Empire
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So he turned to Barings Bank in London, who facilitated the payment, using their financial expertise. A third of the money would be paid in American gold. Barings persuaded Jefferson that the rest could be financed by government bonds – the very first securities issued by the American government on the international market. Barings now sat down with the French and agreed to purchase these bonds from the French government in return for cash. Barings would then sell the bonds on to buyers on the markets of London and Amsterdam to recoup their outlay (and, of course, make a profit).
It was a risk, but finance involves such risks. Were people willing to believe in the future of America to the extent that they would trust them to pay interest on these bonds, and in ten years or so buy them back? The way this was presented by Barings, any purchaser was in a win-win situation. The Louisiana Purchase, as it now became known, doubled the size of this new nation. The bonds were soon snapped up: people were beginning to believe in America. (Even if nine years later, the British burnt down the White House and tried to take America back.)
Just over half a century after the Louisiana Purchase, the US secretary of state William H. Seward would buy another huge chunk of land for America. In 1867, he bought Alaska from the Russian Empire for $7.2 million. The Russians needed this to pay for the Crimean War, yet American finances were in an even greater mess, having barely recovered from the Civil War. This purchase of unexplored territory was greeted with derision, and became known as ‘Seward’s Folly’. But Seward’s strategic instincts were right. The Alaska territory was in danger of falling into the hands of the British.
However, unlike the Louisiana Purchase, Seward’s strategic victory was a financial ioss. His outlay in terms of present-day dollars is still below the balance of cash the federal government has received from Alaska in the 150 or so years since it was bought. Contrary to contemporary wisdom (both within and outside the US), money is not everything – even where America is concerned.
By this time, the United States had taken California from Mexico (1847). Texas had also thrown off Mexican rule in 1836, but it decided instead to become an independent republic. This lasted for ten years, before Texas was annexed by Congress. Then in 1861, there began the most traumatic internal event in the history of the United States. This was the American Civil War, which would last from 1861 to 1865. The mainly rural South employed slaves on its cotton plantations, while all the states of the more industrialised North had abolished slavery by 1804. Things came to a head when the Confederate States of the South threatened secession from the Union, and war between the two broke out.
This was the earliest mechanised war in the world, with both sides using such advanced weapons as repeating rifles, machine guns (Gatling gun), metal-clad ships and even submarines. It was also the first industrialised war, with efficiency increased by the factory manufacture of weapons, technological advances such as railway trains for rapid transport, and telegraph for speedy communications, as well as manned balloons for reconnaissance. The result was a total death toll of around 700,000 – more than the combined US losses in all conflicts, including two world wars, for another century. Not until the Vietnam War would this figure be exceeded.
The Unionist North defeated the Confederate South when General Robert E. Lee finally surrendered to General Ulysses S. Grant on 9 April 1865. Five days later, President Abraham Lincoln would be assassinated by John Wilkes Booth, a Confederate sympathiser. During the Civil War, Lincoln had delivered his famous Gettysburg Address, which to this day is seen as a defining statement of American national purpose. This harks back to the Jefferson Declaration, with Lincoln’s ringing words stating that America was a nation ‘conceived in Liberty, and dedicated to the proposition that all men are created equal’. He was speaking in November 1863 after the Unionist victory in the bloody three-day Battle of Gettysburg. Here more than 23,000 Union soldiers (and many more Confederates) had lost their lives, and Lincoln resolved:
. . . that these dead shall not have died in vain – that this nation, under God, shall have a new birth of freedom, and that government of the people, by the people, for the people, shall not perish from the earth.
It is salutary to compare this speech with the Communist Manifesto, written some fifteen years previously by Marx (and Engels), coinciding with the widespread European revolutions of 1848. Marx’s address stresses the conflict between classes, and urges the workers of the world to unite. Lincoln’s address, by contrast, exhorts a free people to govern themselves.
There is no denying that, even then, America had its class divides. (To say nothing of the racial divide that had given rise to the civil war.) However, Lincoln’s address is to a new people, in a new land. The great majority of these people had not achieved their freedom by revolution, but by crossing the Atlantic in immigrant ships. Twenty-one years later, the Statue of Liberty would proclaim: ‘Give me your huddled masses . . . yearning to be free.’ America was a fresh start for those who set foot on its shores. Here is where Dewey’s ethos of democracy differs so radically from ‘the dictatorship of the proletariat’.
But America was no utopia, even for those who fled the Irish Famine, the Jewish pogroms of Eastern Europe, the poverty – for those ambitious individuals keen to throw off the shackles of European society, as well as the fugitives and the ne’er-do-wells. The erection of the Statue of Liberty would also see the era of the ‘robber barons’. Powerful and ruthless capitalist moguls, who would exploit those same huddled masses in their factories. Cornelius Vanderbilt, Andrew Carnegie, J.P. Morgan, Henry Ford and others, built up huge commercial empires – ruining all competitors who stood in their way, as well as using the latest innovations and business efficiency, to accumulate fortunes. These were the pitiless men who made America great, but at great cost to others.
The government – ‘of the people, for the people, by the people’ – would do its best to stand up to these ‘barons’, whose power often seemed to dwarf that of the government and the law. As J.P. Morgan brazenly informed a judge: ‘I don’t know as I want a lawyer to tell me what I cannot do. I hire him to tell me how to do what I want to do.’
Yet there was another side to such men. Not once, but twice, this same J.P. Morgan would personally rescue the United States. In 1895, he bought sufficient gold to rescue the dollar by keeping it on the gold standard. And in 1907, he stepped in with a financial guarantee that single-handedly averted a Wall Street crash. The government learned from this. No one should have such power, even if he wielded it for the good. In response, the government eventually set up the Federal Reserve.
Henry Ford invented the modern assembly line at the Detroit factory that built the first affordable ‘people’s car’: the ModelT Ford, affectionately known as the ‘Tin Lizzie’. As Ford put it: ‘You can have any colour you want, as long as it’s black.’ The American love affair with the automobile had begun. When Rockefeller monopolised the oil business, the government prosecuted him under the Sherman Anti-Trust Act. Rockefeller fought every which way, swapping his companies from state to state, but in 1911 he was finally forced to split up Standard Oil into thirty-two companies. Some of these remain to this day, such as Chevron, and Exxon Mobil.
America was becoming the greatest country on earth, while nobody else noticed. And its empire was itself. America was, and would essentially remain a world power, rather than an empire. In those early days it didn’t invade countries, or not often. In 1836, the new state of Texas was threatened by Mexico, so the US invaded Mexico. Within two years Mexico was defeated, and the US-Mexico border was redrawn to include New Mexico, Utah and all of California, as part of the United States. (These were new states, not colonies.) In 1902, the US liberated Cuba from the Spanish Empire. Cuba became independent, but only so long as it behaved itself.
In 1903, the US bought out the bankrupt French attempt to build a canal across the Panama isthmus, then a part of Colombia. This was arguably the greatest engineering project undertaken to date, and would be com
pleted by i9i4.47 The Panama Canal’s 51-mile stretch of waterway and giant locks created a vital trade link between the east and west coast of North America. Consequently, Washington decided that this valuable trade link should be protected by the United States army occupying a ‘canal zone’, extending five miles or so on either side of the canal itself. This was defined as ‘unincorporated territory of the United States’, rather than a colony.
The entry of the United States into the First World War would tip the balance in favour of the four leading Western allies (Britain, United States, France and Italy). As a result, at the Versailles Peace Conference, President Wilson was widely recognised as the senior arbitrator amongst the four leading statesmen (which became three, when the Italian leader, Vittorio Orlando, burst into tears and flounced off home when he could not get his way.) Wilson was filled with good intentions, the only American president ever to hold a PhD, and this was the first occasion when it was conceded that America was now probably the world’s leading power.
Despite this, Wilson was outwitted by the practised political deceit of the British Prime Minister, David Lloyd George, and the French President Clemenceau. The thirty-five-year-old economist Maynard Keynes, a junior member of the British delegation, resigned in disgust to dash off The Economic Consequences of Peace, which became a bestseller, sympathetically received by the informed public and future statesmen throughout the world.
Yet nothing was done about the final treaty, which saddled Germany with crippling debts, and drew arbitrary lines in the deserts of the Middle East, marking out new countries divided between French and British interests. The former blunder would contribute in large part to causing the Second World War. The consequences of the latter blunder remain with us to this day.
America now entered the ‘Roaring Twenties’ of the Charleston, bootleg liquor and Charlie Chaplin – as well as great parties thrown by the likes of the fictional Great Gatsby. In America, everything was great. The great party of the 1920s was followed by the Great Crash of 1929, which in turn led to the Great Depression. During this time, skyscrapers began to create the great New York skyline. (Started before the Great Crash, there was nothing left to do but complete these skyscrapers regardless.)
In order to alleviate the effects of the Great Depression, President F.D. Roosevelt introduced the New Deaf a Keynesian-style project designed to put unemployed Americans back to work. Roads were laid out across the country, great projects such as the Grand Coulee Dam were initiated, schools and hospitals were built, even writers were set to work recording the history of states and territories throughout the country, providing a ‘self-portrait of America’.
Such was the power of the American economy that the Great Depression affected the entire world. In America, this downturn only came to an end when the US finally abandoned its isolationist policy with a vengeance and embarked wholeheartedly on the war effort, when it entered the Second World War. This was occasioned in December 1941 by the surprise Japanese bombing of Pearl Harbor. The Japanese Admiral Yamamoto, one of the few sceptics of Japan’s dream of oriental hegemony, warned: ‘We have woken a sleeping giant.’ Simultaneously, Hitler, a master of disastrous decisions, excelled himself by needlessly declaring war on America. A beleaguered Churchill drank champagne with his cabinet: Europe was saved, the war would now be won by the allies.
The cost in lives of this war was barely imaginable, let alone measurable. Vague estimates reach 150 million; almost four times more than in the First World War. Europe, Japan and much of China were left in ruins. The transition of power in Japan was masterfully handled by General MacArthur, who effectively became Emperor of much of East Asia. (It would be six years before megalomania caused the corncob-pipe-smoking general to be relieved of his post during the Korean War.)
Western Europe would be rescued by the munificence of the Marshall Aid programme. Stalin, who now ruled Eastern Europe, refused this ‘capitalist bribe’. Marshall’s $12 billion (well over ten times that amount in present values) rebuilt European commerce, and once again American Coca-Cola, Hollywood, Ford Motors and the like all had a thriving export market. Meanwhile the world’s two new superpowers (the USSR and the USA) embarked upon a series of ‘proxy wars’ – featuring the Korean War (1950–1953) through to the Vietnam War (1955–1975) and beyond.
It was during this period that America elected a president who epitomised his nation in a similar fashion to the way Julius Caesar had epitomised the Roman Empire. This was John F. Kennedy – though the parallels in his actual life are more in keeping with the equivocal Gatsby than Caesar. When the charismatic, youthful and articulate Kennedy took office in 1961, he embodied the hopes of an America that unquestioningly assumed its greatness, yet felt itself once again to be a young optimistic country. ‘Ask not what your country can do for you – ask what you can do for your country,’ Kennedy declared at his inauguration. Kennedy made it plain that he would champion black civil rights at home, and freedom from communist oppression abroad.
At home, amidst marches, mayhem and murder, the southern states were in open revolt. At his first summit conference in Vienna with the tough, brash communist leader Nikita Khrushchev, Kennedy was humiliated. The recent fiasco of the US-backed Bay of Pigs invasion of Cuba, growing confrontations over Laos (a prelude to the Vietnam War), and the Soviet threat to swallow up isolated Berlin, proved unanswerable. ‘He beat the hell out of me,’ confessed Kennedy.
Yet a year later, it was Kennedy who deftly and calmly faced down Khrushchev over the Cuba crisis. And in the same year, in response to the Soviets’ superiority in space, he boldly announced that within a decade America would reach, and land on, the moon: ‘Not because they are easy, but because they are hard.’
The boyish, energetic image that Kennedy presented, accompanied by his attractive, multi-lingual, Vassar-educated wife Jackie, clad in her scrupulously fashionable outfits, captured hearts around the globe. The White House, which hosted diplomatic soirees and sophisticated cultural events, became known as ‘Camelot’, after King Arthur’s legendary court.
Yet behind Kennedy’s Dorian Gray picture lay another darker portrait – every bit as ambiguous as Gatsby’s past. Kennedy’s father Joe had as good as bought the election for his son, using the vast fortune he had accumulated on the stock market, and allegedly from bootlegging during Prohibition. He had mafia contacts, retained fascist sympathies (he once tried to meet Hitler), and later supported the fanatical anti-communist witch-hunt by Senator McCarthy.
John F. Kennedy appears to have remained for the most part innocently unaware of this. Yet the healthy, poster-boy president was also not quite what he seemed. For years he had been racked by crippling illnesses, including hyperthyroidism and a rare endocrine disorder (Addison’s Disease). Treatment required a constant cocktail of drugs and injections, which brought on hypertension, mood swings and sexual addiction. As he confessed to the bemused, upper-class British Prime Minister Harold Macmillan: ‘If I don’t have sex every day, I have a headache’. This practice ranged from call girls (covertly shipped into the White House when Jackie was away) to the likes of Marilyn Monroe, Marlene Dietrich, and more dangerously, Judith Exner, mistress of mafia boss Sam Giancana. Distressing though it is to record such a fact, there is no doubt that Kennedy’s assassination in Dallas in 1963 came just in time. A wave of shock and grief swept the Western world: there is now a JFK Boulevard in major cities throughout all continents. Even a tearful Khrushchev declared Kennedy’s death to be: ‘A heavy blow to all people.’
Just over a quarter of a century later, the Soviet Union would collapse, leaving America as the sole superpower. Liberal democracy was the ultimate form of successful government, and under the aegis of the United States, it would inevitably spread throughout the world. Meanwhile America, acting as the ‘world’s policeman’, would aid this evolution. Invasions of Iraq, Afghanistan, Somalia, and even the tiny Caribbean island of Grenada, have proved such dreams to be an illusion.
America, wh
ich never had an empire, could thus not lose one. Yet its substitute for territorial colonialism – its power – is undoubtedly under challenge. And ironically this challenge comes from the very source that it assumed it had eradicated. Namely, communism – this time in its new variant forms in China and Russia. Capitalism, it seems, is not the only way of doing things that is capable of survival through self-transformation. Yet for the time being, Uncle Sam remains the world’s dominant relative. Just.
Future prospects
‘There’s many a slip ’twixt the cup and the lip’ – a proverb that has held true for more than two millennia. Several decades ago, it was ‘inevitable’ that Japan would become Asia’s leading economic powerhouse. Now it is China’s turn. Similarly, ‘the end of capitalism’ has been predicted since we first recognised its existence – generally agreed to have been around 500 years ago. Yet still it persists, in its latest adaptive form. This was the economic engine that lifted much of the world out of poverty, at the same time exploiting most those who benefitted from it least.
According to the biblical adage attributed to Christ: ‘The poor are always with us.’ So, it seems, are the filthy rich. And contrary to polls, slanted statistics, practitioners of ingenious econometrics and other magi of our age, the worldwide gap between these two strata of society has remained much the same since antiquity.
In 1909, the Italian economist Vilfredo Pareto showed that ‘through any human society, in any age or country’, 20 per cent of the population owned 80 per cent of the wealth, and 20 per cent of that 20 per cent owned 80 per cent of that 80 per cent, and so on. According to this 80:20 power law, the top 0.6 per cent of the population should own 38.4 per cent of the wealth. According to the January 2019 OECD figures, the top 0.6 per cent of the world’s population owns 39.3 per cent of the world’s wealth.