The Driver - Part VIII - Insider Trading
Click here for Parts 1, 2, 3, 4, 5, 6 and 7 of my review of The Driver.
Chapter V featured another Ayn Rand relic - a character similar in some ways (although not in name) to one of the main characters from one of Rand's big novels. Once again I will not say too much for fear of giving away the plot. And once again Rand's character enjoyed fundamental improvements in complexity and depth. Rand's character was more thoroughly integrated into the plot than Garrett's character.
In Chapter VI, the reader is treated to the drama from inside the corporate board room, as the reality of the Panic (of 1893) becomes undeniable. In the midst of the action, as the corporate directors meet to decide the fate of the railroad, Garrett includes a passage that would be almost unthinkable to modern investors:
There is no law forbidding a director to part with his shares when the omens foretell disaster. It is commonly done in fact in the anonymous mist of the stock market, only you never mention it. The convention is that all stockholders have equal rights of parnership. But as directors are the few who have been elected by many to act as managing partners, and since it is necessary for managing partners to have first access to all information, it follows from the nature of circumstances that they are inside stockholders and that the others are outside stockholders; and it follows no less from the nature of mankind that the outsiders invariably suspect the insiders of selling out in time to save themselves.[p. 117]
Garrett could not know that he was describing something - "insider trading" - that would later become the scapegoat used by every political analyst as the New Deal and its stepchildren programs would careen from one economic disaster to another throughout the 20th century (and into the 21st). While Garrett discussed insider trading as an element of the Panic, he recognized that such trading was a result - not a cause - of the general chaos.
Part IX - a run on the U.S. Treasury.