"A FEW WEAK FRENCH SPECULATORS"
Just outside of the city of Paris was located one of the largest,
most complete manufacturing plants in the world, doing an enormous
business, employing an army of skilled artisans, consuming vast
quantities of raw material and making in profits a fortune every
year.
The controlling interest was a man of large wealth, estimated at
sixty millions of francs, and of national reputation. His gallery
of paintings was famous in art circles the world over. His family
moved in the highest strata of society and in their magnificent
home entertained with regal splendor. The man was universally
respected in business, in art, and social circles.
On the board of directors of one of the great Paris banks were two
other men, almost equal in wealth and station to this manufacturer.
These three men, with a few associates of minor importance, entered
into a hare-brained scheme of speculation in our commodity, that
in the very nature of things was bound to terminate in complete
failure. When they realized this and the enormous losses which had
been entailed, in an effort to recoup they took up another commodity,
and then followed the wildest speculation, in any merchandise, that
the world had ever seen.
When the final crash came, with their own magnificent fortunes
swept away and the bank involved, the two directors found suicide's
graves, and the other man went to prison.
Oh, the folly of it! This passion and greed for wealth.
"Market advanced through operations of a few weak French speculators"--so
read our cable. It seemed to us that their strength was far more in
evidence than their weakness, indeed of the latter we could detect
no sign. They had by their purchases advanced the market already
fifteen or twenty per cent and they continued buying in all the
world's markets, at advancing prices, everything that was offered.
The increased price was commencing to tell on consumption. Dealers
and consumers ceased buying until their surplus stocks had become
exhausted, and then bought in small lots only as they were compelled
to. Meanwhile, stocks in the hands of the syndicate were accumulating
rapidly with no visible outlet for reducing them.
A feature in the trade which alone should have been sufficient to
prevent men of brains from going into such an operation was that
the production could not be contracted for in advance. The high
price stimulated production and day after day the syndicate had to
buy in the producing markets large quantities at current prices.
These purchases at such high figures rapidly increased the average
cost of the holdings.
The market advanced by leaps and bounds, until finally the price
in London reached one hundred and sixty-seven pounds sterling per
ton, with an equivalent value in all other markets. This represented
an advance of more than one hundred per cent.
Then the members of the syndicate awakened from their pleasant
dream to find a nightmare.
The hand of every man in the trade throughout the world was raised
against them. They were in the meshes of an endless chain. For
every ton they could sell they must buy five, or more, in order to
sustain the price. If they stopped buying, even for a single day,
the bottom would drop out. What was to be done?
In Wales was an industry, comprising many mills, that in the aggregate
consumed large quantities of the article. The business had become
almost paralyzed by the advance, and many mills were about to or
had closed down. A representative of the syndicate communicated
with all these mills and negotiated a contract for supplies covering
requirements to April 30th, 1888.
The only possible way of making such a contract was by guaranteeing
that the spot market should not fall below the price then ruling.
This meant that every day the syndicate must bid £167 per ton for
all the spot stuff the market would sell--but, it stopped buying
futures. As fast as the stuff could be brought to market it had to
take it, but only as it arrived.
That was the first step. But there was still an enormous stock to
be disposed of, together with all that would have to be taken, up
to the end of April. How was that to be sold?
Our London friends had fought the syndicate from the start with
the utmost vigor. The plan of campaign was to load them with such
quantities that the burden must become too heavy to carry.
The London firm usually carried a large spot stock. This was poured
into the syndicate in parcels, at advancing prices. Then all the
little markets on the Continent were scoured and every ton available
brought to London and disposed of in the same way.
The agent of our friends, in the producing market, bought large
quantities daily. It was a six-weeks' voyage to London. In the
interim there would be a heavy advance in price and as soon as the
steamer arrived the syndicate had to buy these lots. There was no
escape. The leading member of the syndicate went to London and a
secret interview with our correspondent was arranged. His widely
known antagonism to the syndicate made him the only man who could
build a bridge for that unfortunate combination to cross on. He
made his own terms, they were accepted, and that was the beginning
of the end of the syndicate's operations in our commodity.