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

by Geoffrey C. Ward

  After hours, he continued to collect large sums from William Warner and his blind pool of rich friends, as well. He was so desperate to have their money he began allowing Warner to dictate the percentage of profit he would get when the notes came due. “When Warner once got twenty per cent a month,” Ferd remembered, “he never would take less.”5 During March and April alone, Ward would write eighteen checks to his shadowy visitor, totaling $943,166, and two more, totaling $50,000, to Warner’s brother-in-law J. Henry Work. All twenty represented large advances returned along with exorbitant interest.

  Ferd borrowed from major institutions as well as private individuals—$4,650,000 from four big trust companies and the Equitable Life Assurance Society between January 28 and April 25. Each loan was for six months at a high rate of interest. At least one also involved an additional off-the-record payment by Ferd to the executive who agreed to let him have the money.

  He continued to dangle new contracts in front of potential investors, too. He and Fish had begun negotiations to purchase a rocky island off the Maine coast, he told them; the federal government planned a sprawling Romanesque-style post office in Brooklyn; thanks to Grant & Ward’s connections, the firm was guaranteed to win the multimillion-dollar contract to clothe it with granite, and the partners wanted to increase their profits by being able to quarry their own island. Ferd was already peddling municipal revenue bonds to pay for construction of a new aqueduct to bring additional water to the growing city from the Croton Reservoir, and he also began talking up another, far more lucrative scheme to tap the Ramapo watershed in the Catskills. Because “certain members” of the commission looking into improving the city’s water supply were “associated with the firm,” he said, “we [will] complete the contract … receive $35 million,” and earn “a certain profit of 17 million.”*

  The unsecured loans made to Ferd by the Marine Bank, the sums advanced by William Warner and his voracious friends, and the moneys borrowed from financial institutions and advanced by individuals eager to get in on the contracts that Ferd described so vividly all helped Grant & Ward stay in business. But Ferd and Fish were now relying most heavily on the unique and illicit arrangement they had worked out with Comptroller Grant and Chamberlain Tappan to tap directly into municipal funds.

  The mutually beneficial scheme that Ferd and Fish, Tappan and Grant worked out together in early 1884 was simple. Grant was authorized to issue 3 percent municipal revenue bonds to pay city expenses in anticipation of taxes to be collected during the current year. Ferd turned up at his office from time to time to purchase them in large numbers—$7,450,000 worth between January 1 and May 2, 90 percent of all the bonds issued by the comptroller’s office during that period. The law required that he pay for them with certified checks. But Grant—who would eventually invest at least $320,000 of his own money in Grant & Ward’s supposed contracts ($7,220,000 today)—made Ferd’s purchases as painless as possible. He was allowed to pay each bill with several Marine Bank checks certified by Fish, some of which would then be deposited back into the Marine Bank. He did so seven times between January 1 and March 29, 1884, for a total of $954,000.

  When other investors turned up at Grant’s office interested in buying bonds, the comptroller’s subordinates were instructed to tell them they would have to go to Grant & Ward’s to make their purchases. The comptroller’s deputy would one day be asked whether rival would-be purchasers had ever complained. They had, he said: “They had been customers a long time [and] thought it rather hard to turn them off and send them to brokers’ offices.”6 Ferd always did his cheerful best to make potential customers welcome at 2 Wall Street.

  Even with the collusion of the city’s top financial officials, Ferd found it more and more difficult to satisfy creditors like William Warner who insisted he make good on his gaudy pledges, on time and in full. When Ferd and Warner began their murky after-hours transactions, Ferd had been firmly in charge and Warner simply grateful to be making such remarkable returns on funds borrowed from his friends. But as the months went by, their positions had slowly reversed. Ferd needed more and more money to stay ahead of his investors and was forced to promise more and more to get it. It now took just twenty days for a $20,000 investment to grow to $36,000; $433,000 became $519,000 in only thirty days; a month after that saw $450,000 become $540,000.

  Grant & Ward’s balance was so erratic that Ferd often did not have the cash on hand to make good on Warner’s largest investments. Whenever that happened, he now offered a new arrangement: to keep Warner from demanding his money, he would guarantee delivery of the matured principal by a new date but would also pay Warner 20 percent per month in addition. On a single loan of $640,000 that would not mature until October 1884, for example, Ferd had to find $125,000 every thirty days to satisfy Warner and his friends. Warner, not Ward, was now in control of their relationship.

  By the end of March, both Ferd and Fish were feeling desperate. “If this goes on this way,” Fish told Ferd, “the situation will not only be serious but dangerous.”7 Four days later, he wrote to Ferd again. “Do you know that your account is overdrawn $80,000 this morning? Our affairs seem to be drifting entirely beyond my understanding or comprehension.”8

  Then, Chamberlain Tappan suffered a heart attack. His doctors urged him to sail for Bermuda to see if a month’s rest there would restore his health. While he was gone, Ferd returned four times to the comptroller’s office. He bought a total of $2.5 million in revenue bonds during those visits—and, with Grant’s approval, the city of New York deposited a million more dollars in the Marine Bank in four installments, each deposit made on the same day the bonds changed hands.

  By April 25, thanks to Comptroller Grant and with the acquiescence of the absent Tappan, Grant & Ward was able to borrow against some $6 million worth of municipal bonds and the Marine Bank was holding $1.6 million in city funds ($36,100,000 today). This was more than twice as much as any other depository in the city—so much more that Isaac S. Barrett, a veteran clerk in the comptroller’s office who had several times expressed concern about the growing imbalance, finally felt compelled to intervene. “There’s no use talking, Mr. Grant,” he told his boss. “There is altogether too much money in that bank.”9

  Grant reluctantly agreed. People were beginning to ask why the city favored one bank and one brokerage house over all the rest, and he had no ready answer. Municipal funds—and his own reputation—were at risk. Something had to be done.

  J. Nelson Tappan returned from Bermuda two days later. He was still so weak that he had to be carried off the ship. His deputy (and brokerage partner) F. W. Gilley, who met him at the dock, remembered that Tappan “expressed no surprise” at the amount of city money in the bank of which he was a director. But not long after he was put to bed at his home on Lexington Avenue, Comptroller Grant got word to him that there was serious trouble, and that the Marine Bank’s holdings had to be reduced—and quickly.

  On Thursday, May 1, the city withdrew $300,000.

  The next day, Friday the 2nd, Fish got a second letter from the chamberlain’s office, signed by Deputy Chamberlain Richard W. Montgomery on behalf of his ailing boss.

  Mr. Tappan finds it necessary … to draw on the Marine Bank an additional $300,000, and we have notified them of the draft for that amount on Monday [May 5], to come through the Clearing House Tuesday A.M.†

  We regret the necessity, and if unexpected receipts should make it possible to diminish the draft will be glad to do so. As the account of receipts and payments now stands, the draft is unavoidable.10

  Several million dollars in Grant & Ward loans were to come due on Monday. Ferd’s ability to continue drawing on the Marine Bank now represented the difference between life and death for the firm, which had been overdrawn between $80,000 and $115,000 nearly every day for the previous two weeks. If further city funds were withdrawn and could not be replaced by matching sums from some other source, the bank would go under. Ferd had been scurrying after money for we
eks. Now, he became frenzied.

  Ferd first thought he would try Comptroller Grant one more time. He wrote two checks totaling a million dollars and took them to Fish to certify. Fish hesitated: Grant & Ward was now overdrawn by more than half a million dollars. Ferd tried to reassure him. It was only a momentary problem, he said; besides, he claimed, the firm still had a million and a half in negotiable securities as collateral. Fish said he would certify the checks—the crisis was too grave for him not to try to help—but he insisted that Ward bring all of the securities to the bank before the close of business that day.

  Ward raced to City Hall, bought more bonds, and then pleaded with the controller to countermand the chamberlain’s action: the Marine Bank needed more city money, not less. This time, Grant said he was powerless to help: it was all up to Mr. Tappan, and Tappan was too ill to see anyone.

  Ferd returned to his office and fired off a message to Deputy Chamberlain Montgomery. “I had a talk with the Controller,” he wrote, “and he said that he was perfectly agreeable to anything the Chamberlain did.… I want you, if possible, to put $100,000 or $200,000 in the Marine Bank today until Monday, as I have sold lots of bonds to be delivered [then]. Let me know what you can do.”11

  Montgomery refused to do anything.

  Things were falling apart. Ferd hurried back to the bank, with Charles Armstrong struggling along behind, carrying the canvas satchel supposedly filled with the securities Fish had demanded to see. Ferd’s nerves were beginning to fray. He stalked into his partner’s office. “There!” he said, in what Fish remembered as “a very petulant” tone. “There are over $1,400,000 worth of securities in there, and I hope you’re satisfied.”12

  Ward had Armstrong loudly drop the bag in a corner of the directors’ room next door. Then he called Nathan Daboli over. “This belongs to me,” he said, “and I’ll want it when I come for it.”13 About an hour later, he and Armstrong quietly returned and took the satchel away again. No one ever bothered to look inside to see what it actually contained.

  The next morning, Fish pleaded with Ferd: “Get in all [the money] you can and hope to see better days.”14 It was Saturday. Ferd wrote eleven more checks, ostensibly to his employees, but in fact so that he could pay Warner and at least some of the other investors clamoring for their money. The checks totaled $796,112. The firm was now overdrawn by $392,000. Funds were still flowing out. None were coming in.

  “I have arranged with a party up-town for a loan of $200,000,” Ward assured Fish that evening, “but I will not get the check till I get to his house tonight. I will however be able to deposit it by 9:00 Monday morning.”15

  Fish did not know it, but the uptown investor, like the government contracts in which he still believed, was imaginary.

  On Sunday afternoon, the doorbell of the Grant townhouse on East Sixty-sixth Street rang. A maid opened the door. It was Ferdinand Ward, hat in hand. Might he speak to the general?

  He was ushered into the dark, crowded parlor. Buck Grant was home too. Both he and his father were always glad to see Ferd. He rarely turned up uninvited, and when he did he usually brought good news: an unexpected dividend or a quick Wall Street turn that had benefited the firm—and fattened the Grants’ finances.

  Not this time. Ferd was soft-spoken and deferential, as always. But there was a problem. The Marine Bank was in trouble. The city had unexpectedly withdrawn city funds. The bank was now running on its reserves.

  The general was sorry to hear it. But what business was it of his?

  “We have $660,000 on deposit there,” Ferd answered, “and it would embarrass us very much if the bank should close its doors.”

  “They’re good for it, aren’t they?” Buck asked.16

  Of course they were—no worries on that score, Fred said. But it would take time before Grant & Ward had access to its money again. And that could cause problems as its loans came due.

  Ferd had plenty of securities in the firm’s vault, he said, and he had already raised $230,000 on his own. (In fact, he’d been turned down flat by Stephen B. Elkins and others earlier in the day.) But he hoped General Grant might be able to borrow another $150,000 right away. For appearance’s sake, the check needed to be dated Saturday. It would only be needed for twenty-four hours, in any case, long enough for the bank to call in a host of outstanding loans that would return it to solvency.

  That might not be easy on a Sunday afternoon, Buck said.

  True enough, Ferd replied. “But I know the General can borrow it if anyone can.”17

  Getting around was not easy for General Grant these days. He had slipped on the ice in front of his house on Christmas Eve and badly reinjured his left leg, initially damaged when his horse fell on him after the Battle of Vicksburg. He was still leaning heavily on crutches, but he called for his hat and hobbled out into the street. Ferd and Buck trailed along behind and joined him in his carriage.

  They clattered south along Central Park and entered Manhattan’s most fashionable neighborhood, Fifth Avenue in the fifties. H. Victor Newcomb, president of the United States National Bank, lived in a handsome house at 683 Fifth Avenue at Fifty-third Street. The general considered him a friend—Grant served on his board of directors—and thought he’d try him first. While Ferd and Buck waited in the cab, the ex-president got down, made his halting way up to the door, and rang the bell. The banker wasn’t home.

  Grant wasn’t sure to whom to go next. Ferd suggested William H. Vanderbilt. His newly built turreted palace stood just one block south, between Fifty-first and Fifty-second streets. Seven hundred men had worked on it for more than two years; 250 of them had done nothing but carve the interiors of its fifty-eight rooms. The house was so overstuffed with art that when its proud owner paid to publish a book detailing its contents, two volumes were needed just to list them all.

  Grant did not know Vanderbilt well, but he was master of a railroad fortune estimated at more than $200 million ($4.5 billion today). It would do no harm to ask. While Ferd waited in the cab, a startled butler led the general and his son into the parlor, its walls and coffered sixteen-foot ceiling tricked out in gilt, crystal, and mother-of-pearl.

  Grant explained why he was making this unannounced and embarrassing visit. Vanderbilt was as blunt as he was rich. He could not recall ever having made a personal loan to anyone, he said. It was not good business. “I care nothing about the 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.”18

  General Grant promised to have the money back to him in a day or two. He, Buck, and Ferd rode uptown together as far as Sixty-sixth Street, where the general sent for a pen and endorsed the check over to Grant & Ward.

  Ferd pocketed the check and climbed back into his own coupe. Everything would be all right now, he assured the Grants. They needn’t be concerned.

  That evening, he wrote a note to Stephen Elkins. Thanks to his own efforts and some money Fish had allegedly raised separately, the bank would survive, he said. “I shall see,” he vowed, “that that institution does not get into such a fix again. I can run my own business, but I cannot take care of other people’s.”19 He was not to blame for anything that was about to happen; all the fault lay with James Fish and the Marine Bank.

  The Marine Bank opened its doors as usual at ten the following morning. Ferd was first in line at the window of the teller, John H. Carr. He handed over the Vanderbilt check with a flourish. It was “gilt-edged,” he said, because it bore the signature of the railroad millionaire on one side and was endorsed on the other by Ulysses S. Grant. It went into his personal account. He turned as if to leave, then came back to ask a little favor. Over the weekend, he said, he had deposited an uncertified check drawn on his account at the First National Bank for $80,000 to cover a transaction that had subsequently been canceled. He asked that it therefore not be sent to the Clearing House, where all of the cit
y’s bank transactions were settled every morning. The teller told him he was sorry, but it was too late. The bank’s cashier, John Fish, had already certified a check on the Marine Bank against it. Ferd seemed “very anxious” that the certified check not be used, Carr recalled. Together, they went to see James Fish. He and Ferd conferred in low tones. “Well, John,” Fish finally said, “Mr. Ward says it is all right and I suppose it is.”20 He ordered the teller to withdraw the check from the exchange. Ferd thanked him, promised he would bring in a great deal more money by the end of the day, and hurried out.

  As he left, he ran into James Fish’s brother and chief cashier Benjamin on the front steps. “I have just deposited old Vanderbilt’s check for $150,000.” Ferd said. “How’s that? We’re all right now.”21

  They were not all right, and Ferd knew it. The transaction that Ferd said had been canceled had actually gone forward. Within a few minutes the certified check came back, already paid and charged to the Marine Bank. Fish called Ferd on the telephone line that linked their two offices. Ferd expressed astonishment. Clearly, there had been some stupid mix-up, he said; he was very busy just then, but he would come down and sort things out as soon as he could.

  After lunch, Benjamin Fish brought his brother evidence of another troubling transaction. Ferd had deposited his own uncertified check for $75,000, drawn on the First National Bank, and then, before it could clear, had written William S. Warner a check for $71,800.

  Again, Fish telephoned his partner. What was going on?

  “Those checks are all right,” Ferd said. “The money is at the First National, and the $75,000 will be paid.”22 But the money was not at the First National; Ferd had less than $2,000 in his account there. Yet before the day was over he would write a total of $215,000 worth of checks against it.

  “I have secured a loan of $250,000 from a private investor up-town and will take the securities up to him to get a check,” he told Fish in a scrawled note meant to reassure him. “But I may not get to the bank until late in the afternoon.”23