Sunday, October 30, 2011

Fremont and Freedom

Thomas Jefferson Hampson
When last we heard from Thomas Jefferson Hampson, my great grandfather who had been left for dead at the Battle of Wilson’s Creek, August 10, 1861, his chest and leg wounds were healing nicely in the relative comfort of the Greene County courthouse, where the many wounded prisoners of the battle were being held. 
The earlier privations of the courthouse were overcome by some medicine getting through and cots and bedding brought in.  He meets a kindly Union woman who visits the hospital and makes a case for him to come outside the city to her farm.  She could use some help – her husband is on the other side of the Rebel lines, and she takes pity on Hampson.
After a promise not to escape, Hampson spends most of September, getting better and being outfitted with a set of outlandish clothes to replace his that had been stolen in the courthouse.
However, while sitting down to dinner on late summer evening, Rebel troops enter the house and arrest everyone, suspecting that they are part of a scheme to smuggle Union sympathizers past rebel lines.  They send the woman North to where the Union troops are and transport Hampson back to the prison in Springfield, Missouri.  A fairly big man, Hampson weighed 175 pounds when he entered the Army after Fort Sumter.  When he is telling the part of the story that follows, he weighed about half that.
Son of the South
The prospect of spending the winter in Rebel hands weighs on Hampson.  Then the prisoners begin hearing word of General John C.  Fremont’s advance toward Southwest Missouri.  An advance party of Fremont’s force, led by Captain Charles Zagonyi, one of many European immigrants who fought in the Union Army, engages in a sharp battle on the outskirts of Springfield.  His rout of the Rebel troops, behind the battle cry "The Union and Fremont" causes the Confederate leadership to believe that the full force of Fremont’s 38,000 troops is just up the road.  They pull back to the more defensible Wilson’s Creek, leaving Springfield undefended, and wait for the big battle to come with Fremont. 
Hampson is an uneven speller and has General Fremont as Freemont.  The Hungarian Zagonyi comes out Zagonia.   When we pick up the story, it is October 22nd or 23rd, 1861.

The joyous thought of being liberated from our hated prison seemed to give us new life.  We eagerly caught up any news regarding Freemont’s advance; we pictured, in our minds, the glorious reunion between ourselves and our deliverers. 
One day there was great excitement among the Rebel Army and we saw that they were making hasty preparations for the evacuation of Springfield; falling back with all of their Army to their old position at Wison’s Creek.  We learned from the conversation of some of our guards that Freemont was within five miles of Springfield, and advancing in force. 
It would be a hard matter for me to describe the feeling of all of us upon receiving this most welcome news.  We started in to raise a little quiet enthusiasm among ourselves, but our guards soon put a stop to it by dealing out a few broken heads and bayonet thrusts. 
About four o’clock that day the town was free of all able bodied Rebels as Price had forced them all to fall back with his army and was preparing to give Freemont a warm reception at Wilson's Creek.  For a time we were free from all restraint, and gave vent to all our happiness as we fully expected to see our gallant boys in blue marching in next morning with Old Glory waiving over them. 
There lived in Springfield a doctor who was a staunch Union man, but was an invalid and unable to do military service; consequently, he had not been pressed into the Rebel ranks.  When the news came that the Union army was near the town, and that Price and his army had fallen back to Wilson Creek, it seemed to infuse new life into the doctor, and he managed to come over to the hospital.  Under his arm, he carried a bundle.  He came up to our ward and, of course, received a warm reception; after shaking hands with all of us. he said, “well, boys, I have something here that you all want to see.”  He then unfolded his bundle and it was a flag eight feet long.  The sight of our dear old flag set us wild again and again.  We gave three cheers for the Union.  The doctor soon explained to us what he wanted. 
The Rebels, when they left, left their flag flying over the court house and the doctor wanted it hauled down and Old Glory put in its place.  Now he exclaimed “Who will do it?”
My particular chum while in the hospital was a young fellow named James Davidson.  As brave and gallant a soldier as ever drew a sword in defense of his country.  He at once stepped forward and said, “I will go for one.”  “And I for another” yelled out yours truly, and the flag was handed over to us.  We were well aware of the fact that our mission was a dangerous one, and if our Army did not come to Springfield, and General Price and his Rebel force should return, the parties guilty of hauling down their flag would stand a splendid chance to stretch hemp. 
Not daunted, however, we had made up our minds that the flag should come down and Old Glory take its place.  David had been shot through both arms, but he had a good pair of legs.  I had a wounded leg but a good pair of arms, so between us, we made one good whole man.  We started for the courthouse, the streets were deserted save a few boys and three or four women – not a man was in sight.  Going into the courthouse, we soon made our way to the roof where about our head waving in defiance floated the flag of the Confederacy.
We hauled it down and soon had our flag floating proudly in its place.  We could hear a rousing cheer from the hospital as we hauled up our flag and when we had torn the Rebel flag into ribbons, we took off our hats and gave three cheers for the Union and its defenders.
The next morning came, but no Union army nor any sign of them.  Our disappointment was a bitter one and all of us were of the unanimous opinion that Freemont, who had the reputation of being a slow coach, deserved the application applied to him. 
That evening came back a part of the Rebel army and again occupied Springfield, much to our disgust and chagrin.  Of course the appearance of our flag and the disappearance of theirs raised a terrible row, and the uppermost thoughts in the minds of the Rebels was to find out who had the audacity to do such a thing; they threatened to hang every one of the prisoners if the guilty ones were not given up.  They came in the hospital in gangs, threatening and abusing us, endeavoring to find our who had hauled down their flag.
Things looked pretty blue for us; they threatened to burn down the hospital and cremate every inmate.  About this time it was discovered by the Rebels that we were seen by a lot of women and boys, and they hastened away to find them and bring them to the hospital to identify the Union boys who had done this deed. 
The doctor took Davidson and myself to one side and ordered us to go up to Ward No. 3 where all the most desperately wounded cases were kept.  Dr.  Melcher soon had us in cots, our legs and arms were done up in splints, our hands bandaged up in such a manner that our best friend would not have known us.  We were not any too soon, either, as the witnesses to our daring act were in the hospital and only too willing to help discover the guilty ones.  They inspected every inmate, us included, but failed to identify any of us as the ones wanted.  Dr.  Melcher told them that immediately after hauling down their flag we had left the hospital and in all probability were trying to make our escape into Freemont’s lines. 
Hampson and Davidson Make a Break For It
At eleven o’clock that night we were ready to make our desperate attempt.  A piece of cornbread was all we had to subsist on during our travel.  After a warm grasp of the hand from the kind doctor, and a tearful “God bless you” we stole quietly away from the hospital. 
We had travelled about a mile down the Rolla road when we heard the clatter of horses feet coming down the road from the direction of town.  They were right on us before we were aware of the fact; hastily throwing ourselves down in a fence corner, they passed without seeing us. 
That dreary night we struggled on and when daylight came we were hungry and fatigued but not disheartened.  Rebel scouts and bushwackers were on every hand, and we knew that we would not dare to travel during the day.  Fortunately for us, the country through which we were travelling was covered with black jack thickets which made an admirable place to secret ourselves.  A few hundred yards from where we found ourselves when daylight came was a dense thicket of Black Jacks and we were soon hidden there, and made our breakfast on cornbread. 
Feast:  Persimmons and Chickens
After eating, Davidson thought he would reconnoiter and try to find water, which would not seem a hard matter as the country was full of springs, and in about half an hour he came back saying that we were in big luck, he had not only found water but a grove of persimmon trees – the ground was covered with them.  I never tasted anything so delicious in all my life and ever since that time persimmons have had a warm place in my heart. 
All at once we came to a clearing in the weeds and about fifty yards further we saw a house, the sight of which about took our breath away.  We crept up near to what looked like a chicken coop and in that new respect our conclusions were correct.  What was even better, there were chickens inside. 
Our hunger overcame our discretion, and we determined to have a chicken supper.  I volunteered to go in and get a couple while Davidson stood guard, and gave warning should he see anything coming.  Soon I had a chicken in each hand.  I had caught them around the throat to prevent their squalling and rest assured I held them with a firm grip, and never let up grasping when I came out of the chicken house.  No one had seen us and we resumed our journey, and our commissary department was richer by two chickens.  They were dead as Hector for I had choked them in my firm grip upon their necks.
Sitting down we soon had them denuded of their feathers and for the first time in our lives we had a feast of raw chicken.  If we had only dared, we would have built a fire and roasted them – what a supper we would have had, but as it was, they tasted awful good.  After a brief rest, we again resumed our journey and made good time until daylight.  We hid in the thicket feeling refreshed and stronger after our chicken supper.  This time we were located so we could see down the road for a mile and watch for our enemies.
Meeting Up With Zagonyi and In Jail Again

Captain Charles Zagonyi
Civil War Virtual Museum

About ten o’clock we saw a group of Cavalry on the road coming toward our hiding place and at their head was a trooper carrying a flag – that flag was the dear old Stars and Stripes – just imagine our joy the minute we recognized that precious emblem of the free.  We fairly screamed for joy and scrambled through the thicket as fast as our crippled condition would allow.  We were soon on the road advancing to them.  They proved to be a body of Freemont’s men and on a scouting expedition.
When we met them they halted, and we were soon surrounded.  We were indeed a queer looking pair and many a rude joke was passed by the men upon our appearance in general.  Well, we could not blame them much, for we were a hard looking outfit, especially myself, with my calico uniform, plug hat, etc.
Captain Zagonia was in command and he gave us a sharp examination as to who we were, where we were going, etc.  The old idiot did not believe a word we said, and ordered two troopers to take us up behind and they would take us back to camp with him.
He had an idea that we were wounded Rebels acting the part of spies.  He imagined he had made an important capture.  But that night we were once more inside of the Union lines, but in the guard house under suspicion.  Of course we were mad all the way through, but knew, when taken before General Freemont, we would come out all right, as his adjutant, Captain Kennedy, was an old friend of our family and knew us in Covington.
Fremont and Freedom

John C. Fremont
Son of the South

The next morning we were brought before Freemont.  He asked us a great many questions.  He had been prejudiced by that fool Zagonia’s report, and did not know whether to believe us or not.  Captain Kennedy was there and kept watching me.  I knew that under the circumstances he would not recognize me.  Finally, I remarked to the General that Captain Kennedy would identify me and when I told the Captain who I was, he jumped up and caught me in his arms, turning to Freemont, told him that he and I were old school mates.  Well, this ended our trouble, and the next day we were sent to Rolla and from there to St. Louis with orders to report to the Commander of Benton Barracks. 
We arrived at St.  Louis on Monday morning, and to say that our appearance on the street created surprise and astonishment would be stating it mildly.  Davidson’s dress was not quite so loud as mine.  Nevertheless, it was certainly an old, odd looking rig; one that was liable to attract public attention.  The pair of us attracted as much attention as a circus parade.  The fact that we were wounded soldiers and escaped prisoners was enough to enlist the sympathies and admiration of all.  We went through the market and everything was free to us.  The attention and curiosity we excited was rather pleasing to us, and as long as that lasted we had no idea of reporting to Benton Barracks.
Post Script
Hampson and Davidson’s meeting with Zagonyi and Fremont came at a momentous time.  Zagonyi’s charge had occurred just a few days before his force was confronted on the road by the hapless looking escapees, chicken blood on the stubble of their faces, and he may well have been on his way for a second incursion into Rebel country that brought he and his boss, General Fremont, into the center of Springfield itself on October 27, 1861.
Their meeting with Fremont was at an even more significant time.  Upon taking command of the western theater of operations, Fremont ordered that all slaves in Missouri be freed, a policy that Lincoln was not ready to adopt, though he would use the same rationale in the Emancipation Proclamation 14 months later. 
Lincoln ordered Fremont to rescind his order.  Fremont replied that it was well within Lincoln’s power to countermand the order and Lincoln fired him on November 2, 1861, about the time our lads are fattening up at the market in downtown St.  Louis.

Final Installment Next:  A good time in St.  Louis and home for Christmas

Monday, October 24, 2011

Building Home

Though not as tough as this one, the 1980 recession cut pretty hard and, like governments today, the City of Seattle was struggling to make do -- cutting, cutting, cutting.  Once, while preparing a recommendation to the City Council on Community Development Block Grant funding, we decided not to fund a small outfit called the Stevens Neighborhood Housing Improvement Program.  They had a tool bank for home repairs on Capitol Hill and while not a lot of money, we made the call to put the $5,000 previously assigned their program into public safety. 

You would have thought we had cut the Mounted Horse Patrol Program – which, in fact, we also tried to do that year – ouch!  And the Lake City Aid Car – double ouch!  The Council Committee heard the Mayor’s recommendations, then listened to the tool bank’s brigade of speakers talking about self-reliance, the need to keep our neighborhoods in good repair, how neighbor helping neighbor builds community and finally, reminding everyone in the room that the Mayor who we said wanted to do this had actually run on a neighborhood platform.   Yes, on a neighborhood platform!  The council members glanced at the Mayor’s team periodically, seeming to say:  “You are putting us – and your boss – through all of this for 5,000 bucks?”

Today, Capitol Hill Housing, the successor to the tool bank, owns 42 buildings, 1,102 apartments across the city and reports assets of over $50,000,000.  They are one example of an explosion of non-profit housing developers who surfaced in the decade of the eighties.   David Colwell, a wonderful guy who preached at the downtown Congregational Church, thundered in a sermon once that “one homeless person was one too many,” and Plymouth Housing grew from the actions of his congregants and now operate 12 buildings, serve a thousand formerly homeless or marginal homeless residents and have assets of $17 million. 

The Fremont Public Association merged its Housing Development Department with a group of low income housing advocates and created the Low Income Housing Institute in 1991.  Since, LIHI has created 3,800 housing units, 1600 of them in Seattle.  They and 26 other housing developers work in King County as do three housing authorities and a network of financial service providers, lawyers and bureaucrats.  

Taken all together, this non-profit network represents a flow of civic energy that inspires and serves today.  They are a priceless value to our community, but how did they get here?  How did Stevens the tool bank become Capitol Hill Housing the powerhouse?

Answering this question will require a short detour into the Great Depression to find an important part of the non-profit narrative.

Today’s real estate financial systems have roots in the housing catastrophe associated with the Great Depression.  Prior to the Depression, housing markets were significantly different.  According to economic historian Ken Snowden, only 41% of the country’s non-farm housing units in 1920 were owner occupied and only 40% of those properties were mortgaged.  Most loans covered just 50% of the home value and matured in 2-5 years, requiring constant refinancing.  But with the rise of the Building and Loan banks, terms got longer, some as long as 12 years and covered a higher percentage of the value.  Also, private mortgage insurance companies began to enter the market, further spreading risk.  In fact, securitazation of mortgages, bundling mortgages into bonds, was a feature of the twenties bubble.  The end of the twenties saw housing prices inflating and mortgage debt rising along with it, tripling over the decade. 

Decadal Change of Mortgage Debt and Housing Starts
in the US         Kenneth Snowden
After the bubble burst, by 1934, half the home mortgages in this country were delinquent.  After rising to nearly 50%, national home ownership plunged back to the level it had started at in the twenties.  As a comparison, 4.5% of mortgages in 2008 were “seriously delinquent,” defined as 90 days or more overdue.  In 2009, the actual foreclosure rate was 4.5% with 10% of mortgages at least 30 days behind.  As badly as people are hurting today, it’s hard to imagine that harder time.

The alphabet soup of legislation thrown at the housing crisis in the 30s provided the foundation for much of today’s housing finance system and extended the role of the federal government.  The effects of that new role are part of the DNA of neighborhood housing activism in the 1980s. 

Four years before the Federal Housing Administration legislation passed in 1934, the census revealed that 30% of houses in the US lacked at least one component of standard residential plumbing – hot water heating, a toilet, running water itself.  In designing the law, legislators saw it is a tool not just to provide a federal guarantee to mortgages, but also to upgrade the quality of housing stock generally. 

Museum of the City
The desire to have better housing stock and lower lending risk guided FHA's hesitance to make loans in communities where “different” people lived.  Lenders throughout the life of this country took note of where African Americans, Jews, Asians, Italians and others lived, but the FHA neighborhood rating practices institutionalized this discrimination.  FHA’s lending practices also created a bias to new, suburban housing during the tremendous boom that followed World War II – home ownership increased 11.5% to 55.6% during the forties.

While the 1949 Housing Act established the goal of every American living in a decent and suitable living environment, it also emphasized slum clearance -- read that existing low-income housing.  In fact, when President Truman signed the bill, his remarks started with slum clearance ahead of the more lofty “decent and suitable” goals. 

And throughout all this time, the great African American diaspora is taking place, with 6,000,000 people leaving the South for what writer Richard Wright called “the warmth of other suns.”  Born in Roxie, Mississippi, Wright left poverty, family health problems and the murder by whites of his uncle to go to Chicago in 1927 with his aunt.  Listen to the hope in his voice as Wright heads North: 

I was leaving the South
To fling myself into the unknown ...
I was taking a part of the South
To transplant in alien soil,
To see if it could grow differently,
If it could drink of new and cool rains,
Bend in strange winds,
Respond to the warmth of other suns
And, perhaps, to bloom.

The physical and financial decline of the cities and the social unrest in them during the sixties, along with institutionalized discrimination, provide the strings of DNA for today’s continued activism in housing.  Very specific to Seattle are three additional sources.  The great freeway battles of the sixties, prompted by the great contusion Interstate-5 made through close-in neighborhoods, were mostly won by the neighborhoods and created organization and energy.  (See R. H.  Thomson Meet, Mayor McGinn in the "Our Great City" folder) Also important was an excellent Seattle Housing Authority with a tradition of looking out for poor people since 1939.  We’ll tell SHA’s inspirational story in a future posting.  Third is the office tower, hotel and condo building boom in Seattle in the latter part of the seventies and through the decade of the eighties. 

Over those ten years office towers like the Columbia Center, 1201 Third Avenue, US Bank, Wells Fargo, 1111 Third Avenue and many others doubled the available office square footage in the downtown core.  At the same time, condo development was on a roll in the Denny Regrade, now branded as Belltown, and in the neighborhoods, where conversion of apartments to condos was displacing lower income people, especially seniors.

The sum of all that building, its sometime displacement of lower income people, its traffic, its larger, more imposing scale, the rising cost of housing and living in Seattle, the relentlessly changing landscape, conspired to make a lot of people quite uncomfortable.

Accordingly, neighborhood activists collected enough signatures to force a vote on a height restriction for downtown office towers.  The City Council overcame the objections of developers and required one-for-one replacement housing for people displaced by new office development.   A condominium conversion ordinance was passed to provide protection and compensation for displaced households.  For the first time, the city invested directly in low income housing, starting with a bond issue for seniors, low-income and new, large immigrant families.  New, large immigrant families!  Imagine that today!  Most were from southeast Asia.  It was all packaged together with money for a new Seattle Art Museum.  Bread and Roses.   Following up on the bond issue, the city started a seven year housing levy in 1981 that continues to this day.  At one time, Seattle spent as much locally generated tax money on affordable housing for the full spectrum of low income people as did the entire state of California. 

These and other local changes, particularly changes in how federal tax credits can be applied to low income housing, created opportunities for new and creative partnerships with the growing cadre of non-profit housing developers.  Into the mix comes the Downtown Seattle Association and creates the Seattle Housing Resources Group as a private sector response to the cost and availability of housing in and near the downtown -- housing that helps people work in retail, hotel and other jobs supporting the downtown economy. 

SHRG was frequently criticized as a fig leaf for the downtown developers, including me.  Some leaf.  It now works in 29 buildings in and around the downtown, serving 2,000 households. 

Non-profit developers also thrive here because of the remarkable consistency of financial support.  Even in a tough tax year like 2009, city voters passed its fourth seven year housing levy with 63% approval.  Since 1981, when those first property tax levies passed, the city has provided funds to its private non-profit partners and supported the creation of more than 10,000 apartments, rental support for another 4,000 people and 600 down payment loans to first time home buyers earning under 80% of median income.  These funds are leveraged three times over with federal grants and tax credits. 

This is not just about money.  It is more like throwing people at problems, people who are not intimidated by the complications of doing something for and by themselves. 

Cool paper on the federal response to the 30s housing crisis
Kenneth Snowden, Lessons From the 30s
Point of view of artists in Belltown in the Face of Condo Development

Sunday, October 9, 2011

Electrifying America

I’ve actually had two different people show me exactly where they were on the road to their farm house when they first saw it had been electrified.  They knew exactly where they were and how it felt to see the light escaping through the windows.

 Imagine in our wired world what it would be like if you lived 30 miles from the big city and had no access to the Internet.  In 1930, 80% of homes in urban areas had electricity, but just 10% of farms had it.  That meant you milked the cows by hand, cooled the milk in 50 to 55 degree creek water, or, if not too far off the main road, in an ice box, much safer at 40 degrees. 

Most often, not having electricity meant that you had an outside toilet.  It meant your space heating and cooking heat would come from chopped wood or coal or dried manure.  All your tools were hand tools.  It meant, in short, a hell of a lot of work.
And there was something undemocratic about it -- this core technology of society available only to people in cities and suburbs.  It was a technology that most farmers and their families could see, touch and understand, but not at home. 
Thanks to Nikola Tesla's creation of alternating current, transmission over long distances became possible and the electricity business went from a highly local activity with a power plant in your neighborhood to one that was delivering energy over considerable distances.  As the poles and wires covered more ground, the corporate entities that organized and ran them got further away from the people they served. 

Samuel Insull
Chicago Now
Thomas Edison acolyte Samuel Insull was the leading electricity innovator in the industry’s early days.  He had worked at the master’s side and then moved on to Chicago where he bought an electric company and became the industry pathfinder.  Electricity in the early part of the century was very expensive, in 1911 a kilowatt hour in Seattle cost 20 cents.  So, to broaden his customer base, he started what we now call time of day pricing, selling the kilowatt hour more cheaply at times when there is less demand.  This led him to purchasing electric train systems to even out use and spread the cost around to more users.  He also employed new steam generation technologies that were bigger and more efficient than what was in place at the time and set about buying just about any electricity company he could.    Insull was the wizard of the wires, a regular on the cover of Time Magazine and people happily bought stocks in his great pyramid.  
Seattle Municipal Archives
 During the decade of the twenties, American electricity production doubled.  In 1922 electricity’s cost was down to about six cents/kWh, still very pricey compared to today, but it was also steadily declining, hitting four cents by 1930.  With a great opportunity still remaining in the urban market and with costs still high to string wire to the farm, utilities continued to ignore the farmer.

So, in 1929, the Washington State Grange took up the state’s new initiative to the legislature process and began collecting signatures that would allow the creation of public utility districts.  Initiative #1 contained 60,000 signatures, twice the number necessary, and brought the issue of rural electrification to the capitol.

The initiative to the legislature process automatically puts the measure on the ballot if the legislature fails to act.  Concerned about the growing economic disaster enveloping the country, the utilities convinced legislators that the farmers would have to wait for better economic times before they got electricity, so it was placed on the ballot.  Rural areas gave it strong support and the initiative passed with 54% of the vote.  It became effective on January 1, 1931.

 The law gave rural people the ability to form individual districts to provide electricity and water to the members of the district and recover the costs of the project through rates.  The first district, Mason County Number One, was formed in 1934 and now provides electricity, water and sewer services in the Hoodsport area.

Having the law was no guarantee of success.  Each attempt to form a district was a huge political battle with the private utilities and there was a parallel legal fight going on.  In 1936, the Washington State Supreme Court ruled the initiative legal and many districts formed, most of them countywide.  There is still life in Initiative #1.  Jefferson County's PUD was formed in 1939 but only provided water to parts of the county.  Voters approved electrifying the PUD in 2008 and service will start in 2013.

Bonneville Power Administration
At the end of the thirties, twenty three PUDs had been formed in Washington state and were in the process of energizing.  Rural electrification was in full swing everywhere.  The New Deal included the Rural Electrification Act which passed in 1936 and provided low interest loans for the formation of electrical cooperatives.   Today, there are over 3000 public agencies delivering electricity to customers in this country.
The Tennessee Valley Authority formed in 1933, a highly unique institution that Franklin Roosevelt described as a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise.”
Four years later came a somewhat different creature, the Bonneville Power Administration, to sell the output of the new Bonneville Dam and many others that would follow.  These agencies brought home two powerful concepts to aid the goal of rural electrification.
One is public agency preference, in which public agencies receive a priority for the output of federally produced electricity generation.  The second is an idea of transmission pricing called “the postage stamp rate.”  That means the transmission cost of electricity is shared by everyone, benefiting all equally, not just those close to the source of generation.  

Together, these and many other events were bringing electricity to nearly half of rural America by 1942 and, by 1947, to all of it, one of the great accomplishments of the last century.
Samuel Insull was not, at the core, a financial guy.  He was an innovator and builder -- an industry guy.  He cared about electricity, not money.  He is not, as is popularly thought, the inventor of the holding company.  In fact, he disliked the idea.  But the pace of electrification and its incredible returns brought in the money people.  J.P.  Morgan decided to get in big and by 1929, controlled 20% of the US electricity market through its holding company United Corporation.  The holding company formula was simple -- acquire companies, pay for them with bonds, and use the dividends from the companies in the shell to pay the bondholders. As long as everything was going up, it worked.
Insull also concluded that Cyrus Eaton, the Cleveland investor, was secretly buying shares in his operating companies and was seeking to acquire a controlling interest.  To head this off, he went to the holding company formula he didn't like.  He formed Insull Utility Investments and placed in it all his and his family’s holdings in the operating companies.  Such was the confidence in him and in the growing electricity market, that the shares of the new company literally exploded.  Originally priced at $12 they were offered on January 17, 1929.  They opened at $25 and closed  that day at $30.  In the spring, they were trading at $80.  That summer, a share of IUI went for $150.  

Holding Company Stock Certificate
It all unraveled over the next year.  The stock market collapse was complete.  For Insull, the deepest cut was that large numbers of people stopped using the electricity he had so abundantly and creatively supplied.  The economy was such that in 1932, eight percent of Commonwealth Edison’s 800,000 Chicago area customers no longer purchased his electricity.
Two years later he was in exile in France, trying to stave off extradition.  Ultimately arrested in Turkey, he stood trial in Chicago on a variety of federal fraud and mail charges from which he was exonerated in 1934.  His wife refused to live in the United States and so he returned to France.  His ultimate reward for leading the electrification of much of America was that he was not obliged to die in jail, but rather on a Paris Metro platform in 1937.

Lillian Spear's Story, How Tough it is to Form a PUD

Monday, October 3, 2011

British Columbia Wine Country

Barbara and I attended a wedding out at Flathead Lake, Montana and decided after it was over to come home via the southern tier of British Columbia, mostly to check out BC’s wine country around Kelowna and Penticton. 
What we found was a place as lovely as California’s Alexander Valley, Sonoma or the Willamette Valley in Oregon.  We found the wines mostly good or very good and the small scale of the place very much to our liking.   We found the wine prices modest and the food good.  And we decided that a spring or late fall return trip would work just right next year.
The Okanagan wine country is a suite of several stories.  One is the story of a provincial government with a vision of economic development in its eastern farm country and a steady pursuit of the vision over time using powerful regulatory tools and financial incentives.   A second story has to do with pushing the limits of where grapes are grown and how global warming is creating a new set of limits.  A third is the mishmash of regulation between the Canadian provinces that keeps too much good British Columbian wine bottled up in British Columbia. 
Let’s start with the second because it requires a look at the valley’s geology, my favorite science.   In Canada, the Okanagan Valley runs about 100 miles north and south and reaches another seventy miles into the US after crossing the border.   The valley was formed in three phases.  First, a massive volcanic complex grew in the valley about 60 million years ago.  The volcanoes are now mostly gone, distributed across the valley by other massive events, though Mount Boucherie, near Kelowna, remains.  
Following the volcanism, there was a period of folding as the valley was pinched on one side by the rising Rockies and on the other by the rising Cascades.  Finally, the glaciers came, completely covering everything, grinding south, until they started melting about 15,000 years ago, pushing out their debris as they retreated, forming future wine country benches and mineral soils along the valley. 
Left in the valley were three large lakes – Okanagan, the headwaters of the Okanagan River, Lake Skaha, bordering Penticton, and Lake Osooyos, spilling over the border at Oroville, where the Okanogan River continues on, with its new, American spelling, meandering south until it joins the Columbia River at Brewster.
The Okanagan Valley is a continuation of the American Sonoran desert and is the only official desert in Canada.  The valley is in the Cascade rain shadow, meaning warmer, drier weather while the lakes in the valley moderate both the high and low temperatures.  When the sun goes down, the fruit enjoys cool nights.  All this fire and ice, the bending and twisting of the earth, conspire to create many different climates throughout the valley.
Early on, the valley was apple country and still is.  Grapes are a growing niche market.  Conventional wisdom had it that the hardy labrusca grapes, like Concord and Catawba, were the only grapes that would survive the winter lows and summer highs.  These grapes and local hybrids were sometimes mixed with grapes purchased in California, producing low cost, high alcohol content jug wines -- in BC called "Plonk" wines, or as a base of fortified wines.
In 1978, the government counted 3000 acres of grapes in the area, just 2% or them vinifera, from which high quality wines are produced.
Government had long been a player in Okanagan agriculture.  It took over private water systems and helped develop irrigation projects to serve the apple, tree fruit and nascent wine grapes.   It required certain percentages of Okanagan grape content in wines.  Most significantly, it provided protection through its Liquor Board, a hangover from the prohibition era, that purchased and sold all liquor and wine sold in the Province.  There are now options for purchasing wine at other places, but the Liquor Board still runs the show except at the farm level.  In the past, the provincial board marked up imported wine significantly higher to protect its low cost wines, and now does the same for its premium brands.  The current mark up on foreign wines is 135%.
A couple of early Hungarian settlers had planted vinifera grapes in the thirties and kept them alive, so in 1974, the federal government wanted to see how well a larger planting would do.  Penticton is right on the edge of the 50 degree northern latitude that conventional wisdom places as the boundary of wine grape growing and so the federal government also brought in German experts, whose wines grow in colder temperatures.
The government was observing what was happening in rural California and Washington state where wine provided a platform for tourism.  By 1978, the provincial government decided that tourism hinged on the quality of the wines and began a program to incentivize replacement of labrusca grapes with vinifera.  In 1979 it offered incentives that replaced 20% of the valley’s old stock with higher quality vines.  A few years later, it offered the deal again and had more takers than before.  The government also created additional content and quality requirements and exempted local wineries from the Liquor Board mark up as long as wine was sold at a 20 acre vineyard.  Soon it reduced the farm sales exemption to 5 acres. 
In 1984, there were a thousand acres of vinifera grapes and 13 wineries in the Okanagan.

W. A. C.  Bennett
Knowledge Rush

It did not hurt that the Premier of British Columbia was a Kelowna resident named Bennett from 1952 to 1986 save for 3 years.  Though he didn’t drink, W.A.C.  Bennett, the first Premier Bennett, actually helped start a winery, Calona, in the 1930s, trying to sell applejack made from depression-era surpluses of apples.  Bill Bennett, W.A.C.’s son, was Premier during the major changes that would start the transformation of the valley.

The fact that Canada was negotiating a new trade agreement with the United States and Mexico was another reason why the federal and provincial governments were pushing quality. The Vintner’s Quality Alliance legislation passed the BC parliament in 1990 assuring BC grower content, quality production standards and sensory testing of product.  The British Columbia Wine Institute enters the picture about the same time to market, coordinate with government and supervise production standards.  The University of British Columbia creates the Wine Research Center to bring climate, soil and production chemistry academicians into play.
In 2004, there were 90 wineries in southern British Columbia and production was at 10,000,000 liters.  As the industry grew, the wine regions began sorting themselves out.  Reds become the grape of choice in the south with more whites in the northern, cooler part of the valley.  Today, there are more than 9,000 acres in wine grape production, 98% are vinifera, and they are producing 13,000,000 liters.  There are 200 wineries in British Columbia, most in the Okanagan, though the Similkameen Valley immediately to the west is growing rapidly. 
VQA wines now now make up nearly all the wine produced in British Columbia and have captured 20% of the overall BC wine market, double where they stood six years ago.  However, wines carrying the label “cellared in British Columbia”  hold greater market share.  These products, 25% of the BC sales, are juice from other countries around the world that are then made into wine by British Columbia wineries.  This is fallout from the government’s program to change out the labrusca vines.  As they waited for the new vines to grow, producers were allowed to import juice.  This temporary measure soon grew permanent, as the lower costs of the juice allowed producers to get into the under ten dollar market, a significant advantage over VQA wine’s average price of $17.  It is a controversial practice and not universally supported.  Other major participants in the British Columbia market are Australian wines, 12% of the market and US wines at 11%.
Nearly all of the wine produced in British Columbia is consumed in British Columbia.  Most of the rest is consumed by people like us who physically carry it home to the US or other Canadian provinces.  There are three reasons why.  First, British Columbia doesn’t produce enough grapes to get into an export market.  Second, provincial liquor laws make it against the law to ship wine across provincial lines from the producer to an individual – wine can be taken across provincial lines only if it is in the physical possession of its purchaser.  And third, the BC Liquor Board mark up on imported wines more than doubles the price of foreign wine for Canadian consumers. 

Enough of this.   Let’s go drink some wine!  And we're going right to the Naramata Bench!

This is a magical place.  It is a compact geography stretching for nine miles along Lake Okanagan and a creature of glaciers.  Rising 350 feet from the valley floor, abutted by broken and weathered granite and connected by little country lanes, this place overlooks a contented Penticton on the edge of the lake.
They farm on steeper slopes than I've seen before, a piece of climate management, it turns out.  The altitude of the west facing sunny slopes keeps the vines above the cold air masses that settle on the valley floor in winter and closer to the heat-holding rocks surrounding the valley.  The scene reminds us of how needy these vines are -- dependent on volcanoes to produce the basics of their soil, glaciers to mix and distribute it, farmers to offer up their lives, government ministers to fret, cold air masses to slide safely by.
All the accomplishments of the past several years hinge on surviving a winter like 1968-69, when an arctic mass settled
in  at 30 degrees below zero.  Vinifera grapes die at 0-10 degrees F.  The Great Warming may be on farmer's side, but there is always a chance of some climate happenstance.  Some growers bury a cutting by each vine every winter as insurance.
We are on the patio at Poplar Grove, a clean wooden building overlooking the Bench.  “This will have a good, clean white,” I thought, and it sure did, a Pinot Gris.  Like many early vintners on the Bench, this was a garage winery with a few acres of vines.  After 14 years, it was purchased by growers who were land rich and now can leverage the brand with 110 acres of vineyards in the valley.  Proper land is at a premium on the Bench, easily north of $150,000 an acre.
For me, the wine experience is mostly about the people who work in the industry.  The chatty tasting room attendant carries on three conversations at the same time – smiling, explaining, selling.  The principals of the enterprise, escorting a visiting journalist to a back room to a table with bottles and glasses on it, a woman shaking her head, never really considering that her life would include a busload of people from Finland in her tasting room, young Hispanic men balancing lunch boxes on a tire attached to a piece of farm equipment.
We talked about those images during lunch at the Lake Breeze Winery and found ourselves on a patio with the winemaker’s dog and a pretty big lunch crowd for 2:30 in the afternoon.  I ordered the Croque Monsieur and thought about a knowledgable friend who knew his wine and admonished me once to “buy on nuts, sell on cheese.”  In other words, buy for the subtleties, but if you are the seller of wine, remember most wines taste pretty good accompanied by cheese, especially cheese that has been melted.  It seemed quite true for the $25 dollar a bottle Pinot Noir I was drinking.  It was remarkable.  I had another glass, this time without the sandwich, and it was still remarkable.  The dog came over and we chatted.  I tried, unsuccessfully, to make the case for a third glass, knowing we had places to get to and a couple of other stops to make down valley.
We liked Poplar Grove, Lake Breeze, Therapy – where they had two small guest villas right in the mix of the winery – and bought a nice little Tawney Port at La Frenz.  A friend told us we made a big mistake by not going to Kelowna’s Mission Hills Winery with its very good restaurant.  We’ll fix that next year.
We brought back two cases of wine to sample over the winter.  If you are bringing Canadian wine into the United States, you have a personal exemption of one liter that is duty free.  The rest is subject to duty but it is less than 60 cents a bottle.  There is also a Washington sales tax fee of about a dollar.   It is apparently common to waive the duty and its paperwork at the border, which is exactly what happened to us and we drove home duty free and happy.