Who is Henry M. Galt?:
A Review of Garet Garrett's The Driver
The Driver (1922) is a prime example of the literature of achievement. The author, Garet Garrett (1878-1954), had the ability to make economic, financial, and management processes come alive in novel form. Not only is The Driver a novel of high finance and Wall Street methods, it also paints a portrait of an efficacious and visionary man who uses reason to focus his enthusiasm on reality in his efforts to attain his goals.
As a financial journalist for several prominent papers, Garrett knew Wall Street well and wrote a series of novels portraying the morality of capitalism, production, and business activities. For many years, he exhibited his talents as a political commentator and essayist at the Saturday Evening Post. In fact, The Driver first appeared as a six-part series in the Saturday Evening Post.
The novel captures the essence of the progressive era of America that spanned the late 19th and early 20th centuries. During this period, industrialization and a wave of immigrants altered the fabric of American life which became increasingly urban, industrial, and specialized. This was a time of great social and economic development. During this formative period, America’s agrarian society of farmers and small producers was transformed into an urban society in which the corporation became the dominant form of business organization. Steel and oil were in great demand and national transportation and communications networks were being developed. This was a period of seemingly boundless expansion that presented unprecedented opportunities to entrepreneurs and speculators. Wall Street was beginning to develop and railroads boomed as trains moved products from the resource-rich West to the East.
This was also a period of
instability characterized by periods of boom and bust and the fact that
not all citizens shared in the new wealth and optimism. Mark Twain
called this period the “Gilded Age” – a period that was glittering on
the surface but that was tarnished and corrupt underneath. This age saw
the rise of populist reformers who blamed greedy Robber Barons and
speculators for society’s ills. Many people in society, especially those
in government, were anti-business and anti-Wall Street and called for
government intervention to cure the problems that had developed during
the great industrial growth spurt of the late 19th century.
Unlimited prosperity and human happiness
After the Panic of 1893, America suffered a severe economic depression resulting in mass unemployment. In response to this economic adversity, in the winter of 1893-94, Jacob S. Coxey, an American social reformer and populist leader from Massillon, Ohio, proposed a recovery program that included Congressional enactment of a large increase in the amount of legal tender in circulation that could be spent on public works thus providing jobs for the unemployed. In other words, he advocated public works financed by fiat money. Coxey formed an organization called the Commonwealth of Christ and assembled an army of unemployed men. On Easter Sunday, March 25, 1894, he led an army of 100 unemployed men on a march scheduled to arrive in Washington, D.C. on May 1 for a huge demonstration petitioning Congress for measures to alleviate distress and unemployment. Coxey’s Army wanted to demand from Congress a law by which unlimited prosperity and human happiness might be established on earth. They thought that people would work and be prosperous if Congress created an abundant amount of fiat or “democratic” money. Coxey’s Army grew to only 500 participants who arrived in D.C. where the leaders were arrested and the army was quickly disbanded.
According to Garrett, naïve trust is the power of words to command reality is found in all mass delusions. For example, in 1894, populists pressured Congress to enact a bi-metallic system of money by declaring that gold and silver are equal in dollar value and that gold and silver dollars be interchangeable. The problem was that gold remained more valuable to people prompting them to hoard gold or to sell it in Europe. As a result, the Treasury’s gold fund was continually depleted.
The nameless first-person narrator of The Driver is a reporter for an undisclosed newspaper who follows Coxey’s Army to Washington, D.C. This correspondent-narrator is selected by a group of 43 reporters to send accurate reports regarding the march of Coxey’s Army to Mr. Valentine, President of the Great Midwestern Railroad headquartered in New York City. The narrator, who acquires the nickname of “Coxey,” gains a position as personal secretary to Valentine and meets Henry M. Galt, a Wall Street speculator who has an intense interest in the Great Midwestern. After meeting Galt, “Coxey” becomes Galt’s friend and a constant presence in Galt’s business and personal life. It is through the eyes of this reporter-narrator that readers understand the career, struggles, and evolution of a little-known Wall Street speculator and risk-taker to king of Wall Street and to a potential economic dictator of the United States. Unfortunately, Garrett also includes a disappointing, confusing, frustrating, and mostly irrelevant subplot dealing with Galt’s family.
Galt, an eccentric and brilliant broker, floor trader, and member of the stock exchange believes in the future of the Great Midwestern Railroad, continually buys stock in it with his and his family’s money, and becomes one of its largest stockholders. He knows more about the Great Midwestern than anyone else including its President, Mr. Valentine, a weak, inefficient, and non-confident man who runs the business into bankruptcy.
Although Valentine is appointed as receiver, Galt intelligently and diligently studies records, data, and statistics to develop a strategic plan of reorganization to save and rebuild the Great Midwestern. His creative plan encompassed finance, physical resources, and business policy, reflected his great knowledge of the railroad and its properties, and was embraced by the Board. He thereby exhibited how invaluable he was to the railroad.
Galt knew that after the reorganization he would be one of ten men in the boardroom and that “everything else follows from that.” Not only does he become a member of the Board of Directors, he also manages to get himself elected as its Chairman using his influence with several men who were indebted to him. The Great Midwestern Railroad Company thus lives on and progresses under the new name of the Great Midwestern Railway Company. In time, Galt would overthrow Valentine, thereby also becoming the company’s President.
Committed to reality and action
Galt overcame obstacles by driving ahead with aggressive insensitivity and fanatic intentness, all the time keeping focused on his goal and taking practical rational steps in its pursuit. He harshly dismissed employees who hindered the company and rewarded employees who advanced it. Carefully calculating his every action, Galt continually persisted to improve the railroad. He made huge investments in assets, including new tracks, engines, cars, rails, land, road improvements, and equipment. He carefully considered the relative merits of different kinds of equipment, operational problems, the cost of capital, upkeep, and so on. Galt employed an innovative profile map identifying bad grades. As a consequence, he developed better routes by cutting steep grades and by reducing or eliminating curves. Galt ultimately rebuilds the railroad from end to end. Through his intelligence, hard work, and determination, he was able to take a failing company and revitalize it. One of his key moves was to issue new securities using the proceeds to invest in the reconstruction of the Great Midwestern. He later used the company’s profits to buy large interests in other companies. Through the reinvestment of profits, he was able to make his railroad stronger.
Unlike many other businessmen, Galt did not begin by asking how his company can be made to earn a certain rate of profit. Rather, he asked how the Great Midwestern can be built into the greatest transportation company in the world. He knew that if that were done, then the profit would take care of itself.
Galt was committed to reality and action and the need to transform ideas into concrete form. He worked on the premise that once something happened, it becomes an irreversible fact and that every other fact in the universe must adjust itself to that one fact. In other words, a man must use his unique attribute, reason, to apprehend the natural order by which he is bound. It was evident that Galt had confidence in his capacity to deal with the world through the implementation of appropriate and efficacious ideas and measures.
Galt invested all of himself, as well as all of his savings, into the Great Midwestern. He had a tremendous work ethic, as evidenced by his passionate expenditure of time and mental and physical effort in the unwavering pursuit of his dream of building a great railroad. Galt had the power to move men’s minds, persuade them, command them, and reward them. He had the power to imagine what could be, to bring his vision into reality, and to create wealth. He was seen as an elemental force. Regarding Galt, the novel’s narrator says, “The sight of inspired craftsmanship is irresistible to men.”
After rebuilding the Great Midwestern, Galt led the company into other ventures, such as buying controlling interests in other railroads, as well as in investment and insurance companies. Two such companies were the Orient and Pacific Railroad and Security Life Insurance Company. As a result, he and his family became rich.
Galt wins, creates his empire, and makes enemies in the process. He was satiric and had the power to irritate people. In addition, he had no use for public opinion or government. He was contemptuous of politics. Galt knew nothing about society’s views and did not care about them. He had no time for the press and did not engage in public relations. Galt greatly underestimated the force of public opinion. As a result, his family faces social ostracism, Wall Street turns against him, and he is attacked under the antitrust act that had been enacted as special interest regulation to protect less-efficient firms.
Galt’s family gains some acceptance, and Galt is able to take actions to reverse the decline in the price of the Great Midwestern’s stock. An alarmed Congress resolves to investigate Galt and his business dealings and summons him to appear before a Committee of the House. Of course, as expected by now by the reader, Galt defends himself magnificently. He tells the Committee that he is a farmer who farms the country, fertilizes it with money, sows it with more money, reaps profits, and sows the profits back again.
Galt was then asked by the Committee if he, as chairman of the finance committee of Security Life Insurance Company, recommended that securities of the Great Midwestern be purchased. He answered yes and explained that he did not know of a better investment. He was then asked about the disgruntled minority shareholders of the Orient and Pacific who were upset with the Great Midwestern for exercising the power of a majority shareholder. Galt simply explained that he was willing to buy them out at any time.
A well-respected hero
Galt went on to explain that he built his empire by buying a bankrupt company and equipment, property, and stock in other companies when they were selling at low prices. He bought things that nobody else wanted, saw what others did not see, worked hard, managed well, and created great wealth. At this point he announces that in the next year he would be spending $500,000,000 (an amount equal to half the national debt at that time) for double tracking, grade reductions, new equipment, and larger terminals. Galt’s testimony turns public opinion overwhelmingly in his favor.
Galt suffers a stroke and collapses after his ordeal with the committee. His health deteriorates, and he becomes bed-ridden. Still, his mind was clear and he continued to build for the future. He even had his maps and charts drawn on the ceiling so that he could see them. His dream for a pan-American railroad connecting the North and South American continents survived him in the form of an idea. Galt dies a well-respected hero.
It is interesting to note that the character of Henry M. Galt was modeled on 19th century railroad czar and turnaround specialist, Edward H. Harriman (1848-1909). Harriman had bought a seat on the New York Stock Exchange at age 22. By 1883, he sat on the board of the Illinois Central and initiated its huge expansion program. In 1898 he took over and rescued the Union Pacific, a property in receivership and near collapse, and shortly thereafter purchased the Southern Pacific and Central Pacific and saved the Erie. It was Harriman who established standards for locomotives, cars, bridges, structures, signals, and so on.Although The Driver is flawed by its sketchy characterization and its bewildering and extraneous subplot involving Galt’s family, it is still to be recommended for the portrait it paints of a hard-working, visionary, passionate, loyal, and competent businessman and for the sense of the “drive of the age” that it conveys. It is certainly not in the same class as Atlas Shrugged, but what is? It is a good book and a quick read and I recommend it to you, if you can find it. It is available for free from the Ludwig von Mises Institute.
Dr. Edward W. Younkins is Professor of Accountancy at Wheeling Jesuit University. He is the author of Capitalism and Commerce: Conceptual Foundations of Free Enterprise [Lexington Books, 2002]. Many of Dr. Younkins’s essays can be found online at his personal web page at www.quebecoislibre.org. You can contact Dr. Younkins at email@example.com.
Learn about Mr. Stolyarov's novel, Eden against the Colossus, here.