us a questionable and damning interpretationnof actual historical figures.nUnlike Josephson, the author ofnPower and Morality believes that anhierarchy of moral development existednamong the era’s business titans. Withnadherence to the law as the minimumnstandard of morality, Engelbourg identifiesnseveral patterns of behavior.nAmong the lawbreakers, he distinguishesnthose who acted illegallynwhenever it was desirable and safe fromnothers who did so only when it was annapproved practice within their businessnelement. Among law-abiders, therenwere those who obeyed grudgingly andnthose who observed not just the law butnalso a moral code of their own. Finally,nthere was a category of men best describednas moral exemplars.nSuch a man was John Murray Forbes.nPossessing high ethical standards himself,nForbes sought to improve the codenof conduct exhibited by his peers. Amplenopportunity came his way in 1873 when,nas a prominent figure at the Chicago,nBurlington & Quincy Railroad, Forbesnwas shocked to learn that other directorsn(and even the president) of the Burlingtonnheld inside contracts with thenconstruction company that built thenriver roads. When the river roads failednto meet the interest payments on theirnbonds, these directors used their positionnto decide that Burlington moneynwould be spent for this purpose, in effectnenriching themselves at the expensenof the railroads.nThis sort of behavior was a far crynfrom Forbes’s concept of corporate directorsnbeing “trustees for others,” (i.e.nthe stockholders). By 1875, enoughnstockholders had rallied around Forbes’snview to enable him to wage a successfulnproxy fight against the guilty directors,nforcing them off the board. Known asnthe “revolution of 1875,” this unprecendented event not only determined thenBurlington’s policy toward people in itsnservice with conflicting outside interests;nit also established in the processna higher standard of conduct for businessmen.nJ-he revolution of 1875 is simplynone example of moral progress in onenarea: conflict of interest. In this casenthe improvement sprang from a businessninsider’s moral standards (and interests)ncoinciding with the interests of an increasinglynpowerful community of businessnoutsiders (the stockholders); togethernthey effected change. As the eranwore on, business outsiders exercisednan ever-greater influence over the insiders,nwhether directly as stockholdersnor indirectly in the form of public opinion.nEventually, the federal governmentnstepped in at the demand of variousnbusiness elements and the general public;nfirst with the Interstate CommercenAct of 1887, which created administrativenagencies to govern commerce;nthen with the Sherman Antitrust Actnof 1890, to guard against unlawful restraintnof trade.nThe contemporary reader is surelynaware that the government became increasinglyninvolved in business affairs,nthat the public still clamors for greaternaccountability, and that businessmennare more dependent than ever on eachnother’s honesty. As it is today, so wasnthe situation of 1914 in comparison ton1840. The actual moral progress involvednhere can in some degree be measurednby the ascendancy and acceptancenof more ethical standards of conduct.nWas this indeed the state of businessnpractices in 1914.’ Engelbourg summarizednwhat his research had revealed:nnnAt the end of the period there wasnless conflict of interest than there hadnbeen earlier. Restraint of trade wasndelimited, although the structure ofnthe American economy was not affected.nCompetitive tactics were modified,nand certain practices virtuallyndisappeared. Stock watering diminishednin the railroads, although it continuednto flourish elsewhere. Financialnreporting improved, althoughnmuch remained to be done.nWhile Saul Engelbourg has made anvaluable contribution to scholarship,nhe has performed an even greater servicento business, particularly big business,nwhich bears an onus of disrepute.nFor one reason or another, many Americansnconsider business to be a selfishlynmotivated, suspicious, vaguely unethicalnenterprise; and the bigger the business,nthe more suspect it is. Engelbourgnadmits that self-interest has always beennbusiness’s guiding principle, but henstates “Never was it the sole guide.”nBusiness practices in this country havenforever been restrained and directed bynan ethical code. That code, nebulousnthough it is, has improved to such annextent that it can be noted in five specificnareas of conduct. Engelbourg hasndocumented this progress.ntower and Morality deserves closenstudy. And not just by students of thenfield, or businessmen curious about thenevolution of their ethical standards.nThis book has implications worthy ofnpolitical consideration. Conservativesnnow have the evidence (for their defensenof free enterprise) that the systemnhas engendered moral as well asneconomic advance. Liberals will understandnbetter when and how regulationsnand legislation have set good standardsnlong before those standards were internalizednby businessmen. Populistsnshould take heart in the profound effectsnsocial pressures have had in determiningnethical business practices. Onlynenemies of free enterprise itself will bendistraught to learn that the system hasnworked so well. DnJuly/August 1981n