Bitter Enemies United Forever on Currency

This 1861 Confederate States of America $1000 Montgomery Note, featuring John Calhoun and Andrew Jackson, sold for $76,375 at an October 2015 Heritage auction.

By Jim O’Neal

John Caldwell Calhoun served his full four years as vice president under John Quincy Adams, but the year was now 1828 and he needed to make a decision about his political future.

He previously had been a member of the House of Representatives (1811-17) and Secretary of War (1817-25). (He was later Secretary of State, and a U.S. Senator.)

He finally decided to run for the vice presidency again. But, in a twist, he decided to switch horses and run with Andrew Jackson rather than JQA. It seemed like a prudent choice at the time, and he and Jackson easily won the 1828 election. Then they started trying to work together.

They differed on so many fundamental issues, including states’ rights and nullification, that a schism seemed inevitable. Then, to make tensions even worse, his wife Floride Bonneau started meddling in White House politics … and Jackson’s famous temper was riled up. He even threatened to just grab Calhoun and hang him (another duel would have apparently been unseemly).

The end was much less dramatic, as Jackson simply picked Martin Van Buren to be his running mate in the 1832 presidential election. When they won, Calhoun resigned.

Calhoun would remain the only vice president to resign until Spiro Agnew joined the club.

On March 9, 1861, the Confederate States of America issued a $1,000 banknote depicting both Calhoun and Jackson. So the two bitter enemies remain joined for eternity.

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 chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

It’s Unlikely a Wall Will Solve the Immigration Issue

The Great Wall appears on this China/People’s Republic 200 Yuan, 1949.

By Jim O’Neal

One of the Great Walls of China dates to 200 B.C., intended as a protective barrier for its inhabitants rather than a way to restrict the movement of people. The concept surfaced again in the Ming Dynasty era in the 14th century. The Chinese have always preferred a closed societal culture … until the 20th century, when they discovered the advantages of low-cost labor to produce goods for export.

Conversion of a strategic asset like low-cost labor to generate capital for economic development becomes more feasible with every technology improvement. The competitive advantages among nations has evolved into a “flat world” (Tom Friedman) that economists typically call globalization.

However, we still have nations like Japan, which strongly prefers a monoculture (similar to a beehive) and relegates foreigners to service roles. As an island nation with a strong navy, they can implement immigration policies that are enforceable. The rub is that birth rates are so low and the population increasingly aging that their economy has been stagnant for 20-plus years.

Europeans who migrated here in the early 16th century did not have to worry about physical barriers to entry. Their challenges were primarily in crossing the dangerous Atlantic Ocean and then surviving in a new, uncivilized land. The Pilgrims (English Separatists) came from Plymouth, England, via the Mayflower in 1620. They were joined by Puritans, who established the Massachusetts Bay Colony. Many were seeking religious freedom, fame and fortune, or simply personal freedom.

When the U.S. Constitution was adopted on Sept. 17, 1787, it expressly gave Congress the power to establish a uniform rule of naturalization. In 1790, they passed the Naturalization Act, which enabled those with two-year residency to apply for citizenship. However, it was restricted to “free white people” of good moral character. In 1795, it was modified to five-year residency and a three-year notification clause. A 1798 Act increased residency to 14 years and notice of intent to five years.

In 1802, Congress passed the Naturalization Law – “free white” retained – alien intent to three years – residency to five years – resident children included – ditto children abroad – former British soldiers barred from citizenship.

This was the last real major act of naturalization in the 19th century, except in 1870, when it was opened to African-Americans. But in the 20th century, the game changed. The U.S. focus changed from legislation that regulated immigration to restrictions. The Immigration Act of 1917 included literacy tests and barred immigration from the Asia-Pacific Zone. It dramatically increased the list of “undesirables” – alcoholics, idiots, those with contagious diseases, and political radicals. The “Barred Zone” included much of Asia and the Pacific Islands.

The Immigration Act of 1924 severely restricted the immigration of Africans and banned immigration of Arabs and Asians. In 1986, the Immigration Reform and Control Act was designed to be the final solution. Four million undocumented workers got a path to citizenship in return for “border security.” It was never fully implemented.

Build a wall? Sure, no problem. Solve the issue? Two hundred years of American history says probably not.

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 chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

‘We Can Never Know Enough About the American Revolution’

The 1998-S Crispus Attucks $1 was struck to commemorate the 275th anniversary of the birth of Attucks and to honor the nation’s Black Patriots.

By Jim O’Neal

A friend, Oscar Robertson, NBA Hall of Fame player, gained notoriety in 1955 by leading Crispus Attucks High School to the Indiana state championship, becoming the first all-black school in the nation to win a state title. In 1956, Oscar and his teammates won the state championship again, and this time they became the first Indiana high school to complete a season undefeated.

Crispus Attucks was the first person killed in the Boston Massacre (March 5, 1770) and many consider the former slave the first casualty of the American Revolution. In the 1850s, he became a martyr for the abolitionist movement. His probable mixed-race heritage – African and American Indian – allowed both African Americans and Native Americans to leverage his fame in their struggles for justice.

Despite the many eyewitness accounts, scholarly research and dozens of highly acclaimed books, this period is filled with alternate versions and is a continuing source of debate and uncertainty.

A common denominator in many of the high-profile events of the era is the city of Boston, with the Stamp Act of 1765 being a convenient place to start. This was an egregious act of the British Parliament putting a tax on all printed matter – newspapers, books, playing cards and legal documents. It aroused a storm of protest in all the colonies, with Boston’s reaction particularly violent. A Stamp Act administrator was burned in effigy and a mob ransacked the governor’s mansion.

Parliament repealed the Stamp Act, but insisted they maintained the right to pass laws regulating all trade and issuing new taxes at will. This caused protests that were even more violent and into this highly volatile situation, Britain landed 4,000 troops in Boston, strictly “in anticipation of a crisis.”

By 1770, Boston was in an economic decline and the population of 15,000 was smaller than 30 years earlier in 1740. There was continual competition for scarce resources and tensions between British troops and citizens continued to increase. Finally, an argument over payment for a haircut escalated into an angry mob that challenged troops stationed at the Customs House.

The people taunted the soldiers with “Fire! Fire! Fire! We dare you to fire!” At some point, an order was given and they shot into the crowd. Four people were killed and several others wounded. The next day, British Captain Thomas Preston and a small group of soldiers were arrested and taken to Queen Street jail to await trial. Future President John Adams and Josiah Quincy Jr. agreed to be their lawyers. A little-known fact is that four citizens were accused of shooting into the crowd, but they were found not guilty along with all but two of the British soldiers.

Then came the famous Boston Tea Party (1773), when colonists dressed as Indians destroyed 342 chests of tea on three ships in Boston Harbor after the British Parliament levied taxes on tea and granted a monopoly to the British East India Company. All the elements were in place for a war and it lasted for seven years.

The 35 years from 1765 to 1800 are some of the most interesting times in American history and will continue to attract scholarly research and an unending parade of books. However, few have the insight of Pulitzer Prize-winning historian David McCullough, who has said, “We can never know enough about the American Revolution if we want to understand who we are, why we are the way we are, and why we’ve accomplished what we’ve been able to accomplish that no other country has.”

I agree.

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 chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

After World War II, America Immediately Faced Challenges in China, Russia

Taiwan struck a gold 2000 Yuan Year 55 (1966) to commemorate the 80th birthday of Chaing Kai-shek.

By Jim O’Neal

Chaing Kai-shek joined the Chinese Nationalist Party in 1918, succeeding founder Sun Yat-sen as the leader. In 1925, he expelled Chinese Communists from the party and led a successful reunification of China. When the Allies declared war on Japan in 1941, China took its place among the Allied nations.

Chaing may have been an ally of the United States, but he presided over a corrupt society made ungovernable by China’s decade-long occupation at the hands of the Japanese and the growing strength of communist revolutionary Mao Zedong. Inflation was rampant, as was starvation, but Chiang’s police crushed opposition and no amount of American pressure could dissuade him.

In 1946, George Marshall made a valiant effort to consolidate power between Chiang and Mao, but it proved futile. As the Cold War advanced, Americans saw their own security at risk by supporting the anti-communists. Then, the Communist Revolution created an ardent hatred of all things American, followed by more bad news in September 1949. As the last of the Chinese Nationalists fled to Formosa (now Taiwan), a squadron of USAF B-29s detected traces of radioactive material while flying over the North Pole. This provided irrefutable evidence that the Soviet Union had successfully exploded their first atomic bomb.

Americans were disillusioned. This was not the way things were supposed to go. Right was supposed to triumph over wrong, freedom over oppression, God over the godless. Hadn’t the Allies just finished proving this on the beaches of Normandy and in the vast waters of the Pacific? And hadn’t the gods determined that Americans alone should possess the atomic secrets to keep the forces of evil in check?

Mao’s victory and Joseph Stalin’s bomb forced a reconsideration of plans for occupied Japan, for now the line between East and West had to be drawn even more firmly, and every American decision had to be viewed through the prism of the Cold War. The initial strategy, as it had been for occupied Germany, had been to halt Japan’s capacity for future aggression, to disarm the former enemy and slowly introduce democracy. But, just as the Russian actions in Eastern Europe had changed the pace of reeducation in West Germany, the victory of the Chinese Communists made it essential that Japan be immediately strengthened to resist the spread of the Red Tide in Asia.

General Douglas MacArthur, the supreme commander of occupied Japan, had personally written the new Japanese constitution, which banned “land, sea and air forces” and stated any war potential “will never be maintained – or the development of a military industry.” Just three years after the end of the war, that ban was lifted, creating a “self-defense force” of 75,000.

Today, as North Korean nuclear threats continue to grow, there are discussions about Japan assuming total responsibility for their own defense, including the possibility of a nuclear deterrence, something that many believe could be viable in a matter of months.

We seem to be incapable of eradicating or even mitigating war capabilities. Maybe there is just too much profit potential involved.

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 chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Clash of Democracy and Oligarchy Dates to Ancient Times

persia-under-alexander-mazaeus-as-satrap-of-babylon
This double-daric gold coin, provisionally dated to the years Alexander the Great was King of Persia, sold for $70,500 at a September 2013 Heritage auction.

“Dictatorship naturally arises out of democracy and the most aggravated form of tyranny and slavery out of the most extreme liberty.” – Plato

By Jim O’Neal

During the Peloponnesian War (431-404 B.C.), Athens was ultimately defeated by the Spartans. Athenian democracy was twice suspended. In 411 and 404 B.C., Athenian oligarchs claimed that Athens’ weak position was due to democracy and led a counter-revolution to replace democratic rule with an extreme oligarchy. In both cases, democratic rule was restored within one year.

Democracy flourished for the next eight decades. However, after the Macedonian conquest of Athens under Phillip II and his son Alexander (later Alexander the Great) in 332 B.C., Athenian democracy was abolished. It was intermittently restored in the Hellenistic age in the 1st and 2nd centuries B.C., but the Roman conquest of Greece in 146 B.C. effectively killed it off.

Although democratic rule had been quashed, Athenian science and philosophy lived on. The renown and influence of Plato and Aristotle endured through the ages that followed and much of their work continues to influence Western thought to this day.

It is ironic that Aristotle tutored Alexander the Great at age 16 since throughout antiquity, Alexander was widely viewed as the most remarkable man who ever lived. When his father was assassinated in 336 B.C., he secured the Macedonian throne by destroying his rivals, forcing the Greek city/states to accept his authority in 334 B.C. and then marching into Asia Minor (modern-day Turkey) at the head of an army of 43,000 foot soldiers and a cavalry of 5,500. At its heart lay the Macedonian phalanx, a well-drilled corps of 15,000 men armed with the sarissa, a double-pointed 23-foot pike. They were simply invincible.

He then defeated the Persian emperors, subdued Greece, drove his troops across mountains, deserts and rivers into Afghanistan, Central Asia and on to the Indian Punjab, ruthlessly crushing all resistance. Alexander was now king of a vast and ethnically diverse empire that included 70 newly founded cities. It is said that he sat down and cried when he ran out of new places to conquer. He died in 323 B.C., having been history’s most successful military commander.

Not bad for a 32-year-old.

Jim O'NielIntelligent 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 chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Let’s Not Forget that America Remains a Unique Place

medal-struck-for-henry-clay
A U.S. Mint medal struck for presentation to Henry Clay in 1852 sold for $346,000 at a September 2016 auction.

 

By Jim O’Neal

The 1800 census reported 5.3 million people living in the United States – more than twice the number in the colonies at the beginning of the American Revolution. There were four cities with populations greater than 10,000 – Baltimore, Boston, Philadelphia and New York. Half of all Americans were under 16 years old.

The men and women who were born between 1776 and 1800 would not have had any contact with the colonial era. They would have none of the sensibilities of having been subjects of the King of England. They were the inheritors of the revolution and took seriously that they had inherited a remarkable revolution. They intended to demonstrate to a world of monarchs what democracy, what a democratic society could truly be.

Thomas Jefferson’s influence was the most pervasive in this generation and was constantly the subject of discussion. The statesman Henry Clay loomed as a hero as did DeWitt Clinton, because of his leadership in building the Erie Canal. Jefferson was important because he so clearly articulated a different conception of what a republic could be and he had a unique vision of how human beings could participate in their society. He is a point of reference throughout this period.

Once the Revolutionary War was won, there was an outpouring of people into the western parts of New York, Virginia, Georgia and Pennsylvania. By 1820-1830, people primarily farmed since 85 percent lived in rural areas.

Then came the shift to commerce, manufacturing and the professions – medical, teaching, preaching, legal. This required an infrastructure of teachers as literacy spread almost everywhere. Railroads, canals, steamboats and roads were all enablers of this new society, allowing it to flourish and grow.

The military was small, other than the swelling for the War of 1812, but troops quickly demobilized from 70,000 back down to 14,000. West Point was teaching civil engineering, with military people participating in economic life via the railroads and canals. Each veteran received 160 acres of land and they pushed further west.

In the North, almost everyone was educated, including free blacks. In the South, fewer were educated, but there were lots of academics for planters’ children. When the British writers Frances Trollope and Charles Dickens toured America, they found a society that was intoxicatingly free and saw things they loved: the outpouring of human energy, voluntary association at will, the zeal of forming a society to determine America’s character.

To paraphrase Benjamin Franklin when asked what the founders had created: “A republic, madam, if you can keep it.”

The first generation of Americans did a pretty fair job and we are still reaping the benefits of their efforts. I hope this generation does as well in keeping the flame of liberty burning brightly. America is still a unique place on Earth.

Jim O'NielIntelligent 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 Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Chicago World’s Fair was More Than a Ferris Wheel, Buffalo Bill and Commemorative Coins

1893-worlds-columbian-exposition-admittance-ticket
A group of 18 World’s Columbian Exposition tickets, including this scarce Benjamin Franklin piece, realized $1,265 at a January 2011 Heritage auction.

By Jim O’Neal

In 2003, bestselling author Erik Larson wrote The Devil in The White City, a non-fiction narrative of a serial killer who murdered up to 200 people using the 1893 World’s Columbian Exposition (the Chicago World’s Fair) as a backdrop. Leonardo DiCaprio reportedly has the film rights and Martin Scorsese will direct.

There was a lot of competition for the fair between Chicago and New York City. NYC bolstered their bid when Cornelius Vanderbilt, William Waldorf Astor and J.P. Morgan pledged $15 million in support. But Chicago prevailed by matching the $15 million from Marshall Field, Philip Armour and Gustavus Swift (of meatpacking fame, who sold “Everything but the squeal,” a highly effective slogan highlighting how they used all animal parts to make other products and eliminate pollution).

However, what sealed the deal was a pledge by Lyman Gage, president of the powerful First National Bank of Chicago, to provide millions of dollars to help finance exhibitors. Gage would later serve as the 42nd Secretary of the Treasury under both William McKinley and Teddy Roosevelt.

Chicago was eager to host the event and demonstrate how much progress they had made after the disastrous Fire of 1871 involving Mrs. O’Leary’s cow. They painted so many stucco buildings white and had new electric lights illuminating so many streets that they earned the nickname “The White City.” They successfully conveyed the image of fresh, sanitary and new. There was also a major initiative called City Beautiful that included cleaning up trash in streets, empty lots and alleys.

A major mistake they made was denying William Frederick Cody (“Buffalo Bill”) permission to perform his famous Wild West Show. Ever the shrewd businessman, he simply set up shop outside the fairgrounds and siphoned off customers. However, the fair’s shaky finances received a big boost when Pittsburgh-based bridge maker George Ferris debuted his new invention – a 264-foot-tall Ferris Wheel. It could accommodate 2,160 people at a time and with a fare of 50 cents (double the cost of a fair ticket), it bailed out the fair and wiped out a big budget deficit.

The federal government also pitched in with the introduction of the country’s first postcards, a new commemorative stamp, and two new commemorative coins. One was a quarter featuring Queen Isabella – who financed the voyage of Columbus. It was the first time a U.S. coin honored a woman. The other was the 50-cent commemorative Columbus coin, both still popular with coin collectors today. The entire fair was an homage to Columbus, celebrating his voyage 400 years earlier, despite being one year late.

On July 12, American historian Frederick Jackson Turner skipped the Wild West Show and the docking of a replica from Norway of a Viking ship – just two of the hundreds of events that attracted up to 28 million spectators to the fair. Turner opted to put some finishing touches on his thesis before delivery at the Art Institute of Chicago that night.

More on his historic speech in my next post.

Jim O'NielIntelligent 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 Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Canal a Vital Investment that Helped Open the West from Chicago

lockport-il-illinois-and-michigan-canal-at-branch-state-bank-at-chicago-100-post-note
Notes were issued by banks to help fund the Illinois and Michigan Canal Company. This Branch State Bank at Chicago $100 post note is dated Aug. 1, 1839.

By Jim O’Neal

Chicago had a big opportunity buried deep within a challenging situation.

In the early 19th century, trade goods from the Great Lakes region could be shipped on three routes. The Erie Canal got goods to New York, the Saint Lawrence River to the ports on the northern Atlantic, or goods went south on the Mississippi River to New Orleans into the Gulf of Mexico. The last option was best for goods grown or mined around Lake Michigan or Superior.

One issue was the lack of a physical connection to the Mississippi or any of its tributaries. There was a geographically infuriating obstacle in the way: a relatively low plateau with a wide expanse. It was this barrier, just a few dozen feet high, that separated the growing lakeside city of Chicago from the rivers of the west.

As early as 1673, French-Canadian explorer Louis Jolliet had remarked how easy it should be to cut a small canal across the hilltop marsh and make a direct link to the mighty river. Although Jolliet knew very little about artificial waterways, he was aware of a giant canal being built in France, the Canal du Midi, a 150-mile structure linking the Mediterranean to the Atlantic. It had started six years earlier and would take another eight years to complete. But, surely a small waterway here in America would be “trivial.”

Wrong!

Neither the French nor British had pursued a project during their occupation of this land and only when Illinois become a state in 1818 did any serious discussions begin. Finally, on Independence Day 1836, the Illinois and Michigan Canal Company broke ground and digging began.

The implications for Chicago were enormous. Connect to the Mississippi and trade commerce would explode. Immigrant laborers were attracted in large numbers. In the 12 years it took to finish the canal, the population grew to 20,000 and six years later it had tripled.

It took 12 long years because the scope of the canal was much larger than anticipated. It became a fully formed waterway; 60 feet wide at the top, 26 feet wide on the bottom and 6 feet deep. However, it was 96 miles long, had 17 locks, four aqueducts, and a giant pumping station with feeder springs. It allowed vessels to pass without interruption from the Lakes to the new city of LaSalle on the Illinois River.

When the steamer General Thornton arrived in the middle of Chicago on April 19, 1848 (bringing a load of sugar from New Orleans), a cascade of other events followed: Chicago got its first telegraph, the Board of Trade opened, the first steam-powered elevator started unloading on the docks, and the first railroad connection was started.

Suddenly, Chicago was a vital fulcrum for commerce and business – conveniently located between East and West. Journeys that had taken fur traders three weeks or farmers 10 days could now be accomplished in less than one day’s sailing! A torrent of goods flooded in: lumber, wheat, corn, stone, salt and livestock for the packinghouses to fill the nation’s dinner tables.

People quickly found travel into the American interior delightfully uncomplicated since the first half of the journey was easily waterborne. Chicago’s new Grand Canyon was much more than the trivial ditch Jolliet had envisioned, but when gold was discovered in California the following year, the mass migration started, filling in the middle of the country as they went.

This was one “Big Dig” that paid off … big time!

Jim O'NielIntelligent 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 Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

J.P. Morgan was Crucial to the Financial Development of the United States

5-brown-back-bears-signature-of-new-york-financier-j-pierpont-morgan-a
An 1882 $5 Brown Back, National Bank of Commerce in New York note, bearing the signature of J.P. Morgan as vice president (lower right), went to auction in September 2007.

By Jim O’Neal

John Pierpont “J.P.” Morgan may have been the preeminent U.S. banker in the last half of the 19th century. He was born in 1837, avoided serving in the Civil War by paying a substitute the traditional $300 to take his place, and started his banking career … first in London with his father and then in New York City. In addition to becoming a famous financier, he accumulated a world-class art and precious gem collection.

It is his role in helping finance the development of the United States that provides the most interest. In fact, throughout the entire span of his lengthy financial career, there was a chronic lack of capital in the United States to fund economic development. This was primarily due to the lack of a strong national bank or a system to monitor monetary policy and ensure adequate liquidity … without triggering runaway inflation.

This situation was exacerbated by a series of “financial panics” that seemed to occur with regularity every 15 to 20 years due to myriad factors (e.g. bank failures, speculative bubbles, asset-liability mismatches, over-leverage, economic recessions, depressions, etc.). The United States had several in the 19th and 20th centuries and we almost collapsed the entire financial system in 2007-08 after the bursting of the housing bubble and too much bank leverage using exotic products. Central bankers around the world are still struggling with economic development while sovereign governments abdicate their fiscal responsibility.

morgan
J.P. Morgan

During Morgan’s career, there was also the issue associated with European investors being skittish about investments in America that were hard to monitor from 3,000 miles away. This was especially true for railroads that were enormously capital intensive. This void created a perfect role for Morgan in New York and his father in London. They could match up sound investments in the United States with eager foreign investors by taking “moral responsibility” (their term) for overseeing their clients’ investment through their bank.

If a railroad went bankrupt, J.P. would personally step in and take charge by managing the bankruptcy, replacing top management, restructuring the financing, installing a new board (often including himself) and staying until the company’s health was restored. This reorganization of railroads came to be called “Morganization.”

Once the essential railroad structure of America had been knitted together into a sound economic and geographic sector, he then turned his talent to industrial organizations. He put together the first billion-dollar corporation by combining several small steel companies with Carnegie Steel and creating U.S. Steel. Next was Edison Electric and Thomson-Houston to form General Electric, one of the original 12 Dow Jones companies.

He and his partners put together International Harvester, financed AT&T, bailed out the U.S. Treasury when they were about to run out of gold during the 1893 Panic, and almost single-handily stopped the Panic of 1907. In this case, he was a national hero, but within a short period many Americans were horrified that one private citizen had so much power. This led to a national monetary commission and eventually the Federal Reserve System of today.

When J.P. Morgan died in 1913 and billionaire John D. Rockefeller read in The New York Times that his estate was only worth $80 million, Rockefeller reportedly shook his head and said, “And to think, he wasn’t even a rich man!”

Jim O'NielIntelligent 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 Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Trade Has Created Economic Opportunities for More than 100 Years

1915-S Panama-Pacific Octagonal Fifty
To celebrate the opening of the Panama Canal, the U.S. Mint produced this 1915-S $50 Panama-Pacific Octagonal. This example, graded MS67 NGC, realized $282,000 at an April 2014 Heritage auction.

By Jim O’Neal

The ceremonial opening on Nov. 17, 1869, of the Suez Canal, linking the Mediterranean and Red seas, was an emphatic declaration of European – specifically French – technological and financial means. It was also a significant illustration of a rapidly emerging and increasingly global economy and, simultaneously, a further boost to Europe’s imperial ambitions.

The Suez Canal reduced the sailing time between London and Bombay by 41 percent and the route to Hong Kong by 26 percent. The impact on trade was obvious, as it greatly simplified the defense of India and its critical markets, Britain’s key imperial goal. Trade in the Indian Ocean was now protected by 21 Royal Naval bases, making it a virtual monopoly.

An even more challenging project was the construction, begun in 1881, of the Panama Canal linking the Atlantic and Pacific oceans. It was a French initiative, but plagued by controversy and a consistently hostile climate that cost the lives of 22,000 laborers. The United States eventually completed the project in August 1914 after the French finally conceded defeat.

It was the largest and most expensive engineering project in the world.

It, too, dramatically reduced sailing times, shortening the Liverpool to San Francisco route by 42 percent and the San Francisco to New York time by 60 percent. The project assumption by the United States marked a crucial shift in attitudes in both trading and advancing U.S. interests in foreign affairs. This started in 1898 when the United States itself became a colonial power by taking over the Philippines from Spain.

It then accelerated under President Teddy Roosevelt (1901-09), when he actively advocated American military involvement, especially in Latin America, to ensure stability as a means of advancing American interests. A major consequence was the strengthening of the U.S. Navy and its “Great White Fleet,” which completed a circumnavigation of the globe between 1907 and 1909. This was followed by President William Howard Taft’s Dollar Diplomacy, by which American commercial interests – primarily in Latin America and East Asia – were secured by the backing of the U.S. government to encourage huge investments.

A hundred years later, we are still actively pursuing a variant of this strategy by advocating two-way investment with Brazil, China and India despite being on a short hiatus until the current political season ends. This is the only rational way to create the jobs we need and keep our trading partners’ markets open.

Jim O'NielIntelligent 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 Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].