Richard Whitney (financier)
Encyclopedia
Richard Whitney was an American
financier, president of the New York Stock Exchange
from 1930 to 1935, and a convicted embezzler.
He was a descendant of John Whitney (1589/92 - 1673), an English
immigrant who arrived with the Winthrop Fleet
in 1630 and who settled in Watertown, Massachusetts
. This prominent branch of the Whitney family
of New York
descends from Boston. Richard Whitney's father, George Whitney, Sr., of Boston, Massachusetts, was president of North National Union Bank, and educated Richard and his older brother George Whitney, Jr., at Groton School
and Harvard University
.
In 1910 he followed his brother, George Whitney, Jr. to New York City
where he established his own bond brokerage firm
Richard Whitney & Co. Two years later, using money borrowed from his family, Richard Whitney & Co. purchased a seat on the New York Stock Exchange
. His uncle had been a partner in J.P. Morgan & Co.
, and brother George proved invaluable because of his position at the Morgan Bank which allowed him to direct substantial business to Richard's brokerage.
Richard Whitney married the widow Gertrude Sheldon Sands in 1916. She was from Brooklyn, New York, whose first husband Samuel Steven Sands III was the grandson of William Kissam Vanderbilt
(1849-1920); grandson of Commodore Cornelius Vanderbilt. Whitney and she had three children. His father-in-law had served as president of the powerful Union League Club and Whitney became a member of a number of the city's elite social clubs and was appointed treasurer of the New York Yacht Club
. In 1919, he was elected to the Board of Governors of the New York Stock Exchange and not long thereafter was named its vice-president.
On October 24, 1929, Black Thursday
, he attempted to avert the Wall Street Crash of 1929
. Alarmed by rapidly falling stock prices, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor of the New York Stock Exchange. The meeting included Thomas W. Lamont
, acting head of Morgan Bank
; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell
, president of the National City Bank of New York. They chose Whitney, then vice president of the Exchange, to act on their behalf.
With the bankers' financial resources behind him, Whitney went onto the floor of the Exchange and ostentatiously placed a bid to purchase a large block of shares in U.S. Steel
at a price well above the current market. As traders watched, Whitney then placed similar bids on other "blue chip" stocks. This tactic was similar to a tactic that had ended the Panic of 1907
, and succeeded in halting the slide that day. The Dow Jones Industrial Average recovered with a slight increase, closing with it down only 6.38 points for that day. In this case, however, the respite was only temporary; stocks subsequently collapsed catastrophically on Black Tuesday, October 29.
.
While Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. To stay afloat, he began borrowing heavily from his brother George as well as other wealthy friends, and after obtaining loans from as many people as he could, turned to embezzlement to cover his mounting business losses and maintain his extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund, the New York Yacht Club (where he served as the Treasurer), and $800,000 worth of bonds from his father-in-law's estate.
Having retired as president of the NYSE in 1935, Whitney remained on the board of governors, but in early March 1938, his past began to catch up with him when the comptroller for the NYSE reported to his superiors that he had established absolute proof that Richard Whitney was an embezzler and that his company was insolvent. Within days, events snowballed, and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds on March 10 when he was officially charged with embezzlement by New York County District Attorney
Thomas E. Dewey. Following his indictment by a Grand Jury
, Richard Whitney was arrested and eventually pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing
prison. On April 12, 1938, six thousand people turned up at Grand Central Station to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison.
Despite everything, Richard Whitney's wife and family stood by him and friend May Kinnicutt and her husband, G. Hermann Kinnicutt, a partner in a stockbrokerage firm, provided Mrs. Whitney with a farmhouse to live in at Far Hills, New Jersey
. George Whitney eventually made restitution for all the money his brother owed.
A model prisoner, Richard Whitney was released on parole in August 1941 after serving three years and four months in Sing Sing
. He became the manager of a dairy farm, supervising three farmhands and twenty-five cows. In 1946, he went back into business when he became president of a textile company that made yarns from the ramie
plant, which grew in Florida. Banned from dealing in securities for life, he was living a quiet life in Far Hills, New Jersey
at the time of his death on December 5, 1974.
in 1966, and by author John Brooks as part of his 1969 book Once in Golconda : A True Drama of Wall Street 1920-1938 (ISBN 0-471-35753-7). Louis Auchincloss
wrote a novel based on his life entitled The Embezzler. He is mentioned, not by name, in John O'Hara
's short story "Graven Image."
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
financier, president of the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
from 1930 to 1935, and a convicted embezzler.
Biography
He was born on August 1, 1888 in Boston, Massachusetts to George Whitney, Sr.He was a descendant of John Whitney (1589/92 - 1673), an English
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
immigrant who arrived with the Winthrop Fleet
Winthrop Fleet
The Winthrop Fleet was a group of eleven sailing ships under the leadership of John Winthrop that carried approximately 700 Puritans plus livestock and provisions from England to New England over the summer of 1630.-Motivation:...
in 1630 and who settled in Watertown, Massachusetts
Watertown, Massachusetts
The Town of Watertown is a city in Middlesex County, Massachusetts, United States. The population was 31,915 at the 2010 census.- History :Archeological evidence suggests that Watertown was inhabited for thousands of years before the arrival of settlers from England...
. This prominent branch of the Whitney family
Whitney family
The Whitney family is an American family notable for their social prominence, wealth, business enterprises and philanthropy, founded by John Whitney who came from London, England to Watertown, Massachusetts in 1635.-Rise to prominence:...
of New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
descends from Boston. Richard Whitney's father, George Whitney, Sr., of Boston, Massachusetts, was president of North National Union Bank, and educated Richard and his older brother George Whitney, Jr., at Groton School
Groton School
Groton School is a private, Episcopal, college preparatory boarding school located in Groton, Massachusetts, U.S. It enrolls approximately 375 boys and girls, from the eighth through twelfth grades...
and Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
.
In 1910 he followed his brother, George Whitney, Jr. to New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
where he established his own bond brokerage firm
Brokerage firm
A brokerage firm, or simply brokerage or broker in context, is a financial institution that facilitates the buying and selling of financial derivatives between a buyer and a seller...
Richard Whitney & Co. Two years later, using money borrowed from his family, Richard Whitney & Co. purchased a seat on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
. His uncle had been a partner in J.P. Morgan & Co.
JPMorgan Chase & Co.
JPMorgan Chase & Co. is an American multinational banking corporation of securities, investments and retail. It is the largest bank in the United States by assets and market capitalization.It is a major provider of financial services, with assets of $2 trillion and according to Forbes magazine is...
, and brother George proved invaluable because of his position at the Morgan Bank which allowed him to direct substantial business to Richard's brokerage.
Richard Whitney married the widow Gertrude Sheldon Sands in 1916. She was from Brooklyn, New York, whose first husband Samuel Steven Sands III was the grandson of William Kissam Vanderbilt
William Kissam Vanderbilt
William Kissam Vanderbilt was a member of the prominent American Vanderbilt family. He managed railroads and was a horse breeder.-Biography:...
(1849-1920); grandson of Commodore Cornelius Vanderbilt. Whitney and she had three children. His father-in-law had served as president of the powerful Union League Club and Whitney became a member of a number of the city's elite social clubs and was appointed treasurer of the New York Yacht Club
New York Yacht Club
The New York Yacht Club is a private social club and yacht club based in New York City and Newport, Rhode Island. It was founded in 1844 by nine prominent sportsmen. The members have contributed to the sport of yachting and yacht design. The organization has over 3,000 members as of 2011. ...
. In 1919, he was elected to the Board of Governors of the New York Stock Exchange and not long thereafter was named its vice-president.
On October 24, 1929, Black Thursday
Black Thursday
Black Thursday is a term used to refer to events which occurred on a Thursday. It has been used in the following cases:* February 6, 1851, Black Thursday, a day of devastating bushfires in Victoria, Australia...
, he attempted to avert the Wall Street Crash of 1929
Wall Street Crash of 1929
The Wall Street Crash of 1929 , also known as the Great Crash, and the Stock Market Crash of 1929, was the most devastating stock market crash in the history of the United States, taking into consideration the full extent and duration of its fallout...
. Alarmed by rapidly falling stock prices, several leading Wall Street bankers met to find a solution to the panic and chaos on the trading floor of the New York Stock Exchange. The meeting included Thomas W. Lamont
Thomas W. Lamont
Thomas William Lamont, Jr. was an American banker.- Biography :Lamont was born in Claverack, New York. He graduated from Phillips Exeter Academy in 1888 and earned his degree from Harvard University in 1892. He became a generous benefactor of the school once he had amassed a fortune, notably...
, acting head of Morgan Bank
J.P. Morgan & Co.
J.P. Morgan & Co. was a commercial and investment banking institution based in the United States founded by J. Pierpont Morgan and commonly known as the House of Morgan or simply Morgan. Today, J.P...
; Albert Wiggin, head of the Chase National Bank; and Charles E. Mitchell
Charles E. Mitchell
Charles Edwin Mitchell was an American banker whose incautious securities policies facilitated the speculation which led to the Crash of 1929...
, president of the National City Bank of New York. They chose Whitney, then vice president of the Exchange, to act on their behalf.
With the bankers' financial resources behind him, Whitney went onto the floor of the Exchange and ostentatiously placed a bid to purchase a large block of shares in U.S. Steel
U.S. Steel
The United States Steel Corporation , more commonly known as U.S. Steel, is an integrated steel producer with major production operations in the United States, Canada, and Central Europe. The company is the world's tenth largest steel producer ranked by sales...
at a price well above the current market. As traders watched, Whitney then placed similar bids on other "blue chip" stocks. This tactic was similar to a tactic that had ended the Panic of 1907
Panic of 1907
The Panic of 1907, also known as the 1907 Bankers' Panic, was a financial crisis that occurred in the United States when the New York Stock Exchange fell almost 50% from its peak the previous year. Panic occurred, as this was during a time of economic recession, and there were numerous runs on...
, and succeeded in halting the slide that day. The Dow Jones Industrial Average recovered with a slight increase, closing with it down only 6.38 points for that day. In this case, however, the respite was only temporary; stocks subsequently collapsed catastrophically on Black Tuesday, October 29.
Downfall
At the same time that Richard Whitney was achieving great success, his brother George had also prospered at Morgan bank and by 1930 had been anointed as the likely successor to bank president, Thomas W. LamontThomas W. Lamont
Thomas William Lamont, Jr. was an American banker.- Biography :Lamont was born in Claverack, New York. He graduated from Phillips Exeter Academy in 1888 and earned his degree from Harvard University in 1892. He became a generous benefactor of the school once he had amassed a fortune, notably...
.
While Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. To stay afloat, he began borrowing heavily from his brother George as well as other wealthy friends, and after obtaining loans from as many people as he could, turned to embezzlement to cover his mounting business losses and maintain his extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund, the New York Yacht Club (where he served as the Treasurer), and $800,000 worth of bonds from his father-in-law's estate.
Having retired as president of the NYSE in 1935, Whitney remained on the board of governors, but in early March 1938, his past began to catch up with him when the comptroller for the NYSE reported to his superiors that he had established absolute proof that Richard Whitney was an embezzler and that his company was insolvent. Within days, events snowballed, and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds on March 10 when he was officially charged with embezzlement by New York County District Attorney
District attorney
In many jurisdictions in the United States, a District Attorney is an elected or appointed government official who represents the government in the prosecution of criminal offenses. The district attorney is the highest officeholder in the jurisdiction's legal department and supervises a staff of...
Thomas E. Dewey. Following his indictment by a Grand Jury
Grand jury
A grand jury is a type of jury that determines whether a criminal indictment will issue. Currently, only the United States retains grand juries, although some other common law jurisdictions formerly employed them, and most other jurisdictions employ some other type of preliminary hearing...
, Richard Whitney was arrested and eventually pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing
Sing Sing
Sing Sing Correctional Facility is a maximum security prison operated by the New York State Department of Correctional Services in the town of Ossining, New York...
prison. On April 12, 1938, six thousand people turned up at Grand Central Station to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison.
Despite everything, Richard Whitney's wife and family stood by him and friend May Kinnicutt and her husband, G. Hermann Kinnicutt, a partner in a stockbrokerage firm, provided Mrs. Whitney with a farmhouse to live in at Far Hills, New Jersey
Far Hills, New Jersey
Far Hills is a borough in Somerset County, New Jersey, United States. As of the United States 2010 Census, the population was 919.Far Hills was incorporated as a borough based on an Act of the New Jersey Legislature passed on April 7, 1921, from portions of Bernards Township, subject to the results...
. George Whitney eventually made restitution for all the money his brother owed.
A model prisoner, Richard Whitney was released on parole in August 1941 after serving three years and four months in Sing Sing
Sing Sing
Sing Sing Correctional Facility is a maximum security prison operated by the New York State Department of Correctional Services in the town of Ossining, New York...
. He became the manager of a dairy farm, supervising three farmhands and twenty-five cows. In 1946, he went back into business when he became president of a textile company that made yarns from the ramie
Ramie
Ramie is a flowering plant in the nettle family Urticaceae, native to eastern Asia. It is a herbaceous perennial growing to 1–2.5 m tall; the leaves are heart-shaped, 7–15 cm long and 6–12 cm broad, and white on the underside with dense small hairs—this gives it a silvery appearance;...
plant, which grew in Florida. Banned from dealing in securities for life, he was living a quiet life in Far Hills, New Jersey
Far Hills, New Jersey
Far Hills is a borough in Somerset County, New Jersey, United States. As of the United States 2010 Census, the population was 919.Far Hills was incorporated as a borough based on an Act of the New Jersey Legislature passed on April 7, 1921, from portions of Bernards Township, subject to the results...
at the time of his death on December 5, 1974.
Legacy
The story of Richard Whitney on Wall Street was recounted in detail in a film by German director August EverdingAugust Everding
August Everding was a German opera director and administrator. He studied at the Universities of Bonn and Munich, where launching his career in the 1950s...
in 1966, and by author John Brooks as part of his 1969 book Once in Golconda : A True Drama of Wall Street 1920-1938 (ISBN 0-471-35753-7). Louis Auchincloss
Louis Auchincloss
Louis Stanton Auchincloss was an American lawyer, novelist, historian, and essayist. He is best known as a prolific novelist who parlayed his firsthand knowledge into dozens of finely wrought books exploring the private lives of America's East Coast patrician class...
wrote a novel based on his life entitled The Embezzler. He is mentioned, not by name, in John O'Hara
John O'Hara
John Henry O'Hara was an American writer. He initially became known for his short stories and later became a best-selling novelist whose works include Appointment in Samarra and BUtterfield 8. He was particularly known for an uncannily accurate ear for dialogue...
's short story "Graven Image."