Failures Can Be Healthy
J. Michael Sharman
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /> 
            When the biggest tree in a forest dies, it opens up space and light which allow new, young trees to grow and expand. Whether a person is a logger or a tree-hugger they know that the death of the forest's biggest tree is inevitable, and in fact, its death helps keep the forest healthy.
            That same principle of growth, death and regeneration can also be seen in our nation's commercial history.
In 1857, Congress awarded John Butterfield the original overland mail contract in order to connect the Eastern United States with the rapidly expanding <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Western United States. At that time, he was the biggest, and only, trans-continental mail carrier.[1] It took a letter carried by Butterfield's company only 18 days to travel from St. Joseph, Missouri to San Francisco, California.[2]
But the Central Overland Express Company owned by William Waddell, William Russell, and Alexander Majors had become the fastest carrier of mail when they started up the Pony Express on April 3, 1860. The Pony Express riders could weigh no more than 125 pounds, and the company issued each slender rider a "Holy Bible to defend himself against moral contamination" and a pair of Colt revolvers and a rifle "to defend himself against warlike Indians."[3] It cost ten dollars an ounce to get a letter across the country[4] but the first westbound trip from St. Joseph, Missouri to Sacramento, California was made in 9 days and 23 hours, cutting in half the time that it took Butterfield's stages to carry the same letter.[5]
The U. S. government gave Samuel Morse a subsidy to develop and test an invention which Morse theorized would allow electrical impulses to transmit messages on wires strung across the country. Using his "Morse Code", his first test message from Washington to Baltimore in 1844 recited the Bible verse, "What hath God wrought?".
The Pony Express pushed out Butterfield, but its own existence ended in October, 1861, when Samuel Morse's Western Union Telegraph completed the first transcontinental telegraph line and ended the need for the Pony Express' fast horses and riders.[6]
Butterfield's business and the Pony Express were each a progressive step in their time, but to have continued their contracts based upon their past size or importance would have severely hurt America.
Failure is often the next step toward a new success. As Winston Churchill put it, "Success is the ability to go from failure to failure without losing your enthusiasm."[7]
Unfortunately, on March 28, 2009Treasury Secretary Geithner's told Congress: "To ensure appropriate focus and accountability for financial stability we need to establish a single entity with responsibility for consolidated supervision of systemically important firms and for systemically important payment and settlement systems and activities."[8]
But are the big financial institutions really "systemically important" or is it more accurate to say that they have become systemically destructive to the American economy?
The New York Times recently editorialized: "The important question, however, is whether, in a reformed future, any firm should even come close to getting too big - too diverse, too interconnected - to fail. Mr. Geithner's plan assumes that such firms will be a feature of the financial landscape going forward. That is a radical shift in perspective. … If there is no proven way to reduce the systemic risk in big and interconnected firms, why should they be allowed to exist?"[9]
Every tree is going to die sooner or later, and the last thing you want to do is to try and prop up a massive, dying tree which could come tumbling down on your barn or house with the next strong wind.
 
 
--END--

[1] Brown, Dee, The Westerners, p. 146 (Holt, Rinehart, 1974)

[2] Brown, Dee, The Westerners, p. 152 (Holt, Rinehart, 1974)

[3] Brown, Dee, The Westerners, p. 160 (Holt, Rinehart, 1974)

[4] Brown, Dee, The Westerners, p. 161 (Holt, Rinehart, 1974)

[5] History, Pony Express Museum, http://www.ponyexpress.org/index.php?page=history

[6] History, Pony Express Museum, http://www.ponyexpress.org/index.php?page=history

[7] http://www.quotes.net/quote/11937

[8] Blake, Rob K., "Geithnerism: Institutionalizing 'Too Big To Fail' - A Favor To Mega-Banks", March 29, 2009, Real Estate Dispatch,
http://www.biggerpockets.com/renewsblog/2009/03/29/geithnerism-institutionalizing-big-fail-favor-megabanks/

[9] "Questions for Reform" Editorial, The New York Times, online http://www.nytimes.com/2009/03/29/opinion/29sun1.htmlMarch 28, 2009; print version March 29, 2009, page WK8.