Friday, December 28

2012 is Almost History - The Year in Poetic Review


Just when I thought I'd put the whole year to bed as far posting new stories is concerned, along came this unexpected poem in my email this morning. I shouldn't be surprised that Art Cashin  has poetry in his little bag of literary talents but I had never really thought about it. So it was a delightful discovery at the bottom of the stocking I thought I had already emptied on Christmas morning. I hope you all enjoy this entry as much as we did over our morning coffee today. 

Regular posting will resume after the holidays. Thanks for reading our offerings all year, we hope to continue to find interesting historical popcorn for you to snack on during 2013.
Happy New Year from Cheeky History.



By Art Cashin   

'Tis four days yet to New Year 
    but despite what you’re hopin’ 
The folks in the Board Room 
    say “the full eve we'll stay open” 

So we'll buy and we'll sell 
  as the tape crawls along 
And though "Bubbly's" verboten 
  we may still sing a song 

 Two Thousand and Twelve 
    had some spots of high hopes 
They may get fumbled away 
    by those Washington dopes 

The Prez and the Speaker 
    called each other a stiff 
Then went home for Christmas 
  as we slid toward that cliff 

But hold it a minute 
  they're all rushing back 
Yet a sense of good feeling 
  they still seem to lack 

We lost special people 
  as we seem to each year 
It just makes us treasure 
  each one that’s still here 

   Jack Klugman's messy Oscar 
  finally picked up his stuff 
Even Dick Clark, thought eternal,   
  said that he'd had enough 
   
Andy Williams, "Mr. Christmas", 
  took his act up on high 
And now Vidal Sassoon   
  just blows angel's hair dry

Neil Armstrong who once gave us 
  a great leap for mankind 
Joined Sally Ride for a trip 
  to the deepest space they could find 

Whitney Houston joined angels 
  to sing a heavenly song 
Rodney King followed after 
  we're sure he'll just get along 

Larry Hagman, of Dallas 
  who dreamt of Jeannie before 
Joined McCale's Ernie Borgnine 
  on that celestial shore 

Robin Gibb of the Bee Gee's 
  and the Monkees Davy Jones 
Left behind their gold records 
  and ascended some thrones 

Now Mayberry's Sheriff 
  Andy Griffith is gone  
And Fang's wife, Phyllis Diller 
  has also moved on 

Harold Hill – a "Goodfella" 
  has pulled his last job 
He's in eternal protection 
  far away from the mob 

As Joe Paterno departed 
  his great record was stained 
Gone were decades of glory 
  just his silence remained 
  
There were whackos with weapons 
  temples and theaters they defiled 
And in a New England first grade 
  a madman murdered each child 

We all stood in horror 
  none could full comprehend 
We each hugged our kids closer 
  saying this madness must end 

We had droughts and wildfires   
  storms and floods by the score 
Seemed no region was spared 
  "climate change" claimed Al Gore 

The Prez got re-elected    
  not as close as some thought 
Donald Trump and some others 
  claimed the whole thing was bought 
   
YOLO is a text slogan   
  means you only live once 
But some folks abuse it   
  to act like a dunce 

All over the nation   
  women hurried to pay  
For three little volumes     
  about some Shades of Grey 

    
A Korean Rapper 
  got WEB hits by the pile 
As he waved and wiggled 
  in what he called Gangnam style 
   
Clint Eastwood debated 
  a small empty chair 
As most delegates wondered 
  just why he was there 

Facebook finally went public   
  its debut was a flop 
Nasdaq spewed out sell orders  
  that systems just wouldn't stop 

Shuttles went to museums 
  but we still reach for the stars 
We landed a Rover 
  quite safely on Mars  

Mitt went after Big Bird 
  Greek yogurt's a craze 
Taylor Swift and Adele 
  Keep young fans in a daze 

The Supremes threw a curve ball 
  on some Obamacare facts 
Where some saw a mandate   
   Roberts saw just a tax 

Prince Harry in Vegas 
   played strip Billiards, he said 
Friends quickly took pictures 
  but they were not of his head 
  
Lance was stripped of his titles   
  and Petraeus resigned 
Our heroes keep falling   
  and few new ones we find 

Let not this year's memories 
  of sadness or sleaze 
Disturb you this day 
  just give your heart ease 

Have faith that this New Year 
  will bring a new sign 
And believe in yourself 
   it will all work out fine 

Just lift up your spirits 
  and some fruit of the vine 
And kiss ye a loved one 
  and sing Auld Lange Syne 

And late Monday evening 
  as you watch the ball fall 
Wish yourself all the best  
  Happy New Year to All!!

Wednesday, December 19

Poor Richard, the Guy had No Talents


Image = American History Now
By Art Cashin

On this day in 1732, a 26-year-old Bostonian transplant, living in Philadelphia published a helpful calendar and counselor, which he called "Poor Richard's Almanac."  The publication, containing pithy wisdoms like - "Early to bed early to rise makes a man healthy, wealthy and wise" - or (Washington, D.C.'s favorite), "A penny saved is a penny earned" - became an instant success in the colonies.

The revenues allowed Benjamin Franklin to retire at age 42.  Since golf was not available in the neighborhood, he squandered his remaining years by discovering electricity, inventing the lightning rod, the iron stove, bifocals and the glass harmonica.  The next week he developed still-standing theories on meteorology, heat absorption, electricity, and ocean currents.

In his spare time he founded the first insurance company, fire department, public hospital, public library, night patrol and  first militia.  Seeking a break he became colonial postmaster and civil defense chief for the French and Indian War.

Tiring, he was chief delegate at the Albany conference, which organized the colonies and then was appointed chief negotiator with the British crown in London. When negotiations failed he returned home to help draft, and then pass the Declaration of Independence.

He was then sent to Paris where he won the support of the French, which event won the Revolution for the colonies.  He returned home and helped draft and again pass the Constitution of the new nation. After that he did little that was important aside from a few inventions and a couple of immortal publications.

To celebrate take a high school graduate out for a flagon of ale and explain the team concept, consensus thinking and why little can be accomplished by one man alone.



Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.


Tuesday, December 18

Who Really Killed Abe Lincoln?

Image = aboutpresidentaberahamlincolnblogspot
By Grant Davies

The month was May, not April, and the assassin of Abraham Lincoln was not named Booth. In  fact, history has never been able to identify the assassin by name.

"Whoa! That can't be right", you say. Your teachers always told you that Lincoln was killed on April 14th at Ford's Theater by John Wilkes Booth, who ended Abe's life with a single shot from behind and escaped afterward. The murder was part of a conspiracy. Abe's wife Mary was left a widow with children to raise. And all the history books back that up. 

But they only had some parts of it correct. He was shot from behind and killed by a single shot all right, and it was part of a conspiracy, but most of the rest is wrong. You see, his son Tom was there, witnessed it, and told his own son all about it later.  He told it carefully and included all the details. And at the time, nobody disputed the facts as they had been recalled by the multiple witnesses. 

Now, as famous radio host Paul Harvey used to say, "Here's the rest of the story."

The year was actually 1786. The assassin was a native American who snuck up behind Lincoln as he chopped wood with his three sons on their homestead in Kentucky. The Indian (as he was called before it became politically incorrect to describe him that way) had a long barreled firearm and shot Abe from a distance. One shot, goodbye. 

As the Indian came forward from the cover of the woods to make sure he had finished the job - and perhaps even dispatch Abe's son Tom - he himself was sent to the "not so happy" hunting grounds where Indians went after they were no longer breathing. Abe's son Mordicai had fetched the family weapon himself after the fracas began and shot the assassin dead.*

By now you have figured out that what we have here is a case of mistaken identity. The Abe Lincoln in this story is not the same one who was President. But the similarities are remarkable. Both Abrahams had sons named Thomas and wives named Mary. And in fact, they were related. Our Abraham and Mary were the President's grandparents and our witness, Tom, was Honest Abe's father.

The unnamed Indian was sent there to kill Lincoln as part of his tribe's conspiring to rid themselves of a man and his family who they regarded (perhaps correctly) as trespassers on their land. In fact, they had driven him off once before, so from their point of view, he had been warned already.

The moral of the story is..well..there is no moral to the story. It's just a cool story because of the way history sometimes repeats itself.

* Not every account of the event agrees on every detail. Some have the perpetrator escaping. But I like the version where the killer gets his just reward. So that's my story and I'm stickin' to it. (Actually, it's Wikipedia's version of the story. And you know if it's on Wikipedia it's always correct.)

Monday, December 17

The Price of Tea in Boston


By Art Cashin

On this day (-1),  in 1773 (as you surely recall from Sister Herman Joseph's fourth grade class), a group of Colonists, disguised as Indians, boarded three British ships at dockside in Boston Harbor.  And, as you probably also recall, they threw tons of British tea into the Harbor.  And, you probably learned, this was all done to protest the outrageously expensive British tea. Well, you can't be right about everything.

The tea was not expensive; it was cheap - - too cheap.  That was the problem.  The good people of Boston had been making quite a living smuggling Dutch tea into the Colonies.  Now the Brits had cut the price of tea to undercut the smugglers.  So, a guy named John Hancock, who just happened to be making a fortune in duty free imports....(the Brits called him the head smuggler)....funded this little "tea party".

Sure, Americans have historically hated tyranny and taxation but if you really want to get them ticked off -- try a dose of deflation.



Many thanks to Art Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.


Wednesday, December 12

You're a Good Egg, Tom Dewey


By Grant Davies

On this day (-5), in 1941, the Japanese executed a sneak attack on the US Pacific fleet in Pearl Harbor, Hawaii. The world war that ravaged the rest of the globe had finally came to the US.

But this story is only peripherally about that event. This story is about a man who put his own advancement and interests beneath the interests of his country.

Such things were common in those times. Most citizens and virtually every person in the armed services fell into that category. But if you can fathom this, the man in the story was a politician. Crazier things have happened, but not often.

Image= bcfoley.blogspot.com
So let's fast forward a few years. The year was 1944. The man was running for President. His name was Tom Dewey. And Tom knew a secret. The secret he knew was explosive. It would almost certainly assure that he would defeat his opponent, a guy named Franklin D Roosevelt, in the upcoming election.

Tom had it on reliable information that the US had broken the Japanese code prior to the attack on Pearl. The implications were obvious. FDR knew of the plan to attack before it happened and had purposely ignored it so the US could enter the war. FDR wanted to join in, and knew it was inevitable anyway. But people were standing in his way. And it naturally follows that once he knew, all our sailors had died so FDR could get his political way.

The secret was true. The code had indeed been broken, and a pretty important guy named George C. Marshall found out that Dewey knew. Marshall was the US Army Chief of Staff and the situation at the time was desperate. He feared that Dewey might do what almost every candidate today would do with that kind of information, so he sent him a sealed message via a courier named Colonel Carter Clark. Clark caught up with Dewey at his hotel during the campaign.

When he opened the letter from Marshall and read the contents, Tom was initially furious. In the letter, Marshall reminded him of the damage that would be done to the war effort if the Japanese learned that we had broken their code. Based on his own information, and now the admission by Marshall that it was true, Dewey not only thought FDR should be defeated in the election, but that he should be impeached.

But Dewey kept his mouth shut and lost the election without using the only thing that would have insured that he would win. In fact, he never revealed it and took it to his grave. He died in 1971.

But wait a minute. Ten years later some secret documents from the time were declassified. In one of them something was revealed that Dewey never knew. Namely that the code that was cracked was the Japanese diplomatic code, not the military code. The military code wasn't cracked until after Pearl Harbor. FDR hadn't known after all.

So drink a holiday toast to Tom Dewey, who, like Danny Noonan from Caddy Shack, was a good egg and did the right thing even though he had bad information.

Source material for this story was taken from "Destiny", by Paul Aurandt.

Monday, December 10

A Small Accident Kills a Larger Than Life General


Image = Wargodpatton
By Art Cashin

On this day (-1) in 1945, the colorful but controversial American general, George S. Patton, was trying to take his mind off  his troubles.  Although the war was over, Patton continued to say politically incorrect things that beclouded his brilliant military reputation. Papers in the U.S. began to call him a one trick pony.

When he was stripped of his Bavarian command for refusing to remove every government leader who had been even a minor Nazi Party member (he publicly argued the Communists were the new threat), he told friends he might resign from the Army.

His decision, he said, would come after he went home for Christmas. And, there were rumors of a political committee being formed.  (President Patton?) The plane was not due to leave until the 10th.

So, perhaps to stay away from the press, or maybe just to say goodbye, he invited his chief of staff to go pheasant hunting.  As the two men sat in the back seat talking, Patton's driver missed a left turn signal on an on-coming "deuce & a half".  The truck turned and the staff car smashed into it.  Everybody in the truck was okay.  Patton's driver was okay, as was his chief of staff.  Patton said he was okay but couldn't feel his legs.

Eleven days later, on learning he would never be able to ride a horse again; a depressed Patton went to sleep never to awaken.



Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.





Wednesday, December 5

Sinte Klaus is Coming to Town

Image = Abbey-Roads

By Art Cashin

On this day (+1) in about 705 A.D., the Nordic tribes of Europe, recently converted to Christianity, began to adopt a theologically un-definable affection to an Archbishop who had existed three centuries before in an area east of Greece.  Legend says he was as wise as they come.  And certainly he was devout. But was that enough to make him a big hit?

He did have the added benefits of being the designated patron saint of scholars (ain't we all); merchants (a popular Nordic pastime); sailors (the other Viking pastime) and children.  He had gained the latter role through the legend that he had saved three dowry-less young girls by dropping jewels into their home through an open window.

So, over the next thousand years, these Nordic tribes would recall his love of children and his generosity by giving gifts to their children and the poor on Saint Nicholas’s feast day - December 6th.  When the Dutch came to America, they brought their gift giving "Sinte Klaus" with them.  America moved the gift giving day to Christmas and mispronounced his name to Santa Claus.

Of course by this time Nordic and American winters had made open windows rather impractical in December.  So the chimney  became the logical point of entry.  And since cold floors tended to make you reach for your stockings (hung to dry by the fire) they became the logical place to hide the jewels (gifts).

To celebrate the feast of good old St. Nick go to the Rooftop Inn and sip enough well-laced eggnog to make your nose look like Rudolph's.  But don't get out of line or they'll put coal in your stocking.



Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.


Tuesday, December 4

Washington and the Quaker Cannon

William Washington at the battle of Cowpens
Image = Wikipedia
By Grant Davies

On this day in 1780, while engaged in an armed disagreement (later known as The American Revolution), a high ranking officer named Washington prevailed in a small battle by using a big cannon.

The officer in our story was not the one you might have assumed. Our guy's name was William Washington, and he was a Lieutenant Colonel, not a general. He was also second cousin (once removed, if you keep track of that sort of thing) to the more famous Washington, a guy named George, who went on to become the first, and maybe the last, great President of the United States.

The battle came to be known as "the capture of Rugeley's Mill." As it happened, William had "treed" a Loyalist Colonel by the name of Rowland Rugeley, and his 112 men, in his own house and barn. The property, near Camden, had been heavily fortified. But even so, one big cannon was all that was needed to blow the barn and its inhabitants to smithereens. And Rugeley, who was inside, knew it.

Trouble was, Washington didn't have a big cannon. Or actually, any cannon at all. But since ole Rowland didn't know that, William decided to build one. He settled on the design. It was to be a "Quaker Gun."

A "Quaker Gun" was so named because it was the same design used by the pacifist Quakers. They had a lot of success scaring the hell out of anyone who had thoughts of attacking their encampments by making fake cannons out of tree trunks.

So William had the place surrounded by some of his 60 men while the rest fashioned the phony cannon out of a real pine log and propped it up on some wagon wheels. It must have looked pretty intimidating from a distance because once Washington informed Rugeley that he intended to pulverize him if he didn't come out with his hands up, Rugeley came out with his hands up. (History doesn't record if he was quaking or not.)

So the Colonel won the day without firing a shot from a cannon that couldn't shoot. And Rowland's military career was over because he had been "treed" by an old Quaker trick.

To celebrate the victory, hoist a brew to bluffing the next time you join your buddies for a poker game. But just be sure someone else doesn't have a trick up their sleeve before you throw in your cards.

Wednesday, November 28

Panic at The Cocoanut Grove

image= hangwithbigpictureframing.com

By Art Cashin

On this day in 1942 (as you may have heard), America was at war.  Already absences, apprehension of the future and the aura of aisles grown thin by rationing added to anxiety and signaled sacrifice today and more to come tomorrow. Even in purportedly Puritanical Boston, the worries of war were wearing on women and warriors (even would-be warriors).

Now this particular November 28th was a Saturday in Boston (as it was in most of America) and Saturday is a day (and even more of a night) when Americans (even in Boston), lean toward pleasure rather than privation and sacrifice.  Maybe that's why a lot of folks who were in town for the annual "Holy Cross vs. Boston College game" decided to break their thirst and their sacrifice at a popular local night-club.  It was called the Cocoanut Grove. 

The Cocoanut Grove was already crowded with sailors, soldiers, secretaries and sundry citizens seeking surcease from said sense of sacrifice.  The club's management (surely out of a sense of charity) decided to let everybody in.  So....by 8:00 p.m. there were about 1100 people in a place that the Boston Fire Dept. said could hold 500 safely.

About 9:40, a prankster stole a light bulb in the hallway near the restrooms of the basement cabaret.  We presume he (or she) may have hoped to have fun frightening or fondling friends in the darkened hallway.  But someone complained and a busboy was sent to replace the bulb.  Since he had no flashlight, he lit a match to find the socket.

As you might imagine, a place called "The Cocoanut Grove" fancied itself a jungle lodge (even in Boston).  So it was decorated like the nightclub in "Mighty Joe Young."  There was even a false ceiling of draped burlap everywhere.

The busboy's match caught the burlap and soon smoke was everywhere.  People began to scream "fire!" and, in panic, crowds surged toward doorways (remember, the lights were still on).  As was the custom at the time, however, most doors opened inward....so the more people who surged toward a door the less likely was it to open.

Image = bostonfirehistory.org
Hearing the noise downstairs (and smelling the smoke), the folks up at ground level began to panic too.  But here the doorways also opened inward and the halls were also narrow…..so the results were equally tragic.  When the fire department finally put the fire out, they found nearly 500 dead and another 200 severely injured.

There were heroes of course.  One patron smashed a basement window and forced others to climb over the glass to safety.  A kid with a bit part in the "floor show" led a group up some back stairs, across the roof and to safety.  Less appreciated was the nightclub manager who saved himself and a few friends by sealing his group in the meat locker.

The aftermath was typically American…..investigations, indictments and new legislation.  But what was omitted in most reports was the fact that the bulk of the fatalities were not the result of the fire…..most were the result of panic.

To mark the day, stop by the Taki Tiki Lounge and point out to some big gorilla that Wall Streeters have long known that panic can be a bigger killer than any calamity.  But check where the windows are before you sit down.



Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Monday, November 19

Saving Gilbert

Vice Admiral Davies
By Grant Davies

On this day in 1915, the first combat "search and rescue" mission using an aircraft was successfully carried out. It occurred during a misunderstanding that later came to be known as WWI. (For further research on that affair, just Google up "most pointless war ever.")

The story starts with a bombing mission by two British pilots that went south when "his machine was received by very heavy fire and brought down." Apparently that's how the Brits in charge of giving out medals back then described getting your freakin' plane blown out from underneath your ass by enemy fire.

The poor bloke, a certain "Flight Sub-Lieutenant Gilbert Formby Smylie, R.N." (the RN apparently means Royal Navy, not registered nurse) didn't even have time to drop his bombs before they riddled his plane with enough lead to force him to land. So he dumped all his bombs (except the one that wouldn't release -1915 technology ya know) and brought the crippled machine to earth behind enemy lines.

That's when his fellow pilot, a guy named Richard Bell Davies, a relative of the author of this piece, (okay, I made that up in an effort to connect myself to heroism) looped back to see what happened to his buddy Gilbert. What he saw was Gilbert on the ground below lighting fire to what remained of his plane so that it wouldn't fall into enemy hands.

Nieuport 10
So Davies did what any hero would do, he landed his Nieuport 10, and proceeded to rescue his wing man and take off again, all while under enemy fire. As if that wasn't hard enough, the plane in question was one that had been converted from a two seater to a single. The front seat had been roofed over and Smylie had to wiggle past the controls and get wedged into what remained of the front seat. It was the first airplane wedgie. (It took two hours to extricate him when they landed safely back in their own territory.)

Prior to all this, while Davies was coming down to get him, Smylie figured out that the bomb he was depending upon to blow up his plane after he set fire to it, was likely to go off just as Davies got there and blow him up, too. So he ran back to the burning wreckage and used his pistol to set off the explosion before that could happen.

It seems to me that these two guys had big enough stones to build a henge.

In the end, Davies got a well deserved "Victoria Cross" and Smylie got a "Distinguished Service Cross" and I got to write this swell account of their heroic feats.

Editors note... I actually am related to another heroic pilot named Davies. His name was Albert Davies. He was my uncle and he was a B-17 pilot who was shot down and killed while helping to defeat an ass-hat named Adolf about thirty years later. So next time you are making toasts to war heroes in your local pub, lift one to pilots named Davies. Somewhere, two unrelated guys will be tipping their glasses back at ya.

Wednesday, November 14

The Pigs Last Stand

Kirby's Pig Stand 1921
Image = tendingturnipsinda863.blogspot
By Grant Davies

On this day in 2006, an American institution became a historical reference. That is to say, a drive-in restaurant chain where you could get BBQ "on the fly" (I guess pigs really do fly) went the way of all pig flesh. The company that owned the last two went bankrupt and the state closed them down for non-payment of sales taxes.

But this wasn't just any fast food joint. It was the iconic Pig Stand, and it was the first drive-in restaurant in America. Or anywhere else in all likelihood. It was also the first to do a lot of other things as well.

When Jessie Kirby and Reuben Jackson opened the place on the road between Dallas and Fort Worth, Texas in 1921, they invented another "first." They had young men in white shirts and black bow ties running towards the customers' cars as soon as they pulled into the lot. They often hopped onto the running boards of those cars to take their food orders before they even stopped moving.

Yep, you guessed it, they were the first "car hops." They were later replaced by cute girls on roller skates and they may have been the first to do that as well. (A&W drive-ins claim that they were the first, but this story isn't about them, so they can cry in their root beer if they don't like it.)

The food was good and the concept was even better, so success followed like rings followed fries. And speaking about french fries and rings, many say the cooks at one of the drive-ins invented deep-fried onion rings. Not to mention chicken-fried steak sandwiches and a regional specialty known as "Texas Toast."

One of the places, Pig Stand #21 in California became the first "drive-through" in 1931.

After they had expanded from one into a chain of restaurants, they were among the first to create franchises so others could join the fun. By 1939 there were more than 130 of the spots operating in nine different states. A few other companies followed that business model. You might have heard of a place some folks call Micky D's.

The war and the attending shortages of gas and money changed everything however, and by 1959 all of the sites outside of Texas had disappeared for one reason or the other. Those that remained shrunk away slowly until they were all gone by 2006 with the exception the two referenced above.

But don't worry, in 2007 the bankruptcy trustees allowed one in San Antonio to reopen. So if you happen to be there and have a taste for the "pig" and some rings, stop in and say hello to history. Nowadays you have to walk in instead of drive in, but I'm sure you will be able to wash down your BBQ with a glass of nostalgia.

Tuesday, November 13

He Invented the Car Because They Said He Did

Geo takes a joy ride
Image = Wikipedia
By Grant Davies

On this day, (-8),  in 1895, a man named George Selden  invented the automobile. Well, at least that's what the US government, in its infinite wisdom, decided on this day.

He didn't invent it on this day. In fact he didn't invent it on any day. But the government, through its patent office, decided he did, on this day. It's kind of confusing, but then, patent law can be as confusing as the writing on this site.

Anyway, George was a lawyer so he knew the ins and outs of patent law better than most. He took advantage of that knowledge and gained the legal right to scam a bunch of other people who actually did invent stuff related to automobiles.

According to History.com he won "U.S. Patent No. 549,160 for an "improved road engine" powered by a "liquid-hydrocarbon engine of the compression type." In other words, a car.

He never built one. In fact, for the filing, he just copied the design of one he had seen some years earlier at the 1872 Philadelphia Centennial Exposition. Anything worth admiring is worth stealing I guess.

So a few years later, in 1899, he sold the rights to his "invention" to a group of investors (or criminal co-conspirators, as you wish) who called themselves the "Electric Vehicle Company." They in turn sued a company, the "Winton Motor Carriage Company", the largest car maker at that time, for manufacturing gasoline powered automobiles. It didn't take long for the Winton company to see the value in paying the ransom and they struck a deal with the legal thugs. The courts agreed to the deal and upheld Selden's patent in 1903.

Soon a whole bunch of car companies who wanted to be part of a monopoly CARtel (pun intended) joined in with the parties to that lawsuit and formed the "Association of Licensed Automobile Manufacturers." They then sued anyone who dared to make a car without paying them protection money. (See? I told you it was confusing.)

Later a guy named Henry Ford had a different idea. A few lawsuits and appeals later he put an end to the whole scam.

To celebrate legal extortion and monopolies, find a bar and have a few beers. But don't forget to make a toast to the overpriced brew you are sipping because it's illegal for the bar owner to buy his beer from anyone other than a "legal" distributor. Cheers!

Friday, November 9

Something New at Cheeky History

We apologize for the lack of new stories here for the last week. A few are in the process of being written and lots of new sources for fresh stories are being researched. But the main reason is that we have been working on a new feature for the site.

It's the new Cheeky Gift Shop! We wanted to roll it out before the holiday season slipped away and you readers lost a chance to get that cool little gift for someone on your list without spending a bunch of your hard earned dough.

We are offering some coffee mugs and other drinking vessels with our fun little Cheeky History picture on them. They are great for stocking stuffers and grab bag gifts. They are easy to order and easy on the gift budget. 

So check them out on the tab above so you or someone on your list can sip some coffee or one of your other favorite beverages while reading our cool little stories every day. 

There's even a beer stein if you do your reading in the evening. That way you can be as dizzy while reading our stuff as we are while writing it.


Friday, November 2

If Only This Thing Wood Fly

The H-4 Hercules and a DC-3 for size comparison.
By Grant Davies

On this day in 1947, a boat took off and flew through the air. It only flew for about a mile and it was only seventy feet above the water at its highest. But it was pretty impressive since it was, after all, a boat. The takeoff was its first.. and its last.

Actually  it was more of a ship than a boat. It was ginormous. (Ginormous is a scientific term used by lazy people like me to describe size.)  And the damn thing only stayed aloft for a few moments. (A moment is a scientific measurement of time used by lazy people like me who don't want to do the math required to calculate time.)

We could give you the exact measurements, but that's boring, except to history nerds. (Oops, that's you.) Suffice it to say that the contraption was huge. It was bigger than any boat that ever flew, before or since.

Okay, the ship was actually a plane. But the concept for its use and design was a "flying cargo ship" to move large amounts of material from the US to Europe while avoiding those pesky Nazi U-Boats that were sinking every cargo ship in sight in 1942. (For you younger readers, there was a small war going on that year.) The ship flew, but the concept didn't. That sank as surely as the transport ships had.

The plane had a few different names. It's official name was the "H-4 Hercules", but the name most remember it by today referred to the wood it was made out of. Well, maybe not, since the name was "The Spruce Goose", even though the thing was made almost entirely out of Birch. Go figure. Critics of the project called it "The Flying Lumberyard."

The whole thing was the brainchild of a guy named Henry J. Kaiser who was building a lot of the "Liberty Ships" that were currently resting at the bottom of the ocean. He collaborated with a guy named Howard Hughes, who in the end, turned out to be as nutty as the concept Kaiser thought up.

Even though the plane itself got off the ground, or the water as the case may be, the project never took off because the war was over a year before the plane was finished.

This whole historical episode could never have happened today since political correctness and eco-activists  would never allow enough trees to be cut down to construct the damn thing.

To celebrate the day, go out in your yard and hug a Spruce, or a Birch if you have one, and whisper into their branches about how happy you are that they didn't end up as a flight of fancy.

Thursday, October 25

War is Hell - The Screw-up of the Sweaters

Image = Gaurdian.co.uk

By Art Cashin

On this day in 1854, there occurred one of those unique feats of stupidity, bravery and confusion that the world so cherishes.  It happened during the Crimean War and thanks to Lord Tennyson it is remembered as "The Charge of the Light Brigade." But when we studied the event (and the poem) back in the sixth grade, we tended to call it the screw-up of the sweaters.

As you recall from your sixth grade, the Russians were trying to disrupt the siege of  Sebastopol by attacking the Brits at Balaclava.  The Brits managed to fight off the attack.  Then the Brit commander, Lord Raglan (inventor of sweater that has sleeves going up to the collar), saw the Russians and their allies trying to evacuate some cannon on the nearby right flank. He sent a message to his aide, Lord Lucan, to dispatch a small force to capture those guns. When the messenger arrived, the combination of fog and battlefield smoke was so heavy that Lucan could not see the nearby guns in question.  In fact, the only guns he could see were the main Russian battery at the far end of the valley.

Maybe due to the fog and smoke, Lucan failed to note that whatever group he might send toward that Russian battery would have to march, walk or ride through a 1 1/2 mile valley with enemy artillery and sharpshooters on either side.  It was the kind of hopeless situation that in a less politically correct environment might have inspired Lucan to say - "I'd only send my mother-in-law in there."

As you recall from sixth grade, during this period of the British Empire, mother-in-laws were restricted from joining the 5th Dragoons, the 4th Hussars or even the Light Cavalry.  So Lucan turned to the next best thing - his brother-in-law, who was, of course, Lord Cardigan (inventor of sweater that buttons up front). Lord Cardigan (having no in-laws present to order about) turned to his men, the men of the Light Brigade.

Some 607 strong, armed only with sabers, they looked down the long valley, bordered and fronted by artillery and snipers and realized something man has always known - "management" is the ultimate one word oxymoron. They then tried doing that silly thing that decent, competent plain folk often do - make a dumb management plan actually work. They began riding toward the objective.

The Russians and their allies on either side of the valley began to aim their cannon.  Then the Light Brigade upped its pace forcing the cannons to be re-aimed before they could be fired.  Then an even faster pace and again a re-aiming.  Now a full gallop and close to the guns.  The Russians grow panicky and begin firing wildly.  This confuses the main Russian battery into whose face the Brigade is charging.  They begin to flee and the Brigade captures the guns (after suffering only 20% casualties).

That brings us to flaw #2 in the management plan.  These brave resourceful guys have captured a lot of cannon 1 1/2 miles behind enemy lines...they only have sabers and they have no horses to pull the cannon back even if they wanted to try such a suicidal thing. But the Russians began to panic further and sent a large force of cavalry and lancers to attack the Light Brigade.

The Brigade fought back and actually began to make deeper inroads.  Now the Russians really panicked  and began firing grapeshot, cannonballs and everything else...indiscriminately killing their own men along with the Brigadiers.  So the Brigade headed back toward headquarters for more savvy management advice...of course the only route was, as you recall, that 1 1/2 mile valley of withering crossfire.  Along the way, they scooped up their wounded from the ride in.  When they got back, they asked for new orders.

The whole thing took just 25 minutes.  Of the 607 men only 198 made it back having had 475 horses shot out from under the Brigade in the charge.

To mark the day, try developing some strategic plans.  And, remember it all might have worked if only Lord Turtleneck was there.


Comments on this piece are welcome.

About the Author

Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.


Wednesday, October 24

Lawn Chair Larry, Mach Man, and the Queen of the Mist


Today's story comes to us from a guest writer. But don't fret, we only allow the very best writers to be published here. After all, we have high standards to maintain and can't let just anyone stumble in off the virtual street and start banging out historical accounts without checking out their credentials.

As it turns out the author has great skills as a litterateur. She is also genetically qualified by virtue of being one of my wonderfully talented offspring. Which only proves that even a rotten tree can produce some terrific apples.

The following article will be published this morning on the Cecil County Library site and has been edited somewhat to fit our genre and to remove some information of interest only to patrons of that institution.


By Leah Youse


When I heard that a man would free-fall from the edge of outer space in order to break the sound barrier, my first reaction was that we had another Lawn Chair Larry on our hands.

“Lawn Chair Larry” Walters was a Californian who strapped 45 weather balloons to his patio lounger, dubbed it Inspiration I, and attempted to fly 30 feet above his home. Once he reached 16,000 feet, I think he was mighty thankful for that Miller Lite and sandwiches he prepared for his leisure cruise.

Now, I’m not a scientist, but even I can see that his landing strategy – shooting the balloons with a pellet gun – was a bad one. Fortunately for him, he didn't quite meet the qualifications for the Darwin Awards.

But no, Felix Baumgartner – who I affectionately refer to as “Mach Man” – was no Lawn Chair Larry. Every angle and precaution was taken when he took the plunge from a helium balloon just two Sundays ago. Diving 23 miles and reaching 833.9 mph, he made history: the first man to create a sonic boom without being inside an aircraft. If you missed the live video feed on the internet, check out YouTube for a replay. It’s mind blowing.

But today we celebrate the anniversary of another bold dive. Today, 111 years ago, on her birthday, a 63-year-old named Annie Edson Taylor made a name for herself – “The Queen of the Mist” – when she decided to improve her station in life with a feat of daring. Annie plunged down Niagara Falls in a corked, 160-pound barrel and lived to tell the tale, though the achievement arguably gave her a bigger headache than bank account.

Even though she lived the best part of another twenty years, she never had much financial success cashing in on her stunt. And even she figured out it hadn't been worth the risk. She later made a statement to the press  advising others against a similar scheme. She said, "If it was with my dying breath, I would caution anyone against attempting the feat... I would sooner walk up to the mouth of a cannon, knowing it was going to blow me to pieces than make another trip over the Fall."

It was advice most people were never in need of. Except maybe "Lawn Chair Larry" and the "Mach Man."

Monday, October 22

Aim High in Case You Flop

By Grant Davies

On this day (-2) in 1968, a guy named Fosbury flopped spectacularly. In fact, his flop was bigger than any that had previously been recorded in history. In Olympic history anyway.

His name was Dick Fosbury and he was in Mexico City to see if he could jump over a bar that was set higher than it had ever been set before in an Olympic high jump event.

The bar was set 7 feet 4 1/4 inches from the ground and Dick sailed over it to set a new record. Actually, he flopped over it rather than sailed, and there is a significant difference. At least there was back then.

When Dick was back in high school he sucked at the high jump event, but he had an acumen for physics and wasn't afraid to try something new in order to beat his teammates. So instead of doing the conventional "scissor kick" technique that everyone else was being taught, he tried out his own approach.

He decided to experiment, and after trying a few things he settled on perfecting one method. He described it to others this way; "I take off on my right, or outside, foot rather than my left foot. Then I turn my back to the bar, arch my back over the bar and then kick my legs out to clear the bar." He added, "from a physics standpoint, it allows the jumper to run at the bar with more speed and, with the arch in your back, you could actually clear the bar and keep your center of gravity at or below the bar, so it was much more efficient." He was a pretty smart kid.

His style was described derisively by one writer as a "fish flopping in a boat", and by another  as "a guy falling off the back of a truck." One guy even said it looked as if he was having a seizure when he did it.

Other jumpers who witnessed it early on never thought very much of it. That is, until he started to jump higher than them. Funny how that can change a competitor's mind. (It's said that other people were experimenting with similar type moves around the same time, but history doesn't record their names, so screw 'em. History is harsh and life's a bitch.)

After winning the gold medal using his old high school and college technique very few people ever went back to the old way of doing it again. In fact almost every elite jumper has used his method since then and no one has ever won the gold using anything else since 1980.

So if you are having trouble competing at anything and someone makes fun of you for trying something different, just flip them off and tell them you would be happy to have your idea flop, just like Fosbury's did.

Source material - History.com and Wikipedia.

Friday, October 19

The Crash of '87

Editor's foreword:

Unlike most of the posts here, the following story describes an event that many/most of us were alive to witness. Or at least, we were alive at the time. Because to say most people "witness" things that happen during their life is to assume they were actually paying attention to something other than the personal details of their ordinary lives.

But some folks can say something like "I was actually at the ballpark when so and so pitched that perfect game." Of the following account, many of the folks my age who worked on trading floors of stock exchanges or busy trading rooms in brokers offices can say, "I was there when the stock market crashed in '87."  And I'm one of them.

When you "witness" something of that magnitude, your account of it depends somewhat on where you were sitting in the "ballpark" at the time. My story of what happened at my firm, G A Davies & Co. on the floor of the Chicago Stock Exchange on that day is fascinating. At least to me and the others who went through it, but it would be boring to most outside the securities industry.

Not so for the account of Arthur Cashin on the same event. He had a different seat than I did. Exchange wise and perspective wise. That is why his account of the events appears below instead of mine. However, I will conclude this foreword with one memory that I will never forget and which I think wraps up the consequences of the event rather tidily.

Our firm had lots of clients, ranging from small self-financed market makers, to large mega brokerage houses,  to big individual traders. The biggest trader we represented was a friend as well as a client. He was arguably the biggest stock and options trader in Chicago. His trading badge acronym was STA. (You insiders know his name.)  And like most good traders on that day his goal was not profit, it was survival.

After the incredible events of the day had concluded I had an opportunity to talk to him briefly after the close of trading. I asked him the following question. "John, are you okay?" His answer was memorable because it indicated that he had achieved what everyone was striving for. He said, "Well, I lost a bunch of money, but I have a bunch left."

And so we survived. As individuals, as financial institutions, as companies, and as a country. So enjoy Mr. Cashin's account and always remember; since the dawn of history man's biggest goal has been merely to survive. The stories of success and failure are not the norm, they are the exception. Which is why we recount them here.     Grant Davies


By Art Cashin

On this day in 1987 (that's 25 years ago, if you are burdened with a graduate degree), the NYSE had one of its most dramatic trading days in its 220 year history.   It suffered its largest single day percentage loss (22%) and its largest one day point loss up until that day (508 points).  No one who was on the floor that day will ever forget it.

While it was an unforgettable single day, there were months of events that went into its making. The first two-thirds of 1987 were nothing other than spectacular on Wall Street.  From New Year to shortly before Labor Day, the Dow rallied a rather stunning 43%.  Fear seemed to disappear.  Junior traders laughed at their cautious elders and told each other to "buy strength" rather than sell it, as each rally leg was soon followed by
another.

One thing that also helped banish fear was a new process called "portfolio insurance".  It involved use of the newly expanded S&P futures.  Somewhat counter-intuitively, it involved selling when prices turned down.
The rally topped out about August 25 th with the Dow hitting 2722.  Interest rates had begun creeping up amid concerns of early signs of inflation.  Treasury Secretary Baker began a rather open debate with the Germans on the relationship of the dollar and the Dmark.  Soon the weakness in the market was turning into a visible correction.

By the middle of October, the Dow fell to break an uptrend line that had protected it for over 1000 points.  The flurry of takeovers and leveraged buyouts that had flourished all year began to dry up. On Wednesday, October 14th, there were widely discussed rumors of a new punitive tax on takeover profits.  Selling turned a bit ugly and the Dow fell 96 points by the close (a record point drop at the time).  The next day there was no bounce and the Dow fell another 58 points.

Friday, the 16th was an option expiration day.  There was a very bad storm in London and that market closed, which forced more people to seek liquidity in New York.  Stocks faced a steady wave of selling.  As the close neared, rumors spread that the First Lady, Nancy Reagan, the President's right hand, might be admitted to the hospital with cancer.  The selling intensified and the Dow closed down 108 points, on
the low and a new record point drop.

The weekend was a rumormonger's delight.  Nancy was admitted to the hospital.  Japan was considering a confiscatory 96% tax on real estate speculation.  Germany proposed a change in taxes on some interest rates, which would make U.S. Treasuries unattractive to Germans.  Rep. Gephardt was talking about a trade bill that would freeze imports.  Treasury Secretary Baker went on a Sunday talk show and openly challenged the Germans on currency.  There were even rumors of U.S. planes engaging Iran.

At the time, I was running the floor for PaineWebber.  Monday morning I got up well before dawn and saw that Hong Kong was down about 10% and other markets were looking equally weak before their openings.  I headed for the NYSE to check on our systems and staffing.  I reached out asking the team to get in early.
Once I had checked out the systems and verified staffing, I went with a partner up to the Luncheon Club for a quick coffee. With markets around the globe all down about 10%, I didn’t know if we’d get to a coffee – or anything else after we opened. We sat about two tables away from a table where NYSE Chairman John Phelan sat with several directors and some staff.  Every ten minutes or so, someone would rush up to Phelan and slip him a note or whisper in his ear.  It was evident that things were deteriorating.  As I headed for the floor, I went past Phelan's table, put my right arm across my chest and said – "Nos Morituri Te Salutamus Esse".  It was the gladiator's salute to the Emperor – "We, who are about to die, salute you".  Phelan nodded without a smile.

The opening was not an outright disaster, but that was primarily due to the fact that many stocks did not open immediately.  They were delayed, with indications to warn investors of the prices that they might open at (with hopes of inviting bargain hunters).  Meanwhile, in Chicago, where you could short without a plus-tick, prices headed for freefall.  Soon prices were lower in Chicago than in New York.  That brought even more selling pressure to New York.

Shortly after the opening, as it became clear that this would be a very special and very dangerous day, several NYSE directors met in Chairman Phelan's office.  They checked around the street to gauge any new trends in the selling pressure.  They were also on the phone with the White House via former Senator Howard Baker, who was White House Chief of Staff.

Meanwhile, back on the floor, the situation felt more unreal.  Orders flowed in faster and faster and the tape ran later and later.  (The tape was linear and the human eye can only recognize a certain number of symbols per second, 900 I think.  To run faster than that would make the tape an unreadable blur.  Traders can trade faster than the maximum reading speed – so the tape ran late.)  One broker said it was like a bizarre dream sequence – nothing seemed real.

In late morning there were signs that the markets might begin to stabilize.  Then the newly appointed Chairman of the SEC, David Ruder, was intercepted by reporters leaving a meeting at the Mayflower Hotel in Washington.  Whatever they asked and whatever he said, it somehow was reported that the markets might have to be halted.  Later, he would swear it was a typo but you can't un-ring a bell. The fear of a halt sent buyers scurrying away.  Stocks went into virtual freefall.

The interaction with the futures saw prices melt away.  The Dow closed down 508 points.  One specialist, who made too good a market, ran out of funds and the firm was sold to Merrill Lynch that very night.  At watering hole after watering hole, traders and specialists reported again and again how strained their resources were.  Wall Street could not survive another day like this.  Luckily, innkeepers, like Harry let them put the drinks on a tab.

What is often lost in the retelling is that the next day, Tuesday, was far more dangerous.  It was the day that the wheels almost did come off the locomotive. The Dow opened up about 200 points Tuesday to a round of cheers on the floor. But, stocks quickly turned lower.  The 200 point gain was erased and the Dow went negative, accompanied by an audible gasp on the floor.  Soon it was nearing -100 and trading was being halted in several of the Blue Chips that make up the Dow.

Then we learned that several key banks were shutting down the credit lines of market makers and NYSE specialists.  The banks feared exposure to an apparently collapsing stock market. NYSE Chairman Phelan reached out to the recently appointed head of the Fed, Alan Greenspan.  Unfortunately, Greenspan was on a plane.  Desperate, Phelan called the President of the New York Fed, Gerry Corrigan.  He sensed the danger immediately and began calling the banks to reopen the credit lines.  They were reluctant but Corrigan ultimately cajoled them.  The credit lines were reopened and the halted stocks were reopened.  Best of all, the market started to rally and closed higher on the day.

It was an incredible time and the financial system was within hours (and a few phone calls) of an absolute collapse.  It was a time I'll never forget.


Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Wednesday, October 17

Winning at Saratoga Without Going to the Track


By Art Cashin

On this day in 1777, British Forces under "Gentleman" Johnny Burgoyne surrendered to American Forces in Saratoga turning the tide of the Revolution.  The victory could not have come at a more important time.  To the south near Philadelphia, George Washington was losing battles daily - at places called Germantown and Brandywine.

The Continental Congress was forced to flee Philadelphia under threat of capture.  There was even a move afoot to remove Washington as commander.  (What would the dollar bill look like?)

Then came the news of the victory at Saratoga.  The Americans accepted the surrender of nearly 6000 crack British and Hessian troops.  Not only did the victory re-spark morale - it enabled Ben Franklin to convince France to throw in with the revolutionaries - thus providing fresh ships and supplies.

And, as word of the victory spread through the colonies, a new hero was born.  A field commander, a brilliant leader and tactician, who was wounded in his courageous move that turned the tide of the whole Revolution, the man who saved the battle and the Revolution - why it was that famous American patriot - Benedict Arnold.



Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.

Editors note - For more about Benedict Arnold you can read our recent post, A Rotten Egg - Benedict Style.


Monday, October 15

Spying on Margaret

By Grant Davies

On this day in 1917, it all ended badly for Margaretha Zelle. She was made holy, or more correctly, full of holes, by a French firing squad. She went to her reward with eyes wide open, literally, because she bravely refused the blindfold she was offered.

Margaretha was a Dutch girl who came from Holland to France in 1905. Once there she changed her persona to that of a Malaysian beauty who had been born in an Indian temple and was taught how to perform ancient dances by a high priestess.

It was a great story and she quickly made a name for herself by dancing to packed houses of men anxious to expand their knowledge of exotic foreign cultures. She named herself Mata Hari. It was a nice touch.

But the truth was the men came to watch her dance out of her clothing. You see, she was a stripper and naked women never go out of style among such audiences. She performed all across Europe.

She also did performances of a different kind to audiences of one. She became a courtesan, which is a fancy word for a hooker who has wealthy clients. And by the time the war to end all wars was heating up she had quite a number of high ranking military officers on her list of Johns.

It seems they whispered a number of military secrets to her while she was whispering sweet somethings into their ears. So she expanded her product line to include espionage, selling info (mostly of the useless variety) to both the Germans and the French. I'm told that can get you into trouble.

So with the war going badly for everyone, and both sides discarding most of what she told them as unreliable, she became a convenient scapegoat the French could use to distract the populace from focusing on the fact that hardly anyone was coming home from the front, except in a box. So they had her arrested and convicted, and they filled her full of holes.

It's hard to guess what she might have been thinking when she refused the blindfold. It may be her final thought was that when you make your living giving people an eyeful, you don't want to miss a thing at your final performance.


Thursday, October 11

Money by the Cartload


Editor's note - The regular readers of this blog are used to short missives on subjects of general interest, but very little gravity. Today's post is somewhat longer and of great topical importance. I hope you enjoy it, although "enjoy" is not a word I would normally associate with a story such as this. So let's just settle for my hope that you find it enlightening. And perhaps just a tad terrifying. Because as the saying goes, "Those who are ignorant of history are..blah, blah, blah."



By Art Cashin

Originally, on this day in 1922, the German Central Bank and the German Treasury took an inevitable step in a process which had begun with their previous effort to "jump start" a stagnant economy.

Many months earlier they had decided that what was needed was easier money.  Their initial efforts brought little response.  So, using the governmental "more is better" theory they simply created more and more money.  But economic stagnation continued and so did the money growth.  They kept making money more available.  No reaction.  Then, suddenly prices began to explode unbelievably (but, perversely, not business activity). So, on this day government officials decided to bring figures in line with market realities.  They devalued the mark.  The new value would be 2 billion marks to a dollar.

At the start of World War I the exchange rate had been a mere 4.2 marks to the dollar.  In simple terms you needed 4.2 marks in order to get one dollar.  Now it was 2 billion marks to get one dollar.  And thirteen months from this date (late November 1923) you would need 4.2 trillion marks to get one dollar.  In ten years the amount of money had increased a trillion fold.

Numbers like billions and trillions tend to numb the mind.  They are too large to grasp in any “real” sense.  Thirty years ago an older member of the NYSE (there were some then) gave me a graphic and memorable (at least for me) example.  “Young man,” he said, “would you like a million dollars?”  “I sure would, sir!”, I replied anxiously.  “Then just put aside $500 every week for the next 40 years.”  I have never forgotten that a million dollars is enough to pay you $500 per week for 40 years (and that’s without benefit of interest). To get a billion dollars you would have to set aside $500,000 dollars per week for 40 years.  And a…..trillion that would require $500 million every week for 40 years.  Even with these examples, the enormity is difficult to grasp.

Let’s take a different tack.  To understand the incomprehensible scope of the German inflation maybe it’s best to start with something basic….like a loaf of bread. (To keep things simple we’ll substitute dollars and cents in place of marks and pfennigs. You’ll get the picture.)

In the middle of 1914, just before the war, a one pound loaf of bread cost 13 cents.  Two years later it was 19 cents.  Two years more and it sold for 22 cents.  By 1919 it was 26 cents.  Now the fun begins.

In 1920, a loaf of bread soared to $1.20, and then in 1921 it hit $1.35.  By the middle of 1922 it was $3.50.  At the start of 1923 it rocketed to $700 a loaf.  Five months later a loaf went for $1200.  By September it was $2 million.  A month later it was $670 million (wide spread rioting broke out).  The next month it hit $3 billion.  By mid month it was $100 billion.  Then it all collapsed.


Let’s go back to “marks”.  In 1913, the total currency of Germany was a grand total of 6 billion marks.  In November of 1923 that loaf of bread we just talked about cost 428 billion marks.  A kilo of fresh butter cost 6000 billion marks (as you will note that kilo of butter cost 1000 times more than the entire money supply of the nation just 10 years earlier).

How Could This All Happen? – In 1913 Germany had a solid, prosperous, advanced culture and population.  Like much of Europe it was a monarchy (under the Kaiser).  Then, following the assassination of the Archduke Franz Ferdinand in Sarajevo in 1914, the world moved toward war.  Each side was convinced the other would not dare go to war.  So, in a global game of chicken they stumbled into the Great War.

The German General Staff thought the war would be short and sweet and that they could finance the costs with the post war reparations that they, as victors, would exact.  The war was long.  The flower of their manhood was killed or injured.  They lost and, thus, it was they who had to pay reparations rather than receive them.

Things did not go badly instantly.  Yes, the deficit soared but much of it was borne by foreign and domestic bond buyers.  As had been noted by scholars…..“The foreign and domestic public willingly purchased new debt issues when it believed that the government could run future surpluses to offset contemporaneous deficits.”   In layman’s English that means foreign bond buyers said – “Hey this is a great nation and this is probably just a speed bump in the economy.”  (Can you imagine such a thing happening again?)

When things began to disintegrate, no one dared to take away the punch-bowl.  They feared shutting off the monetary heroin would lead to riots, civil war, and, worst of all communism.  So, realizing that what they were doing was destructive, they kept doing it out of fear that stopping would be even more destructive.

Currencies, Culture And Chaos – If it is difficult to grasp the enormity of the numbers in this tale of hyper-inflation, it is far more difficult to grasp how it destroyed a culture, a nation and, almost, the world.

People’s savings were suddenly worthless.  Pensions were meaningless.  If you had a 400 mark monthly pension, you went from comfortable to penniless in a matter of months.  People demanded to be paid daily so they would not have their wages devalued by a few days passing.  Ultimately, they demanded their pay twice daily just to cover changes in trolley fare.  People heated their homes by burning money instead of coal.  (It was more plentiful and cheaper to get.) The middle class was destroyed.  It was an age of renters, not of home ownership, so thousands became homeless. But the cultural collapse may have had other more pernicious effects.

Some sociologists note that it was still an era of arranged marriages.  Families scrimped and saved for years to build a dowry so that their daughter might marry well.  Suddenly, the dowry was worthless – wiped out.  And with it was gone all hope of marriage.  Girls who had stayed prim and proper awaiting some future Prince Charming now had no hope at all.  Social morality began to collapse.

The roar of the roaring twenties began to rumble. All hope and belief in systems, governmental or otherwise, collapsed.  With its culture and its economy disintegrating, Germany saw a guy named Hitler begin a ten year effort to come to power by trading on the chaos and street rioting.  And then came World War II.

We think it’s best to close this review with a statement from a man whom many consider (probably incorrectly) the father of modern inflation with his endorsement of deficit spending.   Here’s what John Maynard Keynes said on the topic:  By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.  By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some…..Those to whom the system brings windfalls….become profiteers. To convert the business man into a profiteer is to strike a blow at capitalism, because it destroys the psychological equilibrium which permits the perpetuance of unequal rewards.

Lenin was certainly right.  There is no subtler, no surer means of over-turning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose….By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of  contract….governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century.

To celebrate have a Jagermeister or two at the Pre Fuhrer Lounge and try to explain that for over half a century America's trauma has been depression-era unemployment while Germany's trauma has been runaway inflation.  But drink fast, prices change radically after happy hour.

And, tell Fed. Chairman Bernanke that it was the “German Experience” that caused many folks to raise an eyebrow when he alluded to the power of the “printing press” a few years ago.  It is why so many, including some of the FOMC, express concern about unintended consequences of each new wave of quantitative easing.  (And, if you think no government would ever sponsor wild inflation to liquidate its debt, take a look at Zimbabwe.)




Many thanks to Mr. Cashin and UBS Financial Services who graciously allow his historical musings to be republished on this site. To enjoy more of Art's posts simply click on "Cashin's Comments" in the label section on the sidebar.




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