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Reflections on a Master

April 26, 2004

By Peter W. Huber

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.

Original Source:



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