The foundation of all securities was threatened with a destructive

upheaval, and most serious consequences were likely to ensue, menacing a

contraction of all values. The prospect was very dark. Not a ray of hope

shone through the sombre clouds that hung dismally over the Union. The

internal dissensions of our people, and the apparent destruction of our

national life, were watched with the deepest interest by European

friends and foes—the latter being then largely in the majority, and only

waiting a favorable opportunity to pounce upon what they considered

their destined prey.

Manifest destiny seemed to have leagued all her forces in opposition to

us. The stoutest hearts quailed at the prospect of our dissolution as a

nation.

At this momentous juncture, when there was no eye to pity, and when no

other arm seemed mighty enough to save, the Wall Street men were equal

to the occasion. They put their heads together, came to the front, and

resolved to extricate the Government from its perilous position. It is

true that they were well paid for it. They charged twelve per cent. for

the loan, but that was nothing when the risk is taken into account. It

was then almost impossible to get a loan at any rate of interest. By

some of the great nations of Europe the risk then involved in such a

loan was regarded in about the same light as the people of this country

now estimate the present chances for realizing on Confederate paper

money, or Georgia bonds of the old issue.

In this state of public feeling, Lombard Street was not in a favorable

mood to negotiate loans with this country, and, the whole fraternity of

the Rothschilds shut their fists on their shining shekels and shook

their heads negatively and ominously at the bare mention of advancing

money to the once great but now doomed Republic.

Money was dear at the time, and the Government was only obliged to pay

what could have been obtained in other quarters. Curiously enough,

private property then was considered better security than the Government

endorsement, on the principle—which was not a very patriotic one, though

in reality true—that the country could survive its form of government.

That form, however, the best the world has yet seen, survived the shock

and maintained its autonomy. That it did so was in a large measure due

to the prompt action of Wall Street men in raising the sinews of war at

the incipient stage of the rebellion. Had they failed to do so, it is

not improbable that the repulse at Bull Run might have proved a decisive

blow to the Union, and plunged the country into a state of anarchy from

which nothing but a despotism almost as bad could have retrieved it.

The negotiation of this loan brought out the twelve per cent. Treasury

notes. After this issue the rates fell. Then came the 11 and the 10¾ per

cent. issues, and subsequently the well-known and long to be remembered

7 3-10 Treasury notes.

After this issue had been popularized, successfully disposed of, and

finally taken up at maturity by the 5-20 loan, Jay Cooke was quick to

issue, after their pattern, his famous 7 3-10 Northern Pacific Railroad

bonds. Evidently he had a patent for negotiating that famous 7 3-10 per

cent. railroad loan, as almost every clergyman, Sunday-school teacher

and public benefactor were found to have invested in them, when the

crash came, and although the road was the means of his financial

downfall, with the ruin of an innumerable number of others besides, who

were dragged into the same speculative whirlpool, this unfortunate event

was not entirely an unmixed evil.

It is true that this was the main and visible cause of precipitating the

panic of 1873, of which I shall speak more fully in another chapter, but

the Pacific road was the great pioneer in opening up the Far West, and

developing its material resources, the great artery of the Western

railroad system, conveying vigorous and durable vitality to the

industrial life of the expansive regions beyond the Rockies.

Thus, in taking a retrospect of my twenty-eight years in Wall Street, I

find that what sometimes appeared to be great evils have been succeeded

by compensating good, fate counter-balancing fate, as the Latin poet has

it. It was so, as I have previously observed, after the panic of 1857.

It was so after the convulsion of 1873, and though I have only historic

evidence to guide me in regard to the earlier history of the Street, I

find it was so after 1837. So, the maxim that history repeats itself has

been fully verified in Wall Street.

So, now that I have relapsed into a reflective mood on this subject, a

host of important associations connected with the main issue rush upon

me. The prominent idea that stands out in bold relief is the rapid and

wonderful progress made in Wall Street during the period that I have

undertaken to chronicle. And not only so, but the rapid strides that

have been made in everything, almost universally, during that time,

present a vast theme for consideration. The part that Wall Street men

have taken in this mighty evolution is the topic that concerns me most

at present. As I attempt to progress with my subject, I observe this

division of it becoming more expansive, so that I find myself in the

position of the Irishman when he ascended to the top of a mountain.

After recovering from the first effects of his surprise, he exclaimed:

“I never thought the world was so large!”

So it is with me. I never thought that Wall Street was so big, nor that

Wall Street affairs were so extensive, until I began to write about

them. They expand, as well as improve, surprisingly on closer

acquaintance. I only hope I shall be able to impress this idea more

vividly on the minds of my clerical friends, and others who have been

misguided in this respect, chiefly on hearsay and irresponsible

evidence, and who, I am sorry to say, have been the well-meaning, but

over-zealous instruments of misleading others.

To come to an approximate deduction of facts, then, it is, I think, a

fair estimate of the general progress of humanity, to say that there has

been greater material advance in everything that relates to a higher

civilization, and the greatest good to the greatest number, during the

last thirty years, than in all the previous time that has elapsed since

the period that the father of history, old Herodotus, began to

chronicle, in his racy style, the real and imaginary events of the human

family.

The part that Wall Street has played in this amazing progress has been

comparatively large, and would, if thoroughly investigated and fully

discussed, make a larger book than I have time to write at present.

I can only glance at the prominent topics and leading events in the

extensive and somewhat sensational history of Wall Street, and sketch

briefly the conspicuous features in the lives of certain celebrities who

have been conspicuous in the history of speculation, and of those who

have been prominent in the financial affairs of the country.

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CHAPTER VII.

MORE WAR REMINISCENCES—BRITISH AND NAPOLEONIC

DESIGNS.

HOW NAPOLEON DEFIED THE MONROE DOCTRINE.—THE BANQUET TO ROMERO.—SPEECHES

BY EMINENT FINANCIERS, JURISTS AND BUSINESS MEN.—THE ELOQUENT

ADDRESS OF ROMERO AGAINST FRENCH INTERVENTION.—NAPOLEON SHOWS HIS

ANIMUS BY DESTROYING THE NEWSPAPERS CONTAINING THE REPORT OF THE

BANQUET.—THE EMPEROR PLOTTING WITH REPRESENTATIVES OF THE ENGLISH

PARLIAMENT TO AID THE CONFEDERATES AND MAKE WAR ON THE UNITED

STATES.

There were other critical periods during the war when Wall Street came

to the front, besides the one in which it rendered such timely aid to

the Government in its financial embarrassment. One of these was when the

Emperor of the French, Napoleon III., showed his cloven foot and

exhibited anew the rancorous disposition which ten years previously had

crushed the Republican hopes of La Belle France by the murderous _Coup

d’Etat_. He made a bold attempt to plant that blood-stained foot on this

fair soil, in open defiance of the Monroe doctrine, and to crush the

liberties that his immortal uncle, even in the full flush of his great

conquests, dared not attack and was forced to respect.

I shall here relate an incident of this period, which, I think, has not

obtained the prominence in our national history to which, I believe, it

is justly entitled.

Senor Romero, then Mexican Minister at Washington, was invited to a

public dinner in New York, in order that proper occasion might be found

to discuss the situation with regard to the intentions of Napoleon the

Little concerning Mexico, and with a view of preventing foreign

intrusion, which was only the entering wedge for future invasion, at a

time when our nation was engaged in a family struggle to maintain its

own existence, and demonstrate the durability of Republicanism.

The dinner, at which there was a grand manifestation of sympathy in

favor of the Mexican cause against French invasion, took place on the

evening of March 29, 1864, at Delmonico’s, Fifth Avenue and Fourteenth

street. The banquet was held in four of the largest rooms. The large

dining hall was illuminated as a promenade for the families of the hosts

and guests, and a large concourse of ladies and gentlemen who were

invited to see the table and be presented to the distinguished envoy.

The rooms were elegantly decorated with flowers, grouped and festooned

with artistic skill, and the doorways arrayed with fragrant wreaths and

garlands. One room was set apart for the orchestra, and Helmsmuller

furnished the music.

Senor Don Juan N. Navarro, Consul-General of the Mexican Republic,

Ignacio Mariscal, an eminent jurist of Mexico, and Don Fernando De La

Cuesta, Assistant-Secretary of the Legation, were invited guests.

Following are the names of the Committee of Invitation:

WILLIAM C. BRYANT,

WILLIAM H. ASPINWALL,

HAMILTON FISH,

JOHN W. HAMERSLEY,

JONATHAN STURGES,

JAMES W. BEEKMAN,

J. J. ASTOR, JR.,

SMITH CLIFT,

W. E. DODGE, JR.,

DAVID HOADLEY,

FREDERICK DE PEYSTER,

W. BUTLER DUNCAN,

WILLIAM CURTIS NOYES,

HENRY CLEWS,

FREDERICK C. GEBHARD,

JAMES T. BRADY,

GEORGE T. STRONG,

HENRY DELAFIELD,

HENRY E. PIERREPONT,

GEORGE OPDYKE,

DAVID DUDLEY FIELD,

GEORGE BANCROFT,

C. A. BRISTED,

ALEXANDER VAN RENSSELAER,

GEORGE FOLSOM,

WASHINGTON HUNT,

CHARLES KING,

WILLARD PARKER,

ADRIAN ISELIN,

ROBERT J. LIVINGSTON,

SAMUEL B. RUGGLES.

Hon. James W. Beekman presided. The stewards were John Jacob Astor, John

W. Hamersley and Henry Clews.

When full justice had been done to the large variety of sumptuous

dishes, the chairman called the company to order, and explained that the

object of the meeting was to do honor to the great cause of religions

and political freedom contended for by the Republic of Mexico. The chair

gave the first regular toast, “The President of the United States,” and

called upon David Dudley Field to respond, who did so in his usual

eloquent style, stating that the sentiment of the whole country was

united in sympathy with the cause of the Mexicans, and that the

Executive Department of the Government was simply the agent and exponent

of the popular will. He dwelt at some length on the French invasion of

Mexico as one of the greatest crimes of the age, and predicted the brief

reign of Maximilian. Mr. Field wound up his discourse with the following

grand peroration:

Maximilian may come with the Austrian eagle and the French

tricolor; he may come with a hundred ships; he may march on the

high road from Vera Cruz to the capital, under the escort of

French squadrons; he may be proclaimed by French trumpets in all

the squares of the chief cities; but he will return, at some

earlier or later day, a fugitive from the New World back to the

Old, from which he came; his followers will be scattered and

chased from the land; the titles and dignities which he is about

to lavish on parasites and apostates will be marks of derision;

the flag of the republic will wave from all the peaks of the

Cordilleras, and be answered from every mountain-top, east and

west, to either ocean; and the renewed country, purified by

blood and fire, will resume its institutions, and be free.

The second toast was, “Don Benito Juarez, Constitutional President of

the Mexican Republic,” to which Mr. Charles King, President of Columbia

College, responded. He spoke of Mexico as the friend and ally of the

Union as opposed to European hostility.

His Excellency, Senor Matias Romero, the honored guest of the evening,

then made a brilliant speech on the situation, from which I take the

following extracts:

“I am very happy to say that the kind of feeling you express for

Mexico is fully reciprocated. In Mexico there are now but the

sentiments of regard and admiration for the United States, and

the desire to pursue such a course as will draw more closely all

those powerful ties by which both nations should be united.

“The Emperor of the French pretends that the object of his

interference in Mexican affairs is to prevent the annexation of

Mexico to the United States; and yet that very thing would, most

likely, be ultimately accomplished if a monarchy were

established in Mexico. Fortunately for us, that scheme is by no

means a feasible one.

“We were willing to grant to the United States every commercial

facility that will not be derogatory of our independence and

sovereignty. This will give to the United States all possible

advantages that could be derived from annexation, without any of

its inconveniences. That once done, our common interests,

political as well as commercial, will give us a common whole

American continental policy which no European nation would dare

disregard.

“The bright future which I plainly see for both nations had made

me forget for a moment the present troubles in which they are

now involved. I consider these troubles of so transitory a

nature as not to interfere materially with the common destiny I

have foreshadowed; but, as they have the interest of actuality,

I beg to be allowed to make a few remarks in regard to them.

“Every careful observer of events could not help noticing, when

the expedition against Mexico was organized in Europe, that it

would, sooner or later, draw the United States into the most

serious complications, and involve them in the difficulty. The

object of that expedition being no less than a direct and armed

interference in the political affairs of an American nation,

with a view to overthrow its republican institutions and

establish on their ruins a monarchy, with a European prince on

the throne—the only question to be determined by the United

States and the other nations concerned, was as to the time when

they would be willing or ready to meet the issue thus boldly and

openly held out by the antagonistic nations of Europe.

“This, in my opinion, is the situation in which the United

States are placed with regard to Mexico. Taking into

consideration the well-known sagacity of American statesmen the

often-proved devotion of the American people to republican

institutions, and the patriotism and zeal of the Administration

that presides over the destinies of the country, I cannot

entertain the slightest doubt that the United States will act in

this emergency as will conduce to the best interests they and

mankind at large have at stake in the Mexican question.

“The United States may find that they are brought squarely to

the issue in the Mexican question sooner than they expected,

should the report, lately reached here, of any understanding

between Maximilian, as so-called Emperor of Mexico, and the

insurgents in this country, prove correct. The archduke, it is

stated, will inaugurate his administration by acknowledging the

independence of the South, and, perhaps, he will go further; and

this, of course, by the advice, consent and support of the

French Government, whose satellite, and nothing else, will the

archduke be in Mexico.

“Among the many events calculated to terminate immediately

French intervention in Mexico, the European complications which

threaten to cause a general war on that continent should be

particularly mentioned. It is certainly wonderful that while

Europe is in so insecure and agitated a condition, menaced by

revolutions everywhere, and wrestling to recover its own

existence and independence, the French Emperor should be

thinking about arranging other people’s affairs, as if his own

did not require his immediate and most particular attention.”

Mr. George Bancroft, the eminent historian, was next called upon to

reply to the toast, “The Eminent Statesmen of Mexico,” among whom the

chair named Guatimotzin, Hidalgo, Morelos, Ocampo, Lerdo and Degollado.

Mr. Bancroft said:

MR. BANCROFT.

GENTLEMEN—Although I am not prepared to deliver an address

worthy of this auditory, I can not refrain from replying and

expressing my sentiments, as I have been called to reply to the

toast which our president has just proposed to the statesmen of

our neighboring sister republic. The struggle which for many

long years the Mexican people have sustained against their

interior tyrants has been an heroic struggle, worthy of a

civilized and cultivated people, and in which the sympathies of

the whole civilized world—of all the friends of political and

religious liberty—ought to have been manifested in a frank and

decided manner in behalf of the Mexican people, directed by the

liberal party. I believe, gentlemen, that the cause of civil

wars, not only in Mexico, but throughout all Spanish America,

has been the clergy alone, who, when they come to acquire power

in the State, always strive to overturn the government and to

subordinate the temporal interests of society to their own. This

attribute seems to belong principally to the Catholic clergy.

“The struggle, then, in which up to this time the patriotic

Mexicans have been engaged, was a holy struggle, and the

sympathy of the whole people of the United States was with

them—a people who, whatever may be their religious creeds,

adopts as a fundamental principle the most complete religious

liberty, and the absolute independence of the Church from the

State.

“But now the sympathy of the United States is increased for the

Mexican people, when, in addition to the facts already

mentioned, we find this people struggling for their independence

and nationality against a European nation, which, taking

advantage of the civil strife in which we were engaged, has

sought to establish before our eyes a form of Government in open

antagonism to our own. We can not do less than receive this

project in the same way as Europe would receive it, were we to

foment revolutions and establish republics on that continent.

“Then it is that those statesmen in the United States who aid us

to emerge from our present difficulties, and to restore our

power and legitimate influence, and those who in Mexico not only

consummate the great work of establishing religious liberty on a

solid basis, but who succeed in driving from their country the

foreign invader, or at least keep the sacred fire of patriotism

and of resistance to the invader burning, while we disembarrass

ourselves of our complications, deserve, in the highest degree,

our success and ardent homage.

“Gentlemen, the Egyptians used to place a burning lamp at the

feet of their royal corpses. On descending the steep vaults in

which the corpses were deposited, the lamp was naturally

extinguished.

“Let Europe place at Maximilian’s feet the weak lamp of

monarchial power. It will not burn in the atmosphere of our

continent.”

Mr. William Cullen Bryant was then called upon, and said, in part:

“We of the United States have constituted ourselves a sort of

police of the New World. Again and again have we warned off the

highwaymen and burglars of the Old World who stand at the head

of its governments, styling themselves conquerors. We have said

to them, that if they attempted to pursue their infamous

profession here they did it at their peril. But now, when the

police is engaged in a deadly conflict with a band of ruffians,

comes this Frenchman, knocks down an unoffending bystander,

takes his watch and purse, strips him of his clothing, and makes

off with the booty. This act of the French monarch is as base,

cowardly and unmanly as it is criminal and cruel. There is no

person, acquainted, even in the slightest degree, with the

political history of the times, who does not know that it would

never have been perpetrated had not the United States been

engaged in an expensive and bloody war within their own borders.

“We thought that we saw the dawn of an era of enlightened

government in the administration of Juarez. That dawn has been

overcast by the clouds of a tempest wafted hither from Europe.

May the darkness which has gathered over it be of short

continuance; may these clouds soon be dispelled by the sunshine

of liberty and peace, and Mexico, assured of her independence,

take the high place which belongs to her in the family of

nations.” (Continued applause.)

Senor Don Ignacio Mariscal responded to “Our Guest and the Bar of

Mexico.”

Mr. George Folsom, formerly envoy from the United States to the

Netherlands, responded on behalf of the diplomacy, making special

reference to Don Jose Lopez Uraga, Mexican Minister to Berlin.

Dr. Willard Parker responded to the health of Dr. Navarro, formerly

Chief of the Medical Staff of the Mexican Army.

Mr. George Opdyke responded on behalf of the merchants.

Senor De La Cuesta replied to the Commerce of Mexico.

Mr. Jonathan Sturges spoke for the fine arts of Mexico.

Mr. Washington Hunt spoke, protesting strongly against the French

invasion of Mexico.

Mr. Frederick De Peyster, President of the New York Historical Society,

responded on behalf of the historians of Mexico. He also made some

eloquent remarks on the tyranny of French intervention.

Mr. Henry E. Pierrepont spoke, as the representative of Brooklyn,

against the French policy in Mexico.

Mr. Smith Clift responded on behalf of the Bar.

Mr. Charles Astor Bristed replied on behalf of the Literary Men.

Mr. William E. Dodge, Jr., spoke on behalf of the Young Men of America.

“The tread of a French invasion,” he said, “is to them a direct insult,

and were our own sad war over, I believe there is not a town, or

village, or hamlet, where a full company would not spring to arms to aid

our sister republic in her glorious struggle. I give, as a sentiment in

which I know all will heartily join, the “Monroe Doctrine”-“Americans

can never allow the heel of European despotism to place its imprint upon

the soil of our Western continent.”

The Chair then said, “Let us now recognize the services of our

commissariat, who have so nobly discharged their stewardship. I propose

the health of the stewards. I beg Mr. John W. Hamersley to speak in

their behalf.” Three cheers were then given for the stewards.

Mr. Hamersley delivered an eloquent address, from which I take the

following excerpts:

“It is hardly fair, sir, to call on us while our hearts are

beating with fervid thoughts, and your ears ringing with burning

words. Had this toast been on the programme, one of my

coadjutors would have prepared an address worthy of the

compliment and the occasion. This Committee was not chosen for

their gifts of utterance, but for those humbler tastes, which

only lend a grace to eloquence. Our duties are æsthetic,

industrial and artistic. We have compassed the ends of the

earth, the depths of the sea; we have levied contributions on

the four winds of heaven, to cluster here all that can tempt the

appetite, or fascinate the ear and eye, and we fancied our

mission accomplished.

“However, there is the post-prandial law; the despotism of the

wine cup, to which we all owe allegiance—the only despotism

which the descendants of the Huguenots, or Pilgrim Fathers, will

ever tolerate on this continent. We are here, sir, in menace to

none, but firmly and respectfully, in the majesty of manhood,

and in consciousness of power, to reassert a principle, imbibed

with our mother’s milk, a household word, a dogma of American

faith; but while we cordially grasp our neighbor’s hand, in the

darkest hour of her trial, the grasp has due emphasis and

significance.

“With her, we have kindred traditions; each of us has hewn an

empire from the wilderness; each of us has expelled the

oppressor; and both of us, with tattered banners drenched in the

gore of hero martyrs, are now appealing from treachery to the

God of Battles.

“We have a common future; for who can doubt that our successes

and the death-knell of treason is already rung?—who can doubt

that the triumph of our arms will be the signal for the eagles

of Austerlitz “to change their base,” from the pyramids of

Puebla for their perch on the towers of Notre Dame? And permit

me here, sir, to express a hope, suggested by the _season_ (God

grant it may be a prophecy), that the Easter chimes of Mexico,

of the coming year, with the glad tidings of a Saviour risen,

shall peal from sierra to sierra, from ocean to ocean, with the

glad tidings of a nation risen, a nation born again. (Cheers.)

“Sir [to the Chair], it is fitting, while the accents of sweet

music recall tender and happy memories (man, imaged by that

armed cactus; woman, by that graceful palm), it is holy to

consecrate the hour to her who was “last at the cross and first

at the sepulchre.” I propose, sir, a toast, to which your

heart’s pulse will echo:

‘The daughters of Mexico—Fair as her sons are brave.’”

(Enthusiastic and prolonged applause. Music—_Viva Republica._)

THE CHAIR.

“We must not permit the modesty of our banker and steward, Mr.

Clews, to outweigh our desire to hear from the Bourse.”

MR. HENRY CLEWS.

MR. PRESIDENT AND GENTLEMEN—Enough has already been said, in the

speeches made this evening, to indicate most conclusively the

depth of sympathy which pervades this community in behalf of the

cause of Mexico, and I rise to express my cordial concurrence

with the sentiments which have been avowed.

The unanimous and determined voices of this company clearly show

that public opinion in this country will not submit to the

encroachments of foreign powers upon any portion of the

territory of the continent.

The principles of free republican government are so strongly

implanted in the hearts of the people both of Mexico and the

United States, that they will never consent to surrender them.

“Human freedom and the rights of man make common cause between

Mexico and all other American States.

“I do not utter these words in prejudice against any government.

In my judgment, European nations will best promote the welfare

of their own people by carefully abstaining from all

interference with the declared will of those who dwell on this

continent.

“The doctrine has been solemnly asserted, and will be maintained

inviolate against all alliances which seek to impede the

progress of liberal institutions, or to impair the strength of

governments founded on the rights and intelligence of the

people.

“This is the doctrine of the United States, and, under the

shield of its power and influence, the safety, prosperity and

independence of Mexico will be maintained and made perpetual.”

(Cheers.)

The meeting then separated, marching out to the inspiring strains of the

Marseillaise.

A few days after this meeting the House of Representatives unanimously

resolved that the United States would never consent to the establishment

of a monarchy which would arise under the auspices of Europe, upon the

ruins of a republic on the American continent.

The speeches at the Romero banquet, followed by this resolution, were

the premonitory sounds of the death knell of Maximilian’s empire, even

before he took formal possession of his evanescent throne.

To show the animus of the Emperor regarding this meeting, and how

closely he was watching the struggle, I may state that when the New York

_Herald_, which had a full account of the meeting, arrived in Paris it

was promptly seized by Napoleon’s censors and shared the fate of _La

Lantern_ and some of Victor Hugo’s most vigorous productions. It was

committed to the flames on account of the speeches made by some of our

representative men. It will be seen by reference to this incident that

our representatives in Wall Street were among the first to perceive this

threatened danger to the nation, and that they manifested their business

tact and capacity in promptly meeting it. They acted literally on the

maxim of Sir Boyle Roche, that “the best way to shun danger is to meet

it half way.”

Wall Street men were the first to make the move that checkmated the

tyrant who was ambitious to prove before the eyes of the world that

Republicanism was a failure.

A volume might be written by the student of universal history, and

probably will be by some future Herodotus, Macaulay, or Prescott, on the

far-reaching influences of this original move on the part of the Wall

Street men. There is a large field for speculative theorizing,

containing much important truth in the way the Republican spirit was

reflected in the political thought of Mexico, as the result of the

feeling manifested at this public dinner in New York. It was undoubtedly

the active precursor of the events that sealed the fate of that

unfortunate cat’s paw, Maximilian. It gave birth to the idea that

reverberated across the Atlantic, created distrust in Napoleon’s schemes

of conquest as visionary with his own people, and alarmed their Teutonic

foes, who urged forward those mighty preparations that culminated in the

terrible overthrow at Sedan.

To the mere reader of our local newspapers the connection between cause

and effect of these great events may seem far-fetched, but it is all

plain sailing to the student of general history.

In this connection it would be unjust to the genius of history to omit

the part which England played on the same chessboard with her former

political refugee, constable and Imperial protégé. Although Mr. Disraeli

has done considerable justice to the case in Endymion, he has not dealt

with it from this side of the Atlantic. And I am now going to touch on

some points of hitherto unwritten history.

There was a secret alliance formed between Napoleon and the British

Cabinet—an international conspiracy on a large scale—to demolish the

liberties of this country, pounce upon the wreck and then share the

spoils between these two powerful pirates. How this was planned and

subsequently averted would form, if fully written up, one of the most

interesting chapters in the voluminous library of statecraft, and would

take most of the political sensation out of the best efforts of

Macchiavelli, Talleyrand and Prince Metternich. I can only glance at the

leading features of the diabolical scheme, and show how Wall Street men

were again promptly in the breach at the proper moment.

The New York riots of 1863 were fomented by British, French and Southern

influence combined, as a part of the villainous plot. The design was to

give our troops enough to do in quelling local riots, so that they

should have no opportunity of going to the front. Southern passion was

predominant, and could not discern at the time that their would-be

allies were their bitterest enemies. It was hoped that the “draft riots”

would be so widespread as to afford Southern chivalry a chance to march

unimpeded to Washington and capture the Capitol, when the allied foes of

liberty, by virtue of their _entente cordiale_, should seize upon their

prey.

Everything was in readiness for raising the blockade and pouring in

armaments from Europe to complete the conquest. England had acted with

more caution than Napoleon, and was slow to move, though he was

constantly urging her forward. It is due to the villainy of his great

conception to state, that, had he been able to move his more sluggish

ally in crime with greater celerity, the result might have been

overwhelmingly disastrous to this country.

------------------------------------------------------------------------

CHAPTER VIII

FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY.

HOW THE IMPERIAL PIRATES OF FRANCE AND ENGLAND WERE FRIGHTENED OFF

THROUGH THE DIPLOMACY OF SEWARD.—OMINOUS APPEARANCE OF THE RUSSIAN

FLEET IN AMERICAN WATERS.—NAPOLEON AIMS AT THE CREATION OF AN EMPIRE

WEST OF THE MISSISSIPPI, AND THE RESTORATION OF THE OLD FRENCH

COLONIES.—PLOTTING WITH SLIDELL, BENJAMIN, LINDSAY, ROEBUCK AND

OTHERS.—URGING ENGLAND TO RECOGNIZE THE CONFEDERACY.—DISRAELI

EXPLAINS ENGLAND’S DESIGNS AND DIPLOMACY.—AFTER THE NAVAL VICTORY OF

FARRAGUT, AND THE CAPTURE OF NEW ORLEANS ENGLAND HESITATES THROUGH

FEAR, AND NAPOLEON CHANGES HIS TACTICS.—RENEWAL OF INTRIGUES BETWEEN

ENGLAND AND FRANCE.—THEIR DASTARDLY PURPOSES DEFEATED BY THE

VICTORIES OF GETTYSBURG, VICKSBURG, AND THE GENERAL TRIUMPH OF THE

UNION ARMS.

While the events related in the previous chapter were progressing

apparently towards a result that might have proved disastrous to the

dearly purchased liberties of this country, the nation was saved by

taking advantage of a circumstance that was peculiarly providential to

the Union. The Russian fleet happened to be in South American waters at

the time. Secretary Seward was apprised of the fact by a Wall Street

man. He was quick to act on the suggestion. Alexis, the brother of the

Emperor, was in command of the fleet. Seward sent him a friendly

invitation, which he instantly accepted. The spies of Napoleon and of

Scotland Yard, who were always on the alert, and who always discerned

the evil side of everything, promptly informed their employers of the

fact. The conclusion was manifest to European statesmen, who, unlike

Wall Street men, never “copper” the points given by spies. It seemed to

them clearly an alliance between the Great Empire and the Great

Republic. Extremes had met for mutual defence and safety probably for

aggressive purposes. The conspirators were frightened with their own

shadows and foiled by their own cowardice, and an apparently imminent

calamity was thus simply averted.

As the designs of the two great European powers were craftily concealed

through their evasive system of diplomacy, it has frequently been a

subject of debate as to whether they meant to take the part of the

Confederacy for the purpose of dissolving the Union. It is necessary,

therefore, to produce some tangible evidence of the intentions of these

foreign potentates in the hour of our country’s greatest peril.

The Confederate records purchased by the Government some years ago throw

a ghastly light on this subject, and gravely warn us of the Scriptural

injunction, to put no trust in kings and rulers.

The correspondence between the officials of the Confederacy and the

Confederate Commissioners, Slidell and Mason, at Paris and London, prove

to a demonstration that the ruler of France and the rulers of Great

Britain were making preparations on a large scale to take charge of this

country as soon as the Union, through their diplomatic aid, should be

dissolved. Letters from other representatives of the Confederates of

Europe go to corroborate this view of the matter. The correspondence

between Dudley, Post, Mann and Lamar, who were commissioners in various

parts of Europe, and Judah P. Benjamin, the Confederate Secretary of

State, is conclusive on the subject of European armed intervention,

which has hitherto formed a topic of dispute in the historic circles of

the Civil War.

The correspondence of Slidell, who was on familiar relations with the

Emperor of the French, gives the inside history of the intrigues of that

potentate in such clear terms, that there can be no doubt of his

intentions towards this country.

Had it not been for the superior vigilance of Mr. Dayton, the United

States Minister at Paris, several privateers would have been launched

from French ports to prey upon the commerce of the United States, and to

do similar work to that for which the Alabama was fitted out.

It would seem from the correspondence that the managers of the affairs

of Great Britain were not so anxious to encourage the South as Napoleon

was; at least they succeeded in concealing their purpose better. The

practical diplomacy of England in this affair was superior to that of

France, though the latter has still held the palm for possessing better

diplomatic plotters, who are supposed to have no superiors outside the

royal associations of the reigning power of Russia.

There is no doubt, however, that Napoleon was anxious to take positive

steps to recognize the South, while professing the most friendly

feelings in favor of the North, but he was afraid to act except in

unison with Great Britain, and he failed to bring her to time until the

favorable moment for the execution of his plans had passed.

Slidell and Mason went to Europe in January, 1862. This was perhaps the

darkest and most critical period for the cause of the Union during the

great struggle. The Commissioners carried letters with them showing the

inefficiency of the blockade of the Southern ports, the great

disadvantages and losses suffered by England and France through cutting

off the cotton supplies, and setting forth the enormous advantages that

would result if free trade with the Confederacy were established. These

were strong arguments to arouse the spirit of commercial selfishness in

favor of the South.

The ambitious designs of Napoleon were of a very towering and extensive

character. He not only expected to recover Louisiana, which his uncle in

an hour of necessity had sold to the United States, but he aimed at the

restoration of the entire old colonial empire of France on this

continent.

The Emperor was thoroughly posted in the affairs of this country. It

seems that while he had resided in a small room in Hoboken, and took his

meals at a twenty-five cent restaurant, paying for them with money

borrowed from French patriots, on the very slim prospect of reaching the

throne of France, he made the best use of his time, and he had studied

the history and geography of the United States and Canada with great

care and accuracy.

In justice to his character for gratitude, however, it must be said, in

passing, that, like young “Corneel” Vanderbilt, he paid all the money he

borrowed, and placed some of his New York and Hoboken creditors in good

positions at the Tuileries, under the Second Empire. He never forgot a

favor nor forgave an injury.

The Emperor’s knowledge of American affairs, as well as his ambitious

designs, were briefly, but at the same time very fully disclosed, in

conversation with Mr. Benjamin, at the Villa Eugenie, at Biarritz. “He

turned with peculiar and undisguised eagerness,” said Mr. Benjamin, “to

the Mexican question. He knew the very number of guns on the Morro, the

sums the United States had spent on the fortifications in Florida, the

exports and imports of Galveston and Matamoras, in fact everything which

well informed local agents could have reported to an experienced

statesman eager for information. He examined me again on Texas and its

population, the disposition of the French residents, the tendencies of

the German colonists, the feeling on the Mexican frontier. He observed

that Louisiana was nothing but French at the bottom. I was fully

persuaded that he proposed to seek in Mexico a compensation for the lost

colonies in the West Indies, which, he said, could not be recovered,

‘_sans nous brouiller avec nòs allies_,’ (without embroiling us with our

allies). He insisted upon it that France must, sooner or later, have a

foothold (_pied à terre_) on the Florida coast, for the purpose of

protecting her commerce in the Gulf, for, he added, ‘_Nous ne voulons

pas d’un autre_ _Gibraltar de ce côté là_,’ (we don’t want another

Gibraltar on that side.”)

Mr. Slidell’s predecessor at Paris, Mr. Rost, had received assurance

from the Duc de Morny, who was then next to the Emperor in his knowledge

of State affairs, that the South would be recognized. It was only a

question of time. After consulting with M. Thouvenel, Minister of

Foreign Affairs; Persigny, Minister of the Interior; Fould, Minister of

Finance; Rouher, Minister of Commerce; Baroche, President of the Council

of State; Mocquard, Private Secretary of the Emperor; Count Walewski, De

Morny and others, Slidell was satisfied that the Emperor was all right,

and he wrote to Jeff. Davis & Co. as follows:

“The Emperor has invited the English Government to join with him

in recognizing the South, but the English Government, owing to

Earl Russell, has refused to act simultaneously with him.”

This statement of Slidell was true in one sense, but it was not strictly

and diplomatically correct. There is no doubt that the English

Government would have been anxious enough to join the Emperor in any

scheme of conquest and spoliation that had a fair promise of success,

and an average chance of avenging the Boston Tea Party and the Battle of

Bunker Hill, but both powers were playing at the game of diplomacy, each

for the purpose of making the other responsible for taking the

initiative in the recognition of the South. They were both very

circumspect about committing themselves, and the Palmerston-Russell

Cabinet, with that caution which always characterized old “Pam” in

foreign affairs, would not recognize any suggestion from the Emperor

that did not bear his signature. The Emperor thought to make use of a

Mr. Lindsay, a wealthy shipowner and member of Parliament, to draw out

the English Government, but the latter was not to be committed to any

course of policy that might involve important responsibilities in the

future through any second-hand authority.

The Emperor seemed to have opened his mind very freely to Mr. Lindsay.

He told him that he would have taken steps to put an end to the blockade

of the Southern ports if the English Ministry had intimated a

willingness to act with him. He said he had forwarded intimation to this

effect through Mr. Thouvenel, but had not received a satisfactory

answer. He intimated that if England was ready, he was, and was prepared

at once to despatch a formidable fleet to the Mississippi, on condition

that England should send an equal force to demand free ingress and

egress for their merchantmen, and for the cargoes of goods and supplies

of cotton which were necessary to carry on the commerce of the world.

Napoleon was resolved to act, as he had always done, on the high ground

of conferring universal favors on humanity.

This was an old trick in his family, but it did not work effectually

this time. He said he had regarded the restoration of the Union

impossible from the first, and for that reason had deprecated the

continuance of the bloody contest, which could not lead to any other

result than separation. He authorized Mr. Lindsay to make this statement

to Lord Cowley, and to ascertain whether he would recommend the course

indicated to his Government.

It is very refreshing to reflect on the sensitive exhibition of feeling

displayed, in his ostensible attempt to stop the carnage and fratricidal

strife, by the man who planned and directed the wholesale assassinations

in connection with the sanguinary _Coup d’Etat_.

Mr. Lindsay reported back to the Emperor the substance of his interview

with Lord Cowley, who said that the English Government was not prepared

to act until further developments. It was about this time that Mr.

Seward was getting _in_ his fine diplomatic work with Earl Russell and

Palmerston, which helped materially to upset the calculations of the

Emperor.

Napoleon then requested Mr. Lindsay to see Palmerston, Russell, Derby

and Mr. Disraeli, and to gather their intentions. He desired Mr. Lindsay

to do all this of his own motion, and not as coming from him, and said

he did not wish to be embarrassed by the forms and delays of ordinary

diplomacy, because he felt the necessity of immediate action.

Lindsay again saw Earl Russell, as the accredited and special ambassador

of the Emperor, _viva voce_. The Earl informed him that he could not

receive any communications from a foreign power, except through the

regular diplomatic channel. He then sought an interview with Mr.

Disraeli, who was much more affable and communicative than the little

Lord who stood so punctiliously on ministerial ceremony.

Disraeli threw considerable light on the subject. After expressing a

deep interest in the affairs of the Confederacy, and saying that he

fully concurred in the views of the Emperor, he told Mr. Lindsay that he

had good reasons for believing that a secret understanding existed

between Earl Russell and Mr. Seward; that England, in the meantime,

would respect the Federal blockade and withhold recognition of the

South. “But if France should take the initiative,” said Mr. Disraeli in

conclusion, “any course she may adopt to put an end to the present state

of affairs will undoubtedly be supported by a large majority in

Parliament, and knowing this, Lord Russell will give a reluctant assent

to this, to avoid a change of ministry, which would otherwise certainly

follow.”

This shows that Disraeli saw very clearly through the duplicity of

English diplomacy, and that while England was profuse in her promises to

Mr. Seward, she was only waiting for the Emperor to act as pioneer in

order that she might have a safe opportunity as well as a plausible

pretext for armed intervention.

The Emperor complained that Earl Russell had divulged his views on

American affairs, as expressed through his ambassador, to Mr. Seward.

Lord Russell placed himself squarely on the “fence,” to be prepared for

any emergency. Finally, about the middle of April, the Emperor thought

it would be best that he himself should make a friendly appeal to the

Federal Government alone to open the ports, if England did not join him,

without further hesitation. He thought it would be necessary, however,

to accompany the appeal with a demonstration of force on the Southern

coasts; and if the appeal should be effective, to back it up by a

declaration of his purpose not to respect the blockade. He determined,

however, to wait a few days longer to see how England would act.

This resolution of the Emperor to make a friendly appeal to raise the

blockade was only a thin excuse to find a cause for quarrel with the

North, and it is very probable he would have acted on this determination

alone, but for an unexpected event which changed his projects, and the

apparent course of history.

About a week after this diplomatic conference, Commodores D. G.

Farragut, and D. D. Porter, with their able commanders Bailey and Bell,

had made the famous passage of forts Jackson and St. Philip, at the

mouth of the Mississippi, with the United States squadron, silenced the

Chalmette batteries and anchored in the harbor of New Orleans. After two

days’ parleying the city surrendered at discretion, or rather, the city

authorities passively and sullenly permitted Farragut, and afterwards

General Butler, to take possession of the city without shedding any

blood.

This great naval victory of Farragut’s squadron and its consequences

dampened the ardor of the Emperor. He saw the chances of backing up his

“friendly appeal” by a demonstration of force, were cut off, so far as

New Orleans and the forts of the Mississippi were concerned.

Yet, Napoleon did not totally relinquish the enterprise, on account of

this crushing defeat of the Confederacy. M. Billault, a prominent member

of Napoleon’s cabinet, after this event said to Slidell, “The cabinet,

with the probable exception of M. Thouvenel, are in favor of the South.

If New Orleans had not fallen, our recognition could not have been long

delayed, but if the Confederates should obtain successes in Virginia and

Tennessee, and hold the enemy at bay a month or two longer, we may see

an opportunity for intervention.”

The Emperor’s intentions, however, were fully revealed in an autograph

letter to General Forey, which was written in July and in which his

grasping ambition stood out in the boldest relief. He wrote: “In the

present state of civilization of the world, the prosperity of America is

not a subject of indifference to Europe, for she nourishes our

manufactures and gives life to our commerce. We are interested in having

the Republic of the United States a powerful and prosperous power, but

we are not willing to have that Republic take possession of the entire

Gulf of Mexico, command from there the Antilles as well as South

America, and monopolize the distribution of the products of the New

World. To prevent this, a stable Government must be established in

Mexico, and we will in that event have restored to the Latin race on the

other side of the Atlantic its power and prestige.”

Napoleon completely overdid the thing in this letter to General Forey.

The vaulting ambition which overleaps itself and falls on the other side

stuck out too plainly. He showed that he wanted the whole earth, and

this aroused the resentment of the South. In the following August, M.

Theron, a French consul in Texas, inspired by Napoleonic ideas of

annexation, coolly contemplated the transformation of Texas to a French

republic, and confided his project to Governor Lubbock of that State,

who apprised Jefferson Davis of the consul’s aspirations. This was too

much even for the Confederate Government, and M. Theron and the French

consul at Richmond were both politely requested to leave the Confederate

States.

Napoleon persisted in his intrigues for the purpose of getting a

foothold in this country, in spite of the rebuff which his officious

consuls had received from the Confederacy. He expressed himself desirous

of interesting some of the rest of the European powers in the cause of

the South, and again entered into confidence with Slidell on the

possibility of joint mediation on the part of England, France and

Russia. “My own preference,” said the Emperor, “is for a proposition for

an armistice for six months, with the Southern ports open to the

commerce of the world. This would put a stop to the effusion of blood”

(How tender-hearted he was!) “and hostilities would probably never be

resumed. We can urge it,” he added, “on the high grounds of humanity,

and the interests of the whole civilized world. If it be refused by the

North, it will afford good reason for recognition, and perhaps for more

active intervention.”

Mr. Slidell then suggested that if the Emperor would give some kind of

assurance that the police would not interfere, ships and munitions of

war might be sent from France to the Confederacy.

“Why could you not have the ships built as if for the Italian

Government?” suggested the Emperor. “I do not think it would be

difficult, but I will consult my ministers about it.”

Napoleon then suggested the joint appeal for the six months’ armistice

to England and Russia, which was declined by both. He then made a direct

offer of mediation to the United States Government, in the most friendly

terms, and on the “high grounds of humanity.”

The United States Government did not see it in this light, and rejected

Napoleon’s humane offer.

The Confederate agents then obtained power to build ships of war in

French ports, and to arm and equip them, and proceed to sea without

molestation from the French authorities, the Treaty of Paris forbidding

such a hostile act against a friendly power like the North to the

contrary notwithstanding. The despot of France imagined himself above

all treaties at that time.

The English Alabama was then cruising in a most successful manner. The

Emperor had a conference with Mr. Arman, a large shipbuilder, and

assured him that there would be no difficulty about building the ships

for the Confederates under the disguise of their Italian destination.

Accordingly, a contract was made for building five ships of war at

Bordeaux and Nantes, and afterwards another contract for three iron-clad

rams.

In 1863 the Emperor had a great deal of business on hand, but was still

convinced, amid all his diplomatic duties that the South should be

recognized by the European powers. He was afraid, however, of putting

his Mexican expedition in jeopardy by risking a rupture with the North.

Finally, he said: “I will make a direct proposition to England for joint

recognition. This will effectually prevent Lord Palmerston from

misrepresenting my position and wishes on the American question.”

Accordingly, he had an interview with those two worthy members of

Parliament, Messrs. Roebuck and Lindsay, at Fontainebleau, which was

said to be highly satisfactory. He authorized them to state in the House

of Commons that he was both willing and anxious to recognize the

Confederate States, with the co-operation of England.

There was a great debate in Parliament on the subject, in the midst of

which Earl Russell arose and said that Baron Gros, the French Minister,

had received no communication from his Government on American affairs.

Mr. Roebuck, who made the motion on the authority of the Emperor, was

astonished that he had been so badly fooled. It still remains a mystery,

however, why Baron Gros did not receive the advice in question from the

Emperor, because M. Mocquard, the Emperor’s Secretary, wrote to Slidell

as follows: “On the next day after the interview of Messrs. Roebuck and

Lindsay with the Emperor, the Minister of Foreign Affairs telegraphed

Baron Gros to ‘officiously’ inform Lord Palmerston that, should Great

Britain be willing to recognize the South, the Emperor would be willing

to follow her in that way.”

The only explanation that seems plausible under these circumstances is,

that the Palmerston-Russell Cabinet interrupted this telegram to Baron

Gros for diplomatic purposes, or that the Baron, seeing that the debate

in Parliament had taken an unfavorable turn, had prudently resolved to

suppress the advice from Napoleon, in order that his master might not

commit himself while England was not heart and soul with him in the

enterprise. In fact, England had begun to see that she had taken a false

position, and Mr. Gladstone’s eloquent spurt, to the effect that

“Jefferson Davis had created a nation,” was no longer the diplomatic

faith of England. She was more influenced by fear than love, as she

always is, and had begun to think, after the capture of New Orleans and

the destruction of the Confederate fleet, that the Federal Government

was capable of organizing a formidable navy. The London _Times_, which

voiced diplomatic sentiment then, said so. During this very debate on

Roebuck’s motion, Lee’s army had been beaten at Gettysburg, Vicksburg

had surrendered and victory was beginning to perch on the Northern

banners everywhere. Napoleon also drew in his horns, complaining

bitterly that “perfidious Albion” had gone back on him, and he was

afraid to permit the war ships, when finished, to leave the French ports

for any destination, and when he permitted the English privateer, the

Rappahannock, to depart, it was under the injunction that the American

minister should know nothing about it.

What Lord Palmerston called a “concatenation of circumstances”

contributed largely to force the Emperor to change his policy towards

the United States. Maximilian’s Mexican expedition was exceedingly

unpopular, trouble was brewing in several parts of the continent, and

Bismarck and Von Moltke were cunningly and deliberately weaving that net

in which the Man of Destiny, seven years later, was hopelessly entangled

at Sedan. His dream of a French American Empire beyond the Mississippi

had vanished long before his last abject act of humiliation in

surrendering the sword of France to Bismarck. And ere he died, a

miserable wreck of disappointed ambition, again a political exile, he

had the opportunity of seeing our own Republic, which he sought to

destroy, rehabilitated, and on its way to become the greatest nation in

history.

[Illustration:

THE HON. JOHN SHERMAN,

Who has taken a prominent part in financial matters since the

beginning of the war, first in making treasury notes a legal tender

in 1862; in proposing the Redemption Act in 1867, which was passed

in 1870, and in the resumption of specie payments in 1879, which was

the crowning success of the financial policy which established the

Government credit on a solid basis.

]

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CHAPTER IX.

SECRETARY CHASE AND THE TREASURY.

THE DEPLETED CONDITION OF THE TREASURY WHEN MR. CHASE TOOK

OFFICE.—PREPARATIONS FOR WAR AND GREAT EXCITEMENT IN

WASHINGTON.—CHIVALROUS SOUTHERNERS IN A FERMENT.—OFFICIALS UP IN

ARMS IN DEFENCE OF THEIR MENACED POSITIONS.—MISCALCULATION WITH

REGARD TO THE PROBABLE DURATION OF THE WAR.—A VISIT TO WASHINGTON

AND AN INTERVIEW WITH SECRETARY CHASE.—DISAPPOINTMENT ABOUT

THE SALE OF GOVERNMENT BONDS.—A PANIC PRECIPITATED IN

WALL STREET.—MILLIONAIRES REDUCED TO INDIGENCE IN A FEW

HOURS.—MIRACULOUSLY SAVED FROM THE WRECK.—HOW IT HAPPENED.

Soon after Mr. Chase came into the Treasury he found that money was

seriously needed. In fact the Treasury was empty. The expenditure for

the fiscal year ending June, 1861, was 62 millions, and there were only

41 millions of revenue to meet them, and even this amount was threatened

with a serious reduction on account of the traitorous and rebellious

attitude of the South.

After President Lincoln had called upon Congress to provide for the

enlistment of 400,000 men, the expenses of the Government were soon

advanced to the enormous amount of a million dollars a day. The

Secretary of the Treasury made a calculation, which he submitted to the

President, showing that the probable expenditures would amount to 318

millions for the ensuing year. He advised that 80 millions be provided

for by taxation, 240 millions by loan, and that 50 millions of Treasury

notes, redeemable in coin on demand, should be issued.

The Secretary was authorized by Congress to borrow a sum not exceeding

250 millions, on the credit of the United States, and as a part of this

loan he was, in the words of the Act, “to issue in exchange for coin, or

pay for salaries or other dues from the United States, not over 50

millions of Treasury notes, bearing no interest, but payable on demand

at New York, Philadelphia or Boston.”

When Mr. Chase advertised for bids on the bonds known as the 81 issue

all bids at 94 and above were accepted, and those under 94 were

rejected.

I got up a syndicate immediately to take the entire balance of the loan

at 94, and went on to Washington to see the Secretary. This syndicate

comprised a number of New York banks and many large capitalists. I

called upon Secretary Chase when I arrived, informed him of the object

of my visit and made him an offer of 94 for the entire balance of the

loan.

He was in favor of the proposition, but requested me to leave the matter

open until the following morning for him to consider. It was a question

with him whether he ought not to give those whose bids had been rejected

an equal opportunity with the parties I represented.

I never can forget the impression I received on my approach to

Washington that morning. As I looked through the window of the

sleeping-car my eye was met by an entire train load of brass cannon.

There were at least a dozen platform cars, each having one of those huge

guns, all apparently in order to wheel at once against the enemy. I

shall always remember the feelings that came over me at that moment. The

question of war or no war was vividly presented to my mind, and this was

the uppermost thought during my visit at Washington.

I descended from my traveling quarters as soon as the train was

announced as having arrived at the capital, and repaired to Willard’s,

then the principal, if not, in fact, the only hotel for a traveler to go

to, and it was an old-fashioned, historic hostelry. I hastened to my

room, rapidly performed my ablutions, and then found my way into the

dingy breakfast room. On inquiry, I found that ten o’clock was the usual

hour for heads of departments, including Mr. Chase, to be at the

Treasury. At that hour I went to see him. I sent in my card and was

ushered into his presence without delay. He was a man of portly frame

and distinguished bearing, and impressed me with the feeling of being in

the presence of an individual far above the average standard of humanity

in every respect.

I informed the Secretary of my mission, with the result above stated.

About seven-eighths of the people of Washington, at that time, were

Southerners. The office-holders were largely composed of the latter, and

they were expecting to be suddenly turned out of office. This rendered

the place a boiling caldron of conspiracy and treason.

As I went around collecting information, the sight of those cannon that

at first had made such an indescribable impression upon me, continued to

haunt my vision wherever I went. The air was filled with rumors of war,

and everybody was wound up to the highest pitch of hostile excitement.

As I mingled among the people, the impression was forced upon me that

war was inevitable, and that up to the very hilt of the sword. I felt

that the contest would be long and bloody.

I sent a dispatch to my firm in New York, conveying my impressions to

that effect, and advised them to clear the decks in preparation

therefor. I urged them to lose no time in selling off all the mercantile

paper on hand, and requested them to communicate to the members of the

syndicate, which I had formed for the purchase of bonds, recommending

them to withdraw therefrom, as I was convinced that war to the knife was

imminent, and that Government bonds must have a serious fall in price in

consequence.

I saw Mr. Chase the next morning, and told him that, as I believed,

there was going to be a long and bloody war, I could not

conscientiously, in the interest of my clients, renew my bid of the

previous day.

With regard to my opinion about the probable length of the war, the

Secretary took issue with me very firmly.

Mr. Chase, however, afterwards proved to be a warm and most valued

friend of mine, and it was largely due to his aid and recognition that I

achieved brilliant success in my early Wall Street career during the war

period.

The Secretary was of opinion that the bonds should command par, at

least, and they would be worth that and above it very soon, he thought.

He made this assertion on the expectation that the impending

difficulties would soon be adjusted, and that in less than sixty days

all the trouble would be at an end.

It was not so extraordinary as it may seem to some people now, with the

light of later events fully before them, that the Secretary was so

sanguine of short work being made of the South, because he only shared

the opinion of a large number of people, who greatly underestimated

Southern durability.

After leaving the Secretary, who treated me with great consideration, as

he did every one in his inimitable and dignified manner, which made such

a durable and favorable impression on all who came in contact with him,

I felt greatly pleased and highly gratified at meeting him. In fact, his

fine, magnetic presence was of a character to command the admiration of

almost every person who had the honor of an interview. He was a great

man for producing good first impressions, and, unlike many impressions

of this character they were generally lasting.

Had I not visited Washington at the time I did, and had I not obtained

the correct impression concerning the future of the then impending

difficulties, my firm, like many others that invested in Government

bonds, mercantile paper, stocks and other fluctuating properties, would

have been irretrievably ruined. I have reason to congratulate myself,

therefore, on my good fortune in narrowly escaping such a disaster,

almost at the beginning of my Wall Street career, as I was thus enabled,

at a later stage of the national trouble, to be of considerable service

to the Government, through the Treasury, in its efforts to sustain such

an army in the field as was calculated to ensure success to the Federal

arms.

My first experience in dealing in Government bonds was just prior to the

Lincoln administration, when Mr. Cobb was Secretary of the Treasury. He

advertised for sale to the highest bidders an issue of U. S. bonds

bearing five per cent. interest, having twenty years to run, and my firm

bid for $200,000 of them, hoping to make a quick turn, and a small

profit thereon. A five per cent. deposit was made, as required by

custom.

The loan was all awarded to most of the bids, mine included, and a very

large part of it was awarded to Lockwood & Co., who were then regarded

the largest and most prosperous Stock Exchange firm in the street.

George S. Robbins & Co., John Thompson, Marie & Kans, and a few others,

whose names I now forget, made also large bids.

Of those mentioned, however, my firm stood alone in taking up the bonds,

as the threatening aspect of political affairs came on so soon

afterwards as to depreciate Government securities. The original deposit

of five per cent. was lost by these subscribers, and the bonds were

permitted to remain in _statu quo_, as the Government never forced the

claim against the delinquents.

This, in a large measure, accounted for the impoverished condition of

the Treasury when Mr. Chase took charge of it, and for which Mr. Cobb

has been made an object, not wholly undeserving, of public reproach.

The $200,000 bonds my firm subscribed for at par were sold mostly at 95

and below, but the fact of taking them, and meeting the subscription,

without fail, gave my firm an excellent standing with the Government at

the beginning of the war, and enured greatly to my firm’s advantage

thereafter.

At the time I visited Washington my firm was more largely engaged in

dealing in mercantile paper than any other branch of Wall Street

business.

I had inaugurated the system at the time of my advent to the “Street” of

buying merchants’ acceptances and receivables out and out, the rate

being governed by the prevailing ruling rate for money, with the usual

commission added.

It was by this method that my firm soon became the largest dealers in

mercantile paper, which business had formerly been controlled by two

other firms for at least a quarter of a century, and whose old fogy

methods were by my innovations easily eclipsed.

The merchants at that time would go to these discount firms and leave

their receivables, bearing their endorsements, on sale there, and only

when sold by piecemeal could they obtain the avails thereof.

The more expeditious plan that I adopted, which was to give these

negotiators a check at sight, seemed generally to merit their

approbation, and enabled me to command the situation in that line of

business, very much to the chagrin of my competitors.

In this way my firm had accumulated about five hundred thousand dollars

in notes, which were hypothecated with various city and country banks.

After coming to the conclusion above referred to on my visit to

Washington, in regard to the certainty of a prolonged and desperate war,

I made quick steps back to New York to dispose of my paper. I went

vigorously to work, and succeeded in unloading all but ten thousand

dollars of short time notes made by Lane, Boyce & Co., and a note of

$500 of Edward Lambert & Co.

I had no sooner accomplished this very desirable work of shifting my

burden, and distributing it in a more equable manner on the shoulders of

others, but at higher rates than I paid, than in less than a week after

my return from Washington the exciting news arrived of the firing of the

first hostile gun at Fort Sumter.

The announcement of this overt act of war spread like wildfire, and the

wildest scenes of excitement and consternation were witnessed in Wall

Street and throughout the entire business community. The whole country

was panic stricken in an instant.

Stocks went down with a bound to panic prices. Fortunes were lost, and

millionaires were reduced to indigence in a few hours. Money was

unobtainable, and distrust everywhere was prevalent.

The two firms whose paper I was unable to dispose of were about the

first to fail, and before the maturity of any of the balance of the

paper which I had successfully negotiated both the drawers and endorsers

thereon, without a single exception, all collapsed.

The height which Gilroy’s kite attained would have been nowhere in point

of altitude to that which I should have reached had I not had the good

luck to have cleared my decks as I did, and in the nick of time.

My safety in this instance was due to my inspiration, to which I believe

myself more indebted than anything else for the privilege of remaining

in Wall Street up to the present date.

I am no spiritualist nor theosophist, but this gift or occasional

visitation of Providence, or whatever people may choose to call it, to

which I am subject at intervals, has enabled me to take “points” on the

market in at one ear and dispose of them through the other without

suffering any evil consequences therefrom, and to look upon these kind

friends who usually strew these valuable “tips” so lavishly around with

the deepest commiseration. My ability to do this, whatever may be its

source, whether human or divine, has saved me from being financially

shattered at least two or three times annually.

I do not indulge in any table tapping or dark seances like the elder

Vanderbilt, but this strange, peculiar and admonitory influence clings

to me in times of approaching squalls more tenaciously than at any

ordinary junctures.

I have known others who have had these mysterious forebodings, but who

recklessly disregarded them, and this has been the rock on which they

have split in speculative emergencies.

Therefore I say again, beware of “points.” They constitute the _ignis

fatuus_ which lure more unfortunate speculators to their financial doom

than all other influences put together.

[Illustration:

HON. ELBRIDGE GERRY SPAULDING,

Author of the Legal Tender Act, which authorized the issue of

greenbacks in 1862. He was a member of Congress from New York. He

resides at Buffalo, and is now in the eightieth year of his age, but

still in good physical health, with his mind clear and vigorous.

]

------------------------------------------------------------------------

CHAPTER X.

THE NATIONAL BANKS.

SECRETARY CHASE CONSIDERS THE PROBLEM OF PROVIDING A NATIONAL

CURRENCY.—HOW E. G. SPAULDING TAKES A PROMINENT PART IN THE

DISCUSSION ON THE BANK ACT.—THE ACT FOUNDED ON THE BANK ACT OF THE

STATE OF NEW YORK.—EFFECT OF THE ACT UPON THE CREDIT OF THE

COUNTRY.—A NEW SYSTEM OF BANKING REQUIRED.

The history of the Bank Act of 1863, improved by the Act of 1864, would

require much larger space than I can devote to it in this book. I can

only glance at its salient points, and show its great influence, not

only on the finances of the country, but upon the destiny of the nation

itself.

The Hon. E. G. Spaulding, who was one of the most prominent men in

dealing with the financial questions of that period, has written and

preserved a very full history of the legislation on the subject, and of

the interesting debates which preceded it.

After the temporary loans had been negotiated to release the pressure

upon the Government, Secretary Chase set his mind to consider the

problem of providing a currency without disturbing the business

organization of the country.

At this period he was met by a fresh difficulty, in the suspension of

specie payments, which had been hastened by the arrest of Mason and

Slidell, which, but for the wise policy of Mr. Seward, would have

precipitated a conflict with Great Britain.

Early in 1862 Congress authorized ten million more of demand notes. This

was followed by further issues, making in all 300 million United States

notes. Secretary Chase was at first opposed to making these notes a

legal tender for private debts, but in order to get the bill through, he

agreed to the legal tender clause, as the Government was greatly in need

of money.

The Secretary was also empowered by Congress to borrow 500 million

dollars on 5-20 year 6 per cent. bonds, and also to obtain a temporary

loan of 100 millions on condition that the interest on the bonds should

be paid in coin, and that the customs should be collected in coin for

that purpose.

The first bill to provide a national currency secured by a pledge of

United States bonds was introduced by Mr. Hooper, in July, 1862, but it

was not reported from the Committee to which it had been sent. At the

meeting of Congress in December the same year the financial problem had

become still more complicated, and owing to the magnitude which the war

had then assumed, the expenses amounted to two millions a day.

The total receipts for the fiscal year ending June 30, 1863, were 511

millions, and the expenditures were 788 millions, thus leaving a deficit

of 277 millions.

All the financial wisdom of the Secretary was necessary in this dilemma.

The question was whether to provide for these 277 millions by a fresh

issue of United States notes, or by interest-bearing loans.

The Secretary was opposed to increase the volume of the currency, saying

that the result would be the inflation of prices, increase of

expenditures, augmentation of debt, and ultimately disastrous defeat of

the very purposes sought to be attained by it.

He was in favor of an increase in the amount authorized to be borrowed

on the 5-20 bonds. He advised the creation of banking associations which

should secure their circulation by a deposit of Government bonds. One

object of this was to create a market for the bonds.

Congress was not in favor of this proposition, and the bill of Mr.

Hooper was again offered in the following January, but was adversely

reported from the Committee on Ways and Means.

Another new issue of 100 millions United States notes was ordered on

motion of Mr. Stevens, of Pennsylvania, to meet the constantly

increasing needs of the army and navy.

Mr. Lincoln signed the joint resolution ordering the new issue with some

reluctance, and sent a special message to the House, in which he

expressed his regret that it was necessary to add this last amount to

the currency while the suspended banks were free to increase their

circulation.

Soon after this Senator Sherman offered a bill to provide a national

currency, somewhat after the model of Mr. Hooper’s bill. The Sherman

bill was passed before the end of February. This virtually secured the

present national banking system.

In order to show more clearly the nature of the national bank

legislation, and the prominent part taken by Mr. Spaulding and a few

others therein, Mr. Chase having been the directing mind, it is

necessary to make a brief resume of the action of Congress with the

State banks in this connection.

In January, 1862, the banks applied to Secretary Chase to receive their

notes in payment for the bonds which he had for sale, but the Secretary,

thinking that this would inflate the bank currency, refused the offer.

Yet the process of inflation went on until it increased from 130 to 167

millions.

When Mr. Spaulding advocated the National Bank Act on the ground that it

would provide a permanently improved bank currency, the Hon. Roscoe

Conkling, at that time in the lower House, opposed the policy of making

war upon the twelve hundred banks in the free States, and made a very

affecting appeal for the orphans and widows who had stock therein. He

proposed to issue 260 millions of seven per cent. bonds, payable in

thirty-one years, to be exchanged for the bills of the suspended banks

of New York, Philadelphia and Boston, and also to issue 200 millions of

United States notes, payable in coin in a year. Mr. Conkling’s scheme

was assailed by Mr. Bingham, of Ohio, on the ground that it would

subject the national currency to the mercy of city bankers and brokers.

Other eminent representatives stood up for the maintenance and integrity

of the State banks, and notably Mr. Conkling opposed the measure

vigorously, which was intended to tax the State banks out of existence.

Mr. Spaulding, who advocated the bill, was followed by Mr. Fenton in an

able argument, showing the superiority of a currency secured by United

States bonds, and Senator Sherman explained the great evil occasioned by

the success attending the counterfeiting of the State bank notes.

These arguments seemed to be conclusive and overwhelming in the passage

of the bill.

It must not be forgotten, to the honor of the State of New York, that

the National Bank Act was founded on the Banking act of this State,

whose chief features were a currency secured on public funds, and that

directors and stockholders should be personally liable.

The authorship of this idea is attributed to Mr. Stillman, who is also

the well-known author of the “Stillman Act” to abolish imprisonment for

debt.

This bank act, which was especially engineered by the far-seeing

Secretary of the Treasury, Salmon P. Chase, had almost a miraculous

effect upon the credit of the country. It created a new and extensive

market for United States bonds, which immediately advanced from 93 to

par.

All the running expenses of the Government, accumulated with such

rapidity, were paid from the sale of the 5-20’s within the short period

of two months or thereabouts.

It was stated in the Treasury report at the end of the year that “The

Bank Act at once inspired faith in the securities of the Government,

and, more than any other cause, enabled the Secretary to provide for the

prompt payment of the soldiers and the public creditors.”

Mr. Hugh McCulloch, the Comptroller of the Currency, saw room for

certain changes in the law, some of which were effected by Congress in

the first session of 1864. These changes were embodied in the Act of

June, 1864.

There was a long debate and strenuous opposition, in which Secretary

Chase deeply sympathized, against State taxation of the national banks,

but despite the opposition the taxation clause was carried.

At length the modified act was passed, limiting the total amount of

United States notes to be issued to 400 millions, with such additional

amount, not exceeding 50 millions, as might be transiently required for

the redemption of the temporary loan, and thus the main features of the

Bank Act, which has served its purpose very well, became a law.

I hope, however, ere long, as I have more fully intimated in another

chapter, to see a superior system of banking, which I believe must

succeed the present system, which is now doomed to “innocuous desuetude”

through the imminent payment of the public debt.

[Illustration:

NEW YORK STOCK EXCHANGE.

]

------------------------------------------------------------------------

CHAPTER XI.

THE NEW YORK STOCK EXCHANGE.

HISTORY OF THE ORGANIZATION FOR NINETY-FOUR YEARS.—FROM A BUTTON-WOOD

TREE TO A PALACE COSTING MILLIONS OF DOLLARS.—ENORMOUS GROWTH AND

DEVELOPMENT OF THE BUSINESS.—HOW THE PRESENT STOCK EXCHANGE WAS

FORMED BY THE CONSOLIDATION OF OTHER FINANCIAL BODIES.—PATRIOTIC

ACTION DURING THE WAR PERIOD.—REMINISCENCES OF MEN AND EVENTS.

The New York Stock Exchange is not a building, as people generally

suppose. It is an Association of brokers united, but not incorporated by

law, for the purpose of buying and selling representatives of value

called “stocks” and “bonds.” Stocks, in the American sense of the term,

are properties consisting of shares in joint stock companies or

corporations, or in the obligations of a government for its funded debt.

In England, government obligations only, are called “stocks,” and the

obligations of companies or corporations are called “shares.”

The edifice in which the Stock Exchange meets, and which, in common

parlance, is designated by the name of the association of members,

occupies a large portion of the block bounded by Broad, Wall, and New

streets, and Exchange Place. Its main entrance is on Broad street, and

it has entrances also on Wall and New streets. It has a frontage of 65

feet on Broad and 158 on New, on which the back entrance is situated.

The members of the Stock Exchange have no need of a charter from the

Legislature. In fact, they have steadily resisted all attempts of the

Solons of this State to legislate in their interest. Their notion in

this respect is more fully commented upon in my chapter on “Corners.”

The Tweed Ring, in the height of its power, made a bold attempt to force

a charter upon the Stock Exchange, but it was indignantly rejected. The

irrepressible “Boss” and his henchmen, by the presentation of false

names, had a charter for the incorporation of the Stock Exchange passed

in 1871, the year prior to Tweed’s downfall, and it was signed by the

Governor. For these gratuitous services the sum of $100,000 was

impudently demanded; but the charter was refused, and the demand

repudiated by the association. Since 1879 until recently the membership,

which has been full, was limited to 1,100, but by a resolution lately

passed the limit is now placed at 1,200. The seats for the past year

have sold at from $25,000 to $30,000.

The Stock Exchange building is a fine, solid structure, devoid of

anything showy, pretentious or decorative. It was designed by James

Renwick, the architect of Grace Church and of St. Patrick’s Roman

Catholic Cathedral, on Fifth avenue at Fiftieth street. The cost of the

building was nearly $2,000,000. It costs nearly $200,000 a year to pay

the salaries of the various officials and keep the building in proper

repair. The apparatus for ventilating the building is one of the best.

It cost $30,000, and supplies an abundance of pure air and perfumes at

the same time. The heating and cooling arrangements are the best of

their kind, and the lighting is admirable. There are three chandeliers

containing 200 electric lamps, which throw a flood of beautiful soft

light around the whole interior. The building is well supplied with

rooms for members, lavatories, and closets. One great feature of the

interior consists of the large vaults, which contain more than a

thousand safes for the safe keeping of securities. About 400 of those

safes are let to persons who are not members. The vaults and safes are

considered the strongest in the country.

The growth of this institution appears marvelous when we go back to its

humble beginning in 1792, when the originators formed the association

under a button-wood tree in front of what is now No. 60 Wall Street.

Following is the text of the simple agreement into which the original

members entered: “We, the subscribers, brokers for the purchase and sale

of public stocks, do hereby solemnly promise and pledge ourselves to

each other that we will not buy or sell from this date, for any person

whatsoever any kind of public stocks at a less rate than one-quarter of

one per cent. commission on the specie value, and that we will give a

preference to each other in our negotiations. In testimony whereof, we

have set our hands this 17th day of May, at New York, 1792. Lem Bleekez,

Hugh Smith, Armstrong & Barnewell, Samuel Marsh, Bernard Hart, Sutton &

Hardy, Benjamin Seixas, John Heary, John A. Hardenbrook, Amurt Beebee,

Alexander Gunty, Andrew D. Barclay, Empn. Hart, Julian McIvers, G. N.

Bleecker, Peter Inspach, Benjamin Winthrop, James Ferrers, Isaac M.

Gomez, Augustine H. Lawrence, John Besley, Charles McIvers, Jr.,

Robinson & Hartshorn, David Reedy.”

This arrangement existed, and was the only one by which the members were

bound, until 1820, when daily meetings and the regular call of stocks

began. The Board met in various places, including the old Merchants’

Exchange on the corner of Wall and William streets, but did not take

root in permanent shape until the year 1842, when it became established

in the new Merchants’ Exchange, now the Custom House. An illustration of

the old Merchants’ Exchange is given on another page. The sight of it

will doubtless awake a host of endearing reminiscences in the minds of

some of the oldest merchants and speculators. It will be remembered by

the few survivors of that period that about the year 1820 the meetings

of the Board were held in the office of Samuel J. Beebee, at 47 Wall

Street. The Board also met in a room in the rear of Leonard Bleecker’s;

also in the office of the old _Courier and Journal_. Subsequently the

meetings of the Board were held in an upper room of the old Merchants’

Exchange. This building was destroyed by the great fire of 1835, and

afterwards the new Merchants’ Exchange was built. The Board moved into

this building in 1842, and remained there until 1853. Up to this time

the Board was the very closest of corporations, its membership being

governed by the most iron-clad rules. There was no field for financial

news agencies in those days, for the Board kept its proceedings a

profound mystery, and its members were bound to the strictest secresy on

pain of expulsion. That wonderful development of our later civilization,

the ubiquitous interviewer, was then unknown. The business of the Board

excited the most intense curiosity, and so impatient did outsiders

become to learn the mysteries of the interior, that the members of an

open Board which was organized about the year 1837, after failing to

force themselves into the regular association, engaged a building next

to the Board-room, and dug the bricks out of the wall in order that they

might see and hear what was going on.

The Board removed from the Merchants’ Exchange building in 1863 to a

room in the Commercial Exchange Bank building, at the corner of Beaver

and William. About the year 1857, memorable as the period of the great

panic, and my advent in Wall Street, the Board removed to “Dan Lord’s

building,” which had entrances on William and Beaver streets. It was

here, about the time of my advent, in Wall street, more fully described

in another chapter, that some of the great speculators of that era

figured. Among these were Daniel Drew, Jacob Little, and the lightning

calculator, Morse, who made and lost a fortune of millions in little

more than a year. In this building the rule of secresy was not relaxed,

and the fact is on record that a hundred dollars a day were freely

offered for the privilege of listening at the key-hole during the time

of the calls. The Board continued to hold its meetings in this building

during the war, and up to 1865, when it removed to the present edifice.

[Illustration:

BOARD ROOM OF THE NEW YORK STOCK EXCHANGE.

]

It is worthy of note here that the Stock Exchange, during the war, for

the purpose of assisting the Government, passed a resolution prohibiting

members from selling Government bonds “short;” and also a resolution

forbidding all dealings in gold. The latter resolution was the principal

cause of the formation of the Gold Exchange. This action on the part of

the Stock Exchange was taken at a pecuniary loss of many millions of

dollars, the sacrifice having been made for the highest and noblest of

patriotic purposes; yet, in the face of such an historic record as this

some people still imagine that the members of the Stock Exchange never

have been anything but a selfish set of money grabbers. Is there any

other institution in the country whose members would have made such a

personal sacrifice in the interest of the Government? I doubt if there

is. Certainly, none did.

There was a second Open Board of Brokers formed in the year 1863. It

took up its quarters first in a basement in William street, called the

“Coal Hole.” The membership began to increase rapidly, and the business

accumulated so fast that the Board was soon enabled to take more

capacious accommodations on Broad street, contiguous to the Stock

Exchange. In this menacing attitude the new Board began to make serious

inroads on the business of the old one, almost one-half of which it had

acquired by the year 1869, when the old Board called a truce. It was

seen by the judicious members of the Board that the competition was

likely to work the ruin of both, and amicable negotiations were begun

which culminated in consolidation. So the Open Board, the Stock Exchange

and the United States Government Board were consolidated in May, 1869,

making the strongest public financial association in the country, and

one of the most important in the world, and placing it upon an almost

impregnable footing. Mr. William Neilson was the first President in the

new building.

The following are the names of the Presidents of the New York Stock

Exchange from 1824 until the present time:

1824 EDW. LYDE.

1825 “

JOHN WICKER.

1828 “

1829 “

1830 RUSSELL H. NEVINS.

1831 JOHN WARD.

1832 “

1833 “

1834 R. D. WEEKS.

1835 E. PRIME.

1836 R. D. WEEKS.

1837 DAVID CLARKSON.

1838 “

1839 “

1840 “

1841 “

1842 “

1843 “

1844 “

1845 “

1846 “

1847 “

1848 “

1849 “

1850 “

1851 H. G. STEBBINS.

1852 C. R. MARVIN.

1853 “

1854 “

1855 “

1856 “

1857 J. H. GOURLIE.

1858 H. G. STEBBINS.

1859 W. H. NEILSON.

1860 “

1861 “

1862 A. B. BAYLIS.

1863 H. G. STEBBINS.

1864 WM. SEYMOUR, JR.

1865 R. L. CUTTING.

1866 WM. ALEX. SMITH.

1867 JOHN WARREN.

1868 WM. SEARLES.

1869 W. H. NEILSON.

1870 WM. SEYMOUR.

1871 W. B. CLARKE.

1872 EDW. KING.

1873 HY. G. CHAPMAN.

1874 GEO. H. BRODHEAD.

1875 GEO. W. MCLEAN.

1876 SALEM T. RUSSELL.

1877 HENRY MEIGS.

1878 BRAYTON IVES.

1879 “

1880 DONALD MACKAY.

1881 “

1882 F. N. LAWRENCE.

1883 A. S. HATCH.

1884 J. EDWARD SIMMONS.

1885 “

1886 JAMES D. SMITH.

1887 “

1888 “

1889 WM. L. BULL.

1890 “

1891 W. B. DICKERMAN.

1892 “

1893 F. K. STURGIS.

1894 “

1895 F. L. EAMES.

1896 “

1897 “

1898 “

1899 R. KEPPLER.

1900 “

1901 “

1902 “

1903 “

1904 R. H. THOMAS.

1905 H. K. POMROY.

1906 R. H. THOMAS.

1907 “

1908 “

* * * * *

JACOB ISAACS was Secretary from 1824 to 1831.

BERNARD HART was Secretary from 1831 to 1855.

GEO. H BRODHEAD was Secretary from 1855 to 1870.

B. OGDEN WHITE was Secretary from 1870 to 1883.

GEORGE W. ELY was Secretary from 1883 to 1900.

WM. MCCLURE was Secretary from 1900 to 1905.

GEORGE W. ELY was Secretary from 1905 to 1908.

* * * * *

TEN OLDEST LIVING MEMBERS TO 1907, ALL OF WHOM JOINED THE EXCHANGE PRIOR

TO JULY 1, 1864.

WILLIAM ALEXANDER SMITH.

HENRY CLEWS.

E. C. BENEDICT.

JOHN H. JACQUELIN.

H. S. CAMBLOS.

L. D. HUNTINGTON.

J. H. WHITEHOUSE.

A. S. CLARK.

EDWIN CORNING.

L. J. VAN BOSKERCK.

------------------------------------------------------------------------

CHAPTER XII.

“CORNERS” AND THEIR EFFECT ON VALUES.

THE SENATE COMMITTEE ON “CORNERS” AND “FUTURES.”—SPECULATION BENEFICIAL

TO THE COUNTRY AT LARGE.—A REGULATION OF VALUES, AND AN IMPORTANT

AGENT IN THE PREVENTION OF PANICS.-“CORNERS” IN ALL KINDS OF

BUSINESS.—HOW A. T. STEWART MADE “CORNERS.”—ALL IMPORTING FIRMS DEAL

IN “FUTURES.”—LEGISLATION AGAINST “CORNERS” WOULD STOP ENTERPRISE

AND CAUSE STAGNATION IN BUSINESS.—ONLY THE CONSPIRATORS THEMSELVES

GET HURT IN “CORNERS.”—THE BLACK FRIDAY “CORNER.”—SPECULATION IN

GRAIN BENEFICIAL TO CONSUMERS.

The New York Stock Exchange is organized after the same manner as a

social club, such as the Union League, the Union or the Manhattan, and

not under a special charter from the Legislature. Hence it is protected

from the interference of that honorable body.

Although various attempts have been made, from time to time, at Albany,

to levy taxes upon the transactions of the Exchange, and to interfere

with the business of speculation and investment in many other ways,

these legislative designs have hitherto been happily frustrated.

Shortly after the memorable “corner” in Hannibal & St. Jo., in 1881,

another attempt was made by the Legislature to force Wall Street matters

under the jurisdiction of Albany lobbyists and “scalpers.”

The newspaper articles on the subject of the “corner” had attracted the

attention of the Legislature then in session, and naturally suggested to

some of the wiseacres of that dignified and incorruptible body that the

“corner” afforded an excellent opportunity, when the public mind was

excited on the subject, to raise an outcry against the shocking

immorality of such huge speculations.

A Senate Committee on “corners” and “futures” was therefore appointed,

and various Wall Street men were summoned to appear before it, and give

their testimony on this interesting subject. I had the honor of being

one of the witnesses cited. I promptly obeyed the subpœna in preference

to taking the risk of being hauled up for contempt and sent to durance

vile. I appeared before the Committee at the Metropolitan Hotel, and not

only answered all questions put to me, without any fashionable lapses of

memory, after the manner of certain other financiers, but I regaled the

Committee with a little dissertation on the subject of investigation. I

had letters from members of the Legislature afterwards complimenting me

for having made the points very clear. So I can say, “Praise from Sir

Hubert is praise indeed,” and therefore I am encouraged to reproduce

that effort in this volume, not so much from an intense desire to go

down to posterity as a successful orator, as from a disposition to

record my approval, in more permanent form, of the soundness of the

legislative judgment on my explanation of “corners.”

When the applause had subsided, I spoke as follows:

“Gentlemen of the Committee on Corners and Futures: Speculation is a

method now adopted for adjusting differences of opinion as to future

values, whether of products or securities. This is more common now than

in former years because the facilities for procuring information have

increased with the greater intelligence and celerity with which all

business is now conducted, and also from the greater rapidity with which

such information can be transmitted by telegraph and cable.

“In former years the results of a crop were known only when it came to

the market. Now almost everything affecting its future value is known

with a fair degree of accuracy before the crop is harvested. This

advanced information naturally becomes the subject of speculative

transactions which could not have existed in former times.

“Speculation brings into play the best intelligence as to the future of

values. It has always two sides. The one that is based principally on

the facts and conditions of the situation wins in the end, and the

result of the conflict is the nearest possible approach to correct

values. The consequences of speculation are thus financially beneficial

to the country at large.

“Speculation for a fall in prices is based upon the presumption of an

over-supply. If it succeeds, the production of the particular product is

checked until prices recover, and in the meantime production is diverted

to articles less abundant. Thus speculation proves a regulator both of

values and production. Speculation for a rise in prices is based upon a

presumption of scarcity or short supply, and its direct effect is to

quicken production and restore the equilibrium of prices.

“‘Corners’ usually come from running speculation to an excessive length,

by which the seller becomes responsible for deliveries beyond what he

can possibly make. He thereby places himself at the mercy of those with

whom he has made the contracts. These exigencies chiefly affect the

speculators themselves, and the community at large but little.

“Extreme prices usually grow out of them, but they are only momentary,

and have small effect upon regular or cash transactions, which

sympathize very remotely with these temporary and artificial quotations.

“Speculation is not to be judged by its occasional excesses, but by the

general effects which the foregoing considerations show to be

beneficial. It regulates production by instantaneously advancing prices

when there is a scarcity, thereby stimulating production, and by

depressing prices when there is over-production. It thus becomes one of

the most beneficial agents in the business world for the prevention of

panics.

“Speculation, moreover, makes a market for securities that otherwise

would not exist. It enables railroads to be built through the ready sale

of their bonds, thus adding materially to the wealth of the whole

country, and opening a more profitable market to labor. In this it

becomes the forerunner of enterprise and material prosperity in

business.

“There are ‘corners’ in all kinds of business as well as in Wall Street

speculation. Mr. A. T. Stewart, the great dry goods merchant, made more

‘corners’ during the latter part of his life than half the rest of the

business community put together. He did this mainly by contracting for

the entire and exclusive production of certain classes of goods, and as

such goods could only be bought at his establishment he had a close

‘corner’ in them, and accordingly put on his own prices.

“The greater portion of all the large mercantile firms do business in

the same way. And all the importing firms deal in futures. They sell

goods by sample, agreeing to deliver them at a future stated period,

varying from thirty days to twelve months. In the meantime the goods

have to be manufactured, and in many instances purchasers have to wait

until they are grown, and imported thousands of miles.

“If it were not for the support which comes from the ‘short’ interest in

grain and the general activity created thereby in times of depression,

which come periodically in this country, it would be in the power of the

large speculative grain dealers in Europe to manipulate prices downward,

and purchase our products every year, on raids, at prices much under the

cost of production.

“When we sell to Europe we must do so at a profit, or our transactions

don’t help to enrich the country.

“Another curious thing about ‘corners’ is that the people who organize

and manipulate them generally get most hurt in the enterprise. This was

the case with the ‘corner’ referred to in Hannibal and St. Joseph. Mr.

John Duff, of Boston, was the man in whose prolific brain that ‘corner’

originated, and the result to him was financial ruin. The stock ran up

to 350, though the short account amounted to only about 1,200 shares,

and the ‘shorts’ had to settle at 280.

“The result was similar in the ‘corner’ in Northwest in 1872,

manipulated by Jay Gould. The stock was started at 80 and it ran up to

280. It then reacted to the former figure. I believe Jay Gould was alone

in that deal, and it came pretty near crushing him, in spite of his

incomparable capacity for wriggling out of a tight place.

“Patents are ‘corners’ protected by law. The inventor has a monopoly for

seventeen years in his invention against all the world, and this gives

him a right to make and sell the article covered by his patent, often at

a profit of several hundred per cent. on the original cost, and on the

price it would bring if placed in competition in the open market, like

railroad stocks and grain.

“If it is the intention of the Legislature of this State to stop

enterprise in business, then your Committee is undertaking to accomplish

that work in the right way, but I think your success would be a public

calamity.”

I doubt the expediency of either undertaking to regulate enterprise by

law or to choke off competition by the law-making power. The result

would be woeful stagnation in business. It would crush the motives for

commercial activity and depress the creative energies of prosperity.

The law of supply and demand is the best regulator.

Congress attempted to suppress speculation in gold during the war, and

as soon as the act was passed prohibiting such dealings, the premium on

gold advanced 100 per cent. This so much terrified the wise statesmen

who concocted this sweeping measure of financial reform, that they

immediately displayed much more wisdom in hastening to have the bill

repealed.

The simple reason that such laws will not work in practice is that where

there is a will there is generally a way to evade them. This is the case

with the very best of such laws that can possibly be framed. Take the

usury laws for example. The methods of getting around these are

numerous, and there is practically no limit to the rate of interest that

can be exacted except the conscience of the lender, which is frequently

very elastic. Daniel O’Connell said he could drive a coach and six

through any act of Parliament. Jake Sharp was also of opinion that he

could run a double-track horse-car railroad through the best act that

could be framed by any Albany Legislature. Jake was checked in his

career at considerable trouble and expense, but his case illustrated

that the rule referred to holds good generally in legislation.

The fact, however, that it seldom happens that anybody gets badly hurt

in “corners,” except the conspirators themselves, is sufficient

protection for the general public, and should set the minds of

legislators at rest, if they mean to do legitimate business in their

law-making capacity.

The conspirators in “corners” are usually left high and dry without any

market for their fictitious values, and the “corner” very frequently has

the effect of putting the property out of the speculative market for a

long time. The fate of Han. & St. Jo. is a warning to those who

manipulate “corners.” The stock was seldom quoted for months afterwards.

Take the case of Black Friday for example. It was most disastrous to the

parties intimately connected with it. It came near proving Gould’s ruin,

and he has not got over the moral effect of it yet. The probability is

it will be an heirloom in his family, a skeleton in the Gould closet for

generations to come. Gould and Black Friday have become synonymous in

the minds of many people, and the further from Wall Street the more the

distinction becomes confounded.

In making these remarks I have no intention of throwing any reflection

upon Mr. George Gould, who seems to be a very promising young man for a

rich man’s son. His careful education has, no doubt, done much to

counteract the drawbacks incident to the sons of wealthy men to which I

have referred more fully in another part of this book. His maternal

training, I understand, has been of the most exemplary kind. This will

go far to offset the disadvantages to a business career, which the

accident of his birth in luxurious surroundings, according to my theory,

otherwise entails. If his brain is composed of the genuine plastic

material out of which the craniums of successful financiers are made, he

may learn to forget that he has been nursed in the lap of luxury, and

look back with due respect to the hole whence his father was digged and

the rock whence he was hewn. He may have brains enough, possibly, to

reflect with more pride on that ingenious mousetrap that first brought

his father into prominence, than the gew-gaws of the gilded palace in

Fifth avenue, the luxuries of the handsome parlors and rich

conservatories at Irvington, and the gorgeous trappings of his father’s

yacht and palace cars. I have, therefore, great hopes that George will

be a conspicuous exception to the rule I have propounded elsewhere

regarding rich men’s sons.

When a large mercantile firm buys up goods in any line so that nobody

else has the same goods, it then has a “corner” in these goods.

“Corners” in goods differ from “corners” in Wall Street in regard to

their influence on the organizers. They don’t act like a boomerang as

the Wall Street “corners” mostly do. The “corner” is sometimes sustained

during the life of the manipulator, as in the case of Mr. Stewart.

The successors of the great operators sometimes maintain it, but in this

instance Judge Hilton made a signal failure, though in some respects he

is a far abler man than Stewart was. Yet, he had not the genius, for

working “corners,” of his eminent predecessor. He is, probably, so well

learned in the law that he has too much inclination to go around the

“corners.”

One thing is certain, very few of these merchants can become wealthy

except through the medium of “corners.” It is by these peculiar methods

that nearly all large fortunes are amassed in their line, and in a

perfectly legitimate manner, too, whatever casuists and hair-splitting

moralists may say or think about the matter. The tendency to make

“corners” seems to be interwoven in our business methods, and to play an

important part in the struggle for existence. So I don’t see what we are

going to do about it without a radical change in that compendium of the

best political wisdom that the world has ever seen. I refer to the

Constitution of the United States. All the acumen and sophistry which

the most astute Philadelphia lawyer could bring to bear upon it has

hitherto failed to show that there is anything in this wonderful

document opposed to the liberty of making “corners.”

As Mr. Gladstone has truly said: “This document is the most wonderful

work ever struck off at a given time by the brain and purpose of man.”

I hold there is nothing in the Constitution opposed to the freedom of

making “corners,” and that all the evils resulting from these

speculative inventions can be met and counteracted by business methods,

and the laws regulating the ordinary concerns of life without resorting

to any rigid or special methods.

To dispose of “corners” or abolish them on the large scale to which I

have alluded would presume an entire revolution in our social system,

and to attack them piecemeal, as the Legislature frequently does,

involves a very suspicious kind of discrimination, and is at variance

with the spirit of the Constitution. In fact it often amounts to a kind

of thinly-disguised blackmail.

The truth is, that it is almost impossible to legislate against

“corners” without aiming a fatal blow at speculation itself, which, as I

have shown, is a vital principle in the regulation of values, the

stability of business, and the prevention of panics.

I believe the men of most experience, not only in Wall Street, but in

other departments of finance and commerce, will bear me out in the

statement that a market where even values are considerably inflated by

speculation, is more desirable than a period of depression. The result,

in the long run, is the greatest good to the greatest number. I don’t

believe that the ghost of Jeremy Bentham himself could rise up and

consistently condemn this statement.

I believe that speculation in grain and provisions is materially

beneficial to consumers, and that the latter are better off, one year

with another, and less liable to be menaced with periodical famines,

than if there were no speculation in these necessities of life.

Before leaving this prolific theme of “corners” I wish to say a few

words about my own experience in that line. The only “corner” in which I

have ever been materially hurt during my long business experience was

one manipulated by the State of Georgia.

This Sovereign State issued and granted altogether about eight millions

of bonds, all bearing the great seal, properly signed and legally issued

for full value. I advanced over two million dollars in good money on a

part of these bonds. Shortly after this transaction, the State of

Georgia ascertained through a garbled report of a committee sent to this

city by the Georgia Legislature, that all these bonds were held outside

of her own borders. The Legislature then passed an act of repudiation,

thereby reducing the value of the bonds from par to that of waste paper.

When I discovered that my little pile of two million dollars in what I

considered good securities would no longer exchange for greenbacks, I

had a very disagreeable sensation of having been “cornered” by the high

toned and chivalrous representatives of the State of Georgia, which,

through its lawmakers, claimed the sovereign right to do wrong to the

citizens of a sister State.

In the Harlem “corner,” which is referred to in another place, contracts

to deliver at 110 were settled at 179.

About three million dollars were taken out of the pockets of the bears.

Several prominent houses went down in the struggle. The result of the

“corner” was that the bulls were saddled with the entire capital stock

of the property.

One broker, who had sold calls at 150 and was requested to fulfil his

contracts when the stock had advanced to 250, was very much in the same

position as Glendower’s spirits, which were called from the vasty deep

but would not come. “I don’t see anything here,” he said, “about

delivering. You can call, but I don’t mind it.”

There were two “corners” in Harlem. The Common Council was cornered in

one and the Legislature in the other.

In the Rock Island “corner” the bulls bought 20,000 shares more than

existed, and the price rose from 110 to 150.

London financiers have a fearful horror of “corners.” Hence the London

Stock Exchange is very chary about listing our railroads, especially

those with a moderate number of shares.

“Corners” are seldom profitable, and the parties connected with them can

hardly escape getting badly hurt unless they are prepared to own and

carry the entire property. Even in that event, it is usually put out of

the speculative market for a considerable time.

The Hudson “corner” was one of the most successful. It paid a profit of

12 per cent. There was a profit of 4½ on the Rock Island “corner.”

The first “corner” of which there is any record in Wall Street was in

Morris Canal, an old “fancy” now almost forgotten except for its

“corner.” It had been forced upward as fancies frequently are, until it

was far above its intrinsic value, and several operators began to sell

“short.”

After this operation had gone on for some time a pool was formed to

protect it, and the pool bought it all up and locked it up in a trunk.

The operation was new to the Street and the bears were astounded, but

when called upon to settle they became furious, and accused the

manipulators of the “corner” of entering into a conspiracy. The “bulls”

asked the “bears” why they had sold what they did not possess and could

not procure.

The dispute was referred to the arbitration of the Board of Brokers, and

that eminent body, then unsophisticated in the arts of speculation, took

what seemed to them an equitable view of the case, and decided it in

favor of the “shorts,” who, on the ground of conspiracy on the part of

the clique, were relieved from fulfilling their obligations.