The Intelligent Collector Magazine | Blog – The Official Blog of Heritage Magazine for the Intelligent Collector

Victory and Defeat

framed photograph — This inscribed and signed Ronald Reagan photograph with a piece of the Berlin Wall sold for $93,750 in a May 2022 Heritage auction.

By Jim O’Neal

Our war with Japan formally ended on September 2, 1945. A week earlier, the battleship Missouri had slipped into Tokyo Bay and anchored where Commodore Matthew Perry had sailed four warships in 1853 to open up trade with Japan. Since the 1600s, Japanese rulers had refused to engage with the outside world. Perry’s Kanagawa Treaty permitted the United States to establish a base and conduct trade in Asia.

Now, nearly 100 years later, U.S. naval crewmen set up a table on the Missouri’s deck and laid out surrender documents. They displayed on a bulkhead the 31-star flag that Perry had sailed into Tokyo Bay a century earlier. High atop the big battleship’s flagstaff luffed the 48-star flag that had flown above the Capitol dome in Washington, D.C., on December 7, 1941.

At 9 a.m. sharp the Japanese delegates arrived – civilian officials in formal morning clothes, naval and military officers in dress uniform. Then General MacArthur and Admirals Nimitz and Halsey stepped on deck, dressed casually in open-collar khaki shirts. MacArthur’s brief speech noted his hope that “a better world shall emerge.” Then Japanese officials signed the surrender documents under the shadow of the Missouri’s 16-inch guns. After MacArthur and Nimitz signed for the Americans, both countries were officially at peace.

Of the men who had survived the Great War of 1914-18 and led the major powers into World War II, only one still stood on history’s stage by the end of 1945. FDR died of a massive intracerebral hemorrhage on April 12, 1945, while sitting for a portrait in Warm Springs, Georgia (at his Little White House). Hitler and Konoye Fumimaro died by their own hands (cyanide). Winston Churchill was shunted out of office in 1945 along with the conservatives by an electorate weary of sacrifice. (He also lost the 1950 election but returned to office in 1951.) Only Joseph Stalin remained, and he would die in 1953.

Following WWII, the United States and the Soviet Union established a vast Cold War in a fierce competition for global supremacy. The two sides never engaged in a physical war, but across nine U.S. presidents and six Soviet premiers, the two superpowers competed with each other. There was a decades-long arms race, building arsenals of nuclear and conventional weapons, and a space race that led to brilliant technological breakthroughs. They even vied for control of countries like Germany, dividing it into two parts. The city of Berlin was itself divided east and west, with a physical wall.

The Berlin Wall became the preeminent symbol of Cold War tensions and Communistic totalitarianism.

On June 12, 1987, President Ronald Reagan was in West Berlin to celebrate its 750th anniversary. He gave a speech in front of the Brandenburg Gate, advocating freedom and liberty. He then addressed Soviet President Mikhail Gorbachev (who was not present) in words for the ages: “General Secretary Gorbachev…come here to this gate. Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!”

Two years later the Soviet empire entered a state of terminal collapse. The USSR was no longer able to underwrite the Soviet bloc countries, and in 1989 country after country threw off the Communist rule. The Berlin Wall fell in November. In 1990 Soviet republics began breaking away, leaving only Russia. On Christmas Day 1999, the Soviet Union officially dissolved. The United States had won the Cold War.

In the intervening years the U.S. was actively involved in two other major wars: the Korean War (“the Forgotten War”) and the Vietnam War (the wrong war fought the wrong way). Now we are peering into the abyss of another European war as Russia systematically destroys Ukraine. Some experts believe the real threat to our security rests in China, which is patiently waiting on deck until its number is called. I’m brushing up on my rusty Mandarin just in case.

Maybe it was Toynbee who once said that countries don’t get defeated; they commit suicide.

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

The Wages of War

book log — An autograph logbook of Captain Robert A. Lewis, co-pilot of the ‘Enola Gay’ – the only in-flight account of the bombing of Hiroshima – sold for $543,000 in a July 2022 Heritage auction.

By Jim O’Neal

Air Force General Curtis LeMay landed on Guam Island on Jan. 7, 1945. He had been transferred there specifically to assume command of the 21st Bomber Command and lead the effort to force Japan to surrender. One of the younger generals in the Army, he constantly chewed a cigar butt to help mask a nerve disorder that made his mouth droop. Thought to be Bell’s palsy, it was probably the result of flying high-altitude bombing missions over Europe.

He was one of the first to abandon the tactic of precision bombing designed to minimize collateral damage to nonmilitary targets and noncombatants. In response to a question, his caustic reply was “I’ll tell you what war is about. You’ve got to kill people, and when you’ve killed enough, they stop fighting.”

In May 1864, during the American Civil War, General William Tecumseh Sherman said something similar. After burning Atlanta during his infamous March to the Sea, he declared, “War is cruelty. There is no use trying to reform it. The crueler it is, the sooner it will be over.”

General Sherman was convinced that the Confederacy should be defeated by the complete destruction of both its military and civilians’ ability to wage war. In his March to Savannah, he cut a wide swath destroying cities, plantations, livestock and crops. His intent was to break the spirit of everyone and everything that stood in his way. Today his name provokes animosity in the South for his cruel, wanton destruction, despite the fact that it helped bring the war to a conclusion.

With General LeMay now in Asia, the primary question involved how to convince Japan that surrender was the most prudent decision. The American military had fought their way across the Pacific Ocean to Japan’s doorstep, defeating Japanese troops on a series of islands with strange names like Saipan, Guadalcanal, Corregidor, Tarawa, Iwo Jima and, finally, Okinawa. The Battle of Okinawa’s initial invasion on April 1, 1945, was the largest amphibious assault in the Pacific Theatre of World War II. The 82-day battle lasted until June 22, 1944. The Allies intended to use the air base for Operation Downfall, the invasion of the Japanese home islands.

However, the battles in the Pacific had been bloody. The capture of Iwo Jima, less than 8 square miles of volcanic ash, had cost the lives of 25,849 Marines (one-third of the landing force). Okinawa’s price was 49,151, and kamikazes diving from the sky had sunk 34 U.S war ships and damaged an additional 368. If the Japanese could draw that much blood on the outer islands of their defense perimeter, how formidable would they be on the 142,000 square miles on their five home islands? The Joint Chiefs had estimated a minimum of 1 to 2 million deaths in a full assault.

When LeMay assumed command, he implemented the strategic bombing concept that had been so successful in defeating Germany. He also added two new technologies that seemed tailor-made for use against Japan’s predominantly flammable cities. The first was a highly efficient 6-pound incendiary bomblet developed by Standard Oil: the M-69 projectile. It spewed burning gelatinized gasoline that stuck to the ubiquitous wooden houses. The second was the B-29 Superfortress, a long-range, intercontinental bomber. Soon LeMay had 350 bombers parked in the Marianas, with more arriving every day. The 11-man crew bomber had a range of 4,000 miles at 35,000 feet. Importantly LeMay had perfected the optimum mix of explosives and incendiary bombs that resulted in firestorms that evolved into virtual thermal hurricanes that killed by heat suffocation.

The first raid consisted of 344 bombers that crisscrossed a target area and then merged into a sea of flames. They left 1 million homeless and 90,000 dead. In the ensuing five months, LeMay’s bombers attacked the 66 largest Japanese cities, killing 900,000 citizens. In addition, 1.3 million were injured, and 8 million houses were destroyed. Hiroshima and Nagasaki were intentionally spared.

Every Japanese citizen took a sacred vow to fight until the last person was dead.

They spent their time constructing 9,000-plus high-altitude incendiary bombs to float across the Pacific Ocean, using the strong trade winds, and drop them on the West Coast of the American mainland. Japanese schoolgirls labored to assemble the balloon bombs. An Oregon family of six were the only American mainland casualties of the entire war.

Meanwhile, Air Force Colonel Paul Tibbets went to Omaha to hand-pick his B-39 #82 off the production line of Glenn Martin. He renamed it Enola Gay, his mother’s name, and got it back in theater ready to go. President Harry Truman was at sea, returning from Potsdam. On Aug. 6, the White House issued a statement: “16 hours ago an American airplane dropped an atomic bomb on Hiroshima … harnessing the power of the Universe.”

Still the Japanese refused to surrender.

Only on Aug. 10, a day after a second nuclear explosion had devastated Nagasaki, killing an additional 70,000 people, did Japanese experts agree that their country was under an atomic attack. Emperor Hirohito recorded an announcement that was broadcast on the radio.

Most Japanese citizens had never heard his voice before.

This particular war was ended.

Let There Be Light

photograph of vintage lightbulbs — These five lightbulbs and one socket, used as court exhibits in patent infringement lawsuits filed by the Edison Electric Light Company in the late 19th century, sold for $30,000 in a December 2016 Heritage auction.

By Jim O’Neal

The Gilded Age was an exciting time in American history and roughly spans the period following the Civil War and extending to the start of the 19th century. The powerful combination of technical advances in manufacturing, communications and transportation marked the transformation of America from an agrarian society to a major industrial pioneer.

In the brief time between 1870 and the beginning of the first World War in Europe, the American economy grew faster, became more diversified and changed more profoundly than at any earlier 50-year period in the nation’s history. In the process, the United States created the largest and most modern industrial economy on earth. In 1890, the Census Bureau declared that the frontier, a hallmark of “The American Story,” had quietly ceased to exist. Newspaperman Horace Greeley’s advice to “Go West, young man” had become apocryphal.

However, it is still possible to trace the roots back to 1830, when men with vision and courage began pushing the fantastical idea that railroads (which barely existed) should be flung across the entire American continent. President Lincoln, agile enough to plan on how to win a war and also consider the nation’s future, was a railroad supporter. In 1862 he had the Pacific Railway Act attached to the important Homestead Act. Two companies, one in the San Francisco area and one in the East, started laying tracks.

On May 10, 1869, they met in Utah and celebrated by driving a golden spike. A telegraph was sent to both coasts with a single word: “DONE!” By 1876 it took just 88 hours and 33 minutes to travel from San Francisco to New York City. Also on board was the United States mail (the telegraph had killed the Pony Express 10 years earlier), fresh vegetables, real beef instead of bison, and gold deposits. Businessmen used it to cut down on travel time, and pioneers abandoned their prairie schooners.

Cities flourished as the rapid growth of factories accelerated urbanization and waves of migrants were attracted to the promise of better jobs. As America raced to become the largest economy, by the 1870s it became clear what was needed most: light. Light for the factories now running 24 hours a day. Light for the streets and homes and even for the library where people congregated to improve their English or hone their skills. The problem was how to get it. Whale oil was out, kerosene too smoky and gaslight too dim and dangerous. The magic elixir was electricity! It had been known since Ben Franklin and had been appropriated to invent the telegraph, telephone and phonograph – three world-changing devices in which Thomas Edison had played a role.

In April 1881, Scientific American dedicated an issue to the enhancement of electricity. On the cover was a sketch of the lights on NYC sidewalks. Seeing the cityscape glow with faces and objects at night suggested a new immense opportunity. Broadway owed the credit to a young inventor from Cleveland named Charles Brush. For a brief time, Brush’s system dominated the field. Not surprisingly, Edison – aka “The Wizard of Menlo Park” – would overtake him.

On New Year’s Eve 1879, using 1 million lightbulbs, there was a demonstration of what would become “The Great White Way.” The Wizard, always looking to the future, thought of the superb potential for expansion, and soon Hollywood was involved and Edison invented moving pictures. In time he would boldly predict, “We will make electricity so cheap that only the rich will burn candles.” And so it was with oil, transportation, publishing, retail and steel. When Andrew Carnegie sold his steel interests to J.P Morgan for $480 million ($300 billion today), it was the largest personal sale in world history.

In 1873, a few years before we met Tom Sawyer, Mark Twain published his novel The Gilded Age: A Tale of Today. He had spotted the irony of the situation and how the splendor of a gold patina was masking the workers’ low wages and the dangerous and unhealthy conditions – a glittering surface obscuring the corruption underneath.

Harry Truman’s Big Challenge

This rare Truman campaign button sold for $13,750 in a February 2020 Heritage auction.

By Jim O’Neal

Harry Truman was born on May 8, 1884, in Lamar, Missouri. This was during the White House years of Chester Arthur, who had succeeded to the presidency after the assassination of James Garfield. Garfield had been shot on July 2, 1881, in a Washington train station. The doctors were unable to locate and remove the bullet and, in the process, exposed Garfield to unsterile instruments that caused a fatal infection.

Alexander Graham Bell made two attempts to locate the bullet with a homemade metal detector, but Garfield was on a mattress composed of steel wires that distorted the sound. President Garfield lasted until September 19, but Dr. Doctor Bliss (yes, that’s his real name) had ignored the new medical research of Joseph Lister linking germs to infections and the critical need for clean hands and instruments. Garfield’s death could have been ruled medical malpractice even in those early days.

In Truman’s lifetime, two more vice presidents — Theodore Roosevelt and Calvin Coolidge — would become president following the deaths of William McKinley (1901) and Warren Harding (1923). John Tyler had become the 10th president in 1841 by establishing this important precedent for vice presidents — since there were others who favored vice president “acting as president” and the Constitution had been ambiguous on the question of presidential succession.

Now it was 104 years later and the United States was heavily involved in World War II. Truman had only been vice president for 82 days when President Franklin D. Roosevelt died on April 12, 1945. Chief Justice Harlan Stone administered the oath of office to President Truman at 7:09 p.m. Earlier that day he had been hurriedly told of a new, highly destructive weapon; however, there had not been time to brief him on the details. He was the seventh vice president to follow the death of a president.

Most historians agree that the new president was faced with an unprecedented surge of history, with larger, more difficult global decisions than any president before him. Neither Abraham Lincoln, with a pending civil war, nor FDR, in his tumultuous first 100 days, had to contend with issues of this magnitude. His big advantage was that he was savvy enough to recognize it. On his first full day, he famously told a group of reporters: “Boys, if you ever pray, pray for me now…when they told me…I felt like the moon, the stars and all the planets had fallen on me!”

To magnify the complexity of the challenge, Truman had no relations with our main allies British or Russian. No firsthand knowledge of Stalin or Churchill. He had no background in foreign policy, and Roosevelt had not included him in high-level decisions or plans. He didn’t even know his secretary of state, except to say hello. He was unprepared, confused and even frightened to some degree. The Washington Post summed it up as gently as possible: “It is needless to say that President Truman comes into this gigantic assignment under a handicap.” The paper then went on to write a candid editorial that left nothing to interpretation.

One thing he did have, although he wouldn’t find out until April 25, was an atomic bomb. This would prove to be one of the most astonishing game changers in recorded history. Then two weeks later, Germany surrendered and the nation celebrated victory in Europe (V-E Day). The date was May 8, Truman’s birthday. He was now 61 years old. The problem had been simplified. Defeat Japan.

We know now how the war ended; however, at the time, there were options. By the summer of 1945, the defeat of Japan was a foregone conclusion. The Japanese navy and air force were destroyed. The naval blockade of Japan and intensive bombing of the cities had devastated the country and the economy. Okinawa had been captured, and the Allies could easily launch an invasion of the main home islands. An invasion would be 10 times worse than Normandy, and the Japanese would fight to the last death.

The issue remained: how to get a full Japanese surrender.

In the end it would take two atomic bombs on Hiroshima and Nagasaki to obtain a full surrender.

The man from Missouri continues to rise in the ranks of American presidents.

He was one tough dude.

The Rocky Path to Proving Einstein’s Theory of Relativity

A first edition of Albert Einstein’s ‘Relativity: The Special and the General Theory, a Popular Exposition’ sold for $10,625 in a December 2021 Heritage auction.

By Jim O’Neal

While watching TV someone mentioned Principe and it piqued my interest, primarily because I knew so little about this relatively small island off the West Coast of Africa in the Gulf of Guinea. After digging a little deeper, I discovered Principe was where Albert Einstein’s theory of general relativity was corroborated by a gifted mathematician, Sir Arthur Eddington, during a total solar eclipse.

The date was May 29, 1919.

To fully understand the sequence of events, it helps to start about 75 years earlier.

During the 19th century, the map of Europe was frequently redrawn as old empires crumbled and new powers emerged. You may not know that in 1850, the countries of Germany and Italy that we know so well today did not exist. Instead, there were many German-speaking and Italian-speaking states, each with their own leaders.

Then in the 1860s and 1870s ambitious politicians started merging these states through a combination of hostile actions and political agreements. A prime example was the Franco-Prussian War of 1870-71. The German states, led by Otto von Bismarck (the “Iron Chancellor”), defeated France soundly. This ended France’s domination of Europe and forced Napoleon into exile in Britain.

The formerly feuding 25 German principalities were transformed into a new unified German Empire on January 18, 1871. The new superpower had an enormous Army, a streamlined economy and intellectual institutions that dwarfed the European continent. The seeds of Germanic militarism would plague the world well into the 20th century. Following a visit by the peripatetic Mark Twain in 1878 he wrote, “What a paradise this land is! Such clean clothes and good faces, what tranquil contentment, what prosperity, what genuine freedom, what superb government! And I am so happy, for I am responsible for none of it. I am only here to enjoy.” High praise for a country that would wreak havoc upon the world twice in the next century.

By the turn of the 20th century, a peculiar devolution emerged with a complicated network of alliances and rivalries. When the heir to the Austrian throne, Archduke Franz Ferdinand, was assassinated by a Serbian nationalist in June 1914, Austria declared war on Serbia. Then the others followed like a line of dominoes cascading helter-skelter. In Europe the fighting took place on two fronts: the Western Front, stretching from Belgium to Switzerland, and the Eastern Front, from the Baltic to the Black Sea. Then it quickly spread to the European colonies throughout the world. The war raged for four and a half years, and more than 20 million lost their lives.

In the United States, seemingly isolated by two great oceans, President Woodrow Wilson was re-elected in 1916 under the slogan “He kept us out of war.” Five months later he asked Congress to declare war against Germany, and 60 days later American troops landed in France. The distant sounds of guns had somehow morphed into a cacophony of a world war.

At the time, very few were aware of the effects the Great War had on Einstein’s efforts to prove his general theory of relativity. The industrialized slaughter bled Europe from 1914-1918 without regard for the weak or strong, the right or the wrong. Wars do not have a conscience or any pity for the young or old. Their objective is destruction. Men make these decisions.

At age 39, Einstein was working in Berlin, literally starving due to food blockades. He lost 50 pounds in three months and was unable to communicate with his closest colleagues. He was alone, honing his theory of relativity, hailed at birth as “one of the greatest — perhaps the greatest — of achievements in the history of human thought.” This was the first complete revision of our conception of the universe since Sir Isaac Newton.

Scientists seeking to confirm Einstein’s ideas were arrested as spies. Technical journals were banned as enemy propaganda. His closest ally was separated by barbed wire and U-boats. Sir Arthur Eddington became secretary of the Royal Astronomical Society and they secretly collaborated. It was actually Eddington who supplied Einstein’s astonishingly mathematical work to help prove the theory. He was convinced that Einstein was correct. But how to physically prove it?

In May 1919, with Europe still in the chaos left by war, Eddington led a globe-spanning expedition to catch a fleeting solar eclipse on film. This confirmed Einstein’s boldest prediction that light has weight and could be bent around an orbiting object — in this case Earth itself. The event put Einstein’s picture on front pages around the world!

Later, on August 2, 1939, he would write a letter to President Franklin D. Roosevelt warning him that an atomic bomb was feasible and the Germans, with all their talented rocket scientists, could be dangerously close to making one. He encouraged the president to secure a supply of uranium and make it a priority.

We now know how this ended.

Even the World’s Architectural Wonders Once Had Their Critics

black and white photograph — Frank Horvat’s ‘Stern, Chaussure, a Shoe and Eiffel Tower, Paris’, 1974, sold for $3,585 in a November 2011 Heritage auction.

By Jim O’Neal

When we lived in Central London in the 1990s, #10 Walton Street became a convenient place to host our American friends and family. We had plenty of room, one block from the world-famous Harrods department store, and the Walton Street restaurants were some of the finest in London. Our neighbor in #12 owned the superb Osteria San Lorenzo restaurant that Lady Diana claimed was her favorite, perhaps because it was three doors down from her exclusive couturier and go-to designer Bruce Oldfield. Michael Caine shopped at our Italian bakery, and Ringo Starr sightings were frequent.

However, it soon became de rigueur to tack on a side trip to Paris via the new Eurostar high-speed trains that attained 180 mph under the English Channel that connected France and England. Once there, a pleasant lunch awaited visitors to the Eiffel Tower and the elegant Le Jules Verne, a one-star Michelin restaurant on the second level. It had a dedicated lift some 240 feet (thankfully).

The 360-degree view of Paris is wonderful at lunch and spectacular at night. “The City of Light” (La Ville Lumiere) derives from the city’s role in the Age of Enlightenment and the extensive use of gas lights on streets (56,000) and monuments. Located on the Champ de Mars, the Eiffel Tower was built as the entrance to the 1889 World’s Fair. It was named for the man who designed and built it. Gustave Eiffel had started working in a family vinegar factory owned by an uncle. When the business failed he switched to engineering, which proved to be quite rewarding.

He built bridges, viaducts and railway concourses that were awe-inspiring in addition to burnishing his reputation. It worked so well he won the commission to build the interior of the remarkable Statue of Liberty in 1884 that ended up being a gift from the French people to celebrate the founding of the young United States.

Sculptor Frederic Bartholdi generally gets credit for “Liberty Enlightening the World” and, of course, it was his design. However, without the ingenious interior engineering to hold it aloft, it was a hollow structure of beaten copper one-tenth of an inch thick. What Eiffel contributed was the ability of the 150-foot structure to withstand the wind, rain, snow, heat, cold and all the other physical weather assaults 24 hours, seven days a week year after year. These were all engineering challenges that Eiffel solved with a skeleton of trusses and springs that support the copper skin and is worn like a suit of clothes. It marked the invention of curtain wall construction, the most important building technique of the 20th century, but with little credit to the man who conceived it.

This new technique enabled the building of skyscrapers and the design of wings for airplanes. Eiffel’s contributions were about to be recognized for this breakthrough when he received the commission for his big project in Paris that we now call the Eiffel Tower. There were over 100 other proposals submitted, including a 900-foot-high guillotine, presumably as a tribute to France’s contribution to popularizing decapitation during the French Revolution.

Then, predictably, many scoffed at Eiffel’s design since it was so enormous and, on the surface, useless. It appeared to be an oil derrick but without any oil. Many people detested it, and unfortunately that included artists, architects and other high-profile notables. This highly influential group wrote a scathing petition on Feb. 14, 1887, denouncing “the grotesque mercenary invention of a lowly machine builder” and signed it “Artists against the Eiffel Tower.” Today we know just how totally wrong they were as 20 million people actually pay admission to tour what is probably the world’s most recognizable landmark-monument.

A similar controversy was roiling San Francisco in 1969, when we moved to San Jose, over the new Transamerica Pyramid. One critic called it “the most portentous and insidiously bad building in The City.” The San Francisco Chronicle’s architectural critic simply called it an abomination, while the Los Angeles Times called the spire gratuitous and compared it to a dunce cap. Angry mobs demonstrated by Mayor Alioto’s office to protest, but it was all in vain. The building was finished in 1972 and has gradually become a cherished, iconic symbol of the SFO skyline.

I wonder if the pyramids had to suffer through similar periods of rejection or ridicule? Retract that musing — I totally overlooked the presence of the Pharaohs. It is much easier to gain consensus when decision-making doesn’t involve others.

Oil, Automobiles and Inflation

photograph - silver statuette — *Full Throttle* circa 1920 nickel-plated bronze automobile mascot, by Boccazzi, realized $2,250.00 at Heritage Auction, November 2019.

By Jim O’Neal

In 1859 a man by the name of Edwin Drake drilled the 1st mechanical oil well in Titusville, PA. Since that time, many great fortunes have been made as crude oil inexorably became the lifeblood of the American economy. Sadly, Mr. Drake did not patent his process and died in poverty. Like almost no other product, oil contributed to the American ethos, most notably the propulsion of our dream machine, the automobile.

After it became available to the middle class in the 1920s, the passenger car was visibly symbolic of American prosperity, perhaps more than wealth itself. It gradually evolved into a necessity as the growth of suburbia made mass transportation an anachronism. In a 1953 Congressional hearing, General Motors CEO Charles Wilson declared, “As General Motors goes, so goes the Nation.” It would take some time, but this linkage to the future was almost prophetic.

As General Motors made larger cars, people bought them according to their status – the bigger the car, the bigger sign of success. An automobile was a statement to society – a chrome and steel declaration of self that spoke to our ambitions of speed and power. Rather strangely, no one in Detroit seemed concerned about the rapid increase of shiploads of smaller Toyotas, Nissans and Hondas unloading night and day in California ports of entry. This trend to smaller is better was a harbinger of dramatic changes just around the next corner, yet no one seemed to care and those that did were not concerned.

My friend Tom Peters (In Search of Excellence) loved to recount this story from his experience at McKinsey, one of the world’s premiere consulting firms, especially for corporate strategy. Apparently, the GM Board of Directors (and the Ford Motor Company) received periodic business updates from Senior Management. One of the more important key performance indicators in most businesses is SOM (share of market). Despite all the competition, GM’s share was remarkably stable at +/- 35%.

After a little digging, it turned out that someone had decided to exclude foreign imports and just focus on domestic production. Effectively, this meant the pie was getting smaller, but their slice was unchanged. A sad, but true story.

Perhaps it was because there was no single event, such as the stock market crash in 1929, that warned of the economic uncertainty of the 1970s. And no single measure to explain the economy’s obvious malfunctioning. Instead, the pain of what turned out to be the most challenging decade since the Great Depression slowly crept up on the United States. When President Nixon was inaugurated in 1969 he inherited a recession from Lyndon Johnson, who had simultaneously supported the Vietnam War and launched the Great Society. Nixon continued to support the war and, despite his reputation as a fiscal conservative, ran budget deficits every single year he was in office. From 1970-1974, the budget deficits totaled $70 billion, a 20% increase.

Still, President Nixon’s concern was not about budget deficits, the strength of the dollar or even inflation. This was a man obsessed about re-election. And in his political calculus this translated into a simple tactic; avoid another recession, stimulate the economy and put maximum pressure on the Federal Reserve for low interest rates. He fired Fed Chair William McChesney and installed presidential advisor Arthur Burns in early 1970. The Nixon mandate was “cheap money” and low interest rates that would promote short term growth and give the economy the appearance of strength as voters were casting ballots. Nixon said, “We’ll take inflation if necessary, but we can’t take unemployment.“ Ironically, the Nation would soon have an abundance of both.

Another dramatic economic intervention was imposing wage and price controls in 1971. They appeared to work during the following election year, but later they would fuel the fires of double-digit inflation. Predictably, as soon as they were removed, virtually every business and individual rushed to raise prices to make up for all the pent-up ground that was lost. Concurrently, the Nixon deficits were making foreign dollar-holders more nervous. The result was a run on the dollar when it became obvious the dollar was vulnerable. Soon they were proved right when Nixon broke the last link to gold. The American dollars were now a fiat currency and devalued, leaving oil barons in the Middle East with tens of millions of petrodollars whose value was slashed.

They would extract their revenge when OPEC quadrupled the price of oil from $3 to $12 a barrel. Then the Arab states punished the West for supporting Israel in the Yom Kipper War by imposing a 6-month embargo in 1973. Inflation doubled to 8.8% in 1973 and later growing to 12%. By 1980 inflation was at 14%, with the United Srates being compared to the Weimer Republic. Still etched in my memory is the picture of long lines of autos at gas stations.

In truth, it was the policies of Lyndon Johnson and Richard Nixon who led our country to the edge of fiscal chaos. Both Administrations supported a winless, expensive War and ambitious social agendas without balancing our checkbook. They both got locked in a vicious cycle; pressed on them by their faith in containment, even as they tried to maintain prosperity. Then expanding to effect social transformation toward a more equitable society at home.

This gruesome story of the great inflation of the 1970s would not end until the early 1980s has been labeled “the greatest failure of American macroeconomic policy in the post-war period.” I think it was a display of hubris by 2 men who were political geniuses, but managed to surround themselves with men of questionable judgement that were willing to follow orders they knew were flawed.

I hope the folks in their spots today will take the time to at least consider the lessons learned. From my viewpoint, we are dangerously close to losing precious things that tens of thousands of great men struggled to attain. At least we could start with what FDR and Lincoln instinctively knew – you must have the support of most of the people, not 50% +1. The U.S. Constitution started with these three words for a reason, “We the people….

Behind the Scenes of Opening Disneyland and the Discovery of Doritos

Disney Poster — “Enchanted Tiki Room” Disneyland Park Entrance Poster (Walt Disney, 1967). “At the Gateway to Adventureland”. This poster sold for $19,200 in a 2018 HA.com auction.

By Jim O’Neal

On Sunday, July 17, 1955 the first Disneyland opened in Anaheim, CA. The $17 million theme park fit nicely on 160 acres of orange groves, and the 13 attractions were designed with the whole family in mind. Opening day was intended for special guests and a crowd size of 15,000. However, the $1 admission tickets were heavily counterfeited and over 28,000 people overwhelmed the Park.

Ronald Reagan, Art Linkletter, and Bob Cummings co-hosted the ABC TV coverage of the event and 70 million people tuned in from home. It was an unusually hot day and Harbor Blvd. had a line of cars seven miles long, filled with parents and kids yelling the usual questions and in need of a rest stop. Later, the Park inevitably ran out of food and water (the plumbing wasn’t finished). Pepsi Cola was readily available, and the publicity was not good (some even implied it was a conspiracy). The day grew in notoriety and soon became known inside Disney as “Black Sunday”. But, within a matter of weeks all the start-up kinks were resolved, and it has been a crowd pleaser ever since.

Although the details are sketchy, 33 local companies (e.g. Carnation, Bank of America, Frito-Lay, etc.) were charter members which helped Disney with the financing and infrastructure involved. Eventually, this evolved into a “Club 33” which included access to an exclusive fine-dining restaurant that serves alcoholic beverages (the only place in the Park). Today there’s a 5-10 year waiting list for companies or individuals eager to pony up $25,000 to have the privilege of paying 6-figure annual dues. There are several versions of the origin of the Club 33 name. One is rather obvious and another involves the California Alcohol Beverage Control regulations that requires a real address in order to have alcohol delivered. Go figure!

Irrespective of the fuzzy facts, when I joined Frito-Lay in 1966, F-L operated Casa de Fritos, a delightful open-air Mexican food restaurant. Visitors could enjoy a family friendly sit-down lunch/dinner or get a Taco Cup to go. The Cup served as a one-handed snack and was easily portable while strolling around the park. Casa de Fritos was managed by a pleasant man named Joe Nugent, who had only one obvious weakness. Casa de Fritos was too profitable!

Let me briefly explain.

Once a year the Flying Circus from Dallas came out to the Western Zone to review our Profit Plan for the next year. President Harold Lilley – who was very direct with few words – would publicly berate poor Joe. ”Dammit, Joe, I told you we didn’t want to make any money at that Mexican joint. We want to promote Fritos corn chips so people will buy them at their local supermarket!”. When I asked Joe about it, he said he had tried increasing the portion sizes and also lowering the menu prices. But, whenever he did even more people would line up to get it. This man may have invented volume price leverage and never had a clue what he was doing!

Soon the VP/GM for SoCal – George Ghesquire – finally convinced the wise men in Dallas to let us test market restaurant style tortilla chips (RSTC). He had grown weary of seeing bags of Fritos over in the Mexican food section. It was proof that someone had initially purchased Fritos, then changed their mind and swapped it for a bag of restaurant style tortilla chips. Dallas had previously been concerned that RSTC would cannibalize sales of Fritos and they were absolutely right. However, the delicious irony was that it was being done by our direct competition!

So our version of RSTC was finally being authorized and would have a brand name of Doritos (you may have seen it). It was to be a 39 cent 6 oz. bag and everyone was eager to get started. To ensure a fast start we loaned some money to Alex Morales the owner of Alex Foods – the supplier of the Taco Cup – and a contract to co-pack. It started with one truckload a week, but they were soon running around the clock. The product was so popular in the West/Southwest that a line had to be added to a plant in Tulsa and the new plant in San Jose. The world of Frito-Lay would never be the same.

To compensate for the lack of salsa, we made a quick trip to a local Vons supermarket and bought some bags of Lawry’s taco seasoning (used in homes to season the meat while preparing homemade tacos for dinner)…voila Doritos Taco flavored chips. Roy Boyd “Mr. Fritos” from Dallas helped us equip Alex Foods with 2 cement mixers from Sears and a handheld oil sprayer to keep the taco powder adhering to the chips.

Now flash forward to 1973 and I was entering my office on the 4th floor of the Frito-Lay Tower near Love Field in Dallas. I noticed a large plastic bag filled with tortilla chips. When I asked Roy, he explained it was a new flavor being evaluated for test market. After tasting 2-3 chips I remember saying “Naw…too dry”. Soon it would become Doritos Nacho flavored tortilla chips, one of the most successful new food products in the later quarter of the 20th century!

Looking back, I now realize that’s probably when I became one of the wise men in Dallas.

The next year (1974) Harry Chapin would sing about the “Cat’s in the cradle” which would earn him a Grammy nomination and eventually a place in the Hall of Fame (2011). I’d nominate the obscure, long forgotten, George Ghesquire for the Frito-Lay Hall of Fame, but I don’t think we have one. So until we do, maybe just “Father of Doritos “. The Crown that now rests with Arch West who absconded with it when he left the Company in 1968.

United States has been tested before, but history shows we shall not perish

A newly discovered 1823 Stone printing of the Declaration of Independence sold for $597,500 at a 2012 Heritage auction.

By Jim O’Neal

The 59th presidential election in 2020 was unusual in several aspects. Despite the complications of a lethal pandemic, voter turnout was remarkable, with more than 159 million or 66% of eligible voters casting their ballots. In recent years, 40% to 50% has been considered normal, a major slump from the 73% in 1900. Joe Biden’s 51.3% was the highest since 1932 – the first of FDR’s four elections. Both candidates snared over 74 million votes, which topped Barack Obama’s record of 69.5 million in 2008. (Biden’s 81 million is the most any presidential candidate has ever received.)

However, it is not unusual for an incumbent president to lose a bid for re-election. Ten presidents before President Trump suffered a similar fate starting with John Adams in 1800. This was the first election where political parties played a role and Adams’ own vice president defeated him.

Another unusual facet of 2020 was the delay in getting all the votes counted and then certified, along with an unprecedented number of legal actions asserting irregularities or voter fraud. Post-election polls indicate that a high percentage of Republican voters still believe that their candidate won. This is unfortunate since the United States has a long, impeccable reputation for smooth, peaceful transfers of power.

By contrast, throughout recorded history – at least from ancient Rome to modern Britain – all great empires maintained their dominance with force of arms and raw political power. Then, the United States became a global powerhouse and the first to dominate through the creation of wealth. It is a truly remarkable story, liberally sprinkled with adversity, financial panics, a horrendous Civil War and Great Depression without an owner’s manual or quick-fix guide. However, in 1782, Congress passed an act that declared our national motto would be E PLURIBUS UNUM (“One from many”), which, in combination with a culture of “can do,” bound us together and crowded out the skeptics and naysayers. In 1931, “In God we trust” was added just in case we needed a little divine help occasionally.

In the beginning, it was the land.

After Columbus stumbled into the New World while trying to reach Asia by sailing west, Europeans were eager to fund expeditions to this unknown New World. Spain was aggressive and hit the lottery, first in Mexico, followed by Peru. Portugal hit a veritable gold mine by growing sugar in Brazil using slave labor. Even the French developed a remarkable trading empire deep in America using fur trading with American Indians in the Great Lakes area and staking claims to broad sections of land. England was the exception, primarily since they were more focused on opportunities for colonization. The east coast of America had been generally ignored (too hot, too cold, no gold) until Sir Walter Raleigh tried (twice) to establish a viable colony in present day North Carolina. It literally vanished, leaving only a word carved on a tree: Croatoan.

However, the English were still highly motivated to colonize by basic economic pressures. The population had grown from 3 million in 1500 to 6 million in 1650, but without a corresponding increase in jobs. Hordes of starving people naturally gravitated to the large cities and the seaside. The largest was London, and it swelled to 350,000 people by 1650. To exacerbate the situation, the influx of gold and silver into Europe spiked inflation, making a difficult situation unsustainable. In the 16th century, prices rose a staggeringly 400%.

But we are living proof that England’s colonization of the Atlantic coast was finally successful in the 16th and 17th century. Colonial America grew and prospered as 13 colonies evolved into a quasi-nation that was on the verge of even greater accomplishments. However, by 1775 the greed of King George III became too much to tolerate and they declared their independence from Great Britain. The American Revolutionary War lasted seven years (1775-83) and the United States of America was established … the first modern constructional liberal democracy. Losing the war and the colonies both shocked and surprised Great Britain (and many others) and even today historians debate whether it was “almost a miracle” or that the odds favored the Americans from the start.

Then we began to expand across the vast unknown continent due to a series of bold moves. President Jefferson doubled the size of the nation in 1803 with the remarkable “Louisiana Purchase.” President Polk engineered a war with Mexico that concluded quickly with the United States taking control of most of the Southwest, followed soon by the annexation of the Texas Republic. The discovery of gold in the San Francisco area attracted people from all over the world. Despite all of this, not enough has been written about the strategic era just after the end of the Revolutionary War.

The Treaty of Paris signed on March 1, 1786, did far more than formalize the peace and recognize the new United States of America. Great Britain also ceded (despite objections of France) all the land that comprised the immense Northwest Territory. This was a veritable wilderness area northwest of the Ohio River totaling 265,878 acres, similar to the existing size of America, and containing the future states of Ohio, Indiana, Illinois and Wisconsin. With this and the Louisiana lands, the United States was eight times larger! In addition, the Northwest Ordinance included three astounding conditions: 1. Freedom of religion, 2. Free universal education and, importantly, 3. Prohibition of slavery.

Also consider that until that point, the United States did not technically own a single acre of land! Now we had an unsettled empire, double the size, north and west of the Ohio River, larger than all of France, with access to four of the five Great Lakes. And then there was the Ohio River itself, a great natural highway west!

This, my friends, is how you build a powerful nation, populate it with talent from all over the world, encourage innovation never seen before, and then trust the people to do the rest. Whenever we are temporarily distracted, have faith that this nation has been tested before and that government of the people, by the people, for the people shall not perish from the earth. As Aesop and his fables remind … United we stand. Divided we fall.

Social upheaval isn’t new … just look at the bumpy year of 1968

Walt Kelly’s *Pogo* comic strip often addressed political issues. This original 1968 Sunday strip realized $4,63 at a November 2016 Heritage auction.

By Jim O’Neal

In 1964, Martin Luther King Jr. was awarded the Nobel Peace Prize. He was on a mission that would include a march over a bridge in Selma, Ala., and he led a high-profile protest over voter-registration rules. Congress finally passed the Voting Rights Act, but it would turn out to be too late. King’s ideas about non-violence were poised for a rapid decline. The long-overdue legislation simply provoked an expression of rage, repression and frustration. Soon, riots broke out in Watts, followed by San Diego, Chicago, Philadelphia and Springfield.

The message seemed clear. This violence was not targeted against unfair laws, long-denied rights or even a new brand of segregation. It was against class distinctions and the invisible racism that deprives people of good jobs and better housing. The struggle to eat at the same lunch counters, and use the same restrooms, hotels or drinking fountains was over. This was about economic inequalities and disparities in everyday life. The voices that were speaking louder than MLK reflected the speeches of Malcolm X … belief in the purity and pride of the black race and separation from whites to obtain true freedom and self-respect.

The fever fueled urban rioting like a contagion, even after Malcolm was killed by a rival black Muslim in 1965. Eight thousand deaths or injuries occurred in 100 U.S. cities from 1965 to 1968. Malcolm’s provocative separatist ideology morphed into the hands of Stokely Carmichael and the Student Nonviolent Coordinating Committee, along with the Black Power sloganeering of Bobby Seale and the Black Panthers. Despite the efforts of broad swathes of committed people, there was a pervasive, ominous fear of a racial clash that was lurking in the shadows, ready to pounce.

In America, most years are routine… 365 days filled with weeks and months and only occasionally an event that might change the arc of history. Rarely do we experience shocks to the system that put us in a new orbit. Ironically, we’re in a classic worldwide disruption now and the path back to normalcy is filled with uncertainty. Even more critical is the simple fact that virtually everyone on this tiny speck has to join in or we all might perish. The pandemic is just one of the dangers. Climate change is a global concern and we’re also drifting back toward another Cold War with obvious parallels to the past. Nobody expected the events in 1914 to expand into a world war, yet almost everyone could see how WW2 was bound to occur.

And thus it was in 1968 when we endured a very bumpy ride.

Perhaps it began on Jan. 30 of that year when North Vietnam launched the Tet Offensive and caught everyone on our side flat-footed. A surprise attack on 100 cities was just implausible, but it did happen. Eventually, the military regained control, but in the process surrendered an enormous strategic PR advantage to the enemy. The American government had been promising that “Victory is in sight,” but was forced to retract the assertion. Walter Cronkite – the most trusted man in America – declared, “The Vietnam War is mired in a stalemate.” President Johnson took it one step further: “If I’ve lost Cronkite, I’ve lost the American people.”

This public embarrassment was followed by the astonishing Kerner Commission report in February. Established by the president, the blue-ribbon group was charged with investigating the causes of the rash of riots sweeping American cities. In a stinging rebuke, it blamed the riots on police brutality, racism and lack of economic opportunities. In siding with the rioters, the 468-page bestseller concluded with a bombshell: “Our nation is moving toward two societies, one white – separate and unequal.” It charged that white society is clearly implicated in the ghetto – “White institutions created it, white institutions maintain it and white society condones it.”

President Johnson promptly ignored it.

As the 1968 presidential primary season rolled around, Tet gave a boost to long-shot Eugene McCarthy. Running as a one-issue candidate (the war), he snagged a surprising 42% of the New Hampshire primary. Enter Bobby Kennedy, who, like most of America, was undergoing a transformation over Vietnam, civil rights and the charge America was not a moral country. However, he clung to the belief that not having a Kennedy in the White House was the missing elixir. He announced his candidacy on March 16.

Two weeks later (March 31), President Johnson made a prime-time speech to the American people. After listing the many positive things that had been accomplished, he started talking about a growing division in America and asked everyone to guard against divisiveness and its ugly consequences. He closed by saying he couldn’t afford to waste any of his precious time on partisan politics and … “I shall not seek and I will not accept, the nomination of my party for another term as your president.”

It had a somber, even sad tonality that when read today doesn’t seem to fit together.

Four days later, Martin Luther King Jr. was assassinated in Memphis and the now-familiar bright orange flames flared over Harlem, Chicago, Detroit and Kansas City. People were losing faith in our institutions and wondering who to blame.

Walt Kelly (1913-1973) seemed to be the only one with a plausible answer. Kelly was an American cartoonist and animator. He worked for Walt Disney studios until 1941, when he moved over to Dell Comics. There, he created a new lineup of animal cartoon characters, including Pogo Possum, Albert Alligator and Churchill LaFemme. The strip was layered with clever political satire. On Earth Day 1971, his son was complaining about sore feet from having to walk on all the tin cans, glass and junk that had accumulated in the swamp. This was when Pogo uttered his most famous observation … “Yep, son, we have met the enemy and he is us.”