Under the impetus of the swirl in Rapid Transit, practically every property in the Street went flying upward, until the end did not seem to be in sight. The bears were beaten to a standstill every time they showed their heads. The only result of their attacks was that Flower stocks would jump up a notch higher. The ex-Governor preached Americanism and confidence, until everybody believed that if a stock were only grounded, and the property located in America, you could buy it at any price and still be on the safe side.
That a terrible panic did not grow out of this boom was due only to one fact: Mr. Flower’s sudden death. Had he lived thirty days longer the bubble must have been pricked, and the result would have been disastrous. Mr. Flower went to the country for a day’s rest, ate freely of ham and radishes, and washed his frugal meal down with a copious supply of ice water. He died, a few hours afterwards, of an attack of acute indigestion. His death alone saved the Street.
The Rockefellers, the Vanderbilts, and his other wealthy friends rushed into the market with millions and sustained values. They were in a position to attribute the threatened reaction to his death, and pointed out the absurdity of letting such an incident affect the value of stocks. They discounted the break that must have come, in the natural course of events, under the forcing process that was going on. Reasoning such as this, spread broadcast through the papers, stopped the break. Where the bottom would have fallen out entirely there was virtually but a moderate break all along the line. The small speculators, operating on moderate margins, were of course wiped out almost to a man; but most of the big fellows were saved. It is probably the only instance on record where the death of a big operator saved a general smash. Those hurt were numerous politicians and small-fry operators who, instead of getting away with snug fortunes in the shape of profits, lost everything.
An interesting incident of the Flower boom was the way it was involuntarily helped along by young Joe Leiter. Leiter himself, although he had gone to the wall some time previously, had indirectly brought about certain conditions that served Mr. Flower’s purpose admirably. These conditions were the general release of hundreds of millions of dollars on mortgages on farm lands. When Leiter began to corner wheat it was ruling down in the neighborhood of sixty cents a bushel. He lifted it to considerably over a dollar before he went broke. This enabled thousands of farmers to realize on their crops at the dollar figure and above, which brought prosperity almost overnight to the wheat-growing belt. With the money realized from their wheat they paid off their mortgages to the extent of two or three hundred million dollars. These mortgages were generally held in the East. This released that much Eastern capital, causing a vast volume of money to seek investment. The men controlling this money were overjoyed when Mr. Flower made an opening for them through the Wall Street boom, and hence it was comparatively easy, for a time, to push up values.
Mr. J. Pierpont Morgan, now a noted character in the Street, was trained as a clerk in the one-time famous banking house of Duncan, Sherman & Co. Later he made a connection with Anthony J. Drexel, probably the wealthiest banker of his time in America. Out of this connection grew the house of Drexel, Morgan & Co., with Mr. Morgan as the managing partner in New York. When Mr. Drexel died, Mr. Morgan absorbed the entire business, and a few years later, when his father died, he became the head of the London house of J. S. Morgan & Co. as well.
This put him in a very prominent position. He soon thereafter demonstrated his influence by reorganizing the bankrupt Richmond and West Point Terminal Railway and Warehouse Company, changing its name to the Southern Railway Company. A number of small roads were added to it, many of which were in financial straits and practically all of which had been badly managed. He combined them into one system under one head. Mr. Morgan next turned his attention to the reorganization of the Reading and the Erie roads, which were in a bad way. He soon produced order out of chaos there, and that resulted in a boom in railroad stocks all along the line. He had several sharp tussles, however, with some of the big stockholders, who tried to stand out against him because they thought his plans too drastic.
The people who followed Mr. Morgan’s lead in these transactions generally made money.
A different sort of deal was engineered a few years before by Mr. S. V. White, popularly known as Deacon White, because of his position as a deacon in Plymouth Church. Mr. White is one of the oldest operators in the Street, and one of its most striking figures. He has made half a dozen great fortunes in speculation and lost them, but he is as undaunted as ever, and in spite of the fact that he is now over seventy years old he is still active daily in the market.
Probably one of the most unique stock deals ever carried out in the Street resulted from the transaction of Joseph Bannigan when President of the Rubber Trust. The history of this deal, which for a time resulted in a great boom in industrials, has never been told, and is known to but very few persons, most of whom, by the way, were its victims.
Bannigan was an uneducated Irishman. He began life in a New England rubber factory and conscientiously worked his way up from a wage of $1.50 a day to die worth $5,000,000. He was shrewd and bright and knew the value of money. He saved to such good purpose that when the Rubber Trust was formed he was at the head of one of the biggest factories in the country, located in Providence. His knowledge of the trade was so thorough that, despite the fact that he almost invariably used small “i’s” in writing a letter, he was made president of the trust, his holdings amounting to about 40,000 shares. When matters had been moving along for some time, Bannigan made up his mind that the other men in the trust, the big fellows, were not treating him right, and that the best thing he could do was to get out. So he packed his stock certificates in a gripsack, left Providence on the night boat, landed in New York bright and early, had his breakfast, and then made a bee line for a stockbroker’s office. He had assured himself in advance that this stockbroker was to be relied upon, and so he told him frankly what he intended to do.