NIPISSING AND GOLDFIELD CON
The embarrassment of the L. M. Sullivan Trust Company, was disastrous
to Goldfield, The decline and fall of the camp dated from that very
hour.
The _Goldfield News_, of nation-wide circulation in those days and
up to then unshackled, sought to stem the tide. It published a
double-leaded editorial, in full-face type, setting forth that the
Sullivan Trust Company had gone down with its flag nailed to the
masthead of a declining market and had lost its last dollar supporting
its own stocks.
The camp took courage. Soon it became evident that the initial smash in
stock-market values was not sufficient to convince the natives that the
death-knell of the market for its long line of mining securities had
been sounded.
The population of Goldfield was 15,000. Its life could not be snuffed
out in a day. Great was the depreciation in the market price of
Goldfield mining issues, but not to an extent as yet that indicated the
almost complete annihilation of values which followed. Final
destruction for the general list, with some scattering exceptions, came
only after a "starving-out" siege on the part of investors, who refused
to commit themselves farther and gradually resorted to liquidation.
Listed Goldfield securities, nearly 200 in number, and valued in the
markets at above $150,000,000 during the boom, had within two months
shown a falling off of $60,000,000 in market value, but the list on the
average was still quoted higher than the promotion prices.
On January 18, 1907, fifteen days after the newspapers throughout the
land carried front-page stories of the failure of the Sullivan Trust
Company, the stocks promoted by the trust company were still in demand
in all mining-share markets of the country at an average price not
below that at which original subscriptions were accepted from the
public.
Jumping Jack, promoted at 25 cents, was quoted at 30 cents bid. Stray
Dog Manhattan, promoted at 45 cents, was in demand at 49 cents. Lou
Dillon, promoted at 25 cents, was still wanted at 26. Indian Camp, sold
originally to the public at 25, was quoted at 85 bid. Silver Pick
Extension, promoted at 25, was 21 bid, a loss of 4 cents from the
promotion price. Eagle's Nest Fairview was quoted at 25, off 10 cents
from the promotion figure. These prices represented terrific losses
from the "highs" that had been reached during the height of the
Goldfield boom, yet the average market price was still above the
subscription price of the shares at which the public was first allowed
to participate. A remarkable part of this demonstration was that for
twenty days no inside support had been lent to these stocks. The
Sullivan Trust Company being in trouble, the markets had been left to
the mercy of short-sellers and market sharp-shooters generally.
Having settled the trust company's liabilities of $1,200,000 by tying
up in trust all of its securities and the other assets, of which the
creditors agreed to accept in full quittance 80 per cent. of the
proceeds and to turn back to the trust company 20 per cent., I returned
to New York during the last week in January. I was again out of a
job--and broke.
I visited the officers of mining-stock brokers in Wall Street and Broad
Street. Wherever I went a hearty handclasp was extended. Not one of the
Eastern stock brokers was involved to the extent of a single dollar in
the Sullivan Trust Company failure.
The brokers were convinced that the embarrassment was honest. The trust
company's credit had always been good. Had the failure been meditated,
I could have involved Eastern brokers for at least $1,000,000. Because
I didn't, New York brokers were not slow to express their good feeling.
A number of them offered to extend a helping hand did I wish to embark
on a new enterprise.
Peculiarly enough--or shall I say, naturally--after tossing off the
trust company's millions, of which half were mine, in a vain endeavor
to support the market for its stocks, I was as full of spirit as the
month of May. I had been broke before, and the sensation was not new to
me. Withal, I had profited. A new fund of experience was mine. Even
though I had not gathered shekels as a result of my hard work in
Goldfield, I had learned something--I had acquired the rudiments of a
great business.
Goldfield had been the mining emporium--the security factory. New York
was the recognized market center. Market handling had been my weak
spot. I now had a chance to witness the performance of some
past-masters in the art of market manipulation, and I tried to make the
best of the opportunity.
I watched intently the daily sessions of the New York Curb. I was in
and out of brokerage offices hourly. Nothing that transpired escaped
me.
Within a month I heard enough and saw enough to convince me that,
daring as were the operations of the mergerers and waterers of
Goldfield Consolidated, in that they ballooned the price of their
security at its inception some $29,000,000 (400 per cent.) above the
accepted intrinsic worth and were able to get the public in at top
prices, their activities were but amateurish when compared with the
stock-market campaign in Nipissing, which was now transpiring on the
New York Curb.
In the Nipissing campaign tens of millions of the public's money went
glimmering, several great promoters' fortunes were reared as by magic,
some big names and big reputations were tarnished, and dollars in
$1,000,000 blocks were juggled like glass balls under the touch of
sleight-of-hand performers.
AN ORGY IN MARKET MANIPULATION
This market melodrama was well staged. It had a sensational start-off,
and action was at high tension every minute. The performance had
covered a period of seven months when I arrived in New York, and was
reaching its climax. It was a wild orgy in market-manipulation and
money-fleecing that had no parallel in history from the early Comstock
days up to and including Greenwater. As a mining-stock boom it was a
dizzy, bewildering success--full of red fire and explosions to the last
curtain climax.
W. B. Thompson, Montana mine promoter and money-getter; Captain Joseph
R. Delamar, famed as a daring adventurer on land and sea, and recently
a highly successful financier, mine-owner, stock-market operator and
art collector; John Hays Hammond, mining engineer, promoter, politician
and ambitious society leader; A. Chester Beatty, millionaire mining
engineer, and the seven Guggenheim brothers, were in the all-star cast.
Mr. Thompson, by reason of the fact that he was market manager, was
most under the spotlight, although at times he was obscured by the
others.
Mr. Thompson was a product of Butte, Montana. Early in the game he had
learned the Wall Street lesson that "stocks are made to sell." Born and
reared in Butte without the aid of a silver spoon, he had never been
"in the money" before coming East. The great pay-streak in the East
apparently looked better to him than the pay-streaks that some of his
Butte neighbors had missed in their deep-mine operations. He was an
ideal man for the Nipissing job, as subsequent events in his career
thoroughly confirm. Of a school that believes money in hand to be worth
more than mining certificates in the box, Mr. Thompson's route from
Montana to Broad Street was via Boston, where he made his first visible
stake by marketing stock in the Shannon group of mines.
When the Cobalt excitement was in its infancy Mr. Thompson took a run
up to the camp. The Nipissing mine was about the best thing in sight.
It was producing real silver. The company was owned by a little club
consisting of E. P. Earle, specialist in rare metals, Captain Delamar,
millionaire soldier of fortune, E. C. Converse, banker and steel
magnate, Ambrose Monnell, R. M. Thompson, Joseph Wharton, since
deceased, of Philadelphia, and Duncan Coulson, a rich Canadian lawyer.
Considerable silver was being produced. The veins, however, were
exceedingly narrow, not more than a few inches wide. It was impossible
to block out ore to an extent that would warrant any opinion as to the
real measure of the mine's riches. The gentlemen owners were not averse
to giving Mr. Thompson an option on 100,000 shares of treasury stock of
the 1,200,000 five-dollar shares ($6,000,000), at $2 a share, when he
made the proposition, and another 100,000 shares at $2.50. Later, they
sold him a call on 50,000 or 100,000 shares around $7. All of this
happened in the Summer of 1906, six months before I reached New York
and at a time when the country was giving indication of going
mining-stock crazy, Nevada stocks having advanced on the New York Curb
in the Goldfield boom hundreds per cent.
After the Goldfield boom had gained terrific headway, during the Fall
of 1906, when Mohawk was climbing from 10 cents per share toward the
$20 mark, which it reached during the climax, the Cobalt mining-stock
excitement spread like wildfire. A sudden demand sprang up for
Nipissing shares. Mr. Thompson, about this time, connected himself with
the old established and conservative banking house of C. Shumacher &
Company on Wall Street. The affiliation was calculated to give the
promoter of Nipissing stock much standing. The move served well its
purpose. The public grabbed at the shares. The price jumped to $4.50 in
a jiffy. Mr. Thompson began to let go of stock after the $4 point was
reached. He was making a killing, but fed out his optional stock very
cautiously at the rate of about 5,000 shares daily, each day at an
advance. By the time the price reached $7 Mr. Thompson got suspicious.
There was something about the play he could not understand. He had not
found it necessary to do much "laundry" work on the Curb market. Every
time he offered stock it was lapped up silently and completely. Every
time his brokers opened their mouths to sell the certificates they were
gobbled.
Mr. Thompson stopped putting out any more stock and streaked it up to
Cobalt to see what was going on. He had a hard time laying hold of the
inside facts, but learned enough to satisfy himself that rich ore had
been encountered at depth. He discovered on his return to New York that
Captain Delamar had been buying that cheap stock through S. H. P. Pell
& Company and was even then the heaviest individual holder, a position
contested only once during the whole campaign, and that by a rank
outsider operating through Eugene Meyer, Jr., whose name has never been
publicly mentioned as having anything to do with the gamble. This
"unknown" was a quiet, mild-spoken, college-bred gentleman. He pulled
down $1,500,000 in Nipissing--and kept it.
Upon the return of Mr. Thompson from Cobalt the promoters warmed up to
their job. The manipulation which had been begun in a comparatively
modest way now showed the spirit of the gambler who plays "the ceiling
for the limit." New market-boosting accessories were called into use.
They did their work. The game waxed hotter and hotter.
THE GUGGENHEIMS ENTER NIPISSING
Boom! Boom! Boom! went Nipissing. By the time the price crossed $20 the
gamblers and speculators of two continents were on fire with
excitement. Presently it became noised about that the Guggenheim family
had taken an option on 400,000 shares of Nipissing stock at $25 a
share, making the investment $10,000,000, and putting a valuation of
$32,000,000 on the property. Furthermore, it was announced that the
deal had been made on the report and advice of John Hays Hammond, the
international mining engineer, crony of Cecil Rhodes and famed as the
head of the profession. As a part and parcel of the remarkable story,
it was authoritatively stated that the Guggenheims had paid $2,500,000
cash for the option. W. B. Thompson was said to have negotiated the
transaction.
Confirmation of the deal set the gamblers crazy. There could be no risk
in following such leadership as the Guggenheims', endorsed by the
eminent Hammond. The market boiled up to $30 and then majestically
boomed to $33.25. Transactions in this single issue totaled hundreds of
thousands of shares a day. Waiters, bar-keepers, tailors, seamstresses
and tenderloin beauties competed with bankers, merchants, professionals
on the regular exchanges, and even ministers of the Gospel, for the
privilege of buying Nipissing shares on a valuation of more than
$40,000,000 for the mine.
On the way up the original bunch of insiders floated out of their
holdings. Most of them had cashed in under $20. Some of them stayed
out; others went back, and, like the moth, got burned. W. B. Thompson,
it is said, parted with the bulk of his 250,000 to 300,000 shares at
from $24.50 up, cleaning up for personal account between $4,500,000 and
$5,000,000, according to the estimates of close friends then in his
confidence. Never was there a cleaner case of "finding" money for Mr.
Thompson. The manipulative campaign, of which he was made manager, was
a giant success. The only ability or skill needed, after the Guggenheim
deal was made--brilliant deal from a market standpoint!--was the sense
to hold on to his optioned stock until his associates, the Guggenheim
following, and the public made a rich, ripe and juicy market for it.
Mr. Thompson subsequently participated in Cumberland-Ely, El Reyo,
Inspiration, La Rose, Utah Copper, Mason Valley, and other mining
promotions, and is now rated at $10,000,000 to $12,000,000. He is
generally prominent at the nutritious or selling end when a good market
exists and is now head of a New York Stock Exchange brokerage and
mining promotion firm which publishes its own newspaper.
But what happened to Nipissing? Plenty, and then some, happened. As
noted, the stock mounted by flying leaps to $33.25, stayed well above
$30 for quite a while, and began slowly to recede. Complacent in the
consciousness that they had the biggest silver mine in the world, the
Guggenheims allowed all of their friends to share in their good
fortune.
Of a sudden, stock from mysterious sources began to press on the
market. It came in great quantity and without let-up. Suspicion was
aroused in the Guggenheim camp. They despatched A. Chester Beatty, one
of their very best expert engineers, and a former protege of John Hays
Hammond, to Cobalt to smell out the trouble. The text of his report was
never printed. It didn't have to be. The facts beat it in.
Much of the showy mineral, on which glowing reports as to the fabulous
value of the property had been based, contained little or no silver. It
was _smaltite_, an ore of the metal cobalt, closely resembling many of
the silver ores.
The story was given out that Mr. Beatty had reported adversely on
account of the unfavorable showing made by mine developments carried
out subsequent to Mr. Hammond's report. The miners had run into
non-productive calcite a few hundred feet down, it was said.
As a matter of fact, because of the limited amount of all underground
development in the interim, there could have been no condition
observable in the property as a whole when Mr. Beatty made his
examination that was not equally apparent when Mr. Hammond made his
report.
The talent jumped to the conclusion that the mine was a "deader."
Many millions in silver bullion have been taken from the property since
then, and it is still a great producer, but this is another and more
prosaic story. This deals with the stock-gambling feature of the
record.
Scenes of the wildest disorder were witnessed on the Curb in those days
of 1907 soon after my return from Goldfield. The Guggenheims "laid
down" on their option, getting out as best they could. According to
published reports, they charged to profit and loss the $2,500,000
originally put up, besides paying the $1,500,000 to $2,000,000 in
losses of personal friends for whose misfortune they felt personally
responsible. Be that as it may, the Guggenheims emerged from the
campaign with damage to their market reputation and standing from which
they have never fully recovered. Previous to their acquaintance with
the Cobalt bonanza, they had a blindly idolatrous following that would
have invested hundreds of millions on a tip from them. They have never
regained the position in this respect they then held.
NIPISSING ON THE TOBOGGAN
The price of Nipissing tobogganed from $33 to under $6 with terrific
speed. W. B. Thompson and his associates, who had unloaded their
holdings on the way up, were reported to have taken advantage of the
Beatty report and to have sold the market short on the way down, making
another "clean-up" of millions. The stock hit a few hard spots on the
descent, but when the wreckage was cleared away and the dead and
wounded assembled, there wasn't hospital or morgue space to accommodate
half of them. The final carnage and mutilation was shocking beyond
description.
_The public had once more been landed with the goods. It had eaten up
Nipissing stock on a $43,000,000 valuation which broke to $7,000,000 or
$8,000,000 within the space of a few days. This $35,000,000 slaughter
represents only a fraction of the actual losses, for fabulous amounts
were sacrificed in marginal accounts. The daily aggregate of open
accounts in Nipissing during the months of keenest excitement probably
averaged not less than five times the total capitalization. Actual
losses were therefore far larger than would appear from a merely
superficial calculation. The public contributed $75,000,000 to
$100,000,000 to its Nipissing experience fund._
There has always been more or less mystery as to just what John Hays
Hammond said orally to the Guggenheims to lead them into the crowning
humiliation of their business career. It did not appear in his written
and published report, for in that document is to be found a neat little
hedge to the effect that "if" conditions as revealed to him were
maintained, the values would be, etc., etc. That little "if" was the
Hammond saving clause, although it did not save that $1,000,000-a-year
job of his, about which some of his admirers have liked to talk in
joyous chorus, nor did it save the public from massacre.
Another Nipissing mystery is the sustained professional and personal
cordiality still existing between the eminent John Hays Hammond and the
scarcely less eminent A. Chester Beatty. For a little while after Mr.
Beatty had to turn down his chief their relations appeared to have been
strained. But this was not for long. Mr. Beatty also severed
connections with the Guggenheim pay-roll, and the two great engineers
were soon again, and are now, on the best of terms.
On rainy days when the tickers drone along and there is no exciting
news, evil-minded derelicts of the memorable Nipissing campaign are
prone to figure how much a man might have made in the market with a
foreknowledge of the two adverse reports and to figure on the sporting
chances for a "double cross" that such a situation would hold.
Scandal mongers, too, who have watched closely the friendship which
exists between W. B. Thompson and John Hays Hammond often ask unkindly
what has cemented the bond between the two. Recently, when the Rocky
Mountain Club needed a new club-house, Messrs. Hammond and Thompson
subscribed an equal amount--a goodly sum it was--to build it.
They are seen much together in public and seem to have many tastes in
common. Mr. Thompson, whose strangely fortunate campaign in Nipissing
on the New York Curb was helped to a triumphant promotion climax by the
Hammond report to the Guggenheims, bears Mr. Hammond no ill-will for
that--and who would blame him for the kindly feeling?
WHO GOT THE $75,000,000?
But what of the public? It played $75,000,000 to $100,000,000 into the
game, and has never yet learned who got it. Who did get it? Some of the
details of the grand separation scheme have been set forth in the
foregoing, but nothing like enough to satisfy the curiosity of the
public who footed the bill, paid the freight, contributed sucker-toll
for the whole prodigious sum.
Did the author of the report on the strength of which tens of millions
were plunged on Nipissing by an army of deluded investors and
speculators ever suffer in fortune by the mischance or misshot, or
whatever name you may give the "come-on" document? Not that you could
notice. True, he gave up his alleged $1,000,000 job with the
Guggenheims. But is he not a heavy contributor to the Republican
national campaign fund, a close personal friend of the Administration,
and did he not represent this great Government as Special Ambassador at
the Coronation of England's King? Was he not talked of as running mate
for Mr. Taft, and did he not organize the National League of Republican
Clubs two years ago? He is tremendously rich and round-shouldered under
a mountain-high burden of honors.
Every mother's son of the old Nipissing crowd is at this very hour up
and at it in regions where the public's money flows. Many of them still
have a grip on the property. It was a good old cow to milk. E. P.
Earle, who was president of Nipissing in 1906, headed the company four
years later. Captain Delamar slipped down and away (he's now in on the
extravagantly touted Porcupine Dome Mines Company), and so did E. C.
Converse, whose time is all taken up managing the Stock Exchange
banknote engraving monopoly and a couple of banks and trust companies.
W. B. Thompson, who came into the Nipissing directory in 1907, still
sticks in spite of the awful experience of 1906-07.
Has an outraged Government ever raised hue and cry against these
eminent captains of industry? Not yet, nor soon.
What difference is there between the respectable multi-millionaire
bankers putting across a losing promotion and the little fellow? Both
may be equally honest or equally crooked, yet in equity both are
entitled to the same treatment and the same consideration. Their
operations differ only in degree. The aim of each is to get the
public's money. And the big fellow is more dangerous by a hundred
thousand degrees.
Where does real tangible evidence of a conspiracy to defraud in
Nipissing exist? Does _any_ exist? Now I venture to say that you
could put on the scent any young man who is a graduate of the public
schools, and within thirty days he would obtain enough evidence to
prove to any jury in the land that the manipulators of that stock used
improper measures to get the public's money.
A scrutiny of the files of the newspapers during the progress of the
malodorous Nipissing campaign reveals many strange happenings. It
shows, among other things, most remarkable willingness on the part of
financial writers for the press of that day to say every possible good
word for the manipulators and to feed the public appetite for
sensational gossip concerning the gamble.
How this was done is easily understood by those familiar with Wall
Street publicity. It was an open secret on the Street at that time that
many writers for the press were subjected to strongest temptations to
lend their hand to the game of publicity. The columns of the daily
newspapers carry in themselves evidence to show that the attempts were
not always in vain.
One little story will illustrate the methods employed. The business
manager of a widely known and reputable daily financial publication was
stopped one day by a man active in Nipissing and told he had been put
into 500 shares of the Nipissing stock at the market price when the
stock was still selling under $10 and at the time when it was being
groomed for the terrific rise which followed and which did not
culminate until $33 had been passed. The newspaper man was not above
making a turn in the Street, but he objected to taking it that way. He
politely turned down the proposition, saying that he did not wish any
part of it.
The tempter then went to him on another tack, agreeing to carry the
stock for him, so that he would have no risk whatever, at the same time
remarking that, in turn for the favor, generous recognition in the news
columns of the publication, in support of the Curb campaign, would be
expected. Again the newspaper man declined, this time with unmistakable
emphasis. He intimated cannily that while he might be taken on he might
not be told when to get off, adding that he might be discharged if he
fell for anything of that sort.
When the market price toppled from $33 back to around $6 this man's
newspaper did not carry any front-page story denouncing the outrage
upon the public.
I do not know that the manipulators of Nipissing "got to" his
employers, but I do know of some newspapers in New York which pose
before the public as embodying the very highest type of newspaper
morality and which have at their head, either as part owners or as
editors, men who were taken in hand by Wall Street magnates at a period
when they were dependent for their daily livelihood on their weekly
wage, and were lifted into the millionaire division by being put into
"good things." Do you suppose newspapers presided over by those men are
going to say a word against the enterprises of their benefactors?
Conversely, if their benefactors happen to be bothered by any man whose
business purposes run contrary to theirs, how far, do you think, these
gentlemen of the press would go in their own news columns to poison the
public mind against the enterprise of their patron's enemy?
When I witnessed the climax of W. B. Thompson's marvelously successful
campaign in Nipissing on the New York Curb, I was fresh from Goldfield.
My recollection is that my chief thought at that time, with the
Goldfield Consolidated swindle fresh in my mind, was simply that the
Western multi-millionaire highbinder promoter didn't class with his
Eastern prototype. Indeed, the two appeared to be of different species,
as different as the humble but noisy coyote from the Abyssinian
man-eating tiger.
The late Spring of 1907 found me back in Nevada. I selected Reno as a
central point for residence and decided to locate there. Eastern stock
markets appeared to be beyond my ken. It seemed quite apparent that the
Western game, as compared with the Eastern, was one of marbles as
against millions. In New York's financial mart I felt like a minnow in
a sea of bass. Without millions for capital, Nevada appealed to me as a
more likely field of usefulness. I believed in Nevada's mineral
resources. Having seen Goldfield evolve from a tented station on the
desert with a hundred people into a city of 15,000 inhabitants; from a
district with a few gold "prospects" into a series of mines producing
the yellow metal at the rate of nearly $1,000,000 a month, I was
enthused with the idea that there were other goldfields yet unexplored
in the battle-born State and that opportunity was bound to come to me
if I pitched my tent on the ground.
THE WONDER MINING-CAMP STAMPEDE
I was back in Nevada just a week when a stampede into a new mining camp
called Wonder took place. I was quick to join in the rush. The
Philadelphia crowd who owned control of the big Tonopah mine had
annexed a property there which they named the Nevada Wonder. It boasted
of a big tonnage of low-grade silver-gold ore.
On arrival at Wonder, I found my former Goldfield partner, L. M.
Sullivan, on the ground. He entreated me to allow him to cut in on any
deal I made. A bargain was struck. He agreed to advance all the money
and I was to receive half of the profits for my work. The corporation
of Sullivan & Rice was formed. We purchased the Rich Gulch group of
claims, a likely piece of ground with a well defined ledge, and
incorporated the Rich Gulch Wonder Mining Company. A company with the
usual million-share capitalization was formed to operate the property.
A high-class directorate was secured. T. F. Dunnaway, vice-president
and general manager of the Nevada, California & Oregon Railroad,
accepted the presidency. Hon. John Sparks, Governor of Nevada, became
first vice-president. U. S. Webb, Attorney General of California,
accepted the second vice-presidency. D. B. Boyd, for twenty-five years
successively Treasurer of Washoe County, Nevada, was made treasurer.
The first advertised offering of treasury stock of the Rich Gulch
Wonder carried the names of forty leading mining-stock brokers,
situated in various cities stretching from New York to Honolulu, who
had signified over their signatures their willingness to undertake the
sale of treasury stock at 25 cents per share on a basis of 20 per cent.
commission. The first thousand shares of treasury stock at 25 cents was
sold to Superintendent McDaniel of the Nevada Wonder mine. This
convinced us that we had a good "prospect."
I had my doubts about the successful promotion of any Nevada mining
company at this period, because of the terrific slump which was
transpiring in Goldfield issues and also because of the smack in the
face that mining-stock investors had just received in Nipissing. It was
my idea that if the Rich Gulch Wonder made any money for us the cashing
would have to be delayed until mills were erected and the property
became a producer. I was willing to go ahead on that basis.
The sale of treasury stock was slow, but sufficient was disposed of to
warrant the expense for mine development of at least $2,000 a month for
six months, and that appeared far enough to provide for in advance.
Pending the making good of this proposition in a financial way, I
determined I would help finance a newspaper publication at Reno which
would give to mining-stock speculators an unbiased statement of mining
and market conditions as they existed. In the mining camps it was
considered tantamount to financial suicide for the home publication to
reflect on the merits of any locally owned property. Strictures were
looked upon as "knocks," and "knockers" are taboo in mining camps.
Moreover, mining-camp papers could hardly make both ends meet at the
time without support from inside interests, and unprejudiced statements
of fact that were detrimental to a local property could hardly be
expected.
Merrill A. Teague was made editor of the new publication, which was
called the _Nevada Mining News_. Mr. Teague had just blown into Reno
from Goldfield where he had been connected with the Nevada Mines News
Bureau, a daily market sheet. Before coming to Nevada he had served in
an editorial capacity on the _Baltimore American_ and the _Philadelphia
North American_. Mr. Teague is the possessor of a facile pen. At $50 a
week, which was his stipend at the beginning, I was convinced that the
_Nevada Mining News_ had a cheap editor. When news was scarce he could
write more about nothing than any man I ever met before. Incidentally,
he could go further without finding a stopping place in a crusade than
any man I had ever bumped up against. That was his drawback. However,
compared with the work of other newspaper men then employed in Nevada,
his stuff was in a class by itself and was commercially very valuable.
TEAGUE ATTACKS SENATOR NIXON
Mr. Teague was on the job just a week when he cut loose with an attack
on United States Senator George S. Nixon of Nevada in a front-page
story headed "Goldfield in the Grasp of Wall Street Sharks." The
article declared that Senator Nixon, needing $1,000,000 to conclude the
merger plans of the Goldfield Consolidated, had got it through B. M.
(Berney) Baruch of the New York Stock Exchange, factotum of Thomas F.
Ryan, at terrible cost. The loan was made at a time when Goldfield
Consolidated was selling around $10 per share. In consideration for the
loan, Senator Nixon, acting for the company, gave Mr. Baruch an option
on 1,000,000 shares of treasury stock of the Goldfield Consolidated at
$7.75 per share. At the time Mr. Teague commenced his onslaught
Goldfield Consolidated shares had slumped from $10 to $7.50. Mr. Teague
alleged that the market on the stock was being juggled and speculators
were being milked. Mr. Baruch, he asserted, had sold the stock down to
$7.50 per share on the strength of his option, and was now tempted to
break the market, sell the stock short and cover all at much lower
prices.
Within two weeks after the publication of Mr. Teague's exposé of the
terms of the outstanding option to Mr. Baruch, Goldfield Consolidated
shares dropped to under $6. The story evidently had its effect.
The issue of the paper which chronicled the break to $6 contained an
editorial headed "Nixon in the Rôle of Brutus." It demanded of Senator
Nixon that he stand behind the stock and support the market, and also
called upon him to declare the payment of dividends which he had
promised to stockholders in his annual report dated two months prior.
People in Nevada began asking, "Who is Teague?" Mr. Teague caused
the publisher of the _Nevada Mining News_, who was Hugh Montgomery,
formerly business manager of the _Chicago Tribune_, to explain over
his signature that Mr. Teague had been the political editor of the
_Baltimore American_, later an editorial writer for the _Philadelphia
North American_, and that while on the _Philadelphia North American_ he
had crusaded against get-rich-quick swindlers who had headquarters in
Philadelphia, with the result that the Storey Cotton Company, the
Provident Investment Bureau, the Haight & Freese Company and other
bucketshop concerns were put out of business. On evidence furnished by
him, it was stated, Mr. Teague secured the conviction by the United
States Government of Stanley Frances and Frank C. Marrin as chief
conspirators in the $400,000 Storey cotton swindle. Finally, the
article said, Mr. Teague was engaged by a far-famed magazine to expose
bucketshop iniquities in the United States. This series of articles had
appeared in 1906.
The biographical sketch seemed to satisfy readers that they were
getting their "dope" straight on Goldfield Consolidated. My name at
this time did not appear in connection with the publication except as
part of the aggregation of Sullivan & Rice who advertised therein, but
I was openly accused by Messrs. Nixon and Wingfield of dictating the
policy of the paper. This was a half-truth. My sympathies were with the
stockholders of Goldfield Consolidated--that's all.
The story is told in Nevada that when Senator Nixon received the check
for $1,000,000 from Berney Baruch, after having executed notes of the
Goldfield Consolidated, signed by himself as president and endorsed by
him as an individual, he took luncheon at the Waldorf-Astoria in New
York. When the waiter presented the bill the Senator ostentatiously
tendered the $1,000,000 check in payment. The waiter put it all over
the Senator by politely stating that if he wished to pay his dinner
check out of the proceeds, Proprietor Boldt would undoubtedly attend to
the matter for him. The Senator was forced to tell the waiter he was
"only joking."
The _Nevada Mining News_ appeared to be catching on and was now
printing 28,000 copies weekly. Sample copies were sent in every
direction with the idea of acquainting investors with its existence.
A day after the issue appeared containing the editorial in which
Senator Nixon was accused of playing the rôle of Brutus, I was stopped
on the street by the editor of the _Reno Gazette_, a newspaper which is
loyally attached to the Senator and his friends.
"The Senator wants to see you, Rice. Better go over to the bank right
away. If you know what's good for you, you'll do it," the _Gazette_ man
said.
"I will, like ----!" I replied. "My office is up in the Clay Peters
Building, and if the Senator has anything to say to me he can give me a
call. I am not one of his sycophants, and I am not going."
I didn't go.
An hour afterward the editor of the _Gazette_ met me again. "Senator
Nixon wants to see you at his office right away," he said bluntly.
"About what?" I inquired.
"About articles which have appeared in the _Nevada Mining News_," he
answered.
"Very well," I replied, "I'll send the editor over."
Turning to Mr. Teague, I said, "I have no business with Senator Nixon,
and if he has anything to communicate regarding the newspaper you, the
editor, are the man for him to say it to."
Mr. Teague went over to the Nixon National Bank and entered the
directors' room. My stenographer accompanied him as far as the door and
took a seat outside, in the banking room.
As Mr. Teague entered, Senator Nixon jumped to his feet. He looked
black as thunder. He quivered with rage.
"Why don't Rice come over here himself, eh? He daren't! I've got his
record from boyhood jacketed in these drawers. While I have not read
it, I know the story, and I am going to have it published in a bunch of
newspapers so the world can know who is holding me up to public scorn!"
the Senator spluttered.
In relating what transpired Mr. Teague later informed me that the
Senator's wrathful indignation appealed to him as so grotesquely comic
he felt like laughing, but he thought it a poor newspaper stunt to
incense him further at a moment when it looked as if, by appeasing him,
he could tempt him into volubility. Soon Mr. Teague had the Senator at
ease, pouring forth a long interview, full of acrimony and affectation,
which Mr. Teague promised to publish in the _Nevada Mining News_.
Mr. Teague reported to me that the Senator construed his pacifying
attitude as meaning that I would undoubtedly "listen to reason" and
that his threat would most certainly accomplish its purpose.
"CALLING FOR A SHOW-DOWN"
When Mr. Teague finished narrating to me what had transpired I was
beside myself. Presently I gave him these instructions: "Write out the
interview with the Senator. Have two carbon copies made. When finished,
take the three copies over to the Senator and have him read them and
put his O.K. on them. After you have done that, give the Senator one
copy, give the printer a copy, and put the other copy in the safe. As
soon as the copy of the interview is in the printer's hands, sit down
and write an editorial. Head it 'A United States Senator with a
Blackmailing Mind.' Publish my record in full. Tell of everything of
any consequence I ever did, good or bad. Parallel my record with the
Senator's record. Tell the people of Nevada all the facts about the
Senator's threat. Say to them nobody can blackmail me, and ask them to
choose between us."
On May 25, 1907, the editorial, headed "Nixon a Senator with a
Blackmailing Mind," appeared. It was a passionate denouncement,
calculated to stir the blood. Also there appeared Senator Nixon's
interview in full.
In the interview the Senator had made an effort to disentangle himself
from a seemingly inextricable network in which he was enmeshed, and the
paper contained still another editorial lambasting him in amplitude for
trying to practise on the credulity of the newspaper's readers. The
editor accused him of equivocation, artful dodging, false coloring,
exaggeration, suppression of truth, cupidity and knavery.
The arraignment wrought an undoubted sensation.
The effect on the Nevada public was unmistakable. It reminded me more
of the motionless and breathless attitude of an audience at the
third-act climax of a four-act drama, than anything else. The Senator
was not seen on the streets of Reno for two months afterwards. For a
fortnight afterward he didn't even call at the offices of the bank.
When he did finally resume his visits to the bank he came in his
automobile. He was whisked to the door of the building, immediately
secreted himself in the directors' room and was not get-at-able.
Leading citizens, including the directors of a number of banks in Reno,
made clandestine calls at my office, shook my hand, felicitated me over
the stand I took, and went away. Even George Wingfield, the Senator's
partner, it was reported (and I afterward corroborated this from the
lips of George Wingfield himself), backed me up in the stand I had
taken. The general sentiment in the State appeared to be that the
threat was a lowdown trick, and that of the two I had the less to be
ashamed of.
When the Senator read the article headed "Nixon a Senator with a
Blackmailing Mind" it is said he telegraphed to former Governor Thomas
of Colorado, his counsel, and asked him to come to Reno.
"If I don't say something in answer to this awful attack, I'll choke!"
cried the Senator as he nervously walked the floor.
"Did you sign that interview which they published?" asked Governor
Thomas.
"Yes," said the Senator.
"Well, then, if you say anything at all now, _they'll_ choke _you_,"
answered Governor Thomas.
During the course of our attacks on Senator Nixon in the _Nevada
Mining News_ which followed at various intervals, the newspaper
accused him of making promises of early dividends to Goldfield
Consolidated stockholders which he knew he could not keep; of having
been the State Agent in Nevada of the Southern Pacific Company at $150
per month during the Huntington régime when legislatures were bought;
of having bilked the investing public out of millions in Goldfield; of
having carved his fortune, that made possible the acquisition by him
and his partner of control of the Goldfield Consolidated, out of a
gambling house in Tonopah; of having gathered his first mining
property and mining-stock interests in Goldfield from prospectors who
lost money and surrendered their mining claims and stock certificates
to the gambling house in lieu of the cash; and of being generally a
financial and political freebooter of the most despicable sort. And
the Senator never sued for libel nor proceeded in the courts in any
way whatsoever to obtain a retraction.
MANIPULATING GOLDFIELD CON
About a week after the publication of the editorial headed "Nixon a
Senator with a Blackmailing Mind," when Goldfield Consolidated stock
had slumped to around $7, the _Nevada Mining News_ in big bold-faced
type urged its readers to place their buying orders for Goldfield
Consolidated at $4 a share, saying that New York mining-stock brokers
advised their clients that the stock would almost certainly go down to
that figure because of the Senator's mistakes in the financial
management of the company. That edition contained another editorial on
Senator Nixon, headed "Branding a Bilker." It accused him of saying in
his annual report a few months previous that payments of dividends on
a regular basis would commence within a short time, and contrasted
this statement with the signed interview published in the _Nevada
Mining News_, in which he said dividends would be paid "whenever the
trustees thought it wise to do so _and not before_."
Within a day thereafter the stock "busted" wide open to $5-1/8 bid,
$5-1/4 asked, and the whole Goldfield list smashed farther in sympathy.
By June 8th Goldfield Consolidated had crashed to $4.50.
On the dip from $7.50 to $4.50 an opportunity had been offered to
Berney Baruch and his associates to buy back in the open market all of
the stock they might have sold on the way down from $10 to $7.75, which
was the option price. Then the stock was promptly manipulated back to
$7. On the way back to $7, the outstanding short interest (of other
traders who had accompanied the decline with their selling orders) was
forced to cover.
To help along the covering by outsiders up to the $7 point a report was
circulated by lieutenants of Senator Nixon in Reno that a dividend
would be declared before the end of June, and almost simultaneously the
general manager of the mining company in Goldfield put forth a similar
tip. As the market began to recover toward the $7 point, Senator Nixon
went to San Francisco and was seen often at the sessions on the floor
of the San Francisco Stock and Exchange Board. On the day before the
bulge to $7 he was quoted in a San Francisco newspaper as saying that
Goldfield Consolidated was such a good thing he would not take $20 per
share for his stock.
When the stock hit $7 and the shorts were being squeezed the hardest,
Senator Nixon was quoted as saying in still another interview that a
dividend was not far away. This interview was carried over the
telegraph wires to all market centers by the Associated Press. At the
same time a story was printed in the New York _Times_ saying that
it was reported on the Street that J. Pierpont Morgan, acting for the
Baruch-Ryan crowd, had taken over the control of the Goldfield
Consolidated. The shorts were successfully driven to cover. Then the
price eased off again in a day from $7 to $6-1/8.
A month later Mr. Teague became editor in chief of the _Nevada State
Journal_ and severed his connection with the _Nevada Mining News_. I
succeeded Mr. Teague as editor and my name appeared at the head of
the editorial columns. At about the same time the Sullivan & Rice
enterprise was abandoned. I discovered that most of the money Mr.
Sullivan had put into the corporation had been borrowed by him from a
member of my own family with whom he had hypothecated most of his
stock in the company. A rumpus ensued which ended in the shutting up
of the $1-3/4shop.
By August Goldfield Consolidated had been manipulated back to $8.37-1/2
a share. Mr. Baruch's option could certainly prove of little value to
him unless the stock sold higher at periods than $7.50. But he now
evidently found it a hard job to hold the stock above $7.50. By
September it had receded again to $7.40. At this period it was reported
in Reno that George Wingfield, sick of his partner's bad bargain, was
beginning to assert himself and demanded that the Baruch option be
cancelled at whatever cost.
The erratic price movement of the stock was causing the loss of public
confidence. The manipulation appeared to be raw. Without any important
transpiration except the news of the Baruch option and the varying
statements put out by Senator Nixon from time to time regarding the
plans of the company, which was now awaiting the erection of a huge
mill before going on a regular producing basis, the stock had dropped
from $10 to $4.50, recovered to $7 and eased off to $6-1/8, rallied to
above $8, and was again tumbling.
The option to Mr. Baruch was conceded to be practically a flat failure
from a company standpoint, only 20,000 shares of stock having been
purchased by Mr. Baruch from the treasury of the company in nine
months. The impression prevailed that Mr. Baruch was milking the market
and held the option principally as a club to accomplish his market
designs. Moreover, nearly every broker, investor and speculator
residing in Goldfield by this time had gone broke because of the
vagaries of this stock in the market, and the losses in bad loans and
unsecured overdrafts incurred by John S. Cook & Company's bank,
controlled by Messrs. Nixon and Wingfield, was said to total nearly
$2,000,000 as a result of the almost general smash in market values.
The entire Goldfield list, with the exception of Goldfield
Consolidated, was now selling at 25 cents on the dollar compared with
boom prices of less than a year before, and it was a rather ordinary
"piker" sort of broker or speculator in Goldfield who at this time
could not boast of being in "soak" to John S. Cook & Company's bank
anywhere from $15,000 to $100,000.
On September 23 the Goldfield Consolidated directorate met at
Goldfield. After the meeting it was officially announced that the
option held by Mr. Baruch on 1,000,000 shares at $7.75 had been
canceled and that Mr. Baruch had been given sufficient of the optional
stock to liquidate the $1,000,000 obligation of the company, leaving
the company free of debt and with a cash reserve of nearly $2,000,000.
It was stated that Mr. Baruch had originally been given the option for
services in securing the loan of $1,000,000 from J. Kennedy Todd &
Company of New York for 13 months with interest at the rate of 6 per
cent., and that the price of $7.75 was an "average" one, indicating
that Mr. Baruch held an option on stock at varying figures on a scale
up from a considerably lower price than $7.75, which he might have
exercised in whole or in part.
It was also disclosed that a large block of Goldfield Consolidated
stock had been put up as collateral for the note. Because the officials
of the company declared by resolution that the "unused certificates
shall be canceled" it was generally believed that the entire 1,000,000
shares under option to Mr. Baruch had been put up as security.
The official statement of the company said that the option had been
turned back to the company "on a satisfactory basis." No figures were
given out. Dispatches from San Francisco to the _Nevada Mining News_,
which I promptly published, alleged that Mr. Baruch was given 200,000
or more shares of Goldfield Consolidated in settlement of the loan to
the corporation of $1,000,000 and for the surrender of his option on
1,000,000 shares at an average price of $7.75.
_The 200,000 shares of stock was taken out of the collateral at the
rate of $5 per share on a day when Goldfield Consolidated was selling
around $7.50, after the stock had been manipulated to a fare-ye-well
and against a market price of $10 for the stock on the day the option
was given._
No denial was ever published. My opinion, based on private
investigation and on analysis of the company's reports, is that Mr.
Baruch fared even better than as outlined above.
The giving of the option had made it dangerous for anybody except Mr.
Baruch to attempt to hold the stock above $7.75 per share after the
option had been given, and the company in addition was now mulcted for
the difference between the low price per share at which settlement was
made with Mr. Baruch and the price at which the stock could have been
sold had it been quietly disposed of on the market during the period of
nine months which had preceded the date of cancellation. As a matter of
fact, there was no necessity at all for settling the loan with stock,
the company having in its treasury more than sufficient to repay the
loan, and the money was not due. The real purpose, apparently, was to
shroud in darkness the exact amount given to Mr. Baruch to release the
company from the option and to keep Messrs. Nixon and Wingfield's
Goldfield bank, which was the depositary of the mining company, in
funds.
Instead of quieting the stockholders the surrender of the option again
thrust into the limelight the entire transaction and proved to be an
exacerbation.
The immediate effect was that Goldfield Consolidated began to slump
again, and in a few days sold down to $6.50. From this point it kept on
tobogganing during a period of weeks down to the $3.50 point--a
depreciation in market price for the capitalization of the company,
within a year of its promotion at $10 a share, of $23,400,000--before
rallying once.
ENTER, NAT. C. GOODWIN & CO.
A mining partnership between Nat. C. Goodwin, the actor, and Dan
Edwards had been formed at Reno a little before this time. Dan Edwards
was a hustling young mining man who had engaged in the business of
"turning" properties to promoters. In August, when Goldfield
Consolidated was selling around $7.50, Mr. Edwards had asked me to give
him a good market tip. I told him to sell Goldfield Consolidated short.
When it hit $6.50 around October 1st he saluted me thus, "Got to hand
it to you. I have been trying to make my new firm stick, but it don't
seem to work. I guess I don't know how to handle the situation in times
like this. How would you like to join us?"
"How much capital have you got?" I asked.
"Five thousand of Nat's money," he answered.
"Get another man with $5,000," I said, "and I'll talk to you."
A young Easterner engaged in mining, named Warren A. Miller, was
stopping at the Riverside Hotel. Within an hour Mr. Edwards had him
lined up. A week later Nat. C. Goodwin & Company was incorporated with
Nat. C. Goodwin president, Mr. Miller vice-president and general
manager, and Dan Edwards secretary. The new corporation engaged to give
me a salary for showing it how and an interest for other substantial
considerations.
Within a fortnight the corporation of Nat. C. Goodwin & Company was
making money, not as promoters, however, but as demoters. Instead of at
first promoting a mining company and earning its profits on the
constructive side of the market, it turned the tables and made money on
the destructive side--of Goldfield Consolidated.
During the first half of 1907 I had felt the country's speculative
pulse from day to day with the promotion literature of the Sullivan &
Rice corporation. Although its new mining company, the Rich Gulch
Wonder, had boasted of a very high-class directorate and the property
was conceded to have merit, the public refused to enthuse. Instead of
subscribing for large blocks, scattering purchases had been made, and
money in dribs and drabs had been grudgingly paid over. The Wonder
mining camp boom had "died abornin'." Investors seemed to have had
enough of mining-stock speculation for a while.
Prices of listed Nevada issues were crumpling like seersuckers in the
rain. By this time the awful mess that had been made of Goldfield
affairs through the mistakes of Messrs. Nixon and Wingfield had
resulted in a depreciation in market value of more than $100,000,000 in
listed Nevada issues. This in itself was sufficient to kill a world of
buying sentiment.
You have to be a rainbow-chaser by nature to be a successful promoter,
but even I, despite my chronic optimism, began to feel the influence of
what was transpiring. I made a flip-flop and turned bear on the whole
market.
On October 17th the Heinze failure occurred in New York. Five days
later the embarrassment of the Knickerbocker Trust Company was
announced. I glued my ears to the ground.
Nat. C. Goodwin & Company "shorted" the mining-stock market so far as
its limited capital would permit. On the day Mr. Heinze went overboard
the company was already short 2,000 shares of Goldfield Consolidated at
around $6. On hearing that the Knickerbocker Trust Company was in
trouble it promptly shorted 2,000 shares more at a lower figure.
On the afternoon when the news reached Reno of the Knickerbocker Trust
Company's embarrassment I received a private telegram from Chicago
stating that the paper of the State Bank & Trust Company of Goldfield,
Tonopah and Carson City had gone to protest in San Francisco. This set
my blood tingling. I knew that meant a general Nevada "bust."
Next morning Nat. C. Goodwin & Company shorted 2,000 shares more of
Goldfield Consolidated at about $5-1/8. Later in the day the failure of
the State Bank & Trust Company was announced. A run followed on the Nye
& Ormsby County Bank and its branches in Reno, Carson City, Tonopah,
Goldfield, and Manhattan, and in two hours that institution, too,
closed its doors.
Goldfield Consolidated promptly broke to $4 a share. Around this point
Nat. C. Goodwin & Company covered its short sales, at discretion.
All of the Nixon banks in Nevada experienced runs as a result of the
failure of the two Nevada banking institutions. So did the other banks.
Governor Sparks was appealed to by Nevada bank officials between two
suns to come to the rescue. Without hesitation he declared a series of
legal holidays to enable the banks of the State which were still
standing on their feet to catch their breath. These banks finally threw
open their doors, but when they did, those of Reno met depositors'
withdrawals with asset money instead of legal tender. The only bank in
Reno which had refused to take advantage of the enforced legal holidays
was the Scheeline Banking & Trust Company. And when asset money was
finally resorted to as a makeshift, M. Scheeline, the president, was
made custodian of the bonds which were put up by the associated Reno
banks to secure payment. This restored confidence.
It was believed in Nevada at the time of the failure of the mining-camp
banks, the State Bank & Trust Company and the Nye & Ormsby County, that
the Nixon institution in Goldfield would have found it hard to weather
the storm but for the fact that the Goldfield bank was believed to have
upward of $2,000,000 of the Goldfield Consolidated Mines Company's
money on deposit.
When the State Bank & Trust Company went to the wall Senator Nixon, in
an interview published in his Reno newspaper, charged the failure of
the State Bank & Trust Company to me. He alleged that the State Bank &
Trust Company lost $375,000 by the failure of the Sullivan Trust
Company ten months before, and that I had broken the bank. The
liabilities of the bank were $3,000,000, and its Sullivan Trust Company
loss was only "a drop in the bucket." The Senator didn't fool anybody,
not even himself. His effort was an ill-concealed attempt to prepossess
the public against me, and was received by Nevada people as such.
Senator Nixon indulged in some more "interview" with a view to stemming
the tide of liquidation in Goldfield Consolidated. Notwithstanding the
fact that the company had only recently resorted to the sale of
treasury stock for money-raising purposes, he asserted that a quarterly
dividend, payable January 25th, would probably be declared. Beyond a
question this statement was made for market purposes at a time when the
Senator was sweating money-blood.
The stock promptly tobogganed farther on the strength of the dividend
forecast. The Senator's interviews had now become a standing joke in
the community. Speculators and brokers had learned the wisdom of
"coppering" anything the Senator said.
THE STORY OF THE GOLDFIELD LABOR "RIOTS"
A large force of miners was discharged from the Goldfield Consolidated
properties. The action of the company in laying off its men at such a
distressful period was denounced. It was alleged that Senator Nixon's
Goldfield bank could not afford to pay out the money on deposit to the
credit of the company because it was required for bank purposes. The
money was apparently being hoarded during the money stringency to help
the bank out of a tight place. After-events appeared fully to confirm
this theory.
Right in the teeth of the panic, during the depressed and troublous
days of the latter part of November;--when current finance was deeply
affected; when Goldfield Consolidated was selling below the $4 point
and the entire Nevada share list had suffered an average depreciation
of about 85 per cent. from the "highs" reached during the Goldfield
boom of the year before; when the State of Nevada was racked from end
to end by the serious losses incurred by citizens through the failure
of the Nye & Ormsby County's and the State Bank & Trust Company's chain
of banks, totaling nearly $6,000,000, and it appeared that the credit
of the State had already been shattered almost beyond repair--a fresh
blow was administered.
Government troops were reported to be en route to Goldfield from San
Francisco "to preserve the law." It had been represented to the
President of the United States that Goldfield was in a state of
anarchy. Goldfield wasn't. As a matter of fact, the situation in
Goldfield with the miners, from the standpoint of law and order, was
never good, but it was as good then as it had been in eighteen months.
True, there had been some lawlessness, but no riot, and the sheriff of
the county had made no call whatsoever on the Governor for any aid.
During the first days of the panic Nixon and Wingfield's Goldfield
bank, John S. Cook & Company, had tendered the miners the bank's
unsecured scrip in lieu of money for the payment of wages. The miners
refused acceptance. They were willing to take time-checks of two, three
or four months, bearing the mining company's signature, but balked at
the idea of becoming creditors of the bank.
It has been stated to me by a number of Goldfield brokers who were
present in the camp at the time that the miners had even decided to
concede this point, when an outsider secured by intrigue and money
sufficient voting power at a meeting of the executive committee of the
Miners' Union to pass a resolution objecting to the bank's scrip. The
refusal to accept the bank's scrip was at once made an excuse by the
Goldfield Mine Owners' Association, which was dominated by George
Wingfield, to determine upon a lockout and simultaneously to demand
Federal intervention.
If Messrs. Nixon and Wingfield's bank needed money, as the tender of
unsecured scrip indicated all too plainly, the complete shutdown which
left with the bank as available resources approximately $2,000,000 in
the account of the Goldfield Consolidated Mines Company, was a perfect
stop-gap; and the need of the presence of troops was a fine
coincidental excuse for the shutdown. Incidentally, it would rid
Goldfield of the Miners' Union, which voted to a man against Senator
Nixon's Republican candidates for office, and would permit the
importation of foreign labor, an expedient which was afterward
successfully resorted to.
Senator Nixon brought pressure to bear at Washington. He invoked the
good offices of Uncle Sam and urged that Federal troops be sent to the
State. He was assisted by Congressman Bartlett in laying the matter
before the departments. The wires between Goldfield, Reno, Carson City
and Washington were kept hot with an interchange of views. President
Roosevelt finally informed the Senator he could not send the soldiers
unless the Governor of Nevada wired that a state of anarchy actually
existed which the State itself was powerless to put down.
Governor Sparks, honest as the day was long and unsuspecting of any
trickery or jobbery, listened to a Goldfield committee and permitted a
dispatch to be sent to Washington over his signature representing that
such conditions existed.
Thereupon Brigadier-General Funston, at the head of two thousand
troops, was ordered to Goldfield. The State being without any militia
and the representations made by Governor Sparks in his dispatches being
strong on the point that a state of anarchy actually existed in
Goldfield, the President finally succumbed.
The maneuver was as swift as it was unexpected. Nevada people at first
could not understand what it was all about. Dispatches from Goldfield
to Reno said the town was quiet. The nearest approach to an overt act
of recent occurrence that had been chronicled was the alleged theft a
few days before of a box or two of dynamite, about 300 feet of fuse and
a quantity of caps that were said to have been clandestinely removed
from the Booth mine in Goldfield. The theft, if theft there was, was
charged to the miners, but proof was lacking.
On the arrival of the troops in Goldfield the Goldfield Consolidated
announced a new wage scale, reducing the miners' wages from $5 to $4
and in some cases from $5 to $3.50. This was a new move, calculated to
rouse the ire of the wage workers and to prolong the lockout. Messrs.
Nixon and Wingfield's bank in Goldfield announced at the same time that
it would thereafter discharge all of the pay-rolls of the company in
gold. But there were no pay-rolls of any consequence then, the mines
being shut down.
General Funston on his arrival in Goldfield interviewed mine operators,
union miners and citizens generally with a view to determining the
necessity for maintaining Government troops there. He discovered that
the Administration had been buncoed. The General wired the President
his opinion. President Roosevelt quickly dispatched a commission to
Goldfield to conduct a public inquiry. This commission consisted of
Charles B. Neal, Labor Commissioner; Herbert Knox Smith, Commissioner
of Corporations, and Lawrence O. Murray, Assistant Secretary of the
Department of Commerce and Labor. They heard testimony day and night
for a week.
They reported to President Roosevelt that there was no occasion for the
presence of troops in Goldfield and that the statements telegraphed to
President Roosevelt by Governor Sparks, indicating the existence of a
state of anarchy, were without justification. The report was given to
the Associated Press and received wide publicity. The President also
issued a broadside backing up the findings, which was telegraphed far
and wide.
Eastern editorial writers poured out torrents of abuse on Governor
Sparks. Senator Nixon went unscathed.
THE DEATH OF GOVERNOR SPARKS
Feeling under a weight of obligation to Governor Sparks, who had
headed nearly all of the Sullivan Trust Company promotions as
president, I tried editorially in the _Nevada Mining News_ to justify
the Governor's action. But it was a wee voice drowned in an ocean of
adverse opinion and was entirely without echo. It didn't even soothe
the Governor.
The Governor, honest, simple old man, broken in purse, in health and in
spirit, grieved over the President's denouncement, took to bed, and
died of a broken heart.
At his imposing funeral pageant in Reno, which was attended by
thousands of mourners, who had come from all parts of the State to pay
homage to the grand old man and who followed the hearse to the
cemetery, Senator Nixon and his partner, George Wingfield, were
conspicuous by their absence.
Even at the moment when the grave closed over his remains the troops
were leaving Goldfield.
"It's the 'Dead March,'" said one of the bereaved.
The bringing of Federal troops to Goldfield accomplished its purpose.
The Miners' Union was destroyed and sufficient time was gained to
enable the financial atmosphere to clarify. By the time the troops
departed, Goldfield Consolidated had rallied to $5 per share. The panic
was over. Money was comparatively easy again.
I ask the reader's indulgence for having devoted so much space to the
facts bearing on the appearance in Nevada of United States troops at a
time when there was no valid occasion for their presence. I feel that
it is an important chapter of my experiences and is fraught with
interest to the general reader, because it illustrates how easy it is
to direct the powerful machinery of our great Government so as to carry
out the machinations of evil-minded men.
You might think, after this demonstration of the lengths to which
Senator Nixon went to accomplish a set purpose, and after witnessing
the success which attended his efforts, that a poverty-stricken
individual like myself, who had had the hardihood to conduct a
newspaper campaign in the Senator's own home town against his financial
and political activities, would judge it the better part of valor to
emigrate from the State. Well, I didn't. I stayed right on the spot.
That I would hear from Washington later I had no doubt, but I stuck,
just the same, until my business interests called me away.
I wasn't wrong in my deductions. Within a few months thereafter there
came a visit to my office in Reno by a postal inspector, who was
apparently "sicked on to the job," and but for the quick intercession
by telegraph of United States Senator Francis B. Newlands of Nevada
with the Postmaster General at Washington, I am certain that potent
influences even at that early day would successfully have "started
something." But of this more at another time, I am ahead of my story.