Walkabout: Charles W. Morse: King of New York

There are a few men who could lay claim to being the de facto “King of New York.” Great politicians like Fiorello LaGuardia, perhaps sports legends like Babe Ruth, or financial wizard and mayor Michael Bloomberg could all vie for the title. But one man, in the beginning of the 20th century had a chance at the title. Unlike the others, who might have the title bestowed upon them, this man wanted to be king, and reached for the crown with all he had. His actions affected every New Yorker in the five boroughs, from the wealthy financiers on Fifth Avenue, to the poorest New Yorker in a rundown tenement. His name was Charles Wyran Morse, and we met him in the last two weeks as the “Ice King,” who controlled the price of ice for a city that could not survive without it.

Last time, after the ice war was over, in 1900, the other players in the scandal all survived and thrived. Whoever said crime doesn’t pay didn’t meet Mayor Robert Van Wyck, Tammany Hall boss Richard Croker or Charles W. Morse. All of them came out of the ice crisis much richer than they went in. While the other two men retired soon after, and lived comfortably on their money, Morse was only getting started. He had amassed millions of dollars in the sale of his ice company stock, and he was ready to get back into the business of making more money. Please see the links below to catch up on the details of the Ice Scandal story.

Morse had begun his career and rise to power while still a student at Bowdoin College, working on the side in the family shipping business. The Morse’s had made money on shipping ice and lumber from their home state, Maine. From there Morse had gone into the ice business. After the Ice Scandal, he took his $12 million of ice money and went back into shipping. In 1901, he established the Eastern Steamship Company. He had just purchased three separate shipping lines, and he consolidated them into one company.

A year later, he bought the only two Hudson River overnight steamship companies, the People’s Line and the Citizen’s Line. He established the Hudson Navigation Company to run them, and organized the whole package as the Hudson River Night Line. The People’s Line named their newest ship the C.W. Morse in his honor.

In 1906, he bought three more New York-based steamship lines, bundled them with the lines he had bought in 1901, and called the whole operation the Consolidated Steamship Company. Morse now controlled a major portion of all the shipping up and down the Eastern Seaboard and up the Hudson River. He topped it off by buying two more lines, one between NY and Cuba, the other between NY and Puerto Rico. He was now even more powerful than ever, with Morse ships plying the shipping lanes from Maine to the Caribbean. It still wasn’t enough.

When you have the kind of money and power Morse had, where do you go next? Why to the biggest poker game in town, of course, and that was Wall Street. Never to do anything by halves, Charles Morse dove into the world of finance with a vengeance. By 1907, he controlled the National Bank of North America, the New Amsterdam National Bank, and was the owner of much of the Mercantile National Bank. He made new friends and business acquaintances, fellow power brokers with dangerous greedy streaks. One of these was F. Augustus Heinze.

Fritz Augustus Heinze, who never went by “Fritz”, way too German, was a Brooklyn boy, born to immigrant German and Irish parents in 1869. He was educated both in Germany and at Brooklyn Polytechnic Institute. Fluent in several languages, he then matriculated to Columbia University School of Mines. His father wanted him to go into mining in Germany, but F. Augustus had a better idea, he headed west to Colorado, Salt Lake City, and finally Butte, Montana.

He established himself in Butte as a mining engineer for the Boston and Montana Company. He was well known in town as a hard drinking, fun loving guy in bars and saloons, which made him popular with the men, while also being a well-dressed and soft-spoken, mannered man in society, which impressed the ladies. Everyone loved him. With a $50,000 inheritance from his father, he established his own copper ore buying company, and began smelting copper.

Long story short, he soon became a major player in the copper industry, in direct competition with the largest company, the Amalgamated Copper Mining Company, today called Anaconda Copper. Heinze began playing very hard ball with Amalgamated. He paid his miners more, which made him popular, and he took advantage of a mining law that allowed him to mine adjacent to someone else’s vein, and then go beneath their operation, and mine the minerals underneath them. As can be imagined, that infuriated Amalgamated, and sent both parties to court, where he always managed, through some judicious “donations,” to have sympathetic judges.

He pulled that off twice. The second time he raided Amalgamated’s turf by mining underneath them, it erupted in all-out war, with sabotage, fist fights, all kinds of violence, and a mine collapse that destroyed the Amalgamated operation there. There were court appearances, and fines on Heinze’s part, but because he had destroyed all evidence of his deeds, he got a slap on the wrist. In the end, Amalgamated paid $12 million dollars for Heinze’s company and the promise that he’d go away. Heinze took the money, and headed back to his favorite place, New York City.

Like long lost twins, Heinze and Morse came together, became friends and business partners. Heinze still had copper interests, and set up his United Copper offices on Wall Street, just down the hall from his two brothers and their brokerage business. Heinze went into banking, and became the president of the Mercantile National Bank, where Charles Morse had a controlling interest. The two men began working together, and by 1907, Heinze and Morse had served as directors together on at least six national banks, ten state banks, five trust companies and four insurance companies.

This would have been enough for most men, but Heinze had a scheme to make even more money. He went back to what he knew best – copper, and with Morse, and his brothers, tried to corner the copper market. They triggered the Panic of 1907, one of the worst financial panics in the history of the United States. After they were done, the financial world would be changed forever.

The Heinze brothers and Charles Morse pooled their banks’money, as well as the money of their clients and investors. The idea was to buy up as many of the shares of United Copper as they could, and force up the price of the stock. They would then leverage the many short sellers of United into paying back their borrowed stock at the higher prices, thereby making millions. It didn’t work, and when the market realized what was going on, they began pulling out of Heinze and Morse’s banks in huge numbers, leading to a massive banking collapse. The Panic of 1907 was on.

It wasn’t quite that simple, of course, there were other factors in the Panic, including the great San Francisco Fire of 1906, recently passed Anti-Trust laws, and other contributing events, but like any disaster, it was a perfect storm of one event combining with another, and another, resulting in total disaster. When Heinze and Morse’s banks began to falter, everyone connected with them also began to fail, whether directly involved or not. It was like a row of dominos. In Brooklyn, this led to the failure of the First National Bank of Brooklyn, Williamsburg Trust Company of Brooklyn, Borough Bank of Brooklyn, and Jenkins Trust Company of Brooklyn. That story was told in a Walkabout last year about the powerful Jenkins family of Williamsburg.

The Panic would have gone on much longer than it did, had not J.P. Morgan gathered up some of the most powerful on Wall Street and had them pool their funds to stop the bank failures. The end result of the Panic was the creation of the Federal Reserve system in 1913, which gave Federal protection and backing to banks to avoid that kind of situation again. But our major players in this story, Morse and Heinze were ruined.

Heinze was indicted but eventually went free, and went back to Montana, where he had a hero’s welcome. He got into trouble there once again, but that’s another story. The hard drinking Heinze died in 1914 of cirrhosis of the liver. Charles Morse lost a personal fortune in the Panic, and his vast shipping company went into receivership. He ended up losing almost all of it. But his problems were just beginning. In 1908, he was indicted for violating federal banking laws. After a lengthy trial, he was found guilty and sentenced to 15 years in the Atlanta Federal Penitentiary.

He appealed but lost, and ended up serving two years in prison. One of his prison mates was a man named Charles Ponzi, who when released, would go on to become one of the greatest swindlers of all time. Who knows who learned what from whom in that Atlanta yard? While Charles was in prison, he had his lawyers and family fighting for his release. He got sick, diagnosed with Bright’s Disease, and was said to be dying. His lawyers were finally able to persuade President William Howard Taft to issue a pardon. Charles Morse got out of federal prison in 1912, and headed for Germany for “treatment.” After he was released, it was discovered that he had faked his illness by drinking a prison cocktail of soapsuds and chemicals. Taft was disgusted.

Morse came back to the United States, and took control of his remaining shipping line, the one that operated on the Hudson River. In 1916, he announced that he was establishing a new trans-Atlantic line. When World War I broke out, he was President of the United Steamship Company, which was owned by the Groton Iron Works and the Virginia Shipbuilding Corporation. The company bid on contracts to build 36 freighters for the war effort, and built 22 of them, before the rest of the contract was cancelled. Morse borrowed heavily from the Emergency Fleet Corporation to build them.

After the war, in 1922, Morse was once more indicted, this time for war profiteering and fraud in the construction and sale of the freighters. He was also charged with mail fraud for solicitations to buy stock related to his shipbuilding efforts. He was eventually cleared of the profiteering and fraud charges, but by the time the mail fraud charge came up, he was deemed too sick to stand trial. His sons had been charged with him, but the government dropped the case.

Morse’s second wife, Clemence, died in 1926. She had remained steadfast and loyal to him throughout all of his troubles. That same year, suffering from paralysis, Charles Morse was placed under the guardianship of the probate court of Bath on September 7, 1926, adjudged incompetent to handle his affairs. He had suffered several strokes, which left him mentally unable to realize where he was, or who was around him. His brilliant and devious mind had been destroyed. On January 12, 1933, the man known as the Ice King died of pneumonia. He died in Bath, Maine, at his summer home. He was 77 years old.

It’s Nice to be Ice, Part One
It’s Nice to be Ice, Part Two
It’s Nice to be Ice, Part Three
It’s Nice to be Ice, Part Four
The Fall of the Jenkins Family Empire, Part Six (all other chapters can be linked from there)