Wolf of Wall Street

In 1891, with his Mother’s blessings, a 14-year old boy ran away from home in Acton, Massachusetts.  Needing help on the family farm, his father had withdrawn him from school, but the strong-headed boy refused and so, with $5 from his Mother, off to Boston he went to seek his future.  He found work as a “board boy” posting stock quotes at a Paine Webber brokerage.  Working six days per week, five trading hours per weekday and two hours on Saturday, he was paid $5 per week. 

96 miles north, but a lifetime away, the workers in Maine’s paper and pulp mills toiled 10 to 12 hours per day, 6 days per week, amidst deafening noise, excessive heat with high-pressure steam, and exposure to toxic chemicals like chlorine and sulfur dioxide.  The “machine men” were paid $18 per week, while the “rag women” earned between $4.80 to $6 per week.  

In 1890, only 45% of American workers earned an income above poverty level.  Children, as young as 4 or 5 years old, but often by age 7 worked eight to twelve hours per day, six days per week, to earn $1.  The Maine Memory Network reports, “Two million school-age children each worked fifty to seventy hours a week. Some of the children’s parents could not take care of them, so they were put in a place where they were forced to work while being contained by barbed wires.”  In 1900 1 out of every 5 children was employed, but to the Puritan mill and factory owners this was a social good, even a favor, providing gainful employment.   

Down in Boston, our “board boy” – quick with numbers and exceedingly clever – began frequenting the “bucket shops,” businesses that allowed bets on the rise and fall of stocks or commodities without actually purchasing the underlying contract; modern day prediction markets – Polymarket, Kalshi or Predictit – are high tech bucket shops.  

In 1892 he made his first bet on five shares of the Chicago, Burlington and Quincy Railroad, returning a profit of $3.12, for a 62% return.  By the age of 16 he quit his job and began trading full time, earning about $200 per week (the equivalent of $7,800 today).  To repay his Mother’s gift that helped him run away, he returned home with $1,000; she disapproved of his gambling, to which he explained that he was, in fact, “speculating.”  With his rare gift, he pioneered day trading.  

By the age of 20 he had achieved a 1,000% return from his trading, and was banned from Boston.  He moved to New York City, where he turned $10,000 into $50,000 in five days, and then, in 1901 at the age of 24, he went long the Northern Pacific Railway turning $10,000 into $500,000 (equivalent to $19.5 Million today).  Such is the extraordinary power of trading the stock of fictive persons. 

Back north in Maine, 1901, Hugh Chisholm’s International Paper Company controlled 60% of the American newsprint market, but espying an opportunity in the high-quality book and specialty papers, he established the Oxford Paper Company, its Rumford Mill producing both pulp and paper, about 44 tons of paper per day.  Through International Paper, Chisholm controlled the paper trust, while through Oxford Paper he had the monopoly on producing all postal cards for the United States Post Office.  

This is a story of “thought bearing animals,” real persons, using fictive persons – joint stock companies – to achieve dominance and power over their peers, the persons – men, women and children – who make things. 

With each passing year, our “board boy” grew stronger, until he became known as the “Wolf of Wall Street.”  1906, still in his 20s, he went short the Union Pacific Railroad before the San Francisco earthquake; anticipating a decline, he sold the shares and when their value went down he made a quick $250,000 profit.  During the Panic of 1907 he was short the entire market, making $1 Million in a single day. 

The panic of 1907 caused a severe nationwide recession, surpassed only by the Great Depression.  Bank runs caused widespread failures, jobs were cut and as credit dried up, industrial output dropped by 30%.  J.P. Morgan personally stepped in to bail out the entire New York Stock Exchange and to persuade the “Wolf” to stop selling.  The Wolf did, but then went long, buying back shares to earn $3 Million, on the rebound.  

To the clever and cunning, the fictive person can be beneficent.  Back north, in the river valleys of Maine, for real persons hardship only worsened.  On Wall Street, the Wolf could earn $1 Million in a day, while in Maine’s paper mills, unskilled laborers earned $1.50, machine tenders $2.50 to $2.75, while Foremen earned up to $3.50 per day.  With the market for paper weak, the warehouses full, International Paper Company and the Oxford Paper Company served notice that wages would be cut by 7.75%.  But the cost of living had increased 11% in two years, and so the Paper Makers Union respectfully declined the Company’s offer.  On 2 August 1908 the workers in Jay, Rumford, Livermore Falls and Orono went on strike.  

The Union made two serious errors in judgment.  The high inventory meant the corporations held the position of strength, so they shut down the mills entirely, laying off all the workers, including the Pulp & Sulphite Union members.  The Paper Makers Union had acted alone, not including the Pulp & Sulphite Union in their decision.  The corporate fictive person, using the strategy “divide and conquer,” easily argued they wanted to keep people working but had been forced to shut down.  Things only got worse.  International Paper rejected the Paper Makers Union demands and reopened the mills, the Pulp & Sulphite Union gladly returning to work, at a 5% wage reduction.  International Paper advertised for strike breakers, who took those Union jobs.  Capitalism does not work by majority rule, the real persons toiling in the paper mills lacked power; they were forced into a one-sided employment contract.  

This discussion about fictive persons versus real persons rests upon a legal cornerstone laid down almost 90 years earlier, neither in Maine nor Massachusetts, but in neighboring New Hampshire.  Trustees of Dartmouth College v Woodward is the landmark United States Supreme Court decision, in 1819, that established corporate charters are contracts inviolate and sacrosanct, protected by the Contracts Clause, Article I, Section 10 of the United States’ Constitution.  

The argument was over education, and the irony is that education emphatically is and has been of local control, per Amendment 10 of the Constitution. The state wanted to make the private college public, to benefit all of its citizens.  The State Supreme Court agreed, ruling in favor of the public good.  But on appeal, at the Federal level, private contracts trumped public education when the United States Supreme Court ruled 5-1 that the contract is unassailable, regardless of the public will. The Dartmouth ruling became the bedrock of American free enterprise, protecting and empowering the growth of private corporations.  

The fault line in that bedrock, however, is the myth that real persons are entirely rational actors.  That fault line emerged in 1776, not in the “City of Brotherly Love,” but in London, England where Adam Smith published The Wealth of Nations, the foundational text of classical economics.  Smith argued that “natural liberty” (free enterprise) was more effective and efficient than heavily regulated trade.  His famous quote is, “”It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

That idea eventually grew to embrace Homo Economicus (Economic Man) which defined real persons as perfectly rational, narrowly selfish agents driven entirely to maximize utility and personal gain; markets are efficient because they are wholly rational.  To his credit, Adam Smith cautioned that free enterprise, if unchecked, would lead to collusion and monopolies, “a conspiracy against the public, or in some contrivance to raise prices.”  In the river valleys of Maine, the fictive person Homo Economicus arguably did conspire against the better interests of the public, being the real persons.  

The Wolf of Wall Street was wise to that myth.  Extraordinary Popular Delusions and the Madness of Crowds is a history of financial mania and non-rational herd behavior, a seminal book published in 1841 that directly contradicts the cherished myth of Homo Economicus.  The Wolf studied that book closely, feverishly, which in part is why he went short the market – making fortunes – both in 1907 and at the Great Crash of 1929.  

Here at our homeschool academy, the working definition puts a premium on the multidimensional, rather than the mono-rational, person.  We embrace emotional intelligence more than narrow productive output.  

My son is the same age as was the Wolf when he ran away from his childhood home in Acton, Massachusetts.  My son can tour the river valleys of western Maine and see first hand the cause and effect of inviolate contracts and rational self interest of fictive persons.  My task is to broaden his understanding, to deepen his empathy, to prepare him for a world that seems increasingly out of balance, as if real persons matter only as mere workers to feed the industrial machine.  

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Red Bud covered with blossoms, Gaia shouts, “summer is near!”

The Page, part 1

In the Tarot, a Page represents youth, curiosity, beginnings and messages.  On the floor of the State of Maine Senate, Pages are curious youths, beginning their path, who carry messages among Senators while the legislature is in session.  To some, this may indicate politics is an occult practice, but I suggest that archetypes are omnipresent.  Let’s choose the encompassing inclusive rather than the narrow argumentative.  

My daughter was an Honorary Page, recently, on the floor of the State of Maine Senate.  At times boring, other times riveting, the Honorable Senators gave speeches extolling these or those constituents, but also argued over Digital Privacy laws, ICE and immigration, SNAP benefits and equal rights to food for all Mainers.  The YMCA Chicago was honored.  The YMCA was founded in Boston, so it was hard to understand why Chicago was celebrated, but the Senators’ praise was unceasing.   

Anne Carney – Senator for our South Portland District – chose my daughter because of her academic performance.  The dress code was “business casual” which my daughter nailed, in a style all her own.  I wore not the Carhartts of my day labor, but “family of origin” clothes: dress slacks, collared shirt, belt and a blazer.  But no tie.  

8am we drove north.  We made the obligatory stop at Starbucks, which speaks a foreign  language: “Venti iced chai with brown sugar syrup and brown sugar cold foam” is lost on me, so I ordered black coffee.  We arrived at the capital Rotunda by 9, went through security, then found the Senate chambers.  The Senators entered more or less around 10:15am.  The decorum was pure British, the gavel absurdly large, the session went for hours, until we left about 2pm to get pizza.  All-in-all a grand day.  

A painting of Abe Lincoln towers over the chambers, and quite a story lies behind that painting.  In 1819, Maine was the northern district of Massachusetts and petitioned for statehood.  But the slave states refused to allow a free state – one not allowing human enslavement – to enter the union.  A deal was made.  

Missouri would allow slavery.  Not for plantations but as small-scale farming and “hiring out” day laborers to urban St. Louis.  The enslaved labor grew hemp and tobacco along the fertile river counties of the mighty Mississippi, and worked as laborers, blacksmiths and domestic workers but were prohibited from marrying, learning to read or write, or testifying against white people.  Missouri as a slave state counter balanced Maine, as a free state holding firm the 12-12 balance on the floor of the United States Senate. 

Thomas Jefferson expressed deep alarm and described the Missouri question, “like a fire bell in the night, awakened and filled me with terror. I considered it at once as the knell of the Union. It is hushed indeed for the moment, but this is a reprieve only, not a final sentence.”

Heather Cox Richardson, a historian from Yarmouth, Maine writes, “Mainers were angry that their statehood had been tied to the demands of far distant slave owners, and that anger worked its way into the state’s popular culture. The opening of the Erie Canal in 1825 meant that Maine men, who grew up steeped in that anger, could spread west.”

West went the young men from Maine.  Elijah P. Lovejoy, from Albion, moved to Alton, Illinois, to launch an abolitionist newspaper.  A pro-slavery mob murdered him and threw his printing press into the Mississippi River.  His younger brother, Owen moved west and was elected, in 1854, to the Illinois state legislature, then became friends with an up-and-coming lawyer from Kentucky, the rail-splitter, Abraham Lincoln.  

Elihu Washburne, from Livermore, Maine went west to become a pivotal Illinois congressman, known as the “Indispensable Man” aiding Lincoln’s campaigns from 1854 until 1860.  Elihu’s brother Cadawallader moved to Wisconsin, and served three terms in the United States House of Representatives, while the youngest brother – William Drew – moved to Minnesota and served eight years in the state legislature, six years in the United States House of Representatives, and six years in the Senate.  Republicans all, the Washburns are the only family ever to send four sons to Congress, each representing a different state.

At the birth of the Republican Party, Maine men served on its front lines.  Again, Heather Cox Richardson explains:

In 1859, Abraham Lincoln would articulate an ideology for the party, defining it as the party of ordinary Americans standing together against the oligarchs of slavery, and when he ran for president in 1860, he knew it was imperative that he get the momentum of Maine men on his side. In those days Maine voted for state and local offices in September, rather than November, so a party’s win in Maine could start a wave. “As Maine goes, so goes the nation,” the saying went.

So Lincoln turned for his vice president to Hannibal Hamlin, who represented Maine in the Senate (and whose father had built the house in which the Washburns grew up). Lincoln won 62% of the vote in Maine in 1860, taking all eight of the state’s electoral votes, and went on to win the election. When he arrived in Washington quietly in late February to take office the following March, Elihu Washburne was at the railroad station to greet him.

The Grand Old Party spoke for equality for all, while the Democrats argued for white supremacy and oligarchy.  When Honest Abe was assassinated on 14 April, 1865, his Vice President, the Southern Democrat Andrew Johnson assumed command.  He vetoed the Civil Rights Bill to ensure Americans Black, Irish, Mexican, Italian, Chinese and Indigenous all should face discriminatory state laws.  Congress overrode his veto, but the words of Andrew Johnson ring true to some, still today:

• “It is upon the intelligent free white people of the country that all Governments should rest, and by them all Governments should be controlled.” (U.S. Senate speech on July 27, 1861) 

• “I am for a white man’s government, and in favor of free white qualified voters controlling this country, without regard to negroes.” (speech on January 21, 1864) 

• “The blacks of the South are … so utterly ignorant of public affairs that their voting can consist in nothing more than carrying a ballot to the place where they are directed to deposit it.” (Third Annual Message to Congress, December 3, 1867).  

• “I wish to God every head of a family in the United States had one slave to take the drudgery and menial service off his family.”

The Democrats then, the Republicans now, more than 150 years later we battle still the either-or of race consciousness.  Maine, where my children come of age, was forged and fought for on the ideal that all people are created equal.  Such was the cornerstone of my Daughter’s day as a Page, when she walked onto the floor of the State of Maine Senate, where Abe Lincoln towers overhead.  

In terms of the balance of power, there are 35 Democrats, 14 Republicans and 1 Independent Senators in the One Hundred and Thirty-Second Legislature.  On our day, there was vigorous debate between corporate rights and civic responsibility over LD 1822 “An Act to Enact the Maine Online Data Privacy Act.”  That shall be next week’s story.  

Bowl of Ammonia

Here at the Art Farm Homeschool Academy, I wear multiple hats, and some days require me to switch back and forth rapidly.  On Wednesday, I worked as Headmaster, Serpent of Caesar, pest control carpenter, and then Science Assistant.  

As the Serpent of Caesar, acting for and on behalf of a private school, I am knee deep in a lawsuit concerning its building with a leaking roof.  Ongoing for more than a year, it has been an all consuming slog, even though mine is a part-time job.

Late in the game now, we are working on a settlement where the roofer will repair its work.  Lawsuits are essentially about money – a battle to get the insurance companies to open their coffers – and so an in-kind repair, at no cost, is highly unusual.  The attorney – whom I shall call Themis – has said in 40 years of construction litigation, she has never seen a defendant offer to repair its failure.  That would seem generous, but the quid pro quo is that the roofer wants a release from all future claims concerning its work, and that legal document is no small task to wordsmith.  

Themis and I have been working toward that, and on Wednesday, surprisingly, the roofer’s attorney agreed to our proposed language.  What had progressed very slowly suddenly went live, and I needed the Board to approve or reject the Agreement.  

Over morning coffee, while work emails sailed inbound, I had been organizing my son’s day.  For language arts, his assignment was to read from “Letters to his Son by the Earl of Chesterfield on the Fine Art of becoming a MAN OF THE WORLD and a GENTLEMAN.”  The letters, written from 1739 until 1771, by the Right Honorable Earl to his illegitimate son served as a guide to etiquette and insights about diplomacy, politics and “the pursuit of excellence.”  The Earl’s son, born of a commoner, would never be fully accepted into aristocratic society, but the father was committed to his hope.  The Magister assigned for my son Letter III that describes the virtues of learning Greek, rather than Latin.  

So, while my Son read Lord Chesterfield, I worked on the legal settlement, until, at 10am, when my son and the Magister had their class on the Greek accent rules, I changed hats, became pest control carpenter and went outside to check on our house.  

My daughter had heard something scratching up in the attic above her bedroom. A serious problem.  The attic vent had come loose, which left a gaping hole into which some rodent had entered.  My only choice was to haul out the ladder, set it upon the porch roof, climb up to see who was there, and put the vent back in place.  But raccoons had lived in the porch ceiling last summer, and eaten through both the asphalt shingles as well as the boarding below.  Climbing up a ladder set upon the roof was fraught with risk but that rodent needed to go and the vent needed to be put back.  

The attic was empty, so I reattached the vent cover, but noticed a raccoon had taken up residence elsewhere.  They had left the attic – which was good – but moved above the porch ceiling – not good.  Our Pit Bull-Rottweiler rescue puppy was going ballistic at the sound of my climbing above, plus the smell of the Raccoon overhead. 

Pit Bulls are descended from the Greek Molossian “dogs of war” while Rottweilers are from the drover dogs of the Roman legion, used to herd cattle to feed the elite soldiers as they crossed the Alps into Germany.  Pit Bulls are ferociously loyal to their owner, so our puppy was literally climbing the walls to protect me.  

Raccoons are awfully cute, but we do not want them living in our house.  Eviction was needed.  A friend, from Vermont, told me that ammonia poured into a bowl is the trick because the rodent will move to get away from that smell.  So as our puppy howled running to and fro, I climbed up and poured one gallon of ammonia into a metal bowl set above the porch ceiling.  The Raccoon huddled in the far corner, hiding.   The ammonia worked. The porch is vacant again.  Truth is stranger than fiction.  I still need to close off the porch ceiling, but things have calmed down.  

Having finished the eviction, I went inside to work more on the lawsuit plus to help with science, which included recrystallizing kosher salt from our Red Cabbage Ph experiment.  In my son’s last class the Mother Tree had taught, “Ph is a measure of hydrogen in solution.  Solvent + Solute = Solution. Something that is water soluble is hydrophilic.  Something that is not water soluble is hydrophobic.  For the Ph Solvent is the water and Solute is the stuff added to create the solution.  Water is what communicates to life.” Let’s communicate to life!

My son poured the red cabbage solvent from the jar, which left the solute – the purple salt – at the bottom.  He scraped that out, spread it upon a plate to dry, then used a mortar and pestle to break the hardened salt.  Admiring his creation, he commented, “We took table salt which is a solid. Put it in a red cabbage liquid. Turned some amount into a liquid. Took it out and turned it back into a solid, by using gas, an evaporation, which is covering all three states of matter: liquid, solid and gas.”  I could not, in my wildest dreams, conjure that sentence so I am learning that he is factually correct.  The homeschooling goes surprisingly well lately.  

It is a curious fact that I am able to do this because I have a part time job, and am not allowed – by law – to earn much income.  Social Security functions by a little known algorithm >62 + <18 = 2.027x, where FRA is 67.  I am older than 62 and my son is 13.  Both he and I receive benefits, with a cap on my income until I reach full retirement age (FRA).  If you exceed that cap, the clawback is draconian, which means, in a culture driven to maximize income at all costs, my path is different. Time is on my side, plus just enough income, and time, for parenting as for life, is worth more than its weight in gold.  

Lord Chesterfield taught that time was the most precious asset, its “true value” was to “snatch, seize and enjoy every moment.”  We are in agreement.  

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Spring has sprung! Happy first Friday! Carpe diem!!!