DETAILS NECESSARY, IF TEDIOUS.
After the events narrated in the last chapter, I returned to London. I
arrived early in the morning, and, meeting my companions, we had a long
and anxious talk over my near-approaching and all-important interview
with that great Sir of the London world, the manager of the Bank of
England. Happy for us if in that interview the manager had asked for the
customary references, or had used ordinary business precaution and
investigated me, or, indeed, had acted as any ordinary business man
would have done under ordinary circumstances. Our own conclusions were
that the fact that I was already a depositor, together with the
impression made by the letters and my L10,000 checks, would put the
thing through. Yet we, of course, felt that a thousand things could
arise to block our way effectually. A look, a word too much, a shadow,
or a smile in my face might ruin all; but still, after providing so far
as possible for every contingency, after planning what was to be said or
left unsaid at the interview, after my companions filling me full of
advice, we felt after all that everything must be left to my discretion,
to say and to act as I thought best under the circumstances.
This council of war was held in my room in the Grosvenor. I had arrived
from Paris at 6 o'clock. Mac and I breakfasted together at 8. George
joined us at 9, and we talked until 10, then we set out together for the
bank. Arriving there, they remained outside, watching for my
reappearance. Entering the bank, I sent in my card (F. A. Warren) by a
liveried flunkey, and was immediately ushered into the manager's parlor.
He has long since gone over to the majority, so here I will not so much
as name or describe him. Sufficient to say, that as soon as I set eyes
upon him I thought that we would have no particular difficulty in
carrying out our plans, save only so far as details went.
The manager, who had been told that I was a railroad contractor,
expressed himself highly gratified to have me do my business through the
bank, and said they would do all in their power to accommodate me. I
told him that, of course, I was financing large sums, and would require
more or less discounts before the year was out. Then I came away, and
meeting my two friends outside of the bank, in answer to their eager
inquiries as to what had transpired, I told them that, so far as the
bank officials were concerned, our way to the vaults of the bank was
wide open.
So ended the last scene of Act I.
The next day I went to the Continental Bank, in Lombard street, and
bought sight exchange on Paris for 200,000 francs, paying for it by a
check on the Bank of England. I was given a note of identification to
the Paris agent of the bank.
That night I left Victoria Station for Paris. At 10 the next morning I
had my money, and, going to the Place de la Bourse, near the Exchange, I
commissioned a broker, who was a member of the Exchange, to purchase
bills on London for L8,000. I cautioned him to buy bills drawn only on
well-known banking houses. About 3 o'clock he had the bills ready. I
paid him the amount, along with his commission, and, examining the
paper, found that he had purchased for me about what I wanted.
I will explain, for the benefit of any reader not conversant with
financial transactions, that if John Russell, cotton broker in Savannah,
ships a thousand bales of cotton to a firm in Manchester, England, the
firm in Manchester authorizes him to draw a bill of exchange on their
firm, payable at some London bank at three or six months' time, for the
value of the cotton. We will say the price is L10,000. Russell draws ten
bills for L1,000 each, say payable at the Union Bank of London. He gives
these bills to a money broker in Savannah, who sells them on the
Exchange and gets for them whatever the rate of exchange may then be on
London. The president of the Georgia Central Railroad may have ordered a
thousand tons of steel rail in England for his road, and to pay for them
he orders a broker to buy for him bills on London to the amount of the
cost of the rails. He purchases the Russell bills, and these bills of
exchange he sends in payment to the steel rail manufacturers in England,
so, as a matter of fact, the president of the Georgia Central pays
Russell for his thousand bales of cotton, but has the bills of exchange.
So, in place of L10,000 in gold being freighted twice across the ocean,
the ten pieces of paper cross only once. These ten bills for L1,000
each, drawn on the Union Bank of London at six months, in due time are
presented, duly accepted and paid at maturity by the bank.
Instead of commercial notes or bills they are now known as acceptances,
and are just as good as a bank note. Therefore, if the owner--no matter
who it is--wants the money at once, any bank will discount all or either
for the face value less the interest. In every commercial centre of the
world these accepted bills are being discounted by banks and moneyed
corporations for enormous sums, but by no bank in the world in such huge
amounts as by the Bank of England. Their daily discounts run into the
millions.
What our plan was will be made clear later.
[Illustration: A BILL OF EXCHANGE.]
The evening of the day of my arrival in Paris found me on the express
speeding to Paris. Two hours past midnight I was on the miserable little
passenger steamer that plies across the chopping channel, and which I
suppose has seen more of human misery than all the fleets that sail the
Atlantic, for the channel has stronger counter currents, and wind,
tide and currents seem ever to be in violent opposition, and here
"E'er across the main doth float
A sad and solemn swell,
The wild, fantastic, fitful note
Of Triton's breathing shell."
And Triton (old Neptune's t'other name) makes all passers over this part
of his realm pay ample tribute for "his fantastic, fitful notes."
The Paris night express lands one at early dawn in London, nearly always
weak on the legs, however. I breakfasted with Mac, and after that took
the bills to the various banks on which they were drawn, and leaving
them for their acceptance, I called again the next day and received them
back, bearing across the face, the magic words:
"London, Aug. 14, 1872.
"Accepted for the Union Bank of London.
"E. Barclay, Manager.
"J. Wayland, Assistant Manager."
Then I hurried to the Grosvenor, and we all looked at them with
curiosity, for it was upon the imitation of just such acceptances that
our whole plan was based. I intended to present this and many more
batches of genuine bills for discount at the bank until the officials
should become accustomed to discounting for me. In the mean time, as
fast as I got genuine acceptances and bills, we kept on making
imitations of them for future use, only leaving out the date until such
time as we should be ready to put them in for discount. Of course, the
success or failure of our whole plan turned upon this point. Is it the
custom of the Bank of England (in 1873) to send acceptances offered for
discount to the acceptors for verification of signatures?
This is always done in America, and had this very requisite precaution
been used by the Bank of England our plan would have been fruitless and
we should have been a few thousands out of pocket; but, if not, then we
could throw into the hopper enough acceptances of home manufacture so
that through the red tape routine of the bank millions of sovereigns
would be ground out into our pockets.
Taking my deposit book and the genuine bills, I went to the bank and
left the bills for discount. This was at once done and the amount placed
to my credit. I drew L10,000, and that night found me once more one of
500 unfortunates paying tribute to Neptune. This time I landed at Ostend
and took the train for Amsterdam. There I repeated the Paris operation,
securing L10,000 in genuine bills. I returned to London, and as before
left them for acceptance. Then my companion manufactured a lot of
imitations and put them away with those previously manufactured, to be
all ready when the day came to use them. The genuine bills were then
discounted. Again and again I went to the Continent, repeating the
operation, until at last my credit at the bank was firm as a rock, and
we were ready to reap our harvest. But these operations, simple as they
seem, lasted over a period of six months, and had been made at heavy
cost. Our ordinary living expenses were not less than $25 a day for the
three, while our extraordinary expenses were enormous. I probably
traveled 10,000 miles over the Continent in my bill-buying expeditions
to Paris, Amsterdam, Frankfort and Vienna.
Another source of expense was the commissions paid to brokers for buying
bills on the exchange. Then we had many expenses purely personal, and,
enormous as it seems, the sum total from the day of our return from
Brazil until the day of our operations against the bank began to bring
us in cash were quite $500 a week, so that we had invested $15,000 in
preparation, not to speak of our hard work--and it was hard work, and
trying, too, for there were a multitude of details to be worked out.