Financing America’s First Transcontinental Railroad

The roles of the Associates and the Central Pacific’s construction of the western leg of America’s first transcontinental railroad are laid out in detail in the past three articles. While the Associates risked their personal wealth in accomplishing their task, the project required far more in resources than they could muster from individual investors. The same was true of the Union Pacific’s principal owners.

In this painting, a rail official drives the golden spike in Promontory, Utah (Source: Politico.com)

In this painting, a rail official drives the golden spike in Promontory, Utah (Source: Politico.com)

The Associates obtained substantial amounts of funding from California and from municipalities, but the greatest source for the national project was the federal government. It seems only fitting that President Lincoln, a former railroad lawyer, signed the first two major pieces of legislation, the Pacific Railroad Act of 1862 and a significant amendment to the Act in 1864.

The 1862 legislation provided for 30-year federal loans at 6% interest, in amounts that depended upon the difficulty of the grade. The “easy grades” generated bonds in the amount of $16,000 per mile. The track in the extremely difficult mountainous regions generated bonds in the amount of $48,000 per mile. Bonds in the amount of $32,000 per mile were issued for track over the high plains. A portion of the funds were withheld until the entire line was in working order. Failure to complete the entire line by January 1, 1874, would result in forfeiture of all rights, including the entire rail line completed as of that date.

In addition, the companies were granted 6,400 acres of land per mile of line completed. The companies were not entitled to mineral rights, but they were entitled to timber and stone on either side of a 400-foot right-of-way.

The 1864 legislation allowed the companies to float their own 30-year bonds at 6% interest, on which the federal government paid the interest the first year and guaranteed the interest payment for the next nineteen years. Authorized amounts ranged from $24,000 to $96,000 per mile. To enhance the marketability of the companies’ bonds the 1864 legislation gave the company bonds first-mortgage status over the government-issued bonds. The legislation also allowed the Central Pacific to extend its track 150 miles across the Nevada line, assuming the Union Pacific did not get ahead of them. Important to both companies, the forfeiture provision was removed.

It is one of four ceremonial spikes driven at the completion of the Transcontinental Railroad (but is not the final golden spike). (Source: Wikipedia)

This is one of four ceremonial spikes driven at the completion of the Transcontinental Railroad (but is not the final golden spike). (Source: Wikipedia)

An 1865 amendment, signed by President Andrew Johnson on July 3, 1866, dropped the restriction against the Central Pacific going 150 miles beyond the Nevada border, allowing the companies to lay track as far as they could until the two tracks met. The race was on and would not end until the driving of the ceremonial golden spike at Promontory Point, Utah, on May 10, 1869, well before the 1874 deadline set in the 1862 Act (but removed in the 1864 amendment).

One may argue whether the legislation was too generous to the railroad companies, but there is little doubt that few investors would have taken on the task without the government subsidies. Much of the West would have remained isolated without the railroad. Before the railroad, goods were shipped either around the southern tip of South America or across Panama. To put matters in perspective, it took upwards of three weeks just to ship mail between New York and San Francisco. Completion of the transcontinental railroad reduced the time to ten days.

Sources: Bain, Empire Express; Lavender, The Great Persuader; Central Pacific Railroad Photographic History Museum, www.cprr.org.

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Edwin B. Crocker, Railroad Lawyer

Born in upstate New York, E.B. Crocker set out for California in 1852, not to dig for gold or to sell to the miners, but to hang his lawyer’s shingle in Sacramento. His brother, Charles, soon followed, not to practice law but to sell to the miners.

tcrr_ecrocker

E.B. Crocker (PBS.org)

The two brothers made up two of the five “Associates,” the men who guided the Central Pacific’s construction of the western leg of the transcontinental railroad, from Sacramento, California, to Promontory Point, Utah. In my prior article, I provided a brief biography of one of the Associates, Collis Huntington, the most successful railroad man of the Gilded Age. The other Associates were Leland Stanford and Mark Hopkins.

As I stated in an earlier article, the Associates largely got along well, each contributing his talents in a collaborative manner, in stark contrast to the men who headed up the Union Pacific, responsible for completing the eastern leg of the transcontinental railroad. I say largely, because Huntington constantly complained about Stanford’s work ethic.

All five men were instrumental in founding California’s Republican Party, not necessarily a popular position in 1856 Sacramento. Stanford later served as California’s governor and appointed E.B. Crocker to the California Supreme Court. E.B. in later years often was referred to as Judge Crocker.

Ultimately, E.B. Crocker served as the Central Pacific’s legal counsel. In that role, he resolved the company’s many legal issues, including the legal details involved in the acquisition of other railroads. But he was much more than that. He regularly exchanged lengthy correspondence with Huntington, who served the company’s needs in the East (purchasing iron and rolling stock; securing financing; lobbying politicians in Washington).

The pressure was enormous. The Central had the onerous task of almost immediately having to drill through the Sierra Nevada granite. The price of Central Pacific bonds rose and fell with the latest rumor. Government subsidies depended upon laying as much track as possible. It was critical that the railroad “end” in a town or city, not in the middle of the Nevada desert or the Utah salt flats. Judge Crocker had to withstand Huntington’s demands to lay off Chinese and Irish workmen when weather prevented work; he knew that doing so might mean he would never get the workers back.

Huntington’s correspondence often chided his western partners when he thought progress was too slow. In turn, Judge Crocker expressed his exasperation with his Eastern Associate, letting Huntington know when he failed to timely arrange for the shipping of rails and other materials required to move forward.

As much as Huntington relished the railroad business, Judge Crocker often expressed his desire to be done with it. His health suffered from the long hours and the stress. He suffered a minor stroke in the spring of 1868. In June, 1869, only one month after officers from the competing railroads drove the golden spike at Promontory Point, he suffered a second stroke, which left him paralyzed. He was done with the railroad. In August, 1869, he and his family set out for a two-year vacation to Europe, where they went on an art buying spree.

Judge Crocker died in 1875. As one of the Associates, he helped to build the wonder of his age, a network of railroads spanning the continent. His widow, Margaret, contributed to his legacy, in the form of many charitable causes. On May 6, 1885, Margaret presented the Crocker art gallery building, grounds, and the E.B. Crocker art collection to the City of Sacramento and the California Association of Museums. The museum was the first public art gallery west of the Mississippi. It remains a vibrant world-class gallery and is located in historic Sacramento.

crocker-art-museum-photo

Crocker Art Museum (Source: TripAdvisor.com)

Judge Crocker’s most colorful child was Aimee, whose autobiography is titled And I’d Do It Again. She married five times and lived an extravagant lifestyle. Among her marriages was one to a European prince. The marriage of American money to European royalty, as portrayed in Downton Abbey, was not uncommon during the Gilded Age. Huntington’s adopted child Clara also married European royalty.

Sources: Bain, Empire Express; Lavender, The Great Persuader. You can learn more about the Crocker family at http://crockerartmuseum.org.

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Collis Huntington: Restless Railroad Tycoon

Collis P. Huntington (Source: Biography.com)

Collis P. Huntington (Source: Biography.com)

Of all the so-called robber barons of the Gilded Age, Collis P. Huntington reigned as the railroad king. He was born near Hartford, Connecticut, in 1821, the sixth of nine children in a humble household. Huntington received a very limited formal education, a few months here and there. His alma mater truly was the school of hard knocks.

As a teenager, Huntington entered the retail business. He traveled the countryside for a number of years, peddling a smattering of household goods. At twenty-one, he went to work for his brother, Solon, who owned a store in Oneonta, New York. Two years later, the brothers formed a partnership.

When news of James Marshall’s gold discovery reached New York, the brothers decided to extend the reach of their business to the California gold fields. Solon financed the venture and Collis made the trip, joined by five fellow Oneontans. They decided to take the shortcut across the Isthmus of Panama rather than sailing around Cape Horn, the route favored by most gold seekers, who feared the cholera, yellow fever, and malaria of tropical Panama more than the rough seas of the Atlantic and the Pacific.

When Huntington’s group reached the Pacific coast, they had to wait six weeks to catch a steamer to California. Huntington did not idle that time away. He walked all over the region, buying goods on the cheap and selling them at great profit to his fellow travelers. By his estimation, he made three thousand dollars during the six-week layover, an enormous sum when one considers that the average American farm worker earned thirty dollars as a monthly wage.

Huntington & Hopkins Hardware Store (Source: Flickr.com)

In California, Huntington successfully sold his goods to the miners and eventually settled in Sacramento, where he and fellow adventurer Mark Hopkins established Huntington & Hopkins Hardware in 1855. Five years later, Huntington was bitten by the railroad bug, in the form of Ted Judah, who visualized a railroad stretching across the American continent. Judah, the railroad prophet, contracted a tropical fever while crossing Panama and died in New York in 1863. Huntington and his business associates, whom Judah inspired, would see to the execution of Judah’s dream, accomplished six years later (May 1869) at Promontory Summit, Utah.

While the pressures of building the transcontinental railroad ruined the health of Edwin Crocker, one of Huntington’s business associates, it only spurred Huntington to do more. Huntington was instrumental in building and controlling railroads throughout the West. Not content there, he helped revive the Chesapeake and Ohio (C&O) Railroad. Huntington planned to build an eastern railroad that would extend from Cincinnati, Ohio, to Newport News, Virginia. He went on to establish the Newport News Shipbuilding and Dry Dock Company, still actively building ships today.

Thus, Huntington’s reach extended over the entire American continent. It is true that some of his success resulted from lining the pockets of politicians at the national and local levels. But he was not the lone sinner in that regard. He was, however, one of the most successful. He took the big chance and received great financial rewards for successfully doing so.

Huntington’s legacy lives on, not only in the railroads and shipyard that survived him, but in the charitable gifts left by his heirs. Those include Mariner’s Museum in my hometown of Newport News; Brookgreen Gardens near Myrtle Beach, South Carolina; and the Huntington Library, Art Collections, and Botanical Gardens in San Marino, California.

Sources: David Lavender, The Great Persuader (Doubleday 1970); David Bain, Empire Express (Viking Penguin 1999).

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The Men of the Transcontinental Railroad

(Source: WXII)

(Source: WXXI)

Building the first transcontinental railroad was the largest engineering and technology undertaking of that time in U.S. history. In the sequel (coming December 2014) to my historical novel New Garden, the construction of the western leg of the transcontinental railroad serves as the primary backdrop for the story. As a preview of sorts, this article centers on “the Associates” of the Central Pacific Railroad Company, who built and financed the railroad that ran from Sacramento, California, to Promontory Summit, Utah. The eastern leg, built by the Union Pacific, ran from Omaha, Nebraska, to Promontory Summit, where the companies drove the ceremonial golden spike on May 10, 1869.

So who were these “Associates,” and what in their backgrounds prepared them for this engineering achievement, even more important in that time than today’s Internet and social media?

Known as the “Big Four,” the primary Associates were Sacramento grocers and hardware retailers: Collis Huntington, Mark Hopkins, Charley Crocker, and Leland Stanford. The fifth, Edwin B. Crocker (Charley’s brother) was a prominent California lawyer. Although Edwin received a civil engineering degree, he opted for the law, so there was no practicing engineer in the entire group. As was true of most Californians at the time, they had come west during the California Gold Rush. They had made their fortunes by supplying the miners, not by digging for gold themselves. Huntington hailed from Connecticut and all the others came from upstate New York.

Union Pacific workers taking lunch in Utah's Uinta Mountains

Union Pacific workers taking lunch in Utah’s Uinta Mountains (Source: PBS.org)

In addition to the engineering challenges at hand, many geographic barriers impeded the process. The Union Pacific’s initial flatland work over the Great Plains proved to be a piece of cake compared with obstacles the Central Pacific encountered – who almost immediately had to tunnel through the Sierra Nevada granite before reaching the easy work east of the mountains. And it wasn’t as if they had to drill only one tunnel; they had to drill fifteen. The longest, Summit Tunnel, required drilling through 1,750 feet of granite at an elevation of seven thousand feet. The Central Pacific also had to deal with Sierra Nevada winters, often lasting from October to June, when snow fell in feet, not inches.

The federal government subsidized the work based on miles of track laid. Although the government provided a higher rate for mountain work than for the easier prairie work, it did not come close to compensating for the greater difficulty of the task.

While the railroad ultimately made the Associates incredibly wealthy, it just as easily could have driven all of them into poverty. It ruined Edwin Crocker’s health. He suffered two strokes before leaving the railroad business behind in August, 1869, for a two-year vacation in Europe.

Mormon workers digging the Union Pacific Deep Cut #1 through Weber Canyon (Source: PBS.org)

Mormon workers digging the Union Pacific Deep Cut #1 through Weber Canyon (Source: PBS.org)

The Associates operated from the Huntington & Hopkins Hardware second-floor offices on K Street in Sacramento. Charley Crocker worked on the line with one-eyed Jack Strobridge, driving the thousands of Chinese and Irish workers who graded the roadbeds. The duo also built the bridges, cut through the granite, and laid the track. Huntington went east, where he twisted arms in Washington and bought the iron and rolling stock that was shipped around the southern tip of South America. Treasurer Mark Hopkins watched prices like a hawk. E.B. Crocker did the legal maneuvering in California, while Leland Stanford handled local politics and negotiated with Brigham Young in Utah.

Once the Central Pacific crossed the Sierra Nevada, the workers laid track at a rate of one to two miles per day. Near the end, Charley Crocker wanted to demonstrate how much track his Chinese workers could lay when really pushed. On April 28, 1869, they laid ten miles of track.

While Charley Crocker puffed out his chest with pride, Huntington, who often questioned why Charley did not accomplish more when funding depended on the number of miles laid, had a different reaction, which he put in a letter to Charley on the same day the other railroad men celebrated at Promontory Summit:

I notice by the papers that there was ten miles of track laid in one day on the Central Pacific, which was really a great feat, the more particularly when we consider that it was done after the necessity for its being done had passed.

That was Huntington, about whom I will say much more in another article.

Sources:

  • Bain, David, Empire Express (Penguin Group 1999).
  • Lavender, David, The Great Persuader, (Doubleday 1969).
  • Central Pacific Railroad Photographic History Museum, cprr.org/Museum/Tunnels.html.

Additional Resources:

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The Fugitive Slave Law and Runaways

Printed in 1851, this flier was circulated around Boston and warned African-Americans of the Fugitive Slave acts, which legalized the capture and return of any runaway slaves (Source: Harvard Square Library)

This poster was distributed around Boston and warned African-Americans of the Fugitive Slave acts, which legalized the capture and return of runaway slaves. (Source: Harvard Square Library)

In 1850, Congressional leaders made their last valiant efforts to forestall conflict between the North and the South. However, in their attempts to reach some form of compromise, they unwittingly set the stage for the Civil War.

Some might say that civil war was the price the United States paid for orchestrating war with Mexico in 1848. By invading Mexico, or at least by sending troops to contested territory, the United States ultimately gained a huge swath of land that included modern day California, Nevada, New Mexico, Arizona, Utah, and Colorado. Like Thomas Jefferson before them when he negotiated the Louisiana Purchase, most American leaders probably believed it would take generations before much of the new territory would be ripe for statehood. But history is full of unforeseen consequences, and James Marshall’s gold discovery in Coloma, California, accelerated the process by attracting sufficient numbers of Americans who wanted statehood. More importantly, California’s citizens had enacted a constitution that prohibited slavery.

For years, Southern leaders had sought to maintain balance in the United States Senate, admitting a free state to the union only while admitting a slave state at the same time. In 1850, they had many demands on the table: carving up Texas into a number of states in an effort to maintain equal representation in the Senate; continued legality of slavery in the nation’s capital, anathema to antislavery Northerners; and a stricter fugitive slave law to insure recovery of runaway slaves.

Anti-slavery forces in the North also had an agenda: admission of California and other future states acquired from the Mexican War as free states and abolition of the slave trade in the nation’s capital.

1850 also saw the last great stand of the Senate’s most famous orators: Daniel Webster of Massachusetts, John Calhoun of South Carolina, and Henry Clay of Kentucky. Clay sought to ease tensions by proposing a series of resolutions. Each resolution offered something to the North, balanced with an inducement to the South. His strategy failed, but Illinois Senator Stephen Douglas, Lincoln’s chief opponent for the presidency ten years later, succeeded by gathering enough votes from Upper South and Midwest representatives, who approved the package as a whole.

Painting titled "Effects of the Fugitive-Slave Law" (Source: Library of Congress)

Painting titled “Effects of the Fugitive-Slave Law” (Source: Library of Congress)

Before the Compromise of 1850, a 1793 federal statute authorized Southerners to enter free states to capture runaway slaves, but state authorities were not obligated to enforce the law. Prigg v. Pennsylvania (United States Supreme Court 1842). One of the compromise’s components, the Fugitive Slave Law, sought to remedy Southerners’ dissatisfaction with existing law by creating a category of federal commissioners empowered to arrest and return runaways to their owners. The law also gave the commissioners authority to deputize any citizen to assist in enforcement of the law.

While many Northerners did not object to slavery where it lawfully existed, they took great exception to playing any role in its enforcement. Southern slave owners, who thought they finally had obtained a meaningful process for retrieving their fugitive property, fumed about Northerners’ resistance to the law’s enforcement and Northern states’ passage of personal liberty laws designed to thwart the enforcement of the law. Within a year of the law’s enactment, it became clear that enacting a law is considerably less difficult than executing it. After 1851, few runaways were returned to their owners under the auspices of the Fugitive Slave Law.

For a fictional but faithful account of a runaway slave’s stop at an Underground Railroad station, please see the “Runaway” chapter in my historical novel, New Garden, available on line from Amazon, Apple, Barnes & Noble, and Dog Ear Publishing. The novel’s “Charleston” chapter about the Democratic Convention of 1860 also depicts Southern politicians’ dissatisfaction with Northerners’ resistance to the Fugitive Slave Law.

For a more detailed historical account of the Compromise of 1850 and the Fugitive Slave Law, see Professor James McPherson’s Ordeal by Fire, pages 70-89 (3rd Edition, McGraw Hill 2001).

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The Presidential Election of 1876

Regardless of your political affiliation, you certainly remember the Presidential election of 2000, when George W. Bush ultimately prevailed over Al Gore. By a 5-4 decision, the United States Supreme Court ultimately validated the election results certified by a Florida Republican official.

Flash back to the Presidential election of 1876. Inauguration day was set for Sunday, March 4, 1877, giving government leaders four months between November and March to resolve the election results of a hotly contested election. Three former Confederate states were in play: South Carolina, Louisiana, and Florida.

Federal troops played a significant role in the South in the years after the Civil War (Reconstruction). The troops protected African Americans from white persecution and guaranteed that Republican officials ran the state governments. White Southerners strongly resented the presence of federal troops within their borders. In the months leading up to election day, organized groups of whites intimidated African Americans, working diligently and violently to suppress black turnout at the polls.

President Hayes (Source: Library of Congress)

President Hayes (Source: Library of Congress)

Republican officials in South Carolina, Louisiana, and Florida certified the results, in each case tossing out enough votes for the Democratic candidate, Samuel Tilden, to give the state’s electoral votes to the Republican candidate, Rutherford B. Hayes. But the game was not over. On the first Wednesday in December, the Democratic electors met separately from the Republican electors in each of the three states and cast their votes for Tilden. It appeared the country might be at the brink of another civil war.

Justice David Davis (Source: Library of Congress)

Justice David Davis (Source: Library of Congress)

The Democrats controlled the House of Representatives and the Republicans controlled the Senate. Ultimately, the politicians agreed to appoint an advisory commission consisting of five members from the Senate (3 Republicans and 2 Democrats), five from the House (3 Democrats and 2 Republicans), and five from the Supreme Court, who were to be selected by agreement of the 10 members from Congress. Two of the justices were Democrats and two were Republicans. Everyone expected the commission to select independent David Davis as the final member. Everyone was wrong.

In those days, each state legislature selected its United States Senator. The Illinois state legislature, deadlocked over its choice, chose Justice Davis as its compromise choice. Davis agreed to take the Senate seat and resigned from the Supreme Court. All of the remaining justices from whom the commission could choose its final member were Republicans. Thus, the commission, with a one-vote Republican majority in the Supreme Court, recommended that Congress accept the election results certified by the Republican election officials in the three contested states.

John Sherman (Source: Library of Congress)

Sen. John Sherman (Source: Library of Congress)

But all was not over. Many Democrats believed they had been robbed of the White House. In an unwritten agreement between the Hayes men and Southern moderates intended to calm the nation, the Hayes men agreed to withdraw federal troops from the South, provide no further support for the carpetbaggers in Louisiana and South Carolina, and allow the Democrats to resume control of the state governments. Generations of African Americans paid dearly for the compromise. In the height of irony, the Hayes men included Senator John Sherman of Ohio, whose brother had made Georgia howl, and Senator John Gordon of Georgia, who had served as a general in the Confederate army.

For more information about the 1876 election and its aftermath, please go to the following sources:

H.W. Brands, The Man Who Saved the Union, pp. 567-577 (Random House 2012);

John Gordon (Source: Library of Congress)

John Gordon (Source: Library of Congress)

Jean Edward Smith, Grant, pp. 597-605 (Simon & Schuster 2001);

James W. McPherson, Ordeal by Fire: The Civil War and Reconstruction, pp. 639-646 (McGraw Hill, 3rd Edition 2001)

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The Civil War’s First Ladies

If you are in the Washington, DC area, you should take the opportunity to visit the National Museum of American History. Among the more popular exhibits is one dedicated to the nation’s First Ladies. The displays in the First Ladies Hall include a series of period rooms modeled after rooms in the White House. The rooms serve as a backdrop for the first ladies’ gowns. If you cannot make it to Washington, you can enjoy an interactive experience at http://americanhistory.si.edu/first-ladies/new-exhibition.

Mary Todd Lincoln (Source: Library of Congress)

Mary Todd Lincoln (Source: Library of Congress)

One First Lady you will not find represented in the exhibit is Varina Davis. During the Civil War, America had two first ladies, the first, Mary Todd Lincoln, of course, served as First Lady in Washington, and the second, Varina Davis, served as First Lady in Richmond, capital of the Confederacy.

The two women were similar in many ways. Both were well-educated and had traveled in high social circles, but both were criticized by their social peers for their “rough” western manners. Mary Todd Lincoln had grown up in a prominent Kentucky family but lived in Springfield, Illinois, at the eve of the war. Varina Davis lived in Mississippi. In 1861, both Illinois and Mississippi were considered western states

In an earlier blog article, Washington’s “It Girl” during the Civil War, I discussed Mary Todd Lincoln’s social rivalry with Kate Chase, the daughter of Secretary of the Treasury Salmon Chase. Mary suffered pot shots partly due to the Todd family’s divided loyalties and partly due to her husband’s unpolished western speech. (For example, when referring to the “chairman” at an event, Lincoln pronounced the word as “cheerman,” typical of western speech.) Varina Davis, the granddaughter of a New Jersey governor, counted many prominent northerners as friends. She was suspected of northern sympathies and also suffered barbs from Virginia’s and South Carolina’s social elite. After her husband’s death, she spent her remaining years writing and living in New York City.

Varina Davis (Source: Library of Congress)

Varina Davis (Source: Library of Congress)

The ladies Lincoln and Davis received similar “titles”: Lincoln often was referred to as the Republican Queen (see Gore Vidal’s historical novel, Lincoln) while Davis was called the Confederate Queen. Mary went over-budget while decorating the White House; Varina’s critics chided her social gatherings as either too lavish in a time of sacrifice or too informal for FFV (First Families of Virginia) standards. George Rable sums up Varina Davis’s dilemma:

Many old-line Richmond families watched the arrival of Confederate politicians, generals, and their wives with a mixture of bemusement and contempt. To members of this closed society, Jefferson Davis and his wife, Varina, seemed like unrefined westerners at best and ambitious parvenus at worst. Although Varina had been a successful Washington hostess [when her husband served, on different occasions, as United States Senator and Secretary of War], the haughty Virginians, and especially the hypercritical South Carolinians, remained cool and aloof. – Rable, Civil Wars: Women and the Crisis of Southern Nationalism (University of Illinois Press, 1991).

Other than attacks about their questioned loyalties, the ladies Lincoln and Davis endured what many people under the spotlight suffer as the price for fame. As you will see if you visit the National Museum of American History or its website, at least our nation’s First Ladies have dressed well for the critics.

For more about Mary Todd Lincoln’s social life, I recommend Vidal’s Lincoln, acknowledging that it is a historical novel but contending that Vidal got the history right. For more about Varina Davis, I recommend Rable’s Civil Wars.

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