Charles W. Morse

For the anarchist, see Chuck W. Morse.
Charles W. Morse (center) and two unidentified associates, pictured circa 1912–1915.

Charles Wyman Morse (October 21, 1856 – January 12, 1933[1]) was a notorious businessman and speculator on Wall Street in the early 20th century.[2][3]

Early life

Morse was born in Bath, Maine, in 1856, the son of Benjamin Wyman and Anna Eliza Jane (Rodbird) Morse. His father had a large role in the towing business on the Kennebec River. Charles was already involved in the shipping business while a student at Bowdoin College, and at his graduation in 1877 he had accumulated a sizable capital. After college he went into business with his father and a cousin, Harry F. Morse, forming C.W. Morse & Company and engaging in an extensive business shipping ice and lumber.[4]

On April 14, 1884, he married Hattie Bishop Hussey of Brooklyn, New York (granddaughter of Maine shipbuilder T. J. Southard). She bore him three sons and a daughter, and died about 1897.[5]

As his business interests grew, Morse moved to Boston and, in 1897, New York City.

The "Ice Trust"

He organized the Consolidated Ice Company in 1897 and went into the ice business. In 1899 he merged it with several other companies to form the American Ice Company which, grossly overcapitalized at $60 million, held a virtual monopoly for ice in New York. Morse quickly became known as "The Ice King".[6] At that time commercial ice was cut from frozen rivers, much of it in Morse's native state of Maine.

On May 1, 1900, Morse attempted to use his monopoly to raise the price of ice. The plan backfired, however, and it was revealed by the New York Journal and Advertiser that Morse had obtained special privileges from Tammany Hall to run his business, and in exchange Robert Van Wyck (New York City's first mayor over the five united boroughs) had been given a substantial ownership share in the ice companies (by then known as the "Ice Trust") as had Richard Croker, the boss of Tammany Hall. Having formed a holding company called the Ice Securities Company, Morse manipulated its stock and left the ice business with a profit of some $12 million.[7]

Shipping and banking

On June 18, 1901 he married Clemence Dodge, a divorcee from Atlanta, at the Fifth Avenue Presbyterian Church in Manhattan. The Morses lived at 724 Fifth Avenue,[8] before moving to Lakewood Township, New Jersey.[9] They maintained a summer home in Bath, Maine. Their marriage was annulled, however, in 1904 when it was determined that Clemence's divorce from her first husband, Charles F. Dodge, was not legal and she was therefore still married to him. Undeterred, she was represented by Samuel Untermyer, who restored her marital rights; she remained devotedly at the side of Morse until her death in 1926.[10]

Morse returned to the realm of shipping in 1901 when he established the Eastern Steamship Company as a consolidation of three existing lines. These were the Boston and Bangor Steamship Company, dating from 1834; the Portland Steam Packet Company, organized in 1843; and the International Steamship Company, established in 1859.[11]

In 1902 Morse acquired control of both overnight steamboat lines on the Hudson River - the People's Line, established in 1835, and the Citizens' Line, established in 1872 - and organized the Hudson Navigation Company to operate them. They were collectively known as the Hudson River Night Line. The People's Line named its new 411-foot steamer C.W. Morse in his honor in 1904.[12] (Morse's uncle James Thomas Morse, his father's brother, was the namesake of the Rockland-Bar Harbor, Maine, steamer J.T. Morse, also built in 1904.[13])

Morse acquired control of the Metropolitan Steamship Company from the Whitney interests in 1906. He organized the Consolidated Steamship Company in January 1907 as a holding company for the Eastern Steamship Company, Metropolitan Steamship Company, Clyde Steamship Company and Mallory Steamship Company. Despite an initial announcement of such a sale, Morse failed in an attempt to purchase the Long Island Sound steamers of the New York, New Haven and Hartford Railroad.[14] He did, however, acquire control of the New York and Cuba Mail Steamship Company and the New York and Porto Rico Steamship Company in 1907.

He parlayed this success into a prominent role in high finance in New York City. Morse controlled the National Bank of North America, the New Amsterdam National Bank and was a large owner of the Mercantile National Bank. He became a close associate of F. Augustus Heinze, who became president of Mercantile National, and E.R. Thomas, a young man of large inherited fortune. Their influence grew—Heinze and Morse served as directors together on at least six national banks, 10 state banks, five trust companies and four insurance companies.[3][15]

Panic of 1907

Main article: Panic of 1907

Along with Augustus Heinze's brothers, Morse helped create a pool of money to drive up and corner the stock of United Copper. On October 15, 1907 this corner failed so spectacularly that depositors with Morse's banks began to pull out their deposits. On October 20, the New York Clearing House, which had a critical role clearing checks between banks, forced Morse to resign from his banking interests. This did not stop the panic, however, which went on to topple the Knickerbocker Trust Company, New York's third largest trust, and led to financial turmoil across the country through November. The Morse-controlled steamship lines went into receivership, for varying periods, in February 1908.[16][17][18]

Indicted by United States District Attorney Henry L. Stimson, Morse was convicted of violations of federal banking laws. He was sentenced to 15 years in the Atlanta federal penitentiary in November 1908 but remained free on appeal.[19]

On October 8, 1909, the assets of the Metropolitan Steamship Company were sold at foreclosure sale to John W. McKinnon of Chicago. The company was reincorporated three days later in Maine with Morse as president.[20] The Metropolitan Steamship Company and Maine Steamship Company were consolidated with the Eastern Steamship Company in 1911 to form Eastern Steamship Corporation. This concern went into receivership in 1914 and emerged in 1917 as Eastern Steamship Lines.[21]

Having exhausted his legal appeals, Morse departed for Atlanta penitentiary on January 2, 1910. In Atlanta he was a prisoner alongside Charles Ponzi, who would go on to create an eponymous fraudulent financial scheme, the Ponzi scheme, and earn a legacy as one of the most famous swindlers in American history. Because of Morse's wealth and connections, he launched a campaign of lawyers, lobbyists and famous journalists like Clarence W. Barron who urged President William Howard Taft for leniency. In 1912 Morse became ill, and a panel of Army doctors declared that he suffered from Bright's disease and other maladies and would soon die if he remained in prison. Taft signed his pardon, and Morse departed for medical treatment at Wiesbaden. However, it soon became known to the Justice Department that he had feigned illness by drinking a combination of soapsuds and chemicals. Taft later said that the case "shakes one's faith in expert examination."[22][23]

Later life and death

On his return from Europe, Morse returned to the shipping business. He still controlled the Hudson Navigation Company, which had not been involved in the crash of the Consolidated Steamship Company in 1907. Morse announced on January 11, 1916, plans for a new transoceanic steamship line, which he organized as the United States Shipping Company. This holding company exchanged its stock for that of 16 subsidiary companies, each organized around a steamship.

During World War I he was president of United States Steamship Company,[24] which was the parent company of Groton Iron Works and Virginia Shipbuilding Corporation.[25] The Virginia Shipbuilding Company won contracts to build 36 vessels for the war effort. The freighters were ordered by the United States Shipping Board, and Morse borrowed from the Emergency Fleet Corporation funds to carry out the contracts. Ultimately, 22 of the ships were completed; the other 14 were cancelled.

Morse controlled the Hudson Navigation Company until its bankruptcy in 1921. The receivers quickly changed the name of the C.W. Morse to Fort Orange.[26]

In 1922 Morse was accused of misrepresentation of his facilities for ship construction; misapplication of funds intended for the building of ships to the building of shipyards; misappropriation of equipment for his own purposes; and failure to turn over to the government the profits of ships it had leased to him. Indicted for war profiteering and fraud, soon after he was confronted with charges of mail fraud involving sales solicitations for stock of the United States Shipping Company. The trial on the war profiteering charges resulted in an acquittal, but a civil suit in 1925 against the Virginia Shipbuilding Company resulted in a judgment for the government of over $11.5 million. The mail fraud case against Morse ended when he was adjudged too ill to stand trial, and after a jury had disagreed the charges against his sons were quashed.[27]

His second wife, Clemence, died in July 1926. Suffering from paralysis, Morse was placed under the guardianship of the probate court of Bath on September 7, 1926, adjudged incompetent to handle his affairs. Having suffered several strokes, he died of pneumonia at Bath, Maine, on January 12, 1933.[28][29]

Notes

  1. ↑ Dictionary of American Biography, Vol. XIII, p. 239. New York: Charles Scribner's Sons, 1934.
  2. ↑ Druett, Joan (2000). She Captains: Heroines and Hellions of the Sea. [Simon and Schuster. p. 304. ISBN 978-0-7432-1437-7. Retrieved December 17, 2008.
  3. ↑ 3.0 3.1 Robert F. Bruner and Sean D. Carr, The Panic of 1907. Lessons Learned From the Market's Perfect Storm, pp. 39-40. Hoboken, New Jersey: John Wiley & Sons, 2007. ISBN 978-0-470-15263-8
  4. ↑ Dictionary of American Biography, Vol. XIII, pp. 239–240.
  5. ↑ Dictionary of American Biography, Vol. XIII, p. 241.
  6. ↑ Dictionary of American Biography Vol. XIII, p. 240.
  7. ↑ Dictionary of American Biography, Vol. XIII, p. 240; Henry F. Pringle, The Life and Times of William Howard Taft, Chapter 33. New York: Farrar & Rinehart, Inc., 1939.
  8. ↑ 724 Fifth Avenue, on the West side of the avenue, between 56th and 57th Streets, had been built for R. Fulton Cutting in 1882; it was a brownstone rowhouse of four storeys and an attic with asymmetrical Romanesque Revival details; it was illustrated in Century Magazine, February 1886.
  9. ↑ Staff. "CHARLES W. MORSE'S MARRIAGE ANNULLED; Divorce Mrs. Morse Secured from First Husband Pronounced Illegal.", The New York Times, January 8, 1904. Accessed February 10, 2011. ""They gave up that house a few months ago, and have been living at their home in Lakewood, N.J., and at their Summer cottage at Bath, Me."
  10. ↑ "Charles W. Morse's Marriage Annulled. Divorce Mrs. Morse Secured From First Husband Pronounced Illegal", The New York Times, January 8, 1904.
  11. ↑ George W. Hilton, The Night Boat, p. 97. Berkeley, California: Howell-North Books, 1968.
  12. ↑ Hilton, pp. 120, 132.
  13. ↑ Hilton, p. 112.
  14. ↑ "Morse Buys Sound Lines From New Haven", The New York Times, February 7, 1907.
  15. ↑ Walter Lord, The Good Years. From 1900 to the First World War, pp. 182–183. New York: Harper & Brothers, 1960.
  16. ↑ "Ask Receivers For Morse Ship Lines. Bondholders Act in Maine, Boston, and This City to Protect Their Interests", The New York Times, January 31, 1908.
  17. ↑ Lord, p. 183.
  18. ↑ Hilton, pp. 97, 99.
  19. ↑ Pringle (1939)
  20. ↑ "Morse Heads New Company. Metropolitan Steamship Lines Will Be Incorporated in Maine To-day", The New York Times, October 11, 1909.
  21. ↑ Hilton, p. 99.
  22. ↑ Dictionary of American Biography, Vol. XIII, pp. 240–241.
  23. ↑ Bruner and Carr, p. 183.
  24. ↑ "C. W. Morse Contracts". Hearings before Select Committee on U. S. Shipping Board Operations. Washington DC: Government Printing Office. 1920. p. 1088. Retrieved on 18 January 2011.
  25. ↑ "C. W. Morse Contracts". Hearings before Select Committee on U. S. Shipping Board Operations. Washington DC: Government Printing Office. 1920. p. 1237. Retrieved on 18 January 2011.
  26. ↑ Hilton, p. 121.
  27. ↑ Dictionary of American Biography, Vol. XIII, p. 241; Bruner and Carr, p. 183.
  28. ↑ Time, July 26, 1926.
  29. ↑ "Charles W. Morse Dead. Ex-New Yorker, Who Controlled 13 Banks, Is a Victim of Pneumonia", The New York Times, January 13, 1933.