Gotham_ A History of New York City to 1898 - Edwin G. Burrows [524]
Over the next twenty years, playing the market with the nerve of a riverboat gambler, Drew accumulated a personal fortune estimated in the millions. He took particular interest in the high-risk “fancies”—wildly fluctuating stocks of troubled companies, typically railroads that had underestimated costs and overestimated traffic. Drew learned to minimize his risks and maximize his profits by purchasing enough stock to get himself named an officer or director of the issuing company. Insider trading violated no laws in this feverish, cynical era, and Drew’s privileged position helped him decide when to buy or sell the company’s stock, as well as to manipulate its market value to his own advantage—something he did on numerous occasions as treasurer of the New York and Erie Railroad. Legend has it that while still a drover, Drew bamboozled Henry Astor by selling him cattle fattened on water just prior to sale; it didn’t happen, but it served as a convenient origin myth for the term “stock watering,” which came into currency to describe the practice of artificially inflating the value of securities.
While Drew himself never succumbed to the temptation, it wasn’t uncommon to see a company straightforwardly looted by its own management. In 1854 directors of the New Haven line discovered that Robert Schuyler, their powerful and distinguished president, had privately printed up twenty thousand shares of bogus New Haven stock, sold them for two million dollars, and pocketed the proceeds. In the ensuing uproar, Schuyler slipped across the Canadian border; neither fugitive financier nor funds were ever recovered.
The results of all this commercial and financial activity, licit and illicit, were soon palpable on Wall Street. Many new banks set up shop in built-to-order Renaissance palazzos—monumental structures made of New Jersey brownstone and cast-iron columns and designed by stylish architects like Richard Upjohn and James Renwick. The new buildings, in addition to keeping up with the latest London fashion in commercial architecture, were more flexible than the now passé Grecian temples. Banks could rent the front rooms to other institutions (private bankers, insurance companies) and still have room in back for the small army of clerks, copyists, and accountants needed to handle their growing paperwork.
Still, the demand for office space kept burgeoning. The members of the Stock and Exchange Board burst out of their quarters in the Merchants’ Exchange and sought new shelters. So did the legions of ever more specialized wholesalers—dealers in cotton, provisions, dry goods, hardware, drugs—and the formal organizations like the New York Produce Exchange (1851), which they established to standardize the grading, inspection, and marketing of their particular commodities. On top of this came the space requirements of brokers, agents, commission merchants, auctioneers, jobbers, and credit reporting firms. Tappan retired from his Mercantile Agency, but the company expanded under his successors Benjamin Douglass and Robert Graham Dun, and indeed attracted rivals, like the Bradstreet Agency.
Insurance companies added to the crush. By 1860 ninety-five insurance outfits protected against losses from fire; seventy-one of them had been founded in the 1850s. A dozen firms covered maritime risks, with fully a third of the city’s business being transacted by the Atlantic Mutual Insurance Company (dominated by the Jones family, which had invested its rentier inheritance in the firm).