Monday, July 16, 2012

Indianapolis National Bank Scandal

By all accounts, Lew Wallace’s older brother William was a capable, honorable, and trustworthy person. From 1855 until 1860, William Wallace and Benjamin Harrison were law partners. Their partnership was just one example of the friendships between the Harrison and Wallace families that crossed the generations. Harrison and Wallace also entered into other partnerships of various kinds including some with Theodore Haughey (pronounced Hoy).


Haughey was born in Delaware in 1826 and moved to Indianapolis in 1848. Theodore married Hannah Moore in 1853 and they had a daughter who died young and two sons, Louis Chauncey and Schuyler Colfax. Theodore worked first as a book keeper and accountant but moved up the ladder of success to become secretary and treasurer of one of the major railroads in Indianapolis. He dabbled in real estate and during the Civil War he was appointed collector of internal revenue for the Indianapolis by President Lincoln. During the war he also became president of the Indianapolis National Bank. Over the years he also became a trustee of Asbury University (now DePauw University) in Greencastle).
Williaml Wallace

The business relationship between William Wallace and Theodore Haughey turned personal when William’s daughter Zerelda married Theodore’s son, Louis Chauncey Haughey. Louis Chauncey and Zerelda had several children: Theodore P., William, Esther, Lawrence G., John D., and Louis C. Several members of the Haughey family followed Theodore in business at the Indianapolis National Bank—and that’s what eventually brought the family down.

Fortunately for William Wallace his friendship with Benjamin Harrison continued over the years. Although William had completed a successful career and had retired, at the age of 64 he was suddenly in need of a job. Many people felt he was working to keep his son-in-law Louis and daughter Zerelda afloat. In 1889, President Harrison, in an effort to help, appointed William the City Postmaster in Indianapolis. This was a difficult position for William Wallace to find himself in but he worked dutifully, enduring some criticism by those seeking Civil Service reform, until his death in 1891. Although William Wallace’s name was never associated with the looming financial debacle, with his passing, the house of cards that the Indianapolis National Bank had become came crashing down.

The Indianapolis National Bank had been organized in 1864 with Theodore Haughey as president and Ingram Fletcher as cashier. It counted among its depositors some of Indianapolis’ most esteemed citizens. Relationships with the rich and powerful were so close that Theodore P. and his wife, Hannah, named their youngest son Schuyler C. Haughey after close family friend Schuyler Colfax—Speaker of the United States House of Representatives during the Civil War, Vice President of the United States, and one of Indiana’s most influential men. The relationship with Schuyler Colfax would prove useful when the bank ran into some difficulties in 1884. Mr. Colfax personally added $27,500 to the bank reserves and encouraged others to do the same.

It’s believed that at this time, the swindles and embezzlement by Theodore P. Haughey started. He began to create fictitious companies, placing his sons Louis and Schuyler in charge of some of them. In ways, some simple and some complicated, Theodore embezzled great amounts of money for almost a decade.

In August of 1893, Theodore was arrested at his home and charged with embezzlement and misapplication of funds and credits of the Indianapolis National Bank. Arrested at the same time were his son, Schuyler Colfax Haughey, and other associates Francis A. Coffin Percival Coffin, and Albert T. Reed. Schuyler, the Coffins, and Reed were charged with aiding and abetting Theodore. Theodore was indicted for embezzling more than $700,000. At the time of the arrests, the bank had liabilities of $2,000,000 and assets of approximately $300,000. Among the 3,000 creditors who lost their savings were charitable aid societies, school teachers and members of Theodore’s church who had trusted him.

The arrest of Theodore sent shock waves through Indianapolis. A business and social leader he had been an esteemed member of the Meridian Street Methodist Episcopal Church, serving the Indiana conference as lay delegate to national conferences and serving for years as a Sunday school teacher. He served as treasurer of the Grand Lodge, Independent Order of Odd-fellows for over 25 years, was chairman of the finance committee for six years of the Second Ward in the Indianapolis City Council and supported numerous charities and worthy endeavors. Glowing tributes directed toward Theodore in the early 1880s were swept away in the early 1890s as his financial misdeeds became known.

As the complicated case wound its way through the court system and decisions were appealed, in some instances all the way to the Supreme Court, it ruined reputations and lives. Theodore pleaded guilty and at the age of 75 was sent to the penitentiary for six years. He was said to be broken in health and newspapers reported that they did not think he would survive the humiliation and disgrace. Theodore actually did survive the humiliation and lived until 1914. His wife Hannah predeceased him by two years, passing away in 1912. In the 1890 census Theodore, recently released from prison, Hannah, and their grandson William were living in a middle class neighborhood on North New Jersey Street. In 1900, they are still in Indianapolis, but they do not show up in 1910 records. Given their advancing ages, Theodore and Hannah may have moved in with family members.

Ultimately, his son Schuyler was acquitted when his case came to trial in 1895 and his other son, Louis (William Wallace’s son-in-law) was not arrested. Although Louis had been involved to some degree, he was not seen as a major player and there may have been some thought that with her husband and other son likely headed to prison, Hannah would have no one to care for her.

Although Theodore and Hannah remained in the city, in the aftermath of this financial collapse and social embarrassment, other members of the Haughey family left Indianapolis. By 1890, Louis C. Haughey and his wife Zerelda had moved to Chicago where census records indicate that their children were living with them and they were still able to have several house servants. By 1920, they had moved to Buffalo, New York and were living in a boarding house. Their children and grand children in turn moved on to places far and wide.

In 1890, Schuyler Colfax Haughey and his wife Gertrude were also living in Chicago in a comfortable residential hotel. Within a few years they left the Midwest and moved to Pasadena, California where they lived the rest of their lives.

Although William Wallace was never implicated in any wrong doing and, in fact, worked to help keep his daughter and her family together, the failure of the Indianapolis National Bank destroyed many lives surely affected the Wallace family personally and financially if not socially.

Sources:
National Bank Frauds by Franck G. Carpenter
History of Indianapolis and Marion County by Berry Sulgrove
History of Greater Indianapolis
A Biographical History of Eminent & Self Made Men of the State of Indiana, 1880
Life of Benjamin Harrison by Lew Wallace
The New York Times, August 22, 1893; November 26, 1893; May 29, 1894


The General Lew Wallace Study & Museum celebrates and renews belief in the power of the individual spirit to affect American history and culture.







1 comment:

Roger Haughey said...

Great and informative summary of the situation we discussed during our family visit to the Lew. Thanks for your article!
Roger Haughey
Montreal, Quebec