Then, as now, a group of smart, conniving scam artists figured out a way to seize control of a leading company, and loot it. By creating so-called "upstream holding companies," which, through interlocking directorates, controlled multiple utilities, the stock manipulators of that era managed to enrich themselves at public expense.
Eventually, the scheme collapsed, there was much indignant harrumphing by the slippery politicians of that era, and the government banned upstream holding companies. All the good guys prevailed, the bad guys disappeared into poverty and obscurity, and the unruly financial markets were tamed for good by wise and beneficent regulators ... OK, that's not exactly what happened.
What happened, of course, was that a new generation of unscrupulous con men found a new generation of greedy marks to scam, and the game played itself out again (and again, and again and again ...).
Uranium stocks in the '50s. The go-go '60s. Jimmy Ling. Harold Geneen. Robert Vesco. National Student Marketing. Conglomerates. The '80s, with Drexel Burnham Lambert, Mark Milliken, junk bonds, hedge funds. The '90s -- long-term capital management. Convergent technologies. Dot.coms. Mark Cuban. The new new thing.
Get the point? It's simple; there's a sucker born every minute, and there will always be enough swindlers around to fleece the suckers.
And here's the real point: This is the way the world is. We may pretend to disapprove, but we like it just fine. We like it for the same reason that we play the lottery or hit Cripple Creek on Sunday afternoon to play the quarter slots.
If we really wanted tightly regulated, fraud-proof financial markets, we'd elect a bunch of Pecksniffian moralists to crack down on the crooks. But we like the stock market to boil over with irrational exuberance every few years, because it gives us (so we think!) a shot at getting rich.
A few weeks back, I was chatting with my cynical Republican cousin, Bert, who used to be in the oil bidness in Houston. I was waxing indignant about Enron, and expressing my solidarity with the unfortunate Enron employees who had seen their 401k's drop like a stone.
"Well," said Bert, "let's say that you had 10 grand in your 401k when Enron's stock began to run. And let's say that you rode it up to 400 grand, and then rode it back down to 20 grand, when you finally bailed. Would you think that you'd made 100 percent on your original investment, or that you'd lost 380 G's?"
Well, er, um ... of course I'd think I lost $380,000. And I would have, but only in the sense that a gambler on a winning streak loses when he's too dumb to leave the casino when the cards start to run against him.
A few years back, psychologists interviewed a number of penny stock traders -- folks who invest in tiny companies at the bottom of the corporate food chain.
These "investors" were asked whether they thought the penny stock market was rigged, manipulated or fraudulent. Every one of them thought so. And then they were asked if that made any difference to them. Not at all; as long as there was market movement, and the chance, however remote, of catching a ride up with the big boys.
The psychologists might as well have asked a group of slot players if they were aware that casinos make money.
It's easy to be philosophical when you're only risking a few thousand bucks on speculative plays. But it's a lot different when, as a retiree or a long-term employee, you lose the money that you'd set aside for your old age.
That's what's happened to Colorado workers at WorldCom and Qwest, who thought they were employed by intelligently directed, financially sound companies. It's still hard to believe that multibillion-dollar companies were managed as recklessly as a start-up Canadian mining play.
Face it: Our public policy reflects our darker nature -- a ramblin', gamblin' nation whose collective fantasy involves getting rich quick. The speculators, con men and snake oil salesmen who profit from our fantasy aren't bad people; they're just predators in our human ecosystem.
Mountain lions and wolves cull weak individuals from the herd; Ken Lay and Bernie Ebbers transfer assets from the weak and greedy to the strong and greedier.
Just part of Nature's grand plan, I guess ...