Real Lace (8 page)

“There was something almost mesmerizing about Southampton in those early days,” recalls one woman who married into the Murray clan. “I had never seen anything like it—the clothes, and the jewels the women wore. I'd feel naked if I went out without dozens of bracelets, and they wore diamond earrings to play golf. Of course it was all very
nouveau riche
, nothing at all like the way the older money lived on the North Shore, or at the Piping Rock Club.” There was also something “almost feudal” about Southampton on a Sunday, when the fleet of Murray and McDonnell cars lined up to transport the families to morning Mass. The front pews on the left-hand side of the Sacred Hearts of Jesus and Mary Church were always reserved for the Murrays, McDonnells, and Cuddihys, who assembled solemnly to listen to one of Father Killeen's two favorite sermons—the one on the evil of birth control or the other on the importance of sending children to Catholic schools.

Socially, there were a few snubs from the Protestant summer residents of Southampton, and there was talk of “this Irish invasion.” “Oh, so you're a Catholic,” said a Southampton lady to Mrs. Murray. “That's what my cook does on Sundays. She's taught me quite a lot about the Catholics.” “I suppose you'd also ask your
cook,” said Mrs. Murray crisply, “which corner of a visiting card to turn down.” From a dressing room at Foulke & Foulke's dress shop in Southampton, one of the McDonnells overheard a customer saying to Mrs. Foulke, “Isn't it dreadful—all these Irish we're getting here?” “At least they pay their bills,” replied Mrs. Foulke. This was true. Anna Murray McDonnell, who never liked to be remiss about anything, would never leave her desk in the morning until every single bill was paid. And there was a certain amount of commotion within the membership of the Southampton Beach Club when Grandpa Murray and his voluminous offspring wanted to join. A sign, borrowing the phrasing of the famous Boston snub, “No Irish Need Apply,” was briefly hung on the club's front door. But the Beach Club also wanted to build a salt-water pool, and faced the same sand-filtering problem that Grandpa Murray had. At last the club agreed to let the family join, provided Grandpa Murray would share the secret of his invention with them. In Southampton it was soon being said, “If you're an Irish Catholic here, you've
got
to be rich.”

“We overcame by sheer numbers,” recalls Mary Jane Cuddihy MacGuire. “After all, we were about sixty strong. We were our own defense, and nobody could touch us. If someone wanted a partner for tennis or golf, they practically had to ask one of us. And those were wonderful, glorious days. We literally didn't have a care in the world. We danced, we swam, we went to parties. Meyer Davis always played. There was very little drinking. Maybe we had some innate fear of inheriting the ‘Irish curse,' I don't know, but we always frowned on anyone who drank, and anybody who got drunk was ostracized. There were always friends dropping in, and house guests, and if we ran out of beds people slept on the piano or on the billiard table. It was marvelous fun. We cared nothing at all about money. We were never
taught
anything about money. We just spent it. When I was sixteen, I was given an allowance of three hundred dollars a month. I promptly went out
and ran up fifteen hundred dollars' worth of bills on clothes. Daddy took my allowance away for a while, but then he gave it back. I can't tell you how many five-hundred-dollar chiffon dresses I've ruined jumping into pools at parties. I remember when my husband asked me to marry him, he told me he was making only twenty-five dollars a week. I said to him, ‘But that's
plenty
of money to live on—isn't it?'” And so, in this gay and carefree manner, the new-rich American Irish families made their way into what passed for New York society or, more properly, Café Society. When Mary Jane Cuddihy, in the late 1930's, danced without her shoes at the old E1 Morocco, her picture was published around the world, even in Nazi Germany, where the photograph was offered as testimony of “the extreme state of poverty in the U.S.”

Grandpa Murray did not have long to live in his great Southampton house. He had developed a fondness for yellow taffy almost to the point of addiction. A box of yellow taffy was almost always within his reach, and he passed out taffy to his children and grandchildren. At Southampton, he became ill with diabetes, and he died in his house there on July 21, 1929. He was not quite sixty-nine. At the time of his death, reports of the size of his fortune varied wildly. Some placed it at over $50 million, while others said it was only $5 million. The figure of $10,044,070 was later published. He died, of course, just a few months before the great stock market crash, and so that event diminished the value of his holdings sharply. The estate entered a lengthy period of litigation, during which the family lawyers argued with the state and federal tax authorities over the amount of taxes to be paid. The
New York Times
commented that “The appraisal shows a wide gap in the valuation set by the family, and those of the State.” The Revenue people wanted, naturally, to tax the estate on its size at the time of Thomas E. Murray's death. The family, naturally, wanted it taxed on the lower figure of what the estate would be worth at the time of its distribution to his heirs, after the Crash. The trouble was
that nothing of the sort had ever happened before in the taxation of large fortunes, and so there was no precedent to go by.

A few things were certain, however. The former lamplighter from Albany who had gone to Brooklyn, and then had gone from Brooklyn to the ample splendors of Southampton, had died a very rich man. At the time of his death it was noted that Grandpa Murray held some eleven hundred separate patents, a record in the world that was second only to his friend and former associate, Thomas Edison. He also left eight children and thirty-seven grandchildren.

“Money can divide a family,” Grandpa Murray used to warn. He was right, of course, and scrambling for a rightful share of his money would cause even more family squabbling and dissension. But he had died wealthy at a time when the rest of the country was plunging into a long period of economic disaster. As one of his grandsons puts it, “When everybody else got poor, we got rich.”

Chapter 5

MR. McDONNELL'S GIMMICK

McDonnells today—perhaps some ten thousand strong—are scattered across Ireland, with the name variously spelled McDonnell and MacDonnell. The most numerous McDonnells are those descended from a Scottish clan in Argyle, whose chief was known as Lord of the Isles, and these McDonnells came to Ireland in the thirteenth century as a military body and, having established themselves as galloglasses—or mercenary foot soldiers—for the most powerful chiefs in the North of Ireland, they were presently acquiring territory of their own, both by grants for military service and through marriage. An ability to marry well has been a McDonnell family trait for five centuries. By the middle of the fifteenth century the McDonnells had become one of the leading families in County Antrim, in Ireland's northeast corner, and, in 1620, the head of the family, Randal McDonnell, was created Earl of Antrim. There have been a number of distinguished McDonnells. In the sixteenth century,
Sorley Boy McDonnell was famous as a life-long foe of the British, and, in the seventeenth century, Francis McDonnell became a well-known politician. Sir Anthony McDonnell, in the nineteenth century, was a noted revolutionist, fighting to give the Irish a say in their own affairs, and, in literature, Sean Clarach McDonnell (1691–1754) was considered the leading poet of Munster. There has even been a McDonnell world chess champion—Alexander McDonnell, who achieved his title in 1833. All the Irish like fondly—and often vaguely—to suppose that they descend from lofty or even noble lineage. But the McDonnells of Drumlish who arrived in New York in the mid-nineteenth century have some reason to make this claim.

The Wall Street firm of McDonnell & Company became, in 1917, the successor to Byrne & McDonnell, which James Francis McDonnell had helped form twelve years earlier. By no small coincidence, Mr. McDonnell was able to buy out Mr. Byrne within a year after his marriage to the wealthy daughter of Thomas E. Murray, though exactly how much of his wife's money may have gone into the creation of the new company is unknown; it eventually became several million dollars.

In the early days there were, just as there are today, specialists in certain stocks. One brokerage firm might specialize in U.S. Steel, another in General Motors, and another in the stocks of banks or insurance companies. But James Francis McDonnell had come up with a somewhat special gimmick. The idea of a
right
had just been initiated (in those days), and stock rights work this way: When a company sells securities by privileged subscription, each stockholder is mailed one right for each share of stock he owns. With a common-stock offering, these rights give the stockholder the option to purchase additional shares according to the terms of the offering. The terms specify the number of rights required to subscribe for an additional share of stock, the subscription price per share, and the expiration date of the offering. The holder of rights has three choices: he can exercise them and subscribe for
additional shares; he can let them expire; or he can sell them, since they are transferable. When a right is sold, it sells at only a fraction of the price of the stock itself. Rights have a limited life, and expire after a specified period of time.

Suppose, for example, that a person owned eighty shares of stock in a company, and that ten rights were required to purchase an additional share. With his eighty rights, this person could purchase eight full shares of stock, or he could sell them. People who want to play the stock market can, of course, buy stock directly. Let us suppose, if they do so, that the price of the stock is $40 a share. If the stock goes up to $60, the purchaser can make 50 percent on his original investment. If he buys 1,000 shares at $40, he puts up $40,000. If he sells them at $60, he has made $20,000 on a $40,000 investment—again 50 percent.

But rights can offer additional leverage to the speculator. If you can purchase for $2, say, a right to buy one share of the same stock within a one-year period, and you buy 1,000 rights, at the end of the year—or at any time during that year—you can buy 1,000 shares of stock at $40 a share. Effectively, then, the cost of the stock to you is $42 a share. Suppose, again, that during the year the stock has increased from $40 to $60. There has been a 50 percent increase in the price, but since the rights only cost you $2,000, you have made a profit of $18,000 on a $2,000 investment. That is, you have made 900 percent rather than just 50 percent.

James Francis McDonnell had a dour and somewhat unaccommodating nature—they called him “Little Caesar” in the family behind his back. He was not a financial genius, or even a brilliant trader. But he was one of the first men on Wall Street to recognize the value of rights, and to see the extra leverage inherent in these rights offerings. He was also among the first to see that lots of speculators would be interested in buying rights to any common stock. And so he became a specialist in rights trading. It was a simple system, perfectly legal, and not at all a laborious way to make money. With his particular gimmick, and with relatively
little else, James Francis McDonnell was able to make the promised million dollars for each new child as it arrived, and to keep his family in the large houses in New York and in Southampton, their cars and parties and polo ponies. As they watched their brother-in-law's climb to success, other Murrays, Cuddihys, McDonnells, and McQuails gradually began letting James Francis McDonnell's brokerage house handle their money. Seemingly without effort, he made money for them. His business prospered throughout World War I, continued to prosper throughout the twenties, and, with the lucky windfall of Grandpa Murray's inheritance in 1929—the Murray heirs eventually won their case, and were allowed to compute their taxes on a lower base—the 1930's continued serenely. There was no reason to suppose that McDonnells and Murrays would ever stop making money, and prospects throughout the thirties seemed eternally rosy. No one stopped to consider the fact that McDonnell & Company, trading rights for clients, and handling family accounts, was really not doing anything more than prospering. It was developing no particular talent or expertise in business management. It didn't need to. “Just let Jim handle it” became the casual family-business watchword. “He has a gimmick.”

The combined families continued, meanwhile, their steady climb into society. Joseph B. Murray's marriage to Theresa Farrell was easily the most socially auspicious in the second Murray generation. Joe Murray was a suave and handsome young man who had graduated from Stevens Institute and the Yale Scientific School, where his charm and good nature had won him the nickname “Jo-Bo Murray-O,” and where, one Saint Patrick's Day, he was presented with a bottle of rye and a bit of doggerel that went:

To Joseph Murray of Irish descent

This little token we present.

If perchance you are troubled with snakes,

Run like hell for heaven's sakes!

Both Joe Murray and his brother Jack showed clear promise of inheriting their father's talents as an inventor, and after Yale Joe Murray had been placed with Grandpa Murray's Brooklyn Edison Company, where he quickly rose to the position of general manager. Theresa Farrell, meanwhile, was a dark-haired beauty, whose father, James A. Farrell, was also a self-made man. Farrell had started as a mechanic in a Pennsylvania steel mill, and had been spotted by the steel king, Charles M. Schwab. Both the Farrells and the Murrays loved publicity, particularly social publicity, a trait that was becoming quite distinctive among the American Irish rich (in contrast, again, to such emerging Jewish families as the Schiffs, Loebs, Lehmans, and Warburgs, who considered publicity anathema and actively worked to keep their pictures off the society pages, even of the Jewish-owned
New York Times)
.