By Trudy Whitman
Special to the Brooklyn Daily Eagle
A tall, imposing, and superbly attired older man attends an engagement party in 1963 in Far Hills, New Jersey. There he grasps the hand of the groom-to-be, thanking him for the invitation to the festivities, acknowledging that the party is the first time he has “been in society” since his “troubles” began.
The young man was Malcolm MacKay, who soon after his marriage moved to Brooklyn Heights, where he has resided ever since. The old man was Richard Whitney, the five-time president of the New York Stock Exchange and the national spokesman in the 1930s for what he called the “perfect institution.” Whitney had been a high society darling with a grand townhouse on the Upper East Side and a 495-acre spread in Far Hills. Among his numerous club affiliations, he was president of the Essex Fox Hounds, riding regally to the hounds on one of his 20 horses.
Richard Whitney’s name had been prominent in Republican circles in discussions of candidates for the 1936 presidential ticket. But he came to Malcolm MacKay’s party as an ex-con, having served time in Sing Sing for embezzlement. Whitney’s “troubles” can be described more accurately as a spectacular fall from grace, a plummet that MacKay describes in his new book, “Impeccable Connections, The Rise and Fall of Richard Whitney,” published by Brick Tower Press. As an example of the coverage the Whitney affair garnered at the time from incredulous reporters, MacKay includes an item from the Nation likening Whitney’s exploits to conjuring up images of “J.P. Morgan stealing from the collection plate at the Cathedral of St. John the Divine.”
MacKay first knew Whitney as the grandfather of his closest childhood friend, who died in an auto accident while a freshman at Harvard. The story of his friend’s grandfather’s rise and fall has always intrigued MacKay, so several years ago he began researching the influential Wall Street figure, wading through documents, reading newspaper accounts of the times, and interviewing family members. “Impeccable Connections” is the result.
“I’ve thought about him [Whitney] all my life,” MacKay said during an interview with this newspaper. A social pariah after his release from prison, Whitney and his wife sat at the back of the church during their grandson’s funeral, shunned by former friends and family alike. That melancholy image has stayed with him through the years, MacKay remarked.
Whitney was known for his arrogance and imperious bearing, but MacKay admitted that he liked the infamous gentleman: “Human beings are complicated. He was a man of a certain honor and conducted himself in an honorable way, and yet he was a crook.”
And the author sees much more than a juicy scandal in the Richard Whitney narrative; he sees national significance. “With his fall [in 1938], any chance to reduce the New Deal reforms disappeared,” MacKay posited.
Richard Whitney’s “impeccable connections” began at Groton and Harvard. His uncle, Edward Whitney, a J.P. Morgan partner, lent his nephew the money to buy a seat on the New York Stock Exchange after graduation. Richard’s older brother, George, followed his uncle to Morgan, eventually heading the firm. Still in his 20s, Richard became the principal bond broker for Morgan.
A combination of bad investment practices and lavish lifestyle started eating away at Richard Whitney’s assets, and as early as 1926 he pledged securities held by him for his clients as collateral for bank loans. He started with his wife’s family money but became much less discriminate over the years. MacKay describes his status at the time of his exposure in March 1938: “During the final four months . . . he took out 111 loans totaling $27,361,500. The loans were mostly from banks for small amounts, with stolen securities acting as collateral. There was constant turnover. Ponzi and Madoff would have recognized the situation. Aside from his bank indebtedness, Whitney owed close to $3 million to his brother, close to $500,000 to Morgan, and roughly $1 million to other individuals.” His brother George, who some call his enabler, ultimately paid off all Richard’s debts.
As long as there is a Wall Street, there will be stories such as Richard Whitney’s, and Malcolm MacKay spills some interesting ink in Impeccable Connections searching for answers as to why. Jealousy, chutzpah, psychological disorder, egotism, and the mentality of the “in” group all come in to play. In 1938, when the judge was preparing to sentence Whitney, he had the gentleman scam artist examined by psychiatrists—an unusual step at the time—who asked him if he ever considered the ethical implications of what he had done. He responded that he hadn’t. Yet, he took full responsibility for his misdeeds. Whitney served 40 months of a five-to-ten-year sentence in prison.
Malcom MacKay is a lawyer and businessman who has authored and co-authored several Brooklyn histories. He has contributed to the New York Times Magazine and Business Week. “Impeccable Connections, The Rise and Fall of Richard Whitney” is available on Amazon.com.