The Trump ‘Brand,’ Part 2: Deadbeat

“He [Donald Trump] is from the private sector, not a politician,” Sarah Palin enthused in her endorsement of her fellow reality TV star. “Can I get a ‘Hallelujah!’”

No, you can’t, Sarah—certainly not from me. I don’t understand the conservative romance with the private sector, which in my lifetime has gone past Ronald Reagan’s enthrallment to a downright fetish today.

In my more than 30 years since my undergrad days, I have worked continuously, for or with several companies, large and small, in the private sector. Trust me: While not universal, many executives in those companies abounded with arrogance, cupidity, cowardice, hubris, hypocrisy, negligence, sexism, hare-brained schemes, mindless penny-pinching, short-term thinking, wastefulness, and deceit.

Trump has committed more than a few of these offenses. Little if anything was heard about it in the primaries—partly because his business concerns were so hydra-headed as to be well-nigh impossible to untangle; partly because, for a long time, neither his GOP opponents nor the media thought he could win and therefore his business affairs weren’t worth investigating or even mentioning; and partly because the other candidates did not want to alienate his base by attacking him.

Now, the curtain is being pulled, though ever so slowly, on the wizard—and it’s not pretty. The party that, for years, screamed about self-reliance and personal responsibility now backs a candidate who’s never displayed either. Here’s just some of what we’ve learned:

In the early 1970s, Trump briefly became a Broadway producer. In certain ways, he probably missed his calling, for producing would have allowed him to swagger into Manhattan without engaging in substance—and without inducing city officials desperate for economic growth to give him close to whatever he wanted. 

(Or, as James Surowiecki of The New Yorker has observed, on “Trump’s Other Tax Ploy”: “[H]is real-estate empire, such as it is, was built on exploiting just about every government tax abatement, credit, and subsidy available.” Remember that the next time he goes into his crybaby act on the cost of regulation.)

But, as Emily Jane Fox noted in a piece for Vanity Fair’s Web site earlier this year, Trump put up half the cost of Paris Is Out but “relinquished responsibility when it came to any real decision-making or creative input.” The more important thing for him was his name, where he insisted on equal billing on the marquee and Playbills.

Perhaps it’s just as well the production lasted only 112 performances—otherwise, he might have used the same M.O. he admitted to in an interview with Howard Stern: i.e., exercising his owner’s prerogative with the Miss Universe pageant to barge in on “incredibly beautiful women” while they were still in their underwear.

Trump certainly hasn’t mastered the minutiae of his financial dealings. It wasn’t Trump who displayed the “brilliance” that enabled him to reap the tax benefit of his $916 million in losses. It was his accountant who discovered the generous write-offs resulting from the titanic loss; it was Trump who displayed the chutzpah in exploiting every bit of it.

Father Gives Best

It says something about Trump’s inability to relate to Americans of diminished circumstances that he could call the $1 million (in 1970s currency!) from his father to start his own business “small.” It says something more about his shaky relationship with the truth that he has been silent on the multiple other ways that Fred Trump ensured his rise. Wayne Barrett, an investigative reporter and author of the biography Trump: The Greatest Show on Earth: The Deals, the Downfall, the Reinvention, spelled them out in an interview with Democracy Now:

*When Trump opened his first office in Manhattan, the rent was paid by his father;

* For the Grand Hyatt, his first major Manhattan project, Donald got the financing from two banks that his father had used;

*Under ordinary circumstances, it would have been well-nigh impossible for a rookie thirtysomething developer to get the green-light on a major project like the Grand Hyatt—except that Fred Trump not only signed the financing agreements, but also sped governmental approval through his close association with members of the Beame administration in the mid-Seventies.

* Fred also supported the financing of his son’s centerpiece property, Trump Tower. 

* Subsequent infusions from Fred Trump—including an illegal $3.5 million loan—were required to bail his son out when he became overextended in the 1980s and 1990s, as a result of Donald’s unsuccessful ventures into casinos, the Trump Shuttle, even the Trump Game. A 1990 net-worth statement revealed that Trump owed nearly three hundred million dollars more to his creditors than his assets were worth.

Stiffing the Little Guy

Those creditors included small companies that delivered pianos, minarets and slot machine stands. When Trump backed out on paying his debts, these companies suffered, with some—including family-run businesses operating for generations—forced to close their doors for good.  

That practice has continued: A USA Today article by Steve Reilly found that at least 60 lawsuits, along with hundreds of liens, judgments, and other government filings, have accused Trump and his businesses of failing to pay them for their work—with not only small businesses, but more vulnerable individual workers—dishwashers, plumbers, painters, waiters, and bartenders—all stiffed. 

Nor was the bankruptcy the prime reason for Trump’s callousness: While building Trump Tower, the 2016 candidate who spoke the loudest about protecting domestic jobs was the subject of reports that 200 undocumented Polish workers had been working off the books while demolishing the old Bonwit Teller structure; that they had been paid below the minimum wage; and that they’d been denied health and medical coverage and been threatened with deportation if they complained. 

Faced with a lawsuit, Trump blamed all problems on his contractor, despite reams of pages of testimony by others to the contrary. The suit worked its way through the courts for 15 years before the mendacious mogul finally settled it. 

Trump and Bankruptcy: The Truth Hurts

Yet, even as Trump finagled accounts and stiffed creditors, he still couldn’t keep his business solvent. In fact, he might be considered the forerunner of “too big to fail.” In an article for Newsweek, Kurt Eichenwald explained the process: 

“Over the next few years, my fellow business reporters and I marveled at the numbskullery in the Trump financial frolics, as banks and junk bond investors threw him billions of dollars in loans so he could buy up businesses he knew nothing about—casinos, an airline and the like…. When the inevitable occurred and Trump could not even pay the interest on his billions of dollars in debt, his lenders found themselves in an impossible position—if they demanded he make good on all the debt he had personally guaranteed, he would file for personal bankruptcy, and the financial institutions that doled out the cash to him would go under. Trump and his lenders were standing in a basement filled with gasoline, and if either lit a match, they would both burn to death. Trump did not ‘outsmart’ his banks, as he likes to say now. He and they had been so reckless that they had to save him to save themselves.”

Trump is correct in only one sense when he whines that critics lie when they say he has gone bankrupt. It is true that he has never filed for Chapter 13 under the personal bankruptcy code. But as just seen, that was only because his lenders were in too deeply themselves with him. Their solution to this dilemma was fourfold: 1) engage in debt-for-equity swaps; 2) force him to sell whatever marketable assets he had available (e.g., his yacht and his air-shuttle service); 3) put him on an allowance for “personal and household expenses” of roughly $450,000 a month (yes, a month; it’s beyond the imagination of many of the desperate people who would vote for him that they’d receive $450,000 a year, never mind a month); and 4) pray awfully hard.

Financial advisers must have persuaded Trump of the folly of personally guaranteeing loans that put him on the brink of personal bankruptcy in the early 1990s. He would never again come this close to sinking. Even so, Trump companies have filed for Chapter 11—i.e., declared business bankruptcy—four times, as recently as 2009. (See Kevin Williamson’s hilarious description in National Review of the circumstances surrounding these filings—as well as Trump’s weird circumlocution around the word “bankruptcy”: “putting a company into a chapter.”)

A brush with financial ruin did little if anything to curb Trump’s penchant for risk. In fact, it has led him to project his methods for escaping responsibility onto an entire nation. This spring, he shocked fiscal conservatives with this statement: “I would borrow, knowing that if the economy crashed, you could make a deal." 

The idea that investors would accept less on the dollar than what they are owed would destroy any notion of the U.S. as a good credit risk and tank the U.S. economy as surely as Trump Casinos. (Danielle Kurtzleben’s explanation on NPR of the implications of the GOP hopeful’s muddled thinking is as deadpan as it is devastating.)

The ‘King of Debt’ Lays Waste to the ‘Sam’s Club Republican’

What Tim Pawlenty called the “Sam’s Club Republican” tried to appeal to working-class and middle-class voters. Central to that constituency is the notion of a government that tries to live within its means, or pay-as-you-go.

For years, in opposing Democrats, the GOP created an image of itself as the party of fiscal restraint. That image even survived, though barely, two of the stiffest tests imaginable: Reagan’s massive military spending increases and the loss of blood and treasury during George W. Bush’s Iraq War. 

That image, though, can never prevail against the self-proclaimed “King of Debt,” a candidate who figured out how to game the system by using other people’s money to avoid personal bankruptcy. 

This magnate helped bring on the day of the locusts in which Atlantic City now finds itself by almost single-handedly flooding the market with more casino space than it could handle. His is not a vision of sustainable economic growth, but of one mad money-making scheme after another that, more times than not, doesn’t work out.

Do we really want him to apply the same methods to the federal government?

Fraud has been an allied Trump strategy in living as a deadbeat. He started by invariably spinning his projects as the best and biggest, then moved on to assuring creditors and partners that they’d get their money on time, and culminated in fleecing gullible and desperate students to invest their hard-earned money in Trump University, a travesty of an educational institution. Not even content with that, he diverted funds meant for charitable purposes in the Trump Foundation to legal expenses for his for-profit businesses and (but of course!) to buy paintings of himself, according to a report by David Fahrenthold of the Washington Post.

Besides defrauding, there is another “D” word that actively describes Trump’s potential impact as President: debasing. Many people—including the GOP establishment that has collaborated in his hostile takeover of the party—don’t seem overly concerned with how he is debasing political discourse, though they should.

But they should be petrified at how he could debase U.S. currency, because his fiscal policies would damage the economic strength that has made the U.S. powerful throughout the 20^th century and into this one. 

Trump promises to run this country like his own business empire. That means insanely high risks, beyond his (or—God forbid if he wins—our) means, crushing debt burdens, and dependence on the patience of creditors. The prospect of this vainglorious private-sector plutocrat might please Sarah Palin, but it should terrify anyone else with a functioning intellect.

(Photo taken by Gage Skidmore of Donald Trump speaking with supporters at a campaign rally at the Prescott Valley Event Center in Prescott Valley, Arizona, Oct. 4, 2016.)

Quote of the Day (Warren Buffett, on Donald Trump and Debt)

“The big problem with Donald Trump was he never went right. He basically overpaid for properties, but he got people to lend him the money. He was terrific at borrowing money. If you look at his assets, and what he paid for them, and what he borrowed to get them, there was never any real equity there. He owes, perhaps, $3.5 billion now, and, if you had to pick a figure as to the value of the assets, it might be more like $2.5 billion. He’s a billion in the hole, which is a lot better than being $100 in the hole because if you’re $100 in the hole, they come and take the TV set. If you’re a billion in the hole, they say ‘hang in there Donald.’” —Warren Buffett on Donald Trump, in a spring 1991 speech to Notre Dame University students, quoted in Julia La Roche, “Warren Buffett Nailed Why Donald Trump's Businesses Failed in a Lecture 25 Years Ago,” Yahoo Finance, June 21, 2016

You really have to hand it to Donald Trump (pictured, of course, in a typical "mouth that roared" moment). Here he is the other day, in between lunges at “corrupt Hillary,” deciding that counterpunching on policy would make him look Presidential—or, at least, like a candidate with gravitas. So what’s the ground he chooses for his fight? Debt.

That takes the same kind of hubris required if Bluebeard ever ran for President on a platform criticizing his opponent’s proposals as bad for women. (Oh, wait: twice-divorced, philandering, STD-was-my-personal-Vietnam Trump has done that, too.)

Trump would probably have been better off with the “corrupt Hillary” spiel. Sure, it’s so tiresome now that even The Donald must be bored by it. But, for every voter who claims the charge is a lie or at least overblown, there’s another for whom Hillary Clinton reeks of inauthenticity.

Even trade might have worked as a wedge issue against Hillary. Bill Clinton, after all, had signed NAFTA, an agreement more problematic (certainly for manufacturing workers) than proponents claimed at the time.

But debt? By the end of Bill's second term, the federal deficit had been erased and the budget balanced. He was not solely responsible for that, of course (stock-market gains, the dot-com bubble, and fiscal restraints imposed by a GOP Congress also played their part).  But the tax hike (chiefly on upper-income brackets) passed early in his term played a considerable role—and without inciting a recession, as Republicans claimed it would. Bill Clinton developed a justified reputation for untrustworthiness. But problems with the debt cannot be laid at his door. No, debt increased under his Republican successor in office.

On the other hand, if reducing debt is a virtue, then Trump is utterly without credibility on this issue. Indeed, in an interview with Norah O’Donnell that aired on “CBS This Morning,” he admitted to having “made a fortune by using debt.”

You might say that that is what builders like Trump do, where the practice is to borrow and make up for it on the back end. But in these enterprises, he was dealing often with private investors who were willing to put up not just with these norms but with his shenanigans. As President, he would deal with other people’s money. You know, tax revenues.

Taxes are supposed to be an issue that the GOP owns, but it’s now in free play. Are voters going to trust a candidate who, if he continues his business practices once elected, will spend their money like a drunken sailor? (Trump likes to say he’s never declared bankruptcy. Personal bankruptcy, he means. He’s been involved with four corporate bankruptcies. Again, other people’s money.)

The interview with O’Donnell opened Trump up to other unforced errors. First, the self-proclaimed “king of debt” brags about his proclivities: “Nobody knows debt better than me.” A great Democratic attack ad could begin with that line, followed by his shamefaced reassurance about an education at the now-infamous “Trump University” that could set attendees back $35,000: “It takes money to make money.”

Second, he briefly opened a window revealing how he has largely escaped damage to his net worth: “I’ve made a fortune by using debt, and if things don’t work out I renegotiate the debt,” he told O’Donnell. “I mean, that’s a smart thing, not a stupid thing.” Most people don’t have that luxury: they are at the mercy of financial institutions with enough time and big pockets to wait out court proceedings. Renegotiation is at the banks’ mercy, not their own.

“If things don’t work out I renegotiate the debt.” Indeed.  It goes back to the difference that Warren Buffett underscored between a $100 debtor and a $1 billion debtor. The last decade has shown that there is a different law in this country for the one-percenters than for everyone else. A Trump victory in November would mean nothing more or less than an even more enduring one for them, his true natural constituency. 

If you think living in post-recession America is bad, you won’t want even to think about a post-Trump America. The lessons learned from that will be an education even harder to afford than Trump University.

Quote of the Day (Leon Wieseltier, on Disappearing Book- and Record Stores)

“The commerce of culture is a trade in ideals of beauty, goodness, and truth. A hunger for profit exploits a hunger for meaning. If the one gets too ravenous, the other may find it harder to subsist. The disappearance of our bookstores and our record stores constitutes one of the great self-inflicted wounds of this wounding time.”— Leon Wieseltier, “Washington Diarist: Going to Melody,” The New Republic, February 2, 2012

This Day in Presidential History (Grant Swindled by Partner)

May 6, 1884—It didn’t start with Bernard Madoff. From the beginning, swindlers and financial panics have infested America, but the failure of banking and stock brokerage firm Grant and Ward on this date was unique.

The machinations of 33-year-old con man Ferdinand Ward led to the financial ruin of his partner, ex-President Ulysses S. Grant—and to the subsequent decision by the aging soldier to rescue his family from debt by finally penning his memoir of his Civil War triumphs.

Recently, I’ve been seized by the urge to read Herman Melville’s 1857 novel, The Confidence- Man. That urge not only harks back to my belief that you can tell as much about an author from his lesser-known works as from those invariably assigned during college, but also because I’ve become increasingly convinced that con schemes are as American as apple pie.

The confidence scheme is so endemic to our culture because of instincts at the heart of the American Dream. 

For the victim, it exploits the belief in entrepreneurship, the risk-taking that will help you achieve success; for the victimizer, it appeals to the idea that you can make yourself over, countless times if necessary.

In one sense, then, it’s appropriate that this early version of the Ponzi scheme (hatched more than three decades before the rise of the Italian immigrant for whom it’s named) would ensnare Grant.

The general not only announced his identity proudly in the very first simple yet sweeping sentence of his autobiography (“My family is American, and has been for generations, in all its branches, direct and collateral”), but also, through his military successes, kept the United States knit together as a transcontinental colossus singularly dependent on a money culture.

As my posts yesterday and last year on the Battles of the Wilderness and Vicksburg indicated, Grant was indomitable, refusing to allow a reverse to defeat him. 

Elizabeth Edwards’ just-released autobiography is entitled Resilience. Grant had this quality in abundance—and he would need every bit of it in the final two crises of his life.

The first initial of the “young Napoleon of Finance” who brought catastrophe on Grant’s family was F, but it could just as easily have stood for “Fake” as for “Ferdinand.” 

First the smooth-talking minister’s son took in the general’s namesake, Ulysses S. (“Buck”) Grant Jr.—a man who, despite a fine name and the best education money could buy, then or now (Phillips Exeter, Harvard, Columbia Law School), had never been able to establish himself independently in the professional world—then he swiftly won over the man who saved the Union.

A Giant With the Sword, A Bust With the Buck

What made Grant such an easy mark? He was one of those people who is really not meant for any profession except the one in which he made his reputation.

After resigning his Army post in 1854 (sheer loneliness and enervating service in a Western outpost sent him off on a bender, suggests sympathetic biographer Geoffrey Perret), Grant could not make a go of it in his father’s business in Galena, Ill. 

And, no matter how good his intentions, he lacked the shrewdness to make a good President, let alone a great one.

Second, Grant believed people would deal as squarely with him as he would with them. Perret makes a very interesting (though, to my mind, not conclusive) argument to this effect when outlining his relationship with chief of staff John A. Rawlins. While other historians see Rawlins as the man who saved his commander from the bottle, Perret sees him as self-aggrandizing. 

This view gains some credibility when one considers the vast amount of corruption during Grant’s two terms as President: Not a bit of it touched him personally, but he could not spot it in others who filled his administration.

Third, the old soldier’s other forms of risk-taking—a friendly hand of poker among friends, or breaking loose from supply lines that hamstrung the rapid movements he executed in the war—were either born of long study or not particularly sizable. The investment in Ward’s firm, in contrast, was $200,000.

Ferdinand Ward: A Character of Vast Shamelessness

Grant thought that his young partner was investing the firm’s money, but Ward did nothing with it but build a magnificent Connecticut home and New York townhouse while glorying in a fine stable of horses. 

When the scheme unraveled, Ward was nowhere to be found at first. After his capture, he was sentenced to Sing-Sing prison. 

Meanwhile, Grant was left with all of $180 in cash and $150,000 in debt.

And what of Ward—what led him to this pass? Well, let’s say this: he challenges one of my most firmly entrenched beliefs—that our current cultural shamelessness represents a recent growth.

Years before the hordes who now confess their sins on Larry King, The View, and 60 Minutes, Ward emerged from a quarter-century of obscurity to offer a retrospective of his relationship with the former President, in the pages of the New York Herald.

How shameless was Ward? Not in the class of a Baron von Munchausen in spinning a tall tale, nor even close to the American equivalent, the memoirs of Supreme Court Justice William O. Douglas.

But you just know you have to be on your guard as soon as you read the following remarkable sentence: “Our friendship never changed through all the period of stress and trouble, but remained until the time of his death.”

Maybe Ward gambled that in the dawning of the age of the mass media, when the public can maintain little or no interest in the news because the press provides little or no historical background to judge it, nobody would recall how Grant had pictured him in his Personal Memoirs: “the rascality of a business partner developed itself by the announcement of a failure.”

Ward’s great-grandson chose to pursue a more honorable method of storytelling: historian. A former editor of American Heritage, Geoffrey C. Ward has more recently been associated with writing text for the great documentaries of Ken Burns.

While researching the life of his famous scandalous forebear, this fine historian discovered a curious postscript: after release from Sing-Sing, Ferdinand kidnapped his son from an uncle who’d been raising the boy after Ferdinand’s wife had died.

Grant’s resolve to do the honest thing and pay off his creditors led him to reconsider a long-held stance—a refusal to write his own memoir. He finally agreed to write a three-part series for Century Magazine’s “Battles and Leaders” series on the Civil War. 

That, in turn, led him to partner with Mark Twain to publish through the humorist’s own new publishing venture.

Theodore Roosevelt and friend Henry Cabot Lodge collaborated on a series of short profiles called Hero Tales of American History. They could very easily have added the story of how Grant, against all odds, completed his memoir.

Nearly a year after the discovery of his financial distress, the general was diagnosed with cancer. For the remainder of his life, he pushed himself to complete his book. After enduring ferocious pain and sleepless nights, he completed the memoir only three days before his demise.

Personal Memoirs not only earned his family a much-needed $450,000 after his death, but, more than a century later, remains the gold standard among Presidential memoirs for its clear prose and unparalleled frankness about waging war.

This Day in Rock History (Mick Fleetwood Files for Bankruptcy)

May 1, 1984—Demonstrating far worse talent for finance than for supplying the backbeat for Fleetwood Mac, drummer Mick Fleetwood filed for bankruptcy in a Federal court in Los Angeles. The news astonished fans of the rock group, who, for the last several years, had read how the band’s 1977 LP Rumours had become one of the bestselling albums of all time.

Rock ‘n’ rollers have varied wildly in their ability to retain and manage their money. Some just have a natural talent for it—and in at least one case, the need to make money gave rise to the urge to make music. I’m talking here about Dave Clark, who, because his soccer team, the Tottenham Hotspurs, needed money in 1960, brilliantly thought of starting a rock ‘n’ roll band, buying himself a set of drums and learning how to play.

There’s also Mick Jagger, who used his acumen from the London School of Economics to ensure that the Rolling Stones remained a moneymaking machine even after their creative peak had long passed.

On the other hand, there’s someone like Billy Joel, who, after the breakup of his first marriage to a wife who doubled as his manager, turned around and, in a move of supreme illogic, hired as his new manager his ex’s brother, who promptly swindled him out of millions. Or Bruce Springsteen, who, in signing with first manager-producer Mike Appel, agreed to an insanely low royalty rate of three percent of retail price.

At least Joel and Springsteen were naïve young men. Fleetwood had been a working musician for nearly two decades by the time of his bankruptcy filing—he’d been around.

Maybe, in a sense, that was part of the problem—he’d been around too much, in very fast company.

If you listen to Fleetwood, his insolvency resulted from faulty Australian real estate investments. Especially in light of recent events, that has a surface plausibility—and, indeed, the bankruptcy came before Paul Hogan’s Crocodile Dundee films and “shrimp on the barbie” commercial had made Americans sit up and take notice of the coolness of Down Under. In that sense, you could make an argument that Fleetwood was just a bit ahead of his time.

Yet, in the same interviews where he blames his problems on these ill-advised speculations, Fleetwood has also admitted to putting $8 million in cocaine up his nose. If you ask me, I think substance abuse cost him far more than that.

Think of all the following ramifications of the rock ‘n’ roller’s self-indulgence:

* Without cocaine, do you think he would have been quite as likely to have even more fun with groupies—and break up two of his marriages and thus incur expensive divorce settlements?

* Without cocaine, do you think he would have made such risky investments in real estate in the first place?

* Without other forms of substance abuse (i.e., alcohol), would he have done insane things such as breaking a $7,000 Rolex with his beer bottle?

* Without the general insanity this induced all induced—the hangovers, the argumentativeness, the depression—would Fleetwood Mac have broken up so readily in 1982?

* Without the depression induced by his bankruptcy, would Fleetwood have written a memoir that made his old bandmates even more ticked off at him than before—and even less likely to hold the Fleetwood Mac reunion he wanted and needed so badly?

Fleetwood, of course, was not the only member of his group with all kinds of issues (Lindsey Buckingham is a mad genius, with the madness often overcoming the genius part). But he was the one most likely to be wrecked by a bankruptcy because a) he was not a songwriter who could collect royalties and b) as a drummer, he could not simply tour on his own—it had to be with others.

Ten years after the bankruptcy filing, Fleetwood finally was able to confront his substance abuse and begin to get control of his life again. In videos I’ve seen of Fleetwood Mac, he seems to be the one group member not in it for the prospect of another paycheck—quite simply, he looks blissed out that, in his early 60s, he’s still alive to do what he’s always loved.

None of this is to say, though, that he’s done with scrapes with financial ruin. In the past few months, Fleetwood and some business partners have become embroiled in a lawsuit with a former attorney who, it’s claimed, failed to give them the right advice about a dispute with the BBC. (It seems that the attorney did not tell them they could be personally liable for more than $4 million in legal fees.)

Quote of the Day ("Light-Horse Harry" Lee, Providing His Famous Son an Example to Avoid)

"Do aid me to my friend in one of the British islands." – Henry Lee (1756-1818), former Revolutionary War soldier, Virginia governor and Congressman, to his attorney, Robert Goodloe Harper, October 22, 1808, quoted in Charles Royster, Light-Horse Harry Lee and the Legacy of the American Revolution (1981)

Today, "Light-Horse Harry" Lee is better known for his son—Robert E. Lee—than for his own accomplishments. At one time, generations of American schoolchildren and quiz-show contestants could recite the most famous line from his eulogy for his great commander, George Washington: "First in war, first in peace, first in the hearts of his countrymen." 

The line to Harper that I've just quoted, however, though less eloquent, has an unexpected relevance for readers today—for this member of a proud Virginia dynasty had decided he must leave the nation he'd helped establish, in order to avoid the creditors who were increasingly haunting him. 

As a kid, you're simultaneously most able to absorb new ideas and, because of your hyperactivity, least inclined to assimilate them. It can be especially difficult to absorb history—a matter not helped by the fact that all human interest is leeched out of most texts. 

When you're talking about early Virginia, with all those horses and wigs and vast country estates maintained by slaves, the distance from now to then can seem hopelessly vast. 

I think adult Americans, however, would find it compelling to learn about Lee and his class—especially so in these last few weeks. For some words and phrases in the story of how Light-Horse Harry Lee—Revolutionary War cavalryman, three-term Virginia governor, author, planter, businessman—came to ruin come up repeatedly in the last month: Real estate. Speculation. Debt. Creditors. Loss. Bankruptcy. 

At some point, I’d love to get my hands on a title I learned about recently: Republic of Debtors: Bankruptcy in the Age of American Independence, by Bruce H. Mann. It describes how traditional notions of manhood, honor and dependency began to give way to debtors’ invocation of the rights of man as an argument against imprisoning debtors—though too late for Lee. 

The Democratic-Republicans that drove Lee's Federalists into the political wilderness for good—Jefferson, Madison and Monroe—would have their own issues with debt two decades after Lee's troubles. But much of that had to do with the precipitous decline of the Virginia economy in the 1820s.

Lee's troubles derived from a different source: the real estate bubble that occurred in the early-to-mid 1790s. 

People with great visions for the new nation, especially George Washington, saw endless opportunity in land. In particular, Virginia held immense promise, with the capital of the United States being moved south and with the Potomac River opening commerce to the trans-Appalachian region—a way to diversify the state's economy away from tobacco and slaves. 

Washington was an active but seldom imprudent speculator, and his micromanagement of Mount Vernon, even while commander of the Continental Army and America's first President, cushioned him when the financial winds shifted. Two associates were not so fortunate: 

* Robert Morris, the "Financier of the Revolution," who put desperately needed funds at hand for Washington and his troops, got in over his head when investments in the West and along the Potomac—along with construction of an unfinished mansion that became known as "Morris' Folly"—went awry. In 1798 he was thrown into a Philadelphia debtor's prison. When he came out three years later, his health was broken. He lived out his last five years through an annuity arranged by his old assistant, Gouverneur Morris. 

* James Wilson, one of only six men to sign both the Declaration of Independence and the Constitution, was so hailed for judicial sagacity that he became an Associate Justice of the Supreme Court. That didn't prevent creditors from hounding him so much that he could not attend sessions of the high court because he feared arrest. Eventually they did catch up to him, in Burlington, N.J. Still pursued for uncollected debt, he high-tailed down to the North Carolina home of fellow Supreme Court Justice James Iredell, where he contracted malaria and died in 1798. (For the relationships between the two justices and their wives—including a possible affair between Iredell and Wilson's much younger, pretty second wife, Hannah—see Natalie Wexler's fascinating account in The American Scholar.) 

When it came to indebtedness, early American law was modeled on English common law. In the 1790s, when Morris, Wilson and Lee came a cropper, there was still no federal bankruptcy law. The welter of state laws created for debtors a hydra-headed situation in which even imprisonment did not always satisfy financial obligations. 

Brave and warm-hearted, Light-Horse Harry lacked his great chief’s hard-won realism about national and personal governance. If a list could be compiled of 20 financial no-nos, Lee could probably be faulted for violating 19 of these, including: 

* Lack of documentation of claims; 

* Loaning $40,000 to someone (Morris) unable to repay him; 

*Lack of priorities in spending his time—e.g., writing a 30-page manuscript on the evils of Thomas Jefferson at a time when he could have been putting his financial house in order; 

* Selling lands whose titles were often in doubt; 

* Selling land whose dimensions and boundaries were imprecise—for instance, buying what he believed to be a 300,000-acre tract, selling it to New England investors, only to have them stop payment when they learned it was only 133,874 acres; 

* Writing a bad check for a friend helping him pay his debts; 

* Buying land he couldn’t see even while being forced to sell land he knew, as when he insanely bought a tract in Georgia even as he coughed up Virginia property. 

Even Lee’s first wife recognized his instability, leaving property to her children in trust so her husband’s creditors couldn’t get at it. 

All these efforts to avoid catastrophe proved unavailing. In April 1809, Light-Horse Harry Lee was arrested for a debt of approximately 5400 Spanish dollars, and jailed for a year. 

When he came out, he had to move the family he had established with his second wife so that his son by his first marriage—Robert’s half-brother Henry—could take over the ancestral estate, Stratford. 

Two years later, in the middle of a Baltimore riot over a newspaper editor’s opposition to the War of 1812, Lee was not just wounded but badly mutilated. 

Now even more desperate to get away, this time for his health, Lee sailed for Barbados. After five years, he wrote that he was coming home. He never made it, dying off the coast of Savannah, Ga., on property owned by the daughter of his old Revolutionary War commander, General Nathaniel Greene.

Ann Carter Lee, Harry’s widow, loved her dashing but flawed husband, making her all the more determined that “his grim cycle of promise, overconfidence, recklessness, disaster, and ruin should not be rounded in the lives of her children,” according to the great biographer of Robert E. Lee, Douglas Southall Freeman. 

Light-Horse Harry Lee’s fate was all too common in a republic founded on “the pursuit of happiness.” Something remains of this in the national DNA, as seen in a widening economic misery that hardly anybody expected to see three-quarters of a century after the Great Depression.