J. Pierpont Morgan, known as the “Railroad Reorganizer,” and who has won

a place in the front rank among American financiers, is a son of the

well-known Junius S. Morgan, the head of the firm of J. S. Morgan & Co.,

of London, and the successor of George Peabody, the great philanthropist

in the banking business there. George Peabody, some years before his

death, visited this country, and, desiring a partner in his great

banking house, made inquiry in Boston for a suitable person. Junius S.

Morgan was recommended as a young man of exceptional business talents

and he was selected for the responsible post, the firm being known as

George Peabody & Co. On the death of the celebrated head of the firm,

the name was changed to J. S. Morgan & Co. The success of the father has

been repeated in the signally successful career of the son. During the

palmy days of the firm of Duncan, Sherman & Co., once renowned among the

financial strongholds of the country, J. Pierpont Morgan was one of the

clerks. It was there he graduated as a practical student of financial

achievements; it was there he won his spurs for the monetary campaigns

that awaited him. Leaving the house that was then a synonym for

invincible solidity, Mr. Morgan established the firm of Dabney, Morgan &

Co. Mr. Dabney was formerly one of the firm of Duncan, Sherman & Co.

After a few years the firm in which Mr. Morgan had thus first engaged in

business on his own account was dissolved. But the check, if it may so

be termed, was only momentary, and colossal feats of financiering were

to deck his career with triumphs. He formed a connection with the

wealthy Drexels, of Philadelphia, and a New York branch of their banking

house was established, under the name of Drexel, Morgan & Co., which has

for some years been largely engaged in the reorganization of crippled

railroads like the West Shore, Reading and many others. And they have

been very successful. They have been financial physicians, healing sick

corporate bodies; monetary surgeons, amputating needless expenditures

and reckless methods; or, in perhaps more happy figure, skilful pruners

of the vine, that the ultimate vintage might be more abundant.

[Illustration:

_Yrs Sincerely

H. Victor Newcombe_

]

Mr. Morgan is endowed with very positive traits of character. He has the

driving powers of a locomotive. He cares nothing for show; he is a plain

man of action. He strikes hard blows; he is naturally aggressive. In

speech he is candid to the verge of bluntness; in action he is short,

sharp and decisive. Like a true soldier, he is a man of acts rather than

words. Rugged as a Spartan in his nature, hating circumlocution, bombast

and palaver, going straight to the mark, yet with due caution and

prudence, he exhibits many of the best traits of the practical

financier.

I have asked Mr. Morgan for his picture for publication in this book,

but with natural personal modesty, he has recommended that his handsome

partner, Anthony Drexel, of Philadelphia, be selected in his place, and

with a view to encouragement in Wall Street of blushing modesty—that

century flower of the financial conservatory—I have complied with his

request.

THOMAS L. JAMES.

President of the Lincoln National Bank, has had a career in New York

brilliant in the service of the public, and marked in the practical

skill with which confidences and enterprises have been directed by him.

His training has contributed largely to his success as a financier. He

came from Utica in 1861 and entered the Custom House as Deputy, and

finally attained the position of Postmaster-General after a long and

successful term as Postmaster of the City of New York. Mr. James

directed the affairs of the Lincoln Bank so successfully that what

promised to be a small up-town bank has developed into a National bank

of considerable importance. He is one of the men of the times, one who

feels the tide of local affairs, a man of the people who acts from

wholly conscientious motives, and whose ambition has never exceeded his

sense of duty.

[Illustration:

_Moses Taylor_

]

------------------------------------------------------------------------

CHAPTER LX.

JAMES B. AND JOHN H. CLEWS.

The subjects of this sketch, whose portraits adorn these pages, are both

members of my firm and I think this book would be incomplete without

putting in a few words in reference to them. As will be seen by the

sketches which follow, they both commenced their business careers in a

modest way and through perseverance and industry have attained positions

in the financial world which are in every way creditable to them. I have

made it a rule never to introduce a blood relative into my office for a

position of trust unless I believed him worthy of confidence and capable

of performing the duties assigned to him in an intelligent manner. To do

so would be an act of injustice, not only to him but to his associates

in the office, and generally causes ill feeling and bad results in the

end. Happily with my nephews I have had no such cause or ground for

complaint. On the score of merit alone they have succeeded in advancing

themselves to their present positions.

James Blanchard Clews was born in Dunkirk, N. Y., August 4, 1859. After

graduating from Chamberlain College, in this State, he entered the

general office of the Red Line Transit Company, in Buffalo, N. Y., where

he spent two years. He then accepted a position of responsibility in the

General Manager’s office of the Union Steamboat Company, also located in

Buffalo. Here his ability and his growing capacity for making a good

business man were further satisfactorily illustrated and recognized by

those officially over him. Realizing, however, that Wall Street offered

better opportunities for advancement, he resigned his position and

obtained one in my banking office as book-keeper. Commencing at the

bottom of the clerical staff, he displayed so much ability, coupled with

untiring energy in the performance of his duties, it was a pleasure to

promote him from time to time, whenever an opportunity offered, with the

result that after eight years of vigorous training through the

successive grades of Book-keeper, Cashier, and General Manager, he was

rewarded in 1890 by being made a member of my firm. It will thus be seen

that my nephew possesses a thorough and practical knowledge of the

inside workings of a banking house which is so essential to a successful

Wall Street business man. Being besides a student of nature, he has also

improved every opportunity to learn the value of railroad and other

investments and to-day is a recognized authority on all such matters. He

has served as President of an important railroad and is a Director in a

number of large corporations.

John H. Clews,[1] junior member of the firm of Henry Clews & Co., was

born October 28, 1856. In beginning his business career he entered the

service of the Erie Railroad Company, in the transportation department,

where he gained a general knowledge of railroad management and its

affairs. After a few years with that company he was offered a position

with the Western Transportation Company, the water line of the New York

Central Railroad. Here he had the opportunity of completing his

education in all the branches of transportation. He was then appointed

Agent of the New York, Chicago & St. Louis Railway at East Buffalo, N.

Y., the distributing point for all freight between the East and the

West. From this place he entered Wall Street, where he evinced the same

progressive spirit. In 1890 he became a member of the New York Stock

Exchange, acting as one of the chief brokers for Henry Clews & Co., and

January 1, 1898, he obtained an interest in the firm.

Footnote 1:

Deceased April 10, 1907.

[Illustration:

_Thomas L. James_

]

------------------------------------------------------------------------

CHAPTER LXI.

A REMARKABLE CHAPTER OF HISTORY.

Any review of the advance of this country during the past fifteen years,

forms a record of the most wonderful progress ever made by any nation in

such a short period. A record of the development of the country’s

resources through a resistless energy that seems destined to control the

markets of the world, reads almost like one of Grimm’s famous tales, for

after numerous trials, and the surmounting of many obstacles, the fairy

wand is turning what we will into gold.

One of the effects of the Vanderbilt boom of 1885 is to be found in the

enormous mileage of new railroad construction in 1887, namely 12,000

miles. It may have looked at the time excessive, but it has turned out

to be a fortunate anticipation of the great business strides made since

that time. As far back as that year, our exports of manufactured

articles began to show an appreciable increase.

The year following will always be memorable as the time of the great

blizzard which tied New York up so effectually for several days. As a

direct result of the exposure to its severity, the country lost in

Roscoe Conkling one of the most picturesque figures in American politics

and a man of unblemished reputation. He was taken from the arena of

affairs too soon to allow his participation in the presidential campaign

of that year.

My own experience at the time has impressed the memory of the great

storm strongly upon my mind. I had gone to Newport accompanied by Mrs.

Clews to inspect some improvements then being made at my summer home,

and in returning we came across the bay in the regular boat for the

purpose of taking the noon-day train which ran from Boston to New York.

When we were about half way over the bay, a vicious squall struck us and

we began to doubt if we should ever reach the shore again. Finally,

however, we did manage to land, and connected with the belated train.

Progress of course was slow, so slow in fact that the next morning saw

us only as far as New London, whence further movement was out of the

question. Many of my readers will recall the railroad ferry over the bay

from New London. The last train previous to ours had been started

across, but the violence of the tempest had compelled the pilot to give

up the task and return. With more incoming trains, New London was soon

congested by the sudden increase in population, and accommodations of

any sort were at a premium. We were for a time at a loss as to where we

could go, but fortunately succeeded in inducing the manager of the hotel

there to install us in the private apartments of the proprietor, who had

the day before started with his family for Florida. He spent the ensuing

four days upon the railroad, between New London and New Haven, banked in

by a snow drift six feet high, while we enjoyed the hospitality of his

apartments during that time. I am sure that we could not conscientiously

complain of the exchange. Telegraphic communication with New York was

completely shut off. As our children had remained in the city, we were

naturally anxious to know of their welfare and relieve any anxiety they

might have as to our safety. There remained but one means of

communication, and that a wire to Boston, whence messages could be

cabled to Liverpool, and back to New York, and that is the way we got

word to and from the metropolis. That was a rather circuitous way, but

it was effective.

[Illustration:

_John H. Clews._

]

Mr. Cleveland’s renomination and accompanying free trade talk, disturbed

the markets more or less from the date of his nomination in 1888 up to

the time of General Harrison’s election. The latter’s entrance into the

White House started the entire business of the country going, and

through his wise management, we were brought to a very high point of

prosperity, the last year of his term being, up to that time, one of the

most prosperous in our history. One of General Harrison’s most signal

achievements was in the exchange of reciprocity treaties, which was

managed in such a masterly manner by his resourceful Secretary of State,

Mr. Blaine.

In the middle of General Harrison’s term, occurred the greatest

financial shock the world had experienced in the last quarter century,

or since the panic of 1873.

The suspension of the great firm of Baring Bros. of London in the fall

of 1890 proved a demoralizing force from the effects of which finances

did not thoroughly recover for several years. The direct cause of the

failure, as is now well known, was over-commitment in Argentine

enterprises. Through the representations of an agent of theirs who had

visited the country, everything bearing the name of Argentine was

colored a most rosy hue, and the investments of that great house and its

following were enormous. The inevitable reaction from such inflation

found them with an immense load of these securities unmarketable, and

they were forced to suspend. The assistance rendered in rehabilitating

the firm has been signally successful. Through the efforts of Mr.

Lidderdale, Governor of the Bank of England, that institution took over

some seven million pounds sterling of the congested obligations of the

firm. By the wise, patient, and sagacious management of these former

unmarketable properties the bank was finally enabled to realize enough

therefrom to pay up all the arrears of the firm.

The liquidation of American securities by British holders which was

consequent upon their failure was enormous in volume and extended over

several years.

The year 1890 was further noteworthy as marking the birth of that

unfortunate compromise of the silver agitation known as the Sherman

silver-purchase law, which was to bring about such direful results

within a brief three years. After the shock of the Baring panic had

subsided, the beneficial effects of the McKinley tariff law began to be

felt and with increased exports, largely of grain, in the succeeding

year, together with ample protection for home industries, we were

ushered into 1892 under very auspicious circumstances.

Bountiful crops again provided a basis for what developed into a

wonderfully prosperous year. During the year, Jay Gould (largely through

the aid of his son George), by one of his characteristic strokes,

succeeded in obtaining control of the Union Pacific system, while Mr.

Huntington was thinking the matter over; but his personal control was

not to last very long, for in December of that year, Mr. Gould died,

after a career of great activity and venturesomeness, which has

elsewhere been reviewed in this book.

[Illustration:

_J. B. Clews_

]

The Democratic party still clung to their idol, and Mr. Cleveland was

renominated for the presidency in 1892, and by one of those inexplicable

turns of public opinion which foolishly wished a change of

administration in the midst of prosperous times, he was elected, and

returned to Washington the following March, be it said, enjoying the

confidence of the great majority of the people. Almost from the time of

that election, the Wall Street markets were depressed, the fear of free

trade measures being the basis of distrust. Late in the year, the

Treasury’s stock of gold began to show signs of diminishing, and with

the exception of a few rallies, one notably in the following January,

prices continued on the downward course. Co-incident with the decrease

of gold reserves arose reports of a disposition on the part of the

Secretary of the Treasury to interpret the word “coin” in our Government

obligations as allowing the redemption of the bonds in either gold or

silver at the option of the Government. The effect of any doubt or

question upon this most important subject could only result in

unsettling confidence; of which Addison speaks as the “high priest in

the temple of trade.” For the first time in very many years, our

Treasury operations showed a deficit, and things were going from bad to

worse. The first great smash in prices occurred in May, when the famous

Cordage Trust went to pieces. At the same time, Sugar stock and the

remainder of the then few industrial shares took part in the sharp

decline. The gold reserve had by the middle of the year reached

alarmingly low figures, so that the pressure of public opinion compelled

the calling of an extra session of Congress for the purpose of repealing

the silver purchase clause of the Sherman law,—which had proved to be a

veritable “Old Man of the Sea” upon the back of the country, threatening

to throttle business interests everywhere.

The Congressional procrastination, and obstructive tactics in the Senate

worked havoc with trade and finance, and when relief finally came in the

repeal of the silver purchase clause, the vitality of the patient had

sunk so low, that it was a matter of years before returning health, in

the form of confidence, brought back our native buoyancy and push. It

became necessary early in the following year to issue $50,000,000 worth

of bonds in order to keep the gold reserve from getting too near the

vanishing point. Tariff agitation, which had been started by President

Cleveland’s message to Congress in December, 1893, upset all the

calculations of business men, who hoped, after a disastrous summer, that

the tide had turned. But, no sooner was the fear of a silver deluge

quieted, than revenue reform brought on another period of anxiety and

delay. Fortunately when that distorted measure (with its 640 Senate

amendments) which bore the name of the late William L. Wilson, a man of

deep thought and the highest integrity, did become a law in the

following year, it was not burdened with an income tax.

There are those who argue, probably to their own satisfaction, that this

latter is an equitable form of taxation, but it has always appeared to

me as putting a premium on idleness by taxing thrift.

[Illustration:

ROSWELL P. FLOWER.

]

Another issue of $50,000,000 bonds was necessary before the year was

out, and in spite of this replenishment, gold exports to pay our debts

to Europe for securities sent back to us by the ream, continued in such

volume as to render a further issue imperative in the following

February. This will be remembered as somewhat unique in our Treasury

operations, being in the form of a purchase of 3,500,000 oz. of gold,

which cost the Government $62,500,000. The famous syndicate which

undertook the delivery of the precious metal, agreed to do all in its

power by the further deposit of gold in the Treasury and as far as

possible, a control of foreign exchange rates to keep the reserve

intact. Its powerful aid unquestionably saved the people from many more

business disasters, by a bolstering up of confidence in the power of the

Government to pay its debts. The syndicate lived up to its agreement

fully, depositing in the month of August some seven and a half millions

of gold.

One scarcely hears mentioned nowadays the name of that poor fellow whose

fabulous fortune (on paper) finally proved too burdensome for his

uneducated mind. Barney Barnato was in his way a picturesque character,

and a most vivid illustration of the overthrow of mind by matter, when

the former is not in control.

The sharp break in South African shares in the London market during

October, of course exerted a sympathetic influence here; but worse

things were yet in store for us. Our President’s famous Venezuela

message to Congress in December, 1895, acted like an earthquake—which

shook the markets to their very foundations and engulfed hundreds of

millions of values before it subsided. The final outcome of the dispute

between England and Venezuela has to a very great extent vindicated the

former’s claims. Let us, however, look upon the whole matter as a step

forward for civilization in the advancement of the principle of

arbitration, the true solution of all international difficulties. In

1896, we did finally reach the end of our troubles, though not without

much worriment. A further bond issue of $100,000,000 to meet deficits,

brought that total up to $262,500,000 issued in two years. A rather

expensive administration, but “troubles come not singly, but in

battalions.”

The Presidential Campaign just past, with the same nominees at the head

of the respective parties, recalls the wild free silver talk of four

years ago. Panic and depression succeeding each other had left the

people almost hysterical. After Bryan’s nomination in July, gold

hoarding was the order of the day. Of course the effect of this on the

money and security markets meant, under the circumstances, another

downward plunge in prices. New York Central sold at 88, the lowest price

in the past fifteen years, and C., B. & Q. at 53, the lowest price in

nearly forty years, and all other stocks sold down in the same

proportion.

[Illustration:

J. PIERPONT MORGAN.

]

I have said that we reached the end of our troubles in 1896, but the end

did not come till the November election, which showed that William

McKinley, “the advance agent of prosperity,” had been elected President.

The nomination of William J. Bryan, hitherto a comparatively unknown

man, but who electrified the Democratic National Convention by his

specious eloquence, the eloquence of a political Belial, able, in the

Miltonic phrase, “to make the worst appear the better reason,” whose

famous phrase, “you shall not press down upon the brow of labor this

crown of thorns, you shall not crucify labor upon a cross of gold,”

swept the convention off its feet and made him the nominee for

president, was a blow that for a time seriously disturbed Wall Street

and commercial circles everywhere. Mr. Bryan called for the free coinage

of silver at the ratio of 16 to 1, and by his tireless activity in

stumping the country created a feeling of depression that reached the

pitch of panic and left the people almost hysterical with fear. But as

Martin Van Buren said on one occasion, “the sober second thought of the

people is never wrong and is always efficient.” The sober second thought

of the people carried the day. Crowds might flock to hear the orator,

but they voted with the party of prosperity and honor. The carefully

written speech of Mr. Bryan, a speech which, for once, he read from his

manuscript in the great Madison Square Garden meeting, did not deceive

the people; it fell flat.

With Bryan’s fiasco in this city, the clouds finally began to break. How

plainly the record of these four years shows the absolute domination of

the markets by Washington. And not of the financial markets alone by any

means, but of the whole business interests of the country, which finally

were well-nigh paralyzed by four years of increasing anxiety and wonder

as to what might happen next.

It is gratifying to turn away from that period of distress to the

succeeding years of prosperity. The vindication of the good sense of the

people in the election of William McKinley did, at last, turn the tide;

and for good and all, let us hope. With an unquestioned currency basis,

improvement became possible. We were greatly favored too, in the first

year of Mr. McKinley’s administration, by bountiful crops at a time of

shortage in Russia, France, and the Danubian Provinces. It was a great

year of prosperity for our farmers, who, through good prices, and the

exportation of some 120,000,000 bushels of wheat, were enabled to pay

off mortgages in wholesale fashion, and herein we see the beginning of

present good times. Furthermore our export trade showed great increase.

As was to be expected, there was a great rush of importations just prior

to the passage of the Dingley Tariff Bill in July, and a consequent

decline in revenues immediately thereafter; but the completed record of

its operation up to the present time is a splendid tribute to the wisdom

of its author. The Supreme Court decision in 1897 in what was known as

the Trans-Missouri Case, declaring all railroad pooling illegal, proved

somewhat of a shock to the market, but with improvement in business, our

roads soon found enough traffic before them to more than go ‘round,

without worrying about its division.

The year 1898 began very favorably with large gold imports and easy

money. Cuban affairs, which had begun to threaten late in the previous

year, finally culminated in the outbreak of war with Spain in April.

The condition of things in Cuba having become a reproach to the

civilized world, this Government, acting for the conscience of

Christendom, directed that the war which Spain was waging against the

Cuban revolutionists should cease, with all its indescribable horrors,

its barbarous cruelties to women and children, and as Spain did not heed

the warning, our Government intervened in the interest of common

humanity, an event which marked a distinct advance in the history of the

human race, for history makes no mention of any war waged on such a

scale in behalf of the cause of humanity. Certainly never was a war more

clearly justified or one which showed greater courage on the part of the

intervening nation, for there can be no doubt that more than one of the

Continental powers of Europe would have been glad to side with Spain and

would have done so, but for the emphatic negative of Great Britain.

Naturally there ensued a period of depression, but it was short-lived.

The ensuing months of activity and buoyancy surpassed anything of the

kind in our history. After the apprehension as to how the business world

would adjust itself to war conditions had passed away, business began to

boom all over the country. We were on our feet again with financial

health restored. That wonderful boom in the stock market, begun in the

summer of 1898 and lasting until the spring of 1899, will not soon be

forgotten.

It seems more like a dream than a fact that trade and commerce and

financial operations could swell to such well-nigh inconceivable

figures, revealing a degree of prosperity almost past belief, like some

marvelous good fortune of an individual in a Persian tale, favored by

good Genii, actual fact rivalling fancy or throwing it far into the

shade. In other words the oldest and most experienced merchants and

financiers in this country were astounded at the degree of solid

prosperity attained by the great Republic, the lion’s whelp, rivalling

or surpassing the strength of the old lion, the mother country across

the sea.

To the late Ex-Governor Flower belongs the credit of fearlessly taking

the initiative in that marvelous rise in values to which I shall revert

later on.

The formal close of the Spanish war gave fresh impetus to trading and

prices kept soaring well on into the spring of 1899. The year 1898 has

the distinction of marking the beginning of the greatest era of trade

combinations, those gigantic commercial engines, that the world has ever

seen. The capitalization of those inaugurated during 1898 and 1899

reached the fabulous aggregate of $3,500,000,000. The mind is staggered

by the possibilities of enterprise which such a sum suggests.

The tendency towards centralization in the railroad world was first

shown in the merger of the Lake Shore road with the New York Central.

The year 1899 was one of great prosperity, the greatest since we have

been a nation, albeit its close was marked by one of the worst

semi-panics the Street has ever experienced. In order to account for

some of the most important features of the panic of December, 1899, it

is necessary to take a glance backward at certain great financial events

of the year even as early as April.

In that month was formed the famous Amalgamated Copper Corporation, a

creation of the Standard Oil magnates.

The capital stock of the company was $75,000,000. The shares were said

to be subscribed five times over. Owing to its parentage, the stock

became popular, and was sustained at par for some time, but scarcely two

months had elapsed before a break of 25 per cent. in the price occurred.

This break was regarded as a rather suspicious circumstance, and was

supposed by the “knowing ones” to be a part of the deal. The Amalgamated

Company was a mammoth combination, comprised of large share interests in

over 30 companies, the famous Anaconda of Montana heading the list, and

being the most prominent

The panic fell most severely upon the copper companies, the shrinkage on

the share capital of which for the year is alone estimated at nearly

$200,000,000.

Besides this, the currency movement to the South and West had been

unusually large and prolonged, and finally tightness of money brought

about an immense drop in the entire stock market. But with general

conditions prosperous all over the country, such panics happily do not

leave lasting scars.

The last year of the wonderful nineteenth century has been a remarkable

one in our history. Since the first defeat of the silver agitators in

1896, our financial strides have been so rapid that it seems now a

question of but a short time when New York will be the financial centre

of the world. What a contrast between our position in 1900, and that in

1895, when we were knocking at the door of Europe with bonds for sale to

provide running expenses for our Government. To-day England finds it to

her interest to place $25,000,000 of her war loan with us, Germany asks

for $20,000,000 of American gold, Russia is seeking to borrow from us

and Sweden has not gone empty-handed away. And these accommodations have

been accorded without causing so much as a ripple in our money markets.

The source of such plenty is of course found in our wonderful increase

of exports. For ten months of this present calendar year, the trade

balance in our favor approximates $500,000,000, making, in the past

three years, the vast total of fifteen hundred million dollars balance

to our credit. There we see both the lever and the fulcrum with which to

move the financial world.

A little over a year ago occurred the death of Cornelius Vanderbilt, the

grandson and namesake of the Commodore. Here was a gentleman whose

charities were almost boundless. His gifts to the people through art and

in many other ways were princely, but perhaps his memory is greener in

the minds of those who, through his great private charity, were lifted

above want.

These great latter day fortunes have not often failed, in this country,

in being administered by men whose conception of life, and of duty

toward their fellow men has turned the duty into a pleasure. This is a

very great tribute to American citizenship and should not be forgotten

or lost sight of by our sometime critics.

The passage of the Currency bill in March, 1900, undoubtedly did much to

increase Europe’s faith in our monetary stability and, furthermore, the

result of the Presidential election of 1900, the triumph of the party of

sound money seems to preclude the recurrence of any attacks upon the

financial honor of this country. There has been a campaign of education

going on in this country ever since the advocate of the free and

unlimited coinage of silver at the ratio of 16 to 1 first promulgated

his doctrines. The benefit to the people of this knowledge of public

affairs is clearly apparent. They will have none of false theories and

suicidal experiments, they will not go after false financial gods, they

will not bow the knee to the Baal of repudiation and confiscation.

While the modern method of commercial development is open to criticism

in some respects, still I take it that the evils complained of are not

those of very existence but are rather those of circumstance, and are

open to correction by the will of the people. How often have we heard

that these combinations stifle competition—but for how long? Does not

their existence excite competition? Furthermore, their management calls

for the very highest ability and creates a keen intellectual competition

which cannot fail to be of educational value at large. It remains for

ensuing years to provide correction for those defects which are bound to

appear in any new and untried system.

We end the century that almost covers our national existence with a past

record and prospects unparalleled. We enter the new century full of

faith in our institutions, that have stood severe tests even in our

short life, and full of hope for even greater national achievements. We

are fast taking the lead in the affairs of nations as well as in the

affairs of commerce and finance, and have need of great steadiness of

character, and fixity of national honor, which now seems assured for all

time. It augurs well that we begin the twentieth century, which displays

such vistas of greatness, at peace with all the world.

------------------------------------------------------------------------

CHAPTER LXII.

BOOMS IN WALL STREET.

Wall Street has lately been enjoying quite a boom in some respects

differing from any in its previous history. Probably the most

interesting feature about this boom is that it is not in any sense

spectacular. In that respect it is unique. Prices of many stocks are

higher and intrinsic values greater than they have ever been before. The

market has all the qualities that normally would cause intensest

excitement and focus the attention of the entire country on the Stock

Exchange. Yet in spite of these conditions, the Street is in a normal

state of mind, and it is doubtful if the general mass of the people, who

get their information from the newspapers are fully aware that there is

even an ordinary boom in Wall Street. This unusual condition is due, I

believe, to the fact that the boom we are enjoying is built on a

foundation that reaches clear to the bowels of the earth. There is

nothing unnatural or artificial about it. Wall Street is simply one of

the centres that reflects the general prosperity throughout the country.

Farmers, merchants, mechanics, mill workers, and miners are all so

intent in keeping pace with the progress in their own pursuits that they

have no time to cast eyes our way. The same conditions that are booming

stocks, are booming everything else in the country at an equal rate, so

that we are in nowise singular or deserving of special attention.

[Illustration:

Photograph from Underwood & Underwood, N. Y.

JOHN D. ROCKEFELLER.

]

Another factor too, has developed in the Street that prevents the usual

excitement and hurly burly incident to a rising market. This is the

absence of a pronounced central figure, or controlling force. Usually a

boom centres about some one man who stands boldly out in the open, or

whose hand it is known is manipulating values. At present the

manipulation is being carried on in a method that is as quiet as it is

novel and unusual. That the market is being manipulated, is apparent

enough even to the most casual observer. But the source of this

manipulation is probably known only to a few; all others are but

students in the Street. They know that a new order has come, and that

this order is due to the most powerful and resistless influence that has

ever manifested itself in Wall Street. This influence is very largely

composed of the Standard Oil Combination, who have introduced in their

Wall Street operations the same quiet, unostentatious, but resistless

measures that they have always employed heretofore in the conduct of

their corporate affairs. Beside this group, every other man or

combination of men that has ever operated in the Street are materially

belittled by comparison. The heretofore conspicuously big operators that

have flashed up and across the horizon, appear comparatively small

beside the men who are running things for us now.

At his best, Jay Gould was always compelled to face the chance of

failure. Commodore Vanderbilt, though he often had the Street in the

palm of his hand, was often driven into a corner where he had to do

battle for his life, and so it has been with every great speculator, or

combination of speculators, until the men who control the Standard Oil

took hold. With them, manipulation has ceased to be speculation. Their

resources are so vast that they need only concentrate on any given

property in order to do with it what they please. And that they have so

concentrated on a considerable number of properties outside of the

stocks in which they are popularly credited with being exclusively

interested is a fact well known to every one who has opportunities of

getting beneath the surface. They are the greatest operators the world

has ever seen, and the beauty of their method is the quiet and lack of

ostentation with which they carry it on. There are no gallery plays,

there are no scareheads in the newspapers, there is no wild scramble and

excitement. With them the process is gradual, thorough and steady, with

never a waver or break. How much money this group of men have made, it

is impossible even to estimate. That it is a sum beside which the gains

of the most daring speculator of the past were a mere flea bite, is

putting the case mildly, and there is an utter absence of chance that is

terrible to contemplate. This combination controls Wall Street almost

absolutely. Many of the strongest financial institutions are at their

service in supplying accommodations when needed. With such power and

facilities it is scarcely conceivable what these men must be making,

what they can do on either side of the market. So far, fortunately,

their manipulations have all been one way, upwards, and in conjunction

with the general prosperity it has resulted in making large sums of

money for nearly everybody in the Street.

Here and there we have heard of losses, some of them fairly large, but

in comparison with the general money making these are hardly to be taken

into consideration.

The last preceding boom that Wall Street enjoyed was as different from

the present as it is possible to imagine. It had all the elements which

this one has not. It centred about one man who stood out in the

lime-light clear and distinct. It kept the Stock Exchange in a constant

state of ferment. It filled the newspapers with column upon column of

sensational stories. It made millions for an army of retainers, on

paper, and it kept the market jerking up and down for months. Roswell P.

Flower, ex-governor of the State of New York, was the leader of the

boom, and a more picturesque figure has never been seen in Wall Street,

which is saying a great deal. Mr. Flower was an individual of very plain

exterior. He often used language that was noticeable more for its force

and directness and emphasis, than it was for polish. He had an ambling

gait and looked like a well-fed farmer. He was rarely seen without a

huge quid of tobacco that almost filled the left side of his mouth.

Spittoons were an essential part of the furnishings of his office. His

clothing hung on his person not unlike meal sacks. His hat was rarely

brushed, and for days at a time, apparently, he forgot to shave.

Altogether he was the last person, in appearance, who might be expected

to lead in a district that is famous for its well groomed men. His

education was certainly not collegiate; doubtless all his peculiar

traits the ordinary man would have judged a handicap, still they were

Mr. Flower’s strongest aids. The lack of artificial polish gave people

confidence in his statements. His limited education enabled him to think

clearly along certain lines without being hampered with mental

digressions, which would probably have come with a higher original

mental culture.

As the administrator and manager of the estate of his brother-in-law,

Henry Keep, he came into the Street twenty or twenty-five years ago. He

in that way controlled a large amount of funds, which by conservative

direction he increased very substantially. He scarcely ever figured in

the speculative field to any great extent, until after he had completed

his term as Governor of New York State. When he returned to the Street

from Albany, he naturally came with a considerable prestige.

Ex-governors of the Empire State are not very plentiful in and about the

Stock Exchange. He also brought with him a large political following. In

both of the great parties in New York State there are many men of

standing and influence who like to take a flyer in Wall Street. Almost

to a man they associated themselves with Mr. Flower, who, during his

term at the capital had made hosts of friends with Republicans and

Democrats alike, and this, though his party loyalty had never been

questioned. He also had close associations with most of the big

capitalists. After he had settled down to business, on leaving politics

behind, Mr. Flower picked out several stocks as his specialties, Chicago

Gas, Federal Steel and Rock Island being some of these. Under his

manipulation all these properties went up and soon began to show a big

advance, unusual strength and great activity. The bears made frequent

assaults on his position and now and then pushed him towards the wall,

but he always fought his way to the front again, and came out master in

every encounter. When he had himself pretty well entrenched in the

specialties he was handling, he suddenly plunged into Brooklyn Rapid

Transit, and for months he kept things stirred up in a way that even

Wall Street has not seen very often., He picked up the stock commencing

at six dollars a share, and in an incredibly short time ran it up to

over 138. Almost every politician in the State made a fortune on paper.

Mr. Flower was immensely popular with the Wall Street news reporters,

who helped his boom along through the glowing accounts they wrote from

day to day.

Under the impetus of the swirl in Rapid Transit, practically every

property in the Street went flying upward, until the end did not seem to

be in sight. The bears were beaten to a standstill every time they

showed their heads, the only result of their attacks being that Flower

stocks would jump up a notch higher. The ex-governor preached

Americanism and confidence, until everybody believed that if a stock was

only grounded, and the property located in America, you could buy it at

any price and still be on the safe side.

That a terrible panic did not grow out of this boom was due only to one

fact: Mr. Flower’s sudden death. Had he lived thirty days longer, the

bubble must have been pricked, and the result would have been

disastrous. Mr. Flower went to the country for a day’s rest, ate freely

of ham and radishes and washed his frugal meal down with a copious

supply of ice water; he naturally, in consequence, died in a few hours

afterwards of an attack of acute indigestion; his death alone saved the

Street.

The Rockefellers, the Vanderbilts and his other wealthy friends rushed

into the market with millions and sustained values. They were in a

position to attribute the threatened reaction to his death and pointed

out the absurdity of letting such an incident affect the value of

stocks. They discounted the break that must have come in the natural

course of events under the forcing process that was going on. Reasoning

such as this spread broadcast through the papers stopped the break.

Where the bottom would have fallen out entirely there was only virtually

a moderate break all along the line; why it was not worse was due to the

market being bolstered up by the Standard Oil Combination and others

with them coming to the rescue just in time to prevent a big smash. The

small speculators operating on moderate margins were of course all wiped

out almost to a man, but many of the big fellows were saved. It is

probably the only instance on record where the death of a big operator

saved a general smash. Those hurt were numerous politicians and small

fry operators who instead of getting away with snug fortunes in the

shape of profits, lost their all.

An interesting circumstance of the Flower boom was developed

involuntarily by young Joe Leiter. Leiter himself, although he had gone

to the wall some time previously, indirectly had brought about certain

conditions that served Mr. Flower’s purpose admirably. These conditions

were the general release of hundreds of millions of dollars on mortgages

on farm lands. When Leiter began to corner wheat, it was ruling down in

the neighborhood of sixty cents a bushel. He lifted it to considerably

over a dollar before he went broke. This enabled thousands of farmers to

realize on their crops at the dollar figure and above, which brought

prosperity almost over night to the wheat growing belt. With the money

realized from their wheat the farmers paid off their mortgages to the

extent of two or three hundred million dollars. These mortgages were

generally held in the East. This released that much Eastern capital,

causing that vast volume of money to seek investment. The men

controlling this money were overjoyed when Mr. Flower made an opening

for them through the Wall Street boom, and hence it was a comparatively

easy matter for a time to push up values.

J. Pierpont Morgan, now a noted character, was trained as a clerk in the

one-time famous banking house of Duncan, Sherman & Co. Later he made a

connection with Anthony J. Drexel, probably the wealthiest banker in his

time in America. Out of this grew the house of Drexel, Morgan & Co.,

with Mr. Morgan as the managing partner in New York. When Mr. Drexel

died, Mr. Morgan absorbed the entire business, and a few years later

when his father died, Mr. Morgan became the head of the London house of

J. S. Morgan & Co. as well. This put him in a very prominent position.

He soon thereafter demonstrated his influence by reorganizing the

bankrupt Richmond & West Point Terminal Railway & Warehouse Co.,

changing its name to the Southern Railway Co. A number of small roads

were added to it, many of which were in financial straits, and

practically all of them had been badly managed. He combined them into

one system under the one head. This railroad combination is now one of

the great properties of this country. Mr. Morgan next turned his

attention to the reorganization of the Reading and the Erie roads, which

were in a bad way. He soon produced order out of chaos there, and that

resulted in a boom in railroad stocks all along the line. He had several

sharp tussles, however, with some of the big stock holders, who tried to

stand out against him on account, as they thought, of his plans being

too drastic; and during these tussles he not infrequently resorted to

the usual methods to break values, buying at the reduced prices so as to

strengthen his control.

The people who followed Mr. Morgan’s lead in these transactions

generally made money.

A different sort of deal was engineered a few years before by S. V.

White, popularly known as Deacon White, because of his position as

deacon in Plymouth Church. Mr. White is one of the oldest operators in

the Street, and one of the most striking figures. He has made half a

dozen great fortunes in speculation and lost them, but he is as

undaunted as ever, and in spite of the fact that he is now over seventy

years old, he is still active daily in the market.

Probably one of the most unique stock deals ever carried out in the

Street resulted from the transaction of Joseph Bannigan when President

of the Rubber Trust. The history of this deal which for a time resulted

in a great boom in industrials, has never been told, and is known to but

very few persons, most of whom, by the way, were its victims.

Bannigan was an uneducated Irishman who could hardly read and write. He

commenced life in a New England rubber factory and worked for $1.50 per

day and died worth five million dollars. He was shrewd and bright and

knew the value of money. He saved to such good purpose that when the

Rubber Trust was formed he was at the head of one of the biggest

factories in the country, located in Providence. His knowledge of the

trade was so thorough that despite the fact that he almost invariably

used small i’s in writing a letter, he was made President of the Trust,

his holdings amounting to about forty thousand shares. When matters had

been moving along for some time, Bannigan made up his mind that the

other men in the trust, the big fellows, were not treating him right,

and that the best thing he could do was to get out. So he packed his

stock certificates in a grip sack, left Providence on the night boat,

landed in New York bright and early, had his breakfast and then made a

bee line for a stock brokers’ office. He had assured himself in advance

that this stock broker was to be relied on and told him frankly what he

intended to do.

“I want to sell out bag and baggage,” he said. “I want to get rid of

every one of my forty thousand shares. Here they are, put them on the

market and sell them.” The stock broker told him that that would never

do. If he wanted to realize full value for his holdings he would have to

go about it in a different way, for if he threw his forty thousand

shares into the market it would knock the bottom out and he would get

little or nothing for his stock. Mr. Bannigan saw the point, and asked

what he was to do.

“Buy,” said the broker.

“But I don’t want to buy; I have got more now than I want.”

“That is all right; buy anyway, that will make a market for the stock,

and then you can unload when the time comes.”

“How much must I buy?”

“Oh, about $250,000 worth.”

“But I have not got $250,000 in cash to go and buy Rubber stock.”

“Well, you can borrow it; a man in your position, Mr. Bannigan, would

have no difficulty in borrowing $250,000.”

Much against his will the old man was finally persuaded to do as he was

told. About two weeks later the broker wrote to him that he must buy

some more, this time, $200,000 worth. Mr. Bannigan used rather strong

language, but finally yielded as he had before. He borrowed $200,000,

and turned it over. With this additional capital to work on, the brokers

continued to manipulate the market. The insiders soon discovered that

some strong party was buying; but they did not know who, Bannigan having

carefully kept himself in the background. His brokers operated skilfully

in the stock, one day buying, the next, selling to keep the stock

active. The brokers after awhile commenced to borrow large amounts of

the stock. This convinced the insiders that there was a big short

interest somewhere, and they got together in order to squeeze the

shorts. The inside holders who held most of the stock, who had combined

to squeeze the shorts out, as they thought, put the price up to 61, and

at about that figure Bannigan’s was all unloaded. Bannigan now found

himself full of money and the other fellows had his stock. They never

awakened to the fact that the President had sold out on them until his

shares were delivered against their purchases, as they thought, of short

stock. Rubber soon thereafter did not stop tumbling until it had gone

from 61 to 16. This deal had all the elements of a comedy-drama and the

playwright who can do it justice will find material there which will

make him an everlasting fortune and reputation. I have touched but

lightly on a few of the important incidents. It is not often, however,

that newcomers in the Street fare as well as this in the end. For a time

they will go on merrily enough, and send things booming; but in the end

many get the worst of it. A. B. Stockwell is a good illustration of the

truth of this. He is still around the Street somewhere, but is one of

the “has beens,” like numerous other former conspicuously large and

supposed to be brilliant operators. At one time he was worth many

millions of dollars. To-day, he is upside down. His start in life was as

purser on a Lake Erie steamboat; his father, it is said, kept a livery

stable in Cleveland. On one of his trips, Stockwell was in a position to

show considerable attention to Elias Howe, the inventor of the eye at

the upper end of the sewing machine needle. Mr. Howe was accompanied by

his daughter. Stockwell made himself agreeable to Miss Howe also, and

with such good effect that he managed to win her affections and soon

thereafter married the young lady. When Mr. Howe died, Mrs. Stockwell

came into possession of her father’s millions. With this nest egg

Stockwell started in Wall Street, and before anyone realized what had

happened he was the most talked of man in the district. He put all his

wife’s millions into Pacific Mail stock, and secured entire control of

the Company. He came into the Street as plain Stockwell, then as the

news of his liberality and good fellowship spread, he became Mr.

Stockwell; after he got hold of Pacific Mail he was Commodore Stockwell,

by common consent. Everybody bowed and scraped to him and no man was so

high and mighty that he was not proud to shake his hand. Stockwell took

hold of Pacific Mail at about 40 and sent it up to 107. It was at this

period that he was worth over fifteen million dollars; but he found,

unfortunately, when it was too late to retreat, that while Pacific Mail

was up to 107, it was not worth that figure when the unloading

commenced. He was landed high and dry with it all and the Street told

him he was welcome to it. He tried to sell, and found that there was no

market. Then came violent demands on him to pay up his numerous call

loans, and in order to respond thereto, he had to sell regardless of

price and thus created a whirlpool, which finally sent the stock down to

the price at which he commenced his original purchase at 40. In this one

upset, he lost all his paper profits and his wife’s millions besides.

This catastrophe not only stripped him of all his worldly possessions,

but reduced him to the position of being plain Stockwell again, and

there are many also who even go so far as to call him “that little

red-headed cuss.” That was the most famous boom in the history of

Pacific Mail, notwithstanding Leonard Jerome’s previous brilliant ups

and downs in that former erratic property.

Leonard and Addison Jerome had a good time with Pacific Mail for a

while. They ran it up to high figures several times; but finally meeting

with the same experience that Stockwell did. The two Jeromes from being

among the wealthiest and most dazzling operators in the Street, were in

the end practically wiped out. Leonard Jerome, who was the father of

Lady Randolph Churchill, had nothing left to bequeath his daughter

except an equity in the house now occupied by The Manhattan Club on

Madison Avenue, which yields an income of about $15,000 a year, of which

Lady Churchill gets $10,000.

[Illustration:

WILLIAM ROCKEFELLER.

]

These are a few of the booms that have stirred up things in Wall Street

at one time or another, as did the Keene booms, of which there were

several, the Gould booms, and the Vanderbilt booms, all of which have

been referred to in previous chapters in this book.

The question of trusts or trade combinations has, in recent years,

excited a good deal of interest. One of the most interesting figures in

this connection is John D. Rockefeller, who will undoubtedly be regarded

by the future historian as a striking character in the business history

of the nineteenth century. And be it remembered that history now

concerns itself, not so much with the doings of governments; not so much

with the personalities of emperors, kings, presidents or even with

political parties, as with the life of the people themselves. This is

clearly shown by such historians as Lord Macaulay and John Bach

McMaster. And looking at history in this way, surely John D. Rockefeller

must be regarded as one of the most interesting types of the great

commercial powers of the day. He was a pioneer, a commercial Daniel

Boone, striking out into a new and untrodden field of enterprise, taking

great risks, undergoing grave financial perils of a novel kind and at

length winning a complete and lasting success—a success which has filled

business history with his achievements and the world with his fame. It

was a great stride from the little farmhouse in Tioga County, New York,

to the place which he fills to-day. Born in 1838 he is now in the prime

of life. Reared by strict, church-going people, his word is as good as

his bond; he is the soul of business integrity, and a striking example

of what thrift, enterprise and persistency will do for a young man who

starts out in life with apparently little or no chance of success. His

old schoolmaster, it seems, was the first to get the young man to look

into the refining of petroleum. Not so many years ago, they used sperm

oil, and it cost $1.50 a gallon. How to refine the thick, ill-smelling

oil found in the water courses of Pennsylvania was a problem. It was

black slime, and John D. Rockefeller, by hitting upon a method of

refining it and introducing it in the home throughout the world has made

a fortune that recalls the fable of Midas. Before he was twenty-one he

formed a partnership with a man named Hewitt and at first engaged in the

warehouse and produce business. Then came the great oil craze in

Pennsylvania. Poor farmers suddenly became rich; thousands flocked to

the oil fields. Young Rockefeller kept his head. Asked to make

investments in oil wells for Cleveland friends he dissuaded them from

the project on the ground that the thing was being overdone, and with

Samuel Andrews, who was familiar with the general processes of

distilling, engaged in the refining branch of the petroleum trade. The

firm subsequently became Rockefeller, Flagler & Andrews, which rapidly

expanded its field of operations, and in 1870 organized the Standard Oil

Company with a capital of $1,000,000. It started pipe lines to ship the

oil to the seaports. It made millions in by-products once considered

worthless. It established markets all over the known world, cheapened

its methods of production and outstripped all competitors. Little wonder

then, that its “extra” dividend in the year 1899 amounted to $23,000,000

over and above the regular dividends on the whole capital stock. Mr.

Rockefeller attributes his success to early training and perseverance.

That is, like other men who have stamped their individuality upon the

affairs of mankind, he is what is termed a causationist; in other words,

he believes that nothing is got for nothing; that effects proceed from

causes, and the cause of success he believes to be largely perseverance.

He believes that perseverance overcomes almost everything, even nature

itself, and in that opinion this practical business man is at one with

the philosophers of antiquity.

He and his associates in the Standard Oil Company are naturally a power

in the stock market. They are, of course, very large holders of railroad

stocks and bonds and at times their influence is as irresistible as the

laws of gravitation. John D. Rockefeller’s influence alone could be so,

as he is supposed to be the richest man in America and indeed the

richest man ever known in human history. His is believed to be the

greatest fortune ever accumulated by any man within his own lifetime.

That he feels the responsibilities of his great wealth is obvious from

his munificent gifts to educational and charitable institutions, to

churches and to a hundred other praiseworthy objects. His princely

donations to schools, colleges and universities rival those of that

other public-spirited citizen, Andrew Carnegie. They are equally strong

in their belief that the greatest charity lies in helping others to help

themselves.

------------------------------------------------------------------------

CHAPTER LXIII.

A GLIMPSE INTO THE FUTURE.

I believe that it would be difficult to set bounds to the possibilities

of American development. The inventive genius of the people, their

adaptability to all circumstances, their tenacity of purpose, their

wonderful energy, and the fabulous resources of the country all make it

certain that the United States will reach a degree of power and

prosperity hitherto unexampled in human history. Carlyle’s “French

Revolution,” has been strikingly described as “history read by flashes

of lightning,” and I am tempted to use the same language in describing

the commercial revolution which has taken place in this country during

the last few years. Great as it is, however, I think it merely a prelude

to what is to come. We are destined for one thing to have a great

Pacific trade. Fifty years ago, Humboldt said that the day would come

when the trade of the Pacific Ocean would be as great as that of the

Atlantic. And the increase within a year or two in this commerce augurs

well for the ultimate fulfillment of the great scientist’s prophecy. We

readily adapt ourselves to the requirements of foreign markets and that

is a very important point. Lord Charles Beresford bears testimony to

this fact. He says with truth that Americans find out what the foreign

markets want, then they supply it. The English say in effect, “We know

what you want better than you know yourselves.” The American sends the

Chinese thirty-inch-wide calico, which is what they want; the Englishman

sticks to twenty-seven inches, with the remark expressed or implied,

“Take it or leave it.” And the Chinese will leave it rather than take it

and the American manufacturer will be the gainer thereby. Minister Wu’s

recent remarks on the necessity of finding out just what the Chinese

want and then conforming to their wants, cannot be too carefully borne

in mind. Furthermore, we are ready to adopt the newest and most highly

perfected machinery regardless of cost. Mr. Carnegie, for instance, on a

single occasion discarded machinery which had cost him $2,000,000, and

replaced it with the latest which inventive genius could supply. The

London engineering journals, on the other hand, admit that the British

manufacturers will not change their machinery no matter how apparent it

may be that they are being distanced by their more progressive rivals in

this country. They reason that they have put just so much money into the

“plant” and must get just so much out of it before they will replace it.

This seems a good deal like the ostrich which thrusts its head into the

sand and refuses to look danger in the face. In the meantime the British

are left behind in the race and Glasgow merchants have to try the

puerile and utterly futile device of getting up a boycott against

American steel and iron products. Such a device, under the

circumstances, seems a good deal like the attempt of the celebrated Dame

Partington, as the famous English wit Sidney Smith describes it, to

sweep back the Atlantic Ocean. She trundled her mop vigorously and made

a gallant onslaught, but the Atlantic was aroused and it is needless to

say who was the victor. And the American iron trade’s invasion of

English markets must result in a victory, unless there is a radical

change in conditions, which no one can now foresee. We study the

markets; we take pains to ascertain their wants, and it is an axiom of

trade that a man or nation that supplies the demand, whatever it may

happen to be, gets the trade. This is a law as inexorable, as

unchangeable as the laws of the Medes and Persians.

We are now one of the five great world powers, financial and political,

with a population second to none except Russia. That is to say, we have

a population of 76,300,000, Germany has 55,000,000, Austro-Hungary

45,000,000, the United Kingdom 41,000,000, France 39,000,000, Italy

32,000,000, Spain 20,000,000, Russia 136,000,000, Japan, 45,000,000,

India 340,000,000, China 400,000,000. The Mongolian race is numerically

powerful, but in the long run can the yellow race stand up against the

white? I doubt it. Meantime the population in this western home of the

Caucasian race is steadily increasing. In 1800 the United States had a

population of only 5,308,483. It is now 76,304,799. Then we had sixteen

states. Now we have forty-five. Then our territory consisted of 909,050

square miles. It is now 3,846,595 square miles. We have practically a

new race made up of an amalgamation of all branches of the Caucasian

race, speaking the English tongue, which in my judgment is destined to

be the one tongue spoken in the world. It is a people determined to

uphold just and equitable principles of trade and to have sound money.

The amount now in circulation is $2,074,687,871, or an increase within

three years of $400,000,000. Russia has only 26,000 miles of railroad;

we have 190,000. In the last fifteen years we have made more progress in

the things which tend to increase practically the term of human life by

annihilating time and space and supplying necessities and comforts of

one kind or another than ever before in our history. We are told that

what does not happen in a year may happen in a minute. Similarly what

might not have happened in a thousand years under adverse conditions,

has happened in fifteen.

What of the future? In the language of Daniel Webster, “the past at

least is secure.” We see that the bank exchanges which in 1888 were

$48,750,886,813, have risen in 1900 to approximately $92,000,000,000.

During four years of a sound money Republican Administration, exchanges

in our clearing houses steadily increased from $48,750,886,813 in 1888,

to the magnificent total of $60,883,572,438 in 1892. But from 1892,

during four years of Democratic rule, our clearings fell from

$60,883,572,438 to $51,935,651,733 in 1896, running as low as

$45,000,000,000 in 1894. From 1896, during Mr. McKinley’s

Administration, we gained on an average more than ten billions each

year, the exchanges having gone up from $51,935,651,733 in 1896, to the

surprising sum of $92,037,588,818 in 1900. From 1888 to 1892 during a

Republican Administration, we increased our exports $317,787,505,

reaching the then gratifying figure of $1,015,732,011. From 1892 to

1896, during a Democratic Administration, our exports decreased by

$152,531,524, falling from $1,015,732,011 to $863,200,487. From 1896

down to June 30, 1900, with two months estimated, during McKinley’s

Administration, our exports have gone up from $863,200,487 in 1896, to

$1,400,000,000, gaining $537,000,000, or nearly doubling; and of this

vast export of $1,400,000,000 more than $400,000,000 are manufactured

goods, and would require in their production more than a million of

American mechanics.

From the fall of 1888 to the fall of 1892, during a Republican

Administration, national banks gained in resources $694,400,000, going

from $2,815,700,000 to $3,510,100,000. From the fall of 1892 to the fall

of 1896, during a Democratic Administration, the national banks lost in

resources $346,500,000, going down from $3,510,100,000 to

$3,263,600,000. From the fall of 1896 to April 26, 1900, during

McKinley’s Administration, the national banks have gained in resources

$1,548,356,000, going up from $3,263,600,000 to $4,811,956,000. The

increase in both Republican periods was constant and gradual throughout,

demonstrating, as has been well said, the influence and power of

far-reaching politics which alone can bring about uniform and universal

prosperity worthy the genius of the American people. The Republican

party turned over the Government to the Democrats in March, 1893, with a

bonded debt of only $585,029,330, and this was increased to

$847,365,130, in times of peace. For the purpose of prosecuting the war

the debt was increased in 1898 by $200,000,000, and now stands at

$1,046,048,750, less such an amount of the twenty-five millions of 2 per

cent. bonds as the Secretary of the Treasury may have already redeemed.

During the last four years of Democratic administration, $201,003,808 of

gold was exported; while during the first three years of the recent

Administration, or down to June 30, 1899, we imported $201,071,000,

making a difference in favor of Republican politics of $402,074,808.

Look, too, at the per capita circulation in the United States. In 1802,

it was $5.00; in 1845, $9.00; in 1873, $15.85; in 1892, $24.40; in 1900,

$26.77.

As President McKinley pointed out in his message, our foreign trade for

the fiscal year of 1900 showed a remarkable record. The total of imports

and exports for the first time in the history of the country exceeded

two billions of dollars. The exports are greater than they have ever

been before, the total for the fiscal year 1900 being $1,394,483,082, an

increase over 1899 of $167,459,780, an increase over 1898 of

$163,000,752, over 1897 of $343,489,526, and greater than 1896 by

$511,876,144. The growth of manufactures in the United States is

evidenced by the fact that exports of manufactured products largely

exceed those of any previous year, their value for 1900 being

$433,851,756, against $339,592,146 in 1899, an increase of 28%.

Agricultural products were also exported during 1900 in greater volume

than in 1899, the total for the year being $835,858,123, against

$784,776,142 in 1899.

The imports for the year amounted to $849,941,184, an increase over 1899

of $152,792,695. The increase is largely in materials for manufacture,

and is in response to the rapid development of manufacturing in the

United States. While there was imported for use in manufactures in 1900

material to the value of $79,768,972 in excess of 1899, it is reassuring

to observe that there is a tendency toward decrease in the importation

of articles manufactured ready for consumption, which in 1900 formed

15.17 per cent. of the total imports against 15.54 per cent. in 1899 and

21.09 per cent. in 1896.

The election of November, 1900, stamped out of the minds of the people

all fear that any sort of governmental policy in any way inimical to the

finances or business or prosperity of the country may be adopted. A very

great factor in our future development, which our people are soon to

discover, will appear in the building up of the ports of trade on the

Pacific Coast, which will be so extensive and rapid in progress that the

Atlantic ports will before long begin to feel the competition of the

Western coast of our country. Our grasp of the Philippine Islands, and

the foothold in trade and greater share of confidence in our

disinterestedness as regards territorial encroachment which is fast

gaining in the Chinese Empire, will finally consummate the preparations

for as great business and prosperity for the Pacific coast States as

have heretofore been enjoyed by those of the Atlantic coast. Soon a part

of the trade and commerce of the Eastern States will be brought into

competition with that of the great Pacific coast, insomuch that it will

appear that indeed “Westward the star of empire takes its way.” It is

the foresight of such change in the Pacific States that has helped

produce such a pronounced electoral result.

Our country is now passing through a rapid growth of progress and power

and prestige which will soon place her in the leadership of the nations,

with every means necessary for extending civilization, enlightenment,

commerce and better government over the world. We have come to the time

when we must take up the mighty work of further cultivating and

improving the condition of mankind, and we will continue this great work

until our labors shall have brought to pass better conditions of

government, co-ordination of interests, education, and peace and good

will among the nations of the earth. In the progress of civilization

since the dawn of the Christian era, the momentous task of leadership

has devolved first upon Rome, then upon Spain, then upon England. It

seems to have been reserved for the “Young Giant of the West” to

complete the tasks undertaken, and assemble into one great community of

interest vast national forces which have been the growth of centuries.

In due time we shall no doubt finish the work and bring peace and good

will to men in every part of the world and prepare men everywhere to

turn the spear into a pruning hook, the sword into a ploughshare and to

give freedom and protection and prosperity to all sorts and conditions

of men, and put an end to strife between the nations. We believe that

such is the great office to which we have been called, and that our

functions as the leading nation of the world have already begun.

[Illustration]

ALL THE PRECEDING PAGES WERE

WRITTEN YEARS AGO, AND WHAT FOLLOWS

BRINGS THE WORK UP TO THE

DATE OF THIS ISSUE, MARCH 31ST, 1908.

------------------------------------------------------------------------

CHAPTER LXIV.

MY CHRISTMAS ADDRESS TO CUSTOMERS DEC. 24,

1906.

You can now realize why we have for so long a period had a congested

stock market. It started by the accumulation of Union Pacific by

comparatively few people, the purchases being commenced in 1903, the

panic year, when the price dipped to 65. By the time the stock touched

100 the accumulation was complete. Then the manipulation was begun for

its advance to 190, at which time the ten per cent. dividend was

declared, since which the process of distribution has been going on. St.

Paul, Northern Pacific, and Great Northern have gone through a similar

process. Prior to the declaration of the increased stock issues by these

companies, the larger part of the old stock had been bought up by the

inside knowing ones, after which the new issues were announced to the

public. The profit to the holders of these stocks can be measured by the

market value of the rights. Now we all know what the large holdings of

these stocks meant. The inside magnates having nearly all of them, the

outsiders were left out in the cold, and were consequently in the dark;

but now the light of day flashes over the situation. You are asked to

buy the rights which represent insiders’ profits, all of which is water

pure and simple. The accumulation of stocks has now ceased and

distribution is under way, and that is why the market has this present

fit of liquidation, which must go on until completed. Then the situation

will have righted itself legitimately, and not until then. Remember what

I tell you: that the accumulation of stock as I have described has

produced the present congested money market, and the unlocking of the

former will, after a short time, unlock the other; then all will be well

again. The present turbulent waves will pass over without many

shipwrecks, and then will come calm weather and a smooth sea. Patience

is a great virtue; exercise it, and wait for bottom; then get in and get

rich.

Gentlemen, this is my Christmas greeting to you. You all have my best

wishes for a happy and prosperous New Year.

------------------------------------------------------------------------

CHAPTER LXV.

EDWARD H. HARRIMAN.

Edward H. Harriman was born on Long Island in 1848. His father was a

clergyman, and the family in poor circumstances. At the age of fourteen

he left school, and began his business career in a Wall Street house. Of

an aggressive and masterful character, with a great capacity for hard

work and the ability to master every detail, he rapidly forged ahead. At

eighteen he became partner in a brokerage house; at twenty-two bought a

seat on the New York Stock Exchange. In 1883 he was chosen a director of

the Illinois Central Railroad Company, and four years later, when he

became its vice president, he retired from the brokerage business,

having amassed what was then considered a comfortable fortune. For a

time, while President Fish was abroad, Mr. Harriman was acting president

of the Illinois Central, and promptly put into execution his idea that

the way to make a road pay was to put it in the best of physical

condition, and thus attract traffic by the ability to handle it, rather

than by cutting rates. This policy afterwards brought the Union Pacific

up from a financial and physical wreck in 1893 to the most aggressive

and progressive railroad corporation of the day, operating, together

with the Southern Pacific, over 15,000 miles of road, besides

controlling the Illinois Central, Chicago & Alton, and St. Joseph &

Grand Island Railroad companies and the Pacific Mail Steamship Company,

and owning large interests in the Baltimore & Ohio, New York Central,

Atchison, Chicago & Northwestern, and Chicago, Milwaukee & St. Paul

roads. Mr. Harriman and his associates were defeated in an attempt to

obtain control of the Northern Pacific in 1901, but the Union Pacific

system benefited by this defeat, it is estimated, by about $60,000,000.

The purchase of Northern Pacific in the open market forced the price of

its stock up to $1,000 per share on May 9, 1901, causing the memorable

panic of that date.

------------------------------------------------------------------------

CHAPTER LXVI.

THE UPS AND DOWNS OF WALL STREET.

ILLUSTRATED BY PERSONAL REMINISCENCES OF ITS LEADERS.

The mutations and vicissitudes, the ups and downs, of Wall Street can be

best illustrated by sketches, from life, of the career and experience of

its leading operators, who have often, though not generally, gone up

like a rocket and come down like a stick.

I will not begin with those now foremost in the Wall Street arena, but

go back to Jacob Little, whose name is still a household word on the

Stock Exchange.

He died in the sixties, while the war between North and South was

raging, and he had gradually ceased to be a power in the Street after

the panic of 1857. He remained a bear on the rising tide of currency

inflation following the outbreak of the war, and was submerged and wiped

out.

He was an odd fish—singular in appearance, manner, and business methods,

but for more than twenty years he had a great name in Wall Street. To

speak colloquially, he was the cock of the walk by self-assertion and

common consent.

He was the successor of Jacob Barker, who came from Philadelphia, and

was the first great leader Wall Street had known. He was trained in his

office, and began as a stock operator on his own account in 1835.

[Illustration:

HENRY H. ROGERS.

]

The panic of 1837 made his reputation and his fortune, for, being

naturally a bear, he was largely “short” of stocks. That panic swept the

whole United States with the besom of destruction, and sent prices down

to zero. It left him a greater bear than ever, a preacher of distrust

and a prophet of failure. He thrived on calamity, and grew richer and

richer during the years of depression that followed that memorable

revulsion.

From 1835 to 1846 he was in his glory and his prime, and no one disputed

his leadership in the world of Wall Street. But then he met with a great

reverse, not, however, through continuing to “bear” stocks, but through

a “bull” operation in Norwich and Worcester Railroad stock. He

attempted, with a Boston clique, to control it, and personally bound

himself to the clique, in the sum of $25,000, not to sell his stock

below 90.

He went to work to put it up, but it “bulled hard,” and refused to stay

up. So he paid the forfeit, and sold out at the best prices he could

get, losing a million, which was looked upon in those days as ten or

twenty millions would be now. This was the only large bull operation he

ever engaged in, and it confirmed him in his natural bearishness.

He more than recovered from this disaster, however, by breaking the

“corner” in Erie stock not long afterwards. He was largely “short” of

it, and the cornering clique had bought up all the stock on the market.

They put the price higher and higher from day to day, but Jacob Little

remained unterrified, and refused to “cover” his contracts. He was the

only one “short” who stood out against the cornerers, and made no effort

to buy in his stock. The eyes of all Wall Street were watching him, and

the prevailing opinion was that he would be forced to “cover” at a

ruinous loss, or fail.

But he had “a card up his sleeve” that the cornerers had never

suspected, and just when they were expecting his surrender, or failure,

at the maturity of his contracts to deliver, he produced a big bundle of

new Erie certificates of stock and filled his contracts by delivering

them. These had been issued to him in exchange for the company’s

convertible bonds, unknown to the clique, the issue of the bonds with

the convertible clause being also unknown to them.

Such a surprise and checkmate Wall Street had never known before, and

the “corner” was broken, with resulting demoralization and disaster to

the cornering clique, and great profit and eclat to Jacob Little. But

subsequently he failed several times on the “bear” side, yet always

managed to pay in full out of later successes. He was equally generous

as a creditor, and compromised on easy terms, so as to give his debtors

a chance to recuperate. Hence he was liked and respected notwithstanding

his aggressiveness and the havoc he often wrought among speculators on

the opposite side of the market.

He was a born speculator. Speculation was his daily bread. He liked it

for its own sake. His ambition was to control the stock market, and he

was willing to run extra hazardous risks to achieve this end. He once

said: “I care more for the game than the results, and, winning or

losing, I like to be in it!”

It was this feeling that kept him in Wall Street after his money power

and his prestige of success, as well as his health, had passed away. He

was out of debt, but without money in any considerable amount. He was a

mere shadow of what he had been, a name and nothing more. Nevertheless,

he risked his small operations with zest. But his health gave way more

and more, and he fainted one morning in the board room, in Lord’s Court,

and his end came not long afterwards.

He said, “I die poor!” But from the ashes of his estate and unsettled

accounts his family succeeded in collecting about $150,000, which he had

neglected to look after, for he had always been careless and easy-going

in money matters, and attached little value to money except for its use

in speculation. He was the very reverse of a miser, for he had never

cared to hoard.

It was Anthony W. Morse who gave the finishing stroke to the career of

Jacob Little, for, while Little was operating for a decline in the early

sixties, Morse sprang into the speculative ring as a rampant bull, and

bid prices up on the Stock Exchange, while it was still in Lord’s Court,

in a way that astonished him and the other fossils of the board. They

considered him utterly reckless. But Morse foresaw that the great war

issues of United States currency—greenbacks as they were called—then

being made would inflate the prices of stocks largely, and he

accordingly, metaphorically speaking, rushed in where angels feared to

tread.

He became the storm center, the hub, the pivotal point, in the wildest

riot of stock speculation this country has ever known, or probably ever

will know again; and who was he? A slight, fair-complexioned country

lad, he came to New York without a dollar, and became a clerk in a

stockbroker’s office. Then he married a woman with some money, and

induced her to let him speculate a little for her, and was successful in

making something for her, and enough for himself to buy a seat at the

Stock Exchange, which then cost only $500, the initiation fee.

That was in 1862, up to which time he was both insignificant and

unknown. But the bold, dashing style in which he immediately began to

astonish the natives and rattle the dry bones of the fossils, by his

rapidly advancing bids for railway stocks, showed that he was a man of

the time, fully up to date. Had he not proved to be right on the market

he would have been ruined at the start, but the market went with him,

and it went with a rush that made the old fogies of the board say:

“Well, well! this young fellow got the start of us—we are not in it!”

He first put up Cleveland & Pittsburg with the ease and celerity of a

man who thought it a mere trifle to handle. Then he successfully took

hold of Ohio & Mississippi, Rock Island, Erie, and Fort Wayne, and put

them up in the same pyrotechnical and flamboyant way. He, in one day,

marked Fort Wayne up from 118 to 152. He had unlimited confidence in

himself, because he saw that he was on the right track, and the Street

and the public followed him. He ran Pittsburg up from 65 to 108 amid

great excitement, and bid 100 for the whole capital stock, “seller one

year.” He then sold all his Pittsburg between 96 and 108. His firm,

Morse & Co., were overrun with commission business at their large

ground-floor office in William Street. By the early part of 1863 he had

punished the bears badly, and made, it was estimated, at least

$1,250,000, and his career of riotous success ran for just two years,

during which he was supposed to have made enormously. There was a rush

to join every pool he formed, so great was his prestige. Men crowded the

sidewalk in front of his office trying to find out what he said, or what

he was doing, so that they might do likewise; and if he gave a “bull”

point on any stock, nearly all who heard of it acted upon it, feeling

confident that it was a dead certainty. His fellow-brokers in the board

largely followed him, like the rank and file, and rag, tag, and bobtail

of the Wall Street crowd, because he had been always right. Never indeed

was a Wall Street leader, before or since, more blindly followed than

Morse. The whole country joined in the mad speculation there, and he was

on the crest of the wave.

One night at the Evening Exchange Morse bid 112 for 10,000 shares of

Erie stock, and Daniel Drew sold them. Then he bid the same price for

20,000 more, and Drew sold them. A day or two later Drew “covered” at a

heavy loss. When Morse took hold of Ohio & Mississippi he jumped it from

49 to 69 in a couple of days.

Money was cheap and abundant, owing to the currency inflation, and

speculation so active that many stock houses kept a relay of clerks for

night work. Meanwhile speculation in gold was as rampant as in stocks,

and hundreds of new mining and petroleum companies were launched, and

the stocks of these were actively traded in at high and rapidly rising

prices, while old and worthless stocks, like Bucks County Lead, were

resuscitated and boomed with the rest.

Clergymen and women were drawn into this whirlpool of speculation, and

any stock with “gold” in its name went off “like hot cakes.” One stock

was considered about as good as another to buy, as all were going up.

Morse led the crazy multitude in everything, and, among his other

achievements, he put Rock Island up from 106 to 149, and, in doing so,

bought the whole capital stock, which was then only 56,000 shares.

Morse’s doom was sealed by Mr. Salmon P. Chase, who as Secretary of the

Treasury sought to stop the wild inflation, and particularly the

tremendous bull speculation in gold, by selling gold for currency, and

locking the currency up in the Sub-treasury, so as to make a tight money

market. This had the desired effect, for it made money so scarce and

dear that it forced the large speculative holders of stocks to sell,

through the banks calling in their loans, and brought on a panic, just

at the time when Morse was more heavily loaded with stocks than he had

ever been before.

Broken in health, and looking weary and haggard, he tried to sell, and

this set every one of his followers selling like a flock of sheep, and

prices tumbled from bad to worse under the general rush to realize. Fort

Wayne fell at the morning session of the board on that fatal Monday of

the Morse panic, on the 18th of April, 1864, from 153 to 119. Then Morse

left the room for the last time, and, going to his office, said to his

partner, “The game is up!” Reading had also fallen that morning nineteen

per cent.; Pittsburg, seventeen; Hudson River, twenty-three; and all

other active stocks about as much.

This monetary tornado, that found Morse overloaded with stocks, there

and then swept him out of the Stock Exchange, for, knowing that he was

hopelessly ruined, he wrote an announcement of the suspension of Morse &

Co., and sent it to the board a few minutes after he had left it. The

failure proved a very bad one, and the firm was unable to settle or

resume. Morse was no longer the leader of Wall Street, and many of his

customers, in a semifrantic condition, rushed in upon him and denounced

him bitterly. The king had been dethroned, never to regain his crown,

nor ever to get a fresh start.

Pandemonium reigned during the rest of the day, and at the Evening

Exchange uptown at night Speculation had been so widespread, and Morse

had been so implicitly trusted as a leader, that the collapse ruined

thousands, including many women, and a raving, cursing mob crowded into

the Evening Exchange and overflowed into the Fifth Avenue Hotel. There

was a night of horror in hundreds of homes. Morse was upbraided and

cursed, and many of his customers, as is usual when they lose their

money in a broker’s office, blamed him for their losses.

Then for a year Morse disappeared. When he returned he looked more

haggard than ever, and he died poor soon afterwards. No one ever accused

Morse of being dishonest, therefore his Waterloo defeat gained him

widespread sympathy. Few Wall Street magnates had more friends than

Anthony W. Morse from start to finish of his career.

John M. Tobin, who had been a ferry gatekeeper for Commodore Vanderbilt

on Staten Island, figured largely as a speculator in the gold room, and

also as a stock operator, during the two years of the Morse campaign,

and saw many ups and downs. He began to loom up still more after Morse

sank below the horizon in 1864. He was known to be the agent of

Commodore Vanderbilt in cornering Harlem stock, and shone in

Vanderbilt’s reflected light, although a large operator on his own

account.

The Harlem “corner” was a memorable event. Through the winter of 1863-64

the stock had been selling at about 60, and Vanderbilt was a director

and large stockholder, and, moreover, determined to make what he called

“a big thing” out of it. The road was, however, generally considered of

little account except for carrying milk. So, in connection with his

street-railway projects for improving its value, he engineered the stock

up to 117. He counted upon getting a charter from the Common Council;

but its members tricked him, and after passing a favorable resolution

they sold the stock “short” and then rescinded the resolution, and it

fell to 72. So they made money at his expense.

[Illustration:

JOHN D. ARCHBOLD.

]

He then applied to the Legislature at Albany for a Harlem franchise to

lay rails in Broadway; and the legislators saw there was room for stock

speculation in this. They made a favorable report on a bill granting

Vanderbilt’s application, and on this Harlem stock rose sharply to 150.

Then they and their friends, including the New York Common Councilmen,

sold it short largely, thinking they had a sure thing; and Tobin bought

for Vanderbilt all that was offered. On March 25, 1864, they voted, by

prearrangement, against the bill, and Harlem stock fell to 101.

The sellers of Harlem rejoiced, for they had large profits on paper; but

Tobin still continued to buy the stock, and under his purchases it

rapidly recovered. The commodore was determined to punish them. Within

ten days Harlem was up to 150 again. A week later it touched 185, and

thereafter, for ten days, fluctuated between 175 and 200. Daniel Drew

sold calls on it for 30,000 shares, thinking it could not stay up long,

and the professional speculators, both in and out of the Stock Exchange,

took a hand in selling it “short” on the same theory. The Morse panic

swept over it in April, but still it stood up, like a pyramid in the

desert, and Tobin still continued buying for Vanderbilt.

In May the price of Harlem was put up to 300. It stood at 285 on the day

15,000 shares had to be delivered, and they were settled for at this

price. Daniel Drew compromised by paying $1,000,000 to Tobin in

settlement of his own Harlem “shorts,” but the claim against him was

$1,700,000. He, however, threatened a suit for conspiracy. Tobin’s share

of the profits of the corner was about two millions, and this made him

worth three.

Commodore Vanderbilt chuckled, and disposed of the Harlem road by

leasing it at eight per cent. on the stock to the New York Central &

Hudson when he got control of it. So Harlem proved a bonanza to him till

the end, and is still one of the splendid assets of his descendants.

After the “corner,” Tobin bulled gold on a tremendous scale in the face

of the Union victories that terminated the war. He bulled it from 198 to

211 against the “short” interest at the beginning of 1865, and then it

broke on him so heavily that he lost more than $1,500,000. After that he

met with a succession of disasters in the stock market, and lost every

dollar that he had, besides running in debt with his brokers. He then

retired to live with his sister on a farm on Staten Island, and was

never seen again in Wall Street. He saw ups and downs with a vengeance.

So did his contemporary of the open board, E. A. Coray, who made and

lost about as much.

Addison G. Jerome had a career in Wall Street more brief than that of

Anthony W. Morse, but he is still well remembered there as a shining

light. He entered Wall Street as an operator early in 1863, after being

a merchant in the dry goods trade, and during the rest of that year was

called “the Napoleon of the public board,” so conspicuously active,

bold, and successful was he in his operations. He was a friend and

broker of John Tobin’s, and coöperated with him in bulling Harlem, with

the result that he made a very large amount of money out of it, first by

the rise from 60 to 117, when Commodore Vanderbilt was dealing with the

New York Common Council, and next when he was punishing the legislators

at Albany for going back on him, as he phrased it, in the 1864 “corner.”

He became a brilliant leader, and had a host of followers, and was

successful in everything he undertook until he bulled Michigan Southern,

and, with a clique that he formed, bought control of it. He put it to

high figures, and was sure of his position. But Henry Keep, the

treasurer of the company, and a keen operator in stocks, stepped in, and

turned Jerome’s success into utter and disastrous failure.

Henry Keep knew something that Jerome was unaware of, namely, that a

clause in the Michigan Southern’s charter permitted its directors to

increase its capital stock. So he called a secret meeting of the board,

and an increase of 14,000 shares was voted. Then, with this increase for

future delivery, he sold the stock against it, and borrowed to make his

deliveries, which made Jerome think Keep was largely “short” of Michigan

Southern. He and his clique, therefore, kept on buying and advancing the

price, while Keep kept on selling more and more. The final result was

that Jerome called in all his loans of the stock, so as to force the

“shorts” to “cover,” and that Keep responded by delivering the 14,000

shares of new stock, which caused a fall of twenty per cent. in Michigan

Southern in one day. This involved the loss of nearly all the three

millions of money Jerome had so quickly made, and killed him as a

leader, although he was respected as an honorable man. He took the loss

of his fortune and prestige so much to heart that he sickened and died

in the following year of some obscure disease, a virtually ruined man.

But, fortunately, during his nine months of phenomenal success he had

settled enough on his wife to keep the wolf from the door. His ups and

downs were remarkably swift even for Wall Street.

Leonard W. Jerome, a younger brother of Addison’s, was prominent in Wall

Street and society, and as the driver of a four-in-hand, long before the

latter appeared, and continued in the Street long after Addison passed

away. His career was also marked by memorable ups and downs. In 1863 he

was a large holder of Hudson River Railroad stock, which the bears had

hammered down to 107. So he formed a strong clique to bull it against

the “short” interest, and bought all the stock that was offered until he

had taken nearly all the capital. Then he bid up the price gradually

till it reached 175, and made the stock so scarce that he loaned it to

the bears to make their deliveries, at five per cent. a day. The shorts,

estimated to represent about 50,000 shares, finding there was no help

for them, covered at a very heavy loss, while Jerome made a great deal

of money by squeezing them, presumably two or three millions.

His prestige increased with his wealth, and he became a social as well

as a financial lion. He had been watching Pacific Mail since it

succeeded the Nicaragua Transit Company in 1856. In 1861 its stock fell

to 69, but in the next year its earnings were enormous, and 26,000 of

its 40,000 shares were bought by a combination of operators, mostly its

directors, who transferred it to Brown Brothers & Co., to be held in

trust for their benefit for five years; and they selected Leonard Jerome

to bull the stock in the open market. Under his manipulation it rose to

160 in thirteen months after he commenced operations for the ring. There

was a large “short” interest in it by that time, and, to force the

“shorts” to settle, he put it to 200, and kept it there, and they

settled.

In 1865 Pacific Mail’s capital was increased from four millions to ten,

and yet its stock stood at 240, and it paid twenty per cent. a year in

dividends. The year after, it was increased to twenty millions, yet it

sold at 180, with Jerome still bulling it. But in 1867 he met his

Waterloo in it. To use his own words, he had bitten off more than he

could chew. The company’s earnings fell off largely, and its report

showed assets reduced from thirty-four to twenty-two millions; the

Government paper-money issues were being rapidly contracted, and the

flood of “water” injected into the stock was beginning to tell upon it.

Moreover, Jerome had agreed to buy the old five-year combination’s stock

at 160. Owing to all this, accompanied by a generally weak stock market,

Pacific Mail broke, under enormous sales, from 163 to 115 in a few days

on his hands, and he lost practically everything he had, except some

real estate. After being thus ruined by Pacific Mail, Leonard Jerome

ceased to be a power in Wall Street. He had no longer any prestige

there, and soon retired from it entirely, and died, at the home of his

daughter, Lady Randolph Churchill, in London, a poor man. He had

experienced his full share of the ups and downs of Wall Street.

Pacific Mail was nothing to Leonard W. Jerome after he lost his money,

nor he to Pacific Mail. The company had seen its most palmy and

prosperous days, and its water-logged stock was heavy on the market. It

suffered from reduced traffic and bad management, and in 1871-72 its

stock had sunk to so low an ebb that the directors felt it was necessary

to do something to mend matters. So, having little of the stock, they

decided, instead of trying to reëlect themselves, to give up the ship.

They retired to make room for a new board in November, 1871, with Alden

B. Stockwell at the helm as president. Nominally the new board selected

him, but really he selected them to do his bidding.

His name was then very little known in Wall Street, but he was known to

have been a steamboat clerk on Lake Erie, and more recently to have

married the daughter of Elias Howe, the sewing-machine inventor and

manufacturer of Bridgeport, Conn., and thus acquired wealth and become

the president of the Howe Sewing Machine Company and the Willcox & Gibbs

Company.

He had come to Wall Street to see what he could do, and finding Pacific

Mail stock down to the 40’s in 1871, he began to bull it with a vigor

that excited some wonder; and the wonder grew when it was found that he

had secured stock and proxies enough to elect his own board of

directors. He elected them and himself by a vote of 118,000 shares, and

became Commodore Stockwell at a bound. His wish was law to his

codirectors, and the irreverent called it a dummy board.

With the assets of the Pacific Mail Company under his control, and

acting for it, he soon managed to get control, and become president, of

the Panama Railway Company. He began, on this acquisition of the Pacific

Mail Company, to bull Pacific Mail stock anew by making splendid

promises. In October, 1872, while the company’s steamers were foundering

and burning with alarming frequency, he claimed that it had increased

its property by large purchases, and was earning more than eleven per

cent. a year in excess of the Government subsidy. This, he said, would

enable it to pay twelve per cent. on its capital stock from January 1,

1872. Then he asked for authority from the Legislature at Albany to

reduce its capital stock from twenty millions to ten, which was granted;

but the company never availed itself of this authority, and to this day

its capital remains at twenty millions.

The stock, that had been as low as 40, responded to his “bull”

statements and manipulation, for Wall Street saw that the intention was

at least to put the stock up. It rose, after a good deal of see-sawing,

to about 107, and Commodore Stockwell was the sensation of the time in

Wall Street. He became, like Leonard W. Jerome, what was called a “big

swell.” He had one of the largest houses in Madison Avenue and one of

the showiest turnouts in the city, and yet he had been commodore for

less than a year.

He did not confine himself to Pacific Mail and the other interests

mentioned, but took hold of that railway cripple, Boston, Hartford and

Erie, and bought 30,000 shares of Atlantic and Pacific Railway preferred

at 25, a stock of uncertain legal status, although the certificates had

been printed by the company, because there was no legal authority for

its issue. But this did not prevent the stock from being made active for

a short time in Wall Street at prices a good deal above cost.

Before long, however, it became discredited, and so also did Boston,

Hartford and Erie stock, while Pacific Mail suffered under fresh losses

and reduced earnings. The stocks of the three companies were vigorously

attacked by the bears and they all went down together, Stockwell being

unable to support them, and all that he had made was lost. This state of

things involved him in a snarl about the 27,000 shares of the Pacific

Mail Company’s treasury stock, and a compromise was the result, by which

he is said to have given his note to the Pacific Mail Company for

$1,140,000, indorsed by the Howe Sewing Machine Company.

Then, at the next election, he ceased to be its president, and a new

board of directors was elected. He was also dropped from the Panama

Railroad directorate and the Atlantic and Pacific board. He had lost his

money and his prestige, and there were none so poor as to do him

reverence. He led a precarious existence as a small speculator

afterwards, and, not long before his death, failed for a small amount as

a member of the Consolidated Exchange.

He was a man of popular manners, and, in describing his change of

fortune, he humorously remarked: “When I first came into Wall Street, it

was asked, ‘Who is that man Stockwell?’ But I was respectfully spoken of

as ‘Mr. Stockwell’ after I had made a good deal of money bulling Pacific

Mail; and when I was elected president of Pacific Mail, I was styled

‘Commodore Stockwell’ and ‘a Wall Street leader,’ and a great man

generally. But when Pacific Mail broke, and broke me, I became ‘That

red-headed cuss Stockwell.’” Thus are the ups and downs of Wall Street,

and Wall Street opinion, illustrated in real life.

Of all the great operators of Wall Street, however, Daniel Drew

furnishes the most remarkable instance of immense and long-continued

success, followed by utter failure and hopeless bankruptcy. His early

success as a stock speculator was all the more surprising because he was

an illiterate man, who had barely learned to read and to write enough to

be able to sign his own name in a sprawling, illegible hand.

He had been a cattle drover, and after that the keeper of the Bull’s

Head Tavern, at the New York Cattle Yards, and was without any

experience of banking or Stock Exchange affairs when he first came into

Wall Street; and he never even read a newspaper. But he succeeded in

making money from the start, and then joined others in putting capital

into Hudson River steamboats; and his investments in these became large

and proved very profitable, although he knew nothing about running

steamers himself.

His shrewdness enabled him to make millions by stock speculation, and

before long, without knowing anything of the stock brokerage business

except as a customer, he entered into a Stock Exchange partnership, his

firm being Drew & Robinson. For many years this house was prosperous and

prominent, and Drew, after it was dissolved, and when at the summit of

his prosperity, said to a friend who rated him at twenty millions, “I

guess sixteen will cover it.”

After that Drew’s cunning and sagacity seemed gradually to fail him. He

met with a succession of disasters through bad judgment, but was more

liberal than before in endowing the Drew Theological Seminary and other

Methodist institutions. Yet, instead of giving the endowments in cash,

he gave his notes for them, and paid interest on these. The consequence

was that when he finally lost every dollar that he had, and was declared

a bankrupt, without any assets, the notes were worthless. While in this

bankrupt condition and dependent for a home on his son, he died, and his

death was as unnoticed as that of any other Wall Street wreck. He had

gone out of sight, and out of mind, when his money was gone. Never did

anyone go further up or further down in Wall Street as a stock

speculator than Daniel Drew.

Charles F. Woerishoffer was a brilliant Stock Exchange operator, who

made a large fortune out of nothing and then lost most of it again by

overstaying his market as a bear after the panic of 1884.

James R. Keene came to New York with several millions, made out of

mining stocks in California at the time of the great Bonanza gold

discovery at Gold Hill, when Flood and O’Brien, Mackay, and John P.

Jones made their millions. But Keene, after adding to his “pile,” lost

all he had through overextending his operations in bulling stocks and

grain in the eighties. He, however, got a fresh start through being

employed by large interests to manipulate stocks for them, and after

several more ups and downs he is rich again.

Henry N. Smith, a former partner of Jay Gould, made five or six millions

as an operator in stocks, only to lose them again and die poor. The

brief meteoric Wall Street career of Ferdinand Ward, who lured General

Grant into forming the firm of Grant & Ward, is well remembered. He went

up so high that when he came down he landed in Sing Sing prison. Fish,

the president of the Marine Bank, did the same, after being long in good

repute.

It is unnecessary to dilate on any of the Vanderbilts, or Goulds, or

Russell Sage, or Henry Keep, or Henry Villard, or William E. Travers,

because they had no totally overwhelming reverses in their Wall Street

career; but John F. Tracy, the president of the Rock Island Railroad in

the sixties, was ruined by his stock speculations after being worth more

than five millions, and he had to relinquish his presidency, and died in

poverty. Cyrus W. Field, too, lost nearly all his large fortune through

overloading himself with Manhattan Railway stock; and Addison Cammack,

the Ursa Major of Wall Street, died worth little in comparison with what

he had once possessed.

How violent the vicissitudes of Wall Street are at times we may easily

infer when we recall the tremendous convulsion produced by the gold

conspiracy of Black Friday, on September 24, 1869, which involved

thousands in enormous losses, and caused both the Stock Exchange and the

Gold Clearing House, and Gold Exchange Bank, to be closed; or when we

think of the devastating Northern Pacific panic of May 9, 1901, or of

the far-reaching and long-continued havoc worked by the panic of 1873.

The memorable failure of Jay Cooke & Co., early in the last-mentioned

panic, will be recalled by many as vividly as the collapse of the Ohio

Life and Trust Company that started the panic of 1857.

All these reminiscences of the ups and downs of Wall Street will serve

to remind my readers that, while it is often easy to make money, it is

still easier to lose it. Therefore, boldness should be always tempered

with caution in the pursuit of the Almighty Dollar in Wall Street.

------------------------------------------------------------------------

CHAPTER LXVII.

RECENT WALL STREET BOOMS.

THE RESISTLESS POWER BEHIND THE MARKET.—THE ADVENT OF GOVERNOR R. P.

FLOWER.—HOW STOCKS WERE BOOMED WITH A DASH.—A SUDDEN DEATH AVERTS A

BIG PANIC.—MR. MORGAN AS A RAILWAY REORGANIZER.—HOW BANNIGAN

UNLOADED HIS RUBBER.—MILLIONS WON ONLY TO BE LOST.

Wall Street, after the election of McKinley, enjoyed a boom such as it

has seldom known. Probably the most interesting feature about this boom

was that it was not in any sense spectacular. In that respect it is

unique. Prices of stocks went higher and the intrinsic value of most of

them was greater than ever before. The market had all the qualities that

normally would cause intense excitement and focus the attention of the

entire country on the Stock Exchange. Yet in spite of these conditions

the Street was in a normal state of mind, and it is doubtful if the

general mass of the people, who get their information from the

newspapers, were aware that there was even an ordinary boom in Wall

Street. This unusual condition was due, I believe, to the fact that the

boom we were enjoying was built on a foundation that reached clear to

the bowels of the earth. There was nothing unnatural or artificial about

it. Wall Street, instead of being the center, is simply one of the

centers that reflects the general prosperity throughout the country.

Farmers, merchants, mechanics, mill workers, and miners are all so

intent on keeping pace with the progress in their own pursuits that they

have no time to cast eyes our way. The same conditions that boom stocks

may boom everything else in the country at an equal rate, so that we are

in nowise deserving of special attention.

Another factor, too, had developed in the Street that prevented the

usual excitement and hurly-burly incident to a rising market. This was

the absence of a pronounced central figure. Usually a boom centers about

some one man who stands boldly out in the open, and whose hand is known

to be manipulating values. But then the manipulation was being carried

on by a method that was as quiet as it was novel and unusual. That the

market was being manipulated was apparent enough even to the most casual

observer. But the source of this manipulation was probably known to only

a few.

They knew that a new order of things had come, due to the most powerful

influence that had ever manifested itself in Wall Street. This influence

was very largely composed of the Standard Oil combination, who

introduced in their Wall Street operations the same quiet,

unostentatious, but resistless measures that they had always employed in

the conduct of their corporate affairs. The heretofore conspicuously big

operators were mere tyros beside the men who are running things for us

now.

At his best, Jay Gould was always compelled to face the chance of

failure. Commodore Vanderbilt, though he often had the Street in the

palm of his hand, was frequently driven into a corner where he had to do

battle for his life; and so it was with every great speculator, or

combination of speculators, until the men who control the Standard Oil

took hold. With them, manipulation has ceased to be speculation. Their

resources are so vast that they need only to concentrate on any given

property in order to do with it what they please; and that they have

thus concentrated on a considerable number of properties outside of the

stocks in which they are popularly supposed to be exclusively interested

is a fact well known to everyone who has opportunities of getting

beneath the surface. They are the greatest operators the world has ever

seen, and the beauty of their method is the quietness and lack of

ostentation with which they carry it on. There are no gallery plays,

there are no scare heads in the newspapers, there is no wild scramble or

excitement. With them the process is gradual, thorough, and steady, with

never a waver or break. How much money this group of men have made it is

impossible even to estimate. That it is a sum beside which the gain of

the most daring speculator of the past was a mere bagatelle is putting

the case mildly. And there is an utter absence of chance that is

terrible to contemplate. This combination controls Wall Street almost

absolutely. Many of the strongest financial institutions are at their

service in supplying accommodations when needed. With such power and

facilities it is easily conceivable that these men must make enormous

sums on either side of the market. So far, fortunately, their

manipulations have all been one way—upward; and in conjunction with the

general prosperity this has resulted in making large sums of money for

nearly everybody in the Street.

Here and there we have heard of losses, some of them fairly large, but

in comparison with the general money-making these are hardly to be taken

into consideration.

The last preceding boom that Wall Street had enjoyed was as different

from this as it is possible to imagine. It had all the elements which

this one had not. It centered about one man who stood out in the lime

light clear and distinct. It kept the Stock Exchange in a constant state

of ferment. It filled the newspapers with column upon column of

sensational stories. It made millions for an army of retainers, on

paper, and it kept the market jerking up and down for months.

Roswell P. Flower, ex-Governor of the State of New York, was the leader

of the boom, and a more picturesque figure had never been seen in Wall

Street, which is saying a great deal. Mr. Flower was an individual of a

very plain exterior. He often used language that was noticeable more for

its force, directness, and emphasis than it was for polish. He was

rarely seen without a huge quid of tobacco that almost filled the left

side of his mouth. Spittoons were an essential part of the furnishings

of his office. His clothing hung on his person not unlike meal sacks.

His hat was rarely brushed, and for days at a time, apparently, he

forgot to shave. Altogether he was the last person, in appearance, who

would be expected to lead in a district that is famous for its

well-groomed men. His education was certainly not collegiate. All these

factors the ordinary man would have judged to be handicaps, yet they

were Mr. Flower’s strongest aids. The lack of artificial polish gave

people confidence in his statements. His limited education enabled him

to think clearly along certain lines without being hampered by mental

digressions, which would probably have come with a higher mental

culture.

As the administrator and manager of the estate of his brother-in-law,

Henry Keep, he came into the Street about twenty-five years ago. He

controlled a large amount of funds, which by conservative direction he

increased very substantially. He scarcely ever figured in the

speculative field to any great extent until after he had completed his

term as Governor of New York State. When he returned to the Street from

Albany he naturally came with a considerable prestige. Ex-Governors of

the Empire State are not very plentiful in and about the Stock Exchange.

He also brought with him a large political following. In both of the

great parties in New York State there are many men of standing and

influence who like to take a flyer in Wall Street. Almost to a man they

associated themselves with Mr. Flower, who, during his term at the

capital, had made hosts of friends with Republicans and Democrats alike.

He also had close associations with most of the big capitalists.

After he had settled down to business, on leaving politics behind, Mr.

Flower picked out several stocks as his specialties. Under his

manipulation all these properties went up and soon began to show a big

advance, unusual strength, and great activity. The bears made frequent

assaults on his position and now and then pushed him toward the wall,

but he always fought his way to the front again, and came out master in

every encounter. When he had himself pretty well intrenched in the

specialties he was handling, he suddenly plunged into Brooklyn Rapid

Transit, and for months he kept things stirred up in a way that even

Wall Street has seldom seen. He picked up the stock commencing at 6 and

in an incredibly short time ran it up to over 138. Almost every

politician in the State made a fortune on paper. Mr. Flower was

immensely popular with the Wall Street news reporters, who helped his

boom along through the glowing accounts they wrote from day to day.

Under the impetus of the swirl in Rapid Transit, practically every

property in the Street went flying upward, until the end did not seem to

be in sight. The bears were beaten to a standstill every time they

showed their heads. The only result of their attacks was that Flower

stocks would jump up a notch higher. The ex-Governor preached

Americanism and confidence, until everybody believed that if a stock

were only grounded, and the property located in America, you could buy

it at any price and still be on the safe side.

That a terrible panic did not grow out of this boom was due only to one

fact: Mr. Flower’s sudden death. Had he lived thirty days longer the

bubble must have been pricked, and the result would have been

disastrous. Mr. Flower went to the country for a day’s rest, ate freely

of ham and radishes, and washed his frugal meal down with a copious

supply of ice water. He died, a few hours afterwards, of an attack of

acute indigestion. His death alone saved the Street.

The Rockefellers, the Vanderbilts, and his other wealthy friends rushed

into the market with millions and sustained values. They were in a

position to attribute the threatened reaction to his death, and pointed

out the absurdity of letting such an incident affect the value of

stocks. They discounted the break that must have come, in the natural

course of events, under the forcing process that was going on. Reasoning

such as this, spread broadcast through the papers, stopped the break.

Where the bottom would have fallen out entirely there was virtually but

a moderate break all along the line. The small speculators, operating on

moderate margins, were of course wiped out almost to a man; but most of

the big fellows were saved. It is probably the only instance on record

where the death of a big operator saved a general smash. Those hurt were

numerous politicians and small-fry operators who, instead of getting

away with snug fortunes in the shape of profits, lost everything.

An interesting incident of the Flower boom was the way it was

involuntarily helped along by young Joe Leiter. Leiter himself, although

he had gone to the wall some time previously, had indirectly brought

about certain conditions that served Mr. Flower’s purpose admirably.

These conditions were the general release of hundreds of millions of

dollars on mortgages on farm lands. When Leiter began to corner wheat it

was ruling down in the neighborhood of sixty cents a bushel. He lifted

it to considerably over a dollar before he went broke. This enabled

thousands of farmers to realize on their crops at the dollar figure and

above, which brought prosperity almost overnight to the wheat-growing

belt. With the money realized from their wheat they paid off their

mortgages to the extent of two or three hundred million dollars. These

mortgages were generally held in the East. This released that much

Eastern capital, causing a vast volume of money to seek investment. The

men controlling this money were overjoyed when Mr. Flower made an

opening for them through the Wall Street boom, and hence it was

comparatively easy, for a time, to push up values.

Mr. J. Pierpont Morgan, now a noted character in the Street, was trained

as a clerk in the one-time famous banking house of Duncan, Sherman & Co.

Later he made a connection with Anthony J. Drexel, probably the

wealthiest banker of his time in America. Out of this connection grew

the house of Drexel, Morgan & Co., with Mr. Morgan as the managing

partner in New York. When Mr. Drexel died, Mr. Morgan absorbed the

entire business, and a few years later, when his father died, he became

the head of the London house of J. S. Morgan & Co. as well.

This put him in a very prominent position. He soon thereafter

demonstrated his influence by reorganizing the bankrupt Richmond and

West Point Terminal Railway and Warehouse Company, changing its name to

the Southern Railway Company. A number of small roads were added to it,

many of which were in financial straits and practically all of which had

been badly managed. He combined them into one system under one head. Mr.

Morgan next turned his attention to the reorganization of the Reading

and the Erie roads, which were in a bad way. He soon produced order out

of chaos there, and that resulted in a boom in railroad stocks all along

the line. He had several sharp tussles, however, with some of the big

stockholders, who tried to stand out against him because they thought

his plans too drastic.

The people who followed Mr. Morgan’s lead in these transactions

generally made money.

A different sort of deal was engineered a few years before by Mr. S. V.

White, popularly known as Deacon White, because of his position as a

deacon in Plymouth Church. Mr. White is one of the oldest operators in

the Street, and one of its most striking figures. He has made half a

dozen great fortunes in speculation and lost them, but he is as

undaunted as ever, and in spite of the fact that he is now over seventy

years old he is still active daily in the market.

Probably one of the most unique stock deals ever carried out in the

Street resulted from the transaction of Joseph Bannigan when President

of the Rubber Trust. The history of this deal, which for a time resulted

in a great boom in industrials, has never been told, and is known to but

very few persons, most of whom, by the way, were its victims.

Bannigan was an uneducated Irishman. He began life in a New England

rubber factory and conscientiously worked his way up from a wage of

$1.50 a day to die worth $5,000,000. He was shrewd and bright and knew

the value of money. He saved to such good purpose that when the Rubber

Trust was formed he was at the head of one of the biggest factories in

the country, located in Providence. His knowledge of the trade was so

thorough that, despite the fact that he almost invariably used small

“i’s” in writing a letter, he was made president of the trust, his

holdings amounting to about 40,000 shares. When matters had been moving

along for some time, Bannigan made up his mind that the other men in the

trust, the big fellows, were not treating him right, and that the best

thing he could do was to get out. So he packed his stock certificates in

a gripsack, left Providence on the night boat, landed in New York bright

and early, had his breakfast, and then made a bee line for a

stockbroker’s office. He had assured himself in advance that this

stockbroker was to be relied upon, and so he told him frankly what he

intended to do.

“I want to sell out, bag and baggage,” he said. “I want to get rid of

every one of my 40,000 shares. Here they are; put them on the market and

sell them.” The stockbroker told him that that would never do. If he

wanted to realize full value for his holdings he would have to go about

it in a different way, for if he should throw his 40,000 shares into the

market it would knock the bottom out of prices, and he would get little

or nothing for his stock. Mr. Bannigan saw the point and asked what he

ought to do.

“Buy,” said the broker.

“But I don’t want to buy; I have got more now than I want.”

“That is all right; buy anyway; that will make a market for the stock,

and you can unload when the time comes.”

“How much must I buy?”

“Oh, about $250,000 worth.”

“But I have not got $250,000 in cash to go and buy rubber stock.”

“Well, you can borrow it; a man in your position, Mr. Bannigan, will

have no difficulty in borrowing $250,000.”

Much against his will the old man was finally persuaded to do as he was

told. About two weeks later the broker wrote to him that he must buy

some more—this time $200,000 worth. Mr. Bannigan used rather strong

language, but finally yielded as before. He borrowed $200,000 and turned

it over. With this additional capital to work on, the broker continued

to manipulate the market. The insiders soon discovered that some strong

party was buying, but they did not know who, Bannigan having carefully

kept himself in the background. His broker operated skillfully in the

stock, one day buying, the next selling, to keep the stock active. The

broker after a while began to borrow large amounts of the stock. This

convinced the insiders that there was a big short interest somewhere,

and they got together in order to squeeze the shorts. The inside holders

who controlled most of the stock combined to squeeze “the shorts” out.

In furtherance of this plan they put the price up to 61, and at about

that figure Bannigan’s stock was all unloaded. Bannigan now found

himself full of money, while the other fellows were filled up with his

stock. They never awakened to the fact that the president had sold out

on them until his shares were delivered against their purchases, as they

thought, of “short” stock. Rubber broke and did not stop tumbling until

it had gone from 61 to 16.

This deal had all the elements of a comedy-drama, and the playwright who

can do it justice will find material there which will make him an

everlasting fortune and reputation.