American Match
Following Cowperwood's coup in securing cash by means of his seeming
gift of three hundred thousand dollars for a telescope his enemies
rested for a time, but only because of a lack of ideas wherewith to
destroy him. Public sentiment--created by the newspapers--was still
against him. Yet his franchises had still from eight to ten years to
run, and meanwhile he might make himself unassailably powerful. For
the present he was busy, surrounded by his engineers and managers and
legal advisers, constructing his several elevated lines at a whirlwind
rate. At the same time, through Videra, Kaffrath, and Addison, he was
effecting a scheme of loaning money on call to the local Chicago
banks--the very banks which were most opposed to him--so that in a
crisis he could retaliate. By manipulating the vast quantity of stocks
and bonds of which he was now the master he was making money hand over
fist, his one rule being that six per cent. was enough to pay any
holder who had merely purchased his stock as an outsider. It was most
profitable to himself. When his stocks earned more than that he issued
new ones, selling them on 'change and pocketing the difference. Out of
the cash-drawers of his various companies he took immense sums,
temporary loans, as it were, which later he had charged by his humble
servitors to "construction," "equipment," or "operation." He was like a
canny wolf prowling in a forest of trees of his own creation.
The weak note in this whole project of elevated lines was that for some
time it was destined to be unprofitable. Its very competition tended
to weaken the value of his surface-line companies. His holdings in
these as well as in elevated-road shares were immense. If anything
happened to cause them to fall in price immense numbers of these same
stocks held by others would be thrown on the market, thus still further
depreciating their value and compelling him to come into the market and
buy. With the most painstaking care he began at once to pile up a
reserve in government bonds for emergency purposes, which he decided
should be not less than eight or nine million dollars, for he feared
financial storms as well as financial reprisal, and where so much was
at stake he did not propose to be caught napping.
At the time that Cowperwood first entered on elevated-road construction
there was no evidence that any severe depression in the American
money-market was imminent. But it was not long before a new difficulty
began to appear. It was now the day of the trust in all its watery
magnificence. Coal, iron, steel, oil, machinery, and a score of other
commercial necessities had already been "trustified," and others, such
as leather, shoes, cordage, and the like, were, almost hourly, being
brought under the control of shrewd and ruthless men. Already in
Chicago Schryhart, Hand, Arneel, Merrill, and a score of others were
seeing their way to amazing profits by underwriting these ventures
which required ready cash, and to which lesser magnates, content with a
portion of the leavings of Dives's table, were glad to bring to their
attention. On the other hand, in the nation at large there was growing
up a feeling that at the top there were a set of giants--Titans--who,
without heart or soul, and without any understanding of or sympathy
with the condition of the rank and file, were setting forth to enchain
and enslave them. The vast mass, writhing in ignorance and poverty,
finally turned with pathetic fury to the cure-all of a political leader
in the West. This latter prophet, seeing gold becoming scarcer and
scarcer and the cash and credits of the land falling into the hands of
a few who were manipulating them for their own benefit, had decided
that what was needed was a greater volume of currency, so that credits
would be easier and money cheaper to come by in the matter of interest.
Silver, of which there was a superabundance in the mines, was to be
coined at the ratio of sixteen dollars of silver for every one of gold
in circulation, and the parity of the two metals maintained by fiat of
government. Never again should the few be able to make a weapon of the
people's medium of exchange in order to bring about their undoing.
There was to be ample money, far beyond the control of central banks
and the men in power over them. It was a splendid dream worthy of a
charitable heart, but because of it a disturbing war for political
control of the government was shortly threatened and soon began. The
money element, sensing the danger of change involved in the theories of
the new political leader, began to fight him and the element in the
Democratic party which he represented. The rank and file of both
parties--the more or less hungry and thirsty who lie ever at the bottom
on both sides--hailed him as a heaven-sent deliverer, a new Moses come
to lead them out of the wilderness of poverty and distress. Woe to the
political leader who preaches a new doctrine of deliverance, and who,
out of tenderness of heart, offers a panacea for human ills. His truly
shall be a crown of thorns.
Cowperwood, no less than other men of wealth, was opposed to what he
deemed a crack-brained idea--that of maintaining a parity between gold
and silver by law. Confiscation was his word for it--the confiscation
of the wealth of the few for the benefit of the many. Most of all was
he opposed to it because he feared that this unrest, which was
obviously growing, foreshadowed a class war in which investors would
run to cover and money be locked in strong-boxes. At once he began to
shorten sail, to invest only in the soundest securities, and to convert
all his weaker ones into cash.
To meet current emergencies, however, he was compelled to borrow
heavily here and there, and in doing so he was quick to note that those
banks representing his enemies in Chicago and elsewhere were willing to
accept his various stocks as collateral, providing he would accept
loans subject to call. He did so gladly, at the same time suspecting
Hand, Schryhart, Arneel, and Merrill of some scheme to wreck him,
providing they could get him where the calling of his loans suddenly
and in concert would financially embarrass him. "I think I know what
that crew are up to," he once observed to Addison, at this period.
"Well, they will have to rise very early in the morning if they catch
me napping."
The thing that he suspected was really true. Schryhart, Hand, and
Arneel, watching him through their agents and brokers, had soon
discovered--in the very earliest phases of the silver agitation and
before the real storm broke--that he was borrowing in New York, in
London, in certain quarters of Chicago, and elsewhere. "It looks to
me," said Schryhart, one day, to his friend Arneel, "as if our friend
has gotten in a little too deep. He has overreached himself. These
elevated-road schemes of his have eaten up too much capital. There is
another election coming on next fall, and he knows we are going to
fight tooth and nail. He needs money to electrify his surface lines.
If we could trace out exactly where he stands, and where he has
borrowed, we might know what to do."
"Unless I am greatly mistaken," replied Arneel, "he is in a tight place
or is rapidly getting there. This silver agitation is beginning to
weaken stocks and tighten money. I suggest that our banks here loan
him all the money he wants on call. When the time comes, if he isn't
ready, we can shut him up tighter than a drum. If we can pick up any
other loans he's made anywhere else, well and good."
Mr. Arneel said this without a shadow of bitterness or humor. In some
tight hour, perhaps, now fast approaching, Mr. Cowperwood would be
promised salvation--"saved" on condition that he should leave Chicago
forever. There were those who would take over his property in the
interest of the city and upright government and administer it
accordingly.
Unfortunately, at this very time Messrs. Hand, Schryhart, and Arneel
were themselves concerned in a little venture to which the threatened
silver agitation could bode nothing but ill. This concerned so simple
a thing as matches, a commodity which at this time, along with many
others, had been trustified and was yielding a fine profit. "American
Match" was a stock which was already listed on every exchange and which
was selling steadily around one hundred and twenty.
The geniuses who had first planned a combination of all match concerns
and a monopoly of the trade in America were two men, Messrs. Hull and
Stackpole--bankers and brokers, primarily. Mr. Phineas Hull was a
small, ferret-like, calculating man with a sparse growth of dusty-brown
hair and an eyelid, the right one, which was partially paralyzed and
drooped heavily, giving him a characterful and yet at times a sinister
expression.
His partner, Mr. Benoni Stackpole, had been once a stage-driver in
Arkansas, and later a horse-trader. He was a man of great force and
calculation--large, oleaginous, politic, and courageous. Without the
ultimate brain capacity of such men as Arneel, Hand, and Merrill, he
was, nevertheless, resourceful and able. He had started somewhat late
in the race for wealth, but now, with all his strength, he was
endeavoring to bring to fruition this plan which, with the aid of Hull,
he had formulated. Inspired by the thought of great wealth, they had
first secured control of the stock of one match company, and had then
put themselves in a position to bargain with the owners of others. The
patents and processes controlled by one company and another had been
combined, and the field had been broadened as much as possible.
But to do all this a great deal of money had been required, much more
than was in possession of either Hull or Stackpole. Both of them being
Western men, they looked first to Western capital. Hand, Schryhart,
Arneel, and Merrill were in turn appealed to, and great blocks of the
new stock were sold to them at inside figures. By the means thus
afforded the combination proceeded apace. Patents for exclusive
processes were taken over from all sides, and the idea of invading
Europe and eventually controlling the market of the world had its
inception. At the same time it occurred to each and all of their
lordly patrons that it would be a splendid thing if the stock they had
purchased at forty-five, and which was now selling in open market at
one hundred and twenty, should go to three hundred, where, if these
monopolistic dreams were true, it properly belonged. A little more of
this stock--the destiny of which at this time seemed sure and
splendid--would not be amiss. And so there began a quiet campaign on
the part of each capitalist to gather enough of it to realize a true
fortune on the rise.
A game of this kind is never played with the remainder of the financial
community entirely unaware of what is on foot. In the inner circles of
brokerage life rumors were soon abroad that a tremendous boom was in
store for American Match. Cowperwood heard of it through Addison,
always at the center of financial rumor, and the two of them bought
heavily, though not so heavily but that they could clear out at any
time with at least a slight margin in their favor. During a period of
eight months the stock slowly moved upward, finally crossing the
two-hundred mark and reaching two-twenty, at which figure both Addison
and Cowperwood sold, realizing nearly a million between them on their
investment.
In the mean time the foreshadowed political storm was brewing. At first
a cloud no larger than a man's hand, it matured swiftly in the late
months of 1895, and by the spring of 1896 it had become portentous and
was ready to burst. With the climacteric nomination of the "Apostle of
Free Silver" for President of the United States, which followed in
July, a chill settled down over the conservative and financial elements
of the country. What Cowperwood had wisely proceeded to do months
before, others less far-seeing, from Maine to California and from the
Gulf to Canada, began to do now. Bank-deposits were in part withdrawn;
feeble or uncertain securities were thrown upon the market. All at
once Schryhart, Arneel, Hand, and Merrill realized that they were in
more or less of a trap in regard to their large holdings in American
Match. Having gathered vast quantities of this stock, which had been
issued in blocks of millions, it was now necessary to sustain the
market or sell at a loss. Since money was needed by many holders, and
this stock was selling at two-twenty, telegraphic orders began to pour
in from all parts of the country to sell on the Chicago Exchange, where
the deal was being engineered and where the market obviously existed.
All of the instigators of the deal conferred, and decided to sustain
the market. Messrs. Hull and Stackpole, being the nominal heads of the
trust, were delegated to buy, they in turn calling on the principal
investors to take their share, pro rata. Hand, Schryhart, Arneel, and
Merrill, weighted with this inpouring flood of stock, which they had to
take at two-twenty, hurried to their favorite banks, hypothecating vast
quantities at one-fifty and over, and using the money so obtained to
take care of the additional shares which they were compelled to buy.
At last, however, their favorite banks were full to overflowing and at
the danger-point. They could take no more.
"No, no, no!" Hand declared to Phineas Hull over the 'phone. "I can't
risk another dollar in this venture, and I won't! It's a perfect
proposition. I realize all its merits just as well as you do. But
enough is enough. I tell you a financial slump is coming. That's the
reason all this stock is coming out now. I am willing to protect my
interests in this thing up to a certain point. As I told you, I agree
not to throw a single share on the market of all that I now have. But
more than that I cannot do. The other gentlemen in this agreement will
have to protect themselves as best they can. I have other things to
look out for that are just as important to me, and more so, than
American Match."
It was the same with Mr. Schryhart, who, stroking a crisp, black
mustache, was wondering whether he had not better throw over what
holdings he had and clear out; however, he feared the rage of Hand and
Arneel for breaking the market and thus bringing on a local panic. It
was risky business. Arneel and Merrill finally agreed to hold firm to
what they had; but, as they told Mr. Hull, nothing could induce them to
"protect" another share, come what might.
In this crisis naturally Messrs. Hull and Stackpole--estimable
gentlemen both--were greatly depressed. By no means so wealthy as
their lofty patrons, their private fortunes were in much greater
jeopardy. They were eager to make any port in so black a storm.
Witness, then, the arrival of Benoni Stackpole at the office of Frank
Algernon Cowperwood. He was at the end of his tether, and Cowperwood
was the only really rich man in the city not yet involved in this
speculation. In the beginning he had heard both Hand and Schryhart say
that they did not care to become involved if Cowperwood was in any way,
shape, or manner to be included, but that had been over a year ago, and
Schryhart and Hand were now, as it were, leaving both him and his
partner to their fates. They could have no objection to his dealing
with Cowperwood in this crisis if he could make sure that the magnate
would not sell him out. Mr. Stackpole was six feet one in his socks
and weighed two hundred and thirty pounds. Clad in a brown linen suit
and straw hat (for it was late July), he carried a palm-leaf fan as
well as his troublesome stocks in a small yellow leather bag. He was
wet with perspiration and in a gloomy state of mind. Failure was
staring him in the face--giant failure. If American Match fell below
two hundred he would have to close his doors as banker and broker and,
in view of what he was carrying, he and Hull would fail for
approximately twenty million dollars. Messrs. Hand, Schryhart, Arneel,
and Merrill would lose in the neighborhood of six or eight millions
between them. The local banks would suffer in proportion, though not
nearly so severely, for, loaning at one-fifty, they would only
sacrifice the difference between that and the lowest point to which the
stock might fall.
Cowperwood eyed the new-comer, when he entered, with an equivocal eye,
for he knew well now what was coming. Only a few days before he had
predicted an eventual smash to Addison.
"Mr. Cowperwood," began Stackpole, "in this bag I have fifteen thousand
shares of American Match, par value one million five hundred thousand
dollars, market value three million three hundred thousand at this
moment, and worth every cent of three hundred dollars a share and more.
I don't know how closely you have been following the developments of
American Match. We own all the patents on labor-saving machines and,
what's more, we're just about to close contracts with Italy and France
to lease our machines and processes to them for pretty nearly one
million dollars a year each. We're dickering with Austria and England,
and of course we'll take up other countries later. The American Match
Company will yet make matches for the whole world, whether I'm
connected with it or not. This silver agitation has caught us right in
mid-ocean, and we're having a little trouble weathering the storm. I'm
a perfectly frank man when it comes to close business relations of this
kind, and I'm going to tell you just how things stand. If we can scull
over this rough place that has come up on account of the silver
agitation our stock will go to three hundred before the first of the
year. Now, if you want to take it you can have it outright at one
hundred and fifty dollars--that is, providing you'll agree not to throw
any of it back on the market before next December; or, if you won't
promise that" (he paused to see if by any chance he could read
Cowperwood's inscrutable face) "I want you to loan me one hundred and
fifty dollars a share on these for thirty days at least at ten or
fifteen, or whatever rate you care to fix."
Cowperwood interlocked his fingers and twiddled his thumbs as he
contemplated this latest evidence of earthly difficulty and
uncertainty. Time and chance certainly happened to all men, and here
was one opportunity of paying out those who had been nagging him. To
take this stock at one-fifty on loan and peddle it out swiftly and
fully at two-twenty or less would bring American Match crumbling about
their ears. When it was selling at one-fifty or less he could buy it
back, pocket his profit, complete his deal with Mr. Stackpole, pocket
his interest, and smile like the well-fed cat in the fable. It was as
simple as twiddling his thumbs, which he was now doing.
"Who has been backing this stock here in Chicago besides yourself and
Mr. Hull?" he asked, pleasantly. "I think that I already know, but I
should like to be certain if you have no objection."
"None in the least, none in the least," replied Mr. Stackpole,
accommodatingly. "Mr. Hand, Mr. Schryhart, Mr. Arneel, and Mr.
Merrill."
"That is what I thought," commented Cowperwood, easily. "They can't
take this up for you? Is that it? Saturated?"
"Saturated," agreed Mr. Stackpole, dully. "But there's one thing I'd
have to stipulate in accepting a loan on these. Not a share must be
thrown on the market, or, at least, not before I have failed to respond
to your call. I have understood that there is a little feeling between
you and Mr. Hand and the other gentlemen I have mentioned. But, as I
say--and I'm talking perfectly frankly now--I'm in a corner, and it's
any port in a storm. If you want to help me I'll make the best terms I
can, and I won't forget the favor."
He opened the bag and began to take out the securities--long
greenish-yellow bundles, tightly gripped in the center by thick elastic
bands. They were in bundles of one thousand shares each. Since
Stackpole half proffered them to him, Cowperwood took them in one hand
and lightly weighed them up and down.
"I'm sorry, Mr. Stackpole," he said, sympathetically, after a moment of
apparent reflection, "but I cannot possibly help you in this matter.
I'm too involved in other things myself, and I do not often indulge in
stock-peculations of any kind. I have no particular malice toward any
one of the gentlemen you mention. I do not trouble to dislike all who
dislike me. I might, of course, if I chose, take these stocks and pay
them out and throw them on the market to-morrow, but I have no desire
to do anything of the sort. I only wish I could help you, and if I
thought I could carry them safely for three or four months I would. As
it is--" He lifted his eyebrows sympathetically. "Have you tried all
the bankers in town?"
"Practically every one."
"And they can't help you?"
"They are carrying all they can stand now."
"Too bad. I'm sorry, very. By the way, do you happen, by any chance,
to know Mr. Millard Bailey or Mr. Edwin Kaffrath?"
"No, I don't," replied Stackpole, hopefully.
"Well, now, there are two men who are much richer than is generally
supposed. They often have very large sums at their disposal. You
might look them up on a chance. Then there's my friend Videra. I don't
know how he is fixed at present. You can always find him at the
Twelfth Ward Bank. He might be inclined to take a good portion of
that--I don't know. He's much better off than most people seem to
think. I wonder you haven't been directed to some one of these men
before." (As a matter of fact, no one of the individuals in question
would have been interested to take a dollar of this loan except on
Cowperwood's order, but Stackpole had no reason for knowing this. They
were not prominently identified with the magnate.)
"Thank you very much. I will," observed Stackpole, restoring his
undesired stocks to his bag.
Cowperwood, with an admirable show of courtesy, called a stenographer,
and pretended to secure for his guest the home addresses of these
gentlemen. He then bade Mr. Stackpole an encouraging farewell. The
distrait promoter at once decided to try not only Bailey and Kaffrath,
but Videra; but even as he drove toward the office of the
first-mentioned Cowperwood was personally busy reaching him by
telephone.
"I say, Bailey," he called, when he had secured the wealthy lumberman
on the wire, "Benoni Stackpole, of Hull & Stackpole, was here to see me
just now."
"Yes."
"He has with him fifteen thousand shares of American Match--par value
one hundred, market value to-day two-twenty."
"Yes."
"He is trying to hypothecate the lot or any part of it at one-fifty."
"Yes."
"You know what the trouble with American Match is, don't you?"
"No. I only know it's being driven up to where it is now by a bull
campaign."
"Well, listen to me. It's going to break. American Match is going to
bust."
"Yes."
"But I want you to loan this man five hundred thousand dollars at
one-twenty or less and then recommend that he go to Edwin Kaffrath or
Anton Videra for the balance."
"But, Frank, I haven't any five hundred thousand to spare. You say
American Match is going to bust."
"I know you haven't, but draw the check on the Chicago Trust, and
Addison will honor it. Send the stock to me and forget all about it.
I will do the rest. But under no circumstances mention my name, and
don't appear too eager. Not more than one-twenty at the outside, do
you hear? and less if you can get it. You recognize my voice, do you?"
"Perfectly."
"Drive over afterward if you have time and let me know what happens."
"Very good," commented Mr. Bailey, in a businesslike way.
Cowperwood next called for Mr. Kaffrath. Conversing to similar effect
with that individual and with Videra, before three-quarters of an hour
Cowperwood had arranged completely for Mr. Stackpole's tour. He was to
have his total loan at one-twenty or less. Checks were to be
forthcoming at once. Different banks were to be drawn on--banks other
than the Chicago Trust Company. Cowperwood would see, in some
roundabout way, that these checks were promptly honored, whether the
cash was there or not. In each case the hypothecated stocks were to be
sent to him. Then, having seen to the perfecting of this little
programme, and that the banks to be drawn upon in this connection
understood perfectly that the checks in question were guaranteed by him
or others, he sat down to await the arrival of his henchmen and the
turning of the stock into his private safe.