The Foreign Service Journal, November 2014

68 NOVEMBER 2014 | THE FOREIGN SERVICE JOURNAL stipend of $2,500, along with a sweetheart deal: a no-interest loan to purchase £10,000 of Emma Mine stock, which would not need to be repaid until he sold the shares. In this way Schenck not only lent the prestige of his diplomatic position to the enterprise, but made it appear that he was making a sub- stantial personal investment in it. To his credit, it seems that Schenck had some reservations about accepting the proposed arrangement. Rather than con- sulting the State Department, however, he informally queried two colleagues at the embassy (both also former Civil War offi- cers). Neither raised any objections, so Schenck took the deal. The prospectus was issued on Nov. 9, 1871, and proved very popular, especially among “widows, clergymen, half-pay military officers and others dependent on annuities.” (Three members of parliament also accepted seats on the Emma Silver Mine’s board.) Shortly thereafter, Schenck again began to have qualms about his relationship with Emma Mine, and finally sent the following telegram to Secretary of State Hamilton Fish asking for guidance: “Am surprised and pained by telegrams from United States, published here, regarding my connection with Emma Mine. Have no pecuniary interest except some shares, for which, after investigating fully, I paid dollar for dollar. Hav- ing thus decided and raised means to invest, was solicited by respectable Americans to act with gentlemen of known high character as director, to protect their interests and my own in what I believe very valuable property. Perhaps made mistake. Want only honorably and usefully to serve my government and countrymen, but have not deemed it wrong to try to make something honestly for myself and family. Will withdraw from board or do whatever you advise. Will not embarrass adminis- tration.” Fish quickly cabled back: “The advertisement of the name of a diplomatic representative of the government, as director of a company seeking to dispose of its shares in the country to which he is accredited, is ill-advised and unfortunate, and is calculated to subject him to criticism. … You are earnestly advised to with- draw your name from the management of the company.” Schenck duly submitted his resignation from the Emma Mine board on Dec. 6, 1871—but did not sever his ties with the firm until Jan. 12, 1872. The delay afforded him additional time to unload his shares. In the end, though, he proved better at playing draw poker than playing the market, losing, he said, about $40,000 on the deal. Ironically, one of the reasons Schenck cited for participating in the venture was that he had “found it impos- sible to maintain suitable living standards for himself and his family on his meager salary.” (This is a sentiment expressed by countless Foreign Service officers serving in London since then.) Many other investors lost money, as well. By the end of 1872, shares in the mine fell from a high of £32 to just a little over £1. Investors naturally became irate over what was increasingly seen as a fraud. To his further discredit, Schenck successfully invoked the cloak of diplomatic immunity to escape British lawsuits over the scandal and his role in it as a director of the Emma Mine. Yet despite his loss of credibility, Schenck chose to stay on in London as minister for another four years, finally returning to the United States in early March 1876. Though animosity was directed at Schenck personally, the episode does not appear to have affected bilateral relations in any significant way. Congress Investigates Schenck’s belated resignation may well have been driven by the worsening political climate in Washington, where Democrats began to push investigations into various scandals implicating the Grant administration with an eye toward the 1876 elections. In February 1876, the House of Representatives passed a resolu- tion directing the Committee on Foreign Affairs to investigate the Emma Silver Mine affair and Schenck’s role in it. Representative Abram S. Hewitt (D-N.Y.), a member of the committee, presented its 876-page report to the full House on May 25, 1876. After summarizing the facts, he commented: “Of all the positions in public life, the ambassador occupies the most delicate, the most responsible, the most honorable. To his further discredit, Schenck successfully invoked the cloak of diplomatic immunity to escape British lawsuits over the scandal.