“In so far as I could judge from hearsay and active contact with him for a period of something like fourteen years, Mr. Osterman was one who required little if any rest and at all times much work to keep him content. His was an intense and always dominant personality. Even after he had passed the age of sixty-five, when most men of means are content to rest and let others assume the strenuous burdens of the world, he was always thinking of some new thing to do. It was only the week before he died, stricken while walking upon his verandah, that he was in my office with a plan to subsidize the reigning authorities of a certain minor Asiatic state, in order that certain oil and other properties there might be developed under peaceful conditions. A part of this plan contemplated a local army to be organized and equipped and maintained at his expense. Of a related nature was his plan for the double-screw platform descents and exits for the proposed New York-New Jersey traffic tunnel, which he appears to have worked out during the spring which preceded his sudden demise and plans for which he was most anxious to have this department prepare in order that they might be submitted to the respective states. It is hardly needful to state, since the fact is generally known, that those plans have been accepted. Of a related nature were those Argentine-Chilean Trans-Andean railway projects so much discussed in the technical engineering as well as the trade papers of a few years since, and which recently have been jointly financed by the two governments. Only the natural tact and diplomacy of a man like Mr. Osterman, combined with his absolute genius for detecting and organizing the natural though oftentimes difficult resources of a country, would have been capable of making anything out of that very knotty problem. It was too much identified with diplomacy and the respective ambitions and prejudices of the countries involved. Yet it was solved and he succeeded in winning for his South American organization the confidence and friendship of the two governments.”
II
The facts concerning the founding and development of the fortune of the late J. H. Osterman, as developed by C. B. Cummings, quondam secretary to Mr. Osterman, special investigator for E. X. Bush, of counsel for the minority stockholders of the C. C. and Q. L., in their suit to compel the resale of the road to the original holders and the return of certain moneys alleged to have been illegally abstracted by J. H. Osterman and Frank O. Parm, of Parm-Baggott and Company, and by him set forth in his reminiscences of Mr. Bush and the Osterman-Parm-C. C. & Q. L. imbroglio.
1. The details of the Osterman-De Malquit matter were, as near as I have been able to gather, or recall, since I was Mr. Osterman’s secretary until that time, as follows: De Malquit was one of the many curb brokers in New York dabbling in rubber and other things at the time Osterman returned from Honduras and executed his very dubious coup. The afternoon before De Malquit killed himself—and this fact was long held against Mr. Osterman in connection with his sudden rise—he had come to Osterman’s office in Broad Street, and there, amid rosewood and mahogany and an unnecessary show of luxury which Osterman appeared to relish even at that time, had pleaded for time in which to meet a demand for one hundred thousand dollars due for ten thousand shares of Calamita Rubber, which Osterman then entirely controlled and for which he was demanding the par or face value. And this in spite of the fact that it had been selling on “curb” only the day before for seven and one-fourth and seven and three-fourths. De Malquit was one of those curb brokers whom Osterman, upon coming to New York and launching Calamita (which was built on nothing more solid than air), had deliberately plotted to trap in this way. Unwitting of Osterman’s scheme, he had sold ten thousand shares of Calamita on margin at the above low price without troubling to have the same in his safe, as Osterman well knew. That was what Osterman had been counting on and it had pleased him to see De Malquit, along with many others just at that moment, in the very same difficult position. For up to that day Calamita, like many another of its kind, had been a wildcat stock. Only “wash sales” were traded in by brokers in order to entrap the unwary from the outside. They traded in it without ever buying any of it. It had to fluctuate so that the outsider might be induced to buy, and that was why it was traded in. But when it did fluctuate and the lamb approached, he was sold any quantity he wished, the same being entered upon their books as having been sold or bought on his order. When a quotation sufficiently low to wipe out the margin exacted had been engineered among friends, the lamb was notified that he must either post more money to cover the decline or retire. In quite all cases the lamb retired, leaving the broker with a neat profit.
This was the very situation upon which Osterman had been counting to net him the fortune which it eventually did, and overnight at that. Unknown to the brokers, he had long employed agents whose business it was to permit themselves to be fleeced for small sums in order that these several brokers, growing more and more careless and finding this stock to be easy and a money-maker, should sell enough of it without actually having it in their safes to permit him to pounce upon them unexpectedly and make them pay up. And so they did. The promoters of the stock seeming indifferent or unable to manage their affairs, these fake sales became larger and larger, a thousand and finally a ten thousand share margin sale being not uncommon. When the stage was set the trap was sprung. Overnight, as it were, all those who at Osterman’s order had bought the stock on margin (and by then some hundreds of thousands of dollars’ worth had been disposed of) decided that they would not lose their margins but would follow up their cash with more and take the stock itself, holding it as an investment. It then became the duty of these brokers to deliver the stock within twenty-four hours or take the consequences—say, a petition in bankruptcy or a term in jail. Naturally there was a scrambling about to find any loose blocks of the stock. But these had been carefully garnered into the safe of Mr. Osterman, who was the sole owner of the stock, and they were compelled to hurry eventually to him. Here they were met by the genial eye of the cat that is expecting the mouse. They wanted Calamita, did they? Well, they could have it, all they wanted ... at par or a little more. Did that seem harsh, seeing that it had been selling only the day before for seven and three-fourths or seven-eighths? Sorry. That was the best he could do. They could take it at that price or leave it.
Naturally there was a panic among those who were short. The trick was obvious, but so was the law. Those who could, pocketed their losses without undue complaint and departed; some who could not, and were financially unimportant, decamped, leaving Osterman’s agents to collect as best they might. Only one, Mr. De Malquit, finding himself faced by complications which he could not meet, took his own life. He had unfortunately let himself in for much more money than had the others and at a time when he could least stand the strain.
The day De Malquit came to see Osterman, he was behind his desk expecting many, and because, as I afterwards learned from Mr. Osterman himself, Mr. De Malquit had been so wary, making agreements at first, which made it hard to trap him, Osterman saw him as one of those who had made it most difficult for him to win, and therefore deserving to be sheared the closest. “One hundred per share, take it or leave it,” was his only comment in reply to Mr. De Malquit’s statement that he found himself in a bit of a hole and would like to explain how a little time would see him through.
“But, Mr. Osterman,” I recall De Malquit replying, “I haven’t so much now, and I can’t get it. These shares were being quoted at seven and three-fourths only yesterday. Can’t you let me off easier than that, or give me a few months in which to pay? If I could have six months or a year—I have some other matters that are pressing me even more than this. They will have to come first, but I might pull through if I had a little time.”
“One hundred, on the nail. That’s the best I can do,” Osterman replied, for I was in the room at the time. And then signaled me to open the door for him.