People & Events: Capitalists, Con Men, and Quality Control
The story of Chicago is often told as the story of capitalism and corruption unchecked, and material ambition rewarded.
The first mayor of the city, William Ogden, came as a land agent and found land prices tripling within a few years. He was one of many Eastern speculators who bought land in the area. In the early days it seemed that the business of Chicago was selling land in Chicago to other Chicagoans. "Men exchanged lots with each other very much as boys swap jack-knives," remembered John Wentworth, another early mayor.
As the city grew, business and money-making drove nearly every major decision in town, for good or ill. The desire to keep taxes low led to an under equipped fire department in 1871, the year the Fire razed the city.
America was not prepared for the centralization of power and industry that emerged in the nineteenth century. Gustavus Swift may be admired for developing a vertically integrated company -- controlling his sale of beef from the slaughterhouse to the local butcher shop -- but he got there by selling meat below cost to put local butchers across the country out of business. Not only that, but Swift colluded with other meat-packers to divide up the markets among themselves, suppress unionization of their workers, and to fix prices.
Federal government had no legislation that anticipated these developments, and local officials were too easily bought off. When a railroad wanted a right of way through the city, a few bribes to city councilmen greased the wheels. In fact, to get a seat on the council, it was useful to have some spending money. When Potter and Bertha Palmer's son Honore ran for alderman, his rival complained that running a rich candidate "raised the price of votes in the 21st Ward from 50 cents to two dollars." Politicians could be so corrupt that they didn't even honor their bribes. After he was elected, Mayor Wentworth told one Irishman looking for a job, "We think you fellows are very nice before you vote, but when we get your ballot you can go to hell."
pursuit of money over all other considerations led to the Levee, the red light district where any alcoholic's drink, any gambler's game, or any man's sexual fantasy could be bought for a price. The Levee's unofficial motto should have been "buyer beware." You might find yourself in Mickey Finn's bar having a drink one minute, and then find yourself stripped, robbed and laid out in an alley in the next. Or, if you went with a prostitute to a "panel house," an accomplice might slip his hand into the room through a removable panel and steal your wallet while you were distracted.
Chicago was an ideal place for confidence men, with railways bringing new victims to town -- greedy "marks" who were probably looking for an easy profit. At the turn of the 20th century, Chicago was home to more than one "wire store," an operation that convinced a mark that he could place a sure bet on a race by delaying the results on the Western Union wire. This scam was famously depicted in the movie The Sting, set in Chicago in the 1930s.
After the initial boom, Chicago's reputation as a lawless, corrupt town occasionally deterred new investment, as when Ogden tried to create the first railway in the city. Passing through the city, H. G. Wells described it as "the most perfect presentation of nineteenth century individualist industrialism I have ever seen. ...Chicago is one hoarse cry for discipline!"
But the true secret to Chicago's successful capitalists was their willingness to guarantee quality. At the retail level, Potter Palmer and his successor, Marshall Field, guaranteed all their merchandise and allowed customers to return anything they decided against. A money-back guarantee was the only way Aaron Montgomery Ward and Richard Sears could convince customers to buy from their mail-order catalogs. Cyrus McCormick allowed customers to return reapers for a full refund if the machines did not work as efficiently as he promised.
Similarly, in architecture, while many of old Chicago's buildings were shoddy firetraps, after the 1871 Fire, architects and engineers carefully studied the properties of their designs and materials, and built for quality. The Home Insurance Building by W. LeBaron Jenney, H. H. Richardson's Marshall Field Wholesale Store, and Adler and Sullivan's Auditorium Building were all innovative, solidly built structures.
Most significantly, the first great capital enterprise of the city, the Chicago Board of Trade, was predicated on the guarantee of quality. By setting up a strict system to grade wheat (and later other grains, and livestock), farmers could warehouse their products for a receipt, and those receipts could be bought and sold with the assurance that the paper stood for wheat of a known value.
Like the Board of Trade, Chicago was invented to make men rich. But also like the Board, Chicago's success in that endeavor depended on proving that the goods, services, and even the buildings were worthy of an investor's dollar. Ambition was only rewarded over the long term when married to quality products.
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