WMQ author Tom Cutterham (October 2018) offers further thoughts on his piece, “‘A Very Promising Appearance’: Credit, Honor, and Deception in the Emerging Market for American Debt, 1784—92” (William and Mary Quarterly, volume 75, no. 4).
by Tom Cutterham
Where is the line between entrepreneur and con-artist? That’s the question that animates Jane Kamensky’s account of early nineteenth-century Boston financier Andrew Dexter Jr. in The Exchange Artist. It’s also at the heart of my article in this past October’s WMQ, about Daniel Parker, one of the earliest international traders in United States public debt during the 1780s and early 1790s. More than that, though, I think the question reaches deep into the nature of entrepreneurship itself—and thus, into the history of capitalism, from the eighteenth century to the twenty-first.
While I worked through the final copy-edits to my article this summer, I was also reading Bad Blood, the journalist John Carreyrou’s gripping story of a much more recent entrepreneurial collapse: that of Elizabeth Holmes and her blood-testing venture, Theranos. In 2015, Holmes was the poster-child for the high-tech innovation that was set to disrupt the lucrative healthcare market, with a personal net worth in the billions of dollars, and the fawning media coverage to match. This June, she was indicted for fraud by a federal grand jury. Her company has ceased to operate.
Reading Bad Blood, I was struck by the eerie parallels between how Daniel Parker and Elizabeth Holmes operated, some two centuries apart. My article describes Parker’s tireless efforts to control the flow of information about his business deals—his judicious use of secrecy, misinformation, and conspicuous consumption to create the “promising appearance” that propped up his enterprise. It also shows how he leveraged relationships with his investors, and with agents of the new American state like ambassador John Adams, to legitimise his project and build up his capital and influence. In each of these ways, Holmes and Theranos did likewise. They kept staff, investors, and customers in the dark, feeding them false or misleading information, while playing on Silicon Valley mystique and their proximity to state power through board members like General James Mattis.
Through it all, Holmes maintained the preternatural self-confidence and charismatic optimism—in other words, the “promising appearance”—that had first interested investors in a nineteen-year-old Stanford drop-out. Over thirteen years, before it all started to fall apart in 2016, she took in hundreds of millions of dollars in investment and led the billionaire lifestyle of a start-up wunderkind. The fact that Theranos never produced what it had promised may be the least important part of the story. With so much money and expertise behind it, the gamble might just have paid off. As Kamensky concluded of Andrew Dexter and his rival Nathaniel Appleton, it can be no more than failure or success that makes the difference between con-artist and entrepreneur. And as Richard White put it in his book on the transcontinental railroads, “modernity is as much a product of disaster as of success.”
Deception has always been a part of human relationships. But there are specific ways it manifests in the political economy of capitalism. The techniques that helped merchants and financiers get by in the late eighteenth century, continue to be practised by their successors on both sides of the success/failure divide. While new technologies and markets struggle their way into being, it takes promising appearances to draw accumulated capital their way. Every now and then they have their spectacular disasters—but for two hundred years it has been con-artists and entrepreneurs, often indistinguishable from each other, who have ushered in our capitalist future.