HEYDAY
i
His activities were of increasing complexity. A Stock Exchange ticker
was installed, for he meant to keep his eye on the stock market;
then an automatic printing device on which foreign, domestic and
Wall Street news bulletins were flashed by telegraph; then a private
switchboard and a number of direct telephones,--one with the house of
Mordecai & Co., one with the operating department at Chicago, one with
the office of Jonas Gates, several with Stock Exchange brokers and
others designated by code letters the terminals of which were his own
secret. He worked by no schedule, hated to make fixed appointments,
and took people as they came. They waited in the reception room,
which of necessity became his ante-chamber. In a little while it was
crowded with those who asked for Galt, Galt, Galt. Not one in twenty
who entered asked for Valentine, the president. A mixed procession it
was,--engineers, equipment makers, brokers, speculators, inventors,
contractors and persons summoned suddenly out of the sky whose business
one never knew. Never wasting it himself, never permitting anyone else
to waste it, he had time for everything. He received impressions whole
and instantaneously. With people he was abrupt, often rude. He wanted
the point first. If a man with whom he meant to do business insisted
upon talking beside the point he would say: “Go outside to make your
speech and then come back.” He never read a newspaper. He looked at it,
sniffed, crumpled it up and cast it from him, all with one gesture.
Four or five times a day he ran a yard or two of ticker tape through
his fingers and glanced in passing at the news printing machine.
Magazines and books were non-existent matter. Yet within the area of
his own purposes no fact, no implication of fact, was ever lost.
Meanwhile Great Midwestern stock was slowly rising. One effect of this
was to relieve the tension in the Galt household. Gram’ma Galt’s daily
question was no longer dreaded.
Having asked it in the usual way at the end of dinner one evening, and
Galt having told her the price, she electrified us all by addressing
some remarks to me.
“You are with my son a good deal of the time?”
“All day,” I said.
I was looking at her. She frowned a little before speaking, wetted her
lips with her tongue, and spoke precisely, in the level, slightly deaf
and utterly detached way of old people.
“Do you see that he gets a hot lunch every day?”
“I have never attended to that,” I said.
“Does he, though?” she asked.
“We’ve been very careless about it,” I said. “Sometimes when he’s busy
he doesn’t get any.”
“Please see that he gets a hot lunch every day,” she said. “Cold
victuals are not good for him. And tea if he will drink it.”
I promised. An embarrassed silence followed. She was not quite through.
“Have you any Great Midwestern stock?” she asked.
“I have a small amount.”
“You must believe in it,” she said, adding after a pause: “We do.”
Then she was through.
Had she alone in that household always believed in Great Midwestern
stock, which was to believe in him? Or had she only of a sudden become
hopeful? Was it perhaps a flash of premonition, some slight exercise of
the power possessed by her son? Long afterward I tried to find out. She
shook her head and seemed not to understand what I was talking about.
She had forgotten the incident.
The next day I ordered a hot lunch to be sent in and put upon Galt’s
desk. He said, “Huh!” But he was not displeased, and ate it. And this
became thereafter a fixed habit.
ii
The new equipment had only just begun to move on the new rails when he
went before the board with a proposal to raise one hundred millions
for more equipment, more rails, elimination of curves and reduction of
grades.
“My God, man!” exclaimed Horace Potter. “Do you want to nickel plate
this road?”
“It will nickel plate itself if we make it flat and straight,” said
Galt.
He was in a stronger position this time. His predictions were coming
true. The flood tide was beginning. Everybody saw the signs. Great
Midwestern’s earnings were rising faster than those of any competitor,
and at the same time its costs were falling because of the character
of the new equipment. Therefore profits were increasing. On the other
hand, Valentine now was openly hostile, and Jonas Gates whom Galt could
have relied upon, was ill. There were nine at the board table.
He argued his case skillfully. For the first time he produced his
profile map of the road, showing where the bad grades were and how on
account of them freight was hauled at a loss over two divisions of the
right of way. To flatten here a certain grade,--selected for purposes
of illustration,--would cost five millions of dollars. The cost of
moving freight over that division would be thereby reduced one-tenth
of a cent per ton per mile. This insignificant sum multiplied by the
number of tons moving would mean a saving of a million dollars a year.
That was twenty per cent. on the cost of reducing the grade. It was
certain.
“Are the contracts let?” asked Valentine, ironically.
“They are ready to be let,” said Galt. “That’s how I know for sure what
the cost will be.”
“Let’s vote,” said Potter, suddenly. “He’ll either make or break us. I
vote aye.”
The ayes carried it. There were no audible noes. Valentine did not vote.
iii
At this time Galt was laying the foundation for an undisclosed
structure. It had to be deep and enduring, for the strain would be
tremendous. He poured money into the Great Midwestern with a raging
passion. As the earnings increased he plowed them in. With the
assistance of the pessimistic treasurer he disguised the returns.
Improvements were charged to expenses as if they were repairs. New
property was added in the guise of renewing old. This he did for fear
the stockholders, if they knew the truth, would begin too soon to
clamor for dividends. He spent money only for essential things, that
is, in ways that were productive, and neglected everything else, until
we had at last the finest transportation machine in the country and the
shabbiest general offices. The consequences of this policy, when they
began to be realized, were incredible.
In the autumn of 1896 a strange event came suddenly to pass. People
were delivered from the Soft Money Plague, not by their own efforts,
as they believed, but because maladies of the mind are like those of
the body. If they are not fatal you are bound to get well. Doctors will
take the credit. The Republican party won the election that year on a
gold platform, and this is treated historically as a sacred political
victory for yellow money; the white money people were hopelessly
overturned. But it was wholly a psychic phenomenon still. Why all at
once did a majority of people vote in a certain way? To make a change
in the laws, you say. Yes, but there the mystery deepens. Immediately
after this vote was cast the shape of events began to change with no
change whatever in the laws. The law enthroning gold was not enacted
until four years later, in 1900, and this was a mere formality, a
certificate of cure after the fact. By that time the madness had
entirely passed, for natural reasons.
iv
After 1896 the flood tide began to swell and roar. Galt was astride of
it,--a colossus emerging from the mist.
The Great Midwestern was finished. He had rebuilt it from end to end.
And now for that campaign of expansion which was adumbrated on the map
I had studied in his room at home. For these operations he required
the active assistance of Mordecai, Gates and Potter. He persuaded them
privately and bent them to his views.
I began to notice that he went more frequently to the stock ticker.
His ear was attuned to it delicately. A sudden change in the rhythm of
its g-n-i-r-r-r-i-n-g would cause him to leave his desk instantly and
go to look at the tape. He was continually wanted on those telephones
with the unknown terminals. Speaking into them he would say, “Yes,” ...
or ... “No,” ... or ... “How many?” ... or ... “Ten more at once.”
One afternoon he turned from the ticker and did a grotesque pirouette
in the middle of the floor.
“Pig in the sack, Coxey. Pig in the sack. Not a squeal out of him.”
“What pig is that?” I asked.
He looked at me shrewdly and said no more.
Under his direction they had been buying control of the Orient &
Pacific Railroad in the open market, so skillfully that no one even
suspected it. He had not been a speculator all his life for nothing.
What set him off at that moment was the sight of the last few thousand
shares passing on the tape.
Valentine was in Europe for his annual vacation. Galt called a special
meeting of the directors. He talked for an hour on the importance
of controlling railroads that could originate traffic. The Great
Midwestern did not originate its own traffic. The Orient & Pacific was
a far western road with many branches in a rich freight producing area.
The Great Midwestern had been getting only one third of its east bound
freight, and it was a very profitable kind of freight, moving in solid
trains of iced cars at high rates; the other two thirds had been going
to competitive lines.
It would be worth nearly fifteen million dollars a year for the Great
Midwestern to own the Orient & Pacific and get all of its business. A
syndicate had just acquired a controlling interest in Orient & Pacific
stock and he, Galt, had got an option on it at an average price of
forty dollars a share. The Great Midwestern could buy it at that price.
What was the pleasure of the board?
The substance was true; the spirit was rhetorical. The formal pleasure
of the board was already prepared. Four members, listening solemnly as
to a new thing, had assisted in the purchase. Galt, Potter, Gates and
Mordecai were the syndicate. Potter as usual called for the vote, and
voted aye. The rest followed.
A brief statement was issued to the Wall Street news bureaus. It
produced a strange sensation. An operation of great magnitude had been
carried through so adroitly that no one suspected what was taking
place, not even the Orient & Pacific Railroad Company’s own bankers.
They were mortified unspeakably. More than that, they were startled,
and so were all the defenders of wealth and prestige in this field of
combat, for they perceived that a master foeman had cast his gage among
them. And they scarcely knew his name.
Twenty minutes after our formal statement had been delivered to the
Wall Street news bureaus the waiting room was full of newspaper
reporters demanding to see the chairman.
“But what do they want?” asked Galt, angry and petulant. “We’ve made
all the statement that’s necessary.”
“They say they must talk to somebody, since it is a matter of public
interest. The bankers have referred them here. There’s nobody but you
to satisfy them.”
“Tell them there’s nothing more to be said.”
“I’ve told them that. They want to ask you some questions.”
It was his first experience and he dreaded it.
“We’ll have a look at them,” he said. “Let them in.”
As they poured in he scanned their faces. Picking out one, a keen,
bald, pugnacious trifle, he asked: “Who are you?”
“I’m from the Evening Post.”
He put the same question to each of the others, and when they were all
identified he turned to the first one again.
“Well, Postey, you look so wise, you do the talking. What do you want
to know?”
Postey stepped out on the mat and went at him hard. Why had control of
the Orient & Pacific been bought? What did it cost? How would it be
paid for? Would the road be absorbed by the Great Midwestern or managed
independently? Had the new management been appointed? What were Galt’s
plans for the future?
To the first question he responded in general terms. To the second he
said: “Is that anybody’s business?”
“It’s the public’s business,” said Postey.
“Oh,” said Galt. “Well, I can’t tell you now. It will appear in the
annual report.”
After that he answered each question respectfully, but really told
very little, and appeared to enjoy the business so long as Postey did
the talking. When he was through the Journal reporter said: “Tell us
something about yourself, Mr. Galt. You are spoken of as one of the
brilliant new leaders in finance.”
“That’s all,” said Galt, repressing an expletive and turning his back.
When they were gone he said to me: “Don’t ever let that Journal man in
again. Postey, though, he’s all right.”
All accounts of the interview, so far as that went, were substantially
correct. In some papers there was a good deal of silly speculation
about Galt. The Journal reporter went further with it than anyone else,
described his person and manners vividly, and went out of his way three
times to mention in a spirit of innuendo that there was a stock ticker
in Galt’s private office, with sinister reference to the fact that
before he became chairman of the Great Midwestern he had been a Stock
Exchange speculator.
I called Galt’s attention to this.
“Yes,” he said. “We’re out in the open now where they can shoot at us.”
v
The Orient & Pacific deal brought on the inevitable crisis. Valentine
was in Paris. An American correspondent took the news to him at his
hotel and asked for comment upon it. He blurted his astonishment. He
knew nothing about it, he said, and believed it was untrue. This was
unexpected news. The correspondent cabled it to his New York paper
together with the statement that Valentine would cut his vacation and
return immediately. Wall Street scented a row. It was rumored that
Valentine was coming home to depose Galt; also that the purchase of the
Orient & Pacific would be stopped by injunction proceedings. Comment
unfriendly to Galt began to appear in the financial columns of the
newspapers. Great Midwestern stock now was very active in the market.
This gave the financial editors their daily text. They spoke of its
being manipulated, presumably by insiders, and it filled them with
foreboding to remember that the man now apparently in command of this
important property was formerly a Stock Exchange speculator, with no
railroad experience whatever.
We easily guessed what all this meant. Galt had no friends among the
financial editors. He did not know one of them by sight or name. But
Valentine knew them well, and so did those bankers who had lost control
of the Orient & Pacific. The seed of prejudice is easily sown. There is
a natural, herd-like predisposition to think ill of a newcomer. That
makes the soil receptive.
Galt was serene until one day suddenly Jonas Gates died of old age and
sin, and then I noticed symptoms of uneasiness. I wondered if he was
worried about those papers I had witnessed in his private office on the
day the Great Midwestern failed. The executors of course would find
them.
On reaching New York Valentine’s first act was to call a meeting of the
board of directors. He was blind with humiliation. First he offered
a resolution so defining the duties and limiting the powers of the
chairman of the board as to make that official subordinate to the
president. Then he spoke.
Owing to the sinister aspect of the situation and to the importance of
the interests involved he felt himself justified in revealing matters
of an extremely confidential character. It had come to his knowledge
that there existed between the chairman and the late Jonas Gates a
formal agreement by the terms of which Gates pledged himself to support
Galt for a place on the board of directors and Galt on his part, _in
consideration of a large sum of money_, undertook first to gain control
of the company’s affairs and overthrow the authority of its president.
Would the chairman deny this?
But wait. There was more. In the same way it had come to his knowledge
that two other agreements existed as of the same date. One provided
that when Galt had gained control of the company’s policies he would
cause it to buy the Orient & Pacific railroad in which Gates was then a
large stockholder. The third was a stipulation that a certain part of
Gates’ profit on the sale of his Orient & Pacific stock to the Great
Midwestern should apply on Galt’s debt to him. Would the chairman deny
the existence of these agreements?
Still not waiting for a reply, not expecting one in fact, he offered
a second resolution calling for the resignation of Henry M. Galt as
chairman of the board; his place to be filled at the pleasure of the
directors.
Galt all this time sat with his back to Valentine gazing out the window
with a bored expression. His onset was dramatic and unexpected.
With a gesture to circumstances he rose, thrust his hands in his
pockets, and began walking slowly to and fro behind Valentine.
“I hate to do it,” he said. “I like Old Dog Tray, here. But he won’t
stay off the track. If he wants to get run over I can’t help it....
Those agreements he speaks of,--without saying how he got hold of
them,--they are true. I had a lot of G. M. stock when the company went
busted. The stock records will show it. I was in a tight place and went
to Gates for money to hold on with. He laughed at me. Didn’t believe
the stock was worth a dollar, he said. I spent hours with him telling
him what I knew about the property, showing him its possibilities. I
had made a study of it. I spoke of the Orient & Pacific as a road the
G. M. would have to control. ‘That would suit me,’ he said. ‘I’ve just
had to take over a large block of that stock for a bad debt.’ I said,
‘All the better. With your stock accounted for it will be easier to buy
the rest.’ And so it was. But that’s ahead of the story. Gates said one
trouble with the G. M. was Valentine. I knew that, too. The end of it
was that I persuaded him. He took everything I had and loaned me the
money. The agreement was that the stuff I pledged with him for the loan
could be redeemed _only_ provided my plans for the development of the
G. M. were realized and certain results appeared. Otherwise he was to
keep it. It was the devil’s own bargain. I was in a hole, remember,
... had the bear in my arms and couldn’t let go, ... and you all knew
Gates.”
Valentine interrupted. He spoke without looking around.
“One of your plans for the development of the Great Midwestern was the
elimination of the president.”
“Exactly,” said Galt. “The president at that time was not president,
but receiver. He was receiver for a property he had managed into
bankruptcy.... Well, that part of the agreement has been kept. There
ain’t any doubt about who’s running the G. M. I’m running it, subject
to the approval of the directors. Five minutes after I was elected
chairman of this board I took the traffic manager’s resignation in
that room out there under threat of having him indicted for theft.
He was the president’s friend. I did this without the president’s
sanction or knowledge. The place was rotten with graft. We were paying
extortionate prices for equipment and materials because the equipment
makers and the material men were our friends. Our pockets were wide
open. Listen to this!”
From typewritten sheets he read a wrecking indictment of the old
Valentine management, setting out how money had been lost and wasted
and frittered away, how the company had been overcharged, underpaid and
systematically mulcted. He gave exact figures, names, dates and ledger
references.
“She’s all right now,” he said. “Clean as a grain of wheat. I’m telling
you what was. I don’t intimate that the president took part in plucking
the old goose. I don’t say that. He was too busy making public speeches
on the miseries of railroads to know what was going on.”
Valentine was not crushed. He showed no sense of guilt. No one believed
him guilty in fact. What he represented, tragically and with great
dignity, was the crime of obsolence. A stronger man was putting him
aside in a new time. He started to speak, but Potter spoke instead.
“I move to strike all this stuff off the record,” he said, “and let
matters rest as they are.” He pushed back his chair. Everyone but
Valentine arose. There was no vote. Officially nothing had been
transacted. The president was left sitting there alone, with his
resolutions in front of him.
All that Galt said was true. It was probably not the whole truth. His
transaction with Gates seemed on the face of it too strange to be so
briefly and plausibly explained. One fact at least he left out, which
was that Gates hated Valentine with a fixation peculiar to cryptic old
age. Nobody knew quite why. He was possibly more interested in revenge
upon Valentine than in the future of the Great Midwestern. It may be
surmised also that he had some intuition of Galt’s latent power, just
as Mordecai had, and placed a bet on him at long, safe odds. It was
Galt who took the risk. And as for the Orient & Pacific deal, that
did not require to be defended on its merits, for there was already a
profit in it for the company.
After this Valentine should have resigned. Instead he carried the
fight outside, over all persuasion. It became a nasty row. He publicly
attacked the company’s purchase of the Orient & Pacific, denounced
Galt personally, and solicited the stockholders for proxies to be
voted at the annual meeting for directors who would support him. His
acquaintance with the financial editors, several of whom were his warm
friends, gave him an apparent advantage. All the newspapers were on his
side.
But nobody then knew how Galt loved a fight. He poured his essence
into it and attained to a kind of lustful ecstacy. His methods were
both direct and devious. To win by a safe margin did not satisfy him.
It must be a smashing defeat for his opponent. He, too, appealed to
the stockholders. Valentine in one way had played into his hands. His
complaint was that Galt had seized the management. Well, if that were
true, nobody but Galt could claim credit for the results, and they were
beginning to be marvelous. Great Midwestern’s earnings were improving
so fast that Galt’s enemies must resort to malicious innuendo. They
said he was a wizard with figures, which was true enough, and that
possibly the earnings were fictitious, which was not the case at all.
Long before the day of the annual meeting Galt had a large majority of
the stockholders with him. Nevertheless, he sent me abroad to solicit
the proxies of foreign stockholders. They were easy to get. I was
surprised to find that the foreigners, who are extremely shrewd in
these matters, with an instinct for men who have the money making gift,
had already made up their minds about Galt. They had been watching his
work and they were buying Great Midwestern stock on account of it.
When it came to the meeting Valentine had not enough support to elect
one director. His humiliation was complete. Then he resigned and Galt
was elected in his place, to be both chairman and president.
He was not exultant. For an hour he walked about the office with a
brooding, absent air. This was his invariable mood of projection. He
was not thinking at all of what had happened. He put on his hat and
stood for a minute in the doorway. Looking back he said, “Hold tight,
Coxey,” and slammed the door behind him.