Richard Whitney

Richard Whitney (January 1, 1888 - December 5, 1974) was an American stockbroker who rose to prominence as president of the New York Stock Exchange (NYSE) and earned the nickname "White Knight of Wall Street" for his bold actions during the 1929 market crash.

His career, marked by elite connections and initial triumphs, ended in spectacular scandal when he was convicted of embezzling millions from clients and institutions he managed.[1][5]

Early Life and Education

Born into a prominent Massachusetts family, Whitney attended Groton School and graduated from Harvard University, institutions that shaped his path into high society and finance.

In 1910, he founded Richard Whitney & Co. in New York City, securing a seat on the NYSE two years later.

His brother George's role at J.P. Morgan & Co. provided crucial ties, propelling Whitney onto the exchange's board of governors by 1919.[2][5]

Rise to Prominence

Whitney's defining moment came during the Wall Street Crash of 1929. As vice president of the NYSE, he strode onto the trading floor on October 25-day after Black Thursday-and announced, "I bid 205 for 10,000 Steel," purchasing shares of U.S.

Steel well above market price. Backed by $20 million from major bankers, this dramatic bid temporarily stemmed the panic, cementing his heroic image despite the crash's ultimate devastation.[1][3][4]

Whitney's audacious order rallied traders and symbolized Wall Street's defiance, though it could not avert the Great Depression.[1]

Presidency of the NYSE

Elected NYSE president in 1930 at age 42-the youngest ever-Whitney served multiple terms until 1935.

A staunch conservative, he fiercely opposed President Franklin D. Roosevelt's New Deal reforms, including the creation of the Securities and Exchange Commission (SEC). "The exchange is a perfect institution," he declared, warning that regulation would bring "grass... on Wall Street."[1][3]

Financial Speculations and Decline

Behind the facade, Whitney was a reckless speculator.

Early losses in Florida real estate gave way to disastrous bets on Distilled Liquors Corporation after Prohibition's repeal. He imported massive quantities of Canadian rye and promoted applejack, but the products flopped, sending shares from $45 to pennies. Desperate to prop up prices, Whitney borrowed heavily-from banks, friends, his brother ($1.25 million total), and even mortgaged family homes.[2][4][5]

Key Investments and Losses

Florida Land (1920s): Invested $2 million in collapsing real estate via borrowed funds.[4]
Distilled Liquors (1933-1937): Pledged worthless stock for loans; peak $45/share, crashed to $11+.[2][4]
Other Ventures: Failed schemes including 106,000 gallons of unsold whiskey.[1]

Embezzlement Scandal

By 1937, Whitney crossed into crime, embezzling approximately $1 million ($17.8 million today) from trusts he oversaw.

Victims included:

Institution	Amount Stolen	Details
New York Yacht Club	$150,200 in bonds	As treasurer, first major theft.[1][3]
Harvard University	Undisclosed securities	Customer funds misused.[1]
St. Paul's School & Wife's Trust	Multiple hypothecations	Family-linked accounts raided.[1][2]
NYSE Gratuity Fund	$1 million total	Pension raid exposed firm.[4][5]

Rumors of insolvency swirled in 1938.

The NYSE, invoking powers Whitney once resisted, audited his books, revealing the fraud. Suspended and arrested, he was convicted of embezzlement in 1938, sentenced to 5-10 years at Sing Sing Prison. Released after three years and four months, he retreated to a Massachusetts farm, milking cows-a stark fall for the man once atop Wall Street.[1][5]

Legacy

Whitney's downfall underscored the perils of unregulated speculation and elite impunity.

Ironically, while his NYSE practices drew scrutiny, jail came for Yacht Club thefts-unforgivable among peers. He died in obscurity in 1974 at age 86.[3][6]

Stock Price Trajectory (ASCII Graph Approximation)

Distilled Liquors Stock (1933-1937)
$45 |    
    |       
$35 |        
    |         
$25 |          
    |            
$15 |             
    |                
 $5 |                 
    +-------------------------------
      1933  34  35  36  37 (Crash)
  ( Peak at $45; pledging led to collapse[2][4])

Whitney's story remains a cautionary tale of hubris in finance, blending heroism, defiance, and ruin.