There is great excitement at the clubs and meeting-places of investors and brokers to-night.
Here is what Mr. Rogers and Mr. Stillman did. After discarding all unsatisfactory and imperfect subscriptions, there remained subscriptions of between $125,000,000 and $150,000,000 which had complied with all legal conditions, and accompanying these were checks aggregating between $6,250,000 and $7,500,000. This was real money, in the bank and within reach, and the two great financiers, hungering for every dollar of it, determined to possess themselves of this great sum and use it as surety to compel the payment of the balance. First, they agreed that not a dollar of the five per cent. subscription should be returned; next, to so use this amount that no one to whom stock was allotted would back out, but, on the contrary, promptly take his whole allotment and pay up the balance. To effect this they decided to allot each subscriber just the number of shares of Amalgamated necessary to render the amount of money accompanying his subscription equal to about a twenty-five or thirty per cent. payment on his whole allotment. This would constitute such a large margin as to assure the payment of the other seventy or seventy-five per cent. due. For instance, a man who applied for a hundred shares accompanied his subscription with a check for $500. He was allotted twenty shares, value $2,000, on which his $500 check represented a payment of twenty-five per cent. If the conditions of the National City Bank's advertisement had been complied with, he was absolutely entitled to three shares of every five subscribed for, or sixty in all. To bring about the proportion which Mr. Rogers wanted, a bogus subscription of five or six times the unallotted balance was put in by him, and this is where the fraud was committed. The National City Bank was in duty bound to protect the public from any such bogus subscription, and to see that fair treatment was accorded to all subscribers. Yet, unfaithful to the trust, it permitted this bogus subscription to be put in, many hours after the bids had been opened. It utterly failed to comply with the conditions of its advertisement, and was thus a direct party to the fraud perpetrated by its president and Mr. Rogers. The exact amount of the bogus subscription could not be decided until the exact figures of the subscriptions had been compiled, so the figures I gave out that night were only estimates. Within the next few days it was ascertained that the genuine subscriptions totalled $132,067,500, upon which an allotment of one share in five, or $26,413,500 of stock altogether, was made to the public.
In this way the conspirators secured from the public $26,413,500 of the original cost, $39,000,000, and yet retained over $48,500,000 of the authorized stock of $75,000,000. In other words the public paid two-thirds of the purchase price, and the conspirators retained nearly two-thirds of the property.
The fraud thus perpetrated amounts to this: Every subscriber legally entitled to three shares of Amalgamated stock was deprived of two of them by the National City Bank, and the proof is to be found in the books of said National City Bank. My readers may say here that this constitutes a fortunate condition rather than a crime to be punished, for the less Amalgamated a man had, the better he was off, as the stock afterward declined. This conclusion is a false one, however.
Here, in simple terms, is an illustration of what was done in Amalgamated and of what the wrong was.
B had a valuable race-horse and decided to dispose of him in five shares. He offered these five shares for public subscription and advertised that if over five were subscribed for he would split up the shares and allot them pro rata. There were on the final day seven subscriptions. Instead of turning over the horse to the seven subscribers to own and race in their own way, B notified them that twenty-one subscriptions had been received, and that for their seven he had allotted them a one-third ownership, while the other subscribers would retain two-thirds. In the two-thirds resided the right to manage and race the horse, and the seven had no say whatever in this direction. The seven honest subscribers, not suspecting that B had simply sold them one-third of his horse for nearly his whole cost, and that he still retained a two-thirds ownership in him, supposed that fourteen others had subscribed on the same terms as themselves. If the horse were really able to race and thereby earn large sums of money, it was by this fraud in B's power to make him appear so worthless that the seven bona-fide subscribers would be inclined to turn over their ownerships to B at his own figure. Contrariwise, B could so dose the horse as to make him appear more valuable than he really was, and use the advantage to dispose of his fourteen shares for fictitiously high prices.
The world assumes an attitude of horror and amazement at the mention of crime, and thousands of words are written to describe what led up to and away from any given overt deed; but the deed itself, however grave, shameful, or portentous, seems strangely barren and bloodless set down in naked words. Yet the mountain peak that tops the great ranges is but a shoulder over its neighbor, though it may be the apex of a continent. A misconstrued word has caused the spilling of the blood of millions; the needle-point of a stiletto has severed kingdoms. Between temptation and consequence there is but little space, yet it is deep and wide enough for all the poison in the tongues of all the world's serpents. To-day, a simple peasant, humble, gentle, is an insignificant atom in the great Russian Empire, and Nicholas is the supreme ruler of rulers. To-morrow, by a simple swing of an arm a bomb is thrown, and the peasant is the one human being in all the world; the face of Russia is changed, and Nicholas—is not.
The first crime of Amalgamated is a matter of mathematics. It involved plain fraud and misrepresentation, the insertion of a bogus subscription and the disruption of solemn pledges, but the commission of it was nothing more than a matter of arrangement between two men, one the master of the greatest of all business organizations, and the other the head of the strongest bank in the United States. The consequences were world-wide. That night no bomb was thrown, but a seed was sown for the cruelest harvest of crime, dishonor, unhappiness, and desolation ever reaped within the confines of our republic.
Note.—The above statement has now been in the hands of the public, has been printed and commented on in thousands of the leading journals of the world for twelve months, and no Government official has taken cognizance of it. The charges I make constitute one of the gravest business crimes ever committed by any national bank. If they are true, the Government at Washington has no more important duty than to punish the criminals. If they are false, I should be sent to prison. What a commentary on our boasted freedom and equality! The National City Bank does business at the old stand. Rogers, Rockefeller and Stillman walk the streets; so do I, and since I published the above statement and submitted the above proof, at least half a dozen poor national bank clerks and officials who have stolen a few hundreds or thousands have been sent to prison, or have committed suicide to avoid being sent there.