Category: Uncategorized

“Less and less human thinking”: Technology’s Role in the 1987 Stock Market Crash

By Ryan Cohane

October 19, 1987, otherwise known as Black Monday, was a frightening day for many. Brian Cohane had been working on Wall Street for 3 years at that point. He was a junior mortgage-backed-securities trader at Paine Webber Inc and recalls the technology that helped contribute to the crash. Cohane describes the beginning of a system where there was “less and less human thinking on things and we let computers do the thinking for us in terms of whether to buy or sell securities.” [1] Technology was not very prevalent on Wall Street when Cohane started working there. Throughout the 80s, the use of technology increased and helped contribute to Black Monday. In that one day alone, the Dow Jones Index dropped 508.32 points or 22.6%, losing over $500 billion of its value. [2] Markets around the world were affected and many feared that this would lead to another Great Depression. In American Dreams, H.W. Brands attributes the main reason for the crash to the high interest rates due to the trade and federal budget deficits. [3] However, a large part of the reason that Black Monday occurred was also the emergence of new technologies in the 1980s.

When Brian Cohane started on Wall Street, he did not have access to a lot of technology.

“Our technology was the phone, calculator, files… we would call some of the credit rating              agencies and get credit reports. Their credit reports of clients that we dealt with [were used] to back  up our own credit analysis, but that was it. We used computers to track numbers. If we assigned a    credit limit to a client, we would put that into a computer and the computer could track whether a    client’s exposure was within the limits we established. We didn’t really have spreadsheet analysis at  the time or the ability to go into databases and look up companies.” [4]

However, in the 80s the access to technology started to increase. With innovations such as the Bloomberg Terminal and the rise of the use of personal computers, technology became more integrated in the Wall Street process then ever before. While there were plenty of positives, such as more equal access to information and more efficiency, there were also computers taking over jobs that used to be done by humans. Technology could perform these jobs faster and more efficiently. [5] As technology became more ingrained in the industry, people became more comfortable using it. Thus, the rise of program trading was not too much of a surprise.

The commercial from 1986 shows how computers were becoming more advanced, but it also shows the limitations of the technology. The IBM PCjr could only run programs built for it, suffered from memory restraints and took up a lot of space. Courtesy of Youtube.

 

The New York Stock Exchange defines program trading as a trade containing fifteen or more stocks with a total value over $1 million. It started in the 1970s with people physically having to go to certain locations to make the trades. Program trading became more popular because it was less risky to trade a diversified portfolio rather than individual stocks, it was cheaper and the volume of trades was increasing. [6] In the 80s, more and more of the process began to be done on computers. Cohane describes it as “quantitate-based technical trading” and “very much computerized.” [7]

One of the strategies associated with program trading is portfolio insurance. This is an investment strategy, where computer models suggest acquiring more stocks during rising markets. When the market is falling, the models suggest the opposite. The idea was that the strategy would mitigate some of the risks involved in buying and selling stocks. Investors tended to deal more with the future market since it was cheaper and it would protect them against losses in their current stocks. The strategy helped contribute to the increase in selling in 1987, because “as computers dictated that more and more futures be sold, the buyers of those futures not only insisted on sharply lower prices but also hedged their positions by selling the underlying stocks. That drove prices down further, and produced more sell orders from the computers.” [8] All these actions in the future markets were not being immediately updated and recognized, since it was very time consuming and could incur transaction costs.

Program trading was completed through the Super Designated Order Turnaround (SuperDOT) system. The SuperDOT replaced the DOT in 1984 and was able to route orders to specialists on the trading floor and bypass floor brokers.  On October 19, 1987, the amount of sell orders was up dramatically due to the cycle brought on by portfolio insurance and the SuperDot began to fall behind. Trading in some stocks had to be suspended, because the quantity of sell orders was so overwhelming. [9] Investors were essentially blind. They were not able to obtain accurate and updated information about the conditions of the current market. Thus, many investors began to panic and just tried to get rid of their stocks and get out all together, exacerbating the issues.

The Federal Reserve, headed by Greenspan, reacted by easing short-term credit and also helping the public confidence. Two days after the initial crash, Greenspan said the Federal Reserve “affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.” Privately, the group also reached out to banks to encourage them to continue to lend per usual. The response helped prevent the economy from entering a depression or even a recession. Two years later, the longest bull market in the history of the United States was achieved. [10]

Circuit breakers were also introduced in markets due to Black Monday. Now, if a market declines by a certain percentage over some period of time, the circuit breakers will go into effect and halt trading. [11] As the events on October 19, 1987 showed, the problem was made worse because people were confused and immediately reacted by selling whatever they could. If the circuit breakers had been in effect, they might have stopped some of this. They are still in effect today, though there is some controversy over them. “People are afraid that if they don’t get out of their trades before the circuit breaker hits, they’ll get stuck with their position,” says Cohane, “so they may actually create more volatility.” [12]

With the advancements in computers and new technologies, program trading and portfolio insurance arose. At first there were no restrictions and they got out of control. Investors did not know how much selling was actually going on because of lagging systems and the disconnect between the current and future markets. Part of the problem was that the new technology was not yet advanced enough. Moore’s Law states that the number of transistors doubles approximately every eighteen months, which essentially means computing speed doubles over the same interval. [13] If the computers had been faster in 1987, investors would have had access to more relevant information and some of the effects of the crisis might have been mitigated.

There are multiple reasons for the crash and people still argue over which ones are the most important. However, the role of technology is valuable in understanding the crash as a whole. It can also be beneficial as we look towards a future where technology’s role is growing exponentially. Without the proper safeguards in place, there can be negative implications such as Black Monday. The relatively quick recovery that the Federal Reserve helped orchestrate might not be possible in the future. Thus, it is essential to look at an event like Black Monday and study what went wrong as well as examine technology’s role in order to ensure that there is no repeat.

 

[1] Phone interview with Brian Cohane, April 27, 2016.

[2] “October 19, 1987- Black Monday, 20 Years Later,” The New York Times, accessed May 1, 2015, <http://graphics8.nytimes.com/packages/pdf/nyregion/city_room/20071019_CITYROOM.pdf>

[3] H.W. Brands, American Dreams: The United States Since 1945 (New York: Penguin Books, 2010), 265.

[4] Phone Interview with Brian Cohane, April 27, 2016.

[5] Phone Interview with Brian Cohane, April 27, 2016.

[6] Dean Furbush, “Program Trading.” The Concise Encyclopedia of Economics, May 6, 2015. Accessed May 3, 2016. <http://www.econlib.org/library/Enc1/ProgramTrading.html>

[7] Phone interview with Brian Cohane, May 6, 2016.

[8] Floyd Norris, “A Computer Lesson Still Unlearned.” The New York Times, October 18, 2012. Accessed May 4, 2016. <http://www.nytimes.com/2012/10/19/business/a-computer-lesson-from-1987-still-unlearned-by-wall-street.html>

[9] Mark Carlson, “A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response.” Federal Reserve, November 2006. Accessed May 1, 2016. <https://www.federalreserve.gov/pubs/feds/2007/200713/200713pap.pdf>

[10] Carlson, “A Brief History of the 1987 Stock Market Crash with a Discussion of the Federal Reserve Response.”

[11] Zach Guzman and Mark Koba, “When do circuit breakers kick in? CNBC Explains,” CNBC, January 7, 2016. Accessed May 4, 2016.

[12] Phone interview with Brian Cohane, May 6, 2016.

[13] H.W. Brands, American Dreams: The United States Since 1945 (New York: Penguin Books, 2010), 328.

 

More photos of the New York Stock Exchange on October 19, 1987:

Spies: Here, There, and Everywhere

By Andrea Bisbjerg

Throughout the Cold War, Douglas Stuart — like most Americans — imagined spies in the manner that they were painted in the media: covert, mysterious, sophisticated, and suave. He would eventually learn that these expectations were just that: mere expectations as opposed to realities. After several encounters with double agents, he would find them “so much less interesting than the kind of people that you see on TV or in the movies involved in spying. But, it was also just a function of how pervasive spying was during the Cold War.”[1] This substantiates the panic in the United States where, in H.W. Brands’ words, “concern regarding communists in government, in Hollywood, and in other allegedly sensitive positions in society intensified as the Cold War grew grimmer.”[2] While figures like the late President Joseph McCarthy exacerbated these fears with dramatic rhetoric and wild accusations, the anxiety of the general population was indeed founded on truth.

The American public first became wary of espionage after the detection of Soviet networks which had infiltrated the United States during World War II. These discoveries fueled newfound counterespionage efforts by the American government and the establishment of the Central Intelligence Agency in 1947.[3] Over the next decades, despite increasing security measures, spies would continue to funnel information. Michael Sulick postulates that the government’s inability to locate spies rested on the fact that “investigative agencies limited their security programs to narrow investigations of an employee’s communist sympathies instead of his or her overall suitability for work in sensitive positions.”[4] After World War II, the primary reasons for betraying one’s country were no longer ideologically based; rather than truly supporting communism, many spies and double agents were enticed by financial gain.

Rainer Rupp was one such man whom Stuart met while living in Germany teaching American military intelligence officers. Stuart came into contact which Rupp through their work with the North Atlantic Treaty Organization and even published chapters in two of Stuarts’ books. Rump “was the head of the NATO economics directory so the highest-level person in their economic department. Because of that, he had the highest level security clearance.”[5] Known at first only by his codename, Topaz — Stuart mistakenly mixed up Rupp’s and his wife’s codenames: Topaz and Turquoise — officials failed to locate the double agent for several years until 1993. Convicted in 1994, Rupp pleaded guilty to smuggling sensitive documents for twelve years between 1977 to 1989.[6] Despite claiming to be motivated solely by ideological beliefs, prosecutors estimated over $400,000 worth of compensation for his efforts.[7] This detail speaks to the growing prevalence of spies motivated specifically by financial gain; however, these claims have never been proven and some sources insist Rupp never received money for the thousands of pages he photographed Eastern Germany’s Stasi’s Central Reconnaissance Administration.[8] This is perhaps echoed in Stuart’s memory of Rupp’s conviction: “it got me to thinking…did I ever see any indications when I would meet with him that there was anything special about him or there was any reason to be suspicious? And the only thing that came to mind was that he was more inclined than most people to complain about his salary and his financial things. He just seemed to be very obsessed with not being adequately compensated.”[9] The double agent has never expressed remorse over his role in the war, but if he truly took so many risks for little to no monetary return, Rupp may have felt underpaid or underappreciated. He appears proud of his service and has stated that “the goal of my reconnaissance work, and that of many other comrades in the secret front, was not to win a war but rather to prevent a war.”[10] Thus, one may never know the rationale behind Rupp’s decisions and those of so many like him.

Although people may speculate as to what reasons drove citizens to betray their countries, the truth will forever remain uncertain and locked in those individuals’ minds. While Stuart was working for his department’s administrator as a graduate student at the University of Southern California, he noticed a completely empty student file labeled “Ben Stiller.” His supervisor assured him that the papers simply had not yet arrived as the student was coming directly from Germany. Stuart soon befriended Stiller and “it very quickly became apparent to me [Stuart] that he was not a German citizen getting a graduate degree…and, little by little, he began to provide me with information…he was indeed a KGB double agent who had escaped from the Middle East and was in hiding because the government believed that he was a high enough KGB agent that he indeed was in danger of being killed.”[11] Eventually, Stuart would learn Stiller’s true identity: Vladimir Sakharov, a former diplomat who served in Yemen, Egypt and Kuwait between 1967 and 1971. He became involved with the KGB while in Yemen and ended up spending over two years as a double agent reporting to the United States Central Intelligence Agency. He ultimately defected to the United States in order to avoid returning to Moscow and has since provided information and perspective on the Soviet Union.[12] He has discussed Soviet culture, their supposed inferiority complex, and has extensively described Yuri Andropov, the chairman of the KGB from 1967 to 1982 (particularly his fascination with American culture[13]).[14][15] Vladimir Sakharov, unbeknownst to Stuart at the time, was relatively well-known within his field and is featured as chapter two “Secrets of the Desert” in John Barron’s KGB: The Secret Work of the Soviet Secret Agents.[16] In Barron’s book, he describes Sakharov as “an intelligent and sensitive KGB officer stationed in the Middle East, who recognizing the oppression of liberty and the evil falsifications of communism.” Once, Stuart did ask “what made him [Sakharov] betray his country and I said, ‘You know, was it democracy and freedom and the ideologies that we stand for here in the West?’ and he thought for a second and he said, “I did it for Frank Sinatra records and a Johnson outboard motor.’”[17] While it is evident that Sakharov merely provided a lighthearted and humorous response, it goes to show that society will never truly know the reasons and factors which contribute to a person’s conscious decision to take such risk.

While double agents and defectors were discovered throughout the duration of the Cold War, most revelations occurred after its end. As governments began to gain access to various archives, documents, and general classified information, they could more easily narrow down areas where such activity was prevalent and, in some cases, individuals involved. For a portion of the Cold War, Stuart had worked overseas but returned by 1992 and was teaching at Dickinson College. He recalls giving a guest lecture at the Massachusetts Institute of Technology when he received an urgent phone call from where he had taught in Italy, John Hopkins: “They wanted me to know I was the front page of The Repubblica, the main newspaper, one of the main newspapers in Italy. The title of the article was ‘The sixth man was an American professor.’”[18] As archives were opened, the Western governments quickly realized that Czech Slovakia was a hub for spies during the Cold War and had discovered five high-ranking Italian officials and scholars who had been involved. Stuart’s name appeared in these documents although they “speculated that maybe I wasn’t like the other five people, a spy, because the other five all had codenames and I did not. And so, consequently, I mean talk about how stupid the logic was: that the fact that I did or did not have a code name mattered at all.”[19] This correlates both with the assumed prevalence of spying, but also the irrationality of that assumption. While, as Brands describes it, “some of the anxieties were perfectly rational. Soviet communism was a threat. Spies did exist,”[20] Stuart’s experience truly exemplifies the absurd justifications which determined who was or was not an undercover agent. He has since concluded that his name was in these files because of his connection another one of the five revealed spies. Because Stuart had been involved with NATO, this scholar (whom Stuart occasionally worked with) “started treating me as if I were providing him with all this high-level top secret stuff which, of course, was absolutely untrue. He was elevating the significance of my stuff to justify his own existence and his own salary.”[21] The scholar and double agent needed to report to higher officials and, in order to do so regularly, exaggerated the importance of Stuart and his information. This man succeeded by merely manipulating the casual comments of a coworker, highlighting the ubiquity of spying and also the nonchalance of it.

But if there is a lesson to be learned from Stuart’s numerous encounters with double agents from both the American and Soviet side of the Cold War, “it’s first off how pervasive this spying was, particularly for folks that just found themselves doing research in certain kinds of areas and, second, how really kind of uninteresting these people were who were spies.”[22] Stuart’s experiences all occurred in normal settings, in places of work. However, he managed to come into contact with various people who all, ultimately, were working against their respective agencies or countries. This underlines the ordinariness of these double agents who were “in my [Stuart’s] experience anyway, people who were just trying to pick up a little extra pocket money or just fell into this position and thought it was a good idea for them to be doing this.”[23] His encounters demonstrate how the paranoia of the public was well-founded and legitimate, but only to a certain degree. These agents existed, perhaps as ubiquitous as feared, but their roles and they themselves were overstated to be far more extravagant than in actuality.

[1] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[2] H.W. Brands, American Dreams: The United States Since 1945 (New York: Penguin Books, 2010), 51.

[3] Michael J. Sulick, Spying in America: Espionage from the Revolutionary War to the Dawn of the Cold War (Washington DC: Georgetown University Press, 2012), 265.

[4] Ibid, 266.

[5] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[6] Rick Atkinson, “Spy against NATO given 12 years,” Wilmington Morning Star, Nov. 18, 1994, https://news.google.com/newspapers?nid=1454&dat=19941118&id=L7ksAAAAIBAJ&sjid=DRUEAAAAIBAJ&pg=6793,1244478&hl=en

[7] Mary Williams Walsh, “Spy Gets 12-Year Term in Germany: Espionage: Rainer Rupp admitted passing NATO documents to East’s security agency. Prosecutors called case the worst in alliance history.” Los Angeles Times, Nov. 18, 1994, http://articles.latimes.com/1994-11-18/news/mn-64323_1_rainer-rupp

[8] Wladek Flakin, “Cooling the Cold War,” Exberliner, Jan. 3, 2013, http://www.exberliner.com/features/people/the-spy-who-saved-the-world/

[9] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[10] Flakin.

[11] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[12] Special to The New York Times, “Russian Says U.S. Fascinates K.G.B.’s Chief,” New York Times, June 13, 1982 [Proquest]

[13] Ibid.

[14] David M. Giles, “Culture Called Best Weapon,” Philadelphia Inquirer, Nov. 1, 1987, http://articles.philly.com/1987-11-01/news/26173528_1_soviet-diplomat-soviet-domestic-policy-double-agent

[15] Encyclopædia Britannica Online, s. v. “Yury Vladimirovich Andropov”, last modified Jan. 4, 2016, http://www.britannica.com/biography/Yury-Vladimirovich-Andropov.

[16] Miguel Faria, “KGB — The Secret Work of the Soviet Secret Agents,” Amazon, Dec. 25, 2012.

[17] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[18] Ibid.

[19] Ibid.

[20] Brands, 53.

[21] Interview with Douglas T. Stuart, Carlisle, PA, April 13, 2016.

[22] Ibid.

[23] Ibid.

By Molly LaBelle

In 1973, Don LaBelle was newly independent. Living in a small apartment on his own in Rochester, New Hampshire, he commuted each day to school and work. Don grew up alongside many brothers and sisters in poor family and worked for most of his childhood. As a teenager, he played football, played the guitar, and was deeply invested in his hair. He was a typical young boy of the era, trying to get by while still enjoying his youth and freedom. However, his youth was quickly taken away from him when the first oil crisis hit: “all of the sudden I had to spend a lot more money on gas. You had to make sure you had gas” he remembers [1]. Like Americans across the country in 1973, Don was forced to make sacrifices like he never had to before. For the first time after the birth of American consumer culture, people were not able to get something they depended on for their daily lives. H.W. Brands puts it best when he notes that “gas shortages were un-American, something people in other countries endured but not citizens of the United States. And Americans were used to being in a hurry and driving fast”[2]. Brands’ interpretation of the crisis helps us to understand that American people now began to question their entitlements to material goods that they had always enjoyed, entitlements that were uniquely American.

The oil crisis and shortage began in October of 1973 when the Organization of Petroleum Exporting Countries enacted an embargo on oil exports as a political weapon against Isreal. The use of oil as a weapon began as a result of Israeli occupation in Egypt and portions of the Sinai Desert and Gaza Strip. The occupation occurred after a violent and short war with Egypt that easily pitted the countries against one another. By stopping the flow of oil, the OPEC nations were directly punishing Israel for its actions, however, they were also indirectly punishing the United States for quietly taking Israel’s side in the conflict. As relations with Middle Eastern countries deteriorated, the U.S. was warned numerous times that if it did not stop its ally with the enemy, the OPEC nations would institute their embargo, essentially stopping the flow of 12% of the United States total oil supply.

While the embargo certainly had an effect on foreign oil affairs, things were already bad on the home front when it hit. Robert Lifset argues that the shortage of oil came long before the embargo, which happened to be a convenient “scapegoat” for the American government[3]. Before the embargo, the American fuel market had already been under strain that would cause a shortage. According to Lifset, when the U.S. was at peak oil production in 1971, President Nixon froze prices. At this time, gas prices were high and heating oil prices were relatively low. This led to the increased demand for heating oil thus increased focus on this by the production companies. The lack of focus on gas created a dramatic drop in supply that caused shortages four months before the OPEC embargo in June. This, then, was only worsened when the embargo was enacted in November of 1973. Both domestic and foreign oil were scarce and the United States bore the brunt of the shortage.

Changes in lifestyle began to show throughout America as soon as the shortage began. What little luxury and leisure people enjoyed slipped away quickly. Don remembers the loss of Sunday drives most clearly:

“This is gonna sound funny, but all the time when I was growing up, when I was young, they used to have something called a Sunday drive. That’s why you hear people called Sunday drivers. And it was a real big thing. People, on Sunday, would go on nice long drives, just kind of exploring in their cars. You know, go to places that they haven’t been before. Go up north… people from Massachusetts would come up. People would take drives to different parts of the state, visit some relative that was quite a way away. Always on a Sunday. Then you couldn’t do that, because you weren’t sure if you were going to have gas[4]”.

While this may not have been a major loss for some Americans, others like Don, felt that a certain charm of American life had suddenly faded away. The U.S. was a place where hardworking people like himself could enjoy things like Sunday drives and explorations. Now that Americans were confined to their homes in fear that they would run out of gas, they felt trapped.

In many ways, the oil crisis took Don’s teenage “innocence” and optimism away from him to soon. He loved his 1968 Ford Grand Torino GT Fastback that he had worked so hard to purchase. Now, as he struggled to finance his travels, it seemed like more of a burden than a luxury. Now, when he went to the gas station, there were feelings of fear rather than relaxation. Don recalls that before the crisis people never pumped their own gas. “The employees would pump it for you and you would get out and clean your windows and talk to people around you[5]”. During the shortage, people came to the gas station on edge and worried that fuel would run out before they got the chance to fill up: “people were more stubborn than anything” because they wanted their gas and their freedom, Don recollects.

Especially in New England, were people on edge. Here,the crisis posed unique threats and problems. Since the embargo was passed in November, it fell right before the eve of a typically harsh New England winter. And if gas was in low supply, naturally heating oil was as well. Don knew the importance of this heating oil in such a cold area: without it, your pipes would freeze and this would cause extreme damage to your home. You had to have heating oil, just like you had to have gas. Newspapers in the region warned that New England would be hit the hardest as the rising demand for heating oil would not be met in time for the winter. One New York Times article predicted that since New England’s oil needs were met primarily by independent companies, the shortage could have a deep and lasting impact on the area[6].

Some good things did come out of the crisis. The shortage of oil certainly helped people to realize that America’s energy independence was crucial to its security interests. Americans began to seek alternative forms of energy and improve the forms they were already using. Don became acutely aware of this after the crisis. A short article in the New York Times from 1973 details how one college professor began trying to use wind as a cleaner and more dependable form of energy in the United States[7]. In addition to efforts like these, car companies began to make smaller, more efficient cars. This change was a lot closer to home for most Americans. Even Don himself put an effort towards depending less on oil. After the crisis, he made sure to buy a smaller car that was more efficient on gas. He sacrificed looks and style for practicality.

In the midst of the oil crisis and the years following it, Americans developed into different kinds of consumers. Instead of taking and taking without any thought, they began to realize how unique America was with its prosperous capitalist society. Don explained that he had never experienced anything being rationed before, much like many Americans during that time period. American consumer culture continued to grow and expand up to the 1970s and allowed people to have whatever they wanted in almost no time. The gas shortage caused them to question the lifestyle they had now become accustomed to.

“You never had food that was rationed; there wasn’t anything that you couldn’t get enough of that you needed. Other countries have experienced this quite a bit. But in the United States, you never had that before. You know, you go to the grocery store and the shelves are all full all the time, or you go to buy clothes and the shelves are all full… or shoes, or any commodity. And it kind of really made you wonder, if it can happen with oil, what else can it happen with?[8]”

It was feelings like these that caused people all over the country to realize that they were not always in control. They would not always be able to get the things they needed or wanted whenever they needed or wanted them. The oil crisis of 1973 and the similar crisis that followed in 1979 helped to dampen Americans’ sense of entitlement and open people’s eyes to the role that foreign affairs could play in their daily lives.

 

[1] Phone interview with Donald LaBelle, April 20, 2016.

[2] H.W. Brands, American Dreams: The United States Since 1945 (New York: Penguin Books, 2010), 196.

[3] Lifset, Robert D, “A New Understanding of the American Energy Crisis of the 1970s”. Historical Social Research. (2014), 39.

[4] Phone interview with Donald LaBelle, April 20, 2016.

[5] Phone interview with Donald LaBelle, May 1, 2016.

[6] “Oil Outlook Dark For New England,” New York Times, September 29, 1973 [ProQuest]

[7] “Hot Air 1973,” New York Times, January 1, 1973 [ProQuest]

[8] Phone interview with Donald LaBelle, April 20, 2016.

Many white Southerners labeled the return of “home rule” following the Radical era of Reconstruction as a period of “Redemption.”  That word, however, contained a very bitter note for anybody who believed that the aftermath of the Civil War promised equality to all and a socioeconomic revolution for the region’s dispossessed.  For southern blacks, in particular, the Redeemers represented an ominous threat, not only to their rights as freemen, but to their lives.  How far Redemption might go in undoing the reforms of Reconstruction –and how violent its advocates might be in that process– remained to be seen by the end of the 1870s.  However, it was already clear during the Centennial Year of 1876 that violence against blacks was looming.  The Hamburg Massacre in South Carolina during July 1876 offered one of the most gruesome examples.  Foner describes the wanton violence against blacks in the small town, but he leaves out a discussion of the subsequent role of

Prince Rivers, the black militia leader and local trial judge charged with investigating the aftermath of the massacre.  A new website from historian Stephen Berry (CSI: Dixie) offers a vivid account of the massacre and the complicated role that Rivers tried to uphold during the proceedings afterward.  Students in History 118 should remember Prince Rivers, because he was the former contraband slave who been “discovered” by James Miller McKim (Class of 1828) and who subsequently emerged as a leader in the First South Carolina volunteers and a hero during the Civil War.  Rivers also turned out to be a symbol of the betrayal of Reconstruction’s promise.  Students should be able to explain why after reading Berry’s narrative of the Hamburg Massacre.

Southerners were not the only Americans whose lives were transformed during the decades immediately following the Civil War.  Northerners did not face the same challenges of political reconstruction or economic transition in the aftermath of slavery, but they did face a series of revolutionary experiences.  Students in History 118 should be able to identify the main social, political and economic forces that ripped apart the North during the 1870s and 1880s, but they should also be able to explain the story of westward expansion in great depth.  That was a story of unexpected complexity, one that can be at least partially summarized through a close reading of this famous painting by John Gast, entitled, “American Progress,” (1872).

American politics has always been pretty rough, but perhaps no period was as bare-knuckled and partisan as the Reconstruction era.  The confrontations involved more than just political combat between Democrats and Republicans.  There were factions at odds with factions.  Most notably, President Andrew Johnson waged war against Radical Republicans.  These men had once been Unionist allies, but now found themselves in bitter disagreement over Reconstruction policy in the South.  The result of this escalating conflict was the impeachment crisis of 1868.  Thomas Nast, a leading cartoonist for Harpers Weekly depicted this crisis in a brilliant series of cartoons for the magazine.  Please browse the selection of these cartoons and select one that seems to embody some of the most important insights from Eric Foner’s history of the period.

• Harp Week exhibit on Impeachment
• Thomas Nast cartoons

Eric Foner and Olivia Mahoney have created a web-based exhibition hosted by the University of Houston that is designed to accompany his published work on Reconstruction.  Students in History 118 should browse the image gallery of the sections of the exhibit entitled “Meaning of Freedom” and “From Slave Labor to Free Labor” in order to immerse themselves in the images and stories of the formerly enslaved people fighting to establish themselves as free American citizens.  These types of visual exhibitions sometimes are even more effective than print sources in conveying the experiences of ordinary people in the past.  What does this exhibit reveal about the everyday life of Reconstruction for the freed people?

By Charlotte Heroux

The aftermath of World War II defined a new era for not only the United States, but also for the world. The world powers had shifted and the once strong European governments were suffering immense economic and industrial troubles from fighting the war on their own soil. One of these countries was France, who emerged from World War II with a series of problems. The United States Secretary of State George Marshall spoke at Harvard University in June 1947 and called for “an ambitious program to aid Europe to stabilize and ameliorate the situation there, in the interests of the Europeans and the world…the Europeans must cooperate with America and among themselves.” [1]

This aid ultimately came in the form of what is known as the Marshall Plan, which planned to give about 13 billion dollars in aid to European economies, both dollars and goods. One European country that was to receive a significant amount of aid was France, which is where Pierre Heroux served as a French interpreter in Villefrance, France while serving in the Navy, and experienced first hand accounts of post World War II France and how it was affected by the Marshall Plan.

Heroux recalls, “I joined the Navy immediately after high school in July 1954. At the time, military service was mandatory for all males. Since I did not wish to join the Army, but rather see the world, I volunteered for the Navy.” [2] But while Heroux was still in high school, the Marshall Plan was taking effect in Europe.

The aid to France began in April 1948, and marked a significant change for the lives of Europeans. The picture published in the New York Times in January of 1949 displays “a ceremony that was held on the pier as the Liberty ship John S. Quick reached Bordeaux last May with a load of 8,000 tons of wheat shipped from the United States. The vessel was placarded ‘The First Ship of the Marshall Plan’ and was greeted in an impressive manner by French officials and citizens while the passengers lined her rail.” [3] This symbolizes the adjusting attitudes towards the United States in European countries, and what was to come in the ongoing and future battle against communism. Over the next couple of years, the aid continued to France, and continued to improve the lives of French citizens and the economy. By December 1950, “France…is a dramatic illustration of how the pump-priming of Marshall plan money – in combination with the will, work, and ingenuity of the people – put one country back on its feet economically. France is not only recovered. It is thriving.” [4]. In only two years, France was once again a fully functioning European economy and society, and was now prepared to take on the challenges of post World War II involving the containment of communism. In 1948 when the United States rolled out the Marshall Plan, “…the Kremlin announced the Molotov Plan, named for Marshall’s Soviet counterpart and intended to accomplish for Eastern Europe, on socialist principles, what the Marshall Plan would do, on a capitalist base, for the West.” [6] These actions escalated the division of Europe, with Germany at the center. Fear of communism expansion in the United States heightened to an all time high, and it became even more important for relationships to be solidified between the United States and Western Europe.

During this pivotal time, Heroux was serving active duty in the navy, and during this time of his service, he was able to experience living in France and witness first hand the effects the United States aid had on the country. “When I was there,” Heroux recalls, “the French people were appreciative of the United States role in conquering Nazi Germany. They treated American servicemen with great respect and friendship.” [6] With the growing relations of Western Europe and the United States, it became even more important to oppose the growth of communism, and the United States was at the forefront of this battle. This fight came in part as the Marshall Plan, as it helped the countries that would be on the ground potentially opposing the communist spread. This worked as a two way street, the United States helped European economies recover, so that these countries could assist the United States in combatting communism. These once demolished countries were returning to full functioning world powers, and this was something the French people did not take lightly. Heroux recalls, “while I was on shore patrol duty and interfacing with the local gendarmes (police) the sargent I was dealing with mentioned to me that if it were not for the U.S.A. aid via the Marshall Plan, the local police would not have been able to become operational in a timely fashion after the war. Such things as equipment, organizational assistance, and financial assistance in his opinion was what allowed local police forces throughout France to become functionally operational as quickly as they did.” [7] France was able to regain its status as a world power because of the help of the United States, and the United States proved that it not only was powerful enough to help other countries, but able to be of immense support to its own citizens.

The United States Navy played an instrumental role in Pierre Heroux’s life, as well as countless other men just like him. After serving his active duty as an electrician’s mate, Heroux remembers, “I was happy to return to civilian life…[and I pursued] a degree in Electrical Engineering…I returned to active reserve Navy duty after acquiring a degree. I was fortunate enough to find a position in the utility field as an electrical engineer.” [8] The Navy, as well as the Army, provided careers and life paths for men throughout the United States. It also provided life experiences these men would not have otherwise experienced, and Heroux’s case is a perfect example of this. While he helped the United States combat communism, he got to experience living in another country and numerous other unique experiences. As he recalled the most important events, he remembered, “cruising to the top of the world and crossing the Artic Circle [and] surviving two hurricanes at sea.” [9] While, these might not have been instrumental in the history of the United States, they were important life events for Heroux and the other men he served with. The United States time and time again proved its immense power not only with dealing with foreign world powers, but providing the best lives for its citizens, and it seems as though the United States power has not limits.

 

 

[1] H.W. Brands. American Dreams: The United States Since 1945. New York: Penguin Books, 2010, 38.

[2] Email interview with Pierre Heroux, March 21, 2015.

[3] “When the First Marshall Plan Shipment Arrived in France.” New York Times. 04 January 1949, 41.

[4]”Marshall Plan Has Put France Back on Its Feet, Economically.” Daily Boston Globe. 17 December 1950, 1.

[5] Brands, 39.

[6] Email interview with Pierre Heroux, March 25, 2015

[7[ Email interview with Pierre Heroux, April 23, 2015

[8] Email interview with Pierre Heroux, April 23, 2015

[9] Email interview with Pierre Heroux March 21, 2015