Interesting at a historical, academic level. Otherwise, a tough slog. ( )

This is a collection of 12 feature news articles (by the length of them, I assume they are feature magazine articles) on business events that happened in the 1960s, written probably in the late 1960s. (After googling for a bit, I think they were all published in The New Yorker.) Bill Gates really liked this book and was probably instrumental in bringing this book into reprint, by praising the book on his blog a couple of years ago. The author is a very good writer. I think I would have been captivated by his writing no matter how benign the topic. Probably because of that, he got me entranced on topics such as how the Federal Reserve Bureau monitor and maintain exchange rates of pounds and dollars, what stockbrokers experience during stock market crashes, and the pros and cons of the Federal Income Tax..... :P One of my favorite two articles is an account of how after a sulfur company discovered a silver mine in Canada, the technicians and executives who knew about the mine bought large number of stocks of their own company and made huge profits, and how the government discovered this and took them to court over it. The other favorite article is about how Xerox developed its paper copying technology through research and development, with leading executives mortgaging their home in order to fund the research, and how after Xerox reached financial success it went out of its way to give back to the community. ( )

This is a book that I should have enjoyed. I like business books, I read business stories every day. I like stories about success and failure in the business world. This a book that the publisher says I should have enjoyed. The publisher tells me it is a great book by a great author whose books are described as great classics. I did not enjoy this book. I did not like it. The author, I am told is a frequent contributor to the the “New Yorker”. This may explain while I never liked the “New Yorker” Please realize that having discovered and declared my dislike for the book that I did not feel obliged to read the entire book. It does not take over 400 pages to know whether something is worth one’s time. It was not. The book consists of twelve chapters, each an individual business story, so far so good, that appear to be reprints from the above noted magazine. Unfortunately there is no preface to the book explaining whether or not this is so. After reading the first story, one has no idea whether or not the second story is intended to tie into the first or is completely independent. Secondly the articles or stories are not dated. It is immediately obvious that these are not recent events but they date back far enough that a date would have been useful in having one place the events with other world or local events of that time period. Next, a reviewer suggested this author was funny - certainly not funny ha-ha as near as I could tell. Why go on. Start reading this at your own risk. Sorry that I could not enjoy it since someone out there must be rolling in the aisles.

Dated, slow, and failed to carry a common theme are among the criticisms of this republished book, which has been touted by wunderkind, Bill Gates. Sadly, the criticisms are all quite true. Most of these "classic tales" date from the late 50s and 60s, ranging from the colossal failure of Ford's Edsel model, to the vagaries of the federal taxation system, to the syndicate of nations that avoided a collapse of the British pound, to a case of cornering the market (Piggly Wiggly), to a case of trade secrets vs. free employment. The only story that I found interesting was the career and philosophy of Tennessee Valley Authority chairman, David Lilienthal. ( )

Just like for a lot of people, it was the joint recommendation of Bill Gates and Warren Buffett that brought this out-of-print essay collection to my attention; "the best business book I've ever read" carries some weight from such luminaries. To cut to the chase, I didn't find this compilation of 1960s vintage New Yorker essays to be quite as peerless as Gates did - James Stewart's Disneywar is probably my current favorite general business work - yet they're still interesting and readable. No one would accuse Brooks of excessive devotion to brevity, many of them lack a "point" in the sense of an immediately digestible bit of wisdom, and there's no consistent theme, but Brooks' lively prose style and attention to detail make this a very worthwhile read.

From the very first story, you get a sense of what attracted Gates and Buffet to Brooks. He's great at taking a complex event and dramatizing the individual roles that the main actors play, while gently reminding the reader that ultimately the actions of human beings might never be perfectly comprehensible, let alone predictable. This limits his actionable value, in the bullet-point sense of "here's what you should do as a businessman", but also enhances his readability value, in the sense of reinforcing your appreciation for how the quirks of human psychology manifest themselves in various provinces of the commercial realm. All of the stories are fun:

- "The Fluctuation". There was a sudden market crash on May 28, 1962 for no obvious reasons that anyone could see. The modern analogue that jumps to mind is of course the Flash Crash, but as Brooks points out, there are innumerable historical examples stretching back as far as you care to look; Joseph de la Vega, quoted heavily, wrote a famous and just as relevant book about market peculiarities back in 1688. Mostly useful as a look at how gentlemanly the rituals of trading were back in the 60s, but of course you can't repeat prudent warnings about how "the market can stay irrational longer than you can stay solvent" often enough.
- "The Fate of the Edsel". "Edsel" is now synonymous with "epic disaster" (the line lost a quarter of a billion dollars at the time), but the fact that there are so many contradictory theories to explain its failure should give the thoughtful historian pause: you can't accuse Ford of both over-reliance on research and also accuse them of failing to appreciate their target market (though some details like the thousands of potential names considered and then thrown away stand out as egregious waste). While its spectacular flameout still retains some element of mystery, Brooks eventually gets around to presenting one major plausible hypothesis - it wasn't a great car. Fair enough.
- "The Federal Income Tax". The concept of an income tax has always been controversial, and the execution even more so. Especially vexing is the question of deductions and loopholes, and where one shades into the other, and how self-perpetuating these can be. Brooks talks about some specific loopholes, like writing off social engagements as business expenses, but his closing sentences will probably be relevant forever: "The ideal income tax envisioned for the far future by many reformers would be characterized by a short and simple Code with comparatively low rates and with a minimum of exceptions to them. In its main structural features, this ideal tax would bear a marked resemblance to the 1913 income tax - the first ever to be put in effect in the United States in peacetime. So if the unattainable visions of today should eventually materialize, the income tax would be just about back where it started."
- "The Impacted Philosophers". There's a fine art to ordering your subordinates to commit illegal acts like price-fixing: you have to make sure that your orders are understood and obeyed, since if you fix your prices and your competitors don't you could lose money; but you can't leave an obvious and unambiguous record, because if you do you'll go to jail. If a VP encourages fraud in a forest but no one provably understood him, did he commit a crime? Brooks serves up a dryly hilarious account of the literal wink-and-a-nod subterfuge that GE and Westinghouse executives used to fix the market for electric equipment before the authorities caught on.
- "A Reasonable Amount of Time". Insider trading can be tricky to define, especially in the case of the mining industry, where even insiders literally on the ground can't always rely on what they hear. Texas Gulf Sulphur thought they were on the verge of striking it fabulously rich in the Ontario wilderness - how quickly and to what extent should their employees have been allowed to speculate on the basis of the latest reports? TGS comes out fairly well here, but what exactly is the dividing line between them and Enron?
- "Xerox Xerox Xerox Xerox". This was a great smaller corporate profile, with lots of detail on Xerox's history, market position, products, challenges, and attitudes towards corporate social responsibility. Along the way Brooks makes a lot of good points about technology: "It may seem paradoxical that this growth [of office reproduction technology] coincided with the rise of the telephone, but perhaps it isn't. All the evidence suggests that communication between people by whatever means, far from simply accomplishing its purpose, invariably breeds the need for more." I'd love to see a compare/contrast of Xerox with Kodak or IBM, just down the road, especially given Xerox's pivotal contributions to personal computers a few years after this piece was written.
- "Making the Customers Whole". One of the differences between an everyday emergency and a systemic crisis in the markets is whether the Folks In Charge need to step in. That old adage of "if you owe the bank a thousand dollars it's your problem; if you owe a million it's their problem" gets magnified many times over in the world of commodities, where blown trading positions on a large enough scale can leave a rat's nest of hopelessly complicated and ruinously expensive deals that only coordinated action can untangle. This tale of a hapless brokerage, in over its head on soybean oil contracts [sic] during the JFK assassination confusion and rescued by the NYSE brings to mind Roger Lowenstein's When Genius Failed, as well as the sorry fate of Lehman Brothers.
- "The Last Great Corner". The turbulent life of Memphis grocery store baron Clarence Saunders, patriarch of the Piggly Wiggly chain, who tried to corner his own company's stock to show Wall Street he wouldn't be pushed around and ended up getting pushed himself by the SEC. The part about cornering strategies reminded me of Paul Krugman's "How Copper Came a-Cropper", which it of course anticipated; the SEC's role in frustrating Saunders' efforts would be a good discussion topic in a class on regulatory strategy. I find the supermarket industry pretty interesting, so the cursory overview of Piggly Wiggly's market position and corporate history wasn't as satisfactory from that perspective as the Xerox chapter was, and it made me appreciate the longer and more comprehensive company profile of A&P in Marc Levinson's excellent The Great A&P.
- "A Second Sort of Life". A capsule biography of David Lilienthal, director of the Tennessee Valley Authority and ardent New Dealer, who acquired a taste for business later in life and founded the Development and Resources Corporation that built TVA-ish projects all over the third world. Along the way he made himself some of the money that he wasn't able to as a public servant, which furnishes the main question of the piece. Brooks makes a big deal out of Lilienthal's public-to-private transition, which is an interesting question - the TVA, which my father worked at when I was born, was created over the determined opposition of private power interests and ended up being a huge success. Should the government be directly competing with industry, and if so on what terms? However, Brooks casts this as a purely abstract metaphysical debate, and without numbers it's less helpful than it could be. So, as in so many things, see the LCRA sections of Robert Caro's The Years of Lyndon Johnson series for a more detailed take on this perennial public-private debate. Brooks is right about the importance of keeping interesting journals though.
- "Stockholder Season". How activist should shareholders be, and how should companies deal with the masses of investors who've put up their money to earn some decent returns? This is a funny but lightweight look at some of the more colorful characters who appear at public shareholder meetings. One useful point he does touch on is that when it came to actual votes, corporate management usually got what they wanted; the "shareholder revolution" of the 1980s was still in the future.
- "One Free Bite". Non-compete agreements are either prudent protection of vital trade secrets, if you're an employer, or stifling limitations and tantamount to wage theft, if you're an employee. In this era of Silicon Valley wage theft scandals and the like, it seems like employers have more tools than non-compete clauses to restrain their employees, but the basic question of how free workers should be to use their skills independently of any particular company is still relevant.
- "In Defense of Sterling". This story could have used more macroeconomic research, even if it's far more dramatic and suspenseful than an account of currency valuation has any right to be. Brooks doesn't mention the famous trilemma of monetary policy (you can have independent monetary policy, free movement of capital, or fixed exchange rates, but not all three simultaneously) that is the whole basic for the British pound's valuation crisis of the mid-70s, instead profiling the heads of the world's monetary authorities as they moved heaven and earth to maintain the value of the pound against the speculators who thought it was over-valued given Britain's fiscal policies and trade balance. Brooks makes a rare outright (though perfectly respectable at the time) macroeconomics error in thinking that currency devaluation helped cause the Great Depression. It's notable that George Soros made tons of money on 1992's Black Wednesday by re-enacting this exact currency speculation strategy and forcing Britain to pull out of the European Exchange Rate Mechanism.

In the literary sense, this is easily in the top rank of business books, just because Brooks makes it fun to read about currency crises, automobile marketing, and shareholder democracy. However, since we're all extremely busy CEOs from whom time is money, this might be more of a vacation read than a boardroom read, so keep that in mind the next time you're hanging out with Gates or Buffett. ( )