I saw a review of a new book titled "Villard: The Life and Times of an American Titan" and while I can't envision having the time to read this particular tome, I decided to do a little of my own research on this Villard chap. As it turns out, he's no J.P. Morgan, but he certainly deserves his place in financial history.

Born Ferdinand Heinrich Gustav Hilgard in Bavaria, 1835, he migrated to America in 1853, changed his name to Henry Villard, and found his way to Colorado. Later, he became one of the better known Civil War correspondents as a member of Horace Greeley's New York Herald, having previously received recognition for his work on the Lincoln-Douglas debates. After the war, and now an agent for German interests in America, Villard headed back out West.

At this time, the Plains west of eastern Kansas and Nebraska were barely populated, save for a few mining towns in Colorado and Nevada. But soon thereafter, the railroads opened the territory up and Villard saw opportunity in the Pacific Northwest. He began to build up a transportation network, labeling it the Oregon Railway & Navigation Co. (ORN), which was a combination of a steamship operation and Northern Pacific railway. J.P. Morgan helped finance ORN but during the period 1881-83, as Northern Pacific was building out its network the cost overruns were becoming quite prohibitive to the financiers.

But Villard was also employing a common practice at the time, planting favorable news stories (no different than the "pump and dump" of today), and the shares skyrocketed to $200 a share. Additionally, ORN also operated like a classic Ponzi scheme, issuing new stock and then using the proceeds to pay dividends on the existing shares, thus giving the impression of a company that was a veritable money machine.

But back during Villard's acquisition phase, as Henry was putting together ORN, he had made enemies with a fellow German immigrant, Charles Woerishoffer. Charles was a major operator on Wall Street who was a master short seller (betting that a particular stock would decline in value), or "plunger" as they were known in those days. Woerishoffer also was a straight investor in various ventures and Villard accused him of not being on the up and up concerning the investment pool that had enabled Villard to originally acquire Northern Pacific. So in the fall of 1883, Charles launched a bear raid (continually shorting the stock until it collapses) that left Villard gasping for air. Woerishoffer's honor was at stake and he successfully bet his whole personal fortune on the effort...at least for a time. Villard was ruined and, as was often the case in this era, J.P. Morgan came to the rescue and bailed out the company, while routing the shorts (including Woerishoffer). "It is a great delight to see those fellows who have been destroying other people's property severely punished," Morgan remarked at the time.

Morgan liked Villard, but clearly Henry couldn't stay on as president. Instead, Morgan paid him a yearly allowance of $10,000. Villard was financially ruined, however, and suffering from a nervous breakdown, he went back to Germany to recover.

[It does need to be noted that Villard had built a New York mansion at 451 Madison Ave., right behind St. Patrick's and what today is part of "The Helmsley Hotel." The property had to be signed over to the railroad after the ORN debacle.]

But in 1886 Villard reemerged in New York as the American representative of Deutsche Bank, and by 1888 he was an adviser to Thomas Edison as the inventor sought to consolidate his holdings. Villard had been an early supporter of Edison's and the financiers of the day saw that money was to be made not in making Edison's light bulbs (October 1879) but rather through controlling the production of electricity. And so, with the support of some large German banks, Villard sought to create an electricity cartel. Edison, himself, wanted out of the business side of Edison Electric so that he could go back to focusing on inventing, but for Villard, the key was once again J.P. Morgan, and winning his blessing.

Villard and Morgan formed a partnership whereby they bought out Edison and Edison Electric (Thomas Edison was well taken care of) and Villard became the president of the new operation, Edison General Electric. EGE was one of three big players at the time, the others being Westinghouse Company and Thomson- Houston Electric. [I have also seen the spelling as Thom(p)son.] Villard then sought to merge with Thomson, but they were twice as profitable as Edison General so Morgan arranged for the deal to be the other way around. Thomson-Houston took over EGE. Morgan then asked for Villard's resignation and in 1892, the new company was renamed General Electric Company.

And now you know…the rest of the story.

Sources:

"The Growth of the American Republic," Morison, Commager, Leuchtenburg
"Morgan: American Financier," Jean Strouse
"Wall Street: A History," Charles Geisst

Brian Trumbore