THE TALE OF BULLFROG RUSH
Following the Eagle's Nest promotion, the Sullivan Trust Company became sponsor for Bullfrog Rush. I had met Dr. J. Grant Lyman, owner of the property, on the lawn of one of the cottages of the United States Hotel in Saratoga a few years before, where he raced a string of horses and mixed with good people, and I knew of nothing that was to his discredit. Dr. Lyman bought the Bullfrog Rush property for $150,000. I was present when he paid $100,000 of this money in cash at John S. Cook & Company's bank in Goldfield. The Bullfrog Rush property was of large acreage, enjoyed splendid surface showings, and was situated contiguous to the Tramps Consolidated, which was then selling around $3 a share. It looked like a fine prospect.
Dr. Lyman incorporated the company for 1,000,000 shares of the par value of $1 each. The services of the Sullivan Trust Company were employed to finance the enterprise for mine development. The Trust company obtained an option on the treasury stock of the company at 35 cents per share, and proceeded to dispose of it through Eastern brokers and direct to the public by advertising, at 45 cents per share to brokers and 50 cents per share to investors. We sold 200,000 shares, realizing $90,000 in less than thirty days, retained $20,000 for commission and expenses, and turned into the treasury of the Bullfrog Rush company $70,000, all of which was placed at the disposal of the company for mine development.
Half a dozen tunnels were run and several shafts were sunk. Down to the 400-foot level the mine appeared to be of much promise. It was then learned that the shaft at the 400-foot point had encountered a bed of lime. It appeared that all the properties on Bonanza Mountain, where the Bullfrog Rush was situated, including the Tramps Consolidated, which was then selling in the market at a valuation of $3,000,000, were bound to turn out to be rank mining failures. The entire hill, according to our engineer, was a "slide," and below the 400-point ore could not possibly exist.
We thereupon notified Dr. Lyman that we would discontinue the sale of the stock until such time as the property gave better indications of making a mine.
A few weeks later Dr. Lyman entered my private office unannounced. At this period Jumping Jack, Stray Dog, Indian Camp, and Eagle's Nest were all selling on the San Francisco Stock Exchange at an average of 35 per cent. above promotion prices. The L. M. Sullivan Trust Company was "making good" to investors. Bullfrog Rush had not yet been listed, and we were afraid to give it a market quotation.
"I have formed here in Goldfield the Union Securities Company," Dr. Lyman said, as he sat down close to my desk, "and I am going into the promotion business myself. I don't believe a word of the reports you have that the Bullfrog Rush is a failure. I am going on with the promotion."
I protested. "We shall not permit it," I said. "Governor Sparks, who is the best friend the Sullivan Trust Company has, accepted the presidency of the Bullfrog Rush on our assurance that the property was a good one. John S. Cook, the leading banker of this town, accepted the treasurership on the same representations. Mr. Sullivan, president of this trust company, is vice-president of the Rush. We are 'in bad' enough as the matter already stands. Don't dare go on with the promotion at this time."
Dr. Lyman left the office without uttering a word.
Two days later I received a dispatch from Governor Sparks saying that a full-page advertisement of the Union Securities Company had appeared in the Nevada State Journal at Reno, offering Bullfrog Rush stock for subscription. The Governor protested vigorously against the sale of the stock. We had previously informed him as to the new conditions which prevailed at the mine.
I sent Peter Grant, one of Mr. Sullivan's partners in the Palace, to Dr. Lyman to protest. The answer came back that the Nevada State Journal advertisement was about to be reproduced in all the newspapers of big circulation throughout the East, and that the orders for the advertisements would not be canceled. Half an hour later Dr. Lyman entered the office with Mr. Grant. Mr. Grant looked nettled. Dr. Lyman glowered.
I bade Dr. Lyman take a chair.
"If you move a finger to stop me," he said, as he sat himself down before me, "I'll expose every act of yours since you were born and show up who the boss of this trust company is!"
Dr. Lyman was tall as a poplar and muscled like a Samson. He was fresh from the East, red-cheeked and groomed like a Chesterfield. I was cadaverous, desert-worn, office-fagged, and undersized by comparison. In a glove fight, Dr. Lyman could probably have finished me in half a round. But the disparity did not occur to me. The sense of injustice made me forget everything except Dr. Lyman's blackmailing threat. I jumped to my feet. Dr. Lyman backed up to the glass door. I aimed a blow at him. He backed away to dodge it. In a second he had collided with the big plate-glass pane, which fell with a crash. In another instant he recovered his feet, turned on his heel and ran. His face was covered with scratches, the result of his encounter with the broken plate glass. Several clerks who followed him, thinking he had committed some violent act, reported that he didn't stop running until he reached the end of a street 600 feet away.
"Oh," he gasped, "I never want to see such a look in a man's eyes again. I thought I saw him reach for a gun."
Such an idea was farthest from my mind, although I was very angry. Conscience had made a coward of the doctor.
I was quick to decide upon a course of action.
The position of the trust company was this: With the exception of Bullfrog Rush, we had a string of stock-market winners to our credit with the public. If we allowed Dr. Lyman to go ahead with his promotion of Bullfrog Rush, we should, unless we abandoned our rule to protect our stocks in the market, be compelled some day to buy back all of the stock he sold. The truth about the mine was bound to come out, and we stood before the public as its sponsors.
I decided that the trust company should refund the money paid in by stockholders of Bullfrog Rush and prevent Dr. Lyman from selling more stock.
To the brokers, through whom we had sold much of the stock to the public, we telegraphed that we would refund the exact amount paid us by the brokers on delivery back to us of the certificates. We also wired to Governor Sparks and asked his permission to insert an advertisement in the newspapers over his signature, announcing that the property had proved to be a mining failure and advising the public not to buy any more shares. This pleased the Governor immensely, for he promptly wired back his O.K. with congratulations over the stand we took.
That night a broadside warning to the public, bearing the signature of Governor John Sparks, and a separate advertisement of the Sullivan Trust Company, offering to refund the money paid for Bullfrog Rush shares, were telegraphed to all the leading newspapers of the East. Next day both of these announcements appeared side by side with the half-page and full-page advertisements of Dr. Lyman's Union Securities Company of Goldfield offering Bullfrog Rush for public subscription. The newspapers, peculiarly enough, performed this stunt without a quiver.
The public didn't buy any more Bullfrog shares.
The Bullfrog Rush incident cost the Sullivan Trust Company a little less than $90,000, which was refunded to stockholders, and the additional sum that was expended for advertising our denouncement of the enterprise. Dr. Lyman was stripped of his entire investment in the property. The newspapers lost many thousands of dollars, representing Dr. Lyman's unpaid advertising bills. A number of mining-stock brokers also forfeited some money; they were compelled to refund their commissions.
J. C. Weir, the New York mining-stock broker, who does business under the firm name of Weir Brothers & Company, had sold in the neighborhood of 100,000 shares of Bullfrog Rush to his clients, and he took violent exception to our decision not to refund an amount in excess of the net price paid to us. He held that his firm ought not to be compelled to disgorge its profits. We stood pat and argued that he ought to be proud to share with us the glory of "making good" in such an unusual way to stockholders. It was the first time in the history of Western mining promotions that a thing like this had ever been done, and we pointed out to Mr. Weir that it would gain reputation both for himself and the trust company. For a period Mr. Weir carried on an epistolary warfare with the trust company. For nearly two months he refused to yield. Finally, we received a letter from Mr. Weir saying that since we refused to come to his terms he would accept ours, and that he had drawn on us for $4,500, with one lot of 10,000 shares of Bullfrog Rush stock attached. On receipt of the letter I gave instructions to the cashier promptly to honor the draft.
An hour later the cashier reported that the draft had been presented and that an examination of the stock certificates showed that not a single one of them had been sold by the trust company through Mr. Weir's firm, and, in fact, had never been disposed of by the trust company to anybody. A hurried examination of the stock-certificate books of the Bullfrog Rush Company, which were in the hands of the company's secretary in Goldfield, a clerk of Dr. Lyman, revealed the fact that a large number of blank certificates had been torn out of the certificate books without any entry appearing on the stubs.
The certificates returned to us by Mr. Weir bore dates of several months prior, and our immediate assumption was that Dr. Lyman, at the very moment when we were marketing the treasury stock under a binding contract which forbade him or any one else to dispose of any Bullfrog Rush stock under any circumstances, was clandestinely getting rid of these shares. Mr. Weir, it appeared, had neglected to segregate Dr. Lyman's certificates from those shipped him by the trust company. Another hypothesis was that those certificates had never been sold at all, but had merely been received from Dr. Lyman to be reforwarded to us in order to claim a refund for what we had never been paid for.
Of course, we returned the draft unpaid. But that didn't end the incident. My partner, Mr. Sullivan, took it upon himself to wire his sentiments to Weir Brothers & Company, as follows: "You are so crooked that if you swallowed a ten-penny nail and vomited, it would come out a corkscrew." That was "Larry's" homely way of expressing his opinion.
Goldfield's year of wind and dust had brightened into the glow of Summer. The still breath of August was diffused through the thin mild air of the high altitude. This thin air, which nearly two years before had prompted a camp wit to comment on the birth of my news bureau to the effect that "the high elevation was ideal for the concoction of the visionary stuff that dreams are made of," appeared unprophetic. There was plenty of concrete evidence of the yellow metal to be seen. Production from the mines was increasing daily and money from speculators was pouring into the camp from every direction.
A mining-stock boom of gigantic proportions was brewing. Mohawk of Goldfield, which was incorporated for 1,000,000 shares of the par value of $1 each, and which in the early days went begging at 10 cents a share, was now selling around $2 a share on the San Francisco Stock Exchange, the Goldfield Stock Exchange and the New York Curb. Other Goldfields had advanced in proportion. Combination Fraction was up from 25 cents to $1.15. Silver Pick, which was promoted at 15 cents a share, was selling at 50 cents. Jumbo Extension advanced from 15 to 60. Red Top, which was offered in large blocks at 8 cents per share two years before, was selling at $1. Jumbo advanced from 25 cents to $1.25. Atlanta moved up from 12 to 40. Fifty others, representing prospects, enjoyed proportionate advances.
The Sullivan stocks were right in the swim. Jumping Jack was in hot demand on the San Francisco Stock Exchange and New York Curb at 45 cents, Stray Dog at 70 cents, Indian Camp at 80 cents, and Eagle's Nest at 50 cents. Subscribers to Indian Camp could cash in at a profit of more than 200 per cent.
The country gave indications of going "Goldfield crazy." My Goldfield publicity bureau was working overtime. James Hopper, the noted fiction writer and magazinist, ably assisted by Harry Hedrick and other competent mining reporters, was "on the job" and doing yeoman service. The news-columns of the daily papers of the country teemed with stories of the Goldfield excitement.
People began to flock into the camp in droves. The town was a scene of bustle and life. Motley groups assembled at every corner and discussed the great production being made from the Mohawk and the terrific market advances being chronicled by mining stocks representing all sorts and descriptions of Goldfield properties. Whenever Hayes and Monnette, owners of the Mohawk lease, appeared on the streets, they were followed by a mixed throng of the riffraff of the camp, who hailed them, open-mouthed, as wonders.
The madness of speculation in mining shares in the camp itself was beginning to exceed in its intensity the exciting play at the gaming tables. There was a contagion of excitement even in the open spaces of the street.
At each meeting of the Goldfield Stock Exchange the boardroom was crowded. The sessions were tempestuous. Every step and every hallway leading to the room was jammed with men and women over whose faces all lights and shades of expression flitted. The bidding for mining issues was frantic. Profits mounted high. Everybody seemed to be buying and no one appeared to be willing to sell except at a substantial rise over the last quotations. Castle-building and fumes of fancy usurped reason.
Bank deposits were increasing by leaps and bounds. The camp was rapidly becoming drunk with the joy of fortune-making.
Manhattan now shone mostly in the reflected glory of Goldfield, but Manhattan stocks were booming. This enabled the Sullivan Trust Company to dispose of nearly all of its Manhattan securities which had been carried over after the San Francisco catastrophe and to pile up a great reserve of cash.
A big demand was developing for shares in Fairview companies. Nevada Hills of Fairview was selling on the stock exchanges and curbs at $3 per share, or a valuation of $3,000,000 for the mine. Only a few months before it had fallen into Goldfield and Salt Lake hands for $5,000. Fairview Eagle's Nest, for which subscriptions had been accepted at 35 cents per share by the Sullivan Trust Company, was selling at 70 cents on the San Francisco Stock Exchange.
The Sullivan Trust Company announced the offering of 1,000,000 shares, embracing the entire capitalization of the Fairview Hailstone Mining Company, at 25 cents. The stock was purchased by us at 8 cents. We sold out in a week. San Francisco and Salt Lake were the principal buyers, and it was unnecessary even to insert an advertisement offering the stock. The brokers fell over one another to underwrite the offering by telegraph.