soldier with rifle american civil warTHE HORSEMAN©
John J. Ryan


THE HORSEMAN

John J. "Bald Jack" Ryan©

Original Text© By Joe Ryan

Part Six

Broker Ryan

It appears Jack gave up his involvement in the horse race gambling game, in about 1908, because the game he was playing had become widely known to the stewards of the race tracks as based on the fixing of the outcome of the races. At the same time he was being permanently ruled off the tracks, state legislatures, in Missouri and New York, were amending their "breeders laws" to prohibit bookmakers from taking bets at the tracks. That the fix was the main factor in the success of his gambling is plain from the record.


In 1917, a case reached the Missouri Supreme Court which sheds light on Jack's ability back in the day to predict the winners of race horses. The case was brought by a bank against Julia H. Harrington and her brother, Joseph J. O'Leary, on the claim that Julia and her husband, Joseph F. Harrington, had fraudulently conveyed title to a piece of real property to a trustee, to secure three promissory notes, totaling $14,000, Harrington had given her brother.

Jack's wife, Anna, was one of three sisters whose father was a St. Louis coal dealer named John J. O'Leary. John operated the business with his brother who had two children, Julia and Joe. According to Joe, Anna, his first cousin, shuffled to him by telephone for a number of years betting information she got from Jack, and from the tips came winnings which he gave to his sister, Julia; and Julia used the money to buy the property in question, a residential lot in a suburb of St. Louis that she lived on the rest of her life, raising in the process two daughters, "Babe" and Margaret.

The House Joe O'Leary's sister, Julia, bought with Jack's money

Not surprisingly, at the trial of the bank's action, the judge found for the bank on the ground that Joe O'Leary had admitted that about the time the deed of trust was executed he had become suspicious of the persons associated with Harrington in the business of the Victor Automobile Company, and for that reason decided to have the money, which he claimed Harrington owed him, secured by the property. From this the judge ruled that Joe was on notice at the time the deed of trust was conveyed that Harrington owed money to creditors who were entitled to priority. When Harrington died, in 1911, the bank attempted to collect on its notes but was met with the defense that the property stood as collateral on Harrison's notes to Joe.

The Victor Automobile Company lot, Circa 1904-1911

The issue upon which the decision of the Supreme Court turned, was whether, in fact, Julia's brother, Joe, had loaned her husband the money the notes specified, or that the notes were manufactured as a means of preventing the bank—which had lent money to her husband for use in his automobile manufacturing business—from foreclosing on the property.

In order to prove its case, the bank called Joe O'Leary as a witness in its case in chief and elicited from him the following story:

"The defendant Joseph J. O'Leary, called as a witness on behalf of the plaintiff, testified: That he was a poster artist. That his business was drawing advertising posters, theatrical posters, circus posters. That he had been in that business for 30 years.

About 1902 he began to get hold of considerable money. That, as close as he could recall in 1903, he let Harrington have about $3,000 in sums varying from $200 to $800. That this money was mostly money that he acquired betting on horse races. With the exception of a small amount in the savings bank, he never kept any bank account. He kept his money in the safe of one Dermody in Cincinnati. That sometimes he had as much as $6,000 or $7,000 in Dermody's safe in currency. In 1904 he let Harrington have $2,000 or $3,000 in various amounts from $200 to $800, that he never took any memorandum from Harrington. That Harrington put a memorandum of all the loans in his book. That in the fall of 1905 he let him have $5,000. That he gave him the $5,000 in Dermody's saloon. That in that year he also let him have some other small loans running from $200 to $500. That he presumed that the $5,000 was for paying off a loan on the home. During all this time he thought that the Victor Automobile Company was in a prosperous condition. That Harrington owned a half interest in the business, and represented to him that it was a prosperous concern, and he accepted this as true, notwithstanding the fact that Harrington borrowed this money from him. That he let Harrington have close to $1,000 in 1906. That in 1907 he let him have about $1,000 in small sums. That in 1908 matters began to tighten up, and he could not afford to let him have any more.

Out of his own winnings he had about $3,000 left, and outside of that the money that he won went to Mr. Harrington. That substantially all the money that he let him have he won betting on horse races.

On cross-examination Mr. O'Leary testified: That he had no brothers or sisters living, except Mrs. Harrington. That his mother and father were dead. That be had no other close relatives. Before he began making the loans to Harrington, he and Harrington had been discussing the matter of going into the lithographing business together. That it was not discussed after that. That this matter was considered between them up to about 1909, when the amount of the indebtedness was figured out, and when Harrington told him that he was going into the automobile business. He then told Harrington that he thought that it was better that they should have some kind of agreement to show what Harrington owed him. That Harrington said, "Well, how about giving notes?" That he knew Harrington had money at the time, and he was not anxious about it, and let him draw up the notes at his own will.

He won his money on horse races, he says, because he was acquainted with John J. Ryan, who formerly lived in St. Louis, and was known as "Baldy" Ryan. That Ryan's wife was his first cousin. That while he was working at Norwood, near Cincinnati, the information which he used in betting was telephoned to him in code by Mrs. Ryan, giving the name of the horses which were most likely to win. That this continued for 5 or 6 years. That he continued to get this information after he left Cincinnati."

 

The Supreme Court reversed the trial court ruling, on the ground that the Victor Automobile Company was solvent on the date Harrington executed the deed of trust to O'Leary and that, therefore, O'Leary had no knowledge that Harrington was in danger of being called upon to pay any notes to the bank as endorser for the car company; that the company only became insolvent a year later when Harrington died. The Court then rejected the bank's second contention that the debt for which the deed of trust was given to secure was in fact fictitious, and never had any real existence, but was a creature of imagination, improvised to cover up Harrington's property and thus defraud his creditors.

The Court's ruling was based upon a technicality of trial practice that is no longer the law—the idea that you cannot impeach the testimony of witnesses you call to the stand.

"The entire evidence bearing upon that question fell from the lips of Julia Harrington and Joseph J. O'Leary, corroborated on some material points by the witnesses Zimmerman and Mary Moloney (another of Anna's sisters). The two former were introduced as witnesses by the respondent, and its chief, if not its sole, reliance for a recovery in this case is based upon what counsel contends is the incredibility of their story, predicated upon the unusual transactions which they claim took place between O'Leary and the Harringtons. Those transactions have been fully stated elsewhere, and will not be here repeated. It will suffice to say, however unusual that story may appear to be, the only evidence regarding them came from the mouths of respondent's own witnesses, and there is not a scintilla of affirmative testimony in this record tending to show their nonexistence, or that O'Leary did not furnish Julia Harrington and Joseph F. Harrington, her husband, the various sums of money they say he did, and at the times and in the manner claimed.

The bank's sole contention, in favor of the negative of that claim, is based, as before stated, upon the said alleged incredibility of their story. So that brings us to the consideration of the legal proposition: Does that incredibility have the legal effect, not only of overthrowing and destroying the positive testimony of respondent's own witnesses, but also of proving the negative of their claim--that is, that O'Leary did not lend the money to the Harringtons, as they claim he did?

The burden of proving that the deed of trust was executed by Harrington to defraud his creditors is on the bank. In this case Julia Harrington and O'Leary, the respondent's witnesses, testified adversely to its claim, and having sustained themselves consistently throughout their testimony, and the respondent having introduced no other evidence in support of its charge of fraud, it is perfectly clear that the bank has totally failed to carry the burden of proof to the extent the law justly imposes upon it."

 

Joe O'Leary appears to have followed a practice that Jack will testify, in his bankruptcy proceeding in 1914,  he followed all his life—the practice of not keeping a record of his business transactions. Winning large sums of money from the betting tips he received from Jack's wife, Anna, Joe didn't deposit them in a bank but claims to have put them in a safe in a Cincinnati saloon operated by a man named Dermondy; drawing the money out from time to time and sending some to his sister Julia. Though a witness named Zimmerman corroborated Joe's story about the safe in Dermondy's saloon, no name of such a saloon owner appears in the Cincinnati telephone book of the times, though, coincidentally, there was a saloon in St. Louis at the time, operated by one of Jack's friend's, Patrick Carmondy.

Jack Turns to Stocks

In 1909, with state laws criminalizing bookmaking and his welcome worn out at the race tracks, Jack turned his talents to the stock brokerage business. The reason why he did this is far from clear. The operation of a string of vaudeville/movie theaters would seem to require one's full time attention and though he might easily hire managers to run the day-to-day operation of each theater, he was not only buying property and constructing buildings for himself, but was doing the same for the theater business. So what was he doing putting his time into being a stock broker? It seems he was simply continuing his gambling business another way, exchanging gambling on the movement of horses for gambling on the movement of stocks, one form of poolroom for another.

In 1909, if the little fellow wanted to speculate in stocks offered by the New York Stock Exchange, or in commodity futures offered by the Chicago Board of Trade, he was effectively shut out by high margins and brokers being unwilling to take trades of less than a hundred shares. In a so-called bucket shop—where at the end of the day the transaction is thrown in the bucket—the little fellow can take a seat in front of the broker's black boarded list of stocks, listen to the buzz of the ticker, and, as a clerk stands upon the platform in front of the board and chalks changes in their prices, he can call out "Buy five shares of Erie Railroad stock at 16," and tender to the broker five dollars as margin. Then, an hour later, seeing the stock price has climbed to 17, he can "sell out," receiving back the five dollars he advanced as margin, together with another five dollars representing the difference between the price he bought at and the price he sold at. On the other hand, in that hour, the little fellow may see the price of Erie Railroad stock fall by a dollar at which point he's lost his margin into the pocket of the broker.

Ryan's Stock Brokerage Office, Cincinnati

Unlike today, when Morgan-Stanley—the king of the bucket shops—claims the New York Stock Exchange is an institution where the general public invests—not gambles—in the future of American enterprise, the money kings in control of the exchanges, in 1909, proudly proclaimed the truth.

William Warren, President of the Chicago Board of Trade, testified under oath in a court proceeding that, as a member of the Board's exchange, he purchased in a year's time "contracts" for the future delivery of 75 million bushels of grain, of which was delivered to him 3 million bushels. The evidence showed that the contracts for the undelivered 72 million bushels were cancelled and the transactions representing them "settled," "cleared," before the delivery date, by the parties paying and receiving the difference between the "contract" price and market price on the day of settlement.

The Federal Circuit Court of Appeals for the 8th Circuit ruled in Warren's case that the Board of Trade was not entitled to an injunction against Christie Grain & Stock Co., an alleged bucket shop which was getting the Board's minute-by-minute price quotations from Western Union, because the Board, itself, was operating a bucket shop in violation of Illinois law which makes it a criminal offense to "contract to have or to give the option to buy or sell, at a future time, any grain or commodity."

The decisive issue, of course, was whether Warren, as an example, had a good faith intent to actually receive or deliver, as the case may be, the subject of the futures contract. "Of the nature of the business Warren carries out," the Court held, "there can be no question under the evidence that there is no good faith intent to actually receive or deliver grain, but these are merely wagers on the rise and fall of market prices. Over 90% of the transactions are merely gambling transactions."

When the case reached the United States Supreme Court, however, the great mind of Justice Holmes disagreed:

"In the pit where the action is, the members make sales and purchases for future delivery. Christie says the Board of Trade keeps the biggest bucket shop in the world. It appears that over three fourths of the time there is no receipt or delivery. So what! The Board is a great market where, through its 1,800 members, is transacted the grain business of the world. In a modern market, people will endeavor to forecast the future and to make agreements according to their prophecy. Speculation of this kind by competent men is the self-adjustment to the probable. It is true that success of the strong induces imitation by the weak, and that incompetent persons bring themselves to ruin by undertaking to speculate in their turn."

 

So it's okay for the big men to engage in the battle of the street, speculate to their hearts' content, on the rise and fall of stock or commodity prices; but it is a crime for the little fellow to follow suit? Meanwhile Western Union, which was selling leases on ticker tape wires to hundreds of bucket shops across the nation, raked in the dough, ticker wire leases accounting for fifty percent of its net income.

Thomas F. Ryan, Joseph Widener, William K. Vanderbilt, Payne Whitney and a dozen others like them, then and now, manipulated, cheated, tricked and bamboozled thousands, if not millions, of little folks to buy their watered worthless stocks, so why not Jack Ryan? But, no sooner did he set up shop than the Cincinnati district attorney began taking pot shots at him, first against he and his partner, Brill, and then against he and his second partner, Cornelius. The indictments came one after the other, but Jack fended them off for over a year, finally deciding he had better get out of Ohio's jurisdiction which he did by moving his family out of their Walnut Hills home and across the Ohio River into Campbell County, Kentucky.

Jack's family home on Bivouac Ave in Fort Thomas, Ky.

Jack's View of the Ohio River

Billboard, April 23, 1910

Cincinnati Enquirer, June 22, 1909

Cincinnati Enquirer, June 23, 1909

What happened with Prosecutor Hunt's case has not been found; but it probably was dismissed. If not, Jack's exposure was the payment of a fine. In any event, Jack was still in the brokerage business, in September 1909—this time with a man named Cornelius—and dodged a real bullet.

New York Times, September 17, 1909

Hartford Courant, September 18, 1909

Cincinnati Enquirer, Sept 18, 1909

Cincinnati Enquirer, Sept. 25, 1909

Apparently, Prosecutor Hunt, who took over from Prosecutor Harlian, continued to nip at Jack's cuffs like a little terrier, because Jack pleaded illness to avoid a court appearance in January 1910 and, in July 1910, announced his retirement from the bucket shop game.

Cincinnati Enquirer, Jan 1910

New York Times, July 1, 1910

__________________________________________

Water Dog Ryan

Now Jack's career takes a most remarkable turn, a turn that is very hard to fathom why he took it. Connected as he was to Big Tim Sullivan and the New York crowd of gamblers, managing, it seems, Sullivan's interest in the theater business with Considine, no doubt managing, too, a pool room in Covington and a road house in the Campbell County countryside, and who knows how many other enterprises his fingers were in, he throws himself into the already crowded boat business. How exactly this came about, the scions of Chris-Craft have a story to tell. But the truth is plain to see from the record.

 

Algonac is about twenty miles north of Detroit

Jack's first "cottage" on Harsens Island

Jack's first cottage burned down, in Sept. 1910. This is his second cottage.

Jack's Runabout at Algonac, 1910

When Jack brought his family to Algonac and Harsens Island in the spring of 1910, buying a home along the North Channel of the Island in what is called Grand Pointe, Christopher C. Smith owned a boat yard at the tip of the town of Algonac and provided a ferry service from that place to the island. Up to the point Smith met Ryan, he had spent his adult life building duck boats one at a time, and using them to take tourists on duck hunting expeditions in the channels that clog the upper end of Lake St. Clair. Smith was best known at the time as a master carver of duck decoys, a country boy with no education.


What prompted Jack to adopt Algonac as his summer residence—heretofore Atlantic City was his summer destination of choice—is not exactly known. Certainly, for Detroiters, Harsens Island was a summer vacation destination with a famous steamer, the Tashmoo, bringing to it day trippers; but, without the steamer, it was an isolated place, a long way from Cincinnati, St. Louis, Indianapolis and New York. It may be Jack was threatened at the time with criminal prosecutions and sought a new base of operations close to the Canadian border, but there is no evidence to be found of this; perhaps, he chose Algonac, to be close to Detroit which was exploding in population with the working class a fertile field for a gambler to plow in. Perhaps, he simply wanted to remove his family to a safe haven while he pursued dangerous activities. What is clear, is that for the next fifteen years Detroit was the hub of his operations which included managing a string of gambling clubs in Mid-western cities.

Indianapolis Star, Jan 13, 1910

Tashmoo nearing dock at Harsens Island, 1910

What is known, is that, in 1910, Jack met Smith through Smith's ferry business and, learning that Smith was a boat builder—it appears Smith had built a fast motor boat which he raced on the St. Clair flats—he hit on the idea of using Smith to build a motor boat he could market to rich power boat enthusiasts he knew. Happy to accept Jack's cash, Smith entered a business relationship with him, known to the public as the Smith-Ryan Boat & Engine Co.

 

Algonac, circa 1911

Though it is unclear whether Ryan's money built the company's building (he may have merely leased space in it), his money certainly supported Smith's construction of a line of one-step (hydroplane) power boats over a two year period, from 1911 to 1913. The boats were called Baby Reliance, a play on the famous America Cup racing yacht, Reliance, and Ryan drove them in races on the Ohio and Mississippi Rivers, at Chicago, Cleveland, Buffalo and New York, setting world records in the process and for a fleeting moment in time, finding himself prominently displayed on the sports pages of the major newspapers.

Bernard Smith with Jack Ryan

Jack Ryan at the Wheel

Trophies Won By Jack's Baby Reliance in 1912

Jack at the wheel

Jack with his New York friends

St. Louis Post-Dispatch, Sept. 27, 1911

St. Louis Post-Dispatch, Oct 1, 1911

Cincinnati Enquirer, Dec. 29, 1911

(Jack still had a theater business to run)

New York Times, June 30, 1912

New York Times, July 18, 1912

New York Times, Aug. 18, 1912

In addition to driving his boats in the river races, Jack seems to have spent time personally marketing the boats, displaying them at Madison Square Garden and other places during 1911-13, and he sold a number of Baby Reliances to rich men such as J. Stuart Blackton, a co-owner of Vitagraph Pictures, then a wealthy man but soon to be broke; a boat to Julius Fleischmann, mayor of Cincinnati, and to one of Thomas Fortune Ryan's sons. It appears, also, that Jack attempted to develop for sale a runabout-type boat called Queen Reliance which was meant to appeal to the ordinary person, but it is doubtful many of these were built or sold.

Queen Reliance

Feb. 12, 1912

New York Times, May 26, 1912

Exactly how successful was the Smith-Ryan Boat & Engine Co., in doing more with its boats than racing them, the record is not clear. Chris Smith did not preserve any accounting records for his business operations until about 1922 when, after working essentially as Ryan's employee and then in a similar capacity for Gar Wood who followed Ryan into the power boat racing game, he established the Chris-Craft Corporation. Passed down to his sons and their sons, Chris-Craft mahogany boats, as the Chevrolet of boats, carved out a major market share of the pleasure boat business which carried the company forward to the 1970s, when the 55 members of the Smith family cashed in their stock and the company went south.

1990 Bankruptcy Petition of Chris-Craft Stockholders

For Jack Ryan's part, it seems his plan was early to kick Smith to the curb by forming a New York corporation out of the Smith-Ryan Boat Co., take advantage of a patent he held jointly with Smith and move the boat building operation to Cos Cob, Connecticut.

Applied 1912, Patent granted 1915

(One-step Hydroplane mechanism)


 

It is doubtful that Smith knew Ryan had incorporated the company in New York, nor that Ryan had done so with the involvement of his New York gambler friends. Among these were included George Boles who operated a successful book-making business out of Greenwich, Ct., and Thomas Tracy, a cousin of Big Tim Sullivan. Boles apparently purchased a boat yard at Cos Cob, Ct. for the proposed new operation. It may be that Ryan & Company were looking ahead to the prospect of world war and the demand for coastal patrol boats it would generate. Having the boat building operation on the east coast, rather than Algonac, would make delivery to the government much easier as government contracts paid off only when the craft were delivered, not when shipped.

Ryan's corporate office was  in the Imigrant Industrial Bank Bldg,

51 Chambers Street, New York

The bank was founded in 1850 by members of the Irish Emigrant Society.

It has assets today exceeding $14 billion.

New York Times, March 11, 1912

("James F. Smith" not connected to Chris Smith)

Palmer Bros Boat Yard, circa 1912

Doing business with Jack was certainly a tenuous thing, and Chris Smith probably realized pretty quick ino it that he was riding the back of a tiger. As Jack's daughter, Marie, tells it, when the end came abruptly, in 1913, Jack stripped the company of its operating cash by taking a hundred grand from the company safe and walking away. As Smith's sons tell it, Smith, "penniless," traveled to New York in 1913 to see J. Stuart Blackton, who then lived on a Long Island estate next to Teddy Roosevelt's, in the hope he would get a new order to build a boat but was turned down. In fact, Smith went to New York to find Ryan, but when he encountered him Ryan waved him off with a pistol and Smith went home and filed a lawsuit in the Wayne County courts that went nowhere. In 1914, questioned about it, Jack gave an untelligible story.

Jack's testimony does not conform to the objective evidence shown by the articles of incorporation, nor does he accurately state the company's situation in 1912. In fact, due largely to his efforts, the company was making money and continuing to have success in power boat racing in 1913.

Boston Globe, Feb. 3, 1913

New York Times, Feb. 25, 1913

Chicago Tribune, April 12, 1913

Motor Boating Mazagine Advertisement, 1913

Motor Boating Magazine Advertisement, 1913

A Ryan Reliance Boat, 1913

Motor Boating Advertisement, 1913

Racing Results, July 1913

(Ryan on board)

(Ryan at Wheel, 1913)

New York Times December 14, 1913

According to Mahogany Memories, a book published by the Chris Craft Antique Boat Club in 2006, Jack "quit the boat business on September 27, 1913." Given his success with the reliance boats why did he shut the business down? Mahogany Memories does not say. Because, on September 14, 1913, Jack learned that Big Tim Sullivan was dead.

New York Times, Sept 13, 1913

Jack's theater business was really Big Tim's, in that the equity its properties possessed belonged, in large measure, to Tim. With his death, Jack knew Tim's relatives would be scrambling to locate his assets and it appears Jack no longer had the capital to continue the business without them.

Almost immediately after Tim's death Jack was in Indianapolis, doing exactly what is hard to fathom other than to say he was manufacturing the illusion he was judgment proof. Opening the Colonial Theater for the season with fanfare, he immediately closes it and leaves town with his checks bouncing all over the place.

Indianapolis Times, Nov. 12, 1913

Billboard, December 13, 1913

Variety, December 1913

Indianapolis Star, December 29, 1913

Detroit Free Press, April 1914

Was Jack really so broke he had to kite checks to live? Hardly; he simply projected proverty while securing his real assets from attachment, by ruses. Here he is, dancing with the creditors' lawyers at his bankruptcy deposition.

The Theater Business

The Boats

The Kentucky Highlands Residence

The First Harsens Island "Cottage"

State Fire Report, Sept. 11, 1910

Detroit Free Press, Sept. 11, 1910

(Arson, or an accident, who knows; in 1911 one of Jack's Reliance boats was

intentionally set fire to, and in 1912, just after he leased his Covington

Colonial theater, the building burned; Jack also had two insurance claims

Based on burglaries of his residence while he was sleeping in the bedroom)

The Second Harsens Island Cottage

(built with insurance proceeds?)

The Household Furniture

Jack's Bookkeeping Method

Whether the bankruptcy proceeding was fraudulent or not, the referee reported its legitimacy to the Court and Jack's creditors walked away with nothing.

Detroit News, 1914

For The Water Dog, The War Years Are Next