Frenzied Finance Part 29

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 b.u.t.te & 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 dispa.s.sionately 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 a.s.sumption 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 a.s.sume the result represented the a.s.sets 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 bra.s.s 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 "b.u.t.ted 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 b.u.t.te 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, embarra.s.sed 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 quant.i.ties 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 surpa.s.s 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 succ.u.mb 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 inst.i.tution, 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 att.i.tude 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 a.s.sociate 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 antic.i.p.ated 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 a.s.sociates 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 a.s.sociates' 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 circ.u.mstances. The members of the syndicate signed the release in due course, until the doc.u.ment 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 doc.u.ment."

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 inst.i.tutions 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 n.o.ble inst.i.tutions 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 acc.u.mulating 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 antic.i.p.ated 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 antic.i.p.ations 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.