For an ambitious capitalist in the United States, the period between the end of the Civil War and the beginning of the twentieth century was the most golden of golden ages. The Civil War had settled once and for all the nettlesome question that had haunted the country for generations: would the Union survive? It would. In Europe, the end of every war dumped another horde of unemployed soldiers into crowded and already mature cities. But the American landscape was ample and open enough to absorb hundreds of thousands of ex-soldiers looking for work and opportunity, in addition to hundreds of thousands of immigrants who came each year to work in factories or to till fields that stretched beyond the horizon. Alexander Noyes, in his classic volume Forty Years of American Finance, wrote: “Almost at the moment when a million citizens were turned from organized destruction to pursuit of peaceful industry, the avenues of American employment and production were widened in a degree unprecedented in the history of trade.”
The pace of growth and production was staggering. Every industry, from manufacturing to agriculture, boomed. American farmers, who in 1867 planted just over 64 million acres of wheat, corn, oats, rye, and barley planted 100 million by 1878. The combined yield increased to 2.3 billion bushels. Moving those vast supplies of grain, as well as a restless people, required a new and extensive transportation network. The transcontinental railroad was rightly hailed as a monumental construction feat when the two sides were linked in Utah in the spring of 1869. But those 1,800 miles were a drop in the bucket of overall railroad development. In the eight years after the end of the Civil War, crews laid some 30,000 miles of track across the United States. Russia, also aggressively building its rail infrastructure, put down just 11,000 miles during the same period.
And every new mile of railroad required steel for rails, timber for ties, and capitalists for cash. If the potential rewards of investing in railroads were great, so were the risks. For every strong, healthy railroad with sound management there were many more that failed for mismanagement, natural obstructions, or outright fraud. Corrupt politics, frequent panics, and a shaky money supply unsettled on the issue of whether gold, silver, or paper ought to be the standard, left a financial landscape strewn with the corpses of would-be tycoons. One of them was Edward Green.
Hetty Green holds the considerable distinction of being the only woman to make her mark in the financial markets during the Gilded Age. But if repressive and constricting attitudes toward women presented serious obstacles for Hetty, the Gilded Age in almost every other regard was tailor-made for a financial genius looking to get rich. A roster of financiers and industrialists of Hetty’s generation, whose fortunes flowered along with hers during this remarkable period, reads like a who’s who of American capitalism. Jim Fisk, whose notorious financial schemes made him the embodiment for the term “robber baron,” was born in 1834, seven months before Hetty. Fisk’s partner, Jay Gould, was born in 1836. Steel magnate Andrew Carnegie was born in Scotland in 1835. J. P. Morgan, the financier and banker who would buy Carnegie’s company (over a golf game) to form the colossus U.S. Steel, was born in 1837. John D. Rockefeller, the muscle and brains behind Standard Oil, was born in 1839. Henry M. Flagler, Rockefeller’s onetime partner who later became a real estate developer who invented Palm Beach, had been born in 1830. For the shrewd and lucky, this Darwinian environment, before regulation, labor unions, and income tax, presented opportunities almost without limit.
Most of these men and their wives and families lived on a scale unprecedented in the history of the world. New York’s Fifth Avenue, laid out in 1811 and completed in 1824, drew Wall Street swells away from their downtown mansions in the postwar years and became the wealthiest and most fashionable address in the United States, if not the world. The stretch of Fifth Avenue in the vicinity of Central Park became known as Millionaire’s Row. Testimonies to wealth and privilege rose in block after block of French manor houses and royal palaces and opulent châteaux, each built by and for some industrial captain whose family a generation or two earlier had been trapping furs, butchering meat, tilling soil, or keeping shop. There were Rockefellers on Fifth Avenue, and Flaglers and Guggenheims, and Russell Sage, a grocer-turned-financier, and Hetty’s archenemy, Collis P. Huntington, who got his start peddling hardware to miners during the California gold rush. The Vanderbilts erected a section of fabulous homes on a ten-block section of Fifth Avenue below Central Park that became known as Vanderbilt Row. In 1879, Henry Vanderbilt commissioned not one but two houses. A few months later, William Kissam Vanderbilt settled on plans for a grand home on Fifth Avenue at Fifty-second Street, to be designed by noted architect to the rich Richard Morris Hunt. Fawning critics pronounced the home a triumphant combination of the Palais de Justice, the Hôtel du Bourgtheroulde at Rouen, the Hôtel Cluny at Paris, and the Château de Blois. When it was completed, Alva Vanderbilt, William’s wife, christened the house with a costume ball at which each guest dressed as a member of European royalty.
This great fat feast was the New York that Hetty found when she arrived after the Cisco failure. But when she left Bellows Falls with her two children in tow, she did not erect a mansion next to the Vanderbilts, although she could have afforded a home as fine as the finest on Millionaire’s Row. She chose instead the teeming, dense borough of Brooklyn, populated by immigrants and, laborers, where nobody dressed up as royalty, European or otherwise. With the exception of short stretches in low-rent quarters in lower Manhattan, Hetty would call Brooklyn home for the next decade. She rented apartments in hotels and rooming houses, usually paying by the month. A large house, beyond the price to buy or build it, would mean an endless stream of payments for upkeep, not to mention a staff of servants to keep the place running. And there was another reason. In order to collect personal property taxes, collectors first had to establish proof of residency. By paying monthly rent and moving frequently, Hetty preserved the ability to deny that she lived in any given city or state whose tax collectors became too persistent. During the course of her life she would be a resident of Bellows Falls, New Bedford, New York, and New Jersey, all of them and none of them at the same time.
Hetty, Sylvia, and Ned moved first into a modest apartment house on Pierrepont Street in Brooklyn Heights. No childhood with Hetty Green as the mother could ever be called normal, but with their move to Brooklyn Ned and Sylvia entered a new, surreal phase of their lives. While they were among America’s richest children, Ned and Sylvia’s lifestyle was more akin to those constantly struggling for the next meal. Hetty never failed to tell them how rich they would be one day, and she meant it, for her goal was to leave them as the richest people in America.
Ned, despite the severe limp that made walking awkward, and despite the rigors of life with his mother, was developing into a tall, gregarious young man with an easy laugh. At seventeen, he was already six feet tall, built like his father. Sylvia, on the other hand, seemed to retreat inside of herself. Tall and not pretty, she was a painfully, shy, self-conscious girl. People who spent time with her were often unable to detect any trace of a personality. To acquaintances, she seemed to go through the motions of life without ever taking a part. She was Hetty’s constant companion, and did chores around the apartment.
This odd little family naturally aroused the curiosity of fellow Brooklynites. As Hetty’s financial prowess became more celebrated, her reputation as an oddball preceded her. A reporter for the Brooklyn Eagle noted: “Nobody ever saw her with a dress which was not severely plain, and seldom has she been noticed when she did not carry an old style and well worn black satchel. Her appearance would never cause the uninitiated to think that she was anything more extraordinary than an old fashioned woman of moderate means and simple tastes, who was on her way to the corner grocery or the bakery on the block below. Yet, if money is power, this same staid looking person is one of the most powerful human beings in the country.”
People found her modest living conditions in Brooklyn and, later, in Hoboken, New Jersey, endlessly fascinating and amusing. Hetty rarely lost sleep worrying what others thought of her, and yet there was a certain irony in the public’s reaction to her. For all of her faults, she was no snob. She sneered at all forms of pretense, and was unimpressed with titles* She didn’t just mix with the common folk; she lived among them, ate at their restaurants, rode their streetcars and ferries. Clerks and storekeepers, delivery boys and washerwomen who would not be allowed through the front door of Alva Vanderbilt’s Fifth Avenue mansion lived side by side with Hetty and her children. And yet it was her very reluctance to live like a queen that evoked derision and ridicule.
The public never seemed to begrudge Andrew Carnegie his sixty-four-room house on Fifth Avenue, a structure so large it required a special railroad track in the basement to move the two tons of coal needed for a single day’s heating in the winter. Carnegie himself justified personal extravagance in his 1889 essay, “Wealth”: “It is well, nay essential, for the progress of the race that the houses of some should be homes for all that is highest and best in literature and the arts, and for all the refinements of civilization, rather than that none should be so.” Untold thousands living in the same city but struggling to maintain their tenement flats seemed to agree with him, according to Carnegie’s biographer, Joseph Frazier Wall. Wall astutely assessed this public sentiment on wealth, using Hetty Green by way of example. The public, he wrote, “expected its millionaires to live in style in big houses; it looked with contempt upon Hetty Green, living penuriously in a small apartment in Hoboken.”
Nor did her lifestyle inure her to criticism from populists that she was just another self-important member of an overmonied class. A reporter once asked her why she lived the way she did. “I am a Quaker; my early training disciplined me towards pomp and show,” she replied. “My family has been wealthy for five generations. We need make no display to insure recognition of our position.” An editorial in the New York World went after her with a vengeance: “The insolence of this utterance would be astonishing if we had not been accustomed to it by the words and ways of our Plutocracy for years past.”
In 1883, after buying the World from robber baron Jay Gould, Joseph Pulitzer had made a point of beating the populist drums against all wealthy financiers, Gould included. The editorial continued:
The assumption needs only to be examined in order to make its absurdity appear. What ‘position do five generations of wealth give which the public must perforce ‘recognize’? Does Mistress Green mean to say that people who are wealthy are better or more honorable or entitled to greater consideration than people who are not wealthy? Or is her claim merely that people who have been wealthy for five generations are superior to people who have not been wealthy for so long a period?
The public recognizes the fact that Mrs. Hetty Green is rich, if that is any comfort to her; but it declines to recognize any sort of virtue or superiority on her because she happens to own more money and property than other people do. It has no greater respect for her than her personal character may entitle her to claim, and not one whit more than it gives to an equally worthy woman who lives in a tenement and takes in plain sewing for a living.
It was a strong reaction to what had been, especially for Hetty, a fairly innocuous comment. And the irony, of course, was that, unlike Pulitzer and his editorial writers, Hetty Green actually did live in a tenement.
For all of her aversion or indifference to matters of society, Hetty’s one connection to the world of wealth and privilege was her lifelong friendship with Annie Leary, who lived in a large limestone house at 1032 Fifth Avenue. Leary, who had been a member of Hetty’s wedding party so many years earlier, was one of New York’s, and hence, the nation’s, leading philanthropists. She didn’t just throw money at good causes, or organize high-toned balls to support some home for the poor. She rolled up her sleeves and became active in a dizzying array of causes. Annie donated the Christopher Columbus monument at Columbus Circle in New York; she served as vice president of Stonywold, a home in the Adirondacks for sufferers of tuberculosis, and as president of the Flower Guild. She built churches and mission houses, and built a chapel at Bellevue Hospital named for her late brother, Arthur. For her efforts with the Catholic Church, the pope conferred upon her the honorary title of papal countess.
Annie saw in Hetty a side that others did not—a side that ran contrary to her public image. Annie appreciated Hetty’s humor and loyalty as a friend. Annie was also secure enough in her social position not to care how her friendship with Hetty would reflect upon her. In some ways, Annie, the do-gooder, took on Hetty and her family as a social project. When Hetty appeared at parties or balls, or events at Newport, Annie Leary was the one who orchestrated it. Hetty’s daughter, Sylvia, was of particular interest to Annie, who was determined to bring her out of her shell. If Hetty believed she was bringing Sylvia up to respect money and to be wary of gold diggers who might be after her (and Hetty’s fortune), it was Annie Leary who saw clearly the devastating effect this was having on the girl.
The friendship with Annie notwithstanding, Hetty lived her life convinced that, as a businesswoman, if not as a woman, she was fundamentally and completely alone. Nobody else would watch out for her interests. She mistrusted all forms of alliances and cabals. Where other investors sought the safety of numbers, the soothing ring of consensus, Hetty felt most comfortable on her own, trusting her own judgment and instincts. She was a free agent in the truest sense of the term, and anyone going into a deal assuming he had Hetty Green in his corner, or that she could be pushed, harassed, or cowed into going along with a crowd, learned difficult and expensive lessons to the contrary. Her shrewd conduct during a takeover attempt of the Georgia Central Railroad a year after the Cisco failure offers an excellent glimpse at the tactics and style she would use over and over for the rest of her career.
Based in Savannah, the Georgia Central had been pieced together from a number of smaller southern roads. It was a large railroad, with some two thousand miles of track around the Southeast, but it was unwieldly, inefficient, and complacent. The stock languished at $69 per share, and the company had been paying stockholders a meager 2 percent semiannual dividend. In a story that sounds more out of the corporate raider days of the 1980s than the 1880s, a group of wealthy investors, mainly from New York, spotted a ripe takeover opportunity. They were particularly interested in a steamship line, owned by the railroad, which ran regular service between Savannah and New York. The steamship line, they figured, had been badly undervalued among the railroad’s jumble of assets. The investors began buying up the stock during the summer of 1886 with the idea of installing their own managers and directors.
Over the next few months, an increasingly bitter and nasty battle ensued, as the New York group tried to round up a majority of the voting stock in time for the directors’ election in January. The New Yorkers charged the railroad with sloppy management and failing to properly reward stockholders. The Georgians dismissed the New Yorkers as greedy manipulators and outsiders who would simply break the company apart for a quick profit. Hovering in the near background, informing and inflaming sentiments on both sides, was the Civil War, barely twenty years past and still fresh in everyone’s mind. The Yankees, it seemed, were marching across Georgia once again.
Hetty got wind of the plan early on and began quietly buying up Georgia Central stock at around $70 per share. By early summer she held 6,700 shares. She waited patiently as passions reached their peak. She took no sides. True, she was a New Yorker, and a Yankee, but people who mixed sentimentality with business were fools. If these breast-beating old soldiers wished to relive Bull Run and Gettysburg in the boardroom, so much the better.
By November, the stock had shot up to $100 per share. She could easily have sold at this point for a quick $200,000 profit. She chose to sit tight, figuring that, as the clock ticked, the New Yorkers would grow ever more nervous. In a close election, her chunk of stock might just mean the difference. E. P. Alexander, the New Yorkers’ handpicked candidate for president following the planned takeover, approached Hetty with an offer of $115 for each of her shares, a $15 premium over the already inflated going rate. He was offering her more than $300,000 above what she had paid.
Hetty told Alexander he could have the shares—for $125. It was a bold gamble. After all, the New Yorkers might simply decide they could win without her and leave her with wads of shares and no buyer. But part of Hetty’s genius was to recognize when the other side was sweating. Alexander did the frightening math—$837,500—in his head, declined the offer, and left. Hetty waited. A short time later, Alexander returned with a new offer. She could have her $125, but not until after the election. Instead of selling her shares now, she would promise to vote their way. When the election was over, she would get her money, in full, regardless of the results of the election and the going rate of the stock. Alexander could hardly believe he was making such a generous offer to this stubborn woman.
Hetty replied, “If I have to wait for my money, the price is $130.”
Alexander had come too far, the election was too near, for him to go away empty-handed again. He countered with $127.50. Hetty agreed. First, as was her custom, she demanded that Alexander’s group post collateral for the entire amount in advance of the vote. On January 3, shareholders elected E. P. Alexander president of the Georgia Central Railroad, and installed a new board of directors. Hetty’s shares provided nearly half of Alexander’s 15,000-share victory. The new managers went about trying to salve wounds of the previous months’ battles, assuring Georgians that southerners, not northerners, would continue to operate the railroad and that the new owners wished only to improve, not dismantle, the company. Hetty Green washed her hands of the entire affair, having sold her shares for $854,250—31 a profit of $385,200.