All in a Life-time

by Henry Morgenthau; French Strother

I next called upon Mr. Olcott, who would not obligate the Central Trust Company to make any definite loan, but authorized me to agree on behalf of the Central Realty Bond & Trust Company to loan one million dollars on mortgages and to subscribe 2,000 shares of the stock.

I then called up Mr. James Stillman and was informed that he was at home nursing a cold. Within half an hour Mr. Stillman telephoned me to inquire if it was something old or new that I wished to see him about. When I answered “New,” he requested me to come to his house at three o’clock that afternoon. I was dilating upon the matter for fully twenty minutes when I suddenly became aware that Stillman had not asked a single question, and I so told him, and asked whether this was because he was not interested in the matter. He answered: “I have but one question: how large an interest am I to have?” I offered him 1,500 shares if he would agree to loan the company one million dollars. He said that he would take the stock, as he thoroughly believed in the Title Insurance business and that the City Bank would be glad to make the loan to the Title Company if the latter would keep a balance with them which would justify them in doing so. So I had secured the required credit and placed 5,500 shares of the stock. That same day Coggeshall and I closed the matter. The 1,500 remaining shares were distributed among some of our friends who we thought could help the Lawyers’ Title Company. A few days later Mr. Olcott sent for me, and told me that my handling of the increase of the Lawyers’ Title Company’s capital stock had raised quite a tempest amongst the Mutual Life crowd: that its president, Richard A. McCurdy, had asked Olcott at a directors’ meeting of the Bank of Commerce why the Mutual Life had not been invited to participate in this increase.

When Olcott explained to him that we had felt that the Mutual Life was so largely interested in the Title Guarantee & Trust Company that they would hardly be of much help to its greatest competitor, while the Equitable Life was unattached in that respect and would prove a good ally. Then McCurdy said: “Well, why was not I personally offered a few hundred shares, as I understand that you and Jarvie and Juilliard have received some?” This aggravated Olcott, and with a very emphatic designation of McCurdy’s character, he said to him: “So, that’s your size?” and that, of course, was pouring oil upon the flames.

Olcott told me that McCurdy intimated that he would expect Jarvie, Juilliard and Coleman to resign from our company unless the Mutual Life were taken care of in this matter. Olcott strongly advised me to defy and fight them, while on the other hand Juilliard and Jarvie told me that it was as much Mr. Olcott’s manner and forcible language as my neglect in taking care of the Mutual Life interests that had aggravated Mr. McCurdy. Juilliard told me that it would be a pity to break up our happy little family, and that if I would use my tact, I could satisfactorily adjust the matter. Although our company had progressed very nicely, in my opinion it was hardly strong enough to antagonize so important an interest as the Mutual Life. I, therefore, consented to let Juilliard arrange an interview between McCurdy and myself. I was ushered into the well-known throne-room and McCurdy told me at great length of his connections with the Title Guarantee & Trust Company and that as the Mutual Life was the largest lender on mortgages and some of its best directors were on my board, I should have given the company an opportunity to participate in this matter. He said that the company could have divided their allegiance and have done business with both the title companies. I informed him that I regretted that I had not known his desire and that now it was too late, but that I was arranging to increase the capital stock of the Lawyers’ Mortgage Company and would gladly put the Mutual Life on the same basis as the Equitable Life. That did not seem to satisfy him. He wanted to be interested in the Lawyers’ Title Company. He was insistent that he wanted some of the stock of the Title Company and rather spurned the Lawyers’ Mortgage stock.

Coggeshall and I finally concluded that we would try to have Mr. Stillman sell some or all of his stock to the Mutual Life. Stillman absolutely refused to do so when first requested, and he made me accept it as a personal favour when he finally consented to sell 1,000 shares for which he had paid $174,000 for $350,000 to the Mutual Life. Stillman thought that if the Mutual and Equitable were going to fight for the control of the Lawyers’ Title Company, as he put it, the stock would go to $500 a share. While I was arguing with him as to the splendid profit this was, he said to me: “Morgenthau, you don’t understand what profits we are in the habit of making,” and told me that when the Northern Pacific was levying a $15 assessment, William Rockefeller and he had agreed to pay the assessment on all the stock on which the stockholders would default, and by so doing, had secured about 270,000 shares, had agreed not to sell it until it showed them a profit of $100 a share, which it did, and he said that even then they regretted that they had sold it before the corner in Northern Pacific had occurred, because thereby they lost a very big additional profit that they might otherwise have made.

McCurdy urged me to try and consolidate the Title Guarantee & Trust Company and the Lawyers’ Title Company, as this would have given him a larger interest in the new company than the Equitable Life possessed. As the leading spirits in neither company were very keen about it, it failed of accomplishment; thereafter we consummated the increase of the stock of the Lawyers’ Mortgage Company from $300,000 to $1,000,000. I personally agreed to buy from the company 5,500 shares of an increase of 7,000 shares of the stock at $125. The Equitable Life interests received 1,500, and 1,000 shares went to the Mutual Life interests. It was the distribution of these shares and the method in which they were finally purchased by the respective companies that were material factors in the condemnation of Messrs. McCurdy and Hyde by the Armstrong Committee, but our company made excellent connections with both the Lawyers’ Title and the Lawyers’ Mortgage companies, and made very substantial profits in later on disposing of the stock.

After these two connections had been made, Grant and I felt that to complete our circle we would also require a construction company.

The Fuller Company had made a great success in the West and was invading the East. Mayor Grant was very much impressed with the scheme, but not so Olcott, Brady, and Crimmins, who had serious objections to a contracting company. Before abandoning the scheme, however, we submitted it to Mr. James Stillman. He listened attentively, and then told us that if we adhered to it, notwithstanding the opposition of Olcott, Brady, and Crimmins, he would join us, with the distinct condition, however, that he was not to dispose of any of the stock, or be asked to interest any one in the enterprise. But he agreed that, as his contribution to the matter, he would finance Grant and myself by loaning us the full amount that was required at a very reasonable rate of interest, and carry us for the life of the transaction.

A few days afterward Stillman sent for me and asked me how much of the preferred stock we had actually sold. When I told him the amount, he said: “Do not sell any more. As I was bicycling up Park Avenue yesterday, I was constantly thinking of Mr. Black’s statement, that New York had to be rebuilt, and the more I looked around me, the more convinced I became that he was right. We ought to secure a substantial share of the work at a profitable commission,” he said, “and therefore we ought not to sell any more of the preferred stock.”

We did not do so until about ten months later when Black made us a proposition on behalf of Charles M. Schwab, who was willing to exchange U. S. Steel Preferred for Fuller Preferred, on even terms. Black strongly recommended it, as he thought we might secure prompter deliveries of our steel, which at that time were very slow and unsatisfactory, if Mr. Schwab were interested in our company. Grant and I immediately disposed of the 2,500 shares that each of us had taken and it was rather amusing to have Stillman ask us in that knowing way of his whether he was justified in concluding from the observations he had made of the sales of U. S. Steel Preferred as recorded on the tape that we had disposed of all our stock. We told him we had. A few days later, at a meeting, he told us with great satisfaction that by letting us rush ours off first, he, through careful selling, secured on an average of three quarters of a point more than we had.