The Civil War created a new debate over government’s role, fostering a political ferment as well as ambivalence. Wartime measures revealed just how much Washington could do when necessary: levy income taxes; create a national paper currency; create a federal banking system; charter and subsidize the transcontinental railroads; destroy slavery; and define and defend nationwide individual rights. With peace, some Americans wished to move back to antebellum norms of limited government, and others wanted to press further. In 1868, Congress had contemplated the distinctly modern idea of government oversight of business corporations. The House Committee on Roads and Canals reported that the largest railroads had “the power to crush out all competition” and concluded that Congress possessed the constitutional power to regulate them. It balked at actually doing so—it was too radical. But the demand for regulation grew in the West, led by the rural Granger movement (formally called the Patrons of Husbandry). Some state legislatures passed laws to control railroad rates, but federal regulation remained out of reach.
In Congress, this new struggle over active government came down to the more modest question of currency. Should Washington act against the depression by slightly increasing the paper-money supply—or do the opposite? The “inflation bill” was so limited that the hard-hit public could reasonably ask, if not this, then what? But it was too much for Fish, and Fish was too much for Grant. He vetoed it.24
“The President’s veto of the inflation bill is the most important event of his administration,” Harper’s Weekly declared. The historian Nicolas Barreyre argues that it provoked a political realignment. The veto alienated voters outside the major financial centers, giving the Democratic Party an opportunity to win over Republicans in the trans-Appalachian West. These voter-rich states “will scatter the dry bones of the Shylocks and sophists like chaff,” a Cincinnati newspaper wrote. In the midterm election of November 1874, the Democrats essentially doubled their seats in the House of Representatives, winning a two-thirds majority.25
The new Congress would not sit until December 1875, but Grant entered the year newly vulnerable. Support for protecting African Americans in the South fell off even within his own administration. He dispatched Sheridan to black-majority Louisiana to battle a white-supremacist attempt to control the 1874 election by force; but he was urged to step back by Fish and others. The Justice Department denied Governor Ames’s request for troops in Mississippi. The outgoing Congress passed a Civil Rights Act in 1875, but watered it down first. Grant and his party were weak, and felt it.26
“My blood boils within me with indignation when I think of the unjust course now being pursued towards our brethren of the South,” Custer wrote to Lawrence Barrett in early 1875. “But for the glorious results of the last election I would feel that men had good cause to have their faith shaken in the permanency of free popular government.”27 His comments show how opposition to Reconstruction united Democrats, who were split by the very currency issues that gave them victory in 1874.
His outburst also reveals that the “glorious results of the last election” emboldened him. He expressed partisanship more ferociously than at any time since 1866. In fact, he wrote to Andrew Johnson on February 2, 1875, after the Tennessee legislature chose him as a United States senator. “My dear friend,” Custer wrote, “[w]ith all lovers of constitutional government I congratulate you.” He had watched events closely, he added, and was thrilled that Johnson would again speak for “a pure government by the people,” words with racial overtones. (Johnson died on July 31.) But Custer’s enthusiasm would turn into overconfidence, and overconfidence into overreaching.28
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CUSTER NEUTRALIZED ONE PERSONAL ENEMY, only to gain another. On March 1, 1874, Colonel Stanley had telegraphed General Terry’s headquarters about a Hunkpapa warrior at the Standing Rock agency who boasted of having killed Dr. Honsinger and the sutler Baliran during the 1873 Yellowstone expedition. “The arrest of the Indian will be a matter requiring address, and force, as it may lead to a collision with all of the Uncpapas camped at Standing Rock. I respectfully advise that the arrest be entrusted to Lieutenant Colonel G. A. Custer, and not less than three hundred men.”29
Custer’s performance against the Lakotas had converted Stanley into something of an admirer. But Custer received no information on the suspect until December 7, when he requested permission “to arrest the Indian referred to and test the proposition as to whether a white man has any rights which a reservation Indian is bound to respect.” His words were ripe with sarcasm. They echoed the U.S. Supreme Court’s notorious Dred Scott decision of 1857, in which Chief Justice Roger B. Taney declared that African Americans were “beings of an inferior order…so far inferior, that they had no rights which the white man was bound to respect.” Custer likely agreed with Taney; by reversing the formulation, he expressed profound outrage at the Lakotas.
It was a legally ambiguous step, arresting an individual for actions during a battle. Custer wrote, “It may be claimed that this [murder of Baliran and Honsinger] was an act of war, but the claim is unfounded.” There was no war at the time, he said. And, typically, he accused the Indian bureau of supplying hostile Indians with rifles.30
Terry approved the mission. Custer dispatched his brother Tom, Captain Yates, and 100 men through the shocking cold of the Dakota winter. Yates feared the federal agent would give their mission away to the Hunkpapas, so he pretended to be looking for three other fugitives. He learned that the suspect was at the trader’s store and went with Tom Custer and “five picked men.”
Their target was Rain in the Face, a renowned warrior. Tom tackled him and subdued him. Within minutes scores of angry Lakotas surrounded the store. Yates reported that an unnamed “chief” gave a speech, “saying, ‘Now was the right time to rescue the prisoner. Those who did not attempt it were cowards.’ Whilst speaking he loaded his rifle and commanded the young men to ‘close up around the troops,’ at the same time remarking that he was ‘willing to die first in attempting a rescue.’ ” Yates extricated his force and his prisoner quietly, crediting his troops’ “determined stand.”31
Back at Fort Abraham Lincoln, Custer locked Rain in the Face in the stockade. He interrogated him personally, though he continued to misidentify him as “Ring Face.” On December 18 he reported to Terry that the warrior “admitted to me yesterday that he shot Dr. Honsinger once and Mr. Baliran twice with arrows,” an accurate description. Custer wished to have Rain in the Face tried in a civilian court for murder, but as Robert Utley notes, that “raised practical as well as legal questions.” The Hunkpapa lingered in captivity for four months, eventually sharing his cell with two white thieves. On April 18, 1875, friends of the outlaws broke open the wall from the outside, and Rain in the Face escaped along with his cell mates.
The affair did not spark an open war, but it left a legacy of anger. As Custer himself wired Terry after the arrest, “The Uncapapas…vow vengeance.”32
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CUSTER REMEMBERED HIS FRIENDS. Isaac Christiancy was elected to the United States Senate at the same time as Andrew Johnson, and Custer wrote to congratulate him as well, even though Christiancy was a Republican. He mentioned his outrage at the army’s interference in Louisiana, where, as Eric Foner writes, “Democrats attempted to seize control of the state assembly by forcibly installing party members in five disputed seats.” One of Sheridan’s officers had removed the five Democrats from office. “I do not think my views differ materially from your own,” Christiancy replied, declining to fight with his old protégé. His letter was another sign of the Republican retreat from Reconstruction—and Custer’s willingness to risk controversy by stating his political views.33
In early 1875, he seemed ready to fight with everyone. He bitterly attacked the commissioner of Indian affairs in an open letter for seeming to criticize the Black Hills expedition. When Professor Winchell, the geologist, contested Custer’s report of gold, he accused Winchell of “professional pique” because amateurs ha
d found the metal, and said Winchell had declined to walk the short distance to see for himself. 34
Custer often became combative when he felt vulnerable or guilty. Tantalizing hints in the archives suggest that 1875 left him financially crippled and morally compromised. Early in the year, an exasperated William Travers demanded that Jairus Hall explain the Stevens Mine’s inertia. Hall told a tangled tale of disputed deeds and lawsuits, of the Crescent Company encroaching on their property. Hall tried to prod Custer. “If we can clear off the indebtedness on the mine, raise a few dollars for our pocket and raise a working capital,” perhaps by borrowing in New York, “we have a bright future before us,” he wrote. But even Hall’s salesmanship wilted. He had borrowed a huge sum in England against the mine. On June 3 he wrote, “The debt against the property cripples it.” He said he would do his best to get rid of it without a loss. Custer’s dream of gold from selling the dream of silver finally evaporated.35
As a man with a gambling problem, Custer felt the seduction of the big score—the deal of the cards that would reverse his luck and erase all debts and worries. It is characteristic that the investment into which he poured his own money was racehorses. He had spent heavily on the champion thoroughbred Frogtown, only to see the horse fall ill in the great epizootic of late 1872, a wave of disease that killed thousands of horses. Frogtown survived, but fat purses from racing victories failed to materialize.36
Custer had written to Libbie in 1873, “It is such a comfort to me to feel independent,” with “many and varied…avenues to honorable employment.”37 In 1875 he found avenue after avenue barricaded. The mine proved barren. Congressional cuts to the army eliminated any hope of promotion. But the army did give him a name. His name allowed him to start writing, and his writing added to his name. A scientist from Boston asked for help with a study of bison, given Custer’s “taste for natural history.” Robert Roosevelt, a patrician New Yorker and an anti-Tweed Democrat, wrote to praise My Life on the Plains. “I suppose you never come East but if you do you must not fail to call on me as it seems I am never to get west & kill a buffalo under your auspices.”38
The most significant admiring letter came from James Gordon Bennett Jr. A year and a half younger than Custer, he was the worldly editor of the New York Herald, which his late father had delivered into his hands several years earlier. For most of the nineteenth century, newspapers played an explicitly political role; editors led parties and factions, articulating political philosophy. The New York Times editor Henry J. Raymond served as a congressman; the New York Tribune’s Horace Greeley ran for president. The Herald, on the other hand, pursued profits before politics, though it was Democratic in tone. Bennett might devote its columns to a political scandal or a wilderness explorer, depending on how the story might boost circulation. A flamboyant playboy, Bennett had a flair for creating news. In 1869, for example, he had famously sent Henry Morton Stanley to Africa to find David Livingstone.39
“I write to ask a favor of you.” Bennett gathered that Custer would lead another expedition to the Black Hills in 1875, but he had no reporter to send with him. He admired Custer’s articles and reports, which “are so well written that I should like you to use the columns of the Herald. If you wish you can write over your own name, or, on the other hand, employ a nom de plume.” He gave him code words to use in his telegraphed reply. Bennett added, “Of course I shall be willing to pay you.” The talk of money, the conspiratorial tone, the appeal to his reputation—Custer liked it.40
Bennett wrote on April 1, 1875. Soon after Custer went to New York. On May 22, after he had been there for some weeks, the New York Tribune reported that he was in the city, “consumed in the completion of the necessary arrangements for his Summer expedition to the Black Hills.” He told the reporter that he would start around July 1.41
It was not true. Lt. Col. Richard Dodge led that year’s expedition to the hills.42 Custer wandered the humid streets of Manhattan as a private citizen—both a gambler, looking for the big score, and a partisan opponent of the Grant administration. Instead of supplying the Herald with colorful letters from the field, Custer would leak tales of corruption at Western posts and Indian agencies. He began to work closely with the Herald reporter Ralph Meeker and others. Custer also stopped by the offices of the New York World on Park Row, wedged between the warehouses and wharves of Lower Manhattan, the shipyards of Corlears Hook, and such narrow, twisting lanes as Wall Street, Pearl Street, and Exchange Place. The World represented the wealthy Democrats who had helped drive Boss Tweed from Tammany Hall—the Belmont, Barlow, Schell, and Tilden group, well known to Custer. (Another key figure, William H. Aspinwall, had died in January.) Custer called to see editor Montgomery Schuyler, who wrote that he regretted missing Custer’s visit but would like to publish his letters.43
On May 17, Custer returned to lower Manhattan. He went to the office of the broker Emil Justh. For a member of the New York Stock Exchange, Justh had led an adventurous life. Born in Hungary around 1825, he had joined the revolution against the Austrian Empire led by Lajos Kossuth in 1848, a year when revolts swept across Europe. It failed, though Justh remained proud of his participation for the rest of his life. Along with thousands of other Hungarians, he fled, finding refuge in San Francisco at the height of the California Gold Rush, where he worked as an assayer. He moved to New York and opened a brokerage house in 1862. In 1867, hearing noise outside his house on 34th Street, he opened the door and was shot in the chest. The New York Times later called him “a straightforward and sagacious man of business.”44
“I trusted him, you know, naturally,” Justh said of Custer. The dashing, famous soldier appealed to the former revolutionary. Custer certainly looked respectable, with his hair cut short, mustache neatly trimmed, his buckskins and uniform set aside for a dark civilian suit.45
That day’s New York Times reported, “The depressed and unsettled tone which has characterized the Stock Market for the past week was more marked today than heretofore.” Prices of the volatile “fancy stocks”—including Western Union, Pacific Mail Steamship Company, and the Erie, Lake Shore, and Northwestern railroads—were falling. Yet Custer plunged in, speculating on 100 shares of Lake Shore, one of the weakest of the Vanderbilt railways, which traded at far below its par value of $100 per share. That day it tumbled from 68 ¼ to 67 ⅜. When Custer returned to Justh’s office two days later, Lake Shore had slipped to 67 ¼. Yet his transactions earned him a profit of $183, less $50 in brokers’ fees.46
Though the records do not specify, he could only have been short selling. He ordered Justh to sell 100 shares of Lake Shore, even though he did not own them. Justh borrowed the shares for delivery from another broker or customer, charging Custer interest. When the price fell, Justh bought the stock to return to the lender. Instead of the conventional formula of buy-low-sell-high, the short strategy was sell-high-buy-low. Again, the records are unclear, but Custer seems to have turned around his short sales on the same day, on both May 17 and 19, though possibly he bought one day and closed the next.
The fact of his short selling was significant. For a small investor like Custer, it was a purely speculative technique, used almost exclusively for gambling on short-term changes in prices. In the more respectable approach, one purchased a stock for the long term, looking for a steady, gradual return in the form of dividends. Custer relied on credit from Justh, which ordinarily would have required him to put up a margin, an amount sufficient to protect the broker from a loss if the market went the wrong way. But, Justh said, “I trusted him.” Whatever he saw in Custer—a celebrity, a fellow adventurous spirit, or “Custer luck”—he told him he merely had to cover any potential losses.
That first small profit sent electricity sparkling through the gambling-wired synapses in Custer’s brain. He began a long-term relationship with Justh, following a “bear” strategy that counted on the depression to drive down prices. He also traded in a class of derivatives known as the “put”—the right to sell a given
stock to someone at a set price within a specific time frame. All this required a sophisticated understanding of the financial markets, the strengths and weaknesses of specific corporations, and the larger picture of the national economy. More than that, it demanded deep financial resources, because some reverses were inevitable. Custer had none of those things.47
Years later, a judge would analyze a pair of letters from Custer to Justh about these trades and draw broad conclusions. “It seems to us impossible to read these papers without being impressed with the idea that they refer to an illicit business, with which Custer was rather ashamed to be connected,” the judge would write. He would explain this discomfiture by claiming that the transactions were unusual and illegal. Illegal, perhaps—but not unusual. They were well within the bounds of ordinary behavior on nineteenth-century Wall Street.48
Custer was ashamed, not because he broke the law but because he broke faith with Libbie. He had often pledged to give up cards, only to return to the table, losing money amid financial stress. She had scolded him, mocked him, driven him to admit that his addiction was the equivalent of “Satan.” In Justh’s office, he may have assured himself that he was keeping his promise. But he knew she would see his trades as bets.
Intelligent people tend to be complicated. Certainly Libbie was. She loved her husband, struggled with his failings, and thrilled to his fame. She, too, deliberately presented an idealized version of herself; it was one of the ways she negotiated the gap between her aspirations and reality. She wanted her existence to be like her books. When the 1874 expedition returned from the Black Hills, one soldier recorded in his diary, officers left the column to “embrace and kiss” their waiting wives. “Mrs. General Custer came to meet her husband, but just as she came in ‘catching’ distance she ‘fainted?’ A very pretty piece of byplay for the men of the command.”49
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