Well, the United States Treasury did not hang out the bankrupt’s sign. What happened instead was that President Cleveland in his solitary strength met a mad crisis in a great way. He engaged a group of international bankers to import gold from Europe and paid them for it in government bonds. The terms were hard, but the government, owing to the fascinated stupidity of Congress, was in a helpless plight. What Cleveland had the courage to face was the fact that any terms were better than none. It was fundamentally a question of psychology. The spell had somehow to be broken. The richest and most resourceful country in the world was about to commit financial suicide for a fetich. All that was necessary to save it was to restore the notion,—merely the notion,—of gold solvency. People really did not want gold to hoard or keep. They wanted only to think they could get it if they did want it.
The news of the President’s transaction with the bankers, appearing in the morning papers, produced a profound sensation. The white money people denounced him with a fury that was indecent. Manymen of his own political faith turned against him, thinking he had destroyed their party. Congress was amazed. There was talk of impeachment proceedings. Popular indignation was extreme and unreasoning. The White House had sold out the country to Wall Street. Mankind was about to be crucified upon a cross of gold. The principle of evil had at last prevailed.
Thus people reacted emotionally to an event which marked the beginning of a return of sanity. Upon the verities of the case the effect of Cleveland’s act was positive. While the nation raved the malady itself began to yield. That ophidian monster which was devouring the gold reserve began to disintegrate from the tail upward. Presently only the head was left and that disappeared with the arrival of the first consignment of gold from Europe under the government’s contract with the bankers.
The full cure of course was not immediate. But never again were people altogether mad. As the tide reverses its movement invisibly, with many apparent self-contradictions in the surf line on the sand, so it is with the course of events. Between the tail of the ebb and the first of the flood there is a time of slack with no tendency at all. That also is true in the rhythm of human activities.
Historically it is noted that a stake set in the wet sand on the morning after the Great Midwestern’sconfession of insolvency would have indicated the extreme low water mark of that strange ebb tide in the economic affairs of this country the unnatural extent and duration of which was owing to the moon of a complex delusion. There was first a time of slack before the flood began to run,—a time of mixed omens, of alternating hope and doubt. Yet all the time unawares the country grew richer because people worked hard, consumed less than they produced and stored the surplus in the form of capital until the reservoirs were ready to overflow.
As for the Great Midwestern, everything came to pass as Galt predicted. Valentine was appointed by the court to work the railroad as receiver. In that rôle he returned to his desk. The word “president” was erased from the glass door of his office; the word “receiver” was painted there instead. That was the only visible sign of the changed status. We paid our way with receiver’s certificates, issued under the direction of the court. Dust settled in the Board Room, where formerly the directors met. Trains continued to move as before.
Life in this financial limbo would have exactly suited the placid temperament of our organization but for the distracting activities of Galt. With Valentine’s permission he took that old vice-president’s desk in Harbinger’s office and began to keep hours. Such hours! He was always there when Harbinger arrived. At ten he went to the Stock Exchange; at three he returned. He was still there when Harbinger went home. The scrubwomen complained of him, that he kept them waiting until late at night. Sometimes for that reason they left the room unswept. Insatiably he called for records, data, unheard of compilations of statistics. He wrangled with John Harrier, the treasurer, for hours on end over the nature of assets and past accounting. Their voices might often be heard in adjacent rooms, pitched in the key of a fish wives’ quarrel.
Harrier was an autocratic person whose ancient way of accounting had never before been challenged nor very deeply analyzed. With so much laxity at the top of the organization he had been able to do as he pleased, and being a pessimist his tendency wasto undervalue potential assets, such as lands, undeveloped oil and mining rights and deferred claims. Gradually he wrote them off, a little each year, until in his financial statements they appeared as nominal items. His judgments were arbitrary and passed without question. This had been going on for many years. The result was that a great deal of tangible property, immediately unproductive yet in fact very valuable, had been almost lost sight of. The Great Midwestern, like the country, was richer than anybody would believe. And nobody cared. Live working assets were in general so unprofitable, especially in the case of railroads, that dormant assets were treated with contempt. Galt valued them. He knew how Harrier had sunk them in his figures and forced him step by step to disclose them.
“They are at it again,” Harbinger said, coming in one evening to sit for a while in my room, bringing some papers with him.
“Who?”
“Galt and Harrier. I can’t think for their incessant caterwauling.”
“How do you get along with him?” I asked.
“With Galt? He makes me very uncomfortable. There’s no concealing anything from him.”
“Do you still dislike him?”
“Oh, no. That wears off. I’ve been watching his mind work. It’s a marvellous piece of mechanism.” He went on with his work. “I know at last what he’s doing,” he said suddenly.
“What?”
“He’s developing a plan of reorganization.”
That was true. I had known it for some time. He accumulated his data by day in the office and worked it up by night in his room at home. He showed it to me as it progressed. There was a good deal of writing in it. The facts required interpretation. He was awkward at writing and I helped him with it, phrasing his ideas. The financial exposition was one part only. There was then the physical aspect of the property to be dealt with. When it came to that he spent six weeks out on the road. Three days after he set out on this errand we began to receive messages by telegraph from our operating officials, traffic managers, agents and division superintendents, to this effect:
“Who is Henry M. Galt?”
At Valentine’s direction I answered all of them, saying: “Treat Henry M. Galt with every courtesy.”
He went over every mile of the right of way, inspected every shop and yard, talked with the agents and work masters and finally scandalized the department of traffic by going through all the contracts in force with large shippers. He studied traffic conditions throughout the territory, had a look at competing lines and conferred with bankers, merchants and chamber of commerce presidents about improving the Great Midwestern’s service.
He returned with a mass of material which we worked on every night feverishly, for he wasbeginning to be very impatient. The physical aspect of the property having been treated from an original point of view, there followed an illuminating discussion of business policy. Good will had been leaving the Great Midwestern, owing to the unaccommodating nature of its service. This fact he emphasized brutally and then outlined the means whereby the road’s former prestige might be regained.
Never had a railroad been so intelligently surveyed before. The work as it lay finished one midnight on Galt’s table represented an incredible amount of labor. More than that, it represented creative imagination in three areas,—finance, physical development and business policy. The financial thesis was that the Great Midwestern should be reorganized without assessing the stockholders in the usual way. All that was necessary was to sell them new securities on the basis of dormant assets. This was a new idea.
“Have you done all this in collaboration with the bankers?” I asked him.
“No,” he said. “They have a plan of their own. My next job is to make them accept this in place of theirs. That’s why I’ve been in such a sweat to get it done.”
“What inducement can you offer them?”
“Mine is the better plan,” he said. “It stands on its merits.”
“What will you get out of it?” I asked.
He looked very wise.
“That’s the crow in the pie, Coxey.” He got up, stretched, walked about a bit, and stood in front of me, saying: “I’ll get a place on the board of directors. I’ll be one of ten men in a Board Room. Everything else follows from that.”
A railroad has its own bankers, just as you have your own dentist or doctor. They sit on the board of directors as financial experts. They carry out the company’s fiscal policies, they sell its securities to the public for a commission, they lend it money while it is solvent, and when it is insolvent they constitute themselves a protective committee for the security holders and get all the stocks and bonds deposited in their hands under a trust agreement. Then in due time they announce a plan of reorganization.
Mordecai & Co. were the Great Midwestern’s bankers. They would naturally control the reorganization. In fact, they had already evolved a plan and were waiting only for a propitious moment to bring it forth. To offer them a new plan in place of their own,—for an outsider to do this,—would be like selling a song to Solomon. I marvelled not so much at Galt’s audacity as at his self-confidence. It seemed an utterly impossible thing to do.
He stopped the next morning at the Great Midwestern office to verify three figures and to have me fasten the sheets neatly between stiff cardboards. Then he marched off with it under his arm, his hatslammed down in front, a slouching, pugnacious figure, blind to obstacles, dreaming of empire.
“Good luck!” I called after him.
He did not hear me.
The profession of dynamic man is arms. It has never been otherwise. Only the rules and weapons change. He makes a tilting field of business. The blood weapon is put away, killing is taboo, but the struggle is there, if you look, essentially unchanged. Men are the same as always.
Wall Street is a modern jousting place. The gates stand open. Anyone may compete. There is no caste. The prizes are unlimited; the tournament is continuous. Capital is not essential. One may borrow that, as the stranger knight of ancient time, bringing only his skill and daring, might have borrowed lance, horse and armor for a trial of prowess.
To this field of combat you must bring courage, subtlety, nerve, endurance of mind and swift imagination. Given these qualities, then to gain more wealth and power than any feudal lord you need only one inch more than the next longest lance of thought. You have only to outreach the vision of the champions to unhorse them. There is no mercy for the fallen, no more than ever. The new hero is acclaimed. He may build him a castle on any hill and with his wealth command the labor of tens of thousands. But he must still defend his own against all comers in the market place. In time he will meet one greater than himself. He may have theconsolation of knowing, if it is a consolation, that defeat is never fatal, or seldom ever.
Now through these gates went Galt. He had a vision of the future longer than the lance of any knight defending. He needed horse and armor. I did not see him again that day.
In the evening I went to the house. Natalie met me.
“He is in bed,” she said.
“Is he ill?”
“He looked very tired and ate no dinner. I was to tell you if you came that he had to get a big sleep on account of something that will happen tomorrow.”
I was holding my hat. Natalie looked at it.
“My beautiful sister is not at home,” she said.
“Tell her I was desolate.”
“And that you did not ask for her?” she suggested, slyly.
“Now, Natalie, you are teasing me.”
“Mamma is out. Gram’ma’s gone to bed. There’s nobody to entertain you,” she said, shaking her head.
“What a dreary state of things!” I said, laughing at her and putting down my hat.
She went ahead of me into the parlor, arranged a heap of pillows at one end of the sofa, saying, “There!” and sat herself in a small, straight chair some distance away.
Going on eighteen is an age between maidenhood and womanhood. Innocence and wisdom have the same naïve guise and change parts so fast that you cannot be sure which one is acting. The girl herself is not sure. She doesn’t stop to think. It is a charming masquerade of two mysterious forces. The part of innocence is to protect and conceal her; the part of wisdom is to betray and reveal her.
“I wish I were a man,” she sighed.
“Every girl says that once. Why do you wish it?” I asked.
“But it’s so,” she said. “They know so much ... they can do so many things.”
“What does a man know that a woman doesn’t?”
“If I were a man,” she said, “I’d be able to help father. I’d understand figures and charts and all those things he works with. They make my silly head ache. I’d study finance. What is it like?”
“What is finance like?”
“Yes. Do you think I might understand it a little?”
For an hour or more we talked finance,—that is, I talked and she listened, saying, “Yes,” and “Oh,” and bringing her chair closer. She made a very pretty picture of attention. I’m sure she didn’t understand a word of it. Then she began to ask me questions about her father,—what his office was like, how he dealt with Wall Street people, what he did on the Stock Exchange, and so on.
“Must you?” she asked, when I rose to go. “I’mafraid you haven’t been entertained at all. I love to listen.”
“I just now remember I haven’t had any dinner,” I said. “I stopped late at the office and came directly here. It’s past ten o’clock.”
“Dear me! Why didn’t you tell me? I’ll get you something. You didn’t know I could cook. Come on.”
Without waiting for yes or no she scurried off in the direction of the kitchen. I followed to call her back, but when I had reached the dining room she was out of sight, the pantry door swinging behind her. I returned to the parlor and waited, thinking she would report what there was to eat. Then I could make my excuses and depart.
She did not return. Presently I began to feel embarrassed, as much for her as for myself; also a little nettled. However, I couldn’t disappoint her now. It would be too late to stop whatever she was doing. She had said, “Come on.” Therefore she was expecting me in the kitchen and was probably by this time in a state of hysterical anxiety, wondering if I would come, or if perhaps I had gone; and no way out of the frolic she had started but to see it through.
I found her beating eggs in a yellow bowl. She had put on an apron and turned up her sleeves. Her face was flushed, her eyes were bright with a spirit of fun, and wisps of wavy black hair hadfallen a little loose at her temples. I surrendered instantly.
“You won’t mind eating in the kitchen, will you? It’s cozy,” she said, almost too busy to give me a look.
A small table was already spread for one; chairs were placed for two.
“This is much more interesting than finance,” I said, watching her at close range.
“I can make a perfect omelette,” she said. “So light you don’t know you are eating it. You only taste it.”
“Not very filling,” I thought.
“There may be something else, too,” she said.
There was. She rifled the pantry. The imponderable omelette, accompanied by bacon, was followed by cold chicken, ham, sausage, asparagus, salad, cheese of two kinds, jams in fluttering uncertainty, cake and coffee.
When she was convinced at last that I couldn’t encompass another bite and rested upon her achievement she began to giggle.
“What’s that for?”
“I’m thinking,” she said, “what my sister would say if she saw us now.”
As I walked home I could not help contrasting her with Vera, who never, even at Natalie’s age, would have thought of doing a thing like that. Why? Yes, why? Well, because she had not that way with a man. Natalie was born to get what shewanted through men. She fed them. She fed their stomachs with food and their egoes with adoration. She liked doing it for she liked men. She already knew more about their simplicities than Vera would ever learn. She knew it all instinctively. And how lovely she was in that apron!
Late the next afternoon he appeared at my desk, sat down, fixed me with a stare and began to whistle Yankee Doodle out of tune.
“Did they take your plan?” I asked him.
He went on whistling. I couldn’t guess what had happened. His expression was unreadable.
“Did they?” I asked again.
He stopped for breath.
“Spit on your hands, Coxey,” he said, as if I were at a distance and needed some encouragement. “We’ve got her by the tail,—by the tail,tail!tail!We’ll tie a knot in the end of it and then we’re off.”
He never told me how he did it. He had no vanity of reminiscence. Long afterward I got it from a junior partner of the firm of Mordecai & Co.
They hardly knew him by sight. He appeared in their office on that hot Summer morning and said simply that he wished to talk Great Midwestern. He would see nobody but Mordecai himself. At mid-day they were still talking, and lunch was brought to Mordecai’s room. One by one the junior members were called in until they were all present.Galt amazed them with his knowledge of the property, its situation and possibilities; even more with his acute understanding of its finances. He gave them information on matters they had never heard of. He gave them original ideas with such frankness and unreserve that at one point Mordecai interrupted.
“Ve cannod vorged vad you zay, Mr. Gald. Id iss zo impordand ve mighd use id. Zare iss no bargain yed. Ve are nod here angels.”
“I can’t help that,” said Galt. “To sell a tune you have to play it.” And he went on.
When Mordecai spoke again the case was lost.
“Vor uss id iss nod,” he said. “Vor uss id iss nod. Ve are bankers. To zese heights ov imagination ve cannod vollow, Mr. Gald. Id iss beautiful. Ve are zorry.”
In the doorway Galt turned and faced them. No one else had moved.
“I’m tired,” he said. “I need some sleep. I’ll come tomorrow.”
The scene was repeated the next day,—Galt talking, the bankers listening, Mordecai lying back in his chair, gazing at the ceiling, tapping the ends of his fingers together, blowing his breath through his short gray beard.
“Vad iss id vor yourself you vand, Mr. Gald?” he asked without moving.
It was Galt’s way when he was winning to presshis luck. He wanted a place on the board of directors. But he demanded more.
“I want to be chairman of the board,” he said.
“Id vould be strange,” said Mordecai, pensively. “Nobody vould understand id. Ooo iss zat Mr. Gald? Vy iss he made chairman? Zo ze people vould talk. Ov ze old directors ooo vould fode vor zat Mr. Gald?”
“Gates and Valentine will vote for me,” said Galt.
“You haf asked zem?”
“I have asked Gates,” said Galt. “I am sure of Valentine.”
Another way of Galt’s was to stop at the peak of his argument, and wait. When the other man in his mind is coming over to your side a word too much will often stop him. Galt knew he was winning. There was a long silence. They began to wonder if Mordecai was asleep. He was a man of few but surprising contradictions. Conservative, cautious, axiomatic, he had on the other side great courage of mind and a latent capacity for daring. He distrusted intuition as a faculty, yet on rare occasions he astonished his associates by arriving most unexpectedly at an intuitive conclusion, knowing it to be such, and acting upon it with fatalistic intensity. On those occasions he was never wrong.
Now he sat up slowly and began to toy with a jeweled paper knife.
“Nobody vill understand id, Mr. Gald....Nobody vill understand id.... Ve accepd your plan. Ve promise all our invluence to use zat you vill be made chairman of ze board,—on one condition. You vill resign iv ve ask id immediately.”
Galt unhesitatingly accepted the condition.
When he was gone Mordecai said to his partners: “Ve haf a gread man discovered. Id iss only zat ve zhall a liddle manage him.”
In September the plan was brought out. Though it caused a good deal of dubious comment the verdict of general opinion was ultimately favorable. The security holders liked it because they were not assessed in the ordinary way. They received, instead, the “privilege” so-called of buying new securities.
When all arrangements were completed the assets of the old Great Midwestern Railroad Company, meaning the railroad itself and all its possessions and appurtenances, were put up at auction. Mordecai & Co., acting as trustees, were the only bidders.
They delivered the assets to the new Great MidwesternRailwayCompany, which had been previously incorporated under the laws of New Jersey. Afterward there was a stockholders’ meeting in Jersey City, in one of those corporation tenements where rooms are hired in rotation by corporations that never live in them but come once a year for an hour or two to transact some formal business and thereby satisfy the fiction of legal residence.
A stockholders’ meeting is itself a fiction. The stockholders are present by proxy. Clerks bring the proxies in suit cases. They are counted and voted in the name of the stockholders under previous instructions. Thus directors are elected. Mordecai & Co. held six tenths of the proxies. Horace Potter, representing himself and the oil crowd whose investment in the old Great Midwestern had been very large, held three tenths. There was no contest; Mordecai & Co. and the oil crowd acted concertedly in all matters. They were allied interests. With one exception the old board was re-elected. The exception was Henry M. Galt, elected in place of a very old man who had been induced by the bankers to withdraw.
In the afternoon of the same day the directors met in the Board Room for the first time since their inglorious exit through Harbinger’s office eleven months before. Valentine was unanimously re-elected president. There was a pause.
“I bropose Mr. Gald vor chairman ov ze board,” lisped Mordecai.
It had all been arranged beforehand. There was no doubt of the outcome. Yet there was an air of constraint about taking the formal step. Evidently in the background there had been a struggle of forces.
Potter said: “Second the nomination.”
The president called for the vote. Four were silent, including Galt. Five voted aye. Valentinenodded his head and the result was recorded: “Chairman of the Board, Henry M. Galt.”
Meanwhile the traffic manager and his three assistants, who had been summoned from Chicago for a conference, were waiting in Harbinger’s office. Galt walked directly there from the Board Room, sat on Harbinger’s desk with his feet in the chair, waived all introductions, and said:
“Now for business. Hereafter all contracts with shippers and all agreements with the traffic managers of other roads will be sent to this office for my approval and signature. They will not be valid otherwise.”
The traffic manager was a florid, contemptuous man who wore costly Chicago clothes and carried a watch in each waistcoat pocket, very far apart. He was one of a ring of traffic managers who waxed fat and arrogant in the exercise of a power that nobody dared or knew how to wrest from them. They sold favors to shippers. They sold railroad stocks for a fall in Wall Street and then got up ruinous rate wars among themselves to make stocks fall. Their ways were predatory, scandalous and uncontrollable. If one railroad tried to discipline its traffic manager the others practiced reprisals and the business of that one railroad would slump; or if a railroad dismissed its traffic manager his successor would be just as bad, or more greedy in fact, having to begin at the beginning to get rich.
At Galt’s speech the traffic manager crossed hislegs with amazement, dropped his arms, slid down in his chair, bowed his neck and assumed the look of an incredulous bull, showing the white under his eyes.
“And who the hell are you?” he asked.
“Me?” said Galt. “I’m the driver.”
“We’ll see,” said the traffic manager. He rose, overturning his chair, and made for the door, meaning of course to see the president.
“You’d better wait a minute,” said Galt. “I’m not through yet.”
He waited.
Then Galt, addressing the assistants, outlined a new policy. What they were to work for was through freight, passing from one end of the system to the other. What they were to avoid was anything they wouldn’t like a railroad to do to them. What they were to believe in was a gang spirit. What they were to get immediately was a doubling of their pay.
Getting down on the floor he advanced slowly with a stealthy step at the traffic manager, who began to quail.
“You choose whether to resign or be fired,” said Galt. “The first assistant will take your place.” He added something in a lower tone that no one else could hear, then stood looking at him fixedly. The traffic manager started, mopped the back of his neck, wavered, and stood quite still.
“Well, it’s damned high time,” he said, at last, by way of mentioning a basic fact. With that he sat down and wrote his resignation.
This incident was an omen. Unconsciously Galt worked on the principle that once a thing has happened it cannot unhappen. The fact of its having happened is original and irrevocable. Every other fact in the universe must adjust itself to that one. Something else may happen the next instant; that is a new happening again.
Mr. Valentine was violently agitated by the traffic manager’s dismissal. If he had been consulted he would have made an issue of it. But there it was. It had happened. The fact created a situation. He might refuse to accept the situation, but he could not extinguish the fact. He fumed and let it pass. Nothing was ever the same again.
Galt consulted nobody. He turned from the traffic man to Harbinger and ordered that the pay of the whole executive staff from the secretary down be doubled. Then he put Harbinger out, took the whole of the room for himself, painted the word “Chairman” on the door and thereafter the Great Midwestern was managed from his desk. There was never a moment’s doubt about it. There was no time to debate his authority. It took all of everybody’s time to keep up with what was happening. He recast the operating department by telegraph in one hour, according to a plan already matured in his mind. He changed the accounting system radically, and much to everyone’s surprise, John Harrier accepted the change with enthusiasm.
Having made a flying trip over the road he sent atelegram ahead of him calling a special meeting of the board of directors. It convened at ten o’clock. Galt came directly from the train, stained, unshaven and a little weary, until he began to talk.
What he proposed was that fifty million dollars be raised at once and spent for new engines, cars, rails and road improvements. Mordecai alone was prepared for this. All the others were daft with astonishment. A railroad only a few days out of bankruptcy to find and spend that sum for improvements! It was preposterous. Not only was the whole board against him, save Mordecai; it was hostile and struck with foreboding. As Galt rose to make his argument I remembered what he had twice said: “I shall be one of ten men in a Board Room. Everything else follows from that.”
This was the first true exhibition of his power to move men’s minds,—a power which nobody understood, which he did not himself understand. Perhaps it was not their minds he moved. Men of strong will often turned from their convictions and voted with him or for what he wanted who afterward, having recovered their own opinions, were unable to say why they had acted that way. He was not eloquent. When he was excited his voice became shrill and irritating. He had no felicity of speech and often lost the grammar of tenses, cases and pronouns. The reasoning was always clear. Hemoulded an argument in the form of a wedge and then hit it a sledge-hammer blow. But it was not the argument alone that did it. As time went on he more and more dispensed with argument and brought the result to pass directly, as a hypnotist with a well trained subject induces the trance without preparation, seemingly by an act of mere intention. It was a power that increased with use until it was like an elemental force and acted at a distance, so that he had only to send an agent with word that this or that should be done, and men did it helplessly. You may say of course that all such later phenomena were owing to a habit of submission, men having accepted the tyranny of his will, only that would not account for the rise of his power from nothing, would it?
In this first case he had back of him no prestige of success. He was still unknown and distrusted by a majority of the ten directors who sat at the board table. And they were not men accustomed to be led. They were themselves leaders. In all Wall Street it would have been impossible to find a more powerful, self-confident group, cold, calculating, unsentimental in business, their faces all cruelly scarred with the marks of success terrifically achieved. Yet as he talked their chemistries changed. The first visible reaction was one of bothered surprise. This was followed by efforts of resistance. The last phase was one of fascination.
His reasons were these: A flood was about to rise. He adduced evidence on that point. Money,materials and labor were plenty and cheap. Never again would it be possible to increase the railroad’s capacity at a cost so low. And a railroad that made itself ready to receive the flood would reap a rich harvest. Finally, the spending of fifty million dollars in this way would give business the impulse it was waiting for,—the little push that sends a great vessel down the ways into the water. The moment was rare and propitious.
“Is it true,” asked Mr. Valentine, “that the chairman on his own responsibility, without consulting the president or the board of directors, has already placed contracts for engines, cars, rails and construction work, before the money has been voted for that purpose, before anybody knows whether it can be raised or not? I have heard so.”
Everyone was startled by the question. Galt was not expecting it.
“That is true,” he said, and waited.
“So we are committed to this expenditure whether we approve it or not?”
“That’s the predicament,” said Galt, recklessly.
Valentine, wholly deceived by his manner, came heavily on.
“Have you any idea what it will cost us to get out of these contracts,—to cancel them?”
“The construction contracts,” Galt said very slowly, “are subject to cancellation without penalty until this midnight. The contracts for engines, cars and rails cannot be cancelled. I’ve baked this pie forthe Great Midwestern. If it doesn’t want it I’ll give the company’s treasurer my check for one hundred thousand dollars and eat it myself.”
“What do you mean?” Horace Potter asked.
“I mean that in consideration of placing the orders when and as I did, on the equipment makers’ empty stomach, I got a special discount of ten per cent. The idea was that the news of our buying as it got around would start a general buying movement. That has happened. Other roads have placed orders behind ours at full prices. We started a stampede. Nobody has been buying equipment for two or three years. Everybody needs some. These contracts can be sold today for at least one hundred thousand dollars.”
“Can we sell fifty millions of bonds?” asked Potter, looking at Mordecai.
“Ve vill guarantee to zell zem,” said Mordecai. “Mr. Gald iss righd. Iv ve reap ve musd zow.”
With no further discussion they voted with Galt, and the feud between Valentine and Galt was openly established.
We were torn by the dilemma of allegiance. Everyone was fond of Valentine. One could not help liking him. And his position was desperately uncomfortable. Galt had reduced him to a mere figurehead, not intentionally perhaps, not by any overt act of hostility certainly, but as an inevitable consequence of his ruthless pursuit of ends. Valentine became obstructive. Galt grew irritable. Theyceased to have any working contact whatever. And although the organization to a man was sorry for Valentine, still there was a turning to Galt, purely as an instinctive reaction to strength. As a railroad executive Valentine for all his experience was inefficient. This had been always tolerantly understood. But now with Galt’s work beginning to produce results in contrast the fact was openly admitted. Galt’s touch was sure, propulsive and unhesitating. And besides, in whatever he did there was an element of fortuity that could not be reasoned about. He not only did the right things; he did them at precisely the right time.
“You remember what I told you a long time ago,” said Harbinger. “He sees things before they happen. My heart breaks for the old man ... but it’s no use.”
The sight of inspired craftsmanship is irresistible to men. The organization wavered between affection for the one and awe of the other and ended by giving its undivided loyalty to Galt, not for love of his eyes but for reasons that were obvious.
One day Mr. Valentine complained that I was unable to serve him and Galt both, and asked me gently if I did not wish to go entirely to Galt. He had guessed my inclinations. So we shook hands and parted. Thereafter my place was in Galt’s room and I attended the board meetings as his private secretary.
His activities were of increasing complexity. A Stock Exchange ticker was installed, for he meant to keep his eye on the stock market; then an automatic printing device on which foreign, domestic and Wall Street news bulletins were flashed by telegraph; then a private switchboard and a number of direct telephones,—one with the house of Mordecai & Co., one with the operating department at Chicago, one with the office of Jonas Gates, several with Stock Exchange brokers and others designated by code letters the terminals of which were his own secret. He worked by no schedule, hated to make fixed appointments, and took people as they came. They waited in the reception room, which of necessity became his ante-chamber. In a little while it was crowded with those who asked for Galt, Galt, Galt. Not one in twenty who entered asked for Valentine, the president. A mixed procession it was,—engineers, equipment makers, brokers, speculators, inventors, contractors and persons summoned suddenly out of the sky whose business one never knew. Never wasting it himself, never permitting anyoneelse to waste it, he had time for everything. He received impressions whole and instantaneously. With people he was abrupt, often rude. He wanted the point first. If a man with whom he meant to do business insisted upon talking beside the point he would say: “Go outside to make your speech and then come back.” He never read a newspaper. He looked at it, sniffed, crumpled it up and cast it from him, all with one gesture. Four or five times a day he ran a yard or two of ticker tape through his fingers and glanced in passing at the news printing machine. Magazines and books were non-existent matter. Yet within the area of his own purposes no fact, no implication of fact, was ever lost.
Meanwhile Great Midwestern stock was slowly rising. One effect of this was to relieve the tension in the Galt household. Gram’ma Galt’s daily question was no longer dreaded.
Having asked it in the usual way at the end of dinner one evening, and Galt having told her the price, she electrified us all by addressing some remarks to me.
“You are with my son a good deal of the time?”
“All day,” I said.
I was looking at her. She frowned a little before speaking, wetted her lips with her tongue, and spoke precisely, in the level, slightly deaf and utterly detached way of old people.
“Do you see that he gets a hot lunch every day?”
“I have never attended to that,” I said.
“Does he, though?” she asked.
“We’ve been very careless about it,” I said. “Sometimes when he’s busy he doesn’t get any.”
“Please see that he gets a hot lunch every day,” she said. “Cold victuals are not good for him. And tea if he will drink it.”
I promised. An embarrassed silence followed. She was not quite through.
“Have you any Great Midwestern stock?” she asked.
“I have a small amount.”
“You must believe in it,” she said, adding after a pause: “We do.”
Then she was through.
Had she alone in that household always believed in Great Midwestern stock, which was to believe in him? Or had she only of a sudden become hopeful? Was it perhaps a flash of premonition, some slight exercise of the power possessed by her son? Long afterward I tried to find out. She shook her head and seemed not to understand what I was talking about. She had forgotten the incident.
The next day I ordered a hot lunch to be sent in and put upon Galt’s desk. He said, “Huh!” But he was not displeased, and ate it. And this became thereafter a fixed habit.
The new equipment had only just begun to move on the new rails when he went before the board witha proposal to raise one hundred millions for more equipment, more rails, elimination of curves and reduction of grades.
“My God, man!” exclaimed Horace Potter. “Do you want to nickel plate this road?”
“It will nickel plate itself if we make it flat and straight,” said Galt.
He was in a stronger position this time. His predictions were coming true. The flood tide was beginning. Everybody saw the signs. Great Midwestern’s earnings were rising faster than those of any competitor, and at the same time its costs were falling because of the character of the new equipment. Therefore profits were increasing. On the other hand, Valentine now was openly hostile, and Jonas Gates whom Galt could have relied upon, was ill. There were nine at the board table.
He argued his case skillfully. For the first time he produced his profile map of the road, showing where the bad grades were and how on account of them freight was hauled at a loss over two divisions of the right of way. To flatten here a certain grade,—selected for purposes of illustration,—would cost five millions of dollars. The cost of moving freight over that division would be thereby reduced one-tenth of a cent per ton per mile. This insignificant sum multiplied by the number of tons moving would mean a saving of a million dollars a year. That was twenty per cent. on the cost of reducing the grade. It was certain.
“Are the contracts let?” asked Valentine, ironically.
“They are ready to be let,” said Galt. “That’s how I know for sure what the cost will be.”
“Let’s vote,” said Potter, suddenly. “He’ll either make or break us. I vote aye.”
The ayes carried it. There were no audible noes. Valentine did not vote.
At this time Galt was laying the foundation for an undisclosed structure. It had to be deep and enduring, for the strain would be tremendous. He poured money into the Great Midwestern with a raging passion. As the earnings increased he plowed them in. With the assistance of the pessimistic treasurer he disguised the returns. Improvements were charged to expenses as if they were repairs. New property was added in the guise of renewing old. This he did for fear the stockholders, if they knew the truth, would begin too soon to clamor for dividends. He spent money only for essential things, that is, in ways that were productive, and neglected everything else, until we had at last the finest transportation machine in the country and the shabbiest general offices. The consequences of this policy, when they began to be realized, were incredible.
In the autumn of 1896 a strange event came suddenly to pass. People were delivered from the Soft Money Plague, not by their own efforts, as theybelieved, but because maladies of the mind are like those of the body. If they are not fatal you are bound to get well. Doctors will take the credit. The Republican party won the election that year on a gold platform, and this is treated historically as a sacred political victory for yellow money; the white money people were hopelessly overturned. But it was wholly a psychic phenomenon still. Why all at once did a majority of people vote in a certain way? To make a change in the laws, you say. Yes, but there the mystery deepens. Immediately after this vote was cast the shape of events began to change with no change whatever in the laws. The law enthroning gold was not enacted until four years later, in 1900, and this was a mere formality, a certificate of cure after the fact. By that time the madness had entirely passed, for natural reasons.
After 1896 the flood tide began to swell and roar. Galt was astride of it,—a colossus emerging from the mist.
The Great Midwestern was finished. He had rebuilt it from end to end. And now for that campaign of expansion which was adumbrated on the map I had studied in his room at home. For these operations he required the active assistance of Mordecai, Gates and Potter. He persuaded them privately and bent them to his views.
I began to notice that he went more frequently tothe stock ticker. His ear was attuned to it delicately. A sudden change in the rhythm of its g-n-i-r-r-r-i-n-g would cause him to leave his desk instantly and go to look at the tape. He was continually wanted on those telephones with the unknown terminals. Speaking into them he would say, “Yes,” ... or ... “No,” ... or ... “How many?” ... or ... “Ten more at once.”
One afternoon he turned from the ticker and did a grotesque pirouette in the middle of the floor.
“Pig in the sack, Coxey. Pig in the sack. Not a squeal out of him.”
“What pig is that?” I asked.
He looked at me shrewdly and said no more.
Under his direction they had been buying control of the Orient & Pacific Railroad in the open market, so skillfully that no one even suspected it. He had not been a speculator all his life for nothing. What set him off at that moment was the sight of the last few thousand shares passing on the tape.
Valentine was in Europe for his annual vacation. Galt called a special meeting of the directors. He talked for an hour on the importance of controlling railroads that could originate traffic. The Great Midwestern did not originate its own traffic. The Orient & Pacific was a far western road with many branches in a rich freight producing area. The Great Midwestern had been getting only one third of its east bound freight, and it was a very profitable kind of freight, moving in solid trains of iced carsat high rates; the other two thirds had been going to competitive lines.
It would be worth nearly fifteen million dollars a year for the Great Midwestern to own the Orient & Pacific and get all of its business. A syndicate had just acquired a controlling interest in Orient & Pacific stock and he, Galt, had got an option on it at an average price of forty dollars a share. The Great Midwestern could buy it at that price. What was the pleasure of the board?
The substance was true; the spirit was rhetorical. The formal pleasure of the board was already prepared. Four members, listening solemnly as to a new thing, had assisted in the purchase. Galt, Potter, Gates and Mordecai were the syndicate. Potter as usual called for the vote, and voted aye. The rest followed.
A brief statement was issued to the Wall Street news bureaus. It produced a strange sensation. An operation of great magnitude had been carried through so adroitly that no one suspected what was taking place, not even the Orient & Pacific Railroad Company’s own bankers. They were mortified unspeakably. More than that, they were startled, and so were all the defenders of wealth and prestige in this field of combat, for they perceived that a master foeman had cast his gage among them. And they scarcely knew his name.
Twenty minutes after our formal statement had been delivered to the Wall Street news bureaus thewaiting room was full of newspaper reporters demanding to see the chairman.
“But what do they want?” asked Galt, angry and petulant. “We’ve made all the statement that’s necessary.”
“They say they must talk to somebody, since it is a matter of public interest. The bankers have referred them here. There’s nobody but you to satisfy them.”
“Tell them there’s nothing more to be said.”
“I’ve told them that. They want to ask you some questions.”
It was his first experience and he dreaded it.
“We’ll have a look at them,” he said. “Let them in.”
As they poured in he scanned their faces. Picking out one, a keen, bald, pugnacious trifle, he asked: “Who are you?”
“I’m from the Evening Post.”
He put the same question to each of the others, and when they were all identified he turned to the first one again.
“Well, Postey, you look so wise, you do the talking. What do you want to know?”
Postey stepped out on the mat and went at him hard. Why had control of the Orient & Pacific been bought? What did it cost? How would it be paid for? Would the road be absorbed by the Great Midwestern or managed independently? Had thenew management been appointed? What were Galt’s plans for the future?
To the first question he responded in general terms. To the second he said: “Is that anybody’s business?”
“It’s the public’s business,” said Postey.
“Oh,” said Galt. “Well, I can’t tell you now. It will appear in the annual report.”
After that he answered each question respectfully, but really told very little, and appeared to enjoy the business so long as Postey did the talking. When he was through the Journal reporter said: “Tell us something about yourself, Mr. Galt. You are spoken of as one of the brilliant new leaders in finance.”
“That’s all,” said Galt, repressing an expletive and turning his back. When they were gone he said to me: “Don’t ever let that Journal man in again. Postey, though, he’s all right.”
All accounts of the interview, so far as that went, were substantially correct. In some papers there was a good deal of silly speculation about Galt. The Journal reporter went further with it than anyone else, described his person and manners vividly, and went out of his way three times to mention in a spirit of innuendo that there was a stock ticker in Galt’s private office, with sinister reference to the fact that before he became chairman of the Great Midwestern he had been a Stock Exchange speculator.
I called Galt’s attention to this.
“Yes,” he said. “We’re out in the open now where they can shoot at us.”
The Orient & Pacific deal brought on the inevitable crisis. Valentine was in Paris. An American correspondent took the news to him at his hotel and asked for comment upon it. He blurted his astonishment. He knew nothing about it, he said, and believed it was untrue. This was unexpected news. The correspondent cabled it to his New York paper together with the statement that Valentine would cut his vacation and return immediately. Wall Street scented a row. It was rumored that Valentine was coming home to depose Galt; also that the purchase of the Orient & Pacific would be stopped by injunction proceedings. Comment unfriendly to Galt began to appear in the financial columns of the newspapers. Great Midwestern stock now was very active in the market. This gave the financial editors their daily text. They spoke of its being manipulated, presumably by insiders, and it filled them with foreboding to remember that the man now apparently in command of this important property was formerly a Stock Exchange speculator, with no railroad experience whatever.
We easily guessed what all this meant. Galt had no friends among the financial editors. He did not know one of them by sight or name. But Valentine knew them well, and so did those bankers who had lost control of the Orient & Pacific. The seed of prejudice is easily sown. There is a natural, herd-likepredisposition to think ill of a newcomer. That makes the soil receptive.
Galt was serene until one day suddenly Jonas Gates died of old age and sin, and then I noticed symptoms of uneasiness. I wondered if he was worried about those papers I had witnessed in his private office on the day the Great Midwestern failed. The executors of course would find them.
On reaching New York Valentine’s first act was to call a meeting of the board of directors. He was blind with humiliation. First he offered a resolution so defining the duties and limiting the powers of the chairman of the board as to make that official subordinate to the president. Then he spoke.
Owing to the sinister aspect of the situation and to the importance of the interests involved he felt himself justified in revealing matters of an extremely confidential character. It had come to his knowledge that there existed between the chairman and the late Jonas Gates a formal agreement by the terms of which Gates pledged himself to support Galt for a place on the board of directors and Galt on his part,in consideration of a large sum of money, undertook first to gain control of the company’s affairs and overthrow the authority of its president.
Would the chairman deny this?
But wait. There was more. In the same way it had come to his knowledge that two other agreements existed as of the same date. One provided that when Galt had gained control of the company’spolicies he would cause it to buy the Orient & Pacific railroad in which Gates was then a large stockholder. The third was a stipulation that a certain part of Gates’ profit on the sale of his Orient & Pacific stock to the Great Midwestern should apply on Galt’s debt to him. Would the chairman deny the existence of these agreements?
Still not waiting for a reply, not expecting one in fact, he offered a second resolution calling for the resignation of Henry M. Galt as chairman of the board; his place to be filled at the pleasure of the directors.
Galt all this time sat with his back to Valentine gazing out the window with a bored expression. His onset was dramatic and unexpected.
With a gesture to circumstances he rose, thrust his hands in his pockets, and began walking slowly to and fro behind Valentine.
“I hate to do it,” he said. “I like Old Dog Tray, here. But he won’t stay off the track. If he wants to get run over I can’t help it.... Those agreements he speaks of,—without saying how he got hold of them,—they are true. I had a lot of G. M. stock when the company went busted. The stock records will show it. I was in a tight place and went to Gates for money to hold on with. He laughed at me. Didn’t believe the stock was worth a dollar, he said. I spent hours with him telling him what I knew about the property, showing him its possibilities. I had made a study of it. I spoke of theOrient & Pacific as a road the G. M. would have to control. ‘That would suit me,’ he said. ‘I’ve just had to take over a large block of that stock for a bad debt.’ I said, ‘All the better. With your stock accounted for it will be easier to buy the rest.’ And so it was. But that’s ahead of the story. Gates said one trouble with the G. M. was Valentine. I knew that, too. The end of it was that I persuaded him. He took everything I had and loaned me the money. The agreement was that the stuff I pledged with him for the loan could be redeemedonlyprovided my plans for the development of the G. M. were realized and certain results appeared. Otherwise he was to keep it. It was the devil’s own bargain. I was in a hole, remember, ... had the bear in my arms and couldn’t let go, ... and you all knew Gates.”
Valentine interrupted. He spoke without looking around.
“One of your plans for the development of the Great Midwestern was the elimination of the president.”
“Exactly,” said Galt. “The president at that time was not president, but receiver. He was receiver for a property he had managed into bankruptcy.... Well, that part of the agreement has been kept. There ain’t any doubt about who’s running the G. M. I’m running it, subject to the approval of the directors. Five minutes after I was elected chairman of this board I took the traffic manager’sresignation in that room out there under threat of having him indicted for theft. He was the president’s friend. I did this without the president’s sanction or knowledge. The place was rotten with graft. We were paying extortionate prices for equipment and materials because the equipment makers and the material men were our friends. Our pockets were wide open. Listen to this!”
From typewritten sheets he read a wrecking indictment of the old Valentine management, setting out how money had been lost and wasted and frittered away, how the company had been overcharged, underpaid and systematically mulcted. He gave exact figures, names, dates and ledger references.
“She’s all right now,” he said. “Clean as a grain of wheat. I’m telling you what was. I don’t intimate that the president took part in plucking the old goose. I don’t say that. He was too busy making public speeches on the miseries of railroads to know what was going on.”
Valentine was not crushed. He showed no sense of guilt. No one believed him guilty in fact. What he represented, tragically and with great dignity, was the crime of obsolence. A stronger man was putting him aside in a new time. He started to speak, but Potter spoke instead.
“I move to strike all this stuff off the record,” he said, “and let matters rest as they are.” He pushed back his chair. Everyone but Valentine arose. There was no vote. Officially nothing had beentransacted. The president was left sitting there alone, with his resolutions in front of him.
All that Galt said was true. It was probably not the whole truth. His transaction with Gates seemed on the face of it too strange to be so briefly and plausibly explained. One fact at least he left out, which was that Gates hated Valentine with a fixation peculiar to cryptic old age. Nobody knew quite why. He was possibly more interested in revenge upon Valentine than in the future of the Great Midwestern. It may be surmised also that he had some intuition of Galt’s latent power, just as Mordecai had, and placed a bet on him at long, safe odds. It was Galt who took the risk. And as for the Orient & Pacific deal, that did not require to be defended on its merits, for there was already a profit in it for the company.
After this Valentine should have resigned. Instead he carried the fight outside, over all persuasion. It became a nasty row. He publicly attacked the company’s purchase of the Orient & Pacific, denounced Galt personally, and solicited the stockholders for proxies to be voted at the annual meeting for directors who would support him. His acquaintance with the financial editors, several of whom were his warm friends, gave him an apparent advantage. All the newspapers were on his side.
But nobody then knew how Galt loved a fight. He poured his essence into it and attained to a kind of lustful ecstacy. His methods were both direct anddevious. To win by a safe margin did not satisfy him. It must be a smashing defeat for his opponent. He, too, appealed to the stockholders. Valentine in one way had played into his hands. His complaint was that Galt had seized the management. Well, if that were true, nobody but Galt could claim credit for the results, and they were beginning to be marvelous. Great Midwestern’s earnings were improving so fast that Galt’s enemies must resort to malicious innuendo. They said he was a wizard with figures, which was true enough, and that possibly the earnings were fictitious, which was not the case at all.
Long before the day of the annual meeting Galt had a large majority of the stockholders with him. Nevertheless, he sent me abroad to solicit the proxies of foreign stockholders. They were easy to get. I was surprised to find that the foreigners, who are extremely shrewd in these matters, with an instinct for men who have the money making gift, had already made up their minds about Galt. They had been watching his work and they were buying Great Midwestern stock on account of it.
When it came to the meeting Valentine had not enough support to elect one director. His humiliation was complete. Then he resigned and Galt was elected in his place, to be both chairman and president.
He was not exultant. For an hour he walked about the office with a brooding, absent air. Thiswas his invariable mood of projection. He was not thinking at all of what had happened. He put on his hat and stood for a minute in the doorway. Looking back he said, “Hold tight, Coxey,” and slammed the door behind him.