Business Adventures summary

Have you ever heard of the Ford Edsel? Originally intended to be Ford’s flagship product in the late 1950s, the car not only ended up being one of the most spectacular product failures of all time but is also frequently cited as one of the ugliest cars ever made.

How could a company as successful as Ford fail so dismally?

Warren Buffett is one of the richest people on the planet, and yet he admits that his tax rate is lower than his secretary’s (whose income, naturally, amounts to far less than his). Sound like a cruel joke?

Well, it’s the perfect example of how unfair the US federal income tax system is. To understand how it got so bad, let’s examine the increasingly twisted development of the system since its inception.

Imagine your uncle works for an oil company and he calls you up one day to tell you to invest in his company’s stock, as they’ve just struck oil and will only announce it tomorrow. Sounds like, if you bought the stock, you could end up doing time for insider trading, right?

That would hold true today, but it wouldn’t necessarily have been that way before the Texas Gulf case.

In the early 1960s, the automatic copy machine was a huge hit and the product’s developer, Xerox, suddenly became the market leader. But, within just a few years, the company experienced a huge downfall. Let’s take a look at Xerox’s rollercoaster ride in three stages.

First, there was initial success against all the odds.

In late 1963, the brokerage company Ira Haupt & Co. was in trouble. It no longer had sufficient capital to trade in the New York Stock Exchange (NYSE) and its membership had to be revoked.

The reason for this predicament was that the brokerage, which traded in commodities, had made a disastrous deal. It had bought cottonseed and soybean oil to be delivered at a later point in time and used the warehouse receipts as collateral to borrow money from the bank. Unfortunately, it turned out that the receipts had been doctored and the oil did not actually exist. Ira Haupt & Co. was suddenly the victim of large-scale commercial fraud and unable pay back the massive debt.

These days, whenever a company is mired in a scandal, they’ll claim that nobody did anything wrong – that the true culprit is “communication problems.”

For example, if a company dumps toxic waste into an aquifer, it’s not out of greed, but because “The board failed to properly communicate the new environmental strategy to the local managers.”

Unless you live in the southern or midwestern United States, chances are you’ve never heard of Piggly Wiggly. Either way, in 1917, it patented the concept of the self-service supermarket. It was the first supermarket to, for example, provide shoppers with shopping carts, put price tags on all the items and have check-out stands.

Piggly Wiggly still operates today, but is relatively unknown due to the actions of its eccentric owner Clarence Saunders, who went to great lengths to fight financial speculation.

When a highly influential government bureaucrat jumps over to the business world and leverages his old government connections to make money, many people are likely to accuse him of being a sell-out.

But in the case of David Lilienthal, this wouldn’t be an appropriate accusation.

Who do you think are the most powerful people in America? In theory, it should be the stockholders.

Especially given the fact that they own the largest corporations in America and these giant companies wield such great power in American society that many political scientists have suggested that the United States resembles an oligarchic feudal system more than a democracy.

If one day you were to receive a highly tempting job offer from a competitor of your current employer, you’d be able to accept it, right?

Actually, your right to do so was not always so clear, and you have a research scientist named Donald Wohlgemuth to thank for setting the precedent that allows you to do as you please.

In the 1960s, of all the currencies of the world, the British pound sterling was perhaps one of the most prestigious due to its old age and high value. So when the pound came under attack from financial speculators in 1964, central bankers around the world felt obliged to defend it.

The roots of the attack go back to the Bretton Woods Conference of 1944, when the major economies of the world decided to build an international monetary exchange system where all currencies were exchangeable at fixed rates. This meant that, to maintain these fixed rates, governments had to often intervene in the currency exchange market by buying or selling currencies.