This is a story of a poor family coming into riches. Settling in the small town of Muenster, Texas, they built an estate, entertained Dallas high society, and rubbed shoulders with national celebrities. Except their oil millions proved to be fantasies — their lavish lifestyle a house of cards built on credit.

Background

Margaret Smiddy was born in central Tennessee’s coal country. Her father started in the mines at 13, working his way up to mine superintendent. Margaret’s 1973 autobiography is thick on details that paint her as a slightly spoiled younger child, and one who always admired the people who stayed in the local hotel and ate steaks. She was also something of a pet of her eldest sister Ella, almost 17 years old when Margaret was born, and her husband Speed, who never had children of their own. Margaret would eventually bring her parents, Speed and Ella to live near her in Muenster.

At some point, Margaret converted from her family’s Baptist faith to Catholicism, and when she found herself widowed with four young children, she chose to take them to a Catholic orphanage in Memphis over her father’s objections. At the time, St. Peter’s Orphanage was transitioning into an institution designed to keep families together through temporary hardships: Margaret was offered a job in the orphanage’s nursery, in return for which she received a small salary, room and board (she shared an attic dormitory with nine other mothers in a similar position), and some time with her children each day.

A friend of her late husband soon arranged for her to meet a widower friend of his, Ernest Medders. Nine months later they were married. Margaret moved her children out of the orphanage and went to work as a practical nurse at St. Joseph’s Hospital in Memphis. The hospital was run by the Poor Sisters of Mishawaka, Indiana, and Margaret made several lifelong friends among the nuns of the order.

Ernest and Margaret’s financial status during their early marriage was precarious. Ernest worked as a mechanic’s helper for Gulf Oil’s gas delivery trucks. (He left school after the third grade when his teachers gave up on teaching him to read, likely due to a learning disability.) In addition to Margaret’s four children, they added four of their own in less than five and half years, and wound up filing for bankruptcy after three of the births, probably due to medical expenses. Margaret began working as a private nurse to bring in additional money. They just managed to buy a house before Ernest was forced to retire on doctor’s orders.

A dream of riches

Then a relative of Ernest’s noticed an advertisement in a newspaper looking for relatives of a Ruben Medders. An attorney, W. T. Weir, had become convinced that this Ruben Medders had a claim on a portion of the Spindletop oilfield near Beaumont, Texas, and was seeking potential heirs to join his suit. Ernest and his brother Isom attended a meeting with 200 other relatives where the case was described, with the potential value pegged at $5 billion. Everyone pitched in $30 to join the suit; Ernest had to pay his in installments. Margaret describes being skeptical at first, although she certainly came to be impressed with Weir. In fact, one gets the sense that she was overawed by the walls of books and framed citations in his office and considered the law something of a mystical art full of secrets. Of course, the real secret is why Weir thought the suit had any merit to begin with.

At the time, Margaret’s eldest son was attending Subiaco Academy, a Benedictine boarding school in Arkansas. The Medderses began to consider moving to Texas to be closer to the lawsuit, with the thought that it might also benefit Ernest’s health, but had trouble picking a suitable place. When the monks at the school learned of the potential inheritance and planned move, they recommended the town of Muenster, Texas, a small German Catholic town north of Dallas, and loaned the Medderses enough money to get established.

At some point, Margaret began to believe that of the 3,000 plaintiffs on their suit, Ernest would receive $500 million. This figure worked its way to the Poor Sisters, and soon the Mother Superior started regular loans to the Medderses to finance the purchase of a farm and construction of a house. Ernest and Margaret did repay the monks of Subiaco Abbey. The Poor Sisters, however, seemed prepared to wait for the Medderses’ windfall.

Ernest and Margaret soon purchased an estate north of Muenster that they named Colonial Acres and began building a house. As a Life magazine spread put it, Colonial Acres “was expensive and tasteless but not offensive, and a Dallas interior decorator achieved the same expensive and tasteless effect inside.” (Nevin 1967) Meanwhile, Ernest pursued his ranching dreams, building up his stock of Angus cattle and Appaloosa horses.

They hired a Dallas PR man to attract attendees to their parties and sent their daughters to the most exclusive Dallas girls school, purchasing a second home next door to ease their commute. They built a large barn, designed for hosting both livestock shows and gala events, and threw a massive barn warming, complete with tuxedo-clad helicopter pilot ferrying guests to the estate. Margaret spent freely at Neiman Marcus — a friend of Margaret’s in Muenster recalled that Margaret had trouble refusing salespeople, finding it hard to say no even to things that didn’t fit.

No one seemed to question their sudden entrance into Dallas society. It certainly helped that Ernest, tall and laconic, looked the part of a Texas millionaire in a suit and cowboy hat. His silences might have been more noticeable but for Margaret’s comparative talkativeness: “Without discussing it, Ernest and I worked out ways to conceal the fact that he couldn’t read. Of course, our method caused our friends to believe that I was unusually talkative and had the peculiar habit of reading aloud everything I saw.” (Medders 46)

They also gave generously to Democratic political campaigns; the peak of their rapid social ascent was a visit to LBJ’s White House, after which they were invited by the President to stay for an intimate supper and movies (plus a slideshow of pictures from LBJ’s ranch — the impulse to force your snapshots on others is universal). The next day, they rode back to Texas with him on Air Force One.

Eventually, the Poor Sisters’ loans had increased to $60,000 a month.

Then, in April 1966, a new Mother Superior decided there would be no further loans: the Medderses could now stand on their own two feet. And had they scaled back spending, they should have been able to. After all, they had a 1,400 acre ranch now, its associated oil wells, and established Angus and Appaloosa breeding programs. Instead the Medderses turned to area banks for credit, continuing to host a series of parties and charity balls, including one with celebrity clairvoyant Jeane Dixon. Margaret’s autobiography describes how she felt pressured to continue her social commitments. But during the same period she also bought the the most expensive mink coat ever made ($75k), and purchased radio spots wishing everyone Merry Christmas. For New Years, the Medderses chartered train cars and buses to bring 200 of their daughters’ friends and classmates up from Dallas for a New Years gala.

Bankruptcy

In September 1966, the Medderses took their Appaloosas to the Tennessee State Fair. While there, they threw a large party for their friends, family, and acquaintances in the horse and cattle breeding community at the Rivermont Hotel in Memphis. This seems to have finally spurred a jealous relative into action: before checking out of the Rivermont the Medderses received reports from relatives that investigators had been asking if they’d received any money from the suit. It seems that Margery Medders, Ernest’s sister-in-law, suspected that Ernest had received a settlement that she should have shared in. In October, she filed suit seeking an accounting of Ernest’s inheritance. It was during a deposition in this suit that Ernest ultimately admitted his only outside income was a $261/month social security check. By February 1967 they were in bankruptcy court.

Several stories circulate about those who discovered the truth earlier. A VP of Muenster State Bank claims to have written to a lawyer in Beaumont in 1964. The lawyer responded that suits based on Pelham Humphries claim were perennial failures. Yet the bank still wound up among the creditors in bankruptcy court. A staunch Republican attorney would also recall investigating the Medderses in 1966, annoyed at their Democratic activism. He claimed to have notified the Poor Sisters and several local creditors, but many still wound up trying to recover their money in bankruptcy court. And then there’s the meeting Edward Marcus describes having with Margaret when she started to fall behind on payments, mere months before everything fell apart:

“Margaret, where does all the money come from?” Marcus said he asked her.

“Some of it comes from my side of the family,” she replied, “but the real money is on Ernest’s side.”

“How much?” Marcus asked.

“Five billion dollars,” she answered.

Marcus said that “When I heard her say billion, I knew we were in trouble.” (Merwin 1977)

Neiman-Marcus stopped delivery on the $75,000 mink coat and called a diamond necklace in for cleaning. They still wound up suffering the largest credit loss in the store’s history.

We never dreamed or never thought we’d ever have any money. Then when we were told, again and again…I believed…everybody probably wants to believe somebody will have a fortune for them.

But when people give the money, that’s proof that they believe it. It helped make us believe.

• Margaret Medders (Simons 1974)

Week 47

 

When the XV Congress of the Italian Socialist Party took place, in the first week of September – about the time of the assassination attempt against Lenin and the opening of the first season of Soviet terror – Mussolini had already renounced the promised land of socialism and elected, for the time being, to earn a living in the desert.

More prosaically, to use Mussolini's own words in his comment to the removal of the subtitle “socialist newspaper” from the header of his Popolo d'Italia, he had decided to “close up that shop for good” and “leave the market to the competition”, to the socialists with their doctrine: “thrift store junk from before the war”. And the results of the Congress with the large victory of the intransigent-maximalist current had given Mussolini new ground for his polemics against the “Italian Bolsheviks” and their defeatist and anti national positions – as well as for a more general approach to the Russian Revolution, not as first step of the socialist triumph, but as confirmation of the definitive failure of the Marxist-socialist doctrine (a theme present in other contemporary works such as A. Lanzillo's La disfatta del socialismo published in the Summer of 1918).

We have already discussed the reasons behind Mussolini's eventual detachment from the socialist doctrine as a whole and the time frame of this process; as well as pointing out some of the main contributing factors, from Mussolini's always very particular approach to socialism, to his dissatisfaction with the orthodox positions of the leadership on the matter of the war, to his inclination for a personalization of political conflicts, as well as his direct economical interests and the contacts and relations created during the years spent running his newspaper, the direct experience of the war, the suggestion of new themes and the intuition-realization that the global conflict was going to reshape somehow the social and political landscape of the nation.

While there might be reason in the future to return to these aspects, it is now time to stop looking back and step forward into Mussolini's new shop, to see what merchandise from the new Century is available for purchase. It's little more than a peak; by the end of 1918 there's nothing in the shop to warrant an extensive examination. Nonetheless – since we are not men from 1918 – we may take a few notes, just to see if some of these things come up again later in time...

 

1. Myths – a recurring word in describing the formation of a fascist ideology; the concept – derived from Georges Sorel (and in turn influenced by the theories of H. Bergson) – that in the age of mass formations participating to political life, a few core-concepts able to penetrate the social (collective) psychology of large groups and inspire them to action would be much more effective (rather Sorel's argument proper wasn't just an instrumental one; positing that any proper, sound political, philosophical or economical doctrine would still be only accepted by the masses in the form of a myth) in their appeal than any complex of systematic formulations.

2. The masses – (this one too a myth in its own right) the large social formations, far from being relegated in the background of the historical scene, could become at a turn of events the irresistible motor of history, as outlined already during the end of the XIX Century by S. Sighele and G. Le Bon, the tide that the great men had to ride into the future, to inspire and drive them to action thanks to their intuition of the core-ideas of an age. A process that would find its institutionalized and symbolic expression in that “sacralization of politics”, as historian E. Gentile defined it in the context of Italian Fascism, that aimed at creating a bridge between the irrational impulses of the masses and the material forms of the state.

3. Anti-parliamentarism – a widespread criticism of the liberal system and the parliamentary institutions, a pervasive trait of early XX Century Italy, with its most specific incarnation in the refusal of the system of power established by Prime Minister Giovanni Giolitti in the first decade of the Century, that earned its own name of anti-Giolittismo; while each political current played this tune to their own liking, from the outright refusal of the institutions of a liberal state in the case of the Nationalists, to the rejection of the growing clientelistic degeneration for the progressive liberals, to the appeal for a return to more traditional and safer political structures for the conservatives, this widespread sentiment increased the vulnerability of the liberal state forms as well as favoring the growth of a persistent intellectual background for the rejection of democratic values.

4. The new state – themes of general palingenesis were commonplace in the early XX Century political thinking; their simplest more immediate incarnation within Italy was that of “the myth of the new state”, as E. Gentile again has defined it. A change of the institutions, a change of leadership, a change of the social formations – declined according to the circumstances either as evolution or upturning – often with an accent on the more productive portions of society, destined to inherit the new Italy and restore it to greatness. And with the progressive predominance of the interventionist themes and the legacy of certain features of the early Century “national radicalism”, a greatness to be achieved by establishing a more direct correspondence of state and nation.

5. Interventionism – the Italian battle over the intervention during the Winter-Spring of 1914-15 with its culmination in the “radiant days of May” had led to a deep fracture in the political tissue of the nation, often running transverse through apparently homogeneous forces (see the liberals split between Giolitti's neutralist majority and Salandra's and Sonnino's interventionist minority), that would be merged only apparently after the end of the War, with the policy of national unity promoted by F.S. Nitti (see his famous “victory speech” of September 1919 - “truth is we won, and victory has cured us all”). But with the ongoing conflict and especially after the military disaster of Caporetto in October 1917, the interventionist identity had become a patent for radical commitment to the war effort, refusal of even entertaining any thought of negotiations or, worse, defeat, active and energetic surveillance of the national life, within and outside of the institutions, denouncing or even taking direct action against any saboteur or defeatist; the socialists being the first among those.

6. Anti-socialism – Mussolini's break up with socialism was a gradual one. By the end of 1918 though, his refusal of socialism had become open and explicit, aligning in this manner with both the Nationalists and the most “interventionist” fraction of the old revolutionary syndicalists. His arguments for this refusal remained quite ambiguous but one can attempt to find a trait d'union between Mussolini's belief in the 1912-13 that Marxism itself with the eventual socialist revolution had to enter the social conscience in the form of a myth, unclothed of their original materialistic form, and his progressive convincing that such a myth was either inadequate for the Italian people, or inadequate altogether, as showcased by the Bolshevik degeneration of the Russian Revolution. That the Great War in short had created a bridge between ideas and myths old and new, that could make a larger impact than the socialist ones.

7. The nation – while the convergence with the more advanced theoretical formulation of the Italian Nationalists would only be completed in the early 1920s, the theme of the nation was already present for Mussolini, implicitly and soon after explicitly, in the early days of the interventionist debate following the dissolution of the Second Internationale. Further back the idea of an imminent return to greatness of the Italian nation, together with the theme of a “exceptional function” of the Italian people, had inspired a general sentiment of italianismo that in its early incarnations had marked the last stages of the Risorgimento experience, following works such as Gioberti's Primato. Notably in its original formulation, such idea of the nation was not opposed to a measure of internationalism, traces of which could still be found in Mussolini's ambiguous stance on the Adriatic question during 1918.

8. Productivism – in light of the socialist failure, rather than advocate for a reorganization of society based on a class division, the productivist doctrine claimed for a cooperation of the productive forces, i.e. workers and owners loosely speaking, taking charge together of the political system and subtracting it to the traditional hegemony of the improductive political establishment. While corporative doctrines existed already at the time and the contiguity with the theme of productivism appears obvious, there was no specialization yet into a concrete project besides the general requests that the productive forces of the nation would gain seniority in the new state coming out of the conflict.