u.s. grant’s humiliation — 8/04/17

Today’s selection — from American Ulysses: A Life of Ulysses S. Grant by Ronald C. White.
U.S. presidents did not receive pensions until well into the 20th century. Prior to that time, a president was expected to return to work to earn his living after serving. For U.S. Grant, who was never well situated financially, this was a challenge. For this reason, late in his life, he joined a small Wall Street firm that had been started by his son Buck and Buck’s friend Ferdinand Ward, who was reputed to be a financial wizard. Soon he learned to his horror that his firm was nothing more than a Ponzi scheme, and he was soon destitute:
“Today, we might call [Ferdinand] Ward’s maneuvering a Ponzi scheme, made infa­mous by Bernie Madoff in 2008. In Grant’s day, it was called ‘rehypoth­ecating.’ It worked like this: Ward paid abnormally high interest to his customers by pledging securities as collateral on a loan, whereas the same securities had previously been pledged for other loans. As a result, Ward was able to pay his investors their interest by siphoning off money from new investments. None of his customers knew, including the two Grants. [By late 1883, Grant] estimated his wealth at $1.5 million, mostly thanks to Ward’s investments.  …
Wall Street Panic of 1884
“Sometime in early 1884, Horace Porter, Grant’s former aide and now president of the Pullman Palace Car Company, felt compelled to warn the general that the profits he had heard about could not be legitimate. It just so happened that when he arrived at Grant’s house, Ward was pres­ent. And after listening to the enthusiastic Ward and watching the gen­eral’s appreciative response, he withdrew, deciding not to interfere.
“On Sunday afternoon, May 4, 1884, Ferdinand Ward rang the door­bell at 3 East Sixty-sixth Street. Ward’s visits to Grant’s home were always welcome, but usually he did not come uninvited. A maid escorted him into the parlor, where he was greeted by Grant and Buck. He told the two men the Marine Bank was in grave difficulty because the city chamberlain had decided to withdraw some of the city’s funds.
“Grant expressed surprise and asked how this matter concerned him. Ward replied that since Grant and Ward had $660,000 deposited there, this could put the firm’s financial position in jeopardy.
“Buck interjected, But isn’t the bank good for the funds?
“Certainly. Nothing to be worried about in the long term. But the firm would need money to cover the potential shortfall. Ward said he already had checks for $230,000 but wondered if the general could borrow an­other $150,000 that day. Ward assured Grant the money would be needed for only twenty-four hours.
“Grant agreed to try to borrow the money. With Ward and Buck in tow, he traveled in his carriage down Fifth Avenue, stopping at the tur­reted fifty-eight-room home of William H. Vanderbilt. Once inside, em­barrassed by his unannounced call, Grant explained the reason for his visit. Vanderbilt, eldest son and heir of Commodore Cornelius Vander­bilt, made it a habit not to make personal loans. Known to be a cantanker­ous man, he told Grant, ‘I care nothing about Marine Bank. To tell the truth I care very little about Grant & Ward. But to accommodate you personally I will draw my check for the amount you ask. I consider it a personal loan to you and not to any other party.’
“Grant accepted the check for $150,000.
“He rejoined the younger men in the carriage and returned to Sixty­-sixth Street, where he endorsed the check and handed it to Ward. [The] young Napoleon assured the old general the whole matter would be all right.
“On Tuesday, May 6, the Marine Bank opened its doors promptly at ten A.M. The bank’s directors arrived and assembled for their weekly meeting. But … where was Ward? Someone contacted his office, but no one had seen him.
“The directors’ meeting ended at eleven A.M. A few minutes later, all doors to the bank were locked even as depositors began to congregate outside. …
“In midday, Grant arrived at his office at 2 Wall Street. Crowds milled in the street, but newspaper reporter Alexander Noyes wrote, ‘The gen­eral looked neither to right or left.’ As Noyes watched, ‘Nobody fol­lowed him, or spoke to him, but everyone in the cynical “hard-boiled” group took off his hat.’ The young reporter declared, ‘It was not so much a tribute of respect to a former Chief Magistrate as spontaneous recognition of the immense personal tragedy which was enacting before our eyes.’
“Behind closed doors, Grant asked Buck what had happened.
” ‘Grant and Ward has failed, and Ward has fled. You’d better go home, Father.’
“Not saying a word, Grant steadied himself on his crutches, which he still used five months after his [recent] fall, walked silently past the gathering crowd, and made his way home.
“Deeply humiliated, he told Julia all that had happened. Then he opened his wallet and removed its contents: $81. She had $130. All his dreams for retirement had vanished….
“Grant determined he would repay every debt, starting with what he owed William Vanderbilt. He prepared an accounting of all he owned: his farm in Missouri, homes in Galena, Philadelphia, and Washington, plus land in Chicago. He gathered his swords, campaign maps, the gold medal awarded by Congress, the pen used to write orders for the Battle of the Wilderness, and rare souvenirs acquired on his world tour. Julia con­tributed jewelry and vases, including her prize vase filled with gold coins given them in many countries. Grant held back nothing. In the end, he believed the total amounted to almost exactly $150,000.
“He sent everything off to Vanderbilt. Upon returning from a Euro­pean vacation to find Grant’s shipment, the financial titan was perplexed. He notified Grant he would return everything. Grant would not hear of it.
“In the end, Vanderbilt accepted the repayment and wrote Julia, ‘All articles of historical value and interest shall at the General’s death, or if you desire it sooner, be presented to the government at Washington where they will remain as perpetual memorials of his fame, and of the history of his time.’ Vanderbilt acted both to preserve Grant’s pride and to preserve his story for future American generations.
“Even though Vanderbilt took title to the house at 3 East Sixty-sixth Street, he insisted Grant and Julia continue to live there.
“The public did not blame Grant. Most Americans believed him an un­informed bystander to Ward’s gigantic swindle. Known and unknown persons stepped forward to help.
“Charles Wood, who owned a brush factory in Lansingburgh, New York, wrote the general, ‘I enclose check for five hundred dollars on ac­count my share due for services ending about April 1865.’ He did so be­cause ‘I owe you this for Appomattox.’ Reading of ‘the Grant Failure’ in the Troy Daily Press, Wood simply wanted to help.
“Grant immediately wrote Wood to acknowledge this gift from a stranger. Within days, two more checks from Wood totaling $1,000 ar­rived. ‘The country will rally for you but large bodies move slowly,’ he encouraged. …
“On the afternoon of May 27, the doorbell at 3 East Sixty-sixth Street rang. Once again, Ferdinand Ward stood at the entrance. Having been arrested on May 21, and destined to spend the next eight years in jail, he was free on bail. He wished to see Grant for only a few minutes. The general sent his answer: he had no more to say.”
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American Ulysses: A Life of Ulysses S. Grant

Publisher: Random House
Copyright 2016 by Ronald C. White
Pages 629-633

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benevolence only makes things worse — 10/27/15

Today’s selection — from Commodore: The Life of Cornelius Vanderbilt by Edward J. Renehan Jr.  The miraculous gains of the Industrial Revolution in the early 1800s brought untold new wealth to western societies, but simultaneously brought a new type of poverty and disruption among workers — equally unprecedented in its scale.

“The first few decades of the nineteenth century were a largely cynical and callous time in American history — a period of institutionalized harshness. It was in 1817 that a group of prominent New York merchants and professionals (many once having been the principal supports of such institutions as the New York Hospital and other worthy causes) officially and publicly began to rethink their charitable habits. Such previously generous philanthropists as DeWitt Clinton (now governor of the state), Thomas Eddy, and John Griscom took their cue in this from British reformers. In so doing, they succumbed to the rhetoric of several hard-nosed British social thinkers, most notably Thomas Robert Malthus, Jeremy Bentham, and the Scottish conservative Patrick Colquhoun.

“Twenty years earlier, all three of those gentleman had been instrumental in the founding of the London Society for Bettering the Condition and Increasing the Comforts of the Poor. Despite the burden of its long-winded name, the London Society did not distribute charity but specialized in cutting off funds for social welfare. Malthus, Bentham, and Colquhoun believed that a distinct line must be drawn between the ‘deserving poor’ (those facing hard times as a result of unfortunate histories) and ‘undeserving paupers,’ namely, the drunk, the lazy, and the whorish members of society for whom aid was considered a reprehensible act of facilitation. Another key underpinning the London Society’s logic was the presumption (for lack of a more accurate term) that paupers outnumbered the deserving poor by a factor of about nine to one. In reform meetings and from church pulpits, politicians and clerics repeatedly cited this astonishing though unverifiable statistic, which soon became accepted as fact. In time, the public mind became convinced that a mere 10 percent of London’s poor were the crippled and the orphaned, while 90 percent were degenerates. For every one person in London’s slums who genuinely needed aid, popular wisdom said there were nine who required something else entirely: intolerance, punishment, and correction. As a corollary to this line of thinking, logic dictated that 90 percent of the charitable aid previously offered was superfluous. In turn, wallets closed.

A group of children at Crumpsall Workhouse_ 1895_97

“For decades the London Society remained influential in the development and spread of such institutions as workhouses and debtors prisons. It was also influential, through its example, in New York and other American cities. By the end of 1817, Clinton, Eddy, and Griscom, joined by hundreds of other New Yorkers, had formed a clone organization on the banks of the Hudson: the Society for the Prevention of Pauperism (SPP).

“Several months before the founding of the SPP, New York’s Humane Society forlornly announced the startling result of recent research: no less than 15,000 men, women, and children — the equivalent of one-seventh of the city’s population — had been ‘supported by public or private bounty and munificence’ the previous winter. Historians Edwin Burrows and Mike Wallace have eloquently described the SPP’s point of view, expressed in response to the above data. In the London Society’s grand tradition, the SPP said it believed that ‘willy-nilly benevolence’ only made things worse. ‘Giving alms to the undeserving poor not only undermined their independence but also drove up taxes and sapped the prosperity of the entire community.’ Thus, ‘for their good as well as everyone else’s … the SPP recommended that all paupers in the city be cut off from all public assistance forthwith.’ Soon the Humane Society itself announced its intention to disband in the wake of its realization that the very act of giving charity had ‘a direct tendency to beget, among [the citizenry] habits of imprudence, indolence, dissipation and consequent pauperism.’

” ‘Tough love’ was in. Cruelty equaled kindness. Frugality equaled generosity. And all three were not only cheap, but easy.”

Author: Edward J. Renehan Jr.
Publisher: Basic Books
Copyright 2007 by Edward J. Renehan Jr.
Pages 48-49
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Delanceyplace.com is a brief daily email with an excerpt or quote we view as interesting or noteworthy, offered with commentary to provide context. There is no theme, except that most excerpts will come from a non-fiction work, mainly works of history, are occasionally controversial, and we hope will have a more universal relevance than simply the subject of the book from which they came.