       
Eyewitness to Wall Street 
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  From the author of the acclaimed Eyewitness series, a vivid and insightful look at the people, passions, and pivotal moments in American financial history from colonial times to the present day EYEWITNESS TO WALL STREET BY DAVID COLBERT "This expansive and entertaining book will appeal to a broad readership." "[Colbert] brings Wall Street to life. . . . This is a meaningful read." "Admirably captures the history of America's richest street." "In Wall Street every man carries Pressure, Anxiety, Loss, written on his forehead. This is far the worst period of public calamity and distress I've ever seen, and I fear it is but the beginning." In the wake of the dramatic swoon in stock prices over the past year and a half, these words might equally well describe the state of mind of shell-shocked investors or of professionals at the major brokerage houses whose practices have recently come under fire. They are, however, the observations of lawyer George Templeton Strong, an eyewitness to the financial panic of 1857, included in a new book that puts the present misery of the financial markets in rich historical perspective: EYEWITNESS TO WALL STREET: Four Hundred Years of Dreamers, Schemers, Busts, and Booms by David Colbert (Broadway Books; August 21, 2001; Hardcover; $30.00). An engaging and accessible montage of the pivotal figures and defining moments in American financial history from the 1600s to the present day, EYEWITNESS TO WALL STREET draws upon a wealth of firsthand accounts-diaries, private letters, memoirs, and reportage-to bring to life the booms and busts, bulls and bears, brilliant successes and staggering failures, con men, tycoons, robber barons, rivalries and corporate battles that have shaped the story of lower Manhattan's most famous lane. The author of the popular Eyewitness series of books, Colbert keeps his "you-are-there" lens focused throughout on people, not numbers, to shed light on the human side of business and on the prominent place that the speculative instinct and the worship of wealth occupy in the American national character. While nearly one half of the book is devoted to the modern era, starting with the "Greed is Good" 1980s and continuing through the "Net Returns" nineties up to the collapse of the financial markets in 2000 and early 2001, the eyewitness accounts of Wall Street's early years show how patterns of investor psychology and behavior evident today have flavored American financial history since our very first IPO-the European fundraising that launched America's colonization. William Worthington Fowler's 1850 portrait of "The Great Bear: Jacob Little" reveals that Wall Street has long been divided into two warring camps-bulls and bears-and also that, at any given moment, one of these two factions enjoys ascendancy at the other's expense. Eyewitness accounts such as Frederic Lewis Allen's 1931 exegesis of the forces underlying the great bull market of the 1920s and David L. Babson's 1971 speech to money managers about the excesses of the post-World War II boom show that the recently ended bull market of the 1990s is not without historical precedent. Indeed, the pattern in which stock prices are first propelled to unprecedented heights by a "speculative frenzy" and then crash down to earth is one that recurs throughout the history of The Street. Other patterns emerge in EYEWITNESS TO WALL STREET: the propensity for investment professionals to pile on to the best-performing stocks and to panic during any sharp market drop; the tendency of experts and investors alike to see in each new period of technological progress the promise of a "new era" of unlimited prosperity-only to subsequently be disappointed when reality sets in; and the constant conflict between intellect and emotion that underlies and animates all investor behavior. "The speculator fights his own good sense, struggles against his own will, counteracts his own hope, acts against his own comfort, and is at odds with his own decisions," wrote Joseph Vega in 1688, describing the scene at the Amsterdam Stock Exchange, the most sophisticated precursor to Wall Street. "Dave reminds me, constantly, that 'trading is 99 percent emotional,' and since trading stocks online in real time with lots of his own money is like roasting marshmallows on the Hindenburg, he must keep his wits about him," deadpans journalist Matthew Klam more than three hundred years later, describing his subject, an obsessive day trader who is "Riding the Mo in the Lime Green Glow." "I wanted to see this revolution," allows Klam of his own motivations. "I wanted to watch day trading up close, see a grown man exhaust himself with fears of bankruptcy and dreams of ascendance, hollowed out of everything but dread, terror, release, desire." Yet as EYEWITNESS TO WALL STREET illustrates, it is not just the amateur but also the seasoned professional with "ice water" in his veins who finds on occasion that emotion gets the better of reason. Witness James Cramer's harrowing yet exhilarating firsthand report of being outsmarted by the vicious bear market that awoke in March 2000 and proceeded to devour more than a third of the NASDAQ index's value in less than a month: All our rationality hadn't made us a dime. All our cool capital commitment and tungsten-like grit hadn't called the bottom. We had not respected the bear enough. We had not given him his due. It was time-as it was in every serious sell-off I have crawled through-to make a sacrifice to the Trading Gods. . . . Markets bottom only when the gods of humility are appeased with offerings of arrogant strategies by steely-eyed traders designed to withstand the stress and strain of the worst markets. They bottom when guys like me can't take it anymore." While illuminating "the lust for acquisition" and "the habit of speculation" central to American financial history, EYEWITNESS TO WALL STREET at the same time shows how The Street has been intimately connected with the building of the nation, whether in the form of saving the Continental army from bankruptcy, raising capital for the great railroads of the 19th century, helping allies to win two world wars, or funding local municipalities. Observes Colbert, "Wall Streeters, while enriching themselves, have also improved and enriched the nation." Shedding light on the little-known roles that women and African-Americans have played in the story of The Street, and including selections from figures ranging from Daniel Defoe to Charlie Chaplin to Michael Lewis, EYEWITNESS TO WALL STREET is a rich compendium of information that will surprise even the most knowledgeable buff. More immediate and accessible than narrative accounts, it is a book that will be must reading for anyone who seeks a better understanding of our present financial predicaments. |
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