A Disposition to Be Rich: Ferdinand Ward, the Greatest Swindler of the Gilded Age

by Geoffrey C. Ward

  The prosecution was led by Elihu Root, the forty-year-old U.S. attorney for the Southern District of New York, ambitious, able, and eager to win a conviction in what was sure to be a headline-grabbing courtroom drama.‖

  “It was a great case,” he recalled half a century later, great in the public interest it inspired and “great in the sense of the mass of evidence to be examined.”39 So many checks and securities and contradictory ledgers were in evidence that it had taken Root six weeks just to get them into some kind of order. An aide remembered him sifting through it all at his enormous desk, “on which he had a dozen spindles, a dozen different colored pencils and little pads.… From time to time he would make a little note and stick it on a red spindle,… he would make another note and stick it on a yellow spindle.”40

  Root and his assistants needed to convince the jury that in approving fictitious loans to Grant & Ward’s employees and close associates without collateral, Fish understood that he was breaking federal law. They also wanted to at least suggest that he had known and approved of everything Ferd was doing. In its opening brief, the prosecution pledged to prove that the loans had been as “unwarranted, as clandestine, and as flagitious as though a conduit had been laid and operated from the vaults of the Marine Bank to those of Grant & Ward and was kept constantly in operation.”

  Fish sat silent, gazing up at the lofty ceiling, polishing his spectacles, sometimes taking notes. His attorneys, led by Stanley G. Clarke and Edwin B. Smith, had to persuade the jurors that their client might have been careless and certainly had made “mistakes,”41 but had never been deceitful or larcenous. Instead, Fish had been Ferd’s luckless dupe: “Gentlemen,” Clarke told the jury, “if anybody is to be punished for these things, let it be Mr. Ward.”42

  It took the government nearly two weeks to lay out its case. Nathan Daboli, the Marine Bank’s former assistant cashier, was the principal witness. He told of Fish’s suspicious willingness to sign off on unsecured loans to Grant & Ward employees and to let Ferd mislead national bank examiners by returning rehypothecated securities to the vault just before their visits. He also described the “special” Grant & Ward account book Fish kept that showed the firm was often overdrawn by hundreds of thousands of dollars and was never shown to the directors.

  The defense countered by doggedly leading Daboli up and down the pages of the bank’s mammoth ledgers—eighty-one of them were stacked waist deep around the witness stand—in search of earlier loans to Grant & Ward that had been paid back with interest. By listing successful transactions, Clarke hoped to show that Fish had not been recklessly risking his depositors’ money when he made loans to his own firm, that Grant & Ward would have somehow paid off its outstanding loans of $1,373,000 had not unfortunate circumstances intervened. The money flowed both ways, he claimed. Yes, U.S. Attorney Root shot back, “but the money the firm paid into the bank was previously drawn out of it.”43 During this phase of the trial, one juror’s wife complained, the attorneys moved through the endless columns of figures so slowly and in such detail that she couldn’t sleep at night because of her husband’s constant tossing and turning and muttering about stocks and securities.

  The government called five former directors of the Marine Bank to the stand to demonstrate how poorly run the bank had been and how casually they had taken their responsibilities: they’d never questioned a single loan made by the bank, had never opened a loan envelope to see if securities were actually present, and claimed not to have known that Fish had an interest in the firm to which millions were being lent or to have recognized the names of the Grant & Ward employees to whom the loans were allegedly granted, even though at least two of them had invested in the supposed contracts and had been introduced to everyone who worked in the firm’s office. On March 24, Root rested the government’s case. If he had had his way, the district attorney said, the bank’s ex-directors would have been in the dock alongside its former president.

  Court was adjourned the next day so that the judge and attorneys could travel uptown to take the testimony of General Grant. He had written to the U.S. attorney expressing his eagerness to speak about what Fish and Ward had done to him and his family. He greeted the lawyers in his library, huddled in front of a hickory-wood fire, wearing a skullcap, dressing gown, and slippers. Everyone agreed to waive the oath. The questioning went on for three-quarters of an hour. Grant’s voice was low but steady. Once or twice he winced in pain.

  He reiterated that the letters that bore his signature and that Fish had claimed would prove his innocence did nothing of the kind. He made it clear again that he had been consistently and adamantly opposed to dealing in government contracts—federal, state, or municipal. When, not long before the crash, he’d heard what he called “whispers” about what Ferd was doing, he had called him aside and been assured that “he wouldn’t do anything that was going to injure me,… and … he had no contracts anywhere.”44 Had Fish ever asked him about the business? Only once, he thought, during their railroad trip together to the Kinzua Viaduct: “I made a remark … to the effect that Mr. Ward was a man of wonderful ability, wonderful business capacity or something like that, and Mr. Fish said he had never got anything so good in his life before.”45 Fish had never told him Grant & Ward’s account in the bank was badly overdrawn, never advised him that the firm was borrowing large sums, with or without collateral. The general had had so much confidence in his partners that he had not even bothered to read the monthly reports of the profits he had believed he was making. On the morning of the crash he had “supposed that I was worth well nigh to a million dollars.”46 He and his sons had lost everything.

  As his visitors rose to leave, one newspaper reported, a lawyer told Grant, “You’re certainly looking remarkably well.”

  “I don’t know about that,” Grant answered. “I am conscious that I’m a very sick man.”

  Grant’s testimony was read out to the jury the following morning. There was nothing new in it. But the effort he had made to answer every question had a profound impact inside the courtroom and beyond. When he seemed suddenly to be sinking two days later, one of his physicians publicly blamed the great effort he’d made to be responsive to his visitors for sapping his strength. Newspapermen began a death watch outside his house. Every day’s developments were described and improved upon by the headline writers: “Grant Failing”; “The Old Chieftain at the Door of Eternity”; “The Hero Still Fighting His Unconquerable Foe.”47 He eventually rallied, but Ferd, reading the newspapers every morning at Ludlow Street, understood the impact reports of the general’s near death were likely to have on his own chances for public forgiveness. When he heard that a lawyer representing his assignee in a suit against William Warner still hoped to examine the general, he wrote begging him to drop the idea.

  The public have already been so ungenerous as to attribute the General’s sickness to his troubles with Grant & Ward and when the examination was made for Mr. Fish the other day, the papers said it did much to aggravate his troubles. This is so hard for me to bear that I can’t help but ask that you will do what you can to save me from any more such insinuations.48

  Plans for Grant’s testimony were dropped, but Ferd had every reason o be concerned. “The public reads about [the general’s] throat and thinks of him only as a sufferer from cancer,” the New York Times would write a few days later. “In one sense it is true that cancer will kill him, but those who know him best know that Ferdinand Ward is morally responsible for his … sufferings.”49

  When Fish testified on his own behalf, he presented himself as his former partner’s hapless dupe. He had joined forces with Ferd only because he had been his late father-in-law’s friend. He had never much wanted to become partners with either Buck or General Grant. He had believed absolutely in the genuineness of Ward’s government contracts and had played no part in drafting the fraudulent letter that seemed to authorize them, signed by the general. He also had never knowingly made any loans without collateral, and
had thought those he had arranged for Grant & Ward in the names of its employees were “as safe as I ever made. I never had any suspicion of Grant & Ward’s soundness and I believed all Ward’s representations to be perfectly true.”50

  Then, Elihu Root began what turned out to be four days of brutal cross-examination. Fish denied everything. Profits had sometimes seemed swollen, he admitted, but he’d never questioned them. Although he and his partner had breakfast together most mornings and often dined with one another as well, he had never once asked Ferd where he was finding such vast amounts of flour and other commodities, or who was paying for them, or how they were to be stored or shipped. He had never asked to see the firm’s books, either, and had always believed that the securities on any loans he approved were in the envelopes where they belonged. On those rare occasions when they were found to be missing, Fish said, he assumed they would be brought to the bank “as soon as it was practicable. Mr. Ward was always rather remiss in these matters.”51

  How had Fish’s curiosity not been aroused immediately after the firm’s founding when the first profits were being divided and yet Grant & Ward’s account with the Marine Bank held just $280? It hadn’t worried him at all, he said; he’d just assumed that the bulk of the firm’s funds were in some other bank. He had always believed that Ward had outside agents handling the contract business, too, though he’d never asked about it.

  Root handed him a heap of checks, all drawn by Ferd against the firm’s special account, and asked if he could find a single one meant to pay for the purchase, transportation, or storage of government supplies of any kind. Fish went through them, one by one. There were none.

  Root bore down.

  “Did you believe these to be honest contracts?”

  “For government contracts, I did.”

  “What do you mean by that?”

  “Well, there were large profits.”

  “Did you believe them honest …?”

  “So considered.”

  “So considered by you?”

  “By everybody that gets government contracts.”

  “Why, then, did you believe that it was necessary that you, a member of this firm, should never see a contract?”

  Fish paused, stared at the ceiling. “I had implicit faith that these contracts existed.”

  “And you considered that there was nothing to prevent you from telling other people that the firm of Grant & Ward had government contracts, but nevertheless the interests of General Grant as a candidate for the presidency forbade that you, a member of that firm—raising millions of dollars to be used in filling the contracts, and lending hundreds of thousands of dollars of the money of your bank to be used in filling them—should not see them?”

  Fish’s voice shook. “I was always very reserved in speaking about government contracts, and always as confidential as I could.”

  But hadn’t he ever inquired about them? After all, he was urging others to invest in them.

  “I did not desire to know about them personally.”

  “Why not?”

  “Nothing. Only I had no curiosity.”52

  Fish’s attorneys said they planned to call some twenty witnesses willing to testify to their client’s lifelong reputation for honesty. The judge allowed only one to take the stand, former New York governor John T. Hoffman: the issue was not whether Mr. Fish had been honest before he formed his partnership with Ferdinand Ward, the judge ruled; what mattered was what he had helped Ward do once they had begun to work together.

  Fish’s attorney called his client back to the witness chair to explain that he had at least once consulted Grant about the business of the firm. Fish said,

  In the latter part of 1883, I called at the office of our firm to see Mr. Ward. I met General Grant in the outside office and after some general conversation, I asked him how business was. He answered that it was first-rate; that the success of Grant & Ward was phenomenal. “I think we have made more money than any other house in Wall Street, perhaps in the city.” He said that Ward was the ablest young businessman he ever saw. I asked him whether he ever examined the books of the firm. He said, no; he had only looked over the monthly statements which were satisfactory to him.

  Fish’s return to the stand did not help his case.

  “Why did you ask General Grant if he had examined the books?” Root demanded.

  “Because I had a perfect right to do so!”

  “You testified that you had never examined them yourself.”

  “I did so testify.”

  “Then, why did you want to know whether General Grant had examined them or not?”

  “Well, I had the curiosity to ask him.”

  “Is that the best reason you can give?”

  “That is all.”53

  Wasn’t it at about that time, Root asked, that Fish had conveyed $100,000 worth of real estate to his children? “It might have been.”

  “What connection was there between the conveyances and your conversation with General Grant?”

  “None in the world.”

  And hadn’t Grant & Ward also changed its way of doing business around then, using city deposits to provide money to the bank for the firm to use?

  “I never thought of it.”

  The defense rested on April 10. In his summation, Edwin Smith did what he could for his badly damaged client. His errors had all been committed in good conscience, he argued. Ward, not Fish, was the villain. “It is absurd,” he concluded, “to argue that Mr. Fish deliberately went to work to defraud the bank which he considered the apple of his eye, and which he loved as the children of his loins.”54

  Elihu Root’s response was devastating, its impact enhanced by a severe cold that had reduced his voice to a hoarse rasp so that everyone in the courtroom had to strain to hear him. Nearly everything to which Fish had testified in court led inexorably to a finding of fraud, he said. Fish had admitted that he’d made fictitious loans for which no securities had ever been deposited with the bank; he’d known all along that Grant & Ward, to which he was lending these enormous sums, had no firm basis and no credit beyond what the use of the Marine Bank’s funds gave it; he had allowed his partner to overdraw his account by $750,000 and also to borrow $1.5 million without having to put up any collateral; and as bank president and business partner he had made deals between the bank and himself that had betrayed his depositors.

  “That man,” Root said, pointing to Fish, “that man is ready to testify to anything which he thinks will save him from the Penitentiary.”

  To the crime of defalcation he has added that of perjury.… Either he knew he was putting the money of the bank into the hands of a confederate to defraud the bank, or else he tried to cheat the United States government by helping his confederate to carry out his fraudulent contracts. His defense reduces itself into this—that he knew the bank’s money was used in corrupt practices unequalled since the days of the Tweed ring.

  Mr. Smith said that the bank was wrecked because James D. Fish believed Ward. I say it was wrecked because James D. Fish entered into a conspiracy with Ferdinand Ward to rob the bank, to lend its money to carry out contracts which he knew were fraudulent. He deliberately allowed the firm of which he was a partner to honeycomb the bank; he deliberately embarked the funds intrusted to his charge on a fraudulent scheme. Whether he was deceived by Ferdinand Ward or not, James D. Fish deceived the directors of the bank, he deceived the stockholders and the depositors. If this man cannot be convicted upon the evidence furnished, there is no use of talking about the integrity and probity of our financial institutions. We might as well acknowledge that only the poor may be punished.55

  General Grant’s increasing frailty was still on everyone’s mind. Fish’s effort to justify his own actions by implicating Grant in the contract business now seemed especially cruel. Root took full advantage of this, his voice now a mere whisper.

  These conspirators knew that great heart could not stoop to the pettiness of their greed. His one weak
ness was that singular truthfulness and steadfastness which gave him, in his firmness of attachment and unwillingness to suspect wrong, the simplicity of a child.… . I do not know in the records of business treachery any story that can parallel this treatment of a simple and great soldier by these two conspirators. Forever be sunk into infamy the ignoble soul that would seek to besmirch that great reputation which is the glory of our country, for the sake of gain by petty treacheries, faithlessness to trust and lying devices.56

  The jury agreed. It took less than six hours to find Fish guilty on twelve of the twenty-five original counts. (The verdicts on five would later be overturned on appeal, but seven stuck.)

  Despite everything, the editor of Fish’s hometown paper remained sympathetic: “Expressions of sadness at this ending of the trial are general in our village, notwithstanding there are so many sufferers from the wrecking of the Marine Bank. Many elder persons of the Mystics cannot forget that Mr. Fish was their school-mate and companion in youth, and many others seem to feel that, however irregular may have been his proceedings in the bank matter, he is not worse than many others in like positions.”57

  The New York Times was less forgiving: “Upon Mr. Fish’s own statement it appears that a person so guileless, simple and confiding as he depicts himself to be, should not be the President of a bank. Moreover, such a person, does not, in fact, become the President of a bank.”58

  * Some months later, when a federal grand jury examined Ferd about the same matters, it got more or less the same answers. According to the foreman, the future publisher George Putnam, he showed Ferd one of his ledgers while he was on the stand. Many years later, he reconstructed the exchange that followed: