Reflections on a Master

[R. A. Hettinga]

<http://www.forbes.com/forbes/2004/0426/065_print.html>

Forbes



Insights
Reflections on a Master
Peter Huber,   04.26.04, 12:00 AM ET


 
 Is technology destined to make us helpless, as George Orwell predicted in
1984, or to empower us? I recently spent several hours with a man who has
thought a lot about this question and as a banker fashioned some of the
answer: Walter Wriston.

In 1947 Wriston was guarding two electromechanical Sigaba encryption
machines for the Army on the Pacific island of Cebu. Soon after he accepted
an entry-level job at First National City Bank. He went on to serve as
chief executive of what is now Citigroup for 17 years, until he retired in
1984. Along the way--years ahead of Gates and Google--he invested almost $2
billion of Citicorp's money to wire it all together, so that traders, and
then customers, could get real-time access to their accounts and cash. Next
time you step up to an automatic teller machine, think of Wriston. It was
Citibank that pioneered this "thin branch" on Wriston's watch.

Betting the bank on telecom technology, Wriston dramatically extended
Citicorp's reach. It emerged as the Coca-Cola of financial services, the
largest foreign lender and the lender most actively engaged in developing
countries. Other banks were forced to follow. And this wiring of the
world's financial markets had a greater impact on our daily lives than any
other private-sector initiative since the invention of the steam engine.

As Wriston describes in his 1992 book, The Twilight of Sovereignty, he
watched and responded as governments lost control over two key levers of
state power, the power to define what is true about how ordinary people
live under different forms of government, and the power to define the value
of the nation's currency. In the U.S. the gold standard gave way to the
information standard in 1971--Richard Nixon ceded control of the value of
the dollar to Wriston's network and the millions of traders scattered
around the globe, who now use it to conduct the second-by-second
plebiscites that set the values of currencies, stocks, bonds and much else
besides. For a billion or so ordinary consumers, the fully wired
debit/credit card--Wriston's currency, one could call it--now provides far
more liquidity than Alan Greenspan's bills.

Wriston won't take credit for any of this. As he tells the story of his
extraordinary life, he was a simple, plodding fellow, lucky enough to be
surrounded by real talent. Behind all the self-effacing diffidence,
however, stands a warm, engaging, confident man with terrific judgment, a
reliable sense of the future and the courage to take big, calculated risks.
The truly great bosses I've met over the years have all been like that. So
was Ronald Reagan. Reagan knew how to do entertainment, too, but most of
the Wriston-style leaders are too boring for prime time. The nightly news
thus focuses, instead, on flamboyant but inconsequential personalities and
the corporate investments that fail.

Wriston has no Panglossian illusions about technology. We don't yet know
whether or not wired networks have made global financial networks more
stable. Minute-to-minute volatility is certainly higher than it used to be,
he says, but the system may simultaneously impose essential discipline, and
thus stability, on central bankers and political autocrats. Wriston
recognizes that stateless cash makes possible stateless jobs, and that the
decline of sovereign power has facilitated the rise of stateless
armies--terrorists. He understands technology for what it is--not
necessarily a powerful force for good, but certainly a powerful force,
which good people can direct to good ends if they choose. Wired money--the
ATM--is convenient, and saves us time. Wired weapons help us pursue our
enemies into the caves and spider holes in which they hide.

While Wriston was guarding encryption machines on the island of Cebu,
Orwell was writing his novel on the island of Jura, off the coast of
Scotland. Big Brother, as Orwell envisioned him, would only be the face on
the "telescreen"--the real power would be exercised behind the phosphor by
a cabal of faceless government bureaucrats and corporate executives who
would control everything. Orwell died a few years later; Wriston, one might
say, joined the cabal. He rose through the ranks, reached the top, built
the machine and ran it for a long stretch. In the future Orwell imagined,
the hapless, tragic Winston Smith ends up defeated by the machine. In the
future that Walter Wriston created, we carry the machine in our cell
phones, shop with it at Wal-Mart and browse it in our dens.



Peter Huber, a Manhattan Institute senior fellow, is the author of Hard
Green: Saving the Environment From the Environmentalists and the Digital
Power Report. Find past columns at www.forbes.com/huber.




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R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'