Chapter XLVIII

Panic

On August 4, 1896, the city of Chicago, and for that matter the entire financial world, was startled and amazed by the collapse of American Match, one of the strongest of market securities, and the coincident failure of Messrs. Hull and Stackpole, its ostensible promoters, for twenty millions. As early as eleven o’clock of the preceding day the banking and brokerage world of Chicago, trading in this stock, was fully aware that something untoward was on foot in connection with it. Owing to the high price at which the stock was “protected,” and the need of money to liquidate, blocks of this stock from all parts of the country were being rushed to the market with the hope of realizing before the ultimate break. About the stock exchange, which frowned like a gray fortress at the foot of La Salle Street, all was excitement – as though a giant anthill had been ruthlessly disturbed. Clerks and messengers hurried to and fro in confused and apparently aimless directions. Brokers whose supply of American Match had been apparently exhausted on the previous day now appeared on ’change bright and early, and at the clang of the gong began to offer the stock in sizable lots of from two hundred to five hundred shares. The agents of Hull & Stackpole were in the market, of course, in the front rank of the scrambling, yelling throng, taking up whatever stock appeared at the price they were hoping to maintain. The two promoters were in touch by ’phone and wire not only with those various important personages whom they had induced to enter upon this bull campaign, but with their various clerks and agents on ’change. Naturally, under the circumstances both were in a gloomy frame of mind. This game was no longer moving in those large, easy sweeps which characterize the more favorable aspects of high finance. Sad to relate, as in all the troubled flumes of life where vast currents are compressed in narrow, tortuous spaces, these two men were now concerned chiefly with the momentary care of small but none the less heartbreaking burdens. Where to find fifty thousand to take care of this or that burden of stock which was momentarily falling upon them? They were as two men called upon, with their limited hands and strength, to seal up the ever-increasing crevices of a dike beyond which raged a mountainous and destructive sea.

At eleven o’clock Mr. Phineas Hull rose from the chair which sat before his solid mahogany desk, and confronted his partner.

“I’ll tell you, Ben,” he said, “I’m afraid we can’t make this. We’ve hypothecated so much of this stock around town that we can’t possibly tell who’s doing what. I know as well as I’m standing on this floor that someone, I can’t say which one, is selling us out. You don’t suppose it could be Cowperwood or any of those people he sent to us, do you?”

Stackpole, worn by his experiences of the past few weeks, was inclined to be irritable.

“How should I know, Phineas?” he inquired, scowling in troubled thought. “I don’t think so. I didn’t notice any signs that they were interested in stock-gambling. Anyhow, we had to have the money in some form. Anyone of the whole crowd is apt to get frightened now at any moment and throw the whole thing over. We’re in a tight place, that’s plain.”

For the fortieth time he plucked at a too-tight collar and pulled up his shirt-sleeves, for it was stifling, and he was coatless and waistcoatless. Just then Mr. Hull’s telephone bell rang – the one connecting with the firm’s private office on ’change, and the latter jumped to seize the receiver.

“Yes?” he inquired, irritably.

“Two thousand shares of American offered at two-twenty! Shall I take them?”

The man who was ’phoning was in sight of another man who stood at the railing of the brokers’ gallery overlooking “the pit,” or central room of the stock exchange, and who instantly transferred any sign he might receive to the man on the floor. So Mr. Hull’s “yea” or “nay” would be almost instantly transmuted into a cash transaction on ’change.

“What do you think of that?” asked Hull of Stackpole, putting his hand over the receiver’s mouth, his right eyelid drooping heavier than ever. “Two thousand more to take up! Where d’you suppose they are coming from? Tch!”

“Well, the bottom’s out, that’s all,” replied Stackpole, heavily and gutturally. “We can’t do what we can’t do. I say this, though: support it at two-twenty until three o’clock. Then we’ll figure up where we stand and what we owe. And meanwhile I’ll see what I can do. If the banks won’t help us and Arneel and that crowd want to get from under, we’ll fail, that’s all; but not before I’ve had one more try, by Jericho! They may not help us, but – ”

Actually Mr. Stackpole did not see what was to be done unless Messrs. Hand, Schryhart, Merrill, and Arneel were willing to risk much more money, but it grieved and angered him to think he and Hull should be thus left to sink without a sigh. He had tried Kaffrath, Videra, and Bailey, but they were adamant. Thus cogitating, Stackpole put on his wide-brimmed straw hat and went out. It was nearly ninety-six in the shade. The granite and asphalt pavements of the down-town district reflected a dry, Turkishbath-room heat. There was no air to speak of. The sky was a burning, milky blue, with the sun gleaming feverishly upon the upper walls of the tall buildings.

Mr. Hand, in his seventh-story suite of offices in the Rookery Building, was suffering from the heat, but much more from mental perturbation. Though not a stingy or penurious man, it was still true that of all earthly things he suffered most from a financial loss. How often had he seen chance or miscalculation sweep apparently strong and valiant men into the limbo of the useless and forgotten! Since the alienation of his wife’s affections by Cowperwood, he had scarcely any interest in the world outside his large financial holdings, which included profitable investments in a half-hundred companies. But they must pay, pay, pay heavily in interest – all of them – and the thought that one of them might become a failure or a drain on his resources was enough to give him an almost physical sensation of dissatisfaction and unrest, a sort of spiritual and mental nausea which would cling to him for days and days or until he had surmounted the difficulty. Mr. Hand had no least corner in his heart for failure.

As a matter of fact, the situation in regard to American Match had reached such proportions as to be almost numbing. Aside from the fifteen thousand shares which Messrs. Hull and Stackpole had originally set aside for themselves, Hand, Arneel, Schryhart, and Merrill had purchased five thousand shares each at forty, but had since been compelled to sustain the market to the extent of over five thousand shares more each, at prices ranging from one-twenty to two-twenty, the largest blocks of shares having been bought at the latter figure. Actually Hand was caught for nearly one million five hundred thousand dollars, and his soul was as gray as a bat’s wing. At fifty-seven years of age men who are used only to the most successful financial calculations and the credit that goes with unerring judgment dread to be made a mark by chance or fate. It opens the way for comment on their possibly failing vitality or judgment. And so Mr. Hand sat on this hot August afternoon, ensconced in a large carved mahogany chair in the inner recesses of his inner offices, and brooded. Only this morning, in the face of a falling market, he would have sold out openly had he not been deterred by telephone messages from Arneel and Schryhart suggesting the advisability of a pool conference before any action was taken. Come what might on the morrow, he was determined to quit unless he saw some clear way out – to be shut of the whole thing unless the ingenuity of Stackpole and Hull should discover a way of sustaining the market without his aid. While he was meditating on how this was to be done Mr. Stackpole appeared, pale, gloomy, wet with perspiration.

“Well, Mr. Hand,” he exclaimed, wearily, “I’ve done all I can. Hull and I have kept the market fairly stable so far. You saw what happened between ten and eleven this morning. The jig’s up. We’ve borrowed our last dollar and hypothecated our last share. My personal fortune has gone into the balance, and so has Hull’s. Someone of the outside stockholders, or all of them, are cutting the ground from under us. Fourteen thousand shares since ten o’clock this morning! That tells the story. It can’t be done just now – not unless you gentlemen are prepared to go much further than you have yet gone. If we could organize a pool to take care of fifteen thousand more shares – ”

Mr. Stackpole paused, for Mr. Hand was holding up a fat, pink digit.

“No more of that,” he was saying, solemnly. “It can’t be done. I, for one, won’t sink another dollar in this proposition at this time. I’d rather throw what I have on the market and take what I can get. I am sure the others feel the same way.”

Mr. Hand, to play safe, had hypothecated nearly all his shares with various banks in order to release his money for other purposes, and he knew he would not dare to throw over all his holdings, just as he knew he would have to make good at the figure at which they had been margined. But it was a fine threat to make.

Mr. Stackpole stared ox-like at Mr. Hand.

“Very well,” he said, “I might as well go back, then, and post a notice on our front door. We bought fourteen thousand shares and held the market where it is, but we haven’t a dollar to pay for them with. Unless the banks or someone will take them over for us we’re gone – we’re bankrupt.”

Mr. Hand, who knew that if Mr. Stackpole carried out this decision it meant the loss of his one million five hundred thousand, halted mentally. “Have you been to all the banks?” he asked. “What does Lawrence, of the Prairie National, have to say?”

“It’s the same with all of them,” replied Stackpole, now quite desperate, “as it is with you. They have all they can carry – every one. It’s this damned silver agitation – that’s it, and nothing else. There’s nothing the matter with this stock. It will right itself in a few months. It’s sure to.”

“Will it?” commented Mr. Hand, sourly. “That depends on what happens next November.” (He was referring to the coming national election.)

“Yes, I know,” sighed Mr. Stackpole, seeing that it was a condition, and not a theory, that confronted him. Then, suddenly clenching his right hand, he exclaimed, “Damn that upstart!” (He was thinking of the “Apostle of Free Silver.”) “He’s the cause of all this. Well, if there’s nothing to be done I might as well be going. There’s all those shares we bought to-day which we ought to be able to hypothecate with somebody. It would be something if we could get even a hundred and twenty on them.”

“Very true,” replied Hand. “I wish it could be done. I, personally, cannot sink any more money. But why don’t you go and see Schryhart and Arneel? I’ve been talking to them, and they seem to be in a position similar to my own; but if they are willing to confer, I am. I don’t see what’s to be done, but it may be that all of us together might arrange some way of heading off the slaughter of the stock to-morrow. I don’t know. If only we don’t have to suffer too great a decline.”

Mr. Hand was thinking that Messrs. Hull and Stackpole might be forced to part with all their remaining holdings at fifty cents on the dollar or less. Then if it could possibly be taken and carried by the united banks for them (Schryhart, himself, Arneel) and sold at a profit later, he and his associates might recoup some of their losses. The local banks at the behest of the big quadrumvirate might be coerced into straining their resources still further. But how was this to be done? How, indeed?

It was Schryhart who, in pumping and digging at Stackpole when he finally arrived there, managed to extract from him the truth in regard to his visit to Cowperwood. As a matter of fact, Schryhart himself had been guilty this very day of having thrown two thousand shares of American Match on the market unknown to his confrères. Naturally, he was eager to learn whether Stackpole or anyone else had the least suspicion that he was involved. As a consequence he questioned Stackpole closely, and the latter, being anxious as to the outcome of his own interests, was not unwilling to make a clean breast. He had the justification in his own mind that the quadrumvirate had been ready to desert him anyhow. <…>

Schryhart’s idea, like that of Hand, was to cause Hull & Stackpole to relinquish all their holdings for nothing to the banks in order that, under pressure, the latter might carry the stocks he and the others had hypothecated with them until such a time as the company might be organized at a profit. At the same time he was intensely resentful against Cowperwood for having by any fluke of circumstance reaped so large a profit as he must have done. Plainly, the present crisis had something to do with him. Schryhart was quick to call up Hand and Arneel, after Stackpole had gone, suggesting a conference, and together, an hour later, at Arneel’s office, they foregathered along with Merrill to discuss this new and very interesting development. As a matter of fact, during the course of the afternoon all of these gentlemen had been growing more and more uneasy. Not that between them they were not eminently capable of taking care of their own losses, but the sympathetic effect of such a failure as this (twenty million dollars), to say nothing of its reaction upon the honor of themselves and the city as a financial center, was a most unsatisfactory if not disastrous thing to contemplate, and now this matter of Cowperwood’s having gained handsomely by it all was added to their misery. Both Hand and Arneel growled in opposition when they heard, and Merrill meditated, as he usually did, on the wonder of Cowperwood’s subtlety. He could not help liking him.

There is a sort of municipal pride latent in the bosoms of most members of a really thriving community which often comes to the surface under the most trying circumstances. These four men were by no means an exception to this rule. Messrs. Schryhart, Hand, Arneel, and Merrill were concerned as to the good name of Chicago and their united standing in the eyes of Eastern financiers. It was a sad blow to them to think that the one great enterprise they had recently engineered – a foil to some of the immense affairs which had recently had their geneses in New York and elsewhere – should have come to so untimely an end. Chicago finance really should not be put to shame in this fashion if it could be avoided. So that when Mr. Schryhart arrived, quite warm and disturbed, and related in detail what he had just learned, his friends listened to him with eager and wary ears.

It was now between five and six o’clock in the afternoon and still blazing outside, though the walls of the buildings on the opposite side of the street were a cool gray, picked out with pools of black shadow. A newsboy’s strident voice was heard here and there calling an extra, mingled with the sound of homing feet and street-cars – Cowperwood’s street-cars.

“I’ll tell you what it is,” said Schryhart, finally. “It seems to me we have stood just about enough of this man’s beggarly interference. I’ll admit that neither Hull nor Stackpole had any right to go to him. They laid themselves and us open to just such a trick as has been worked in this case.” Mr. Schryhart was righteously incisive, cold, immaculate, waspish. “At the same time,” he continued, “any other moneyed man of equal standing with ourselves would have had the courtesy to confer with us and give us, or at least our banks, an opportunity for taking over these securities. He would have come to our aid for Chicago’s sake. He had no occasion for throwing these stocks on the market, considering the state of things. He knows very well what the effect of their failure will be. The whole city is involved, but it’s little he cares. Mr. Stackpole tells me that he had an express understanding with him, or, rather, with the men who it is plain have been representing him, that not a single share of this stock was to be thrown on the market. As it is, I venture to say not a single share of it is to be found anywhere in any of their safes. I can sympathize to a certain extent with poor Stackpole. His position, of course, was very trying. But there is no excuse – none in the world – for such a stroke of trickery on Cowperwood’s part. It’s just as we’ve known all along – the man is nothing but a wrecker. We certainly ought to find some method of ending his career here if possible.”

Mr. Schryhart kicked out his well-rounded legs, adjusted his soft-roll collar, and smoothed his short, crisp, wiry, now blackish-gray mustache. His black eyes flashed an undying hate.

At this point Mr. Arneel, with a cogency of reasoning which did not at the moment appear on the surface, inquired: “Do any of you happen to know anything in particular about the state of Mr. Cowperwood’s finances at present?” <…>

“We are not obligated to Mr. Cowperwood for anything so far as I know,” continued Mr. Arneel, after a slight but somewhat portentous pause. “As Mr. Schryhart has suggested here to-day, he seems to have a tendency to interfere and disturb on every occasion. Apparently he stands obligated to the various banks in the sums we have mentioned. Why shouldn’t his loans be called? It would help strengthen the local banks, and possibly permit them to aid in meeting this situation for us. While he might be in a position to retaliate, I doubt it.”

Mr. Arneel had no personal opposition to Cowperwood – none, at least, of a deep-seated character. At the same time Hand, Merrill, and Schryhart were his friends. In him, they felt, centered the financial leadership of the city. The rise of Cowperwood, his Napoleonic airs, threatened this. As Mr. Arneel talked he never raised his eyes from the desk where he was sitting. He merely drummed solemnly on the surface with his fingers. The others contemplated him a little tensely, catching quite clearly the drift of his proposal.

“An excellent idea – excellent!” exclaimed Schryhart. “I will join in any programme that looks to the elimination of this man. The present situation may be just what is needed to accomplish this. Anyhow, it may help to solve our difficulty. If so, it will certainly be a case of good coming out of evil.”

“I see no reason why these loans should not be called,” Hand commented. “I’m willing to meet the situation on that basis.”

“And I have no particular objection,” said Merrill. “I think, however, it would be only fair to give as much notice as possible of any decision we may reach,” he added.

“Why not send for the various bankers now,” suggested Schryhart, “and find out exactly where he stands, and how much it will take to carry Hull & Stackpole? Then we can inform Mr. Cowperwood of what we propose to do.” <…>

The library of Mr. Arneel’s home was fixed upon as the most suitable rendezvous. Telephones were forthwith set ringing and messengers and telegrams despatched in order that the subsidiary financial luminaries and the watch-dogs of the various local treasuries might come and, as it were, put their seal on this secret decision, which it was obviously presumed no minor official or luminary would have the temerity to gainsay.