‘Follow the Money’: A Shaggy Dog Story About a Rule Rarely Applied Right


Cleveland, Ohio:  Graves of John D. Rockefeller (center) and his wife and mother, Lakeview Cemetery  5/22/10
Cleveland, Ohio: Graves of John D. Rockefeller (center) and his wife and mother, Lakeview Cemetery 5/22/10

          Three months before the Watergate Bunglers were caught – 41 years ago on June 17 – I finished the best[1] course of my university and law school years.


           The course was Business Associations; the professor was Alan Schwarz.

           I had a great job with the Ohio Department of Natural Resources.  Business Associations suited my schedule, so I signed up for it.  Reluctantly.  It was a seven credit-hour, two-quarter Bataan Death March.

           Schwarz’s Socratic manner included high volume responses to student inadequacies that were shared with everyone in the core of the old Ohio State Law School building.  I knew what I was in for.  Except I didn’t.

           We spent weeks on John Kenneth Galbraith’s New Industrial State and Graham, Dodd & Cottle’s Security Analysis.  Schwarz’s approach to his subject didn’t include the standard march through Cary’s casebook.  I recall not a single case from the course, though that doesn’t mean we read none.  The Delaware Corporation Code would remain uncracked.

           In addition to assigned texts, we had to read – study, actually – the day’s Wall Street Journal and New York Times before each class.  (They were much thinner 40 years ago.)  From Schwarz I learnt to read the business pages like Pravda or a coded text and to integrate that data with the news sections.


          The classes were longer than standard – maybe 75 minutes?  And, Schwarz invariably ran over.

           Time didn’t exist for him in the classroom.  Understanding – ours, his – was all that mattered.

           After the initial class in each module, his impossible questions seemed directed as much to himself as to us.  Did I imagine Schwarz davened as the haze increased from the cigarette ever-present in his right hand?  His classes proved so intense, so mentally taxing I couldn’t sit through another for the rest of the day.


           In his effects on me and, importantly, for the course of socially responsible investing research, Schwarz was all about the whys.

           After a couple of weeks of respectful discussion of Galbraith’s New Industrial State, he began the module’s final class by motioning me for a cigarette, disdainfully breaking off its filter, lighting it, and through a gust of smoke, asking, ‘Two words disprove Galbraith.  What are they?’

          As each of us failed to answer his initial question, he berated us more intensely.  He baffled us.  But when I reviewed my notes, his questions had directed us toward corporate managers.  What would lead them away from Galbraith’s vision of a corporatised utopia?

           After two hours, having exhausted my cigarettes and his, Schwarz stared at us in disgust, picked up Galbraith’s book, and left the dais.  When he reached the back of the bowl, he paused and said quietly, ‘Harold Geneen’.


           In 1972, the Times and the Journal were full of Geneen.  But he is remembered, if at all, as the personification of the reasons for the Foreign Corrupt Practices Act (1977), though his company, ITT, was far from unique in spreading money amongst foreign government officials.

           Then, giant, trans-national conglomerates were real rarities.  More common were multi-national mono-lines like General Motors or IBM.  They made it possible in the early 1970s to think of lifetime employment with one company, good pensions and benefits, and the perks of middle class life.

           Geneen’s ITT denied that notion.  He bought and sold hundreds of companies.  He hired and fired to suit.  He foreshadowed ‘Chainsaw Al’ Dunlap and GE’s Jack Welch.

           Abroad and allegedly at home, money flowed to insure regulators didn’t interfere with ITT’s transactions.  In a time when executives took ‘corporate statesmen’ as their models, Geneen and his team weren’t shrinking violets, either in visibility or odor.

           To use a term not then in use, they were profit maximisers.  They harkened to the British East India Company for whom governments were instruments.  The cooperative got rewarded; the uncooperative, subverted.

           Schwarz didn’t imply Geneen and ITT were the future.  Rather, they made impossible the corporate socialism Galbraith and Peter Drucker (‘pension fund socialism’) imagined.  They were whys we had to recognise.


           A somewhat smaller version of ITT was Gulf+Western Industries headed by Charles Bluhdorn.  When he died in 1983, his New York Times obituary found it remarkable enough to note: ‘Mr. Bluhdorn’s favorite expression, on issues as well as on dollars… was, ”What is the bottom line?”’

           Using Bluhdorn as his example, Schwarz drilled into us to look closely at corporate managers’ prior employers.  A remarkable number of G+W alumni figured in 1971-72 stories, such as those featuring travails at Bohack’s Supermarkets and Iowa Beef Processors.  (An OSU securities professor taught me to pay the same attention to a company’s lawyers and accountants.)

           To use another anachronistic term, Schwarz was all about corporate culture and its transmission.  Corporations ran true to form, a concept well understood by Schwarz who was famous for his poker skills.


           As I worked on this piece, I wondered what Schwarz would make of today’s corporations, of a world where lifetime employment with a single firm is unknown, where there is no corporate safety net except for the most senior management.

           Is there such a thing in the era of transnationals as corporate culture?  Do notions like loyalty have a meaning when people change jobs like shoes?

           Our times are very different from the early 1970s.  They may be unique.  But Whitey Bulger’s enterprise suggests they aren’t.  Quite the contrary.


           On our last day of class, Prof. Schwarz repeated the Harold Geneen exercise, demanding we sum up the course in three words.  Again, over two hours, we failed.

           This time, from the back of the bowl, he shouted, ‘Follow the money!  Follow the money!!’

           When ‘Deep Throat’ tells the Bob Woodward character in the movie, ‘All the President’s Men’ (1976), ‘Follow the money’, he was stating the obvious.  The hands it touches reveal the story.  Money is the means to understanding, not its end.  Never its end.


           So, I thought of Al Schwarz when I read the day’s Whitey Bulger story in the Times:

[In his opening statement] Mr. Bulger’s lead lawyer, J. W. Carney Jr., took the unusual tack of immediately acknowledging that his client was guilty of several charges against him, including drug dealing, illegal bookmaking and loansharking, and said he had made “millions upon millions” of dollars through his criminal enterprises.

           Where did that money go?  Even before Whitey Bulger blended into Santa Monica’s aged middle class, he and his family – in several senses – never lived the bling-full life of Kim Kardashian or Paris Hilton.

           The Bulger trial won’t ‘follow the money’.  And, there’s no sign anyone is tracking the ‘millions upon millions’ with the trail 17 years cold.  But that’s where the big story is, the one we’re not likely to learn, the one we must learn – as we did of Harold Geneen.



           1.  By leagues, though, the most important was Civil Procedure.  If you left Robert Wills’s course with any insecurities about the structure of civil litigation, it was your fault.  Never did anyone teach more clearly, more thoroughly.  His course was a huge confidence builder.  A warm, kind, generous man, he was not an inspiring lecturer, especially at 9 a.m., three days a week for three quarters.  The character actor, Chill Wills, gave Robert Wills his nickname: ‘The Chiller’.  But what I learned!