Great Fortunes, and How They Were Made

by James Dabney McCabe

He did not stay long in Newburyport, as a great fire, which burned up a considerable part of the town, destroyed his brother's store, and obliged him to seek employment elsewhere. He always retained a warm attachment to the place, however, an attachment which a resident of the town explains as follows:

"The cause of Mr. George Peabody's interest in Newburyport was not alone that he had lived here for a brief period, or that his relatives had lived here; but rather it was the warm friendship that had been shown him, which was, in fact, the basis of his subsequent prosperity. He left here in 1811, and returned in 1857. The forty-six intervening years had borne to the grave most of the persons with whom he had formed acquaintance. Among those he recognized were several who were in business, or clerks, on State Street in 1811,—Messrs. John Porter, Moses Kimball, Prescott Spaulding, and a few others. Mr. Spaulding was fourteen years older than Mr. Peabody, and in business when the latter was a clerk with his uncle, Colonel John Peabody. Mr. Peabody was here in 1857, on the day of the Agricultural Fair, and was walking in the procession with the late Mayor Davenport, when he saw Mr. Spaulding on the sidewalk, and at once left the procession to greet him.

"Mr. Spaulding had rendered him the greatest of services. When Mr. Peabody left Newburyport, he was under age, and not worth a dollar. Mr. Spaulding gave him letters of credit in Boston, through which he obtained two thousand dollars' worth of merchandise of Mr. James Reed, who was so favorably impressed with his appearance, that he subsequently gave him credit for a larger amount. This was his start in life, as he afterward acknowledged; for at a public entertainment in Boston, when his credit was good for any amount, and in any part of the world, Mr. Peabody laid his hand on Mr. Reed's shoulder, and said to those present, 'My friends, here is my first patron; and he is the man who sold me my first bill of goods.' After he was established in Georgetown, D.C., the first consignment made to him was by the late Francis Todd, of Newburyport. It was from these facts that Newburyport was always pleasant in his memory; and the donation he made to the Public Library was on his own suggestion, that he desired to do something of a public nature for our town."

From New England, George Peabody turned his face southward, and entered the employment of his uncle, Mr. John Peabody, who was engaged in the dry goods business in Georgetown, in the District of Columbia. He reached that place in the spring of 1812; but, as the second war with England broke out about the same time, was not able to give his immediate attention to business. He became a member of a volunteer company of artillery, which was stationed at Fort Warburton, but as no active duty was required of the company, he soon went back to his uncle's store. His uncle was a poor man and a bad manager, and for two years the business was conducted by George Peabody, and in his own name; but at the end of that time, seeing the business threatened with ruin by his uncle's incapacity, he resigned his situation, and entered the service of Mr. Elisha Riggs, who had just established a wholesale dry goods house in Georgetown. Mr. Riggs furnished the capital for the concern, and Mr. Peabody was given the management of it. Soon after this, the latter became a partner in the house. It is said that when Mr. Riggs invited Mr. Peabody to become his partner, the latter informed him that he could not legally assume the responsibilities of the business, as he was only nineteen years old. This was no objection in the mind of the merchant, as he wanted a young and active assistant, and had discerned in his boy-manager the qualities which never fail to win success.

The new business in which he was engaged consisted chiefly in the importation and sale of European goods, and consignments of dry goods from the northern cities. It extended over a wide field, and gave Mr. Peabody a fine opportunity for the display of his abilities. Mr. Riggs' friends blamed him very much for leaving his business so entirely in the hands of a boy of nineteen; but he had better proof than they that his affairs were not only in good but in the best hands, and he answered them all by telling them that time would justify his course. Mr. Peabody traveled extensively in establishing his business, often journeying into the wild and unsettled regions of the border States on horseback. He worked with energy and intelligence, and in 1815 the business was found to be so extensive that a removal to Baltimore became necessary. About this time a sort of irregular banking business was added to the operations of the house. This was chiefly the suggestion of Mr. Peabody, and proved a source of great profit.

Mr. Peabody quickly took a prominent rank among the merchants of Baltimore. His manner was frank and engaging, and won him many friends. He was noted for "a judgment quick and cautious, clear and sound, a decided purpose, a firm will, energetic and persevering industry, punctuality and fidelity in every engagement, justice and honor controlling every transaction, and courtesy—that true courtesy which springs from genuine kindness—presiding over the intercourse of life." His business continued to increase, and in 1822 it became necessary to establish branches in Philadelphia and New York, over which Mr. Peabody exercised a careful supervision. He was thoroughly familiar with every detail of his business, and never suffered his vigilance to relax, however competent might be the subordinates in the immediate charge of those details. In 1827 he went to England on business for his firm, and during the next ten years made frequent voyages between New York and London.

In 1829 Mr. Riggs withdrew from the firm, and Mr. Peabody become the actual head of the house, the style of the firm, which had previously been "Riggs & Peabody," being changed to "Peabody, Riggs & Co." The firm had for some time been the financial agents of the State of Maryland, and had managed the negotiations confided to them with great skill and success; and every year their banking department became more important and more profitable.

In 1836 Mr. Peabody determined to extend his business, which was already very large, to England, and to open a branch house in London. In 1837 he removed to that city for the purpose of taking charge of his house there, and from that time London became his home.

The summer of this year was marked by one of the most terrible commercial crises the United States has ever known. A large number of the banks suspended specie payment, and the majority of the mercantile houses were either ruined or in the greatest distress. Thousands of merchants, until then prosperous, were hopelessly ruined. "That great sympathetic nerve of the commercial world, credit," said Edward Everett, "as far as the United States was concerned, was for the time paralyzed. At that moment Mr. Peabody not only stood firm himself, but was the cause of firmness in others. There were not at that time, probably, half a dozen other men in Europe who, upon the subject of American securities, would have been listened to for a moment in the parlor of the Bank of England. But his judgment commanded respect; his integrity won back the reliance which men had been accustomed to place in American securities. The reproach in which they were all involved was gradually wiped away from those of a substantial character; and if, on this solid basis of unsuspected good faith, he reared his own prosperity, let it be remembered that at the same time he retrieved the credit of the State of Maryland, of which he was agent—performing that miracle by which the word of an honest man turns paper into gold."

The conduct of Mr. Peabody, as well as the evidences which he gave of his remarkable capacity for business, in this crisis, placed him among the foremost merchants of London. He carried on his business upon a large scale from his base of operations in that city. He bought British manufactures in all parts of England and shipped them to the United States. His vessels brought back in return all kinds of American produce which would command a ready sale in England. Profitable as these ventures were, there was another branch of his business much more remunerative to him. The merchants and manufacturers on both sides of the Atlantic who consigned their goods to him frequently procured from him advances upon the goods long before they were sold. At other times they would leave large sums in his hands long after the goods were disposed of, knowing that they could draw whenever they needed, and that in the meanwhile their money was being so profitably invested that they were certain of a proper interest for their loans. Thus Mr. Peabody gradually became a banker, in which pursuit he was as successful as he had been as a merchant. In 1843 he withdrew from the house of Peabody, Riggs & Co., and established the house of "George Peabody & Company, of Warnford Court, City."