Listener Call

PETER ONUF: We’re back with BackStory. I’m Peter Onuf.

ED AYERS: I’m Ed Ayers.

BRIAN BALOGH: And I’m Brian Balogh. Today on the show, April Fools, we’re looking at three centuries of cons, frauds, and scams.

PETER ONUF: As always, we’ve been inviting your thoughts on the subject on our website. We got a comment there from Elizabeth in Lewisburg, Pennsylvania. And we have Elizabeth on the line to share that comment now.

Elizabeth, we’ll level with you. This is a show about deception.

ELIZABETH: I’m glad to hear that. No dissembling here.

PETER ONUF: No, not at all.

BRIAN BALOGH: Not yet.

ELIZABETH: Well, I was wondering about intrafamily swindles.

BRIAN BALOGH: Do you know my family, Elizabeth?

ELIZABETH: Intrafamily swindles in the context of the stock market crash of 1929, actually.

In every family, I’m sure that there is a favorite uncle who has some kind of– or supposed financial acumen. And everyone else in the family says, oh, well, let’s trust Uncle So-and-so to invest our money in the stock market. And Uncle So-and-so is actually a closet gambler and uses the money otherwise, and assumes that he’ll be able to make it back before anyone asks for their returns. Then he doesn’t.

So this is what happened on one side of my family. And they came down on him hard and he went to jail.

And then on the other side of the family, the favorite uncle lost all of everyone’s money in the crash. And then, whatever he could retrieve he paid himself and said, oops, sorry, and they all forgave him.

PETER ONUF: Wow. He didn’t pay anybody else back? It was just–

ELIZABETH: No, he paid no one else back. So my question is for you, when you have people who are in your family, you have a close personal connection with them and they swindle you, are we more willing to forgive them than people who are not?

PETER ONUF: Yeah, I think the default is to hunker down and maintain family solidarity. And I think there’s a good reason for it.

In the 19th century and before, family connections are a way of socializing risk. And in my period, the great commercial networks of the Atlantic world, and even within the colonies, would be family dynastic networks. Or, the next best thing would be for instance, the Quakers had a religious commitment that taught them to trust each other because their word was always good. And the great challenge is to achieve the kind of trust that enables you to act together.

So I think deeply embedded in our psyches is a notion that trust begins at home. And I think that story about the investor uncle, Elizabeth, I think that’s the one that is– that’s the default. And I think you, in the tone of your voice, and maybe I’m not listening closely enough, were suggesting that you endorsed that, too. Even though this guy was a scoundrel, this investor, there was something about what the family did that makes sense to you.

ELIZABETH: Yeah. Well, it really depends on the context of the family and whether or not the investing uncle, individual, had a history of going out on a limb and always losing. Finally, they had a–

PETER ONUF: There would be a learning curve there.

ELIZABETH: Yeah, exactly. Or, whether somebody had done, in good faith, the best that they could do. And so we embrace them. We take care of them. And we don’t kick them out on the shingle. Because they are, at the end of the day, family. And so you’re right, the trust factor is very much there and we always trust family more than we trust any outsider.

PETER ONUF: Well, that’s true. But don’t we learn who in the family deserves trust? And aren’t there ways of dealing with unreliable people in families? Mainly by not taking risks on them.

BRIAN BALOGH: I would answer Elizabeth’s question by saying that the degree of retribution depends on the degree of interdependence in the first place. And I’m guessing that for much of Ed’s century, operations, whether businesses or farms, were family oriented, family dominated.

ED AYERS: Oh, yeah.

BRIAN BALOGH: And people probably compromised or cheated at the edges all the time. But people also were constantly dealing with each other. It was a constant negotiation.

This was true even for the first part of the 20th century in certain businesses. I come from a small business background. My father and my uncle were in business together. And depending on what week it was, they were heroes or they were villains. They were honest, moral people or they were crooks, and it went back and forth. And as a kid growing up in this environment, you just got used to this was the nature of family business.

My larger point about the 20th century is the number of people engaged in family businesses diminishes across the 20th century. And increasingly, we kind of contract out the decision-making about whether somebody is a crook or not to law enforcement, to attorney generals, to regulators, et cetera, et cetera.

I don’t know, what do you think, Ed?

ED AYERS: It’s interesting that the dynamic you lay out there, Elizabeth, is one of the most famous plays in American history of Death of a Salesman. And it’s the uncle who has gone out and made all this money and is entrepreneurial, and he’s on other continents. And he comes back and he makes the humdrum life of the non-risk-taking salesman seem like a real dead end.

PETER ONUF: Right. Exactly.

ED AYERS: So it’s kind of interesting. We wouldn’t want to glorify too much the way that families can absorb all this. And in other ways, they embody the tensions with them, sort of a capitalist economy. So don’t feel bad. It’s just the way America is.

ELIZABETH: Yes.

BRIAN BALOGH: Well, thank you for joining our family for this brief moment, Elizabeth.

ELIZABETH: Well, thank you very much. I really enjoyed you bantering about the question.

ED AYERS: Hey, Bantering R Us.

ELIZABETH: Thanks a lot.

PETER ONUF: Thanks, Elizabeth.

ELIZABETH: OK.

BRIAN BALOGH: Bye.

ELIZABETH: Bye.