From General Slocum to BP, lessons never learned

The General Slocum (via Wikipedia)

The other evening, as my husband and I went for a walk through the East Village, we stumbled on a plaque commemorating the deaths of more than 1,000 people aboard the General Slocum, a pleasure-seeking side-wheel steamship. They were German immigrants, mostly women and children bound for the annual community picnic. Technically,  it was flames or the treacherous currents of the East River that killed them. But that wouldn’t accurately describe the true cause of their deaths. The real culprit was corruption.

Would it surprise you to learn that regulators had inspected the ship not long before the 1,300-plus Lutheran church members had embarked on their excursion, and declared it fit? Would it surprise you even a little that the crew had never trained for disaster and the safety equipment was faulty? The lifeboats were painted and wired to the deck; the life jackets were so old that those who donned them sank.

The anniversary of that disaster in 1904 is almost here — June 15.  And until terrorists struck the World Trade Center towers in 2001, it was the deadliest fire in New York City history.

After we finished reading the plaque, my husband turned to me and said: Nothing ever really changes, does it? We fight the same battles over and over. The oversight breakdown at the General Slocum is sui generis, the losses too horrible to contemplate. But over the course of time we seem to bump into the same issues over and over. Moral laxness is a poison in our system. BP. The financial meltdown. It’s still hard to believe that people in charge of our safety and well-being would  shirk their responsibilities for personal gain.

Almost no one was held accountable for the General Slocum tragedy. Only the captain went to jail. He later received a pardon from President Taft. No on else from the ship company even went to trial. And the inspectors? They lost their jobs. That appears to be it; the Coast Guard took over inspection duties.

Accountability seems more elusive than ever. Over the past week we’ve seen a barrage of news bruiting the perils of regulator capture and indifference to the weakest among us.

Rolling Stone reports in chilling detail the sins of omission and commission leading to the disastrous oil spill in the Gulf of Mexico. The application for the rig, put forth when the new broom of Ken Salazar promised to sweep away the fecklessness of the Bush administration Department of the Interior, was a joke. A telling detail: In the event of a catastrophe, BP promises to protect walruses and other cold mammals swimming off the coast of Louisiana. Some plan.

And then come two new reports of regulatory capture. The SEC’s Elizabeth King, a key player in market and trading oversight, is joining high-frequency trading firm Getco — which is doubtless keenly interested in the investigation the agency is now putting together on the May 6 flash crash. John Paulson, the hedgie who  (in)famously shorted the housing market through a trade with Goldman Sachs, has added two former SEC heavies to his board, the NY Post reports exclusively: former SEC Chairman Harvey Pitt and former SEC Commissioner Roel Campos. Could this move be a form of insurance against a civil investigation?

Meanwhile, Forbes is stunned at the way financial reform so unabashedly favors the strong over the weak: six too-big-to-fail banks, beneficiaries of taxpayer money and central bank policy moves, earned $51 billion in 2009 while 980 lost money, the story notes. “Public policy has benefited the oligopoly at the cost of hurting some of the other 980 bank holding companies in the nation. The financial overhaul bill unfairly penalizes any bank with more than $50 billion–even if it is a retail bank serving Main Street, making loans to small business and mortgages to ordinary people, not billionaire hedge fund managers.”

The plaque commemorating the Slocum is attached to an iron fence in front of a synagogue, the house of worship for the next immigrant group that came to this country seeking a better way of life. As I think about these issues I suddenly realize why my grandmother always talked about people who died in the course of building this country — and not from war. She would have been too young to remember the Slocum disaster or the fire in the Triangle Shirt Waist factory. But in retrospect I think she was keenly aware of the perils that threatened the little guy — the riveter, the pattern cutter, or the picnickers on a sunny morning.

Below, a detailed assessment of what happened on the General Slocum more than 100 years ago.

In the official investigation that followed, it became evident that many confluent factors contributed to the heavy loss of life: the rampant corruption of that era, inadequate safety precautions and lack of crew preparation (the 35-man crew had never received required training or had a fire drill) and the still debatable decision of the captain to press ahead. One month before the disaster, two inspectors from the U.S. Steamboat Inspection Service had declared the Slocum safe and sound.

In fact, the six lifeboats were all tied down and glued to their chocks (blocks used to prevent them from temporarily moving) from a recent paint job and would not budge. The life belts were nailed tight to the overhead by rusty wiring and dated “1891.” They were required by law to contain six pounds of solid cork; however, a noticeable powdery substance was spilling out of them. When the passengers put them on and jumped into the river, instead of floating, they sank like a rock from their weight. The fire hoses, which were declared in “good condition,” burst apart from the water pressure.

However, Captain Van Schaick was declared solely culpable and was the only one to go to jail. (He later received a presidential pardon.) Steamboat company officials were tried, but never convicted even though records indicate that owners bribed the inspectors; in any case, the latter most likely bought their jobs, as this was the practice of the day. Upon inspection of all the harbor excursion boats, many were found to have similar violations. As a result, there was a complete shakeup of the Inspection Service. Since 1942, the U.S. Coast Guard has carried out its functions.

via Remembering the Slocum disaster, a century later.

Addendum: After reading this post, my 11-year-old son said to me, “Mom, you have to say something more. You can’t just end it here. Ending it here feels like a stack of unstapled papers.”  But I have very little to add; I only hope that we get better at learning how to prevent the morally-challenged from harming us — and that we must recognize that regulations often give us a false sense of confidence. 

7 thoughts on “From General Slocum to BP, lessons never learned

    • That’s an excellent question. In theory, journalists write about the regulators. But it’s a hard slog with limited readership until something terrible happens. It’s no secret that the media are in a state of upheaval now. I’m hoping that when the new paradigm(s) for profitable journalism emerges watching the watchdogs will gain prominence. But it’s hard to be optimistic about this. In an interview on NPR’s Planet Money, a congressman admitted that the proposed new rules governing derivatives on Wall Street were weak. The reason? His constituents don’t understand the topic, and, based on his interview, just don’t care as much about them as the Wall Street lobbyists. It’s shocking when you think about the number of stories written about the havoc these instruments wreaked on the economy. But you can’t force people to pay attention to details that are difficult to understand or just plain boring — even if they are important to the safety of the wider community.

    • Hello regnar,

      The legislative and executive branches are supposed to ensure that regulators are in fact regulating. Regulators can only regulate if they are authorized to do some enabling act of legislation. It is the executive branch’s job to – well, execute – the legislation. Regulatory bodies are part of the executive branch.

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