The Titanic Plan (2 page)

Through the next critical days the financial system of the United States teetered on complete ruin. Without any governmental safety net, such as a Federal Reserve Bank, there was no mechanism to end the downward spiral. Banks from around the country were calling in their money from the New York institutions. Stock prices were plummeting. Wall Street was thick with crowds of nervous men milling aimlessly about, praying their life’s savings were not about to evaporate.

Morgan tried to fight the financial fires by continually dousing them with cash. He received a $10 million contribution from a syndicate of bankers that was matched by a government transfer of $25 million to a “rescue fund” that Morgan controlled. In essence, the United States government had turned over the reins of the country’s economic operations to the very private bankers Roosevelt was battling over anti-trust issues. Despite his bluster, the President realized his administration could do nothing more than try and assure a nervous public that everything would be all right and let the bankers sort out the mess they created.

Throughout the second week of the panic there were runs on banks across the nation. Some smaller banks and trusts failed. People lost their life savings. Businesses were driven into bankruptcy. Stories of personal despair and desperation were reported from all corners of the country. From a banker’s point of view though, it was manageable – the major markets were holding and that’s all that really mattered. Morgan and his team of bankers and financiers continued to prop up banks with cash to instill confidence and keep the Stock Exchange level. It appeared the end of the crisis was in sight. Then a whole new firestorm unexpectedly erupted.

Next to
J. P. Morgan & Company
, the largest and most prestigious brokerage house in America was the firm of
Moore & Schley
. Among its largest assets was a southern steel company called
Tennessee Coal & Iron Company
, known simply as
TC&I
. It was a solid, though hardly spectacular, business. The problem was that the firm’s head, Grant Schley, was using
TC&I
as collateral for speculative loans. With the panic, those loans were called. Schley needed to come up with over $35 million dollars worth of cash or else his brokerage house would also collapse. And with that collapse, all the hard work Morgan had done would come crashing down in a sudden heap. Morgan was deemed the only person who could save the situation. But to do so, he would have to purchase
TC&I.
The problem was, Morgan already owned America’s largest steel company,
U.S. Steel.
If a deal was put together, an anti-trust suit would surely come from Roosevelt. Morgan weighed his options, the most important factor being not to rekindle the panic into a full-fledged wildfire.

Morgan carefully put the pieces in place, twisting arms and creating a complicated stock swap that would have
TC&I
merge, rather than be purchased outright, with
U.S. Steel
. Still, there was one last obstacle: Roosevelt.

On November 4, 1907, Elbert Gary and Henry Clay Frick, two steel magnates who helped Morgan work out the
TC&I-U.S Steel
deal, went to the White House for breakfast. They outlined the terms of the merger to Roosevelt over eggs and flapjacks. They stressed the consequences of another panic if the deal fell through and made sure Roosevelt was aware of the extraordinary effort Morgan made in order to protect the financial foundation of the country. Roosevelt, the battling trustbuster, the tormentor of corporations, the robber barons great foe, docilely acquiesced and approved the merger he would have never agreed to under normal circumstances.

At four minutes to ten that Monday morning, Morgan’s office received a call from the White House relaying Roosevelt’s approval of the deal. With that, the crisis officially ended. The stock market shot up. At the lunch hour, an exhausted 70-year-old man stepped down his office’s short shelf of steps to a waiting cab. He was showered with thunderous cheers from the crowd that had gathered outside 23 Wall Street. Morgan was being hailed as the single greatest economic force in American history. He alone had wrestled back the explosive forces that threatened to ruin the U.S. economy. Morgan knew he had won. And he vowed to himself that he would do whatever it takes to prevent anything like the Panic of ’07 from ever happening again.

On Thursday, November 14, 1907, less than a month after the first hint of trouble, Charles Barney, Morgan’s friend and the former head of the
Knickerbocker Trust
, the institution whose insolvency touched off the panic, pressed a gun barrel to his abdomen and pulled the trigger. The bullet traveled upward into his neck. He died later that day.

CHAPTER 1

DECEMBER 31, 1907

They would be arriving soon, those that were still alive. Coming up Fifth Avenue in their horse drawn carriages, they would ignore the vulgar coughs and spits of the automobiles that motored by. The carriages would pull up to the corner at 65th Street. Horses would restlessly snort steam in the chill evening air. And then a woman would emerge.

Stepping down, she would lift the hem of her bejeweled ball gown and take the arm of her ancient husband. The couple would disappear into the gray limestone chateau that would have been more appropriate in 16th Century Paris than 20th Century Manhattan. Inside they would be announced in a grand ritual that made them who they were – a Vanderbilt or an Astor or a Waldorf or a Winthrop. And the others at the party would turn just oh-so-slightly to notice, sizing up the family and status, the scandals and rumors, the glow or sallow of the skin, the clearness or fogginess in the eye.

Yes, they would be arriving soon
, thought John Jacob Astor IV as he scuttled about to make sure the house was ready. The table for 400 was set, the orchestra was in place, the servants – all 70 of them – stood stiffly like soldiers at their stations. Astor scurried up the foyer’s staircase to his mother’s room for one final check. He was, after all, throwing this New Year’s Ball for her; it was his way of letting her once more be who she was:
The
Mrs. Caroline Webster Schermerhorn Astor – the greatest, most revered woman in American society.

The
Mrs. Astor was splayed across her bed when her diligent son John walked in. Two maids and a dresser were rolling and tugging her over the huge mattress so she might be maneuvered into her ball gown.

“
Mother?” he asked.

“
Yes, James,” she answered as the servants hoisted her into a strategic upright position, allowing them to draw the gown over her head.

“
It’s John, mother. James is your son-in-law.”

The
Mrs. Astor squealed, “Aaaaooowwwww!!” as one of the maids tucked her hands under Mrs. Astor’s armpits to hoist her up.

“
They’ll be arriving soon,” Astor muttered to no one in particular. “We’ll bring her out maybe an hour after it starts. I’ll let you know.”

None of the help acknowledge him, they were too busy working Mrs. Astor into her dress. Astor shuffled over to his mother. He stroked the few long gray hairs that remained on her nearly bald head and kissed it tenderly.

***

There was another man tending to his old mother that night. Far south of Manhattan, he was in a large, white gabled house near the Savannah riverbank in Augusta, Georgia. Outside a soft breeze whispered through the naked magnolia branches. Inside the man was tipping a decanter of aged bourbon into two finely cut crystal tumblers, then precisely diluting it with an equal amount of water. He placed the glasses on a tray next to two carefully folded linen napkins and walked the drinks into the living room, setting them in front of the shrunken woman seated before the fire.

“
Mother, your drink.” His drawl was smooth and easy.

“
Thank you, Archie.” Her honeyed speech was even more drawn out – she was a true daughter of Dixie.

They sat by the fire listening to a grandfather clock tick away the seconds of 1907, not exchanging a word. Archie glanced at the woman he loved more than anyone in the world. He observed how frail she was and knew this might be their last New Year’s together. He took an inventory of her as she sipped her drink, making a mental photograph that he might retain forever. Her skin was a creamy pink, unblemished, marked only by the brush of age. Her silken hair, once golden and now a shimmering ivory, was fixed in a loose bun in the fashion of her youth. Her eyes were pools of jade offset by surrounding pearl white. She blinked serenely, felt his eyes upon her and reached her thin hand out to take his.

“
Archie,” she said in a low voice, “this drink is mixed in a fine and proper manner, but may leave me a touch intoxicated before the midnight chime arrives.”

“
Then just sip it judiciously, mother.”

“
Come now, have you ever known me to be judicious about fine bourbon?”

“
No, and that’s one of the reasons why I love you.”

“
Of course you realize I may drop off and begin snorin’ like a hibernatin’ bear before the celebratin’ begins.”

“
Music to my ears, mother.”

“
If my snorin’ is sweet music to your ears, then I have my doubts that I raised you properly.”

They both laughed. “You raised me properly, mother. Trust me on that.”

She squeezed his hand. “I know I did, son. Praise the Lord.”

* * *

John Astor surveyed the guests as they streamed into the ballroom below him. As the room filled, Astor had his mother wheeled in her chair to the edge of the second floor balustrade. In the misty glow of candlelight, with a dark wig of gentle curls that tumbled onto her shoulders, Mrs. Caroline Astor looked like a regal mistress peering down on the American aristocracy that was primarily her invention. Everyone in the ballroom stopped, gazed up at her imperial face and broke into applause.
The
Mrs. Astor waved her white-gloved hand and smiled sweetly, mouthing words the guests couldn’t hear from below. Which was fortunate, because she was spouting a stream of senile foulness about the unworthiness of the entire group of old, white-hair poseurs and wondering where her beautiful, refined friends were.

Her son John, who was by her side, did not bother to tell her that those white-haired poseurs below were what remained of her beautiful, refined friends. As Mrs. Astor continued to smile and wave and mutter a stream of vileness, John itched for fresh air and a cigarette. “Take her back to her room then bring her out near midnight,” he said to the maid, then headed down the stairs. On his way through a back hallway he spotted his wife Ava laughing with a tall, dark-eyed man whom he didn’t recognize.

“
Oh, hello Jack,” Ava said dryly. “Having fun?”

Astor twitched his mustache. “Yes. You?”

Ava took a sip of champagne and shook her head of graying hair. Even middle age did not diminish her ravishing beauty. “Mmmmm. Oh, I haven’t introduced you. This is Mr. Daniels. Mr. Daniels, my husband, John Astor.”

Astor nodded ever so slightly. “Sir.” Then Astor dared to ask: “I don’t recall you on the invitation list, Mr. Daniels. You were invited by…?”

“
Me, darling,” Ava piped up. “Mr. Daniels and I play bridge together.”

“
Oh, I see. Well, I trust you’re enjoying yourself, Mr. Daniels?”

Daniels looked at the floor, his eyes darting uncomfortably about. Ava leveled a look at her husband. “He’s having a divine time and truly appreciates your hospitality.”

“
It’s nice to be appreciated,” Astor muttered then pulled out his pocket watch. “I expect you by my side at midnight to wish our guests a good New Year.”

“
Of course, darling.”

Astor nodded to his wife and Daniels then scurried away.

* * *

She
was
snoring. And it
was
music to Archie’s ears. He glanced over at the grandfather clock. 11:27. He decided to tend the fire before waking her. Archie lifted his tall frame from the deep chair and bent near the woodpile. He examined the split logs, searching for a nice birch that would blast the room with a New Year’s light then quickly fade so that they both might retire soon after the glass of champagne. Finding just the right log, Archie threw it on the fire. The log slid into a slot between the fading embers and began to crackle.
Maybe another log
. He straightened, only to be stopped by his image in the mirror over the mantle.