My Amazon Review of James Kaplan's "Irving Berlin: New York Genius"

 

Writing the American Songbook

 

James Kaplan has written an endearing biography of Irving Berlin, perhaps America’s best songwriter. Berlin born Israel Bailin in Belarus in 1888 arrives in America at age five and becomes a grade school dropout at fourteen.

He is a born hustler selling newspapers and singing in bars on the Bowery and by 1911 with his “Alexander’s Ragtime Band” he becomes America’s most celebrated songwriter over the next five decades.

 

Drafted into the army in 1918 he ends up organizing the “Yip Yank Yaphank” review with an all-soldier cast. It plays on Broadway to great acclamation. It was the precursor to his World War II “This is the Army” review.  By the 1920’s he is firmly established on Broadway and he owns 25% of the new Music Box Theater. He pens such songs as “Always” and “Puttin’ on the Ritz.” His 1933 “As Thousands Cheer” show co-stars the great Ethel Waters. She sings the tragic “Supper Times” portraying the lynching of her husband. This was the first integrated show on Broadway. A year later he would write “Easter Parade.”

 

By then Berlin would become bi-coastal with his work in Hollywood. One of his childhood friends ends up running a major studio. He goes back and forth with his second wife Ellen (his first wife dies early) and his three daughters. Along the way he works with the greats, Fred Astaire and Ginger Rogers. Further he drives very hard bargains with the Hollywood moguls. Berlin was a shrewd businessman as well.

 

In 1938 he pulls out a leftover song from “Yip Yap Yankhank” and that song becomes “God Bless America” which Kate Smith debuts to a national radio audience. ( See: - YouTube )  All the royalties would go to the boy scouts and girl scouts. With the start of the World War II, he organizes the “This is the Army” show where he travels the European and Pacific theaters being at times very close to live fire. The all-soldier unit was the only integrated army unit of the war.  Berlin donates his royalties to Army Relief. He still has time to compose “White Christmas” for Bing Crosby in 1942. During the war he meets Marshall, Eisenhower, Churchill, and Roosevelt.  At war’s end he receives the U.S. Army Medal of Merit directly from Marshall.

 

With the war over he writes the musical “Annie Get Your Gun.” In that show Ethel Merman belts out “There’s No Business Like Show Business.” He also writes in a fifteen-minute cab ride “Anything you can Do; I can do Better.”  His last Broadway show was “Call Me Madam.”

 

What can I say? Despite suffering from insomnia and depression he lived a full life, and his songs made our lives all the better. Kaplan’s biography makes him come alive.

For the full Amazon URL see: Writing the American Songbook (amazon.com)

My Amazon Review of Bridgett M. Davis' "The World According to Fanny Davis: My Mother's Life in the Detroit Numbers"

 

Love and Capital in Motown

Baruch College creative writing professor Bridgett M. Davis has written a loving biography of her mother Fanny and along the way a partial autobiography of herself and the Black experience in declining Detroit through the prism of the subculture around the numbers game. (Note: I received this book as a gift and although I have an association with Baruch College, I have not met the author.) Fanny Davis moves her family from Jim Crow Nashville to Detroit in the mid-fifties and the author, the last of five children is born there in 1960. It is through her eyes and the research that she had undertaken we see the larger-than-life Fanny Davis.

After winning a big 500-1 payout to the tune of $25,000 Fanny has the cash to “buy” (actually a land contract of sale because the neighborhood was redlined.) a house and is also taken with the idea of at first being a numbers bookie and then a numbers banker. All of this is illegal. For the uninitiated, the numbers game involves betting on three-digit number that is derived from the last digits of a parimutuel pool in a given race. The odds of winning are, of course, 1,000-1 while the payoff varies between 500-1 and 600-1 making the expected value of a $1 bet 50 or 60 cents. Thus, there is huge “vigorish” for the house. However, the house faces the risk of ruin if too much is bet on the winning number. It is the success of this business that enables the family to grow up with a middle-class lifestyle.

The author was born in 1960, the youngest of five children and she is treated like a princess. She wears fancy clothes, has lots of shoes and most importantly many books to read. There is an early incident where her first-grade teacher questions the number pairs of shoes she has and further questions how her family makes its money. Fanny soon puts her into her place. We see similar incidents in high end department stores where store clerks question Fanny’s ability to pay. She then either roles out $100 bills or a stack of credit cards.

Fanny and other members of the numbers reinvest their profits back into their businesses and into the community at large by founding legitimate businesses and funding the local NAACP and Urban League chapters. Capital accumulation occurs at different levels.

In 1972 new competition enters in the form of a legal state lottery. Fanny had to adjust her whole business strategy. In the parlance of today’s Wall Street, she creates a derivative bet on the state lottery. She allows people to bet with her on the same numbers, but she pays out 600-1 instead of 500-1 and because the activity is illegal the winning better avoids the income taxes associated with winning in the formal state lottery. Further the risk of ruin is gone, because if there were excessive betting on a given number, she laid off the bet with the official lottery. Again, using Wall Street terminology this is called delta hedging. In a different era, Fanny could very well have run a casino or worked as a trader on Wall Street. To highlight her acumen in that regard, she bought Chrysler stock when it was on the brink of bankruptcy in 1980.

We also see her family in turmoil as three of her children die young, her divorce from her first husband who moved with her from Nashville, and her dying of cancer. The author brought tears to my eyes as she recounted her Mom’s death.

All the events in the book are going on amidst Detroit’s long wave decline. The auto industry is collapsing, whites are fleeing the city and the crime rate skyrockets. Indeed, the house that the author grew up in was later vandalized and ultimately bulldozed. The triggering event was the 1967 riot where the Army was called in. I would disagree with the author that the passage of the 1968 Fair Housing Act was the trigger for the white flight. In my opinion the white flight was already underway and that the Fair Housing Act did not have the perverse effect of advancing racial segregation.

Although I largely focused on the business side of things, Bridgett Davis’ endearing story of her Mom is an American story of success and capital accumulation against the backdrop of a major American city in decline. I would end by noting that this story will soon(?) be a major motion picture. I can’t wait.

For the complete Amazon URL see:  Love and Capital in Motown (amazon.com)

Trump's Pardonpalooza Coming Christmas Eve

At a time when Christians worldwide are celebrating the birth of their savior and peace on earth and goodwill toward men, Donald Trump is likely to unleash a pardonalooza on the most corrupt and venal people he has associated with. Trump maybe so full of the Christmas spirit that he will actually pardon himself. We will see. What better time to hide his perfidy than on slowest news day of the year. My advice is that newsrooms should have more than a skeleton staff on duty that long weekend.

My Amazon Review of Nicholas Sargen's "JPMorgan's Fall and Revival: How the Wave of Consolidation Changed America's Premier Bank"

 

A Reflection on the House of Morgan

 

Nick Sargen, longtime Wall Street economist and a friend and former colleague, has written a personal memoir of his working at JPMorgan, a history of the financial markets from 1978-2005 and a too endearing recent history of JP Morgan and the strategic issues it faced in the late 20^th century.* To me it is a misnomer to call JPMorgan “America’s premier bank,” in that as of yearend 1976 Morgan, with $28 billion in assets was the fifth largest bank holding company with roughly one-third the assets of Bank of America and standing behind Citicorp, Chase Manhattan, and Manufacturers Hanover. Simply put JPMorgan’s past was brighter than its future.

 

Sargen arrives at Morgan in early 1978 with an economics Ph.D. from Stanford after a stint at the Federal Reserve Bank of San Francisco where he specialized in international economics. He is thrust into a rapidly inflating global economy and the world of sovereign lending to Asia and Latin America and is taken under the wing of the banks lead international economist, the highly respected Rimmer De Vries. In the early 1980’s Morgan had a virtual murderers row of economists that included Dick Berner (later Morgan Stanley’s chief economist), Bill Dudley (later Goldman Sachs’ chief economist and later President of the NY Fed), and Steven Roach (later Morgan Stanley’s chief economist). It was quite the intellectual hothouse.

 

By 1982 the American banking system and JPMorgan found themselves facing the imminent default of a host of Latin American countries as their scheme to recycle petro-dollars went awry. For all practical purposes the banks were insolvent. Sargen whose early warning system at the San Francisco Fed signaled the crisis, was not heeded at Morgan and elsewhere as the lure of high spreads dazzled the commercial banker of that day. To me, of all banks, Morgan should have stayed away given its experience with the Dawes Plan of the 1920s which recycled German reparations payments. Morgan partner Tommy Lamont was in up to his eyeballs with German loans. Of course, that all came crashing down when the New York call money market sucked money in from all over the world and the Fed’s 1929 tightening brought that episode to an ignominious end. The Volcker tightening of 1979-82 had the same effect. Simply put, Morgan should have known better.

 

Sargen describes a very insular and elite coat and tie “WASP” culture that only hired from the best of schools. There is no way Morgan would have hired me as a Jewish street kid from Queens with a UCLA finance Ph.D.  Although it was somewhat of a culture shock when Sargen was lured away from Morgan to the rough and tumble shirt-sleeve culture of Salomon Brothers. Sargen arrived in 1984 and I arrived there two years later. There Sargen learned the power of Salomon’s trading floor and he was shocked to see the firm’s chairman John Gutfreund sitting at open desk right on the floor. A far cry from JPMorgan. While there Sargen witnessed the collapse of the dollar, the 1987 stock market crash and the Brady Plan for Latin debt and Salomon’s infamous treasury scandal. By 1991 he was looking for greener pastures and ended up running money for Prudential and then in 1995 he returned to Morgan to be the chief strategist for its Private Bank. All the while he keeps up with the fits and starts problems facing Morgan as it enters investment banking.

 

Sargen rightly notes that Morgan’s strategic dilemma was that its core strength of banking for America’s top corporations was being disintermediated by the Wall Street investment banks who picked off its clients by offering better terms and conditions via the short-term commercial paper and long-term capital markets. Morgan under the leadership of Lew Preston and Dennis Weatherstone understood the problem and began to build an investment bank skirting around the requirements of the Glass Steagall Act that limited commercial banks from underwriting securities. They were successful to a degree, but at great cost. According to Sargen, Morgan’s biggest strategic mistake was not buying State Street Bank in 1990 when it had the chance.

 

With the late 1990’s bull market in full swing Morgan is left behind. All the action is in the new economy, while Morgan is wedded to the old economy. Its stock lags and of a sudden Morgan becomes takeover bait. Sargen cites an interesting vignette when Morgan invites twenty something TheGlobe.com CEO to address their annual managing directors meeting. Krizelman addresses the crowd in jeans and a tie-dyed T-shirt. The game was over, and Chase Manhattan Bank would soon acquire Morgan. However, the culture class was enormous with Chase and Morgan people hating each other’s guts. It would only settle down after JPMorgan Chase would acquire Bank One bringing with it a star banker named Jamie Dimon. It would be Dimon who restores the franchise to its past glory, but in a completely unrecognizable incarnation. Sargen would be long gone by then.

 

Because I am a finance and history geek and was involved in many of the big events discussed in the book, I thoroughly enjoyed reading Nick’s account. However, I am not so sure about the general reader. It would have helped if either there was more discussion about all the Morgan executives named in the book, or alternatively dropping a host of names. It was confusing at times. Further it would have helped to have annual data on Morgan’s profitability metrics and stock price. Nevertheless, from my biased perspective it is well worth the read.

 

*-I received the book from Sargen.

For the full Amazon URL see: A Reflection on the House of Morgan (amazon.com)

 

My Amazon Review of Paul Jankowski's "All Against All: The Long Winter of 1933 and the Origins of the Second World War"

 

From Postwar to Prewar

 

Brandeis University history professor has written a very dry academic book about the origins of World War II through the twin lenses of the 1932-34 League of Nations Geneva Disarmament Conference and 1933 London World Economic Conference. He spends most of the book on the disarmament conference. He not only covers the major powers, but he also covers Poland, Hungary, Czechoslovakia, and Yugoslavia.

 

By mid-1932 the Versailles settlement was breaking down. Germany was given the right to rearm and reparations, for all practical purposes, were eliminated at the Lausanne Conference. Thus, before Hitler Germany was free to become a great power once again in Europe.

 

The lynchpins of the postwar era were the notion of collective security via the League of Nations, the Locarno Treaty which formalized borders in the west and the Kellogg-Briand Pact which in principle outlawed war. On the economic side the Dawes and Young plans of 1925 and 1929 established an orderly process, at least temporarily, for German reparations payments and the recycling of capital through American loans. This gives lie to the notion that the United States was isolationist in the 1920’s. Further the U.S. with observer status was an active participant in the disarmament talks in Geneva.

 

Nevertheless in 1931 Japan invaded Manchuria and established the puppet state of Manchukuo. The League sat idly by and allowed it to happen, so much for collective security. With Mussolini’s Italy hellbent to seize Ethiopia and Stalin’s Russia beginning to develop a major armaments industry, the disarmament conference was in major trouble. A rearmed Russia and Germany force the states in between to rearm as well. Simply put everyone is going their own way.

 

The fatal conceit of the disarmament conference was that if Europe could not agree with a Locarno in the east that would confirm the borders there, how could it possibly agree on a general disarmament. The coup de grace, is of course Hitler coming to power with his very aggressive aims towards eastern Europe.

 

The World Economic Conference does not get the attention it deserves. Faced with a global depression the leading countries of the world got together in London in June 1933. Britain left the gold standard in 1931, the U.S. had just left it in May 1933, and under the weight of the economic collapse and worldwide protectionism international trade went into a tailspin. The goal of the conference was to restore trade and some form of the gold standard. It failed miserably when President Roosevelt blew up the conference with a telegram and sent the American delegation home. Keynes applauded Roosevelt’s decision because any return to gold, would have put the global economy into a straitjacket by preventing the needed reflation. From the point of view of economics Keynes was correct, but from the point of view of politics it sent a signal to Hitler and Mussolini that the U.S. had withdrawn from Europe. Collective security was done for with the U.S. withdrawing from the world. America’s true isolation was in the 1930’s, not the 1920’s. As a result, the world moved decisively from a postwar to prewar world.

 

Jankowski’s lessons for today are obvious. America’s withdrawal from the world and Britain’s from Europe contain the same seeds of destruction we witnessed in the early 1930s. An all against all world ends badly. I only wish Jankowski wrote with more drama.

For the full amazon URL see: From Postwar to Prewar (amazon.com)

Trump's Big Lie and the Legacy of 1918 Germany

Donald Trump is following the playbook of the 1918 German Right with his big lie that the 2020 election was “stolen” from him. Unfortunately, by saying it loud and saying it often a good chunk of his followers believes him and have sent him an astounding $175 million since election day.

 

Yesterday Jochen Bittner outlined the German history in an Op-Ed for the New York Times. (See Opinion | 1918 Germany Has a Warning for America - The New York Times (nytimes.com)  Bittner gets most of his history right with the German Army facing imminent defeat in World War I, Kaiser Wilhelm II abdicates on November 9 leaving the Reichstag in charge of the new Weimar government. It is that government believing in Wilson’s “Peace without Victors” and his Fourteen Points that signs an armistice with the allies on November 11. Where Bittner gets it wrong is that he said that armistice was signed by the German military. The key signatory was Mathias Erzberger, a politician for the Catholic Center Party, a foreign office official and two military officers representing the army and the navy. Erzberger would be assassinated three years later by a rightwing hit squad.

 

Because Germany was never physically invaded a rightwing myth was propagated that defeat came from a “stab in the back” orchestrated by the social democrats, the communists and, of course, the Jews. Instead of quickly dying out the myth grew after the Allies imposed harsh terms on Germany at Versailles in June 1919 and it became part and parcel of the vocabulary of every rightwing party, especially the Nazis. My guess is that like 1918 Germany, Trump’s $175 million is to keep his “They stole it” myth alive.

 

Perhaps more insidious and not mentioned by Bittner, was the success of the German Right in naming the Weimar government as “the November criminals.” This I fear is what Trump will do to President-Elect Biden and the Democrats next year. Once someone is branded a criminal anything goes, including violence. You can already see it in the physical threats made against former Trump officials and the dedicated state and local officials involved in the vote counting and certification processes.

 

We live in scary times and it behooves the Democrats and clear-eyed Republicans to go all out in counteracting Trump’s big lie.