He said: “Now, Henry, don’t speak so fast. Before you definitely commit yourself, I understand trust companies are not making loans on an exclusively industrial collateral.” I told him that I knew how my board felt about Standard Oil which was then selling at about $180 a share, and to convince him that I was authorized I told him that if his friend had any doubts, I would make him a time loan of six months. Mr. Strauss brought in Mr. John T. Underwood, the president of the Underwood Typewriter Company.
Strauss told me at the time that this transaction might lead to other business. A few years afterward, Strauss came to see me and told me that Underwood required additional money to proceed with his enterprise. He then told me how Underwood had come to this country from England to represent his father’s business—the John Underwood Company, manufacturers of inks; how he had started business at No. 30 Vesey Street; and how, shortly after typewriters had been introduced, had manufactured supplies for them, carbon paper, ribbons, etc., and built up a large and profitable business. His transactions were very largely with the then existing typewriter companies, the Remington and Smith Premier. Shortly after the Union Typewriter Company had been started, these people notified Underwood that they would themselves go into the typewriter supply business. This induced Underwood to go into the typewriter business and to manufacture the first visible typewriter.
In 1901, when they came to me, he had invested in the enterprise about $950,000, and as he wanted to buy a new factory in Hartford, and increase his facilities, he wanted to secure an additional capital of $500,000 and that was the proposition that Strauss had suggested to me. We discussed the matter, and I proposed that he rearrange his capitalization; sell $500,000 of 6 per cent. First Preferred stock; have issued to himself, Strauss, and others who had advanced the $950,000, Second Preferred of $1,000,000; and that he issue $2,000,000 Common stock, of which he could give the First Preferred stockholders $500,000. Messrs. Hugh J. Grant and James M. Jarvie of the Executive Committee of the Trust Company subsequently joined me in the deliberations, and in the course thereof Mr. Underwood told us that the Trust had offered him $2,000,000 for his proposition. Jarvie said to him: “You are a bachelor, you have no under-study. You have no one dependent upon you. Your enterprise is a one-man enterprise, and much as I would like to go into this matter with you, I strongly recommend that you sell to the Trust.”
Jarvie talked so convincingly that Underwood again opened negotiations with the Trust. They renewed their offer, but insisted upon making their payments in installments, which, when analyzed, practically meant that they would pay Underwood largely, if not entirely, out of his own profits. Underwood and Strauss rebelled at that and determined to continue their enterprise.
It was then February, 1903, and the panic of that year was imminent, and Grant and Jarvie declined to go into anything new. It rather discouraged me, but I took a small subscription of the First Preferred stock, more out of compliment to Strauss and Underwood than for the sake of investment. Strauss made a proposition to me, saying that they desired to have me on the Board of Directors, and if I would agree to serve for five years, they would give me $30,000 of Common stock for nothing. I consented to do so upon one condition, that all meetings would have to be held at the Trust Company office, as I did not wish to take the time it would require for me to go up to their office. They promptly accepted my condition, as they said they had no meeting room and, in fact, they considered this, instead of being a condition, an accommodation. I attended the directors’ meetings pretty regularly until 1909, when at one of the meetings I was very much gratified to see that during the current month, the Company had earned more than the $90,000, their fixed charges on the First and Second Preferred stock for the entire year. I invited Underwood and Strauss to lunch with me, and I then told them that I had been a director now for six years, and the time had arrived when I could be useful in creating a market for the stock, which was not being dealt in at all. I asked them whether they would be willing to sell me one half of their holdings, and I would undertake to popularize the stock. Mr. Underwood gave me an option in November, 1909, to purchase from him 40 per cent. of the Common stock. He gave this option without any payment down. I invited Mr. Jacob Wertheim to join me and when I gave him all the facts that I had learned while acting as director for years—he found them so convincing that he waived making an investigation and proposed that we confine the matter entirely to ourselves—he offered to finance the operation to any extent that I was unable to do. I accepted this on condition that he would give his son Maurice, who had married my daughter Alma, an interest in his half. He consented and I gave my son an interest in my share. After we had made this arrangement, we decided that it would be better for Underwood and the other stockholders of the enterprise that, instead of creating a market for the then existing shares, we should create a new issue of $5,000,000 of Preferred stock, dispose of it to the public, and with the proceeds redeem the First and Second Preferred, and also the outstanding Common stock, pay off the notes then outstanding, and have enough cash left to more than double the facilities of the Company at Hartford. When I made the suggestion to Underwood, he said he would not entertain it until I had consummated my option. We did this promptly, and then refinanced the Company. It was one of the first companies, if not the very first, that sold its Preferred stock to the bankers without giving them, or their purchasers, any of the Common stock as a bonus. My experience as president of the Central Realty Trust Company had taught me that this could be done, and I insisted upon trying it, so that when we finished with the entire operation, Wertheim and I and our sons were owners of very substantial amounts of the Common stock at a very moderate price. Underwood and Strauss and the other Preferred and Common stockholders of the Company were all, and still are, pleased with the refinancing, as everybody concerned was benefitted by the operation.
In the meantime, the Underwood Company has completely outstripped all the other companies, and Underwood has had the satisfaction of metamorphosing from the discharged purveyor of supplies to the Remington and other typewriter companies, into the unquestioned, outstanding leader of the typewriter business, and he is still the same modest, energetic, tireless executive that he was in 1903. It has been no small satisfaction for all of us to see the steady, healthy growth of this infant into the magnificent giant that it is to-day, and some of the credit is due to our most efficient superintendent, Mr. Charles A. Rice.
In 1919, when the Underwood commenced to manufacture the portable machines, I asked Mr. Underwood to give me No. 1, so that I could present it to President Wilson, as I was about to go to Europe, and expected to see him in Paris. I sent it to the President, and a few days thereafter I met Miss Benham, Mrs. Wilson’s secretary, and she told me that unintentionally I had almost caused a little quarrel between the Presidential couple, and when I inquired how, she told me that Mrs. Wilson had annexed the Underwood machine over the President’s protest.
CHAPTER VI
SOCIAL SERVICE
DURING all these years of which I have been writing my spirit was in a never-ceasing conflict with itself, a conflict between idealism and materialism. My boyish imagination had been fired with a vision of a life of unselfish devotion to the welfare of others, and in an earlier chapter I have described the influence of religious and ethical teachings upon my character and activities. But the necessity of earning a livelihood had early thrust me into the arena of business. Once there, I became absorbed in money-making. It was a fascinating game. It challenged all my powers of brain and will to hold my own and forge ahead in the fierce competition of my fellows. I lived business, ate business, dreamed business. There came a time when the most interesting lectures, the finest theatrical performances, or even the best staged operas could not hold my entire attention. My schemes constantly intruded themselves upon my consciousness and would absorb the mentality that was required for me to understand and rejoice with what was going on. As usual, as with all other business men, the day’s work had practically absorbed my day’s supply of vitality. I had not the power to shake off this exacting task-master.
But, though business could conquer pleasure, it could not conquer idealism; and idealism resorted to similar tactics as business. It asserted itself during business hours, and again and again demanded opportunities to exercise itself. I shall now try to tell how it successfully resisted complete annihilation.