Panic
On August 4, 1896, the city of Chicago, and for that matter the entire
financial world, was startled and amazed by the collapse of American
Match, one of the strongest of market securities, and the coincident
failure of Messrs. Hull and Stackpole, its ostensible promoters, for
twenty millions. As early as eleven o'clock of the preceding day the
banking and brokerage world of Chicago, trading in this stock, was
fully aware that something untoward was on foot in connection with it.
Owing to the high price at which the stock was "protected," and the
need of money to liquidate, blocks of this stock from all parts of the
country were being rushed to the market with the hope of realizing
before the ultimate break. About the stock-exchange, which frowned
like a gray fortress at the foot of La Salle Street, all was
excitement--as though a giant anthill had been ruthlessly disturbed.
Clerks and messengers hurried to and fro in confused and apparently
aimless directions. Brokers whose supply of American Match had been
apparently exhausted on the previous day now appeared on 'change bright
and early, and at the clang of the gong began to offer the stock in
sizable lots of from two hundred to five hundred shares. The agents of
Hull & Stackpole were in the market, of course, in the front rank of
the scrambling, yelling throng, taking up whatever stock appeared at
the price they were hoping to maintain. The two promoters were in
touch by 'phone and wire not only with those various important
personages whom they had induced to enter upon this bull campaign, but
with their various clerks and agents on 'change. Naturally, under the
circumstances both were in a gloomy frame of mind. This game was no
longer moving in those large, easy sweeps which characterize the more
favorable aspects of high finance. Sad to relate, as in all the
troubled flumes of life where vast currents are compressed in narrow,
tortuous spaces, these two men were now concerned chiefly with the
momentary care of small but none the less heartbreaking burdens. Where
to find fifty thousand to take care of this or that burden of stock
which was momentarily falling upon them? They were as two men called
upon, with their limited hands and strength, to seal up the
ever-increasing crevices of a dike beyond which raged a mountainous and
destructive sea.
At eleven o'clock Mr. Phineas Hull rose from the chair which sat before
his solid mahogany desk, and confronted his partner.
"I'll tell you, Ben," he said, "I'm afraid we can't make this. We've
hypothecated so much of this stock around town that we can't possibly
tell who's doing what. I know as well as I'm standing on this floor
that some one, I can't say which one, is selling us out. You don't
suppose it could be Cowperwood or any of those people he sent to us, do
you?"
Stackpole, worn by his experiences of the past few weeks, was inclined
to be irritable.
"How should I know, Phineas?" he inquired, scowling in troubled
thought. "I don't think so. I didn't notice any signs that they were
interested in stock-gambling. Anyhow, we had to have the money in some
form. Any one of the whole crowd is apt to get frightened now at any
moment and throw the whole thing over. We're in a tight place, that's
plain."
For the fortieth time he plucked at a too-tight collar and pulled up
his shirt-sleeves, for it was stifling, and he was coatless and
waistcoatless. Just then Mr. Hull's telephone bell rang--the one
connecting with the firm's private office on 'change, and the latter
jumped to seize the receiver.
"Yes?" he inquired, irritably.
"Two thousand shares of American offered at two-twenty! Shall I take
them?"
The man who was 'phoning was in sight of another man who stood at the
railing of the brokers' gallery overlooking "the pit," or central room
of the stock-exchange, and who instantly transferred any sign he might
receive to the man on the floor. So Mr. Hull's "yea" or "nay" would be
almost instantly transmuted into a cash transaction on 'change.
"What do you think of that?" asked Hull of Stackpole, putting his hand
over the receiver's mouth, his right eyelid drooping heavier than ever.
"Two thousand more to take up! Where d'you suppose they are coming
from? Tch!"
"Well, the bottom's out, that's all," replied Stackpole, heavily and
gutturally. "We can't do what we can't do. I say this, though:
support it at two-twenty until three o'clock. Then we'll figure up
where we stand and what we owe. And meanwhile I'll see what I can do.
If the banks won't help us and Arneel and that crowd want to get from
under, we'll fail, that's all; but not before I've had one more try, by
Jericho! They may not help us, but--"
Actually Mr. Stackpole did not see what was to be done unless Messrs.
Hand, Schryhart, Merrill, and Arneel were willing to risk much more
money, but it grieved and angered him to think he and Hull should be
thus left to sink without a sigh. He had tried Kaffrath, Videra, and
Bailey, but they were adamant. Thus cogitating, Stackpole put on his
wide-brimmed straw hat and went out. It was nearly ninety-six in the
shade. The granite and asphalt pavements of the down-town district
reflected a dry, Turkish-bath-room heat. There was no air to speak of.
The sky was a burning, milky blue, with the sun gleaming feverishly
upon the upper walls of the tall buildings.
Mr. Hand, in his seventh-story suite of offices in the Rookery
Building, was suffering from the heat, but much more from mental
perturbation. Though not a stingy or penurious man, it was still true
that of all earthly things he suffered most from a financial loss. How
often had he seen chance or miscalculation sweep apparently strong and
valiant men into the limbo of the useless and forgotten! Since the
alienation of his wife's affections by Cowperwood, he had scarcely any
interest in the world outside his large financial holdings, which
included profitable investments in a half-hundred companies. But they
must pay, pay, pay heavily in interest--all of them--and the thought
that one of them might become a failure or a drain on his resources was
enough to give him an almost physical sensation of dissatisfaction and
unrest, a sort of spiritual and mental nausea which would cling to him
for days and days or until he had surmounted the difficulty. Mr. Hand
had no least corner in his heart for failure.
As a matter of fact, the situation in regard to American Match had
reached such proportions as to be almost numbing. Aside from the
fifteen thousand shares which Messrs. Hull and Stackpole had originally
set aside for themselves, Hand, Arneel, Schryhart, and Merrill had
purchased five thousand shares each at forty, but had since been
compelled to sustain the market to the extent of over five thousand
shares more each, at prices ranging from one-twenty to two-twenty, the
largest blocks of shares having been bought at the latter figure.
Actually Hand was caught for nearly one million five hundred thousand
dollars, and his soul was as gray as a bat's wing. At fifty-seven
years of age men who are used only to the most successful financial
calculations and the credit that goes with unerring judgment dread to
be made a mark by chance or fate. It opens the way for comment on their
possibly failing vitality or judgment. And so Mr. Hand sat on this hot
August afternoon, ensconced in a large carved mahogany chair in the
inner recesses of his inner offices, and brooded. Only this morning,
in the face of a falling market, he would have sold out openly had he
not been deterred by telephone messages from Arneel and Schryhart
suggesting the advisability of a pool conference before any action was
taken. Come what might on the morrow, he was determined to quit unless
he saw some clear way out--to be shut of the whole thing unless the
ingenuity of Stackpole and Hull should discover a way of sustaining the
market without his aid. While he was meditating on how this was to be
done Mr. Stackpole appeared, pale, gloomy, wet with perspiration.
"Well, Mr. Hand," he exclaimed, wearily, "I've done all I can. Hull and
I have kept the market fairly stable so far. You saw what happened
between ten and eleven this morning. The jig's up. We've borrowed our
last dollar and hypothecated our last share. My personal fortune has
gone into the balance, and so has Hull's. Some one of the outside
stockholders, or all of them, are cutting the ground from under us.
Fourteen thousand shares since ten o'clock this morning! That tells the
story. It can't be done just now--not unless you gentlemen are
prepared to go much further than you have yet gone. If we could
organize a pool to take care of fifteen thousand more shares--"
Mr. Stackpole paused, for Mr. Hand was holding up a fat, pink digit.
"No more of that," he was saying, solemnly. "It can't be done. I, for
one, won't sink another dollar in this proposition at this time. I'd
rather throw what I have on the market and take what I can get. I am
sure the others feel the same way."
Mr. Hand, to play safe, had hypothecated nearly all his shares with
various banks in order to release his money for other purposes, and he
knew he would not dare to throw over all his holdings, just as he knew
he would have to make good at the figure at which they had been
margined. But it was a fine threat to make.
Mr. Stackpole stared ox-like at Mr. Hand.
"Very well," he said, "I might as well go back, then, and post a notice
on our front door. We bought fourteen thousand shares and held the
market where it is, but we haven't a dollar to pay for them with.
Unless the banks or some one will take them over for us we're
gone--we're bankrupt."
Mr. Hand, who knew that if Mr. Stackpole carried out this decision it
meant the loss of his one million five hundred thousand, halted
mentally. "Have you been to all the banks?" he asked. "What does
Lawrence, of the Prairie National, have to say?"
"It's the same with all of them," replied Stackpole, now quite
desperate, "as it is with you. They have all they can carry--every
one. It's this damned silver agitation--that's it, and nothing else.
There's nothing the matter with this stock. It will right itself in a
few months. It's sure to."
"Will it?" commented Mr. Hand, sourly. "That depends on what happens
next November." (He was referring to the coming national election.)
"Yes, I know," sighed Mr. Stackpole, seeing that it was a condition,
and not a theory, that confronted him. Then, suddenly clenching his
right hand, he exclaimed, "Damn that upstart!" (He was thinking of the
"Apostle of Free Silver.") "He's the cause of all this. Well, if
there's nothing to be done I might as well be going. There's all those
shares we bought to-day which we ought to be able to hypothecate with
somebody. It would be something if we could get even a hundred and
twenty on them."
"Very true," replied Hand. "I wish it could be done. I, personally,
cannot sink any more money. But why don't you go and see Schryhart and
Arneel? I've been talking to them, and they seem to be in a position
similar to my own; but if they are willing to confer, I am. I don't
see what's to be done, but it may be that all of us together might
arrange some way of heading off the slaughter of the stock to-morrow.
I don't know. If only we don't have to suffer too great a decline."
Mr. Hand was thinking that Messrs. Hull and Stackpole might be forced
to part with all their remaining holdings at fifty cents on the dollar
or less. Then if it could possibly be taken and carried by the united
banks for them (Schryhart, himself, Arneel) and sold at a profit later,
he and his associates might recoup some of their losses. The local
banks at the behest of the big quadrumvirate might be coerced into
straining their resources still further. But how was this to be done?
How, indeed?
It was Schryhart who, in pumping and digging at Stackpole when he
finally arrived there, managed to extract from him the truth in regard
to his visit to Cowperwood. As a matter of fact, Schryhart himself had
been guilty this very day of having thrown two thousand shares of
American Match on the market unknown to his confreres. Naturally, he
was eager to learn whether Stackpole or any one else had the least
suspicion that he was involved. As a consequence he questioned
Stackpole closely, and the latter, being anxious as to the outcome of
his own interests, was not unwilling to make a clean breast. He had
the justification in his own mind that the quadrumvirate had been ready
to desert him anyhow.
"Why did you go to him?" exclaimed Schryhart, professing to be greatly
astonished and annoyed, as, indeed, in one sense he was. "I thought we
had a distinct understanding in the beginning that under no
circumstances was he to be included in any portion of this. You might
as well go to the devil himself for assistance as go there." At the
same time he was thinking "How fortunate!" Here was not only a loophole
for himself in connection with his own subtle side-plays, but also, if
the quadrumvirate desired, an excuse for deserting the troublesome
fortunes of Hull & Stackpole.
"Well, the truth is," replied Stackpole, somewhat sheepishly and yet
defiantly, "last Thursday I had fifteen thousand shares on which I had
to raise money. Neither you nor any of the others wanted any more.
The banks wouldn't take them. I called up Rambaud on a chance, and he
suggested Cowperwood."
As has been related, Stackpole had really gone to Cowperwood direct,
but a lie under the circumstances seemed rather essential.
"Rambaud!" sneered Schryhart. "Cowperwood's man--he and all the
others. You couldn't have gone to a worse crowd if you had tried. So
that's where this stock is coming from, beyond a doubt. That fellow or
his friends are selling us out. You might have known he'd do it. He
hates us. So you're through, are you?--not another single trick to
turn?"
"Not one," replied Stackpole, solemnly.
"Well, that's too bad. You have acted most unwisely in going to
Cowperwood; but we shall have to see what can be done."
Schryhart's idea, like that of Hand, was to cause Hull & Stackpole to
relinquish all their holdings for nothing to the banks in order that,
under pressure, the latter might carry the stocks he and the others had
hypothecated with them until such a time as the company might be
organized at a profit. At the same time he was intensely resentful
against Cowperwood for having by any fluke of circumstance reaped so
large a profit as he must have done. Plainly, the present crisis had
something to do with him. Schryhart was quick to call up Hand and
Arneel, after Stackpole had gone, suggesting a conference, and
together, an hour later, at Arneel's office, they foregathered along
with Merrill to discuss this new and very interesting development. As
a matter of fact, during the course of the afternoon all of these
gentlemen had been growing more and more uneasy. Not that between them
they were not eminently capable of taking care of their own losses, but
the sympathetic effect of such a failure as this (twenty million
dollars), to say nothing of its reaction upon the honor of themselves
and the city as a financial center, was a most unsatisfactory if not
disastrous thing to contemplate, and now this matter of Cowperwood's
having gained handsomely by it all was added to their misery. Both
Hand and Arneel growled in opposition when they heard, and Merrill
meditated, as he usually did, on the wonder of Cowperwood's subtlety.
He could not help liking him.
There is a sort of municipal pride latent in the bosoms of most members
of a really thriving community which often comes to the surface under
the most trying circumstances. These four men were by no means an
exception to this rule. Messrs. Schryhart, Hand, Arneel, and Merrill
were concerned as to the good name of Chicago and their united standing
in the eyes of Eastern financiers. It was a sad blow to them to think
that the one great enterprise they had recently engineered--a foil to
some of the immense affairs which had recently had their genesis in New
York and elsewhere--should have come to so untimely an end. Chicago
finance really should not be put to shame in this fashion if it could
be avoided. So that when Mr. Schryhart arrived, quite warm and
disturbed, and related in detail what he had just learned, his friends
listened to him with eager and wary ears.
It was now between five and six o'clock in the afternoon and still
blazing outside, though the walls of the buildings on the opposite side
of the street were a cool gray, picked out with pools of black shadow.
A newsboy's strident voice was heard here and there calling an extra,
mingled with the sound of homing feet and street-cars--Cowperwood's
street-cars.
"I'll tell you what it is," said Schryhart, finally. "It seems to me
we have stood just about enough of this man's beggarly interference.
I'll admit that neither Hull nor Stackpole had any right to go to him.
They laid themselves and us open to just such a trick as has been
worked in this case." Mr. Schryhart was righteously incisive, cold,
immaculate, waspish. "At the same time," he continued, "any other
moneyed man of equal standing with ourselves would have had the
courtesy to confer with us and give us, or at least our banks, an
opportunity for taking over these securities. He would have come to
our aid for Chicago's sake. He had no occasion for throwing these
stocks on the market, considering the state of things. He knows very
well what the effect of their failure will be. The whole city is
involved, but it's little he cares. Mr. Stackpole tells me that he had
an express understanding with him, or, rather, with the men who it is
plain have been representing him, that not a single share of this stock
was to be thrown on the market. As it is, I venture to say not a
single share of it is to be found anywhere in any of their safes. I can
sympathize to a certain extent with poor Stackpole. His position, of
course, was very trying. But there is no excuse--none in the
world--for such a stroke of trickery on Cowperwood's part. It's just as
we've known all along--the man is nothing but a wrecker. We certainly
ought to find some method of ending his career here if possible."
Mr. Schryhart kicked out his well-rounded legs, adjusted his soft-roll
collar, and smoothed his short, crisp, wiry, now blackish-gray
mustache. His black eyes flashed an undying hate.
At this point Mr. Arneel, with a cogency of reasoning which did not at
the moment appear on the surface, inquired: "Do any of you happen to
know anything in particular about the state of Mr. Cowperwood's
finances at present? Of course we know of the Lake Street 'L' and the
Northwestern. I hear he's building a house in New York, and I presume
that's drawing on him somewhat. I know he has four hundred thousand
dollars in loans from the Chicago Central; but what else has he?"
"Well, there's the two hundred thousand he owes the Prairie National,"
piped up Schrybart, promptly. "From time to time I've heard of several
other sums that escape my mind just now."
Mr. Merrill, a diplomatic mouse of a man--gray, Parisian,
dandified--was twisting in his large chair, surveying the others with
shrewd though somewhat propitiatory eyes. In spite of his old grudge
against Cowperwood because of the latter's refusal to favor him in the
matter of running street-car lines past his store, he had always been
interested in the man as a spectacle. He really disliked the thought
of plotting to injure Cowperwood. Just the same, he felt it incumbent
to play his part in such a council as this. "My financial agent, Mr.
Hill, loaned him several hundred thousand not long ago," he
volunteered, a little doubtfully. "I presume he has many other
outstanding obligations."
Mr. Hand stirred irritably.
"Well, he's owing the Third National and the Lake City as much if not
more," he commented. "I know where there are five hundred thousand
dollars of his loans that haven't been mentioned here. Colonel
Ballinger has two hundred thousand. He must owe Anthony Ewer all of
that. He owes the Drovers and Traders all of one hundred and fifty
thousand."
On the basis of these suggestions Arneel made a mental calculation, and
found that Cowperwood was indebted apparently to the tune of about
three million dollars on call, if not more.
"I haven't all the facts," he said, at last, slowly and distinctly. "If
we could talk with some of the presidents of our banks to-night, we
should probably find that there are other items of which we do not
know. I do not like to be severe on any one, but our own situation is
serious. Unless something is done to-night Hull & Stackpole will
certainly fail in the morning. We are, of course, obligated to the
various banks for our loans, and we are in honor bound to do all we can
for them. The good name of Chicago and its rank as a banking center is
to a certain extent involved. As I have already told Mr. Stackpole and
Mr. Hull, I personally have gone as far as I can in this matter. I
suppose it is the same with each of you. The only other resources we
have under the circumstances are the banks, and they, as I understand
it, are pretty much involved with stock on hypothecation. I know at
least that this is true of the Lake City and the Douglas Trust."
"It's true of nearly all of them," said Hand. Both Schryhart and
Merrill nodded assent.
"We are not obligated to Mr. Cowperwood for anything so far as I know,"
continued Mr. Arneel, after a slight but somewhat portentous pause.
"As Mr. Schryhart has suggested here to-day, he seems to have a
tendency to interfere and disturb on every occasion. Apparently he
stands obligated to the various banks in the sums we have mentioned.
Why shouldn't his loans be called? It would help strengthen the local
banks, and possibly permit them to aid in meeting this situation for
us. While he might be in a position to retaliate, I doubt it."
Mr. Arneel had no personal opposition to Cowperwood--none, at least, of
a deep-seated character. At the same time Hand, Merrill, and Schryhart
were his friends. In him, they felt, centered the financial leadership
of the city. The rise of Cowperwood, his Napoleonic airs, threatened
this. As Mr. Arneel talked he never raised his eyes from the desk
where he was sitting. He merely drummed solemnly on the surface with
his fingers. The others contemplated him a little tensely, catching
quite clearly the drift of his proposal.
"An excellent idea--excellent!" exclaimed Schryhart. "I will join in
any programme that looks to the elimination of this man. The present
situation may be just what is needed to accomplish this. Anyhow, it may
help to solve our difficulty. If so, it will certainly be a case of
good coming out of evil."
"I see no reason why these loans should not be called," Hand commented.
"I'm willing to meet the situation on that basis."
"And I have no particular objection," said Merrill. "I think, however,
it would be only fair to give as much notice as possible of any
decision we may reach," he added.
"Why not send for the various bankers now," suggested Schryhart, "and
find out exactly where he stands, and how much it will take to carry
Hull & Stackpole? Then we can inform Mr. Cowperwood of what we propose
to do."
To this proposition Mr. Hand nodded an assent, at the same time
consulting a large, heavily engraved gold watch of the most ponderous
and inartistic design. "I think," he said, "that we have found the
solution to this situation at last. I suggest that we get Candish and
Kramer, of the stock-exchange" (he was referring to the president and
secretary, respectively, of that organization), "and Simmons, of the
Douglas Trust. We should soon be able to tell what we can do."
The library of Mr. Arneel's home was fixed upon as the most suitable
rendezvous. Telephones were forthwith set ringing and messengers and
telegrams despatched in order that the subsidiary financial luminaries
and the watch-dogs of the various local treasuries might come and, as
it were, put their seal on this secret decision, which it was obviously
presumed no minor official or luminary would have the temerity to
gainsay.