The American Spectator : The Deeper Roots of Our Financial Crisis

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The Deeper Roots of Our Financial Crisis

By Theodore Roosevelt Malloch on 2.11.09 @ 6:07AM

We shouldn't neglect the cultural and moral reasons for this economic mess.

Almost all of the liberal and conservative commentators on the Great Recession and Financial Collapse/Bailout of 2008 have neglected the cultural and moral reasons for this economic mess. Unless those causes are addressed, all the finger pointing and all the proposed "solutions" will be like putting band-aids on a tumor. Let me be as specific and concrete as I can.

In the 1980s, Michael Lewis wrote a comedic book called Liar's Poker that depicted the excesses of Wall Street at my old firm, Salomon Brothers. He recently updated it with an article entitled, "After the Fall, Greed, Stupidity, and Really Bad Luck: How Wall Street Did Itself In." The bottom line is Wall Street learned next to nothing, from the past, the scandals, schemes, downturns and the criminality. The materialism and culture of greed was just too addictive. To quote Lewis' last line, "Something for nothing. It never loses its charm."

Certainly macroeconomic weakness, heightened economic imbalances, over-leverage and extreme credit risks have contributed to the unbelievable levels of market volatility we have witnessed in this downturn, now become a near collapse. Almost all financial experts and many policymakers have started to cry out for financial reforms, greater financial transparency and measures to rebuild confidence. Trust is needed in the financial architecture and institutions, regulatory agencies among them, that underlie our now highly interconnected global economic system. Yet this is why the sage market advisor, David Smick spells out so explicitly in his book, The World Is Curved, "The distasteful reality, is that there are no quick fixes for the global credit system's dilemma, which is why the world has become a dangerous place with so much economic heartache."

Let's be completely honest since so much is at stake. Why did the financial giants: investment banks, hedge funds, ratings agencies, large investors for that matter, get us into this "risky business" and dangerous situation in the first place? The answer in a word, actually a deep-seated and virulent vice, is greed.

The outcries for punishment, heads rolling, massive government regulations and bureaucratic solutions are only now beginning. There will be dozens of plans and much hand wringing. Congress will over-react and yet more firms and perhaps half of all hedge funds will fail, hurting yet more people and dragging down the economy as a whole. No one can even predict what will happen to the credit default swap market, which totals just shy of a quadzillion dollars (do the math).

It is characteristic of the age in which we live to see the "moral dimension" as a matter of following yet more rules or dictated regulations. The ancients, however, seldom referred to rules or even principles. For them a moral life was not a matter of what you do but of what you are. The fundamental notion was not duty but virtue (Latin virtus, Greek arête) and the task of the moral person was to describe the virtues that we should emulate and teach. This is how Socrates, Plato and preeminently Aristotle conceived of the moral life. St. Thomas Aquinas synthesized it into Christianity. The words of the Roman, Cicero closely correspond, as do those of the great sage Confucius, in China. Like him, the Greeks, Romans and Christians all attempted to find a basis for moral conduct in human nature. They all believed that the core idea is virtue.

Today "virtue" is literally and figuratively missing from our public vocabulary and the idea of "the moral" has been either trivialized or totally relativized. No training session or quick executive briefing can revive ethics and morality because they are habituated over years and years not in some late afternoon consultants' PowerPoint presentation or a touchy feely weekend retreat. At the very root of our financial crisis is a moral vacuum, which can only be filled with true virtue. Virtue can be defined as "moral excellence," which is gained on the grounds or basis of reason. It is a core positive quality that advantages both individuals and society.

Capitalism, the goose that laid our golden eggs over the past decades, brings about immense transformation, particularly in its globalized form. It is in nature as Adam Smith reminded us in his first book, The Theory of Moral Sentiments, written long before his better-known work, The Wealth of Nations, all about what he called "the moral sentiments." He himself distinguished between self-interest, which he promoted, and greed. Self-interest is both good and essential. Greed is always wrong and bad. The key difference is the former uses self-restraint, which obviously requires a moral code and a moral compass. There are moral preconditions in a market economy: the sentiments of sympathy, benevolence and compassion, of approval; disapproval and indignation, which underpin the social order and make it possible to engage in business in the first place. Human beings are not just profit-maximizers. They have moral scruples, personal commitments and the desire for happiness. These set limits to their plans for personal profit, and also stimulate them to pursue profit in ways that honor their higher values and generosity. Many companies, large and small, exhibit these; they live and conduct business by these values, in every industry and on every continent. I collected sixty examples in my recent book but there are thousands upon thousands.

Those nations, peoples, and businesses that neglect the moral ecology of their own cultures, especially corporate cultures, and financial firms' cultures are most noteworthy, cannot enjoy the fruits of capitalism. Because that system must essentially be moral or it falters, declines and fails. What we need to rediscover and renew today at this time more than any other in modern memory is spiritual enterprise, which is capitalism in its most profound and important virtuous form.

Spiritual capital is the fund of beliefs, examples, and commitments that are transmitted from generation to generation through a religious, moral or spiritual tradition, and which attach people to the transcendental source of human happiness. Without rediscovery of the virtues we cannot understand or resolve the deepest roots of this financial and, ultimately, moral crisis.

That moral crisis cannot be dictated by governmental power or throwing money at "problems." One of the paradoxes of the "progressive movement" is that it has spawned public policies that have had as their collective consequence an end totally opposite to the one intended. Instead of offering temporary help to a needy few, we have expanded the ranks of those perpetually in need. Where communism failed to create "new socialist man" behind the former Iron Curtain we are succeeding in America. Instead of creating a society of free and responsible individuals, we have created the entitlement generation(s). Ever since we proclaimed that we should be free from fear, we have been afraid to be free.

There is, lest we forget in this era of Obamanomics, a very corrosive and morally corrupting influence of government which stimulates the "something for nothing" mentality more than anything else in our present culture. The latest episode in so-called "stimulus" is mostly a series of government giveaways or payoffs to interest groups now in power. There is nothing virtuous about such bailouts to any and every constituency that screams loudest or turns out the vote. Quite the opposite, such actions inevitably destroy freedom, cripple the market, and like drug addiction lead to a need for more and more without regard to effect. At some point we will wake up and there will be hell to pay, i.e., hyperinflation and a worthless currency.

topics:
Financial Crisis

About the Author

Theodore Roosevelt Malloch is the author of Spiritual Enterprise: Doing Virtuous Business (Encounter Books) and CEO of The Roosevelt Group, a global strategy firm.

Letter to the Editor View all comments (25) | Leave a comment

Dwight Thorne| 2.11.09 @ 6:55AM

Popular Rage Grows as Global Crisis Worsens,
tempers around the world are getting shorter.
French and British trade unions are organizing strikes

I believe that these changes represent a "social time bomb,"
and that the resulting instability could become "extremely hazardous to democracy" in some countries. Guys - something to think about when you ponder which Robber Baron created the whole mess....

Rocco| 2.11.09 @ 7:12AM

Well written, Mr. Malloch. As a lifelong (42 years so far) student of the Greek and Latin classics, I thoroughly agree. In fact, our founding fathers noted that a virtuous and educated citizenry would be the foundation of our republic. The fact that as a society we have lost that virtue (and our education, thanks to a dumbed down, unionized public education system) bodes ill for our future and makes our transition to an oligarchy or even worse, dictatorship, more likely. Seeing Obama-mania at work reminds me of what older family and friends used to tell me of what it was like living under Mussolini and Hitler in their early years. Chilling.

Robert Rosencrans| 2.11.09 @ 8:03AM

The last greedy entity standing and thriving is the government.

Dwight Thorne| 2.11.09 @ 8:57AM

Investment bankers meet with personnel recruiters at parties in New York,
pretending that there were still jobs to be had on Wall Street.

The handshake has to be just right, groveling is embarrassing and kills your chances.

I have seen army of 400 other unemployed people at a bar in midtown Manhattan.
They’ve congregated here, on the lookout for personnel recruiters,
easily recognizable because they wear bright green armbands. Green like money.

Now they spend evenings staring at Blackberry, refusing to believe that their office no longer sends reports.
Those on Wall Street leveraged the entire world into a poo hole, using borrowed money.
We know what will follow. There will be strict regulations, new laws and safeguards.
The salary caps for CEOs recently enacted by the American government are just the beginning.

It is sad to already hear that due to ideology, some consider that democracy/government should be
(overthrown,replaced or what??) because it is "thriving and greedy".
The instability might indeed become hazardous to democracy if stick will replace the words....

HomelessLeRino| 2.11.09 @ 9:11AM

Wall street has been unveiled as a bastion of the greedy, over rated, immoral, even insane.
these people are card carrying members of the super rich class. But, are they and CEO's the only super rich who seem overpaid in relation to any sane standard or business model? Trial lawyers deserve scrutiny do they not ? 700 k an hour for their work on the tobacco lawsuit seems excessive. How about movie stars and tv people? Are they to be the only rich in America ? What is really going on with the top 1 per cent getting 20 per cent of income ? Is it really the free market at work ?

Dwight Thorne| 2.11.09 @ 9:17AM

Movie stars and TV people did not create financial black hole for the rest of the society, I have no beef with them...
For the investment bankers, let's not get mad - let's get even.

Ryan| 2.11.09 @ 9:23AM

Ecclesiastes, Proverbs, and many of the words of Jesus address the matter as well.

It's the problem that arises when times are so good for so long - those who are less scrupulous, who don't have a moral code other than their own greed and power can be overlooked for a time because the rest of us are doing well also. When the bottom falls, we start caring who they are instead of when times were going well.

We are living in an era where personal responsibility has taken a back seat to what essentially amounts to stealing when you screw up and expect others to pay for it.

Honestly, I think the answer to the question is fatherhood. Probably the best method for a good, moral, successful, responsible person is a stable family with a caring father.

MWB| 2.11.09 @ 9:36AM

I don't need to hear moralizing talk about the sin of greed; it's a simplistic cop out. Rather it seems to me that the financial crisis results from government distortion of capital markets in the form of Fannie Mae and her brethren. These government sponsored entities appeared to ameliorate the risk in obviously risky lending practices with their implicit backing of the U.S. government. Add in additional government tinkering in the form of laws mandating unwise, "socially just" lending practices and the conditions were ripe for an unsupportable mortgage boom.

The second factor is competition, not greed, which compelled the Wall Street investments banks to compete with the government sponsored entities or face losing out in the market place to the FMs who were given an unnatural advantage from their government backing.

Dwight Thorne| 2.11.09 @ 10:13AM

I agree with both, Ryan and MWB - your comments add value, when attempting to comprehend what happened. And the truth is not a two dimensional simple one page explanation.

I am more and more convinced that all of us need to sit back to the drawing table and see what went wrong with the American institutions (SEC, Federal government) that should stand guard to ensure level playing field for all folks. Absent that - greed, envy and social unrest will become a norm in our times. Asking why the society rejected (thanks to General Smedley Butler !) the investment banker's plot to overthrow democratically elected president Roosevelt back in 1930's is a timely question.
It comes to morals, institutions and above all fair play. It was clear that Roosevelt intended to conduct a massive redistribution of wealth from the rich to the poor in 1930's . Old rule that spinns this Universe - bad things come back to you with fierce power. Mentioning Jesus, Budda or Lord Shiva is being right on the subject in this context.

JP| 2.11.09 @ 10:59AM

Little mention of the Federal Reserve in all of this moralizing. As a matter of fact, the one thing that preceeds a market bubble is cheap money. Both the Dot Com bubble (equities) and the Real Estate bubble were caused by cheap money (ie interest rates set too low for too long). It is quite easy to take large risks when the costs of borrowing are near zero.

Greed will always be with us -it is part of the human condition. A good society attempts to limit or localize corruption. It is better to limit corruption at the ward or city level. But our democratically elected goverment has federalized corruption. You can see it everywhere -from the loan applicant who lies; the mortgage broker who was allowed to sell his high risk mortgages to some unlucky broker in Iceland; the homeowner who can continue to pay his mortgage but walks away anyway because his home value dropped 40%. Greed and avarice are everywhere. Just look at the business Dave Ramsey is doing. He runs a faith based business and is very popular with Chirsitans. How did so many Chirsitians live such an unCalvanistic life?

In a period of 50 years, our goverment has instiutionalized avarice. We are all to blame.

Appleby| 2.11.09 @ 11:19AM

From here in Kanukistan, in a city run by socialists (called the New Democratic Party NDP, they are unabashed socialists one and all), I would say that two generations of people who were told that they are "Entitled to my Entitlements" (one man fired from a government position actually said that on his own behalf) -- that they are "entitled" to have everything they want the nanosecond they want it and someone else will pay, have finally reached the point where there is nobody left to pay. The notion that you can keep on grabbing money out of a pot without putting anything in, forever, has never been true and never will be true -- yet the socialists in charge continue to believe you can spend every dime you have as many times as you want to, and there will always be somebody left to loot.

Now the grabby hands vastly outnumber the hands refilling the pot. At present we are only at the stage when the kids are whining for ice cream cones and trips to Disney World and Hannah Montana tickets when Daddy has lost his job. The tantrums will follow soon, and they will be awesome to behold. Cities will burn, bodies will lie in the streets, and socialists will flee for their lives...because they promised what nobody could possibly deliver and now the kids are going to make them pay for disappointing them.

Enjoy the show. See you at Galt's Gulch.

Ann| 2.11.09 @ 11:23AM

"Something for nothing-- it never loses its charm." When faced with the opportunity to rake in the bucks, certain businesspeople and execs sold their souls-- and sold out their fellow citizens in the bargain. To fix it, Obama, Pelosi, Reid and their minions are promoting "something for nothing" in the form of the so-called "stimulus package" and their dangerous left-wing public policies-- and they, too, think nothing of selling out the American people.

Thomas| 2.11.09 @ 11:36AM

It is easy to point at greedy, self-centered people who care not a whit for the welfare of others in their blind rush to personal wealth and aggrandizement. Yes, those in government [most, in fact], financial moguls and gamblers in one hundred countries all climbed 0n the money train. And it was all about the money. Money brings power and prestige and almost everyone wants that. The lure of being special, of being somebody, is strong in the human animal. People go on television and make total fools of themselves, tell family secrets that cause serious pain for their loved ones, just to be noticed for fifteen minutes. Young men sell illicit drugs and young women sell their bodies, not for money for mom's gall bladder operation or to send their younger brother to law school, but for bling. So that they are noticed and, therefor, are somebody, not nobody.

What people don't realize is that you can't buy sincere recognition or attention. This kind of power and prestige is transitory. People will be attracted to your wealth, your money, and care not who is holding that wealth. When the money dries up the admirers will simply flock to someone else with the cash. Why? Because the human animal is, basically, an amoral opportunist. And while this may work for individuals living by themselves in the wilderness, it does not work in a large society. For societies to last, people have to embrace a philosophy of compassion, generosity, integrity, and moderation. These are qualities espoused in, not just the great religions of the world, but all of the great philosophies of the world. And there is a reason for that. The present world situation simply drives that message home.

The specific incidents of greedy self serving behavior that caused this current situation should be identified and addressed. In the case of the government, a good general rule of thumb is never rely upon anyone else to have your best interests at heart.

Paul| 2.11.09 @ 12:15PM

the rich get bailouts
the poor get handouts
the rest of us pay for it all
liberals pat themselves on the back for a job well done

any other dumb**s questions?

ccc| 2.11.09 @ 1:32PM

and conservatives deny all fault while aping liberal actions

Marc Jeric| 2.11.09 @ 2:33PM

One universal law still holds: You get what you pay for. So if you pay for children without a father you get 75% of black children born as bastards. What's a poor black girl to do? Work from time to time as an $8/hr maid or beget children who bring her $800/month each, food stamps, and free apartment and utilities? With 6 such bastards she can join the middle class. We paid for that and that is exactly what we got. That such children without a father become criminals in large numbers is another "benefit" of such compassion. Our Abu Hussein from Kenya, well educated by Alinsky, Ayers, and other "thinkers", is engaged in more of the same type of compassion.

bob montgomery| 2.11.09 @ 2:49PM

Yes, Chris Dodd and Barney Frank are greedy. Yes, John Conyers and Debbie Stabenow are greedy. You want to give away TRILLIONS of dollars to the social programs that enslave people and then whine about a few MILLIONS that corporate execs get. Keep your eye on the ball.

Robert A. Connor| 2.11.09 @ 3:01PM

Mr. Malloch,

We need a new firecracker. Hans Timmer, who directs the World Bank’s international economic analyses and projections, said on December 10, 2008: “It is not just a supply shock. It is not just a reduction in demand, but it is the lack of availability of credit.” Thomas Mayer, chief European economist for Deutsche Bank remarked: “We’re almost in an air pocket, where we don’t have a new global driver of growth.”

Virtue is not enough. We need a new model. There’s always a metaphysics and its attendant epistemology lurking at the bottom of consciousness that needs to be conceptualized, but may not emerge for centuries – or ever.

We have been trapped in so called “objectifying reason.” That means that we reduce everything and everyone into an object of use, which ultimately means that we exempt ourselves as outside the system and quite alone and unrelated. The wired and wireless personal technologies of iphone, blackberry, cell phone, video game, etc. gives us control of limited relations which at best are tangential to gut personal relations. We are substances at the center of a lonely crowd. Our metaphysics is Greek and abstractive. It must become Christian and existential, i.e. real.

Add virtue to Greek and Roman anthropology of being as in-itself, and you haven’t solved the in-depth problem. You can be very virtuous, but it’s still all about you. And it would be a great mistake to insist on the intrinsic selfishness of man groveling after self-interest when the spirit of service and the quality thereof has been the soul of the flourishing entrepreneurship of the United States. It’s important to note that the United States experienced 150 years of a lived Christianity before the consciousness of the dignity of the human person became explicit as a revolution of autonomy (very different from the French) and Bill of Rights.

The two ideologies of communism and capitalism – both abstractions - are dead as of 1989 and 2008 respectively. The life either one of them had was the truth of the human person as justice and service to others in Communism or autonomous freedom in Capitalism. They both took from Christianity. As partial truths that lived themselves out in conflict with each other, they are both dead. That’s why there’s no getting away from a Christianity that is not religion but anthropology. Jesus Christ is the revolutionary existential from self to service. He’s not a religious figure, but the prototype of man.

The field of conflict at the moment is dominated by nihilism in which everything is true, and therefore nothing is true. This is a dictate of Saul Alinsky’s third rule of ends and means: “in war the end justifies almost any means.” Benedict XVI called it “a dictatorship of relativism.”

I submit that even virtue is also a band aid on the real problem. David Walsh wrote: “The dominant force of the modern world is instrumental reason. This is what dictates the flow of capital within an ever more integrated global economy, what compels our submission to the demands of the computerized manipulation of data, and what subjects us to the dehumanizing possibilities looming over the biotechnology horizon. The problem of modernity becomes conscious in the realization of modernity as a problem. We sense a fatal entrapment from which all avenues of escape have been foreclosed. Neither technology nor its benefits can be surrendered. We can no more live without electricity than we can live without water…. But the costs of our access to electrical energy are measured not just by our monthly utility bills. They are also urchased by the dependence on which our independence has been built. Our putative mastery of light and heat and power is purchased at the cost of our entanglement in the vast network of grids by which we are held fast. Power and powerlessness seem coeval moments.”

This is why I would submit Benedict’s plea since becoming pope for a “broadening of reason.” Reason must lift its eye from the blackberry as it wilts and groans under the weight of endless data bases without ultimate meaning. Reason must come in contact with the being of the self in the act of work as a gift of service to another. What is at stake now is surely not the economic bail-out/stimulus package of 2.5 trillion, nor even the headier lacing of the time-immemorial anthropological model of substance with virtue. I submit that what is needed is a dynamic and resonating experience of the working person as becoming self (subsidiarity) by gift of self (solidarity) that will bring about “a radical cultural transformation which is essential for solving the grave problems which must be faced by the age in which we live.” John Paul II proposed this in Poland during his trip to Poland in 1979 in a like situation where communism was faltering. He wrote immediately after that (1981) that “if the solution… of the social question… must be sought in the direction of ‘making life more human,’ then the key, namely human work, acquires fundamental and decisive importance.” Shortly after, Joseph Ratzinger directed and signed a document that proclaimed: “The person of the worker is the principle, subject and purpose of work. [A work culture] will affirm the priority of work over capital and the fact that material goods are meant for all. It will be animated by a sense of solidarity involving not only rights to be defended but also the duties to be performed. It will involve participation, aimed at promoting the national and international common good and not just defending individual or corporate interests. It will assimilate the methods of confrontation and of frank and vigorous dialogue.”

jr| 2.11.09 @ 6:24PM

Stimulus, no. Socialism yes. Stimulus simple trick -- cut my taxes in half and see what happens, dodo. Nothing fancy and does not require more than one sentence in legislation. Wasn't that cheap and to the point? Limbaugh today -- "we" will get them, returning the favors that they laid on us. Don't think so Rush -- the socialist-communistic acts that will go on during the next 8 years cannot be turned back. FDR started it, LBJ jacked it up several notches and every president since has help plow the socialist field. There is no turning back. I guess that is "progressism."

Thom| 2.11.09 @ 7:04PM

While I agree the lack of a moral compass (or virtue) have a hand in the current mess I would be very careful about simply characterizing this in subjective terms like “greed” or as the current Pope recently said about Western Society “materialism”. That coming from a very humble man living in a Palace no less compared to the other 99.99% of the world’s population. Like so much of life, such terms are subject to relative judgments. By the standards of the rest of the world most Americans are “rich”. The worst America has to offer is well above most of the best in Africa. Much of South and Central America look kind of stark by comparison to most of America but only the US has the disposable income to fund all the efforts most of the rest of the world depend on, not the least is food production. To the African plainsman, I live in a castle by comparison and by most American standards I live in a small starter home that cost me in 1990 what many American SUV and luxury vehicles list for today. By the same token, what I’ve made in the stock market over the last 15 years would be considered “greed” by the standards of someone that just puts their excess money in a pass book savings account and like wise that would be seen as greed by someone that just stuffed their mattress all their life. It’s all relative and subject to many different standards world wide. I think it would be very difficult to codify what “greed” is by using say people on Wall Street or some CEOs as examples given that most professional sport jocks and Actors make as much or more for what? Do I feel cheated when I pay $9.00 for a movie where the lead Actor got paid 10-20 million for? What about the collective salaries of a professional football team? What did it cost per seat at the Super Bowl on average? Somebody got rich off that I can assure you. Let’s see Super Bowl commercials cost $100,000 a second? Probably a bargain by some people’s standard. Not mine of course.

There are certainly greedy, materialistic people in this world. The problem is, it all depends on who you ask as to who’s list you end up on.

hlrino| 2.11.09 @ 8:56PM

Sorry Thorne but overpaid jerks are the problem. One way or another, Hollywood or Wall Street they steal from the common man. Do you not think Hollywood, the tv industry, the media conglomerates will gain from this bailout ? They have all benefited from easy financing, and need more of it to fill their swimming pools with diamonds. Look at the mess Redstone is in ? GE is floundering and still pays jerks at NBC big money even as ratings drop. What kinda business model is that ? Scam. We pay without even having to directly purchase their products. The unworthy rich are everywhere and they'd earn a fraction of their incomes if their industries followed a true free enterprise model. As for those superbowl commercials ? Where they really effective ? Did they really help anyone's sales ? It's all a scam. Every regular person who buys the product advertised whether they watch the game or not is forced to fund a privileged few. And what do they really produce, well who more than the chattering class has polluted this culture ? Hollywood adores anti social behavior and tv is not far behind. Overpaid lawyers have killed common sense. We need to cut these frauds down to size via their pocket books. I for one avoid giving them a nickel. Movies, shove your movies.

tgt4ex| 2.12.09 @ 2:16PM

Thorne, does the level playing field extend to all industries and intitutions ? The super rich need to be examined. They are on wall street and in Washington and in Hollywood. Prove to me these super rich got it through a system of fair play. They did not make this mess, but yhey gorged at the trough of easy money. How it was flooded to Hollywood for instance is a good question. How can these be good loans ? Is is sound to invest in a venture that pays such a huge sum of gross revenue to a select few ? Hollywood is just a tangled mess of media conglomerates, and they will benefit big from these bailout billions upon billions.California runs Congress and will take care of their own. If your gut tells ya somebody is way overpaid it is a good chance you are right. Same with these trial lawyers and the tobacco settlement money. Why is smoker cessation money in the bailout ? That was what the lawsuit billions was gonna address ? But lawyers scored huge and states used the money to bailout their own bloated budgets. This is more than just wallstreet greed.

Matt | 2.25.09 @ 5:59PM

Mr. Malloch,

Your well written article made me think of Theodore Roosevelt's square deal speech.

In speaking on Labor Day at the annual fair of the New York State Agricultural Association, it is natural to keep especially in mind the two bodies who compose the majority of our people and upon whose welfare depends the welfare of the entire State. If circumstances are such that thrift, energy, industry, and forethought enable the farmer, the tiller of the soil, on the one hand, and the wage-worker on the other, to keep themselves, their wives, and their children in reasonable comfort, then the State is well off, and we can be assured that the other classes in the community will likewise prosper. On the other hand, if there is in the long run a lack of prosperity among the two classes named, then all other prosperity is sure to be more seeming than real.

It has been our profound good fortune as a nation that hitherto, disregarding exceptional periods of depression and the normal and inevitable fluctuations, there has been on the whole from the beginning of our government to the present day a progressive betterment alike in the condition of the tiller of the soil and in the condition of the man who, by his manual skill and labor, supports himself and his family, and endeavors to bring up his children so that they may be at least as well off as, and, if possible, better off than, he himself has been. There are, of course, exceptions, but as a whole the standard of living among the farmers of our country has risen from generation to generation, and the wealth represented on the farms has steadily increased, while the wages of labor have likewise risen, both as regards the actual money paid and as regards the purchasing power which that money represents.

Side by side with this increase in the prosperity of the wage-worker and the tiller of the soil has gone on a great increase in prosperity among the business men and among certain classes of professional men; and the prosperity of these men has been partly the cause and partly the consequence of the prosperity of farmer and wage-worker. It cannot be too often repeated that in this country, in the long run, we all of us tend to go up or go down together. If the average of well-being is high, it means that the average wage-worker, the average farmer, and the average business man are all alike well-off. If the average shrinks, there is not one of these classes which will not feel the shrinkage. Of course, there are always some men who are not affected by good times, just as there are some men who are not affected by bad times. But speaking broadly, it is true that if prosperity comes, all of us tend to share more or less therein, and that if adversity comes each of us, to a greater or less extent, feels the tension.

Unfortunately, in this world the innocent frequently find themselves obliged to pay some of the penalty for the misdeeds of the guilty; and so if hard times come, whether they be due to our own fault or to our misfortune, whether they be due to some burst of speculative frenzy that has caused a portion of the business world to lose its head -- a loss which no legislation can possibly supply -- or whether they be due to any lack of wisdom in a portion of the world of labor--in each case, the trouble once started is felt more or less in every walk of life.

It is all-essential to the continuance of our healthy national life that we should recognize this community of interest among our people. The welfare of each of us is dependent fundamentally upon the welfare of all of us, and therefore in public life that man is the best representative of each of us who seeks to do good to each by doing good to all; in other words, whose endeavor it is not to represent any special class and promote merely that class's selfish interests, but to represent all true and honest men of all sections and all classes and to work for their interests by working for our common country. We can keep our government on a sane and healthy basis, we can make and keep our social system what it should be, only on condition of judging each man, not as a member of a class, but on his worth as a man. It is an infamous thing in our American life, and fundamentally treacherous to our institutions, to apply to any man any test save that of his personal worth, or to draw between two sets of men any distinction save the distinction of conduct, the distinction that marks off those who do well and wisely from those who do ill and foolishly. There are good citizens and bad citizens in every class as in every locality, and the attitude of decent people toward great public and social questions should be determined, not by the accidental questions of employment or locality, but by those deep-set principles which represent the innermost souls of men.

The failure in public and in private life thus to treat each man on his own merits, the recognition of this government as being either for the poor as such or for the rich as such, would prove fatal to our Republic, as such failure and such recognition have always proved fatal in the past to other republics. A healthy republican government must rest upon individuals, not upon classes or sections. As soon as it becomes government by a class or by a section, it departs from the old American ideal.

Many qualities are needed by a people which would preserve the power of self- government in fact as well as in name. Among these qualities are forethought, shrewdness, self-restraint, the courage which refuses to abandon one's own rights, and the disinterested and kindly good sense which enables one to do justice to the rights of others. Lack of strength and lack of courage and unfit men for self-government on the one hand; and on the other, brutal arrogance, envy -- in short, any manifestation of the spirit of selfish disregard, whether of one's own duties or of the rights of others, are equally fatal.

In the history of mankind many republics have risen, have flourished for a less or greater time, and then have fallen because their citizens lost the power of governing themselves and thereby of governing their state; and in no way has this loss of power been so often and so clearly shown as in the tendency to turn the government into a government primarily for the benefit of one class instead of a government for the benefit of the people as a whole. Again and again in the republics of ancient Greece, in those of medieval Italy and medieval Flanders, this tendency was shown, and wherever the tendency became a habit it invariably and inevitably proved fatal to the state. In the final result, it mattered not one whit whether the movement was in favor of one class or of another.

The outcome was equally fatal, whether the country fell into the hands of a wealthy oligarchy which exploited the poor or whether it fell under the domination of a turbulent mob which plundered the rich. In both cases there resulted violent alternations between tyranny and disorder, and a final complete loss of liberty to all citizens -- destruction in the end overtaking the class which had for the moment been victorious as well as that which had momentarily been defeated. The death-knell of the Republic had rung as soon as the active power became lodged in the hands of those who sought, not to do justice to all citizens, rich and poor alike, but to stand for one special class and for its interests as opposed to the interests of others.

The reason why our future is assured lies in the fact that our people are genuinely skilled in and fitted for self-government and therefore will spurn the leadership of those who seek to excite this ferocious and foolish class antagonism. The average American knows not only that he himself intends to do what is right, but that his average fellow countryman has the same intention and the same power to make his intention effective. He knows, whether he be business man, professional man, farmer, mechanic, employer, or wage-worker, that the welfare of each of these men is bound up with the welfare of all the others; that each is neighbor to the other, is actuated by the same hopes and fears, has fundamentally the same ideals, and that all alike have much the same virtues and the same faults. Our average fellow citizen is a sane and healthy man who believes in decency and has a wholesome mind. He therefore feels an equal scorn alike for the man of wealth guilty of the mean and base spirit of arrogance toward those who are less well off, and for the man of small means who in his turn either feels, or seeks to excite in others the feeling of mean and base envy for those who are better off. The two feelings, envy and arrogance, are but opposite sides of the same shield, but different developments of the same spirit.

The line of cleavage between good citizenship and bad citizenship separates the rich man who does well from the rich man who does ill, the poor man of good conduct from the poor man of bad conduct. This line of cleavage lies at right angles to any such arbitrary line of division as that separating one class from another, one locality from another, or men with a certain degree of property from those of a less degree of property.

The good citizen is the man who, whatever his wealth or his poverty, strives manfully to do his duty to himself, to his family, to his neighbor, to the States; who is incapable of the baseness which manifests itself either in arrogance or in envy, but who while demanding justice for himself is no less scrupulous to do justice to others. It is because the average American citizen, rich or poor, is of just this type that we have cause for our profound faith in the future of the Republic.

There is no worse enemy of the wage-worker than the man who condones mob violence in any shape or who preaches class hatred; and surely the slightest acquaintance with our industrial history should teach even the most short-sighted that the times of most suffering for our people as a whole, the times when business is stagnant, and capital suffers from shrinkage and gets no return from its investments, are exactly the times of hardship, and want, and grim disaster among the poor. If all the existing instrumentalities of wealth could be abolished, the first and severest suffering would come among those of us who are least well-off at present. The wage-worker is well off only when the rest of the country is well-off; and he can best contribute to this general well-being by showing sanity and a firm purpose to do justice to others.

In his turn, the capitalist who is really a conservative, the man who has forethought as well as patriotism, should heartily welcome every effort, legislative or otherwise, which has for its object to secure fair dealing by capital, corporate or individual, toward the public and toward the employee. Such laws as the franchise-tax law in this State, which the Court of Appeals recently unanimously decided constitutional -- such a law as that passed in Congress last year for the purpose of establishing a Department of Commerce and Labor, under which there should be a bureau to oversee and secure publicity from the great corporations which do an interstate business -- such a law as that passed at the same time for the regulation of the great highways of commerce so as to keep these roads clear on fair terms to all producers in getting their goods to market -- these laws are in the interest not merely of the people as a whole, but of the propertied classes. For in no way is the stability of property better assured than by making it patent to our people that property bears its proper share of the burdens of the State; that property is handled not only in the interest of the owner, but in the interest of the whole community. Among ourselves we differ in many qualities of body, head, and heart; we are unequally developed, mentally as well as physically. But each of us has the right to ask that he shall be protected from wrong-doing as he does his work and carries his burden through life. No man needs sympathy because he has to work, because he has a burden to carry. Far and away the best prize that life offers is the chance to work hard at work worth doing; and this is a prize open to every man, for there can be no better worth doing than that done to keep in health and comfort and with reasonable advantages those immediately dependent upon the husband, the father, or the son. There is no room in our healthy American life for the mere idler, for the man or the woman whose object it is throughout life to shirk the duties which life ought to bring. Life can mean nothing worth meaning, unless its prime aim is the doing of duty, the achievement of results worth achieving. A recent writer has finely said: ; "After all, the saddest thing that can happen to a man is to carry no burdens. To be bent under too great a load is bad; to be crushed by it is lamentable; but even in that there are possibilities that are glorious. But to carry no load at all -- there is nothing in that. No one seems to arrive at any goal really worth reaching in this world who does not come to it heavy laden."

Surely from our own experience each one of us knows that this is true. From the greatest to the smallest, happiness and usefulness are largely found in the same soul, and the joy of life is won in its deepest and truest sense only by those who have not shirked life's burdens. The men whom we most delight to honor in all this land are those who, in the iron years from '61 to '65, bore on their shoulders the burden of saving the Union. They did not choose the easy task. They did not shirk the difficult duty. Deliberately and of their own free will they strove for an ideal, upward and onward across the stony slopes of greatness. They did the hardest work that was then to be done; they bore the heaviest burden that any generation of Americans ever had to bear; and because they did this they have won such proud joy as it has fallen to the lot of no other men to win, and have written their names forevermore on the golden honor-roll of the nation. As it is with the soldier, so it is with the civilian. To win success in the business world, to become a first-class mechanic, a successful farmer, an able lawyer or doctor, means that the man has devoted his best energy and power through long years to the achievement of his ends. So it is in the life of the family, upon which in the last analysis the whole welfare of the nation rests. The man or woman who, as bread-winner and home-maker, or as wife and mother, has done all that he or she can do, patiently and uncomplainingly, is to be honored; and is to be envied by all those who have never had the good fortune to feel the need and duty of doing such work. The woman who has borne, and who has reared as they should be reared, a family of children, has in the most emphatic manner deserved well of the Republic. Her burden has been heavy, and she has been able to bear it worthily only by the possession of resolution, of good sense, of conscience, and of unselfishness. But if she has borne it well, then to her shall come the supreme blessing, for in the words of the oldest and greatest of books, "Her children shall rise up and call her blessed;" and among the benefactors of the land, her place must be with those who have done the best and the hardest work, whether as lawgivers or as soldiers, whether in public or private life.

This is not a soft and easy creed to preach. It is a creed willingly learned only by men and women who, together with the softer virtues, possess also the stronger; who can do, and dare, and die at need, but who while life lasts will never flinch from their allotted task. You farmers, and wage-workers, and business men of this great State, of this mighty and wonderful nation, are gathered together today, proud of your State and still prouder of your nation, because your forefathers and predecessors have lived up to just this creed. You have received from their hands a great inheritance, and you will leave an even greater inheritance to your children, and your children's children, provided only that you practice alike in your private and your public lives the strong virtues that have given us as a people greatness in the past. It is not enough to be well-meaning and kindly, but weak; neither is it enough to be strong, unless morality and decency go hand in hand with strength. We must possess the qualities which make us do our duty in our homes and among our neighbors, and in addition we must possess the qualities which are indispensable to the make-up of every great and masterful nation -- the qualities of courage and hardihood, of individual initiative and yet of power to combine for a common end, and above all, the resolute determination to permit no man and no set of men to sunder us one from the other by lines of caste or creed or section. We must act upon the motto of all for each and each for all. There must be ever present in our minds the fundamental truth that in a republic such as ours the only safety is to stand neither for nor against any man because he is rich or because he is poor, because he is engaged in one occupation or another, because he works with his brains or because he works with his hands. We must treat each man on his worth and merits as a man. We must see that each is given a square deal, because he is entitled to no more and should receive no less.

Finally, we must keep ever in mind that a republic such as ours can exist only by virtue of the orderly liberty which comes through the equal domination of the law over all men alike, and through its administration in such resolute and fearless fashion as shall teach all that no man is above it and no man below it.

Bryan| 8.31.09 @ 7:42AM

I agree, unless the rewards are reduced people are always going to take huge risks. It's human nature, but the unfortunate thing with this is these gamblers have the countries welfare at stake