A president has to deal with debt and the temptation to print money

A federal government struggling to pay debts? A Congress that wants to roll the money-printing presses? These issues apparently aren’t new… from American Ulysses: A Life of Ulysses S. Grant:

A major problem left over from the Johnson administration was the federal debt. When Grant assumed the presidency, the national debt, which stood at $64 million in 1860, had grown to a staggering $2.8 billion. The problem was compounded as hundreds of millions of dollars in unredeemable paper money—“greenbacks”—had pushed gold coins out of circulation. All of this left the nation’s credit in precarious shape. As his first presidential act, Grant signed a law promising that the federal government would pay holders of U.S. bonds in “gold or its equivalent” and would redeem the greenbacks as soon as practicable. Grant initiated strong federal action to pay down the national debt. He believed “sound money” was the best way to restore the economy, whereas Democrats focused on relief for farmers and small-business owners through printing paper money—injecting more money into the economy.

After months of debate, the Senate and House agreed on Bill S.617, known as the “inflation bill.” It would increase the number of greenbacks placed in circulation to $400 million. At the same time, it would advance circulation of specie-backed moneys to an equivalent amount. The Senate-sponsored bill received overwhelming approval in both houses of Congress. Everyone expected Grant to sign it.

Finally, after spending many hours at his desk, he concluded he could not sign it, stating it to be “a departure from true principles of finance, national interest, national obligations to creditors, Congressional promises, party pledges (on the part of both political parties), and of personal views and promises made by me in every annual message sent to Congress and in each inaugural address.” Grant recognized the views of proponents of the bill—a majority in Congress—and stated these views in their best light, then countered them with his own financial convictions.

Grant had the last word: “I dare say the first result will be a storm of denunciation. But I am confident that the final judgment of the country will approve my veto.” Congress attempted to override Grant’s veto, but the Senate could muster only 34 yeas to 30 nays. The veto was sustained. No one was more surprised than Grant at the outpouring of support for his decision.

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Presidential Pomp and Circumstance in the 19th century

From American Ulysses: A Life of Ulysses S. Grant:

President Grant established his daily routine. He rose at seven, read the Washington papers, and enjoyed breakfast with his family at eight thirty. Two of his four children were away—the oldest, Fred, at West Point and the second son, Buck, at Phillips Exeter Academy, preparing to enter Harvard. After breakfast, he went for a short stroll in the Washington streets, greeting locals and surprising tourists. In the aftermath of Lincoln’s assassination, armed guards had been stationed in and around the White House. Grant dismissed them all. He wanted the American people to see their president was accessible.

At ten A.M., he went to his office on the second floor. His brother-in-law Frederick Dent sat at a reception desk. Two of Grant’s former aides, Horace Porter and Orville Babcock, served as his secretaries. Dent, Porter, and Babcock wore civilian dress but impressed bodyguard William Crook as “a military council” because of the “sort of military exactness which pervaded the routine business.” Adam Badeau, writing a military history of Grant, was assigned an office. At the end of official business at three P.M., the president, usually accompanied by his son Jesse, went to his stable.

The family gathered for dinner—punctually—at five P.M. To his father’s enjoyment, young Jesse enlivened the conversation with humor. Julia’s father, Colonel Dent, still un-Reconstructed at eighty-three, growled about Republican Radicals and Negroes trying to move beyond their place.

A few close friends would visit for informal conversation, then he and Julia would retire between ten and eleven.

On Sunday evening, January 2, 1870, the president walked alone across Lafayette Park to Senator Charles Sumner’s home at the corner of H Street and Vermont Avenue.

The lame duck session of the Forty-second Congress had voted the president a 100 percent pay raise—from $25,000 to $50,000—increased salaries for Supreme Court justices, and approved hefty increases for themselves. The salary increase for the president seemed fitting because he had to pay expenses for running the White House from his personal funds.

More: read American Ulysses: A Life of Ulysses S. Grant

 

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Impossibility of changing minds via top-down direction from Washington, D.C.

Much of American Ulysses: A Life of Ulysses S. Grant is devoted to Reconstruction. The North beat the South militarily in just four years but then spent at least 12 years with the army running around imprisoning unconvinced Confederates, removing elected local and state politicians, etc.

Grant negotiated a surrender that prevented the Federals from prosecuting the Confederate military officers:

To further Lee’s letter and application, Grant decided to speak with the president. One of the first things out of [Andrew] Johnson’s mouth was his determination “to make all treason odious.” He asked, “When can these men be tried?” “Never,” Grant responded, “unless they violate their paroles.” He told Johnson he had made “certain terms” with Lee. If “I had told him and his army…they would be open to arrest, trial, and execution for treason, Lee would never have surrendered, and we should have lost many lives in destroying him.” Shaken, Grant walked back to his headquarters and described his conversation with his staff: “I will not stay in the army if they break the pledges that I made.” The bottom line: “I will keep my word.” Recognizing Grant’s enormous popularity, Johnson gave in and directed Attorney General Speed to drop the charges against Lee. On the same day, Grant wrote Lee to inform him that his word at Appomattox would be honored. In the weeks that followed, scores of Confederate officers who trusted Grant applied for pardons through him.

Even the KKK was initially pretty harmless:

Although the Ku Klux Klan ultimately symbolized white terrorism in the post–Civil War South, the group did not start out that way. The Klan was organized in 1866 in Pulaski, Tennessee, a market town near the Alabama border, by six young Confederate veterans who wanted to establish a social club. A few college men among them, recalling the Greek-letter fraternities then becoming popular in the South, suggested the group adopt the Greek kuklos, meaning “circle” or “band,” and then extend it by alliteration to “Ku Klux Klan.”

But fights broke out anew with unpersuaded locals:

The Richmond Examiner, the loudest voice of dissent in the Confederate capital during the war, continued its combative tone after the war. When Grant learned the Examiner reprimanded Richmond women for attending a ball hosted by Union general Alfred Terry, he instructed Terry to “take immediate Military possession” of “the dangerously inflammatory” paper and to “prohibit the publication of the paper until further orders.” Examiner editor H. Rives Pollard hurried to Washington to speak with Johnson. After meeting Pollard, Johnson referred Pollard to Grant, requesting if he “ ‘makes satisfactory explanation,’ and promises to do better hereafter, you will be as moderate with him as possible.” Later that day, Pollard wrote Johnson promising “to give a cordial support to the Union, the Constitution & the laws of the land.” Sensing an opening, Pollard concluded, “The policy of your administration will continue to receive the support of the journal.” Grant did not buy Pollard’s “explanation.” That day he wrote Pollard a letter, which he also sent to the president. “The course of the ‘Examiner’ in every number which I have seen has been such as to foster and increase the ill feeling existing towards the Government of the United States.” Grant believed “it to be for the best interests of the whole people, North and South, to suppress such utterances.” Anticipating Johnson’s question—under what legal authority?—he answered, “The power certainly does exist where martial law prevails and will be exercised.”

One year after Appomattox, Grant had grown concerned that the magnanimous peace he had negotiated was stalling, if not stopped. On April 2, 1866, Johnson had issued a proclamation declaring that the “insurrection…is at an end.” His order precipitously reestablished civil rule throughout an increasingly chaotic South. At Johnson’s direction, Stanton issued General Orders No. 26 on May 1, 1866, directing military courts to give up their authority to civilian courts. Grant read with alarm this proclamation that ended martial law and military tribunals “except in cases of actual necessity”—the meaning of which phrase would become hotly debated in the coming months. In an interview with The New York Times in May, Grant declared, “I find that those parts of the South which have not felt the war…are much less disposed to accept the situation in good faith than those portions which have been literally overrun by fire and sword. A year ago, they were willing to do anything; now they regard themselves as masters of the situation.” On the anniversary of the triumphant grand march in Washington, Grant understood how much had changed in the South in the short span of one year.

Appeals began arriving from southern governors requesting both withdrawal of federal troops and permission to replace them with state militias. When Johnson forwarded a request from the legislature of Mississippi, Grant replied, “The condition of things in the State of Mississippi, does not warrant the belief that the civil authorities of that State ‘are amply sufficient to execute the laws and good order.’ ” When a similar request came from the governor of Alabama, George Thomas, departmental commander, prepared to approve the governor’s request but passed it up the chain of command. Grant countermanded the decision of a senior commander. “For the present,” he responded, “and until there is full security for equitably maintaining the rights and safety of all classes of citizens in the states lately in rebellion, I would not recommend the withdrawal of United States Troops from them.”

States had to ratify the Fourteenth Amendment to get back into Congress. A lot more time and effort was spent insisting that people support this amendment than was put into working out the long-term consequences in an era of trains and steamships. Much of the current fight over immigration seems to stem from the first sentence of the amendment:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

They couldn’t imagine a U.S. with 325 million residents and transportation so cheap and fast that some of the world’s poorest people would be able to show up here, have babies, and thus become parents of U.S. citizens.

The Federal government and military exercised more direct control over Indian-related issues and Grant was reasonably effective in changing U.S. policies toward the people from whom we stole the land that we hadn’t stolen from Mexico:

In his conclusion, Grant engaged two vexing national issues. First, he promised the “proper treatment of the original occupants of this land—the Indians.” He favored “any course toward them which tends to their civilization and ultimate citizenship.” No president had ever discussed the rights of American Indians in an inaugural address.

At the beginning of Grant’s administration, the nation’s policy toward Indians roiled in turmoil. More than 250,000 Indians, living in more than one hundred tribes and governed by some 370 treaties, had been pushed involuntarily west of the Mississippi. A mosaic of different languages, religions, and forms of governance, Indians, as the first inhabitants of the land, confronted the menacing advance of white settlers lured by gold and new western lands and protected by twenty thousand soldiers.

Grant had seen the clash of civilizations firsthand on his inspection tour of the Great Plains nine months earlier in the summer of 1868. He witnessed white settlers heading west in ever-increasing numbers. He worried about the prospect of increasing conflicts between Indians and settlers. If Grant had earlier pitied the Indians, now he had a passion to find a solution to a long-simmering problem.

Grant read first [from the new Board of Indian Commissioners] report in November with interest. It began by boldly acknowledging that the history of the United States’ dealings with Indians was “a shameful record of broken treaties and unfulfilled promises.” Challenging prevailing opinion, “the testimony…is on record…that, in our Indian wars, almost without exception, the first aggressions have been made by the white men.” The report further declared, “Paradoxical as it may seem, the white man has been the chief obstacle in the way of Indian civilization.” The main body of the report consisted of proposals. It recommended that Indians live on reservations and the United States eliminate the treaty system, enhance schools, and encourage Christian missions.

Grant had a similar dream to Martin Luther King’s, albeit expressed in more prosaic terms:

… after his reelection, Grant welcomed a delegation of African American leaders from Philadelphia to the White House. They came to thank him, declaring he was “the first President of the United States elected by the whole people.” They wanted him to know that for them he represented “the practical embodiment of our republican theories.” Grant responded, “In your desire to obtain all the rights of citizens I fully sympathize.” He spelled out what he meant: “A ticket on a railroad or other conveyance should entitle you to all that it does other men.” In that spirit he told them, “I wish that every voter of the United States should stand in all respects alike. It must come

Grant’s dream wasn’t realized until the Eisenhower era of desegregation of schools and public transit at the earliest. That’s 1865 to 1957.

Maybe Americans who disagreed would have been convinced faster if they’d had Facebook and Meryl Streep?

How about political affiliation? An African-American’s vote could be predicted with near-certainty in Grant’s day. He looked forward to that ending: “Treat the negro as a citizen and a voter, as he is and must remain, and soon parties will be divided, not on the color line, but on principle. Then we shall have no complaint of sectional interference.” What about in the last few elections? Black Americans voted for Obama by a 95:4 ratio in 2008, a 93:6 ratio in 2012, and for Hillary 88:8 in 2016.

More: read Much of American Ulysses: A Life of Ulysses S. Grant

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Gleason: a good movie for parents, partners, and Hillary Clinton enthusiasts

The inauguration of the Trumpenfuhrer has prompted fresh outpourings of grief from my Facebook friends. What could be worse than “Orange McFuckface” in the White House, a man “so corrupt that his mere presence on the national stage inspires people to hate crimes and harassment, and whose narcissism prevents him from seeing the stakes he’s playing with: our republic, global stability, and the climate”? (typical quote)

How about being diagnosed with ALS at age 34? Amazon is currently streaming Gleason, based primarily on a video journal that Steve Gleason started for his unborn son in case the child never got a chance to know him. If you weren’t previously impressed by the determination of professional football players, you will be by the time you finish this movie.

Grousing about the challenges of daily life with an adult partner? (But never on Facebook! Plenty of complaints about King Donald I but I’ve never seen anyone complain about laundry left on the floor in the domestic environment.) Check out what Michel Rae Varisco signs up for (given Louisiana’s no-fault divorce system, she could have walked away, with most of the cash, on any day that the marriage was no longer convenient for her).

How about practical inspiration for those of us without a terminal disease? We can turn the camera around from time to time. When our kids are adults they’ll be able to see and hear us. We can write some autobiographical material that will help adult children understand their roots even if we’re not around when they happen to get curious.

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Grant and the Civil War

American Ulysses: A Life of Ulysses S. Grant covers the Civil War extensively. As I’m not a Civil War scholar, however, and it is a big and familiar subject, I’m not going to say too much about it except the book is worth reading.

According to the author, contrary to what his political opponents said during his lifetime, Grant was not a drunk. He may have overindulged in booze while stationed at a lonely Oregon outpost before the Civil War. This possibly led to his resigning from the Army. There then followed a period of failed efforts at making money in the private sector, which might have driven Grant to drink but did not. Once back in the Army and while serving as President, he was abstemious by the standards of the day.

As during other wars, it was hard to suppress Americans’ commercial spirit:

Northern Illicit Trade for cotton angered Grant. By the Civil War, cotton had become the indispensable lifeblood of the Southern agriculture that grew it and the Northern manufacturing that processed it. Cotton was to the nineteenth century what oil would become to the twentieth century. Union coastal and river blockades were put in place to deprive the South of necessary staples, but Northern businessmen were more than willing to break the blockades in order to exchange all manner of goods covertly for Southern cotton. The problem, as Grant observed in Memphis, was that Northern goods did not go just to sustain civilians, but to supply the Confederate army. As Sherman wrote Grant, “We cannot carry on war & trade with a people at the same time.

War could be chaotic and inglorious then as now:

The Second Corps, which had been commanded by Stonewall Jackson—who was accidentally shot and killed by his own men at the Battle of Chancellorsville—was now led by Virginian Richard Ewell.

Abraham Lincoln is portrayed as a near-saint by the author, though my friends who didn’t go to K-12 here in the U.S. tend to think of him as a tyrant seeking to maximize power.

“Please read and answer this letter as though I was not President, but only a friend.” It was an intriguing opening to an unusual request Grant received that same month: “Without embarrassment to you, or detriment to the service,” could Grant find a place for twenty-two-year-old Robert Lincoln, a recent graduate of Harvard, on his staff? Although the letter did not mention Mary Lincoln, behind the request lay a family struggle involving a son who wanted to join other young men serving in the war, a mother who had already lost two sons and feared losing a third, and a father caught in the middle. Grant replied, “I will be most happy to have him in my Military family in the manner you propose.” He suggested the rank of captain. Unwilling to make the U.S. Treasury pay the bill, Lincoln bought his son his military outfit and equipment as well as a new horse.

Grant was gracious in victory:

As Grant started back to his headquarters, news of the surrender spread like wildfire. Spontaneous firing of salutes exploded everywhere, but Grant immediately sent an order to stop all such demonstrations. “The war is over; the rebels are our countrymen again.”

What did it cost to keep North America as home to three countries rather than four?

When the North and the South went to war, the United States population stood at barely more than thirty million. For that small nation, the accepted total of deaths in the Civil War stood at 620,000—360,000 from the North and 260,000 from the South—far and away the largest toll of any American war. Now, new research using digital census data from the nineteenth century has revealed that the acknowledged death total was far too low. It is now accepted that the Civil War cost the lives of nearly 750,000 men—20 percent higher than the original total

I do wonder if it was worth it. Slavery ended everywhere else at close to the same time, usually without bloodshed. Whenever I point out that Singapore is richer than the U.S. people are prone to say that it is due to them having a smaller population. Canadians seem happy. If being part of a population of more than 300 million is so great, why don’t the Canadians try to join up?

More: read American Ulysses: A Life of Ulysses S. Grant.

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Clint Eastwood buys a Dell XPS 13 2-in-1

A forthcoming major motion picture: A Fistful of Dongles.

Plot: Clint Eastwood buys a Dell XPS 13 2-in-1 and wants to transfer some files from his old hard drive, in a USB 3.0 enclosure, only to discover that the machine lacks standard USB connectors.

Dialog:

  • Joe: “Get three coffins ready.”
  • Engineer: “It could be one millimeter thinner if we force consumers to use USB-C.”
  • Joe: “My mistake. Four coffins…”

Related:

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Difficult Thanksgiving dinners pre-Civil War

Your Thanksgiving devolved into a fight about Hillary’s foundation cashflow and Donald Trump’s statements about what women are willing to do for wealthy TV stars? It was a lot worse for the future General/President Grant. From American Ulysses: A Life of Ulysses S. Grant by Ronald White:

Ulysses and Julia seemed barely conscious of the internal tension beneath the surface of their happy wedding. She was the daughter of a slave owner. He was the son of an ardent antislavery father. Jesse and Hannah [Grant’s parents] decided not to attend the wedding.

Now that he was home, keeping his political views to himself, Ulysses planned to build a house, cultivate the land, and become a farmer. Julia’s father had given her sixty acres of uncleared land as a wedding present. With all his children married except Emma, Dent was eager to keep Julia nearby and offered help with equipment. The owner of more than twenty slaves, he gave his daughter three—Eliza, Julia Ann, and Dan—to serve as maid, cook, and houseboy. Ulysses spent a “pleasant” winter at White Haven, eager to begin farming in the spring. Ellen Dent orchestrated the delicate balancing act of providing hospitality for the joint household, but Colonel Dent did not hide his displeasure. All his other children had married well, yet Julia, his favorite, had married a man who at thirty-two seemed to have few prospects for success.

 

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Oracle overpaying white males and trying to hire Indians?

“U.S. sues Oracle, alleges salary and hiring discrimination” (Reuters) says that “the technology company systematically paid its white, male employees more than other workers” and then “Oracle was far more likely to hire Asian applicants – particularly Indian people – for product development and technical roles than black, white or Hispanic job seekers.”

Does this make sense? Suppose that Larry Ellison wants to run a club where white guys can talk about their college frat days and steals from shareholders by overpaying these guys. But at the same time he tries to avoid hiring any more white guys to join the backslapping and beer pong club? Going forward, he prefers to hire Indians?

For all of this to be true, doesn’t the company need to have multiple personality disorder? It doesn’t care about profit for existing workers so it just ladles out way more cash than it needs to, as long as the worker is a white male. When it comes to new workers, though, the company would much rather hire an Indian applicant than a white applicant because the white applicant would cost more (see above).

Readers: Can anyone explain how both allegations could be simultaneously true?

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Grabbing land from the Mexicans and then trading with them

From American Ulysses: A Life of Ulysses S. Grant by Ronald White…

Before the conflict in Texas erupted, Mexicans regarded the United States highly. Many politicians wished to emulate American democratic institutions. But Americans did not appreciate how much more difficult and complex Mexico’s path to becoming a nation was as it sought to shed the bonds of imperial Spain. From the Mexican perspective, America’s determination to tear Texas from Mexico initiated generations of distrust.

These letters [to Julia, his future wife, in 1846] reveal his observant, artistic eye. While some soldiers wrote home disparagingly of Mexico, he marveled about Monterrey: “This is the most beautiful spot that it has been my fortune to see in this world.” With feeling, he described the “beautiful city enclosed on three sides by the mountains with a pass through them to the right and to the left.

Grant would come to believe the Mexican War was unjust—a large nation attacking a small nation—but he had high praise for the American army. “The men engaged in the Mexican War were brave, and the officers of the regular army, from highest to lowest, were educated in their profession,” he declared. “A more efficient army for its number and armament I do not believe ever fought a battle.”

The Mexican War of 1846–1848, largely forgotten today, was the second costliest war in American history in terms of the percentage of soldiers who died. Of the 78,718 American soldiers who served, 13,283 died, constituting a casualty rate of 16.87 percent. By comparison, the casualty rate was 2.5 percent in World War I and World War II, 0.1 percent in Korea and Vietnam, and 21 percent for the Civil War. Of the casualties, 11,562 died of illness, disease, and accidents. Thirty-nine men Grant had known at West Point died. Four members of his 1843 class lost their lives.

What did we get as a reward for our aggression?

On February 2, 1848, Trist concluded a peace treaty that the commissioners signed at Guadalupe Hidalgo. The Senate ratified it on March 10, confirming American claims to Texas and setting the boundary at the Rio Grande. The Mexican government ceded to the United States New Mexico and Upper California, which included present-day Arizona and New Mexico, as well as parts of Nevada, Utah, and Colorado. In exchange, the United States paid Mexico $15 million and assumed claims against Mexico by United States citizens. The Mexican Congress ratified the treaty on May 25. United States troops began leaving Mexico five days later.

After the Civil War and the Presidency, it was time to think about commerce with Mexico:

Traveling with friend and diplomat Matías Romero, Grant became convinced that investment of foreign capital would “put the people on their feet” so that “Mexico would become a rich country, a good neighbor, and the two Republics would profit by contact.

Think that the debate over the pros ad cons of NAFTA and free trade with Mexico are new?

Knowing of Grant’s interest in Mexico, in early 1882 Chester Arthur—president of the United States since the death of James Garfield by an assassin’s bullet in September 1881—invited Grant to become U.S. commissioner to draw up a commercial treaty with Mexico. Mexico appointed Matías Romero as one of its two commissioners. The commissioners quickly agreed on terms of a free trade treaty that would remove tariffs on U.S. and Mexican products. The treaty of reciprocity was signed on January 20, 1883, but needed to be approved by the senates of both countries. The treaty was defeated in both countries.

In the United States, protectionists decried the free trade provisions. Some in the United States and Mexico charged that Grant and Romero were involved primarily for their own pecuniary gain.

More: read American Ulysses: A Life of Ulysses S. Grant

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What can Trump do with an economy addicted to overspending?

“Federal Debt Projected to Grow by $8.6 Trillion Over Next Decade” (nytimes) describes the basic economic situation with which Trump is faced. If the economy meets Congress’s rosy growth projections, which seems unlikely given that a rising minimum wage will reduce labor force participation (see Puerto Rico), the government will spend 3.8 percent of GDP over and over any tax revenues received. (The article is unintentionally humorous:

Despite the swelling deficit, the report describes an economy that is currently on “solid ground,” with increasing output and job growth on the immediate horizon.

How can an economy that has to spend more than it generates, borrowing from a hoped-for brighter future, be considered on “solid ground”?)

Given that members of Congress are addicted to being reelected and Americans are addicted to showers of cash (SSDI, SSI, Social Security, food stamps, etc.) and what they perceive as free services (Medicare, Medicaid, Obamacare subsidies) from Washington, what can Trump do as a practical matter? Every federal spending program is popular. Even Reagan wasn’t able to persuade Congress to cut anything substantial (which is why there were big deficits back then; Congress heeded his call to cut taxes, but ignored the calls to cut spending).

If we could grow our way to a Singapore level of per-capita GDP (50 percent higher than U.S.) then all of our fiscal dreams could come true. But Singapore seems to have done that by (1) running an effective public school system, and (2) not having a substantial welfare system (mostly an earned income tax credit-style system in which people whose market-clearing wage is low get a boost, but, unless they’re disabled, they do need to work). Public schools are beyond federal control and the U.S. welfare state has grown more or less continuously since the 1960s.

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