Modern Methods of Finance
By L. A. S.
THE story of “Frenzied Finance,” which is being told by Thomas W. Lawson, Boston millionaire, in Everybody’s Magazine, constitutes a forcible commentary upon the words of the apostle James: “Go to now, ye rich men, weep and howl for your miseries that shall come upon you. . . . Ye have heaped treasure together for the last days.” In his account of the make-up and methods of the great Standard Oil machine, Mr. Lawson, who speaks from the knowledge gained by actual participation in its affairs, sets before us the means by which this latter-day heaping up of treasure is accomplished. It comes, as he shows us, through the channel of dishonesty. It is accumulated “loot,” obtained by acts of robbery compared with which the deeds of the most successful bank burglar or train robber pale into utter insignificance. Of the many transactions which engage the activities of the Standard Oil octopus, the particular one of which Mr. Lawson speaks is that of “Amalgamated Copper.” This concern, he tells us, “was begotten in 1898, born in 1899, and in the first five years of its existence plundered the public to the extent of over one hundred millions of dollars.” This was accomplished by unloading upon the public the shares of stock in “Amalgamated,” at a highly fictitious value created by “watering,” and adroit handling of the stock by “Wall Street’s king of manipulators.” Amalgamated Copper, Mr. Lawson tells us, “is a corporation with $155,000,000 capital, 1,550,000 shares of the par value of one hundred dollars each. Its entire stock was sold to the public at an average of $115 per share ($100 to $130), and in 1903 the price had declined to $33 per share.” This concern was built up, it appears, upon the foundation of the great Anaconda gold, silver, and copper mine, of which Marcus Daly was manager and6part owner, two other men being owners with him. Mr. Daly alone, however, knew the real value of the mine, there being hidden veins of ore which made its real worth far greater than its surface valuation. Mr. Daly conceived the idea of buying out his two partners at a price based on the mine’s surface valuation, and thus alone reaping the profits of the rich secret veins which he as manager had been careful to leave unworked, and of whose existence he alone knew. He confided his scheme to the chief executive of Standard Oil, Mr. Henry H. Rogers, who undertook to finance it, with Mr. Daly as silent partner. The surface valuation of the mine, based on the amount of ore ‘in sight,’ was $24,000,000. Some other properties were purchased with this for about $15,000,000, making a total of $39,000,000. These consolidated with the Anaconda made the Amalgamated company, and this was capitalized a few days after the purchase at $75,000,000. Thirty-nine millions were at once swelled to seventy-five millions. On this capitalization the shares were sold to the public; $36,000,000 ‘profits’ being thus realized out of $39,000,000 in a few days’ time. Nor did the $39,000,000 even belong to the few men who realized on it this enormous profit at the public expense, Mr. Lawson says, and promises to show in a future chapter of his story. This is a sample instance of the methods by which unscrupulous men of ability in the modern world of finance, intoxicated with the power of wealth until they become insensible to the claims of honesty and justice, are heaping together treasure for the fires of the approaching day of God. To-day these men walk proudly, in defiance of any human power that would punish them or thwart their designs. But the hour is swiftly nearing when they will come face to face with a new Power concerning which they had not reckoned. Their startled ears will catch the sound of the chariot wheels of the coming King, and then will they ‘weep and howl’ for that which they see coming upon them.