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Monday, Nov. 25, 2002
THE VIEW FROM NEW YORK
Gilded Age of excess returns to America
By HIROAKI SATO
NEW YORK -- During a recent talk in this city on his lifelong subject, the Iwakura Embassy, businessman-scholar Saburo Izumi reminded those gathered that the Japanese group visited the United States during the Gilded Age. This appellation comes, of course, from American writer Mark Twain (and C.D. Warner) and refers to the period in 19th-century America when, as a literary encyclopedia puts it, "unbridled acquisitiveness dominated the national life."
The Iwakura Embassy had occasion to witness some prominent representatives of the Gilded Age flaunting their wealth.
Darius Ogden Mills (1825-1910), who invited the group to his estate in San Bruno on Jan. 21, 1872, was the founder and president of the Bank of California, and was then at the pinnacle of the first phase of his "conspicuously successful" business career. His brief biographical sketch, in fact, reads like acquisitiveness gone rampant, even though the West Coast region at the time was virgin enough to tolerate such activity. "The gardens in his mansion took up vast land," the embassy reported, and no wonder. Mills owned much of the town of San Bruno.
Four days later, William Chapman Ralston (1826-1875), Mills' close associate and one of "the bonanza gods," regaled members of the embassy in his own mansion, Belmont. Modeled on the Paris Opera House, it boasted four stories and 100 rooms, and the dining room was grand enough to easily take on "a large party of 106, with 70 Americans accompanying the embassy." During the sumptuous dinner, a full orchestra serenaded the guests.
"Mr. Ralston built his assets on gold mines in California," the embassy was told. "At present, his personal worth is $9 million."
By way of comparison, consider that the 50,000 Chinese immigrants toiling in that state at the time were estimated to send back home a sum of $10 million annually, and that the initial budget for the 100-member embassy's extravagant travels through the U.S. and Europe, which were to last 10 months, was set at half a million dollars. Ralston's house remains a national landmark.
Jay Cooke (1821-1905), who invited the embassy to his house in Philadelphia on July 27, had established his reputation as "the financier of the Civil War," and was thought to be the wealthiest man in the U.S. at the time. His Philadelphia mansion was "built of solid stone with double roofs and walls," it was explained to the presumably gawking members of the embassy. "The air circulating through them was cooled in summer and heated in winter, keeping the in-house climate even."
The well-tended gardens surrounding the mansion, complete with "deep stands of trees, ponds with fountains, stables, hothouses, and barns for agricultural and gardening work" were so extensive that "a day's leisurely walk wouldn't have been sufficient to savor them all," the embassy reported. "Inside the house were several fine paintings valued at more than $10,000 each, and framed paintings, large and small, filled each chamber."
That night each member of the embassy was given his own elegantly appointed room. The collapse of Cooke's banking empire the next year would become a catalyst for the Panic of 1873.
I say that Mills, Ralston, and Cooke -- and there were others -- flaunted their wealth, but whether they thought they were doing so may be questioned. Wealth and its liberal use may have come naturally to those Americans who made it.
After all, none other than President John Adams had argued, a biographer tells us, that "the natural aristocracy" included men of education, ability and, yes, wealth -- an understanding that was perhaps inevitable when Benjamin Franklin and President George Washington were the wealthiest men of the land. In that tradition, Mills and others, however humble their origins, were part of the American aristocracy.
I was struck by Izumi's reference to the Gilded Age in his talk because America is, if anything, in the midst of the latest version of the Gilded Age. Izumi spoke a few days after the results of the midterm elections became clear: The American people had given both houses of Congress to the party that is for the rich, assuming that such a characterization has any validity. And that party happens to be that of the president as well. Had not corporate excesses exposed in the past year or so dampened the prorich sentiments of ordinary people?
Several days after Izumi spoke, a good friend of mine wrote me an illuminating commentary. It is axiomatic that the aim of the U.S. government is to provide liberties and equal opportunity to all and leave the matter of what to do with them to individual members of the society. This is a social construct that dates from the days of Adams and Thomas Jefferson, even though in those earlier times some had already expressed concern for the inevitable social inequity.
To put it simply, my friend said, the Republican Party has stuck to the basic "American" proposition, whereas the Democratic Party has taken the position that "revising" that proposition is necessary for the obvious reason that untrammeled liberties and competition produce excesses. While serving the Japanese government, he was twice stationed in the U.S., and has remained a keen observer of American systems and ideas.
What was illuminating was what my friend said next: Even though the ones who benefit from the basic American tenet are bound to be in the absolute minority at any time, the Republican position appeals to many because of its logical clarity. In contrast, the Democratic position lacks clarity as it is a form of revisionism, and revisionism always comes with murky edges and is therefore less appealing.
A passage I read recently in a short biography of Grover Cleveland sticks in my mind. Referring to the severe depression that struck the U.S. in the 1890s, the historian Henry Graff writes, "No politicians, from the president on down, were prepared to directly help the victims of the economic slump. That kind of caring government was still in the distant future."
That caring government in the distant future was, of course, President Franklin Roosevelt's. As a result of his New Deal, the top 1 percent income-earners' share of gross personal income, which had reached 15 percent at the end of the Roaring Twenties, went down to 8 percent after World War II. It regained its pre-Depression share by 1988 or by 1997, depending on which calculations you use: New York University economist Edward Wolff's, or the Congressional Budget Office's.
In the meantime, the salaries of chief executive officers have skyrocketed. In 1968, the average CEO's salary was 24 times that of the average worker, according to the Economist. It was 411 times greater in 2001, according to the Institute for Policy Studies.
Hiroaki Sato is a translator and essayist who lives in New York.