Posted on 01/31/2009 11:38:31 AM PST by Publius
Synopsis
The bar is the most expensive in New York. Located on the 60th floor of a skyscraper, it looks like a cellar, even forcing its patrons to stoop to get across the room. Orren Boyle of Associated Steel, James Taggart, Paul Larkin and Wesley Mouch, now identified as Hank Rearden’s lobbyist in DC, all meet to discuss the order of Rearden Metal from the railroad.
Boyle explains to Jim that the delay in supplying steel to the railroad is due to his inability to obtain iron ore, thanks to played out mines, worn out equipment and general transportation problems. Because of the interdependency of business, he wants others to help shoulder his burdens. “The only justification of private property is public service,” says Boyle. He believes that Rearden Metal is dangerous because of its lightness; the National Council of Metal Industries has created a commission to study it.
Jim states that when the people are agreed on something, how dare anyone dissent from the popular will? (This is to become a recurring theme.)
Boyle says that while monopolies are bad, so is unbridled, destructive competition. He is upset that Rearden can always get the material needed for his mills while others can’t. Rearden’s ability and success are destroying everyone else in the steel business; therefore, there should be a national industrial policy aimed at giving everybody a fair shot at iron ore. He wants Taggart’s help in DC.
But Jim wants something for himself. Is it fair at a time of transportation shortages and railroad bankruptcies that there is duplication of service and unbridled, destructive competition from newcomers in areas where the old established railroads have always held sway? Boyle agrees that his friends at the National Alliance of Railroads might weigh in on this.
Larkin, who apparently has some pull in DC, is uncomfortable about betraying his friend Hank Rearden, but in the face of historical necessity he sees he may have to.
Wesley Mouch says little to nothing the whole time except to agree with what everyone else has said. His disloyalty to his boss is not mentioned.
The deals are sealed.
Boyle says he has visited the San Sebastian mines in the People’s State of Mexico, the last piece of private property left in that benighted country. Taggart asks about the rumors of imminent nationalization and Boyle labels them as malicious slander.
Boyle is upset about the poor rail service to San Sebastian provided by Taggart Transcontinental, especially the fact that there is only one passenger train per day, using ancient coaches hauled by an even more ancient wood-burning steam locomotive. Taggart isn’t aware of this but makes excuses to sound as if he knows what is going on.
There is a flashback explaining the relationship between Dagny and Jim and her friendship with Francisco d’Anconia. Dagny made the railroad run, while Jim worked Washington for favors and influence. Jim had built the line to Francisco’s mines at San Sebastian, but the line had never shown a profit. Jim’s friends had purchased large blocks of stock in Francisco’s enterprise. Their rationale for building the line was to help the people of Mexico, not to mention currying favor with the communist government which they believed was the wave of the future. Profit was secondary.
This mis-allocation of resources is causing the more important Rio Norte Line to crumble, and because Taggart cannot service Ellis Wyatt’s oil fields in Colorado, Wyatt is moving his oil by the competing Phoenix-Durango Railroad.
The San Sebastian Line isn’t producing because the mines aren’t producing, but Francisco had explained that his mines were still in development. Dagny knows that Francisco had become utterly worthless over the past decade, but Jim still believes he can deliver. Dagny had been putting the worst assets of the railroad into service in Mexico because she believed the line was about to be nationalized, and Jim goes ballistic when she mentions this. He orders her to run better service in Mexico, but Dagny says she will have to reduce service on the rest of the network to accomplish it. Jim doesn’t want to make decisions or take responsibility, so Dagny resolves to continue providing service her way.
Leaving her office, Dagny stops at a cigarette stand in Taggart Terminal. The proprietor says that there are only a few brands of cigarettes available because most of the other brands have gone out of business. He notes that the people who rush through the train station seem to be haunted by fear. In his list of things wrong with the world, he ends by saying, “Who is John Galt?” Dagny is upset at hearing the phrase, and both of them dislike what people mean when they say it.
Eddie Willers eats in the company cafeteria with a nameless Rail Worker. He tells the Worker that the Rio Norte Line is the last hope for Taggart Transcontinental. There have been more accidents on the system; diesel locomotives are being lost, and United Locomotive Works is two years behind schedule in delivering new equipment. McNamara of Cleveland will lay the new rail on the Rio Norte Line once Rearden delivers. Eddie also tells the Worker of Dagny’s love for the music of Richard Halley. (The Worker is to play a critical role later, so let’s keep the discussion out of spoiler territory.)
Hank and Dagny’s Enemies
The previous two chapters defined Dagny Taggart and Hank Rearden, and now we meet the villains, all friends of Jim Taggart and a scurvy lot indeed. Orren Boyle was just a name earlier, but now he has a face and an ideology. We’ve heard that Hank employs a lobbyist in DC and now we meet him, or we would if he had anything worthwhile to say.
Concerning the ever quiet and discreet Wesley Mouch, is his last name pronounced “ouch” prefixed by an “M”, “mouk”, “mooch”, or the French “moosh”?
Railroads and Government Transportation Policy
A Canadian rail magnate once told me, “Railroads are a tool of government transportation policy.” From the earliest days of railroading, government at all levels got involved.
Early in the railroad age, the state of Pennsylvania launched the Main Line of Public Works, a plan to build a railroad that would pierce the Alleghenies and join the two halves of the state. After years of pouring money down a rathole and having little to show for it, the state sold the project to a group of financiers in Philadelphia who created the Pennsylvania Railroad, the “standard railroad of the world”.
States would grant corporate charters to one group of people for building a railroad in order to prevent another group of people favored by competing interests from building a different railroad. Favoritism and influence peddling were part of the game from the very beginning.
Abraham Lincoln, a railroad lawyer by trade, gave away vast tracts of the American West to railroads to raise the capital necessary to build across the continent and link the country together. This was a product of grand vision and even grander influence peddling.
Because railroads are so capital intensive, most rail entrepreneurs were financiers first, people who built their rail lines with equal parts BS and other people’s money. It was a rare man, like the real life Jim Hill and the fictional Nat Taggart, who did it the hard way, raising money outside of Wall Street. Most rail entrepreneurs had some facet of government policy on their side.
It had started almost at the very beginning of the United States.
After the War of 1812, the federal government decided it needed a transportation policy, and it concentrated that policy upon canals and roads, classified under the term “internal improvements”. The burning issue of that era was who was going to pay for them. One side took the position of private financing and the other favored the application of government largesse. The two-party system as we know it today coalesced around this issue.
With the arrival of railroad technology in the years before the War Between the States, government policy shifted again, both at the state and federal level. This was the great era of railroad building in America.
With the invention of the internal combustion engine at the beginning of the 20th Century, transportation policy shifted back to roads. This began the great era of highway building, culminating in Eisenhower’s Interstate Highway System, the greatest and most successful application of practical socialism in American history.
Today, with the highways saturated with trucks, there are signs that government transportation policy is poised to shift back to railroads again.
While Rand’s image of the lone entrepreneur building a railroad is certainly noble, it is also rare. Government was always a key player.
Hank Rearden, Bill Gates and Industrial Policy
James Madison built a constitutional prison for the federal government. By keeping taxation powers limited, there would not be much money to spend, thus keeping the government out of trouble. One thing the Framers feared was that an entire class of people would come to the seat of government to lobby for their share of federal largesse; the term used at the time was “rent seeking”. But the implementation of government transportation policy started an inexorable process.
During the Seventies, there was serious discussion of government allocation of resources to “sunrise” industries, as opposed to “sunset” industries. Financiers like Felix Rohatyn and industrialists like Max Palevsky pushed this idea within the Democratic Party. Jimmy Carter ran for president in 1976 touting government resource allocation under the title “industrial policy”.
In the book, it was mentioned that Jim Taggart was picked as railroad president by the board because of his pull in DC, thus making him a professional rent seeker for his company. The meeting in this chapter was aimed at using the federal government as a weapon against Hank Rearden because he was a success. Rearden’s own friend and paid lobbyist were in on it. The weapon itself was industrial policy, designed not to protect the people, but to protect other industrialists.
When the Microsoft antitrust suit was filed by the government, the current wisdom was not that Bill Gates had done anything wrong, but that he had failed to hire the right lobbyists in DC and pay off the right politicians and regulators. Gates’ crime, like Hank Rearden’s, was simply to be successful.
Some Discussion Topics
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Earlier threads:
Our First Freeper Book Club: Atlas Shrugged
FReeper Book Club: Atlas Shrugged, The Theme
FReeper Book Club: Atlas Shrugged, The Chain
Our vote on posting frequency is:
I think it’s a landslide.
Can anyone say "Global Warming is real: we have a consensus"?
This comes close to one of the sub-themes and a key underlying thread in the book. Reflect that Ayn Rand nearly died of starvation in what has previously been a bread basket of the new Soviet Union. Ayn Rand, for all her faults, hated communism and hated Marxism. Therefore, this comment can be tied into her disgust for all things Communist.
No one needs a justification to own anything. I own what I own by the sweat of my brow, not because I plan on using it for the good of anyone. This insiduously creeping Socialism spreads its first tendrils here - with everyone at the table nodding in agreement - why? Because no one at this table is proud of their work. They have no belief in themselves and obviously need the affirmation of others to have 'permission' to own wealth.
However.....and this is where things get tricky and come to today..... it is for thee and not for me! YOU must give, I should not be expected to lose anything - but YOU, YOU are greedy, and vile, and a hoarder, so YOU need to give, whilst I sit back and direct how your money should be spent. Sound familiar? Yeah, you know it does!
This is the world begotten by procrustean socialism, and a misplaced sense of human empathy.
It is hypocrisy, but it is also willful self-delusion. Modern parallel: Al Gore is telling us how to "live green", yet has an energy-munching mansion, flies in private planes, etc.
Another parallel: that stupid Ashton Kuchner "I pledge" video. Those people are living a much more extravagant, selfish life than I am, yet deem it necessary to preach to me on how to live a good life in service of "the greater good".
I really think all of these people who are truly greedy (Al Gore making money on his crusade) have to convince themselves that they are working for good.
It isn't just self-delusion, it is rationalization.
Check on Obama’s missing birth certificate?
“We cannot thwart the will of the people.”
James Madison (essay #10 of the Federalist Papers):
“Democracies have ever been spectacles of turbulence and contention, have ever been found incompatible with personal security or the rights of property and have in general been as short in their lives as they have been violent in their deaths.”
Thomas Jefferson:
“A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.”
Benjamin Franklin:
“Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.”
Alexander Hamilton:
“We are a republican government. Real liberty is never found in despotism or in the extremes of democracy, but in moderate governments.”
John Adams:
“Democracy never lasts long. It soon wastes, exhausts and murders itself.”
Excellent! And how did Orren Boyle build his empire? And Jim get to the top? Let's connect that to rent seeking.
Good. Rand is fond of symbols and metaphors. Connect this to the rotted out tree in the first chapter.
Read the entire book. Let 3 months pass, then read it AGAIN. Read slowly, digest the words of principal characters and then sicken as you recognize the insipid words of many of today’s political big-wigs. Study the pronouncements of certain “teacher’s associations” and be upset..be very upset at the words coming from those who are charged today with the education of America’s children. Turn another page and watch as “those who cannot” work the angles to gain control over “those who can and do”. Does it appear familiar? It should, it is happening. Those in our society who commit the crime of SUCCESS are to be scorned as greedy..those who proudly proclaim their “failure” are to be cherished and held as proud examples.
You think that ATLAS would NOT shrug? He already has. Atlas is the doctor who practices medicine with both eyes on legal ramifications of any decisions. Atlas is the manufacturer who ceases production of a given product because its blatant MISUSE will leave him financially responsible for some else’s stupidity. Atlas is the business man who refuses to allow his business to grow, because one additional employee makes him a target for government operatives, armed with .45 caliber regulations. Atlas is the teacher who if AFRAID to give extra help to the young student who MAY accuse him of mis-deeds.
No, Atlas IS indeed shrugging, look around, you may see him lift a shoulder.
On the money. There are different laws for them than there are for us. They are the truly enlightened, far beyond the concerns of mere mortals like us.
Thank you. The goal of this effort is to read the book slowly and understand just what Rand accomplished. This book is thickly textured, and once you get the issue of her prose style, it’s highly rewarding.
This quote is suspect because it doesn't sound like Franklin. It's a bit too short and direct for the old master.
And the word "lunch" didn't come into common use until the 1920's. The word was always "luncheon" until then. Franklin, in his era, wold have used the word "supper".
Orren Boyle built his empire with help from the gov’t. Jim got to the top by winning life’s lottery - he was born into it. Jim especially has done nothing to earn his wealth, and is clueless how to maintain his wealth. Without the help of his sister Dagny, Taggett Transcontinental would have already been out of business.
Don’t you love how Rand creates characters you love to hate?
OK, I’m cheating. I read the book twice before, and then, the day after the election, started listening to it on CD. It took me until nearly Christmas to get through 47 CDs. I’m not actually reading along again. The Catholic in me had to admit it.
By the way, listening to it, you get different layers of meaning, as well.
I own what I own by the sweat of my brow, not because I plan on using it for the good of anyone
And, I was born with nothing - and I still have most of it left
Man, she came up with some weird character names.
Oh Jim earns his wealth all right! He peddles influence. He schmoozes. He "seeks rent", as Madison would have put it. He sits down at expensive bars and engages in deals that will destroy good people.
Jim knows on which side his bread is buttered.
Bless you, my son. For your penance, say 20 Our Fathers, 47 Hail Marys, read John Galt’s speech again, and make a good Act of Contrition.
Nothing but a play on reputation.
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