The bringing of order out of chaos is one of the most interesting and
also one of the most satisfying employments a person can have.
Likewise it is usually one of the most exhausting, if the chaos has
been really chaos and the order be really order. But the satisfaction
of seeing, as the clouds break and the skies clear, the salient outline
of the thing appear as it ought to appear is sufficient compensation
for all the effort. Even if the work be no more elevated than washing
up a trayful of soiled china, a certain thrill is there at the
successful completion of the task; and the greater the Augean stable,
the purer is the pleasure of him who cleans it.
When in the spring of this, his most eventful year, Smith had taken
charge of the slipping, wavering, demoralized Guardian, the stable of
Augeas there confronting him would perhaps have dismayed a less
enthusiastic and a less determined man. Everything was at loose ends;
under the shiftless hand of Gunterson even the fine insurance machine
built up by Mr. Wintermuth in his best constructive days had suddenly
grown to creak painfully in its joints. The heads of departments,
seeing no inspiring or even efficient leadership above them, had become
discouraged, and there had been no one to brace their failing spirits.
Mr. Cuyler and Mr. Bartels in particular had felt the altered fortunes
of the company more keenly than they had felt any business crisis in
all their previous experience.
When Mr. Cuyler had witnessed his local business, his pride and his
life, the fixed star of his professional soul, begin slipping away, his
gloom, as has been told, was not to be lifted. But the case of Mr.
Bartels was even more sad. Year after year had that painstaking
official made up the current statement of the company's position, to be
presented in silence to Mr. Wintermuth on the first business day of
every month. Year after year had he carried this balance sheet to his
chief and stolidly waited for the word of satisfaction which was always
forthcoming, save in exceptional cases. For there had come to be a
kind of sacred formula about it, and if that formula failed to
materialize, the world was all awry for Mr. Bartels, until another
month put matters right once more. And this, so placidly prosperous
had the Guardian been, the succeeding month had seldom failed to do.
"Holding our own, Otto?" the President would inquire.
"Poohty good; losses is bad but premiums is up some, too," Mr. Bartels
would usually reply; and Mr. Wintermuth, appreciating the impossibility
of ever reaching a loss ratio low enough to meet the approval of his
Teutonic subordinate, would scan the statement with little fear of the
result. And then, after another little exchange of courtesies, this
monthly playlet would end.
When the Guardian had first met the rough water, Mr. Bartels had not
been able to understand that anything was amiss--that anything could be
amiss--with the company whose inconspicuous prosperity had been an
axiom of the Street. When, on the first day of February, he had taken
off his first summary of January results, a little cloud of puzzled
suspicion had gathered in his still blue eyes. After carefully
checking his own figures he had rung for Dunham, the chief accountant,
and it had been a querulous and angry summons.
"Here, dese figures is all wrong. You have January premiums pretty
near fifteen per cent behind last year. Fix 'em."
But Dunham, chill as the Matterhorn, assured the excited little man
that the figures were quite correct and that he had checked them twice
to make certain.
"But--but--" said Bartels in bewilderment, "we cannot be going
backwards like that! We have never gone back like that in January."
"Until this year," incautiously rejoined the other.
"No; nor this year, neither!" cried Mr. Bartels; and only his own
thrice repeated checking of the premium sheets would convince him.
Shaking a puzzled and resentful head, he at last sought his chief; with
a hang-dog air he handed over his statement, and with heavy heart he
waited for the President to speak.
Speech was longer than usual in coming.
"Not quite so good?" the President said at last.
"No," said Mr. Bartels. "Rates must be off, I guess?"
"No, Otto," returned Mr. Wintermuth, slowly. "It's not a rate war. It
is that we have had to give up some of our agencies in the East on
account of the Conference separation rule. I am afraid we shall have
to expect a certain decrease for a little while until things get
readjusted. But it won't last; you needn't worry about that."
Unfortunately, however, it did last; and not only that, but it became
more and more marked with each succeeding month. With the third
statement, when the greatest inroads had been made into the Guardian's
business, Mr. Bartels became like a living sepulcher. So heavy and sad
was the heart he carried in his breast that not all the consoling words
of his chief could stir him.
"I have seen agencies whose accounts I have passed for twenty years
fall away to almost nothing or nothing at all. From Silas Osgood I get
no March account; from Jones and Meers I get none. Every month for
fifteen years have I written Jones and Meers to correct their adding;
now I write them not at all." And there were many more.
Finally, when at last it dawned upon Mr. Bartels's Bavarian mind that
the Guardian was really in peril and that unless something were done
quickly, a large part of the remainder of the agents in the East would
follow those already gone, his blind anger and resentment knew no
bounds. He could not, however, understand the real facts in the case,
and no one ever took the trouble fully to explain them to him. So his
impotent rage, lacking a target whereat to aim it, became even blinder.
He was like a child, being unjustly punished for some wrong which he
had not committed, and which he could in no way comprehend. The
thought of facing his chief with a semiannual statement made up of a
series of months like these, was more than he could bear. Fortunately
he was not to be called upon to do so, for Mr. Gunterson left the
Guardian when the fat was all but in the fire, and another turn was
given to affairs.
And the year now just closing had been a busy year for Mr. Richard
Smith. During the most of it he had worked nearly twelve hours a day,
and spent a liberal share of the balance in laying his plans. Now, and
only now,--as the year 1913 was drawing to a close,--had he time to
draw a full breath and look about him.
His Augean stable, if not wholly clean, was at least free from the more
dangerous impurities. The Guardian was not yet, it was true, clear of
all possibility of disaster; but the tide had been turned, and with
strict care there was no further need to fear shipwreck. In
Pennsylvania, in Maryland, in New York,--in short, practically
everywhere save in Massachusetts, where the fight was still in the
courts,--separation had received its deathblow, while robbed of this
advantage the Conference companies could do little or nothing to harm
the Guardian. And in justice to them it must be said that none of them
apparently manifested any abnormal desire to do so, excepting always
the Salamander, whose hostility increased in geometrical ratio with the
Guardian's recovery of strength and prestige. Most of the agencies
which had been lost under Mr. Gunterson's management were either
restored to the company's lists, or else their places had been taken by
others of equal or superior quality.
Out in the field the special agents had under Smith's aggressive
direction recovered their courage and carried out with striking success
the details of his campaign. At the few points where the company's
loss record had been consistently bad, Smith either kept the Guardian
out altogether or made an appointment on such a basis that the agent's
profits would be small unless the company itself made money through
that agency. Being free and not bound by Conference restrictions, he
was able at many points to improve his company's position. And when,
in the early days of the coming January, Mr. Bartels should approach
his annual statement, it seemed probable that it would show little
diminution in the Guardian's resources. The statement would be helped,
too, by the fact that the value of some of the securities owned by the
company, chiefly considerable blocks of bank and anthracite railroad
stocks, had appreciated very handsomely during the year. And Mr.
Cuyler, thanks to the increased conflagration line and to the large
business he was securing from his new branch manager, was making a
record so good that he could scarcely believe the figures which he
himself had compiled.
All in all, the showing would be by no means a discreditable one. It
had been a remarkable task; and Smith, now that he came to look back on
it, remembering the black days of the reign of Gunterson the Unready,
could himself only wonder mildly at the way all these things had come
about. In the midst of the satisfaction which he could not help but
feel, there was always a genuine sense of amazement at the facile way
in which Fate had played into his hand. If he had any doubts, however,
no one else confessed to any. Mr. Wintermuth frankly gave to his young
underwriter the proper share of credit for the results that had been
brought about. All this was pleasant, but it was also earned.
In these months of activity, activity unusual even for Smith, who was
customarily a busy man, there had been for him only one personal
diversion. This was his growing friendship with Helen Maitland; and to
this relationship Smith had by this time come to turn as a lost Arab
turns to a chance-discovered oasis. Through the days of Gunterson's
administration he had not had heart to write Helen or even to think of
her--to his darkened vision she seemed increasingly far away. But this
could not last, and when the tide turned, he presently found himself
writing to her almost as to another self, and found himself awaiting
her letters as filling one of the most vital needs of his life. There
was a name for this, but as yet he was not prepared to use it, and if
Helen were prepared, certainly no hint of any such readiness showed
through her diction.
Because men no longer go abroad, as in medieval times, hewing their way
to glory and romance with sword and mace, it is no sure sign that the
flower has fallen from romance's tree. Merely because that flower now
blooms perhaps more quietly, less flamboyantly than it used to bloom in
purple and gold, is no reason to think that it does not bloom at all.
The singers of world songs find voice to-day, just as they always have,
and no lack of all the panoply of old-time chivalry and war can make a
friendship slipping into love less than a beautiful and wondrous thing.
It is perhaps in some ways to be regretted that the inspiring bombast
of the elder days is no longer in vogue--the grandiloquent arrogance
that led a man to tie a lady's ribband to his arm and proclaim on fear
of sudden death her puissance of beauty throughout the world. This is
perhaps unfortunate; but through added reticence beauty really suffers
no wrong.
Smith, although he had not as yet formulated his precise wishes or
intentions as regards Helen, still knew that he desired a house
professionally in order before he allowed himself to think of another
kind of house. The Guardian was his company, and the Guardian must be
placed in a haven where storms could come not, before he would feel
that his charge was sufficiently relaxed to allow of his dreaming
dreams.
It was with this idea that, as the old year was drawing to a close, he
approached Mr. Wintermuth with a definite project in view.
"We are not going to have such a bad year, after all," he began.
"I fancy we shall come through pretty well," the President agreed.
"Although it didn't look much like it at the start."
"No," said Smith; "it didn't. But do you know, sir, that in one way
we're not making as much of a profit as we should?"
"In what way do you mean, Richard?" inquired his chief.
"Not in the underwriting," replied the younger man. "I'm not going to
suggest increasing our lines or opening up any more than we have. But
I don't think it would hurt us if we opened up a little financially."
"How so? In what way?"
"Well, our investments are in high-class securities, but they're not
liquid enough. We've always bought with the intention of holding what
we buy forever. Now, we've got an exceptionally good finance
committee; Mr. Griswold in particular is regarded as one of the
strongest and shrewdest men in Wall Street."
"Yes; I know he is," Mr. Wintermuth conceded.
"And there's really no good reason why we shouldn't benefit by his
judgment. Now, you know as well as any one that the money to be made
out of underwriting, pure and simple, is comparatively little. You
know that in the long run, even with the most ably managed companies,
expenses and losses together just about eat up all the premiums
received--that less than a dozen first-class companies doing a national
business have an underwriting balance on the right side for the last
ten-year period."
"I admit that unfortunately such is the case."
"Therefore the only chance a company has to make money is from the use
of money--from the use of its premiums between the time they are
received and the time they are paid out in losses. And as this is
really our only chance, we ought to take every advantage--and make as
much of an investment profit as we possibly can."
"I trust you do not mean to suggest that we use the Guardian's assets
for purposes of speculation," Mr. Wintermuth remarked.
"Certainly not--unless it is speculating to take advantage of what
foresight and knowledge of conditions our finance committee possesses.
I do not suggest buying on margin or selling what we haven't got. But
I do suggest that we carry more liquid assets and a bigger cash balance
than we have ever done, so as to be able to take advantage of
opportunities that may present themselves. Now, take our Ninth
National Bank stock, for instance. The Duane Trust Company crowd are
trying to buy the control, and the stock's higher than it's ever been.
In my opinion the block we hold is worth more to the Duane people than
it is to us; I'd let them have it."
"Why, we've had that stock for twenty years!" the President said.
"Well, we've probably had it long enough," said his subordinate, with a
smile. "At least I'd like to have Mr. Griswold's opinion on the point.
And you certainly will never lose much by getting out of a security at
the highest price it's touched in that entire period."
"Perhaps not. I will speak to Griswold about it," said Mr. Wintermuth.
"I am not a financier, and all this is somewhat outside my province,"
Smith went on; "but I think we ought to follow more closely the trend
of modern business methods. We hold far more than we need of solid
railroad bonds that net us four per cent on our investment. With very
little extra risk I am sure we can secure a good deal larger return."
It was a rather daring speech to make, for four per cent first-mortgage
railroad bonds had been Mr. Wintermuth's idea of finance for almost a
generation. It spoke well for his confidence in his Vice-President
that he did not regard the remark as an impertinence.
"That may be true, Richard," he said mildly, "although I have held to
the contrary for twenty years. Still, times change, and to-day you may
be right."
"I think I am, sir," returned Smith, respectfully. "At any rate, why
shouldn't the question be laid before the directors?"
"We could do that," agreed Mr. Wintermuth, with, it must be confessed,
a covert feeling of relief. After all, the assimilation of new ideas
is not the most painless of processes, whatever the age of the
assimilator.
"There's no meeting before the January one, is there?"
"No. January fifth--dividend meeting. But that's comparatively soon.
I'll lay it before the board at that time."
"Thank you, sir," said his subordinate, rising; "and I think that at
least one person present will approve a little more elastic financial
policy for the Guardian."
"Mr. Richard Smith?" inquired the President.
"Oh, yes. But I was thinking of Mr. Griswold."
"Well, we shall see," rejoined Mr. Wintermuth; and the conversation
concluded.
The year 1914 dawned clear and cold. There had been an almost daily
snowfall in New York during Christmas week; and although the street
cleaning squad had labored stoutly, a little dusky whiteness still
persisted in the less frequented corners of the city. This had come
near to being the undoing of Mr. Jenkins, the main reliance of the
Pacific Coast accounts and otherwise of considerable importance in the
period of stress and toil known as "statement time."
At the beginning of every year comes this period to every company--the
time when the accounts department becomes, instead of an active thorn
in the company's flesh, the real, essential hub of the whole wheel; the
time when the adding machines are never still and the rooms resound
with the rustle and stir of a thousand sheets of figures, swung
ceaselessly over by practiced and hasty thumbs; when the lights burn
late every night for two weeks on end, and the laboring bookkeepers see
their families only by cinematographic glances between newspaper and
coffee cup in the cold gray mornings.
This time was now come; and the Guardian's men, under the silent but
none the less strenuous urging of Mr. Bartels, had begun the grind
which could end only when the annual statement of the company was in
the printers' hands with proof initialed and approved by Otto Bartels,
Secretary. And this, taken in conjunction with the cold weather and
heavy snowfall, had fairly undone the honor and the reputation of Mr.
Jenkins. For the unusual cold and the night work together had betrayed
him into potations even beyond his wont, the slippery pavements had
proven very baffling to his dignified tread--and the snowy signet upon
the back of his topcoat spoke to a delighted office all too plainly
that at last the alcoholic equilibrist par excellence had fallen.
This, however, embarrassing as it was to the individual in question,
did not seriously delay the work of the department, which was well
under way by the time the directors came together in their private
office, to declare the semiannual dividend which for many years the
Guardian had undeviatingly paid. A trial balance, from gross figures,
had been drawn off, so that the President was able to report with
reasonable exactitude on the condition of the company. The dividend
was promptly declared, and this was followed by a more or less informal
discussion among the gentlemen around the big table.
"The increase in our surplus seems due mostly to the rise in value of
some of our securities," Mr. Whitehill commented; "but the underwriting
showing is much better for the last six months than for the first. I
think our friend, Mr. Smith, is to be congratulated; and at the same
time I want to ask what he thinks of our prospects for the coming year."
"Well, from the underwriting viewpoint," Smith answered, "there is no
reason why this year should not be better than last, and several
reasons why it should; but if you will pardon the presumption of my
going outside of my own department, I think our chance for an increased
profit lies more along financial than insurance lines."
"Mr. Smith thinks," said Mr. Wintermuth, "that there has not been a
sufficient flexibility in our investments--that we could do better with
a larger cash balance and more liquid--or easily liquidated--assets."
"And so we could," said Mr. Griswold. He leaned forward with more
interest than he had yet shown. "I have felt for some time," he
continued, "that our management of our resources was substantial and
safe, but--without wishing to reflect on our President, whose
conservatism has been a tower of strength to us--I have also felt we
were financially just a little old-fashioned."
"What would you suggest that we do?" inquired the President. "My mind
is entirely open on the subject."
"Let me see the statement," said Mr. Griswold. He regarded it
carefully through his glasses. "Well," he said, "there are several
items on this, representing securities of which I advised the purchase.
This Schuylkill and Susquehanna Railroad and this Ninth National Bank."
"Ninth National--that's the bank the Duane crowd is trying to buy,
isn't it?" asked another director.
"Yes. It's higher now than it has been for twenty years," said Mr.
Wintermuth.
"And a great sight more than it's worth," Mr. Griswold commented. "If
it were mine, I'd get out at the present price. And I'd get out of
Schuylkill and Susquehanna, too. I don't want to be quoted on this,
you understand, but there's no reason for its selling at 160 except the
expectation of an extra dividend, and in my opinion all this talk of an
extra dividend is just rubbish. I believe if we sold what we have
to-morrow, we could get it back within six months, if we wanted, at
135."
The gentlemen around the table were visibly impressed, as Mr.
Griswold's reputation for sagacity in such matters was more than
metropolitan.
"Well, I move that the Finance Committee be empowered to recommend the
sale of any of our securities," said another well-intentioned director.
"And that on their recommendation the securities be sold," he added
somewhat lamely.
"The Finance Committee doesn't need any such resolution passed," said
Mr. Griswold, with a laugh. "If I'm not greatly mistaken, it's always
had such powers. But I'm glad to learn that it is now the desire of
the directorate that we should use them."
It was only a few days after this that Smith, having stopped on his way
home to see a Pittsburgh man who always put up at the Waldorf, met Mr.
Griswold in the lobby of that hotel.
"Well, our Ninth National stock is sold," remarked that gentleman,
casually. "Four ninety-two."
"Good!" said the underwriter. "I think we're well out."
"So do I," returned the other. "By the way, did you notice the market
to-day?"
"No."
"Closed weak. Schuylkill and Susquehanna off two points and a half."
"Too bad we didn't get out of that, too," said Smith. "I remember you
said it was too high."
"It still is," returned the financier, dryly. "But we got out. We
sold every share we had, at the opening, this morning."
Smith looked at him.
"You mean--?" he asked.
"I mean that a good big cash balance is often a handy thing to have.
And just now I'd rather have cash than stocks. I don't mean there's
going to be a panic, or anything like that, but everything's very high.
They may go some higher, but they'll certainly go a good deal lower.
And I don't think that we'll have to wait very long. Good-night--glad
to have seen you."
"Good-night," replied Smith, thoughtfully.