by David Liss
He shrugged, caught but unwilling to deny it. “He offered me a dollar.”
I handed him some coins from the fund Mrs. Pearson had given me. “Here’s two dollars. Report back that I said nothing, only made you stop the coach so I could vomit at the roadside.”
He nodded. “Thank you, sir.”
Leonidas and I went and warmed ourselves by the fire. “Did you learn anything of moment?” Leonidas asked me. “What are his plans? Is the scheme the short-selling of stock?”
“I don’t think so,” I said. “Duer is playing at something he thinks very clever, but I don’t think it’s selling bank stock short.”
“How can you know that?”
“Because whenever he spoke of it, his discourse became theoretical, saying a man may do this or my agent might do that. He defended what he neither admits nor denies doing. He spoke about it in the most obviously evasive manner, and so could not have been more obviously hoping I would believe the shorting of issues was his goal. He was trying to lead me down a path to one thing and, by inference, away from another.”
“From what?”
I shook my head. “I can’t be sure. Did you learn anything in the kitchens?”
“Possibly,” he said. “Some major event is afoot with the servants. Things are to be made ready for early Wednesday morning. The coaches are to be prepared and food ready for an early meal. There will be a large and early breakfast at the house. It has all been discussed and planned with the greatest urgency, yet no one knows the occasion.”
I slapped my hand upon the table. “Oh, poor Mr. Lavien. He shall be behind us now, for we know what Duer intends and when he intends it.”
“We do?”
“Do you not remember what the men in the express told us? The Million Bank launches on Wednesday. Duer plans to have his agents come to the house for one last strategy meeting and then descend upon the launch. He considers it vital that the world have no faith in the Million Bank, because, if I am correct, he means to take control of the bank on its first day. We have until Wednesday, then, to learn why. We have to find out if this is just another financial maneuver or if it is connected to dark schemes in Philadelphia.”
Leonidas looked significantly brighter. “It must be very satisfactory,” he said, “to know you have so well retained the old skills.”
“Oh, well, you know,” I said modestly, but it pleased me more than I could say that he should notice.
“But was that a clever move, paying the coachman such as you did? He might just as well report your bribery to Duer.”
“If he tells Duer what he overheard, Duer will think I know nothing and will never learn anything. He will cease to regard me seriously.”
“And if he tells Duer that you paid him to lie?”
“Then,” I said, “we will have stirred up the hornet’s nest, and we shall be able to watch the results. Always better to be involved in chaos of your own making, Leonidas. We know almost nothing and are set against powerful forces, but as long as they are reacting to what we do, the advantage is ours.”
Joan Maycott
Autumn 1791
Within a few months of our arrival in Philadelphia, even Jericho Richmond, the most cynical of our band, began to think success was likely, if not precisely assured. William Duer may have been intrigued initially by the mere novelty of a female speculator, but soon enough he came to regard me as a sage advisor as well. I should like to have been able to offer him advice on how to invest, and have that advice bear fruit, but I am no more prescient than any other mortal, and I had no abilities beyond those provided by keen observation and common sense. Accordingly, I did the next best thing. Already having one of Dalton ’s whiskey boys close to Duer, I could receive word on the speculator’s plans and then advise him to do what I knew he intended. If I could not predict the market, I could at least predict the investor, and he, hearing his own ideas parroted back, believed me brilliant, for I reflected back to him his belief in his own sagacity.
It was important that I also know the history of the investor. When I met with Duer I questioned him as closely as I dared. My interest would always have to be that of an adoring woman, not a counting-house clerk, and yet it was the details of the ledger book I craved. Indeed, Duer dropped a few hints of some past exploits I thought could be useful, and accordingly I visited the Library Company, that marvelous institution founded by Benjamin Franklin, and conducted some researches into old papers.
In reviewing the accounts of the old Board of Treasury, which functioned between the end of the war and the establishment of the Constitution, I learned that when William Duer had run the board he lent himself some $236,000, and only a careful review of the records, one conducted with knowledge of the cheat, made clear that the money had never been returned. Duer had stolen from his country, and apparently no one knew it.
I had found what I most sought, a key to Duer’s ruin. It was a primed pistol, ready for me to discharge when the time was right.
D uer was, as near as I could tell, quite dedicated to his wife, Lady Kitty, the daughter of William Alexander, the famous Lord Stirling, hero of the Revolution. Yet after our first meeting he asked me to meet him again the next day at the City Tavern, where we might discuss further my insights into speculation. I cared little for his reputation or the feelings of Lady Kitty, so I agreed immediately. As we were stepping out onto the street, however, we were joined again by Reynolds, who continued to eye me with suspicion.
“I’m certain I know you from somewheres,” he said to me.
“Mind how you speak to a lady, Reynolds,” said Duer.
“I’m not looking to be impertinent,” he said, “but I am to look after you, and I’m telling you I know her.”
I had to make a decision, for if I denied knowing them, my falsehood might later expose me. Thus I smiled at Duer. “You sold my husband a ground lease in the West some years ago.”
Reynolds colored. “By God, that’s it! You’re Maynard or Mayweather or something of that sort.”
“This is Mrs. Maycott,” said Duer. “Now, if you’re done-”
“That’s her! The one what Tindall said killed her own husband!” Reynolds shouted.
An expression of understanding crossed Duer’s face. I don’t know how much he had heard of the incident, but if he dealt with Tindall he would have had some notion of his perfidy.
He looked at me with a very contrite face. “I never did hear the full story, but my understanding was that Tindall treated your family unkindly and then attempted to lay the blame upon you.”
I bristled at his use of so limpid a euphemism for murder, but this was not the time to resolve such things. Instead, I said, “I suppose none of us could be surprised that Tindall dealt with himself so harshly, given the crimes upon his conscience.”
As it happened, accusations of murder had never surfaced in the Tindall affair. Perhaps Phineas ultimately lacked the resolve to deliver his confession, and the sheriff decided that a wound to the back of the head was consistent with a hanging. After Brackenridge had humiliated Tindall before the sheriff (a man who did not scruple to talk about his supposedly private conversations), it was widely rumored that Tindall had murdered both Andrew and his own man and, after attempting and failing to blame me, had taken his own life rather than face the humiliation of a trial.
I met his gaze. “Those events are in the past.”
Duer took my hand and held it softly. “For my own part in that wretched affair-”
I shook my head. I did not want to hear a meaningless apology from him. “You did no more than sell us a lease. You cannot be responsible for how Tindall behaved.”
“Of course not,” he said, “and yet some small part of the affair must be set before me.”
“No,” I said. “It is noble that you say so, but it is not true.”
“Wait one moment,” said Reynolds. He stepped close to me, crowding me with his massive form. I believed I could actually feel the heat emanating from
him, and his smell, like that of a bull, filled my nostrils. “I don’t like this at all.”
Duer pushed him back. “Mind yourself, Reynolds.”
“I think I’d rather mind you and her. She always was a cagey one, this lady. You forget I rode out to Pittsburgh with her. She’s one of those women who must always have her own way.”
“Is there another kind? Ha-ha! You’ll forgive me, madam.”
I smiled in deference.
“You don’t think it a bit odd,” Reynolds said, “her appearing here, making nice with you after what you done-”
“That will be enough, Reynolds,” Duer barked. “Silence yourself-now!”
Reynolds took a step back as if struck, though his face showed no expression of pain, just puzzlement. He wished to know what I did with Duer, and I could see he did not believe for a moment that our meeting was by chance or that I was so quick to forget the injury the speculator had done me. Even then, I could see behind his dark eyes, so obvious in their brooding, that he searched not for a way to protect Duer but to turn my unlikely presence to his own advantage.
I began to meet with Mr. Duer at the City Tavern whenever he did business in Philadelphia, which amounted to at least one protracted visit every two weeks. Though men wondered at the nature of our friendship, no one wondered aloud in our presence.
As I repeated to Duer his own ideas, handily reported to me by my man in his service, the speculator began to grow increasingly sanguine about my opinions. Thus, after meeting with him for the better part of two months, I decided it was time to begin pushing him in the direction I so desired. Duer made it a point to introduce me to a number of his associates-perhaps he wished them to believe our relationship was of a more intimate nature than it was, or perhaps he wished to impress them with his marvelous pet, the thinking woman-and so I came to know a number of men in Duer’s circle.
The circle itself was a curious thing. His most important project that autumn was a loose confederation of traders he called the Six Percent Club. Its principal object, as all its members knew, was to establish control over those government issues yielding six percent interest. There was value in monopoly for its own sake, of course, but Duer’s scheme was more far-reaching. When the Bank of the United States launched, investors could only buy scrip, the ownership of which allowed them to make the four subsequent payments necessary to own actual bank shares. Not until those four payments were complete would the scrip holder actually be a shareholder. Two of those payments were to be made in specie, but two were to be made in six percent issues.
Hamilton ’s intention in doing this was actually quite clever. Create a demand for government securities in order to increase the trade and, consequently, the value. Duer’s plan was equally clever but far more diabolical. Control the flow of the six percents, make them impossible to obtain, and the original bank investors cannot hope to turn their scrip into actual shares. Their scrip becomes worthless, and they must sell it-to members of the Six Percent Club. It was his intention that by the end of the next year, his cartel would control both bank scrip and the six percent issues required to redeem it.
There was one added dimension, however. The Six Percent Club consisted of both agents whom Duer publicly acknowledged and those he did not. There were men who bought and sold with Duer’s money, and those who bought and sold with their own. Not all in the latter category, but certainly many of them, were nothing more than stooges, men Duer sacrificed to manipulate the market. If he wanted prices to go down, he would send the unwitting agents out to sell. If he wanted prices to go up, he would send them out to buy. That their investments would ruin them mattered nothing to him. He did not see himself as directing a skirmish but rather the final battle of a long war. When it was done, he might have ruined the markets, but he would own them. He might have ruined his reputation, but by then it would not matter.
Much of this I learned from our man in Duer’s employ in New York, and much I learned from my own observation. Duer liked to keep me on hand, as a kind of sign of his power, a charming woman with a considerable knowledge of finance. Never, not once, did he suggest he wished for a greater familiarity with me, though at times he might touch my arm when he spoke or place a hand upon my back. It was intimacy of a sort, certainly, and it took all my will not to recoil, but it was far less than I had feared he might demand.
Too, he discovered that my presence disarmed potential victims. I was a refined lady, and who would attempt chicanery in front of me? Only once did he ask me to participate in one of his ruses. Late in 1791, a man began to appear regularly at the City Tavern, a local landowner of some significance named Jacob Pearson.
Pearson would sit quietly during trading and then strike up conversations with other traders, explaining loudly that they had made terrible mistakes. He said he had observed the markets since their inception in this country and knew an error when he saw one-and a good trade as well. Yet he himself refrained from trading.
“Why do you think he behaves thus?” Duer asked me.
“Because he in fact knows nothing of the difference between a good trade and a bad one. He wishes to benefit from the markets but is too proud to admit knowing nothing.”
“Precisely,” Duer said. “He is quite perfect for our purposes.”
Duer sent the man a note, saying he wished to meet but that the meeting must be private, lest the world know of their business. Thus it was we arranged to meet in the back room of another tavern, where we could discuss these matters in private.
“Will he not be confused by my presence?” I asked Duer.
“That can only work to our advantage,” he said.
From a distance I’d found Mr. Pearson to be an unlikable person, loud and vain and pleased with himself to an unreasonable degree. In close conversation, I found him even more unpleasant, but because of, not despite, a kind of native charm. A man of a certain fading beauty, he displayed with Duer a self-confident expansiveness, but with me he used a predatory charm. It was the alluring gaze of a predator. I felt at once that Pearson was a dangerous creature-not to us, perhaps, but to those in his power. For myself, I did not fear him, but I did immediately despise him.
To this man, Duer explained that he needed someone to help him alter the market, someone who must buy and sell with his own money. When he profited, he would keep what he earned minus a small commission. When he lost, he would be reimbursed.
Some men, Duer had explained to me, reacted quite harshly to this suggestion, not liking the idea of behaving dishonorably to other traders, but that was what made Pearson so perfect. He was a stranger to the trading community and had no concerns about betraying his brothers. More to the point, he wished to learn the secrets of trade, yet he had nothing but contempt for those who had learned the secrets through the usual slow and persistent means. Duer offered him an opportunity to demonstrate his inherent superiority, wrapped in the protective cloak, so he would believe, of the undisputed master.
It began slowly. Duer had Pearson make a few trades he knew would prove sound, and these enticed Pearson’s appetite. While he profited, Duer also directed Pearson to lose a few thousand dollars on a single trade, and Duer did not hesitate to return the funds with all speed and cheer, demonstrating that he was as good as his word and Pearson had nothing to fear from his losses. Within six weeks, Pearson was making a name for himself on the Philadelphia floor as a canny investor. No one knew he was Duer’s puppet, and no one knew he was doomed.
P art of the difficulty of attempting to corner a market is that it does not take long for buyers to recognize that someone, even if they don’t know who it is, consistently snaps up an issue when it comes to market. Thus, the prices of six percent securities began to rise, which made them more expensive and harder to obtain. Men who already held them understood an attempt at a corner was under way and so were understandably reluctant to sell.
The best way to bring more issues to market was to convince holders that they did not know all and that so
meone else knew more. Thus it was that Duer and Pearson executed a simple but effective deception. At the City Tavern, Duer arrived and announced he wished to sell six percents and buy four percents, rated less valuable for the simple reason that they yielded less interest. Yet the price of six percents was high, and the other speculators drew the obvious conclusion that Duer anticipated that six percents had peaked and that four percents were undervalued and poised for a sudden increase.
Pearson, per prior arrangement, accepted Duer’s offer to sell. It was a perfect deal, since Pearson would simply return the six percents back to Duer later in the day. Pearson, who had begun to attract some notice, then announced that he would buy four percents from anyone who would sell them, and that he no longer wished to purchase six percents. Within a few days, the price of four percents soared while six percents declined. Duer’s other agents, those acting with his money, snapped up the six percent issues now on the market. Pearson continued to buy four percents at a newly inflated rate, a rate they would likely never see again, but this rate kept the four percents high and the six percents low. It was for this reason, and no other, that Duer continued to drive Pearson, and anyone who would follow him, to keep buying. When it was all done, Pearson had committed himself to more than sixty thousand dollars of four percents, issues whose value was wildly overinflated and would crash without warning.
“I doubt the whole lot is worth more than forty thousand,” Duer said to me, “and that is under the most optimistic of circumstances. If Pearson tries to sell them in anything but the smallest increments, he shall drive the price even lower. Of course, much of this will depend on how the other buyer chooses to act.”
“What other buyer?” I inquired.
“I haven’t been able to determine his identity, but there is another trader attempting to obtain four percents. It hardly matters, though. If the price goes down a little or a lot-or even stays high-it is nothing to me.”