Wednesday, May 6, 2009

This Day in Presidential History (Grant Swindled by Partner)

May 6, 1884—It didn’t start with Bernard Madoff. From the beginning, swindlers and financial panics have infested America, but the failure of banking and stock brokerage firm Grant and Ward on this date was unique.

The machinations of 33-year-old con man Ferdinand Ward led to the financial ruin of his partner, ex-President Ulysses S. Grant—and to the subsequent decision by the aging soldier to rescue his family from debt by finally penning his memoir of his Civil War triumphs.

Recently, I’ve been seized by the urge to read Herman Melville’s 1857 novel, The Confidence- Man. That urge not only harks back to my belief that you can tell as much about an author from his lesser-known works as from those invariably assigned during college, but also because I’ve become increasingly convinced that con schemes are as American as apple pie.

The confidence scheme is so endemic to our culture because of instincts at the heart of the American Dream. 

For the victim, it exploits the belief in entrepreneurship, the risk-taking that will help you achieve success; for the victimizer, it appeals to the idea that you can make yourself over, countless times if necessary.

In one sense, then, it’s appropriate that this early version of the Ponzi scheme (hatched more than three decades before the rise of the Italian immigrant for whom it’s named) would ensnare Grant.

The general not only announced his identity proudly in the very first simple yet sweeping sentence of his autobiography (“My family is American, and has been for generations, in all its branches, direct and collateral”), but also, through his military successes, kept the United States knit together as a transcontinental colossus singularly dependent on a money culture.

As my posts yesterday and last year on the Battles of the Wilderness and Vicksburg indicated, Grant was indomitable, refusing to allow a reverse to defeat him. 

Elizabeth Edwards’ just-released autobiography is entitled Resilience. Grant had this quality in abundance—and he would need every bit of it in the final two crises of his life.

The first initial of the “young Napoleon of Finance” who brought catastrophe on Grant’s family was F, but it could just as easily have stood for “Fake” as for “Ferdinand.” 

First the smooth-talking minister’s son took in the general’s namesake, Ulysses S. (“Buck”) Grant Jr.—a man who, despite a fine name and the best education money could buy, then or now (Phillips Exeter, Harvard, Columbia Law School), had never been able to establish himself independently in the professional world—then he swiftly won over the man who saved the Union.

A Giant With the Sword, A Bust With the Buck

What made Grant such an easy mark? He was one of those people who is really not meant for any profession except the one in which he made his reputation.

After resigning his Army post in 1854 (sheer loneliness and enervating service in a Western outpost sent him off on a bender, suggests sympathetic biographer Geoffrey Perret), Grant could not make a go of it in his father’s business in Galena, Ill. 

And, no matter how good his intentions, he lacked the shrewdness to make a good President, let alone a great one.

Second, Grant believed people would deal as squarely with him as he would with them. Perret makes a very interesting (though, to my mind, not conclusive) argument to this effect when outlining his relationship with chief of staff John A. Rawlins. While other historians see Rawlins as the man who saved his commander from the bottle, Perret sees him as self-aggrandizing. 

This view gains some credibility when one considers the vast amount of corruption during Grant’s two terms as President: Not a bit of it touched him personally, but he could not spot it in others who filled his administration.

Third, the old soldier’s other forms of risk-taking—a friendly hand of poker among friends, or breaking loose from supply lines that hamstrung the rapid movements he executed in the war—were either born of long study or not particularly sizable. The investment in Ward’s firm, in contrast, was $200,000.

Ferdinand Ward: A Character of Vast Shamelessness

Grant thought that his young partner was investing the firm’s money, but Ward did nothing with it but build a magnificent Connecticut home and New York townhouse while glorying in a fine stable of horses. 

When the scheme unraveled, Ward was nowhere to be found at first. After his capture, he was sentenced to Sing-Sing prison. 

Meanwhile, Grant was left with all of $180 in cash and $150,000 in debt.

And what of Ward—what led him to this pass? Well, let’s say this: he challenges one of my most firmly entrenched beliefs—that our current cultural shamelessness represents a recent growth.

Years before the hordes who now confess their sins on Larry King, The View, and 60 Minutes, Ward emerged from a quarter-century of obscurity to offer a retrospective of his relationship with the former President, in the pages of the New York Herald.

How shameless was Ward? Not in the class of a Baron von Munchausen in spinning a tall tale, nor even close to the American equivalent, the memoirs of Supreme Court Justice William O. Douglas.

But you just know you have to be on your guard as soon as you read the following remarkable sentence: “Our friendship never changed through all the period of stress and trouble, but remained until the time of his death.”

Maybe Ward gambled that in the dawning of the age of the mass media, when the public can maintain little or no interest in the news because the press provides little or no historical background to judge it, nobody would recall how Grant had pictured him in his Personal Memoirs: “the rascality of a business partner developed itself by the announcement of a failure.”

Ward’s great-grandson chose to pursue a more honorable method of storytelling: historian. A former editor of American Heritage, Geoffrey C. Ward has more recently been associated with writing text for the great documentaries of Ken Burns.

While researching the life of his famous scandalous forebear, this fine historian discovered a curious postscript: after release from Sing-Sing, Ferdinand kidnapped his son from an uncle who’d been raising the boy after Ferdinand’s wife had died.

Grant’s resolve to do the honest thing and pay off his creditors led him to reconsider a long-held stance—a refusal to write his own memoir. He finally agreed to write a three-part series for Century Magazine’s “Battles and Leaders” series on the Civil War. 

That, in turn, led him to partner with Mark Twain to publish through the humorist’s own new publishing venture.

Theodore Roosevelt and friend Henry Cabot Lodge collaborated on a series of short profiles called Hero Tales of American History. They could very easily have added the story of how Grant, against all odds, completed his memoir.

Nearly a year after the discovery of his financial distress, the general was diagnosed with cancer. For the remainder of his life, he pushed himself to complete his book. After enduring ferocious pain and sleepless nights, he completed the memoir only three days before his demise.

Personal Memoirs not only earned his family a much-needed $450,000 after his death, but, more than a century later, remains the gold standard among Presidential memoirs for its clear prose and unparalleled frankness about waging war.


voxpop said...

Thanks for this! Fascinating and thought-provoking as usual. I'm going to post a link to it on The Greased Pig.

MikeT said...

Dear Robert,

Many thanks! I appreciate that.

Mike T.