What is Ironic is Grant was involved in one of the top 10 ponzi schemes in US history.
Ulysses S. Grant was an enormously successful General in the Civil War and he spent eight long years as President of a healing United States. But despite this heroic body of work, his financial life had plenty of room for improvement.
After a failed attempt at becoming a third-term President, the General settled into civilian life. He and his wife moved from St. Louis to New York City where, with the help of money raised for them, they bought a four-story brownstone for $98,000 ($2.1M in today’s dollars).
One of Grant’s sons, Buck, got into business with a young hotshot financier, Ferdinand Ward. Ward was referred to as the “Young Napoleon of finance” and some suggested he would one day become Secretary of the Treasury. The General had such confidence in Buck and his partner that he decided to kick in $50,000, most of the money he had, to help get the brokerage firm Grant & Ward up and running. This arrangement worked well for a few years. Grant & Ward paid him a monthly stipend and even kicked in some extra money from time to time.
Grant & Ward was did so well for its clients that there was a line of people waiting to throw money into the operation. In the epic biography
Grant, Ron Chernow wrote, “One friend invested $50,000, disappeared for six months on a European vacation, then came home to a whopping $250,000 check. As others reaped 15 percent to 20 percent profits per
month, a mania to invest with Grant & Ward overtook Wall Street.”
Today we recognize Grant & Ward as a classic ponzi scheme, but at the time, Grant was hopelessly naive. He said, “I think we have made more money during the past year than any other house in Wall Street.” He had no business making these claims because he had no idea what the operation actually did. Chernow wrote, “Grant’s complacency was shocking. He seemed to think it perfectly normal that gigantic sums of money should fall from the sky without any effort on his part.” Sums were indeed falling into his lap to the tune of $2,000 a month ($43,000 in today’s dollars).
As all ponzi schemes do, this one collapsed on itself after a few years. Once he found out about the scheme, he said, “When I went downtown this morning I thought I was worth a great deal of money, now I don’t know that I have a dollar.”