It took but a little over a month to organize this new company, which bought out the old company for the consideration of two hundred thousand dollars, payable in stock of the new company. With great glee the new stockholders bought from themselves, as old stockholders, the old company at this valuation, each man receiving two shares of one hundred dollars face value for each one hundred dollars' worth of stock that he had held before. It was their very first transaction in water, and the delight that it gave them one and all knew no bounds; they had doubled their money in one day! But their elation was not half the elation of J. Rufus Wallingford, for in his possession he had ninety thousand dollars' worth, par value, of stock, the legitimacy of which no one could question, and the market price of which could be to himself whatever his glib tongue had the opportunity to make it. In addition to the nine hundred shares of stock, he had a ten-thousand-dollar house, a five-thousand-dollar automobile and unlimited credit; and this was the man who had landed in the city but two brief months before, with no credit in any known spot upon the globe, and with less than one hundred dollars in his pocket!
It is a singular commentary upon the honesty of American business methods that so much is done on pure faith. The standing of J. Rufus Wallingford was established beyond question. Aside from the perfunctory inquiries that Edward Lamb had made, no one ever took the trouble to question into the promoter's past record. So far as local merchants were concerned, these did not care; for did not J. Rufus own a finely appointed new house in Gildendale, and did he not appear before them daily in a fine new automobile? This, added to the fact that he established credit with one merchant and referred the next one to him, referred the third to the second, and the fourth to the third, was ample. If merchant number four took the trouble to inquire of merchant number three, he was told: "Yes, we have Mr. Wallingford on our books, and consider him good." Consequently, Mrs. Wallingford was able to go to any establishment, in her own little runabout that J. Rufus got her presently, and order what she would; and she took ample advantage of the opportunity. She, like J. Rufus, was one of those rare beings of earth for whom earth's most prized treasures are delved, and wrought, and woven, and sewed; for transcendent beauty demands ever more beauty for its adornment. In all the city there was nothing too good for either of them, and they got it without money and without price. The provider of all this made no move toward paying even a retainer upon his automobile, for instance; but, when the subtle intuition within him warned that the dealer would presently make a demand, he calmly went in and selected the neat little runabout for his wife, and had it added to his bill. After he had seen the runabout glide away, the dealer was a little aghast at himself. He had firmly intended, the next time he saw Mr. Wallingford, to insist upon a payment. In place of that, he had only jeopardized two thousand dollars more, and all that he had to show for it were half a dozen covered tacks which J. Rufus had left him to ponder upon. In the meantime, Lamb's loan of one thousand had been increased, upon plausible pretext, to two thousand.
There began, now, busy days at the factory. In the third floor of their building a machine shop was installed. Three thousand dollars went there. Outside, in a large experimental shop, work was being rapidly pushed on machinery which would make tacks with cross-corrugated heads. Genius Wallingford had secretly secured drawings of tack machinery, and devised slight changes which would evade the patents, adding dies that would make the roughened tops. A final day came when, set up in their shop, the first faulty machine pounded out tacks ready for later covering, and every stockholder who had been called in to witness the working of the miracle went away profoundly convinced that fortune was just within his reach. They had their first patent granted now, and the sight of it, on stiff parchment with its bit of bright ribbon, was like a glimpse at dividends. It was right at this time, however, that one cat was let out of the bag. The information came first to Edward Lamb, through the inquiries of a commercial rating company, that their Boston capitalist was a whited sepulcher, so far as capital went. He had not a cent. The secretary, in the privacy of their office, put the matter to him squarely, and he admitted it cheerfully. He was glad that the exposé had come—it suited his present course, and he would have brought it about himself before long.
"Who said I had money?" he demanded. "I never said so."
"Well, but the way you live," objected Lamb.
"I have always lived that way, and I always shall. Not only is it a fact that I have no money, but I must have some right away."
"I haven't any more to lend."
"No, Eddy; I'm not saying that you have. I am merely stating that I have to have some. I am being bothered by people who want it, and I cannot work on the covering machine until I get it," and Mr. Wallingford coolly telephoned for his big automobile to be brought around.
They sat silently in the office for the next five minutes, while Lamb slowly appreciated the position they were in. If J. Rufus should "lay down on them" before the covering machine was perfected, they were in a bad case. They had already spent over twenty thousand dollars in equipping their office, their machine shop, and perfecting their stamping machine, and time was flying.
"You might sell a little of your stock," suggested Lamb.