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National Perspective

AIG bonuses spawn a new era of reviling business leaders

CONGRESSIONAL DISCONTENT Representative Barney Frank was so angered by the AIG bonuses that he threatened to name the executives' names. CONGRESSIONAL DISCONTENT
Representative Barney Frank was so angered by the AIG bonuses that he threatened to name the executives' names.
By Peter S. Canellos
Globe Staff / March 24, 2009
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WASHINGTON - President John F. Kennedy barreled out of a 1962 meeting with the chairman of United States Steel spouting a full head of steam. "My father told me businessmen were all [expletives], but I didn't really believe he was right until now," the furious president told his aides. "God, I hate the [expletives]."

Kennedy's feelings about corporate executives, coming 33 years after the stock market crash that set off the Great Depression, were entirely understandable to most Americans. In fact, in an ensuing battle over steel prices, the public overwhelmingly backed Kennedy - whose tactics allegedly included using the FBI to investigate steel executives' private compensation - rather than the industry, which preached faith in the free market.

For a half-century after Black Tuesday, Americans hated businessmen. Most adults of the period had direct memories of the crash, recollections of the Depression that followed, or were well-schooled in both by their parents. And the culprits in the catastrophe were absolutely clear to everyone: Greedy, dishonorable, self-interested Wall Street executives and financiers.

The anger that exploded last week over the million-dollar bonuses to AIG executives was well beyond that of the usual congressional show trial. Representative Barney Frank, chairman of the Financial Services Committee, threatened to name names even after the AIG chief suggested that exposure could risk the lives of the executives who received the bonuses.

All in all, the proceedings seemed to portend another generation or more of distrust of American business leaders.

Of course, a relatively quick turnaround could soften the blow. A renewed commitment to oversight by the Securities and Exchange Commission might help restore confidence in the markets. And the American people might once again adopt the pro-growth, antiregulation attitudes that recently prevailed.

But it's not likely that anyone will uncritically accept the notion that the stock market would naturally outperform other investments over the "long" run, a view that was so recently prevalent everywhere from the White House to the Personal Finance shelf of Barnes & Noble.

Nor will people be likely to view CEOs and others in the executive suite with the cool admiration that so many displayed since the 1980s. More likely, people will insist that the government try to limit executive pay, a move that could restore some balance to the wage scale but might also send top executives looking for "free market" havens overseas.

Such a prospect never bothered President Franklin D. Roosevelt, whose relationship with the business community was based on mutual contempt from the get-go.

"Rulers of the exchange of mankind's goods have failed through their own stubbornness and their own incompetence, have admitted their failures, and have abdicated," Roosevelt declared in his 1933 inaugural address.

Nearly 16 years later, Roosevelt's successor, Harry Truman, had merely to evoke memories of the Depression to bond voters to his Democratic ticket, despite widespread dissatisfaction with his own policies.

"You remember the results of that Wall Street Republican policy," Truman said in Dexter, Iowa, during his famous "Give 'em hell" barnstorming tour of 1948. "You remember the big boom and the great crash of 1929. You remember that in 1932 the position of the farmer had become so desperate that there was actual violence in many farming communities. You remember that insurance companies and banks took over much of the land of small independent farmers - 223,000 farmers lost their farms. That was a painful lesson. It should not be forgotten for a moment."

Truman won reelection, and suspicion of business continued to dominate politics until 1980; even the Republican presidents of the era were careful not to align themselves too closely to Wall Street. Dwight Eisenhower's concerns about the influence of big business were inherent in his warning against the military-industrial complex.

Ronald Reagan changed the tune. And Democrats, starting with Bill Clinton, also began to preach faith in the markets. Many post-Clinton Democrats were proud to declare themselves pro-business, aware that even middle-aged Americans, lacking any link to the Depression, did not have the broad-brush antipathy toward the executive class that prevailed in the mid-20th century.

Perhaps the distrust was excessive. Perhaps some of the high-tax, high regulation policies it spawned served to choke off economic growth. But as all Americans saw last week, hatred of big business wasn't a political trick invented by Roosevelt and his fellow New Deal Democrats.

It was the product of bitter experience.

Peter S. Canellos is the Globe's Washington bureau chief. National Perspective is his weekly analysis of events in the capital and beyond. He can be reached at canellos@globe.com.

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