Death of American Virtue - Ken Gormley [27]
Bill Clinton won a smashing victory in his campaign for governor in the fall of 1978, garnering 63 percent of the vote. At age thirty-two, he was installed as the youngest governor in the nation. Bill and Hillary, as they daydreamed of setting up a nursery in the governor’s mansion, imagined that Whitewater might produce a modest amount of useful extra income.
CHAPTER
4
MCDOUGAL PAINTS THE TOWN
As with many of Jim McDougal’s projects, the reality of the Whitewater investment did not match the grandiose pictures formulated in the. architect’s head. Flippin, a town that was so small (as locals said) “you could blow through it like grits through a dwarf,” was hardly a hot tourist destination. It was located in a dry county, without a single spot to buy beer. The town had few amenities other than one Dairy Queen and a roadside store that sold Confederate flags.
By far the biggest problem with Whitewater was its location. Gene Lyons, a writer who covered the unlikely scandal and owned a fishing camp a short canoe float away, explained that the property was simply located on the wrong side of the river. During the frequent “toad-strangling storms” that bloated the tributary and caused it to flood over, it was impossible to reach the property. Moreover, the parcel was “in the middle of nowhere.” Explained Lyons: “Had Whitewater been located on the Baxter County side of the White River, prospective buyers would have been afforded the same views and the same terrific trout fishing without quite the same isolation. Nor would it have required an hour’s round trip to buy a six-pack.”
There was another aspect of the Whitewater failure that had nothing to do with its jinxed location. For years, usury laws in Arkansas had limited interest rates to 10 percent. Just as Whitewater was revving up in the early 1980s, these caps were removed by constitutional amendment, as the nation sunk into a recession. Interest rates now soared to match those in the rest of the country. As Susan McDougal would explain the worsening dilemma: “We were selling paper at ten, and our loan was at twenty-three, and it turned us upside down.” Soon, Whitewater was “losing money at every turn.”
Still, Jim McDougal wasn’t about to confess error. His strategy was to start “doing more real estate things, putting that money back into [Whitewater] to try to keep it propped up so it wouldn’t be a failure, because we had our friends and it was embarrassing to admit that it was a total failure and had lost money.” To Susan, her husband was becoming Rube Goldberg. “If one thing wouldn’t work to fix something, he’d do seven. And they’d all be convoluted and interrelated, but none of them would work. Like, ‘Let’s get Hillary to build this house up there.’ Well, we’re already losing money, you know. Nobody’s wanting to buy land there. The economy’s in a terrible place, so we’re going to spend more money, you know, to do these things.” One of Jim’s stock phrases was “You’ve got to stanch the flow of blood.”
In the end, the Whitewater scandal, as the press dubbed it, really had little to do with the ill-fated Whitewater property that the Clintons had partnered with the McDougals to purchase in 1978. Rather, it dealt with a series of business ventures that Jim McDougal had leaped into with reckless abandon—most relating to a bank called Madison Guaranty Savings and Loan—in order to rescue himself from the Whitewater fiasco. These unorthodox enterprises