America Needs Its Frontier Spirit

By Daniel Henninger
The Wall Street Journal

The greatest danger in the current economic crisis is that the United States will lose its historic appetite for risk. The mood now is that risk-taking got us into this mess. Risk, though, is the quintessential American trait that built the nation -- from the Battle of Bunker Hill to the rise of the microchip. If we let risk give way to a new ethos of commercial reserve and regulatory restriction, the upward arc of the U.S. ascendancy will flatten. Maybe it already has.

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Daniel Boone: Founding Risk-Taker

By "we" I mean the policy makers in Washington who will write the new rules of finance, our stunned bankers and businessmen, and the average Joes of Main Street who with reason have lost confidence. If all lose faith at once in the American idea of risk, refinding it when the recession ends may prove difficult.

This is the moment for Americans to rediscover the "frontier thesis" of Frederick Jackson Turner. In a seminal paper delivered in 1893 to the American Historical Association, "The Significance of the Frontier in American History," Turner argued that the U.S. found its identity as it pushed away from the Eastern seaboard and crossed a series of frontier "fall lines": the Allegheny Mountains, the Mississippi, the Missouri, the plains, the Rocky Mountains and California.

Every American absorbs the frontier experience from reading biographies of great Americans or from movies. Frederick Turner, however, made it clear that with this effort to transform the wilderness the Americans broke decisively with what he called, believe it or not, "old Europe." "Here is a new product," Turner wrote, "that is American."

"From the conditions of frontier life," Turner believed, "came [American] intellectual traits of profound importance . . . coarseness and strength combined with acuteness and inquisitiveness; that practical, inventive turn of mind, quick to find expedients; that masterful grasp of material things, lacking in the artistic but powerful to effect great ends; that restless, nervous energy, that dominant individualism, working for good and for evil." These, he said, are "the traits of the frontier."

Turner's ideas on the frontier lie at the center of many political fights today over domestic and foreign policy. It is hard to overstate how abhorrent Turner's frontier thesis became to the American left, especially its new historians. His paper has been called "notorious and troubling" and a "myth." Their problem with Turner's view of the Americans' tendency to "incessant expansion" needs no elaboration. His critics have called him a racist.

This is unfair. Turner himself later described the political tensions in the new 20th century between Morgan's banks, Harriman's railroads -- "wealth beyond their power to enjoy" -- and the new forces of reform.

If indeed the Democrats' intellectuals want to disown Turner, the conservative movement could profit from adapting what he admired on the frontier. Everyone's ancestors made the frontier, but if it's just a Republican thing now, so be it.

Turner's purpose wasn't to idealize America but to try to understand the wellsprings of its remarkable and self-evident success. He found it, persuasively, in the lessons learned settling a continent.

For our purposes, amid economic meltdown and fiasco, the telling phrase in his list of shaping frontier traits is "that dominant individualism, working for good and for evil."

Individualism working for good is the story of America's entrepreneurs, the wonder of the world the past 100 years. This week Congress is producing the tragic final turn of three of the most famous -- Ford, Chrysler and General Motors.

Most people would view the economic rubble before them as the result of individualism working for ill and evil -- Angelo Mozilo's mindless mortgage originators at Countrywide, Robert Rubin's bonus-addicted risk managers at Citigroup, the politically connected million-dollar managers who opened the vaults at Fannie and Freddie.

The great danger now is that a depressed and angry people will allow the risk-taking American baby to be thrown out with the toxic-securities bathwater. The line of waiting washerwomen is long.

France's Nicolas Sarkozy ("Laissez-faire capitalism is over") and our European friends propose a global regulatory body to monitor financial risk, which of course means it would corral America's cowboy capitalists. Barney Frank wants a "systemic-risk regulator."

Some rethinking of the financial regulatory regime is inevitable. The abrupt September transformation of Goldman Sachs and Morgan Stanley into bank holding companies, most notably with their capital ratios regulated (intensely) by the Federal Reserve is a beginning, and arguably not much more is needed.

What's worrisome is that Congress and an array of piling-on regulatory bodies -- the Fed, Tim Geithner's Treasury, the SEC, the CFTC, a new derivatives regulator -- will create too many designated drivers for American finance and business, producing a status quo of caution.

The current crisis is the result of a world gone madly long on real estate. Daniel Boone, the famed American frontiersman, went belly-up speculating on Kentucky land. He moved on in 1788 and paid his debts. So should we, without losing sight of the American frontier, where we discovered the rewards of risk.