Read CHAPTER XLI of Frenzied Finance Vol. 1: The Crime of Amalgamated , free online book, by Thomas W. Lawson, on ReadCentral.com.

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 Caesars, 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.