Never shall I forget the oppressed feeling which overcame me as I stepped out and proceeded to the telegraph office to wire President Thomson. Something told me that I ought not to do so. I would wait till to-morrow when I had the contract in my pocket. I walked from the banking house to the Langham Hotel—four long miles. When I reached there I found a messenger waiting breathless to hand me a sealed note from the Barings. Bismarck had locked up a hundred millions in Magdeburg. The financial world was panic-stricken, and the Barings begged to say that under the circumstances they could not propose to Mr. Baring to go on with the matter. There was as much chance that I should be struck by lightning on my way home as that an arrangement agreed to by the Barings should be broken. And yet it was. It was too great a blow to produce anything like irritation or indignation. I was meek enough to be quite resigned, and merely congratulated myself that I had not telegraphed Mr. Thomson.
I decided not to return to the Barings, and although J.S. Morgan & Co. had been bringing out a great many American securities I subsequently sold the bonds to them at a reduced price as compared with that agreed to by the Barings. I thought it best not to go to Morgan & Co. at first, because I had understood from Colonel Phillips that the bonds had been unsuccessfully offered by him to their house in America and I supposed that the Morgans in London might consider themselves connected with the negotiations through their house in New York. But in all subsequent negotiations I made it a rule to give the first offer to Junius S. Morgan, who seldom permitted me to leave his banking house without taking what I had to offer. If he could not buy for his own house, he placed me in communication with a friendly house that did, he taking an interest in the issue. It is a great satisfaction to reflect that I never negotiated a security which did not to the end command a premium. Of course in this case I made a mistake in not returning to the Barings, giving them time and letting the panic subside, which it soon did. When one party to a bargain becomes excited, the other should keep cool and patient.
As an incident of my financial operations I remember saying to Mr. Morgan one day:
"Mr. Morgan, I will give you an idea and help you to carry it forward if you will give me one quarter of all the money you make by acting upon it."
He laughingly said: "That seems fair, and as I have the option to act upon it, or not, certainly we ought to be willing to pay you a quarter of the profit."
I called attention to the fact that the Allegheny Valley Railway bonds which I had exchanged for the Philadelphia and Erie bonds bore the guarantee of the Pennsylvania Railroad Company, and that that great company was always in need of money for essential extensions. A price might be offered for these bonds which might tempt the company to sell them, and that at the moment there appeared to be such a demand for American securities that no doubt they could be floated. I would write a prospectus which I thought would float the bonds. After examining the matter with his usual care he decided that he would act upon my suggestion.
Mr. Thomson was then in Paris and I ran over there to see him. Knowing that the Pennsylvania Railroad had need for money I told him that I had recommended these securities to Mr. Morgan and if he would give me a price for them I would see if I could not sell them. He named a price which was then very high, but less than the price which these bonds have since reached. Mr. Morgan purchased part of them with the right to buy others, and in this way the whole nine or ten millions of Allegheny bonds were marketed and the Pennsylvania Railroad Company placed in funds.
The sale of the bonds had not gone very far when the panic of 1873 was upon us. One of the sources of revenue which I then had was Mr. Pierpont Morgan. He said to me one day:
"My father has cabled to ask whether you wish to sell out your interest in that idea you gave him."
I said: "Yes, I do. In these days I will sell anything for money."