CHAPTER XIII
THE "SYSTEM" VERSUS WESTINGHOUSE
In 1894 I had just wound up one of the most strenuous and successful financial campaigns I ever engaged in. This was the Westinghouse deal, of which the papers were full at the time. George Westinghouse, to whom the world owes the air-brake and countless improvements in electrical machinery, having surmounted the difficulties that clog the early steps of the inventor who would be his own master, had taken rank, some years before, among the prominent public figures of the day. The various corporations in America bearing his name had prospered amazingly; his ingenious appliances had displaced home products in the European market; and titles and decorations had been conferred on the inventor, though these last, like the sturdy American he is, Westinghouse had put aside.
This great success was wholly the fruit of George Westinghouse's personal endeavor. It owed nothing to extraneous influences. It had been accomplished along those manly, independent, Yankee lines which have made that name synonymous with hustle and success in every part of the civilized world. Above all, the man had organized and developed his companies without the aid of the "System" or without truckling to its votaries. In consequence he had incurred the deadly hatred of some of its lords paramount.
In the business world Westinghouse's great rival was the General Electric Company. To mention "Westinghouse" and "General Electric" in the same breath was to speak of a thing and its antithesis. Everything George Westinghouse was or had been the General Electric was not and had never been. The General Electric had been and was by leave of the "System"; in fact, was one of the very foremost examples of its methods. Its high-priest was J. Pierpont Morgan; its home, Wall Street; its owners, the principal votaries of the "System." It had grown because of their favor and by means of the rankest exhibitions of knock-down-and-drag-out methods of consolidation of all competitors but—Westinghouse.
Just previous to 1894 Westinghouse had rejected a dazzling scheme of uniting the two institutions on an immense capitalization which would have absorbed millions and millions of the people's savings and earned millions in commissions for its projectors. Wall Street's indignation at his hardihood knew no bounds, and at the time of which I write the yegg-men of the "System" were laying for him with dark-lantern and sand-bag.
To appreciate the story of what the "System" tried to do to George Westinghouse and what he withstood, one must know the man. He embodies in many ways the conception of what the ideal American should be. His remarkable six feet and odd of physique and his fertile, powerful brain are the admiration of all true men with whom he comes in contact. In spite of his unparalleled success and the accumulation of a great fortune, he retains the same simplicity of manner and conduct that characterized him when working at the bench for weekly wages, and with all his shrewdness and force of character he has preserved a simple, honest, childlike belief in humanity. Single-handed he conducted all his great enterprises on a plain, patriarchal basis, using their revenues for extensions, and depending on his faithful and well-satisfied stockholders for such further accessions of capital as the business might in his judgment need. About the time General Electric was most anxious to bolster up its jerry-built structure with the solid Westinghouse concern, the latter institution had begun the erection of some big new plants which required immediately several millions additional capital. Westinghouse prepared to apply to his stockholders for the required funds, and the announcement was to be made at the annual election soon due. Suddenly the financial sky became overcast. The stock-market grew panicky and money as scare in Wall Street as rain in Arizona in May. It was just such a situation as the "System" might have brought about to accomplish its fell designs had it possessed the power to work miracles.
And the "System" took care of its advantage. At a tense moment in that soul and nerve trying period, with Wall and State streets full of talk about General Electric's probable absorption of Westinghouse, General Electric being then at its highest price, $119 per share, the Westinghouse companies held their annual meetings and the big inventor, confidently facing his stockholders, quite regardless of conditions which he thought could have no possible bearing on his concern's splendid prospects, came forward with his demand for the millions required to complete the projects already under way. This was the signal. From all the stock-market sub-cellars and rat-holes of State, Broad, and Wall streets crept those wriggling, slimy snakes of bastard rumors which, seemingly fatherless and motherless, have in reality multi-parents who beget them with a deviltry of intention: "George Westinghouse had mismanaged his companies"; "George Westinghouse, because of gross extravagance, had spread himself and his companies until they were involved beyond extrication unless by consolidation with General Electric"; these and many more seeped through the financial haunts of Boston, Philadelphia, and New York, and kept hot the wires into every financial centre in America and Europe, where aid must be sought to relieve the crisis. There came a crash in Westinghouse stocks, and their price melted. From amidst the thunder and lowering clouds emerged the "System." "Notwithstanding the black eye the name of everything Westinghouse had received, it would stand by and consolidate and save the day!" But the "System" and its everything-gauged-by-machinery votaries had reckoned without their host. George Westinghouse was too strong a man to be thus easily shaken down. He threw back his mighty shoulders, shook his big head, and flung his great private fortune into the market to stay the falling prices of his securities. The movement was too strong against him at the moment, and his millions were but a temporary help. He got on the firing-line himself and did a thousand and one things that only a brave, honest, and democratic Yankee would or could do—everything but accept the cunning aid offered him by the "System" or its votaries. He knew too well that the friendly mask concealed a foe and that the kid-gloved hand extended him had a dagger up its sleeve.
These were the conditions when I, as an expert in stock-market affairs, was called in for assistance. Here was this sound, sturdy institution standing for everything that was best and self-supporting in American finance adrift on the Wall Street shoals, and it seemed almost a hopeless task to attempt its rescue. But it was a task eminently worth while, and I undertook it with all the energy I could command.
The problem was to restore the Westinghouse stocks to their former high price, and, confidence being re-established, to sell the new treasury stock at such a figure as would pay for the plants and other projects the company had under way. The completion of these meant greatly increased earnings and such an advance in facilities and economy of manufacture as would surely seal the fate of General Electric if it competed with Westinghouse under the new conditions. Small wonder "Standard Oil's" whole strength was bent to force the alliance.
My fight had hardly begun when I saw it was to be opposed by all the forces of General Electric and the "System," and I concluded defeat was sure unless by a counter movement on their stock I could keep them so busy that they would have no time to interfere with Westinghouse. Thereupon I laid out that attack on everything connected with General Electric which created so much consternation at the time. To this day, if my enemies are asked to name the act which most conclusively justifies their hatred of me, they will point to my terrible General Electric raid. They will tell you I broke the stock from 118 to 56 in a day, and thereby caused one of our most disastrous panics; that I continued to hammer it to 20, that I compelled reorganization, and then did not let up. They will show you that the misery and ruin I wrought were beyond calculation. I will only say that, of any of the things I am proud of having done, I am proudest of what I did in General Electric, and, willingly, I would give over five years of my life to go through the experience again.
It was a most arduous campaign, and our fate trembled many times in the balance. By dint of hard, overtime work, and what my enemies were pleased to call rank manipulation, we drove Westinghouse stock back to its former price, after which a strong syndicate was formed to take the new stock, and the righted institution at once magnificently swept on its international career which to-day is at its height.
Though I had taken up the Westinghouse cause as a business venture and its successful termination was most profitable to me, I had entered into the campaign with the ardor of a lawyer defending a client unjustly accused of a heinous crime. But there was this difference—if in spite of his efforts the lawyer fails to convince the jury of his client's innocence it means no detriment to his fortune or his reputation, whereas all I had and was were involved in this stock-exchange struggle. The great rewards that are the guerdon of success in financial fights are balanced by the terrific consequences of defeat. The broker general engaged in surrounding his enemy requires every dollar he and his principals can pledge or beg, and where great forces are in conflict millions are burnt up to seize any vantage, as Kuroki sacrifices a regiment to gain a hill. I had won for myself as well as for Westinghouse, but if the fortunes of the war had been on the other side, I must certainly have been wiped out.