Frenzied Finance Part 22

No better ill.u.s.tration of the att.i.tude 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 una.s.sailable. 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 inst.i.tution, 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 advertis.e.m.e.nts, 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 fas.h.i.+on." 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 partic.i.p.ation of the great ma.s.s of the people, and I was determined that no subservience to the selfish ends of my a.s.sociates 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 partic.i.p.ation, then my inst.i.tution 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 inst.i.tution, 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 att.i.tude 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 a.s.sociate 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 b.u.t.te & 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.

b.u.t.te & Boston and Boston & Montana were essentially Boston inst.i.tutions, 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 b.u.t.te & 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 t.i.tles 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 b.u.t.te & 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 role of Ca.s.sandra 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, b.u.t.te & 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 a.s.sessment 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 compet.i.tion for the coveted fruit.

Next day, and for several days afterward, there were strenuous doings in b.u.t.te & 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 b.u.t.te & 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 b.u.t.te & 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 coa.r.s.ely "b.u.t.ted 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 compet.i.tion with Donnybrook Fair, and to judge by the action and feeling developed in both individual and corporation cla.s.ses, the Hub had Donnybrook jigged to a wind-up. In my various contests with the "System" I had acc.u.mulated 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 b.u.t.te & 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 a.s.sessment 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 b.u.t.te 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, b.u.t.te & 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 l.u.s.ty 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 pa.s.sed 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 a.s.s of State Street, that knave of knaves, Tom Lawson, is braying again, and such braying!--"b.u.t.te 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 b.u.t.te 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 b.u.t.te & 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 b.u.t.te 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 b.u.t.te & 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 b.u.t.te 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 b.u.t.te & 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 b.u.t.te & Boston fight was publicity. Every morning while the battle waxed hottest I had huge, striking advertis.e.m.e.nts 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 b.u.t.te & 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 b.u.t.te & Boston I had acc.u.mulated 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.