CHAPTER XXV.
KEENE’S CAREER.
HE STARTS IN SPECULATION AS A CALIFORNIA BROKER.—A LUCKY HIT IN A MINING
STOCK PUTS HIM ON THE ROAD TO BE A MILLIONAIRE.—HIS SPECULATIVE
ENCOUNTER WITH THE BONANZA KINGS.—HE MAKES FOUR MILLIONS, STARTS FOR
EUROPE AND STOPS AT WALL STREET, WHERE HE FORMS AN ALLIANCE WITH
GOULD, WHO “EUCHRES” HIM AND OTHERS.—SELOVER DROPS GOULD IN AN AREA
WAY.—KEENE GOES ALONE AND ADDS NINE MILLIONS MORE TO HIS FORTUNE.—HE
THEN SPECULATES RECKLESSLY IN EVERYTHING.—SUFFERS A SUDDEN REVERSAL
AND GETS SWAMPED.—OVERWHELMING DISASTER IN A BEAR CAMPAIGN, LED BY
GOULD AND CAMMACK, IN WHICH KEENE LOSES SEVEN MILLIONS.—HIS
DESPERATE ATTEMPTS TO RECOVER A PART ENTAIL FURTHER LOSSES, AND HE
APPROACHES THE END OF HIS THIRTEEN MILLIONS.—HIS PRINCELY LIBERALITY
AND SOCIAL RELATIONS WITH SAM WARD.
One of the most remarkable up-and-down lives known to Wall Street is
that of James R. Keene. His rise and fall are both of recent date.
Mr. Keene is of English parentage, and was born in London, about 48
years ago. He came to this country at the age of 17, lived in the South
and studied law there. He removed to San Francisco in 1853, and became
well informed in mining matters through several mining cases that were
put into his hands while practising at the bar in that city. I am told
he was also connected with a Western newspaper for some time. He caught
the speculative fever shortly after his arrival in California, and, as
it seems, abandoned both law and journalism to become a broker.
Keene had hard work for some time to make both ends meet, and his
struggle for existence in the wild West made serious inroads on his
health. His physician told him he must give up work, and advised him to
take a long sea voyage if he intended to prolong his life. Acting on
this advice, he secured his passage to the East. This was the turning
point in both his health and fortune.
Prior to his departure, Mr. Keene was urged to invest a few hundred
dollars in a mining stock then selling very low. The length of his
journey and the change of scene caused him almost to forget about his
investment, and the methods of communication between the far West and
the far East in those days were so very slow that he had hardly any
chance of being informed of his lucky venture until his return. As an
illustration of this slow transit of news at that time, it may be stated
that gold was discovered January 19, 1848, but the news did not reach
the Eastern States until the following December. It was authoritatively
announced in the President’s annual message, and created great
excitement. Mr. Alfred Robinson, with about twenty companions, were the
first to leave New York for the scene of the new El Dorado, on the bark
“John Benton.”
After nearly a year’s absence Keene was surprised to find, on his
return, that mining stocks had taken a prodigious bound upward and
carried the one in which he had invested with them. The mine had turned
out to be a veritable bonanza, and the stock which had cost him only a
few hundred dollars was then worth over $200,000.
Had Mr. Keene’s health not required his absence from the scene of
speculation the chances are that he would have disposed of his stock as
soon as it should have realized a few thousand dollars.
This was a wonderful realization for one who had been comparatively
poor, and was sufficient to turn the head of any ordinary man; but it
only made Keene more anxious for greater success, which he set himself
diligently to achieve.
The speculative craze was then intense and epidemic. Waiters and
chambermaids bloomed into millionaires with the rapidity of mushroom
growth. Mr. Keene secured a seat in the Board, and began to do an
immense business.
Flood, Mackay, Fair and O’Brien were then the prominent operators. The
speculative contagion spread rapidly over the coast, and soon imparted
its influence to the entire continent. Keene’s further investments were
crowned with similar success to that of his first venture, and even in a
greater ratio of profit.
Seeing the great and rapid advance in the stocks of the Comstock mines,
he naturally reasoned, like old Daniel Drew, that what had gone up so
high and so fast was bound to come down. There were but few people on
the coast at that time, however, in a mood to reason so soberly, and it
required more than ordinary nerve to make the experiment of selling
“short.” Mr. Keene, however, had the courage of his convictions, and
made an onslaught upon the market.
There Was a strong contingent to oppose him, for the wealthy syndicate
just named, with the Bank of California behind them, were his bitter
foes, and they did their best to crush him. In spite of their efforts,
however, the market began to yield under the pressure of Keene’s “short”
sales. In a little while the list gave way and stocks began to topple
from their dizzy eminence, even quicker than they had climbed to that
unprecedented height. Keene netted millions in their fall. He cleared
two and a-half millions in the Belcher and Crown Point mines, and over
half a million in Ophir.
So, in a few years, this poor lawyer, journalist, curbstone broker and
invalid, found himself the happy possessor of millions, his name covered
with speculative glory, and the fame of his fabulous fortune heralded in
every city, town, hamlet and mining camp between the two oceans.
Keene was still found on the right side of the market when the great
bubble burst, when the Bank of California went under, and its president,
Mr. Ralston, committed suicide while pretending to take a bath in the
Pacific Ocean.
In 1877 Mr. Keene started on a voyage for Europe for the good of his
health, and made a friendly call in Wall Street to see how business was
transacted there. He found the speculative attraction irresistible.
Mahomet had come to the mountain and was held by its magnetic power.
Although Mr. Keene had been a grand success in California, he had a good
deal to learn when he came to Wall Street. He soon discovered that
California tactics would not do here. He began to sell “short,” but
found the market failed to yield to the touch of his bearish wand as it
had done in San Francisco. When he sold ten thousand shares of a certain
stock the decline, instead of being a slump, as he expected, was only an
insignificant fraction, and the market soon reacted. Mr. Keene quickly
discovered that he was throwing water into a sieve, and stopped
sacrificing his California gold so lavishly.
A pool was then formed by Mr. Keene and Jay Gould to put down Western
Union. Keene and Selover sold the stock in large blocks, but it was
absorbed by some party or parties unknown as fast as it was thrown out.
It was gravely suspected that Mr. Gould was the wicked partner who was
playing this absorbing game behind the scenes. Major Selover brooded
over the matter so seriously that his suspicions began to take tangible
form and “body themselves forth” in violence.
The Major and Keene met one morning at the rear entrance of the Stock
Exchange, in New street, and interchanged intelligent glances on the
subject, after the fashion of those passed between Bill Nye and his
companion at the card table with the Heathen Chinee. Selover walked down
the street with blood in his eye, and meeting Mr. Gould on the corner of
New street and Exchange Place, caught him up by the collar of the coat
and a part of his pants and dropped him in the area way of a barber’s
shop.
The little man promptly picked himself up, went quietly to his office,
and made a transaction by which Selover lost $15,000 more. This was his
method of retaliation.
Mr. Keene next went into the Atlantic and Pacific Telegraph pool, and
was again fortunate. It has been frequently asserted that he lost
heavily in this deal, but I have it on good authority that he came out
ahead. In the deal with Gould in Western Union, he and Gould netted on
joint account $1,300,000. It is popularly believed that Gould “euchred”
Keene in this pool, but these are the bare facts.
Keene looked over the speculative field, and found that there had been
great depreciation in values prevailing here since the panic of 1873. He
had arrived in the nick of time to take advantage of the situation. He
was backed by four millions of money, and the few losses which he at
first sustained were not felt by him, and only seemed to initiate him
properly.
This new blood was just what Wall Street then wanted to put the wheels
of speculation in motion. Mr. Keene informed himself about the principal
stocks dealt in at the Exchange. He did so with remarkable rapidity.
They were all down to panic prices, and seeing that most of them were
intrinsically cheap, he bought heavily. Soon the turn came which
resulted in the high tide of speculation which continued with but slight
reactions all through 1879-80.
The advance was immense, as can be seen in the tabular statement at the
end of this book, and the profits were enormous.
Keene’s millions were doubled and trebled. He must have felt himself a
modern Crœsus.
Fully nine millions were added to the four which he brought from
California. He stood in the centre of that great pile, figuratively
speaking, the cynosure of all eyes from Maine to California, and his
fame was noised abroad in Europe.
Gould and other old speculators began to grow green with envy at Keene’s
unprecedented success. He seemed likely to exceed the wildest dreams
that ever the avarice of Monte Cristo or Daniel Drew had conjured up,
and with him the imaginary profits of Col. Sellers had become material
realities. His investments were nearly all in good, reliable securities.
No dubious paper acceptances nor rotten railroad items were mixed up
with his tangible fortune, which was without parallel in Wall Street for
its size and rapidity of accumulation.
The history of speculation was ransacked in vain for an illustration of
such amazing success in so short a period. But here, I regret to say,
this marvellous prosperity ends.
In an evil hour Mr. Keene was induced to spread himself out all over
creation, while he still retained his immense interest in stocks. He was
so flushed with successive victories that he began to regard failure
impossible, and thought he was a man of destiny in speculation, such as
Napoleon considered himself in war. He speculated in everything that
came along—in wheat, lard, opium and fast horses.
Keene’s attempt to get a corner in all the grain in the country,
however, was a signal failure. The very week that Foxhall won the Grand
Prix in Paris he himself was sadly beaten in the speculative race by the
steady going farmers of the West, who sent their wheat to market quicker
than he could purchase it with his thirteen million dollars, and all the
credit which that implied.
All of a sudden, reversal in the tide of speculation set in. Mr. Cammack
was quick to perceive that Mr. Keene was extending his lines and his
ventures. He had a conversation with Mr. Gould. They became convinced
that the Californian must soon be obliged to leave some of his
enterprises in a weak and unguarded position. It was impossible that he
could take care of them all. These two champion bears united their
efforts to upset the market, and each day brought additional force to
their aid. By dint of perseverance their efforts commenced to bear
fruit, and it was apparent that they would soon be rewarded with
success. The bears began to multiply while the bulls diminished, and the
remnant of the latter that were left were anything but rampant at that
time.
The bankers became timid. The brokers were inspired with the same spirit
and were still calling out for more margin. Loans were called in as a
part of the programme of a bear campaign, and all the machinery of
depression was put in active motion. Prices were torn to pieces.
Properties that had been considered good as solid investments for a long
turn, were mercilessly raided, and some of them shattered to fragments.
In fact, there was a regular panic. In the general slaughter, many of
the brokers sold Mr. Keene’s stocks out. His wheat was also sold in
immense quantities at great sacrifice, and his load was lightened all
around, even more quickly than it had been heaped up.
His losses are said to have amounted to seven millions of dollars at
this time.
The manly efforts of Mr. Keene to recover these losses, as is usually
the case in such instances, only resulted in further misfortune.
Disaster followed disaster, and as he became desperate in his efforts to
get back something, his losses became constantly greater, until nearly
the whole of his immense pile was buried in fruitless efforts to recover
a portion of it.
Great sympathy has been felt in Wall Street for Keene since his failure,
for the Street had never before found such a liberal man. By general
consent he decidedly took the palm in this respect, not only from all
his speculative contemporaries, but the archives of Wall Street since
the days of the first meetings of the brokers in the Tontine Coffee
House, opposite the sycamore tree, early in the century, can furnish no
such parallel of princely liberality as that of James R. Keene during
the period of his matchless prosperity.
The parasites that waxed fat on his bounty and business are numerous. At
least a score of Wall Street brokers were raised from penury to wealth
by the commissions which they made out of him. Many of them are to-day
living in luxury who started with a desk and a few plain office chairs
to do business for the California millionaire, and now he is
comparatively poor, and thrown on the slender resources of his wife.
Keene arose from nil to be worth thirteen millions. He is now back where
he started.
A full and correct history of Keene’s beneficences would fill this
volume, and however much I admire him, I cannot afford to give him so
much space.
I shall relate one remarkable instance of his unbounded generosity,
however, as the object has been so universally known, and was himself
such a popular society man.
Long prior to Mr. Keene’s advent in Wall Street, Sam Ward had been a
conspicuous figure in Washington and Wall Street, and had acquired a
society reputation in Europe.
This gentleman was originally forced into prominence by his marriage
with Miss Astor.
Mr. Ward had changed from one thing to another until finally he took up
his abode in Washington, and became a lobbyist.
When Mr. Keene came to New York with his four millions of dollars, which
he had made when the majority of New York investors had been on the
losing side, dropping their money almost as fast as water runs down
hill, through the unprecedented shrinkage in values, there was a wide
field for profitable investment. This shrinkage had been going on from
the panic of 1873, step by step downward until 1878, when society had
reached a stratum by dint of levelling down that placed almost everybody
upon an equality. Property, in many instances, became a serious
encumbrance instead of a benefit, and many were glad to be rid of the
responsibility of their holdings for what was sufficient to settle the
mortgage. Everybody felt poor, and was really so, with a few fortunate
exceptions.
Mr. Keene arrived here at the most fortunate moment for investment.
Everything was down to bed-rock prices. He, therefore, became an object
of actual curiosity, and was as much of a lion in our midst as he had
been in San Francisco.
He was not only the favorite of fortune, but a favorite of society,
which generally go together with curious inconsistency in our social
democracy.
One of the first acquaintances Mr. Keene made on his arrival was this
great society man, the celebrated Sam Ward, who at once recognized his
social worth, not only in dollars and cents, but in considerable
liabilities, genuine representatives of dollars and cents. The more
tangibly he realized this fact the more tenacious was his attachment,
until Mr. Keene found Mr. Ward the very _beau ideal_ of Scriptural
fraternity, namely, “a friend that sticketh closer than a brother.”
Wherever Keene appeared, though apparently alone, it was safe to bet
that Ward’s shadow could soon be seen.
It is said of Seneca, when he observed a house falling, and nobody near
it, that he asked: “Where is the woman?” So Keene’s presence naturally
suggested Ward to the mental vision of every Wall Street man and every
sporting man.
Whether it was up-town or down-town, at Newport, or in London, at the
Derby, or the Grand Prix, it was all the same, where Keene was, there
Ward soon appeared with the promptitude of the genius that stood before
Aladdin when he touched his wonderful lamp or rubbed his magic ring.
This self-sacrificing friendship and ardent devotion on the part of Mr.
Ward was recognized by Mr. Keene in the most tangible manner. He made an
investment for his protege, of $50,000 in solid securities, placing them
in the hands of trustees, so that his ward received the income therefrom
of three thousand dollars, as an annuity, for life.
Mr. Keene bestowed numerous benefits on other newly made acquaintances,
of which this is a fair sample.
A Pacific coast biographer draws the following graphic sketch of Keene,
some time after his departure from California, which is curious reading
in the light of the events which I have related:
“No series of sketches of men, prominently identified with the
stock interests of the Pacific coast, would be complete without
a pen portrait of James R. Keene, the free lance operator of the
San Francisco stock market, who dared to beard the Bonanza Kings
in their den, and came off victorious with many shekels of gold
and silver. Mr. Keene is no longer with us. Some time since,
after having realized largely on his stock ventures, he
concluded to take a trip East, to be extended to Europe, unless
on the Atlantic seashore he regained the health which too active
exertions on the Pacific had impaired. And so he went with his
family. Those who bade him God-speed expected to see him return
within a few months, certainly within a year, with recovered
health, new ambitions, new conquests to make. But he comes not.
New York has presented more attractions than his old love, San
Francisco. Railroad stocks, Jay Gould, Sam Ward, Rufus Hatch,
Long Branch, Trenor W. Park, Newport, have been too many
attractions for Jim Keene. He fell into the New York market as
easily as any man generally falls among thieves—but he seems to
have got the best of the thieves in every issue. When it was
rumored that Keene contemplated making Wall Street his
headquarters, his old San Francisco friends generally wrote out
their calendars, and figured up when ‘Jim’ would be back,
bursted out and out, looking for a job. A few who had abiding
faith in Keene, who knew his pluck, who had gauged his
capacities, who had measured his horse sense, consulted their
calendars and said: ‘Jim is gone! He never will come back to
couch his lance in such a narrow field as ours. New York is big,
Wall Street is big—just about the size of institutions that
Keene wants to tackle.’ The few were right. Keene hasn’t come
back to look for a job. He has tried conclusions with the
smartest of the Wall Street operators, and, novice that he was,
came out triumphant. The California goose that was to be plucked
wasn’t plucked. Even Jay Gould, with all his shrewdness, gave it
up as a bad job; and Vanderbilt condescends to confer with Keene
on momentous occasions.
“Keene started in his career as a stock operator years ago in
San Francisco. He first was conspicuous as an impulsive,
dare-devil sort of a street broker, acting for big firms, with
an occasional dash for liberty and himself. Gradually he worked
his way from steerage to cabin, from the private’s ranks to the
position of the lieutenant of the watch, then to officer of the
day, and finally, boss of the stock concern. No man in the stock
market exercised so much influence as Mr. Keene. He had hosts of
friends, friends whom he grappled with hooks of steel, ready to
swear by him on any and every occasion. Generous to a fault,
brusque in manner at times, but with the heart of a woman, ready
to melt at a moment’s notice, open-handed and open-hearted to
the appeal of even an acquaintance, no wonder that Jim Keene was
the ideal of the market.”
It is not generally known that Keene was chiefly instrumental in
rehabilitating the Bank of California after the death of Ralston. He
raised a large subscription in the Stock Board, and got the Hon. William
Sharon, D. O. Mills and “Lucky” Baldwin to subscribe a million each, and
he put in a million himself. The bank was thus enabled to meet all
immediate demands, and a threatened panic was averted.
At the time of Keene’s failure he was chief of a syndicate which had
purchased 25,000,000 bushels of wheat, which would soon have netted many
million dollars of profit, if it had been firmly held, but one or two of
his partners in the pool became timid and sold out. The syndicate went
to pieces, and both profits and capital vanished. He laid his misfortune
mainly to the newspapers which raised such a universal cry about the
immense “corner” that was being manipulated in wheat, threatening a
famine in the great staple of human life.
Keene was next shaken out of his stocks. This was done chiefly by an
ably concocted scheme of the bears, and he had the mortification of
seeing the stocks which he had held advance within a few months’ time to
a point that would have enabled him to realize ten million dollars, if
he had been able to hold them.
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