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diff --git a/26330-8.txt b/26330-8.txt new file mode 100644 index 0000000..aaf3795 --- /dev/null +++ b/26330-8.txt @@ -0,0 +1,21582 @@ +The Project Gutenberg EBook of Frenzied Finance, by Thomas W. Lawson + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Frenzied Finance + Vol. 1: The Crime of Amalgamated + +Author: Thomas W. Lawson + +Release Date: August 16, 2008 [EBook #26330] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK FRENZIED FINANCE *** + + + + +Produced by Barbara Tozier and the Online Distributed +Proofreading Team at http://www.pgdp.net + + + + + + + +------------------------------------------------------------+ + | Transcriber's Note: | + | | + | Obvious typographical errors have been corrected in | + | this text. For a complete list, please see the bottom of | + | this document. | + +------------------------------------------------------------+ + +[Illustration: THOMAS W. LAWSON AFTER TWELVE MONTHS OF "FRENZIED +FINANCE"] + +FRENZIED FINANCE + +BY + +THOMAS W. LAWSON + +OF BOSTON + +VOLUME I + +THE CRIME OF AMALGAMATED + + +NEW YORK +THE RIDGWAY-THAYER COMPANY +1905 + + +_Copyright, 1905, by_ +THE RIDGWAY-THAYER COMPANY + +_These articles are reprinted from "Everybody's Magazine"_ + +COPYRIGHT, 1904, BY THE RIDGWAY-THAYER COMPANY + +COPYRIGHT, 1905, BY THE RIDGWAY-THAYER COMPANY + +_All rights reserved_ + +TROW DIRECTORY +PRINTING AND BOOKBINDING COMPANY +NEW YORK + + + + +TO + +PENITENCE AND PUNISHMENT + +THIS BOOK IS DEDICATED + +TO PENITENCE: that those whose deviltry is exposed within its pages may +see in a true light the wrongs they have wrought--and repent. + +TO PUNISHMENT: that the unpenalized crimes of which it is the chronicle +may appear in such hideousness to the world as forever to disgrace their +perpetrators. + +TO PENITENCE: that the transgressors, learning the error of their ways, +may reform. + +TO PUNISHMENT: that the sins of the century crying to heaven for +vengeance may on earth be visited with condemnation stern enough to halt +greed at the kill. + +TO PUNISHMENT: that public indignation may be so aroused against the +practices of high finance that it shall come to be as culpable to graft +and cozen within the law as it is lawless to-day to counterfeit and +steal. + +TO PENITENCE: that in the minds of all who read this eventful history +there may grow up a knowledge and a conviction that the gaining of vast +wealth is not worth the sacrifice of manhood, and that poverty and +abstinence with honor are better worth having than millions and luxury +at the cost of candor and rectitude. + + + + +TO MY AUDIENCE + +SAINTS, SINNERS, AND IN-BETWEENS + + +Before you enter the confines of "Frenzied Finance," here spread +out--for your inspection, at least; enlightenment, perhaps--halt one +brief moment. If the men and things to be encountered within are +real--did live or live now--you must deal with them one way. If these +embodiments are but figments of my mind and pen, you must regard them +from a different view-point. Therefore, before turning the page, it +behooves you to find for yourself an answer to the grave question: + +Is it the truth that is dealt with here? In weighing the evidence +remember: + +My profession is business. My writing is an incident. "Frenzied Finance" +was set down during the twenty-fifth and twenty-sixth hours of busy +days. I pass it up as the history of affairs of which I was a part. The +men who move within the book's pages are still on the turf. A period of +twelve years is covered. So far, eighteen instalments, in all some +400,000 words, have been published. The spigot is still running. I have +written from memory, necessarily. While it is true that fiction is +expressed in the same forms and phrases as truth, no man ever lived who +could shape 400,000 words into the kinds of pictures I have painted and +pass them off for aught but what they were. The character of my palette +made it mechanically impossible to shade or temper the pigments, for the +story was written in instalments, and circumstances were such that often +one month's issue was out to the public before the next instalment was +on paper. Considering all this, the consistency of the chronicle as it +stands is the best evidence of its truth. In submitting it to my readers +I desire to reiterate: + +It _is_ truth--of the kind that carries its own bell and candle. Within +the narrative itself are the reagents required to test and prove its +genuineness. Were man endowed with the propensity of a Münchhausen, the +cunning of a Machiavelli, the imagination of Scheherezade, the ability +of a Shakespeare, and the hellishness of his Satanic Majesty, he could +not play upon 400,000 words, or one-quarter that number, and make the +play peal truth for a single hour to the audience who will read this +book, or to one-thousandth part the audience that has already read it in +_Everybody's Magazine_. + +Such as the story is, it is before you. If in its perusal you fathom my +intentions, my hopes, my desires, I shall have been repaid for the pain +its writing has brought me. At least you will find the history of a +colossal business affair involving millions of dollars and manned by the +financial leaders of the moment. It is a fair representation of +financial methods and commercial morals as they exist in America at the +beginning of the twentieth century. As a contemporary document the +narrative should have value; as history it is not, I believe, without +interest. As a message it has had its influence. Indeed, it is not an +exaggeration to say that no man in his own generation has seen such a +crop come forth from seed of his own sowing since the long bygone days +when the wandering king planted dragons' teeth on the Phoenician plain +and raised up an army of warriors. + +Yours very truly + Thomas W. Lawson + + + + +FOREWORD + + +There will be set down in this book, in as simple and direct a fashion +as I can write it, the story of Amalgamated Copper and of the "System" +of which it is the most flagrant example. This "System" is a process or +a device for the incubation of wealth from the people's savings in the +banks, trust, and insurance companies, and the public funds. Through its +workings during the last twenty years there has grown up in this country +a set of colossal corporations in which unmeasured success and continued +immunity from punishment have bred an insolent disregard of law, of +common morality, and of public and private right, together with a grim +determination to hold on to, at all hazards, the great possessions they +have gulped or captured. It is the same "System" which has taken from +the millions of our people billions of dollars, and given them over to a +score or two of men with power to use and enjoy them as absolutely as +though these billions had been earned dollar by dollar by the labor of +their bodies and minds. Yet in telling the story of Amalgamated, the +most brazen and voracious maw of this "System," I desire it understood +that I take no issue with men; it is with a principle I am concerned. +With the men I have had close and intimate intercourse, and from my +knowledge of the means they have used, and the manner in which they have +used them, and the causes and effects of their performances, I have no +hesitation in stating that the good they have done, the evils they have +created, and the indelible imprints they have made on mankind are the +products of a condition and not of their individualities, and that if +not one of them had ever been born the same good and evil would to-day +exist. Others would have done what they did, and would have to answer +for what has been done, as they must. So I say the men are merely +individuals; the "System" is the thing at fault, and it is the "System" +that must be rectified. Better far for me not to tell the story I am +going to tell; better far for the victims of Amalgamated not to know who +plundered them and how, than to have them know it only to wreak +vengeance on individuals and overlook the "System," which, if allowed to +continue, surely will in time, a short time, destroy the nation by +precipitating fratricidal war. + +The enormous losses, millions upon millions--to my personal knowledge +over a hundred millions of dollars--which were made because of +Amalgamated; the large number of suicides--to my personal knowledge over +thirty--which were directly caused by Amalgamated; the large number of +previously reputable citizens who were made prison convicts--to my +personal knowledge over twenty--directly because of Amalgamated, were +caused by acts of this "System" of which Henry H. Rogers and his +immediate associates were the direct administrators; and yet Mr. Rogers +and his immediate associates, while these great wrongs were occurring, +led social lives which, measured by the most rigid yardstick of mental +or moral rectitude, were as near perfect as it is possible for human +lives to be. As husbands, fathers, brothers, sons, friends, they were +ideal, cleanly of body and of mind, with heads filled with sentiment and +hearts filled with sympathies; their personal lives were like their +homes and their gardens--revealing only the brightest things of this +world, the singing, humming, sweet-smelling things which so strongly +speak to us of the other world we are yet to know. As workers in the +world's vineyards, they labored six days and rested upon the Sabbath, +and gave thanks to Him from whom all blessings flow that He allowed +them, His humble creatures, to have their earthly being. And yet these +men, to whose eyes I have seen come the tears for others' sufferings, +and whose voices I have heard grow husky in recounting the woes of their +less fortunate brothers--these men under the spell of the brutal code of +modern dollar-making are converted into beasts of prey, and put to shame +the denizens of the deep which devour their kind that they may live. + +In the harness of the "System" these men knew no Sabbath, no Him; they +had no time to offer thanks, no care for earthly or celestial being; +from their eyes no human power could squeeze a tear, no suffering wring +a pang from their hearts. They were immune to every feeling known to God +or man. They knew only dollars. Their relatives of a moment since, their +friends of yesterday and long, long ago, they regarded only as lumps of +matter with which to feed the whirring, grinding, gnashing mill which +poured forth into their bins--dollars. + +In telling the story of Amalgamated I hope to have profited by my long +and intimate study of this cruel, tigerishly cruel "System," so as to be +able to deaden myself to all those human sympathies which I have heard +its votaries so many times subordinate to "It's business." I shall try +only to keep before me how the Indians of the forest, as our forefathers +drove them farther and farther into the unknown West, got bitter +consolation out of the oft-chanted precept of their white brethren of +civilization, "An eye for an eye, a tooth for a tooth," reminding myself +that whatever of misery or unhappiness my story may bring to the few, it +will be as nothing to that which they have brought to the many. + +In asking for the serious, earnest consideration of the public, I shall +be honest in giving to it my qualifications, my motives, and my desires +for writing this narrative. For thirty-four years I have been actively +connected with matters financial. As banker, broker, and corporation +man, I have, from the vantage-point of one who actually handled the +things he studied, studied the causes which created the conditions which +made possible the "System" which produced the Amalgamated affair. In my +thirty-four years of business experience I have seen the great fortunes, +which are the motive power of the "System" referred to, come out of the +far West as specks upon the financial horizon and grow and grow as they +travelled Eastward, until in their length, breadth, and thickness they +obscured the rising sun. At short range I have seen the giant money +machine put together; I have touched elbows with the men who made it, as +they fitted this wheel and adjusted that gear, while at the same time I +broke bread and slept with the every-day people who, with the industry +of the ant and the patience of the spider, toiled to pile in the +pennies, the nickels, and the dimes which have kept the "System's" +hopper full. + +At my first meeting with the creators of Amalgamated it was clearly and +distinctly understood that under no circumstances would I enlist in that +"System's" interests other than for such special services as, after due +thought and investigation, I should decide to be such as I could in +fairness to myself and my clients work for; and when I give the details +of this first meeting in my narrative it will be evident to its readers +that in telling the story of Amalgamated I am violating no confidence, +nor in any way encroaching upon the niceties of that business code which +is, and should be, the foundation of all legitimate financial dealings, +nor in any way misusing knowledge which, if acquired under other +circumstances, might be sacred. + +Amalgamated was one service the "System" asked of me. It was created +because of my work. It was largely because of my efforts that its +foundation was successfully laid. It was very largely because of what I +stood for and because of the public's confidence in the fulfilment of +the promises I made that the public invested its savings to an extent of +over $200,000,000; and it was almost wholly because of the broken +promises and trickery of the creators of the "System" that the public +lost the enormous sums it did. + +My motives for writing the story of Amalgamated are manifold: I have +unwittingly been made the instrument by which thousands upon thousands +of investors in America and Europe have been plundered. I wish them to +know my position as to the past that they may acquit me of intentional +wrong-doing; as to the present that they may know that I am using all my +powers to right the wrongs that have been committed, and as to the +future that they may see how I propose to compel restitution. + +My desire in writing the story of Amalgamated, while tinged perhaps with +hatred for and revenge against the "System" as a whole and some of its +votaries, is more truly pervaded with a strong conviction that the most +effective way to educate the public to realize the evils of which such +affairs as the Amalgamated are the direct result, is to expose before it +the brutal facts as to the conception, birth, and nursery-breeding of +this the foremost of all the unsavory offspring of the "System." Thus it +may learn that it is within its power to destroy the brood already in +existence and render impossible similar creations. + +In the course of my task I shall describe such parts of the general +financial structure as will place my readers, especially those +unfamiliar with its more complicated conditions, in a mental state to +comprehend the methods by which the savings they think are safely +guarded in the banks, trust and insurance companies, are so manipulated +by the votaries of frenzied finance as to be in constant jeopardy. I +shall show them that while the press, the books, the stump, and our +halls of statesmanship are full to overflowing with the whys, +wherefores, and what-nots of "tariff," "currency," "silver," "gold," and +"labor"; while our market systems are perfected educational machines for +disseminating accurate statistics about the necessaries and luxuries of +life, the water and land carriers, real estate, and other material +things which the people have been taught to believe are the only things +that vitally affect their savings; that while they imagine they +understand the system by which speculation and investments are +controlled and worked, and that the causes and effects of this system +are at all times get-at-able by them through their bankers and their +brokers; there is a tangible, complicated, yet simple trick of financial +legerdemain, operated twenty-four hours in each day in the year, and +which the press, the books, the politicians, and the statesmen never +touch upon--a trick by means of which the savings of the people and the +public funds of the Government, whether in the national banks, +savings-banks, trust or insurance companies, are always at the absolute +service and mercy of the votaries of frenzied finance. + +Therefore, in the course of my story of Amalgamated will come a few +kindergarten pictures of how the necessaries and luxuries of the people +are "incorporated"; of how the evidences of corporation ownership are +manufactured; of the individuals who "manufacture" them; of the +individuals who control and make or unmake their values; of the +meeting-place of these individuals, within and without the +stock-exchanges; of some of the corporations and of some of the signs +and tokens of corporation ownership; of some of their histories; of some +of their doings, and of some of their contemplated doings. These +kindergarten pictures I will endeavor to paint, not in that +"over-the-head" verbosity or "under-the-feet" profundity and intricacy +of the political economy pedant, which are as the canvases of the +Whistler school to the masses; but rather will I use the brush of the +artisan who in giving us our white fences, our gray cottages, and our +green blinds sets off those things which make up the pictures the people +really understand and dearly prize. + +In the last few years the public has heard many stories of this +Juggernaut "System," which has grown to be the greatest private power in +our land--greater almost than the power which governs the nation, +because it is not only great within itself but by its peculiar workings +is really a part of the power which governs the people. Particularly has +it been told the story of Standard Oil by Mr. Henry D. Lloyd in his able +work, "Wealth Against Commonwealth," and by Miss Ida M. Tarbell in her +recent historical sketches; but however thorough these writers may have +been in gathering the facts, statistics, and evidences, however +relentless their pens and vivid their pictures, they dealt but with +things that are dead; things that to the present generation are but +skeletons whose dry and whitened bones cannot possibly bring to the +hearts, minds, and souls of the men and women of to-day that +all-consuming passion for revenge, that burning desire for justice, +without which no movement to benefit the people can be made successful. + +In telling my story I shall, for I must, tell it fairly, and to make +sure of this I pledge myself to keep to the exact facts as they +occurred, not allowing myself to be overawed by their greatness into +contracting them, nor to be tempted by their littleness into expanding +them. In doing this I know, because of the peculiarity of the subject +and my intimate relation to it, no other way than to do it in the first +person. As I have already stated, I would prefer to deal with my subject +through the principles involved rather than with the men concerned; but +as I shall be compelled to call spades spades, I must, of necessity, use +the names of men and of institutions fearlessly and without favor. + +In the beginning it will be necessary, for that clear understanding of +the whole subject which is one of my principal objects, to treat at +sufficient length the Bay State Gas intricacies and trickeries, in which +in a certain sense Amalgamated had its being. This will compel me to +devote a chapter to one of the most picturesquely notorious characters +of the age, John Edward O'Sullivan Addicks, of Delaware, Everywhere, and +Nowhere. + +The main part of my narrative must of necessity deal with the two real +heads of Standard Oil and Amalgamated, Mr. Henry H. Rogers and Mr. +William Rockefeller; and with the biggest financial institution of +America, if not of the world, the National City Bank of New York, and +its head and dominating spirit, Mr. James Stillman. + +An important chapter should be that devoted to the conception and +formation of the United Metals Selling Company, which was specially +organized to control the copper industry of the world without coming +within the restrictions of the laws for the prevention or regulation of +monopolies. + +I shall also deal at length with a notorious character, who, like the +spot upon the sun, looms up in all American copper affairs whenever they +appear in the full vision of the public eye--Mr. F. Augustus Heinze, of +Montana. + +There will be a chapter of more or less length devoted to one of the +most important episodes in Amalgamated affairs, wherein I shall describe +one of Wall Street's most picturesque, able, and intensely interesting +men, Mr. James R. Keene. + +I shall touch on a bit of the nation's history in which within a few +days of the national election of 1896 a hurry-up call for additional +funds to the extent of $5,000,000 was so promptly met as to overturn the +people in five States and thereby preserve the destinies of the +Republican party, of which I am and have always been a member. + +I shall draw a picture of two dress-suit cases of money being slipped +across the table at the foot of a judge's bench in the court-room, from +its custodian to its new owners, upon the rendering of a court decision; +and I shall show how the new owners frustrated a plot having for its +object their waylaying and the recovery of the bags of money. + +I shall devote some space to pointing out the evils and dangers of the +latter-day methods of corrupting law-makers, and show how one entire +Massachusetts Legislature, with the exception of a few members, was +dealt with as openly as the fishmongers procure their stock-in-trade +upon the wharves; how upon the last day of the Legislature, because +their deferred cash payments were not promptly forthcoming, its members +turned, and made necessary the hurried departure for foreign shores of a +great lawyer and his secretary, with bags of quickly gathered gold, and +all evidences of the crimes committed and attempted; how after the ship +arrived at an island in foreign seas the great lawyer's dead body +received hurried burial, and his secretary's was later dropped, with +weights about its feet, to the ocean's depths; and how ever since the +natives whisper among themselves their gruesome suspicions. + +I shall devote a chapter to the doings of certain financial reputation +sandbaggers and blackmailers; show how through their agencies they hold +up corporations and their managers for large sums, which upon being paid +start into motion a perfected system for the false moulding of public +opinion for the purpose of making more easy the plundering of the +people. I shall photograph the men and draw accurate diagrams of the +machinery through which their nefarious trade is carried on. + +My story will carry me down Wall Street, into the Stock Exchange, +through its hundred and one or million and one open and hidden passages, +and into State Street, that ever-hung hammock of financial somnolence, +and into the courts of justice of New York, New Jersey, Pennsylvania, +Delaware, Massachusetts, and Montana, and into many other interesting +abodes of justice and injustice, of trickery, fraud, and simple, honest +trustfulness. + +When my story is ended and the great American people, whose simple but +proud boast is that they cannot be fooled in the same place by the same +methods and the same instruments twice, know as much as I now know of +Amalgamated and its relation to the "System" which has for years as +boldly, as coarsely, and as cruelly robbed them as the coolie slaves are +robbed by their masters--it will be for them to decide whether my story +has been, because of the facts which entered into it, so well told that +they will not be satisfied with the restitution of the vast sums which +the Amalgamated took from them, which United States Steel took from +them, and which other financial enterprises took in lesser amounts but +by equally flagrant methods; but will demand the overthrow of the +"System" itself. It will be for them to decide; and if their decision +should be for a conclusive revolt, I shall be amply repaid for the pains +and the miseries which must necessarily follow in the wake of a task +such as the one I undertook when I decided to tell the story of +Amalgamated. + + + + +CONTENTS + + + PAGE + + FOREWORD vii + + +PART I + +CHAPTER + + I. THE TORTUOUS COURSE OF AMALGAMATED 1 + + II. THE "SYSTEM'S" METHOD OF FINANCE AND MANAGEMENT 5 + + III. THE MEN IN POWER BEHIND THE "SYSTEM" 13 + + IV. MY OWN RESPONSIBILITY 23 + + V. THE POWER OF DOLLARS 33 + + VI. CONSTRUCTION OF "STANDARD OIL'S" "DOLLAR-MAKING" MILL 41 + + VII. JUGGLING WITH MILLIONS OF THE PEOPLE'S MONEY 52 + + VIII. "STANDARD OIL" INVESTS "MADE DOLLARS" IN GAS 56 + + IX. A VOTARY OF THE "SYSTEM" 60 + + X. ADDICKS COMES TO BOSTON 67 + + XI. HOW ADDICKS CAPTURED BOSTON GAS 71 + + XII. STOCK-BROKERS NOT ALL BAD 79 + + XIII. THE "SYSTEM" VERSUS WESTINGHOUSE 88 + + XIV. THE ALLIANCE WITH ADDICKS 93 + + XV. THE GREAT BAY STATE GAS FIGHT 103 + + XVI. PEACE NEGOTIATIONS WITH ROGERS 110 + + XVII. A MEMORABLE CONFERENCE 113 + + XVIII. THE DUPLICITY OF ADDICKS 125 + + XIX. ENTER H. M. WHITNEY 133 + + XX. AN AWKWARD ATTACK OF APPENDICITIS 142 + + XXI. BRIBING A LEGISLATURE 149 + + XXII. PLUNDERED OF THE PLUNDER 162 + + XXIII. TWO GENTLEMEN OF FRENZIED FINANCE 170 + + XXIV. BUYING A BUNCH OF STATES 176 + + XXV. ATHLETICS OF FINANCE 182 + + XXVI. THE CIRCLING OF THE VULTURES 187 + + XXVII. COURT CORRUPTION AND COIN 191 + +XXVIII. PEACE AT LAST 195 + + +PART II + + I. THE MAGIC WORLD OF FINANCE 197 + + II. THE "SYSTEM" AND THE LOUISIANA LOTTERY COMPARED 202 + + III. THE FUNDAMENTALS OF FINANCE 208 + + IV. THE MAGIC "JIMMY" 213 + + V. HOW THE "SYSTEM" DOES BUSINESS 217 + + VI. HOW WALL STREET'S MANIPULATIONS AFFECT THE COUNTRY 223 + + VII. ECONOMICS OF COPPER 226 + + VIII. MY PLAN FOR "COPPERS" 233 + + IX. BIRTH OF "COPPERS" 237 + + X. ROGERS GRASPS "COPPERS" 245 + + XI. THE COPPER CAMPAIGN OPENS 253 + + XII. THE BUNCOING OF THE STOCKHOLDERS OF UTAH 261 + + XIII. THE TRAP IN FINANCE 266 + + XIV. LAWYER UNTERMYER DISCOVERS THE "NIGGER" 274 + + XV. DEGREES IN CRIME 281 + + XVI. MR. ROGERS UNMASKS 283 + + XVII. "EXTRACT EVERY DOLLAR" 289 + + XVIII. THE BITERS BIT 301 + + XIX. THE DESPOILING OF LEONARD LEWISOHN 307 + + XX. THE CHRISTENING OF AMALGAMATED 311 + + XXI. FIXING THE RESPONSIBILITY 320 + + XXII. THE RESPONSIBILITY FASTENED 332 + + XXIII. THE FIRST CRIME OF AMALGAMATED 340 + + XXIV. THE SUBSCRIPTION OPENS 346 + + XXV. DOLLAR HYDROPHOBIA 351 + + XXVI. DEVILTRY AFOOT 359 + + XXVII. THE BLACK FLAG HOISTED 364 + +XXVIII. THE BOGUS SUBSCRIPTION 370 + + XXIX. THE AFTERMATH 376 + + XXX. THE MORNING AFTER 385 + + XXXI. I WALK THE PLANK 389 + + XXXII. PERFECTING THE DOUBLE CROSS 397 + +XXXIII. A RETROSPECT AND A MORAL 405 + + +LAWSON AND HIS CRITICS + + I. THE INSURANCE CONTROVERSY 413 + + II. THE ENEMIES I HAVE MADE 487 + + III. EXPLANATIONS 539 + + + + +FRENZIED FINANCE + +THE STORY OF AMALGAMATED + +_PART I_ + + + + +CHAPTER I + +THE TORTUOUS COURSE OF AMALGAMATED + + +Amalgamated Copper was begotten in 1898, born in 1899, and in the first +five years of its existence plundered the public to the extent of over +one hundred millions of dollars. + +It was a creature of that incubator of trust and corporation frauds, the +State of New Jersey, and was organized ostensibly to mine, manufacture, +buy, sell, and deal in copper, one of the staples, the necessities, of +civilization. + +It is a corporation with $155,000,000 capital, 1,550,000 shares of the +par value of $100 each. + +Its entire stock was sold to the public at an average of $115 per share +($100 to $130), and in 1903 the price had declined to $33 per share. + +From its inception it was known as a "Standard Oil" creature, because +its birthplace was the National City Bank of New York (the "Standard +Oil" bank), and its parents the leading "Standard Oil" lights, Henry H. +Rogers, William Rockefeller, and James Stillman. + +It has from its birth to present writing been responsible for more hell +than any other trust or financial thing since the world began. Because +of it the people have sustained incalculable losses and have suffered +untold miseries. + +But for the existence of the National City Bank of New York, the +tremendous losses and necessarily corresponding profits could not have +been made. + +I laid out the plans upon which Amalgamated was constructed, and, had +they been followed, there would have been reared a great financial +edifice, immensely profitable, permanently prosperous, one of the +world's big institutions. + +The conditions of which Amalgamated was the consequence had their birth +in Bay State Gas. To explain them I must go back a few years. + +In 1894 J. Edward Addicks, of Delaware, Everywhere, and Nowhere, the +Boston Gas King, invaded the gas preserves of the "Standard Oil" in +Brooklyn, N. Y., and the "Standard Oil," to compel him to withdraw, +moved on his pre-empted gas domains in Boston, Mass. + +Late in 1894 a fierce battle was raging in Boston between Gas King +Addicks and Gas King Rogers; the very air was filled with denunciation +and defiance--bribery and municipal corruption; and King Addicks was +defeated all along the line and in full retreat, with his ammunition +down to the last few rounds. + +Early in 1895 I took command of the Addicks forces against "Standard +Oil." + +By the middle of 1895 the Addicks troopers had the "Standard Oil" +invaders "on the run." + +In August, 1895, Henry H. Rogers and myself came together for the first +time, at his house in New York, and we practically settled the Boston +gas war. + +Early in 1896 we actually settled the gas war, and "Standard Oil" +transferred all its Boston gas properties ($6,000,000) to the Addicks +crowd. + +In October, 1896, the whole Bay State Gas outfit passed from the control +of Addicks and his cohorts into the hands of a receiver, and as a result +of this receivership, with its accumulated complications, "Standard +Oil," in November, 1896, regained all its old Boston companies, and in +addition all the Addicks companies, with the exception of the Bay State +Gas Company of Delaware. + +In 1896 I perfected and formulated the plans for "Coppers," a broad and +comprehensive project, having for its basis the buying and consolidating +of all the best-producing copper properties in Europe and America, and +the educating of the world up to their great merits as safe and +profitable investments. + +In 1897 I laid these plans before "Standard Oil." + +In 1898 "Standard Oil" was so far educated up to my plans on "Coppers" +as to accept them. + +In 1899 Amalgamated, intended to be the second or third section of +"Coppers," was suddenly shifted by "Standard Oil" into the first +section, and with a full head of steam ran out of the "City Bank" +station, carrying the largest and best train-load of passengers ever +sent to destruction on any financial trunk-line. + +In 1899, after the allotment of the Amalgamated public subscription, the +public for the first time, in a dazed and benumbed way, realized it had +been "taken in" on this subscription, and a shiver went down America's +financial spinal column. + +In 1900, after the price of Amalgamated had slumped to 75 instead of +advancing to 150, to 200, as had been promised, the "Standard +Oil"-Amalgamated-City Bank fraternity called Wall Street's king of +manipulators, James R. Keene, to the rescue, and under his adroit +handling of the stock in the market Amalgamated was sent soaring over +its flotation price of 100. + +In 1901 Boston & Montana and Butte & Boston, after long delay, drew out +of the "Standard Oil" station as the second section of Amalgamated, +carrying an immense load of investors and speculators to what was at +that time confidently believed would be Dollar Utopia; and the price of +the enlarged Amalgamated fairly flew to 130. These were the stocks which +I had originally advertised would be part of the first section of the +consolidated "Coppers," and which, after Amalgamated had been run in +ahead of them, I advertised would follow in due course. + +In the latter part of 1901 President McKinley was assassinated, and the +great panic which might have ensued was averted by the marvellous power +of J. Pierpont Morgan. + +Then the Amalgamated dividend, without warning and in open defiance of +the absolute pledges of its creators, was cut, and the public, including +even James R. Keene, found itself on that wild toboggan whirl which +landed it battered and sore, at the foot of a financial precipice. + +This, briefly, is the tortuous course of Amalgamated, and it is along +this twisting, winding, up-alley-and-down-lane way I must ask my readers +to travel if they would know the story as it is. + + + + +CHAPTER II + +THE "SYSTEM'S" METHOD OF FINANCE AND MANAGEMENT + + +At the lower end of the greatest thoroughfare in the greatest city of +the New World is a huge structure of plain gray-stone. Solid as a +prison, towering as a steeple, its cold and forbidding façade seems to +rebuke the heedless levity of the passing crowd, and frown on the +frivolity of the stray sunbeams which in the late afternoon play around +its impassive cornices. Men point to its stern portals, glance quickly +up at the rows of unwinking windows, nudge each other, and hurry onward, +as the Spaniards used to do when going by the offices of the +Inquisition. The building is No. 26 Broadway. + +26 Broadway, New York City, is the home of the Standard Oil. Its +countless miles of railroads may zigzag in and out of every State and +city in America, and its never-ending twistings of snaky pipe-lines +burrow into all parts of the North American continent which are +lubricated by nature; its mines may be in the West, its manufactories in +the East, its colleges in the South, and its churches in the North; its +head-quarters may be in the centre of the universe and its branches on +every shore washed by the ocean; its untold millions may levy tribute +wherever the voice of man is heard, but its home is the tall stone +building in old New York, which under the name "26 Broadway" has become +almost as well known wherever dollars are juggled as is "Standard Oil." + +Wall Street and the financial world know that there are two "Standard +Oils," but to the public there is no clear distinction between Standard +Oil, the corporation which deals in oil and things which pertain to the +manufacture and transportation of oil, and "Standard Oil," the giant, +indefinite system which sometimes embraces all the "Standard Oil" group +of individuals and corporations, and sometimes only certain of the +individuals. + +This giant creature, "Standard Oil," can best be described so that the +average man may understand it as a group of money-owners--some +individuals and some corporations--who have a right to use the name +"Standard Oil" in any business undertakings they engage in. The right to +use the name is of priceless value, for it carries with it "assured +success." + +Standard Oil, the seller of oil to the people, transacts its business as +does any other corporation. It plays no part in my story and I shall not +hereafter touch upon its affairs, but confine my meaning, wherever I use +the name "Standard Oil," to the larger and many times more important +"System." + +There are only three men who can lend the name "Standard Oil," even in +the most remote way to any project, for there is no more heinous crime +against the "Standard Oil" decalogue than using the name "Standard Oil" +unauthorizedly. The three men are Henry H. Rogers, William Rockefeller, +and John D. Rockefeller. Sometimes John D. Rockefeller uses the name +alone in projects in which Henry H. Rogers and William Rockefeller have +no interests. Henry H. Rogers or William Rockefeller seldom, if ever, +uses the name in projects with which neither of the other two is +associated. Sometimes, but not often, John D. and William Rockefeller +use the name in connection with projects of their own in which Henry H. +Rogers has no interest. Henry H. Rogers and John D. Rockefeller, I +believe, never are associated in projects in which William Rockefeller +has no interest. Henry H. Rogers and William Rockefeller frequently +bring to bear the influence of the magic-working syllables in connection +with joint affairs in which John D. Rockefeller has no interest--in +fact, during the past ten years the name "Standard Oil" has been used +more in their combined undertakings than in all others put together. + +There are eight distinct groups of individuals and corporations which go +to make up the big "Standard Oil": + +1st. The Standard Oil, seller of oil to the people, which is made up of +many sub-corporations either by actual ownership or by ownership of +their stock or bonds. Probably no person other than Henry H. Rogers, +William Rockefeller, and John D. Rockefeller knows exactly what the +assets of the Standard Oil corporation are, although John D. +Rockefeller, Jr., son of John D. Rockefeller, and William G. +Rockefeller, that able and excellent business man, son of William +Rockefeller and the probable future head of "Standard Oil," are being +rapidly educated in this great secret. In this first institution all +"Standard Oil" individuals and estates are direct owners. + +2d. Henry H. Rogers, William Rockefeller, and John D. Rockefeller, +active heads, and included with them their sons. + +3d. A large group of active captains and first lieutenants, men who +conduct the affairs of the different corporations or sections of +corporations in which some or all of the "Standard Oil" are interested. +Many of these are the sons or the second generation of men who held like +positions in Standard Oil's earlier days. Of these Daniel O'Day and +Charles Pratt are fair examples. + +4th. A large group of captains retired from active service in the +Standard Oil army, who participate only in a general way in the +management of its affairs, and whose principal business is looking after +their own investments. These men are each worth from $5,000,000 or +$10,000,000 to $50,000,000 or $75,000,000. The Paynes and the Flaglers +are fair illustrations of this group. + +5th. The estates of deceased members of this wonderful "Standard Oil" +family, which are still largely controlled by some or all of the +prominent "Standard Oil" men. + +6th. "Standard Oil" banks and banking institutions, and the system of +national banks, trust companies, and insurance companies, of which +"Standard Oil" has, by ownership and otherwise, practically absolute +control. The head of this group is James Stillman, and it is when these +institutions are called into play in connection with "Standard Oil" +business that he is one of the "Standard Oil" leaders, second to neither +of the Rockefellers nor to Mr. Rogers. + +7th. The "Standard Oil" army of followers, capitalists, and workers in +all parts of the world, men who require nothing more than the order, "Go +ahead," "Pull off," "Buy," "Sell," or "Stand Pat," to render as absolute +obedience and enthusiastic cooperation as though they knew, to the +smallest detail, the purposes which lay behind the giving of the order. + +8th. The countless hordes of politicians, statesmen, law-makers and +enforcers, who, at home or as representatives of the nation abroad, go +to make up our political structure, and judges and lawyers. + +To the world at large, which looks on and sees this giant institution +move through the ranks of business without noise or dissension and with +the ease and smoothness of a creature one-millionth its size, it would +seem that there must be some wonderful and complicated code of rules to +guide and control the thousands of lieutenants and privates who conduct +its affairs. This is partially true, partially false. "Standard Oil's" +governing rules are as rigid as the laws of the Medes and Persians, yet +so simple as to be easily understood by any one. + +First, there is a fundamental law, from which no one--neither the great +nor the small--is exempt. In substance it is: "Every 'Standard Oil' man +must wear the 'Standard Oil' collar." + +This collar is riveted on to each one as he is taken into "the band," +and can only be removed with the head of the wearer. + +Here is the code. The penalty for infringing the following rules is +instant "removal." + + 1. Keep your mouth closed, as silence is gold, and gold is + what we exist for. + + 2. Collect our debts to-day. Pay the other fellow's debts + to-morrow. To-day is always here, to-morrow may never come. + + 3. Conduct all our business so that the buyer and the seller + must come to us. Keep the seller waiting; the longer he + waits the less he'll take. Hurry the buyer, as his money + brings us interest. + + 4. Make all profitable bargains in the name of "Standard + Oil," chancy ones in the names of dummies. "Standard Oil" + never goes back on a bargain. + + 5. Never put "Standard Oil" trades in writing, as your + memory and the other fellow's forgetfulness will always be + re-enforced with our organization. Never forget our Legal + Department is paid by the year, and our land is full of + courts and judges. + + 6. As competition is the life of trade--our trade, and + monopoly the death of trade--our competitor's trade, employ + both judiciously. + + 7. Never enter into a "butting" contest with the Government. + Our Government is by the people and for the people, and we + are the people, and those people who are not us can be hired + by us. + + 8. Always do "right." Right makes might, might makes + dollars, dollars make right, and we have the dollars. + +All business of the gigantic "Standard Oil" system is dealt with through +two great departments. Mr. Rogers is head of the executive, and William +Rockefeller the head of the financial department. All new schemes, +whether suggested by outsiders or initiated within the institution, go +to Mr. Rogers. Regardless of their nature or character, he first takes +them under advisement. If a scheme prove good enough to run the gantlet +of Mr. Rogers' tremendously high standard, the promoter, after he has +set forth his plans and estimates, hears with astonishment these words: + +"Wait while I go upstairs. I'll say Yes or No upon my return." + +And upon his return it is almost always "Yes." If the project, however, +does not come up to his exacting requirements, it is turned down without +further ado or consultation with any of his associates. + +Those intimate with affairs at 26 Broadway have grown curiously familiar +with this expression, "I am going upstairs." "Upstairs" means two +distinct and separate things. When a matter in Mr. Rogers' department is +awaiting his return from "upstairs," it means he has gone to place the +scheme before William Rockefeller, on the thirteenth floor, and laying a +thing before William Rockefeller by Mr. Rogers consists of a brief, +vigorous statement of Mr. Rogers' own conclusions and a request for his +associate's judgment of it. William Rockefeller's strong quality is his +ability to estimate quickly the practical value of a given scheme. His +approval means he will finance it, and William Rockefeller's "say-so" is +as absolute in the financing of things as is Mr. Rogers' in passing +upon their feasibility. It does not matter whether it is an undertaking +calling for the employment of $50,000 capital or $50,000,000 or +$500,000,000, Mr. Rockefeller's "Yes" or "No" is all there is to it. He +having passed on it, Mr. Rogers supervises its execution. + +The other "upstairs" is one that is heard every week-day of the year +except summer Saturdays. At 26 Broadway, just before eleven o'clock each +morning, there is a flutter in the offices of all the leading heads of +departments from Henry H. Rogers down, for going "upstairs" to the +eleven o'clock meeting is in the mind of each "Standard Oil" man the one +all-important event of every working day. + +In the big room, on the fifteenth floor, at 26 Broadway, there gather +each day, between the hour of eleven and twelve o'clock, all the active +men whose efforts make "Standard Oil" what "Standard Oil" is; here also +come to meet and mingle with the active heads the retired captains when +"they are in town." Around a large table they sit. Reports are +presented, views exchanged, policies talked over, republics and empires +made and unmade. If the Recorders in the next world have kept complete +minutes of what has happened "upstairs" at 26 Broadway they must have +tremendously large fire-proof safes. It is at the meeting "upstairs" +that the "melons are cut," and if one of the retired captains were asked +why he was in such a rush to be on hand each day when in town, and if he +were in a talkative mood--which he would not be--he would answer: "They +may be cutting a new melon, and there's nothing like being on hand when +the juice runs out." + +If a new melon has been cut--an Amalgamated Copper, for instance--it is +at one of these meetings that the different "Standard Oil" men are +informed for the first time that the scheme, about which they may have +read or heard much outside, is far enough along for them to participate +in it. Each is told what sized slice he may have if he cares for any. It +is a very exceptional thing for any one to ask for more than he has been +apportioned, and an unheard-of thing for any one to refuse to take his +slice, although there is absolutely no compulsion in the connection. + +And here, perhaps, may not come amiss an incident which illustrates what +may happen in a few minutes "upstairs." + +Before Amalgamated was launched, in bringing together the different +properties of which it was composed I negotiated for the acquisition of +the Parrott mine, the majority of whose stock was held by certain old and +wealthy brass manufacturers in Connecticut. They had never seen any of +the Rockefellers nor Henry H. Rogers, but we were several months getting +the deal into shape before it was finally arranged, and they became +familiar with the great "Standard Oil" institution. So much so that the +chief of the owners--to whom was delegated the duty of turning over the +securities to my principals--looked forward with much eagerness to the +time when he must necessarily meet the mysterious and important +personages who guided 26 Broadway's destinies. Finally the day came, and +at precisely a quarter of eleven I let him into one of the numerous +private offices which are a part of Mr. Rogers' suite. He had under his +arm a bundle of papers representing the stocks which he was to exchange +for the purchase money, amounting to $4,086,000, and I think he fully +expected that in their examination, in the receipting for so large an +amount of money, and in the general talkings over, which he thought must +of course be a necessary part of the delivery, the greater part of the +day would be taken up. It took me some six or seven minutes to get him +located, and it was close on to five minutes of eleven when Mr. Rogers +stepped into the room. I was well into the introduction, when out came +Mr. Rogers' watch, and with what must have appeared to the visitor as +astonished consternation. + +"I do hope you will excuse me," he exclaimed in the middle of a +handshake, "but, my gracious, I am overdue upstairs," and he bolted. + +His place was taken fifty seconds after by Mr. Rogers' secretary, who in +less than five minutes had exchanged a check of $4,086,000, made out to +herself and indorsed in blank, for the bundle of stocks, and in another +minute I was ushering the old gentleman into the elevator. + +When he came to on the sidewalk he got his breath sufficiently to say: +"Phew! I thought my trade was a big one, but that friend of yours, +Rogers, must have had some other fellow upstairs who was going to turn +in $40,000,000 of stuff, because he did appear dreadfully excited!" + +The success of "Standard Oil" is largely due to two things--to the +loyalty of its members to each other and to "Standard Oil," and to the +punishment of its enemies. Each member before initiation knows its +religion to be reward for friends and extermination for foes. Once +within the magic circle, a man realizes he is getting all that any one +else on earth can afford to pay him for like services, and still more +thrown in for full measure. Moreover, while a "Standard Oil" man's +reward is always ample and satisfactory, he is constantly reminded in a +thousand and one ways that punishment for disloyalty is sure and +terrible, and that in no corner of the earth can he escape it, nor can +any power on earth protect him from it. + +"Standard Oil" is never loud in its rewards nor its punishments. It does +not care for the public's praise nor for its condemnation, but endeavors +to avoid both by keeping its "business" to itself. As an instance, in +connection with certain gas settlements I made with "Standard Oil," it +voluntarily paid one of its agents for a few days' work $250,000. He had +expected at the outside $25,000. When I published the fact, as I had a +right to, "Standard Oil" was mad as hornets--as upset, indeed, as though +it had been detected in cheating the man out of two-thirds of his just +due, instead of having paid him ten times what was coming to him. + + + + +CHAPTER III + +THE MEN IN POWER BEHIND THE "SYSTEM" + + +In the great Thing known to the world as "Standard Oil," the most +perfect embodiment of a "system" which I will endeavor to get before my +readers in later chapters, there are three heads, Henry H. Rogers, +William Rockefeller, and John D. Rockefeller. All the other members are +distinctively lieutenants, or subordinate workers, unless possibly I +except James Stillman, who, from his peculiar connection with "Standard +Oil" and his individually independent position, should perhaps be placed +in the category of heads. + +Some one has said: "If you would know who is the head of a family, slip +into the home." The world, the big, arbitrary, hit-or-miss, +too-much-in-a-hurry-to-correct-its-mistakes world, has decided that the +master of "Standard Oil" is John D. Rockefeller, and John D. Rockefeller +it is to all but those who have a pass-key to the "Standard Oil" home. +To those the head of "Standard Oil"--the "Standard Oil" the world knows +as it knows St. Paul, Shakespeare, or Jack the Giant-killer, or any of +the things it knows well but not at all--is Henry H. Rogers. John D. +Rockefeller may have more money, more actual dollars, than Henry H. +Rogers, or all other members of the "Standard Oil" family, and in the +early days of "Standard Oil" may have been looked up to as the big gun +by his partners, and allowed to take the hugest hunks of the profits, +and may have so handled and judiciously invested these as to be at the +beginning of the twentieth century the richest man on earth, but none of +these things alters the fact that the big brain, the big body, the head +of "Standard Oil," is Henry H. Rogers. + +Take station at the entrance of 26 Broadway and watch the different +members of the "Standard Oil" family as they enter the building: you +will exclaim once and only once: "There goes the Master!" And the man +who calls forth the cry will be Henry H. Rogers. + +The big, jovial detective who stands all day long with one foot resting +on the sidewalk and one on the first stone step of the home of "Standard +Oil" will make oath he shows no different sign to Henry H. Rogers than +to a Rockefeller, a Payne, a Flagler, a Pratt, or an O'Day; yet watch +him when Mr. Rogers passes up the steps--an unconscious deference marks +his salutation--the tribute of the soldier to the commanding general. + +Follow through the door bearing the sign, "Henry H. Rogers, President of +the National Transit Co.," on the eleventh floor, and pass from the +outer office into the beautiful, spacious mahogany apartment beyond, +with its decorations of bronze bulls and bears and yacht-models, its +walls covered with neatly framed autograph letters from Lincoln, Grant, +"Tom" Reed, Mark Twain, and other real, big men, and it will come over +you like a flash that here, unmistakably, is the _sanctum sanctorum_ of +the mightiest business institution of modern times. If a single doubt +lingers, read what the men in the frames have said to Henry H. Rogers, +and you will have proof positive that these judges of human nature knew +this man, not only as the master of "Standard Oil," but also as a sturdy +and resolute friend whose jovial humanity they had recognized and +enjoyed. + +Did my readers ever hear of the National Transit Company? Very few +have--yet the presidency of it is the modest title of Henry H. Rogers. +When the world is ladling out honors to the "Standard Oil" kings, and +spouting of their wondrous riches, how often is Henry H. Rogers +mentioned? Not often, for he is never where the public can get a glimpse +of him--he is too busy pulling the wires and playing the buttons in the +shadows just behind the throne. Had it not been that that divinity which +disposes of men's purposes compelled this man, as he neared the end of +his remarkable career, to come into the open on Amalgamated, he might +never have been known as the real master of "Standard Oil." But if he is +missing when the public is hurrahing, he is sufficiently in evidence +when clouds lower or when the danger-signal is run to the masthead at +26 Broadway. He who reads "Standard Oil" history will note that, from +its first deal until this day, whenever bricks, cabbages, or aged eggs +were being presented to "Standard Oil," always were Henry H. Rogers' +towering form and defiant eye to be seen in the foreground where the +missiles flew thickest. + +During the past twenty years, whenever the great political parties have +lined-up for their regular once-in-four-years' tussle, there would be +found Henry H. Rogers, calm as a race-track gambler, "sizing-up" the +entries, their weights and handicaps. Every twist and turn in the +pedigrees and records of Republicans and Democrats are as familiar to +him as the "dope-sheets" are to the gambler, for is he not at the +receiving end of the greatest information bureau in the world? + +A Standard Oil agent is in every hamlet in the country, and who better +than these trained and intelligent observers to interpret the varying +trends of feelings in their communities? Tabulated and analyzed, these +reports enable Rogers, the sagacious politician, to diagnose the drift +of the country far ahead of the most astute of campaign managers. He is +never in doubt about who will win the election. Before the contest is +under way he has picked his winner and is beside him with generous +offers of war expenses. + +When labor would howl its anathemas at Standard Oil, and the +Rockefellers and other stout-hearted generals and captains of this band +of merry money-makers would fall to discussing conciliation and retreat, +it was always Henry H. Rogers who fired at his associates his now famous +panacea for all Standard Oil opposition: "We'll see Standard Oil in hell +before we will allow any body of men on earth to dictate how we shall +conduct our business!" And the fact that "Standard Oil" still does its +business in the Elysian fields of success, where is neither sulphur nor +the fumes of sulphur, is additional evidence of whose will it is that +sways its destinies. + +An impression of the despotic character of the man and of his manner of +despatching the infinite details of the multitudinous business he must +deal with daily may be gained by a glimpse of Henry H. Rogers at one of +the meetings of the long list of giant corporations which number him +among their directors. Surrounded though he be by the élite of all +financialdom, the very flower of the business brains of America, you +will surely hear his sharp, incisive, steel-clicking: "Gentlemen, are we +ready for the vote, for I regret to say, I have another important and +unavoidable meeting at ----?" You look at your watch. The time he +mentions is twelve, or, at the most, fifteen minutes away. There is no +chance for further discussion. Cut-and-dried resolutions are promptly +put to the vote, and off goes the master to his other engagement which +will be disposed of in the same peremptory fashion. + +At a meeting of the directors of "financed" Steel, during the brief +reign of its late "vacuumized" president, Charlie Schwab, an episode +occurred which exhibited the danger of interfering with Mr. Rogers' +iron-bound plans. The fact that the steel throne was many sizes too +large for Schwab had, about this time, become publicly notorious, but +Carnegie and Morgan on the surface, and "Standard Oil" beneath, were so +busy preparing their alibis against the crash which even then was +overdue that they had neither time nor desire to adjust themselves on +the seat. + +In advance Mr. Rogers made his invariable plea for quick action on a +matter before the board when Schwab, with a tact generated by the +wabbling of a misfit Wall Street crown chafing a generous pair of ears, +blurted out: "Mr. Rogers will vote on this question after we have talked +on it." + +In a voice that those who heard it say sounded like a rattlesnake's hiss +in a refrigerator, Rogers replied: "All meetings where I sit as director +vote first and talk after I am gone." + +It is said, and from my knowledge of these and after-events I believe +with truth, that this occurrence was the spark that started the terrific +explosion in United States Steel, for not long afterward some unknown +and mysterious power began that formidable attack on Steel stock which +left Wall Street full of the unattached ears, eyes, noses, breastbones, +and scalps of hordes of financial potentates and their flambeau +carriers. Whether or not Mr. Rogers was the instigator of this movement +no man, of course, can positively state, but I can vouch for the fact +that about this time he displayed, when talking "Steel" affairs with +intimates, a most contemptuous bitterness against "King Charlie" and +certain of his associates. + +At sixty-five Henry H. Rogers is probably one of the most +distinguished-looking men of the time; tall and straight, and as +well-proportioned and supple as one of the beautiful American elms which +line the streets of his native town. He was born in Fairhaven, a fishing +village just over the bridge from the great whaling port, New Bedford. +He comes of stalwart New England stock; his father was a sea-captain, +and his lot, like that of most of the sons of old New England seaport +towns, was cast along those hard, brain-and-body-developing lines which, +beginning in the red village school-house, the white meeting-house, and +the yellowish-grayish country store, end in unexpected places, often, as +in this instance, upon the golden throne of business royalty. + +Mr. Rogers' part in the very early days of Standard Oil was that of +clerk and bookkeeper. He makes no secret that when he had risen to the +height of $8 a week wages he felt as proud and confident as ever in +after-life when for the same number of days' labor it was no uncommon +occurrence to find himself credited with a hundred thousand times that +amount. + +All able men have some of God's indelible imprints of greatness. This +man's every feature bespeaks strength and distinction. When he walks, +the active swing of his figure expresses power--realized, confident +power. When at rest or in action his square jaw tells of fighting power, +bull-dog, hold-on, never-let-go fighting power, and his high, full +forehead of intellectual, mightily intellectual power; and they are +re-enforced with cheek-bones and nose which suggest that this fighting +power has in it something of the grim ruthlessness of the North American +Indian. The eyes, however, are the crowning characteristic of the man's +physical make-up. + +One must see Mr. Rogers' eyes in action and in repose to half appreciate +their wonders. I can only say they are red, blue, and black, brown, +gray, and green; nor do I want my readers to think I put in colors that +are not there, for there must be many others than those I have +mentioned. I have seen them when they were so restfully blue that I +would think they never could be anything but a part of those skies that +come with the August and September afternoons when the bees' hum and the +locusts' drone blend with the smell of the new-mown hay to help spell +the word "Rest." + +I have seen them so green that within their depths I was almost sure the +fish were lazily resting in the shadows of those sea-plants which grow +only on the ocean's bottom; and I have seen them as black as that +thunder-cloud which makes us wonder: "Is He angry?" And then again I +have watched them when they were of that fiery red and that glinting +yellow which one sees only when at night the doors of a great, roaring +furnace are opened. + +There is such a kindly good-will in these eyes when they are at rest +that the man does not live who would not consider himself favored to be +allowed to turn over to Henry H. Rogers his pocket-book without +receiving a receipt. They are the eyes of the man you would name in your +will to care for your wife's and children's welfare. When their +animation is friendly one would rather watch their merry twinkle as they +keep time to their owner's inimitable stories and non-duplicatable +anecdotes, trying to interpret the rapid and incessant telegraphy of +their glances, than sit in a theatre or read an interesting book; but it +is when they are active in war that the one privileged to observe them +gets his real treat, always provided he can dodge the rain of blazing +sparks and the withering hail of wrath that pours out on the offender. +To watch them then requires real nerve, for it is only a nimble, +stout-hearted, mail-covered individual that can sustain the encounter. + +I have seen many forms of human wrath, many men transformed to terrible +things by anger, but I have never seen any that were other than +jumping-jack imitations of a jungle tiger compared with Henry H. Rogers +when he "lets 'er go"--when the instant comes that he realizes some one +is balking the accomplishment of his will. + +Above all things Henry H. Rogers is a great actor. Had his lot been +cast upon the stage, he might easily have eclipsed the fame of Booth or +Salvini. He knows the human animal from the soles of his feet to the +part in his hair and from his shoulder-blade to his breastbone, and like +all great actors is not above getting down to every part he plays. He is +likely also so to lose himself in a rôle that he gives it his own force +and identity, and then things happen quite at variance with the lines. +The original Booth would come upon the stage the cool, calculating, +polished actor, but when well into his part was so lost in it that it +was often with difficulty he could be brought back to himself when the +curtain fell. Once while playing Richard III. at the old Boston Museum, +Richmond, by whom he was to be slain, made, at the ordained moment, the +thrust which should have laid him low, but instead, Booth in high frenzy +parried it, and with the fiendishness of the original Richard, step by +step drove Richmond off the stage and through the wings, and it was not +until the police seized the great tragedian, two blocks away, that the +terrified duke, who had dropped his sword and was running for dear life, +was sure he would ever act again. + +When in the midst of his important plays, it is doubtful whether Henry +H. Rogers realizes until the guardians of the peace appear where the +acting begins and the reality should end. His intimate associates can +recall many times when his determination to make a hit in his part has +caused other actors cast with him to throw aside their dummy swords and +run for their lives. + +The entire history of "Standard Oil" is strewn with court-scenes, civil +and criminal, and in all the important ones Henry H. Rogers, the actor, +will be found doing marvellous "stunts." Standard Oil historians are +fond of dwelling on the extraordinary testifying abilities of John D. +Rockefeller and other members of the band, but the acrobatic feats of +ground and lofty tumbling in the way of truth which they have given when +before the blinking footlights of the temples of justice are as +Punch-and-Judy shows to a Barnum three-ring circus compared to Henry H. +Rogers' exhibitions. + +His "I will tell the truth, the whole truth, and nothing but the truth, +so help me God," sounds absolutely sincere and honest, but as it rings +out in the tone of the third solemnest bell in the chime, this is how it +is taken down in the unerring short-hand notes of the recording angel +and sent by special wireless to the typewriter for His Majesty of the +Sulphur Trust: "What I tell _shall_ be the truth and the whole truth, +and there _shall be_ no truth but that I tell, and God help the man or +woman who tells truth different from my truth." The recording angel +never missed catching Henry H. Rogers' court-oaths in this way, and +never missed sending them along to the typewriter at Sulphurville, with +this postscript: "Keep your wire open, for there'll be things doing +now!" + +At the recent but now famous sensational Boston "Gas Trial," Henry H. +Rogers in the rôle of defendant was the principal witness. I was in +court five hours and a half each sitting as day after day he testified. +I watched, as the brightest lawyers in the land laid their traps for him +in direct and cross-examination, to detect a single sign of fiction +replacing truth, or going joint-account with her, or where truth parted +company with fiction; and I was compelled, when he stepped from the +witness-stand, to admit I had not found what I had watched for. This, +too, when I was equipped with actual knowledge and black-and-white +proofs of the facts. Weeks before the trial began Attorney Sherman L. +Whipple, one of the great cross-examiners of the time, had made his +boast that he would break through the "Standard Oil" magnate's +heretofore impenetrable bulwarks, and when H. H. Rogers entered the +court-room for the first time and let his eagle eye sweep the lawyers, +the laymen, and the judge until it finally rested on Whipple, the glance +was as absolute a challenge and a defiance as ever knights of old +exchanged. + +I followed Mr. Rogers on the witness-stand and was compelled to give +testimony directly opposite to that which he had given, and at one time, +as I glanced at the row of lawyers who were in "Standard Oil's" hire, I +felt a cold perspiration start at every pore at the thought of what +would happen if I even in a slight detail got mixed in my facts. Then I +fully realized the magnificence of Mr. Rogers' acting, for not once in +all the hours I had sat and watched him had I detected a single evidence +of cold, hot, or lukewarm perspiration coming from his pores. + +Yet away from the intoxicating spell of dollar-making this remarkable +man is one of the most charming and lovable beings I have ever +encountered, a man whom any man or woman would be proud to have for a +brother; a man whom any mother or father would give thanks for as a son; +a man whom any woman would be happy to know as her husband, and a man +whom any boy or girl would rejoice to call father. Once he passes under +the baleful influence of "The Machine," however, he becomes a +relentless, ravenous creature, pitiless as a shark, knowing no law of +God or man in the execution of his purpose. Between him and coveted +dollars may come no kindly, humane influences--all are thrust aside, +their claims disregarded, in ministering to this strange, cannibalistic +money-hunger, which, in truth, grows by what it feeds on. + +In describing one head of "Standard Oil," I have necessarily used many +words because nature cast him in a most uncommon and chameleon-like +mould. The other two require less of my space, for neither is unusual +nor remarkable. + +John D. Rockefeller, however great his ability or worldly success, can +be fully described as a man made in the image of an ideal money-maker +and an ideal money-maker made in the image of a man. A foot-note should +call attention to the fact that an ideal money-maker is a machine the +details of which are diagrammed in the asbestos blue-prints which paper +the walls of Hell. + +With William Rockefeller it is different. When I read in my Bible that +God made man in His own image and likeness, I find myself picturing a +certain type of individual--a solid, substantial, sturdy gentleman with +the broad shoulders and strong frame of an Englishman, and a cautious, +kindly expression of face. And that is the most fitting description I +can give of William Rockefeller. A man of few, very few words and most +excellent judgment--rather brotherly than friendly, clean of mind and +body; and if I have not given you the impression of a good, wholesome +man made in the image of his God, I have done William Rockefeller a +greater wrong than an honest man can afford to do another. + + + + +CHAPTER IV + +MY OWN RESPONSIBILITY + + +As to my personal responsibility for the crime of Amalgamated, right +here, before proceeding further, I shall briefly explain the +transaction, state my share in the deal, and point out how completely I +was hoodwinked by the "System." + +The great Anaconda mine and affiliated properties, previous to the +creation of the Amalgamated, were owned by J. B. Haggin, Lloyd Tevis, +and Marcus Daly. The control of the properties and their operations were +absolutely vested in Marcus Daly, and he alone knew where the lean veins +ended and the fat ones began. For many years he had kept a close guard +over the very fat ones, never letting his right eye know what the left +one saw when he was examining them. For deep down in his mind Marcus +Daly cherished a dream--a dream of immense riches, and it was to be +realized in a simple enough way. He would get together the millions to +buy out his partners on the basis of a valuation of the "ore in sight," +then in supreme ownership himself reap untold profits out of the milling +of the plethoric veins he had been so careful to leave unworked. The +immense natural endowments of the Anaconda rendered this easy enough, +for even the lean veins "in sight" contained a vast store of copper and +gold and silver. + +Just about the time the world awaited the first section of "Coppers" +which I had advertised should consist of the rich Boston & Montana, and +Butte & Boston properties, it "happened" that Mr. Rogers "met" Marcus +Daly. The result of the conjunction of the two personalities--the +whole-souled, trusting miner and the fascinating and persuasive master +of Standard Oil--was decisive; the miner confided his dreams and his +aspirations to the magnate, who at once magnificently undertook to +realize them. The trade was almost instantly made. Mr. Rogers would buy +the properties of Daly, Haggin, and Tevis, at "in-sight" prices, and +Daly would be his partner, but the partnership must remain secret until +the purchase was consummated. + +The ownership of the Anaconda Company at the time consisted of 1,200,000 +shares, and the purchase of a few shares over the majority at the +"in-sight" lean-vein valuation of $24,000,000 would carry the turnover +of the management and the control. It took but a very brief time to get +together the other properties which were finally included in the first +section of Amalgamated. They consisted of the Colorado, Washoe, and +Parrott Mining companies and timber, coal, and other lands, and +mercantile and like properties situated in the State of Montana, for +which Mr. Rogers paid in round figures $15,000,000, _a total of +$39,000,000 for what within a few days after purchase was capitalized at +$75,000,000 in the Amalgamated Company_. + +No one but Henry H. Rogers, William Rockefeller, myself, and one lawyer +knew the actual figures of the cost, although a number of the members of +the different groups, including Marcus Daly, the silent partner, were +sure they were in the secret. + +As soon as the properties were secured, they were capitalized for +$75,000,000 as the Amalgamated Copper Company and were immediately +offered for sale to the public. It will thus be seen that the profit on +this section alone was $36,000,000, probably the largest actual profit +ever made by one body of men in a single corporation deal, yet so nicely +does "Standard Oil" discriminate in dispensing its generosity that in +this case those who received the $36,000,000 profit refused to deduct +from it $77,000 of expenses connected with the formation of the company, +thereby compelling it to start $77,000 in debt. This was something +Marcus Daly never forgave and to the day of his death he repeatedly +referred to the act as the personification of corporation meanness. + +In the organization of the Amalgamated Corporation certain individuals +and institutions, for various considerations, were entitled to some +share in the profits of the deal. First there was Marcus Daly who knew +what the major portion of the property had cost and was a silent partner +in the winnings as he knew them. The Amalgamated Company was organized +in and floated on the public from the National City Bank, and so James +Stillman, its president and head, who is also one of the inner circle of +"Standard Oil" chiefs, should participate. Something was due also to J. +Pierpont Morgan & Co., and to Frederick Olcott, president of the Central +Trust Company of New York, who were on the board of directors. On the +board of directors, too, was Governor Flower, of the banking and +brokerage house of Flower & Co., who had acted as fiscal agents for the +corporation at its formation. Nor must I forget the Lewisohn Brothers, +who had been compelled to turn in all their copper business at a +fraction of its worth--or at just the aggregate of its cost and raw +material--to be incorporated in the United Metals Selling Company, a +part of the Amalgamated scheme, but not included in the corporation. +Every one of these men had elaborate assurances that he was in on the +cellar floor. + +This is what actually occurred. Before Mr. Rogers and William +Rockefeller let any one at all in, they built a superbly designed +water-, air-, and light-proof structure (particularly light-proof), +consisting of five floors, each one being the exact duplicate of the +$39,000,000 one upon which they, and they only, stood. Marcus Daly alone +was ushered in on the first floor, elevated just a few million dollars +above their own. James Stillman and Leonard Lewisohn, of Lewisohn +Brothers, were admitted to the next one, the $50,000,000 floor. In other +words, Mr. Stillman and Mr. Lewisohn were given an unnamed percentage, +the percentage to be arranged later by Mr. Rogers, in all profits above +actual cost, and such actual cost was called $50,000,000 and was arrived +at by adding the $11,000,000 of secret profits to the actual $39,000,000 +cost. Then J. P. Morgan & Co., Frederick Olcott, Governor Flower, and +one or two of the dearest friends and closest associates, were let in on +the $60,000,000 floor--were given an unnamed percentage, the percentage +to be arranged by Mr. Rogers, in all profits above actual cost, and such +actual cost was called $60,000,000, and was arrived at by adding +$21,000,000 of secret profits to the actual $39,000,000 cost. Then +selected ones from the eight different groups of "Standard Oil" were +allowed to move in to the fifth, or underwriters' floor, which was +affirmed to be $70,000,000 cost; and then, as a solid phalanx, all the +different floor-dwellers marched upon the dear public to the tune of +$75,000,000, in the front ranks of which were those of the eight groups +of the Standard Oil army who had not already been admitted to any of the +secret floors. + +Right here the crime of Amalgamated was born, not so much the legal +crime but the great moral crime. In the ethics of Wall Street the +heinousness of the transaction lies not in the fact that the public was +compelled to pay $36,000,000 profit to a few men who had invested but +$39,000,000--and, as I shall show when I approach this part of my story, +the $39,000,000 did not even belong to them--but in the fact that Mr. +Rogers and Mr. Rockefeller had given to their associates what, in the +vernacular of "the Street," is termed "the double cross." + +The every-day people, the millions who do not know Wall Street, realm of +the royal American dollar; Wall Street, its sidewalks inlaid with gold +coin and paved from curb to curb with solid gold bricks; Wall Street, +lined with huge money-mills where hearts and souls are ground into +gold-dust, whose gutters run full to overflowing with strangled, +mangled, sand-bagged wrecks of human hopes, to be poured, in a +never-ending stream, into the brimming waters of the river at its foot, +for deposit at the poor-houses, insane asylums, States' prisons, and +suicides' graves, washed daily by that grim flood's ebb and flow--the +every-day people, I am sure, will not take in the blackness of this +transaction at this stage of my story, but before it is ended I will lay +this and many more of an equally hellish nature before them in such A B +C simplicity that all can read the portent as clearly as the Prophet +Daniel read the writing on the wall in the banquet-hall of Belshazzar. + +When I consented to allow property which had cost only $39,000,000 to be +sold to the public for $75,000,000, it was under a pressure which it was +practically impossible for me to withstand. I do not think I use too +strong a word when I say "pressure." For three years I had been +advertising to the world the great merits of "Coppers," and for over a +year I had announced that when the public was given an opportunity to +participate in the consolidated "Coppers" it would be upon a basis most +carefully worked out: that the properties included in the first section +would surely be worth more than the price at which they would be offered +to the public, and that all the power, capital, and ability of "Standard +Oil" were behind the promises I made. I did this advertising openly and +in the frankest possible way, and in all of my announcements, whether +printed, oral, or otherwise, used the names of Henry H. Rogers, William +Rockefeller, James Stillman, the National City Bank of New York, and +"Standard Oil" as freely as I did my own, and in many ways led the +public to believe that the very rich Boston & Montana and Butte & Boston +companies were to be included in this section of "Coppers." + +At that time my alliance with "Standard Oil" was close. A business +connection had developed into a strong personal relation between Mr. +Rogers and myself. We were engaged, together with William Rockefeller, +on a great financial deal which was based on certain conclusions I had +worked out in regard to the copper industry. These men were to me the +embodiment of success, success won in the fiercest commercial conflict +of the age. Their position at the helm of the greatest financial +institution in the world gave weight and importance to their judgment +and opinions. Nor had aught occurred between us to suggest they would +dare perpetrate the crimes they did. Besides all this, indeed an +integral part of it, my personal resources were completely involved in +the transaction, for the most part pledged with Mr. Rogers and William +Rockefeller in stocks of the Butte & Boston and Boston & Montana +corporations. + +This was, then, the nature of our connection when Mr. Rogers, suddenly +and without previous intimation of his schemes, notified me of his +purchase of the Daly-Haggin-Tevis properties, and practically ordered me +to put them upon the tray which I was preparing and take them to the +eagerly waiting public, who by this time were fairly howling for the +good things we had been promising them. + +In support of this extraordinary change of plan Mr. Rogers urged the +secret wealth of the Anaconda and the great value of the other +properties which I myself had helped purchase, but I bitterly opposed +the new proposition until there was nothing before me but these +alternatives--to accept the change Mr. Rogers insisted on or break with +"Standard Oil." The latter would mean that I must announce to the public +that it was in danger of being tricked, and it was by no means certain +that my warning would carry weight against the denials and assurances of +"Standard Oil." However much influence I had obtained through my long +years of dealings with the public, independent of "Standard Oil," I +realized that "Standard Oil's" influence and prestige were much greater, +for it must be remembered that at this time the public had not had the +evidence since acquired of the "System's" cold-blooded trickery. If I +took this course it would mean not only my own ruin financially, for Mr. +Rogers and William Rockefeller could call my loans and wipe me out +completely, but also the ruin of my friends and allies, who, under my +direction, had invested their own millions in the properties concerned. +On the other hand, I had the most earnest assurances from Mr. Rogers and +William Rockefeller that the new properties were worth much more than +the $75,000,000 at which it was proposed to capitalize them. They took +me to task for my distrust of them, and went far to demonstrate to me +the accuracy of their estimates. They not only gave me Marcus Daly's +minute estimates of the values and legitimate possibilities of Anaconda, +but consented to have these verified by outside experts in whom I had +implicit confidence, and whose personal examination more than bore out +Daly's appraisal. I have never yet had reason to doubt the correctness +of the figures then shown me, although since I began this story +"Standard Oil," in an endeavor to get me to abandon my efforts to +secure justice for the thousands I assisted in duping, have stated for +the first time that Marcus Daly deceived them and really, to use the +words of their chief counsel, sold them a "gold brick." + +After this examination I felt convinced that the properties "Standard +Oil" insisted on substituting for those originally intended for the +first section of Amalgamated were such that the public, if honestly +dealt with, could not possibly meet with loss in purchasing. But even +then I only consented to go ahead with the flotation under a definite +agreement which seemed to me completely to guard against all +contingencies of jugglery or deception. This agreement stipulated that +all the profits from the transaction should be taken by those to whom +they were due in the stock of the Amalgamated Company, and no part of +them in cash--that the public should be sold, at the flotation, only +$5,000,000 of the $75,000,000, and that "Standard Oil" and all +associated with "Standard Oil" in the profits should retain the +remaining $70,000,000 until such time as it had been absolutely +demonstrated to the public that the property behind the $75,000,000 of +stock was worth more than the amount it had been capitalized for. +Furthermore, I was also promised that the $5,000,000 cash to be taken +from the public should be kept intact, and in my handling of the market +it should always be available for the repurchase from the investors of +what had been sold to them, at the price which they had paid for it. + +This was the basis on which I went on with Amalgamated. I would not have +my readers understand me as asserting it would have been possible for me +to have stopped the flotation had I attempted it. But, on the other +hand, I would not have them think that I desire to be absolved from the +disastrous results of the great mistake I made at this time in not at +any cost doing that which after-happenings have shown would have been +the most honest course for me to have pursued. Nor would I have them +think I desire to be absolved from the consequences of many other +mistakes which this one led me into--mistakes in temporizing with the +situation and postponing action which I should have boldly and +fearlessly forced, regardless of all consequences to the public, my +friends, and myself. + +The subsequent proceedings, the manner in which Amalgamated was actually +sold to the public, the flagrant disregard of the conditions of my +agreement with Mr. Rogers and William Rockefeller, will, when fully told +in their proper place in my story, show that the "System," by whose +methods the public is as ruthlessly plundered as though the fruits of +its labors were taken away from it by highwaymen, admits also of its own +votaries being tricked and despoiled by their associates. The men who +participated in the transaction I have just described are among the most +astute financiers in the country and presumably possessed of invincible +capacity to protect their own interests. But with all their knowledge of +the "System's" tricks they were, in this instance, as shrewdly duped as +the veriest tyro in the Wall Street game. + +My own experience with the "System" in this deal was different in degree +but not in principle from that of these others, and it must be remembered +that I was better equipped to protect my interests than any of them. I knew +that the actual cost of the properties comprising the first Amalgamated was +$39,000,000, and that when sold to the public at $75,000,000 there must be +a profit of $36,000,000. I had every right to think I knew all the other +details connected with the transaction, for as organizer and executant of +the deal my share in the profits was to be equal to that of Henry H. Rogers +and William Rockefeller respectively. We were each to have twenty-five per +cent., the remaining twenty-five per cent. going to others. This was no +gentleman's "leave-it-to-me-and-I'll-see-you-get-what's-coming-to-you" +arrangement either, but a hard, cold, mutually satisfactory and +settled-in-advance agreement. But when it came to the final accounting, the +"System" had so regulated things that the participants on the various +floors, except, of course, Mr. Rogers and William Rockefeller, must each +accept without question the share finally handed over to him. Having no +means of knowing how large the other interests were, or what the +"extraordinary expenses" had been, they were in no position to question the +payments made them, which represented sums below what they would have had +if the business had been conducted as they thought it had been. When my +final account was presented to me I was startled. Notwithstanding the +"cleverness" of the "System," the deception was so obvious, so audacious, +that the instant Mr. Rogers submitted it to me I exploded and denounced the +transaction with such vehemence and conviction that within a few minutes +there was forthcoming a second statement, revising the account, by which I +was given just double the amount first tendered, and the figures in both +accounts ran into millions; yet the amount in the second account upon which +I settled was only one-half the share received by my equal partners, Henry +H. Rogers and William Rockefeller, as I afterward learned.[1] + +This is a fair statement of my own share in the first Amalgamated +transaction. I have no desire to evade the issues suggested and raised +by these revelations. My frankness should be absolute proof of that. As +I promised, I shall hew to the exact line of fact, letting the chips of +responsibility, legal and moral, fall where they may, though many of +them stick to my own clothes. My own burden of error I am ready and +willing to shoulder, but I decline any longer to take and carry +responsibilities which belong absolutely to others. There should be a +time-limit on martyrdom, and mine anyhow is up. + +FOOTNOTES: + +[1] I know no better spot in my story than right here to set the public +right on two vital points concerning Amalgamated, upon which they are and +always have been greatly at sea: + +John D. Rockefeller did not have before the Amalgamated Company was +organized and floated, nor at its organization and flotation, directly or +indirectly, a dollar's interest in its stock nor its affairs, and I have +what I consider excellent reasons for believing he has not had any interest +up to the time of this writing. + +The disasters which have come to the Amalgamated stockholders did not +occur, as has been so industriously and ingeniously advertised throughout +the world, because of the inability of the "Standard Oil"-Amalgamated-City +Bank fraternity to prevent the collapse of the price of copper, the metal, +from the high price of seventeen cents to the low one of eleven cents per +pound. "Cornering" the metal market, forcing the price to an abnormally +high figure and maintaining it there had, notwithstanding the many emphatic +statements to the contrary, absolutely no part in any of our original +plans, and the success or failure of our project was in no way dependent +upon any price for copper, the metal, other than the fair and legitimate +price caused by legitimate supply and demand. In fact, as I shall +demonstrate before my story is ended, forcing the price to extremely high +points and the resulting collapse were all a part of the trickery by which +the public was plundered. + + + + +CHAPTER V + +THE POWER OF DOLLARS + + +At no time in the history of the United States has the power of dollars +been as great as now. Freedom and equity are controlled by dollars. The +laws which should preserve and enforce all rights are made and enforced +by dollars. It is possible to-day, with dollars, to "steer" the +selection of the candidates of both the great parties for the highest +office in our republic, that of President of the United States. It is +possible to repeat the operation in the selection of candidates for the +executive and legislative conduct and control of every State and +municipality in the United States, and with a sufficient number of +dollars to "steer" the doings of the law-makers and law-enforcers of the +national, State, and municipal governments of the people, and to "steer" +a sufficient proportion of the court decisions to make absolute any +power created by such direction. It is all, broadly speaking, a matter +of dollars practically to accomplish these things. I must not be +misunderstood as even insinuating that there are not absolutely honest +law-makers and law-enforcers, nor that there are not as many of them in +proportion to the whole body as there were at the creation of our +republic. I believe there is at the present time as large a percentage +of honesty among Americans as ever there has been, but it is plainly +evident to any student of the times that at no other period in the +history of the United States has honesty been so completely "steered" by +dishonesty as at this, the beginning of the twentieth century. + +_I shall go further and say that there to-day exists uncontrolled in the +hands of a set of men a power to make dollars from nothing._ That +function of dollar-making which the people believe is vested in their +Government alone and only exercised under the law for their benefit, is +actually being secretly exercised on an enormous scale by a few private +individuals for their own personal benefit. This, I am well aware, is a +startling statement, but not more so than the facts which support it. +Throughout the country we have all grown accustomed to the spectacle of +men who, poor yesterday, to-day display more dollars than the kings and +queens of olden times controlled. In flaunting this money these men +proudly boast: "We made all this yesternight, and are going to multiply +it five-or fifty-fold to-morrow night." + +The fact that there must be in this country some secret method of +gaining vast fortunes gradually dawned on the minds of the people. This +method, they argued, must be outside the laws of the land which they +themselves had made, and they were confronted with the fact that the +possessors of these fabulous fortunes were creating a power not +recognized by their Government and which practically placed the +Government in the hands of the fortune-owners. They realized that in +some way the magic of this fortune-making was connected with, or seemed +to be compounded in, institutions called corporations and trusts, and +that among these the head and centre was a great affair called "Standard +Oil." Wherever this "Standard Oil" was, all knew that strange wonders +were worked. Within the sphere of its influence dirt changed to gold, +liquids to solids, and what was, was not, and what was not, was. Whoever +became a part of this mysterious "Standard Oil," at the same time was +rendered "powerful"; as though touched by a fairy's wand, he changed +from pauper to millionaire. But what was "Standard Oil"? The people knew +that at the beginning it was only an aggregation of men, private +individuals, who had accumulated much money by securing a monopoly of +selling oil, and that these men were "Rockefellers," and that Standard +Oil and "Rockefellers" had been cute and cunning in the conduct of their +oil-selling to a degree greater than had been rival sellers of oil or of +other necessities. And as time wore on much more was heard of the +cleverness of Standard Oil and "Rockefellers," as the victims of the +cuteness and the cunning "hollered" in public places, and the +newspapers and writers of books exclaimed against their practices and +exactions. But many other things were happening simultaneously, and to +the great bulk of the people it was interesting rather than portentous +that there existed in the country a giant oil-thing whose owners were +reputed the richest men in the world. + +It was not until the beginning of the twentieth century that the monster +"Standard Oil" loomed up before the people as the giant of all corporate +things and that its ominous shadow seemed to dwarf all other +institutions, public or private. In multitudinous forms it was before +the people. + +In awed whispers men talked of its mysterious doings and canvassed its +extraordinary powers as though "Standard Oil" were a living, breathing +entity rather than a mere business institution created by men and +existing only by virtue of the laws of the land. + +About the time that the world had begun mistily to take in the +tremendous forces which radiated from "Standard Oil," there occurred a +financial crash, and the people saw their savings, invested in what they +supposed were the legal and absolute titles of ownership in the material +things of their country, suddenly decline in value and contract to +prices representing a loss to them of billions of dollars. Throughout +the misery and suffering this terrible collapse occasioned, "Standard +Oil" remained undisturbed as before and amid all the confusion kept +sternly on its dollar-"making" way. Indeed, it seemed to gain in bulk as +other institutions diminished or disappeared. Then it was that the +people first began to demand, what they are still to-day fiercely +demanding, "What is this 'Standard Oil'?" "What is its secret?" "Whence +came it?" and, "Can our republic endure if it, too, endures?" + +To-day "Standard Oil," the "Private Thing," is the greatest power in the +land--more powerful than the people individually or as a whole, and its +secret is the knowledge of the trick of finance by which dollars are +"made" from nothing in unlimited quantities subject to no laws of man +nor nature. The dollars that "Standard Oil" _makes_ are of the same +value as the dollars of the people as made by the Government, which +dollars we know can be coined and put into circulation only in +accordance with law and for the benefit of all the people. + +For the better understanding of those readers not versed in the +technical phrases of finance and economics I shall in my narrative make +use of certain terms of my own which will convey meanings readily +grasped when the sense in which they are used is once comprehended. In +speaking of "Standard Oil," for instance, I will speak of it as a +"Private Thing." By that term I desire to typify the active, private +identity of a corporation which comprehends, but exists independently +of, its legalized functions. Some corporations have a real personality +in addition to that which their name and the corporation laws prescribe +for them, an inherent power, or individuality, which exists above and +apart from their physical functions as sellers of oil, of coal, or of +ice. This may be an incarnation of the power developed in the +transaction of their legalized occupations, but the "Private Thing" is +uncontrolled by any of the restrictions by which the law defines and +curbs the corporation whose name it bears. Already I have distinguished +between "Standard Oil" which wields all the powers of its subsidiary +companies, and Standard Oil, the seller of oil. In the same way we have +"American Sugar Refineries" and "United States Steel," the "Private +Things" which are not one whit better than nor different from "Standard +Oil," the "Private Thing." Though this narrative will deal only with the +"Private Things," Bay State Gas and Amalgamated Copper, I have no +hesitancy in saying that the methods employed and the results, good or +bad, which accrued in the case of any of the other "Private Things" with +which the public have had to do, differ only in details from those with +which I shall deal in my story. + +In speaking of dollars brought into existence by the trick of finance I +have referred to I shall call them henceforth "made dollars," to +distinguish them from dollars coined by the Government and legitimately +acquired by the individual or corporation. These "made dollars," it must +be remembered, are really "made" for all purposes of use as surely as +if they had the Government's stamp, yet they are not made in the sense +of the known volume of the people's money being added to. So, however +many of these "made dollars" are brought into existence by this trick of +finance, only the men who "made" them can know and profit by their +existence. The people are no wiser nor can they adjust themselves to the +change of conditions brought about by the creation of all this new +money; yet if "unmade" or lost, the entire volume of the nation's wealth +would be contracted. + +I can set before my readers better by an illustration than by any +process of definition, the trick of finance by which "made dollars" are +brought into existence. Let us suppose that the United States Government +at Washington, the only power legally entitled to issue money for +circulation among the people, puts forth a particular $10,000. All the +conditions prescribed by law have been followed, and all the people in +the country are benefited by the issue and circulation of this +particular $10,000, each in the proportion the laws prescribe. + +"B," a Western farmer, tills his soil and receives, by the sale of his +wheat, the particular $10,000, which he then deposits in _The Bank_. +_The Bank_, being a part of the Government machinery, only receives, +holds, and uses the $10,000 under safeguards provided for by the laws of +the land, so hereafter "B's" material life is conducted on the basis +that he is the full and actual possessor of $10,000. He knows, further, +that his $10,000 cannot be expanded nor contracted, nor its relation to +any of the other money of the people which is in circulation altered +without his knowledge, because he knows such changes cannot come about +except through the Government. I say he knows this--he has every right +to believe he knows it--but, in fact, it is not so, because of the +working of the secret financial device of the Private Thing. At this +stage enters "C," the Private Thing. + +"C" purchases with $3,300 ("B's" money) which he borrows from _The +Bank_, a copper-mine, depositing the title which he receives from the +seller with _The Bank_ as collateral for the $3,300. After purchasing he +arbitrarily calls the copper-mine worth $10,000--arbitrarily because +his act is not controlled nor regulated by any of the laws of the +land--arbitrarily because the actual cost, $3,300, is his secret and his +alone. Then, arbitrarily, "C" organizes his $3,300 of copper property +into the Arbitrary Copper Company, and issues to himself a piece of +paper, which he arbitrarily stamps "10,000 stock dollars." This he takes +to _The Bank_, and by loan or other device exchanges it for the +remaining $6,700 belonging to "B," and thereafter "C" conducts his +affairs on the basis that he is the possessor of $6,700, his "made +dollars" in the transaction. At this stage there is actually in use +among the people $16,700 where "B," the legitimate factor, and his kind, +the people, suppose there is but $10,000--$10,000 which is recorded, +known and legal, being used by the legitimate factors, "B" and _The +Bank_, and $6,700 which is unrecorded and unknown to any but "C" and +_The Bank_, being used by the illegitimate Private Thing "C." + +Right here is the secret device, the financial trick, by which the +greatest power in the land has been created, and by which the people can +be absolutely plundered of their savings for the benefit of the few. + +At this stage the two-thirds of "B's" $10,000, of which he later is to +be plundered, has not been actually taken away, so he cannot possibly +have any evidence yet of the process of pillage which has been begun, or +that the volume of money which he supposes is all that exists has been +tremendously expanded. The next step is where "C" sells his $3,300, +stamped "10,000 stock dollars" (which, as already shown, he has +exchanged with _The Bank_ for the $10,000 deposited by "B"), to "B" for +$10,000, which $10,000 "B" withdraws from _The Bank_ by simply making +out a check in favor of "C." ("B's" inducement to exchange his dollars +for the stock dollars of "C" is the high rate of interest that they will +return in the form of dividends, which rate is much larger than _The +Bank_ can afford to pay.) "C" deposits "B's" check with _The Bank_ and +hereby liquidates his $10,000 indebtedness to _The Bank_. + +At this stage "B" is still the possessor of $10,000, but it is "10,000 +stock dollars." "C" is the possessor of $6,700, and "D," from whom the +copper-mine was purchased, is the possessor of $3,300; but the two +latter amounts make up the 10,000 real dollars, and _The Bank_ remains +where it was at the beginning of the transaction. The people, however, +are no wiser; but they know, because they have been most carefully +educated to such knowledge by "C's" agents, Wall Street, and the press, +that their country is tremendously prosperous--that its great prosperity +is evidenced by the $6,700 added wealth in the form of 6,700 new stock +dollars. At the next stage the financial trick accomplished by the +secret device is complete. "B," the farmer, who has contracted for new +machinery and other necessities and luxuries to be paid for "next +season," attempts next season to turn his 10,000 stock dollars into real +dollars, and "C," the Private Thing, knowing their real value to be but +$3,300, refuses to make the exchange, but instead, by proclaiming their +real value, compels "B," who must have real dollars to meet his debts, +to sell them for what "C," the Private Thing, is willing to pay. "C," +the Private Thing, is willing to pay their worth, which he alone knows +is $3,300; he repurchases them at that price from "B," that he may +repeat the operation at the return of the next "wave of the country's +prosperity." + +By this operation "B," the farmer, has lost, as absolutely as though +they had been taken away from him by a Government decree, $6,700 of his +own making, and "C," the Private Thing, has "made," as absolutely as +though the Government had allowed him to coin them for his own benefit, +6,700 real dollars, and _The Bank_, created, regulated, and controlled +by law, and existing because of the people's deposits of money, has been +the instrument by which "C," the Private Thing, has deprived "B," the +farmer, of his savings, because "C," the Private Thing, is at one and +the same time during the operation I have outlined, himself and _The +Bank_. + +A careful study of this illustration, by even laymen unacquainted with +financial or corporation affairs, will clearly show that the foundation +of this transaction was _The Bank's_ putting in jeopardy $3,300 of "B's" +deposited $10,000, and that if the $3,300, after being put in jeopardy, +had been lost, "B" would have been the loser,[2] which, in turn, means +that the compensation for the jeopardy in which the $3,300 was placed +was the possibility of $6,700 profit; and that, therefore, the $6,700 +profit when made should have gone to the owner of the $3,300, "B," +instead of to "C," the user of it. + +It is therefore in this sense that I shall use the term "made +dollars"--wherever they are "made" or "unmade" through one set of men +using the dollars of another set of men without that other set knowing +that their dollars are being so used; and wherever the result of such +use is that when dollars are "made," they are "made" by the ones who use +others' money, and where dollars are "unmade," they are lost by the ones +who own the dollars which they don't know are being used. + +FOOTNOTES: + +[2] I say "B" would have been the loser because all money lost by a bank +must eventually be lost by the depositors, the people, or the surplus or +capital of the bank which belongs to the people, through their ownership of +the stock in the bank. Of course the loss of individual amounts such as +$3,300 would not come directly on the people. But when the aggregate of the +money put in jeopardy by the four classes of institutions I name--national +banks, savings-banks, trusts, and insurance companies--runs into billions +and is lost, the loss _must_ fall on the people, because the only other +ones involved are the managers and controllers of these institutions, who +always see to it that when the losses which would wreck the bank are +actually made, they, the managers and controllers, have no deposits and +none of the stock. + + + + +CHAPTER VI + +CONSTRUCTION OF "STANDARD OIL'S" "DOLLAR-MAKING" MILL + + +I believe "Standard Oil" was the first to utilize this secret device for +circumventing the safeguards which the law has erected to protect the +savings of the people. It was the first practically to apprehend that, a +large proportion of all the moneys in circulation, which belong to the +people or the Government, being in the custody of the national and +savings-banks and trust and insurance companies, it would only be +necessary for a set of men to obtain control of sufficient of the +principal national and savings-banks and trust and insurance companies +to control practically unlimited amounts of such funds. Once in control +of these funds dollars could be absolutely "made" at will by the three +following steps: 1st. Using the money in these institutions to acquire +properties. 2d. Consolidating such properties on an inflated basis, and +selling them to the people (who, in fact, already owned them; because +they owned the funds with which they had been purchased); and, 3d, by +stock-market trickery scaring their owners into re-selling them at an +enormous shrinkage from the price they had paid. To understand a +situation with "Standard Oil" is to act, and twenty years ago it began +to weave a net to secure control of the four classes of institutions I +have named. + +Its first move was to establish a great corporation, the Standard Oil +Company, and make its stock, 1,000,000 shares, sell at from $650 to $800 +per share, or $650,000,000 to $800,000,000. It kept its affairs +mysteriously secret, it paid enormous dividends, and from time to time +it caused to be published broadcast throughout the world the statement +that it was held in such value by its creators, the Rockefellers, +Rogers, etc, that they continued to own all but a few shares of the +entire capital. To prove that there could be no doubt of such continued +ownership, the public's attention was repeatedly called to the fact that +the Standard Oil Company was the only great corporation which did not +allow its shares to be traded in upon any of the stock-exchanges. As a +matter of fact, though they are not traded in on the regular +stock-exchanges, they are actively bought and sold daily on the New York +"Curb." + +At the height of the recent financial storm word went round that the +crafts of three over-night-made multimillionaires, men foremost in the +seventh group of "Standard Oil" votaries, were in the trough of the +financial sea and headed for the breakers, which were already strewn +with the wrecks of the people's savings. Following closely on the heels +of these stories came the astounding one that each of these enormously +rich men had, in his endeavors to raise large amounts of cash, disclosed +among his assets blocks of "Standard Oil" stock ranging from 5,000 to +20,000 shares each. Hardly had the public heard this before all +financialdom knew that the storm-tossed crafts had received succor, and +that the crisis had passed. For one brief day the financial press of the +country printed the item: "Standard Oil came to the rescue by buying for +cash large blocks of Standard Oil stock which had long been held by this +or that interest for investment," and no more was thought of the +incident. Even the most alert financiers never suspected that the most +important stock secret of the age had been on the verge of becoming +public property. + +Planted deep in the minds of the public that watches the comings and +goings of the Street is the conviction that Standard Oil is the holy of +holies among stocks. The world has been taught to believe that the +owners of Standard Oil regard the shares of the great oil corporation as +their most precious, most sacred possessions. Yet while "Standard Oil" +has been so scientifically spreading abroad the impression that the +public would never be permitted to own Standard Oil stock, secretly it +has been engaged in exchanging that stock for the securities of the +people in the form of banks and trust companies, railroads, and other +assets of definite value. So completely has "Standard Oil" pulled the +wool over the eyes of the votaries of finance that there cannot be found +in or out of Wall Street a single great financier who would not laugh to +scorn the suggestion that "Standard Oil" is engaged in a campaign for +the distribution of its Standard Oil stock to the public. Yet pin your +great financier down to the facts, and he'll admit that he himself has +quite a block of the stock, and that institutions of which he is a +director include among their assets in one form or another good-sized +parcels of the inestimable security. But so completely are these very +wise men held by the spells woven over them when for this or that +special reason they were allowed as a favor to acquire their holdings, +and so impressively have they been shown that their ownership in +Standard Oil stock must be kept secret, that no suspicion has ever +entered their minds that they were playing the part of lambs in its +purchase. + +Nor was the episode I have described above allowed to disturb their +serenity. It soon became known to the innermost circle of Wall Street +that the stock the three men had resold to "Standard Oil" represented +the share of each in some of the gigantic deals to which he had been a +party during the last ten years, and that with its acquirement had gone +a pledge that it would always be kept in the purchaser's "tin box," and +whenever inspected by "Standard Oil" would be free from "pinholes." And +so, adroitly, dangerous deductions were prevented. + +For the uninstructed I may say that a capitalist's "tin box" is the +receptacle for the stocks and bonds that largely represent his fortune, +and pinholes in a stock certificate are in Wall Street conclusive +evidence that such certificate has, at some period, temporarily passed +into other's hands as collateral for loans, for there has been pinned to +it a memorandum or note stating the details of the transaction in which +its owner parted with it. Pinholed securities are looked upon by the +upper crust of big financiers with much the same horror as that with +which members of the American social upper crust look upon their No. 10 +boots and gloves--reminders of their peasant ancestry. + +But to return to "Standard Oil's" financial weavings: Their next move +was to use Standard Oil stock as the basis for loans, that is, as +collateral for money borrowed from the banks, trust and insurance +companies, and treasuries of other great corporations and estates. The +money thus acquired was paid out to purchase the control of banks and +trust and insurance companies in all parts of the United States, the +Standard Oil ownership being represented by dummy directors and +officers. + +The next move represents another of the dazzling devices of finance in +which "Standard Oil" is adept, and brings the process of artificial +expansion still further along. Control of a certain number of these +savings and national banks and trust and insurance companies having been +acquired, the funds of each were so manipulated by depositing those of +one institution with another, and the latter's in turn with the first, +as to swell the deposits of all and create in all of them an apparently +legitimate basis for increases of capitalization. At the same time there +was shown an apparently legitimate necessity for the establishment of +additional banking and trust companies, which were duly organized and +their assets juggled around by the same process. The result of all this +manipulation defies description. Throughout the series of correlated +institutions loans and deposits are multiplied in such an intricacy of +duplication that only a few able experts, employed by the "System" +because of their mathematical genius, are able to unravel the tangle to +the extent of approximating the proportion the legitimate funds bear to +those which have been created by the financial jugglery I have +indicated. + +When "Standard Oil" had gathered into its net sufficient of the +important private institutions of finance there still remained the +federal Government, the largest handler of money in the country. It was +not hard for "Standard Oil" to introduce its expert votaries into the +United States Treasury and thus to steer the millions of the nation into +the banks subject to the "System's" control. This accomplished, the +structure was complete and the process of "making" dollars proceeded on +a magnificent scale. + +That there may be no possible doubt in the minds of those of my readers +who are unacquainted with such matters that I am citing every-day, actual +happenings, I will tell just how the Daly-Haggin-Tevis-Anaconda-Amalgamated +transaction was worked out, showing that but for the existence of the +National City Bank of New York, or a like institution of the people, it +could not have been brought about. + +When Mr. Rogers and William Rockefeller "traded" with Messrs. Daly, +Haggin, and Tevis for the Anaconda stock, and with others for like stock +or other properties which I have already named, the price agreed upon +was $24,000,000 to Daly, Haggin, and Tevis, and $15,000,000 to the +others, or $39,000,000 in all. This was to be paid by "Standard Oil" and +received by Daly, Haggin, and Tevis, and the others, but one of the +stipulations in the "trade" was that instead of the money's being paid +to Daly, Haggin, and Tevis, and others direct, it was to be credited to +them on the books of the National City Bank of New York and was to be, +by agreement, not withdrawn from the bank before a given time, the bank +agreeing that the new owners of this money should receive interest at a +low rate upon it while it so remained deposited. At the same time the +bank agreed to loan Mr. Rogers and William Rockefeller the $39,000,000 +at the same rate of interest upon the collateral which the $39,000,000 +was used in purchasing. Therefore the first part of the transaction was +as follows: + +The bank, having $39,000,000 on hand belonging to the public in the form +of savings deposited, or having a fictitious $39,000,000 in the form of +book-keeping accounts made possible by the deposits of the public and +the manipulation of the funds in other banks and trust and insurance +companies belonging to the public or the Government, caused an entry to +be made in its books showing that this $39,000,000 had been loaned to +Mr. Rogers and William Rockefeller, and that they, having transferred it +to Daly, Haggin, Tevis, and others, were, upon the books of the bank, +the real owners. + +The second part was the summoning into the City Bank of certain +"Standard Oil" lawyers, office-boys, and clerks, and the organization by +them of the Amalgamated Copper Company. The lawyers drew up the papers +and the office-boys and clerks signed them. First, the papers certified +that "whereas we (the office-boys and clerks) are desirous of taking +advantage of the corporation laws of the State of New Jersey, we (the +said office-boys and clerks) do so take advantage of the said laws and +form ourselves into the Amalgamated Copper Company, which will have a +capital of $75,000,000, and which will be allowed by said laws to own +copper-mines and other things, to mine copper and other things, to +manufacture, buy, sell, and trade in copper and other things, and to do +numerous and variegated other things; and that whereas we (the said +office-boys and clerks) have now become the Amalgamated Copper Company, +one of our number will purchase the entire capital stock of the said +Amalgamated Copper Company for $75,000,000 cash, which $75,000,000 cash +we herewith certify to have been paid in the form of a check for +$75,000,000, herewith delivered to the treasurer, one of our number, by +the clerk who drew it; and the treasurer, herewith certifying that he +has received the $75,000,000, herewith delivers unto said clerk the +$75,000,000 capital stock of the Amalgamated Copper Company, and we (the +said office-boys and clerks) herewith certify that there is within the +treasury of the Amalgamated Copper Company $75,000,000, and we (the said +office-boys and clerks) vote that it, the said $75,000,000, shall be +used in the purchase of certain stocks and properties, and said certain +stocks and properties shall be the same stocks and properties previously +purchased by Mr. Rogers and William Rockefeller, and now owned by them, +and we (the said office-boys and clerks) herewith certify that we have +paid from the treasury $75,000,000, that said $75,000,000 is in the form +of a check, and said check is the one previously received, or its +equivalent, by our treasurer, from one of our number, to wit, the clerk +referred to earlier in these papers, and said $75,000,000 has been paid +to Henry H. Rogers for his and William Rockefeller's use." Henry H. +Rogers, now having $75,000,000, where formerly he had stocks and +properties which had cost him $39,000,000, and being desirous of +investing it, purchased from the clerk the $75,000,000 of Amalgamated +stock which he, the clerk, had previously purchased from the treasury of +the Amalgamated Company, Mr. Rogers promptly paying for said purchase +with the $75,000,000 check or its equivalent, which has already done +such yeoman service. + +The organization of the Amalgamated Copper Company of New Jersey now +being complete, and the company being in possession of all the property +which had formerly belonged to Mr. Rogers and William Rockefeller, and +which had cost them $39,000,000, and the clerk having again come into +possession of his $75,000,000 check, and Mr. Rogers and William +Rockefeller being the sole owners of the $75,000,000 of Amalgamated +stock, the second part of this transaction was completed. The third +began by the office-boys and clerks resigning from their positions as +directors and officers of the Amalgamated Copper Company of New Jersey +in favor of the more responsible and better known "Standard Oil" +votaries. Mr. Rogers and William Rockefeller then had the National City +Bank of New York offer for sale to the public the $75,000,000 of stock +in such a way that, although it was then the private property of Mr. +Rogers and William Rockefeller, the public were led to believe it was +the property of the Amalgamated Copper Company. Simultaneously, the +National City Bank of New York offered to loan the public its deposits +at the rate of ninety cents on the dollar, on any amount of the +Amalgamated stock it, the public, purchased; whereupon the public, +taking advantage of this offer, agreed to purchase from the National +City Bank of New York the $75,000,000 of stock for $75,000,000, thereby +enabling it to certify upon its books that the $39,000,000 it had loaned +to Messrs. Rogers and Rockefeller had been repaid, and enabling Mr. +Rogers and William Rockefeller, after paying said debts to the National +City Bank of New York, to become the absolute owners of $36,000,000 of +money, none of which they had owned before, and which they had "made" as +absolutely as though they had coined it by permit from the Government +of the people who had parted with it.[3] + +The fourth part of the transaction began when months afterward the +public, who had borrowed their money from the National City Bank of New +York and other banks and trust and insurance companies to buy +Amalgamated stock at 100 cents on the dollar, were compelled to repay +it, and to do so were obliged to sell the Amalgamated stock which they +had purchased at $100 per share for the best price they could get, which +was $33 per share; and if we suppose for a moment that the "Standard +Oil," after repurchasing it at $33 per share, at a later day repeated +the operation of selling it for $100 per share, it will be seen that +"Standard Oil," the "Private Thing," would thereby "make" an additional +$50,000,000, as absolutely as though they had been allowed by the +Government to coin it.[4] + +This explanation is not the creation of an extravagant fancy. It is not +romance, but reality. The thing described was a supreme manifestation of +the "System," of the perfect working of that tremendous financial +machine which reaps, grinds, and harvests for its own benefit, the +earned savings of the American people. + +In showing how these thirty-six millions were made in the brief space of +this creature's (Amalgamated Copper's) life, I deal with reality and not +romance; but let my readers for a moment give their imaginations play +and picture to themselves one scene in this stupendous drama. A great +room in the greatest banking house in America, if not in the +world--silent, solemn--an atmosphere of impregnable rectitude--the solid +furniture, the heavy carpets, the chill high walls, the massive desks, +the impressive chairs, the great majestic table portentously suggestive +of power. Presto! the dim calm is broken; the air vibrates as when an +ancient church is invaded by a swarm of vampire-bats. Into the great +room enter a group of men and a flock of youths, who settle in the +impressive chairs round the majestic table. You wonder what is the +motive of the assemblage. These grave lawyers, whose names are weighty +in the nation's councils, and these gray-haired, dignified financiers +might well be gathered to arbitrate a dispute involving empires; but why +these office-boys and clerks, with their restless, surprised eyes and +uneasy gestures? The flourishing of papers, the murmuring of voices in a +confusion of "seventy-five million," "we buy," "we sell," "we are," "we +will"--words, nothing but words; then silence as one reads from a stiff +parchment certain resolutions which the suave gentleman with incisive +steel-clicking manners, at the head of the table, puts to a vote. Then +these youths, whose souls are afire with the hope of a director's $5 +gold fee, timidly sign the record, trembling the while lest a blot call +down on them a scolding; a head clerk, whose fondest dream is a raise of +salary as the result of coming under the Master's eye in a +seventy-five-million-dollar deal, affixes a seal, and there is an +exchanging of thin slips of paper--checks--dollars--magically "made +dollars." Exit office-boys and lawyers. + +The door closes--silence again. Then the air vibrates with the sound of +a hearty hand-slap and the genial, whole-souled greeting of the "Master" +to his partner. "William, I feel as though I had done an honest day's +labor! Thirty-six million dollars 'made' and no hitch, no delay!" Then +follows the partner's mild answer: "Yes, Harry, but don't forget James' +and the others' shares will shrink it up quite a bit." + +Thirty-six million dollars for _one honest day's labor_! Thirty-six +million dollars--and Alaska cost us but seven millions and Spain +relinquished to us her claims on the Philippines for only twenty +millions. Thirty-six million dollars!--more than a hundred times as much +as George Washington, Thomas Jefferson, and "Abe" Lincoln together +secured for the patriotic labors of their lifetimes. And this vast sum +was taken from the people to enrich men whose coffers were already, as +the results of similar operations, so full of dollars that neither they +nor their children, nor their children's children could count them--as +the people count their savings, a dollar at a time--as thoughtlessly +taken as are the apples that the school-boy steals after he has eaten so +many that he can eat no more. + +A thousand times have I tried to figure out in my mind what worlds of +misery such a sum of millions might allay if issued by a government and +intelligently distributed among a people--and do my readers know that +never in the world's recorded history has any nation felt itself rich +enough to devote thirty-six millions to the cause of charity--even in +the midst of the most awful calamities of fire, flood, war, or +pestilence? On the other hand, I have had to know about the horrors, the +misfortunes, the earthly hell, which were the awful consequences of the +appropriation of this vast amount. I have had to know about the +convicts, the suicides, the broken hearts, the starvation and +wretchedness, the ruined bodies and lost souls which strewed the fields +of the "System's" harvest. + +Pondering all these things, I have ceased to wonder at the deep murmurs +of discontent that are rising, rising to my ears from all parts of the +continent. + +Can it be that a just God suffers the sons and daughters of some of us +to eke out a bare existence as the best reward of earnest effort and +sterling worth, and at the same time rewards these other men with +$36,000,000 for one day's labor? Is this the freedom which our fathers +and our sons died on many a bloody, hard-fought field to preserve? I am +conscious of a haunting fear that these men and women may not always be +patient, may not always be put off with skilled evasion or slippery +subterfuge, and for one brief moment I see visions of a marching people, +bearing aloft grisly heads on gory poles, and hear above the low, +bestial murmur of the mob the cry for bread and for revenge. + +And then I remember that this is _America_, not France; that our laws +are strong--if but the people are aroused to see them obeyed; that our +prisons are ample, even though they be for the present filled with petty +rascals who can do but little harm though turned loose to make room for +the real scoundrels who are undermining the foundations of our +Republic. + +FOOTNOTES: + +[3] It must be remembered that the Amalgamated Company never owned all the +capital stock of the Anaconda, but, on the contrary, only a few shares over +600,000, which represented the ownership of the Haggin-Tevis-Daly people, +and which they had turned in for a lump sum before the market price had +advanced. The control of the Parrott, owned by the Amalgamated Company, was +purchased for a lump amount from Franklin Farrell and his associates for +the sum of $4,000,000-odd, not $12,190,000. The Colorado Smelting and +Mining Company was also purchased in a lumped batch of Senator Wolcott, not +at $7,000,000, but for $2,000,000-odd, while the tremendous advance in the +price of Anaconda in the market from 30 to 70 was due to the operations of +Messrs. Rogers and Rockefeller for their private account, out of which they +made a large additional profit. + +There can be no possibility of mistake or successful misrepresentation of +these figures: first, because the Anaconda figures are known not only to +Mr. Rogers, William Rockefeller, and myself, but to J. B. Haggin, and to +the estates of Tevis and Marcus Daly; the Colorado figures, to associates +of Senator Wolcott and to his estate; and the Parrott figures, to Mr. +Farrell who received the money, and to a large number of those to whom he +had to account; and, further, these figures will all be demonstrated in +open court in suits outside of any with which I have to do, which are now +being brought or are pending. + +[4] As a matter of fact, the people lost even more than thirty-six millions +of dollars on this part of the Amalgamated transaction, because "Standard +Oil" did not sell all the 750,000 shares at $100 per share ($75,000,000) at +that time. They retained two-thirds of them, which at a later date they fed +out to the public at $115 per share, and at a still later date they took +them back at $33 per share. + + + + +CHAPTER VII + +JUGGLING WITH MILLIONS OF THE PEOPLE'S MONEY + + +For the purposes of the transaction I have just described the machinery +of a great bank or trust company was essential. The vast profit gained +here was absolutely "made" through the instrumentality of the National +City Bank of New York, but some other tractable institution would have +been equally efficient. In order that my readers may focus such great +financial concerns as this National City Bank, I give right here brief +résumés of its career and resources and of those of two of its +affiliated institutions: + + NATIONAL CITY BANK New York City + + JAMES STILLMAN, _President_. + + The "City Bank" was chartered by the New York Legislature in + 1812, and reorganized as a National Bank July 17, 1865. The + capital paid in was $1,000,000. Moses Taylor held the office + of president for thirty-four years, and died in 1892, when + Percy R. Pyne, son-in-law of Moses Taylor, was elected + president and held office until the election of James + Stillman, of Woodward & Stillman, cotton merchants, when the + capital stock of the bank was increased to $10,000,000, and + again increased to $25,000,000. The sworn report of the + officers and directors filed with the Controller of the + Currency shows that the condition of the bank, January, + 1904, was: + + RESOURCES + + Loans and discounts $114,507,919.20 + Overdrafts secured and unsecured 162.90 + United States bonds to secure circulation 3,220,000.00 + United States bonds to secure United States deposits 12,937,000.00 + United States bonds on hand 60,120.00 + United States bond account 4,450,000.00 + Premiums on United States bonds 1,354,013.00 + Stocks, securities, etc. 16,709,241.62 + Banking-house furniture and fixtures 200,000.00 + Due from national banks (not reserve agents) 4,727,461.12 + Due from State banks and bankers 644,288.80 + Exchange for clearing-house 31,000,935.34 + Checks and other cash items 798,843.22 + Notes of other national banks 209,015.00 + Fractional paper currency, nickels, and cents 684.63 + Lawful money reserve in bank, viz.: + Specie $36,928,350.00 + Legal tender notes 7,100,000.00 44,028,350.00 + Redemption fund with U. S. Treasurer (5% of circulation) 161,000.00 + Due from U. S. Treasurer other than 5% redemption fund 204,105.95 + + Total $235,213,140.78 + + LIABILITIES + + Capital stock paid in $25,000,000.00 + Surplus fund 8,900,000.00 + Undivided profits, less expenses and taxes paid 8,503,038.26 + _National bank notes outstanding_ 3,180,000.00 + _Due to other national banks_ $36,469,683.95 + _Due to State banks and bankers_ 5,903,473.87 + _Due to trust companies and savings-banks_ + 29,210,461.00 + Provident reserve fund 30,000.00 + Dividends unpaid 519.00 + _Individual deposits subject to check_ 82,576,884.06 + Demand certificates of deposit 43,790.00 + _Certified checks_ 10,752,671.01 + _Cashier's checks outstanding_ 7,631,619.78 + _United States deposits_ 12,937,000.00-- 185,556,102.67 + United States bonds 4,155,000.00 + + Total $235,213,140.78 + + THE NEW YORK LIFE INSURANCE COMPANY + + The company was incorporated by special act of the New York + Legislature in 1841. It is the third largest insurance + company in the United States. The assets of the company + January 1, 1892, were $125,947,290, and income $31,854,194. + In 1904 the assets were $352,652,048; income, $88,269,531. + + THE NATIONAL SHAWMUT BANK, OF BOSTON + + This institution was incorporated in 1898 with a paid-in + capital of $3,000,000. In 1904 its total resources, also + liabilities, were $63,471,639, of the same general character + as those of the National City Bank of New York. + +A calm examination of these figures, illuminated by the explanation of +the "System's" methods I have previously given, will awaken the +American people to a comprehension of what use "high finance" makes of +the savings of the public intrusted to it for legitimate investment. + +Nor must it be supposed for one minute that the insurance company and +the Boston bank which I have used for illustrations differ in any way +from scores and scores of their kind which are as absolutely "steered" +in their operations by the National City Bank of New York as the +National City Bank of New York is absolutely "steered" by its president, +James Stillman, or as James Stillman is absolutely "steered" by +"Standard Oil," the Private Thing, or as "Standard Oil," the Private +Thing, is absolutely "steered" by its supreme heads, Henry H. Rogers, +William Rockefeller, and John D. Rockefeller. And if any doubt remains +in the minds of my readers of the absolute power of "Standard Oil," the +Private Thing, to "make" dollars at will, or of the dead-sure working of +their "heads-I-win-and-tails-you-lose" gambling game, I ask them +carefully to analyze the above statements in connection with the facts +in the Amalgamated transaction which just precede them. + +Fourteen years ago the National City Bank passed out of the legitimate +management of old-fashioned business men of the Moses Taylor stamp and +into the hands of the "System," the Private Thing. Then its capital was +$1,000,000; it is to-day $25,000,000, and after having paid out millions +in dividends and other profits it has, in addition, a surplus of +$16,000,000, and it has the absolute power to juggle with a total of +$235,000,000, $36,000,000 of which belong to other national banks, +$6,000,000 to State banks and bankers, $29,000,000 to trust companies +and savings-banks, $82,000,000 to individual depositors, $10,000,000 to +the holders of certified checks, $7,000,000 to the holders of cashiers' +checks, $13,000,000 to the Government directly, and $4,000,000 in +Government bonds, to say nothing of scores of hundreds of millions more +through its affiliated institutions. And all this juggling is done in +such a fearless manner that we find it in the Amalgamated deal loaning +in one transaction an amount so great that if it had been lost, the +bank's entire capital would have been more than completely wiped out. +That my readers may not base their conclusions upon this one +transaction of this mighty engine of the "System," vicious as it shows +on the surface and destructive as it really was to the thousands who +were parties to it, _I will later in this story show the National City +Bank in another section of the Amalgamated deal, doing things which in +intention and in result were so much bolder and grosser that this +transaction will by comparison appear pure and legitimate_. + +During the past thirty years the American people have become so used to +enormous figures in connection with corporations and trusts that they +have not stopped to discriminate between different classes of fortunes +nor to figure out that fortunes of certain kinds are absolute +self-evidence that they were acquired by illegal methods, and that if +allowed to multiply the people will surely be enslaved and the republic +destroyed. For instance, there are in New York City alone dozens of +national and savings-banks and insurance and trust companies which +control money enough to make them practically omnipotent in whatever +direction their controllers exert their power. I will name but seven, +showing what enormous amounts their managers control; and let it be +borne in mind that all such institutions are linked together by the +"System" as firmly and surely as any human things can be linked. The +Equitable, Mutual, and New York Life Insurance companies have a combined +capital of $1,200,000,000 of assets, a yearly income of $230,000,000, +and $4,500,000,000 of insurance in force; the National City Bank, United +States Trust, Mercantile Trust, and Union Trust companies $30,000,000 +capital, and $45,000,000 surplus, and they have the vast sum of +$450,000,000 of the people's money to juggle with. + + + + +CHAPTER VIII + +"STANDARD OIL" INVESTS "MADE DOLLARS" IN GAS + + +And now I shall have to go back a bit in my story. After "Standard Oil" +had firmly established, through the agency of the curb,[5] the value of +the 1,000,000 shares of Standard Oil, the corporation seller of oil, at +between $600,000,000 and $800,000,000, and had used it as collateral in +securing control of the four classes of money institutions I have +named--the national and savings-banks and trust and insurance +companies--it proceeded to use the funds thus controlled to manipulate +the stocks of great public corporations for its own profit, forming them +into trusts with capitals far beyond their values, represented by new +stocks and bonds, which it sold to the public at prices aggregating a +hundred to five hundred per cent. over the old capitalization. It then +engaged in a wonderfully clever campaign to work off on the +people--directly, the very rich people, but indirectly, the people as a +whole--through institutions which exist because of the people's +savings--the $600,000,000 to $800,000,000 of Standard Oil stock which +had at this stage served the principal use for which it had been +created. It must be borne in mind that while "Standard Oil" is grinding +out "made dollars," its owners never for an instant lose sight of that +dim, distant day of reckoning when the people will awaken to their +losses. The "Rogerses" and the "Rockefellers" know well that the public +cannot always be kept in ignorance of the methods of the "System" by +which it has been plundered, and that once it is in possession of the +secret of how the savings of the many have become the property of the +few, there may be reprisals of such a nature as will compel the "System" +to yield up its gains. They know that when that day comes it will not be +best for them to have their enormous fortunes in such get-at-able +property as real estate, in which so many of the legitimately acquired +American fortunes are invested. In a quiet way, therefore, they have put +the bulk of their "made dollars" into unrecorded forms, such as +Government bonds; bonds and preferred stocks of what they consider +non-duplicatable franchise corporations such as railroads, which require +rights of way; into municipal public service enterprises, such as gas +companies, the existence of which depends upon rights of way for pipes; +and into the stocks of banks and trust and insurance companies, which +they believe the people will never dare attack because their savings are +largely deposited in them. + +I would not have my readers think that the principal motive actuating +"Standard Oil" in parting with its Standard Oil stock is doubt of its +present intrinsic worth, for such is not the case. The masters of +"Standard Oil" are very able, far-seeing men, and they know that so +thoroughly have the American people been educated to the crimes which +created Standard Oil, the crimes by which it has existed and does exist, +that no passage of time or "pious-ing" of latter-day methods, will ever +blind them to its iniquities, and that when reprisal day comes, as come +it surely will, the first thing the people in their frenzy will look for +will be Standard Oil. This is the reason which, more than any other, +influences them in selling to others an enterprise which has up to the +present time not only enjoyed tremendous prosperity, but which has as +yet met with no obstacle or hindrance. + +Of all forms of tangible investment "Standard Oil" has looked most +favorably upon gas stocks, and its secret devices have been worked +overtime in consolidating gas companies throughout the United States. In +a general way, as manufacturers of illuminating oil, "Standard Oil" had +early become familiar with the problems of supplying large +communities--cities--with gas light; and with the advent of water-gas, +as sellers of petroleum they controlled an important factor in the +production of that volatile commodity. All the talent of the "System," +trained in "handling" municipal authorities, came into play in this big +new business of lighting cities--a business which perforce became a +monopoly as soon as the powerful tentacles grasping it were recognized +as "Standard Oil." + +At the time my story opens (1894) "Standard Oil" had already captured +the gas-lighting corporations of certain of the great cities of the +United States, including the immensely rich ones of New York (directly), +Philadelphia and Chicago (indirectly); and for two years previously had +been besieging the several independent Brooklyn companies for the +purpose of consolidating them into a single gigantic corporation. This +project it has since accomplished. Its intention is to weld this +corporation with the great one that already holds the monopoly of +Manhattan. + +The task of diagramming a territory for invasion is one after Henry H. +Rogers' own heart. His campaigns are planned with Napoleonic power and +foresight. When the capture of Brooklyn was decided on, the several +corporations to be subdued were "sized up" as to their revenues and +liabilities; the resources of their stockholders were studied out, and a +plan of action organized to separate each one from his shares at +"hard-pan" prices. In the "Standard Oil" armory there are many +instruments of "persuasion," and he is indeed a hardy fellow who can +resist the various "trying-out" processes to which mutineers are +subjected. This obstinate capitalist will be summarily knocked on the +head; that other inveigled into a dark corner by a strong-arm man; +another group owe money to one of the "System's" banks and a brief spell +on the financial rack will weaken their grip. Sooner or later all +succumb. While such details as these were being attended to, lines were +being strung here and there to bring about the passage by the city of +Brooklyn and the Legislature of New York State of ordinances and laws +which should allow this and compel that to be done, and so rivet the +various links of the great venture. + +While in the midst of this campaign, to which Henry H. Rogers' genius, +matured in many a hard-fought business battle, foresaw an early and easy +triumphal termination, there came athwart his victorious path a +financial guerilla, "balloony," mysterious, yet as sticky as a +jelly-fish, who was destined to exert a most maleficent influence on his +after-life. Fate hangs no red lights at the cross-roads of a man's +career. No "pricking of his thumbs," no strange portents warned the +Master of "Standard Oil" that the impudent Philadelphia swashbuckler who +dared interfere with the execution of his plan to fetter the "System's" +yoke to the necks of the citizens of Brooklyn was the factor that +destiny had chosen to shape the ends that he had rough-hewn. + +The financial guerilla was J. Edward O'Sullivan Addicks, votary of +rotten finance, perpetual candidate for the United States Senate, +wholesale debaucher of American citizenship and all-round corrupter of +men--J. Edward O'Sullivan Addicks, a corporation political trickster, +who has done more to hold up American laws, American elective +franchises, and American corporations to the scorn of the civilized +world than any other man of this or any previous age. + +FOOTNOTES: + +[5] The New York "curb" is the latest invention in finance, coming closely +upon the heels of the invention of trusts, and it holds the same relation +to the New York Stock Exchange that Private Things hold to corporations. +Before a stock can be bought and sold on the New York Stock Exchange, there +must be submitted to the governors a description of what the stock is, +which must be of such tangibility that any one who cares to investigate may +find there every detail and particular of the property represented, set +forth with the utmost exactitude. But on the "curb" stocks can be traded in +without responsible sponsors or descriptions that mean anything. In other +words, a stock may be bought and sold there, which is so vague and +indefinite as to be little more than a name, and it is through the "curb" +that the value of "Standard Oil" stock is established, for it is daily +bought and sold there at the steadily held prices of 650 to 800, and the +press of the world makes daily record of these prices. + + + + +CHAPTER IX + +A VOTARY OF THE "SYSTEM" + + +The "System" has all sorts of votaries. About J. Edward O'Sullivan +Addicks there is nothing that remotely suggests coworkers of the types +of Mr. Rogers and William Rockefeller. A description that left him in +any part a duplicate of either would do him and them a grievous wrong. +Henry H. Rogers and William Rockefeller have two sides, their social +side and their business side. Socially, they are good men; in business +they work evil. J. Edward O'Sullivan Addicks is a bad man, socially, in +business, in every way. The term "bad man" is used advisedly. My idea of +a "bad man" is that like a bad dollar he is a counterfeit. A counterfeit +has all the appearances of reality, and is yet devoid of its properties +and virtues. So with Addicks. It is easy to find men who will declare by +all that is sacred that Henry H. Rogers is one of the best fellows in +the world, though as many more will as earnestly proclaim him the fiend +incarnate. About Addicks, among those who know the man, there is but one +opinion. I have yet to meet the man, woman, or child who would say aught +of Addicks, after a month's acquaintance, other than, "Don't mention +him! He is the limit." And it will be said with the calm of +dispassionate conviction, as one might speak of a stuffed tiger in a +dime-museum jungle. + +Here we have a man without a heart, without a soul, and, I believe, +absolutely without conscience--the type of man who even his associates +feel is likely to bring in after their deaths queer bills against their +estates as an offset for what he owes them; the type of man whose +promise is just as good as his bond, and whose bond is so near his +promise as to make it absolutely immaterial to him which you take. + +Exhibited in the side show of one of the great circuses some years ago +was a strange creature which, for lack of a better name, its owner and +the public dubbed, "A What Is It?" This freak had the semblance of +humanity, and yet was not human. All its functions and feelings reversed +the normal. Tickle it and it would cry bitterly; pinch or torture it and +it would grin rapturously; when starved it repelled food, and when +overfed it was ravenous for more. It had heart-beats but no heart. The +public gave it up. The public would long ago have given up J. Edward +O'Sullivan Addicks if he would have let them. + +Illustration is better than explanation, and perhaps I can more +graphically set J. Edward O'Sullivan Addicks before my readers by a few +incidents which show his contradictory characteristics in action than by +verbal diagrams, however laborious. + +Once upon a time Addicks, entering Delmonico's for dinner, stumbled on a +couple of newsboys at the entrance. One, broken-hearted, was being +consoled by the other. Addicks, observing the deep sobs, asked: "What's +the matter with you, bub?" The consoler explained that his chum had lost +$2, his day's earnings and capital, and "His mudder--his fadder's +dead--an' de baby'll git trun outter de tenement." Addicks, without more +ado, slipped the suffering young news-merchant a bill which his friends +supposed was $2 to replace the lost funds. As they were taking off their +coats in the hall, however, the little newsboy pushed his way in with: +"Say, boss, did yer mean ter guv me de twenty?" Addicks nodded a +good-natured assent, and his friends registered silently a white mark to +his score, and felt that, after all, somewhere beneath the surface he +was more of the right sort than they had given him credit for being. +After dinner, as they left, the newsboy again approached. "'Scuse me, +boss, but me chum 'd like ter t'ank yer too. I'm goin' ter give him a V +outter it." Addicks looked at the boy in his mildly cold way and said: +"Let me have that bill. I will change it for you." The boy gave it up, +and Addicks, after methodically placing it in his purse, handed him back +a $2 bill with: "That's what you lost, isn't it? And you" (to the +second little fellow, who by this time had mapped out visions of new +duds for the kids and a warm seat in the gallery of a Bowery theatre), +"you didn't lose anything, did you? Well, both of you run along now!" + +His friends looked at each other, and from their slates wiped away the +white mark and replaced it with a deep, broad, black one. And yet +Addicks had made good the loss--done a good deed, but in an--Addicks +way. I should perhaps remark that J. Edward O'Sullivan Addicks has never +smoked, nor used a swear-word, nor taken liquor in any form. + +During the Addicks gas campaign in Boston one of his lieutenants +demanded as his share of the deal a large amount of money, which he +claimed Addicks was withholding from him. Addicks refused to pay. +Friends and associates urged him to settle. While yet refusing, he +agreed to meet this man at one of the leading hotels in the presence of +counsel and lieutenants. The interview was a hot one. Addicks surprised +all by his absolute fearlessness in the face of a savage attack, which +culminated in the production of a document signed by certain +Massachusetts legislators, wherein they receipted for the bribe money +Addicks had paid for their votes. The man who claimed he was being +cheated threatened this would be laid before the Grand Jury the +following day. All the witnesses were dumfounded at the situation and in +concert begged Addicks to hush the matter up by paying what was claimed. +"Gentlemen," said this great financier, "my honor, my business and my +personal honor, has been assailed, and rather than submit to this +outrage I would die! I now ask you all to bear witness that under no +circumstances will I pay to this man a single dollar!" And he +indignantly left the meeting. + +While his counsel and associates were appalled at what might be the +outcome, they admired Addicks' manly pluck, and asked themselves if they +had not, after all, been mistaken in their estimates of his courage and +principle. In the middle of the same night, the man with the document +was surprised by a telegram reading: "Meet me in Jersey City to-morrow +sure with paper; keep absolutely secret." Next day in Jersey they met, +and Addicks simply said: "There is the full amount. Give me the paper. +You don't suppose I would compound a felony in the State in which it was +committed, and before witnesses, do you?" + +In the national election of 1896 J. Edward O'Sullivan Addicks was a +candidate for the United States Senate in Delaware, and for a variety of +reasons was anxious to secure a Republican victory. Within the State, +however, the real contest was not over national issues, but to obtain +control of the Legislature which in the following January had to elect a +United States Senator. There were three factions, the Democrats and two +wings of the Republicans, the Addicks and anti-Addicks parties, the +latter calling themselves "regulars." On Election Day Addicks used an +even $100,000 buying votes, and that evening Delaware was safe for +McKinley--both the "regulars" and the men whom Addicks' money bought +having voted for a Republican President. But it was early bruited around +that if the vote of Sussex County (there are three counties in +Delaware--Newcastle, Kent, and Sussex) were allowed to stand as +received, all Addicks' efforts to control the Legislature would have +been fruitless and his "made dollars" expended for nothing. The ex-flour +dealer of Philadelphia was not satisfied to accept the people's sacred +verdict. He quickly called his lieutenants together, mapped out a +campaign of almost reckless audacity and daring, and assigned his best +men to its execution. + +The ballot-boxes with their contents were in the sheriff's charge and +stored under lock and key in the court-house. The sheriff was an Addicks +tool. At midnight he turned over his charge to one of the would-be +statesman's trustiest lieutenants, who, with the aid of a lantern and a +slip of paper containing the directions, sorted over the legal ballots, +threw some out, and put in new ones. When another sun arose the +dastardly outrage upon the American elective franchise had been +completed, and Addicks was busily scheming to carry out the remainder of +the plot. On the declaration which he or one of his associates would +make, that there had been fraud in Sussex County, the Government at +Washington must send on an investigating committee to whom it would be +asserted that the voting lists had been doctored by the Democrats. To +prove it the boxes would be opened, the ballots counted, and lo! the +villany of the Democrats would be, beyond contradiction, demonstrated. + +But the scheme was an Addicks scheme. Had it been the plot of any other +man with the brains, the nerve, and the lack of principle to concoct it +and set it in motion, inevitably it would have been carried through to +the designed conclusion. As it was, this is what happened: The +lieutenant who had charge of the actual commission of the crime +thoughtlessly chuckled over the details of it with another, and this +other "in the presence of witnesses" laughingly congratulated Addicks on +his plan's success. What was the astonishment of the group to hear the +candidate for the Senate say: "Gentlemen, I could not countenance such a +transaction. This is the first I have heard of it, and it is so +outrageously criminal that I refuse to allow it to proceed further. +There will be no investigation, and if it is a fact that those ballots +have been changed in the box, the ones who changed them shall receive no +benefit from their nefarious work. I have spoken." + +Mind you, every member of the group was a party to the scheme and had +been carefully rehearsed in the part assigned him by Addicks himself, +but alone, that is, without witnesses; nevertheless so earnest and +apparently honest was the man in his protest that for an instant they +doubted their senses--until they remembered it was Addicks. + +The investigation was never held, and to this day Addicks' lieutenants, +especially he who did the midnight work and who still lives in the +peaceful State of Delaware, turn with disgust when Addicks' daring is +mentioned. + +It should be explained here that, whenever Addicks plans an illegal +transaction--one for which he might be made civilly or criminally +liable--he invariably coaches each of his accomplices alone, "without +witnesses." And when it becomes necessary in developing the plot to have +a confab, at which the several parties to the proceeding must meet, +Addicks is most careful to preserve a legal semblance of ignorance of +incriminating details. At intervals, when a danger-place in the +discussion is approaching, he will get up from his seat and, moving to +the door, will say: "Gentlemen, halt right there, until I step out of +the room; tap at the door when you are over that bad spot, and I will +return." + +Addicks' "Wait until I step out of the room" is as familiar among his +coworkers as the "I am going upstairs" is among the "Standard Oil" +family. + +Try to conjure before your mind's eye a picture of the anomalous character +these instances suggest. I'll warrant your mental image as little +resembles the original Addicks as Mr. Hyde did Dr. Jekyll in the story. He +does not look the part assigned him here, nor any other part for that +matter. I saw him coming toward me on State Street one summer day some +years ago, a tall, wiry man, in a white-flannel suit, perfect in fit and +spotless as snow, wearing a fine Panama hat. This was in the period before +Panamas were commonly worn. He was to the life the elegant and luxurious +Southern planter of ante-bellum days. Six months afterward in about the +same place I saw approaching me a splendid person in rich sable outer +garments who looked for all the world like an exiled Russian grand duke. +It was Addicks in winter. You will not surprise his secret from that +pleasant, rather ambiguous, but square-jawed face, nor from the mouth +hidden under a long, drooping, gray, military mustache. His is a +good-sized, well-shaped head, you might say, and the gray, shallow eyes +that look out at you are almost merry in their glances. But they are +inscrutable eyes which seem to have a challenge in their gaze, a sort of +"look-me-over-as-long-as-you-like-and-you'll-never-guess-what's-under-the-surface" +expression that is baffling and provocative. Yet this sybarite, this +daring coward, this stingy prodigal, this sincere hypocrite, this +extraordinary blending of contradictory qualities, is the man who from +1887 to 1892 made Boston look like the proverbial country gawk at +circus-time. + +Power the man certainly has, and of a distinct quality, yet his +intimates cannot explain the reason of their obedience to him. After a +brief acquaintance he is revealed as the very soul of insincerity--he +"works" his friends, he pays toll to his enemies, he frankly shows +himself without the sense of moral obligation. I believe his talent +resides in his capacity to select the proper type of man to "make rich" +in the illicit schemes his abnormal mind conceives. These coworkers of +his are of different grades; some have a super-abundance of cash; others +a desire to get it--in common are their lack of principle and dearth of +brains. Addicks cannot do business long with men of real ability, nor +does he understand them, whereas he can read the minds of his ordained +victims as if they were an open book. The big men who have encountered +or been associated with Addicks are prone to characterize him as a +mountebank, a joker, or a chump. + + + + +CHAPTER X + +ADDICKS COMES TO BOSTON + + +J. Edward O'Sullivan Addicks was born in Philadelphia in 1841, and was +in the eighties plodding along the ordinary, uneventful path of a seller +of flour to the people of that city which since the death of William +Penn holds the record for the highest and densest percentage of sleep +per capita of any English-speaking community. + +In the eighties two things happened that changed the whole course of J. +Edward O'Sullivan Addicks' life. Some one invented water-gas and "let +in" Addicks on the invention; and the Philadelphia branch of the +"Standard Oil," represented by Widener, Elkins, and Dolan, "trustified" +the gas companies of the city of Chicago, which enabled Addicks to "hold +up" the "trustification" until Dolan and Dolan's associates paid him the +sum of $300,000 for the instrument with which he had done the holding +up, $10,000 worth of the stock of one of the necessary Chicago +companies. + +The law of compensation, which gets in its deadly work on all the +prettiest plans of man, but decreed that what goes up must come down +when it ceases going up. It has a shrewd trick of grafting sorrows on +our joys, and of handicapping success with discomfiting conditions. The +favorite of fortune whose feet have fallen in pleasant places sooner or +later stubs his toe. + +Addicks' first "made dollars" certainly came easy--so easy, indeed, that +those who watched his early career marvelled at his success; but nowhere +on God's footstool is there to-day a more terrible illustration of the +inevitable workings of the law of compensation than the present +standing of J. Edward O'Sullivan Addicks affords. + +The thief whose first excursion into a wayfarer's pocket is rewarded +with the equivalent of days and nights of honest labor will surely be +convinced thereafter of the superiority of theft over toil as a means of +money-getting. Invariably the manufacturer of "made dollars," after his +first coup, forsakes forever after the cold arithmetic of commerce for +the rule of guess, dream, hope, and "I will," which constitutes the +mathematics of high finance. Addicks' first "made dollars" came with +such magical ease that there awoke in his slumbering substitute for a +soul a disgust for those prosaic pursuits at which one could never, try +how one might, make more than four by the addition of two and two. He +probably argued to himself: "Why should I work in the flour business +when I know a way of getting overnight more than I can make out of flour +in a lifetime? If people are so simple in guarding their savings that I +can by a trick take away from them enormous wealth without the slightest +danger to my own safety or my profit, even if detected, why should I not +devote my life to such healthful and profitable occupation?" The logic +of the proposition was convincing. Accepting its conclusions, J. Edward +O'Sullivan Addicks, of Philadelphia, embarked on his career. Soon +afterward he discovered gas in Boston. + +This was in 1887. Equipped with his "made dollars" for capital, his +impressive name, sublime effrontery, and a pedigree free from anything +suggestive of his new purpose in life, the ex-flour merchant "lit" into +our everything-figured-out-ahead-and-every-promise-made-taken-at-par +town of Boston. To appreciate the lights and shadows of this event, one +should know Boston and, at the same time, Addicks. Every country boy +will remember Tom Hood's poem beginning: + + I remember, I remember the house where I was born, + With the little lattice window where the sun came peeping in at morn, + +and can recall milking-time in July or August when, sitting on the +rail-fence surrounding the barn-yard, he watched the pigeons snipping +up grain, the old hen scratching up worms for the chicks, the ducks and +the drakes and the geese and the ganders proudly waddling back and +forth, among and around the fluffy ducklings and goslings, and the +bull-pup sound asleep by the side of the tortoise-shell cat. Probably he +will think of some particular milking-time when the calm, contented +serenity of the barn-yard was suddenly disturbed by the unexpected +descent in its midst of a neighboring peacock, who, apparently +unconscious of the consternation produced by his entry, proceeded +proudly to spread his dazzling plumage to convince every one, from Uncle +Cy, on the milking-stool, and mild-eyed Bess, down to the white +fan-tailed dove, that he was--It. + +Conjure up the picture--the peacock at milking-time in the farm-yard; +thus Addicks came to Boston--though it is far from my intention to +identify the bucolic background I have drawn with the Hub of the +Universe. + +Boston, up to this time, had been singularly free from the mushroom +variety of millionaire which had sprung up overnight in such numbers in +New York and Philadelphia. Proudly defiant of a product so alien to all +her traditions, her citizens would have sworn that no votary of modern +high finance could exist over one curfew-toll within her gates. For +Boston had her own financial eminence, of a character in keeping with +the chill conditions of conservatism and rectitude appropriate to the +metropolis of the New England conscience. She had her Stock Exchange, +her numerous great corporations, her scores of single and +multimillionaires, and it was her boast that her capital had played the +greatest legitimate part in the country's growth. She had furnished a +large percentage of the money which had created our vast Western railway +system; she had found and made the superb copper-mines of Michigan and +Montana, and in all parts of the land branches of her sturdy +institutions were vitally assisting the miracle of America's +development. Notwithstanding what these wide-flung enterprises imply of +commercial push and audacity, Boston, at the time Addicks discovered gas +there, was one of the most trusting wealth-investing communities in the +world. She had her simple rules of business conduct which years of +usage had consecrated into all-powerful precedent, but her brokers and +capitalists, however fearful of all things quick or tricky, had never +previously figured as candidates for what in Western parlance are +described as "come-ons." + + + + +CHAPTER XI + +HOW ADDICKS CAPTURED BOSTON GAS + + +At the time Addicks "lit" in Boston that city numbered among her +proudest possessions several extremely rich gas companies, and they were +owned by her "best people." To do business with Boston's "best people" +is no easy task, and up to the advent of Addicks, to do business with +her "best people" without doing it through others of her "best people" +who could absolutely vouch for you was an unheard-of thing. The manner +in which the ex-flour merchant of Philadelphia managed to slip by the +barriers and into the heart of our blue-blooded citadel affords the most +unparalleled example of audacity of which I know. + +In many ways Boston is unlike other great American cities. Some of her +institutions through antiquity or association have acquired a positive +sanctity. Pedigree is important. The average inhabitant spends much of +his time watching the grandson of his neighbor's father, to see the old +man's characteristics crop out in him. The boy's failures will be +remembered against his own offspring fifty years hence. It is a city of +long memories and of traditions. In 1887 Boston, as now, consisted +largely of her traditions, her blue-glass window-panes and her Somerset +Club. + +Now the distinction, sanctity, and antiquity of the Somerset Club are +quite beyond peradventure. Since Boston has been Boston she has had her +Somerset Club, a club distinctively of grandfathers, fathers, and sons. +The right to membership in the Somerset Club is as much the inheritance +of a Somerset man's son as his name or as the proud title which always +will be found affixed to his signature when he reaches man's estate, "of +Boston." For a man to get into the Somerset without long years of +waiting and intense scrutiny, not only of his own record but of his +parents' before him, is a rare event. Yet the name of J. Edward +O'Sullivan Addicks was up for full membership, with Boston's picked best +for his sponsors, a few days after he "lit." How Addicks got upon the +Somerset list Boston will never tell, and the mention of the fact +nowadays within the club-house will empty its sideboard instanter. + +The campaign of arrangement for the advent of Addicks in Boston was more +elaborate, more astute and expensive than was ever organized for +exploitation of prima donna or great pianist. For months an advance +agent had been preparing the way for his chief's arrival in a blaze of +glory. There was talk in the papers and among the financiers about the +wonderful water-gas process which enormously enhanced the profits of +gas-making, and such rumor was always linked with the name of the +brilliant Philadelphia Gas King, for so the press had already dubbed +him. A wonder and magic immensely provocative of curiosity were woven +about the identity of this J. Edward O'Sullivan Addicks, who it was said +might be persuaded to visit Boston to work marvels with the stocks that +had been "in the family" long before the present generation could +remember. When it was sure that the great man was really coming the +agent sought the advice of Boston's best in selecting quarters for him. +In the Tudor, a beautiful family hotel adjoining the Somerset Club on +Beacon Hill, a magnificent suite of apartments was taken, and though the +great man could remain in Boston but a brief space, the furniture, the +hangings, and even the carpets were all changed for him. + +Eminent financial tricksters have various ways of handling their +victims. Some believe that the most skilful mode of attack is the slow, +confident, dignified approach which allays the subject's fears by its +solemn display of deliberation. Others (and Addicks is of this creed) +are persuaded of the superior efficacy of the "rush-in-and-drag-out" +method. The subject, they say, "gives up" more and quicker when the +hurry call is sounded. It was a winter's day when Addicks "lit" in +Boston, and circumstances had arisen, the suave advance agent told +various Boston's best, with whom he was in consultation, that would make +his chief's stay much briefer than either had anticipated. So when the +great man arrived at the club just before dinner, quite an array of +important people were congregated there. + +Addicks ran the gantlet of the critical glances of as critical a group +as you'll find on earth, and the word went round--no one could remember +afterward who started it--"Typical Southern gentleman! Breeding sticking +out everywhere!" So well had the astute advance agent done his work that +a little dinner was arranged on the spot, and Addicks made such rapid +progress with these reserved and conservative Bostonians that, by the +time coffee was served, conversation had reached the stage where it was +natural for him to send the waiter to the coat-room for his bunch of gas +papers. The emissary returned bringing the fur overcoat with which +Addicks always envelops himself in chilly weather. Addicks searched the +pockets, and, apparently to his surprise, discovered that they did not +contain the required documents, but where they should have been he found +a small bale of 1,000-dollar government bonds, containing, one of the +party said afterward, at least one hundred certificates. "How careless +of my secretary!" said Addicks, nonchalantly replacing the packet in the +pocket and motioning the waiter to take the overcoat away again. + +It was, of course, due to the admirable work of his advance agent that +these Monte Cristo effects impressed the cultured little set who would +have laughed to scorn such a display on the part of one of their own +kind. In Addicks it was the dazzling eccentricity of the wonder-worker, +and so excusable; and the free, flash, careless exhibit of wealth made +the man's conversation and subsequent demands seem natural. Next +morning, in discussing the work of the previous evening with his +lieutenant, Addicks delivered himself of the wise remark: "Finance, my +boy, like theatricals, is dependent for success on the staging, more +even than on the actor. My experience has shown me that men the world +over are alike--if you properly surround them, they will hiss at hissing +time and clap at applauding time; yes, upon the way you stage your +finance plays depends their success." The fact is that by no other +method could this scenic artist of finance have set his plans moving so +rapidly. The man had calculated to a nicety on the romantic cupidity he +aroused. + +After dinner, Addicks at once "got down to business": "Gentlemen, my +project is as simple as it is feasible and conservative, for I will +touch nothing but conservative enterprises. Gentlemen, you have three +great gas companies supplying this great city with light, the Boston, +Roxbury, and South Boston. They are worth at the present time about five +million dollars. I am going to buy them and spend three or four millions +more on a new company; then I shall consolidate the four and turn them +from coal into water-gas companies, which will sell gas to your people +at less than they now pay, and at the same time make a lot of money for +you and for myself. What do you say?" + +This was certainly quick action. Boston's best was breathless for a +minute. Then some one suggested that in so weighty a matter it would be +necessary for solicitors to investigate, for the families owning the +stock to be consulted and agree before a proper basis could be arrived +at on which to dispose of their holdings. + +Addicks' genius was equal to the occasion. "I regret, gentlemen, any +seeming haste, but this is the situation: I am going to invest fifteen +or twenty millions, or perhaps thirty or forty, in city gas properties, +and as the project will require quite a bit of financiering, I have got +to round it up at once, in time to slip over to London to lay it before +my associates, ----, ----, and ----" (naming some of the great English +lords of finance), "with whom you, gentlemen, are probably well +acquainted. I think you will, after you have given the matter a little +thought, agree with me that it would be a mistake to postpone the +conversion of these magnificent Boston plants to the water-gas system +until after other cities I have in mind are reconstructed. You see we +can turn over but one city at a time, the system being new and competent +engineers and builders few." + +The painful thought took shape in the minds of the distinguished little +gathering that if they were not careful, Monte Cristo might actually +slip out of their town without working any of the promised golden +marvels. + +"Just what is your idea, Mr. Addicks, of how this gigantic piece of +business could be done?" one asked. + +"Simple, simple"--the great Colonel Sellers of eye-water fame never +looked more cool and unconcerned when calling attention to the facts, +"100,000,000 of people, two eyes each, a bottle of my patent eye-wash +for each at a dollar a bottle, and eye-wash made at a net cost of a dime +a barrel"--"simple, simple; you name your price, I pay it, and the thing +is done." + +Some one pointed out that the gas properties were valued very high. That +in the Boston, for instance, the par value of each share was $500--and +that it was improbable Mr. Addicks could buy it for less than--than +eight hundred. + +"Of course, of course; I am not buying gas companies that are not well +thought of by their present owners," returned Addicks. "I think you +underestimate the value of the Boston Company's stock when you say $800. +Naturally, as a conservative business man I wish to buy as reasonably as +possible, but as I know what the future of your company will be under +the water-gas change, I consider $1,000 a share cheap; and if you say +so, will take it now--majority, minority and all--at that price." + +This was strong talk. In spite of their proverbial frigidness under all +conditions, Boston's best began to get fidgety. + +"Indeed," went on the Monte Cristo from Philadelphia, "I'll do better +than that. On second thought I will give you $1,200 a share. Think it +over and we'll have another sit-down to-morrow." + +It took Addicks but a few days to trade, for at each sitting the staging +was more enticing and the call from his associates in London more +insistent. Minor difficulties were magnificently waved away. A number of +scions of Boston's best families had good paying positions in the +different companies; what would Mr. Addicks do with them? + +"Simple, simple," he replied; "double the time of contract and the +salary; no favor to them or you; good men are very hard to get, you +know." + +One episode that occurred about this time was allowed to get into print +when the stocks and bonds were being floated, by way of showing what a +tremendous fellow Addicks was. In a hired hack he had driven up to the +club from State Street. A snow-storm was raging. After Addicks had been +in the club a few moments word was brought in to him that the driver had +found his sable overcoat inside the carriage. Addicks stepped into the +vestibule to speak to the driver, and next day it was all over the +club-house and through the "Street" that the prodigal Philadelphian, +overcome at the thought of the unfortunate driver in his scanty clothing +exposed to the cruel storm, had said: "My good man, take that coat as a +present from me." + +For the truth of the story I do not vouch, nor for that other which +explains that the door-boy who spread this tale of generosity said +afterward, when discharged, that Addicks himself had told him what he +had done, and at the same time had given him a five-dollar bill. He +would have sworn the moment before that he heard Addicks tell the driver +to take the coat to his apartments. + +Addicks got what he came to Boston for--the Boston, Roxbury, and South +Boston Gas companies. He did what he said he would, built a new one, the +Bay State of Massachusetts, and turned them all into the Bay State of +Delaware, and the Bay State of Delaware turned them out on the public in +exchange for their savings to the extent of $19,000,000 in the form of +bonds and stock. Addicks, to use his own language, "cleaned up around +$7,000,000," and turned to new fields, fields suited to his peculiar +genius. + +As he looked over the United States he found but one great city which +had not already been captured by "Standard Oil" or some of its +disciples--Brooklyn, N. Y. To the present day Rogers swears Addicks' +only reason for coming to Brooklyn was to hold up the "Standard Oil" +"trustification." Addicks retorts with: "I saw it first." Whatever the +facts, in 1892 Rogers in the midst of tagging the different companies +was surprised and angered to find that Addicks had slipped in ahead and +had secured one of those necessary to the success of his plan. He +quickly served notice on the man from Delaware to "git," and Addicks, +flushed with an unbroken chain of victories, as promptly returned the +notice with, scrawled across its face, a variation of Rogers' pet +phrase--for it must be remembered Addicks never "cusses"--"I'll see you +in heaven first." + +If there is any one time when Henry H. Rogers is quicker of action than +any other, it is when his notice to "git" in a stock deal has been +returned with "sass." + +The ink was hardly dry on Addicks' answer before the Master of "Standard +Oil" and his hosts were upon him, but not where the Philadelphian looked +for them. While he awaited their attack in Brooklyn, N. Y., he received +a series of hurry-up calls from his lieutenants in Boston. Rogers had +bought the insignificant Brookline Gas Company, which supplied gas to +one of the suburbs of Boston. It was only a $300,000 affair, but it +possessed charter rights to come into any and all of the streets of +Boston. This was a characteristic "Standard Oil" attack. It came out of +a clear sky, and before the public had even a warning of it they were +witnessing a war which looked as though it had been years in maturing. +Rogers let it become public knowledge that the entire "Standard Oil" +forces were to be brought to bear to crush Addicks and that untold +millions would, if necessary, be spent in the effort. In reality he had +most carefully mapped out a cyclonic campaign which he believed would +not call for an expenditure of over $500,000, and which he was sure +would in a few months drive Addicks out of Brooklyn, N. Y., and bring +him to his knees in Boston. His fight began in earnest in 1894. Gas in +Boston was $1.25 per thousand cubic feet, and the rate yielded a good +profit to the Addicks companies. Rogers served notice that he would +parallel with the Brookline Company every pipe of the different Boston +companies and would reduce the price of gas to $1. Simultaneously he +attacked the Addicks stocks and bonds in the market, his charters in the +Legislature, and took away from him the contracts to supply the +municipality of Boston with gas. For a time Addicks struck back +savagely. Then, as the fight became hotter, he gave it up in Brooklyn, +and concentrated all his resources on repelling the savage inroads +Rogers was making in Boston. By this time the contest had grown to such +proportions and so much bad blood had been engendered that Rogers +declined to be mollified by Addicks' surrender in Brooklyn and refused +to retire from Boston unless Addicks repaid "Standard Oil's" entire +outlay and got down on his knees in public--a demand that called forth +one of Addicks' sardonic smiles. + +Addicks had at this time additional difficulties to face. He had spread +out his financial commitments, and now he found his stocks and bonds all +declining. It was obvious to State and Wall streets that Rogers was in a +fair way to drive the buccaneer from Philadelphia to the wall. + +It is at this stage that I come into the story. + + + + +CHAPTER XII + +STOCK-BROKERS NOT ALL BAD + + +Right here, before plunging deeper into the current of events which led +to the organization of Amalgamated--for what has gone before is only +that which I deem necessary setting for the story, necessary in order +that my readers may clearly take in its meaning--it is only fair to them +and to myself for me to say that my life has been spent in the +stock-market for the purpose of gain. I have never in my stock +operations set myself up for a philanthropist nor in any way posed as a +reformer, nor pretended to be a bit better than the business I had +chosen for a livelihood. From the first day until now I have endeavored +to keep strictly to the principle that I would never knowingly deceive +any man, woman, or child who, out of confidence in me, risked their +money in speculation or investment. At the same time it should be +remembered that the stock-brokerage business often makes queer +bedfellows. Moreover, the true stock-operator is sometimes tempted to +buckle on his armor and get into an exciting fight solely for the +combat's sake, and then he may not be over-concerned about the rights +and wrongs of the contention, if upon both sides are lined up +professional captains of finance. The minister, the college professor, +the dry-goods merchant, may exclaim against this, but they have never +known the delicious tingle which, since the abolition of the tournaments +of old, can be felt only on the great financial battlefields. If the +critics of the stock-gambler could be put through a single minute of a +thousand I have known they would be less brash in their denunciations. +And let it be remembered that in these terrific dollar-wars there is as +much opportunity for heroism, for generosity, for kindly deeds, as ever +physical fighting affords. I read here in the papers of the noble act +of a captain in the navy who has taken his life in his hands; in another +place of a rich man who has given a million to create a charity. On the +same page that these men are eulogized I will find references to "Jim +Keene, the stock-gambler," etc., "heartless, soulless stock-sharp," etc. +"Jim Keene, Stock-gambler," keeps no press agent to flaunt his kindly +acts, but from the noble things I know he has done, and the things +others with whom I am personally acquainted know he has done--men, +women, and children saved from misery, pain, and death, at the risk of +ruin to himself--I'll warrant the celestial scroll shows to his record +as many deeds of mercy and noble daring as are credited to any soldier +or philanthropist who has achieved worldly fame in recent years. + +The desire for sudden wealth is strong in all parts of our American +community. Men want money, and women too, for a score of reasons--some +good, some bad--and the stock-market is the magical place where miracles +occur and dollars multiply themselves overnight. The agent for all the +cupidity of the world is the stock-broker, and he sees life from a +strange angle. + +Hundreds of letters come to me daily from all kinds of people, who have +no other call upon me than their belief that, having at some previous +time profitably followed my advice or advice credited to me, they have a +right, when "the papers say" I am doing or going to do this, that, or +the other thing in stocks, to come to me with their troubles. In 1899 +there reached me from a woman a picture of her husband, herself, her +three children, and the aged father and mother of her husband. I wish I +might print it, but I dare not through fear that they would be +recognized. The letter accompanying it was one of the most touchingly +pathetic I have ever read. I investigated the case. The statements made +were absolutely true. The woman's husband was the cashier of one of the +small national banks in one of the old towns in a New England State. His +father's brother had been cashier before him. The family's past was +thickly strewn with all those simple honors and good things which are so +often the heritage of families of the old, self-respecting, +God-fearing, middle-class communities of New England and like +long-settled sections of the country. On his death-bed the uncle +confessed that for years he had carried upon the books of the bank a +shortage which had arisen from mistakes. Her husband, to keep the +family's name from stain, had continued to keep this buried, which was +an easy thing to do, as when he was moved up from teller to cashier at +his uncle's death the two positions were combined into one. The wife +explained that her husband had let her into the fearful secret, and +together they had carried it until it had eaten its way into their +hearts. At last the man could no longer stand the strain. He had +followed my printed sayings about the market, and now had made the fatal +plunge. He had bought upon margin 2,000 shares of Sugar stock to see if +it were not possible to make up quickly a shortage of over $20,000, +because I had said Sugar was going right up; and then horror of worse +than death had seized the wife and she had given me the awful secret, +and a description, a word picture of what would happen if I had made a +mistake. + +She could go no further. She did not need to. I read the letter. I saw +the picture, and even I, who believed myself from long years of +experience with such affairs immune--I, too, became horror-stricken. It +was no affair of mine. I had not said Sugar was going up; as is often +the case, some newspaper had printed what another operator had said and +credited it to me. I was not even operating in Sugar, nor at the time +particularly interested in it. I could not return the letter nor have +any communication with these persons without in a way becoming their +accomplice. The woman had said that with the purchase her husband had +given orders to sell the stocks at twelve points' rise. + +Try as I might to look at the matter in a cold-blooded business way the +picture haunted me--the old gentleman proud of his family's long record +of sturdy honesty, the old mother's faith in her boy, the wife seeing on +each of her children the brand of a felon father, and the husband +watching each day's market prices to see whether they had brought him a +verdict which meant State's prison or permanent relief from the +haunting fear which had become his never-absent shadow; and I read and +reread the closing lines of the faithful wife: "Mr. Lawson, you will put +Sugar up?--you surely will, just this once--and we will teach the +children to pray for you and yours, and God answers this kind of +prayers, you know He does." + +The picture haunted me; I saw it in the market prices; I heard the story +in each tick of the ticker and each rustle of the tape; and every time +my eye caught "SUG," the stock-exchange abbreviation for Sugar, I +winced, as one does at the dentist's probe--well, I could not stand it. +I determined to put up Sugar--that is, I determined to try. Little the +woman knew what she asked when she wrote: "You will put up Sugar?" She +had read that a stock operator works magic, but it had never entered her +head that his wand was a stick of dynamite a thousand times +concentrated--a stick of dynamite that the law of stock-market averages +shows goes off in his hand nine out of every ten times it is handled, +and that when it goes off there is nothing more for the handler but the +minister, the flowers, and the head-stone; indeed, often the explosion +leaves nothing with which to buy even a head-stone! Little she thought +that it might strain the wealth of the Bank of England to move Sugar up +twelve points. I moved it up, and it went so easy--oh, so easy! +that--well, I will let the first description I pick from my scrap-book +from among a hundred from the daily press tell the story: + + [From the _Boston Journal_, March 17, 1899] + + LAWSON'S LUMP + + HIS COFFEE SWEETENED WITH QUARTER OF A MILLION--MADE IT IN + SUGAR THURSDAY IN TWO HOURS' TRADING + + A quarter of a million in a day! + + That was Thomas W. Lawson's record for March 16, 1899. + + The celebrated "Unthroned King of State Street" was on top + of the Sugar market; that is the reason of it all. + + Sugar was the big card of stock speculation yesterday. + + Indeed, the stock had one of the wildest days in its + history, and its high price--$170--reached amid great + excitement--is the highest on record. The speculation was + something tremendous, and it has been through the + speculation that the people who have been under the + impression that the markets were drifting into a dull and + uninteresting condition have had a sudden awakening. + + From the opening it quickly advanced to 149, receded a point + or more, and shortly after noon started sharply upward. The + demand for it came so rapidly that the tape could not keep + up with it, and the excitement grew as the demand increased. + The scenes on the floors of both the New York and local + boards were most exciting. Blocks of 500 and 1,000 shares + changed hands frequently, and at one time the quotation in + the Boston market was fully four points behind that of the + New York list. The small army of shorts scrambled to get + covered up, and everybody was in a fever of wild excitement + over the marvellous movement. Before it had culminated the + price reached 170, or a gain of twenty-nine points over the + opening--the most remarkable display of strength in so short + a period of time that this remarkable stock has ever shown. + + Broker Lawson did the buying, and while the excitement was + running high he bought freely. He had taken 20,000 shares + all told before the advance had fairly gotten under way at + from 143-1/2 to 144. At 170 he gave an order to sell 20,000 + shares at a limit of 155, and obtained an average of over + 160, thereby netting an estimated snug profit of $250,000 or + more within two hours. Asked as to whether the strength in + Sugar meant a settlement of the Sugar war, Mr. Lawson smiled + and said: "There has never been any Sugar war." + + The conservative people on the Street are disposed to regard + the whole movement as a piece of clever manipulation. + + * * * * * + + [From the _Boston Herald_, March 16, 1899] + + Mr. Thomas W. Lawson was the mover in the deal, and his + orders for 20,000 shares early in the day excited other + buying, which encompassed the astonishing rise. What point + Mr. Lawson had to trade upon is his own asset, if he had any + point, and it would not matter so far as the event was + concerned whether he had a point. The market was in a + position to respond to orders of these dimensions, and it + did respond. + + * * * * * + + [From the _New York Journal_, March 17, 1899] + + The frenzied brokers fought like madmen around the Sugar + post. The wildest sort of excitement prevailed throughout + the day. The rest of the floor was practically abandoned, + and brokers crowded, pushed, elbowed, and yelled frantically + in their efforts to fill orders. There was no warning. The + sudden jump of the stock almost threw the brokers into a + panic. Men became ferocious in their efforts to fill orders. + Those on the outside made wild rushes to get into the + whirlpool. Men who are generally calm fell over each other + in their excitement. Scores of arms whipped the air, and men + yelled themselves hoarse. So great was the din and so + compact the yelling crowd that those on one side of the post + did not know the bidding on the other. At one point Sugar + was going at 159, and five feet away it was bringing 164. + While almost at arm's-length farther away it was going at + 160, and farther around the post at 162. + + The excitement became general among the offices of + stock-brokers as the news flew on the ticker. Members of + firms who were not on the floor gathered about the tickers + in excited groups and watched the pyrotechnic fluctuations + of Sugar to the exclusion of all other stocks. The + quotations came out at two and three points apart. One + minute the stock was away up, and the next it seemed to fall + hopelessly. Then it would as suddenly soar upward again. It + reached 170, and in five minutes it was down to 152. + + * * * * * + + [From the _Boston Post_, March 22, 1899] + + Late in the afternoon Mr. Lawson was induced to give the + following explanation of his movements in Sugar: "You know + it is not conducive to the health of an active operator to + talk on what he is doing, for if he expects to retain his + hirsute adornment he must either keep jumping so lively that + none of the expert scalpers who haunt the jungles of Wall + Street can find him long enough in one spot to cut the floor + from under him, or he must envelop himself in mystery so + dense that all seeking for him will grow color-blind; but on + this particular commodity--Sugar--I can depart from the + standard formula. + + "I have been twenty-nine years dodging the scalping-knives + of Wall Street Comanches, and, although I am still here, I + have many places on my head where the hair refuses to grow, + and, strange to tell, almost all the bare spots are labelled + 'Sugar.' I suppose that I have, during the past ten years, + contributed money enough to Sugar to endow a fair-sized + asylum for tailless bears. It has never seemed to matter + whether I bought or sold, went long or short, the dollars + which I secured by the employment of pick and shovel, brawn, + muscle or gray matter, all seemed to follow one another into + the relentless maw of that modern Saccharine Titanotherium. + + "Way back in 1890 I invested the profits of my Lamson + deal--$700,000--in 10,000 Sugar at 84, and in a few days, + amid brilliant fireworks, I bade it adieu, when it + gracefully dropped below 50. Again, four years ago, I + decided I could make no better long-time investment of + $700,000 or $800,000 Electric profits than to short Sugar + from 61 to 70. In eleven days it took $1,500 more than my + profits to even up my accounts. + + "Thinking these things over of late, I determined to make a + final demand on astute and relentless Wall Street for my + accumulated deposits--a kind of + please-give-me-back-my-losses demand. I carefully loaded up + two weeks ago to the extent of 20,000 Sugar in the thirties, + and feeling the atmosphere was redolent of opportunities, + last Friday I bought 20,000 more, the last 5,000 of which in + a rather open and frank way that seemed but fair to my + scalping New York friends. Well, you know the rest. It took + fire. I cleaned up something over $700,000, and put out a + short line of 30,000 shares, the last of which I have + covered to-day at something over $350,000 profit. Strange as + it may seem, I was quit. I have struck a balance with Sugar, + and it gets no more of my money. + + "I am one of the few Bostonians who are contented to live in + the knowledge that Wall Street is too big and bright and + cute a metropolitan centre for country boys to monkey with, + and you can say I am so tickled to get back my bait that I + will never again, never, wander away from home. There is one + moral that may be drawn by Wall and State streets from the + last few days in Sugar. It is this: It is not necessary + to-day, any more than it was in old days, to work deals with + false stories or fakes. In doing what I did in Sugar I + depended on no fakes nor stories. I simply followed Charley + Osborne's old admonition: 'If you want to bull stocks, buy + 'em. If you want to bear 'em, sell 'em.' I bought 'em and I + sold 'em. These are Sugar facts as far as my movements have + affected them!" + +For years after, even up to to-day, this yarn turned up in the press in +different parts of the world, and every time I read it I chuckled to +myself, for I see a big manly fellow, president of a bank now and asking +no odds of any, for he can buy 2,000 shares of Sugar at any time and +draw his check to pay for it against a bank account honestly earned +since the day his wife wrote that letter. + +And I see a grateful mother teaching three youths to say a certain +prayer, and then I forget the critics' scathing sermons against stock +gamblers. It does not pain me when my own children ask, "Why do they say +such awful things about the stock operator?" I answer: "Oh, they mean no +harm; they don't know the stock gambler they write about." + + +ONE OF THE SYSTEM'S SHADOWS + +That my readers may not drop this chapter with a false idea of the +results of the stock-broker's efforts to "live and let live," I will +give them an illustration of one of the counterbalances of the law of +compensations. + +In the same year with the Sugar transaction, in an evil moment my mail +brought me the following letter: + + _Dear Sir_: I have read with interest your proclamations + about "Coppers." I am not a rich man, but I have about + $20,000 lying idle which I should like to add to, and will + put it into anything you advise. + +The writer received the following answer from my secretary: + + Mr. Lawson instructs me to say he received your letter of + ---- and he knows no better investment than the stock of the + Amalgamated Copper Company, which will be offered for public + subscription next week. In the advertising which will + accompany the offer you will note that it is to pay 8 per + cent., is now earning 16, and should sell at $150 or $200 + per share. It will be offered at par. Not only does Mr. + Lawson personally believe in every word in the + advertisements, but they are vouched for by such men and + institutions as the National City Bank of New York, Henry H. + Rogers, William Rockefeller and others, whose names are + synonymous with success in business affairs. Mr. Lawson does + not hesitate to advise you to invest your $20,000 in this + stock, provided you are not looking for an investment that + is absolutely safe, that is, one that should not, in these + times, pay you over 3-3/4 or 4 per cent.; but if you are + looking for a semi-speculative investment, that is, one that + will pay you over 6 per cent., and where the chances are + good for large profits, he recommends this stock. + +Later I received the following: + + Upon your advice I purchased 200 shares of the Amalgamated + stock at $100 per share. When the stock dropped to 80, + remembering your strong advice I purchased 300 shares more, + and after it had advanced to 120, thinking it was surely + going to the 150 or 200 you mentioned, I bought 1,000, + putting up my 500 shares as margin. It has now dropped back + to 100, and the many stories I read in the papers are + causing me much anxiety. Do you still believe as you first + wrote me? + +To which he received the following answer: + + Mr. Lawson instructs me to say he received yours of ----. + His faith in the Amalgamated property, the men who control + and manage it, and the stock is the same as it always has + been. He, like yourself, added to his holdings at 120, and + as high as 129, and knowing what he does about the property, + and what the men who control and manage it, and with whom he + is intimately associated, say to him, he cannot believe the + yarns which are appearing in the press are other than the + vaporings of those stock-market critics who must write their + opinions of prominent stocks even though they have no means + of actually knowing anything about them. + + While Mr. Lawson regrets that you have spread yourself out, + as you say in your letter, he can only answer your question + by the above, to wit, his faith in Amalgamated is the same + as from the beginning. + +Later I received the following from one of the penal institutions of the +country: + + You will observe by the postmark on this letter my present + place of residence. You probably knew that before, as the + press has had much to say about me of late. + + I trust you and your associates are satisfied with + yourselves when you observe the hell you have caused others. + When I first wrote you about the Amalgamated stock I was an + honest, prosperous man. I had never committed a crime nor + done any great wrong to my fellow-beings. Relying upon what + you said publicly and the well-known record of the + Rockefellers and their partners, I committed acts which I + now know to my everlasting sorrow I should not have + committed. I had no intention of doing wrong, but when I saw + ruin staring me in the face I used, as I supposed only + temporarily, funds intrusted to me to protect my stocks from + being slaughtered at declining prices by the sharks of + brokers whom I dealt with. The rest is the old story. My + wife and children are disgraced and oppressed with poverty, + and I am serving a five years' sentence in this institution, + buoyed up only with the hope that I may live to face you and + your kind, that you may have the pleasure of seeing the + wreck you have wrought--in the hope that I may satisfy a + desire which night and day gnaws at my very soul, a desire + to say to you, face to face: "Look upon a man who, although + a branded criminal, is as much better than you and your + associates as it is possible for one to be," and to ask you + how your wife and your children enjoy the luxuries they have + when they know at what price they were secured, for I shall + surely, if I live, insist upon your wife and children + hearing from my lips what agonies a wife and children, who + are as dear to me as yours are to you, have suffered because + of your baseness. + + + + +CHAPTER XIII + +THE "SYSTEM" VERSUS WESTINGHOUSE + + +In 1894 I had just wound up one of the most strenuous and successful +financial campaigns I ever engaged in. This was the Westinghouse deal, +of which the papers were full at the time. George Westinghouse, to whom +the world owes the air-brake and countless improvements in electrical +machinery, having surmounted the difficulties that clog the early steps +of the inventor who would be his own master, had taken rank, some years +before, among the prominent public figures of the day. The various +corporations in America bearing his name had prospered amazingly; his +ingenious appliances had displaced home products in the European market; +and titles and decorations had been conferred on the inventor, though +these last, like the sturdy American he is, Westinghouse had put aside. + +This great success was wholly the fruit of George Westinghouse's +personal endeavor. It owed nothing to extraneous influences. It had been +accomplished along those manly, independent, Yankee lines which have +made that name synonymous with hustle and success in every part of the +civilized world. Above all, the man had organized and developed his +companies without the aid of the "System" or without truckling to its +votaries. In consequence he had incurred the deadly hatred of some of +its lords paramount. + +In the business world Westinghouse's great rival was the General Electric +Company. To mention "Westinghouse" and "General Electric" in the same +breath was to speak of a thing and its antithesis. Everything George +Westinghouse was or had been the General Electric was not and had never +been. The General Electric had been and was by leave of the "System"; in +fact, was one of the very foremost examples of its methods. Its +high-priest was J. Pierpont Morgan; its home, Wall Street; its owners, the +principal votaries of the "System." It had grown because of their favor +and by means of the rankest exhibitions of knock-down-and-drag-out methods +of consolidation of all competitors but--Westinghouse. + +Just previous to 1894 Westinghouse had rejected a dazzling scheme of +uniting the two institutions on an immense capitalization which would +have absorbed millions and millions of the people's savings and earned +millions in commissions for its projectors. Wall Street's indignation at +his hardihood knew no bounds, and at the time of which I write the +yegg-men of the "System" were laying for him with dark-lantern and +sand-bag. + +To appreciate the story of what the "System" tried to do to George +Westinghouse and what he withstood, one must know the man. He embodies +in many ways the conception of what the ideal American should be. His +remarkable six feet and odd of physique and his fertile, powerful brain +are the admiration of all true men with whom he comes in contact. In +spite of his unparalleled success and the accumulation of a great +fortune, he retains the same simplicity of manner and conduct that +characterized him when working at the bench for weekly wages, and with +all his shrewdness and force of character he has preserved a simple, +honest, childlike belief in humanity. Single-handed he conducted all his +great enterprises on a plain, patriarchal basis, using their revenues +for extensions, and depending on his faithful and well-satisfied +stockholders for such further accessions of capital as the business +might in his judgment need. About the time General Electric was most +anxious to bolster up its jerry-built structure with the solid +Westinghouse concern, the latter institution had begun the erection of +some big new plants which required immediately several millions +additional capital. Westinghouse prepared to apply to his stockholders +for the required funds, and the announcement was to be made at the +annual election soon due. Suddenly the financial sky became overcast. +The stock-market grew panicky and money as scare in Wall Street as rain +in Arizona in May. It was just such a situation as the "System" might +have brought about to accomplish its fell designs had it possessed the +power to work miracles. + +And the "System" took care of its advantage. At a tense moment in that +soul and nerve trying period, with Wall and State streets full of talk +about General Electric's probable absorption of Westinghouse, General +Electric being then at its highest price, $119 per share, the Westinghouse +companies held their annual meetings and the big inventor, confidently +facing his stockholders, quite regardless of conditions which he thought +could have no possible bearing on his concern's splendid prospects, came +forward with his demand for the millions required to complete the projects +already under way. This was the signal. From all the stock-market +sub-cellars and rat-holes of State, Broad, and Wall streets crept those +wriggling, slimy snakes of bastard rumors which, seemingly fatherless and +motherless, have in reality multi-parents who beget them with a deviltry +of intention: "George Westinghouse had mismanaged his companies"; "George +Westinghouse, because of gross extravagance, had spread himself and his +companies until they were involved beyond extrication unless by +consolidation with General Electric"; these and many more seeped through +the financial haunts of Boston, Philadelphia, and New York, and kept hot +the wires into every financial centre in America and Europe, where aid +must be sought to relieve the crisis. There came a crash in Westinghouse +stocks, and their price melted. From amidst the thunder and lowering +clouds emerged the "System." "Notwithstanding the black eye the name of +everything Westinghouse had received, it would stand by and consolidate +and save the day!" But the "System" and its everything-gauged-by-machinery +votaries had reckoned without their host. George Westinghouse was too +strong a man to be thus easily shaken down. He threw back his mighty +shoulders, shook his big head, and flung his great private fortune into +the market to stay the falling prices of his securities. The movement was +too strong against him at the moment, and his millions were but a +temporary help. He got on the firing-line himself and did a thousand and +one things that only a brave, honest, and democratic Yankee would or could +do--everything but accept the cunning aid offered him by the "System" or +its votaries. He knew too well that the friendly mask concealed a foe and +that the kid-gloved hand extended him had a dagger up its sleeve. + +These were the conditions when I, as an expert in stock-market affairs, +was called in for assistance. Here was this sound, sturdy institution +standing for everything that was best and self-supporting in American +finance adrift on the Wall Street shoals, and it seemed almost a +hopeless task to attempt its rescue. But it was a task eminently worth +while, and I undertook it with all the energy I could command. + +The problem was to restore the Westinghouse stocks to their former high +price, and, confidence being re-established, to sell the new treasury +stock at such a figure as would pay for the plants and other projects +the company had under way. The completion of these meant greatly +increased earnings and such an advance in facilities and economy of +manufacture as would surely seal the fate of General Electric if it +competed with Westinghouse under the new conditions. Small wonder +"Standard Oil's" whole strength was bent to force the alliance. + +My fight had hardly begun when I saw it was to be opposed by all the +forces of General Electric and the "System," and I concluded defeat was +sure unless by a counter movement on their stock I could keep them so +busy that they would have no time to interfere with Westinghouse. +Thereupon I laid out that attack on everything connected with General +Electric which created so much consternation at the time. To this day, +if my enemies are asked to name the act which most conclusively +justifies their hatred of me, they will point to my terrible General +Electric raid. They will tell you I broke the stock from 118 to 56 in a +day, and thereby caused one of our most disastrous panics; that I +continued to hammer it to 20, that I compelled reorganization, and then +did not let up. They will show you that the misery and ruin I wrought +were beyond calculation. I will only say that, of any of the things I am +proud of having done, I am proudest of what I did in General Electric, +and, willingly, I would give over five years of my life to go through +the experience again. + +It was a most arduous campaign, and our fate trembled many times in the +balance. By dint of hard, overtime work, and what my enemies were +pleased to call rank manipulation, we drove Westinghouse stock back to +its former price, after which a strong syndicate was formed to take the +new stock, and the righted institution at once magnificently swept on +its international career which to-day is at its height. + +Though I had taken up the Westinghouse cause as a business venture and +its successful termination was most profitable to me, I had entered into +the campaign with the ardor of a lawyer defending a client unjustly +accused of a heinous crime. But there was this difference--if in spite +of his efforts the lawyer fails to convince the jury of his client's +innocence it means no detriment to his fortune or his reputation, +whereas all I had and was were involved in this stock-exchange struggle. +The great rewards that are the guerdon of success in financial fights +are balanced by the terrific consequences of defeat. The broker general +engaged in surrounding his enemy requires every dollar he and his +principals can pledge or beg, and where great forces are in conflict +millions are burnt up to seize any vantage, as Kuroki sacrifices a +regiment to gain a hill. I had won for myself as well as for +Westinghouse, but if the fortunes of the war had been on the other side, +I must certainly have been wiped out. + + + + +CHAPTER XIV + +THE ALLIANCE WITH ADDICKS + + +It was part of my method of conducting my stock-brokerage business to +expose through the medium of the press or through market letters the +stocks of corporations I thought rotten. It was also my way to work up +bull campaigns in stocks that seemed to be selling for less than they +were worth. With Addicks or the "Standard Oil" I had no connection. I +had watched the Philadelphian's operations and had my eye marketwise on +his bonds and stock, particularly on his stock, which was 100,000 shares +of the Bay State Gas Company of Delaware, of a par value of fifty +dollars each, and which became very active in the market shortly after +it was created, at just under par. I thought I saw in the scheme the +ordinary, cold-blooded, stock-jobbing, unloading-on-the-public affair. I +had heard recounted the man's wonderful doings, particularly his +recklessness in the purchase of the Boston companies; I "sized up" his +mighty effort to be the tremendously rich good fellow as inspired by the +idea and the purpose of giving his "stuff" in the stock-market a good +send-off; and from the start I had put his property on my "to-be-watched +memoranda" as one I might at the proper time let daylight into. + +I was tearing large strips from its values when Addicks' bankers, who +happened to be business friends of mine, sought to enlist me on their +side of the gas war. I remember expressing frankly my opinion about the +contestants and their contest at the time, stating that so far as +morality, fairness, or justice went I could see little to choose between +Addicks and "Standard Oil." I continued to "bear" the stock until one +day my banker friends brought me an earnest request from the Delaware +financier that I go to New York and talk things over with him. + +On reaching New York--the two bankers and myself--we went directly to +Addicks' apartments at the Imperial Hotel. Although the fortunes of war +were rapidly crumbling this worthy's brilliant financial structure, +there were as yet no outward signs of disintegration. His beautiful +estate at Claymont, Del., his stock farm in the same State, his +town-house in Philadelphia, his $30,000 apartments in the Knickerbocker +on Fifth Avenue in New York, and the superbly furnished suite in the +Imperial, close by, all seemed to testify to the man's boundless +prosperity. + +Memorable though this meeting was destined to be to both of us, my chief +sensation in approaching it was a certain curiosity as to the +personality of Addicks, whom I had seen, but had never spoken to. I knew +him to a "T" in my mind, but here was my opportunity to compare my +mental "sizing-up" with the real man. The apartment into which we were +ushered was of the low-burning-red-light, Turkish pattern. Addicks rose +from a great divan disturbing a pose which his white cricket-cloth suit +and the scarlet shadows made so stagy that I guessed it was for my +benefit. I looked him over, and he returned the inspection. After the +introduction he at once unlimbered his business gun. + +"Let's get right down to business, Lawson," he began. "I wanted to meet +you to see if we could get together on any satisfactory basis." + +I told him that that was my understanding of our meeting. Then he wanted +assurances that I had no connections with "Standard Oil" and that I was +free, sentimentally and commercially, to enlist in his fight. I replied +that I was a stock-broker and operator, and was looking for +opportunities; no one had strings on me, and provided he made +satisfactory terms I was free to join him; further, that when it came to +enlisting in a fight between two such financiers as Addicks and Rogers, +sentiment seemed to me out of place. + +"That's right," he said. "That's what I like to hear. Now, Lawson, will +you take this fight of mine against 'Standard Oil'?" + +"If you meet my terms, yes." + +Addicks looked at me. "What do you want?" he asked. "Perhaps, though, +you'd first like to have me tell you how my affairs stand." + +"I know sufficiently where you stand," I replied, "to name my terms +right now. If they are acceptable, I'll hear you tell where you stand +afterward. I'll take your fight for a cash commission of $250,000 and a +cash capital of $1,000,000, to be used in the market on joint account, +we to divide the profits of all operations." + +Addicks smiled. "You are too high," he said. "I'll pay you $50,000 +commission and give you $250,000 capital, and after I show you in what +good shape my fight now is and how near I am to victory, you'll agree +that the terms I offer are good pay and fair." + +"Mr. Addicks," said I, "I have just time to get dinner, look in at the +theatre, and catch the midnight back to Boston. It is my business to +keep posted on such scrimmages as you are engaged in. If you and your +affairs are where I believe they are, the terms I offer are +exceptionally low. If your affairs are as you would have me believe, you +need no one to captain your fight." + +Addicks asked where I thought his affairs stood, and I answered: "I +don't think--I know, or, at least, I feel quite sure I do. You are at +the end of your rope and are practically bankrupt." + +At once Addicks grew indignant. "You are absolutely wrong," he asserted. +"I'll admit I have had a hard fight, and that it has cost me, so far, +considerable money; but I give you my word I'm worth between six and +seven millions clear and clean right now." + +I bade him good-night and left. Our interview had consumed not over +twenty to twenty-five minutes. I said to his bankers: + +"Addicks is the Addicks I have sized him up to be, only worse." + +We got back to Boston next morning, and at the opening of the Stock +Exchange I sailed into the Bay State stock in earnest, for I felt surer +than before that Addicks was nearing his finish. A few minutes after +the Exchange opened, Addicks' banker rushed into my office and said the +Delaware financier begged that I would return to New York at once, and +whispered to me that in a conversation just held on the telephone +Addicks had stated that he would accept my terms. I informed the banker +I was not anxious for the job, but as he urged his own interest, I +jumped on the noon train and in the evening was again in New York. + +It was a warm day and I was pleased to get a wire on the train from +Addicks asking me to meet him at the pier, as we should hold our +conference on his yacht, the _Now-Then_, at that time one of the fastest +steam-yachts afloat. + +It was a night of memorable beauty. In the golden light of a dazzling +sunset we flew up the majestic Hudson. From under the awning I watched +the serried edges of the Palisades as we slipped swiftly by them to the +broad reaches of tinted waters above Yonkers. Every natural influence +conspired to make acute to me the warning whisper of my soul, which +flashed the caution as I crossed the gang-plank, "Watch out!" But, as I +said before, Fate hangs no red lights at the cross-roads of a man's +career, and I plunged recklessly into the toils my Mephistophelian +companion so artfully wove around me. + +The _Now-Then_ was hardly in mid-stream before Addicks had got down to +business. His demeanor had changed since the previous evening. All his +bravado had disappeared; he was simple, frank, direct, and, in the +manner of one who has made a mistake and regrets it, he commenced +without any delay: + +"I didn't think last night I'd pay your price, Lawson. It staggered me a +bit, but I gave it considerable thought after you left, and when this +morning's prices showed me you were again on the war-path, I saw my +error." + +"Mr. Addicks," said I, "let's have no fooling about this matter. If we +do business together, it will only be after there is some +plain--brutally plain talk between us. It will do no good to trick, +because some one will get slaughtered when the trickery is discovered, +as it surely would be, after we hitched up together." + +Then, straight from the shoulder, free from all attempt to gloss over +the raw truth, I detailed to him the things I knew he had done to his +former associates, and it was a tale of unbroken duplicity and +double-dealing on his part, loss and misery for his lieutenants, and +profits and curses for him. I ended by saying: "If we get together, +Addicks, it will be upon my terms, and I'll see to it that you never put +me in the position in which you have put all the others you've been +connected with. I don't trust you and I'll watch you all the time." + +When I had finished Addicks looked at me sadly with a wounded, +"how-this-man-has misjudged-me" expression in his eyes. + +"Lawson," he said, "you were never more mistaken in your life, but it's +a matter I don't want to argue about. You'll tell me you were all wrong +after you know me better. I'll do business with you--yes, and I'll allow +you to make your own terms. I'll agree to them whatever they are, and +I'll live up to the very letter of them, however hard." + +I may mention that it is a peculiar characteristic of Addicks that one +may talk to him as though he were a pick-pocket, and he will not resent +it, if it is "business." Where H. H. Rogers would flash into a Vesuvius +of wrath, the Delaware statesman only smiles. + +Addicks by no means convinced me of his sincerity. I decided I would +test him pretty thoroughly before I went further. So I said: "This seems +the proper time for a clean statement from you as to just where you and +your companies stand." + +I did not believe this man could make an absolutely truthful statement +on any subject of importance, but I knew enough of his real position to +protect me from being fooled. What was my surprise, therefore, when in +the most open way possible he calmly spread before me a condition of +affairs far worse than the worst I knew. He was, indeed, bankrupt and +his corporation was in little better shape. + +As soon as I could catch my breath I said: + +"No wonder you refused my proposition last night. If your bankers had +dreamed of this state of affairs, they would have had a receiver +to-day. You cannot meet my terms. You cannot even carry out the ones you +yourself offered." + +Addicks leaned back on the cushions of his chair in the easiest, most +_insouciant_ way imaginable. He grinned. "That's true," he replied, "but +I never give up a ship till I feel her bump the bottom, and I am sure +that, bad as things are, you and I can pull them out and whip Rogers to +a standstill." + +It was a remarkable situation. Here was one of the most ruthless +financial schemers of the age cornered for slaughter, and he had put +himself absolutely at the mercy of the man who had bitterly fought him +and whom he knew hated his kind. Yet he was as cool and collected as a +bunch of orange blossoms at a winter's wedding. + +The man's supreme nerve astounded me, yet I could not help admiring him. +I saw through his game, yet his assurance fascinated me. I thought a +minute. I said to him: "Addicks, I'm really sorry for you, and I'll +promise you here now to keep what you've told me sacred. What's more, +I'll stop fighting you. I'll cover my shares and without doing any one +any harm I'll help make prices a bit better for your securities." + +He smiled, said "Thank you!" and continued looking at me as though he +awaited something further, a quizzical, expectant smile on his face. + +There was an interval of silence. Finally I said to him--and there were +neither red lights nor warning intuitions to signal my peril: "Just what +do you expect me to do, Mr. Addicks?" + +"Whatever you think best," he replied in a mild tone. Then, rousing +himself a bit, he went on: "They say in the market that you like a fight +and the harder it is the better. Well, I certainly have an uphill fight. +Do as you would have the other fellow do to you." + +After that I had no further doubts of Addicks' slickness. I said to him: +"You are certainly the shrewd man they describe you as. Now continue to +be frank long enough to answer this one question: Did you figure this +out as the last card to throw at me, knowing that the very desperation +of the case might warm me up and tempt me to tackle it for the sake of +the fight there's in it?" + +Instantly Addicks knew his game was won. He straightened up and was the +able, shrewd, and cunning financier who had tricked conservative Boston. +His facts chased his figures in marvellously rapid succession, and he +showed a knowledge of conditions, relations, and corporation tricks that +dazzled me. For an hour he rushed on, and when at last he came to a stop +I said to him: + +"It's unnecessary to say any more. I see the situation as you would have +me see it, and it comes to this: If I refuse to link up with you it +means another 'Standard Oil' victory and another wreck for Boston. +Rogers' success means that New England speculators and investors will +again, for the three hundred and thirty-third time, be robbed of their +savings. If I get in, we may either avert all this or I may be ground up +at the same time you are. However, it's too good a fight to miss, and so +here goes. I'll link up." + +At some particularly hazardous halting-place in after-years Addicks and +myself have often laughed as we have talked over that August evening on +the _Now-Then_. I was easy, he asserts, and I must admit that he is +right--I was easy. Yet no one knew Addicks better than I did then. +Looking back along his extraordinary career, one is obliged to allow a +certain magic as a factor in his men-and-dollar tussles. We had +absolutely nothing in common, Addicks and I. We thought and felt +differently about every relationship of life. A dozen other ventures, +sure, easy, and promising infinitely greater profits, were ready at my +hand--but he appealed to my sense of adventure, he promised me abundant +and glorious fighting, and I forgot everything else and went with him. + +When the _Now-Then_ touched her pier and I stepped ashore, it was as +captain of Addicks' corporation and stock-market forces, with absolute +power to wage war, make peace, and use in whatever way I thought best +such resources of his as I could lay hands on. I lost no time. Within +forty-eight hours of my return to Boston I had mapped out my campaign, +reconstructed Addicks' broken lines, and gayly set forth on about as +forlorn a hope as ever operator or fighter tackled. + +Nothing more desperate could be imagined than the condition of the +Delaware financier's affairs when I assumed control. All the resources +of his companies were pledged for loans, and the constantly falling +prices of his securities, coupled with the discrediting stories Rogers' +agents kept in circulation, made it difficult to keep these going. To +pay would mean ruin, for Addicks had no further thing of value to +pledge. At the same time, Rogers' company, which had now paralleled many +of the Bay State Company's pipes, had secured a large slice of that +corporation's business, and had a corps of up-to-date solicitors working +overtime to secure the balance. Boston, in the meantime, having decided +that Addicts' star was of the shooting variety, and on its return trip, +was throwing up its hat in the wake of the "Standard Oil" band-wagon. +The city government and the Massachusetts Legislature had awakened to +the enormity of Addicksism and were boiling over with that brand of +virtue which the "System" and "Standard Oil" know so well how to rouse +in American breasts by way of American pockets. By this time Rogers' +investment in Boston had grown from the half-million he had in the +beginning estimated as sufficient to annihilate Addicks to three and a +half millions, a million and a half of which represented real property, +and the balance, all kinds of expenditures made in the fight to crush +the Delaware financier, a large part of it being invested in the votes +and favor of State and municipal authorities. + +Chief among the enemies of Addicks at this period was the young and +brilliant boss of Boston, its reform mayor, the Hon. Nathan Matthews, +and thereby hangs a swinging tale. When the Addicks-Rogers gas-fight +broke out in Boston this Nathan Matthews was at the zenith of his +political career, and was rather a greater man than even reform mayors +generally fancy themselves. He was at that state of development in the +lives of aspiring persons which compels the average spectator to debate +whether the swelling of the cranium should be met by a larger hat-band +or by a sweeping haircut. _En passant_, Addicks' Panama had had its +fifth enlargement to accommodate the successive bulges of his brow. + +Now, the city of Boston's contract with the Bay State Company for gas at +a dollar and twenty-five cents, which had run a long term of years, was +just expiring. One bright June morning the mayor's secretary telephoned +the secretary of the Mogul from Delaware that His Honor of Boston, +desired converse with the Gas King. If those who overheard the dialogue +can be credited, the parley was of this character: + +"This is the mayor of Boston, the Hon. Nathan Matthews." + +"This is J. Edward O'Sullivan Addicks, Gas King and United States +Senator-to-be. What would you with me?" + +"I would hold converse with you in regard to a contract of much moment +which will expire in a few days." + +"Well and good. My office is in West Street. Give your card to my first, +second, or third secretary and I will not keep you waiting long." + +"The office of the mayor of Boston is at the City Hall and my first or +under-secretary will make things agreeable while you wait. When will you +call?" + +"I would have you understand, Mr. Mayor, that any one to talk gas with +J. Edward O'Sullivan Addicks, Gas King and United State Senator-to-be, +comes to his office." + +"Good-day to you, Mr. Gas King and United States Senator-to-be." + +"Good-day to you, Mr. Mayor." + +I do not, of course, guarantee that the conversation took exactly the +form here given it, but no injustice has been done its substance, nor +would it be possible to estimate in miles the breach it created. From +that telephonic encounter date the earnest efforts of Matthews and +Addicks to do up each other, in which both were successful to a degree +that filled their hearts with Indian pleasure. + +A few days later public announcement was made that the Brookline Gas +Company, Rogers' corporation, had been awarded the contract for lighting +Boston, and that henceforth the legal price of gas to the consumer was +to be $1 per thousand feet. This was due notice to all concerned that +"Standard Oil" had captured City Hall, and Addicks realized his error. +He sought the mayor's office, but the mayor had no time to see him. His +companies met the new rate. There was nothing else for them to do. + + + + +CHAPTER XV + +THE GREAT BAY STATE GAS FIGHT + + +It was to this condition that I had to adapt my campaigning plans. I +determined first to raise the market price of Addicks' securities; to +turn the tide against the "Standard Oil" by that most potent of +stock-market weapons, publicity; and then to attack Rogers from the rear +through the City Hall. For Addicks to attempt to match pocket-books with +Rogers and "Standard Oil" in corrupting city or State officials I knew +would be useless; and besides a fundamental stipulation in the agreement +with the Delaware financier on the _Now-Then_ had been that under no +circumstances should bribery or corruption be allowed to enter into any +of our plans while I was connected with the enterprise. I had always +held, do now, and always shall hold, that the meanest crime in the +calendar of vice is bribery of the servants of the people. I felt pretty +sure, moreover, that I could play a card that would more than offset the +dollars of "Standard Oil." Nathan Matthews was on the high-road to the +governor's chair, but I happened to know that, however ambitious he +might be for political preferment, his temperament rendered him more +avid for distinction in business. Addicks had within his gift the +richest plum in all the Boston commercial world. As controller of the +affairs of the Bay State Company of Delaware, which controlled the +nomination and consequent election of the officers of the old Boston gas +companies, he could award to any one he pleased the presidency of these +corporations, together with the large salary that went with the +office.[6] + +My plans in shape, I rushed to the firing-line. I began with a statement +to the investors of New England and the gas consumers of Boston brimming +over with facts and figures. Then I fired a volley of candid details as +to the manner in which city and State officials had recently betrayed +the public's interests. Lastly, I discharged at "Standard Oil" a +broadside which my attorneys and friends assured me meant jail on a +libel charge. I put my banking-house and my personal guarantee behind +the old and new loans, and proceeded to roll up my sleeves in the +stock-market. I got results at once. A change became apparent in public +sentiment--the rottenness of Addicksism was overcome by the stench of +"Standard Oil." The prices of Bay State stocks and bonds shot up; loan +funds were offered freely and at lower rates of interest. + +There were, however, reprisals. Rogers met my onslaught by a manoeuvre +new in "Standard Oil" tactics. He came into the open, issuing a +proclamation over his own signature which gave me the lie, at the same +time tearing off a yard or two of my skin and throwing on a bucket of +brine to remind me I had lost it. This attack was just off the press +when I was out with a rejoinder which he, in after-years, referred to as +quite the hottest thing of its kind he had ever read. In it I calmly, +but in that "chunk English" which those who really wish to convey the +truth naked can always find handy, told him plainly who he was, +explicitly what "Standard Oil" was, and exactly who and what I was. I +opine that about either assault there was nothing dignified, generous, +or refined, but in stock-exchange battles one has not time to scent +shrapnel. The immediate result of this interchange of deckle-edged[7] +insults was to daze the public. "Standard Oil" attacked and actually +replying; Rogers assaulting Lawson and Lawson sending back worse than he +got--almost anything might happen next. It was right here I got to +Rogers' _solar plexus_. I came out with another plain public talk, and +gave him the choice of haling me into court--in which event I pledged +him my word I would send him and his associates to jail for bribery and +other crimes--or of acknowledging to the world he was licked and on the +run. He was silent and I loudly claimed victory. The price of Addicks +stocks quickly emphasized our success by a further advance. + +Thus far the campaign appeared to be working smoothly, and I turned my +attention next to my rear attack. I began negotiations with Mayor +Matthews for the withdrawal of his support from Rogers. It was a +difficult task, but after much manoeuvring I landed my big fish. I +promised him the presidency of the Boston, South Boston, Roxbury, and +Bay State gas companies for the term of three years, at a salary of +$25,000 per annum, with the explicit understanding that he was to allow +me, as his vice-president, to see that the bargain between us was lived +up to. When the trade was made it was understood that the fact of +Matthews' change of base should be kept secret, and that he should not +assume the office until the end of his term as mayor of Boston. With +that agreement the deal was clinched, signed, sealed, and delivered. + +In order that my readers may comprehend the events that follow, it is +necessary that they understand something of the complications in which +Addicks' manipulations had involved that corporation. + +When Addicks purchased the several Boston gas properties he organized a +company, the Bay State of Delaware, in which this ownership was vested. +In order to facilitate the financing of the new corporation and for +other manipulative purposes of his own, Addicks created an inner +corporation, the Bay State of New Jersey, owned by the treasury of the +Bay State of Delaware, to which he turned over the stocks of the Boston +gas companies. These the Bay State of New Jersey transferred to the +Mercantile Trust Company of New York as collateral for the twelve +million Boston Gas bonds which had been sold to the investing public. +While to all intents and purposes the Bay State of Delaware was owner of +the subsidiary properties, the contract with the Mercantile Trust +Company was made with the Bay State of New Jersey, and it was to the +president of the latter corporation (Addicks) that the Trust Company was +bound to deliver the proxies for the gas stocks in its possession, three +days before an annual election. Knowledge of this subcutaneous +corporation was confined to Addicks and his immediate associates, and +the Delaware financier alone quite grasped its potentialities. + +Hitherto Addicks had used the proxies to elect himself president of each +of the subordinate corporations, drawing the several salaries which went +with the offices. To prevail on him to give up these places and their +emoluments to a man he hated as bitterly as he did Matthews was a +difficult task, but his situation was desperate. Finally, he agreed. I +did not know till long afterward that this reluctant compliance was +yielded only after Addicks had had a secret session with his Bay State +directors, at which they voted him, by way of salve for his resignation, +a sum equal to three years' salary, $75,000. + +The mayor, who was a lawyer, prided himself on his shrewdness, and was +fully alive to the serpent strategy of Addicks. He determined that the +prize he had secured should not slip through his fingers for lack of +precaution. We had many legal pow-wows in which the most astute lawyers +at the Boston bar were called in, and finally the directors of the Bay +State made an iron-clad contract with Nathan Matthews, agreeing to +deliver over to him whatever proxies it, the Bay State Gas of Delaware, +received from the Mercantile Trust Company of New York, on a given day +before the annual election, with which he, of course, could elect +himself president. This contract was signed by Addicks and his directors +and by all the officers of the Bay State of Delaware corporation, and +was passed on and approved by the eminent law sharps both sides had +retained. + +A few days after the document that made Nathan Matthews supreme boss of +Boston Gas was conveyed to him, there came an explosion. Like the +premature bursting of a bombshell at a Fourth of July celebration, the +transaction "leaked," and the press announced in sable head-lines that +Mayor Matthews had sold out, that Addicks was on top, and that Rogers +and "Standard Oil" would surely be found beneath the _débris_. Matthews +has always claimed that this "leakage" was a piece of Addicks' double +dealing; Addicks declares it was a part of Matthews' and Rogers' +deep-laid plan to give him the double cross. Anyway, as a hurrier-up of +coming events the news was most successful, although its effect was +somewhat of the nature of that produced by the throwing in of an +overdose of soda at a candy pull--the pot boiled over, and the air for a +time was permeated with the odor of burned sweets. In spite of all +public and private criticism Matthews budged not a jot, and confirmed +the reports. I made the most of our triumph over "Standard Oil," and for +a few days the public took to it, too. Then came one of those return +waves of sentiment which may always be counted on in any contest in +which "Standard Oil" is engaged. From mysterious places and in +untraceable ways the report became current that victory was really with +Rogers instead of with our side; that the deal was a smooth piece of +Machiavelian work; that Matthews when he took the helm was to steer our +ship alongside one of Rogers' forts and perhaps drop anchor under a row +of his concealed guns. + +This rumor alarmed me. I lost no time in running it to earth, and +discovered to my consternation that Matthews had spent the night before +he made the agreement to come over to us in New York, at the home of H. +H. Rogers. Exactly what had occurred there, or what their programme was, +I don't know. Long after this episode had slipped into gas history, at +the time when Rogers and myself were doing business together, I asked +him to enlighten me on this one point, and he did to the extent of +saying, "Matthews only did what I approved of." This certainly redeemed +Matthews in my eyes from the reproach of having sold out his friends. +There is nothing more despicable than a man who, after having consented +to be "put" will not "stay put"--even though the first "put" be of a +questionable character. + +This new complication demanded immediate action. I called on Matthews to +make public announcement that I was to be his vice-president, and thus +set at rest the reports that were fast destroying the beneficial effects +of our coup. I argued that such an announcement would convince the +public that victory was with us and not with Rogers. My surprise may be +grasped when the Mayor placed this icicle in my hot palm: + +"Mr. Lawson, it has long been my ambition to show the public of Boston +and gas consumers what I could do with this situation, and now that I am +absolutely assured of gas supremacy, I would have you and all others +distinctly understand I will run it as I deem best, regardless of the +wishes of any one." + +Nathan Matthews was destined later to learn that in an Addicks edifice +there are secret trap-doors and concealed passageways available for +quick escape in emergency, and that the term "absolutely assured" is of +relative value when used in high finance, with Addicks to interpret the +relativeness. A few days after the mayor had shown his colors the annual +election was "pulled off" in an unexpected manner. The Mercantile Trust +Company delivered its proxies to the president of the Bay State _of New +Jersey_, who promptly re-elected himself and his friends to their old +offices. + +Next morning the public, the press, and the ex-mayor were alike +surprised to learn that J. Edward O'Sullivan Addicks was still president +of all the Boston gas companies; that General Sam Thomas, of New York, +and Thomas W. Lawson, of Boston, were vice-presidents; and that the +expected and widely heralded Matthews turnover to Matthews had been +indefinitely postponed. There was a tremendous "towse" for a few days +during which time I tried my hand at public-opinion moulding, and so +successfully that all interested saw that the tide had really turned, +and was running swiftly against the heretofore invincible "Standard +Oil." Rogers tried to stem it by causing it to be known that Matthews +was to carry the new complication to the courts, but we quickly disposed +of this possibility by reaching a settlement with our man. This was +brought about by the payment to Matthews of a number of thousands of +dollars, which Addicks afterward informed me he had entered in the +gas-books as "balm salary." From this event until August, 1895, it was +one continuous running fire with Rogers and his crowd, with a constant +gain to our side in public opinion, though final victory was still far +off because of the unlimited money resources of "Standard Oil." In fact, +it gradually became evident that, though we might hold out, it was +impossible to whip "Standard Oil" to an open acknowledgment of defeat. + +The phase of the problem that gave me keenest cause for uneasiness was +the possibility I recognized of treachery in my own camp. I had become +painfully aware that Addicks was getting impatient and was ready at any +favorable moment to make one of his quick Judas turns, which would land +him safe with Rogers as the price of the slaughter of the rest of us. +True, I had taken all possible precautions to safeguard my own and my +friends' interests against his craft by securing from him and from the +subsidiary companies iron-clad power to act for them without +consultation. To get this I had had to use great pressure, for he had +balked long and hard against giving it. This was the condition of +affairs when I decided to stake everything on one move. + + * Certain of my critics have seized upon the transaction + with Mayor Matthews, narrated in this chapter, to say: "He + bribed the Mayor and is no better than other bribers." + + The fact is, that the only thing the Mayor of Boston could + do in the gas war--take sides with Rogers, grant a permit to + the Brookline company to open the streets and come in + competition with our companies, thus compelling, in the + interests of the people, a reduction in the selling price of + gas from $1.25 to $1.00--the Mayor had already done. There + was nothing more in his power, and the only object we had in + securing his services was to put him between our companies + and Rogers, in the belief that Rogers, owing to his former + relations, would not dare fire through him. + + I never, directly or indirectly, bribed Mayor Matthews; but, + on the contrary, only induced him to do what he had a moral + right to do and I a moral right to ask him to do. + +FOOTNOTES: + +[6] See page 109. + +[7] Mr. Lawson's proclamations and market communications are invariably +printed on the finest grade of deckle-edged paper.--THE PUBLISHER. + + + + +CHAPTER XVI + +PEACE NEGOTIATIONS WITH ROGERS + + +Having made up my mind that the time had come for a final engagement, I +decided myself to try legitimately to settle with Mr. Rogers, and +prepared two letters which, if he were willing for us to get together, +would pave the way for a meeting. These letters I sent by my secretary, +Mr. Vinal, to Mr. Rogers at Fairhaven. My readers, in weighing this odd +correspondence, must bear in mind what the relations between Mr. Rogers +and myself had been. We had vilified each other in every imaginable way, +and I knew, or at least I thought I did, that the "Standard Oil" magnate +would not hesitate to use any written communication of mine that he +could lay hold of to bring about a split between Addicks and myself. I +had good evidence that he believed that in such a rupture lay his only +chance of bringing home the quieting blow he had been trying to inflict +on us. Letter I. read as follows: + + HENRY H. ROGERS, Fairhaven, Mass. + + _Dear Sir_: My secretary, Mr. Vinal, will hand you this + letter. If after reading it you are desirous of further + communication with me, he has instructions, after you have + returned this one to him, sealed in the enclosed envelope, + to hand you another, which if after reading you return to + him in another enclosed envelope, he will bring to me with + whatever verbal answer you may care to send. + + My secretary knows nothing more of his errand or the + contents of either letter. He can, therefore, give you no + further information. If you do not call for the second + letter, I will consider you do not care to pursue the + subject further, which will lead me to notify you that the + Boston gas war will end in a most sensational way next + Wednesday. + + Believe me, sir, + Yours respectfully, + (Signed) THOMAS W. LAWSON. + +Upon his return from Fairhaven Mr. Vinal informed me that Mr. Rogers, +after reading this letter twice, folded and placed it in the envelope I +had sent and handed it without comment to him, whereupon my secretary +delivered to him letter II., which was a type-written communication on a +plain bit of paper, addressed to no one, signed by no one, and bearing +no marks to identify the sender: + + There is a gas war now existing. Upon one side is the + "Standard Oil." Upon the other the Addicks Bay State + companies. + + After a fight has been begun there are but four things + possible: + + "Standard Oil" can sell out to the Bay State. + + The Bay State can sell out to the "Standard Oil." + + They can come together by consolidation; or + + They can continue fighting until one or the other has been + annihilated. + + Nothing else is possible. Therefore, one of these four + things is to be the outcome of the present war. + + If you can be shown now that if one of the first three is + not settled upon before next Wednesday the fourth will be + impossible beyond that date, and that it is absolutely in + the power of one man, without consultation with any one, to + bring about the accomplishment of any one of the first + three, you will meet that man before next Wednesday and make + your selection. + + I can absolutely prove to you that this war will not + continue after next Wednesday, and that it is absolutely in + my power, without consulting any one, to do any one of the + three things you signify you desire done. + +Mr. Vinal reported that Mr. Rogers also read this letter a second time, +but slowly and carefully, as though he were weighing each word, and +then, sealing it in the envelope, passed it back to him with: "Say to +your employer I return to New York to-morrow, Sunday night, and shall be +at my office, 26 Broadway, from 9.30 on Monday morning till five in the +afternoon; that I shall dine at my house, 26 East 57th Street; that I +shall be through dinner at eight o'clock, and that I go to bed at 10.30. +Tell him that any man who has an important communication to make to me +affecting a matter in which I have large interests will be welcome to +call on me between the hours I have named, provided he notifies me a +little while in advance." + +When my secretary, whose practice it was to give me the minutest +details of such affairs as this errand, had reported all that had +happened, I at once sent a message to 26 Broadway stating that I would +be at Rogers' house at eight o'clock on Monday night, and on the stroke +I pushed his electric latchstring. His man had hardly taken my hat when +Mr. Rogers himself came down the hall with outstretched hand. + + + + +CHAPTER XVII + +A MEMORABLE CONFERENCE + + +If the years of my life are protracted beyond the Psalmist's threescore +and ten, even though the events that chance in the comparatively long +future seethe and struggle as strenuously as those that befell in the +eager, vivid procession of yesterdays which makes up my past, my +memory's picture of this meeting will always hang where the lights cast +their kindest reflections. + +I had left Boston on the noon train, and got down to my hotel, the +Brunswick, on Fifth Avenue, by six o'clock. In those kind days of good +memory when New Yorkers really lived instead of looping-the-loop through +life, the Brunswick was head-quarters for Southerners and Bostonians of +the old school. To-day its bricks and mortar and the picturesque iron +balconies, from which two generations of America's celebrities reviewed +the marching armies of peace and war, are heaps of refuse; for the old +Brunswick has had to give place to yet one more of the twenty-storied, +emblazoned hostelries, whose alabaster halls, frescoed walls, mosaic +floors, and onyx and silver bathtubs are designed to minister to the +comfort of our great and free people when they needs must wander from +the luxury of their homes. When I had dressed I crossed over to the old +Delmonico's opposite, and, in a secluded corner beside an open window +which gave full view of the passing show on Gotham's great boulevard, I +sat and listened to old "Philip," who, time out of mind, had been +high-priest of the famous Frenchman's temple of appetite, as he posted +me on the latest doings of the town where no one remembers further back +than yesterday, and to-morrow doesn't count. Ordinarily I should have +lingered for hours with "Philip" and his tidbits, but that night my +mind was a mad steeplechase of memories and hopes, all starting and +finishing at 26 East 57th Street, and I fear he must have thought he had +failed in the plump little duck which I left unpicked, and in the bottle +of Chianti which I hardly sipped. + +At 7.30 I lit my cigar and started for what I felt was to be the tomb or +the forcing-house of all the air-castles I had cherished from boyhood. +At last I was to meet the real champion; I was to tussle hand-to-hand +with the head of the financial clan, the man of all men best fitted to +test to the utmost the skill and quickness which I had picked up in the +rough and tumble of a hundred fights on State and Wall streets--Rogers, +wary, intrepid, implacable, the survivor of bloody battles in comparison +with which mine were but pink skirmishes. + +I had carefully put aside that half-hour between dinner and the moment +for my appointment to run up and down my mental keyboard under what to +me are the most favorable conditions possible--an evening walk through +the streets of a great city. Some men can invite their souls only in +sylvan solitudes, but the flare of light, the clash of traffic, the +kaleidoscopic procession of humanity, with its challenging contrasts +shifting and seething on great metropolitan highways, breed in my mind a +sense of calm, cool remoteness in which all the glitter and excitement +of the spectacle suggests only its appalling transiency. + +From the gay carnival of Broadway I cut across through the brownstone +gloom of 27th Street into Sixth Avenue, where the tired men and women of +the toiling millions sat in their doorways or at their windows over the +shops resting after the heat and travail of the day. Some watched the +sidewalk antics of their children--perhaps speculating on the +possibility that this or the other among that merry throng of urchins +might rise to be an alderman or even a city boss--perhaps President of +the greatest republic on earth--or--transcendent bliss--a Rogers or a +Rockefeller. + +From 42d Street I turned up Fifth Avenue, lifting my hat and exchanging +a word with Mr. and Mrs. Russell Sage, and for an instant, as I left +them, my wandering thoughts took a new twist, for Mrs. Sage had informed +me that "Father and I are on the way to prayer-meeting"--early evening +prayer-meeting in New York! For an instant I was in one of those tiny +New Hampshire villages, a forgotten haven of rest and simplicity, +innocent as yet of steam, machinery, or trolleys, for the sweet lady and +the angular man with the pained gait which spoke in loud tones of the +unbroken store-shoe could belong in no other than a rural place. But the +image of the New Hampshire village only flitted across my mind's film, +for my truant senses seized on a message over memory's telephone: +"Russell Sage has $100,000,000." One hundred millions, and I was back on +earth again, but as I walked the thought was buzzing in my brain: "Is it +possible that that countryman has MADE _one hundred million dollars_, +when the expert carpenter who started at the birth of Christ to trudge +the world until from his honest labors he had accumulated $1,000,000 by +laying aside each day all the wage he was entitled to, one dollar, had +at the end of 1,900 years only a little more than half that sum?" + +At last I turned the corner of 57th Street, and when I looked down Mr. +Rogers' home-like hall and grasped his outstretched hand and heard his +"Lawson, I'm glad to see you!" I would have sworn it was hours and hours +since I left the little table in the corner of Delmonico's. + + * * * * * + +The chief impression I recall of my experience that night is gratitude +for Henry H. Rogers' unexpected kindness, and admiration for his +manliness, ability, and firmness. When this memory rises in my mind I +regret "Frenzied Finance" and all the consequences with which it is +fraught for him and his connections. When the American people are +aroused, as they surely will be, to demand restitution and are in the +act of brushing, with a mighty sweep of indignation, back into the laps +of the plundered the billions of which they have been robbed, and +"Standard Oil" and the "System" break and fall like trees before the +gale, I doubt, even if Henry H. Rogers be brought face to face with +ruin, that he will feel half the pain I shall, for I know that the +picture of that memorable night will surely come back to me with all +the vividness of reality. + +But as my mind harks back, there clashes with this another, a hellish +picture, which the same Henry H. Rogers painted with the brush of +Amalgamated, and a procession of convicts and suicides trail slowly +toward me out of the canvas. Then I realize that my pen is but the +instrument of a righteous retribution and that no personal feelings, +however tender, must be allowed to interfere. + +"Come this way," said my host, striding ahead of me along the hall. "In +here we can have our talk and our smoke undisturbed." He led me into the +big, empty dining-room and closed the door. + +"Mr. Rogers," I began, "it is kind of you to be so friendly after the +mean things we have said of each other. Am I to understand you don't lay +any of all that has passed up against me?" + +"Lay it up against you, my boy? Drop that all out of your mind. You +probably know I talk to the point and mean what I say. If you had hit +below the belt as that--Addicks has, I _would_ lay it up against you and +a hundred years would not make me forget it. I know what you've done and +why you've done it, and it was as much your right to do it as mine to do +what I have done. I have nothing against you, and if events place me in +a position where I can do anything to make your job easier without +hurting my own interests--mind that, without hurting my own interests--I +will do it. You have my word for it." + +We sat within a few feet of each other, and I looked squarely into his +eyes as he said, "You have my word for it," and they were honest +eyes--honest as the ten-year-old boy's who with legs apart and hands in +pockets throws his head back and says: "Wait until I am a man, and I +will do it if I die for it!" I looked into them and I knew "My word for +it" was all gold and a hundred cents to the dollar. For a minute we +gazed steadily into--through each other, and I knew he was reading away +into the back of my head. Inwardly I said: "If I do business with this +man for a day or for a lifetime, I will never face him and give him my +word for one thing and mean another," and in the years after when we did +millions upon millions of business, with only each other's word for a +bond of fair treatment, not once did I depart from the letter of my +resolution. Up to the recent famous "Gas Trial," where our roads +suddenly shot off at right angles, owing to a foul act of perjury, Henry +H. Rogers never tired of meeting all his associates' attacks upon me +with: "Lawson's word is gospel truth for me." + +When we dropped our eyes, both evidently satisfied, he said: "Now, what +have you to say to me?" + +I spoke my piece rapidly and without interruption: "There are four +things possible, as I wrote you--only four. I will take up the fourth +first. I have absolute power to speak for all our local companies. If +we, you and I, come to no settlement by to-morrow night, I will, without +warning to any one, confess a default to the notes of our different +companies and have a receiver appointed. As our stocks and bonds are +held by our best investors all over New England, and as no such move is +suspected, there will be a terrific rumpus. In the crash I shall go down +with Addicks and the rest, for we have all put our personal resources +behind the enterprise. I will see that the howl following the crash +shall be such as all must hear, and I will call attention to the illegal +acts of every one--your companies, Addicks' companies, and the city and +State officials that have made such conditions possible. I don't think +you will be able to stand against the cyclone this crash will raise; but +even if you do, the receiver, having no interest to pay on bonds, will +be in a position to smash the price of gas to seventy or seventy-five +cents, and make it impossible for you to get possession of our companies +for so long a time that the consumers will never allow you to get the +price back to a profitable one. Have I made it clear that you cannot, as +you were counting on doing, continue this fight till you have us tired +out and crushed?" + +His answer came as clear, quick, and sharp as the click of a revolver: +"Perfectly, provided you can do the thing you say." + +"I will prove to you I can." + +"It is not necessary," he clicked back. "Do you give me your word that +you can?" + +"Absolutely." + +"I am satisfied. Go on." + +"That leaves only three possibilities," I continued. "You buy us; we buy +you; or, we consolidate. I will take the third first. Under any +circumstances or conditions will you join forces and do business with +us?" + +"Under no circumstances nor conditions will I do any business with +Addicks. He has played me false, broken his word, and lied to me when +there was no necessity for doing so, and no man who has done this once +can ever do business with me a second time." + +I once stood by a mechanism through which passed a strip of metal. +Click! 'Twas cut. Whir! 'Twas a cylinder. Click! Whir! Click! A corner, +an edge, an end, and b-r-r-rr! It was dropped, a metallic cartridge, to +do its part in peace or war. Even more fascinating was it to see this +human machine eject the product of its whirring brain. + +"Then we have but two possibilities. Will you buy us out at the price we +must have?" + +"What is the price?" + +"Sufficient to make good the promises that I have made to Addicks, my +friends, and the public since I have been in command," I replied. + +"Pass that by as an impossibility." + +"Then, Mr. Rogers, we are down to this: You must sell and we must buy +you out." + +"Right. Now, how do you propose to buy?" + +For months the ablest financiers and business men of Wall Street and +Boston had striven to start up negotiations with Mr. Rogers with a view +to settlement, and all had dropped them without even getting in an +opening wedge, and here was I at the end of fifteen minutes of my first +meeting, with my task half accomplished. I went on: + +"There is something more you must do, Mr. Rogers. You must assist us in +buying, which means you must sell at the terms you and I agree are the +only ones we can meet. Therefore I will run over our situation. You have +certain property, consisting of the Brookline Company and miscellaneous +investments in connection with it. What cost does it stand you?" + +Frankly, he went over what his Boston gas-war equipment consisted of and +what it had cost, which, boiled down, amounted to $3,500,000. He then +said: + +"Let us figure what it will be worth to you when, it being known you +have won out, you will have additional prestige and no competition." + +We agreed upon $2,000,000 as representing the probable appreciation in +what we were to acquire from him over and above any increase to our own +securities. + +"I'll take cost, $3,500,000, if it is cash or the equivalent, or I will +take $4,500,000 if it is to be credit of a nature that assures me my +money eventually, and I will divide my profit of a million equally with +you. This sum will of course be in addition to anything you may be paid +by Addicks." + +Instantly, as if we had agreed upon it in advance, our eyes met--his +cold, clear, and steely business--mine, I hoped, the same. For a second +neither of us said a word. Then I said: "Thank you for the offer of the +$500,000 profit, but we will cut all such offers out. My pay comes from +my side. I never yet have known the man who could take pay from both +sides and do his work properly." I slowly drew out the word +"_properly_," and he in the same tone of voice said: + +"'Properly' is better than 'honestly.' You know, Lawson, there is much +cant in these times of which 'honesty' is the refrain." + +"You and I will make no headway discussing moral ethics, Mr. Rogers, +although we may in discussing business practices," I said, and I chalked +up on my mental black-board: "Test One." Then I went on: + +"I agree that $4,500,000, in anything we can pay in, is as fair a price +as $3,500,000 cash, provided we find a credit guarantee satisfactory to +you; unless indeed you are willing to allow us the $500,000 you just +offered me." + +"What I offered you was part of my profit. I will not allow any of it. +My price is the same whether I pay you anything or not." + +"Very well, Mr. Rogers, then the situation is this: In any trade that is +made it will first be necessary for you to turn your property over to us +to manage in conjunction with our own. When the public see it in our +hands, our securities will advance and we can, by issuing additional Bay +State stock, sell it and secure whatever sum it will be necessary for us +to have beyond what we can borrow on your securities. Do you agree with +me?" + +He saw it as I did. + +"I imagine you will never consent to turn your property over to us on +our say-so that we will later pay you for it?" + +"You are right there. I would not take J. Edward Addicks' guarantee in +any form he could possibly put it. Once he got his hands on my company, +for even thirty days, he would so far misuse it that he would +deliberately default for the purpose of returning it to me in a damaged +condition, and, in addition, would play some of those tricks which are +second nature to him." + +"It will be necessary for us then," I went on, "to give you some forfeit +bond so large that, even if we misuse your property while it is in our +hands, you will be repaid for the damage done, and it must be at the +same time something of such value to us that even Addicks will be +compelled to play fair." + +"Well, what can you put up?" Mr. Rogers asked. + +"Addicks has a right, through the Bay State Company of Delaware, to +issue, through the Bay State Company of New Jersey, a million and a half +new bonds for the purpose of acquiring new property. He and I have +discussed the scheme as a last resort should any settlement seem +possible." + +"Do you mean to tell me there is anything Addicks can get his hands on +which he has not yet used for his companies nor stolen for himself?" +replied Mr. Rogers incredulously. + +"Yes, he has time and again assured me of this, and he would not dare to +lie to me under existing conditions." + +He arose from his chair and stood directly in front of me and +straightened up for what I could see was to be an unusual effort. Then +with the force and the fire which in all his supreme moments make Henry +H. Rogers wellnigh irresistible he said: + +"Lawson, I have listened to you. Now listen to me. I have taken you at +your word, and have talked frankly and shown you my hand as I have +seldom shown it to a stranger. To do the business I want to do, I see I +must talk even more frankly than I already have, and I want you to weigh +carefully what I shall say to you, for it may have a great bearing on +your after-life. How old are you?" + +"Thirty-seven," I replied. + +"I thought you were about thirty-seven," he said. "Well, I am fifty-six +and in experience am old enough to be your grandfather, so you can +afford to give weight to what I am about to say, especially as I give +you my word that I speak for your benefit first and my own afterward. I +watched you before you hitched up with Addicks, and always thought that +if the opportunity arose, we might do business together. We, or as you +and others like to call us, 'Standard Oil,' have money enough to carry +through whatever business we embark on and we know where there is all +the business to be had that we care to engage in. We have everything, in +fact, but men. We are always short of men to carry out our +projects--young men, who are honest, therefore loyal; men to whom work +is a pleasure; above all, men who have no price but our price. To such +men we can afford to give the only things they have not got, or, if they +have already got them, to give them in greater quantities--I mean power +and money. You made a great mistake when you joined forces with Addicks, +because no man can afford to be associated with the kind of a rascal +Addicks is, the lowest I have yet come across. He is the type of man who +cuts his best friend's throat with as much ease and satisfaction as he +does his worst enemy's, if not with more. I fully expected that by this +time he would have sold you out. If he had, where would you have been? +Now, here you are from sheer desperation driven to me to avoid utter +failure. Suppose you can do all you hope to--get the bonds, put them up +and secure my property--do you not suppose that by that time Addicks +will have some mine dug under you which will blow you to destruction? +But grant even that he plays fair, and you bring the Boston situation +up to a paying place, what good will it do you? You surely have more +sense than to believe a man of Addicks' make-up can be permanently +successful?" + +Mr. Rogers halted. I had risen, and we stood facing each other. I felt +that I was right here playing for that greatest of all stakes, my +self-respect, the loss of which to any man, I had long before +discovered, means ebon failure. + +"What do you want me to do?" I asked. + +"Say you'll come with us, and we'll fix up the Boston situation in some +way that will forever eliminate Addicks from our affairs--your and my +affairs. I would not insult you by asking you to sell Addicks out. It is +unnecessary. He has no real rights in Boston. You and I can figure out a +scheme that will take care of every other interest, and we'll give +Addicks a lot more money than he can secure in any other way and show +him the door. As for you and me, we'll make a lot of money and make it +fairly and above board. But I am not thinking so much of the immediate +situation as I am of the possibility of you joining us and working on +some of the deals we have on hand. I shall put you in a position to make +more money and secure more real power than you could possibly obtain in +a like time under any other conditions. You know corporations and the +stock-market, and you can readily see what the combination of our money +and prestige and your knowledge of the market and investors will mean." + +Heaven knows I could see what it all meant. I had even at that time in a +chrysalis state those plans for destroying the "System" which now in a +rounded out and matured form I intend to be the superstructure of my +story of "Frenzied Finance." I had, a year before in Paris, outlined +those plans to some of the brightest financial minds of Europe, and +while they had marvelled at their radicalness, they had pronounced them +sound, and had offered to furnish the hundred million of dollars +required for their execution. Then I realized that to take this money +from bankers would hamper me in the execution of my plans, and I +postponed putting the project in force until I could furnish the +necessary money through my own connections. Again, I had big ideas as +to the copper situation--ideas that only awaited unlimited capital to be +brought before the people, and which, if carried out, would do for them +what had as yet never been done--give them tremendous profits upon their +savings. And here were the unlimited capital and unlimited business +prestige right at hand, but---- + +"Mr. Rogers," I said, "don't! Please don't! I appreciate your +proposition, and I thank you, but I can't accept. I agree with you about +Addicks, the position I am in, and the mistake or foolish recklessness I +was guilty of when I linked up with this Boston mess, but that doesn't +alter the case an iota. I am enlisted with this man. I knew what he was +when I consented to take charge of his affairs, and I should hate myself +if I sold him out, even though I knew he would without hesitation sell +me out. I must be true to myself." + +Mr. Rogers remained silent. I went on: + +"This, if I accepted your proposal, I could no longer be, even were +Addicks and Boston Gas out of it. The man who is 'Standard Oil' wears a +collar, and if I did what you ask I should expect to wear a collar +and--and--I can't do it." I stopped; I was not excited; it was +impossible to be so with that calm figure, apparently cut from crystal +ice, so near me, but I was very much in earnest. I wondered what would +come next. Mr. Rogers raised his hand and held it out to me, mine +grasped it, and without a word thus we stood long enough to put that +seal on our friendship which none of the many financial hells we jointly +passed through in the after-nine years was hot enough to melt. + +But that friendship is ended now. Henry H. Rogers' evidence in the +Boston "Gas Trial" was the spark that kindled the dead leaves of the +past into the conflagration which, now spread beyond the control of man, +has brought to light the hidden skeletons of forgotten misdeeds and +exposed them for all the world to see. + +He at last broke the spell. "Lawson, you're a queer chap; but we are all +queer, for that matter, and we must work along those lines we each think +best. I once stood, just as you do now, in front of a man whom I looked +up to as all that was wisest and best. He made an earnest effort to +induce me to choose the ministry for my life-work, but I chose dollars +instead, and I sometimes wonder if I chose wisely; but, as I said, we +all must select our pack and, as we are the ones who must carry it, I +suppose no one else should complain." + +After a moment's pause I shot ahead into business again as though we had +never left it. It took me but a short time to arrange the details of our +trade. The Bay State of Delaware was to buy all of Mr. Rogers' Boston +investments and to pay for the same $4,500,000--$1,500,000 in six +months, $1,000,000 in a year, the balance in a year and a half, with +interest at five per cent.; the Bay State was to put up, as a pledge of +good faith, $1,500,000 new Boston bonds; and as soon as such deposit was +made, Mr. Rogers was to transfer his securities and corporation to us. I +was to go to Philadelphia that night and arrange all details with +Addicks and report the following day. + +It was 10.30 o'clock when I left 26 East 57th Street. I hurried down to +the Brunswick, where I had time only to shift my clothes and catch the +"midnight" for Philadelphia. After breakfast next morning I tackled +Addicks. It goes without saying that I was a cyclone of enthusiasm as I +minutely ran through what I had done, beginning with my letter to Rogers +and finishing up with my visit of the night before. I omitted not the +slightest detail, and when I wound up with my request that Addicks get +the lawyers together and prepare the necessary documents for the +turnover of the bonds and acceptance of Rogers' properties, I felt that +my share in the Boston gas war was almost ended. + + + + +CHAPTER XVIII + +THE DUPLICITY OF ADDICKS + + +Addicks looked at me in a cool, aggravating way, as though my enthusiasm +was a joke. + +"Lawson, you have done a big thing, a big thing, but you put up too many +bonds, altogether too many. It looks to me as though that old trickster +had got the best of us at last." + +By this time I had learned all the moods of this man and knew that when +he assumed that air of cold, saturnine jocularity it was safe to look +for the uncovering of some vaporized trickery. My enthusiasm oozed. I +hastened to ask: + +"What do you mean by 'too many bonds,' Addicks? I gave him all we had. +Sorry it was not more. We are to pay him four and a half million +dollars, and the sooner we do it the better. Now out with what you've +got in your mind; I won't stand any trifling." + +Addicks continued to look at me with the same insolent, critical air. He +said slowly: + +"The reason I say you've given too many bonds is that we haven't a +million and a half to put up. Where in the world did you get the idea we +had?" + +In an instant I realized that this sharper had tricked me into +apparently tricking Rogers. I was boiling with rage. + +"You have told me over and over again that you retained the right to +issue a million and a half bonds, that you had never parted with it, and +relying on your assurances, I have done business with Rogers. Let's have +the truth now at once." + +Addicks is a master in the management of just such tangles as had +developed here. I had expected him to give way before my indignation. +He looked me square in the eye and turned the tables on me. He got mad +first. + +"You have taken too much on yourself," he began vehemently. "You had no +right to go ahead without consulting me. Because I've given you full +swing you think you are the whole thing, but you're not. And as for your +rushing in on me without warning and expecting me to let you turn all +the assets of this corporation over to your new 'Standard Oil' friend, I +won't stand for it. You can't do this corporation's business that way." + +He poured on for five minutes without giving me a chance to interpose a +word. He seemed to be consumed with anger and paced up and down the +office. Then suddenly he stopped: + +"We cannot afford to have any trouble, you and I, Lawson. I'm sure you +did only what you thought best, but the fact is, I pledged some of those +bonds for our war supplies a few months ago, and though I'm not going to +dispute it with you, I'd swear I told you at the time." + +As Addicks talked I had been mentally reviewing the situation in which I +found myself. I saw myself dropped out of Rogers' consideration as the +same kind of a financial trickster that Addicks was. For the moment, I +had no fight left; I was knocked out. + +"Don't feel bad, Lawson. You got as far with Rogers as it is possible to +get, and you are dead right when you say that once we get hold of his +corporation so that every one knows we've licked him, we can easily sell +stock enough to pay him in a few weeks." As he talked he was again the +master financial trickster, full of device and strategy. Finally I +answered: + +"Don't say any more, Addicks. Words won't help us. I've got to face +Rogers as soon as a train can take me back to New York, and after +that--then I'll have something to say to you." I started to go. + +"What are you going to say to him?" he asked. + +"Say to him? What can I say to him? At my solicitation he gave me a +hearing--at his own home--treated me best in the world. I told him +certain things, and pledged my word they were truths, and I've got to go +back and tell----" + +"Tell what?" + +"That I'm either as big a liar as he says you are or a fool--a doddering +fool." + +"You are going to do nothing of the kind," Addicks declared +peremptorily. "You're going to tell him that you were not posted up to +date, and that I, being pressed for money, had pledged some of the +million and a half I had told you we had. That's all. He'll see it all +right, and he'll trade for--for--what we have left." + +I suddenly remembered that he had not told me how many bonds he had on +hand. Just a ray of hope in the fog. + +"How many free bonds have we to offer, Addicks, suppose he is willing to +overlook this ugly piece of trickery?" I asked anxiously. + +"I'm not quite sure," he answered, "but I can find out from the books." +He rang for Miller, his right-hand man, the dummy treasurer of the Bay +State Company, and said to him: "Harry, Mr. Lawson has got mixed up +about the bonds. He thought we had a million and a half. You remember +we've pledged some in the loans. Just how many have we now on hand?" + +"Harry" looked it up and said: "Just $904,000 worth." + +"There you are, Lawson," cried Addicks. "There's plenty to assure Rogers +we'll do what we agree to." + +Fool that I was, I did not see his game. No one ever does see Addicks' +game till it is too late, for no one but a moral idiot would play the +game Addicks plays, and, thank heaven, moral idiots are so rare in life +that it is not worth while figuring out the formula from which they +work. + +By one o'clock I was at Mr. Rogers' office at 26 Broadway. + +He greeted me warmly. "Well, Lawson, did you get things finished up all +right?" + +"Mr. Rogers, I have a most humiliating admission to----" + +"Hold up right there. Cut out all explanations and excuses. Have you +brought those bonds as you agreed to, or not?" His eyes were snapping +and shifting from one color to another. + +"No, I have not got them." + +"Why not?" + +Had I been a woman I should have clapped my hands to my ears and +screamed, so sudden and bomb-like came those two words. + +"He had used some of them and has only $904,000 on hand." + +"Only $904,000!" + +It is impossible to convey the concentrated scorn and sarcasm Mr. Rogers +infused into these words, and he continued to glare at me for fully a +minute, his eyes as searching as _x_-rays. When that glare shifted I had +a presentiment it would leave me forever a stranger to him, and I made +up my mind to turn on my heel and leave his office without a word. I +felt that he was in the right, and that if I were in his place I'd +glare, too. + +Suddenly the expression changed. He said peremptorily: "Lawson, get on +the first train for Philadelphia and bring back those agreements +executed and the $904,000 instead of the $1,500,000." + +"Mr. Rogers," I began, but he stopped me with an imperative gesture. + +"Don't say a word, but do as I tell you. I warned you you were dealing +with a dog, but you wouldn't have it. Now I'm going to put this trade +through even if I make a fool of myself thereby. You've done your work +and that whelp shall not keep you out of its results. I'm in this now, +and we will see if Addicks can outplay me as well as you. Not another +word. I understand the whole thing." + +I returned to Philadelphia deciding once and for all certain things in +regard to Mr. Rogers and others affecting the future of J. Edward +O'Sullivan Addicks; and that night Addicks and I "had it out." I shall +not attempt to reproduce our talk. Suffice it to state that when I +called for the bonds Addicks began to hem and haw, and then I realized +that he had a second time lied to me. We were in his Philadelphia +office, and it was night and we were alone. I demanded the truth, and +finally he told me he had no $904,000 of bonds. As a fact he had not a +single bond. He had used them to the last one and had deceived me for +months. In regard to this interview Addicks has always maintained that I +laid hands upon him, and that he was on the verge of doing some awful +thing, but this is false. What I did was to turn the key in the door and +then, without undue regard to his sensibilities, draw a word-picture of +the position he had placed me in. Also I said what I thought of him. +That is all. + +The vast profits which the stock operator makes apparently overnight are +often subjects for the world's wonder and envy. But if the gains are +great, the road is muddy. If those who covet the golden rewards will +participate in a deal or two, wallow in the filthy double-dealing which +is an inevitable part of the cost price of success, they will quickly +realize the dark side of the glittering game, and that the sacrifices +are in proportion to the winnings. If I had been asked that night what +price would recompense me for the hell Addicks' shabby deceit had +stirred up in me, I should have said--that night--that no number of +millions would pay for the bitterness of the experience. + +It was after midnight when I left Addicks' office, and as I walked to my +hotel I was steeped in gloom and bitterness. Before me was the most +humiliating ordeal with which Fate had ever saddled me. I had to confess +failure a second time, and under such circumstances that Rogers would be +justified in believing me either a swindler or a dupe unworthy of +respect or consideration. + +I was at 26 Broadway by ten o'clock the same morning. Mr. Rogers was in +his main private office. His secretary was with him. He was full of +business, and, I thought, preoccupied. As I entered, and before a word +of greeting passed, he gave me one of his keen, appraising glances. + +"Well?" was all he said. + +"Your estimate of Addicks was correct. He has no bonds," I said, giving +him the worst of it at once. I was desperate and certainly in no mood +for apology. Rogers looked at me. I thought he gasped. He +rushed--whether he pushed or pulled me, or we both slid, or how we got +there I don't know--but in an instant after I had said "He has no +bonds" we were in one of the number of 8 x 12 glass-sided pens he calls +waiting-rooms, but which the clerks have dubbed "visitors' sweatboxes." +He put both hands on my shoulders and he yelled--fairly _yelled_: "Say +that again! I did not get it." + +In after-years I became on rather playful terms with the extraordinary +bursts of wrath to which Henry H. Rogers occasionally gives way, and +which sweep through the "System's" shrine like a tornado; but this was +my first experience, and it was a shock and a revelation. Just what was +going to happen next I could not imagine. I remembered afterward that +the most definite of the impressions that chased each other through my +mind was that Henry H. Rogers would surely have a stroke of apoplexy. +Then that he would "bust." However, I pulled myself together and began: + +"Mr. Rogers, what's the use of getting excited?" + +I got no further. He jumped backward. The next second I was in the +storm-centre. The room was small. Suddenly it became full of arms and +legs and hands waving and gesticulating, and fists banging and +brandishing; gnashing teeth and a convulsed face in which the eyes +actually burned and rained fire; and the language--such a torrent of +vilification and denunciation I have never heard, mingled with oaths so +intense, so picturesque, so varied that the assortment would have driven +an old-time East Indiaman skipper green with jealousy. I was horrified +for an instant, then surprised, and after that, if it had not been for +my position as the cause of it all, I should have been interested in the +exhibition as a performance. + +I could hear a stirring and a movement outside. The clerks were +evidently aware of the scene. Forms passed rapidly across the +ground-glass walls. After a time Rogers controlled himself. Then he said +to me in a voice still vibrant with passion: + +"Lawson, tell me--put it in short, plain language--do you mean to say +that after coming to me of your own accord and agreeing to do certain +things, and then returning here to this very office, admitting that you +had tricked me; after my overlooking that breach of faith and agreeing +to take half the collateral simply because it was all you could raise, +and because I desired to assist _you_--do you mean to say you have the +audacity to tell me to my face that the whole thing is a lie and you +have imposed on me?" + +"I mean, Mr. Rogers, to tell you that Mr. Addicks has just proved to me +that he has no bonds; that he is a liar and worse." + +"Oh, he is, is he? But does that justify you in coming?--oh!----" + +Again he was off. When he stopped for breath I raised my voice and made +it loud and emphatic enough to convince even a man temporarily insane +that my part as audience and victim had ended. I said: + +"Mr. Rogers, I can't say more than that I apologize for the part I've +been made to play in this transaction, and I'll leave your office +prepared to take any kind of medicine, however harsh it may be, that you +will deal out on account of all this. Not only will I take it, but I'll +think you are right in administering it." + +Rogers once more got himself under control. I stepped toward the door. + +"One minute, Lawson--one minute. What are you going to do? Go back to +your associate, that gentlemanly, square-dealing fellow in +Philadelphia?" + +"Mr. Rogers," I replied, "I ask no mercy at your hands, but there's a +limit to the things a man will stand under the mess I'm laboring with. +I'm going to do the best I can. What it will be I don't know. There's a +deal of money at stake--my friends', the public's, my own--I'm +responsible for it. I've made a terrible blunder. I am paying for it, +but nothing that has happened has altered my idea of the duty I owe +myself and others." + +He was about to say something sarcastic. Then he choked back the words. +His manlier nature rose to the surface. + +"Lawson," he said, "I'm sorry for you. Upon my soul I am." + +"You needn't be, Mr. Rogers. It's all right; it's part of the game, but +I'm awfully sorry I came near you." I opened the door. + +"One second more, Lawson," he said, stopping me and putting out his +hand. "I'm not only sorry, but I give you my word I have not a +doubt--no, not a suspicion of your good faith throughout this +business--and if at any time you see your way to open up negotiations, +you're welcome. Do you understand? You're welcome to come in here or to +my house at any time you think you see your way out." + +I said "good-by" and bolted before my feelings overcame me. + + + + +CHAPTER XIX + +ENTER H. M. WHITNEY + + +It is not surprising that there should now have ensued an interval of +silence and peace in the Boston gas war. Disheartened, disgusted, +disappointed, I had to take stock of our position. However enraged I +might be at the new revelation of Addicks' extraordinary veniality, the +other elements in the situation remained as before. I could see nothing +for me to do but to resume the tactics I had employed previous to the +meeting with Rogers. My friends' interests had to be protected, and to +do that war must be waged until a vulnerable spot in Rogers' armor had +been found. But it was some days before I could screw my enthusiasm back +to fighting-pitch. In the mean time Rogers did nothing. He, too, was +waiting for new developments. + +To this extent the situation had altered, however: I knew just where I +stood with Rogers, and he realized the consequences of pressing us into +a corner. I knew he would sell his company and retire from the field if +I could find a way to pay him for so doing. He knew that if he turned +the screws too hard I would as a last resort turn the tables by throwing +Bay State Gas into bankruptcy. I tried many times and in many ways to +find means to bring about a termination of the struggle, but to no +purpose. Our extremity was such that it was impossible to do more than +protect our companies from a receivership. To raise new capital to +deposit as collateral with Rogers was out of the question, for the +public, looking on at what was evidently most disastrous warfare, was in +no temper to buy new stock. + +The lull in our hostilities was only a pause between battles. It +suddenly came to an end January, 1896, when a new enemy appeared in the +field. Henry M. Whitney, who had built up Boston's electric +street-railway system, and who, from his frequent dealings with the +Massachusetts Legislature in obtaining franchises, had the reputation of +carrying that body in his waistcoat-pocket, came before this Legislature +with a proposition for a charter for a new and independent gas company. +Up to this time Whitney had had no relation with the gas public. He +based his new departure on the claim that he had come into possession of +a patented device through which it became possible to turn the low-grade +sulphuric coal of Nova Scotia into coke without sacrificing either the +valuable by-products, such as ammonia, tar, etc., or illuminating gas. +This was a very remarkable pretension, for we had long ago eliminated +these low-grade coals from consideration as material for gas-making; but +if Whitney's device actually was what he claimed, undoubtedly he would +be a dangerous competitor. Whitney's petition set forth further, that +because of the exceedingly low price of this Province coal and its +richness in by-products he could afford to sell gas to consumers at 50 +cents per thousand feet (the legal charge was then $1 per thousand +feet), a price which would enable the great manufacturing institutions +and all the steam and heating plants to use gas economically for fuel +purposes. + +The thing was sprung one day and was all over town before night. There +were interviews and pamphlets floridly setting forth Mr. Whitney's good +intentions toward gas consumers. + +Mr. Whitney was, and is, one of Boston's most important citizens, at the +present time president of the Chamber of Commerce, and a brother of the +"System's" most Machiavelian votary, the late William C. Whitney. The +application, backed by his prestige, and the roseate dreams of cheap gas +it conveyed, created a sensation in Boston. Evidently he intended to +have it seem that the people were in favor of the new charter, for +simultaneously there appeared notices in the press calling for three +distinct citizens' meetings. There seemed to be general rejoicing that +at last the odious Standard-Oil Addicks-Bay State Gas outfit with all +its corruption and unwholesome wrangling was to be deposited outside +the city walls. + +The experience of any man who has had to do with political and financial +affairs invariably shows him that nothing ever happens of itself. +Thunderbolts do descend from clear skies, but an enemy and not nature +has hurled them. A clever tactician will always look for his +antagonist's hand behind any isolated or detached fluctuation of public +feeling which bears in the slightest degree upon his problem. In going +over the circumstances, looking for the correct interpretation of the +appearance in our field of this second Richmond, I took into +consideration the fact that H. M. Whitney was deep in a speculative +venture, Dominion Coal, which owned vast tracts of these low-grade coal +lands in Nova Scotia, and it was known he had been trying vainly to +utilize their products in the locomotives of the Boston & Maine Railroad +and several other ventures in which he was a controlling factor. In one +way it seemed reasonable that if Whitney really had found a way to get +something out of his coal, he was justified in making the best possible +use of it. On the other hand, I could not but see how the new project +brought about the very situation at which Rogers had so long been +aiming. Selling gas at 75 or 50 cents, the new company would absolutely +command the business; the old companies must go bankrupt, pass into a +receiver's hands, and in due course would be absorbed by the Whitney +corporation. That would leave but one gas company in complete control of +the Boston field, and it would not be bound to continue the low prices +when competition had disappeared, but would be legally free to go back +to the old rates of $1 and $1.25. In a combination which so completely +went Rogers' way, surely his fine slim Italian hand might be perceived +at the throttle. + +Once I had made up my mind by what we were confronted, I lost no time. +Inquiries revealed that Whitney's alleged control of the Legislature was +not exaggerated. In fact, it seemed eager to do his bidding in any +direction. There was no space for negotiation or deliberation, so I +returned his bomb with another, which, exploding in his breastworks, +created as much of a sensation as his own had done. I did not believe +Whitney could do with Nova Scotia coal the things he claimed, but, +whether or not, if he got his charter, Rogers' object would be +accomplished. If he were absolutely bound, however, under heavy bonds to +do exactly as he had promised, his proposition would be so loaded that +it might go off in his own hands and blow him to pieces. The next day I +went personally before the Legislature and agreed to pay the State of +Massachusetts $1,000,000 for the charter Whitney had applied for, and +offered to give bonds to do all the things Whitney would give bonds to +do on receipt of it. + +This proceeding caused a halt. It startled the public and set the +Whitney forces agape. My proposition was decidedly novel, and on its +face absurd--the State could not under the law accept a million dollars +or any other sum for its charter--but, on the other hand, it was the +quickest-acting horse-sense producer that could possibly have been +brought to bear. It was discussed everywhere. Men said: "Why not? If the +State has a valuable thing to give away, why should it not go to the one +who will pay the people the most money for it?" I had outflanked the +enemy, and if he gave battle it would have to be on my conditions. +Whitney was furious, and his privately owned Legislature cursed me for +interfering with its plans; but he and they recognized my advantage, and +that night I had a call from Mr. Whitney and his attorney, George Towle. + +"What are you trying to do, Lawson?" Whitney asked. + +"Only trying to protect from destruction the Boston gas companies of +which I am vice-president and general manager," I replied. + +"But my proposition is a perfectly legitimate one," Whitney objected. "I +have got hold of this invention, which enables me to utilize my Dominion +coal in such a way that we can make coke out of it, and at the same time +get all the gas. This coal is cheap to produce and costs little per ton +to bring in. So I can sell gas cheaper than you can make it." + +"And we have a plant for the manufacture and distribution of gas which +has cost us seventy years and millions of dollars to get together, and +we have also the customers to whom you must sell your cheap gas," I +returned. "If you can really do what you claim, why not go ahead, make +your gas, and sell it to us? We will distribute it to the people and we +will divide the profit, and you will make as much as though you did it +all, for you will not have a fight on hand nor be obliged to build up a +duplicate plant. That's all you can do now; you cannot get a charter to +duplicate our plant, because whatever price you offer the Legislature +for it we will go you a few hundred thousand better." + +We argued for hours. I showed him that if he finally prevailed and got +what he was after, his charter would bind him to the absolute fulfilment +of his promise under bonds that would make it unprofitable and +dangerous. He finally made up his mind that such a victory was not worth +winning, and he said to me: + +"What kind of a hitch-up can I make with you and your companies?" + +"Any fair one," I replied. "This is the situation as I see it, and I'm +going to be frank: You say you have a good scheme, but you certainly +have a Legislature, and you have evidently entered into a compact with +Rogers whereby he is to utilize what you have, to knock us on the head. +Now we have fairly checkmated you, and Rogers is out. Seems to me you +owe it to us and yourself to give us the same chance you offered him. +Let us utilize your plans to save ourselves and to knock Rogers on the +head. But first, are you free to go on with us without explaining things +to 'Standard Oil'?" + +Whitney assured me that his arrangement with Rogers was tentative, +depending on whether he could get the charter and could carry out his +other plans. + +After some further manoeuvring we agreed that we should withdraw our +offer from the Legislature, that Whitney should secure the new charter, +and that it should be so worded as expressly to allow his company to lay +pipes, manufacture, buy or sell gas, and to consolidate any or all of +the existing or new gas companies in the State of Massachusetts; and +that when the charter was granted it should belong equally to the +Addicks Boston gas companies and to Whitney. Upon their part the Boston +gas companies would buy of the new company all the gas it produced at +something less than it was costing them to manufacture it under the old +process. That bound us to nothing dangerous, and we were not forced to +take Whitney's gas unless he actually got the results he promised. + +At this time I knew nothing whatever of the workings or the +wire-pullings of State legislatures. My business life had been engaged +at the stock end of corporate transactions, and I had not troubled +myself about franchises, or how they were obtained, being content to +play my part with the manufactured product with which we dealt on the +market. In a general way I knew political corruption existed. That +Rogers had obtained favors for his Brookline Company through bribing +officials I had good grounds to believe; I had read of strange doings in +connection with H. M. Whitney's West End Railway franchise obtained from +the Massachusetts Legislature amid an accompaniment of much public +scandal; but being quite without personal experience I had no clear +conception of how things were done and, innocently enough, I asked +Whitney before we parted: + +"How is it possible for you to get this valuable charter from the +Legislature, particularly with such a strong and honest man as Roger +Wolcott in the governor's chair, when Addicks has been trying +continuously for four or five years, regardless of expense, to secure an +ordinary one under which he can combine our gas companies?" + +George Towle answered for Whitney: + +"Lawson, that part of the transaction is no affair of yours. Mr. Whitney +will absolutely guarantee to deliver all those goods, and should it +prove necessary to override the governor in getting them, he will +guarantee to do that too. You can call all that done the minute we sign +papers." + +There was no doubt the new combination was a winner for both of us. If +Whitney got the charter, he would be in a position to make a lot of +money out of his Dominion Coal stock, which would surely go up with a +bound in company with Bay State Gas stock when it became known that our +companies were in the new deal. Besides, all the talk he would make over +the value of the charter would help create a market for new stock which +we would issue for the purpose of obtaining funds to buy Rogers out. +Later, if Whitney's invention was what he imagined, his own profit would +run into millions and our properties, having the sole right to +distribution, would be stronger than ever. That meant resuscitation of +Bay State Gas, and that all the stocks and bonds held by my friends and +the public would return splendid profits. + +I tested the scheme in all its aspects and found only one weak spot in +it. We, the Boston companies, were to "go snags" with Whitney in the +results of a legislative game in which he was to bear the expense of +getting a charter, and as Whitney and Towle said it was to cost them +$250,000 to $300,000 to get it, it looked as if there would be some +nasty business done at the State House. + +I do not set up for a saint, nor to possessing exclusive virtues which +distinguish me from the ordinary American citizen who does business for +gain. In reiterating that the bribery end of our "hitch-up" with Whitney +did not appeal to me, I am neither pluming nor crowning myself; I am +merely stating a fact. This was an emergency, however, I could not +regard as a mere personal concern. It was my duty to care for the +interests of a great property which must not be endangered by my +scruples, and I was willing to be advised by my business friends in the +matter. I went round among my most conservative banking, business, and +newspaper connections and put hypothetical questions to them bearing on +my difficulty. In nearly all instances the replies were the same, and +the subject seemed to be regarded as a joke--what were legislatures for, +anyway, but to be "fixed"? All who did business with legislatures +"fixed" them, and Whitney was certainly the star "fixer." I frankly +stated that I considered bribing a legislator as a low-down crime and +that I did not believe it was done in our strait-laced old Commonwealth +as freely as they all seemed to imagine. Thereupon I was sarcastically +referred to my Bell Telephone, New Haven, and Boston & Maine Railroad +friends, to the organizers of trust companies, and to many other +representative pillars of social and business society who had had +occasion to deal with the State. I started at once a round of +investigation among men who would talk frankly to me, and discovered +that a most iniquitous condition existed. Massachusetts senators and +representatives were not only bought and sold as sausages or fish are in +the markets, but there existed a regular quotation schedule for their +votes. Many of the prominent lawyers of the State were traffickers in +legislation, and earned large fees engineering the repeal of old laws +and the passage of new ones. Agents of corporations nominated candidates +for office, and paid the expenses of their election in return for votes +for a favorite measure and promises to "do business." The Legislature +was organized on the same basis; its executive officers were chosen +because of their subservience to certain corporation leaders; committees +were rigged to do given things and prevent other things from being done. +Above all, I learned that the chance of a citizen of Massachusetts +obtaining a charter from the Legislature of his State, unless he had +money to put up for it, was about as good as a hobo's of securing a +diamond and ruby studded crown at Tiffany's by explaining that he wanted +it. In fact, the citizen's request would be regarded by senators and +representatives very much as Tiffany's would regard the hobo's--as a +joke first, then as an impertinence. + +Right here I desire to say to my readers and especially to all those +hypocritical and ignorant people who, imagining any strong statement +must express a strong prejudice and not a fact, will cry, "He +overstates! He exaggerates!" that in years after when I had full +opportunity to study at close range the Massachusetts Legislature, its +workings and those who worked it, all the impressions I had received at +this time were absolutely confirmed. I do not hesitate to state, then, +that: + +_The Massachusetts Legislature is bought and sold as are sausages and +fish at the markets and wharves. That the largest, wealthiest, and most +prominent corporations in New England, whose affairs are conducted by +our most representative citizens, habitually corrupt the Massachusetts +Legislature, and the man of wealth connected with such corporations who +would enter protest against the iniquity would be looked on as a "class +anarchist." I will go further and state that if in New England a man of +the type of Folk, of Missouri, can be found who, after giving over six +months to turning up the legislative and Boston municipal sod of the +past ten years, does not expose to the world a condition of rottenness +more rotten than was ever before exhibited in any community in the +civilized world, it will be because he has been suffocated by the stench +of what he exhumes._ + +To return to my story, after my investigations I again saw Whitney and +Towle, and they, not relishing my remarks on the subject of bribery, +told me frankly to attend to my own part of the affair and leave their +part to them. At this stage I called in Addicks, our corporation +counsel, and some of the largest holders of Bay State bonds and stock, +and put before them the bargain I had arranged with Whitney. They all +agreed it was an excellent combination, and ratified the terms I had +proposed to Whitney. It was further agreed that Whitney should make over +to us one-half ownership in the new company, which we were to transfer +to the Bay State Company after the charter had been granted. + +There was every reason at this stage in the deal to regard victory as +assured, for it did look as though the flapping sails on our +much-buffeted and battered craft were at last to be filled with a lusty +breeze strong enough to carry us to the harbor we had so long been +trying to make. Besides what we ourselves could do and had already done, +we now had Whitney for an ally in the deal, and certainly he was a +stock-selling power throughout New England. He had agreed to go before +the Legislature and the public, and pledge his word that his scheme +would do all the wonderful things he had promised for it.[8] And when +amid acclamation the charter was awarded and it became known that we +were its beneficiaries, I could see our stock soaring. + +FOOTNOTES: + +[8] As a matter of fact, he did, later, in the peroration of an eloquent +address before a public legislative hearing, electrify the law-makers with: +"I here and now pledge my word, my fortune, and my sacred honor to the +fulfilment of these promises." + + + + +CHAPTER XX + +AN AWKWARD ATTACK OF APPENDICITIS + + +In no walk of life is that head-light axiom, "Man proposes, God +disposes," so often flashed plump in the eyes of enthusiastic travellers +for their bewilderment or befuddlement as in finance. At this very +moment of success I was, without knowing it, on the brink of ruin, owing +to causes and conditions which were beyond human power to calculate or +foresee. Here is what happened: + +All the details of our bargain having at last been agreed upon verbally, +it was proper the principals should get together and formally execute +the documents which should bind the trade. We arranged to meet on a +given Saturday at the beautiful stock-farm of Parker C. Chandler, Esq., +the Bay State's general counsel, and as secrecy was important, a special +train was to take the party the twenty-five miles out of Boston. By an +unavoidable accident I missed the train, and in driving over the road in +a bleak rain-storm, caught a violent cold. I was about three hours late, +but when I arrived we went to work with a will and by seven o'clock, +shortly before dinner, our contracts had been dictated to the +stenographers and would be typed, ready to sign, by the time we came to +our coffee. + +That dinner was a thing to be remembered. No one in New England +understands more admirably the art of dining than does Parker Chandler, +and he gave us a feast worthy to celebrate the brilliant new combination +which was to end all our troubles and lead us out of darkness into the +light. As the cheese was being served I was seized suddenly with a +terrible pain, which was followed by convulsions. They carried me to a +bedroom; lawyers and capitalists went scurrying after doctors, and in +the confusion the documents which were all ready awaiting execution were +put aside. It was obvious that at that moment I could not O.K. them. At +last specialists from Boston arrived and it was diagnosed that I was +suffering from an aggravated attack of appendicitis. At two o'clock in +the morning, after a prolonged consultation, the consensus of opinion +was that my next field of operations would be in another world. + +It must have been some time a little later that I, awaking to a brief +interval of consciousness, witnessed a tableau, the memory of which +invariably rises to my mind's eye whenever I try to mitigate or subdue +my feelings of hatred and disgust for Addicks. The room was dimly lit; +the two doctors were at the foot of the bed; Addicks, standing beside +them, was looking fixedly at me. I caught his eye; doped as I was with +opiates I saw the cold, calculating expression of his face, which told +me as plainly as words that he felt it was all up with me, that my +usefulness to him was at an end, and that without a thought for my +interests or a scintilla of regret, he was calculating how to turn my +death to his advantage. An amused conviction of the man's heartlessness +crept over me, and then I passed out into the land of dreams. + +From that night until one bright morning ten days later, I was visiting +other worlds than those of finance and gas; but on the tenth day they +told me I had eluded the grim ferryman and, barring accident, might get +out into the world again in five weeks. A suspicion which owed its +origin to that glimpse of Addicks on the first night of my illness +awakened in my mind, and the following day I sent for my principal +attorney and demanded an exact statement of what had happened in the +interval of my illness. He had kept close track of all that had +occurred, and the facts he revealed, calloused as I was to the thought +of Addicks' baseness, horrified me by their cold-blooded villany. My +associates had gone ahead with a vengeance, without waiting a minute to +see whether I should live or die. My offer to the Legislature had been +withdrawn; Addicks had substituted his name for mine in all the +documents, and then he had traded with Rogers. It had been arranged +between them that Whitney should go on and get the charter, which was to +allow the company to sell gas at any price, for it was not to be under +the supervision of the gas commissioners, who had pledged the public +that the price of gas in Boston should not ever be more than $1 per one +thousand feet. This obtained, a new corporation was to be organized, +into which Rogers would merge his companies, and Addicks our Boston +properties, in such a way as to leave Bay State stock and bondholders +high and dry, while Addicks, Whitney, and Rogers reaped tremendous +profits. These amiable plans were being hammered into shape at top +speed, and unless I could get into harness at once, my friends and I +would most certainly be ground up. Head-quarters had been opened at the +Algonquin Club, and there Addicks, Whitney, Towle, and the lawyers and +lobbyists were holding day and night sessions. + +There was but one thing for me to do, and I lost not a moment. I sent +for my doctors and said: "I will devote to-day, to-morrow, and next day +to getting well; but on the fourth day I will be moved in a special car +to Boston and then to the Algonquin Club." I explained the situation and +showed them that regardless of all consequences this must be done. + +I shall never forget the expression on the faces of these loyal +associates of mine--Addicks, Whitney, and the others--when I dropped in +upon their deliberations Saturday morning, four days later. My doctor, a +nurse, and my lawyer accompanied me, and I was swathed in flannels and +shawls. I got to a chair, dismissed my attendants, and launched in. What +little I had to say would be brief, I told them, but "edgy." It was all +that. I insisted that we should go right back to our old bargain exactly +at the place we had left it the night I was taken ill. If they did not +comply, I would make application for a receiver for the Bay State +companies and give to the afternoon papers the inside facts of the +affair from beginning to end. No one doubted either my ability or my +determination to carry out my threat. We sent for the documents that had +been prepared at Parker Chandler's, and inside of three hours these had +been substituted and the several agreements entered into with Rogers +formally renounced. I retired to bed that night with a chuckle of +self-satisfaction, and a convincing appreciation of the truth of the +axiom I have referred to. + +The low-down treachery and double-dealing characterizing this +transaction, the utter callousness to sacred obligations it exhibits in +men of presumed high standing and personal honor, may surprise my +readers. I assure them that several such episodes will be told in the +forthcoming pages of this history. Indeed, among a certain school of +eminent financiers, loyalty is no more than devotion to the opportunity +of making the highest profit. If circumstances shift this from the side +of their enlistment to that of an adversary, their arms and hearts go +where their pockets lead. It must be remembered that the Hessian who +"down-town" is steeped in perfidy, trickery, and fraud, may appear +before the "up-town" world as a Christian citizen and an example of +domestic virtue. The type is not uncommon nowadays of the pleasant and +proper gentleman, prompt to knock down any one daring to asperse his +veracity after five any evening and all day Sunday, but who considers +himself free to engage in any dirty juggle or misrepresentation from 9 +A.M. to 4.45 P.M. In office hours you run no risk in calling him a liar, +for then he'll laugh at the joke and tell you business is business. +However, the foregoing episode was an experience that left an indelible +impression on my mind, and the hatred and disgust it engendered +precipitated events out of which in the course of years came the +offences and injuries that are responsible for the story of "Frenzied +Finance." + +The immediate results of my reappearance were not startling. Rogers +raved at Addicks and especially at Whitney, but he was too old a student +of men, and the monkeys Dame Fortune makes of them, to sulk over the +facts he could not remedy. He soon resumed his former attitude of +waiting for something to turn up, which indeed he had maintained ever +since my unsuccessful effort to make terms with him. + +Fate had not yet tired, however, of playing shuttlecock with our hopes. +The world learned one morning of a new gas called acetylene, clear, +brilliant, cheap, and simply made from calcium carbide. It would surely +revolutionize gas-making the world over, and the company which could +secure the right to it would have those who could not at its mercy. +Addicks moved like a flash to gather in the advantage, and the +announcement that the new gas had been proved a success was coupled in +the press with the news that the Bay State Gas had captured the +invention for New England, and was to pay millions for it. This did give +a boost to our securities, and for a time it looked as though we had +clinched our success with another rivet. What Addicks had done was this: +He had bought the right, subject to the test of a big public +demonstration. For this demonstration a fine flare-up was arranged. +Eminent mayors, counsellors, and gas magnates were to attend in +multitude, and if the invention met its engagements, there would be such +a blaze of publicity and congratulations that we felt sure our new stock +would go off like hot cakes. The demonstration proved in a most +sensational way that acetylene was a failure--a tremendous explosion +occurred; three men were killed, many others injured, and next day back +went our stock to its old figures. + +All this time I had sought most diligently for the real solution of our +troubles--a method of purchasing Rogers' companies. A substantial +guarantee there must be, not only for the performance of our financial +engagements but to insure to Rogers the integrity of his properties +while under the domination of Addicks. The difficulty was, in the +weakened condition of the company, to put together any satisfactory +guarantee. Others in our group had wrestled with the problem as +strenuously as I had. Suddenly, a few days before May, 1896, the light +came to me. All the time the solution had been in our hands, and, beset +as we were, it had never occurred to any of us. We absolutely controlled +the old Boston gas companies. They were intrinsically among the richest +corporations in Massachusetts, and although their stocks were pledged +for the $12,000,000 of bonds held by the public, they did not owe a +dollar. Though the terms of the agreement between the Bay State Company +and the Mercantile Trust, which held their shares, precluded them from +contracting any debts, they were empowered, through us, their officials, +to buy or sell gas, and all their great wealth was behind such +contracts. If, then, we agreed on their behalf to buy gas of the +Brookline Company for a term of years at such a price and in sufficient +quantities to give the latter concern a profit equal to ten per cent. +dividends on its stock, surely we had complied with the very letter of +Rogers' exaction. Testing the idea in one way and another, I found it +sound as a bell. The problem after that was to get into shape for the +substantial issue of new stock we must make to pay for our purchase. The +banks and trust companies were loaded up with our securities pledged for +loans, and before there could be any conviction behind our prosperity it +behooved us to get all our valuables out of pawn. I went to Mr. Rogers +and frankly told him I had solved our problem and his by a financial +invention of my own. I entered into the details of our plan, explaining +it would not even be necessary for us to buy any gas of him, because we +would turn over a sufficient number of our own customers to the +Brookline Company to secure to it the required profit. He saw in an +instant the scheme with all its far-reaching possibilities, and +assented. Then I broached the rest of my plan--we would pay him four and +a half millions in six months. To do this we must sell stocks and bonds. +Before we could do that it was necessary that he help us still +further--he must buy of us all the bonds now in pledge and the stock of +the Dorchester Gas Company, another Bay State asset up for security, all +for the sum of a million and a half dollars. For this amount these +securities would at once be released and turned over to him. Then he +should resell them to us together with the Brookline Gas Company for six +millions of dollars. There would be a formal turning over of the +management of his properties so the public should be convinced that we +really were the victors in the strife. Mr. Rogers saw my point, quickly +ran over the details in his comprehensive way, and closed the trade +without further bargaining. That time, thank Heaven, it was not within +Addicks' power to thwart me. + +On May 1st we made our settlement in compliance with the terms I had +arranged. The six millions of dollars were to be paid November 1st. As +the necessary options and sales could not legally run to our company, +they were made to Henry M. Whitney, and he simultaneously transferred +them to us, and we elected him a director of our different corporations. +Rogers publicly resigned and turned over to us the control of the +Brookline Company, and we elected our own management. To all intents and +purposes we had won. + +The settlement was the sensation of the day in financial circles, and I +was the recipient of many generous congratulations. I had neither time +nor inclination to take care of bouquets at that moment, however. I was +too keenly aware of the difficulty of raising six millions of dollars in +the limited period at our disposal. Times have changed since 1896. Then +six millions was quite a large sum, larger than sixty millions now. That +was before the halcyon period of "Frenzied Finance." + + + + +CHAPTER XXI + +BRIBING A LEGISLATURE + + +That six months between May 1st and November 1st was the most crowded +period in all my experience up to that time. Events of consequence +tumbled over one another in startling succession. We actually lived on +sensations. In exercising the historian's right to choose the order of +setting down incidents I am puzzled as to which to give precedence. +Shall I begin with the sensational bribery of the Massachusetts +Legislature which occurred within this period, or with the episode that +was the exciting climax of that interval of trial? About this time, too, +occurred the laying of the foundation of "Coppers" and Amalgamated, but +that certainly requires a chapter to itself. However, as all are starry +examples of what made "Frenzied Finance" possible, and as any one fits +into my story as well ahead as behind the other two, I'll take them in +the succession above set down. + +The Whitney machine for the manufacture and moulding of legislation was +complex but efficient. It achieved its wonders in broad daylight. +Considering all it did and how that all was accomplished, the +astonishing fact is that no outcry to speak of was ever raised at its +performances. It was vastly bolder than Tammany and made fewer excuses +for its grabbings. It must be remembered, however, that its chief +engineer was a leading citizen, and his assistants all gentlemen of +great respectability and admirable antecedents, and, in Boston, social +and civic distinctions are shields behind which much may be concealed. + +Corrupting a Legislature is not something a man may do with a fillip of +his finger and thumb. However bold the operations, the convenances must +be observed. When really large designs are entertained, the manipulator +sets to before the preceding election and has his "lawyers" at work +throughout the country interviewing candidates and ascertaining their +feelings. Thus a certain percentage of votes are signed and sealed in +advance, ready for delivery at the proper time. But there is always a +crowd of new men who must be taken care of on the spot, and these must +be approached with tact. Some amateurs have fanatical notions of honor +which interfere with both their own and the interests of +franchise-grabbers. To deal with all contingencies, to take care of +captured votes and to shape legislative proceedings along safe lines, +requires the services of almost an army of men. + +At the head of Whitney's forces was his lawyer, George H. Towle, big of +brain, ponderous of frame, and with the strength of an ox. A man of +terrific temper, he knew not the meaning of the word fear. Nothing +aroused him to such frenzy as to have to do with a legislator who +unnecessarily haggled over the price of his vote or influence. On +occasions when a lieutenant reported that Senator This or Representative +That would not come into camp, Towle, with an oath, would say: "Take me +to him, and I'll have his vote in ten minutes or there'll be occasion +for a new election in his district to-morrow!" + +Second in command was Mr. Patch, Towle's secretary and factotum, his +exact opposite in every way. Where Towle was brutally straight to the +point, Mr. Patch was as smooth an intriguer as ever connected himself +with secrets by way of keyholes and transoms. It is a Beacon Hill +tradition that for years Towle on final-payment day would have the +members of the Massachusetts Legislature march through his private +offices one at a time, and, handing each of them their loot, would +proclaim: "Well, you're settled with in full, aren't you? That +represents your vote on ---- and on ----." Then he would loudly identify +the bill and the particulars of the service, while behind a partition +with a stenographer would be Mr. Patch, who after the notes had been +written out would witness the accuracy of the stenographer's report. +When the Legislature assembled again, old members, the same story goes, +would be requested to call on Towle to renew acquaintanceship. Then he +would allow them to look over his memoranda "just to keep them from +being too honest," as he gently phrased it. + +Subordinate to Towle and Patch was a long line of eminently respectable +lawyers known over the Commonwealth as "Whitney's attorneys." These men +assisted at nominations, orated at elections, and took care of the finer +preliminary details. The first line of attack was composed of practical +politicians of various grades--ex-senators or representatives, and local +bosses, who were known as "Whitney's right-hand men." Below these were +the ordinary lobbyists, the detectives, and runners, who kept "tabs" on +every move and deed, day and night, of the members of the Legislature. +This was the Whitney machine, and it worked together with that fine +solidity and evenness which can be attained only by constant practice +and much success. In comparison with this competent organization, an +average "Tammany Gang," a "Chicago Combine," or a "St. Louis Syndicate" +would look like a hay-covered snow-plough in August. + +It is seldom the public is given an opportunity of seeing a picture, +drawn to life, of the Legislature of one of the greatest States in the +Union in the act of being bribed to grant the votaries of "Frenzied +Finance," for nothing, those things which should and do belong to the +people, and for which the "System's" votaries would willingly pay +millions of dollars if they were compelled to. I shall dwell on the +performance that ensued at this juncture of my story long enough to +present an outline of such a proceeding. + +Head-quarters for Whitney's Massachusetts Pipe Line were opened at +Young's Hotel--Parlors 9, 10, and 11, Rooms 6, 7, 8, second story front. +Parlors 9 and 10 were the general reception-room, while 11 was reserved +for the commander himself and for important and "touchy" interviews. The +rooms 4, 5, 6, 7, 8 were used for educational purposes. In the morning +the place was deserted, but at noon the parlors began to fill up with +the different officers of the "Machine" and their friends, trustworthy +members of the Legislature. A little later an elaborate luncheon would +be served, the supernumeraries eating in one room, Towle and his chiefs +and the legislators in the other. At table the gossip of the morning +session at the State House was exchanged and the work laid out for the +afternoon legislative and committee sessions. Another interval of +silence and peace until at 5.30 the real business of the day began. Mr. +Patch was generally on the ground first, carrying the books in which the +bribery records were kept, for be it remembered that the efficiency of +the Whitney machine was largely due to the thoroughly systematic manner +in which its operations were conducted. Nothing was left to chance or to +any one's memory. In turn, the subordinates presented careful reports of +the day's transactions. At 6.30 Mr. Towle would go over these documents, +"sizing up" the actual results for submission later to the chief +himself. Between 7.30 and 8.30 the "Machine" dined; the remains of the +feast having been removed, the doors were locked and the books brought +out. + +If an outsider could possibly have obtained the entry to the +head-quarters of the Whitney Massachusetts Pipe Line, say at nine +o'clock any evening during the session, he might easily have imagined +himself at the Madison Square Garden or at Tattersall's on the evening +of the first day of an international horse-sale. This is what he would +have seen: In Parlor 10, seated at a long table a dozen of Mr. Towle's +chiefs, all in their shirt-sleeves, smoking voluminously; before each a +sheet of paper on which is printed a list of the members of the +Legislature; against every name a blank space for memoranda; at the head +of the table Towle himself, frowning severely over a similar sheet +having broader memoranda-spaces. One after another the chiefs call off +the names of the legislators, reporting as they go along. The outsider +would have heard droned monotonously: "..... from ..... not my man; +..... from ..... my man and .....'s man; seen to-day, stood same as +yesterday; ..... from ....., raised price $20, making it $150; agreed; +$10 paid on account, total of $90 due; raised because ..... told him +that he had got $20 more from ....." + +As each man reports the other chiefs and Towle discuss the details, and +when a decision on disputed points is arrived at, Towle makes a +memorandum on his blank, and the chief concerned records the order in +the little note-book which each carries. All reports at last in, Towle +retires to Room 11 and speedily returns with the "stuff," consisting of +cash, stocks, puts, calls, or transportation tickets, which he deals out +to the chiefs to make good their promises for the day. It would have +been obvious to the outsider, as soon as he had learned what was being +dealt in, that a large proportion of the members of the Great and +General Court of Massachusetts had bargained with the different members +of "the machine" to sell their votes not only in committee but in full +session of the Legislature, and that the price was to be paid when the +votes were cast, though something was invariably exacted on account, to +tie the bargain. Payment was made in cash, calls on Bay State Gas or +Dominion Coal, or transportation on any of the railroads in the United +States or Canada. The latter appears to be a class of remuneration Towle +favored, probably because it cost nothing. + +The conference seldom closed for the day without Towle admonishing his +subordinates: "The old man's getting dead sore at the way his leg is +being pulled, and if you fellows don't get those countrymen to play a +more liberal game, they'll just drive the boss out of the business, and +then there'll be a slump in prices that'll make them prefer to stay home +and farm." + +You may ask here, Could such things happen without attracting public +attention? Or are the citizens of Boston so habituated to the corruption +of their Legislature that they could witness unmoved this wholesale +bribing campaign conducted in full daylight from Young's Hotel? Thank +Heaven, this is not so. There are in every American community honest, +sturdy souls who can be depended on to come forward in emergencies and +cry out aloud against a threatened political crime. Above the brute +hubbub of a city's roar their voices are heard like the voice of +conscience, and the hurrying throng pauses a second in its mad rush +after dollars to listen to their tale of the Commonwealth's wrong. But +what's in the air is not on earth. The practical politicians, whose +affair it is to heed and counteract these honorable protests, laugh +contemptuously at the vanity of any contest between theories and the +"stuff." They know the overpowering logic of gold. + +There were public meetings in Boston; good-government clubs throughout +the State met and "resoluted"; citizens' organizations howled robbery +and malfeasance. For a few weeks all Massachusetts seemed wrought up. +From the space the papers gave the protestants one might have imagined +that there was a chance for virtue, but the results of the clamor were +more apparent than real. Day by day, night by night, the "machine" +ground away at Young's, and as its product fell into the hopper Whitney +and Towle only smiled at the clamor and awaited the moment when, as +Towle coarsely put it, "the reformers would have yawped themselves to a +standstill." + +That day came at last. One by one, all in a perfectly orderly and +methodical manner, the giving-bonds-to-compel-promises clauses, +restrictive amendments and other people's safeguards had been voted down +and the "Are you ready for the main question?" having been put in both +houses, the Massachusetts Pipe Line Charter was duly passed and sent on +to the governor. It required his signature to make the bill a +hard-and-fast law, and that once appended, all Towle's "promises to pay" +became due. + +As the campaign neared a finish Whitney had, a number of times, informed +his chiefs, and they the members of the Legislature, that the governor +had given personal assurance that if the bill passed both houses, he +would sign it. On this score all interested had been relieved of doubt, +and immediately upon the Senate's favorable action Bay State and +Dominion Coal shares advanced in price. During the period the governor +had the bill under consideration there was an active and rising market +and a great volume of transactions on the Stock Exchange. Apparently the +day of our peace and prosperity had dawned at last. But we were not yet +out of a gnarled Fate's clutches. + +In the midst of a strenuous forenoon of trading, suddenly, without the +slightest warning, both stocks began to sink in price like pigs of lead +from a capsized boat. At once I was on the defensive. To prevent a wild +market panic during the few minutes consumed in getting telephone +connection with the State House, I had to purchase thousands of shares. +I knew that something disastrous had happened, but was not prepared for +the startling information that came over the wire: "The governor has +vetoed the Whitney bill with a savage message." My informant told me +that Towle and his men were making for head-quarters on a run. As I hung +up the receiver, the bell rang again. In a second my telephone with +Whitney's office was in the middle of a spasm. + +"Have you got the news, Lawson?" + +"Have I got it? The tape is screaming it.[9] Bay State and your stock +are racing for the bottom," I replied. + +"What shall we do? This is a thunderbolt." + +"Do?" I replied. "It's for you to say what to do. That's your end, not +mine, but from now until three o'clock one thing you must do, or +there'll be no further thinking on the subject--protect Dominion +Coal--have your brokers on the floor every second and tell them to buy +all that's offered. Beat a slow retreat if you must, but prevent a wild +break. Things at the Exchange are bad now. I'll take care of Bay State. +Look out for Dominion at once, and when you are through I must see +you--where?" + +"At Young's in ten minutes." + +"I'll be there." + +Ten minutes later I was in Whitney's head-quarters. There pandemonium +reigned; all the cocksureness and bluster of the "machine" had vanished, +and it was a horde of clamorous and excited men I found struggling round +Towle and Whitney, who vainly sought to stay the panic. It was not +disappointment at the governor's message that had so stirred these +hardened practitioners of politics, but the terror of impending loss. +The majority of the Whitney band, lawyers, lieutenants, and +water-carriers had bought one stock or both on margin, and had assured +their friends it was safe to plunge to the limit. + +On earth there is no more pitiable sight than the panic of a herd of +novice stock-speculators suddenly awakened to a realization of their +ruin. The ticker clicks a sort of death-watch as the merciless tape, +without hitch or let up, reels off destruction. To such desperate beings +the stock operator--the market-maker--is the straw to save them from +drowning, and to him they turn as the one possible source of aid and +hope. I only knew these men at sight's end, but they knew me and were +sure in their abject plight that I could help them--by what wizardry +they never stopped to think. They were terribly certain that unless the +market turned, their brokers must have additional margin or their stock +would be thrown overboard, sinking prices still lower and bringing down +their friends' stock, and so on, like a row of falling bricks. + +From their comfortable viewpoint of out-of-temptation virtue, my readers +may regard these lawyers, lieutenants, and water-carriers of Whitney as +bad men, deserving of no sympathy, meeting here a righteous punishment; +but, my word for it--and I know the world and the human ants and spiders +who inhabit it--while they bore no marks of immorality, they were the +average men one meets in one's journey over the bridge between the two +unknowns. + +My talk with Whitney and Towle was brief and pointed. It was no time for +pow-wow. It was the moment for action. Men who do things in +stock-markets never waste time over milk that is in the gutter. How to +get new milk to replace that spilt is their care. + +"What are you going to do, Mr. Whitney?" I asked. + +George Towle started to explain. I stopped him. + +"The market is bad," I said, talking quickly. "If time is dribbled, it +will be worse, and--and Boston will be a warm place for you, Towle. It +would not surprise me if it got warm even for Mr. Whitney, when the +desperate men who are filling the brokerage shops and the corridors +outside demand a reason why they were egged on to buy stocks on Mr. +Whitney's word that the governor would sign. No excuses now; I want to +know from Mr. Whitney just what he proposes to do. You both told me the +legislative end was none of my business, and, thank Heaven, it was not. +You said it was your business. Now, how about it?" + +Henry M. Whitney is a great general. He also can light his cigar, when +the battle's on, with the friction of a passing cannon-ball. + +"I'm going to pass it over the governor's veto," he instantly answered. + +"Can you do it?" I asked. + +"I can, for I must." He meant it. It needed but one look into his and +Towle's eyes to see they both had read the message on the back of +To-morrow's visiting-card. + +"All right," I said. "Let your people have the word, and it must have no +doubtful ring; tell your brokers to buy Dominion Coal, and don't let +them stand on the order of their buying. Dominion Coal must be put back, +regardless of how much it costs or how little you want what you must +buy. I will turn Bay State before three if it is necessary to trade in +the whole capital stock to do it." + +As I came out of Parlor 11 to rush back to my office I said to the +despairing men who crowded the corridor outside the head-quarters, and +who had in their desperation thrown all caution or thought of +concealment to the winds: "Coal and Gas look to me like good buys." The +sudden revulsion of feeling was pathetic. In a minute the news had +spread by way of them to their brokers and their suffering friends: +"It's all right; Whitney and Lawson are buying stock." It got to the +Exchange almost as soon as I did. + +We turned the market. + +That night Whitney and Towle's plans were mapped out to the army and +their orders despatched with a vicious snap that plainly said: "Whoever +attempts to put the Whitney machine in a hole will be shown no mercy." +The morning papers announced that Whitney had picked up the gantlet +Governor Wolcott had thrown at his feet, and--all roads led up Beacon +Hill. + +It was a quick, sharp set-to. Every man was lined up with a jerk, and +when the line was tallied up and tallied down and Towle had consented to +the last raise in price of votes and given away to the final squeeze, +the word went up and down the ranks that the Whitney bill would, on the +approaching last day of the session, go flying through both Houses over +the governor's veto with a vote or two to spare. Again the prices of the +two stocks shot upward. + +Then, sharp and quick as a bolt of lightning, Fate, who apparently had +been camped on the trail of Bay State Gas and Addicks from the first, +let fly another of her quiver's contents. On the morning of the closing +day of the session (the one selected for the Whitney coup), there +slipped in and out amongst the Whitney legislative ranks a man with a +story. As each legislator listened, his brow knitted and he nodded +assent. The story was a simple one: In one of Whitney's former +campaigns, desperate like this one, on payment-day Towle had gone back +on his promises and forced the acceptance of a fifty-cents-on-the-dollar +settlement; and, so the story now went, he, Towle, had put the saved +fifty cents, a matter altogether of some $75,000, in his own pocket. +Probably he was now going to repeat the operation on an even larger +scale. In an hour there came to Young's Hotel a trusty messenger who +delivered to Towle himself the ultimatum of the Great and General Court +of the dear old Commonwealth: "Money in advance or no bill!" + +Consternation reigned. The army was quickly recalled to head-quarters, +and despatched back to the State House to put through every manoeuvre +known to the two veterans--but to no purpose. The Great and General +Court stood its ground, openly defied the army and hurled back into +Towle's teeth all his frantic threats. It was the last day, and the +Great and General Court was intrenched inside the protecting walls of +the State House, and it knew that before it could be compelled to come +forth to face Towle he must come to a decision. A terrible dilemma, +surely, for the amounts promised had run up to such an enormous +aggregate that it was impossible to pay all in so short a time, even if +such had been Whitney and Towle's intention. Yet to pay one or a few of +the dangerous malcontents meant to pay every one; the gang had firmly +banded themselves together. + +This was the real moment of panic. Even Whitney and Towle were at their +wits' end. Finally, in desperation, and as a last resort, Whitney rushed +to the governor, threw up his hands, and asked for mercy. "What would +the governor sign?" + +Massachusetts' able and fearless Governor Wolcott, who seemed to have +been expecting some such outcome of the battle, gave his answer clear as +an anvil-blow: + +"You have told the people your company would give them cheap gas. Bind +yourself to do it by amending the charter so that the highest price your +gas can be sold at will be sixty cents. Then I will sign." + +There was nothing else to do.[10] At the last minute the amendment was +inserted. The governor's representative gave the word that it was +satisfactory, and it passed. + +I was in my office taking care of the market. Of the stampede I knew +nothing. Suddenly came the word: "The Whitney bill has passed on the +governor's recommendation." Both stocks started to jump; then a halt, +then--I didn't try to stop the decline, for I saw something terrible had +happened. In a few minutes the news was on the Street: "The charter was +not worth the parchment upon which it was engrossed." + +The biter had been fatally bitten. + +The market closed with the tape and ticker fiercely, exultingly shouting +"Ruin!" with each tick and slip: and that night Whitney's head-quarters +was little better than a mob. Frantic men demanded money, money due to +them for votes, money they had promised for margins to the brokers +before the Stock Exchange opened the next day, and swearing desperate +consequences to Whitney and Towle regardless of the effect upon +themselves. + +Early next morning there came to my office two wild-eyed, desperate +creatures, Towle and Mr. Patch. + +I had spent the night going over my accounts and those of which I had +charge, and in addition to a quick, real loss of over a million dollars, +I realized that the immediate future was so hung with dark clouds that I +dared not anticipate what the coming day might mean to me and mine; but +when I looked upon the big, powerful man, who had always seemed in any +light in which I had heretofore beheld him to fear neither man nor +God--when I looked and saw his plight I pitied him deeply, sincerely. He +carried a large travelling-bag, and Mr. Patch two others. + +"Lawson, for God's sake, don't do what they are all doing--don't upbraid +me! I've got to get out into the world and be dead to all I +know--family, friends, every one. If I stay, it's State's prison or +worse, and Whitney says I must go. I've got all the papers together and +Whitney has given me what cash he had on hand, and this check of +$10,000. Do me one last favor, get me gold for it. I know I have no +right to ask any favors of you, but think if you were in my place. I +have a wife and children, and--" and the great, strong man wept like a +child.[11] + +I called my secretary, and in a short time George Towle with the $10,000 +in gold and the bags of "evidence" faded out of my life and into the +gray mist of eternity. + +A few days after, a vessel dropped anchor off the island of Jamaica; +George Towle's body was carried ashore and buried, and Mr. Patch was +escorted back to the ship. A few days later, with weights of lead to +carry it to its last resting-place at the ocean's bottom, the latter's +dead body was dropped over the vessel's side. And somewhere floating the +high seas are a venturesome sailor-captain and a crew, who when in their +cups tell, 'tis said, strange tales of bags of gold and mysterious +documents. + +As for the members of the Great and Good Court of the old Commonwealth +of Massachusetts for the year of our Lord One thousand eight hundred and +ninety-six, they received, none of them could tell from where, their +promised vote-money in the form of a yarn that the "stuff" belonging to +them had been delivered to George Towle, but that Towle had decamped +with it to foreign shores, where he was living in luxury with Mr. Patch. + +'Tis writ that some crimes are so black and foul that they will not +down, and when I read over what is written here, I wonder if there will +not some day be another chapter of "Frenzied Finance" written by another +pen than mine. + +I sent two police officials to the island of Jamaica, and had the +contents of the coffin marked "George H. Towle" photographed. I could +not photograph the contents of the ocean's depths. + +FOOTNOTES: + +[9] A stock operator's one reliable source of information is his ticker and +tape. For the benefit of those of my readers who are unacquainted with the +paraphernalia by which stock-markets and financial operations are +conducted, I would say that the ticker is a small printing machine through +which passes an endless paper tape. The machine is run by telegraph wires, +and it prints upon the tape letters and figures which are abbreviations of +the names and prices of all the stocks and commodities dealt in on the +stock-exchanges and boards of trade throughout the world. The instant +anything of moment happens anywhere, it is reflected by a rise or fall in +the price of securities or commodities such as wheat, corn, pork, cotton, +etc., that are dealt in in the different stock-exchanges or boards of +trade. As soon as a share of stock or bushel of wheat is sold by one +operator to another on the floors of the different exchanges, its price is +within a second printed on the tapes in the different offices. Therefore +what the ticker "ticks" out onto the tape is instantly read by operators +throughout the world, and as "the tape never lies," operators turn to it +for their real information. When the ticker begins to increase its clatter +and the tape to travel fast, an operator will tell you its activity means +something unusual is happening. The ticker begins to talk at ten o'clock +each week-day morning and finishes at 3 P.M., with the exception of +Saturday, when the hour is 12 noon. These are the hours that the +stock-exchanges are in session. + +[10] The charter as originally passed had gone through by a fair majority, +but to pass it over the governor's veto was another matter. That required a +two-thirds majority of both houses, and in the brief time at the disposal +of the conspirators the securing of the additional votes was wellnigh +impossible. From the necessities of the case such votes must cost much more +than those of the original supporters of the bill, for it may be taken for +granted that most of the members of the minority had already withstood such +temptations as the Whitney faction had cared to offer. It was therefore a +case of bringing into camp the most honorable and the most expensive +members of the legislature, and without opportunity for strategy or +manipulation. The sole recourse was rank, flat bribery, and that in full +view of a mutinous following ready at the suggestion of the slightest +favoritism to the new men to become actively hostile. The task was +altogether too fraught with peril, to be undertaken. When they realized how +threatening the situation really was, Whitney and Towle decided to make +terms with the governor. The charter once obtained, they calculated that +the obnoxious clause might be amended out of it at a subsequent session (as +a matter of fact this charter, with its 60-cent clause, was afterward made +the nucleus of the present Massachusetts Gas companies which has just been +floated on a basis of $53,000,000 capital). Besides, the state of feeling +of the legislators and conditions in the stock-market had both to be taken +into consideration. It was not the fault of the legislators who had voted +for the charter that the governor had vetoed it, for they had been given to +understand by Mr. Whitney that he would not oppose it. They had delivered +their goods, and now, if the governor's sanction could be had under any +sort of a compromise, they would certainly hold Towle and Whitney +responsible for failure to make whatever arrangements were necessary. + +[11] Towle told me, as he waited impatiently in my office for the gold, +that in addition to the great losses the drop in price of the two stocks +had inflicted on himself and his associates, there were losses on stocks +held by legislators, who had plunged on assurances that the charter would +go through, and that the amounts he would be called on to pay, if he +remained, were far greater than could possibly be met. + + + + +CHAPTER XXII + +PLUNDERED OF THE PLUNDER + + +So extraordinary a happening as the disappearance of George H. Towle and +Mr. Patch, you think, should have furnished a national sensation. And +this is the first you have ever heard of it. Bear in mind that here for +the first time the facts of this case are set forth in their proper +relation to one another, and without the fear or favor that has hitherto +prevented them from being understood. + +In Boston after the adjournment of the Legislature, however bitter the +feeling of the men who had sold themselves, and those others who had +lost their all in the crash of stock values that had followed Whitney's +defeat, their own complicity enforced silence and prevented outcry. It +was given out that George H. Towle and Mr. Patch, tired by their labors, +had gone to the country for a brief sojourn. On their return there would +be a settlement. And with these assurances, both legislators and +lieutenants had, perforce, to be satisfied. Gradually, betrayers and +betrayed drifted back to their own homes and their erstwhile avocations, +and when the strange story of the disappearance and death of the chief +actors in the Whitney drama came from over the seas, it fell on the +heedless ears of men who had written off a loss and desired to forget +the experience. A conspiracy of silence is easily organized among +accomplices. + +I myself was the greatest sufferer by the disaster. Banking on Whitney's +assurance of success I had loaded up heavily with Bay State on my own +account; and my customers pinning their faith to my predictions of a +rise, had also bought heavily both of the gas stock and Dominion Coal. +In my attempt to support the market when the first decline occurred, I +had further increased my holdings, and, at the final break, thousands +of shares purchased for my clients were left on my hands. So my loss was +very large, many times larger than Whitney's. Like the others, I said +nothing, crediting the expense to education, while Whitney silently +tucked his emasculated charter into a crypt already furnished with other +corporation derelicts, to await some fair opportunity of legislative or +other resuscitation; for the instrument, shorn though it had been of its +immediate availability, was by no means without real value. Probably in +view of prospective contingencies, perhaps with a sense of what his +error had cost me, he said to me: "Lawson, the Pipe Line charter is +worthless now, but if at any time in the future it becomes valuable, you +or your company shall have half of it." + +If Henry M. Whitney had kept that promise, what a world of disaster and +bitterness might have been averted. Generated in corruption, perhaps it +is not strange that this charter has since been so fertile a breeder of +dissension and ruin among all who have attempted to handle it. It may be +accepted as an axiom of finance that double-dealing is as dangerous to +the dealer as to his victim. The fierce conflicts that at intervals +burst out in the financial world and like a cyclone spread dishonor and +destruction broadcast, invariably are caused by some one man's +treachery. + +To return to my story. To all appearances, the gas war was over. We bore +the palm of victory, but looming up before us was the task of getting +together the six millions which Rogers must have by November 1st. That +paid, the companies became permanently ours. It was a period of +unremitting effort, but the prospects of success were excellent. Addicks +had got ready a new lot of Bay State stock, and I had prepared the +public to take it. With the proceeds of this stock and the securities +which Rogers would turn over to us, we should have money enough to meet +our engagement, always provided no slip-up occurred. Since the May 1st +settlement our relations with Rogers had been satisfactory--I should +say, _my_ relations--for he persistently kept Addicks and his crowd at a +distance, refusing to have anything to do with them. But it's hard to +keep a big pot boiling in the open without some intruder smelling the +savor of your soup and sneaking up for a mouthful. Though secrecy had +been solicitously preserved regarding the details of our bargain with +the "Standard Oil" magnates, certain of the camp-followers of "Frenzied +Finance" had nosed out the facts, and at the very moment when our +position and prospects seemed most secure a plot was being laid, which, +as after-events will show, came close to bringing about the destruction +we had thus far managed to escape. + +As the time of settlement drew near, it became necessary for me to have +frequent conferences with Addicks and his directors, and we opened +head-quarters at the Hoffman House in New York. It was my habit to come +over for a short time every week, when we got together, reported +progress, and discussed future moves. It was at one of these gatherings, +on Friday, October 16th, that we had intimation of our peril. I had come +down on the midnight train from Boston and was brimming over with +pleasant news and agreeable anticipations. The day and all other things +seemed good to me. The air was crisp and the morning sun gleamed +brightly on the red and yellow autumn tints of the trees in Madison +Square. For a moment I stood on the corner beside the naval monument +watching the down-townward procession of cabs and coupés in which the +spider aristocracy of finance makes its way to its webs in Wall Street +and lower Broadway. In the parlor of Addicks' suite at the Hoffman the +directors were gathered when I entered, and with them was Parker +Chandler, the Bay State's general counsel. We got down to business at +once. I told them how well our affairs were moving in Boston and +listened to their tidings of progress elsewhere. We were all in the +merry mood of success. The past was nothing but a bad dream; our +thoughts were on the rich moments beyond November 1st when we should +handle and know the real currency of our victory. + +The telephone bell rang. Some one wanted Addicks quick. + +Addicks stepped to the instrument. We all heard him say: "Hello." +Then--"Is that you, Fred?" (Fred Keller was his personal secretary.) +Then--"Yes, I hear you plainly. Repeat it." Then--a minute's wait while +we listened. Then--"When will they get up there?" Then--"Send every one +home, lock up and go over to the house, and call me on my wire." All +this in his ordinary, well-attuned, even voice, without the emphasis of +a word to show that the subject was a hair more important than any of +the hundred and one ordinary messages which went to make up a large part +of his daily life. The talk was so commonplace that we were none of us +interested enough to even stop our chatter. + +Addicks stepped from the telephone and in a "bring-me-a-finger-bowl" +tone of voice said: "Tom, come into the other room for a minute; I want +a word with you." + +He passed ahead of me through a small parlor into his bedroom. I +followed. He went straight to the bureau, took something from a drawer, +slipped it into his pocket, turned and dropped upon a lounge. But a +minute had elapsed since he had gone to the telephone. Could this gray +ghost be the same man who a short time ago had been smiling so +contentedly at Parker Chandler's last story? His face was the color of a +mouldy lead pipe and seared with strange lines and seams. The eyes that +met mine were dim and glazed, lustreless and dead as the eyes of a fish +dragged from watery depths. + +Courage is not character; it is temperamental. There is an impression +that the man truly brave is he who can face sudden, unexpected +misfortune or calamity without a tremor or a flicker to suggest his +hurt. That is but a single phase and indicative of physical rather than +moral qualities; or, perhaps, merely the callousness born of long +exposure to danger. One of the bravest men I've ever known stood +watching the ticker one day during a downward run. Suddenly I heard "My +God, I'm ruined!" and he fell in a faint on the floor. And a certain +bank officer, whom I knew to be an arrant coward when arrested for +stealing a million, smiled at the policeman who had tapped his shoulder +and asked him for a light for his cigarette. Addicks had not turned a +hair as he hung up the telephone receiver, and here he was cowering in a +mortal funk, abjectly hopeless. + +"Lawson, the game's up," he said in a trembling voice. "That was Fred. +He says Dwight Braman has had himself appointed receiver of Bay State; +that he raided the Wilmington office immediately after he was appointed, +broke open desks, and took all the papers he could find, and that in an +hour or so he will be in Philadelphia and in possession of all my books +and papers. He has a court order for the bank accounts and the right to +take charge of our funds." + +"This is a startler," I said; "what are we going to do?" + +"The trap is perfect, and I'm in it. They've caught me with every bar +down. Before, when they attempted to get a receivership, things were +ready for them--books and papers packed for Europe and cash in charge of +an unserved officer prepared at the first word to start for Canada. But +now, a few days before election, when if I don't throw a lot of money +into Delaware for my followers, they'll turn on me like wolves--they've +caught me napping. It's a plot, sure--a receiver in possession, +particularly Braman, and appointed in a way that shows deliberate +calculation, proves it was done by some one who knows our situation to a +'T.' It means ruin for me and the company. You know I won't have a +friend left on earth, and enemies now will rise up like snakes before a +prairie fire." + +It was indeed a stiff, tough turn, yet I was watching the man rather out +of curiosity to note how he could take a reverse than out of sympathy. I +don't believe there was another man on earth who, similarly placed, +would not have aroused my pity; but Addicks--no man or woman has pity +for Addicks. + +"Well," I repeated, "what are we going to do?" + +He did not reply for a moment. I continued to look at him. The eyes +haunted me. I noted that the lines round the lids had deepened into +furrows. He half raised himself from the lounge. + +"I've said they would never get me, and they won't." Instinctively his +hand sought the pocket into which he had dropped what he had taken from +the dresser's drawer. Then I knew. The yellow streak showed plain at +last. I had guessed from the start it was there. + +The stock manipulator in common with the successful general must have +the capacity to deal with the unexpected. The faculty to see a situation +whole must be his, to focus instantly the lay of the land, the enemy's +plans and strength, his own resources, the strategic possibilities of +his position; and instantly, if necessity demands it, he must be ready +with a new plan of campaign fitted to the first emergency. The more +rapidly his mind works the safer are the interests he is guarding. But +if he has not this capacity, he can never be a market manipulator. + +For a moment I could not but pause to admire the devilish ingenuity of +the trap that had been sprung on us. The state of affairs that Addicks +revealed was about the worst imaginable. I had been on this particular +war-path so long that my mind instantly grasped the possibilities of +destruction that lay in this new attack. I saw November 1st--no money to +pay Rogers; everything forfeited; Addicks in a nauseating scandal; and +all those friends of mine who had put their funds into Bay State because +of their confidence in my ability to win out slaughtered. No, it should +not be if I could prevent it. Other storms we had met and weathered, why +not this? Even if it were a tornado, we would "ride her out." Perhaps we +should not be afloat when the rollers subsided, but at least we should +be at rest--on the bottom. I turned to Addicks, who, heaped up on his +lounge, was staring into vacancy. + +"Brace up, Addicks," I said. "We are not knocked out yet. At least let +us find out what has struck us." + +I was some moments in arousing him from his condition of despair, but +finally he pulled himself together, and piece by piece we went over +the situation. I had to agree with him that he was in an +end-to-end-center-pull trap. The cunning machinery he had set up to +meet just such an emergency, now that it was in hostile hands, was +rather a source of danger than of safety. There was but one way out of +the complication--we must undo this receivership and release our +properties and funds before November 1st. Addicks, when he got his +thinking loom running, declared the receivership was all a "Standard +Oil" plot to ruin him. I felt sure it was an independent operation, +but there was no time for controversy. + +The telephone bell rang again. It was Fred Keller, talking from Addicks' +house. We soon had all the details of the raid. This is what had +happened. Dwight Braman, a former Boston broker, now a New York +capitalist and promoter, had suddenly appeared in Wilmington, Del., +accompanied by Roger Foster, a New York attorney representing Wm. +Buchanan, one of the original holders of Bay State Gas income bonds. He +held $100,000. They had gone before Judge Wales, and pleading that the +interest on the bonds was in default and that Addicks was dissipating +the assets of the company, had succeeded in inducing the judge to +appoint Braman receiver. The whole performance was put through with such +marvellous rapidity that not one of Addicks' innumerable henchmen had +had a hint of it, and so no warning could be given in any direction. +Braman, an adept in corporation try-outs, lost not a moment, for the +instant his receivership appointment was signed he pounced down on the +Delaware offices of the Bay State and seized everything they contained. +He was waiting there for the first train to Philadelphia for the purpose +of capturing the head offices of our corporation, which were located +there, adjoining Addicks' private offices. + +It was the moment for rapid action. We had an hour before Braman and +Foster could reach Philadelphia, and in finance in that time continents' +have been submerged and oceans pumped dry. Addicks instructed Fred +Keller to rush the books of the company into a trunk, together with all +the private papers in Addicks' safe, and to come at once to New York, +where he would be beyond the jurisdiction of the Delaware court. We +returned to the large parlor and hastily explained to the waiting +directors what had occurred. Addicks instructed the Bay State secretary, +who was present, to connect with the trunk upon its arrival and +disappear. In the meantime the company's counsel advised that Addicks +and the other directors barricade themselves in their rooms at the +Hoffman to frustrate any attempt to get legal service on them, for we +well knew that Braman and Foster, as soon as they realized they were +balked in Philadelphia, would go to the New York courts for additional +powers--which afterward they did. + +This line of defence having been fully organized I hurried down town to +26 Broadway. I felt certain that Mr. Rogers had nothing to do with the +Braman-Foster affair, but to satisfy Addicks and make assurance doubly +sure I determined to see him. After being with him for five minutes I +knew I had not been deceived. Rogers agreed with me that the situation +looked as though it had been made for his interest, for it threatened to +leave us absolutely at his mercy with nothing to prevent his checkmating +Addicks at his own game. As I pointed out to him, however, there were +disadvantages in the position which he must take into consideration. His +acceptance of the opportunity would work such losses to the public and +to my friends that though the responsibility might be laid to Braman and +Foster, I would fight so viciously that no one would be spared. Besides, +between the Addicks scandal and that other which we agreed must +unquestionably lurk in the hasty appointment of the receiver, the whole +affair must eventually be ventilated in court. It is always hard for Mr. +Rogers to forego an advantage, but by this time he was tired of the +wrangle and wanted peace, and, moreover, he did not relish the thought +of court proceedings, so he admitted that my reasoning was good, and +promised to do anything in his power to assist us. + + + + +CHAPTER XXIII + +TWO GENTLEMEN OF FRENZIED FINANCE + + +The enemy did not leave us long in suspense. Next day Braman and Foster +arrived in New York, bursting with a noble wrath at the failure of their +coup in Philadelphia. An outrage had been worked upon them, upon the +public, upon the majesty of the law. To hear their ravings one might +have supposed them the evangelists of Justice righteously denouncing a +desecration of the sacred altar; or, that we had deprived them of an +inalienable right they had possessed to our property. It would have been +humorous if the conditions had been less tragic. + +No defender of property right is so vociferous as the financier who, +having appropriated his neighbor's goods, argues that possession +constitutes legal ownership. On a country road I once almost rode over +two hoboes, who were so busy wrangling with one another that they had +not heard my approach. I gathered that one of them, having filched a +collection of laundry from a farmer's backyard, had placed it in charge +of his mate while he went off for a second helping, and had returned +just in time to stop the latter from decamping with the swag. The talk +the original purloiner was giving his ungrateful assistant was one of +the best expositions of virtue and honesty I've ever listened to. + +We met the following Monday and in reply to my request that we talk +things over, Foster delivered himself of an exalted exposition of the +rights of deluded stockholders, the majesty of the law, and the stern +duties of Mr. Braman, who, for the time being, had departed his private +self and, until further notice, existed only as a rigid arm of the +court. Just as I had arrived at the conclusion that I had got into the +wrong shop, Braman took up the lecture by informing me of things I +already had made myself familiar with, to wit, how he had at different +times occupied similar rôles in other corporations' affairs and how +relentlessly he had exposed mismanagement and peculation. I suggested to +him that in most such cases the receiverships seemed to have been +dismissed in favor of the former managers. He waved his hands and +replied that in this particular case there was absolutely no chance of +control being returned to Addicks, who had outrageously abused his +trust; "although, of course (this as a sort of second thought) you know, +Mr. Lawson, if Mr. Foster on behalf of his client should receive the +amount of his claim and the proper fee, from whatever source, I should +be powerless to prevent the dismissal of the receiver." + +Braman and Foster were a delightful combination. As the talented Chimmie +Fadden would say: "Dey knew dere biz from de bar to de till an' from de +till by de way of de cash register to de wine-cellar, so's dey could do +de circuit wid dere lamps blinked and dere hands tied." With their +corporation mix-up records I was familiar, and after a few minutes' talk +realized that it would be impossible to do anything with them until they +had kicked up against one or two of the bricks Addicks was now with +renewed energy preparing to cast into their pathway. I left with an +agreement to see them the following day, and a parting reminder that all +natural history showed that unpicked ripe plums were in great danger of +being blown from the tree with every passing breeze. + +I hurried back to Addicks. "It's the old game," said I; "they are on the +box and have the lines, and know just how badly we need our coach, and +it's only a case of how much 'inducement' we can stand." + +I left him and went down to 26 Broadway. I had not wasted time, but they +had been there ahead of me. + +"Lawson," said Mr. Rogers, "this time Addicks is up against a real +condition, and phenomenal work will have to be done or his race is run. +Braman and Foster have been here and made a strong bid for a partnership +with me, but I did as agreed and sent them away with a cold 'I'm in no +way interested.'" + +Foster and Braman secured an order from the New York courts to take +possession of all property, money, papers, and books claimed by the +company, and formally laid siege to Addicks' quarters in the Hoffman. +There was considerable excitement for the guests and the newspapers. +Doors were battered down, but the astute and slippery Addicks led them a +merry chase until they finally caught him hiding in a freight elevator +which he was using for a private staircase, only to find he had no +books, papers, or money. + +The week that ensued was full of trouble and incident for all concerned. +Addicks led an expedition to Wilmington in an effort to get the court to +call off the receivership, but had his labor and the expense of his +lawyers for his pains. Braman and Foster dragged us through a weary +round of special hearings and demands of various kinds in the different +courts, but by Tuesday night of the second week their ardor had cooled +considerably and they were as puzzled how to let go of the bull they had +captured as we were to find a way to make them do so. + +Bright and early Wednesday morning Braman called on me, and when he +threw his coat and hat into a chair he must have dropped his +receivership cloak too, for after he had carefully closed the door and +made sure we were without witness he said: + +"If there's any business to be done in this matter it must be done +quick." + +I admitted no one could possibly appreciate this more than I--but what +could be done? After bluffing for an hour and exchanging honest views +for fifteen minutes we agreed that the situation stood thus: + +If nothing were done before the coming Sunday, the 1st, the receivership +would be permanent; the stock, which had fallen to $3 per share, would +remain at that figure or go lower; my friends, the public, and myself +would be tremendous losers; all the past of Bay State, the doings of +Addicks and Rogers, and the appointment of the receiver would come in +for thorough investigation; an awful scandal would be aired in public; +every one would be covered more or less with mud; and no one could +possibly be the gainer but "Standard Oil," for Braman agreed with me +that the deal we had made with Rogers would probably stand in the +courts. + +On the other hand, if an arrangement could be arrived at by which we +could have the receivership discharged, the company returned to its +officers, or our equities preserved, all would be gainers by the move, +for it would be proof positive that whatever the obstacles, we could +overcome them, and the stock would go flying upward again. + +After we had set out all the advantages, disadvantages, and +possibilities of the situation, I bluntly plumped Braman with that +inevitable question of all such "sit-downs": "What's the price?" And +Braman as plumply and bluntly answered: "Buchanan, Foster's client, must +have the face of his bonds and interest, $150,000, and we must have at +least $150,000 for our trouble and expense." + +My long experience in corporation affairs, and my intimate knowledge of +the practices which the "System" with its votaries has made habitual was +such that I was proof against shock from anything that could possibly +turn up in even extraordinary financial deals, but I was just a bit +staggered by the business-like way Braman demanded for himself and +Foster $150,000 and the coolness with which he further explained that +they must divide their share with certain influential persons without +whose hearty cooperation the tangling-up which had been so cleverly +accomplished would have been impossible. He made no bones of showing me +that once "we gave up" it would only be a matter of the number of +minutes required to get details fixed before everything would be as it +was before he had interfered. I dwelt upon the possibilities of the +judge not following orders to the letter and the minute, but he only +smiled and answered: "Leave all that to us; if we don't make good as +agreed, we get no pay." He was fully alive to the dangers of the game, +and he impressed upon me he would take nobody's word for anything. With +him and Foster nothing but money talked, and it must not be of the +marked-bill kind either, meaning he would not take anything which could +be tied up by injunctions and lawsuits after the receiver had been +dismissed. However, he would play fair. He would not ask us to pay on +anything but the actual delivery of the goods. He also frankly told me +that he had named the very low figure, $150,000, because he expected to +invest what he received in Bay State Gas stock at $3 and, upon its +jumping to $10 or $20, to make half a million. + +But this is outrageous, you say. You call the performance I have +described by hard names! Surely our courts are not also the creatures of +"frenzied finance"? you ask. I warn my readers that this narrative is no +more than a record of events occurring within my own knowledge, and that +dark and vicious as the pictures seem they are photographs of actual +happenings. Nor should the public conclude that the dishonor and +dishonesty revealed in connection with Bay State Gas are exceptional. On +the contrary, such doings are the rule in the affairs of great financial +corporations. Into the rigging and launching of almost every big +financial operation in the United States during the last twenty years, +double-dealing, sharp practice, and jobbery have entered; and, what is +more, the men interested have participated in and profited thereby. To +correct a popular fallacy I want to say that I am not referring here +simply to moral derelictions but to actual legal crimes. If the details +of the great reorganization and trustification deals put through since +1885 could be laid bare, eight out of ten of our most successful +stock-jobbing financiers would be in a fair way to get into State or +federal prisons. They do such things better in England. During the past +ten years three "frenzied financiers" have practised their legerdemain +in London--Ernest Hooley, Barney Barnato, and Whitaker Wright. The first +is bankrupt and discredited; Barney Barnato jumped into the ocean at the +height of his career, and Whitaker Wright, after numerous attempts to +escape, was hauled up before an English judge and jury, promptly +convicted and sentenced, and committed suicide by poison before leaving +the court-room. I will agree at any time to set down from memory the +names of a score of eminent American financiers, at this writing in full +enjoyment of the envy and respect of their countrymen and the luxury +purchased by their many millions, whose crimes, moral and legal, +committed in the accumulation of these millions, would, if fully +exposed, make the performances of Wright and Barnato seem like petty +larceny in comparison.[12] But freedom and equality, as guaranteed us by +the Declaration of Independence, have recently been capitalized, and +"freedom" now means immunity from legal interference for financiers, +while the latest acceptance of "equality" is that all victims of special +privilege are treated alike by those who control and exercise such +privilege. If the judges and the public prosecutors of these United +States were equal to the sworn duties of their sacred offices, this +"freedom" would have been confined long ago, and throughout this broad +land there would be jails full of "frenzied financiers" who had imagined +themselves licensed to rob the public. + +But to return to Bay State Gas: "Braman," I said, "we see the situation +through the same glasses, but before deciding as to prices let us see +where the coin required is to come from. Until the receivership is +dismissed not a cent can come from the Bay State treasury, so that +eliminates Addicks. I, personally, am in such shape because of this same +receivership that I can do nothing. So, as usual, it comes down to the +man with unlimited money--Rogers. The question is, how to get Rogers to +advance so large a sum in such a ticklish business? He does not want to +get mixed up in a matter in which any one man's treachery might mean +State's prison." + +"Somebody's word ought to be good," he commented. + +"Only two men's words would be of any avail," I interrupted--"yours and +Addicks', and you have just made it clear that in this case neither +would be worth the breath expended in pledging it." + +FOOTNOTES: + +[12] Since the above was published the American people have become aroused, +and as this book is going to press, scores of the greatest financiers in +America are having under oath confessions squeezed from them in a +life-insurance investigation conducted by the State of New +York--confessions which reveal such a condition of perjury, bribery, and +habitual sequestration of funds, as to make my statement seem mild. + + + + +CHAPTER XXIV + +BUYING A BUNCH OF STATES + + +I left Braman and went down to Mr. Rogers. After a careful canvas of the +situation it was settled that the only way out was for Rogers to furnish +the money to release the receivership, in consideration of which +accommodation Addicks should forfeit the old Boston companies to him +through Bay State's failure to comply with the terms of the May contract +which matured the following Monday. Rogers would administer these +companies in trust, applying their earnings to the liquidation of the +bonds, and after these latter had been paid off, would turn them back to +the Bay State Company for the benefit of its stock; or he would release +the companies to us whenever we could raise the money to redeem them. +Thus Rogers would make sure of the amount of his original investment, +the million dollars profit the May 1st deal permitted him, while I +should have secured for my friends and the public the amount of their +investment in the property and a good profit for the stockholders to +boot. To secure Addicks' consent to this arrangement would be the +difficulty; but there was one consideration that would probably induce +him to give way--his terrible plight in case the receivership became +permanent. + +Having reached this point, the next problem was how to get the money. +Rogers refused absolutely to be a party to any payment that could be +traced back to him. He pointed out the sources of hazard; first, through +treachery on the part of Foster, Braman, or Addicks, he might be accused +of bribing a court officer, the receiver; Addicks might blackmail him by +charging him with conspiracy, or a conspiracy charge might be brought by +Bay State stockholders, and he be held for tremendous damages. He +refused to put himself into any such trap. I put forward a dozen ways to +meet the emergency, but he would have none of them. Finally he suggested +a method which was certainly perfect of its kind. He began by letting me +into the secret that the chances of a McKinley victory in the election +the following week looked pretty bad, and that the latest canvass of the +State showed that unless something radical were done, Bryan would surely +win. Hanna had called into consultation half a dozen of the biggest +financiers in Wall Street, and it was decided to turn at least five of +the doubtful States. For this purpose a fund of $5,000,000 had been +raised under Rogers' direction,[13] to be turned over to Mark Hanna and +McKinley's cousin, Osborne, through John Moore, the Wall Street broker, +who was acting as Rogers' representative in collecting the money. It +would be legitimate for the National Committee to pay out money to carry +Delaware, and he, Rogers, would arrange it that the coin to satisfy +Braman and Foster should come through this channel. Thus he would be +completely protected. + +"Lawson," said Mr. Rogers, looking at me with intense and deadly +seriousness, his voice charged with conviction, "if Bryan's elected, +there will be such a panic in this country as the world has never seen, +and with his money ideas and the crazy-headed radicals he will call to +Washington to administer the nation's affairs, business will surely be +destroyed and the working people will suffer untold misery. You know we +all hate to do what Uncle Mark says is necessary, but it's a case of +some of us sacrificing something for the country's good. Bryan's +election would set our country back a century, and I believe it's the +sacred duty of every honest American to do what he can to save his land +from such a calamity."[14] + +The "System's" conscience has its own quaint logic--the logic of +self-interest--and this is how it reasoned: "The election of Bryan would +disturb our control of American institutions, therefore American +institutions would be destroyed by Bryan's election. On us, the +'System,' devolves the sacred if expensive duty of saving the nation, +and, however abhorrent to our fine moral sense, patriotism compels us to +spend millions in bribing and corrupting the electorate so that virtue, +'Standard Oil,' and J. P. Morgan may continue the good work of caring +for the public's interests as their own." + +As I listened to Rogers' exordium on the duties of a citizen in an +emergency, I remembered the "Standard Oil" code--"Everything for God +(our God); God (our God) in everything." It was so essentially "Standard +Oil," this willingness to commit even that greatest wrong, subverting +the will of the people in the exercise of their highest function--the +election of a President--but only that good (their good) might come of +it. It was no more than selfish greed tricked out in the noble trappings +of morality, an infamous crime disguised as patriotism. Doubtless, the +excellent, God-fearing, law-abiding citizens of the doubtful States who +read this and learn how the "System" defeated their will at the polls +will cry, "Monstrous! Can such things be in America?" and then will +resume their interrupted occupation of "letting well enough alone." +However, this is aside from my story. + +Having clearly set forth the political situation through which we should +be saved, Mr. Rogers proceeded to map out my own programme. First, I +must perfect an alibi for him by going to Foster and Braman, and +impressing upon them the fact that he was absolutely out of the affair, +and must under no circumstances be brought into it; next, I must +convince Addicks to the same effect, and in addition tell him that Mr. +Rogers had angrily refused to get into the mix-up; I should then hold +myself in readiness to meet John Moore and Hanna or Osborne as soon as +an appointment could be arranged. That afternoon I got the word and went +to 26 Broadway, and from there Mr. Rogers and I went over to John +Moore's office, slipping in the private door from the rear street. + +"John," said Mr. Rogers, "I am going to turn this matter over to you and +Lawson, and I am to have nothing further to do with it. What you two +agree to will be satisfactory to me, and remember, both of you, every +dollar that is paid is paid by the National Committee, but after it's +all settled, and if there is no slip-up, I will look to Lawson for +whatever is expended. Is it understood?" + +We agreed that it was, and Mr. Rogers left us. + +John Moore deserves more than a mere passing mention here, for he was at +this time a distinguished Wall Street character and one of the ablest +practitioners of finance in the country. During the last fifteen years +of his life, John Moore was party to more confidential financial jobs +and deals than all other contemporaneous financiers, and he handled them +with great skill and high art. Big, jolly, generous, a royal eater and +drinker, an associate of the rich, the friend of the poor, a many-times +millionaire, who a few years before had been logging it on the rivers of +Maine, his native State, John Moore well deserved his "Street" name, +"Prince John." His firm, Moore & Schley, transacted an immense brokerage +business, and numbered among its clients great capitalists and bankers +all over the country. Especially were Moore & Schley famed for their +discretion, and the highest proof of confidence reposed in the firm was +the fact that it did the bulk of the stock speculating for what is known +as "the Washington contingent." This is, perhaps, the most peculiar and +delicate business that comes to "the Street." A big Wall Street house +opens a Washington office and organizes an elaborate system of special +wires, wires from which there can be no possibility of leakage. It is +then ready for the patronage of members of Congress, United States +Senators and national officials, whose honorable positions make them the +custodians of national secrets of great commercial value. If, for +instance, a new law is to be passed which must favorably affect a given +stock, legislators who are on "the inside" often buy thousands of shares +in order to reap the profit of the rise in value incidental to its +passage. Or perhaps there is in prospect a law which will interfere with +the special privilege of some other stock and reduce its price. Those in +possession of advance information "go short" of that stock (sell for +future delivery) to profit by the drop. There are many other +opportunities the Washington "insider" of speculative turn may use to +advantage. For instance, if a high official of the Government were about +to issue a proclamation against a foreign nation, and should desire +secretly to make a million or so out of the panic he knew must follow +the announcement, he would cast about him for a broker who would +preserve this sacred confidence. It would invariably be through the +Moore firm that his secretary or confidential man would do the short +selling. There are also the operations of lobbyists who, to affect +important legislation for this great interest or the other, buy or sell +stock for the benefit of legislators whose votes they desire to +influence. Extreme caution is demanded in the execution of such orders, +or all hands might by some slip-up find themselves wearing striped +suits.[15] + +Such a catastrophe seemed imminent some years ago when the Sugar Trust +was before the United States Senate for some legislation necessary to +bolster up its monopoly. Its agents had either been less cautious than +usual in disguising the raw bribery they were perpetrating, or this +particular Senate was too brazen to take the usual precautions to hide +its greed from the world. In any case, so great an outcry was made in +the press of the country that some sacrifice to the people's wrath was +called for--one of those familiar sacrifices which, at intervals of ten +or fifteen years in this republic, our rulers make to the great god +Integrity. An investigation was organized, and a Senatorial inquisition +had before it eminent sugar capitalists and many other distinguished +gentlemen who could by no possibility shed light on the transactions, +and then, realizing that a show of earnestness, at least, was demanded, +it was agreed that some member of Moore & Schley's firm must go on the +witness-stand, and, on refusing to tell which Senators had speculated in +sugar, must be sent to jail. This grandstand play, it was calculated, +and rightly, would so hold the attention of the American people that +when the committee concluded its investigation with the usual loud +acclaim of duty well done, its Draconian punishment of the unsubmissive +broker would act as another ten years' stay against outcry. + +When this stratagem was decided on, John Moore announced that he as head +of the firm should be the sacrifice. But the representatives of the +"System" and the Senate firmly refused to assign him that rôle, and +instead, to his grief and anger, nominated for jail the associate member +who had charge of Moore & Schley's Washington business, whom they +declared the logical victim. During the thirty days that his friend and +partner spent behind the bars John Moore's hair whitened more than in +all the years before, and from that time until his death he refused +firmly to take part in his old line of work, or was ever again his old +jovial self. + +FOOTNOTES: + +[13] Over a year after the publication of this statement startled the +country, John A. McCall, President of the New York Life Insurance Company, +and George W. Perkins, Vice-President of the same company and partner of J. +Pierpont Morgan, were compelled to confess that they had contributed from +their policy-holders' deposits, large amounts of money to a fund to defeat +Bryan in 1896 and to the Republican campaign funds of the two following +presidential elections, and that they gloried in it. At the same time Jacob +Schiff, director of the Equitable Life and a partner in the great +international banking-house of Kuhn, Loeb & Co., admitted that funds +belonging to the policy-holders of the "Big Three," the New York, the +Mutual, and the Equitable, were used in a joint fund to influence the +Legislature of every State in the Union. + +[14] President McCall used almost the same language in September, 1905, in +justifying his payment. + +[15] The President was notified some few months ago that the cotton report +was being juggled by employees of the United States Department of +Agriculture in the interest of certain Wall Street speculators who were +gambling in cotton. Investigation proved that it was the practice to +falsify the report; and certain Government officials and brokers are now +under indictment. + + + + +CHAPTER XXV + +ATHLETICS OF FINANCE + + +Entirely apart from his relationship with Mr. Rogers it was a great help +in this Bay State emergency to have the aid of a man of John Moore's +wealth of vim and wide knowledge of men and affairs. Freely and frankly +I explained our situation to him with its innumerable complications +until he had mastered its intricacies. A tough job he pronounced our +proposition, and he was the authority on the subject. After our talk was +ended he called in Osborne, who had evidently already been talked to. He +said to Osborne: + +"I've been over Addicks' affairs with Lawson, and there is no question +in my mind and that of other friends of the party that he should have +what is necessary to carry Delaware. You had better have the committee +ready to put in between $350,000 and $400,000 if we call for it. I will +see that it is kept down as low as possible." + +Osborne then spoke his piece and replied that the committee would do +whatever was decided best, and asked me to send Addicks around next day +to explain just how he was pushing things in Delaware. All this was +play-acting for the benefit of Rogers' alibi. + +The next thing on my programme was to persuade Addicks to relinquish his +hold on the old Boston gas companies, and this was likely to prove my +most difficult task. I left John Moore, who agreed to hold himself in +readiness at any hour to consult on and approve such settlement as I +could arrange, and energetically started in on the Delaware financier. +It was a trying ordeal. As soon as Addicks saw I had something to work +on he began to demur and object. If he could not have things his way, he +would do nothing. He knew that I had joined a conspiracy to ruin him; +that I was in league with Rogers, who was in league with Braman and +Foster, and that all were banded together to take all he had away from +him. In the course of that two hours' wrestle I was tempted several +times to throw up the whole affair, and there were some bitter and +savage word-passages that left both of us heated. I could do nothing +with him; he must hear from Rogers personally. Finally I got the +"Standard Oil" wire, and Rogers talked so plainly and coldly as +partially to sober him, but ended by agreeing to have his counsel talk +things over with Addicks, which was a distinct concession. A little +later Mr. Rogers' representative was at the Hoffman and he and Addicks +had it hot and heavy. After about fifteen minutes of conference they had +wellnigh come to blows. However, the hot exchanges had begun to tell. +Addicks grew saner, but he insisted on seeing Foster and Braman. I +warned him that he was fast getting our affairs into such shape that no +one could patch them up, but to no avail. He must meet his enemies face +to face if only to ram into their teeth that they were scoundrels. +Finally, I got Braman on the telephone and explained that I was doing my +best to quiet a crazy man, who would consent to nothing until after he +had seen him and Foster and told them what thieves they were. I heard +Braman chuckle. He said: "Bring him along to Foster's house at 10.30," +and added: "It wouldn't be a bad idea to have an ambulance along, too." +This suggested further complications, for Braman has the reputation on +"the Street" of being more eager to face a wild man on a rampage than a +sick one in a plaster cast, while Foster, although a little bit of a +fellow, was never known to side-step or duck trouble. I slipped word +down to Moore at the Waldorf to follow along to Foster's place in a cab. + +There are several "spite houses" in New York. Foster's house was one of +them. It is a narrow strip of a brownstone dwelling at 79 West 54th +Street, built to express the enmity of one property owner for his +neighbor who refused to pay an extortionate price for the land. It is +about the width of a front door, and inside there is just about room to +move around. It afforded a queer background for the scene enacted there +that night. + +Promptly at 10.30 Addicks and I were at the door, and by 10.32 the +tunnel-like walls of the "spite house" resounded with as illuminating a +verbal interchange of billingsgate biographies as I have ever listened +to. At 10.35 I covered Addicks in a hasty but quite successful retreat +which he beat to our cab. Thence to the Hoffman House, where I summoned +Parker Chandler to aid in the calming of our raving associate. The next +two hours were of the pulse-jumping, vein-tearing kind incidental to +"frenzied finance," but they were not without avail, for Addicks finally +agreed that he might consent to "something" provided the Bay State +equities in the Boston companies were so preserved that he could +eventually get them back into his hands by repayment to Rogers or by the +redemption of bonds. + +Having got thus far, I again went after Braman and Foster, who were at +the Hotel Cambridge. We repaired for further conference to the +University Club, which was then in the old A. T. Stewart marble palace +on the corner of Thirty-fourth Street and Fifth Avenue. I shall never +forget that session. It was past midnight, but the three of us battled +with our smoky problem, now good-naturedly, now bitterly. At times it +looked hopeless because of this obstinate demand or that steadfast +refusal. It must have been three o'clock in the morning when I left them +and stepped into the Waldorf for a moment to relieve Moore's vigil. Then +back again to the Hoffman, where Addicks, Chandler, and some Bay State +directors were nodding. By this time I was in no mood to say more than +that I would be over in the morning, and that Addicks should go early to +the National Committee's head-quarters and explain the desperation of +conditions in Delaware to Hanna, Osborne, and their associates. At last +I was free to return to the Brunswick for a few hours' rest. + +In the country, cock-crow is the signal to be up and doing. In the city, +the signal to be up and to do is a hoarse, metallic roar that would +drown a million country cock-crows if each particular cock were as big +as the mythical rooster of antiquity and could crow in proportion to his +size. My readers who dwell on the hills and in dales and wheat-fields, +and who are unfamiliar with the wild, weird early morning din of the +city, may not know that the metropolitan cock-crow is made up of the +jingle and jangle of a million tin milk cans jolted over a million +blocks of stone to the tune of thousands of steel-shod feet, the shrill +cries of an army of butcher and baker boys and the groans and the moans +of countless troubled and tortured human souls. Cock-crow in the country +means "Awake to another day of life." Cock-crow in the city is a signal +for the slaves of Mammon to arise to another interval of flight and +pursuit. + +The great city cock was just getting ready to send forth his hoarse cry +as I went to bed, and he was still on his roost a few hours later, when +I awoke. I looked from my window of the Brunswick across the Square, now +flooded with the pure sunlight of early morning, and all the kinks and +quirks and hobgoblins which the rush and irritation of yesterday had +generated seemed to have vanished, and I could not suppress a smile at +the thought of the night before, when this battle--this puny, +insignificant battle for a few dirty dollars--had almost raised feelings +I now knew too well should only be aroused by real battles, battles in +which noble principles were involved, and I felt better able to fight +what I had thought, the night before, was going to be a hard battle. + +"Pshaw!" said I, as I looked away and beyond the park to the grand +battlefields of my better imagination, "what will it matter a hundred +years hence what name appears against victor or vanquished in the +archives of fame or the records of infamy when the student reads, 'A.D. +1896, Bay State Gas-"Standard Oil" war,'" for I saw that among the +countless real deeds there would be no room for any record to mark the +existence of any Gas or Dollar war. + +With these thoughts still in mind I sat down to breakfast with Parker +Chandler, and as I listened to his cheerful gossip of yesterday, I +inwardly resolved that whatever the result of the day's effort, I would +take it with a smile. + +Thursday was another period of strenuous struggle and unceasing effort. +I began early, and every moment was taken up with arguments, wrangles, +pleadings! Chandler had agreed to see that Addicks kept his appointment +with the National Committee and that a quorum of Bay State directors +should be on hand in the Hoffman so that we could get quick action on +any proposition that came up. This arranged I hurried over to see John +Moore, then down for a last word with Mr. Rogers. Addicks came next for +a spell; from him to Braman and Foster; back to John Moore; more +interviews with lawyers and round the circle again. It seemed as though +it were impossible to arrive at any agreement that some one of the +principals interested would not kick over. At four o'clock Friday +morning John Moore and myself ceased our labors for the day, both of us +wellnigh exhausted. With all our efforts many of the vital points to our +agreement were still in the air. A few hours' sleep and we were back at +our task, and by six o'clock on Friday night the last obstacle had been +overcome and the deal was completed. + +There remained now the tremendous business of putting all the +arrangements concluded into execution. A multitude of legal documents +had to be drawn up and executed, first by Rogers and then by the Bay +State board of directors and officers. It was a pile of work, but not a +second was lost, and by 11.20 that night we were ready for the third +act, which was to be performed simultaneously by different sets of +actors in Boston and Wilmington. For this our officers were split. With +the directors of the Boston corporations, Chandler, and Mr. Rogers' +attorney to supervise the legal end of next day's transaction, I left on +a special car attached to the midnight train for Boston; while Addicks +and the Bay State directors set forth on another midnight train for +Wilmington, Del., to be followed in the early morning by my New York +partner, John Moore's partner, Braman, Foster, and more counsel +representing Mr. Rogers. This contingent was to carry the money. + + + + +CHAPTER XXVI + +THE CIRCLING OF THE VULTURES + + +I don't believe there ever was before or since a financial operation in +which so many things, each of vital importance, had to be done at one +and the same time. + +Before I took the train for Boston, just after the last deed had been +signed, Braman, Foster, and I had come to a complete understanding in +regard to the manner in which the court proceedings the following +morning should be conducted. It was understood that no one should take +another's word for anything, and consequently that no money should pass +until specific performance of all the required conditions. Immediately +on the release of the receivership, Foster and Braman were to be paid +their "fee," and they asked that the $175,000 cash coming to them should +be arranged in separate piles of bills. The two packages containing +Foster's and part of Buchanan's, and Braman's $50,000 were to be in the +joint custody of John Moore's representative and my partner, who, with +Rogers' counsel and Addicks, had been assigned to represent Bay State in +the court. + +What would happen after the transfer of these several amounts was +outside my jurisdiction. Addicks did not confide to me his own scheme of +revenge, but of Braman and Foster's purposes I had a clear idea. As +Braman had explained, the great winning of his adventure should be made +in the stock plunge he and Foster contemplated in Bay State Gas stock, +then selling at 3-1/2 to 4; but lest there be some slip-up in court, +"buy" orders to their brokers were contingent on the word "go!" from +Wilmington. To get this off at the right moment a clerk was taken along, +whose only part in the play was to telephone this word "go!" They +expected in this way to make at least half a million.[16] + +Addicks' intentions, as I afterward learned, were less exalted but much +more direct. He had conceived a plan whereby without danger to himself +he could punish Braman and Foster for the wrong they had done Bay State, +and at the same time meet his election expenses at no cost to his own +pocket. In the course of his electioneering campaign in Delaware, +conducted as all the world knows how, Addicks had gathered to his cause +as tough and rascally a set of "heelers" as ever waylaid aged woman or +lame man on the highway. A lieutenant who had been despatched to +Delaware early Friday afternoon, when it had become evident that we +should get things settled up, gathered the sturdiest members of this +precious troop together and solemnly told them that a serious hitch had +occurred in Addicks' game and that it looked as though, owing to the +receivership, there would be no "stuff" to put in circulation this year. +The men responsible for this outrage were to be in Wilmington on the +following day and from the appearance of things would get the money +Addicks had destined for his followers. He understood they were to +receive it in cash, too--$175,000--cash that really belonged to Addicks, +who had intended it for his good friends in Delaware. The thugs, +properly indignant at the wrong that had been done "the Boss," dispersed +rapidly to discuss the information among themselves. That night a group +of leaders got together and figured out a little plan of campaign to +frustrate the robbery of their beloved master. Court proceedings to +release the receivership could not take long, and they calculated that +the train schedule would detain Braman and Foster at least two hours in +Wilmington after the adjournment. What more easy than the organizing of +a little scuffle on the station platform or on the street and in the +rush--well, many things happen in a rush. This simple procedure +commended itself to all concerned, and that night there was much +rejoicing among the Addicks camp-followers at the pleasant things that +should be pulled "off" at the flim-flamming bee next day. + +All these things were in the air when court opened in Wilmington on +Saturday morning. A special telephone line had been run and +arrangements made for a clear wire right into the directors' office in +the head-quarters of the Gas Light Company in Boston. At the telephone +in Wilmington sat my partner ready to communicate to me the exact course +of the proceedings, so that I might simultaneously make the agreed +transfers of our companies to Rogers. I knew my partner's voice; he knew +mine. We, too, were taking no chances. + + * NEW YORK, February 21, 1905. + + _Dear Mr. Lawson_: In your article in _Everybody's Magazine_ + for January, among other misstatements upon which I shall + not now comment--since you have committed yourself too far + to make it likely that you will withdraw them--you accuse me + of having speculated in Bay State Gas stock with Mr. + Buchanan's money; and of having subsequently been sued by + him. I hold Mr. Buchanan's receipt for the money collected + for him, which I paid him the night that I returned from + Delaware. He has never sued me. Please inform me whether you + are willing and agree to strike out these statements from + your article when published in book form, and also whether + you will agree to withdraw the same in your magazine. I + tried to call on you and discuss the case when in Boston, + January 21st; and I also tried to meet you on the day after + last Thanksgiving; but apparently you were unwilling to see + me. I remain, + + Very truly yours, + ROGER FOSTER. + + + THOMAS W. LAWSON, ESQ., + Boston, Mass. + + FEBRUARY 23, 1905. + + _My Dear Mr. Foster_: I received your letter of the 21st + inst., and in reply will say, if I have done you any wrong + in my story, "Frenzied Finance," or otherwise, it has been + unintentional, and I regret it, and I seek this, the first + opportunity, to give my regrets the same wide circulation as + my original statements. + + As I wrote you previous to the publication of the magazine + containing the parts you refer to, I try to exercise the + greatest care in allowing nothing to appear in my story but + facts--facts I know to be facts, and in addition only such + facts as are absolutely necessary to my work, which is the + portrayal of those events of the past essential to a proper + understanding by the people of the evils that have been done + them, and how they have been done, that they may do what is + necessary to undo them and to prevent their repetition in + the future, and, in addition, such facts as it is fair for + me to use. I repeat what I said to you then: I have + absolutely no feeling in regard to you other than an intense + desire to do you exact justice. + + I dealt with you in the entire Bay State receivership affair + in connection with Mr. Braman and I thought that I had every + reason to believe that his Bay State Gas purchases were for + your joint account; but now that you assure me they were + not, I hasten to have such assurances chase my original + story with the hope that they may speedily overtake it. + + My information that you had been sued by Mr. Buchanan came + to me in a way that left no doubt in my mind of its + correctness--no doubt until I received your letter. Papers + were sent to me some time ago by reputable attorneys in a + suit of Buchanan against Braman and, I understood, yourself, + along the lines outlined in my story, with the request that + I allow my deposition to be taken, so that Buchanan could + get at the facts in his attempt to recover the moneys + claimed. + + Your assurances to the contrary in regard to this matter I + also hasten to start on the road you point out, and I will + see that both statements are expunged from my book. + + You are in error in thinking that I did not wish to see you + when you were in Boston. I did not know in either case of + your desires until it was too late to see you. I certainly + would have had a "sit-down" with you if it had been + possible. + + Again assuring you not only that it is a pleasure to set + forth the facts you have called to my attention, but that I + am your debtor inasmuch as you have given me an opportunity + to perform that duty which I owe to every individual my + story treats of--to state facts and only facts with which + they have been connected--believe me, + + Yours truly, + THOMAS W. LAWSON. + +FOOTNOTES: + +[16] See foot-note on pages 189 and 190. + + + + +CHAPTER XXVII + +COURT CORRUPTION AND COIN + + +The closing scene of this most significant drama was enacted on Saturday +morning in the Wilmington Circuit Court-room. There was nothing in the +cold formality of the proceedings to indicate that here was the +_dénouement_ of a serio-comedy in which greed and ambition had clashed +in a battle for millions; nor in the amiable indifference of the men who +got within the enclosed space below the judge's desk to suggest the +murderous passions and fierce hatreds raging beneath the surface of the +prevailing calm. + +The _dramatis personĉ_ were gathered in little groups representing the +separate interests--Addicks and some of his lieutenants; my partner at +the telephone; John Moore's partner and Rogers' counsel with their heads +together; Braman and Foster nearer the judge, their eyes wandering +toward two dress-suit cases piled before John Moore's partner, which, it +was understood, contained the money. At a glance it was impossible to +tell the one containing Buchanan's share from the other laden with the +receivership loot, but each was tagged, and it was evident that +possibilities of a mix-up had been carefully guarded against. Behind +Braman was his clerk, and in the rear of the court-room sat as many of +Addicks' thugs as could squeeze into the narrow space reserved for +spectators. They, too, eyed the dress-suit cases avidly, for the +information had been passed around that these innocent receptacles +contained the "stuff," of which the "Boss" was about to be robbed. + +Court came to order. Foster rose, announced that the claims of his +client had been satisfied, and made a formal motion to dismiss the +receivership. The Court formally consented, and as the clerk was +entering the dismissal in his minute-book my partner telephoned the +facts to me. I sent back the word that my directors were resigning--had +resigned--that Rogers' directors were being elected--had been +elected--that the Boston gas companies were now transferred to Rogers. +My partner whispered my words to John Moore's partner and Rogers' +counsel. At once the two dress-suit cases, each loaded with currency, +were slipped to Braman and Foster. At the same time the messenger who +was to telephone to their broker rose and quickly left the court-room. A +brief period was consumed in signing receipts, certificates, and other +legal papers, and then the performance was over. Addicks rose and went +out among his henchmen in the rear, who eagerly surrounded him. In the +bustle Braman and Foster, each with his own booty, fled. + +Let us see what was happening at the Boston end of the wire while all +this dumb show was being enacted in the Wilmington court-house. My +directors and officials were lined up against the walls of the +directors' room in the Boston Gas Light Company's office like so many +members of young John D. Rockefeller's Sunday-school class, inasmuch as +they were prepared to listen, sing, or shout "Amen!" at any time they +received the nod of the class-leader. In an adjoining room Rogers' +counsel had a similar line-up, with the difference that my men were +about to shed the crowns which the others were waiting to receive, and +which would transform them from humble business men into royal gas +kings. Through the open wire I was in such close touch with the scene in +the Wilmington court-room that I was almost sure I heard the subdued +weeping of the blindfolded Lady of the Scales on the bills which +occupied such a prominent part in the disreputable proceedings. Nothing +now could impede the course of events, so I concluded to take Time by +the headgear and secure what Bay State stock was in the market before +Braman and Foster got in their work. Over another wire which was at my +elbow I gave the word "go!" to my own brokers in Boston and New York, +and when a few minutes later they told me they were securing thousands +of shares, and that the stock was climbing toward 10, I could not +repress an inward chuckle at the thought that the money we had so +reluctantly parted with would spread over only one-half or one-third the +surface it was originally intended to cover. + +It was all over in a few minutes, and when my partner said, "It's done," +and "By Jove, there go Dwight Braman and Roger Foster on the dead run +with a dress-suit case apiece!" I held my sides as Parker Chandler in +his inimitable way bawled: "Tom, let's leave our straw hats on the pegs, +for we'll probably be back next spring figuring out how to pump air +enough through the gas-measuring meters to pay for that money we've just +loaned Braman and Foster for a day or two." + +Braman and Foster, as I have observed before, knew their business. The +danger to which $175,000 in currency would be exposed, in a territory +controlled by Addicks, had appealed to their cautious instincts, and +once outside the court-room they literally took to their heels and ran +for a corner of the railway yard, where awaiting them was a special car +and engine. They jumped aboard, yelling to the engineer: "Let her go." +In the meantime eager-eyed ruffians searched the streets and hung round +the hotels, looking for two men with dress-suit cases. A hundred of them +were on the station platform, awaiting the departure of the regular +train. Ten minutes before leaving-time one of the henchmen appeared +among the gang, and passed round the word that the gents and the "stuff" +had got off by a special, and it was no use waiting any longer. Later +that afternoon, Addicks, to use his own words, in one of his rendezvous, +"dealt out his own good money in place of that he had hoped would take +care of the people's rights." + +It was a fierce session of the Stock Exchange that Saturday morning. +Shortly before closing time a new set of brokers were frantically +grabbing for Bay State stock round 10, and Monday morning, when all the +world knew that the receivership had been lifted and our company was +itself again, the same crowd continued to buy fiercely. To these eager +purchasers I resold all that I had previously gathered, and enough +short besides, to compensate me for some of the losses I had previously +suffered, for this latter I was enabled to repurchase at half price, +when news came that another suit had begun against Bay State. This +latter drop in price so shattered the nerves of Braman and Foster that +they retired, having made up their minds that they did not know quite as +much about one end of "frenzied finance" as they did about the other. As +a matter of fact, nothing came of the suit in question, for it was +evident when the transfer of the Boston gas companies to Rogers' control +became known, that Bay State Gas receiverships had played their last +successful engagement. + +My readers will not object if I again call their attention to the +inevitable workings of the law of compensation. The losses occasioned by +the market action of Bay State stock in these four days so mixed up +Braman and Foster in their financial accounts that later they were sued +by their client, Buchanan, who in court stated that he in turn was so +confused as to what was done in connection with this business that he +really knew less after it was over than before the suits were brought. +But one thing was indelibly impressed upon his mind--that his bonds had +disappeared in the whirl and he had not received anything for them. I +think this suit is still pending. + + + + +CHAPTER XXVIII + +PEACE AT LAST + + +When the curtain fell on the closing scene of the performance in the +Delaware court there ensued a brief interval of quiet in the affairs of +Bay State Gas. Rejoicing in the temporary diversion of public attention, +the chief actors proceeded to assume their former rôles, and soon +affairs began to move at their old gait. Rogers took possession of all +the Boston gas companies and patiently awaited the coming down the pike +of some traveller with more money than brains. Having successfully +corrupted the State of Delaware, Addicks was being measured for the +senatorial toga, when accidentally the blind lady dropped her scales on +his unprotected head, which catastrophe laid him out long enough to +enable another to sneak the prize he had so long striven for. We are not +at present concerned with the affairs of Delaware, and it suffices to +say in passing, that after a heated contest one Richard Kenney was +chosen to the senatorial seat Addicks had so long coveted, and that this +man, a typical Delaware vote-rancher, after being sworn in as United +States Senator, was brought back to Wilmington and tried for robbing a +Delaware bank, his accomplices being some other heelers of Addicks. The +disclosures made in the trial showed that the case in all +characteristics conformed to the Addicks standard of indecency, for the +bank officials, not satisfied with "blowing in" every dollar of deposits +and capital the institution owned or controlled, had actually "lifted" +in addition the building in which the bank was situated. One of the +court functionaries who had heard the evidence tersely remarked: "Talk +about stealing a red-hot stove: this is a case where they took the +funnel with it to keep the draught going until they set it up in a new +location!" + +But Delaware, as my readers have doubtless gathered long ere this, is +its own kind of a country, and rewards and punishments are so perversely +adjusted that it seems a sort of Topsyturvydom. In this instance certain +of Addicks' heelers went to State's prison and death; Kenney returned to +the Senate to help make laws for the great free people of America, while +the chief conspirator, with a threat to sue the blindfolded lady for +damage done, began to set out the pieces on the Bay State Gas chessboard +with a view to trying certain new moves that had occurred to his +perpetual-motion mind. + +The situation of Bay State Gas stock was fully understood by the public. +While Rogers had possession of the Boston companies, he simply held them +in trust, and must give them up whenever the parent corporation had coin +enough to redeem them. The securities were still in the hands of the +public and my friends, and my own duty to get Bay State Gas on its feet +was plain. It was again a case of raising money, and to do this we had +the issue of securities which we were preparing to float just before +Foster and Braman swooped down on us. Addicks agreed that if I would +undertake the marketing of this stock, he would issue only enough of it +to redeem the properties from Rogers. His directors met and formally +"resoluted" on this point, and I felt satisfied before going ahead that +there was no danger of this money being put in jeopardy without actually +stealing it. The company, for the nonce, had no other business but to +pay office rent and clerk hire, and in spite of Addicks' financial +immorality, all who knew him were aware he took no chances of ever +getting himself sent to jail. So I began to sell the stock in the open +market. + + + + +_PART II_ + + + + +CHAPTER I + +THE MAGIC WORLD OF FINANCE + + +Though this is the twentieth century and enlightenment is supposed to +prevail throughout this broad land of ours, the majority of people still +regard the world of finance as the world of magic. Within the fairy +realm of finance the laws of nature apparently are suspended, and, +overnight, wonders are worked. The ordinary mortal, wise in all other +walks of life, sees the man who yesterday stood beside him at the plough +or at the bench emerging from the mysterious portals bearing the fruits +of the endeavors of a hundred or a thousand lives, although a moment ago +he passed through them with nothing. Who can deny the magic that thus +demonstrates its power, or fail to accord veneration to the magicians +that work such marvels? No wonder the ordinary mortal feels that he has +no license to enter the world of finance save on his knees, hat in hand, +bearing tribute to the divinities enthroned within this enchanted +territory. + +It is my purpose to do away with this extraordinary deception and to +show it up as one of the artifices with which tricksters, since the +beginning of the world, have imposed upon the people. There should be +nothing in finance that any man or woman of ordinary intelligence and +experience cannot understand, and I purpose to explain here the +machinery of the "System" so that every one will exactly understand it +from headlight to rear-end lantern. Many intelligent people have no +clear idea of what a certificate of stock or a bond really is, and the +words "money," "stock-exchange," and "finance" are mere terms which they +glibly use without knowledge of their meaning. + +It is not difficult to understand the grocery or the dry-goods business. +Standard articles of well-known form are sold by weight or measure over +the counters for fair prices. The patrons of such businesses insist on +knowing what they are buying--what they are to get in exchange for the +money which is the fruit of their labor, and then, after they have been +told, and they trade, they require that the goods be as described or +they will know why not. The average American would consider it a huge +joke should his grocer undertake to induce him to buy one hundred times +more sugar than he could use, on the ground that he might find in the +sugar bags when he reached home gold and diamonds. But would he not +wrathfully seek the police if, after opening his sugar bag, for which he +had paid $1, he found it contained only 50 cents' worth of sugar? He +would tell you if you met him at this stage: "You can bet that chap on +the corner cannot get away with any such trick as that--not in America. +He might in Zanzibar or in the kingdom of the Sultan of Sulu, but I will +show him he cannot rob Americans in these enlightened times." The grocer +would be hustled to jail without a "by your leave," and thenceforward +his name would be a by-word among all honest tradesmen. + +And so it goes in every business but finance--finance, the most +important of all, the business into which is merged all other +businesses, the business of taking and preserving the results of all +other businesses, of all other human endeavor. Over our land to-day are +big, able Americans, long-headed and experienced, adept at a jack-knife +swap or a horse trade--industrious farmers, hard-handed miners, shrewd +manufacturers, each in his own line a good business man, yet these +sturdy traders, whom the "gold-brick" artist or the "green-goods" +practitioner would never dream of tackling, come weekly into Wall +Street, or into such branch shops as exist in every community on the +continent, and are done out of their savings like the veriest +"come-ons." Humbly they take, in return for the gold earned with the +sweat of their brows, a piece of paper of a given value which they +return later and exchange for half the amount the paper cost them +originally. In the space between purchase and sale fifty per cent. of +their investment has disappeared--has been filched away, but yet they +have no resentment. They evince none of the feelings of the man whose +pocket has been picked or whose till has been robbed. On the contrary, +their sentiment is of admiration for the banker, the broker, the +financier through whose agency their money has been lost. + +Take, for instance, the prosperous tanner who goes to his banker with +$100,000, the fruit of ten years' success, and exchanges this sum for +1,000 shares of Steel Preferred. Now, if he were to examine this +security with half the thought or investigation he gives to a $500 +car-load of bark, he would learn that there was not 20 cents on the +dollar of real value behind it. In six months the eminent tanner is +again at the banker's offering for sale his thousand shares of steel. In +the meantime it has declined in value and he has to part with it for +$50,000. But he does not complain; indeed, he bows his way out of the +palatial office of the great man and is full of sincere thanks when the +banker promises to let him know the next good thing on the market. +Suppose our tanner had purchased ten cars of tan bark and found that +each car-load was short ten per cent. Would he not at once go to his +attorney and exclaim emphatically that he would spend thousands rather +than let the scoundrel who had tricked him get away with his swag? + +Suppose our grocer waxing rich invests his funds in the Sugar trust. He +thinks he knows all there is to be known about sugar. The business of +the trust is to make the sweet commodity and sell it to the people. No +mystery or magic, surely, about this simple pursuit. Yet when our grocer +invests his savings, the sugar stock is many dollars more valuable than +when, scared into selling by fluctuations which he cannot see any reason +for, he tries to get back his investment. So many times have investors +been milked of their savings by this one trust during the past twenty +years that in the coffers of its creators and jugglers are hundreds of +millions of money that once belonged to the people for which they have +received absolutely nothing in return. + +Both the tanner and the grocer must know, when they look up and down +Wall Street at the great office buildings which tower into the sky on +either side of the street, that these are huge hives of expensive bees +who, from New Year's to New Year's, do not produce a dollar. They should +realize that the hundreds of millions spent each year for the expense of +running the "System's" game, and the millions which the game-makers +flaunt in their faces, must have been derived from such as they--the men +who produce. + +It is the phenomenon of the age that millions of people throughout this +great country of ours come of their own free will to the shearing pens +of the "System" each year, voluntarily chloroform themselves, so that +the "System" may go through their pockets, and then depart peacefully +home to dig and delve for more money that they may have the debasing +operation repeated on them twelve months later. + +You may ask if I desire to convey the idea that the great financial +institutions and trusts of this country, which have their head centre in +Wall Street, are all concerned in a conspiracy to rob the people of +their savings. You think, doubtless, that so sweeping a statement goes +beyond the truth. I desire to go on record right here in declaring that +all financial institutions which in any way are engaged in taking from +the people the money that is their surplus earnings or their capital, +for the ostensible purpose of safeguarding it, or putting it in use for +them, or exchanging it for stocks, bonds, policies, or other paper +evidences of worth, are a part of the machinery for the plundering of +the people. + +This is a terrible charge, I am well aware, but it is based upon a +thorough knowledge of the subject and made with a full appreciation of +its gravity. I do not mean to say that all the men who handle and +control the different institutions I mentioned have guilty knowledge of +the bearing of their actions. Many of them are of the purest minds and +most honest intentions, and are quite incapable of participating +voluntarily in a conspiracy to wrong any one. They do not know, however, +that the relation between their own minor institution and the general +financial structure constitutes the former an agency for the "System," +which controls and has organized the general financial structure into an +instrument for converting the money of the public to its own purposes. +In fact, the "System" has cunningly possessed itself of the financial +mechanism of the country and is running it, not for the object for which +the machine was devised, but for the benefit and personal profit of its +votaries, and so the vast correlated organization of banks, trust +companies, and insurance corporations which were brought into being for +the safe handling of the people's savings has become an agency for +transferring these savings to the control of unscrupulous manipulators, +who take liberal toll of every dollar that passes through their hands. + +The duty of the American people is to unloosen the thraldom of the +"System" on our financial mechanism; to pluck out of their high places +the dishonest usurpers who have degraded the purposes of our financial +institutions, and to restore those institutions to their legitimate +functions. When the people are fully awakened to the condition I +describe, surely they will arise in their wrath and sweep the +money-changers from the temple. + + + + +CHAPTER II + +THE "SYSTEM" AND THE LOUISIANA LOTTERY COMPARED + + +Years ago one of the greatest evils in this country was the Louisiana +Lottery. Through that lottery millions and millions annually were taken +from the people and transferred to a few unprincipled schemers, who soon +found themselves in possession of enormous fortunes. Wise men called for +the abatement of this awful drain on the savings of the nation, but the +law-abiding, God-fearing people of the country met their plaints with +"Why should we be bothered about this matter? If fools and knaves elect +to gamble in such palpably fraudulent ways, let them gamble, and their +losses are no affair of ours. It is none of our business." But presently +these honest people had it pounded into their well-meaning heads that +the principal instrument by which the swindle was conducted was their +own mail service, one of the most important branches of their +Government; that, in fact, in each and every city, town, village, and +cross-road in all our virtuous land, Government officials were acting as +distributing agents for this huge corrupter and robber. + +Then the people rose in their irresistible might, and between the rising +of one day's sun and its setting this powerful machine went as goes the +gum-drop on the red-hot stove cover at a pop-corn soirée. It melted, +leaving nothing but a faint odor and a thin stain, both of which +disappeared in the next morning's scrubbing, and the Louisiana Lottery +was as though it had never been. Yet during its reign its insolent +votaries could prove to the absolute satisfaction of all intelligent, +patriotic men that it was useless for any man or set of men to attempt +the lottery's destruction, because they would be met with the +accumulated resistance of the reckless spending of the vast amounts of +festered dollars which had been stolen from the people. The argument of +these comparatively petty thieves was: "No men nor sets of men can hope +to 'stack up' against us, for their money comes hard, cents and dollars +at a time; they are obliged to earn it, while we get ours in chunks by +simply taking it. We can buy lawyers and can hire law-makers, and we can +lease Government officials, and we can outbid any honest men, who are +the only ones who object to our game. In the market for legislative or +business talent you cannot get within touching distance of us." Yet the +people had but to sneeze and this foul parasite was detached from their +free and honest structure and was wafted away with the dead leaves and +the dust to bottomless nowhere. + +In the height of its prosperity the Louisiana Lottery took from the +people only a paltry ten or twenty million dollars a year, while to-day +there are single groups of banks, trust companies, corporations, and +trusts which take from the people by might, by trick, and by theft +hundreds of millions each year; and there are scores of such groups. The +Sugar trust has been the instrument of gathering, in one year, a hundred +millions of the people's savings, and the Steel trust alone has robbed +the people of over five hundred millions of dollars in a single twelve +months. + +To-day the "System" and its methods are as clearly and as sharply +defined in the tangibility of their relation to the people as was ever +the Louisiana Lottery. On certain days the Louisiana Lottery sold its +tickets, which the people bought with their savings. On a certain day +the drawing took place, at which all those who had parted with their +dollars expected to receive them back together with immense profits, and +upon that day disappointment was spread broadcast among the many and +unhealthy joy among the few. So with the "System." On certain days the +public is sold their stock, bond, and insurance policy certificates. +Upon other days they look for their savings and profits. On the +contrary, they learn that their savings have decreased in value or have +been wiped out, and that there never was any chance of profit. My +critics will say that such a comparison cannot hold, for in the lottery +nothing was dealt in but gambling tickets, whereas the stock or bond +certificate represents an ownership in the material things of the +country. This is the fallacy the "System" spends millions every year to +foster and disseminate. Between the two the difference is in favor of +the Louisiana Lottery, for both are gambles and the lottery game was +square. Those who ran it had for their trouble a fixed percentage of the +profits, an enormous percentage, it is true, but the general fund was +never encroached upon by the controllers. Who is to say what percentage +the votaries of the "System" take in their game? It depends on how much +their victims have to lose. The public have been persuaded, too, that in +purchasing stocks they do not gamble, but only invest, or, at the worst, +speculate, so they are deceived as well as plundered. A few millions +each year satisfied the lottery owners; the votaries of the "System," +among whom the "swag" must be divided, demand millions upon millions +each. The tickets of the lottery had a definite value at all times until +the drawing took place. The stocks and bonds of the "System" have no +rigid or unalterable value when issued or at any other time, and do not +represent a fixed ownership in all the savings of the people which have +been paid for them. + +Morally, legally, or ethically, the Louisiana Lottery, with all its +attendant curses, was a far better institution for the people to bump up +against every month than is the "System" against which the whole people +are now directly or indirectly dealing every working day of the year. +Startling this statement may be, but not more startling than the facts. +The records of the lottery company will show how many dollars it took in +from the public; how many were returned in prizes and expenses; and how +many went into the pockets of the owners. The records of the banks, +corporations, trusts, and stock-exchanges will exhibit how many dollars +were paid into the "System" by the people; how much they received back +in return therefor; how much the expense of conducting the business was; +and how much profit went to the votaries of the "System." Compare the +two and it will be found that there is annually taken by the "System" +from the people a hundred, yes, a thousand times more than the Louisiana +Lottery ever obtained in the same period. + +This being the fact, for how long will the people allow such a monstrous +wrong to be done? How long will they suffer a few men to siphon +automatically the money of the many into their own pockets? + +It is only a matter of simple mathematics to ascertain the day, and that +only a few years away, when ten men will be as absolutely and completely +the legal owners of the entire United States and all there is of value +in it, as John D. Rockefeller is the absolute legal owner of the large +section of it of which he is to-day possessed. + +_When that day is here, the people will legally be the slaves of these +ten men._ + +If this is so--and it is as surely so as it is that the Constitution of +the United States of America guarantees to every man, woman, and child +who is a part of it perpetual freedom--it is so because the legal +interest alone to which the ten men will be entitled and which they must +receive (or our entire structure will fall) will of itself bring to +their coffers all the wealth in existence within a given time. If this +is so, then why have the American people allowed themselves to reach +this condition? Why are they to-day not only resting peacefully under +this worse than death-bringing yoke, but assisting in the further +riveting of this badge of dishonor and degradation? + +The reason is simple: They have been lulled to sleep by the "System" and +its cunning votaries until they have but a dull appreciation not only of +existing conditions but of their coming consequences. It is almost +incredible that a people as intelligent as the American people, and as +alert to that individual and national honor which they have bought with +so much of their blood and their peace of body and mind, can be so +deceived and juggled with. When one looks about, however, and notes +happenings of which one personally knows, and the degradation and +dishonor to which public opinion is seemingly indifferent, nothing is +incredible. + +One sees a certain man openly displaying five hundred millions of +dollars, a sum which represents the life earnings of 150,000 of our +population, and knows that this man has secured this incredible amount +during forty years of his life. One sees the second highest and most +honorable office in the nation, a United States Senatorship, openly +bought for a few stolen dollars by a man who up to the very day of its +purchase was a watch repairer in a small country town, and who had never +done a single meritorious deed or been possessed of worldly goods to the +extent of $5,000. One sees a wily adventuress secure from the banks, +which exist only to safeguard the people's deposited savings, hundreds +of thousands of dollars on her bare story that she was the possessor of +some mysterious documents. One sees a $6-a-week office-boy of one of the +"System's" votaries able to borrow for the "System," on his bare note, +four millions of dollars from a New York institution which only exists +to safeguard the people's savings--although the law says that such +institutions shall not loan to any man on any kind of collateral, even +Government bonds, one-tenth that sum. One sees two men, drunk with their +success, gouging and tearing at each other's hearts in Wall Street, and +sees their gouging and tearing bring about a panic which takes from the +people in an hour over a billion dollars and drives scores to suicide, +murder, and defalcation--the two men continuing meanwhile as ornamental +pillars of society instead of wearing prison stripes. One sees a great +railroad corporation, in which are millions of the trust funds of +widows, orphans, and charitable institutions, caught "short" (having +sold something it did not own) in the stock-gambling game and held up to +the tune of ten million dollars by a reckless stock gambler, who says +"If you don't settle to-night it will be twenty millions to-morrow"; and +the toll is paid, while the great banker who conducts the release of the +hold-up charges the further tribute of twelve million dollars for his +services. And then one sees this twenty-two millions of "commission" +tacked on to the capital stock of the great railroad which is +subsequently capitalized into a "bond" and sold to great life-insurance +companies as a first-class investment for their trust funds. + +When one sees these things and a hundred other as rankly fraudulent, one +should not wonder at anything American connected with dollars. + +Such things occur because the "System" has so far been able to keep the +public in ignorance of its doings. On the surface there is nothing to +suggest that a set of vampires have captured the high places of finance +and are sucking away the life-blood of the nation. Our banks and trust +companies all present a fair exterior and apparently are the same safe +and honorable institutions they were before the canker fastened on them. +Only its votaries know what the "System" is, and their way is the way of +silence and darkness. A tie, stronger and more effective than the oath +of the Mafia, binds them to its service, and woe be to him who dares +divulge its methods. He who is bold enough to enter upon a recital of +these secrets must be strong indeed to withstand the bribes to silence +which would be placed in his hands. The "System" can well afford to pay +any price rather than be brought face to face with its past, with an +enraged people for referee. And even if the being be found who will +venture an exposé of the conspiracy, he will find it strangely difficult +to get his story past the traps and pitfalls which will be placed +between it and the people for whose enlightenment it is intended. + + + + +CHAPTER III + +THE FUNDAMENTALS OF FINANCE + + +Finance is easy enough to comprehend if it be explained, but so long as +an explanation is deadly to the interests of the men who control it, one +can be sure none will be offered. There is no term more common to-day +than "trusts," and we are surrounded by "trusts," institutions whose +workings during the past twenty years have awakened intense public +curiosity to know what a "trust" is. Yet there is not extant a +definition of a "trust" which conveys to the rank and file of the people +any real idea of what a "trust" is. So vague is the general +understanding of the "trust's" functions and purposes that the most +intelligent and honest statesmen struggle and hopelessly flounder when +they attempt to define them, and we have at the present time the able +chief of our nation talking of regulating them by law, when, as a matter +of fact, a "trust" is, top, sides, bottom, outsides, and insides, an +absolutely illegal institution, created outside the law, existing +outside the law, and having for its purpose the performance of those +things and only those things which the law says cannot be performed +legally. Imagine our law-makers gravely meeting to make laws for the +control and regulation of the pick-pocket or burglar or counterfeiting +industry, or endeavoring to prescribe legally the times, places, and +amounts of national bank defalcations, or the kind of ink, paper, and +pens which must be used by forgers in the pursuit of their +profession--imagine it! + +In entering upon an explanation of the workings of the "System," it is +necessary to set forth plainly the fundamentals of finance, the few +rules and inventions by and through which humanity regulates its +affairs. In the beginning, of course, might was right and men supplied +their wants by force, trickery, or cunning. In time the disadvantages +of this became obvious, for while the stronger could overcome the weaker +and satisfy desire, a combination of the weaker units acting together +could always wrest the prize from the individual. To equalize things, +the people got together and made for themselves rules and regulations +governing the conduct of their lives and their relations with one +another. This was invention No. 1: _Law_. Presently it developed that +the physical barter of the commodities of labor was not a satisfactory +basis of exchange; so to the statutes already in existence a new one was +added providing an interchangeable token of value. This was invention +No. 2: _Money_. The statute insisted that the money be of a fair and +just standard, by which all the people should receive the equivalent of +their labor, and no more. As conditions became more settled, there grew +up a realization of the value of a man's life to those dependent on him, +and of the fact that when he died his wife and his children were +deprived of the livelihood his labor won for them. A new regulation was +added to the code, providing that men contributing to a fund during +their lifetime should be entitled at death to leave to their heirs a sum +in proportion to the amount of their contribution to the fund, less the +actual expense of caring therefor. This was _Life Insurance_--invention +No. 3. But there were other calamities less distant than death to be +guarded against, and a common fund, also based on the contributions of +individuals, to aid and relieve in case of fire and kindred calamities, +was organized. Hence invention No. 4: _Fire Insurance_. + +And thus the fabric of civilization grew, each addition to the structure +being made to cover a want which experience developed. As time went on, +some of the people accumulated the fruits of labor, money, in greater +quantity than was requisite for their own needs, but which less thrifty +or less fortunate brethren could so profitably employ in their own +affairs as to be able to pay for its use a fair proportion of what it +could be made to earn. Thereupon provision was made for a common place +of safety for this surplus money, a place where experts in the handling +and putting to use of money could employ their talents, first, +safeguarding it and, then, loaning it to others. And the law was made to +say that all money put into this common place should be so guarded as to +be ready for its owner when he demanded it; that its owner should +receive all it earned less the necessary expense of holding it, and that +the amount it earned should be only such as those who borrowed it could +fairly make it earn. This was invention No. 5: _The Bank_. + +As the years followed one another, "the bank" became one of the most +important of the people's institutions and grew in number and variety. +There came to be many different forms of banks. For instance, _national +banks_, which, under the control and regulation of the Government, +became depositories for the circulation of the Government's money and +were privileged to lend money to individuals or corporations with or +without collateral. Funds confided by the people to these national banks +had always to be ready for their owners. A second form was the +_savings-bank_, which grew out of the requirements of small depositors +and was governed by the laws of its community. The savings-bank used and +safeguarded money confided to it in small sums, and these amounts could +be withdrawn only by their owners in person, after an agreed term of +notice. The savings-bank was allowed to lend only on real estate or +certain other securities, the character of which was rigidly regulated +by the law. In consequence, it could use its funds for long-time loans +and mortgages, so it earned larger rates of interest than the national +banks. The _trust company_ was a third variation, coming somewhere +between the national and the savings-bank, and was regulated, as was the +latter, by the laws of the community in which it existed. The trust +company, too, received deposits from the people, but was allowed a +broader latitude in employing them. It was also authorized to engage in +certain other business--for example, to act as manager for a deceased +person's estate and even to buy and sell securities. Because of the +extra-hazardous business in which it engaged and from which the other +two institutions were legally debarred, the trust company earned and +paid larger rates of interest to its depositors, and the men who +handled its funds were allowed to take for their own remuneration +profits in excess of those derived by the custodians of national and +savings-banks. + +Another deficiency in the business structure growing out of the +increasing prosperity of the people was next provided for. When an +enterprise became so large as to necessitate several owners for its +conduct, the prescribing and defining of the relation of these owners to +each other and to the common property became a task of increasing +difficulty. So the idea arose of welding the enterprise itself into a +separate entity which could do all the things the individual might, and +yet exist apart from the individual and independent of his personal +dealings and comings and goings. His ownership should be an undivided +interest in the whole represented by certificates of stock or bonds, +which could pass from him to another without interfering with the +enterprise. This was invention No. 6: _The Corporation_. The law then +provided regulations for the creation and conduct of these corporations +which compelled them to keep their affairs in such shape that all could +ascertain of what each consisted. + +When these six organizations had been founded, the machinery for the +conduct of the business of a civilized people was almost complete. But +still one other want developed: with the multiplication of the +corporation tokens of property, it became necessary that there should be +some place where the worth of these might be ascertained either by +purchase, sale, or loan under the regulation of experts. So there was +created a common market-place, to which came all those who had +corporation tokens of property to sell and those who desired to purchase +them; and the prices these brought were announced to the world and +became the measure of the value of the institution they represented. +Rules for the regulation of the business of the market-place were +gradually formulated, and invention No. 7--the _Stock Exchange_--came +into existence. + +With this addition, the people's organism for safeguarding and +economically handling the funds of their labor to the best advantage of +all concerned and without interfering with the rights and privileges of +individuals was fully equipped. Each separate institution had grown out +of an actual necessity and had its own legal organic function, fully +understood and defined. And there was no branch of human industry which +could not be safeguarded, handled, and perpetuated through this +organism, nor could evil come from the existence of any one of these +seven components. The robber, the thief, and the pirate, as defences +against whom they had been erected, could not seize any of them or the +people's savings which they were created to safeguard, because the +constitution of each provided adequate penalties for such a seizure. As +long as the members of the organism performed their ordained functions +the fabric of the people's fortunes was safe from plunder. + + + + +CHAPTER IV + +THE MAGIC "JIMMY" + + +It was at this stage that the class which is now the "System"--of which +the mighty robber of barbaric days was the prototype--began to cast +envious eyes at the accumulated earnings of a prosperous people locked +up and safeguarded against depredation, while the owners (the public) +rested easy in the conviction that they had fully protected themselves +against the spoilsman. The "System" reasoned: "If only a way could be +devised to win control of the seven institutions so that all the +benefits the people intend for themselves may revert to me and yet I be +exempt from the punishment provided for those who attempt unfairly and +dishonestly to secure such benefits, I can get a much easier and surer +possession of the results of the labor of the people than I was wont to +when I took them by might." + +A need defined is half relieved. Outside the treasure-house was the +robber enviously surveying its strong walls and iron doors, its locks +and bolts, specially designed to defy the felonious intentions of such +as he. How safely to win his way in and possess himself of the piled-up +gold was his problem. And as he waited and watched, the lawyer, at his +solicitation, invented for him a magic "jimmy"--an instrument with which +he could not only break through the outside door, but as easily force +his way past the complex locks of the chambers inside. What was still +better, this magic "jimmy" was also a license to enter upon and take +possession of others' properties and use them for his own benefit. It +conferred on its owner a legal privilege to steal. The robber was +satisfied. The "jimmy" which the lawyer had brought him was the +"trust." + +All this sounds very hyperbolical and far-fetched, perhaps, but it is +exactly what a "trust" is. The "trust" may also be defined as a master +key to the people's financial structure, which enables its owner to +enter any or all of the separate institutions I have mentioned, and +combine any or all of them, without affecting their respective +organisms, into a new organization which possesses the potencies and the +privileges of each, but is unhampered by the legal restrictions of any +one of them. Like electricity, the exact nature of a "trust" does not +admit of rigid definition, but it is a force which can be exerted only +in conjunction with financial organisms, which it joins and yet +releases, adds power to, and exempts from consequences. Let us suppose +that two men are made into a "trust"--this human combine becomes at once +free from the bondage of matter and the senses, sees out of the back of +its head and passes in and out through solid walls. It has all the +combined strength and more that the two men had and all their human +privileges and possessions, but it evades nature's laws as to +individuals, and the laws of man both as to individuals and other +material things. + +To put the description in still another way, a "trust" is an institution +which endows itself with the right to use any or all of the seven +institutions of the people as the people use them, but so made that its +user derives from the institutions the benefits the people intended for +themselves, and yet is immune from the legal consequences of +appropriating such benefits. Two or more men make a "trust" by +combining--acquiring the control of--an insurance company, a trust +company, and a savings-bank. The new organization _is_ all of these +institutions, performs the functions of all of them, yet can legally do +with their incomes, capital, and surpluses things which, from the very +nature of each, none of the institutions is allowed to do--the new +organization is all of these institutions until the law attempts to +bring it to book; then it evades being any one of them. The trust +company is empowered to lend money on speculative ventures which the +insurance company and savings-bank may not do, so the "trust" lends the +insurance company's vast accumulations and the savings-bank's hoard +through the trust company with great profit or tremendous loss and +enjoys immunity from the consequences which should follow such +disobedience of the law. Moreover, when the trust company shows a profit +the "trust" appropriates it, and when a tremendous loss is sustained the +insurance company or the savings-bank must bear it. + +An illustration: A, B, and C form a "trust." A and B are president and +controller of a savings-bank and an insurance company respectively. They +organize a trust company with $1,000,000 capital, of which the insurance +company furnishes the majority; they then elect C president and +controller of the trust company, and make him their associate or a +dummy. The trust company receives $5,000,000 of the people's money on +deposit. The insurance company deposits $5,000,000 of its surplus funds, +and the savings-bank $5,000,000 more. The trust company now has +$15,000,000 of the people's savings in its control with which by law it +is allowed to do certain things; but what it does with the $5,000,000 of +the savings-bank and the $5,000,000 of the insurance company the law +specifically says neither one of the institutions can do itself. The +"trust" then purchases for $5,000,000 the stock of an industrial +corporation. It borrows the $5,000,000 and an additional $5,000,000, +which represents its own first profit, from the trust company through +irresponsible dummies, depositing the industrial stock as collateral. +The "trust" next causes the trust company to issue bonds for +$15,000,000. These bonds are based upon and secured by nothing of worth +but the stock. The trust company offers these bonds for sale. The +insurance company buys $7,500,000 of the bonds, and the trust company, +through dummies, the other $7,500,000. By the operation so far the +"trust" shows a profit of $10,000,000. After making this profit and the +true worth of the bonds becoming known, these decline back to the +original worth of the stock upon which they are based, $5,000,000, and +there is the tremendous loss of $10,000,000 made. The trust company +"busts," and there is a loss to its depositors of $10,000,000. This loss +is divided as follows: $3,333,000 to the savings-bank, $3,333,000 to the +insurance company, and $3,333,000 directly to the people, less the +small amount which will be recovered from the stockholders. (These +losses will be affected in an unimportant way by the $1,000,000 original +capital.) + +In this case the "trust" has done nothing for which those responsible +for it can be held civilly or criminally liable. Neither has the +insurance company, the savings-bank, nor the trust company, and yet, if +there had been no "Trust" and any one of the three institutions had made +the loss directly through its own actions, the officers of that +institution would have been civilly and perhaps criminally held +responsible. + +The utility and convenience of the "trust" having been demonstrated, it +became a popular instrument for financiers desiring to accomplish all +manner of illegal purposes. Especially was it an apt tool for the +"System," which in the meantime was perfecting its control of the +people's institutions. The owners of railroads running through the same +territory, finding cumbersome and hampering the restrictions with which +the community they served had safeguarded its interests, formed +"trusts." Straightway there were valuable results--the combination was +emancipated from the regulations which had bound its individual members; +competition was eliminated and rates were raised. + +As time went on new "trust" possibilities were discovered and other +institutions linked up--corporations of all kinds, insurance companies +and national banks and savings-banks, were brought together for the +benefit of the "System" and the detriment of the public. The end of the +trustification of the institutions of the nation is not yet, but the +people are to be shown a way by which the plundering process can be +reversed and through which they can make their freedom complete and +absolute by the complete and absolute enslavement of the "System" +itself. + + + + +CHAPTER V + +HOW THE "SYSTEM" DOES BUSINESS + + +To follow the various steps in the crimes of Amalgamated, my readers +should know how the securities of a corporation are manufactured, how +"put upon the market," how admitted to the Stock Exchange, how prices +are made in the Stock Exchange, how fictitious and fraudulent quotations +are created and disseminated, until the very shrewdest members of the +Stock Exchange cannot distinguish those which are real from the +fictitious in cases outside their own manufacturing. Then there is an +elaborate and ingenious procedure by which public opinion is moulded, +that is, by which people are made to believe that the prices at which +they buy and sell the stocks and securities are bona fide; and this is a +procedure as compact and as well understood by the "System's" votaries +as are the methods of the bank-breaker or burglar--who sends his "pals" +ahead to "pipe" the lay of the land--by felony's votaries. When I have +shown these things, about which little is known to-day by the public, my +readers will have no difficulty in comprehending what I shall lay before +them of the actual robberies in the case of Amalgamated and other +notorious enterprises. + +The underlying principle of the several organisms through which the +commerce of the country is conducted is the protection at once of the +interests of the individuals composing them and of the public with which +they do business. Provided this principle is adhered to, no harm can be +wrought to either. Most of the contemporaneous swindles through which +the people have been plundered were perpetrated through the agency of +corporations, and this organism has become a sort of synonym for corrupt +practice. Yet the original corporation invention as I have described it +was devised to meet a real want of the people, and it has merely been +diverted from its proper use by the lawless votaries of the "System." +Consider the institution as we now understand it. Certain individuals +decide to conduct their business in railroads, mines, manufactories, +patents, etc., in the form of a corporation and apply to the +community--the State Government--asking authorization to do so. They are +compelled first to conform to the rules and regulations laid down by the +State for the control of corporations, which say in one form or other: + +"We create you for the purpose of doing those things that are best for +the many, not the few, and if we knew you would use our authority to +oppress the many in the interest of the few we would not create you." +The fundamental privilege of incorporation is the legal authorization to +issue paper titles of ownership to the business just incorporated. These +are in the form of stocks and bonds. Whoever owns these paper titles +shall possess the property and the business as the individuals did +before they incorporated, and the law presumes that they shall manage +and control that business, receive the benefits which come from it, and +suffer any loss arising from its conduct, and that all these benefits +and responsibilities shall be as laid down in the law. It follows that +no harm other than that the law expressly prescribes penalties to +prevent can come to any one from corporations thus created, always +provided the laws are what they appear and what the people intended them +to be, and that they are enforced as the people intended they should be. + +It is most important to all concerned in a corporation that the paper +ownership shall represent the real value of the property on which it is +based, and no more. When the people exchange their savings for these +authorized paper tokens, they should be able to rest confident in the +State's guarantee that they are worth what they purport. + +There have probably been jailed in the United States during the past +twenty years thousands and thousands of American citizens whose +aggregate stealings do not amount to one-tenth the total taken from the +people by either the Amalgamated, the United States Steel, the American +Tobacco Company, or a score of other fraudulently organized or +fraudulently conducted corporations. + +There are various ways of organizing corporations and issuing their +stocks and bonds. Sometimes a company is organized to acquire a +property; individuals and institutions set down their names to take and +pay for the shares or bonds. With the money thus obtained the property +is purchased. _Or_ the individuals who own the property which is to be +the basis of the corporation exchange it for all or part of the stocks +and bonds. In the latter event those original owners usually sell to the +public the tokens thus acquired. + +Honest men in forming a corporation make publicly known the character +and worth of the properties or enterprises they are organizing, what +they have cost, what their profits are, and what may reasonably be +expected by investors. The tricksters and the "System," with whom +incorporation is generally but the first step in a conspiracy for +plunder, surround the proceeding with an air of mystery and refuse +information usually with: "We do our business quietly and in silence, +and those who do not like our ways may keep out of this scheme." Their +whole procedure is of that high and mighty order which impresses the +ordinary mortal with a sense of confidence in the independence of its +users and a conviction that their scheme must be so good that they do +not care whether they sell or not. This is just the effect it is +intended to produce. + +The next step is to lead the people toward the shambles. This is done by +"moulding public opinion," and for this interesting function the +"System" and Wall Street have an equipment of magical potency. Public +opinion is made through the daily press, through financial publications +of various kinds, and through "news bureaus." Every great daily has a +financial editor and a corps of experts in finance who spend their days +on "the Street" cultivating the friendship of the financiers. At night +they are round the clubs and hotels where the brokers and promoters +congregate, debating the events of the day and organizing those of the +morrow. There are also the strictly financial papers--daily, weekly, +and monthly--whose corps of editors and news gatherers live on "the +Street," and know and care for nothing but finance. And lastly, there +are the news bureaus, with runners out everywhere to gather in items of +news affecting stocks, Wall Street or finance. These are printed on +small square sheets of paper, and delivered by an army of boys at brief +intervals while the Stock Exchange is open at the offices of the +bankers, brokers, insurance companies, and hotels; or the same matter is +disseminated by means of an automatic printing machine called a +news-ticker. For this service the offices pay the bureaus from $1 to $2 +a day. News bureaus form an important cog in the machinery for making +stock-markets, as it is through the news they furnish to the Stock +Exchange and to the offices where investors and speculators gather +together that the big operators affect the market. A decision to buy, +sell, or "stand pat" is often based on the _on dits_ of these printed +slips. + +The first step toward "moulding public opinion" is taken when the +"System's" votaries send for the dishonest chief of a news bureau, a man +usually up in every trick of the trade. I will later describe one of +them, a scoundrel so able and experienced that, to use the vernacular of +the gutter of "the Street," he can give cards and spades to the +frenziedest of frenzied financiers. To this man the "System's" votary +will say something like this: "We are going to work off blank millions +of blank stock; it costs us thus and so, and we want to sell for so and +so many millions." Nothing is kept back from this head panderer and +procurer, for it would be useless to attempt to deceive him, and, to +quote his always picturesque language: "Never send a sucker to fish for +suckers or he'll lose your bait, so spread out your bricks and I'll get +the 'gang' to polish up their gildings." After the quality and amount +the "System" intends to work off in exchange for the people's savings +are explained, that part of the plunder which is to come to the head +news-bureau man is settled upon. The amount varies with the size and +quality of the robbery to be perpetrated. In some cases as high as a +million dollars in cash or stock or their equivalent has been paid to a +"moulder of opinion" for simply so shaping up a game that the people +might be deceived into thinking one dollar of worth was four, six, or +eight dollars. + +The head of the news bureau, having taken the contract to lay out and +carry through the deceptive part of the scheme by which the people are +to be buncoed, now begins operations. First, bargains are made with +conscienceless financial editors of the daily and weekly newspapers, +whereby for so much stock or for "puts" or "calls" or both,[17] they +agree to insert in their paper's financial column whatever yarns are fed +them by the bureau man, regardless of their truth or falsehood. To +justify the attention paid the subject by each editor, a certain amount +of money is spent in advertising, in the newspaper that employs him, the +merits of the enterprise. The financial journals are dealt with about on +the same basis. In return for straight advertising or for "puts" or +"calls" they agree to insert the manufactured news. The news-bureau man +then puts his entire staff to work inventing fairy tales of one kind or +another to excite the interest and attention of the people, and these +tales must be so concocted that the public is drawn into believing that +the statements disseminated represent actual conditions. I shall, later, +give real instances of the working of this nefarious game of "moulding +public opinion," and present it in the lime-light necessary for its +appreciation. To show the extent to which this "moulding" process is +carried, I know in one instance of a high-priced financial scribe being +sent to live in St. Petersburg for no other purpose than to send certain +"news items" to a confederate located in Germany, who would get these +items to a reputable English banking-house through whom they were given +out in London as news: the whole object of this complicated system being +that the news items might be sent back to New York without Wall Street +suspecting they were bogus. + +I must not be understood as meaning to say that all financial editors, +news gatherers, or news bureaus are engaged in this, one of the lowest +forms of swindling, for such is not the case. _On the contrary, there +are many of them whom no amount of money or influence could make waver +in their allegiance to the truth and to honest dealings._ With some of +the others I hope to deal specifically later, and I shall not hesitate +to set forth in detail certain transactions in which they have been +engaged. + +FOOTNOTES: + +[17] A "put" is the right to sell to a certain firm or individual shares of +stock at a stated price for a stated period, and a "call" the right to buy +under the same conditions. The holder of the "put" or "call" is under no +liability, as he can use the "put" as margin to buy stocks, or the "call" +as margin to sell stocks, or he can hold them for the profit there may be +in selling or buying the stock after it has declined or risen below or +above the price named in the "puts" or "calls" he holds. + + + + +CHAPTER VI + +HOW WALL STREET'S MANIPULATIONS AFFECT THE COUNTRY + + +What is the connection between the "System" and the minor financial +institutions throughout the country which are owned and controlled by +groups of sturdy men who know not Wall Street and its frenzied votaries, +and who are ignorant of "made dollars"? Let us see. We will take five +national banks in different parts of the country, each having a capital +of $200,000 and deposits of $2,000,000. One is in the farming district +of Kansas; another is in Louisiana in a cotton district; a third is in +the orange groves of California; in the mining district of Montana is a +fourth; the fifth in the logging and lumber country of Maine. These +$10,000,000 of deposits represent savings earned by the type of men who +have made America what it is, and who laugh when they read in their +local papers: "Panic in Wall Street; stocks shrink a billion dollars in +a day." "Fools and their money are easily parted," they say, "but Wall +Street gets none of our honestly earned money." Now the officers of +these five banks are honest men and they know nothing of the "System," +yet the day of the panic they each telegraph to their Illinois +correspondent, the big Chicago bank, "Loan our balance, $200,000, at +best rate." That day the Chicago bank with similar telegrams from +forty-five other correspondents in various parts of the country, wires +its New York correspondent, the big Wall Street bank, "Loan our balance, +$2,000,000, at best rates." + +Thereupon the great New York bank sends its brokers out upon "the +Street" to loan on inflated securities of one kind or another which its +officers, the votaries of the "System," have purchased in immense +quantities at slaughter prices the millions belonging to the Chicago +bank and to other correspondents of its own in Cincinnati and Omaha and +St. Louis and other big cities. The decline is stayed, and then the +world learns that the panic is over and that the stocks, of which the +people have been "shaken out" to the extent of a billion dollars, have +recovered in a day $500,000,000 of it, and that probably in a few days +more will recover the other $500,000,000. Who has _recovered_ this vast +sum? The people who had been "shaken out"? No, indeed! The votaries of +the "System" have made it--they and the frenzied financiers whose haunt +is Wall Street, and whose harvest is in such wreckage. + +The part that the five little banks innocently played in this terrific +robbery was unimportant. What is important is that it was the funds of +their depositors and others like them which the "System" used to turn +the Stock Market and make an immense profit out of the recovery of +values. It is true the banks received but two and one-half or three per +cent. for the use of their balances, and their officers would scorn the +suggestion that they had put any of their money in jeopardy in a Wall +Street gamble. But what I have outlined happened, and has happened many +a time before and since, and goes to prove my assertion that every +financial institution which is taking the money of the people for the +ostensible purpose of safeguarding it or putting it to use for them, is +a part of the machinery for the plundering of the people. + +Sooner or later, every dollar taken by the "System" through Wall +Street's manipulation of stocks directly affects every man, woman, and +child in the United States. Let us, for example, see how a stock slump +in New York affects the owner of a small life-insurance policy in +Wyoming. The shares of the American and English ocean steamship +companies were bought up by the "System" at double their worth and +converted into a "trust." New stocks and bonds to a number of times +their value were issued and sold to the public. The great insurance +companies bought many millions worth of these securities, using for the +purpose the money they had collected from the policy-holders, a dollar +at a time. This "investment," at the moment it was made, actually +represented a loss to the purchasing insurance companies of millions of +money, for millions more than the property was worth or could possibly +be made worth had gone to the people who formerly owned the steamship +properties, and many millions more to the "System" as its share of the +swag. And it should be remembered that the men who organized the +steamship trust were the men who invested the insurance company's money +in its securities. + +The policy-holder in Wyoming knows about the steamship trust and about +the terrible loss sustained by those who invested in its securities. He +does not realize, however, that his insurance company has been buying +such poor stuff, for he is persuaded it is a great and noble +institution, and far above Wall Street and its rash gamblers. Even when +he and his kind find their yearly dividends on their policies growing +less and less and their premiums rising "because of the tremendous +increase in the expense of doing business," they do not dream of +connecting these misfortunes with the "System's" trustifications of +inflated securities; nor do they associate them with the glowing +accounts of the half-million-dollar seaside palace built by the +insurance company's officer who entered the employ of the institution a +few years before, with his salary for his fortune, and who is now +pointed to as an example of thrift, being worth from ten to fifteen +millions. + + + + +CHAPTER VII + +ECONOMICS OF COPPER + + +A thorough familiarity with the facts and conditions set forth in the +preceding chapters will help my readers to an understanding of the +series of complicated transactions through which the snaky course of +Amalgamated must be pursued. Its flotation was the most tremendous and +public ever even attempted, much less successfully carried out, and in +its market career the full resources of stock jugglery were exercised on +its behalf. The crimes of Amalgamated are to the delinquencies of Bay +State Gas as the screaming of eagles to the chirping of crickets. From +its birth this great enterprise went hand-in-hand with fraud and +financial dishonor, and the facts I shall proceed to reveal are so +formidable in their indictment as to startle even those calloused to the +trickery of modern stock deals. + +An armistice followed that last desperate battle of the gas fight in the +Delaware court-house, and gave me time to turn my whole attention to the +plans I had long been maturing in my mind in connection with quite +another project--"Coppers." + +For sixty years past Boston had been the home of the copper industry. +From it great fortunes had been derived, and there was in course of +development a copper aristocracy which threatened the supremacy of the +East India aristocracy that had so long lorded it in Boston society. +Indeed, so far had the rival contingents progressed that there was a +serious searching of the pretensions of any new-comer whose origin had +to do with other enterprises. "Coppers" were respectable, were genteel, +and, above all, were not "trade," for the average old-time Bostonian +affects the Anglo-Saxon contempt for the traffickings of retail +commerce. + +For the benefit of those in the outer darkness, to whom the ways of +Boston are strange, it may be explained that the East India trade goes +elsewhere under other less euphonious names, and consisted in the +swapping of New England rum, made from molasses, water, and other +things, for human cotton-pickers. It was a most profitable industry, +with a spice of adventure to it, and in which at the time it flourished +a gentleman might honorably engage. It may be said that with the +paradoxical conscientiousness characteristic of the Puritan mind, the +first outcry against the personal ownership of human chattels was voiced +by New England, and her leading citizens generously devoted the incomes +of the fortunes their forefathers had amassed in the slave traffic to +releasing their colored fellow-creatures from bondage. That, however, is +still another story. + +To return to "Coppers." In my young days in "the Street" in the early +'70s, the first task I remember performing was making deliveries of +copper stocks traded in by "the house" which was entitled to my +twelve-year-old services in return for the three large dollars which I +received each Saturday with far more honest pride than any three +millions I have since handled. As I grew up I watched Calumet and Hecla +advance from a dollar to 450 (it afterward sold at 900) because of its +real worth, and imbibed the conviction, which all true Bostonians +entertain, that money acquired through copper is at least 33 per cent. +better than money from any other source. I sympathized with the State +Street code which declares, or should: "Gold can be found in a day by +any one with eyes, silver in a week by any one with hands, and money in +a year by any one with sense enough to save it, but no man gets into +copper without capital, fortitude, patience, and brains." As a matter of +fact, it requires, even to-day, with all of to-day's facilities and +rush, $5,000,000 in money and five years of spending it after a copper +deposit has been found before it can be made to yield returns. Is it +surprising that a project requiring so much money for so long a time +should appeal to Boston's regard for endurance, expensiveness, and +exclusiveness? Could there be found an enterprise better calculated to +discourage the upstart? + +My daily round of errands led me from broker to broker and from bank to +bank, and always I heard talk of copper. It is not remarkable that my +youthful mind became impressed with the profound importance of the metal +and all pertaining to it. I picked up a great deal of information on the +subject, which I fortified later with a careful study of copper the +metal, copper the mine, and copper the investment. As I mulled over the +immense returns obtained from their ventures by the men I knew had their +money in copper, it struck me as extraordinary that this industry should +be so much more profitable than others. Here was a great staple, a +necessity of the people, which had been in use since men began to sit +up, and would be needed until Father Time smashed his glass, that +returned 100 per cent. gross profit on the business done in it, while +the business done in any other staple did not return, gross, over ten to +eighteen per cent.; which gross profit gave to the capital invested in +copper a net profit of sixteen to twenty-five per cent., while that +invested in the other staples returned a net profit of only three and +three-fourths to four and one-fourth per cent.[18] The value of money +had decreased with the world's development; the cost of the great +commodities of life had all come down with the decline in interest--all +but copper, which kept its old places throughout all the changes that +had occurred in the relations of capital to labor and business. I +realized that copper, in that year, would afford a gross profit of 100 +cents on each $2 worth produced; that this great gross profit was +legitimate, was not brought about through unfair restrictions or forced +combination, or evasion of the country's laws, but was wholly natural, +being founded on the fact that the supply was so limited that the demand +prevented the price dropping below a certain figure, and that this under +ordinary circumstances represented at least 100 per cent. of gross +profit to the producer after he had paid for labor and material the +highest ruling prices. + +No better illustration of the main facts about copper can be found than +the condition of the industry to-day, in 1905. The metal is now fifteen +and a half cents per pound, and the consumption so great that the price +still advances, yet if through an agreement among the producing mines +this sales-rate should be dropped twenty-five per cent., it would so +increase consumption as to force back the price to a point that would +again discourage consumption; and yet in the old mines the cost of +producing the metal sold at fifteen and a half is but six to seven and a +half cents, in some even lower. + +Compare these conditions with those existing in the steel industry. +Therein unlawful combinations and unnatural restrictions are essential +if those engaged would show a gross profit of even fifteen per cent. on +their gross output. If more than fair or going returns are earned, then +new capital flows into competition and the surplus again shrinks to an +uninviting point. The same is true in wheat, corn, and cotton--big +prices invite fresh investments and the planting of broader acreage. +Hence the sorry spectacle of the cotton planter who, in 1905, will +receive no more for his twenty per cent. increased crop, coming from +over two millions increased acreage planted last year, than for his +smaller one of the year before. + +That my readers may quickly, and once for all, grasp the point I wish to +make, I will illustrate: + +The Steel trust in 1904 did a gross business of $432,000,000, upon which +they made a profit of $71,400,000, and yet this vast amount was only +five per cent. upon the trust's inflated capital of $1,400,000,000 odd; +and as the "System," in regulating the capitalization, arranged that the +preferred stock (and bonds), which represented the "System's" profit, +should receive seven per cent., there was not a dollar in dividends for +the $520,000,000 of common stock which had been sold to the people for, +in round figures, $300,000,000. + +At the same time the Calumet & Hecla Copper Company produced and sold +over $10,000,000 worth of copper, upon which it earned, net, over +$5,000,000, which enabled it to pay to the people who had invested in +its 100,000 shares of stock (par value, $25), 160 per cent., or a total +of $4,000,000, and, at the same time, carry an enormous amount to its +surplus. + +In the commercial world copper occupies an impregnable position. To +compete, it is first necessary to find a copper deposit; then to lock up +a vast sum of money for a long term of years before returns begin to +accrue. And new copper deposits are as rare and few and far between as +Lincolns and Roosevelts in politics or Grants and Lees in war. In the +last eight years, or since the metal has been prominently before the +world of capital, but two great producers of copper have been +created--the Copper Range at Lake Superior, Michigan, and the Greene +Consolidated in Mexico--and these two mines have only, at the end of six +years, after an immense expenditure of millions (Copper Range, with a +capital of $38,500,000, 385,000 shares, par $100, which sold in the open +market a few years ago at $6, now selling at $75, and Greene +Consolidated, with a capital of $8,650,000, 865,000 shares, par $10, now +selling in the open market at $25), reached the point of profitable +production. Their combined output, while reaching the (for young mines) +unprecedented amount of one hundred and odd million pounds of metal per +annum, constitutes but a fraction of that which Mother Earth has given +up during the period of their development, namely, 2,500,000,000 pounds, +all of which has been disposed of and cannot again be used to satisfy a +ravenous consumption. + +It seemed to me, then, a curious anomaly that, while capital was chasing +investments which promised but four per cent., it eschewed copper which +yielded from sixteen to twenty-five per cent., and my investigations +told me that a producing copper-mine is the surest business venture a +man engages in, for, by the time it begins to produce profitably, it +must be so far developed that its owners are certain of ore to work on +for decades ahead. A good copper-mine is really a safe-deposit vault of +stored-up dividends, which cannot be stolen nor destroyed by fire, +flood, or famine. Calumet & Hecla, for instance, though it cost its +first owners but a dollar a share, has paid out $87,000,000, or $870 per +share, or 3,480 per cent. on its par value of $25, and while it has been +paying dividends over thirty-five years, it paid last year $40 per +share, and has more in sight than it has yet paid. And Copper Range, +though but six years old, will be producing soon as much as Calumet & +Hecla, and has now in sight ore to keep it going fifty or sixty years. + +Having pieced together all the facts and circumstances in this +connection, I was sure that I had grasped a principle of great +commercial value, and I set about finding a cause why the world of +capital should for so long have overlooked the tremendous potentialities +of this industry. I found the cause in Boston herself, in the +characteristics of the city, which was head-quarters for copper, and +which had grown in financial power with the revenues her mines earned +for her investors. Boston controlled and managed the copper industry, +and had since the days when copper-mining was a hazardous pursuit, in +which only bold and speculative souls dared engage. In the early days +the canny Bostonian demanded for the honorable dollar his parent had +earned--exchanging five-cent rum for human beings worth $1,000 +apiece--at least twenty per cent. interest, and having acquired this +habit, it became a principle, and such principles as these are clung to +in Boston with the zeal of a miser for his hoard or of a martyr to his +faith. Looking back over the years, I still recall with chagrin the +quiescent hilarity of the scion of a Back Bay family whose good father +had been one of the most successful and most brutal of all the "East +India traders," when I suggested to him that he was fortunate in +obtaining twenty per cent. on some copper ventures about which he was +grumbling. (My readers must not confuse a Boston grumble with the +ordinary ejaculations of discontent indulged in by the inhabitants of +other portions of the world remote from the Hub of the Universe. A +Boston grumble consists of an upward movement of the eyebrow, a slight +twitch of the mustache and a murmur cross-bred from "Deuce take it!" and +"Scoundrelly!") "Young man," he said, "my father said that such a +hazardous venture as copper should return at least thirty per cent. to +be safe, and I feel if I receive but twenty per cent. that something is +radically and unpardonably wrong with the management of the mine." I did +not pursue the argument, for I knew he inherited with his fortune a line +of Boston reasoning, and I remembered once having watched a country boy +put his tongue on a frosty iron door-knob. I knew better than to invoke +again that wintry Boston smile, which in a Western or Southern community +would be used to _frappé_ mint-juleps or cold-storage hogs with. + +No better illustration of the attitude of the shrewd New York investor +to "Copper" can possibly be given than to detail my first interview with +H. H. Rogers and William Rockefeller on the subject. To-day Mr. Rogers +is known throughout the world as the leading figure of the copper +world--the copper Czar, so to speak; yet it was only nine years ago when +I said to him at the end of a gas-talk: + +"Mr. Rogers, would Mr. Rockefeller and yourself look into Copper?" + +"Copper?" said he in an amused way, "copper? What kind of copper?" + +"Why, copper such as we know in Boston--copper the metal, copper the +industry, copper stocks." + +He burst into one of his jolly laughs. "Look into it? Why, I don't know +a thing about copper other than that we had old copper kettles when I +was a boy which were used to fry doughnuts in, but I suppose my plumbers +would look at anything you wanted, for I remember I get big bills for +copper tanks at the house." + +FOOTNOTES: + +[18] For those unacquainted with such business terms as "gross" or "net" +profit: Gross profit on business done is that first profit which remains +after deducting the first cost of producing the goods--in this case copper, +the metal; and from this gross profit must be deducted other expenses, such +as unusual development expenses, the expense of running the executive +departments, interest, etc. This leaves the net profit which is available +for dividends. + + + + +CHAPTER VIII + +MY PLAN FOR "COPPERS" + + +The plan I had so carefully formulated in connection with "Coppers" was +simple in application yet vast in scope. It was to buy up all the good +producing mines at their market price, or double if necessary, to +organize them into a new corporation and offer its stock to the public +at a capitalization of double the original cost. By advertising the +exceptional merits of the copper industry and the financial power of the +men who were backing it, the public would become educated to a knowledge +of the values of "Coppers." Under this education the world of capital +would invest in copper shares until the price had advanced, because of +so much capital seeking this form of investment, to a point where the +net return was brought down to the going rate of, say, four per cent. +This would mean that the old going prices of good producing Boston +copper-mines would advance 100 to 200 per cent., which in turn meant +that those who risked their money in the first venture (which I figured +would require $100,000,000) would make $100,000,000 to $200,000,000, +while at the same time the public would make $200,000,000 to +$400,000,000. This seems like an "Aladdin-lamp" story when it is told, +but, as a matter of fact, prices afterward did advance in this ratio, +and 100 and 200 per cent. beyond, and many of them, notwithstanding the +tremendous drops that have taken place since, still show from 200 to 300 +per cent. advance over the prices then in vogue. _Never in all the +history of business was there afforded capitalists so fair an +opportunity to make honestly and legitimately so vast a sum of money and +at the same time to do so much for the people. Nor was there a more +honorable undertaking nor one which a man could be more justly proud of +carrying to success._ + +As time went on, this big enterprise was more and more in my thoughts, +and I tested it in every way I knew, going over in my mind and trying +out each successive step and link until I was certain the whole +structure was unassailable. Then it became my purpose in life to launch +the venture. The difficulties of the task were never for a moment +overlooked, for I well knew that much money would be required, but with +strong backing success was sure, and such a success was tremendously +worth attaining. Next to putting in force my financial invention which +would remedy the evils of the "System," this great copper project seemed +the thing--the dollar thing--best worth doing in all the world. It was +to execute this project that I allied myself with the "Standard Oil" +party, for with their money and backing I knew I could carry through my +plans on the lines I had so carefully mapped out. + +The chief indictment my critics brought against me when my series of +articles appeared in _Everybody's Magazine_ was that I had turned +"State's evidence." Having been "in with" "Standard Oil" in their +robberies of the public, it was not until we disagreed and "split" that +I thought of taking the public into my confidence. The truth is, my +relation with "Standard Oil" was different from that any other man ever +had with that mysterious and reticent institution, and throughout the +copper crusade I insistently blurted out our plans and purposes through +every channel of publicity I could command. At no time was there the +slightest secrecy. From the very first day of the campaign I told the +story as I tell it here, and I told it from the housetops by newspaper +interviews and advertisements, market letters and circulars frankly and +freely explaining what I was about. The absolute truth of the foregoing +is easily proved through existing records, for the press of the country +contains an almost continuous story, beginning in 1896 and running up to +date, wherein I have openly and fairly told what I knew about "Coppers" +and detailed the progress of our plans. Time and again, during this +period, financial writers commented on my frankness, quoting brokers +and bankers to the effect that "Lawson will surely have his head dropped +into the 'Standard Oil' basket if he keeps telling people all he knows +in this fashion." For the complete realization of my project the +public's interest was essential. The creation of the vast business +structure that I had designed required the participation of the great +mass of the people, and I was determined that no subservience to the +selfish ends of my associates should swerve me from my plan. I saw the +enterprise whole; saw that there was great profit for all concerned, for +"Standard Oil," for myself, and for the public; but if the public were +not taken care of or were discouraged from participation, then my +institution would surely be only another combination of capitalists and +I should fail in my ambition. + +This is why I so persistently kept in the open throughout my "Copper" +campaign. I fully realized how anomalous my position was and how far I +had departed from "Standard Oil" precedents; but my thought was to +protect the integrity of my enterprise, and the best way to do this was +to have the people partners in its conception and development. To be +perfectly frank, the prospect of millions of profit counted for less in +my calculations than the honor and prestige I foresaw in the success of +my copper structure. As proof of this, witness how I voluntarily gave +back the millions I had secured, to make good. To create a great +institution, to erect a new and absolutely staple investment, and in +doing so to make millions for one's partners, one's self, and the +public, would be to live not in vain. The knowledge of my attitude will +perhaps help my readers to comprehend the enthusiasm with which I +entered into my "Copper" crusade; help them to understand how strongly I +resisted, and how deeply resented, the perversion of my fair structure +into a pitfall for those I had expected to benefit. My indignation +against the "System" is that which any honest man would feel against +ruffians who had used his best ideas and his most generous feelings to +lure innocent and unoffending people into some den of vice and infamy. +If I have not troubled to correct the misstatements of detractors who, +in an attempt to discredit my facts, have tried to pillory me as a +traitor, it is because I knew that when my complete story reached the +public it would make plain how and what I had been doing. The succeeding +chapters of this narrative will yield unimpeachable evidence that all my +dealing in "Coppers" as an associate of "Standard Oil" were open and as +much in the interests of the people as it was possible to have them. + + + + +CHAPTER IX + +BIRTH OF "COPPERS" + + +Active upon the Boston market during my Bay State Gas operations were +two copper-mining companies--the Butte & Boston and the Boston & +Montana. Their properties were in Montana and both were large producers +of the metal, that is, they were old and equipped mines. These two +organizations form to-day the most valuable part of the Amalgamated +Copper Company--in fact, more than three-quarters of all the real worth +owned by that corporation. + +Butte & Boston and Boston & Montana were essentially Boston +institutions, and were both officered and directed by the same set of +men. It had come to my knowledge, in the course of my stock business, +that there had been bought for the Butte & Boston, with its money, some +very valuable mines; instead of transferring these to that corporation, +however, its directors at the last minute had turned the titles over to +the Boston & Montana. It is only fair to these men to say that up to the +present this alleged fact has not been proven, although set forth in +cases still pending in the courts. This curious proceeding was part of a +plot the subsequent steps in which would be to run Butte & Boston +through the bankruptcy mill, and, by placing it in the hands of a +receiver, to drop the stock to a nominal figure, at which it might all +be gathered in from the public. I verified my information sufficiently +to decide to act, and swung the red danger-signal in a public statement +telling the stockholders and people in general of the coming move. At +once there arose a chorus of denials and recriminations from the +management, and the cry, "He's short of the stock and is working a fake +to scare us into throwing over our holdings that he may buy them," from +the Stock Exchange, stockholders, and the hireling moulders of opinions, +the "News Bureaus." + +The rôle of Cassandra is not more popular to-day than it was in ancient +Troy. The swinger of the red danger-signal is seldom heeded, and is +invariably suspected of interested motives by the human moths circling +round the flickering flames of frenzied finance. When I gave my warning, +Butte & Boston was selling between 25 and 30. In accordance with their +plan the insiders began to sell, and soon the price began to slide +downward, for the great majority of the stock was held by the people. +There was a halt when the denials of the management were heard, but only +for a moment. The decline continued, growing swifter as it got lower +until the stock struck $2 per share. At this stage, while the stock was +on the way to $2, just as I had predicted, the property was cleverly +slid into a receiver's hands by the very men who had so indignantly +denied my statement that such would be their action. An assessment of +$10 per share was next levied, and those who held on, hoping against +hope, began to throw over their holdings for what they would +bring--which was around a dollar. + +So far the scheme had slipped smoothly along the single-rail track +constructed for it by those in the deal, and just as my information had +led me to expect. At this juncture, however, the train struck an open +switch, and with a painful jolt for the conductor and the engineers it +slid out on a siding--it was my siding. From the time the stock struck +$2 a mysterious purchaser took in all that was offered, and when it +struck bottom he was still buying. Suddenly the schemers "tumbled" that +the plums they were shaking off the tree were dropping into some other +bag than their own, and they started into competition for the coveted +fruit. + +Next day, and for several days afterward, there were strenuous doings in +Butte & Boston on the Boston Stock Exchange. The trading was heavy and +the price pushed up from the bottom to 6-1/2. Soon, however, it was +slammed to 2-3/4, then back to 6 again, down to 3-1/4, back to 5-3/4, +and so on, until the middle of the fourth day, when the rival News +Bureau to the "System's" favorite opinion-moulder sprang the following +notice set forth on a double-leaded sheet: + + "We have just solved the Butte & Boston conundrum. The + enormous blocks of stock purchased during the past few days + have come in for transfer, and the management now know who + owns the bag into which all the stock they have for months + been planning to acquire dropped. We have unmistakable + evidence that the bag belonged to Lawson, and that he now is + in control of the Butte & Boston Company. A hasty + investigation amongst the leading floor brokers which we + have just made brings out a consensus of opinion that there + will now be music in Coppers." + +The announcement was calculated to interest a good many persons, and I +was the target of a thousand inquiries. In answer to the innumerable +calls for a denial or confirmation of the statement, I issued the +following: + + 'Tis true. 'Tis my bag, and there are 46,000 shares in it. + +It was not until the following morning that I realized what a rarely +presumptuous thing I had done. I had invaded a valuable preserve. I had +coarsely "butted into" a private copper domain without a by-your-leave +to the natives who thought it belonged to them. I was an interloper, an +intruder, an upstart. The prevailing opinion seemed to be that it now +devolved on me to present what I had purchased to those who had been a +bit late in getting to the bargain-counter, or that I should, at least, +turn it over to the conscience fund of the Stock Exchange. The copper +market reflected the indignation of the baffled schemers. It entered for +once into an open competition with Donnybrook Fair, and to judge by the +action and feeling developed in both individual and corporation classes, +the Hub had Donnybrook jigged to a wind-up. In my various contests with +the "System" I had accumulated a certain hardihood which now stood me in +good stead. I had learned before this that breaking into a secluded +treasure-trove is about as pleasant as taking the lining out of a steel +furnace with the metal sizzling and the blower on. + +I stood to my guns for the time being and then charged into the ranks +of the enemy. I issued the following statement: + + TO MY FELLOW-BROKERS AND THE PUBLIC + + I have stumbled on the fact that the stock--capital 200,000 + shares--of the Butte & Boston Copper Mining Company is a + nugget. I bought about 46,000 shares of it at an average of + something over 2-1/4, or, with the assessment paid, 12-1/4 + per share. I am going to hold it until I get over 50 for it. + Barring accidents, I shall get it. + + I advise--strongly and unqualifiedly advise--all my friends + and the public to load up with it at anything under that + price. My friends and the public know whether or not I mean + a thing when I say it. I pledge them that I not only mean + this but that I shall fight it out, and shall not sell until + there is an active and legitimate market for not only my + stock, but for what they buy, at over $50 per share. All + intending purchasers must bear in mind this is not a sure + thing, for the men who are opposing, and will oppose me, are + not conducting their operations from a graveyard, but are as + lively and aggressive as Bengal tigers at raw-meat time; but + they may rest easy in the knowledge that barring tripping + over stumps or into bogs, I'll give whoever buy a run for + their investments. + + Buy and watch Butte all the time, and, above all, pay no + attention to what the fake "News Bureau" says. + +This was the formal declaration of war. State and Wall streets, familiar +with my style of fighting, at once lined up and took sides. The papers +entered the controversy. According to what one read, Butte & Boston was +either the greatest mine in the world or a hole in the ground. Feeling +intensified; Geneva and Queensberry conventions were forgotten; it +became a go-as-you-please scramble; mud batteries filled the air with +liquid dirt, and both sides used Gatling guns to fire off their libels. +It was altogether a lusty and vociferous contest, which meant +destruction and death for the lame, the halt, and the slow-footed who +got between the fighting lines. I was naturally the chief mark for the +enemy, and was deluged with vilification. In the Bay State campaign I +had learned the personal cost of antagonizing the "System"; the copper +magnates showed me that they had terrors at command which might make +even "Standard Oil" jealous. In those days I don't believe my bank +account varied thirty-five cents without the news being passed around +before the ink on the bank-book was dry, and my family, down to my +ten-year-old, received daily or weekly through the mails pictorial +representations of their parent being hustled along to the realms where +sulphur is the standard of all values. Here is a sample of my usual +breakfast-table reading: + + C. W. Barron, the proprietor of the "Boston News Bureau," + feels it his duty to inform his readers, the banks and + bankers and brokers and representative investors of New + England, that that faking ass of State Street, that knave of + knaves, Tom Lawson, is braying again, and such + braying!--"Butte is to sell at 50, and going to be worth + 50." It would be such a joke that this conservative paper + would be only too happy to circulate this scoundrel's + vaporings, if it were not for the sad part of such schemer's + work--if it were not that the poor and ignorant unfortunates + who are unacquainted with this knave, may buy Butte because + of his advertised lies at $14 or $15 a share and thereby be + robbed of what they can ill afford to lose. There is no more + chance of Butte & Boston stock selling at $50, or even $25, + than there is of Tom Lawson telling the truth; and this + paper does not hesitate to say that if Butte stock ever does + sell at 50, we will upon that day close up our office and + forever leave Boston and our lucrative business of guarding + investors against such knaves as this lying thief; for any + man who would do what he is doing to fleece investors is a + thief and should wear stripes, and it is surprising to us he + has so long escaped. + +It was not so long after the above appeared that Butte & Boston stock +was selling at $130 per share, and that the same Mr. Barron was using +his own and his "News Bureau's" best efforts to induce the people whose +Butte showed them over $115 a share profit to exchange it for +Amalgamated. At this latter time he was acting for "Standard Oil." + +It may be added that this same Butte & Boston stock, which I was such a +knave to advise the people to buy at twelve and fifteen, sells to-day in +the form of a share of Amalgamated, for which it was exchanged at +seventy-five to eighty-dollars, not cents. + +My chief weapon in this Butte & Boston fight was publicity. Every +morning while the battle waxed hottest I had huge, striking +advertisements in the papers urging the public to buy and to hold on to +what they had bought. My opponents responded in kind, and being +intrenched in the management, told such alarming stories of the mine +that it was often as much as I could do to prevent my followers from +being scared into throwing over their holdings. The tremendous expense +of this mode of warfare, together with the immense sums my market +operations required, kept me hustling, and there were times when things +looked distinctly blue. However, the value of victory is measured by the +fierceness of the tussle, and far be it from me to complain of my +opponents' energy. There was good fighting over Butte & Boston. + +The more deeply I became interested in this struggle and the more +familiar I grew with "Coppers," the more advantageous and profitable +seemed the prospects of such a consolidation of copper properties as I +had in mind. The large holdings of Butte & Boston I had accumulated in +the battle gave me a practical basis for my structure, for I could now +afford to do all my own part of the work of organization for what I +would eventually make when the consolidation was brought about, and I +could get for my shares what I knew they were worth. It was at this +stage I broached the subject of "Coppers" to Mr. Rogers, and discovered +to my surprise that he knew nothing about it or its possibilities, +notwithstanding that "Standard Oil" has a department for the sole +purpose of keeping the "System" posted about what the world is doing in +various directions. Indeed, both he and Mr. Rockefeller laughed when I +informed them that we had been trading in copper stocks in Boston long +before the Standard Oil Company received its birth certificate. + +Before I could get down to business on the subject I had to take +advantage of five gas-talks, offering at each a few interesting and +striking facts about the metal. One day Mr. Rogers said to me, laughing +pleasantly: "Lawson, we're beginning to look for all your talks to taper +off with, 'I wish I could get you to listen to Coppers!'" + +"Why don't you then?" I said. "It's the biggest opportunity in the world +to-day." + +"I'll tell you what I'll do," replied Mr. Rogers. "If you will put +through for us right away thus and so" (naming quite a difficult little +bit of work in connection with the Brooklyn Gas Company), "and do it in +good shape, I'll ask John Moore to run up to Boston next week and +listen to your story. If he says it looks anything like good, I'll go +over it with you to a finish." + +The Brooklyn job was done on time, and I began on John Moore in my +office at my hotel in Boston just after breakfast one bleak, rainy +morning the week following. I talked for five straight-away hours, and +he listened. He was a good listener. On all stock things he was +admirably posted, and it was not necessary to waste words. I wasted +none. I knew my subject from the letter-head to "Yours truly," and I was +playing for a stake that looked as big to me as the sun does to a +solitary-confinement life prisoner. At the end of the five uninterrupted +hours I agreed with Moore that I had nothing more to produce, and I +looked for my verdict. Before starting I had felt sure of winning him; +when I was half through I knew nothing could stand against my arguments, +and when I had said the last word I felt satisfied that, being human and +intelligent, he must be convinced. It took him only ten minutes to show +me that I had been talking against ten-inch armor-plate, and that he +meant it absolutely when he said, "Lawson, I want to see it your way, +but I can't." + +It was John Moore's turn then, and he showed me the good thing in an +industrial scheme he was floating at that time, and as he wound up he +said pleasantly: + +"Lawson, we must do something to show for our long talk, so I'll put you +down for $50,000 underwriting." And he did. + +If John Moore had seen "Coppers" as I tried to show them to him that wet +morning he could not have made for himself less than three to five +millions, for in the operation which hung on his decision I had expected +to buy stocks that soon after doubled and trebled in value. Calumet & +Hecla then sold at 256, and later as high as 900, while Boston & +Montana, then 50, mounted to 520. On the other hand, the stock of which +he had sold me $50,000 worth returned at the end of the year but a mere +fraction of that amount, and was one of the worst failures of the +industrial boom period. It cost John Moore not only an enormous amount +of money, but also prestige, and its miscarriage was one of the few bad +disappointments of his brilliant career. Afterward, when "Coppers" were +the rage and all Wall Street was green with envy at our success and his +enterprise was trying to hide itself behind the garbage barrels, John +Moore said to me: + +"Lawson, we all think we are the masters of our own fortunes, but we are +not. We are only working on a schedule laid out by some One who does not +take our desires into consideration." + +And it is so. The ablest Wall Street man is only like the burglar who, +after working for weeks to loot a second story, is astounded to find, +while lugging his swag by the police station, that the bag he thought +full of dead sealskins contains a live parrot with a lusty vocabulary, +"Police! Robbers!" + + + + +CHAPTER X + +ROGERS GRASPS "COPPERS" + + +The next day our gas business brought me to New York, and after Mr. +Rogers and myself had threshed out the matter I had come about, he said +with a smile: + +"Well, I've heard from John Moore. Are you satisfied now? Will you drop +that copper will-o'-the-wisp?" + +"Far from it," I replied. "I'm surer than ever of my position. In going +over the ground with Moore I got the whole business in perspective, and +now I know I'm right. All his argument amounted to anyway was that it +was impossible for so gigantic a thing to have lain out in the travelled +highways all these years." + +I ran on vigorously for a few moments, in a way I felt might pique his +curiosity, if it did not gain my point. Finally he said: + +"Well, Lawson, what more can I do?" + +"This," I answered: "go over the matter fully with me yourself. I will +surely carry it through one way or another; if not with you, with +others, and I cannot drop it with you until I have your personal +judgment." + +Instantly came one of those flash decisions for which H. H. Rogers is +noted among his business associates, the oft-proved correctness of which +goes far toward making him the pre-eminent American financier of the +day. + +"Lawson," he said, "be in New York next Sunday, and I will listen until +you have run the subject out." + +That decision changed the face of the copper world. + +Sunday is Mr. Rogers' pick of days for a lengthy hearing, and returning +from church, he came directly to the "stowaway" rooms at the Murray Hill +Hotel, at which we frequently met while the Wall Street world was +trying to trace and keep track of our movements. I had been there for +some time awaiting him and was keyed for the struggle. + +Of my ability to land John Moore I had felt confident, yet I had failed; +but this time in advance I knew success was mine. Experience has taught +me that in all dollar matters the man to "talk up to" is the actual +owner of the dollars you are after, who when he hears your story and +weighs your goods can deal out the _yes_ or _no_ which means business. I +had discovered some years before that few bull's-eyes are scored +shooting at a target by mail or messenger. One's finest word-pictures +sound better than they read, and if you would have the next man see them +in as vivid colors as they appear on your mind's canvas, you must paint +them before his eyes. The enthusiasm of the artist, his love of the +subject, the deep or high tones of his voice, the very movements of his +hands, are all factors in aiding the other man's vision. When he sees +what you do, you have won. Nowadays when I have things to sell, I engage +the eyes as well as the ears of my purchaser. When the other fellow +would make me his customer, he must first sell his goods to my +secretary, who may, if he can, sell them to me. Thus I am always able to +dispose of the only merchandise I keep in stock, honest goods, and I +seldom buy chromos for oils. + +As I waited the coming of my most powerful customer, I could not keep my +mind off the momentousness of the interview before me. I knew I was at a +fork of the road, at one of those departure points from which coming +events must date, and I thought of a dream I had had years before in +which I found myself drifting with the grim ferryman across the brimming +flood, the far bank of which is eternity. In my hand was a long staff +with strange and irregular notches on it. And these represented the +actions of my life. Some were shallow, others deep and wide, and as I +ran my fingers up and down, I seemed to remember what each nick +commemorated--the good things and the bad things, here a death, there a +disappointment, this a victory, that an error. I wondered, as the +circumstances of the dream came to my mind, what kind of marking this +day's events would make on my life staff, and I felt a conviction that +it would be both deep and wide. + +Then, as I heard Mr. Rogers' footstep outside my door, I forgot all +about dreams and notches and plunged into my argument. + +"Mr. Rogers," I began, "you and your associates have unlimited money. +You have not always had it. You have obtained it through business +projects and you are using it in business projects to get more. There +are two ways of adding new dollars to those in your possession: by +taking them from others so they are losers and you the gainer, whereby +you win at the cost of their happiness; or by expanding the world's +wealth so that others gain when you do. You, I know, prefer the latter, +that others should make money when you do, rather than that they should +lose and suffer when you are benefited." + +I did not then know "Standard Oil's" and the "System's" religion as I do +now. I had yet to learn the cruelly cynical principles that guide this +financial Juggernaut in its relation with men and things. I imputed to +it the generosity and freedom which seemed to characterize Henry H. +Rogers' personality, ignorant that the man and the machine he served +might stand for different things. The "System's" Big Book says: "A +dollar honestly made makes another for some one else; but a dollar taken +is two dollars, because it increases our power and diminishes the +people's. Between the 'System' and the people must be eternal war, and +it is the price of the 'System's' existence that all opportunities of +weakening the people are sternly utilized." + +"Mr. Rogers," I continued, "I have discovered in 'Coppers' an +opportunity whereby you and your associates can, by the investment of a +hundred millions of dollars, obtain these results: _First_, your money +will be as safe as in anything you now have it invested in. _Second_, by +indorsing this form of investment with the seal of your business +success, you will make it known to all who have money and there will at +once arise a tremendous demand for its securities. This demand will +drive prices up until dividend returns are in normal proportion to the +legitimate value of the security, namely, four to six per cent., which +is, as I can prove to you, a little more than can be got from anything +else but 'Copper' with the same elements of safety. _Third_, when the +advance I foresee occurs, your one hundred millions have doubled, and +all those who have joined us in the venture or have held on to their +stock will gain in the same proportion. As I estimate that we will have +but a third interest in all the good American 'Coppers,' there should be +something like $200,000,000 for the people, while we will have made +$100,000,000. To bring this about I have planned a campaign which will +make what you have done known from one end of the world to the other, +and will persuade the people at large to look at 'Standard Oil' in a +more favorable light than they do now. And, what is more, all this money +can be made and all these benefits rendered without taxing any one a +single additional dollar, for there will not be a penny a ton added to +the price of copper the metal, nor a reduction of a mill a year taken +from the wages of those who mine it or work it." + +Here I halted. I had made a beginning, and I was familiar with Mr. +Rogers' system of diagnosis and treatment. Propositions placed on his +operating-table are invariably dissected in parts--this is the winner's +method; so if, under the probe of his keen mind, one section or limb is +found stiff, dead, or unhitchable to that to which it belongs, he at +once stops operating and the corpse is removed. + +"How is it the situation is as you outline it?" + +I drew the picture of copper Boston as I have given it in the early part +of this chapter. It astonished him. + +"How do you prove that safety in this class of investment is more +assured than in others?" + +I reeled off the facts: A copper-mine, from the very nature of the +business, must be developed years and years ahead before it entered the +ranks as a regular producer. The price of the metal being practically +fixed within certain limits, the mine's value, present and future, could +always be told to a certainty. + +He saw it. He put me through a thorough examination about my second +claim that the price would advance 100 per cent. I again astonished him +by showing him what a market there was and had been for many years for +copper stocks, and that it was simply a question of educating investors +at large to their merits to advance them to the price my plans called +for. + +When he came to the question of the amount to be invested and the +aggregate amount of profit, he did not attempt to disguise his surprise +when I showed him there were 150,000 shares of Boston & Montana which +had been selling at 20-odd and were now 50-odd, and could surely be +bought between 50 and 100; and 200,000 shares of Butte & Boston, 100,000 +outside of what I and those who had bought with me owned that could be +had at an average of 20 or 25; that there were 100,000 shares of Calumet +& Hecla, selling at 250, large quantities of which could be gathered in +between that price and 400, and so on through the list. Mine after mine +I enumerated to him, all as sure dividend earners in the future as they +had been in the past, to an aggregate, without touching any of the +uncertain ones, which it would surely take one hundred millions to +purchase, and as I called them off, he listened patiently while I gave +him a full history of each. + +Then I outlined my sensational but never before attempted plan of +campaign for educating the public, he vigorously questioning me as to +details and particulars the while. + +It does not take Henry H. Rogers months, weeks, nor even days to grasp +any plan, however vast, nor many minutes to come to a decision after he +has grasped it. I believe he would, if the world were going to be +auctioned off next week, be the first man on earth to decide upon a +limit price that he would take it at, and three minutes after it was +knocked down to him he would be selling stock in it at 150 per cent. +profit. + +Just before lunch-time I saw that the effect of my arguments on Mr. +Rogers was the exact opposite to that they had made on John Moore. When +I had come to a finish, Mr. Rogers simply said: "It's curious, Lawson, +why I have not listened to you before. I'll talk with William +Rockefeller to-morrow. No--I'll make it this afternoon if I can get at +him." + +And his eyes snapped a bit when, as I was helping him on with his coat, +he said, "We must not lose a minute in getting to work." + +As he left the hotel and before I crossed the street to the Grand +Central to take my train back to Boston--I suppose I should not say it, +but I shook my own hand in self-congratulation. How many times since I +have thought that had old Dame Fate but hung out a danger-signal for +this faithful servitor of her behests, or had but given him a glimpse +ahead through the years 1899, 1900, 1901, 1902, 1903, and 1904, instead +of using his hands in cordial self-clasping he would have employed his +feet in the more fitting task of kicking himself. + +If Henry H. Rogers had been slow at getting started on "Coppers," once +in he made up for his early tardiness. After our Sunday interview things +moved swiftly forward. Before noon next day he called me up on the +telephone to say that both he and William Rockefeller were impatient to +have my facts and figures verified, and would I at once send my data to +start his experts on? I mailed him a bale of "pointers," and from that +hour until the flotation of Amalgamated Mr. Rogers' enthusiasm on +"Coppers" constantly grew until there actually came a time when it went +beyond my own. It took him months to complete that rounding-up of the +situation which is the absolutely necessary preliminary to the making of +final decisions on any far-reaching and important project to which the +magic name of "Standard Oil" is to be permanently attached. + +This period of waiting I duly improved by continuing my fight on Butte & +Boston, and by way of intensifying the campaign I included Boston & +Montana in the tussle, and led a fierce attack into the stronghold of my +opponents. While this war was at its bitter height I received word from +26 Broadway that at last reports were all in, and that they were ready +to talk business. Next day I was in New York. + +"Lawson," said Mr. Rogers, "our experts have examined your plans step +by step and have verified your conclusions. It is an exceptional +situation, and one we are equipped to handle." + +Then and there we had a "to-a-finish-sit-down," and while I had in my +time gone pretty thoroughly into the general subject of "Coppers," and +thought myself well informed thereon, I was surprised at the +completeness and detail of the reports that had been prepared for the +"System's" master. In beautiful shape, concise, clear, comprehensive, +the entire copper industry of the world was spread out before me. Every +mine had its place and its history--not merely the mines of America, but +those of Europe as well; and fully set forth were the extent and cost of +the product of each, the profit it made, the men who owned it, +and--miraculous "Standard Oil"--the standing, financial and otherwise, +of the men who might have to be dealt with in our prospective trades. + +Rogers smiled watching my growing surprise as I ran over the +extraordinary budget of facts he had collected. I said to him: + +"This is wonderful. You have here all there's to be known about the +subject, and I marvel how you got hold of so much inside information." + +"'Standard Oil' has its own way of doing things," he replied. "You told +us your copper plans would mean an investment of $100,000,000 of our +money, and now's the time, not after we have parted with it, to find +just what we are to get for it." + +The world has never yet heard of "Standard Oil" locking its barn door +after some one has stolen its mule; for that matter, it is not of record +that any one ever locked the gate after his barn had been visited by +"Standard Oil." The reason is that, with the thoroughness characteristic +of this great reaping-machine, it never fails to take the barn with the +mule. + +At this meeting it was agreed that Henry H. Rogers, William Rockefeller, +and myself should become partners in my plan of "Coppers," they to +furnish the capital and to have three-quarters of the profit, I to have +the remaining quarter. The campaign for the execution of the enterprise +I agreed to work out and submit as soon as possible, and we parted. + +As I bade them good-by Mr. Rogers said to me: + +"Your baby is born, Lawson, and if you put the same kind of work on +raising it you have in bringing it into the world, it will be a giant." + +From that day it was understood that we were together, and that all my +dealings in "Coppers" outside Butte & Boston were for the joint +account--that is, they were to have the right to come into all my +operations. Those they did not care to join in I had the right to put +through alone. On the other hand, I must not undertake anything on their +behalf without a specific understanding with them. + +Thus began Amalgamated, that extraordinary dollar-thing which shot up in +a night and grew as grows the whirlwind, until even its creators +wondered at its mightiness. It waxed greater and stronger while the +world watched and waited, until finally there came that tremendous and +unprecedented culmination when lines of investors fought round the +portals of the greatest money mart in America, the National City Bank, +for a chance to obtain the $100 shares of this $75,000,000 institution. +And the world wondered indeed when it was announced that Amalgamated had +been oversubscribed over $300,000,000. + +Thus began Amalgamated. It might have brought to all the world good-will +and happiness, and to the men who made it much glory and the great +regard of their fellows. Instead, it has wrought havoc and desolation, +and its Apache-like trail is strewn with the scalped and mutilated +corpses of its victims. The very name _Amalgamated_ conjures up visions +of hatred and betrayal, of ambush, pitfalls, and assassination. It +stands forth the Judas of corporations, a monument to greed and a +warning to rapacity. May the story that I am to tell so set forth its +infamies and horrors that never again shall such a monster be suffered +to violate and defile our civilization. + + + + +CHAPTER XI + +THE COPPER CAMPAIGN OPENS + + +My plans for the great copper campaign were most carefully diagrammed, +then spread before Mr. Rogers and Mr. Rockefeller, who, before +approving, tested every detail of them. The formal scope of our action +decided on, it was agreed that I should be free to work in my own way, +and it was understood that I should, as far as possible, carry the +campaign on my own shoulders, using to the limit my personal capital and +credit. "Coppers" was to be a Lawson operation on the face of it, and I +was determined, for many reasons, to avail myself of "Standard Oil's" +aid only in taking care of completed transactions and not at all in the +preliminary negotiations. This was not always possible, but my attitude +in the matter and my desire to make a brilliant showing explain the +straits I was sometimes put to in conducting some of my deals. From the +start I had a big personal stake in the success of my campaign, for at +the time I first showed Mr. Rogers my hand I had 46,000 shares of Butte +& Boston, and my following among the public owned as many more. They had +agreed that the profits on this stock, when it was taken into the +consolidation, should be mine entirely in payment of my own work and +risk. + +There was another transaction I had in mind which also fairly belonged +to me. As I have stated, I had undertaken to dispose of Bay State Gas +stock, and by this time I had succeeded in placing a large number of the +shares. The proceeds, $2,300,000, were in the treasury of the company. +Now the charter of Addicks' company permitted it to buy, sell, and deal +in anything and everything, and I saw here a good opportunity to enable +Bay State to earn the balance of the money necessary to relieve its +indebtedness to Mr. Rogers--between four and six millions of dollars. +So I explained to Mr. Rogers that as soon as our copper deal had +progressed to a point where there was absolutely no risk, and a large +gain was assured, I would make a bargain with Bay State whereby for a +part of the profits I would pilot the investment of the company's cash +in Butte & Boston. This proposition he considered fair, and he agreed +that neither he nor Mr. Rockefeller would consider themselves "in" on +that bargain, save as indirectly profiting by it through the successful +winding up of their Boston gas investments. + +It is impossible for any great move to be begun in the stock-market +without some suggestion getting into the air which notifies "the +Street"[19] that "something is up." Not long after my alliance with +Rogers had been formally arranged, the atmosphere of State Street grew +thick with rumors about "Coppers." Some of these announced that I had +hitched up with "Standard Oil"; others denied it; between them all a +movement was created, and the leading stocks became very active and +increased rapidly in price. + +We had agreed that the first companies to go into our consolidation +should be Butte & Boston, Boston & Montana, Calumet & Hecla, Osceola, +Quincy, Tamarack, and any other of the long-established properties of +which we could get hold. It would be difficult, we knew, to purchase the +control of the Calumet & Hecla, for its owners thought too highly of +their investment to part with it, but it was safe to buy whatever was +offered, and if we accumulated less than a majority of the shares we +could easily resell at a large profit. I began my operation with Boston +& Montana stock, buying cautiously and obtaining it at fair prices, and +this transaction, though conducted quietly, added fresh fuel to the +rumor blaze. Finally Boston became so excited over the situation that I +came out with a public statement in which I frankly showed what I was +trying to do. In all such affairs, however, the explanations of any man +known in his business as a stock speculator or manipulator are never +accepted as true. It is assumed that such announcements are merely +blinds to disguise his real purpose; that they are feints or +manoeuvres in his campaign. So when I declared that I was working out +plans for the consolidation of all good Boston "Coppers," and that +associated with me were the strongest capitalists in the world, a laugh +went up from a goodly portion of "the Street." The hireling news bureaus +shrieked at my presumption and the absurdity of my combination, and when +after a hot day's operations I was quoted in the financial press as +telling my followers that it was "Standard Oil" money which was to back +"Coppers," Barron, whose News Bureau moulded opinion for the opposing +copper magnates, came out with a statement: + + "Lawson is spreading in his peculiar underground ways that + the Standard Oil crowd is looking into Coppers. Just enough + countrymen swallowed his yarns to enable him to boost prices + over six points to-day, but by to-morrow, when the + Rockefellers or Rogers of Standard Oil put their foot down + on his transparent lies, those who were foolish enough to + listen to his ridiculous fakes will find they must sell at a + loss. We can say, on a high authority in Standard Oil, that + they have never bought nor contemplate buying a share of any + copper stock." + +My enemies were numerous and powerful, and there were many other +announcements of the same character as Barron's tending to cast ridicule +on my movement and expose me as a falsifier. Indeed, notwithstanding the +merits of the plan and the benefit it must confer on all copper +properties, I was assailed as fiercely as though I had advocated anarchy +or had prepared a scheme of wholesale plundering. In stock affairs +innovations are resented and resisted even more fiercely than in other +walks of life, and the Boston money crowd fought me tooth and nail. The +titles I acquired in those days were varied and startling. For one set I +was a "charlatan," "wizard," "fakir," an "unprincipled manipulator"; in +another I was a "copper king" or a "prince of plungers." Feeling ran +high, and prices rose and fell in the most erratic and extravagant +fashion. Certain stocks advanced or receded from five to ten points in +as many hours or minutes. Fortunes were made and lost daily. Many +people, confused by the conflict of opinions and announcements, sold +their holdings, only to repurchase at higher prices as prices continued +to mount. So fiercely was I attacked that it almost seemed at times as +if my enemies might prevail in spite of the great powers at my back. +Indeed, there were tense moments when my fate as well as my plans +trembled in the balance. Several times I was sent for by Rogers and his +colleagues for a war council, and sometimes, as I detailed my lines of +defence and enumerated my resources, I suspected that even these +storm-seasoned warriors were tiring of the fray. + +The fiercest fighting at that early period centred round Butte & Boston +and Boston & Montana. Many a spirited engagement we fought on the floor +of the Exchange. Perhaps the fiercest of these began when, after a +strenuous rush one morning, I rapidly carried the price of Butte up. +This exploit so enraged my adversaries that they got together and +organized a powerful combination against me. This included several of +the leading banks and trust companies of Boston that held large amounts +of stocks as collateral for my loans. At a given moment it was arranged +that all these loans, aggregating millions of dollars, should be called; +and further to intensify the complication they expected to bring about, +a great friend in common attempted to scare Mr. Rockefeller and Mr. +Rogers by informing them that the titles to the copper properties were +defective, and that a man, then unknown, named Heinze, who had made +himself very strong with the Montana courts, was about to make a move to +confiscate them. There was a hurry call for me from New York, and this +time the explanations had to be very full, for "Standard Oil" had an +impression that while my general plan might be meritorious, it was +possible that I had the details "skewed." However, I satisfied them as +to the facts and then hurried back to tackle my own problem, for these +individual engagements I handled myself, using my own personal resources +to take care of them. The emergency that had developed thus suddenly was +so serious as to be alarming, and it devolved on me to act, and at +once. Blows in finance are like those at sea--the most dangerous are the +quick-come-quick-go kind. I recalled one I had run into a short time +before on my sailing yacht. We were broad-reaching down the New England +coast, close in, with a 20-knot sou'wester blowing. Suddenly, without +apparent reason, my skipper put the wheel hard down and brought the +craft up standing. A second later a "twister" from the hills hit us, and +adroitly he headed her into it. + +"How in the world did you know that was coming?" I asked. + +"I smelt her, sir," the old sea-dog replied, "just smelt her." + +For those unacquainted with the freaky ways of our New England coast +winds it may be explained that when a "twister" off the hills gets ready +to do business in a 20-knot sou'wester it sends no messenger boys ahead +to distribute its itinerary handbills. You hear one shriek and the blow +is upon you; and woe betide the unthinking skipper who attempts holding +his craft to her course or paying her off till she catches it full. He +is likely to have mourners at home if a married man, and "cussing" +owners if the craft is not his own. As my old sea-dog afterward wisely +observed: "When you smell a land 'twister,' act first and think +atterwards, or your widow 'ill get blear-eyed watching for you to make +harbor." + +In the stock-market it was decidedly a case of "act first and think +atterwards." The "twister" was a fierce one, for not only were my stocks +assailed, but the rumor machines were turning out all sorts of yarns +affecting my credit, as the knowledge gradually filtered through the +market that my loans had been called. My stocks broke badly, and when +the market closed it really seemed as though I might have to verify the +report that they would wind me up the next day. + +It was at this particular stage that the Bay State was let into the +deal. I had a long consultation with Addicks that night and showed him +my hand. He agreed that with what I already had of the stock and +"Standard Oil's" backing, the venture came as near being an absolutely +sure thing as could ever be found in stocks. My proposition was that I +should secure for the Bay State Company 50,000 shares of Butte at an +average of 20 to 25, and that I should have half the profits of the +venture provided they aggregated over two millions of dollars. Coming to +Addicks in this emergency was cold-blooded business on my part, and, it +goes without saying, was frozen-blooded business on his, for he +evidently saw then what I did not until later, that there was an +excellent opportunity to practise his pet game--make money and +double-cross his partner while doing so. We clinched the deal that +night, and next day in the market I turned the tables, for I took every +share my opponents offered for sale, and the stock, instead of dropping +out of sight, became firm, then began to mount, and never after fell +again. + +The Bay State's venture showed a profit afterward of four millions of +dollars, but of my share of this large sum I was deprived, as I will +detail later. + +At this juncture there occurred one of those strange and sad fatalities +which with its attendant circumstances helps to explain why those of us +who play with stock-markets grow superstitious. I have spoken of my +secretary, Mr. Vinal, a man of admirable discretion and absolute +loyalty, who was my right hand in executing the minutiĉ of the various +operations I then was engaged in. In such affairs the fidelity of one's +aides must be beyond all question, for if the merest detail of one's +plans leaks out at the critical moment, one is undone beyond recovery. +After my talk with Addicks I had laid out the campaign for the next +day's engagement and called in Vinal to explain to him his own part. He +was to attend to taking up and transferring the loans that had been +called, and I armed him with my power of attorney and blank checks, +instructing him to put these matters through without further +consultation with me, for my entire time must belong to my brokers +during the battle of prices which I knew must inevitably come with the +stroke of the gong that opened the Exchange next morning at ten, and +which would rage until its close at three. As I had anticipated, the +assault was fierce. It was give and take, charge and retreat, all day. A +few minutes after twelve, Vinal pushed through a crowd of brokers to me +and said: "I'm about half through my shifting, but a telephone has just +come from Mrs. Lawson saying that something has happened at the school +and will I at once get a carriage and bring your daughters home. It will +take half an hour. Shall I go?" I replied: "You had better, but get back +as quickly as possible." A minute later a thought occurred to me, and I +sent a boy to call Vinal back. He reported that my secretary had jumped +into "Ben's" cab ("Ben" was a cabman whose stand had been in front of my +office, 33 State Street, since my boyhood days). I returned to the fray. +Fifteen minutes later the appalling message that startled all Boston at +the time came over the ticker tape: "Terrible Explosion! Boston Gas +Company's pipes in the Subway have blown scores to death." Then there +floated in to me a rumor, vague, indefinite, that Vinal was a victim. I +jumped into a cab and in a few moments was at the undertaker's to whose +place the corpses were being removed. The undertaker stepped up to me +and said: "Poor Vinal! Don't look at him, for it is frightful. He was on +the very apex of the explosion, and he and 'Ben' were both instantly +killed and are frightfully burned. The only thing recognizable is this +envelope, which I found among the rags that were left of his coat." He +handed me over the large envelope in which I had seen Vinal that very +morning depositing the various documents, checks, and securities which +he required for his day's operations. It was burned around the edges, +but the contents were uninjured, and among the papers was a carefully +prepared memorandum showing to a dot where my secretary had left off in +his exchanges. He had evidently just finished making notes, for so +carefully arranged were the contents of the envelope that all that was +necessary to complete the business was to turn it over to Vinal's +assistant. No further explanation was required. That envelope +represented two millions of money and securities. + +Poor Vinal! Another victim of that soulless corporation hag, Boston Gas, +to prolong whose life he had spent some of the best years of his own. +Vinal was very dear to me. He had filled my canteen, held my ammunition, +and carried my knapsack through many a hard-fought battle, willingly +allowing others to do the cheering in victory, but reserving to himself +the right to suggest and console when the clouds lowered and we were +left alone on the field of defeat or the dusty road of retreat. Poor +Vinal! He was worth a hundred copper deals or corporation hags. + +Between death and life, success and failure, what a hair's-breadth after +all. If Vinal had stubbed his toe, or had been able to take the first +cab he found; if he had heard my call which would have brought him back; +if he had tarried a moment longer in the Young Men's Christian +Association where he had stopped to deliver a message, he would have +escaped. The thought did not occur to me at the moment, for Vinal's +death was too keen a personal sorrow to allow me to estimate my own +narrow escape, but if that envelope, so miraculously preserved, had been +burned as were the other papers in my secretary's pocket, there might +have been no Amalgamated. "Coppers" must have dropped back to the lowly +place from which Rogers had lifted them, for I should have been +financially ruined. + +To show the marvelous workings of Him who tempers the wind to the shorn +lamb: At the same moment that I was called away from my guns, the +commanding general of the opposing forces received the same call. The +aged mother of the President of the Boston & Montana and Butte & Boston, +while riding in her carriage, had been a victim of the same explosion. + +FOOTNOTES: + +[19] "The Street" is a general term used to designate the stock operators, +the fraternity in New York being known as Wall Street, in Boston as State +Street, and in Philadelphia as Broad Street; these streets are the centre +of the financial districts of their respective cities, the Stock Exchanges +being situated on them. + + + + +CHAPTER XII + +THE BUNCOING OF THE STOCKHOLDERS OF UTAH + + +This was veritably a period of financial delirium in Boston. No one +talked or thought of aught but "Coppers," at least no one with a spare +dollar or good credit. The air was full of mysterious yarns and the +Stock Exchange was hung with Aladdin lamps. From every nook and corner +of State Street, from the chinks between its sedate old cobblestones, +came forth copper-mines--mines undreamt of before and unheard of since. +Innumerable devices were rigged to take advantage of the prevailing +intoxication. The prices of the strong properties leaped up with +breath-taking rapidity. The copper epidemic spread over New England and +began to extend in constantly widening circles through the rest of the +country, while from England, France, and Germany came daily news of +symptoms which proved that the infection had crossed the ocean. I, with +my hands full, kept two secretaries busy shooing away industrious +promoters who came at me in armies with old and new copper properties, +which I might have on my own or any old terms. + +In the midst of this excitement I had my first real demonstration of the +"System's" method of making dollars from nothing. Well as I thought I +knew the stock game, I'll admit that I looked on open-mouthed, like the +veriest novice, at the magic wrought by the simple use of the name +"Standard Oil." Even now I can hear myself as I gasped: "Heaven help the +people if this sort of thing can be done in America, for Heaven alone +has power to help them." + +The Boston and New York brokerage house of Clark, Ward & Co. had +promoted the Utah Consolidated Mining Company of Utah. It was less than +two years old, and its 300,000 shares had been kicked from gutter to +curb and curb to gutter at from $2 to $4 per share. Samuel Untermyer, +the astute corporation lawyer who, on his own account and as the +representative of a large European clientele, had long been interested +in "Coppers," had taken hold of Utah, and believing it a good thing had +bought large quantities of its stock for himself and his European +connections. Under the stimulus of my campaign the price of this stock +had leaped to 17 or 18, and rumor had it that Utah was a prospective +factor in my consolidation. One day Mr. Rogers asked me if I were in any +way responsible for these rumors, and I replied that I knew nothing more +about them than that they were in circulation. + +"Good," replied Rogers. "Do this, then--send word that we propose to +issue a denial that we are to have anything to do with Utah +Consolidated, and bring me their answer." + +I carried the message in person. The Utah people were absolutely +panic-stricken. Such an announcement meant destruction to the pretty +price-fabric they were rearing, and they begged to be allowed to make a +proposition to Rogers before he should declare himself. This was their +proposal: That Mr. Rogers should admit their property to the +consolidation provided he found it good enough; that every facility +should be accorded his experts to examine the mine; and that if the +report was favorable, and they were convinced that it would be, and he +decided to take hold, he should be given an option on a block of stock +way below the market. + +This offer I took back to Mr. Rogers, who smiled one of his thin, easy +smiles, and questioned me closely about the genuineness of the market +for this stock. Could 50,000 shares be sold readily? I assured him that +when it once became known that we were even looking at Utah it would be +easy to sell 100,000 shares and at constantly advancing prices. + +"All right," said Mr. Rogers, "if you're sure of this we'll go ahead. +Tell them we'll take a sixty-day option on 50,000 shares, no liability +to us, at--well, we'll be liberal, say at 15, and when you mention the +price impress upon them that I know it cost them but $2 to $4." + +I returned at once and began negotiations, but, as is usually the case, +the fact that "Standard Oil" was nibbling leaked before I had clinched +the option, and before we had even begun to examine the property, prices +had advanced until there was a profit of $500,000 for us in the +transaction. To look over the Utah property Mr. Rogers sent his +son-in-law, Broughton, and in a short time I got word to feed out the +50,000 shares on the market at the best prices obtainable, and to borrow +it for delivery in such ways that the Clark-Ward-Untermyer contingent +should suspect nothing about it. No information was given me as to the +expert's report, and I was absolutely ignorant whether it was good, bad, +or indifferent, though from the fact that we were to sell the stock I +inferred that it was unfavorable. The public took the 50,000 shares at +between 32 and 36, much as an elephant takes in water after a thirsty +tramp across sandy deserts--the shares were just sucked in without a +gulp or a gasp. I did not know until long afterward that the purchasers +were the English holders who had contributed the greater part of the +50,000 shares to meet our option--in other words, were buying back from +us their own stock at more than twice the price we were to pay them for +it, and that their eagerness was due to confidential information that +the expert's examination had disclosed such richness that the price +would surely jump to over $100 when "Standard Oil" assumed the +management. Just where they acquired this information or how it was put +in their path was a matter I never found out. As I have previously +demonstrated, "Standard Oil" has its own system of wires and underground +passages and rumor bureaus. It works in mysterious ways its wonders to +perform. + +This section of the deal was soon wound up, and the transaction showed +us a profit of $1,000,000. That is, we had sold 50,000 shares which we +did not possess, but which were ours on demand, for $1,000,000 more than +we should have to pay their owners for them. When I reported my success +to Mr. Rogers he expressed complete satisfaction, and ordered me to +inform the Utah people that another 50,000 shares must be added to the +option, as he could not think of tacking the great name of "Standard +Oil" to an enterprise in which he had less than a third interest; +indeed, he was not sure that he would consider less than a one-half +ownership. This second request was a bitter pill to the +Clark-Ward-Untermyer crowd, who hated to surrender for such a low figure +this tremendous parcel of a stock that was now selling fast at 40 per +share. There was no gainsaying the soundness of Rogers' reasoning, +however: "Who made it worth 40? Who but 'Standard Oil'? And what will +happen if 'Standard Oil' declares that it will not take Utah into the +consolidation?" The bare suggestion threw the Utah contingent into one +of those hundred-in-the-shade, twenty-below-zero sweats, which resemble +the moisture upon steam-pipes that pass through cold-storage boxes. They +succumbed. At the moment the option was signed over to us it represented +a profit of $1,000,000 more, and when we sold it, it netted us +$1,250,000, for the market was still climbing. This latter phenomenon +was not surprising, for it should be borne in mind that when our demand +for the second 50,000 shares was made, the heavy Utah stockholders were +called together and it was explained to them by their own managers--not +by "Standard Oil" or by Mr. Rogers mind, for "Standard Oil" never makes +false statements--that the expert's examination had developed such +wealth that "Standard Oil," the mighty of mighties, had insisted on +having at least 100,000 shares; but that, of course, "Standard Oil" +could not be asked to pay over twenty for stock which had cost its +original owners but $2 to $4. What was there to do? The stockholders +just gave up, and then once more climbed over one another in the market +to get back their precious shares as best they could. + +Just to keep the conditions of the transaction at this stage before my +reader's mind, I'll repeat that the Clark-Ward-Untermyer people had now +given us the right to buy of them 100,000 shares of their stock (_at a +price $2,250,000 less than we had already sold it for_), with the +understanding--not in words or in writing, of course, because "Standard +Oil" never makes a promise in writing, but implied as sacredly as though +it had been set down and attested under oath--that we would take and +pay for their stock and engage with them in their enterprise, giving +them the benefit of our experience, our capital, and our prestige. I say +they had every reason to assume that we were acting in absolute good +faith, and no ground to suppose that there was any ulterior motive +behind our negotiations. It must be remembered that this occurred some +years ago, before the "System's" perfidy was a calculated contingency. + +The knife was now in, but the "System" had still to corkscrew it in the +wound. + + + + +CHAPTER XIII + +THE TRAP IN FINANCE + + +After "pulling off" such a big "trick," as the professional crooks put +it, and getting away with such a fat bundle of "swag," you, my good +reader, might naturally suppose that this shining light of the "System," +contented with his profits, would pass on to new victims; or, if you +have a mistaken impression of Mr. Rogers' sense of humor, for really he +has a keen sense of the ridiculous--after five o'clock on week-days and +all day Sunday--you might think he would take the opportunity to order +me to tack up his card on the Utah office door, inscribed, "We will +return when you recoup," and transfer his milking machine to other +udders. No, that is where you, old-fashioned reader that you are, have +"sized up" Mr. Rogers inaccurately. He had not finished. + +Utah was not yet exhausted as a wealth-producer for the "System." After a +brief lull, representatives of Clark, Ward & Co. came to me requesting that +they be allowed to see "Standard Oil's" report on their mine. It was most +important for their financial arrangements that they be told what was in +store for them. That was what they thought. I told Mr. Rogers. He +instructed me to report to the Utah people that Mr. Rogers had looked wise +and said nothing. The double-perfected "look-wise-and-say-nothing" is one +of "Standard Oil's" pet business devices. Whoever tries to penetrate its +secrets is always welcome to his inferences, but no one in "Standard Oil" +is ever on record in case the inquisitive one guesses wrong. + +"Lawson," Rogers said, "just tell those people that our way of doing +business is to send out reports when we decide it is time for them to be +seen." + +In the meantime Utah kept booming. A week before the expiration of our +option, the price being then forty-five, I heard from Mr. Rogers again. +He gave me the most mysterious order of all: "Sell 50,000 more." Up to +that time I should have declared to any one that I was up in all the +quirks and kinks of the stock game, but this move puzzled me. However, I +sold, and at the very top. We had now "out" 150,000 shares of Utah, had +sold that number "short," in fact. Clark, Ward & Co. were bound to +deliver us 100,000 shares when we called for them. These 100,000 shares +had been contributed by the large stockholders to Clark, Ward & Co. at +the price we had agreed to pay. Assuming that "Standard Oil" control of +Utah would immensely enhance its value, the stockholders naturally +desired to replace the holdings of stock they had contributed, and +instructed Clark, Ward & Co. and other brokers to buy them back in the +market. So Clark, Ward & Co. were carrying all one end and much of the +other end of the deal, paying for the actual stock which our option +called for as it came in, and carrying their customers for the new stock +purchased for them at vastly higher prices. _But_, as we had not taken +up our option and paid Clark, Ward & Co. for our stock, the money +necessary to finance the whole transaction had to be borrowed from the +banks. It is evident that, at this phase of the game, Clark, Ward & Co. +must have been, as the phrase goes, "extended." + +While the operation had been in process, during the life of the option +in fact, money at the "banks" became as "easy" as an old haircloth +rocker for whoever desired to borrow on Utah Copper collateral. The fact +was much commented on at the time by the "Street," and Clark, Ward & Co. +often gratefully remarked to their customers: "After all, 'Standard Oil' +is good to its associates." + +The day before the option matured, Mr. Rogers briefly said to me: +"Lawson, I've been thinking that Utah matter over and have made up my +mind that it is not safe to go ahead unless we have the actual control +of the company, 151,000 shares. Tell them so, and that we must have +51,000 shares in addition to our 100,000." + +At last his game was plain to me. I gasped as I took in all the features +of the new plan. "They'll never stand for it," I cried. + +"They won't, eh?" he said. "You look it over more carefully and I think +you will agree they _must_ stand it even if I make it another 100,000. +This is the situation: They are sure we are going to take and pay for +100,000 shares, and in anticipation have borrowed millions on call at +the banks. For fear they may not see all the nice points of their +position you can show them that if they refuse, the banks as well as +every one else will know that we not only are not going into Utah as +investors, but would not--in fact, could not--become connected with the +management, because our thorough examination of the property shows that +the mines are not as valuable as they affirmed. Now, when they grasp the +fact that they have all the Utah stock they had, to start with, and +150,000 more which they have bought since, they must realize that in a +slump the price of their shares will go lower than the $2 or $4 it +started from. Have no fear. Clark, Ward, and Untermyer will do just what +we ask, and, in fact, if it were not for the stir a lot of failures +would make and the bad effect these would have on our general plans, I'd +refuse to take up that option anyway, for there would be more money in +buying back in a smash what we have sold than in taking it from them at +our own price," he went on. + +The implication in my suggestion that he was going too far in the Utah +deal stung him. He said: + +"The fact is, Lawson, Americans who have accumulated great fortunes get +no credit; on the contrary, they are unfairly treated. Instead of being +honored for our splendid efforts as evinced by our wealth, the people +howl as though they had not equal chances with us. Take this very case: +we did not ask these people to give us options; we did not ask them to +allow us to become associated with them. We have done nothing but take +what they have thrown upon us, and yet if we refuse to exercise the +option we did not ask for, and there comes a smash, we should never hear +the last of how 'Standard Oil' robbed them. The more I see of the fool +way Americans look at such things the less sympathy I have for their +losses and what they entail. There was a period when I allowed myself to +waste time on such ideas as you seem to entertain, but, thank goodness, +I have outlived it." + +The job cut for me was one I hated to perform. I could refuse, but what +then? Some one else would carry out Rogers' mandate, and where should I +and my great copper structure be? If I balked here, they would go no +farther with me--and remember, we were just at the beginning of our +association. Had I foreseen the misery and ruin with which the future +was fraught, I should have stopped then and there; but the future was +hidden, and I was expectantly revelling in a glorious and delightful +period in which I and all who were following me into "Coppers" should be +gloriously successful and rich. So I looked at the situation in a +practical business way, and I said to myself that even if we did insist +on having the 100,000 shares extra Rogers had mentioned instead of the +50,000 he had decided to demand, the Clark-Ward-Untermyer combination +would still have remaining more of value than their whole property could +possibly have been worth without our association. Therefore I tumbled +into their midst and dropped Mr. Rogers' bomb--and bomb it was. + +At once they realized that they were looking into the cold steel muzzles +of 45-calibre revolvers, for there was no concealing the +money-or-your-life inference of the message. I had honestly tried to +soften the blow as well as I could, but all they could see was 50,000 +shares more at something like a million dollars less than its market +value--or in twenty-four hours a panic and no market for their stock at +any price. What could they do? With perspiration streaming in big beads +down their foreheads, they declared that even if their people were +willing to submit to the knife, it was impossible in the brief time +available to get to them. At least would I not beg Mr. Rogers and Mr. +Rockefeller to take up the 100,000 shares pending their negotiations for +the balance? Would I not, because they had made all their financial +arrangements for big payments of loans next day which they could not +renew at such short notice--I must!--I must! + +As I listened to the pleadings of these men there flashed into my mind a +conviction of the malignant humor of my situation. Here was I, father of +a plan in the successful execution of which I had figured myself out as +a benefactor to all concerned, turning the torture screws of "Standard +Oil's" new dollar rack--fashioned from my structure--and I was powerless +to stop or rescue the screaming victim. "But why," ask my readers, "did +you not denounce the men and renounce the work, instead of profiting by +it, as you undoubtedly did?" You have never--you who ask that +question--sat in at the great game of millions; you know nothing of the +excitement of the dollar chase, of the terrible joy of hearing, "A +million while you wait." I am not, in telling this story, setting myself +up as an angel, nor posing as better than others. My experience of +business has demonstrated to me long before this that rapacity rules in +the modern dollar game, and that in wholesale dollar making many of the +laws of men and more of the laws of God are inevitably violated. But he +who cannot or will not play according to the rules of those who are +making the game is disqualified. He should go elsewhere. Hitherto in my +life I had followed the code of a smaller game, in which we seldom +pressed an advantage to the limit or cut our pound of flesh from out a +vital part. Now I had voluntarily associated myself with other men in a +venture I believed was big, fair, and square, and I was learning that +the rule of their game was thumbs down--give nothing--take everything. I +might have retired, but I was already deep in, with resources pledged to +the limit; and what would my reluctance to press our advantage with +Clark, Ward & Co. be considered but fool sentimentality? If I insisted +on my view, what would happen? The people who had followed me so +far--and their number was thousands and their quality, measured by any +heart and soul standard, more human than any of those whom Rogers was +thumb-screwing--as well as I myself, would be surely ruined. If I went +on, at least I could care for those I had brought along with me. I +looked at the complication fairly and squarely, weighed my duty with +such powers of judgment as I possessed, and decided, wisely or +unwisely, that it was best to go on. Wisely or unwisely I made up my +mind to accept the responsibility of acting as fireman to the +engine--and to bide my time. That time, thank God, is here now. + +I reported to Mr. Rogers. His fox-trap jaws, with their bone-and +heart-and soul-crushing teeth, came together with a snap, and when they +relaxed his lips parted into one of his marrow-chilling smiles. + +"I thought so," said he. "Those able gentlemen are loaded, Lawson, +loaded, and without a by-your-leave have made up their minds that Mr. +Rockefeller and myself are only in business to draw their load to some +convenient safe-deposit vault, from which they can from time to time +take it out to pay for palaces, yachts, fast horses, and society crowns. +Lawson, don't tell me of their plight. Don't waste my time with their +pleadings." The tiger was awake, his cage rattled; it was raw-meat time. +I watched. Presently he snapped: "What do you suppose they would answer +were they in our position? This: 'Give us the additional 50,000 shares +we have demanded quick, or take the consequences.' They are able +business men, so what they would do is just good enough for us to do. +Take back this answer: 'You have the only proposition we will make; +decide at once!'" + +I looked at him. I said not a word--I could not. Perhaps my thoughts +were miles and ages away to scenes where Cĉsars, Napoleons, and +Bismarcks stood gazing over fields strewn with corpses oozing blood. I +remembered "to the victor belong the spoils"; but there also wandered +into my mind the memory of a good mother's knee on a Sunday afternoon, +and of a voice which repeated, "For what is a man profited if he shall +gain the whole world and lose his own soul?" + +As I left him Mr. Rogers said: + +"You had better sell 10,000 shares more of Utah. Sell them quick and +sharp, and perhaps they will read our answer on the tape before you get +to them." + +I sold the 10,000 shares. The price dropped two to three points, and, +sure enough, by the time I got to Clark, Ward & Co.'s office I found +them poring dazedly over the ticker tape. They knew my answer before I +stated it, and were trembling with nervous apprehension. I wondered if +they, too, saw the tiger, his bloody chops and claws and his piece of +raw meat. I said what Mr. Rogers had told me to say in so many words, +and then I talked frankly to them about their situation, and advised +that they meet "Standard Oil's" demands. I called their attention to the +tape: "They told me to throw over only 10,000 shares," I concluded. + +"Great heavens!" said Armstrong, the negotiating partner of Clark, Ward +& Co., "they are likely to follow it up with 90,000 more. They have it; +at least they can demand it of us, and if they do we are ruined. What +can we do, Lawson? What _can_ we do?" + +I pointed out that their only possible course was to lay the situation +before the large shareholders involved, stating the absolute necessity +of coming to "Standard Oil's" time, and to make their medicine a little +more palatable I added: "Once you come to time I can induce my people, I +believe, to make a public announcement that they will take the open +management and control of the Utah Company, and you know that will +surely make the stock jump--enough, perhaps, to offset what you people +lose on the extra 50,000 shares you yield up." + +I advised them to the best of my ability as to their only way out. If I +had revealed to them that we had sold every share of the stock they were +to turn over to us, it would have served no good purpose, for it would +have made business impossible between us, and a crash would have +occurred which would have ruined Utah, inflicted destruction on their +price structure, and only enriched "Standard Oil." When I concluded, +they started in to do as I had suggested, and the way they burnt up time +and annihilated space was marvellous to behold. Though the thing was +almost a miracle, they met the condition within the time limit, and we +had turned over to us 150,000 shares of stock. + +The moment Mr. Rogers saw the deal was a "go" all his hardness melted as +the snow upon the mountainsides under the April sun. Nothing could be +softer, kinder, and fairer. The blood had disappeared; the tiger was a +great, purring house-cat, intent only on catching naughty rats and mice +for the good of the household. Why, he would do anything to help out +these good gentlemen; certainly, the world should know of his great +interest in the Utah properties, and as the millions of golden dollars +clinked into his golden bucket the next day, the world did learn of the +great value of Utah, for his private counsel was made president, and +certain other gentlemen who bear the uncounterfeitable "Standard Oil" +tag were appointed as directors. There was a general jubilation--I had +almost said, a killing of the fatted calf; but that part of the ceremony +had been most ably attended to by Mr. Rogers in the preliminary stages +of the entertainment. + + NOTE.--When this startling and cold-blooded-trick part of my + story was published in _Everybody's Magazine_, it astounded + the world, and my enemies took advantage of the fierce anger + which was aroused to call attention to my part, which they + attempted to show was as bad as that of Rogers. Right here I + wish to go on record: If I had been a human angel instead of + a stock-broker, actuated solely by a desire to do just + right, to do that which would work least harm to the + greatest number of innocents, and least good to the largest + number of tricksters, I should have done as I did. + + AUTHOR. + + + + +CHAPTER XIV + +LAWYER UNTERMYER DISCOVERS THE "NIGGER" + + +I have dwelt on this Utah episode because it shows phases of the +"System's" methods never heretofore made public, just as episodes which +are to follow in the narrative will develop other startling and +ingenious deviltries. But, before going on, the sequel to the Utah +affair deserves a place in the story. A sequel there was, and my readers +will agree, I think, that it has a mordant humor quite its own. To-day, +after the years that have gone by, I cannot think of this tremendous +bunco game, in spite of its cruel and tragic phases, without a laugh at +the manner in which the smart gentlemen who composed the Utah +Consolidated crowd were "outwitted." Bear in mind that Clark, Ward & Co. +were among the "flyest" operators in Wall Street's juggle factories. +They asked no odds of any one in shuffling and dealing their cards, and +with them was the eminent Samuel Untermyer, surely the head of his class +of corporation counsellors, and himself a master in the fine arts of +copper financiering. On the conclusion of the deal, these gentlemen and +their partners in Utah assumed all the airs and graces they conceived +proper for associates of "Standard Oil," and at once enlarged their +hatbands and let out their waistcoats. Some of them, I believe, went so +far as to be measured for copper crowns. The stories they set afloat +about the richness of Utah, as proved by "Standard Oil's" determination +to have its 150,000 shares, would have made the constructor of Aladdin's +palace look to his laurels as a treasure-house creator, and the +stockholders of the corporation felt so good over their prospects that +in London and New York two large banquets were simultaneously given at +which the prospective millionaires tossed cable congratulations at one +another across the Atlantic and toasted in vintage champagnes the +brilliant promoters who had worked such wonders. At these entertainments +there was no question but that Utah was destined to be the foundation +company in the coming great copper consolidation. + +With this roseate view Mr. Rogers did not entirely coincide. His +diagnosis of the situation had all that whichever-way-the-cat-jumps +frankness I had learned to look upon as characteristic of the man. He +said to me: + +"Lawson, this is the situation: We are in absolute control of the Utah +property. If it were good we could do great things with it, but it's +bad, very bad; there is nothing out there but a bunch of ore which is +rich enough, but which cannot possibly last longer than six years, and +then--then there is nothing but a hole in the ground. Of course there is +a possibility of our finding other bunches, but with all the machinery +in our hands it looks to me as though we could play a very safe game. If +we find things that will make the stock valuable, we can keep the good +news buried until we shake the price down and get whatever we want. If +it is all bad, we can sell the stock and buy it in at big profits. I +think, on the whole, it is safe to call this deal completed and mark it +a success." + +With this understanding we left it, and for some little time I paid no +attention whatever to Utah. One day I was surprised to notice on the +tape that the price of the stock was declining. I was puzzling over what +could have happened, when I received a sudden call from the Machiavelli +of the New York Bar, Samuel Untermyer. The set glare of his eyes, the +fervor of his hand-shake, told me that I had a volcano to deal with. + +"Lawson," said he, "something came up the other day that led me to +investigate, and do you know, I have got to a point already where I can +put my fingers on people, outside of any one connected with 'Standard +Oil,' who own over 200,000 shares of Utah. If this is so, how can Rogers +and his crowd own the 150,000 shares they took away from us at millions +below the market? It seems impossible, but it looks as though we had +been buncoed--buncoed as no one outside a crazy-house was ever buncoed +before." + +That steely imperturbability which is alternately the pride and pleasure +of Mr. Untermyer's friends, the glittering surface of which it is said +no cloud has ever shadowed or no gale disturbed, was fast losing its +distinction under the influence of the excitement that welled up in the +heaving bosom of the eminent cross-examiner; and excitement and he were +so remote, so studiously antagonistic, that I looked on and listened in +wonder for the outcome. An interesting situation was evidently fast +developing, and to grasp its possibilities one should know the attitude +of Mr. Rogers toward Mr. Untermyer. For this astute lawyer the "Standard +Oil" magnate has something akin to terrified admiration. Mr. Rogers has +said many times to me and to others among his associates that there is +but one lawyer in the United States whose cross-examination on the +witness-stand could afford him anything but amusement and recreation; +and this extraordinary exception is Samuel Untermyer. The bare thought +of being subjected under oath to the remorseless questioning of this +astute dissector and analyst of motives and actions brings him to the +verge of rippling chills. And here was this legal Nemesis on the +war-path and headed directly for 26 Broadway. + +"What does it mean, Lawson?" His voice was in a court-and-jury key. + +The opportunity was too good to miss. I could not help it. I said, +"Untermyer, you have another guess coming." + +"Do you refuse to tell me anything about it?" he snapped. + +"Tell you about it?" said I. "What could I possibly tell you about your +own scheme? You flatter me; you are getting excited. Let me ask you a +question, What do you say it means?" + +"I say it means," he fairly yelled, "that we have been +buncoed--swindled!" + +"If that is a fact," I said, "you are the best man on earth to tackle +such a proposition. Introducing swindlers to justice is your specialty." + +"Lawson," said he, "let's talk it out. I don't see wherein you are in +any way to blame, but I tell you if I find true what I now suspect, +there will be music in the copper world that will set copper investors +by the ears." + +I saw there was no use trying to dodge the issue, and we entered into +executive session. He had gathered most of the facts, he told me, and to +ascertain the balance, proposed at once to call a meeting of Utah +Consolidated stockholders. Also he had men out examining the transfer +agencies to find who got the shares of Utah delivered to Rogers. + +I said to him, "What do you think has happened, Untermyer?" + +"I think you people have sold the bulk of that stock," he said. + +"Suppose we have," I said; "there is no crime in that, is there?" + +"No crime," said he, "but it is a piece of dirty double-dealing." + +"All right, suppose I admit it," said I, "what of it?" + +"Well, did you do it? Did you sell that stock after we delivered it to +you?" + +"Not a share," said I. + +"Do you give me your word for it?" + +"I give you my word, we didn't sell a share of that stock after you +delivered it to us." + +"When did you sell it?" said he. + +"Every share before we secured it of you." + +At this the distinguished impassivity faded finally away and Samuel +Untermyer was actually and absolutely flabbergasted. The sight of him +dumfounded, confused, was too much for me. I laughed. It is seldom one +gets the laugh on Mr. Untermyer. + +"Do you mean to tell me you were short the whole bunch?" + +"Short every share of it, and 10,000 besides," said I. + +"And where do you stand now?" he pursued. + +"Still short of it, and before you can get fairly to work kicking up a +rumpus I should not be surprised if we were short the whole capital +stock. Rogers, as you know, does play a great game, that is, when he has +all the cards, owns the table, the room it's in, and has control of the +doorkeeper." + +There was an interval of tense silence. Untermyer was making a noble +effort to swallow his fury. I began to figure the degree of my +responsibility if he should burst a blood-vessel or have an apoplectic +stroke. Finally he said: + +"Lawson, if I don't blow this thing to pieces and shake 26 Broadway to +its foundations, I'm not Sam Untermyer." + +The time had come to reason with the heated legal gentleman, and in +plain language I proceeded to show him where he stood, the position of +the property, the public's relation to it, and his own duty to the +clients whose money he had invested in it. Under the logic of my +argument he cooled. He saw the net, and that he and his friends were +absolutely enmeshed. He even admitted that he and his friends had +unknowingly aided in what had occurred and were mostly to blame for +their present position; but while he acknowledged all this, he +reiterated over and over again that in all his experience--and in Samuel +Untermyer's professional position he has either prosecuted, defended, or +had an inquisitorial finger in every sword-swallowing, dissolving-view, +frenzied finance game that has been born or naturalized in Wall Street +within the decade--he had never met the equal in high-handed bunco of +this deal in Utah. + +Finally he said: "There's one thing I can do, if I cannot get even with +Rogers; and that is, I can 'fire' the present management of this +company, and I'm going to do it now, this very minute, and incidentally +I'm going to state what I think of them and the whole dirty business." + +I called up "Standard Oil" on the telephone and told what had happened. +Mr. Rogers said: "Cool him down at any cost, but particularly try to +show him I had little to do with the deal; that it was largely the +outgrowth of what the Clark-Ward people thrust upon us, and that I left +the details to you and the lawyers." + +Again I had visions of what would be the cost of making "Coppers" a +success. + +Within an hour Untermyer was back visibly relieved and glowing after his +encounter. He had the resignations in his pocket, and he began joyously +to detail the specific opprobriums he had cast upon the management. "I +shall put in an entirely new management," he proclaimed triumphantly. + +"You have positively made up your mind to that?" said I. + +"You bet I have," he answered. + +"Excuse me for a few minutes, then," I said; "I want to give my brokers +orders to rip out 50,000 or 60,000 shares of Utah. Rogers and +Rockefeller would take me to task if I wasted a minute." + +"Hold on there, Lawson," he said. + +"Not a minute," said I; "you know the game well enough, Untermyer, to +realize that there are a few millions hanging very low on the boughs at +just this second. I want to get my hat under them before you and your +friends have an opportunity to roll in your own hogsheads." + +It was no time for diplomacy, and I set forth in plain, dog-eat-dog +terms to Mr. Untermyer exactly where he was "at," and that no one but +himself and his associates would be the sufferers by a public explosion. +Reluctantly he agreed with me that under no conditions must the +"Standard Oil" management be changed, but he was bound to have one +victim to show. + +"You have the resignations of the present board--why not put in new men, +the strongest 'Standard Oil' men you know?" I suggested. + +"I'll do it," he said, "but I'll throw out the present president, blame +him for all that's happened, but--whom shall I put in to replace him? +How about Rogers himself?" + +Knowing Mr. Rogers' cross-purposes I was sure he would never become +officially responsible for the company; so I told Untermyer this was +impossible, but I continued: "The next best man and the closest I know +to Rogers is Broughton, his son-in-law. There's your president." + +Whereupon Broughton was elected president of the Utah company. The stock +has since dropped from 52 to 22, gone from 22 to 37-1/2, dropped to +18-1/2, with frequent repetitions, and is now 43: and all the drops have +been preceded by tremendous short selling, followed by stories of the +absolute worthlessness of the property; and all the rises, by +tremendous buying and stories of the mine's fabulous richness. Some one +has made millions. + +"Standard Oil" is ever ready to forgive and forget those it has injured, +but it has power and place for those who have made it tremble. Its +associates to-day are often yesterday's enemies. As one looks back upon the +Utah episode from over the divide, it helps accentuate its humor to +contrast the present attitudes of the parties engaged with those they then +held to one another. We now see the virtuously indignant Samuel Untermyer +shoulder to shoulder with his wicked betrayer, Henry H. Rogers, whose +counsel he is against the original ally of the same Henry H. Rogers, Thomas +W. Lawson, historian of "Frenzied Finance." And the talented expert, most +trusted of "Standard Oil" mining emissaries--Broughton, whose unfavorable +report on Utah Consolidated was the instrument of the plundering of the +Clark-Ward-Untermyer contingent--elected president by Samuel Untermyer, has +remained ever since at the head of the property he had pronounced +worthless. + + + + +CHAPTER XV + +DEGREES IN CRIME + + +Every profession has its social grades. Even crime is not without an +aristocracy. There are as many classes of crooks as there are things to +steal, and the more dangerous the theft, the more distinguished is the +criminal in the eyes of his professional brethren. In the thieving +fraternity the burglar and the highwayman figure as important persons, +for do they not take their lives in their hands every time they "pull +off" a trick? He who signs another man's name to a check requires fine +dexterity to be successful and endangers his liberty for a long term, so +the forger is of high consequence. Pickpockets and sneak-thieves stake +freedom on the agility of their fingers and legs, and are the small fry +of the fraternity, yet figure as legitimate practitioners. But the +confidence man, he who goes forth among rural communities disguised as a +clergyman or doctor, and wheedles money out of some unsuspecting +fellow-creature by means of the trust he has inspired, ranks low in the +estimation of his plucky brethren of the jimmy and the black-jack. Force +they respect; stealth they despise. The burglar is frankly a burglar; +the confidence man conceals his plundering purpose under the aspect of +respectability. He is doubly a knave in that he pretends to be honest. + +The Utah trick performed by the "System," as described in my last +chapter, was essentially a confidence operation. The men who executed it +had the reputation and appearance of honesty, and their victims were +hypnotized into security by accepting standing in the community, great +business prestige, and enormous wealth as guarantees of individual +probity. The only capital employed in capturing three millions of "made +dollars" and the control of a great corporation was respectability. I +contend, then, that the magnitude and success of the deal do not make it +less despicable. + +Some of my readers will doubtless ask me why I so insistently repeat the +details of the "System's" criminality, which for all purposes of +argument have already been sufficiently established. My answer is that +repetition alone will impress people with the real character of the +class of individuals with whom I deal. The mass of Americans look upon +these men as great leaders, and regard their millions as monuments to +their commercial genius. I am showing that this commercial genius is no +better than a high talent, for financial jugglery, and that its +successes are achieved by a calculated disregard of the laws of the +game. The "System's" fortunes have been won by means of marked cards and +cogged dice, crooked wheels and bribed umpires--in other words, by the +corruption of legislatures, the undermining of competitors, the evasion +of railway rates, the wrongful manipulation of stocks, the perversion of +justice, by intrigue, graft, and four play. Once the people realize +this, the "System" is doomed; and it is my purpose to demonstrate so +clearly and forcibly the crimes of the past that the nation may be +aroused not only to prevent their repetition, but to crush their +rascally perpetrators as they would so many reptiles. I shall so +familiarize the people with the rights to which they are properly +entitled and with the outrages committed in violation of them under the +guise of legitimate commerce, that they will know them as they do the +common facts of their daily lives. Let any "System" attempt to interfere +between a man and his Bible, his meat and bread, and his proper +allowance of sleep, and there would occur an explosion fierce enough to +wipe the conspirators and their plots off the face of the earth; yet it +is absolutely the fact that in the past our people have suffered +unwittingly much fiercer wrongs than these would be, and far more vital +invasions of their rights. + + + + +CHAPTER XVI + +MR. ROGERS UNMASKS + + +There was in Montana a great copper property known as the +Daly-Haggin-Tevis group, the centre of which was the huge Anaconda mine +with its 1,200,000 shares. This is the mine that Marcus Daly induced the +late George Hearst to buy and develop for the marvellously successful +syndicate of California mining operators, composed of J. B. Haggin, +noted now the world over for his horses; Lloyd Tevis, an extraordinarily +shrewd San Francisco financier; and Senator George Hearst, himself +perhaps the greatest mining expert America has ever known. After Senator +Hearst's death his estate sold its holdings to European investors, who +with the other three owned the company at the time of which I am +writing. I had never in my copper-consolidation plans contemplated +including this property, for the reason that the public I was operating +among was not familiar with it. I did not care to put in jeopardy the +success of our venture by admitting any but mines of such well-known and +unquestionable value that there could arise no possible doubt as to the +security of the investment. I was well along in my task of gathering in, +through public-market manipulation and private negotiation, the shares +of the several good Boston companies whose merits I myself knew about +and had so carefully gone over with Mr. Rogers and Mr. Rockefeller, when +one day Mr. Rogers called me up on the telephone and requested that I +come to New York to see him. "I have," he said, "a very important matter +to go over with you." I took the train and early next morning was at 26 +Broadway. As soon as we started in I was struck by a certain strangeness +in his manner--an unusual impressiveness that indicated to me at once +that something was in the wind. + +This proved to be the case. I was soon in possession of the information +that he and Mr. Rockefeller had been putting in a lot of work on the +copper business; that they had evolved some further schemes, and that +now the plans were so far along that I could not upset them, therefore +they proposed to let me in--all this in the pleasantest manner. + +In answer to my quick inquiry as to what plans I had ever upset he waved +a chilling hand toward me. "Don't start in looking for trouble," he +said. "There are certain things which cannot be done by a man who works +as you do. From the very beginning you have insisted upon taking the +public into your confidence, with the result that they get large profits +which otherwise would come to us. If you did your business as we do +ours--acted first and talked after, or, better still, did not talk at +all--there would be no difference of opinion between us. Still, we +recognize that each man must do business in his own way, and we have let +you go ahead where it was possible." After a short pause he continued: + +"While you were getting the Boston companies in shape I unearthed +another situation which almost seemed as though it were made to order +for us. What do you know of the Anaconda Company?" + +The way he asked this question in one of his cross-bred, +cat-purring-and-fox-bark tones which I had seen him work on others, and +which I had observed always denoted a perfect knowledge of your answer +to his question before you had it, did not help my guessing any. + +I told him I knew nothing more than that there was such a company with +stock dealt in on the English and our markets. + +"Nothing more than that?" And he looked at me quizzically. "Have you +been watching the stock's actions in the market?" + +In a second it flashed over me that Anaconda had been quite active of +late, that is, had been largely traded in without attracting much +attention, although the price had been steadily advancing. + +"I thought you boasted you could read the tape, Lawson?" he went on, +"and that nothing could be happening in a field you were interested in +without your smelling it out? When I tell you Mr. Rockefeller and myself +have bought control of the biggest copper property in the world, +measured either by the number of shares and their selling price or by +production, without your even suspecting it, much less the public's +jumping in and running up the price on us, you can see there is +something in our quiet way of doing things compared with your public +way." + +"All right, Mr. Rogers; I have never contended that there were as many +dollars in my way of doing things as in yours--as many dollars for +_us_." + +"Lawson," said he, "the public are about ready to invest in the first +section of our new consolidated company, are they not?" + +"Sitting up nights to see that they get a place in line the minute we +scatter our first handbills," I answered. + +"Well, are we ready to put our things together? Have we got the +necessary companies to meet the ideas you have been educating the public +into?" + +"We have things in such shape that we can whip a $75,000,000 or a +$100,000,000 company up for public subscription in a very few days, if +you give the word." + +Mr. Rogers leaned toward me and said in his most decisive and imperious +tones: + +"Very well; I have plans all shaped up which will allow us to offer the +first section, but not made up as we first arranged. Mr. Rockefeller and +myself have decided to put entirely new companies in the first section, +and to reserve the Butte and the Montana and other companies you have +been working on for the second section." + +The blow had fallen. My head swam. Visions of Clark, Ward, Untermyer, +Utah, and others I had seen on the rack writhed fearfully across the +stage of memory. Here I was loaded with Butte, Montana, and other stocks +which I had felt as certain were to go into the first section as one can +feel in regard to a thing which seems in one's own control. On my public +and private assurances as the accredited agent of Mr. Rogers and William +Rockefeller and "Standard Oil," my friends and following had large +amounts of money in the same securities. The market was booming on what +I had proclaimed was to happen, and here an absolutely new condition was +being imposed, a condition which gave all my assertions the lie, which +discredited me, and would, I felt sure, precipitate a terrible disaster. +Inevitably the copper public would be dazed, would be shaken; a reaction +would follow which would bring on a panic and a destruction of values +impossible to measure. In it all, I should be left alone to bear the +brunt of the storm of ruin, wrath, and denunciation as the result of +what must seem base trickery to those who had accepted my +representations. I tried to pull myself together, for I felt Mr. Rogers' +keen eyes burning into the back of my head, appraising the effect of his +words and measuring the degree of my numb terror. He saw, in spite of +all my efforts to appear calm, that I knew I had been given a knock-out +blow. + +As in a dream I inquired what companies it had been decided should go +into the first section. + +"Anaconda, Washoe, Colorado, and all the big timber lands, coal-mines, +banks, stores, and other Montana properties that go to make up the +Daly-Haggin-Tevis properties," he replied crisply. + +I found my numb inertia melting in a fierce anger. I jumped up. I raised +my voice: + +"Mr. Rogers, do you mean to tell me that Mr. Rockefeller and yourself +have deliberately decided to take advantage of the situation I have +made--the situation I have not only made but put myself into--to try to +sell to the investors of this country other property than that I have +promised them they were to have? You cannot mean that--you surely +cannot, for you and all your 'Standard Oil,' even though you were many +times bigger than you are, would never have dared to tell it to me face +to face." + +I was boiling over--becoming literally frenzied at the picture unrolling +before me. + +Now it was Mr. Rogers' turn to be aroused. His voice quivered with +intensity and his fist came down on his desk with a force that shook the +inkstand. It flashed into my brain that this anger was assumed to cow +me, and I tried to look through his eyes on to his mind tablets back of +them, and read what was there recorded. The gaze that met mine was +polished steel ice coated, off which my glances slipped and slid. I +dropped into my chair. + +"In the name of all that's sensible, Lawson, hear me out and quit acting +like a child." He stopped a second and then went on impressively. "In +looking over the copper field I discovered a number of things you failed +to see. First, that Haggin and Tevis, who own Anaconda with Marcus Daly, +have grown so wealthy that they have left the management of their +Montana copper and silver properties entirely to Daly, and he has been +coddling the mines along, saying nothing about their real worth and +quietly passing by the richest parts, awaiting the day when he could buy +his partners out. Shortly after you let it be known that we were to go +into 'Coppers,' Daly came to me to talk things over, and it took me only +a short time to get under his waistcoat and find just what he had out +there, and it took me still less time to decide that he offered +something a little better than anything we had yet turned up. These +properties, which we can secure for $24,000,000, which will carry with +them the majority of the 1,200,000 shares of Anaconda, alone are worth +$75,000,000, and with the addition of the Colorado, Washoe, and Parrott, +which he recommends that we buy and which he is in a way to secure for +us at a bargain, will cost not over $15,000,000. So it came right down +to this: We could trade with Daly immediately, while if we waited until +the first section was out to the public the inevitable appreciation of +Anaconda stock in the market would alone make it impossible; for even if +Daly was willing to go in with us, Haggin and Tevis would not let him at +anything like the prices he now names. It seemed best to take action at +once, so we closed with him; and we have also just closed with the +Washoe and Colorado, and we want you to secure the Parrott. Under these +circumstances, could we do otherwise than we have done?" + +His argument seemed conclusive. It looked so fair and unanswerable that +I could not disguise from him that my fears had fled. I was immensely +relieved. My fight oozed; I became as pliable as any of the brittle +clay which he daily kneaded for each shaping with his applications of +oil. + +"What are your plans, Mr. Rogers?" I asked quietly. + +"This is what we thought would be the thing to do if you agreed, Lawson, +for, of course, you are, after all, the one who must decide. First, you +shall go over everything we have done, and if you feel sure we have +property worth at least, at the hardest kind of hard-pan prices, +$75,000,000, we want to whoop up the country to the very top notch of +expectation, and while doing so begin to hint that there are to be three +or four sections, and that the first one will embrace Anaconda, +Colorado, Washoe, Parrott, and lots of other unnamed things. Then our +idea was to offer the $75,000,000 by public subscription, and by using +every dollar we receive for it to support it in the market, to make it +sell afterward under all conditions at a big premium over cost, so that +every one would make big profits, and so, consequently, by the time the +second section came along, the demand for subscriptions would be +unprecedented. We could continue this until all the good 'Coppers' were +in our company, and then our consolidation would be a prodigious +success, just as you outlined at the start. There cannot possibly be any +loss to any one; in fact, success is so assured that William +Rockefeller, Daly, Stillman, and all the others who will be associated +with us, do not propose to sell a share of their stock, but, on the +contrary, will go along with us to the finish. So good does it look to +us that I feel it will really beat out Standard Oil itself as a +money-maker, and you must remember that whatever else they may say about +Standard Oil, no one who has ever owned a share has lost money; on the +contrary, every one has made large profits." + + + + +CHAPTER XVII + +"EXTRACT EVERY DOLLAR" + + +"Standard Oil's" arguments always are absolutely flawless, and this was +one of their best. I was fast becoming imbued with the wisdom of the +plan which Mr. Rogers was revealing so adroitly, and began secretly to +wonder if after all I was not a novice in such business. + +Unerringly Mr. Rogers followed my thoughts. He piled Pelions of better +things on Ossas of good ones. Surely it was after watching some parallel +hoodwinking put through by a remote ancestor of "Standard Oil" that Puck +enunciated his famous dictum, "What fools these mortals be." I fell in +like the veriest tyro--hypnotized and happy. + +"How much of this first section do you figure, Mr. Rogers, that we are +to give to the public?" I inquired. + +"We, Mr. Rockefeller and myself, have carefully considered this phase of +it, and as we all want to retain as much as possible of the stock, we +would not sell over $5,000,000 to the public." + +"But can you do this?" I asked. "If the public know 'Standard Oil' is +retaining nearly all the stock they will sour on it." + +"Leave that to us," he said, knowingly. "We can iron this out so easily +you need not give it another thought, for no one can have any possible +rights in the matter until he has been allotted stock, and as all those +who come in are to have big profits from the start, they will raise no +objection to anything we do." + +"All right, if you think it's wise. You know," I responded; "but who +will be in this besides ourselves?" + +"Every one of us--Stillman, Daly, Olcott, Flower, Morgan, all who can be +of use to us will have to be let in on some of the ground floors. The +foundation profits, as we agreed under the old plan, will be twenty-five +per cent. to you, seventy-five per cent. to us. After that we will +jointly take care of those we let in. Is that all right?" + +When Henry H. Rogers sets out to batter down an antagonist he is as +fierce as an eagle foraging for her young; victorious, he is as amiable +and generous as a salesman who has unloaded on a customer a big cargo of +damaged goods. Anything the victim wants he can have by simply naming +it. + +Fascinated by his mastery of the subject and the obvious completeness of +his plans, I could only continue to assent. He went on: + +"There's another section of the subject we must get at now, Lawson, and +decide on once and for all. You seem to have made no provisions for the +most important end of the whole business, the selling end. What is your +idea as to how we shall control the selling end?" + +"I had given that little thought, Mr. Rogers," I replied. "I believe +that easily takes care of itself. The demand is always greater than the +supply. We shall have the metal to sell, the world will be more anxious +to buy than we to sell: what more can be necessary?" + +"Lawson," said the master brain of the greatest and most successful +commercial enterprise in the world, "you know the stock-market, but you +don't know the first principle of working to advantage a great business +in which you absolutely control the production. The novice assumes that +consumption when it is greater than production makes the price, but this +is one of the many time-worn sophistries of business. Do you suppose +Standard Oil has built itself up to where it is and made the money it +has simply because there were always more lamps than we had oil? If you +do, you are in dense ignorance of the foundation requisite for great +success. As the world goes to-day, the prices of necessities and +luxuries are fixed and should be fixed by the man who controls both the +selling and the producing end, for there is a greater profit to be had +by supply to regulated demand and demand to regulated supply than from a +charge made and regulated by supply and demand. Standard Oil gets +to-day and has always since its birth got its enormous profit from its +'regulation' department. Production yields it a proper profit and by +supplying legitimate demands it earns other fair profits, but its big +gains come from so adjusting one to the other that there can be no such +thing as competition. Do you see?" + +"I agree that is not my end, Mr. Rogers, though in a general way I know +about railroad rebates, steamship comebacks, and such things; but I +don't see how they are required in our copper business, where the demand +is of such proportions that the producer sets the price and makes a +profit away above what may be gained in other business enterprises. +Surely no one would ask larger gains than are naturally made out of +copper." + +"Lawson," responded Mr. Rogers with oracular emphasis, "that is where +your business education is flawed. No man has done his business properly +who has missed a single dollar he could have secured in the doing of it. +I do not think a fair judge would find me guilty of avarice, either in +business or in the manner of my living, and yet I am made fairly +miserable if I discover that, in any business I do, I have not extracted +every dollar possible. It is one of the first principles Mr. Rockefeller +taught me; it is one he has inculcated in every 'Standard Oil' man, +until to-day it is a religion with us all." + +There you have it--the fundamental precept of the gospel of greed. "What +must ye do to be rich? Extract every dollar." How the formula explains +"Standard Oil," and how completely it reveals the Rockefeller attitude +of mind! Greed crystallized into a practice, dignified into a principle, +consecrated into a religion and become a fanaticism. But, mind you, not +the dross, but the rule; not profit, but precedent. Money no object, but +our laws must be kept. Shylock's god is "Standard Oil's." The ravenous +lust for gold that possesses these men is not an appetite, but a fever. +In them it is the craving of the tiger for blood. Gorged and glutted +with riches, their millions piled into the hundreds, masters of the +revenues of empires, still they are as the daughters of the +horse-leech. + +Once in Ogreland there was a giant, larger and fiercer than any of his +fellows, and it was the habit of this monster to compel the inhabitants +of the territory which he ruled to render him every evening a tribute of +human hearts. At sundown he would come out of his castle and seat +himself in a great chair in front of the huge iron gate, and his vassals +would lay at his feet the dripping sacks of hearts for which they had +scoured the land. "How many have you brought me to-day, my merry men?" +he would say as he weighed the sacks in his mighty fingers. "Are they +large and juicy?" How they came or whence, he cared not at all; the +screams of the unfortunates whose hearts were torn from their breasts he +neither heard nor thought of; hearts he must have, and if people were +killed, so much the worse for them. But the ogre _ate_ all the human +hearts his vassals gathered for him; he lived on them and grew greater +and lustier, for they were the food his great frame required for its +sustenance, and he never had all he really wanted. + +"Standard Oil" in our life to-day plays the rôle of this mythological +giant, forcing its tribute of dollars from the people, indifferent to +the blood and tears in which they are soaked, oblivious of the cries of +the victims from whom they have been dragged; but, unlike the giant, +_"Standard Oil" does not need this tribute to sustain its life, nor to +make richer its blood_. + +But to return to Mr. Rogers, who triumphantly proceeded with his plot: + +"Let me show you, Lawson, how you have overlooked the best part of the +copper business. We have found that for years Lewisohn Brothers have had +a double-clamped and riveted contract with at least half the best +producing mines in the country to sell their output, and they have grown +very wealthy. As near as we can make it, they have made at least fifty +millions in one way or another in the last ten or twelve years. First, +they have had a big profit as their commission for selling; next, big +interest out of the advances they make to companies while their output +is being sold; now, they actually control the copper market of the +world. Think of it, Lawson, for a few seconds, and the possibilities +will loom up to you. You can buy or sell any number of millions of +pounds in futures or actual deliveries. Suppose a man controlling the +selling of three or four hundred million pounds a year should knock the +price to, say, ten cents, sell to himself the year's output of all the +mines he controls and then lift the price to, say, twenty cents. He +would have a sure profit, with absolutely no risk, of thirty to forty +millions of dollars. If he should sell the next year's output short at +twenty and drop the price back to ten, he would have another thirty or +forty millions. Wouldn't he? Then if, before he broke the price, he sold +copper mining stocks short, and if, before advancing the price, he +covered and loaded up with them, he could easily make an additional +thirty or forty millions. Think it over, and you will agree with me that +the possibilities are far beyond those of oil, and perhaps at the same +time you can account for the violent fluctuations in copper stocks and +the price of the metal during recent years. A man in such position could +absolutely _dictate_ to all new mines whose selling agency he could +secure under long-term contracts. When their stocks were up, he could +pinch them to the edge of bankruptcy by refusing to sell their metal or +advance them the cash they needed for operation. Now, don't you agree +with me that you overlooked one of the most important branches of the +copper business when you made no provision for taking in the selling +end?" + +Again it crept into my mind that in comparison with the diabolic +astuteness of this man, such knowledge and experience of business as I +had gathered were as those of the primary student to the post-graduate +scholar's. Again, there was no quarreling with his logic or his +conclusions. + +"It is common knowledge in Boston," I replied, "that copper commissions +on the surface and below constitute as soft graft as any one would ask +for, but no one suspected the possibilities you outline. Do you actually +mean to say that that is the way the business has been conducted in the +past?" + +Mr. Rogers lowered his voice confidentially: + +"I can only tell you, Lawson, that we have dug up some queer doings +during our investigation, and I think I can put my finger on a great +many millions of dollars now in the hands of certain mine officers +which could be recovered by the different companies they have been +acting as trustees of. It would be quite an eye-opener to some of your +pious Bostonians to know that the controlling officials of several mines +are silent partners in some of the big selling agencies." + +There was a pregnant interval of silence. Perhaps the expression of my +face suggested the thronging thoughts which seethed through my head as I +said: + +"But surely, Mr. Rogers, that's off our beat. We shall make money enough +along our lines without getting into that kind of a game." + +Mr. Rogers swung his chair half round and looked straight at me. For a +long second he stared--sitting half upright, his long, fine hands +clasping the arms of the chair with a clutch like steel. He said not a +word. Then he replied: + +"Of course, Lawson, we have no need for such methods in our affairs. But +it is a duty we owe investors and ourselves not to conduct this business +in a way that will encourage others to continue doing it along the old +lines." + +He frowned at me as much as to say (only he never uses such +expressions), "Oh, but you do make me tired," as he always did when I, +with a serious face, would ask him, as I often did: "How is it, Mr. +Rogers, that young John D. can make such a success of his +Sunday-School-Class Trust, and at the same time of his father's oil and +investment business?" In business hours Mr. Rogers taboos frivolity. + +The neophyte in crime, being initiated into the mysteries of the +profession by some able Fagin, gets his instruction by degrees. Great +care is taken that he shall not realize too soon the depravity he is to +practise, lest, appalled by the hideousness of it, he might jump the +track, and along with each advance in knowledge goes a picture +representing the ease of the life and the lordly rewards and pleasant +adventures of the "industry." From the remote perspective of to-day very +similar seems to have been the process in this most momentous +conversation between Mr. Rogers and myself. The apprentice at the knees +of the master was being gently and gradually admitted into the secrets +of the calling--financial highwaymanry. At the moment, however, it +never entered my thoughts to imagine myself other than a favorite +lieutenant gathering the garnered wisdom of a great general of commerce. + +So when Mr. Rogers shifted bobbins in his shuttle and agreeably and +naturally wove fancy patterns into the woof of our conversation, I +suspected no sinister motive. Indeed, in reply to his kindly queries, I +was delighted to tell him how well I was getting along with Butte, +Montana, and the other stocks that I had been dealing in, and how deeply +interested all the country was in our plans. We must have been fully +half an hour discussing the degree to which the craze for "Coppers" had +spread over all America and had affected even Europe, and it was +pleasant to realize his interest in my own personal well-being. Then, +suddenly, as the thread on a bobbin runs out, he paused and shifted to +the old subject--just as if a new phase of it had occurred to him. + +"To come back, Lawson, to Lewisohn Brothers. We must buy that concern, +and at once. Had you best do it or we?" + +Our pleasant talk had restored my mind to its normal alertness, and I +grasped at once the significance of the switch. + +"I don't think I could begin to do as well as you on a trade of that +kind, Mr. Rogers," I answered, off the reel, "for I don't suppose they +will be anxious to sell, will they?" + +"Anxious?" he replied, as quick as a chipmunk; "about as anxious as +Apollo to have one of his front teeth pulled! But they will sell, and at +my price, too. I think I know just where they stand, and when they know +I know it, I don't believe they will be long in seeing it my way, for I +shall show them what coming in with us means, and just what refusing my +offer means, too!" + +Click! His jaws came together. + +"These are my plans," he continued. "They have all the money they want, +and such a large European and American following that nothing could be +accomplished by a financial squeeze, even if we resorted to that form of +pressure; and they are very bright men. Leonard Lewisohn, head of the +firm, is second to no man in America as a business man, which means he +will not hanker for a fight with us; and when I show him we will buy, if +necessary, the control of all the companies they represent, he will see +the absolute futility of opposing us. I have it right from the inside of +his own concern that Lewisohn Brothers have on hand a little over five +millions cash and its equivalent, and that they consider the good-will +and business of the firm worth ten to twelve millions more, which is +fair enough, for their direct earnings must be a million and a quarter +to a million and a half a year. Now here is what I propose offering +them, and no more: We will incorporate the firm into a new selling +company, which will have irrevocable contracts not only with our +consolidated companies but with everything that we can influence, and +the capital will be just the cash on hand, say five millions, we to take +fifty-one per cent. of the stock and give them forty-nine. I will +undertake to show them that their forty-nine will be more valuable under +those conditions than the whole is now." + +This is where I sat up amazed. "But, Mr.--," I gasped. + +I remember reading somewhere that New York's infamous Boss Tweed, at the +zenith of his extraordinary corrupt career, actually began negotiations +with a syndicate composed of his friends to sell them the New York City +Hall on a long-time note. When some curious heelers asked where the city +fathers should conduct the affairs of the metropolis, he beamed on them +in a paternal way as he explained: "Oh, a detail of the sale will be a +hundred years' lease back to the city at a rental which will give us +enough each five years to pay the purchase price." + +Absurd, you say. Not so far-fetched as you may think, if you will +remember the conditions under which the National City--the "Standard +Oil" Bank--acquired New York's old Custom House on Wall Street. They +bought it from the United States Government, credited the purchase price +to Uncle Sam on their books, then rented it for a good round price to +the Government, whose new Custom House was not ready for occupancy, and +because it remained in Uncle Sam's possession, evaded municipal taxation +on the investment. They got the property absolutely without paying a +cent, and have ever since collected a splendid interest on the million +they did not invest. + +But this deal which Mr. Rogers outlined to me seemed to go both of these +transactions a point or two better, inasmuch as neither of the parties +were corrupt city or government officials, but merely private citizens +in a country where all are free and equal, and where the Constitution +guarantees that no man's property shall be taken from him without due +process of law. + +Before I could get my breath, Mr. Rogers, as if he divined my thought, +quietly said: + +"One of the inducements I offer will be to allow them to reinvest the +money we pay them in the new consolidated company's stock, at a good big +advance over what it will cost us." + +This was too much. I roared and roared, and even he had to laugh as he +quietly remarked: "I said you would find we had done better for you than +you could do for yourself, Lawson, for you must remember you are in on +this at actual cost." + +I stopped laughing. "How is that? I thought you intended the new copper +company to have the fifty-one per cent. of the selling company?" + +He looked at me with something akin to disgust. Then his voice changed, +and he let me have it straight from the shoulder: + +"Lawson, do you really intend that this whole copper business shall be a +charitable affair? If you do, just count us out right here. We are +willing to accede to a lot of your ideas, but there is a line we must +refuse to cross even to please you. This fifty-one per cent. of the +selling company is to be owned by all of our friends, and it is one of +the things we must use as a sop to Daly, Stillman, Morgan, and the rest, +to make them enthusiastic on our main scheme, and it will not come under +our general arrangements of seventy-five and twenty-five per cent. It is +one of the things I want you to leave entirely to Mr. Rockefeller and +myself, and you can depend upon it we will do the right thing. All the +stock is to be pooled in our hands for a long term of years, so you can +say to the public that its operations will be in favor of the +consolidated company." + +There you will note was the second explosive point in our conversation. +I was too much concerned at the moment to take in all his words implied +or to appreciate the fine dexterity with which a difficult situation was +being handled. These decisive sentences were cracked off quick, sharp, +emphatic, like the snapping of a bunch of firecrackers. I began a "But, +Mr. Rogers," when he interrupted, and his words came stern, aggressive: + +"Is it satisfactory to you or not? I am half beginning to think you are +crowding this good thing we have in copper a bit too much. I simply ask +now, Is this satisfactory to you? Do you leave it to us, or not? But +whether you do or not, this particular part does not go to the public in +any way." + +He really showed a heap of irritation, and even now I think a little of +it was genuine anger. It came over me that perhaps I _was_ overcrowding +it and treating the whole copper enterprise too much as if it were my +personal property; for here was something I had had nothing to do with, +the setting out, pruning, and gathering the fruit from, this particular +plum-tree, and so I answered without any hesitation: + +"It is you, I think, Mr. Rogers, who are a little unreasonable in not +giving me a chance to tell you how I look at it. Yes, it is perfectly +satisfactory. I will leave it entirely to you and Mr. Rockefeller. +Whatever you do will be all right." + +At once Mr. Rogers' expression changed. He looked relieved, making no +attempt to disguise the fact that he had discharged a troublesome duty. +"That is the way to look at it, Lawson," he said. "You'll not suffer, I +promise you." + +Meditating over the conversation afterward, I realized how delicate his +task really had been, and how well he had performed it. It had been to +settle this matter and to rearrange our copper plans that he had +summoned me to New York, and if I had proved refractory I can see he +would have been badly snagged in his negotiations with the Lewisohns. If +there had been a trace of dissension in our camp, that firm would never +have surrendered their great business on such terms as Rogers proposed +to exact. + +This is as good a place as elsewhere to tell exactly how fair and just +Mr. Rogers proved himself in the cutting of this particular melon, and +to explain why he had been at such pains to have me leave it entirely to +his and Mr. Rockefeller's generosity. The fifty-one per cent. of the +sales company amounted in hundred-dollar shares to 26,000 ($2,600,000). +If I had insisted upon the arrangement then in force my share would have +been 6,500 shares ($650,000), which to-day are worth a fabulous figure. +For some time after this I heard nothing about the matter and was in +complete ignorance of what my portion was until one day Mr. Rogers said +in an offhand way: "By the way, Lawson, you can send me a check for your +allotment of the selling company's stock, 250 shares." Before I got a +chance to interpose a word he said: "We had to divide that up among a +great many, or there would have been a good deal of hard feeling, but, +after all, it's only a side-show and does not amount to anything when +you consider our real plans." + +At this moment, carefully chosen for that very reason, our affairs were +swimming along so magnificently and my own profits were so great, that I +had not the heart to make any serious objection. I let the matter go +with an inward resolution that at the first convenient moment I would +slip out of the selling company. Sure enough, shortly afterward Mr. +Rogers said to me: + +"Lawson, I do wish we could get in that selling company's stock from the +different holders." He did not actually say he was buying it in for the +Amalgamated Copper Company, but he desired that I infer it. I snapped +him up: + +"All right. You can have mine, Mr. Rogers," I said. + +"At what price?" And I think he thought that he would be compelled to do +some trading. + +"Oh, about cost and interest," said I; and the thing was done. I +afterward learned that he had treated every one in much the same way, +and that he and Mr. William Rockefeller practically had it all. They +have it to-day, just as they and John D. Rockefeller, and possibly one +or two others in "Standard Oil," have appropriated all the inner +companies of "Standard Oil" where the real melons are cut--the secret +rebates and all the other under-the-rose profits--while they are so +industrious in their unloading of the stock of the main company, +Standard Oil, that the last annual report showed that the list of +outside stockholders numbers 4,100, this too at a time when 26 Broadway +sits up nights to disseminate the impression that the Rockefellers and +Rogers own it all. + + + + +CHAPTER XVIII + +THE BITERS BIT + + +To see and judge actions aright one must have them in perspective. As +the Celt remarked, "You can get the best view of your life after you're +dead." Looking back on the performances of this period, I myself am +amazed at their monstrous audacity. Remote from common experience, their +extravagance suggests unreality. Here were the master of the greatest +business the world has ever known, and I, a mere captain of his forces, +without even a by-your-leave, calmly carving up a big commercial +enterprise, the property of other men who had spent the days of their +lives in creating it; and these men whose institution was thus being +ravished were not children, idiots, or aged dolts, but able merchants +renowned the world over for their shrewdness and success. The one phase +of the contemplated operation which occurred to neither of us as worth +discussing was the possibility of not securing the property. This +transaction demonstrates the despotism of the "System," the extent of +its rapacity, and its arrogant disregard of all laws and rights, human +or divine, in the enforcement of its exactions. And it was but one of a +hundred similar transactions. + +Before Mr. Rogers and myself parted, I had definite instructions: First, +to begin to teach the public to look for new things in the first +section; second, to overcome the objections of the holders of Butte & +Boston and Boston & Montana, and other Boston stocks to being in the +second section of the consolidation; third, to purchase the majority of +the Parrott Company's stock; fourth, to see that the public kept away +from Anaconda in the market for the time being. + +While the minor details of these plans were being mapped out, I had let +my mind run over the market situation of Anaconda stock, and had arrived +at certain conclusions which I determined to test forthwith. So I said: + +"Some one, Mr. Rogers, must have bought lots of Anaconda while you have +been working this plan out--I mean lots outside of that which is going +into the new company--and I should like to know if I'm in on any part of +what may have been gathered in?" + +His eyes focused me with a cold stare which told me even before he spoke +that I had better have kept my suspicions to myself. + +"I have heard of no one putting you in on any Anaconda," he said +sarcastically. "You have not given any one any orders, have you, nor +sent any one your check to pay for any, have you?" + +I was nettled at his tone. "That is all I wanted to know," I answered. +"Of course, Anaconda will have a still bigger rise, and if we have all +we care to buy for the new company, no one will object to my telling the +public what a good thing it is and putting them aboard now." + +I was on perilous ground. He gave me an ugly glare which I knew meant +real danger as he slowly said: "I think, Lawson, you have done all that +is necessary for you to do for the public in letting them in on the +things you already have, and for some time any one who interferes with +the market on Anaconda stock, which I consider fairly belongs to Mr. +Rockefeller and myself, will not find his investment a profitable one." + +"Well and good, Mr. Rogers," I answered. "If you consider the market +yours, I will not interfere, but I wanted to know just how it stood." + +"You know now, and I shall expect you not only to keep out of it, but to +see that it is handled in such a manner that all others stay out--all +others except sellers," which meant that not only was no one to get any +of the benefits on this stock, but that innocent holders were to be +enticed into selling, that "Standard Oil" might buy before the real rise +came. + +As I write these sentences I marvel at my patience, and my blood +tingles with the thought of how, if the opportunity were again mine, I +should reply to such an imperious mandate. If men said and did at the +crucial moment all the wise, strong things that occur to them afterward, +this would be a different world. The brave and scornful words I should +have uttered I choked back, and, as countless others had done before me, +I bowed my head and--submitted. Conscience and honesty slunk sadly into +the background as I flaunted off on the arms of policy and discretion, +pirouetting to the jingling music of golden shekels. + +Great fortunes are seldom achieved without sacrifice of morals--or at +least of pride--and ambition makes meaner cowards of us than conscience. +Then and there I might have made a martyr of myself by threatening an +exposure of the whole bad scheme and defying "Standard Oil" to do its +worst; but martyrs seldom give themselves to the flames, and looking +back dispassionately from the vantage-ground of the present, I doubt +seriously if by denouncing the conspiracy I should have done more than +discredit myself. + +The interview ended, I returned to Boston and at once began the +execution of the new plans, the remoulding of the public and the +purchase of the Parrott mine. + +Parrott was an active mine earning a large revenue and with something +over 200,000 shares of capital stock. For the purpose of Mr. Rogers' +plan its inclusion was essential, for it was well known and helped cover +up the inflation in his consolidation. + +Possession of 100,000 shares would give control, and the public would +imagine when the announcement of its purchase was made that this meant +ownership of most of the entire capital stock. Indeed, it afterward +developed that this was one of the conditions Mr. Rogers and William +Rockefeller relied on to deceive investors, for it was a natural +assumption that nearly all of Anaconda and Parrott were included in the +consolidation, and in estimating the value of the properties the public +would multiply the market prices of their shares by the total capital +stock and assume the result represented the assets of the amalgamation. +For instance, the valuation of 1,200,000 shares of Anaconda at $70, and +200,000 shares of Parrott at $68--the prices at the time Amalgamated was +floated--would represent respectively $84,000,000 and $13,600,000; +whereas the company owned only 602,000 shares of Anaconda and a few +shares over 100,000 of Parrott, selling for in all about $48,600,000. + +The control of Parrott was in the hands of certain wealthy Connecticut +brass manufacturers, and, just previous to my receiving orders from Mr. +Rogers to acquire the property, they were so anxious to sell this mine +that they had given my brokers, Brown, Riley & Co., of Boston, an option +on a majority of their shares at $10 per share, agreeing to pay a large +commission should a good customer be secured. Before I could clinch at +this figure they took advantage of the excitement in "Coppers" to bid up +the stock, so that when I began operations Parrott was in the market at +$15, and I offered $20 for the majority of the shares. An intimation of +our purpose must have leaked, for other shrewd owners, also Connecticut +men, bid the price up still higher until I was forced to raise my limit +to $30 per share--quite an advance on $10. On that figure we all agreed +and the papers were prepared, but at the last moment a young man "butted +in"--I think he was the son-in-law of one of the owners, who turned up +with an option, and declared he could get $40 per share for the +property. We were trapped, for the alternative presented was to forego +the purchase or pay the price demanded. There was a conference, at which +I denounced the "hold-up" in strenuous terms; but the son-in-law proved +equal to the emergency and stood by his guns, though some of the old +gentlemen declared his exaction was unwarrantable. In the discussion +there developed a queer fact--the son-in-law told us that the property +was a good deal richer than any one thought: he had discovered that a +certain section of rich ore in which there were several millions of +dollars had been walled up by some designing person for his own purpose +and the mine was easily worth $40 per share. I had heard stories of this +kind before and frankly professed incredulity. The son-in-law agreed to +reveal the ore to any one we might send to the mine, and so one of our +most trusted engineers was despatched with him to Butte on the +agreement that if he were convinced that the walled-up values were all +that had been indicated, we should pay $40. If not, $30 would be the +price. The twain started at once; our expert was convinced, and we paid +four millions instead of one, two, or three. Strange to say, the +subsequent operations of the mine have never revealed the walled-up +values; instead, there has been developed a queer lot of litigation, the +tendency of which suggests strange uses of that extra million. Anyway, +the trade was made, and the gentleman of the Nutmeg State went home +chuckling at the thought that though there was a "Standard Oil," there +were others. + +"Standard Oil" never forgets. Sometimes it may get left at the post, but +always it catches up in the running--so as to be in the lead at the +tape. When I reported the conclusion of this Parrott deal to Mr. Rogers, +he said: + +"Lawson, all's fair in a trade"; but I shall never forget the expression +his face wore as he went on. "Just give me the name, Lawson, again, of +that particular individual in this particular trade, that I may remember +him hereafter." He spoke in a low, intense tone, and each word was +separated from the preceding one by a dwelling stop. I gave him the name +and the identification marks to go with it, and felt satisfied that even +if the Nutmeg financier lived to be a thousand and Henry H. Rogers kept +him company, there would surely come an evening-up which would be the +worse for the erstwhile victor. Sure enough it came soon afterward, for +the able Connecticut man, embarrassed at possessing so much uninvested +money, came to us to ask advice about reinvesting it. The "Standard Oil" +magnate was most sympathetic and generous, and pointed out the obvious +advantages offered by the great new company Amalgamated, which would be +out in a few days at $100 per share, and doubtless would sell soon +afterward for $150 per share. The Nutmegite nibbled and then swallowed +bait and hook whole, for when the subscription was announced his agents' +names were found opposite a large block. Later on he applied to us for +consolation and advice, for the stock he had bought at $100 and $124 was +then selling at $33. We figured out for him that after all he had little +to complain of; "for you see," we explained, "fair exchange is no +robbery, and you have had just a fair exchange. You sold us your +property inflated four times, and we sold it back to you under another +name at about the same percentage." + +Before the fireworks began, Anaconda sold in the market at $25 per +share, and Parrott, as I have shown, at $10, and in addition to the +enormous profits which Mr. Rogers and Mr. Rockefeller made in the +Amalgamated Company proper, they cleared some $15,000,000 to $20,000,000 +on their outside purchases of Anaconda, and some $25,000,000 to +$30,000,000 more later by selling it short (as I shall show hereafter), +at the tremendously high prices which were obtained by leading the +public as well as myself to believe that they intended to purchase the +entire stocks of both companies for the Amalgamated--that is, it was +given out that the sections which were to come after were to have these +minority holdings included in them. They sold Anaconda short in enormous +quantities between $50 and $70, and Parrott between $50 and $68; +afterward they bought them at $14 and $16 respectively, and no one knows +how many millions these gentlemen are taking in now, for both stocks are +again on the return trip, selling at the present writing at $32 and $30 +respectively. + + + + +CHAPTER XIX + +THE DESPOILING OF LEONARD LEWISOHN + + +A few days later there came another summons from New York. Realizing +that matters of importance were in the balance, I hurried over. Nothing +could surpass the cordiality of Mr. Rogers' greeting as I entered his +office. + +"Lawson," he said, "we own Lewisohn Brothers." + +"You certainly lost no time," I replied. "Is it actually fixed up +already?" + +"Yes," he said, settling back in his chair. "It was about as I outlined +to you the other day. We had a very pleasant sit-down--Leonard Lewisohn +and I--and I frankly told him what I wanted, explained our plans, and +gave him twenty-four hours to think things over. Next day he was in and +we went at it again. He began by talking $15,000,000, and it did come +hard to bring it down to a little less than the actual cash and copper +on hand; but when he saw I intended to have things my way or not at all, +he meekly surrendered, and the United Metals Selling Company ($5,000,000 +capital stock) is now a reality. And, Lawson, if I ever had to do with a +better scheme I certainly cannot recall it." + +"Did not Lewisohn put up any sort of a fight?" I persisted, surprised +that so able and forceful a man should succumb so easily. "Didn't you +have any words about the matter?" + +"Not any but pleasant ones," replied Mr. Rogers, "although Lewisohn did, +in an almost pathetic way, gasp when I emphasized that my only terms +were $5,000,000, fifty-one per cent. to us and forty-nine per cent. to +his people. He told me how he and his brothers had struggled up to +success. They began in a small way as feather merchants, you may +remember, and from one thing to another they progressed until the firm +is known to-day as one of the greatest copper houses and the greatest +coffee house in the world. He explained how he had brought up his three +sons and his daughter's husband in the firm until they had become great +merchants, too; and his ambition was that their sons and grandchildren +should succeed to the institution, enlarging and strengthening it until +the house of Lewisohn was as famous as the house of Rothschild--with +which, by the way, he is closely connected. I tell you, Lawson, I felt a +bit mean when, after he had told me how he had always kept his name's +credit as good as any other man's bond, he asked me almost with tears in +his eyes to let the name of the new company be Lewisohn Brothers. +Indeed, he made a strong argument on the great value of the name to the +copper business; but it did not take me long to show him the evils that +grow out of letting men's personalities get into the public's mind. I +battered down his objections by showing him the wisdom of Mr. +Rockefeller's attitude in this connection. Always, from the first, he +has taken the stand: 'The business first, the man second': with the +result that there has never been jealousy or dissension in Standard +Oil." + +"Too bad," I interrupted. + +"Yes," Mr. Rogers went on; "I wished I might have done this for him, for +he is a splendid fellow; but it would not do, for after the newness wore +off he, or more probably his sons, would surely imagine that they, and +not we, were the real heads of the business." + +As I have explained, Henry H. Rogers, when not working the handle or +hopper end of the "System's" grinder, is a warm-hearted and generous +man. And now, resting from his labors, he was the genial and kindly +gentleman whom his social acquaintances admire so sincerely. I believe +he felt almost as badly as I did over the sad picture he had drawn of +the proud old merchant yielding up his children's birthright. I felt +grieved to the depths of my soul at Leonard Lewisohn's predicament, for +I knew, as did all men connected with Wall Street or Copper, what a +stalwart he was. He had the heart of an ox and the pluck of a lion, and +his white-man squareness and sense of justice belonged to other periods +than that of frenzied finance. No man or woman in distress ever left his +house or office without relief, and he gave as generously of his time +and advice as of his money. Amid the jagged rocks and treacherous cross +currents of Wall Street Leonard Lewisohn stood as a beacon lighting the +way to better things, and men pointed at him and said, "There is still +hope." Amalgamated may not have broken this man's heart as it did +others, but I can imagine the bitterness and distress it caused him, +whose proud boast it was that he had never gone back on his word. One of +the promoters of the company, his name stood, in the minds of many +investors, especially European, for a guarantee of fair play and square +dealing. Yet the course of Amalgamated was one continuous going back on +words. He had never allowed an associate of his to lose through his +ventures, but in Amalgamated there was nothing but loss, and loss by +trick and fraud. After the flotation, with its harvest of disgrace and +scandal, Leonard Lewisohn became a changed man. His old-time happy smile +was seldom seen, and it is said that before he died he summoned his sons +to him and instructed them to destroy the notes and obligations of all +his poor debtors and to return to them their collateral, of which there +was a safe full. This man employed no press agent, and so his golden +deeds were never reported in the papers, nor did he found a college to +perpetuate his name; but he left a million of his estate to found a +great home for the Jewish poor, for he loved and was proud of his race. + +I have given you a portrait of this man; let me, by way of contrast, +present another picture, which will help toward an appreciation of how +the votaries of the "System" respond to generosity and chivalrous +self-abnegation. Before Leonard Lewisohn died he organized a tremendous +deal in coffee, and Rogers, Rockefeller, and all the other "Standard +Oil" men were in. A fund of $5,000,000 was subscribed, to which all +contributed in due proportion, and an immense amount of coffee was +bought against a prospective scarcity. The condition Mr. Lewisohn +anticipated did not immediately develop, and instead of rising, coffee +dropped down and down until the $5,000,000 and more were all used up. +Another man would have called on his associates for additional margin, +or, at least, closed up the deal. Not so Leonard Lewisohn. Though some +of the other members of the combination were many times richer than he, +he shouldered the burden alone, saying: "It's my scheme, and I'll carry +it if it breaks me, or until my judgment is proven sound." Still coffee +declined until he had sunk $12,000,000, but never a whimper and not a +word of complaint to his partners. Things were near the worst when he +died, but he had instructed his heirs not to wind the deal up until +every cent of his associates' liability was wiped out. + +There came a time not long ago when Leonard Lewisohn's foresight was +vindicated, and an advance in the price of the commodity relieved the +"Standard Oil" coterie of their responsibility. The sons of the old man +then desired to dispose of the great holdings of coffee, and so close +the deal and secure the locked-up millions for the estate. They went to +the various members of the syndicate and asked them to sign a release +simply agreeing to relieve the estate of liability for presumptive +profits growing out of further advances in coffee after they had sold +out. It was a very ordinary legal precaution, and no great favor to the +Lewisohns under the circumstances. The members of the syndicate signed +the release in due course, until the document finally came to Henry H. +Rogers, and this is the contrasting picture: + +"Coffee is going up, I think," said the "Standard Oil" magnate, "and now +that the Lewisohns have extricated themselves from a bad hole, they may +as well carry the stuff until I get some profit out of it. Neither Mr. +Rockefeller nor I will sign that document." + + + + +CHAPTER XX + +THE CHRISTENING OF AMALGAMATED + + +My readers may recall the wave of indignation which swept over this +country when the news came of the kidnapping of Miss Stone, the American +missionary, by the bandits of Bulgaria, and how hot we all felt at the +capture of Ion Perdicaris by Raissuli, the Morocco rebel. Only in remote +and barbarous countries, we reflected, could such outrages occur, and we +dwelt with high inward satisfaction on our own splendid American +institutions and law-abiding civilization. If only these miscreants were +on American soil so American justice could lay hands on them--what stern +punishment would be meted out to them! Yet, under the panoply of these +noble institutions and just laws of ours, one citizen of our +commonwealth was enabled to seize from another millions of money and the +ownership of a great enterprise--literally wrench it from the hands of +men who had spent their lives in developing it--and the execution of the +deed involved neither financial nor physical risk and carried with it no +legal nor social consequences. Look on the picture, all ye free +Americans rejoicing in vaunted liberty and the right to the pursuit of +happiness--this able and successful merchant, head of a great business +which it has been his life-work to rear, surrendering the splendid +structure at the mere nod of one man, whose "I want it" is more potent, +more irresistible, than family pride or Government decree. If Leonard +Lewisohn, a millionaire many times over, rich in connections with the +strongest financial houses of Europe, meekly submitted to the behest of +"Standard Oil," what resistance could the average man oppose to such a +power? The logic of the situation is inevitable. Can you free Americans +absorb the details of this most extraordinary performance and not see +the coming storm as clearly as the mariner does when all along the +horizon creep the hosts of Boreas and the barometer drops like lead in a +shot tower? + +At last, in April, 1899, the first section of the much-heralded company +was ready to step before the footlights to the plaudits of an awaiting +financial world, and it was really a great moment when Mr. Rogers sent +me word: "Come over, and be prepared to stay until the consolidation is +formed and launched." I was at 26 Broadway next day, and we entered at +once on our council of war. It was a momentous sitting and secret, for, +until the entire programme was mapped out and decided upon, no one was a +party to it or had knowledge of it but Mr. Rogers, his counsel, William +Rockefeller, and myself. After we had finished the final details, Mr. +Rogers said: + +"This is a job on which we must not lose time, for if we give any one, +even those who are to be directors, too long to think things over, there +will be counterplots, and a cog may slip or jump and we shall all be +crushed. We must all bear in mind that this thing has rolled up and up +until it is unprecedented in business affairs, and if we slip up in any +of the important details, we shall have a panic on our hands such as +Wall Street has never witnessed." + +On all sides for weeks there had been accumulating evidence, which we +could see pointed to a monumental success or an avalanche failure. The +copper market was literally boiling, and investors from one end of +America to the other and throughout Europe were on the _qui vive_ for +the anticipated announcement. At intervals in history great "booms" are +started, which bloom into iridescent bubbles, and for a moment dazzle +the world with fairy dreams of sudden millions. Greatest of all these +was the South Sea Bubble. Since then we have had the tulip craze in +Holland, the Hooley excitement, and the Barney Barnato South African +mining furor in England, the Secretan copper corner, and the tremendous +bonanza delirium in California; but none of these, save the first, is +comparable with the magnitude of the copper maelstrom of 1899. The tulip +craze could have been thrust in and withdrawn again without diverting +one of its currents; the Barney Barnato affair was little more than an +eddy on the surface of English finance in contrast. We were dealing in +hundreds and five hundreds of millions; shares rose and fell twenty to +fifty points in a day; some had mounted to the giddy height of $900 +each; thousands of the public had invested their savings in one copper +property or another, and all awaited with bated breath and marvelling +anticipations the launching of this copper monster with its freight of +hopes and visions. + +The programme as specifically arranged had several important clauses. +The first involved the notification of James Stillman, President of the +National City, the "Standard Oil" Bank, who was to be let into only as +much of the secret as was necessary to enable him to handle his +important end intelligently. To Leonard Lewisohn it was decided to +intrust the French, English, and German end of the subscription, and he +was at once to receive orders to lay his pipes. I may say here that this +task was admirably executed through his son-in-law, Philip Henry, of the +English branch of Lewisohn Brothers. The other directors of the company +were then and there selected, but it was agreed that they should not be +told of the distinction thrust upon them until the very eve of the +company's formation. + +This decision surprised me at the moment it was concluded, for with my +Boston ideas I had regarded the gentlemen we had chosen to preside over +the destinies of our great company--all men of the highest prestige and +standing in American finance--as so powerful and so independent in their +own fields as to be beyond either the coercion or the cajolery of +"Standard Oil." It was because of this reputation for integrity and the +confidence their names would inspire in the public mind that we had +selected them; yet here was Mr. Rogers irreverently using them as the +veriest pawns in his game, and taking absolutely for granted their +immediate consent to the loan of their reputations and honor for any +scheme he might put up. The possibility of one of these eminent +financiers objecting to be used in any way "Standard Oil" might desire +was a contingency evidently so remote as to be unworthy of +consideration. + +The legal aspects of the problem were considered, but as we felt sure of +our ground it was agreed to avoid all delays in this direction. As a +matter of form and habit, however, Mr. Rogers said that at the last +moment, when the papers were ready to issue, he would have the wise +lawyers in charge of the legal department of 26 Broadway run over them, +but whether they approved or not, he would allow no technicalities to +hold up the flotation. This was certainly a departure from the +well-ordered rule of "Standard Oil," but the urgency of the situation +seemed to require it. + +After our council adjourned, not a moment was lost. The organization was +quickly shaped up and got ready, and the time was ripe to broach to Mr. +Stillman the part that he and the funds deposited in the National City +Bank were to play in the forthcoming engagement. This was a crucial +point, and I saw that Mr. Rogers approached the task with no gusto. +Before he went off that night he spoke about the interview which was to +occur after dinner, and he said: + +"I don't mind giving Fewer or Olcott or even Morgan but a minute's +notice, for every one of them will do about what I ask him to, but I +shall feel better when I get through with Stillman." + +"But Mr. Stillman would never dare to refuse what you and Mr. William +Rockefeller asked, any more than he would the request of John D., would +he?" I asked. + +"I don't know about that," Mr. Rogers replied. "Stillman has been +growing fast of late, and it is not nearly so easy to get him to consent +to run deals blindly as it was formerly. Of course, if he were in on the +bottom floor with us, it would be different. All I fear is, he may ask +questions, and if he does, it will not do for me to refuse an answer. +And too many answers may be dangerous to our plans." + +"Why not take him in with us--you, Mr. Rockefeller, and myself?" I +suggested. "The profits will stand it, and as far as my share goes I am +willing." + +"Not by a jugful, Lawson," said Mr. Rogers emphatically. "Stillman will +only get what fairly belongs to him. He has had none of the risk or +work, and we do not need him in any way except through the bank, and the +bank is 'Standard Oil's,' not his. He is lucky to get what I am going to +give him." + +It is interesting to note in passing the authoritative manner in which +26 Broadway speaks of the so-called institutions of the people that it +controls--the banks, trust companies, and insurance companies, having +deposits of hundreds of millions of the public's money. Familiarly they +are alluded to as "_our_ bank" or "_our_ insurance company," as the case +may be. We are all apt to feel we own the things we use, and that Mr. +Rogers should speak of the millions of the National City Bank as "our +funds" is not surprising when he possesses the power and the privileges +of doing with them as he pleases. I was too fascinated at that time by +the ready magic of "Standard Oil" to observe all the anomalous +conditions my relation with it revealed. Such things all seemed a +natural attribute of the despotic and all-powerful institution that I +served. + +I was vastly relieved when Mr. Rogers reported, the following morning, +that at the dinner with Stillman everything had slipped through very +smoothly. Not only would the National City Bank take charge of the +subscription, but through the institution Mr. Stillman would furnish the +millions necessary to form the company. This meant supplying the +paraphernalia in loans, checks, and cash necessary to pay in the +seventy-five millions capital, thirty-nine millions of which must at +once be "book-keepingly" available to pay for the property bought from +Daly, Haggin, and Tevis, and purchased by the company. + +"It couldn't have gone through easier, Lawson," Mr. Rogers said quietly, +"for the fact is, Stillman seems to have got the copper fever as badly +as any one else and is as anxious to take a hand as we are to have him. +It will be plain sailing now unless we strike some snag with Sterling or +Elliott"--referring to the principal "Standard Oil" lawyers. + +By this time such substantial progress had been made with the plans that +they were formulated on paper and the time had come when it seemed +advisable to try them on the "Standard Oil" law-department. We arranged +that night that next morning Mr. Rogers should himself go over the +matter with Mr. Sterling. I was waiting in his office when he returned +from this consultation, and the expression of his face as he entered +indicated plainly that a real snag had been struck. His jaw and the +droop of the upper corners of his eyelids gave a curiously sinister +aspect to his face. + +"Well," said he, "Sterling says if we carry out that plan there may be +h--l to pay some day." + +"Wherein does he say it is wrong?" I asked, not over-surprised. + +"Everywhere. He says if there is any slip-up in the future Mr. +Rockefeller and myself may have to pay back a lot of money." + +"Well, what are you going to do?" I said. + +"Just what we started to do." No lawyer's warnings could hold him back +from the bursting barrels now in sight. He went on: + +"I told Sterling to forget I had asked him to pass on the matter, and +that I would have my own counsel take the responsibility. So we go right +ahead, and nothing is to be said to any one, not even to William +Rockefeller. I have always argued that it is fool business to go to a +lawyer with a scheme that depends entirely on how it is carried through +as to whether it is perilous or not. I could have told Sterling there is +apt to be more danger in a deal in which one makes thirty-five to forty +million dollars without turning a hair, than in furnishing staid advice +from an office-chair for a fixed sum per diem." + +The concentrated incisiveness of these sentences! Opposition, the mere +suggestion of danger, had stimulated his determination to proceed rather +than enjoined caution. Himself convinced of the expediency of our deal, +no power on earth could make him deviate or face about. Truly a man of +blood and iron, as Bismarck or Moltke was, his erected will is a sword +and a vise. To gain a predetermined goal Henry H. Rogers will go through +hell, fire, and water, swing about and make the return trip, and then +repeat, until death interferes or his object is attained. Such men as +he in other days subjugated kingdoms or made deserts where they +operated; in religion they became St. Pauls or Savonarolas. + +It may occur to my readers that in depicting Henry H. Rogers I use more +whitewash than tar, and that if he is half as determined and relentless +as my characterization of him, he will surely exact a terrible reprisal +for what I have written here. In describing the man I adhere to the +facts, and before I began this crusade I weighed well the consequences. +From the implacable wrath of Henry H. Rogers and his associates, from a +thirst for vengeance which grows more bitter as it is deferred, nothing +can save me, nothing but--myself. + +And now events flew. Mr. Rogers took the forenoon to notify Governor +Flower, President Frederic P. Olcott, of the Central Trust Company; +Marcus Daly, and J. P. Morgan, that they, in connection with William +Rockefeller, himself, his counsel, and James Stillman, were to +constitute the directors of the new company. + +"There, Lawson," he said, when he returned to 26 Broadway, "that job is +done, and I am glad it's off my hands. It was all pleasant enough but +the Morgan part. I wish it were possible for us to get along without +having his assistance, but it isn't. Leaving him out would create +comment, from which it would be only a short step to Wall Street's +nosing around and manufacturing something uncomfortable, even if they +didn't discover it. I don't like Morgan a bit, and he likes us less. It +won't be long before one or the other of us will be able to do business +without knowing what the other's about, much less consulting him--not +very long." + +As the "not very long" shot out from between his lips much as the +tail-end of an up-chimney wind switches itself around the angle of the +fireplace, I felt there was little doubt in his mind who would be left +to do business after the final drag-out and clean-up. At the same time +it did not dissipate a sort of come-and-go confidence I had that the old +terrapin around whom so many of Wall Street's eddies have swirled would +cause the 26-Broadway crowd many a broken knife-blade before crawling or +being pushed into his shell. Turtles are not much good as sprinters, +but they're blue-ribbon winners when it comes to the staying class. + +"You didn't meet with any set-back with Morgan, did you?" I asked. + +"Oh, no," Mr. Rogers replied; "he simply said it would be best, +everything considered, for us to put in his right-hand man, Robert +Bacon, instead of himself, and I agreed with him; in fact, I think it +much better, as Bacon is a rattling good fellow who takes no interest in +the other fellow's business, even when he does happen to be a director +in the other fellow's company, and he will recognize that this copper +affair is mine, not Morgan's." He stopped abruptly. "Now, Lawson, let us +settle upon what in this case is an important point, the name of the +company." He had asked me the day before to think of a suitable title +for our organization, and I had put in some time with a pad and pencil +experimenting. I had several names ready for him, but after I had run +over them and given my reasons, he said: + +"There is nothing more important than to have just the right name for a +company which is going to make history, is there?" + +I agreed; in fact, even more than he I was impressed with the +desirability of a suitable name for a corporation whose stock was bound +to become a great market star, and I was not satisfied with any I had +dug up. Give a stock or a book a good name, and it is sure to be +numbered among the best sellers. + +Mr. Rogers continued: + +"Lawson, we want something as good as 'Standard Oil,' if it is possible +to find it. Now"--and he drew over one of his little writing-pads and +taking a slim gold pencil from his pocket slowly wrote something and +handed it to me--"how do you like this?" + +I read "'Amalgamated Copper Company.' Perfect!" I exclaimed. + +"I thought you would say so"; and he reached over and wrote underneath +the name, "A second Standard Oil." It was an impressive moment for both +of us. I folded the slip, and putting it in my pocket said: "You will +see this again, Mr. Rogers, when its stock sells for as much as +Standard Oil." + +Surely an adder crawled from that tiny golden cylinder and upon the +smooth white paper distilled its subtle venom. I, poor fool, exulting in +the splendid throes of accomplishment, never dreamed that the real +christening of my bantling was the toast the Master of Hell drank as the +name "Amalgamated" was slowly traced upon the pad before my eyes; never +dreamed that this cherished offspring on whose rearing I had lavished +all I possessed of dollars, of ideals, of generous hopes and high +expectations--whose growth I had literally watered with my sweat--was an +imp of darkness. My fool's paradise I had planted with all manner of +fair flowers and lordly trees, and in my folly believed that those who +had been my friends were forever after assured of pleasant places, +lovely perfumes, and grateful shade; but like the Grecian in the ancient +fable, I found I had sown dragon's teeth, and the crop I reaped was of +hatred and envy, passion and revenge. + + + + +CHAPTER XXI + +FIXING THE RESPONSIBILITY + + +On the day before Amalgamated's incorporation, Mr. Rogers and I +conferred long and earnestly upon the plan of campaign for the company's +organization. It was very necessary to avoid all errors, and to have +everything cut and dried in advance. We were obliged to railroad things +through, once started, a hitch or a side-track might be fatal, and I +desired to have Mr. Rogers pass upon the programme I had drawn up. +Therein was set down the work of each captain, lieutenant, and +water-carrier who was to take part, and we discussed every detail to a +finish. When he had approved everything up to the point where formation +ended and the flotation began, I said: + +"Now comes the most important part of all--the offer to the public; for +a slip-up, the misuse of a single phrase, or even of a word, at this +point might destroy our whole structure." + +"Quite true, Lawson," he answered, "but I have no fear of you there. Let +me have your idea." + +"First," I replied, "there should be an advertisement of the National +City Bank, and one of the Amalgamated Company, and in this advertisement +the story of the good things we have collected must be told in strong +terms." + +I am now about to explain exactly of what the First Crime of Amalgamated +consisted, and it behooves my readers to weigh carefully the details, +for I make the claim here that without further proof they will be able +to realize not only my own position and purpose at this, the crucial, +stage of the Amalgamated enterprise, but to grasp the cold-blooded +villany of the men I am exposing. + +At this time I was in a most uncomfortable and uncertain position. Each +day that I did business with Mr. Rogers and his associates increased my +knowledge of their heartless brutality in dollar-making. I knew I was on +dangerous ground; but to retreat meant not only my own destruction but +terrible losses to my friends who had followed me and to the public +which had come in on my advice. So I had made up my mind to go on but to +keep my eyelids pinned back, my tongue anchored, and what gray matter I +possessed oscillating. Remember, I was in no way sure that Mr. Rogers +intended to misuse the public, but I suspected that his coat-sleeves +contained more things than his shirt-cuffs, and that he was playing a +game other than the one he let me see. Up to now Mr. Rogers and William +Rockefeller had kept me between the people and their legal +responsibility by having all public statements made over my signature. I +had half-way concluded that this was done to avoid future accounting, +but there might be other reasons. I determined when it came to the +flotation, which would be the first time they took openly the public's +money, to connect them publicly with my statements. It is next to +impossible for any man to sit in front of Henry H. Rogers and give one +reason for his actions and have another about his person; but this was a +desperate situation and I resolved at any cost to carry my point. How +difficult a task I had undertaken I did not realize until I was well +into it. When I had stated the form I thought Amalgamated's first +announcement should have, Mr. Rogers paused. He repeated: + +"The City Bank--that's a question. Now, how do you propose to go about +that advertisement?" + +"Simply this way," I replied. "I will draw up a memorandum of the main +strong points about the Amalgamated Company, and you will ask Mr. +Stillman to have some of his people write them into a good, clear +statement. This we will publish as an advertisement over the bank's +signature, and have the Amalgamated Company indorse it, showing that it +is joined with the bank in responsibility for the truth of the +announcement." + +Mr. Rogers said nothing, but continued to gaze inquiringly at me. I went +on: + +"Or, the Amalgamated Company can be the principal and the bank the +indorser." + +"Just what is the bank to say in this statement?" he asked very +seriously. + +"The big things about our enterprise that I have been telling the +public. We will put them forward in an old-fashioned, unequivocal +way--that should accomplish what we want," I replied. + +He was looking at me in a curiously searching manner as I spoke. He +said: + +"Let us have the strongest one or two as an illustration." + +"Well, for instance, what I have advertised so often, that this stock is +so good the 'Standard Oil' people who formerly owned the property behind +it would prefer to own all the stock and hold it as a permanent +investment, but that the enterprise is so large their interests will be +better served by letting the public in than going it alone. You and I +know that's true. Also that the company is earning sixteen per cent. and +will always pay eight per cent. or over. Something to that effect." + +"Do you suppose, Lawson," said Mr. Rogers, straightening up and speaking +very impatiently, "that the public will swallow any statement of that +kind? Just think it over--William Rockefeller, James Stillman, and +myself, to say nothing of others, openly spending our money for +advertisements to induce Tom, Dick, and Harry to buy stock at par which +we know is earning sixteen per cent. and will always pay eight!" + +"Why not?" I responded. "I have practically stated the same thing scores +of times as your agent, until, so far as the public is concerned, my +telling it is the same as though 'Standard Oil' had said it." + +"Well and good," Mr. Rogers went on dryly. "But, Lawson, you know +there's a heap of real difference between your telling it and our +putting it over our signature." + +I well knew the difference, but I had my point to make; so I said: + +"All right. Let the City Bank and Mr. Stillman put it their own way." + +"Lawson, that's foolish," Mr. Rogers returned. "They must not be allowed +to have anything to do with it save to O. K. what we are to advertise +over their signature. Stillman would never agree to our using the City +Bank to hawk any stock but a gilt-edged one." + +"Isn't this a gilt-edged one?" + +Mr. Rogers glared at me. + +"Why waste time and words over a matter that you know as well as I must +be handled very, very gingerly? It is not because it is not gilt-edged, +but because of the peculiar situation of it. The public thinks this +stock which is to be offered to it belongs to the Amalgamated Company, +and that the City Bank is selling it for the Amalgamated treasury just +as in any of the ordinary first-class issues they offer for +subscription; whereas we know that the stock belongs to us and the bank +is selling it for our profit. If the public suspected that this stock +was ours, and that we were not going to subscribe on the same basis as +themselves, it would demand to know what we paid for it, and if we +didn't tell, it would be figured out as a clear case of false +representation. Where would that leave us? Mr. Rockefeller, myself, the +bank, and Stillman would be held for every cent of the capital forever. +We cannot put our heads into any such halter." + +"I cannot see why not," I expostulated. "You and I know there is no more +chance of loss than if we were dealing in the City Bank's own stock, +because of the way we are handling the deal, selling only $5,000,000 to +the public, and standing behind every dollar of that, all possible risk +is eliminated." + +"Call all that true," angrily replied Mr. Rogers, "and you don't alter +the fact that such a scheme as you map out _is impossible_. You must get +to work and figure out some plan which is practical." + +"I knew that we should find this a difficult matter to get right," I +said. "Now, what is your idea of how it should be gone about?" + +This time the burden of explanation was fairly upon Mr. Rogers, and I +waited his answer expectantly. He replied, in much milder tones: + +"There is no real difference between us, Lawson, except that you don't +seem to realize the actual position we are in. We are going to do what +is fair and right in this enterprise--indeed, there is no necessity for +anything else--but we must not put the bank or ourselves in such a place +that either or both of us can be held legally responsible for anything +that happens in connection with this company. You must keep in mind +Sterling's words, that the thing is risky enough anyway, and that even +under the best circumstances and conditions we may find ourselves in a +hole. Exactly how to do it I have not figured out, but the City Bank +must appear as offering the subscriptions, and the Amalgamated Company +as owning the stock, and simultaneously some one else must tell all +about the advantages. Unless this latter is very fully done, the public +will not only refuse to subscribe, but will get suspicious, and there +might be a big scandal. It seems to me as though this part of the job is +yours to do, and to do just right." + +So far in our argument we were even. We eyed each other as fighters do +in a ring--looking for an opening. Both sparred for an idea. Mr. Rogers' +reluctance to shoulder any legal responsibility deepened my suspicions, +and inwardly I sweated blood at the thought of the deviltry that might +be piled up around the affair. However, there was nothing for it but to +square away and keep sparring, for if I lost my temper and exploded, it +meant that I should be ground up or disappear in the hopper, and then, +good-by to independence. It was the first time I had ever sat in a +finish game with the master of "Standard Oil," and I trembled at the +possible outcome. Yet this duel--for it was as clearly a fight for life +on my side as though we both were armed with deadly weapons--was but one +of a thousand similar encounters the Rogerses and Rockefellers had had +with other adversaries as fearless and as honest as I, and out of these +heart-breaking and soul-crushing sit-downs they had always emerged +survivors, while behind the "Standard Oil" juggernaut, defeated and +submissive, trudged the men who had dared oppose them. Should the fate +of these others be also mine? Across my mind flitted "not while my brain +retains its fly-wheels and my hands their power"; and I found myself +wondering if there were not some stage at which a man cornered by +arbitrary conditions and legal observances was justified in bursting all +such trammels and meeting artifice with physical violence. Murder is a +crime against society and against nature, and we must all observe the +canons of God and the regulations of the law; but at least a dozen times +in my wrestles with the exasperating, grinding, hell-generating machine, +it was only my inborn reverence for God's law and man's that prevented +me from--well, shall I say, strangling the fox? + +All this, however, was between me and my mind. I showed not a vestige of +it on the surface, but went on with much earnestness: + +"Mr. Rogers, I think I understand the situation perfectly, but let us +see if I do. We have reached a point where we are out in the open, and +the whole world is in position to pass judgment on us and our venture. +There must be between us unanimity of purpose, for the time is past when +I can say one thing, you another, and Stillman and his bank confuse all +concerned by agreeing with one story and denying the second. It is +essential that we all pull together, yet conditions are such--and no +one's to blame for them, for they have so developed--that we cannot have +a general pow-wow to organize a programme. We, you and I, must formulate +a plan which can be sent out to the public with the approval of all +concerned, all the parties to it being sure they understand absolutely +its meaning, while in reality it means something different to each of +them. Isn't that about it?" + +"You have covered the situation fully, Lawson," approved Mr. Rogers. +"You must understand that this tie-up is due to our having departed from +our usual way of doing business. 'Standard Oil' never goes to the public +direct for money, but works up its projects through some of our"--he +almost said "dummies," but caught himself--"our lieutenants. You have +worked up this affair in our name instead of your own, as would have +been the safer way." + +I thought to myself, "You cannot, whatever you do, evade responsibility +for the millions you are to take this time"; but I went on smoothly: + +"This, then, is how I see our procedure: We will write out an +advertisement for the City Bank. You will have Mr. Stillman pass it for +the bank, by authorizing me to publish it. You will then authorize me to +publish a second advertisement on behalf of the Amalgamated Company. If +there is any slip-up, I, as the agent of both, will have to become +responsible instead of you. Is that right?" + +He nodded. I went on: + +"Besides these, there must be a third advertisement, in which some one +will tell the strong facts about Amalgamated, and it will be so worded +as to bring the public with its money into the City Bank just the same +as though it were signed by the bank, Stillman, the Amalgamated Company, +and you and Mr. Rockefeller. What's the use of beating round the bush +any longer? The one to sign that story and stand behind it is myself, +because, owing to conditions, no one else will." + +I had said it. Mr. Rogers' eyes snapped just once. Only on two other +occasions in all my long and intimate acquaintance with this wonderful +man have I seen him lose his self-control. To anger he will give way +frankly if the occasion justifies it or he desires to intimidate or +impress an individual; but his face, mobile though it is, presents a +calm and impassive mask. I caught the snap, and I think he caught me +catching it. It meant much to me--more even than if he had said in so +many words "I've got him." In such encounters one cannot see into one's +adversary's mind nor know what he is trying to do, and any indication is +like the sight of a buoy in a fog to a mariner. I gathered that the snap +indicated relief at my compliance, and that he had been afraid I might +balk. That showed me that consent on my part was important--which meant +that he saw no possible way of carrying the enterprise to the end we had +mapped out unless I stepped into the gap. Then I knew that he would have +to agree to my terms, provided they were not too harsh and that I did +not too vehemently insist upon them. It is a cardinal principle of +"Standard Oil" never to do anything they decide they won't do, and that +which they decide they won't do is what any man on earth says they must +do. You may lead "Standard Oil," but you cannot drive it. If at that +critical moment I had foreseen all that subsequently occurred, or +realized that this copper affair, which was to me a matter of life and +death, was to Henry H. Rogers only another device to extort dollars from +the public, I should then and there have thrown down the gauntlet and +demanded that "Standard Oil" step out into the open and assume all legal +responsibility, or have exposed the whole scheme. But my suspicions were +suspicions only, and I could not be sure that Mr. Rogers was doing other +than discretion warranted, when he desired to have things done in such a +way as to allow me to continue to conjure with the magic name "Standard +Oil." In other words, wasn't he doing exactly what I myself was engaged +upon? I was planning to have him consent to things he was otherwise +unwilling to allow, and he, in his turn, was scheming to have the bank +and his "Standard Oil" associates pass over things they would be sure to +question if presented less adroitly, or if they came from some other +quarter. Yet all I was trying to accomplish was honest and best for all. +Why might not his intentions be as fair as mine? However, the eye-snap +determined me to steer nearer the wind. + +"Well and good, Mr. Rogers," I went on. "I will tell the story I know is +true and that you know is true, and that you have repeatedly given me +your word you would stand by me in telling, but I will only do so in a +way I deem safe and fair to myself. Is that agreed?" + +He winced a bit. "What do you mean by that?" he said. "What do you mean +by a 'way safe and fair' to yourself? You are not suspicious of any of +us, are you?" + +"Suspicious is not the word, Mr. Rogers. I brought you and Mr. +Rockefeller this copper enterprise. We have gone ahead with it upon +clearly laid down lines. I have done to the letter all I agreed, and, so +far, the enterprise has more than fulfilled my promises. I realize that +our success has largely come from our going to the public and openly +telling it what we were doing and what we intended to do. Until now, I +am the one who has made all the promises, and, legally, up to this +point, I am the only one who can be called to account, but it is the +fact that for any statement I have made, you and Mr. Rockefeller have +been as much responsible as myself, and you as much or more than I have +had the benefit which has come from what I have promised. Now we are +ready for business with the public, and there must be a clear and +distinct understanding with it or it will not part with its money. This +understanding can have but one bearing--_that what the public read, we +must all be responsible for legally and morally, not some of us, but all +of us, you, Mr. Rockefeller, the City Bank, James Stillman, and myself_. +For bear in mind it was you and Mr. Rockefeller who changed my plans by +substituting companies and properties of which I knew nothing but what +you told me. All the things we ought to tell, you say cannot be put into +words, because if they are powers beyond us will refuse to allow the +enterprise to go through as it must go through. Then the condition must +be implied, must be between the lines. You say this is my task, and that +I alone can perform it properly. All right--but I will perform it in a +way that will hold every one concerned to his legal as well as to his +moral responsibility just as it will me who sign it. To save our +enterprise I will concede just this much: The advertisements will be so +worded as not apparently legally to involve Stillman, William +Rockefeller, or the Bank but in reality they will be bound to as strict +responsibility as though their signatures were in the place of mine. In +doing this I compromise with my conscience, Mr. Rogers, because it is +now of paramount importance that our consolidation go through--as +important to the thousands of others who have followed us as to +ourselves." + +"You mean this, Lawson, that you will insist upon having this done in a +way that will make every one legally responsible?" + +"I mean just that, Mr. Rogers. In what other way can it be done?" + +"As all such affairs are arranged--by allowing the public to think for +themselves--but steering our end clear of all possible legal +entanglements," he replied in a voice half choked with suppressed rage. +Now we were both thoroughly aroused, he fairly seething with fury at my +rebellion, and I boiling over at his willingness to sacrifice me to his +own safety. By this time he was on his feet facing me, and it was +evident the tussle would be serious. Still I slowly and coldly asked: + +"How can that be done?" + +"By _your_ taking the responsibility," he as slowly and freezingly +answered. + +"You mean that _I_ shall go ahead and make glowing and generous +promises, on the strength of which the public will put up its money, and +that if these promises for any reason are not carried out, I alone shall +be the one to face the music? Is that what you mean, Mr. Rogers?" + +I held myself together, with closed hands and clinched teeth. + +"Just that," he returned. "You are making millions out of this +enterprise, and I consider this is one of the places where you earn +them." + +"Not if every one of the millions you mention were multiplied a thousand +times, Mr. Rogers, do I say one word to the public to induce it to part +with its money--not a word that will not hold you and Mr. Rockefeller, +Stillman, and the City Bank to a full responsibility--not if, on the +other hand, I become a pauper." + +It was out. I know that the deadly earnestness I felt was in my voice, +for though I spoke in a low tone I thought my head would burst until the +last word was spoken. We looked at each other--glared is not the word to +define that white-hot yet frozen, "another-step-and-I-shoot" look which +of all expressions of which the human face is capable is most intense +and dangerous. I did not flinch. I did not know what he would do, but I +saw my words impressing on his mind the absolute conviction that for +once he was face to face with a resolution no power of his could alter. +Slowly his anger, his will, seemed to subside, but as they did I was +aware intuitively that he had changed tactics and was coming at me from +another direction. In an instant his whole being seemed to relax and he +dropped into a chair with a sigh of relief as he said: + +"All right, Lawson. You've thought it out, I see. You are making a bad +mistake, but as your mind is made up, I can do the only thing left to +do--call the whole business off for the time being." + +I had not served as Mr. Rogers' pike-carrier in vain. Superb actor +though he is, I saw his bluff, and quick as a hair-trigger called it. + +"Is that your decision, Mr. Rogers?" I asked, almost before the last +word was out of his mouth. I did not attempt to shade the +"If-it-is-I'm-off" tone of my voice. + +He replied slowly and naturally, as though he were taking his decision +right off the scales: + +"Yes, I think so." + +"Then we will call it off for good. I've hung so long by the heels on +this whole matter that anything is better than a further wait. I'm for +Boston on the next train, and by to-morrow I'll have figured out where +we stand." + +I started for the door. + +"Just a minute." His voice was as indifferent as though no tremendous +issue were at stake, for Henry H. Rogers is of the iron-willed breed +whom peril never betrays into trepidation. He would throw dice for his +life as casually as one of your Wall Street tipsters would for a cigar, +and here reputation and millions were in the balance. I knew as well as +though I had seen the message telegraphed across his mind that he had +said to himself, "It didn't work, I must round to," but I knew my man +well enough to realize that a false move now would tip victory back into +defeat. I halted. As naturally as though there had been no calculation +in the tone of resigned despair which tinged my voice, I said: + +"Mr. Rogers, don't let us prolong this talk. You well know what this +decision of yours means to me, so let me go where I can think it to a +finish." + +In an instant Henry H. Rogers was again his virile and commanding self. +He jumped to his feet. His words came round and tense, passionately +convincing and persuasive. + +"Lawson, are you crazy? Would you go back to Boston and smash this +business that we have spent years on? Would you sacrifice the millions +that are in your grasp? Would you? Would you, I say? You know I would +not threaten you, but I ask, would you do this, and at a time when you +are all tied and tangled up with us in such a way that you would be +bankrupt, literally be a pauper, and all because I insist upon things +that conditions over which I have no control compel me to demand?" + +Whether he intended to halt or not I never knew, for I let him have my +pent-up feelings in eleven words that gave me as much relief as any +thousand I could have selected had I a day to do it in: + +"As true as there is a God above us, I would!" + + + + +CHAPTER XXII + +THE RESPONSIBILITY FASTENED + + +Life's alternatives are seldom labelled. Right is not always white, nor +wrong, black. The parting of the ways is oftentimes to the eye no more +than the forking of main-travelled roads, and good intentions are no +sure guide to the straight path. This, however, was one of those rare +crossings at which Fate's red light swung full in view, and in its +warning glow I seemed to read the sign: + +"Settle Right or Forever Regret." + +Well it was for me and for those thousands who were victimized and +robbed later that I heeded the monition, for if in the interests of +peace I had allowed myself to be overwhelmed by the imperious will of +Henry H. Rogers, I should to-day be as helpless as those others who, +coming forward to accuse, are met with "Standard Oil's" crushing +rejoinder, "It's a lie--you can't prove it." I have wondered since if +the master of "Standard Oil" also saw the red signal or interpreted its +prophetic message. His eyes still met mine in the same deadly, intense +stare, but the anger had passed out. Then in an instant the battle was +mine. Henry H. Rogers came out of the clouds and with a gesture of his +hand waved away all that had passed, and said: + +"D--n it, Lawson, you are a most impractical man to do business with, +but I suppose you must have your way. Now just tell me--and put it in +few and plain words--what is it you intend to do to get this affair +through, for we must carry it to a finish at once, although it does seem +hard that I must do things I don't want to and which may put me in a bad +hole; but let us hope the future will only show that all these +precautions were a waste of energies. Bear in mind, though, that +whatever is done, must be so arranged that no one but me will know the +real condition, for though I have given way, William Rockefeller and +Stillman, to say nothing of the others, would throw up the whole affair +rather than incur the danger of future litigation and trouble." + +At that moment Mr. Rogers had, I believe, made up his mind to play so +fair with the public that there should never arise dissatisfaction with +the course of Amalgamated, that is, he had determined to be content with +a half brick of gold without retribution or restitution in place of the +whole fraught with penalties of exposure and reprobation. At that period +his cupidity had not flared into the towers of fire it afterward became, +in the smoke and flame of which all undefined dangers were obscured. + +"As you will, Mr. Rogers," I assented; "that part is not my hunt. I +should prefer that our associates knew things as _we_ do, but as it +seems that is impossible, I must be satisfied with knowing that you +thoroughly understand the conditions I am going ahead on. Here they are: +First, all public notices must bear the names not only of the +Amalgamated Company and the City Bank, but of the individuals, +Rockefeller, Rogers, and Stillman. As the real story is to be told by me +alone, these names will prevent any suspicion the public, particularly +Wall Street, would have that there was any lukewarmness or dodging. This +means that you and Mr. Rockefeller must be known as officers of the +company as well as directors." + +"Now, Lawson, right there, that is impossible--absolutely out of the +question. William Rockefeller will under no circumstances take on +additional duties of this kind, and whatever the consequences, I cannot +persuade him to." + +I saw he meant this, and that we must get around it. + +"Let us begin at the beginning, then--the president. You should be +president--over the flotation, at least." + +"That is impossible, too, for you know it is settled that Marcus Daly is +president. I promised the position to him as a part of the trade. It +would be ridiculous for me, who it is known am not a copper expert, to +be president of a new copper company in which Marcus Daly is a large +owner and is supposed to have a prominent hand. Besides, in certain +parts of the country his name will stand much better than mine, and it +means much to all miners the world over." + +"All right for president," I answered. "That settles, then, where you +would naturally come in--vice-president; and as vice-president it will +be proper to print your name in the advertisement below that of the +president." + +He demurred at first, but finally acquiesced, for he had now made up his +mind to play out the string. For treasurer and secretary he suggested a +brother of Governor Flower's, but I knew that this was now the only +place left where the magic name of Rockefeller could be used and I drew +his attention to the fact. + +"How can we do it, Lawson, when I have told you it is impossible?" + +"William Rockefeller has a son, William G. Rockefeller. He's our man for +treasurer and secretary. Not one in ten thousand but will think William +G. is the senior Rockefeller, so the name is as good for the country as +his father's, and in State and Wall streets it is better, for among +financiers it is known that William Rockefeller would hesitate longer +about putting his son out in the open in an enterprise he did not +approve than about getting in himself. So William G. Rockefeller it must +be." + +Mr. Rogers did not take kindly to the idea, and I could see it would be +quite a task for him to arrange the matter. However, it was necessary, +and he undertook the contract. I went on: + +"That covers the company. Second, we will print three advertisements--a +plain notice of the City Bank, which must be signed not only with the +usual 'National City Bank,' but 'James Stillman, President.' This will +immediately follow the company's advertisement, which I shall so word +that the enormous properties composing the consolidation will be set +forth, yet without details of the extent of our holdings in any of them. +In its own advertisement offering the stock the City Bank will refer to +the advertisement of the Amalgamated as though all particulars had there +been given, and I will see that it reads openly and frankly and yet +contains nothing that need scare Stillman. Then there will be a third +advertisement, signed by myself, in which, in the plainest and strongest +terms at my command, I shall tell just what the company is and what it +proposes to do." + +"So far all right," assented Mr. Rogers. + +"There is one more thing," I went on. "It cannot openly be put forward +that I am the authorized agent of the Amalgamated Company and the City +Bank--well, I must have the equivalent of this. It must be shown by +inference. If I insert these three advertisements in the papers and pay +for them, and the company pays me for them, it will be proof positive +for all time that I acted as the authorized agent of not only the +company and the City Bank, but of Marcus Daly, yourself, William +Rockefeller's son, and James Stillman, and therefore that whatever my +advertisement says is binding upon them. Remember, though, it will be +your affair whether you tell them of it or not." + +"You persist, Lawson, that this is necessary?" Mr. Rogers interrogated. +"You seem to lose sight of the position I shall be in should anything +happen later to reveal to these men with whom I am so closely associated +in business that they were binding themselves without their knowledge, +and that I was fully aware of the fact." + +[Illustration: LAWSON'S ADVERTISEMENT WHICH APPEARED IN CONJUNCTION WITH +AMALGAMATED'S. + + =COPPERS.= + + =Amalgamated Subscription.= + + Owing to the very large number of inquiries (over 3,000 the + first day), received and anticipated, as to the best means + of securing an allotment of the first issue of the + consolidated stock, it is necessary to reply collectively by + this advertisement. I advise the purchase of Amalgamated by + subscription, because it is, in my opinion, the best + opportunity ever offered the public for safe and profitable + investment. It is probably the first time in the history of + public subscriptions that a stock is worth and can be sold + for 50 to 75 per cent. more than the subscription price, and + yet will be allotted to each and every subscriber in + proportion to his application. This means that every one who + makes a bona-fide subscription, large or small, will receive + shares at one hundred dollars each that can be sold at once + at a large profit. + + In my opinion the entire $75,000,000 is worth and can be + sold to-day for from 30 to 60 per cent. more than the + subscription price. + + First--Because the assets now owned by the Amalgamated + Company are worth from $100,000,000 to $125,000,000. + + Second--Because the Amalgamated Company is now earning at + the rate of 12 to 16 per cent. per annum. + + Third--Because it will, from the start and always after, pay + 8 per cent. dividends annually. + + Fourth--Because the interests actively engaged in its + management will make and keep it one of the most + conservative and sought-for investments. + + Fifth--Because there will be rights attaching to it almost + at its beginning that will give to it large profits + independent of those accruing from its dividends. + + The fact that the above values are now known to some, and + will be in the next few days recognized by all, will cause + the stock to be largely oversubscribed, but this should + deter no one from subscribing, for the reason that, + notwithstanding this certainty, those who are engaged in + perfecting this great enterprise have decided that instead + of a favored few being allotted the entire amount, all shall + be treated alike. Captious critics of "Coppers" will + probably again cry their sarcastic "philanthropy," but to + the legion of broad-minded investors who have followed and + profited by this great industrial revolution, the policy of + this liberal treatment will be obvious--the consolidated + company is to be many times larger than its present capital + indicates; it, in my opinion, will from time to time offer + to the investing public large amounts of increased stock for + the purpose of obtaining hundreds of millions of cash with + which to pay for all the producing copper mines, as it is + now obvious to students of affairs financial that this + company must in time become the owner of all good mines, + because all such mines can be run to better advantage to the + consumer of copper, the investor in copper stocks and the + present owners, by the Amalgamated Company than by others. + This being so it requires no supernaturally bright mind to + see the wisdom of a policy that insures a constantly + increasing premium for every new issue of stock. + + I advise all intending subscribers to send their + subscriptions personally or through their banking or + brokerage house direct to the National City Bank of New + York. While my firm will, for the convenience of its + clients, forward subscriptions, I would have it understood + that such subscribers will receive the same treatment if + they send their applications direct. + + My firm will also furnish subscription blanks to those who, + through lack of time or otherwise, cannot secure them + elsewhere. + + All subscribers should bear in mind, if on receiving their + allotment they are disappointed with the amount, that their + subscription is only reduced in the same ratio as all + others, and that they have the pledge from a Board of + Directors whose personnel means good faith. + + In again advising the purchase of "Amalgamated" I call + attention to the names of the men who are to conduct it to a + future, and to the fact that from its inception it will + surely give a return of over 8 per cent. per annum on its + par. + + THOMAS W. LAWSON.] + +"Absolutely necessary, Mr. Rogers," I returned without an instant's +hesitation. "Now let us run over the situation finally, for I want to +relieve your mind of the idea that I am doing anything selfish in +insisting on these conditions. When the public subscription is offered, +there must be a story of facts to go with it. Some one must make it. The +men who should, will not, although they are prepared to reap all the +benefits of what the man who will, says. It seems I am that man, and +what I say must be what I understand is the exact truth about the +enterprise. Well and good. It is essential for the one who assumes this +responsibility to do it in such a way that he can for all time show that +the men who benefited and upon whose say-so he acted were in every way +responsible for what he did. All this is undeniable. There are only two +possible considerations that enter into the problem: first, that the +facts I am to state are not true; second, that it devolves on me to +accept a risk those associated with me will not take. If the first can +be maintained, farewell to our enterprise, and get ready for the worst +financial scandal Wall Street ever faced. If it's the last--Mr. Rogers, +the 'Standard Oil' people are all very strong, but I don't believe any +of them would have the nerve to ask me to accept a risk they dared not +themselves undertake." + +There was no escaping my conclusion, and unwelcome as the fact was, he +saw no further talk would avail, so he snapped: + +"Draw up the advertisements you think proper. Have them ready in an +hour, and I will in the meantime see William Rockefeller and Stillman +and do what is necessary." + +I noted the set of Henry H. Rogers' jaw and the down slant of his eyelid +as he uttered these words, and I had no doubt of the compliance of James +Stillman and William Rockefeller with whatever demands he chose to +propose that day. "Cyclones and thunderbolts! Heaven help these or any +others who venture to resist him in this mood," I inwardly commented, +"especially if they are of those with whom he has travelled the +'Standard Oil' blood-trail." My imagination showed me a picture of 26 +Broadway and the National City Bank swaying and shaking like full-blown +hollyhocks in a gale. + +I had my advertisements ready and was waiting when he returned. + +"Lawson," said he peremptorily, "if your work will pass me you may go +ahead with it." + +"You mean you have obtained all the consents necessary?" + +[Illustration: INITIAL ADVERTISEMENT OF AMALGAMATED COPPER COMPANY. + + =Amalgamated Copper Co.= + + =Capital................$75,000,000= + + This company is organized under the laws of the State of New + Jersey for the purpose of purchasing and operating + copper-producing properties. Its capital is $75,000,000, + divided into 750,000 shares of common stock, of the par + value of $100 each. It has no bonds or mortgage debt. + + This company has already purchased large interests in + Anaconda Copper Company, Parrott Silver and Copper Company, + Washoe Copper Company, Colorado Smelting and Mining Company, + and other companies and properties. + + MARCUS DALY, Pres., + H. H. ROGERS, Vice-Pres., + WM. G. ROCKEFELLER, Sec'y and Treas. + + NEW YORK, April 28, 1899. + + + =OFFER FOR PUBLIC SUBSCRIPTIONS.= + + Referring to the foregoing statement of the Amalgamated + Copper Company of New Jersey, notice is hereby given that + offers for subscription to 750,000 shares of the par value + of $100 each of the stock of the said copper company will be + received at the National City Bank of New York, until 12 + o'clock noon, Thursday, May 4, 1899, at the rate of $100 per + share. + + Subscriptions must be addressed to the said bank and + accompanied by a certified check to its order for 5 per + cent. of the amount of such subscription, the balance to be + payable within 10 days after date of notice of allotment. + + Temporary negotiable receipts on payment of sums due on + allotment will be issued exchangeable for certificates of + stock, as soon as same can be engraved. + + In case of oversubscription, allotment will be made pro + rata. The right is reserved, however, to reject any + subscription. + + NEW YORK, April 28, 1899. + NATIONAL CITY BANK OF NEW YORK, + JAMES STILLMAN, President. + =52 WALL STREET, NEW YORK.=] + +"I mean that we will waste no more words on this matter. The +advertisements you can convince me are right you may have inserted in +the papers, and no one will say a word publicly or otherwise. Neither +William Rockefeller, his son, Stillman, the Bank nor any officer or +director of the Amalgamated Company will talk until after the +subscriptions have been closed and the allotments made; not one word +but what you say or print will be uttered. Can you ask anything more +than that?" + +"Not a thing more." + +I then laid out the rough copies of what afterward appeared in the +papers throughout the country (reproduced on pages 336 and 338). + + + + +CHAPTER XXIII + +THE FIRST CRIME OF AMALGAMATED + + +That those of my readers who are not versed in stock affairs may +appreciate the unusual character of these announcements, it is proper +for me to explain their divergence from the form of the average +financial advertisement. It is the invariable custom in all stock +subscriptions for the corporation which is being offered for sale, or +the bank or bankers assuming responsibility for the proposition, to set +forth at length the facts essential to a proper understanding of the +enterprise: if a new corporation, its reason for existence and the +security offered; if old, its history and the immediate purposes for +which additional funds are asked. It is the same in finance as in +ordinary business. If you are offering for sale goods which cannot speak +for themselves, it is necessary that some one talk for them so those who +purchase may know what they are receiving for their money. Under normal +circumstances the initial advertisement of the Amalgamated Company would +have stated the amount of its capital, its organization, and that the +proceeds of the $75,000,000 of stock offered for sale were to go into +its treasury to purchase designated properties. It will be seen from the +Amalgamated's advertisement reproduced herewith, that all the +information vouchsafed intending investors is mention of its $75,000,000 +capital, that it has no bonds or mortgage debt, and that it has already +purchased large interests in the Anaconda and other copper properties. +Not a word about indebtedness, equally vital, nor in definition of the +extent of the interests owned. It is quite the briefest, most meagre +notice of subscription ever placed before the public. Indeed, it is +informative and specific only in regard to the officers, who are given +extraordinary prominence. Such announcements are usually signed by the +president and the secretary and treasurer, or else the names of all the +officers and directors are stated, so it is obvious here that the +prominent insertion of the vice-president's name is for a purpose. And +all Wall Street as well as the general public gathered that "Standard +Oil" was so sure of this enterprise that its principal men were anxious +to be known as being behind it. + +The offer of the National City Bank begins with a reference to "the +foregoing statement," as though that really showed the purpose of the +sale of stock--leaving the inference that the beneficiary was the +Amalgamated Company. Other details--the designation of conditions of +subscription, terms, etc., follow the ordinary form. In the matter of +oversubscription the offer diverges vitally. Usually it is prescribed +that "in case of oversubscription stock will be allotted pro rata and +the right is reserved to reject any subscription in whole _or in part_." +In preparing the advertisement I purposely left out the "or in part," +thereby making it impossible to reject any part of any subscription--in +other words, rejection had to be without compromise, so that every +subscriber whose subscription was not wholly rejected would stand on +equal terms with every other subscriber, as he would receive his exact +proportion. + +The terms of these advertisements prescribed the conditions under which +subscriptions for the stock of the Amalgamated Copper Company must be +made to the National City Bank, and bound the bank to accept +subscriptions presented in compliance therewith. In fact they +constituted a legal contract binding the National City Bank, an +institution doing business under the national banking laws of the United +States, to allot to every subscriber whose subscription was not rejected +in full, his proportionate part of the entire 750,000 shares of the +capital stock of the corporation, his proportionate part being the ratio +his subscription bore to the entire subscription received at the +National City Bank before twelve noon of Thursday, May 4, 1899. On +receipt of official notification from the National City Bank that he had +been allotted twenty per cent. of his subscription, or one share in +every five subscribed for, the subscriber had a right to think he knew +that the total subscription to the stock had been five times +$75,000,000--$375,000,000--or five times 750,000 shares--3,750,000 +shares; and that before noon, May 4th, the National City Bank had in +hand certified checks to the amount of $18,750,000. The public, +including the shrewdest Wall Streeters, has, since the subscription +closed, believed that the subscription totalled the figures given above. +Indeed no one has ever suspected anything to the contrary, because it +was clear that if the allotment was conducted under conditions other +than those contracted for in the advertisement, the National City Bank +had laid itself open to a charge of fraud and was liable to each +subscriber for the proportion of shares of which he had been deprived. + +_The actual amount of the subscriptions received on or before noon, May +4, 1899, at the National City Bank was but $132,067,500, and the amount +of the five per cent. certified checks received in the institution up to +noon was only $6,603,375, or $5 per share on a total of 1,320,675 +shares._ + +The meaning of this is that every legitimate subscriber--and I except +the millions of subscriptions which the bank decided were illegitimate +and rejected, as they had a perfect right to do under their contract +with the public--was defrauded of two shares of each three to which he +was entitled. Before me as I write is the original allotment of the +National City Bank to the subscribers, which I propose to print in my +second volume as part of this indictment, showing that the figures are +exactly as I have stated. + +From the beginning of my narrative I have claimed that the frauds +committed in connection with Amalgamated could be completely +demonstrated from records outside any evidence of mine. The list of +subscribers and the most cursory examination by the Government national +bank authorities at Washington will furnish all the proof necessary to +substantiate the accuracy of my statement here. At this juncture I shall +not attempt to sum up the bearing or the consequences of this illegal +and dishonest act, but it was one of the main cogs in bringing about the +disaster that ensued. The conditions which led to its perpetration are +narrated later. In passing I may say that while the formation of the +Amalgamated Company by the clerks and office boys (as I have already +described it) and the means by which Mr. Rogers and Mr. Rockefeller let +in their friends to their appointed "floors" were deceptive and +outrageous in their double-dealing, and should be prohibited by law, I +knew them to be so commonly practised throughout our American financial +centres that it never entered my mind to suggest that they were +criminal. The infraction I have just explained, however, is a tangible +fraud and a very different proposition. + +The two announcements alone would have had but little efficacy in +persuading the public to part with its money for Amalgamated stock, but +in conjunction with the third advertisement--mine--they proved +irresistible. There was nothing equivocal in my announcement. I not only +advised the purchase of the stock by subscription on the ground that it +was the best opportunity for safe and profitable investment ever offered +the people, but asserted that the shares could afterward be sold for +fifty to seventy-five per cent. advance on the subscription price, so +that every one who obtained a share of Amalgamated for $100 was buying +something which would subsequently be worth $150 to $200. Further I +promised that all the subscribers should be treated alike and gave it as +my opinion that the whole 750,000 shares could at the time the public +was reading my statement be sold for thirty to sixty per cent. more than +the subscription price, and declared unqualifiedly that the assets owned +by the Amalgamated Company were worth from one hundred to one hundred +and twenty-five millions; that the company was then earning from twelve +to sixteen per cent. per annum, and that from the start and ever +afterward it would pay eight per cent. dividends annually. + +As I have previously stated, I had no personal knowledge of the +conditions in the several properties comprising the first section of +Amalgamated, but the facts and figures which were put forward in this +advertisement were supplied me by Henry H. Rogers and through him by +Marcus Daly, who vouched for them, and furthermore the three +advertisements were carefully read and scanned by Mr. Rogers himself. +If I had not believed them to be true I should not have put them +forward nor allowed them to be published, but I accepted them as the +public and the financiers did when they read them over the signature of +the known agent and mouthpiece for Amalgamated and "Standard Oil," +myself. I showed that I believed them by putting my signature to them. I +was and am personally responsible for the truth of these statements, but +more so are H. H. Rogers, William G. Rockefeller, the National City +Bank, and the Amalgamated Company. Even if it had not been a matter of +public knowledge that I was the agent of the City Bank and the +Amalgamated Company and the "Standard Oil" party; if it had not been a +fact, as it was, that I inserted these three advertisements by agreement +with those who were responsible for them and who were doing business +directly with the public; if it had not been a fact that these people +through me paid for these advertisements, thereby directly showing I was +their authorized agent; if I had not taken the precaution to see that +such payment was made by a check signed by William G. Rockefeller, +treasurer of the Amalgamated Company, and yet made to the order of the +newspaper people and handed by me to them, thereby clinching my agency, +nevertheless the advertisement itself would have made it clear that I +was the full and authorized agent, or it would have been stopped there +and then and the bank and the company would have refused to proceed +further, for I say: + + "I advise all intending subscribers to send their + subscriptions personally or through their banking or + brokerage house direct to the National City Bank of New + York. While my firm will, for the convenience of its + clients, forward subscriptions, I would have it understood + that such subscribers will receive the same treatment if + they send their applications direct. + + "My firm will also furnish subscription blanks to those who, + through lack of time or otherwise, cannot secure them + elsewhere." + +I think I have made clear so far the conditions under which these vital +statements were put forward and have lodged the legal responsibility for +them where it belongs. The National City Bank is plainly liable for +violation of the published stipulations under which subscriptions were +allotted, and it is common knowledge that the stock was allotted one +share in five subscribed for, while the original list of subscriptions +shows that the total allotment was less than twenty-seven millions and +the full subscription less than double the amount to be allotted. + +It is common knowledge that the dividends were cut to two per cent., and +are at the present time, the best ever known in the copper business, +only four per cent., and that they have been cut under eight per cent., +so they either could not have been twelve to sixteen per cent. at the +time it was stated they were, or there has been great fraud committed +since. As we are dealing with the greatest national bank in the country, +it will be simple for the Government and banking officials at Washington +instantly to disprove my statements if they are false; otherwise they +must take action, civil and criminal, against the National City Bank. + + + + +CHAPTER XXIV + +THE SUBSCRIPTION OPENS + + +When Mr. Rogers on returning from his conference with James Stillman and +William Rockefeller had given the word that the course was clear, I was +conscious of the necessity of clinching the decision so that there could +be no further backing and filling. I told Mr. Rogers so and suggested +that we insert at once the advertisement of the City Bank and the +Amalgamated Company in the New York papers, and that the following day I +have arrangements concluded with my advertising agents for their +publication throughout the country. The announcements appeared in New +York and the following day they were spread before the public in the +great papers of this country and England. Thus was Amalgamated launched. + +With the appearance of these long anticipated announcements the pent-up +copper excitement burst forth, and an avalanche of queries began to pour +in upon us all. The interest was tremendous, and I felt certain we were +to reap a greater success than I had dared dream of. The days preceding +the opening of the subscription were taken up in answering a thousand +questions regarding conditions, in supervising the advertising, and +steering "Coppers" in the market. On the eve of the opening day Mr. +Rogers said to me: + +"Lawson, at last we are to know how well your work has been done. The +time of talk ends to-night and after that we'll have facts to go upon. +What do you place the subscription at?" + +"I'll stake my prospective profits that when the books close there will +be from forty to fifty millions subscribed and that when your 'Standard +Oil' experts have analyzed the subscriptions they will tell you that +three-quarters of all have come from the country--from my campaign--and +not over a quarter from the 'Standard Oil's' following and Wall Street," +I answered. "Then you and Mr. Rockefeller will admit I was right when I +told you that the public will respond to open and fair treatment when it +is deaf and blind to stock trickery and manipulation." + +"I do hope you are right," returned Mr. Rogers, in a quiet, earnest, +I-pray-it-may-really-be-so tone, "but if it is from six to ten millions +we will all take off our hats to you." + +This defined the expectation of the man who above all others knew most +of what had been done to mature and perfect the venture. I realized that +none of the parties to the enterprise anticipated an extraordinary +success, and though I felt more confident than the others, I was far +from cognizant of the actual feeling abroad among the people. Monday +morning I got an inkling of what was coming. My office in Boston was the +centre of a dense mass of people from morning until night, and round the +National City Bank in New York crowds were gathered watching the throng +fight its way through the doors. Inside, a long line of men and women +headed for the subscription desk stood laden with checks and currency, +patiently awaiting their turn, and every mail brought sacks of orders. +The big banking and brokerage offices in the financial districts of +Boston, Philadelphia, and New York were packed with customers asking to +be shown the way to secure as much as possible of this easy money, while +the wires buzzed with messages and bids from the far West and from +Europe. The excitement knew no bounds. In my rooms at the Waldorf I sat +beside the telephone getting rapid reports from my lieutenants. From 26 +Broadway I learned of the progress of events at the bank, and was +impressed with the fact that the prevailing excitement and the strain +were beginning to affect even the nickel-steel equilibrium of Mr. Rogers +himself. Indeed, he made no attempt to disguise his uneasiness, and told +me that William Rockefeller was in much the same condition. It was the +first venture of size these two strong wheelmen of "Standard Oil" had +undertaken without the co-operation of John D. Rockefeller, and it +appeared that he was considerably worked up over the public hubbub, and +so opposed to the whole Amalgamated affair that nothing short of a great +success could justify his subordinates' temerity. However one looked at +the situation, it was evident that Henry H. Rogers and William +Rockefeller were playing for the stake of their lives, though how great +the stake was no one at that time guessed. Since then they have steadily +forged ahead, both in riches and in influence, until to-day they have +actually supplanted John D. Rockefeller in the kingship of finance. At +that day, though his had always been the master-mind of "Standard Oil," +I don't believe Mr. Rogers was worth, all told, over twelve to fifteen +millions, while to-day he is probably a hundred and fifty times a +millionnaire. + +It must be remembered that there was good cause for trepidation over +this venture, for though the stock markets buzzed with "Coppers" it was +all guesswork as to how far the public would go with us. The question +was, What would they do now that our stock was within their reach? It +was a tremendous proposition we had put forth, for remember this was +before the period of the great trustifications, and ten to twenty +millions figured as the limit of large flotations. Even these were of +well-known properties and invariably were offered below par. To come +into the open, offering at $100 a share a brand-new stock capitalized at +$75,000,000, was breaking the record, and we might well wonder what was +before us. + +So far as man could do I had safeguarded the public and my own +reputation, and believed that the assurances I had secured eliminated +all opportunities of fleecing investors. Mr. Rogers and Mr. Rockefeller +had each pledged me his solemn word, under no circumstances to sell to +subscribers over five million dollars of the stock, and to place at my +disposal the five millions cash received, to use in the open market for +the purpose of protecting the stock so that it should never decline +below par. That this promise should be kept was of the utmost +consequence. While "Standard Oil" held the large majority of the +Amalgamated stock and the public but a small minority, there was no +danger of the latter being slaughtered, whereas if the public was loaded +up with stock at $100 per share, it would be profitable for Rogers, +Rockefeller, and Stillman to practise the method I was fast beginning to +see was their favorite device for accumulating wealth--selling stock and +then dropping its price and taking it away from its holders at +twenty-five to fifty per cent. below what they had purchased it at. If +my plan of guarding against this possibility were adhered to, I knew +that there would be such a demand for the shares in the open market +after the allotment that when the second section of seventy-five or one +hundred millions came to be offered, it would be even more eagerly +sought than the first. So with the third and other sections +contemplated, until in time the whole stock would be distributed among +the investors of the world, and assuming that part of our enormous +profits would always be used to keep up its market price, there could be +no possible decline. Thus Amalgamated, like "Standard Oil" or a +Government bond, must always be worth more than par, first because there +would be value to justify it, and second because its holders would have +absolute confidence that the security could always be sold for as much +or more than they had paid for it. + +So far, I had carefully refrained from discussing with Mr. Rogers how we +should go about securing our part of the subscription. I had not +forgotten it. Indeed, I had it well in mind and was ready to enter upon +the matter when it came up. An iron-bound contract held the Amalgamated +Company and the National City Bank over the signatures of a Rogers, a +Rockefeller, and a Stillman to allow the public to subscribe for +$75,000,000 of stock, and the terms were that every subscription must be +in the bank at noon, May 4th, and that each subscription must be +accompanied by a certified check of $5 for every share applied for. _As +we had agreed that the public should be sold but five millions of the +stock, that meant that we proposed to retain seventy millions of it +ourselves, but to obtain this allotment legally, we must comply with the +conditions of the advertisement exactly as outsiders had. So it was +necessary that we have a bid in before noon on Thursday for our seventy +millions, accompanied by a check for_ $3,500,000, _which would secure us +our quota provided the public subscription was no more than five +millions._ If the public subscription ran over five millions, then the +bank must throw out all additional subscriptions over that amount, for +the advertised contract specifically declared that all accepted +subscriptions would be allowed pro rata. By my suppression of the usual +condition that the Bank reserve the right to reject any part of any +subscription, it was absolutely precluded from the common method of +dealing with such an emergency and so could not reject _parts_ of +subscriptions. There was a way out--without practising fraud. If at noon +on Thursday the public had subscribed ten or fifteen millions then the +insiders must put in bids of $140,000,000 to $210,000,000, in which +event the entire subscription would be divided by allotting each +subscriber one share for every two or three subscribed. + +I presumed then that some such method would be followed. It surprised me +at the time that Mr. Rogers should have given so little attention to so +vital a part of our programme, for he is in the habit of thoughtfully +thumbing over just such details to avoid slip-ups, but the idea that our +subscription would run into unwieldy amounts never occurred to him, and +he let things go, trusting to luck and "Standard Oil's" motto "To Hell +with the people anyway," to adjust the matter at the last moment. To-day +Henry H. Rogers, William Rockefeller, and James Stillman would each give +five millions from his private fortune if this seemingly unimportant +detail had then been provided for. Its neglect is the bloody +finger-print on the knife-handle of the murderer, it is the burglar's +footprint in the snow. In this case it furnishes the evidence of the +crime of Amalgamated. + + + + +CHAPTER XXV + +DOLLAR HYDROPHOBIA + + +Our first fears of failure were soon succeeded by apprehensions of a +different nature. By Tuesday noon it was evident that the flotation +would far exceed the low expectations of Rogers and Rockefeller, and I +knew that if the people's interest continued to develop at the rate the +subscriptions indicated, the totals would be far ahead of my own most +sanguine anticipations. Every hour the excitement intensified. The +crowds on the street and in the brokers' offices; the rush of investors +to the City Bank--all demonstrated a feverish condition of the public +mind, a state of unrest that fills the conservative banker with dread +lest something happen to precipitate a disorder and a panic. The acute +sensitiveness of a body of investors to extraneous influence, however +slight, is familiar to any one who has had to do with market +manipulation. In a theatre or church one strenuous spirit can quell a +tumult with some ringing assurance, but long before the leader of a +financial movement has got word to his following, wide-spread over the +country, it has taken alarm, the rout has begun, and the field is strewn +with corpses. A great financial excitement, like a rocket, should soar +triumphantly into the air, leaving behind it a comet-like trail of +glory, climaxing in a shower of gold; diverted from its course, it runs +a mad, brief, tragic career along the earth, spreading ruin and disaster +in its path. + +There comes a time when all great enterprises must emerge from the +nursery and be exposed to the sunlight and the breezes of every day. We +were crossing the ominous tract which divides the trenches of +preparation from the sheltering fortress of attainment, and the hosts +of failure were rallied to dispute our passage. + +At this juncture any accident to our venture might affect the whole +American business fabric, and no one realized the danger of the +situation better than Mr. Rogers and myself. During the anxious days +that were passing we canvassed the dire possibilities that the situation +contained, just as children tell each other ghost stories when left +alone in the darkness of the night. The great catastrophes of finance, +we remembered, had all been born of the unexpected--of unforeseen +contingencies--far beyond the range of human foresight. Who knew but +that the hours were pregnant with some terrible potentiality--the +assassination of a king or president, a Chicago or Boston fire, an +epidemic of cholera, a belligerent message from the President, such as +Cleveland's Venezuela ultimatum, a great bank defalcation, the suicide +of an important operator, the death of an eminent capitalist--a breath +of one of these world cyclones would crumble our structure into the dust +and take along with it the neighboring edifices on both sides of the +street. There were also the hidden possibilities of betrayal, of +treachery, for we knew that scores of Wall Street's most ingenious minds +were bent on unravelling and exposing the secret threads of our +enterprise. + +On Wednesday morning soon after ten o'clock Mr. Rogers, on his way +downtown, came to the Waldorf. He was plainly excited. + +"Lawson," he said, "this is something unheard of, unprecedented. The +bank is being buried under subscriptions. Stillman says he is adding +scores of clerks, but that he cannot possibly keep pace with the +subscriptions. Mr. Rockefeller is very nervous, and I must confess to +feeling a bit of 'rattle' myself. It now looks as though the total would +run into fabulous figures. The Lewisohns are being swamped with orders +from Europe. They alone will probably put in more than ten millions. +Wall Street has lost its head entirely, and our people at 26 Broadway +are coming in asking advice and doubling and trebling their +subscriptions. If we don't keep our heads something bad may happen, for +it looks now as though the cash the subscription is tying up would make +a money-pinch. This affair must not be allowed to run away with us. What +do your reports from Boston and the country show?" + +"The same as yours. The people have simply gone wild. Calls come in +ceaselessly to me from Wall Street men. The hotel is so full of brokers +from out of town that they are placing cots in the big rooms. I went +down into the office just now to talk to them and was nearly mobbed. +Already they are talking of a premium of $40 to $60 per share, but if we +keep to the line we have laid down, I don't think we need fear bad +consequences." + +We discussed other aspects of the affair, the intense interest developed +in Europe, and the effect of the excitement on the price of the metal. +As he started to go down to his office, Mr. Rogers said, as though by +way of an after-thought: + +"Lawson, if the people are so hungry, why should we not take some +advantage of it?" + +The suggestion, with all it implied, stunned me for a second. + +"What do you mean, Mr. Rogers? Take advantage--how?" + +"Would it not be well to let the subscribers have more than the amount +we agreed? Why not take more of this money than five millions?" + +This was out of a clear sky, for there had not been the slightest +suggestion of a change of programme and I had rested in the certainty +that our plan insured the safety of all who had gone in on my say-so. I +choked down my excitement. + +"Good God, Mr. Rogers, are you mad?" I exclaimed. "Don't let us depart a +hair from what we all in our cool moments decided was best. We are in +the field now. It would be sure ruin to try any new schemes at this +moment." + +"You are rattled yourself, Lawson. There's no need for excitement. I +merely offered the suggestion. Everything is going well," he reassured +me, but the picture his words conjured before my mind disturbed me all +day. That he would dare do what he had suggested I did not credit, for +the assurances I had were too solemn to allow me to believe such +treachery could be meditated. Nevertheless I brooded over the matter, +and late in the afternoon ran down to 26 Broadway, ostensibly to hear +the latest news from the bank, but really to try if I could not look +into Mr. Rogers' head and see if the imps I had sighted early in the day +were still there. + +Mr. Rogers was over with Stillman at the bank. In half an hour he came +in, and the excitement he labored under was plainly evident in his face. + +"Lawson," he said, "no one has ever seen anything like this before. +Stillman is bewildered. He says it looks as though by to-morrow there +will be a mob around the bank doors, and if between now and then +anything unusual should happen, there'll be the devil to pay sure. I +tell you I'm so tired out that I'm going home now to rest up." + +Together we went uptown on the Elevated, and when I left him at +Thirty-third Street to cross over to my hotel, somehow the dark +forebodings of the morning had been lulled by his frank geniality and +carried away by his enthusiastic rejoicings in the success of our +enterprise. The picture of that soft spring evening hangs in my memory's +gallery--the declining sun seen through a long perspective of gilded +brick and brownstone façades, the heavy rumble of trains, the clamor of +newsboys crying last editions, the packed cable-cars slowly threading +their way amid the hurrying crowds of clerks and shop girls streaming +homeward, the cabs swinging in and out of the throng, through whose +windows I caught glimpses of jewels on bare shoulders, light silks, and +sweeping plumes--the butterflies of fashion or folly hurrying out on +their evening trysts. Broadway, with its hundreds of sights and sounds, +was before me in the hour of its transformation, the street lamps +breaking into incandescence, and the huge electric signs beginning to +glare above the theatre entrances. By the time I reached the Waldorf, +that high abode of Yankee royalty, the kinks and curlicues were so far +ironed from my nerves and brain that I had little doubt of my ability to +take a fall out of Fate in whatever sort of collar-and-elbow tussle she +might designate. In this mood I swung into the huge hotel through the +carriage entrance on Thirty-fourth Street, eager to forget myself amid +the rapt concourse of dollar worshippers, preening themselves against +the plush, onyx, and gildings of the Astor caravansary. I seemed to see +in the mirrors, on the walls, on the buttons of the lackeys' livery, in +the patterns of the rugs, inscribed on the tessellated floors and +painted on the lofty ceilings, dazzling and glittering, the universal +crest of the twisted S with its two upright bars. + +_Dollars, dollars, dollars._ + +Through the office I pushed, my path disputed by the hosts of Croesus +in ambush for market information. Colonels and generals of the +almighty-dollar army were on either flank of me, and the air was thick +with the echo and the rumor of millions. At last I found myself in the +high and splendid room, with its tall windows elaborately curtained with +velvet, its floor space studded with small tables, where after four +o'clock any afternoon, the year round, you will find the active Wall +Street contingent busily discussing the day's doings and plotting good +or evil for the morrow. There they all were, that eventful evening, in +parties of seven or eight clustered at the little tables, and as I +entered a vigorous hail caught my ear and again I found myself +surrounded. + +"Sit down a minute, Lawson," said ex-Congressman Jefferson M. +Levy--"Jeff Levy" in Wall Street--"and tell us about Amalgamated. I +suppose there's not a chance to get what one wants unless one subscribes +for five or ten times more than one needs, but if you say that's +straight, I'll put in another subscription for ----." + +In the group were sitting "Harry" Weil, who time and again has tied tin +cans to Wall Street's tail; big, bluff, honest "Billy" Oliver, whose +"I'll take ten thousand more" is as familiar to Stock Exchange members +as the sound of the gong; and little "Jakey" Field, most audacious and +resourceful of floor operators, graduated but a few years ago from the +ranks of Wall Street's errand boys--"Jakey" Field, who is able +single-handed to turn a "bear" market in a rout by "bidding 'em up all +round the room five thousand at a crack"--which means he dares buy one +hundred thousand shares off the reel in a demoralized market when every +one is selling, thus standing to make or lose a million or two on his +judgment. + +They listened, breathless, while I poured out the story of the terrific +rush of Amalgamated subscribers. Another group hailed me and I recounted +the same story. So it went all over the busy assemblage--"_dollars, +dollars, dollars_," how to get them, how to get them quick. The money +talk ebbed and flowed; the chink of dollars echoed in the rattle of +china, in the tinkling of glasses, in the laughs and salutations, in the +shuffle of feet. It was the one word, the single theme, the alpha and +omega of all these men of talent and virility who accorded me +recognition as one of themselves and assumed that I, too, was crucified +to the two bars on the snaky S; the whole thing was so interesting that +I lost sight of the terrible seriousness of it, and I chuckled as one +does when one sits on the cool grass under the apple-trees in summer and +watches myriads of ants hustling and jostling and bumping over each +other to get away with what to humans is but a tiny grain of dirt. + +As I arose to go at last, the head waiter came forward and led me into a +corner, where his assistant and the chef awaited me. All with tremendous +earnestness asked, "Is it safe, Mr. Lawson, for us to put our savings in +Amalgamated?" They took my breath away by telling me they proposed to +subscribe for one thousand, five hundred, and two hundred shares each, +$100,000, $50,000, and $20,000 worth, if I but said the word. + +"_Dollars, dollars, dollars_" beat a tattoo on my ear-drums as the rain +used to on the roof at the old farmhouse. + +A moment later Manager Thomas of the great hotel slipped up to me. "I'm +in for a thousand or two, if you say the word," he whispered. At dinner +my old waiter, who I would have sworn did not know a stock certificate +from a dog license, bent over respectfully to tell me that twenty of the +boys had chipped in and desired me to take their thousand dollars and +put it up for two hundred shares--$20,000 worth more. Room Clerk Palmer +called over to me as I went by his desk a moment later to say he was +going in for three hundred shares if it broke him. And so it +went--bell-boys, chambermaids, valets, elevator men, all begging an +interview, and all with the same request--"Would I not put their savings +into this magic money-maker?" + +All were friends or protégés of mine, these managers, clerks, stewards, +and waiters. Their money was more sacred to me than my own. I had been +instrumental in bringing many of them up to the palace of American +dollar royalty from the old Brunswick, and I would rather have lost a +finger any day than have jeopardized their savings. For all of them I +had but one answer: "Go your limit." + +I looked over the memoranda and telegrams piled high on the table in my +room, all recording the whirlwind sweep of this tremendous copper +movement that I had set a-booming. + +"_Dollars, dollars, dollars._" + +Requests from friends for some of the easy money I was dispensing to the +public, appeals from old associates for special allotments of the +subscription, urgent petitions from capitalists and bankers with whom I +had business relations that their bids for shares should have +preference, perfumed notes on tinted paper in feminine handwriting +begging aid, advice, my influence, on a hundred specious pleas. It +seemed to me that all the world was in a conspiracy of dollars and I the +one object of its plotting. For a moment there overcame me a sickening +disgust at this universal greed, at this all-absorbing passion for gold +which my momentary pre-eminence revealed to my view. Then sanity +asserted itself, and I remembered that if there was a conspiracy I was +its ringleader, that I myself for months past had thought intensely of +nothing but dollars. Why, then, should I resent the eager desires of +others to attach to their own bank accounts some of the money which I +was proclaiming from the housetops any one who desired might have for +the asking? Many of these men, moreover, who sought my assurance of the +safety of their little ventures, had earned the private word by +thoughtful service and friendly attentions. Dollars were food and drink +and fine raiment; were music, pictures, and theatres; were horses and +dogs; were green fields, blossoming trees, and the open air of heaven; +were liberty, release from sordid cares, from servitude--and why should +I, who had helped myself in bountiful measure to the good things in +life's cornucopia, feel superior when confronted by the lusts I myself +had been instrumental in arousing? I laughed at my egregious virtue and +dropped off to sleep. + + + + +CHAPTER XXVI + +DEVILTRY AFOOT + + +Thursday, May 4, 1899, dawned as fair a spring morning as ever set off +sacrificial rite or triumphal jubilee--a day of buoyant, delicious airs +which set the blood throbbing in the veins and ambition thrilling in the +heart--a day for action, achievement, for wild gallops along country +lanes, for swift motion on land or water. I looked out of my lofty +parlor window far up Fifth Avenue's long vista of mansions and palaces +to where the sunlight glittered on the tender verdancy of Central Park. +A trickle of cabs and carriages headed southward already had begun the +descent to Wall Street. Almost the first call over the telephone came +from Mr. Rogers, asking for the morning's news. I told him there was not +a cloud on our sky, not a single breeze but blew from the right quarter +to fill our sails. "And what were my movements?" To stick to my rooms +right handy for anything. Was there a sinister thought, I wonder, behind +the "Good, I agree with you," that came back from him in his heartiest +tones? "I will look after things down-town and we can keep each other +posted at near intervals." + +It was as busy a forenoon as man ever lived through. My Boston wire kept +up a constant ringing; Chicago, Philadelphia, and other long distance +points showered in messages. A direct wire to Wall Street informed me of +the progress of events in the financial maelstrom. All went merrily and +well. It was nearing noon when a lull came; I was sitting back in my +chair enjoying the sudden cessation of clatter and buzzing, thinking +that after all my forebodings our ship was headed right for harbor and +in a few moments would be across the bar and into smooth water, when a +sharp ring at the telephone summoned me back to attention. 'Twas from 26 +Broadway, from whom it doesn't matter for the purpose of this story. +Suffice it to say that it was from one who, because of past acts of +mine, would make any sacrifice to warn me of danger. Only a few words, +for he who sends secret messages from the mysterious depths of 26 +Broadway, even to dwellers on its threshold, is wise in remembering that +brevity is the essence of safety--but were few words ever charged with +such damnable import? This is what I heard: + +"Mr. Stillman has just left Mr. Rogers and there is deviltry afoot. You +cannot get to him any too quick." "One word of its nature?" I whispered +back. "They are going to grab more than five millions of the +subscription money." + +I hung up the receiver. The face of my world had changed. To choke back +the passion of fury that rose in my throat I went over to the open +window and looked out at the brilliant world below, at the procession of +pleasure carriages rolling up and down the Avenue, the sunlight flashing +from gold-mounted harness and shining on the sleek, polished flanks of +splendid horses. A gay rumble of traffic, the murmur of voices, the +clangor of street-car bells were borne in to me on the mellow air. But +for me the light had fled and the May world was black and freezing cold. + +The grim agony of that moment's silence I shall never forget. I jumped +for the door; a second's delay to tell my secretary to catch me with any +important messages at Mr. Rogers' office, and I was flying down Fifth +Avenue through Washington Square, and down the back streets my cabby +knew so well how to make time on. When the recording angel calls off +page after page of my life-book and comes to the black one covering that +ride, I fear 'twill be no easy task excusing the murderous passion that +filled my heart and the poison-steeped curses my lips involuntarily +formed. After an eternity I was at 26 Broadway. I flew to the elevator, +was on the eleventh floor in an instant, bolted by Fred, the colored +usher who guards Mr. Rogers' sanctum, and strode, without knock or +announcement, into the large private office beyond. Mr. Rogers was alone +with his secretary, who at my first words shot out of the room. He was +bending over a stack of papers, and as I landed at his desk he looked up +quickly, and in a surprised way asked: + +"What does this mean, Lawson?" + +No one ever enters Mr. Rogers' room without his permission. + +"It means that I have just learned that you and Stillman have decided to +break your solemn promise to me." I tried to control myself, but the +seethe of rage almost choked me. "It means that you have decided to take +more of that subscription money than the five millions we agreed upon, +and that means hell." + +Mr. Rogers stood up, his jaws set as in their last hold, and, +recognizing the crisis, he met me, not with the fierce anger I half +expected and hoped he would show, but with quiet earnestness. + +"Stop just there, Lawson--remember you are in my office. Who gave you +this tale?" + +"Never mind. Is it true? Are you going to break your promise to me? Do +you intend to allot the public more than five millions?" + +He hesitated only a second. Just a second, but it seemed an age; then +slowly and calmly: "Yes, it has been decided that considering the +tremendous number and amounts of the subscription it will be best to +give them more." + +"How much more?" I shouted, for I was beside myself. + +"Ten millions in all," he slowly answered. + +"Who has decided?" + +"Every one, Mr. Rockefeller, Stillman, all of us." + +"All of us? Have _I_ been consulted? Have _I_ decided? Have _I_ +consented to the breaking of your word, Mr. Rockefeller's word? What +have Stillman and the rest to say about this? What have they to do with +the promises I have made the people? I have been trapped just as all the +others you and I have dealt with have been trapped. I see it all now. +Trapped, trapped until now it is too late for me even to save my +reputation. To think I should have been fool enough to allow myself to +be made a stool-pigeon for 'Standard Oil,' and all because I took your +word." + +My rage was exhausted, and then, heartbroken, I turned and plead, plead +for fair treatment, for an honest deal for my friends and +associates--plead for my good name in his keeping--plead as I never +before plead to any man. I had lost control of myself--begged as no man +should beg another even for life, though the things I sought were more +than life. He calmly awaited the end of my feverish, broken petition; +then he went to work as the expert diamond cutter goes at a crystal. He +focussed my position, twisted and turned my arguments, chipped and split +my reasoning, smoothed off the corners, and then polished up the subject +so that it might retain its old-time lustre for the bedazzlement of the +customer whose favorable decision he meant to have. + +As ever, Mr. Rogers' arguments were plausible and intelligent. The +subscriptions were coming in at such a rate it would be dangerous to +allot as little as five millions; there might be talk, and an +investigation which would so affect the market later that we could have +no second section. Then where should we be with our millions of Butte, +Montana, and other Boston stocks? And where would our friends be--and +the public? On and on he spun, lulling my fagged brain with his specious +arguments until the change of plan seemed robbed of its poison and I +swallowed it. + +"Lawson," he concluded, "every dollar of the additional five millions +will be kept intact and, with the first five millions, will be at all +times behind the price, and as you are going to have the handling of it +how can there be any wrong or any more danger because of it than if it +were only five millions?" + +I gave in, agreed to go back to the Waldorf and take hold of the lever +again. I left him, driving uptown by way of Broad and Wall streets so I +might see the crowds outside the Stock Exchange and in front of James +Stillman's money trap. By the time I reached the hotel I had recovered +some of my optimism, and went to work to catch up with the mail and +messages accumulated in my absence. At three o'clock I called up Mr. +Rogers. He was very jubilant. At the stroke of twelve, he told me, it +required four big policemen to close the bank doors in the faces of +hundreds of belated subscribers; that it had been decided that those +inside the building were legally entitled to pass in their subscriptions +and at that moment they were still doing so. Sacks of mail still awaited +opening; it would be well toward midnight before the last of the +subscriptions were tabulated. Stillman was making a tremendous effort to +get at an approximate statement in time for me to deal it out to the +newspapers before they went to press at midnight. + +"How does it look to Stillman now?" I asked. + +"He cannot tell much about it yet," Mr. Rogers replied, "although he can +see far enough ahead to be sure even your estimate was too low. It will +be at least fifty millions." + +"And about our big subscription--have you and Mr. Rockefeller put it in +yet?" I asked, and how I strained for his answer! I well knew they had +not done so, knew they would think it safe to wait until the final tally +to see just how much they must put in to get their $65,000,000, which +would thus leave the public $10,000,000. + +"Not yet," he returned. "It's all right, but we can do nothing till +Stillman gives us the total. He says there are millions and millions of +such a nature that he can easily throw them out. At four o'clock we will +have a meeting and figure out the best way to fix this matter up." + +He saw no danger spot. I felt anyway his error was beyond correction +now. I told him I would be at his office by five, so that we could +arrange how much the press should have of our affair. + + + + +CHAPTER XXVII + +THE BLACK FLAG HOISTED + + +It was a little after five when I reached 26 Broadway--my second visit +that day. Mr. Rogers was still at the bank. Half an hour later he +entered and threw himself wearily into a chair. + +"Lawson, this is a fitting climax for all the stories you have been +telling Mr. Rockefeller and myself and the public for the past year +about 'Coppers.' I have talked with the Lewisohns, Governor Flower, +Morgan, and many others, and I have just come from an hour with Stillman +and we are all agreed this Amalgamated subscription is the greatest +accomplishment in finance. It is truly marvellous. The bank is literally +buried in money, and as near as we can make it out, the stock to be +delivered when allotted is actually selling at forty to fifty dollars +over the subscription price. The job is done, and you and I have good +reason to congratulate each other." + +"I am not so sure, Mr. Rogers, that we should, right now. There's lots +of work ahead, and we may strike big snags yet," I began. He interrupted +impatiently: + +"Oh, no, you're wrong, Lawson! We have the money safely housed at the +bank. Nothing can now turn it into failure." + +There was a new note in his voice as he spoke. Tired though he was, I +detected a sharpness that seemed to indicate at once a relief and an +indifference which said plainer than words: "I am now beyond all your +power to hurt or harm me." I went on: + +"I don't want to bring up any new things to-day, for you must be tired +out, Mr. Rogers, but surely you are taking into consideration that +unless everything is steered carefully to-morrow and for some time to +come, we may have a crash in the market which will throw back on our +hands the ten millions of stock, and it might take us years to bring out +the other section. Don't lose sight of the fact that the people are all +expecting to see fifty or one hundred points profit to-morrow on +whatever stock they secure." + +As I talked I saw that he was getting impatient, irritated, angry, that +he wanted to hear of no more unfavorable things. + +"Good Lord, Lawson, it is about time for you to let up on your croaking +about what may happen. You have done a big thing and you have been paid +handsomely; you have made millions, and we have just now decided that +you are entitled to a good rest. Governor Flower has agreed to take +charge of the market end and he is amply able to keep us out of all +trouble in that direction." + +A cold chill struck into my heart and crept over my whole being. I +looked straight at him and he gave me back the look with a defiance +which plainly said that we might as well have it out now as any other +time. + +"Mr. Rockefeller and myself have tried to play fair with you, Lawson, +and we think we have been generous, but at times you have been almost +intolerable. The only way you know how to do things is to do them your +own way, and we cannot do business except in our way. This morning you +kicked up a disturbance because we decided to adjust ourselves to +conditions as they arose. I did tell you five millions would be all we +would sell, but when we agreed to that we had no idea the subscription +would be so large. Since then we have got far enough to see that the +subscription will run even beyond fifty millions, and you may as well +hear now that in consequence it has been decided by every one interested +with the exception of yourself to raise it still another five millions, +that is, fifteen millions instead of ten, and I don't want to go through +any more scenes about broken promises and what the people will think, +either. The people have gone into this thing with their eyes wide open; +we are giving them good value; you are in no way their guardian, and you +are not going to run this affair any more than others who are +interested. You may as well make up your mind to it right now." + +He let himself go as he talked, breathing fire and defiance, but I cared +nothing for all the terrors of his anger. A blind fury seized me--I +don't believe there was ever such a scene before at 26 Broadway, and I +think it has had but one parallel since, when Mr. Rogers and myself +again had it out over another matter. This time there were no pleas or +petitions. I denounced, demanded, threatened. He had straight and strong +my version of the vampire history of "Standard Oil," and also in rough, +crude terms my opinion of his trickery and double-dealing. My voice was +raised. I had lost all thought of what his people in the outer office +would think. As I went on he wilted and tried to stop me, for I had +shown him, until he knew it was so, that nothing but my death before I +left the building would prevent me from taking the whole miserable +affair, first to the newspapers, and then to the courts. I proved to him +that I would have injunctions against Stillman, the National City Bank, +and every one in interest, before the allotment could be made. Gradually +his rage subsided and he broke down--not as other men break down, but as +much as it is possible for his stern nature to give way. We remained +there until seven o'clock. The building was as still as a set +mouse-trap, and he strove with me. Such action, he demonstrated, would +precipitate a panic. His argument was perfect in its logic. + +"Not one man in a million, Lawson, will agree with you that you are +justified in bringing about all this disaster simply because you think +that we are taking too much of the cash that has been voluntarily paid +in by people well able to attend to their own affairs. You must remember +once this scandal and trouble are public they never can be smothered. +There can be no more consolidation, no more copper boom in your lifetime +and mine, and when the collapse comes every one will look for the +victim, and that victim will be you. Even your best friend will say if +you were going to turn informer you should have been smart enough to +have discovered your mare's nest before you let it grow so big. Look at +it, Lawson, look at it, and in the name of everything that is reasonable +get back your senses." + +My readers must remember that the Henry H. Rogers I am portraying here +is no ordinary man, but the strongest, most acute, and most persuasive +human being that in the thirty-five active years of my life I have +encountered. And on me all the magic of his wonderful individuality, all +the resources of his fertile mind, all the histrionic power of his +dramatic personality were concentrated. His logic was resistless. As he +spun the web of his argument my position seemed hopeless; even more +forcible than his reasoning was the graphic recital of how both +increases had been made. His eyes watered as he spoke. They were not his +proposals, but Stillman's and the others' who had been let in on the +several floors, but to whom he had never explained my rights nor my +position in the enterprise. + +"The truth is, Lawson," he said--"and I'll not mince matters further: +From the beginning I have done business with you on a basis entirely +different from that on which it is our rule to deal with agents or +associates. At the start I expected that you would, as all others have +done, fall into our ways. Instead, you have grown more stubborn, and the +result is, I have been forced into all kinds of holes, some of which I +have not even let William Rockefeller know about. Here at last I am in +between the grinders. I cannot go to such men as Stillman and Morgan and +admit that you are the one who has been doing this copper business that +I have had them think I was doing myself. You would not ask me to put +myself in such a humiliating position. Think what John D. Rockefeller +would say of such a confession. It's impossible. And when these +associates of mine get down to this matter and all agree upon the way it +should be closed up, what can I do but go with them? If they knew the +facts it would be easy to run you in between us, and then you would +either have to convince them or give way yourself, but this is not +possible here." + +The straight and narrow way is easy to follow, but once lost is hard to +find. The defaulting bank president who overnight "borrows" a few +thousands from his institution, fully intends to return the "loan" next +day, but repairing an error is even more difficult than resisting a +temptation, and when a man is in crime's net, his struggles to escape +seem only to tighten around him its meshes. When the incidents of his +downfall are before the jury or the coroner, there will always appear a +dozen places where the unfortunate might have cut his way out of the +strangling coils, but he who surveys such situations from the outside +has a clearer vision than the blinded and desperate wretch in the trap. +He who enlists with the brigands of "frenzied finance" and takes the +oath of addition, division, and silence cannot discharge himself because +his comrades are needlessly harsh to their victims. Eventually he may +decide on desertion as preferable to throat-cutting, but to suggest +resignation is to invite destruction, for it is a tradition of the +fraternity that the best cure for repentance is a knife-thrust. + +Mr. Rogers and myself wrestled with the situation until both were fairly +exhausted. Finally we went uptown together; he home, to return later to +the bank, I to the Waldorf to meet the newspaper men who were there +awaiting the news of the subscription. I left him at Thirty-third +Street, the question between us still unsolved. In the years that have +passed since that ill-starred night, over and over again I have sifted +and pounded the talk that then passed between us, and never have I been +able to decide how much of what Mr. Rogers said to me was true and how +much cunning argument to make me accede to his wishes. I hope none of my +readers will ever find themselves so caught between the high cliffs and +the deep water as I was that night. I recalled the old story of the +sea-captain whose ship was captured by pirates and who was offered the +alternative of hoisting the black flag and joining the band with his +crew, or walking the plank. If he became a pirate, at least he saved the +lives of his men, for their fate hung on his decision. If he +refused--well, he retained his own virtue and kept intact that of his +crew. The captain in my story had preferred propriety to piracy, and +fifteen men lost their lives to no purpose, whereas the part of wisdom +would have been to submit, with reservations, on the chance of throwing +the pirates to the sharks at the first opportunity. If I should throw +the bomb that I had threatened Rogers with, I felt sure it would put an +end to all his evil machinations, but I could not limit the area of +destruction to the guilty. I let my mind dwell on Mr. Rogers' words: +"Lawson, no harm can come to your people, for the fifteen millions will +be used in the market to protect the stock, just as I promised you." If +this promise were kept, what was there to fear? But would it be kept? In +the face of the evidence of broken pledges already crowded on me, and +the bitter knowledge I had acquired of the wolfish greed of this man and +his associates, it would be paltering with facts to say that even then I +felt certain the money would be so used. Yet "Standard Oil" avoids such +direct illegality as might bring it within the law's clutches, and I +knew that already a fraud had been committed. I might hold that over +them and compel them to go straight. Then I recalled the passion that +possessed them to grab at real money when it came within their clutches, +and the "Governor Flower to handle the market in such a way that no harm +can come to us." + +I carried my heart-tearing perplexities to dinner, cogitated over the +arguments pro and con, and finally made up my mind that the percentage +of wisdom was in favor of sticking by the ship. On board I was in better +shape to protect my friends and followers than if I jumped into the +ocean. Time has shown since that it would have been far better for all +concerned for me to have touched off the powder magazine that night, had +one grand and glorious explosion, and gone down with the wreckage, than +to have sailed through the hell of after years. I am not the first man +who has balked at amputation and got blood-poisoning. + + + + +CHAPTER XXVIII + +THE BOGUS SUBSCRIPTION + + +Later, on his way downtown, Mr. Rogers came to my rooms. + +"Are you ready for the finals, Lawson?" he said cordially. He, too, had +dined, and doubtless philosophized; his whole air showed me he had +satisfied himself that I would submit to the logic of conditions. No man +knows the human animal from his heart's seed to its bloom better than +Henry H. Rogers--and I was human. + +I told him I would hold the reporters until I got the word from him, and +that it must not be later than midnight. No questions were asked nor +assurances given. He left in a moment for the National City Bank, and +there in its solemn chambers he and James Stillman perpetrated the act +which is the crime of Amalgamated, in itself a stark and palpable fraud, +but aggravated by the standing of the men concerned in it, and the +pledges that were slaughtered, into as arrant and damnable piece of +financial villany as was ever committed. + +About eleven o'clock my telephone rang. I heard Mr. Rogers' voice. + +"Lawson, Stillman's tally is so far completed that we know about where +we are. Give out to the press that the subscription runs between four +hundred and four hundred and twenty-five millions, call it four hundred +and twelve millions, after throwing out one hundred and seventy millions +from speculators, and sixty-two millions as defective, and after +shutting out fifty millions more which were received too late. Each +subscriber will be allotted fifteen to twenty per cent. of his +subscription--call it eighteen per cent." + +The figures were paralyzing. I made no attempt to analyze them. They +came so late that as soon as the newspaper-men with me got them they +flew to their offices and thus I escaped a strenuous ordeal of +interviewing. Our arrangements for distributing the facts throughout the +country were made through the _Boston Financial News_, to which we had +given the exclusive right to send out the details, and its special wires +were soon clicking the news to all the world. The next morning the press +contained the particulars. I reproduce from the papers of May 5th the +tale. + + * * * * * + + =$412,000,000 FOR AMALGAMATED COPPERS= + + =$75,000,000 Subscribed More Than Five Times Over= + + =FINANCIAL WORLD COPPER MAD= + + Subscriptions of $412,000,000--the largest in any financial + deal in the world's history--are reported by the _Boston + Financial News_ to have been received toward the Amalgamated + Company. "The world has gone copper mad" in truth. + + Subscribers can be allotted only eighteen one-hundredths, or + less than one share in five of the amount applied for. + + One week ago, says the report, it was announced that the + Standard Oil magnates, Rogers, Rockefeller, and their + associates, had begun their conquering march upon + copperdom--that the much heralded copper consolidation was a + thing of fact--that the Amalgamated Company had been + incorporated, and that its first capital, $75,000,000, would + be offered to the public by subscription through the + National City Bank of New York at $100 per share--$100 per + share, without a discount, a commission, or profit to any + one. + + Never before since the first dollar of civilization was + invented to take the place of the stone tokens of barbarism + had such a thing been heard of--$75,000,000 of stock to be + sold to investors at $100 per share, and in one week after + the birth of the corporation upon which it was based. + + The financial world held its breath, and from that time up + to the closing of the books of subscription, at twelve + o'clock noon yesterday, the financial world, English, + German, and French, have awaited with bated breath the + outcome of this great feat of modern financiering. + + During the entire week from all parts of the world have + poured into the National City Bank applications, accompanied + by checks for the first payment--one continuous stream of + entreaties--for some of the shares of this great enterprise. + Nothing in history tells of such a movement. + + Early in the week it became evident to the managers of the + great industrial revolution that something must be done to + stop the movement or it would run to such an extent as to + cause serious trouble in the money markets of the world. + Since Monday most strenuous efforts have been made to + discourage the taking of large subscriptions. To that end + the powerful financiers interested have begged all who + contemplated subscribing for over $1,000,000 to keep their + applications down to that figure, and their efforts met with + complete success. + + Again, all those who were connected with the enterprise and + who had intended subscribing on the same basis as outsiders + for very large amounts, agreed that if the subscription ran + over $150,000,000 they would refrain from subscribing that + those who had subscribed would not become dissatisfied with + the smallness of their allotment. Still the rush continued. + From all financial centres of the world came the unbroken + chain of applications, until those most interested in the + success of the undertaking were appalled at the magnitude of + the interest aroused. + + For the past forty-eight hours the National City Bank has + had employed, night and day, a corps of forty-odd extra + clerks calculating and arranging the applications and + checks. At exactly twelve o'clock noon four uniformed + watchmen closed the doors of the subscription department of + the City Bank in the face of over three hundred intending + subscribers, who were frantic at their vain efforts to get + in their subscriptions before the appointed hour arrived. + + Up to eleven o'clock to-night the entire bank force, regular + and extra, have been at work, and at this hour the figures + were announced which make the subscription of the + Amalgamated Copper the greatest event in finance since the + world began. + + After throwing out bids that were, on examination, proved to + be the efforts of speculators to take advantage of the great + interest to make money with no risk, and after throwing out + bids unaccompanied by checks, or checks that were not + satisfactory, the first class amounting to over + $170,000,000, and the last to over $62,000,000, the total + cash subscription was found to have reached the gigantic sum + of $412,000,000, which gave to each and every subscriber + eighteen per cent. of his subscription. + + It is not known how much was represented in the 300 + subscribers who were too late, but it is estimated at + $50,000,000--five of the 300 had single subscriptions of + $1,000,000 each. It is estimated that the sum total of the + subscriptions that were thrown out or that arrived by + messenger or mail--for the mail is still pouring into the + bank--was between $300,000,000 and $400,000,000, which, + added to what insiders had intended to secure for + themselves, would have carried the total to over + $1,000,000,000. + + It is estimated also that there are a great many who, + anticipating the enormous over-subscriptions, have refrained + from subscribing and will purchase in the open market. + + Immediately after the subscription closed, 140, or forty per + cent. premium, was bid for the stock secured by the lucky + bidders. + + It is said the company will issue the next $100,000,000 at + once, as those insiders who refrained from subscribing were + practically promised that they would at once be given an + equal opportunity to subscribe if they would hold back on + this issue. It is apparent that the next subscription will + be even greater and cause more excitement than the first + one, particularly as it is agreed by all that the price of + the stock will quickly mount to $200 per share, as it is to + be put upon the English, German, French, New York, and + Boston Stock Exchanges, and will undoubtedly become one of + the greatest investments sought for by the wealthy classes. + + England sent in subscriptions for $50,000,000; Germany and + France, $20,000,000 each; Boston and New England showed + their steadfast faith in copper by subscribing for over + $200,000,000. + + There is great excitement at the clubs and meeting-places of + investors and brokers to-night. + + * * * * * + +Here is what Mr. Rogers and Mr. Stillman did. After discarding all +unsatisfactory and imperfect subscriptions, there remained subscriptions +of between $125,000,000 and $150,000,000 which had complied with all +legal conditions, and accompanying these were checks aggregating between +$6,250,000 and $7,500,000. This was real money, in the bank and within +reach, and the two great financiers, hungering for every dollar of it, +determined to possess themselves of this great sum and use it as surety +to compel the payment of the balance. First, they agreed that not a +dollar of the five per cent. subscription should be returned; next, to +so use this amount that no one to whom stock was allotted would back +out, but, on the contrary, promptly take his whole allotment and pay up +the balance. To effect this they decided to allot each subscriber just +the number of shares of Amalgamated necessary to render the amount of +money accompanying his subscription equal to about a twenty-five or +thirty per cent. payment on his whole allotment. This would constitute +such a large margin as to assure the payment of the other seventy or +seventy-five per cent. due. For instance, a man who applied for a +hundred shares accompanied his subscription with a check for $500. He +was allotted twenty shares, value $2,000, on which his $500 check +represented a payment of twenty-five per cent. If the conditions of the +National City Bank's advertisement had been complied with, he was +absolutely entitled to three shares of every five subscribed for, or +sixty in all. To bring about the proportion which Mr. Rogers wanted, a +bogus subscription of five or six times the unallotted balance was put +in by him, and this is where the fraud was committed. The National City +Bank was in duty bound to protect the public from any such bogus +subscription, and to see that fair treatment was accorded to all +subscribers. Yet, unfaithful to the trust, it permitted this bogus +subscription to be put in, many hours after the bids had been opened. It +utterly failed to comply with the conditions of its advertisement, and +was thus a direct party to the fraud perpetrated by its president and +Mr. Rogers. The exact amount of the bogus subscription could not be +decided until the exact figures of the subscriptions had been compiled, +so the figures I gave out that night were only estimates. Within the +next few days it was ascertained that the genuine subscriptions totalled +$132,067,500, upon which an allotment of one share in five, or +$26,413,500 of stock altogether, was made to the public. + +In this way the conspirators secured from the public $26,413,500 of the +original cost, $39,000,000, and yet retained over $48,500,000 of the +authorized stock of $75,000,000. In other words the public paid +two-thirds of the purchase price, and the conspirators retained nearly +two-thirds of the property. + +The fraud thus perpetrated amounts to this: Every subscriber legally +entitled to three shares of Amalgamated stock was deprived of two of +them by the National City Bank, and the proof is to be found in the +books of said National City Bank. My readers may say here that this +constitutes a fortunate condition rather than a crime to be punished, +for the less Amalgamated a man had, the better he was off, as the stock +afterward declined. This conclusion is a false one, however. + +Here, in simple terms, is an illustration of what was done in +Amalgamated and of what the wrong was. + +B had a valuable race-horse and decided to dispose of him in five +shares. He offered these five shares for public subscription and +advertised that if over five were subscribed for he would split up the +shares and allot them pro rata. There were on the final day seven +subscriptions. Instead of turning over the horse to the seven +subscribers to own and race in their own way, B notified them that +twenty-one subscriptions had been received, and that for their seven he +had allotted them a one-third ownership, while the other subscribers +would retain two-thirds. In the two-thirds resided the right to manage +and race the horse, and the seven had no say whatever in this direction. +The seven honest subscribers, not suspecting that B had simply sold them +one-third of his horse for nearly his whole cost, and that he still +retained a two-thirds ownership in him, supposed that fourteen others +had subscribed on the same terms as themselves. If the horse were really +able to race and thereby earn large sums of money, it was by this fraud +in B's power to make him appear so worthless that the seven bona-fide +subscribers would be inclined to turn over their ownerships to B at his +own figure. Contrariwise, B could so dose the horse as to make him +appear more valuable than he really was, and use the advantage to +dispose of his fourteen shares for fictitiously high prices. + +The world assumes an attitude of horror and amazement at the mention of +crime, and thousands of words are written to describe what led up to and +away from any given overt deed; but the deed itself, however grave, +shameful, or portentous, seems strangely barren and bloodless set down +in naked words. Yet the mountain peak that tops the great ranges is but +a shoulder over its neighbor, though it may be the apex of a continent. +A misconstrued word has caused the spilling of the blood of millions; +the needle-point of a stiletto has severed kingdoms. Between temptation +and consequence there is but little space, yet it is deep and wide +enough for all the poison in the tongues of all the world's serpents. +To-day, a simple peasant, humble, gentle, is an insignificant atom in +the great Russian Empire, and Nicholas is the supreme ruler of rulers. +To-morrow, by a simple swing of an arm a bomb is thrown, and the peasant +is the one human being in all the world; the face of Russia is changed, +and Nicholas--is not. + +The first crime of Amalgamated is a matter of mathematics. It involved +plain fraud and misrepresentation, the insertion of a bogus subscription +and the disruption of solemn pledges, but the commission of it was +nothing more than a matter of arrangement between two men, one the +master of the greatest of all business organizations, and the other the +head of the strongest bank in the United States. The consequences were +world-wide. That night no bomb was thrown, but a seed was sown for the +cruelest harvest of crime, dishonor, unhappiness, and desolation ever +reaped within the confines of our republic. + + NOTE.--The above statement has now been in the hands of the + public, has been printed and commented on in thousands of + the leading journals of the world for twelve months, and no + Government official has taken cognizance of it. The charges + I make constitute one of the gravest business crimes ever + committed by any national bank. If they are true, the + Government at Washington has no more important duty than to + punish the criminals. If they are false, I should be sent to + prison. What a commentary on our boasted freedom and + equality! The National City Bank does business at the old + stand. Rogers, Rockefeller and Stillman walk the streets; so + do I, and since I published the above statement and + submitted the above proof, at least half a dozen poor + national bank clerks and officials who have stolen a few + hundreds or thousands have been sent to prison, or have + committed suicide to avoid being sent there. + + + + +CHAPTER XXIX + +THE AFTERMATH + + +It was just past the midnight of May 4th. The last newspaper-man had +taken his departure, my friends had all retired, and I was alone for the +first moment since the news had come from the City Bank. I had not then +stopped to analyze its character, for there had been only time to +announce it. Now, however, I sat down at my desk and with a pencil and a +piece of paper began to cipher out what the "412 millions" meant. As I +figured, cold sweat began to gather on my forehead, and the further I +figured the colder the sweat, until at last in an agony of perplexity I +again called up Mr. Rogers. My agitation must have betrayed itself in my +voice, though I tried to assume a tone of calm inquiry. + +"Mr. Rogers," I said, "I've been vainly trying to figure out the meaning +of the subscription figures you gave me and I cannot make head or tail +of them. You said '400 to 425 millions'; of course that means you have +put in our dummy subscription, but what was the real subscription? It is +absolutely essential that I know to-night, for in the morning I shall be +besieged for information, and ignorance on my part may get all hands +into trouble." + +"Lawson," he replied, "you must not talk such things over the wire--you +don't know who is listening. You must not." + +"I can't help it," I replied determinedly. "I positively must have the +real figures, for even you and Mr. Stillman may have made a slip-up and +I want to work the thing out so that I may have it clear in my head for +the morning. It is essential." + +He realized that it was useless to try to escape my insistence, and he +snapped out: + +"All I can say now is, it is between 125 and 150 millions real, solid +subscriptions, backed with actual money. We haven't got it figured out +within some millions, and won't before to-morrow, when we will put in +our subscription for the right amount, but we know it is surely between +these two figures, and that each subscriber will have about one share in +five, so we shall have a good, strong twenty-five per cent. margin. That +is all I will or can say to-night." + +I heard the sharp click as he hung up the receiver. + +I went back to my pencil and pad and began again the interminable +figuring. My head throbbed and my senses reeled. In those still, dark +hours of the early morning I covered sheet after sheet with figures, all +of which had for a basis 125 to 150 millions, 400 to 425 millions, one +in five, and twenty-five per cent. margin, and these figures I turned +and twisted in a vain, vain effort to bring out something with fifteen +millions for an answer. + +"No, it will not come," I said to myself at last in hopeless despair. + +Numb and dull, I leaned back in my chair with half-closed eyes, while +night, that master phantom maker, played upon my harried nerves and +distraught mind. Stealthily out of his murky caldron the ghosts and +goblins crept. I saw the spectres of all my dearest dreams trail +slouching by, jostled and driven by sneering bullies. I saw a great +company of scowling men, wailing women, and little children, with drawn, +pinched faces, and they seemed to point at me as they plodded past, +muttering, "But for you." Then, to the clanking of chains, hoarse +curses, and the sharp whip-snap, lines upon lines of men in striped +suits, with cropped heads, and faces branded by despair, filed up. +Faintly a mutter of sobs and groans echoed, "But for you." The clanking +ceased; there came the slow shuffling of many feet, and a procession of +men, bearing stretchers on which lay shrouded figures, advanced into +view. Like a solemn knell upon my ear smote the reproach, "Suicides +because of you." And now out of the caldron sprang a mob of goblin +dollar-signs compounded of blood-red snakes and copper bars, that +danced a mad saraband around my chair to a weird chorus of, "But for +you." Transfixed and aghast I stared at the train of awful forms. So +real were they, they seemed almost to touch me as they swept onward. At +last, with a convulsive effort, I threw off the spell, banished the +phantasms of my frightened brain, and shook myself together with a: "You +have work ahead and dreaming will not do it for you." + +Back into my mind trooped the unanswerable, cold realities. There could +be no doubt that the announcements in the morning papers would surprise +those who had been led to expect an allotment of one share in twenty or +thirty and had subscribed accordingly, and likewise those who had +expected to get all, or at least one out of two. There might be murmurs +of foul play and a general suspicion that trickery had been practised. +Looking at the situation, I saw that upon me the chief blame must fall, +and that it behooved me to think soundly and quickly over what had best +be done to protect from the impending massacre those whom I had lured +into the ambush. The smoke-wreaths had all gone out of my brain now, and +as the known factors began to group themselves symmetrically before my +mind I forced myself to face certain all-too-evident facts: Rogers and +Stillman had plainly hoisted the black flag; they had broken all their +promises to me and assuredly had no intention of carrying out to the +public the pledges I had made on their behalf; they would handle this +affair as they had others I knew about--only to extract the greatest +number of dollars from it--and in the course of their operations I and +my friends would probably be sent through the crusher with the rest. All +this being true, I could do little by denunciation or exposure, for +these men, caring nothing for the sufferings of others, would not fear +the consequences of their own acts; my only hope was to meet them on +their own ground and outplay them at their own game. Then and there I +determined on my course--to compel them to undo the wrongs they had +committed and, if so great an achievement were possible, put the people +in position to do to them what they had done to the people. An almost +hopeless resolution at that juncture, it would seem, but, as results +have shown, by no means out of the power of man's accomplishment. + +This is what I reasoned out before I retired to bed: If the actual +subscription were 125 to 150 millions, then six to eight millions of +real cash had been paid into the National City Bank. On an allotment of +one share in five, these six to eight millions represented a margin of +about twenty-five per cent.--big enough to cover any ordinary drop in +the price of the stock, and big enough also to lead those to whom shares +had been assigned to make good the balance. But to meet this allotment, +a very large bogus subscription had been necessary, and therein I saw +the weakness of Rogers and Rockefeller and the weapon that Providence +had intrusted to my hands. + +Mr. Rogers' uncertainty as to the totals of the subscription made it +evident that the bogus subscription was not in the bank even yet, and as +it must be for a definite amount and backed up by a five-per-cent. +check, it could not be put in until James Stillman's clerks had computed +to the last cent the public's applications, and that enormous piece of +work would not be completed on the next day nor even the day following. +This bogus subscription was already outlawed--its insertion even at the +present moment would have been criminal; how much worse the criminality +if days were allowed to elapse between the legally fixed last moment for +bids and the actual time at which this outlawed subscription was +admitted. And as the transaction involved the making of a large check +and other formalities, it was obvious it was not one that could be +easily concealed. It must be a part of the bank's records. If I but +played aright the cards Dame Fate had put into my hands, I might yet +redeem myself and save the public I had led into the trap. But as clear +as the new moon against a November sky stood forth the warning that if I +attempted to cut into a "Standard Oil" game, I must play cards their +way--dispassionately, scientifically, with no sentiment nor +consideration for adversary or partner. With this conviction I went to +bed. + +It was quite early on the following morning that I met Mr. Rogers, and +without giving him time to begin the conversation, for I was determined +he should have no provocation for the break with me that I guessed he +had on his programme, I started in: + +"I have been figuring this thing out, Mr. Rogers, and I think I see +things as they are, and although I might not have handled it as you and +Stillman did, it is done, and the only thing to do now is to make some +arrangements to keep the subscribers feeling good until the stock gets +to a round premium. Of course it would not do to have any slump below +par until after the receipts are issued and the whole amount of the +subscriptions paid up." + +Mr. Rogers looked me over, very suspiciously at first, then brightened +up, and it did not require an extra eye to see he was agreeably +surprised at my cheerful attitude. Doubtless he explained to himself the +change on the ground that "He at last sees the dollars he is to have." + +"What suggestion have you, Lawson, as to what should be done this +morning?" + +"Only that all hands look happy, talk big, and do all possible to keep a +good premium on the stock to be delivered when issued. By the way, have +you and Stillman changed the scheme about putting all the cash received +behind the stock?" + +This I asked in as mild a tone as possible, and tried to convey by my +voice the suggestion, "Because you may have had good reason to, and if +you have I will not kick over the traces." It took every ounce of +will-power in my armament to keep from grating my teeth as I so spoke. + +Again his eyes bored piercingly into mine, and I felt as though all the +man's mental faculties were ranged to assail me, but I guess I ran the +gauntlet. + +"Yes," he said slowly, "we have changed it some. The fact is, Lawson, I +have agreed to leave that part wholly to Flower and Stillman, while I +run out of town for a few days." I had steeled myself to play the game +and said not a word, but silence was a mighty effort. "And," he went on, +"if I were you, Lawson, I should just dig out too for a while." + +"What a heartless rascal!" was on my lips, but I gripped myself hard +and pushed the insult clear way back, and made never a protest by word +or look. + +"I am afraid that won't be best," I said in an every-day, pondering +tone. "There are lots of sharp chaps on 'the Street' who will insist on +asking questions, questions Flower cannot possibly answer, and in a jiff +they might start in to offer the subscriptions down, and before one +could whistle a bar from 'Wait Till the Clouds Roll By' the air might be +full of falling stars." + +This seemed to strike home. + +"Well, what have you to propose?" he asked. + +"Some one should be ready in the market to take any amount of stock--" I +argued. + +He interrupted in his old aggressive way before the sentence was half +out of my mouth: + +"Cut that line out, Lawson; I told you Flower has that end of the affair +entirely in his hands." + +And at this point my resolution to keep quiet and play the game did +almost go by the board. For a second I literally boiled. Then there +flashed before my mind's mirror the dreadful procession of the night +before, and I once more held tight and, oh, so deferentially and +politely, like a chastened school-boy, went on: + +"Oh, that will be all right. I was not going to suggest that you let me +interfere with Flower's plans, for I can gather, Mr. Rogers, that you +and the others have decided on doing things your own way, and you can +rest easy I shall not interfere." + +"That's something like, Lawson," he said, with a heartiness I could see +was from the lower hold. "That's the way to look at a big thing of this +kind, and if we all just pull together for a while we shall have your +old plans going like oil again." + +Yes, Mr. Rogers was plainly pleased at my complaisance and the prospect +of using me to gather in another harvest of dollars later. Playing my +game, I pursued: + +"Is it fair, Mr. Rogers, to ask what arrangements Stillman has made for +loaning money to those who may want to borrow on their subscriptions? +You know we gave out before the subscription was opened that the City +Bank would loan on the stock?" + +"That is one of the things I was going to tell you, Lawson. Flower is +going to let it be known that any one and every one who cares to, can +borrow the remaining seventy-five per cent. at the City at going rates, +so there will be no excuse for any one selling." + +There it was as plain as a haystack: it was the old trap, the old +ambush; within were the victims lured there by the cupidity which I had +played upon; the bars were up now and "Standard Oil" was ready to begin +its familiar trick of going through their clothes. + +Already "Standard Oil" had laid its hands on the amount each subscriber +had paid in, which represented twenty-five per cent. of the total value +of the shares allotted. The National City Bank would generously loan the +balance. A little later an accomplice would cause a flurry in the +market. The loans would be called and, automatically, the stock, +together with the money that had been paid for it, would fall into the +greedy maws of Rockefeller and Rogers. No fluttering fly was ever so +surely enmeshed and at the mercy of weaving spider as the unfortunates +whom I had so decoyed to the "Standard Oil" web. With the most valiant +assumption of indifference, I continued: + +"That being the case, it cannot possibly interfere with Flower's set-out +for me to spread the news, too, that any one who wants to borrow the +balance of his subscription can get it from Stillman's Bank?" + +"You can do better than that, Lawson," said Mr. Rogers with an air of +real cordiality. "You can let it be known to the brokers and the Wall +Street men that any good house can borrow all it wants on Amalgamated to +the extent of ninety cents on the dollar. Of course, this won't be for +irresponsible outsiders, for the stock might break below ninety, but +give the word that any responsible broker can always borrow as high as +ninety dollars a share for those who want the stock on margin." + +"That will help things," I answered. "Now, Mr. Rogers, let me tell you +what I have decided to do on my own hook. Don't misunderstand me; it +has nothing to do with you or the rest, and, of course, none of you will +object to my doing all I care to on my own account. As you said +yesterday, one portion of our job is finished, and we have thirty-six +millions' profit. This means either cash or its equivalent, stock, which +at par or over is as good as cash, at least as good as ninety, which I +can have my brokers borrow at the City. I calculate that my share is +nine millions less whatever you have given away in the handling of the +enterprise." + +I paused as I saw a black cloud gathering on his face at my mention of +nine millions of dollars, but before he could object I went on: + +"I understand, of course, that the expense and the shares you have had +to give to others represent a huge total. At the same time there have +been huge profits on the side. There is no necessity to enter upon what +is coming to me just now, but what I intended to say was this: I have +millions with you and Mr. Rockefeller--millions more than I owe you on +account of Butte and other Boston stocks of the second section. Now, I +propose to take a million or two of that and start in on my account to +support the market right from this morning; independent of Flower or +your other operations, I will see if I cannot get up a good feeling." + +At once the frown relaxed and his set features broke into a smile of +gratification. + +"That's something like it, Lawson," he said. "When you get down to real +business we never have differences. It is only when you start up that +confounded croaking about what we must do for the people, that I get +angry." + +"All right, Mr. Rogers," I answered. "Let those things drop and, as you +say, we'll keep down to business. How much can I depend upon drawing +from my account this morning, provided I want it?" + +"How will two millions do?" he answered cheerily. + +"Plenty," I said. + +"All right; I will notify Stillman that you or your brokers may want to +borrow up to that, and if you need the Amalgamated stock, you can have +it at any time. I will leave word to that effect with Curtis." + +Curtis was William Rockefeller's secretary and right-hand man, who then +handled the details of all their financial matters. + +Before leaving I indicated to Mr. Rogers the details of my proposed +actions, and explained that I had sent for my principal Boston brokers +who would be with me on Wall Street to help steer the craft. Evidently +my plans met his personal approval. Indeed, from the change that had +come over his manner I realized that he felt he had been spared a +disagreeable task and that my shift had been a pleasant surprise to him. +It was plain that he and Stillman had decided that I must be thrown to +the sharks if I kept on my old tack, and were therefore gratified to +find that I was not only ready to assist in steering the ship their way, +but also willing to feed the engines coal at my own expense to keep up +her speed. In spite of Mr. Rogers' confidence in Governor Flower's +ability to take care of the market, it was a great relief to his mind to +know that I should be there, for he realized that no one, however able +and popular--and Governor Flower was both to an unusual degree--could +possibly take up such an intricate bunch of lines as those with which we +had been driving, without a lot of feeling-out practice. + +There was another aspect of the situation that had been suggested to me +by a certain passing twitch of his lip that I had noted when I had said +I proposed putting some of my own millions behind the market. It was as +though the tongue had involuntarily started to lap the chops for blood, +and I scribbled a memo on my mind's black-board, "Think over whether he +does not intend to set traps for your share of the spoils." + + + + +CHAPTER XXX + +THE MORNING AFTER + + +It was with a feeling of intense relief that I left Mr. Rogers and +returned to the Waldorf. At last I knew where I "was at": I was to play +a lone hand; my enemies were in front; there were no partners from whose +treacherous knife-blades I should have to protect my back. The path was +clear, and as I examined my position, I felt my old self again. Promptly +I called up my Boston brokers, who were at the Holland House, to say I +would drop in for them on my way downtown, and with a clear plan of +campaign in my mind, I determined to face the breakfasting crowd in the +big café downstairs. + +Almost immediately I found myself in the centre of a knot of men who +began eagerly to press me for further particulars of the Amalgamated +subscriptions. We all know the story of the comedian informed in the +midst of a performance of his beloved wife's death, who yet must laugh +and antic to the end of the play. I appreciated the heavy-hearted +actor's plight as I surveyed the little throng so vitally interested in +their dollar affairs. I longed to mount a chair and tell them how they +had been duped, but my rôle called for different lines. It was my part +to feign satisfaction and my duty to keep every cent invested in our +enterprise from shrinking a mill. I pumped as much enthusiasm into my +speech as possible. + +"You see what the papers say," I said. "That gives you all the +information I have, for although you may not think it, I have been +spending the night just as the rest of you have--in lands where all +flotations sell away over par. I'm going down to Wall Street just now. +After a while I'll have more to tell you." + +The flutter of an eyelash, a hair-breadth of hesitation, a mumbled word +and there may be born in the mind of the investor that instinctive +distrust which is the beginning of panic. In a stock market as in a +powder magazine there are always dread possibilities of explosion, and +he who would survive must have incombustible nerves and an ice-packed +brain; asbestos assurances and an unblushing swagger have averted many +money conflagrations and set prices hill-climbing. + +My little congregation had all the fluttering fugitiveness of the +investor-out-for-quick profits, and after a few generalities, I got down +to the one question they all longed to ask but none dared to +voice--"What can I sell my subscription for if I want to part with it?" +Raising my voice a trifle and looking straight at them: + +"Don't get excited about what you read in print these next few days," I +said, as though some one had asked me the question, "for there will be +hogsheads of rumors unhooped, and remember that rumor prices are never +real money. The papers this morning say that any one can sell at 40 to +60 per cent. profit, but that hardly seems reasonable to me; in fact, if +I were any of you who have been allotted stock and could get such profit +as that overnight, I'd take it. All I'll do just now is this: I will +give 110 for any amount any of you want to sell, provided you sell right +now--and 10 per cent. profit is not so bad when you come to think it's +40 per cent. on what actual money you have put up." + +In the vernacular of stocks this process I used is called "moulding +public opinion" and "making a market," and it had the expected effect on +that bright May morning which followed the closing day of the +Amalgamated flotation. I was not offered a share; in fact, there was a +loud guffaw, and it was a hundred to one wager that as I passed on to +another group each listener tumbled over his neighbor to get in first. +"110! That's a good joke! I wonder if he takes us for children! +Evidently he is out early this morning to catch any stray worms napping! +110 for something worth 160!" + +Inside of ten minutes it was all over the Waldorf and on the wires, +"Look out for Lawson! He's trying to get Amalgamated at 110." And by the +time I got to the Holland, a block down the Avenue, the brokers and +investors gathered there were ready to give me the laugh with "You're +out early, we see, to pick up a bundle of easy money." + +My first task had been accomplished to my own satisfaction. Inside of an +hour it would be flashed over the world that there was a firm reliable +market at 110 bid and almost any price asked for Amalgamated, and while +110 was not anything like the wild 140 to 160 that rumor gossiped of, it +represented such a good profit that it was sure to set the market off +with an all-round chipperness. + +My readers must bear in mind that as yet there was no real Amalgamated +stock which could be sold, and no place to sell it if there had been, +for until each subscriber received official notice no one really knew +for certain that he had been allotted any stock, and until the +Amalgamated shares were listed on the Stock Exchange, there could be no +reliable market, although they could be traded in on the curb. + +At the Holland House, I quickly outlined to my chief brokers my plans +for the day. Then together we started for Wall Street. + +The hours that followed were busy ones, and confusing as well. Wall +Street was a-buzz with curiosity and from all sides poured questions. +"The Street," it was evident, had awakened to the fact that the +situation in Amalgamated disclosed a different line-up of conditions +from that which it had anticipated. As to whether the change was good or +bad no one dared hazard a guess. For the first time in my experience, +Wall Street was completely at sea. The shrewdest plungers and +manipulators, men to whom the tape yields up its secrets as the penitent +to the priest; to whom the ticker babbles the inner mysteries of +directors' meetings and deep-down deals--these men whose eyes, ears, and +noses decades of stock-play had trained to supernatural acuteness were +as impotent to track the truth as the veriest tyro. All admitted that +the conditions were unusual, that the subscriptions had far exceeded +expectation, that time would be required to get them straightened out. +Because of this it was natural that the market should be slow and in the +absence of definite facts it might easily look one price and be another. +If the subscription really were 412 millions and if each subscriber +would have a fifth of his allotment, then there was the usual chance for +trick playing and "Standard Oil" might be scheming to gather in this +valuable stock at 110 when its proper price mayhap was 140 to 160 or +more. + +In Wall Street the best brains of all the Western world centre. Fortunes +are there waiting for brains to carve and take; stacked up there are +millions which he who has brains can pocket without a "by-your-leave." +Wall Street is the millionnaire's checker-board, but brains direct the +moves and make the plays. And with all its mordant wisdom, cynical +cunning, cold suspicion, Wall Street was baffled. + +There was nothing to do but to continue my campaign of smiles and +cheerfulness, repeat my 110 bid in every quarter possible, and so keep +up the delusion. Late that afternoon I saw Mr. Rogers, who eagerly +interrogated me. + +"Well, Lawson, what do you make out?" + +"It is the most mixed-up mess 'the Street' has ever wrestled with," I +replied, "but one thing is clear: no one will dare to sell much until he +receives notice of just what he has been allotted, and then most will be +timid about selling until they have received the receipts. I don't see +how, if nothing definite leaks out, there can be much danger until after +they get their hands on the receipts, and by that time, of course, you +will have a fine market organized to take care of any offerings." + +He flinched. I saw again that I had touched his sore spot, for at every +faintest suggestion that our profits should be used to protect the +market, he became as shy as a pick-pocket at a police parade. + + + + +CHAPTER XXXI + +I WALK THE PLANK + + +Have you ever seen a bunch of school-boys who, having sneaked under a +corner of the circus tent, are prowling furtively round the show in holy +terror lest some one who has seen their entry may be awaiting a chance +to nab them? One minute they are tasting the raptures of being under the +canvas; the next, longing to be safely outside. That is about how Wall +Street felt on the memorable Friday after the Amalgamated flotation. The +same feeling prevailed generally on Saturday, though I was obliged to +buy a few blocks of the stock at 110 from Wall Street men whose sharp +noses had sniffed a carrion scent in the air. Sunday was uncomfortable, +for I realized that I might have to face bad conditions on the morrow. +On Monday an ominous feeling began to rise and pervade "the Street" like +a miasma mist in a tropical swamp. The bacillus of distrust had started +its infection. I had to buy quite a lot of subscriptions and was now +varying the price from 110, for it seemed possible any moment that +something would break loose. + +These were the conditions when on Tuesday a telephone call came from Mr. +Rogers asking me to drop round to 26 Broadway, as he had an important +matter to talk over with me. I reported at the appointed time. Mr. +Rogers was evidently full of business. + +"Lawson," he said, "we have figured everything up and balanced accounts, +and each member of the different syndicates is to be given his share, +cash and stock, at once." + +"All right," I answered. "That suits me." + +"I thought so," he continued pleasantly. "Mr. Rockefeller has had Curtis +figure up your account, and while in the rush he may not have got +everything in, he's fairly accurate. From what you said about getting +your affairs into shape to help the market, it occurred to me you might +like to have your balance of this section in hand ready for use. I have +the statement here, and if you find it all right I'll go upstairs and +get all it calls for fixed up at once." + +We were in the little glass pen where most of our conferences took +place. I, with my elbows on the small mahogany table, sat looking across +at him leaning back in his chair. Without knowing what was to happen, +but from a certain suppressed eagerness I had detected under his frigid +composure, I had a strong conviction that he was nerving himself for a +coup of some kind. I realized that he and Mr. Rockefeller had talked me +over pretty thoroughly and had decided that they had best run this +gauntlet as soon as possible. Since Mr. Rogers had broached the +substitution of Anaconda for the properties originally intended for the +first section of Amalgamated, I had felt that this balancing of accounts +would be a crucial affair, and after the recent turn of the screw, I +hardly knew what to expect, but was ready for the worst. Now a swift +thrill of apprehension suggested I'd better look for real deviltry. +There was perhaps a minute's delay while he fumbled in his pocket and +drew out letters and papers. My blood steeplechased in my veins as I +waited for him to deal me the hand that might decide my fate. In such +tense moments thoughts flash in and out of the mind like lightning, and +as I watched him rise, the fateful paper in his hand, it came over me +with a sharp exultation that however the trumps fell it was a great +game--great even for this king of gamesters who was about to play his +hand. + +Henry H. Rogers looked piercingly into my eyes and said: "There's the +account, Lawson." He laid on the table in front of me an oblong piece of +paper. On it were some lines of words followed by other lines of +figures. That was all. I spread it out carefully between my two hands +and bent over it. Then I looked up. Before I allowed the significance of +the figures to penetrate my mind, I wished to know exactly what they +represented. + +"If I understand aright, Mr. Rogers," I asked, "this statement does not +take in our Boston deals nor my loans on the Butte and other affairs, +but is a settlement of this first section only--a final clearing-up +showing just what my twenty-five per cent. of the Amalgamated and the +things connected with it amount to? Am I right?" + +My voice was even and calmly business-like, and he answered in exactly +the same tone. + +"It shows where you stand on this particular affair, and gives your +balance of stock and cash, which we are ready to pay over in whole or in +part, in case you may want to leave some of it against the loans on the +other section." + +I turned to the paper; I leaned over it, letting my two hands with the +elbows resting on the table support my head. Mr. Rogers could see only +the back and top of my head, no part of my face. At the first glance I +caught the balance--it was a little less than two millions and a half. +At once the other lines upon the sheet became a crimson blur. Into my +mind rushed an avalanche of figures and facts which seemed to prove +irresistibly that I should have read nine millions in place of the +numbers that were burning themselves into my brain. But what if it were +rightly but two and a half millions, and the great sum on which all my +market movements had been predicated was a hideous miscalculation on my +part? Then inevitably was I hopelessly bankrupt, or saved from that only +to find my neck irrevocably caught in the "Standard Oil" noose. I strove +fiercely to steady my nerves, to arrest the stampeding terrors that had +broken loose in my brain. There came to me a feverish memory of the +hideous procession of Thursday's midnight vigil. I desperately +asseverated to myself, "I must be cool, I must, I must." But all my +resolutions went as goes the powder when touched by the match. In an +instant more nothing in the world mattered; I sprang to my feet, kicked +over the chair, and with an exclamation which was half yell, half +imprecation, I stuck the paper under Mr. Rogers' eyes. On the balance +line I beat a tattoo with my trembling forefinger. Heaven knows what I +said, for all barriers were down and a flood-tide of rage, overwhelming, +terrific, swept my being. There was no chance for Mr. Rogers to answer +or to interrupt me. Suddenly I became conscious that I was asking, "Am I +to understand that this is final? Is this what I get for all I have +stood for?" My voice as I heard it was strange--a hoarse hiss--and the +words fell on my ear like a death sentence. "No, by God, no!" I sprang +between him and the door. + +"Lawson, in the name of Heaven, stop for a second; there is some +mistake; I see there is some mistake, some terrible blunder that they +have made upstairs. Don't say another word. Give me that paper and I'll +take it to Mr. Rockefeller. He will see what is wrong; he and I'll go +over it together and you shall have what's right. I will be back in a +few minutes and I swear to you you shall have your full share. Yes, I +swear to you you shall have what you say is right, even if it takes +every dollar of the profits, every dollar." + +I handed him the paper without a word and he was out of the room. I +heard gates bang and knew he had, as he promised, "gone upstairs." I +locked the door and waited. I shall never forget the racking torture of +that period of inaction. To make real all the terrors I was suffering it +would be necessary for me to enter into elaborate details of the +wide-spread financial commitment into which I had been led by my +relationship with the Consolidation. I was staggering under immense +lines of Boston "Coppers," which were to be included in the second +section of Amalgamated, but had been purchased to make part of the first +section. Some of these Mr. Rockefeller was carrying for me; the rest +were portioned among two dozen banks, trust companies, and brokers. With +a portion of the profits I had legitimately calculated upon, I had +proposed to lighten my burden and to devote the balance to carrying +through the contract I had taken on my shoulders of protecting +Amalgamated stock in the market. To do so on this showing would be out +of the question; more than ever should I be at "Standard Oil's" mercy. +The dangers that threatened me assumed cyclopean proportions as I +marshalled them. Suddenly another possibility flashed across my brain, +"What if they should tell you that having refused what was fair, you +should have nothing--that you could go to the devil and fight? Then +where would you be?" That meant ruin, crushing, irrevocable, complete; a +series of disasters, so portentously realistic, began a cinematographic +procession across my disordered brain, that I found myself shivering in +anticipation, when suddenly the door-knob clicked and I jumped to my +feet to admit Mr. Rogers. In his hand was the paper. I had eyes for it +alone. I took it from his outstretched fingers and devoured its +contents. It was the same sheet, the same word "balance," but underneath +the old figures was a line below which appeared a new set of ciphers, +showing just a fraction under five millions of dollars. In the brief +interval of minutes my balance had doubled. Before I could utter a word, +with his hand on my arm to arrest my attention, Mr. Rogers was +exclaiming: + +"Lawson, one word before you open your mouth. Remember I said you should +be satisfied. Mr. Rockefeller agrees with me. He is convinced these +figures now are right, but wants me to tell you if you believe they are +not, to make your own and you'll have what they call for." + +As I said before, Henry H. Rogers knows the human animal, and in the +intimate intercourse of preceding years he had had ample opportunity to +learn those very human characteristics which go to the blending of my +individuality. It is a weakness of which I am intensely conscious, yet +cannot altogether regret, to be easily moved by any show of generosity +and fairness, however specious. When I saw the new figures and realized +that all the hell I had conjured up was no more than a nightmare, a very +rapture of gratitude and relief seized me. It was not that I lost sight +of the fact that this new balance was far below what I knew was my +right, for according to the lowest computation my proper share was nine +millions; nor that I failed to realize that I was in the power of this +man whose greed, callousness, and brutal obstinacy in the face of +opposition no one knew better than I. Still, though his unusual +deference convinced me that by continued, fiery insistence I could force +from him the remaining four millions (for the one thing Standard Oil +never lets get into court is a dispute over a division of profits on a +joint stock deal), the first shock had been so awful, and the reaction +was so sudden, that my whole being revolted at the idea of further +wrangle. Indeed, I was in the same condition as the man whose runaway +horse suddenly stops just as the children in the roadway seemed doomed +to be crushed and beaten to death beneath its iron heels. He condones +the running away in gratitude for the timely halt. A glad voice within +me seemed to be saying, "It's all right, all right--that's money enough +to fight him out with--that's ammunition for victory--victory for +yourself, for the friends who have banked on your ability to protect +them." + +I said to Mr. Rogers: "Tell Mr. Rockefeller I thank him for his +fairness. I thank you both. I'm satisfied and this is settled." I put my +finger on the account which lay on the table. + +Yes, I positively thanked these men who had tried to rob me of +seventy-five per cent. of all the millions that I had earned by all the +laws _of the game_, and that I so urgently needed to protect those whom +I had lured to probable destruction; needed as a mother in the desert +needs milk to keep life in her babe. I thanked these men in heartfelt +terms because they had returned me an additional third of my own money. +Idiot, you say. I went further; I shook Mr. Rogers by the hand, and as +the tears gathered in his eyes I said, and it was from the heart, too: + +"Don't think, Mr. Rogers, that I shall ever lay up this day against you +and Mr. Rockefeller, or that I shall resent not getting all I believed I +should have had. I want you both to understand that I do know I am +entitled to more, but it ends here. I will cherish no ill-feeling, for +this balance is amply sufficient to enable me to do what I intended to +do, and--there is more on earth than millions." + +We were both emotionally excited; I from relief at escaping the clutches +of that dread hell of which for certain moments I had felt the flaming +grasp; he because of a sudden degrading realization that he had +attempted to practise on a faithful comrade in arms a cowardly and +contemptible piece of treachery. My impulsive gratitude for the measure +of justice granted me made his avaricious greed seem even to him +despicable, and for an instant Henry H. Rogers was honestly ashamed. + +Some years have elapsed since this episode, but a thousand times I +suppose the scene has arisen to rack Henry H. Rogers with bitter +memories of his baseness. The severest punishments are not those that we +mortals inflict on our fellows whom for violations of our little earthly +laws we clap in striped suits and shackle with steel bracelets. What are +striped suits which imprint no mark on the body of the wearer, or +handcuffs that any blacksmith can strike off at a blow, in comparison +with the ever-recurring torture of the white-hot iron with which God +sears the hearts and brains of those sinners whose wrong-doing is beyond +human retribution? What memories of prison and disgrace are comparable +with the exquisite suffering of the undetected criminal who in the dark +watches of the night pores over the bitter scroll of his delinquencies? +When Henry H. Rogers reads the record set down here of this faithless +and degrading action, he will suffer infinitely more than ever I did for +the loss of the gold he and his associates so meanly filched. Nor will +the knowledge of the seven and a half score of millions marshalled ready +at his nod, abate one jot or tittle of the measure of his humiliation +and shame. + +Peace having been established, Mr. Rogers sent "upstairs" for the checks +and stocks to complete the settlement, and while we waited we talked, +and, as was inevitable after so strenuous a session, we found ourselves +back on the sincere and frankly friendly footing of our earlier +intercourse. A knock-down and attempted drag-out which at the end is +declared a draw invariably promotes cordiality between the principals, +and ours was no exception to the rule. Evidently Mr. Rogers had been +doing considerable thinking since our last conversation and had +accumulated troublesome ideas which had to be worked off. My mood at the +moment seemed made to order for the purpose, and he ran over our +affairs, one after another, until he thought it safe to explode his +bomb. He rang for a clerk, and instructed that Mr. Stillman be called up +and asked to send over "that paper if it was ready." Soon afterward the +messenger returned with a big, square package. Mr. Rogers opened it. + +"Lawson," he said, "here's the whole story. Stillman has been steadily +at work and has just finished two copies of the entire subscription. I +think you ought to look it over." + +"Look it over," I repeated. "Why, it is of the utmost importance to the +whole enterprise that I study every name. I alone can tell just what +that list means. After I've been over it I'll know pretty thoroughly who +will hold, who will want to sell, who must sell, and who will need +encouragement." + +"That's just what I thought," he answered, with an air of high approval. +Then, dropping to his most friendly and confidential key, the tone of +voice that never fails to persuade an associate that he is in on the +bottom floor and that all others are outsiders, he went on: "And more +than that, Lawson, why cannot you get in touch with all those +subscribers who are disappointed at the amounts they received and sell +them what they want?" + +Mr. Rogers leaned back to appraise the effect of this startling +proposition on me. At any other moment I should inevitably have broken +loose again, but the fascination of his personality was upon me and I +let him spin his webs. Any man, and there are scores adrift, who falls +under the spell of Henry H. Rogers, invariably, as did the suitors of +Circe, pays the penalty of his indiscretion. Some he uses and +contemptuously casts aside useless; others he works, plays, and +pensions; still others serve as jackals or servitors and proudly flaunt +his livery; a few, the strong, independent souls, tempted with great +rewards and beguiled by the man's baleful, intellectual charm into his +clutches, preserve a semblance of freedom; but let the boldest of these +turn restive--he is maimed or garroted with sickening promptitude. + + + + +CHAPTER XXXII + +PERFECTING THE DOUBLE CROSS + + +To get back to my story. I realized that though one disaster had been +averted, I was far from any haven of rest. Remembering my cue, however, +I asked innocently: + +"Have you all decided to sell more of the stock, Mr. Rogers?" + +"All? Why no," he said. "Just let me show you where we stand now. All +the unsold stock, roughly forty-eight millions, has been divided up and +each man has to carry his own. That's easy, because Stillman will carry +them all at the bank, for they are all good, Lewisohn, Morgan, Olcott, +Flower, Daly, and the others. The only loose stock will be Mr. +Rockefeller's, yours, and mine, and that we must turn into money before +we can bring out the second section. You have been losing sight of the +fact, Lawson, that we have millions upon millions tied up here, and Mr. +Rockefeller has decided he will not go ahead until we have turned this +venture into money." + +Marvellous, marvellous man! He unrolled the new scheme as openly and as +freely as though he were a world's philanthropist explaining a new +benefaction and I an enthusiastic minister employed to carry the glad +tidings to the people. The plot was obvious. In spite of Flower and +Stillman and all the talk of our taking a rest he was back on his black +courser again, in a new saddle, with a freshly lighted lantern, and the +old blackjack newly leaded. And I was the only one who could stalk the +game. I listened. + +"Now let me show you, Lawson, what a pretty campaign I have laid out," +he went on. "I've pledged all the others to hold their stock and I've +got it rigged in such a way they can't let go a share without my knowing +of it. Then I've got them all enthusiastic and have formed a pool at +Flower's office which, if necessary, can buy 500,000 shares, and what +with the money they have made and the promise that they will be let in +on the second section if they're good, we ought to have things pretty +much our own way." + +The scheme seemed to be perfect for robbing every one in sight, and here +was I being taken right in--I who had but one thought: to get those I +had mired on to firm soil and myself outside the breastworks of this +pirate stronghold. + +"It looks perfect, Mr. Rogers," I said. "Now where do I come in on all +this?" + +He shrugged his shoulders impatiently. "You see as well as I can tell +you," he replied evasively. + +"I take it that you want me to unload our stock on to the pool and the +other members of the syndicate?" I asked with a brutal frankness that I +realized, after I heard the words, was almost indecent. + +"What is the use of putting it that way, Lawson?" he replied angrily. +"You know I mean nothing of the sort. You know I want you to keep every +one you can from selling, and simply supply the legitimate demand that +can be worked up among the subscribers all over the country. If worked +as you can work it, this ought to clean up our stock without any one's +being hurt." + +I understood perfectly. If Mr. Rogers and I had been on terms of +flippancy instead of dignity, at this stage we should have given each +other the wink. Just what he wanted done I knew. He knew I knew what he +wanted, and I knew he knew I knew, and yet we were pretending not only +that we knew nothing but that there was really nothing to know. + +Fortunately, at this stage of the duel Mr. Rogers' secretary arrived +with my checks and stock, and while we were verifying these, I had time +to study my mental chess-board for the next move. The papers were all +passed at last and then I entered into some explanation of my own +intentions. I told Mr. Rogers that for the time being I would hold all +my stock, but that I intended to borrow a stack of money on it from +Stillman through my brokers, for I fully intended to support the +market, as my belief in the stock was absolute. + +I could have sworn Mr. Rogers inwardly chuckled at my fatuity, but I +went right on: + +"If Mr. Rockefeller has decided that your share and his of the allotment +must, in whole or in part, be turned into money before the second +section is tackled, there's nothing for it but to go ahead, and I will +put in great work for you (I didn't add, "my work, if I can make it, +will keep you in as long as the public have a share"), because," said I, +"my one ambition now is to complete the second section and get things in +such shape that those people I have had locked-in so long can get out, +if they care to." + +It was an intricate problem that was thus settled, for Mr. Rogers well +knew that it would be useless to attempt to sell big quantities of +Amalgamated without my detecting it, and he dared not ask me to have a +hand in his plot without including my own stock. When he saw I intended +to stand by my baby, and yet was so anxious to get to the second section +that I would accede to Mr. Rockefeller's wishes, he perceived that the +situation was ideal for his purposes. + +"Let me glance over that subscription list," I said; and I opened up the +book, for book it really was. + +My readers may surmise how intense was my interest in scanning the +results of my work. This great stack of bank sheets before me was the +official list of the subscription, stitched together in seventeen +sections of twenty pages each; twenty-eight names, with city, State, +street number addresses, and amounts subscribed to a page, all in ink in +longhand. + +"Better take them with you to the hotel and go carefully over the names +and amounts," put in Mr. Rogers. "It certainly is a long job, but one +that you must tackle some time, and the sooner the better." + +Here was the missing link in my chain of evidence, delivered directly +into my hands without a word of persuasion or cajolery. Providence +played that hand for me surely. I concealed my jubilance by rattling +along vociferously: + +"I shall have to work over this a heap, sending out circulars and what +not. It would have been better to have had it in typewriting, but I +suppose Stillman didn't dare intrust it to the machine people. However, +I can divide up the seventeen sections among different people and none +will know the whole story. I will keep it in Boston with the other +papers, and--gracious! what's this?" + +"What is it?" he asked, smiling at my excitement. + +In front of me was the section beginning with the "Mc's," and the +largest subscription on the page was 6,000 shares--1,200 allotment. I +followed the line back to the name. It was that of Hugh McLaughlin, then +the big "boss" of Brooklyn, who, like all the other big bosses of New +York State, was a trusted lieutenant of "Standard Oil." I put my finger +on the amount and said: + +"You have taken care of your friend across the river, I see. No wonder +all the politicians were so anxious to get in, for they know you would +not put this old gentleman into anything that is not pretty sure." + +Mr. Rogers nodded wisely: + +"Yes, I told the old stalwart he had better have about half a million, +but he went $100,000 better, I see. I sent the word around to the +others, too, but have not had a chance to go over the list carefully. +Have they all gone in under their own names?" + +I ran over page after page, looking for names as he called them off, but +most of them had disguised their ventures through dummies. We had no +trouble in putting our fingers on their allotments, however; Mr. Rogers +commenting in his sage and caustic way on men and politics. It was +growing late, and at a natural stopping-place in our talk I sent for +paper and string, with my own hands tied up the book, and--with all the +airs of extreme leisureliness--literally bolted. + +No school-boy with a three-pound trout caught in a deep hole under a big +willow bearing the sign, "Any one fishing here will be prosecuted," no +burglar with an unexpected fat swag, was ever in such a fever to lug his +booty to a concealed place as I to get that infinitely precious bundle +to the Waldorf. At last I landed it in my room and began to scan the +interesting pages. My first thought was to look for our own big dummy +subscription. As I supposed, it was not there. _Roughly I added the +totals of the different sheets and compared them, with the 412 millions +we had given the public, which was now indelibly, the world over, a +matter of record._ Again I stopped to congratulate myself on my good +fortune in securing this first-hand evidence of the fraud that had been +practised on the people. + +I leaned over the thick pages with their various inscriptions. The names +and addresses carried me into every corner of the United States and into +the great cities of Europe as well. Set down there were towns and +villages I had never heard of, and my mind made pictures for me of +fathers, mothers, and children, beguiled by my pledges and promises, +embracing the opportunity to add to their scanty hordes. But it was not +a moment to indulge in scares, so I slipped over the people's mites and +fixed my mind on the millions. + +The Lewisohns were down for eleven millions, and Mr. Rogers' old +cronies, John Moore's firm, were represented by a subscription of +between six and seven millions. As I ran over the names I found million +after million down to Mr. Rogers' friends, which told me that he had +spared no one. All the lieutenants and the queer people who do the +confidential business of the "System," and invariably turn up at +melon-cutting time, were down for round amounts. Conspicuous among the +rest was the name of that rising votary of the "System" who won +notoriety, while Comptroller of the Currency under President Cleveland, +as manipulator of the slick bond deal which has gone into American +history as among the queerest performances of its period. Loaded up with +Government banking secrets, this young man subsequently became a prize +for whom the various organizations of the "System" competed valorously. +There he was, in three places--James H. Eckels, President of the +Commercial Bank of Chicago, 6,000, 2,000, and 2,000 shares--or a million +dollars altogether. + +Another name caught my eye: "Bay State Gas Co., J. Edward Addicks, +20,000 shares"--two millions of dollars. I leaned back and laughed as I +thought of this wary old fox, with the bruises and scars of the +"System's" hopper thick all over his body, dutifully bringing his +contribution to his old enemy, Rogers. And Rogers, disdainful and +contemptuous of the man, found his $400,000 good. This, I said to +myself, is a case of spider eat spider with a vengeance; and I wondered +if experience is really as good a teacher as the text-book says. + +Hour after hour I pondered over that list, "sizing up" each subscriber +and questioning what his financial condition might be. At last I dropped +it, swearing to myself to use every effort to protect these thousands of +people who had ventured so much money on the strength of my pledges. + +Two days later the allotments were officially announced; in a few days +more the receipts were issued and Amalgamated was fairly out in the +world on its own feet. It was not listed on any of the exchanges yet, +but it was very much in the mouths of people, and in the papers. And +every day grew the ominous feeling that something was wrong. It was a +contradictory situation and no one could put a finger on the trouble. +Rumors one heard, but no definite derogatory statements. The truth was +that those who knew what was wrong had good reasons for saying nothing, +while all who had to do with stock affairs and surmised the evil, were +themselves loaded up with the stock and hoping against hope that our +promises of great profits would yet be fulfilled. + +It was my part to keep up these anticipations and by hook or crook +prevent Rogers and Rockefeller from unloading. I bought and bought to +steady the market when no one else apparently would buy; and when I +found others whom I could induce to venture, I had them relieve those +who were faltering and who must sell. When Mr. Rogers took me to task, I +invented all manner of excuses to account for my tardiness in creating a +market on which he could unload his holdings. He listened impatiently +and incredulously, and I felt that sooner or later he would take the bit +in his teeth. + +In spite of my efforts the price of Amalgamated dropped and dropped and +it was all I could do to prevent a quick crash. My profits--the immense +sum of money I had obtained at the settlement--had been used up, +together with the great sums I had borrowed on my own allotment of +shares. At intervals I stopped long enough to make brief excursions into +sugar or other stocks, out of which I captured additional hundreds of +thousands, but every cent of such gains went toward staying the +avalanche. These indeed were days of desperation and black despair, all +the more trying because I had to look happy and talk hopefully; all the +more difficult because my enemies came out of their holes and did their +share to balk my efforts; all the more painful because the public were +beginning to doubt whether the second section was coming--and whether it +had best come--and our Boston "Coppers" had begun to drop in value. + +During all this time I had troubled myself but little about the Flower +pool, which had been set going soon after the conversation in which Mr. +Rogers had told me that he and Mr. Rockefeller intended to unload their +stock. I concluded that the pool would surely get a share of what they +had to sell, and showed no inclination to join in with it. But at last +Mr. Rogers said to me: + +"As every one is going into the pool, Lawson, it will seem strange if +you are missing, so you had better send Flower your check and I will see +you get it back later." + +"For how much?" I asked him. + +"A hundred thousand will be about right," he answered, and I sent it, +and that was all I had heard of the subject until one day after the +stock had been weaker than usual I received by mail a brusk notice from +Flower & Co. to mail them another hundred thousand dollars. Immediately +I called up the banking-house, and learned to my horror and astonishment +that the pool had accumulated over 225,000 shares. I went at once to Mr. +Rogers with Flower's call and said: + +"I know nothing whatever of this affair, Mr. Rogers, and as I have not +been unloading any of my stock and have all I can do to keep up my end +anyway, you will look after it, of course." + +He took the notice and said: "I will attend to it." Remembering his +intentions to unload, after what I had heard of the pool's accumulations +I was not surprised at Mr. Rogers' willingness to take care of this +matter of mine. It is of interest now, in looking back over our affairs, +to recall that though there were several periods later when the sledding +was hard, and I needed all the money I could lay hands on, he never +offered to return me that hundred thousand, not even after the pool had +liquidated, as will be shown later. In spite of this fact, in his +readiness to hurl any charge or insult at me, he had his hireling, Denis +Donohoe, recently make the accusation that I alone of all its members +refused to keep up my payments to the Flower pool. + + + + +CHAPTER XXXIII + +A RETROSPECT AND A MORAL + + +The crime of Amalgamated and its immediate consequences are before my +readers. I have fulfilled the promise made in my foreword to expose to +the people of America the manner in which they have been plundered and +the methods by which the "System" habitually cheats them out of their +savings. Robbery conducted on so gigantic a scale as I have pictured +must necessarily simulate the natural processes of finance, and to +understand the deep devices of the schemers requires a knowledge of +banking and commercial practices which the average man has no chance to +attain. If I had begun my story by stating exactly what constituted the +crime of Amalgamated, my readers would not have grasped its heinousness. +In the chapters that I have devoted to leading up to it they have been +educated in the piratical practices of finance and financiers, and have +acquired familiarity with the jugglery of corporations and the +multiplication and division of stock certificates through which most of +the great American fortunes have been created. + +Depending still on the ignorance of its blinded dupes, the "System" +again raises its brazen face from among the poison rushes of Wall Street +and hisses, "Listen to what he calls a great crime--a simple business +transaction. It is no crime, but a common practice of modern finance and +by no means unusual or extraordinary." + +No crime to take by a trick from thousands of the people thirty-six +millions of the results of our great country's prosperity? Think of what +this vast sum represents--the revenues of a year's work of 36,000 men +earning each $1,000. Think of it, ye millions who dig and delve and bear +heavy burdens that your mothers, wives, and children may in exchange +have a bite to eat and a couch to sleep upon! + +The crime of Amalgamated, as I have explained it, constitutes a specific +breach of the banking laws of the State and nation. But the legal +aspects of the offence are trivial in comparison with the great moral +crime which was consummated by Henry H. Rogers and James Stillman, in +the National City Bank on that night in May, 1899. Through false +representations and specious pledges and the credit of the names of +"Standard Oil" and the National City Bank, thousands of people were +beguiled into investing their savings in this Amalgamated Copper +Company. Because of the promise of great gains other thousands mortgaged +their homes, appropriated their wives' savings, even their employers' +funds, and embarked in this fair-seeming enterprise. The greatest bank +in America aided and abetted the conspiracy by the loan of its funds to +lure the victims deeper into the toils. All in, the trap is sprung; the +thousands are despoiled of their savings by familiar devices of finance, +and throughout the land is spread a wave of misery, madness, and +despair. + +The crime of Amalgamated, a critical correspondent writes me, is purely +a Wall Street offence, important to bankers and capitalists but of no +consequence to the working men, the farmers, or the toiling millions who +have no savings to invest in stocks. "Of what concern is it to us," says +this writer, "how one section of the rich robs another of its +hoardings?" + +Poor fool! A few men cannot deprive even a few thousands of so great a +sum as $36,000,000 without working untold injury upon the entire body of +the people. Such a stupendous sum looted from the coffers of the many +and piled in the vaults of three or four men unbalances the whole +economic structure of the nation. The consequences of that act do not +end in the series of defalcations and bankruptcies, imprisonments and +suicides, in the ruined homes and wrecked careers that follow in its +immediate wake. In the grip of these plunderers intrenched in the +stronghold of finance each of these filched millions becomes a new +weapon of oppression. Because of the crime of Amalgamated every pound +of food that goes to sustain life in the American people, every shingle +on every roof that shelters the American people, every mile of +transportation for man or freight in America; in fact, every necessity +and every luxury of the American people has had added to its cost some +fractional increase, representing in the aggregate tens and tens of +millions annually, which, flowing into the coffers of the "System," +strengthen and extend its stupendous grip on the property of the nation. + +Our country for a generation has been prosperous beyond the dreams of +man, yet what have the masses of our people to show for it? A better, a +higher, and a MORE EXPENSIVE standard of living--that is all. That this +prosperity which is our national boast will last forever is incredible. +Sooner or later will come one of the times when Nature frowns and sends +her floods, her droughts, and her epidemics of disease. Is the American +people prepared by its long-sustained prosperity to bridge over that +period of want and suffering? + +The truth is that the mass of our population has not sufficient surplus +laid by to last over thirty days of such a calamitous interval. All the +unearned increment of national prosperity the "System" has captured and +capitalized. Not only have the people been deprived of the profits of +their labor, but this capitalized prosperity is the stern instrument by +which new burdens are laid on their shoulders and new tithes are exacted +from their wages. But for the plundering "System" the great mass of our +people would be able to sit in their tents in the shade of their +husbanded harvests and laugh to scorn the frowns of fortune. Now, I say, +God help the nation when Nature, tired from her great work, rests, and +the people, too, are compelled to rest--for then will come an awful +awakening. When the millions face famine and realize for the first time +that their gigantic storehouses, filled to bursting with the surplus of +the past, are the property of the few who cannot even count the +contents, much less use them--when they realize that these hoarded +treasures are as far beyond their starved reach as are the violets and +daisies beyond the picking of the galley-slave, then they will +appreciate how much deeper and more damnable are the crimes of the +"System," such crimes as Amalgamated and its like, than even such +national tragedies as the assassinations of Lincoln, Garfield, and +McKinley, at each of which all the people held aloft their hands in +horror. + +Why is it that the millions of intelligent, able-bodied Americans, who +could crush the tribe of Rockefeller as elephants crush snakes, rise +with each sun and dig and delve and suffer that a Rogers may wallow in +wealth and an Armour gain a greater income than the Rothschilds? Why are +they so easily hoodwinked into imagining that the elaborate reports +detailing the immense and growing wealth of the country represent their +own well-being and affluence? Because the wise men of the "System" know +human nature, know that most men and women accept unquestioningly the +conditions they find surrounding them. Each day it is pounded into the +heads of the people through a hundred agencies that it is the greatest +and most flourishing of peoples and that the laws and customs which +regulate its lives and rights are the best in all the world. How shall +the people know that these glowing rumors, these propitious tidings, are +but the siren songs of the "System" under the spell of which it is +despoiled of its savings? + +Ask yourselves, my friends, how much you know about those familiar +things which are part of your lives as are the sunshine, the grass, and +the flowers--your Bible, your money, your playing-cards. Each is an +institution so consecrated by custom that you accept it exactly for what +it meant to your father just as he took it from his own father a +generation before. That the Holy Book is God's message to His children, +the human race, we know because we have the words of our ancestors +therefor; the stamped silver and gold we take for granted as we do shoes +and clothes, because money is an essential factor in the social fabric +and the form in which it comes to us seems as inevitable as the moon or +our ten fingers; humanity has gone on for hundreds of years considering +the knave of greater value than the ten-spot and the ace of higher worth +than all the rest of the pack, because it is content to believe that the +rules that have been handed down apportioning these values are the best +that could be devised. With a hundred other elements and details of our +daily life, it is the same--we accept unreasoningly what we are told or +what is given us, with no look forward or back, and, engaged with the +thousand new toys and problems which Fate, the conjurer, shakes out of +his hat, we become bound by habit and blinded by precedent. + +The love men have for the formulas and conventions of their daily lives +is the "System's" opportunity for plunder, and it is this fundamental +principle of humanity that makes my work so difficult. It would be as +easy to convince the masses that their playing-cards are all wrong and +that the ace is really of lower value than the two-spot as it is to +awaken them to the terrors of the conditions that are confronting them; +to compel them to realize that a despotism of dollars is being organized +among them; that the cherished institutions of generations are the +instruments by which a few daring schemers are concentrating into their +own hands the money of the nation, and that this concentration can have +no other result than the abject slavery of the American people. + +END OF VOLUME + + + + +LAWSON AND HIS CRITICS + +I + +THE INSURANCE CONTROVERSY + + +In the July, 1904, number of _Everybody's Magazine_ I announced that I +proposed to give to the world a story concerned with events which had +taken place in real life--a true story. + +I outlined it, giving the names of the persons and events it would deal +with. + +These things happened: + +The edition of the magazine was sold out in three days; my chapter was +printed in part or in full in nearly all the papers and periodicals of +the United States and Canada; many of the representative journals, even +in England, published long editorials on the subject, and with but few +exceptions, editorials and news comments were favorable. + +I was urged to continue. My second chapter appeared. + +The magazine, with an additional 100,000 copies, was sold out in two +days. The press took hold of the matter with even greater interest than +it had accorded my first chapter. + +The third chapter met with a still more cordial reception. The edition +of the magazine, although increased another 100,000, sold out as before, +and my mail expanded to a degree that surprised me. In addition to +thousands of press notices and criticisms, I received ever so many +letters from all classes of Americans and Canadians--teachers of the +Word of God, and members of the flocks who are taught, earnest statesmen +and insincere politicians, millionnaires and paupers, anarchists, +socialists, municipal-ownershipists, and the hundred and one travelers +on the beaten highways and lowways of life, who, spurred by ambition or +unrest, pantingly seek a chance to blaze a way for the trudging millions +of the future to that goal of all ambitious and restless dreamers--a +people's Utopia. Nearly all appealed to me to give them the word as to +the ultimate intention of "Frenzied Finance"--"Is it only to point to +the sores, or will it prick them with its long sharp point and will its +double edge cut the flesh in which they are rooted?" Others required +further information or explanation about the subjects I had treated; +another section questioned my statements and found fault with my +disclosures. The volume of these communications and criticisms finally +became so large and they were so urgent in tone that I made up my mind +it was necessary to devise some fair and intelligent way to remove the +writers' difficulties and resolve their doubts. The modern surgeon finds +the preparation of a patient who is to go under the knife as important +as the operation itself. My readers, unacquainted with the intricate +details of finance and confused by the angry outcries and denials of +those I had attacked, required education _en route_ to be able to absorb +and digest the hard facts and strong statements I was dealing out to +them in monthly instalments. My publishers agreed with me as to the +necessity of dealing in some radical way with the emergency, and devoted +to my service additional pages in the back of _Everybody's Magazine_. +Here I decided to begin a department to be called "Lawson and His +Critics" in which I would solve the knotty problems my correspondents +presented to me, set right their misunderstandings, and reply fully to +those critics who had aspersed my motives or were attempting to +discredit my message. + +I began the department in October, 1904, and though I have been most +seriously pressed for time, and in many instances have dealt imperfectly +with the problems treated, I must say that the task I set myself has +proved interesting and agreeable, and the letters the department evoked +have been a tremendous source of inspiration and encouragement to me +along the hail-stony road I had set myself to travel. + +The bulk of the department during the months of 1904 was devoted to the +subject of insurance. In an early chapter of my story I said that the +three great insurance corporations, the New York Life, the Equitable, +and the Mutual Life of New York, were an integral part of the "System," +and especially instanced the New York Life as one of the most pliable +tools of the "Made Dollar" makers. This statement, so mild and so vague +in view of subsequent developments, was the first move in the historic +controversy that has resulted in the extraordinary exposures that are +being made as this book goes to press. When that first pebble was +thrown, the surface of the insurance pond was as placid as a mountain +lake, unruffled by a ripple, and in it were reflected the benignant +faces of the noble philanthropists who consented to spend their days +conserving the interests of the widows and the orphans of America. The +people had grown so accustomed to regarding the McCalls, the Perkinses, +the Hydes, the McCurdys, and the Alexanders, whose eminent physiognomies +looked out at them from their insurance policies, as lofty and generous +souls far removed from thoughts of pelf or self-aggrandizement, that my +assertion caused consternation such as would occur in a Chinese temple +if some rough intruder struck the idol, before whom a congregation was +worshipping, with a stone. At once an avalanche of letters--protests, +demands for further facts, anxious appeals from policy-holders--poured +in upon me, and frankly I took up the subject, giving my readers exactly +what they desired. + + +NEW HAMPSHIRE TRACTION + +In order that the controversy may be unfolded in the manner in which it +was first given to the public, I give here the first letter of the +series, and then follow directly along with those passages from +succeeding numbers that are devoted to the subject: + + BUFFALO, N. Y., August 25, 1904. + + MR. THOMAS W. LAWSON, + Boston, Mass. + + _Dear Sir_: I have been astounded beyond measure at the + revelations you make in your second article regarding the + New York Life Insurance Company, because I have two policies + in that concern which I am keeping up for the protection of + my family. My confidence in the company has been shaken by + your revelations, and I wonder if much more can be said. + Perhaps it is best for clean life insurance to tell all + now--the rest will be the better for it. Do you really + believe the officers of the company personally profited from + using the "cash on hand" of the company? Go on in your + exposure; you are doing a meritorious work, and we poor + devils, plodders, will never cease to thank you for your + work. Should like to have you intimate if anything more + about New York Life is coming. + + Yours truly, + ---- ---- + +To this I replied: I desire to emphasize that the New York Life +Insurance Company, which I cited, is no different from the Equitable and +the Mutual Life, or many of the other large companies. They are links in +the chain of the "System"--necessary links in the device by which +dollars are "made," by which the savings of the people are sucked from +the people to the "System," the "Private Things." + +I will, later in my story, dwell upon this tremendous phase of this +stupendous question, and will only say at the present time, as an answer +to such questions as "Buffalo's": The insurance companies use the +billions the people have placed with them to buy or create banks and +trust companies, the stocks of which are a large part of their assets. +They then use these banks and trust companies, which exist because of +the people's savings, in stock gambling enterprises, speculations as +unsafe and as frenzied as those of the wildest plunger of Wall Street. I +will give one illustration: + +The New York Life Insurance Company's directors and managers created the +New York Security and Trust Company. $1,000,000 capital; $500,000 +surplus--in all, $1,500,000. $150 per share, of which the insurance +company held about two-thirds. The Trust Company soon secured deposits +to the extent of about $50,000,000, and these it loaned out by +"financing" new and old enterprises. Among them was the New Hampshire +Traction. The Trust Company flourished. Its stock advanced in price to +over $1,300 per share, or over $13,000,000, and its different +speculative ventures prospered exceedingly. New Hampshire Traction kept +pace with the rest and simultaneously with them bounded upward in value +until the amount of this stock owned by the Trust Company represented a +value of between $5,000,000 and $6,000,000. There came a time when the +directors of the New York Life Insurance Company decided to dispose of +their stock in the Trust Company, and did so to a syndicate composed of +their own members, headed by John D. Rockefeller, at $800 per share. +Afterward the stock disposed of at $800 per share advanced to over +$1,300, or, with the third which had not been owned by the insurance +company but by the "insiders" and their friends, to a total of over +$13,000,000. Then came the slump, and the price of the New Hampshire +Traction fell to twenty-five cents on the dollar, and the Trust +Company's stock to less than $600. + +If in all the histories of the wildcats of the wild catteries of Wall +Street a wilder case of "frenzied finance" can be discovered, I don't +know it, and yet this is only one of many I could quote, selected at +random. Boiled down, it means that what was bought at $150 went to +$1,400 and back to $590, and that it changed hands at $800 before it got +to $1,400, and that the plunger in this transaction, which made this +plunging possible, was one of the most conservative life insurance +companies in America. + +I will answer "Buffalo's" question by asking another: + +Suppose all the insurance companies have been doing business on the same +scale, and have tied up billions of the people's money in such schemes +as New Hampshire Traction, and the people, learning these facts, should +demand their savings to the extent of the $9,000,000,000 which they have +deposited in banks and trust companies, what would happen? What would +happen to the undigested securities, the insurance companies, the +people's savings, and the policies such as "Buffalo" says he has +purchased for the benefit of his family? + + * * * * * + +This statement precipitated a perfect flood of letters and queries, +growing more urgent as the month wore on. It was impossible to answer +all of them. I contented myself with replying to the letter of a +prominent Philadelphia church-man, a policy-holder in the New York +Life, who wrote as follows: + + PHILADELPHIA, September 23, 1904. + + MR. THOMAS W. LAWSON, Boston, Mass. + + _My Dear Sir_: I have just finished reading the current + article on "Frenzied Finance," and like "Buffalo" I am + astounded at your statements regarding the "New York Life." + I, too, have a policy in that company and have been led to + believe that I was not only insured in the best and most + conservative company, but that I had a first-class and + perfectly _safe_ investment as well. This particular company + claims that not a dollar of its assets is invested in stocks + of any kind, and yet, to quote from your article: + + "The insurance companies use the billions the people have + placed with them to buy or create banks and trust companies, + the stocks of which are a large part of their assets." + + Either you are manifestly unfair or else the company is + guilty of deliberate falsehood for the purpose of deceiving + the public. + + As a policy-holder and prospective sharer in the surplus of + the "New York Life," I am much interested in knowing whether + its statements in regard to its investments are to be relied + upon. + + Will you take just a moment to answer the following + question? Is the "New York Life" telling a falsehood when it + states that not a dollar of its assets is invested in stocks + of any kind? + + Very respectfully yours, + ---- ---- + +I replied: The transaction in regard to the New York Security Company +and the New Hampshire Traction stocks was exactly as I set it forth. I +can imagine no one but an absolute idiot who would dare to set it forth +unless he knew he was dealing with facts. + +Your high position in the church should, in my opinion, peculiarly fit +you to answer fairly your question, "Is the New York Life telling a +falsehood when it states that not a dollar of its assets is in stocks of +any kind?" when I unqualifiedly state the fact that the New York Life +owned the millions of the New York Security Company's stock; that it +paid $150 a share for them and sold them to a syndicate of its own +directors at $800 per share, and that the stock afterward sold at over +$1,300 per share, and still afterward dropped to less than $600 per +share. I did not wish to be unfair to the New York Life, or I should +have stated, what I shall endeavor to show before my story is ended, +that at the time the New York Life parted with these shares to their own +directors at $800 per share they were actually worth and could have been +sold for hundreds of dollars per share more. + + +THE HONESTY OF THE ONE MAN + +At this the big insurance companies uncovered their guns, and soon the +air, the newspapers, and my mail were full of underwriting explosions. +It was necessary then to line up my forces and to go at the attack +seriously. So, having carefully thought out a campaign which my +knowledge of the men whom I was antagonizing taught me would bring +results, I began, in December, as follows: + +When I began to write "Frenzied Finance" I specifically stated that I +should not concern myself with men, but with principles. I held that to +put an end to the plundering of the people required more than the +denunciation of individual criminals; that the real peril lay in the +financial device through which the plundering was done and the "machine" +developed for their operation. The "machine" is the tremendous +correlation of financial institutions and forces that I call the +"System," and the most potent factor in the "System" is the life +insurance combine--the three great insurance companies, the New York +Life, Mutual Life, and Equitable, with their billion of assets and the +brimming stream of gold flowing daily into their coffers. That I should +have to discuss the relation between the "System" and these great +institutions was inevitable; but, knowing how vitally interested the +public is in the preservation of the gigantic structures its savings +have erected, I had thought to treat this phase of my subject later on, +when my readers should be absolutely convinced by what had preceded it +of the honesty and fairness of my purpose. Moreover, it did not seem +possible to touch on life insurance conditions without involving the men +who direct the three great companies, and whom policy-holders and the +people at large have been taught to regard as men of wellnigh miraculous +sagacity, integrity, and beneficence. With these men I have had none but +the pleasantest relations, and determined as I am on the performance of +my task, I go about it with the reluctance a surgeon feels when, in +order to save a friend's life, he must amputate his limb. + +A contingency has now arisen which compels me to depart from my rule and +to discuss much more frankly than I had purposed at this juncture, the +New York Life Insurance Company, the system which controls it, and its +president, John A. McCall, the "System's" representative. + +In reply to the inquiries of an anxious policy-holder, who had taken +alarm at my statement that the funds of these great corporations were +under the control of the "System," I stated in the October issue of +_Everybody's Magazine_ that the New York Life was, as well as its +so-called competitors, the Equitable and the Mutual, as much a +participant in the frenzied speculation of the period as were the +plunging Wall Street stock gamblers; but in giving an illustration of +its methods (the New York Security and Trust Company and the New +Hampshire Traction Company) I selected a case which would not +unnecessarily alarm nervous people, for the transaction showed an +enormous profit as the result of a wild stock plunge, instead of an +enormous loss--some of the New York Life's other deals were much less +fortunate. When I stated that the New York Life disposed of its interest +in the Security Trust Company to its directors for four millions of +dollars, which represented a gain of over $3,000,000 on its original +investment, I was careful not to state that the shares for which they +paid $800 each were worth at the time $1,300 each, or $7,000,000 for +what was sold for $4,000,000--particularly careful to state that they +were afterward worth this additional amount. + +Policy-holders in the three great life-insurance companies may argue: +"The man who is known to us policy-holders as the real head of the New +York Life is John A. McCall, its president. All that you may say about +the 'System's' votaries being in control may be so, but we depend on the +integrity and the character of this one man to protect our interests. He +is our representative, not the 'System's,' and our savings are surely +safe in his strong hands." + +There is the point. In the great insurance corporations that are +"one-man run," the hundreds of thousands of policy-holders have but one +protection. This, notwithstanding the protection of the State laws, the +guardianship of the Insurance Department of the various States, and the +provisions of the company's charter and by-laws. + +However impregnable may seem the safeguards which the law has built +round the administration of our great insurance companies, the fact +absolutely is that the honesty of "the one man" is the one potent +protection policy-holders may depend on. The others may be juggled with +as are the rules of the Stock Exchange, which say in thunder tones, "All +within our sacred walls is honest and honorable," when in reality if the +microbes of dishonor and dishonesty generated within Stock-Exchange +walls each busy week of every year should be collected and disseminated +throughout the land, they would give typhoid of the soul to our eighty +millions of Americans. So it becomes the duty of every policy-holder to +find out by such tests as he can apply, "Is 'the one man' who runs our +company an honest man or is he a dishonest man?" If "the one man" stands +their tests, if he emerges from their ordeal clean, strong, honest, as +they believed, then they may rest awhile in patience. But if he is +revealed as dishonest, then it behooves the policy-holders of that +company to take measures for the protection of their interests. The +welfare and happiness, perhaps the very lives of their mothers, their +wives, and their children depend on their action. + +I was recently waited upon by an important man. + +"Lawson, what are you doing in life insurance?" he asked. + +"Giving facts about the life-insurance branch of a 'System' which is +foully plundering the people," I answered. + +"What are you trying to do?" + +"Educate the millions of life-insurance policy-holders to their present +peril; after they are educated, arouse them to quick, radical action." + +"What are you going to do?" he asked. + +"I am going to cause a life-insurance blaze that will make the +life-insurance policy-holders' world so light that every scoundrel with +a mask, dark-lantern, and suspicious-looking bag will stand out so +clearly that he cannot escape the consequences of his past deeds, nor +commit new ones." + +"Have you figured the consequences to yourself?" + +"Having no interest in what the consequences may be to myself in +performing what I have decided is a sacred duty, I have not." + +"Let me show them to you. First let me ask, do you intend to confine +your criticisms to the New York Life Insurance Company?" + +"I intend to bring out the facts, particularly as to the New York Life, +the Mutual Life, and the Equitable Life; and, so far as in my power +lies, as to every other life-insurance company in America that is +connected with the 'System.'" + +"Are you actuated by any selfish motives--gain, revenge, or friendly +interest in certain life-insurance companies or banks or trust +companies?" + +"My only interest is to perform a duty in righting a startling wrong, +and I would not undertake the terrible task if I could possibly avoid +it." + +"I am sent to ask you these questions, to find out whether, if you are +only seeking to serve the policy-holders, and the insurance companies +can absolutely prove to you that your making public your facts will +cause terrible destruction to policy-holders' interests, you will +consent to forego the life-insurance branch of your story?" + +"I know the facts. I have calmly, and I believe intelligently, reviewed +the effects of their being given to the world, and have concluded that +the damage to policy-holders and the people would, in any circumstances +or conditions, be greater because of my not doing what I have decided to +do than by my doing it. Therefore I will not in any circumstances +consent to stop until I have laid before the world those things I +consider it should know." + +"Well and good. Let me show you what you are up against. The Equitable, +the New York Life, and Mutual Life Insurance Companies, and their +affiliated institutions and individuals, are to-day by all odds the +greatest power in the world, greater by all odds than any power that +can possibly be gathered together from those outside themselves, a power +so great that the effort of no man nor party of men outside themselves +can possibly prevail against their wishes." + +"Stop where you are for a minute," I answered, "and let me run over to +you what I know I am up against, and then you can judge whether I +appreciate the difficulties of my task: + +"First, the three companies I have named have absolute possession of +property and money in the form of assets of over $1,000,000,000--more +than half the combined assets of all the insurance companies of +America--and indirectly, through their affiliated institutions, of an +additional sum, the aggregate of which is much greater than the assets +of all the national banks of America and the great financial +institutions of Europe, such as the Banks of England, France, and +Germany. The three have a ready cash surplus of almost $200,000,000, +which is greater than the combined capital of the four greatest +institutions of Europe--the Banks of England, Russia, France, and +Germany. The income of these three companies is, each year, $100,000,000 +greater than the combined capitals of the Banks of England, Russia, +France, and Germany--or about $250,000,000, $200,000,000 of which is +taken each year from their policy-holders in the form of premiums. Yet +from out of this income there is returned to their policy-holders each +year in dividends less than $15,000,000, and in total payments of all +kinds not over $100,000,000. And yet these three companies pay out each +year in what they call expenses to keep the concerns running +$50,000,000, paying to the officers of the companies $3,000,000 in +salaries, almost $1,000,000 to their lawyers, and a number of millions +in various forms of advertising. + +"Second, the three companies are absolutely steered and controlled from +a common centre, and the men who do the steering and controlling are the +'System's' foremost votaries, Henry H. Rogers, William Rockefeller, +James Stillman, and J. Pierpont Morgan through George W. Perkins, a +partner in J. Pierpont Morgan & Co. Mr. Rogers, vice-president of the +Standard Oil Company, is a trustee of the Mutual Life and a director in +one of the largest trust companies owned by the three great insurance +companies, the Guaranty Trust Company of New York. William Rockefeller, +vice-president of the Standard Oil Company, is a trustee of the Mutual +Life and director in the National City--the 'Standard Oil'--Bank. James +Stillman is a trustee of the New York Life, and president of the +National City--the 'Standard Oil'--Bank of New York. George W. Perkins, +partner of J. Pierpont Morgan & Co., is vice-president and trustee of +the New York Life and a director in the National City--the 'Standard +Oil'--Bank; while John A. McCall, the president of the New York Life, is +a director in the National City--the 'Standard Oil'--Bank. + +"These great institutions own a majority of the capital stock or have +absolute control of a number of the leading banks and trust companies of +New York and elsewhere; and such ownership shows conclusively the +linking together of the three great insurance companies. For instance, +the Equitable owns more than a majority of the stock of the Mercantile +Trust Company of New York, of a book value of about $4,500,000 and a +market value of almost $13,000,000; and of the Equitable Trust of New +York, of a book value of $5,500,000 and a market value of $9,000,000; +and of the Bank of Commerce of New York, of a book value of about +$8,000,000 and a market value of over $9,000,000; and in the directory +of the Mercantile Trust of New York and Equitable Trust is E. H. +Harriman, one of the leading 'Standard Oil' men and one of the active +votaries of the 'System,' while in the directory of the Bank of Commerce +are the president of the Mutual Life and seven other trustees of the +Mutual Life and three of the trustees of the New York Life. + +"The Mutual Life owns stock of the Bank of Commerce, of a book value of +$4,500,000 and a market value of $7,500,000; of the United States +Mortgage & Trust Company, of a book value of $2,000,000 and a market +value of $4,500,000; and of the Guaranty Trust Company of New York, of a +book value of $1,250,000 and a market value of $5,500,000. The directors +of the United States Mortgage & Trust Company consist of eight trustees +of the Mutual Life, including its president, and two trustees of the +Equitable Life, while in the Guaranty Trust directory is the president +of the Mutual Life, Henry H. Rogers, and E. H. Harriman, 'Standard Oil' +votary and director in the Equitable. + +"In addition to these financial institutions, the Mutual Life has about +$20,000,000 of its funds invested in the stock of twenty-five other +trust companies and national banks, while the Equitable has about +$10,000,000 invested in some fifteen other trust and banking +institutions. + +"Third, the absolute control of the three great companies, and through +them of their subsidiary financial institutions, while supposed to be in +the hands of the policy-holders, is entirely beyond their regulation, as +all policy-holders of the three companies give over complete control of +their companies to the 'System' through the following machinery: The +control of the New York Life rests absolutely in President McCall, that +of the Mutual Life with President McCurdy. Originally these men were +elected to office by policy-holders' proxies, voted by the great general +agents; but so immeasurable has been the growth of these corporations +that only rebellion among policy-holders on an international scale could +oust from power the McCalls and the McCurdys. The control of the +Equitable Life rests in the $100,000 of capital stock which is almost +entirely owned by the men who elect themselves to manage the company. + +"Therefore you will see that I fully comprehend that this power, which +you claim to be, and which undoubtedly is, the greatest on earth, is +absolutely, for all practical purposes, in the hands of three men, and +that any one who attempts to do anything contrary to what this power +allows will find himself opposed by practically unlimited money, which +can be used first to corrupt all sources of help, including State +insurance-law enforcers, and then to keep such corruptions from the +policy-holders by subsidizing the press. In other words, you see that I +fully comprehend that I, or any man or any body of men, would be +absolutely helpless in an attempt to correct present evils unless we +could do two things: First, show to the policy-holders of the great +insurance companies that they are absolutely in the hands and at the +mercy of 'one man,' and next, that this 'one man' is unscrupulous." + +In other and different ways I had it forcibly impressed upon me that I +must go no further in connecting the life-insurance companies with +"frenzied financiering"; that while the "Standard Oil"-Amalgamated-City +Bank crowd might bide their time for reprisal and vengeance, the great +insurance companies must at any cost instantly squelch those rash souls +who dared to cross their paths. To all such warnings I replied that a +life-insurance company, especially great institutions with hundreds of +thousands of policy-holders, must be as far above suspicion as Cĉsar's +wife; that the security of the immense funds in their possession must be +as unassailable as the United States Constitution; but that immunity +from criticism could be secured only by honesty of purpose, honesty of +method, and honesty of results; and that I would follow "frenzied +finance" wherever it might lead, even if the exposure brought every +life-insurance concern in the country down to the ring-bolt of making +public confession of complicity. But with all my knowledge of the +"System's" weakness, I never dreamed of the condition of fatuity into +which the past few years of unbridled "frenzied finance" have plunged +its votaries. If the correspondence that follows here correctly +represents the purposes and the methods of great American life-insurance +companies, I ask my readers what quick, sharp, effective means should be +taken to call a halt and rescue the billions of the people's savings +before it is too late. And I ask all policy-holders in the great +insurance companies to weigh carefully what follows, that from it they +may decide the question. + +As soon as it became fixed in the minds of the different interested +parties who had communicated with me that my purpose was unalterable, +queer things happened: + +First, there appeared in the press of the country, under large, black +headlines, the startling confession of the editor of a New York +financial paper, who, conscience-stricken, admitted that he had been +engaged in the systematic blackmail of insurance companies and officials +and Wall Street institutions such as banks and trust companies. It was +a curious document, and even the casual reader must have wondered at the +mysterious lack of detail. The paper, I found out later, was one of the +innumerable swarm of journalistic insects generated, like mosquitoes, in +the financial swamps of Wall Street, destined to live a day and die as +they deliver their sting, and the attention given it was curiously out +of proportion to its importance. Among other queer things, the editor +announced that after printing his confession he would disappear; no +names were mentioned nor a fact printed which identified any one or +anything. All this could not happen without a motive, and I said to +myself, "The 'System' is planting a mine for some one." Not another word +appeared. I awaited developments. On October 8th I received the +following letters, which tell their own story: + + FREMONT, OHIO, October 6, 1904. + + MR. THOMAS W. LAWSON, Boston, Mass. + + _My Dear Sir_: I have followed with intensest interest your + discussion of "Frenzied Finance." The _exposé_ of the + "System," and its Machiavellian performances, was highly + interesting to me. I was associated with Attorney-General + Monnett in his effort to get testimony and the inside facts + concerning the trust and its operations in his prosecution + against that corporation for violating the Ohio anti-trust + law. At that time the books of the company were burned in + Cleveland, and, as stated in your article, the company now + relies upon the superior memory of Standard Oil. + + I was well aware of the connection of certain life-insurance + companies with Morgan and the Rockefellers, but until your + public charge, was not familiar with the details. As I had + considerable money invested myself in New York Life + Insurance I wrote John A. McCall a bitter letter. In this + age of commercialism sentimental benevolence gets little + place. The common sentiments of humanity and appreciation of + responsibility admonish one in moderate circumstances or + even in affluence to invite the co-operation of others in + providing for those dependent upon the individual hazard of + life and fortune. Life insurance has come to be a sacred + thing. It is the substantial token and expression of + responsibility which a reasonable man dying leaves to those + dependent upon him. I so wrote Mr. McCall, and told him that + if the head of a great institution like the New York Life + Insurance Company would be guilty of such perfidy as charged + by you, the organization which would retain him in a + position of responsibility was undeserving of confidence or + patronage. + +[Illustration: PHOTOGRAPH OF JOHN A. MCCALL'S REPLY TO H. C. DERAN, THE +POLICYHOLDER WHO HAD ASKED FOR A DENIAL OF MR. LAWSON'S CHARGES.] + + I enclose for your inspection Mr. McCall's reply. This is + doubtless a sample of the sort of campaign waged throughout + the country by the "System." + + I enclose stamped envelope for the return of the McCall + letter, as I purpose continuing the correspondence until I + force him to an issue. + + You will observe the very palpable evasion of the issue. I + asked him if the details of the transaction described in + _Everybody's_, in which the New York Life Insurance figured + conspicuously, were true. He answered by saying that he made + money out of the trust company venture and retired. The fact + that New York Life money is so deposited as to suit the + convenience of the "System" in its heads--I win, tails--you + lose, operation, is a matter which has escaped the attention + of the astute financier. I have written him further, calling + his attention to the fact that his letter conveys no + information not heretofore made public in circular but that + my inquiry was directed to the particular transaction + alluded to in _Everybody's_, and requesting a flat + affirmation or denial. + + Trusting that these facts may be of assistance to you, I am, + + Yours very truly, + (Signed) H. C. DERAN. + +I shall spare my readers the enclosures. They were newspaper slips, +printed on fairly thick paper, reproduced from unknown publications, and +obviously put forth to discredit me by implication. One, headed "A +Frenzied Financial Blackmailer," from the _Vigilant_, New York City, +September 30, 1904, presented the confession, previously referred to, +made by the editor of the _United States Investors' Guardian_, and an +editorial denouncing the blackmail of financial corporations. Another +slip was "Stamp out the Fake Financial Newspaper Publisher" from the +_Fourth Estate_, New York City, October 1, 1904, in which the wickedness +of the aforesaid editor came in for further moral castigation. + +At once, as I read these letters and ran over the printed slips pinned +to Mr. McCall's, I realized the purpose of the blackmail editor's +confession and just how so much space came to be given it in the daily +papers. Insurance corporations are large advertisers[20] and enjoy great +popularity in the business offices of great newspapers. It is not said +in these clippings that either Mr. Lawson or _Everybody's Magazine_ +belongs to that lowest order of criminal, the self-confessed +black-mailer, but the suggestion is obvious. Every policy-holder +throughout the world who received these enclosures attached to letters +from the greatest insurance president in America would instantly supply +the connection--"'Frenzied finance black-mailer'--that's intended for +Lawson, surely; 'Frenzied financial journal'--_Everybody's Magazine_, +beyond question." + +Will my readers weigh carefully this awful charge: + +"Thomas W. Lawson, in addition to being a frenzied financial +black-mailer, is attacking the New York Life Insurance Company because +he tried to secure insurance from that company, and that company would +not give it to him. His attack is made in the interest of some competing +company." + +Again, I ask that it be kept in mind that all this is not said by an +insignificant and irresponsible trickster, but is deliberately put forth +by the greatest insurance president in America, over his signature, to +his policy-holder No. 826,152 and 957,006. + +Soon afterward, in its issue of October 20th, a well-known organ of the +insurance companies, _The Spectator_, published in New York, had a long +article dealing with malicious attacks on our great insurance +corporations, specifically mentioning my accusation against the New York +Life. "Mr. Lawson was actuated by the meanest motives," says _The +Spectator_. + +Extract from _The Spectator_, October 20, 1904: + + Mr. Lawson, in the hypocritical rôle of a + would-be-reformed-speculator, is a figure calculated to stir + the risibilities of all who have watched his antics and read + his articles, _especially when each one of the companies he + mentions has repeatedly rejected him for insurance_. + +Letters to policy-holders from the New York Life Insurance officers +poured in on me from different parts of the country, all containing the +same defence and the same accusations as the one above, and signed by +vice-presidents of the company as well as President McCall, showing +conclusively that this great corporation as a corporation had +deliberately adopted this method of meeting my serious yet +conservatively put business accusations. + +President McCall's defence of the New York Life Insurance Company and +his reply to my accusations are now completely before my readers. Let us +see if there is not a chance here to determine the grave question, "Is +'_the one man_' who runs each of our great insurance companies honest?" + +The facts are: During the past twenty years I have been importuned, +begged, and hounded by the several great insurance companies of the +United States to take out policies with them almost upon any terms I +might name. Of this statement I could present more photographic proof +than would fit in any one issue of this magazine, but most of it would +have no bearing on the point at issue. + +In the present year (1904)--to go no further back--John A. McCall has +repeatedly urged me to come into the New York Life Insurance Company. +Absolute evidence of the truth of this assertion is presented below. Mr. +McCall's letter reproduced here would be accepted as complete proof in +any court of justice. In the correspondence that follows this first +letter it will be seen that Mr. McCall left no stone unturned in his +effort to get me into the New York Life Insurance Company. A duplicate +of the communication sent to my residence went on the same date to my +office. To quote his own words, "I hope you may" and "I may have the +pleasure of welcoming you either to new or increased membership in this +great mutual insurance investment." Then, his anxiety being so great, +after waiting four days for a reply he sent his special agent to argue +with me, and, on the following day, his Boston manager to urge me +further. + +[Illustration: PHOTOGRAPH OF LETTER FROM JOHN A. MCCALL SOLICITING +INSURANCE, SENT TO MR. LAWSON'S HOUSE.] + +[Illustration: PHOTOGRAPH OF HEADING AND SIGNATURE OF JOHN A. MCCALL'S +LETTER OF JANUARY 22D, SENT IN DUPLICATE TO MR. LAWSON'S OFFICE; OF +SPECIAL AGENT GILLESPIE'S LETTER OF JANUARY 27TH; OF MANAGER HAYES'S +LETTER OF JANUARY 28TH. THESE THREE LETTERS SOLICITING INSURANCE, +FOLLOWED EACH OTHER WITHIN A PERIOD OF SIX DAYS.] + +Is it any wonder that I called the history I am writing "Frenzied +Finance"? The man who wrote the letter practically saying that I was a +black-mailer and that my reason for attacking the New York Life was my +anger because he would not take me into his company, and the man who +wrote the ones begging me to come in, are one and the same; and he +absolutely controls directly $400,000,000 of the people's savings in +the New York Life, and indirectly unnumbered millions in affiliated +institutions! + +I think the case is complete. The policy-holders of the New York Life +have an opportunity to decide whether the "one man" who runs the great +institution in which their savings are invested is honest. In making up +their minds, I implore them not at the present time, or at least until +the question has been more fully ventilated, to allow their policies to +lapse. Under any and all circumstances they should keep up the payment +of their premiums, for the one thing especially desired and schemed for +by some of the "frenzied finance" insurance companies is a wholesale +lapse of policies. + +Some few years ago the financial world learned with great interest of a +new and very useful invention in finance. A group of individuals who had +been buying large quantities of a certain stock at a low price, found +they could not, on account of the fact of its overcapitalization having +become known to the public, resell it; and they were, to use the +stock-gambling term, "hung up" with it because it was too water-logged +to float. It became necessary to disguise its identity. Here's how they +did it: They formed a "syndicate," to which they "turned over" their +stock at a good profit; the "syndicate" in its turn put it "in trust" by +simply depositing the stock certificate with a trust company, which in +its turn issued against the stocks thus held a new security, which it +called a "bond." For these a ready market was found, for the word "bond" +is still a term to conjure with in the world of finance. + +This seemed such a serviceable arrangement that the originators soon had +many imitators. Many "syndicates" were formed, and many so-called +"bonds" were put on the market. In most cases the stocks were purchased +at a low price, turned into "trusts" at double their cost, and then paid +for by means of these certificates, dubbed "bonds." As one stock after +another was converted into syndicate certificates--"bonds"--the +familiarity of the procedure robbed it of its novelty and these "bonds" +were quoted and dealt in much as other and more tangible securities +bearing the same name. Perhaps this is why the startling announcement of +the New York Life Insurance Company made about this time, that it +proposed to sell all its stocks and thereafter hold nothing but bonds, +created so much less of a sensation than was anticipated. The term +"bond" had become vulgarized. + +This excellent example would undoubtedly have had many followers but for +the humor of the Tobacco Trust. This robust institution, with an immense +amount of watered stock, audaciously poured it all but a small amount +into bonds, $157,000,000 of them, and with a fine trumpet-blast +proclaimed these "bonds" safe investments for widows, orphans, and +insurance companies. Even Wall Street, with its frenzied votaries and +its frenzied environment, was staggered. The culmination of these +conversion performances was the brilliant plan evolved by George W. +Perkins, the junior partner in the firm of J. Pierpont Morgan & Co., +vice-president of the New York Life Insurance Company and expert +investor of its vast surplus, to have the United States Steel Trust +purchase some $200,000,000 worth of its own water-logged stock and +convert the same into more "absolutely safe bonds"; for its most +valuable services in the turning-over process the Morgan firm was to +have a commission of some forty millions of dollars. At this juncture +"frenzied finance" became gagged with its own froth, and I have not +space here to go further into the subject. + +The New York Life Insurance Company declares to its agents, +policy-holders, and prospective policy-holders that it no longer holds +stock securities. In its last report to the Insurance Commissioners +there are set forth stock securities of the kind I have described above, +to the amount of fifty millions of dollars. I will give one +illustration: + +"Northern Pacific--Great Northern--C., B. & Q. collateral 4s, book +value--$12,057,132.59, market value--$11,375,000."--(From the official +report to Insurance Commissioners.) + +Now, these bonds are nothing more nor less than Chicago, Burlington and +Quincy stock of a par value of $100 per share, which shares were +purchased by individuals, and had "bonds" issued against them at $200 +per share. (Northern Pacific and Great Northern stock in about the same +proportion.) In the sense in which the public look upon the old bonds of +railroads this "bond" is no more a bond than it is a Government bond. It +is nothing more nor less than a stock security, _and yet President +McCall says in his letter printed above and sent by him to +policy-holder DeRan that the New York Life does not and cannot invest +its surplus in stock securities_. + + +THE TRUE STORY OF HOW I WAS "BLACK-LISTED" + +The publication of President McCall's letter and the charges which +accompanied it attracted so much attention that the "Big Three" were +flooded with letters from policy-holders demanding information. In the +January, 1904, issue of _Everybody's Magazine_, I continued the +controversy. After reviewing the conditions of the previous month's +argument, I went on: + +In entering upon the exposure of the most powerful body of men in the +world, I knew quite well what I was "up against," and deliberately +decided that in the conduct of my fight I would use such strategy as I +believed proper to outwit so strong and so unscrupulous an adversary. +One can hang a dog as well with a cord as with a hawser, and in proving +my assertions I am quite willing that the insurance companies should +believe each play is my best card. I decline, however, to show my hand. + +In reply to the charge that I was attacking the New York Life because I +had been refused insurance by that company, as positively stated in Mr. +McCall's letter, I reproduced a letter written and signed by President +John A. McCall, dated 1904, soliciting me to take out insurance in his +company. I printed parts of three other letters, one directed to my +office, also signed by Mr. McCall, another from the special agent, and a +third from the Boston agent of the New York Life, supplementing Mr. +McCall's letter and requesting the privilege of an interview. + +This correspondence was put forth with a thorough understanding of its +nature. The publishers of _Everybody's Magazine_ and my own lawyers, to +whom I submitted it, both pointed out that the insurance companies would +undoubtedly take the ground that the McCall letter was no more than a +circular that had been sent out to a number of capitalists and had gone +to me by mistake. I replied that such a rejoinder would practically +amount to an admission that the statement and signature of the highest +officials of the New York Life were valueless and without significance, +which would place President McCall in an untenable position. If his +signature were valueless and without significance when appended to a +letter addressed to me, why not in other instances if the interests of +his corporation seemed to require such a disclaimer? Considering my +argument, would not such a confession have a pregnant bearing on the +proposition--is the "one man" honest, especially as I was equipped with +additional documents to offset further attempts on the part of the +insurance companies to show me up as a disappointed seeker after their +policies? + +Here, specifically, are the details of my encounter with the +life-insurance institutions, and I pledge my word to my readers that +they constitute all the facts in this connection. They are well known to +the prominent men associated with the great companies whose duty it is +to keep track of just such transactions. Whoever knows by experience of +the incessant pursuit of business by the important insurance +corporations need not be told that a man in my position has had his +share of importuning by agents great and small. I have never sought life +insurance, for it has not appealed to me as an investment, but on three +separate occasions I have yielded to the persuasions of a friend +connected with one of the big institutions and have considered the +subject. The first time was in 1887, following a breakdown from +overwork. This illness my friend used as an argument to induce me to +take out insurance, and I went so far as to agree to submit to a private +medical examination by the leading physicians of his company for the +purpose of ascertaining if my breakdown, which for a brief time had left +a trace of paralysis in my left side, would bar me. This examination was +at my own expense, and it was expressly understood that, being private, +it should not constitute a record. The physician pronounced me a perfect +risk, but advised against going further inasmuch as a rigid rule of the +company precluded them from granting insurance to any one who had +suffered from this form of illness until seven years after the attack. +I was not disappointed except on account of my friend. + +Five years later his solicitation was renewed and I was assured that the +officials of his company were so eager to have me that they would waive +the seven-year rule, which still had two years to run. This time I went +up before another medical examiner, and after the usual tests, was asked +the stereotyped question if I had ever previously been rejected for life +insurance. My friend replied for me--no. I, however, in spite of his +protests stated fully the conditions of my previous examination, which +the doctor assured me did not constitute an official rejection, and the +application was filled out. In the conversation that ensued, the doctor +said that it was safer to await the expiration of the seven years, and I +being still indifferent, except to my friend's interest, accepted the +apologies of the several people concerned for the trouble I had taken +and let it go at that. + +Four years later, in 1896, after the attack of appendicitis which I +described in the December, 1904, instalment of "Frenzied Finance," again +my good friend the agent came to me and used the incident of my narrow +escape from death to impress upon me once more the desirability of +having a large policy of life insurance. Those who have read the +"System's" disclaimer, will remember that I had been blacklisted since +1892. There were the usual consultations with high officials of the +corporation, and when all preliminary bargains had been arranged, I +underwent a thorough examination in New York. This time, the seven-year +term having expired, I was pronounced a perfect risk. But my latest +illness had brought me up against another waiting rule, and once more +the subject was abandoned after the usual expressions of regret and +good-will. Since 1896 my connection with life-insurance companies has +been about the same as that of a molasses barrel with the industrious +flies in summer. + +The interviews of 1892 and 1896 are both matters of record. My position +in each instance was well understood, and several insurance officials +who know the facts as well as I do have, since the publication of the +company's statement, come to me and offered to back up my assertions +with their own. American manhood is certainly not extinct when men are +willing to sacrifice their careers to set a wrong right. + +The manner in which the great companies have met my rejoinder to +President McCall will afford my readers an excellent illustration of how +the "System" goes after a man who has excited its antagonism. + +A few days after the publication of the December issue of _Everybody's +Magazine_, containing my fac-simile of President McCall's letter to +policy-holder DeRan and his two letters to me, the Life Insurance +Underwriters met and "resoluted" that I had applied for insurance in the +New York Life Insurance Company in 1892, and being asked if I had ever +been refused insurance, had replied in the negative. Investigation +showed that I had been refused four years before by two other companies, +whereupon my application was rejected and I was practically +black-listed, and so could not secure life insurance in any American +company. By way of corroborating this plausible story two letters, +purporting to have been written by agents of the two companies to their +head officers without my knowledge, were incorporated in the resolution. +The letters stated that the writers could secure me for a large amount +of insurance if the companies would accept the risk. The virtuous +corporations were alleged to have replied that Mr. Lawson had been +refused life insurance before, and for good reasons was not desired as a +risk. This resolution was then published throughout the press of America +in the news columns, and to all but those initiated in the desperate +practices of the "System" and its votaries, it was conclusive evidence +that an unprincipled man had been convicted, red-handed, of fraud. + +You who read this statement of mine doubtless found the resolutions in +your own paper, and thought it ordinary news-matter printed because of +its public interest. This notice was an advertisement disguised as news, +and inserted through the "System's" professional character assassinator, +whose head-quarters are in Boston, a person who will occupy a prominent +part in the chapters of my story wherein I treat of the crimes of +Amalgamated. The publication cost the insurance companies $2.50 per +line of the policy-holders' money, while advertisements that I insert in +the course of my private business cost me but 75 cents per line. + + +HOW THE "SYSTEM" MAKES ITS PROFITS + +It appeared that I had sinned still further, for had I not questioned +the virtue and integrity of the New York Life's securities? To +policy-holder DeRan, Mr. McCall had stated, over his own signature, that +the New York Life did not and could not own stock securities. (See the +DeRan letter on page 428.) I proved from the regular insurance reports +that millions of the New York Life's bonds were no more than disguised +stock securities, created by the new device of depositing stocks with a +trust company at an inflated price and issuing against them a receipt +which is arbitrarily called a "bond." I mentioned, as an illustration, +the Northern Pacific-Great Northern-C., B. & Q. Collateral 4s, created +out of the stock of the Chicago, Burlington & Quincy and other +railroads. I could have selected a much worse type of security, just as, +instead of the typewritten letter of Mr. McCall, I might have published +others of a more personal nature. + +Against me out sallied 2d Vice-President Perkins, brother of George W. +Perkins, 1st Vice-President of the New York Life (J. Pierpont Morgan's +partner), and at a banquet in Philadelphia boldly answered my aspersions +by declaring that the bonds I named "are printed in the list of holdings +which the company publishes in detail, and has published for the last +five years, in order that its policy-holders may be informed of its +affairs in the minutest detail." The convincing logic of this rejoinder +the dullest will appreciate, but for a moment I must stop to remind Mr. +Perkins that the publicity on which he plumes himself is really not an +expression of the New York Life's individual frankness, but merely an +observance compelled by the law. + +All this recapitulation has been for a purpose. My readers will bear in +mind before taking hold of my next exhibit that the great insurance +companies have published me as a falsifier, who since 1892 has been +refused insurance and black-listed for good reasons, and have claimed +that Mr. McCall's letters were circulars sent me by mistake. We are +still considering the problem--_are the men who run our great insurance +companies honest?_ Well, look at the reproduction on page 442 of a +document that is now in my possession and has always been since the date +when it was delivered to me by one of the three great representatives of +the "System," the Equitable Life Insurance Company. + +This document speaks for itself. My readers are aware of the +negotiations and investigations which precede the making of an insurance +contract. To them and to the "System's" votaries I recommend the exhibit +and the underwriters' resolutions as a simple lesson in frenzied +finance. + +My charge that the directors of the great life-insurance corporations of +America use the funds of the companies they control in stock speculation +for their personal benefit is but one contention in my argument against +the character of their management. Here I formally add another charge: +It is that in the placing of loans, in the purchase of properties and +securities, and in the underwriting of enterprises, there are enormous +profits made, directly and indirectly, which are pocketed by individuals +and are never shown on the books of the corporation. + +The basis of life insurance is security. A policy-holder pays his +premium to enable the corporation accepting it to make good its contract +with him when death or time matures it. The vast sums in the possession +of the three great companies are accumulated to safeguard their +policy-holders, and should be invested only in securities of tried and +solid worth, which will bring in no more nor less than the going rate of +interest. There must be no experiments and, above all, no speculation. +But what do we find? The positions of managers and manipulators of these +huge hoards of the people's money have become the greatest financial +prizes of the day. New and ingenious methods of graft have been devised +in connection with them. The vast revenues of the insurance companies +have become the "System's" most potent instrument in working its will in +the stock world. + +[Illustration] + +[Illustration] + +Their investments, largely in the securities of properties or +corporations in which the "System's" votaries have large interests, are +fertile sources of profit to the "insiders." The groups of banks and +trust companies affiliated with them are the medium through which access +to the coveted insurance funds is obtained, for these institutions are +allowed by law to use money for speculative purposes, which the +insurance concerns are prohibited from doing. + +The immense opportunities for profit afforded by the control of these +great money hoards are taken advantage of in various ways. Let me +illustrate one or two of them. Rogers, Rockefeller, Stillman, and Morgan +buy the capital stock of three railways at a fair valuation, say, +$20,000,000 apiece, $60,000,000 for the three. Owning all, or nearly +all, the stock, they can put its price on the stock-exchanges to any +figure they desire, say, $60,000,000 for each railway, or $180,000,000 +in all. They proceed to deposit the stocks of the three roads in a trust +company, issuing against them $180,000,000 of what they call "bonds." An +"underwriting" syndicate is then organized. This is composed of certain +individuals and corporations who agree that when these bonds are offered +to the public at $180,000,000, the portion the public does not buy, they +(the "underwriters") will purchase on the basis of $120,000,000; in +other words, they guarantee the sale of the bonds at $180,000,000. In +return they "make" on all the bonds sold the difference between the +price to them, $120,000,000, and the price the public pays, +$180,000,000. Let us assume that the public takes up the issue greedily +and the full price, $180,000,000, has been secured. The original owners, +Rogers, Rockefeller, etc., have made $60,000,000, the difference between +the first cost and $120,000,000, the cost to the "underwriters," while +the "underwriters" have made $60,000,000, the difference between +$120,000,000 and the $180,000,000, the cost to the people. In looking +over the list of subscribers to these bonds, you will note that the +largest purchases have been made for the great insurance corporations +and the banks and trust companies owned or controlled by them and "The +System." If, in the instance I am using for illustration, a president +or vice-president of one of the great insurance companies is known to be +willing to subscribe for, say, $10,000,000 for his insurance company; +$5,000,000 for his principal trust company, which is owned by the +insurance company; $1,000,000 apiece for five other banks and trust +companies, also owned or controlled by the insurance company; and can +influence five other affiliated institutions to subscribe for $1,000,000 +apiece, he controls, as will readily be seen, a purchasing power of +$25,000,000, and is sought for as an underwriter, if he is not already +an owner. For this $25,000,000 which his institutions buy he "draws +down," as his personal profit, 33-1/3 per cent. "underwriters'" +commission, or over eight millions of dollars. + +In taking this amount, he is not _robbing_ his insurance company, in the +common acceptance of the term in this era of "frenzied finance," though +he has absolutely appropriated to himself a profit which belongs to it +and not to him. + +It must not be supposed that such transactions as this I have outlined +are conducted in the simple ABC fashion I have set down here for purpose +of illustration. No "one man" appears through any deal. The purchases +and sales are usually made through dummies, and the final recipient of +the "made millions" carefully conceals all the phases of his +participation. + +Let us take another type of transaction. An insurance company owns two +adjoining pieces of unimproved city real estate, for which it paid +$250,000 apiece, but which are now worth $500,000 each. The directors of +the corporation formally decide to dispose of these holdings, and sell +the first piece to a trust company, which is owned or controlled by the +insurance company. One of the "System's" dummies or an officer or +director of the corporation agrees to take the other at the same price. +This is a perfectly legitimate transaction, and the insurance company +shows a half-million profit on its investment. The next step is this. On +its piece the trust company erects a two-million-dollar building, +procuring the money from the insurance company at a low rate of +interest. Thereupon the value of the adjoining piece bought by the +"System's" votary jumps fifty per cent., so he has made $250,000 +without risking a dollar. At the same time there have been several other +profitable transactions between institutions and individuals. The agent +who disposed of the two pieces of real estate and who is "in" the +transaction receives a generous commission for making the sales; the +trust company's representative has his own "draw-down," and there are +further commissions to the agents who borrow and loan the money and +control the erection of the building. + +My readers may well ask, Are these merely illustrations, or do such +things really take place? I unqualifiedly reply that deals similar to +these have occurred repeatedly and that the principle and procedure set +forth are the rule and not exceptional. Here is a minor episode of which +I have personal knowledge. A well-known man made direct application to +the Mutual Life Insurance Company for a loan of $400,000 on a valuable +city business block which he owned. He was told that the corporation had +no funds available for that purpose. The refusal was authoritative and +definite. A few days later a lawyer and real-estate agent came to his +office and said to him: "I'm informed that you want $400,000 on your +property. I can let you have it, or $500,000 if you need that much." + +"Good," said the would-be borrower, "I will take it. Whose money is it?" + +"The Mutual's." + +"My dear fellow," said the would-be borrower, "how can that be? I was +there at the office a few days ago and was assured I could not have the +money." + +"That's all right," was the answer. "Of course you could not get the +money. The right party did not see the right party. D'ye understand?" + +He understood. + +A recent issue of the _Insurance Register_, of Philadelphia, in +criticizing my comments on President McCall and life insurance, makes +the following significant admissions in regard to the conduct of these +great corporations: + + While riding on the train on my way to my office this + morning a lawyer told me the following story: A client of + his, a real-estate agent, represented a corporation owning + and wishing to sell a valuable Chestnut Street property. + The price asked was $750,000. A representative of a New York + corporation called upon him and agreed to take the property, + but stipulated that the price named in the deed and + receipted for should be $850,000, the difference covering + his commission of $100,000. The Philadelphian, finding it + impossible to induce his clients to make this concession, + and the New York agent insisting upon it as indispensable to + the purchase, made a trip to New York to see the principal, + acquaint it with the facts, and find out whether or not some + arrangement could be made by which the buyer could take care + of its agent's commission. He was received by the manager of + the New York corporation, but when he stated that he + represented the owner of the Philadelphia property he was + instantly bowed out of the office, with the assurance: "We + never interfere with business in the hands of our agent." + The outcome was that the sale was not consummated, because + the officers of the Philadelphia corporation would not + receipt for $850,000 when they were to receive only + $750,000, for the reason that they could not square the + transaction with their stockholders, and the buyer's agent + would not consummate the deal without such a receipt, + because he could not square with his client and its + stockholders the payment of $850,000 with the consideration + of $750,000 mentioned in the deed. This story was told to + illustrate the proposition that every action has its + prompting motive, and my fellow-passenger imparted to me his + conclusion that the motive of the manager of the New York + corporation for refusing to listen to his client was that + "the scoundrel was in cohoots with the agents to share in + the commission and cheat his own company." The public will + in time come to look for motives, and we, fellow-editors, + and the managers of mutual life-insurance companies, will be + judged by what seems the most apparent motive for our + actions.... + + Any alliance between life insurance and this modern + speculative frenzy cannot be too deeply deprecated, nor too + strongly reprobated. Every true friend of honest life + insurance among insurance journals will demand that this + great business, of all businesses, must be kept free from + the contagion of corruption that has shamed finance, is + covering commerce with a blighting mildew, and threatens our + whole land with disaster as well as dishonor. + +All this is preliminary to treating the case of the Prudential Insurance +Company. I want to say here that I do not know the corporation, any of +its officers, nor any one interested in the control or management of it, +and personally have never had the slightest connection with its +officers. I desire to prove through an outsider, some one of +unquestioned authority, that the great insurance companies are part of +the "System" and are engaged in manipulating the stock-market with the +funds their policy-holders put in their hands as a sacred trust. In so +far as the Prudential is concerned, rank and unsound as are the +transactions I am about to speak of, my investigations have proved to me +that this insurance corporation is only as a baby-carriage to a runaway +automobile compared with the three great representatives of the +"System," the New York Life, the Mutual, and the Equitable. Certain +critics have accused me of being unduly emphatic in my strictures on the +doings of the corporations of which I am treating. I will confess to a +secret amusement at being able, in this instance, to quote the language +of one of the most conservative insurance officials in America, +Frederick L. Cutting, for many years Insurance Commissioner for the +State of Massachusetts. + +The Prudential Life Insurance Company has $2,000,000 capital stock. The +stock is owned and the company absolutely controlled by a few men. This +capital of $2,000,000 represents only $91,000 paid in in cash; the +balance has been derived from stock dividends; that is, profits that +have been made out of policy-holders. In addition to this enormous +amount, there has been paid ten per cent. in cash dividends annually, so +that for every thousand dollars paid in the stockholders hold $22,000 of +stock, upon which they receive annually $2,200, or, as Commissioner +Cutting puts it, "each year for ten years the stockholders have received +in cash dividends more than twice the original investment." I commend to +the policy-holders of the Prudential and other insurance corporations, +and to other honest men, these tremendous figures: every $1,000 invested +turned into $22,000, not in a gold or diamond mine, but in a +life-insurance company where every dollar comes from the policy-holder +who is supposed to pay in only enough to insure a promised payment plus +provision for honest expense. + +The Prudential Company owned the stock of the Fidelity Trust Company, +the capital of which was $1,500,000, and the directors came before +Commissioner Cutting and informed him that they proposed to double up +the stock of the Fidelity Trust Company to $3,000,000; that the new +$1,500,000 at a par value of $100 was to be sold for $750 per share; +that the new stock was to be bought by the Prudential Company and the +Equitable Company; and that with the proceeds of the sale, the Trust +Company was to buy a control of the Prudential Company from its +directors. The motive of this transaction was as follows: The set of men +who absolutely controlled the Prudential, with its sixty millions of +assets belonging to its policy-holders, proposed to control it for all +time, but without tying up $7,000,000 of their own money in the +business. In other words, they desired to eat their pudding and yet have +it for continuous re-eating, and had found a way to accomplish this +heretofore impossible feat. + +By this plan the men who controlled the Prudential Company, and thereby +the Trust Company, at the time the plan went into force, would forever +continue to manage and control both institutions, although not one of +them held a policy or any investment in the insurance company beyond the +one share of stock required by law to qualify as director. + +If this scheme had been consummated it would have borne to "frenzied +finance" the same relationship that perpetual motion does to mechanics. +By it a few men could gamble forever with the entire assets of the +policy-holders of this corporation for their own personal benefit. If my +readers will imagine the same scheme applied to several other great +insurance companies and the men controlling them, the "System's" +votaries, they will recognize the "System's" ideal world, with all the +people in a condition of ideal servitude. However, this ingenious plan +was forestalled because there happened to be in control of the +life-insurance affairs of Massachusetts one of those old-fashioned +relics of American honesty--a man who thought more of the interests of +the people intrusted to his care than of the prospect of innumerable +"made dollars" which might have been his had he proved more amenable. It +is regrettable that he was not able to deprive the conspirators of their +power to juggle with the property of the corporation, for only two weeks +later they developed and executed an alternative device which +practically accomplished the result which the Massachusetts authorities +had declared illegal and the courts of New Jersey had enjoined. + +There is food for thought here for the policy-holders of American +insurance corporations who have intrusted to the "System" and its +upholders the billions of their savings, to which they are adding every +year hundreds of millions. To them I recommend a reading of the +Forty-eighth Annual Report of the Massachusetts Insurance Commissioner, +dated January 1, 1903, and the decision of the New Jersey judge who +passed on the case. These men are surely not to be accused of exploiting +my story. Under the head of "Control of Life Insurance Companies" in the +Massachusetts Report will be found the following: + + The Insurance Commissioner had the honor of addressing the + insurance committee of the General Court relative to the + control of life-insurance companies by other corporations or + by syndicates. For some years it has seemed to impartial + observers who are conversant with life-insurance matters, + and have also seen the eager quest by promoters for funds to + finance all kinds of enterprises, and the determined + struggle to grasp every opportunity for speculation, that + there would be no cause for wonder if covetous glances + should be turned toward the massive accumulations of + life-insurance companies. It is well, therefore, to pause + and ask what would be the chances for obtaining control of + them, and what might be the result of such control, and in + general whether the funds of such companies are imperilled + by modern methods. + + Insurance corporations on a capital stock basis, on the + other hand, give their policy-holders no voice in their + management. To obtain control of such a company it is + necessary only to control by purchase or otherwise a + majority of its capital stock. If a "king of finance" should + start out with the determination to secure a majority of the + stock of such corporations, the chances are that in some + cases at least he would be successful. He might, it is true, + be obliged to pay more than the "book value" of the shares; + but perhaps _control_ of a company's assets would well be + worth twice or thrice or even more than what could be + figured out as the value of the stock on the books of the + company. On no other theory can the figure offered for + life-insurance company stock in some cases be accounted for, + since these offers are not warranted by the surplus nor by + the dividends paid, nor by both combined. + + Is there aught to prevent a bold manipulator from entering + this inviting field and purchasing a controlling interest in + the stock of enough such life-insurance companies to make + their combined assets aggregate one hundred million dollars + of the more than six hundred millions of assets of stock + life-insurance companies doing business in Massachusetts? + This accomplished, he transfers his rights to a "trust," or + an association, or trust company, which is not only a bank + of deposit, but is also engaged in brokerage schemes, in + financing large enterprises and promoting all kinds of + corporate consolidations, and underwriting their stock for a + consideration. The central controlling trust company, or + whatever it may be, becomes a medium through which the + investments of the controlled insurance companies are made; + all sales of their securities pay tribute to its treasury; + all funds awaiting investment are deposited in its keeping; + the most valuable of their securities are turned into cash, + and then used by the controlling power for such purpose as + it sees fit. All these things are conceivable, and their + accomplishment would be a no greater task, seemingly, than + some of the gigantic "operations in finance" of the last few + years. + + Judged by what has happened in other fields, this trust + would not only control these vast assets, if the plan should + be executed, but would control them without individual + liability on the part of its managers. + + THE PRUDENTIAL MERGER CASE + + Is there really any danger, it may be asked, that any trust + or syndicate will attempt to control the stock and assets of + life insurance in this way, or is this simply the + presentation of possibilities? As an answer to that question + here follows a plain, unvarnished story of what has been + attempted and what has taken place within the past year + between one of the life-insurance companies doing business + in Massachusetts and a trust company with which it has close + relations. + + In October, 1902, the Insurance Commissioner received from + the president of the Prudential Insurance Company of America + a letter, transmitting a copy of a circular letter addressed + "To the field and home office staff" of the company. That + circular letter disclosed a plan of mutual control between + the insurance company and the Fidelity Trust Company, a + corporation organized under the laws of New Jersey. It + stated that: + + "The capital of the Fidelity Trust Company is about to be + increased from $1,500,000 to $3,000,000, the new stock being + sold at $750 per share. This will result in giving the + Fidelity Trust Company a capital of $3,000,000, a surplus of + $13,000,000, and a considerable amount of undivided profits, + making this company, from the standpoint of capital and + surplus, as large if not larger than any similar institution + in the country. Sufficient of this stock will be taken by + the Prudential Insurance Company to give it, together with + its present very large holdings of Fidelity stock, absolute + control of that company. A very large portion of the balance + of said stock is to be taken by the Equitable Life Assurance + Society of New York, which will give to that company a very + substantial interest in the Fidelity Company, and therefore + justify it in materially increasing its business with the + Fidelity. The bulk of the new money thus to be received by + the Fidelity Trust Company is to be used by it in the + acquisition of a controlling interest in the entire capital + stock of the Prudential Insurance Company.... A contract has + been entered into between the Fidelity Trust Company and a + large majority of stockholders in interest of the + Prudential, in which the latter have contracted to sell + their holdings of Prudential stock, or as much as may be + necessary, to the Fidelity Trust Company on or before May + 1st next, at $600 for every $100 of par value.... While by + this arrangement the Prudential Company will control the + Fidelity, and, on the other hand, the Fidelity will own a + majority of the capital stock of the Prudential, the annual + meetings of the two companies will be so arranged and other + arrangements be so made that the Prudential will forever be + the dominant factor, as of course it should be. The officers + of the Prudential are united in their belief that this move + is of the greatest possible interest to its stockholders, as + well as to all of its policy-holders and its great army of + employees. The consummation of this arrangement insures the + continuance of the present management of the Prudential, + both in its home office and in the field. The advantages of + the plans of the trust company are too obvious to need + comment. It is expected to consummate this entire + transaction between the two companies on or about February + 1, 1903." + +The Insurance Commissioner of Massachusetts, on receipt of this +circular, wrote United States Senator John H. Dryden, president of the +Prudential Insurance Company of America, declining to approve of the +proposed exchange of stock on the ground that the merger was +antagonistic to the interests of policy-holders, inasmuch as it forever +deprived them of the power to dislodge the management from the control +of the institution. The minority stockholders petitioned the New Jersey +courts for an injunction to restrain the Prudential and the Trust +Company's directors from carrying out the proceeding for mutual control, +and Vice-Chancellor Stevenson enjoined the corporation from executing +its project. However, the reciprocal control was effected by the sale of +enough Prudential stock to the Fidelity, whose capital was increased for +the purpose of purchasing it, so that the Fidelity lacks but eight +shares to control absolutely the Prudential. As the situation stands +now, the Prudential directors control the Fidelity, and the Fidelity +holdings, with eight shares more, control the Prudential. Practically +the ring is about as hard to break into as the plan enjoined. Those who +control the Fidelity can always "dominate" the insurance company. +Minority stockholders and policy-holders alike are practically in the +hands of the trust company for all time, and the insurance company's +assets can be managed as the majority of the trust company's directors +dictate. + +The director goes on to explain the relations between a life-insurance +company and a trust company, which, in the light of recent exposures, +seems prophetic. + + "The money value of intimate relations between a majority of + the directors of a life-insurance company and a trust + company may be easily comprehended. These relations are at + the beginning based on the needs of the insurance company, + which needs it is hard to define and limit, and accordingly + hard to say just where the provision for them becomes more + of an advantage to the trust company than to the insurance + company. Standards will differ, and change, too. But here, + let us say, is a great insurance company with over + $50,000,000 of assets which it has collected from its + policy-holders, and which are needed for carrying out their + contracts, and which safety requires shall be held in sound + investments. Such an insurance company has to have a large + and active bank account. It must deposit checks and all + forms of paper promises or orders for collection, and for + the payment of expenses and claims must have a large sum of + ready money. This is the absolute need; but the directors + are not bound by any legal requirements to limit their + deposits to just what will reasonably suffice as a margin to + pay current claims and expenses, nor are they required to + patronize any particular banks. They conclude, let us say, + that 'it will be safer' to take some banking institution for + such depository which they 'know about,' and of which, + perchance, some of them are directors, or in which, at all + events, they are stockholders. If no such trust company is + at hand, it is very easy to start one, and easy for the + directors of the insurance company to be in 'on the ground + floor.' The insurance company then begins to bestow its + patronage. The trust company, which is thus supplied with + funds, begins to feel the effects of this attention; by the + use of its big deposits large dividends are earned. A 'boom' + begins, and the director who 'had the sagacity' to invest in + the stock of the trust company when it was around about par, + sees his holdings advance by rapid strides until he is + offered perhaps ten times as much for his stock as its par + value. He has seen this stock advance in value in proportion + to the amount of funds of the insurance company which the + trust company had at its command. It has been worth much to + him 'to be on the inside,' and will be worth much in the + future for him to be on the inside if any new trust company + is to be a depository; the bigger the deposit, the more it + will be worth to him." + +All thinking people, after reading these extracts from Insurance +Commissioner Cutting's report, will ask: "Why have we never heard of +this before?" I can only answer that he found it impossible to get any +part of the warning contained in it before the people. It should be +remembered that the insurance companies annually spend millions of +dollars with the daily, weekly, and monthly press--and it is unnecessary +for me to say more. My own advertisement calling attention to the +life-insurance chapters in the last issue of _Everybody's Magazine_ was +refused by some of the leading dailies of New York, Boston, Cleveland, +and Pittsburg. When I called on the managing editor of one of +Pittsburg's leading dailies for an explanation of the publication's +declination, he said: "Don't mention me or you'll get me into trouble. +Our copy for the advertisement was a day late and the insurance combine +had time to get in its work. The local managers sent a representative to +all the papers warning them not to run your stuff, under penalty of +losing the big full-page annual from each of the three big companies, as +well as the numerous fliers through the year." One hears of the +sagacious ostrich which, when pursued by an enemy, hides its head in the +sand. The ostrich is wise in comparison with the "System's" votaries in +the year 1904. + + +THE VULTURES FEEDING + +Owing to the claims of other subjects on my space, I left the subject of +life insurance for a few months. In the meantime President Alexander +began his grapple with President Jimmy Hyde for the control of the +millions of the Equitable Life--the historic entanglement which has had +such dire consequences for all concerned. In the April, 1905, issue of +The Critics I wrote as follows: + +When first I touched on the subject of life insurance and called +attention to the manner in which the three great companies were juggling +with the immense funds entrusted to them by their policy-holders, the +"System" raised a great outcry, declaring that I was unsettling the +confidence of the people in a sacred institution. At this moment we have +the chief officials of one of these huge organizations engaged in a +desperate and disgraceful struggle among themselves for its control. +All thought of the widow and the orphan, against whom they declared my +hand had been raised, has been forgotten in the mad fight for supremacy +over the accumulated millions in stocks, bonds, and in trust companies, +from the secret manipulation of which the great private fortunes of +successful underwriters are derived. + +Before definitely grappling with the evils of the insurance trust, I +hesitated a long time. I realized my words would cause terror or +distrust among policy-holders and perhaps induce some misguided ones to +abandon their insurance. After long consideration, however, I became +convinced that what I had to say would in the long run benefit all +policy-holders, insure the greater safety of their funds, reduce their +annual premium-payments, and perhaps bring about the restitution of the +vast amounts which in the past had been diverted from them to private +individuals. The response to my criticism was a flood of abuse. Instead +of meeting my charges, the big companies denounced me for a liar and a +misrepresenter, and the insurance journals and subsidized press declared +that the things I had charged were impossible. Now, the president of the +Equitable Life Insurance Company is openly accusing a leading member of +his board of trustees, who is one of the foremost votaries of the +"System," of loading the company with twenty-two millions of securities, +which, as a member of the finance committee of the corporation, he had +purchased for himself in his capacity as head of a great banking-house. +On the other hand, the president and his associates, who have hitherto +swayed the destinies of the institution, are accused by the other party +of conspiring to mutualize the institution, not for the benefit of the +policy-holders, but to conceal the traces of past misdeeds. Before this +chapter is in the hands of my readers the officers and directors of this +great insurance company may be before the courts and a condition of +affairs spread out for the public's gaze such as will make my charges +seem, in comparison with the actual truth, as chestnut-burrs to +porcupines' quills. + +One result achieved so far is an awakening of the people's attention to +the evils of present conditions; but let them beware of the remedies +suggested. The "System" is quick to adjust itself to storms it cannot +control, and there are many signs abroad that it is trimming its sails +to fly before the present blow, ready when it shall abate to switch back +to its old course, and, under fresh canvas, make up for lost time. +Already we have Senator Dryden, representing New Jersey and the +Prudential Life Insurance Company in the United States Senate, +introducing a bill for Federal supervision of life insurance, and the +"System's" hirelings throughout the land are clamorously agitating the +passage of some such measure. It behooves the public to scrutinize +carefully the form of reform which these patriots approve. It may be +taken for granted that they will initiate nothing that will interfere +with their grip on the millions of the policy-holders or will divert fat +pickings and commissions from their own pockets. Once I asked a leading +votary of the "System": + +"What would you do if by any chance the Government decided to get into +the railway business, and took a railway or so to see how government +control would work?" + +"Oh," was the reply, "we'd manage that all right! As soon as we saw it +coming, the stocks and bonds of the roads wanted would go up, so that by +the time Uncle Sam got ready to buy, it would be the fattest sale we +could possibly make. After that it would not be difficult to disgust the +Government with its bargain, and before long the people would be glad to +sell the property back to us, and we'd find a way to get it at slaughter +prices." + +The reformation of the big insurance companies is sadly needed, but +reformation of a more drastic kind than they'll be willing to administer +to themselves. To begin with, there should be a relentless probing of +their stock transactions of the last fifteen years, followed by the +passage of some simple laws regulating their investments. The +relationship between these institutions and the "System" would then at +once of necessity terminate, and we could say good-by to the _régime_ +under which the expenses of the Big Three have enormously increased and +their dividends to policy-holders have steadily declined while during +the same period the private fortunes of their officers and controllers +have flourished amazingly. + +I have been repeatedly asked to define the conditions that make it +possible for these immense private fortunes to be gathered, within the +law. An examination of the figures that follow will reveal the +far-reaching possibilities that reside in the direction of the billion +of assets of the great insurance companies. + +The last issued New York report (1903) shows that the three leading +companies had in uninvested funds, all told, $70,212,453. Of this sum +total there was "deposited in trust companies and banks drawing +interest"--at the _close_ of the year: + + Equitable $25,617,668 + Mutual 22,439,396 + New York 17,731,710 + ----------- + $65,788,774 + +the balance, $4,423,679, being on deposit without interest. + +The above aggregate represents 71.7 per cent. of the uninvested +interest-bearing funds of twenty-eight companies--leaving but 28.3 per +cent. for the remaining twenty-five (in which, by the way, is included +$6,801,789 of the Prudential, as large in proportion as the funds of the +Big Three, with which it is associated). + +This sum, at the two-per-cent. interest allowed by the trust companies, +returned to the insurance companies $1,315,775, while it earned for the +trust companies in the different speculations in which they were +engaged, from five to twenty per cent., or an annual profit of +$1,973,663 to $11,184,079, over and above the interest paid the +insurance companies for its use. + +But who owns the trust companies? you ask. Some are owned jointly by the +three great insurance corporations and their directors, others by the +directors alone. The men who control the Big Three organize these +flexible depositary institutions, allotting half or more of their stocks +to themselves, the balance to the insurance companies, or keeping all +the stock themselves, for the purpose of manipulating the stupendous +sums in the treasuries of the insurance companies. The trust company is +the irrigating canal of Wall Street, the insurance company the +reservoir. For the development of the various schemes of consolidation, +trustification, and amalgamation in which Wall Street profits are made, +money is required in large quantities. When the soil is ready for the +seed, when negotiations have been sufficiently matured, the trust +company's sluice is tapped and the gold flows out. And gold which makes +a $225 crop sprout, where previously only a $100 crop grew, is a +valuable commodity, for the use of which large compensation is given the +engineers. Thus the men who hold the treasury-keys of the Big Three, and +who decide how the accumulated premiums of the policy-holders shall be +used and where deposited, are actually the owners of these trust +companies and of other corporations and trusts which borrow the money +the trust companies have on deposit from the insurance companies. + +The hackneyed defence of the insurance companies to this accusation is +that great corporations, such as they are, must keep on hand, ready for +emergencies, enormous amounts of cash. This is a futile argument, for in +the nature of things the daily receipts of each of the Big Three are +larger than the expenditures. We are also told "We keep large amounts, +ready to take advantage of a sudden smash in the market." This sounds +well, but cloaks one of the most vicious practices of these great +institutions, and another of the insider's opportunities for private +graft. It means that the officers of the great insurance corporations +are ever ready for a stock gamble with the sacred funds of their +policy-holders; that is, they admit their willingness to use the +people's savings to make sure-thing gambling-profits from those +unfortunates who must throw over their stocks and bonds because of the +"System's" manipulations. + +Imagine, my honest, old-fashioned reader, the millions of insurance +funds used in this way! Let me give you a picture of how it is done. I +have seen it worked a score of times. The stock-market is crashing, +dropping tens of millions a minute, and business men are saying: "Oh, if +we only had cash to buy, but we can not get it! The banks will not loan +at any price. Rates have gone up to 100 to 150 per cent. and no cash is +in sight." No one has money but the big insurance companies and the +"System's" votaries. + +Suddenly mysterious buying appears--hundreds of thousands of shares of +stock, and bonds in million blocks. The crash has been stayed; the panic +is over; stocks are bounding upward again; millions are being made by +the mysterious buyers with each tick of the clock, and presently it is +common knowledge that all the insurance insiders have cleaned up +millions, and--of course, the company has made something, but the +biggest profits have been won by the men who, having previously +personally loaded up, were able to throw the unlimited buying power of +the policy-holders' millions into the gap. Talk of loaded dice, or any +of the sure-thing gambling devices! They are lily-white business schemes +compared with this method of plundering the people. + +Again we are authoritatively informed that the great companies have so +much cash on hand that it is impossible to find investments for it save +at a low rate of interest. The fallacy here is obvious. If these +institutions have grown so unwieldy that they cannot conduct their +business as ably as the smaller companies, the latter are the ones to +insure with, because, right along, they are deriving larger returns from +their invested funds than the big companies. There are scores of ways, +however, by which the sixty-five millions could be made to earn even +larger dividends than do the funds in stocks and bonds. Let the Big +Three offer the use of their big cash balances by public +competition--under the most conservative conditions that can be +prescribed. Instantly the net returns will double. + +All insurance policy-holders are familiar with the specious circulars +and letters presenting statements of business done and investments made, +which are sent out from the head offices of the great companies at odd +intervals on the plea: "We want our policy-holders to know everything we +are doing at all times." The public is assured at other intervals that +there can be no secret or inside deals in the affairs of insurance +companies because of the close examinations they are subjected to by the +Insurance Departments of the various States. The insurance officials +say: "All our facts and figures are vouched for by so many different +sets of auditors and State Departments that they must be exact truths." +To what extent is the public actually safeguarded by these +investigations? + +Some months ago I called attention to the fact that the directors of the +New York Life Insurance Company had sold to themselves the stock of the +New York Security & Trust Company at from three to four millions less +than the property would have commanded from outsiders. Here is another +transaction which requires explanation: + +In 1901, ostensibly in order to maintain its position in the German +states--I will explain later on what I mean by "ostensibly"--the +insurance company disposed of its remaining holdings of stocks, the same +having a book value of $2,965,000 and a market value of $5,471,000, as +per report of 1900. These stocks, with possibly sales of some other +securities, realized an actual profit of $5,839,087 instead of +$3,075,392 as per the company's _sworn_ report to the several State +Insurance Departments. + +Rather a queer proceeding, you say. Why should it do such a thing? Had +some one stolen the extra profit? Or what? This is what was done: The +company had simply availed itself of the opportunity to conceal an +actual cash profit of $2,763,715 in order that it might sequestrate +assets to that amount unnoticed by its policy-holders or the +departments. The sum so sequestrated was made up of balances due from +agents--presumed, as in all such cases, to be amply secured by pledge of +renewal contracts--to the amount of $1,919,734, and $843,891 charged off +depreciation of real estate. (See Massachusetts Report, 1902, pages +158-159.) + +This illegal suppression of most important transactions, directly +affecting, as will be seen later, the interests of policy-holders, would +have remained a sealed book but for the careful audit of the +Massachusetts Department, which revealed the fact, unnoticed by that of +any other State (note in this one instance the boasted careful +supervision and boasted double and triple auditing of all accounts +before publication!), that the item "Agents' Balances," amounting in +the preceding year to $1,527,123, had disappeared altogether from +assets. This led to a prompt request from the Massachusetts Department +for explanation. + +The honorable business men of the New York Life, who pay out so many +hundreds of thousands of dollars each year advertising the fact that +they are sitting up o' nights to find new ways to acquaint the +policy-holders with the innermost secrets of the company, finding there +was no avenue of escape from their dilemma, quickly realized that the +Massachusetts Department meant to have the facts, and publish them, too. +Their own "faked" report was already before the public in the published +reports of two departments, those of Connecticut and New York. + +There was but one course open to avert the terrific scandal that was +inevitable upon publication of the Massachusetts Report, and that was to +head off and forestall adverse comment and criticism, as far as +possible, by making a clean breast of it. No time was lost in preparing +a letter of explanation to the Department. This answered the purpose of +the Department, which did not care to press the matter, having +accomplished its main object. + +Now for the moral, or the iniquity, rather, of the preceding, the wrong +to policy-holders, which has been so completely ignored and passed over +by the insurance press and all hands: Either the company had, as at +least supposedly it has in all such cases, ample security for its +advances to agents in the pledges of their renewal contracts, or it had +not. On the former hypothesis, that $1,900,000-odd was a sound and valid +asset, earning a good rate of interest. On the latter, the company +simply squandered this amount of trust funds belonging to its trusting +policy-holders in its mad rush for business at whatever cost; or--In +either case the money has gone from sight so far as any sign or +indication appears to the contrary since. + +And before leaving this point, it may be well to ask, "Has the New York +Life Insurance Company altogether discontinued these advances to +agents?" If not, how and where are they accounted for? An answer may be +found, possibly, in the comparatively meagre underwriting profits of the +company, growing relatively smaller and beautifully less with each +succeeding year. I say it may possibly be found here, because this is +the only place the item could be buried; but I am reasonably sure that +it is not buried here, and that these advances to agents are being +continued on a scale as large as, or larger than ever, for the agents +could not have been shut off and the business increased at one and the +same time. + +Again, during the last two months of 1904, or at a time when my story, +"Frenzied Finance," began to get in its work all over the world, I +received from many quarters information that the Big Three had +instructed their leading agents to get in a great lot of new risks "at +any cost," so that the total business for the year would show such +increase as to discredit my claim that the policy-holders were getting +"scared." I watched the game with much interest, knowing that bunco +would out in time, by whomever worked. During these months I read from +week to week of this great policy, or that record-breaking risk just +landed by this or that agent. One in particular made me chuckle at its +transparency. A certain friend of the New York Life, a Wall Street man, +"has just taken out a $2,000,000 policy." About the same time I began to +receive information of the remarkable offers that were being made to +prospective customers, offers which probably meant an indirect rebate of +perhaps the full first year's premium; and I got to thinking and +reaching back into my memory-box, and I raked out a number of instances +of the same kind of offers which had been made to me in the past, and I +ruminated to myself how all this was possible; for even if the Big Three +were bold enough to get around the law against such practices, it +puzzled me how they could pay to their agent the big cash commissions +that new business called for. Presently as I waited I read, as did the +rest of the world, the big January full-page advertisements of the New +York Life to its policy-holders, calling their attention to the increase +of $15,000,000 new business over the year before. Then I took another +think and did a little work, with the following result: + + +A JOLT FOR THE NEW YORK LIFE + +The "Brown Book of Life Insurance Economics" shows that the sum laid by +annually for future tontine or other dividends ranged in the ten years +ending with 1903 from $2,936,026 to a minimum of $956,597, these amounts +being savings after payment of dividends. In 1904, however, for the +first time in the tontine history of the company--also the first year of +maturity of non-forfeitable tontine contracts with their largely reduced +dividends--the dividends paid and credited, $6,018,202, actually +exceeded the year's earnings, as shown by the company's sworn statement, +by $76,595. + +I want to call policy-holders' attention right here to what this means +to those who are now being beguiled into taking policies on the strength +of "adjusted" estimates placed by the company in its agents' hands, +showing dividend results ranging from fifteen to fifty per cent. higher +than those of 1904, with, however, the saving (?) clause that, depending +upon future unforeseeable conditions, the same "may be higher or may be +lower." It may be added that, but for a profit realized from sale of +securities, the company's gross surplus would have shown shrinkage. + +In order to realize what such a showing means, let us make a comparison, +using the figures of a well-known Western company (partly tontine, but +operated on diametrically opposite lines from the New York Life), for +the three years 1901-03, this company being barely four-tenths the size +of the New York Life as regards outstanding business: + + COMPARISON OF TOTALS, THREE YEARS, 1901-03 + + Dividend Laid by for future + earnings. Dividends. dividends. + + New York Life $16,826,289 $13,189,278 $3,636,091 + Western Company 17,788,820 12,284,255 5,504,565 + ----------- ----------- ---------- + -$962,531 +$905,023 -$1,867,574 + +After mulling these over, I dug further in regard to the "prosperity" as +shown by the business of 1904. The company boasts of its enormous volume +of new business, $345,722,000, which is $15,000,000 in excess of the +1903 business. Here is the story: While this new business was being +secured, the + + Total terminations were $162,326,114 + Less those inevitable terminations by death + or maturity of endowments 26,767,873 + ------------ + Waste by lapse, surrender, etc. $135,558,241 + And when we add the lapsed policies which + continued in force, under the "extended-insurance" + provision 89,938,500 + ------------ + We have the total waste of $225,496,741 + +and this, reduced to its actual significance, means that of the total +actual terminations, 83.6 per cent. was _actual waste_ and only 16.4 per +cent. legitimate terminations, while the great bulk of the last item of +$89,938,500, upon which premium payments have ceased, must run off the +books in the near future; and this is what goes on from year to year, +more than keeping pace with the boasted increase in volume of new +business. The public never sees this side of the question. + +When I got to this point in my deductions, I was brought face to face +with the tremendous expense of acquiring new business. Then I saw the +light--why it was necessary to wipe off the books nearly two millions of +what were considered good assets, that is, pledges from agents of their +renewal commissions against which advances had been made, and where the +new business came from, and how it was possible to make rebates when the +law says they shall not be made. An agent induces a friend to have a +policy written, for which the agent practically pays the premium out of +his commission, and thereupon has advanced to him large sums against the +future premiums which are to be paid by the policy-holder, who has no +intention of paying them, and allows his policy to lapse. Heavens! What +a vista of plundering opportunities the bare thought opens up! Somebody +has to pay. + +THE MILLION-DOLLAR POLICY + +In the May number I inserted the following letter: + + FORT WORTH, TEXAS, February 16, 1905. + + THOMAS W. LAWSON, ESQ., Boston, Mass. + + _Dear Sir_: I have read and will continue to read your + articles on "Frenzied Finance," published in _Everybody's + Magazine_, with a great deal of interest. I have noted + especially your statements in reference to the big + life-insurance companies, as I am a policy-holder in both + the New York Life and the Equitable. + + Under the heading of "Lawson and His Critics," in + _Everybody's_ for January, you give your side as to the + assertion on the part of the insurance companies that you + have been refused life insurance, among other things + publishing a fac-simile of a contract of life insurance + between yourself and the Equitable Life Assurance Society + for $1,000,000. On my first reading of your article, I was + certainly impressed with the fact that you had $1,000,000 of + insurance with this company. On a second reading, I note + that you do not say in so many words that this is a policy + in force, but you say: "Well, look at this reproduction of + the document that is now in my possession and always has + been since the date when it was delivered to me by one of + the great representatives of the 'System,' The Equitable + Life Assurance Society." This statement taken in connection + with others, conveys the idea that you are insured in the + company named. + + In conversation with a gentleman a few days since, who + claims to know whereof he speaks, having gotten his + information direct from New York, he stated that you had no + policy in the Equitable Life Assurance Society for + $1,000,000, or any other amount, and that the reproduction + referred to above, was of a _sample copy_ of a policy, and + not a real contract. + + As your editor states that you will answer any pertinent + question, I will ask the following, trusting that you may + consider it pertinent: Have you a valid subsisting policy in + the Equitable Life Assurance Society for $1,000,000, the + fac-simile of which appears in _Everybody's Magazine_ for + January, 1905? + + Trusting you will favor me with a reply, I am, + + Very truly, ---- + +I answered: + +Since the chapter which contained the fac-simile of the million-dollar +policy was published I have received many letters similar to the above, +but have not answered any because I wished to see how far the insurance +people would go in this matter. Finding I did not reply to the +different attempts they made in their subsidized journals to draw me +out, they grew bolder, until the use of this million-dollar policy has +become the chief defence of the Big Three companies. I want my readers +to think this point over and weigh its significance carefully. In a +previous chapter I called attention to the fact that there is nothing to +protect the policy-holder from being robbed of the amounts he has +invested to insure his family from poverty after his death but the +honesty of the men who really control the big insurance companies as +absolutely as any of their policy-holders do their personal affairs. If +these men are honest, policy-holders in their companies may rest easy +for the time being; but if they are dishonest, the policy-holders should +call them to account, for these men have it absolutely in their power to +make way with the funds of the companies they manage until there will +not be a dollar left for policy-holders. + +Therefore the one thing for policy-holders to settle, the one vital +thing is, Are these men honest, or are they tricksters and liars? + +To settle this point they must be weighed in the same way that all other +men and women in this world are weighed--by the simple, ordinary +standards: Do they lie? Do they trick? Do they cheat? + +When I made my charges in my first chapters against the votaries of the +"System" who controlled the insurance companies, they met my specific +charges as dishonest men would meet them, not as honest men would. They +impugned my motives, and specifically charged that my reason for +attacking them was that I had been blacklisted by all insurance +companies and could not get insurance from any of them. + +While it was immaterial so far as my specific charges went whether this +was so or not, it had a most decided bearing upon the question whether +the officers and controllers of the Big Three insurance companies were +honest or dishonest men. Therefore I picked up their accusation and +began a line of argument to prove they were tricksters and absolutely +devoid of honor. + +I showed, by reproducing the personal letters of President McCall, of +the New York Life, to my office and to my house, reënforced by his +special agent's letter, and these reënforced by his Boston agent's +letter, that I had been continuously and urgently importuned to take +insurance during the time he said I was blacklisted. The insurance +people met this by the excuse that these were not personal letters, but +mere advertisements. + +I then reproduced the million-dollar policy, hoping to drag from the Big +Three a specific charge that this, too, was an advertisement. + +Of course, I did not pretend that the policy in question was in force, +that is, that I was insured in the Equitable Life Assurance Society for +one million dollars. This would have been too childish; first, because +every insurance policy, particularly the very large ones, is as much a +matter of record, to be got at by any one in the insurance business, as +are real-estate records; and, next, because that which I printed had the +signature punched out, which made it obvious that it was not in force. +My object was to lead the Equitable into the positive statement that it +was an ordinary advertisement, when I would have reproduced the +proposition that accompanied it and which the Equitable made in probably +the most elaborate set of documents ever assembled by an insurance +company for the purpose of inducing one of the "best risks" in America +to take out a "great big policy." These constitute the complete argument +which was made by the Equitable Life Assurance Society to persuade me to +take a million dollars' worth of insurance. They are engrossed upon +parchment and bound in a specially gotten-up morocco cover, and, I was +told, cost the insurance company between four and five hundred dollars. +They were presented to me as the result of my demanding that all the +inducements they offered to come into their company should be put down +on paper, so that there could be no mistaking them. The documents as +engrossed and the terms of the contract were carefully copyrighted by +the Equitable, and are now on my table before me as I write. + +The question which the publication of the million-dollar policy was to +settle was whether or not I had been importuned to take out great sums +of insurance in the leading insurance company of America, and it proved +exactly what I had contended--that I had been so importuned. + +Up to and including my April, 1905, instalment I have made specific +charges against the great insurance companies, the Mutual, the New York +Life, and the Equitable: + +1st. That the control of the officers of these great corporations over +the billion dollars of their policy-holders' funds is as absolute and +unrestricted for all practical purposes, as is their control of their +own personal affairs, and is largely exercised for their personal +enrichment. + +2d. That the policy-holders have absolutely no voice in the management +of these companies or the control of their funds, because of the +manipulation of proxies in the New York Life and the Mutual and the +control of the stock of the Equitable. + +3d. That those who do control the big companies are votaries of the +"System," and as such are subject to the "System's" orders as absolutely +as is James Stillman, president of the "Standard Oil" National City +Bank. + +4th. That the insiders of these insurance companies, not one but several +of them, have accumulated fortunes in the past few years, of from one to +twenty millions, while at the same time premium-rates have advanced and +dividends decreased. + +5th. That under the present methods of conducting these great companies +it is as inevitable as it was in the case of 520-per-cent. Miller or +Mrs. Howe's Woman's Bank, that as soon as they can get no more +insurance, the funds behind the old insurance will be dissipated and a +crash take place such as the world has never known before. + +6th. That the companies are "milked" in every direction, through the +purchase and sale of real estate, through the loaning of their millions, +and through the manipulation and investment of their funds. + +7th. That they acquire new business at an expense and by methods which +alone will in time wreck the companies. + +8th. That in a single instance the New York Life sold securities for +$5,839,087, but its statement under oath to the State Insurance +Departments showed receipts of only $3,075,392. + +9th. That the New York Life sold the stock of the New York Security & +Trust Company, which it held, to its insiders for over $4,000,000 less +then they could have secured for it from others. + +I have specifically charged other things, and will, as my story +proceeds, make many more specific charges of as serious a nature; but +the above suffice for my present argument, which is, that up to and +including the April number I have made these accusations and that the +only way they have been met is by underhand mud-slinging and by alleging +that the incentive for my attack was that I could not secure insurance +from any of the American companies; and I have met this with absolute +proof, which must stand until it is disproved, that I have been during +the past ten years importuned and urged by the large insurance companies +of America to take out insurance. + +Therefore I will leave the question of this million-dollar policy and +other forms of importuning until the insurance companies offer something +in rebuttal. + + +THE WAY OUT + +The overhauling of the Equitable Life exposed conditions far worse than +I had indicated to the public, and it seemed probable that the usual +whitewashing process would be utilized to conceal the guilt of the +rapacious criminals who had been untrue to the most sacred trust that +can be imposed on man. Since that time, however, the Governor of the +State of New York has appointed a committee to investigate the affairs +of the Big Three corporations, and the resulting disclosures are the +sensation of the hour as this book goes to press. In order to protect +the interests of policy-holders, in case the authorities declined to +act, I issued the following address in the July, 1905, number of +_Everybody's_: + +TO THE POLICY-HOLDERS OF THE NEW YORK LIFE, MUTUAL, AND EQUITABLE +INSURANCE COMPANIES + +The time has come for you to act. When, less than a year ago, I began my +story, "Frenzied Finance," I exposed the function of the three great +life-insurance companies in the structure of the "System." I explained +that they were controlled in the interests of great financiers and that +their funds were juggled with to compass the huge plundering operations +of Wall Street. At that time the New York Life, the Equitable, and the +Mutual Life loomed before the American people as the greatest, most +respected, and most venerable institutions in our broad land. To-day +they stand for all that is tricky, fraudulent, and oppressive. + +A great change to have been accomplished in less than twelve months! + +My readers are by this time familiar with the condition of affairs in +the Equitable. The greed, juggling, and grafting practised by its +officers and controllers have been fully exposed through the press. I +hope none of those who have followed the terrific arraignment of +rottenness and rascality made through the Frick report are so foolish as +to imagine that the evils described are confined to the Equitable. In my +own opinion the Equitable is much less reprehensible than the New York +Life, and when that institution and the Mutual are thoroughly shaken up, +as they will be in the future, indubitable evidence of the same fashion +of extravagance, trickery, and fraud will be found in plenty. Conditions +in the three institutions are the same; though of late the New York Life +has altered the character of most of its securities. Each has piled up +an immense surplus which has been used through allied trust companies +for stock juggling; each has paid extravagant commissions to agents; the +funds of each have been managed to afford to high officials plentiful +opportunities of graft; each has its real estate, fire insurance, low +rent and loan favor graft; in each will be found the same type of +syndicates as President Alexander and Vice-President Hyde used for their +personal enrichment in the Equitable. To-day President John A. McCall of +the New York Life is credited with possessing a fortune of between ten +and fifteen millions--a few brief years ago he was State Superintendent +of Insurance in Albany. The chief associate in the management of the +same corporation, George W. Perkins, J. Pierpont Morgan's partner, is +another very rich man, whose wealth has been accumulated in a few short +years. Do you imagine for a moment that such transactions as I set forth +last year in connection with the New York Security and Trust Company, in +which the interest of the New York Life was sold to a syndicate of its +own directors for a sum far below the market value of the shares, were +put through without the connivance of President McCall and +Vice-President Perkins? Even if the New York Life, as its president +explains, did make a large profit on the sale of the trust company's +stock, he cannot deny that the syndicate paid far less than the then +market value of the shares for the insurance company's holdings. + +There is something particularly vile about the crimes of these high +officials and distinguished gentlemen who have been waxing fat and +luxurious on life-insurance graft. In a recent number of this magazine I +drew a parallel between the confidence operator and the burglar to show +that the latter despises the former for a sneak thief who takes no +chances in his thieving operations. Infinitely more depraved than the +sneak thief is the high-placed functionary, presiding over a great +institution built up out of the savings of millions of people, paid an +immense salary for his important services, trusted with vast funds +because of his reputation for integrity and business sagacity--who yet +uses his splendid place to line his own pocket. Of all fiduciary +institutions, life insurance should be the most sacred. Its chief +function is to care for the widow, the orphan, and the helpless. The +millions of revenue paid annually into the life-insurance companies of +this country represent the blood and tears and sweat of millions of +Americans who thus provide for the care of their dear ones for the time +when death shall have put an end to their own income-earning abilities. +The administrator of a trust so solemn and exalted should devote himself +to its safeguarding as a priest dedicates himself to the service of his +Maker. The responsibility conferred on him is the highest and holiest +man can repose in his fellow-man. Remembering all this, consider again +the revelations of greed and plunder in the Equitable; consider that +millions upon millions of dollars have been filched and wasted; analyze +the Frick report and the letter of President Alexander to the directors +of the society, calling for Vice-President Hyde's removal from office. +Think, ye farmers and laborers, of personal traveling expenses of +$75,000 in a brief period, of salaries of $100,000 annually paid for a +few hours of work per day; think of vast sums of your money used to +provide expensive safe-deposit institutions with low-priced quarters so +that the personal income of men already multimillionaires may wax still +greater. Think of the great institution to whose hundreds of millions' +income you contribute your hard-earned dollars, being farmed, milked, +and squeezed by a pack of dissolute and greedy schemers and robbers more +conscienceless and oppressive than any band of thugs in the country. + +When I began to discuss in _Everybody's Magazine_ the subject of the +three great life-insurance companies, I stated that there is actually +nothing between the two million-odd policy-holders and the possibility +of their being robbed of the billions of dollars of their accumulated +savings but the devotion and the honesty of the men who are in control +of these institutions. + +You know what happened when I said this to you the first time--less than +a year ago. The officers, trustees, and hirelings of these great +companies laughed to scorn my statements and called me a liar and a +scoundrel. They drew the attention of the whole world to the standing +and wealth and honesty of the men who managed these great corporations, +and proved by the most positive asseverations that nothing could be more +preposterous than that any one of them could do wrong. But the great +God, who seldom allows His children to remain long deceived to their +undoing, heard these loud-mouthed protestations, and to-day the world is +listening to exposures of low, mean thefts and contemptible crimes far +worse than any to which I had pointed. + +And from whom comes the proof of the treacheries and rascalities +perpetrated within the Equitable? From the men who control and manage +this great institution and its hundreds of millions of accumulations. +When my accusations first appeared, these men saw the handwriting on the +wall and some of them, bolder than others, determined to seize these +vast hoards of the public's money and at the same time get possession of +all evidence of past crimes so that they might be immune forever after +from punishment and the necessity of making restitution. In the act of +grabbing, however, the robbers fell out with one another, and, presto! +they are in the public square where all men, women, and children, cats, +dogs, and asses may see and hear as they gouge, bite, and accuse each +other of the vilest crimes. + +These are the men in whose custody even now are the accumulations on +which you, Mr. Policy-holder, are depending to take care of your wife +and little ones, should you die. On the honor and responsibility of men +who in the past five years have "saved" out of salaries of $20,000 to +$100,000, private fortunes of millions, you must absolutely rely for the +safety of the billions of dollars of your savings. The future of the +helpless beings whom your hard daily labors provide with a livelihood is +in the hands of men who admit having expended $100,000 of your money to +provide a lordly and regal entertainment for a set of extravagantly paid +agents and solicitors who, spurred on by prodigal inducements, have +piled up huge amounts of new business on the company's books. I have +explained to you before what such business is worth, that the agent gets +so large a commission that he is practically in a position to accept +risks at far below their cost to the company, and that such business as +this is seldom renewed. The same men have been paying personal +secretaries, gardeners, and flunkies out of your earnings; they have +been feasting and traveling in private cars with large parties of the +New York flubstocracy at your expense; every possible extravagance they +have been guilty of by means of the revenues some of you have worked +fourteen to eighteen hours a day to gather in. Shame, I say, on such +contemptible thievery. + +I cannot resist the temptation to pull back the slide from one episode +of the past. When my strictures on the three great life-insurance +companies first appeared, one of the vice-presidents of the Equitable, +Gage E. Tarbell, in writing to an inquiring policy-holder, said: "Pay no +attention to Lawson; he is only a reckless stock gambler, and every +sensible person knows that any man, no matter what his position might +be, who would do anything to cause loss to the class of people we +insure, must be a rascal." And this is the same man Tarbell, it is now +admitted by all the Equitable officers and investigating committees, +who, as soon as he saw the crisis coming in the affairs of the +Equitable, had his pal, President Alexander, pay to him $135,000, which +he claimed was due him for commission renewals, even though he was then +in receipt of a salary of $60,000 per annum for his services. It is +through the operations of this same Tarbell that the vast system of +rebates, one of the chief evils of the present system of life insurance, +came into being, and through his prodigality that the immense sum of +$2,000,000 stands on the books of the company, representing advance +commissions to the pampered agents. + +The time has come for all you policy-holders to act, and there is but +one way to act. + +A thousand and one schemes are afloat to confuse and trick you at this +period. The cry is--anything to hush things, to confine the fire to the +Equitable, at any cost, even though it totally consumes the $400,000,000 +of the people's savings in that institution. I told you at the beginning +that the New York Life was worse, if anything, than the Equitable, and +the Mutual Life just as bad. Therefore I unqualifiedly advise +policy-holders to: + +1. Pay up this year's premium--it will be the last to these plunderers. + +2. Have nothing to do with any committee or scheme. + +3. Write me, at once, your name, address, and the amount and character +of your policy. I want nothing more from you, and under no consideration +will I divulge your name without your further consent in writing. + +I already have the names of thousands of policy-holders, but to make my +plan instantly effective I must have scores of thousands. + +My plan has for its aim and end, this and only this: + +The absolute preservation of the face value of your policy. + +The reduction of future premium payments to forty cents on the dollar on +what you now pay. + +The restitution of millions upon millions looted from the three great +companies, or as much as can be collected after a careful examination of +the books--and the punishment of the thieves. + +Bear in mind _that I will not have any money connection with you in the +working out of my plan. I pay my own expenses. I will not ask any reward +or profit, money, office, or otherwise, nor will I under any +circumstances accept any._ + +[Illustration: Policy-holders reply coupon.] + +In response to this appeal I received over sixteen thousand proxies, +representing over fifty-four millions of insurance. The investigations +made by the legislative committee of the State of New York are +unearthing in a most thorough manner the iniquities of the directors and +managers of the Big Three, and before proceeding further I shall await +the results of its work. If there is any way short of criminal +proceedings to compel the restitution of the millions diverted or stolen +from policy-holders, I shall begin suits which I am satisfied can be +fought to a successful conclusion. + + +THE CALL TO ARMS + +The extraordinary disclosures made before the investigating committee of +the New York Legislature, which is now conducting inquiries into the +methods of the great insurance companies, led me finally to issue the +following open letter to John A. McCall, in which I review the +controversy between us and contrast his disclosures of corruption and +mismanagement with his brazen professions of virtue and probity made +last year. In order to wrest the two great mutual companies from the +control of men who are obviously unworthy to direct them and with whom +the policy-holders' funds are plainly unsafe, I asked for proxies which +would make it possible for me to bring about a change in the control of +these two great corporations. + +This letter and call appeared in the November, 1905, issue of +_Everybody's Magazine_. + + +AN OPEN LETTER TO JOHN A. McCALL, PRESIDENT NEW YORK LIFE INSURANCE +COMPANY + +_Sir_: It is time your attention was called to the moral sense of the +American people. It is time some one dragged you out of the Wall Street +conservatory and set you in the plain white light of daily life. It is +time you were shown yourself as you are to-day seen by the millions of +your countrymen who, a month ago, believed you to be a great and +honorable man. + +In spite of the terrible exposures of the past few weeks, in spite of +the pitiless revealment of yourself and your directors as tricksters, +in spite of the unveiling of the jugglery, grafting, and corruption of +your administration of the most sacred trust that can be confided to +man, you remain unconvinced of your fall and unpenetrated by your shame. +Fortified by the sympathy of your fellow-sinners, you imagine your +audacious bluster and your sly evasions before the Investigating +Committee of the State of New York represented shrewd generalship and +able strategy, forgetting that the enemy against whom your manoeuvres +were directed was the American people and that, in this inquisition, +your character and reputation were as absolutely before the bar as +though you had been indicted for sequestration of the funds of some dead +friend's wife. + +Throughout this broad country of ours are good Americans who have slaved +and toiled to gather up the hundreds of dollars which you have exacted +from them yearly as the price of the future livelihood of their wives +and children, or as the provision for their own old age. You have made +yourself the custodian of these funds under sacred pledge of square +dealing and safe and honest administration. You have made yourself the +national executor, the great depositary of the moneys of the widow and +the orphan. You have cried your virtue and honorableness from the +housetops, and, under the stress of your pleadings, hundreds of millions +of dollars have been confided to you annually--half the savings of the +nation have been turned into your coffers, all because you insisted that +you were honest beyond all other men, and that the dear ones left behind +might rely on your generosity and integrity for their support. + +And it is with the moneys that might at any time have been claimed by +these widows and orphans that you have been rigging syndicates, +debauching legislatures, juggling judges, manipulating stock-markets, +and doing other things which will be proven later. Instead of employing +the vast power and the immense wealth intrusted to you to conserve the +interests of your policy-holders, you have made yourself a part of the +cruel robbing machine which the "System" has created to deprive the +American people of their savings. Under the pretence of seeking +profitable investment, your corporation has been perverted into a vast +stock-gambling agency. You have filled the high places in your +corporation with your own children and relatives and their relatives, +and conferred on them great salaries out of which they have grown rich. +You have paid out to friends and associates, on various pleas, millions +that rightly belonged to your policy-holders. You have done all these +things habitually, yet to-day you describe the investigation being +conducted into your operations as an impertinence, and secretly you +regard this inquisition and all that pertains to it as a waste of time +and energy. You are unrepentant, unashamed, and defiant. + +I shall take this opportunity, sir, of reviewing our own relations +during the past year and contrasting your position to-day with that you +boasted twelve months ago. + +One year ago, in _Everybody's Magazine_, I said: + +"The officers, trustees, and officials of the 'Big Three' life-insurance +companies have been and are systematically robbing their policy-holders. +They are grafters--mean, contemptible grafters." + +I gave specific instances of their thieveries. + +You replied, not by haling me to court, but by: + +Circulating throughout the world documents by the millions, disparaging +my reputation by advertisements and "news" and "editorial" statements +from your subsidized insurance press, denying my charges and attacking +my character, all at the expense of your policy-holders. + +You libelled me in thousands of private letters to policy-holders, many +of which came back to me. + +You employed James M. Beck, ex-Assistant Attorney-General of the United +States, then and now chief attorney for Henry H. Rogers, the Standard +Oil Company, the "System," and the Mutual Life Insurance Company, to +ridicule my utterances and asperse my honor in addresses in the cities +of Philadelphia and Boston. + +You employed James H. Eckels, ex-Comptroller of the Currency of the +United States, now president of the Commercial Bank and representative +of the "System" in the West, to attack my arguments and distort my +motives in Chicago. + +You ordered Vice-President Perkins, of the New York Life Insurance +Company, to perform similar service in Philadelphia; and + +The burden of all these documents, advertisements, and disguised +advertisements and addresses was: "Lawson is an unmitigated liar and +scoundrel, whose sole reason for attacking the insurance companies is +that we refused him insurance." + +I replied by printing your personal letter to me, wherein you importuned +me to accept insurance in your company. + +Again you gave me the lie, and pronounced your letter spurious. + +I replied to you and your followers by instancing cases of perjury, +bribery, and false statements. + +I stated that your claim that your company did not own, nor loan upon, +stocks was false, and that it was made for the purpose of misleading and +imposing upon your policy-holders, banks, trust companies, Government +officials, and investors. + +You answered this by writing a letter to one of the great churchmen of +America, and in it you said: "I pledge you my word of honor this company +has never, since 1899, had a dollar's interest, directly or indirectly, +in any stock. Lawson knows this, and deliberately, for his own base +purposes, makes charges to the contrary which he knows to be false." + +To-day you and your fellow-plunderers stand convicted in the eyes of the +whole world not only of juggling the moneys of the widow and the orphan +in the stock-market, but of manipulating these trust funds for the +benefit of your own pockets. To-day the world is aghast at your perfidy +and amazed at your temerity. + +Notwithstanding the turpitude already exposed to the people, you still +imagine you can so conduct yourself as to prevent the investigators from +fastening on you and your associates the more desperate crimes that have +been committed in the past--the 150 to 200 millions stolen and diverted +or used in corruption. You know as I do that only the very edges of this +national cesspool have yet been uncovered. You know that not only have +the ballot-box and the Legislature at Albany been tampered with, but +the law-making and administering machinery of other States corrupted, +the Federal Government surrounded, and certain of the judiciary of +America "educated." + +You believe you can keep the evidence of these crimes from the American +people by the same kind of bluff and effrontery with which you met my +first charges. But you have mistaken the tempers of your countrymen. + +I have been authorized in writing by over 16,000 policy-holders, +carrying over fifty-four millions of insurance, to act for them. + +I had intended to await the finish of the New York investigation before +proceeding, but as I have had placed in my hands during the past few +days evidences of the determination of yourself and your accomplices and +fellow-conspirators to face it out regardless of consequences, and as I +believe men capable of committing the acts that have been proved during +the past few days are fully capable of taking the transportable part of +the billion and a quarter funds to foreign countries, and of using them +to keep themselves from their justly deserved punishments, I have +decided to act now. + +In sending you this open letter, I am actuated only by a desire to bring +you and your associates to such a sense of the seriousness of your +position that you will see it is useless longer to attempt to defy the +American people. + +Yours, for the Exposure of Corporation Sneak Thieves, + THOMAS W. LAWSON. + + +TO LIFE-INSURANCE POLICY-HOLDERS + +At the beginning of my story, in 1904, I made certain accusations +against the management of the three big life-insurance companies. + +I knew, when I began my story, that the big life-insurance companies +were in the hands of grafters and thieves, just as are the great banks, +trust companies, railroad companies, and big corporations and trusts. + +_This I knew_ and, in plain language, said it. + +The big insurance companies, through their officers and trustees, +replied by declaring: "He's an unmitigated liar." + +I kept at my knitting, for I knew the crimes of these insurance grafters +were such that, sooner or later, the world would have an opportunity to +judge fairly who were the unmitigated liars and thieves. + +The opportunity is at hand. + +To-day the press of the world is devoting its space, news and editorial, +to a recital of the contemptible and heinous crimes of the New York Life +and the Mutual Life Insurance companies--not as I relate them, but as +their own officers and trustees publicly confess them. + +In the July instalment of my story I called upon policy-holders to sign +a coupon blank inserted in _Everybody's Magazine_, and send same to me +that I might speak for them in a plan to further their interests. + +In response to my call I have received up to October 4, 1905, 16,307 +answers, representing $55,165,916. + +I think my readers, when they analyze the following list and take into +consideration the character of the senders, many of whom are men of the +highest standing--bishops, ministers, governors, mayors, judges, +senators, members of Congress, railroad, bank, and trust company +presidents--will agree with me that it is the most remarkable collection +ever made by one interest since life insurance began. + + INSURANCE COUPONS + + _Received from June 20th to October 4, 1905_ + + New York Life $18,845,410 + Equitable 17,317,956 + Mutual 14,550,240 + Miscellaneous 4,452,310 + ----------- + $55,165,916 + +Alabama 22 Montana 130 +Arizona 127 Nebraska 236 +Arkansas 124 Nevada 28 +California 842 New Hampshire 73 +Colorado 211 New Jersey 282 +Connecticut 177 New Mexico 40 +Delaware 43 New York 1,780 +District of Columbia 152 North Carolina 466 +Florida 230 North Dakota 143 +Georgia 169 Ohio 985 +Idaho 150 Oklahoma 154 +Illinois 1,012 Oregon 93 +Indiana 415 Pennsylvania 1,133 +Indian Territory 130 Rhode Island 67 +Iowa 560 South Carolina 81 +Kansas 316 South Dakota 104 +Kentucky 153 Tennessee 157 +Louisiana 197 Texas 580 +Maine 144 Utah 68 +Maryland 126 Vermont 57 +Massachusetts 843 Virginia 242 +Michigan 406 Washington 417 +Minnesota 574 West Virginia 205 +Mississippi 173 Wisconsin 318 +Missouri 499 Wyoming 36 + +Alaska 27 Corea 1 +Argentina 1 Mexico 71 +Bermuda 1 Newfoundland 4 +Canada 344 New Zealand 1 +Chili 1 Panama 2 +China 1 Philippines 16 +Colombia 1 Porto Rico 5 +Costa Rica 1 Santo Domingo 7 +Cuba 4 Straits Settlements 1 +England 9 Sweden 1 +France 4 Trinidad 2 +Hawaii 35 Uruguay 2 +Honduras 2 Yukon Territory 4 +Japan 4 ------ +Grand total 16,307 + +As soon as I received a number of signatures sufficiently large to +warrant it, I quietly began operations. + +The first direct result is the investigation now being held. This +investigation has proceeded far enough to put before the public absolute +proof of all the crimes I have charged, and three to thirty times as +many more. + +It is now evident to all that: + +1st. The policy-holders in the great companies have yearly paid into +their company scores of millions more than necessary. + +2d. The policy-holders have been robbed of scores of millions. + +3d. The vast funds now on hand have been habitually used by the grafters +now in control of them in the rankest kind of stock-gambling. + +4th. These funds have been used to corrupt the ballot-box and the +law-makers of the country. + +I repeat, absolute proof of all this has been made public. + +It should now be evident to all that: + +1st. The funds now on hand are in actual jeopardy, because they are in +the absolute control of unprincipled scoundrels. + +2d. Unless something is done, and done at once, by the policy-holders, +each and every one of the largest companies may become insolvent; that +is, they may not be able to meet the engagements of their policies, +because of waste of funds, tremendous falling off of new business, +tremendous cost of new business, and the nature of the new +business--so-called "graveyard business"; for I am credibly informed +that they are now seeking to insure those who formerly have been refused +insurance because of physical infirmities. + +It should also be plainly evident that, if the policy-holders move, and +move quickly, they can be absolutely assured that: + +1st. The funds as they are to-day will remain intact. + +2d. They will be added to by the restitution of from $75,000,000 to +$150,000,000. + +3d. A score of the thieves who have plundered policy-holders in the past +will be sent to prison. + +4th. The future payments of policy-holders will be largely cut down. + +5th. The present swollen surpluses will be returned in large part to +policy-holders. + +6th. In the future policy-holders will actually run the company. + +7th. All policy-holders can be assured that in the future they will +receive the actual worth of their policy at surrender. + +All this being so, it is most eminently desirable for policy-holders to +act, and at once. + +The time will never again be so opportune, for if nothing definite is +done now, policy-holders will be discouraged for all time. + +I have given the subject the closest and most earnest study, assisted by +the best insurance experts and lawyers procurable, and guided by the +suggestions of over 100,000 policy-holders, for in addition to the +16,000 mentioned, I have received over 90,000 letters. I have come to +the conclusion that the one thing for policy-holders to do now is: + +To authorize some one in whom they have confidence to select a committee +to take their proxies and at once seize possession of the two great +mutual companies, the New York Life and the Mutual. + +I omit the Equitable at this stage, because litigation may be necessary +before the Equitable, being a stock company, can come into the +policy-holders' hands. But in the other two, no obstacles can be placed +in the way of the policy-holders' taking control. + +To empower this committee to bring action at once to compel full +restitution and enforce full punishment, and then to change the present +method of conducting the insurance business. + +The vital question is: Whom can the policy-holders trust to do this? + +The "Big Three" are at present spending vast sums of the policy-holders' +money to prevent some such action as this, in the following ways: + +First, by moulding public opinion through paid news and editorial items; +next, by the collection of proxies; and third, by the inauguration of +different moves and dummy suits and investigations. + +There are already three of these affairs under way. Almost any way the +policy-holders turn for relief they are confronted with traps which, if +they fall into them, will make relief and rescue impossible. + +Any man or body of men who go to the great expense necessary to collect +proxies must have some hidden scheme for reimbursing themselves, or they +must be working in the interests of the thieves now in control. + +I therefore make bold to say: I am the natural one to make this move. + +Just a minute before you pass judgment. Let us see if I am: + +1st. I have already spent in my work over a million dollars of my own +money. + +2d. I am willing to spend, if necessary, two millions more. + +3d. I will absolutely prove I want nothing in return. + +4th. I will absolutely prove on the face of my plans that I cannot in +any way benefit beyond the satisfaction I shall derive from putting +another spike in the "System's" coffin. + +I ask of the policy-holders simply this: + +Fill out the following form of proxy; sign and seal it, and send it to +me. Quick action is most desirable in view of contingencies. + +[Illustration] + +FOOTNOTES: + +[20] In the course of the legislative investigation of the great insurance +companies in New York, it developed that the Mutual Life Insurance Company +conducts a publicity bureau, organized to discredit any one who dares +criticise its methods. This bureau is conducted by one Charles J. Smith, on +a salary of $8,000 per annum, and he works through Allan Forman, editor of +the _Journalist_. Forman maintains a "telegraphic news bureau" and secures +publication in various newspapers or periodicals of matter sent him for +dissemination by the Mutual Life, and he is paid $1.00 per line of the +policy-holders' money on all matter for which he obtains publicity. The +whitewash paragraphs recently published throughout the country in regard to +President McCurdy and the Mutual Life were all paid for on this basis. + + + + +II + +THE ENEMIES I HAVE MADE + + +When a man discovers that a public building full of men, women, and +children is infested with rats and that these vicious rodents have +undermined its foundations and honeycombed its structure, it becomes his +duty, first, to warn the occupants of the presence of the rats, next, to +show them the damage that has been wrought and how the rats can be +trapped and killed--and then he may take a hand in the rat-hunt himself. + +That is about what I have been doing, and if proof were needed that the +"System" suffered under my exposure of its villainies, I should have it +in plenty in the showers of mud bullets it has fired at me. From scores +of quarters these volleys came. A regular army of the "System's" +votaries must have been out working like Trojans to stop my work, to +discredit me, to bespatter me with its dirt. + +The manner in which the "System" writhed under my attacks showed how +seriously it was hurt. What surprises me was that so little intelligence +was exhibited in defaming me. Such wanton, foolish attacks those that +were made on me personally! As though it mattered who or what I am in +comparison with the accusations I have made. Americans are not fools. To +say that Lawson is this or that does not minimize or detract from his +charge of robbery and conspiracy. + +Every morning after I began to write "Frenzied Finance" I found a new +budget of personalities in my mail, in the newspapers, in pamphlets. +Learned lawyers traveled about the country slinging mud at me at +banquets and society gatherings; scores of hireling weekly and monthly +papers devoted pages to vilifying me; the insurance press was laden +with assaults, and for fear the public should miss the brickbats, the +insurance companies carefully mailed them to their policy-holders. All +these tirades were in one key--that of crude abuse. The statements about +myself and my career were nothing but lies. They were not even cleverly +imagined. + +Upon entering on this crusade against "Frenzied Finance" I expected +attack. Reforms are not matured to accompaniments of incense and +rose-water, and I had made up my mind to disregard the mud and its +slingers. Afterward, if there were any "System" left, I rather looked +forward to smothering it beneath the foulness of its own generating. +There came a time during the year, however, when I deemed it proper to +depart from this resolution and nail some of the lies my enemies were +circulating about me. I debated the subject thoroughly, for the rancor +of these assaults was evident and I could not help feeling that the +general run of my readers would be impatient of the space given these +gutter rakers. The determination to go at them was clinched by a letter +which came to me, with a number of others from clergymen of various +denominations, from a learned Catholic priest, who put the case for a +reply most earnestly. He said: + + You owe it, my son, to yourself to clear away, for once and + all, the charges your enemies have made against you. I have + faith you mean all that you say, but there are many, many + sons and daughters who are troubled in heart and harassed in + mind with doubt whether your motives be pure, and if your + deeds in the past have been along the ways of the good. It + is my advice, if you will accept it, that you put aside your + pride and your dignity and frankly and openly tell us + whether these charges that we read are true or false. + + +BECK VS. LAWSON + +I shall deal with the subject as fairly as possible, reminding my +readers, however, that I am at a disadvantage in having to use pen and +ink instead of the implement appropriate for the purpose, a hose +connected with a disinfectant barrel. To begin with, I reproduce the +following from the Toledo _Blade_, December 26, 1904. (I have similar +paragraphs clipped from one hundred other papers.) + + JAMES M. BECK FLAYS LAWSON + + Calls Boston Author-Broker a Frenzied Fakir. + + DEFINES MONEYPHOBIA + + Declares He is Victim of New Disease--Compares His Actions to "Crazed + Malay Running Amuck." + + PHILADELPHIA, December 26th.--Ex-Assistant Attorney-General + James M. Beck talked on "Moneyphobia" at the thirty-ninth + annual commencement exercises of the Peirce Business + College. He paid his respects to Thomas W. Lawson in such + terms as "frenzied fakir" and "crazed Malay running amuck." + ... "There are abundant indications that this epidemic is + now rife in the community. The extraordinary vote polled by + a Socialistic candidate for President, in a time of general + prosperity, seems to evidence this, as does the avidity with + which many intelligent people read in a cheap 'penny + dreadful' magazine the incoherent, self-contradictory, and + self-incriminating articles of a notorious frenzied fakir, + who, like a crazed Malay, is wildly running amuck, and, + without rhyme or reason, slashing at the reputations of + judges, senators, and financiers." + +The following is from a Chicago insurance paper, and comes to me with +the marginal inscription, "Puncture this bladder when convenient." I may +say that I receive hundreds of clippings every day from various parts of +the country, sent me by correspondents who are determined I shall be +apprised of what my antagonists are trying to do against me. + + BANKER ECKELS AND BROKER LAWSON + + The splendid tribute to our country's greatness, resources, + and possibilities given by President James H. Eckels, of the + Commercial National Bank, of Chicago, and ex-Comptroller of + Currency of the United States, before the Chicago Life + Underwriters' Association, was listened to with earnest + attention. + + The brilliant young financier ... believes in life insurance + for the people. It creates the valuable habit of saving. He + deprecates the malicious attacks on companies by men of + mysterious motives, and feels it will be a sorry day if they + ever become objects of prey for political thieves. + + The banker paid his respects to Thomas W. Lawson, of Boston, + whom he characterized as a notoriety seeker and branded as a + "discredited, disreputable, despised stock-jobber who + glories in his infamy." Mr. Eckels lashed Lawson with + caustic language, and stated the American people of judgment + are not misled by his diatribes. + + Mr. Eckels believes that life-insurance presidents reach + their high stations by their own ability and grasping of + opportunities. Because a man is elevated to a position of + eminence and responsibility does not mean he is dishonest. + He arrives there because he cannot be held down and remains + as long as he proves his worth. The banker declared that + life companies, with their vast funds, were being safely + guided by men of superior mental mould. + + Mr. Eckels referred to President McCall, of the New York + Life, as being a clerk in a State bureau office when he + first made his acquaintance. He said President McCall had + advanced, like other company executives, owing to his own + ability and genius for management. + +In an early article in this series I stated that one of the favorite +operations of the "System" is to pick off those officials who have +exhibited unusual talent or energy in protecting the interests of the +National Government. In this way they secure the services of men who +know the secret workings of the people's institutions and how best to +guard the corporations against the consequences of their misdeeds. +During the Cleveland administration there developed a "financial +phenomenon," James H. Eckels, Comptroller of the Currency. It did not +take long for the astute Rogers-Morgan-McCall clique to see that this +young man's knowledge of finance in connection with his governmental +position might prove a dangerous obstacle to their machine if he were +not captured. It was not long before he was captured. + +I met Mr. Eckels during the Cleveland bond performance. I need not enter +into the details of that extraordinary affair here, for it is one of the +sore spots in recent American history. Briefly, the Administration at +Washington attempted to issue $100,000,000 government bonds and deliver +them in a snap sale to the "System." The New York _World_ began a +crusade against the transaction, and was so successful that the +Administration was compelled to offer the issue to the public through +competitive bids. The result--the bonds fetched many more millions for +the Government than if the deal had been allowed to slip along the ways +the "System" had greased for it. I remember well the scene at the +opening of the bids. It was in the United States Treasury at +Washington. With many others who desired an allotment of the bonds, I +was present. We were crowded into a small room, and following the +direction of young Mr. Eckels, who handled the transaction, we gave him +our bids, which, according to the advertised programme, were in sealed +envelopes. After all the bids were submitted--mine was for a number of +millions--the envelopes were taken by Mr. Eckels into a rear room. Then +a few of the leading financiers present, among them John A. McCall, of +the New York Life, J. Pierpont Morgan, and one or two others of the +"System's" foremost representatives, got their heads together and began +an earnest conference. Certain of them went out of the room and after +awhile returned for a further conference. There were several such +confabulations and comings and goings, until finally, after a monotonous +delay, the bids were opened and the bonds awarded. Morgan, McCall, _et +al._, had secured the bulk of the issue at a price many points above +what any one had been led to believe the bonds would sell for, and many +points higher than the "System" and the Government had proclaimed to the +people they could possibly sell for, yet at a price which showed +millions of profit a few hours after the bids were opened. I do not +charge that the public's envelopes were opened and "peeked" into before +the "System's" bids were sealed. Such a charge is not necessary. It has +been made many times by the press. Mr. Eckels, to the minds of such of +us as could see through cracks in a floor wide enough to drive a +four-in-hand coach into without unhooking the leaders, had lived up to +his rôle as a financial phenomenon, and when some time afterward it was +bruited abroad that this able young man was to have the presidency of +the City Bank, or any other large bank belonging to the "System" that he +might select, there was no surprise, although much comment, in Wall +Street. Mr. Eckels finally accepted the presidency of the Commercial +Bank of Chicago, where he now is one of the important cogs in the +"System's" machine. + +The case of James M. Beck has points of similarity. Mr. Beck, a young +Philadelphia lawyer, obtained a valuable knowledge of the secrets of the +Department of Justice in Washington as Assistant United States +Attorney-General, and in the prosecution of the Northern Securities suit +got an insight into the "System's" methods. It will be remembered that +at the trial of the suit he made a great appearance and became famous as +the young champion of the people who had succeeded in "busting" this +notorious trust. The victory was hardly announced before it became known +that the brilliant Assistant Attorney-General had renounced the cause of +the public and had been engaged at a large salary as chief counsel for +Henry H. Rogers, of Standard Oil. + +Mr. Beck has proved a most available and flexible servant in the cause +of his master. He has done Mr. Rogers's bidding in a manner befitting +the best traditions of "Standard Oil." Almost his first work was the +trial of the famous Boston Gas suit, in which for weeks he "steered" +Henry H. Rogers while on the witness-stand in the Massachusetts Supreme +Court. The very night before this case was to be called for trial, the +eminent young "trust buster" and people's champion called on my attorney +and made him a proposition. It was that I should meet Mr. Beck and agree +upon the details of certain testimony that Mr. Rogers and Kidder, +Peabody & Co. (the "System's" Boston representatives), and myself would +be called upon to give upon the witness-stand next day. My attorney +brought the proposition to me. + +"Great heavens!" I said, "is it possible that this man has the audacity +to come to Boston and ask me to commit perjury?" + +"He does not put it in just those words," my attorney answered. + +"No, but he says he wishes to _match up_ testimony with me so that we +may all testify alike." + +"That is it," my attorney answered. + +"But," said I, "I have got to state the facts, and the facts are +diametrically opposed to the testimony Mr. Rogers and the others are to +give. This looks to me like subornation of perjury." + +My lawyer would not have it that way, and I instructed him to secure +from Mr. Beck a writing as to just what he wished me to do, and that +writing I have at the present time. In it he states that if I do not +see him and agree upon the testimony to be submitted in the Supreme +Court of Massachusetts the following day, there may be developments +which will be decidedly uncomfortable for Mr. Rogers and perhaps for the +rest of us. + +I did not meet Mr. Beck, and Henry H. Rogers and Kidder, Peabody & Co. +told one story and I another. Bald perjury was committed by some one. +However, I will give all the facts, including the "match up" letter, +when I come to them in my story. + +Mr. Beck and Mr. Eckels are the two men designated by the "System" to +attend public gatherings and vilify Thomas W. Lawson. They are at it, +industriously. + + +THE DONOHOE EPISODE + +As soon as the first chapter of "Frenzied Finance" appeared, Henry H. +Rogers turned loose on me one Denis Donohoe, a character thug whom he +had imported from California for just such emergencies. Donohoe's first +service for Mr. Rogers was a vicious onslaught on Heinze, of Montana, in +the New York _Commercial_. This was an attack of such unusual vulgarity +and malignity that it won Donohoe his spurs, for soon afterward, when by +a characteristic trick Mr. Rogers obtained possession of the New York +_Commercial_, he made Donohoe its editor. I may mention that Heinze sued +the _Commercial_ for $300,000 damages, and apropos of the suit an +interesting complication occurred which seriously interfered with Mr. +Rogers's plans. The night before the old owners, from whom Mr. Rogers +had grabbed the _Commercial_, were to be thrown into the street, they +threatened, by way of reprisal for the mean trick that had been served +on them, to confess judgment to Heinze. One was president and the other +secretary of the company, and this action would have settled the +proposition. Rogers, treated to a dose of his own medicine, had to make +a compromise, and the men are still on the paper. The details of this +good story are to be found in the Detroit _Journal_. It was fitting that +when I began my exposures of the "System" this thug should be ordered +to do his worst by me, and he began the series of virulent assaults that +the _Commercial_ published and advertised all over the country. The +first of these was devoted to proving me crazy, and it was carefully +circulated by my friends the insurance companies by way of offsetting +the effects of my revelations of their jugglery of the people's funds. +Later I showed up the fellow so vigorously that John D. Rockefeller +ordered Mr. Rogers to muzzle him in his own paper, whereupon +arrangements were made with a New York weekly to act as the +sewer-conduit for the lies and abuse this thug was warranted to turn +out. + +I should not dream of dealing with this man or his fatuous attacks in a +respectable publication save that he has been appointed the "System's" +chief defender. It really seems as though the game were too small to +take time for its killing, but as these weak and febrile maunderings +really represent the "System's" reply to my charges, it may be worth +while to show, once and for all, what idiotic lies they put forth and +what a silly and ineffective falsifier it is that they have made their +champion. I shall take the second article of the series and contrast +Donohoe's statements with the actual facts. + + Incidents in Mr. Lawson's versatile career which even those + who are not censorious might well deem shameful. + +If in my career I have done anything of which I or any honorable man +should be ashamed, then I am willing to stand convicted of all that this +character thug charges against me--of being a stock-jobber, fakir, liar. + + He claims, if the writer understands him aright, that he is + _animated solely_ by a keen regard for the public weal in + performing what he describes as a public duty. + +I stated positively in the Foreword of my story, and have reiterated +many times since, that in making these revelations I am actuated first +and mainly by a desire to benefit the people of this country, not only +by informing them how they are being plundered, but how they can in the +future guard themselves, and that if it were necessary to accomplish my +purpose I would spend every dollar I possess; but mixed with this desire +is a hatred of the "System" as deadly as a man can have for anything +human. I have also reiterated that at such stage of this revelation as +is possible I shall secure from the "System" every dollar I can wring +from it to be used in my fight against it, provided always I can get its +dollars in legal, fair, and above-board fighting ways--I mean, in the +open market. + + Mr. Lawson appears before the bar of public opinion as a + volunteer witness for the commonwealth--"state's + evidence"--as the lawyers phrase it--and hence his + reputation, his motives, his character, his every act, + become at once fit subjects for the closest scrutiny and + examination. + +Whoever says that in telling my story I am revealing anything which it +is not fair or just to tell, or that I have not a perfect right to +state, says that which is false. I am confining myself to explaining how +the "System" gets its money. I do not touch upon how it spends it. If in +an honorable way I could write the things that have come to me +confidentially, the "System" might well tremble. I confess that at times +I have been tempted to depart from my code--when, for instance, soon +after the first Donohoe chapter, a man came to me and showed that he had +been offered $5,000 to vouch for the statement--which Denis Donohoe, H. +H. Rogers's right-hand man, had printed, and the insurance companies had +spread broadcast--that the first ten years of Thomas W. Lawson's +business life were spent as an employee of Richard Canfield, the +Providence and New York gambler, and afterward as his partner. "Give us +an affidavit to that effect and we will pay you $5,000." To this man I +said: "I have never in my life been connected with any gambling-place in +any way, nor had to do with gambling in any form, and only once in my +life have I set eyes on Richard Canfield. He was in the Waldorf Café one +day when I was passing through. However, if I did know him I should not +be ashamed to admit it, for I consider Canfield, from what I have read +of him, an angel of purity compared with any one of a score of the +'System's' votaries I could name." The man left me, but soon after +returned. He said: "It makes no difference whether what you say is true +or not, I can now secure $10,000 for the affidavit." When this kind of +fighting is brought to my attention, I am strongly tempted to let down +the bars. + + He relates, with all the graphic art of a novelist, a + wellnigh incredible story. Chicanery, fraud, blackmail, + bribery of a legislature and of a judge, systematic pillage + of investors and of the American public. + +The details I have narrated are facts, and I will prove them to be facts +so all may know them. + + In delving into Lawson's career--a most unwelcome task--the + writer has detected a continuity of purpose, a fixity of + design, a uniformity of method pervading his every public + act. What he is doing now, _i.e._, exposing somebody or + something, he has repeatedly done on a lesser scale in the + past; not from worthy motives, but for the sole purpose of + illegitimate pecuniary gain. + +Yes, throughout my entire life I have pursued with a continuity of +purpose that class I am pursuing to-day--the class that has taken from +the people their earnings by fraud or trick. If other proof were needed +that the men I am after have lost the discretion which made them great +in the world, these foolish yarns supply it. It is well known that no +man ever gets near to "Standard Oil" in business or socially until their +detectives have dissected his career from the cradle up. I spent years +in close business relations with these men, so close that, as I will +show later, I acted as the agent not only of Rogers and Rockefeller, but +of the Amalgamated Company and the City Bank. + + He is at present engaged in attacking the "System," as he + calls it, and the banks and the insurance companies and Wall + Street and American finance, by circulars, by + advertisements, and through the stock-market, as in the past + he has repeatedly attacked other corporations and + individuals until he obtained what he was seeking, and in + every recorded instance that thing was unearned dollars. + +In the past I have repeatedly attacked individuals and corporations +until I obtained what I sought in every case--justice for the defrauded +and punishment for those who had cheated them, and in no case dollars or +their equivalent. + + In the gilded biographies of himself which, from time to + time, Mr. Lawson has caused to be written and published in + newspapers and magazines. + +My history is well enough known. I have always lived in the open. It has +not been necessary to press-agent myself. A good deal has been printed +about me in the newspapers during the last twenty-five years, but if I +have ever sought to exploit myself before the public by means of +autobiographies or journalistic puffs, and it is so proved by any +reputable newspaper, may I be shown up to public scorn. + + It was Mr. Stevens who defrayed the expense of a six months' + course at a Boston business college for his protégé. + +I have never had such a course of six months, nor of any length, nor +have I ever been inside a business college. + + Mr. Stevens, who was a kindly, philanthropic man, known and + beloved by all his fellow-citizens, died years ago, + therefore he cannot dispute what Lawson tells. + +The late Horace H. Stevens died not years ago, but on March 8, 1904. + + Old residents of New York will recall that long before the + days of Canfield's gilded palace, and long before the era of + the present district attorney, Mr. Jerome, there was a + gambling-house known to the commercial traveller and + man-about-town as "818 Broadway," and that one of the + backers of the game was William F. Waldron, or "Billy + Waldron," as he was usually called. Waldron retired nearly + thirty years ago from the syndicate that controlled this + house and moved to Providence, where he interested himself + in gambling and what, for lack of a better term, may be + called the cognate industries. One of these latter was a + bucket-shop of the ordinary country town type. + + This bucket-shop was confined to the tender mercies of one + "Jo" Lumpkin as manager. Lumpkin failed to make the business + profitable, and Waldron, after attaching $500.00 that + Lumpkin had on deposit in a bank in New York, turned him + out. In his place he installed the present loquacious + reformer of American finance, Thomas W. Lawson, or "Billy" + Lawson as he was then known to the gamblers, race-track + touts, and confidence men who made Providence their + head-quarters. + +My readers will agree with me that such weak and feeble rot is beneath +any man's attention, for even if what is here charged were true, namely, +that a young man of twenty-one had been so employed, it would have no +bearing on his work twenty-six years afterward; but as I have decided to +take cognizance of this stuff, here are the facts: + +What to-day is known as the bucket-shop evil--that is, the speculation +in stocks over the counter at offices conducted by brokers outside the +pale of the law or the Stock Exchange--did not exist at the period +mentioned. This method of conducting speculation, however, had just been +invented, and many of the legitimate brokers, Stock-Exchange members, +utilized the new form in their ventures. Indeed, the number of brokers +and brokerage shops outside the Stock Exchange was as large, if not +larger, than that of the regular houses. At the time Donohoe treats of I +was doing considerable business for a young man, as will be evidenced by +my business card of that period: + + +----------------------------------------------------------------+ + | THOMAS W. LAWSON & CO., | + | | + | BANKERS AND BROKERS. | + | | + | Dealers in First-class Investment Bonds and Stocks. | + | Offices: Boston, Providence, New York, and Chicago. | + | | + | President of the Lawson Manufacturing Company. | + | President of the McDonald-Lawson Manufacturing Company. | + | Vice-President of the Briggs Printing Machine Company. | + +----------------------------------------------------------------+ + +I regularly visited every week my offices in Boston, Providence, and New +York. At one time I had a Providence office in the building marked in +the cut in the Donohoe story, and the sign over the door was "Thomas W. +Lawson & Co." + + It was in Providence, during the heyday of the + Waldron-Lawson enterprise, that Lawson ... first met "Jack" + Roach, whose apparent employment now is selling diamonds on + commission to the so-called "sporting element" of New York, + but who is acknowledged to be Lawson's personal + representative in this city. It was there, too, that he made + the acquaintance of Herbert Gray, who subsequently conducted + a gambling-house in Boston, and who recently served as one + of Lawson's captains and managed his trotting stable. Ben + Palmer, a well-known character in State Street, who is one + of the main cog-wheels of Lawson's machine, first made + Lawson's acquaintance during this period of his career. + +I do know the Waldron Brothers, of Providence, who are among the oldest +residents of Rhode Island, and who, with the present United States +Senator Nelson A. Aldrich, composed the great wholesale grocery house of +Waldron, Wightman & Co. They did not graduate from a gambling-house on +Broadway. I knew the brother referred to familiarly throughout Rhode +Island as "Honest Bill," and a royal old fellow he was. I did business +with him in those days, and to any connection I ever had with him I look +back with pleasure. He was then conducting a farm in the suburbs of +Providence, and in a straightforward, old-fashioned way supplying that +city with produce and poultry, and had, to the best of my knowledge, the +respect and confidence of all who knew him. I never knew of his having +been a gambler, and had no means of knowing, as such matters were then +an unknown world to me. + +I never, up to reading it in Donohoe's story the other day, heard of 818 +Broadway, curious as it may seem for a man of my experience. My +knowledge of gambling has always been confined to that kind which comes +under the head of stock gambling. I had not met my present friend, John +J. Roche, of New York, at the time mentioned. I never heard of Herbert +Gray, of Boston, until I employed him to manage my stable in 1899. I +have known J. Benjamin Palmer all my life. We were boys together on +State Street. Afterward he was the Stock-Exchange member of one of the +oldest banking-houses in Boston. He is still a broker on State Street. + + Nothing of certainty can be learned of his career during + this period. That he sold "base-ball" cards (a unique kind + of playing-cards) at the Providence railroad station is + stated on credible authority; that he "worked the trains" + between New York and Providence; that he sold books; that he + was a hanger-on at race-tracks, has been alleged. Any or all + of these rumors may be true--or false--for whatever may be + said of Lawson, his career has undoubtedly been one of + marvellous activity in many diversified lines. + +I have never sold baseball playing-cards at the Providence station, nor +anywhere, at this time nor any time, but I did invent the Lawson +Baseball Playing-Cards, and was president of the Lawson Playing-Card +Company. I never sold books at this time nor any time, and never "worked +trains" at this time nor any time, although I fail to see any disgrace +in such honest employment; nor had anything to do with trains in any way +whatever at this time nor any time except to ride in them. I have never +been a hanger-on at race-tracks, and have never had anything to do with +a race-track of any kind other than visiting one for the first time in +1899 to see my own horse, Boralma, race, and four or five times since to +see my own horses run. I desire to dwell on this especial accusation +because these character thugs have caused it to be published throughout +the country that I am and have always been a _habitué_ of race-tracks +and a plunging bettor upon races. I regret that it is my misfortune +never to have seen a horse-race until 1899, but if it can be shown that +I was ever upon a race-track before that time, I will agree to stop +writing this story of "Frenzied Finance." + + In 1882, a concern known as the Briggs Printing Machine + Company was incorporated in Rhode Island ... to manufacture + a machine that was advertised to "print, cut, pack, and + fasten with twine 100,000 tags per hour." Thomas W. Lawson + secured the job of selling agent of this company, and he + proved so successful and the advertising matter which he + wrote brought such handsome returns, that we find him in + 1884 promoted to the position of manager and enjoying a + salary of $150 per month. Later he became the secretary of + the company, and very shortly thereafter, in 1887, the + enterprise collapsed, was sold out by the sheriff, and + realized little or nothing for the numerous creditors.... + +It is true that I was the vice-president of the Briggs Printing Machine +Company, which was organized and owned by others before I had aught to +do with it. I was induced to invest considerable money in it and to take +charge of its affairs. The Briggs Company was a close corporation. Its +stock was never sold to the public, and after I left it it met with +failure. + + In December, 1888, the Lamson Consolidated Store-Service + Company was incorporated at Boston. Its purpose was to + exploit an invention of W. S. Lamson ... the overhead + trolley system used in department-stores for carrying cash + and parcels.... The capital stock at the beginning was + $250,000--par value of shares, $50. The company was doing + business and declaring two and a half per cent. dividends + quarterly, when Mr. Lawson stepped in and began to + manipulate the stock. The price of shares rose steadily to + 122. Under the influence of speculative excitement the + directors increased the capital stock to $1,000,000, then to + $4,000,000. Mr. Lawson boomed the stock on the basis of a + report, totally destitute of truth, that an English + syndicate was about to purchase a controlling interest in + the company. Having unloaded all the shares at his disposal + on the uproad to 122, Mr. Lawson suddenly one morning awoke + to a realization of the fact that Lamson Store-Service + shares possessed absolutely no value, and he at once took + the public, as is his custom, into his confidence. In + circulars, by advertisements, and by cunningly contrived + "news" items he insistently dinned into the public ear that + Lamson shares were valueless. The result was as well might + be imagined. The stock declined to 30, whereupon Lawson + bought it back and then and there made his first grand + _coup_. It is said that first and last he realized $250,000 + from the Lamson shareholders. + +I did "Lawsonize" the Lamson Store-Service Company, just as I am at the +present time "Lawsonizing" the "Standard-Oil"-Amalgamated-City-Bank +crowd. The Lamson Store-Service Company, with $4,000,000 capital, was +blunderbussing all who dared oppose it--all who refused to be bulldozed +into consolidating with it. It was the most vicious exponent of the +"Trust" methods I had ever met up to that time. Its arrogance, audacity, +and crimes were the themes of the newspapers and courts of the day. A +most casual investigation of the newspaper files, particularly in Osgood +_vs._ Lamson, and The New York Store-Service Company _vs._ Lamson, will +show a state of corporation assassination equal to that of the "Standard +Oil," only on a smaller scale, of course. Perjury, bribery, and even +murder will be found openly charged and in some cases proved. At the +height of the sensational career of the Lamson Company it ran into one +of my corporations, The Lawson Manufacturing Company, and started in to +"do me up" or compel a consolidation, and--well, I gave it battle. The +following circular to the stockholders will show how the battle +started: + + _Dear Sir_: I deem it my duty to say to you, as a + shareholder of the Lamson Store-Service Company, that your + Mr. Lamson and his agents have opened up on my company, and + with their usual criminal methods are endeavoring to ruin + us. This circular is to inform you that I have this day + given notice to each of your officers and directors that, in + three days from to-day, if they have not stopped their dirty + work and taken their hands off my company, they will take + the consequences. I do not pretend to be able to meet them + on the fighting grounds of the courts, for I know too well + their power of corruption and jury-buying, but I assure you + I have other ways by which I can stop them, etc., etc. + +If Donohoe had desired to deal with facts, he could not have missed the +details of this story, of which the papers at the time were full. It was +a fight which would have warmed the heart-cockles of an embalmed warrior +of the catacombs. Lamson stock was selling at 62, the highest price it +ever attained, not 122, as this numskull states. When I began operations +I slaughtered it and the reputation of Lamson and his associates; and in +the midst of the fight, when the shares were down to 18, or perhaps 14, +a great public meeting of stockholders--there were a whole lot of +them--was called in the city of Lowell, and, amid fiery speeches, Lamson +was told to choose between refuting my charges of fraud and being +deposed from the presidency of the institution. Lamson attempted +explanations, but the hard-headed stockholders did what the Amalgamated +stockholders will some time do, passed resolutions that Lamson must +punish me for libel or that they would punish him. The gathering then +adjourned to a future date, at which Lamson was to report what action he +had taken to punish me for my crimes. The next step was interesting, and +bears on an accusation I have seen mentioned frequently of late. I had, +when I began my fight, laid before Mr. Joseph Pulitzer, of the New York +_World_, the dastardly crimes of which the company had been guilty, and +was even then engaged in committing, and he had said: "Damnable! I will +aid you in exposing them." And he did. Day after day there were +broadsides in the _World_ relentlessly denouncing the rascalities of the +Lamson outfit. These finally stirred them to action. One day I received +word that some trickery was being put up in the district attorney's +office in New York. A few days later there appeared at my office in +Boston a police officer from New York and three of our head Boston +police officers. They said to me: "We regret, Mr. Lawson, but we must +take your secretary, Mr. William L. Vinal, back to New York, as he has +been indicted for spreading false reports." + +"Has any one else been indicted?" I asked. + +"Oh, yes," they replied, "you and some of the _World_ people." + +"Mr. Vinal has done nothing but obey my orders," I said. "Why don't you +take me?" + +"We have no orders to," was the reply. + +I saw the game and sent word to the Governor of Massachusetts, who +promptly told the combination: "Go slow, gentlemen. Remember you are not +in New York now, but in Massachusetts." He ordered a public trial. +Within two hours from the time they laid hands on my secretary I brought +suit in his name for false arrest against the officers who were trying +to arrest him, and grabbed the New York official before he could skip +out of town. Then I went to see the Lamson crowd and we had it out. They +begged that I allow Vinal to go to New York, just to vindicate them, in +which circumstances he would be allowed to return on the next train, and +the case would never be heard of again. If I would consent, they would +agree to a reorganization of the company and the dropping out of Lamson. +I showed them that they had gone too far, that I had damaging +information as to how they had secured the indictment, and that now they +must take the consequences. + +I took the "midnight" for New York, and in the morning was at +District-Attorney Fellows's office. I dared him to arrest me or the +officers of the _World_. He replied: "I don't want you, Lawson. I cannot +and won't help you advertise your fight." It proving impossible to get +up any excitement in New York, I returned to Boston, and the extradition +proceedings furnished a most sensational trial. The cause was bitterly +fought. The lawyers even came to blows in the governor's chamber. +Finally, when Governor Brackett had all the facts before him, he said: +"You cannot work your dirty tricks on me," and he entered a vigorous +refusal of the application for Mr. Vinal's extradition. This case +established precedents for all such proceedings since. + +The fight won, pressure was brought to bear on me to let up on the +Lamson outfit and call off further proceedings. For some time I +persistently refused to do so, as I was determined to contest the +constitutionality of the law. Finally, however, on condition that Lamson +should be thrown out, the management of the company reorganized, its +criminal methods abandoned, and all records and trace of the indictment +against myself and the others removed from the district attorney's +books, I consented. + +This is the history of how I "Lawsonized" the Lamson Store-Service +Company, and if there is anything I have ever done that was good to do +and well worth doing, this was it. I am just as proud of my work here as +of what I did in the General Electric fight upon which I have already +touched. In the Lamson reorganization I was offered all sorts of good +things, but I refused, as I always have in such affairs, to benefit in +any way but the open and fair one where I go into the open market and +stake my money against that of my opponents on my ability to prove I am +right. The facts here are of legal record. Following is the +Donohoe-Rogers version. The mendacity is obvious: + + Among the unfortunate Lamson-Service stockholders were + numbered several aggressive people of the old-fashioned + kind, who resented Mr. Lawson's peculiar way of doing + things. These submitted, in 1892, to the grand jury of the + city of New York a sheaf of Lawsonian literature, comprising + his scandalous attacks on the company's securities. The + grand jury indicted Thomas W. Lawson, and Colonel John R. + Fellows, the district attorney, and his assistants, Francis + L. Wellman and Mr. Lindsay, went to Boston to try to have + Lawson extradited. The Governor of Massachusetts came to + Lawson's rescue in the nick of time and declined to honor + the request of the Governor of New York for his extradition; + but for years thereafter the future author of "Frenzied + Finance" made his trips to this money-centre incognito. + + THE GRAND RIVERS ENTERPRISE + + In 1890 the entire country rang with the fame of Grand + Rivers, and it was Thomas W. Lawson, of Boston, who pulled + the bell-rope.... The scheme, as may be deduced herefrom, + was a most comprehensive one. The development of the + "marvellous deposit of coal and iron," which had been + discovered upon the property by Mr. Lawson, one day while + seated in his revolving chair in his State Street office, + furnished the basis for the incorporation of the Furnaces + Company. After $2,000,000 had been "expended," the clamor of + the stockholders caused the company actually to build + several furnaces. They were erected and stood idle, with + nothing to feed them. The whole scheme collapsed in 1892. + The stockholders lost every dollar of their investment.... + + In this, his fourth financial venture, Mr. Lawson did but + repeat his former experiences--except, in this case, the + loss sustained by those who reposed confidence in his + promises was heavier than in any of his prior undertakings. + +The Kentucky experience is one of the pleasantest memories of my life. +Measured by dollars and cents it was expensive but was well worth it, as +the young man remarked who broke his arm by being thrown from his horse +into the lap of his future wife. It makes a long story, and I shall only +touch on the leading facts concerning it by way of showing the desperate +straits my enemies are put to in their efforts to discredit my career. + +My present brokers, Messrs. Brown, Riley & Co., one of the oldest and +largest Boston and New York Stock Exchange houses, had floated the Grand +Rivers enterprise for some of their wealthy clients. It was an iron, +coal, and furnace proposition, and before I ever heard of it, it had +been bought and paid for, and enormous furnaces were under way. It was a +close corporation. After a very large amount of money--in the +millions--had gone into the property, I was induced to take the +executive management, and also I put in a very large amount of my own +money. My work was to be that of business director, for I did not know +an iron or a coal mine from an alabaster ledge in the lunar spheres, and +not half as much about an iron smelter as I did about converting +whiskers into mermaid's tresses. However, one of the greatest iron men +in New England, Aretas Blood, president of the Manchester Locomotive +Works, and of the Nashua Steel and Iron Company, was at the head of the +enterprise, which apparently safeguarded it. Well, it turned out that +there was no iron in the mines--at least not enough to pay for +extraction, and the investment simply disappeared. I lost a very large +amount--at least, a very large amount for me--but I had to show for it +the love and friendship and respect of the inhabitants of one of the +fairest places on the earth--a place where brave men and lovely women +live in peace and comfort in the knowledge of their own fearless, simple +honesty, and their hatred of shams and trickery--in absolute ignorance +of frenzied financiers and the "System's" votaries. + +The history of Grand Rivers is an open book. There is no secret about my +connection with the enterprise. It was a straight and proper venture. +The men who are my brokers of to-day fathered it, and they are men of +honor, probity, and responsibility, who since my first year in business +in 1870 have been my close business associates and personal friends. Why +do not Donohoe and his breed of gutter-rooters, when seeking information +about me, ask such men as these for facts about my life?--they know what +every hour of it has been. Strange as it may seem to such vampires, the +men I began to do business with when I was a boy I am doing business +with to-day, and they are my associates and friends. + +I postponed until the last moment writing this article in order that I +might be able to diagnose the "System's" attack on me. The first of the +widely advertised series was such a foolish and asinine thing as to be +unworthy of notice, and I desired to see how much further the second +would go. In the former it was charged that I was writing my articles +solely for the purpose of securing stock-market profits and compelling +the "System" to settle; in other words, that I was attempting to +blackmail them; that I had no honorable motives in writing my story, and +had no remedy of any kind in mind; that in the recent panic I had made a +million and a quarter of dollars; that I had secured President +Roosevelt's message eight days before it was published; that I had +advertised on November 29th, unqualifiedly advising all to purchase +Amalgamated, and that on December 6th I had advertised advising all to +sell. It is true that I did advise the public to sell, but that in my +advertisement of November 29th I advised the people to buy Amalgamated +I positively deny. I carefully avoided doing so. The other statements +are equally false, and were made with a full knowledge of their falsity. + +The incidents in my career about which I have here set forth the facts +are not secret. All the things I have stated are fully susceptible of +proof. For another instant let me take the assertion that my motive in +this crusade is personal gain through stock-jobbery, and that I have no +aim or end in view other than that. Well, I can to-day show the Remedy +to which I have alluded so often, and which when I worked it out in 1893 +I had printed with full detail. It is in my vault now under lock and +key. In the year 1894, in London, I laid a copy of this document before +Joseph Pulitzer of the New York _World_. Remember, this was a year +before I met H. H. Rogers or any of the "Standard Oil" party. + +Since Donohoe began his latest series of attacks I have had scores of +letters commenting on them. A significant verdict on what the man is +accomplishing is the following: + + BUFFALO, N. Y., January 23, 1905. + + _Dear Sir_: I herewith enclose you copy of a letter just + sent to Mr. Donohoe, also to the editor of ---- + + Yours respectfully, + ---- + +(COPY) + + January 23, 1905. + + MR. DENIS DONOHOE, + + Financial Editor, New York _Commercial_, New York City. + + _Dear Sir_: With considerable pleasure, satisfaction, and + conviction, I have carefully read all the articles on + "Frenzied Finance," by Mr. Lawson, and from my limited + knowledge of affairs, gained by fifteen years of active + life, am of the opinion that he has been telling facts, + although at times they are clothed in the language of a + writer of fiction. + + I have been waiting and confidently expecting, during the + past six months, that some able, honest, unbiassed, and + free-handed man would take up the discussion against Mr. + Lawson, and in this way aid the people in viewing the entire + subject with all possible side-lights, so that when public + opinion shall be finally formed, as surely it will be in the + future, it may be as nearly right as possible and only the + guilty suffer. It was, therefore, with a high degree of + exultation that I purchased ---- of January 19th, upon the + first page of which in bold type appears: "Lawson + Answered--the Truth About Frenzied Finance." At the sight of + these words I said in almost audible tones: "Now we shall + hear the other side, or at least learn what Mr. Lawson has + omitted, if anything." + + I have just finished reading your article in said issue of + ----, and as you now pose as a public writer and benefactor, + you of course will welcome frank, honest criticism. After + reading and rereading your said article, I am, against my + desire, forced to the following conclusions: + + 1. You are either one of the "System" or are hired by it. + + 2. This article of yours was prepared for the purposes of + making two points: (a) Working on the sentiment and passions + of the weak, and the women; and (b) diverting public + attention and opinion from the real facts at issue, by + attacking Mr. Lawson's personal character, which is not up + for discussion. + + 3. Your article is full of high-sounding declarations, and + void of either logic or common sense. + + 4. In your endeavor to express the wishes of the prejudiced + and biassed, you are undoubtedly dishonest with yourself + without deceiving the public. + + 5. Your article lacks the ring that carries conviction, + either as to your sincerity or the truthfulness of the + statements you make. + + 6. The article indicates that you are vainly trying to ape + Mr. Lawson's style. + + Yours respectfully, + E. G. MANSFIELD, + Attorney-at-law. + +Following the Donohoe outburst there came innumerable letters, of which +this is a good sample: + + TACOMA, WASH., February 14, 1905. + + _Dear Sir_: It would be greatly appreciated by at least one + of your readers if you would furnish the great and only + Donohoe the details of some really scandalous epoch of your + past. It has been stated many times that one man cannot make + a million dollars and do it honestly, so we must assume you + have done some "things" in your past. We have a very high + regard out West for the works of Mr. Dooley and Mark Twain, + and also are regular subscribers of _Puck_ and _Judge_, and + we don't want to see these noted writers and periodicals + unseated, even for the time being, by Mr. Donohoe. + + Therefore we ask you to give him some tip from which he can + work out something serious, so he can make a statement that + is not "reported," or the deduction of which does not + require Sherlock Holmes. + + His work of "dissecting" so far reminds us of the work of a + six months' student of a medical college on a Tom cat (no + pun meant). + + Yours very truly, + L. H. M. + +I answered as follows: + +_My Dear Sir_: Your request is similar to that of a hundred other +correspondents. I regret I can do nothing to help out. Donohoe's trouble +is, he is short of facts, so "short" that he seems to me completely +"cornered." I am "long of" them, as you and all my other readers will +admit before I am through my story, but my facts are not the kind +Donohoe can use, or I would willingly let him have a few to assist him +out of his present predicament. + +Donohoe's employers, Rogers and the "Standard Oil," knew before they put +him on to his present "job" that my life was a peculiarly and unusually +open one--one that had absolutely no dark or covered corner in it; they +knew it not only because all men in my walks of life know it, but +because they had investigated it with their unerring search-light. Most +men who have ever been on the inside of "Standard Oil" know that no man +with a bad record could do business, much less have an intimate +relation, with Rogers and Rockefeller for nine seconds; and my +connection extended over nine years. + +The tone of my correspondence during the year was not by any means +altogether friendly. The writer of the following letter presented his +conclusions straight from the shoulder and I was equally direct in my +reply: + + Personal. + + GAINESVILLE, FLA., February 21, 1905. + + MR. THOMAS W. LAWSON, Boston, Mass. + + _Dear Sir_: Pardon my "buttin' in"--seems I must say + something. + + If what Donohoe says about your Trinity Copper Company is + true, it would seem you ought to stop throwing mud at the + Standard Oil crowd, for you are no better than are they, and + they are known thieves and robbers. While you may be telling + the truth about the other fellow, yet the fact of your + telling it does not set well on the stomach of those who + read both sides of the story. Seems to me it's "dog eat dog" + until every one is disgusted. + + Why don't you come down to business and give the readers of + _Everybody's_ something wholesome to digest and plenty of + it? The way it comes now, we are over our hunger before the + next issue shows up, and, in the meantime, your friend has + converted many to the thought that you are worse than the + Standard Oil crowd. + + Won't you please answer, in the next issue of _Everybody's_, + if you made your money--your fortune, HONESTLY, or did you + "do others" for fear they would "do you"? I am inclined to + think you are as big a "grafter" as ever came down the pike, + even though you may be telling on the other fellow--turning + State's evidence. + + Yours truly, + ---- + +You ask why I do not get down to business. You won't mind my telling you +the principal reason is that it is _I_ who am writing "Frenzied +Finance," not you nor any of your kind, and that I propose to decide +when it is time to get down to business. If in the meantime there is any +one else who can do the job I have cut out better than I, why, none will +be better pleased than myself. Indeed, I will gladly contribute as a +reward to my successor double the many thousands of dollars I am paying +each month to get this work of mine properly before the people. + +What Donohoe says of my Trinity Copper is not only absolutely false, but +has over and over again been demonstrated to be so. The actual facts +regarding that property have been printed time and again in reputable +Boston newspapers, and casual inquiry will obtain you the full details. +In addition, practically everything which Donohoe, the hired mouthpiece +of "Standard Oil" and the "System," has said is absolutely untrue and +made from whole cloth. When I say this I cover all criticism which has +been made upon me or my work by "Standard Oil" or the "System," for this +character thug has utilized every dirty slander which my enemies ever +invented and put into circulation. + +Did I make my fortune honestly, you ask? and I answer: In thirty-six +years of active business life, very active, embracing transactions +through which I have passed from poverty to wealth and back again from +riches to poverty, and in which I might easily have retained the riches +by sacrificing a principle, I have never once in all these years and in +all these transactions done a wrong to man, woman, or child, nor taken +from man, woman, or child a dollar unfairly, much less dishonestly. +Rather a remarkable record, you will say, for one who has made millions +in the stock business. But I should not be broadly honest if I did not +add the modification that these millions of dollars were made in the +open stock-market, by methods which in the open stock-market are called +fair and honest; that is, I have played the game according to the rules, +and the "other fellow" has had equal chance with me and might have done +anything I ever did. If, however, business were conducted as it should +be and as it will be after my "Remedy" has reformed present conditions, +such methods will net those using them only thousands where I have +gained millions. + +You add that you are inclined to think I am a "grafter." In reply I can +only say you would not dare--and I don't know your size, color, or +length of trigger-finger--to say it in my presence, though of course, it +is absolutely immaterial what you or your kind think of me or my work. + + +THE LAWSON PANIC + +During the eighteen months in which "Frenzied Finance" has been before +the public, history has been made at a stiff pace. Next to the insurance +revelations which are still in process of deliverance, the most striking +demonstration of the period has been the flurry in stocks which was +spoken of as the Lawson panic. In the February, 1905, issue of +_Everybody's Magazine_ I dealt with the performance and its attendant +phenomena. + +Without undue vaunting, I may say that my explanation of the mysteries +of modern finance has not been without immediate profit to the public. +The people, accustomed to invest their money in the legitimate +securities of the country, had time and again lost hundreds of millions +without dreaming that they had been as ruthlessly robbed as though held +up at a pistol-point by a highwayman. They imagined that the great +capitalists whose names were emblazoned in the press throughout the +land, and who managed the banks and trust companies and insurance +corporations to which their savings were intrusted, were noble and +public-spirited gentlemen of the highest moral principles and of +absolute integrity. They know to-day that many of them are reckless and +greedy stock gamblers, incessantly dickering with the machinery of +finance for their own private enrichment. + +I have stripped the veil from these hypocrites and exposed to all the +world their soulless rapacity. I have let the light of heaven into the +dim recesses of Wall Street in which these buccaneers of commerce +concocted their plots. I have done more than this: I have nipped in the +bud the newest conspiracy for the entanglement of the public--the great +"bull" market which was organized late in 1904 by the chief votaries of +the "System," to harvest a new crop of profits on the securities they +had laid in during their last raid. In other words, I have treated Wall +Street to a dose of its own medicine. + +During the month of December the newspapers devoted considerable space +to the doings of the stock-market in connection with the episode to +which I refer. I use the word "episode" purposely, for I warn my readers +that it was but one of a series of disturbances which must occur before +the grasp of the pirates on the great financial interests of this +country can be shaken off. David slew Goliath with one pebble from his +sling, but the giant "System," intrenched in the stoutest citadel ever +constructed, and armored in gold and riven steel, will yield to no mere +call for surrender. My own part I have cheerfully taken with no +delusions as to the difficulties of the contest. He who interferes +between the lamb and the wolf is likely to provoke the wrath of the +wolf, and I have done worse, for have I not come between the lions of +finance and their willing prey? + +It is worth while here to rehearse the steps of this first disturbance, +because it constitutes part of a movement destined to wield a tremendous +influence in this country's history. While my revelations of the methods +of the "System" were circulating throughout these United States, the +"System" was engaged at its old trick of inflating the prices of its +favorite stocks and bonds and spreading its nets for another gigantic +plundering of the people. In the stock-market and in the highways and +by-ways and resting-places of finance nothing was heard for months but +fairy tales of great earnings of railroads and industrials, fairy tales +of new ore in old mines, fairy tales of great financial forces +converging toward colossal combinations. + +These are the lures of the "System's" hirelings, the decoy calls of the +market tout and the financial tipster whose part it is to mould opinion +and urge the people to the shambles. Before my eyes, with a blind and +audacious defiance of my warnings, the old, old game was rigged in full +view of the audience and the old players began their venerable antics. +In the meantime the "System" attended to its own rôle in the +conspiracy--supplying out of its banks and trust companies the public's +money for the gamblers to make the game with. Then began the artful +process of working up the market; stocks gradually climbed higher and +higher. Amalgamated ascended from the forties into the fifties and the +sixties and even into the eighties; steel assumed the appearance of life +and grew from ten slowly upward into the twenties and thirties. Every +day in the Stock Exchange hundreds of thousands of shares changed hands +back and forth among the professionals who lustily played their parts in +this financial melodrama. The good old myths of great fortunes made by +lucky investors began to reappear in the papers. Sales increased; values +jumped rather than climbed. The trap was set; the market made. The wily +manipulators rubbed their hands gleefully. The public began to bite, to +buy. It was then only a matter of sizing up the wool crop before +beginning the shearing. + +Before I detail the steps I took to spring its own trap on the "System," +I should explain that this market was purely an artificial one. The +immense advance of prices was not brought about by any honest methods or +legitimate causes. The "System's" votaries had enormous quantities of +stocks--millions upon millions of shares, bought when the people during +the past two years were compelled to throw them overboard at slaughter +prices. By employing one of the oldest swindling devices known to +finance,[21] they could bid prices to any figure they desired. Honest +financial writers called attention each week to the tactics of the +manipulators and declared the high quotations unjustifiable and +unreasonable. + +At the stage of the game that I felt sure immediately preceded the +unloading signal, I determined to test whether the people had really +digested as well as absorbed the cold facts I had been ladling out to +them in my story of "Frenzied Finance"--whether they had grown wise +enough to heed a warning. So on Monday, December 5th, I carefully +prepared the following advertisement, which was published Tuesday +morning in the great papers of the great cities of this country and +later in Europe. + + AMALGAMATED STOCKHOLDERS--WARNING + + From the creation of Amalgamated I have continuously + believed in its worth and constantly advocated the purchase + of its stock. + + Henry H. Rogers personally negotiated with Marcus Daly for + the properties which went to make up the Amalgamated + Company. + + Henry H. Rogers alone knew absolutely their values. + + Henry H. Rogers's associates took his word for them. + + While they cost Messrs. Rogers, Rockefeller, and associates + only $39,000,000, we all believed they were worth more than + the $75,000,000 at which they were sold to the public. + + Shortly after the public flotation at $100 per share, the + stock dropped to 75. I did all in my power to prevent the + decline, losing millions in the effort, but I retained my + faith in the real worth of the property. + + Some of the insiders made millions; the public was fleeced + of millions. + + I still refused to be discouraged. I urged Messrs. Rogers + and Rockefeller to make good their promises made through me + to the public. Finally they consented. The stock advanced + until it sold at 130. + + At the highest price I was still buying and advising its + purchase. Then there came the awful slump which slid the + stock down to 33. I lost enormously; insiders made vast + profits. The public was again fleeced. + + At 33 I began a new campaign to induce my followers and the + public to buy. As a result there were purchased by hundreds + of people all over the country directly and indirectly + through me, rising 260,000 shares, at an average of 40 to + 42, and probably hundreds of thousands more which I could + not trace. + + This campaign I have prosecuted incessantly up to the + present time, until now I estimate the public holds + 1,000,000 shares, 700,000 of which show at to-day's price, + 82, a profit of $28,000,000. + + When my story, "Frenzied Finance," began, I advertised that + it could do no damage to Amalgamated stock, but would help + it. + + Hoping to divert the dangerous disclosures I threatened, the + leading attorney of Messrs. Rogers and Rockefeller asked for + a conference. At it he demanded of me what I expected to + accomplish. I replied: "One thing, at least--to put the + price of Amalgamated back to 100, that those unfortunates + who still retain their stock may recover their money." + + Then the secret was revealed to me that Amalgamated was not + worth anything like the price at which it had been sold to + the public. I said: "How can this be?" + + He answered: "Mr. Rogers knows for a certainty that Marcus + Daly deceived him about the worth of the properties." + + I had great faith in this attorney. He was sincere in what + he said; his knowledge and relations were such he could not + have been deceived, and his special information about this + property was such that he could speak in the first person. I + believed him. Soon afterward another official of Amalgamated + confirmed his statements. + + When I received this information my dilemma was a terrible + one. If I gave it to my following they would at once throw + over their stock, probably at a great loss. I waited. Sooner + or later I knew these men would get behind the market, push + up the prices of the stocks they had gathered in at bottom + figures, and, when the moment was ripe, again unload on the + public. + + The market "came in." I did all in my power to assist in + raising the price of Amalgamated. + + To-day's situation is the same as that of 1901. + + "Frenzied finance" stock gamblers have accumulated immense + lines of Amalgamated. The same sensational rumors of a great + rise to come flood Wall and State streets as in 1901. They + have asked me to join in creating a wild market upon which + all the Amalgamated taken in at lower prices may be turned + out upon the public. + + It would be millions in my pocket to assist, but---- + + I see the handwriting on the wall which the "frenzied + financiers" of Wall Street do not yet see. It reads: + + "The people will not stand plundering any longer." + + And I have decided. + + I advise every stockholder of Amalgamated stock to sell his + holdings at once before another crash comes. Another slump + may carry it to 33 again, or lower. + + It may go higher, but this is no affair of mine. From the + moment of the publication of this notice all those who have + looked to me for advice must relieve me of further + responsibility. + + As the people who look to me for advice are scattered all + over this country, I know of no other way than this to + simultaneously notify them of what I have learned. + + If the powerful people who manage and control Amalgamated, + and who, after selling it to the public at $100 a share, + allowed it to sink to $75, and after it had advanced to 130, + smashed it to 33, regardless of their sacred promise to me + and the public through me, now reveal to me that it is not + worth over 45, it is inevitable that if they are honest in + what they say, the stock must go there of its own weight. If + they are not honest, they will put it there anyway, and + lower still. + + I would have waited until the reckless speculators who are + now manipulating the market had put the stock higher, but I + did not dare. During the past two days I have detected + unmistakable signs that the vultures are gathering for the + feast. + + In the past I have told what I thought I knew about + Amalgamated; from to-day I shall tell what the men who + control and manage Amalgamated say they have found out about + it. No stockholder should, after this fair notice, object or + accuse me of trying to injure the property, even though I be + compelled to begin court proceedings based on this + information so lately revealed to me. + + This advertisement and my mailed notices will appear in New + York and Boston, Tuesday, December 6th; in the Eastern and + middle portions of the United States Wednesday, and the + balance of the country, Canada and Europe Thursday, and I + shall wait until Friday, that all may have ample time to + dispose of their stock, if they care to, before making my + next move. + + Every holder of Amalgamated must keep before his eyes this + one tremendous fact: His property is now absolutely at the + mercy of men who have the market in the hollow of their + hands, and who in the past have raised this stock to the + highest and then dropped it to the lowest without heed or + concern but for their own pockets. + + COPPER RANGE + + Since Copper Range Consolidated sold at 12 I have advised + its purchase. To-day it sells at 70. All who have followed + my advice have made immense profits. + + Copper Range has 385,000 shares; Amalgamated 1,550,000. + + Copper Range is a new property at Lake Superior, consisting + of three immense mines and a railroad, with the latest and + most complete plant in the world, including its own + smelters. It is the largest and richest copper mine + discovered and developed in the past twenty years. It is + producing now 40,000,000 pounds of copper annually, and will + in the near future become the largest producer in the world. + + Amalgamated pays 2 per cent. in dividends. Copper Range will + pay 6 per cent. in the coming year, and continue to + increase, to what limit no man can tell. If the present + market for copper, the metal, holds at 15 cents, and the + best judges think it will probably go higher, Amalgamated + should increase its dividends to 4 or 6, but with 15-cent + metal Copper Range will earn and pay 8, 10, and 12 per + cent., and upward. + + The curse of Amalgamated has been "Standard Oil" management. + Copper Range has been, and is, directed and controlled by + representative Boston copper men, who seek their profits in + the mine and not in the stock-market. + + THOMAS W. LAWSON. + BOSTON, December 6, 1904. + +The result of this announcement proved that my message had not fallen on +stony places, but had been accepted by the public in the spirit of its +giving. All Tuesday, Wednesday, and Thursday the people sold their +stocks to the "System's" votaries at the falsely inflated prices these +gentry had forced for their own plundering purposes. Instead of +gathering in the savings of the toilers, the "System" had to part with +some of its wad. For once the people got the money and the "System" had +the stocks. Under the stress of tremendous selling the price of +"Amalgamated" was shattered. Other frenzied finance stocks declined in +sympathy. The power of publicity had been triumphantly vindicated and +the cries of frenzied financiers, their mouths full of their own +fish-hooks, resounded through the land. + +That this condition would be allowed to prevail long, I knew was +improbable. The "System's" leading votaries got together and organized +to stop the frightful decline in prices. The old cuttle-fish methods +were at once resorted to--a campaign of falsehood, deception, and +trickery began. Lest the people should realize that it was their power +which had wrought such havoc, the touts and tipsters shouted in chorus +that the slaughter of prices was the work of the "System" itself, and +that I was secretly in league with the "System" against the public; +that, the public having been robbed of its stocks, prices would advance +with an extra bound. Scores of millions were drawn from the banks and +trust companies to stay the slump. Under the influence of all this +industry and clamor the market began to boil again; prices recovered, +and the people, confused and bewildered, were once more about to be +entrapped. A sharp advance was followed by a cry from the votaries that +I was a trickster and that what had been in reality the most notable +demonstration of "the people's strength" ever given was only another +evidence of the "System's" infallibility. If this deceit had prevailed, +the task I have undertaken of enlightening the public would have had a +setback. Relying on my previous work, I put forth the following +announcement Monday morning, December 12th, and confidently awaited +results: + + INVESTORS AND SPECULATORS--WARNING! + + For six months through my story, "Frenzied Finance," in + _Everybody's Magazine_, I have been educating the people to + the terrible condition existing to-day in America--the + people are plundered of their savings by a few men through + the working of the "System." + + After a close study for six months I concluded that the + people were awakening to the truth. + + I decided to make a test. + + I advertised certain truths. That was all. + + For three days Wall Street and the "System" were + panic-stricken--paper values melted to the extent of + hundreds of millions. + + The laws of the land are strict about panic-breeding by + public statements. + + If any of the terrible statements I have made had been + false, I should to-day be in prison or my body suspended + from a lamp-post. I could not possibly have escaped. + + What I have stated is truth. No one dares gainsay it. + + Wall Street and the "System" for the first time were + compelled to come to the rescue and put in jeopardy their + own money by buying stocks from the people at inflated + prices. + + For the first time a break came while the manufacturers of + stock still held them. + + The people sold them. + + To-day every scheme known to frenzied financiering is being + worked to make the world believe last week's panic was the + result of stock speculators, bears, "Standard Oil," and the + "System." + + Throughout this country and Europe is being spread the story + that I was in league with "Standard Oil" and the "System," + that they had sold out their stocks and got me to raid the + market to shake out the public. + + That another great rise is coming. + + * * * * * + + This is clever, smart, the only thing possible under the + circumstances. + + But it is a lie. + + I ask the people to watch the desperate efforts that are + being made to get this lie to pass for a truth. + + The "System" must unload on the public, but above all else + the "System" must convince the people that the awful + destruction of last week could not have been brought about + merely by the people's own doings. + + If the people are not so convinced they will know their + power, and that they have in their own hands, to use at any + time, a weapon which can stand the "System" on its head. + + There is no reason why the people cannot reverse the old + process and always sell at the top to the frenzied + financiers and buy from them at the bottom. + + * * * * * + + This is my warning: + + I ask the people and Wall Street and the "System" to give it + weight or their loss will be on their own heads. + + I am going to strike again, suddenly, sharply, + sensationally, and in a way that will produce effects upon + prices and upon markets, so much more destructive, that the + effects and the destruction of last week will appear by + comparison as milk to vitriol. + + Every owner of an active stock in which the "System" has any + interest owes it to himself to weigh my warning. + + The result must be terrible for Wall Street and the + "System," and nothing can avert it. + + It matters not how much preparation is made, as it will come + in a way not possible to guard against. + + I want all to know now, so they will not blame me when the + slaughter is on. + + My first and only warning will come in the form of a public + notice that certain named stocks should be sold the day my + advertisement appears. + + Three days afterward I will publish why, but with the why it + will be too late for holders of stock to save themselves. + + I now say to all, if you decide after reading this that I am + only talking, well and good, but when it is too late, + remember what I did say. + + While waiting for me to speak, again think it over. + + * * * * * + + When "Frenzied Finance" first appeared, only six months ago, + the wise heads of the "System" said: + + "The public will tire of it in sixty days." + + At the end of six months the people, the press, and the + pulpit are lashing themselves into a fury over its + revelations, and it is impossible to print magazines enough + to meet the demand. + + When I first touched on the life-insurance companies they + laughed. + + To-day policy-holders are panic-stricken, and the big + companies are falling behind millions a week. + + When I said my story would affect Wall Street, Wall Street + laughed; last week it yelled, cursed, and begged. + + And I am only in the mild, preliminary stages yet. + + While waiting for the next move, make no mistake. + + When real work begins Wall Street and the "System" will look + like a last year's straw hat in the swirls of Niagara. + + AMALGAMATED + + Last Tuesday morning I publicly said: + + "The men who control Amalgamated told me it is not worth + half the price it was floated at. If they told the truth it + will go back to 33. If they have lied they will smash it + back to 33 as they did before. Sell it." + + All that day (Tuesday) holders could have sold at an average + of 79. + + Holders of over 200,000 shares did. + + The following day all holders could have sold at an average + of 74--300,000 did. + + The third day all holders could have sold at an average of + 66--200,000 did. + + Then the Wall Street powers got desperate and stopped the + decline. + + During these days I did not sell a share nor do anything in + the market to assist the decline, but did buy enormous + amounts to prevent it from breaking below 60. + + Every scheme known to frenzied financiers is being worked to + make it appear now that this stock is going to sell much + higher. + + It is advertised broadcast that I was working with the bear + raiders and "Standard Oil." + + This is a lie. + + My brokers were requested by another client to publish a + statement that a prominent copper company president stated + there was $33 in the Amalgamated treasury. + + Instantly the rumors were sent broadcast that I had settled + with "Standard Oil" and was bulling the stock. + + This, too. + + I know the man who made the statement and the high officer + of the Amalgamated who got him to make it. + + And it shows the desperate position of the Amalgamated + "Insiders." + + They are loaded with the stock. + + I dare any officer of the Amalgamated Company to publish the + above statement over his signature. + + If he does court proceedings will be begun at once. + + I also dare Mr. Rogers or Mr. Rockefeller to deny the + statement made by me that they have said the stock is not + worth 50, and that Marcus Daly deceived them. I dare them. + + I repeat what I have said to holders of Amalgamated: + + Sell your stock now, before it is too late. + + Bear in mind when Amalgamated sells at 33 that I have warned + you. + + And in the meantime watch for sharp breaks in Amalgamated. I + will give no further warning on this stock, and under no + circumstances will change my now advertised position on it. + + Thomas W. Lawson.</sc> + BOSTON, December 12, 1904. + +The second test brought a stronger demonstration than the first. This +time the "System's" votaries were drawn up in solid phalanx; behind them +uncounted millions and unmeasured power braced to meet attack. All day +Monday the people hurled their securities at the gamesters, and with +every onslaught prices crumbled until, when the Stock Exchange closed, +the "System's" losses were represented by hundreds of millions of +dollars. The people had learned a lesson, and a hundred years more of +the "System's" trickery and falsehood will not efface its impression. + + +VILIFICATION NO REPLY TO FACTS + +The attacks I made on the "System" were frank and direct statements of +facts. The destruction they wrought upon the cherished plans of the +gamesters was due to their truth. If the things I stated about +Amalgamated were not true, how easy to prove them false, and how +completely then should I have been discredited. But what has the +"System" in its blind rage done? Well may the American people who read +what is printed below say to themselves, "'Whom the gods would slay, +they first make mad.' What is Thomas W. Lawson in this transaction that +his personality need enter into a controversy wherein the issue is of +facts alone?" Suppose I were all that my enemies say of me, the question +is not of my guilt, but of the truth of my charges. I was not surprised +to read on the morning of Tuesday, the 13th of December, the diatribe +printed below. It was published in the leading papers of the country in +the form of an advertisement, in great type covering half a page. + + THOMAS W. LAWSON--READ THIS PICTURE + + NEW YORK, December 12, 1904. + + THOMAS W. LAWSON, Boston, Mass. + + For six months I have read with close attention your story + of "Frenzied Finance," in _Everybody's Magazine_, and have + paid close attention to the manner in which, by pandering to + the worst prejudices of the American people, you have + endeavored by misstatement of facts to distort the + conditions actually existing through what you call the + workings of the "System." + + What is the conclusion to be deducted from your own + statements? What is the "System" to which you have so often + referred? + + From the standpoint of honest, unprejudiced men no other + conclusion can be derived but from your own statements you + have endeavored personally and through subornation of others + to debauch legislation, to distort facts, to create in the + minds of investors a lack of confidence in men whom the + public for many years have looked up to as the leaders in + the industrial world. + + By every foul vilification and every statement which + distorted imagination is capable of producing, you have + endeavored to show that the so-called leaders of finance of + the United States are in league to rob and defraud the + investing public. + + Taking all your statements and analyzing them, what do they + amount to? That certain men, amongst whom you yourself was + one of the leaders, have bought out certain corporations + which were capitalized at a price which you state was far + above their cost. + + Not one single new fact has been brought to the attention of + the public. If men, by their brains, their capital, and + their energy, acquire properties that have not been + appreciated by the public, put them forth under whatsoever + name, so that the statements made in connection with those + properties are true, and capable of verification, what is it + but a business proposition that cannot be criticised? + + What is the "System" which you denounce as the very + personification of evil? Is it not the "System" of which you + have been the leading advocate, votary, and exponent for + many years? Is not the "System," when analyzed and reduced + to its root, a stock-brokerage of which you are and have + been for many years one of the shining lights; not the + system of honest, legitimate brokerage, but the system of + endeavoring by false statements and by exciting the fears of + the multitude to depress and destroy values in order that + its votaries may reap their ill-gotten gains? + + Is there one thing in connection with all that you have + written in your articles on "Frenzied Finance" in which you + have not been from start to finish one of the prime movers? + Who is the man that, from the inception of the enterprise + which you most severely criticise, has been most prominently + before the public? Who is the man that, from your own words, + originated the idea and carried it to its completion? Is it + not Thomas W. Lawson? Who is the man that, in the various + schemes which you hold up to the condemnation of the public, + has taken from start to finish the leading part? Is it not + Thomas W. Lawson? + + Is there one honest man in the United States who to-night + believes that, in spending the thousands and thousands of + dollars that you have spent in advocating your views and in + posing as the friend of the people, that you have not acted + for your own selfish ends? Do you believe that there is one + man in all this wide world to-day who honestly believes one + single statement that you have made, or who believes that + you have ever turned your hand to, or aided in the slightest + degree in, any honest enterprise? You criticise the copper + corporations who have placed their stock before the public + as a legitimate investment. Can you point to one single + instance in which a misrepresentation of fact or figure has + ever been made in anything connected with the Amalgamated + Company? + + Who are you, who should say in relation to a copper mine + whether it is good or bad? Did you ever see a copper mine? + Did you ever put a pick into ore? Did you ever reduce one + ton of metal so that it would yield up its wealth for the + benefit of mankind. Have you ever done anything excepting to + act as a parasite upon honest labor and, by chicanery and by + misrepresentation, endeavor to rob the people of their hard + earnings? I speak to you plainly, knowing you yourself for + what you are. Can you show one man that can point to any + honest industry in which you ever took part; to one single + act of yourself that ever contributed to the welfare or the + advancement of the working people? Can you point to one + single act in your career that was ever based on any other + motive than absolute egotism and selfishness; to one single + utterance, act, word, or deed of yourself that was not based + on selfishness and a desire to rob or misrepresent or, in + some other manner, attach the earnings of the people to your + coffers without effort on your part? + + I address this communication to you knowing you for what you + are; as a man who, throughout his many years of active life + on the Stock Exchange, came to be generally considered as + the synonym of chicanery and of misrepresentation. To-day, + through your perversion of truth and partial misstatement of + fact, which, through many years in pursuance of your + calling, you have become an adept in, you can destroy the + confidence of the people who make the money and the wealth + of the country. Do you for one moment suppose that there is + one honest person in this country to-day who believes that + you are actuated by a sincere desire to aid them? + + Do you not know that your only motive is, by destroying + confidence, to endeavor to make a large profit for yourself, + by the methods which you have pursued of advertising to the + public? The men who do things, the men who created wealth, + the men who are known throughout the world for integrity and + for their business qualifications, will unanimously say that + your motive is selfish from start to finish. + + Do you remember the dealings that you had with me, how they + were based on falsehood and misrepresentation from start to + finish? How, by the use of names that are well known in the + financial and business world, you endeavored to rob and + convert to your own use what you thought was one of the + greatest properties in the world? What has been the result + of your advertisements of the last few days? Has it not been + to destroy confidence, to create a panic among people who + had invested their earnings in what they have considered as + legitimate propositions? Have you ever paused and thought + for one moment about what the results of your selfish and + distorted statements might be? + + In your articles you have spoken of the loss that has been + entailed upon widows and orphans, of disgrace and suicide + and other ills that have come through what you are pleased + to call the workings of the "System," the "System" of which + you have been and are to-day the exponent, the system of + misrepresentation and of spreading false statements; in + other words, of stealing Heaven's livery to serve the devil + in. Millions of dollars of legitimate investments have been + lost to the people who have made them. Why? Because you, in + your selfish egotism, have looked to nothing but your + personal gain, thinking nothing, caring less for the woe + that you might work to thousands, pandering to the worst + prejudices, and by means of such words as "Standard Oil," + "Amalgamated," "Frenzied Finance," etc., and making + statements which investors have not the means or the time to + dispute, you have endeavored to destroy values that have + been created by the works of a lifetime. + + To-morrow, in Boston, I shall call upon you. I for many + years have stood as a worker, as a man who has built up and + who has created, and I know that the savings of a lifetime + of many honest investors have been swept away by the + falsehoods that you have spread abroad through the public + press. + + To-morrow, at your office, I shall denounce you for what you + are. The Master long ago said: "By your works ye shall be + judged." + + Personally I shall call upon you for your answer to-morrow. + + W. C. GREENE. + +This is the rejoinder of the "System." No denial of my facts. No defence +against my charges, but a volley of mud and a threat of assassination. I +had dared tell the people how they had been robbed. + +All remember the panic of 1901, the famous Northern Pacific corner, in +which values shrank hundreds of millions in a few hours and tens of +thousands of the people lost their entire savings. Who precipitated that +terrific slaughter? Certain great railroad magnates and bankers were at +each other's throats; two greedy corporations had quarrelled ferociously +over the control of a railway line. No man in all our broad land dared +to hint at the assassination of a Morgan or a Perkins or a Harriman or +any of the "Standard Oil" votaries who were parties to the bitter +contest that left Wall Street strewn with the mangled and bleeding +carcasses of the ruined and bankrupt. That time, however, the "System" +had both money and stocks--the people had lost both. + +I am not going to enter into a defence of myself against Colonel +Greene's charges. In the newspapers of the country that matter was fully +ventilated at the time. I simply republish his vituperation to show how +the "System" sets about silencing those who dare protest against its +villainous methods. In the first six months of the publication of my +story the sole defence the "System" entered against my specific and +terrible charges of plunder and debauching of the people was to attack +me personally. It inaugurated a war of mud-slinging and vilification +directed by the New York _Commercial_, Henry H. Rogers's own paper, +which printed the ridiculous statement that I was crazy. This editorial +made splendid ammunition for the big insurance corporations, which +caused it to be distributed among their policy-holders, and for the +yelping pack of insurance papers which may be depended on to bark, and +bite the legs of any one who dares attack their master, the "System's," +most profitable institutions. I find I have not space here to reproduce +these several mud broadsides, which really are more valuable as evidence +of the doddering imbecility and fatuous weakness of the so-called great +men of finance than interesting or informative. Since my personality is +the issue, I propose to give my readers some testimony of a different +character, gathered by experts[22] in the heat of battle. + + THOMAS W. LAWSON AT CLOSE RANGE + + AN INTIMATE TALK WITH THE FINANCIER AND FIGHTER + + BY ARTHUR McEWEN + + From the _New York American_, November 27, 1904. + + Thomas W. Lawson of Boston, who is making it so interesting + for Standard Oil financiers and other able gentlemen that + add your money to their corpulent millions while you wait, + is himself an interesting man and a very puzzling one to a + great many people. + + One day last week I spent several hours with him at his + rooms in Young's Hotel, and it surely was a stimulating and + enjoyable time. Everybody now knows how exceedingly well Mr. + Lawson can write, and he talks as he writes--boldly, + vividly, audaciously. He thinks out loud, pouring forth a + flood of speech, breaking off in the middle of sentences, + going into long parentheses, touching on a dozen incidental + things by way of illustration as he goes, but always coming + back to the main point. He may confuse you, but he does not + confuse himself. And notwithstanding the rapidity of his + utterance and his copiousness he is not carried away into + saying what he would rather not have said. + + He is handsome--tall, broad-shouldered, strong, well-knit, + and graceful--still almost youthful physically, despite his + forty-five years and the beginning of grayness in the dark, + wavy hair which covers his large, finely arched, and + well-proportioned head. His forehead is high and broad, his + gray eyes deep set under brows that come together and give + intentness and fierceness to his gaze when he is aroused. + + And when Lawson is aroused you see a fighter with all his + wits about him and of utter fearlessness. He would have made + a first-class soldier, with his quickness and dash and the + pluck that was born in him, and has not to be summoned by + thinking and resolving. + + THE BOSTON VIEW OF LAWSON + + The Boston view of Lawson is illuminating. They are afraid + of him on State Street. He thinks so rapidly and does things + with such instant decision that he bewilders the + conventional plodders. They admit that he is brilliant, that + he has a genius for gathering in the dollars, but he shocks + the financial Mrs. Grundy. They tell you that he is + "irregular," "sensational," "bizarre," and the rest of + it--all of which means simply that he is a man of original + mind, who follows his own methods, succeeds with them, and + doesn't care a snap of his fingers about being out of the + fashion. + + He has a hundred ideas and impulses where the "safe and + steady-going" business man has one--and as the safe and + steady-going State-Streeter doesn't understand the + ninety-nine Lawson ideas and impulses which do not come to + him, he charges them up to "eccentricity" and + "charlatanism." + + Boston says Lawson is vain. He certainly does hold a good + opinion of himself, and he has a right to. A boy who goes + into a bank at twelve as he did and before he is seventeen + cleans up $60,000 is hardly to be rebuked for considering + that he is better fitted for the financial game than most. + He knows life, he knows men. He has made and lost fortunes + and is not afraid of being "broke." + + That experience has been his repeatedly, but always he rose + again. His brains, energy, and daring would cause him to + rise anywhere. Had he been given birth in a South American + republic, the dictatorship would have been his inevitably. + + Lawson was born a money-maker, but he is a great deal more + than that. He is a many-sided man, interested ardently in + lots of things to which the ordinary money-maker is + oblivious. He is very, very human. He has a soul. + + Although he is raining blows on important men, who are not + accustomed to being treated with disrespect--although he is + charging them with crimes, and hopes, I should say, to drive + them out of the country or into the penitentiary, he speaks + of some of them with the greatest kindness, thoroughly + understanding their good personal qualities. + + THE WONDERFUL ROGERS + + He denounces H. H. Rogers, for example, as a robber, a + criminal, and he said to me: + + "Rogers is a marvellously able man and one of the best + fellows living. If you knew him only on the social side, and + knew him for years, you couldn't help loving him. He is + considerate, kindly, generous, helpful, and everything a man + should be to his friends. But when it comes to business--his + kind of business--when he turns away from his better self + and goes aboard his pirate brig and hoists the _Jolly + Rover_, God help you! And, then, as a buccaneer you have to + admire him, for he is a master among pirates, and you have + to salute him, even when he has the point of his cutlass at + the small of your back and you're walking the plank at his + order. Rogers is wonderful. He is one of the most prolific + human creatures I have ever met; prolific in thought, in + devices--and I've been at the game a long time now and ought + to know. + + "Don't think me egotistical, but I can't help looking under + the surface and going to the bottom of things. So I learn + more about men in Wall Street and what they are at than + most. This is my thirty-fourth year of sixteen and seventeen + hours a day and three hundred and sixty-five days in the + year, and I have seen them all come and go. I _am_ with the + third generation of my time now. In such matters I feel + somehow that I'm about three hundred years old. + + "Men like Rogers are all very good fellows. They are genial + and tolerant in their judgment of others. Yes, they are + mighty good fellows, until you turn them around and look at + their other side. Rogers is lovable enough until he touches + the other button. Then he goes with perfect ruthlessness for + what he wants. And yet, though you are his victim, you can't + bring yourself to hate him. After he has thrown you down and + taken all you have and you turn yourself over and find the + dark lantern has disappeared, and you hear him going up the + lane, you pick yourself out of the gutter and admire the + skill with which he did the job. If you could stand it, you + would almost whistle to have him come back and do it over." + + "It is easy to see," I said, "by what you write of Mr. + Rogers in your magazine story, that you were fond of him and + gave him the highest rank for ability, but just the same you + said you had to go on the stand in the gas suit and swear + exactly opposite to his testimony. Do you charge him flatly + with perjury?" + + "I have put it fifty times in black and white," answered Mr. + Lawson, "that he committed perjury. There isn't any question + about it. I produced my secretary's minutes, delivered over + the telephone, received by his secretary and afterward + confirmed. He confirmed the message to me, called me up and + talked it over and did business on that agreement. Two men, + Rogers and myself, followed each other on the stand and made + diametrically opposite statements; and neither one of them + reserved himself in stating that it was knowledge at first + hand. Therefore there was perjury." + + LEGISLATIVE CORRUPTION + + "Mr. Lawson, the whole country is familiar enough with + legislative corruption, so there's nothing new in your + charge that the Legislature of Massachusetts was bought up. + But what will attract national notice is the definiteness of + your accusation. You charge H.M. Whitney, brother of the + late W. C. Whitney, and one of the foremost business men of + your State, with having done the corrupting in order to get + through a complete charter for a gas company. Now, when you + pillory a person of Whitney's standing and prominence, as + you have done, he has got to do one of two things--either + force you to come to the front and compel you to prove the + truth of what you say or stand before the public morally + convicted." + + "That's right," agreed Lawson heartily. + + "Do you stand ready to prove your charge if he challenges + you to do it?" + + "What else can I do? Of course I can prove it. I'm sorry for + Whitney. He is a good fellow on his personal side, like + Rogers, but truth is truth." + + "However used we may have become to buying Legislatures, + however commonplace it may be, still, when a financially + responsible man like yourself gives concrete instance, and + is prepared with proofs, the fact is horribly startling to + everybody that cares for his country. What is to be the end + of this sort of thing--the purchase of the people's + representatives by the criminal rich?" + + "Well, you can ask me a question even broader than that. + What is going to be the end, not only of such things as I + have stated in regard to the corruption of the Legislature + of Massachusetts--and we all admit that the same thing is + being done in other States--what is going to be the outcome + of this rottenness in connection with the practices in Wall + Street that I am telling about in my magazine narrative in + 'Frenzied Finance'? To answer would be to disclose my + remedy--the climax to my whole story. At present I can only + say that I make no charges loosely, on insufficient + evidence. I state only what I know. I have seen the + iniquities worked out. I know that these crimes are being + committed every day; that these great financial schemes are + carried through, not only by the commission of moral crimes, + but legal crimes--crimes for which those participating in + them can be held responsible if they are gone after in the + right way, and I am going to show the right way. + + THE REMEDY + + "I believe that I have a remedy. That, of course, is a + tremendous thing to say. I have spent my life on it. I have + been waiting for the opportunity." + + "I may not ask you what your remedy is?" + + "No, I shall propose that myself when I have laid all my + facts about these crimes before the people. I am going to + tell them about some startling crimes. All that I have told + so far, including the systematic corruption of the + Massachusetts Legislature, relates to the past. That is, the + deeds are dead, so to speak. But the crimes of Amalgamated, + though in one sense they are now past, are yet connected + with the present, because Amalgamated is alive. The man who + was robbed in 1899, in 1900, and 1901 has his claim + unsettled. That man is alive and Amalgamated is a big, + living corporation. When I get to that I shall be talking in + the present and something is going to be done. + + "I have the remedy for the whole thing. You will appreciate + the largeness of that statement, but I have thought and + advised and worked it out. My remedy is based on common + sense." + + "Does it aim at any real change in our political system? Is + it socialistic?" + + "Oh, no; it doesn't mean a turning over in politics. You and + I know that the dollar is what is running things in this + country to-day, and if you come along with an ideal + proposition--a proposition that carries with it a change in + our laws or a proposition to have some new laws passed--you + might as well say good-by to it, because the fellow whose + hundred millions you want to take away is going to say: 'How + many dollars does it need to turn that upside down?' and he + is going to supply the dollars." + + LAWSON'S VERSATILITY + + Mr. Lawson gave me nearly three hours of his time, and + during those three hours he was interrupted every five + minutes or so by telephone calls. He conducted his business + right along, ordering the selling and buying of stocks, + making or declining appointments, talking with his + publishers, his lawyers, his family, his friends. It would + have goaded almost any man into excitement and irritability, + but it was all in a day's work with Lawson. Yet he is not + phlegmatic; indeed, he is extraordinarily animated. But it + is animation with composure. In a business way there is not + a busier man in the country, but he finds leisure for other + interests--books, pictures, bronzes, horses. He has a + beautiful country home, where he goes daily by special + train, and then puts up the bars against business, bores, + and all intruders. + + In his talk with me he ran a remarkable gamut. He spoke of + business like the shrewdest and readiest of practical men. + Then in the midst of some story of stock-market guile, such + as he is exposing in _Everybody's Magazine_, his face, + voice, and hands conveyed amusement, anger, disgust. With + his good looks and gift of expression he would have made his + way to the top of the stage. I do not know if he has done + any public speaking. But when he got into the full tide of + denunciation of the crimes of Amalgamated I regretted that + he was not addressing a great audience, for it was real + oratory--strong talk, ardent, electric, manly. His eyes + flashed, his teeth came together with a snap and he shook + both fists under my nose. He has enthusiasm, capacity for + righteous wrath, and the spirit of battle. But he doesn't + lose poise for a moment. + + HIS CONFIDENCE IN HIMSELF + + Cheerfulness, gay confidence in his own powers, is his + predominant trait. + + "You are firing hot shot into these people," I said. "They + have endless money, and you are in the stock-market, taking + chances every day. Aren't you afraid they will dig pits for + you?" + + "Well, what can they do to any of us in this world except to + send us to the poor-house or the grave? I don't fear them. I + know them and all about them. You must remember this is not + a new occupation with me. For twenty-five years or more I + have been in the habit of picking up a brick without looking + to see how many corners it had or whether it was round or + square and hitting the first head I thought I had a good + reason to hit. I have been doing these things regardless of + how they liked it. It's upward of a quarter of a century + since I had my first wrestle with a corporation in the + newspapers. I have tried not to be a common scold and + avoided being vicious when I could. I have only attacked + when I thought some fellow had done me a deliberate wrong. + And when I have felt that way I have started after him. Then + it has been vicious, hard fighting, you know; vicious, but + not malicious. + + "With the 'Standard Oil' crowd I have this big advantage--I + am only one man, a small target, and it needs a mighty good + aim to hit me, whereas they present a large surface and I + have only to heave a brick in any direction to break a + window. The contest is unequal. Everything favors me. My + ammunition is the truth." + + There is cheerful courage for you--more particularly in the + case of a man who proclaims from the housetop that there is + no limit to the villainy of his adversaries. + + "Mr. Lawson," I said, "there are few who would care to be in + your shoes--a rich man waging a war of this sort. The + chances are altogether in favor of their smashing you + financially." + + "Let them, if they can. There are worse things in this life + than being smashed financially." + + Mr. Lawson's smile was sunny and confident. He is fearless. + + * * * * * + + LAWSON, THE MAN + + BY JAMES CREELMAN + + From the New York _World_, December 12, 1904. + + BOSTON, December 10th. + + All through the critical business hours of Friday, when + Thomas W. Lawson, master spirit in the present extraordinary + war against Standard Oil finance in Wall Street, was + reported to be locked up with H. H. Rogers, generalissimo of + Standard Oil, perfecting the details of a settlement for + $6,000,000--all through that anxious time, when the + stock-tickers and newspapers of the country were trying to + guess the meaning of Mr. Lawson's sudden silence and + inaccessibility, he was standing in his quiet room in + Young's Hotel, explaining the situation to the public + through the _World_. + + Although I sat in the room with him almost from the time + that the stock-market opened until long after it closed, not + once did Mr. Lawson show the slightest sign of excitement + over market affairs. Strong as an ox, clear-eyed, tranquil, + smiling, the man who had moved the financial market downward + against the will of the greatest combination of capital the + world has ever seen, bore himself like one absolutely + confident of success. The bunch of blue corn-flowers in his + button-hole was not fresher than he, although on the + previous day he had fought through one of the greatest + battles in the history of speculation, had made an + hour-and-a-half speech at a night banquet, had gone to bed + after midnight, and risen before five in the morning. + + In that one day he had forced nearly 3,000,000 shares of + stock into the market in New York. + + "My one instrument is publicity," he said. "It is the most + powerful weapon in the world. With it I have been able to + strike with some of the power which eighty millions of + Americans possess when they are wide-awake and in earnest. + + "This week's work is only the beginning of a demonstration + that the secrecy of the frenzied finance system--under the + cover of which the savings of the people gathered into + banks, trust institutions, and insurance companies, have + been used by the Standard Oil crowd to rob the people + through the stock-market--cannot succeed against publicity. + The people only need light to save themselves. + + "At the beginning of the week I advised the people of the + United States to sell Amalgamated Copper and the other pool + stocks. It was the first step in the final realization of + plans I had been maturing for ten years. Since then, against + the whole force of the billions and billions commanded by + the Standard Oil system, Amalgamated has dropped from 82 + into the 60's. I give the people my word, which I have never + yet broken, that not once in that time have I sold a share + of Amalgamated stock. Not only that, but I have actually + bought large blocks of Amalgamated in order to steady the + market and prevent too great and too sudden a panic, so that + my friends everywhere might be able to get out without + complete ruin. But for that I believe we would have had a + panic greater than the Northern Pacific crash. + + "I simply went out into the public square and told the + people the truth. I was in a position to tell the truth. I + knew the methods by which they had been robbed. I knew that + ruin was staring them in the face unless they acted quickly. + + SPENT $92,000 ADVERTISING + + "I advertised the fact over my signature in the newspapers + of New York, Boston, Chicago, Los Angeles. I cabled the + advertisement to London. All this cost, with incidental + expenses, something like $92,000. + + "The frightened leaders and agents of the 'System' spread + reports that I was in league with the leading plungers and + manipulators of Wall Street, that I was making a mere stock + raid, that I was trying to 'shake down' Mr. Rogers. The + truth is that I have no partners. Not a soul knew my plans + until my first advertisement appeared. I have no price, for + there can be no peace now until the whole rotten scheme of + frenzied finance is smashed and things are brought back to + their natural honest level. I am in deadly earnest. No man + knows better than I do how great a service I am rendering to + the American people." + + Mr. Lawson stood squarely upon his heels, the incarnation of + strength and courage. The square head, high and wide at the + top, the long line of the jaw and broad, fighting chin, big, + blue-gray eyes, the big, flat teeth, the strong nose, large + firm mouth, sinewy neck, hairy hands, broad, deep chest, + powerfully curved thighs, and the steady voice--these were + eloquent of strength, determination, and concentration. + + There was a black pearl in his cravat and an almost + priceless canary-colored diamond sparkling on his little + finger. He wore gray, striped trousers and a black coat and + vest, across which was a beaded gold watch-chain. Everywhere + in his room were flowers, roses, lilies, and bunches of the + famous Lawson Pink, the flower for which he once paid + $30,000. + + The man whom I had expected to find haggard, pale, + wild-eyed, and excited, in the centre of a nervous + hurricane, was rosy-cheeked, cheerful, and apparently as + free from care as though he had never heard of Wall Street. + He spoke rapidly but in an even voice, occasionally pacing + the floor and sometimes gesturing or setting his hands + firmly on his hips. He answered questions promptly and with + an almost boyish appearance of frankness. It would be hard + to imagine a more masculine, compact, and concentrated + personality. + + This is the man who left school in Cambridge at the age of + twelve, walked into Boston with his books under his arm, and + secured a three-dollar-a-week position as an office-boy + almost on the very spot where, after thirty-six years, he + has worked himself up into a position from which he feels + able to captain the fight against Standard Oil and its + allies. He owns a palace in Boston filled with works of art; + he has a six-hundred acre farm on Cape Cod, with seven miles + of fences, three hundred horses, each one of whom he can + call by name; a hundred and fifty dogs, and a building for + training his animals larger than Madison Square Garden. Some + of his horses are worth many thousands of dollars apiece. + Even the experts of the German Government who examined + Dreamwold the other day were amazed at its costliness and + perfection. Within forty-eight hours Mr. Lawson wrote and + published a large illustrated book analyzing his farm and + gave it to his German visitors as a souvenir, after + organizing for them a horse show that overwhelmed them with + surprise. + + He built the yacht _Independence_ at a cost of $200,000, and + when it was shut out from the America's Cup race smilingly + threw it on the scrap heap. He established a great racing + stable, and when tired of playing with it, broke it up. He + went to Kentucky, and the day before a great trotting race + bought Boralma for $17,000. His pride was aroused by the + fact that the betting was against his trotter. He gave + $104,000 to a friend to sustain Boralma's reputation in the + betting and won $92,000. And yet he claims that he has never + been seriously interested in betting, and that his winnings + on Boralma were simply an accident. + + THAT $30,000 PINK + + But it was the purchase of a pink carnation, wonderful in + color and vigor, which had been named by a Boston + experimental florist after Mrs. Lawson, that made Mr. + Lawson's name known all over the world. Thirty thousand + dollars for a pink! The news was spread broadcast, and + printed in the newspapers of all countries as an + illustration of the vulgar extravagance and folly of an + American millionaire. + + Mr. Lawson explained that incident while I was with him, and + his explanation threw a new light upon his character. He + bought the flower originally as a matter of sentiment, but + the sum he offered was comparatively small. Mr. + Higginbotham, of Chicago, bid $25,000 for the Lawson Pink. + When he heard this news, Mr. Lawson sat down with a florist + friend and figured out the possibility of the new flower as + a business investment. He closed the matter in a few minutes + by paying $30,000. Some time later on the florist bought + back the right to the Lawson pink for $30,000, and gave Mr. + Lawson, in addition, $15,000 profit, according to agreement. + + A curious evidence of this man's astonishing coolness is the + fact that, at the very time when the market was closing on + Friday, when it was whispered all over the country that he + was arranging terms of peace for the Standard Oil with Mr. + Rogers, Mr. Lawson was actually explaining the peculiar and + beautiful qualities of his favorite flower. + + A REASON FOR HIS LAST ATTACK + + "But if Amalgamated Copper shares were worth $100 when you + were market manager for Mr. Rogers and his friends, how is + it that they are not worth that price now?" I asked. + + Mr. Lawson leaned against the edge of an open door and + thrust his hands deeply into his pockets. + + "I have tried to make that plain to the public," he said + quietly. + + "The other day Mr. Rogers's lawyer was trying to get me to + stop. I told him that I intended to force the Standard Oil + crowd to put the price of Amalgamated Copper back to $100, + at which I advised my friends to buy it. He said that the + stock was not worth $100. I asked him how he knew. He + answered that Mr. Rogers, Mr. Stillman, Mr. Rockefeller, and + the other fellows in control had discovered that they had + been deceived when the property was bought. They did not + consider it worth more than $45 a share. + + "That settled it in my mind. I appealed to the public to + test the situation. I advised them to sell Amalgamated at + once and keep on selling. If it was worth $100, the men in + the 'System,' having billions of dollars behind them, would + buy it. If it was worth only $45 a share, then the price + must fall to that point in the end. It was simply a question + whether the public could unload on the Standard Oil crowd + before the 'System' could unload on the public." + + "Then you caught the leaders of Standard Oil at the + psychological moment." + + Mr. Lawson's smile was beyond words to describe. + + "That partly explains the crash," he said. "They were ready + to unload on the public, but the public moved too quickly. + Publicity destroyed the one great weapon of the Standard Oil + men, which is secrecy. I had been tricked and deceived, and + those who were responsible had used my name to deceive and + trick the public. I got out into the open and laid the plot + bare. I had been working up to that point for many years, + always waiting, waiting, waiting for the day when I could + begin a work of reformation in behalf of 80,000,000 of + people. + + "I know my game. I have stood here in Boston for thirty-six + years studying man and his ways. I have no false conceptions + of my own strength. I know, and I have known all along, that + to win against a system backed by billions of dollars + working in the dark and controlling largely the law-making + powers of the nation, I must have the people with me. My + articles in _Everybody's Magazine_ were simply in + preparation of the public mind for the practical + demonstration which I have made this week, that the + whispering manipulators of Wall Street will not buy at $68 a + share stock which they were selling to the public at $100 a + share. + + "The Standard Oil interests came into my world simply + because they entered Boston to control gas affairs. They + wanted to run their automobile down a particular road, but + they found a fellow standing in the middle of the road. They + did not dare to run over that fellow, as little as he was, + because he warned them that he had in his pocket a stick of + dynamite that would blow the machine up if it passed over + him. Mr. Rogers is a really big and brainy man. He saw and + understood the situation. He offered to take me inside of + his secret lines. + + HIS INDEPENDENCE + + "It is said by my enemies, and they are many--and some of + them are crackajacks, I admit--that I am a squealer, that I + have peached on my pals. That is absolutely untrue. From my + boyhood up I have always insisted on being free and + independent. I have punched a head when I thought it needed + punching, without asking whose it was or what the + consequences would be. But I have never consciously told a + lie or violated a confidence. The newspaper files will show + that when I made my deal with the Standard Oil people, I + publicly announced that I had entered into a secret + agreement with them. That brought a hurried call from Mr. + Rogers, who wanted to know what I meant. I told him, as I + had told him before, that I had to work in my own way, that + my methods were open and above board, and that I could not + work successfully unless I was free to do things as I + thought they should be done. + + "That was my arrangement with Standard Oil. They had a great + chest, and the whole method of the 'System' was to prevent + any one from getting a peep at that chest save as one of + them and on their own terms. I refused to be bound by their + code. I told Mr. Rogers again and again that everything I + learned as the market manager of the Standard Oil interests + I felt free to use publicly at any time. Mr. Rogers again + and again assured me that this was fully understood. + + THE REMEDY + + "All through that time I had, deep down in my heart, the + plan which I am carrying out now. Each day brought me nearer + to the day when I would expose the whole system of fraud to + the public. Having that idea always present with me, I was + careful to avoid deals or partnerships which involved any + loss of independence to act when the day for action came. I + have been worth as much as $28,000,000, and I have lost as + much as $14,000,000. But never have I altered my purpose to + awaken the public to a realization of the great crimes + committed against them in the name of finance. + + "If the people will stand by me, and I have always been open + and honest with them, America will witness a great + transformation. With an honest and courageous President in + the White House we shall see whether the 'System' will be + able to use the fiduciary institutions of the country for + piratical purposes. The fall in the price of Amalgamated and + other pool stocks is only a bubble on the surface. The final + revelation, and the final solution, are yet to come into + sight." + + Just then the telephone bell rang and Mr. Lawson put the + receiver to his ear and laughed as he listened. "No," he + answered softly, through the instrument, "I am not locked up + with Mr. Rogers, but with a man who has more power." + + Then he turned to me, rocking back strongly on his heels and + clasping his hands behind his square head. + + "I meant that," he said; "there is more power in the pen of + one honest writer in the service of an honest, fearless + newspaper than in all the wealth and cunning of the + 'System.'" + + +THE MUNROE & MUNROE EPISODE + +There came a time in the first twelve months of my "Frenzied Finance" +crusade when people rather took the attitude that I was exaggerating +conditions and that neither Wall Street nor the "System" was so bad as I +had depicted them. About this time, following the so-called Lawson +panic, occurred the Munroe & Munroe _esclandre_, the details of which +plainly showed eminent financiers in the vulgar business of +stock-washing. I frankly treated the subject in _Everybody's_, and as it +is part of the history of the movement, I reproduce the passage: + +The average man is prone to lose sight of perfidy in magnitude and to +say, when he hears all the facts: "At least these rascals hunt big +game." I wish to say here that such distinction is undeserved. The +"System" is omnivorous. Its insatiable maw yawns as greedily for the +ten-cent pieces of the people as for the thousands of the larger +investor. It is as avid and relentless in devising ant-traps as +elephant-snares. There fell into my hands recently certain valuable +documents in the meanest of contemporary swindles, which reveal the +connection of the National City Bank, certain of its officers and other +important financial interests, with a plot to fleece the fag ends of the +public. The details of the Munroe & Munroe-Montreal & Boston conspiracy +have been widely published, and the world is well acquainted now with +the two Munroes, graduates of a "gents' furnishing-goods" shop in +Montreal, introduced into high finance in New York, organizing with the +assistance of the great Rockefeller-Stillman-Rogers bank a copper +corporation with shares at a par value of five dollars. There never was +such barefaced exploitation as was used on behalf of this proposition. +It was advertised as a bonanza; investors were guaranteed against loss +by an assurance that their stock would double and treble in price, and +that the company would stand ready at all times to buy back shares at +cost. The intention was plainly to entice into the Montreal & Boston +people of very limited means, who could ill afford to lose their +savings. + +The sudden panic, brought about by the warning to the people of the +traps that were being set for them, caught napping many of the +"System's" votaries, large and small, and before they could get their +different devices even-keeled from the shock caused by that single blast +of truth, the public got a peep 'tween decks into the machinery. Among +those whose port-holes were blown wide open was the Munroe & Munroe-City +Bank-Montreal & Boston outfit, whose scheme went down like a card-house +in the blow. A receiver was at once appointed to take care of the +débris. This mishap revealed an amazing condition of affairs. With only +$2,000 capital, Munroe & Munroe had arranged with the great National +City Bank to honor their checks for immense sums every day, the proceeds +being used to carry on a series of fictitious transactions in Montreal & +Boston stock for the purpose of beguiling the public into purchasing it. +The affair was a ten-days' wonder, and was finally squelched by the +great bank's throwing over its vice-president, Archibald G. Loomis, who +had bravely shouldered the responsibility for the transaction. At +writing, two professional gamblers, who seem to have been the principal +victims of the underwriting end of the swindle, are being settled with, +and the whole affair will soon be buried from public gaze. + +The episode was, on the whole, so foul in its revelation of greed that +even Wall Street was horrified--not at the arrant double-dealing +exposed, but that the "System" should descend to such vulgar +malpractice. The documents now in my possession, which I shall publish +later in my story, include the original underwriters' agreement, which, +at great cost of time and money, has so far been kept from the public, +and they show some of the greatest bankers in the land deliberately +planning, by the use of fraudulent papers and bogus agreements, to +beguile investors to adventure their money in a scheme the sole purpose +of which was the enrichment of its organizers. The whole performance +reveals a depravity so profound and a greed so heartless that the people +may well tremble for the safety of their savings intrusted to the +custody of men of this type. It also proves my contention that the +"System," while depending on burglary for its largest returns, does not +despise the small profits of the pick-pocket. + +FOOTNOTES: + +[21] Groups of Stock-Exchange members each day appear to buy from other +groups great quantities of shares of different stocks at advancing prices. +In reality all the brokers--the ones appearing to buy and those who sell to +them--are in league with each other, and none of the transactions is +actual. The performance bears the same relation to legitimate +Stock-Exchange trading that the purchase and sale of a gold brick among +confederates at a circus do to the genuine work of the gamblers and +pick-pockets who are really attending to business around them. On certain +days in the months I refer to, when the official records of the Stock +Exchange told that one and a half million shares had been bought and sold, +and prices had advanced until the aggregate increase in the worth of the +stocks dealt in amounted to hundreds of millions of dollars, not more than +a few thousand shares of real stock changed hands. The rest was barefaced +fraud for the purpose of deceiving the millions of investors and +speculators throughout the country who are dependent upon the daily press +and "market letters" for information in regard to investments for their +savings. + +[22] Arthur McEwen and James Creelman are among the strongest and ablest of +American newspaper writers. Their names are not as familiar to the readers +of magazines as some others, but they are, perhaps, the most highly paid +men in journalism to-day, and they have a well-earned reputation for +independence and personal integrity. Mr. McEwen, who is now one of the +editors of the New York _American_, is known throughout the country as a +fearless exponent of corporate villainies. Mr. Creelman is a distinguished +member of the New York _World's_ editorial staff, and has interviewed more +of the world's great men than any other journalist living. From their +standing in their profession, their well-known hatred of hypocrisies and +shams, their wide experience in estimating men of all degrees--the verdict +of Mr. Creelman and Mr. McEwen, as set forth in their papers, should be +conclusive. + + + + +III + +EXPLANATIONS + + +The revelations I delivered to the public in my story of "Frenzied +Finance," together with the accompanying expositions of insurance and +other rottenness in the "Critics" department, were not accepted without +protest from my correspondents. Though the majority of the letters that +came to me in shoals from all parts of the country have been generous in +their appreciation of my work, many have seriously taken my methods to +task and dubiously questioned my motives. The most salient and +satisfactory expression of these doubters was a letter that came to me +from a New York banker, to which I replied at length, for it afforded me +the opportunity to get before my readers in general many matters about +which explanations seemed due them. The letter was as follows: + + NEW YORK. + + _Dear Sir_: I have read all that you have written in + _Everybody's Magazine_, and have been unusually interested. + If you will consult the Amalgamated subscription list you + will see my house is down for quite a large amount. For this + reason and others, and as an old member of our Stock + Exchange, I naturally follow such writings as yours. At the + beginning I agreed with most bankers in believing that you + were actuated by a desire to get even with Mr. Rogers, Mr. + Rockefeller, or Mr. Addicks; but as your tale progressed I + thought I perceived a sincere desire to carry out some + genuine work of reform in the system of conducting the stock + business; then when you began your advertising work last + December, I shifted again and felt that your efforts were + probably for personal gain. + + Since then I have noted your every move with an acute + interest, for I became convinced that you were going to work + considerable mischief before you got through. Of late you + have been so bold--and I believe I voice the opinions of the + large majority of men connected with financial affairs when + I say _dangerous_--that I cannot resist writing you as I do + herewith. + + You advertise through the daily press and in your "Critics" + pages that you are doing all in your power to create unrest + and fear among the people for the purpose of frightening + them into selling their stocks and bonds, and you go further + and openly make the most astounding of statements, the most + dangerous and vicious--that you will endeavor to have all + the people owning deposits in banks, trusts, and insurance + companies withdraw them in concert. + + I will be frank and state that if I did not know your + business career, and had not read your writings, I should + dismiss this latter statement of yours by calling on the + proper authorities to take cognizance of you as a most + dangerous lunatic, but as your business career and your + writings show you to be an able financier, a successful + business man, an advanced thinker and brilliant writer, I + feel that mental derangement cannot be the cause of this + remarkable proceeding. + + Therefore I challenge you, as one who professes to be an + honest man, to answer at once the inclosed list of questions + fully and unqualifiedly in your magazine before you make any + more extraordinary and, I believe, perilous public requests; + and I warn you that if you do not do so, I shall consider it + my duty to make public through the press of this country, + and in other places where you have been advertising your + vicious theories, that you have not dared to make answer. In + other words, I shall, after the next issue of _Everybody's + Magazine_, if it does not contain your answers, publish + broadcast a copy of this letter, and in all fairness and + sincerity, I warn you I shall not be deterred from doing + this by any excuse you may make that my letter was received + too late for the July number of the magazine, or that more + important matters take up your space. I have, by diligent + research, ascertained that you will have at least + forty-eight hours from the time this letter is placed in + your hands before the section containing your "Lawson and + His Critics" pages is sent to press; or, to be plainer, I + can have advertisements inserted in the same section as that + containing your "Critics" pages if I hand in my copy + forty-eight hours after you will have received my letter. + + Therefore you have sufficient time to formulate your answer, + and you know as well as I that, in the present excited + condition of the public mind, which has been created largely + by your public statements, there can be nothing more + deserving of space in _Everybody's Magazine_ than the + answers to my questions. You must realize, sir, that in all + sections of the country small holders of stocks are not only + selling their holdings, but that small depositors in banks + and trust companies are already beginning to withdraw their + deposits, that already many small banks have failed because + of this feeling of apprehension. So far as Wall Street is + concerned, legitimate business is practically dead, and you + have, for the time being at least, killed it. I will not add + what ill your attacks have worked in the large insurance + companies, for it is, I am sorry to say, patent to all that + there is but little life-insurance business being done at + present by the very large companies, and at best it will + require years to live down the unsettlement you have + wrought in the people's confidence in this worthy and + time-proven institution. + + These are the questions I want answers to, and answers in + keeping with those broad professions of honesty and keen + regard for the best interests of the people which you have + been making. + + Earnestly and respectfully yours, + ---- + + 1. Do you know economics and finance, money, banking, + credits, corporations, and business in their broad relations + to the people, the American Government, and natural law, and + the relation each holds to the other, or is your knowledge + confined to the skimming and smattering such as any alert + and bright stock speculator would naturally pick up in years + of experience as a broker and manipulator? + + 2. Do you not know that in all times there have been, and + must naturally be, very rich men, and that necessarily there + can be but very few of these, and that where they are there + must be very many times as many poorer ones, very poor ones? + + 3. Do you not know that there must be billions of dollars' + worth of stocks and bonds in America, and that they must not + only increase but increase very rapidly, and that their + existence instead of being evidence of great evil is proof + positive of the great prosperity of the whole country and + the whole people, and that it is the sacred duty of all the + people down to the very poorest, who own none of these, to + guard, protect, and maintain their price, and not the duty + of any honest man to destroy or shrink the value of this + evidence of real wealth? + + 4. Do you not know that a large portion of all these stocks + and bonds is owned by the masses of the people; that if they + should be frightened into selling them there would be no + place to put the vast sums they would receive for them, as + the banks could not profitably use this cash if it were + added to what is deposited now, and that the only sufferers + by this frightened and forced selling would be the people + whom you profess to be working for? + + 5. Do you not know that if the people should start on a + given day to withdraw their money from the banks and trust + companies throughout this country, there would be the worst + calamity in this country that the world has ever witnessed; + that all lines of business would be disorganized; that the + country would be set back a very long time, and that the + principal sufferers would be the working people and the + farmers, and, in fact, all those classes you profess to be + working for; and do you not know that in the middle of this + calamity you would probably be lynched and perhaps torn limb + from limb by the crazed and deluded people, who would then + see the danger of your teachings? + + 6. Do you not know that the result of the people's selling + their stocks and bonds in concert would be a great drop in + their price, and that the people's raiding the banks and + trust companies of their deposits would also bring about a + tremendous drop in the price of stocks and bonds; that the + only ones who can possibly benefit are the bears who sell + short; that these bears have no legitimate standing in the + business world, and should have none, and that in the + broadest sense of the term they are not honest men? + + 7. Do you not know that the greatest institution in this + country to-day is life insurance, and that if you disturb + the confidence of the people in life insurance their + families will be deprived of the greatest source of income + at a time when most in need of it? + + 8. Do you not know that there can be no new remedy for the + present condition of affairs, even if it is really as bad as + you picture it, and that the only remedy or cure possible is + a more honest enforcement of our present laws, a more honest + conduct of our present enormous business, and a more + intelligent recognition by the working people and farmers of + the inevitable natural laws? Also that there can be nothing + more pernicious than this constant teaching them that their + interests are opposed to the interests of the very rich + class? + + 9. Did you not write your story to advertise yourself for + the purpose of making money out of the following your + disclosures would bring you and for the purpose of making + money for _Everybody's Magazine_? + + 10. Do you not own the largest part of _Everybody's + Magazine_, and has not your part of the profits received + from that source since you began your story been very large? + + 11. Do you not sell stocks short before each of your + advertisements, and are not the press stories and the one + now current in Wall Street that you made over a million + dollars in the decline which preceded the appearance of the + June _Everybody's_, true? + + 12. Are you going to commit the crime of calling out bank + and trust company deposits? + + 13. If you make such a call, and it is answered, and there + is a destructive panic and a number of the big New York + banks and trust companies fail, what will you do? + + 14. If the masses should sell their stocks and bonds and get + their money, what would then happen? + + 15. Do you dare say to your readers now and unqualifiedly, + that you have a real remedy for the present financial evils, + and that it will show when it is given that it is anything + more than some new scheme by which you personally are to get + the people's money? + + 16. Do you dare to say now to your readers unqualifiedly + that this remedy will show conclusively that it has not been + invented since you began your story of "Frenzied Finance"? + + 17. Do you dare tell your readers now and unqualifiedly that + you personally did not make money out of what you call the + "Amalgamated swindle"? + + 18. Do you dare tell your readers now and unqualifiedly that + you have not made money, and an enormous amount of it--very + much more than all you have spent in connection with your + work of "Frenzied Finance"--out of the people since your + story began? + + I will state in fairness to you before you make answer to + the above questions that it is now my intention to take + your answers into court in a suit which will be brought, and + that if you have made answers different from those you make + under oath you will be held up to the scorn of the whole + American people. + +I replied: + +I admire your smartness. Of the thousands of letters I have recently +received yours is the cunningest. If I do not answer your shrewd and +adroitly put questions in the brief space at my disposal, you will +discredit my work. If I take offence at your way of putting your +questions, you will have the pretext you are evidently looking for. +Then, your closing warning is so manly and generous! I must not lie, +because, if I do, you will expose me in court! You thought that would +make good reading after I had refused to make reply in this issue, and +you had advertised your letter. Again, you probably figured that as my +June chapter was all taken up with my story and there was no room for +the insurance article I had promised, I should need all my "Critics" +space this month for it; so, all in all, I guess you were pretty sure I +could not answer your apparently fair and honest questions. + +I'll disappoint you. If my "Critics" pages had actually been on the +press at the moment your questions came in, I should have telegraphed +the publishers to yank off the plates and hold up the edition at my own +expense until I should have had time to polish off your interrogations. +Before starting in let me say to you that if you will find a way of +getting my answers out into the open under oath, I shall consider that +you have done me and my work a good turn. + +QUESTION 1. I _know_ economics and finance, money, banking, credits, +corporations, and business in their broad relations to the people, the +American Government, and natural laws, and the relation each holds to +the other--not so well as I should like to know them, but as well as any +member of the "Standard Oil," of the "System," or any one of their +hirelings knows them. You have been brutally blunt in putting your +questions, so don't accuse me of egotism if I bluntly answer: I know +them all, top, sides, and bottom, from thirty-six years' book study of +them and thirty-six years' actual experience in the nine-pin alleys +where they are daily and nightly set up for the express purpose of being +knocked down. I know the relation of each of these important life +factors to each of the now-you-see-it-and-now-you-don't jokers of the +"System." Make no mistake, Mr. Banker, my knowledge is not "a skimming +and smattering such as any alert and bright stock speculator would +naturally pick up in years of experience as a broker and manipulator," +but the straight brand which the "Standard Oil" and the "System" so like +to impress into their service when they run up against it in their +continuous robbing excursions. You may judge that my knowledge is not of +the smattering kind when I say that for years, in spite of my refusal to +join the band and wear the collar, whenever Rogers and Rockefeller had a +particularly hard nut to crack they called me in to try it on my +"_knows_." + +2. Yes, I am aware that there have always been, and that there will +always continue to be, very rich men, and that there cannot be many of +them, and that where they are there must be very poor ones. And I also +know that no honest man, rich or poor, objects to the necessarily few +very rich ones who have honestly acquired great fortunes as the reward +of their own or their ancestors' labors of body or brain in the interest +of all the people. Don't misunderstand me--no honest man or woman can +object to the _necessary_ great fortunes, but all honest American men +and women do object, and are getting ready to make their objection +heard, to all unnecessary great fortunes, "made dollar" fortunes gained +by trick of finance or evasion of law, or the brutal and ruthless stock +manipulation of recent years. The sooner the "System" and the other +possessors of these "unnecessaries" realize that their doom is sealed +and dig for the cyclone cellars, the quicker the American people will +get through with the strenuous house-cleaning job for which they are +just rolling up their sleeves. + +3. I do know there must be billions of dollars' worth of stocks and +bonds in America. I also know that among these legitimate billions of +dollars are now mixed other billions of dollars that have no proper +title to being, save the greed of the "System." That while the existence +of certain billions of dollars' worth of stocks and bonds is proof +positive of the great prosperity of the whole country and the whole +people, it does not follow that their existence is proof that the hands +they are found in are the hands they should rest in. Further, I assert +that the existence of other billions of dollars' worth of stocks and +bonds is proof positive that the laws have been violated and that the +great prosperity of the whole country has been used as the excuse and +motive of this violation, and declare that, in my opinion, it is the +duty of honest men and women to do all in their power to shrink +fictitious securities and to destroy them; and, further, that it is the +duty of all honest men to lend a hand so that the legitimate billions of +dollars of stocks and bonds may be returned to the hands of those who +are legally entitled to them. + +4. I am aware that the people owned billions of these stocks and bonds +three years ago, and also that if they had then sold them back to the +"System," even at the price they had paid for them, and had kept their +money in the banks without interest, or had even buried it in the ground +or kept it in their stockings for a year, they would have been able to +buy back for fifty cents on the dollar what they had sold the "System," +thereby making for themselves billions of dollars and impoverishing the +"System" by just as many billions as they had made. You know that the +"System," after it had loaded up the people with its stocks, "shook them +out," and thereby gathered in half the billions of money the people had +paid for what they bought. + +Let me illustrate. The people bought of the "System" for 760 millions of +dollars the Steel Trust stocks and bonds, and after the people had the +"System's" chromos and the "System" had the people's 760 millions of +savings, the "System" caused the price to be cut in two. Then it bought +back the Steel Trust's chromos for 380 millions, thereby transferring +from the people to the "System," in this one instance alone, 380 +millions. And, further, after the people had been shaken out of their +stocks and bonds and the millions of their savings--in the Steel Trust +alone 380 millions--the "System," having these securities in its +possession, began to inflate prices for the purpose of again selling to +the people; in December last they had inflated the prices of billions of +stocks and bonds to their old false figures, and were then preparing to +unload them on to the people; in the case of the Steel Trust stocks and +bonds the price had again mounted to 760 millions. In compliance with my +warnings the people began in December last to unload upon the "System" +the billions they then held at these inflated prices, and they have +continued to do so ever since, and have suffered no hardship by the +forced selling into which I have frightened them. I further know that +they will find good use for this money at a later period in buying back +from the "System" these same securities at their true worth; in other +words, that before I am through with my work they will be able to +repurchase from the "System" for 380 millions or less the Steel stocks +and bonds now selling for 760 millions. + +5. I do know that one of the most colossal impositions ever perpetrated +on the whole people of any nation is that formula which the "System" has +so insidiously instilled into the minds of the American people during +the last century, to wit: that they must do nothing which might disturb +the "System" in its use at two to four per cent. per annum of all the +people's savings, deposited in banks and trust companies throughout the +country; that if they do, there will be a Wall Street panic, and thereby +all the people will be made to suffer great hardships. On the contrary, +I know that if the people do what is necessary to shake off the +"System's" strangling grip upon their savings, the "System" will suffer +death, and everlasting profit and advantage will accrue to the nation. +Though it be necessary for the people to withdraw from the banks and +trust and insurance companies their billions of savings, and even though +such withdrawal must cause a temporary business crash and the failure of +many of the financial institutions of the country, the sacrifice would +be many thousand times compensated for by the benefits that would follow +in its train. I will go further and state that if such radical action +should become necessary, the people should willingly face the failure +and destruction of one-half the banking institutions of New York if by +doing so they could absolutely destroy the "System." But do not +misunderstand me--the simultaneous withdrawal of the people's savings +from the banks and trust companies throughout the United States would be +such a terrible temporary hardship that nothing could justify it but the +absolute necessity for uprooting and eradicating the "System"; I should +not hesitate, however, to face the full responsibility for such a move +if the "System" cannot be destroyed in any other way, even though I were +sure I should be lynched or torn limb from limb by those people who have +been crazed and deluded, not by my teachings, but by the damnable +doctrines and acts of the "System" and its votaries. + +6. I am well aware that the result of the people's selling their stocks +and bonds in concert and the withdrawal of their savings would bring a +tremendous drop in the price of stocks and bonds. _This is what I am +working for_, but I am proceeding in such a way that I believe when the +crash comes the people will be free from their stocks and bonds. Your +proposition that the bears will be the only beneficiaries I regard as +rot; on the contrary, I know that the people will benefit a dollar where +the combined bears will benefit a cent. Pardon my giving you here an A B +C lesson in finance--I know a bear is no more dishonest than a bull. +When a man tries to put up the price of stocks and bonds, he is a bull. +When he tries to put them down, he is a bear. If a bull tries to put +prices to a point of fair worth, he is an honest bull. When he tries to +put them any higher than fair worth, he is a dishonest bull, for he does +so for the purpose of obtaining from the one to whom the stocks are sold +a greater gain than he is entitled to, and always by false pretences. +When a bear tries to put stocks from an artificially high price to their +fair worth, he is an honest bear. When he tries to put them any lower, +he is a dishonest bear, because he does so for the purpose of purchasing +from their owners stocks or bonds at less than their fair price, that he +may pocket the difference between the artificially low price he makes +and the higher price at which he has sold, and this profit is procured +by false pretence. You, and thousands like you, should get out of your +heads the false notion that a bear is necessarily less honest than a +bull. + +7. Life insurance is a great institution, and should be a sacred +institution--_provided_ it is honest life insurance. He who would, for +any dishonest reason, disturb the people's confidence in honest life +insurance I consider a criminal; but I am sure that one who, having the +power to awaken the people to their peril, yet stands silently by and +suffers them to be bled and plundered in the name of life insurance is +even a greater scoundrel. + +_What is life insurance--honest life insurance?_ A contract between two +parties by which the first agrees, in return for a certain fixed charge +per year, to pay to the family or other beneficiary of the second party +a stipulated sum in case of said second party's death; but it is plainly +understood between them that the annual charge exacted by the first +party shall be only such an amount as will insure the carrying out of +the contract, plus whatever is the legitimate expense of conducting the +business connected therewith. Under no circumstances would I say aught +in disparagement of such a contract, but if I did not lift my voice +against such life insurance as is carried on by the Mutual, New York +Life, and Equitable companies, knowing what I do know, I should be a +deep-dyed scoundrel. + +Life insurance as it has been conducted in the past and as it is being +conducted at present by these three companies, I regard as the most +damnable imposition ever practised upon the people of any nation. Under +the pretence that it is necessary to enable life-insurance companies to +carry out their contracts, two million policy-holders are annually +tricked into contributing from their savings sums which not only insure +the performance of these contracts but enable the officers and +trustees--mere servants of the policy-holders--to maintain the most +gigantic stock-gambling machine the world has ever known. Through its +operation the companies themselves not only make and lose millions at +single throws of the dice, but the bands of schemers whose services it +is pretended are essential for the transaction of the life-insurance +business filch for themselves huge individual fortunes. Piled on to +these excessive charges are additional amounts which enable these +tricksters to maintain palaces, hotels, bars, and every conceivable kind +of business, to pay for armies of lackeys and employees and private +servants of officers and trustees, and for debauches and banquets which +vie with any given by the kings and queens of the most extravagant and +profligate nations on earth; in addition, enough more to accumulate huge +and unnecessary funds--which are juggled with for the enrichment of +individuals. Such wicked exactions and shameful extravagances constitute +an imposition of the most wanton and criminal character, and those +responsible should be sent to State prison for life, as too vicious and +dangerous to be allowed freedom among an honest people. + +I would say further that the trickery and frauds that have been +practised by the New York Life and the Mutual companies are fully as bad +as, if not worse than, those of the Equitable, now publicly confessed. + +8. It is difficult for me to answer such a question--just as difficult +as it is for the mature man to answer the question of the child, "If the +moon is made of green cheese, what kind of rat-traps do they use in +heaven?" The "System" for forty years has taught the people that it is +impossible for them to improve upon the conditions which the "System" +has moulded for its own plundering purposes, yet I have a simple Remedy, +readily understood, which I believe the people will eagerly embrace as +soon as it is given them. This Remedy is adjusted to laws now in force; +and when it is put into operation those who have acquired enormous +fortunes by trickery and fraud will find themselves deprived of their +ill-gotten gains by the simple application of natural laws to which the +said Remedy affords leverage and action. All honest people, the richest +as well as the poorest, will be benefited in fair and just proportion. +Once the Remedy is in force, it will be out of the power of the +trickster and the thief to accumulate overnight scores of millions, +although the Edisons, the Stephensons, the Morses, or any man who by +brain or body does those things for his fellows which they cannot do +for themselves, will continue to receive that great reward which the +whole people in their wisdom and generosity decide is fair for +exceptional services; the common miner, too, when he discovers the +hidden gold, silver, or copper in the earth will obtain the same return +that he is entitled to under to-day's laws, or even better. + +9. This story is written, as I have explained so many times before, +simply and solely in performance of my duty toward my country and its +people and without hope or desire for reward of any kind. + +10. I do not own any part of _Everybody's Magazine_, nor have I any +money interest in it, directly or indirectly. I have not made a dollar +from _Everybody's Magazine_ directly or indirectly, but, on the +contrary, have spent hundreds of thousands of dollars to assist in +getting my story into the hands of the people. + +11. Before my first advertisement in December, at a time when I did not +know how the people would take it, and when I did not know whether +stocks would go up or down, I took my chance in the open of making loss +or profit and did sell large amounts of stock short, making some +hundreds of thousands of dollars profit; but when in the middle of the +disturbance I saw how seriously the people took my message and that +there might be a great panic, I began to buy, and thereby sacrificed a +million of profits. And, since then, that is, after I realized that the +people would respond to my warnings, I have refrained from going short +in advance of these advertisements, because I desire to keep strictly +apart transactions conducted for my own personal account and operations +I am directing for the benefit and safeguarding of the public. I am +determined to use every means in my power to keep the people out of a +dangerous market and to concentrate the billions of stocks in the hands +of the "System," and am not actuated by any desire or necessity for +gain. Already the "System's" votaries are tottering under their load and +it is certain that in the coming months they will employ every possible +means to persuade the public back into their trap. More than ever, then, +is it necessary to be firm against their blandishments, for when the +crash comes it will be a terrific one, and those who have great +holdings of speculative securities will surely find their values cut in +half. Since my first public announcement I have not made enough out of +market operations to pay even the expenses of any particular +advertisement. + +12. I shall not commit any crime; I have too much veneration for the +laws of our country; although let it be understood that I may, at any +time, commit what some hireling judge of the "System" may call a crime, +_for I am going to call upon the American people to withdraw their +deposited savings at the proper time; and the proper time will be that +time when I am absolutely sure they will withdraw them. But I shall not +resort to this last move unless it is certain that the "System" cannot +be crushed in any other way_. + +13. I will first thank God and then proceed to assist in burying the +corpse of the "System." + +14. The "System" will be brought to its knees; stocks will fall to +figures representing their legitimate values and the public will +reinvest its money therein, and thus regain control of the great +transportation and industrial interests of the country which the +"System" has filched from them. + +15. I say unqualifiedly to the American people that this Remedy of mine +will, when adopted, correct the greatest evil in the financial system of +this country. That while it is simple it is absolutely new, and that +neither I nor any one else can possibly benefit moneywise from it except +in the some proportion as all other people in the country benefit. + +16. My Remedy was worked out before 1894, and in that year, one year +before I had met any of the "Standard Oil" people, it was so far +perfected that in London I laid before Joseph Pulitzer, then and now +owner of the New York _World_, the identical first printed plan that I +will print in _Everybody's Magazine_ when I judge the people are ready +to receive it. + +17. I unqualifiedly say to you and to the American people that I lost +millions of dollars more in what you call the Amalgamated swindle than I +made, and that I lost trying to make good my word to the Amalgamated +subscribers. + +18. I have spent much more money, hundreds of thousands of dollars +more, in getting this work, "Frenzied Finance," into the hands of the +people than I have made through anything in any way connected with it. + + +THE CRIME OF AMALGAMATED + +Many of my readers had difficulty in following the intricacies of the +great crime of Amalgamated and I had many letters desiring further +explanation of that act. + + PEAKE'S ISLAND, ME., May 31, 1905. + + T. W. LAWSON, ESQ. + + _Dear Sir_: Have just finished June number of "Frenzied + Finance." + + You are running a "primary class" of High Finance for + millions; have been able to follow you up to this number, + and my apology in writing to you is to state that I don't + understand this lesson and I believe I am of the average + intelligence of your readers. + + I am not clear on the following points, and if you can take + the time and have the desire to do so, I should be glad to + have you set my gray matter moving in the right direction. + + 1. Why should subscribers think that a company, who had as + good a thing as advertised, would sell the entire stock, + thus giving an opportunity to any financier to gather in + fifty-one per cent. and practically take away its good + thing? + + 2. How would it have been possible for you with the + $5,000,000 from the shares it was originally the plan to + sell to protect those 50,000 shares on a bear market with + 700,000 shares in Messrs. Rogers and Rockefeller's + possession? + + 3. Why would it not have been a crime to dispose of only + 50,000 shares when the whole 750,000 were advertised? + + 4. Messrs. Rogers and Rockefeller were the Amalgamated + Company after purchasing the capital stock from the + office-boys, were they not? + + 5. If Rogers and Rockefeller paid for their shares, what + became of the Amalgamated Company's $75,000,000 secured by + sale of stock? + + These may sound foolish to you, but I'm interested and + should like to understand. + + Permit me to state that I admire your pluck and ability and + wish you success in your remedy, whatever it may be. + + Respectfully yours, + (Signed) ---- + +I replied: + +Your first question is a hard one to answer, as it goes to the very +foundation of "the stock-market." In the ideal operation of +stock-markets, owners of valuable properties should always allow the +public to join in their "good things" at fair prices, because all who +thus participated would make money and would be ready for the next "good +thing," and so on to the end. On the other hand, if the public were only +invited into the "bad things," in time they would not come in on +anything, good or bad, and there would be no stock-market. The +foundation of stock-markets, like all other kinds of markets, is the +public interest therein--for it is the people who own the great bulk of +the money in the country, and its aggregate is far beyond the amount +that the very few rich men possess. Stock-markets are no different, at +least should be no different, from horse-markets, boot and shoe markets, +or mowing-machine markets. The horse-markets whose dealers sell to their +patrons good horses at fair prices, succeed; those whose dealers offer +only the "culls" and "no goods," fail. + +2. Had I been able to keep 700,000 shares in the hands of Rogers and +Rockefeller with but 50,000 in the hands of the public, Rogers and +Rockefeller would never have permitted the stock to go down, because +they would have lost $700,000 at every point drop and by "bearing" they +could make only $50,000 a point drop. Stock schemers never "bear" a +stock of which they own a large majority and the public a small +minority. + +3. It would have been no crime if Rogers and Rockefeller had subscribed +honestly--that is, according to the advertised terms--for enough to +secure the stipulated 700,000 shares, because there was nothing in the +conditions which excluded them or any one from subscribing. The crime +was in the way they obtained the amount thus retained and in their +"intentions" subsequently executed, also in the selling of $27,000,000 +worth of the stock when they had pledged their word solemnly to me in my +capacity as protector of the people that they would sell but $5,000,000. + +4. Yes. + +5. The office-boys, equipped with the check of $75,000,000 provided by +the National City Bank, were organized into a corporation and turned +over to the treasurer of the new corporation the $75,000,000 check in +payment for the capital stock of the company. The company then turned +this same check over to Rogers and Rockefeller for the mining properties +comprising the consolidation, for which Rogers and Rockefeller had paid +thirty-nine millions of dollars; then Rogers and Rockefeller paid back +to the office-boys the seventy-five-million check and received from them +the seventy-five-million stock. The check was returned to the bank by +the office-boys, who stood where they stood at the beginning of the +transaction, and canceled. Thus Rogers and Rockefeller at the close of +the transaction had in their possession the entire capital stock of the +Amalgamated Company. + + * * * * * + +Another correspondent had even greater difficulties with the problem: + + May 29, 1905. + + MR. THOMAS W. LAWSON, + Boston, Mass. + + _Dear Sir_: The writer of this letter has had much + experience in literary matters, but does not remember ever + reading after any one who could hold his interest as you + can. He is an author himself (though not so well known as + you), and feels some little ability to measure and + appreciate not only literary worth, but the intentions of + the author in hand. From the "internal evidences" alone he + has a settled conviction that you are perfectly honest in + this crusade, and from the bottom of his heart wishes you + Godspeed. + + A few points are certainly not clear to the ordinary reader. + Closely as I have followed you I cannot see some things as + you think they should be seen. For instance: + + 1. Just why were you so fearfully wrought up at the thought + of the public's getting ten millions instead of five? If you + had such confidence in the gigantic possibilities of + Amalgamated, why should you not have been glad to let the + poor suffering public have ten millions, or twenty millions, + instead of a paltry five millions? Was this hydrophobia of + yours at the mere suggestion prompted by a perfectly pure or + by a selfish motive? At the first did _you_ not plan to let + the public have very much more than this? Was it not your + thought, I mean, that the public should be in the thing + about equally with you promoters? Then why not welcome the + suggestion of Rogers? I do not understand this at all. + + 2. About that "bogus subscription." Did you not all plan to + do about the same thing? Did you not intend to have Rogers + put in a towering subscription, large enough to cover the + situation, and to permit the bank to reject all above the + five millions to be allowed the public? I believe _you_ + expected Rogers to make it "genuine" by really putting it in + in time, and by laying down his check for the five per + cent.; but, as you fully expected to realize on the thing so + quickly, did you not understand that the whole of this + "subscription" would not have to be paid at all, and that + your "check" was after all only technical? If I am right, + how did this differ so greatly from what Rogers did? Was not + your avowed object to cheat the public into thinking they + were to be allowed to subscribe to seventy-five millions, + when actually you were only going to let them subscribe to + five? And if, on that last day, you knew the subscriptions + were pouring in in such a flood, and knew that offers of a + big premium were then being made, how in the world did the + idea of letting the outside public have twenty millions or + so (on which to immediately realize this premium) seem so + abhorrent to you, when you professed to be looking after + their interests? + + The more I think of these points, the more mixed I become, + and I think many, very many of your readers are in the same + boat. Your illustration of the horse-race does not clear the + matter a particle. It certainly does appear on the face of + the facts you present that the people who did not get any + stock were the lucky ones, whether Rogers's precise action + was criminal or not. You say yourself that it would have + been good all round if you had pricked the bubble that + night--that is, if you had then and there prevented anybody + from getting any premiums, from buying or selling a share. + Then in the name of reason, why was it not really good for + those who were rejected, that they were left out? + + 3. Now, in plain language, brief and straight, what would + you have deemed the right thing, that night at the bank? + With hundreds of millions subscribed, how many shares would + you have thought the public should have? How many do you + think now? And how should the balance have been kept for you + promoters? Perhaps in answering this you will make it plain. + + Sincerely yours, + (Signed) ---- + +In answer to Question 1, I said: All my dealings had been conducted on +the basis of selling to the public a fair amount of the first section of +the consolidation and I had no tremors as to consequences. I knew that +whatever allotment was made them would be worth all they were to pay for +it, for I was personally familiar with the value of the properties of +which the section was to be composed. When Mr. Rogers, as I have +explained in my story, substituted, under circumstances that rendered me +defenceless, an entirely new set of mines for those programmed for the +first section--properties about which I knew only what he told me--from +that time on my only guarantee against the jugglery and fraud I feared +was to keep in the hands of Rogers and Rockefeller so large a part of +this stock that they could play no tricks on the public without +themselves suffering much more severely. If they regarded the stock as +so valuable a possession that it was a security to be held as "Standard +Oil," then their attitude to it guaranteed its value, and no harm could +come to any one. When, however, they showed a readiness to part with +more shares than the number they had promised me they would not go +beyond, my fears were aroused, for all the contingencies I dreaded at +once became imminent. Besides, such action was proof positive that in +their opinion the mines were not worth the price at which they were +selling them. Later on, when I had practical evidence that they were +unloading and proof positive that they were juggling the stock, I felt +certain that these facts constituted proof positive that they had lied +to me about the cost and worth of the Amalgamated mines. + +My answer to Question 1 practically disposes of part of Question 2, and +my replies to the other inquiries above take care of another part. + +I did expect Mr. Rogers to make an honest subscription for that part of +the stock which we were to retain and which I was doing all in my power +to have him retain, not because I desired to hold all of the good thing +and so cheat the public, but because I did not think it safe for the +public to hold so many shares that it would be to Rogers's and +Rockefeller's interest to "bear" prices later and take shares away from +the holders at slaughter prices. In one sense it was not fair to lead +people to imagine that they were being offered $75,000,000 of an issue +when as a matter of fact they were really offered only $5,000,000, but +if only $5,000,000 were offered no harm could come to them, because +every one who got some of it would make a profit, and those who received +none would not suffer. + + +STEEL COMMON AND PREFERRED + +A definite accusation of misrepresentation was presented in a letter +that came to me early in the year in criticism of Steel facts and +figures I had used in illustrating the artificial advance and depression +of stocks: + + CINCINNATI, O., January 24, 1905. + + THOMAS W. LAWSON. + + _Sir_: Lawson, you are both a fakir and a fool. A fakir + because you misrepresent, and a fool because you do not + begin to understand the people. + + When you said the stockholders of the Steel Corporation lost + $500,000,000, you knew that you lied. Because the difference + in price of the stock to-day and when it was quoted on the + New York Stock Exchange for the first time in 1901 does not + approach that amount. I say that you knew this when you made + that statement, but you thought and hoped that the general + public would not be posted in the matter. + + The whole substance of your magazine articles has been + nothing but half-truths, and a half-truth is worse than a + lie. You know that it is to gratify your personal spite, and + not to help the general public, that you have engaged in + your frenzied writings. The public is wiser than you think, + although your conceit has blinded you to that fact. + + Respectfully, + F. F. METHVEN. + +This frenzied nincompoop is evidently ignorant of the fact that +360,281,000 shares of Steel Preferred were sold to the public at over +$100 per share, and that 5,500,000 shares of Steel Common were sold at +over $50 per share, or nearly $300,000,000, and that months later, when +the people were compelled to resell to the "System," they could get only +$50 for this preferred stock and $10 for the common, while the +$551,000,000 of bonds depreciated in value over $100,000,000 more. What +this critic desired to say was that, at the present price of Steel +stocks, no such loss as $500,000,000 is shown, which proves my +oft-repeated contention--the "System," having "shaken out" the public +and acquired their holdings at fifty and ten respectively, is now +engaged in putting the price back to the old figure, intending to repeat +the robbery process later. A votary of the "System," whom I know quite +well, said to me a few weeks ago: + +"Lawson, you keep chasing 'Frenzied Finance' will-o'-the-wisps while the +rest of us are pulling in the dollars, and see where you will come out +in the end. Look what I've done: I sold 200,000 shares of Steel Common +for $8,000,000. It cost me $3,000,000. I made $5,000,000. I then +'shorted' 100,000 at $50 and bought it back at $12. I made $3,800,000. I +then bought 300,000 at 10. It's now 30. When I sell out at 40, I shall +have $9,000,000 more, making $18,000,000, without turning a hair or +risking a dollar. With prizes such as these a man can stand a lot of +frenzied hard names, can't he?" + + +THE REMEDY + +As I have explained on another page of the "Critics," my Remedy cannot +be dealt with save at considerable length and with living, tangible +illustrations. I have purposely abstained from starting it until I have +the American public educated to the point of comprehending its value and +appreciating its practicability so far as to be ready to put it into +operation. During the year I have had thousands of letters in regard to +it, the following being a fair example: + + TOPEKA, KAN., January 5, 1905. + + _Dear Sirs_: I have followed Mr. Lawson's article very + closely and, as I understand it, he intimates that he has a + remedy for the rotten condition of affairs now prevailing. + What I, and many more of your readers, would like to know + is, whether Mr. Lawson, in offering a remedy, is taking into + consideration the 22,000,000 people of the country who + neither invest in stocks nor hold any amount of insurance, + or is his remedy meant merely to protect the four million + small capitalists from being eaten up by what he terms the + "System." + + It is very evident to some of us that if he cannot show us + how to protect the great majority of the people who, + although they are not even small capitalists, are the ones + who are really footing the bills, his remedy will not be the + grand success he anticipates. + + J. P. FERRITER. + +My Remedy will benefit the whole American people. It will help most the +man who nowadays in America deserves most to be helped--the producer, +who to-day is exchanging the efforts of all his working hours for the +bare necessities of himself and family; not those bare necessities which +the white slaves of Europe are ground down to believe are their only +requirements, but those which the free and enlightened American +believes, and has taught his family to believe, should be his +necessities. + +It is intended to benefit most the man who has nothing left over after +paying his bills Saturday night but the terrors of not being able to +meet them the coming week. It would indeed be a parody on a Remedy if it +did not bring relief to this class. + +Next, my Remedy will benefit that great middle class whose savings go to +make up the billions in the savings-banks, national banks, trust and +insurance companies, which are used by the "System" to secure for +themselves a hundred, a thousand, and ten thousand per cent. interest on +_their_ capital, while the owners of these billions must be content with +two and a half to four per cent. per annum; and + +Next, it will benefit that class which possesses large fortunes honestly +acquired, inasmuch as it will enable them to know what there is behind +their investments. None but those who have plundered the +people--acquired overnight fortunes many times larger than any honest +lifetime efforts could possibly bring--can possibly be hurt by the +application of my Remedy. + +You are right--any remedy which would do other than what mine proposes +to do would be a farce. + + +--------------------------------------------------------------+ + | Transcriber's Notes: | + | | + | Page vi: Scheheherezade _sic_ | + | Page 40: Missing "l" added to "loser" in Footnote 2 | + | Page 59: guerilla _sic_ | + | Page 62: dumfounded _sic_ | + | Page 64: villany _sic_ | + | Page 99: gayly _sic_ | + | Page 107: Machiavelian _sic_ | + | Page 134: Machiavelian _sic_ | + | Page 154: "slighest" amended to "slightest" | + | Page 175: Comma added after "perjury" in Footnote 12 | + | Page 193: "metres" amended to "meters" | + | Page 277: dumfounded _sic_ | + | Page 289: Opening quotes added to "Every one of us...." | + | Page 348: millionnaire _sic_ | + | Page 352: Comma added after "defalcation" | + | Page 388: milllionnaire's _sic_ | + | Page 447: cohoots _sic_ | + | Page 471: "very rich men" amended to "very rich man" | + | Page 478: haling _sic_ | + | Page 482: Corea and Porto Rico _sic_ | + | Page 490: "managment" amended to "management" | + | Page 548: "insuarnce" amended to "insurance" | + | | + | Hyphenation has generally been standardized. However, when | + | hyphenated and unhyphenated versions of a word each occur | + | an equal number of times, both versions have been retained | + | (baseball/base-ball; blackjack/black-jack; blacklisted/ | + | black-listed; chessboard/chess-board; cooperation/ | + | co-operation; downtown/down-town; handshake/hand-shake; | + | headlight/head-light; headlines/head-lines; setback/ | + | set-back; typewritten/type-written; uptown/up-town; | + | viewpoint/view-point). | + +--------------------------------------------------------------+ + + + + + +End of the Project Gutenberg EBook of Frenzied Finance, by Thomas W. 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