Fifty years in Wall Street
The bankers became timid. The brokers were inspired with the same spirit
and were still calling out for more margin. Loans were called in as a
part of the programme of a bear campaign, and all the machinery of
depression was put in active motion. Prices were torn to pieces.
Properties that had been considered good as solid investments for a long
turn, were mercilessly raided, and some of them shattered to fragments.
In fact, there was a regular panic. In the general slaughter, many of
the brokers sold Mr. Keene’s stocks out. His wheat was also sold in
immense quantities at great sacrifice, and his load was lightened all
around, even more quickly than it had been heaped up.
His losses are said to have amounted to seven millions of dollars at
this time.
The manly efforts of Mr. Keene to recover these losses, as is usually
the case in such instances, only resulted in further misfortune.
Disaster followed disaster, and as he became desperate in his efforts to
get back something, his losses became constantly greater, until nearly
the whole of his immense pile was buried in fruitless efforts to recover
a portion of it.
Great sympathy has been felt in Wall Street for Keene since his failure,
for the Street had never before found such a liberal man. By general
consent he decidedly took the palm in this respect, not only from all
his speculative contemporaries, but the archives of Wall Street since
the days of the first meetings of the brokers in the Tontine Coffee
House, opposite the sycamore tree, early in the century, can furnish no
such parallel of princely liberality as that of James R. Keene during
the period of his matchless prosperity.
The parasites that waxed fat on his bounty and business are numerous. At
least a score of Wall Street brokers were raised from penury to wealth
by the commissions which they made out of him. Many of them are to-day
living in luxury who started with a desk and a few plain office chairs
to do business for the California millionaire, and now he is
comparatively poor, and thrown on the slender resources of his wife.
Keene arose from nil to be worth thirteen millions. He is now back where
he started.
A full and correct history of Keene’s beneficences would fill this
volume, and however much I admire him, I cannot afford to give him so
much space.
I shall relate one remarkable instance of his unbounded generosity,
however, as the object has been so universally known, and was himself
such a popular society man.
Long prior to Mr. Keene’s advent in Wall Street, Sam Ward had been a
conspicuous figure in Washington and Wall Street, and had acquired a
society reputation in Europe.
This gentleman was originally forced into prominence by his marriage
with Miss Astor.
Mr. Ward had changed from one thing to another until finally he took up
his abode in Washington, and became a lobbyist.
When Mr. Keene came to New York with his four millions of dollars, which
he had made when the majority of New York investors had been on the
losing side, dropping their money almost as fast as water runs down
hill, through the unprecedented shrinkage in values, there was a wide
field for profitable investment. This shrinkage had been going on from
the panic of 1873, step by step downward until 1878, when society had
reached a stratum by dint of levelling down that placed almost everybody
upon an equality. Property, in many instances, became a serious
encumbrance instead of a benefit, and many were glad to be rid of the
responsibility of their holdings for what was sufficient to settle the
mortgage. Everybody felt poor, and was really so, with a few fortunate
exceptions.
Mr. Keene arrived here at the most fortunate moment for investment.
Everything was down to bed-rock prices. He, therefore, became an object
of actual curiosity, and was as much of a lion in our midst as he had
been in San Francisco.
He was not only the favorite of fortune, but a favorite of society,
which generally go together with curious inconsistency in our social
democracy.
One of the first acquaintances Mr. Keene made on his arrival was this
great society man, the celebrated Sam Ward, who at once recognized his
social worth, not only in dollars and cents, but in considerable
liabilities, genuine representatives of dollars and cents. The more
tangibly he realized this fact the more tenacious was his attachment,
until Mr. Keene found Mr. Ward the very _beau ideal_ of Scriptural
fraternity, namely, “a friend that sticketh closer than a brother.”
Wherever Keene appeared, though apparently alone, it was safe to bet
that Ward’s shadow could soon be seen.
It is said of Seneca, when he observed a house falling, and nobody near
it, that he asked: “Where is the woman?” So Keene’s presence naturally
suggested Ward to the mental vision of every Wall Street man and every
sporting man.
Whether it was up-town or down-town, at Newport, or in London, at the
Derby, or the Grand Prix, it was all the same, where Keene was, there
Ward soon appeared with the promptitude of the genius that stood before
Aladdin when he touched his wonderful lamp or rubbed his magic ring.
This self-sacrificing friendship and ardent devotion on the part of Mr.
Ward was recognized by Mr. Keene in the most tangible manner. He made an
investment for his protege, of $50,000 in solid securities, placing them
in the hands of trustees, so that his ward received the income therefrom
of three thousand dollars, as an annuity, for life.
Mr. Keene bestowed numerous benefits on other newly made acquaintances,
of which this is a fair sample.
A Pacific coast biographer draws the following graphic sketch of Keene,
some time after his departure from California, which is curious reading
in the light of the events which I have related:
“No series of sketches of men, prominently identified with the
stock interests of the Pacific coast, would be complete without
a pen portrait of James R. Keene, the free lance operator of the
San Francisco stock market, who dared to beard the Bonanza Kings
in their den, and came off victorious with many shekels of gold
and silver. Mr. Keene is no longer with us. Some time since,
after having realized largely on his stock ventures, he
concluded to take a trip East, to be extended to Europe, unless
on the Atlantic seashore he regained the health which too active
exertions on the Pacific had impaired. And so he went with his
family. Those who bade him God-speed expected to see him return
within a few months, certainly within a year, with recovered
health, new ambitions, new conquests to make. But he comes not.
New York has presented more attractions than his old love, San
Francisco. Railroad stocks, Jay Gould, Sam Ward, Rufus Hatch,
Long Branch, Trenor W. Park, Newport, have been too many
attractions for Jim Keene. He fell into the New York market as
easily as any man generally falls among thieves—but he seems to
have got the best of the thieves in every issue. When it was
rumored that Keene contemplated making Wall Street his
headquarters, his old San Francisco friends generally wrote out
their calendars, and figured up when ‘Jim’ would be back,
bursted out and out, looking for a job. A few who had abiding
faith in Keene, who knew his pluck, who had gauged his
capacities, who had measured his horse sense, consulted their
calendars and said: ‘Jim is gone! He never will come back to
couch his lance in such a narrow field as ours. New York is big,
Wall Street is big—just about the size of institutions that
Keene wants to tackle.’ The few were right. Keene hasn’t come
back to look for a job. He has tried conclusions with the
smartest of the Wall Street operators, and, novice that he was,
came out triumphant. The California goose that was to be plucked
wasn’t plucked. Even Jay Gould, with all his shrewdness, gave it
up as a bad job; and Vanderbilt condescends to confer with Keene
on momentous occasions.
“Keene started in his career as a stock operator years ago in
San Francisco. He first was conspicuous as an impulsive,
dare-devil sort of a street broker, acting for big firms, with
an occasional dash for liberty and himself. Gradually he worked
his way from steerage to cabin, from the private’s ranks to the
position of the lieutenant of the watch, then to officer of the
day, and finally, boss of the stock concern. No man in the stock
market exercised so much influence as Mr. Keene. He had hosts of
friends, friends whom he grappled with hooks of steel, ready to
swear by him on any and every occasion. Generous to a fault,
brusque in manner at times, but with the heart of a woman, ready
to melt at a moment’s notice, open-handed and open-hearted to
the appeal of even an acquaintance, no wonder that Jim Keene was
the ideal of the market.”
It is not generally known that Keene was chiefly instrumental in
rehabilitating the Bank of California after the death of Ralston. He
raised a large subscription in the Stock Board, and got the Hon. William
Sharon, D. O. Mills and “Lucky” Baldwin to subscribe a million each, and
he put in a million himself. The bank was thus enabled to meet all
immediate demands, and a threatened panic was averted.
At the time of Keene’s failure he was chief of a syndicate which had
purchased 25,000,000 bushels of wheat, which would soon have netted many
million dollars of profit, if it had been firmly held, but one or two of
his partners in the pool became timid and sold out. The syndicate went
to pieces, and both profits and capital vanished. He laid his misfortune
mainly to the newspapers which raised such a universal cry about the
immense “corner” that was being manipulated in wheat, threatening a
famine in the great staple of human life.
Keene was next shaken out of his stocks. This was done chiefly by an
ably concocted scheme of the bears, and he had the mortification of
seeing the stocks which he had held advance within a few months’ time to
a point that would have enabled him to realize ten million dollars, if
he had been able to hold them.
------------------------------------------------------------------------
CHAPTER XXVI.
OUR RAILROAD METHODS.
DECEPTIVE FINANCIERING.—OVER-CAPITALIZATION.—STOCK “WATERING.”—FINANCIAL
RECONSTRUCTIONS.—LOSSES TO THE PUBLIC.—PROFITS OF CONSTRUCTORS.—BAD
REPUTATION OF OUR RAILROAD SECURITIES.—UNJUST AND DANGEROUS
DISTRIBUTION OF THE PUBLIC WEALTH.
The following chapter, on the subject of “Our Railroad Methods,” was
delivered by me as a Fourth of July address at Mr. H. C. Bowen’s Annual
Symposium at Woodstock, Conn., to an assemblage of over 3,000 people. It
was so favorably received by the press and the public in general, that I
have been encouraged to publish it in this book without any material
changes:
In the whole range of our law-making there is no one branch in
which there has been such an utter lack of judgment, foresight
and just regard for the rights of the citizen, as in the
legislation provided for our railroads and railroad companies.
For the most part, the statutes relating to this class of
corporations are a set of general enactments, loosely defining
the large powers granted to the incorporators, comparatively
silent on the duties and obligations of the companies to the
public, and conferring upon them a virtual _carte blanche_ as to
their methods of finance and of conducting their business.
In a country whose products are mainly bulky, and have to be
carried to markets hundreds or thousands of miles distant, it is