Wednesday, March 20, 2013

War Is Big Business

Deep Politics of Freeport Sulphur

In the Vol. 3, No. 3, March-April, 1996 edition of Probe, noted JFK assassination researcher Lisa Pease wrote in her article entitled "David Atlee Phillips, Clay Shaw and Freeport Sulphur":
Freeport Sulphur was born in Texas in 1912. The company later moved the headquarters office to New York. Originally, the principal business was mining sulphur. By 1962, Freeport Sulphur was the nation's oldest and largest producer of sulphur. In 1962, the fertilizer industry used 40% of the sulphur produced in the world. Other business segments that use sulphur in the production process are chemical, papermaking, pigment, pharmaceutical, mining, oil-refining and fiber manufacturing industries. For most of this period, Freeport was headed by John Hay Whitney.

Jock makes the Time cover
In 1927, Payne Whitney, one of America's richest multimillionaires, died, leaving his only son and future Freeport president an estate valued at over $179 million. At the young age of 22, John Hay Whitney became one of the country's richest men. Nonetheless, "Jock," as the press later called him, took a job at Lee Higginson and Co. on a salary of $65 a month. There, he made a fateful friendship with another onetime Lee Higginson employee named Langbourne Williams. Langbourne's father had originally founded Freeport Texas, then lost control of the business. Langbourne enlisted Jock's boss at Lee Higginson--J. T. Claiborne--to help in a proxy fight for control of Freeport. Claiborne urged the young Jock to join their efforts. Jock did--to the tune of a half a million dollars. By 1930, the Claiborne-Williams-Whitney team had won control of Freeport.

Freeport, Texas, was actually a town--not a business. It became a deep-water port when a Swedish Texan named Swenson, coincidentally the widowed brother-in-law of fertilizer magnates from Maryland named Tilghman, decided to use the expiring Herman Frasch patent to develop a sulphur resource. Located within a salt dome located on a part of the historic Austin's Colony granted to Stephen F. Austin, the land was owned by the heirs of Austin's sister, Mrs. James F. Perry, whose Peach Point Plantation in Brazoria County--variously called Bryanmound (Bryan Mound) or Bryan Heights Salt Dome -- was first suspected to contain sulphur by stock speculator Bernard Baruch a few years prior to its actual development in 1912.

When Baruch was unable to obtain financing from J.P. Morgan for sulphur production at the Bryan/Perry property, he instead moved to adjacent Wharton County's Boling salt dome, which he (along with the Morgan bank and W. Boyce Thompson) purchased in 1914 from  the Gulf Sulphur Company. In 1918 the name changed to Texas Gulf Sulphur. Austin's original land grant included land all the way to Bastrop, but it is not known whether the mineral estate of Boling Dome was still by that time owned by the Perrys and Bryans.

Freeport Sulphur, early days

Sulphur, however, was in great demand during World War I, and Bernard Baruch of the War Industries Board in Woodrow Wilson's administration was sniffing it out. It should not be overlooked that Woodrow Wilson was a wholly owned subsidiary throughout his administration by the little man from Texas named "Colonel" Edward M. House, originally from Houston. 

House's father, Thomas W. House, had run the blockade during the war years and had been in Matamoros and Monterey with Charles Stillman, William Marsh Rice and other merchants from Texas. They knew how to profit from trading in war materiel. 

The New Regime at National City Bank

By 1915 sulphur output would double:

By this time, Erice Swenson was 65 years old, no doubt ready to retire. But, as an officer in the National City Bank in new York, and as head of Freeport Sulphur in the middle of the great war, that was not about to happen. James Jewett Stillman, who died in 1918, was for four years replaced by his son, James Alexander Stillman. 

An 1896 Harvard graduate, young James in 1901 married Anne Urquhart, the daughter of actress Cora Urquhart and James Brown Potter. As founder of high society's Tuxedo Set, Potter was the son of banker Howard Potter, who married Mary Louisa Brown, whose father, James Brown, was the senior partner of  Brown Brothers & Co, an investment bank founded by sons of Alexander Brown of Baltimore.

When Mrs. Stillman followed her mother onto the stage as "Fifi" Stillman in 1921, a long battle played out in news headlines across the nation, and when James' embarrassing personal life hit the front pages of all the newspapers, it was the elderly Eric Swenson who rose to the chairmanship of the National City Bank.

Swenson must have known where lots of bodies were buried over the years, even having been one of the chief witnesses in the case prosecuted by the grandfather of James A. Baker III against the alleged murderer of William M. Rice, whose death opened up the huge endowment for Rice University.

By now most of the men who participated in setting up the sulphur facility at the new city of Freeport, Texas and the port that allowed for its distribution, were beginning to recede from the active management. These investors were named as the original underwriters of the stock at page 105 of a book by Gerald Kutney, Sulfur: History, Technology, Applications & Industry, as well as in a magazine article in The Chemical Engineer.

Original underwriters of $700,000 worth of stock in the company included the following:
  • Frank A. Vanderlip, James Stillman, Samuel McRoberts--all officers of National City Bank, along with Eric P. Swenson, whose family bank, S. M. Swenson & Sons, also subscribed, as did Maud Tilghman Swenson's brothers, Frederick B. & Sidell Tilghman. Maud died in 1892, only three years after her marriage to Eric Swenson.
  • John Langbourne Williams & Sons and Franklin Quimby Brown of Redmond bank (also involved in Knickerbocker Trust), who also subscribed as underwriters, were members of a fertilizer syndicate called Interstate Chemical Corporation with the Tilghmans. Their syndicate of investors in railroad securities often included C. Sidney Shepard (Yale, 1878) of New Haven, CT.
  • Smaller investors: Edwin Hawley (tycoon in Chesapeake & Ohio Railroad), Williams & Peters (coal merchants), E. K. Knapp, E. M. Carter, Benjamin Andrews (a mining engineer who held several patents in connection with Union Sulphur Co.), James M. Edwards, Orne Wilson, W. B. Chisolm (part of a fertilizer syndicate), W. O. Wetherbee (a bank clerk who testified with Swenson in the Rice murder trial), John N. Steel, John Hays Hammond (associate of William Boyce Thompson), A. Chester Beatty, A. C. Swenson, F. A. Fearing, George C. Reiter, and S. M. Betts.
Many of those named above were also directors of the Interstate Chemical Corporation.
It was because of the initial investment by the J.L. Williams & Sons banking enterprise that Langbourne Meade Williams, Jr. ascended to a management position in 1930. His father (L.M. Sr.), died in 1931, and the Freeport Sulphur stock the family held gave him an opportunity to make a financial play, but it was another connection which gave him the power to do it. That came from the Rockefellers.

To be continued in a future post.

Monday, March 11, 2013

Citigroup's Texas Roots

From Wethersfield, CT - Puritan Stronghold

Charles Stillman, whose Texas-made fortune was used to set up the First National City Bank in New York City, was born in Wethersfield, Connecticut in 1810. His father, Francis Stillman, was a great-great-grandson of the man referred to by Stillman family genealogists as the "Settler" in America, George Stillman.

Wethersfield, CT
Francis Stillman stemmed from three Nathaniel Stillmans in a genealogical line that began in Hadley, MA in 1691. The first Nathaniel, who married a daughter of David and Honour Treat Deming in 1743, died in Wethersfield in 1770, six years before the Declaration of Independence. Francis' father was the third Nathaniel Stillman, born in 1752, who fought in the Revolutionary War, then died in Wethersfield in 1838, the same year his son Francis died--only two years after Texas had declared its independence against Mexico.

Francis was a ship-owning merchant who took his teenage son Charles to Durango, Mexico, as early as 1823, leaving him there to fend for himself within a trading network already established. "Don Carlos," as Charles was known in those parts, commandeered a profitable mercantile trade, which he would substantially increase during the Mexican War, which began when the new Republic of Texas was annexed as part of the United States in 1845. Upon his death many years later, Charles Stillman's family donated his papers from those years in Mexico and Texas to Harvard, an event which would give rise to research projects designed to establish a link between the New England money interests and Stillman's somewhat hidden Texas roots.

Dredging up the Past 

Chauncey D. Stillman
In 1939 one of these descendants, a cocky young Harvard graduate named Chauncey Devereaux Stillman, recruited some historians to pore through the papers, while he also tossed some family money around in Texas, most of it in the form of grants to memorialize his ancestor's eminent stature in the wilds of Texas. He even brought an entourage with him to Texas for ceremonial purposes, but according to one local resident named G.E. Dodd, more money was sought from the locals to memorialize their unsaintly ancestor than was passed down to them.
Charles Chauncey and sons, 1922

Charles Devereaux Stillman was the acknowledged author of a genealogy which began with the life of Don Carlos, who is said to have made his way on his father's schooner Albion from Mexico's interior near Durango in 1828 to Brazos de Santiago--the "salt water harbor for the town of Matamoros." There he came in contact with Francis Stillman's partner, Daniel Willard Smith, according to this book, Charles Stillman 1810-1875, published in a private printing for the author in 1956. 

Smith, who also hailed from Wethersfield, had been appointed American Consul to Mexico by President James Monroe. The consul's job was to resolve disputes that American citizens, then trading with Mexico (which at that time included what is now known as Texas), had with the government or other citizens of Mexico during an extremely tense time. Evidence of that tension was revealed in this article published in early 1837 recounting numerous reports recently received in the U.S. capital regarding incidents that had occurred in Mexico:
Zalmon Hull, father of Hezekiah Hull, Lydia Wells' father

Zalmon Hull's father was a resident of Fairfield, CT., 60 miles or so down the road from Wethersfield, passing by Middletown and New Haven. But Zalmon married a Redding girl named Betts and relocated further inland, even though he shipped out to engage in the Mexican trade. He was mentioned in the January 1914 edition of National Magazine, an article entitled "The Tragedy of Mexico," page 847 of which reads:

This "American consul" was Daniel W. Smith, who was already married by that time to the widow of Zalmon Hull's son, formerly Mrs. Hezekiah Belden Hull. That marriage made him the stepfather of her daughter Lydia Ann Hull, the mother of James B. Wells, Jr., for whom Jim Wells County in Texas was named. Lydia's husband, James Babbage Wells,
"was a privateer or mercenary during the Texas Revolution and commanded the Texas Navy yards at Galveston. In Aransas village, Wells was a cattle rancher who owned a schooner."
It was that fact which caused his name to be listed in an extremely rare book called The Sons of the Republic of Texas., which glorifies the lives of those who settled Texas when it still a part of Mexico prior to 1836, and before statehood in 1845.

When Charles Stillman arrived in Matamoros (often spelled Matamoras) in 1828, he naturally gravitated to fellow natives of Connecticut there, in addition to two of his brothers with whom he was involved in business partnerships until 1847, when the last of them, Frank D. Stillman, returned to Connecticut. Charles was then on his own but soon established a partnership with John J. Young on Rosales Street in Matamoros. Young died in 1859, but his descendants remained, and we will hear more about them later.

During this time, Charles realized the U.S. government would want to sell off part of the land on which Fort Brown was located and had almost 5,000 acres surveyed out of it. This was to become the city of Brownsville. We can only wonder if Frank had helped to make that happen once he returned to the northeast. A land boom quickly occurred, making Charles quite wealthy, but the population diminished from cholera epidemics. In 1849 Charles, at the ripe old age of 38, returned to Wethersfield for a wife.

Chauncey Devereux Stillman

Keep in mind that Charles Stillman's descendant, fresh from Harvard in 1929, had taken it upon himself to research and write the history of his family in Texas. In 1955 he traveled down to Brownsville to dedicate a house to the City of Brownsville, claiming it to have been the home that Charles Stillman bought for his bride Elizabeth Pamela Goodrich Stillman a century earlier.

Beginning in 1945, articles began to appear in the Southwestern Historical Quarterly on this subject, such as this one by Harbert Davenport, whose father was a law associate of Judge James B. Wells, Jr. Newspaper articles, like the one below, appeared under the byline of his wife:

Not everyone believed the story told by Jim Wells' law partner, Harbert Davenport, or by Mrs. Davenport in the above article. One witty, courageous long-time Brownsville resident, however, named George Emmet Dodd (son of Beeville, Texas attorney William W. Dodd), responded to the Mayor Stokeley's trumped up decision to grovel before the Stillman and Rockefeller families who came to Brownsville in 1955 to memorialize Charles Stillman with a little help from the city taxpayers. Dodd himself had a long and illustrious heritage in Texas, married to a granddaughter of Colonel James Eskridge Graham

It's unfortunate there aren't more people like G.E. Dodd in the world, who can tell fake historians and paid public relations "experts" to take a flying leap.