USA > Massachusetts > Suffolk County > Boston > Metropolitan Boston; a modern history; Volume II > Part 12
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With the decline in commerce, Boston capital turned to domestic production of merchandise, which had formerly been imported. Great cotton and woolen mills soon dotted New England. Boot and shoe fac- tories followed. Soon these industries, financed from Boston, commanded their respective fields. In the face of labor difficulties, extremely severe competition and other serious problems, they have survived, although since the World War the textile industries have been brought face to face with the most serious situation in their existence.
The changes in women's styles, where today a young woman wears fewer clothes on the street than her grandmother wore in going to bed ; the demand for silk underwear and stockings in place of cotton; these may be cited as very material factors in the plight in which these indus- tries find themselves, a plight which probably will not be remedied until they change over their plants, with new capital, to meet the changing demands of the day.
It is interesting to note, however, that while huge profits have been made in the past by the manufacturing interests of New England, all of which have depended on Boston capital, there have always been periods of great losses. Martin's "Boston Stock Market," issued back in 1866, presents the following comment, which clearly emphasizes this fact :
While at times both the cotton and woolen manufacturing interests have been emi- nently successful, there are long periods of lean dividend payments, and, besides these, a large number of disastrous losses, in some instances sweeping away the entire prop- erty, which was the case of the first Cocheco Mills-$1,000,000 sunk. A more recent example is the Washington Mills, with a loss of $1,650,000. A peculiarity of this com- pany was the fact that it was originally organized on the debts of the defunct Bay State, where $1,800,000 went out of sight. The somewhat familiar process of a "cut down" in capital, to meet deficiencies from losses, has been followed by numerous com- panies. In this way the Atlantic sunk $1,200,000; Bartlett, $280,000; Bates, $1,125,000; Boston Belting, $404,300; Boston and Sandwich Glass, $100,000; Chicopee, $490,000; Continental, $600,000; Dwight, $750,000; Great Falls, $750,000; Laconia, $600,000; Middlesex, $800,000, and Newmarket, $180,000.
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These are some of the heavier partial losses; while the Kearsarge, Lawrence Ma- chine Shop, Manchester Print, and Salisbury are notable instances, where, by failure, nearly every dollar invested was lost. In some of the above cases of severe "cuts," new capital was paid in, and a portion of the losses recovered by those fortunate enough to "hold on" to their interests. This may fairly be rated as the dark side of the picture, while the silver lining is found in few companies; among which the Amoskeag, Boott, Lancaster, Lowell Bleachery, Merrimac, Pepperell, and York may be mentioned as giv- ing gratifying results for a series of years. The Pacific Mills is a marked instance of both loss and gain, the company having suspended in 1857, and the $1000 shares being offered for sale at $50. Later, new stock was voluntarily taken at par, and by judicious management the company became, in due course of time, one of the most prosperous. It is by no means claimed that every fortunate or every unfortunate company has been named in this brief résumé, but it will go to show that the losses figure up a very heavy aggregate to be taken from the large gains in other instances; and a careful study of the very full dividend tables will give the precise information as to just where the latter came in.
Boston's capital next became interested in railroads. The General Court of 1826 created a special committee to consider a proposal for the building of a railroad from Boston to the Hudson River. In October of the same year the first railroad in the United States, the "Granite Rail- way," was opened in Quincy, Massachusetts. It was built mainly for transporting from the quarries to tidewater at Neponset, the granite used in the construction of the Bunker Hill Monument. Thomas H. Perkins, a Boston merchant, was its president. It was never intended to become a passenger road.
The special legislative committee reported in 1827, favoring the pro- posed railway from Boston to the Hudson River, and immediately be- came an object of public ridicule. "The Boston Courier," in an editorial in June of that year referred to the project as follows : "Alcibiades, or some other great man of antiquity, it is said, cut off his dog's tail, that quidnuncs might not become extinct from want of excitement. Some such motive, we doubt not, moved one or two of our natural and experi- mental philosophers to get up a project of a railroad from Boston to Albany ; a project which every one knows, who knows the simplest rule in arithmetic, to be impracticable, but at an expense little less than the market value of the whole territory of Massachusetts, and which, in prac- tice, every person of common sense knows would be as useless as a rail- road from Boston to the moon."
Undismayed by such a reception from the public, the far-sighted group of men who had faith in the project, headed by Peter Paul Fran- cis Degrand, who was largely responsible for the organization of the Boston Stock Exchange in 1834, continued their agitation until they were finally successful in launching the project. In the meantime, however, on July 4, 1828, the building of the Baltimore and Ohio Railroad was
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begun in Maryland, and was opened with horse-power, for thirteen and a half miles in May, 1830, becoming the first passenger railroad in the country. The special Massachusetts legislative committee in its report in 1827, stated that horse-power was preferable to locomotive-power by steam. The Baltimore and Ohio Railroad changed over to locomotives in 1832.
A very few miles of railroads existed in the country at this time, but on April 7, 1834, the Boston & Worcester Railroad was opened, and by the following year the Boston & Lowell and Boston & Providence rail- roads were operating, which started New England off to a reputation as "The Mother of Railroads."
After the first successes at home, Boston financiers started to build and operate railroads which gradually pushed farther West, opening up vast agricultural and mining sections of the country. The Union Pacific, the Chicago, Burlington & Quincy, the Kansas City, Fort Scott & Gulf, the Mexican Central, and the Atchison, Topeka & Santa Fé were among the railroads which were Boston enterprises.
In 1851 a railroad jubilee, which lasted for three days, was held in Boston. President Fillmore, Secretary of State Daniel Webster and many distinguished visitors attended. The event was described as "commemorative of the great lines of railway connecting our city with the Canadas and the West, and the establishment by some of our citizens of a line of ocean steamships to facilitate and enlarge our commercial intercourse with the Old World."
The next recorded use of Boston capital on a huge scale came in the development of the Lake Superior copper mines-the most notable of which was the Calumet & Hecla, found in 1866-which have yielded vast fortunes. Boston capital became a pioneer in the development of elec- tricity as a motive and lighting power. Street railway companies and electric lighting companies in various parts of the country were financed in Boston, and in many cases built by Boston concerns. Then came the organizing and developing of the American Telephone & Telegraph Com- pany and the General Electric Company.
Huge building projects in various cities, steel, lumber, western stock- yards and other important developments have found Boston capital largely involved. In later years, by one company alone, which already had figured very conspicuously in the financial history being made in Boston-Lee, Higginson & Company-came the development of the United Fruit Company, the reorganization of the General Motors Com- pany and the creation of the Nash Motors Company.
This brief résumé will give some idea of the magnitude of the projects upon which Boston capital has embarked, and the contribution it has
BOSTON ART MUSEUM
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made to the development of the country. It is impossible to present here the individual history of every investment banking house, or every banker and broker, but an attempt has been made to record short reviews of the careers of some of the largest and most representative organiza- tions.
Lee, Higginson & Company-One of the great financial houses of the United States, with an international reputation, is Lee, Higginson & Company, a partnership conducting a private banking business, special- izing in the distribution at wholesale and retail of investment securities, the purchase and sale of listed and unlisted securities in the various financial markets, and in the conduct of a large foreign business. The home office is located at 70 Federal Street, Boston. An office was estab- lished in Chicago in 1905, and one in New York City in 1906. It has an important European business, which is conducted through the affiliated firm of Higginson & Company of London, organized in 1906. It has been a member of the Boston Stock Exchange since 1848, the New York Stock Exchange since 1888, and the Chicago Stock Exchange since 1893.
The present members of the firm in Boston are George Cabot Lee, N. Penrose Hallowell, Francis Lee Higginson, James Nowell, Charles E. Cotting, Edward Holyoke Osgood. The partners in New York are Fred- eric Winthrop Allen, Jerome D. Greene, Donald Durant, Edward N. Jesup, Robert Grant, Jr. The partners in Chicago are Charles H. Sch- weppe, Barrett Wendell, Jr., William McCormick Blair. The resident members of the firm of Higginson & Company in London are Sir W. Guy Granet, who is also a partner of Lee, Higginson & Company, Lieuten- ant-Colonel the Hon. George Akers-Douglas, Charles L. Dalziel, T. H. McKittrick, Jr.
Lee, Higginson & Company has offices and representatives in all im- portant cities of the United States, and more than 3,000 correspondents throughout the world. As a house of issue it sells annually investment bonds to the value of several hundred million dollars, and handles a large volume of commission business on the New York and Boston Stock ex- changes. It also finances for its customers the shipments of exports and imports amounting to many millions of dollars, more especially the im- ports of raw materials for New England factories, such as wool, hides and skins, rubber, Egyptian cotton, hemp, woodpulp, silk, and also such domestic necessities as coffee, sugar and tea. The firm is doing business not only nationally, but internationally, and its name is being carried to every corner of the globe. With its home office in Boston and stretching out to partnerships in New York, Chicago and London, it is maintaining the old traditions of New England that go back to the days of its com-
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mercial greatness when its clipper ships sailed every sea and the names of Boston and Salem merchants were known throughout the world.
The firm of Lee, Higginson & Company was established May 1, 1848, by John Clarke Lee, of Salem, and George Higginson, of Boston, who formed a partnership under the name of Lee & Higginson, with offices at 47 State Street, Boston. The first announcement of the partnership told the public that Lee & Higginson offered their services "in the pur- chase and sale of Stocks, Notes and Exchange." The signature of George Higginson appears in the constitution of the Boston Stock Exchange on May 1, 1848.
The business of the firm began on a small scale, and for some years no clerk was employed. In April, 1853, the name of the firm was changed to Lee, Higginson & Company, and two new partners were admitted- Henry Lee, brother-in-law of George Higginson, and George Cabot Lee, son of John Clarke Lee. At the same time the offices were moved from 47 State Street to the Union Building at 44 State Street. The operations of the firm at this period were confined principally to selling notes of Massachusetts mills to savings banks and other financial institutions, the purchase and sale of stocks, more especially the local railroad issues and the stocks of the local banks and insurance companies.
Major Henry L. Higginson was admitted to the firm in 1868, and the following year his brother, Francis L. Higginson, became a partner. Major Higginson continued to be a member of the firm for fifty-one years until his death in 1919. For many years he was esteemed one of the leading citizens of Massachusetts. He was founder and patron of the Boston Symphony Orchestra, and will long be remembered for his many philanthropies. His brother, Francis L. Higginson, after rendering serv- ice of great value to the firm during the difficult years that followed the Civil War, retired in ISS6. He continued to be a notable figure in the financial history of Boston until his death in 1925, at the age of eighty- four.
During the period following the Civil War the principal business of the firm was the sale of securities of western railroads, more especially of the roads which subsequently were consolidated into the Chicago, Burlington & Quincy, and the Atchison, Topeka & Santa Fé. It also became interested in the development of the Calumet and Hecla copper mines in Michigan, through its association with Professor Alexander Agassiz, a brother-in-law of Major Higginson. It played an active part in the development of the American Telephone & Telegraph Company and the General Electric Company.
Beginning about 1900 the firm began to devote more attention to the selling of investment securities to private investors and fiduciary institu-
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tions. Out of this has grown the merchandising of securities as known today, which requires a large sales force and distributing offices through- out the country. In recent years the firm has sold to many thousands of investors a wide variety of securities, including Government, railroad, public utility and industrial bonds to a value of several billion dollars.
Among the former members of the firm who played an important part during this latter period were James Jackson, partner from 1885 until his death in 1900; Gardiner M. Lane, a member from 1892 until his death in 1914; George L. Peabody, a member of the firm from 1898 to 1910, and Sir Hugh G. Levick, a partner from 1906 until he retired in 1919 to become one of the two British members of the Reparations Commission in Paris.
James J. Storrow became a member of the firm in 1900, and became the senior partner in 1919 upon the death of Major Higginson. Mr. Stor- row was the son of the Boston patent lawyer of the same name, who won fame for his victory in the prolonged Bell Telephone litigation. He gave generously of his time and money to civic and philanthropic affairs. During the World War he was fuel administrator for the New England States. His death in 1926, at the age of sixty-two, was a shock to the community.
Among the more important undertakings of Lee, Higginson & Com- pany during the period in which Mr. Storrow was senior partner, were the firm's connections with the United Fruit Company, and the reorgan- ization of the General Motors Company in 1910, which was accomplished under Mr. Storrow's direction as chairman of the company's executive committee from 1910 to 1915. In 1916, with Charles W. Nash, the firm organized the Nash Motors Company, one of the striking successes in the recent development of the automobile industry. The firm has also financed various foreign governments, and also scores of public utilities and large industrial corporations located in all parts of the United States, in Canada, in Europe, and even in Japan and Australia.
One factor that has made for the continuity of the policy and main- tenance of the traditions of the firm has been the remarkably long service given to the firm by its early partners and some of their descendants. Mr. Henry Lee, cousin of John Clarke Lee, one of the founders, was a member of the firm from 1853 to 1897, a period of forty-four years, and George Cabot Lee, son of John Clarke Lee, was a member from 1853 to I910, a period of fifty-seven years. George Higginson, one of the two founders, was a member of the firm for twenty-six years, and his son, Major Henry L. Higginson, was a member of the firm from 1868 to 1919, a period of fifty-one years. It is interesting to note that two grandsons of the original founders are members of the present firm-George Cabot
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Lee, grandson of John Clarke Lee, who has been with the firm since 1900, and who became the senior partner upon the death of Mr. Storrow, and Francis L. Higginson, Jr., a grandson of George Higginson, a partner since 1910.
As mentioned under Boston's Trust Companies, the year 1927, as this record is being concluded, saw two of the large investment houses branching out into a new field. Lee, Higginson & Company was one of the two houses to make application to the State for a trust company char- ter, to be known as the Lee, Higginson Trust Company, with an initial capital of $300,000 and a paid in surplus of $200,000. Although maintain- ing a banking department for the convenience of customers, the real pur- pose of organizing the trust company was to give the clients of the in- vestment house the advantages of a corporation organized to serve in the caring and managing of property, settling of estates and administering trusts.
The officers of the new company were announced as follows: Chair- man of the board, George C. Lee; president, Charles E. Cotting ; secre- tary, David H. Howie; treasurer, Arthur I. Glidden; directors, Charles Francis Adams, Frank G. Allen, Frederic W. Allen, Charles E. Cotting, Francis C. Gray, N. Penrose Hallowell, Francis L. Higginson, Louis E. Kirstein, Ivar Kreuger, George C. Lee, Arthur N. Maddison, Charles W. Nash, James Nowell, Edward H. Osgood, Thomas Nelson Perkins, Charles H. Schweppe, James J. Storrow, Jr., and L. Edmund Zacher.
After being located in State Street for more than seventy-seven years, Lee, Higginson & Company purchased, in 1925, the former home of the First National Bank at 70 Federal Street, consisting of a four-story bank building, with a connecting ten-story office building at 50 Federal Street. The bank building was erected by the First National Bank in 1908, and the office building in 1912. The new trust company will begin its opera- tions on the fourth floor of the office building.
Kidder, Peabody & Company-The oldest of Boston's investment banking houses, through its relationship to the firm of John E. Thayer & Brother, is Kidder, Peabody & Company, one of the foremost private financial houses in the country, and known throughout the world. Its home office is located at 115 Devonshire Street, Boston, and it has a New York office at 17 Wall Street. Other offices are maintained in Newark, Providence, Springfield and Brookline.
The present members of the firm are Frank G. Webster, Robert Win- sor, William Endicott, Charles S. Sargent, William L. Benedict, William Holway Hill and Alexander Winsor.
Kidder, Peabody & Company succeeded the banking house of John E. Thayer & Brother in 1865, of which Henry P. Kidder had been a
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junior partner for some years. The original firm was started by John E. Thayer in 1824, when the bankers of Boston were very few in numbers. In 1838 his brother, Nathaniel Thayer, joined with him and the firm's name became John E. Thayer & Brother. Mr. Kidder became identified with the firm in 1847 and was admitted to partnership eleven years later.
John E. Thayer died in 1857, when Nathaniel Thayer became senior partner. In 1865, however, the latter decided to retire, and the firm of Kidder, Peabody & Company was organized, consisting of Mr. Kidder as senior partner, Francis H. Peabody and the latter's brother, Oliver W. Peabody. Until his death in 1886, Mr. Kidder was noted as one of the leading financiers and philanthropists of New England. He was one of the founders of the Boston Art Museum.
Francis H. Peabody, who succeeded Mr. Kidder as the head of the firm, came to Boston from Springfield in 1849 and entered the office of John E. Thayer & Brother. During his long career he filled many places of responsibility in the financial world. He was a vice-president of the Atchison, Topeka & Santa Fé Railroad, a director of the United States Steel Corporation and of other financial and industrial enterprises. He served in the Boston City Council and was prominent in the civic life of the city. He died in 1905, at the age of seventy-four. His brother, Oliver W. Peabody, also began his career in the office of John E. Thayer & Brother. He died in 1896.
Frank G. Webster became the bookkeeper of Kidder, Peabody & Company when the firm was organized. He closed the books of John E. Thayer & Brother, and opened the books of the new firm. In 1870 he acquired an interest in the firm and in 1886, the year that Mr. Kidder died, he became a partner. At the same time Frank E. Peabody, the only son of Francis H. Peabody, was admitted to the firm. Robert Winsor be- came a partner in 1894, shortly before the death of Oliver W. Peabody, and William Endicott, Jr., and Frank W. Remick became partners in 1905, just after the death of Francis H. Peabody.
Kidder, Peabody & Company opened an account with the famous English house of Baring Brothers & Company, Ltd., in 1878, a connec- tion which added greatly to the prestige of the firm both at home and abroad. In 1886 a branch house was established in New York, with Thomas Baring, George C. Magoun, George F. Crane and Herbert L. Griggs as the partners. This branch was given up in 1891, however, when the New York partners formed the firm of Baring, Magoun & Com- pany, which was the New York branch of the House of Baring.
The firm today has correspondents in the principal cities of the world and carries on a vast brokerage and banking business. It is unnecessary here to go into detail concerning the enterprises which have been largely financed through this firm.
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In 1927 application was made to the State by Kidder, Peabody & Company for a charter for a trust company, to be known as the Peabody Trust Company. The original capital was fixed at $200,000, and the paid in surplus at $100,000. Before the charter had been granted, however, the capital was increased to $500,000. The officers of the new trust com- pany were announced to be as follows :
President, Howard N. Flanders; vice-presidents, William B. Snow, Jr., and Robert H. Storer ; trust officers, Vincent Farnsworth and Wil- liam B. Snow, Jr .; assistant trust officer, Norman W. Hall; treasurer, John A. Remick; assistant treasurer, William N. Oedel; secretary, E. Merrill Darling ; directors, Frank G. Webster, Robert Winsor, William Endicott, Charles S. Sargent, William L. Benedict, William Holway Hill, Howard N. Flanders, Graham B. Blaine and Alexander Winsor.
Hornblower & Weeks-The firm of Hornblower & Weeks, of Boston, is one of the largest, if not the largest, commission brokerage house in the United States. It maintains stock, bond, unlisted securities, statist- ical, underwriting, correspondence and note departments, and is equipped to meet the requirements of every individual, trustee, corporation, and institution.
Hornblower & Weeks commenced business on August 6, 1888, with Henry Hornblower and John Wingate Weeks as the sole partners. At that time it had only about twenty-five customers, and only one clerk, James J. Phelan, who became a partner in the firm in 1900 and is now a senior partner. Offices were opened at 51 State Street, the site of the present Exchange building. In 1908, the firm moved to its own build- ing at 60 Congress Street, which it now occupies.
Mr. Hornblower continues as the head of the firm, but Mr. Weeks died in 1926. The latter had enjoyed a distinguished public career. He was graduated from the United States Naval Academy in 1881, and re- mained in the navy for two years. He was mayor of his home city of Newton for two terms, and served as a member of Congress from the Twelfth Massachusetts District. He was later elected to a term in the United States Senate. When President Warren G. Harding took office on March 4, 1921, Mr. Weeks became Secretary of War in the cabinet, and remained in that office under the administration of President Calvin Coolidge, until a short period before his death.
At the beginning of 1927 there were thirteen partners in the firm of Hornblower & Weeks, who, together with the date of their admission, are as follows : Henry Hornblower, 1888, James J. Phelan, 1900, Edward L. Geary, 1902, and John W. Prentiss, of New York, 1906, as senior part- ner, and the following as junior partners : Henry N. Sweet, 1909; Charles T. Lovering of New York, 1910; Ralph Hornblower, 1913; James A.
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