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MY first purchase of real estate was No. 32 West Thirty-fifth Street, a twenty-two-foot, white marble, high-stoop building. I bought it for the modest sum of $15,000 and resold it at an advance of $500, and thought I was doing well. To-day it is worth at least $110,000. This, however, was not my first experience with real estate, for that was in 1872 when, at the request of my preceptor, Mr. Ferdinand Kurzman, I undertook for an extra compensation of $5 a month to collect for him the rents of No. 218 Chrystie Street.

The tenants of this building in 1872 were Irish and Germans, and one of the stores was occupied as a saloon by an Irishman named Ryan who catered to the worst element of the neighbourhood. Kurzman, failing to get rid of him in a peaceful way, and knowing that there was a political feud between him and Anthony Hartman, the odd though popular Justice of the District Court, waited for the first of May, when only a three-hours’ dispossess notice was required. Circumstances favoured the plan because on that day the Thomas Ryan Association were giving a picnic. So the notice was served by nailing it on the door at twelve o’clock. Judge Hartman opened court at three o’clock, called the cases of Kurzman vs. Ryan, took Ryan’s default, signed the dispossess warrant, and adjourned the court, compelling all other litigants to wait for their justice until the next day. Instead of the usual one marshal, all those attached to the court, with their assistants, were hurried to No. 218 Chrystie Street, and within two hours had removed everything to the sidewalk.

By that time word had reached Ryan, and he and some of his henchmen returned. They were thoroughly aroused but quite helpless. As there was no court in session, and the marshals were in possession of the premises, Kurzman was rid of Ryan for good and all. This was the first exhibition I ever saw of how justice might be travestied.

The next day Ryan’s attorneys appeared before Hartman and attempted to have the proceedings reopened, and upon Hartman’s refusal to do so, attacked him bitterly. The Judge said that if the learned counsel would not at once stop his impudent remarks, the court would forget its dignity long enough to leave the bench and “punch him in the jaw.”

My next experience brought me in contact with even a worse element. Kurzman had foreclosed a second mortgage on some houses on West Thirty-ninth Street between Tenth and Eleventh avenues. They were part of the block that was called “Hell’s Kitchen.” Many of the tenants owned only a mattress and a few chairs, and no kitchen utensils of any kind, and frequently paid their rents in instalments of less than one dollar. Twice I saw women carried out of the buildings the worse for the “exciting arguments” they had indulged in with some of their visitors. It would not have paid us to dispossess these people, as the new ones would have been no better. We collected the rents for a few months longer until the first mortgages were foreclosed.

This condition was very general throughout the City of New York. The boom days of real estate had disappeared, and with them, the optimistic speculators. Real estate was unsalable, and those who had received mortgages in payment of some of their capital and all their profits were confronted with the choice of either abandoning their mortgages or foreclosing them and again assuming control of their property. The conferences between the delinquent owners and the mortgagees to adjust these matters reminded one as much of funerals as the joyous meetings in the wine cellars had of weddings. These middle-class investors whom I met in ’72 and ’73 were completely wiped out and never came back. Quite the contrary was the case with most of those intrepid builders and operators like John D. Crimmins and Terrence Farley, who forgot their losses and went at it again with fresh vigour and new courage as soon as the liquidation had ended. In 1879, when specie payment had been resumed, the superintendents of both the insurance and bank departments urged institutions under their supervision to market their real estate as soon as possible. Their efforts and those of other recent plaintiffs to dispose of their holdings started a new active period. Real estate again became fashionable, and the plucky operators and builders who had survived the drastic punishment they had received were soon reinforced by a new set of men, of whom I was one.

In 1880, I turned my attention to Harlem where nearly all the brownstone and brick houses that had been built in the seventies were in the hands of mortgagees, and where the owners of the old frame houses were thoroughly discouraged and could see little hope in the future. Nearly all of Harlem was for sale. I bought plots of three to five adjoining houses at a time, and quickly resold them at small profits. This activity stopped when President Garfield was shot. The suspense during his illness caused a complete cessation, so I, too, rested until October, 1885. I was then worth only $27,000, and as a large part of that was represented by my interest in the Celluloid Piano Key Company, I had but little working capital.

My brother-in-law, William J. Ehrich, agreed to operate with me in real estate, he to contribute $40,000 capital and I to do the work. All profits, after paying him interest, were to be divided equally.

At that time my mother lived on One Hundred and Twenty-sixth Street in a house I had purchased, a 17-foot brown-stone house with a pleasant yard which she personally transformed into a delightful little garden. In my frequent visits there I became impressed with the prospective importance of One Hundred and Twenty-fifth Street. It was the first broad street north of Forty-second that ran from river to river, and I foresaw its future value, particularly of the block between Seventh and Eighth avenues. It seemed to me like the neck of a funnel into which the entire neighbouring population was daily poured to reach the Elevated station at One Hundred and Twenty-fifth Street and Eighth Avenue.

Ehrich and I concluded to secure some property on this block. The first that we obtained was the lease of seven lots for which, at the beginning, we paid the annual rental of $4,000. We still own this leasehold, and the gross rental now is $44,500. We subsequently purchased the adjoining plot of five lots, improved the same, and were delighted when we were enabled to sell it to the Knickerbocker Real Estate Company among whose stockholders were Solomon Loeb, of Kuhn, Loeb & Company; Henry O. Havemeyer, John D. Crimmins, and John E. Parsons, at a price which netted us a profit of $100,000. This was in 1899. Subsequently, I repurchased this plot jointly with my partners, Lachman & Goldsmith, for $250,000, and within two years thereafter sold it to Mr. Louis M. Blumstein for $425,000. This was the most profitable, but not the only transaction we had on this street. With various associates I owned, at one time or another, one half of the property on the south side of that block, so that I made good use of my early judgment as to its future value.

Our operations on One Hundred and Twenty-fifth Street were not confined to that block alone. We had also purchased various plots between Fifth and Sixth avenues and, with a friend, I had collected a plot of eight lots between Lexington and Fourth avenues. This made Oscar Hammerstein one of my customers.

One day the optimistic Oscar came into my office with his serious, flat-footed walk, his French silk hat on his head, and his eternal cigar between his fingers. He had just completed the Harlem Opera House on West One Hundred and Twenty-fifth Street, and he told me that, for his success there, it was essential to have also a theatre on the East Side, and he negotiated for the eight lots that we had collected on One Hundred and Twenty-fifth Street near Park Avenue. We spent several hours arranging the details of the lease of our property, with privilege to buy, which was what he wanted. He argued me into giving it to him on a 4 per cent. basis while the building was being constructed. When he was all through, I said:

“Do not think that you have deceived me as to your real aim. You want to secure this property and pay down as little as possible until your building is completed! All of us who own property on One Hundred and Twenty-fifth Street between Seventh and Eighth avenues greatly appreciate the fine theatre you put there, and the consequent increase in the value of our property, and I am therefore willing to help you make this enterprise a success. I will at once give you a deed, and as there is no broker in the transaction, you need only pay the equivalent of six months’ rent on account of the purchase price.”

Hammerstein gratefully accepted the offer and, subsequently, told me how he financed that entire operation without any capital. He struck a sand-pit and saved all costs of excavation, besides realizing over $30,000 for the sand. That furnished him nearly all the cash for the building.

A little later Hammerstein got into difficulties about an office building next to the Harlem Opera House. He wanted to borrow $25,000 on a second mortgage. He practically put a pistol to my head, and said:

“You folks must lend me this money, or I can’t finish the building—and that will force me into bankruptcy.”

I looked at him and saw not the optimistic Oscar, but the harried Hammerstein. He went on:

“You don’t know what that will mean. If I go into bankruptcy, the Bank of Harlem will also have to go. I owe them over $50,000 and they have agreed that, if I can finish the building, they will buy it from me, giving me back my notes in part payment.”

“But that bank,” I protested, “has only $100,000 capital! How could it lend you $50,000?”

“One day,” he said, “as I was seated in my little office underneath the steps of the Harlem Opera House, the president of the Bank broke in, and leaning over my shoulder, handed me a blank note, and asked me, for God’s sake, to make it out to the order of the Bank for $10,000. ‘Don’t ask any questions,’ he whispered, ‘but just do what I want, and do it quick.’ I complied with his request, I didn’t stop to put on my hat and coat, but followed him to the Bank; and just as I expected, there were the bank-examiners!”

He paused in his narrative to give me one of those knowing, piercing looks of his. This was still another Hammerstein: he was the accomplished actor awaiting applause for securing such an extensive and undeserved line of credit from so unexpected a source.

“Does that,” he asked, “explain to you how I could pull his leg?”

The impresario did not then go into bankruptcy. A few of us combined and lent him the money. My activities in Harlem also included the purchase of two solid blocks of lots.

In 1887 Ehrich and I bought from Oswald Ottendorfer the entire block bounded by Lenox and Mount Morris avenues and One Hundred and Twentieth and One Hundred and Twenty-first streets. I induced the Ottendorfers to split the transaction and content themselves with our buying the Lenox Avenue front outright and their giving us an option on the Mount Morris front. This option was sold for $10,000 profit, to Walter and Frank Kilpatrick, and our total profits, which we divided in May, 1887, were $43,424.10. I always remembered the numbers because of the sequence, 43, 42, 41.

Immediately after we had sold the Ottendorfer block we purchased the block to the north, also for $325,000. In this purchase the Kilpatricks joined us. I had a peculiar experience when it came to drawing the contracts. As the Ottendorfers had agreed to take back separate mortgages on every four lots, I wanted the Astors, owners of this block, to do the same. Mr. Southmayd, the partner of William M. Evarts and Joseph H. Choate, attorneys for the Astors, refused to do so, and insisted that we give him one mortgage for the entire $240,000 which they had agreed they would allow to remain on the property. All my pleadings were in vain. He even refused to take back four mortgages on eight lots each, saying that he could not tell which was the most valuable, and we might retain one or two of the plots and forfeit our equities on the rest.

Mr. Southmayd told me that just prior to the Panic of 1857, when farms of 160 acres in Brooklyn were being sold at very inflated prices, an old German truck-farmer was asked what he wanted for his 160 acres. He demanded $50,000, the prevailing price at that time; $35,000 cash and a $15,000 mortgage. When they argued with him that he had reversed the order of things, Hans still adhered to his terms, as he claimed that the property was not worth over $15,000, and when asked why he then insisted on $50,000, he answered, “because you paid that amount to my neighbour Peter for the same size farm.” Southmayd sneeringly added that after the Panic of 1857 Hans got his property back for his mortgage.

I would not submit to being balked by Southmayd. I made up my mind to talk to the famous John Jacob Astor himself.

I had never met him, but he had often been pointed out to me, as, shortly before 9 o’clock, he walked with his son, Waldorf, down Fifth Avenue, from their home to their office in Twenty-fifth Street. Astor was a portly figure with impressive side-whiskers. I watched for them and followed them to their office and asked for an interview. My plain statement of facts made no apparent impression on them. I tried again: I told Southmayd’s story of Hans: a smile broke the severity of the elder’s face.

“Mr. Astor,” I concluded, “you must admit that it’s unfair to your property to compare the Harlem of to-day with the Brooklyn of 1856.”

“You’re right,” said Astor. “You make me a proposition of what relative values you put on the various plots, and what will be the amounts of the separate mortgages, and I will have it checked up.” I submitted my figures and they were accepted without any change. The mortgages were paid long before they were due, as all the property was promptly improved. I believe this was the first time that the Astors broke away from their policy of not selling any of their holdings.

While these activities were going on in Harlem, a great many builders had erected rows and rows of private houses on the West Side, principally between Central Park West and Amsterdam Avenue, so as to be adjacent to the Elevated roads. In 1887 and 1888 there was a considerable slump, and over three hundred new private houses were unsold and unoccupied. Everything looked very gloomy. All of us who were interested in the West Side were terrified when an announcement came that there would be an unrestricted auction of the Joshua Jones Estate on Seventy-fourth and Seventy-fifth streets from Central Park West to within a few hundred feet of Amsterdam Avenue.

Ehrich and I attended the auction, and when the first lot on Seventy-fourth Street was put up with the privilege of the balance of the block, we astonished the auctioneer and all present by taking all twenty-four lots.

That afternoon Ehrich and I went up to look at our purchase. As we walked over the lots a couple of men shouted at us to get off the property. We asked them why, and they said: “Don’t you see our traps? We are catching birds here.”

There is not much bird-trapping in that neighbourhood to-day!

Success breeds enterprise. When we had disposed of these various plots at a good profit, I was ambitious to undertake still larger transactions. The original Rapid Transit Commission was then laying out the routes of the first subway, and I, in search of another One Hundred and Twenty-fifth Street, began to prospect for the district in which the Commission would be likely to locate a northerly spur, concluding that if Washington Heights were made accessible, One Hundred and Eighty-first Street would become the important thoroughfare of that neighbourhood.

There were four hundred lots owned by Levi P. Morton, then Vice-President of the United States, and George Bliss, of Morton, Bliss & Company, for which I had practically concluded my negotiations in September, 1890, when the Old World was shocked by the failure of Baring Brothers, the largest banking house of England. All negotiations were stopped. But, in February, 1891, about eighty lots located in this vicinity were successfully disposed of at auction. Peter F. Meyer, who conducted that sale, assured me that less than one half of the bidders had secured lots.

On the strength of this success, I asked L. J. Phillips to ascertain whether, owing to the financial stress of the times, the owners, Morton and Bliss, would take $900,000 for their property, for which they had formerly asked $1,000,000.

Phillips’s report was brief: “Nothing less than a million.”

This was what I really expected, and my directions were briefer: “Go close it!”

On March 26th I signed the contract. I paid $50,000 down and agreed to pay $300,000 more on May 27th. I then interested about fifteen people in the syndicate, many of whom were very prominent in real estate. We were granted special facilities to open One Hundred and Eighty-second Street, and had all the work done before the auction.

This arrangement gave us sixteen complete blocks with sixty-four corners, a most unusual percentage.

There were a number of fortuitous circumstances which helped to make for success. James Gordon Bennett having large possessions in that neighbourhood, directed that our sale receive generous attention in the Herald. There had been a secession of some of the auctioneers from the Real Estate Exchange, which then occupied its own building at No. 65 Liberty Street. Their manager called and said that their Board of Directors were ready to do almost anything that I would ask to secure the sale. They allowed me to display in the salesroom during all of May a sign 60 feet wide and 20 feet in height, and they also agreed that they would permit no other sale on May 26th.

We had numerous conferences, and none of my associates agreed with me that it was possible to sell so many lots at one session, but I was absolutely firm and insisted that it be tried. I conceded that I would stop the auction if I found that the purchasers had been exhausted, or that the lots were being sold at a loss. Thousands of people visited the property on the preceding Saturdays and Sundays. We could have sold the property on the 26th of May without having made our final payment, and could have used the proceeds of the sale for that purpose, but to avoid any possible question as to whether we had taken title or not, we closed the title on the day before the sale. As we were about leaving Morton, Bliss & Company’s offices, both Bliss and Morton expressed the wish that we might have a great success the next day, and the genial Vice-President of the United States added: “If there is anything I can do, please call upon me.” In response, I asked him whether he would come over to the auction-room and if necessary, to convince the public of our authority to sell the property, whether he would make a statement from the auctioneer’s stand. He consented to do so and waited at his office until I notified him that there was no need of his remaining any longer.

When the auction started, the entire floor as well as the auction stands and gallery were crowded to capacity. The bidding was very lively, and when some of the One Hundred and Eighty-first Street corner lots sold for over $10,000, there was considerable applause.

The auction lasted until seven o’clock, and every one of the 411 lots was sold. Ex-Register John Reilly had paid the highest prices: he bought the entire front on the west side of St. Nicholas Avenue from One Hundred and Eightieth to One Hundred and Eighty-first streets, and he afterward confided to me that he had succeeded where we failed in finding out that the Subway was to go through St. Nicholas Avenue, and that there was to be a station at One Hundred and Eighty-first Street. The corners of One Hundred and Eighty-first Street and St. Nicholas Avenue are to-day the most valuable on Washington Heights.

Our syndicate was well satisfied with the result, as we divided a profit of $480,000 amongst the men who had invested $300,000. They showed their appreciation of my work by presenting me with a magnificent silver service, which was greatly admired by my Turkish visitors in Constantinople.

I was quite carried away with my success, and my enthusiasm made me an easy prey to the temptation of participating in a still larger scheme—the development of the Town of Bridgeport, Alabama. A few years prior to 1891 there had been a great boom in Birmingham and Anniston, so that I was easily persuaded by the firm that had been associated with me in the purchase of the Astor Block to go in with them to develop Bridgeport.

All of us in the North felt that the South was “coming back” and Bridgeport was near coal and iron fields and had good water power. We started development, stove- and iron-pipe companies, a hotel, and a bank. We believed, with energetic New Yorkers back of it, this little town on the Tennessee River could be made a great manufacturing centre; we all forgot that it was very far from Broadway. Before I knew it, I had sunk more than my Washington Heights profit, and I am still paying taxes on some of the land that I bought at that time.

The loss of that money was a wholesome lesson, and I resolved to stick to New York. I broke this resolve on only one other occasion, and that was my venture into the Bamberger-Delaware gold mine: we took out plenty of gold—something like $600,000 a year, but it cost us more than that to do so. That investment also proved a total loss.

In the winter of 1891 we began an operation which was to result in winning the record for rapid construction up to that date. Our tenants in the Hoagland property at Fifteenth Street and Sixth Avenue failed. We concluded to tear down the old buildings and erect a new one. We had been negotiating unsuccessfully with Baumann, the furniture dealer, so we planned with our architect to put up a four-story building. I was in the architect’s office the latter part of January, when in walked Mr. Baumann and told me that if I would guarantee to finish the building by April 30th, he would pay the price I asked.

I consulted my architect, Albert Buchman.

“It’s impossible,” he declared, “four and a half months—June 15th is the earliest date conceivable.”

“Even if we use double shifts?”

“Even if we use double shifts.”

“Well,” I said, “I’m going to chance it.”

Buchman’s allotment for the excavation was fifteen days. I sent for Patrick Norton, who had done some excavating work for me in Harlem.

“Pat,” I asked, after I had sketched the case, “is there any objection to working twenty-four hours a day?”

“That depends,” said he.

“Well, if you went at it on that basis, couldn’t you finish this job in seven instead of fifteen days? I’ll pay for the light, and I’ll give you 25 per cent. extra.”

Norton belonged to the type of bluff, enterprising contractors. The novelty appealed to him, and he accepted it on the spot and completed the job on time.

Everything else went with similar speed. We were told that it would take some time to get the iron posts required for the cellar; I showed our plans to a man from Jackson & Company, and asked him whether, for an extra consideration, he could have the posts required for the job finished within a week. Within three days he made his deliveries. We changed our specifications and substituted wooden ceilings for plaster. We had the building finished and the elevators running on April 27th. The building was a four-story structure with an iron front covering five full lots, and we erected it for a trifle under $110,000.

I had another but less satisfactory experience with Pat Norton:

In the Winter of ’97 I bought from Collis P. Huntington a tract of land running from One Hundred and Thirty-eighth to One Hundred and Forty-first streets and from St. Ann Avenue eastward. The Title Company discovered that Huntington did not own as large an area as was described in the contract, so I called on him to ask for a reduction. It was a memorable sight to behold this great old gentlemen, 6 feet 3 inches in height, over eighty years of age, with as keen an intellect as a man of thirty, trying to fathom my motives and playing with me as a cat plays with a mouse. He leaned forward to get close to me, adjusting his little skull cap a bit, and said:

“Suppose I make you no concession at all! Are you going to throw up that contract, or take the property?”

“I will take the property because I expect to make a profit,” I said, “but I am going to rely on you to do the fair thing by me.”

He sat back in his chair and told me his experiences with Trenor W. Park, who wanted to buy a railroad from him. A dispute arose about it, which resulted in a law-suit. Afterwards, Park wanted to settle and buy him out. Huntington fixed the price, and as Park hesitated, he told him that for every day he delayed in accepting the offer he would add $100,000 to his price, and as seven days had expired since his first offer, the price was $700,000 more that day. Park agreed to that figure before he left the room.

“My experience,” said Huntington, “is that no man benefits by law-suits, but that no man can succeed if he is afraid of them. Now, what do you really think would be the fair thing for me to do in your case?”

I mentioned a sum, and he said:

“Strange to say, that is the figure I had in my mind.” He dictated a letter then and there, agreeing to the reduction.

We were anxious to dispose of the Huntington property at auction, and hurriedly prepared it. There was a stone fence running diagonally over the southerly part of the property, and I thought it would improve the appearance of this place to have the stones removed, and as Norton was putting through the streets and laying the sidewalks, I made a contract to have him do so for $800. The next morning I was impelled to visit the Huntington property. I was amazed to find 150 Italians working shoulder to shoulder, digging a trench alongside the stone wall, and dumping the stones into it. I stopped them and sent for Norton. When he came, instead of being ready to apologize, he wore a broad grin and said that he never expected me to come there, as I always came alternate days: by the second day no trace of that trench would have been left—what difference would it make to me, as long as it had disappeared, where it had gone?

We advertised an auction of this property for April 5, 1898. Because of the expectation of a war with Spain, a number of people asked me to abandon the sale. I agreed with their arguments that the sale would not succeed, but I wanted to see if my analysis of the psychology of prospective buyers was correct, which was, that some persons expecting big bargains would come to the sale and would buy. So I concluded to put up a few of the least valuable lots—those that had considerably more rock above the surface—and then try some of the St. Ann Avenue fronts. Just as I expected, the rock lots brought a very low price, but really all they were worth, and were purchased by one of the shrewdest dealers in New York. We stopped the sale after thirty were sold.

In the winter of 1894 great excitement was caused among the real estate men by mysterious efforts to secure the block on the east side of Sixth Avenue between Eighteenth and Nineteenth streets. I was keenly interested because if the east side of Sixth Avenue was to be developed it would injure our Hoagland property, especially if it were a retail concern, which would throw the travel from Macy’s on the east side. I, therefore, called on my old friend William R. Rose, who was acting as attorney in the matter. On my assuring him that I wished to benefit by my information without interfering with his scheme, he told me that the site was being collected for a retail drygoods store with a main entrance on Sixth Avenue, and it finally turned out to be Siegel-Cooper & Company. I immediately negotiated for the properties on the east side of Sixth Avenue adjoining this block and secured for Lachman, Morgenthau & Goldsmith from William Waldorf Astor the Nineteenth Street corner now occupied by the Alexander Building, and for myself alone the entire block from Seventeenth to Eighteenth street to a depth of 180 feet, from some of the descendants of John Jacob Astor. Simultaneously with the completion

Mr. Morgenthau playfully refers to this picture as the Morgenthau dynasty

of the Siegel-Cooper Company, I modernized the block front from Seventeenth to Eighteenth Street, and we erected a new building on the corner of Nineteenth Street, and sold it to Andrew Alexander.

One evening Alwyn Ball, Jr., told me that Henry Parish wanted to sell his house at the corner of Fifth Avenue and Nineteenth Street. I suggested that I would buy the property if Mr. Parish would take in part payment the second mortgage of $100,000 that Alexander had given us on his corner. The Astor Estate held the first mortgage of $100,000. Ball looked aghast.

“Why,” he said, “that’s a preposterous proposition! The idea of offering a second mortgage on a leasehold for the fee of a first-class Fifth Avenue corner, and to make it to so conservative a man as Mr. Parish! He has never even had a telephone in the offices of the New York Life Insurance & Trust Company, of which he is president! You must want me to be kicked downstairs.”

“You’re absolutely mistaken,” I answered. “Mr. Parish is constantly buying mercantile notes for his Trust Company, and will know that this personal bond of Andrew Alexander’s, guaranteed by me, is as good as any note that he has in his wallet. His office is on the ground floor—you needn’t be afraid of being kicked downstairs.”

Ball presented the offer and Parish accepted it. The mortgage was paid on its due date: I made a small profit on the Parish house and disposed of an almost unmarketable mortgage without any loss; Ball made a good commission, and so all were happy.

Shortly after I had another deal with William Waldorf Astor. It involved a part of the Semler farm on the east side from Fourth to Tenth streets. My negotiations with Charles A. Peabody, now president of the Mutual Life Insurance Company of New York, were drawn out for over six months, as his letters had to follow Astor all over Europe. After we had come to a definite arrangement, war was declared with Spain. Peabody surprised me one day when he came unannounced to my office to ask me whether I was still willing to make the purchase. I told him that I was convinced that the war would not affect the thirty Germans who were occupying these houses, and to whom I expected to sell the fees; and that I would be more pleased if he would sell me one hundred houses instead of forty. We entered into a contract to purchase forty lots on which the leases expired within a year. There was tremendous excitement among the tenants; protest meetings were called and cables sent to Astor. This brought me another visit from Mr. Peabody.

“Now, Morgenthau,” he said after sketching his predicament, “will you try to help us out?”

“I am perfectly willing,” I said, “to take other property of Mr. Astor’s, and let him deal direct with the objecting tenants, but I want a corner plot for a corner plot, and an inside avenue plot for an inside avenue plot and as many inside street lots as I was to have had. Although you have no properties on which the leases terminate the same time as these for which I am under contract, I am willing to buy them on the same basis,”—which was multiplying the annual ground rent by twenty.

Peabody said that this was eminently fair; he would try and show his appreciation, which he did, by selling us forty-four plots instead of forty. We consummated the transaction on July 18, 1898. The deed that was given was the first in which William Waldorf Astor failed to describe himself as “of the City of New York.” It was a very satisfactory transaction, as all but three of the tenants availed themselves of the privilege we gave them to buy the property from us at a reasonable profit.

The year 1898 marked the twentieth anniversary of Lachman, Morgenthau & Goldsmith. As I was leaving for my summer vacation, my partners urged me to plan out how we could celebrate that event. While I was fishing in the Thousand Islands, the infrequency of the bites of the black bass left me ample time for reflection, and I concluded that instead of a celebration, it would be a separation. I had felt so inclined for many years, but the delightful association with my partners, the extreme consideration they constantly showed me, the deep affection we felt for one another, had caused me to delay, and their persuasion not to do so had prevented my taking the final step. Here during these uninterrupted hours on the St. Lawrence, I was able to look at myself objectively and from both a retrospective and prospective point of view.

The success of my real estate operations had won me away from the exclusive devotion to the law which is so essential to rise in that profession. In figuring the profits that had been made by the various real estate syndicates that I had managed since 1891, I was surprised at the total, and realizing that at no one time had I had the use of more than $500,000 of my friends’ and my own money, I concluded that if I had had a company with that amount of capital, and could show the profits that had been made as surplus, the good will of such a company would be very valuable and would be reflected in the selling price of the stock. So why not induce some leading financiers to join me in the formation of a real estate trust company, which would do for real estate what the banking institutions have done for the railroads and industrials?

I wrote my partners of my decision, and told them that I would withdraw from the firm on January 1, 1899.

Among others with whom I discussed my scheme were Frederick Southack and Alwyn Ball, Jr., who had surprised me by informing me that they had had a similar thought and had already secured from the New York Legislature a special charter granting the privileges that would fit my scheme.

They asked me to join them and accept the presidency of this company. I accepted conditionally, telling them, however, that I would aim very high as to my associates and would insist that as chairman of the executive committee there be secured either the leading banker, J. P. Morgan, or the leading bank president, James Stillman, or the leading trust company president, F. P. Olcott.

Southack and James H. Post, who was a director in the National City Bank, presented the scheme to Mr. Stillman, who kept it under advisement for several weeks, but finally declined because he had been advised that some of our operations might be too speculative. In the meantime, Southack and Ball had, in addition to Mr. Post, interested Henry O. Havemeyer, John D. Crimmins, and several others. They then presented the matter to Mr. F. P. Olcott, president of the Central Trust Company, who was a trustee of the estate of Southack’s father. Olcott listened to the outlining of the plans of such a company, and when they proposed me as president and told him of the great profits I had made in real estate, he said that when it came to any proposition involving real estate, he was entirely guided by Hugh J. Grant, whose office adjoined his.

Grant had, while Mayor of New York, appointed Olcott to the first Rapid Transit Commission, and when he was appointed receiver of the St. Nicholas Bank, Grant called on Olcott and availed himself of an offer theretofore made him by Olcott to be of service to him. He told Olcott that he was very anxious to make a record as receiver, and asked an immediate loan of as much as the assets of the bank justified to enable him to declare promptly a substantial dividend to the depositors. Olcott not only did this, but was so pleased with the manner in which Grant handled the receivership, that he urged him to abandon his railway advertising business. He did so, and took offices next to Olcott and above those of Brady, and became the third member of that famous combination—Brady, the creator of the schemes; Olcott, the financier; and Grant, the expert in political and municipal affairs.

He called Grant into the office. Grant listened most attentively to the proposition, and then said:

“Morgenthau has been too successful to be willing to work for a salary and accept the presidency of a company.”

As Southack and Ball insisted that he was mistaken, Grant, with his usual directness, came right over to see me. That visit was a very memorable one for me. We carefully canvassed the entire proposition and concluded then and there that not only was I to take the presidency, but that Grant should take the vice-presidency, and become a visible figure in finance and cease being known as an unattached associate of Olcott and Brady.

Grant’s greatest faculty was in being able to “sniff” success, and through his tremendous amiability—which had made him so popular a man in New York—he was able to appeal to successful men, who heartily welcomed his coöperation on equal terms with themselves in their various enterprises. He also had watched me during my career, and realized the wisdom of a combination with me from his point of view; while I realized that a close coöperation—a supplementing of one another—would benefit us both, so we fell into each other’s arms. Grant and I then and there agreed to join forces. He agreed to take 1,000 shares for himself, 1,000 shares for Mr. Olcott, and within an hour telephoned me to note also Anthony N. Brady’s subscription for 1,000 shares. That afternoon when Southack and Ball came in and heard of the subscriptions, they each insisted upon the right to subscribe for 1,000 shares.

This disposed of one half of the stock. I wanted one half of the remaining 5,000 shares, but unfortunately for me, the others insisted that I should content myself with 1,000, and that the other 4,000 should be distributed amongst the rest of the directors, and amongst lawyers and real estate operators and brokers, whose interests would produce business for the company. There was a tremendous scramble for the stock, and it was impossible for us to satisfy the demand.

A few days later Grant introduced me to Olcott, who gave me quite a dissertation on how to run a trust company. He said that the most important thing was to have no men around who had any “yellow” in them and that the president must get the business and leave it to the other officers to execute it and carry out the details. He laid the greatest stress on the fact that the head of a company must disregard details entirely.

“He ought constantly to have his mind,” said Olcott, “on the larger matters, and should abstain from doing any work that can be done by any expert help that can be hired.”

On my part, I gave to Olcott a sketch of how I thought the company should be developed, explaining to him that the prejudice of the big trust companies and banks against real estate was not justified, and that the financial interests of New York had so far failed to recognize the increased stability of real estate, due to the enlarged population of the city and to the definite fixation of certain trades in certain neighbourhoods. I instanced the financial centre in Wall Street; the jewellery centre in Maiden Lane; the retail centres, and the definite northward development of Broadway. I also explained how many very substantial men had entered the real estate field, and how the general prosperity of the country had improved values in New York City.

“Now,” I said, “this group of successful men can only handle the large units that the exigencies of the time are demanding if they have additional financial facilities given them. Those facilities our company should provide.”

I explained how many groups of men had formed real estate corporations, only to discover that even then their resources were inadequate to handle all the profitable business that was coming to them. I told of some of my own larger transactions; how I always had to get others to help me finance them, and how, therefore, such a company as the one we proposed forming would undoubtedly become the syndicate manager of some of the larger operations. I told him if he had no objections, we could secure large deposits. Olcott replied that my plans would in no way conflict with his corporation, and that I should do any business that I deemed profitable. He asked me whom I wanted on the board, and I told him that I should like to have some representatives of the Mutual Life Insurance Company, who were then the largest investors in mortgages on New York City real estate, and suggested Messrs. Juilliard and Jarvie, the two best known and most influential members of its board.

We settled on a number of other directors, and a few days later Stillman sent word that he wanted some of the stock. Olcott agreed that he should only be given some of the stock if he consented to serve on the Executive Committee. Post and Southack, who had brought the message, hesitated to deliver this answer, as they thought we ought heartily to welcome Stillman’s interest in our corporation, and when they put the proposition to Mr. Stillman, he asked them, in his mystifying manner, whether this was an ultimatum. They hesitated to admit it. They were really afraid of him, and he was simply tantalizing them about his acceptance, which he finally gave them. He was allotted only 200 shares, and within a year he sent for me and in his peculiar teasing way told me that he was dissatisfied with his connection with the company. When I asked him why, he said that he had not a sufficiently large interest. I had to coax Olcott to sell 300 of his 1,000 shares for as much as he had paid for his entire 1,000. I doubt if I could have persuaded him to sell to any one else. It was simply, as he put it, that he wanted the satisfaction of making “that smart neighbour of his”—as he often called Stillman, their offices in adjoining buildings—“put him on velvet in this transaction.”

I shall tell later on how, several times, I had to go on bended knees to have some of these men accept what seemed to me tremendous profits.

I was now ready to proceed to business, as president of the Central Realty, Bond & Trust Company.