That evening, Ferd climbed the stairs above the shuttered bank to which James Fish had devoted most of his adult life and asked to see him. The housekeeper showed him to a chair. Fish entered, accompanied by two of the bank’s other directors. By then, he had had to absorb still more disturbing news: the government contracts that had been at the heart of Grant & Ward’s supposed success had never actually existed; virtually everything Ferdinand Ward had told him over the past four years had been a lie.
Ferd began to talk, words spilling over one another. He wanted to explain, he said, wanted to say how sorry he was. He didn’t know how it had happened. Fish was his best friend, had been like a father to him. He had been unable to resist temptation, could not seem to help himself. Why hadn’t someone stopped him?
Fish cut him off. Ferd had ruined him and his family, he shouted. Several of his sons had lost their savings investing in the shattered firm—and his own reputation had been destroyed forever. Ferd was an ingrate, a liar, a thief. “I said to him that I could kill him if he were not such a contemptible miserable viper,” Fish remembered. “I took up [a] chair and raised it over my head as if to strike him, and he crawled and fell on the tiles of the floor and begged me not to kill him.… He kept on his knees and whined.”41
What should he do? How could he make things right?
It was “one of the most exciting affairs I ever saw,” one of the witnesses told a reporter. “Ward cringed and slunk like a whipped cur.”42
The banker eventually put the chair down. “I advised him to go and commit suicide,” Fish remembered. “Drown himself, hang himself.”43
Ferd fled down the stairs and out into the empty street.
* The figures Ferd used were, as usual, wholly imaginary, but in this case real profits seem to have been at least possible. In January of 1881, six New Yorkers had burned to death in a fire that engulfed the seven-story Potter Building on Park Row. Firemen blamed low water pressure for their inability to put out flames on the upper floors. A consortium of insurance underwriters and dry goods merchants, worried that Manhattan buildings were sure to go still higher, proposed to increase water pressure in the city by bringing water down from the mountains by gravity alone. Mayor Edson appointed a two-man committee to look into it. One member was Comptroller S. Hastings Grant. Both he and the mayor may initially have been inclined to favor the scheme. Ferd had worked closely with both of them; each had profited personally from that friendship. But on May 7, 1885, just as the decision was due to be made, Grant & Ward collapsed. Less than two weeks later, Comptroller Grant joined his fellow commissioner in advising against the Ramapo scheme on the grounds that it would be too costly, take too long to complete, and leave the city’s water supply in the hands of private speculators. Edson quickly accepted the committee’s recommendation. Whether the decision was affected by the potential embarrassment of having the press uncover Ferd’s role behind the scenes if the go-ahead had been given, no one will ever know.
In 1899, a similar scheme was proposed by another private syndicate—and was rejected for the same reasons. In 1905, the state legislature finally created a public board of water supply empowered to acquire land and begin construction. Twelve years later, New Yorkers in all five boroughs were drinking and bathing in water from the Catskills. Proceedings by New York (N.Y.) Sinking Fund Commissioners; Ferdinand Ward, “General Grant an Easy Prey for the Wolves of Finance.”
† The New York Clearing House, established in 1853, centralized banking activity in the city. Checks representing tens of millions of dollars were exchanged there each morning and accounts were kept to insure the financial health of each participating institution.
‡ On May 14, a week after the collapse of Grant & Ward and the Marine Bank, there was a run on the Second National Bank of New York, when it was revealed that its young president, Amos R. Eno, had lost $3 million of his depositors’ money speculating on Wall Street. The bank was saved only when Eno’s father, Amos R. Eno, stepped in and personally paid back every penny. Young Eno fled to Canada. He was arrested there, but released again because the extradition treaty between the two countries then covered neither defalcation nor embezzlement. He would remain across the border for nine years, until he was sure the indictment against him would be quashed, then returned to Manhattan and inherited what was left of his father’s fortune.
On May 16, the Metropolitan Bank had to close its doors; its president, George Seney, had lost most of his depositors’ money dabbling in railroad stocks.
§ The $250,00 trust fund, created earlier to provide the Grants with a comfortable life in Manhattan, had been invested in bonds of the Wabash Railroad—which was about to go into default.
‖ Fish’s hometown paper was equally kind to its native son. “Mystic people were sadly surprised and shocked” at the collapse of the bank in which so many townspeople had been stockholders and depositors. But it had been heartening to hear from many quarters “entire confidence expressed in the integrity of President Fish.” Livingston Republican, May 10, 1884; Mystic Press, May 8, 1884.
TWELVE
A Magnificent and Audacious Swindle
It was now clear that serious crimes had been committed. “Every day has developed some new and startling phase of dishonesty,” the editor of the New York Times wrote on Sunday in a call for the immediate arrest of both Ferd and Fish. “What was originally supposed to be a large bank failure, involving the downfall of an enterprising business firm conducted upon legitimate principles, now resolves itself into a magnificent and audacious swindle.”1
It was also evident that as creditors warred over the spoils, the courts would soon be clogged by suits and countersuits. There were separate receivers for the Marine Bank and for Grant & Ward, different assignees for each of the firm’s partners, a phalanx of lawyers representing the Erie Railroad, the First National Bank, former senator Chaffee, and dozens of other investors. Chamberlain Tappan hired lawyers too, determined to get back at least some of the $320,000 he’d personally invested.
Ferd himself soon added to the tangle. Will Ward had just come in from Denver. “Till he arrived, Mr. Ward had not the courage to take any decisive step,” one of Ferd’s attorneys said. “He had been constantly alone … and even now is in constant fear of violence.”2 Now, Will insisted that his agitated brother make a second, separate assignment of his property, to a Manhattan attorney, George C. Holt. Having Mr. Warner get everything was unfair to Ferd’s other creditors, Will said, and the assignment to him had, in any case, been made under duress. Sidney Green agreed: on the night of the crash his brother-in-law had been “laboring under great mental excitement [as well as] misrepresentations, if not threats,” he told a newspaperman. “But whether he was out of his mind or not, I am unable to say.”3
The first suit to reach the New York Supreme Court was that of Fish’s assignee, John H. Morris, against Grant & Ward. A justice appointed an eminent attorney, Hamilton Cole, as referee, empowered to take evidence and try to determine who was entitled to what.
On Wednesday morning, May 14, a week and a day after the crash, Ferd was called to testify in Cole’s big fourth-floor office in the Metropolitan Bank Building at Third Avenue and Seventh Street. Framed lithographs of British barristers in wigs lined the black walnut–paneled walls. Attorneys for all the parties sat along both sides of a long wooden table heaped with ledgers and bundled checks. Behind them were rows of newspapermen and creditors, all craning their necks to see Ferd step into the room.
He seemed nervous as he took his seat at one end of the table; he swallowed hard, his prominent Adam’s apple rising and falling. One reporter, who had last seen him in Stamford the previous summer when “his acquaintance [had been] courted by a great many people,”4 thought he had aged ten years.
Ferd had reason to be fearful. The diminutive white-bearded lawyer who rose from his seat at the other end of the table to interrogate him was Francis N. Bangs, said to be the most relentless cross-examiner in the city.
Bangs went right at him. Ferd did his best to be an elusive target.
Did Ferd keep businesslike books? Yes. But the contract business did not appear in them. Those transactions were recorded on several pages of foolscap he had kept in his locked desk. He no longer knew where those pages were. He thought Work might have taken them during his late-night visit to the Wards’ Brooklyn home. He didn’t think the firm had owed Warner anything like the $575,000 Work and he had claimed, but without his records he couldn’t say for sure.
He said he couldn’t remember when he’d bought his homes or what he’d paid for them, didn’t know how he’d come by his other properties, wasn’t able to recall how much he’d paid for his share of the Booth Theatre.
“Can’t you remember within $100,000 or $50,000 or $25,000 or $10,000?”5
Ferd said he could not. He sighed and shut his eyes when pretending not to remember things. He said he had also forgotten precisely how the conveyances to Warner had come about—except that when he’d agreed to Work’s demands the night of the crash, he had not “been fit to talk or to be talked to.”
“Tell us about the government contracts,” Bangs said.
“There are no such contracts. There never were any. I never had any contract with the government, neither personally nor as a member of the firm.”
“Then what was meant when the investors were given to understand that there was a contract?”
“Nothing at all.”
“Did the money go into the bank with your personal deposits?”
“Most of it.”
“It was not put into specific investments?”
“Oh, no.”6
What made him pay such immense interest for money loaned to the firm?
“That’s hard to tell. I had to rob Peter to pay Paul.”7
He had been forced to borrow at exaggerated rates to pay debts already incurred. For more than two years he’d been unable to pay his bills without doing so. He’d known all along that the crash would come.
He was so depleted by the end of his first day’s testimony, so pallid and shaky, that Bangs told him to go home and get a good night’s rest.
He needed it. The next morning, Bangs returned to the attack, emphasizing each phrase by rapping his knuckles on one of several ledgers fanned out across the referee’s table.
“So, then, the real nature of your business consisted in discounting the fanciful prospects of imaginary profits to be derived from fictitious contracts, founded on manufactured artificial contributions of altogether imaginary money. Is that so?”
The lawyers in the room laughed. Ferd laughed too, but said nothing. “Well, why don’t you speak? Doesn’t that adequately describe the business you were in?”
“Some—some of it was conducted on an imaginary basis, yes.”
“And was not that known to anyone besides you? Do you mean to say that you hadn’t any confederates?”
“I think that was the case.”8
How did he persuade people to invest in contracts that they had never even seen?
“Take Tappan, for instance. How did you get him in?”
“I didn’t get him. Mr. Fish got him. Mr. Fish was the first man associated with me in the business.”
“Well, how did you get Mr. Fish?”
“I simply represented to him the business I proposed to carry on, based on government contracts, and asked him to share in the profits.”9
Ferd couldn’t recall how much Fred Grant or Tappan or anyone else had invested in the contract business. Nor had he ever bothered to explain to any of his investors the supposed details of the business he was doing.
Bangs was incredulous: no one had ever asked to see the contracts?
“None of them. No, sir, not even Messrs. Warner and Work.”10
Ferd had claimed that the ledgers and heaps of checks on hand did not tell the full story, that his personal record of the contract business had somehow been lost.
But it wasn’t. As Ferd’s fourth day of testimony began, Judge Ashbel Green, representing Assignee Davies, presented the referee with an envelope sealed with wax. In it were four sheets of paper clipped together, on which Ferd had recorded in black ink each investment in the supposed contracts as well as the initials of the man who had made it and the date repayment was due. Supposed profits were recorded in red. The investors and the sums they had invested were genuine; the profits were fictitious.
The identities of most investors were straightforward enough—“J.D.F.” was James D. Fish, for example, “W.S.W.” was William S. Warner—but one set of initials drew Bang’s attention.
Did “C.A.A.” stand for President Chester A. Arthur?
No.
Had Ferd told Fish they did?
He couldn’t remember.
The total of “Profits on Contracts” was given as $1,928,716.92. Ferd admitted he’d once shown that figure to Fish, but he didn’t recall telling him how the money was obtained. Bangs turned the page. Still more profits were listed.
“Mr. Ward,” Bangs asked, “was there any rule, arithmetical or geometrical, which you followed, or did you simply divide up all the money you had on hand or could raise?”
Ferd smiled. “We had no rule,” he said.11
He was especially forgetful when it came to what he’d done over the last days before the crash. He had no memory of writing checks for a million dollars on May 2, for example, and couldn’t remember telling Fish he had $1.4 million in securities on hand, or bringing the satchel supposed to contain them to the bank—or taking it away again.
“Isn’t your memory remiss about matters generally which occurred about that time?”
“I can’t answer that.”
Bangs had no more questions.*
Any pleasure Ferd may have felt at completing his testimony before Referee Cole cannot have lasted long. Just before he entered the hearing room that morning a deputy had handed him a subpoena. He was to appear before a grand jury looking into civil charges against him the next day, Wednesday, May 21. J. Nelson Tappan, the ailing city chamberlain who had helped him and Fish loot New York City funds, had filed a complaint through his attorney, John R. Dos Passos,† demanding return of the $320,000 he had invested with Ferd in supposed government contracts.
Ferd testified for just one relentlessly forgetful hour and was arrested that same afternoon at his lawyer’s Wall Street offices. When Deputy Sheriffs Brown and David McGonigal turned up with the warrant, he was “much affected, almost wild,”12 according to an eyewitness.
“Don’t take me to jail,” he begged. “Can’t I go to a hotel till something can be done?”13
He could, McGonigal murmured, but it would cost him a hundred dollars—$2,260 today. Ferd quietly agreed to pay. The three men crossed town by carriage and under assumed names checked into room 13 at the Sinclair House at Broadway and Eighth Street. They ordered up dinner and drinks from room service. When it came time to sleep, Deputy Sheriff Brown summoned his own father to keep watch all night in case the prisoner tried to escape. The room was crowded and filled with the sound of snoring. “I didn’t like the arrangement all,” Ferd remembered, “especially at the steep price I was paying.”14
For the next eight years, he would be at the mercy of prison officials willing to provide him with special treatment for a price. He resented them all but never failed to come up with the money, almost all of it provided by others. The world might see him as a common criminal, but he refused to be treated like one.
He entered Ludlow Street Jail the next day. His bail had been set at $300,000. Ferd’s attorneys believed he might still be capable of raising it, but they counseled him not to do it. There were likely to be so many additional warrants, each with its own demand for bail, that eventually the total would be far too great to meet. If he were going to remain locked up, Ludlow Street was the place to be. Built of red brick at the corner of Ludlow and Broome streets, it had originally housed debtors and looked more like a library than a jail
. Ordinary prisoners occupied eighty-seven ten-by-ten-foot cells upstairs, but “tip-top types”15 like Ferd, willing to pay as much as a hundred dollars a week for their board plus more for what were called “extras” and “extraordinaries,”16 were provided with a first-floor suite, where, as the New York Times said, there was “nothing suggestive of imprisonment.”17
“There are three rooms in [Ward’s] suite,” a visitor noted, “all nicely furnished and very comfortable.”
His reception-room, almost as large as an ordinary parlor, has soft sofas and lounging chairs scattered about a marble-topped centre table. The hangings of the room are of a soft neutral-tinted brown, very restful to the eye, and accord well with the heavy Brussels carpet. Through the open windows a cool breeze floated in between the bars, rendering the apartment delightfully cool and stirring the pages of the magazines on the table. [The keeper] declared emphatically that the rooms were “cooler than in any hotel in the city because the walls are so thick.”18
From the moment he arrived, carrying an alligator-skin valise filled with papers, Ferd seemed at home. He paid to have a cage of canaries and his favorite black-and-white setter brought in to keep him company, procured a piano so that he could enjoy the sing-alongs he’d always liked, imported a barrel of Havana cigars and cords of wood for his three fireplaces, and greeted a steady stream of visitors—his wife, his brother, his brother-in-law, teams of lawyers, newspapermen looking for headlines, old friends from Wall Street. He seemed happy to see them all. “He sat half-buried in the depths of a great arm-chair, with his legs on a table,” one reporter noted. “He was in his shirt-sleeves, had a long cigar in his mouth at an angle of 45 degrees, and chatted away cheerfully, listening to the gossip that his friends brought from the outside world.… He pressed his guests to stay for dinner, promising them a meal almost equal to any Delmonico’s might serve, and offering to send for any brand of wine they chose.”19
A Disposition to Be Rich: Ferdinand Ward, the Greatest Swindler of the Gilded Age Page 27