APPRENTICED TO THE LAW
When I left City College, my father wanted me to become a civil
engineer, but a brief experience in an engineer’s office convinced me
that I lacked the requisite mathematical foundation, so I gave it up and
accepted a position as assistant bookkeeper and errand boy at $6 a week
in the uptown branch of the Phœnix Fire Insurance Company.
In September, 1871, I improved myself by securing a $10 position with
Bloomingdale & Company, who were then in the wholesale “corset and
fancy-goods” business on Grand Street near Broadway. I kept the books
and also helped to pack hoop-skirts, bustles, and corsets until the
firm’s financial difficulties gave me an excuse for turning my ambition
again to the law. I returned to Kurzman’s office, January 16, 1872.
Though Kurzman’s perspicacity could pierce directly through the
intricacies of any tangled case, his accounts were shamefully neglected.
His check book was his only book of entry--he trusted his memory to keep
track of what his clients owed him--so I voluntarily and without
informing him arranged a regular system of accounts, and shall never
forget his surprise and appreciation when, at the end of the year, I
showed him what he had earned and the sources and also the amounts still
due him.
The most important branch of his practice was the searching of titles,
and this gave me my early taste for real estate. This department was
under the able management of Alfred McIntire, who graciously initiated
me into the intricacies of his work.
We were then in the midst of a real-estate boom mostly participated in
by the recently created middle class. Houses were dealt in almost as
freely as merchandise, the only hindrance being the delay occasioned by
the searching of titles, which was still confined to the lawyers, as
there were no title insurance companies. Contracts would frequently be
assigned twice and sometimes thrice, before the great event, “the
closing of the title.” Then the various couples involved--the seller,
the assignors of the contract, and the final purchaser--would all troop
into our offices. The women invariably were the bankers and pulled out
their roll of bills and sometimes Savings Bank Books, rarely checks, to
consummate the transaction. The moneys invested were seldom taken out of
the business, but were mostly the savings of the thrifty housewives.
When everything was completed, all adjourned to a neighbouring wine
cellar, to be treated to a bottle or two of Rhine wine by the vendor,
and frequently I had to go along to represent Kurzman, and as the
youngest listen attentively to the real estate stories told with all
kinds of embellishments.
Kurzman at that time took as his partner George H. Yeaman, who had been
a member of Congress from Kentucky and, more recently, American Minister
to Denmark, and subsequently became a lecturer at the Columbia Law
School. His native Southern chivalry had been polished by his experience
at the Danish court; he was a man of splendid education and wide
culture. I was fortunate in being chosen to take his dictation. I was
amused in 1916 when, as Ambassador, I visited Dr. Maurice Francis Egan
at our Legation in Copenhagen, and looked through the records made by
Yeaman in 1865 while he was the head of that Legation.
My private life I continued to order along the lines that I had laid
down for myself. I would get up at 6 A. M. and go to Central Park. Then
if I had not exercised at home, I would take a long walk; otherwise I
would sit under the trees and read. The hour that the horse car consumed
in wending its way from the Park to Duane Street I would devote to my
books, and I was so thrifty that I did not even buy a newspaper. I kept
myself so busy that I did not even see one, until, going home for the
night, I unfolded and read such as had been left in Kurzman’s office
during the day.
Thrift was, indeed, a necessary virtue. I had left commerce for the law
at something of a sacrifice: in 1872, my accounts, which I kept
scrupulously all this while, bear evidence of how careful I had to be of
my scanty income. “Carfare, 10 cts.; Dinner, 15 cts.; Sundries, 2 cts.”
That is a typical day’s expenditure.
No man that lived through the Panic of ’73 can ever forget it and on me
it made an indelible impression. At the root of the trouble was railway
over-expansion. The successful completion of the Union Pacific in 1869
caused the projection of many other roads. Jay Cooke launched the
Northern Pacific; Fisk and Hatch, the Chesapeake & Ohio; Kenyon, Cox &
Co., the Canadian Southern. The eminent New York banking concerns
floated the bonds; the large rate of interest promised--N. P. paid 8½
per cent.--attracted buyers, largely clergymen, school-teachers and
small professional men--and prices advanced until optimism bordered on
hysteria. Issue followed issue. Then, in the May of ’73, a panic on the
Vienna Bourse stopped European consumption and threw back on the New
York financiers obligations that strained their credit. Early in
September, after one unfortunate bank-statement followed on the heels of
another, call-money was at 7⅙ and commercial paper at from nine to
twelve per cent.
Minor failures were numerous in the week of September 8th. Kenyon, Cox
&. Co. failed on the 13th; the Eclectic Life Insurance Co. on the 17th.
On the 18th, the big bolt fell; word ran round that Jay Cooke & Co., in
many respects the greatest house of its time, was tottering. This news
greatly startled Kurzman, who had been a persistent purchaser of
Northern Pacific bonds. “On the floor of the Exchange,” said the
_Times_, “the brokers surged out, tumbling pell-mell over each other in
the general confusion, and reached their offices in race-horse time.”
Those were not the days of telephones; when the panic-stricken men had
got their orders, they ran back to the floor, on which absolute
confusion reigned. Men shouted themselves hoarse, contradicted
themselves and collapsed. A moment was enough to ruin many a dealer. Any
one with money to lend was beset by a mob of lunatics. Almost
immediately the effect was felt all the way down the financial line;
smaller companies went the way of the big ones and many of the smallest
were tottering after the smaller.
That week I took as usual all that I could spare from my scant salary
and went, according to my custom, to the German Uptown Savings Bank to
deposit it along with the little fund that I was laboriously setting
aside. There was a big line of confident depositors bent on similar
errands; many were ahead of me, and waiting my turn, as I looked into
the teller’s cage, I saw the president of the bank in a very earnest
conversation with three other men. Of course, I could not hear what they
were saying, but I thought the president seemed worried, and that those
with him also showed uneasiness.
I turned my head to find that the shuffling line had brought me before
the window that was my goal. The clerk behind it was both a receiving
and a paying teller. On a sudden impulse I thrust my dollar bill that I
intended to deposit back into my pocket, presented my pass-book, and
told the clerk that I wanted to withdraw the entire $80 that was to my
credit.
Three days later that bank closed. The other depositors ultimately got
about fifty cents on the dollar.
The real estate market had been as badly inflated as the stock market,
and foreclosures were the order of the day. Properties like the block
bounded by Park and Madison Avenue and Seventy-first and Seventy-second
streets went under the hammer. John D. Crimmins and his father had paid
$475,000 to James Lenox, who repurchased it for $374,150 at the
foreclosure sale under the mortgage. Equities disappeared like the snow
in spring-time. Where we had once been almost rushed to death with the
drawing of mortgages to consummate the many sales, we were now hard
pressed to keep pace with foreclosure proceedings.
I took charge of this work for Kurzman, who gave me 10 per cent. of the
net fees; the commission was most acceptable, the experience invaluable,
but a more depressing task it has never been my lot to perform. The
proud and prosperous men that had been our best clients from 1871 to
1873 now returned to shed their wealth and, with it, their
self-reliance. One who had owned eight or ten houses was reduced to
borrowing $100 from Kurzman for temporary relief. I made up my mind
never to “plunge”; if I had not lived through the Panic of ’73, I should
to-day be either many times richer than I am or, what is far more
likely, penniless.
The bad light in the Kurzman offices had injured my eyes, and, just
after the panic had subsided, my doctor ordered a sea trip. I sailed on
the barque _Dora_ for Hamburg--thirty days for $35, and no extra charge
for the excitement that was thrown in.
We were undermanned and underprovisioned. The first mate was ill when
we set out from Jersey Flats; because of that, two of the crew had
deserted, leaving only eight men aboard. There was no doctor among
these, and the Captain and I read a thumbed work on medicine that
adorned his cabin, studied the remedies that it suggested, and nearly
emptied the medicine chest in trying to cure the poor fellow, who lost
sixty pounds under our ministrations and, at the voyage’s end, went home
with his disease still undiagnosed.
Meanwhile, the crew were dissatisfied on account of the extra work
forced on them by the inactivity of the mate and the absence of the
deserters, and also with their rations. They won the second mate to
their side, and, on a day of storm when they declared themselves too few
to handle the sails, he led something like an old-fashioned mutiny. They
crowded toward the Captain.
“Run and get a pistol!” he whispered to me.
I obeyed. As I returned and slipped him the weapon, the mutineers were
just coming to a pause before him.
The Captain levelled his pistol. He made short work of the difficulty.
He offered them cold lead or hot grog. The crew, like sensible men,
chose the latter, but they continued to grumble at the food--which was
mostly hard-tack and cornmeal--until, on a day when we were becalmed in
the North Sea, we caught several dolphins weighing over 150 pounds. I
have rarely eaten anything better than that dolphin steak.
This is not to be a record of travel, but one phase of that early
journey of mine is well worthy of notice: I saw Germany just as she was
entering on the imperialistic career that ended so abruptly when her
crestfallen representatives signed the Treaty of Versailles. The
Franco-Prussian War had just ended in triumph; the German Empire had
been reborn. Its people were not the easygoing people that I remembered
from my earlier boyhood in Mannheim. Everywhere there were the
beginnings of commercial and military activity; everywhere there was
preached the doctrine of world power.
I passed several weeks at Kiel; I lived well on less than a dollar a
day. I had some difficulty in becoming friendly with a pensioned wounded
army captain because he held me personally responsible that American
ammunition had been sold to the French. The same complaint was made to
me by the German Ambassador, Baron Wangenheim, in Constantinople, in
1915. I saw the launching of the new Empire’s first battleship, the very
beginning of that colossal preparation for war which, at the cost of so
many millions in lives and money, was finally to bear its bloody fruit
in 1914. A wrinkled old man wearing a small military cap made the speech
on that occasion. It was the famous General von Moltke. I listened
intently to what he said. His words reached everyone in that crowd,
which was attentively listening to the great hero of the Franco-Prussian
War; and when I looked into his piercing eyes, I found that they seemed
to penetrate right through me, and I could understand the frequently
made statement that officers used to quiver in his presence, and that
his questions, accompanied by one of his fixed looks, always elicited
the exact truth.
On my return to America, I entered the law office of Chauncey Shaffer,
who was a leader of the New York Bar and had a nation-wide reputation.
He had been retained in many important cases, and some romantic. His
offices were first on the third floor in an old-fashioned private house
at No. 7 Murray Street, and later, he moved into the Bennett Building,
one of the city’s first modern office buildings.
In our new, well-lighted quarters, we had some interesting neighbours,
and these, along with many another, were constantly dropping in on
Shaffer. I still recall with pleasure my acquaintance in those
surroundings with Gildersleeve and Purroy, with Butzel and Bourke
Cochran.
Henry A. Gildersleeve had been born on a farm in Dutchess County, and in
early life was the handiest man with his fists in all that district. In
the Civil War he organized a company and was elected a captain. He
returned from that to complete his education and become a lawyer, but he
became a crack shot, too, at the international rifle matches; and when
he first visited Shaffer’s office, it was as an Apollo of a man with
romance in every feature of his face and every particle of attire.
He was offered by both parties the nomination as Judge of General
Sessions and came to consult Shaffer about it. I was in the room at the
time.
The scene is still vivid. Shaffer never forgot his Napoleonic pose when
there was anybody present to observe it, and now he moved about with one
hand under his coat tails and the other thrust into his breast. The
harder he thought, the harder he chewed his tobacco and the more
frequent were his expectorations. Finally he stopped short in front of
Gildersleeve, who had been waiting patiently for this queer oracle to
speak.
“If you have to go down in this fight,” Shaffer said, “go down in good
company: take the Fusion nomination.”
Gildersleeve accepted that advice. He remained on the bench until he was
seventy years of age. He is in his eighties now and as keen of intellect
as in those far-off days when he used to visit Shaffer. He is still one
of my favourite golf companions.
On many Saturdays we did little work; the coterie met in Shaffer’s
office, and we talked; it would be nearer to the mark to say that one of
us talked and entertained the others by his endless flow of good stories
and sparkling reminiscences. He was a student under Shaffer, and his
name was Bourke Cochran. I never saw him poring over Blackstone or
Kent, but on Saturday when freed from his duties as principal of the
Public School at Tuckahoe, this exuberant young instructor would either
practise his future orations on us or pour out his flood of Cochranisms
and anecdotes. Not getting my name at the first meeting, he dubbed me
“Mortgagee” and still calls me so. He thrilled us with the account of
his early struggles at Dublin University, roused our enthusiasm by his
plans to restore oratory to the New York Bar, and evoked our applause by
his determination to Patrick Henryize the Assembly at Albany. The
Democrats promised him a nomination to the Assembly, but withdrew the
promise when they discovered that he was not yet twenty-one.
It was while at Shaffer’s that I began to find out how human great men
really are. The names of Benjamin F. Butler--the redoubtable Butler of
Massachusetts--and Preston Plumb of Kansas used to move me to awe. One
of my employer’s important cases involved some grants of land
to the Atchison, Topeka, and Santa Fe Railroad and was brought
by John Leisenring, of Pennsylvania, whose attorney-of-record,
Congressman-at-large Charles P. Albright, of the same state, had, in
addition to Shaffer, associated with him in the affair, Butler and
Plumb. The latter used to dash into our office without a necktie and
then chafe at the former’s unpunctuality and indifference in the matter
of keeping appointments.
“It’s all very well for Butler to behave like this just now,” he would
say. “Wait a few more years. Then he will still be a mere Congressman,
while I’ll be a United States Senator! We’ll see who’ll kowtow to the
other then!”
Although Plumb was elected to the Senate not long after and served there
many years, I did not hear of Ben Butler doing any kowtowing.
In the summer of 1875 I felt that obtaining a knowledge of the law in
this scrappy, unsystematic fashion was unsatisfactory, and that,
therefore, I would leave Shaffer’s employ, attend Columbia Law School to
get a thorough grounding of the law, and arrange for future easy access
the odd bits of legal knowledge that I had absorbed in the offices. As I
needed an income to enable me to do this, I secured a position as
night-school teacher at $15 a week in the school on Forty-second Street
near Third Avenue.
At that time Forty-third Street had not yet been cut through, and on top
of the rocks was a shanty-town occupied by squatters. As I had the adult
class, my pupils were from eighteen to forty-five years old, some of
them denizens of the rocks, while others were hardworking carpenters,
brakemen, butchers, factory workers, a plumber’s assistant, a coachman,
and a blacksmith.
I particularly remember the latter three, because the plumber’s
assistant came to the school to inveigle some of the other boys to play
cards with him in one of the rear seats, and to amuse himself by
throwing tobacco quids and beans while I, with my back turned to the
class, would be engaged in explaining things on the blackboard. I was
nineteen years of age, husky, weighing 180 pounds, and unafraid even of
a plumber’s boy. As my weekly stipend of $15 was my sole support and its
retention depended upon my being able to maintain discipline and keep up
the attendance, I was not going to permit this loafer’s antics to defeat
me--and one evening when I caught him playing cards, I forcibly ejected
him from the classroom. Thenceforth my tenure of office was assured and
continued to the closing day exercises, at which I had the pleasure of
rewarding the coachman, Morgan O’Toole, with a prize for the greatest
advancement made by any pupil. This man was very anxious to learn
fractions. During the first three weeks of the session, every Friday
evening I had succeeded in teaching them to him. Every following Monday
evening his mind was an absolute blank as to fractions, and the fourth
week I asked him to come to my house both Saturday and Sunday, and gave
him private lessons. His joy on the next Monday when he found he had
retained his knowledge is still a vivid memory in my mind.
The blacksmith, a man named Whitney, had been a fellow pupil of mine in
Fifty-first Street School, and had been one of the best penmen. I was
surprised to see him come to reacquire that ability, which he had lost
through wielding the hammer and pulling the bellows.
One of the carpenters wanted to learn duodecimals. As I knew nothing
about them, I told him that I wanted him to brush up on ordinary
fractions for two days. In the meantime, I learned duodecimals and then
taught him.
It was really a great experience to divide impartially two hours every
evening so as to satisfy the twenty-five earnest seekers after
knowledge.
I deeply sympathized with these men who, wearied from their day’s
labour, preferred to forego needed rest or amusement and devote their
evenings to extricate themselves from the ignorance in which they had
been compelled, probably through poverty and the early need of
self-support, to live the better part of their existence.
It spurred me to still greater efforts to increase my own knowledge and
I was no longer content merely to perform my allotted tasks at the Law
School, but spent several hours a day at the Astor Library and drew deep
drafts from that fine well.
During that period I devoted all the daylight hours to study,
principally at the Law School, sitting in the midst of these hundreds of
men who had come from all parts of this country and Japan, to imbibe
from the lips of this great teacher, Professor Theodore W. Dwight, the
basis of the law of the land.
I joined the Columbia Club and was elected one of the team to debate
with the Barnard Club, all of whose members were college graduates,
while we had not had that advantage. I studied the subject of the
debate, “Whether Participation in Profits or Agency Is the Correct Test
of Partnership,” more thoroughly than I ever did any case on which I was
retained during my practice of law. Professor Dwight, who presided,
praised our thorough preparation and fine team work and declared us the
winners. When our class graduated, we had the great honour of having
that famous leader of the Bar, Charles O’Connor, come out of his
retirement to bid us “Godspeed” on our way.
I was formally admitted to the bar on June 1, 1877.
During my second year in Law School I did not teach night school, but
supported myself by accepting a position from that fine Southern
gentleman, General Roger A. Pryor, who had been Congressman, Minister to
Spain, and finally became a Judge of the Supreme Court of the State of
New York.
An interesting episode that occurred at that time was my representing
General Pryor at several meetings of the owners of the Greenwich Street
property, who had retained him to seek an injunction to prevent the
continued use and extension of the first Elevated road, which was on
their street and was propelled by a chain. They claimed that their
property would be ruined for private residences, and it was. They did
not visualize, however, that this was the first step forward in the
solution of the transit problem of New York, which was then totally
dependent upon its horse-car system; and that someone had to suffer for
the general good.
A very important and valuable after-effect of my connection with
Pryor’s office was my becoming acquainted with Mr. Valentine Loewi, for
whom I searched the title in a mortgage transaction. Loewi doubted my
experience and when Pryor confronted me with this, instead of resenting
the criticism, as Loewi expected me to do, I recognized its justice, and
satisfied Loewi by having my work checked up by Mr. McIntire. He became
my permanent friend and one of my firm’s first clients, and through his
recommendations we secured some of the most valuable clients we ever
had.
A little later came the uproar consequent upon Tilton’s entering the
wrong berth in a sleeping-car. He came to Pryor, and I acted as
secretary while these two prepared the Tilton statement for the
newspapers. Curiously, both these six-footers had the habit, when
thinking intensely, of striding across the room with swinging arms, and
were that day doing it in opposite directions. I was constantly on the
alert for a collision. Tilton would dictate a phrase. Pryor would stop
and suggest another word. Tilton would weigh and test it, and would make
still further corrections. Not even my weightiest diplomatic notes from
Constantinople received the care and attention that these few lines were
given by these two masters of English.
In the summer of ’77, as Mr. Kurzman was going to Europe, he requested
me to come back to Kurzman & Yeaman, and as they offered me a
well-lighted office, I did so. Still associated with Kurzman was Alfred
McIntire to whom I have already referred, and with whom I had kept up
the pleasantest of relations during my clerkships with Shaffer and
Pryor, both of which positions he had secured for me. McIntire was a New
Englander of the very best type, considerably older than Mr. Kurzman,
and recognized as one of the best conveyancers of the City of New York.
One Sunday while I was visiting McIntire, we went rowing on the Harlem
River, and discussed plans for a prospective partnership. He was about
six foot two in height, and weighed fully 250 pounds, and I was to do
the rowing. Our skiff had not proceeded fifty yards before I discovered
that I could not pull such a load and get anywhere. I took this as an
omen, and then and there resolved that when I did select a law partner,
he should be of my own age and weight, so that he could do some of the
pulling.
During this summer, one of the old clients of the office, Henry Behning,
got into very serious differences with his partner Diehl. The matter
became greatly complicated, and the more complicated it became, the more
excited Behning grew, and the more excited he was, the more incoherent
and less comprehensible was his English, so that Mr. Yeaman, who was
acting as his counsel in Mr. Kurzman’s absence, despaired of
understanding him. A climax was reached one day when Diehl’s attorneys
had secured the appointment of a receiver. Behning was accusing the
lawyers, and the judge, and everybody else of all kinds of conspiracies,
and Yeaman was so bewildered that he called me in to tell Behning that
he did not think he could do justice to him because he could not
understand his speech, and that he had better secure a German-speaking
attorney. Upon my explaining this to Behning, he said: “All right, I’ll
take you.” I explained the proposition to Mr. Yeaman, and he said that
if Behning would be contented to do all his consulting with me he would
be very glad to steer the legal proceedings. I discovered that some of
Behning’s fears of conspiracy were justified, and concluded that the
only way to counteract them was to throw the firm into bankruptcy. I
prepared the necessary papers, and had them signed by the judge of the
United States District Court. I then communicated with the pompous
ex-judge who represented Diehl, and had the tremendous satisfaction of
having completely checkmated him. A prompt settlement resulted. The
creditors realized that if they kept on fighting, the lawyers would be
dividing the assets, and therefore consented to have Behning and Diehl
divide them, and each continue in business for himself, and each assume
half the liabilities.
Behning greatly appreciated what I had accomplished. He wanted to give
me something to prove it. As he had no spare cash, he offered, and with
Yeaman’s consent I accepted, one share of the Celluloid Piano Key
Company stock. At that time, Arnold, Cheney & Company had cornered the
word’s ivory market, driving up the price of ivory for piano keys to
$30.00 a set. The piano manufacturers tried alabaster and other
substitutes with small success, when Behning thought of using celluloid
and formed the Celluloid Piano Key Company, securing for it the
exclusive right for the use of that substance in piano and organ keys.
The company was so successful that its president began to intrigue for
its control. The president was an Englishman, the treasurer a Dane, the
secretary an American, and most of the rest Germans. Themselves densely
ignorant of the manipulations of corporations, they finally feared that
the president was in a fair way to get the company away from them,
whereupon those representing over 70 per cent. of the stock held a
hurried meeting, but they could not agree on a common policy because
each mistrusted the others. I proposed that they all give their proxies
to one man who should obligate himself faithfully to represent the
interests of all against the president; they replied that this was
excellent, but they could not agree on the one man.
Then Behning spoke:
“What’s the use of fencing any longer? The only one we _all_ trust is
Henry. Let’s give him all our proxies.”
They did so, slated me for secretary, and as I wanted to prevent any
mischief until the next annual meeting, I called on the president, told
him I had the proxies of 70 per cent. and, with the audacity of my
years, warned him that, if he did anything improper for the remainder of
his term, I would bring him into court.
He asked me:
“Are you going to be an officer?”
“I am to be secretary,” I said.
“Will you protect my interest, and see that I get my proportionate share
of the profits?”
I went back to the others and obtained the authority to give him this
assurance, which I did.
“All right,” he declared, “make out my proxy to you and I’ll sign it.”
I had bearded a lion in his den and brought a lamb out with me. My
connection with this concern, in one capacity or another, continued
through two decades, and I was its president when I left it.
This adventure in celluloid put me in a position where it was possible
to realize my ambition to stop clerking and start for myself.
It was settled most unexpectedly. During my attendance at Law School,
Abraham Goldsmith, Wilbur Larremore, son of Judge Larremore, and I used
to hold weekly quizzes at my house. In that way I had renewed my
friendship with Goldsmith, who had been my classmate in the City
College. One evening, early in December, 1878, Goldsmith called and
informed me that Samson Lachman and he contemplated starting a law firm.
I had always been very fond of Goldsmith, and Samson Lachman had won my
unlimited admiration when I listened to his Commencement Day oration and
saw him receive eleven prizes, which were about all that one man could
take. Hence, Goldsmith found me very receptive, and before we separated
that evening, our partnership was an accomplished fact. We both agreed
that Lachman was entitled to head the firm. As Goldsmith expressed
indifference as to his position, and as Lachman, Morgenthau & Goldsmith
sounded more euphonious, that order was adopted. We agreed to start on
January 1, 1879. Our average ages were twenty-three. We hired offices at
No. 243 Broadway at an annual rental of $400. Our net receipts for the
year 1879 were $1,500.
Our practice, as well as our income, grew steadily, but I shall abstain
from relating many details, as most of the matters involved were not of
public interest.
A rather interesting affair, because some of the participants are well
known to the public, was the dissolution in February, 1893, of the firm
of Wechsler & Abraham, of Brooklyn. We represented Wechsler, and William
J. Gaynor, afterward Mayor of the City of New York, represented Abraham.
Their partnership agreement contained a very peculiar dissolution
clause. They were to meet on February 1, 1893, and bid for the business,
and a bid was to be final only if the non-bidding partner had failed to
increase it during a term of twenty-four hours. When we met, I drew
attention to the fact that if we acted under the contract, either side
could prolong the matter indefinitely, and recommended that we amend the
agreement by reducing the limit to one hour. This was agreed to on
condition that both parties would deposit $500,000 as an earnest of
their intentions to complete their bid, the unsuccessful bidder to have
his check returned to him. Isidor Straus pulled out a certified check of
$500,000 and I instructed Wechsler to make out his check. When Wechsler
admitted that he did not have that much in the bank, I showed them an
underwriting that I had secured from the Guaranty Trust Company and the
Title Guarantee & Trust Company, to finance our purchase to the extent
of $1,000,000. The auction then proceeded, and both factions were
cautiously watching each other. Gaynor, Abraham, and the Strauses
several times retired to the other end of the room for conference,
Nathan Straus constantly pulling at one of his big cigars and pretending
that they had about reached the limit of their bidding. I had arranged
definitely with Wechsler that we would bid an amount that would produce
$500,000 for the good will of the business. So, finally, when they came
within reach of about $100,000 of it, I bid the exact amount that would
produce the desired result. They saw what I meant, and, as it turned
out, had their last conference, which lasted about ten minutes, and
raised us $100. I then informed them that we would take our hour. We
(Wechsler, Mr. MacNulty, who was the manager of the store, and myself)
went to an adjoining restaurant to discuss the matter. Wechsler devoted
fully forty minutes of the hour in trying to persuade me to reduce the
fee that he had agreed to pay me. He and I had agreed that if he
purchased the property, and we had to complete the financing of it, my
firm’s fee was to be $25,000, while if Abraham bought him out, we were
to receive $10,000. Wechsler thought we had earned it too quickly, and
begged for a reduction. I was absolutely firm and finally told him the
story of the dentist who, with his modern methods, had painlessly
extracted two teeth for a farmer in two minutes, and when he demanded
his fee of $2.50, the exorbitancy of the charge was objected to by the
farmer, who stated that when he had his last tooth extracted, the
dentist had pulled him around the room for half an hour, and then only
charged him 50 cents for all that work. I said to Wechsler that I could
have protracted this matter for thirty days, and this delay would have
been most injurious to him on account of his diabetic condition. He
wanted me to bid another $10,000 so that Abraham would have had to pay
the fee, and he would have a net $250,000 for his good will. I was firm
in my advice that he was unwise to run the business alone and should not
risk securing it. We returned before the hour had expired, got
Wechsler’s check back, and his half interest in the business became the
property of Isidor and Nathan Straus, for whom Abraham had in reality
been bidding. Immediately thereafter they dropped Wechsler’s name and
created the well-known firm of Abraham & Straus.
Incidentally it may be of interest to the public to know that, when
Isidor and Nathan Straus divided their interests, Isidor and his sons
secured the business of R. H. Macy & Co., which they owned in common,
while Nathan and his sons secured the half interest in Abraham & Straus.
No doubt a good share of Nathan Straus’ munificent charities are
financed to-day by his share of the profits from that business.
One of the greatest surprises in our practice was when Judge Horace
Russell retained me as a business lawyer to advise him what to do about
the affairs of Hilton, Hughes & Company, who had succeeded to the
business of A. T. Stewart & Company, and who, in turn, were later
succeeded by John Wanamaker. Judge Russell’s brother-in-law, Mr. Hilton,
had been increasing the volume of the business rapidly, but his expense
ratio was increasing much faster in proportion, so that, at the end of
the year, he showed a tremendous loss. Some of the biggest banks in New
York were refusing to renew the notes, even though Judge Hilton was
willing to endorse them. They said they felt safe on all the paper they
had then with Judge Hilton’s endorsement and collateral, but they feared
that if they permitted the losses to continue much longer, it might
even engulf Judge Hilton in the unavoidable catastrophe. I finally
advised him that he should sell out the business and take his loss. He
retained Mr. Elihu Root as counsel. The three of us went over the whole
situation. I explained that, owing to the very large general expenses
due primarily to the excessive salaries which Hilton had agreed to pay
under five-year contracts to his buyers, heads of departments, and even
the superintendent of the engine room, and the bad credit in which the
firm then stood, the only wise course was to sell out the business. We
concluded to do so, but in the meantime decided that it would be
necessary to make a general assignment to preserve the assets and secure
a reasonable settlement with the men who held long contracts. When the
assignment was finally prepared, it had to be executed the following
day, and Root, Russell, and I first dined together, and then remained in
Russell’s office until five minutes past midnight, when young Hilton, in
our presence and that of Mr. Wright, the assignee, and a notary,
executed the document.
While waiting, Mr. Root told us of several cases in which he had
recently been retained, where the younger generation dissipated big
fortunes in a very short time. He laid particular stress on the case of
Cyrus W. Field, who, in his lifetime, prided himself that he had an
income of $1,000 a day, which at that time was enormous. I also recall
Root telling me that night that it was unwise for any lawyer to devote
himself entirely to politics, that he should, when called upon, render a
public service, complete it, and then return to his profession, but be
ready for any further calls that might be made upon him. Root has
pursued that course most successfully.
I felt a strange sensation to be present at this midnight dénouement of
the great business of A. T. Stewart & Company. I could not help but
think of the causes. Judge Hilton had offended the Jews in America
because his hotel, the “Grand Union” in Saratoga, had refused to
accommodate Joseph Seligman, whom both the New York Chamber of Commerce
and Union League Club honoured by electing as one of their
vice-presidents. Hilton did not then realize that this act not alone
involved the loss of his Jewish customers, but it would also influence a
great many of his Christian patrons who would resent such
discrimination, and withdraw their custom from his firm. Most of this
trade went to the rising firms of B. Altman & Co. and Stern Bros. and so
strengthened them that they became great competitors of Hilton, Hughes &
Company, and precipitated their downfall. John Wanamaker bought the
lease and stock of goods. I remember distinctly with what satisfaction,
when the transaction was closed, he told me that this was the first time
that he had ever heard of so valuable a franchise being given away for
nothing. Wanamaker shrewdly disregarded the short existence of Hilton,
Hughes & Company, and advertised John Wanamaker as the successor of A.
T. Stewart & Company.