Thomas L. James.
President of the Lincoln National Bank, has had a career in New York brilliant in the service of the public, and marked in the practical skill with which confidences and enterprises have been directed by him. His training has contributed largely to his success as a financier. He came from Utica in 1861 and entered the Custom House as Deputy, and finally attained the position of Postmaster-General after a long and successful term as Postmaster of the City of New York. Mr. James directed the affairs of the Lincoln Bank so successfully that what promised to be a small up-town bank has developed into a National bank of considerable importance. He is one of the men of the times, one who feels the tide of local affairs, a man of the people who acts from wholly conscientious motives, and whose ambition has never exceeded his sense of duty.
Moses Taylor
CHAPTER LX.
JAMES B. AND JOHN H. CLEWS.
The subjects of this sketch, whose portraits adorn these pages, are both members of my firm and I think this book would be incomplete without putting in a few words in reference to them. As will be seen by the sketches which follow, they both commenced their business careers in a modest way and through perseverance and industry have attained positions in the financial world which are in every way creditable to them. I have made it a rule never to introduce a blood relative into my office for a position of trust unless I believed him worthy of confidence and capable of performing the duties assigned to him in an intelligent manner. To do so would be an act of injustice, not only to him but to his associates in the office, and generally causes ill feeling and bad results in the end. Happily with my nephews I have had no such cause or ground for complaint. On the score of merit alone they have succeeded in advancing themselves to their present positions.
James Blanchard Clews was born in Dunkirk, N. Y., August 4, 1859. After graduating from Chamberlain College, in this State, he entered the general office of the Red Line Transit Company, in Buffalo, N. Y., where he spent two years. He then accepted a position of responsibility in the General Manager’s office of the Union Steamboat Company, also located in Buffalo. Here his ability and his growing capacity for making a good business man were further satisfactorily illustrated and recognized by those officially over him. Realizing, however, that Wall Street offered better opportunities for advancement, he resigned his position and obtained one in my banking office as book-keeper. Commencing at the bottom of the clerical staff, he displayed so much ability, coupled with untiring energy in the performance of his duties, it was a pleasure to promote him from time to time, whenever an opportunity offered, with the result that after eight years of vigorous training through the successive grades of Book-keeper, Cashier, and General Manager, he was rewarded in 1890 by being made a member of my firm. It will thus be seen that my nephew possesses a thorough and practical knowledge of the inside workings of a banking house which is so essential to a successful Wall Street business man. Being besides a student of nature, he has also improved every opportunity to learn the value of railroad and other investments and to-day is a recognized authority on all such matters. He has served as President of an important railroad and is a Director in a number of large corporations.
John H. Clews,[[1]] junior member of the firm of Henry Clews & Co., was born October 28, 1856. In beginning his business career he entered the service of the Erie Railroad Company, in the transportation department, where he gained a general knowledge of railroad management and its affairs. After a few years with that company he was offered a position with the Western Transportation Company, the water line of the New York Central Railroad. Here he had the opportunity of completing his education in all the branches of transportation. He was then appointed Agent of the New York, Chicago & St. Louis Railway at East Buffalo, N. Y., the distributing point for all freight between the East and the West. From this place he entered Wall Street, where he evinced the same progressive spirit. In 1890 he became a member of the New York Stock Exchange, acting as one of the chief brokers for Henry Clews & Co., and January 1, 1898, he obtained an interest in the firm.
[1]. Deceased April 10, 1907.
Thomas L. James
CHAPTER LXI.
A REMARKABLE CHAPTER OF HISTORY.
Any review of the advance of this country during the past fifteen years, forms a record of the most wonderful progress ever made by any nation in such a short period. A record of the development of the country’s resources through a resistless energy that seems destined to control the markets of the world, reads almost like one of Grimm’s famous tales, for after numerous trials, and the surmounting of many obstacles, the fairy wand is turning what we will into gold.
One of the effects of the Vanderbilt boom of 1885 is to be found in the enormous mileage of new railroad construction in 1887, namely 12,000 miles. It may have looked at the time excessive, but it has turned out to be a fortunate anticipation of the great business strides made since that time. As far back as that year, our exports of manufactured articles began to show an appreciable increase.
The year following will always be memorable as the time of the great blizzard which tied New York up so effectually for several days. As a direct result of the exposure to its severity, the country lost in Roscoe Conkling one of the most picturesque figures in American politics and a man of unblemished reputation. He was taken from the arena of affairs too soon to allow his participation in the presidential campaign of that year.
My own experience at the time has impressed the memory of the great storm strongly upon my mind. I had gone to Newport accompanied by Mrs. Clews to inspect some improvements then being made at my summer home, and in returning we came across the bay in the regular boat for the purpose of taking the noon-day train which ran from Boston to New York. When we were about half way over the bay, a vicious squall struck us and we began to doubt if we should ever reach the shore again. Finally, however, we did manage to land, and connected with the belated train. Progress of course was slow, so slow in fact that the next morning saw us only as far as New London, whence further movement was out of the question. Many of my readers will recall the railroad ferry over the bay from New London. The last train previous to ours had been started across, but the violence of the tempest had compelled the pilot to give up the task and return. With more incoming trains, New London was soon congested by the sudden increase in population, and accommodations of any sort were at a premium. We were for a time at a loss as to where we could go, but fortunately succeeded in inducing the manager of the hotel there to install us in the private apartments of the proprietor, who had the day before started with his family for Florida. He spent the ensuing four days upon the railroad, between New London and New Haven, banked in by a snow drift six feet high, while we enjoyed the hospitality of his apartments during that time. I am sure that we could not conscientiously complain of the exchange. Telegraphic communication with New York was completely shut off. As our children had remained in the city, we were naturally anxious to know of their welfare and relieve any anxiety they might have as to our safety. There remained but one means of communication, and that a wire to Boston, whence messages could be cabled to Liverpool, and back to New York, and that is the way we got word to and from the metropolis. That was a rather circuitous way, but it was effective.
John H. Clews.
Mr. Cleveland’s renomination and accompanying free trade talk, disturbed the markets more or less from the date of his nomination in 1888 up to the time of General Harrison’s election. The latter’s entrance into the White House started the entire business of the country going, and through his wise management, we were brought to a very high point of prosperity, the last year of his term being, up to that time, one of the most prosperous in our history. One of General Harrison’s most signal achievements was in the exchange of reciprocity treaties, which was managed in such a masterly manner by his resourceful Secretary of State, Mr. Blaine.
In the middle of General Harrison’s term, occurred the greatest financial shock the world had experienced in the last quarter century, or since the panic of 1873.
The suspension of the great firm of Baring Bros. of London in the fall of 1890 proved a demoralizing force from the effects of which finances did not thoroughly recover for several years. The direct cause of the failure, as is now well known, was over-commitment in Argentine enterprises. Through the representations of an agent of theirs who had visited the country, everything bearing the name of Argentine was colored a most rosy hue, and the investments of that great house and its following were enormous. The inevitable reaction from such inflation found them with an immense load of these securities unmarketable, and they were forced to suspend. The assistance rendered in rehabilitating the firm has been signally successful. Through the efforts of Mr. Lidderdale, Governor of the Bank of England, that institution took over some seven million pounds sterling of the congested obligations of the firm. By the wise, patient, and sagacious management of these former unmarketable properties the bank was finally enabled to realize enough therefrom to pay up all the arrears of the firm.
The liquidation of American securities by British holders which was consequent upon their failure was enormous in volume and extended over several years.
The year 1890 was further noteworthy as marking the birth of that unfortunate compromise of the silver agitation known as the Sherman silver-purchase law, which was to bring about such direful results within a brief three years. After the shock of the Baring panic had subsided, the beneficial effects of the McKinley tariff law began to be felt and with increased exports, largely of grain, in the succeeding year, together with ample protection for home industries, we were ushered into 1892 under very auspicious circumstances.
Bountiful crops again provided a basis for what developed into a wonderfully prosperous year. During the year, Jay Gould (largely through the aid of his son George), by one of his characteristic strokes, succeeded in obtaining control of the Union Pacific system, while Mr. Huntington was thinking the matter over; but his personal control was not to last very long, for in December of that year, Mr. Gould died, after a career of great activity and venturesomeness, which has elsewhere been reviewed in this book.
J. B. Clews
The Democratic party still clung to their idol, and Mr. Cleveland was renominated for the presidency in 1892, and by one of those inexplicable turns of public opinion which foolishly wished a change of administration in the midst of prosperous times, he was elected, and returned to Washington the following March, be it said, enjoying the confidence of the great majority of the people. Almost from the time of that election, the Wall Street markets were depressed, the fear of free trade measures being the basis of distrust. Late in the year, the Treasury’s stock of gold began to show signs of diminishing, and with the exception of a few rallies, one notably in the following January, prices continued on the downward course. Co-incident with the decrease of gold reserves arose reports of a disposition on the part of the Secretary of the Treasury to interpret the word “coin” in our Government obligations as allowing the redemption of the bonds in either gold or silver at the option of the Government. The effect of any doubt or question upon this most important subject could only result in unsettling confidence; of which Addison speaks as the “high priest in the temple of trade.” For the first time in very many years, our Treasury operations showed a deficit, and things were going from bad to worse. The first great smash in prices occurred in May, when the famous Cordage Trust went to pieces. At the same time, Sugar stock and the remainder of the then few industrial shares took part in the sharp decline. The gold reserve had by the middle of the year reached alarmingly low figures, so that the pressure of public opinion compelled the calling of an extra session of Congress for the purpose of repealing the silver purchase clause of the Sherman law,—which had proved to be a veritable “Old Man of the Sea” upon the back of the country, threatening to throttle business interests everywhere.
The Congressional procrastination, and obstructive tactics in the Senate worked havoc with trade and finance, and when relief finally came in the repeal of the silver purchase clause, the vitality of the patient had sunk so low, that it was a matter of years before returning health, in the form of confidence, brought back our native buoyancy and push. It became necessary early in the following year to issue $50,000,000 worth of bonds in order to keep the gold reserve from getting too near the vanishing point. Tariff agitation, which had been started by President Cleveland’s message to Congress in December, 1893, upset all the calculations of business men, who hoped, after a disastrous summer, that the tide had turned. But, no sooner was the fear of a silver deluge quieted, than revenue reform brought on another period of anxiety and delay. Fortunately when that distorted measure (with its 640 Senate amendments) which bore the name of the late William L. Wilson, a man of deep thought and the highest integrity, did become a law in the following year, it was not burdened with an income tax.
There are those who argue, probably to their own satisfaction, that this latter is an equitable form of taxation, but it has always appeared to me as putting a premium on idleness by taxing thrift.
ROSWELL P. FLOWER.
Another issue of $50,000,000 bonds was necessary before the year was out, and in spite of this replenishment, gold exports to pay our debts to Europe for securities sent back to us by the ream, continued in such volume as to render a further issue imperative in the following February. This will be remembered as somewhat unique in our Treasury operations, being in the form of a purchase of 3,500,000 oz. of gold, which cost the Government $62,500,000. The famous syndicate which undertook the delivery of the precious metal, agreed to do all in its power by the further deposit of gold in the Treasury and as far as possible, a control of foreign exchange rates to keep the reserve intact. Its powerful aid unquestionably saved the people from many more business disasters, by a bolstering up of confidence in the power of the Government to pay its debts. The syndicate lived up to its agreement fully, depositing in the month of August some seven and a half millions of gold.
One scarcely hears mentioned nowadays the name of that poor fellow whose fabulous fortune (on paper) finally proved too burdensome for his uneducated mind. Barney Barnato was in his way a picturesque character, and a most vivid illustration of the overthrow of mind by matter, when the former is not in control.
The sharp break in South African shares in the London market during October, of course exerted a sympathetic influence here; but worse things were yet in store for us. Our President’s famous Venezuela message to Congress in December, 1895, acted like an earthquake—which shook the markets to their very foundations and engulfed hundreds of millions of values before it subsided. The final outcome of the dispute between England and Venezuela has to a very great extent vindicated the former’s claims. Let us, however, look upon the whole matter as a step forward for civilization in the advancement of the principle of arbitration, the true solution of all international difficulties. In 1896, we did finally reach the end of our troubles, though not without much worriment. A further bond issue of $100,000,000 to meet deficits, brought that total up to $262,500,000 issued in two years. A rather expensive administration, but “troubles come not singly, but in battalions.”
The Presidential Campaign just past, with the same nominees at the head of the respective parties, recalls the wild free silver talk of four years ago. Panic and depression succeeding each other had left the people almost hysterical. After Bryan’s nomination in July, gold hoarding was the order of the day. Of course the effect of this on the money and security markets meant, under the circumstances, another downward plunge in prices. New York Central sold at 88, the lowest price in the past fifteen years, and C., B. & Q. at 53, the lowest price in nearly forty years, and all other stocks sold down in the same proportion.
J. PIERPONT MORGAN.
I have said that we reached the end of our troubles in 1896, but the end did not come till the November election, which showed that William McKinley, “the advance agent of prosperity,” had been elected President. The nomination of William J. Bryan, hitherto a comparatively unknown man, but who electrified the Democratic National Convention by his specious eloquence, the eloquence of a political Belial, able, in the Miltonic phrase, “to make the worst appear the better reason,” whose famous phrase, “you shall not press down upon the brow of labor this crown of thorns, you shall not crucify labor upon a cross of gold,” swept the convention off its feet and made him the nominee for president, was a blow that for a time seriously disturbed Wall Street and commercial circles everywhere. Mr. Bryan called for the free coinage of silver at the ratio of 16 to 1, and by his tireless activity in stumping the country created a feeling of depression that reached the pitch of panic and left the people almost hysterical with fear. But as Martin Van Buren said on one occasion, “the sober second thought of the people is never wrong and is always efficient.” The sober second thought of the people carried the day. Crowds might flock to hear the orator, but they voted with the party of prosperity and honor. The carefully written speech of Mr. Bryan, a speech which, for once, he read from his manuscript in the great Madison Square Garden meeting, did not deceive the people; it fell flat.
With Bryan’s fiasco in this city, the clouds finally began to break. How plainly the record of these four years shows the absolute domination of the markets by Washington. And not of the financial markets alone by any means, but of the whole business interests of the country, which finally were well-nigh paralyzed by four years of increasing anxiety and wonder as to what might happen next.
It is gratifying to turn away from that period of distress to the succeeding years of prosperity. The vindication of the good sense of the people in the election of William McKinley did, at last, turn the tide; and for good and all, let us hope. With an unquestioned currency basis, improvement became possible. We were greatly favored too, in the first year of Mr. McKinley’s administration, by bountiful crops at a time of shortage in Russia, France, and the Danubian Provinces. It was a great year of prosperity for our farmers, who, through good prices, and the exportation of some 120,000,000 bushels of wheat, were enabled to pay off mortgages in wholesale fashion, and herein we see the beginning of present good times. Furthermore our export trade showed great increase. As was to be expected, there was a great rush of importations just prior to the passage of the Dingley Tariff Bill in July, and a consequent decline in revenues immediately thereafter; but the completed record of its operation up to the present time is a splendid tribute to the wisdom of its author. The Supreme Court decision in 1897 in what was known as the Trans-Missouri Case, declaring all railroad pooling illegal, proved somewhat of a shock to the market, but with improvement in business, our roads soon found enough traffic before them to more than go ‘round, without worrying about its division.
The year 1898 began very favorably with large gold imports and easy money. Cuban affairs, which had begun to threaten late in the previous year, finally culminated in the outbreak of war with Spain in April.
The condition of things in Cuba having become a reproach to the civilized world, this Government, acting for the conscience of Christendom, directed that the war which Spain was waging against the Cuban revolutionists should cease, with all its indescribable horrors, its barbarous cruelties to women and children, and as Spain did not heed the warning, our Government intervened in the interest of common humanity, an event which marked a distinct advance in the history of the human race, for history makes no mention of any war waged on such a scale in behalf of the cause of humanity. Certainly never was a war more clearly justified or one which showed greater courage on the part of the intervening nation, for there can be no doubt that more than one of the Continental powers of Europe would have been glad to side with Spain and would have done so, but for the emphatic negative of Great Britain.
Naturally there ensued a period of depression, but it was short-lived. The ensuing months of activity and buoyancy surpassed anything of the kind in our history. After the apprehension as to how the business world would adjust itself to war conditions had passed away, business began to boom all over the country. We were on our feet again with financial health restored. That wonderful boom in the stock market, begun in the summer of 1898 and lasting until the spring of 1899, will not soon be forgotten.
It seems more like a dream than a fact that trade and commerce and financial operations could swell to such well-nigh inconceivable figures, revealing a degree of prosperity almost past belief, like some marvelous good fortune of an individual in a Persian tale, favored by good Genii, actual fact rivalling fancy or throwing it far into the shade. In other words the oldest and most experienced merchants and financiers in this country were astounded at the degree of solid prosperity attained by the great Republic, the lion’s whelp, rivalling or surpassing the strength of the old lion, the mother country across the sea.
To the late Ex-Governor Flower belongs the credit of fearlessly taking the initiative in that marvelous rise in values to which I shall revert later on.
The formal close of the Spanish war gave fresh impetus to trading and prices kept soaring well on into the spring of 1899. The year 1898 has the distinction of marking the beginning of the greatest era of trade combinations, those gigantic commercial engines, that the world has ever seen. The capitalization of those inaugurated during 1898 and 1899 reached the fabulous aggregate of $3,500,000,000. The mind is staggered by the possibilities of enterprise which such a sum suggests.
The tendency towards centralization in the railroad world was first shown in the merger of the Lake Shore road with the New York Central.
The year 1899 was one of great prosperity, the greatest since we have been a nation, albeit its close was marked by one of the worst semi-panics the Street has ever experienced. In order to account for some of the most important features of the panic of December, 1899, it is necessary to take a glance backward at certain great financial events of the year even as early as April.
In that month was formed the famous Amalgamated Copper Corporation, a creation of the Standard Oil magnates.
The capital stock of the company was $75,000,000. The shares were said to be subscribed five times over. Owing to its parentage, the stock became popular, and was sustained at par for some time, but scarcely two months had elapsed before a break of 25 per cent. in the price occurred.
This break was regarded as a rather suspicious circumstance, and was supposed by the “knowing ones” to be a part of the deal. The Amalgamated Company was a mammoth combination, comprised of large share interests in over 30 companies, the famous Anaconda of Montana heading the list, and being the most prominent
The panic fell most severely upon the copper companies, the shrinkage on the share capital of which for the year is alone estimated at nearly $200,000,000.
Besides this, the currency movement to the South and West had been unusually large and prolonged, and finally tightness of money brought about an immense drop in the entire stock market. But with general conditions prosperous all over the country, such panics happily do not leave lasting scars.
The last year of the wonderful nineteenth century has been a remarkable one in our history. Since the first defeat of the silver agitators in 1896, our financial strides have been so rapid that it seems now a question of but a short time when New York will be the financial centre of the world. What a contrast between our position in 1900, and that in 1895, when we were knocking at the door of Europe with bonds for sale to provide running expenses for our Government. To-day England finds it to her interest to place $25,000,000 of her war loan with us, Germany asks for $20,000,000 of American gold, Russia is seeking to borrow from us and Sweden has not gone empty-handed away. And these accommodations have been accorded without causing so much as a ripple in our money markets. The source of such plenty is of course found in our wonderful increase of exports. For ten months of this present calendar year, the trade balance in our favor approximates $500,000,000, making, in the past three years, the vast total of fifteen hundred million dollars balance to our credit. There we see both the lever and the fulcrum with which to move the financial world.
A little over a year ago occurred the death of Cornelius Vanderbilt, the grandson and namesake of the Commodore. Here was a gentleman whose charities were almost boundless. His gifts to the people through art and in many other ways were princely, but perhaps his memory is greener in the minds of those who, through his great private charity, were lifted above want.
These great latter day fortunes have not often failed, in this country, in being administered by men whose conception of life, and of duty toward their fellow men has turned the duty into a pleasure. This is a very great tribute to American citizenship and should not be forgotten or lost sight of by our sometime critics.
The passage of the Currency bill in March, 1900, undoubtedly did much to increase Europe’s faith in our monetary stability and, furthermore, the result of the Presidential election of 1900, the triumph of the party of sound money seems to preclude the recurrence of any attacks upon the financial honor of this country. There has been a campaign of education going on in this country ever since the advocate of the free and unlimited coinage of silver at the ratio of 16 to 1 first promulgated his doctrines. The benefit to the people of this knowledge of public affairs is clearly apparent. They will have none of false theories and suicidal experiments, they will not go after false financial gods, they will not bow the knee to the Baal of repudiation and confiscation.
While the modern method of commercial development is open to criticism in some respects, still I take it that the evils complained of are not those of very existence but are rather those of circumstance, and are open to correction by the will of the people. How often have we heard that these combinations stifle competition—but for how long? Does not their existence excite competition? Furthermore, their management calls for the very highest ability and creates a keen intellectual competition which cannot fail to be of educational value at large. It remains for ensuing years to provide correction for those defects which are bound to appear in any new and untried system.
We end the century that almost covers our national existence with a past record and prospects unparalleled. We enter the new century full of faith in our institutions, that have stood severe tests even in our short life, and full of hope for even greater national achievements. We are fast taking the lead in the affairs of nations as well as in the affairs of commerce and finance, and have need of great steadiness of character, and fixity of national honor, which now seems assured for all time. It augurs well that we begin the twentieth century, which displays such vistas of greatness, at peace with all the world.
CHAPTER LXII.
BOOMS IN WALL STREET.
Wall Street has lately been enjoying quite a boom in some respects differing from any in its previous history. Probably the most interesting feature about this boom is that it is not in any sense spectacular. In that respect it is unique. Prices of many stocks are higher and intrinsic values greater than they have ever been before. The market has all the qualities that normally would cause intensest excitement and focus the attention of the entire country on the Stock Exchange. Yet in spite of these conditions, the Street is in a normal state of mind, and it is doubtful if the general mass of the people, who get their information from the newspapers are fully aware that there is even an ordinary boom in Wall Street. This unusual condition is due, I believe, to the fact that the boom we are enjoying is built on a foundation that reaches clear to the bowels of the earth. There is nothing unnatural or artificial about it. Wall Street is simply one of the centres that reflects the general prosperity throughout the country. Farmers, merchants, mechanics, mill workers, and miners are all so intent in keeping pace with the progress in their own pursuits that they have no time to cast eyes our way. The same conditions that are booming stocks, are booming everything else in the country at an equal rate, so that we are in nowise singular or deserving of special attention.
Photograph from Underwood & Underwood, N. Y.
JOHN D. ROCKEFELLER.
Another factor too, has developed in the Street that prevents the usual excitement and hurly burly incident to a rising market. This is the absence of a pronounced central figure, or controlling force. Usually a boom centres about some one man who stands boldly out in the open, or whose hand it is known is manipulating values. At present the manipulation is being carried on in a method that is as quiet as it is novel and unusual. That the market is being manipulated, is apparent enough even to the most casual observer. But the source of this manipulation is probably known only to a few; all others are but students in the Street. They know that a new order has come, and that this order is due to the most powerful and resistless influence that has ever manifested itself in Wall Street. This influence is very largely composed of the Standard Oil Combination, who have introduced in their Wall Street operations the same quiet, unostentatious, but resistless measures that they have always employed heretofore in the conduct of their corporate affairs. Beside this group, every other man or combination of men that has ever operated in the Street are materially belittled by comparison. The heretofore conspicuously big operators that have flashed up and across the horizon, appear comparatively small beside the men who are running things for us now.
At his best, Jay Gould was always compelled to face the chance of failure. Commodore Vanderbilt, though he often had the Street in the palm of his hand, was often driven into a corner where he had to do battle for his life, and so it has been with every great speculator, or combination of speculators, until the men who control the Standard Oil took hold. With them, manipulation has ceased to be speculation. Their resources are so vast that they need only concentrate on any given property in order to do with it what they please. And that they have so concentrated on a considerable number of properties outside of the stocks in which they are popularly credited with being exclusively interested is a fact well known to every one who has opportunities of getting beneath the surface. They are the greatest operators the world has ever seen, and the beauty of their method is the quiet and lack of ostentation with which they carry it on. There are no gallery plays, there are no scareheads in the newspapers, there is no wild scramble and excitement. With them the process is gradual, thorough and steady, with never a waver or break. How much money this group of men have made, it is impossible even to estimate. That it is a sum beside which the gains of the most daring speculator of the past were a mere flea bite, is putting the case mildly, and there is an utter absence of chance that is terrible to contemplate. This combination controls Wall Street almost absolutely. Many of the strongest financial institutions are at their service in supplying accommodations when needed. With such power and facilities it is scarcely conceivable what these men must be making, what they can do on either side of the market. So far, fortunately, their manipulations have all been one way, upwards, and in conjunction with the general prosperity it has resulted in making large sums of money for nearly everybody in the Street.
Here and there we have heard of losses, some of them fairly large, but in comparison with the general money making these are hardly to be taken into consideration.
The last preceding boom that Wall Street enjoyed was as different from the present as it is possible to imagine. It had all the elements which this one has not. It centred about one man who stood out in the lime-light clear and distinct. It kept the Stock Exchange in a constant state of ferment. It filled the newspapers with column upon column of sensational stories. It made millions for an army of retainers, on paper, and it kept the market jerking up and down for months. Roswell P. Flower, ex-governor of the State of New York, was the leader of the boom, and a more picturesque figure has never been seen in Wall Street, which is saying a great deal. Mr. Flower was an individual of very plain exterior. He often used language that was noticeable more for its force and directness and emphasis, than it was for polish. He had an ambling gait and looked like a well-fed farmer. He was rarely seen without a huge quid of tobacco that almost filled the left side of his mouth. Spittoons were an essential part of the furnishings of his office. His clothing hung on his person not unlike meal sacks. His hat was rarely brushed, and for days at a time, apparently, he forgot to shave. Altogether he was the last person, in appearance, who might be expected to lead in a district that is famous for its well groomed men. His education was certainly not collegiate; doubtless all his peculiar traits the ordinary man would have judged a handicap, still they were Mr. Flower’s strongest aids. The lack of artificial polish gave people confidence in his statements. His limited education enabled him to think clearly along certain lines without being hampered with mental digressions, which would probably have come with a higher original mental culture.
As the administrator and manager of the estate of his brother-in-law, Henry Keep, he came into the Street twenty or twenty-five years ago. He in that way controlled a large amount of funds, which by conservative direction he increased very substantially. He scarcely ever figured in the speculative field to any great extent, until after he had completed his term as Governor of New York State. When he returned to the Street from Albany, he naturally came with a considerable prestige. Ex-governors of the Empire State are not very plentiful in and about the Stock Exchange. He also brought with him a large political following. In both of the great parties in New York State there are many men of standing and influence who like to take a flyer in Wall Street. Almost to a man they associated themselves with Mr. Flower, who, during his term at the capital had made hosts of friends with Republicans and Democrats alike, and this, though his party loyalty had never been questioned. He also had close associations with most of the big capitalists. After he had settled down to business, on leaving politics behind, Mr. Flower picked out several stocks as his specialties, Chicago Gas, Federal Steel and Rock Island being some of these. Under his manipulation all these properties went up and soon began to show a big advance, unusual strength and great activity. The bears made frequent assaults on his position and now and then pushed him towards the wall, but he always fought his way to the front again, and came out master in every encounter. When he had himself pretty well entrenched in the specialties he was handling, he suddenly plunged into Brooklyn Rapid Transit, and for months he kept things stirred up in a way that even Wall Street has not seen very often., He picked up the stock commencing at six dollars a share, and in an incredibly short time ran it up to over 138. Almost every politician in the State made a fortune on paper. Mr. Flower was immensely popular with the Wall Street news reporters, who helped his boom along through the glowing accounts they wrote from day to day.
Under the impetus of the swirl in Rapid Transit, practically every property in the Street went flying upward, until the end did not seem to be in sight. The bears were beaten to a standstill every time they showed their heads, the only result of their attacks being that Flower stocks would jump up a notch higher. The ex-governor preached Americanism and confidence, until everybody believed that if a stock was only grounded, and the property located in America, you could buy it at any price and still be on the safe side.
That a terrible panic did not grow out of this boom was due only to one fact: Mr. Flower’s sudden death. Had he lived thirty days longer, the bubble must have been pricked, and the result would have been disastrous. Mr. Flower went to the country for a day’s rest, ate freely of ham and radishes and washed his frugal meal down with a copious supply of ice water; he naturally, in consequence, died in a few hours afterwards of an attack of acute indigestion; his death alone saved the Street.
The Rockefellers, the Vanderbilts and his other wealthy friends rushed into the market with millions and sustained values. They were in a position to attribute the threatened reaction to his death and pointed out the absurdity of letting such an incident affect the value of stocks. They discounted the break that must have come in the natural course of events under the forcing process that was going on. Reasoning such as this spread broadcast through the papers stopped the break. Where the bottom would have fallen out entirely there was only virtually a moderate break all along the line; why it was not worse was due to the market being bolstered up by the Standard Oil Combination and others with them coming to the rescue just in time to prevent a big smash. The small speculators operating on moderate margins were of course all wiped out almost to a man, but many of the big fellows were saved. It is probably the only instance on record where the death of a big operator saved a general smash. Those hurt were numerous politicians and small fry operators who instead of getting away with snug fortunes in the shape of profits, lost their all.
An interesting circumstance of the Flower boom was developed involuntarily by young Joe Leiter. Leiter himself, although he had gone to the wall some time previously, indirectly had brought about certain conditions that served Mr. Flower’s purpose admirably. These conditions were the general release of hundreds of millions of dollars on mortgages on farm lands. When Leiter began to corner wheat, it was ruling down in the neighborhood of sixty cents a bushel. He lifted it to considerably over a dollar before he went broke. This enabled thousands of farmers to realize on their crops at the dollar figure and above, which brought prosperity almost over night to the wheat growing belt. With the money realized from their wheat the farmers paid off their mortgages to the extent of two or three hundred million dollars. These mortgages were generally held in the East. This released that much Eastern capital, causing that vast volume of money to seek investment. The men controlling this money were overjoyed when Mr. Flower made an opening for them through the Wall Street boom, and hence it was a comparatively easy matter for a time to push up values.
J. Pierpont Morgan, now a noted character, was trained as a clerk in the one-time famous banking house of Duncan, Sherman & Co. Later he made a connection with Anthony J. Drexel, probably the wealthiest banker in his time in America. Out of this grew the house of Drexel, Morgan & Co., with Mr. Morgan as the managing partner in New York. When Mr. Drexel died, Mr. Morgan absorbed the entire business, and a few years later when his father died, Mr. Morgan became the head of the London house of J. S. Morgan & Co. as well. This put him in a very prominent position. He soon thereafter demonstrated his influence by reorganizing the bankrupt Richmond & West Point Terminal Railway & Warehouse Co., changing its name to the Southern Railway Co. A number of small roads were added to it, many of which were in financial straits, and practically all of them had been badly managed. He combined them into one system under the one head. This railroad combination is now one of the great properties of this country. Mr. Morgan next turned his attention to the reorganization of the Reading and the Erie roads, which were in a bad way. He soon produced order out of chaos there, and that resulted in a boom in railroad stocks all along the line. He had several sharp tussles, however, with some of the big stock holders, who tried to stand out against him on account, as they thought, of his plans being too drastic; and during these tussles he not infrequently resorted to the usual methods to break values, buying at the reduced prices so as to strengthen his control.
The people who followed Mr. Morgan’s lead in these transactions generally made money.
A different sort of deal was engineered a few years before by S. V. White, popularly known as Deacon White, because of his position as deacon in Plymouth Church. Mr. White is one of the oldest operators in the Street, and one of the most striking figures. He has made half a dozen great fortunes in speculation and lost them, but he is as undaunted as ever, and in spite of the fact that he is now over seventy years old, he is still active daily in the market.
Probably one of the most unique stock deals ever carried out in the Street resulted from the transaction of Joseph Bannigan when President of the Rubber Trust. The history of this deal which for a time resulted in a great boom in industrials, has never been told, and is known to but very few persons, most of whom, by the way, were its victims.
Bannigan was an uneducated Irishman who could hardly read and write. He commenced life in a New England rubber factory and worked for $1.50 per day and died worth five million dollars. He was shrewd and bright and knew the value of money. He saved to such good purpose that when the Rubber Trust was formed he was at the head of one of the biggest factories in the country, located in Providence. His knowledge of the trade was so thorough that despite the fact that he almost invariably used small i’s in writing a letter, he was made President of the Trust, his holdings amounting to about forty thousand shares. When matters had been moving along for some time, Bannigan made up his mind that the other men in the trust, the big fellows, were not treating him right, and that the best thing he could do was to get out. So he packed his stock certificates in a grip sack, left Providence on the night boat, landed in New York bright and early, had his breakfast and then made a bee line for a stock brokers’ office. He had assured himself in advance that this stock broker was to be relied on and told him frankly what he intended to do.
“I want to sell out bag and baggage,” he said. “I want to get rid of every one of my forty thousand shares. Here they are, put them on the market and sell them.” The stock broker told him that that would never do. If he wanted to realize full value for his holdings he would have to go about it in a different way, for if he threw his forty thousand shares into the market it would knock the bottom out and he would get little or nothing for his stock. Mr. Bannigan saw the point, and asked what he was to do.
“Buy,” said the broker.
“But I don’t want to buy; I have got more now than I want.”
“That is all right; buy anyway, that will make a market for the stock, and then you can unload when the time comes.”
“How much must I buy?”
“Oh, about $250,000 worth.”
“But I have not got $250,000 in cash to go and buy Rubber stock.”
“Well, you can borrow it; a man in your position, Mr. Bannigan, would have no difficulty in borrowing $250,000.”
Much against his will the old man was finally persuaded to do as he was told. About two weeks later the broker wrote to him that he must buy some more, this time, $200,000 worth. Mr. Bannigan used rather strong language, but finally yielded as he had before. He borrowed $200,000, and turned it over. With this additional capital to work on, the brokers continued to manipulate the market. The insiders soon discovered that some strong party was buying; but they did not know who, Bannigan having carefully kept himself in the background. His brokers operated skilfully in the stock, one day buying, the next, selling to keep the stock active. The brokers after awhile commenced to borrow large amounts of the stock. This convinced the insiders that there was a big short interest somewhere, and they got together in order to squeeze the shorts. The inside holders who held most of the stock, who had combined to squeeze the shorts out, as they thought, put the price up to 61, and at about that figure Bannigan’s was all unloaded. Bannigan now found himself full of money and the other fellows had his stock. They never awakened to the fact that the President had sold out on them until his shares were delivered against their purchases, as they thought, of short stock. Rubber soon thereafter did not stop tumbling until it had gone from 61 to 16. This deal had all the elements of a comedy-drama and the playwright who can do it justice will find material there which will make him an everlasting fortune and reputation. I have touched but lightly on a few of the important incidents. It is not often, however, that newcomers in the Street fare as well as this in the end. For a time they will go on merrily enough, and send things booming; but in the end many get the worst of it. A. B. Stockwell is a good illustration of the truth of this. He is still around the Street somewhere, but is one of the “has beens,” like numerous other former conspicuously large and supposed to be brilliant operators. At one time he was worth many millions of dollars. To-day, he is upside down. His start in life was as purser on a Lake Erie steamboat; his father, it is said, kept a livery stable in Cleveland. On one of his trips, Stockwell was in a position to show considerable attention to Elias Howe, the inventor of the eye at the upper end of the sewing machine needle. Mr. Howe was accompanied by his daughter. Stockwell made himself agreeable to Miss Howe also, and with such good effect that he managed to win her affections and soon thereafter married the young lady. When Mr. Howe died, Mrs. Stockwell came into possession of her father’s millions. With this nest egg Stockwell started in Wall Street, and before anyone realized what had happened he was the most talked of man in the district. He put all his wife’s millions into Pacific Mail stock, and secured entire control of the Company. He came into the Street as plain Stockwell, then as the news of his liberality and good fellowship spread, he became Mr. Stockwell; after he got hold of Pacific Mail he was Commodore Stockwell, by common consent. Everybody bowed and scraped to him and no man was so high and mighty that he was not proud to shake his hand. Stockwell took hold of Pacific Mail at about 40 and sent it up to 107. It was at this period that he was worth over fifteen million dollars; but he found, unfortunately, when it was too late to retreat, that while Pacific Mail was up to 107, it was not worth that figure when the unloading commenced. He was landed high and dry with it all and the Street told him he was welcome to it. He tried to sell, and found that there was no market. Then came violent demands on him to pay up his numerous call loans, and in order to respond thereto, he had to sell regardless of price and thus created a whirlpool, which finally sent the stock down to the price at which he commenced his original purchase at 40. In this one upset, he lost all his paper profits and his wife’s millions besides. This catastrophe not only stripped him of all his worldly possessions, but reduced him to the position of being plain Stockwell again, and there are many also who even go so far as to call him “that little red-headed cuss.” That was the most famous boom in the history of Pacific Mail, notwithstanding Leonard Jerome’s previous brilliant ups and downs in that former erratic property.
Leonard and Addison Jerome had a good time with Pacific Mail for a while. They ran it up to high figures several times; but finally meeting with the same experience that Stockwell did. The two Jeromes from being among the wealthiest and most dazzling operators in the Street, were in the end practically wiped out. Leonard Jerome, who was the father of Lady Randolph Churchill, had nothing left to bequeath his daughter except an equity in the house now occupied by The Manhattan Club on Madison Avenue, which yields an income of about $15,000 a year, of which Lady Churchill gets $10,000.
WILLIAM ROCKEFELLER.
These are a few of the booms that have stirred up things in Wall Street at one time or another, as did the Keene booms, of which there were several, the Gould booms, and the Vanderbilt booms, all of which have been referred to in previous chapters in this book.
The question of trusts or trade combinations has, in recent years, excited a good deal of interest. One of the most interesting figures in this connection is John D. Rockefeller, who will undoubtedly be regarded by the future historian as a striking character in the business history of the nineteenth century. And be it remembered that history now concerns itself, not so much with the doings of governments; not so much with the personalities of emperors, kings, presidents or even with political parties, as with the life of the people themselves. This is clearly shown by such historians as Lord Macaulay and John Bach McMaster. And looking at history in this way, surely John D. Rockefeller must be regarded as one of the most interesting types of the great commercial powers of the day. He was a pioneer, a commercial Daniel Boone, striking out into a new and untrodden field of enterprise, taking great risks, undergoing grave financial perils of a novel kind and at length winning a complete and lasting success—a success which has filled business history with his achievements and the world with his fame. It was a great stride from the little farmhouse in Tioga County, New York, to the place which he fills to-day. Born in 1838 he is now in the prime of life. Reared by strict, church-going people, his word is as good as his bond; he is the soul of business integrity, and a striking example of what thrift, enterprise and persistency will do for a young man who starts out in life with apparently little or no chance of success. His old schoolmaster, it seems, was the first to get the young man to look into the refining of petroleum. Not so many years ago, they used sperm oil, and it cost $1.50 a gallon. How to refine the thick, ill-smelling oil found in the water courses of Pennsylvania was a problem. It was black slime, and John D. Rockefeller, by hitting upon a method of refining it and introducing it in the home throughout the world has made a fortune that recalls the fable of Midas. Before he was twenty-one he formed a partnership with a man named Hewitt and at first engaged in the warehouse and produce business. Then came the great oil craze in Pennsylvania. Poor farmers suddenly became rich; thousands flocked to the oil fields. Young Rockefeller kept his head. Asked to make investments in oil wells for Cleveland friends he dissuaded them from the project on the ground that the thing was being overdone, and with Samuel Andrews, who was familiar with the general processes of distilling, engaged in the refining branch of the petroleum trade. The firm subsequently became Rockefeller, Flagler & Andrews, which rapidly expanded its field of operations, and in 1870 organized the Standard Oil Company with a capital of $1,000,000. It started pipe lines to ship the oil to the seaports. It made millions in by-products once considered worthless. It established markets all over the known world, cheapened its methods of production and outstripped all competitors. Little wonder then, that its “extra” dividend in the year 1899 amounted to $23,000,000 over and above the regular dividends on the whole capital stock. Mr. Rockefeller attributes his success to early training and perseverance. That is, like other men who have stamped their individuality upon the affairs of mankind, he is what is termed a causationist; in other words, he believes that nothing is got for nothing; that effects proceed from causes, and the cause of success he believes to be largely perseverance. He believes that perseverance overcomes almost everything, even nature itself, and in that opinion this practical business man is at one with the philosophers of antiquity.
He and his associates in the Standard Oil Company are naturally a power in the stock market. They are, of course, very large holders of railroad stocks and bonds and at times their influence is as irresistible as the laws of gravitation. John D. Rockefeller’s influence alone could be so, as he is supposed to be the richest man in America and indeed the richest man ever known in human history. His is believed to be the greatest fortune ever accumulated by any man within his own lifetime. That he feels the responsibilities of his great wealth is obvious from his munificent gifts to educational and charitable institutions, to churches and to a hundred other praiseworthy objects. His princely donations to schools, colleges and universities rival those of that other public-spirited citizen, Andrew Carnegie. They are equally strong in their belief that the greatest charity lies in helping others to help themselves.
CHAPTER LXIII.
A GLIMPSE INTO THE FUTURE.
I believe that it would be difficult to set bounds to the possibilities of American development. The inventive genius of the people, their adaptability to all circumstances, their tenacity of purpose, their wonderful energy, and the fabulous resources of the country all make it certain that the United States will reach a degree of power and prosperity hitherto unexampled in human history. Carlyle’s “French Revolution,” has been strikingly described as “history read by flashes of lightning,” and I am tempted to use the same language in describing the commercial revolution which has taken place in this country during the last few years. Great as it is, however, I think it merely a prelude to what is to come. We are destined for one thing to have a great Pacific trade. Fifty years ago, Humboldt said that the day would come when the trade of the Pacific Ocean would be as great as that of the Atlantic. And the increase within a year or two in this commerce augurs well for the ultimate fulfillment of the great scientist’s prophecy. We readily adapt ourselves to the requirements of foreign markets and that is a very important point. Lord Charles Beresford bears testimony to this fact. He says with truth that Americans find out what the foreign markets want, then they supply it. The English say in effect, “We know what you want better than you know yourselves.” The American sends the Chinese thirty-inch-wide calico, which is what they want; the Englishman sticks to twenty-seven inches, with the remark expressed or implied, “Take it or leave it.” And the Chinese will leave it rather than take it and the American manufacturer will be the gainer thereby. Minister Wu’s recent remarks on the necessity of finding out just what the Chinese want and then conforming to their wants, cannot be too carefully borne in mind. Furthermore, we are ready to adopt the newest and most highly perfected machinery regardless of cost. Mr. Carnegie, for instance, on a single occasion discarded machinery which had cost him $2,000,000, and replaced it with the latest which inventive genius could supply. The London engineering journals, on the other hand, admit that the British manufacturers will not change their machinery no matter how apparent it may be that they are being distanced by their more progressive rivals in this country. They reason that they have put just so much money into the “plant” and must get just so much out of it before they will replace it. This seems a good deal like the ostrich which thrusts its head into the sand and refuses to look danger in the face. In the meantime the British are left behind in the race and Glasgow merchants have to try the puerile and utterly futile device of getting up a boycott against American steel and iron products. Such a device, under the circumstances, seems a good deal like the attempt of the celebrated Dame Partington, as the famous English wit Sidney Smith describes it, to sweep back the Atlantic Ocean. She trundled her mop vigorously and made a gallant onslaught, but the Atlantic was aroused and it is needless to say who was the victor. And the American iron trade’s invasion of English markets must result in a victory, unless there is a radical change in conditions, which no one can now foresee. We study the markets; we take pains to ascertain their wants, and it is an axiom of trade that a man or nation that supplies the demand, whatever it may happen to be, gets the trade. This is a law as inexorable, as unchangeable as the laws of the Medes and Persians.
We are now one of the five great world powers, financial and political, with a population second to none except Russia. That is to say, we have a population of 76,300,000, Germany has 55,000,000, Austro-Hungary 45,000,000, the United Kingdom 41,000,000, France 39,000,000, Italy 32,000,000, Spain 20,000,000, Russia 136,000,000, Japan, 45,000,000, India 340,000,000, China 400,000,000. The Mongolian race is numerically powerful, but in the long run can the yellow race stand up against the white? I doubt it. Meantime the population in this western home of the Caucasian race is steadily increasing. In 1800 the United States had a population of only 5,308,483. It is now 76,304,799. Then we had sixteen states. Now we have forty-five. Then our territory consisted of 909,050 square miles. It is now 3,846,595 square miles. We have practically a new race made up of an amalgamation of all branches of the Caucasian race, speaking the English tongue, which in my judgment is destined to be the one tongue spoken in the world. It is a people determined to uphold just and equitable principles of trade and to have sound money. The amount now in circulation is $2,074,687,871, or an increase within three years of $400,000,000. Russia has only 26,000 miles of railroad; we have 190,000. In the last fifteen years we have made more progress in the things which tend to increase practically the term of human life by annihilating time and space and supplying necessities and comforts of one kind or another than ever before in our history. We are told that what does not happen in a year may happen in a minute. Similarly what might not have happened in a thousand years under adverse conditions, has happened in fifteen.
What of the future? In the language of Daniel Webster, “the past at least is secure.” We see that the bank exchanges which in 1888 were $48,750,886,813, have risen in 1900 to approximately $92,000,000,000. During four years of a sound money Republican Administration, exchanges in our clearing houses steadily increased from $48,750,886,813 in 1888, to the magnificent total of $60,883,572,438 in 1892. But from 1892, during four years of Democratic rule, our clearings fell from $60,883,572,438 to $51,935,651,733 in 1896, running as low as $45,000,000,000 in 1894. From 1896, during Mr. McKinley’s Administration, we gained on an average more than ten billions each year, the exchanges having gone up from $51,935,651,733 in 1896, to the surprising sum of $92,037,588,818 in 1900. From 1888 to 1892 during a Republican Administration, we increased our exports $317,787,505, reaching the then gratifying figure of $1,015,732,011. From 1892 to 1896, during a Democratic Administration, our exports decreased by $152,531,524, falling from $1,015,732,011 to $863,200,487. From 1896 down to June 30, 1900, with two months estimated, during McKinley’s Administration, our exports have gone up from $863,200,487 in 1896, to $1,400,000,000, gaining $537,000,000, or nearly doubling; and of this vast export of $1,400,000,000 more than $400,000,000 are manufactured goods, and would require in their production more than a million of American mechanics.
From the fall of 1888 to the fall of 1892, during a Republican Administration, national banks gained in resources $694,400,000, going from $2,815,700,000 to $3,510,100,000. From the fall of 1892 to the fall of 1896, during a Democratic Administration, the national banks lost in resources $346,500,000, going down from $3,510,100,000 to $3,263,600,000. From the fall of 1896 to April 26, 1900, during McKinley’s Administration, the national banks have gained in resources $1,548,356,000, going up from $3,263,600,000 to $4,811,956,000. The increase in both Republican periods was constant and gradual throughout, demonstrating, as has been well said, the influence and power of far-reaching politics which alone can bring about uniform and universal prosperity worthy the genius of the American people. The Republican party turned over the Government to the Democrats in March, 1893, with a bonded debt of only $585,029,330, and this was increased to $847,365,130, in times of peace. For the purpose of prosecuting the war the debt was increased in 1898 by $200,000,000, and now stands at $1,046,048,750, less such an amount of the twenty-five millions of 2 per cent. bonds as the Secretary of the Treasury may have already redeemed. During the last four years of Democratic administration, $201,003,808 of gold was exported; while during the first three years of the recent Administration, or down to June 30, 1899, we imported $201,071,000, making a difference in favor of Republican politics of $402,074,808. Look, too, at the per capita circulation in the United States. In 1802, it was $5.00; in 1845, $9.00; in 1873, $15.85; in 1892, $24.40; in 1900, $26.77.
As President McKinley pointed out in his message, our foreign trade for the fiscal year of 1900 showed a remarkable record. The total of imports and exports for the first time in the history of the country exceeded two billions of dollars. The exports are greater than they have ever been before, the total for the fiscal year 1900 being $1,394,483,082, an increase over 1899 of $167,459,780, an increase over 1898 of $163,000,752, over 1897 of $343,489,526, and greater than 1896 by $511,876,144. The growth of manufactures in the United States is evidenced by the fact that exports of manufactured products largely exceed those of any previous year, their value for 1900 being $433,851,756, against $339,592,146 in 1899, an increase of 28%. Agricultural products were also exported during 1900 in greater volume than in 1899, the total for the year being $835,858,123, against $784,776,142 in 1899.
The imports for the year amounted to $849,941,184, an increase over 1899 of $152,792,695. The increase is largely in materials for manufacture, and is in response to the rapid development of manufacturing in the United States. While there was imported for use in manufactures in 1900 material to the value of $79,768,972 in excess of 1899, it is reassuring to observe that there is a tendency toward decrease in the importation of articles manufactured ready for consumption, which in 1900 formed 15.17 per cent. of the total imports against 15.54 per cent. in 1899 and 21.09 per cent. in 1896.
The election of November, 1900, stamped out of the minds of the people all fear that any sort of governmental policy in any way inimical to the finances or business or prosperity of the country may be adopted. A very great factor in our future development, which our people are soon to discover, will appear in the building up of the ports of trade on the Pacific Coast, which will be so extensive and rapid in progress that the Atlantic ports will before long begin to feel the competition of the Western coast of our country. Our grasp of the Philippine Islands, and the foothold in trade and greater share of confidence in our disinterestedness as regards territorial encroachment which is fast gaining in the Chinese Empire, will finally consummate the preparations for as great business and prosperity for the Pacific coast States as have heretofore been enjoyed by those of the Atlantic coast. Soon a part of the trade and commerce of the Eastern States will be brought into competition with that of the great Pacific coast, insomuch that it will appear that indeed “Westward the star of empire takes its way.” It is the foresight of such change in the Pacific States that has helped produce such a pronounced electoral result.
Our country is now passing through a rapid growth of progress and power and prestige which will soon place her in the leadership of the nations, with every means necessary for extending civilization, enlightenment, commerce and better government over the world. We have come to the time when we must take up the mighty work of further cultivating and improving the condition of mankind, and we will continue this great work until our labors shall have brought to pass better conditions of government, co-ordination of interests, education, and peace and good will among the nations of the earth. In the progress of civilization since the dawn of the Christian era, the momentous task of leadership has devolved first upon Rome, then upon Spain, then upon England. It seems to have been reserved for the “Young Giant of the West” to complete the tasks undertaken, and assemble into one great community of interest vast national forces which have been the growth of centuries. In due time we shall no doubt finish the work and bring peace and good will to men in every part of the world and prepare men everywhere to turn the spear into a pruning hook, the sword into a ploughshare and to give freedom and protection and prosperity to all sorts and conditions of men, and put an end to strife between the nations. We believe that such is the great office to which we have been called, and that our functions as the leading nation of the world have already begun.
ALL THE PRECEDING PAGES WERE
WRITTEN YEARS AGO, AND WHAT FOLLOWS
BRINGS THE WORK UP TO THE
DATE OF THIS ISSUE, MARCH 31ST, 1908.
CHAPTER LXIV.
MY CHRISTMAS ADDRESS TO CUSTOMERS DEC. 24, 1906.
You can now realize why we have for so long a period had a congested stock market. It started by the accumulation of Union Pacific by comparatively few people, the purchases being commenced in 1903, the panic year, when the price dipped to 65. By the time the stock touched 100 the accumulation was complete. Then the manipulation was begun for its advance to 190, at which time the ten per cent. dividend was declared, since which the process of distribution has been going on. St. Paul, Northern Pacific, and Great Northern have gone through a similar process. Prior to the declaration of the increased stock issues by these companies, the larger part of the old stock had been bought up by the inside knowing ones, after which the new issues were announced to the public. The profit to the holders of these stocks can be measured by the market value of the rights. Now we all know what the large holdings of these stocks meant. The inside magnates having nearly all of them, the outsiders were left out in the cold, and were consequently in the dark; but now the light of day flashes over the situation. You are asked to buy the rights which represent insiders’ profits, all of which is water pure and simple. The accumulation of stocks has now ceased and distribution is under way, and that is why the market has this present fit of liquidation, which must go on until completed. Then the situation will have righted itself legitimately, and not until then. Remember what I tell you: that the accumulation of stock as I have described has produced the present congested money market, and the unlocking of the former will, after a short time, unlock the other; then all will be well again. The present turbulent waves will pass over without many shipwrecks, and then will come calm weather and a smooth sea. Patience is a great virtue; exercise it, and wait for bottom; then get in and get rich.
Gentlemen, this is my Christmas greeting to you. You all have my best wishes for a happy and prosperous New Year.
CHAPTER LXV.
EDWARD H. HARRIMAN.
Edward H. Harriman was born on Long Island in 1848. His father was a clergyman, and the family in poor circumstances. At the age of fourteen he left school, and began his business career in a Wall Street house. Of an aggressive and masterful character, with a great capacity for hard work and the ability to master every detail, he rapidly forged ahead. At eighteen he became partner in a brokerage house; at twenty-two bought a seat on the New York Stock Exchange. In 1883 he was chosen a director of the Illinois Central Railroad Company, and four years later, when he became its vice president, he retired from the brokerage business, having amassed what was then considered a comfortable fortune. For a time, while President Fish was abroad, Mr. Harriman was acting president of the Illinois Central, and promptly put into execution his idea that the way to make a road pay was to put it in the best of physical condition, and thus attract traffic by the ability to handle it, rather than by cutting rates. This policy afterwards brought the Union Pacific up from a financial and physical wreck in 1893 to the most aggressive and progressive railroad corporation of the day, operating, together with the Southern Pacific, over 15,000 miles of road, besides controlling the Illinois Central, Chicago & Alton, and St. Joseph & Grand Island Railroad companies and the Pacific Mail Steamship Company, and owning large interests in the Baltimore & Ohio, New York Central, Atchison, Chicago & Northwestern, and Chicago, Milwaukee & St. Paul roads. Mr. Harriman and his associates were defeated in an attempt to obtain control of the Northern Pacific in 1901, but the Union Pacific system benefited by this defeat, it is estimated, by about $60,000,000. The purchase of Northern Pacific in the open market forced the price of its stock up to $1,000 per share on May 9, 1901, causing the memorable panic of that date.