For more than a year the vast operations of Smithers & Co. had astonished business circles in London. Formerly they had been considered as an eminently respectable house, and as doing a safe business; but of late all this had been changed in so sudden and wonderful a manner that no one could account for it. Leaving aside their old, cautious policy, they undertook without hesitation the largest enterprises. Foreign railroads, national loans, vast joint-stock companies, these were the things that now occupied Smithers & Co. The Barings themselves were outrivaled, and Smithers & Co. reached the acme of their sudden glory on one occasion, when they took the new Spanish loan out of the grasp of even the Rothschilds themselves.
How to account for it became the problem. For, allowing the largest possible success in their former business to Smithers & Co., that business had never been of sufficient dimensions to allow of this. Some said that a rich Indian had become a sleeping partner, others declared that the real Smithers was no more to be seen, and that the business was managed by strangers who had bought them out and retained their name. Others again said that Smithers & Co. had made large amounts in California mining speculations. At length the general belief was, that some individuals who had made millions of money in California had bought out Smithers & Co., and were now doing business under their name. As to their soundness there was no question. Their operations were such as demanded, first of all, ready money in unlimited quantities. This they were always able to command. Between them and the Bank of England there seemed to be the most perfect understanding and the most enviable confidence. The Rothschilds spoke of them with infinite respect. People began to look upon them as the leading house in Europe. The sudden apparition of this tremendous power in the commercial world threw that world into a state of consternation which finally ended in wondering awe.
But Smithers & Co. continued calmly, yet successfully, their great enterprises. The Russian loan of fifteen millions was negotiated by them. They took twenty millions of the French loan, five millions of the Austrian, and two and a half of the Turkish. They took nearly all the stock of the Lyons and Marseilles Railroad. They owned a large portion of the stock of the Peninsular and Oriental Steam Navigation Company. They had ten millions of East India stock. California alone, which was now dazzling the world, could account to the common mind for such enormous wealth. The strangest thing was that Smithers himself was never seen. The business was done by his subordinates. There was a young man who represented the house in public, and who called himself Henderson. He was a person of distinguished aspect, yet of reserved and somewhat melancholy manner. No one pretended to be in his confidence. No one pretended to know whether he was clerk or partner. As he was the only representative of Smithers & Co., he was treated with marked respect wherever he appeared.
The young man, whether partner or clerk, had evidently the supreme control of affairs. He swayed in his own hands the thunder-bolts of this Olympian power. Nothing daunted him. The grandeur of his enterprises dazzled the public mind. His calm antagonism to the great houses of London filled them with surprise. A new power had seized a high place in the commercial world, and the old gods—the Rothschilds, the Barings, and others—looked aghast. At first they tried to despise this interloper; at length they found him at least as strong as themselves, and began to fancy that he might be stronger. A few experiments soon taught them that there was no weakness there. On one occasion the Rothschilds, true to their ordinary selfish policy, made a desperate attempt to crush the new house which dared to enter into rivalry with them. Widespread plans were arranged in such a way that large demands were made upon them on one day. The amount was nearly two millions. Smithers & Co. showed not the smallest hesitation. Henderson, their representative, did not even take the trouble to confer with the Bank of England. He sent his orders to the Bank. The money was furnished. It was the Directors of the Bank of England who looked aghast at this struggle between Rothschild and Smithers & Co. The gold in the Bank vaults sank low, and the next day the rates of discount were raised. All London felt the result of that struggle.
Smithers & Co. waited for a few months, and then suddenly retorted with terrific force. The obligations of the Rothschilds were obtained from all quarters—some which were due were held over and not presented till the appointed day. Obligations in many forms—in all the forms of indebtedness that may arise in a vast business—all these had been collected from various quarters with untiring industry and extraordinary outlay of care and money. At last in one day they were all poured upon the Rothschilds. Nearly four millions of money were required to meet that demand.
The great house of Rothschild reeled under the blow. Smithers & Co. were the ones who administered it. James Rothschild had a private interview with the Directors of the Bank of England. There was a sudden and enormous sale of securities that day on Change. In selling out such large amounts the loss was enormous. It was difficult to find purchasers, but Smithers & Co. stepped forward and bought nearly all that was offered. The Rothschilds saved themselves, of course, but at a terrible loss, which became the profits of Smithers & Co.
The Rothschilds retreated from the conflict utterly routed, and glad to escape disaster of a worse kind. Smithers & Co. came forth victorious. They had beaten the Rothschilds at their own game, and had made at least half a million. All London rang with the story. It was a bitter humiliation for that proud Jewish house which for years had never met with a rival. Yet there was no help, nor was there the slightest chance of revenge. They were forced to swallow the result as best they could, and to try to regain what they had lost.
After this the pale and melancholy face of Henderson excited a deeper interest. This was the man who had beaten the Rothschilds—the strongest capitalist in the world. In his financial operations he continued as calm, as grave, and as immovable as ever. He would risk millions without moving a muscle of his countenance. Yet so sagacious was he, so wide-spread were his agencies, so accurate was his secret information, that his plans scarcely ever failed. His capital was so vast that it often gave him control of the market. Coming into the field untrammeled as the older houses were, he had a larger control of money than any of them, and far greater freedom of action.
After a time the Rothschilds, the Barings, and other great bankers, began to learn that Smithers & Co. had vast funds every where, in all the capitals of Europe, and in America. Even in the West Indies their operations were extensive. Their old Australian agency was enlarged, and a new banking-house founded by them in Calcutta began to act on the same vast scale as the leading house at London. Smithers & Co. also continued to carry on a policy which was hostile to those older bankers. The Rothschilds in particular felt this, and were in perpetual dread of a renewal of that tremendous assault under which they had once nearly gone down. They became timid, and were compelled to arrange their business so as to guard against this possibility. This, of course, checked their operations, and widened and enlarged the field of action for their rivals.
No one knew any thing whatever about Henderson. None of the clerks could tell any thing concerning him. They were all new hands. None of them had ever seen Smithers. They all believed that Henderson was the junior partner, and that the senior spent his time abroad. From this it began to be believed that Smithers staid in California digging gold, which he diligently remitted to the London house.