American History Revised (73 page)

This all began only two weeks after Martin Van Buren had taken office. Probably no other incoming president faced
such a crisis except Abraham Lincoln in 1860 and Franklin Roosevelt in 1932. Van Buren chose a very cautious conservative course, making nobody happy. “Your friends,” he was told bluntly, “think you a little exalted in the head on the subject,” though of course nobody had any positive suggestions how to pull off a miracle. From 1839 to 1843, cotton prices fell from thirteen cents a pound to 7.85 cents in New York, and from 12.4 to 5.7 cents in New Orleans. Average commodity prices fell from $125 to $67. Annual imports fell from $159 million to $43 million. When the flow of English capital to finance internal improvements dwindled to virtually zero, nine states went into default on their loans. Out of 850 banks in the United States, 343 banks (a whopping 40 percent) went out of business, and another sixty-two failed partially and had to suspend operations.

To make matters worse, there was a real estate bubble going on. Just as the wild buying of stocks on margin helped cause the Crash of 1929, so speculation in real estate helped trigger the monetary collapse of 1837. In the city of Mobile, Alabama, the real estate valuation skyrocketed from $1.3 million in 1831 to $27 million in 1837; by 1846 it had sunk back to a more realistic $8.6 million. The real estate value of New York City in 1836 was higher than it would be in 1851, when it was a much larger and more prosperous city. But the most interesting market dysfunctionality occurred in the West, where the price of public land was fixed by law at $1.25 an acre. Speculators moved in, leveraging themselves to the hilt. Annual public land sales averaged $1.3 million during 1820–29, then started going up, reaching $2.6 million in 1832 and $4.8 million in 1834. Then the roof blew off: sales jumped to almost $15 million in 1835, and $25 million in 1836. Any contraction of ever-ready credit—which of course was inevitable—would cause the market to collapse.

Had Alan Greenspan been around then, undoubtedly he would have uttered his infamous phrase, “irrational exuberance.”

1861
This new president, aided by his vice president and secretary of war, was confident of a quick victory and of being able to bring home the troops in less than a year. Once the U.S. had captured the enemy’s capital city, the war would be over. The president got congressional approval to launch the war in retaliation for an attack made by the enemy, along with his requested supply of 75,000 troops.

An experienced military man—the top general in the army—cautioned the president and his war hawks that they were going into hostile territory with too few troops. To keep the peace after capturing the enemy’s capital, some 500,000 troops would be needed, plus a lot more planning for the occupation.

His warnings went ignored. The president’s team of armchair experts and political strategists told the president they had the situation well in hand, and the boys would be home soon. “On to Baghdad!”

In 1861, “On to Richmond!” was the battle cry. The Cassandra nobody wanted to hear was not General Eric Shinseki, Army chief of staff, who urged President Bush to add another 125,000 troops to his invading force of 175,000. It was General Winfield Scott, the most experienced general in the United States, who urged Lincoln to add 500,000 troops to his force of 75,000. Scott had fought in the War of 1812, had won numerous engagements with the Indians, and had served as commander of the Mexican War, where he had supervised promising young officers like Lee, Grant, McClellan, and Jefferson Davis. He was now seventy-five and retired. Scott’s warnings were resented by the younger men as the rantings of a curmudgeon. Nobody wanted to believe his warning that the South would be a tough adversary.

Viewed today, Scott looks like a genius. He argued that the defense of a homeland against an invading occupier gave the defender a powerful advantage. The North, while rich, was not prepared for an arduous, long-drawn-out struggle. Simply capturing Richmond was myopia; the fight would last a lot longer than that. Scott thereupon developed a strategic plan, called the Anaconda Plan, whereby the North would set up a naval blockade all along the eastern seaboard from the Chesapeake down to the Gulf of Mexico, coupled with an army of sixty thousand men to blockade the Mississippi from Illinois to New Orleans. It would surround the enemy like a snake and choke it. Only by sealing the borders and cutting off supplies, he argued, could the North force the South into submission.

Had the U.S. implemented an Anaconda Plan for Iraq modeled after the ideas of General Winfield Scott, rather than the “army lite” concept of Donald Rumsfeld, there would have been no looting after the “capture” of Baghdad, no loose borders, and certainly no multiple insurrections plunging the country into chaos.

1862
This war-weary president was getting fed up with the nation’s most charismatic general, a prima donna and presidential candidate who was acting unctuously. When this general took the nation—and his boss—by surprise by issuing his own political orders for areas under his command, the president was deluged with mail urging him to take a stand one way or the other. It was the most controversial moment of his presidency. Finally, on October 24, the outraged president “decided to fire the troublesome general.”

Many years before Harry Truman fired General Douglas MacArthur, there was another prima donna general, the renowned
John C. Frémont. For issuing orders authorizing the emancipation of slaves in Missouri without presidential permission, Lincoln fired him on the spot.

As for MacArthur, he should have known better: the same thing had also happened to his own father. Back in the early 1900s, General Arthur MacArthur, military governor of the Philippines, made the stupid mistake of not recognizing the superior authority of the civilian governor, William Howard Taft, who later became president. Years later, when MacArthur’s turn came to be promoted to army chief of staff, Taft blackballed him.

1864
After four years, this president had run up the greatest government
deficits ever. He was the first president of the United States to go on public record as believing that neither deficits nor the national debt constituted a serious problem.

When war came and the government needed money desperately, he sought to reassure the American public that although the government’s finances were in terrible shape, the government could spend its way out of it:

As president, he revolutionized the financial methods of the United States. During his tenure he established a national banking system, increased taxes and tariffs, and made U.S. dollar bills a monopoly medium of exchange vis-à-vis state bank notes. Every year his administration incurred relatively large deficits and accumulated a large national debt.

He died just as the war ended, and did not like to see his Keynesian economics applied in peacetime conditions. His successor presidents renounced his philosophy and made fiscal prudence and elimination of the budget deficit a high priority of their administrations.

It wasn’t until FDR was elected that Keynesian economics became accepted policy. The president who first espoused it was Abraham Lincoln.

1865
When Alice Roosevelt Longworth planted a voodoo doll in the White House garden, she had good history to go on: Ford’s Theatre. After Lincoln’s assassination in 1865, the federal government took over the building and turned it into a records facility for the War Department. In 1893 the building collapsed and killed twenty-two federal clerks.

In the presidential box with Lincoln were his wife, Mary, and a young couple, Colonel Henry Rathbone and his fiancée, Clara Harris. Mary Lincoln became insane in 1875 and had to be institutionalized for several months, and ended up spending the rest of her life in seclusion, much of it in Europe. But she wasn’t the only member of the presidential party to go off the deep end; there were also Henry Rathbone and Clara. As a result of that awful night, Clara’s dress was totally bloodstained, putting her in a quandary. What to do with the dress? She thought all the blood was Lincoln’s, but actually it was Rathbone’s; he had been knifed by John Wilkes Booth. She didn’t want to throw the dress away, but she obviously didn’t
want it lying around, either. So she put it away in a closet. Finding this procedure a bit creepy, she called in the bricklayers and had the closet entombed behind a brick wall, the dress still inside.

In the meantime she married Henry Rathbone and had three children. But Rathbone had demons of his own, and in 1883, on Christmas Eve no less, he entered the bedroom with a gun and a knife just as Booth had, and proceeded to murder his wife with a gunshot, then turned the knife on himself and stabbed himself six times, trying to kill himself. He failed and spent the rest of his life in a home for the criminally insane.