For a few days in 1923, the entire world focused on York Harbor as home to the love nest that figured in the biggest and juiciest society scandal of the day.
York Harbor then was much different than it is today. Between the 1870s and 1920s, the scenic slice of Maine’s coast functioned as a fashionable summer resort for wealthy East Coast families. Remnants of that past still exist in York as a microcosm of period resort architecture.
One of York Harbor’s socialite residents allegedly had an affair with the pioneering founder of ASCAP, which licenses the rights of musical composers. Her husband found out when he received a poison pen letter, allegedly from the lover. In the scandal that erupted, the husband claimed the lover had sent letters to the husbands of 40 wealthy East Coast socialites—each of whom he was having affairs with.
The story gave the world one of the all-time great beach reads. As it unfolded in real time, it ensnared some of New York’s biggest names. The drama ended quickly. But it was the hottest story of the summer no matter which part of York you came from.
The People of York Harbor
The characters in this story:
George Maxwell, an expatriate Englishman, publisher, president and a founder of the newly formed American Society of Composers, Authors and Publishers (ASCAP):
Sarah Tuck Ryan, a Philadelphia socialite from an oil fortune, whose marriage to Allen Ryan left her both embarrassed and apparently somewhat poorer; and,
Allen Ryan, a Wall Street financier with a one-time wealth of $30 million, a family seat on the New York Stock Exchange, and a knack for making the market turn out profits for his investors.
Allen Ryan’s misfortune set the stage for the scandal.
The Ryans were already well-known to America by 1923. Born May 5, 1880, Allen Ryan was the son of U.S. tobacco and transport magnate, Thomas Ryan. The two had a rocky relationship. Allen held the family seat on the stock exchange by the age of 25. But he always insisted on independence from his father. That independence then grew an icy patina when his father remarried a young woman 12 days after he became a widower.
By 1919, Allen Ryan was a famously successful financier. He had holdings in steel companies, oil and a wide array of industries. The mention that “Ryan is buying” or that a stock was one of “Ryan’s stocks” was enough to move a stock quickly up in price.
His good fortune crumbled in 1920, however, when he cornered the market for the stock in one of the era’s prestige companies – Stutz Motor Car. The iconic Stutz brand put the roar in the roaring 20s. Ryan began buying the company’s stock before the decade began. Others, however, viewed the company as shaky. Short sellers saw a chance to give Ryan a beating.
The short-selling on Stutz mounted, and Ryan continued to increase his positions. He controlled virtually all the available company stock. It then became clear the short sellers were in trouble because a short squeeze had developed. That’s a situation in which people taking a short position have pledged more stock than is actually available. Once people realize the situation, the chase to fill the void by buying shares pushes the price through the roof.
And that’s exactly what happened to Stutz. The price soared as short sellers tried to cover their position. Ryan’s net worth soared with it as the stock moved from $100 to $391 a share. There was essentially no limit to the price it could reach, since there was virtually none available on the open market. At the same time, the short sellers could leave open their positions, resulting in a standoff. A settlement, however, resulted in short sellers agreeing to replace their shares at $550. That earned Ryan more than $1.6 million. But if Ryan thought he had outsmarted his adversaries at the exchange, he was dead wrong.
The win was actually a loss for Ryan, as Stutz had been delisted from the New York Stock Exchange; he was left with no place to sell his shares. Ryan charged that the short sellers (some of whom were well-connected members of the Exchange) had used their influence to force the shares into the over the counter market, though he could not prove this.
Useless as collateral, the shares became a burden. Ryan exited the Exchange, and relinquished the family seat, giving it over to his son before the family sold it outright. He sued the Exchange for $1 million in a futile attempt to recover.
His father, Thomas, however, was still a wealthy and powerful figure in finance, but he did nothing to assist Allen in his fight. All of this persuaded his investors that Ryan would be unable to continue to pull the strings and manipulate the markets for his and their advantage. The pressures on him to prop up his empire with additional capital only grew. By the end of 1920, his bankers had taken charge of his affairs. Finally, in July of 1922, he filed for bankruptcy. His wife was among his creditors, making a $2 million claim against his assets. The stage was now set for the dramatic events of 1923.
Read Part II by clicking From New York to York Harbor—The Poison Pen Scandal Unfolds. This story updated in 2022.