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07/25/2008

Albert Wiggin

6 ½ years ago I did a piece on one of the banking industry’s true
scumbags, Albert Wiggin, as back then corporate fraud
investigations, such as the one enveloping Enron, dominated the
headlines. Today it’s all about the banking sector and, in some
instances, traders and speculators perhaps crossing the line in
terms of spreading rumors in an attempt to sink various
institutions such as Bear Stearns. Thus it’s a good time to revisit
Wiggin’s story.

Albert Henry Wiggin was born in 1868 in Medfield,
Massachusetts. The son of a Unitarian minister, Albert was a
bank clerk at the age of 17. By 1904 he had become a vice
president (the youngest ever) at Chase National Bank in New
York, after which he rocketed up the ladder, becoming chairman
of Chase in 1917. Wiggin then embarked on an acquisition
spree that saw Chase swallow up six New York institutions by
1929, thus making the bank the 2nd-largest in the world next to
National City.

Wiggin expanded Chase’s traditional businesses, opening up
branches all over New York City, as well as overseas. He also
took advantage of his connections, serving on 59 corporate
boards, which helped him gain support far and wide for his own
ventures. Of course it was I'll scratch your back, you scratch
mine.

But unbeknownst to but a precious few executives at Chase, by
the time the fall of 1929 rolled around, Wiggin had established
six private corporations, 3 in America and 3 in Canada. Through
this setup, which wasn't discovered until a 1933 Senate
investigation looking into the causes of the Crash, Wiggin
organized investment pools that bet on shares of Chase Securities
and Chase National Bank, profiting handsomely during the bull
run during the first half of 1929. Wiggin cut some of his fellow
executives in on the action (sound familiar?) and all parties
borrowed from the bank to pay for their holdings. Wiggin and
his family even took out loans of $8 million from Chase, even
though their own net worth clearly didn't require it.

Back then, the quiet, reserved Wiggin was known as “the most
popular man on Wall Street.” [Charles Kindleberger] Little did
folks know though that as the market topped on September 3,
1929, with the Dow Jones peaking at 381, Albert Wiggin was
preparing his next big move. Beginning on September 23, with
the Dow still at 359, he began to short stock in his own bank,
both the shares of Chase Securities and Chase National. Here
was a man, being paid a handsome salary of $275,000 a year to
not only enhance the prospects of his companies, but also to
protect the common shareholders, and he was betting that the
very same stock would go down.

Of course it proved to be a smart bet as the market reached a
temporary bottom of 230 on October 29. By the time he
wrapped up his most aggressive short-selling on December 11,
he had profits in excess of $4 million.

As if that wasn’t bad enough, Wiggin had been part of a banking
group that had gotten together on Black Thursday, October 24,
in an attempt to save a market that appeared to be in freefall. All
the players agreed to fund a pool with the intent of stabilizing the
market (it worked for a few days), but here was Wiggin selling
short his own company.

And just like some of the names in the news today, Wiggin used
his ‘offshore’ (Canada) shell companies to hide his profits and
thus avoid paying taxes. [Again this wasn’t discovered until he
was required to testify in 1933.]

Market historian Charles Geisst says of Wiggin’s activities,
“(They) gave banking and the stock market a bad name for at
least 2 generations after the Crash.” Author Charles Morris adds,
in commenting on the Wiggins’ of the world, “(Even if) they had
done nothing actually criminal, (they) had treated their own
stockholders and the investing public as so many sheep to be
fleeced by whatever means the ingenuity of accountants and
lawyers could devise.”

When the Pecora Commission (named after Senate counsel
Ferdinand Pecora) finally got to the truth, Wiggin still didn’t
admit any wrongdoing. “I think it is highly desirable that the
officers of the bank should be interested in the stock of the
bank.” [Maury Klein]

Wiggin retired from Chase in 1932, at which point he was
awarded with a $100,000 pension by the board, only to have to
renounce it when the new chairman questioned the validity.
Wiggin was also sued by a group of Chase shareholders, a suit he
ended up settling for $2 million. He died in relative obscurity in
1951. Today we can call him just another dirtball.

[As for Chase National Bank, it merged in the early 1950s with
Bank of Manhattan to create Chase Manhattan Bank.]

Sources:

“Money, Greed, and Risk,” Charles R. Morris
“Wall Street: A History,” Charles Geisst
“Rainbow's End,” Maury Klein
“The Great Bull Market,” Robert Sobel
“The Great Game,” John Steele Gordon
“Manias, Panics, and Crashes,” Charles P. Kindleberger
“Eyewitness to Wall Street,” David Colbert

Wall Street History returns next week.

Brian Trumbore



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Wall Street History

07/25/2008

Albert Wiggin

6 ½ years ago I did a piece on one of the banking industry’s true
scumbags, Albert Wiggin, as back then corporate fraud
investigations, such as the one enveloping Enron, dominated the
headlines. Today it’s all about the banking sector and, in some
instances, traders and speculators perhaps crossing the line in
terms of spreading rumors in an attempt to sink various
institutions such as Bear Stearns. Thus it’s a good time to revisit
Wiggin’s story.

Albert Henry Wiggin was born in 1868 in Medfield,
Massachusetts. The son of a Unitarian minister, Albert was a
bank clerk at the age of 17. By 1904 he had become a vice
president (the youngest ever) at Chase National Bank in New
York, after which he rocketed up the ladder, becoming chairman
of Chase in 1917. Wiggin then embarked on an acquisition
spree that saw Chase swallow up six New York institutions by
1929, thus making the bank the 2nd-largest in the world next to
National City.

Wiggin expanded Chase’s traditional businesses, opening up
branches all over New York City, as well as overseas. He also
took advantage of his connections, serving on 59 corporate
boards, which helped him gain support far and wide for his own
ventures. Of course it was I'll scratch your back, you scratch
mine.

But unbeknownst to but a precious few executives at Chase, by
the time the fall of 1929 rolled around, Wiggin had established
six private corporations, 3 in America and 3 in Canada. Through
this setup, which wasn't discovered until a 1933 Senate
investigation looking into the causes of the Crash, Wiggin
organized investment pools that bet on shares of Chase Securities
and Chase National Bank, profiting handsomely during the bull
run during the first half of 1929. Wiggin cut some of his fellow
executives in on the action (sound familiar?) and all parties
borrowed from the bank to pay for their holdings. Wiggin and
his family even took out loans of $8 million from Chase, even
though their own net worth clearly didn't require it.

Back then, the quiet, reserved Wiggin was known as “the most
popular man on Wall Street.” [Charles Kindleberger] Little did
folks know though that as the market topped on September 3,
1929, with the Dow Jones peaking at 381, Albert Wiggin was
preparing his next big move. Beginning on September 23, with
the Dow still at 359, he began to short stock in his own bank,
both the shares of Chase Securities and Chase National. Here
was a man, being paid a handsome salary of $275,000 a year to
not only enhance the prospects of his companies, but also to
protect the common shareholders, and he was betting that the
very same stock would go down.

Of course it proved to be a smart bet as the market reached a
temporary bottom of 230 on October 29. By the time he
wrapped up his most aggressive short-selling on December 11,
he had profits in excess of $4 million.

As if that wasn’t bad enough, Wiggin had been part of a banking
group that had gotten together on Black Thursday, October 24,
in an attempt to save a market that appeared to be in freefall. All
the players agreed to fund a pool with the intent of stabilizing the
market (it worked for a few days), but here was Wiggin selling
short his own company.

And just like some of the names in the news today, Wiggin used
his ‘offshore’ (Canada) shell companies to hide his profits and
thus avoid paying taxes. [Again this wasn’t discovered until he
was required to testify in 1933.]

Market historian Charles Geisst says of Wiggin’s activities,
“(They) gave banking and the stock market a bad name for at
least 2 generations after the Crash.” Author Charles Morris adds,
in commenting on the Wiggins’ of the world, “(Even if) they had
done nothing actually criminal, (they) had treated their own
stockholders and the investing public as so many sheep to be
fleeced by whatever means the ingenuity of accountants and
lawyers could devise.”

When the Pecora Commission (named after Senate counsel
Ferdinand Pecora) finally got to the truth, Wiggin still didn’t
admit any wrongdoing. “I think it is highly desirable that the
officers of the bank should be interested in the stock of the
bank.” [Maury Klein]

Wiggin retired from Chase in 1932, at which point he was
awarded with a $100,000 pension by the board, only to have to
renounce it when the new chairman questioned the validity.
Wiggin was also sued by a group of Chase shareholders, a suit he
ended up settling for $2 million. He died in relative obscurity in
1951. Today we can call him just another dirtball.

[As for Chase National Bank, it merged in the early 1950s with
Bank of Manhattan to create Chase Manhattan Bank.]

Sources:

“Money, Greed, and Risk,” Charles R. Morris
“Wall Street: A History,” Charles Geisst
“Rainbow's End,” Maury Klein
“The Great Bull Market,” Robert Sobel
“The Great Game,” John Steele Gordon
“Manias, Panics, and Crashes,” Charles P. Kindleberger
“Eyewitness to Wall Street,” David Colbert

Wall Street History returns next week.

Brian Trumbore