This Moses — Moses Schwartz — was a Louisville distiller and banker who did not lead his followers to the Promised Land, instead legitimately was accused of siphoning off their money, resulting in financial ruin for some and even suicides. Moreover, Schwartz seems to have escape punishment for his wrongdoing and, indeed, thrived.
Moses grew up poor. He was born in 1852 in New York City the son of immigrant parents from Poland, Michael and Paulina Schwartz. His father was a peddler, an individual selling a range of commodities on the street from a cart or case. Although it was hard work with meager returns, it often was the only alternative for immigrants speaking little or no English. Assuming the elder Schwartz initially was peddling in New York, he faced considerable competition.
When Moses was still a youngster, the family moved to Nashville, Tennessee where working conditions for his father might have seemed brighter. The 1860 federal census found the family there. The father was working as a peddler and an older daughter was employed as a milliner. Moses was nine, a younger brother, Jacob, three. A second peddler, an immigrant from Russia, with his wife and baby boarded with the Schwartz family.
The history of America is replete with stories of gifted entrepreneurs who sprang from peddler families. Moses Schwartz was among them. After completing his education in Nashville, he moved to Louisville, Kentucky, above. There his fortunes took a major leap forward when he met, and in a ceremony at the city’s Jewish Temple, married Jennie Lehman, accounted in the press as “handsome and sprightly.” More important for Schwartz’s future, Jennie’s father, I. L. Lehman, was a prosperous wholesale liquor merchant. In the same article the groom was described as “a young gentleman well known and respected…and having a high character.” That description would be challenged in days to come.
During the next few years, Schwartz presumably was working for his father-in-law or another of the many whiskey-related enterprises in Louisville. About 1880, he incorporated the Sweetwood Distillery Company, with capital of $100,000. His office was located at 126 East Main Street on Louisville’s “Whiskey Row” where Schwartz carried on a wholesale liquor business. He also claimed to operate a distillery located at 26th Street and Broadway. According to Byron Bush, author of Bluegrass Bourbon Barons, “His distillery had the capacity for ten thousand barrels annually. The product of his distillery was fire copper whiskey. His business extended to every part of the United States, with shipments coming directly from his distillery.”
While this may have been Schwartz’s advertising pitch, things were not exactly as they might have seemed. The peddler’s son did not own the distillery or even a significant share. The facility, shown below, was constructed and owned by the J.B. Wathen Distilling Company, composed of three members of the well known and respected Wathen family. J.B. Wathen was president; R.N.and M.A. Wathen, respectively, secretary and treasurer.
Also known as the Kentucky Criterion Distillery, the plant produced and marketed a variety of whiskeys under the Wathens’ own label but also leased warehouse space to liquor dealers from which they could draw product under their own brand names. I have counted 31 such “on paper” distilleries, of which Schwartz’s “Sweetwood" was one. This was a genius stroke by the Wathens. The system tied a plethora of liquor dealers to them as customers, charged those dealers for storing barrels of whiskey, and permitted them, with the Wathens' compliance, to advertise themselves as “distillers.” A downside were defaults. J.B. Wathen later told a Louisville Courier-Journal reporter that Schwartz “caught me for $45,000.”
At some point during the estimated 14 years in which Moses was actively involved in the liquor business, he decided to change course. A member of the Louisville Board of Trade, the Commercial Club, and boasting of contacts throughout Kentucky and beyond, he seemingly had deduced that the whiskey trade was too slow and tedious a way to become very rich. The financial sector beckoned. He became a director of the German National Bank, the Germania Vault and Trust Company, and in 1891 organized and was elected founding president of the Louisville German Deposit Bank. With a name like “Schwartz” his credentials seemingly went unquestioned.
By 1850, immigrants represented about half of the population of Louisville, and about two-thirds of them were Germans. During ensuing decades the German population of Louisville was large enough that entire German-speaking neighborhoods existed. Germans established their own churches, bilingual schools, and kindergartens. Social and benevolent organizations, such as singing societies, orphans' asylums, and a Turnverein (athletic club), thrived. Banks designated “German” had a ready constituency.
Louisville’s citizens of German origin flocked to Moses Schwartz’s new bank. Hundreds of residents became depositors. Almost overnight, the owner began spending money lavishly on himself and his family. Schwartz bought a home for himself, wife Jennie, and their four children, Amy, Corrine, Morton and Charles. Shown here undergoing repairs in recent times, it was a large three-story dwelling in a fashionable neighborhood. It still stands.
On August 2, 1893, a local newspaper declared sardonically: “This will prove a memorable day in the financial history of Louisville.” It had taken only two years of Schwartz’s maneuvering to send the Louisville German Deposit Bank into failure. Moreover, he had not registered his bank in the city’s Clearing House Association. “In its time of need none of the other banks would give it any assistance whatever.” A bank official assured reporters that the institution was abundantly able to meet its assets and assured depositors they would lose nothing. But Schwartz’s bank had been gutted. Depositors lost everything. A few were ruined to the point of suicide. Hundreds of others faced a future of poverty.
Meanwhile Schwartz continued his financial finagling. He declared the Sweetwood Distillery bankrupt, welching on his debt to the Wathens, and assigned all his personal assets to the Germania Vault and Trust Company, on which he sat as a director. According to press accounts: “Mr. Schwartz could not say what the liabilities amounted to and felt too bad to talk about the matter.” But not too bad to plan his next move. When irate depositors tried to see him about the situation, they found that Moses had fled Louisville. With him had gone money from the German Deposit Bank and the German National Bank.
As expected, the multiple bank failures generated a series of investigations and lawsuits. Moses was not present for any of them. Leaving behind the intense legal wrangling, the former distiller led his family unscathed to a new “promised land” — New York City. In 1901, a report came from The Big Apple that indicated Schwartz was practicing a swindle in that city similar to the one he had pulled off in Louisville. This time he was running an outfit called the Manhattan Merchantile Company and had borrowed $100,000 on the basis of phony asset
statements provided by him to the Seventh National Bank of New York. When J.B. Wathen found Moses in Manhattan and accosted him over the $45,000 debt, Schwartz pleaded that he was impoverished. Wathen noted, however, that the former whiskey dealer was living at a posh address and appeared to be “on the high wave of prosperity.”
When the Seventh National Bank recognized the fraud behind its loan, it confronted Schwartz who responded by running again, first to Chicago and then to Philadelphia. Discovered there by authorities he was arrested as a fugitive and taken back to New York. The Seventh National Bank had gone belly up in the meantime, apparently the victim of its own dubious loan practices as reported by the New York Times. So far I have been unable to find what happened to Schwartz as a result of his arrest. There are no indications that he was convicted of forgery or spent time behind bars.
 |
| Isaac Bernheim |
Skip forward in time a decade later. Schwartz came to notice living in upacale Palm Beach, Florida. In April 1911 the Louisville Courier Journal reported that Moses and his wife had been encountered there by distiller Isaac Bernheim, apparently enjoying the life of the wealthy. He had not seen Moses in some eighteen years but was greeted warmly. As Bernheim communicated to the newspaper, the former fugitive told him at length how he had prospered.
About the time Moses was on the run from authorities in 1901 his twin sons, Morton and Charles, had gone two work for a “big Wall street plunger” and were quick to learn the financial game, apparently without the need of paternal chicanery. Both had become millionaires as a result and were among New York elites. Schwartz had invested with his sons, retired from business, and enjoyed a substantial income, Bernheim related.
All this rings true. Moses sons, particularly Morton, had made strong reputations on Wall Street. Said one observer of Morton: “Schwartz quickly became well-known as a banker by making smart financial decisions that set him apart from others in the industry. His ability to spot good investments and plan strategically led to his success as a financier.” Morton and Charles apparently also were dutiful sons, attentive despite their father’s breaches of law.
Moses lived to be 72 years old, dying in December 20, 1923. After a Jewish funeral service, he was buried in the Bronx, New York, at Woodlawn Cemetery. Shown below, the Schwartz Mausoleum (Sassafras Plot, Sec. 120) is an elegant resting place, replete with sculptured panels and stained glass windows. In time Jennie and other family members also would be buried there. Thus was ended the career of a master scam artist whose ability to escape justice and continue to prosper deserves to be the stuff of legends.
Note: For this post I leaned on the book by Byron Bush cited earlier, leaving out much of the copious information he provides on the legal wrangling in Louisville over Schwartz's bankruptcies. The Louisville Courier Journal was another major source. This website also contains posts on the Wathen distilling family, August 1, 2020, and the Bernheim Brothers, December 10, 2014.
No comments:
Post a Comment