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


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

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.