A Disposition to Be Rich: Ferdinand Ward, the Greatest Swindler of the Gilded Age

by Geoffrey C. Ward

  She seems to have grown into the kind of woman Jane Shaw Ward had often wished she herself had been: calm, reassuring, fond of reading her children to sleep in a low, beautifully modulated voice they never forgot. She saw to it that they and all the servants gathered together before breakfast to say their prayers and taught them their ABCs before sending them off to one or the other of Philadelphia’s most exclusive schools. On the Sabbath, she made sure every child who was old enough memorized five new Bible verses, then led the whole family to the Tenth Street Presbyterian Church at Twelfth and Walnut streets—the whole family, that is except for her husband.

  “My father, as his father had been before him … was an Episcopalian,” Brinton Jasper explained many years later, “and we had a pew in the gallery at Holy Trinity Church. This was occupied by all of us on the rare occasions when my father’s professional duties led him to announce his intention of going to church. Then we would accompany him in family procession—up Spruce Street and across [Rittenhouse Square]—a very important occasion.”21

  Such occasions were very important in part because they were so infrequent. Dr. Brinton was neither a Presbyterian nor a weekly churchgoer, and he refused to pretend otherwise when his mother-in-law came to town. Evidently, she complained during her visit. He responded with some heat. Sarah was caught in the middle. “It is just as you say about worldly men,” Jane told her daughter after she had left, “and I don’t think arguing does the least bit of good. Let us both go to God with an earnest desire for Dr. B’s conversion.”22 Perhaps not surprisingly, Dr. B. did not welcome her back to Spruce Street.

  Jane and Maggie moved on to Brooklyn, where Ferd did everything he could to impress his mother with how well he was doing. He arranged things so that when she stepped off the ferry, Watson B. Dickerman’s top-hatted coachman and gleaming coupe were waiting to whisk her and her companion up the cobblestoned hill to 81 Pierrepont Street. There, even though it was midwinter, her son and daughter-in-law were waiting in the doorway with bouquets of roses fresh from their Stamford greenhouse.

  “Ferd and Ella received me with open arms and seemingly warm hearts,” Jane reported. The butler served her an elegant lunch and afterward Ferd proudly led his mother from room to room so that she could see “all the improvements.” The Ward home was even more opulently furnished now. General Grant had presented his young partner with some of the surplus gifts he had gathered during his world tour: tiger and leopard skins and a velvet-seated piano stool from India with gilt legs in the shape of long-trunked elephants; a Japanese ceremonial sword and a bamboo fire screen hand-painted with a map of the world.

  “[Ferd] certainly seems to take great pleasure at my being here,” Jane wrote on stationery embossed with her son’s address.23 It can’t have been easy for him to give that impression. With his mother present no cigars could be smoked, no wine could be served. Ella—still weak after the loss of her baby—had to listen without complaint to her mother-in-law’s exhortations to pray more often and more earnestly for Ferd’s conversion. She spent as much time as she dared out of the house, taking the air—under doctor’s orders, she said.

  Harriet Clarke, Ferdinand’s youngest sister, came to Brooklyn for a few days. Sarah, who had lived with her beloved “Auntie Harriet” in Washington during the Civil War, came north to see her. The unabashed enthusiasm with which Mrs. Clarke was greeted evidently did not sit well with Jane. “I only wish I was more agreeable to outsiders,” she told her daughter afterward. “All here extol Auntie as such a lovely & agreeable lady. I am glad always to hear others praised but I would like to be worthy of a little myself.”24 It must have been with some relief that Ferd and Ella saw her and Maggie to the train that took them back to Geneseo.

  Ferd went back to work. He was slender and intensely blond with deep-set blue eyes and a pale, drooping moustache. He dressed well, spoke softly but moved fast, and enjoyed the same fine Havana cigars Fish had shipped to General Grant by the barrel. But he also sometimes showed signs of the high-stakes tension under which he constantly lived: he tapped his teeth absently with the earpiece of the spectacles he wore to correct his old nearsightedness and sometimes compulsively opened and closed a gold-handled pocketknife marked “U.S. Grant,” a gift from the ex-president, who had watched it being made for him in Sheffield, England.

  “Young Ward has a rather old face,” wrote a Wall Street veteran who knew him well, “like that of a man who sacrificed youth for business ambition and had not been much in the company of ‘the boys.’ ”

  Of a serious nature, laboriously in earnest, with his eyes set upon a fortune, he is typical of hundreds of young men who come to New York and put no measure to their hopes of fortune and power. Discovering how easy it is to do things they had esteemed difficult, they have never known the distress nor the training of one who has lost money after slowly acquiring it. Made buoyant by juvenile success, with young brains full of blood which can race they often fall over a precipice because they had not tripped up at some friendly snag or hole earlier in the start.25

  That precipice seemed very close in early 1882. For all the enthusiasm with which he had displayed his treasures to his mother, Ferd and his business were in terrible trouble. Some of it was the fault of the Grant family. The general’s fondness for old friends had led him to reward some with unwise speculations: at his insistence, for example, the firm had bought the Southern Coal Company with mines in West Virginia from his old Confederate adversary, General John Bell Gordon. The firm would lose $150,000 (in modern terms more than $30 million) before it could extricate itself. And there were other unfortunate investments in mines that failed, railroads that never got built.

  Ferd would one day blame Fish and the Grants for most of the firm’s losses. Despite their “recklessness,” he claimed, the firm’s standing remained “unimpaired and its business good because the general run of business in my hands turned in a most gratifying profit for the benefit of the entire firm.”26

  In fact, there had been no genuine profits since 1880. In order to make it seem otherwise, at least in the firm’s ledgers he showed to his partners, he had begun rehypothecating the firm’s securities, pledging the same paper over and over again to borrow money, paying the interest on one loan out of the principal for the next, hoping that things would somehow balance out one day. So long as everyone got paid it was not illegal, but it was considered a dangerously risky practice, unworthy of a prominent brokerage firm. Ferd was careful not to let his customers know that he was doing it.

  Fish, however, did know. He had already begun authorizing bank loans to Ferd and the firm, then permitting his young partner to take back to the Grant & Ward office the securities that were supposed to remain in the Marine Bank vault as collateral so that he could pledge them for a second or third time. As early as September 1880, just two months after Grant & Ward was established, he had to remind Ferd to return a bundle of bonds temporarily so that the national bank examiner would be satisfied that its loans were all properly secured. “We are not so rich as we ought to be at the bank,” he told Ferd, “and I do not want to put too much for appearance’s sake in bonds and securities that are not available.… We expect the Bank Examiner daily. He is very arbitrary [and] likes to show his power.”27 Ferd did as he was told—he slipped the bonds back into their loan envelopes at the bank and left them there until the examiner had finished his work, then carried them back to the office to use to raise more money. “Mr. Ward rehypothecated everything, the moment he could get his hands on it,” George W. Spencer, the firm’s clerk, recalled.28 Grant & Ward had struggled along in this way for a little over a year.

  But now, the bull market had ended. Wall Street was again sliding steadily downward. Investors were no longer inclined to take the kind of flyers Ferd had routinely taken. Some called in their loans. Creditors clamored to be paid. “I was in a corner,” Ferd would recall. “These people held our paper. They expected their tremendous profits and I was anxious to retain the reputat
ion I had gained.” That, he said, was the moment when he began what he called “the imaginary business.”29

  No one was more concerned about the firm’s prospects than James Fish, and when he turned up for breakfast in Brooklyn on Wednesday, February 1, 1882, he was relieved to learn that his resourceful young partner seemed to have come up with a brand-new money-spinning plan. Given the disturbing trends on Wall Street, Ferd said, he thought it best that the firm shift its focus from stocks and bonds to government contracts. Whatever happened elsewhere, the federal government still had to buy vast quantities of wheat and oats, hay and pork, and other supplies to feed and outfit soldiers and sailors and reservation Indians. Cities and towns signed contracts, too, continuing to undertake costly civic improvements—roads and bridges, waterworks and gas lighting.

  It was ordinarily a risky, fiercely competitive business. Suppliers had to fight one another for contracts. But the potential profits were so great, Ferd explained, that contractors were willing to offer sizable shares of them to anyone who would advance them the money they needed to get started.

  Grant & Ward was in a unique position to do just that, he assured Fish. Thanks to the behind-the-scenes influence of General Grant and his powerful friends, including Buck’s father-in-law Senator Chaffee and New Mexico Territory’s former congressional delegate Stephen B. Elkins (in whose New York law office Buck was now a junior partner), the firm could get far more than its share of government business.

  Not even Ferd—who always wanted the world to believe the worst of everyone he wronged—dared hint that the general was aware that his young partner planned to exploit his name in this way. In fact, Grant would later testify that he had expressly forbidden Ferd ever to seek government contracts for the firm; while there was nothing inherently wrong about dealing in them, he said, he had told Ferd, “I had been President of the United States and I did not think it was suitable for me to have my name connected with government contracts.”30

  But the picture of potential profits Ferd painted for Fish proved so irresistible that he evidently didn’t ask whether Grant was actually willing to cooperate. Massive infusions of new money would be needed, of course. That was where Fish came in. Ferd proposed that the firm issue notes, which Fish, as president of the Marine Bank, would immediately endorse and get discounted. For fear of alerting rivals, Ferd continued, he thought it best never actually to sign contracts in the firm’s name; rather, he would take them on assignment from third parties and Fish was to keep a separate “special” set of ledgers at the bank so that the contract business would not get mixed up with whatever else the firm was doing.

  Fish was intrigued. Before the week was out, Ferd reported that he already had an order from the U.S. government for 2,500 barrels of flour. It would require a considerable investment, but he thought the firm could clear $5 a barrel, for a total of $12,500 (more than $271,000 in today’s terms). “Shall we take it?” he asked. “There won’t be many more of these orders given until spring, so we had better take what we can get.”31

  Fish said take it by all means, saw that his bank loaned Ferd all the money he needed, and set sail for Cuba for two months in the sun. He was delighted that his young partner had once again figured out a novel way to make big money in hard times.

  He had not. There were no government contracts—none. He never intended that there should be. He planned simply to keep the firm afloat and himself out of jail by pyramiding its funds; past investors were to be paid their supposed profits out of money freshly deposited by gullible new ones. “In reality,” one reporter remembered, “Ward was borrowing from the next victim to pay off the victim of several months back who was hotly pressing for his money.”32 His only hope, Ferd later admitted, was that “I might, through a more active stock market in the future get even again.”33

  Until this moment, James Fish had understood—and actively encouraged—a good deal of Ferd’s trickery. He’d overlooked the coming and going of securities from the vaults of his own bank, for example, and had authorized the loan to the firm of so much of his depositors’ funds that it sometimes cut into the bank’s reserves deeply enough to imperil its status as part of the national banking system. He had also allowed Buck Grant to believe that he and Ferd had each contributed $100,000 to capitalize the firm when they had not. But from now on, Ferd would have to make sure Fish remained as deeply in the dark about the true nature of the business he was doing—or pretending to be doing—as were his intended victims. Since the contracts didn’t exist, he needed to come up with a plausible reason why his partner must keep secret every detail of the firm’s supposed dealings with the government. “Now, as to grain orders,” he wrote Fish on February 26, “I note your advice to take all the government contracts I can get, and I have done so since you went away.”

  I fully agree with you that we must make hay while the sun shines, as we may not be in favor long [because the Democrats might win the presidency in 1884 and Grant’s name would no longer carry the same weight in Washington], so I shall take these orders when I can get them.…

  Now, a word about the General. You know the Senate has passed the bill to retire him on [the] pay of [a] general, and it is now going to the House. If some of those fellows down there who oppose this bill should get wind of our having these contracts they will use it as a tool to defeat the bill, so I am very careful and have cautioned [James R.] Smith [the member of the stock exchange Grant & Ward used formally to buy and sell stock] against saying anything. As long as we keep quiet and do this business in outside names and in a quiet way, the General will stick by us.

  We have a bright prospect ahead if we are careful. We [presumably he and Buck] fully appreciate your kindness in aiding us in getting the money. I shall always look out for your interest in these matters, and if I get going too fast at any time or seem too anxious to make money you must check me, for although I am very cautious, still I know that discretion is the better part of valor. We are fast gaining a foothold in Washington and if some day we can get some of those Indian contracts I will be happy, for the profits on one of them is enough to set us up.34

  Three days later, he wrote Fish again to drive home the need for silence: “The Government contract business is progressing well but we need to ‘keep it mum’ for if we don’t the papers will give us fits. Some of our friends … have their suspicions that we are getting something rich … but I keep it quiet.”35

  Fish, too, kept it quiet, at least at first. (Later, he would occasionally confide in potential investors he knew well, thinking he was doing both them and himself a favor by letting them in on such a good thing.) And Ferd seemed to be doing spectacularly well, reporting the purchase of more and more contracts that promised ever-larger revenues—so many lucrative contracts, he told Fish, he thought it best to refer to them only by number to ensure total secrecy. In April, for example, he wrote to remind his partner that a “ten thousand dollar note is due today on Contract No. 16, and we will carry it over to Contract no. 5.”36 Fish never fully understood what such notes meant—neither “Contract No. 16” nor “Contract No. 5” existed, after all—but he also never failed to try to find the money Ferd asked for, making loans from his own bank and approaching friends in the banking business, as well.

  Sometimes the strain showed. In May, Fish evidently caught Ferd selling off some shares of his stock without informing him. Ferd was abject, at least on paper, his tone exactly the same as it had been when he was a boy and his mother or his brother had caught him in a lie.

  Now Mr. Fish, you know that I appreciate too deeply the kindness you have shown me since Mr. Green’s death to ever be guilty of trying to take advantage of you. I have always looked upon you as a second father to me, and I fully appreciate your kindness. You have been the sole means of placing me where I am, and I can’t stand it to feel that you think I would take advantage of you if I could.37

  A week or so later, Fish wrote Ferd another stern note. The bank directors, he said, had begun as
king awkward questions: “For instance, [the loan] to Sidney Green [of] $86,137.50.… There are things in that loan that I know nothing about.… And then the check of yours in cash since May 6. These things are not what they should be.”38 Ferd apologized again.

  Others also began to worry about the pace Grant & Ward seemed to be setting. On July 5, Fish got a letter from Thomas L. James, the president of the Lincoln Bank, from which Grant & Ward had borrowed large sums on Fish’s recommendation. James asked Fish to clarify his relationship with the firm: Was he a general partner and therefore responsible for all its actions and for its debts and obligations, or merely a special partner, liable only for the sum he’d invested in it? It was clear that James had grown suspicious.

  Fish worried that others would become wary too, and for the first and only time in the history of Grant & Ward, he wrote to the general, asking if they might get together and talk over what their young partners were up to. He evidently wanted to be sure Grant was fully committed to the contract business he thought Ferd was conducting behind the scenes.

  [PRIVATE]

  My dear General:

  You and I don’t often meet to talk over business matters, or for any other purpose, but I trust that you are well aware that the failure to do so is not for any want of respect, esteem or friendship on my part. We are both pretty well occupied generally, which explains it. I think, however, it would not be amiss for you and me to counsel a little occasionally in regard to the business of Grant & Ward, as our conservative influence, if not beneficial, would do them no harm as they [Buck and Ferd] are so much younger than ourselves.