The National Corporation Problem 1045
Conclusion 1063
------------------------------------------------------------------------
ILLUSTRATIONS.
PAGE.
Henry Clews Frontispiece
Mills Building 5
Parents of Henry Clews 7
Birthplace of Henry Clews 9
Map of U. S. by Henry Clews 11
Jacob Little 13
Salmon P. Chase 39
John Sherman 73
E. G. Spaulding 81
New York Stock Exchange 87
(exterior)
New York Stock Exchange 91
(interior)
Daniel Drew 117
George I. Seney 175
Henry Villard 209
Georgia State Bond 255
Samuel J. Tilden 337
Commodore Vanderbilt 345
W. H. Vanderbilt 355
Cornelius Vanderbilt 387
W. K. Vanderbilt 389
F. W. Vanderbilt 393
Three Rothschilds 397
Nathan Rothschild 401
W. R. Travers 407
C. P. Huntington 451
Leland Stanford 455
D. O. Mills 457
Charles Crocker 459
John W. Mackay 461
James C. Flood 463
James G. Fair 465
Robert Garrett 553
August Belmont 595
George J. Gould 607
Jay Gould 619
Cyrus W. Field 659
P. D. Armour 661
Levi P. Morton 663
J. A. Stewart 665
A. J. Drexel 667
Leonard W. Jerome 669
Addison Cammack 671
Russell Sage 673
Chauncey M. Depew 675
James M. Brown 677
E. C. Stedman 679
H. Victor Newcombe 681
Moses Taylor 683
Thomas L. James 685
John H. Clews 687
James B. Clews 689
Roswell P. Flower 691
J. Pierpont Morgan 693
John D. Rockefeller 701
William Rockefeller 713
Henry H. Rogers 729
John D. Archbold 735
Edward H. Harriman 793
Wm. H. Moore 821
Daniel G. Reid 843
Thomas F. Ryan 849
John W. Gates 853
Chas. M. Schwab 869
August Belmont 879
Anthony N. Brady 881
Stuyvesant Fish 903
William E. Gladstone 921
_Fac-simile_, Gladstone letter 923
------------------------------------------------------------------------
DEDICATION
TO THE
VETERANS OF WALL STREET,
MOST OF WHOM I HAVE KNOWN PERSONALLY.
--------------
MY DEAR FRIENDS:
I have attempted, in the following pages, to relate in a simple and
comprehensive manner, without any aim at elaboration, the leading
features of the most prominent events that have come within the sphere
of my personal knowledge and experience during the twenty-eight years of
my busy life in Wall street. I have never kept a diary regularly, but
have been occasionally in the habit of preserving certain memoranda in
the form of letters, and a few scraps from the newspapers at various
times. With these imperfect mementoes, I have revived my recollection to
dictate to my stenographer the matter which these pages contain, in a
somewhat crude form and unfinished style. In fact, I have not aimed at
either finish or effect, not having time for it, but have simply made a
collection of important facts in my own experience that may help the
future historian of Wall Street to preserve for the use, knowledge and
edification of posterity some of the most conspicuous features and
events in the history of the place that is yet destined to be the great
financial centre of the world.
If I can only succeed, out of all the poorly-arranged material I have
gathered, in furnishing the historian of the future with a few facts for
a portion of one of his chapters, I shall have some claim upon the
gratitude of posterity.
In my description of Drew, Vanderbilt, Gould, Travers, Keene, Conkling
and others, I have followed the advice which Oliver Cromwell gave his
portrait painter: “Paint me as I am,” he said. “If you leave out a scar
or a wrinkle, I shall not pay you a farthing.” I have given my opinion
of men and things also without any superstitious regard for the proverb
_de mortuis nil nisi bonum_.
I have also endeavored to refrain from setting down aught in malice.
Many of those referred to are now dead.
When any of those gentlemen of whom I have had occasion to speak, who
still survive, shall write a book, they can indulge in the same
privilege with my name that I have done with theirs, whether I am living
or dead at the time.
I shall ask no indulgence for myself that I don’t accord to others.
I have expressed my opinions freely from a Wall Street point of view,
from the standpoint of the much-abused operator and broker, and “bloated
bondholder.”
I have endeavored to enlighten the public on the true status of Wall
Street, as the very backbone of the country’s progress and prosperity,
instead of misrepresenting it as a den of gamblers, according to the
ignorant and somewhat popular prejudice of the majority who have
attempted to write or speak on the subject. This feeling has been
largely fostered by clergymen, on hearsay evidence, as well as by the
practices of professional swindlers, who have been smuggled into Wall
Street from time to time, but who have no legitimate connection
therewith any more than they have with the church, which repudiates them
as soon as it discovers them.
In fact, the great aim of the book is to place Wall Street in its true
light before the eyes of the world, and help to efface the many wrong
impressions the community have received regarding the method of doing
business in the great financial mart to which the settlement of accounts
in all our industry, trade and commerce naturally converges.
I have endeavored to correct the utterly erroneous impression that
prevails outside Wall Street, in regard to the nature of speculation,
showing that it is virtually a great productive force in our political
and social economy, and that without it railroad enterprise and other
branches of industrial development which have so largely increased the
wealth of the nation, would have made but slow progress.
To preserve and inculcate these ideas by putting them in what I hope may
be a permanent form, is another object of publishing this volume. I know
you can sympathize with me in this effort to set public opinion right,
as many of you have long been making strenuous endeavors after success
in the same direction.
To put the whole matter, then, into one short and comprehensive clause,
my cardinal object in this book is to give the general public a clearer
insight of the reputed mystery and true inwardness of Wall Street
affairs.
In my relation of certain reminiscences of Wall Street, and in
discussing the checkered career of certain brokers, operators and
politicians, I have endeavored to be guided by a historic aphorism of
Lord Macaulay:
“No past event has any intrinsic importance,” says the great essayist,
litterateur, historian and statesman. “The knowledge of it is valuable,”
he adds, “only as it leads us to form just calculations with respect to
the future.”
In the samples of my experience which I have given in this book I have
aimed, to some extent, at this rendition of the noble purposes of
history and biography in their philosophic and scientific application of
teaching by example. If I have fallen far short of this high ideal of
the British Essayist, as I humbly feel that I have, I must throw myself
on the kind indulgence of the readers, and ask them to take the will for
the deed. For the presentation of the facts themselves I crave no
indulgence. They are gems worthy of preservation in the light of the
above definition. I only submit that the setting might be much better.
My chapters on politics may be considered foreign to the main issue, but
as many of the events therein described were intimately connected with
my business career, I think they are not much of a digression.
HENRY CLEWS.
------------------------------------------------------------------------
INTRODUCTORY.
MY PART IN MARKETING THE UNITED STATES CIVIL WAR
LOANS.
BY HENRY CLEWS, LL.D.
To a very large majority of Americans now living the great Civil
War—waged from 1861 to 1865—between the North and the South is only
known as a matter of history. But it was the greatest war the world ever
witnessed, involving the loss of nearly a million of men, and I have a
vivid recollection of it, for I was an actor in it, from its beginning
to its end, to the extent of providing some of the sinews of war for the
United States Government, without which it could not have defeated the
armies of secession, and preserved the Union.
From the time that Abraham Lincoln was elected to the Presidency of the
United States, in November, 1860, the South began to prepare for
secession from the North, peaceably if the North consented, but by war
if it resisted. It was bent on this course because it foresaw in a
Republican administration at Washington its practical loss of control of
Congress and the spoils of office—in fact, of the Government itself—that
it had so long enjoyed under Democratic administrations. James
Buchanan’s term as President having expired on March 4, 1861, Abraham
Lincoln was then inaugurated as his successor. It angered the South to
see a Republican succeed a Democrat in the White House, and it
precipitated the tremendous conflict that followed, by seizing Fort
Moultrie, in Charleston Harbor, and firing on Fort Sumter. Fort
Moultrie’s guns awoke the North to action, and made it a determined unit
in defense of the flag that had been fired upon, and its cry was, “The
Union must and shall be preserved!”
As this was the most eventful and critical period in our national
history since 1776, and so many know it only by what they have read of
it, I will give a general idea of its salient features bearing upon the
Government finances and the war loans.
When, after the bombardment of Fort Sumter by Fort Moultrie, on April
14, 1861, Major Robert Anderson, the Union commander, accepted, under
the stern necessities of the situation, General Beauregard’s terms of
evacuation, the die was cast.
The North picked up the gauntlet of war with patriotic enthusiasm, and
the great conflict had begun. But when our troops marched out of that
dismantled stronghold of the Union, with drums beating and colors
flying, it is safe to say that few or none, either in the North or the
South, foresaw the long and mighty struggle that would, for four
eventful years, follow the bombardment of Fort Sumter, during which gold
would become demonetized before the end of the year. It did so on
December 30, 1861, and in the darkest days of the conflict commanded a
premium as high as one hundred and eighty-five per cent. over United
States legal tender notes, making these worth only 54 1/20 cents in
gold, while United States bonds were selling for about 60 cents on the
dollar in gold.
When the New York Clearing House agreed, on the date named, to suspend
specie payments, the example was at once followed by all the banks in
the country, and gold immediately began to command a small premium. None
supposed then that the suspension would continue for eighteen years.
In England, during the long suspension from 1797 to 1821—through the
Napoleonic wars—the premium on gold never rose above forty-one per
cent., and that was in 1814, the year before the end of hostilities.
This was owing to the policy of William Pitt and his successors in the
management of the British finances. They raised all the money needed for
war purposes by taxation and loans, thus restricting the paper money
issues, so as to prevent currency inflation, whereas we pursued the
opposite course.
When Fort Sumter was fired upon, my firm—Livermore, Clews & Co.—was
already prominent in Wall Street, and I immediately began to devise ways
and means to help the Government to raise the money that I saw would be
necessary to prosecute the war for the Union which this bombardment made
inevitable. Fort Moultrie’s guns had united the North in a call to arms,
and men by tens of thousands left the farm, the loom, the office, and
the store, from Maine to Indiana, to join the Union army.
Money, therefore, was needed by the United States Government, and very
large amounts of it, to equip troops and purchase munitions of war.
As James Buchanan was then President, and, like a long line of his
predecessors, a Democrat, he had several Southerners in his Cabinet.
These promptly resigned their places and went South, including the
Secretary of the Treasury, Howell Cobb, who left with surprising
suddenness, and the office was filled for a brief period by General John
A. Dix, as acting Secretary.
But before leaving, Howell Cobb had offered and sold to Wall Street
bankers $20,000,000 of United States five per cent. bonds at 105,
authorized, of course, by an old law. Owing, however, to the heavy
decline in securities, and general depression following the outbreak of
the war, only about one-quarter of these bonds were taken and paid for
by those who had subscribed for them; and nothing was done by the
Government to enforce the completion of the purchase by those who had
defaulted under the severe stress of the times.
Their default was a serious matter for the Government at that time, as
it left the funds in the Treasury in a very depleted condition, and
interest payments on the public debt were about to fall due, which it
had no money in its vaults to provide for. At this crisis John J. Cisco,
the United States Sub-treasurer in New York, was instructed, from
Washington, to call a meeting of the principal Wall Street bankers at
the Sub-treasury, and after stating the situation to them, to ask for an
emergency loan on one-year United States notes, and let them fix the
rate of interest themselves to correspond with the state of the money
market.
Money was then loaning at about twelve per cent. per annum in Wall
Street. So when the bankers who responded to Mr. Cisco’s call, myself
among the number, assembled at the Sub-treasury, they, after full
discussion, agreed to take the amount of notes offered, and at this rate
of interest. It was a very high rate for the Government to pay, too high
under ordinary circumstances, but the emergency justified it; and Mr.
Cisco approved of it, in view of the market rate and the notes running
for one year only. My firm took a considerable amount of them and
induced others to do so also, and we did so, presumably like the rest of
the buyers, not merely because the rate agreed upon was so high, but
because we felt it a duty to help the Government; and at all times
thereafter during that critical period we worked no less diligently to
uphold the public credit.
The Government recognized that a default in its interest payments would
have been disastrous to the public credit, and a stumbling block in the
way of raising money to prosecute the war, besides causing general
depression of business. It therefore had to be prevented at all hazards.
Had these notes not been taken, the Treasury would undoubtedly have been
left without the means of paying this interest when due. Consequently,
it gratified me to feel that I had been instrumental in inducing others
to subscribe for a part of this urgently needed loan.
Soon afterwards Mr. Salmon P. Chase was appointed Secretary of the
Treasury by President Lincoln.
Not long afterwards Secretary Chase came to the Sub-treasury and invited
bids for $20,000,000 of six per cent. United States bonds maturing in
1884. These were authorized by an old law. He accepted all bids at 94
and over, but rejected all under 94, the result of which was that
considerably more than a third of the 1884’s remained unsold. This was
to be regretted, because the Treasury was in great need of money. I
therefore quickly bestirred myself to form a combination to purchase the
unsold bonds of 1884 at 94, my firm being willing to take a liberal
share of them, and I succeeded in getting subscriptions from banks and
capitalists who had not bought any of those sold, for the unsold amount,
subject to my own discretion as to the advisability of taking the bonds,
after going to Washington and conferring with Secretary Chase.
So I immediately went there by night train and saw the Secretary early
in the morning at the Treasury, and told him I had come on behalf of the
combination I had formed, to make him a direct offer at his own
price—94—for the unsold 1884 bonds. He was evidently pleased and
surprised by the apparent improvement in the demand for them. He said,
however, with a fine sense of probity, and consideration for the rights
of others, that while he was glad I had come to Washington, and made the
proposition to take the balance, he did not think it would be fair to
those who had bid and whose bids were thrown out, to sell the rest of
the issue without first notifying them of the new offer, and giving them
the option of taking what they wanted at the price I offered—94.
He asked me to call again the next morning, after he had given the
matter further consideration, and I did so. But meanwhile I had talked
with many Southern politicians and office-holders, Peter G. Washington,
one of the Virginia Washingtons, among them, and seen so much of the
extensive war preparations which were being made in and about
Washington, that I came to the conclusion that a long and very bitter
war lay before us, notwithstanding that Mr. Chase had the day previously
assured me that it would all blow over, with peace restored, within
sixty days, a prediction that was echoed by Secretary of State Seward a
little later. I was particularly impressed by what Mr. Washington,
himself a prominent Government official, had told me of Southern
sentiment and Southern determination to fight till all was lost or
gained, and by his and other Southerners’ absolute but mistaken
confidence that the South would establish its own Confederacy, however
long a war it might take to do it. The South in seceding from the Union
expected to be able to establish a slave oligarchy, for in Lincoln’s
election it foresaw the doom of slavery, as both he and the Republican
party were pledged to work for its abolition. Yancey and the other
leading Southern “fire eaters” were responsible for this false view.
When I made my second call upon Mr. Chase, I said: “Since I saw you
yesterday, Mr. Secretary, I have heard so much in conversation with
Southern politicians and office-holders at the hotels, and seen and
heard so much of the extensive war preparations on both sides, that I am
convinced the war will be a long one, and I fear we shall see much lower
prices for Government bonds and securities of all kinds. Feeling as I
do, therefore, in justice to those I represent and who have given me
full power to use my own discretion in the matter, I must withdraw the
offer I made you yesterday. Had you accepted my offer at the time, of
course I would have considered the transaction closed, and taken the
bonds without question, but as it is, you will admit I am under no
obligation, and free to retire.”
“Oh, certainly,” said Mr. Chase, “but I think you are making a mistake,
for the war will be over in sixty days and these bonds will go to par!”
But my sober second thought and foresight, based upon what I had seen
and heard, and the information I had gleaned in Washington, served me
well, and my associates in the combination had reason to thank me for my
sagacious action, as the bonds soon afterwards declined to 84; and the
Union disaster at the battle of Bull Run, fought at Manassas on July 21,
1861, aroused the North to a realization of the gravity and vastness of
the conflict far more than any of the warfare that had preceded it had
done; at the same time it made it more determined than before to
prosecute the war till the South was conquered into submission to the
Union forces.
Mr. Chase’s second act, in replenishing the Treasury’s funds, was to
offer for subscription six per cent. United States notes, receivable for
all payments, including customs duties, authority to issue which already
existed. He found difficulties in the way, however, and, after
conferring with the Sub-treasurer, Mr. John J. Cisco, who recommended
the appointment of three Wall Street banking houses to act as Government
agents for their sale, on commission, namely, Morris Ketchum & Co.,
Read, Drexel & Van Vleck, and Livermore, Clews & Co., he appointed them.
These were the first and sole Government agents for the sale of its
securities that had been thus far selected, and they all appreciated the
compliment, and did their work well, for they promptly sold all the
notes, of this issue, the Secretary had offered.
Mr. Chase throughout made strenuous efforts to supply the Government
with the means for carrying on the war, and he was loyally aided by the
banking interests of New York, a fact which he recognized and
acknowledged to me and others in appreciative terms.
On a subsequent memorable occasion, in the summer of 1861, Secretary
Chase appeared at the Sub-treasury after Sub-treasurer John J. Cisco had
called, at his request, a number of leading bankers and capitalists to
meet and confer with him. When we assembled there he said to us, in his
stately and impressive manner, “Gentlemen, the Government needs and must
have fifty millions of dollars, and it wants it at once to meet war
expenses. For this I am prepared to issue that amount of Treasury notes
of the two hundred and fifty million issue just authorized by
Congress—by the act of July 17, 1861—bearing interest at 7 3/10 per
cent. I am no financier, so I cannot tell you how to raise the money,
but you distinguished leaders in the world of finance well know what
means to adopt to get it. So I leave it in your hands entirely. All I
need say further is to repeat that the Government must have fifty
millions of dollars, and I leave it to you to find the way to procure
it.”
Then Mr. Chase sat down, and all of us who were present compared notes
with each other in conversation about the room; that is, we talked the
matter over for nearly twenty minutes. The result of the conference was
then announced by our spokesman, Moses Taylor, who said, addressing Mr.
Chase:
“Mr. Secretary, we have decided to subscribe for the fifty millions of
United States Government securities that you offer, and to place that
amount at your disposal immediately! So you can begin to draw against it
to-morrow!”
A general clapping of hands followed this prompt announcement, and Mr.
Chase responded by saying:
“Gentlemen, I thank you on behalf of the Government for your public
spirit in helping it so generously and so promptly in this emergency.”
The whole scene was of rare and stirring interest, and momentous
consequences hinged upon its result. As a drama drawn from real life it
would have been effective if represented on the stage, with the large
and portly form and massive head of Secretary Chase as its leading
feature.
This was the first lot, or installment, of the $250,000,000 issue of
7-30 Treasury notes put on the market.
Of these, the Secretary had the privilege of issuing $50,000,000,
payable in coin at the Sub-treasuries in New York, Boston, and
Philadelphia, without interest, to be used as currency.
After disposing of the first 50,000,000 of 7-30 notes, as I have
described, Secretary Chase communicated with the banks concerning the
sale of the remainder, with the view chiefly of saving the payment of
commission to the agents. But he was unable in that way to make sales on
satisfactory terms to them. So he added to the three Government agents
originally appointed for the sale of its securities, Fisk & Hatch, and
Vermilye & Co., of New York, and Jay Cooke & Co., of Philadelphia, and
told them the “7-30” notes would be delivered to them as fast as called
for at the New York Sub-treasury.
Thereupon the New York agents held a meeting, at which it was agreed
that Jay Cooke, of Philadelphia, should be at the head of the agency
system and take charge of the advertising of the 7-30 loan, or, in other
words, that Jay Cooke should act as Chairman of the agency system. The
agreement also specified the commission rates and other details for the
purpose of avoiding cutting, or clashing, between the agents. To this
organization and agreement Mr. Chase assented; and all the agents made
strenuous efforts to make sales from the word go.
Jay Cooke & Co. had no office in New York at that time, nor did they
establish one till after the end of the war. This really led to their
designation as the head of the agency system, as the selection of a New
York firm would have created jealousy among the New York firms.
After all the 7-30s authorized to be issued were sold, came the 5-20
loans, which were sold through the same Government agency system, and
the 5-20s were as successful as the 7-30s had been.
Mr. Munson B. Field, Assistant Secretary of the Treasury under Salmon P.
Chase, had an examination made of the books at Washington, at my
request, to see which individual firm of the Government agents sold the
most United States 7-30s and 5-20s, and he reported that Livermore,
Clews & Co. had the highest record. But I am willing that the credit
should be shared equally by the four United States war loan banking
firms, viz.: Jay Cooke & Co.; Livermore, Clews & Co.; Vermilye & Co.,
and Fisk & Hatch, as all did equally good and earnest work in financing
the Government during the Civil War. Certainly the four firms are
entitled to equal credit, and no one to a greater extent than the
others. There was sufficient glory achieved by the magnificently
patriotic work done by these four firms to admit of dividing the honors,
so that I do not hesitate to say that they did immensely valuable
service to the Nation, and made for themselves a proud National record,
which should be always greatly appreciated by the American people, as it
was at the time by the Government authorities in Washington. The
Government was thus enabled to clothe and feed a million of soldiers in
arms on the battlefield, fighting for the salvation of the Nation, and
these finally brought the war to a victorious end, thus perpetuating the
best form of government known to man.
I may here mention that Secretary Chase said:
“If it had not been for Jay Cooke and Henry Clews, I should never have
been able to sell enough of the 7-30 notes and 5-20 bonds to carry on
the war.”
This remark of his was generally published at the time in the
newspapers.
The Government had sold through its agents $150,000,000 of the 7-30
notes before the suspension of specie payments, an event that was
hastened by the Secretary’s withdrawal from the banks into the
Sub-treasuries of most of the proceeds of the sales, his call for
payment from the agents to the Treasury being in three installments: on
August 19th, October 1st, and November 2d. Moreover, the hoarding and
exportation of gold were largely stimulated by the anticipation of
specie suspension, and, after it occurred, gold suddenly disappeared
from circulation.
This obviously involved a corresponding contraction of the circulating
medium, and Mr. Chase, to neutralize it, and supply the place of the
demonetized coin, issued the $50,000,000 of non-interest-bearing notes,
which were called United States Demand Notes. He did this also to
obviate the necessity of the State Banks issuing more of their own
notes, as well as to raise money to meet the rapidly increasing demands
of the Treasury.
Congress, seeing that this contraction tended to produce stringency in
the money market, and handicapped the Government’s agents in the sale of
its securities, had, on August 5, 1861, suspended the act of August 6,
1846, “providing for the better organization of the Treasury, and for
the collection, safe-keeping, and disbursement of the public revenue.”
It did this so as to permit the Secretary of the Treasury to deposit any
of the money obtained on authorized loans in such solvent specie-paying
banks as he might select, and, in addition, it expressed this in a
resolution. The resolution was promptly acted upon by Secretary Chase,
and this, and a later law, governed the policy of the Treasury ever
afterwards. Monetary stringency was thus avoided by the Treasury keeping
as much of its money in the banks as it could, and so locking up as
little as possible in the Treasury and Sub-treasuries. The evil effects
of the Sub-treasuries system in locking money out of circulation was
thus practically acknowledged and guarded against.
When the sale of the 7-30s had been completed by the Government agents,
there was great pressure brought to bear by the banks throughout the
country, who were backed by many influential newspapers, in favor of
giving the sale of the 5-20s to the banks instead of to the Government
agents. The pressure upon Secretary Chase became so great that he
concluded to try the experiment, and authorized all the banks throughout
the country to sell the 5-20s. After giving them every opportunity to
supersede the agency system, as previously adopted with the six per
cent. and the 7-30 Treasury notes, the Secretary was finally compelled
to abandon the banks and go back again to the agents, who took hold with
vigor and made the sale of the 5-20s as brilliant a success as they had
previously made that of the 7-30s. We were friendless in Europe, but we
overcame this by patriotism and energy at home.
After a time, some of the banks, and there were only State Banks then,
threw out the Demand Notes, and so it became necessary to enforce their
circulation. To accomplish this, Secretary Chase asked Congress to make
them a legal tender for the payment of all debts, public and private,
excepting customs duties, and interest on the public debt, payable in
coin.
Congress, therefore, on February 25, 1862, remedied the difficulty by
passing the Legal Tender Act, making these and all the United States
notes lawful money. In the same act it authorized the issue of
$150,000,000 of new non-interestbearing legal tender notes. The
provision for the payment in coin of customs duties and interest on the
bonded debt was obviously as necessary as it was wise, as customs duties
furnished the means for paying the interest in specie; and the fact of
its being payable in gold created a demand for our bonds in other
countries, as well as at home, which would not have existed on paper
money interest.
Before long, the whole of the authorized $250,000,000 of 7-30 notes had
been sold to the public through the Government agents; and later, from
time to time, Congress authorized large additional amounts of these till
finally they reached their maximum, in August, 1865, when $830,000,000
of them were outstanding.
At the same date, also, the Government bond issues, which had kept pace
with the 7-30 note issues, and simultaneously reached their maximum,
showed immense totals. There were then outstanding $514,880,500, of 5-20
bonds, and $172,770,100 of 10-40 bonds. Among our own people patriotism
and profit combined to make these great United States loans doubly
attractive, and the Government agents used their best efforts to
stimulate the demand for them both at home and abroad. Livermore, Clews
& Co., in particular, sold large amounts of these in England and other
foreign countries, where they ultimately proved extremely profitable
investments. To meet the demands of the war, we—the Government
agents—were as anxious as the Secretary of the Treasury himself, and
never were men more successful in accomplishing their object and doing
good work than we were. There was patriotism worthy of Patrick Henry, as
well as profit, in this, and Wall Street can lay the flattering unction
to its soul that it rendered, through the Government agents, the best of
good service to the Government in this time of peril to the Union.
As General Grant said long afterwards to me, we were not fighting for
the Union as soldiers in the field, but we served it equally well by
helping it in its struggle for money to prosecute the war; and I felt
proud of the active part I took in thus helping to preserve the Union as
one of its army in civil life.
The campaign in Virginia having proved prolific of disaster to the Union
army, Congress, on July 11, 1862, authorized the issue of a hundred and
fifty millions more of non-interest-bearing United States legal tender
notes, and on January 17, 1863, another hundred millions to which it
added $50,000,000 on March 3d, in the same year, making $450,000,000 of
legal tender notes, or greenbacks, fifty of which were to be held as a
Treasury reserve, for the redemption of temporary loan certificates.
This was the maximum issue of non-interest-bearing legal tender notes at
any time, and by the act of January 28, 1865 Congress restricted the
total to $400,000,000, and there it remained till Hugh McCulloch became
Secretary of the Treasury, early in 1865.
Secretary Chase had meanwhile become Chief Justice of the United States
Supreme Court, and Thomas Fessenden, who succeeded him as Secretary, had
resigned. Mr. McCulloch began to contract the legal tender notes, and
had withdrawn $44,000,000 before Congress interfered to prohibit any
further contraction. It did this in response to a general protest
against any further curtailment of the greenbacks in circulation.
From that time until the panic of 1873 their amount remained at
$356,000,000. In the interval Mr. Boutwell had succeeded Mr. McCulloch,
and Mr. Richardson had succeeded Mr. Boutwell as Secretary. Mr.
Richardson, under diminished customs and revenue receipts, and the
stress of the panic, restored to circulation $26,000,000 of the
$44,000,000 of legal tender notes that had been withdrawn by Mr.
McCulloch, whereupon Congress, on June 22, 1874, provided that the
greenbacks in circulation should remain fixed at the then existing total
of $382,000,000.
The same law which thus legalized the reissue of the $26,000,000 of
legal tender notes by Secretary Boutwell abolished the National Bank
reserve, previously required to be kept on bank-note circulation, and
for this substituted the provision that the banks were to deposit five
per cent. in legal tender notes of the amount of their own note issues
with the United States Treasurer at Washington for the redemption of
their notes.
This law is still in force, and the establishment of the Redemption
Bureau at Washington has resulted, ever since, in daily receipts by it
of mutilated bank notes to be replaced by new notes, in addition to the
ebb and flow caused by banks increasing or reducing their circulation.
The five per cent. in legal tender deposited is counted by them as part
of their legal reserve. But the necessity of sending the notes to
Washington, and of receiving them therefrom, involves trouble and loss
of time to the banks, and also prevents the banks from contracting their
circulation when the demand for it is light and increasing it when
heavy, as freely and promptly as they would if every Sub-treasury was
made a redemption point for National Banks. Congress ought therefore to
authorize the equipment of the Sub-treasuries with redemption bureaus
for the banks in their respective districts, in order to facilitate this
ebb and flow of bank-note issues, and so increase the much needed
elasticity of the currency.
In addition to United States legal tender notes, large amounts of
interest-bearing legal tender notes were issued during the war. On
September 1, 1865, when the currency, like the whole National debt,
reached its greatest amount of inflation, the noninterest-bearing legal
tender notes and fractional currency stood at $459,505,311, the three
years six per cent. compound interest legal tender notes at more than
$217,000,000, and the one and two years five per cent. legal tender
notes at nearly $34,000,000, the whole aggregating $685,236,269 issued
by the Treasury.
There were also outstanding $107,000,000 of temporary loan certificates.
These, being payable after ten days’ notice, were treated as greenbacks
by the banks, and counted as part of their lawful money reserve, while
the remainder circulated as currency, and so practically increased the
volume of paper money. At the same time the new National Bank law had
put in circulation $170,000,000 of National Bank notes; and more than
$70,000,000 of State Bank notes were still circulating. The last named
were, however, soon taxed out of existence by Congress. The grand total
of the issues enumerated was ten hundred and sixty-seven millions of
paper money in circulation. Nor was this all, for there were then
outstanding $85,000,000 of one-year certificates of indebtedness; and
the $830,000,000 of 7-30 notes, called 7-30s, outstanding were
extensively used as money, and so tended to increase the inflation of
the currency and prices.
It will be seen therefore that the inflation of the currency was really
much larger than it appeared to be by the Public Debt statements at that
time. But so rapid was the contraction during the eight years following,
through the maturity and cancellation of interest-bearing notes and
certificates, that it is safe to say we had from sixty to seventy-five
per cent. less paper, used as money, in circulation when the panic of
1873 commenced than we had in September, 1865, and to this enormous
contraction of our medium of exchange that disastrous panic, the worst
this country ever had, was largely due. It was, I repeat, the worst in
its effects that this country ever experienced, not excepting the panics
of 1837 and 1857, and was aggravated by the Franco-German War, that
practically shut American securities out of the European markets, which
had previously taken them freely. This was a severe blow to the American
bankers who had undertaken to finance the railways then in process of
construction in different parts of the country, and who had relied upon
finding both home and foreign markets for the sale of the bonds issued
against the completed mileage of these railways, and it led to much
embarrassment and a number of failures. The depression following this
panic of 1873—in which Jay Cooke & Co. failed owing to their having
undertaken to finance the Northern Pacific—was prolonged, and prosperity
did not really return to us as a Nation till after the resumption of
specie payments in 1879. Meanwhile, nearly all the uncompleted railways
in the country had been reorganized through foreclosures that wiped out
hundreds of millions.
Our National debt, which had increased from $64,000,000 on June 30,
1860, and $88,409,387 on June 30, 1861, to $2,845,907,626 on September
1, 1865, had then been very largely reduced, for it was only
$2,140,695,365 on September 1, 1873. The debt and the currency had gone
up and down together under the influence of a common cause. Not till
specie payments were resumed by the Government and the banks did gold
cease to command a premium. With this the Gold Room became a thing of
the past.
The great activity and the enormous sales of the Government agents may
be inferred from the maximum amounts I have quoted, of the 7-30 notes,
and the 5-20 and 10-40 bonds outstanding five months after Lee
surrendered to Grant at Appomattox on April 9, 1865.
The total debt on which interest was payable in coin then amounted to
$1,116,658,100, while that bearing interest in lawful money was
$1,874,478,100, the first calling for $65,001,570 in gold annually, and
the other for $72,527,646 of greenback currency.
That great event—Lee’s surrender to Grant—that ended the war, was the
fitting prelude to General Grant’s election to the Presidency. It made
it certain that no other Republican candidate for the office of
President of the United States would have any chance of success at the
next general election, and, of course, no Democratic candidate could be
elected. Grant became our great National hero, and the country glorified
him for his splendid war record.
But soon after the memorable historical scene at Appomattox, while the
country was rejoicing over the advent of peace, with the Union restored,
there came that terrible tragedy at Ford’s Theater in Washington, when
President Lincoln, on April 14, 1865, was assassinated by John Wilkes
Booth, and on the following day Vice President Andrew Johnson was sworn
in as President.
Then, indeed, the Nation was plunged into mourning, and mourning emblems
from ocean to ocean testified to the National grief.
I will not dwell on the stormy career of Andrew Johnson as President,
and the impeachment proceedings against him, that for a long time made
both branches of Congress seething cauldrons of excitement. But it was a
happy relief to the country when his term expired and General Grant
succeeded to the Presidency on March 4, 1869, with Schuyler Colfax as
Vice President. The Democratic candidates who had run against General
Grant in the campaign in which he was elected in November, 1868, were
Horatio Seymour and General Francis P. Blair, Jr. But the popularity of
Grant was so overwhelming that his election was a foregone conclusion.
Till within a short time of its final termination the duration of the
war was a matter of much uncertainty, and its ultimate result had long
been the subject of doubt and gloomy forebodings by many who failed to
see that the superior money power and resources of the North were sure
to conquer and crown the Union with victory in the end. Our currency,
greatly inflated though it was, remained good throughout the trying
ordeal, whereas that of the Confederate States became utterly
discredited and worthless, thus repeating the history of the French
_assignats_.
A new era opened in our history with the ending of the war, and our
currency, which, of course, had previously no circulation in the South,
began to circulate there. This, of itself, was equivalent to extensive
contraction. The currency of one section had now to supply the currency
needs of both sections, and for a long time the drain of money from the
North to the South was felt in the money market.
The country was somewhat like a sick man accustomed to and dependent on
stimulants, to withdraw which suddenly would have been perilous. Many in
Congress recognized this danger, for it was a noticeable feature of the
debates on the subject that not a few of those who had been strongly
opposed to our excessive issues of paper money during the war, and
warned the country against them, were among those who opposed violent
contraction as being a remedy worse than the disease. The radical
contractionists, however, failed to see, or refused to acknowledge, that
the arguments which would have applied to the rising tide of the
currency while the war continued, and there was danger of indefinite
further inflation, did not apply with equal force to the altered
condition of affairs.
Although schemes of radical contraction were rejected, even the moderate
measure of contraction that was adopted proved too severe to be endured
without much complaining from business interests, so hard and painful is
the process of contraction, whereas that of inflation is always pleasant
and easy.
In later years I became very well acquainted with General Grant, and
toward the end of his first term of the Presidency, when a good deal of
opposition was manifested to his renomination by the press, including
the New York _Evening Post_, I made strenuous efforts to secure his
renomination. To that end I organized a public meeting at the Cooper
Institute, and induced William E. Dodge to act as Chairman. It was a
great popular success, and Grant’s renomination was unanimously
advocated with immense enthusiasm. The _Evening Post_ then said that
after such an overwhelming demonstration it was evident that public
sentiment was on the side of Grant, and that it was useless to oppose
his renomination. He was accordingly renominated by the Republican Party
and triumphantly reëlected. His second term as President began on March
4, 1873, and he retired from the Presidency four years later.
General Grant was well aware of the part I took at this meeting, which,
many said, turned the scale in favor of his renomination when it was
doubtful and trembling in the balance, and he also knew of my services
in connection with the Government war loans, and in organizing various
public meetings to celebrate Union victories and stimulate recruiting
for the army. He said that I deserved some public recognition of my
public services in supplying the sinews of war, and asked me how I would
like to be Secretary of the Treasury, but I said I preferred Wall
Street. Therefore, later on, he appointed me Fiscal Agent for the United
States Government in all foreign countries, in place of Baring Brothers,
of London, who had been its fiscal agents up to that time, since the
Bank of England had acted in that capacity.
When it became certain that General Grant’s death was very near, I was
anxious to see him once more, and also a strong advocate of his burial
in the city of New York, where his tomb would be a conspicuous monument,
to be seen by all, instead of burying him almost out of sight in
Arlington Cemetery or at West Point, which places were strongly urged.
The States of Ohio and Illinois also claimed him, as did the city of St.
Louis. They all made strenuous efforts to obtain the family’s consent,
as well as his, through committees sent to Mount McGregor for that
purpose.
So I went to Mount McGregor, where he was, and as delicately as possible
urged this upon him and his family. All of the members of the family
assented, and the General, being unable to speak, nodded his assent also
to what I said. Then when he was wheeled out in his chair, on the
veranda, on his way to take his regular afternoon sun bath on the
mountain side, accompanied by Dr. Douglas, he wrote on a pad that all he
demanded was that his wife should be buried by his side when her own
time came. Knowing them all well, I remained there two hours, talking
with the General and the family, and my visit, when I made its result
known, led to the selection of New York as the great soldier’s burial
place, on the conditions mentioned by him. Within three days after I had
seen him, the great General died. I had visited him on a Monday
afternoon, and he died on the following Wednesday. His death threw the
Nation into mourning.
Incidentally, I may mention that I started the organization of the
famous Committee of Seventy, that brought about the overthrow of the
corrupt Tweed Ring, that had robbed the city of New York of about a
hundred millions of dollars. I nominated sixty-five of its members, and
for my instrumentality in forming that Committee of eminent and
public-spirited citizens I received many congratulations. That Committee
not only drove the thieves out of office, but caused the prosecution of
all of them who had not fled the country, and ultimately brought back
and convicted Tweed, who died in prison. Meanwhile, it had reorganized
the City Departments, and put new men in office, with Andrew H. Green as
Comptroller. It purified, and, for a time, virtually ruled the city,
through controlling its government.
But above everything else in my business life, I regard with most
satisfaction the work I did in marketing the Civil War loans of the
Government of this great and glorious country of ours—the United States
of America—and in other ways strengthening the hands of the Government
to the best of my ability and with all my heart and soul, not only as a
banker but a patriotic American citizen; and I felt that I had my reward
when, after the memorable four years’ war, peace came bringing with it
Victory for the Union and a reunited country, a victory which gave
permanence to the best government ever known to man—a government “of the
people, for the people, and by the people,” which bids fair to be
everlasting.
[Illustration:
MILLS BUILDING (OPPOSITE NEW YORK STOCK EXCHANGE), NOS. 11-13-15-17
BROAD STREET AND 35 WALL STREET, OCCUPIED BY THE BANKING HOUSE OF
HENRY CLEWS & CO.
]
------------------------------------------------------------------------
FIFTY YEARS IN WALL STREET
----------
BY HENRY CLEWS, LL.D.
----------
CHAPTER I.
MY DEBUT IN WALL STREET.
MY advent in Wall Street was on the heels of the panic of 1857. That
panic was known as the “Western blizzard.” It was entitled to the name,
as its destructive power and chilling effects had surpassed all other
financial gales that had swept over Wall Street. The first serious
result of its fatal force was the failure of the Ohio Life and Trust
Company, a concern of gigantic dimensions in those days.
The Company had an office in Wall Street, and on the announcement of the
collapse, business became completely paralyzed. This failure was
immediately followed by the suspension of many large firms that had
withstood the shock of all ordinary collisions and had successfully
weathered many financial storms.
The panic was due in part to excessive importations of foreign goods,
and also to the rapid construction of railroads, to a large extent on
borrowed capital. There were other contributing causes. The crops were
bad that year, and the country was unable to pay for its imports in
produce, and coin was brought to the exporting point. In October, the
New York City banks suspended payments, and their example was followed
throughout the country. Bank credits had been unduly expanded
everywhere, and the time had naturally arrived for contraction. It came
with a bound, and financial disaster spread like a whirlwind, becoming
general.
The Stock Exchange had been a moderately growing concern for the ten
years previous to this calamity, and the securities there dealt in had
been rapidly accumulating in number and appreciating in value. Its
members were wealthy and conservative, with a strong infusion of
Knickerbocker blood, an admixture of the Southern element and a
sprinkling of Englishmen and other foreigners.
The effect of the crisis on the majority of Stock Exchange properties
was ruinous. Prices fell fifty per cent. in a few days, and a large
proportion of the Board of Brokers were obliged to go into involuntary
liquidation. There was a great shaking up all around.
Then came the work of rehabilitation and reorganization. Confidence
gradually returned. The Young Republic had great recuperative powers,
and they were thoroughly exerted in the work of resuming business. Much
of the old conservative element had fallen in the general upheaval, to
rise no more. This element was eliminated, and its place supplied by
better material, and with young blood, and in December the banks resumed
business.
This panic and its immediate results created an entire revolution in the
methods of doing business in Wall Street. Prior to this time, the
antique element had ruled in things financial, speculative and
commercial. This crisis sounded the death knell of old fogyism in the
“street.” A younger race of financiers arose and filled the places of
the old conservative leaders.
The change was a fine exemplification of the survival of the fittest,
and proved that there was a law of natural selection in financial
affairs that superseded old conservatism and sealed its doom.
[Illustration:
JAMES CLEWS
Of “The Leasows” Staffordshire, England
Father of Henry Clews
]
[Illustration:
HENRY CLEWS
In 1857, at the Time of His Start in Wall Street
]
[Illustration:
MRS. ELIZABETH KENDRICK CLEWS
Mother of Henry Clews
]
Until that time, the general idea prevailed that those engaged in
financial matters must be people well advanced in years, even to the
verge of infirmity. It is the same idea that has been handed down, as if
by divine right, from old world prejudices, especially in the learned
professions. No doctor was considered a safe prescriber unless his hoary
locks, bald head and wrinkled brow proclaimed that he had almost passed
the period of exercising human sympathy. The same rule of judgment was
applied to the lawyer and the clergyman.
These unworthy prejudices were fostered by the character of the
Government of the old country, and nurtured by the surroundings of the
venerable monarchies of Europe, where they exist largely even to the
present day. So tenacious of life are these old-fashioned ideas, that
many of them were found in full vigor, dominating Wall Street affairs up
to the crash of 1857, fostering the antique element and choking off
salutary enterprise.
Hence the process of decay of these archaic notions and our gradual
development.
This struggle for new life in Wall Street was not successfully developed
without a serious effort to attain it. The old potentates of the street
fought hard to prolong their obstructive power, and their tenacious
vitality was hard to smother, reminding one of the nine lives attributed
to the feline species. The efforts of the young and enterprising men to
gain an entrance to the Stock Exchange were regarded by the older
members as an impertinent intrusion on the natural rights of the senior
members. It was next to impossible for a young man, without powerful and
wealthy patrons, to obtain membership in the New York Stock Exchange at
the time of which I speak.
The old fellows were united together in a mutual admiration league, and
fought the young men tooth and nail, contesting every inch of ground
when a young man sought entrance to their sacred circle.
The idea then struck me that there was a chance for young men to come to
the front in Wall Street. I was then engaged in the dry goods importing
trade, in which I received my early training. I had been kept out of the
Exchange for several years by the methods to which I have alluded. My
fate was similar to that of many others. It was only by an enterprising
effort, and by changing the base of my operations, that I finally
succeeded.
The commissions charged at that time were an eighth of one per cent. for
buying and selling, respectively.
After numerous efforts to gain admission to the Exchange, without
success, I finally made up my mind to force it. I at once inserted an
advertisement in the newspapers, and proposed to buy and sell stocks at
a sixteenth of one per cent. each way. This was such a bombshell in the
camp of these old fogies that they were almost paralyzed. What rendered
it more distasteful to them still was the fact that, while they lost
customers, I steadily gained them. The result was that they felt
compelled to admit me to their ranks, so that I could be kept amenable
to their rules and do business only in their own conventional fashion.
My membership cost me, in all, initiation fee and other trifling
expenses in connection therewith, $500. This presents a striking
contrast to the recent price of a seat, $35,000, but though this
difference seems very large, yet the changes in every other respect
connected with Wall Street affairs have been in similar proportion.
Among some of the old members of that day were Jacob Little, John Ward,
David Clarkson and others whose names may be found in the archives of
the Stock Exchange.
As an instance of the way in which membership was then appreciated, it
may be mentioned that speculators frequently offered $100 a week, or ten
times the cost of membership, for the privilege of listening at the
keyhole during the calls.
[Illustration:
HENRY CLEWS’S BIRTHPLACE, “THE LEASOWS,”
HILDERSTONE, STAFFORDSHIRE, ENGLAND.
]
Although the prostration growing out of this panic was very great and of
long continuance throughout the country, general confidence being shaken
to its very foundation, yet, on the whole, it was a great gain, and
marked an era of financial and speculative progress. It was the chief
cause in drawing out the young element in the business of Wall Street,
which might have lain dormant for a much longer period without this
sudden and somewhat rude awakening. It not only brought Young America to
the front in speculation, commerce and general business, but it imparted
an impetus of genuine enterprise to every department of trade and
industry, from the good effects of which the country has never since
receded.
This new element, emanating from the throes of one of the greatest
business revolutions that any country has ever experienced, has
continued to grow and thrive with marvellous rapidity. It is now getting
so large that the Exchange will soon require a whole block instead of a
basement as at its origin for its headquarters. The Governing Committee
of the Stock Exchange are now looking forward to arrangements for this
consummation. How the ancient fathers of my early days in Wall Street
would have been shocked at the bare idea of such amazing progress!
It is not the least singular phase of this evolution in Wall Street,
that the youthful element to which I have referred stands alone as
compared with the progress achieved by the same class of men in any
other nation. In America only does the youthful element predominate in
financial affairs; and results have justified the selection, which
perhaps in no other nation is possible. Thanks to the freedom of our
Republican institutions, which, in spite of some individual deductions
and the occasional obstructions of “crankdom,” make way for that
progress, in the wake of which the other nations of the world are
emulous to follow.
The Exchange was at this time situated on William street between Beaver
street and Exchange Place. That place is rich in speculative
reminiscences. It was there that Jacob Little made and lost his nine
fortunes. It was there that Anthony Morse, the lightning calculator,
operated. He could foot up four columns of figures as easily as the
ordinary accountant could run up one. He had been a clerk, and having
saved seven hundred dollars by close economy, began to deal in stocks.
His career at that time was more marvellous even than that of Keene of a
recent date. Morse made a fortune of several millions in a year, and
became bankrupt during the same period, without any available assets to
speak of. It was all honorably lost, however. There was no Ferdinand
Ward game connected with it.
Youthful speculators had not then learned the “crooked” methods of the
young idea of modern times. It was there also that Daniel Drew began to
accumulate those millions that afterward were subject to such a rude
scattering. It was there that the celebrated “corners” in Rock Island,
Prairie du Chien and Harlem were concocted. It was there that the wealth
was accumulated which built twenty thousand miles of Western railroads,
causing many millions of acres, that would otherwise have been a
wilderness, to blossom like the rose, in spite of Mr. Powderly’s opinion
that no material good can come out of speculation, and thus adding
immense wealth in real estate to the country, besides conferring
incalculable benefits on trade and commerce, and preparing comfortable
homes not only for the pioneers and surplus population of the Eastern
States, but a teeming soil that has attracted the down-trodden of every
nation to come and partake of the blessings of freedom and prosperity.
One of Jacob Little’s speculative ventures has been rendered
historically famous through the rule of limitation of sixty days for
option contracts. The necessity for this limit was brought about by one
of his celebrated attempts to manipulate the market. He was one of the
most prominent speculators in Erie in the early days of Drew’s
transactions with that property and its stocks. Mr. Little had been
selling large blocks of Erie on seller’s option, to run from six to
twelve months. This was in the early history of “corners,” before the
method of managing them scientifically had been fully developed and
while “blind pools” were yet in embryo.
[Illustration:
THIS MAP OF THE UNITED STATES OF AMERICA IS A PHOTOGRAPH TAKEN FROM
THE ORIGINAL PEN-AND-INK HAND DRAWING MADE BY HENRY CLEWS FIFTY-FIVE
YEARS AGO.
]
The leading members of the Erie Board formed a pool to “corner” Mr.
Little, and ran Erie shares up to a considerable height. They imagined
that he was in blissful ignorance of their purpose, and had everything
arranged for a _coup d’etat_ which was to reach its crisis at two
o’clock on a certain day, when Little was to be completely overwhelmed
and hopelessly ruined. An hour prior to the time appointed by the clique
for his disaster he walked into the Erie office, opened a bag filled
with convertible bonds, and requested an exchange of stock for the same.
He had purchased the bonds in London and had them safely locked up for
the emergency, which he promptly met on its arrival. He got the stock,
settled his contracts, broke the “corner,” and came out triumphantly.
The option limit of sixty days was afterwards adopted in order to
prevent similar triumphs in manipulation on the “short” side.
As will be illustrated more fully in subsequent chapters, Mr. Little’s
convertible bond trick was used with signal advantage by his speculative
successors in Erie, who practically demonstrated on several occasions
that there were millions in it.
Mr. Little was generous and liberal to a fault with his brother
speculators who had experienced misfortune. He used to say that he could
paper his private office with notes he had forgiven to the members of
the Board. He was also remarkable for his great memory. He could easily
remember all the operations he made in the course of a day without
making a note or a mistake.
Like Drew, he was careless in his attire, wearing a hat like that of a
farmer, and not a very prosperous one, but he had no compeer in his day
at calculating ahead in a speculative venture.
[Illustration:
JACOB LITTLE.
]
------------------------------------------------------------------------
CHAPTER II.
WALL STREET AS A CIVILIZER.
CLERICAL OBLIQUITY OF JUDGMENT ABOUT WALL STREET AFFAIRS.—THE SLANDEROUS
ELOQUENCE OF TALMAGE.—WALL STREET A GREAT DISTRIBUTOR, AS EXHIBITED
IN THE CLEARING HOUSE TRANSACTIONS.—POPULAR DELUSIONS IN REGARD TO
SPECULATION.—WHAT OUR REVOLUTIONARY SIRES ADVISED ABOUT IMPROVING
THE INDUSTRIAL ARTS, SHOWING THE STRIKING CONTRAST BETWEEN THEIR
VIEWS AND THE WAY LORD SALISBURY WANTED TO FIX THINGS FOR THIS
COUNTRY.
The dense ignorance displayed by men outside of Wall Street, in regard
to the business of that great mart, is almost incredible. Even the most
intelligent men I meet in other professions and walks of life have the
most utterly crude and undefined notions about the methods of doing
business at the Stock Exchange. Many good and pious clergymen are under
the impression that Wall Street is a name for the sum total of all kinds
of infamy, and solemnly exhort their devoted flocks not to touch the
unclean thing.
Clerical obliquity of judgment is not quite so bad, nor popular
ignorance so dense in this respect, as it has been, but there is a large
field for improvement yet. The business activity of the country, and the
spirit of intercourse being so rapidly infused throughout all ranks of
the community, have demonstrated that this antipathy to Wall Street has
been simply an unworthy prejudice, in spite of the high moral authority
from which it has emanated.
I don’t wish to throw any aspersion on the noble purposes of the clergy.
The end they have been seeking has been good, but it has not always
justified the means employed. These good men have unwittingly
misrepresented Wall Street, to the great detriment of the business
interests of the country.
There is no excuse, however, for a man in this enlightened age, who
professes to be a Shepherd in Israel and a spiritual leader of the
people, to remain ignorant of an important fact, or to continue to see
that fact through a false medium, when he has the opportunity of coming
into Wall Street and seeing for himself. He has no right to set himself
up as a censor, a public detractor, and a public libeller upon a set of
men and merchants who are the bone and sinew of the commercial and
industrial interests and prosperity of the country. It is not only a
personal wrong but a public injury.
The Rev. T. De Witt Talmage has perhaps done more than any other
clergyman to make our speculators, investors and business men ridiculous
in the eyes of the rest of the community and in the estimation of John
Bull, in whose dominion his so-called sermons are extensively read.
Talmage has employed his flashing wit and mountebank eloquence to bring
financial disgrace on the business methods of the whole country by the
manner in which he has ignorantly vilified Wall Street.
He can go to the Cremorne Garden, Billy McGlory’s, Harry Hill’s and
other places of dubious reputation, and make himself acquainted with the
real condition of things there.
How far he has penetrated into the green rooms and behind the scenes in
these places it is not my business to know, but why should he not treat
Wall Street as fairly, where everything is open to inspection, as he
does these dens of vice, where midnight scenes of villainous revelry and
reckless dissipation reign supreme? Why does he misrepresent Wall Street
without knowing anything about it? He can come here and go wherever he
wishes without a bodyguard of detectives or fear of molestation. Why is
he so particular about doing justice to the brothel and the gaming den,
while he airs his ludicrous eloquence to the highest pitch to falsify
the respectable business methods of Wall Street?
I recollect the time that men in the higher walks of life, and among the
higher classes (if I may use the expression, in opposition to the
opinion of the New York _Sun_, whose editor maintains that we have no
classes in this country) would have been ashamed to be seen in Wall
Street. Now, men in the same sphere are proud of the distinction, both
socially and financially. In fact Wall Street has become a necessity as
a healthy stimulant to the rest of the business of the country.
Everything looks to this centre as an index of its prosperity. It moves
the money that controls the affairs of the world.
Take the Clearing House, for example, with its 50 billions of
transactions annually. All but a fraction of this wonderful wealth,
compared with which the stupendous pile of Crœsus was a mere pittance,
passes through Wall Street, continually adding to its mighty power. This
great power, in comparison with which the influence of monarchies is
weak, is not, like the riches of these, concentrated chiefly on itself.
It is imparted to all the industries and productive forces of the
country. Wall Street is a great distributor. It is also universal in its
benevolent effects, practically unlimited by either creed or geography.
It has taken greater advantage, for the general good, of scientific
discovery than all the scientific societies combined. Wherever the
electric wires have penetrated the Wall Street broker has followed. The
members of the Stock Exchange are, through the power of electricity, in
closer sympathy with the great heart of civilized humanity than all the
missionaries and philanthropic societies in the world. They are the
great cosmopolitans of the age. In practical sympathy they outshine the
most devoted efforts of the benevolent associations of half the
continent. They have the means to do it, and this comes chiefly from
being practical, and from their strong antipathy as a body to cant and
hypocrisy.
There are many popular delusions outside the ranks of the clergy
connected with the effort to form a correct estimate of Wall Street
affairs by the general public. It is a popular delusion that it is a
place where people who are in the “ring” take something for nothing. No
idea could be further wide of the mark in regard to Wall Street men as a
class, however true it may be of some individual instances, as in other
departments of business. Wall Street gives full value for everything it
receives, and the country at large is deeply its debtor. Some people may
think this a paradox, but there is nothing more easily demonstrated to
those who have observed the commercial and industrial progress of the
country and the age.
Wall Street has furnished the money that has set the wheels of industry
in motion over the vast continent, and in one century has brought us
abreast, in the industrial arts, of countries that had from one to two
thousand years the start of us. In this respect it has assisted nobly to
carry out the ideas of the fathers of the Constitution. Washington,
Jefferson, Madison, Franklin and Hamilton laid down the doctrine that it
would be a betrayal of the interests of posterity to limit the
productive energies of this country to raw material. With our present
experience we may think it strange that this question should ever have
been debated, but it was, even after the old tyranny had been obliged to
loosen its grasp on the struggling enterprise of the young Republic. Our
old revolutionary sires deserve credit for their foresight, but what
would have been the fate of their commercial philosophy if Wall Street
had not supplied the sinews of war to cope with the forces of nature, to
work our mines and build our railroads, and through these and other
means, to attract the teeming population from every clime to cultivate
our virgin soil and develop our wonderful industries and resources?
Apropos of the above observations, I may add that during the debate in
the British Parliament, on the recognition of the Confederacy, the great
manufacturing power in our industrial, financial and commercial progress
was clearly exhibited and thoroughly appreciated by British statesmen.
It was made one of the strongest arguments, too, by some of the
representatives of our jealous and envious cousins on the other side of
the “pond,” why Great Britain should recognize and aid the South in the
war. Lord Salisbury, then Lord Robert Cecil, at present the leader of
the Tory party in England, and the advocate of twenty years’ coercion
for Ireland, was one of the bitterest foes of the Union, chiefly on this
account. He was one of the Vice-Presidents of the “Southern Independent
Association,” for the promotion of the cause of the Rebellion, and for
supplying the Confederates with money and arms, and for the ultimate
object of founding an empire of slavery on this continent.
In his speech then, on the Southern blockade, the future Lord Salisbury
made the following touching allusion to our dangerous prosperity on this
side: “The plain matter of fact is, as every one who watches the current
of history must know, that the Northern States of America never can be
our sure friends, for this simple reason—not merely because the
newspapers write at each other, or that there are prejudices on both
sides, but because we are rivals—rivals politically, rivals
commercially. We aspire to the same position. We both aspire to the
government of the seas. We are both manufacturing people, and in every
port as well as at every court we are rivals to each other. With respect
to the Southern States the case is entirely reversed. The population are
an agricultural people. They furnish the raw material of our industry,
and they consume the products which we manufacture from it. With them,
therefore, every interest must lead us to cultivate friendly relations,
and we have seen that when the war began they at once recurred to
England as their natural ally.”
Thus we see how anxious Great Britain was to take the place which the
North has reserved for itself, and so proudly maintained in commerce and
industry.
The great coming man, Salisbury, wanted to reduce us all to the position
of hewers of wood, drawers of water and planters and pickers of cotton,
for the special accommodation of Great Britain, as the mighty centre of
the world’s manufacturing industries. This would have given a set-back
to our civilization, causing us to make a retrogressive move to the dark
ages. Since then we have afforded this noble lord and his nation ample
proof that we are very far advanced in the manufacturing arts ourselves,
and that in many things we are far ahead of England, and they are no
doubt greatly surprised that the arrangement by which England was to
have all the profit and America all the hard work, has not been carried
out.
In this wonderful development of the industrial arts, Wall Street money,
enterprise and speculation have played by far the most conspicuous and
progressive part, thus enabling us, in little more than two decades, to
outstrip the old nations that were so anxious to enslave us, in spite of
the fact that they had centuries upon centuries the start of us. It must
be galling to some of these people that we are now the most available
candidates for the commercial and industrial supremacy of the world, and
we have attained this position, in a great measure, through the
instrumentality of Wall Street as a civilizer.
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CHAPTER III.
HOW TO MAKE MONEY IN WALL STREET.
HOW TO TAKE ADVANTAGE OF PERIODICAL PANICS IN ORDER TO MAKE
MONEY.—WHOLESOME ADVICE TO YOUNG SPECULATORS.—ALLEGED “POINTS” FROM
BIG SPECULATORS END IN LOSS OR DISASTER.—PROFESSIONAL ADVICE THE
SUREST AND CHEAPEST, AND HOW AND WHERE TO OBTAIN IT.
But few gain sufficient experience in Wall Street to command success
until they reach that period of life in which they have one foot in the
grave. When this time comes these old veterans of the Street usually
spend long intervals of repose at their comfortable homes, and in times
of panic, which recur sometimes oftener than once a year, these old
fellows will be seen in Wall Street, hobbling down on their canes to
their brokers’ offices.
Then they always buy good stocks to the extent of their bank balances,
which have been permitted to accumulate for just such an emergency. The
panic usually rages until enough of these cash purchases of stock is
made to afford a big “rake in.” When the panic has spent its force,
these old fellows, who have been resting judiciously on their oars in
expectation of the inevitable event, which usually returns with the
regularity of the seasons, quickly realize, deposit their profits with
their bankers, or the overplus thereof, after purchasing more real
estate that is on the up grade, for permanent investment, and retire for
another season to the quietude of their splendid homes and the bosoms of
their happy families.
If young men had only the patience to watch the speculative signs of the
times, as manifested in the periodical egress of these old prophetic
speculators from their shells of security, they would make more money at
these intervals than by following up the slippery “tips” of the
professional “pointers” of the Stock Exchange all the year round, and
they would feel no necessity for hanging at the coat tails, around the
hotels, of those specious frauds, who pretend to be deep in the councils
of the big operators and of all the new “pools” in process of formation.
I say to the young speculators, therefore, watch the ominous visits to
the Street of these old men. They are as certain to be seen on the eve
of a panic as spiders creeping stealthily and noiselessly from their
cobwebs just before rain. If you only wait to see them purchase, then
put up a fair margin for yourselves, keep out of the “bucket shops” as
well as the “sample rooms,” and only visit Delmonico’s for light lunch
in business hours, you can hardly fail to realize handsome profits on
your ventures.
The habit of following points which are supposed to emanate from the big
operators, nearly always ends in loss and sometimes in disaster to young
speculators. The latter become slavish in their methods of thought,
having their minds entirely subjected to others, who are presumed to do
the thinking for them, and they consequently fail to cultivate the
self-reliance that is indispensable to the success of any kind of
business.
To the question often put, especially by men outside of Wall Street,
“How can I make money in Wall Street?” there is probably no better
answer than the one given by old Meyer Rothschild to a person who asked
him a similar question. He said, “I buys ‘sheep’ and sells ‘dear.’”
Those who follow this method always succeed. There has hardly been a
year within my recollection, going back nearly thirty years, when there
have not been two or three squalls in “the Street,” during the year,
when it was possible to purchase stocks below their intrinsic value. The
squall usually passes over in a few days, and then the lucky buyers of
stocks at panic prices come in for their profits ranging from five to
ten per cent. on the entire venture.
The question of making money, then, becomes a mere matter of
calculation, depending on the number of the squalls that may occur
during any particular year.
If the venture is made at the right time—at the lucky moment, so to
speak—and each successive venture is fortunate, as happens often to
those who use their judgment in the best way, it is possible to realize
a net gain of fifty per cent. per annum on the aggregate of the year’s
investments.
In this way it is easy to see how the rich will get richer, and the poor
poorer.
Sometimes men make money in Wall Street by strange turns in their
fortunes that appear like having been governed by a special Providence,
and this sometimes occurs when men appear to be utter wrecks.
One of the strangest examples of this kind, in my personal experience,
occurred in the summer of 1885.
A man called at my office utterly broken down in spirit, but with a few
hundred dollars left out of many thousands that he had possessed a few
months previously.
“I read your letter of the third of July,” he said, “and had some mind
to act on the advice which it contained, but was unfortunately dissuaded
therefrom by reading an article in a city paper by a very able writer,
who had got the bearish mania, then prevalent, on the brain, and who, I
am informed, is now, like myself, almost ruined.”
“I hardly know what to do,” he continued. “I have a few hundred dollars
left, which I will leave with you, and you can use your pleasure with
it. I am going out to the country for the remainder of the summer. I
will leave my address with you, and, if there is any good result, you
can let me know of it. I really don’t hope for much, and of course, I
need hardly tell you that, in the event of being ‘wiped out,’ you need
not apply to me for more margin. Let this go with the rest,” he added,
in a despairing tone.
The man walked sadly out, and I did not see him again for months. I
invested his pittance on the _carte blanche_ order which he had given
me, to the best of my judgment. The result was favorable, and his
account began to accumulate. He was duly advised, according to our
business methods, of his good luck, but I did not hear anything from him
personally for several months.
One day, a portly gentleman, with rosy health beaming in his face,
stepped into my private office, and was quite profuse in his thanks to
me.
“Well,” I said; “I have but a hazy recollection of your acquaintance, if
I know you at all.”
“Don’t you recollect,” he said, “the time I went to the country in
summer, when I told you my case, and how I had been unfortunate in
speculation?”
“And are you the man who went to the country in despair to die?” I
asked, in surprise at his changed appearance.
“I am,” he replied, “and I owe the wonderful change which you now see to
your timely advice. I staked almost my last dollar on that counsel, and
now I am comfortably fixed through your management of the small fund
placed at your disposal.”
How, this was an example of a man who did make money simply by taking
the advice that was freely tendered him.
There are others who lose, in spite of all that the most honest judgment
can do to prevent them.
Some men, when they have money, are so fearfully perverse that all
attempts to get them to do the right thing only have the opposite
effect, and they prefer to follow every wild rumor.
One day, for instance, a man gave me an order to buy a thousand shares
of Erie without limit. The order was executed at 94. I had no sooner
bought it than the stock went down.
My customer returned in a short time and ordered the stock to be sold.
It was then 92½.
In half an hour afterwards he returned again and ordered it bought back
again, without any limit as before. It was bought back at 95.
After consulting with other friends for some time he ordered it sold
again. The market by that time was 90.
He then came back the fifth time, and said: “I first saw one man who
told me to buy, and then another who told me to sell. I understand one
is called a ‘bull’ and the other a ‘bear.’ About these names I don’t
know much, but I do know now that I am a — jackass.”
This affords a good illustration of the way the average speculator is
managed and perplexed in Wall Street. There is a means of avoiding such
a peck of trouble, however, if he would only take a little wholesome
advice, wait patiently for a proper opportunity, and not rush headlong
to purchase on the “tips” of the delusive rumor mongers. He would then
begin to learn how to make money in Wall Street.
As I have pointed out in another chapter, speculation is a business that
must be studied as a specialty, and though it is popularly believed that
any man who has money can speculate, yet the ordinary man, without
special training in the business, is liable to make as great a mistake
in this attempt, as the man who thinks he can act as his own lawyer, and
who is said “to have a fool for a client.”
The common delusion, that expert knowledge is not required in
speculation, has wrecked many fortunes and reputations in Wall Street,
and is still very influential in its pernicious and illusory
achievements.
When a man wants correct advice in law he goes to a professional lawyer
in good standing, one who has made a reputation in the courts, and who
has afforded other evidence to the public that he is thoroughly
reliable. No man of average common sense would trust a case in law to a
bar room “bummer” who would assert that he was well acquainted with
Aaron J. Vanderpoel, Roscoe Conkling, and Wm. M. Evarts, and had got all
the inside “tips” from these legal lights on the law relating to the
case in question. The fellow would be laughed at, and, in all
probability, if he persisted in this kind of talk, would be handed over
to the city physician to be examined in relation to his sanity, but in
Wall Street affairs men can every day make similar pretensions and pass
for embodiments of speculative wisdom.
If speculators are caught and fleeced by following such counsel, the
professional brokers who are members of the Stock Exchange, are no more
to blame than the eminent lawyers to whom I have referred would be for
the upshot of a case that had been taken into court on the advice which
some irresponsible person had pretended to receive from these
celebrities of the New York Bar.
Professional advice in Wall Street, as in legal affairs, is worth paying
for, and costs far less in the end than the cheap “points” that are
distributed profusely around the Street, thick as autumn leaves in
Vallombrosa, and which only allure the innocent speculator to put his
money where he is almost certain to lose it.
My advice to speculators who wish to make money in Wall Street,
therefore, is to ignore the counsel of the barroom “tippers” and
“tipplers,” turn their backs on “bucket shops,” and when they want
“points” to purchase, let them go to those who have established a
reputation for giving sound advice in such matters, and who have ample
resources for furnishing correct information on financial topics, as
well as a personal interest in making all the money they can for their
clients.
There is no difficulty in finding out such reliable men and firms in the
vicinity of Wall Street, if speculators will only read the newspapers,
or make inquiry of the first messenger boy they may happen to meet.
------------------------------------------------------------------------
CHAPTER IV.
IMPORTANCE OF BUSINESS TRAINING.
SONS OF INDEPENDENT GENTLEMEN MAKE VERY BAD CLERKS.—THEY BECOME
UNPOPULAR WITH THE OTHER BOYS, AND MUST EVENTUALLY GO.—NIGHT DANCING
AND LATE SUPPERS DON’T CONTRIBUTE TO BUSINESS SUCCESS.—GIVE MERIT
ITS TRUE REWARD.—KEEPING WORTHLESS PRETENSE IN ITS TRUE
POSITION.—RUNNING PUBLIC OFFICES ON BUSINESS PRINCIPLES.—A PIECE OF
GRATUITOUS ADVICE FOR THE ADMINISTRATION.—A COLLEGE COURSE NOT IN
GENERAL CALCULATED TO MAKE A GOOD BUSINESS MAN.—THE QUESTION OF
ADAPTABILITY IMPORTANT.—CHILDREN SHOULD BE ENCOURAGED IN THE
OCCUPATION FOR WHICH THEY SHOW A PREFERENCE.—THOUGHTS ON THE ARMY
AND NAVY.
I have usually found that the sons of independent gentlemen, who have
great expectations, make very poor clerks and don’t develope into Good
Wall Street men.
Their expectations seem to dwarf the ability that might develope under
the more favorable auspices of being obliged to paddle their own canoe.
Like the light under a bushel, referred to in the Good Book, their
brilliant qualities are obscured and circumscribed by the paternal
protection in prospect. They have not a sufficient incentive to work,
because they know that all they require for their natural wants will
fall easily into their laps. The motives, therefore, which usually
develope the greatest mental qualities are absent and the qualities
themselves lie dormant, and frequently decay like poppy seeds in their
seed vessels, without being productive of the fruits which are the
result of industrial habits and the desire for acquisition. Such young
men, instead of being a help to an office into which they happen to be
thrust, often through friendship and favoritism, are a great hindrance
and a stumbling block in the path to promotion of other young men.
After many ineffectual attempts to reform and remodel them, they have
generally to be discarded, as the drone bees are ejected from the rest
of the industrious hive. And they usually become as unpopular with the
other boys as the drone does with his comrades who make the honey and
will not suffer the idle fellow to feast on the fruits of their labor.
Young men who have nothing but their own resources to depend upon will
be found far more meritorious than this higher class. There are some
eminent exceptions, but it takes a large amount of good sense to
counteract the conceit instilled by the idea of financial independence
by birth.
The latter are more liable to youthful and enervating excesses, as they
have the means to indulge in nocturnal amusements that are not conducive
either to clear brains or active habits during the day.
Night dancing and late suppers, with some of their social concomitants,
when habitually indulged, don’t contribute to business success. I know
how this is myself, and therefore speak feelingly; but I don’t lay
myself open to the charge of egotism when I say that I have never
permitted the habit to get the better of me.
I am not setting myself up as a censor of other men’s habits, nor
attempting to utter mere moral or religious cant. I am simply discussing
the question from a scientific and physical standpoint, and I say that
these habits don’t contribute to business success, but, on the contrary,
form one of the greatest hindrances to it. They make any man, no matter
how strong he may be, physically unfit for ordinary business. These
“recreations” up town, however attractive and delightful they may be,
don’t fit a young man for business down town. The line must be drawn
somewhere. Let us draw it, say, at Fourteenth street.
There has been much said and written about Civil Service Reform by
various authorities from President Cleveland down to Dorman B. Eaton and
the Custom House officials. The great rule to follow is to give merit
its true reward This draws out the best efforts of the recipient, where
real merit is found, and keeps the drones beyond the pale of
competition. It develops the qualities that are worthy of being
encouraged, and keeps worthless pretense in its true position. This is
the role I have adhered to in my office, and it works like a charm. My
office, though not quite so large as the Custom House or Post Office of
New York city, I think affords a fair test of what could be done on the
largest possible scale.
If public office is a public trust, and we have the high authority of
President Cleveland and of the New York _Tribune_ for saying so, I think
it can be administered on the same business principles that have
contributed to the success of some of the largest and most successful
firms in the world; and among these, I think I can say without egotism,
as the matter is capable of demonstration, that the house of which I
have the honor to be the head, stands second to none in the attributes
to which I have referred.
The reader may say, “This is a puff for his own house.” Well, even so.
If it is, it is true, and will bear the strictest investigation. So I
don’t see why I should feign any false modesty about the assertion. It
would be sheer affectation to do so.
Collegiate education is a great question for debate among literary men,
journalists and business men, as to its utility in forming the character
of youth for business life. As the college curriculum and training stand
at present, the ordinary course is not in general calculated to make a
good business man. It is erroneously regarded by some people as a kind
of substitute for business training in the earlier years of a young
man’s life. There could be no greater mistake in the beginning of a
business career. It is in many instances not only a hindrance, but
absolutely fatal to success. To put a young man in an office fresh from
college, on a level with one of the same age who has been training in
business methods since he left the common school, is demoralizing to
both.
I wish to have it distinctly understood that in the foregoing remarks I
have not made any attempt to cast the slightest reflection on the
personal attributes and abilities of any young man in any line of life
or status of society, and I make this statement perfectly independent of
the mere social incident as to whether the young man in question may
part his hair in the middle or assume other dudish airs. That is his
business, and I have no right to trench on the sacred precincts of his
individuality, nor do I mean to do so. As a rule I stick to my own
business. I simply intend to imply that when a dude happens to come into
my office, where I think he will find the most æsthetic appointments in
the way of furniture and the business arrangements, if he should, upon
thus entering into my employment, come to the sudden conclusion that
this æstheticism of office furnishing implied any plea for idleness or
assumption of airs on his part, he would very soon experience a rude
awakening from his charmed lethargy of conceit, and if he were not
prepared to undertake in a calm and appreciative tone of mind the first
lessons of business industry, I would politely bid him an affectionate
adieu, and on parting tell him very kindly that though his great natural
gifts might be thoroughly adapted to shine in another sphere of life, he
was both by nature and education totally unfitted to play the most
humble part in a business career, such as that of which my firm affords
a fair and most successful example.
The same remarks will apply to any other young man who does not
appreciate his vocation, and try to know himself as old Seneca taught.
I don’t insidiously single out the dude for an odious comparison. The
remark will apply just as appropriately to the young man who is better
fitted for a blacksmith or a farmer, or perhaps a preacher, than a
business man or a financier.
“All blacksmiths,” says the Rev. Robert Collyer, “can’t become
preachers, and it would be bad for the world if they did.” There is a
good deal of philosophy in the remark of this popular preacher, and
quite to the point on the subject which I am now attempting to handle.
In fact, there is nothing in this world would grieve me more than the
prospect of being obliged to reflect in future years on the fact that I
had been instrumental in keeping a young man’s “nose to the
grind-stone,” so to speak, in my office, where he would make a very poor
employee without the chance of attaining average success, while in a
career for which nature and education had fitted him, he might not only
be happy and successful, but make his mark as a star of the first
magnitude.
When viewed in this light, the question of adaptability becomes a
serious affair, for young men starting in life, and for their parents,
who often sacrifice a great deal of their worldly comforts and peace of
mind to launch their fond offspring.
The best thing for parents to do, then, as a general rule, is to
encourage their children in that occupation or avocation for which they
show a decided preference. Whatever young men do voluntarily, as a rule,
they do well. This is especially illustrated in the lives of youths who
exhibit an inclination for a military pursuit, which offers the least
inducement to human avarice, and attracts the mind through the more
sentimental motives of patriotism and the love of glory. But in our
present civilization there are national feelings that must be inculcated
and encouraged.
I entertained at my Newport residence, during the past Summer, the
officers of the 23d Brooklyn regiment of the National Guard of the State
of New York, because I felt it a matter of duty to do so, as well as a
privilege to do my part in contributing to the encouragement of the
young men who have taken it upon themselves voluntarily to be members of
that militia company.
These young men visit Newport at very great cost to each one, as they
themselves have to contribute to the expenses attending the trip, and
their presence in Newport in going through, regularly each day, their
drills and parades with as much precision and correctness as though they
all had been graduates of West Point, all well equipped and well attired
in plain but most becoming military apparel, made a most interesting
scene to witness, contributing not a little to the amusement and
gratification of the residents of that famous watering place. They are
becoming disciplined to be soldiers. They are mostly young men of good
families, of profitable occupation, many in business for themselves and
others trustworthy clerks in the employ of others, with good salaries;
consequently they make a great sacrifice to themselves in the time that
they thus bestow upon such excursions as well as ordinarily in the
drills which they have to go through, when at home, once or twice each
week, frequently oftener. What is the incentive in this personal
sacrifice on their part?
The answer is, the spirit of patriotism, and that really is what it
means, for in the event of a foreign invasion or internal disturbances,
their services are pledged to the State and to the Government. They are
therefore liable to receive at a moment’s notice a call from any quarter
to go to the front with their lives in their hands, leaving their
families, their wives, their children, their old parents, their
business, leaving all and requiring a farewell at their departure, as
the dangers they may have to encounter are threatening in character and,
not unlikely, may prevent their ever returning alive.
Taking this view of the subject, therefore, these young men should be
encouraged by all who have the means and power at their hand, and to the
full extent of their ability. Whenever they go on missions of State
defense, it is only just and fair that they should be received as
soldiers, and accorded the honors which soldiers merit. They are
entitled to it to a greater extent than the regular soldiers of the
United States standing army. These men do not make one-half the
sacrifice that the young militia do, nor do they make any better
soldiers on the battle-field.
These militia soldiers, when they go to the front, leave behind them
enough, in the way of properly, good homes and families, to make them
more enthusiastic to fight for victory, than the regular army, so that
they may return to their own domestic circles with the laurels that
victory gives.
In thin country we do not desire standing armies, for we do not wish the
expense entailed upon the Government to sustain them, but we do want the
young men encouraged to do military duty and be prepared for action when
it comes. The only money, therefore, that the Government need expend to
protect our continent is a good militia force in each of the various
States, to be well disciplined. In that case our country will be
prepared to meet foreign foes.
I am also opposed to a large standing naval force, not only on account
of the expense, but also because our country is less likely to get into
trouble with other nations, providing we have no ships to send into
their waters. Naval officers are often very impetuous and chivalrous and
sometimes fancy they have grievances to repel, which are largely
imaginary, and with them it is a word and a blow.
With a thoroughly equipped and largely efficient naval force, we might
thus not unlikely be driven into a conflict without cause or reason with
some friendly power. Our country is happily located far in the distance
from the quarrelling nations of Europe, and our being so removed is our
protection. It is not desirable to be brought in closer contact by
sending our naval vessels into their waters, to be under their fire. The
policy of this nation is peace and good will to all mankind. What gain
would it be to America to have a conflict with England, even though we
should conquer in the end, or France, or Germany, or Russia? We couldn’t
tow any of these countries to ours, nor could we hold on to our conquest
as a permanent possession; neither should we desire to do so, as we have
territory enough in the 38 States which comprise the United States of
America, already, without desiring to annex that of any of our far-off
neighbors.
And if an emergency should arise in what has been called the last resort
of kings, namely, the necessity of going to war, it would be found that
the importance of this training in the special business of war could
then be appreciated at its true value.
The importance of business training, that is, training for the special
occupation in which a man’s energies are to be developed, is always made
apparent when those energies are put to the test of competition, or are
called upon to put forth an extraordinary effort. If a man has not got
the special training, whether in the army or in civil life, he is never
reliable in an emergency, but is like that weak and vacillating friend
which old Solomon compared to a broken ankle.
I say, therefore, to the young man of the rising generation, while you
don’t relax any effort to procure all the education that your time and
means will afford, above all things, don’t neglect the paramount
importance of business training.
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CHAPTER V.
PERSONAL HONOR OF WALL STREET MEN.
BREACH OF TRUST RARE AMONG WALL STREET MEN.—THE ENGLISH CLERGYMAN’S
NOTION OF TALMAGE’S TIRADES AGAINST WALL STREET.—ADVENTUROUS THIEVES
HAVE NO SYMPATHIZERS AMONG WALL STREET OPERATORS.—EARLY TRAINING
NECESSARY FOR SUCCESS IN SPECULATION.—FERDINAND WARD’S EVIL
GENIUS.—A GREAT BUSINESS CAN ONLY BE BUILT UP ON HONEST
PRINCIPLES.—GREAT GENERALS MAKE POOR FINANCIERS, THROUGH WANT OF
EARLY TRAINING.—PRACTICAL BUSINESS IS THE BEST COLLEGE.
There is no place in the world where people are trusted so much on faith
as they are in Wall Street; not even in the Church.
The business is one of mutual confidence, and each day there are
numerous opportunities for men to secure many millions of dollars of
other people’s money and take themselves safely off to that Paradise of
defaulters and absconders over the Border. Yet instances of this nature
are comparatively rare when we consider the large number of transactions
and the immense amount of money handled in Wall Street.
The men of Wall Street have, therefore, become world-renowned for
straightforward dealing, and have thus obtained the first position as
leading spirits in the speculative affairs not only of their own
country, but of the entire world. Wherever the speculative spirit of the
age has obtained a foothold, there Wall Street is a household word, and
Wall Street men are held in the highest esteem. It has become a term
familiar to the ears of those even who know nothing about the business
which has made its name almost universal.
“What is that Wall Street?” said an English curate to a friend of mine
who recently visited Liverpool. “What a queer place,” he continued, “for
Mr. Talmage to have his Tabernacle.”
The English divine, evidently only having “caught on” to isolated
sketches of the Brooklyn preacher’s calumnious invectives, thought they
were actually delivered among the bulls and bears, and that Talmage had
the boldness to beard these ferocious animals in their den.
It is true the honor of Wall Street is sometimes slightly tarnished,
especially in the eyes of those who reside at a great distance, owing to
the occasional delinquencies of dishonorable men, who consider Wall
Street men and Wall Street money fair game for swindling operations.
These are for the most part outsiders, who pounce upon the Street as
their illegitimate prey, after probably making a show of doing business
there.
There is no place, of course, where confidence men have the opportunity
of reaping such a rich harvest when they can succeed in establishing the
confidential relations that help them to secure their swag. But Wall
Street proper is not any more responsible for such men than the Church,
whose sacred precincts are used and abused by the same social pariahs in
a similar manner. The Street is the victim of these adventurers, and has
no more to do with nurturing and aiding them than the Church has.
What should be said of a financier who would have the temerity to assert
that the Church was an asylum for swindlers, and that thence they issued
forth to commit their lawless depredations on society? He would be
tabooed by all intelligent people. Yet there would be about as much
truth in such a statement as in most of the eloquent anathemas and
objurations launched from the pulpit every Sunday against Wall Street.
There is no place on this earth where adventurous thieves have fewer
sympathizers than in Wall Street, except perhaps in Pinkerton’s and
Byrnes’ detective bureaux.
There is another popular delusion with regard to those who don’t succeed
in Wall Street. Their failure is frequently attributed to sharp practice
on the part of the old habitues of the Street. People forget that the
business of speculation requires special training, and every fool who
has got a few hundred dollars cannot begin to deal in stocks and make a
fortune. The men who don’t succeed are usually those who have spent
their early life elsewhere, and whose habits have been formed in other
grooves of thought.
The business of Wall Street requires long and close training in
financial affairs, so that the mind may attain a flexible facility with
the various ins and outs of speculative methods. If this training is
from youth upward, all the better. It is among this class that many of
our most successful men are to be found, though there are some eminent
examples of success among those who began late in life. It will be
found, however, that the latter must have a special genius for the
business, and genius, of course, discounts all the usual conditions and
auxiliaries; but among ordinary intellects early training is generally
indispensable to financial success.
It seldom happens, moreover, that the early trained man from youth up
does any great wrong.
Ferdinand Ward may seem an exception to this rule, but he had a born
genius for evil, and though he had all the early advantages of Timothy
and Samuel the Prophet, with a higher civilization thrown in, so utterly
incorrigible was his nature that nothing but prison walls and iron bars
could prescribe bounds to his rascality. He is an extraordinary
exception, a genius of the other extreme, against whose subtle
operations society must always be on its guard; but he is only one of
the dangerous exceptions that prove the rule for which I am contending,
the rule that early training in finance more, perhaps, than in any other
field of human energy, is the great desideratum.
If such a man is unsuccessful, dishonor seldom accompanies his
misfortunes. He may pass through the whole catalogue of financial
disasters and their natural results. He may fall to the gutter through
over-indulgence in liquor and the despair attendant on a run of bad lack
or unfortunate connection with wicked partners, but he is still capable
of rising from the very ashes of his former self. He will never stoop to
swindle, no matter how low the rest of his moral condition may be
brought.
No great business can be built up except upon honest and moral
principles. It may flourish for a time, but it will topple down
eventually. The very magnitude to which the business of Wall Street has
grown is a living proof of its moral stamina. It is impossible, in the
social and moral nature of things, to unite a large number of men,
representing important material interests, except on principles of
equity and fair dealing. A conspiracy to cheat must always be confined
to a small number.
The most successful men of Wall Street, to my own personal knowledge,
are those who came to the Street young and have “gone through the mill,”
so to speak; those who have received severe training, who have had some
sledgehammer blows applied to their heads to temper them, like the
conversion of iron into steel.
These are some of the prerequisites of a successful financial career.
One of the most common delusions incident to human nature in every walk
of life is that of a man who has been successful in one thing imagining
he can succeed in anything and everything he attempts. In general,
overweening conceit of this kind can be cured by simple experiments that
bring men to a humiliating sense of their mortal condition and limited
capacity. When the experiment is tried in Wall Street, however, to these
healthy admonitions are frequently added irreparable disaster and
overwhelming disgrace.
I shall note a few examples within the memory of newspaper readers still
living. The brief panic of 1884 brought several instances of this
character to the surface. Some of them had fought our battles for
national existence and preserved the Union when this achievement seemed
almost hopeless. Their fame as generals was as extensive as history
itself. They had planned and executed projects with success on which the
destiny of a great nation, and perhaps the destiny of other nations, had
impended, yet when they attempted to manage banks, railroads and
financial operations they became hopelessly entangled.
The great captain of the Union’s salvation was as helpless as a babe
when Ferdinand Ward and James D. Fish moved upon his works. The eye that
took in the whole situation at a glance at Vicksburg, Richmond and
Appomatox was totally unable to penetrate the insidious and speculative
designs of the “Young Napoleon of finance.”
General Grant was a victim, not so much to the sincere, veracious and
unsuspecting attributes which were so largely predominant in that great
man, as to his want of early training in financial business affairs, and
to the fact that he was unable to appreciate its necessity in dealing
with sharp business men of loose morals. Generals Winslow and Porter
fell into a similar error of judgment in the West Shore Railroad matter.
Their mistake came near being a serious blow to the railroad interests
of this country. General Wilson, of the New York and New England, and
General Gordon were similarly unfortunate. The common mistake committed
by these worthy men, to whom the country owes an inestimable debt of
gratitude, was the chief cause of the “general demoralization,” to which
Treasurer Jordan facetiously but indignantly alluded when denouncing
railroad methods, and which from time to time has played sad havoc with
some of the best securities in the country.
Therefore, I say to all who have sons destined for a business career,
let your cherished offspring have the advantage of early practical
training in the particular line of business for which you may consider
them best adapted, and do so, even to the partial neglect of their
school and college education. Practical business is the best school and
college in which they can possibly graduate. I shall attempt to make
this point clearer in another chapter.
[Illustration:
SALMON P. CHASE,
Secretary of the U. S. Treasury during the war period.
]
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CHAPTER VI.
WALL STREET DURING THE WAR.
THE FINANCIERS OF WALL STREET ASSIST THE GOVERNMENT IN THE HOUR OF THE
COUNTRY’S PERIL.—THE ISSUE OF THE TREASURY NOTES.—JAY COOKE’S
NORTHERN PACIFIC SCHEME PRECIPITATES THE PANIC OF 1873.—WALL STREET
HAS PLAYED A PROMINENT PART IN THE GREAT EVOLUTION AND PROGRESS OF
THE PRESENT AGE.
Wall Street came to the rescue of the country when the war broke out.
The Government then did not have money enough to pay the interest on the
debt, and was sorely embarrassed for a time. The Hon. S. P. Chase,
Secretary of the Treasury, sent word to Mr. Cisco, the Sub-Treasurer in
New York, to do everything in his power to raise the money required to
sustain the nation’s credit.
Mr. Cisco apprised the “Street” of the instructions he had received from
Washington concerning the empty condition of the Treasury. He showed a
number of the leading operators and financiers that within a few days
the interest on the accruing obligations would have to be paid, or the
Government paper should go to protest. It was clearly demonstrated that
if funds could not be raised the Government should be placed in a
perplexing position, that would, in all probability, greatly complicate
and prolong the struggle for national existence. It was one of the most
critical moments in the whole history of the Republic, and the emergency
required clear, decisive judgment, and promptitude of action.
Wall Street men perceived the gravity of the situation at a glance. If
the Government’s credit should collapse, it was feared that the whole
framework of our political system would be endangered.