Posted on 03/21/2009 7:41:56 AM PDT by Publius
Synopsis
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.”
”Picket Fences” and Rome, Wisconsin
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.
Beatniks, Hippies and Atlas
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!)
Lee Hunsacker, Coleman Young and the CRA
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.
Lee Hunsacker and Richard Wagner
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.
Victor Borge had a wonderfully droll, but absolutely accurate, view of Wagner.
”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.
Some Discussion Topics
Finally, what the barbarians of the Middle Ages and our current elite don’t understand is: What has already been created can be taken. However, if the person doing the creating doesn’t continue to create (either through death or disincentives) one winds up with a finite supply of goods that eventually disappear.
Once the creation of goods is killed, a society dies, because the skills required to keep a civilization going are lost. Those people who are left are nothing but savages, fighting over an ever dwindling supply of goods.
How do any of these easy-money lenders differ from George Bailey of the Bedford Falls Building and Loan?
Thanks for the link to the CNBC video. That was very informative.
Back in the fall, I started reading the role Wall St. had played in this crisis with the mortgage securities, but that video provided much more explanation. In reading some of your other comments on this thread, I suspect you and I might have similar views about what caused the economic crisis.
I don’t have sympathy for the people who lost their homes due to buying properties they could never afford and/or refinancing again and again. I’m a notorious penny-pincher; our house is relatively small, and our family has never taken a vacation. So, when I see the built-in swimming pools in their backyards, etc., and listen to how they lied about their incomes, I don’t feel sorry for them.
But, I never saw Wall St. as victims, either. They share the blame in this mess. Government also shares the blame, as Peter Schiff explains so well.
In “Atlas Shrugged”, Rand’s heroes are the businesspeople that produce something of value, like steel, a railroad system, sound loans, and more. I have to go back through the book or maybe earlier Freeperbookclub threads to find the lines I think she wrote that criticize the people who shuffle papers but produce nothing of real value. I don’t think I imagined those lines (or did I?). In any case, it might take me some time to find them.
I’ll be back later to respond to your other post and to reply again to Publius.
I believe that to be a very accurate analysis of what has happened and very well stated.
You are a fool for not understanding that the requests for bailouts are the result of the socializaion of business by the govenment as well as the lack of proper management of unionized labor.
I think that people no longer understand what a capitalist really is. Please read the book to find out.......
"... There's no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren't enough criminals, one MAKES them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. ......just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted -- and you create a nation of law-breakers -- and then you cash in on guilt. Now that's the system, Mr. Reardon, that's the game, and once you understand it, you'll be much easier to deal with."
p.411, Ayn Rand, ATLAS SHRUGGED, Signet Books, NY, 1957
That is what it all boils down to. That is where we are.
That has long been my observation about gun laws. They are written in such a way so as to make law abiding citizens who own guns criminals.
Yes! There is that and the income tax comes to mind as well.
The request for bailout is a result of socialization of business?! You sir are the fool.
place marker.
Aw, Jimmy Stewart is such a nice guy, you forgive him for dangerous lapses in banking practices.
That was me in a reply to another FReeper. I pointed out that we converted our economy from manufacturing -- which we moved abroad to take advantage of lower labor costs -- to shuffling paper assets from one pile to another. The leasing industry, which exists because of lines in the tax code, is a good example of this. So is the entire derivatives industry on Wall Street -- which has gotten us into a real fix.
......just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted -- and you create a nation of law-breakers --
and you added
That is what it all boils down to. That is where we are.
I don't agree that is where we are but I do agree that we're getting pretty darn close. The unenforceable part has me confused. It sounds more like name calling, not criminalizing.
A strategy that is in use and gaining popularity is jury nullification---
Jury nullification is an act of a jury (its verdict) intended to make an official rule, especially a statute, void in the context of a particular case. In other words, "the process whereby a jury in a criminal case effectively nullifies a law by acquitting a defendant regardless of the weight of evidence against him or her."
A juror is bound only by his/her conscience. There is no law dictating a jurors decision.
I have heard that the IRS doesn't go to a jury trial so I suppose that this process may not apply there.
Any thoughts on the impact if jury nullification were to gain widespread use?
They don't. Well, Bailey got the money back, I believe. I take some heat pretty much every Christmas time when I observe, Grinch-like, that Bailey forgot whose money he was playing with. That's actually a little fuzzy in the movie - his firm was founded with his father's money but apparently it was enough of a bank to warrant a bank examiner (and a potential arrest for Bailey). If it was depositors' money then his first ethical duty was to the people who had entrusted him with their life savings and not to the community at large, however much its life was enriched by his misfeasance. If, on the other hand, it was his own, then as far as I'm concerned he can lend it to anyone he likes for any reason he likes. In which case, however, you'd have to wonder why he'd be worried about a bank examiner. Aw, heck, it's a silly Christmas story, just roll with it. Bah. Humbug.
Right as always, Bill.
I confess I cry every year when I watch this movie, but it is typical Capra populist drivel.
I have, however, used JS’s explanation of why his depositor’s money is not physically located in his vault to clarify to my wife why it doesn’t matter which bank our money is deposited with, as long as the bank itself is sound, and FDIC is overseeing it. Of course, if these two circumstances aren’t met, it wouldn’t matter where it is. She just doesn’t grasp the nature of banking.
BTW, I look forward to your analyses each week, and especially so when we get to the chapter containing the real description of what happened in Starnesville. That, and Frisco’s disquisition on money are my favorite parts of the book.
Kirk
You're going to be a very happy camper two Saturdays from now.
LOL! Just finished that and packed it off to Publius - hope it doesn’t disappoint. I recall a little girl watching IAWL and yelling “jump, George! Jump!” at the bridge scene to the horror of her parents. I put her up to it. Heh heh...
I can tell you with absolute certainty that jurist do not like the idea one little bit as I have personally had more than one heated discussion with them about it. I can also tell you that it is my personal belief that it was the intention of our founders that jurors have exactly the power you describe - to judge both the facts AND the law - and make their judgments accordingly.
Objectivism is more closely aligned with Conservatism and Classical Liberalism than Liberalism.
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