The Go-Go Years (3 page)

Wall Street as a political issue was long dead except in those homes of the stuck record, Moscow and Peking. Even the American Old Left had stopped attacking Wall Street long since (and was probably long since in the market itself). “Lackeys of Wall Street” was a phrase to laugh at when Mao or Khrushchev mouthed it—as well say “lackeys of Monte Carlo.” Spreading affluence and the rise of corporate and federal power had reduced Wall Street to the status of a national facility without important political influence. The New Left simply ignored it, except in 1967 when Abbie Hoffman and his Yippie friends had the inspired notion of throwing dollar bills from the visitors' gallery onto the Stock Exchange floor. A few months later, the Exchange management did
its
bit for the Yippie cause by installing bulletproof glass around the visitors' gallery, thereby seeming to indicate that it considered thrown-away dollar bills to be lethal weapons. (And maybe, after all, from the Exchange's point of view they were.) In short, a taunt was offered and magnificently accepted. But the taunt was not even to Wall Street; Wall Street had become a convenient metaphor for commercial America. Hoffman was right to crow, “Throwing money onto the floor of the Stock Exchange is pure information. It needs no explanation. It says more than thousands of anticapitalist tracts and essays.” And how magnificently bulletproof glass underlines the message! Wall Street, which despises suckers, had been suckered.

And all through the stormy course of 1967 and 1968, when
things had been coming apart and it had seemed that the center really couldn't hold—the rising national economic crisis culminating in a day when the dollar was unredeemable in Paris, the Martin Luther King and Robert Kennedy assassinations, the shame of the Chicago Democratic convention, the rising tempo of student riots—the silly market had gone its merry way, heedlessly soaring upward as if everything were O.K. or would surely come out O.K., as mindlessly, maniacally euphoric as a Japanese beetle in July. Or as a doomed man enjoying his last meal. One could only ask: Did Wall Street, for all its gutter shrewdness, have the slightest idea what was
really
going on?

Beyond that, wasn't Wall Street the very living symbol and embodiment of everything—the Protestant work ethic, Social Darwinism, market orientation, money-madness—that America was only now learning, if not to reject, at least to get into a new and lesser perspective? Wasn't Wall Street backward-looking, a kind of simplified, idealized version of the older and now largely discredited America, unrelated or even antipathetic to the new America that was struggling now to come into being?

Of course, Wall Street itself claimed to be more broadly American than ever before. Even at the height of the 1929 boom, Wall Street could and did point out, there were only 4 or 5 million Americans in the stock market. In the summer of 1970 the Stock Exchange proudly unveiled a survey showing that the country now held over 30 million shareowners. “People's capitalism” had arrived, then, and there were figures to prove it. Yet in another and perhaps more important perspective, the stock market was not more closely related to American life in 1970 than in 1929; in fact, the contrary was true. In 1929, America— the America of history, the one described in books and newspapers and popular magazines and even in the intellectual journals—had been essentially still a small country consisting of people possessing either land or money. Everybody else had been simply considered beneath notice. As the majority consisting of slaves is ignored in the idyllic histories of the democracy of ancient Greece, so the majority of the poor was ignored in the social histories of America
circa
1929. By 1970, social commentary
at all levels had become democratic; minorities, black and other, had become consequently self-conscious, aware of their right to be included and noticed even though they remain as they are rather than remolding themselves in the white Protestant image, as the Jews and the Irish had so largely done in earlier times. Even among the affluent, discussing the stock market at social occasions—a custom not just sanctioned but approved in 1929—had come to be considered generally dull or boorish. In the national context, the 4 or 5 million stockholders of 1929 loomed far larger than the 30 million of 1970. And in 1970, people's capitalism—as almost any black, Mexican, Puerto Rican, Appalachian poor white, unemployed laborer, or hardscrabble farmer would tell you—was still largely a myth.

Wall Street—sometimes so beautifully, so patly metaphorical that it could break a poet's heart—was not only a place sorely in need of physical and spiritual “greening,” but had been almost the first place in the nation to be literally ungreened. A print made in 1847, long before the coming of large-scale industrialization, the age of asphalt, hangs in the famous old restaurant Sweets in Fulton Street. It shows almost the whole six-hundred-yard stretch of Wall Street looking toward Trinity Church, and the scene contains exactly one tree. With the physical ungreening went—and goes—the spiritual concomitant, a certain dehumanization. For generations, Wall Street as a social ambiance has tended to represent what is hardest, coldest, and meanest in America. Sneaky, parsimonious, hypocritical old Daniel Drew is not a Wall Street legend for nothing. This is not to say that life there has been (or is) all mean and inhuman. Along with Drew's unprepossessing qualities, in Wall Street there has always been extraordinary enterprise, generosity, courage, villainy on a grand scale, the drama of success and failure, even now and again a certain nobility. In the nineteen sixties Wall Street still had a stimulating tendency, as it had had for a century and more, to project humanity (and specifically American humanity) on a wide screen, larger than life; to be a stage, perhaps one of the last, for high, pure, moral melodrama on the themes of possession, domination, and belonging.

But at a cost. As few plants bloom there, so do few people. While the Wall Street kings play out their classic dramas in the filtered air behind the high windows, the vassals, footmen, and ladies-in-waiting of the Street are short of the little satisfactions that make life bearable. Numbers and machines that they don't understand benumb them. One gets off the subway at Broadway and Wall and begins to feel depressed. Men's faces seem pinched and preoccupied. Pretty women seem flesh without magic. In winter a savage wind curls around the corners of those canyons; in summer the air lies heavy, dank, and sunless. The debaters of theology who cluster outside the Bankers Trust seem disturbingly psychotic, not engagingly zany. Not greed nor avarice, but footling bad temper, is too often the prevailing mood.

In a revolutionary time like 1970, could it be that Wall Street, that summary of so much that is least engaging about our national tradition, was coming to be—in the cliché of the moment—irrelevant?

5

Not to Ross Perot. To him, Wall Street was a Puritan's Hell, dangerous and fascinating, and also, as he well knew, the source of his almost incredible riches. He had entered Hell, conquered it, and remained pure. By environment and temperament he was a perfect Western populist, feeling toward “city slickers,” including those in Wall Street, a fear and suspicion not unmixed with envy and contempt. His boyhood in East Texas, as the son of a depression-ridden small-town cotton broker and horse-trader, had set the pattern of his life: he had broken horses for pay before he was ten (and repeatedly broken his nose in the process), become an Eagle Scout, learned the cult of self-reliance and learned to make a holy Calvinist doctrine of the pursuit of the honest dollar by honest effort. In some senses he was an anachronism. He had grown up, before and during World War
II, believing that the frontier not only existed but still dominated American life. What had been physically extinct long before his birth summed up his spiritual reality. He believed that all things were possible in America for the man of enterprise and that the natural habitat of the man of enterprise was the “frontier.” Even now, when he had turned the tables and was admired, envied, perhaps hated in Wall Street itself, he instinctively equated “West” with “good” and “East” with “bad”; traveling on airliners—as I learned when I spent three days traveling with him on them, late in 1970—he found that his fellow passengers became more pinched, constricted, snobbish, close-mouthed as a plane moved eastward over the nation, and more generous, open-hearted, and free-thinking as it moved westward.

He was of pioneer stock; his grandfather Perot, son of an immigrant from France to Louisiana before the Civil War, in the true frontier days, had made his way upriver and overland to New Boston, Texas, where he had hacked out a clearing, hewed timber, and built a trading post and general store. Ross Perot, after high school and two years of junior college in nearby Texarkana, had wangled an appointment to the Naval Academy, where he had graduated in 1953 with an average academic record but had been recognized for leadership through election as class president. Already he showed promise as a supersalesman. After four years of active Navy duty he had taken a job as a computer drummer, on commission, for I.B.M. in Dallas. He had soon turned out to be such an overachiever that any promotion to a salaried job would have involved a cut in pay, so the company had taken drastic steps to control his income. It had cut his commission on sales by four-fifths and assigned him an annual sales quota beyond which he would get no commission. For the year 1962, he had made his annual quota by January 19, thus putting himself effectively out of business for the next eleven months and twelve days. After brooding on his dilemma, he quit I.B.M. that June and incorporated his own company—Electronic Data Systems Corp., designers, installers, and operators of computer systems—taking with him a couple
of brilliant young I.B.M. colleagues, Milledge A. Hart, III, and Thomas Marquez. He had no investors or backers; his initial investment was $1,000, the minimum required for incorporation under Texas law; his directors, apart from himself, were his wife, his mother, and his sister. Hard times followed for a while. (When E.D.S. put up its own building in Dallas and decorated it with the firm's initials, some local people took the place for a restaurant called “Ed's.”) But persistence and salesmanship paid off. In 1965, opportunity knocked for E.D.S. when federal Medicare legislation was passed and E.D.S. quickly got in on the ground floor. Perot actually spent a spell working part-time for Texas Blue Shield, which had a contract with the Social Security Administration to develop a computerized system for paying Medicare bills. Out of this association came a subcontract from Texas Blue Shield to E.D.S. That was only the beginning. Eventually E.D.S. had subcontracts to administer Medicare or Medicaid in eleven states, including Texas, California, and Indiana; the firm derived the major portion of its revenue from these contracts, and was, as
Ramparts
remarked scathingly in 1971, “America's first welfare billionaire.” All told, by 1968 E.D.S. had twenty-three contracts for computer systems, 323 full-time employees, about $10 million in assets, annual net profits of over $1.5 million, and a growth curve so fantastic as to make investment bankers' mouths water.

Of such cloth was cut the man who, by early 1970—and by methods that we shall soon see—had beaten every one of the city slickers on their home ground, and become the single biggest winner in what the writer “Adam Smith” called “the money game,” emerging with paper assets to his name of almost $1.5 billion. His personal relations with Wall Street and its slickers began early in 1968, when the market was going through the roof and the hungry investment bankers had suddenly realized that Perot's little clutch of refugees from the fur-lined trap of I.B.M. was now ripe for a public sale that might be a bonanza all around. Seventeen investment bankers visited Perot in rapid succession and urged him to put his stock on the market. At first he said, as he had always said previously, that he never would.

He didn't want outside interference in his company's affairs, he just wanted to be left alone to do a job. But the seventeenth banker got to Perot. He was Kenneth Langone of R.W. Pressprich and Company, a respectable enough Wall Street firm. Langone was a youngish, sympathetic, fast-talking stock peddler of urban Italian extraction. In character, temperament, and background he and Perot presented a study in contrasts—in almost everything except that great binding tie, a shared respect for money. Other investment bankers had offered to sell Perot's stock at thirty times current annual earnings, then at fifty times, then at seventy times. Langone, however, offered one hundred times, possibly somewhat more. Perot hesitated for several weeks, during which he conducted a series of windy seminars within his company on the abstract moral question of whether or not a company like theirs ought to go public. Predictably, the seminars turned out to be largely a grotesque exercise in middle-management men trying to guess which way the cat would jump. But as to Perot, was all this soul-searching merely self-deception? Did his principles, like so many principles, have their price? Was his mind made up? Whatever the case, Perot said yes to Langone.

Then began Perot's education in the ways of the slickers, and he proved to be an astute pupil indeed. First of all, Langone wanted to know, who were the company's directors? His wife, his mother, and his sister, Perot reported. Langone said that wouldn't do. So Perot wrote himself a more acceptable board, consisting of Hart, Marquez, and other principal employees. Next, the company would have to be recapitalized: say, 11.5 million shares. A preposterous capitalization for a company that earned only $1.5 million a year? Necessary, Langone explained, if you wanted that high earnings multiple and also a reasonable stock price. E.D.S., then, would be the seller of 325,000 shares of stock; Perot himself would be the seller of another 325,000. The rest would be kept by Perot and the E.D.S. employees— around 1.5 million shares for the employees (he had issued it to them by way of bonuses), and not quite 9.5 million for Perot himself. Wasn't 650,000 shares for public trading a dangerously
small float, likely to make for a highly volatile market in which small investors might possibly get hurt? Langone told Perot it was plenty. After all, he pointed out, R. W. Pressprich itself would make the market, and could be counted on to maintain a fair and orderly one. The offering price finally agreed upon was $16.50 a share—118 times current E.D.S. earnings, and an infinite number times current dividends, since there were none.