May 9, 2012
The Chicago Bulls and their fans watched in horror as their star guard, Derrick Rose collapsed on the floor toward the end of a recent playoff game against the Philadelphia 76ers. Just days later, the New York Yankees and their fans watched Mariano Rivera, the greatest relief pitcher in baseball history, fall to the ground while shagging fly balls before the start of a game in Kansas City. Both athletes suffered torn anterior cruciate ligaments in their knees, putting their futures and their teams’ prospects in doubt. Sportswriters called the injuries “tragic.”
Of course, both injuries were shocking, but “tragic” might be better reserved for matters of life and death and athletic contests gone awry—such as a confrontation that took place more than 90 years ago in New York, in the heat of a pennant race, when a scrappy Cleveland Indians shortstop stepped into the batter’s box against a no-nonsense Yankees pitcher.
The Indians were in first place, a half-game ahead of the Yankees on August 16, 1920, when they arrived at the Polo Grounds, the home the Yankees shared with the New York Giants until Yankee Stadium was built three years later. It was the start of a three-game series on a dark and drizzly Monday afternoon in Harlem. On the mound for the Yankees was right-hander Carl Mays, the ace of the staff, hoping to notch his 100th career win. Mays, a spitballer (legal at the time), threw with an awkward submarine motion, bending his torso to the right and releasing the ball close to the ground—he sometimes scraped his knuckles in the dirt. Right-handed submariners tend to give right-handed batters the most trouble because their pitches will curve in toward the batter, jamming him at the last moment. Mays, one baseball magazine noted, looked “like a cross between an octopus and a bowler” on the mound. “He shoots the ball in at the batter at such unexpected angles that his delivery is hard to find, generally until along about 5 o’clock, when the hitters get accustomed to it—and when the game is about over.”
Mays had good control for a submariner, but he also was known as a “headhunter” who was not shy about brushing batters, especially right-handers, off the plate; he was consistently among the American League leaders in hit batsmen. His feud with Detroit Tigers great Ty Cobb was particularly intense: In one game, he threw at the cantankerous “Georgia Peach” every time he came to bat, prompting Cobb to throw his bat at Mays, Mays to call Cobb a “yellow dog,” the umpires to separate the two as they tried to trade blows, and Mays to hit Cobb on the wrist with his next pitch. In another game, Cobb laid a bunt down the first-base line so he could spike Mays when the pitcher covered the base.
December 5, 2011
On the evening of July 18, 1935, in an America still crushed in the coils of the Great Depression, an old man with a long white beard appeared on the front lawn of a farm off Route 1 in Metamora, Indiana.
It was late, nearly dusk, and when the farmer’s wife came out to ask what the man wanted, he begged her for a piece of bread. “He had a very kind face,” she wrote some days later,
and it has always been my custom to give to tramps if I have anything I can handy [sic] give. He was carrying a pack on his back so I told him to set it down on the lawn. I had a nice warm supper cooked so I served him on the lawn. He seemed to be very hungry. I gave him a second serving. When he finished he took from his pack two checks copied from brown paper, looked like they were cut from paper bags. He came forward and handed these to me with his plate.
According to this woman, “his face was so kind it is hard to believe he meant anything false.” But when she looked down at the paper checks, she saw that one had been written for $25,000, and the other for $1,000.
More than a year later, on October 23, 1936, the same old man wandered into a lunchroom on a highway outside Columbus, Texas. He told the waitress he had no money but asked her for a cup of coffee. Feeling sorry for him, she took him into the kitchen and fed him a bowl of stew and a jelly roll with his coffee. The old man ate his fill and, while the waitress was serving other customers, took another piece of paper from his pack, scribbled on it in indelible pencil, and slipped it beneath his coffee cup before taking up his pack and hurrying off into the night. The waitress returned to find that the slip of paper was a blank check for $27,000, written on the Irving National Bank of New York and signed “John S. Smith of Riga, Latvia, Europe.” On the back he had scribbled the words: “Fill your name in, send to bank.”
November 29, 2011
Three years removed from the stock market crash of 1929, America was in the throes of the Great Depression, with no recovery on the horizon. As President Herbert Hoover reluctantly campaigned for a second term, his motorcades and trains were pelted with rotten vegetables and eggs as he toured a hostile land where shanty towns erected by the homeless had sprung up. They were called “Hoovervilles,” creating the shameful images that would define his presidency. Millions of Americans had lost their jobs, and one in four Americans lost their life savings. Farmers were in ruin, 40 percent of the country’s banks had failed, and industrial stocks had lost 80 percent of their value.
With unemployment hovering at nearly 25 percent in 1932, Hoover was swept out of office in a landslide, and the newly elected president, Franklin Delano Roosevelt, promised Americans relief. Roosevelt had decried “the ruthless manipulation of professional gamblers and the corporate system” that allowed “a few powerful interests to make industrial cannon fodder of the lives of half the population.” He made it plain that he would go after the “economic nobles,” and a bank panic on the day of his inauguration, in March 1933, gave him just the mandate he sought to attack the economic crisis in his “First 100 Days” campaign. “There must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and wrongdoing,” he said.
Ferdinand Pecora was an an unlikely answer to what ailed America at the time. He was a slight, soft-spoken son of Italian immigrants, and he wore a wide-brimmed fedora and often had a cigar dangling from his lips. Forced to drop out of school in his teens because his father was injured in a work-related accident, Pecora ultimately landed a job as a law clerk and attended New York Law School, passed the New York bar and became one of just a handful of first-generation Italian lawyers in the city. In 1918, he became an assistant district attorney. Over the next decade, he built a reputation as an honest and tenacious prosecutor, shutting down more than 100 “bucket shops”—illegal brokerage houses where bets were made on the rise and fall prices of stocks and commodity futures outside of the regulated market. His introduction to the world of fraudulent financial dealings would serve him well.
Just months before Hoover left office, Pecora was appointed chief counsel to the U.S. Senate’s Committee on Banking and Currency. Assigned to probe the causes of the 1929 crash, he led what became known as the “Pecora commission,” making front-page news when he called Charles Mitchell, the head of the largest bank in America, National City Bank (now Citibank), as his first witness. “Sunshine Charley” strode into the hearings with a good deal of contempt for both Pecora and his commission. Though shareholders had taken staggering losses on bank stocks, Mitchell admitted that he and his top officers had set aside millions of dollars from the bank in interest-free loans to themselves. Mitchell also revealed that despite making more than $1 million in bonuses in 1929, he had paid no taxes due to losses incurred from the sale of diminished National City stock—to his wife. Pecora revealed that National City had hidden bad loans by packaging them into securities and pawning them off to unwitting investors. By the time Mitchell’s testimony made the newspapers, he had been disgraced, his career had been ruined, and he would soon be forced into a million-dollar settlement of civil charges of tax evasion. “Mitchell,” said Senator Carter Glass of Virginia, “more than any 50 men is responsible for this stock crash.”
The public was just beginning to get a taste for the retribution that Pecora was dishing out. In June 1933, his image appeared on the cover of Time magazine, seated at a Senate table, a cigar in his mouth. Pecora’s hearings had coined a new phrase, “banksters” for the finance “gangsters” who had imperiled the nation’s economy, and while the bankers and financiers complained that the theatrics of the Pecora commission would destroy confidence in the U.S. banking system, Senator Burton Wheeler of Montana said, “The best way to restore confidence in our banks is to take these crooked presidents out of the banks and treat them the same as [we] treated Al Capone.”
President Roosevelt urged Pecora to keep the heat on. If banks were worried about the hearings destroying confidence, Roosevelt said, they “should have thought of that when they did the things that are being exposed now.” Roosevelt even suggested that Pecora call none other than the financier J.P. Morgan Jr. to testify. When Morgan arrived at the Senate Caucus Room, surrounded by hot lights, microphones and dozens of reporters, Senator Glass described the atmosphere as a “circus, and the only things lacking now are peanuts and colored lemonade.”
Morgan’s testimony lacked the drama of Mitchell’s, but Pecora was able to reveal that Morgan maintained a “preferred list” of friends of the bank (among them, former president Calvin Coolidge and Supreme Court justice Owen J. Roberts) who were offered stock at highly discounted rates. Morgan also admitted that he had paid no taxes from 1930-32 because of losses following the crash of 1929. Though he had done nothing illegal, the headlines damaged him. He privately referred to Pecora as a “dirty little wop” and said he bore “the manners of a prosecuting attorney who is trying to convict a horse thief.”
At a break in the hearings, a Ringling Bros. press agent barged into the room, accompanied by a performer named Lya Graf, just 21 inches tall. “Gangway,” the agent shouted, “the smallest lady in the world wants to meet the richest man in the world.” Before Morgan knew what was happening, the diminutive lass was perched on the tycoon’s lap, and dozens of flash bulbs popped.
“Where do you live?” Morgan asked the girl.
“In a tent, sir,” she answered.
Senator Glass’s description of the hearings proved prophetic; the atmosphere had become truly circus-like. And although Morgan’s appearance marked the height of the drama, the hearings continued for nearly another year, as public outrage over the conduct and practices of the nation’s bankers smoldered. Roosevelt took advantage of the public sentiment, arousing broad support for regulation and oversight of the financial markets, as the Pecora Commission had recommended. After passing the Securities Act of 1933, Congress established the Securities and Exchange Commission to regulate the stock market and to protect the public from fraud. The Pecora commission’s report also endorsed the separation of investment and commercial banking and the adoption of bank deposit insurance, as required by Glass-Steagall, which Roosevelt signed into law in 1933.
By investigating Wall Street business practices and calling bankers in to testify, Ferdinand Pecora exposed Americans to a world they had no clue existed. And once he did, public outrage led to the reforms that the lords of finance had, until his hearings, been able to stave off. His work on the commission complete, Pecora had hoped to be appointed chair of the SEC. Instead, Roosevelt surprised the nation by naming Joseph P. Kennedy to the position—a reward, many assumed, for Kennedy’s loyalty during FDR’s campaign. When asked why he’d chosen such a manipulator as Kennedy, FDR famously replied, “Takes one to catch one.” Pecora was nominated as commissioner of the SEC, where he worked under Kennedy.
In 1939, Pecora published Wall Street Under Oath, which offered a dire warning. “Under the surface of the governmental regulation, the same forces that produced the riotous speculative excesses of the ‘wild bull market’ of 1929 still give evidences of their existence and influence.… It cannot be doubted that, given a suitable opportunity, they would spring back into pernicious activity.”
Ferdinand Pecora would be appointed as a justice on the New York State Supreme Court in 1935 and run unsuccessfully for mayor of New York City in 1950. But he had already left his legacy: his investigation into the financial abuses behind the crash of 1929 led to the passage of the Securities Act, the Glass-Steagall Act and the Securities Exchange Act. The protections he advocated are still being debated today.
Books: Michael Perino, The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance, Penguin Press, 2010. Charles D. Ellis with James R. Vertin, Wall Street People: True Stories of the Great Barons of Finance, Volume 2, John Wiley & Sons, Inc, 2003.
Articles: “Mitchell Paid No Tax in 1929,” Daily Boston Globe, Feb. 22, 1933, “Clients ‘Sold Out’ As National City Saves Officers,” The Atlanta Constitution, Feb. 23, 1933. ”Pecora Denounces Stock Manipulation,” New York Times, Feb 19, 1933. ”Pecora to Question Private Bankers,” New York Times, March 16, 1933. “Where is Our Ferdinand Pecora?” by Ron Chernow, New York Times, Jan. 5, 2009. “Ferdinand Pecora, ‘The Hellhound of Wall Street’” All Things Considered, NPR, Oct. 6, 2010. http://www.npr.org/templates/story/story.php?storyId=130384189 “Ferdinand Pecora, An American Hero,” by Jackie Corr, Counterpunch, Jan. 11-13, 2003. http://www.counterpunch.org/2003/01/11/ferdinand-pecora-an-american-hero/ “Ferdinand Pecora Ushered In Wall Street Regulation After 1929 Crash” by Brady Dennis, Washington Post, Sept. 16, 2009. “Where Have You Gone, Ferdinand Pecora?” by Michael Winship, Bill Moyers Journal, April 24, 2009. http://www.pbs.org/moyers/journal/blog/2009/04/michael_winship_where_have_you.html “A Midget, Banker Hearings and Populism Circa 1933″ by Michael Corkery, Deal Journal, Wall Street Journal, Jan. 12, 2010. http://blogs.wsj.com/deals/2010/01/12/a-midget-banker-hearings-and-populism-circa-1933/ “When Washington Took on Wall Street” by Alan Brinkley, Vanity Fair, June 2010.
August 16, 2011
He stood just four feet tall, his body contorted by a hump in his back and a crooked gait, and his stunted torso gave the illusion that his head, hands and feet were too big. But he was a giant among scientific thinkers, counting Albert Einstein, Nikola Tesla and Thomas Edison as friends, and his contributions to mathematics and electrical engineering made him one of the most beloved and instantly recognizable men of his time.
In the early 20th century, Charles Steinmetz could be seen peddling pedaling his bicycle down the streets of Schenectady, New York, in a suit and top hat, or floating down the Mohawk River in a canoe, kneeling over a makeshift desktop, where he passed hours scribbling notes and equations on papers that sometimes blew into the water. With a Blackstone panatela cigar seemingly glued to his lips, Steinmetz cringed as children scurried away upon seeing him—frightened, he believed, by the “queer, gnome-like figure” with the German accent. Such occurrences were all the more painful for Steinmetz, as it was a family and children that he longed for most in his life. But knowing that his deformity was congenital (both his father and grandfather were afflicted with kyphosis, an abnormal curvature of the upper spine), Steinmetz chose not to marry, fearful of passing on his deformity.
Born in 1865 in Breslau, Germany (now Wroclaw, Poland), Carl August Rudolph Steinmetz became a brilliant student of mathematics and chemistry at the University of Breslau, but he was forced to flee the country after the authorities became interested in his involvement with the Socialist Party. He arrived at Ellis Island in 1888 and was nearly turned away because he was a dwarf, but an American friend whom Steinmetz was traveling with convinced immigration officials that the young German Ph.D. was a genius whose presence would someday benefit all of America. In just a few years, Steinmetz would prove his American friend right.
Soon after his arrival, he went to work for Eickemeyer and Osterheld, a company in Yonkers, New York, and he identified and explained, through a mathematical equation that later became known as the Law of Hysterisis, or Steinmetz’s Law, phenomena governing power losses, leading to breakthroughs in both alternating- and direct-current electrical systems. America was entering a golden age of electrical engineering, and when Thomas Edison and General Electric learned what Steinmetz was doing with electric motors in Yonkers, the company bought out Eickemeyer and Osterheld in 1892, acquiring all of Steinmetz’s patents as well as his services.
Steinmetz Americanized his name to Charles Steinmetz. He chose Proteus as his middle name—the nickname his professors in Germany had affectionately bestowed upon him in recognition of the shape-shifting sea god. In Greek mythology, Proteus was a cave-dwelling prophetic old man who always returned to his human form—that of a hunchback. Steinmetz thoroughly enjoyed the comparison.
In 1894 he arrived in Schenectady, the place he would call home for the next thirty years, and his impact at General Electric was immediate. Using complex mathematical equations, Steinmetz developed ways to analyze values in alternating current circuits. His discoveries changed the way engineers thought about circuits and machines and made him the most recognized name in electricity for decades.
Before long, the greatest scientific minds of the time were traveling to Schenectady to meet with the prolific “little giant”; anecdotal tales of these meetings are still told in engineering classes today. One appeared on the letters page of Life magazine in 1965, after the magazine had printed a story on Steinmetz. Jack B. Scott wrote in to tell of his father’s encounter with the Wizard of Schenectady at Henry Ford’s River Rouge plant in Dearborn, Michigan.