Madoff Just Another Name in Long Line of Scoundrels
By GABE PRESSMAN
Updated 3:45 PM EST, Mon, Jun 29, 2009
Bernie Madoff is not the first villain in New York’s history to defraud people of their life’s savings.
He is one of the most brazen but not the only one to have preyed on unsuspecting investors.
Charles Ponzi’s scheme is looked upon as the model for the immense fraud perpetrated by Madoff. It happened in 1920 and, as journalism professor Mitchell Zuckoff wrote in the Times, Ponzi ‘’tapped into a widespread belief that prosperity was a new American birthright. When it collapsed, the public’s outrage was as much about the fear that some people would always be denied the brass ring as it was about the money they lost. After years of Americans believing that the stock market was a rising tide that would lift all boats, Bernard Madoff is living proof that the tide has gone out.’’
Jay Gould was one of the leading robber barons of the 19th century. He used dirty tricks, including bribery of public officials and watering stock, to take over the Erie Railroad. With his partners, he tried to corner the gold market but the scheme caused a financial disaster -- the panic of Black Friday, when the price of gold crashed. Thousands of investors were ruined and the public was outraged.
One of Gould’s cohorts was the infamous William Marcy Tweed, known in the history of New York rogues as "Boss Tweed." Among the dubious highlights of his career: stealing an estimated $200 million -- in 1873 dollars -- from the taxpayers. It was for that day a very large sum.
The robber barons included wheelers and dealers who made their fortunes in finance, railroads, real estate, oil. In New York’s modern history, the villains have been the robber barons of Wall Street.
NYU law professor Stephen Gillers told the Times: "We may never know who hurt more people, Ken Lay [the former CEO of Enron] or Bernie Madoff. It depends on how you count. Enron had more shareholders and creditors than Mr. Madoff had investors. But some of his investors were non-profit groups that helped others. We’ll still remember Madoff when Enron and Worldcom are just business school case studies.’’
Gillers points out that Madoff’s victims were friends and others who gave him their trust. And he betrayed them.
A history professor at the University of Georgia, Stephen Mihm, takes a different view of what happened. He says there’s a long tradition in American economic history of praising financiers and speculators in good times and turning on them when the economy goes bad.
Mihm says many Americans bought into the ethic of "something for nothing" that ruled the economy in the last decade.
He says "In times of financial booms and manias, the line between con men and the rest of us gets blurry, thanks less to people like Bernie Madoff but instead to law-abiding speculators who push the envelope. That’s true whether you’re talking about western land speculators in the 1830s, railroad speculators in the 1870s or the everymen who entered the stock market in the 1920s."
And yet the betrayal of close friends and associates -- and the blow to worthy charities dependent on Madoff investments for their support still seem overwhelming. Despite the fact that he has a lot of company among the charlatans of the past, Bernie Madoff has earned a firm place in history.
First Published: Jun 29, 2009 1:56 PM EST
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