Colwell paced up and down his office nervously. It was seldom that he allowed himself to lose his temper, and he did not like it. The ticker whirred away excitedly, and in an absent-minded, half-disgusted way he glanced sideways at it.
“Man. Elec. 5s, 106⅛,” he read on the tape.
THE BREAK IN TURPENTINE
In the beginning of the beginning the distillers of turpentine carried competition to the quarrelling point. Then they carried the quarrel to the point of silence, which was most to be feared, for it meant that no time was to be wasted in words. All were losing money; but each hoped that the others were losing more, proportionately, and therefore would go under all the sooner. The survivors thought they could manage to keep on surviving, for on what twelve would starve four could feast.
It is seen periodically in the United States: an industry apparently suffering from suicidal mania. It is incomprehensible, inexplicable, though mediocrities mutter: “Over-production!” and shake their heads complacently, proud of having diagnosed the trouble. Here was the turpentine business, once great and lucrative, now ruin-producing; formerly affording a comfortable livelihood to many thousands and now giving ever-diminishing wages to ever-diminishing numbers.
It was Mr. Alfred Neustadt, a banker in a famous turpentine district, who first called his brother-in-law’s attention to the pitiable sight. Mr. Jacob Greenbaum’s soul thrilled during Neustadt’s recital. He perceived golden possibilities that dazzled him: He decided to form a Turpentine Trust.
First he bought for a song all the bankrupt stills; seven of them. Later on, in his scheme of trust creation, these self-same distilleries would be turned over to the “octopus,” at nice fat figures, as Greenbaum put it, self-admiringly, to his brother-in-law. Then he secured options on nine others, the tired-unto-death plants. In this way he was able to control “a large productive capacity” at an expenditure positively marvellous—it was so small. It was also in his brother-in-law’s name. Then the banking house of Greenbaum, Lazarus & Co. stepped in, interested accomplices, duped or coerced into selling enough other distillers to assure success, cajoled the more stubborn, wheedled the more credulous, gave way gracefully to the shrewder and gathered them all into the fold. The American Turpentine Company was formed, with a capital stock of $30,000,000 or 300,000 shares at $100 each. The cash needed, to pay Mr. Greenbaum, Neustadt and others who sold their plants for “part cash and part stock,” was provided by an issue of $25,000,000 of 6 per cent bonds, underwritten by a syndicate composed of Greenbaum, Lazarus & Co., I. & S. Wechsler, Morris Steinfelder’s Sons, Reis & Stern, Kohn, Fischel & Co., Silberman & Lindheim, Rosenthal, Shaffran & Co. and Zeman Bros.
They were men who never “speculated”; sometimes they “conducted financial operations.” They had shears, not fleeces.
The prospectus of the “Trust” was a masterpiece of persuasiveness and vagueness, of slim statistics and alluring generalities. In due course of time the public subscribed for the greater part of the $25,000,000 of bonds, and both bonds and stock were “listed” on the New York Stock Exchange—that is, they were placed on the list of securities which members may buy or sell on the “floor” of the Exchange.
Tabularly expressed, the syndicate’s operations were as follows: