 It's a great pleasure to introduce our speaker today who's just published this amazing book Inside Money, Brown Brothers Harriman and the American Way of Power, which has already received a lot of very good reviews. Zachary Caravelle, the author, is sort of a Renaissance man. This is unbelievably his 13th book and he's also a very successful investor and also a board member of New America. So Zachary, would it turn it over to you to give us some high level kind of big themes, big stories from the book and then we'll do a little Q&A and then we'll open it up to the audience. Sure, thanks Peter. It's nice to do this with you even though it's virtual. I wonder whether this will be the waning days of Zoom world. I guess we'll have to figure out what we're all going to do in the fall. But regardless, it's nice being virtually with you. I've been doing a lot of these and the one advantage of this particular medium is that it scales a lot better than human beings do. So it's a lot easier to do these. You can just sit in our living room and talk and chat and listen which again it'll be interesting to see how we go back to this. So I'm going to just give a brief overview of the book and then Peter and I are going to have a discussion and then hopefully there'll be some questions and thoughts and challenges from the audience. But I've tended to want to look for book topics that are both history but speak to the present. There are interesting stories in and of themselves but that there are interesting stories because they say something about who we are today. And the past is prelude in so far as it sets the table for our present. It's not predictive, it's not determinative, and it's not a guide to the future. But it does I think illuminate a lot about who we are and where we've been. And that's more or less books that I've tended to topics that I've tended to gravitate toward. And Brown Brothers Harriman, I've now written two books where the initial reaction of a lot of people when I told them I was writing the book was what? Mostly by just sheer non-recognition. The first was when I wrote a very short biography of a very obscure American president named Chester Allen Arthur. And then the reaction was who when I said that I was writing a book about the creation of money and power in the United States using Brown Brothers Harriman as the narrative hook, people said what? Because there isn't a lot of recognition of this firm and in many ways that's as this firm would have wanted it to be and still wanted to be. So Brown Brothers Harriman is the longest oldest independent private bank in the United States. They say they were founded in 1818. I actually think they're wrong about their own founding date. Not wrong because they don't know their own history, but wrong about the founding date they chose, which we don't need to go into is a bit of an artificial date based on when one of the four brothers who are the Brown Brothers opened a branch in Philadelphia, which was the first time one of those branches was actually called Brown Brothers. I think it starts in 1800 when the father, Alexander Brown, who was a linen merchant from Belfast, a Protestant littered merchant who flees sectarian violence, not the first and by no means the last Irish who comes to the United States to get away from Ireland and starts his own importing business in Baltimore where he had had an exporting business in Belfast. And then they continue for the next 221 years and most people don't even know they still exist. They sold 5,000 employees and scattered around the world, about $2 billion in revenue and about $500 million in profit. And if they were a publicly traded financial firm, they would probably be worth somewhere between $10 and $20 billion, which compared to BMS like Goldman Sachs or JP Morgan is not a whole lot, but compared to most of humanity, it's still a massive amount. And I've also said, look, the fact that they've been around for 220 plus years is not a reason to write a book about them. Living long may have its virtues, but it's not either necessarily a good story or a meaningful one. So their longevity is interesting, but not in and of itself book worthy. It's the fact that they are, to paraphrase Dean Atchison who wrote about the creation of the post-World War II global international system. He said that that group at the time was present at the creation, present at the creation of a new world. So in many ways, Brown Brothers-Hareman is present at the creation of almost every important economic event in the evolution of the United States. And because they become central to the creation of the 20th century, WASP, White Anglo-Saxon Protestant establishment that then creates that present at the creation world. And Atchison, like the partners of Brown Brothers-Hareman at the time, was a university grad and like them in secret societies and interwoven with them in the same bonds of class and marriage and social circles. But there was also an interesting reality of them continuing to today and the fact that they are forgotten. So they are forgotten one because it's a firm that whose partners wake up every day when their name is not in the news and treat that as a good day. And in fact, the partners of the firm were, shall we say, apprehensive at the thought that I was going to write this book. Even if it was, as it turned out to be, largely a, I don't know if it's a laudatory, it's the right word. It is a book that acknowledges that there is a particular model of capitalism that Brown Brothers came to both define and inhabit that I think is a more constructive model of what capitalism could be than the current variant of shareholder capitalism with these publicly traded firms whose risks are put on the public balance sheet and whose gains are privatized, which was not the Brown Brothers model in 1800 and it was not the Brown Brothers model in 2021. As a private partnership, everything they do for 220 years, they take the risk on their own personal balance sheet. They put up a million dollars, it's their million dollars and they may get other people to put that money up as well. So it ends up being a story of capitalism, a story of how capitalism really fundamentally shapes the evolution of the United States in the 19th century. And I don't think I was as sensitive to just how central Brown Brothers was to the creation of an economic system in the nascent United States in the 19th century. Every single important moment in U.S. economic and to some degree, you know, political history in the 19th century, Brown Brothers is kind of quietly present. I liken them a little bit to Zeleg, right, that at every important moment in American history, there's a Brown Brothers banker in the back second row left looking like a banker who had no interest in being the story, but without whom there is no story. And, you know, that's a challenge for a narrative, right, because people who don't want to be the story and who purposely live lives of kind of rectitude and no drama are not always the most scintillating characters for drama. But as an exoskeleton for the story of how money made America in the 19th century and how the men who made money and they were all men, and they were all white men, how the men who made money in the 19th century then made the global system in the 20th, because three of the partners of Brown Brothers, if anyone has, you know, tends to remember Brown Brothers, it's because one of the more prominent partners in the mid 20th century is Prescott Bush, the senator from Connecticut, who is the patriarch of the Bush family dynasty, and where that fortune comes from. I mean, it comes from him, but it also comes from Dorothy Walker, the family that he marries into, from George Herbert Walker, who was part of the E.H. Harriman Railroad Empire and then helped run Averill Harriman's investment firm in the 1920s. So it's this merger of sort of Harriman money and Bush's own Brown Brothers career, which is also Brown Brothers Harriman, that then creates the Bush dynasty as this exemplar of the establishment that then creates the global economic system post World War II, and the global political system that is with us today, and is also the flip side for why Brown Brothers for a period of time, or that whole cohort was the source of so many reactions against them when people started reacting against the establishment in the late 60s and 70s, Brown Brothers is kind of exhibit A for that. And then they fade from view. And the way the book ends is that the reasons for them fading from view have a lot to do with how capitalism came to be defined, and not how Brown Brothers itself continued to do business. So at the apex of their influence, and in their DNA from Alexander Brown on down, there is a kind of an embedded notion within this establishment group, both by schooling and by culture and by structure, that they could not thrive individually, or that their firm could not thrive as an organization, unless the public good was attended to or served. And in many ways, they kind of take from the motto of the Grotten School, another one of the feeder schools into this establishment, to reign is to serve that that with great power with great power comes great responsibility, what I've jokingly called the Spider-Man ethos of history. And they believed this, and they lived it, that their acts of public service were in part an extension of that belief that if the commons was beggared, they would ultimately not thrive. And that's a very different kind of capitalism than the one that emerges in the 80s and 90s, where the incentives of shareholder capitalism, when all these private partnerships that have been around forever, like Goldman Sachs and Lehman Brothers and Morgan Stanley, are able to massively augment the amount of capital they can call on with far less individual risk. And that's certainly true of tech companies today. So if you know your partner at one of those firms today, you might make $10 million a year, but you are highly unlikely to individually lose $10 million a year. Those risks and those losses are spread out, and the rewards are concentrated in the individual. And that's an alien model. And it's not one that Brown Brothers ever embraced. And it's also one that carried with it that sense of connection with the public sphere. And just to finish, let's talk, I don't celebrate that world in so far as it's a world that I think we should go back to. First of all, we can't. Secondly, I wouldn't want to. I would have no seat at that table. And it was both exclusive and exclusionary. And we can get into the fact it was not without greed and flaws and huge acts of self-serving policy. But I do believe that human beings, in a world where we expect a kind of a binary narrative, that the nuance and complexity of people and institutions is important to remember, that you can be self-serving and of service. You can be selfless and selfish. You can go after private gain rapaciously, but also attend to the public good. And that those things can and do often coexist. It does not have to be one or the other. So I take at their word to some degree this commitment to public service, which in no way precluded intense self-service. And again, a class that was self-replicating and in many ways a global system that was designed by establishing the primacy of the dollar and the centrality of the United States to maintain the centrality of the United States, which would then of course benefit firms like Brown Brothers or firms like General Motors, you name it. But I think that their continuance today, having eschewed a certain kind of capitalism is, if not a lesson, then an example of what is possible. And that how we understand today's capitalism is one variant and one version. It is not the only variant and not the only version and probably not the one we should cultivate going forward, which I'm sure many of you probably think and agree with, but is not as much a part of our public discourse. And again, I think the story of Brown Brothers over the past 200 plus years points in that direction in a way that's fairly constructive and which I found far more hopeful as a story than I think I even thought going into it. I just thought it would make a good story about the rise of America to global power through the lens of this firm. But it turned out to be, I think, a much more expansive story about capitalism through the lens of the story of this one firm. So that's the book. Well, thank you for that very much. And congratulations on an amazing piece of work. And so sort of two-part question relating to the process and the genesis of the book. I mean, how did the book come about? And what was the process? And what were the sources? I mean, you cover two and a half centuries of history. It's a vast project of you have to understand. I didn't know, for instance, that Brown Brothers sort of essentially ran Nicaragua for quite a period of time. There's great details about the kind of skeleton bones of 100 years ago and kind of that whole process and that kind of whole ethos. So how did you start the book, get into the book? How did you research it? What were the sources? And how did you kind of educate yourself about Nicaragua in 1920? Right. I mean, first of the Nicaragua story, I barely knew about myself. And it is fascinating to the point where the occupation of Nicaragua in 1912 is almost entirely for the US government to make whole Brown Brothers for loans that they have extended to the government. Actually, not even loans that they've extended to the Nicaraguan government. Loans that the Nicaraguan government had taken from others that Brown Brothers bought the bonds of when the initial lenders wanted out. A little bit like what this firm Elliott Management did in Argentina a few years ago. They bought all these bonds up cheaply that the initial bondholders didn't want to deal with. And then that begins the kind of fraught, fractured relationship with the United States and Nicaragua for the next, well, I mean, really until today, but certainly through the 80s. So I wanted to tell the story of money and America. I want to tell the story of how a thesis that the United States, particularly in the 19th century, had this massive advantage relative to the old world in that so much of capital in the United States in the 19th century was liquid, as opposed to what it was and had been everywhere else in the world until then, which is money and capital was essentially tied up in land, people, gold and silver. And so you had this world of illiquid wealth compared to the United States, where it was just promiscuous capital, people printed paper, used paper, and could obtain it, and which meant that, you know, in sort of detochable terms, by the way, everyone who writes about American history always has to quote detochable as some sort of, you know, gives you authority in case you don't have it. So I wanted to write about that story. I didn't entirely know how to write about that story. And I wanted to write about the rise of America in the 20th, kind of a big story of money in America. And Brown Brothers ends up being the perfect way to tell that story. And in many ways was pointed out to be by my editor at the time, you know, so we're talking about this book, I'm saying, okay, here's what I want to write about next is like, Hey, if you thought about writing about Brown Brothers. And my initial response was, of course, I had not thought about writing about Brown Brothers and no one had. And, and that's what got me into the book, but I certainly knew about them because of their centrality in that, in that Cold War period that had been my PhD work, and I kind of knew about that world. And then it turned out to be, you know, everybody wants to say, Oh, you know, I scoured the world for archives, and I went here and I went there. The fact is, Brown Brothers commissions a 150th anniversary book in 1968, and some somebody spends five years writing this book interviewing everybody and compiling the entire archive of the firm, literally, before 1918, you know, since, since Alexander Brown came over. And all of that was deposited at the New York Historical Society. And I live on the Upper West Side. So, and the Historical Society is on 77th and Central Park West. So honestly, I mean, other than like a college paper where I could get out of bed and like go to the library. This may have been the easiest research, logistically the easiest research I ever had to do. And then, you know, the American history part, having studied this for decades and written about it, I was able to draw on other stuff that, you know, wasn't like I was starting at zero for a lot of that. So it ended up being, it ended up being a simpler book to get information for. It ended up being a much more expansive and in some sense harder book, because it was a much bigger story than I expected. And I feel like we've known each other for quite some period of time. I feel like you've been writing this book almost since we first met. How long have you been writing this book for? I mean, it was about six years. So, and again, to be fair, I wasn't, I wasn't writing the book for six years. I was, I had a full time gig as the head of strategy for a publicly traded company, and I was sort of focusing more on my kids. So I didn't sit around like, oh my God, I'm writing this book, I'm writing this book, I'm writing this book. I sat around a lot saying, I've got to write this book, I've got to write this book more than I sat around. What's the process? You wake up early, you write it now? I am useless in the morning. I mean, this is about as early as I function, meaningfully. But I do write late at night, which, you know, is convenient when you have, well, I mean, it's convenient when the kids were younger because they were asleep and everybody else was asleep. So I could just write until two in the morning, which I still do. And that's that weird circadian rhythm of people. Like, some people seem to be wake up at five and have a cup of coffee and look at the dawn and sit down and pound out five pages of perfect, not purple prose and feel like, ah, I've done my work for the day, I can go forth and sally. And I tend to spend my day going, I've got to get to work. And one of you had a cover story in the Wall Street Journal review, which is a very good summary of the book. And in the book itself, you don't sugarcoat the fact that, you know, obviously, the Brown Brothers, the fortune started with textiles, and then kind of was, I guess they moved to cotton. And so to what extent was, and you talk about this in the book, to what extent was slavery, the kind of slave economy part of the story of their rise? So by the 1820s, Brown Brothers is probably the single largest cotton merchant in the United States. And Alexander Brown has four sons whom he sends to New York, Philadelphia, and Liverpool, and then one of them stays and helps Alexander run the Baltimore House. And then when Alexander dies in 1832, the four of them are in those various geographies. They moved from being a linen merchant, which was one commodity, to trading a lot of different goods. And certainly by the 1810s, cotton is assuming an ever greater role of importance. Remember, a lot of the slave economy first was tobacco before it was cotton. So cotton is like rising in importance, almost in sync with the house of Brown evolving as a merchant family. And so they become central to the cotton trade. And they don't just trade physical cotton, they become the paper merchants who facilitate the trade of massive amounts of physical cotton that they themselves don't even hold. And in fact, the desire of the brothers after the 1830s is to move increasingly away from the physical trade of cotton and more and more into the financing of the trade of cotton. One, because it can scale, but two, because of their own moral opposition to slavery. And honestly, moving into the financing of something that depends on slave labor is hardly a radical moral shift, right? Back to what I said before, where people can be selfish and selfless and self serving and of service. The Browns are complicit in slavery unequivocally. You know, Baltimore at the time was a was a slave in a slave state, Maryland was a slave state, although most of the African Americans in Baltimore were freed slaves in the actual city. And there's reasons for that. But nonetheless, they were embedded in this system, as were the entire cotton industry of the English midlands of those mills of Lancashire and Manchester and Birmingham. And everybody knew that, right? And I think part of the reason, this is kind of a bigger historical question, but part of the reason for the Civil War isn't just as Lincoln said that the United States couldn't be half slave and half free structurally. It couldn't really be half slave and half free morally in that to be half slave really meant that the whole system was a slave economy. And given how important cotton was in terms of providing capital to the North. And yes, by 1860, the North has a much more diversified, much more robust economy that is not as cotton dependent. But it is certainly cotton fueled. And everybody was complicit in that system. And the Browns were even more so because they were directly part of that trade. But changing that system while you're in the middle of it, even if you find it morally repugnant, and the Browns were founding members of the Republican Party, you know, deeply uncomfortable with the annexation of Texas in the 1840s, opposed to the Mexican War, you know, all these things that were going to extend the slavery. So I don't, in any way, sugarcoat this, nor should it be. But nor should it be telescoped, meaning they were they were exhibit a for a system that was complicit. And I tried to use a little bit of the analogy of it's really difficult to opt out of a system, even a one that is 100% morally compromised. Because if you think about our discomfort with and multiple people's legitimate desire to decarbonize our economy today, unless you move off the grid to a yurt in Alaska, you are consuming and you are part of the very problem that you believe to be an existential threat. It was very difficult to opt out of the slave system. I don't believe, in fact, I'm sure William Lloyd Garrison, one of the great abolitionists of the time, wore cotton clothing. I actually think John Brown did not toward the end of his life as a kind of active. I am not going to be part of this. Did that answer that important question? Well, to try a little bit, I mean, so I mean, is there an analogy during the Trump administration and the Obama administration that was certainly quite a lot of folks from Goldman Sachs who went in? Was that an analogist at our brown brothers, Harriman, kind of, there was a revolving door, was it a higher level? Was it more influential than the sort of the golden experience? Right. So, you know, one of the things I certainly true in the narrative of American history is that the idea of people of sort of money and commerce going into government, particularly in appointed positions, but also in the case of Prescott Bush elected, is really a 20th century phenomenon. You know, most people, JP Morgan would have preferred to buy his representatives than he would have preferred to serve and thought, I think, legitimately that he had way more power as a captain of finance than he would have had, certainly in the executive branch, which was tiny, you know, the executive branch before the creation of that post Cold War national security state and also to some degree the New Deal, was a really, you know, it was a small, it was a small part of the government. It had powers and wartime. So that beginning revolving door is of which Brown Brothers really kind of begins it and a few law firms on Wall Street. And certainly Goldman Sachs in the 90s and into the aughts, and I guess into the Obama administration, maybe even into Trump, given that Mnuchin had been a Goldman partner, but he was not a Goldman partner by the time he was Treasury Secretary. So, you know, it's important where they were called government Sachs was definitely a similar model, but coming out of a very different firm. So by the time all these Goldman partners are going into government, the kind of money they had made and the kind of money that Goldman was making really was kind of incomparably greater than the kind of money Brown Brothers ever made. I mean, don't get me wrong, the Brown Brown family was immensely rich, you know, Alexander when he died in the 1830s probably left a fortune of about a hundred million dollars. But some of the partners of Goldman at all, you know, were individually in the realm of hundreds of millions of dollars alone. And there were many of them, not just like the one head of the company. So the kind of money we're talking about was different. And the relationship, I think, between them and capital markets was different, you know, because that whole incentive structure had changed from personal risk to collective risk. And eventually, as we know from Goldman's, you know, a lot of the movement of Goldman people in the government coincides with the US government at least, taking a much more aggressive approach to bailing out companies if they believe them to have systemic risk. The first, you know, being long term capital management in the late 90s when Robert Rubin was Treasury Secretary, I mean, I happen to know him and grew up with his kids. But you know, that I think is very different ethos. It wouldn't have occurred to these guys, you know, to bail out a company, a bank that had whose loans had gone bad. That would have been a kind of an inconceivable relationship between government and finance or government and a company. And for the audience members, if you have a question, probably in the chat or the Q&A function, you mentioned your PhD and that it sort of had some bearing on this. What was the PhD about? I know it was at Harvard. God, I mean, it's been like 26 minutes and we haven't talked about Harvard. So it was sort of American international history. I did a dissertation on US interventions in the third world from the end of World War II up until Vietnam. And, you know, and so like I felt like I knew something about that establishment, you know, the John Foster Dulles's and the Atchison's and to some degree Robert Lovett. So one of the other major partners of Brown Brothers in the 30s and 40s who goes to the government is Robert Lovett, who in many ways is one of the more important and yet somewhat forgotten you know, Titans of that moment. He's on the cover of Time Magazine several times. He's the, he basically helps create the modern Air Force, the supply chain for the modern Air Force as Assistant Secretary of War under Stimson during World War II because he had been a World War I Yale flyboy. He then becomes George Marshall's number two at the State Department and one of the main coordinators, facilitators, definers of the Marshall Plan and then becomes under Secretary of Defense when Marshall becomes Secretary of Defense in 1950 and then Lovett himself becomes Secretary of Defense for the final year and a half of the Korean War and, you know, deeply responsible for the militarization of American foreign policy, a staunch anti-communist cold warrior. So I knew about these, about that group somewhat more, but I wasn't as I think attuned certainly not when I was a graduate student or did my PhD work. I was not, I was not as focused on the interlinkages between kind of Wall Street and policy. When I was there, I don't know when you, I mean, there was, you know, one theory in vogue was this thing called corporatism, which was an academic history and political science view that elite groups like industry, politics and and finance shaped a system in their self-interest, not necessarily coordinating it explicitly with each other, but that the systems that emerged were kind of part of this, you know, self-interested nexus. And I think there's probably some truth to that. We have a question from Anne-Marie Slaughter, which I'm going to summarize because it just disappeared from my screen, that and what are the lessons from Brown Brothers about sort of moving from shareholder capitalism to stakeholder capitalism? Yeah. So I think one thing I've been speaking and writing a bit more about since the book came out and which the last chapter points to, so the last chapter of the book is called When Is Enough Enough? And before explicitly answering Anne-Marie's question, I want to tell a little story that I thought was that that kind of ends the book that is delightful in its irony. So 1933 because of Glass-Steagall, Brown Brothers like all the financial institutions separates its investment bank from its commercial bank. And unlike a lot of other places, its primary definition, they select as for their commercial bank. So Brown Brothers Harriman, the commercial bank, is what is now Brown Brothers Harriman. The investment bank gets hyped off because a lot of their business in those years was not the investment bank. And in fact, in the 1930s, investment banking was less, was often less profitable for traditional banks. So even Morgan Stanley also hives off its investment bank. And the investment bank that Morgan Stanley hives off is called Drexel and Sons. This Drexel had been this Philadelphia firm that had worked with Junius Morgan to create what we now call JP Morgan. And Harriman, Brown Brothers Harriman hives its investment bank off and it's called Brown Brothers Harriman and Co very confusingly. And it's eventually then renamed. And in the 1960s, both it and Drexel are doing quite badly. And so they decide to merge in the 60s. And then after a series of other mergers by the early 1970s, Brown Brothers Harriman investment bank becomes Drexel Burnham Lambert, which people remember was the poster child for the new kind of shareholder capitalism and also where Michael Milken made his fortune selling high yield bonds to casinos. So that became the model for Wall Street capitalism, lionized obviously by Michael Douglas, you know, playing the Gordon Gekko figure, which was some composite of Ivan Bosky and Michael Milken, both of whom were then targeted under the RICO Act by Rudy Giuliani and all of whom other than Milken who was convicted, all of whom got off. That kind of capitalism, it's not just that it became structurally shareholder capitalism, where you could literally bet other people's money. It became a model that was sort of emulated even as it was demonized. And even more recently, once of course, as you did the Wolf of Wall Street, you know, that that that view of capitalism. I think one thing that's forgotten is that there were there are plenty of firms like Brown Brothers and to some degree, there are still our firms like Brown Brothers not as old but with that ethos that never sort of bought into that mold. And that that retained a culture of part of the purpose of a firm is not just to make huge amounts of money for the partners or for kind of anonymous stock prices, but it's to do well for its employees. It's to literally the part of the purpose of a firm is to serve its employees and create a working environment and a compensation that is with dignity and is sustainable. I use the word about Brown Brothers that they are a form of sustainable capitalism, but it's a very different use of the word sustainable than the kind of patois of sustainability. It's not about environmental social governance. It's about literally what kind of capitalism can be sustained over generations. And it is fascinating that this firm still lives and breathes the kind of poor Richard Almanac like homilies of its founder, Alexander Brown, who wrote these letters to his son over decades, like, you know, do one thing, do it well, make sure you don't take too much risk because, you know, that can harm you. Every night you go to sleep, you should be prepared to wake up for the world having changed. You know, this is a firm that was and would have been perfectly positioned for a pandemic because they would have been ready for one, not because they knew when was tomorrow, but because they knew that tomorrow could always bring some crisis or catastrophe. His famous line was, Shoemaker stick to thy last, you know, do what you do, do it well and then do it again. And the stakeholder part is that it didn't just serve the family, it served the employees. And then in that public service mode, there was an awareness of an of an ineluctable, but absolutely undeniable connection between the private gain and the public good, you know, which again, didn't mean that they, you know, were didn't mind. They certainly got rich and they certainly created an exclusive club of elites. So it does point to a different mold of capitalism. But if we're going to go to that, it's important, I think that we go to that, not back to it. You know, you'd want, you wanted to distill the best of what they were, but you wouldn't want to return to what they were for all the reasons that we've talked about. And I look, I maybe it's utopia, maybe it's idealistic, I believe that to be possible. I believe it to be possible because some firms are starting to talk that way, people like Larry Fink at BlackRock. I believe it's possible because Brown Brothers has managed to thrive quietly in spite of all this, doing a lot of things that are much more workman like, and I'll end, I mean, I know it's a long answer to Emory's question, but it's a really crucial one that, you know, you, what you, I think you want in a constructive financial system and therefore kind of a stakeholder capitalism is, is the, the obverse of what you currently have, right? What you currently have is that far too much of the capitalism at the heart of the financial system is constantly looking for outsized returns and risk to generate those. And then you have, at the periphery of that system, you know, firms that are handling deposits and doing modest loans and not bundling mortgages and, you know, doing the stuff that needs doing, but is quiet and not as profitable. And I think what you need is that that ratio has to shift. What you want is, is, is a Brown Brothers sensibility at the heart of the financial system, which is too much risk and can implode capital is power, but it can also destroy, you should respect that power and not constantly be going for outsized returns. But you do want some of that on the periphery of the system, you know, Brown Brothers would never have underwritten Elon Musk and, you know, love him or hate him. You want somebody to underwrite the dreams and the hopes and the risks. You just don't want everybody at the heart of that system to be in the business of trying to underwrite that. Do you see a shift in the direction that you're describing beyond the, I think you mentioned BlackRock? I mean, I see it more in operating companies. And then the reality is a lot of what we call Wall Street that are publicly traded companies because of Dodd-Frank and the financial crisis, they have become much more like utilities. You know, so meaning the large money center banks, the J.P. Morgan's of the world, the city banks, the, you know, Barclay's Bank of America are much less innovative, interesting risk taking places because they just regulatorally cannot be. But there's so much capital in the world that then it goes to private equity firms and it goes to hedge funds and it goes to venture capital. So it's not like that that's been excised from the system. It's just, its locus has shifted more to Silicon Valley or to, you know, tech investing and tech land. I think in operating companies like Procter & Gamble or BlackRock, you know, you have a much different approach toward employees and toward the role in society. So yes, I think there are shifts going on. I think it's less evident in the financial world. One of the things you mentioned was the fact that Brown Brothers was able to survive crises. Brown Brothers-Harman was a result of the biggest financial crisis we've had, which is a great depression. So tell us how that came about. You know, again, this is like the perfect establishment exhibit at any moment where so all by 1930, a series of Harrowman partners, which was started by April Harrowman, who inherits his father, E.H. Harrowman's railroad, Baron Fortune and his brother, Roland, and a bunch of Brown Brothers partners, including what Prescott was working for Harrowman and then ended up working for Brown Brothers. But Robert loved it and they all went to Yale, let's say between 1912 and 1917. And by 1929, eight of the 17 Brown Brothers partners had been in Skull and Bones. So, you know, the story you can tell about them does at least at face value justify a lot of the conspiracy theories of the 60s that this was an incredibly insular club of the same set of people. In at one point, I talk about the founding of a golf club in the mid-20s that April Harrowman does near Oyster Bay. And you know, it's like a who's who who's around at the time. It's Bill Paley. It's Cornelius Vanderbilt. It's Harrowman. It's Marshall Field from the Marshall Field. It's like a who's who of political and economic elites. And they all go to the same schools. And so when the Great Depression, obviously it wasn't called the Great Depression in the fall of 1930, it was, you know, bad stuff happening. So they're going to their Yale reunion and they charter a private rail car to go there, sort of the, you know, the Gulf Stream four of its day. And they're in their private car leaving from Grand Central and they're playing poker and they're playing poker, I'm sure, for aunties that are more than the average daily wage of whoever's still employed in the United States. And they are talking about the gathering economic storms. And it's not clear that either of them were in any deep peril. They were both going to lose money. But they all knew each other. And I think they had been talking for years about, oh, wouldn't it be great if we just combined and became one for, wouldn't that be grand? And so that's what they do. And they're two older partners at the time who sign on to this. And within a few months, they've decided to merge. And the merger in December of 1930 is taken by, it's on the front page of the New York Times, as a sign of, you know, that the storm might not ruin everybody, that there's a deluge, but it may not deluge everyone. So it's taken as a kind of a positive story. And then the two firms become Brown Brothers Harriman, merging the business of Brown and the money of Harriman into one neat little firm. And how did they do in the 2008 crisis? I mean, they were largely unaffected. I mean, they were affected in so far as everybody is affected by the markets going down, plunging by March of 2009, 70%. And they're affected by the liquidity of the system drying up. And a lot of their business today is kind of the arcane workmen like areas of finance, you know, they, they make sure a lot of foreign exchange, they also, because they had helped create the foreign exchange system in the 19th century, they still had an expertise in foreign exchange. So they helped harmonize foreign stock trades to settle in US mutual funds in dollars. Like somebody has to do that process, even in a high tech computer age, and they're very good at it. So they do a lot of this stuff that is behind the scenes and pretty low margin, but that someone needs to do. They essentially do business that needs doing for clients that need trusted intermediaries to do it at a reasonable price. And that's kind of their business. So while they were impacted by 2008, 2009, in so far as their business shrunk, because all business shrank, they were not at all even, even minimally imperiled. And of course, the irony of the pandemic is that most firms, most places that had capital going into the pandemic did extraordinarily well because of the pandemic. And that, you know, mismatch, which we're grappling with today in public policy, is one that we're going to keep grappling with. And one of the points of the book there too is, you know, if you've done really well in a system that has benefited you disproportionately, what are your responsibilities to give back or to meaningfully make sure that the rest of the polity is also thriving? And what is the responsibility of financial leads for people who are rich or, you know, any of it to the public good? And I think the Brown Brothers model for today says that responsibility is immense. And if you're not, if you're not attending to it as many tech elites today or not, you're really asleep at the wheel. Please drop your questions in the chat or the Q&A. Well, I mean, that does raise a sort of interesting question. I think John Mickelthwaid and Adrian Woolrich have a, their recent book about COVID kind of made the point that, you know, the tech sector is sort of, it's kind of marked, it's a striking feature that there's so little interest in public service, rather than speaking, of course, in New America is, you know. A bright shining example, please. Well, no, but everything, you know, leading the field in the public interest technology kind of sphere, but which isn't quite the same thing. But what, you know, do you think that, will a Brown Brothers kind of sensibility suddenly land in Palo Alto or is that highly improbable? Yeah, I mean, I am, I am deeply struck by the, the crickets emanating from the tech world, you know, the resounding silence when it comes to really attending to the consequences of a business or set of business models that have made, you know, that entire ecosystem unbelievably wealthy, rather incredibly powerful and rather extraordinarily silent when it comes to the public policy implications of those things. Even at a time when, you know, the only thing that Elizabeth Warren, Tom Cotton, Josh Hawley and Bernie Sanders can agree on is that the tech sector either needs to be broken up from its BMS or regulated in multiple fashions in terms of data privacy, who pays, you know, who uses, whether the platforms privilege their own business. 50 state attorney generals are united in these multiple suits, some against Google, some against Facebook. You would think that if you're sitting in those companies that waiting it out and thinking like government is inefficient and effective, it's, it's answerable to the petty passions of the moment and this will all just blow over because it's too hard and we all need these products anyway. As opposed to really jumping into the fray with, you know, their own answers and their own take and their own kind of willingness to serve, I find both surprising not in their ultimate self-interest and is a prime example of everything that I'm talking about. And I look, I'm happy to have the pushback against that. It just is, it's hard to find an example of, you know, Bezos is going to launch himself into space. He's not launching himself into the public policy fray. The global minimum tax surely is kind of a, will have some implications for these companies. Yeah, I don't think much though. I mean, mostly because their level of profitability is so immense that, that a global minimum tax of 15% is not going to change the business model. You know, be massive amounts of regulation that are incoherently passed at both the state and federal level and then, you know, potential regulation that tries to break them up, that will obviously impact them. I mean, I, you know, we, this is a whole other argument about whether antitrust alone is a sufficient tool in terms of these business models. I happen to feel that it's not, but even, even if it is the fact that a lot of these companies are only present in that debate defensively is, is not a good example of how you have a responsibility to be engaged. And the government and the public policy debate is one of the primary forums for how we work these things out. But they're not even present in the idea debate, right? There's not a whole lot that you can say, I have a sense from these companies in this world, from these VC firms or from these companies, how they would shape the landscape going forward in a way that would be most of service. Okay, here's an interesting question from the audience. One of the interesting parts of the book is the description of how the United States built canals and railroads on a grand scale in the 19th century and banks were there to share and finance those visions. How much did that all depend on government spending? And could banks play that kind of role in rebuilding our infrastructure today? So before the railroad boom of the 1860s and 1870s, almost all of these were done locally and privately. And that includes the Erie Canal. It includes what Brown Brothers helps launch and fund, which is the first railroad. So Brown Brothers is in Baltimore in 1828 and Alexander Brown is legitimately concerned that Baltimore is going to fall behind New York and Philadelphia economically, because New York has just benefited from the opening of the Erie Canal. Philadelphia is about to build a canal across to the Ohio River Valley, which is the primary driver of the American economy in those years. And as an active public works, he and his sons decide that they're going to fund a completely untested bit of technology, kind of their own moonshot in the form of a steam locomotive to carry freight and passengers over the mountains. And they fund and raise the first offering for the Baltimore and Ohio railroad, which is the first steam powered locomotive in the United States and railway. And they don't make any money on it. They do it as a public works in the belief that only if this is done will Baltimore be able to thrive. And only if Baltimore thrives will the House of Brown in Baltimore thrive. And ultimately the House of Brown in Baltimore becomes Alex Brown and sons, which has its own history, but is not nearly as consequential or successful as the other ones. And the federal government doesn't support this at all. The state of Maryland does chip in some money, but it's a far cry from the infrastructure today. To some degree, these projects were not as capital intensive. So you could do them at a state and private level. By the time you're doing the Transcontinental Railroad, almost all of that is underwritten by the federal government, the Homestead Act and ways in which the first Transcontinental Railroad in 1869 is a complete money loser. It only gets built symbolically by the federal government to show that we can conquer the continent, which also meant obviously conquering the Native Americans. I think the amount of capital required today, you need government. Well, let's put it this way, either you remove government entirely except for national defense and therefore it spends less money. Or given the fact that government is an aggregate of a lot of capital, you need government capital. But how it gets spent, the United States has not been nearly as good as some other countries like Canada in the public-private partnership way. How can government encourage private capital to be in a risk position but not a total risk position? You could unlock a lot more private capital for public works and public infrastructure and public good than we do. And certainly one critique of the Biden plan would be it privileges just brute government spending over mobilizing private capital in these ways that it might otherwise be able to. How do you come down on sort of the Biden administration, I mean, the critique of the Obama administration that they didn't really do enough in the 0809 and that Biden has sort of learned that lesson or overlearned that lesson or how do you? Well, I mean, clearly, that lesson has been learned and learned well and of course learned globally to some degree. It's not like the United States is the only country that has spent oodles of money to plug the gaps created by the pandemic. It certainly has done so in a way that is much more like the European social safety net of the 1950s and 1960s, meaning the level of money spent commensurate to GDP commensurate to how much that actually augments people's incomes. Again, I do think part of this represents a collectivization of the awareness of a social compact phrase and then starts to unravel when there is a perception that a very few are benefiting and a very many are suffering or struggling. And that that very many doesn't have to be a majority, but it has to be a considerable amount and you need to pay attention to that, which I think is part of the reason why, you know, Brown Brothers Harriman, even though they were part of the business class that Franklin Roosevelt routinely assailed as responsible for the crisis, were more or less in favor of a lot of the New Deal. They could have done without the rhetoric, but they tended to support even, you know, Prescott Bush, if you were a Connecticut Republican in the 40s and 50s, you looked like a center left Democrat today. I mean, meaning the spectrum is so extraordinarily to the right of where it was in those years, including a system that I was going to say, I mean, look, the bizarreness of this elite driven system in the 50s is that the compact then the average income between a worker and a CEO is about 30 to one by the reckoning today average CEO makes about $14 million. That's closer to 250 to one. So it's kind of bizarre that are supposedly more egalitarian capitalism of today is has created a far less equal world. How is the book being received by Brown Brothers? Do you know? Yeah, I mean, they they they've ended up being quite they like the book. I mean, because the book ultimately does come down on a, this is a redemptive model of capitalism. And while, you know, it's an interesting thing, you kind of see what you're sensitive to. So I live in New York City, a lot of people, if you read the New York Post are walking out of New York City and and what they see is homeless and crime and danger and threat and trash. And I walk out these days and I see people and life and some sort of like collective side relief, sort of, you know, a big messy block party. They're both true, right? It's a matter of what you see. And initially, the Brown Brothers partners, they read the book and all they saw was like slavery, imperialism, Nicaragua, some random moments of antisemitism, elite privilege. And that's it. And I think as they read the book, they're like, okay, that that is in fact part of our story. And and anybody who isn't us and frankly, even us writing our story would be a nape and a fool to leave that stuff out. But but that doesn't make us anything other than human and fallible and flawed and complicit in things that we shouldn't have been. But that there is a story there about the culture and its ultimate implications for society that is a constructive and a positive one. And I think they have embraced that part of the story. There's a related question here from Ralph Humphrey, one of Robert Carr's insights from his research into powerful people has led to the idea that power reveals rather than corrupt. Have you discovered any insights into power in researching and writing this book about an institution and people that have wielded power? Yeah, I mean, I think, you know, I think Robert is Carr is totally right in that observation. It, you know, there's probably a shading of it I would do, which is power can reveal things that apps and power would otherwise have never been revealed. And so, you know, that part, I think, when the brown partners were at the apex of influence in the government in the late 40s and 50s, I do come out of a tradition that while there was a potential threat of communism as a system that was more, you know, Soviet communism that had Western Europe collapsed economically and the entire European continent kind of gone under various communist governments and the same thing in Latin America that both could have been economically damaging to the United States and also probably politically unstable. I think that the intensity of the view of the Soviet Union is a threat that people like Lovett and Harriman and Bush really shift to and inhabit without question. And the ease, which I mean, these were not people in the 30s who had communism on the mind. Harriman was, you know, doing business with Stalin in the 20s. They were not thinking of the Soviet Union as a particular threat that the immediacy of that shift and the way in which it's almost unthinkingly embraced by this cohort in the 40s I don't think it was them at their best, you know, and I mean it was the United States as a whole, there was a lot of fear, but in that sense, the power they had with the certainty that they brought to there, you know, this is a group that does not seem to have suffered from many self-doubts and that as a recipe for the launching of the Cold War was, I think, created a groove that was much more intense than it needed to be. Well, Zachary, I think we're almost at time, so I wanted to thank you on behalf of the audience for spending time with us and your brilliant book, Inside Money, and thank you for doing this. Thank you so much Peter, it was great to do this with you and thanks to New America and everyone who has joined this afternoon.