Digging holes here and there in American history.


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Monday, November 13, 2017

RAY KROC, THE "FOUNDER" OF McDONALDS

This post is a response to an assignment in my “History of Capitalism” course at Louisiana Tech University.  

I watched the 2016 film "The Founder," a portrayal of Ray Kroc of the McDonald's Corporation as part of a class assignment. Part of my assignment was to determine if the movie presents Kroc as a "villain." Is it even possible for Hollywood to make a film about a conservative Republican businessman and not make him look like a villain?  Probably not.  I read several reviews after watching the movie and several critics noted the film served as an indictment of President Trump-type capitalists.   

Kroc was definitely a capitalist. He took an idea--some would say stole--and made millions. The movie is compelling, especially since we all know McDonald's--"billions and billions served." The first 30 minutes is spent building a sympathetic picture of the McDonald brothers who started the first restaurant. This serves to contrast the greed and ruthlessness of Ray Kroc as the movie progresses. 

The movie portrays Kroc as a villain to some degree, although it does mention how he provided opportunities for financial success to many. There is no question that Kroc's operation has provided thousands of jobs and made millions for investors. But still, the movie tends to condemn his methods and motives. Emphasis is placed on how he "cheated" the McDonald brothers. At one point one of the McDonald brothers say, "We are not greedy men," implying that Kroc is. We are to assume that all capitalists are greedy. Kroc's actions are so ruthless that they supposedly stress one McDonald brother to the point he is hospitalized.
There are also attempts in the film to paint Kroc as a hypocrite. Through words and imagery, Kroc's patriotic and religious beliefs are mocked and his actions (divorce, lying, swindling, etc.) are portrayed in contradiction to his espoused beliefs. This is presented subtly but repeatedly. In one scene, Kroc tries to persuade the McDonald brothers to go national by equating the firm's "golden arches" with "flags and crosses," explaining that McDonald's restaurants should as common as churches. Or as Michael Keaton says in portraying Kroc, "McDonald's can be the new American church." 
I have read articles before that praised Kroc for his business talent and innovation that led to one of the most successful businesses in American history.  "The Founder" is honest with us by noting at the beginning of the movie that it is "Based on a true story." I think we have to take the film as what it is--an Hollywood interpretation with its own perspective and motives. I recommend the movie but also reading more about this fascinating entrepreneur. 


Tuesday, October 31, 2017

CASH OR CREDIT?

“Will that be cash or credit?”

This post is a response to an assignment in my “History of Capitalism” course at Louisiana Tech University.  

All of us have been asked that when making a purchase. We pull out a card to pay for everything without thinking about it. Who wants to think about “credit.” An incredibly boring topic for a history blog, right? I thought so as well until I heard a podcast featuring historian Louis Hyman of Cornell University discussing “The History of Consumer Credit.” Hyman’s explanation of how credit changed after World War II is clear as well as fascinating.

Americans owe over $84 billion in credit card debt, reflecting a 285% increase since 1980. Many owe tens of thousands of dollars on their cards, debt that will take years to pay off, if ever. How did we get to this point where we owe others so much?

Hyman’s discussion starts with “installment credit” shortly after World War II. Under an installment credit contract, if a customer failed to pay, the item was repossessed. As goods became cheaper, there was no longer any value in repossession, except for cars and houses.

“In the 1950s, we see stores sell cheaper and cheaper goods,” Hyman explains, as a new system of credit emerges. This new world of credit was developed with the inundation of the market with economical products—revolving credit could be used to buy anything with credit. Stores like Kmart developed systems to reduce costs in labor and overhead, giving them the ability to sell discounted goods.

By the 1970s, general credit cards, rather than store-specific ones, emerged. I recall “Bank Americard,” the forerunner of VISA, as my first credit card. I remember checking storefronts for signs that the businesses accepted this new form of payment. These general-use cards not linked to a single store created what Hyman calls a “distributive landscape of credit.” Now we could buy just about anything anywhere on credit.

Debt shapes how we live; it has also shaped business and banking practices. Hyman emphasizes that credit is more than a simple buyer-seller transaction. He cites General Electric, one of the big companies that ventured into providing consumer financing, not only for its own products but for other marketers. By 1969, GE was financing one in 25 Americans, many who did not even know they owed GE since their purchases were through other companies but financed by GE.

“Consumer credit is not just about the borrower,” Hyman, concludes, “it’s not just about the lender, but it’s also about the worker (who produced the goods) who is also a consumer.”

Hyman does not extoll the dangers of excessive debt in the podcast, but he does warn of it in his books, Debtor Nation: The History of America in Red Ink and Borrow: The American Way of Debt.


In other research, I found that consumer debt and its effect on capitalism continues to change. Surprisingly, 63% of millennials do not have credit cards. Raised by “baby boomers” who had wallets and purses full of credit cards, this is an astounding development. How will it affect the economy? Also, we are seeing less use of cash and even checks as other mechanisms of payment (online, debit cards, etc) are encouraged.




Sunday, October 22, 2017

THE CAPITAL THAT MADE CAPITALISM

Did slaves get our economy to where it is today?

This post is a response to an assignment in my “History of Capitalism” course at Louisiana Tech University.  I hope you find this analysis of Julia Ott’s essay, “Slaves: The Capital that Made Capitalism” interesting.

Ott’s article makes the case that slavery was a significant factor in developing capitalism in America and the world.  In fact, she calls slaves “the capital that made capitalism.”

According to Ott, slaves were essential for the “industrious revolution” and the subsequent “industrial revolution.” The Industrial Revolution was the result of surplus money and crops, leading to the development of new technology. But before the Industrial Revolution was an Industrious Revolution, a period of tremendous desire for more goods. During the Industrious Revolution, the demand for goods increased, but supply did not rise as quickly. These included goods like tobacco, coffee, chocolate, sugar, and tea.  Ott calls these “drug foods” since their new consumers developed a craving, or addiction if you will, to these new luxuries that quickly became “necessities.”

During the Industrious Revolution, Europeans worked harder to be able to afford these drug foods in the 16th Century, which paved the way for the Industrial Revolution of the 18th and 19th Centuries.

But Ott notes the demand for these products is only part of how the Industrious Revolution and the subsequent Industrial Revolution came about. Essential to these economic developments, according to Ott, was new capital in the form of slaves.

Ott explains that trading in slaves and the goods they produced led to the development of modern finance and new industrial activities. Transoceanic trading networks, banks, and insurance services rose from the international slave trade. The capital derived from these endeavors financed British industries such as gun and metal manufacturing, sugar refinement, rum distillation, and the creation of cotton products.  The effect of slavery on the development of capitalism went far beyond what the individual slave did in a cotton field.

Cotton, in fact, became the world’s most significant crop, and slavery was the most efficient capital to produce it. The number of slaves in America grew to increase cotton production. In the early 1800s, cotton was the world’s number one traded good.  The export of cotton to Britain and other nations was imperative to obtain the products and credit needed from abroad.
Slaves picking cotton.

Not only did cotton, through slave labor, develop a wealthy South, according to Ott, it also developing an industrial complex in the North. Northerners participated in the slave trade, transported products created by slaves, created mills to refine those products, and used those profits to invest in other industries.

Ott concludes the essay with the statement that slavery “set capitalism in motion and sustained capital accumulation for three centuries.” Slavery may have given capitalism a “jump start” but other factors have since have attributed to its advancement.

I disagree with the notion that slavery, which ended 150 years ago, is responsible for where our economy stands today. Too many other factors have influenced our economy in the intervening years. In the U.S., the Civil War, Reconstruction, and the Great Depression destroyed the capital Ott says was in the hands of rich Southerners. World War II brought prosperity to many due to the manufacture of war materiel.  Technology developments in one year in recent decades make the entire Industrial Revolution look like the Stone Age. New products and services are developed every day. Communication is instantaneous, prompting constant changes, including growth, in our world economy.  

We would not be far off the mark to call technology the drug of choice today, although Ott’s drug foods are still extremely popular. Many who read this post consider their daily latte, expresso, or frappe essential to life. Millions are attached to cell phones as if they were life support machines that must be monitored constantly. There is more computer capability within a modern cell phone than in the Apollo spaceships that took American astronauts to the moon in the 60s and 70s. Such advancements, considering the size of the world economy today, have the ability to influence capitalistic societies practically overnight. According to Angus Maddison in his book The World Economy, in the last half century, the world economy performed better than at any time in the past. 

Slavery certainly played a role in the development of capitalism. Slaves were chattel, much like money itself, and served as the resource to grow one's finances. But world events, technological advances, and the ingenuity of the capitalist now overshadow slavery's influence on the current status of capitalism and the world economy.



Monday, March 13, 2017

THE LINCOLN ASSASSINATION

Every year I attend a conference in Washington, DC on the assassination of President Abraham Lincoln.  I hope to publish a book one day on the physical evidence from the crime.  Through my research and my participation in this annual conference, I have met many people who are serious students of history.

One of those is Dave Taylor, an elementary school teacher in Maryland. who has become an expert on the assassination.  He publishes an excellent blog on the Lincoln assassination called Boothie Barn.  A recent post on the blog includes a video of Dave giving a dramatic reenactment as the assassin John Wilkes Booth.  It's worth a look: https://boothiebarn.com/2017/03/04/an-evening-with-john-wilkes-booth/#comment-33209

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