Hetty (24 page)

Now, these fears seemed more real to her than ever. Hetty began to suggest openly that her father had been murdered, and her aunt Sylvia as well, all by greedy manipulators after a piece of the family fortune. Her fears peaked when she visited New Bedford, home, as it was, to a high concentration of heirs-in-waiting. When Hetty visited on business she usually stayed at the home of Benjamin Irish, one of the few people she trusted. Irish had been a clerk at the old Isaac Howland Jr. and Company whaling firm. Sylvia had left Irish $15,000 in her will. After the deaths of her aunt and father, and the dissolution of the whaling company, Hetty kept Irish on as her business agent in town, looking after her real estate there. She trusted his honesty and integrity and, significantly, his home was one of the few places in town where she felt no fear in eating a meal. On one occasion in New Bedford, Hetty visited with a friend and distant relation, who subsequently asked her to stay for dinner. Hetty demurred, saying the Irishes were expecting her. She then described for her friend some of the fears and suspicions she had about eating at various homes of relatives around town.

“I’m one of those heirs,” the friend said. “Hetty, you don’t mean to insinuate I would poison you, do you?”

When Hetty tried to smooth her friend’s ruffled feathers, the friend replied, “Humph. I’m going to get only a few hundred dollars out of that old will. If I was going to get thousands, I would consider a proposition to poison you.”

THIRTEEN
IF MY DAUGHTER IS HAPPY

E
conomics is complex enough to fill a thousand fat textbooks and as simple as the law of supply and demand. Through the ages, whether the commodity was tulips in Holland, gold in California, or cash on Wall Street, speculation has made millionaires and paupers, created and destroyed fortunes in the blink of an eye. But the most secure fortunes have always belonged to those with the discipline and foresight to stay out of the fray, those who supply speculators with the tools of their glory or ruin.

Stock values soared during the first years of the twentieth century, as the United States transformed itself from an economy based on agriculture and thousands of small, mostly local manufacturers to one driven by a new creature—the Large Corporation. In 1901, J. P. Morgan paid Andrew Carnegie nearly $500 million for Carnegie Steel—the highest price ever paid for a company—laying the cornerstone for U.S. Steel. The purchase set off a wave of mergers and acquisitions as would-be Morgans bought up strings of mills and factories to form one national colossus after another, with names such as United States Spinning, International
Weaving, and American Steel and Wire. Some of these corporations were based on sound financing. But in many cases the deal-makers simply financed their acquisitions by issuing huge amounts of watered stock—stock whose value on paper vastly exceeded the actual assets of the company
*

In their optimism, investors eagerly snapped up even the most heavily watered shares of major corporations, believing, as would Internet investors nine decades later, that values were destined to continue rising forever. With the exception of a brief downturn in 1903, the mania continued unabated until early 1907, when reality set in. It wasn’t just individual investors who were caught unprepared when the bubble burst. Many banks and trust companies had been speculators themselves, and had made reckless loans secured only by still more shares of inflated stock. Stocks began to slide in March, but the real catalyst for disaster came several months later, on October 21, when word spread that the venerable Knickerbocker Trust Company, one of the city’s largest, was in deep trouble. The next day, after a furious run, Knickerbocker shut its doors for good, leaving many of its seventeen thousand depositors searching in vain for their $35 million in deposits. Panic spread—within a week, six banks with combined deposits of $57 million were closed, and many more teetered precariously on the brink of failure. And the panic soon spread beyond New York, jeopardizing banks nationwide.

Hetty had avoided any temptation to join in the speculative fever. During the height of the boom, in November 1905, she told a
New York Times
reporter, “I buy when things are low and no one wants them. I keep them, just as I keep a considerable number of diamonds on hand, until they go up and people are
anxious to buy. That is the general secret of business success.” She added, “I never speculate. Such stocks as belong to me were purchased simply as an investment, never on a margin.” Her words must have seemed hopelessly stodgy and archaic to speculators riding the crest of the wave. But by 1907 the wisdom of her investment methods was painfully clear.

When the bottom fell out, she expressed sympathy for hapless investors caught in the panic, telling a Times reporter during a trip to Boston that fall, “Can’t you see that watered stock is in everything? It’s ruinous … I mean the middle class. They’ve got a lot of this watered stock, and the water has been squeezed.” While others watched their fortunes float way on rivers of all but worthless stock, Hetty had the comfort of real assets—the bricks and mortar of her buildings, secure bonds, and tens of millions of dollars in cash that she was prepared to lend to buyers who met her standards.

In mid-1907, with the crisis drying up city coffers, New York mayor George McClellan announced a freeze in the hiring of new police officers, a halt in new government construction projects, and a freeze on salaries for the street cleaning department. As she had done several times before, Hetty came to the rescue, writing a check for $1.1 million, drawn on her Chemical Bank account, in exchange for short-term revenue bonds, paying 5.5 percent. Her money helped keep the government running.

This crisis in particular showcased Hetty’s ability to remain coolheaded while others panicked. Banks, which until recently had been passing out loans like party favors, now indulged their own deepest fears, often refusing loans even to sound, well-run companies needing cash for expansion. When they did lend, they accepted stock as collateral only at rates far below the stock’s actual market prices. After all, the banks reasoned, in these uncertain times the stock could collapse, leaving them holding scads of worthless paper. Faced with a Hobson’s choice of doing without needed loans or mortgaging themselves to the hilt to get them, many companies simply folded. Hetty
remained one of the few sources consistently willing to lend money at or near the market value of the stock.

One such company was the Delaware, Lackawanna and Western Railroad, which hauled coal east and west from Pennsylvania and carried seagoing passengers from the Great Lakes at Buffalo to the mouth of the Atlantic at Hoboken. In addition to its choice routes, the DL&W was a forward-thinking railroad—among the first to power its locomotives with cleaner burning anthracite (as opposed to soft bituminous) coal, ensuring its passengers a relatively soot-free ride. Hetty no doubt considered these factors as she extended loans to the company during the panic. On October 19, 1909, two years after the crisis ended, the
New York Times
singled Hetty out for levelheadedness that had helped save the railroad. “So great was her confidence in the intrinsic worth of the stock that she was willing to take the chance of wide fluctuations occurring during the panic. That she was right about the stock has been shown since the panic, for Lackawanna since October, 1907, has advanced several hundred points.”

J. P. Morgan, whose purchase of Carnegie Steel had helped touch off the wave of mergers, eventually played the lead role in bringing the panic of 1907 to a close. Shortly after the Knickerbocker closing, two of the city’s largest trusts—the Trust Company of America and the Lincoln Trust Company—appeared on the verge of collapse. Morgan stepped in, organizing one of the most extraordinary meetings in the history of Wall Street. With his private library on East Thirty-sixth Street as headquarters, a furious, daylong series of negotiations ensued, drawing around thirty of the nation’s leading bankers and industrialists. Calling themselves the Committee of Trust Companies, they hashed out a plan to rescue the two companies. Negotiations with the directors of the two trusts stretched on into the night. At midnight, a wagon from the Waldorf Hotel pulled up in front of Morgan’s library, and six hotel workers carried in a catered supper and urns of coffee. George B. Cortelyou,
President Theodore Roosevelt’s treasury secretary waited in a hotel nearby. Although Cortelyou did not participate directly in the meetings, the Treasury, at Morgan’s request, had deposited some $35 million in national banks for the specific purpose of bailing the distressed trusts out.

Finally, at 3 A.M. on November 6, the Committee of Trust Companies announced a plan to save the trusts by assuming control of their stock. The bankers also decided to make millions of dollars available from the New York Clearing House (set up to clear checks drawn on the city’s largest banks) specifically to bolster banks during the threat of a run. The meeting marked the first step toward what would become, six years later, the Federal Reserve banking system, providing a measure of stability for the banking industry. The gathering included a lone woman. The Times reported that a woman wearing a black veil entered Morgan’s library at 6:30 P.M. and stayed for several hours. Although the woman was never positively identified, reporters were convinced that the woman was Hetty Green. Hetty was known to wear a black veil on the streets at times to give herself a measure of privacy. Perhaps Morgan and the other bankers invited Hetty to gauge her interest in the 6 percent bonds they planned to issue to establish the Clearing House fund. She would have been a logical buyer. At any rate, it is difficult to imagine any other woman of the time being called in by J. P. Morgan and his associates to discuss a national financial crisis.

As her financial power reached its zenith, so did the popular impression that Hetty was, despite her money, a desperately unhappy person. Her customary black dress, accented at times by the veil, gave her a witchlike appearance as she walked the streets of lower Manhattan. Some took to calling her the Witch of Wall Street. This notion of her unhappiness owed itself in part to the tenor of the times. How could a woman be happy whose thoughts were so dominated by business and finance? Her preoccupation with money must be covering for some huge gap in her domestic life. Certainly, nothing Hetty said supported
the notion that she was unhappy. Virtually every public comment she made regarding her own life reinforced the idea of a woman living her life contentedly, according to a few simple rules. “I really have nothing to say,” she told a
New York Times
reporter in November 1905, “further than to be thankful for my continued health and interest in general affairs. I know of but very few people who are busier than myself or who are better trained to combine business with pleasure.” Asked if she planned to retire, Hetty responded, “Why should I give up work? I was never more capable of handling my affairs.”

In the end, her principal crime seems to have been that the rules she chose to live by were her own rather than society’s. One of the more cutting portraits came in January of 1908, when
Broadway
magazine published a particularly long and unflattering article describing Hetty as the “least happy woman in New York.”

The article, by a writer named Mabel Potter Daggett, began: “If you have been a part of the hurrying throng that daily jostles down lower Broadway, you may have seen her. Such a lonely little figure! A withered leaf, it seems strangely tossed in the great financial current. Follow this little old woman in rusty black and see her enter the Chemical National Bank. She is not the scrubwoman. The scrubwoman has no clothes of such ancient date as hers, the alpaca gown that has weathered many seasons, the black woolen cape that has shaped itself to the shoulders as they have bowed through the last ten years, and the tousled bonnet with its little bunch of flowers that faded with the millinery of many summers past.”

Daggett continued: “The shabby little old woman who has just passed from view is worth $60,000,000, even $100,000,000, some estimates say. She is Hetty Howland Robinson Green, greatest mistress of finance the world has ever seen. Seated atop of her huge yellow millions, a wrinkled old woman, the financial limelight of a continent plays about her as she directs the destinies of men and of corporations. There is power in the
pen stroke of her aged fingers, the thin old fingers that are busy, busy all day long cutting coupons and signing checks. She has more ready money at her command than any other one individual. Wall Street waits on her coffers. To the old-fashioned mahogany desk comes a procession of bank presidents, hat in hand, railroad magnates, bowing low, and rich directors humbly making obeisance. Even the city of New York in need has brought its plea to her, its richest citizeness.”

Yet for all of her power, Daggett wrote, “Hetty Green is really a bankrupt to-day, bankrupt in desire! With money to buy all that the world has for sale, it holds nothing that she would like. She has mortgages strewn in acres from Boston to San Francisco. She owns railroads and steamboat lines, copper mines in Michigan, gold mines in Nevada, iron mines in Missouri, telegraph and telephone securities and government bonds, and in her safe is locked a pint of diamonds and one of the finest collections of pearls on earth. Yet the girl stenographer who takes her dictation probably has a lighter heart under a new spring gown, the butcher from whom she buys chuck steak at twelve cents a pound has a better Sunday dinner, and her neighbors in a Hoboken flat, when they go on a Coney Island outing, brighten the monochrome of existence with more of color than varies her drab days.”