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 BULL
STREET
– The art of the Con
Albert Henry
Wiggin was born in Medfield, Massachusetts, the son of an obscure Unitarian
minister. Albert skipped the normal process of getting a solid education and
in 1885 at the age of 17 became a bank clerk. Albert was a quick study and absorbed
everything about the industry and his job that he could get his hands on. He
was well like and did his job in a professional manner so at the age of 36 he
was appointed vice president at Chase Bank making him the youngest man to ever
attain that position in the Bank’s history. Thirteen years later he became Chairman
of Chase and once ensconced in that position he started buying out his competitors,
one right after another. By the time 1929 rolled around, Wiggin had achieved
substantial status in the banking world as one of its most brilliant senior
executives. He had changed Chase from a sleepy local banking institution into
a world class global financial conglomerate.
However, unbeknownst to his cohorts, Wiggin had
another agenda. While he was being paid almost $300,000 a year to run the bank,
which was a substantial amount of money for the times, he felt that he was being
shortchanged. Wiggins developed a plan whereby if the bank’s directors were
not going to adequately compensate him for the wonderful work he was doing on
the bank’s behalf he would find a way to do it himself. Wiggin began the process
of taking care of himself by forming numerous dummy corporations both in the
United States and overseas. He used nominee names as the officers of these companies
and then approved massive loans from Chase to fund them. Although hidden from
sight, he and other members of his immediate family owned literally all of the
stock in these companies and no one else was even aware of their existence.
Along came the crash and Wiggin saw a glorious opportunity
of making a killing. He better than anyone knew the perilous condition of the
stock market, the economy and most import of all, the condition of Chase Bank.
While not only continuing to issue glorious reports on the future of the bank
and while publicly announcing that he was joining numerous bankers and brokers
who were uniting in trying to stem the blood bath on Wall Street, he secretly
started selling stock in his bank short. In other words, he was making an astronomical
bet that he stock was overpriced, that the market would continue in free fall
and that the economy was not going to recovery, while telling his friends, associates,
and shareholders the opposite.
Now, in order to make his prophecy self-fulfilling,
he began to use his credibility not only as the Chairman of Chase but his position
as a director of 59 other companies to begin to bemoan the condition of the
economy and that of the bank. Not only did Wiggin clean up but he screwed
everyone in the process. He was even able to avoid the payment of taxes on his
ill-gotten profits by taking his gains offshore and then nefariously retuning
them through illegal channels. The full extent of Wiggin’s double dealing
did not totally emerge until the United States Senate began a full scale investigation
into the collapse of 1929 and what the banks in this country had to do with
it.
For the most part, Wiggin was able to keep his ill
gotten gains but lost his Chase Pension when the enormity of his double dealing
was disclosed. Wiggin showed no particular remorse about what he had done saying
that “I think it is highly desirable that the officers of the bank should be
interested in the stock of the bank.”[44]
It is interesting to note that at the time that
Wiggin did in his own partners and the bank’s shareholders, there was really
no regulations governing either insider trading, the use of borrowed money to
leverage investments or not releasing all of the information that he had access
to relative to the bank’s condition. The Senate banking investigation caused
the 1933 and 1934 Security Acts to come into being and Mr. Wiggin was one of
the key reasons that they were enacted. Chase Bank later merged with Bank of
Manhattan to become Chase Manhattan. Moreover, Chemical Bank purchased Manufacturers
Hanover and that entity effectively took over Chase and J.P. Morgan. The name
of that monolith called, J.P. Morgan, Chase.
Wiggin, who died in obscurity, has gone down in
financial history as a man that set the standard for dealing from the bottom
of the deck. The Robber Barons at least told you that you were going to get
screwed and made no pretense that they were going to separate you from your
money, this guy said one thing and did another doing in everyone in sight. Probably
the most amazing thing about this scoundrel is the fact that he survived to
the age of 83.
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