Swindled in New York City

This past week my family and I traveled to New York City. It was an amazing journey with one adventure after another. We walked around Times Square, rode bikes through Central Park, took a bus tour uptown, and caught a water taxi from midtown to downtown. It is hard to name all the sights we saw and adventures we  took, but here are a few:  Apollo Theater, Grant’s Tomb, 9/11 Memorial, Empire State Building, Rockefeller Center, 5^th Avenue, Met, Guggenheim, Lion King, Charging Bull, Statue of Liberty, Brooklyn Bridge, and Trinity Church.

On the bus tour through uptown, we saw Grant’s Tomb located on the Hudson River (west side of Manhattan Island) at 123^rd Street. The tour guide talked a little about his life and why he was buried in New York. Seeing the tomb reminded me of the Autobiography of Mark Twain. In the book, Twain (aka Samuel Clemens) shares a few stories about his friend, Ulysses S. Grant. One of the stories impacted me more than all the rest. Though the tour guide failed to mention this story during the tour, I’ll share it with you now.

After completing his second term as president, General Grant was a “poor man.” However, a group of wealthy private citizens contributed funds totaling a quarter of a million dollars for the General. They “invested it in such a way that he could not be deprived of it either by his own want of wisdom or the rascality of other people.”[i] However, these funds ended up in the hands of the investment firm, Grant and Ward, a firm of “brokers and stock dealers” that consisted of General Grant’s sons and “a young man—a boy, in fact—who was even then referred to as the young Napoleon of Finance. That was Ferdinand Ward.”[ii]

As Mark Twain wrote, “The truth was, however, that Ward was robbing all the Grants and everybody else that he could get his hands on and the firm was not making a penny. The General was unsuspicious, and supposed that he was making a vast deal of money, whereas indeed he was simply losing such as he had, for Ward was getting it. About the 5th of May, I think it was, 1884, the crash came and the several Grant families found themselves absolutely penniless. Ward had even captured the interest due on the quarter of a million dollars of the Grant fund, which interest had fallen due only a day or two before the failure.”[iii]

The following passage was included on Grant’s timeline of events, dated May of 1884:  “The brokerage firm of Grant and Ward fails on Wall Street, losing the General and his family's fortune. Grant had been a silent partner in the firm with his son and Ferdinand Ward, the scoundrel who robbed the company and was eventually jailed. Days before the bankruptcy, Ward begs Grant for a loan of $150,000 to save the Marine bank. The General then asked William Vanderbilt to make him a personal loan, and he eventually repaid the millionaire with his war trophies and uniforms. [. . .] The Grant and Ward failure plunges Grant into a prolonged depression.”[iv]

Some of you may have heard this story before, but I am guessing that most of you have not. I had not previously known of this event and was surprised and intrigued by it. The following are a few of my questions and observations:

• How many people invested their hard earned money with the firm Grant and Ward because Ulysses S. Grant and his sons were affiliated with the firm? The Grant name was huge back in the late 1800s. General Grant was an honorable man, and with his name on the firm, people would trust their money would be safe.
• Did the General or his sons have any knowledge of what their partner, Ferdinand Ward, was doing? Being that they were business partners with Ward, I wonder if they ever asked him questions about his business activities. I am certain the Grants trusted their business partner, but I would guess there were red flags present that would have raised suspicion.
• I enjoy learning about fraud schemes that happened in the past because it is interesting to compare and contrast them to the fraud schemes of today. There is evidence of fraud throughout history, and the elements of fraud remain consistent.
• Why was the Ponzi scheme named after Charles Ponzi and not Ferdinand Ward? There were aspects of Ward’s scheme that were similar to a Ponzi scheme. It could have been called the Ward scheme, Ferdinand scheme or maybe Freddy scheme.
• The financial and emotional impacts to General Grant were significant. When fraud happens, people and businesses lose money, but they also lose a trusted relationship because the persons committing the fraud are almost always in a position of trust. Prior to the fraud being discovered, their contributions are usually seen as invaluable and possibly irreplaceable. The impacted parties, both fraudster and owner/executive, experience strong feelings of embarrassment and shame.

When I think about all the fraud out there, I feel overwhelmed and wish that I could do more to fight it. The size of New York City gives me that same feeling. It makes me feel very small. We had a little over three days to experience The Big Apple, and we hit everything on our list. But it is amazing when you think about everything else the city has to offer, and no matter how long you stay or how often you go, you will never experience it all. We could have spent our entire trip in The Met and still not have seen everything in the museum. 

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[i] "About General Grant’s Memoirs: Paragraph 11," in Autobiography of Mark Twain, Volume 1. 2010 

[ii] Ulysses S. Grant Homepage

[iii] “About General Grant’s Memoirs: Paragraph 15 - 18," in Autobiography of Mark Twain, Volume 1. 2010 

[iv] Ulysses S. Grant Homepage