century London. The city was awash with dodgy, mostly failed schemes to exploit the untold riches of the Americas. The Pilgrims struck a deal, made their move and, foreshadowing so many speculative deals, ultimately fell out with their backers. Thus was modern capitalism brought to America.
The author moves quickly through the colonial era, focusing on agriculture( particularly tobacco and cotton) and the debt and slave culture that accompanied them. Around 1800, the story picks up steam— literally— as transportation is revolutionized through Fulton, Vanderbilt, canal fever and ultimately railroads. Easier movement, accompanied by immigration, a gold rush and the telegraph opened the country up. Srinivasan makes it clear that the speed with which these developments occurred would not have been possible( then or now) without the government seeding innovation and risk through legislation and financing.
A pivot point for the century was the Civil War. Using 1859 slave auction data, the author shows that no financial payoff could have satisfied slaveholders, as the economic“ value” of the slave population dwarfed the size of any other national asset, including the entire federal budget. The price of slavery had to be paid in blood. The decades following the War saw innovation and capitalism gather momentum— in energy, consumer products, steel, publishing and labor. The agrarian phase of America’ s development had given way to the industrial.
The focus of Americana shifts as the 20th century opens, with rising wealth creating new opportunities for business. Here the author uses personalities to explain the entrepreneurial drive behind the creation of a consumer economy: Ford and the automobile, Sarnoff and the radio, movie moguls and film. The author has a sense of humor: bootlegging( starring Al Capone) gets its own chapter and comes just before the section on banking. A coincidence I am sure.
War again plays a big part in the story, as returning GIs spur another wave of spending on roads, real estate and entertainment. Computing technology— the basis for so much of today’ s economy— was started largely to fill the needs of government in counting heads, paying benefits and building a vast defense industry. No discussion on current business and capitalism can be had without mentioning Steve Jobs, who gets his due as the book closes.
There is a lot of American business between the Pilgrims and Steve Jobs. Four hundred years is a long time. I wish that more had been written on boom and busts beyond just the 1930s, and healthcare over the past 40 years deserved coverage. However, this takes nothing away from an excellent treatment of how our economy got built, sector by sector.
Srinivasan clearly loves the vibrancy and the freedom that are the core of our country and our markets, and his enthusiasm and respect are reflected in this wellresearched, well-written book.
James P. Prout is a lawyer with 30 + years of capital market experience. He now is a consultant to some of the world’ s biggest corporations. He can be reached at jpprout @ gmail. com.
www. MoAF. org | Winter 2018 | FINANCIAL HISTORY 41