burbank1915-1

THE UNDOING OF LUTHER BURBANK, PART III

Luther Burbank was in trouble. The 66 year-old horticulturist was watching helplessly as his dreams of a secure future and assured legacy were fading, due to no fault of his own but because of the failures and scandals of other men.

“Do you think Luther Burbank is an honorable person?” Would have been an interesting question to ask on a public opinion poll in 1915 (well, except polling wasn’t a thing, yet) and the replies probably would have shown a sharp divide.

To many he was the Plant Wizard, a man with almost mystical powers to bend nature to his will, someone with integrity and nearly saintly bearing. Others viewed him with disdain; a conman, or the dupe of conmen, or at best, someone so injudicious he entrusted his reputation to men who ruined it. Which answer pollsters received was decided not only on who they asked, but also when in 1915 they asked the question.

Burbank was in the news much that year. He was being celebrated for different reasons both locally and nationally; that tale will be told in the following article. This piece wraps up the stories of the two companies which used his name – and in 1915, both companies were dragging his name through the mud. The best thing that can be said about them was that they were run by men who were not very competent, and the worst was that both companies exploited local trust in Burbank himself to peddle worthless stock to Sonoma County residents.

Both companies were founded in 1912 and introduced in previous articles here. Most prominent was the Luther Burbank Company, which completely took over the commercial side of his business selling plants and seeds. Burbank was elated. “For fifteen years at least I have been endeavoring to make some such arrangements,” he told the Press Democrat. “Henceforth I shall only engage myself in the creation of more novelties in fruits, flowers and plants.” The deal was for Burbank to be paid $30k, followed by annual payments of $15,000.

The Luther Burbank Company had problems from the start. It had little to sell except for his spineless cactus, which Burbank was already cultivating commercially at a cactus plantation near Livermore. And it didn’t help that the Company was run by an enthusiastic young go-getter and former bank teller who had no experience running any sort of business, much less a highly-specialized nursery. (For more, see part II of this series.)

What they did have to sell was corporation stock, and about $375k (equivalent to about $10M today) worth of shares were sold – which was quite a lot, considering the main asset was the intangible value of the Luther Burbank brand and faith that he would not approve any products which were not top quality. Most of the shareholders were from the usual Bay Area investor class, but a block was set aside for Burbank’s friends in Santa Rosa.

The company was never financially sound, however, and had paid Burbank only a fraction of what was agreed upon ($5,920 total for the years 1913-1914). By the midsummer of 1915 rumors were circulating that the business was failing.

To counter those rumors, Burbank may have broken the law: As the corporation was trying to sell a new round of stock, the PD and other local papers reported he gave an interview stating the company was in fine shape (the newspaper wasn’t named, and the rumors weren’t specified). Although Burbank wasn’t on the Board, he was completely dependent on the company for his income and certainly had insider knowledge that the company was headed off the cliff – after all, he had been complaining privately about their inability to pay him more than a fraction of what was owed. Keeping that info secret would be considered securities fraud today.

Then just before the end of 1915, Luther Burbank pulled the trigger and sued the Luther Burbank Company. Interviewed by the PD, his lawyer said, “Burbank has been the victim of stock pirates…They paid him the $30,000, sold stock like hot cakes and never paid him another dollar.” A few weeks later, the company declared bankruptcy and liquidated.

All of those who had invested – including Burbank’s friends in Santa Rosa – lost everything. Locals had to remember he had personally reassured everyone the business was fundamentally secure, and not too long before.

The Luther Burbank Company failed for the reasons most businesses fail: It was just badly run. Had they better management, more investment, more time, yap, yap, they might have survived, as would many companies that flop. But that comment about “stock pirates” aside, it was not a scam. The intentions of the Luther Burbank Press, however, were another story.

The mission of the Luther Burbank Press was to publish and sell an encyclopedic 12-volume set of books about Burbank’s plant-breeding methods. When the corporation was formed in 1912 those books were not yet written; it had been an on-again, off-again project since 1907, made difficult because Burbank kept few notes and hated being bothered by answering detailed questions. At least five editors churned through the job before the Burbank Press found a hack writer of popular science articles willing to cobble the thing together. (All of the background up to 1914 was covered in part I of this series.)

In the meantime, Burbank Press boasted of having some big-name investors including breakfast cereal magnate C.W. Post and beer baron Gustave Pabst. Within the first year Burbank Press had issued over a half-million dollars in stock, which might suggest it was a healthy business. Not widely known at the time, however, was that 23 of it was owned by Burbank Press President Robert John and VP John Whitson, the latter soon to become the key player in our story.

1912burbankpressad(RIGHT: Luther Burbank Press ad as it appeared in the November 2, 1912 Santa Rosa Republican)

During that first year of 1912 Burbank Press ran an ad in the Santa Rosa newspapers seeking to raise money, but not by selling stock – for one week only, residents of Sonoma County could buy $500 notes directly from their office. This was a big deal, the ad explained, because they didn’t sell shares of stock to the public (and couldn’t, legally); rather, this was a goodwill gesture to the community. In a separate interview with the Santa Rosa Republican, Whitson said Burbank Press would be a “permanent Santa Rosa institution” and about half of the money from the notes would be used to construct a building large enough to hold 400 employees. (At the time about 70 young women were working at their Courthouse Square office in the Odd Fellows hall, adjacent to the Empire Building.)

It seemed like an incredibly sweet deal. The five-year notes (bonds, really) paid a 7% return, when blue chip bonds at the time had returns in the 3-5 percent range. Even better, buyers had the option to convert the note/bond into preferred stock. So at the end of five years, instead of the measly 7% return, they would have Burbank Press stock purchased at the introductory 1912 price. With the company about to quadruple in size, the ad stated their stock “is capable of earning 40 to 100 in dividends.” (“40 to 100” what? Percent? Dollars? Cents?) In short, it was all too easy to come away from the ad believing that a $500 investment was a Sure Thing to be worth many thousands – or tens of thousands – by the time it converted into shares of stock in 1917.

And like the Luther Burbank Company stock, it was all resting on blind faith that everything was being done with Burbank’s personal approval. While there was nothing illegal about the investment deal offered by Burbank Press, it was really just a very overpriced, very high-risk junk bond.

Burbank Press made essentially the same offer again in April 1914, even recycling most of the same text – except the good deal was now called a “7 per cent Guaranteed Profit sharing investment”. Other changes included news that the manuscript was finished and the books were now at the printers (the first three volumes would be available by the end of the year), they had made over $415,000 in sales (yet still found it necessary to raise $45k from locals?) and now had 130 employees (so much for quadrupling every year).

That new ad also raise a theme the city papers had been long trumpeting – that the Burbank Press was bringing fame and fortune to Santa Rosa. A section of the ad read: “It means much to Sonoma County that this great publishing enterprise should be permanently located in Santa Rosa…Already hundreds of thousands of strangers know of Santa Rosa through the mailings of the Luther Burbank Press…Already hundreds of strangers have been attracted here, many to locate and invest.”

Thus it came as quite a surprise in early January, 1915, when a full-page notice appeared in the local papers, Everyone was fired and the executives were moving to New York City:


After three years’ work and an expenditure of $400,000, the compilation of Luther Burbank’s Records has been completed. Their publication in twelve large volumes for public sale will be completed this month. The assembly and organization of the selling force can best be accomplished in New York,…It would be too costly at least at present to duplicate such management in New York and Santa Rosa, it is therefore considered advisable to transfer activities to New York during the process of sales organization, retaining however, the quarters and mail sales material in Santa Rosa. The offices at Third Street and Exchange Place will be closed to the public, the office on Mr. Burbank’s Grounds will remain open …

pressmove1915Oh, to have eavesdropped on the party lines afterward. As there were only about 14,000 people living in or near Santa Rosa, probably everyone would have known someone who lost their job – and the post office had also hired extra staff to deal with the mail volume from Burbank Press, so many over there were likely now out of work as well. Still, it’s doubtful that Luther Burbank’s reputation was harmed by this. Not yet.

In May came other news: Robert John and John Whitson were no longer part of the business. Burbank Press was now in Chicago, where former treasurer Preston Gates was now both secretary and general manager. From hereon it’s unclear what the company really did; all we know for sure is that about a year later Burbank Press was no longer able to legally do business in California.1

Few in Santa Rosa probably knew that founders John and Whitson were forced to resign because Luther Burbank Press, like the Luther Burbank Company, was on the verge of bankruptcy that winter, even as they were setting up their ‘luxe new office on Fifth Ave. overlooking Central Park. Creditors swooped down and demanded they surrender their controlling interest via owning two-thirds of the stock. If Burbank Press still didn’t go under, they would each get $12,000. Maybe.

We only know those details because they came out in court – as did lots of other revelations about John Whitson, who found himself much in the news that summer of 1915.

Whitson’s secret past was introduced in part I of this series. He was a Russian originally named Mark David Kopeliovich who went by the aliases of Whitson and Edmund Kopple. In 1905 he began selling shares in the “Whitson Autopress Company.” Investors bought an estimated $200,000 of stock before he disappeared, either because the machine didn’t really work or because he had abandoned his wife and two children to run away with his girlfriend. He had his name legally changed and then was granted a divorce in Reno, claiming his wife had deserted him and her whereabouts were unknown (that he had children was not revealed). Whitson and the other woman then married in England.

annawhitson(RIGHT: Mrs. Anna Whitson, 1915)

Detectives hired by Anna Whitson tracked him down in Santa Rosa and in the months before the sudden move of the business to New York City, it was mentioned in the papers that he was mostly out East on “important business,” which we can now presume was negotiating with Anna’s lawyer. (He later claimed in court “…the action of his wife ‘hounding’ him was largely responsible for the financial difficulties” of the Burbank Press.) Supposedly he had agreed to pay her a settlement of $35,000 when the creditors forced him to surrender his stock. Anna then filed a $46,000 suit against him and had him arrested as a flight risk.

A wire service item about the doings was catnip to news editors, as it portrayed an over the top version of the wronged-woman-seeks-justice news story archetype (nor did it hurt that the story was often accompanied with a portrait of the attractive Mrs. Whitson wearing a sheer evening gown). The story appeared in papers large and small nationwide and they included all or part of her key quote:

“For nine years I have struggled to get to the point financially where I could humble the man who made life miserable for me. Nine years ago I was penniless and he was on the road to wealth. Now I have risen and he is down. This is a woman’s world as well as a man’s,” said Mrs. Anna Whitson. “If I win my separation and a judgment, the money will go to the children; I want nothing from him, nothing but revenge.”

The Santa Rosa newspapers spun the story by only offering a few words (Press Democrat headline: “IS BEING HARASSED BY HIS FORMER WIFE”) and ignored court developments that followed over the next six months. But Santa Rosans also read the San Francisco papers which carried the news being censored here, and you can bet that locals – particularly those who had bought the Burbank Press notes – were following events closely.

The Whitson scandal attracted press attention through the end of the year, peaking with a courtroom showdown in January 1916, just as papers were also reporting on Luther Burbank’s lawsuit against the Luther Burbank Company. (That wasn’t the first time a pair of bad stories appeared close together – the item about rumors of the Company being in trouble had appeared exactly a month after news broke about Whitson’s wife having him arrested.)

Under a previous court order he was paying her $75 a month alimony; she wanted it bumped to $500, which he claimed was impossible – he couldn’t even make the $75 payments without borrowing from his brother and friends. He had found a job “but lost it a short time ago through no fault of his own,” according to coverage in the New York Times. The court ordered him to increase the alimony to $150/mo. and pay his wife’s $600 legal fees. The whole matter wasn’t settled until 1920, when the second marriage was annulled and his divorce from Anna was declared invalid because she had not been served notice.

And remember how the Burbank Press ads had promised to make Santa Rosa famous? That came true, as Every. Single. Item. about the Whitson scandal mentioned he was “Vice President of the Luther Burbank Press at Santa Rosa, Cal.” Sure, a paper sometimes noted he was the former VP, but never did an editor forget to mention he had been living La Vida Bigamous in “Santa Rosa, Cal.” Thanks for making us a household name, Mr. Kopeliovich-Kopple-Whitson.

It’s difficult to imagine the stress that Luther Burbank was under that summer, privately knowing that both the Luther Burbank Company and the Luther Burbank Press were teetering on bankruptcy. While the travails of the Company are well covered in Burbank biographies, none mention that Burbank Press was likewise deep in financial trouble – and that’s because none of the authors looked into the Whitson affair, where details about the business were revealed in court.

Nor do any of the modern books on Burbank cover the third reason he was in deep trouble during 1915: He was losing his base of supporters – the gardeners and small farmers who had long kept faith in Burbank’s integrity even as academics and botanists were snorting that he was a huckster. Walter L. Howard’s book-length 1945 monograph on Burbank2 remains the definitive analysis of his life and work, and he spent ten pages on how his reputation was being wrecked because the public didn’t grasp that he had nothing to do with the businesses using his name:


Not one per cent of the hundreds and hundreds of people I have contacted knew that the Company was separate from Burbank. Those that had some inkling of the existence of a company thought it was organized by Burbank and that its policies and practices wer dictated by him.

A particular sore spot with his followers was The Luther Burbank Society, a non-profit set up in May 1912 to be the copyright holder of the Burbank books and to promote their sale. (Directors of the corporation were Santa Rosa’s top businessman John P. Overton, Burbank Company president James Edwards and Burbank Press president Robert John.) In reality, the “Society” was a sham that generated no small measure of ill will.

It was a huge junk-mail operation that sent out 1.8 million pieces of mail in just a single three month period to sell subscriptions to the future set of books. The letters claimed the recipient had been selected to be one of the 500 charter members; they would receive proofs of book chapters as they became available and invited to help edit and comment (none of that would happen). When the books became available they could be purchased at the (non) discount price of $15 per volume.

Howard explained that he himself was fooled by the letter at first, and wrote that others resented the trickery. A magazine for southwestern ranchers commented Burbank had “made his name largely a joke throughout the country.” Howard wrote of meeting a Missouri fruit grower who became crestfallen when he visited California and learned that his Luther Burbank Society membership was nothing special:


…He even lost his desire to visit the Burbank place, which had been his dearest wish when he left home. It was no use to remind him that Burbank had not planned or organized the “Society,” had practically nothing to do with it, and should not be blamed for everything. But he would have none of it. He said he had been deceived by somebody and thought Burbank was the man to hold responsible for the deception, which, I believe, was typical of many others. So far as I can learn Burbank never made the least effort to clear himself of charges of this kind.

Thus Burbank was also in trouble in a way he didn’t – or couldn’t – recognize. Howard wrote, “He must have been cognizant of the methods being employed but he was absorbed in his own affairs and chose to ignore them, as he did on other occasions, thus employing a sort of split personality…”

For all these reasons the future did not look bright for Luther Burbank in the autumn of 1915. To be saddled with two bankrupt companies (with debts?) and his base of supporters lost, he might have to sell his precious farms as well as the rights to every plant he still owned. It would be a crushing, utter defeat.

And then a completely unexpected letter arrived from a San Francisco newspaper: How would he like to meet Thomas Edison?

NEXT: RELAUNCHING LUTHER BURBANK


1 “On March 12, 1916, the press forfeited its charter to do business in California by reason of nonpayment of taxes…” pg. 199, “A Gardener Touched With Genius” by Peter Dreyer, 1985

2 pp. 389-398, “Luther Burbank A Victim of Hero Worship” by Walter L. Howard, Chronica Botanica, 1945-6

 

sources
(Any unattributed quotes or assertion above were sourced from THE UNDOING OF LUTHER BURBANK, PART I or THE UNDOING OF LUTHER BURBANK, PART II)

 

BURBANK PRESS SENDING OUT 1,800,000 PIECES OF MAIL
Tremendous “Ad” Is Being Given City of Santa Rosa

People who visit the Santa Rosa post office late at night are greeted by an air of bustle and stir inside the mail room. The whirring of the electric stamp canceller and the movements of the mail clerks indicate there is something doing. The activity has been in progress since January 26, and will continue until April 25th.

Between the dates the Luther Burbank Press will send out 1,800,000 pieces of mail matter, and the are being handled at the rate of 24,000 every night.

Probably not all of the people in Santa Rosa and Sonoma county realize what a big boost the Luther Burbank Press is giving Santa Rosa, and incidentally the whole county. Every piece of mail bears a small picture of Mr. Burbank and the address “Santa Rosa, Sonoma County, Cal.”

[..]

– Press Democrat, February 7 1914

 

The last annual report to stockholders, Aug. 31, 1913, of the Luther Burbank Press, Santa Rosa, Cal., shows the company has outstanding preferred stock at $415,050 and that there has been issued $120,000 of common stock. It is understood that the defunct Cree-Binner Publishing company and the Luther Burbank Publishing company were predecessors of the Luther Burbank Press and that the basis on which these companies have operated is a contract with Luther Burbank of Santa Rosa, Cal., for the publication and sale of books to be written by him relating to his discoveries in the field of horticulture. The prospect of income from the purchase of stock in a business of this nature is speculative.

– Chicago Tribune, July 8, 1914

 

PARTNERS HAVE PARTED COMPANY
Robert John and John Whitson Dispose of Their Interests in the Luther Burbank Press

It is reported here that Robert John and John Whitson, who organized and established the Luther Burbank Press in this city a few years ago, have parted company. It is understood that they have disposed of their interests in the Luther Burbank Press to a big Chicago publishing concern which will carry on the work on an enlarged scale. Three volumes have already been published and work is now in progress on the remainder.

The firm did an immense circularizing business from Santa Rosa, reaching to every State in the Union and even to foreign countries. When the field had been practically covered with this kind of work the local offices were closed and about six months ago all activities were transferred to New York City, where it was planned to establish quarters and put out a large force of subscription agents for the work.

The news that the men have parted company and the corporation has been taken over by a Chicago firm will come as a great surprise to Santa Rosans generally.

The company has met all its financial obligations and it is said provision has been made for closing up its affairs on a cash basis.

– Press Democrat, May 16 1915

 

IS BEING HARASSED BY HIS FORMER WIFE

New York, May 15. John Whitson, Vice-president of the Luther Burbank Press, of Santa Rosa, Cal., has been served with papers in a complaint by his first wife, in which she charges him with failing to provide for her and their two children and sues to recover $16,000 she has paid out of her private fortune for their maintenance.

– Press Democrat, May 16 1915

 

WORKS 9 YEARS FOR FUNDS TO SUE HUSBAND

NEW YORK – “For nine years I have struggled to get to the point financially where I could humble the man who made life miserable for me. Nine years ago I was penniless and he was on the road to wealth. Now I have risen and he is down. This is a woman’s world as well as a man’s.” Mrs. Anna Whitson, thus described her reasons for filing suit in New York for separation from John G. Whitson, one of the founders of the Burbank Press, Santa Rosa, Cal., despite the fact that her husband obtained a divorce from her several years ago at Reno, Nev. She has brought additional suit for $46,000, which she says should have been hers had not Whitson, as she alleges, deserted her nine years ago. “If I win my separation and a judgment,” says Mrs. Whitson, “the money will go to the children; I want nothing from him, nothing but revenge.”

– UPI wire story, June 15, 1915

 

WANT TO INCREASE CAPITAL STOCK
Mr. Burbank Denies Rumor of Dissatisfaction – Directors Decide on Plan to Increase Working Capital

In a published interview yesterday Luther Burbank stated positively that any rumor to the effect that he was dissatisfied with The Luther Burbank Company, sole distributors of his seeds and creations, or with its financial standing, was absolutely unfounded.

It is possible that rumors as to the financial outlook of the Luther Burbank Company may have grown out of the fact that stockholders have been asked to increase their holdings so as to provide a bigger cash reserve, thus enabling the company to give time to big purchasers who have found money collections somewhat slow, and to provide an addition to the working basis.

In a recent statement issued to the stockholders of The Burbank Company, some of whom reside here – the big stockholders being men of wealth and prominence in the bay cities – the directors said regarding the additional stock issue:

“You are hereby notified that the board of directors has authorized the sale of 1,200 shares of stock of the par value of $25. This stock is to be purchased only by the present holders of shares in the company. Payment is to be made as follows: $12.50 per share in cash the difference between the par and the cash payment amounting to $12.50 per share is to be taken out of the undivided profits…

“…The directors have determined upon this offer of stock in order to increase the working capital of the company. The experience of the last year has demonstrated that the actual cash capital of the company is not sufficiently large for the business of the company. New Burbank novelties turned over to the company by Mr. Burbank must be carried and propagated for from two to three years before sufficient quantities are available to make marketing profitable. This alone keeps occupied about $45,000 of cash capital…”

– Press Democrat, June 30 1915

 

RUMOR DENIED Persistent rumors have been afloat for the past several days to the effect that the Burbank Company is in financial difficulties and this week the reports were strenuously denied. The directors state that there is absolutely no truth to the report and Mr. Burbank, when seen by a local newspaper reporter, stated that the company is doing as nicely as he could desire and the business is being well handled and is in good shape.

– Sebastopol Times July 3 1915

 

BORROWS TO PAY ALIMONY
Whitson Protests Against Increase From $75 to $500 a Month.

The suit of Mrs. Hannah Whitson for a separation from John T. Whitson was heard yesterday by Justice Hotchkiss of the Supreme Court. Mr. Whitson appeared, not to contest the suit, but to protest against his wife’s application that alimony of $75 a month he has been paying her be increased to $500. The Whitsons were married in April, 1896, and they separated in January, 1900. They have two children, Bertram, 18 years old, and Gladys, 16. Mr. Whitson’s name used to be Kopple, but he had it changed by the courts.

Before she brought the suit, Mrs. Whitson tried to effect an arrangement with her husband by which he would pay her $35,000 in settlement of her claims against him. She said that since she ceased living with him she had spent $46,000 out of her own estate to support herself and children. The agreement was about to be signed when Mr. Whitson’s creditors began troubling him.

Mr. Whitson was the Vice President of the Luther Burbank Press at Santa Rosa, Cal. Yesterday he testified that he and Robert John owned two-thirds of the capital stock of the press company, and that last April their creditors notified them that unless they relinquished the stock the concern would be thrown into bankruptcy, but that if they surrendered their interest each of them would receive $12,000 if the plant finally became successful. The stock was given up, and Mr. Whitson said he came to this city and got a job, but lost it a short time ago through no fault of his own.

Asked where he got the $75 a month he was paying his wife, he replied that he borrowed it from his brother and from friends. He would continue making these payments if he possibly could, he said, but he was sure he could not pay any more than $75. Concerning his present means he said that he had earned only $750 since April 15, and that he had only $8 in cash.

He said that a short time ago he had a talk with his son and told him that if the plantiff did not stop bothering him he would not be able to earn anything. Asked if he did not say it was only in Cherry Street that people thought one wife was enough for a man, he replied, “No.”

[..]

– New York Times, January 12, 1916

Leave a Reply

Your email address will not be published. Required fields are marked *