177. The Mystery of Bank Names: Chemicals, Drovers, a Corn Exchange, Shoes, and Old J.P.

Bankers have not always been loved.
Adam Smith

    When I came back to New York in the early 1960s and rented an apartment on Jane Street in the West Village, I did my banking at the Chemical Corn Exchange Bank on 14^th Street and Seventh Avenue.  It never occurred to me to ask what connection there could be between a bank and chemicals or a corn exchange.  In this regard I was probably no different from most New Yorkers, who are too busy and too hurried to poke about in the city’s history.  But I have since come to realize that names like “Chemical Corn Exchange Bank” say a lot about banking in early nineteenth-century New York.

A Chemical Bank note, 1835.  Back then, bank notes were the common form of currency.

     The New York Chemical Manufacturing Company was founded in 1823 by a number of enterprising merchants to manufacture such chemicals as blue vitriol, alum, nitric acid, camphor, and saltpeter, as well as medicines, paints, and dyes.  Their real goal was to start a bank, which meant obtaining a charter from the New York State Legislature, but they knew that they would have a better chance of getting the charter if their bank was part of a larger business. The legislature’s suspicion of banks probably resulted from the inept management of the Second Bank of the United States, which many  thought responsible for the disastrous Panic of 1819.  But in 1824 the legislature amended the company’s charter to create the Chemical Bank of New York.  Meanwhile the chemical plant continued to operate at a site north of the city near the Hudson River, its many smokestacks emitting clouds of black smoke.

     Operating as a division of the chemical company, the bank practiced very conservative banking and catered to the city’s merchants.  It was managed by a tight-knit group of insiders, which may explain why, for the first 25 years of its existence, it paid no dividend and no interest on deposits.  In a city where banks were abundant, it must have enjoyed some special kind of mystique to retain the loyalty of depositors.  In 1851 the bank was separated from the manufacturing company to operate solely as a bank, and from then on, like most New York banks, it grew through a series of mergers while surviving periodic panics and depressions.  Then, in 1954, it merged with the Corn Exchange Bank, thus creating the bank I patronized, the Chemical Corn Exchange Bank of New York.

     And the Corn Exchange Bank?  Founded in 1852 to operate in connection with the Flour and Grain Exchange, it engaged primarily in grain, provision, cotton, and coffee trades.  Unlike the Chemical Bank, it paid a steady dividend from an early date.  In 1894 it moved into its new headquarters on William Street, a sleek 11-story building of granite and limestone that a guidebook of the time called “immense and elegant,” and that the New York Times hailed as “a noble monument to the thrift and industry of the bank.”  Significantly, the new building was located between the Cotton and Produce Exchanges.  Five years after its merger in 1954 with the Chemical Bank, the bank dropped the word “corn” from its name, thus erasing the last trace of its commodity-linked origin.

  

Aaron Burr, Alexander Hamilton's nemesis.
Very much an eighteenth-century gentleman,
and handy with a dueling pistol.

     And today?  In 1996 Chemical Bank acquired Chase Manhattan Bank, a venerable institution dating back to its founding in 1799 as the Manhattan Company by Aaron Burr, who wanted to compete with the Bank of New York, founded in 1784 by Burr’s arch rival and future dueling victim, Alexander Hamilton.  As for the name “Chase,” it came into the picture in 1877 with the founding of the Chase National Bank, named for Samuel P. Chase, Abraham Lincoln’s Secretary of the Treasury during the Civil War and subsequently Chief Justice of the Supreme Court, who in fact had no connection with the bank.  When Chase National Bank merged with the Manhattan Company in 1955, the result was the Chase Manhattan Bank, which the Chemical acquired in 1996, and in so doing took Chase’s name, since Chase was better known abroad.  But the bank – whatever its name – was still a greedy gobbler and in 2000 completed its acquisition of J.P. Morgan & Company and took the name J.P. Morgan Chase, which is the entity that I now deal with daily. 

     If all these mergers and name changes confuse you, think what I went through when confronted by one change after another, often with a change of address for my local branch as well.  And why did the final (to date) name change include the name of J.P. Morgan (1837-1913)?  Because, I presume, John Pierpont Morgan was a titan of finance in his own time and a name still remembered – whether esteemed or reviled – today.  Just look at a photo or portrait of old J.P., his ample, mustached form topped by a tall silk hat, his eyes capable of a fierce look of scorn that could pierce you to the core.  And he had a temper.  Sensitive about a skin condition that gave his nose a purple tint, he was quick to take a cane to any photographer who tried to photograph him.

     When the Panic of 1907 broke out and the major New York banks were on the verge of bankruptcy, Morgan rushed back to the city, summoned the nation's leading financiers to his mansion, and forced them to devise a plan to quell the panic.  And when a major brokerage firm was threatened with a collapse that would have precipitated a hundred other failures and possibly the collapse of the entire financial system, he got President Theodore Roosevelt to promise immunity from antitrust action and then orchestrated the brokerage firm's rescue.

Wall Street during the Panic of 1907.  The building fronted by columns is Federal Hall (1842), then
 a U.S. Sub-Treasury building with millions in gold and silver in its vaults.  A statue of George Washington (1882) stands in front.
Soerfm

     Only Morgan could have quelled the panic, thanks less to his vast fortune than to his prestige and the domineering gaze of those piercing eyes; he was a man to whom you didn’t say no.  Since old J.P., then seventy, would probably not be around for the next crisis, bankers and politicians got together to create the Federal Reserve System in 1913, the very year of Morgan’s death.  The Fed is still with us, garnering both praise and blame much as Morgan did in his lifetime.  What would he think today of the bank that bears his name, a bank that lost at least $4 billion and probably much more in a bad trade in 2012?  How that look of scorn would impale Jamie Dimon, the bank’s CEO!

     (A personal note:  The Panic of 1907 affected many people far from Wall Street, including my mother’s family.  Her father, a judge in Indiana, suffered losses to the extent that he sent his elder daughter, my mother, out to get a job.  At the tender age of eighteen she became a schoolteacher in a little one-room rural elementary school, teaching children of all ages while boarding with a farm family nearby.  The older boys were good at arithmetic; she barely kept a page or two ahead of them.  Fortunately, in winter one of them would get to the school ahead of her and the others, and light a fire in the wood-burning fireplace.  This went on for two years; my mother learned a lot, not all of it in textbooks; it was a maturing experience.)

     To see how the need for a bank might arise, let’s have a glance at the Bull’s Head Tavern, the city’s cattle market in the 1830s, located at the corner of Third Avenue and 24^th Street, on the northernmost edge of the city.  New York was growing fast, and its residents had a great appetite for beef, to satisfy which drovers made overland drives of cattle from as far away as Ohio, often spending eight weeks on the road.  On Sunday evening in late spring the drovers would bring their herds in, drive them into the pens, and tumble into bed, sometimes three to a room and two to a bed.  Then, on Monday morning, the tavern yard would be jammed with hundreds of cattle, urged this way or that by running, shouting, prodding cattle boys, while butchers and drovers haggled over the price of the critters, the whole scene unfolding to the music of whinnying, lowing, grunting, bleating animals.  By afternoon butchers were leading their purchases away, and drovers who had done well would be standing their friends to drinks at the bar, while others complained of “the meanest market” and proclaimed  themselves “dead broke.”

     But what were the drovers to do about the money due them, when there was no bank up there on the fringe of the city, and they didn’t want to wait a week until the butchers paid them?  Substituting for a bank was Dan Drew, an ex-drover who was now the proprietor of the Bull’s Head and a very smart fellow when it came to money.  Setting himself up as a collector, he cashed the drovers’ bills on the butchers and held the money in an account for each drover, and for this service charged one percent.  In addition, any guest with a large amount of cash – a drover who had just been paid, or the winner in a game of chance – might deposit the funds with Drew, who deposited them in an iron safe in the brick wall of the taproom.  Everyone knew Dan Drew and trusted him, so he became their banker.

     This makeshift system worked for a while, but as the city grew and grew, and more and more droves came in, the need for a bank – a real bank with safes, where large sums could be deposited and loans negotiated – became apparent.  And when Drew left the Bull’s Head and set himself up on Wall Street, that need intensified, since his successors at the Bull’s Head might know more about cattle than banking. 

     The solution was the founding of the Butchers’ & Drovers’ Bank in 1830, the very year Drew came to the Bull’s Head.  The bank was founded by members of the cattle trade, but it was located far downtown at the corner of Grand Street and the Bowery in the settled part of the city, so the drovers must surely have preferred to deal with Drew at the Bull’s Head.  But the bank endured and, like all New York banks, went through a series of mergers that repeatedly changed its name and left little trace of its origins as an institution founded to cater to butchers and drovers.  The currency it issued has become a collectors’ item today.

     Nineteenth-century New York was the busiest port in the nation and the entire Western hemisphere.  From its harbor to foreign ports went grain from the Midwest, cotton from the South, flour from mills in the hinterland, tobacco from Virginia, and naval stores (tar, pitch, and turpentine, used in building and maintaining wooden ships) from the pine forests of North Carolina.  To its harbor came textiles and iron goods (knives, pots, scissors, hammers, nails) from England; silks, ribbons, laces, brandy, and wines from France; gin from Holland; marble and olive oil from Italy; raw sugar, molasses, and rum from the Caribbean; tobacco and cigars from Cuba; silver from Mexico; coffee and cowhides from Brazil; tea and chinaware from China; and ivory and palm oil from the Guinea Coast of Africa. 

     The seamen on the ships engaged in this trade numbered in the thousands, and when, at the end of a voyage, they received their pay, they needed a safe place to deposit it in a city whose docks were overrun with gangs, and whose streets and horsecars were infested with pickpockets.  The Seamen’s Bank for Savings was founded in 1829 to encourage thrift among seamen, who all too often gambled their money away, spent it on liquor and whores, or had it stolen.  The bank prospered, surviving the Panics of 1837 and 1857.  In 1863, when it was located on Wall Street, it had $9 million on deposit, which suggests that its depositors included more than just seamen, though a substantial amount of the deposits did indeed belong to seamen serving on ships throughout the world.

A run on the Seamen's Savings Bank during the Panic of 1857.  The excited silk-hatted gentlemen don't look like seamen, which shows that, by then, there were other depositors as well.

     Savings banks were a new development in the banking world.  In New York City they began when commercial banks and wealthy investors proved unwilling to buy the bonds financing the construction of the Erie Canal, fearing loss of their investment if the canal was a failure.  So in 1819 promoters of the canal founded the Bank for Savings in the City of New York, which  welcomed deposits from ordinary working people and invested in Erie Canal bonds and other government securities.  The bank was an immediate success and encouraged the organizing of more savings banks.

     Savings banks came about because the existing commercial banks had been founded by moneyed gentlemen who dealt only with one another; leery of unfamiliar faces and the hoi polloi, they scorned the small deposits of ordinary people.  To remedy this situation, savings banks were established to encourage thrift among the working classes and provide a safe place for the earnings of small savers.  Usually the founders served as trustees, overseeing the banks’ operations without pay and managing conservatively.  The lack of competition for small deposits, and the rapid industrial and economic growth of the Northeast, guaranteed the success of the first savings banks and the founding of more, and the amount of their deposits soared.  An 1866 guide to New York City lists thirteen such institutions, including the Seamen’s Bank for Savings, the Mechanics’ and Traders’ Bank, the Merchants’ Clerks Savings Bank, and the Emigrant Industrial Savings Bank.  This last had been organized in 1850 by Archbishop John Hughes and the Irish Emigrant Society to protect the savings of newly arrived Irish immigrants and let them send money to destitute relatives in famine-stricken Ireland.  With the appearance of savings banks, democracy came to the banking industry.

     The Seamen’s Bank for Savings survived many more financial panics, including the Great Crash of 1929, only to founder in the 1980s, when soaring interest rates and ill-advised investments in mortgage-backed securities resulted in heavy losses and the closing of the bank by federal regulators in 1990, following which the Chase Manhattan Bank bought its deposits, and the bank’s other assets were sold by the FDIC (Federal Deposit Insurance Corporation) to repay its creditors.  The Emigrant Industrial Savings Bank, on the other hand, survives today as the Emigrant Savings Bank, a full-service bank headquartered at 5 East 42^nd Street in Manhattan.

The Emigrant today, a savings bank that made it big.

     Also listed among commercial banks in the 1866 guide was the Shoe and Leather Bank at the corner of Broadway and Chambers Street, with a capital of $1 million.  A Shoe and Leather Bank?  This, at first glance, is as puzzling as the name of the Chemical Corn Exchange Bank, but of course there is an explanation, or at least my guess at an explanation.  Founded in 1852, the Shoe and Leather Bank must have served the needs of merchants involved in the leather trade, which was concentrated two blocks east of City Hall in a district known as the Swamp, though the swamp that gave it its name had long since disappeared.  Those merchants took dried or salted hides imported from Argentina, Uruguay, and Brazil and tanned them into leather, the value of the hides doubling in the process.  Much of the leather was then shipped to Boston to be made into boots and shoes. 

     There was just one problem with this lucrative business: it stank.  To dry them, the tanneries kept malodorous green hides hanging in the open for days, and the stench, which carried far, was horrendous, perhaps surpassing the stink of the city’s slaughterhouses.  But tanneries and slaughterhouses were confined to certain districts far removed from the brownstones where the middle class lived snugly.  Located farther uptown at Broadway and Chambers Street, the Shoe and Leather Bank served depositors whose nostrils were not offended by the tanneries, which is more than can be said for those unfortunate enough to live near the Swamp.

     Even a glance at the history of early banking in New York shows how inventive the first bankers were.  If an industry or trade needed a safe place to deposit funds and a reliable source of credit, they created a commercial bank attuned specifically to the needs of those merchants.  And if large numbers of ordinary workmen wanted to deposit their wages in a safe place and earn a little interest in the process, civic-minded citizens joined together to found a savings bank addressed to the needs of those workers.  And most of these banks, being managed conservatively, prospered and grew, and even survived the financial panics that gripped the nation about every twenty years.  Back then, bankers could promote the well-being of the community and still make a decent profit for themselves.  There were a few crooks from time to time, but most of the men in banking were honest.  And today?  See the note "Banking Today" below.

     Relief for the right kind of bank:  The New York Times’s financial columnist Gretchen Morgenson, who covers financial news from the point of view of small investors and shareholders, reports that Thomas Hoenig, vice-chairman of the FDIC (Federal Deposit Insurance Corporation, the agency that insures bank deposits), has proposed regulatory relief not for the big banks that crave it and lobby for it, but for banks that rarely fail.  The banks he has in mind are the vast majority of commercial banks that stick to traditional banking (old-fashioned, boring banking) and go about it with sufficient capital reserves.  The banks that would not benefit are the big banks involved in all kinds of nontraditional, razzle-dazzle deals – the very banks that helped provoke the crisis of 2008 and got bailed out at taxpayers’ expense.  In other words, Mr. Hoenig’s proposal would help Main Street, not Wall Street.  His proposal needs Congressional approval, so who knows if it will get it.  But here at least is a suggestion for financial reform not initiated and promoted by J.P. Morgan Chase, Citibank, Wells Fargo, and the other usual suspects.  I wish it great success.

     Banking today:  Deutsche Bank has just agreed to pay a $2.5 billion fine to settle U.S. Justice Department accusations that it manipulated interest rates underpinning trillions of dollars in mortgages, student loans, and other debt.  Similar guilty pleas from Barclays, J.P. Morgan Chase, Citigroup, and the Royal Bank of Scotland are expected by next month.

     In 2012 HSBC Bank USA, a subsidiary of UK-based HSBC Holdings, agreed to pay $1.9 billion in fines to settle a money-laundering case brought by the Justice Department.  I have often walked past its branch at West 11th Street and Hudson Street, but a short block from my apartment building, but I have rarely seen anyone in there, at best maybe one solitary teller way in back, and one lonely customer;  otherwise, just empty desks and vacant teller windows.  And last Saturday I saw no one at all in there, but then, it's closed on Saturday, usually a busy day for banks.  A curious contrast with my own bank, a branch of J.P. Morgan Chase, which is usually thronged with customers and diligent staff: a receptionist, tellers, two Chase Private Client representatives, a mortgage banker, and others.  So what gives with HSBC?  And who would bank there, with so many other bank branches available nearby?  Meanwhile its London-based parent outfit is contemplating moving its headquarters out of the UK, where stricter regulations following the 2008 financial crisis are making life unpleasant.  Ah, those pesky governments again!

     Redbuds:  It's late April, when here in New York daffodils give way to tulips.  This is also the time for redbuds, when the leafless branches of these little trees bear red buds that will soon open into pink flowers.  Just yesterday I discovered three of them in the little park diagonally across from my building.  This is their moment of glory, when their thin, reddened branches justify the name "redbud."  Soon enough the flowers will come and go, and the leaves will come out, making the redbud just another nice little tree with nothing special about it.  Tulips give blasts of colors; subtler, redbuds offer a delicate tracery of red.  Enjoy redbuds now in the parks; the buds will soon be gone.

     Coming soon:  Manhattan real estate: Is there a bubble doomed to burst?  Predictions of dire times ahead, mystery buyers, skinny high-rises, REBNY (never heard of it? neither had I), and a glance at another real estate boom, a time of great innovation, soaring aspirations, and maybe hubris that produced the Gothic cathedrals of France.  And how did that boom end?  The answer may be found in the choir vault of Beauvais cathedral.

     ©  2015  Clifford Browder

176. Outlaws

     Nicky Barnes swaggered.  In the 1970s, when he strode along the streets of Harlem, everyone noticed.  “There goes Nicky Barnes,” they would say.  They noticed his custom-made suits and shoes, his full-length leather coats, his flashy ties, his look of bold command.  Everything about him said elegance, power, success.  And when he drove on the streets of Harlem, often with a beautiful woman not his wife beside him, they noticed his Mercedes-Benz, his Thunderbird, his Lincoln Continental, his Cadillac, and knew that he was fabulously rich, to the tune of a hundred million dollars.  Not everyone admired the drug lord of Harlem who had flooded their neighborhoods with heroin, but many did, especially the street kids, for in a world where everything was against them, this son of Harlem had made it big, very big, and it gave them hope.  The authorities noticed him too, but if a law enforcement surveillance team followed him, he took delight in leading them on a high-speed chase, to see if he could shake them off.

      In 1977 the New York Times also noticed Barnes and decided to do an article on him in the Sunday Magazine section chronicling his uncanny ability to wiggle out of charges and arrests.  The Times asked Barnes to pose for a cover photo; though unwilling, when informed that they were going to use a mug shot from a previous arrest, the dapper drug lord agreed.  When the June 5, 1977, issue appeared, there on the cover of the Magazine section was Barnes in a blue denim suit with a red, white, and blue tie, looking composed and elegant, with the label “Mister Untouchable”; it was the peak of his career.  I remember that issue; it was the first time I'd ever heard of Nicky Barnes.  I didn’t admire him, but I marveled at his charmed existence.  But President Jimmy Carter also saw the article, and Barnes’s look of smug invulnerability infuriated him.  He told his attorney general to get him.

     Every day at noon a gleaming limousine pulled into the driveway of a modest split-level house in the Howard Beach section of Queens, and out of the house came a barrel-chested, broad-shouldered man in a muted double-breasted suit, creamy white shirt, and hand-painted floral silk tie, his silvery hair swept back, his step springy.  He stepped into the waiting limousine, a Mercedes-Benz or Lincoln, and off he went, his bodyguard at the wheel.

     Arriving at the Bergin Hunt and Fish Club in the Ozone Park district of Queens, he settled down in a barber’s chair installed there especially for him and had his hair cut, washed, and blow-dried in what had become a daily ritual.  He then conferred with his lieutenants, for whom the club was a regular hangout.  In the late afternoon he was driven to the Ravenite Social Club, his main headquarters, on Mulberry Street in Little Italy, Manhattan, where the top members of his family – meaning his organization – reported to him regularly. 

     If in the course of his daily rounds he spied FBI agents tailing him, he might rub one index finger against another while mockingly saying, “Naughty, naughty,” though he was also known to offer them coffee.  And if, when he entered a restaurant, he saw people gawking at him, he relished it, for unlike most Mafia capos, who shunned attention, the Dapper Don loved it and considered these gawkers his fans.  “When people go to the circus,” he once told a subordinate, “they don’t want to see the clowns.  They want to see lions and tigers, and that’s what we are.”  Waiters showered him with attention, but he always sat with his back to the wall, commanding a wide view of his surroundings, just in case.

     From his associates he demanded and got respect.  Brawny bodyguards accompanied him everywhere, and even his brothers held doors open for him, helped him put on or take off his coat, and held umbrellas over his well coiffed head.  In public he was always elegant, always poised and amiable, though in private he was known for a fiery temper and a foul tongue, and a readiness to betray allies.  On the street, moving out of the range of any concealed microphones, he might order a killing, perhaps a loyalist whom he deemed a traitor or who had failed to show him respect.  Needless to say, he was feared.

     Such was John Gotti, the Dapper Don, in the 1980s.  He claimed to be a hard-working family man making $100,000 a year as a plumbing supply salesman and from a job with a garment accessories firm, but everyone knew he was a top Mafia boss, astute and ruthless, grossing $500 million a year from illegal activities in the New York area and Florida.  And his Howard Beach neighbors admired him, flocking to the annual summer street party that he sponsored at his social club in Queens.  When news came of his acquittal on racketeering charges, they decorated trees near his home with yellow ribbons, a symbol of concern for hostages.  For many Italian Americans he was a symbol of success, a hero.  And his acquittal in three much publicized trials in the 1980s gave him another nickname, the Teflon Don.  Arrested yet again in 1990, in the back of a police car he announced, “I bet ya three to one I beat this.”  Having immersed himself in a world of obsequious subordinates, he thought he was invincible.

     Nicky Barnes and John Gotti, Mister Untouchable and the Teflon Don, are prime examples of outlaws who loved attention and flaunted their contempt for the law.  Known criminals, for years they seemed to get away with it and were admired, if not by everyone, by many in the ethnic group they came from.  Their swagger won them praise. 

     But not immunity.  Following President Carter’s order, Nicky Barnes was arrested for drug-related crimes and sentenced to life in prison without parole on January 19, 1978.  In prison, learning that his associates weren’t looking after his interests, Barnes helped the authorities indict 44 other drug traffickers, 16 of whom were convicted.  Because of his cooperation, he was resentenced to 35 years in prison and was released in August 1998, following which he entered the federal Witness Protection Program and began a new life with a different name.

     John Gotti was convicted in 1992 on multiple charges that included murder, conspiracy, loansharking, and illegal gambling and was sentenced to life in prison without parole.  “The Teflon is gone,” announced an FBI official.  Diagnosed with throat cancer, he deteriorated rapidly and died in prison in 2002 at age 61.

     What exactly is an outlaw?  In this country the word suggests the desperadoes of the Old West, but the word goes back much further and has a wider application.  Webster’s Second defines “outlaw” as follows:

1.    A person excluded from the benefit of the law, or deprived of its protection.

2.  Hence: A lawless person, or a fugitive from the law.

     The first definition applies to premodern times, when an outlaw was someone excluded from the protection of the law; anyone could persecute or kill him.  But later, in medieval England, those suspected of crimes had to be judged in a court of law before punishment could be administered.  And already outlaws were being admired, as seen in the stories of the perhaps mythical Robin Hood.  But being declared an outlaw meant that you were banished from civilized society, and anyone who gave you food, shelter, or other support risked likewise being declared a criminal.  This changed with time, as population density made it harder for fugitives to avoid capture, and modern concepts of law and order took hold.  Today the second definition prevails.

Billy the Kid, the quintessential outlaw.

     In this country’s history those who have been labeled outlaws include pirates and buccaneers (Jean Lafitte), Western desperadoes (Jesse James, Billy the Kid), gangsters (Al Capone, John Dillinger, Bonnie and Clyde), and motorcycle clubs like Hell’s Angels.  Most of these outlaws have inspired both fear and admiration, though the admiration usually implies a certain distance from the outlaw, so we don’t feel menaced, and a certain romanticizing, a blurring of unpleasant facts, which the media and Hollywood have often been happy to do.  The fact remains, many law-abiding citizens can’t help but admire those who break the law and seem to get away with it.  Yet at the same time we resent the outlaws’ seeming immunity and feel great satisfaction when they are apprehended or killed.

     Who in the history of New York City can be viewed as an outlaw?  Madame Restell, the notorious but successful nineteenth-century abortionist who has visited these pages before, paraded herself and her ill-gotten gains for years, provoking condemnation but eluding prosecution.  Like Nicky Barnes and John Gotti, she shunned the shadows, displayed herself in daily carriage promenades, and violated the decorum and exclusiveness of fashionable Fifth Avenue by building a handsome brownstone mansion only a block from the rising walls of Saint Patrick’s Cathedral.  Few in those days dared voice admiration of Madame, but given the less rigid mores of today, feminists have discovered and extolled her as a woman in advance of her time.  But she too paid a price: arrested by the Puritan crusader Anthony Comstock, on the eve of her trial she cut her throat from ear to ear.

     Were the robber barons outlaws?  Commodore Vanderbilt, the first to whom the label “robber baron” was applied, reputedly once said, “Law?  What do I care about the law?  I got the power, hain’t I?”  Which would certainly suggest that he merited the label “outlaw” as well.  Trouble is, he probably never said that.  Another robber baron, Jay Gould, skirted illegality throughout his career, but may never quite have broken the law.  Christened “the Mephistopheles of Wall Street,” he was supremely unloved, but his daring market coups provoked amazement and wonder, if rarely admiration.  He got away with a lot, but the laws were looser then and there was little regulation.  

     Who in our own time might be labeled outlaws?  Politicians immediately come to mind, as for example Jimmy “Beau James” Walker, the mayor of New York from 1926 to 1932, at the peak of the Roaring Twenties and beyond, who has appeared on these pages more than once.  Fond of leading celebrity parades down Fifth Avenue, and fond as well of speakeasies and showgirls, he was fun-loving and dapper, and was on the take from businessmen eager to get city contracts.  When an investigation began uncovering evidence of corruption in his administration, he decamped for Europe with his showgirl girlfriend and returned only when the risk of prosecution had faded.  But when he did return, ferry whistles greeted him in the harbor, and a multitude of well-wishers awaited him at the dock.  He was elegant and charming, so many New Yorkers forgave him his rumored peccadillos.  An outlaw?  Maybe only a rascal, but he did get away with a lot.

     He wasn’t the only one.  For years, the crucial decisions about legislation in Albany were decided in secret by a committee of three: the governor, whether Democrat or Republican; Joseph Bruno, Majority Leader of the Republican-dominated State Senate; and Sheldon Silver, Speaker of the Democratic-dominated State Assembly.  All too often their private enclave produced legislation that legislators had to vote on immediately, without having time to read its contents and know what they were enacting.  Little wonder that Albany was considered one of the most corrupt state governments – if not the most corrupt – in the nation.  If Congress was – and is – a swamp, Albany is a cesspool.

     Like many, I deplored this system, suspected rank corruption, and wondered how long they could get away with it.  For years they did, and cries for reform went unanswered.  Governors came and went, but Bruno and Silver persisted, like hardy weeds.  Bruno, an upstate Republican, and Silver, a New York City Democrat, balanced each other out and exerted vast influence.  Outlaws of a kind, I suspected, but there were only rumors and suspicions, nothing that would hold up in court.

UpstateNYer

     In 2008 Joseph Bruno announced that he would not seek reelection and shortly afterward resigned from the Senate in the wake of a federal corruption investigation.  In January 2009 he was indicted on eight counts of corruption, including mail and wire fraud.  It didn’t surprise me, and I felt a delicious satisfaction at seeing one of the mighty brought down.  In 2010 he was convicted and sentenced to two years in prison.  But never underestimate the skills of good lawyers.  In 2011 Bruno’s attorneys got his conviction overturned on a technicality.  A legal imbroglio followed with resulting delays, and in 2014 Bruno was retried and acquitted on both charges.  White-haired and buoyant, Bruno, age 85, left the courthouse smiling, then with friends and admirers adjourned to a nearby oyster house, where he told journalists that his case involved “persecution, not prosecution.”  Still popular in his upstate home district, he is honored there with his name on a minor-league baseball stadium, as well as a commemorative bust at the Albany airport.  An outlaw, I suspect, who did in the end get away with it.

Sheldon Silver, Speaker of the Assembly.  For looks,
Bruno wins.  For power, it was a toss-up.

     And what about Silver, a bespectacled and jowly man with graying hair who looks like your benign and smiling uncle?  When Tweedledee was indicted, I hoped that Tweedledum would follow.  Reelected Speaker of the Assembly eleven times, despite complaints by upstate Republican members that he wielded too much power, Silver was guarded and shrewd, not open and jovial, seemed unassailable.  He controlled where Assembly members parked, the size and location of their offices, how much money they could spend on their staffs, and who got the lucrative Assembly leadership posts.  An Orthodox Jew born and raised on Manhattan’s Lower East Side, he had a solid base of support there, comparable to Bruno’s base upstate.  But like Bruno before him, on January 22, 2015, he was arrested on federal corruption charges resulting from his receiving large payments over the years from a law firm advocating reductions of New York City real estate taxes.  Under intense political pressure and with dwindling support, on January 30 he resigned as Speaker, while remaining an Assembly member and vowing to fight the charges against him.  Will Tweedledum, like Tweedledee before him, be acquitted?  Given the stench that emanates from Albany, I hope not.  But he’s innocent until proven guilty.  Time will tell.

     So much for politicians.  How about CEOs of banks: can they be classified as outlaws?  If so, they’re sure getting away with it, for I’m not aware of any of them going to prison; at most, the banks get fined some outsized sum that the shareholders have to pay, while the CEOs get their usual fat bonuses.  But have the banks really committed dark deeds?  Here are some of their alleged or admitted crimes:

·      Laundering money for terrorists.  Bank of America is said to have funneled large amounts of money to BCCI, an international bank with offices in Karachi and London, which in turn funneled it to Bin Laden and other terrorists.

·      Laundering money for drug cartels.  In 2013 London-based HSBC, Europe’s largest bank, settled with the U.S. for $1.9 billion to resolve charges that it enabled Latin American drug cartels to launder billions of dollars.  And in 2015 Swiss authorities raided two HSBC offices in Geneva as part of a new criminal inquiry into allegations of money laundering.  And Wachovia, now owned by Wells Fargo, settled with the U.S. Department of Justice for $160 million in 2010 for moving billions from Mexican drug cartels into currency exchange houses.

·      Manipulating the price of precious  metals.  In 2015 the U.S. Department of Justice launched an investigation into the manipulation of the price of gold and silver by at least ten of the world’s biggest banks. 

·      Deceiving regulators by hiding the extent of their losses.  J.P. Morgan Chase has been accused of this by the Senate’s Permanent Committee on Investigations.

·      Selling complex investments without disclosing the risks.  Wells Fargo and its subsidiary Wachovia have been fined for these offenses many times, and J.P. Morgan Chase settled with the SEC for $153 million in 2011 for similar charges.  In 2013 Bank of America settled for $14 billion with Fannie Mae, Freddy Mac, and other agencies, and in 2010 Goldman Sachs settled with the SEC for $550 million.

And these are only some of the charges.  Are the CEOs gloating in private as they get their bonuses, or are they sweating in the face of more possible charges?  Either way, I see them as modern-style outlaws, seemingly immune to the rigors of justice.

     Dare we aim higher?  Diplomat and statesman Henry Kissinger, the confidant of presidents, admitted to saying, “The illegal we do immediately.  The unconstitutional takes a little longer.”  He was joking of course, wasn’t he?  To pursue this further would take us into deep waters indeed, and the highest levels of government.  Have any of our post-World War II presidents broken the law?  Have any not?  How high can outlawry go?  To probe such matters would require one or several posts and take us far afield from New York, the focus of this blog.  But there’s lots to ponder.

     Finally, how about whistleblowers?  They often violate the letter of the law so as to make public the misdeeds of government agencies, but in spite of U.S. legislation meant to protect them from retaliation, they often suffer dire consequences.  I’ll mention only Edward Snowden, now a fugitive in Russia, who in 2013 leaked thousands of classified documents from the National Security Agency to the mainstream media.  Those documents revealed massive global surveillance programs by the NSA and cooperating European governments and provoked heated debates over mass surveillance, government secrecy, and the conflicting claims of national security and the right to privacy.  Indicted by the U.S. Justice Department for violating the Espionage Act and theft of government property, he has been hailed as a hero and denounced as a traitor.  Polls indicate more support for him abroad than in the U.S.  Personally I view him as an outlaw hero, one who broke the law with justification, and I rejoice in his immunity at present in Russia.  Time magazine named Snowden the runner-up for Person of the Year in 2013, losing out to Pope Francis, and he has received numerous awards.  Yes, a modern outlaw, no swaggerer but highly controversial, and one whose story is still unfolding.

     Coming soon:  Why do the names of banks mention chemicals, drovers, shoes, and old J.P.?  A glance at the history of New York banks, and how they once were creative in a way that benefited the whole community.

     ©  2015  Clifford Browder