CHAPTER VIII.
Until this time the course of financial events in Benham since its evolution from a sleepy country town began had been steadily prosperous. There had been temporary recessions in prices, transient haltings in the tendency of new local undertakings to double and quadruple in value. A few rash individuals, indeed, had been forced to suspend payments and compound with their creditors. But there had been no real set back to commercial enthusiasm and speculative gusto. Those who desired to borrow money for progressive enterprises had found the banks accommodating and unsuspicious, and to Benham initiative it yet appeared that the development of the resources of the neighborhood by the unwearying, masterful energy of the citizens was still in its infancy.
But now, after a few months of inactivity, which holders of speculative securities had spoken of as another healthy breathing spell, the tendency of prices had changed. Had not merely halted, but showed a radical tendency to shrink; even to tumble feverishly. Buyers were scarce, and the once accommodating banks displayed a heartless disposition to scrutinize collateral and to ask embarrassing questions in regard to commercial paper. Rates of interest on loans were ruthlessly advanced, and additional security demanded. A pall of dejection hung over Benham. Evil days had come; days the fruit of a long period of inflation. A dozen leading firms failed and carried down with them diverse small people. Amid the general distrust and anxiety all eyes were fixed on Wall street, the so-called money centre of the country, the Gehenna where this cyclone had first manifested itself. The newspapers, voicing Benham public opinion, cast vituperation at the bankers and brokers of Wall street, whose unholy jugglings with fortune had brought this commercial blight on the community. Wall street had locked up money; consequently funds were tight in Benham, and the plans of its honest burghers to promote enterprise and develop the lawful industries of the country were interrupted. So spoke public opinion, and, at the same time, hundreds of private letters were being despatched through the Benham Post Office in response to requests for more margins on stocks held for the honest burghers by the fraternity of Wall street gamblers. There was private wailing and gnashing of teeth also, for in the panic a few of these bankers and brokers had been submerged, and the collateral of Benham's leading citizens had been swept away.
The panic itself was brief as panics always are, but it left behind it everywhere a paralyzed community. So far as Benham was concerned, only a few actually failed, but, in a host of instances, possessors of property who had thought themselves wealthy a year before found that they were face to face with the knotty problem of nursing their dwarfed resources so as to avoid eventual insolvency. Everything had shrunk fifty—often one hundred—per cent., for the basis of Benham's semi-fabulous development had been borrowed money. Many of Benham's leading citizens were down to hard pan, so to speak. Their inchoate enterprises were being carried by the banks on the smallest margins consistent with the solvency of those institutions, and clear-headed men knew that months of recuperation must elapse before speculative properties would show life again. Benham was consequently gloomy for once in despite of its native buoyancy. It would have arisen from the ashes of a fire as strenuous as a young lion. But, with everybody's stocks and merchandise pledged to the money lenders, enterprise was gripped by the throat. In the pride of its prosperity Benham had dreamed that it was a law unto itself, and that even Wall street could not affect its rosy commercial destinies. It appeared to pious owners of securities almost as though God had deserted his chosen city of a chosen country.
Lyons was among those upon whom the harrow of this fall in prices and subsequent hand-to-mouth struggle with the banks pressed with unpleasant rigor. In business phraseology he was too much extended. Consequently, as the margins of value of the securities on which he had borrowed dropped away, he was kept on tenter-hooks as to the future. In case the process of shrinkage went much further, he would be required to supply more collateral; and, if the rate of money did not fall, the banks would refuse to renew his notes as they became due, unless he could furnish clear evidence of his solvency. He was owing over one hundred and fifty thousand dollars on paper secured only by the stock and bonds of brand-new enterprises, which had no market negotiability. From the money which he had borrowed he had sent, from time to time, to Williams and Van Horne an aggregate of forty thousand dollars to protect some two thousand shares of railroad stocks. Williams had especially commended the shares of the coal-carrying roads to his attention, and the drop in prices had been uniformly severe in these properties. Instead of being the possessor of a stable quarter of a million, which he considered to be the value of his property at the time of his election to Congress, Lyons suddenly realized that he was on the brink of a serious financial collapse through which he might lose everything before he could discharge his liabilities. It seemed cruel to him, for he believed that all his ventures were sound, and that if he were not forced to sacrifice his possessions, their future value would attest his sagacity. But at present the securities of speculative enterprises were practically worthless as procurers of ready money. The extreme circumstances had come upon him with startling rapidity, so that he found himself in the unpleasant predicament of having used for temporary relief some of the bonds belonging to the Parsons estate which he held as executor. He had forwarded these to Williams merely as a matter of convenience before he had become anxious, expecting to be able to replace them with funds coming to him within thirty days from a piece of real estate for which he had received an offer. He had held off in the hope of obtaining a higher price. The following week, when signs of danger were multiplying, he had found the would-be purchaser unwilling to buy at any price. Realizing the compromising position in which he had placed himself by his action, he had cast about feverishly for the means to redeem the hypothecated securities, but all his resources were taxed of a sudden by the advent of the panic. It occurred to him to ask Selma to allow substitution of the twenty thousand dollars, which had been apportioned, to her as her legacy, for the bonds, but at first he had shrunk from the mortification of disclosing his condition to her, and now that the situation had developed, he feared that he might be obliged to borrow this money from her for the protection of his other interests. It gave him sore concern that he, a champion of moral ideas, a leading church member, and a Representative of the Federal Government should be put in such an equivocal position. Here again there was no opportunity for conciliation, and dignified urbanity was of no avail. If the condition of drooping prices and general distrust, a sort of commercial dry-rot, which had succeeded the panic, continued much longer he would be driven to the wall unless relief were forthcoming. Nor was it much consolation that many others were on the verge of failure. Financial insolvency for him would mean the probable loss of his seat in Congress, and the serious interruption of his political career. From what source could he hope for relief? The preparations for the autumn campaign were already being considered, and there was likelihood of another close contest between the two political parties. But for the worry occasioned by his plight, he would have resumed the contest with hopeful ardor, appreciating that the pecuniary distress of the community would be likely to work to his advantage. His own nomination was assured; his re-election appeared probable. But after it what could he expect but the deluge?
One source of the effectiveness of Horace Elton was that he was wont to exercise foresight, and make his plans in advance while other men were slumbering. He had been prepared for the panic because he had been expecting it for more than a year, and the ship of his financial fortunes was close reefed to meet the fury of the overdue gale. Also he was quick to recognize that the wide-spread depreciation of values would inevitably be followed by a period of business inactivity which would throw out of employment a large number of wage earners whose ballots as a consequence would be cast against the political party in power. As far back as the time when he made the acquaintance of Selma at Washington and selected her as the wearer of his cameo pin, he had been incubating on a scheme for the consolidation of the gas companies in the cities and towns of the state into one large corporation. For this corporation he required a liberal charter, which the next legislature would be invited to grant. He expected to be able to procure this franchise from the legislature, but he judged that the majority in favor of the bill would not be large enough to pass it over the Governor's veto. Accordingly it was of the first importance that the Governor should be friendly to the measure.
This was the year of the Presidential election. Both political parties were seeking to nominate their strongest candidates for the various federal and state offices. A promoter of large business schemes was at a disadvantage in a campaign where party feelings ran high and national issues were involved, and Elton knew it. He commonly chose an off year in politics for the consummation of his business deals. But he had chosen to push his bill this year for the reason that he wished to be in a position to buy out the sub-companies cheaply. The community was pressed for ready money, and many men who would be slow in prosperous times to extract gas shares from their tin boxes and stockings would be glad to avail themselves of a reasonable cash offer. Elton was a Republican on national issues. His experience had been that the Republican Party was fundamentally friendly to corporations, in spite of occasional pious ejaculations in party platforms to the contrary. He had a Republican candidate for Governor in mind who would be faithful to his interests; but this candidate was put aside in the convention in deference to the sentiment that only a man of first-rate mental and moral calibre could command the allegiance of independent voters, whose co-operation seemed essential to party success. The Republican state convention was held three weeks prior to the date fixed for that of their opponents. Within twenty-four hours subsequent to the nomination of Hon. John Patterson as the Republican candidate for Governor, while the party organs were congratulating the public on his selection, and the leaders of the party were endeavoring to suppress the murmurs of the disappointed lower order of politicians who, in metaphorical phrase, felt that they were sewed up in a sack for another two years by the choice of this strong citizen, one of the most widely circulated democratic newspapers announced in large type on its front page that Hon. James O. Lyons was the only Democrat who could defeat him in the gubernatorial contest. Behind the ledger sheet of this newspaper—which was no other than the Benham Sentinel—lurked the keen intelligence of Horace Elton. He knew that the candidate of his own party would never consent to indicate in advance what his action on the gas bill would be, and that he would only prejudice his chances of obtaining favorable action when the time arrived by any attempt to forestall a decision. This did not suit Horace Elton. He was accustomed to be able to obtain an inkling before election that legislation in which he was interested would not encounter a veto. His measures were never dishonest. That is, he never sought to foist bogus or fraudulent undertakings upon the community. He was seeking, to be sure, eventual emolument for himself, but he believed that the franchise which he was anxious to obtain would result in more progressive and more effectual public service. He had never before felt obliged to refrain from asking direct or indirect assurance that his plans would be respected by the Governor. Yet he had foreseen the possibility of just such an occurrence. The one chance in a hundred had happened and he was ready for it. He intended to contribute to the Republican national campaign fund, but he did not feel that the interests of his State would suffer if he used all the influences at his command to secure a Governor who would be friendly to his scheme, and Congressman Lyons appeared to him the most available man for his purpose.
It had already occurred to Lyons that his nomination as Governor was a possibility, for the leaders of the party were ostensibly looking about for a desirable Democrat with whom to confront Patterson, and had shown an intention to turn a cold shoulder on the ambition of several aspirants for this honor who might have been encouraged in an ordinary year as probable victors. He knew that his name was under consideration, and he had made up his mind that he would accept the nomination if it were offered to him. He would regret the interruption of his Congressional career, but he felt that his election as Governor in a presidential year after a close contest would make him the leader of the party in the State, and, in case the candidate of his party were chosen President, would entitle him to important recognition from the new administration. Moreover, if he became Governor, his financial status would be strengthened. The banks would be more likely to accommodate one in such a powerful position, and he might be able to keep his head above water until better times brought about a return of public confidence and a recovery in prices. Yet he felt by no means sure that even as Governor he could escape betraying his financial embarrassment, and his mind was so oppressed by the predicament in which he found himself that he made no effort on his own part to cause the party leaders to fix their choice on him. Nor did he mention the possibility of his selection to Selma. Mortification and self-reproach had made him for the moment inert as to his political future, and reluctant to confide his troubles to her.
The clarion declaration of the Benham Sentinel in favor of Lyons evoked sympathetic echoes over the State, which promptly convinced the political chieftains that he was the strongest candidate to pit against Patterson. The enthusiasm caused by the suggestion of his name spread rapidly, and at the end of a week his nomination at the convention was regarded as certain.
The championship of the Sentinel was a complete surprise to Selma. She had assumed that her husband would return to Washington, and that political promotion for the present was out of the question. When she saw her husband's features looking out at her from a large cut on the front page of the morning newspaper, and read the conspicuous heading which accompanied it—"The Sentinel nominates as Governor the Hon. James O. Lyons of Benham, the most eloquent orator and most public-spirited citizen of the State"—her heart gave a bound, and she eagerly asked herself, "Why not?" That was just what they needed, what she needed to secure her hold on the social evolution of Benham. As the wife of the Governor of the State she would be able to ignore the people who held aloof from her, and introduce the reforms in social behavior on which her heart was set.