Frenzied Finance Part 28

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 const.i.tute 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-Cla.s.s 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 f.a.gin, 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 s.h.i.+fted 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 b.u.t.te, 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 s.h.i.+fted 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 munic.i.p.al 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 Const.i.tution 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 inst.i.tution 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.