THE ORIGINAL WALL STREET BULL

 

I apologize, but the closest I can come to describing the drama in the board room of the New York and Erie Railroad on that crisp November afternoon is to imagine being drunk, riding on a hungry alligator. With raw chicken in my pockets. And that must have been what it was like that afternoon to being Mr. Jacob Little, the Antebellum Napoleon of the Board Room. 

When Jacob Little was riding the Wall Street roller coaster, every once in awhile the cars jumped the rails and some riders got killed.  That has not been a reality for corporate managers in America for so long as to make it hard for modern readers to imagine it was ever true.  It ain’t a real game if you are “too big to fail” because then, you can’t lose. And Jacob could. And did.

Jacob Little (above) -  tall and slim and “careless in his attire, wearing a hat like that of a farmer, and not a very prosperous one” - was called “The Great Bull of Wall Street”.  

See, the original traders, who bought hides from butchers, had invented the ‘futures market’, by buying and selling the hides of cattle that had not yet been slaughtered, and then later, those not yet born.  And if farmers thought the prices for hides were about to fall, they would hold onto more of their bulls, thus ensuring more calf's for next season, when the prices might be better. 

So, those who expected prices were going up, were expecting a “bull market”.  And a Bull Trader in the stock market is an aggressive  gambler, willing to use his horns to get to the food trough.  And that is an apt description of Jacob Little.

Jacob’s contemporary, Henry Clews, claimed that Jacob “…made and lost” nine fortunes on the Wall Street ride. And Matthew Smith, in his book “Sunshine and Shadow in New York” recorded a moment of introspection which Jacob experienced while walking past the mansions surrounding Union Square. “I have lost money enough today to buy this whole square. Yes, and half the people in it,” he said. And that was probably not an exaggeration.

At a time when railroads were the high tech, Jacob Little was known as the ‘Railway King’, and not because he knew anything about how to run a railroad.  Jacob was one of the first to realize there was far more money to be made in buying and selling railroad stock than in actually running a railroad. 

Between 1830 and 1855 the nation quadrupled its miles of railroad track, During that same time at least 125 railroad companies issued stock but never laid a single mile of track. They sold preferred stock and common stock, and bonds that had to be held for years, and bonds which could be converted into either preferred or common stock the same day you bought them. But they never bought a single engine or a freight car.

And then there was the "futures’ market" in railroad stocks and bonds. There was even an ‘options’ market, which was the buying and selling of promises to buy or sell stock in railroads which might never exist. This was the Wall Street version of the Wild West; have printing press, will fleece all suckers. And even those railroads which were real, suffered from endless stock manipulation.

Consider the profitable Norwich and Worchester Railroad in Massachusetts, whose largest stockholders signed a secret agreement to stop investing in the new track or engines, and sell their Norwich stock only to each other. This created an artificial shortage of the stock, which drove up the price...for the time being.  

The partners agreed to hold their shares until Norwich topped $90 a share. They would then dump the stock and leave the suckers owning a hollowed out and nearly worthless railroad;  And just to keep all the crooks honest, any member of the “cartel” who sold below $90 a share contracted to pay a $25,000 fine to their fellow conspirators.

Jacob Little was one of the largest conspirators in the Norwich stock scam, but he was the smart one. As the stock price began to rise, Jacob quietly offered to sell his fellows a portion of his stock at $89 a share. Well, perhaps offer is the wrong word. Because after Jacob had done this several times it dawned on his New England  "partners" that they had to buy his stock in order to avoid a price collapse of their own now inflated stock, before they were ready to sell. Thus proving that old adage about honor among thieves. 

And once Jacob had unloaded all his Norwich stock at $89 a share, he dutifully mailed a $25,000 check to his “partners”. By then he had profited several times that amount by shafting his partners exactly as they had planned on shafting the suckers. The partners let it be known that if the Bull of Wall Street showed his face in Boston again, they intended on claiming his ears.

It was maneuvers such as that which inspired a handful of the lesser wizards of Wall Street to plot Jacob’s demise. They called themselves "The Happy Family" but in reality were his fellow board members on the New York and Erie Railroad. And it seemed to them that Jacob was overextended.  Besides owning a large chunk of now almost worthless Erie stock, Jacob had recently bought several thousand ‘options’ pledging to buy even more. When those options matured in six months, if the option holders demanded it, Jacob would have to deliver the stock at whatever the current market price.

Jacob was betting, of course, that the price would go down, and as a board member he had the power to help that happen.  But the Happy Family decided to use Jacob’s genius against him. First, they quietly bought up all of Jacob’s 6 month options. And then, as the six months ran out, they began to buy every share of Erie stock they could find, bidding the price up 15 points above the price of Jacob’s options. And Jacob seemed to remain so blissfully unaware of this impending doom that he actually bought even more options.

The ultimate thrill on this ride arrived at the annual stock holders meeting, promptly at  2:00 p.m. Friday, 16 November, 1855.  It was the maturity date for Jacob’s options. The meeting had droned on for an hour until the clock struck 3:00 pm. The stock market was now closed for the day. It was not until it was no longer possible for Jacob to buy stock to meet his options, that he made his appearance.  Now they would bankrupt him. 

At Jacob's late appearance, one of the Happy Family, Nelson Robinson, could not help gloating. He greeted Jacob by saying, "Well, we've got the Erie locked up tight enough, every share of it. Now, stand to the rack like a man and acknowledge that the jig is up".

And then, one by one,  the wizards presented their options to their cornered prey. The stack was very impressive. The Napoleon of the Board Room had been broken right before their eyes. But just as the operator was about say, "Exit the car to your right", Jacob Little pulled another ticket for the ride, right out of his derriere.

Actually he pulled it out of London. Jacob was late to the board meeting because he had stopped in the Erie’s stock transfer room to complete a transaction he had conducted out of sight of the Happy Family, on the London Stock Exchange.  There Jacob had bought Erie Railroad “convertible bonds”, 

Normally convertible bonds are not worth the premium they sell for. If you are going to pay a premium price,  you might as well buy the common stock. But in this case the Happy Family had helpfully bid the price of Erie stock so high, they made the premium more than worth the price. 

And as Jacob fastidiously converted his convertible Erie railroad bonds into enough shares of common Erie Stock required to fill the options, he was also diluting Erie Stock so that, when the market opened Saturday morning (they traded a half day Saturday in those days) the price of Erie stock took a nose dive. The wizards had been so intent on cutting off the limb that Jacob had climbed out on, that they failed to notice they were on the same limb. And Jacob had just climbed down first.

Clearly somebody had leaked the plot, and, in retrospect that was inevitable. With Jacob always willing to bribe any trader or broker for an advantage,  somebody was bound to warn Jacob about the brewing coup d’etat.  But so brilliantly had Jacob gamed the system that future generations of Wall Street bulls used this same trick to transfer future fortunes into their bank accounts at the expense of future generations of suckers, until investors insisted the rules be changed - in this case a new law requiring a convertible bond be held for at least sixty days before it could be transferred into common or preferred stock.

None of this had anything to do with running a railroad. Except it siphoned profits out of providing better and safer service at a lower price - the supposed advantage of capitalism. 

Most Wall Street fairy tails end the story here, with The Napoleon of the Board Room winning until he faded into history. But inevitably Jacob lost one more fortune than he made. Less than a year later a Wall Street Panic left him (above center right) stunned and wandering Wall Street. 

Jacob Little, "The Great Bear of Wall Street” and "The Napoleon of the Board Room". died broke on Sunday, 28 March, 1865.  The Board of the New York Stock Exchange adjourned for the day to attend his funeral, but I can not say for certain whether they did this out of respect, or to confirm that Jacob was really dead.  But I can say that it has been the goal of Wall Street brokers ever since to rig the game so that they never run the risk of dying broke, ever again. And that makes it a very different game than the one that Jacob played.  But a hell of a lot safer for the investors, and the crooks.

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GETTING LOST WITH DANIEL BOONE

"I can't say as ever I was lost, but I was bewildered once for three days.” The words were written by the real Daniel Boone. And if Daniel were to wake up from his current sleep he would be bewildered again and angry to find that most of him was back in Kentucky. Because this man who kept moving his entire life to avoid “people”, finally fell into the clutches of the very "people" he hated the most - politicians and their close kin - lawyers.

Daniel Boone never wore a coonskin cap. He was born in Pennsylvania, the sixth child of Quaker parents. While he was still an infant his parents were forced to sell their land after two of their elder children married outside the “Society of Friends”.  Their fellow "friends" forced them out of their church.

Daniel reached adulthood in North Carolina. There he showed such natural talent as a hunter, he  dropped out of school to take it up professionally. Most of what he killed was sold in public markets. A sister-in-law taught him to read and write, and other men would later follow him because he could regal them with readings from the “Bible” and “Gulliver’s Travels”. 

When he was 21 years old he married 16 year old Rebecca Bryan. They had ten children - although when they found the time I have no idea, Daniel was often away from home.

Daniel was a short and shy man, and taciturn except when surrounded by his family. He was not the first white man in Kentucky. He was however one of the first Europeans who managed to walk out of Kentucky alive.  

He was not a great Indian fighter, and in his old age insisted, “I never killed but three”, adding, “I am very sorry to say that I ever killed any, for they have always been kinder to me than the whites.” 

And when he walked back into Kentucky it was as the supervisor of forty lumbermen, hired to cut a trail through the forest. Boonsboro was named after him because he was in charge of the crew who built the fort.  But it was not his fort.  He had no financial share in it.

In 1799, after being cheated out of his property by Kentucky lawyers, he took his family completely out of the United States, settling in what was then the Spanish territory of Missouri.   He returned to Kentucky only once, in 1810.  Missouri had changed hands twice by then, once to the French and then to the Americans. To placate the Kentucky lawyers who could now harass him, Daniel returned only long enough to pay off his debts. He immediately returned to Missouri.

It was there, surrounded by her children, grandchildren and great-grand children that Rebecca died, in 1813. And it was there that Daniel Boone died in September of 1820, after eating too many sweet potatoes and suffering indigestion. He was 85.

The funeral service was preached by a son-in-law of Daniel’s son, and was held in a barn because so many extended family members wanted to pay homage to a man who had never been wealthy but had always been loved. He was buried in a coffin he built by himself, next to his beloved Rebecca, in a family graveyard on Teuque Creek.

And as was common with frontiersmen and women, the graves (above) were unmarked for a decade, until the 1830’s.

Then, beginning in the mid-1840’s, as the Boone legend was created by novelists (and with hundreds of trees baring marks supposedly carved by Daniel, which increased the property value) investors in Frankfort, the new capital of the Commonwealth of Kentucky, decided that the late Daniel Boone was just the draw they needed to attract new customers (and investors) to their new municipal cemetery.  

One booster wrote that it was “…fitting that the soil of Kentucky should afford the final resting place for his remains, ….that the generation which was reaping the fruits of his toils (should)…have in their midst…the sepulcher of this Primeval Patriarch whose stout heart would be watched by the cradle of this now powerful Commonwealth.”

Kentucky appealed to Daniel’s only surviving son, Nathaniel, describing their offer of the “Most beautiful cemetery in the west…” and assuring him that “$10,000 will be expended on the grounds and improvements”. But the answer from Nathaniel, who knew how his father felt about Kentucky, was a firm and short “no”.

So Frankfort officials dispatched an aging nephew of Daniel's, who still lived in Kentucky, William Linville Boone, along with two more animated representatives to speak to the family. Jacob Swigert was a longtime country court Judge in Frankfort, and for twenty years the Clerk for the Kentucky Court of Appeals. Thomas L. Crittenden (above) was the 26 year old son of the American Secretary of State, and was being groomed to join the power structure in Kentucky..

Unfortunately (or fortunately) the trio arrived in Missouri while Nathaniel was away on militia duty. So the trio descended upon Harriet Boone Barber and Panthea Boone Boggs, granddaughters of Daniel, through his deceased son Jesse. Whatever the two women told the Kentuckians, the trio decided it meant they had agreed to Daniel’s removal to the Commonwealth.

The next morning, 17 July, 1845, the determined delegation appeared at the front door of Harvey Griswold, who now owned the land Daniel and Rebecca were lying in. Harvey argued, but the lawyers from Kentucky answered every protest, promising to erect a monument to replace the missing relics of Daniel and Rebecca. And with the "approval" of the two grand daughters, it appeared the law was on the Kentucky side. Three local black men had been hired to disinter the graves; King Bryan, Henry Augbert, and Jeff Callaway. Jeff had been a slave for the Callaway family, and now as a free man he was digging up the father of his one time owner, Mrs. Flander Boone Callaway.

The work attracted a crowd of thirty to forty people, most of them related to Daniel and Rebecca. As the three men worked, the crowd grew angry, Thomas Crittenden distracted the angry relatives, assuring them that all was being done legally and properly (it was not) and that Kentucky was going to erect a memorial to the great man on this spot. They never did. Meanwhile the three black men continued to dig. The coffins had long since rotted into the soil, but the workers did not realize this until they struck bone and shrouds.

Wrote a St. Louis newspaper, “Some bones crumbled when hands tried to lift them, but the three black men put what they could in pine boxes.” Another observer noted that the bones were handled “as carelessly as if they belonged to an ordinary mortal.” The St. Louis Reporter observed that “A number of local people picked up teeth and bits of bone…” and kept them as personal mementos, along with the silver cuff links from Daniel’s best shirt. The next day landowner Harvey Griswold found a jaw bone laying on the ground. It is hard not to describe what the officials from Kentucky achieved as less of a removal, and more of a hurried desecration.

On Friday, 12 September, 1845, the “remains” of Daniel and Rebecca Boone laid in state in the (old) State House. That night, the skeletons were arraigned on a table to be examined as if they were paleontology exhibits. Daniel’s skull, minus his jaw, was passed around, examined even by eight year old John Mason Brown. When the skull had finally been examined by a phrenologist, all the bones were reloaded into two elaborate coffins and finally allowed a second measure of peace.

On Saturday, 13 September,  a grand procession of bands and marchers followed the hearses, each pulled by four white horses up the hill to the cemetery on a bluff overlooking the Kentucky River. Speeches were made, and prayers were said, and then a brisk business was made selling burial plots near the now sacred site where Daniel Boone’s bones now rested.

But the cemetery never allotted money to build the promised monument, and it was not until 1860 that the state of Kentucky approved $2,000 to build one. Once it was, it was not well cared for. And it was not until after years of damage by souvenir hunters that the Daughters of the American Revolution convinced the state legislature to repair the monument and erect a fence around it. What a shock; the politicians had lied to Daniel, even after he'd been dead for 25 years.

Needless to say, Kentucky never allotted money to erect the promised monument on the original grave site in Missouri. And in July of 2008, a thief stole the bronze plaque bolted to a boulder which had been placed there in 1915 (again by the D.A.R.) to mark the humble spot where Daniel had wanted to rest in peace. It is estimated it would cost the state of Missouri $10,000 to replace that plaque. It does not seem likely any modern politicians, who see no advantage in investing in America’s future, will be willing to invest that amount of cash in our past.

It puts a lie to one of the most insightful things that the self educated hunter Daniel Boone ever said, “Curiosity," he wrote, "is natural to the soul of man, and interesting objects have a powerful influence on our affections”.  Evidently, Daniel, that is true only if there is money to be made out of those objects, and then, everything is for sale, even the soil feed by our earthly remains.

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