Mrs. Parker nodded approval. "John, you old dud," she decided, "you always liked horse-races and athletics. You're stuck for some prizes."
Her indulgent husband good-naturedly agreed, and at Kay's suggestion, Carolina brought a pencil and a large writing-tablet, whereupon the girl constituted herself secretary of the carnival committee and wrote the program, as arranged by Don Mike and her father. She thrilled when Farrel announced a race of six furlongs for ladies' saddle-horses, to be ridden by their owners.
"You ought to win that with Panchito," he suggested to Kay.
Kay's heart beat happily. In Farrel's suggestion that she ride Panchito in this race she decided that here was evidence that her host did not contemplate any action that would tend to render the ranch untenable for her prior to the fiesta; indeed, there was nothing in his speech or bearing that indicated the slightest mental perturbation now that he had discovered the compact existing between her and Bill Conway. Perhaps his pride was not so high as she had rated it; what if her action had been secretly pleasing to him?
Somehow, Kay found this latter thought disturbing and distasteful. It was long past midnight before she could dismiss the enigma from her thoughts and fall asleep.
It was later than that, however, before Don Miguel José Federico Noriaga Farrel dismissed her from his thoughts and succumbed to the arms of Morpheus. For quite a while after retiring to his room he sat on the edge of the bed, rubbing his toes with one hand and holding Bill Conway's promissory note before him with the other.
"That girl and her mother are my secret allies," he soliloquized. "Bless their dear kind hearts. Kay has confided in Conway and for reasons best known to himself he has secretly accepted of her aid. Now I wonder," he continued, "what the devil actuates her to double-cross her own father in favor of a stranger?"
He tucked the note back in his pocket, removed a sock and rubbed the other foot thoughtfully. "Well, whatever happens," he decided eventually, "I've got to keep my secret to myself, while at the same time effectually preventing this young lady from advancing Bill Conway any further funds for my relief. I cannot afford her pity or her charity; I can accept her sympathy, but not her aid. Conway cannot have so soon spent much of the money he borrowed from her, and if I insist on the cessation of operations in the Basin he'll promptly give her back her fifty thousand dollars in order to save the interest charges; in the meantime I shall mail Kay the note in a plain white envelope, with the address typewritten, so she will never know where it came from, for of course she'll have to hand Bill back his canceled note when he pays it."
He blew out the light and retired, not to sleep, but to revolve plan after plan for the salvation of the ranch. To float a new loan from any source in San Marcos County he dismissed for the hundredth time as a proposition too nebulous for consideration. His only hope of a bank loan lay in an attempt to interest outside bankers to a point where they would consent to have the property appraised. Perhaps the letter from Parker which he held would constitute evidence to cautious capitalists of the sufficiency of the security for the loan. It was for that purpose that he had cunningly inveigled Parker into making him that offer to clear out and leave him a fair field and no litigation. However, Don Mike knew that between bankers there exists a certain mutual dependence, a certain cohesiveness that makes for mutual protection. If, for instance (he told himself), he should apply to a San Francisco bank for a loan on the ranch, the bank, prior to wasting either time or mental energy on his application, would first ascertain from sources other than him, whether it was remotely worth while considering the loan up to a point of sending a representative down to appraise the land. Their first move, therefore, would be to write their correspondent in El Toro—John Parker's bank, the First National—for information regarding the Farrel family, the ranch and the history of the mortgage. Don Mike was not such an optimist as to believe that the report of Parker's bank would be such as to encourage the outside bank to proceed further in the deal.
He was also aware that the loan would not be attractive to commercial banks, who are forced, in self-protection, to loan their money on liquid assets. He must therefore turn to the savings-banks and trust companies. But here again he faced an impasse. Such institutions loan money for the purpose of securing interest on it; the last thing they wish to do is to be forced, in the protection of the loan, to foreclose a mortgage. Hence, should they entertain the slightest doubt of his inability to repay the mortgage; should they be forced to consider the probability of foreclosure eventually, he knew they would not consider the loan. Don Mike was bitterly aware of the fact that the history of his family bad been one of waste, extravagance, carelessness and inefficiency. In order to place the ranch on a paying basis and take up John Parker's mortgage, therefore, he would have to have a new loan of not less than half a million dollars, and at six per cent., the lowest rate of interest he could hope to obtain, his annual interest charge would be thirty thousand dollars. Naturally he would be expected to repay the loan gradually—say at the rate of fifty thousand dollars a year. By running ten thousand head of cattle on the Palomar he knew he could meet his payments of interest and principal without lessening his working capital, but he could not do it by attempting to raise scrub beef cattle. He would gradually produce a herd of pure-bred Herefords, but in the meantime he would have to buy "feeders," grow them out on the Palomar range and sell them at a profit. During the present high price of beef cattle, he dared not gamble on borrowed capital, else with a slump in prices he might be destroyed. It would be a year or two, at least, before he might accept that risk; indeed, the knowledge of this condition had induced him to lease the San Gregorio for one year to the Basque sheep man, André Loustalot. If, in the interim, he should succeed in saving the ranch, he knew that a rest of one year would enable the range to recover from the damage inflicted upon it by the sheep.