STILL FLYING AND NAILED TO THE MAST
Chapter Seven: Make No Mistake, Stranger
Shortly before midnight on Sunday, July 8, 1906, the steamer Tenana eased away from the dock at Fair-banks and headed downstream for a rendezvous with the steamer Ida May at Nenana. On the upper deck, in plain view of anyone who happened along, sat two stout wooden boxes filled with gold ingots. One of them, sealed with the mark of the Washington-Alaska Bank, held forty bricks worth more than $79,000, in-sured against all risks by the Fireman's Fund.
Gold had been shipped out of Alaska and the Yukon in this fashion from the beginning, and never a bar had been lost. But for the audacious crime of the Tenana's saloon watchman, a dapper young fellow by the name of Bobby Miller, the shipment, like the Tenana itself, would long ago have been forgotten.
At that time, of course, the Fireman's Fund was deeply involved in the struggle for survival at home. In focusing on their financial troubles, it is easy to
overlook the fact that the problems of everyday busi-ness came up just as if San Francisco hadn't burned. The case of the Tenana treasure loss coincides month by month with the near death and resuscitation of the Company, and is but one of the many smaller dramas soon obscured and forgotten.
When the boxes were transferred to the deck of the Ida May at Nenana several hours later, no one observed that one box was considerably lighter than the other.
While the Ida May was unloading at Fort Gibbon the next day, a roustabout named "Hard Rock" Charley Tague and a pal of his noticed that no one was watching the gold. Without so much as a how-do-you-do, they hoisted the lighter of the two boxes and marched down the gangplank and off into a swamp several hundred yards away.
The purser soon discovered the loss, and the cry went out. The story of the theft was a sensation in the Territory; nothing like it had ever happened.
Although he discovered that someone else had taken most of the gold, Hard Rock Charley was over-whelmed by the fortune left behind: those two bricks were equal to several years' wages. But he got drunk that night and couldn't keep his mouth closed about it. An informer tipped off the marshal, and Hard Rock Charley and his friend were promptly arrested.
When they first confessed, no one would believe that they had found a boxful of lead with only two bars of gold. Then rumors spread that the bankers had filled the box with lead instead of gold and hired Hard Rock Charley to steal and destroy the box. The two gold bars were presumed to be payment.
Fortunately, for there were signs of a run on the bank, a young hardware store clerk came to the bank manager, W. H. Parsons, with the news that a certain George Raphael had purchased 96 pounds of lead shot from him a few weeks earlier. The police arrested Raphael, but with all the pressure they could bring to bear, he wouldn't budge from his denial of any connection with the theft.
Since there wasn't enough evidence even to hope for a conviction, Parsons offered Raphael $5000 with immunity if he would lead them to the gold. Raphael agreed to tell everything he knew. He admitted he had bought the shot for Miller and that he had carried the gold off the Tenana, but he could lead them to only three of the bars. After burying the gold, Raphael had feared Miller might double-cross him, and to pro-tect himself, he took those three bars, worth about $9000, from one of the caches. When Miller found out, he dug up all the rest of the gold and hid it in places known only to himself.
After his arrest, Miller, like Raphael, wouldn't talk at first. He knew that the longest sentence he could serve would be ten years, and he was willing to do it for the money.
At this point, Parsons offered him $10,000 and a light sentence if he would produce the balance of the gold. Miller, who had begun to worry that someone might have seen him bury the bullion, agreed, saying that the gold he had would probably assay at $45,000 to $50,000. The result was disappointing: twenty-two bricks worth about $42,000, which brought the value of the gold recovered to more than $51,000. Miller swore the balance had been stolen from him.
Miller served two years in the federal penitentiary at McNeil Island, and all this time the Fireman's Fund waited. Frank G. Taylor, indefatigable marine manager for the Northwest, told the papers that the Company had paid the loss and wouldn't rest until the missing gold was recovered.
After Miller's release, the U. S. Marshal's office in Seattle received reliable word that a confederate of Miller's named Beggs was on his way there by steamer with the gold. When the ship arrived, police went aboard and arrested the suspect and seized all his baggage. It would be pleasant to report that the $18,000 in gold was found, but it wasn't. What hap-pened to those thirteen bricks remains a mystery today.
In reviewing the scores of letters and telegrams ex-changed on this case by Levison and Taylor, not a single mention of the San Francisco ordeal, not a single word of discouragement can be found. Every message was written as though the Company would last for-ever. For instance, take the letter written by Levison early in the day of his fateful encounter with Henry T. Scott in Dutton's office:
August 4, 1906
I am in receipt of your favor of 31st, ult., and while your telegram of the 30th, rather "dashed to the ground" my hopes of a large recovery, the extract from the last telegram from Charles, is again most encouraging, and I can only hope that his anticipations will be realized.
As severe a blow as it would be to us in the placing of the business in the future, as this loss would be without salvage, just so much stronger will we be in the future if the bulk of the gold is recovered, as indicating to our reinsurers the character of the peo-ple with whom we are dealing..."
The "placing of business" of which he speaks is the rather complex matter of reinsurance. He seems far more concerned about keeping the reinsurers happy than about the gold itself. Because of the tremendous values involved in the treasure insurance, the Fire-man's Fund had arranged, through the London brokerage firm of C. T. Bowring & Company, for English underwriters to take seventy per cent of all the treas-ure risks written by the Company. Had the treasure business soured, it would have lessened confidence in the judgment of the Company and could have affected all reinsurance negotiations.
Interesting as the case of the Tenana gold theft might be, it was to prove child's play in light of the other celebrated Alaskan gold robbery. In all those woolly years there were only two such thefts, and each time the Fireman's Fund found itself with the privilege of paying the loss.
To tell the story of what followed in detail would fill the rest of this book. The celebrated detective novel Boston Blackie found its origin in the facts of this case. In the true version of the story, the cast includes Charlie Page and Frank Taylor of the Fireman's Fund; Secret Service agents Harry Moffit and Steve Connell; the Pinkerton and Burns detective agencies; the thieves, all hopheads, Charlie Barrett, Orville Cavi-ness, Clem Shepard, Benny Wiseman, and Jimmy (The Goat) Kane; conspirators Spence Thompson, Jimmie Whalen, and Margaret Henry; and an assortment of stool pigeons, grifters, and hopheads with such names as the Christ Kid, Big Tex and Little Tex, the Jip, the Oregon Mare, and Jimmy the Rat. Of the last group we shall hear no more, but their names are too salty to be left out entirely.
Stripped to the essentials, the story runs like this: on an afternoon early in September of 1910, purser Clem Shepard stood at the rail of the steamer Hum-boldt as the ship approached the Ketchikan dock. Spot-ting his friend Orville Caviness, he casually tipped his cap - a prearranged signal that a gold shipment was aboard.
When the ship arrived in Seattle, Benny Wiseman and Jimmy (The Goat) Kane came aboard to help remove the bricks. They met later that day at a room-ing house near Poindexter's, a hop joint where plans for the crime had first been outlined by Barrett, and divided the gold into equal shares.
When the theft was discovered the next day, the Fireman's Fund stepped into what certainly must be one of the longest and most frustrating salvage at-tempts in the Company's history.
It wasn't until December that the first break came. San Francisco Secret Service agent Harry Moffit and city police, acting on an informer's tip, raided the Sixth and Howard Street lodgings of Mr. and Mrs. E. C. Smith. The newspapers called the arrests the most sensational in city history.
The Smiths, it turned out, were none other than Or-ville Caviness and Margaret Henry. Although they were grilled through the night, neither Caviness nor Margaret would admit anything. Levison commented later that Margaret came through "like a debutante." Despite this, Margaret was presumed to have enticed purser Shepard into her cabin on a promise of some sort or another, while Barrett and Caviness stole the gold.
One enthusiastic newspaper account told of the de-tectives finding almost $50,000 in gold in Caviness' quarters. Actually, the only gold ever recovered from him came later. Newspaper coverage of the case, ex-cept for the discovery of the theft, was totally unreliable because little of the detective work was ever made public.
For that matter, not even the confidential Company files tell precisely how part of the gold was returned. This much is known: on a certain spring night, in the shadow of the Dewey Monument in Union Square, Page received a package of gold of unknown quantity from an unidentified confederate of Caviness. With the office and all the banks locked up for the night, he carried the gold across the bay on the ferry to his home in Alameda and slept the night with the treas-ure under his pillow. The only hint of this in the rec-ords is an otherwise cryptic paragraph at the end of a long letter from Taylor to Page:
"They tell me that your favorite place of meeting is back of the Dewey Monument. Do you carry a gun?"
Several months later Caviness pleaded guilty and surrendered six more gold bars. The value of all gold recovered: $6377.94. In return the Fireman's Fund recommended a light sentence (Caviness spent eight-een months in San Quentin), withdrew their com-plaint against Margaret, and asked Oregon authorities to drop an unrelated Portland bank swindle indict-ment against Caviness.
Between the time of Caviness' capture and the next real break, fifteen months were to pass in which one frustrating lead tantalized the pursuers.
When Jimmie Whalen, a friend of Caviness', was caught in Portland after having sold more than a pound of gold filings, it looked as though the case might be broken. Whalen couldn't explain where he got the gold, but there wasn't enough evidence to con-vict him. He was never indicted. The unsigned letter, below, which was apparently intercepted while he was held in jail, speaks for itself. The clipping mentioned in the first sentence told of his arrest in connection with the Humboldt robbery.
Seattle Wn. Jan. 5th, 1911
Inclosed you will find a clipping out of an evening paper, must say that it gives you a nice write up. Well Jim you have more than likely got yourself in good shape for a nice little trip to Salem and while there you will more than likely have some time to think of the way you done me in. I only hope you get your hop fiend lady friend Mrs. Edith Austin Donald or whatever name she goes by and give her a few days there with you. From what I have been told that if they keep her away from the dope for a day or two she will tell plenty. That old but sweet song. I would rather be on the outside looking in than on the in-side looking out. You sure treated me like a dog to get to live with this fiend. Now you know that old saying, those that dance must pay the fiddler. If you get out of it you will be a broke man with a bum woman on your hands. You always said the finish was all the same but I fail to think so. Hoping you are happy and content...
Another character to be drawn into the drama was Seattle saloonkeeper Spence Thompson. Police found a receipt for a $500 telegraph money order sent to Thompson pinned to the hem of Margaret Henry's skirt. He was questioned and shadowed, badgered and threatened, but not one shred of evidence that directly linked him to the crime could be found. Not until 1917 was there positive proof that he even knew about the robbery.
Charlie Barrett managed to stay out of sight until January, 1911, when Salt Lake City police, working on word from San Francisco, arrested Barrett and his wife Pearl, or Black Pearl, as she was better known, and held them until Page arrived. After days of questioning, it was the same story: they didn't know any-thing about the Humboldt gold robbery, despite the incriminating circumstances.
Later that year Barrett was given two to twenty years for his role in a $2300 Portland bank swindle that he, Caviness, and Whalen pulled before the Humboldt robbery.
While this was going on, Taylor dropped the Pin-kertons, who had failed in three months to come up with anything, in favor of William Burns, of San Fran-cisco graft investigation fame. Burns got the investi-gation going in the right direction, but it was ulti-mately Page and Moffit in San Francisco, Taylor, and Portland Secret Service agent Steve Connell who developed the full story. Connell, who once had served as Teddy Roosevelt's private bodyguard, be-came indispensable as the case progressed. Without him, the investigation surely would have ground to a halt before any more gold was recovered.
During 1911, by one means or another, Wiseman, Shepard, and Jimmy the Goat were implicated in the crime, and the Humboldt was definitely established as the scene of the crime.
By February of 1912, the important facts of the theft were either known or properly guessed. Where the gold might be was still a mystery. Connell and Taylor visited Oregon's Governor West that month to forestall the possibility of an early release for Barrett. West listened to the story of their investigation - par-ticularly the information linking Barrett to the robbery - with great interest, and arranged to have Barrett sent to his office that very afternoon. West confronted him in a small private office with the accusation, but like Page in Salt Lake City, he might as well have talked to the wall. Not willing to give up, West came out and asked Connell and Taylor for more details and clarification of certain points before pressing Bar-rett further. When he emerged from the little office the second time, it was with the words, "I've got the whole business!"
West had persuaded Barrett that he was slowly kill-ing his mother and that his only hope for an early re-lease would be to come clean. He admitted his part in the robbery, without disclosing the names of any of the others, and offered to surrender the gold. Later
that week Barrett led the prison superintendent to a ranch twenty-six miles from Salem. Barrett found the spot and dug down four feet to the treasure. The bars assayed at $6496.31.
The governor paroled Barrett to Connell on the thief's promise to convince his cronies that they had to surrender their share of the gold to keep him from going back to prison. The threat of Barrett's turning state's evidence was supposed to be the clinching argument.
Not another cent was ever found. Even though Or-ville Caviness and Margaret Henry made a full con-fession later that year and agreed to testify against Kane, Shepard, and Wiseman, none of them was ever brought to trial. Kane was never found, Wiseman was convicted of smuggling opium from Canada, and Barrett was caught in another bank swindle. Shepard was arrested, but the case fell apart shortly thereafter and he was never tried. The final blow came when Connell was transferred to St. Louis. When the bills were added up, the Fireman's Fund had spent $15,000 to recover not quite $13,000 in gold.
The last letter in the file was dated July 8, 1913, but the case, begun in 1910, didn't die until 1917. In that year Levison received a wire from the Burns Agency in Montreal with the report that two men were on their way west to dig up part of the gold. Taylor found out, presumably through an informer, that the men were stopping at a certain low-class rooming house in Victoria.
When Taylor arrived, one of them ran off and was never identified. The other, lying dead drunk across the bed, was none other than Spence Thompson. Tay-lor sat and waited for several hours until Thompson awoke. Taylor was a no-nonsense man, and Thomp-son, quickly realizing the spot he was in, suggested that he might be able to find some of the gold if the Company would agree to give him part of it. Taylor phoned the home office for instructions. He asked first for Levison, then for Page, and finally for Fay-monville, who was at that time president of the Com-pany. Thompson heard the last name, which by chance was also the name of a detective who had been hounding him, and refused to say anything more. With Thompson still drunk, Taylor went through his things in search of some clue but, with the exception of a stout, homemade canvas money belt, found nothing.
Thompson wandered back to eastern Canada where he eventually died with his secret. The gold that might have filled the seven pockets of the canvas belt still lies buried somewhere in the Northwest.
When the War to End Wars surged across Europe, American marine underwriters, who only then had be-gun to make a dent in the English domination of the field, were confronted with a tremendous demand for "war-risk" insurance. This class of business is on the very surface a complicated game played for enormous stakes. The American marine offices were thrown into a confusion which never completely cleared up until years after the war had ended. A few fared well, and the Fireman's Fund was among them.
Herrmann also managed three other companies in addition to the Fireman's Fund, two of which were English, and the other, German. The English com-panies, strangely, continued to do business under Herrmann for more than a year after the war began. They withdrew only after their London executives were threatened with arrest and jail by the British government.
Of all the men ever to represent the Fireman's Fund, Herrmann was certainly the most thoroughly unde-sirable. A man of gross appetites and casual morals, he was nevertheless a brilliant underwriter.
In 1915, Herrmann introduced Levison to Dr. Heinrich Albert, whose secret purpose in coming to Amer-ica was to buy supplies for Germany and otherwise strengthen the German position. The United States was officially neutral, and although public sentiment was on the side of the British and French, the hatred only war can bring had yet to materialize. Later that year, Albert came to San Francisco with the an-nounced purpose of seeing the Exposition.
Years after, Levison wrote:
"...He indicated to me a desire to meet some of our prominent business leaders to discuss with them direct steamer connection with Germany at the close of the War, so I invited a number of men to meet him at a luncheon in the Red Room of the Bohemian Club.
"Later I read in a British White Book an intercepted communication from Albert to [Franz] Von Papen, from the Hotel St. Francis, that exposed the true na-ture of his business in San Francisco. He had come here to arrange for the shipment of supplies to Ger-many.
"Before I read that White Book, however, my eyes were partially opened to Dr. Albert's activities. On one of my visits to New York while Albert was still there, Herrmann came to me in a more or less apologetic way with a proposition from Albert, saying that he felt satisfied in advance I would not agree to it. I asked him what it was. Albert's proposal was to buy a cargo of cotton, load it on an American ship, and insure it with the Fireman's Fund as an American company, in the confidence that the British would seize it and thereby further strain the relations between Great Britain and the United States. "In justice to Herrmann it must be said that he did not put this thing forward seriously, so it was disposed of at once by my saying, 'You have anticipated my answer by the way you have put the proposal to me.' "
The German torpedoes which precipitated Amer-ica's entry into the war in 1917 also ended Herrmann's career. Suspected of transmitting information to the enemy, he was exiled, under the surveillance of a Secret Service man, to his estate at Vinalhaven off the coast of Maine.
From the very outbreak of war, the Fireman's Fund took all the war-risk business it could handle within the limits of its capital capacity. The dangers were high, to be sure, but so were the rates. Results were dramatic. Despite British seizure and German U-boats, the Company's total assets, premium income, and sur-plus more than doubled between 1914 and 1919. The Atlantic Marine Department made so much money in 1917 and 1918 that an extra month's salary was given every three months in reward for the long and hectic days worked by all. Edwin Limberg, who was then chief accountant, recalls that the books were in such bad shape it took more than two years of diligent work to straighten them out.
In 1917 the Company brought in about $7,000,000 in marine premiums which accounted for fifty-two per cent of the total for the year. In 1962, marine premiums amounted to $15,000,000, but because of the enormous changes in the insurance industry since World War I, that figure represents less than five per cent of the Company's premium income for the year. In August 1917 the directors of the Fireman's Fund decided the time was nigh to refloat the old Home Fire and Marine. Its affairs had been handled on the same basis as the parent company after the fire, with claimants being paid half in cash and half in Fireman's Fund stock. The Home Fire and Marine, to outward appearances, had been dead and gone for more than ten years. Its stock was no longer listed as an asset of the Fireman's Fund; it issued no policies; the name had been forgotten. However, each year the Company carefully paid the California corporation tax for the Home Fire and Marine, and by this means it remained a real, if somewhat tenuous, entity.
Bernard Faymonville, who had retired in April of that year because of a breakdown, might have recalled, bad he been well, the letter he received in 1914 from Vice-President F. C. Buswell of the Home Insurance Company of New York. Faymonville had written to tell him that the Company was toying with the idea of forming an "annex" called the "Home Fire and Ma-rine Underwriters" and wanted to know if there might be any objection on the part of the Home because of the similarity of names. Buswell answered that they would, indeed, object. This was all forgotten by 1917, apparently, because in that year Vice-President C. A. Ludlum of the Home verbally expressed the opinion to Western Department Manager John Marshall that there would be no objection.
When the Company formally applied for certificates in the various states, the Home vigorously opposed the move. Many of the states summarily turned down the application because of its objection.
In all probability the problem would never have arisen if the Home were not at that same time trying to block the admittance of a company called the Home Fire Insurance Company of Utah. After the storm broke, Ludlum wired the San Francisco office: "When in Chicago last month I told John Marshall I regretted I had not known in Boston that what I said as he recalled it was to be taken as official com-ment...I did not think much about it at the time and forgot conversation until recalled by Home of Utah matter... Marshall here last week. I told him however disagreeable personally, we felt it our im-perative duty to protect our friends we could not oc-cupy position of assenting to one because we loved its officials and objection to others of the same name.
For business purposes and as a matter of principle, Levison accepted the challenge and the battle was joined. The Home Fire and Marine had done business alongside the Home for twenty-two years in New York and upwards of forty years in California, and the ques-tion of names had never been brought up. For many decades, the office of the superintendent of insurance for the state of New York has been one of the most powerful factors in the insurance industry. One of the New York rules stated that if a company does not con-duct its business in accordance with New York regula-tions in all the other states, then it cannot do busi-ness in New York.
Although many states decided for the Home Fire and Marine after the company appealed the original adverse rulings, not until June 1918 did the New York superintendent finally decide in its favor. Comment-ing on the ruling, the Insurance Journal, of Hartford, said:
"In view of this statement of facts the commissioners of Massachusetts, Connecticut and one or two others [actually 13] who have been hesitating, will doubtless now issue their licenses, which never should have been withheld for a single hour in view of the demand for direct writing companies to take the place of the for-eign reinsurance concerns like the Rossia, that are gathering in millions in American premiums, not one dollar of which should be handed over to them."
And then, as if to clinch the argument:
"The Home Fire and Marine is under the same management as the Fireman's Fund of California, than which no company in the world has a better reputa-tion."
Following Herrmann's retirement in 1917, the firm of O. G. Orr & Company, which included several of Herrmann's partners, managed the Atlantic Marine De-partment for two years, but Orr and another partner were forced out by Levison when their lack of underwriting and executive ability became obvious. The re-maining partners joined to manage under the names of F. H. and C. R. Osborne, men of high character brought by Levison into Herrmann's office in 1916. By the time the war ended, rates on insurance
against non-war-risk perils had dropped to inadequate levels. In their efforts to secure the war-risk business, which had proved to be very profitable, the com-panies practically gave away the normal cargo and hull insurance. This, plus the competition of the many new marine departments formed to cash in on the bonanza, left marine underwriting on a very unstable basis.
It was into this situation that Levison called Charles Page to take over management when the Os-bornes, unable to make a profit, submitted their res-ignations in 1921. In 1917, President Wilson had ap-pointed Page to the United States Shipping Board. After the war, Page resigned to become manager of the American Hull Syndicate in which the principal marine underwriters participate on a fixed percentage basis on all hulls insured in the American market. The Fireman's Fund was then and still is actively involved in the operations of the Syndicate.
Under Page the Atlantic Marine Department was brought under tighter control of the Company than it ever had been before. For the first time the manager was working for the Company, not with it.