THE BUNCOING OF THE STOCKHOLDERS OF UTAH
This was veritably a period of financial delirium in Boston. No one
talked or thought of aught but "Coppers," at least no one with a spare
dollar or good credit. The air was full of mysterious yarns and the
Stock Exchange was hung with Aladdin lamps. From every nook and corner
of State Street, from the chinks between its sedate old cobblestones,
came forth copper-mines--mines undreamt of before and unheard of since.
Innumerable devices were rigged to take advantage of the prevailing
intoxication. The prices of the strong properties leaped up with
breath-taking rapidity. The copper epidemic spread over New England and
began to extend in constantly widening circles through the rest of the
country, while from England, France, and Germany came daily news of
symptoms which proved that the infection had crossed the ocean. I, with
my hands full, kept two secretaries busy shooing away industrious
promoters who came at me in armies with old and new copper properties,
which I might have on my own or any old terms.
In the midst of this excitement I had my first real demonstration of the
"System's" method of making dollars from nothing. Well as I thought I
knew the stock game, I'll admit that I looked on open-mouthed, like the
veriest novice, at the magic wrought by the simple use of the name
"Standard Oil." Even now I can hear myself as I gasped: "Heaven help the
people if this sort of thing can be done in America, for Heaven alone
has power to help them."
The Boston and New York brokerage house of Clark, Ward & Co. had
promoted the Utah Consolidated Mining Company of Utah. It was less than
two years old, and its 300,000 shares had been kicked from gutter to
curb and curb to gutter at from $2 to $4 per share. Samuel Untermyer,
the astute corporation lawyer who, on his own account and as the
representative of a large European clientele, had long been interested
in "Coppers," had taken hold of Utah, and believing it a good thing had
bought large quantities of its stock for himself and his European
connections. Under the stimulus of my campaign the price of this stock
had leaped to 17 or 18, and rumor had it that Utah was a prospective
factor in my consolidation. One day Mr. Rogers asked me if I were in any
way responsible for these rumors, and I replied that I knew nothing more
about them than that they were in circulation.
"Good," replied Rogers. "Do this, then--send word that we propose to
issue a denial that we are to have anything to do with Utah
Consolidated, and bring me their answer."
I carried the message in person. The Utah people were absolutely
panic-stricken. Such an announcement meant destruction to the pretty
price-fabric they were rearing, and they begged to be allowed to make a
proposition to Rogers before he should declare himself. This was their
proposal: That Mr. Rogers should admit their property to the
consolidation provided he found it good enough; that every facility
should be accorded his experts to examine the mine; and that if the
report was favorable, and they were convinced that it would be, and he
decided to take hold, he should be given an option on a block of stock
way below the market.
This offer I took back to Mr. Rogers, who smiled one of his thin, easy
smiles, and questioned me closely about the genuineness of the market
for this stock. Could 50,000 shares be sold readily? I assured him that
when it once became known that we were even looking at Utah it would be
easy to sell 100,000 shares and at constantly advancing prices.
"All right," said Mr. Rogers, "if you're sure of this we'll go ahead.
Tell them we'll take a sixty-day option on 50,000 shares, no liability
to us, at--well, we'll be liberal, say at 15, and when you mention the
price impress upon them that I know it cost them but $2 to $4."
I returned at once and began negotiations, but, as is usually the case,
the fact that "Standard Oil" was nibbling leaked before I had clinched
the option, and before we had even begun to examine the property, prices
had advanced until there was a profit of $500,000 for us in the
transaction. To look over the Utah property Mr. Rogers sent his
son-in-law, Broughton, and in a short time I got word to feed out the
50,000 shares on the market at the best prices obtainable, and to borrow
it for delivery in such ways that the Clark-Ward-Untermyer contingent
should suspect nothing about it. No information was given me as to the
expert's report, and I was absolutely ignorant whether it was good, bad,
or indifferent, though from the fact that we were to sell the stock I
inferred that it was unfavorable. The public took the 50,000 shares at
between 32 and 36, much as an elephant takes in water after a thirsty
tramp across sandy deserts--the shares were just sucked in without a
gulp or a gasp. I did not know until long afterward that the purchasers
were the English holders who had contributed the greater part of the
50,000 shares to meet our option--in other words, were buying back from
us their own stock at more than twice the price we were to pay them for
it, and that their eagerness was due to confidential information that
the expert's examination had disclosed such richness that the price
would surely jump to over $100 when "Standard Oil" assumed the
management. Just where they acquired this information or how it was put
in their path was a matter I never found out. As I have previously
demonstrated, "Standard Oil" has its own system of wires and underground
passages and rumor bureaus. It works in mysterious ways its wonders to
perform.
This section of the deal was soon wound up, and the transaction showed
us a profit of $1,000,000. That is, we had sold 50,000 shares which we
did not possess, but which were ours on demand, for $1,000,000 more than
we should have to pay their owners for them. When I reported my success
to Mr. Rogers he expressed complete satisfaction, and ordered me to
inform the Utah people that another 50,000 shares must be added to the
option, as he could not think of tacking the great name of "Standard
Oil" to an enterprise in which he had less than a third interest;
indeed, he was not sure that he would consider less than a one-half
ownership. This second request was a bitter pill to the
Clark-Ward-Untermyer crowd, who hated to surrender for such a low figure
this tremendous parcel of a stock that was now selling fast at 40 per
share. There was no gainsaying the soundness of Rogers' reasoning,
however: "Who made it worth 40? Who but 'Standard Oil'? And what will
happen if 'Standard Oil' declares that it will not take Utah into the
consolidation?" The bare suggestion threw the Utah contingent into one
of those hundred-in-the-shade, twenty-below-zero sweats, which resemble
the moisture upon steam-pipes that pass through cold-storage boxes. They
succumbed. At the moment the option was signed over to us it represented
a profit of $1,000,000 more, and when we sold it, it netted us
$1,250,000, for the market was still climbing. This latter phenomenon
was not surprising, for it should be borne in mind that when our demand
for the second 50,000 shares was made, the heavy Utah stockholders were
called together and it was explained to them by their own managers--not
by "Standard Oil" or by Mr. Rogers mind, for "Standard Oil" never makes
false statements--that the expert's examination had developed such
wealth that "Standard Oil," the mighty of mighties, had insisted on
having at least 100,000 shares; but that, of course, "Standard Oil"
could not be asked to pay over twenty for stock which had cost its
original owners but $2 to $4. What was there to do? The stockholders
just gave up, and then once more climbed over one another in the market
to get back their precious shares as best they could.
Just to keep the conditions of the transaction at this stage before my
reader's mind, I'll repeat that the Clark-Ward-Untermyer people had now
given us the right to buy of them 100,000 shares of their stock (_at a
price $2,250,000 less than we had already sold it for_), with the
understanding--not in words or in writing, of course, because "Standard
Oil" never makes a promise in writing, but implied as sacredly as though
it had been set down and attested under oath--that we would take and
pay for their stock and engage with them in their enterprise, giving
them the benefit of our experience, our capital, and our prestige. I say
they had every reason to assume that we were acting in absolute good
faith, and no ground to suppose that there was any ulterior motive
behind our negotiations. It must be remembered that this occurred some
years ago, before the "System's" perfidy was a calculated contingency.
The knife was now in, but the "System" had still to corkscrew it in the
wound.