Category: Mark Twain’s Portfolio

EDITOR’S NOTE: Each installment of “Mark Twain’s Portfolio” can be read as a stand-alone essay, though together they will produce a more comprehensive account of Twain’s financial life. If you enjoy what follows, check out the first installment, “Existential Hedging & The United Fruit Company.”

In November 1905, an innovative publicist placed an ad in a series of midwestern newspapers. Herbert Vanderhoof, then working out of Chicago, would go on to have so much success attracting settlers to British Columbia, the Canadian government would name a town after him. But in 1905, the 30-year-old publicist was shilling for the insurance industry. The conceit of his advertisement, dressed up to look like an editorial, was that insurance “will do for you what H. H. Rogers did for his friend Mark Twain…it will invest your dollars. It will guarantee you a definite and fixed profit.”

“Would not we ordinary fellows of common sense jump at the chance,” Vanderhoof mused, “if H. H. Rogers came along and said to us: ‘Just turn your savings over to me and I’ll see what I can do with them. You can’t lose, and you may win.’” There was but “one gracious act in the life of the master of Standard Oil,” Vanderhoof said, but the insurance companies stood ready everyday to put ”the power of their money-making machinery at your disposal.” 

The merging of retail investing and insurance under one corporate umbrella was such a foolproof plan it only crashed the U.S. economy twice. 

Vanderhoof’s argument, though deeply flawed, shows how well-publicized Mark Twain’s relationship with Henry Huttleston Rogers was, as well as how dubious were some of the sources that helped circulate and calcify the conventional wisdom about that relationship. 

The advertisement, purposefully designed to look as though it was regular copy, includes fake dialogue between Twain and Rogers. Vanderhoof imagines Twain saying things like “I’ve heard that one of your professions is that of receiver-general for suckers” and “Some say I’m a genius, which is as it may be. But one thing I’m not – I’m not a financier.” Befitting his trade, the publicist was both reiterating what he presumed to be the common beliefs of midwestern readers about the humorist and his patron-magnate, and reinforcing those beliefs with pure fabrication. It was a cynical ploy to raise his credibility in a way he could leverage on behalf of his clients.

But the question that motivates Vanderhoof – What do readers want to believe? – is an important one when considering the reputations of both Twain and Rogers. Vanderhoof can, in almost the same breath, present Twain as the rarest literary genius and a representative of “we ordinary fellows.” He presumes that Twain’s widely reported financial misadventures made him an empathetic figure. Twain came to recognize this himself. In his autobiographical writings, there are many confessions of short-sightedness, self-delusion, and speculative euphoria which resonate with anyone who has ever put money on a horse, imagined winning the lottery, owned a few bitcoin, failed to read the fine print, or had a car repossessed.

For those of us with relatively shabby fiscal records, supposing that “geniuses” also leads lives of perpetual financial bumbling is reassuring, as is the implication that the wealth of financiers is endogenous to their moral turpitude. But Twain was not a perpetual bumbler and Rogers was not a compassionless shark. 

The timing of Vanderhoof’s advertisement is significant. Twain had long been a national celebrity, but Rogers’s fame (or, perhaps, infamy) had risen in recent years. He was the primary spokesperson for Standard Oil as the company defended itself against antitrust lawsuits and progressive muckraking. In the same month Vanderhoof’s advertisement circulated, another professional publicist, Thomas Lawson, published the eighteenth and final installment of “Frenzied Finance,” a serial in Everybody’s Magazine which, among other things, gratuitously slandered Rogers. 

Lawson had helped Rogers and his primary business partner, William Rockefeller, promote a series of copper mining companies linked together like the subsidiaries of the Standard Oil Trust. Rogers and Rockefeller were transparently creating a Copper Trust on the model of their employer. Only after making $50 million in this gambit did Lawson have a very performative crisis of conscience, refashioning himself as a whistleblower. He began publishing “Frenzied Finance” in July 1904 to much fanfare. Lawson promised to unravel for his readers the sordid history of the Amalgamated Copper Company and, by so doing, reveal the secret system of American corporate finance “which, if allowed to continue, surely will in time, destroy the nation by precipitating fratricidal war.” 

Rogers, Lawson insisted, was the primary architect of this “tigerishly cruel system,” the one “pulling the wires and playing the buttons in the shadows just behind of the throne” of the more  recognizable Rockefellers. Rogers was “the big brain, the big body, the head of Standard Oil,” though he did not hold the title. It was he who ruled over the “spider aristocracy of finance,” though he did not work for a bank or a brokerage. And it was he who was the “Master of Hell” who tempted Lawson to sell his soul for $50 million. Lawson insisted Rogers, unlike himself, “knew no Sabbath, no Him” and was “immune to every feeling known to God or man.”

As these lines suggest, “Frenzied Finance” is a classic American conspiracy theory. It is just accurate enough to satisfy paranoid fanatics and fills the spaces between with the prejudices and grievances of its author. Like most conspiracy theorists, Lawson was bad at editing himself. After making an initial splash as the de facto sequel to Ida Tarbell’s wildly popular history of Standard Oil, “Frenzied Finance” wore out public and publisher alike. By the time it ended, Lawson had run so tediously and circuitously long that he had to pay to have his final installment published in the advertising section.

In August of 1905, Clemens wrote to Rogers, “I hope you are noticing it is Lawson’s turn now – a thing which was sure to happen. If he likes skinning, there’s good times ahead.” While I can’t be sure exactly what inspired his schadenfreude, Twain accurately describes the backlash that was unfolding in the press. In newspapers issued during the preceding week, there are dozens of derisive mentions of Lawson, ranging from sarcastic jokes to incendiary accusations. The Detroit Free Press, which had previously sung the whistleblower’s praises, now reported that Lawson had been shorting copper stocks in hopes of inciting a sell-off with “Frenzied Finance” and the associated lecture tour. 

The market did not collapse and Lawson got laryngitis early in the tour. Rogers deadpanned to Clemens, “He has lost his voice because he has nothing left to say.” 

The week after the first installment of “Frenzied Finance,” Amalgamated Copper was called “an impudent farce” by the Wall Street Journal and the trading price of its shares dipped below $50. By the time Lawson’s serial concluded, Amalgamated was trading at over $90 a share. If the Detroit Free Press report was correct, Lawson’s speculating scheme backfired spectacularly. As polemic, “Frenzied Finance” didn’t fare much better. The copper conglomerate survived the antitrust battles of the ensuing decade and emerged in 1915 as the biggest producer in the world. 

Mark Twain owned a large block of shares in Amalgamated Copper and, later, in its largest subsidiary, Anaconda Copper. Though he may have become cavalier about Lawson’s “skinning,” he was initially spooked. Within days of the first installment of “Frenzied Finance,” he was looking to unload his shares. Rogers cautioned him against selling into the run, “I have not overlooked the matter of the Amalgamated stock, but the market has not been favorable to selling, so I have deferred it. It will come out right in the end, I am sure.” As alluded to above, the price rose 80% by the end of the next year. 

This episode conforms to the conventional wisdom about their relationship: Clemens impulsively misreading the market and the far-sighted financier saving him from his bad instincts. Even the few contemporary scholars who do acknowledge that Clemens’s investing record was remarkably strong after his 1894 bankruptcy usually attribute that success entirely to the patronage of Rogers. Michael Sheldon, for instance, writes, “It was only because Rogers continued to keep a close eye on his finances that Twain didn’t return to his old ways and lose more money on one bad investment after another.” 

Rogers undeniably played the leading role in Clemens’s financial recovery and remained the author’s most valued advisor and, frequently, his broker. But the history of his copper investments, upon closer examination, shows that Clemens still took the lead in his investing decisions, for both good and ill.

It was Clemens who floated the idea of investing in Amalgamated in the first place. “The Vienna papers,” he wrote, “have been excited over the great Copper combines; and sometimes they say you are the president of it, other times they call you vice-president, but all the time I seem to gather from them that you are the Company and the Board of Directors.” Recognizing that Rogers would “make a copper hen lay a golden egg,” Clemens suggested putting the $52,000 in his brokerage account into the new venture. Though they didn’t discuss the exact size or price of the block Rogers purchased on Clemens’s behalf, two years later Clemens marveled that the trading price was “nearly 70 points above what it cost me.” That day, Amalgamated shares were trading around $87, which means Clemens truly got a cut rate as an initial investor, and regardless of when he sold, he must have made an utter killing.  

Based on their conversations, it seems safe to presume that Clemens held onto his block of Amalgamated shares at least through 1905, but they were not part of the inventory of his estate in 1910. Perhaps Clemens sold during the 1907-1908 recession, when Amalgamated’s stock dipped below $50 per share. It does seem reasonable to speculate, though there is no record of this, that he may have sold the shares to finance the purchase and construction of his Stormfield property during this time. 

Or perhaps he sold just before the bubble burst, when Amalgamated was trading at over $110. Or maybe he held on until the final months of his life, when Amalgamated was trading around $75. In any case, if he really did buy in at $17 per share, he made somewhere between 350% and 650% return. And if he really did commit $52,000 to the initial investment, he turned it into the contemporary equivalent of $4.5-8.6 million. And that’s before we account for the dividends.

The dividend history of Amalgamated is very complicated, including both annual and quarterly statements, and shifting between defined and proportional payments. Within the Wall Street Journal archives I rely upon there are conflicting reports of what Amalgamated paid its shareholders during the period Clemens held the stock. A conservative estimate puts his earnings above $2 per share annually from 1899 to 1905, which would yield him about $6000 a year or, after adjusting for inflation, $150,000. It may have been significantly more than that. In 1907, Clemens would claim 1902, a strong year for Amalgamated, was the most profitable year of his life. 

Even though Twain commanded the highest rates in his industry, he could still only get $150-$200 for a lecture or magazine article, both of which required work he found demanding. It’s easy to see why he preferred “the financial platform” to the literary one, as he told Rogers in 1899, and recommitted himself to investing. 

Clemens was one of the “first in” on Amalgamated and made a mint. His experience with its subsidiary, Anaconda Copper, where Rogers was also a Vice President and trustee, was almost the inverse.

Rogers’s personal secretary, Katharine Harrison, purchased 400 shares of the Anaconda on behalf of Clemens. She acquired half the shares at $59 and the other half at $60. The latter price was the closing price listed in the Wall Street Journal on May 27, 1907, the same day Harrison wrote Clemens to let him know the shares had been acquired. Presumably these 400 shares were the same 400 shares listed in the inventory of Clemens’s estate three years later. They were appraised at the value of $45.25 per share, which meant Clemens had taken a 24% loss on their exchange value. He had also collected $3700 in dividends. 

Adjusting for inflation, these shares were good for the equivalent of $33,000 in annual income. They would continue to provide healthy income (assuming the Twain estate held onto them) for decades to come, though the trading price would not equal what Clemens had paid for more than twenty-two years.

These investments in the Copper Trust simultaneously confirm and contradict conventional wisdom surrounding Mark Twain’s investment record. It would seem that Clemens, to an almost comical degree, bought his Anaconda shares at the absolute peak of the market. Not only did the trading price on those shares dip severely during the coming decade, but Anaconda’s quarterly dividend dropped from $1.75 when Clemens bought in to $0.50 within the next year, and remained at that comparatively low rate until 1917. But Clemens bought in on Amalgamated during the initial allotment and whatever his estate lost on Anaconda (if anything), he more than made up for with Amalgamated. 

Both Anaconda and Amalgamated were good long-term investments at nearly any price. It is tempting to presume that Rogers’s office not only executed these trades for Clemens, but directed his investing decision. But in the case of Amalgamated, the evidence points to the opposite chain of command and, in the case of Anaconda, there is no evidence that Rogers was pulling the strings. If he was, why did he have Clemens buy into Anaconda so late, missing out on the boom years and paying an inflated price for shares? Why wasn’t he part of the initial group of investors, as he had been with Amalgamated? These transactions seem to suggest that Clemens was largely in control of his portfolio, even when it came to the investments about which Rogers was the epitome of an inside trader.  

I don’t mean to imply that Twain didn’t benefit from insider information due to his close friendship with Rogers. He most certainly did, as future installments will evidence. But, from at least 1897 forward, Clemens was not exclusively reliant on or even wholly deferential to Rogers. Nor was it a given that Rogers would include his friend in every promising operation he undertook. Twain heard about Amalgamated in the international press before he heard about it from his friend and broker, who was the President of the company! We cannot selectively ascribe the good investments to Rogers and the bad ones to Clemens, unless there is a clear and substantive archival rationale for doing so. 

Like United Fruit, which was the subject of my first chapter, Anaconda Copper would survive and prosper deep into the 20th century, profiting from destructive labor and environmental practices. Twain had a complicated, but generally favorable attitude toward labor unions, and likely would’ve been disgusted by many of the things narrated in books like Smoke Wars (2001) by Donald Macmillan, Anaconda (2001) by Laurie Mercier, and The Battle for Butte (1981) by Michael Malone. But, despite superficial resemblances between Anaconda Copper and United Fruit, I don’t think we can attribute his investments in copper to his philosophy of existential hedging. Whereas he was well-informed about the U.S. imperialism which underwrote commercial plundering abroad, he seems to have been surprisingly unaware (or uninterested) in the abuses of industrialization in the American West, even though he had spent much of his youth in places similar to the copper mining towns. Nor were the labor and environmental practices of the copper conglomerate a significant part of the ample and ambivalent public discourse surrounding it during Clemens’s lifetime.

The copper boom was driven largely by technological developments about which Twain was enthusiastic, which may have blinded him to the social costs. Both Twain and Rogers understood that the U.S. was on the precipice of a communication revolution which required copper filaments, wiring, conductors, etc. More on that in due time.