Business Adventures: An Intimate Glimpse Into Corporate America

The timeless classic is Bill Gates’ favorite business book of all time.


Written over half a century ago, Business Adventures remains relevant in its examination of the pitfalls and successes of the world of Wall Street. The book is a collection of stories written over John Brooks’ career. As a financial journalist and longtime contributor to The New Yorker, Brooks excelled at writing insightful commentary about complicated business phenomenon in a way that was accessible to the everyday reader. 

Business Adventures showcases this—breaking down complex historical events that capture an era or exemplify certain values. From the rise of Xerox to the spectacular failure of the Ford Edsel, John Brooks’ book highlights some of the most unbelievable and defining moments in corporate America.

The following passage is an excerpt from one of the chapters of Business Adventures, titled “The Impacted Philosophers,” which originally appeared as an essay in The New Yorker in 1962. In it, Brooks discusses information he learned about the price-rigging scandal in the electrical-manufacturing industry that ultimately led to the indictment of 29 companies and various employees in 1961. 

The biggest offender was General Electric, which conspired with other companies to secretly meet and agree upon non-competitive pricing for their goods, an unfair practice that ultimately hurt consumers. Brooks explores how an inability to effectively communicate paved the way for such a massive scandal, inviting the reader to reflect on what that meant for the company and industry as a whole.

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Read on for an excerpt from Business Adventures, and then download the book.




Business Adventures

By John Brooks

EMBATTLED days at 570 Lexington Avenue! After years of cloaking the company in the mantle of a wise and benevolent corporate institution, the public-relations people at G.E. headquarters were faced with the ugly choice of representing its role in the price-fixing affair as that of either a fool or a knave. They tended strongly toward “fool.” Judge Ganey, by his statement that he assumed the conspiracies to have been not only condoned but approved by the top brass and the company as a whole, clearly chose “knave.” But his analysis may or may not have been the right one, and after reading the Kefauver Subcommittee testimony I have come to the melancholy conclusion that the truth will very likely never be known. For, as the testimony shows, the clear waters of moral responsibility at G.E. became hopelessly muddied by a struggle to communicate—a struggle so confused that in some cases, it would appear, if one of the big bosses at G.E. had ordered a subordinate to break the law, the message would somehow have been garbled in its reception, and if the subordinate had informed the boss that he was holding conspiratorial meetings with competitors, the boss might well have been under the impression that the subordinate was gossiping idly about lawn parties or pinochle sessions. Specifically, it would appear that a subordinate who received a direct oral order from his boss had to figure out whether it meant what it seemed to or the exact opposite, while the boss, in conversing with a subordinate, had to figure out whether he should take what the man told him at face value or should attempt to translate it out of a secret code to which he was by no means sure he had the key. That was the problem in a nutshell, and I state it here thus baldly as a suggestion for any potential beneficiary of a foundation who may be casting about for a suitable project on which to draw up a prospectus.

Related: Business Adventures: Inside the Stock Market Crash of 1962 

For the past eight years or so, G.E. had had a company rule called Directive Policy 20.5, which read, in part, “No employee shall enter into any understanding, agreement, plan or scheme, expressed or implied, formal or informal, with any competitor, in regard to prices, terms or conditions of sale, production, distribution, territories, or customers; nor exchange or discuss with a competitor prices, terms or conditions of sale, or any other competitive information.” In effect, this rule was simply an injunction to G.E.’s personnel to obey the federal antitrust laws, except that it was somewhat more concrete and comprehensive in the matter of price than they are. It was almost impossible for executives with jurisdiction over pricing policies at G.E. to be unaware of 20.5, or even hazy about it, because to make sure that new executives were acquainted with it and to refresh the memories of old ones, the company formally reissued and distributed it at intervals, and all such executives were asked to sign their names to it as an earnest that they were currently complying with it and intended to keep on doing so. The trouble—at least during the period covered by the court action, and apparently for a long time before that as well—was that some people at G.E., including some of those who regularly signed 20.5, simply did not believe that it was to be taken seriously. They assumed that 20.5 was mere window dressing: that it was on the books solely to provide legal protection for the company and for the higher-ups; that meeting illegally with competitors was recognized and accepted as standard practice within the company; and that often when a ranking executive ordered a subordinate executive to comply with 20.5, he was actually ordering him to violate it. Illogical as it might seem, this last assumption becomes comprehensible in the light of the fact that, for a time, when some executives orally conveyed, or reconveyed, the order, they were apparently in the habit of accompanying it with an unmistakable wink. In May of 1948, for example, there was a meeting of G.E. sales managers during which the custom of winking was openly discussed. Robert Paxton, an upper-level G.E. executive who later became the company’s president, addressed the meeting and delivered the usual admonition about antitrust violations, whereupon William S. Ginn, then a sales executive in the transformer division, under Paxton’s authority, startled him by saying, “I didn’t see you wink.” Paxton replied firmly, “There was no wink. We mean it, and these are the orders.” Asked by Senator Kefauver how long he had been aware that orders issued at G.E. were sometimes accompanied by winks, Paxton replied that he had first observed the practice way back in 1935, when his boss had given him an instruction along with a wink or its equivalent, and that when, some time later, the significance of the gesture dawned on him, he had become so incensed that he had with difficulty restrained himself from jeopardizing his career by punching the boss in the nose. Paxton went on to say that his objections to the practice of winking had been so strong as to earn him a reputation in the company for being an antiwink man, and that he, for his part, had never winked.

Although Paxton would seem to have left little doubt as to how he intended his winkless order of 1948 to be interpreted, its meaning failed to get through to Ginn, for not long after it was issued, he went out and fixed prices to a fare-thee-well. (Obviously, it takes more than one company to make a price-fixing agreement, but all the testimony tends to indicate that it was G.E. that generally set the pattern for the rest of the industry in such matters.) Thirteen years later, Ginn—fresh from a few weeks in jail, and fresh out of a $135,000-a-year job—appeared before the Subcommittee to account for, among other things, his strange response to the winkless order. He had disregarded it, he said, because he had received a contrary order from two of his other superiors in the G.E. chain of command, Henry V. B. Erben and Francis Fairman, and in explaining why he had heeded their order rather than Paxton’s he introduced the fascinating concept of degrees of communication—another theme for a foundation grantee to get his teeth into. Erben and Fairman, Ginn said, had been more articulate, persuasive, and forceful in issuing their order than Paxton had been in issuing his; Fairman, especially, Ginn stressed, had proved to be “a great communicator, a great philosopher, and, frankly, a great believer in stability of prices.” Both Erben and Fairman had dismissed Paxton as naïve, Ginn testified, and, in further summary of how he had been led astray, he said that “the people who were advocating the Devil were able to sell me better than the philosophers that were selling the Lord.”

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It would be helpful to have at hand a report from Erben and Fairman themselves on the communication technique that enabled them to prevail over Paxton, but unfortunately neither of these philosophers could testify before the Subcommittee, because by the time of the hearings both of them were dead. Paxton, who was available, was described in Ginn’s testimony as having been at all times one of the philosopher-salesmen on the side of the Lord. “I can clarify Mr. Paxton by saying Mr. Paxton came closer to being an Adam Smith advocate than any businessman I have met in America,” Ginn declared. Still, in 1950, when Ginn admitted to Paxton in casual conversation that he had “compromised himself” in respect to antitrust matters, Paxton merely told him that he was a damned fool, and did not report the confession to anyone else in the company. Testifying as to why he did not, Paxton said that when the conversation occurred he was no longer Ginn’s boss, and that, in the light of his personal ethics, repeating such an admission by a man not under his authority would be “gossip” and “talebearing.”

Meanwhile, Ginn, no longer answerable to Paxton, was meeting with competitors at frequent intervals and moving steadily up the corporate ladder. In November, 1954, he was made general manager of the transformer division, whose headquarters were in Pittsfield, Massachusetts—a job that put him in line for a vice-presidency. At the time of Ginn’s shift, Ralph J. Cordiner, who has been chairman of the board of General Electric since 1949, called him down to New York for the express purpose of enjoining him to comply strictly and undeviatingly with Directive Policy 20.5. Cordiner communicated this idea so successfully that it was clear enough to Ginn at the moment, but it remained so only as long as it took him, after leaving the chairman, to walk to Erben’s office. There his comprehension of what he had just heard became clouded. Erben, who was head of G.E.’s distribution group, ranked directly below Cordiner and directly above Ginn, and, according to Ginn’s testimony, no sooner were they alone in his office than he countermanded Cordiner’s injunction, saying, “Now, keep on doing the way that you have been doing, but just be sensible about it and use your head on the subject.” Erben’s extraordinary communicative prowess again carried the day, and Ginn continued to meet with competitors. “I knew Mr. Cordiner could fire me,” he told Senator Kefauver, “but also I knew I was working for Mr. Erben.”

Want to keep reading? Download Business Adventures now. 

Why Business Adventures Is Bill Gates' Favorite Book

In 1991, Bill Gates and Warren Buffet met for the first time, and Gates asked Buffett what his favorite business book was. The answer, of course, was Business Adventures—and Buffett sent Gates his personal copy to prove it. 

In 2014, Gates wrote this in his blog: "More than two decades later—and more than four decades after it was first published—Business Adventures remains the best business book I've ever read. John Brooks is still my favorite business writer. And Warren, if you're reading this, I still have your copy."

Even without a recommendation from Warren Buffett himself, it’s no wonder why Business Adventures is Bill Gates’ favorite book on business. Brooks is open-minded when approaching his subjects, laying out the facts without telling the reader what to think, and writing in a style that's accessible and fascinating, even for those of us without MBAs. 

All of the anecdotes in this collection center around true stories, whether they be scandalous, inspiring, or thought-provoking—each has a distinct lesson to be gleaned. With the stories remaining as relevant as ever 50 years later, there’s a sense that these lessons about corporate America still have much to offer the modern-day reader. For an in-depth dive into the world of Wall Street, which has influenced such successful people as Warren Buffett and Bill Gates, download Business Adventures today.

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