CHAPTER IV
MY OWN RESPONSIBILITY
As to my personal responsibility for the crime of Amalgamated, right here, before proceeding further, I shall briefly explain the transaction, state my share in the deal, and point out how completely I was hoodwinked by the "System."
The great Anaconda mine and affiliated properties, previous to the creation of the Amalgamated, were owned by J. B. Haggin, Lloyd Tevis, and Marcus Daly. The control of the properties and their operations were absolutely vested in Marcus Daly, and he alone knew where the lean veins ended and the fat ones began. For many years he had kept a close guard over the very fat ones, never letting his right eye know what the left one saw when he was examining them. For deep down in his mind Marcus Daly cherished a dream—a dream of immense riches, and it was to be realized in a simple enough way. He would get together the millions to buy out his partners on the basis of a valuation of the "ore in sight," then in supreme ownership himself reap untold profits out of the milling of the plethoric veins he had been so careful to leave unworked. The immense natural endowments of the Anaconda rendered this easy enough, for even the lean veins "in sight" contained a vast store of copper and gold and silver.
Just about the time the world awaited the first section of "Coppers" which I had advertised should consist of the rich Boston & Montana, and Butte & Boston properties, it "happened" that Mr. Rogers "met" Marcus Daly. The result of the conjunction of the two personalities—the whole-souled, trusting miner and the fascinating and persuasive master of Standard Oil—was decisive; the miner confided his dreams and his aspirations to the magnate, who at once magnificently undertook to realize them. The trade was almost instantly made. Mr. Rogers would buy the properties of Daly, Haggin, and Tevis, at "in-sight" prices, and Daly would be his partner, but the partnership must remain secret until the purchase was consummated.
The ownership of the Anaconda Company at the time consisted of 1,200,000 shares, and the purchase of a few shares over the majority at the "in-sight" lean-vein valuation of $24,000,000 would carry the turnover of the management and the control. It took but a very brief time to get together the other properties which were finally included in the first section of Amalgamated. They consisted of the Colorado, Washoe, and Parrott Mining companies and timber, coal, and other lands, and mercantile and like properties situated in the State of Montana, for which Mr. Rogers paid in round figures $15,000,000, a total of $39,000,000 for what within a few days after purchase was capitalized at $75,000,000 in the Amalgamated Company.
No one but Henry H. Rogers, William Rockefeller, myself, and one lawyer knew the actual figures of the cost, although a number of the members of the different groups, including Marcus Daly, the silent partner, were sure they were in the secret.
As soon as the properties were secured, they were capitalized for $75,000,000 as the Amalgamated Copper Company and were immediately offered for sale to the public. It will thus be seen that the profit on this section alone was $36,000,000, probably the largest actual profit ever made by one body of men in a single corporation deal, yet so nicely does "Standard Oil" discriminate in dispensing its generosity that in this case those who received the $36,000,000 profit refused to deduct from it $77,000 of expenses connected with the formation of the company, thereby compelling it to start $77,000 in debt. This was something Marcus Daly never forgave and to the day of his death he repeatedly referred to the act as the personification of corporation meanness.
In the organization of the Amalgamated Corporation certain individuals and institutions, for various considerations, were entitled to some share in the profits of the deal. First there was Marcus Daly who knew what the major portion of the property had cost and was a silent partner in the winnings as he knew them. The Amalgamated Company was organized in and floated on the public from the National City Bank, and so James Stillman, its president and head, who is also one of the inner circle of "Standard Oil" chiefs, should participate. Something was due also to J. Pierpont Morgan & Co., and to Frederick Olcott, president of the Central Trust Company of New York, who were on the board of directors. On the board of directors, too, was Governor Flower, of the banking and brokerage house of Flower & Co., who had acted as fiscal agents for the corporation at its formation. Nor must I forget the Lewisohn Brothers, who had been compelled to turn in all their copper business at a fraction of its worth—or at just the aggregate of its cost and raw material—to be incorporated in the United Metals Selling Company, a part of the Amalgamated scheme, but not included in the corporation. Every one of these men had elaborate assurances that he was in on the cellar floor.
This is what actually occurred. Before Mr. Rogers and William Rockefeller let any one at all in, they built a superbly designed water-, air-, and light-proof structure (particularly light-proof), consisting of five floors, each one being the exact duplicate of the $39,000,000 one upon which they, and they only, stood. Marcus Daly alone was ushered in on the first floor, elevated just a few million dollars above their own. James Stillman and Leonard Lewisohn, of Lewisohn Brothers, were admitted to the next one, the $50,000,000 floor. In other words, Mr. Stillman and Mr. Lewisohn were given an unnamed percentage, the percentage to be arranged later by Mr. Rogers, in all profits above actual cost, and such actual cost was called $50,000,000 and was arrived at by adding the $11,000,000 of secret profits to the actual $39,000,000 cost. Then J. P. Morgan & Co., Frederick Olcott, Governor Flower, and one or two of the dearest friends and closest associates, were let in on the $60,000,000 floor—were given an unnamed percentage, the percentage to be arranged by Mr. Rogers, in all profits above actual cost, and such actual cost was called $60,000,000, and was arrived at by adding $21,000,000 of secret profits to the actual $39,000,000 cost. Then selected ones from the eight different groups of "Standard Oil" were allowed to move in to the fifth, or underwriters' floor, which was affirmed to be $70,000,000 cost; and then, as a solid phalanx, all the different floor-dwellers marched upon the dear public to the tune of $75,000,000, in the front ranks of which were those of the eight groups of the Standard Oil army who had not already been admitted to any of the secret floors.
Right here the crime of Amalgamated was born, not so much the legal crime but the great moral crime. In the ethics of Wall Street the heinousness of the transaction lies not in the fact that the public was compelled to pay $36,000,000 profit to a few men who had invested but $39,000,000—and, as I shall show when I approach this part of my story, the $39,000,000 did not even belong to them—but in the fact that Mr. Rogers and Mr. Rockefeller had given to their associates what, in the vernacular of "the Street," is termed "the double cross."
The every-day people, the millions who do not know Wall Street, realm of the royal American dollar; Wall Street, its sidewalks inlaid with gold coin and paved from curb to curb with solid gold bricks; Wall Street, lined with huge money-mills where hearts and souls are ground into gold-dust, whose gutters run full to overflowing with strangled, mangled, sand-bagged wrecks of human hopes, to be poured, in a never-ending stream, into the brimming waters of the river at its foot, for deposit at the poor-houses, insane asylums, States' prisons, and suicides' graves, washed daily by that grim flood's ebb and flow—the every-day people, I am sure, will not take in the blackness of this transaction at this stage of my story, but before it is ended I will lay this and many more of an equally hellish nature before them in such A B C simplicity that all can read the portent as clearly as the Prophet Daniel read the writing on the wall in the banquet-hall of Belshazzar.
When I consented to allow property which had cost only $39,000,000 to be sold to the public for $75,000,000, it was under a pressure which it was practically impossible for me to withstand. I do not think I use too strong a word when I say "pressure." For three years I had been advertising to the world the great merits of "Coppers," and for over a year I had announced that when the public was given an opportunity to participate in the consolidated "Coppers" it would be upon a basis most carefully worked out: that the properties included in the first section would surely be worth more than the price at which they would be offered to the public, and that all the power, capital, and ability of "Standard Oil" were behind the promises I made. I did this advertising openly and in the frankest possible way, and in all of my announcements, whether printed, oral, or otherwise, used the names of Henry H. Rogers, William Rockefeller, James Stillman, the National City Bank of New York, and "Standard Oil" as freely as I did my own, and in many ways led the public to believe that the very rich Boston & Montana and Butte & Boston companies were to be included in this section of "Coppers."
At that time my alliance with "Standard Oil" was close. A business connection had developed into a strong personal relation between Mr. Rogers and myself. We were engaged, together with William Rockefeller, on a great financial deal which was based on certain conclusions I had worked out in regard to the copper industry. These men were to me the embodiment of success, success won in the fiercest commercial conflict of the age. Their position at the helm of the greatest financial institution in the world gave weight and importance to their judgment and opinions. Nor had aught occurred between us to suggest they would dare perpetrate the crimes they did. Besides all this, indeed an integral part of it, my personal resources were completely involved in the transaction, for the most part pledged with Mr. Rogers and William Rockefeller in stocks of the Butte & Boston and Boston & Montana corporations.
This was, then, the nature of our connection when Mr. Rogers, suddenly and without previous intimation of his schemes, notified me of his purchase of the Daly-Haggin-Tevis properties, and practically ordered me to put them upon the tray which I was preparing and take them to the eagerly waiting public, who by this time were fairly howling for the good things we had been promising them.
In support of this extraordinary change of plan Mr. Rogers urged the secret wealth of the Anaconda and the great value of the other properties which I myself had helped purchase, but I bitterly opposed the new proposition until there was nothing before me but these alternatives—to accept the change Mr. Rogers insisted on or break with "Standard Oil." The latter would mean that I must announce to the public that it was in danger of being tricked, and it was by no means certain that my warning would carry weight against the denials and assurances of "Standard Oil." However much influence I had obtained through my long years of dealings with the public, independent of "Standard Oil," I realized that "Standard Oil's" influence and prestige were much greater, for it must be remembered that at this time the public had not had the evidence since acquired of the "System's" cold-blooded trickery. If I took this course it would mean not only my own ruin financially, for Mr. Rogers and William Rockefeller could call my loans and wipe me out completely, but also the ruin of my friends and allies, who, under my direction, had invested their own millions in the properties concerned. On the other hand, I had the most earnest assurances from Mr. Rogers and William Rockefeller that the new properties were worth much more than the $75,000,000 at which it was proposed to capitalize them. They took me to task for my distrust of them, and went far to demonstrate to me the accuracy of their estimates. They not only gave me Marcus Daly's minute estimates of the values and legitimate possibilities of Anaconda, but consented to have these verified by outside experts in whom I had implicit confidence, and whose personal examination more than bore out Daly's appraisal. I have never yet had reason to doubt the correctness of the figures then shown me, although since I began this story "Standard Oil," in an endeavor to get me to abandon my efforts to secure justice for the thousands I assisted in duping, have stated for the first time that Marcus Daly deceived them and really, to use the words of their chief counsel, sold them a "gold brick."
After this examination I felt convinced that the properties "Standard Oil" insisted on substituting for those originally intended for the first section of Amalgamated were such that the public, if honestly dealt with, could not possibly meet with loss in purchasing. But even then I only consented to go ahead with the flotation under a definite agreement which seemed to me completely to guard against all contingencies of jugglery or deception. This agreement stipulated that all the profits from the transaction should be taken by those to whom they were due in the stock of the Amalgamated Company, and no part of them in cash—that the public should be sold, at the flotation, only $5,000,000 of the $75,000,000, and that "Standard Oil" and all associated with "Standard Oil" in the profits should retain the remaining $70,000,000 until such time as it had been absolutely demonstrated to the public that the property behind the $75,000,000 of stock was worth more than the amount it had been capitalized for. Furthermore, I was also promised that the $5,000,000 cash to be taken from the public should be kept intact, and in my handling of the market it should always be available for the repurchase from the investors of what had been sold to them, at the price which they had paid for it.
This was the basis on which I went on with Amalgamated. I would not have my readers understand me as asserting it would have been possible for me to have stopped the flotation had I attempted it. But, on the other hand, I would not have them think that I desire to be absolved from the disastrous results of the great mistake I made at this time in not at any cost doing that which after-happenings have shown would have been the most honest course for me to have pursued. Nor would I have them think I desire to be absolved from the consequences of many other mistakes which this one led me into—mistakes in temporizing with the situation and postponing action which I should have boldly and fearlessly forced, regardless of all consequences to the public, my friends, and myself.
The subsequent proceedings, the manner in which Amalgamated was actually sold to the public, the flagrant disregard of the conditions of my agreement with Mr. Rogers and William Rockefeller, will, when fully told in their proper place in my story, show that the "System," by whose methods the public is as ruthlessly plundered as though the fruits of its labors were taken away from it by highwaymen, admits also of its own votaries being tricked and despoiled by their associates. The men who participated in the transaction I have just described are among the most astute financiers in the country and presumably possessed of invincible capacity to protect their own interests. But with all their knowledge of the "System's" tricks they were, in this instance, as shrewdly duped as the veriest tyro in the Wall Street game.
My own experience with the "System" in this deal was different in degree but not in principle from that of these others, and it must be remembered that I was better equipped to protect my interests than any of them. I knew that the actual cost of the properties comprising the first Amalgamated was $39,000,000, and that when sold to the public at $75,000,000 there must be a profit of $36,000,000. I had every right to think I knew all the other details connected with the transaction, for as organizer and executant of the deal my share in the profits was to be equal to that of Henry H. Rogers and William Rockefeller respectively. We were each to have twenty-five per cent., the remaining twenty-five per cent. going to others. This was no gentleman's "leave-it-to-me-and-I'll-see-you-get-what's-coming-to-you" arrangement either, but a hard, cold, mutually satisfactory and settled-in-advance agreement. But when it came to the final accounting, the "System" had so regulated things that the participants on the various floors, except, of course, Mr. Rogers and William Rockefeller, must each accept without question the share finally handed over to him. Having no means of knowing how large the other interests were, or what the "extraordinary expenses" had been, they were in no position to question the payments made them, which represented sums below what they would have had if the business had been conducted as they thought it had been. When my final account was presented to me I was startled. Notwithstanding the "cleverness" of the "System," the deception was so obvious, so audacious, that the instant Mr. Rogers submitted it to me I exploded and denounced the transaction with such vehemence and conviction that within a few minutes there was forthcoming a second statement, revising the account, by which I was given just double the amount first tendered, and the figures in both accounts ran into millions; yet the amount in the second account upon which I settled was only one-half the share received by my equal partners, Henry H. Rogers and William Rockefeller, as I afterward learned.[1]
This is a fair statement of my own share in the first Amalgamated transaction. I have no desire to evade the issues suggested and raised by these revelations. My frankness should be absolute proof of that. As I promised, I shall hew to the exact line of fact, letting the chips of responsibility, legal and moral, fall where they may, though many of them stick to my own clothes. My own burden of error I am ready and willing to shoulder, but I decline any longer to take and carry responsibilities which belong absolutely to others. There should be a time-limit on martyrdom, and mine anyhow is up.
FOOTNOTES:
[1] I know no better spot in my story than right here to set the public right on two vital points concerning Amalgamated, upon which they are and always have been greatly at sea:
John D. Rockefeller did not have before the Amalgamated Company was organized and floated, nor at its organization and flotation, directly or indirectly, a dollar's interest in its stock nor its affairs, and I have what I consider excellent reasons for believing he has not had any interest up to the time of this writing.
The disasters which have come to the Amalgamated stockholders did not occur, as has been so industriously and ingeniously advertised throughout the world, because of the inability of the "Standard Oil"-Amalgamated-City Bank fraternity to prevent the collapse of the price of copper, the metal, from the high price of seventeen cents to the low one of eleven cents per pound. "Cornering" the metal market, forcing the price to an abnormally high figure and maintaining it there had, notwithstanding the many emphatic statements to the contrary, absolutely no part in any of our original plans, and the success or failure of our project was in no way dependent upon any price for copper, the metal, other than the fair and legitimate price caused by legitimate supply and demand. In fact, as I shall demonstrate before my story is ended, forcing the price to extremely high points and the resulting collapse were all a part of the trickery by which the public was plundered.