During the fall of 2008, as the economy crashed and the phrase “too-big-to fail” entered the national lexicon, it became clear how dependent the U.S. economy was upon nebulous financial instruments such as credit default swaps and collateralized debt obligations. The rise of the financial sector partly reflected systemic changes in the nation's economy. No longer acting primarily in support of industry and manufacturing, finance had become an end in itself. Dubious accounting practices, high amounts of leverage, and even greater amounts of risk brought billions of dollars to those who adroitly captured markets, secured cheap labor, and ruthlessly streamlined business operations. Concurrently, these same forces brought ruin to millions of others. It is now clear how a deregulated Wall Street, peddling worthless mortgage securities, inflated a housing bubble and, at least in part, caused the Great Recession. Meanwhile, historians have produced many effective studies on the decline of the nation's industrial base, as well as the impact of globalization.Footnote ¹ Whether it was the oil shocks, the abandonment of the gold standard, the ascent of global competition, or the economic malaise that defined the 1970s, U.S. industry has waned and finance has assumed greater significance.

While this oft-repeated narrative contains more than a morsel of accuracy, it fails to consider the role that finance has played in American life over a far longer duration. Julia Ott and Jonathan Levy offer a corrective as they present the many ways in which investment, stock ownership, and financial risk have shaped the U.S. economic system. Together, they contribute to a burgeoning historiography on the growth and development of American capitalism.

Ott's When Wall Street Met Main Street explores the rather unlikely transition from a “proprietary democracy” to an “investor's democracy” (12). Advocates of republicanism, Ott maintains, were long suspicious of wealth accumulated through means other than production. This echoed an older conception of Jeffersonian democracy and the free labor ideology rooted in the Early National and Antebellum eras. These ideas held sway through the first decade of the twentieth century, and most Americans still viewed stock ownership and investment income as less honorable than manual labor. Private organizations such as the New York Stock Exchange (NYSE) were widely seen as disreputable institutions that created wealth through the manipulation of interest and debt, much to the disadvantage of small shopkeepers and farmers.

Only after World War I did the perception of investment income and the NYSE evolve. The Woodrow Wilson administration financed U.S. involvement in the conflict through the aggressive sale of war bonds. Ott believes this was a tactical decision by the Democrats. After all, Wilson could have simply raised taxes on the wealthy or printed money. Instead, amid fears of radicalism and labor militancy, he fostered a national identification with the wartime state. Purchasing a share of the U.S. government was an effective way to demonstrate one's loyalty: “Investment both made and manifested citizenship, as the citizen-investor assumed full membership in the polity with his or her acquisition of federal war debt” (57). The strategy was successful, and by war's end over 80 percent of U.S. households had pledged to buy war bonds. For the first time a majority of the American public had invested their money; it made financial sense to do so. But more importantly, it solidified the bonds of citizenship and nationhood at a time when the United States was heavily comprised of first- and second-generation immigrants.

In sum, the War Loan campaign exposed Americans to a relatively stable, conservative outlet in which to invest. This proved to be the opening for corporations and the NYSE to advertise the alleged benefits of private investment to a public historically wary of financial speculation. Harvard economist Thomas Nixon Carver was perhaps the lead advocate of “New Proprietorship,” or the transition from a citizenry invested in government debt to one invested in private securities (127). Yet it was still far from inevitable that Americans would enter the securities market en masse. The decade of the 1920s was therefore pivotal, Ott argues. As unions clamored to solidify the gains achieved during the Great War, and radical ideologies threatened corporate control, reining in the newfound power of labor as well as the nascent welfare state was paramount. In these crucial years Ott finds that political and financial elites took decidedly “conservative—that is, antistate, anti-union, and antiregulatory—directions” (149). Though some of the nation's largest employers provided workers with what seemed to be an economic stake in the company through novel employee stock ownership programs, the investor's democracy failed to live up to its name. As Ott concludes, “In the 1920s, corporate and financial leaders offered the middle and working classes access to the instruments of corporate wealth but withheld the levers of economic power” (189).

Ott's epilogue connects the ascent of neoliberalism and financialization to this longer history. Over the past thirty years, stock ownership has become even more ubiquitous, particularly through mutual funds and defined-contribution retirement accounts such as the 401(k). Those who have had the disposable income to invest and “timed” the market effectively—or, some would say, luckily—have come out ahead. Unfortunately, there are millions more who have lacked the means to enter the market and have lost more than they have gained. The stagnation of wages; the ebb of organized labor; the gradual dismantlement of defined-benefit pension plans; and most obviously, the growing chasm between the wealthiest and poorest Americans suggest that today's so-called investor's democracy has subverted a citizen's democracy.

For Ott, the central tension resides in who or what should administer economic security in the near and long term. Should the individual, through private investments, retirement savings, and stock ownership, be wholly responsible for her or his security? Or, does society writ large have a responsibility to provide a modicum of security through the implementation of a welfare state? These questions dominated political discussions during the early-twentieth century as thoroughly as they do today; illustrating this stands out as one of Ott's primary contributions.

Ultimately, however, these questions pivot around the very notion of risk and how it should be managed. Jonathan Levy's Freaks of Fortune is thus an ideal companion to When Wall Street Met Main Street. While the latter explores the vexed relationship between a proprietary democracy and an investor's democracy, Levy demonstrates how independence and citizenship, as they were defined throughout the nineteenth century, relied upon an individual's ability to negotiate risk in a dynamic, rapidly changing nation. Both studies shed light onto the disparate and creative ways in which republican individualism and liberal personhood had to be reconciled within a capricious industrial economy that inherently threatened the safety and security of nearly every American.

Levy's award-winning study historicizes what John Maynard Keynes famously referred to as the “radical uncertainty” of capitalism (14). Through a dialectical process of movements and countermovements, Levy shows how men (indeed, the study focuses almost exclusively on men) dealt with the contingencies of industrialization. And just as the industrial revolution commodified labor, it also commodified risk. The latter led to the emergence of an array of financial products and new theories of social organization. Covering such varied ground in a single volume seems nothing short of herculean at best and treacherous at worst. But instead of presenting an exhaustive narrative of nineteenth-century financial history, Levy develops his argument through some well-chosen, demonstrative case studies. Despite their obvious differences, he skillfully connects New World slavery to the advent of life insurance and to the corporatism of the Progressive Era. Whether it was a slave revolt off the Virginia coast in 1841 or the Panics of 1873, 1893, or 1907, events revealed the instabilities of the so-called free market. Most significantly, they highlighted the agency of people, be they slaves, workers, financiers, or reckless speculators, rather than divine providence, in the vagaries of daily life. This alone represented a seismic shift in how Americans conceived of risk as well as democratic citizenship. The days were numbered when simply invoking a deity explained catastrophe.

Investing in human flesh and plantation slavery defined a perverse though profitable form of risk management for white men in the Antebellum South; meanwhile, life insurance and actuarial science emerged in the Antebellum North to stem the liabilities associated with industrial labor. After the Civil War, corporatism took center stage. This development, advocated by George Walbridge Perkins, receives the strongest treatment from Levy. In the wake of the financial panics, Perkins devised a corporate model that privileged cooperation over competition based on his confidence that social balance could be achieved through the consolidation of business. Peculiarly, this was his definition of “socialism” (265). More fundamentally, this required Americans to reimagine liberal notions of self-ownership through a new paradigm of incorporation, one seemingly at odds with the tenets of individualism. Accordingly, this anticipated “twentieth-century corporate welfare capitalism, which was distinct in some ways from the capitalism that came before” (265). Here, Levy's study comes full circle. While twentieth-century modes of corporate management may have been distinct, they nevertheless conveyed an uncomfortable irony in the nation's history of risk: the search for wholly realized, independent personhood had apparently led to yet a new form of dependency, this time upon the impersonal bureaucracies of welfare capitalism.

Over the past generation or so, cultural and social historians have partly defined themselves in opposition to the stodgy, top-down, and institutional histories of business and finance once prevalent in the discipline. But Freaks of Fortune and When Wall Street Met Main Street swing the pendulum in the other direction. Just as the “cultural turn” of the 1980s and ‘90s followed the “new labor history” of the 1960s and ‘70s, yet another turn has appeared, corresponding to the Great Recession and the ever-widening gap between the rich and poor. The history of American capitalism and its accompanying institutions and leading figures must then be reconsidered and, to some extent, prioritized. This opens up several exciting lines of inquiry and injects new life and urgency into the study of business and finance.

Some minor criticism falls not necessarily upon Levy or Ott, but instead, I assume, upon Harvard University Press, the publisher of both studies. It is disappointing that each contains almost no discussion of the historiography. The endnotes provide some assistance, but it would be useful to know more precisely how each author relates her and his work to some of the relevant scholarship. Levy, in particular, writes on topics and people that have attracted significant attention, notably the Creole case, Farwell v. Boston and Worcester R.R. Corp., Elizur Wright, and George W. Perkins. I suspect this was an editorial decision; for some it may enhance the books’ readability.

Levy's study is at times circuitous and a bit redundant in its prose. It nevertheless reconceptualizes nineteenth-century U.S. history through the narrow but focused lens of risk. And in this, it is as ambitious as it is insightful. Likewise, Ott never truly delves into the financial history of Main Street, as her title suggests, fixated instead almost solely upon Wall Street and Washington. But again, this is mild criticism given what the book accomplishes. Together, these two studies help constitute the bedrock of a new generation of scholarship written firmly in response to, and embedded within, the current neoliberal moment or what some have called a New Gilded Age.Footnote ²