THE TRAP IN FINANCE
After "pulling off" such a big "trick," as the professional crooks put
it, and getting away with such a fat bundle of "swag," you, my good
reader, might naturally suppose that this shining light of the "System,"
contented with his profits, would pass on to new victims; or, if you
have a mistaken impression of Mr. Rogers' sense of humor, for really he
has a keen sense of the ridiculous--after five o'clock on week-days and
all day Sunday--you might think he would take the opportunity to order
me to tack up his card on the Utah office door, inscribed, "We will
return when you recoup," and transfer his milking machine to other
udders. No, that is where you, old-fashioned reader that you are, have
"sized up" Mr. Rogers inaccurately. He had not finished.
Utah was not yet exhausted as a wealth-producer for the "System." After a
brief lull, representatives of Clark, Ward & Co. came to me requesting that
they be allowed to see "Standard Oil's" report on their mine. It was most
important for their financial arrangements that they be told what was in
store for them. That was what they thought. I told Mr. Rogers. He
instructed me to report to the Utah people that Mr. Rogers had looked wise
and said nothing. The double-perfected "look-wise-and-say-nothing" is one
of "Standard Oil's" pet business devices. Whoever tries to penetrate its
secrets is always welcome to his inferences, but no one in "Standard Oil"
is ever on record in case the inquisitive one guesses wrong.
"Lawson," Rogers said, "just tell those people that our way of doing
business is to send out reports when we decide it is time for them to be
seen."
In the meantime Utah kept booming. A week before the expiration of our
option, the price being then forty-five, I heard from Mr. Rogers again.
He gave me the most mysterious order of all: "Sell 50,000 more." Up to
that time I should have declared to any one that I was up in all the
quirks and kinks of the stock game, but this move puzzled me. However, I
sold, and at the very top. We had now "out" 150,000 shares of Utah, had
sold that number "short," in fact. Clark, Ward & Co. were bound to
deliver us 100,000 shares when we called for them. These 100,000 shares
had been contributed by the large stockholders to Clark, Ward & Co. at
the price we had agreed to pay. Assuming that "Standard Oil" control of
Utah would immensely enhance its value, the stockholders naturally
desired to replace the holdings of stock they had contributed, and
instructed Clark, Ward & Co. and other brokers to buy them back in the
market. So Clark, Ward & Co. were carrying all one end and much of the
other end of the deal, paying for the actual stock which our option
called for as it came in, and carrying their customers for the new stock
purchased for them at vastly higher prices. _But_, as we had not taken
up our option and paid Clark, Ward & Co. for our stock, the money
necessary to finance the whole transaction had to be borrowed from the
banks. It is evident that, at this phase of the game, Clark, Ward & Co.
must have been, as the phrase goes, "extended."
While the operation had been in process, during the life of the option
in fact, money at the "banks" became as "easy" as an old haircloth
rocker for whoever desired to borrow on Utah Copper collateral. The fact
was much commented on at the time by the "Street," and Clark, Ward & Co.
often gratefully remarked to their customers: "After all, 'Standard Oil'
is good to its associates."
The day before the option matured, Mr. Rogers briefly said to me:
"Lawson, I've been thinking that Utah matter over and have made up my
mind that it is not safe to go ahead unless we have the actual control
of the company, 151,000 shares. Tell them so, and that we must have
51,000 shares in addition to our 100,000."
At last his game was plain to me. I gasped as I took in all the features
of the new plan. "They'll never stand for it," I cried.
"They won't, eh?" he said. "You look it over more carefully and I think
you will agree they _must_ stand it even if I make it another 100,000.
This is the situation: They are sure we are going to take and pay for
100,000 shares, and in anticipation have borrowed millions on call at
the banks. For fear they may not see all the nice points of their
position you can show them that if they refuse, the banks as well as
every one else will know that we not only are not going into Utah as
investors, but would not--in fact, could not--become connected with the
management, because our thorough examination of the property shows that
the mines are not as valuable as they affirmed. Now, when they grasp the
fact that they have all the Utah stock they had, to start with, and
150,000 more which they have bought since, they must realize that in a
slump the price of their shares will go lower than the $2 or $4 it
started from. Have no fear. Clark, Ward, and Untermyer will do just what
we ask, and, in fact, if it were not for the stir a lot of failures
would make and the bad effect these would have on our general plans, I'd
refuse to take up that option anyway, for there would be more money in
buying back in a smash what we have sold than in taking it from them at
our own price," he went on.
The implication in my suggestion that he was going too far in the Utah
deal stung him. He said:
"The fact is, Lawson, Americans who have accumulated great fortunes get
no credit; on the contrary, they are unfairly treated. Instead of being
honored for our splendid efforts as evinced by our wealth, the people
howl as though they had not equal chances with us. Take this very case:
we did not ask these people to give us options; we did not ask them to
allow us to become associated with them. We have done nothing but take
what they have thrown upon us, and yet if we refuse to exercise the
option we did not ask for, and there comes a smash, we should never hear
the last of how 'Standard Oil' robbed them. The more I see of the fool
way Americans look at such things the less sympathy I have for their
losses and what they entail. There was a period when I allowed myself to
waste time on such ideas as you seem to entertain, but, thank goodness,
I have outlived it."
The job cut for me was one I hated to perform. I could refuse, but what
then? Some one else would carry out Rogers' mandate, and where should I
and my great copper structure be? If I balked here, they would go no
farther with me--and remember, we were just at the beginning of our
association. Had I foreseen the misery and ruin with which the future
was fraught, I should have stopped then and there; but the future was
hidden, and I was expectantly revelling in a glorious and delightful
period in which I and all who were following me into "Coppers" should be
gloriously successful and rich. So I looked at the situation in a
practical business way, and I said to myself that even if we did insist
on having the 100,000 shares extra Rogers had mentioned instead of the
50,000 he had decided to demand, the Clark-Ward-Untermyer combination
would still have remaining more of value than their whole property could
possibly have been worth without our association. Therefore I tumbled
into their midst and dropped Mr. Rogers' bomb--and bomb it was.
At once they realized that they were looking into the cold steel muzzles
of 45-calibre revolvers, for there was no concealing the
money-or-your-life inference of the message. I had honestly tried to
soften the blow as well as I could, but all they could see was 50,000
shares more at something like a million dollars less than its market
value--or in twenty-four hours a panic and no market for their stock at
any price. What could they do? With perspiration streaming in big beads
down their foreheads, they declared that even if their people were
willing to submit to the knife, it was impossible in the brief time
available to get to them. At least would I not beg Mr. Rogers and Mr.
Rockefeller to take up the 100,000 shares pending their negotiations for
the balance? Would I not, because they had made all their financial
arrangements for big payments of loans next day which they could not
renew at such short notice--I must!--I must!
As I listened to the pleadings of these men there flashed into my mind a
conviction of the malignant humor of my situation. Here was I, father of
a plan in the successful execution of which I had figured myself out as
a benefactor to all concerned, turning the torture screws of "Standard
Oil's" new dollar rack--fashioned from my structure--and I was powerless
to stop or rescue the screaming victim. "But why," ask my readers, "did
you not denounce the men and renounce the work, instead of profiting by
it, as you undoubtedly did?" You have never--you who ask that
question--sat in at the great game of millions; you know nothing of the
excitement of the dollar chase, of the terrible joy of hearing, "A
million while you wait." I am not, in telling this story, setting myself
up as an angel, nor posing as better than others. My experience of
business has demonstrated to me long before this that rapacity rules in
the modern dollar game, and that in wholesale dollar making many of the
laws of men and more of the laws of God are inevitably violated. But he
who cannot or will not play according to the rules of those who are
making the game is disqualified. He should go elsewhere. Hitherto in my
life I had followed the code of a smaller game, in which we seldom
pressed an advantage to the limit or cut our pound of flesh from out a
vital part. Now I had voluntarily associated myself with other men in a
venture I believed was big, fair, and square, and I was learning that
the rule of their game was thumbs down--give nothing--take everything. I
might have retired, but I was already deep in, with resources pledged to
the limit; and what would my reluctance to press our advantage with
Clark, Ward & Co. be considered but fool sentimentality? If I insisted
on my view, what would happen? The people who had followed me so
far--and their number was thousands and their quality, measured by any
heart and soul standard, more human than any of those whom Rogers was
thumb-screwing--as well as I myself, would be surely ruined. If I went
on, at least I could care for those I had brought along with me. I
looked at the complication fairly and squarely, weighed my duty with
such powers of judgment as I possessed, and decided, wisely or
unwisely, that it was best to go on. Wisely or unwisely I made up my
mind to accept the responsibility of acting as fireman to the
engine--and to bide my time. That time, thank God, is here now.
I reported to Mr. Rogers. His fox-trap jaws, with their bone-and
heart-and soul-crushing teeth, came together with a snap, and when they
relaxed his lips parted into one of his marrow-chilling smiles.
"I thought so," said he. "Those able gentlemen are loaded, Lawson,
loaded, and without a by-your-leave have made up their minds that Mr.
Rockefeller and myself are only in business to draw their load to some
convenient safe-deposit vault, from which they can from time to time
take it out to pay for palaces, yachts, fast horses, and society crowns.
Lawson, don't tell me of their plight. Don't waste my time with their
pleadings." The tiger was awake, his cage rattled; it was raw-meat time.
I watched. Presently he snapped: "What do you suppose they would answer
were they in our position? This: 'Give us the additional 50,000 shares
we have demanded quick, or take the consequences.' They are able
business men, so what they would do is just good enough for us to do.
Take back this answer: 'You have the only proposition we will make;
decide at once!'"
I looked at him. I said not a word--I could not. Perhaps my thoughts
were miles and ages away to scenes where Caesars, Napoleons, and
Bismarcks stood gazing over fields strewn with corpses oozing blood. I
remembered "to the victor belong the spoils"; but there also wandered
into my mind the memory of a good mother's knee on a Sunday afternoon,
and of a voice which repeated, "For what is a man profited if he shall
gain the whole world and lose his own soul?"
As I left him Mr. Rogers said:
"You had better sell 10,000 shares more of Utah. Sell them quick and
sharp, and perhaps they will read our answer on the tape before you get
to them."
I sold the 10,000 shares. The price dropped two to three points, and,
sure enough, by the time I got to Clark, Ward & Co.'s office I found
them poring dazedly over the ticker tape. They knew my answer before I
stated it, and were trembling with nervous apprehension. I wondered if
they, too, saw the tiger, his bloody chops and claws and his piece of
raw meat. I said what Mr. Rogers had told me to say in so many words,
and then I talked frankly to them about their situation, and advised
that they meet "Standard Oil's" demands. I called their attention to the
tape: "They told me to throw over only 10,000 shares," I concluded.
"Great heavens!" said Armstrong, the negotiating partner of Clark, Ward
& Co., "they are likely to follow it up with 90,000 more. They have it;
at least they can demand it of us, and if they do we are ruined. What
can we do, Lawson? What _can_ we do?"
I pointed out that their only possible course was to lay the situation
before the large shareholders involved, stating the absolute necessity
of coming to "Standard Oil's" time, and to make their medicine a little
more palatable I added: "Once you come to time I can induce my people, I
believe, to make a public announcement that they will take the open
management and control of the Utah Company, and you know that will
surely make the stock jump--enough, perhaps, to offset what you people
lose on the extra 50,000 shares you yield up."
I advised them to the best of my ability as to their only way out. If I
had revealed to them that we had sold every share of the stock they were
to turn over to us, it would have served no good purpose, for it would
have made business impossible between us, and a crash would have
occurred which would have ruined Utah, inflicted destruction on their
price structure, and only enriched "Standard Oil." When I concluded,
they started in to do as I had suggested, and the way they burnt up time
and annihilated space was marvellous to behold. Though the thing was
almost a miracle, they met the condition within the time limit, and we
had turned over to us 150,000 shares of stock.
The moment Mr. Rogers saw the deal was a "go" all his hardness melted as
the snow upon the mountainsides under the April sun. Nothing could be
softer, kinder, and fairer. The blood had disappeared; the tiger was a
great, purring house-cat, intent only on catching naughty rats and mice
for the good of the household. Why, he would do anything to help out
these good gentlemen; certainly, the world should know of his great
interest in the Utah properties, and as the millions of golden dollars
clinked into his golden bucket the next day, the world did learn of the
great value of Utah, for his private counsel was made president, and
certain other gentlemen who bear the uncounterfeitable "Standard Oil"
tag were appointed as directors. There was a general jubilation--I had
almost said, a killing of the fatted calf; but that part of the ceremony
had been most ably attended to by Mr. Rogers in the preliminary stages
of the entertainment.
NOTE.--When this startling and cold-blooded-trick part of my
story was published in _Everybody's Magazine_, it astounded
the world, and my enemies took advantage of the fierce anger
which was aroused to call attention to my part, which they
attempted to show was as bad as that of Rogers. Right here I
wish to go on record: If I had been a human angel instead of
a stock-broker, actuated solely by a desire to do just
right, to do that which would work least harm to the
greatest number of innocents, and least good to the largest
number of tricksters, I should have done as I did.
AUTHOR.