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Friday, January 23, 2015

DUER CONSIQUENCES

I can't seem to find anyone who was not certain that William Duer (above) was destined to die broke. and even a few who told him so, some even while helping him bankrupt themselves. At forty-five Duer was a slight man with “sharp features and a receding hairline”, a man of “...dashing personality...with both talent and wit...”, a gregarious individual of boundless energy and imagination, “Making schemes every hour and abandoning them as instantaneously”. His fortune, at its peak, was between $250,000 and $375,000 in 1792 (over $4 billion today). But more, William Duer was the founding father who put the manic in America's economic depressions. Thomas Jefferson called him “The King of the alley”, meaning both the back alley, and "The Street", as in Wall Street before it was even "The" street of American finance. He suckled at the breast of that most unfair American midwife, Madam Laissez Fair. His bipolar greed added the purge to American gluttony. He was the American fingers on Adam Smith's invisible hand, always reaching for his partner's wallet. Let me give you an example.
The United States officially came into existence on 1 March, 1781, when the Articles of Confederation were finally ratified after four years of bitter debate. But economically America would not be a nation until all thirteen states shared a currency. Paper money was considered too risky to be legal tender, but coins had intrinsic value. In 1786 the Treasury Board accepted a bid from the firm of Jarvis and Parker to supply copper “Fugio” pennies (above), named for the Latin word meaning “I fly” stamped on their obverse.
Winning bidder, James Jarvis (above),  suggested speeding up the process of issuing the coins by melting down the 30 tons of British copper pennies the Treasury already had on hand, and proposed paying for the copper out of his profits. And that little bit of economic legerdemain was the opening that William Duer needed to grab a little something for himself. You see, Duer was the head of the Treasury Board, appointed by his friend and business partner, Alexander Hamilton.
According to James Jarvis, when they met in William Duer's New York City mansion to discuss the copper trade, Duer bluntly demanded a share of the business as a bribe. Jarvis says he was offended and ready to walk out, but then agreed so long as Duer remained a silent partner. Duer countered with a demand for a straight $10,000 bribe. Jarvis agreed to that too, but only if the business was successful. And that was what Jarvis thought he had agreed to, “relying on his (Duer's) honor”. Unfortunately Duer had no honor. Only few hundred “Fugio”'s were ever minted. Jarvis returned the unused copper, and that should have been the end of it. . But like a bad penny, William Duer turned up again, still demanding his $10,000 bribe.
Jarvis insisted he was not bound to pay Duer so much as “ten pence”. He insisted, Duer's “share... was conditioned on the success of the contract.” Duer simply ignored Jarvis' arguments and relentlessly demanded to be paid. And Jarvis simply refused. Finally, at the end of September, 1788 Duer turned up the pressure, using his friends in Congress to demand Jarvis pay for the copper used in minting the few hundred “Fugio” pennies. The government already had the pennies. Now they wanted to be paid for the copper that was in them. Given the criminal treatment for debtors in those days, Jarvis was looking at some unpleasant jail time.
And just at this moment, Duer suggested that Jarvis might want to invest in another one of his schemes, an Ohio land speculation called the Scioto Company.  Two shares were available, at $5,000 each. Anxious to be rid of the Duer, and reasoning this way he at least got land that might some day be worth something, Jarvis gritted his teeth and sold off his coin stamping equipment, using the cash to pay a premium price for two sections of land in the “Scioto Company” Ohio reserve. Finally free from the villain (he thought), Jarvis left on a business trip to Europe.
A year later Jarvis returned and found he had no shares and no cash. He wrote to Duer's lawyers, “I demanded of Mr. Duer, the Ohio rights he was to have purchased for my account....He told me they were in the name of Doctor. J. Ledyard, and should be transferred to mine, in the company's books. I applied to...the treasurer, who informed me there were two shares in the name of Doctor Ledyard, but that he could not transfer them to me.....I have more than ten times applied to Mr. Duer, and...I could get no satisfaction....” It was a favorite tactic of Duer, to stubbornly refuse to admit he had stolen money, no matter the evidence or the law or common sense. Poor Mr Jarvis was so worn down by now, and so confused by Duer's shifting arguments, he seems to have forgotten they were arguing over the payment of an illegal  bribe! Jarvis complained, “I have been three years amused in this business, it appears that he (Duer) should at least allow me interest (on his $10,000)..." 
It was like speaking Greek to an Italian donkey. Duer (above) insisted he had sold two shares of the Scioto Company to Doctor Issac J. Ledyard. He (Duer) had been paid. He no longer had the shares. The company was supposed to transfer the shares to Mr. James Jarvis. So if Jarvis had a problem, it was with the company, not with Duer. It was perfectly logical as long as you forgot that the Scioto Company treasurer took his orders from William Duer.  If you did remember that, Duer's arguments would eventually drive you insane. When the Scioto Company finally failed some years later, two shares were still on the companies' books as belonging to Doctor Isaac J. Ledyard. And there is no hint how many times Duer used Dr. Ledyard's two shares to bilk other partners. But for William Duer all this was a mere distraction to his tour de fraud with the Bank of New York.
The BNY was America's only private bank large enough to have its shares traded on the brand new New York Stock Exchange. Many people expected Alexander Hamilton, as Secretary of the Treasury Department, to eventually take over the BNY. And that was what William Duer assured his neighbor and new partner, Alexander Macomb. Blindly following Duer's instructions, Macomb bought 290 shares of the BNY, expecting to make a tidy profit as soon as Hamilton announced the Federalists were taking over the bank.
Of course, word that Alexander Macomb (above)  was buying BNY stock sent the price climbing, which so impressed Macomb he wrote to a friend in London praising his partner. “Duer's genius assures him it can be done without any further capital farther than can be raised beyond our joint credit at the bank.” Of course, “joint capital” meant Alexander Macomb had co-signed Duer's loans, which meant the money had been raised on Macomb's reputation, not Duer's. By 1792 a growing number of people no longer  trusted William Duer enough to do that . Macomb was one, and Walter Livingston, of the large and wealthy and powerful Livingston family, was another.
While in New York City, Alexander Macomb and William Duer continued borrowing and buying BNY stock (eventually $100,000 worth), in Philadelphia Walter Livingston (above)  and William Duer were buying $160,000 shares of BNY futures, and buying them short. In other words Walter and William were betting against Alexander and William. Of course, Walter Livingston had also co-signed William Duer's Philadelphia loans. So without risking a penny of his own money, William Duer had bet both sides of the coin - heads he won and tails at least one of partners lost. It was predictable. .
Other members of the Livingston clan certainly predicted it, and Duer's involvement made them nervous. They began to withdraw the gold and silver they had on account at the BNY. That forced the directors of the bank to tighten their loan levels, and to raise the interest rates as high as 1% per day on just the sort of risky loans that Alexander Macomb and Walter Livingstson had recently made. William Duer (above)  tried to calm his New York partner, assuring Macomb, “I am now secure from my enemies, and feeling the purity of my heart, I defy the world.”
The world did not share the feeling. First Macomb and then Walter Livingston defaulted on their loans and were confined in the Manhattan debtors prison (above) . The financial panic spread and quickly caught up Duer as well.  By the summer, William Duer was also in debtors prison, partly for his own protection, flat broke but not broken, claiming he could save his fortune if the banks would just let him free to repeat his old mistakes. The American economy teetered briefly on the edge of its first collapse, the recession of 1792, or what was called "Duer's Panic". 
Five hundred of Duer's victims laid siege to the jail, chanting, “We have Mister Duer. He has our money.” Benjamin Rush, Congressional gadfly and gossip, went down to take a look, and described the victims as,  “merchants and tradesmen, dray men, widows, orphans, oyster men, market women, churches, and even common prostitutes.” A lively trade developed on the streets around the jail in Mr. Duer's IOU's, and fights even broke out. One night a man broke into the jail, and confronted Duer with a pair of dueling pistols, demanding he pay what was owed or choose a weapon right there. Duer handed over what he had on him and the would be duelist left..
The end, when it came, was long and drawn out. Confined in jail for seven years for debts he could never pay,  William Duer died, probably of kidney failure, in April of 1799. He was only 57 years old. He left behind a widow unprepared for a life without wealth, and eight children. Alexander Hamilton wrote the first   epitaph for William Duer,  when he insisted, “There must be a line of separation between honest men and knaves, between respectable stockholders and dealers in the funds, and mere unprincipled gamblers.”.
The second, more permanent epitaph to William Duer was delivered on Thursday, 17 May, 1792 when 24 traders signed an agreement under a Buttonwood tree in front of 68 Wall Street. The two regulations they committed themselves to were, one, the signers would only trade with each other, and two, they would charge a ¼ of 1 % fee on each transaction. Like all practical market systems the New York Stock and Exchange Board was created by and survived because of regulations, designed by and for the majority of "respectable stockholders and dealers in funds",  and not the manic gamblers flaming across the horizon.  
Despite having only the Bank of New York and 4 other stocks to trade, a year after it was founded the New York Stock Exchange was successful enough to build itself a home, The Tontine Coffee House (above, left) on the corner of Wall and Water Streets. John Lambert would describe the Tontine as “filled with underwriters, brokers, merchants, traders, and politicians; selling, purchasing, trafficking, or insuring...Everything was in motion; all was life, bustle and activity...”  But the attraction of the dramatic manic was there as well, even with  the wreckage of William Duer still scattered about.  Noted an observer in June of 1793, “There was an affray at the Tontine...(a fight) between...aristocrat and democrat.” A few months later the newspaper “Columbian Gazetteer” would complain, “only persons of the same party” remained at the Tontine."   Wall Street, on its way to the panic of 1798, was again becoming addicted to the dramatic manic depressives in its nature, and likely always will..    
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Wednesday, January 21, 2015

THE SURPRISING JOAN

I have just been surprised again by Joan of Arc. Some modern thinkers think she was insane, others that she was hungry for attention, and many still believe she was touched by God. But I would not be surprised if all or none of that were true, considering how many surprising things I know about her  – beginning that her real name was not Joan of Arc. Her father was Jacque Darc, a farmer and a tax collector in the tiny northern French village of Domremey. Now, at the time, few people could read or write. So when Charles VII raised Joan's family into the nobility, it is probable the scribe who transcribed the family name for the first time, spelled it phonetically. And that is how Jehanne Romee Darc became Joan d'Arc. And that is half as surprising as the latest thing that has surprised me about her.
Catholic France in the 14th and 15th centuries closely resembled Islamic Syria in 21st, - a vacuum of anarchy, pestilence, war, famine, death and rape all made worse by religious fanaticism. The French inferno broke out in 1328, when 34 year old Charles IV died. The next King of France should have been Charles' nephew with his fourth wife, Edward,   AKA Edward III,. King of England. However Philip Capet, the fourth son of Charles with his first wife thought the King of France should be more French. Like him. Over the next ninety years this disagreement split the French nobility into waring factions, and justified repeated English invasions. The Gallic nobility proceeded to die, mostly with arrows from English longbows in their chests. The English nobility mostly died from campaign diseases - dysentery, gonorrhea, diphtheria, tetanus, typhoid, smallpox, measles, malaria and food poisoning. And that was even before the Black Death surprised Europe in 1348 and killed half of the peasants in both France and England.
By 1429 the English and their French flunkies controlled the French coast from Normandy south to the Pyrenees mountains. They had captured Paris and most of the north, and everything in the interior down to the River Loire. They had laid siege to the only bridge over that river, at the town of Orleans.  It seemed only a matter of time before Orleans fell and the English captured the current French, French King, Charles VII.
At 27, Charles was a beaten man. He had lost his self confidence when he was defeated by the English at Agencourt, and his self-respect when his own mother called him a bastard and disinherited him. He was now the timid, indecisive King of Bourges, the capital of the only part of France he still controlled. His most adventurous thoughts of late were of retreating to Spain. So desperate were Charles' supporters that their hopes for salvation centered an illiterate 17 year old religious fanatic who showed up at court in Chinon, talking about the voices which had been telling her for five years that she and Charles would save France.
They had smuggled Joan across English controlled territory by dressing her like a man. The story is that when she arrived at Chinon, in March of 1429, Charles had disguised himself, but Joan unhesitatingly pushed through a crowd, and from one knee greeted him, “God give you a happy life, sweet King.” It must have been a miracle, since no one at court, whose lives and wealth depended on the King, could have been trying to rebuild Charles' self confidence with a little theatrics. Joan was then sent off to restore the self confidence of the troops at Orleans.
She did not carry a sword. She did not lead any charges. She carried a banner. She shouted religious cheers from behind the lines. She took an arrow in the shoulder, but it was not a serious wound. She encouraged the soldiers as they broke the siege of Orleans in early May. The turn around started so quickly it must have been a miracle, or an operation prepared over the winter, before Joan had even arrived at Chinon.
And then somebody – it could have been Joan, or Charles or his generals or even Joan's voices– proposed the King's army surprise the English, and march around Paris, 150 miles. to Reims, in the dry and beggarly province of Champagne. Reims was where Clovis, King of the Franks, was baptized in the year 496. In its Cathedral every French King since had been crowned. And with Joan symbolically leading the way, Charles VII was crowned in the Reims Cathedral, in July of 1429. 
 This recaptured the momentum from the English and their French allies. And Joan got much of the credit for this surprising reversal of fortunes in the war. Maybe a little too much credit for her own good.
The next year, 1430, was also surprising, but unpleasantly. Charles' army tried to take Paris, but failed, and Joan was wounded again. In May Joan fell off her horse in a skirmish outside of Compiegne, and was captured by English supporting Frenchmen. By January of 1431 she had been sold to the English and was a prisoner in Rouen, in northern France. And that spring she was put on trial. 
The English did not want to kill Joan. They wanted to disgrace Charles VII. And if they could get Joan to confess to being a liar or a sorceress, that would mean Charles was either a fraud or a fool. So they charged Joan with wearing men's clothing and claiming she was communicating directly with God. 
It should have been easy for the well educated ruling class clergy, politicians and soldiers to control a simple French maid, especially one being confined for months in a dank, dark cell and kept on a starvation diet. But surprisingly it didn't quite work out that way
Obviously God had communicated directly with some people – Noah, Moses, the saints, Kings and the Pope. But to claim direct contact with God without Catholic Church endorsement was heresy, and punishable by death. 
 Joan avoided this trap by refusing to discuss anything her voices had said, including who the voices said they were. The maiden of Orleans was no dummy, as she showed again while avoiding the next trap which her judges threw at her.
She was asked, “Do you know whether or not you are in God's grace?” The questioner must have thought himself clever. If she said yes, Joan was guilty of the sin of arrogance, meaning she was not in a state of grace. If she said no, then Joan was admitting to being in a state of sin. Either response would condemn her to death. But Joan left the elite judges “stupefied”. 
She said, “If I am not, may God put me there; and if I am, may God so keep me. I should be the saddest creature in the world if I knew I were not in His grace.” Joan of Arc was no simple French maid. Or perhaps, surprisingly to the ruling classes, few maids in France were as simple as their “betters” wanted to believe.
Condemned to be “burned at the stake”,  Joan changed her plea. But when Joan learned she was to live the rest of her life in an English prison on bread and water, she recanted her recantation. 
Her jailors responded by probably having her rapped, certainly having her beaten and tortured, trying to force yet another confession from her. Surprisingly to many, the torture did not work. Joan was convicted as a relapsed heretic , and again sentenced to be burned alive at the stake. But surprisingly, that was not what happened.
At nine in the morning of 30 May 1431, the now 19 year old Jehanne Romee Darc, dressed in a simple white linen shift, was lead into the old market square of Rouen, France. She knelt in front of her enemies for thirty minutes and prayed for her soul and theirs. And then she mounted the steps to the platform, and was led through an opening in the circular pile of wood. 
In the center,  she was bound to a large post. The opening was closed and the wood set afire. And then - and this is the surprising thing I have recently learned - Joan did not burn to death. No witnesses reported her screaming or writhing against her ropes. We know she could still breath because,  until almost the end, she kept repeating the name “Jesus”. In truth, Joan d'Arc died of heat stroke.
A wood fire burns at 800 to 900 degrees Fahrenheit. The bundles of wood piled around Joan were mostly air. Once the wood was ignited, the air in between the branches quickly expanded and rushed out, drawing more air in from all sides, and then up and out at the center post, where Joan was standing. While the flame was still barely a few inches high on the distant perimeter of the fire, the air temperature around Joan started climbing. The already badly dehydrated girl began to sweat, which was quickly soaked up by her linen shift, which then prevented evaporation from cooling her body.
Her terror caused her heart to beat faster until she went into tachycardia, with a heart rate above 170 beats per minute. That caused her blood pressure to plummet. That caused the blood to pool in her feet, legs and abdomen. She became light headed and faint. 
Witnesses said she repeated the name “Jesus” just seven times before her head fell forward, meaning she fell unconscious within two minutes of the fire starting. It would take another eighteen minutes for the air around her to reach 300 degrees, when flesh starts to burn. Long before then her brain had been starved of oxygen for so long, she was already dead.
Using a sickle, the binding ropes were cut and her executioners pulled the corpse out of the fire. The crowd confirmed that the body was indeed Joan's, that she was indeed a young woman, and that she was dead – all of which meant she had not yet been extensively burned. So they pushed her body back into the fire, and burned it to ash and bone. Under guard, more wood was stacked atop the chard bones, and they were burned again, until the they cracked and shattered, ensuring there was nothing left of la Pucelle – the Maiden - but ash. Then the ashes were swept up and dumped in the river Seine, which ran right outside the city walls.  
The English were determined to wipe out all traces of Joan of Arc. Not surprisingly, they failed.
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Sunday, January 18, 2015

BATS IN THE ATTIC

I can’t say she was beautiful, but then photographs are a poor record of personality. The newspapers called her “comely”, which the dictionary defines as “pleasing and wholesome in appearance.” But Dolly Oesterreich (pronounced "Ace-strike") (above) was not wholesome. She was, when our story begins, about 33 years old, an age at which a woman, so we are told, reaches the peak of her sensuality. However, I suspect that Dolly had always been skilled at seduction. Murder? Not so much.
For 15 years Dolly had been married to Fred Oesterreich (above), a man whose only selling point as a husband was that he was wealthy. He owned an apron factory in Milwaukee, Wisconsin, where he was constantly berating his 60 seamstresses to work faster.
He pinched every penny and drove himself as hard as he drove his employees. Of course, he was better paid. As a result of his dedication to his job, the Oesterreiches  grew richer. And Dolly grew lonelier. So it should have come as no surprise when, in 1913,  Dolly asked her husband to dispatch a particular repairman she had seen about his apron factory, to fix her personal sewing machine.
His name was Otto Sanhuber  (above) , and when our story begins, he was all of 17. Again it seems, the photographs do not do him justice, either. To the casual observer he looked like a mousy milk toast of a man.  But Dolly must have recognized that, beyond Otto’s nebbish exterior, loomed an undiscovered Hercules of passion.
Dolly (above) answered Otto's knock attired only in a robe and slippers.  She showed him to her bedroom, where she kept her Singer. She lounged on the bed while Otto adjusted her bobbin. Dolly brushed back her hair. Otto tightened her belts. Dolly lifted a leg. Otto greased her shuttle shaft.  Dolly let her robe fall open. And according to Otto, he threaded her needle eight times that first afternoon.
They began by sneaking assignations in the Oesterrich home while Fred was at work, but a needling neighbor warned Fred about the man who was constantly coming and going from his house.  Dolly was forced to hem and haw an excuse. Then the lovers substituted Otto’s depressing rooms, and then a hotel. But every rendezvouses ran the risk of uncovering their affair. Eventually, Dolly conceived a simple pattern for their love. Otto quit his job and moved into the attic of the Oesterreich home (above). A curtain was thus drawn and there would be no more comings and goings - none visible to the neighbors, anyway.
The thread of Otto’s life had found his spool. The hook of Dolly’s life had found her eye. For three years they pulled the wool over Fred’s eyes. For three years Otto slept above his mistresses’ marriage bed, slipping out of his hidden attic room by day to help Dolly with her housework, and once the dishes were done, to pump her treadle and spin her crank. There were loose threads, of course, that threatened to unfray the fabric of their affair. But with a little tacking, awl was mended.
Eventually Fred got the notion of moving his factory to Los Angeles,  and in 1918 he bought Dolly a grand home on North St. Andrew’s Place (above)  in that city.  Dolly made certain the new home had a tidy tiny attic room, so Otto would feel comforted too.  Life was a perfect fit for Dolly and Otto. And Fred. As long as Fred never noticed how much it was costing him to feed and clothe one woman.
This happy scene unraveled on the night of Tuesday, 22 August, 1922,  four years after the move to Los Angeles.  Fred and Dolly returned from a dinner party and a fight broke out.  Fred lost his temper and actually struck Dolly.  And that was when Otto, listening upstairs, rushed to the rescue from his hidden room,  carrying a .22 pistol.  Now why did he have one of those?  The two men struggled. Otto’s gun went off three times, and Fred went down.  His string had run out. A few moments later the police arrived to discover an apparent house robbery gone bad.  The husband was dead on the living room floor and the hysterical wife was locked in the hall closet.  Still, there was something that made the police suspicious. When sweatered by the cops,  Dolly insisted the couple had never fought. The police, many of them married men,  knew that had to be a lie, but they couldn't prove it.
Dolly was arrested, and charged (above) with the murder of her husband. While she was in lockup Dolly pleated with one of her lawyers, Herman Shapiro, to do her a tiny  favor.  Dolly claimed to have an addled half-brother named Otto who lived in her attic, and who must be running short of food by now. Already under Dolly’s beguiling influence, Herman agreed to deliver sustenance to the half brother.
When he tapped on the hidden attic door, a bespeckeled little face appeared and wolfed down the food, and talked; he talked as if he had no one to speak to for years. He was, in fact, explained Otto, a sewing machine repairman who had come to fix Dolly’s machine years before, in Wisconsin,  and stayed to be her “sex slave”. Otto said nothing about Fred’s murder, but Herman was a lawyer and no fool. But being a lawyer, he kept his mouth shut.
Without knowledge of Otto, the Police case against Dolly (above, center)  fell apart, and she was released. But Herman Shapiro found he now cottoned to Dolly, and he insisted that before anything happened between them, Otto had to go. 
So, in 1923, Otto moved out of the attic. He went to Canada and established his own life. He even married (above). But, eventually, in search of work,  he moved himself and his new wife back to Los Angeles. In L.A. he got a job as a porter in a hotel. And Otto might have lived there happily ever after with his devoted wife, if only Herman Shapiro had kept his big fat mouth sewn shut.
In 1930, eight years after Fred’s death, Herman finally realized the seductress (above) from Milwaukee was never going to marry him, after he discovered she was secretly seducing her business manager, Mr. Ray Bert Hendrick.  Maybe the lady just couldn't help herself. Maybe Bert was really good at business and not so good at managing. A lawyer scorned,  Herman went to the police and confessed his encounter with the man in the attic. 
The police checked the long since abandoned Oesterreich homes in Wisconsin and Los Angeles and discovered Otto’s hidden abodes, and the veil was stripped from their eyes. Dolly's life quickly unraveled. 
Otto was arrested, and he made a full confession (above)  about the night he burst out of his hidden room to confront the violent Fred, and how he shot him dead.. 
And he showed (above) his tiny room where he hid while the police searched the night of the shooting, and did not find him.
And Dolly was arrested again. And charged with murder, again. 
Otto was convicted of manslaughter. But, since the statute of limitations for manslaughter was eight years, which had just run out, Otto was released immediately after his conviction. He then faded from history. I wonder if his marriage survived the revelations. I'm willing to bet they did.  
Dolly’s trial ended in a hung jury, the majority favoring her acquittal.  She was never retried, and lived out the rest of her life over a garage, surviving on the meager remains of the fortune that Fred had amassed - which would have infuriated Fred, had he not been dead.  In the end I guess Dolly was still needling poor hardworking unaware Fred.
Dolly did remarry in 1961, at the age of 75 (above, center). Her new husband was her long time business manager, Ray Bert Hendrick (above, left). She died just two weeks later.
It brings to mind the way that Leo Tolstoy began his novel Anna Karenina; “Happy families are all alike; every unhappy family is unhappy in its own way”.  And this family was surely particularly unhappy, because whatever it was that Otto and Fred and Dolly were doing together, they were doing it tailored to fit their very own custom fit lives.
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