第1章
When Wall Street Gambles with History
In 1969, Bill Gates named "Business Adventures" as his favorite business book, yet John Brooks' masterpiece remained largely forgotten until Warren Buffett lent his personal copy to Gates decades later. This collection of twelve Wall Street Journal articles from the 1960s has since become a cult classic among the business elite, praised for its timeless insights into corporate America. What makes Brooks' work exceptional isn't just his analysis of business failures and successes, but his literary approach to financial journalism-blending character studies, dramatic tension, and cultural context in ways that transform mundane corporate events into compelling human stories. Through Brooks' eyes, we see beyond balance sheets to the psychological forces that drive markets and the moral complexities that underpin capitalism itself.
第2章
The Market's Eternal Fluctuations
"It will fluctuate." This simple response from J.P. Morgan when asked what the stock market would do captures the fundamental nature of markets. Despite technological advancements-from telegraph wires to high-speed computers-human reactions to market movements remain remarkably consistent since the first exchange opened in Amsterdam in 1611. The "Little Crash" of May 1962 perfectly illustrates this timeless pattern.
The 1962 crash began on a seemingly ordinary Monday when the Dow Jones plummeted nearly 35 points (about 5.7%) in massive trading volume, followed by another decline Tuesday morning before stabilizing. The drop was the worst since October 29, 1929-a comparison that terrified investors who remembered the Great Depression. Yet by Thursday, the market had completely recovered its losses.
What makes this episode fascinating isn't just the dramatic price swings but the behavior of different market participants. When investigators analyzed trading patterns, they discovered that wealthy individuals (those earning over $25,000 annually) were the heaviest sellers, while those earning under $10,000 became net buyers during the panic. Women sold 2.5 times as much stock as men. Perhaps most surprisingly, mutual funds-often blamed for market volatility-actually served as stabilizing forces, buying during Monday's plunge and selling during Thursday's recovery.
The ultimate cause of the 1962 crash remains unknown, but its pattern reflects an eternal market truth: periods of speculative buildup followed by sudden collapse, driven by human psychology rather than economic fundamentals. As one Wall Street veteran observed, "I think people may be more careful for a year or two, then we may see another speculative buildup followed by another crash, and so on until God makes people less greedy." Or as Dutch financial pioneer de la Vega wrote centuries earlier, "It is foolish to think that you can withdraw from the Exchange after you have tasted the sweetness of the honey."
第3章
When Corporate Ambition Outpaces Market Reality
The Ford Edsel stands as perhaps the most spectacular product failure in American business history. Launched in September 1957 after a $250 million development investment-the most expensive consumer product launch of its time-the Edsel was discontinued just over two years later. Despite Ford's expectations of selling at least 200,000 units annually, only 109,466 Edsels were sold in total.
What went wrong? The Edsel's development began promisingly enough. Designer Roy Brown was tasked with creating a car "readily recognizable" among nineteen other makes that looked like "peas in a pod." Working under elaborate security measures, Brown's team created a distinctive vehicle featuring a vertical "horse-collar" radiator grille, horizontal rear wings contrasting with popular tail fins, and innovative transmission push buttons on the steering wheel hub. When first revealed to Ford executives in August 1955, the clay model received unprecedented applause from Henry Ford II and other leaders.
Meanwhile, Ford's market research director David Wallace conducted extensive studies to determine the ideal "personality" for the new car. His research concluded the E-Car should position itself as "THE SMART CAR FOR THE YOUNGER EXECUTIVE OR PROFESSIONAL FAMILY ON ITS WAY UP"-neither too masculine nor too feminine, with moderate status positioning just below Buick and Oldsmobile.
Even naming the vehicle became an extraordinarily elaborate process. Despite early suggestions to name it after Edsel Ford (Henry's son), the company embarked on an exhaustive search-testing 2,000 potential names with sidewalk interviews, hiring poet Marianne Moore (who suggested fanciful options like "Intelligent Bullet" and "Mongoose Civique"), and organizing an employee competition yielding 18,000 names. After narrowing to just ten options with "Corsair" as the favorite, Chairman Ernest Breech abruptly ended the process by selecting "Edsel"-a name previously excluded from consideration.
The Edsel Division launched with tremendous fanfare. J.C. "Larry" Doyle orchestrated an extraordinarily successful dealer recruitment strategy, creating artificial scarcity by placing prototype Edsels in locked regional offices with drawn blinds, offering viewings only to serious dealer prospects who first sat through a complete sales presentation. By Introduction Day, they had nearly reached their ambitious goal of 1,200 dealers nationwide.
But when the Edsel finally reached consumers in September 1957, the timing couldn't have been worse. The American economy had entered recession, and consumer preferences were shifting dramatically toward smaller, more economical cars-partly in response to the Sputnik launch, which had profound psychological effects on Americans, causing many to reject heavily ornamented, status-symbolic vehicles. The Edsel's distinctive styling, once considered its strength, became a liability as critics mocked its "horse-collar" grille. Mechanical problems plagued early models, damaging the brand's reputation.
By November 1959, Ford discontinued the Edsel after losing approximately $350 million. The human cost was significant: 6,000 white-collar workers lost jobs, and many Edsel dealers who had abandoned profitable franchises went bankrupt. Yet Ford as a company recovered quickly, with subsequent successes like the Thunderbird, Falcon, and Mustang more than compensating for the Edsel losses.
The Edsel story reveals how even meticulous planning can fail when market conditions shift unexpectedly. As former Edsel executive Warnock reflected, the car represented "America in the fifties-high hopes, and less than complete fulfillment of them." Perhaps that's why the Edsel failure possesses "a certain grandeur that success never knows."
第4章
The Tax Code That Shapes American Life
The federal income tax has driven otherwise sensible Americans to seemingly bizarre behaviors. Wealthy individuals passionately finance municipal governments while denouncing government interference. High-income couples mysteriously prefer December weddings while avoiding January nuptials. Successful artists suddenly cease working mid-year on financial advisers' urgent instructions. Actors inexplicably acquire bowling alleys and gravel businesses. Oil investors drill speculative wells defying normal business judgment. Company owners arrange partnerships with their infant children-or even unborn ones.
These peculiar actions all trace directly to provisions in the federal income tax law. With nearly sixty-three million individual returns filed in 1964 alone and tax collections comprising almost three-quarters of government receipts, the income tax has become America's most pervasive and economically significant law, creating what writer David Bazelon calls two separate currencies: "before-tax money and after-tax money."
Critics charge that the tax law contains a fundamental dishonesty: it establishes steeply progressive rates while providing convenient escape hatches for the wealthy. In 1960, taxpayers earning $200,000-$500,000 paid only about 44% on average, while even millionaires paid under 50%-approximately what a single taxpayer earning just $42,000 would pay. The system's complexity-a thousand-page code supplemented by seventeen thousand pages of rulings and regulations-creates absurdities like "gravel-producing actors and unborn partners."
Income taxation's history is surprisingly brief. Ancient taxes were invariably head taxes rather than income-based. Britain enacted the first modern income tax in 1798 to finance war with France, featuring graduated rates from zero to 10%. Despite widespread hatred and evasion, Britain's income tax eventually took hold through simple habituation-opposition always strongest at inception, weakening with time.
America's income tax history has followed a pattern of rising rates punctuated by special provisions benefiting the wealthy. The 1922 capital gains preference established that investment profits would be taxed at lower rates than wages. The 1926 oil depletion allowance-perhaps the most notorious loophole-allowed well owners to deduct up to 27.5% of gross annual income indefinitely, even after recovering their original investment many times over.
The paradoxical evolution of American income tax has been from a low-rate tax relying on high-income groups to a high-rate tax relying on middle and lower-middle income groups. The Civil War levy affected only one percent of the population-unmistakably a rich man's tax-as was the 1913 levy. By 1960, it took 32 million taxpayers-over one-sixth of the population-to account for nine-tenths of collections.
Despite its flaws, the American income tax is the best-obeyed in the world. The IRS spends only about 44 cents for every hundred dollars collected, compared to rates two to three times higher in other developed nations. This efficiency stems partly from tradition-American income taxes developed not from monarchical demands but from an elected government serving the general interest-and partly from the power and skill of the Internal Revenue Service itself.
The tax code's anti-intellectual bias is inconsistent. Tax-exempt foundations channel millions toward scholarly research. Provisions for appreciated property donations have revolutionized the art world, with collectors able to deduct artwork's current value without paying capital gains tax-sometimes profiting from donations. The charitable contribution system particularly benefits the wealthy, enabling tax avoidance to masquerade as charity.
As Joseph de Maistre observed, "every nation has the government it deserves"-and perhaps the same is true of tax systems. America's tax code, with its progressive appearance but regressive reality, reflects national contradictions between egalitarian ideals and capitalist practices.
第5章
Inside Information and the Market's Moral Dilemmas
Private information has always been a valuable commodity in securities trading-so valuable that stock exchanges might be considered markets for such information as much as for stocks. Until recently, the propriety of insiders using privileged information for personal enrichment went largely unquestioned. Nathan Rothschild's use of advance news about Wellington's victory at Waterloo built the Rothschild fortune without public protest. In post-Civil War America, investors still accepted insiders' right to trade on privileged information, hoping merely to benefit from whatever scraps might fall their way.
The Texas Gulf Sulphur case of 1964-1968 fundamentally changed this landscape. In November 1963, Texas Gulf began drilling at a site designated as Kidd-55, fifteen miles north of Timmins, Ontario. Initial core samples revealed extraordinary mineral deposits-potentially one of the largest zinc-copper discoveries in North American history. The company took elaborate precautions to conceal their discovery, but rumors inevitably spread through the Canadian mining community.
When major U.S. newspapers reported the discovery on April 11th, Texas Gulf issued a press release downplaying the findings as "preliminary" and "not conclusive." This dampened the stock price, which fell from 32 to below 29-even as company officials privately knew they had discovered a major mine. By Wednesday, they drafted a dramatically different press release acknowledging "a major strike" with "more than 25 million tons of ore."
The actions of directors Coates and Lamont in the half-hour following the April 16th press conference would become the most controversial part of the SEC's complaint. Though a Dow Jones reporter called his office between 10:10 and 10:15 AM, the Texas Gulf story inexplicably didn't appear on the broad tape until 10:54 AM. In this crucial interval, Coates borrowed a phone and called his son-in-law, ordering 2,000 shares for family trusts. Lamont moved with "elegant, almost languorous lack of hurry," lingering in the boardroom for twenty minutes before finally calling Morgan Guaranty Trust Company around 10:40 AM to order shares for Nassau Hospital and pension funds.
The SEC charged that the insiders who had bought stock between November 1963 and April 1964 had engaged in illegal insider trading and demanded they make restitution. They also charged that the April 12th press release was deliberately deceptive. The most consequential matter in the case concerned precisely when information legally transitions from "inside" to "public." The SEC maintained that even after an announcement, a "reasonable amount of time" must be allowed for the investing public to absorb complex news. However, when pressed about what constituted "reasonable time," the SEC admitted it was "a nearly impossible task to formulate a rigid set of rules."
In August 1968, the Appeals Court ruled that the original drill hole had provided material evidence, the April 12th press release was misleading, and Coates had illegally jumped the gun with his orders. This landmark decision established that corporate insiders cannot trade on material non-public information, and that even after public disclosure, they must wait a "reasonable time" before trading-a principle that continues to shape securities law today.
第6章
The Xerox Revolution: How One Machine Changed Everything
The advent of mechanical document reproduction fundamentally changed business practices, though adoption was initially slow. When A.B. Dick introduced the first practical mimeograph in 1887, people were skeptical about needing multiple document copies. The concept of copying carried negative historical connotations-"copy" and "counterfeit" were nearly synonymous for centuries.
The true revolution came with xerography-a breakthrough technology producing dry, high-quality copies on ordinary paper. Copy volume in the United States exploded from 20 million annually in the mid-1950s to 14 billion by 1966, fundamentally changing attitudes toward printed materials and written communication.
Xerox Corporation became the most spectacular business success story of the 1960s. From modest sales of $33 million in 1959 when introducing its first automatic xerographic copier, the company grew exponentially-exceeding half a billion dollars by 1966. Unranked in Fortune's 500 largest American industrial companies in 1961, Xerox rocketed to 126th place by 1967. Its stock performance created the decade's greatest investment success story-shares purchased in late 1959 multiplied 66 times by early 1967.
The technology originated with Chester F. Carlson, an obscure inventor working in a makeshift kitchen laboratory above an Astoria bar. After five years of rejection by every major office equipment company, Carlson finally persuaded Battelle Memorial Institute in 1944 to develop his "electrophotography" process. By 1946, Haloid Company (Xerox's predecessor) acquired rights to the technology, eventually taking full ownership of Carlson's patents in 1955 at staggering cost-about $75 million on research between 1947-1960.
The 914 copier created an intimate relationship between operator and machine. Unlike typewriters (too simple) or computers (too complex), the 914 exhibited "animal traits"-requiring feeding and grooming, showing unpredictable behavior, and responding to its treatment. "I was frightened of it at first," one operator confided. "The Xerox men say, 'If you're frightened of it, it won't work,' and that's pretty much right."
However, xerography brought serious problems. "Overcopying" became rampant as people made unnecessary duplicates, seduced by the technology's ease. More concerning was widespread copyright infringement. Libraries installed copiers that tempted users to reproduce copyrighted materials without permission, depriving authors and publishers of income. Marshall McLuhan predicted xerography would revolutionize publishing by allowing readers to become authors and publishers.
Unlike most corporations, Xerox demonstrated distinct social responsibility. CEO Joseph Wilson proclaimed, "To set high goals, to have almost unattainable aspirations, to imbue people with the belief that they can be achieved-these are as important as the balance sheet." They donated over 1.5% of pre-tax income to educational and charitable institutions-significantly higher than corporate peers. In 1964, they spent $4 million on commercial-free UN television programs despite receiving 15,000 protest letters, with Wilson later claiming the decision actually gained them more friends than enemies.
By fall 1966, Xerox faced its first post-xerography adversity as over forty companies entered the office copier business. Between June and October 1966, Xerox stock plummeted from 26734 to 13158, halving the company's market value. Yet this setback proved temporary-within a month the stock recovered its entire loss and soon reached new highs, demonstrating the market's enduring faith in the company's future.
第7章
The Price of Collusion: GE's Communication Breakdown
The 1961 Senate hearings on price-fixing conspiracies in the electrical manufacturing industry revealed a breakdown in communication so severe it made the Tower of Babel seem a model of organizational rapport. These hearings followed the imposition of nearly $2 million in fines on 29 firms and 45 employees, with seven executives receiving 30-day prison sentences. The violations involved collusion on expensive electrical equipment sales totaling over $1.75 billion annually. Judge J. Cullen Ganey called the violations "a shocking indictment of a vast section of our economy" that threatened "the survival of the free-enterprise system."
General Electric, the largest defendant with $4 billion in annual sales, became the public face of the scandal. The company received the highest total fines ($437,500) and had three executives imprisoned. The irony wasn't lost on observers that G.E. had long portrayed itself as a champion of the free competitive system.
The price-fixing scandal revealed a profound communication breakdown at General Electric. Despite having Directive Policy 20.5 explicitly forbidding price agreements with competitors, many executives believed this policy was mere window dressing, not meant to be taken seriously. Some managers conveyed compliance orders with a literal wink, indicating the opposite intention.
When William Ginn became general manager of the transformer division in 1954, Chairman Cordiner personally instructed him to comply with Policy 20.5. Yet immediately afterward, Henry Erben (Ginn's direct superior) countermanded this order, telling him to "keep on doing the way you have been doing." Ginn continued price-fixing, explaining he knew "Cordiner could fire me, but also I knew I was working for Mr. Erben."
The concept of "impacts" emerged as another communication mechanism at GE, where executives gauged company policy not just through official directives but through impressions and signals. When Frank Stehlik learned his superior had been directed to lunch with a competitor, it "had a heavy impact" on him, suggesting the company wasn't serious about Policy 20.5. This led him to comply when ordered to hold price-fixing meetings, ultimately resulting in his punishment-pay cut from $70,000 to $26,000, legal fines, and forced resignation.
The communication breakdown between superiors and subordinates was further illustrated by Raymond Smith and Arthur Vinson. Smith, as transformer division manager, began price-fixing meetings despite Cordiner's admonitions. When Vinson became his boss, Smith attempted to inform him by making cryptic references to "meeting with the clan" or showing plans to "the boys." Vinson later claimed he completely misunderstood, thinking "the boys" meant GE salespeople, not competitors.
When Senator Kefauver questioned whether an executive with thirty years' experience could be so naive, Vinson replied, "I may be naive, but I am certainly telling the truth, and in this kind of thing I am sure I am naive." Kefauver countered that Vinson wouldn't be earning $200,000 a year if truly naive, to which Vinson remarkably suggested that "naivete in this area" might actually help one reach such a position.
Chairman Cordiner, compensated with a $280,000 salary plus substantial deferred income and stock options, maintained complete ignorance of the conspiracies. Throughout his testimony, he oddly used the phrase "be responsive to" rather than simply answering questions. When asked if GE had incurred "corporate disgrace," he replied he was "deeply grieved and concerned" but "not going to say that General Electric had corporate disgrace."
The aftermath saw numerous triple-damage lawsuits from customers, stockholder attempts to unseat Cordiner, and most convicted executives from other companies keeping their positions, while all GE employees involved were dismissed. The impact on the electrical industry would likely ensure compliance with antitrust laws for some time, though whether communication had improved remained questionable.
第8章
From Public Service to Private Enterprise: Lilienthal's Journey
During Franklin D. Roosevelt's presidency, perhaps no New Dealer better typified the New Deal to Wall Street than David Eli Lilienthal. This wasn't due to specific anti-Wall Street actions, but rather what he symbolized through his association with the Tennessee Valley Authority-a government-owned electric-power concern larger than any private power corporation, embodying what Wall Street saw as galloping Socialism. Lilienthal served on TVA's board from 1933-1941 and as chairman until 1946, causing the business community to think he "wore horns."
After leaving government service in 1950, Lilienthal entered private life with both trepidation about making a living and relief at regaining personal freedom. Despite offers from Harvard faculty and numerous law firms, he chose a part-time consulting position with Lazard Freres & Co. His unexpected fortune came through his work with Minerals Separation North American Corporation, a struggling patent company where Lazard Freres had significant interests. After becoming president in February 1952, he brokered a merger with Attapulgus Clay Company of Georgia, delicately navigating between Wall Street interests and Southern business suspicions. Through subsequent mergers, the company's net profit per share more than quintupled between 1952 and 1955. Lilienthal's stock option of 50,000 shares at $4.8712 per share transformed him into a millionaire as the stock skyrocketed to about forty dollars a share.
When asked about his motivation beyond financial gain, Lilienthal explained he "wanted an entrepreneurial experience"-taking a small, struggling company and building something meaningful. The process changed his perspective, giving him newfound respect for financiers like Andre Meyer, whose "correctness" and "high sense of honor" impressed him. He discovered business was intellectually stimulating but also potentially consuming: "Business has its man-eating side, and part of the man-eating side is that it's so absorbing."
Despite his business success, Lilienthal sensed something missing. When confronted with this observation, he acknowledged that making money itself wasn't troubling-"It's like when you're a boy and you try to jump six feet. Then you find you can jump six feet, and you say, 'Well, so what?'" What he missed were the gratifications of public service.
The Development & Resources Corporation became Lilienthal's perfect solution-allowing him to pursue meaningful work while making a profit. Founded with Lazard Freres backing and staffed largely by TVA alumni, D&R focused on international development projects. Their breakthrough came with work in Khuzistan, Iran-once part of the ancient Persian Empire with ruins of sophisticated irrigation systems, now an oil-rich but impoverished region. D&R designed a massive development plan including fourteen dams across five rivers. The corporation expanded to projects worldwide, eventually becoming highly profitable while providing the meaningful work Lilienthal had sought.
Lilienthal's journey demonstrates how one can successfully transition from public service to private enterprise without sacrificing core values-finding a way to combine profit-making with meaningful contribution to society. His experience offers valuable lessons for anyone seeking to balance financial success with deeper purpose in their career.
第9章
When Central Banks Unite: The Sterling Defense
On November 19, 1963, a haggard Morton Kamerman, managing partner of Ira Haupt & Co., arrived at the New York Stock Exchange to report his firm's capital had fallen below requirements. This seemingly routine regulatory matter would soon spiral into one of the Exchange's most serious crises, compounded by President Kennedy's assassination days later. The trouble stemmed from Haupt having extended enormous credit to Allied Crude Vegetable Oil & Refining Company for speculating in cottonseed and soybean oil futures. Haupt, with only $8 million in capital, had loaned Allied $37 million, accepting warehouse receipts for oil as collateral-receipts that would prove fraudulent in what was emerging as the biggest commercial fraud since Ivar Kreuger's.
By Friday morning, the Haupt partners had spent the night calculating their position and reached the devastating conclusion around 3 AM that their firm was insolvent due to the worthless warehouse receipts. The situation worsened dramatically when news of President Kennedy's assassination reached the Exchange floor at 1:40 PM Friday, initially in garbled form suggesting multiple attacks on government leaders. In the panic-stricken 27 minutes before the Exchange closed at 2:07 PM, stock values plummeted by thirteen billion dollars at an unprecedented rate.
Exchange President Funston became convinced the Exchange must take unprecedented action to protect innocent Haupt customers. He quickly assembled thirty leading brokers and proposed that the Exchange put up funds to make all customers "whole"-returning their cash and securities rather than letting them suffer losses of up to 35% through bankruptcy proceedings.
The negotiations with creditor banks continued through the weekend, with Gustave L. Levy of Goldman, Sachs flying to London with Chase representatives to persuade the British banks, who had lent Haupt unsecured Eurodollars totaling $5.5 million. By Monday afternoon, all British banks agreed, and Funston's plan moved forward. By Christmas, $6.7 million had been dispensed to customers, and by March 1964, the Exchange had paid out $9.5 million, making virtually all customers whole.
This unprecedented action demonstrated Wall Street's sense of responsibility in crisis. The Exchange's willingness to protect innocent customers, even at significant cost to member firms, helped preserve public confidence in the markets during a period of extreme uncertainty. The Haupt crisis showed that despite its reputation for ruthless self-interest, the financial community could act decisively to protect the system's integrity when truly threatened.
