email@example.com (Carl Zwanzig) wrote
> Reminds me of a railroad executive in the '50s. When asked what the
> biggest problem the railroads faced, he said "Too many bankers
I'm not sure if that's true.
Specifically to the railroads of the 1950s: they faced new competition
from tax subsidized highways, waterways, and airports and the
obligation to pay more taxes on their own properties. Further, they
faced strict regulatory and labor laws on improving their own
As to 'bankers':
All business requires capital. Unless you are personally very rich
and have very rich friends, you must get your capital from the finance
markets (bank loans, investors of stocks and bonds).
If your business is floundering, your investors will get nervous about
losing their investment and will naturally wonder if you are doing a
good job. Depending on the nature of financing, they may have a legal
right to muddle in the business. Stockholders can and do have proxy
fights to kick out existing managements. Sometimes that is a good
idea, sometimes not.
Part of the challenge of running _any_ business is keeping the
investors happy. It is not an easy task.
Henry Ford (I) did it by being so rich he could buy out the other
investors in Ford Motor Co. (although only after some nasty court
battles). Most other corporations aren't so lucky. The flip side of
that was that Ford had no one balancing him and as he got older, got
more eccentric and tough to work with. Ford Motor Co. lost its
leadership in the car industry and almost shut down because of the
father's stubborness in his later years. His family forced him to
give up control, in obviously a very emotional and difficult
In the 1950s IBM was poised for dramatic growth. The father, Thomas
J. Watson Sr, was most uncomfortable about his son raising additional
capital needed to expand the business, but he finally relented.
Today it is said that investors are too short term oriented. I don't
know the answer to that. I do wonder how the old Bell System would've
developed if today's attitudes were in place. In the 1950s, Western
Electric equipment was built for the long-haul and cost accordingly.
I wonder if the investment community would've been as patient and
accepting of the steady but modest return on investment of AT&T stock.