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.

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].

Pepsi, Coca-Cola, Michael Jackson, Roger Enrico, Central Park and a Texas woman named Rogers

An original 1949 oil-on-canvas illustration by Haddon Hubbard Sundblom (1899-1976) for a Coca-Cola advertisement sold for $11,250 at an April 2020 Heritage auction.

Then We Set His Hair on Fire: Insights and Accidents from a Hall-of-Fame Career in Advertising by Phil Dusenberry, chairman, BBDO

By Jim O’Neal

Phil Dusenberry and I became friends when he was at the top of his game and working for Pepsi-Cola in the 1980s for another close friend, Roger Enrico. Both of these men were creative geniuses and the remarkable advertising they created was both legendary and memorable. However, on a personal level, they were quite different.

Roger was a brilliant strategic leader, inspirational speaker, risk-taker (“Big changes to big things”) and exactly what PepsiCo needed as a CEO. He got a break when Steve Jobs lured John Sculley to Apple and Roger took his place as president of Pepsi-Cola. This would lead almost inevitably to chairman and CEO of PepsiCo, which had gradually became weighed down by too many underperforming restaurant concepts and a bloated corporate structure.

Phil was a quiet, almost elegant perfectionist, right out of central casting, who was obsessed by “The Work.” He literally earned the sobriquet as Phil “Do it Again” Dusenberry by carefully evaluating excellent creative advertising (that others could only wish for) and then tirelessly “working” it into jaw-dropping brilliance. He also dabbled in the film business and co-wrote the screenplay for The Natural (Robert Redford). As part of the “Tuesday Team,” he helped write speeches for President Reagan and created the still memorable “Morning in America,” a 60-second spot in 1984 that many credit with helping him win re-election.

The “fire and ice” combination of Roger and Phil resulted in a symbiotic relationship that resulted in truly world-class work that was unparalleled, at least in soft drinks.

Virtually everyone knows about the Pepsi Challenge and how fiercely loyal Coca-Cola drinkers actually preferred Pepsi in blind taste tests. After lots of research to ensure the claim was legal, Pepsi started making TV commercials using real people taking “The Challenge” and it was soon a national campaign. Having a legitimate claim to a preferred product that can be advertised was a real boost in sales. Roger always believed that the Challenge was the real reason that Coke in 1985 changed their original secret formula. The result was New Coke, which turned out to be a marketing fiasco. All they had to do was add a small amount of regular sugar to the concentrate and the Challenge would have ceased to exist. But, for 99 years, no one was allowed to make changes to the original recipe. Leaders sometimes overlook the obvious.

Meanwhile, Roger decided that the Challenge was getting tired. After various forays into fruit-flavored soft drinks (Slice) and tinkering with all the sweeting systems (cyclamates, fructose, etc.), he decided Diet Pepsi was OK (barely) but the Pepsi brand needed an entire rethink. He, Phil and several others were struggling with imagery – easy to say and much harder to get on film – when a miracle happened. Roger got a call from Jay Coleman pitching a Pepsi-Michael Jackson deal. It would include two Pepsi commercials, a national tour and a slew of press conferences.

The only shocker was that boxing promoter Don King was involved and the price was an unprecedented $5 million! It took a week to hammer out a contractual deal when someone asked if PepsiCo Chairman Don Kendall had been told (he was in Russia). When he returned, they set up a special presentation for Mr. Kendall and held their breath. After watching the MJ video, Kendall purportedly told Roger: “That is the most remarkable performer I’ve ever seen!”

With some trepidation, Roger invited Don King and his entourage to PepsiCo corporate headquarters to meet the PepsiCo family. It was quite a spectacle, but soon migrated over to the Tavern on the Green for a big press conference in Central Park. Some people take parks for granted … just natural landscapes with grass, trees and perhaps some water. But, consider the fortunes of New York’s Central Park.

This 19th century park was the creation of journalist William Cullen Bryant and prominent horticulturist /landscape designer Andrew Jackson Downing. The city bought the land and Frederick Law Olmsted provided the plan. Construction started in 1858 and nearly completed by 1873. But the corrupt Tammany Hall politicians who ran the city lost interest, and the funds to maintain the 800 acres disappeared. Trees were unpruned, ponds untended and lawns unseeded. By the early 1900s, the park resembled an abandoned ruin.

However, when Fiorello La Guardia became mayor in 1934, he appointed Robert Moses as parks commissioner and over the next 30 years rebuilt the park. For more on Moses, please read The Power Broker by Robert Caro (Pulitzer Prize-winner and voted one of the top 100 nonfiction books of the 20th century). But, by 1975, NYC was broke again and there went the park budget again. Finally, a woman by the name of Elizabeth Barlow Rogers – from San Antonio – became administrator of Central Park. During her tenure of 16 years, a conservancy fund of $100 million was raised (it’s up to $1 billion now). So Central Park finally looks stable.

Phil Dusenberry died of lung cancer in 2007, Roger had a stroke in 2016, and MJ died in 2009. For several years, they made a powerful trio that helped create a New Generation. Even the venerable Tavern on the Green has been shuttered.

Things change.

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 New Yorker is perhaps the best magazine America has ever produced

Charles Samuel Addams’ original cartoon art for Sad Movie, which appeared in The New Yorker in 1946, sold for $40,625 at a March 2012 Heritage auction.

By Jim O’Neal

Conventional wisdom suggests that greatness did not come easily or immediately to the venerable New Yorker magazine. Founded in February 1925, its primary strengths were zeal and enthusiasm, derived primarily from editor Harold Ross. He had journalism in his blood and would be editor for every copy (1,339 issues) until his death in 1951.

Then there was the critical financial indulgence of principal backer Raoul H. Fleischmann, who founded the General Baking Company. Ross and Fleischmann formed F-R Publishing Company to publish the new magazine. Fleischmann was widely quoted as saying, “The very best thing about the first issue was the cover” – a Knickerbocker dandy (by Rea Irvin) peering through a monocle at a butterfly. Later named Eustace Tilley, the New Yorker dandy became a well-known icon.

The magazine “stank,” Fleischmann pronounced. That first year was dangerously precarious. By the fourth month of publication, circulation had plummeted from a robust 15,000 to a mere 4,000 … with a measly three to four pages of ads. Fleischmann reluctantly agreed to prop it up financially through the summer, and by the fall, it had stabilized … barely.

The 1925 cover of The New Yorker’s first issue, created by Rea Irvin.

But timing was favorable since New York – at least during Prohibition years – was at the peak of its gaudiest best. American writing, graphic art and musical comedy were especially lively. Soon, a host of bright, talented writers were attracted to this unconventional weekly publication. Some were already established names, like Robert Benchley and Ralph Barton, while others made the risky leap from ad agencies in the hope it was something more exciting than writing ad copy.

Gradually, the magazine morphed into a curious, almost schizophrenic publication, with parts of The New Yorker getting lighter and funnier, while its fiction, reporting and poetry got more serious. Ross banished sex in any form and scrutinized every sentence for off-color jokes and double entendres. He scrubbed the advertising to ensure it was suitable and disliked fatalistic or socially conscious pieces since they were inevitably too grim.

He was the quintessential editor who kept the copy clear and concise. In his opinion, Harry Houdini and Sherlock Holmes were the only two people in the English-speaking world everyone knew. Any lesser-known, marginal characters were quickly dispatched with a red line. Come back when they’re famous!

Well known for his extreme use of commas, one saving grace was that Ross was a true original member of the Algonquin Round Table, a group of writers, critics and actors who gathered daily for lunch to amuse each other with razor-sharp wisecracks and witticisms. Ross used his contacts with this group to help leverage the magazine since many had national newspaper columns. Also known as “The Vicious Circle,” especially after a few rounds of martinis, they delighted in sharpening their tongues. For example, someone would say “Calvin Coolidge died” and poet/satirist Dorothy Parker would respond, “How could they tell?” Or the comment about a famous actress’ theatrical performance: “Her emotions ran the full gamut from A to B.”

The group was a perfect complement to the magazine and New York’s classic elitism and charming sarcasm. In fact, a prospectus brochure announced (proudly) that it was not edited for old ladies in Dubuque. It was New York snobbery at its best (worst?).

Cartoonists Peter Arno and Helen Hokinson became regulars that first season and added to its reputation of “cosmopolitan sophistication.” One 1928 cartoon shows a mother telling her daughter, “It’s broccoli, dear” and the daughter responds, “I say it’s spinach and I say the hell with it!” (“I say the hell with it” became a common catchphrase and inspired a Broadway song by Irving Berlin). But perhaps the most reprinted cartoon in history is Peter Steiner’s 1993 gag: a drawing of two dogs at a computer with one saying, “On the Internet, nobody knows you’re a dog.”

On the serious side, after WWII, John Hershey penned a 31,000-word article in 1946 titled “Hiroshima.” It deftly conveyed the cataclysmic narrative of the 130,000 people killed through the stories of six survivors coping with the bomb’s aftermath. It was a publishing sensation and the questions it raised about humanity languish yet today. It has been called the most celebrated piece of journalism to come out of the war. This is exactly what Ross wanted. He dedicated nearly the entire issue to the article – a first for the magazine.

Another highly controversial coup was “The Lottery” by Shirley Jackson on June 6, 1948, which told a morbid, dark tale of a small town that conducts a bizarre ritual each year. It is often ranked as the most famous short story in the history of American literature (you’ll have to Google it).

Now, David Remnick, the fifth editor (starting in 1998), calmly leads the magazine to an uncertain future. The New Yorker has become the nation’s most honored magazine, with numerous National Magazine Awards and Pulitzer Prizes. Remnick’s personal awards are impressive and he has authored six important books. The New Yorker is not only the best general magazine, but perhaps the best magazine America has ever produced. At age 94, some say without it, everyone’s sights would be lower.

You decide.

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.”

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].

‘Sesame Street’ inspired by the simple idea of making the world a better place

The original illustration for the July/August 1980 cover of Sesame Street Magazine, by Rick Brown, sold for $2,390 at a December 2017 Heritage auction.

By Jim O’Neal

Can you tell me how to get to Sesame Street?

It’s a question millions of children have been asking every day for the past 50 years. In a single television season, 1969, Sesame Street became the most famous street in America, eclipsing Wall Street, Madison Avenue and even (every town has one) Main Street. So how did we get here in the first place?

Television producer Joan Ganz Cooney recalls a “little dinner party” in 1966 with her husband, Tim Cooney, and Lloyd Morrisett – an executive as the Carnegie Corporation – who asked an innocent but sincere question: “Do you think television can be used to teach young children?” In his book Street Gang: The Complete History of Sesame Street, author Michael Davis writes about Morrisett watching his young daughter sitting in front of their TV watching a test pattern, but who also knew popular TV ad jingles from memory. That sparked a lightbulb question: “What else could she learn and remember?”

Joan Ganz Cooney (b.1929) had already become interested in working for educational television through her work as a documentary producer for WNET, New York’s first educational TV station. She thought about Morrisett’s dinner-party question and answered, “I don’t know, but I’d like to talk about it.” As it turned out, they did a lot more than simply talk.

She claims none of them had any idea when they started that Sesame Street and the Children’s Television Workshop (CTW) would grow into the international institutions they are today. Or that Sesame Street, winner of more Emmys than any other show (167 Emmys and eight Grammys), would also become the longest street in the world, benefiting more children in more countries than any program in history. None of them had any idea that the characters – wonderful, zany and vulnerable Muppets that taught children about letters, numbers and getting along – would become an integral part of American culture, or that they were creating a family that every child watching would feel a part of.

They only knew for sure that they wanted to make a difference in the lives of children and families, particularly low-income children. When they began their work in the late 1960s, this seemed imminently possible. It was a time when many believed they had the responsibility and power to make the world a better place, even if only just a little better. Note: Some of us are still absolutely certain this will happen. For any doubters, just be aware that for the first time in recorded history, more than 50 percent of the world’s population is now living above the poverty line!

Sesame Street’s goal was more modest (and only in retrospect, revolutionary): to use television to help children learn (full stop)!

They knew children watched a great deal of television in the years before pre-school. They were well aware that they loved cartoons, game shows and situation comedies; that they responded to slapstick humor, music with a beat and, above all (sadly), fast-paced, oft-repeated commercials. If they could create an educational show that capitalized on some of commercial television’s most engaging traits – high production values, sophisticated writing – they could attract a sizeable audience that included, most importantly, low-income children.

There was a lot of betting against them because of the number of UHF stations in the public television system, especially in pre-cable days. But their basic instincts were almost impeccable. The wasteland was too vast and the yearning for something better too great. Sesame Street was an instant hit and remains so yet today.

On a personal note, I don’t recall ever watching it (I was 32 when it debuted), but I recall that Big Bird is 8-foot-2 and I knew Joan Ganz’s second husband, Peter G. Peterson, who she married in 1980. He was an absolutely remarkable man who was CEO of Bell & Howell and co-founder of the Blackstone Group with Stephen Schwarzman in 1985 when I was heavily involved in minority business development for Frito-Lay. He was the one who first made me aware of the implications of the national debt and the cruel burden we are passing to the next generation. Peterson’s book, Running on Empty, is still a classic, even as the situation has only gotten worse. The only one who doesn’t seem to get it is New York Times columnist and Noble Prize-winner Paul Krugman, who could easily be a character on Sesame Street if he ever learns his multiplication tables.

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].

Airplanes added economic, psychological factors to warfare

Alexander Leydenfrost’s oil on canvas Bombers at Night sold for $4,182 at a February 2010 Heritage auction.

By Jim O’Neal

In August 1945, a historic event occurred: Foreign forces occupied Japan for the first time in recorded history. It was, of course, the end of World War II and cheering crowds were celebrating in the streets of major cities around the world as peace returned to this little planet.

A major factor in finally ending this long, costly war against the Axis powers of Germany and Japan was, ultimately, the use of strategic bombing. An essential element was the development of the B-29 bomber – an aircraft not even in use when Japan attacked Pearl Harbor in 1941, forcing a reluctant United States into a foreign war. Maybe it was hubris or fate, but the attack was a highly flawed decision that would not end well for the perpetrators.

The concept of war being waged from the air dates to the 17th century when several wrote about it while speculating on when or where it would begin. The answer turned out to be the Italo-Turkish War (1911-12), when an Italian pilot on Oct. 23, 1911, flew the first aerial reconnaissance mission. A week later, the first aerial bomb was dropped on Turkish troops in Libya. The Turks responded by shooting down an airplane with rifle fire.

As World War I erupted seemingly out of nowhere, the use of airplanes became more extensive. However, for the most part, the real war was still being waged on the ground by static armies. One bitter legacy of this particular war was the frustration over the futility and horror of trench warfare, which was employed by most armies. Many experts knew, almost intuitively, that airplanes could play a role in reducing the slaughter of trench warfare and a consensus evolved that airplanes could best be used as tactical army support.

However, in the 20-year pause between the two great wars, aviation technology improved much faster than other categories of weaponry. Arms, tanks, submarines and other amphibious units were only undergoing incremental changes. The airplane benefited by increased domestic use and major improvements in engines and airframes. The conversion to all-metal construction from wood quickly spread to wings, crew positions, landing gear and even the lowly rivet.

As demand for commercial aircraft expanded rapidly, increased competition led to significant improvements in speed, reliability, load capacity and, importantly, increased range. Vintage bombers were phased out in favor of heavier aircraft with modern equipment. A breakthrough occurred in February 1932 when the Martin B-10 incorporated all the new technologies into a twin-engine plane. The new B-10 was rated the highest performing bomber in the world.

Then, in response to an Air Corps competition for multi-engine bombers, Boeing produced a four-engine model that had its inaugural flight in July 1935. It was the highly vaunted B-17, the Flying Fortress. Henry “Hap” Arnold, chief of the U.S. Army Air Forces, declared it was a turning point in American airpower. The AAF had created a genuine air program.

Arnold left active duty in February 1946 and saw his cherished dream of an independent Air Force become a reality the following year. In 1949, he was promoted to five-star general, becoming the only airman to achieve that rank. He died in 1950.

War planning evolved with the technology and in Europe, the effectiveness of strategic long-range bombing was producing results. By destroying cities, factories and enemy morale, the Allies hastened the German surrender. The strategy was comparable to Maj. Gen. William Tecumseh Sherman’s “March to the Sea” in 1864, which added economic and psychological factors to sheer force. Air power was gradually becoming independent of ground forces and generally viewed as a faster, cheaper strategic weapon.

After V-E Day, it was time to force the end of the war by compelling Japan to surrender. The island battles that led toward the Japanese mainland in the Pacific had ended after the invasion of Okinawa on April 1, 1945, and 82 days of horrific fighting that resulted in the loss of life for 250,000 people. This had been preceded by the March 9-10 firebombing of Tokyo, which killed 100,000 civilians and destroyed 16 square miles, leaving an estimated 1 million homeless.

Now for the mainland … and the choices were stark and unpleasant: either a naval blockade and massive bombings, or an invasion. Based on experience, many believed that the Japanese would never surrender, acutely aware of the “Glorious Death of 100 Million” campaign, designed to convince every inhabitant that an honorable death was preferable to surrendering to “white devils.” The bombing option had the potential to destroy the entire mainland.

The decision to use the atomic bomb on Hiroshima (Aug. 6) and Nagasaki (Aug. 9) led to the surrender on Aug. 10, paving the way for Gen. Douglas MacArthur to gain agreement to an armistice and 80-month occupation by the United States. Today, that decision still seems prudent despite the fact we only had the two atomic bombs. Japan has the third-largest economy in the world at $5 trillion and is a key strategic partner with the United States in the Asia-Pacific region.

Now about those ground forces in the Middle East…

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].

Artists, writers tapped into America’s traveling spirit

Robert Crumb’s original illustration of Jack Kerouac sold for $33,460 at a February 2011 Heritage auction.

By Jim O’Neal

While we lived in London, I was always fascinated by one common employee characteristic. Irrespective of the school – be it Eton, Oxford or the London School of Economics – every curriculum vitae (CV) included an explanation of a student’s foreign travels the year following graduation. Asia and Australia were the most popular; only rarely did it include the United States. After all the studying, cramming for exams and other typical activities on campus, they felt an overwhelming compulsion to just travel for as long as a year.

America was like that one time not too long ago. Novelist/journalist James Agee (A Death in the Family) wrote about it in Fortune magazine in 1934: Hunger for movement, he said, was “very probably the profoundest and most compelling of American racial hungers.” The road could help satisfy that hunger. Just put the hood ornament on the center line, the speedometer on 80 and let ’er rip. The urge was there before the car … long before … and invariably sent the country westward. As Huck Finn said: “But I reckon I got to light out for the territory ahead of the rest, because Aunt Sally she’s going to adopt me and sivilize me, and I can’t stand it. I been there before.”

The road was our nation’s ticket to ride and, more precisely, to ride away on. Maybe it was away from who we were, but it was, for sure, away from where we were. To where? Who knew? How about just a fresh start? We could put it all behind us as fast as the car could go.

Novelist/playwright William Saroyan, who liked getting behind the wheel of his Buick, wrote about his desire to hit the road: “It isn’t simply driving at night, it’s going on … to find out what’s out there now, not so much along the highway, in the terrain, under the sky, but in the interior of the driver himself.” Romance with the road was all about get up and go. Wherever you want to go, whenever you want to leave. There were no schedules and no reservations. Time of arrival? Whenever.

Lolita’s Humbert Humbert chose to hit the road to find his interior. Humbert’s creator, the Russian lepidopterist/novelist Vladimir Nabokov, spent two summers on America’s highways, chasing butterflies. A great year for the road was 1957. It was the year painter Edward Hopper gave us his classic Western Motel, the stark symbol of mobility and restlessness. The year that Jack Kerouac, out of the grim mill town of Lowell, Mass., weighed in with his novel On the Road. The road was Kerouac’s characters’ means of escape like the Mississippi was for Huck and Jim. On the Road captured the energy of trying to satisfy that hunger for movement.

The true north of the road was west. The West owned those lonesome, inexhaustible roads with few-and-far between motels designed so that cars could be parked about 20 feet from the beds. There was a lot of nowhere for these roads to cover. Distance was measured by hours (18 hours from Amarillo to Santa Monica), providing time to think. Playwright Sam Shepard used the road for writing and that may explain how he got the West so right.

John Steinbeck wrote that our “Mother Road” was Route 66. The Okies (including my whole family) called it their highway to heaven because it got us to California. We didn’t pick fruit like the Joads in The Grapes of Wrath. We bought real estate in Southern California that had its own fruit trees. I picked peaches and apricots off our three acres and I sold them in front of our house for 50 cents and $1 a lug. One uncle was a carpenter and he bought an entire block, built two houses, sold one for a tidy profit and lived in the other with a semi-alcoholic aunt.

My mother’s three brothers all found great jobs building airplanes and my father bought Pacific Cold Storage in Central Los Angeles (after he divorced my mother). I had two paper routes that netted me $60 a month after expenses (bicycle tires and rubber bands). I could also play night league softball in Huntington Park (we lived in Downey, home of the first Taco Bell 25 years later), and one-on-one basketball every spare minute.

My friends and I lived vicariously through TV shows like Route 66 with Martin Milner and George Maharis playing drifters in a Corvette – the only fictional series that shot all over North America – with their stories of working in shipbuilding, oilrigs and shrimping from Chicago to Los Angeles. (Corvette sales doubled). This was followed by Michael Parks in Then Came Bronson and the classic Easy Rider with Peter Fonda, Jack Nicholson and Dennis Hopper.

We had scratched our itch and found gold fast (sunshine, beaches, long-legged tan girls), but it was still fun watching others make their way west.

I wonder if space travel is what itches Elon Musk and Jeff Bezos?

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].

Franklin had Faults, but he Remains an Extraordinary American

Norman Rockwell’s illustration of Ben Franklin for a 1926 cover of The Saturday Evening Post sold for $762,500 at a May 2018 Heritage auction.

By Jim O’Neal

George Washington was the only United States president who lived his entire life in the 18th century (1732-1799). However, every early vice president – from John Adams on – spent a significant part of their lives in the 19th century. Of the Founding Fathers, Benjamin Franklin (often considered the “grandfather” of the group), was born in 1706 and died in 1790 – nine years earlier than even Washington. In reality, he was actually a member of the previous generation and spent virtually all of his life as a loyal British subject.

As a result, Franklin didn’t have an opportunity to observe the nation he helped create as it struggled to function smoothly. Many were determined not to simply replicate the English monarchy, but to establish a more perfect union for the common man to prosper (women, slaves and non-property owners would have to wait). Franklin was also a man of vast contradictions. He was really a most reluctant revolutionary and discretely wished to preserve the traditions of the British Empire he had grown so familiar with. He secretly mourned the final break, even as he helped lead the fight for America’s independence.

Even while signing the Declaration of Independence and the Constitution, like many other loyalists, he hoped for some sort of reconciliation, a hopeless cause after so many careless British transgressions.

Fortunately, we have a rich history of this remarkable man’s life since he was such a prolific writer and his correspondence was greatly admired, and thus preserved by those lucky enough to receive it. Additionally, his scientific papers were highly respected and covered a vast breadth of topics that generated interest by the brightest minds in the Western world. He knew most of them personally on a first-name basis due to the many years he lived in France and England while traveling the European continent. Government files are replete with the many letters exchanged with heads of state.

Despite his passion for science, Franklin viewed his breakthrough experiments as secondary to his civic duties. He became wealthy as a young man and this provided the freedom to travel and assume important government assignments. Somehow, he was also able to maintain a pleasant marriage despite his extended absences, some for as long 10 years. He rather quickly developed a reputation as a “ladies’ man” and his social life flourished at the highest levels of society.

Some historians consider him the best-known celebrity of the 18th century. Even today, we still see his portrait daily on our $100 bills – colloquially known as “Benjamins” – and earlier on common 50-cent pieces and various denominations of postage stamps. Oddly, he is probably better known today by people of all ages than those 200 years ago. That is true stardom that very few manage to attain.

Every student in America generally knows something about Franklin flying a kite in a thunderstorm. They may not know that he proved the clouds were electrified and that lightning is a form of electricity. Or that Franklin’s work inspired Joseph Priestley to publish a comprehensive work on The History and Present State of Electricity in 1767. And it would be exceedingly rare if they knew the prestigious Royal Society honored him with its first Copley Medal for the advancement of scientific knowledge. But they do know Franklin from any picture.

Others may know of his connection to the post office, unaware that the U.S. postal system was established on July 26, 1775, by the Second Continental Congress when virtually all the mail was sent to Europe, not to themselves. There were no post offices in the Colonies and bars and taverns filled that role nicely. Today, there are 40,000 of them handling 175 billion pieces (six per second) and they have an arrangement with Amazon to deliver their packages, even on Sundays. Mr. Franklin helped create this behemoth as the first Postmaster General.

Franklin was also a racist in an era when the word didn’t even exist. He finally freed his house slaves and later became a staunch opponent of slavery, even sponsoring legislation. But he literally envisioned a White America, most especially for the Western development of the country. He was alarmed about German immigrants flooding Philadelphia and wrote passionately about their not learning English or assimilating into society. He was convinced it would be better if blacks stayed in Africa. His dream was to replicate England since the new nation had so much more room for expansion than that tiny island across the Atlantic. But we are here to examine the extraordinary mind and curiosity that led to so many successful experiments. Franklin always bemoaned the fact that he had been born too early and dreamed about all the new wonderful things that would be 300 years in the future.

Dear Ben, you just wouldn’t believe it!

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].

Withholding Created 75 Years Ago – Giving Us a ‘Charge It’ Government

A preliminary sketch Norman Rockwell did for a 1945 Saturday Evening Post cover, titled Income Taxes (Beating the Deadline), sold for $59,375 at a November 2014 Heritage auction.

“Our new Constitution is now established, and has an appearance of permanency, but in this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin, 1789

By Jim O’Neal

I suspect Benjamin Franklin would be pleased that our Constitution has become the most revered document of our United States, but mildly surprised that the U.S. Internal Revenue Code – while undoubtedly much more prosaic – now symbolizes the highly intimate relationship between the people and their federal government. Detailed IRS regulations guide the filing of federal tax returns, an activity that is the most universal civic act in our history. Its 14,000 pages and 4 million words represent a remarkable achievement unparalleled by any government on earth.

As the size and cost of government have grown, so has the size and difficulty of the tax return itself. In 1913, the first year the modern income tax was levied (an emergency income tax levied during the Civil War was allowed to expire in 1872), the top rate was 7 percent and then only for incomes over $500,000. The rate for people between $3,000 and $20,000 was just 1 percent, and below that zero. All but 1 percent of Americans were exempt from taxes. This was by design since advocates wanted a tax directed only at excess corporate and personal profits, not the wages of ordinary people. It was a way of reasserting the values of the early republic – now focused principally on equality – in reaction to gross inequities brought on by industrialization, and a way to force millionaire industrialists to share their wealth with society.

But WWI and the Great Depression increased the responsibilities of the federal government and rates took a quantum leap with the demands of WWII as the government took advantage of American patriotism. The number of tax filers rose to a point that what had been a “class tax” became a “mass tax.” The April 15 deadline is now a national rite, dreaded as much as it is observed. The complexity has become so pervasive that most filers require the aid of professional tax preparers. Looking back, it still seems remarkable that the income tax could have been extended to include so many people without creating a backlash. The wars helped, as did the success of government in defeating our enemies and the post-war economic growth. But the primary reason was that a new way had been devised to collect it.

For that, the IRS can thank Beardsley Ruml, a mid-century Macy’s executive who came up with a plan to institute what is politely called “withholding.” Until 1943, income tax was paid each year in a lump sum and filers were expected to put aside the money to make the payment. Yet that year, when the number of wage earners included under the tax grew by nearly 35 million and the Treasury Department became nervous about how many were actually prepared to pay, Ruml offered an idea. Aware that customers in his store were comfortable buying big-ticket items when they could pay in installments, he suggested the government get businesses to collect the tax in small increments and report that amount to the employees and IRS each year for future reconciliation.

To get the public’s endorsement, he also suggested a tax amnesty for the previous year. Congress did just that by forgiving 75 percent of the previous year’s tax liability while they installed the machinery for the withholding that has operated ever since. To appreciate the profound shift that a broad-based income tax brought to the Treasury, just consider that in 1910, tariffs and excise taxes brought in more than 90 percent of federal monies; by the end of the century, income tax had replaced tariffs, providing 90 percent of the nation’s revenue, or $2 trillion! More importantly, it changed the debates – from regional tariffs or whiskey producers versus cattle growers, to which income levels should be taxed more. Class versus class and a “soak the rich” is always the first reaction to feed the insatiable appetite at every level of government.

As an elastic source of revenue, the income tax became a fundamental part of statism, a tool to be used in the interest of creating a more democratic social order. Look to Washington, D.C., today to see what this has wrought: a city bursting at the seams with lobbyists, industry organizations, tax lawyers and political advocacy groups. Any tall building will have a group with the word “tax” in its title, all working to shape policy and regulations. Yet despite our best efforts, we have become addicted to spending more than our revenue and simply saying “charge it.”

I suspect even Mr. Ruml would be surprised about the success of our “buy-now-pay-later” system that so closely resembles his Macy’s secret sauce.

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].

Do We Risk Forgetting the Past … Again?

An illustration of Jimmy Carter and Gerald Ford, dated 1977 and attributed to Al Hirschfeld, sold for $4,500 at an October 2015 auction.

By Jim O’Neal

People of my generation recall the 1970s as a decade of chronic financial instability. A lethal combination of rising inflation, slower growth and unpredictable economic policies resulted in a level of volatility that made the stock market a tricky place to navigate. Although the Dow Jones Industrial Average had closed near $1,000 in 1966, it went sideways for the next 17 years. 1972 produced a boomlet for “Nifty Fifty” stock prices that was followed by a steep decline. By spring 1980, the Dow Jones was back below $800.

Risk-averse investors piled into Money Market Funds (MMF) with high yields and low risk. Ross Perot supposedly bought $1 billion of 30-year Treasury Notes and locked in a 15 percent yield. Others chose to speculate in commodities or precious metals as a hedge against the pernicious effects of high inflation. President Ford waged a war on inflation with his WIN (Whip Inflation Now) program that was more of a slogan than a tangible set of financial policies. Cash was something to convert into tangible assets before it lost its buying power.

One prominent example in 1978 was the wife of the governor of Arkansas. The future first lady turned a modest bankroll of $1,000 into $100,000 in 10 short months by trading in cattle futures, soybeans and live hogs. She explained her market prowess was due to reading The Wall Street Journal. Perhaps even more remarkable was that her trades were mostly “shorts” at a time when cattle prices doubled.

But all commodities were generally on the rise and after the Soviets invaded Afghanistan in 1979, the price of gold rose to $875 an ounce. Nelson Bunker Hunt and his brothers tried to corner the silver market and bought control of 200 million ounces – equivalent to 50 percent of the world’s supply. In the process, silver prices shot up tenfold to $50. The Commodities Exchange (COMEX) and the Federal Reserve stepped in and changed the rules and the price quickly plummeted to $10 in March 1980. Despite losing over a billion dollars, they seemed to be mildly amused and still ended up in Johnny’s BBQ for the usual. Later, they were forced into bankruptcy, but a lot of silverware in Dallas homes got melted down, along with jewelry, teapots and other silver-based objects.

I lost a $20 gold coin when gold was at $430 and I bet it would fall to $400 before it hit $500. I had won it on a different bet by knowing a horse had to run 3 15/16th miles to win the Triple Crown. The Wall Street Journal was not involved in either case.

Then the 1980s gave way to the rise of the professional market trader after several leading investment banks had gone public; transforming cautious partners with limited capital to anonymously secret shareholders with large capital resources. “Proprietary Trading” produced quick profits and large bonuses that offset the elimination of fixed commissions by the NYSE. The flashy trader became a symbol of Wall Street – “Masters of the Universe” as chronicled in Tom Wolfe’s The Bonfire of the Vanities. It was now the era of greed and it became an international phenomenon as deregulation and globalization exploded.

Capital whirled around the globe in 24-hour trading and the remnants of conservatism from the Great Depression had quietly vanished. Debt was now viewed as a tax-efficient way to finance corporate takeovers and deregulation replaced supervision. Hedge funds and private partnerships proliferated like George Soros’ Quantum Fund, which generated 25 percent returns with highly leveraged bets on stocks, currency or “risk arbitrage.” In summer 1982, the Federal Reserve reduced the discount rate and incentivized the leveraged buyouts of public companies (LBO).

Falling interest rates and rising stock prices created a perfect setting for “junk bonds” and leverage became a strategy rather than a risk. Eventually it relied on trading on illegal proprietary insider information. Corporate raiders had a field day until 1986, when Ivan Boesky was arrested and the action moved to the federal courts. Naturally, the virus spread into the large home mortgage market and the savings and loan bubble collapsed.

It took a while for a new generation of greedy financiers to come along, and this time the leverage almost took down the world’s financial system in 2008.

Philosopher George Santayana was right: “Those who do not remember the past are condemned to repeat it.” What’s in your wallet?

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].