The V that laid the Gouldian Goose Egg from Henry Adams to Milton Friedman

[alice malice]

from Sparknotes

Summary

Even in the dormant Grant administration, a young reformer soon has plenty
to write about. On September 24, 1869, the price of gold crashes
spectacularly, exposing a scheme involving financiers Jay Gould and James
Fisk as well as President Grant's own brother-in-law. The Legal Tender Act
is still an issue, and Adams is concerned that the Constitution has lost
its effectiveness because of emergency measures taken by the Lincoln
administration during the Civil War. While they oppose slavery, for
example, the Adams men maintain that even the Emancipation Proclamation was
actually unconstitutional.

Analysis

Adams often writes in cryptic terms in the *Education*, dropping a name
here or an issue there with the assumption that his reader is thoroughly
versed in the history of the time. With his initial audience, a close
circle of friends, that may have been the case; later readers may need a
little explanation.

The Gold Scandal of September 1869 allows Henry and his brother Charles to
work as an investigative team. Jay Gould, president of the Erie Railroad
and a capitalist known for his financial manipulations -- along with his
associate, James Fisk -- attempts to corner the market in gold during the
late summer of Grant's first year in office. The approach is to purchase as
much American gold coin and bullion as possible in order to control the
price. If successful, the scheme could then effect a monopoly, and the gold
would sell at a much higher rate to those whose contracts require them to
pay off debts in gold. This would especially impact foreign trade because
other countries are reluctant to accept greenbacks. The two bring Grant's
brother-in-law, a man named Corbin, into the deal with the expectation that
this will dissuade Grant from intervention. On Black Friday, September 24,
the price of a gold dollar (1/20 of an ounce) rises as high as $1.65 in
paper money. At this point, Grant belatedly orders Secretary of Treasury
Boutwell to place on sale $4,000,000 worth of government gold. The price of
gold plummets, setting off a panic on Wall Street. Gould somehow knows of
the Treasury sale in advance and sells his gold near the top price. Fisk,
however, is not informed and is still buying as the price sinks. Although
no one can prove that Grant or members of his Cabinet are directly involved
in the scheme, Henry feels that the circumstantial evidence is
overwhelming. (See Ernest Samuels' *The Young Henry Adams* and Jean Gooder,
ed., the Penguin Classics edition of the *Education* for further comments.)

For Henry and Charles, the scandal is, as Henry says in the *Education*,
"heaven-sent." Charles investigates corruption in the management of the
railroads; Henry pursues the gold conspiracy and even gets an interview
with James Fisk. James A. Garfield, who in 1881 will become the twentieth
President of the United States (assassinated that year), heads an
investigation as chairman of the House Committee on Currency and Banking.
He exchanges information with the Adams brothers. For Henry, the result is
one of his most highly praised articles, "The New York Gold Conspiracy," in
the *Westminster Review* (October 1870). Although he is disappointed that
more prestigious publishers refuse the piece, fearing charges of libel, he
is delighted that the work is widely distributed in "pirated" versions.
Charles's exposé of the railroads is so effective that his life is
threatened. He survives, unharmed, to father five children and die at the
age of eighty in 1915.

Henry is pleased with the reception of other articles, especially "The
Legal Tender Act" in *North American Review *(April 1870), which accuses
Congress of "a piece of intolerably impudent political abuse." He argues
again against greenbacks and reiterates his belief in
*laissez-faire*economics, hoping that the Grant administration will
return the
government's position to a hands-off policy. In another installment of
political assessments called "The Session," in the *North American
Review *(July
1870), he calls for Grant to restore the power of the Constitution and the
federal government's system of checks and balances. All expectations to the
contrary, it has been a productive and rewarding period for Henry.


On Sun, Feb 2, 2014 at 6:39 AM, alice malice <alicewmalice at gmail.com> wrote:

> After the publication of AGTD the P-Industry accelerated its wagon while
> the jumpers flipped over stacks of boys' books...and I suspect that, like
> James Gatz, who kept a Ben Franklin To-Do list in the back jacket of his
> Hop-Along Cassidy, young P kept a list somewhere...
>
> but...but like Grover, the boy whiz kid in Pynchon's only short story (the
> others reissued in that SL book are mere juvenilia (lower case j), and
> though I take the author's reading of CL49 seriously and so classify it not
> as it was marketed but as it read and would therefore place it next to
> TSI on the short story shelf...
>
>  and...oh, where was I?
>
> Oh yes, um, the boy in the TSI who reads those Tom Swift books is
> disgusted by the characterization of  the black man who shuffles and shucks
> under the lash of the ghost writers, an Industry that mass produces books
> for young readers, popping them up, as Grover describes the production,
>  like crispy hot bread from a toaster, filling the boy's senses with
> delight, his mind with ideas not so delightful.
>
> In any event, there is in that story and in the juvenilia the fitful
> flashes of Gold. The motif is buried, awkwardly in figurative language that
> exposes the young thief's shaky hand, and literally in a motif he maintains
> to this day, the gold that is waste, that is what a disposable society
> buries in landfills, tosses on the lawns of its black neighbors, piles high
> in the junkyard.
>
> The Gouldian Goose is there in TSI. That because by the time TSI is
> written the young author has read and studied the books that continues to
> shape his art, and of these there none more influential than those of Henry
> Adams.
>
>  Before he got back to Quincy, the summer was already half over, and in
> another six weeks the effects of President Grant's character showed
> themselves. They were startling--astounding--terrifying. The mystery that
> shrouded the famous, classical attempt of Jay Gould to corner gold in
> September, 1869, has never been cleared up--at least so far as to make it
> intelligible to Adams. Gould was led, by the change at Washington, into CHAPTER
> XVIII
>
> FREE FIGHT (1869-1870)
>
> THE EDUCATION OF HENRY ADAMS
>
> the belief that he could safely corner gold without interference from the
> Government. He took a number of precautions, which he admitted; and he
> spent a large sum of money, as he also testified, to obtain assurances
> which were not sufficient to have satisfied so astute a gambler; yet he
> made the venture. Any criminal lawyer must have begun investigation by
> insisting, rigorously, that no such man, in such a position, could be
> permitted to plead that he had taken, and pursued, such a course, without
> assurances which did satisfy him. The plea was professionally inadmissible.
>
> This meant that any criminal lawyer would have been bound to start an
> investigation by insisting that Gould had assurances from the White House
> or the Treasury, since none other could have satisfied him. To young men
> wasting their summer at Quincy for want of some one to hire their services
> at three dollars a day, such a dramatic scandal was Heaven-sent. Charles
> and Henry Adams jumped at it like salmon at a fly, with as much voracity as
> Jay Gould, or his *ame damne* Jim Fisk, had ever shown for Erie; and with
> as little fear of consequences. They risked something; no one could say
> what; but the people about the Erie office were not regarded as lambs.
>
>
> What has this to do with Milton Friedman? Thought you would never ask.
> Well, V or Velocity in the key to Friedman's theory of money, as
> Acceleration is the key to Adams's theory of History.
>
>
> And Gould and Gold make the story.
>
>
> Without reminding my dear readers of their Economics 101 Lectures, I beg
> them to recall that Adam Smith, in his classic door stopper, The Wealth of
> Nations, explained why gold, silver, material stuff is not the foundation
> of a nation's wealth. A nation's wealth, as Marx well understood,  is
> driven by the value of labor, of productivity, by what we now call
> Technology and Capital and Trade (Ricardo).
>
>
> In any event, Gould didn't need a supply and demand graph to cast his evil
> spell. He didn't need to read Smith or Adams. He understood money supply in
> a primitive way. He had a hunch that what Friedman would argue much later,
> had value, if only he could get his arms around it.
>
>
> V.    V= GDP / M1
>
>
> That is, the Velocity of Money is equal to the level of GDP divided by the
> money supply.
>
>
> So monetary policy.   V. Get it?
>
>
>
>
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://waste.org/pipermail/pynchon-l/attachments/20140202/52ea3ea2/attachment.html>