Walter Wriston was once one of the most powerful people on the planet. The chairman of the financial giant Citibank and its parent corporation, Citicorp, he was also a man with a vision. Wriston was a globalist who was deeply influenced by economist Friedrich Hayek’s vision of a world in which market freedoms were the basis of individual liberty. Look closely at the burgeoning of international finance, of information networks, of logistical innovations that transformed trade. You’ll find Wriston everywhere.
Wriston’s financial innovations helped create the modern Eurodollar market — a vast offshore realm of financial transactions in US dollars happening outside of US borders. His efforts to build a private global payments system under Citibank’s control in the early 1970s prompted other banks to build their own collective system, so as to avoid being drawn inside Citibank’s gently smiling jaws.
Wriston’s willingness to put his ideas into action changed the world. As he explained in 1979, the “current banking network, with its Euromarkets and its automated payments system” seemed dull and technical, but it had immense political consequences. He believed that if money could move rapidly from country to country, it could no longer be mastered by nations. Instead it might master them, replacing the whimsical tyranny of political rulers with the austere rigor of market discipline.
But the tragedy of globalization was that men and women like Wriston built a world that seemed to escape the control of government but in fact was wide open to government power and its own undoing.
A clattering steampunk engine
At the beginning of Wriston’s career, in the 1960s, international banking barely existed. It was sluggish, timid, and lazy. Banks were trapped inside national borders by complex and clashing rules put in place after the financial crash of the Great Depression. These regulations meant that most banks faced little international competition and had scant incentive to invest in new ways of doing things. It was nearly impossible to be a true international bank.
The 1960s banking industry was a Victorian relic in the modern era, a clattering steampunk engine of rusting pistons and gutta-percha-covered cables, with a few incongruously modern parts bolted on. Eric Sepkes, who helped build the European payments system, later recalled how Citibank’s London operation relied on a system of pneumatic tubes to communicate between the office that initiated the payments to clients — borrowers, business, brokers — and the office that authorized those payments. Staff had to handwrite payment instructions on a form, which they then stuffed into a canister and inserted into a partial vacuum conduit that ferried it to its destination where the authorizes would then release the funds (the City of London had built miles of pneumatic tube networks in the nineteenth century). One day, when the payments people didn’t hear back from authorization, they discovered that the tube had become blocked. Citibank had to call in a chimney sweep to fix the problem, re-enabling payments processing for the entire continent of Europe.
Henry Farrell and Abraham Newman, “How a Single Hard-Charging CEO Helped the US Dollar Take Over the World,” Insider, September 12, 2023.