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Balleisen, Edward J.

WORK TITLE: Fraud
WORK NOTES:
PSEUDONYM(S):
BIRTHDATE:
WEBSITE:
CITY: Durham
STATE: NC
COUNTRY:
NATIONALITY:

https://history.duke.edu/people/edward-j-balleisen * https://duke.app.box.com/v/BalleisenCV12-16

ESEARCHER NOTES:
LC control no.: n 00098863
LCCN Permalink: https://lccn.loc.gov/n00098863
HEADING: Balleisen, Edward J.
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370 __ |c United States |f Durham (N.C.) |2 naf
372 __ |a Financial institutions |a Commercial crimes |a Fraud |a United States–History |2 lcsh
373 __ |a Duke University |2 naf
374 __ |a History teachers |a College teachers |a Authors |2 lcsh
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670 __ |a Balleisen, Edward J. Navigating failure, 2001: |b CIP title page (Edward J. Balleisen) galley (asst. prof. of history, Duke University)
953 __ |a sg20

PERSONAL

Male.

EDUCATION:

Princeton University, B.A., 1987; Yale University, M.Phil., 1992, Ph.D., 1995.

ADDRESS

  • Office - Duke University, Department of History, 210 Carr Bldg., Durham, NC 27708.

CAREER

Historian, educator, writer, and editor. Duke University, Durham, NC, professor of history, previously associate professor of history and public policy, also vice provost of Interdisciplinary Studies, 2015—, and director of the Rethinking Regulation Project, sponsored by Duke University’s Kenan Institute for Ethics from 2010-15.

WRITINGS

  • Navigating Failure: Bankruptcy and Commercial Society in Antebellum America, University of North Carolina Press (Chapel Hill, NC), c. 2001
  • (With David A. Moss) Government and Markets: Toward a New Theory of Regulation, Cambridge University Press (New York, NY), 2010
  • (Editor) Business Regulation (three volumes), Edward Elgar Publishing Ltd. (Northampton, MA), 2015
  • Fraud: An American History from Barnum to Madoff, Princeton University Press (Princeton, NJ), 2017
  • Policy Shock: Recalibrating Risk and Regulation after Oil Spills, Nuclear Accidents and Financial Crises, Cambridge University Press (New York, NY), 2017

Contributor to books, including New Perspectives on Regulation, edited by D. Moss and J. Cisternino, The Tobin Project (Cambridge, MA), 2009, and others.

Contributor of articles to scholarly journals, including Business History Review, Politics and Governance, Regulation and Governance, and others.

SIDELIGHTS

Historian Edward J. Balleisen is primarily interested in the historical intersections among law, business, politics, and policy in the modern United States. He also has a growing interest in exploring the origins, evolution, and impacts of the modern regulatory state. A collaborator with historians and social scientists on studies concerning regulatory governance in industrialized and industrializing societies, Balleisen has also started an oral history project examining regulatory policymaking. In the academic area, he has been a leader in discussing reconfiguring doctoral education in the humanities.

Balleisen is also the author and editor of books in his areas of interest, including Navigating Failure: Bankruptcy and Commercial Society in Antebellum America. He is coauthor with David A. Moss of Government and Markets: Toward a New Theory of Regulation and editor of the three-volume Business Regulation, which examines modern regulatory governance since 1871. In his book titled Fraud: An American History from Barnum to Madoff, Balleisen provides a history of economic duplicity in American markets, with an emphasis on the long-time interplay between innovation and business fraud.

Balleisen noted in an interview for the Princeton University Press Web site that his motivation for researching and writing Fraud was partly due to “the dramatic American fraud scandals of the late 1990s and early 2000s, which demonstrated how badly duplicitous business practices could hurt investors, consumers, and general confidence in capitalism.” Balleisen went on to note: “I wanted to understand how American society had developed strategies to constrain such behavior, and why they had increasingly proved unequal to the task since the 1970s.” Balleisen was also spurred on by continuing debates about government regulation in terms of its costs and benefits.  

Throughout the book, Balleisen presents historical accounts of what he sees as an endemic part of capitalism, including stories about individual scandals or fraudsters. He details the methods people and companies have used in their fraudulent schemes. He reveals how many of these schemes succeeded and how many fraudsters eventually met with their downfall. In the process Balleisen  also examines efforts made by both private organizations and government agencies to counter some of the most egregious deceptions.

Balleisen reveals the interconnections between markets and regulations over the course of U.S. history. For example, he points to how the courts handled several fraud issues in the nineteenth century, such as using the mail to commit fraud, adulterating foodstuffs, and making exaggerated claims about products or services. Nevertheless, he writes that few convictions or penalties resulted, largely due to what became an overriding laissez-faire policy. In terms of self-regulation, Balleisen notes that private regulatory bodies such as the Better Business Bureau often went after small businesses but seemed averse to confronting fraud in larger corporations.

Balleisen points out that government intervention has a history of sporadic success over the years in addressing fraud. He writes that during the 1970s and 1980s the federal government turned more toward emphasizing criminal prosecution rather than instituting more rules and regulations. Then, after the 2008 Great Recession, regulations once again became a sought-after government approach against fraud. Discussing the modern age of technology, Balleisen cautions against the idea that deregulation is needed to foster technological and financial entrepreneurship, pointing out the “enduring links throughout American history between innovation and fraud,” as noted by Tulsa World Online contributor Glenn C. Altschuler.

Overall, Balleisen warns that history shows that a philosophy of caveat emptor, that is, the idea it is up to the buyer to take responsibility for goods and services before they are purchased, is a dangerous way to avoid handling fraudulent practices in a more comprehensive manner. Balleisen also addresses approaches he deems to be helpful in addressing fraud. These approaches include better public education about fraud and improved disclosure rules. He also calls for targeted enforcement campaigns.

“Balleisen’s lucid, engagingly written mix of institutional and legal history, behavioral economics, and entertaining anecdotes illuminates,” wrote a Publishers Weekly contributor. A reviewer writing in Kirkus Reviews called Fraud “a touch arid at times, but overall a fascinating, illuminating look at bunko and the social conditions under which its practitioners operate.”

BIOCRIT

PERIODICALS

  • Kirkus Reviews, January 1, 2017, review of Fraud: An American History from Barnum to Madoff.

  • Publishers Weekly, December 19, 2016, review of Fraud, p. 115.

ONLINE

  • Christian Science Monitor Online, https://www.csmonitor.com/ (February 2, 2017), Randy Dotinga, “Books Chapter & Verse: Is Fraud an American Tradition?,” author interview.

  • Duke University History Department Web site,https://history.duke.edu/ (October 30, 2017), author faculty profile.

  • Princeton University Press Web site, https://press.princeton.edu/ (October 30, 2017), “An Interview with Edward J. Balleisen, author of Fraud: An American History from Barnum to Madoff.”

  • Tulsa World Online, http://www.tulsaworld.com/ (February 26, 2017), Glenn C. Altschuler, review of Fraud.

  • Wilson Center Web site, https://www.wilsoncenter.org/ (October 30, 2017), brief author profile and “The Takeaway,” commentary on author speech concerning his book Fraud.*

  • Navigating Failure: Bankruptcy and Commercial Society in Antebellum America University of North Carolina Press (Chapel Hill, NC), c. 2001
  • Government and Markets: Toward a New Theory of Regulation Cambridge University Press (New York, NY), 2010
  • Business Regulation ( three volumes) Edward Elgar Publishing Ltd. (Northampton, MA), 2015
  • Fraud: An American History from Barnum to Madoff Princeton University Press (Princeton, NJ), 2017
  • Policy Shock: Recalibrating Risk and Regulation after Oil Spills, Nuclear Accidents and Financial Crises Cambridge University Press (New York, NY), 2017
1. Policy shock : recalibrating risk and regulation after oil spills, nuclear accidents and financial crises LCCN 2017028166 Type of material Book Main title Policy shock : recalibrating risk and regulation after oil spills, nuclear accidents and financial crises / edited by Edward Balleisen, Lori S. Bennear, Kimberly D. Krawiec, and Jonathan Wiener. Published/Produced Cambridge, United Kingdom ; New York, NY : Cambridge University Press, 2017. Projected pub date 1710 Description p. ; cm. ISBN 9781107140219 (alk. paper) Library of Congress Holdings Information not available. 2. Fraud : an American history from Barnum to Madoff LCCN 2016935601 Type of material Book Personal name Balleisen, Edward J. Main title Fraud : an American history from Barnum to Madoff / Edward J. Balleisen. Edition 1st edition. Published/Produced Princeton, NJ : Princeton University Press, 2017. Projected pub date 1701 Description pages cm ISBN 9780691164557 (cloth : alk. paper) Library of Congress Holdings Information not available. 3. Business regulation LCCN 2015933342 Type of material Book Main title Business regulation / edited by Edward J. Balleisen, Associate Professor of History and Public Policy and Vice Provost for Interdisciplinary Studies, Duke University, USA. Published/Produced Cheltenham, UK ; Northampton, MA, USA. : Edward Elgar Publishing Limited, [2015] Description 3 volumes : illustrations ; 25 cm. ISBN 9781781951590 set 1781951594 set CALL NUMBER K3840 .B87 2015 Copy 1 Request in Law Library Reading Room (Madison, LM242) 4. Government and markets : toward a new theory of regulation LCCN 2009037726 Type of material Book Main title Government and markets : toward a new theory of regulation / Edward J. Balleisen, David A. Moss. Published/Created Cambridge ; New York : Cambridge University Press, 2010. Description xvi, 559 p. : ill. ; 24 cm. ISBN 9780521118484 (hardback) 0521118484 (hardback) Links Cover image http://assets.cambridge.org/97805211/18484/cover/9780521118484.jpg CALL NUMBER HD3612 .G68 2010 Copy 1 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HD3612 .G68 2010 FT MEADE Copy 2 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE 5. Navigating failure : bankruptcy and commercial society in Antebellum America LCCN 00061537 Type of material Book Personal name Balleisen, Edward J. Main title Navigating failure : bankruptcy and commercial society in Antebellum America / Edward J. Balleisen. Published/Created Chapel Hill : University of North Carolina Press, c2001. Description xv, 322 p. : ill., maps ; 25 cm. ISBN 0807826006 (cloth : alk. paper) 0807849162 (pbk. : alk. paper) Links Publisher description http://www.loc.gov/catdir/description/unc041/00061537.html CALL NUMBER HG3766 .B22 2001 Copy 1 Request in Jefferson or Adams Building Reading Rooms CALL NUMBER HG3766 .B22 2001 FT MEADE Copy 2 Request in Jefferson or Adams Building Reading Rooms - STORED OFFSITE
  • Duke - https://history.duke.edu/people/edward-j-balleisen

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    Edward J. Balleisen

    Professor of History
    External address:
    210 Carr Bldg, Durham, NC 27708
    Internal office address:
    Box 90719, Durham, NC 27708-0719
    Phone:
    (919) 684-2699
    eballeis@duke.edu
    Links
    Balleisen cv -- July 2017
    Information about my book, FRAUD: AN AMERICAN HISTORY FROM BARNUM TO MADOFF
    Information about my book, NAVIGATING FAILURE: BANKRUPTCY AND COMMERCIAL SOCIETY IN ANTEBELLUM AMERICA
    Information about my co-edited book, GOVERNMENT AND MARKETS -- TOWARD A NEW THEORY OF REGULATION
    Information about my co-edited book, POLICY SHOCK: RECALIBRATING RISK AND REGULATION AFTER OIL SPILLS, NUCLEAR ACCIDENTS, AND FINANCIAL CRISES
    Information about my edited three-volume research collection, BUSINESS REGULATION
    Interdisciplinary Studies at Duke
    Overview of Bass Connections -- Duke's innovative program to support collaborative, interdisciplinary, problem-centered research
    Radio Interview with Ralph Nader on FRAUD: AN AMERICAN HISTORY FROM BARNUM TO MADOFF
    Versatile Humanists @ Duke -- Information about our efforts to enhance doctoral training in the humanities
    Video Discussion (C-SPAN) about FRAUD with Former Congressman Brad Miller and NC Sr Deputy Attorney General Kevin Anderson, April 2017
    Overview
    Grants
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    Professional Activities
    Overview
    My research and writing explores the historical intersections among law, business, politics, and policy in the modern United States, with a growing focus on the origins, evolution, and impacts of the modern regulatory state. I have pursued a number of collaborative projects with historians and other social scientists who study regulatory governance in industrialized and industrializing societies. I have also started an oral history project that examines regulatory policy-making, which involves extensive collaboration with Duke undergraduate and graduate students.

    My most recent book is Fraud: An American History from Barnum to Madoff (Princeton University Press, 2017). Economic duplicity has bedeviled American markets from the founding of the Republic. In this wide-ranging history, I emphasize the enduring connections between capitalist innovation and business fraud, as well as the vexed efforts by private organizations and state agencies to curb the worst economic deceptions. Placing recent fraud scandals in long-term context, I argue that we rely solely on a policy of caveat emptor at our peril; and that a mixture of public education, sensible disclosure rules, and targeted enforcement campaigns can contain the problem of business fraud.

    A growing proportion of my writing engages interdisciplinary debates about the nature of regulatory policy more generally, as well as the evolution of dominant approaches to political economy in modern capitalist societies. This dimension of my scholarship led to the publication of Government and Markets: Toward a New Theory of Regulation (Cambridge University Press, 2010), which I edited along with the historian David Moss. This volume brings together several new conceptual approaches to regulatory governance from across the social sciences. It also lays out a wide-ranging research agenda for regulatory studies.

    In 2015, my sole-edited three-volume multidisciplinary research collection, Business Regulation, came out with Edward Elgar. This collection includes a long introductory essay, “The Dialectics of Modern Regulatory Governance,” that conceptualizes the emergence of the modern regulatory state in the nineteenth-century and its evolution since then, often in response to powerful critiques from scholars and regulated businesses. It then provides over 100 leading writings on key aspects of regulatory governance, with selections that range from 1869 to the 2010s, and from across the social sciences.

    Along with Duke colleagues and collaborators Jonathan Wiener, Lori Bennear, and Kim Krawiec, I am also completing an interdisciplinary volume that examines when and how industrialized democracies reconfigure regulatory institutions in the aftermath of major crises. This book, Policy Shock: Recalibrating Risk and Regulation after Oil Spills, Nuclear Accidents, and Financial Crises, will be published by Cambridge University Press in 2017.

    From 2010 through 2015, I directed the Rethinking Regulation Project, sponsored by Duke's Kenan Institute for Ethics. Rethinking Regulation brings together faculty and graduate students from across the university who are interested in regulatory policy and strategies of regulatory governance. The group pursues ambitious collaborative research that brings undergraduate and graduate students into research teams linked to Duke's Bass Connections program, such as the 2015-16 team that investigated approaches to Retrospective Regulatory Review.

    I am especially interested in mentoring graduate students who wish to study the history of business-state relations, the regulatory state, business culture, political economy, and legal institutions. Although my research expertise lies particularly with American history from 1815 to the present, I have advised several graduate students who have pursued transnational dissertation topics, or who study other areas of the world. I am also now mentoring several graduate students in other social science disciplines.

    Since 2015, I have served as Duke’s Vice Provost for Interdisciplinary Studies, working with university-wide institutes and initiatives to foster collaborative, interdisciplinary research, teaching, and engagement. In this capacity, I oversee Bass Connections, an innovative program that supports interdisciplinary, problem-centered research teams involving faculty, graduate students, and undergrads. I am also the lead co-PI on Duke’s “Versatile Humanists” project, funded by a Next Generation Implementation grant from the National Endowment for the Humanities. Through this grant, we hope to improve the preparation of our doctoral students in the humanities to make a difference within and outside of academia.

    [last updated, 7/17]

    Education & Training
    Ph.D., Yale University 1995
    M.Phil., Yale University 1992
    B.A., Princeton University 1987
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    Fraud: An American History from Barnum to Madoff
    The United States has always proved an inviting home for boosters, sharp dealers, and outright...

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    bookjacket

    Fraud:
    An American History from Barnum to Madoff
    Edward J. Balleisen
    Book Description

    Edward J. Balleisen

    Edward J. Balleisen
    (Photo Credit: Les Todd/Duke Photography)

    An Interview with Edward J. Balleisen, author of Fraud: An American History from Barnum to Madoff.

    Can you explain what brought you to write this book?

    For more than two decades, I have been fascinated by the role of trust in modern American capitalism and the challenges posed by businesses that break their promises. My first book, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America, addressed this question by examining institutional responses to insolvency in the mid-nineteenth-century. This book widens my angle of vision, considering the problem of intentional deceit in the United States across a full two centuries.

    In part, my research was motivated by the dramatic American fraud scandals of the late 1990s and early 2000s, which demonstrated how badly duplicitous business practices could hurt investors, consumers, and general confidence in capitalism. I wanted to understand how American society had developed strategies to constrain such behavior, and why they had increasingly proved unequal to the task since the 1970s.

    In part, I was gripped by all the compelling stories suggested by historical episodes of fraud, which often involve charismatic business-owners, and often raise complex questions about how to distinguish enthusiastic exaggeration from unscrupulous misrepresentation.

    In part, I wanted to tackle the challenges of reconstructing a history over the longer term. Many of the best historians during the last generation have turned to microhistory – detailed studies of specific events or moments. But there is also an important place for macro-history that traces continuity and change over several generations.

    In addition, my research was shaped by increasingly heated debates about the costs and benefits of governmental regulation, the extent to which the social legitimacy of market economies rest on regulatory foundations, and the best ways to structure regulatory policy. The history of American anti-fraud policy offers compelling evidence about these issues, and shows that smart government can achieve important policy goals.

    What are the basic types of fraud?

    One important distinction involves the targets of intentional economic deceit. Sometimes individual consumers defraud businesses, as when they lie on applications for credit or life insurance. Sometimes taxpayers defraud governments, by hiding income. Sometimes employees defraud employers, by misappropriating funds, which sociologists call “occupational fraud.” I focus mostly on deceit committed by firms against their counterparties (other businesses, consumers, investors, the government), or “organizational fraud.”

    Then there are the major techniques of deception by businesses. Within the realm of consumer fraud, most misrepresentations take the form of a bait and switch – making big promises about goods or services, but then delivering something of lesser or even no quality.

    Investment fraud can take this form as well. But it also may depend on market manipulations – spreading rumors, engaging in sham trades, or falsifying corporate financial reports in order to influence price movements, and so the willingness of investors to buy or sell; or taking advantage of inside information to trade ahead of market reactions to that news.

    One crucial type of corporate fraud involves managerial looting. That is, executives engage in self-dealing. They give themselves outsized compensation despite financial difficulties, direct corporate resources to outside firms that they control in order to skim off profits, or even drive their firms into bankruptcy, and then take advantage of inside information to buy up assets on the cheap.

    Why does business fraud occur?

    Modern economic life presents consumers, investors, and businesses with never-ending challenges of assessing information. What is the quality of goods and services on offer, some of which may depend on newfangled technologies or complex financial arrangements? How should we distinguish good investment opportunities from poor ones?

    In many situations, sellers and buyers do not possess the same access to evidence about such issues. Economists refer to this state of affairs as “information asymmetry.” Then there is the problem of information overload, which leads many economic actors to rely on mental short-cuts – rules of thumb about the sorts of businesses or offers that they can trust. Almost all deceptive firms seek to look and sound like successful enterprises, taking advantage of the tendency of consumers and investors to rely on such rules of thumb. Some of the most sophisticated financial scams even try to build confidence by warning investors about other frauds.

    A number of common psychological tendencies leave most people susceptible to economic misrepresentations at least some of the time. Often we can be taken in by strategies of “framing” – the promise of a big discount from an inflated base price may entice us to get out our wallets, even though the actual price is not much of a bargain. Or a high-pressure stock promoter may convince us to invest by convincing us that we have to avoid the regret that will dog us if we hold back and then lose out on massive gains.

    How has government policy toward business fraud changed since the early nineteenth century?

    In the nineteenth century, Anglo-American law tended to err on the side of leniency toward self-promotion by businesses. In most situations, the key legal standard was caveat emptor, or let the buyer beware. For the judges and legislators who embraced this way of thinking, markets worked best when consumers and investors knew that they had to look out for themselves. As a result, they adopted legal rules that often made it difficult for economic actors to substantiate allegations of illegal deceit.

    For more than a century after the American Civil War, however, there was a strong trend to make anti-fraud policies less forgiving of companies that shade the truth in their business dealings. As industrialization and the emergence of complex national markets produced wider information asymmetries, economic deceit became a bigger problem. The private sector responded through new types of businesses (accounting services, credit reporting) and self-regulatory bodies to certify trustworthiness. But from the late nineteenth century into the 1970s, policy-makers periodically enacted anti-fraud regulations that required truthful disclosures from businesses, and that made it easier for investors and consumers to receive relief when they were taken for a ride.

    More recently, the conservative turn in American politics since the 1970s led to significant policy reversals. Convinced that markets would police fraudulent businesses by damaging their reputations, elected officials cut back on budgets for anti-fraud enforcement, and rejected the extension of anti-fraud regulations to new financial markets like debt securitization.

    Since the Global Financial Crisis of 2007-08, which was triggered in part by widespread duplicity in the mortgage markets, Americans have again seen economic deceit as a worrisome threat to confidence in capitalist institutions. That concern has prompted the adoption of some important anti-fraud policies, like the creation of the Consumer Financial Protection Bureau. But it remains unclear whether we have an entered a new era of greater faith in government to be able to constrain the most harmful forms of business fraud.

    Many journalists and pundits have characterized the last several decades as generating epidemics of business fraud. What if anything is distinctive about the incidence of business fraud since the 1970s?

    Fraud episodes have occurred in every era of American history. During the nineteenth century, railroad contracting frauds abounded, as did duplicity related to land companies and patent medicine advertising. Deception in the marketing of mining stocks became so common that a prevalent joke defined “mine” as “a hole in the ground with a liar at the top.” From the 1850s through the 1920s, Wall Street was notorious for the ruthless manner in which dodgy operators fleeced unsuspecting investors.

    Business frauds hardly disappeared in mid-twentieth-century America. Indeed, bait and switch marketing existed in every urban retailing sector, and especially in poor urban neighborhoods. Within the world of investing, scams continued to target new-fangled industries, such as uranium mines and electronics. As Americans moved to the suburbs, fraudulent pitchmen followed right behind, with duplicitous franchising schemes and shoddy home improvement projects.

    The last forty years have also produced a regular stream of major fraud scandals, including the Savings & Loan frauds of the 1980s and early 1990s, contracting frauds in military procurement and healthcare reimbursement during the 1980s and 1990s, corporate accounting scandals in the late 1990s and early 2000s, and frauds associated with the collapse of the mortgage market in 2007-2008.

    Unlike in the period from the 1930s through the 1970s, however, business fraud during the more recent four decades have attained a different scale and scope. The costs of the worst episodes have reached into the billions of dollars (an order of magnitude greater than their counterparts in the mid-twentieth century, taking account of inflation and the overall growth in the economy), and have far more frequently involved leading corporations.

    Why is business fraud so hard to stamp out through government policy?

    One big challenge is presented by the task of defining fraud in legal terms. In ordinary language, people often refer to any rip-off as a “fraud.” But how should the law distinguish between enthusiastic exaggerations, so common among entrepreneurs who just know that their business is offering the best thing ever, and unacceptable lies? Drawing that line has never been easy, especially if one wants to give some leeway to new firms seeking to gain a hearing through initial promotions.

    Then there are several enduring obstacles to enforcement of American anti-fraud regulations. Often specific instances of business fraud impose relatively small harms on individuals, even if overall losses may be great. That fact, along with embarrassment at having been duped, has historically led many American victims of fraud to remain “silent suckers.” Proving that misrepresentations were intentional is often difficult; as is explaining the nature of deception to juries in complex cases of financial fraud.

    The most effective modes of anti-fraud regulation often have been administrative in character. They either require truthful disclosure of crucial information to consumers and investors, at the right time and incomprehensible language, or they cut off access to the marketplace to fraudulent businesses. Postal fraud orders constitute one example of the latter sort of policy. When the post office determines that a business has engaged in fraudulent practices, it can deny it the use of the mails, a very effective means of policing mail-order firms. Such draconian steps, however, have always raised questions about fairness and often lead to the adoption of procedural safeguards that can blunt their impact.

    How does this book help us better understand on contemporary frauds, such as the Madoff pyramid scheme or the Volkswagen emissions scandal?

    The basic psychological patterns of economic deception have not changed much in the United States. Indeed, these patterns mirror experimental findings regarding vulnerabilities that appear to be common across societies. Thus I would be skeptical that the tactics of an investment “pump and dump” or marketing “bait and switch” would look very different in 1920s France or the Japan of the early 21st century than in the U.S. at those times.

    That said, dimensions of American culture have created welcome ground for fraudulent schemes and schemers. American policy-makers have tended to accord great respect to entrepreneurs, which helps to explain the adoption of a legal baseline of caveat emptor in the nineteenth century, and the partial return to that baseline in the last quarter of the twentieth-century.

    The title of this book is Fraud: An American History from Barnum to Madoff. What do you see as uniquely American about this history of fraud?

    The basic psychological patterns of economic deception have not changed much in the United States. Indeed, these patterns mirror experimental findings regarding vulnerabilities that appear to be common across societies. Thus I would be skeptical that the tactics of an investment “pump and dump” or marketing “bait and switch” would look very different in 1920s France or the Japan of the early 21st century than in the U.S. at those times.
    That said, dimensions of American culture have created welcome ground for fraudulent schemes and schemers. American policy-makers have tended to accord great respect to entrepreneurs, which helps to explain the adoption of a legal baseline of caveat emptor in the nineteenth century, and the partial return to that baseline in the last quarter of the twentieth-century.

    The growth of the antifraud state, however, likely narrowed the differences between American policies and those in other industrialized countries. One hope of mine for this book is that it prompts more historical analysis of antifraud regulation elsewhere – in continental Europe, Latin America, Africa, and Asia. We need more detailed histories in other societies before we can draw firmer comparative conclusions.
    What do you see as the most important implications of this book for policy-makers charged with furthering consumer or investor protection?

    Business fraud is a truly complex regulatory problem. No modern society can hope to eliminate it without adopting such restrictive rules as to strangle economic activity. But if governments rely too heavily on the market forces associated with reputation, business fraud can become sufficiently common and sufficiently costly to threaten public confidence in capitalist institutions. As a result, policy-makers would do well to focus on strategies of fraud containment.
    That approach calls for:

    • well-designed campaigns of public education for consumers and investors;
    • empowering consumers and investors through contractual defaults, like cooling off periods that allow consumers to back out of purchases;
    • cultivating social norms that stigmatize businesses that take the deceptive road;
    • building regulatory networks to share information across agencies and levels of government, and between government bodies and the large number of antifraud NGOs;
    and
    • a determination to shut down the most unscrupulous firms, not only to curb their activities, but also to persuade everyone that the state is serious about combating fraud.

    Return to Book Description

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  • Wilson Center - https://www.wilsoncenter.org/person/edward-j-balleisen

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    Edward J. Balleisen is Vice Provost for Interdisciplinary Studies and Associate Professor of History and Public Policy at Duke University. His most recent book is: Fraud: An American History from Barnum to Madoff (2017). Other volumes include Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (2001); Government and Markets: Toward a New Theory of Regulation (2009, co-edited with David Moss); and a three volume research collection, Business Regulation (2015). He has won three teaching prizes at Duke, and is a leader in the national conversation on reconfiguring doctoral education in the humanities.

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    Skip to main content RESEARCH EVENTS EXPLORE EXPERTS ABOUT DONATE You are here Wilson Center Home Edward J. Balleisen GUEST SPEAKER Edward J. Balleisen AFFILIATION Vice Provost for Interdisciplinary Studies and Associate Professor of History and Public Policy, Duke University Bio Edward J. Balleisen is Vice Provost for Interdisciplinary Studies and Associate Professor of History and Public Policy at Duke University. His most recent book is: Fraud: An American History from Barnum to Madoff (2017). Other volumes include Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (2001); Government and Markets: Toward a New Theory of Regulation (2009, co-edited with David Moss); and a three volume research collection, Business Regulation (2015). He has won three teaching prizes at Duke, and is a leader in the national conversation on reconfiguring doctoral education in the humanities. RELATED CONTENT HISTORY Fraud: An American History from Barnum to Madoff WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS Ronald Reagan Building and International Trade Center One Woodrow Wilson Plaza 1300 Pennsylvania Ave. NW Washington, DC 20004-3027 202-691-4000 The Wilson Center, chartered by Congress as the living memorial to President Woodrow Wilson, is the nation’s key non-partisan policy forum for tackling global issues through independent research and open dialogue to inform actionable ideas for Congress, the administration, and the broader policy community. DONATE NOW EMAIL UPDATES Weekly updates from the Wilson Center FOLLOW WILSON CENTER Facebook Twitter RSS Youtube Linked In Press About Support the Center 990 Forms/Budget Privacy SUPPORT the Wilson Center with every Amazon purchase. Close Skip to main content RESEARCH EVENTS EXPLORE EXPERTS ABOUT DONATE You are here Wilson Center Home Edward J. Balleisen GUEST SPEAKER Edward J. Balleisen AFFILIATION Vice Provost for Interdisciplinary Studies and Associate Professor of History and Public Policy, Duke University Bio Edward J. Balleisen is Vice Provost for Interdisciplinary Studies and Associate Professor of History and Public Policy at Duke University. His most recent book is: Fraud: An American History from Barnum to Madoff (2017). Other volumes include Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (2001); Government and Markets: Toward a New Theory of Regulation (2009, co-edited with David Moss); and a three volume research collection, Business Regulation (2015). He has won three teaching prizes at Duke, and is a leader in the national conversation on reconfiguring doctoral education in the humanities. RELATED CONTENT HISTORY Fraud: An American History from Barnum to Madoff WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS Ronald Reagan Building and International Trade Center One Woodrow Wilson Plaza 1300 Pennsylvania Ave. NW Washington, DC 20004-3027 202-691-4000 The Wilson Center, chartered by Congress as the living memorial to President Woodrow Wilson, is the nation’s key non-partisan policy forum for tackling global issues through independent research and open dialogue to inform actionable ideas for Congress, the administration, and the broader policy community. DONATE NOW EMAIL UPDATES Weekly updates from the Wilson Center FOLLOW WILSON CENTER Facebook Twitter RSS Youtube Linked In Press About Support the Center 990 Forms/Budget Privacy SUPPORT the Wilson Center with every Amazon purchase. Close ShareThis Copy and Paste

  • The Christian Science Monitor - https://www.csmonitor.com/Books/chapter-and-verse/2017/0202/Is-fraud-an-American-tradition

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    BOOKS CHAPTER & VERSE
    Is fraud an American tradition?
    Edward J. Balleisen, author of 'Fraud,' says America’s embrace of democracy has eased the path for some charismatic pitchmen of fraudulent schemes.

    Caption

    Randy Dotinga
    FEBRUARY 2, 2017 —American swindlers have existed as long as there have been Americans to swindle, and they've just gotten bigger and bolder over time. Indeed, we've played host to "many of the world's most ambitious and expensive frauds," writes Duke University historian Edward J. Balleisen in his new book Fraud: An American History from Barnum to Madoff.

    But the fraudsters aren't invulnerable. As Balleisen reveals, the US has also produced "some of the most far-reaching and innovative responses to financial and commercial deceit."

    In an interview with the Monitor, Balleisen talks about the history of the American swindle, the strategies used by fraudsters and our society's efforts to fight back.

    Q: What did you learn about swindlers and their schemes as a whole?


    Perpetrators of fraud tend to be winsome characters, likable individuals who inspire confidence. They also demonstrate a knack for taking advantage of common cognitive and emotional vulnerabilities, often through compelling storytelling.

    Bad guys in books: Try our villains in literature quiz!
    Particularly in the case of complex corporate accounting frauds, however, deception sometimes emerges less out of an initially well-worked out scheme and more out of incremental attempts to mask bad news or to meet unrealistic targets.

    Q: What about fraud in the US over our history has been particularly American?


    America’s embrace of democracy has eased the path for some charismatic pitchmen of fraudulent schemes – investment charlatans like Henry H. Tucker, Jr., president of the early 20th-century Uncle Sam Oil Company, or Glenn Turner, the head of the 1970s multi-level marketing scheme, Dare to Be Great.

    These individuals didn't only play up the ability of anyone in American to rise from modest circumstances to riches. They also adroitly deflected public attacks on their methods and honesty as emanating from a threatened business and political establishment.

    Q: What did you learn about the victims of fraud in the US?

    America’s abundant historical encounters with business fraud suggest that just about everyone gets taken in at some point by some consumer deceptions or investment misrepresentations.

    Given the complexity of modern economic life, it’s very difficult for even the most careful consumers and investors to spot every dodgy marketing claim that comes their way.

    Frequently the victims of fraud have chosen to remain “silent suckers,” so as to sidestep ridicule for their lack of marketplace savvy. Compared to the 19th century or even the early 20th century, though, in recent decades American consumers and investors have become far more willing to levy public allegations of fraud.

    Q: How have efforts to combat fraud evolved over the past few decades?

    From the mid-1970s up through the 2008 financial crisis, the tenor of anti-fraud policy reflected the broader tendencies of a deregulatory era, with deeply problematic consequences.

    In implementing policies, officials often chose to err on the side of providing leeway to businesses in how they marketed their products and services, so as not to crimp the creative energies of the marketplace. The result was a regular stream of major fraud scandals.

    The costs associated with the worst episodes reached into the billions of dollars, an order of magnitude greater than major business frauds in the mid-20th century, taking account of inflation and the overall growth in the economy. And they've far more frequently involved leading corporations.

    Q: As Trump takes over, what do you see going forward in terms of fraud prevention, regulation and so on? Will anyone (government, non-profits like Consumer Reports, etc.) be watching the store?

    Given the new president’s stance on regulation, I would not anticipate vigorous anti-deception policing by most federal agencies that have anti-fraud missions.

    The Consumer Financial Protection Bureau still enjoys considerable independence, but there are many signs that Congress, the new president, or both will soon try to bring that agency to heel.

    Still, we need to remember that states and local governments play significant roles in anti-fraud policing, as do consumer organizations and websites, self-regulatory bodies, and the press. There is likely to be a greater onus on these institutions to engage in public consumer and investor education, to provide channels for complaints, and, at the state and local level of government, develop effective policies that respond to the always evolving world of economic deception.

    Q. Do you think it will ever be possible to really prevent Ponzi and Madoff types?


    No open society will ever completely stamp out business fraud. But smart policies and practices can contain it.

    The list here would include well-designed public education campaigns, sensible legal defaults like cooling-off periods that allow consumers to cancel transactions within a short window, effective information-sharing among law enforcement agencies about prevailing scams, and tough enforcement actions against the most deceitful firms.

    Randy Dotinga, a Monitor contributor, is a board member and immediate past president of the American Society of Journalists and Authors.

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9/14/2017 General OneFile - Saved Articles
http://go.galegroup.com/ps/marklist.do?actionCmd=GET_MARK_LIST&userGroupName=schlager&inPS=true&prodId=ITOF&ts=1505440588449 1/2
Print Marked Items
Balleisen, Edward J.: FRAUD
Kirkus Reviews.
(Jan. 1, 2017):
COPYRIGHT 2017 Kirkus Media LLC
http://www.kirkusreviews.com/
Full Text: 
Balleisen, Edward J. FRAUD Princeton Univ. (Adult Nonfiction) $35.00 2, 1 ISBN: 978-0-691-16455-7
A broad-ranging study of the big swindle in American life over the last couple of centuries.Americans, P.T. Barnum
divined, have a deeply ingrained habit of needing "to cast suspicious eyes on what was before them"--but then "to be
taken in regardless." There is something in our character, something at once aspirational and gullible, that makes the
nation so avid to embrace the likes of a Charles Ponzi, a Bernie Madoff, and any number of religious and political
figures past and present. Balleisen (History and Public Policy/Duke Univ.; Navigating Failure: Bankruptcy and
Commercial Society in Antebellum America, 2001, etc.) casts a gimlet eye on the passing parade of hucksters and
charlatans, peppering a narrative long on theory with juicy asides that build toward a comprehensive catalog of "Old
Swindles in New Jargon"--e.g., the ever popular pyramid scheme. That fundamentally undemocratic bit of fraud--I got
mine, and it doesn't matter whether you get yours--is built on an ethos of wishful thinking and anxiety alike, for
Americans have always had the haunting fear of sliding backward into poverty. Ranging among the disciplines of
history, economics, and psychology, Balleisen constructs a sturdy narrative of the many ways in which we have fallen
prey to the swindler, and continue to do so, as well as of how American society and its institutions have tried to build
protections against the con. But these protections eventually run up against accusations of violating "longstanding
principles of due process," since the bigger the con, the more lawyers arrayed behind it. It's in looking at these
regulatory mechanisms that the narrative sometimes bogs down in detail, but it all adds up to a useful, if perhaps
accidental, operating manual to living in America, a land in which the great novelist Herman Melville pointedly
followed up his vast novel Moby-Dick with the savagely satirical The Confidence-Man. A touch arid at times, but
overall a fascinating, illuminating look at bunko and the social conditions under which its practitioners operate--and
flourish.
Source Citation   (MLA 8th
Edition)
"Balleisen, Edward J.: FRAUD." Kirkus Reviews, 1 Jan. 2017. General OneFile, go.galegroup.com/ps/i.do?
p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA475357249&it=r&asid=23c435172cc539d35ce5395b361ed4f8.
Accessed 14 Sept. 2017.
Gale Document Number: GALE|A475357249

---

9/14/2017 General OneFile - Saved Articles
http://go.galegroup.com/ps/marklist.do?actionCmd=GET_MARK_LIST&userGroupName=schlager&inPS=true&prodId=ITOF&ts=1505440588449 2/2
Fraud: An American History from Barnum to
Madoff
Publishers Weekly.
263.52 (Dec. 19, 2016): p115.
COPYRIGHT 2016 PWxyz, LLC
http://www.publishersweekly.com/
Full Text: 
Fraud: An American History from Barnum to Madoff
Edward J. Balleisen. Princeton Univ., $35 (496p) ISBN 978-0-691-16455-7
Balleisen (Navigating Failure), associate professor of history at Duke University, explores America's ambivalent
attitude toward con-artistry in this colorful survey history of business fraud and the fitful attempts to suppress it. In
American fraud's 19th-century golden age, adulterated commodities, shoddy manufactures, counterfeit bank-notes,
inflated stocks, Barnum-esque hoaxes, predatory sales contracts, and Ponzi schemes galore were mainstays of
commerce. More recently, Balleisen reveals that the methods have kept pace with sociopolitical changes, as evidenced
by Medicare fraud, credit default swaps, and more Ponzi schemes. He counterpoints the nature of the swindles with the
growing formal--and informal--"anti-fraud state" of postal inspectors, government financial and trade regulators,
criminal prosecutors, class-action lawyers, and muckraking reporters (who sometimes colluded with stock scams
instead of exposing them). Balleisen shows how anti-fraud regulations were perennially weakened by Americans'
grudging admiration for clever con-men, industry lobbying, the doctrine of caveat emptor (the notion that buyers are
responsible for avoiding scams), and fears that cracking down too harshly on fraudulent promises might dampen the
investor enthusiasm powering the economy. Balleisen's lucid, engagingly written mix of institutional and legal history,
behavioral economics, and entertaining anecdotes illuminates this land of bilk and money. Illus. (Feb.)
Source Citation   (MLA 8th
Edition)
"Fraud: An American History from Barnum to Madoff." Publishers Weekly, 19 Dec. 2016, p. 115. General OneFile,
go.galegroup.com/ps/i.do?
p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA475324331&it=r&asid=849f4b43860572243b26115f9695da96.
Accessed 14 Sept. 2017.
Gale Document Number: GALE|A475324331

"Balleisen, Edward J.: FRAUD." Kirkus Reviews, 1 Jan. 2017. General OneFile, go.galegroup.com/ps/i.do? p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA475357249&it=r. Accessed 14 Sept. 2017. "Fraud: An American History from Barnum to Madoff." Publishers Weekly, 19 Dec. 2016, p. 115. General OneFile, go.galegroup.com/ps/i.do? p=ITOF&sw=w&u=schlager&v=2.1&id=GALE%7CA475324331&it=r. Accessed 14 Sept. 2017.
  • Tulsa World
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    Book review: "Fraud: An American History from Barnum to Madoff" by Edward J. Balleisen
    By Glenn C. Altschuler Feb 26, 2017 0
    2017-02-26 sc-bksfraudp1
    ‘FRAUD: AN AMERICAN HISTORY FROM BARNUM TO MADOFF’

    By Edward J. Balleisen

    Princeton University Press, $35
    The “new smooth sell,” Ralph Lee Smith once pointed out in 1962, “often consists of ancient gimmicks in shiny new packages, tailored to a modern age.”

    He was right, of course. Well before and long after P.T. Barnum’s (probably apocryphal) comment that “there’s a sucker born every minute,” Americans of all socioeconomic classes have succumbed to the siren songs of lying promoters and cheating retailers.

    In “Fraud,” Edward Balleisen, a professor of history and public policy at Duke University, provides a lively and informative account of chicanery in the United States in the past 200 years. His book illuminates how anti-fraud policies helped shape American business, as they transformed the relationship between the market and the regulatory bureaucracy of the government.

    Balleisen demonstrates that markets and regulation have always been inter-connected. In the 19th century, judges often upheld mail fraud proceedings, state grain grading, fertilizer inspection, anti-adulteration laws and occupational licensing laws as constitutional exercises of state “police power.” That said, he acknowledges that the philosophy of laissez-faire/caveat emptor translated into a small percentage of criminal convictions and penalties.

    Nor was self-regulation all that effective. The Better Business Bureau, Balleisen writes, exposed con artists and small businesses that crossed the line with exaggerated or false claims, “but left alone the big corporations whose executives sat on their boards of directors.” In the 1920s, for example, the BBB did not investigate egregious conflicts of interest and misrepresentations used by investment banks to sell securities to clients ignorant of the risks.

    Government regulation has ebbed and flowed. In the 1970s and ’80s, Balleisen reminds us, critics gained the upper hand, many of them arguing that criminal prosecution, not costly and intrusive administrative rules and investigations, was the most appropriate and effective response to fraud. In response to the Great Recession of 2008, the pendulum swung back, with, for example, the establishment of the Consumer Financial Protection Bureau in the Dodd-Frank bill.

    $3.95 a month: Get unlimited access to tulsaworld.com so you are in the know on all the fun.
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    A “central rationale for deregulation” in the 21st century has been a perceived need to spur technological, organizational and financial entrepreneurship. Proponents of this view, Balleisen points out, seem unaware of the enduring links throughout American history between innovation and fraud, in railroad-building, mail-order marketing, mutual stock funds, sub-prime mortgage loans and the dot-com bubble. Referring to the collapse of Enron, for example, economist Paul Krugman claimed that the uncertainty and fantasies associated with transformative innovations make it “springtime for charlatans.”

    Too often, the message to business owners and managers is, “reaching objectives is what matters and how you get there isn’t that important.” With deregulation about to become the order of the day amid renewed rhetoric in Washington, D.C., and many state capitols about the virtues of free enterprise, we are left to wonder, along with Balleisen, about what exceptions, if any, our legislators will make “for consumers and investor whom they see as especially vulnerable to fraud.” And about the role of “inventive governance” in building “the social trust necessary for modern capitalism.”

    Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University.

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