Sunday, January 13, 2013

On Beyond Holcombe: A Documentary Diversion to Noble & Mestre, Brokers


Malcolm Goldstein returns to 1898 Revenues for 2013, but the first edition of the year is on a business that used documentary stamps, not the proprietary series.  In December I posted several stamps canceled by the firm Noble & Mestre with little information about the firm.  Malcolm took the cue and sent in this history:

Henry G S Noble (1860-1946) and Alfred Mestre (1860-1929) began as fraternity brothers and classmates and grew to be family and business partners.  They became fraternity brothers in the Nu Chapter of Delta Kappa Epsilon which was at City College (or College of the City of New York as it is more formally styled), graduated together from City College in 1880, became brothers-in-law in 1882 when Noble married Mestre’s sister, Clemencia, and entered partnership together when they opened Noble & Mestre, their stock brokerage business on the New York Stock Exchange in 1885. Each achieved formidable success in his own right.

Noble’s name came first in the partnership because he grew up in the world of wealth and privilege that surrounded the New York Stock Exchange.  He was a grammar school classmate of Charles Even Hughes, who ended his own long and distinguished career as Chief Judge of the United States Supreme Court. Immediately upon graduation from City College, Noble became a clerk at the brokerage firm of Henry G Stebbins & Son, and in 1882 himself  became a member of the New York Stock Exchange when he purchased his grandfather’s seat on the Exchange.  His grandfather just happened to be Henry G Stebbins.  Stebbins himself had acquired the seat on the Exchange in 1831, and had served as President of the Exchange in the years 1851, 1858 and 1863.  Noble became a governor of the Exchange in 1897.  In 1902, he left the firm that had borne his name to became a partner in the brokerage firm of DeKoppet & Doremus, an “odd lot” broker, which dealt principally in stock orders of less than 100 shares. When the Senate conducted an investigation into the trading practices of the Exchange in 1914, Noble testified as the Exchange’s spokesperson, assuring the Senate of the Exchange’s trading integrity.  Shortly thereafter, he was elected President of the Exchange in May, 1914. 

In furtherance of the principles he had enunciated during the Senate hearings, as President of the Exchange, he served as nominal plaintiff in litigation brought by the Exchange to stamp out “bucket shop” brokerage operations. As defined by the United States Supreme Court, a “bucket shop” was “an establishment, nominally for the transaction of stock exchange business ... but really for the registration of bets ... on the rise and fall of the prices of stock ....” In other words, “bucket shops” advertised themselves as brokerage houses to place buy and sell orders for stock, but they did not actually buy and sell the stock that the transactions required, and merely treated the orders as bets.  The determination of the bet followed the actual course that the validly made stock transactions took.  In one set of lawsuits, the Exchange attempted to enforce its contracts with the major telegraph companies requiring them to deliver such stock trade information only to brokerage houses authorized by the Exchange to receive such information and prohibiting the telegraph companies from releasing such information to any brokerage houses not specifically authorized by the Exchange to receive such information.  In a second group of lawsuits, the Public Service Commission of Massachusetts and a barred brokerage house attempted to persuade the state court to order the telegraph companies, because of their status as state regulated common carriers, to provide stock quotation information to any interested party without regard to the proprietary nature of the information. The cases were consolidated before the 1917 term of the United States Supreme Court, and the decision rendered by Justice Oliver Wendell Holmes vindicated the Exchange’s position entirely against both the state commission and the barred brokerage house.

Noble served five consecutive terms as President of the Exchange until May, 1919, particularly during the entire duration of the participation of the United States in World War I.  He thus became a wartime President of the Exchange, just as his grandfather had been. He then returned to DeKoppet & Doremus where he remained a full partner until 1927.  Thereafter, he reduced his interest in that company, but continued to hold his seat on the Exchange until 1938, when he transferred the seat to his own grandson, Henry Stebbins Noble, and finally retired.  At the time of his retirement, it was noted that John D Rockefeller had been older than Noble when he died the previous year in 1937, but even then Noble had longer continuous service on the Exchange than Rockefeller.  In all Noble was a member of the Exchange for 56 years, and for 37 of them, he was a governor of the Exchange.  When Noble died in 1946, the “Noble” seat on the  Exchange had been held in the same family for 115 years.

Alfred Mestre was cut from somewhat different cloth than Noble.  He was born in Cuba of Cuban parents in 1860.  His father was a professor of law at the University of Havana in Cuba, until the Spanish government of Cuba exiled him in 1869 for advocating too vociferously on behalf of Cuban independence.  Mestre’s father then brought the family to the United States, and, although an attorney in Cuba, was obliged to attend Columbia Law School in order to qualify to practice law in the United States.  The story is told that when legendary Columbia Law School Professor Theodore Dwight asked Mestre’s father  too complicated a question in English, the father would respond in Latin and the discussion would continue in Latin, to the great amazement and amusement of the rest of the law class.  Joseph Mestre graduated in 1876 and soon created a lucrative law practice serving South American clients as part of the firm Olcott, Mestre & Gonzalez.  He died at age 54 in 1886. Alfred and his younger brother Aurelius both attended City College.  Alfred graduated with Noble in 1880 and Aurelius graduated in 1881. As noted above, their sister Clemencia became Noble’s wife in 1882.  While Noble immediately entered the brokerage business, Mestre followed in his father’s footsteps and attended Columbia Law School from which he graduated in 1882. He tried the practice of law for a year with his father’s firm, but thereafter spent a year in Europe, then returned to Cuba where he married Maria Villa Urrutia of Havana in 1883.  In 1885, he joined with Noble and the two launched the successful stockbroking business of Noble & Mestre. In the meantime, Mestre’s brother ultimately returned to Cuba to manage the family’s estates and, later, as a volunteer attached to General Joseph Wheeler’s staff during the Spanish-American War in 1898 played a vital role in negotiating the Spanish surrender of Santiago, Cuba.  Unfortunately, he also contracted a disease during the Santiago campaign that broke his health and killed him in 1899.  Alfred Mestre and Henry Noble continued their partnership until 1902. Thereafter, Mestre conducted his own business in his own name as Alfred Mestre & Co. Elected to the Board of Governors of the New York Stock Exchange, he subsequently resigned in 1914 because he found he had become too busy as a market specialist in Reading Railway stock.  He retained his seat on the Exchange until 1925 and died in 1929.

Ruins of Alfred Mestre's Sheffield Island Mansion

While Noble’s only notable outside interest seems to have been his membership in the New York Yacht Club, Mestre enjoyed his wealth more.  Around 1909, he seems to have commissioned a specially designed 40 foot inboard cruiser which drew the attention of Forest & Stream Magazine. In 1912, he built a mansion on Sheffield Island, located in the Norwalk Islands chain off the coast of Connecticut.  Grand in its day, sadly, it burned down in the 1940s long after it had passed out of his family’s hands.  Only picturesque views of the ruins remain.