first heard of Garet Garrett through his being mentioned by Murray
Rothbard in What
Has Government Done to Our Money? and his mention
Grant as one of his heroes (James Grant is one of my heroes).
When I finally got the chance to read Garrett's People's
Pottage, I was thereby converted into a fan of Garet Garrett's
writing. Next I anxiously read his fascinating story of Henry Ford
and laissez-faire, The
Wild Wheel. I then embarked on reading his novel
Driver, the story of Henry M. Galt who courageously
turned a railroad bankrupted during the panic of 1892 into a profit-making
juggernaut by focusing on efficiently serving the customer.
period of the book's beginning, the panic of 1892, is of great interest
to lovers of classical liberty as it existed in the United States.
The Democratic Party to that point had been the last political bastion
of sound money, laissez-faire, and non-interventionist foreign policy.
Sound money would face one of its greatest crises and the inefficiency
of government intervention in economic affairs would become evident
to the observant in 1892. Unfortunately, President Grover Cleveland,
the last knight of the old Democracy, would win the battle against
the silverite inflationists but lose the war to them as their hero,
William Jennings Bryan, would be nominated to run for president
in 1896. The Democracy, as the party was called at the time, would
never be itself again. It would only make a comeback as the antithesis
of its old self under Woodrow Wilson and then FDR.
fairly portrays the typical silverite money crank of the time as
a well-meaning ignoramus. His explanation of the silver problem
is one of the clearest available. Simply put, the government was
forced by political pressure to declare that silver was worth about
twice what it was really worth in terms of gold. Therefore people
took advantage of the bargain thus created by continuing to buy
gold for silver. The treasury's gold supply was continually in danger
of dropping to a level which would mean national bankruptcy (see
Allan Nevins' biography
of Grover Cleveland and/or Cleveland's own book, Presidential
Problems for a complete account of the episode).
Garrett portrays Wall Street at the time of this monetary crisis
as a place filled with people who had lost faith in what they were
doing with no plan of how to renew their faith.
Into the breach
steps Henry M. Galt. Galt had been quietly buying devalued shares
of the struggling Great Midwestern railroad and making himself a
general nuisance to the complacent and hopeless board of directors.
Privately Galt had been studying everything about the railroad business
in general and in particular the potential of the Great Midwestern
line. When, like every other major government-subsidized railroad
at the time, the Great Midwestern went into bankruptcy, Galt was
the only major shareholder with a plan to make the Great Midwestern
profitable again. One of Galt’s first tasks was to invest money
in straightening the route and reducing the grades so that freight
could be carried profitably all along the line. Anyone familiar
with the incredible inefficiency of the government
subsidized transcontinental railroads in terms of their being
built over the longest routes with little concern for grading in
order to collect government money on the basis of miles of track
laid, will understand the task that Galt faced in turning the Great
vision for the Great Midwestern went beyond simply making it a profitable
line. He also acquired feeder lines so that the Great Midwestern
could originate its own traffic. Next Galt acquired various life
insurance interests which would be sources of capital to continue
expanding the services the Great Midwestern.
an upstart titan of Wall Street. Share value of the Great Midwestern
and of Galt's other holdings sky-rocketed. However, while Galt was
a visionary in the railroad business, he had made powerful enemies.
First his family was socially ostracized and then his politically
well-connected rivals used vaguely-written antitrust laws to attempt
to destroy him. Anyone familiar with the true
nature of antitrust laws as means for less efficient competitors
to attack more efficient rivals and for politicians to shakedown
corporations for money could have predicted the ease with which
largely ignorant congressmen could be convinced to pursue Henry
may point to other laws and legal theories to explain the descent
of the legal profession into its current sorry state, but antitrust
law has to be considered as one of the prime culprits. Garrett describes
the lawyer that congress had to hire to cross-examine Galt, congressmen
being incompetent to do it themselves, as a consummate opportunist.
He would either collect huge fees for advising corporations on how
to avoid prosecution, or if he found a corporation in violation
of the law, blackmail the corporation into paying exorbitant fees
for advice on how to fix the problem, or turn to "public service"
and collect fees from the government for his help in investigating
by this lawyer, who had actually attempted to extort a million dollars
from Galt previously, Galt was perfectly honest and totally disarmed
the lawyer and derailed the case against him. I won't spoil it by
giving too many details. Rest assured it is well worth reading.
The Driver is a masterpiece of a novel that rewards any one
interested in how a great entrepreneur sees what others do not,
at a time when few others are even looking. Galt ran his business
as I think Gary
North would advise. In Galt's own words:
has to see it, – somebody who knows not only how to spend
money when everyone is wild to buy, but how to spend it courageously
when there is a surplus of things that nobody else wants. Every
financial institution that I have anything to do with will be
governed by that idea, and Great Midwestern properties, while
I run them, will decrease their capital expenditures as prices
rise and increase them as prices fall. When we show them the whole
trick and how it pays everybody will do it…. We won't have any
more unemployment. In a country like this unemployment is economic
indeed and it is economic lunacy foisted upon society not by greedy
capitalists but by ignorant politicians who can create no wealth.
They can only impede great visionaries like Henry M. Galt with monetary
chicanery, antitrust litigation, labor laws and a host of other
regulatory measures from creating wealth.
Davis [send him mail]
writes from Arizona.