The Ice King | Frozen Assets | 2

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0:56Imagine it's fall 1809 in Boston, Massachusetts. You're marching down a damp stone corridor in the local jail. At the end of the hallway, you wait as the jailer unlocks a heavy wooden door and pushes it open. Inside, your 26-year-old son, Frederick, rises from a bench. He smooths down his rumpled jacket and runs his fingers through his hair. Earlier today, he was arrested for failing to pay his debts. The moment you heard, you rushed to the jailhouse, but you're not sure whether to help your son or just let him face the consequences of his actions. Frederick gestures to the bench. Father, you can sit if you'd like.

1:36You eye the rough, rickety planks. I'll stand. Frederick slumps back down onto the bench. It wobbles under his weight. Am I supposed to sleep on this thing? I suppose they'll give you a blanket. When can I get out of here? Not until your debt's paid. And how am I supposed to repay anyone from a cell? You shake your head, dismayed at your son's naivete. You can't. Your only choice is to rely on your friends and family. Frederick looks at you with pleading eyes. Well, please, father, I can't stay here. You say nothing. The silence hanging in the air. The blood drains from Frederick's face. You are getting me out of here, right?

2:16It's not that simple. You know, I can't keep bailing you out. My own situation isn't what you think. But I'm not asking for a handout. I'll repay every cent when I'm back on my feet. I just need the chance to rebuild my business. Oh, it's that silly business of yours that got you into this mess. The ice trade will make a fortune. You'll see. No, it won't. Promise me you'll give up on this fool's errand, Frederick. Isn't it enough that you're a laughingstock? Maybe this is God's way of telling you enough is enough. So that's it. You're leaving me here. You shake your head. No, your mother would never forgive me.

2:50I've scraped together enough to clear your most pressing debts. But Frederick, you need to give up this lunacy. It's reckless, and it's not just yourself you'll ruin. You'll take the whole family down with you. Your son buries his face in his hands and says nothing. You turn and leave the cell, intending to seek out the sheriff to cut a deal. Since this is Frederick's first defense, the authorities will likely spare him the humiliation of a night behind bars and give him a week to pay his creditors. But you can't help feeling it's only a temporary reprieve. Trouble has a way of finding your son, and next time, he might not get off so easily.

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4:33In early 1806, Boston trader Frederick Tudor thought he'd found an ingenious way to make a fortune. That winter, he harvested ice from a pond on his family's estate and shipped it to the tropics. He hoped to create a new market for ice as a luxury product in places where the frozen commodity was otherwise nowhere to be found. But he'd quickly discovered that having the idea was the easy part. Making it pay was more difficult. and by the fall of 1809, Tudor was in trouble. After a disastrous two years of being unable to ship his product due to an embargo on trade with the Caribbean, Tudor had sunk so far into the red that he was arrested for debt.

5:13He managed to avoid a lengthy stay behind bars, but despite the pleas of his father, Tudor refused to give up on his dream of making his fortune by exporting ice. Tudor remained convinced that the ice trade would eventually become enormously profitable, so he persisted even when others mocked him and his creditors pursued him. So as he faced setback after setback, Tudor would be forced to innovate, experimenting with new technologies and new markets in his quest for success, because no matter what, Tudor was determined to continue on the course he'd chosen. This is Episode 2 in our four-part series on The Ice King, Frozen Assets.

5:55At the beginning of the 19th century, Europe's great powers were at war. After the French overthrew King Louis XVI and installed Napoleon Bonaparte in his place, they came under attack from the continent's other monarchies, and the conflict was not just confined to Europe. Since France, Britain, and Spain all held colonies in North and South America, the fighting extended to the other side of the Atlantic, too. For the young United States, this broader conflict, known as the Napoleonic Wars, was a real threat. As a sovereign state, America was still less than 30 years old, and its armed forces paled in comparison to those of the great European powers.

6:33As a result, President Thomas Jefferson made staying out of the conflict a foreign policy priority. And to emphasize American neutrality, he closed the country's ports to international trade. Merchants could no longer do business with any of the warring nations or their colonies. And Jefferson's restrictions did keep America out of the fighting, but at a steep price. The embargo devastated the U.S. economy. Exports collapsed by 80 percent. Docks fell silent and ships sat idle. Merchants like Frederick Tudor lost all their income and soon faced bankruptcy. So by March 1809, President Jefferson finally recognized the damage his policies were doing and lifted the trade restrictions.

7:14But it was too late for Frederick Tudor. Having been unable to ship ice that season, his debts had continued to mount. Nevertheless, when he'd heard the news of the end of the trade embargo, he immediately began planning to harvest ice from his family estate as soon as the temperature dropped. But when he was released from his short stay in a Boston jail that fall, he still had creditors on his tail. So for the time being, he thought it was wise to leave New England and put some distance between him and his debts.

7:46Imagine it's December 1809 in the governor's mansion in Havana, Cuba. You scrawl your signature on a document, then pick up another piece of paper from a stack that never seems to shrink. Before you can read a word of the document in front of you, though, there's a knock at the door and a smartly dressed young man enters. You gesture to a chair in front of your desk. Please, come sit down. Thank you. I'm Frederick Tudor and I have an appointment with the governor. You take in the man's haughty demeanor as you check the calendar. Yes, it appears you do have an appointment, but I'm afraid you won't be seeing the governor today.

8:18You'll be dealing with me. Tudor's brow furrows in confusion. Forgive me, I assume the governor would take a personal interest in a matter of this importance. A smile tugs at the corners of your mouth. Well, Mr. Tudor, the governor of Cuba is a very busy man, but rest assured I have full authority to deal with this matter. Very well. As you may recall, I was responsible for importing a fine shipment of quality ice here to Cuba two years ago. I do remember that. You caused quite a stir. Well, I only stopped my shipments because American trade policy was such that I would be breaking the law not to do so.

8:52But I put in a lot of time, effort, and money into establishing the ice export business, and I don't want to see it wasted. Now that American policy has changed, I'd like to resume those shipments. Well, of course, but you don't need any special permission to do that. What exactly are you looking for today? I would like exclusivity, the sole rights to import ice into Cuba. Now that trade's resumed, I don't want another merchant to sweep in and take advantage of my hard work. So you are saying you would like a monopoly? You could call that, I suppose, but it's a fact that Cuba wouldn't have any ice at all if it wasn't for me.

9:24I feel I should be the one to reap the benefit of the trade I brought to this island. You find this young man brash and demanding, but you can see where this conversation is heading, and you sense an opportunity to personally profit. Well, Mr. Tudor, I understand your position, and I am sympathetic to it. You would benefit greatly from this arrangement, of course, monetarily. I think we would all benefit from an exclusive trade agreement. That may well be. Why don't you give me some time to consider your proposal and let me get back to you? Tudor nods and stands to leave, but just as he's about to walk away, he reaches into his pocket and drops a bag of coins on your desk.

10:01Perhaps this might help you make your mind up a little sooner. You pick up the bag and hastily deposit it in your desk drawer. Thank you, Mr. Tudor. I'm confident you'll be happy with my decision. After he leaves, you count out the coins and pocket your share, setting aside the rest for the governor and other officials you'll need to give a cut. Then you take a piece of paper and write out the license, granting the exclusivity that Tudor requested. You set it on a pile for the governor's signature, satisfied that you'll profit handsomely from this renewed ice trade, whether Tudor ultimately does or not.

10:40In early 1810, after winning the exclusive right to trade ice in Cuba, Frederick Tudor was ready to get back to work. But before his shipment of ice arrived that spring, he needed to rebuild his dilapidated ice house. In the two years since Tudor had last shipped New England ice to Cuba, the ice house in Havana had stood empty. Its underground storage chamber was damp and dirty, and the timber structure above it had collapsed. So Tudor decided to start from scratch. He hired a team of Cuban laborers to build him a new and bigger ice house, and they managed to finish construction before two new ships carrying ice from Boston docked in Havana in April 1810.

11:17After taking receipt of the shipments, Tudor paid Longshoremen to unload the cargo and transport it to the new ice house. Then, just as he had two years earlier, he placed ads in local newspapers encouraging the inhabitants of Havana to come and buy a chunk of pure, clean New England ice. And to his great relief, he was soon back to making money. But a month later, Tudor's worst fears were confirmed when a rival appeared on the scene. A ship sailed into Havana with its hold packed with ice from New England, and it wasn't one of his vessels. Tudor's unusual business idea had been mocked for years, but now it was clear that someone else had finally seen the potential profits.

11:56So Tudor went straight to the Cuban authorities, demanding they block the newcomer from unloading his cargo. According to the terms he'd agreed to with the government, only Tudor was permitted to import ice to Cuba. But despite their previous assurances that he alone would be able to sell ice on the island, the governor's officials ignored Tudor's complaints and made no move to enforce his exclusive rights. Tudor realized that the trade agreement he'd made was nothing but a worthless piece of paper. But Tudor was still not about to let a rival encroach on his territory. He reasoned that if the people of Havana could buy the cheapest ice from him, His rival wouldn't stand a chance, so he slashed his prices.

12:34This move worked. Customers flocked to Tudor's ice house while the rival merchant was shut out. After just a few days, the newcomer's ice was melting rapidly, and he made overtures to Tudor, offering to sell the rest of his ice at cost. But Tudor had no intention of allowing his rival to even break even and refused to purchase the remaining stock. This left the other merchant no option but to raise anchor and leave Havana, dumping his now worthless cargo into the sea. By the time Tudor's own ice ran out, he generated$7 ,400 in revenue, on which he made a$1 ,000 profit. But it wasn't much of a payday for all the effort he put in, and Tudor was still deeply in debt.

13:14Still, it was enough to prove that after a long embargo, the ice trade could again be profitable, and it motivated Tudor to keep going. But looking ahead, Tudor realized that if he wanted to make real money, he'd have to expand. So over the winter of 1810 and into early 1811, he began the process of branching out into a new market. He kept his ice house in Havana and continued to send shipments there, but he decided to add a second destination on another Caribbean island, Jamaica. As he'd done before, Tudor asked his family for help. He recruited his younger brother, Harry, to travel to Jamaica and build a temporary ice house, big enough for a test shipment.

13:51Then after dispatching ice to Havana to begin a new season of trading there, Tudor loaded up a second ship bound for Jamaica, which departed in April 1811. Unfortunately, this shipment never arrived at its destination. The vessel was lost at sea, and since it was already spring in Boston, Tudor had no ice left to harvest. His attempt to break into the Jamaican market sank with the doomed ship. And even worse, the failed delivery triggered a series of disasters. When news spread in Boston that Tudor had lost stock in the shipwreck, It spooked one of his creditors, prompting a demand for immediate repayment.

14:28But Tudor didn't have enough cash to settle the debt, so the creditor sought a warrant for Tudor's arrest. For the second time, Tudor was apprehended by a Boston sheriff, and this time he was locked up in a prison cell for days. Tudor was only released after his family scraped together enough money to satisfy the court. But no sooner was he free when another blow landed. The War of 1812 broke out between the United States and Britain, and to stop the Royal Navy capturing American merchant ships, President James Madison once again closed American ports. For the second time in five years, a self-imposed trade embargo delivered a crushing blow to America's merchants, and Tudor faced another winter unable to harvest or sell ice.

15:11With exports on hold but creditors still on his tail, Tudor desperately looked for other ways to make money. He considered investing in Massachusetts coal mines, but he lacked the funds to buy in. He tried to persuade his father to remortgage the family estates, but he had made risky real estate investments that weren't paying off, so he wasn't in a position to lend his son any more money. Desperate for cash, Tudor soon had an idea just as unconventional as exporting ice. Although he had no experience in shipbuilding, he came up with an innovative design for a flat-bottom boat that had a keel only at the stern, meaning it could remain stable while sitting high in the water.

15:48This made it perfect for sailing far upriver where water was increasingly shallow. As a merchant himself, Tuner knew that traders would appreciate the ship's ability to carry cargo deep inland. But aware that the country was at war, he also hoped that the government would see the military applications of his new design. The Navy could sail further upriver and deposit troops deeper inland than previously possible. In the hope of catching the attention of the Secretary of the Navy, Tudor somehow managed to borrow yet more money and construct a prototype of the boat. As he pursued this new goal, his debt soared to almost$39 ,000, more than three quarters of a million dollars today.

16:26And he still had no income. But Tudor did not let that fact slow him down. In May 1813, he launched his experimental boat and sailed up the Charles River with a delegation of potential investors aboard. But unbeknownst to him, he would not be returning to port with the rest of the passengers. Tudor's prototype hadn't traveled far when he was flagged down by another vessel. A sheriff then boarded and arrested Tudor once again for failing to pay his creditors. The experimental ship returned to port without the man who built it and without attracting any financial backing. Yet again, Tudor was imprisoned in a Boston jail and only released when his father agreed to bail him out once more.

17:06But his father also left him in no doubt that this was the last time. Frederick Tudor's business woes had gotten him in trouble with the law a third time. He was frustrated, still believing that no one else could see what he could. As far as he was concerned, Tudor had been laid low not because his business concepts lacked merit, but by sheer bad luck. So no matter what obstacles were put in his way, Tudor was sure that his fortunes would change when he got the chance to resume the ice train, even if it meant risking another arrest and disappointing his father yet again.

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19:38The War of 1812 and America's subsequent trade embargo was a serious obstacle for Frederick Tudor's ice export business. But Frederick's father found that there was a silver lining in the war. Since it put his son's risky ice exports on hold, he used the time to encourage Frederick into safer business ventures. But Frederick was only biding his time until Boston Harbor reopened. In February 1815, Congress ratified the Treaty of Ghent, bringing the War of 1812 to a close. With British warships no longer patrolling the East Coast, President James Madison then reopened the nation's ports. And almost immediately, arguments began in the Tudor household.

20:18Because no matter what he may have promised his father in the past, Frederick was determined to resume his trade in ice.

20:29Imagine it's the evening of November 1st, 1815 in Boston Harbor. The sun is sinking below the horizon as your son, 32-year-old Frederick, gently peels your arms from around him. You pull a handkerchief from your sleeve and dab your eyes while he tries to comfort you. Oh, mother, I thought you'd be used to me going away by now. It never gets easier. What if the ship sinks? It won't. You might catch a tropical disease. I won't. Oh, I'm sorry. Every time you go, it makes me think of your brother, John. Fourteen years ago, your son John died on his return journey from Cuba, where he'd been sent to recover from a bout of illness.

21:09Oh, mother, John was already sick. He would have died whether he went away or not. You glance toward the ship, where the captain's making the final preparations for departure. He spots Frederick and gestures for him to come aboard. Well, look, I've got to go. They'll pull the gangplank any minute. You know what? I'm sorry your father's not here to see you off. Oh, it's okay. I know he's angry. But this is the only way I can pay back what I owe. And I'm not going to bury my head in the sand like he does about his own debts. Well, he's trying his best. But you know he's a very proud man. So am I.

21:43And I want to stand on my own two feet. I don't want father to bail me out every time I get in trouble. But still, couldn't you send someone else to Cuba for you? You could manage the ice harvest here instead, like you've done before. Nah, I think it's better if I'm out of Boston for now. There's a reason we're sailing at sunset. It's easier to slip out of the harbor without the law knowing. The law? Are you in trouble again? No, I'm just keeping a low profile in case one of my creditors hears I'm leaving the country. They might call in the authorities again to stop me from going. I see. You hand Frederick a parcel, wrapped in brown paper.

22:17Well, here, take this. What is it? Some sweets, a few clean shirts, it's not much. Well, it's perfect, thank you. Now, I really must go, but I'll be back in the spring, and God willing, I'll have a hold full of cash, too. You wrap your arms around your son one last time, but after a few seconds, your son Frederick wriggles free and dashes up the gangplank onto the departing ship. You stand on the dock, waving, as the vessel slowly drifts away into the gathering dusk. You find yourself wishing your son would come to his senses. Like your husband, you have serious doubts that the ice trade will ever make him rich.

22:56You can only hope that Frederick has learned from his past mistakes, and that this time he'll do things differently.

23:06In late 1815, three weeks after bidding his mother farewell in Boston, Frederick Tudor once again docked in Havana. He still didn't enjoy Cuba's sweltering climate, which made him physically uncomfortable, and even worse, threatened to quickly melt his precious cargo. But after more than a decade, Tudor had an increasingly sophisticated understanding of how to harvest, transport, and store his product. So when Tudor disembarked in Havana this time, he wasn't alone. With him was a team of Boston carpenters who he'd hired to construct a new ice house, one that was to be a radical break from previous designs.

23:41Tudor's earlier ice houses in Cuba had been based on the type used widely in New England. There, the structures tended to be excavated into the ground, with subterranean chambers which were hewn out of rock and lined with brick or stone. These ice houses managed to keep ice frozen even at the height of a Boston summer, but Tudor had concluded that they weren't as effective in the tropics, and he thought he'd worked out why. In the Caribbean, the heat of the blazing tropical sun caused the ground to become much warmer than in northern climates like New England, leading the subterranean chamber of his Havana Ice House to warm quickly and much more than expected.