SEPTEMBER 2017

SEPTEMBER  2017
ONE HUNDRED YEARS AGO - STANDARD OIL. Still dominating strangling the nation, a century later.

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Wednesday, November 18, 2009

HOW TO GO BROKE IN A HURRY


I heard about a guy who came up with a brilliant idea, convinced some money people to invest in his dream, and made a billion dollars. He built himself a huge mansion and lived happily ever after. It happens. Of course you never hear about the fifty or sixty guys who came up with exactly the same idea and then went broke. The text books call this capitalism. I call it the “Savannah Effect”, that being the name of the first ship to cross the Atlantic using steam power. And if you were wondering why Detroit doesn’t have an electric car ready for sale right now or why the U.S. spent billions on a Space Shuttle that is now considered a white elephant, the answer is the “Savannah Effect”.

It happened in 1819 and if you check the history books you will discover that the first steam ship to cross the Atlantic was the “Great Western” or the “Cape Breton” in 1833, or the “Siruis” in 1838.  It depends on which book you read. But whichever book you read you will not read about the “Savannah” because, well, because it never made a dime. And in a Capitalist culture this is the big secret, I mean besides the secret that advertising lies and that girls like sex. Failure, is the big secret.

The alternative engergy folks are now selling the idea that sailing ships can cross the ocean powered by the free fuel of the wind: except the wind is not free. It requires masts and sails and a lot of rope and it once required a large crew to handle it all. And even with all of that you could only move when the wind was blowing.

By the beginning of the nineteenth century the world had five thousand years invested in sailing technology. And living with wind technology meant that the advantages of steam power were obvious.

A steam ship could leave port when it wanted to, and even travel against the wind. The crew could be a tenth of the size needed on a sailing ship, which meant more of the power was used for moving cargo and less for moving the crew. The crew are expenses. The cargo is the profit. And the new nation of America had a shortage of manpower, meaning a shortage of sailors. Steam ships were the obvious way to increase profits. And that is what capitalism is all about. Because it sure ain't about efficency. That is the other great secret of capitalism, that, and "the check is in the mail".

Anyway, in 1818, the successful cotton merchant William Scarbrough of Savannah, Georgia paid $50,000 for a 319 ton packet ship then under construction at the Fickett and Crockett shipyard, on the East River, in New York City. Mr. Scarbrough was convinced that the future of naval commerce was in steam, and he was president of (and principle investor in) the newly formed Savannah Steamship Company. Do you like they way they worked the hi-tech product into the company name?  Sort of like calling your new electric car "The Volt". Mr. Scarbrough was intent upon establishing a regular steam ship service between America and Europe. And to shepherd that intention into reality Scarbough sought out Captain Moses Rogers.

Moses Rogers seemed to have been born at almost the perfect time and place for a young man with a maritime heritage, a mechanical bearing of mind and an adventurous spirit. Fifty years earlier those talents would have been wasted. But at the turn of the 19th century he seemed to be perfectly positoned - seemed to be.

He was pure Yankee, born in New London, Connecticut. He had been one of the first captains of Robert Fulton’s “North River Steamboat” (Later called the “Claremont”) and in June of 1808 he had shared command of John C. Steven’s steamboat “The Phoenix”. Now, Stevens had missed beating Fulton to the honor of first steamboat in America by just a month, and missed profitability by not having the Governor of New York as his partner.

While Governor Livingston had granted Fulton (his partner, of course) the sole right to operate steamboats on the Hudson River, Steven’s designs were forced to make the  riskier runs between New York and Philadelphia. And it was in costal waters that Rogers built his reputation as a navigator and an engineer, cause the engines kept breaking down. It was, at the time, a relatively rare combination of skills. Also, Captain Rogers had already discussed the idea of oceanic steamships with Stephen Vail.

Vail owned an iron works in Moorestown, New Jersey. Vail employed engineers who had worked with Watson Watt, the developer of the steam engine. Vail’s engineers not only had personal experience at building steam engines but they had also managed to smuggle vital data about them out of England. It seemed like a partnership of these three men was made in heaven. How could they fail? I shall pause now while we all snicker.

On August 22, 1818 the newly named “Savannah”, 98’6” long by 25’10” wide, with three masts and a man’s bust for a figurehead , slid off the ways in upper Manhatten and immediately sailed to Vail’s Speedwell Iron Works, at Mooristown, New Jersey where a 90 horsepower 30 ton steam engine, removable side paddlewheels and a 17’ bent smokestack were installed. The work took six months. On March 29th 1819 the Savannah sailed on her shakedown cruise to her namesake port. Then on May 22nd, she set sail for Liverpool, England.  Scarbrough could already smell the money piling up in his pockets.

The correct word here is “sailed” as the Savannah’s engine gobbled up 10 tons of coal a day. She could only carry 75 tons (with about another 5 cords of wood as an emergency backup). Besides, under sail, the Savannah could make 10 knots an hour, while under steam alone she could only average about 5 knots. So the steam power was used only when the winds failed. She used her steam engine less than 80 hours in total during her crossing.

The Savannah broke no speed records. She covered the 3,000 miles in a mediocre 22 days, and ran out of coal in the process. The boilers had to be fed the wood so the Savannah could make her "grand entrance” into Liverpool under steam.

The British were not impressed.  In the first place they had not invented the thing, the Americans had. Pish posh, and poo hoo. It seemed to the Limies that the limited power of the steam engine was not worth the loss in the cargo space the engine took up.

Given the cold shoulder in England the Savannah sailed for Copenhagen, where the King of Sweden offered to buy the ship for $100,000. But not having been authorized in advance to sell the ship, Captain Rogers said no. Ah, if he had only said yes, this story might have had a happier ending, because back home in America, the nation was being rocked by the Panic of 1819, and Mr. Scarbrough needed the cash infusion.

Record numbers of people in Boston were sent to debtors’ prison. In Richmond, Virginia, property values fell by half. Farm workers, making $1.50 a day in 1818, were only earning fifty-three cents a day a year later; wood cutters were being paid thirty-three cents for a cord of wood in 1818, but only ten cents for a cord by 1821. (Does any of this sound familar?)

And one of the bigger victims of the panic was William Scarbrough, of the Savannah Steamship Company. On June 5, 1819 Scarbrough had to take out a mortgage on his new mansion to secure his debts, which then totaled $87,534.50. A year later, May 13, 1820, Scarborough was forced to sell his beautiful home to Robert Isaac, his brother-in-law, for $20,000.  He had to sell his house to his brother-in-law; that must have stung! Oh, Isaac allowed William to continue to live in the house. But the very next day he laid claim to everything else that Scarborough still owned, including his shares of the steamship Savannah.

The Savannah was stripped of her boilers and put back into service as a standard packet ship. She was a failure at that too. In November 1821, in a gale, she ran aground and broke up off of Long Island, New York. Gee, I hope she was insured.

Stephen Vail, whose Speedwell Iron Works had installed the engine on the Savannah, was still owed $3,527.84 for his work. He never got paid. Moses Rogers went back to work running a dull coastal steamer, the “Pee Dee”. He died of yellow fever at Georgetown, South Carolina on November 15, 1821, at the age of 42. And somehow I am sure a contributing factor to his early death was his loss of faith in the Savannah.

William Scarborough, the inspiration for this noble misadventure, lived out the rest of his life in his own home, (thanks to his brother-in-law), even leaving it to his daughter in his will, just as if he still owned it. He died in 1838, at the ripe old age of 62 and is buried in the Colonial Park Cemetary in Savannah.  His home is still standing. It's address is now 42 Martin Luther King Jr. Boulevard, an address which might take some explaining to an old slave holder from 1818. But the building now houses "The Savannah “Ships of the Sea” Maritime Museum", featuring a model of that amazing failure, the steamship Savannah. And that should make the old man proud.

The steamship Savannah was a good idea. But like most ideas, good and bad, it was judged a failure. Nobody got rich off the Savannah and most people associated with her went broke. And that is why they should be remembered. It's the way capitalism moves forward, the way it's supposed to move forward. If death is required to give life meaning, then failure is required to give capitalism meaning. And somebody should explain that to the Wall Street Bankers and the Health Care Leeches who think they are entitled to suck America dry so they can avoid going broke. Please remember, luck is always part of the balance sheet. The Savannah should serve as yet another reminder of that.


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Sunday, November 15, 2009

CRIMINAL MASTERMIND


I hasten to point out that the men who sought shelter at the Inn were not a harmonious quartet of criminal masterminds. It turns out they were not masterminds of any kind. But then, how many people are masters in any line of work? The lead voice in this group was Charles Gibbs, a diminutive thirty-six year old fire plug - and the last pirate in New York City who did not work on Wall Street. His Achilles in crime was the baritone Thomas Wansely, a tall and powerfully built black man too curious by half. The bass was voiced by Robert Dawes, cook and nonentity, a plump man with no criminal record, as of yet. But tenor and ringer was John Brownrigg, who possessed a fatal combination of a conscious and stupidity, which caused him to first commit a crime and then to confess it unbidden to a complete stranger.

Perhaps it was the warm food, or the hot rum or perhaps it was the flames of purgatory which drove John Brownrigg to draw innkeeper Samuel Leonard aside and spill his tale on that stormy afternoon of November 24, 1830. The four men, explained John, had been crewmen of the small brig Vineland, docked at Vera Cruz, Mexico, loaded with a cargo of cotton bales, and casks of molasses and rum.

Late in the day Thomas Wansely had been ordered by Captain William Thornby to stack a half dozen heavy barrels in the Captain’s quarters. The strain and curiosity drove Wansely to pry open one of the leaden barrels for a peek. Inside he found newly minted Republican silver coins – Mexican pieces of eight. And as the tide pulled the Vineland into the Gulf of Mexico, Wansely shared his discovery with first mate Charles Gibbs.

By Gibb’s figuring the barrels together held today’s equivalent of over one million dollars in untraceable cash. It was untraceable because, without a standardized national currency of their own, Spanish and Mexican coins circulated so commonly in America, that prices were figured as the equivalent in Spanish (and Mexican) currency, to the point that today’s ubiquitous American “$” sign was borrowed from its Spanish inventors.

In the morning, Gibbs and Wansely opened one of the barrels of rum and shared it with Dawes, Brownrigg and the other crewmen. And once they were all well intoxicated, Gibbs told them of the cargo of silver, and confessed that last night he had thrown Captain Thornby overboard. With that much money at stake, explained Gibbs, they were now all under suspicion for murder. So, Gibbs suggested, why not share the crime and the silver between them. One crewman balked and joined the captain in the briny deep. The others quickly agreed to become pirates. As the vessel crossed the gulf bound for New York, a second man sobered up and expressed regret. He joined the other two in the sea.

Their doubts thus drowned, on November 23, 1830 the Vineland reached the westernmost barrier island off New York. Its name derives from the Dutch ‘Conyne Eylandt’, meaning Rabbit Island. They anchored in an isolated corner of Jamaica Bay. There, with a nor’easter brewing in the gathering darkness, the four men struggled to lower a skiff and fill it with their burdensome barrels of silver. They then scuttled the Vineland and set her afire. As she sank into the muddy waters of the bay the four men in the low riding skiff set off for shore, at what is today Rockaway Beach.

It was not beach weather. The surf was pounding. A gale was approaching. The landing was a disaster. In the crashing waves the four seamen lost most of their booty, and were able to save just 10% of the coins. Wet and cold and exhausted, soaked by a pounding downpour, the gang of four came to the realization they had not thought things through as well as they thought they had. While Wanesly and Brownrigg stood guard over what was left of their loot, Gibbs and Dawes walked to a tavern Gibbs recalled in the isolated village of Carnarsie.

The tavern was run by the Johnson brothers, John and William. The youngest, William, who answered the door that night, recognized Gibbs and was willing to loan him a horse and wagon for an hour or so. Gibbs explained he had a heavy load to transfer from a boat.

Having thus obtained the tools required, Gibbs and Dawes returned to the beach, and, according to Brownrigg, the four men buried the remaining $5,000 in Mexican silver, marking the spot with a strand of ribbon tied to the saw grass. They then returned to Johnson’s house and Gibbs paid for the rental with a generous bag of new Mexican coins.

The four men were headed for lower Manhattan, where they would claim the ship had been lost in the storm. But their convenient alibi was by now pounding the coast, and after having crossed Coney Creek, the quartet was forced to seek refuge in John Leonard’s Sheepshead Bay Inn, where John Brownrigg spilled his guts.

Leonard was nothing if not decisive. Quietly he gathered his staff and they fell upon the three villains. Well, two of the villains. Gibbs and Dawes were quickly tied to their chairs, but Wanesly broke for the woods, followed by the courageous waiter Robert Greenwood who was armed with an unloaded flintlock pistol. An hour later Greenwood returned with Wanesly in tow.

The justice of the peace, John Van Dyck, was summoned, and next morning Brownrigg lead the authorities to the buried treasure. Only the treasure was not there.  Under questioning Dawes decided to cooperate, and related the tale of the visit to the Johnson brothers tavern. Under questioning the brothers confirmed the details but, no, they insisted, they knew nothing else. Van Dyck was certain that they did. And Van Dyck was correct.

The instant Gibbs had crossed William Johnson’s palm with the silver, the mastermind William knew that something serious afoot. Perhaps if the payment had been less generous, or if Gibbs had paid in any other currency, his secret might have remained secret. As it was, 19 year old William immediately woke up his older brother John, and after examining the weary horse’s hooves, the brothers searched the beach. They quickly found the cache of stolen silver and re-stole it. They dragged it inland a few hundred yards, divided and re-buried it in two new caches, one of $40,000 and the second of $16,000. And then they returned home for a hearty breakfast.

JP Van Dyke suspected this, or most of it. But he could prove nothing. And once a beachcomber had discovered Mexican eights rolling in the surf, and was joined by hundreds of others combing the sand, there was no way of proving where the crazy eights had come from, the cache or the surf. Van Dyke could only choke the four birds he still had in his hand, held for now in the Flatbush Jail.

And then something curious happened. William Johnson began to have second thoughts. He approached the insurance company (yes, even in 1830 there were insurance companies), and inquired what they might pay as a reward for the return of some of the silver. The insurance company replied that they would be willing to make a generous settlement which might not leave the brothers filthy rich, but at least they would be free from worry of future legal entanglements. Encouraged, William returned to the Coney Island Beach to confirm the security of the cache, whereupon he made a most distressing discovery.

The larger cache was gone, as was older brother John. Had he stolen the silver from his own brother? Well, John was married, so there was John's wife’s incipient criminal mastermindy-ness to consider as well. Clearly John or his wife had reached the conclusion that even though John had not heard opportunity knock, but had to be awakened to it, he was deserving of the larger share of the stolen silver. So he took it. And the 21 year old Willaim Johnson returned the $16,000 in pieces of eight left behind in exchange for a very small reward.

On April 22, 1831, on the site that would one day support the Statue of Liberty, criminal masterminds Charles Gibbs and Thomas Wansley climbed the thirteen steps of a scaffold, where they were both hanged by the neck until they were dead. Gibbs had been convicted of piracy, and was the last man hanged for that crime in America - so his death was not entirely without meaning. Wansley died for the crime of murder. Dawes and Brownrigg served short jail terms, and disappeared from history. William Johnson lived in Brooklyn until 1906. He married and produced at least one son and a daughter.

But of the two remaining masterminds, John and Mrs Johnson, who were heard of escaping with today’s equivalent of $800,000 in cash, nothing more was ever heard. But I would very much like to know what became of them, because if, as I suspect, he or she later turned up dead, then we would know if the percentage of criminal masterminds in this affair was 20% or less - less being the historical average.

 -30 -

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