A Disposition to be Rich
Geoffrey C Ward
Knopf, 418 pp
Reviewed by Christopher Silvester
Investors referred to him as one of ‘the Young Napoleons of Wall Street’. A US senator called him ‘the most successful financier thus far produced’ and even suggested that the next president ‘would make a stupendous blunder if he did not make Ferdinand Ward Secretary of the Treasury’. Yet not long afterwards his financial business had crashed, practically ruining a former US president, and he was exposed as a fraudster who had been robbing Peter to pay Paul. Long before Bernie Madoff gulled the financial world and even before Charles Ponzi had given his name to his infamous method of swindling investors, there was Ferdinand De Wilton Ward Jr.
Notice the author’s shared surname. Geoffrey C Ward is the great-grandson of this miscreant financier of the Gilded Age. He has been waiting to write about Ferd, as the family called him, for 50 years, ever since his grandfather, Ferd’s son Clarence, turned over to him the contents of Ferd’s prison trunk. This book is no attempt to clear his great-grandfather’s name, but a searing portrait of a financial scoundrel — a sociopath and narcissist who fooled Wall Street from 1880 to 1884.
The son of a Presbyterian minister and his wife who had served as missionaries in India, Ferd was brought up in upstate New York. He learnt deception early on, feigning illness to escape school by convincing an eye specialist that he was going blind. He began running up bills and borrowing money among his father’s parishioners. His mother bemoaned his ‘avaricious spirit’ and his ‘disposition to be rich’.
At the age of 21, through his older brother Will, he obtained a job in New York as secretary to the superintendent of the Produce Exchange, which dealt in foodstuffs. Ferd courted Ella Green, the daughter of a banker, and three months after they married his father-in-law died. Ferd persuaded his widowed mother-in-law to invest in 30 Produce Exchange certificates at $300 each. Instead of actually investing the money, which would have earned a handsome return in the next five years, Ferd used it to pay for his extravagant lifestyle. It was the first of his frauds.
Through his father-in-law Ferd had met James Fish, president of the Marine Bank, and through his brother he met Buck Grant, the son of Ulysses S Grant. Fish was 30 years Ferd’s senior and had a reputation for rectitude, but he was also greedy for profits. Ferd manipulated the older man into thinking Ferd had connections on Wall Street. In 1880 the trio founded the brokerage of Grant & Ward.
Over the next few years Buck Grant brought his father into the company and also his brother Jesse. Ferd had contributed no more than IOUs towards the company’s share capital, while the Grant family had committed $250,000. The scene was set for Ferd’s bold, though hardly elaborate, fraud.
Ferd ‘began rehypothecating the firm’s securities, pledging the same paper over and over again to borrow money, paying the interest on one loan out of the principal of the next, hoping that things would somehow balance out one day’. Fish turned a blind eye; the Grants were kept in ignorance.
When it came to recruiting investors, Ferd’s trick was to claim that his firm had an inside track on lucrative government contracts through General Grant. As with Madoff a century later, Ferd ‘knew the power of the subtle suggestion and secretive wink that opened purse and emptied pockets, and was masterful at spinning out the kind of particulars that made his supposed contracts seem plausible’. His boldest stroke was when he took seven prominent men, including General Grant, on a three-day trip to upstate New York by private railroad car. His guests were forbidden to discuss business and none of them raised the subject of the secret government contracts from which each falsely believed he was profiting.
The Marine Bank failed, then Grant & Ward collapsed, and most people believed that General Grant died of shame, although cancer of the tongue was the given medical cause. Fish was convicted of fraud, then Ferd followed suit. Emerging from prison after seven years, he set up home with a woman other than his wife, and for the remainder of his life he attempted to prey on his son Clarence by seeking to gain control of Clarence’s inheritance from his mother.
The pages devoted to his upbringing only serve to emphasise Ferd’s strangeness. But the core of this illuminating and colourful book is the four years of his riding high on Wall Street and the two years between exposure and conviction.
The lesson for financial historians is contained in the reflection of one Wall Street contemporary, as true of Madoff from the 1980s onwards as it was in the 1880s: ‘It is marvellous how the idea of large profits when presented to the mind in a plausible light has the effect of stifling suspicion.’