Hubris in the Street

By George Church

THE GO-GO YEARS by JOHN BROOKS

357 pages. Weybright & Talley. $10.

It was only a few years ago. Mutual funds were growing so fast that their chiefs seemed likely to become American zaibatsu. Conglomerateurs were making profits appear out of thin air by "creative" merger accounting and deceiving legions of the gullible. Golden showers of money were descending on brokers merely for saying yes to clients over the phone.

But now that mutual funds are hemorrhaging cash and conglomerate has become a dirty word, the story of the 1960s on Wall Street has the faraway quality of tales from 1929. As New Yorker Writer John Brooks points out, the speculative excesses of the decade bore a haunting resemblance to those of the '20s, and they, too, led to a resounding market crash (in 1970) that wiped out fortunes and nearly destroyed Wall Street itself by threatening to bankrupt its biggest brokerage houses.

In The Go-Go Years, Brooks tells the story of that doomed decade in the market, and a fine moralistic tale it is. Brooks' research is not impeccable. Despite his reputation as a clarifier of financial complexities (Once in Golconda), following his prose requires a working knowledge of market terminology. Some of his stories are long digressions from the sweep of his history. Never mind. He is about the only writer around who combines a thorough knowledge of finance with the ability to perceive behind the dance of numbers "high, pure, moral melodrama on the themes of possession, domination and belonging."

The book's pursuit of such themes produces a succession of well-turned tales. In particular the saga of Edward Gilbert, parvenu builder of a short-lived empire in construction materials, is a fine financial version of The Great Gatsby. Along the way, Brooks tells of how investors got fleeced and shows some of the major changes in the social ambience of Wall Street, most notably the temporary replacement of the old-line leadership by a crew of sideburned young "gunslingers." Throughout, Brooks steadily returns to his grand theme, which is Greek tragedy: financial hubris--exemplified by the belief that companies and brokers could go on forever peddling mountains of essentially worthless paper--leading swiftly and blindly to disaster.

The outcome was not quite cathartic. Wall Street did save itself, barely, by a series of mergers between shaky brokerage houses that makes a well-told suspense story. But in Brooks' view, "the Street" is being destroyed anyway by technology. "The twin forces that hold Wall Street together as a social unit," he explains, "are the stock certificate, the use of which calls for geographical unity because it must be quickly and easily conveyed from seller to buyer, and the stock-exchange floor, which gives stock trading a visible focal point." Neither is necessary any more; stock trades can easily be arranged by a computer in Dallas talking to one in Los Angeles, or wherever.

Investors may be better served that way, the author admits, but such a setup will be too impersonal to nurture the moral melodrama that Brooks loves. He probably need not worry, though. Greed, ambition and willful refusal to face reality are constants, quite capable of being programmed into computers (as shareholders of Equity Funding have discovered). Burned investors of, say, 1983 will still need a Brooks to tell them how it was done.

. George Church

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