(3 of 6)
In reality, however, Richard Whitney has had plenty to worry about for a long time. Nobody ever regarded Dick Whitney as a financial genius. He was a broker, not a banker. But with an immaturity usually found only in younger and less well-connected brokers, he had been trying for years, it now appears, to parlay himself a fortune out of one peewee project after another. At the age of 49, the ex-President of the New York Stock Exchange was a director in no important U. S. industrial corporation. Horse gamblers are not the only ones that die broke. The horse that threw M. F. H. Whitney and the White Knight of Wall Street was something called Distilled Liquors Corp.
Like many & many another stock punter in 1933 when liquor was about to come back, Dick Whitney was frantic to get in the liquor business. But instead of grabbing off some good brands and making himself a pile as Joe Kennedy is said to have done with Somerset Importers (Haig & Haig, King William IV, Gordon's Dry Gin), Dick Whitney went bargain hunting in the applejack business. This New Jersey product had been made for years by distilleries only a few miles from Dick Whitney's Far Hills estate. "Jersey Lightning" had been popular during Prohibition; it was said to require little aging to be potable. So Dick Whitney and his partner, Ferdinand Kingsley Rodewald, organized Distilled Liquors Corp. which bought the 40-year-old Hildick cider and vinegar plants, eventually sold 148,750 shares of stock.
The public took the stock so eagerly that the price shot to $45.40 a share, but applejack, contrary to Whitney's dream, did not become the nation's favorite drink. Dick Whitney & friends then bought 106,000 gallons of Canadian rye whiskey to bottle and merchandise, paid for it in Distilled Liquors stock and warrants. The rye did not sell well either, and the stock tumbled to $13 a share. The Canadian company began howling about its warrants. Dick Whitney bought them in for $15 a share. Meanwhile banks which had taken Distilled Liquors stock from Whitney at a high price as collateral on loans began asking for more collateral as the price fell. Dick Whitney then began a long, desperate and, in the end, disastrous effort to keep the price of Distilled Liquors stock up on the New York Curb Exchange. He tried to peg it at about $9 a share with a standing bid. When the market began to crack last fall Dick Whitney was forced to buy more & more Distilled Liquors stock. Presently he had 139,400 shares, virtually all of it pledged as collateral for loans. To conceal the situation, the stock was listed under the names of Dick Whitney's several partners.