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

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

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

By Jim O’Neal

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

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

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

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

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

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

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

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Do We Risk Forgetting the Past … Again?

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

By Jim O’Neal

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

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

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

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

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

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

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

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

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

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

Intelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is president and CEO of Frito-Lay International [retired] and earlier served as chair and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].

Since the Days of the Pony Express, It’s Been All About Speed

Walter Martin Baumhofer’s oil on board titled The Pony Express, St. Joseph, sold for $10,000 at a March 2012 Heritage auction.

By Jim O’Neal

On Nov. 19, 2007, I watched Charlie Rose interview Jeff Bezos about the new Kindle that debuted that day and sold out in 5½ hours. Books had been the last bastion of analog holdouts, although there were lots of Ebooks for sale.

The Kindle was something new.

It was a light (10 ounces) device that didn’t require a computer and would store up to 200 books in a library. One hundred and one of the 112 New York Times bestsellers were already available for $9.99, in addition to all major newspapers and magazines. You could order it from Amazon.com for $399 and when it arrived, it automatically recognized the user. Plus, there were lots of other cool features like a 250,000-word dictionary, access to Wikipedia and its 400 million pages, and you could read the first chapter of any book for free before deciding to buy it.

I immediately ordered mine and there was already a two-month waiting time. It is still around somewhere gathering dust, but my new Kindle is on my iPad (with an audio feature).

I guess we have always been an impatient culture with the “need for speed” in our DNA. Until the spring of 1860, it took 20 days for mail to get from St. Joseph, Mo., to Sacramento … far too long for most merchants and businessmen. Stagecoaches were just too slow until one of them – Russell, Majors and Waddell of Leavenworth, Kan. – came up with an idea to cut the delivery time by 50 percent.

For a fee of $2 to $10 per ounce, depending on the distance, you could use their new innovative mail service: the Pony Express. Starting on April 3, 1860, every Wednesday and Saturday one rider on horseback would leave at noon from Sacramento heading east, and another at 8 a.m. from St. Joseph heading west. Averaging about 8 miles an hour, every 10 miles or so, they would change horses at a relay station and continue at breakneck speed.

The typical payload of 20 pounds of letters was tucked into a Mexican mochila (knapsack) with four cantinas (locked pockets) for the oiled silk-wrapped letters that kept them dry when the rider inevitably had to cross streams or rivers. The mochila was designed to slip over the saddle horn and the rider sat on it until the next change of horses. Every 75 to 80 miles was a “home station,” where the incoming rider would pass the mochila to a fresh rider and then bunk down until the mail arrived from the opposite direction. Then, somewhat rested, he was off again, back the way he came.

The young hell-bent for leather riders intrigued the nation and their dedication became a staple for many bedtime stories. Some children heard the tale about 19-year-old Jack Keetley, who rode 340 miles in 31 hours non-stop until taken from the saddle … sound asleep. Fifteen-year-old William Frederick Cody was one of the daring young riders who would later become famous as Buffalo Bill with his own traveling Wild West show.

Still, speed was what mattered and the formal record for the central route’s 1,966 miles is 7 days and 17 hours. This was of special significance since it allowed California newspapers to publish President Abraham Lincoln’s inaugural address. The Pony Express was, in every way, about speed. Even its history went by in a flash— 19 months, 2 weeks, 3 days and kaput! The bold experiment was finished, partially because it was costing about $30 a letter, but it was really just another victim of a new technology.

The ride lasted from April 3, 1860, to Nov. 20, 1861 … 596,501 miles, 30,700 pieces of mail and only one lost mochila! The Pony Express and its 80 dedicated riders, 400 horses and 190 relay stations all became irrelevant on Oct. 21, 1861, with the completion of the transcontinental telegraph line. That pattern of one innovation, one technology, giving way to another seems to be accelerating as our impatience and expectations continue to grow.

I just ordered four C batteries from Amazon and discovered they won’t be here until tomorrow (bummer!).

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].

‘M*A*S*H’ Showed Us How Far Intelligent TV Can Go

Rick Meyerowitz’s original M*A*S*H art for a 1974 cover of TV Guide sold for $657 at a June 2008 Heritage auction.

By Jim O’Neal

By 1983, the population of the United States had increased to 232 million … and virtually everyone was watching television on a regular basis. On Feb. 23, over 50 percent of them (best estimate is 125 million) tuned in that night to the last episode of one of their all-time favorite shows, M*A*S*H.

For weeks, newspapers had run contests asking readers to suggest how the show should end. “M*A*S*H Bashes” were held in every major city and people donned old army fatigues to watch the show, primarily in bars. Seventy-one percent of viewers watching television that night helped “Goodbye, Farewell and Amen” become the most-watched show in history. (No. 2 is Cheers for its finale “One For The Road.”)

We were saying farewell, not just to beloved television characters, but to an era and anti-war spirit that the show had captured so brilliantly.

M*A*S*H, which ran for 11 years (1972-83), with 251 episodes that snagged nearly 100 Emmy nominations, is still broadcast in reruns and is considered one of network television’s finest efforts. It was based on Richard Hooker’s 1968 bestselling novel Mash: A Novel About Three Army Doctors and the 1970 feature film directed by Robert Altman. (Note: Some nitpickers claim it was really based on the failed film M*A*S*H Goes to Maine, which itself was based on Hooker’s 1972 book sequel.)

The story of a fictional Mobile Army Surgical Hospital near the front lines of the Korean War (technically a U.N. “police action”), the TV show was filled with the high jinks typical of the book and movie, yet it established its own tone of prickly intelligence, wit and sardonic warmth. In tackling the darker aspects of war, the show perfectly echoed a conscience-stricken America, deeply troubled by Vietnam. In reality, and with an exquisite touch of irony, the book’s author was a surgeon from Maine who served in a MASH unit in Korea and actually hated the show for its anti-war message!

M*A*S*H creator, comedy writer Larry Gelbart, put the wise-cracking, womanizing, yet humane Benjamin Franklin “Hawkeye” Pierce (Alan Alda) at the center of the action. Sharing Hawkeye’s flea-bitten tent were fellow surgeons “Trapper” John McIntyre and Frank Burns, who was having an affair with Margaret “Hot Lips” Houlihan, the strong-willed head nurse. A favorite was Max Klinger, a cross-dresser who would try anything to get home. The cast changed over time, and finally even Gelbart left, exhausted from battles with network sensors.

The last episode, “Goodbye, Farewell and Amen,” which ran 2½ hours, was a remarkable culmination of everything the series represented: good, funny television drama that probed the ugly underside of war – in that last case, the savagery of peace in the closing days of Korea.

“What happened on the bus?” psychiatrist Sidney Freedman keeps asking Hawkeye, who in the final episode’s opening is in a mental institution.

Slowly, we learn that on July 4, after a day at the beach, the unit’s bus stopped to pick up refugees and wounded G.I.’s who told them to drive the bus into the bushes to hide from an enemy patrol. Hawkeye keeps hissing at a refugee woman, to keep her rooster on her lap quiet. The woman complies and eventually the repressed memory emerges … the woman has smothered her own child.

Hawkeye shakily returns to the 4077th and on the night of the armistice, one of the worst rounds of casualties is brought in. “Does this look like peace to you?” Margaret asks. Then over the PA system comes a litany of the war’s damage, ending with “2 million killed and 100,000 Korean orphans.” As the unit is broken down, each character gropes toward civilian life.

As Hawkeye lifts off in a helicopter, he sees down below on the deserted 4077, spelled out in stones, a message from his friend B.J. Hunnicutt: GOODBYE.

This last episode, considered the best in television history, was more than a goodbye. It was an example of how far serious and intelligent television can go, and a reminder that it very rarely does.

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].

Sanctions Didn’t Stop Germany from Roaring Back After WWI

A 1939 political cartoon by Charles Werner (1909-1997) for Time magazine comments on the worldwide mood 20 years after the Treaty of Versailles. The original art sold for $836 at a February 2006 Heritage auction.

By Jim O’Neal

From 1939 to the winter of 1941, the German military won a series of battles rarely equaled in the history of warfare. In rapid succession, Poland, Norway, France, Belgium, Holland, Yugoslavia, Denmark and Greece all fell victim to the armed forces of the Third Reich. In the summer and fall of 1941, the USSR came close to total defeat at the hands of the Wehrmacht, losing millions of soldiers on the battlefield and witnessing the occupation of a large portion of Russia and the Ukraine. The German air force, the Luftwaffe, played a central role in this remarkable string of victories.

It was even more startling to those countries that had participated in WWI and taken draconian anti-war measures when it ended. This was simply something that was NEVER supposed to happen again, much less a mere 20 years later. How was it even possible?

The Allied powers had been so impressed with the combat efficiency of the German Luftwaffe in WWI that they made a concerted effort to eliminate Germany’s capability to wage war in the air. Then they crippled their civilian aviation capability just to be certain. The Allies demanded the immediate surrender of 2,000 aircraft and rapid demobilization of the Luftwaffe. Then in May 1919, the Germans were forced to surrender vast quantities of aviation material, including 17,000 more aircraft and engines. Germany was permanently forbidden from maintaining a military or naval air force.

No aircraft or parts were to be imported, and in a final twist of the knife, Germany was not allowed to control their own airspace. Allied aircraft were granted free passage over Germany and unlimited landing rights. On May 8, 1920, the Luftwaffe was officially disbanded.

Other provisions of the Versailles Treaty dealt with the limits of the army and navy, which were denied tanks, artillery, poison gas, submarines and other modern weapons. Germany was to be effectively disarmed and rendered militarily helpless. An Inter-Allied Control Commission was given broad authority to inspect military and industrial installations throughout Germany to ensure compliance with all restrictions.

However, one critical aspect got overlooked in the zeal to impose such a broad set of sanctions. They left unsupervised one of the most influential military thinkers of the 20th century … former commander-in-chief of the German Army Hans von Seeckt. He was the only one who correctly analyzed the operational lessons of the war, and accurately predicted the direction that future wars would take. Allied generals clung to outdated principles like using overwhelming force to overcome defensive positions, while Von Seeckt saw that maneuvers and mobility would be the primary means for the future. Mass armies would become cannon fodder and trench warfare would not be repeated.

The story of the transformation of the Luftwaffe is a fascinating one. Faced with total aerial disarmament in 1919, it was reborn only 20 years later as the most combat-effective air force in the world. Concepts of future air war along with training and equipment totally trumped the opposition, which was looking backward … always fighting the last war.

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].

G.I. Bill Crucial to Creation of our ‘Greatest Generation’

Illustrator Mort Künstler’s depiction of D-Day, which began the liberation of German-occupied northwestern Europe, went to auction in May 2017.

By Jim O’Neal

By 1944, it was clear that World War II would end the following year and America had a difficult question to answer: What to do with the 16.35 million men and women serving in the armed forces when they came home from the war?

One estimate from the Department of Labor was that up to 15 million of them would be unemployed since the economy (which was winding down) would not be able to absorb them, especially in an orderly fashion. A similar post-war situation of lower production and a bulge of returning veterans had resulted in a sharp depression after WWI, from 1921 to 1923. To further complicate things, the world was in worse economic shape following the devastation the war had produced. The government had tried a cash bonus program and it failed so miserably that many Americans were angry for the next decade.

President Franklin Roosevelt was well aware of the potential implications and determined to avoid a repeat performance. He proactively took to the nation’s airwaves, proposing a series of benefits for all the men and women who had sacrificed so much for the country. The veterans’ self-appointed lobby, the American Legion, grabbed onto the proposal with both hands – as did Hearst newspapers. Legion publicist Jack Cejnar came up with the term the “G.I. Bill of Rights,” officially passed as the Servicemen’s Readjustment Act of 1944.

Returning veterans could borrow up to $2,000 to buy a house, start a business or start a farm. They would receive $20 a week for 52 weeks, until they found a job. There would be lifelong medical assistance, improved services for those disabled in action, and a de facto bonus of $1,300 in discharge benefits.

The effect of the program was substantial and immediate. By 1955, 4.3 million home loans worth $33 billion had been granted. Veterans were responsible for 20 percent of all new homes built after the end of the war. Instead of another depression, the country enjoyed unparalleled prosperity for a generation.

However, few veterans bothered to collect their $20-a-week unemployment checks. Instead, they used the money for the most significant benefits of all: education and vocational training. Altogether, 7.8 million vets received education and training benefits. Some 2.3 million went to college, receiving $500 a year for books and tuition, plus $50 a month in living expenses. The effect was to transform American education and help create a middle class.

College was sheer bliss to men used to trenches and K-rations. By 1946, over half the college enrollments in the country were vets, who bonded into close, supportive communities within the wider campuses. Countless G.I. Bill graduates would go on to occupy the highest ranks of business, government and the professions, and even win Nobel Prizes.

The number of degrees awarded by U.S. colleges and universities more than doubled between 1940 and 1950 and the percentage of Americans with bachelor degrees or more rose from 4.6 percent in 1945 to 25 percent a half century later. Joseph C. Goulden writes in The Best Years, 1945-1950 that the G.I. Bill “marked the popularization of higher education in America.” After the 1940s, a college degree was considered an essential passport for entrance into much of the business and professional world.

Thanks to the G.I Bill, a successful entrance into that world was created for the millions of men and women who kept our world free and assured its future. Along the way, they also helped rebuild a world that had been ravaged.

I offer you the Greatest Generation!

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].

Look to 1935 if Goal is Infrastructure Projects That Work

Joseph Christian Leyendecker’s cover illustration for the Oct. 19, 1935, edition of The Saturday Evening Post sold for $137,000 at a May 2015 Heritage auction.

By Jim O’Neal

“The social objective is to try to do what any honest government … would do: to try to increase the security and happiness of a larger number of people in all occupations of life and in all parts of the country … to give them assurance that they are not going to starve in their old age.”

Although this could have been taken directly from any Bernie Sanders speech anytime over the past 10 years … it was actually a response from President Franklin D. Roosevelt on June 7, 1935, when answering a question about the social role of government.

This was the same week that Babe Ruth announced his retirement from the Boston Braves, only six days after he hit three home runs in the last game he played. It was the end of an era and it came right in the middle of the Great Depression.

Bread lines were still long and double-digit unemployment was accepted as the new normal. People were generally depressed and hope was a rare commodity.

Technological unemployment threatened to permanently engulf huge sectors of the workforce, particularly less skilled and older workers in general. Observers suggested that deep structural changes in the economy meant that the majority of those over 45 would never get their jobs back. Lorena Hickok (Eleanor’s paramour) opined that, “It looks like we’re in this relief business for a long, long time.” The president’s advisor, Harry Hopkins, was soon speaking of workers who had passed into “an occupational oblivion from which they will never be rescued… We shall have with us large numbers of the unemployed. Intelligent people have long since left behind them.” Sound familiar?

Even FDR chipped in with his “Fireside Chat” on June 28, 1934: “For many years to come, we shall be engaged in rehabilitating hundreds of thousands of our American families … The need for relief will continue for a long time; we may as well recognize that fact.”

The Emergency Relief Appropriation Act became law on April 18, 1935. The bill approved the largest peacetime appropriation in American history. This single appropriation authorized more spending than total federal revenues in 1934; with a special $4 billion earmarked for work relief and public works construction. Roosevelt and the bill’s architects did NOT believe they were addressing a transient disruption in the labor market, but a long-term (perhaps permanent) inability of the private economy to provide employment for all who wanted to work.

Thus were born many federal agencies, with the Works Progress Administration (WPA) the largest. The WPA employed 3 million people in the first year and in eight years it put 8.5 million people to work at a cost of $11 billion. WPA workers built 500,000 miles of highways, 100,000 bridges, as many public buildings, plus 8,000 parks.

When the current administration and Congress debate “infrastructure projects,” they would be well served to study this period in American history. These folks really knew how to do it!

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].

Westward Migration Spurred by ‘Oregon Fever,’ California Gold

Dean Cornwell produced this preliminary illustration of the Lewis and Clark Expedition for New York Life Insurance Co., circa 1954.

By Jim O’Neal

In the 1700s, British fur traders in northern regions between the Pacific Ocean and the Rocky Mountains came into conflict with Russian traders arriving from the north and the Spanish from the south. Then, Americans began appearing in the early 1800s after the Louisiana Purchase (1803) and the Lewis and Clark Expedition (1804-06).

By this time, England had negotiated a boundary agreement with Spain, but not with the Russians. The British and Americans collaborated to gain leverage over the Russians by agreeing to joint sovereignty over a large area called Oregon Country. The agreement encompassed what is today Oregon, Washington, Idaho, British Columbia and parts of Wyoming, Montana and Alberta that were west of the Continental Divide.

By the 1840s, England and the United States were ready to formally separate their joint interests in Oregon Country, but couldn’t agree on a dividing line. The U.S. demanded it should be 54 parallel-40 degrees, however, this would have deprived GB of Vancouver, their major Pacific port. The dispute escalated into “54-40 or fight” – which became a major theme during the 1844 U.S. presidential election.

After James Knox Polk became president, he rather wisely avoided a war with England by conceding to their demand of 49 degrees. He had his eye on Mexico and decided the United States could only engage in one major skirmish at a time. After the annexation of Texas, war with Mexico seemed inevitable and it arrived right on time, eventually delivering the highly coveted areas of California, New Mexico and Arizona. The concession to England seemed prudent since westward migration had started earlier in 1836. The first migrant wagon train left Independence, Mo., along the Oregon Trail, a 2,170-mile east-west trip that connected the Missouri River to the lush valleys in Oregon.

Then on May 22, 1843, a massive wagon train with 1,000 settlers and more than 1,000 head of cattle set out for Oregon. They followed the Santa Fe Trail for 40 miles and then turned west to the Platte River to Fort Laramie, Wyo., and eventually over the Blue Mountains into Oregon territory. The Great Migration arrived in October, covering 2,000 miles in five months. The next year, four more wagon trains made the journey and in 1845, the number of emigrants exceeded 3,000. “Oregon Fever” seemed to have gripped the nation.

Then in 1848, gold was discovered in California and the flow of people headed there instead of Oregon. The population of California zoomed from 20,000 to 225,000 in four short years. The phrase that summed up America’s assertive development was coined by columnist and editor John O’Sullivan when he wrote, it was “our manifest destiny to overspread the continent allotted by Providence for the free development of our yearly multiplying millions.”

Thomas Jefferson thought it would take 1,000 years to fill up the vast emptiness of the west, but of course, he didn’t know about the California gold, the Oregon Trail, and the basic restlessness of future emigrants and the transcontinental railroad. The $15 million he spent on doubling the size of the United States turned out to be one of best real estate deals in history.

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 Need to Take Care of Our Cozy Home

Chesley Bonestell’s oil on board Rings of Saturn sold for $20,000 at an October 2014 Heritage auction.

By Jim O’Neal

Four gigantic planets dominate the outer solar system. Very different from the rocky inner planets, these strange worlds are huge globes of gas and liquid, with no solid surface and hundreds of moons.

After the sun formed, its heat drove gases away from the inner solar system, leaving behind heavier compounds such as rock and metals. Astronomers call the outer planets gas giants, though they consist mostly of liquid, with solid cores.

Mighty Jupiter is the fifth planet from the sun and the largest in the solar system – so big that it is 2.5 times more massive than all the other planets combined! Its strong gravitational pull greatly affects the orbits of other planets, and its rate of spin stretches its surface clouds into spots (storms) and ripples swirling together.

The second-largest planet and sixth farthermost from the sun is Saturn, which shines like a bright yellow star. Even a small telescope will reveal its most famous feature: a magnificent ring system. Saturn’s main rings are 220,000 miles wide, yet they are only 30 feet thick. Beyond the main rings are hazy outer rings.

Uranus, the seventh planet from the sun, was unknown to ancient astronomers, even though it is visible with the naked eye in perfectly clear and dark skies. Composer William Herschel discovered it from his back garden in Bath, England, in 1781. It is similar to Neptune and is the coldest of all the planets. A faint set of rings was discovered in 1997 and all of its 27 known moons are named after characters in works by Shakespeare or the English poet Alexander Pope.

Neptune, the eighth and farthest from the sun, was discovered in 1846. Astronomers had noticed Uranus wasn’t following its expected path – there seemed to be an unseen body, perhaps an undiscovered planet, pulling on it. Two mathematicians calculated where it might be and within days, it was spotted by an observatory in Germany. The violent weather on the surface is thought to be powered by 1,300-mph winds from internal heat, since it is too far from the sun to absorb much warmth.

Our sun belongs to a giant whirlpool of stars called the Milky Way. Like all galaxies, the Milky Way is unimaginably vast. Galaxies come in all shapes and sizes, with some containing a few million stars, and others trillions. Our little home seems to be quite cozy and we need to take good care of it since there are no known options (at least yet).

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].

Spanish Flu Actually Has Its Origins at a U.S. Army Base

Kafka for Beginners (also known as R. Crumb’s Kafka), an illustrated biography of the novelist and short story writer, includes a vignette about the Spanish Flu. This page of Robert Crumb’s original art for the book sold for $5,377.50 at a February 2014 Heritage auction.

By Jim O’Neal

The Spanish Flu pandemic of 1918 most likely got started at Fort Riley, an Army installation in North Central Kansas.

At least according to John Barry, the author and historian who spent seven years researching the topic. His 2004 bestselling book The Great Influenza describes how the plague began in Kansas, moved east as World War I troops were shipping out, and in the process killed tens of thousands of Americans.

The armistice ending WWI was signed in 1919 and the year before saw a high number of casualties. Then there was this influenza pandemic, which became the worst infectious disease in recorded history. It struck some 500 million people across the globe, with updated estimates of between 50 million and 100 million deaths … up to 5 percent of the world’s population at the time.

Influenza is really a simple virus … usually.

We get the flu when somebody around us has it and coughs or sneezes. This makes it airborne and we typically just breathe it in. Or, you get the virus on your hands and then touch your nose, eyes or mouth.

The virus has to get into your lungs since it only has eight genes and needs to live off human cells. While in the lungs, its only job is to turn a cell into a virus factory. The virus takes over the cell’s machinery and forces it to make new viruses. Then the cell dies, the virus escapes, and infects new cells.

It is a simple little plan.

With the unusually deadly 1918 flu strain, people died quickly, sometimes overnight, as their lungs filled with liquid. The still-gasping-for-breath people died as their skin turned dark (black) due to a lack of oxygen.

Every year, the flu makes its way through a population, affects everyone exposed to it and then burns itself out. After it mutates, the new version spreads around all over again. That’s what it’s programmed to do.

The 1918 strain did that, too. It was just an unusually deadly version of the H1N1 virus and more virulent than the previous wave.

Practice, practice, practice.

The next time a particularly serious strain returns (everyone agrees it will be back), we will have vaccines and antibiotics to help combat it. Plus, we’ll be more educated about how to avoid its spread (hopefully).

That is about the extent of our protection.

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].