Daniel LeRoy Dresser (December 13, 1862 – July 10, 1915) was an American merchant and banker. He killed himself after he was bankrupted by the collapse of the United States Shipbuilding Company, a project that involved J.P. Morgan and Charles M. Schwab. The New York Times wrote that his "rise and fall in finance was one of the greatest sensations of the banking history of the first decade of the century...."
Early life Dresser was born in Newport, Rhode Island to Elizabeth Stuyvesant LeRoy and George Warren Dresser, an Army brevet major. His maternal grandparents were Susan Elizabeth (née Fish) and Daniel LeRoy. His maternal great-grandparents were Elizabeth Stuyvesant and Nicholas Fish.
His sisters included Edith Stuyvesant Dresser who married George Washington Vanderbilt II, and Natalie Bayard Dresser who married John Nicholas Brown. His sister Pauline married Rev. George D. Merrill of Stockbridge, Massachusetts, and his sister Susan married Vicomte Romain D'Osmoy of Normandy, France.
In 1885, Dresser was a founding director of the Newport Fish and Game Association. He attended of Columbia College, graduating in 1889.Meyer, H. L. G. Catalog of the Members of the Fraternity of Delta Psi Revised and Corrected to July 1906. New York: Fraternity of Delta Psi, 1906. p. 39. via Google Books. There, he was a member of the Fraternity of Delta Psi (aka St. Anthony Hall). He was also appointed to the committee of the Intercollegiate Athletic Club.
Career In 1889, Dresser started his first business. He inherited a fortune, and became a member of Nelson, Goodrich & Dresser by 1891. In 1894, the successful firm became Dresser & Goodrich. By 1897, he was earning $100,000 a year. In May 1897, he established Dresser & Co., a wholesale dry goods business that specialized in Japanese silks, hosiery, and webbing, with partners Charles E. Reiss and C. E. Sawyer. Dresser & Co. "advanced money to manufacturers and sold silks on commission, and had representatives in Japan, China, and England." The firm was located at 71 Franklin Street in New York City.
Dresser's next business interest was the American Asiatic Steamship Company, and he served as its vice president. He also became a director in the American Brass Company, the American Tubing and Webbing Company, and the Holmes, Booth & Hayden Company. He was also president of the Richmond Realty Improvement Association.
He was elected president of the Merchants' Association of New York in 1901. Under his leadership, the group distributed a circular about the corruption of the New York City police department and of its leadership, saying it was "an injury to every interest in the city." A newspaper had high hopes for their success, observing, "Men like Daniel LeRoy Dresser can not be threatened with moral blackmail which these many years have served to terrorize Tammany's enemies." In January 1902, Dresser and the secretary of the Merchants' Association, met with President Theodore Roosevelt to discuss the need for a new post office in New York. In April 1902, Dresser sent a letter to Roosevelt that mentions an investigation into silk frauds.
In January 1902, Dresser became a founding director of the newly formed Trust Company of the Republic which was organized "to loan money to farmers throughout the country on warehouse receipts as security, and, when its resources will not permit of such loans, to become a headquarters for the negotiation of paper of that character." The Trust Company had $1 million in capital and $500,000 in surpluses.Sammis, L. Walter. "The Relation of Trust Companies to Industrial Combinations, as Illustrated by the United States Shipbuilding Company." The Annals of the American Academy of Political and Social Science 24 (1904): 241–70 . Dresser also served on the board of its associated Security Warehouse Company, which planned to build warehouses across the United States to store the cotton, rice, and raw materials received from the farmers. On March 31, 1902, Dresser was president of the Trust Company which was located at 345 Broadway in New York City. This banking business involved many prominent individuals in New York's financial world. The New York Times noted, "He began to think and work in millions."
In April 1902, Dresser was approached by John J. McCook from the law firm of Alexander & Green on behalf of John Willard Young, a son of Brigham Young, to support the United States Shipbuilding Company (USSC), an effort to merge seven large shipyards into one company. As president of the Trust Company, Dresser authorized loans to form the USSC, with Young's promise that his company would earn $250,000 in bonds, $67,000 in cash, $700,000 in preference shares, and $700,000 in common shares. Of the $9 million needed so that the USSC could issue bonds, the Trust Company underwrote $3 million, with the other necessary $6 million already secured by the Mercantile Trust Company on London. In addition to being promoted by Dresser and Young, and USSC involved financier J. P. Morgan, Chicago lawyer and manufacturer Max Pam, steel magnet Charles M. Schwab, and naval architect Lewis Nixon who became its president.United States Shipping Board and Emergency Fleet Corporation: Hearings Before the Select Committee to Inquire Into the Operations, Policies, and Affairs of the United States Shipping Board and the United States Emergency Fleet Corporation, House of Representatives, Sixty-eighth Congress, First Session, Pursuant to House Resolution 186. United States: U.S. Government Printing Office, 1925. p. 725. via Google Books.The National Cyclopedia of American Biography. United States: J. T. White, 1921. p. 431. via Google Books. If successful, the venture would have made millions for the USSC, millions for the Trust Company, and millions for Dresser.
To fund the USSC loans, Dresser went to Wall Street, getting firms "to hold up prices on bonds that he underwrote, agreeing to take them at the market figures in addition to brokerage." However, when the funding to issue bonds came due in August 1902, Dresser then learned that he had to raise another $1,750,000 because of delays in the London subscriptions; another $1,250,000 of the delayed London subscriptions were being raised in Paris. Dresser contracted with John W. Young to sell $4,200,000 in USSC bonds in Paris in exchange for a commission of interim stock receipts that would be worth millions. Young successfully arranged for the sale of these bonds, but the French investors were scared off when Morgan and Schwab sold their Bethlehem Steel Company to the USSC for $35 million in bonds, cash, and stocks.
Dresser rushed to Paris to salvage the business deal and his companies which were heavily invested in USSC. At this point, Dresser borrowed $3,500,000 under the Trust Company's name to support USSC—he was counting on the French investments in time for the loan's sixty-day note. However, even Dresser could not rescue the Paris transaction. In addition, he found Young in "state of collapse." Furthermore, Young had drawn drafts in Dresser's name while in Europe, creating a hefty bill. Back in New York City, Dresser found debt and obligations. The Wall Street brokers started selling the USSC bonds instead of keeping them, forcing Dresser to buy them back. Reportedly, the bonds came "in stacks and he took them as they came." His Trust Company spent $250,000, as well as tens of thousands from other sources trying to maintain the value of the USSC bonds. However, once rumors about the USSC circulated, its stock dropped from $350 a share to $50 a share. At this point, Dresser personally owed banks $750,000; as the notes came due, he was not able to renew them. Later, in 1909, Dresser testified that the Trust Company secured $4 million of the $6 million that the USSC had to pay on August 12, 1902. Thus, when USSC failed, it also brought down the Trust Company.
The crash of USSC also nearly caused a financial crisis for George Washington Vanderbilt.Hill, Jonathan (April 19, 2017). "Crossing the Atlantic: Carl Schenck and Formation of American Forestry" (PDF). p. 70. Duke University. Retrieved May 15, 2022. Dresser had convinced his brother-in-law to purchase 100,000 shares of USSC at a time when Vanderbilt has spent most of his inheritance creating Biltmore Estate. As a result of investing the estate's operating fund with Dresser, Vanderbilt had to scramble for cash, cutting the 120,000 acre Biltmore's operating budget from $250,000 a year to $70,000.
On March 3, 1903, Dresser stepped down as president of the Trust Company of the Republic. The firm's credit was so impaired that they suspended liabilities over $100,000. However, Dresser paid off his debt of some $10,000 to the Trust Company before he resigned. Dresser & Co. went into bankruptcy on March 7, 1903, also having been brought down by it investments in USSC. Its assets were $750,000 and its liabilities were $1,250,000, with some forty creditors. The collapse of the business ruined Dresser financially. He testified in October 1903 that Morgan and Schwab cleared millions when they sold Bethlehem Steel to USSC, and they also sold their USSC stock worth $20 million ahead of all others. In addition, Morgan and Schwab got their USSC bonds at 90% plus a bonus of 100%, while regular investors got their stock for 90% and a 25% bonus, and the public got their bonds at 97.5% wi$ no bonus. In June 1902, the USSC claimed in a legal brief that certain promotors confederated to defraud the public by capitalizing the company at $41 million when it was worth $10 million and only had enough work for an income of $5 million. Those accused of the scheme were USSC associates Charles J. Canda, Horace W. Ganse, Charles S. Hanscom, E. W. Hyde, John S. Hyde, Lewis Nixon, Henry T Scott, and Irving M. Scott, with Dresser from the Trust Company. In this scenario, some participants were "dummies," including Young.
Dresser paid more than $1 million of the $1.4 million in claims filed against him in 1903. A newspaper report on April 9, 1903, indicated that some $850,000 had been given to Dresser by his friends to cover debts of Dresser & Co.; however, no funds came from his various wealthy relations. He obtained a discharge from bankruptcy on March 5, 1907.
Once on the road to financial solvency, Dresser sought "revenge on the men he thought responsible for his ruin four years before." He filed eight suits against James Hazen Hyde, John Willard Young, the Mercantile Trust Company, the Commonwealth Trust Company (formerly the Trust Company of the Republic), members of the law firm of Alexander & Green, and others. Dresser claimed that false representations totaling $15 million were made to him when he was asked to underwrite the USSC bonds. In October 1908, due to lack of evidence, all of his suits settled out of court for around $200,000; Dresser still had to pay his legal fees from this sum. Dresser left the courtroom "very angry" at this outcome. Moving forward, he worked to reestablish Dresser & Co.
On March 16, 1908, Dresser was arrested for the misappropriation of $4,000 related to the failure of the Trust Company of the Republic. The charges against him were filed by William S. Andrews who was the former attorney for Young. Andrews claimed Dresser failed to pay drafts issued to him by Young in 1903. The case was dismissed because of the statute of limitations. This was the only criminal case brought against Dresser in connection to the USSC and Trust Company failures.