“The arms are fair when borne with just intent.”
It was blue Monday in Wall Street. It was the beginning of the second
week of the most disastrous panic ever known in the history of finance.
Capital fled, affrighted, to its strong boxes, and refused to come forth
at any rate of interest, or upon any security. Values had been going
downward without reaction for six days. The yellings and shoutings in
the stock board were such as might have been indulged in by escapees
from an asylum for violent lunatics. Fortune after fortune had been
swept into the vortex in a vain attempt to stay the current. Stocks
which had ranked for years as among the most reliable of investments,
descended the grade as rapidly as the “fancies.” Northwestern had fallen
from $112 to $60; Western Union from $80 to $45, and Lackawana from $138
to $70, and even at these prices more stock was apparently offered than
found purchasers.
The conspirators were, apparently, successful. Three men whose combined
wealth already aggregated $300,000,000, had produced this storm of
disaster merely to increase their millions, regardless of ruined homes.
They sold their own stock as they had plotted, seventy-five millions of
it at full rates, and seventy-five millions at an average reduction of
fifteen per cent, early the preceding week, and before Morning had
perfected his arrangements, or appeared upon the scene. Their subsequent
short sales were made at lower prices than they had estimated, for
others came in competition with them, as vendors. They locked up both
the currency received from their sales, and the currency they had
borrowed, so effectually that merchants, brokers, and others, who were
unable to obtain the usual banking accommodations, were compelled to
throw upon the market their holdings of bank, railroad, and telegraph
stock.
Wolf, who personally led the bear raid in the board, followed prices
down with fresh lines of shorts, to an amount beyond that originally
intended, and at the close of the previous week, the short sales of the
conspirators amounted to $400,000,000. In one particular they had
miscalculated, for, after stocks had fallen twenty per cent, the brokers
who purchased them refused to loan them again for resale on the
customary margin, but believing, or affecting to believe, that prices
would advance with greater celerity than they had receded, they demanded
an amount of money as margin equal to the difference between the
existing market price of the stock loaned and the market price that
ruled before the break.
This demand was made under the direction of Morning, who did not appear
in public, but, from his private office on Broadway, sent orders to a
dozen different brokers whose services had not been engaged by the
Gray-Claybank-Wolf syndicate. After the first break, Morning was the
purchaser of nine-tenths of the stock sold, and after each purchase the
money paid for the stock, with the margin added, was locked up in the
vaults of one of his brokers, or in banks not under the control of the
conspirators. In this way the syndicate had been compelled to add
$60,000,000 to the $140,000,000 they had received from the sale of their
own stock.
On the morning of the second Monday of November, 1895, the “Gold King”
was the owner, by purchase, of stocks which had cost him $400,000,000,
but which were worth, at the prices which prevailed before the raid,
$600,000,000.
These stocks had been loaned to the conspirators by Morning, repurchased
by him, loaned and repurchased again, until he now held in his control
two hundred millions of money, put up by the syndicate as margin, or
security, for the delivery to him of stocks which needed only to be
restored to their former value to cause the conspirators to lose
$200,000,000, and Morning to gain that sum. If, however, prices could be
kept at panic figures until the conspirators could turn buyers, and
cover their shorts, they would gain $200,000,000, which would be filched
from whomsoever had been compelled to sell.
There were $400,000,000 at stake on the game. The bear syndicate thought
they were playing with loaded dice, and so they were, but the load was
against them, instead of being in their favor.
On Sunday night a private conference was held at Mr. Claybank’s
residence, on Fifth Avenue.
“To-morrow,” said Gray, “let us stop selling and begin buying, and cover
as rapidly as possible. There are some features of the situation which
fill me with uneasiness.”
“Ont so I thinks, Misder Gray,” said Wolf. “I don’t gomprehent where the
money comes from on Fritay and Saturtay with which our sales were met.
As I figure it, we hat every tollar locked up on Thurstay that was
anywhere available, but so much as a huntret, or, maby, a huntret and
fifty millions of new money came into the street on yesterday and
Fritay.”
“It probably came from Chicago,” said Claybank.
“No,” replied Wolf. “Chicago sent only fifty millions, ont it vas all
here by Wednesday. It buzzles me, ont I ton’t like it, ont I believe it
is full time to commence closing the deal.”
It was, accordingly, agreed to close it, and on Monday morning these
three worthies appeared in their seats in the Stock Exchange, for they
were all members of that body, although they seldom or never
participated in its proceedings, preferring to transact their business
through other brokers.
Morning was also a member of the Stock Exchange, having purchased a seat
a year previously, but he did not often appear there, and had never
bought or sold a share of stock himself in open board. Even amid the
excitement of the panic, his presence gave interest to the occasion, for
his sobriquet of the “Gold King” attached legitimately to his ownership
of a mine that was yielding $4,000,000 per month, with the probability
of making its owner in a few years the greatest billionaire in the
world.
There were probably few among the active members of the Stock Exchange
who did not, at this time, know nearly as much about the causes of the
panic as even the three men who produced it, and among all the brokers,
except those in the employment of the syndicate, only indignation was
expressed at the operations of Wolf, Claybank, and Gray. The New York
stockbroker is neither a Shylock nor a miser. He is usually a genial,
generous sort of fellow, who prefers a bull market to a bear raid. He
likes to make money himself and have everybody else make it. A boom is
his delight, and a panic his abhorrence. If a majority of the board of
brokers could have had their way, they would have hung the members of
the syndicate to the gallery railings, and the question of reaching them
in some lawful way, and relieving the board from the effects of their
conspiracy, had been informally discussed.
But nothing was attempted, because nothing seemed really practicable. It
was well known that the existing condition of things had been produced
by locking up the currency. So long as it remained locked up, prices
must remain at whatever figures the conspirators might choose to place
them. Only the power that withdrew the money from circulation, could
restore it to the channels of commerce. There was absolutely nothing for
those not already ruined to do except to hide in the jungle until the
three tigers should have fully gorged themselves. When Claybank, Gray,
and Wolf should graciously permit the money to be unlocked, then stocks
would advance to their real value, business would resume its proper
channels, and the panic would be over—and not until then.
In the Exchange, stocks were called alphabetically, and the first upon
the list of railroad securities was the Atchison, Topeka, and Santa Fe.
This was not a dividend-paying or favorite investment stock, and,
probably, three-fourths of it had been held in the street for years, in
speculative and marginal holdings. Morning had special reasons for
securing control of this road in addition to his general purpose of
thwarting the conspirators. Prior to the panic, Atchison, Topeka, and
Santa Fe had vibrated for months between $27 and $33, and on the
Saturday previous to the Monday which saw the beginning of the bear
raid, it had closed at $30. Under the operations of the conspirators, it
had been hammered down to $15, at which figure it closed on the previous
Saturday.
One of the syndicate brokers who sat by Wolf, opened the ball by
offering two hundred shares of Atchison at $15.
“Taken,” cried Morning, from his seat.
“Five hundred Atchison at $15½,” said the broker.
“Taken,” replied Morning.
A shade of uneasiness covered the features of the broker, but, in
response to a gesture from Wolf, he called again:—
“One thousand Atchison offered at $16.”
“Taken,” said Morning.
The broker dropped into his seat and mopped his face with his
handkerchief.
“Any further offers of Atchison for sale?” cried the caller.
And there was no reply.
“Two hundred Atchison, Brown to Morning, at $15; five hundred Atchison,
Brown to Morning, at $15½; one thousand Atchison, Brown to Morning, at
$16. Are there further bids for Atchison?” said the caller.
Wolf arose and cried, “Fifteen dollars is offered for one thousand
Atchison.”
There was no higher offer, but the caller did not proceed to cry the
next stock on the list. Somehow everybody seemed to feel that a crisis
had been reached; it was in the air, and, amidst a hushed and expectant
silence unprecedented in the history of the New York Stock and Exchange
Board, the voice of David Morning rang out like a trumpet.
“I will give,” said he, “$30 per share for the whole or any portion of
the capital stock of the Atchison, Topeka, and Santa Fe Railroad
Company.”
Then pandemonium reigned. The quick wit of the stockbrokers comprehended
the situation in an instant. It was all as clear to them as if it had
been written and printed. They knew that Claybank, Wolf, and Gray had
joined forces, locked up the currency, brought about a panic, broken
down the market, and ruined half the street. They knew that the country
was prosperous, the mines prolific, and the crops good. They knew that
the depression in prices was wholly artificial, and that it must, sooner
or later, be followed by a reaction and restoration of values, and they
had so advised their customers, but they supposed that the period of
such reaction was wholly within the control of Gray, Claybank, and Wolf.
They had no reason to expect that relief would come from any other
source, and the appearance and action of Morning burst upon them like a
revelation. Here was a man who was a new-comer to fortune and to
finance, a man who had devoted the immense revenues of his mine to
beneficent rather than business purposes, and who was above the
necessity or the temptation of increasing his wealth by speculation. His
presence in the Board, and his bid of $30 a share for Atchison,
demonstrated that he knew of the Claybank-Gray-Wolf conspiracy, and that
he proposed to baffle it. He must have measured the forces of the
members of the syndicate and be advised as to the amount of money
necessary to meet them. Possibly he had found a way to unlock the
federal treasury, or had from some source obtained the necessary
millions. Certainly he had obtained them or he would never have thus
challenged the magnates of Wall Street to combat. Clearly, the panic was
at an end, the man from Arizona was about to lead them out of the
wilderness.
And they shouted, and roared, and cried, and hugged each other, and
mashed each others’ hats, and marched up and down and around the floor,
and joined hands and danced around Morning, and disregarded all calls to
order, and were finally quieted only when Morning, escorted by the
President of the Stock Exchange, ascended the stand.
The President, as soon as silence was secured, said:—
“Gentlemen, it seems to be the general wish that the regular call shall
be temporarily suspended, and that we shall hear from Mr. David
Morning.”
That gentleman, after the roar of greeting had subsided, said:—
“GENTLEMEN: I think you will agree with me in believing that the prices
of securities listed on this exchange have, during the past week, ruled
altogether too low. I propose to put an end to this condition of things,
which ought never to have been brought about, and I have authorized my
brokers here to offer, during to-day and to-morrow, and for the rest of
this week, to purchase, to the extent of $700,000,000, any and all
railroad stocks listed on this Exchange, at the prices which ruled at
the close of the board on Saturday week, before the panic began.”
A great cheer went up from the throats of the multitude, and, after it
subsided, Isaiah Wolf, livid with rage and excitement, arose and
exclaimed:—
“Does this lunatic then expect to make fools of us all? Is it to be
beliefed dot this crazy man has got seven huntret millions of tollars in
cash to buy stocks mit? His golt mine has turned his prain. It vos
better dot we don’t all pe too fresh apout this pizness.”
Morning quietly continued:—
“Anticipating that my purchases of stock might possibly be large to-day
and during the week, I have made arrangements to dispense with the
customary methods, and so will avoid the usual delays in receiving and
paying for stock. I have quadrupled my usual force of clerks, and my
offices on Broadway will be open every day this week from nine o’clock
in the morning until nine o’clock at night. No checks, certified or
otherwise, will be issued by me, but the stocks bought by my brokers
will be paid for on delivery at my offices at any time during the hours
named, and paid for in treasury and national bank notes.”
“Where,” roared Wolf, “did you get such a sum of money as seven huntret
millions of tollars? You are either a liar, a lunatic, or a
counterfeiter.”
“Two hundred millions of dollars of the money which I hold,” replied
Morning, “was deposited by you and your colleagues in the conspiracy, as
security for the return of stocks which I bought of you, and then loaned
to you to sell to me again and again. Under the rules of the stock board
these $200,000,000 will be forfeited to me unless you restore the
borrowed stocks on the usual notice. The notices will be served on you
to-day, and when you begin to buy in to cover your shorts, you will be
compelled to pay full value. I think I can count upon your $200,000,000
to aid in paying for to-day’s purchases, Mr. Wolf.” And, amid continued
cheers and laughter, Morning descended from the caller’s stand, and
started for his seat.
Claybank and Gray had left the hall, but Wolf remained, and as Morning
passed along the aisle, the Jew, with face white and twitching, and with
foam on his mustache, stepped out and confronted him.
“You have made a beggar of me,” said he with a curse, “but I will have
your heart’s blood for this,” and he reached for Morning’s throat.
But the man from Arizona stepped backward and then forward, and at the
same moment his right arm went swiftly forth from his shoulder.
“Smack! smack! smack!” and the nose of Wolf was spread over his face,
and the crazed man was hustled and hurried by the crowd, and greeted
with oaths and blows as he went, until, with torn clothing and battered
face, he was literally kicked into the street.