Those who don’t learn from history…

Posted by Marc Hodak on October 8, 2007 under History | 4 Comments to Read

Yesterday’s WSJ has a story about Ohio Attorney General Marc Dann. Dann is nurturing a reputation as a “bad cop” in enforcement against certain business practices. He says:

My job is to be the bad cop, and I’m comfortable with that role because I believe a terrible crime has been committed.

The “crime” he’s referring to is the chance that banks took on turning low-income folks into homeowners, what Dann calls “the largest financial scam in American history.”

Sure, that didn’t work out perfectly, but Santayana’s famous quote works well, here. About 130 years ago, Ohio attorneys general began a crusade against Rockefeller and Standard Oil. Ohioans of the day viewed Standard’s products as superior in quality as well as lower in price. They saw Rockefeller as a local Clevelander who did well, a rags-to-riches story to inspire youths everywhere, and a boon to their state’s move to compete with Pennsylvania and New York as a major industrial and financial center. Ohio’s political and media elite had other ideas.

Euclid Avenue, 1912

Ohio’s politicians began what can only be called an obsessive campaign against Standard Oil. Ohio tax authorities began the relentless pursuit of Standard, and Rockefeller personally, for highly questionable tax liabilities. In 1890, Ohio’s attorney general, successfully went after Standard’s charter, forcing the trust to temporarily dissociate. These attacks propelled the careers of these prosecutors, and sold a lot of newspapers based on the narrative of the “tough” public servant pursuing a big business “unaccountable to the people.”

Rockefeller eventually, and with a heavy heart, moved his family and his headquarters east to escape the persecution. Standard’s mammoth financial and business activities followed him to New York. The oil refining industry shifted to what would become the “Chemical Coast” of New Jersey. Despite the fact that Cleveland is where the mighty New York Central, Erie, and Pennsylvania railroads converged on a fine harbor, Cleveland lost its industrial anchor, and the transportation hub of the U.S. would migrate west to Chicago.

Euclid Avenue, 2006

Today, when a New Yorker or Philadelphian wanders the streets of Cleveland, it seems like a city that has been largely bypassed by the 20th century. While other cities went through ups and downs with the economy, from the late 1800s Cleveland only went down. Unlike Philadelphia, Chicago or Pittsburgh, Cleveland never bounced back from the depression. Most businesses along what was once a thriving Euclid Avenue remain shuttered to this day. No major business calls Cleveland its home.

The destruction of Cleveland’s hopes of becoming a major city on par with Philadelphia, Pittsburgh, or Chicago was not an economically driven loss. It was a politically driven forfeit.

So, Ohio’s current attorney general comes from a distinguished line of “tough” guys going after “criminal” business interests.

At least the Indians are still in the pennant race.