Henry Kaufman Quotes

In 1900, industrial workers toiled 10 hours a day, 6 days a week and earning an average of $375 dollars a year. ...[W]orking conditions were typically unsanitary, unsafe, and often fatal, and there were few protections—whether from unions (...a meager 5 percent of industrial workers), employers, or government. ...[S]tate and federal governments frequently trotted out their armed militias to help suppress striking laborers. ...[W]hites lived an average of only 47 years, blacks a mere 33.

[D]uring the ... the federal government took large strides to regulate corporate America. ...[T]he federal government managed to break up several trusts (including the , American Tobacco, and ) and to establish the Federal Trade Commission and the Federal Reserve.
In our time, business consolidation is evoking no similar reaction.

In the 1890s and 1810s corporate consolidation inspired an enormous public outcry against the "trusts" (...big business). Newspapers overflowed with editorial deriding... "robber barons," and for the first time in American history the federal government stepped in to regulate... First came the ... designed to limit discriminatory railroad rates, and then the Sherman Anti-Trust Act of 1890—Congresses' first attempt to constrain monopolistic practices. In practice, both acts proved to be weak against the predominant power of big business. For decades, the courts in effect made regulatory policy in how they interpreted... these two...

The credit approval process began with the analysis of balance sheets and profit and loss statements. For those who know how to unlock their secrets, these documents can contain hidden traps, as I soon discovered—and was later reminded by some of the more spectacular credit problems of recent decades. Balance sheets tend to overstate assets and understate liabilities. Inventories commonly are assigned a large cash value after they have become obsolete, while receivables that are ostensibly current are quite often in arrears. Inadequate reserves constitute yet another common weakness that is poorly reflected... A receivable is a current asset, but it could be a slow asset.

The professor that had the most influence on me was Marcus Nadler. ...As a teacher he had a rare ability to break down complex subjects into more palatable and understandable points. ...[H]e had a great capacity to simplify, to turn abstract ideas into practical applications. ...His lectures helped shape my belief that financial institutions and markets must balance entrepreneurial drive with responsibility. And his fairness and openness to opposing points of view influenced me to conclude that no one school of economic thought has a monopoly on wisdom.

[T]he most striking feature of America's Gilded Age banking and financial markets is their lack of regulation. Wall Street was periodically upended by... colorful figures such as , Jim Fiske, and Jay Gould to manipulate prices and corner markets. The only force countervailing against such panics was a handful of more responsible investors, most notably J. P. Morgan... [who] engineered a successful rescue operation after the ... That episode inspired Congress to begin... plans for a central bank. After all, Morgan couldn't live forever.

The federal made some efforts at regulation in 1900, by passing the Gold Standard Act, which allowed state banks to set up branches in small towns and ended the bimetalism debate by establishing gold as the only redeemable metal. Still, the vast majority of banks were local, single unit operations, and access to capital and credit... increasingly difficult as... business enterprises expanded rapidly.

In 1900, two-thirds of the nation's... citizens still lived in rural communities... But that was changing rapidly (by 1920 more than half of all Americans lived in cities), thanks in large part to the explosive growth of manufacturing. ...[T]wo-thirds of the nation's output was in manufactured goods, even though manufacturing employed less than a quarter of the work force. The average plant producing petroleum, iron and steel, and textiles (the three leading industries)... were belied by the behemoth factories... Carnegie... christened the new century by selling his sprawling steel interests to J. P. Morgan, who promptly assembled the $1.4 billion United States Steel Corporation in 1901, the nation's first billion-dollar industry.
Still, American manufacturing was then churning out a tiny fraction—roughly 1 percent...—of what today's cleaner and enormously more efficient plants produce.

[T]he nation's middle class was about to embark on an educational revolution that would help boost incomes to unimagined levels over the next three generations. ...Along with the obvious benefits to... individuals, education yielded enormous social and economic returns. Economists have found universal public education in America to be one of the leading engines of economic growth.

Judgements on the performance of our economy require a clearly defined objective. Too often... there are multiple and contradictory objectives. Unless we are clear on our... objectives, we are not able to evaluate performance as good or bad...

[G]ood bankers understand the shortcomings of accounting and know how to correct for them.

[A] balance sheet is a snapshot of one moment in time, and thus presents a very limited view... To be a good banker, therefore, a business is much more than its balance sheet.

[A] profit and loss statement is not simply a collection of figures, but rather—for the perceptive banker—a window into the nuts and bolts of the business, from its method of operation to its management philosophy.

What fascinated me about Drucker, and still does, is how he infuses his broad perspective on business issues with philosophical and historical considerations.

[F]inancial markets can be considered one of the great wonders of the world.