FReeper Book Club: Atlas Shrugged, Wyatt's Torch

Dagny and Hank visit the county seat and discover that the Twentieth Century Motor Company is tied up in litigation with two owners vying in court for possession. Mark Yonts of the People’s Mortgage Company of Rome, Wisconsin, an S&L known for easy credit, had sold the company to a concern in South Dakota and had used it again as collateral for a loan from a bank in Illinois. When his S&L collapsed, he disappeared after stripping the factory of its assets. All records are gone due to a courthouse fire.

They visit Mayor Bascom of Rome who had sold the factory to Yonts. The mayor, whose ethics are flexible and has no room for principle, had looted the factory of Jed Starnes’ mahogany desk and a manager’s high class stall shower. He had picked up the factory from the crash of the Community National Bank in Madison. Eugene Lawson, the “banker with a heart” who had owned the bank, is now with the Bureau of Economic Planning and National Resources, working with Wesley Mouch!

It takes them a 200 mile drive to find a place where they can make a long distance phone call. Dagny reaches Eddie to ask him to send two engineers to Starnesville, but Eddie tells her in a panic that “they” are planning to kill Colorado.

Back in New York, Dagny and Eddie stash the mysterious motor in a vault under the Taggart Terminal.

Political chaos has broken out. The rail unions are demanding lower speeds and shorter trains. The states surrounding Colorado are demanding that they receive an equal number of trains as Colorado. Orren Boyle’s political action committee is demanding a Preservation of Livelihood Law that would limit Rearden’s mill output to an amount equal to his competitors. Mr. Mowen’s PAC is demanding a Fair Share Law to give equal supplies of Rearden Metal to all customers. Bertram Scudder’s PAC is demanding a Public Stability Law that would forbid Eastern businesses from leaving their home states. Wesley Mouch is issuing directives left and right based on a national emergency due to an unbalanced economy. Jim Taggart is firmly on the looters’ side, but says he is going to protect the railroad’s interests.

Hank discovers that Paul Larkin has not kept his word on the shipment of ore to the Rearden mill. He has been shipping it by rail, not lake boat, to support Jim Taggart’s failing branch line in Minnesota. And he has shipped it to Orren Boyle. Hank now works the back alleys of the steel business to find the ore he needs.

At home, Lillian enters Hank’s bedroom; she wants something. She speaks of the virtue of telling an ugly women she is attractive and how loving a woman for her virtues is meaningless. She notices that Hank has been less tense of late. As she embraces him, he tears himself away from her in revulsion. Hank asks her what is her purpose in life. She hints that simply being is enough for an enlightened person.

Dagny visits Eugene Lawson at his Washington office; he thinks she is there to beg favors of the bureau for her railroad, but Dagny disabuses him of that notion. Lawson feels no guilt in the collapse of his bank because he lost everything in the crash; he is proud of his sacrifice. He based his bank’s lending policy on need, not greed. Lawson put up the money for the purchase of the Twentieth Century Motor Company because the plant was absolutely essential to the region. While saying that the common worker at the plant was his friend, he can’t seem to remember anyone’s name. As Lawson sees it, he suffered for an ideal: Love. Dagny asks if he has seen that section of Wisconsin lately, and Lawson becomes defensive, blaming the rich. But Lawson remembers Lee Hunsacker, the man from Amalgamated Services, who bought the plant and is now living in Grangeville, Oregon. As Dagny leaves, Lawson states that he is proud that he has never made a profit. Dagny tells him that is the most despicable statement a man could ever make.

Lee Hunsacker lives in squalor, cadging free space from a working married couple in their home, and he blames the world for having never given him a chance. Jed Starnes was a backwoods garage mechanic, while Hunsacker came from the New York Four Hundred, the city’s richest and most prominent citizens. Hunsacker’s mission in life is to complete his all-important autobiography; he has no interest in pulling his weight at the house. His shot at the Twentieth Century Motor Company was his life’s dream. The Starnes heirs had run it into the ground, and he went to the bankers to get money to buy the plant, only to discover that the bankers were intent on profit! Midas Mulligan, the Chicago banker, had been particularly rough on him. Hunsacker says he was the only man who beat him.

Dagny remembers the legend of Michael “Midas” Mulligan, who had bankrolled Rearden Steel in its early days. You never dared mention “need” when you went into his office to ask for a loan. Seven years ago, Mulligan had vanished in the most orderly bank run in American history; everyone got his money back.

Hunsacker had applied to Mulligan for a loan, and Mulligan had told him he was unqualified to run a vegetable pushcart. So Hunsacker sued, and a liberal lawyer and an Illinois law aimed at emergency situations got him into court. Judge Narragansett ruled against him, but an appeals court granted him the loan. Mulligan shut down his bank and disappeared rather than comply. Narragansett retired and disappeared six months later.

Eugene Lawson granted him the loan, though, but it wasn’t enough. The new factory owners went bankrupt when Nielsen of Colorado put out a similar motor at half the price. Hunsacker’s top priority was to make the plant’s offices prettier for the sake of his mental attitude, to include that high class stall shower in his executive washroom. He blames the failure on outside conditions beyond his control. But he does have the location of the Starnes heirs: Durance, Louisiana.

The Durance police chief tells Dagny that Eric Starnes had killed himself years ago after a life of whining about his sensitive feelings. When a 16 year old girl spurned his advances and married someone else, Eric had broken into their house and slashed his wrists. Gerald Starnes lives in a flophouse married to a whiskey bottle and an attitude that the world is totally rotten. Ivy Starnes lives in a house by the Mississippi inhaling incense while sitting on a pillow on the floor. She is far above the mundane concerns of mere mortals thanks to a trust fund from her father. But she has a story to tell.

Jed Starnes was an evil man because all he thought about was money; the fact that he had built a successful business was immaterial. Ivy and her brothers existed on a more enlightened plane. So the heirs of Jed Starnes implemented “The Plan” for the factory according to a historical precept: From each according to his ability, to each according to his need. Everyone was paid the same, and there was an annual meeting for each employee to present his needs to the collective. But things did not work out; The Plan collapsed over four years into a morass of lawyers, cops and courtrooms. She can only remember the name of William Hastings, the lab chief, who quit as soon as The Plan was introduced and who moved to Brandon, Wyoming. He was the second person to quit, and she can’t remember the name of the first. Dagny’s impression of the visit is an encounter with pure evil.

Dagny meets Mrs. Hastings, now a widow. After working for some years in Wyoming, her husband retired. In the last two years of his life he went away for a month every summer and wouldn’t tell his wife where he was. Mrs. Hastings remembers the motor, however, and says it was designed by a 26 year old colleague of her husband. Mrs. Hastings had seen the designer as he left on a train along with an older, distinguished looking gentleman. More recently she had seen that same older gentleman working at a diner west of Cheyenne in the mountains.

Traveling to Cheyenne, Dagny sees the older gentleman cooking at the diner, and he cooks her the best burger she has ever tasted. She offers him the job of head of the dining car department at the railroad, but he refuses. Dagny is upset that she can’t find anybody who can do a job properly, and she gets compassion from the cook. She asks him if he knew the engineer at Twentieth Century, and after a pause he says yes. He tells her that she will never find him. The cook is Hugh Akston! Dagny can’t figure out why the leading philosopher of the age is cooking at a diner in the Rockies. He tells her to give up the quest and to check her premises; if there is a contradiction, then something is wrong. Dagny asks about the three students he and Robert Stadler had shared at Patrick Henry University; Akston says that nobody would remember the nameless third man. But he is proud of all three. Akston offers Dagny a cigarette and tells her that the designer of the motor will find her when he chooses. The cigarette is stamped with a dollar sign.

At the Cheyenne station, Dagny overhears a conversation about the latest directives issued by the government bureaucracy, apparently authorized by the National Legislature. Alarmed, she grabs a newspaper and discovers that Wesley Mouch has been very busy, issuing a set of directives due to a national emergency.

Dagny senses that Ellis Wyatt is going to do something rash; she tries to stop him before it is too late, but Wyatt doesn’t answer the phone. As her train comes to an emergency stop, in utter horror Dagny witnesses Wyatt’s oil fields going up in flames. His last message before his disappearance is, “I am leaving it as I found it. Take over. It’s yours.”

The CBS series “Picket Fences” aired in the early Nineties, and was set in the fictional town of Rome, Wisconsin. Producer David Kelley was hardly a conservative, and the show was about the town’s police chief and his wife, a doctor, who spent much of their time admiring their own liberalism. I can’t help but think of this as a slap at Rand.

Following the end of World War II, the bebop movement in jazz gave birth to the beatniks, who became one of the two rebel classes of the Fifties. (The other was the greasers.) Rand witnessed the rise of the beatniks, but gave them no space in the book. What she did, however, is astonishing.

A decade after the publication of the book, during the late Sixties, the hippies came along. These were the children of Timothy Leary who urged people to “Tune in, turn on and drop out.” They were all about detaching themselves from the annoying realities of mundane material concerns. It’s fascinating that Rand could so clearly anticipate the hippy movement with her portrayal of Ivy Starnes. Ivy lives in a house by the Mississippi River inhaling the vapors of incense – and God only knows what else – while she sits on a pillow on the floor contemplating her navel, no doubt in a lotus position. She is a practicing communist and will keep practicing until she gets it right. She attempted to bring Marxism to Wisconsin and destroyed a company and a town in the process.

But Rand’s other surprise is Lillian Rearden. When hippies of the Sixties were asked about their purpose in life, they would often reply that it was not necessary to achieve, but merely to be. Ivy Starnes would have understood this sentiment. Lillian says much the same thing to Hank when she is asked this question, and she is as far away from being a hippy as one could imagine. It’s impossible to visualize Lillian Rearden in jeans, peasant blouse with no bra, and sandals. (Even Gucci sandals!)

In many respects, the real life Lee Hunsacker was long-time Detroit mayor Coleman Young. Back in the early Seventies, he noticed that different sections of Detroit had differing degrees of investment, a phenomenon known as “redlining”. Bankers would invest in one area but not another, which meant that unelected bankers, not elected officials, were deciding which neighborhoods of Detroit would prosper and which would decline. Young was joined by other big city mayors, to include Dennis “the Menace” Kucinich of Cleveland.

What the mayors chose to ignore was that banks are businesses. They are not only interested in return on investment, but return of investment. People in certain parts of town understood the importance of paying the local bookie or loan shark, but didn’t feel the same sense of urgency when it came to paying the local banker. Had bankers employed Mafia soldiers armed with baseball bats to be applied to certain knees, these problems would never have surfaced. Young’s success came from framing the argument in terms of racism and civil rights.

So in 1977 Congress passed the Community Reinvestment Act. This gave the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Office of Thrift Supervision the authority to supervise banks to make sure they were not engaging in discrimination and to act as an approval authority for the opening of new branches, and for mergers and acquisitions. Banks were not being forced to make risky loans – that was strictly forbidden – but bank lending practices were now placed under government supervision.

In 1992 the other shoe dropped; the Federal Housing Enterprises Financial Safety and Soundness Act was passed. Up until this point, bankers were not required to write loans to those who could not meet the appropriate criteria. But now that the loans were to be backstopped by Fannie Mae and Freddie Mac, the banks were on the hook. And with these government guaranteed loans, the banks didn’t protest all that much. The price for rape was right.

Coleman Young didn’t go to court to beat Midas Mulligan, he went to Congress. And that led to our current crisis with sub-prime mortgages and the derivatives intended to protect them.

What does Lee Hunsacker have in common with German opera composer Richard Wagner? Wagner spent much of his time soliciting funds from wealthy Germans to subsidize him while he wrote great German operas, and he was not shy about describing his “music dramas” that way. Once someone gave Wagner money, he treated the donor shabbily, and the more the donor gave, the more contemptuous Wagner was. He had an attitude of absolute entitlement.

”I cannot live like a dog,” he wrote to Franz Liszt, “I must be soothed and flattered in my soul if I am to succeed at this horribly difficult task of creating a new world out of nothing.” Well, I don’t know about his soul, but Wagner did all right for his body. He imported lilac curtains and satin quilts and silk ribbons. He ordered huge quantities of exotic powders and delicate cold creams and perfumed bath salts. He installed soft lights and hung brocaded tapestries and put up Chinese incense burners and kept his music scores in red velvet folders. He filled his house with golden cherubim and ivory figurines and hand-decorated porcelains. After that, composing was a snap.

At least, Wagner delivered on his promises. He not only reformed German opera, gone dissolute after Mozart and Beethoven, but completely reformed the art of opera, influencing Verdi among his contemporaries, and those who came after.

Lee Hunsacker is Richard Wagner without the talent. He needs pretty colors in his office to be properly inspired, not to mention that classy stall shower. He is contemptuous of those who would help him, and his failures are always somebody else’s fault. And he didn’t write one single opera.

Howdy, Pub’!

So we’ve made Chapter 10, Wyatt’s Torch, one of the most significant chapters in Atlas Shrugged. Chapter 10 is a quest chapter, a series of episodes describing Dagny’s search for the engineer who created the mysterious motor that Dagny and Hank found in the wreckage of the Twentieth Century Motor Company. Each step along the way helps us fill in the picture of what happened there to cause the company’s downfall, the abandonment of the motor, and the crippling poverty now gripping the surrounding countryside.

Our first stop is the decaying community of Rome, Wisconsin, (the Rome of AD 476, perhaps, that has not fallen but is in the hands of the barbarians) wherein one Mayor Bascom presents an argument that is critical to the understanding of the economic and philosophical underpinnings of socialism.

Within a long and frightening list of characters and events chronicled in the next few chapters is Rand’s own Bernie Madoff, a fraudulent financier named Mark Yonts:

“He wasn’t the kind who ever operates anything. He didn’t want to make money, only to get it.”

That didn’t, of course, prevent the Mayor from helping Yonts’s plunder:

“There’s plenty of laws that’s sort of made of rubber, and a mayor’s in a position to stretch them a bit for a friend. Well, what the hell? That’s the only way anybody ever gets rich in this world” – he glanced at the luxurious black car – “as you ought to know.”

“Property is theft” said Pierre-Joseph Proudhon, the proto-anarchist. (He also stated that “Anarchy is Order” in Confessions of a Revolutionary. A bit of trivia there – I capitalized both nouns in the second sentence to highlight the origin of the “circle-A” logo that anarchist kiddies like to spray-paint on vertical surfaces, raging against the capitalist machine with weapons purchased on special from Costco at $1.39 a pop). Interesting fellow, Proudhon. Before his breakup with Marx he was quite the thing in post-revolutionary France, at one point attempting to institute a curious scheme for the redistribution of wealth - a bank that obtained its money from the evil capitalists through an income tax and lending it to the workers at what amounted to sub-prime rates of interest. It failed, of course. Surely nobody would be stupid enough to try that in the United States? All that we learned from it is that folly renamed and taken to a national scale is still folly.

This fundamental article of faith, of received truth underlying socialism is that wealth is theft; that any movement from the “natural” even distribution of wealth is illegitimate, that the wealthy are ipso facto criminal, and that as such it is not a criminal act, but one of “social justice” to steal it back on behalf of the people (and take a prime cut off the top for being clever enough to figure the whole thing out). I’ve never run into a thief yet who didn’t consider himself cleverer than his victims. Clearly the Mayor feels he has the whole thing figured out, and Hank has to restrain his hands from the Mayor’s throat.

A crooked financier, and next a failed bank. The reader is to be forgiven for suspecting that Rand owned a crystal ball.

“Some say it was this motor factory that broke the bank, but others say it was only the last drop in a leaking bucket, because the Community National had bum investments all over three or four states. Eugene Lawson was the head of it. The banker with a heart, they called him.”

This is the same Eugene Lawson who is now working with Wesley Mouch at the Bureau of Economic Planning and National Resources. The “banker with a heart,” meaning he made loans on a basis of something other than the likelihood of repayment. Banks that do that tend to fail, as we are learning so bitterly of late, having compounded one banker’s foolishness to all the banks by governmental mandate. Incredibly, Rand anticipated that as well.

One of Dagny’s stops involves a fellow named Hunsacker, who was attempting to raise the capital necessary to come into possession of the old Starnes/Twentieth Century factory. A hard-hearted, classic, and very successful banker Midas Mulligan, who disappeared under mysterious circumstances seven years ago, turned him down as incompetent to make enough money for repayment. As if that were the primary criterion, instead of ”Need, not greed,” as Eugene Lawson puts it later. And so what does Hunsacker do? Why, he sues, of course:

“…the state of Illinois had a very humane, very progressive law under which I could sue him…I had a very smart, liberal lawyer who saw a way for us to do it. It was an economic emergency law which said that people were forbidden to discriminate for any reason whatever against any person…[Judge Narragansett threw it out]…but we appealed to a higher court – and the higher court reversed the verdict and ordered Mulligan to give us the loan on our terms.”

We’re living this part of the chapter, and notwithstanding what Marx said about it, the first fictional occurrence of this history was the farce and the second, real one, the tragedy – a government forcing banks to lend money at an unacceptable risk for criteria other than ability to repay, and an ensuing default when the borrower proves incapable of generating wealth sufficient to meet his obligations. It took half a century for this to grow from a fictional tadpole to a real-world Godzilla, but grow it did. This was not prophecy, it was a necessary consequence of the sort of corruption she was positing and that the United States came later to embrace.

Mulligan paid off all of his creditors and got the heck out. We’ll meet him later. But lest anyone think it outlandish that a bank could be punished for not making loans at unacceptable risks I offer that individual This Story. Once again, reality has caught up with fiction.

Dagny next tracks down the Starnes siblings, offspring of the entrepreneur Starnes who founded the Twentieth Century Motor Company. They ruined it within a few short months following a set of precepts that make an observer of 20th-century history shudder with recognition. After Starne’s death his children actually tried to manage the firm on the Marxian basis of “From each according to his ability to each according to his need.” Literally. The factory was run by workers’ councils – the Russians call these “soviets” – who adjudicated salary on the basis of the employees’ abilities to state their need. Naturally where need was rewarded and achievement punished the achievers departed very rapidly and the needy remained to divide the pie, dwindling because those capable of replenishing it were gone.

Lenin actually tried something like this between 1918 and 1921. His industries went broke nearly as quickly as Rand’s fictional one, and the upshot was a new, “realistic” approach named the New Economic Policy. But along with this was a subtle difference that Trotsky pointed out in The Revolution Betrayed that “to each according to his need” was shown not to be a feasible principle during this “stage” of historical progress toward communism. It became “to each according to his work,” and naturally that work included a premium on the activities of the ruling class, to their enrichment. Stalin followed this with full collectivization and central direction, after which the workers’ soviets went the way of the workers’ councils at the Twentieth Century Motor Company. Some of their inhabitants were stood against a wall and shot, blinking, never understanding why their socialist fantasyland had such a grim ending.

In the event, however, one of the Starnes heirs did manage to leave with some of her fortune intact and all of her self-righteousness. Djilas’s “New Class” always does. Dagny manages to keep her jaw from dropping at this cold recitation of ruin.

Dagny heard a cold, implacable voice saying somewhere within her: remember it well – it is not often that one can see pure evil…

The result of this ethical and economic catastrophe was the broken bits of a revolutionary motor residing in the rubble of the abandoned factory. They’d run out of things to steal, but what they ran out of first was the vision necessary to recognize the motor for what it was. Those capable of that left early on, disgusted. One of these was named William Hastings, the supervisor and defender of the young engineer who invented the motor. Dagny tracks down his widow, who gives her two interesting pieces of information in addition to verifying the connection with the inventor. First, that her late husband disappeared for one month each year, in the summertime, to where she does not know. And second, that she has seen the inventor himself in the company of a white-haired gentleman on a railway platform. Can this inventor be his mysterious third student, the friend of both Ragnar Dannerskjold and Francisco d’Anconia?

Dagny is given a lead to the older man (with rather improbable precision) by Mrs. Hastings, and she tracks him down to a diner in which the quality of the food, and everything else, is high enough for her to offer the cook a job. He declines. She ups the offer and still he declines, but she finds out that he is, in truth, the philosopher Hugh Akston. She is close to her quarry now, very close. But what on earth is Akston doing as a fry cook in the middle of Wyoming?

“What are you doing out here?”

“Making a living.”

“This doesn’t make sense!”

“Are you sure? …By the essence and nature of existence, contradictions cannot exist. If you find it inconceivable that an invention of genius should be abandoned among ruins, and that a philosopher should wish to work as a cook in a diner – check your premises. You will find that one of them is wrong.”

“Check your premises.” It is Aristotle’s iron law and the war cry of Objectivism. It is the answer to an individual who presents you with a logical conclusion that flies in the face of observed fact. Check your premises.

She started: she remembered that she had heard this before and that it was Francisco who had said it.

Akston’s other student. But Akston will not help her find the inventor. Dagny remains determined.

“I will find him.”

“Not until the day he chooses to find you – as he will.”

Dagny abandons her search out of a sense of honor, at least for the time being. Nothing she can do honestly will take her any closer to the elusive inventor of the motor. She returns to the frantic world of politics and industry to find a distraught Eddie Willers, who has been holding Taggart Transcontinental together with his bare hands, describing what to him is simply unbelievable:

“Dagny, you’re going to think I’m insane, but I think they’re planning to kill Colorado.”

He is correct. Eddie understands what the looters do not, that wealth is the product of achievement, not theft, and that when the achievement ceases or is deliberately prevented, wealth is no longer created. Eventually the theft ceases as well, because as we have seen at the Starnes company, there is nothing left to steal.

But to the looters – we may openly call them socialists by now, I hope - wealth is a pile of material goods that someone has amassed immorally, to be confiscated and divided by those who have established political control over it. They are killing Colorado because they cannot control it, and because it represents a threat to the piles of material goods they do control. And, on a deeper level, they are killing Colorado so that the achievers, who appear to them only as particularly skilled thieves (although not so skilled as themselves) will have nowhere else to go.

That is, parenthetically, the reason that communism – its own proponents state this – can only succeed if it is established on a worldwide basis. There must be no escape. That strikes me as a particularly revealing admission. If communism is, as Marx insists, the acme of human actualization, then why would anyone wish to escape from it? And yet every communist state ever established became a prison camp in pursuit of some mythical, never realized benefit to the prisoners. To the communist the inhabitants wish to escape because they are not yet perfect enough for the system. In no sense must the system be perfect enough for them. It is the collective, after all, that is supreme, not the individuals making it up. But in fact this is the death of the human spirit, not its transcendence, and that is the point Rand is attempting to convey in Atlas Shrugged.

And so the Bureau of Economic Planning and National Resources makes its move, and if this too sounds disturbingly familiar it ought to:

“The laws shouldn’t be passed that way, so quickly.”

“They’re not laws, they’re directives...there’s no time to palaver when it’s a national emergency.”

We have to remind ourselves here that it is a fictional character speaking this and not Rahm Emanuel, for whom such an emergency is not to be wasted. It is a complete enough package, to be sure. The railroads on which Colorado depends are to be limited in performance, the mills limited in output, existing firms prohibited from moving there, and the interest on the bonds they purchased in order to stay alive is placed under a moratorium for five years. And in addition the cost for all of this is to be covered by a special tax on the very people at whom it is aimed.

And, in reply, Ellis Wyatt makes his own move:

[Dagny recalled] two pictures: Ellis Wyatt’s implacable figure…saying, “It is now in your power to destroy me; I may have to go; but if I go, I’ll make sure that I take all the rest of you along with me” – and the circling violence of Ellis Wyatt’s body when he flung a glass to shatter against the wall.

“Ellis, don’t! Don’t! Don’t”

…In a break between mountains, lighting the sky…the hill of Wyatt Oil was a solid sheet of flame…later, she looked at his handwriting on the board… “I am leaving it as I found it. Take over. It’s yours.”

And so Rand strips us of the romantic hope that persons of achievement must always prevail over the obstacles presented to them by lesser men. It isn’t so. And a society corrupted to the point where it isn’t so, is committing suicide. Gone now is the hope for an industrial renaissance in Colorado, for the presumptive progressive ascension. It turns out that progress can also descend. And here, at the end of the first section of Atlas Shrugged, we realize which direction progress will be progressing.

Have a great week, Publius!

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.