Creative Nationalism

Governor-General Ezra Gallivan.

Creative Nationalism was a period in the history of the Confederation of North America between the Age of Renewal and the Starkist Terror, from 1888 to 1898, during the first two terms of Governor-General Ezra Gallivan. Sobel characterizes the period as a time of vigorous, but orderly, reform, as Gallivan built on the successes and repaired the failures of his predecessor, John McDowell. Domestically, Gallivan pursued a reform program designed to improve the lives of ordinary North Americans by reducing inflation, lowering taxes and military spending, and encouraging small business creation. In foreign affairs, Gallivan, a fervent isolationist, reversed McDowell's growing ties with the British Empire and avoided antagonizing the imperialistic United States of Mexico.

The People's Coalition's 73-seat plurality in the 1888 Grand Council elections came as a surprise to the nation, which expected a victory by McDowell's Liberal Party. None of the three major parties had the majority necessary to choose the next governor-general, and Gallivan, like McDowell ten years before, refused to form a coalition government with one of the other parties. In the event, eight Liberal Grand Council members from Indiana chose to vote for Gallivan, allowing him to form a minority P.C. government. Sobel leaves unresolved the question of whether or not the eight Councilmen were acting on McDowell's orders. Gallivan for his part was content to credit McDowell's generosity and patriotism for his elevation, perhaps with an eye to retaining the support of the eight Liberals during his first term in office.

The Five Points

In his inaugural address, Gallivan set out a five point program for his administration:

1. An end to ... this ruinous inflation ....
2. ... full employment is necessary for our nation, and it will be the goal of this administration to see to it that every worker ... has a meaningful job.
3. Although a police force is necessary, the C.B.I. has become far too powerful for a free people to bear. I have arranged to meet with the necessary authorities and will ... report later on ...
4. Quebec has real and long-standing grievances against the national administration ... every attempt will be made to secure the full loyalty of every citizen of that important state.
5. The People's Coalition want the people to have power over their lives, and not government control of every aspect ... of activity. ... New means will be found for the people to ... share more fully in the profits their work made possible.

It was also in his inaugural address that Gallivan coined the phrase "Creative Nationalism" for his program. Gallivan's program reflected his political outlook, which was pragmatic rather than doctrinaire. Rather than being a coherent political philosophy based on a set of fundamental premises, Creative Nationalism was a catch-all phrase that could mean anything Gallivan wished it to mean. The Five Points were a set of practical goals, chosen by Gallivan because he believed them to be realizable during the five years of his upcoming term.

The People's Coalition had been formed nineteen years earlier in the Southern Confederation by farmers suffering from low prices for their produce and high shipping costs. Gallivan's was the first national government the P.C. had ever formed, and the party's lack of governing experience showed. Sobel states that while the new men were not lacking in intelligence or dedication, few had any important government experience, and efficiency suffered while they learned their way around the halls of power in Burgoyne. The professional politicians and businessmen who had staffed the government under McDowell were replaced by technicians, representatives of small business, and college professors, particularly Georgia University, Northwest University, and Webster University. Worker representatives from the Mechanics National Union were replaced by men from the more radical Consolidated Laborers Federation.

Gallivan sought to reduce unemployment by creating special grants to the confederation governments for use in public works projects. While this did serve to create jobs, the grants were funded by the flotation of government bonds, which exacerbated rising prices. This was balanced by cuts in government spending, particularly military spending and funding for the Confederation Bureau of Investigation, using the savings to reduce taxes on incomes. Along with cuts to its budget, Gallivan replaced the C.B.I.'s Commandant, Mark Forsyth. However, this caused trouble with the more radical members of the Coalition, who wished to abolish the C.B.I. entirely, and not simply replace its head and reduce its budget.

The Fifth Point

Julius Nelson of the N.F.A.

Although the People's Coalition had become much more conventional by 1888, the party still included many supporters who had been radicalized by the Bloody Eighties and who sought a wholesale transformation of society. These radicals had adopted the ideas of Erich Neiderhoffer, a German political philosopher who called for the end of political and economic elites, and for businesses to come under the control of their workers. Although the Fifth Point of Gallivan's inaugural address had pledged that "new means will be found for the people to ... share more fully in the profits their work made possible," he did not intend to adopt a Neiderhofferist program of expropriating existing businesses. Instead, he proposed that the National Financial Administration, a government agency created by McDowell to offer low-interest loans to bankrupt businesses, be repurposed to offer loans to startup businesses, with the funds for the loans obtained through N.F.A. bond issues.

The radical wing of the P.C. denounced the Fifth Point for its failure to implement Neiderhoffer's proposed collective ownership of businesses. Meanwhile, some members of the Liberal Party called the Fifth Point socialistic, while Conservative Party members called it "destructive of all that has made our nation great." Nevertheless, Gallivan was able to gain enough votes to pass the proposed repurposing of the N.F.A. in 1891.

Gallivan had appointed his man Julius Nelson as Administrator of the N.F.A. in 1889, and even as Gallivan guided the legislation through the Grand Council, Nelson set to work restructuring the agency, setting up new confederation-level offices, and arranging for new financings. Sobel notes that few new loans were granted in this period, since the C.N.A. was still recovering from the Great Depression, and few potential entrepreneurs understood the program. He might also have noted that the final contours of the Fifth Point had yet to be established by the Grand Council.

The first important financings began in 1891, after final passage of the Fifth Point legislation and the N.F.A.'s first bond issue. New firms incorporated in 1891 included the dry goods chain Kenton, Ltd., the flour producer Indiana Milling, Ltd., and the construction company Parkins, Ltd.. Kenton, Ltd. proved to be a spectacular success, so that the N.F.A.'s stock in the company came to be worth a great deal. The first bond issue, totalling N.A. £46 million, was managed by Henry Clews in New York City and J.P. Morgan in London. Morgan's involvement established him as the leading banker in the English-speaking world, a position he held for almost a quarter of a century.

Under the terms of most of the contracts reached by the N.F.A. under Nelson, the agency had the option of selling its stock to the entrepreneur at current market value within ten years of its issuance, provided the value was at least ten percent over the original price. The N.F.A. could also sell shares to outsiders, or on the Broad Street stock exchange. By the end of Gallivan's first term in 1892, financings by the N.F.A. had risen from 21 per year to 155; by the end of his second term in 1897, they had risen to 280.

The Fifth Point proved to be a great success, and it had far more important implications than Gallivan himself realized. The 1890s saw the rise of a new class of ambitious and talented young men who wished to start their own companies, and who applied to the N.F.A. for loans rather than commercial banks, since the government agency had lower qualifications and would accept equity as well as bonds as collateral and payment. Given the economic boom of the 1890s, which the N.F.A. both stimulated and benefitted from, most of agency's loan recipients were able to succeed at least moderately; the failure rate for N.F.A. loans fell steadily throughout the decade. Thus, the Fifth Point "worked" in the sense that it did what Gallivan wanted it to do: contribute to the economic growth of the C.N.A. by encouraging new business creation.

Despite the Fifth Point's success, the program never lacked for critics. Andrew de Molay, head of the New York Bankers Association, accused Nelson of "stealing business from commercial banks, and not serving the purpose for which he has been named to office. Almost every N.F.A. financing could have been handled by a member bank of this Association, but the borrowers went to Nelson instead, since by law his rates are lower than ours. This is not creating new business; it is taking money from one pocket and putting it in the other." In 1900, during Gallivan's third term, Samuel Frier of the Textile Union argued that Nelson's own low failure rate statistics indicated the extent of his failure. "The N.F.A. was not supposed to be a money-making operation, but a service to the people. A commercial bank might be pleased to show a failure rate of 13.3. To us it indicates that Mr. Nelson has not been taking the kind of risks he should. In 1899 the N.F.A. granted 314 loans and financings, nine more than the previous year. Mr. Nelson does not tell us that the N.F.A. processed 2,539 applications and culled the 314 from that amount. What of the other 2,225 men who failed Mr. Nelson's test? These are the people the Governor-General told us were to be helped, and these are the men the N.F.A. ignores." A newspaper columnist named Milton Fields opined that the N.F.A. ought to be making 30,000 startup loans a year, not 300.

The Quebec Plebiscite

While the Fifth Point attracted the most attention from Gallivan's supporters and opponents, it was the Fourth Point that proved to be the most successful plank of his Creative Nationalism program. There had been a number of uprisings in Quebec in the 19th century by the confederation's Francophone majority, beginning with the Papineau Revolt of September 1839, and a series of terror attacks on Anglophone residents by an underground resistance movement called the Patriotes.

Gallivan pledged in his inaugural address that "every attempt will be made to secure the full loyalty of every citizen of that important state." Gallivan followed this later in February 1888 with a visit to Quebec City, where he ignored assassination threats by the Patriotes by walking among the crowds, and delivering a speech to the Francophone populace ending with the words, "I have heard, and I have understood." The assembled crowds cheered, though Sobel notes that more than one onlooker admitted that he didn't know why.

Nearly a year later, on 1 February 1889, Gallivan appeared before the Grand Council to deliver a message on Quebec, offering a plan "to determine the future of the Confederation of Quebec, its relations with the national government, and the will of its people." Gallivan proposed that a plebiscite be held in Quebec that summer, offering its people a choice of

1. Remaining within the C.N.A. as presently constituted;
2. Becoming as "associated state" with significant local autonomy but without full membership in the C.N.A.; or
3. Independence, with those wishing to leave being assisted in doing so by the national government.

Following Gallivan's speech, the thirteen-member delegation from Quebec rose to cheer him, followed by polite applause from the rest of the Grand Council. The next day, most of the C.N.A.'s newspapers supported Gallivan's proposal. The proposal passed the Grand Council on 9 February, with the date of the plebiscite set for Saturday, 6 July.

Three parties appeared in Quebec during the five-month runup to the plebiscite: the largest was the pro-independence Free Quebec Coalition, which included the Patriotes. The smallest was the pro-C.N.A. Loyalty Party, which included wealthy businessmen and monarchist exiles from France. In between was the pro-association Justice and Peace Party, which included middle-class farmers and Quebecois with ties to Nova Scotia. Supporters of the Free Quebec Coalition destroyed opposition offices and threatened an uprising if the vote did not go for independence. However, the attempt at intimidation backfired. Support for the Free Quebec Coalition fell, and on 6 July a majority of Quebecois voted for associated status:

The Quebec Plebiscite, 6 July 1889

Alternative	Votes	%
Associated Status	995,289	54
Independence	756,344	41
Confederation Status	92,456	5
Total	1,844,089	100

Following the plebiscite, Gallivan called for a special session of the Quebec legislature "to implement the will of the people." The results of the plebiscite were ratified in October 1889, after which Quebec had full control of internal affairs while remaining associated with the C.N.A. "on issues of common interest." Quebec's seats in the Grand Council were redistributed to the other six confederations after the 1890 census, though Quebec retained the right to send three observers to the Council.

The Hermión Dictatorship

U.S.M. Chief of State Benito Hermión.

The least popular aspect of the Creative Nationalism program was Gallivan's isolationist foreign policy. Although many Liberal Party members supported Gallivan's domestic reforms, including the Quebec Plebiscite and the Fifth Point, the Liberal Party as a whole supported closer ties with the British Empire, and wished to see the C.N.A. take a leading role in what Prime Minister Geoffrey Cadogan was already referring to as the "United Britannic Commonwealth."

While the members of Gallivan's own People's Coalition felt disdain for the British Empire, which they regarded as a reactionary regime, there was considerable support for the idea of the C.N.A. wielding influence on the world stage on its own behalf rather than in partnership with the British. These Coalitionists were adherents of a growing worldwide movement called the Moral Imperative, whose supporters believed that it was the "moral imperative" of the industrialized nations to bring the blessings of civilization to less advanced peoples. In the C.N.A., a leadiing exponent of the Moral Imperative was Professor Henry Newton of Burgoyne University, who published The North American Mission in 1882.

The particular target of the P.C.'s interventionists was the United States of Mexico under its dictatorial Chief of State, Benito Hermión. Hermión had seized power in the U.S.M. in September 1881, and within five years he had embarked on a program of imperialist expansion, occupying the nation of Guatemala in the fall of 1886 during the Isthmian War. Gallivan's rise to power in 1888 coincided with growing tension between the U.S.M. and the South American nation of New Granada. Ever since seizing power, Hermión had continually harped on the supposed threat to Mexico posed by the revolutionary government of France. Hermión's pretext for invading Guatemala in October 1886 had been alleged French control over Guatemalan President Vicente Martinez.

Hermión had launched a series of pogroms against Mexicans of French descent after the Isthmian War, and tens of thousands of them had fled to New Granada in the late 1880s. On 10 February 1890 Hermión gave a speech to the Mexican Senate in which he claimed to have learned of a plot "hatched in Bogotá to assassinate leading members of this body, the Cabinet, and the Chief of State." Four days later, shots were fired at the homes of five senators, and bombs were found in the Presidential Palace. New Granadan Premier Adolfo Camacho met with the ambassadors of the C.N.A., Great Britain, and Spain, warning of an impending attack by Hermión. He told North American Ambassador Wesley Eagen that "today Hermión threatens La Guaira, tomorrow he may attack Norfolk. You must realize that we will fight, and may be able to defeat this madman without your help. But if we fail, you will be next. Guatemala was the doorway to Bogotá, and Bogotá may prove the gateway to Burgoyne." However, Gallivan was unwilling to intervene militarily on New Granada's behalf, and the British and Spanish refused to act without him.

The war began on 1 March 1890, and by September New Granada had fallen to Mexico. In Burgoyne, Gallivan issued a statement in which he "deplored the seizure of this land which had done no harm," and offered asylum to its refugees. However, he refused to allow the New Granadan refugees to establish a government-in-exile in Tampa, Georgia, and resisted calls from supporters of the Moral Imperative to embargo Mexican imports. Gallivan felt strongly that his predecessors had spent too much time on foreign affairs, and believed that a strong foreign policy was a conceit, not necessary for the C.N.A. At a Cabinet meeting shortly after the Mexican conquest of New Granada, Gallivan told Patrick O'Shea, his Minister of Finance, that "If I could have one wish, it would be that the C.N.A. could be severed from this earth and put into orbit, somewhere near the moon. There is nothing we need from other nations. We export grain, manufactured goods, and other items they need badly, and in return we import trouble. Let Hermión have the world, if only he allows us our own land." Nevertheless, after the Mexican conquest of New Granada, Gallivan reversed his earlier policy of reducing military expenditures. By 1894, Gallivan was saying, "So long as El Jefe seeks his destiny to the south we shall do nothing. But if the tyrant looks to the north or to the east, he shall be dealt with severely."

Thomas Kronmiller of Indiana.

Gallivan led the People's Coalition to victory in the 1893 Grand Council elections, increasing its seats in the Grand Council to a majority of 98. However, his victory came at a cost, since it increased the size of the Coalition's radical caucus, and gave that caucus a powerful new leader in the form of Thomas Kronmiller, a radical labor organizer from Indiana. Kronmiller fully supported the Moral Imperative and vocally opposed Gallivan's isolationism. Responding in 1894 to a speech by Gallivan asserting the C.N.A.'s military strength, Kronmiller said, "In 1845, when the war with Mexico began, our population was fifty percent larger than theirs. The Mexican Army never had more than 650,000 men under arms, while we raised almost three times that amount. The difference between the economies was more startling then than it is today. Yet the Mexicans of a half-century ago were able to fight us to a standstill. What might they do today if we do not prepare for all eventualities?" Privately, Kronmiller was even more warlike, calling for war with Mexico in a "great moral crusade" to "liberate the enslaved peoples of Guatemala and New Granada, return Hawaii to its former free state, and most importantly, rid the world of its last vestige of slavery."

Gallivan was able to maintain his policy of isolationism during his second term, but the outbreak of the Great Northern War between Mexico and Russia in 1898, and the Mexican conquest of Alaska and Siberia, caused a massive wave of war hysteria and xenophobia to sweep across the C.N.A. Gallivan himself was accused of treason by Councilman Fritz Stark in July 1899, putting an end to his Creative Nationalism program and ushering in the wave of political violence known as the Starkist Terror.

Sources

Sobel's sources for the Creative Nationalism era include his own The Fifth Point: Ezra Gallivan and His Creative Nationalism (New York, 1967); and Gallivan's own memoirs, Under Fire and the Sword (New York, 1898); as well as Julius Nelson's Financing a Nation: My Years at the N.F.A. (New York, 1910); Bernard Gallivan's Letters from My Father (New York, 1920); Michael O'Shea's A Diplomat in the Family: The Life of Patrick O'Shea (New York, 1922); Howard Arthur's The Impossible Victory: The Coalition in 1888 (New York, 1934) and Creative Nationalism (New York, 1939); Armond Fleur's We Leave as Friends: The 1889 Plebiscite (New York, 1945); John Earley's The Drums of War: Ezra Gallivan and Benito Hermión (New York, 1966); and Henry Kurtz's The Moral Imperative: Its Origins and Development (New York, 1968).

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