The Intelligent Collector Magazine | Blog – Page 8 – The Official Blog of Heritage Magazine for the Intelligent Collector

Solving a problem starts with understanding it

Bank of England notes printed on denominated watermarked paper, like this 1914 example, often appear at auction.

By Jim O’Neal

The venerable Bank of England, established in 1694, was known colloquially as “The Old Lady of Threadneedle Street.” This moniker derived from its address in Central London and the English propensity to “tut tut” anything considered disdainful. She took deposits, made loans and financed wars. None of the directors was a banker or even an economist. It was essentially merchant/businessmen who guarded the precious pound sterling, the lifeblood of the economy.

In August 1931, the bank issued an odd press release: “The governor of the Bank of England has been indisposed as a result of the exceptional strain to which he has been subjected in recent months. Acting on medical advice, he has abandoned all work and has gone abroad for rest and change.” That governor was Montagu Norman, the last of the four great Central Bankers (Britain, France, Germany and the United States) to still be alive. Governor Norman had a strange aversion to the press and was notorious for his clever ways to avoid them.

So it was a surprise when he openly explained his trip by ship to Canada: “I need a rest … suffered very difficult times … my health is poor, etc.” What he failed to mention was his incapacitation due to a nervous breakdown or that the world’s financial system was on the verge of collapse. This was especially true of the European banks, where he was revered as the world’s most powerful banker and, as he would later be forced to admit, he was unquestionably “the dictator of European currency,” a role he cherished to all others.

The bank’s press release had been received in Asia, the United States and, naturally, Europe and had further spooked anxious investors since this man was considered the thought leader of “the most exclusive club in the world” … Central Bankers. And 1931 was just the second year of what would become the unprecedented Great Depression that followed the collapse of the U.S. stock market on “Black Tuesday” in 1929. The effect on the United States can be explained by four simple indices from 1929-32: industrial production (46 percent), wholesale prices (32 percent), foreign trade (70 percent), and unemployment (607 percent!).

Supply-demand economists typically point to the event when a stock-market bubble bursts (as in the U.S.) and results in bank failures, bankruptcies and widespread economic devastation. Later monetarists led by Milton Friedman point to the contraction in money supply as a bigger culprit. Ex-Federal Reserve Chairman Ben Bernanke now agrees with Friedman and we’ve seen the results of quantitative easing during the 2008 Great Recession followed by 10 years of slow recovery.

I have a different perspective. The cause was pure greed. “Virtual casinos” inside banks were making big bets using customers’ money and outrageous leverage. A housing bubble combined with subprime lending was accompanied by exotic structured products like collateralized debt swaps, mortgage-backed securitization, and a slew of other complicated derivatives that nobody truly understood. They were approved by rating agencies and sold to unsuspecting investors (including other financial firms). Once the housing market collapsed, it exposed all the other high commission, risky products.

This difficult-to-understand situation was simplified by writer Michael Lewis in his book and movie The Big Short. My idea is to have him do something similar to our health-care system (which everybody agrees is terrible … like most of the ideas to fix it). I suspect it could all be cleaned up by having a truly transparent price-based system and eliminating an incomprehensible fee structure that lacks an outcome-based tracking system by hospital, doctor or other caregivers. It is too important to leave to Congress.

Mr. Lewis, I hope someone can get your attention … I am busy this week.

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].

Roosevelt selected a running mate who now ranks among the best

A pencil portrait of Franklin Roosevelt by E.A. Burbank, dated 1939 and signed by both, sold for $2,270 at a June 2008 auction.

“I hardly know Truman.” – Franklin Delano Roosevelt (1944)

By Jim O’Neal

President Franklin Roosevelt was a tired and worn out man. The worry aroused by his appearance was more than justified. Unbeknown to all but a few, he was suffering from a progressive, debilitating cardiovascular disease. Several elite cardiologists agreed he would be dead within a year, especially if he decided to run for a fourth term. But FDR was determined, and told a few close confidants that he would resign as soon as WWII was concluded satisfactorily.

He had ventured into national politics when his name, youth and political strength in populous New York led to his nomination for vice president in 1920. The DNC had met in June in San Francisco and picked James Cox for the president slot. However, the Republican ticket of Warren Harding and Calvin Coolidge won easily.

The following year, the 39-year-old Roosevelt contracted poliomyelitis while vacationing at the family’s summer home on Campobello Island in Canada. He was crippled in both legs, permanently. In a show of intestinal fortitude, he mastered the use of leg braces, crutches and a wheelchair; he built his upper-body strength by swimming. He demonstrated his new skills in dramatic fashion in June 1924 at the National Democratic Convention.

He rose from a wheelchair and, unassisted, walked to the speaker’s rostrum and nominated Al Smith for president. The crowd went wild after Roosevelt crowned Smith “the Happy Warrior of the political battlefield.” Smith ultimately lost the nomination that year; four years later in 1928 he won the nomination but lost the election to Herbert Hoover. The economic good times favored the better-known Hoover, but there was also the lingering issue of Smith’s Catholicism. This would remain an issue until 1960 when Jack Kennedy would vanquish it permanently.

In 1930, FDR was re-elected governor of New York. In the wake of the stock market crash, he convinced the legislature to provide $20 million to the unemployed. This was the first direct unemployment aid by any state and was a harbinger of bigger government programs. It was also a springboard to the 1932 Democratic nomination for president. FDR was so energized that he flew to Chicago to accept – the first time a nominee accepted in person.

No one was surprised at the results of the 1932 election, when FDR defeated Hoover in a landslide. The country had turned on Hoover and the Republicans and was eager and impatient to have the new president installed. This led directly to the 20th Amendment of the Constitution, which advanced the presidential inauguration to Jan. 20 and Congress to Jan. 3. Alas, it didn’t go into effect until 1933. Hoover was full of ideas on how to help the new president, but Roosevelt was less willing to accept any advice, since he had his own plans.

And so it began. With a soothing voice and supreme self-confidence, Roosevelt rallied a fear-ridden country to overcome the Great Depression. With a New Deal, he provided social justice; security to the aged; relief to the unemployed; and higher wages to the working man. He revamped the federal government, adding scores of new agencies and reshaping the Democratic Party from states’ rights into a Hamiltonian model of a strong central government.

Twelve years went by fast, and the last days of the Second World War required a series of critical decisions and it started with a decision on a fourth term. His trusted advisers saw defeat unless something was done about VP Henry Wallace. A plant geneticist by profession, he had become very popular as an author, lecturer and social thinker. To the “wise men,” he seemed pathetically out of place and painfully lacking in political talent. But there was more concern over the president’s declining health, which could no longer be ignored. All realized that the man nominated to run with Roosevelt would probably be the next president.

That man turned out to be Senator Harry Truman from Missouri. Together, they would win the 1944 election; 82 days after taking office, Truman would become president when FDR died on April 12, 1945. He would end the war as expected, win re-election in 1948 and become embroiled in another war, this time with Korea. However, with each passing year, Truman continues to gain in stature and now often polls among the top 10 best presidents.

Tornadoes, cash registers, indictments and pardons

One of the most famous tornadoes appeared in 1939’s *The Wizard of Oz*. This original half sheet promotional poster for the movie sold for $108,000 at a March 2019 Heritage auction.

By Jim O’Neal

On Easter Sunday 1913, a great tornado ripped through Omaha, Neb. As people scrambled for cover, a naked man was blown through a dining-room window. He grabbed the tablecloth to use as a toga and politely asked the startled family for a pair of trousers. The local newspaper dubbed him the “human meteorite” and went on to report how the twister sucked two babies out the window of the town orphanage. Another man reported the body of a 4-year-old girl dropped out of the sky into his arms, while cows were impaled on fence posts and chickens were plucked clean. That night, another dozen clouds raced across Iowa, Illinois, Missouri, Michigan and Indiana.

After the storms’ initial volley, heavy rains began to fall, swelling the Ohio River until its levees could no longer stem the angry waters and they were breached. The submerged cities included Fort Wayne, Columbus, Cincinnati and Indianapolis. However, Dayton, Ohio, was hardest hit as the Miami River rushed downtown, washing away homes and stranding residents on roofs, buildings and even telephone poles.

Dayton-based businessman John Patterson (1844-1922) immediately seized command and converted a factory assembly line to turn out rowboats for use in rescuing trapped inhabitants. A large plant cafeteria started baking bread and other foodstuffs. Most of Dayton’s provisions were either underwater or ruined by floodwaters. Many of the town’s residents owed their lives to Patterson’s quick actions. Still, over 300 people perished and damages topped $2 billion.

Patterson had launched his business career in December 1884 when he purchased the rights for “Ritty’s Incorruptible Cashier” for $6,500. James Ritty (1836-1918) was an Ohio bar owner who discovered what all bar/restaurant owners eventually learn: Employees inevitably start pilfering cash, booze or food. Many a chef has walked out with a ham or turkey under their coat on the way home. Or perhaps served friends and relatives drinks without keeping tabs.

Ritty’s invention was a machine positioned atop an adding machine that kept track of orders or controlled the cash. Patterson improved the design by adding the now familiar pop-up number, a cash drawer and a bell that rang when employees used it. He quickly recognized the potential profit in selling the machine to various retail merchants. All were potential customers. Thus, the National Cash Register Company was formed and Patterson went to work developing a skilled sales organization. Trainees were enrolled in a “Hall of Industrial Education” and after graduating, received their own exclusive territory to sell the new invention.

It was an immediate success and the company gained a reputation for generous commissions. A new factory was built with glass walls so the sun could shine through. This was the era when most factories were called “sweatshops” for good reason. In addition, Patterson included free medical clinics, a swimming pool and an employee cafeteria serving healthy food. The grounds were sculptured landscapes designed by architect John Charles Olmsted.

Patterson was a demanding boss and the list of future prominent businessmen he fired was a long one. One was Thomas Watson Sr. (1874-1956), who owned a butcher shop with a shiny NCR cash register. After the business failed, Watson went to work at NCR until Patterson fired him. Watson would go on the build International Business Machines (IBM) into a world-class institution. Another was Charles Kettering (1876-1958), a near genius engineer who went to work for General Motors after he was fired several times. He would head up GM’s engineering research department for 30 years. In addition to inventing the automobile electric self-starter, he recorded 186 patents and became a towering member of the Inventor Hall of Fame.

Patterson was a ruthless competitor and built a “gloom room” filled with cash registers from all the competing companies he ruined. In 1912, the company was found guilty of violating the Sherman Antitrust Act after acquiring over 80 direct competitors and ending up with a 95 percent market share. Patterson and 26 of his executives were headed to jail for a year after President Wilson refused to pardon them.

But fate intervened and an appeal overturned the conviction, partially because of Patterson’s good deeds during the Great Flood of 1913. Dayton welcomed them with a giant parade.

Pardons can be tricky for presidents, but all have used the power. Franklin Roosevelt holds the record with more than 3,600 acts of clemency! Since they were spread over four terms, there was not much political criticism. President Clinton was not so fortunate. On Jan. 20, 2001, his last day in office, he granted 140 pardons. One was to Marc Rich, an international commodities trader indicted by U.S. Attorney Rudy Giuliani in 1983 on 65 criminal counts involving income tax evasion, wire fraud and racketeering. Rich fled the United States.

When it was revealed he was still a fugitive and the pardon had been handled by Jack Quinn, it caused an uproar from both prominent Democrats and Republicans (Quinn had been Clinton’s White House Counsel). Then things escalated when it was discovered his ex-wife made donations to the DNC, the Clinton library, and Hillary’s Senate race. Attorney General John Ashcroft asked federal prosecutor Mary Jo White to investigate, but James Comey took the lead when White left the government. The probe was closed down after federal investigators ultimately found no evidence of criminal activity.

Hmmn. Giuliani, Clinton, Comey. Small town.

Floridians seem too busy enjoying the sun to worry about sea levels

Hermann Ottomar Herzog’s oil on canvas *Fishing on the Gulf Coast, Florida*, sold for $150,000 at a May 2017 Heritage auction.

By Jim O’Neal

Many people typically think of American colonization in terms of English exploration and the establishment of eastern settlements like Jamestown, Va. (1607), the first permanent colony. Or perhaps even the slightly more renowned Massachusetts Bay Colony (1628-91) and Plymouth Colony (just south), which was founded by Separatist Pilgrims seeking freedom from the edicts of the Church of England.

However, the fact is Spanish explorer Juan Ponce de León (1457-1521) was the first European to touch what is now the mainland of the United States. He accompanied Christopher Columbus on his second voyage to the New World in 1493 as one of several hundred “gentlemen explorers.” This voyage landed in Hispaniola (now the Dominican Republic and Haiti) as Columbus never actually set foot in North America.

Ponce de León leveraged his military prowess to win an appointment from King Ferdinand of Spain to become the first governor of Puerto Rico. This was followed by his maiden voyage to the mainland, where he discovered La Florida (Land of Flowers) in 1513. He would die eight years later, after a battle with native Calusa people, without establishing a permanent settlement. The mythical tale of his search for a magical “Fountain of Youth” began circulating after his death. He was interred in Puerto Rico and his tomb is in the Cathedral of San Juan Bautista. Some speculate that more than 30 percent of Puerto Ricans are in his lineage.

The arrival of Europeans, primarily from Spain and England, has been described as the “most astounding clash of civilizations in history.” Scottish philosopher Adam Smith called it the “greatest and most important event in the history of mankind.” Spain dominated world exploration from the 15th to 17th centuries and was the first to own the description of an “empire on which the sun never sets.” This title shifted to the British Empire in the 18th and 19th centuries as the British Navy became the world’s most powerful force.

The devastation these incursions into the Western Hemisphere had on native populations almost defies comprehension. In 1492, Hispaniola had 1 million inhabitants; 20 years later, it had dwindled to 46,000. America’s native population was estimated at up to 100 million. An average of 1 million perished annually for most of the 16th century. It has been labeled “the greatest genocide in human history.”

The first official voyage to Florida is a microcosm of the relentless force of conquest. Spain traded it to Great Britain in 1763 for control of Cuba. The United States claimed ownership after the Louisiana Purchase (1803), and it gained statehood (no. 27) on March 3, 1845, after the Indian Removal Act and Andrew Jackson defeated the Seminole. Florida became a slave state, seceded from the Union and became part of the Confederacy.

During the next century, Florida would suffer through killer hurricanes, tornadoes and severe freezes. Then came the Great Land Boom of the 1920s when the city of Miami turned itself into a real estate cornucopia; 100,000 people were getting rich selling lots to each other. Some land was sold 10 times a day and the bubble was getting bigger every hour. One cabdriver drove a couple down from New York, took the $1,300 fare and invested it. Within three days, he was a millionaire. Another man sold his place in an auction line, went to another location and parlayed his money into $5 million.

One day, the merry-go-round stopped and those still holding tickets were broke!

Today, Florida has recovered from the 2008 real estate bubble, has a $1 trillion economy (fourth in the U.S.), a population of over 20 million (third largest), and is home to more than 451,000 millionaires (a fact) … and property is hot again.

One Achilles’ heel is that the state is a long peninsula and 75 percent of its people live within 10 miles of the coastline. The state is very flat. The highest point is 345 feet above sea level, which is the lowest high point in any state. It is easy to visualize rising sea levels endangering a state already known for its swamps. But Floridians seem relaxed about the risk. They are too busy flipping houses and enjoying the sun, sand and nightlife.

Cheers!

President Coolidge deserves credit for his guiding hand

An official inaugural medal for Calvin Coolidge, inscribed “Inauguration March 4, 1925,” sold for $16,250 at a May 2019 Heritage auction.

By Jim O’Neal

There must have been thousands of American veterans of World War I still alive when I was born in 1937. After all, it had been less than 19 years since the Peace Armistice had been signed in November 1918. Although the war started in Europe in 1914, the United States didn’t get directly involved until April 1917 after a series of events provoked President Wilson to ask Congress to declare war.

However, my only recollections are about the Second World War, when my father and five of my mother’s brothers went to strange-sounding places like Iwo Jima, Guadalcanal, Tarawa and Okinawa. My Saturdays at the movies were (seemingly) exclusively Westerns and war films. Of course, there were the newsreels narrated mostly by Lowell Thomas, the voice of Movietone News. This was the generation that suffered through the Great Depression and earned the title of “the Greatest Generation” (Tom Brokaw) for their courage, sacrifice and honor. I give them a lot of credit for a time in the 1950s that I fondly recall with television, my own car, more money than I could spend and unlimited basketball, baseball and surfing.

Still, historians agree that the First World War had a major impact in shaping the modern world. A war of unprecedented violence, it upended the Victorian Era’s peace and prosperity. It unleashed mechanized warfare and death on a level that was staggering. Concurrently, it fundamentally altered the social norms for economics, psychology and liberalism that dated back to the Enlightenment. No one has developed an acceptable theory on the confluence of events that shattered the relationships of monarchies with blood and familial ties. The complicating treaties and alliances served as an obvious domino factor, but a single circuit breaker had the power to defuse the entire situation if it had been employed early.

Yet not a single leader had the courage or foresight to simply call “Time out!” and stop the equivalent of a runaway train. This strategic void led directly to the loss of 10 million lives and the destruction of a continent that had slowly evolved a benevolent culture with so much potential. Fortunately, the war was primarily rural and most of the grand historic buildings were spared; fate would not be so kind to the next confrontation … with thousands of bombers, guided bombs and the destruction of entire cities.

Perhaps worse, though, was the post-war legacy of hatred that made the horrific second tragedy inevitable. Consider the mindset of Adolf Hitler on Sept. 18, 1922, when he warned, “It cannot be that 2 million Germans should have fallen in vain … No, we do not pardon, we demand … vengeance!” Are these the words of a sane man who would be satisfied to regroup, rebuild and start over? Or a clever psychopath who would corrupt the minds of people, even as they were struggling with the punishment required by the Treaty of Versailles and the English, French and Russians exacting their revenge? Thousands of books have answered this with clarity.

Sadly, Americans and especially President Wilson would be seduced by a vague concept of a “14 Point Peace Plan” and a “League of Nations” to prevent future war, yet couldn’t even pass an obstinate Congress. It was another academic chimera, followed by a disabling stroke. Wilson’s successor was a flawed man, surrounded by corrupt men and public scandal. President Harding’s death in 1920 was unexpected but provided the opportunity for his vice president to perform an overdue house cleaning.

Calvin Coolidge was just the man to address the scandal-ridden administration of Warren G. Harding. His list of accomplishments are still not well known, but included cutting taxes four times, a budget surplus every year in office, and reduction of the national debt by a third. In many respects, he was a man of a bygone era. He wrote his own speeches, had only one secretary and didn’t even have a telephone on his presidential desk. Little wonder that President Reagan, who admired Coolidge’s efforts toward a smaller government and lower taxes, placed Silent Cal’s portrait in the White House Cabinet Room next to Lincoln and Jefferson.

Today, it’s not clear precisely how many wars we are in and how many have the exit strategy that Colin Powell considers essential to any military action (along with a clear objective and overwhelming forces to ensure victory). I wish I’d heard more from those WWI veterans that prompted this lesson!

Was Henry Ford right? Is history bunk?

A first edition of John F. Kennedy’s *Profiles in Courage*, inscribed by the author, realized $7,500 at a September 2018 Heritage auction.

By Jim O’Neal

Among the towering figures of the Civil War, none is more enigmatic than General William Tecumseh Sherman.

Widely denounced as ruthlessly destructive for his infamous March to the Sea across Georgia, Sherman was a brilliant commander who helped bring the bloody war to a decisive end. His legacy of “total war” against anyone and everyone (even unarmed civilians) has haunted many Americans and military leaders. It has no parallel in U.S. military history in terms of ferocity or effectiveness.

Sherman (1820-1891) was massively paranoid due to a catastrophic event when he was 9 years old. His father, apparently very successful, suddenly went into bankruptcy and then died … leaving the family penniless and in chaos. His decision to do whatever necessary to restore order and harmony to the Union was rooted in his compulsion for normalcy.

Psychobabble aside, I tend to agree with the following: “The historians of the future will note his shortcomings. Not captiously, but in the kind spirit of impartial justice he will set them down to draw the perfect balance of his character. Let him deduct them from the qualities that mark his distinction, and we shall still see William Tecumseh Sherman looming up a superb and colossal figure in the generation in which he lived,” said General F.C. Winkler, addressing the Army of the Cumberland in the year Sherman died.

Edwin McMasters Stanton (1814-69) became Attorney General for President James Buchanan the day Major Robert Anderson moved his federal troops to Fort Sumter, S.C. This action was viewed as a quasi act-of-war and South Carolina issued an “ordinance of secession.” Later, Stanton would become Abraham Lincoln’s War Secretary and General-in-Chief, replacing General George McClellan due to “inaction.” After Lincoln’s assassination, he became the temporary de facto head of the government as Andrew Johnson was paralyzed in a state of inaction and Congress was not in session.

A man of action, Stanton mobilized the hunt for John Wilkes Booth and all suspected conspirators. All but three were hanged after a swift military tribunal found them guilty. The Stanton role was played by Kevin Kline in the 2010 movie The Conspirator, directed by Robert Redford. Robin Wright played Mary Surratt, the first woman executed by the United States. After the trial, Stanton had a contentious role in President Johnson’s Cabinet, despite their intense mutual dislike.

Johnson (1808-1875) was the only member of the U.S. Senate from a seceding state (Tennessee) to remain loyal to the Union. Hoping to make an example to undermine the Confederacy, Lincoln designated him a brigadier general of volunteers and appointed him military governor of the state with instructions to form a government and return to the Union. The best Johnson could do was declare himself the leading Unionist of the South. Lincoln was expecting a difficult re-election in 1864 and Johnson was selected as vice president in the hope he could attract Southern Democratic votes. They were nominated in June and elected in November. Johnson botched his inauguration by getting drunk; his oath of office was a rambling, incoherent speech. It was so humiliating that he left town for a week. Upon his discreet return, accounts described him as the “invisible man.” Six short weeks later, he would be president of the United States.

The lives of these three men would become forever intertwined in a fascinating series of events.

On April 9, 1865, at the Appomattox Court House, Robert E. Lee (1807-1870) surrendered the Army of Northern Virginia to General Ulysses S. Grant (1822-1885), who accepted the surrender under terms that were considered generous. President Lincoln accepted them since he was still apprehensive about the rest of the Southern troops.

Three Confederate generals – Joe Johnston, Edmund Kirby Smith and Nathan Bedford Forrest – were still on the loose. Lincoln and Grant feared they would form guerilla units. The war could then theoretically last several more years.

However, after Lincoln’s assassination on April 15, Johnston followed Lee’s action and surrendered his troops to General Sherman. Their first meeting was similar to Grant/Lee, except without aides and note-takers (and the eyes of history). Sherman offered to accept Johnston’s surrender on the same terms as those give to Lee. Surprisingly, Johnston demurred and countered with a stunning proposal to make it a “universal surrender” – thereby surrendering all Southern forces to the Rio Grande. In short, it would end the war once and for all.

When Sherman agreed and sent it forward, President Johnson and the entire Cabinet were furious. They suspected Sherman of a conspiracy to take over the entire country or, at a minimum, position himself for the 1868 presidential election. It took Grant 10 days of diplomacy to settle the issue, but exposed a deep rift between President Johnson and Secretary Stanton.

In the end, when Johnson tried to fire Stanton, the Republican Congress impeached the president for “high crimes and misdemeanors.” He was famously acquitted by one vote (twice) by Senator Edmund G. Ross of Kansas. Interestingly, Ross was among the eight men profiled in the 1957 Pulitzer Prize-winning book Profiles in Courage “by” John F. Kennedy.

Critics have claimed Ross was bribed for his vote to acquit … and that Kennedy’s speechwriter and close adviser Ted Sorensen had ghostwritten the JFK book. Even Eleanor Roosevelt weighed in, famously quipping, “I wish that Kennedy had a little less profile and more courage.”

Perhaps Henry Ford was right. History is bunk!

Einstein was right: Income taxes are hard to understand

A 1952 Topps trading card for oil industry magnate, industrialist and philanthropist John D. Rockefeller sold for $720 at a February 2019 auction.

By Jim O’Neal

Next year promises to be another year when a major political party has an unusually large number (perhaps 20) of eager aspirants wanting to become president. Republicans had to contend with a similar problem in 2016. Sixteen hopefuls filled out the requisite forms. Most of them withdrew during the primaries and the last two – Ted Cruz and John Kasich – withdrew when Donald Trump won Indiana. On May 2, Trump became the presumptive nominee for Republicans.

There are advantages to having a broad, diverse group of candidates, but almost as many headaches. One that I suspect will become more prominent is “too many hogs at the trough.” Every candidate is challenged to find a unique angle to woo prospective voters, but it is surprising how many are making promises that will be impractical to keep. Free health care, college debt forgiveness, and free college tuition are fundamentally different than promises of lower taxes or new high-paying jobs.

Generally, populist proposals are “paid for” by taxing the rich with a “billionaire tax” or a radical wealth tax on existing assets. Since 70 percent of federal revenues come from the top 20 percent of taxpayers, the math just doesn’t work. This is especially true with 10,000 people retiring every day and existing entitlement projections squeezing out almost all other spending. One fact is certain: We can’t use the same tax dollar to pay for four different expenditures (unless we really crank up the printing presses … which are now just electronic gizmos).

Naturally, opponents are quickly stigmatizing all creative spending proposals as merely different variants of socialism. As “The Iron Lady” Margaret Thatcher wisely observed, “The trouble with Socialism is that eventually you run out of other people’s money.”

There may have been a time 150 years ago during the Gilded Age when some of these things made sense. America’s industrial success produced an era of financial magnificence when many basked in dynastic wealth of inexhaustible dimensions. John D. Rockefeller made the equivalent of $1 billion and paid no income tax. No one else did either since income tax didn’t exist in the United States at the time. Congress passed a 2 percent tax on earnings over $4,000, but it was ruled unconstitutional by the Supreme Court. Twenty years later in 1914, a modest income tax was finally approved. Albert Einstein said: “The hardest thing in the world to understand is the income tax.” I agree.

The wealthy in the 19^th and 20^th centuries found that spending all of their money became a full-time job. After emptying all of Europe’s fine art and artifacts, they built houses on a truly grand scale. The grandest of all were said to be the Vanderbilts. Ten mansions on 5th Avenue (one with 137 rooms). Next was Newport, R.I., where magnificent homes were quaintly called “cottages.” Then came George Washington Vanderbilt II (1862-1914), who, with successful and influential landscape designer Frederick Law Olmsted, built the Biltmore House – an estate outside Ashville, N.C. The house is believed to be the largest domestic dwelling in the United States, with 250 rooms nestled on 125,000 acres.

Olmsted and his senior partner, Calvert Vaux, designed America’s most famous park: New York City’s Central Park. The list of Olmsted’s projects is too extensive to list here even by category. The most fitting description of his work comes from the words of Daniel Burnham – the great American architect and urban designer: “An artist, he paints with lakes and wooded slopes, with lawns and banks and forest-covered hills, with mountainsides and ocean views.”

Worthy of a great man’s epitaph!

Lewis Cass among most important yet least known 19th century politicians

A rare political campaign daguerreotype of Lewis Cass from 1848 sold for $17,925 at a February 2007 Heritage auction.

By Jim O’Neal

By 1848, slavery had inexorably become a national issue. Opinions were slowly but surely being formed, much as wet cement hardens while baking in the sun. Generally, most people agreed that slavery should be “hands off” and left alone in the 15 states where it already existed.

However, they disagreed violently over whether it should be permitted in new regions. Pro-slavers insisted it be allowed to follow the U.S. flag. But anti-slavery backers (primarily Northerners) strongly opposed expansion into federal territories. Their logic was impeccable. Strong containment policies would eventually lead to complete elimination everywhere. This was the same flawed thinking that the framers of the Constitution had tripped over when they permitted a 20-year phase-out period. Except the difference, of course, was that without this clause, there were not enough votes to ratify the Constitution. Deception? Probably, but there was an overarching priority in favor of ratification … kick it down the road … maybe it will just wither away.

Naturally, the political leaders of both the Whigs and Democrats were just as anxious to duck the issue entirely. Both parties relied on support from voters in every section of the country. However, the issue was now much too prominent and the slavery issue ended up playing a major role in the 1848 presidential election.

Meeting in Baltimore in May 1848, the Democrats were the first to select candidates. For president, they went for Michigan Senator Lewis Cass. He had been a territorial governor for years and would be the first Democratic candidate from the area known as the Northwest. Many years later (1861), as James Buchanan’s Secretary of State, he begged the president to send reinforcements to Fort Sumter to keep the South from raiding its guns and supplies. He resigned when Buchanan predictably refused; it was the only option the 79-year-old diplomat had to display his strong objections.

Cass was 6 years old when his mother held him up to the window of their home to watch the bonfires blazing in the streets of Exeter, when New Hampshire became the ninth and final state required to ratify the Constitution. When he resigned, he memorably said, “I saw the Constitution born, and I fear I may see it die.” The Constitution survived, but 620,000 Americans died in the war to preserve the Union.

Cass was solidly known as an advocate for “squatter sovereignty” – the right of settlers in federal territories to decide the slavery issue for themselves. At the Baltimore convention, the New York delegation quickly split over the selection of Cass for president, accompanied by a party platform that declined to take a firm stand on the extension of slavery. They simply walked out and, along with other anti-slavery people, organized the Free Soil Party, which was firmly dedicated to preventing slavery in all federal territories. They chose the hapless ex-President Martin Van Buren and Charles Francis Adams (son of the sixth president) with an unequivocal slogan: “Free Soil, Free Speech, Free Labor and Free Men.”

With the Democrats now divided, the Whigs made their choice at a convention in June in Philadelphia. Sticking to a “War Hero General” formula that proved to be successful, they confidently chose General Zachary Taylor of Louisiana, “Old Rough and Ready,” the hero of the recent war with Mexico. Many Whigs (including a young Abraham Lincoln) were appalled by the choice. Not only was he too old (64), but he had never been involved in politics! In fact, he had never even voted and admitted he knew little about national domestic issues.

Daniel Webster called him “an illiterate frontier colonel” and warned that many thousands of Whigs “will not vote for a candidate … simply because of a war record.”

Webster turned out to be terribly wrong and the party backed “Old Zach” just as they had selected “Old Tippecanoe” (William Henry Harrison) in 1840. Taylor easily beat Lewis Cass on Nov. 7, 1848 – the first presidential election that took place on the same day in every state and the first Election Day statutorily on a Tuesday.

Taylor died on July 9 two years later and was the last president elected who was not a Republican or a Democrat … a period of 198 years (yes, I know that Lincoln ran in 1864 for the Union Party after becoming the first Republican president in 1860). Third-party candidates do not do well … just ask Teddy Roosevelt.

Cass remains a good candidate for the most important yet least known of any politician in 19th century America.

Civil War question: What were these men thinking?

This albumen print of a Union encampment, most likely of the 110th Pennsylvania Volunteer Infantry, sold for $2,868 at a November 2008 Heritage auction.

By Jim O’Neal

The last truly great Civil War book I read was Doris Kearns Goodwin’s Team of Rivals: The Political Genius of Abraham Lincoln (2005). The award-winning book focuses on the 1860 presidential election and how underdog Lincoln was able to secure the Republican nomination against three formidable opponents, and then win the presidency without a single Southern vote (he was not on any Southern ballot).

Then, it deftly explains how President Lincoln was able to recruit all three Republican opponents to serve as key members of his Cabinet: New York Senator William H. Seward (Secretary of State), Ohio Governor Salmon P. Chase (Treasury Secretary), and Missouri’s favorite son Edward Bates (Attorney General). Next was the brilliant way he managed to leverage each man’s strength and weakness into a form of political-enemy synergy.

Steven Spielberg secured the film rights before the book was written and his 2012 movie Lincoln was highly acclaimed. Out of 14 Oscar nominations, Daniel-Day Lewis won for Best Actor. But the movie was really only about the last four months of Lincoln’s life when he maneuvered to get the 14th Amendment approved. Neither the book nor film spends much time on the Confederacy or the underlying circumstances that made the Civil War inevitable.

This is not unusual, since books about Lincoln, his Cabinet and the generals of the war pop up with regularity. Relatively little has been written about the Confederacy per se (i.e. the formal government of the South). The primary focus seems confined to biographies of Robert E. Lee, Thomas “Stonewall” Jackson or the famous battles between the North and South (such as Gettysburg).

Sure, people might know that Jefferson Davis was president of the CSA or that Alexander H. Stephens was vice president. But these two men were in office the entire war, from April 1861 to May 1865. Perhaps interest in individuals is limited because, as some historians argue, the Confederate States of America represented an entire people’s effort to cling to their past. They feared after the 1860 election that Lincoln and the now-dominant Republicans would simply force them to abandon the practice of slavery. So they naively decided to secede from the Union and start their own country.

They started with seven secessionist slave-holding states and in February 1861 established a new Confederacy in Montgomery, Ala., before Lincoln even took office. After Confederates fired on Fort Sumter in April, four more states seceded and joined the Confederacy (now based in Richmond, Va.). Missouri and Kentucky were later accepted but did not secede. Two seats in the Confederate Congress were given to Southern California.

Organizationally, the Southern government was much like the North. They had a Constitution and a Cabinet with six departments that composed the executive branch. With few exceptions, they replicated their counterparts in the Union. A prominent exception: the Attorney General was elevated to Cabinet status. It grew in importance since the Confederacy had no Supreme Court; the Department of Justice arbitrated any legislation or constitutional disputes.

However, most departments discovered their limitations once the War started. The Navy began the war without a single major vessel and soon lost easy access to international sea-lanes from Southern ports. The Treasury and War departments did not have the resources of their Union counterparts, little things like enough money or an army and a non-industrial economy. Here, one must ask: Who were these men and what were they thinking?

Some deep thinkers sincerely believe it was an honest attempt to build a New South with 11 individual states forging a future based on prosperity from land and slaves. After all, only 4 percent to 5 percent had direct involvement with the institution of slavery. The majority considered their way of life inviolate enough to defend it by force of arms. However, despite obvious mismatches from virtually every aspect, that did not deter its political leaders. They assured the Southern people that courage and determination could substitute for limited resources, limited manpower and lack of foreign aid.

The South’s goal of independence was as absolute as the North’s determination to maintain the Union. Hence, the objectives of the opposing governments could be neither compromised nor harmonized. The Civil War would have to be a fight to the finish.

For four long years, against impossible odds, the South persevered and suffered. It accepted honorable defeat and then wrapped itself in nostalgia. The South’s postwar vision of “The Lost Cause” – fighting and surrendering with honor – became a soothing balm for the sores of war.

However, President Jefferson Davis would admit much later, “The simple fact was the people had gone to war without considering the cost.”

Case closed.

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.