Hetty (14 page)

Despite the rumors about Cisco that had circulated for days, the announcement took Wall Street by surprise. Cisco and Son was still known as a conservative house, not given to rash speculation. The
New York World
wrote the following day: “The fact that the firm did not do a speculative business to any great extent, that it received very large deposits from innumerable persons and corporations, that it had acted as fiscal agent for several railroads and as correspondent for many out-of-town bankers; that it did a large business in issuing letters of credit to travelers in Europe, made the failure a more than ordinary disaster.”

Bankers, investors, and financial reporters around lower Manhattan immediately began looking for the villain responsible for bringing the house of Cisco to its knees. As it turned out, there were several possibilities. They turned their anger and resentment first on Collis P. Huntington, the leader of the Houston and Texas Central. To anyone with more than a passing interest in the affair, the railroad’s failure to make the bond payment looked less like financial distress than a calculated and insidious plan by Huntington and his associates to marginalize outside bondholders and consolidate control of the company. No sooner had the bonds plummeted in value than the Huntington group started buying them up at bargain prices from distressed bondholders. It was the sort of act that today might
earn Huntington and his cronies at the very least a hot seat before the Securities and Exchange Commission, various Senate and House committees, and an intimate examination by the Justice Department, if not jail time.

In the wilder and woollier nineteenth century, the average investor could do little but gnash his teeth in anger as Huntington himself pleaded ignorance and mild surprise at the whole controversy. In a self-serving letter to the
New York Daily
Tribune two days after the Cisco failure, Huntington wrote that his Southern Development Company had acquired the Houston and Texas Central indirectly, as part of a much larger acquisition of industrialist Charles Morgan’s Louisiana and Texas Railroad and Steamship Company. Huntington claimed that since he had neither built the railroad nor issued the bonds, he was not responsible for paying interest on them. “I have been and am wholly unable to bring myself to the conclusion that any legal or moral obligation existed for my payment from my own resources the maturing coupons upon bonds of a railway company with which I have become connected only in the indirect way which I have mentioned.” As for his subsequent eagerness to buy the depressed securities, Huntington explained that he did so only as a favor to investors who felt themselves “inconvenienced” by holding nonpaying bonds.

Two other obvious culprits in the episode were John A. Cisco and Frederick W. Foote. Their crime was one not of malice but of gross naivete. As one anonymous investor wrote the day after Huntington’s letter appeared: “The Messrs. Cisco were the financial agents of the Texas Railroad Company for a long series of years, and ought to have known precisely what was its financial condition.” What the letter writer didn’t say is that Cisco and Foot should also have been more wary in dealing with Huntington, whose reputation for devious tactics was already well established.

Within a few days of the collapse, the press and the financial community had identified a new villain. The headline in the
New York World
of January 18 stated it succinctly:

“John J. Cisco & Son have nearly eight hundred creditors,” the article began. “The report in yesterday’s
WORLD
that Mrs. Edward H. Green was the heaviest of these received further confirmation in Wall street yesterday. The amount of her deposit in the bank is about $475,000 [sic]. Curiously enough while she is a creditor of the firm her husband is its principal debtor.” The
World’s
story explained the crux of the argument against Hetty:

As the
World
thus praised Cisco and Foote for their gallantry in resisting the temptation to pilfer a million or two from Hetty’s securities (which, given their recent record, they might well have lost), the
Tribune
concurred that Hetty’s “peremptory demand for the transfer of a large sum of money precipitated the failure of the firm.”

The
Times
described the events like this:

The Cisco affair marked the beginning of the public fascination with Hetty Green that would follow her for the rest of her long life. At that point she was still referred to as “Mrs. E. H. Green.” Within a short time, as her fame eclipsed that of her husband, the papers would rarely refer to her as anything but “Hetty Green.” “Mrs. E. H. Green is well known, by reputation at least, in Wall-street,” the
Times
reported. “She is believed to be the richest woman in America, a title earned by her own business sagacity, energy, and watchfulness.” The article added later: “She has lived a frugal life, exercised extraordinary keenness in her investments, and by embracing every good opportunity that the stock market afforded she has more than quintupled her inheritance. Old Wall-street operators give Mrs. Green credit for having as intimate a knowledge of railroad securities as any person they know.” Her idiosyncrasies also were attracting attention: “The ‘richest woman in America’ has some strongly marked characteristics,” the Times said. “She does business on the strictest business principles, regardless of sentiment or relationship, and she is economical in the most elaborate sense of the word. She seems to have made it a rule of her life to indulge in no personal luxuries. She has been known to
walk from her hotel in this city to a social reception through a heavy snowstorm rather than pay for the use of a coach.”

An enterprising reporter from the World journeyed to Bellows Falls. “Mrs. Green looks to be about forty-five years old [she was fifty], is of robust form, usually wears her iron-gray hair in a French twist and her sharp eyes continually dart from one object to another. She is a woman of tremendous will power, her determination being quite as remarkable as her parsimony. Overdress, according to the townspeople, is not one of her weaknesses…. Frequently she rides or promenades wearing on her head a hat with iridescent trimmings and in cold weather she invariably uses old hosiery for overshoes. She seems to have an innate desire for bartering, and notwithstanding the Yankee shrewdness of these Vermonters, Mrs. Green seldom loses a dollar by any of her small trades.”

The
World
was also among the first to suggest publicly what would become a stock characterization of Hetty—that she must be unhappy. “Health and wealth she may have, but there is scarcely a villager here who has less happiness or less of the things to be enjoyed in life than Mrs. Edward H. Green.”

Hetty cared far less what people were saying of her than she did about the fate of her money locked away at a now-bankrupt firm. Since his financial difficulties started, Edward had been spending more and more time away from the family, at the Union Club in New York. One hopes for his sake that he was in New York rather than Bellows Falls when these events transpired. Hetty always had a temper, especially when she felt her money compromised, and her reaction to the Cisco fiasco must have bordered on pyrotechnic, the walls shaking with every colorful epithet she had soaked up on the New Bedford docks. She packed a bag and marched down to the Bellows Falls station to await the next train to New York.

By the time she arrived, control of John J. Cisco and Son had passed from Cisco and Foote to Lewis May, an appointed assignee. May issued the following announcement upon taking
charge: “The rumors started some ten days since about the old established banking house of John J. Cisco & Son, and which were telegraphed all over this country and Europe, have caused a very severe run upon them on the part of their depositors. In addition to this, they were largely interested in the bonds of the Houston and Texas Central Railroad, which have been greatly depreciated by the severe blow against the credit of that company caused by the action of C.P. Huntington in purchasing the coupons of the first mortgage bonds. These matters with the general great depression of all securities have compelled them for the benefit of all their creditors to make an assignment without preferences for the purpose of a gradual liquidation of all their affairs. All the depositors will undoubtedly be paid in full as soon as the securities can be realized upon. The firm has no outstanding contracts at the Stock Exchange.”

The assurance that all depositors would be paid hardly mollified Hetty. As soon as she arrived in New York, she marched into the Cisco offices at 59 Wall Street, looked May in the eye, and said, “I’ve come to get what’s mine.”

Hetty might have been able to browbeat the dispirited Cisco and Foote into complying, had they still controlled the bank. But May did not flinch. A familiar and respected figure on Wall Street, he had been a partner in May and King, an investment house, and, more recently, had presided as assignee over the failure of a large dry goods company. He had, in the words of the
Tribune
, “won a reputation for prompt business methods.”

An extraordinary scene developed over the next several days. Hetty threatened, screamed, and pleaded, stomping her foot and at times sobbing. May matched her fire with a cool (and, to Hetty, infuriating) calm. Bystanders gathered at the windows of the Cisco headquarters to watch. Many more followed the saga in the newspapers. Hetty’s $25 million in securities were not technically among Cisco’s assets, and were therefore not part of May’s jurisdiction in settling Cisco’s affairs. Hetty’s cash deposit of $558,851 accounted for more than a quarter of the firm’s total. The
next largest depositor, the estate of founder John J. Cisco, had a mere $218,593 on the books. In a rather pathetic footnote, at the bottom of the list of depositors was Edward Green, holding in trust for his son $1,106. But the physical presence of Hetty’s securities at the locked-up bank gave May a powerful negotiating tool. However much Hetty valued her cash deposit, May knew that the securities represented virtually her entire net worth.

May said he would be pleased to release Hetty’s massed securities—as soon as she made good on her husband’s $702,000 debt. At first, Hetty haughtily repeated what she had told Cisco and Foote—that her husband’s finances were no concern of hers. She demanded to examine the securities. May agreed. Hetty sat for several hours, meticulously counting, and found to her relief that nothing had been taken.

As Hetty twisted and writhed, May let it be known (both in person and through the papers) that he had all the time in the world. Quoting “a friend of the assignee,” the
Tribune
reported: “Mr. May could wind up the affairs of the depositors in four weeks, but he prefers, for the sake of all, to nurse matters, and is willing to devote a year to bringing things out straight. Not a man of the depositors has asked for his money; on the contrary, most of them are willing that the assignee should take his time about payment.” The line about “not a man” may or may not have been a sly reference to Hetty’s gender, but the article closed with this: “No information as to Mrs. Green’s attitude was furnished by the assignee.”

The prospect of having no control over her fortune for weeks or even months at last wore Hetty’s resistance down. In early February, she curled her fingers around a pen and forced herself to scrawl out a check for $422,143.42. She also agreed to relinquish half of her deposit, or, $280,015.62. This brought her total payment to $702,159.04. With that, she packed up her securities and took them in a hired cab—an unaccustomed luxury, but a necessary one, considering the size of the bundle—to the offices of the Chemical National Bank.

Hetty would never forget the many indignities done to her through the Cisco fiasco. She held a grudge against Lewis May and, in particular, against Collis P. Huntington, the railroad magnate. She patiently planned her revenge on May, waiting almost two years to the day from the time of the Cisco failure, when May had at last sorted out the finances and was preparing to pay off the long-waiting creditors. Hetty filed objections with the New York State Supreme Court, claiming that May had defrauded the creditors by paying himself inflated commissions as assignee. According to the
New York Times
, Judge William S. Keiley had agreed to hear Hetty’s objections, but only on the condition that she pay all court expenses should she lose. The fact that the costs would easily reach $10,000 shows the depth of her anger.