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Wall Street History
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10/05/2001
Ulysses S. Grant, Part III
In wrapping up our story on Ulysses S. Grant, I first wanted to
pass on an account from historian John Simon ["The Presidents"]
concerning Grant''s inability during his presidential
administration to make suitable appointments, from the collector
of port taxes in New Orleans to Supreme Court Justice. When
Chief Justice Salmon P. Chase died in 1873, Simon writes:
"Grant first asked (Senator Roscoe) Conkling to serve as chief
justice, influenced both by gratitude for his political support and
Julia Grant''s belief that black robes would set off Conkling''s
blond curls. When Conkling declined, Grant went to the
opposite extreme by approaching (Secretary of State Hamilton)
Fish, who also declined. Grant finally nominated Attorney
General George H. Williams, whose name was withdrawn after
discovery that he had used government funds to supply his wife''s
carriage. Grant next nominated Caleb Cushing of Massachusetts,
whose name was then withdrawn because Cushing had written a
letter to Jefferson Davis in March 1861, recommending someone
for a position in the Confederate government. Grant eventually
came up with Morrison R. Waite of Ohio, who served ably."
Well, after Grant left office he traveled around the world
extensively, both as tourist and former head of state, but when he
returned to the U.S., the former president, hereinafter referred
to as "General," was basically broke. Friends such as J.P.
Morgan contributed funds to Grant''s well-being (all in the name
of past services rendered), which enabled the general and Julia to
live in comfort in Manhattan.
Meanwhile, one of Grant''s two boys, Ulysses Jr., or Buck, set up
a brokerage firm with a Wall Street speculator, Ferdinand Ward.
General Grant then decided to contribute all of his net worth,
$200,000, to the new venture, Grant & Ward, where Ulysses Sr.
would be a limited, and silent, partner. Ward, in particular, was
anxious to cash in on the general''s fame and access to the White
House. Soon folks from all over were opening up accounts with
the new firm.
Ferdinand Ward then hooked in James Fish, president of Marine
National Bank, and he began to spread rumors that Grant &
Ward was receiving all manner of government contracts on
companies which the firm controlled. Fish fell for it and had no
trouble lending as much money as Ward requested. After
all, General Grant was involved (even if in name only) and
surely his prior service was influential in gaining the government
work. But the fact was that neither Grant, junior or senior, were
soliciting Washington for any business. The Grants may have
been fools, but they were also honest.
But the fortunes of Grant and Ward soared. Ward used the Grant
name to woo the general''s friends and admirers and the money
flowed in. Ward would then promise them higher dividends than
they could find at other institutions, which in the early days he
delivered. But the money Ward was paying out (and he had
ultimate control over all of the securities'' firm''s assets) was
coming from the capital of new investors. In other words, it was
a giant Ponzi scheme.
General Grant would spend a great deal of his time at the offices
of Grant and Ward, greeting customers who were thrilled to be in
the company of a genuine war hero and former president. But by
May 1884, Ferdinand Ward''s scheme fell apart and word began
to leak out that not only was Grant and Ward in deep trouble, but
Marine National Bank was hurting as well. When the Grants
approached him, Ward lied and said that it was Marine''s
problems which could bring Grant and Ward down. Ferdinand
then implored the general to seek the aid of his friend William
Vanderbilt (son of the late Cornelius Vanderbilt who had become
quite the financier himself after his father died in 1877).
Ward told Grant that he needed $150,000 and the general was
startled when Vanderbilt (who could afford many times that
amount) said, "What I''ve heard about (Grant and Ward) would
not justify me in lending it a dime."
General Grant''s reputation was such, however, that Vanderbilt
wrote a check for $150,000 to Ulysses directly, which Grant then
turned over to Ward who cashed it the next day. Two days later,
May 6, both Marine National and Grant and Ward went under,
with Ferdinand Ward nowhere to be found.
Amazingly, there wasn''t a huge panic on Wall Street, even after
the following week when the 26-year-old president of Second
National Bank, John Eno, fled to Canada with $4 million of the
bank''s money. Wall Street sold shares, but the New York Clearing
House came to the rescue. The Clearing House, which processed
the banks'' trades, still had fresh memories of the Panics of 1857
and 1873, and in this case it acted as "lender of last resort" in
issuing $25 million in loan certificates which helped to keep the
financial institutions afloat. Because of the coordinated action
the national economy was largely unaffected.
[Note: The term "lender of last resort" was coined by British
journalist Walter Bagehot.]
It was soon discovered that Grant and Ward had $67,000 in
assets and liabilities of $16 million. Ward was apprehended as
he was trying to flee the country and sentenced to ten years in jail
for grand larceny. General Grant was wiped out. By June he had
about $200 to his name. Sympathizers began sending him
checks for his past heroic service to his country. It was so bad
that the general had to pass his medals and sword on to
Vanderbilt, who then donated them to the government.
But as many have since pointed out, Grant''s misfortune was our
gain, because it finally forced him to write down his thoughts on
the conduct of the Civil War, something people had been
begging him to do for years.
One of Grant''s good friends was Mark Twain and Twain
arranged for Grant to receive the staggering sum (for those
times) of $25,000 for his memoirs. Shortly thereafter Grant
learned he had inoperable throat cancer. Writing his book thus
became a race against time, if he was to keep Julia and his family
from the poorhouse. Despite being in incredible pain (eventually
he was unable to speak because the cancer had spread to his
tongue), Grant completed the manuscript on July 16, 1885. He
wrote his doctor, "I am ready to go at any time. I know there is
nothing but suffering for me while I do live." Ulysses S. Grant
died on July 23rd.
Upon hearing of Grant''s death, Mark Twain scribbled in his
notebook, "He was a very great man - & superlatively good."
The book proved to be a resounding success, selling 300,000
copies and earning $450,000 for the family. If you haven''t read
the memoirs yourself, do; it''s one of the great reads of all time
and is generally considered to be the top book on military history
of the past two hundred years.
Grant''s funeral was as grand as Lincoln''s and he was buried
on Riverside Drive in New York City. Four words are inscribed
on the tomb, "Let us have peace."
While Ulysses S. Grant was a superb general, he was, alas, also a
miserable president. But concerning the latter, as he himself said
in his final message to Congress, "Failures have been errors of
judgment, not of intent."
Sources: [For Part III, I relied solely on the following]
"American Heritage: The Presidents," Michael Beschloss
"The Great Game," John Steele Gordon*
"The Presidents," edited by Henry Graff
"Morgan: American Financier," Jean Strouse
*I have to add that there were some discrepancies in parts of this
story between the above accounts. I''m going with Gordon where I
had any questions.
Brian Trumbore
*Wall Street History will return October 19.
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