Honesty and Free Markets

Ray Dirks is the pudgy young man whose financial research led to the discovery that the great Equity Funding insurance empire was a thoroughly fraudulent operation. Shortly after Dirks made his findings public, the great company went crashing to the ground; its officers were snared in legal problems; and investors and policyholders lost everything.

There wasn’t a Ray Dirks to blow the whistle on the Penn Central system a few years ago, but the results were the same. One day the Penn Central was considered to be the strongest corporation around, with billions of dollars’ worth of real estate holdings backing up its borrowings through the banking system and the money market. Next day the company couldn’t meet its payroll, couldn’t pay interest on its debt, couldn’t run the railroad. It, too, went bankrupt, and noteholders and stockholders lost. fortunes.

WR

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William F. Rickenbacker

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Ray Dirks is the pudgy young man whose financial research led to the discovery that the great Equity Funding insurance empire was a thoroughly fraudulent operation. Shortly after Dirks made his findings public, the great company went crashing to the ground; its officers were snared in legal problems; and investors and policyholders lost everything.

There wasn’t a Ray Dirks to blow the whistle on the Penn Central system a few years ago, but the results were the same. One day the Penn Central was considered to be the strongest corporation around, with billions of dollars’ worth of real estate holdings backing up its borrowings through the banking system and the money market. Next day the company couldn’t meet its payroll, couldn’t pay interest on its debt, couldn’t run the railroad. It, too, went bankrupt, and noteholders and stockholders lost. fortunes.