HOW THE "SYSTEM" DOES BUSINESS
To follow the various steps in the crimes of Amalgamated, my readers
should know how the securities of a corporation are manufactured, how
"put upon the market," how admitted to the Stock Exchange, how prices
are made in the Stock Exchange, how fictitious and fraudulent quotations
are created and disseminated, until the very shrewdest members of the
Stock Exchange cannot distinguish those which are real from the
fictitious in cases outside their own manufacturing. Then there is an
elaborate and ingenious procedure by which public opinion is moulded,
that is, by which people are made to believe that the prices at which
they buy and sell the stocks and securities are bona fide; and this is a
procedure as compact and as well understood by the "System's" votaries
as are the methods of the bank-breaker or burglar--who sends his "pals"
ahead to "pipe" the lay of the land--by felony's votaries. When I have
shown these things, about which little is known to-day by the public, my
readers will have no difficulty in comprehending what I shall lay before
them of the actual robberies in the case of Amalgamated and other
notorious enterprises.
The underlying principle of the several organisms through which the
commerce of the country is conducted is the protection at once of the
interests of the individuals composing them and of the public with which
they do business. Provided this principle is adhered to, no harm can be
wrought to either. Most of the contemporaneous swindles through which
the people have been plundered were perpetrated through the agency of
corporations, and this organism has become a sort of synonym for corrupt
practice. Yet the original corporation invention as I have described it
was devised to meet a real want of the people, and it has merely been
diverted from its proper use by the lawless votaries of the "System."
Consider the institution as we now understand it. Certain individuals
decide to conduct their business in railroads, mines, manufactories,
patents, etc., in the form of a corporation and apply to the
community--the State Government--asking authorization to do so. They are
compelled first to conform to the rules and regulations laid down by the
State for the control of corporations, which say in one form or other:
"We create you for the purpose of doing those things that are best for
the many, not the few, and if we knew you would use our authority to
oppress the many in the interest of the few we would not create you."
The fundamental privilege of incorporation is the legal authorization to
issue paper titles of ownership to the business just incorporated. These
are in the form of stocks and bonds. Whoever owns these paper titles
shall possess the property and the business as the individuals did
before they incorporated, and the law presumes that they shall manage
and control that business, receive the benefits which come from it, and
suffer any loss arising from its conduct, and that all these benefits
and responsibilities shall be as laid down in the law. It follows that
no harm other than that the law expressly prescribes penalties to
prevent can come to any one from corporations thus created, always
provided the laws are what they appear and what the people intended them
to be, and that they are enforced as the people intended they should be.
It is most important to all concerned in a corporation that the paper
ownership shall represent the real value of the property on which it is
based, and no more. When the people exchange their savings for these
authorized paper tokens, they should be able to rest confident in the
State's guarantee that they are worth what they purport.
There have probably been jailed in the United States during the past
twenty years thousands and thousands of American citizens whose
aggregate stealings do not amount to one-tenth the total taken from the
people by either the Amalgamated, the United States Steel, the American
Tobacco Company, or a score of other fraudulently organized or
fraudulently conducted corporations.
There are various ways of organizing corporations and issuing their
stocks and bonds. Sometimes a company is organized to acquire a
property; individuals and institutions set down their names to take and
pay for the shares or bonds. With the money thus obtained the property
is purchased. _Or_ the individuals who own the property which is to be
the basis of the corporation exchange it for all or part of the stocks
and bonds. In the latter event those original owners usually sell to the
public the tokens thus acquired.
Honest men in forming a corporation make publicly known the character
and worth of the properties or enterprises they are organizing, what
they have cost, what their profits are, and what may reasonably be
expected by investors. The tricksters and the "System," with whom
incorporation is generally but the first step in a conspiracy for
plunder, surround the proceeding with an air of mystery and refuse
information usually with: "We do our business quietly and in silence,
and those who do not like our ways may keep out of this scheme." Their
whole procedure is of that high and mighty order which impresses the
ordinary mortal with a sense of confidence in the independence of its
users and a conviction that their scheme must be so good that they do
not care whether they sell or not. This is just the effect it is
intended to produce.
The next step is to lead the people toward the shambles. This is done by
"moulding public opinion," and for this interesting function the
"System" and Wall Street have an equipment of magical potency. Public
opinion is made through the daily press, through financial publications
of various kinds, and through "news bureaus." Every great daily has a
financial editor and a corps of experts in finance who spend their days
on "the Street" cultivating the friendship of the financiers. At night
they are round the clubs and hotels where the brokers and promoters
congregate, debating the events of the day and organizing those of the
morrow. There are also the strictly financial papers--daily, weekly,
and monthly--whose corps of editors and news gatherers live on "the
Street," and know and care for nothing but finance. And lastly, there
are the news bureaus, with runners out everywhere to gather in items of
news affecting stocks, Wall Street or finance. These are printed on
small square sheets of paper, and delivered by an army of boys at brief
intervals while the Stock Exchange is open at the offices of the
bankers, brokers, insurance companies, and hotels; or the same matter is
disseminated by means of an automatic printing machine called a
news-ticker. For this service the offices pay the bureaus from $1 to $2
a day. News bureaus form an important cog in the machinery for making
stock-markets, as it is through the news they furnish to the Stock
Exchange and to the offices where investors and speculators gather
together that the big operators affect the market. A decision to buy,
sell, or "stand pat" is often based on the _on dits_ of these printed
slips.
The first step toward "moulding public opinion" is taken when the
"System's" votaries send for the dishonest chief of a news bureau, a man
usually up in every trick of the trade. I will later describe one of
them, a scoundrel so able and experienced that, to use the vernacular of
the gutter of "the Street," he can give cards and spades to the
frenziedest of frenzied financiers. To this man the "System's" votary
will say something like this: "We are going to work off blank millions
of blank stock; it costs us thus and so, and we want to sell for so and
so many millions." Nothing is kept back from this head panderer and
procurer, for it would be useless to attempt to deceive him, and, to
quote his always picturesque language: "Never send a sucker to fish for
suckers or he'll lose your bait, so spread out your bricks and I'll get
the 'gang' to polish up their gildings." After the quality and amount
the "System" intends to work off in exchange for the people's savings
are explained, that part of the plunder which is to come to the head
news-bureau man is settled upon. The amount varies with the size and
quality of the robbery to be perpetrated. In some cases as high as a
million dollars in cash or stock or their equivalent has been paid to a
"moulder of opinion" for simply so shaping up a game that the people
might be deceived into thinking one dollar of worth was four, six, or
eight dollars.
The head of the news bureau, having taken the contract to lay out and
carry through the deceptive part of the scheme by which the people are
to be buncoed, now begins operations. First, bargains are made with
conscienceless financial editors of the daily and weekly newspapers,
whereby for so much stock or for "puts" or "calls" or both,[17] they
agree to insert in their paper's financial column whatever yarns are fed
them by the bureau man, regardless of their truth or falsehood. To
justify the attention paid the subject by each editor, a certain amount
of money is spent in advertising, in the newspaper that employs him, the
merits of the enterprise. The financial journals are dealt with about on
the same basis. In return for straight advertising or for "puts" or
"calls" they agree to insert the manufactured news. The news-bureau man
then puts his entire staff to work inventing fairy tales of one kind or
another to excite the interest and attention of the people, and these
tales must be so concocted that the public is drawn into believing that
the statements disseminated represent actual conditions. I shall, later,
give real instances of the working of this nefarious game of "moulding
public opinion," and present it in the lime-light necessary for its
appreciation. To show the extent to which this "moulding" process is
carried, I know in one instance of a high-priced financial scribe being
sent to live in St. Petersburg for no other purpose than to send certain
"news items" to a confederate located in Germany, who would get these
items to a reputable English banking-house through whom they were given
out in London as news: the whole object of this complicated system being
that the news items might be sent back to New York without Wall Street
suspecting they were bogus.
I must not be understood as meaning to say that all financial editors,
news gatherers, or news bureaus are engaged in this, one of the lowest
forms of swindling, for such is not the case. _On the contrary, there
are many of them whom no amount of money or influence could make waver
in their allegiance to the truth and to honest dealings._ With some of
the others I hope to deal specifically later, and I shall not hesitate
to set forth in detail certain transactions in which they have been
engaged.
FOOTNOTES:
[17] A "put" is the right to sell to a certain firm or individual shares of
stock at a stated price for a stated period, and a "call" the right to buy
under the same conditions. The holder of the "put" or "call" is under no
liability, as he can use the "put" as margin to buy stocks, or the "call"
as margin to sell stocks, or he can hold them for the profit there may be
in selling or buying the stock after it has declined or risen below or
above the price named in the "puts" or "calls" he holds.