THE GREAT SILVER HUNT

 

I think billionaire Nelson Bunker Hunt (above) would prefer to be remembered as a man who did not smoke, drink or gamble, even though he owned, bred and raced a thousand thoroughbred horses. He was the son of a flagrant womanizer, who had openly produced two completely separate families, and a third in secret - fifteen children in total by three wives, In response to his father's sins, Nelson was a major financial supporter of Fundamentalist Christian political groups.

Nelson was friends with and a financial supporter of white supremacists Senators Jesse Helms, of North Carolina and Strom Thurmond, of South Carolina. He was also a major financial supporter of the right wing John Birch Society.  And he was famous for searching his couch cushions looking to recover lost change, his own and visitors.

Said a family member; “Sometimes he’s brilliant. The rest of the time you wonder whether he’s really there with you or not.” Said a business partner; “He doesn’t just want some of it. He wants it all.”

Said his father, legendary oil man and bigamist Haroldson Lafayette Hunt Jr. (above); “I could find more oil with a road map, than Nelson could with a platoon of fancy geologists”. Said Nelson himself; “Worrying is for people with strong intellect or weak character.”

But maybe the key to his personality was that Nelson Baker Hunt was born a second son. Nelson’s eldest brother - his father’s “run away favorite” - Hassie Hunt (above, left), was an oil wildcatter and “a millionaire in his own right by the age of 21.” And then this older, smarter brother developed schizophrenia and his desperate father decided to treat him with a lobotomy. Since that "Hail Mary Pass" of treatment, Hassie spent the rest of his life under 24 hour nursing care.

Thus Nelson (above) became the replacement son. But he was never his father’s favorite. And that may explain why one dark night in 1974 Nelson and a staff descended upon New York City in three charted 707 jets,. When the jets took off again, they flew 40 million ounces of silver to Nelson's leased vaults in Switzerland.

Now, silver is a commodity, like wheat or oil or steel. You can buy a commodity, and you can even sign a contract pledging to buy it at a set price some time in the future. These futures are a bet as to what the price of that commodity will be. The vast majority of futures traders never intend upon taking delivery of the actual commodity. They merely bet on the market, providing producers and buyers a hedge against price fluctuations of the actual commodity. People who buy gold on TV ought to remember that.

In most cases, these bets stabilize the market, which is good for everybody. And to encourage trading in futures, buyers have to put down only a small percentage of the total price, called a “margin”. But Nelson was willing to suffer the expense of transportation, storage and insurance, by actually taking delivery on his silver, because he believed in a doomsday fundamentalist theology, that sooner or later the world’s financial markets were going to collapse. Paper money would become worthless. And if all that happened, a commodity like silver would still have intrinsic value.  Not like, food, you know. Just intrinsic, some how. 

In 1974 the world wide production of new silver was 245 million ounces, while annual consumption was 450 million ounces. The imbalance (67%) was made up through recovery of “scrap silver”, everything from recycling industrial applications to melting down family heirlooms.

But that imbalance also meant the control of a tiny percentage of the world’s silver could swing the price. This meant that every ounce of silver that Nelson bought and now stored in his Swiss vaults was another ounce removed from the market. And that drove the price of the remaining silver up. As the price went up, the silver in Nelson’s vaults increased in value.  Thus, on paper, he was getting richer by the day.

Nelson Bunker Hunt (above) cashed in on that increase by using it as collateral for loans, which he used to buy more silver and silver futures. Which took even more silver off the market. Which made Hunt's silver even more valuable. He was gambling that the price would always go up, and he seemed to have enough control of the game, called leverage, to insure that it did.

The price rose from $6.22 per ounce in November of 1971 to $11.00 per ounce by the end of 1979. Nelson now controlled 1/3 of all the silver in the world not sitting in various government vaults.

But Nelson’s manipulations had not gone unnoticed. Tiffany and Company made money selling silver art (above) to consumers. They took out a full page ad in the New York Times naming Nelson Hunt as the villien , and stating, “We think it is unconscionable for anyone to hoard several billion, yes billions, of dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver.”  What the retailer meant, of course, was Tiffany was having to pay more, and sell less.

By the end of December 1979 the price of silver had risen to over $50 an ounce. Five years after that first late night silver flight, Nelson (above, right) and his younger brother (above, left) had earned between two and four billion dollars in paper profit from the (by then) 100 million ounces of silver they had in their Swiss vaults, And they had future contracts to buy much more at even higher prices.

But while Nelson had been buying silver futures “long”, betting that the price would go up, he was also squeezing the manufacturers - like Tiffany's - who needed silver today. They would have to pass their price increases to the millions of customers who used their products...

....such the silver used in the millions of catalytic converters required to reduce air pollution from all automobiles by the new Environmental Protection Agency .  Compared to the universal health benefits of cleaner air, the only  beneficiaries of Nelson Baker Hunt's silver hoarding scheme were the Hunt family and friends. In addition, unchecked, Nelson's speculations held the potential to bring about at least the economic doomsday part of the evangelical vision.

On 7 January, 1980, the five year old United States Commodity Trading Commission, which had oversight of all futures markets, issued “Silver Rule 7” which increased the margin required for silver futures. Just four days later the price of silver had fallen back to $25 an ounce.

As the value of Nelson’s collateral began to plummet, the brokerage houses and banks which had made him loans to buy silver futures, now issued a $100 million "margin call" on those loans. In effect, Nelson would either have to cough up that $100 million, or fulfill the contracts, and take delivery on and pay for $1.7 billion in additional silver he did not already own.

Early on the morning of Thursday 26 March, 1980, before the commodity markets opened, Nelson’s younger brother and partner, Herbert Hunt (above), placed a telephone call to the chairman of the Futures Commodity Trading Commission and asked him not to open the silver market. The reason given for that extraordinary request was that the Hunt brothers would not be meeting their margin calls that morning – “would not”, Hunt had said, not “could not.”

As John Bloom noted in an article he wrote for the magazine “Texas Monthly” “Here was one of the leading spokesman for unbridled free enterprise in America, asking a federal regulator to close a market. If the federal government would not do that, then he simply wouldn’t pay up.”

That day, the silver markets did open. And they immediately collapsed. The price of silver futures fell from $25 an ounce to $10.20 an ounce. The day passed into history as “Silver Thursday”.

As the Federal government attempted a postmortem, they discovered that Nelson Hunt had assets of $1.5 billion, and now owed $2.43 billion. In short he was bankrupt. In addition he owned 6.5% of one of the brokerage houses which had loaned him money on the Silver Futures, a fact never revealed to the Security Exchanges Commission, which was supposed to regulate those houses. That was illegal.

The feds also discovered that Federal Reserve Chairman Paul Volcker (above) had met with Nelson several times in an attempt to find funding to save him from bankruptcy., and allow him to continue to unbalance the silver market.

As Time Magazine noted, Volcker’s “continual monitoring of the situation was interpreted by bankers to mean that the Federal Reserve…favored some kind of bailout to keep the Hunts from going under…(which) showed that when big speculators lose millions, “telephone calls come to Paul Volcker for a quick fix.” Those banks put together a one billion dollar line of credit to save, not the Hunt brothers, but the brokerage house he had defaulted. Yes, it has all happened before. Several times.

The aftermath to Bunker Hunt’s silver manipulation is also informative. The banks went after the Hunt’s fortune, seeking return of another billion dollars lost in their game. Like all good defendants, Nelson countersued, accusing the banks of lending him money which they knew he couldn’t possibly pay back. It was an absurd argument, but it allowed Hunt’s fifteen lawyers to negotiate a reduction of the repayment. Yes, the rich really do live in a different world than average people.

In 1998 a federal jury found Herbert Hunt (above, left), Lamar Hunt (above, center) and Nelson Baker Hunt (above, right) guilty of fraud and conspiracy to monopolize the world's silver market. Nelson was banned for life from ever trading in futures again. And finally Nelson Bunker Hunt was personally forced into Chapter 11 bankruptcy.

Nelson was certainly not reduced to poverty. The extended family remained wealthy and politically well connected. A reporter for the Dallas Morning News found in March of 2009 the 83 year old living “in relative modesty in a North Dallas house with his wife of 57 years”. The key word there is "relative".  Nelson insisted he had no regrets.

In better times, Nelson Baker Hunt said, “People who know how much they're worth, aren't usually worth that much.” Stephen Susman, one of Nelson’s lawyers, said, “These people are gamblers. If you’re a gambler, you take your shot.” Except, of course, when these rich folks win their gambles, it's their money. When they lose, it's ours. And that has always been true.

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FIFTY-FOUR FORTY OR FIGHT!

 

I wonder why so many people keep complaining about politicians.  Check my math, please: politicians say stupid, outlandish things, like "Fifty-Four Forty or Fight!", or" Segregation Now, Segregation Forever!", or "I will build a beautiful wall!". and politicians get elected. Could there be a connection?  Let me give you some examples from ancient history, so no living voters feel insulted.

James Knox Polk (above) was America's eleventh President, serving a single term from 1845 to 1849. He was, until Richard Nixon, our most secretive President. He often did not even tell his own cabinet members what he was thinking. He had been Speaker of the House of Representatives and most recently the Democratic Governor of Tennessee.  But no matter what your history books tell you Polk did not campaign on the phrase "Fifty-Four Forty or Fight" – that came up later. 

The actual 1844 campaign centered on the divisive issue of Texas (above). Recently declared to be a slave republic, Democrats favored it's admission into the union because it would strengthen their hold on the Senate, and weaken Wig control of the House. It also extended slavery westward, toward the Pacific.  

The Wigs opposed Texas admission for the same reasons, but they preferred talking about high tariff's, which raised prices for all consumers. So their candidate, Henry Clay (above),  merely issued a few confusing statements about Texas. And then, abruptly, in August,  the Wigs decided to claim that Polk was unfit to be President because he branded his slaves. And trust me, this smear was so good they still haven’t figured out who exactly was behind it.

The story was first published in the 21 August, 1844 edition of the Ithaca New York "Chronicle". It was a Whig Party newspaper. And the story claimed to be a letter to the editor, quoting a three paragraph extract from an unpublished book, titled “Roorback’s Tour Through the Western and Southern States…” 

The extract claimed to detail Baron Von Roorback's conversations with a group of slave traders on the Duck River in Tennessee. “Forty of these unfortunate beings had been purchased, I was informed, by the Honorable J.K. Polk…; the mark of a branding iron, with the initials of his name on their shoulders, distinguishing them from the rest.”  Now, even in 1844 the idea of branding human beings, even those treated as slaves, was appalling to many people...most Whigs and even some Democrats, of whom, remember, James K. Polk was the leading candidate for President.

Which was why the story was picked up by the "Albany Evening Journal", and other Whig newspapers, particularly in the 1844 “battleground states” of New York, Ohio and Pennsylvania. Many voters in those swing states were outraged that a man standing for President would do something so despicable as to brand human beings the same way you brand cattle. 

To Whig politicians the story from "Roorback’s Tour" was almost too good to be true.  And almost instantly the Democratic press discovered there was no such book and no such Baron. 

The details claiming to be about Polk had been lifted from a real travel book, of a run in with some slave traders on Virginia’s New River. Polk’s plantation was in Tennessee, so the inventor of the smear had shifted the scene to where it would be easier to tie the branded humans to Governor Polk. Besides, it was not common practice to brand slaves.  Like whipping scars, branding tended to reduce their value as property, since it indicated this slave had a tendency to escape. Slaves were certainly whipped and branded because in 1844, most Americans, even most Whigs, still believed black slaves were property and would have been equally offended if some government official tried to tell them how to treat their horses or how to slaughter their hogs.

So now, embarrassed at repeating what was so obviously a fabrication, the Whigs pinned the whole thing on William Linn, a lawyer and a Democratic operative in Ithaca, New York.  But why would a Democrat smear his own candidate? Well, if I were a believer in conspiracy theories, I might say that this kind of allegation against Polk was actually a fairly safe charge to make. 

Polk did own slaves. But his Whig opponent in the 1844 election, Henry Clay (above), owned even more slaves than Polk did.  And it has been suggested by some historians that the “Roorback” story was a case of nineteenth century “wedge” politics. 

Abolitionism was still a minor issue in 1844, but abolitionists formed a solid voting block in certain sections of New York, Ohio and Pennsylvania, those key battleground states. Convince enough abolitionists in those states that the Whigs were lying to them, and they just might choose the Democrat Polk over the Whig Clay as the lesser of two evils.  Or they just might stay home and not vote at all. It was the same game later used by Republicans to prop up "liberal" candidates to siphon votes away from Hillary Clinton in the 2016 election.  And the letter to the Ithaca Chronicle had been signed, “An Abolitionist”, thus adding insult to the injury.

Well, maybe....And maybe that theory implies a level of sophisticated conspiracy that did not exist in the simpler culture and times of 1844 –

...and certainly would not have existed in Athens in 415 B.C., when Alcibiades was accused of vandalizing statues of the god Hermes.

You see Hermes (above) was the mythical inventor of fire, who "...protects and takes care of all travelers...".  Each Greek home had an anatomically correct statue of Hermes standing on its front lawn, and it was common practice for visitors to pause at the stature and stroke his stone phallus for good luck before knocking on the front door. 

And when the owner left the house, they would also give the phallus a tug for a safe return.  And that was why it was so shocking that on the morning that Athens was launching a massive naval assault on Sicily, the city awoke to discover that during the night many home statues of Hermes had their phallus' knocked.

It sounds to my modern ears as if the neighborhood kids had been drinking sour wine on the street corner and started smashing phalluses as a prank. But to the devout in Athens (and there were many who believed in the gods) it was also sacrilege. And rumors began almost immediately that the person responsible for the damaged statues was the golden boy politician who had conceived of the Sicilian expedition, and was known for his past sacrilegious opinions, Alcibiades (above). 

Of course Alcibiades had his own theory. He thought it had been the work of his chief political opponent and co-commander of the Sicilian expedition, Nicias (above).  Two thousand five hundred years later, it is impossible to know who the phallus whackers really were or why they were whacking off in the dark.. But whether the politicians planned it all or just took advantage of the situation, the one thing we know for certain is, that the people spewing hot air over both sides of this scandal were politicians.

The point is, politicians have been gaming voters since voting was invented. And voters have been playing along, else the game would not have remained so popular. Like claiming to build a wall to nowhere.  And that is why when a politician tells me he is selling something, especially when it is something I want to believe  my first reaction should be,  “Pull the other one.,”  When the American political system works  (which it has not been doing for a generation)  it is been based upon pragmatism, not hysteria.  When it gets hysterical, it's usually when the politicians want to distract you.

And the election of 1844 is a perfect example.  Polk won 49.5% of the popular vote to Clay’s 48.1 %, and part of that razor thin margin were victories in New York and Pennsylvania - by less than 6,000 votes in both states.  Those two states gave Polk 62 Electoral Votes, out of his sixty-five vote margin of victory (170 to 105). It seems that if the Roorback story was a double blind trick, it damn well worked.

Oh,... and remember the phrase “Fifty-Four Forty or Fight!”?  Well, that was actually invented by Ohio Senator William “Earthquake” Allen (above), known for his thundering speeches, and he used it after the 1844 election. 

The number was  the Southern border (54 degrees & 40 minutes of latitude) claimed by Russia when they owned Alaska, before 1867.  Radical Democrats were demanding the U.S. insist on that line for our northern border with Canada, and Polk seemed to back that position.  He might have even have supported starting a shooting war over it.  However,  simple glance at a map will confirm the modern border,  agreed upon by President Polk, was (and is) the 49th parallel. 

So much for the “…Or fight!” part of the slogan.  Have you noticed how often politicians don’t actually mean what they seem to say? Like they are going to build a wall and Mexico is going to pay for it? Or how they say Democrats want to leave our southern boarder wide open?  You might say many of them make a career out of hysteria.  And always have.  And voters keep buying the horse manure they keep dropping all over the place.  And whose fault is that?

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