Finance and American Empire

Abstract

Despite the hubris that has attended the global ambitions of American financiers for over a century, the actual rise to world dominance of American finance was far from smooth or inevitable. The goal of ‘building the world’s capital for all time to come’ in New York, already articulated in the late nineteenth century, looked set to be realized by the end of the First World War. Yet it was only a decade later that the Wall Street crash triggered the Great Depression and the breakdown of the international financial order. And while New York took its place as the world’s principal financial centre at the end of the Second World War, this seemed much less important when the new Bretton Woods order had supposedly marginalized finance relative to production and trade. As the story of twentieth-century capitalism is usually told today, only the neoliberal ‘revolution’ of the 1980s and 1990s finally unleashed the forces that made Wall Street the central location of the world economy. But far from this marking the end of history, the scandal that enveloped Richard Grasso in 2003 over his $150 million salary not only epitomized the venality of New York as the capital of global finance, but it also appeared to symbolize its fragility. And Hank Paulson’s bold statement of confidence in New York as the financial capital of the world — expressed in the midst of the global credit crisis that had its roots in the collapse of the US domestic subprimemortgagemarket (with Paulson’s ownWall Street firm Goldman Sachs having played a large role in making that market) — could be taken as yet another example of whistling in the dark (Stein 2007).

‘Today, there are no more worlds to find. Upon us is the responsibility never laid before on a people — building the world’s capital for all time to come.’

(Wall Street lawyer and Congressman John DeWitt Warner, 1898)¹

‘Remember the song, “We Are the World?” In matters of finance and politics, if not culture, we are becoming the world and much of the world wants to become us.’

(Chairman of the New York Stock Exchange Richard Grasso, 1997)²

‘I do believe New York is the financial capital of the world, that the strongest capital markets in the world are in New York, and they benefit our whole country. But I also believe that having strong capital markets in London benefits us all.’

(Secretary of the Treasury Henry M. Paulson, 2007)³