Frenzied Finance, Vol. 1: The Crime of Amalgamated

by Thomas William Lawson

When Addicks purchased the several Boston gas properties he organized a company, the Bay State of Delaware, in which this ownership was vested. In order to facilitate the financing of the new corporation and for other manipulative purposes of his own, Addicks created an inner corporation, the Bay State of New Jersey, owned by the treasury of the Bay State of Delaware, to which he turned over the stocks of the Boston gas companies. These the Bay State of New Jersey transferred to the Mercantile Trust Company of New York as collateral for the twelve million Boston Gas bonds which had been sold to the investing public. While to all intents and purposes the Bay State of Delaware was owner of the subsidiary properties, the contract with the Mercantile Trust Company was made with the Bay State of New Jersey, and it was to the president of the latter corporation (Addicks) that the Trust Company was bound to deliver the proxies for the gas stocks in its possession, three days before an annual election. Knowledge of this subcutaneous corporation was confined to Addicks and his immediate associates, and the Delaware financier alone quite grasped its potentialities.

Hitherto Addicks had used the proxies to elect himself president of each of the subordinate corporations, drawing the several salaries which went with the offices. To prevail on him to give up these places and their emoluments to a man he hated as bitterly as he did Matthews was a difficult task, but his situation was desperate. Finally, he agreed. I did not know till long afterward that this reluctant compliance was yielded only after Addicks had had a secret session with his Bay State directors, at which they voted him, by way of salve for his resignation, a sum equal to three years' salary, $75,000.

The mayor, who was a lawyer, prided himself on his shrewdness, and was fully alive to the serpent strategy of Addicks. He determined that the prize he had secured should not slip through his fingers for lack of precaution. We had many legal pow-wows in which the most astute lawyers at the Boston bar were called in, and finally the directors of the Bay State made an iron-clad contract with Nathan Matthews, agreeing to deliver over to him whatever proxies it, the Bay State Gas of Delaware, received from the Mercantile Trust Company of New York, on a given day before the annual election, with which he, of course, could elect himself president. This contract was signed by Addicks and his directors and by all the officers of the Bay State of Delaware corporation, and was passed on and approved by the eminent law sharps both sides had retained.

A few days after the document that made Nathan Matthews supreme boss of Boston Gas was conveyed to him, there came an explosion. Like the premature bursting of a bombshell at a Fourth of July celebration, the transaction "leaked," and the press announced in sable head-lines that Mayor Matthews had sold out, that Addicks was on top, and that Rogers and "Standard Oil" would surely be found beneath the débris. Matthews has always claimed that this "leakage" was a piece of Addicks' double dealing; Addicks declares it was a part of Matthews' and Rogers' deep-laid plan to give him the double cross. Anyway, as a hurrier-up of coming events the news was most successful, although its effect was somewhat of the nature of that produced by the throwing in of an overdose of soda at a candy pull—the pot boiled over, and the air for a time was permeated with the odor of burned sweets. In spite of all public and private criticism Matthews budged not a jot, and confirmed the reports. I made the most of our triumph over "Standard Oil," and for a few days the public took to it, too. Then came one of those return waves of sentiment which may always be counted on in any contest in which "Standard Oil" is engaged. From mysterious places and in untraceable ways the report became current that victory was really with Rogers instead of with our side; that the deal was a smooth piece of Machiavelian work; that Matthews when he took the helm was to steer our ship alongside one of Rogers' forts and perhaps drop anchor under a row of his concealed guns.

This rumor alarmed me. I lost no time in running it to earth, and discovered to my consternation that Matthews had spent the night before he made the agreement to come over to us in New York, at the home of H. H. Rogers. Exactly what had occurred there, or what their programme was, I don't know. Long after this episode had slipped into gas history, at the time when Rogers and myself were doing business together, I asked him to enlighten me on this one point, and he did to the extent of saying, "Matthews only did what I approved of." This certainly redeemed Matthews in my eyes from the reproach of having sold out his friends. There is nothing more despicable than a man who, after having consented to be "put" will not "stay put"—even though the first "put" be of a questionable character.

This new complication demanded immediate action. I called on Matthews to make public announcement that I was to be his vice-president, and thus set at rest the reports that were fast destroying the beneficial effects of our coup. I argued that such an announcement would convince the public that victory was with us and not with Rogers. My surprise may be grasped when the Mayor placed this icicle in my hot palm:

"Mr. Lawson, it has long been my ambition to show the public of Boston and gas consumers what I could do with this situation, and now that I am absolutely assured of gas supremacy, I would have you and all others distinctly understand I will run it as I deem best, regardless of the wishes of any one."

Nathan Matthews was destined later to learn that in an Addicks edifice there are secret trap-doors and concealed passageways available for quick escape in emergency, and that the term "absolutely assured" is of relative value when used in high finance, with Addicks to interpret the relativeness. A few days after the mayor had shown his colors the annual election was "pulled off" in an unexpected manner. The Mercantile Trust Company delivered its proxies to the president of the Bay State of New Jersey, who promptly re-elected himself and his friends to their old offices.

Next morning the public, the press, and the ex-mayor were alike surprised to learn that J. Edward O'Sullivan Addicks was still president of all the Boston gas companies; that General Sam Thomas, of New York, and Thomas W. Lawson, of Boston, were vice-presidents; and that the expected and widely heralded Matthews turnover to Matthews had been indefinitely postponed. There was a tremendous "towse" for a few days during which time I tried my hand at public-opinion moulding, and so successfully that all interested saw that the tide had really turned, and was running swiftly against the heretofore invincible "Standard Oil." Rogers tried to stem it by causing it to be known that Matthews was to carry the new complication to the courts, but we quickly disposed of this possibility by reaching a settlement with our man. This was brought about by the payment to Matthews of a number of thousands of dollars, which Addicks afterward informed me he had entered in the gas-books as "balm salary." From this event until August, 1895, it was one continuous running fire with Rogers and his crowd, with a constant gain to our side in public opinion, though final victory was still far off because of the unlimited money resources of "Standard Oil." In fact, it gradually became evident that, though we might hold out, it was impossible to whip "Standard Oil" to an open acknowledgment of defeat.

The phase of the problem that gave me keenest cause for uneasiness was the possibility I recognized of treachery in my own camp. I had become painfully aware that Addicks was getting impatient and was ready at any favorable moment to make one of his quick Judas turns, which would land him safe with Rogers as the price of the slaughter of the rest of us. True, I had taken all possible precautions to safeguard my own and my friends' interests against his craft by securing from him and from the subsidiary companies iron-clad power to act for them without consultation. To get this I had had to use great pressure, for he had balked long and hard against giving it. This was the condition of affairs when I decided to stake everything on one move.