Campaign Spending has RULED since 1860

Occasionally (really, pretty frequently) I'm struck by all the interesting stuff you can find in books written by people marginalized by the history profession. For example, Ferdinand Lundberg's 1937 book, America's 60 Families, includes a chart of presidential campaign spending beginning in 1860. I've never seen anything like this in a mainstream history book. But it should probably be there, because it turns out that the guys who won the highest office were almost always the guys who spent the most, from Abe Lincoln on.

National Party Funds in Presidential Years

Lincoln -R-
Lincoln -R-
Grant -R-
Grant -R-
Hayes -R- (lost popular vote)
Garfield -R-
Cleveland -D-
Harrison -R-
Cleveland -D-
McKinley -R-
McKinley -R-
Roosevelt -R-
Taft -R-
Wilson -D-
Wilson -D-
Harding -R-
Coolidge -R-
Hoover -R-
Roosevelt -D-

So in every election except two, the party that spent the most money won. The two exceptions were Woodrow Wilson's 1916 re-election (when Wilson promised to keep the US out of a European War), and Franklin Roosevelt's 1932 landslide victory over Hoover (who was blamed for exacerbating the Great Depression). In both those cases, though, the winning party spent three quarters of the money the money spent by the loser.

What I found interesting was that the historic break in the Republican Party's half-century in the White House were the two non-consecutive terms of Grover Cleveland. In 1884, Cleveland outspent his Republican rival, Maine Senator James Blaine, by raising a million dollars more than the Democrats had spent four years earlier. The general consensus of Political Historians is that "popular outrage at the influence of money in politics helped put Grover Cleveland into the White House." (Heather Cox Richardson,
To Make Men Free, 2014, p. 122) A standard undergraduate textbook remarks that "the election of 1884 was one of the dirtiest ever recorded." But it fails to mention that the mudslinging in the media was fueled by a doubling of the money spent by the campaigns four years previous. The textbook paints Cleveland as a reformer of sorts, although it mentions without explanation that Cleveland "vetoed two out of every three bills brought to him [by a Democrat-controlled Congress], more than twice the number of all his predecessors." (Davidson et. al, Nation of Nations, 2005, 676-7)

In 1888 the Republicans outspent the Democrats by nearly a half million dollars, and Cleveland lost to Benjamin Harrison. Harrison's victory is portrayed as the accomplishment of "a rising kingmaker named Mark Hanna." (
To Make Men Free,123) Cleveland "decried the takeover of government by the wealthy," which some historians take as a suggestion the Democrat believed himself to be a people's candidate. The Republicans tried to insure their control over the presidency by bringing western territories into statehood, buying newspapers like Frank Leslie's Illustrated, and stuffing the Civil Service with their cronies. But in 1892, Cleveland's campaign outspent the Republicans by a half million dollars, and the Democrat became the only President to be elected to non-consecutive terms.
Cleveland is often considered a political outsider and champion of the common man because he was from Ohio. But by the end of the 19th century, Ohio was not the wild frontier it had once been. Five other presidents including Cleveland's rival Benjamin Harrison claimed a close connection (birth or public service) with the state, which during the last decades of the 19th century was the home of Standard Oil. While John D. Rockefeller "habitually contributed large funds to the Republicans in return for lucrative concessions; Colonel Oliver H. Payne, his partner, gave liberally to the Democrats." (
America's 60 Families, 54) Payne's son-in-law, William C. Whitney, became Cleveland's Secretary of the Navy.

While it is too simplistic to claim that the results of all these elections simply followed the money, the standard approach of political historians and the authors of history textbooks seems to go too far in the other direction. They say nothing -- leaving "fringe" historians like Ferdinand Lundberg the task of pointing out the fact that kingmaker Mark Hanna was considered by many the "statesman of Standard Oil." Luckily, the writings of these fringe historians, although left out of the history books, are not that hard to find online.

Approaching WWI with Thomas Lamont


Continuing my notes on America's 60 Families, with a digression to a little-known speech:

Lundberg says "total wartime expenditures of the United States government from April 6, 1917, to October 31, 1919, when the last contingent of troops returned from Europe, was $35,413,000,000. Net corporation profits for the period January 1, 1916, to July, 1921, when wartime industrial activity was finally liquidated, were $38,000,000,000…" (134)

By the end of the American involvement, US national debt had reached $30 billion, "or more than thirty times the prewar national debt. The only way the people could recover some of this money was by taxing the corporations" that had made some extreme windfall profits during the war. But the Republican administrations that followed Wilson's "saw that taxes on the rich were sharply reduced rather than increased." (135)

JP Morgan and Company acted as purchasing agent in the US for the European allies. Wilson's Secretary of State, the Populist William Jennings Bryan, warned the President in August 1914 that Morgan was seeking credit for Britain and France. Bryan told Wilson "money is the worst of all contrabands," and that if the loan was permitted, "the interests of the powerful persons making it would be enlisted on the side of the borrower, making neutrality difficult, if not impossible."
Wilson concurred, and Bryan wrote to JP Morgan in his official capacity as Secretary, outlining the administration's position that "Loans made by American bankers to any foreign nation which is at war are inconsistent with the true spirit of neutrality."  So on October 23, 1914, "with Bryan out of town," the bankers tried an end run. Samuel McRoberts, vice president of National City Bank, approached a State Department advisor named Robert Lansing, who called on Wilson. "Between them they drew a Jesuitical distinction between credits and loans: credits were held to be permissible…the Allied governments…began buying supplies in large quantities on bank credits…it was only a little more than six months before Wilson secretly gave permission for the flotation of the huge Anglo-French loan." (Wilson's good friend and trusted advisor Cleveland Dodge was a director of National City. 136-7)

Lundberg then moves on to JP Morgan and Company and especially to Thomas Lamont, who was to play an important role in financing the war and negotiating the peace at Versailles. Lamont gave an important but little-known speech in April, 1915, Lundberg says, which laid out the bankers' agenda for the war. Lamont spoke to the American Academy of Political and Social Science. Although Lundberg observes the speech, titled "The Effect of the War on America's Financial Position," was "neither reported in the newspapers nor was it brought to light by the Nye Committee." (139) Luckily, a transcript was published in the
Annals of the Academy. Here are some highlights:

Lamont begins by recounting that at "the outbreak of the general war…We saw our high-grade securities fall with great violence; we saw the entire fabric of our foreign exchange, built up over many generations, knocked completely awry; we found ourselves unable to buy sterling exchange wherewith to pay our debts in London. Our gold was exported in great volume…Domestic rates for money advanced to a high figure, and even at that money was scarce and hard to obtain." This alarming chain of events, Lamont recalls, was met with swift and decisive action. "Our securities were being dumpoed upon us in large volume by foreign holders. Therefore, we closed our exchanges…Gold was being exported and there was danger of a money panic. Therefore…under the Aldrich-Vreeland Act $400,000 of additional currency was almost immediately issued." To forestall the calling of foreign loans, the financiers of New York "sold $100,000,000 of its 6 per cent notes," raising $80 million in gold. When the South was panicking over the breakdown of the cotton market, the financiers "organized a banking pool to lend up to $150,000,000 on cotton." In these ways, Lamont says, "a comparatively few active and patriotic men acting as leaders, but with the loyal and united support of the whole financial community," saved the American economy.

Since the initial crisis, Lamont continues, the situation has turned to America's advantage. "Money is easy, we are importing gold on a good scale, having already brought back over $50,000,000 of what we sent out last year…we are turning from a debtor into a creditor…We are piling up a prodigious export trade balance [with] war orders, running into the hundreds of millions of dollars." Lamont lists a half dozen countries the financiers have loaned money to since Wilson allowed "credits," concluding "these foreign loans that we have made since war broke out [are] well above two hundred million dollars." But that's just the tip of the iceberg. "Many people seem to believe," Lamont says, "that New York is to supercede London as the money center of the world. In order to become the money center we must of course become the trade center of the world." So instead of a dangerous crisis, the European war might just be a tremendous opportunity for America.

But it's not a sure thing. In order to take advantage of this opportunity, the financiers will need to be both smart and bold. And a lot rests, Lamont admits, on "the duration of the war." If it's over quickly and Germany is able to regain its competitive position in international trade, "we should find that the building up of our foreign trade would be a much slower matter than if the war were to continue indefinitely…If we should continue to buy such securities [of US companies] back on a large scale -- and the chances are that if the war continues long we shall do that -- then we should no longer be in the position of remitting abroad vast sums every year in the way of interest…If the war continues long enough…then inevitably we shall become a creditor instead of a debtor nation, and such a development, sooner or later, would certainly tend to bring about the dollar, instead of the pound sterling, as the international basis of exchange."

So what's it going to take to bring about this historic reversal of America's financial fortunes? First, of course, American financiers need to be allowed to loan (and American manufacturers to sell) as much as possible to the warring Europeans. But in order to do this, Lamont says the US government needs to turn control over to the patriots who saved the economy at the war's start. "We are witnessing extraordinary developments on the other side of the water," he says; "we are seeing government control of industry being undertaken on a gigantic scale. Will such control continue in part or in whole after the war? Will the value of the cooperative effort which is now being demonstrated, be so great as to demand continuance after the war is over?" This passage may be confusing to people reading today, since we now expect businessmen to be against government involvement. Lamont is
calling for government cooperation with business -- but with himself and his fellow financiers calling the shots.

"Here in America," Lamont asks, "shall our manufacturers and merchants be able to take effective steps, with the active cooperation of the government for the development of foreign business? Will American producers be able to arrange for cooperation among their organizations?" To make America the world leader in trade and finance, Lamont says, things will have to change because "Today our laws do not allow them." In order to take advantage of the opportunity before them, "this year to one billion dollars," Lamont says the government needs to start looking the other way on antitrust and let business "cooperate."

"Some fail to realize," Lamont concludes, "that finance and general business are so interwoven that the success of manufacture and trade depends entirely on the cooperation of finance." Trusts and the holding companies that followed them, by the logic of the day, allow financiers to rationalize industries and make them more efficient and profitable. Bigger is better -- this is an idea we still recognize as part of the philosophy of big business. Lamont is calling for unlimited size, and also for cooperation by government to turn control over American foreign financial policy over to the people who took "those great remedial and protective steps that I have briefly alluded to…taken by a few gentlemen quietly and without legislative action."

Military-Industrial Complex, WWI-Style

In his final speech as President, Dwight D. Eisenhower famously warned Americans to guard against the creation of  a "permanent armaments industry of vast proportions." But reading Ferdinand Lundberg's America's 60 Families, it seems a military industrial complex was already well established. Here are some passages relating to military spending in World War I:

According to "House Report No. 637, sixty- sixth Congress, second session…although more than $1,000,000,000 had been spent [during World War I] for combat airplanes none was ever delivered. The airplane scandal became so notorious in 1918, indeed, that President Wilson appointed Charles Evans Hughes [Standard Oil attorney, Supreme Court Justice, Secretary of State] to investigate." (193-4)

The Senate Committee on Naval Affairs determined in 1916 that the cost of producing armor plate by the steel companies was $262 a ton, against prices of $411 to $604 charged the government…United States Steel Corporation and Bethlehem Steel Corporation charged Russia $349 a ton, Italy $395 a ton, and Japan $406.35 a ton for identical plate…profits of the United States Steel Corporation during the war were $888,931,000, or more than the par value of its stock." (196-7)

According to House Report No. 998, 66th Congress 2nd session, "The committee finds that there has been expended for construction upon the Government's nitrate program to the present time the sum of $116,194,974.37, and that this expenditure produced no nitrates prior to the armistice, and contributed nothing toward the winning of the war. The nitrates program originated with the War Industries Board of the Council of National Defense, and is directly traceable to Mr. Bernard M. Baruch." Lundberg continues, "Although the nitrate plants were not necessary, as there was an abundant supply of Chilean nitrate, their construction entailed the placing of huge orders for steel, lumber, copper, cement, dynamos, etc. The Du Ponts were given $90,000,000 to build a nitrate plant at Old Hickory, Tennessee, on a cost-plus basis; after the war this plant was sold to the Nashville Industrial Corporation for $3,500,000." (197)

Then there's this page:


"Up to September 1, 1919, the War Department spent $18,501,117,999, and, judging by the Graham Committee's findings at least one third of this was dissipated in channels that had no relation to a successful prosecution of the war…The basis for many prosecutions was laid by the Graham Committee, and there were indictments of various minor figures. But there were no convictions. By November, 1925, the last of the indictments was quashed." (201)