January 2019 – The Intelligent Collector Magazine

How does a prosperous continent mobilize for total war?

The U.S. Mint in 2013 issued its First Spouse gold coin commemorating Ellen Wilson.

By Jim O’Neal

In 1912, President William Howard Taft and ex-President Theodore Roosevelt managed to divide the Republican Party to the extent that (Thomas) Woodrow Wilson regained the White House for the Democrats. Even Socialist Eugene V. Debs snared nearly a million votes for his policy to replace America’s capitalist system with a socialized economic system. Wilson was the only Democratic Party president elected between 1892 and 1932.

Success in office came easily for Wilson. He was more effective with groups than one-on-one and he broke a tradition that extended back to Thomas Jefferson. He read his State of the Union to Congress rather than submitting a written report. Another change was to keep a sharp line between his public and personal life (a habit developed during his days in academia). Surprisingly, he did not believe in racial equality and some Cabinet organizations were totally racially segregated. His wife Ellen was different. Despite supporting the racial segregation that resulted from the appointment of Southern Senators, she was appalled by the slums that surrounded the White House and became an active crusader to clean up the densely populated, alley blight that was pervasive.

Her failing health was exacerbated when she tripped on a throw rug and fell. She was confined her to bed each day for four hours. In July 1914, she was diagnosed with tuberculosis of the kidneys – a form of Bright’s disease that proved fatal. She died on Aug. 6, 1914. In addition to being stricken with grief, Wilson was dismayed by what would become World War I, when Austria declared war on Serbia after an assassination. The president was grateful that the First Lady was never made aware that the world was crashing into ruin. “It would have broken her heart.”

As the world continued toward a catastrophic war, President Wilson buried himself in work and public appearances were scarce. Newspaper front pages were dominated by the war in Europe and there was a palpable hostility against imperial Germany, despite the president urging for moderation. A European land war did not appear to be a threat to the United States. Our oceans ensured our domestic security.

Occasional positive events punctuated the war clouds, which were growing darker. On Jan. 15, 1915, Wilson hosted a ceremony to inaugurate the first transcontinental telephone call from New York to San Francisco. Ten days later, Germany ominously announced the beginning of submarine warfare around the British Isles. Wilson rushed to mediate (another hopeless gesture), followed by a formal warning reminding Germany of the rights of neutrality for American ships. Sensing a deeper involvement, Secretary of State William Jennings Bryan protested the statement as Wilson remained steadfast.

Sixteen months after Ellen’s death, Wilson remarried and during this interlude the president continued to guide America over the hazardous shoals of neutrality. It was obvious that American involvement could tip the scales of war to either side, but the choice was to avoid war and treat it as rivalry between degenerate political systems. After the Germans sank the RMS Lusitania, the loss of life offended the sense of American justice and extensive war propaganda inflamed it further. The distant war seemed ever so closer.

In the fall of 1916, Wilson produced a message to the warring nations of Europe to lay down their arms, accept American mediation and work together to ensure peace and justice throughout the world. He considered it a masterpiece. “There are some sentences,” he wrote in his diary, “that will live as long as human history.” (Uh, maybe not).

When the United States entered the war, American armies propped up France and England when they were on the brink of collapse. The entire European financial system was crumbling sans U.S. credit.

When Wilson traveled to Paris to pursue his lofty goal of creating a just peace, America’s world prestige and power was at an all-time high. His idealistic 14-point plan was lauded around the world – promising democracy and self-determination for all. Wilson was arguably the most famous man alive. Had he merely presented his plan for a peace framework, his position would have been impregnable. He could have departed and ruled from the safety of the White House. Instead, he stayed and got ensnared by his sharp-elbowed allies, who proceeded to exploit his proximity and inculcate their tribal animosities. Most disastrous was his stubborn inability to compromise.

The ensuing meetings were little short of a disaster and he managed to alienate both his allies and the Germans. Upon his return, he was unable to get even his colleagues to support his plan for a League of Nations; he had a stroke and was unable to govern. It is still a mystery how little was accomplished and how much carnage was suffered. Worse was the planting of seeds guaranteeing a short reprieve followed by a resumption of hostilities.

But then, the First World War was a real mystery … its origins baffling, as were the events that followed. How is it possible for a prosperous continent – a symbol of wealth, global power, at the peak of intellectual and cultural achievement – opt to mobilize for total war, and in the process commit their future to pointless slaughter?

If reincarnated, their first question would likely be, What’s changed?

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].

It’s that time of year again … thinking about taxes

An editorial cartoon by Winsor McCay, circa 1925, protesting Congress “milking” income taxes while ignoring business taxes, sold for $10,800 at a November 2018 Heritage auction.

By Jim O’Neal

U.S. Rep. Schuyler Colfax of Indiana described the issue this way: “The most odious tax we can levy is going to be a tax on land. I cannot go home and tell my constituents that I voted for a bill that would allow a man, a millionaire, who has put his entire property into stock, to be exempt from taxation, while a farmer who lives by his side must pay a tax!” Colfax (1823-1885), who would later become one of only two men (with John Nance Garner) to be both speaker of the house and vice president, had a different proposal: Put a tax on stocks, bonds, mortgages and interest. A de facto income tax.

There was ample precedent for an income tax. England imposed one in 1799 and various states – which relied primarily on estate taxes – had begun taxing income in the 1840s. By 1850, some states had income taxes with high exemptions and low rates that graduated based on the wealth of the taxpayer. They didn’t raise much revenue, but were viewed as a way of taxing any wealth that escaped common real estate taxes. Colfax prevailed and the Ways and Means Committee dropped the property tax and replaced it with “direct taxation upon personal income or wealth.”

The only issues remaining were the constitutional restrictions on direct taxes, except in proportion to population (i.e. different tax rates for different states). The solution was simple. Call the new taxes something other than a direct tax and “impose the burden on the people equally in proportion to their ability to pay.” An amendment was adopted to impose a 3 percent tax on income over $600 a year and a luxury tax on alcohol and luxury goods.

The Senate went one step further with a 5 percent tax on income over $1,000. Eventually, they compromised on 3 percent for income over $800. At last, said The New York Herald, millionaires would contribute a fair proportion of their wealth to the support of the national government. Inequality would soon be a relic of the past and every man would pay according to his ability!

The time was early 1862 and Secretary of the Treasury Salmon Portland Chase realized he had grossly underestimated the cost of the Civil War. After the embarrassment at Bull Run and a reassessment of Gen. George McClellan’s preference to train his troops rather than engage the South in battle, a new estimate of the first year’s cost was a staggering $530 million. Chase doubted that merely labeling the new income tax an “indirect tax” was constitutional. More importantly, Congress had neglected to establish any means for collecting or enforcement of the new tax. The decision was made to view the tax legislation as simply a recommendation and everyone conveniently ignored it.

However, this left the Treasury with an urgent need to start borrowing money to fund the war effort and the challenge was growing more daunting each day. Treasury funds were facing a virtual depletion in a matter of weeks and American banks were adamant that the Union raise taxes rather than expect more loans. Without new revenues, the Union was in peril and the urgency was significant. President Lincoln found it convenient to cede authority to Chase and plead ignorance whenever the issue of finance was raised.

An earlier gambit in late 1861 to raise $150 million through a consortium of banks had failed when debt instruments were only partially subscribed to and government gold supplies were totally inadequate to cover the mounting financial needs. Trapped without any viable traditional options, Lincoln and Chase broke with longstanding traditions and accepted the idea to simply print the money needed. Congress passed the Legal Tender Act of 1862, turned on the printing presses and cranked out $150 million that the government declared as legal tender for private and public debts. An important proviso of the new “green backs” was that they were not redeemable for gold or silver and not for payment of customs duty or federal bonds and notes.

Most estimates for the cost of the war (1861-65) range from $6.2 billion for the Union and at least $2 billion for the South. These little wars can become very expensive if allowed to continue … a lesson we have learned once again in the Middle East (estimated at $80 billion “tops” … to actual $3 trillion and growing). But if you own a printing press, no problem.

In 1894, Congress tried to introduce an income tax of 2 percent on earnings over $4,000, but the Supreme Court ruled it unconstitutional. Income tax would not become a regular part of everyday life until 1914. However, once it did, the battles over taxes versus government spending (and who should pay) has become de rigueur.

“Don’t tax you. Don’t tax me. Tax that guy behind the tree.”

What would you do if you saw your obituary?

Francis H.C. Crick’s Nobel Prize Medal and Nobel Diploma, awarded in 1962 for his work related to DNA molecules, sold for $2.27 million at an April 2013 Heritage auction.

By Jim O’Neal

In 1888, a French newspaper published Alfred Nobel’s obituary with the following title: “Le marchand de la mort est mort” or “The merchant of death is dead.”

In reality, it was actually his brother Ludvig who had died, but Alfred was appalled that this kind of sendoff could tarnish his own professional legacy. One presumes that the only error was the mix-up in names since the sobriquet seemed apt given Alfred’s contributions to the effectiveness of substances that resulted in death.

In a complicated maneuver, the inventor of dynamite attempted to rectify future obits by posthumously donating the majority of his estate (94 percent) to the establishment of the Nobel Prizes, designed to expunge his reputation for all the deaths resulting from his explosive product. It was only partially successful since he was accused of treason against France for selling Ballistite (a smokeless propellant composed of two explosives) to Italy. The French forced him to leave Paris and he moved to Sanremo, Italy, where he died in 1896. There were five Nobel categories with an emphasis on “peace” … for obvious reasons.

A native of Stockholm, Nobel made a fortune when he invented dynamite in 1867 as a more reliable alternative to nitroglycerin. As a chemist and engineer, he basically revolutionized the field of explosives. Some accounts give him credit for 355 inventions. In 1895, a year before his death, he signed the final version of his will, which established the organization that would bear his name and “present prizes to those who, during the preceding year, shall have conferred the greatest benefit to mankind.”

Nobel’s family contested the will and the first prizes were not handed out until 1901. Among the first winners were German physicist Wilhelm Conrad Röntgen, who discovered X-rays, and German microbiologist Emil Adolf von Behring, who developed a treatment for diphtheria. The Nobel Prizes were soon recognized as the most prestigious in the world. Except for war-related interruptions, prizes have been awarded virtually every year. The category of economics was added in 1969.

The first American to receive a Nobel was President Theodore Roosevelt, who garnered the prize in 1906 after he helped mediate an end to the Russian-Japanese war. The German-born American scientist Albert Michelson claimed the physics prize the next year. However, the peace and literature prizes would become the most familiar to Americans and are some of the most controversial. Critics voiced concerns over Roosevelt, Woodrow Wilson (1919), George Marshall (1953) and Secretary of State Henry Kissinger (1973). More recently, winners have included Al Gore (2007) for making an Oscar-winning documentary on climate change, and Barack Obama (2009) “for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples.” (for more, see Obama’s Wars by Bob Woodward).

William Faulkner, Ernest Hemingway, John Steinbeck and Toni Morrison generally have escaped criticism, as have multiple winners like Marie Curie (the first woman in 1911, and in two separate categories), and Linus Pauling, among others. The Red Cross has snagged three. From a personal standpoint, the most obvious non-winner is Mahatma Gandhi, or as someone quipped, “Gandhi can do without a Nobel Prize, but can the Nobel Committee do without Gandhi?”

I think not.

‘Miracle on Ice’ remains one of sports’ greatest moments

The 1980 U.S. Hockey “Miracle on Ice” Olympic gold medal presented to team member Mark Wells sold for $310,700 at a November 2010 Heritage auction.

By Jim O’Neal

A recent New York Times crossword puzzle (the dreaded Saturday version) had a surprisingly easy clue for 18 down: Sports Illustrated named it #1 in their “100 Greatest Moments in Sports History.” A quick count confirmed my immediate candidate … the “Miracle on Ice” … and I got off to a fast start that fizzled out before I peeked at the answers on Rex Parker.

At the 1980 Olympic Games, an underdog U.S. hockey team defeated a brilliant Soviet Union team that was heavily favored. In 1980, professional athletes were barred from participating in the Olympics, however, communist teams maneuvered around the rules by claiming their professional players were in the military. The 1980 Soviet team – which competed in a world-class league – was generally recognized as the best in the world at any level.

Since the 1980 Olympic Games were held at Lake Placid, N.Y., the Soviet team played nine games against the top NHL hockey teams and won five out of nine games. Then they proceeded to defeat a team of NHL all-stars by an embarrassing 6-0. These guys were unquestionably the finest players in the world and eagerly looking forward to more gold medals at the Olympics, where they were the four-time defending gold medalists.

U.S. coach Herb Brooks had a long history, starting with winning the Minnesota state championship with Johnson High School in 1955 and from 1960 to 1970, he had been on eight U.S. national teams, playing the 1964 and 1968 Olympics. He was also on the 1960 Olympic team, but was the last man cut from the squad. He did know hockey and was keenly aware of the challenges the 1980 team would face. His only strategy was perhaps endurance, and the team played a staggering 61 exhibition games to get in shape.

In their final tune-up for the Olympics, they played the vaunted Soviets at a high-profile venue: Madison Square Garden. The game was played about one week from the Olympic ceremonies and the U.S. team was trounced by the arrogant Soviets, 10-3. Every hockey expert fully expected the U.S. team to be one of the early teams eliminated. But the team had developed into a cohesive unit with a surprisingly strong defense and a flair for last-minute heroics. Still, none of these was to be confused with having a chance since they were still the youngest team and up against professionals with depth and experience.

Meanwhile, the Soviets were trouncing their opposition, winning all five games with a combined score of 51 to 11, and now scheduled to meet the U.S. in the first game of the medal round. The game started as expected with the Soviets drawing first blood. The Americans bounced back and scored a tying goal with one second to go in the first period.

Then the Soviet coach made a change that is still controversial … he petulantly pulled his goalie, Vladislav Tretiak, who was universally rated the world’s best goalie and would later be inducted into the Hockey Hall of Fame. Then the U.S. pulled ahead and with seven seconds left, and TV announcer Al Michaels posed his now famous question: “Do you believe in miracles?” He then answered his own question: “Yes!” Three days later, the U.S. team came back from a 2-1 deficit to beat Finland 4-2 and win the gold medal, while the Soviets defeated Sweden to win the silver (but they didn’t turn them in to be engraved as was the tradition).

Michaels was named Sportscaster of the Year and the historic game was on a tape delay in the United States due to time-zone TV broadcast considerations. Jim McKay made this announcement before the airing … promising it would not spoil the results. He was right, since the U.S. amateur hockey team had arguably completed the biggest upset in the history of competitive team sports.

Let’s not forget the horrors spawned by Russia’s dictators

“How Stalin Hopes We Will Destroy America” is a 1951, 16-page anti-communism giveaway comic book published by Joe Lowe Co.

By Jim O’Neal

It is (almost) painful to watch otherwise bright and eloquent activists attempt to explain the basic tenets underpinning their infatuation with democratic-socialism. Even a casual reading of 20th century history should be more than enough to convince the naive of its fatal flaws. I sometimes wonder if philosopher George Santayana was anticipating this situation and trying to find a kind, diplomatic way to explain that “Those who cannot remember the past are condemned to repeat it.”

Yet socialism is back with a presidential election on the horizon (will Bernie Sanders run?) and another generation thirsty for change. The old warhorses of populism and capitalism will do battle again as advocates field their best warriors to convince others. My only hope is that we don’t have to repeat the tired, discredited concepts of Marxism, Leninism and communism that co-mingled with early 20th century socialism.

It is far too easy to pick from any number of fuzzy thinkers to make a compelling case to indict and convict them of naïveté, or to find a country in the Western Hemisphere that is disintegrating in front of our eyes (e.g. Venezuela). A bit more challenging is to link two historic names, familiar to all, who went from bad to disastrous.

Throughout the 20th century, renowned historians debated whether Vladimir Lenin’s successor – Joseph Stalin – was his rightful heir or simply an opportunistic usurper. After the collapse of the USSR in 1991, they finally had their answer. Evidence that had been locked away for decades in secret files eliminated any lingering doubts. The two dictators were like evil twins, starting with Lenin’s obsession to shoot, hang or destroy anyone who resisted the Bolsheviks agenda. The world’s experts agreed that Lenin spawned Joseph Stalin.

Lenin was born into a life of luxury, a normal child with a curiosity satisfied by reading. That phase of his life changed dramatically when his brother was hanged in 1887 after involvement in a plan to kill Czar Alexander III. Perhaps even worse was the family ostracism from polite society. Later, he would write, “The bourgeois will always be cowards and traitors.” He then dedicated his life to destroying the czarist system and its members.

Withdrawn and intensely focused, Lenin developed a maniacal passion for revolution that drove him to the brink of a nervous breakdown even after being exiled in Western Europe. He was a ruthless debater with the familiar “win at any cost” strategy that radicals invariably adopt. One of the Mensheviks summed it up nicely: “I hope there is no afterlife. Can you imagine arguing with Lenin after death? And then thereafter listening to his gutter abuse?”

From the moment of the Bolshevik coup in October 1917, he crushed any threat to his party’s hold on power, eliminating political parties, jailing opponents and unleashing terror using the political police.

In the aftermath of Lenin’s death in January 1924, Joseph Stalin – Secretary General of the Communist Party – emerged as the outright leader of the Soviet Union. Impatient with dictatorship, Stalin set out to forge a despotism in mass bloodshed. It included the forced collectivization of Soviet agriculture, the linchpin of the first five-year plan. He set draconian quotas for the confiscation of “surplus” food and violently repressed those he then exterminated. The consequent famine killed more than 5 million in Ukraine, Kazakhstan and the Northern Caucasus.

It is estimated that he was responsible for 50 million deaths. The rest of the story is available through dozens of books that chronicle his “Reign of Terror.”

To the well-intentioned, this is the road to socialism and then worse. It is an oft-traveled route that will ensure destruction of the many good things we enjoy. Travel at your own peril.

When American wealth met British nobility

A print by American photographer Slim Aarons, showing Consuelo Vanderbilt (right) in Palm Beach, Fla., circa 1955, went to auction in 2014.

By Jim O’Neal

John Jacob Astor (1763-1848) was the first member of the well-known Astor family to gain prominence in both business and social circles of America. He holds the unique distinction of becoming the first multi-millionaire in the United States. Yet there is little in his early German background that hinted at his ultimate financial accomplishments. He was a baker and dairy salesman before moving to London at age 16. These were primarily family-related activities that expanded to include making flutes and pianos.

It was after relocating to New York City that events smiled on him as his instincts for mercantilism flourished. A fur trader piqued his interest and he began an astonishingly successful business buying raw hides from American Indians and finishing them for resale in London. The trendy English practice of owning fur hats seemed almost insatiable and Astor’s profits were generous. He even opened a thriving retail shop for fur goods in NYC just as the American Revolution ended.

The Jay Treaty between Great Britain and the United States in 1795 that opened trade between Canada, the Great Lakes region and London provided even more lucrative opportunities for Astor. Later, he would expand further West, all the way to Canton, China, as he added tea and opium to the lucrative fur business that he dominated in broad areas of the Northwest. Despite an interruption during the War of 1812, Astor’s profits enabled him to expand into New York City real estate with exquisite timing. The fashion trends in London were changing and Astor rightfully guessed that New York real estate was on the verge of exploding.

This almost prescient ability to transform his business to meet changing demands allowed him to grow his profits in an unprecedented manner. At the time of his death in 1848, John Jacob Astor was the richest person in North America. The family prospered and proliferated as the Astors naturally married into other wealthy families and would go on to become socially dominant as they had in business, despite the Civil War, which raged through the South for four long years.

Once peace was restored, there was a need to help rebuild vast portions of the ravaged country and it coincided with a number of major advances in economic developments that would fuel yet another, even greater period of prosperity. The Gilded Age is often used for the post-Civil War period from 1870 to 1900 when great fortunes were made in steel, oil, railroads and even the lowly sewing machine. It is also associated with names like Rockefeller, Carnegie, Mellon and Vanderbilt. These “Robber Barons” accumulated their great fortunes during a period when antitrust laws were virtually unknown and the personal income tax was decades away from being legislated.

Technically, it was probably a pejorative term, since “Gilding Gold” or “Gilding the Lilies” were considered examples of greed and excess. In the 1920s, Mark Twain co-authored a novel that described the excesses, just as Shakespeare had done, but not as caustic and with less sarcasm.

Across the pond, quite the opposite was happening. A combination of new death taxes and an agricultural depression had left much on the English aristocracy with dwindling incomes and in a paradoxical position of being land rich and cash poor. For the daughters of America’s new millionaires, it provided the ultimate opportunity: marriage to a cash-strapped British aristocrat in return for a title and automatic entry into the elite social circles that were quickly forming.

At no time was this more evident than in 1895, when Consuelo Vanderbilt, the daughter of American Willie Vanderbilt, married Charles “Sunny” Spencer-Churchill, the Duke of Marlborough. It was the media event of the year. Three hundred policemen were employed outside the church to hold back thousands of onlookers desperate to catch a glimpse of the glamorous bride in a dress with a five-yard train. Details of the wedding were reported on the front page of The New York Times, and Vogue devoted several pages just to the bride’s trousseau, which had gold clasps studded with diamonds.

Consuelo carried orchids that had been grown in the greenhouse of Blenheim Palace and shipped in a specially refrigerated chamber, because Marlborough brides always carried flowers from Blenheim, irrespective of where the marriage took place. Gifts were displayed for the public – as they are for royal weddings today – and the queue stretched halfway down Fifth Avenue. They included a string of pearls once owned by Catherine the Great. Consuelo was the most famous of the “dollar princesses” – a fabulously rich person looking for the one thing they couldn’t buy at home … a title. Between 1870 and 1914, a total of 454 steamed across the Atlantic and married titled Europeans.

In 1895 (alone), nine American heiresses married English aristocrats and by the end of the century, 25 percent of the House of Lords had a transatlantic connection. The other angle was to simply marry into an elite group, like New York native Caroline Schermerhorn Astor, who in 1853 married William Backhouse Astor Jr. and for several decades was the undisputed queen of American society. She was known as “the Mrs. Astor” (despite the existence of several others). After all, why should one go all the way to England and then live in a stately home that was drafty, isolated and devoid of any creature comforts?

We know the answer, as F. Scott Fitzgerald once told Ernest Hemingway: “You know, the rich are different than you and me” – to which Hemingway replied, “Yes, they have more money.” The “Money Honeys” would simply add, “But, my dear boy, you must also have a title!”

Touché.

Here’s why DeWitt Clinton had real nerve, visionary leadership

This DeWitt Clinton memorial pewter rim went to auction in February 2018.

By Jim O’Neal

If you’re not weary yet of presidential politics, hold on. Bill and Hil Clinton are on a 13-city speaking tour using a conversational format followed by a Q&A session. They are most likely eyeing 2020 as yet another chance to move into a big white house in the 1600 block of Pennsylvania Avenue in Washington, D.C. The current occupants do not seem to have a good chance of making it two more years, but next in line is a family named Pence.

The name “Clinton” was also prominent in Washington, D.C., and NYC during the 18^th and 19th centuries, and perhaps even more pervasively. George Clinton (1739-1812) is generally considered a Founding Father as he participated in the French and Indian War and was a brigadier general in the Continental Army. He was also a delegate to the Continental Congress in 1776, but opposed adoption of the U.S. Constitution. Like Samuel Adams, he finally relented when the Bill of Rights was added.

He then turned to politics and in 1777 was elected (concurrently) to become lieutenant governor and governor of New York. In the second presidential election in 1792, he came in third behind George Washington and John Adams, but ahead of Thomas Jefferson and Aaron Burr. Clinton served four more years as governor of New York and held the record for longest-serving governor (21 years) until it was broken in December 2015 by Terry Branstad of Iowa. Branstad is now the U.S. Ambassador to China.

George Clinton then served as vice president for Thomas Jefferson in his second term (1805-1809) after Jefferson dropped Aaron Burr (presumably because he killed Alexander Hamilton in a duel in 1804). Clinton then served as vice president for James Madison until Clinton’s death in 1812. This was the first time the office of vice president was vacant and also the first time a VP served for two different presidents. Later, John C. Calhoun would serve as vice president for two different presidents (John Quincy Adams and Andrew Jackson) as he unsuccessfully tried to position himself for the top spot.

However, we are more interested in George Clinton’s nephew, DeWitt Clinton (1769-1828), who challenged James Madison for the presidency in 1812. DeWitt was a U.S. Senator from New York, mayor of NYC, and the sixth governor of New York. It was during his time as governor that he made his mark on history.

At the time, the great American rivers on the Eastern seaboard – like the Hudson, Delaware and Connecticut – were woefully underutilized for transportation or commerce. The primary modes for river transportation were limited to the currents, wind, various animals or one’s own feet. And, of course, going upstream against the currents was difficult and essentially impractical. But there were exciting things going on in Europe that would help transform the United States.

James Watt’s coal-fired steam engines were powering the spinning machines that transformed cotton into high-grade cloth. The cost was so low that the material could be shipped all the way to India and still be cheaper than local hand looms. Since England was sitting on huge supplies of coal and the coalmines could use the abundance of labor, it was a near-perfect situation. The remarkable Industrial Revolution was in full swing, transforming a nation of shopkeepers into a modern nation. The same near-perfect balance occurred in steel production following Henry Bessemer’s technique that obsoleted iron.

Attaching a steam engine to a boat was the next big thing and America’s ingenuity took over. By 1807, an American who had spent most of his life in England and France decided to return to America and tackle this obvious opportunity. Robert Fulton’s boat, the North River Steamboat, was 133 feet long with a tonnage of 160. It literally dwarfed all other experimental steamboats and was ready for a trial run to Albany.

Most skeptics believed Fulton would not be able to ever move 1 mile per hour or be of any utility. With smoke plumes marking its progress, the North River headed north on the Hudson. It arrived in Albany in 32 hours, averaging nearly 5 mph … upstream. On the return, it was back in a mere 30 hours. Vindicated, Fulton predicted it would soon be providing quick and cheap conveyance on the Mississippi, Missouri and others. He was right, as the Mississippi, Ohio and every other major river would soon have steamboats churning up and down their waters.

Even as steam had conquered America’s rivers, other geographic features limited commerce. Mountains were near impossible, and flat lands required the considerable exertion of horses, oxen and people. Land-based commerce – which was rapidly becoming the major activity – was both limited and expensive. One solution was canals and that’s where Governor DeWitt Clinton re-enters the picture. He personally championed the Erie Canal when others (including Thomas Jefferson) thought the idea was “little short of madness.”

Thanks to Clinton’s unwavering efforts to overcome all objections, on July 4, 1817, construction began on a 363-mile canal that was dug all the way from Lake Erie to Albany, N.Y. … blasting its way through mountains with powder from E.I. Du Pont de Nemours; the powder was DuPont’s only product for the company’s first 60 years of its existence. It took eight years and a budget of $6 million, raised from bonds from the public rather than squabbling with state bean counters. It was a lot of money; for perspective, the entire federal government budget for 1811 was $8 million. So hats off to a Clinton with real nerve, perspective and the kind of leadership vision that built this nation.

As an aside, today the federal government spends $8 million every 56 seconds. Maybe that’s why we have bridges that crumble, airports that lag third-world countries and we owe someone $22 trillion.