Frenzied Finance, Vol. 1: The Crime of Amalgamated

by Thomas William Lawson

This is what actually occurred. Before Mr. Rogers and William Rockefeller let any one at all in, they built a superbly designed water-, air-, and light-proof structure (particularly light-proof), consisting of five floors, each one being the exact duplicate of the $39,000,000 one upon which they, and they only, stood. Marcus Daly alone was ushered in on the first floor, elevated just a few million dollars above their own. James Stillman and Leonard Lewisohn, of Lewisohn Brothers, were admitted to the next one, the $50,000,000 floor. In other words, Mr. Stillman and Mr. Lewisohn were given an unnamed percentage, the percentage to be arranged later by Mr. Rogers, in all profits above actual cost, and such actual cost was called $50,000,000 and was arrived at by adding the $11,000,000 of secret profits to the actual $39,000,000 cost. Then J. P. Morgan & Co., Frederick Olcott, Governor Flower, and one or two of the dearest friends and closest associates, were let in on the $60,000,000 floor—were given an unnamed percentage, the percentage to be arranged by Mr. Rogers, in all profits above actual cost, and such actual cost was called $60,000,000, and was arrived at by adding $21,000,000 of secret profits to the actual $39,000,000 cost. Then selected ones from the eight different groups of "Standard Oil" were allowed to move in to the fifth, or underwriters' floor, which was affirmed to be $70,000,000 cost; and then, as a solid phalanx, all the different floor-dwellers marched upon the dear public to the tune of $75,000,000, in the front ranks of which were those of the eight groups of the Standard Oil army who had not already been admitted to any of the secret floors.

Right here the crime of Amalgamated was born, not so much the legal crime but the great moral crime. In the ethics of Wall Street the heinousness of the transaction lies not in the fact that the public was compelled to pay $36,000,000 profit to a few men who had invested but $39,000,000—and, as I shall show when I approach this part of my story, the $39,000,000 did not even belong to them—but in the fact that Mr. Rogers and Mr. Rockefeller had given to their associates what, in the vernacular of "the Street," is termed "the double cross."

The every-day people, the millions who do not know Wall Street, realm of the royal American dollar; Wall Street, its sidewalks inlaid with gold coin and paved from curb to curb with solid gold bricks; Wall Street, lined with huge money-mills where hearts and souls are ground into gold-dust, whose gutters run full to overflowing with strangled, mangled, sand-bagged wrecks of human hopes, to be poured, in a never-ending stream, into the brimming waters of the river at its foot, for deposit at the poor-houses, insane asylums, States' prisons, and suicides' graves, washed daily by that grim flood's ebb and flow—the every-day people, I am sure, will not take in the blackness of this transaction at this stage of my story, but before it is ended I will lay this and many more of an equally hellish nature before them in such A B C simplicity that all can read the portent as clearly as the Prophet Daniel read the writing on the wall in the banquet-hall of Belshazzar.

When I consented to allow property which had cost only $39,000,000 to be sold to the public for $75,000,000, it was under a pressure which it was practically impossible for me to withstand. I do not think I use too strong a word when I say "pressure." For three years I had been advertising to the world the great merits of "Coppers," and for over a year I had announced that when the public was given an opportunity to participate in the consolidated "Coppers" it would be upon a basis most carefully worked out: that the properties included in the first section would surely be worth more than the price at which they would be offered to the public, and that all the power, capital, and ability of "Standard Oil" were behind the promises I made. I did this advertising openly and in the frankest possible way, and in all of my announcements, whether printed, oral, or otherwise, used the names of Henry H. Rogers, William Rockefeller, James Stillman, the National City Bank of New York, and "Standard Oil" as freely as I did my own, and in many ways led the public to believe that the very rich Boston & Montana and Butte & Boston companies were to be included in this section of "Coppers."

At that time my alliance with "Standard Oil" was close. A business connection had developed into a strong personal relation between Mr. Rogers and myself. We were engaged, together with William Rockefeller, on a great financial deal which was based on certain conclusions I had worked out in regard to the copper industry. These men were to me the embodiment of success, success won in the fiercest commercial conflict of the age. Their position at the helm of the greatest financial institution in the world gave weight and importance to their judgment and opinions. Nor had aught occurred between us to suggest they would dare perpetrate the crimes they did. Besides all this, indeed an integral part of it, my personal resources were completely involved in the transaction, for the most part pledged with Mr. Rogers and William Rockefeller in stocks of the Butte & Boston and Boston & Montana corporations.

This was, then, the nature of our connection when Mr. Rogers, suddenly and without previous intimation of his schemes, notified me of his purchase of the Daly-Haggin-Tevis properties, and practically ordered me to put them upon the tray which I was preparing and take them to the eagerly waiting public, who by this time were fairly howling for the good things we had been promising them.

In support of this extraordinary change of plan Mr. Rogers urged the secret wealth of the Anaconda and the great value of the other properties which I myself had helped purchase, but I bitterly opposed the new proposition until there was nothing before me but these alternatives—to accept the change Mr. Rogers insisted on or break with "Standard Oil." The latter would mean that I must announce to the public that it was in danger of being tricked, and it was by no means certain that my warning would carry weight against the denials and assurances of "Standard Oil." However much influence I had obtained through my long years of dealings with the public, independent of "Standard Oil," I realized that "Standard Oil's" influence and prestige were much greater, for it must be remembered that at this time the public had not had the evidence since acquired of the "System's" cold-blooded trickery. If I took this course it would mean not only my own ruin financially, for Mr. Rogers and William Rockefeller could call my loans and wipe me out completely, but also the ruin of my friends and allies, who, under my direction, had invested their own millions in the properties concerned. On the other hand, I had the most earnest assurances from Mr. Rogers and William Rockefeller that the new properties were worth much more than the $75,000,000 at which it was proposed to capitalize them. They took me to task for my distrust of them, and went far to demonstrate to me the accuracy of their estimates. They not only gave me Marcus Daly's minute estimates of the values and legitimate possibilities of Anaconda, but consented to have these verified by outside experts in whom I had implicit confidence, and whose personal examination more than bore out Daly's appraisal. I have never yet had reason to doubt the correctness of the figures then shown me, although since I began this story "Standard Oil," in an endeavor to get me to abandon my efforts to secure justice for the thousands I assisted in duping, have stated for the first time that Marcus Daly deceived them and really, to use the words of their chief counsel, sold them a "gold brick."

After this examination I felt convinced that the properties "Standard Oil" insisted on substituting for those originally intended for the first section of Amalgamated were such that the public, if honestly dealt with, could not possibly meet with loss in purchasing. But even then I only consented to go ahead with the flotation under a definite agreement which seemed to me completely to guard against all contingencies of jugglery or deception. This agreement stipulated that all the profits from the transaction should be taken by those to whom they were due in the stock of the Amalgamated Company, and no part of them in cash—that the public should be sold, at the flotation, only $5,000,000 of the $75,000,000, and that "Standard Oil" and all associated with "Standard Oil" in the profits should retain the remaining $70,000,000 until such time as it had been absolutely demonstrated to the public that the property behind the $75,000,000 of stock was worth more than the amount it had been capitalized for. Furthermore, I was also promised that the $5,000,000 cash to be taken from the public should be kept intact, and in my handling of the market it should always be available for the repurchase from the investors of what had been sold to them, at the price which they had paid for it.

This was the basis on which I went on with Amalgamated. I would not have my readers understand me as asserting it would have been possible for me to have stopped the flotation had I attempted it. But, on the other hand, I would not have them think that I desire to be absolved from the disastrous results of the great mistake I made at this time in not at any cost doing that which after-happenings have shown would have been the most honest course for me to have pursued. Nor would I have them think I desire to be absolved from the consequences of many other mistakes which this one led me into—mistakes in temporizing with the situation and postponing action which I should have boldly and fearlessly forced, regardless of all consequences to the public, my friends, and myself.

The subsequent proceedings, the manner in which Amalgamated was actually sold to the public, the flagrant disregard of the conditions of my agreement with Mr. Rogers and William Rockefeller, will, when fully told in their proper place in my story, show that the "System," by whose methods the public is as ruthlessly plundered as though the fruits of its labors were taken away from it by highwaymen, admits also of its own votaries being tricked and despoiled by their associates. The men who participated in the transaction I have just described are among the most astute financiers in the country and presumably possessed of invincible capacity to protect their own interests. But with all their knowledge of the "System's" tricks they were, in this instance, as shrewdly duped as the veriest tyro in the Wall Street game.