At eight the next morning the train from the Adirondacks arrived,
and Montague was awakened by his brother at the telephone. “Have you
seen this morning's Despatch?” was Oliver's first word.
“I haven't seen it,” said Montague; “but I know what's in it.”
“About the Trust Company of the Republic?” asked Oliver.
“Yes,” said the other. “I was told the story before I telegraphed
you.”
“But my God, man,” cried Oliver--“then why aren't you down town?”
“I'm going to let my money stay.”
“What?”
“I believe that the institution is sound; and I am not going to
leave Prentice in the lurch. I telegraphed you, so that you could do
as you chose.”
It was a moment or two before Oliver could find words to reply.
“Thanks!” he said. “You might have done a little more--sent somebody
down to keep a place in line for me. You're out of your mind, but
there's no time to talk about it now. Good-by.” And so he rang off.
Montague dressed and had his breakfast; in the meantime he glanced
over a copy of the Despatch, where, in the account of the day's
events, he found the fatal statements about the Trust Company of the
Republic. It was very interesting to Montague to read these
newspapers and see the picture of events which they presented to the
public. They all told what they could not avoid telling--that is,
the events which were public matters; but they never by any chance
gave a hint of the reasons for the happenings--you would have
supposed that all these upheavals in the banking world were so many
thunderbolts which had fallen from the heavens above. And each day
they gave more of their space to insisting that the previous day's
misfortunes were the last--that by no chance could there be any more
thunderbolts to fall.
When he went down town, he rode one station farther than usual in
order to pass the Trust Company of the Republic. He found a line of
people extending halfway round the block, and in the minute that he
stood watching there were a score or more added to it. Police were
patrolling up and down--it was not many hours later that they were
compelled to adopt the expedient of issuing numbered tickets to
those who waited in the line.
Montague walked on toward the front, looking for his brother. But he
had not gone very far before he gave an exclamation of amazement. He
saw a short, stout, grey-haired figure, which he recognised, even by
its back. “Major Venable!” he gasped.
The Major whirled about. “Montague!” he exclaimed. “My God, you are
just in time to save my life!”
“What do you want?” asked the other.
“I want a chair!” gasped the Major, whose purple features seemed
about to burst with his unwonted exertions. “I've been standing here
for two hours. In another minute more I should have sat down on the
sidewalk.”
“Where can I get a chair?” asked Montague, biting his tongue in
order to repress his amusement.
“Over on Broadway,” said the Major. “Go into one of the stores, and
make somebody sell you one. Pay anything--I don't care.”
So Montague went back, and entered a leather-goods store, where he
saw several cane-seated chairs. He was free to laugh then all he
pleased; and he explained the situation to one of the clerks, who
demurred at five dollars, but finally consented for ten dollars to
take the risk of displeasing his employer. For fifty cents more
Montague found a boy to carry it, and he returned in triumph to his
venerable friend.
“I never expected to see you in a position like this,” he remarked.
“I thought you always knew things in advance.”
“By the Lord, Montague!” muttered the other, “I've got a quarter of
a million in this place.”
“I've got about one-fourth as much myself,” said Montague.
“What!” cried the Major. “Then what are you doing?”
“I'm going to leave it in,” said Montague. “I have reason to know
that that report in the Despatch is simply a blunder, and that the
institution is sound.”
“But, man, there'll be a run on it!” sputtered the old gentleman.
“There will, if everybody behaves like you. You don't need your
quarter of a million to pay for your lunch, do you?”
The Major was too much amazed to find a reply.
“You put your money in a trust company,” the other continued, “and
you know that it only keeps five per cent reserve, and is liable to
pay a hundred per cent of its deposits. How can you expect it to do
that?”
“I don't expect it,” said the Major, grimly; “I expect to be among
the five per cent.” And he cast his eye up the line, and added, “I
rather think I am.”
Montague went on ahead, and found his brother, with only about a
score of people ahead of him. Apparently not many of the depositors
of the Trust Company read their newspapers before eight o'clock in
the morning.
“Do you want a chair, too?” asked Montague. “I just got one for the
Major.”
“Is he here, too?” exclaimed Oliver. “Good Heavens! No, I don't want
a chair,” he added, “I'll get through early. But, Allan, tell
me--what in the world is the matter? Do you really mean that your money
is still in here?”
“It's here,” the other answered. “There's no use arguing about
it--come over to the office when you get your money.”
“I got the train just by half a minute,” said Oliver. “Poor Bertie
Stuyvesant didn't get up in time, and he's coming on a special--he's
got about three hundred thousand in here. It was to pay for his new
yacht.”
“I guess some of the yacht-makers won't be quite so busy from now
on,” remarked the other, as he moved away.
That afternoon he heard the story of how General Prentice, as a
director of the Gotham Trust, had voted that the institution should
not close its doors, and then, as president of the Trust Company of
the Republic, had sent over and cashed a check for a million
dollars. None of the newspapers printed that story, but it ran from
mouth to mouth, and was soon the jest of the whole city. Men said
that it was this act of treachery which had taken the heart out of
the Gotham Trust Company directors, and led to the closing of its
doors.
Such was the beginning of the panic as Montague saw it. It had all
worked out beautifully, according to the schedule. The stock market
was falling to pieces--some of the leading stocks were falling
several points between transactions, and Wyman and Hegan and the Oil
and Steel people were hammering the market and getting ready for the
killing. And at the same time, representatives of Waterman in
Washington were interviewing the President, and setting before him
the desperate plight of the Mississippi Steel Company. Already the
structure of the country's finances was tottering; and here was one
more big failure threatening. Realising the desperate situation, the
Steel Trust was willing to do its part to save the country--it would
take over the Mississippi Steel Company, provided only that the
Government would not interfere. The desired promise was given; and
so that last of Waterman's purposes was accomplished.
But there was one factor in the problem upon which few had reckoned,
and that was the vast public which furnished all the money for the
game--the people to whom dollars were not simply gamblers' chips,
but to whom they stood for the necessities of life; business men who
must have them to pay their clerks on Saturday afternoon;
working-men who needed them for rent and food; helpless widows and
orphans to whom they meant safety from starvation. These unhappy
people had no means of knowing that financial institutions, which
were perfectly sound and able to pay their depositors, might be
wrecked deliberately in a gamblers' game. When they heard that banks
were tottering, and were being besieged for money, they concluded
that there must be real danger--that the long-predicted crash must
be at hand. They descended upon Wall Street in hordes--the whole
financial district was packed with terrified crowds, and squads of
policemen rode through upon horseback in order to keep open the
streets.
“Somebody asked for a dollar,” was the way one banker phrased it.
Wall Street had been doing business with pieces of paper; and now
someone asked for a dollar, and it was discovered that the dollar
had been mislaid.
It was an experience for which the captains of finance were not
entirely prepared; they had forgotten the public. It was like some
great convulsion of nature, which made mockery of all the powers of
men, and left the beholder dazed and terrified. In Wall Street men
stood as if in a valley, and saw far up above them the starting of
an avalanche; they stood fascinated with horror, and watched it
gathering headway; saw the clouds of dust rising up, and heard the
roar of it swelling, and realised that it was a matter of only a
second or two before it would be upon them and sweep them to
destruction.
The lines of people before the Gotham Trust and the Trust Company of
the Republic were now blocks in length; and every hour one heard of
runs upon new institutions. There were women wringing their hands
and crying in nervous excitement; there were old people, scarcely
able to totter; there were people who had risen from sick-beds, and
who stood all through the day and night, shivering in the keen
October winds.
Runs had begun on the savings banks also; over on the East Side the
alarm had reached the ignorant foreign population. It had spread
with the speed of lightning all over the country; already there were
reports of runs in other cities, and from thousands and tens of
thousands of banks in East and South and West came demands upon the
Metropolis for money. And there was no money anywhere.
And so the masters of the Banking Trust realised to their annoyance
that the monster which they had turned loose might get beyond their
control. Runs were beginning upon institutions in which they
themselves were concerned. In the face of madness such as this, even
the twenty-five per cent reserves of the national banks would not be
sufficient. The moving of the cotton and grain crops had taken
hundreds of millions from New York; and there was no money to be got
by any chance from abroad. Everywhere they turned, they faced this
appalling scarcity of money; nothing could be sold, no money could
be borrowed. The few who had succeeded in getting their cash were
renting safe-deposit boxes and hiding the actual coin.
And so, all their purposes having been accomplished, the bankers set
to work to stem the tide. Frantic telegrams were sent to Washington,
and the Secretary of the Treasury deposited six million dollars in
the national banks of the Metropolis, and then came on himself to
consult.
Men turned to Dan Waterman, who was everywhere recognised as the
master of the banking world. The rivalry of the different factions
ceased in the presence of this peril; and Waterman became suddenly a
king, with practically absolute control of the resources of every
bank in the city. Even the Government placed itself in his hands;
the Secretary of the Treasury became one of his clerks, and bank
presidents and financiers came crowding into his office like
panic-stricken children. Even the proudest and most defiant men,
like Wyman and Hegan, took his orders and listened humbly to his
tirades.
All these events were public history, and one might follow them day
by day in the newspapers. Waterman's earlier acts had been planned
and carried out in darkness. No one knew, no one had the faintest
suspicion. But now newspaper reporters attended the conferences and
trailed Waterman about wherever he went, and the public was invited
to the wonderful spectacle of this battle-worn veteran, rousing
himself for one last desperate campaign and saving the honour and
credit of the country.
The public hung upon his lightest word, praying for his success. The
Secretary of the Treasury sat in the Sub-Treasury building near his
office, and poured out the funds of the Government under his
direction. Thirty-two million dollars in all were thus placed with
the national banks; and from all these institutions Waterman drew
the funds which he poured into the vaults of the imperilled banks
and trust companies. It was a time when one man's peril was every
man's, and none might stand alone. And Waterman was a despot,
imperious and terrible. “I have taken care of my bank,” said one
president; “and I intend to shut myself up in it and wait until the
storm is over.” “If you do,” Waterman retorted, “I will build a wall
around you, and you will never get out of it again!” And so the
banker contributed the necessary number of millions.
The fight centred around the imperilled Trust Company of the
Republic. It was recognised by everyone that if Prentice's
institution went down, it would mean defeat. Longer and longer grew
the line of waiting depositors; the vaults were nearly empty. The
cashiers adopted the expedient of paying very slowly--they would
take half an hour or more to investigate a single check; and thus
they kept going until more money arrived. The savings banks of the
city agreed unanimously to close their doors, availing themselves of
their legal right to demand sixty days before paying. The national
banks resorted to the expedient of paying with clearing-house
certificates. The newspapers preached confidence and cheered the
public--even the newsboys were silenced, so that their shrill cries
might no longer increase the public excitement. Groups of mounted
policemen swept up and down the streets, keeping the crowds upon the
move.
And so at last came the fateful Thursday, the climax of the panic. A
pall seemed to have fallen upon Wall Street. Men ran here and there,
bareheaded and pale with fright. Upon the floor of the Stock
Exchange men held their breath. The market was falling to pieces.
All sales had stopped; one might quote any price one chose, for it
was impossible to borrow a dollar. Interest rates had gone to one
hundred and fifty per cent to two hundred per cent; a man might have
offered a thousand per cent for a large sum and not obtained it. The
brokers stood about, gazing at each other in utter despair. Such an
hour had never before been known.
All this time the funds of the Government had been withheld from the
Exchange. The Government must not help the gamblers, everyone
insisted. But now had come the moment when it seemed that the
Exchange must be closed. Thousands of firms would be ruined, the
business of the country would be paralysed. There came word that the
Pittsburg Exchange had closed. So once more the terrified magnates
crowded into Waterman's office. Once more the funds of the
Government were poured into the banks; and from the banks they came
to Waterman; and within a few minutes after the crisis had
developed, the announcement was made that Dan Waterman would lend
twenty-five million dollars at ten per cent.
So the peril was averted. Brokers upon the floor wept for joy, and
cheers rang through all the Street. A mob of men gathered in front
of Waterman's office, singing a chorus of adulation.
All these events Montague followed day by day. He was passing
through Wall Street that Thursday afternoon, and he heard the crowds
singing. He turned away, bitter and sick at heart. Could a more
tragic piece of irony have been imagined than this--that the man,
who of all men had been responsible for this terrible calamity,
should be heralded before the whole country as the one who averted
it! Could there have been a more appalling illustration of the way
in which the masters of the Metropolis were wont to hoodwink its
blind and helpless population?
There was only one man to whom Montague could vent his feelings;
only one man besides himself who knew the real truth. Montague got
the habit, when he left his work, of stopping at the Express
building, and listening for a few minutes to the grumbling of Bates.
Bates would have each day's news fresh from the inside; not only the
things which would be printed on the morrow, but the things which
would never be printed anywhere. And he and Montague would feed the
fires of each other's rage. One day it would be one of the Express's
own editorials, in which it was pointed out that the intemperate
speeches and reckless policies of the President were now bearing
their natural fruit; another day it would be a letter from a
prominent clergyman, naming Waterman as the President's successor.
Men were beside themselves with wonder at the generosity of Waterman
in lending twenty-five millions at ten per cent. But it was not his
own money--it was the money of the national banks which he was
lending; and this was money which the national banks had got from
the Government, and for which they paid the Government no interest
at all. There was never any graft in the world so easy as the
national bank graft, declared Bates. These smooth gentlemen got the
people's money to build their institutions. They got the Government
to deposit money with them, and they paid the Government nothing,
and charged the people interest for it. They had the privilege of
issuing a few hundred millions of bank-notes, and they charged
interest for these and paid the Government nothing. And then, to cap
the climax, they used their profits to buy up the Government! They
filled the Treasury Department with their people, and when they got
into trouble, the Sub-Treasury was emptied into their vaults. And in
the face of all this, the people agitated for postal savings banks,
and couldn't get them. In other countries the people had banks where
they could put their money with absolute certainty; for no one had
ever known such a thing as a run upon a postal bank.
“Sometimes,” said Bates, “it seems almost as if our people were
hypnotised. You saw all this life insurance scandal, Mr. Montague;
and there's one simple and obvious remedy for all the evils--if we
had Government life insurance, it could never fail, and there'd
be no surplus for Wall Street gamblers. It sounds almost
incredible--but do you know, I followed that agitation as I don't
believe any other man in this country followed it--and from first to
last I don't believe that one single suggestion of that remedy was ever
made in print!”
A startled look had come upon Montague's face as he listened. “I
don't believe I ever thought of it myself!” he exclaimed.
And Bates shrugged his shoulders. “You see!” he said. “So it goes.”