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