The history of the financial world for the next two months was peculiar. The markets of London and of all Europe were affected by the strange conditions which developed in America. Prices of all classes of securities continued abnormally high. There had been some advance above the figures at which settlements had been made on that memorable 2d of January. Sound dividend paying stocks commanded prices which yielded on the average less than four per cent to the investor. No commercial or industrial depression, no bad news from any quarter, no offerings by holders of stock anxious to unload, had any effect upon Wall Street quotations. But the market was by no means a healthy one. Speculation had almost ceased—perhaps a good thing in itself, but the reason for it had no virtuous significance. Even speculators will not play a game they know they do not understand, and nobody understood the great game which an unknown power was playing quite in its own way in the stock market. There seemed to be no limit to its resources. Careful observers of its operations in{151} the Exchange estimated that it had expended fully $125,000,000 in cash within two months.
Who was this new master of millions, this incognito king of finance? He must be some new-come conqueror. Of that everybody was convinced. All the veteran gladiators of the stock arena had one after another been suspected, but had declared their innocence and had proved it. They were as much in the dark as everybody else.
Even Congress had shown some disposition to search the mystery. A booming stock market is usually considered the best proof of “good times” and general prosperity, but discordant voices raised here and there suggested that it was not altogether an unmixed blessing. So a drag-net inquiry was proposed at Washington, and it probably would have been ordered had not the day of adjournment been so near. The point most dwelt upon in Washington, and in financial circles too, was the marvelous increase in the country’s supply of gold bullion. Fully ten millions per week of what was described as new or foreign gold had passed through the New York Assay Office. The announcement had just been received that a single deposit of nearly $25,000,000 had been made within a few days. This movement of the precious metal nobody had been able to account for. There had been no importations in the ordinary way.{152} On the contrary, the flow of gold had been in a steady though not large stream out of the country, for the most part to London. The news of the last large deposit had led the House of Representatives to ask information upon the subject from the secretary of the treasury. The answer had been that the recent unusual deposits had all been made by a single firm of brokers in New York, but the government did not know who the brokers were acting for or whence the gold came.
The subject was discussed for some hours, with more or less wisdom, in both branches of Congress. Naturally it revived the by no means buried silver question. An increase of fully twenty-five per cent in the country’s supply of gold, the silver advocates argued, should be followed by a proportionate addition to the monetary use of the despised white metal. The mints were working at fullest capacity turning gold into coin under the Free Coinage of Gold Act. Surely a country with such a plethora of gold, in spite of the croakings of the monometallists less than a year ago, could afford to admit some silver to the mints to take its chance with the more valuable metal.
This special pleading had no influence upon the supporters of “sound money” theories. It was solely because silver had finally been demonetized, they pointed out, that the country was able to retain{153} its increasing supply of gold from whatever source it had come. The great increase of the precious metal was not in the government Treasury, but in private hands. It did not strengthen the government credit, which would be ruined if it should open its mints to silver.
Nobody was quite able to demonstrate clearly even to his own satisfaction that either side was entirely right or altogether wrong. So the arguing convinced no one, and nothing came of it. Congress adjourned on the 4th of March without meddling seriously with a matter which it did not understand.
The enigma was not one which the financial world could dismiss or ignore. It bore too vitally upon the welfare of the country. One hundred and twenty-five million dollars in cash from nobody knew where had completely changed the financial situation in two short months. It had been an amazing demonstration of the superior power of actual money over any other form of wealth.
The investment of this $125,000,000 had really increased the quoted market value of stocks and bonds dealt in on the New York Stock Exchange by an aggregate of fully $500,000,000. Western union, for instance, had sold in December below 80; now it commanded 115. The capital of Western union is $100,000,000. The advance in price of this stock{154} therefore represented an increased market value of no less than $35,000,000. But it had required the purchase of very much less than $35,000,000 worth of the stock to effect this advance in price. Many stocks and bonds which had not been touched by the brokers who had managed the bull movement had risen materially merely from sympathy with the rest of the market.
The situation, however, was not sound or satisfactory from any point of view. The market was not self-sustaining. It required continued heavy purchases to maintain the abnormally high range of prices. If this mysterious support should be withdrawn a sharp collapse would be inevitable. Sensible financiers recognized this fact and conservative opinion was momentarily in fear of disaster. This feeling was so widespread that it paralyzed ordinary financial affairs. Naturally it led to such a general unloading of all manner of securities by investment holders that it did not seem possible in the estimation of competent judges that the tremendous burden could be borne much longer.
On the other hand, money became very cheap—on good security. This was an advantage in the commercial world, and a considerable revival of business set in. If the boom in Wall Street and easy money could be maintained for some weeks or months longer,{155} perhaps the country’s general prosperity would warrant the inflation of prices that had taken place under such strange circumstances. But nobody believed it could be maintained, and so it was pointed out that if a collapse must come, the sooner the paralyzing uncertainty was ended the better.
This opinion was very widely held in the early days of March, and it was justified by all visible conditions. The unloading of stocks by investment holders had been heavier than ever for a week or two. The market had been peculiarly irregular for a few days. Stocks that were systematically supported held their own steadily, no matter how freely they were offered by investment holders. But others equally good sagged in price. The influence of sympathy was not strong enough to keep the whole market at a steady level, in face of the prevailing public opinion. So there arose for a time the anomaly of quotations for stocks of known superior intrinsic value at fifteen or twenty per cent lower prices than others of lesser worth. This was abundant proof of the unnatural and threatening condition of affairs. What nonplussed banking men more than anything else was the fact that none of the great quantities of securities which were being taken out of the market were being used, as far as they could ascertain, as collateral for loans. It is usually the case, when an important bull{156} movement in stocks is attempted, that the operators borrow of the banks large sums with which to continue their operations, using the stocks as fast as they are purchased as security for the loans. It was almost incredible that this greatest of bull campaigns could be carried on without resorting to this expedient. It must be, the New York bank men said, that loans were being made in Europe and in other American cities instead of in the metropolis.
But the real mystery was still the enormous deposits of gold made at the New York Assay Office. The reports of these deposits were now watched with greater interest and curiosity than any item of financial news. They increased rather than diminished from week to week. It was noticed that there was a close relation between the amount of these deposits and the pressure to sell stocks in Wall Street. The average weekly deposit of $10,000,000 for the past two months suddenly increased to $25,000,000 the first week in March. The following week the same enormous sum was paid in. It was this fact more than the impregnable defense in the Stock Exchange, which confounded the wiseacres of finance more than ever. They began to waver in their gloomy forebodings. They sought again by every means in their power to penetrate the mystery.
The newspapers tried it too, and some of the solu{157}tions which they offered were amusing and absurd. One enterprising sheet asserted that it had discovered a plot by the Chinese government to revenge itself for the anti-Chinese legislation during the last two or three years in the United States by getting control of the principal railroads and telegraphs of the country, with a view to dictating a change of policy or possibly in preparation for a sudden invasion. Another was confident that the Standard Oil millionaires had undertaken a vast scheme in finance. The story which obtained greatest credence, perhaps, was one which credited a great English syndicate having the Bank of England at its back with a plan for investing some of the millions which had been saved from Argentina and South Africa in really sound “Americans.” There were many speculations about the strength and scope of this syndicate. It was explained that all the gold which made its appearance in the Assay Office was shipped secretly from England, and that the flow of gold from America to London was permitted to take place merely as a blind.
It had come to be pretty generally understood that the enormous gold deposits were being made at the Assay Office by Strong & Co. Of course they were only agents. The newspapers tried direct inquiry at first, and they obtained only polite refusals of information. Indirect attempts to learn the secret were{158} as futile. One enterprising journal set a watch for several days upon the firm’s office. At last they made a discovery. A new covered wagon, heavily built and drawn by a pair of powerful horses, drove up to Strong & Co.’s office just before ten o’clock one morning. The team was quickly backed up to the door and a pair of skids was run out. Two men who were with the driver went inside the office. A few moments later they reappeared, one of them pushing an ordinary railway baggage truck upon which was a small wooden box, apparently very heavy. This was deposited at the bottom of the skid. Then both men, big muscular fellows, pushed and tugged it up the incline into the wagon. Twenty such boxes were brought out and loaded in the same way. Then the three men jumped on the team and drove off, with a knee-nosed reporter in full chase.
The team went by a rather circuitous route to the Assay Office, where the boxes were unloaded and taken inside. The wagon returned to Strong & Co.’s, received another load, and delivered it also at the Assay Office.
Meantime, the energetic reporter had communicated with his office, and a member of the artist staff armed with a kodak had been sent to his assistance. When the wagon was being loaded the second time, one of the mysterious boxes was quickly sketched by the{159} half-concealed penciler and a snap-shot was taken at the team and the teamsters. On leaving the Assay Office the second time the wagon started up town at a rapid trot. The reporter was quite prepared for this move. He jumped into a cab which had waited for him around the corner in Nassau Street and he easily kept the heavy team in sight. Before reaching City Hall Park, two of the men jumped off and disappeared down a side street. The reporter would have liked to follow them, but it seemed more important to keep on after the team. The driver continued north through the Bowery and Third Avenue to East Seventeenth Street. Then he turned east for a couple of blocks and suddenly drove through an open gate into what seemed to be a small private stable. The high board gate was closed as soon as the team entered.
The reporter dismissed his cab and reconnoitered. The team apparently did not belong to a public truckman; for that matter it bore no name or number according to city requirement, and there was no business announcement upon the stable entrance or the adjoining house. There was nothing to be learned by observation, so the newspaper man resolved on a bold stroke. Going to the stable gate, he tried to push it open, and then knocked loudly. He got no response. He repeated the summons two or three times without{160} result. Then he went to the adjoining house and rang the bell. The door was opened presently by a young girl.
“Will you please tell your father that a gentleman from Strong & Co.’s office would like to see him?” remarked the young man in his most urbane manner.
“Yes, sir. Will you walk in?” said the child.
The young man congratulated himself and took a seat in the reception room. Presently the driver of the wagon, looking like a well-to-do man of affairs and not like a truckman, came into the room. He looked at his caller sharply, saying,
“You come from Strong & Co.?”
“Yes, I am not in their office, but I was just too late to see you this morning,” responded the caller with the most business-like air he could assume. “I wanted to see you about the transfer of some bullion—similar work to that which you are doing for Strong & Co.”
“Oh, no, you don’t, young man,” interrupted the other in cold sarcasm as he opened the door. “You were not sent here by Strong & Co., and you don’t want any bullion moved. You are either a newspaper reporter or you are trying to pry into Strong & Co.’s affairs for some Wall Street concern. Good morning,” and the big man made a suggestive motion toward the front door.{161}
The other hesitated a moment, then he wisely abandoned his ruse. “Well, I admit it,” he replied, smiling feebly. “I am a newspaper man and I must learn all I can for the —— about Strong & Co.’s supply of bullion. I saw you carry two wagonloads of gold from their office to the Assay Office this morning and I followed you here. Now, I hope you won’t send me away quite as ignorant as I came.”
The big man allowed his resentment to disappear. He even grinned a little as he said, “That’s right; don’t lie when it won’t do any good. You’ve discovered quite enough already, and I haven’t a word to tell you.”
“At least you will give me your name?”
“Oh, you’re quite welcome to that. My name is John Holmes. Now you must excuse me. Good morning.”
But the failure of the interview did not prevent the —— from having a big story about the great gold mystery next morning. It was a highly embellished yarn told with all the emphasis of double leads and a “scare head.” “The Gold Bugs Discovered” was the black line at the head of the article on the first page, and a two-column picture of “the mysterious wagon loaded with five tons of gold” was a prominent feature of the story. The plain wooden box which the men were struggling to put into the rear of the wagon{162} was reproduced as graphically as possible. There was a picture also of the modest dwelling and stable entrance in East Seventeenth Street, but the reporter’s interview with Driver John Holmes was not faithfully described. And the —— newspaper praised itself fulsomely for having been “the first to discover the true though only partial solution of the great gold mystery which was paralyzing the financial world.”
The next day the same journal established a fresh surveillance not only over Strong & Co.’s banking house but over the Assay Office and the East Seventeenth Street stable. But the heavy covered wagon and the powerful chestnut horses were seen no more either in East Seventeenth Street, at Strong & Co.’s, or at the Assay Office. The enormous deposits of gold continued, however, at regular intervals. Several wagons carried loads of bullion to or from the Assay Office nearly every day, and the watchers were unable to identify the ones which brought the big gold deposits.
The mystery grew deeper than ever. It baffled newspapers and financiers alike. It became an important factor in the banking houses of London and in the continental bourses. The governors of the Bank of England discussed it with only less interest than the Clearing House Committee of the New York banks. Meantime, stocks continued to be bought and{163} sold. The great selling movement of early March gradually ceased. It was estimated that the supporters of the market had been compelled to expend at least $75,000,000 during the first half of the month in order to maintain prices at the prevailing high level. The market did sag a little sometimes, but there was never anything like a break. The conservative fears of a collapse began to subside. A power strong enough to accomplish what had already been done, it was argued, could maintain the present condition of the market without the expenditure of another dollar. It had only to borrow money on the securities it had already accumulated in order to keep control of the market as long as it liked. Furthermore, money was plenty and cheap. That it was new money was proved by the fact that gold coin was coming rapidly into circulation in the Eastern States. Gold was being sent to the mints faster than it could be coined. The export of a few millions in bullion occasionally, seemed to have no effect upon the mysterious supply.
The people who complained were those having money to invest. Those who had sold at a good profit stocks and bonds which they had held for a long time as investments had no right to grumble. But those who wished to invest their savings had a more genuine grievance. Three months before they{164} might have bought safe properties at thirty per cent below present figures. Then their money would have earned six or seven per cent. Now it would scarcely yield four, with the prospect of a substantial shrinkage of the principal as soon as conditions changed, as change they must, in almost everybody’s opinion.
Even though the danger of disaster seemed to have diminished, the conviction was strong in the minds of sound financiers that the financial status was still unhealthy, inasmuch as it was not controlled by natural laws. The financial fate of America for the moment was in the keeping of a single despotic will. As long as this remained true there was no safety. It was useless apparently to complain or rebel.
This feature of the situation was not much discussed in public, but it was the subject of many long private conferences among financial leaders in New York. It was to them an octopus which threatened the very life of trade. Private attempts to learn something about the identity, resources, and intentions of the unknown dictator had all failed, and yet it was felt that some information on these points was essential to genuine business prosperity. This necessity was so great in the estimation of the presidents of the principal banks that they finally resolved upon a bold but straightforward course for solving some of their doubts. They decided to ask the master of these new golden mill{165}ions, through his only known agent, for certain assurances regarding his future plans.
The matter took shape in this way: The secretary of the treasury was asked to come to New York and attend a conference of the members of the Clearing House Committee of the New York banks and two or three private bankers of New York and Philadelphia. He agreed to come. Then a polite request was sent to Messrs. Strong & Co., inviting them to send a representative to the same meeting.
Fifteen men sat in the big leather chairs in the directors’ room of a Wall Street bank at noon on the 21st of March, in response to the above call. John Wharton, the junior partner of a house but little known in the financial world a few weeks before, looked somewhat out of place among the grave and dignified masters of finance who represented as well as any equal number of men could the monetary interests of the nation. But it might have been noticed that the young man was greeted with as much respect and cordiality by every one present as was the almost white-haired secretary of the treasury himself.
No time was wasted in ceremony or purposeless talk. Wharton had been a bit late. When he had been made acquainted with such of the company as he did not know, and two or three others had come{166} in, the chairman of the Clearing House Committee briefly stated the object of the meeting.
“We find ourselves confronted,” he said, “by a peculiar condition of monetary affairs and of the circulating medium. We have had for the past few weeks industrial depression and widespread commercial disaster throughout the country, coupled with a buoyant stock market and a rapidly increasing supply of money. This unnatural situation has come about by means quite unprecedented in our financial history. It is a situation so important in all its bearings upon the material welfare of the whole country that it demands our most earnest consideration. The Clearing House Committee of the New York banks believes it is imperative to prepare some general policy for meeting the crisis which the present anomalous condition threatens. So we have invited you, Mr. Secretary, and you, gentlemen, to meet us here for an informal consultation. We thank you for coming and we hope you will contribute freely of your advice and knowledge. May we hear from you first, Mr. Secretary?”
There had been hardly a hint in the chairman’s brief remarks of the real object of the meeting, but that was scarcely to be expected. Every one waited with interest for what the secretary of the treasury might say. Drawing a memorandum slip from his pocket, that gentleman responded:{167}
“I quite agree with your chairman that the financial phenomena which now absorb the attention of the entire country demand of the managers and students of our monetary system the most careful examination. I thank you for the privilege of meeting you for that purpose. No facts or figures need be quoted to prove the depression which has ruled for months in industrial and commercial circles. With that side of the question we are powerless to deal directly. We must confine ourselves more exclusively to the financial phase of the subject. There we have a strange paradox. You know what has taken place in the stock market. The increase in the quoted market value of bonds and shares listed in the New York Stock Exchange since the middle of December amounts to fully $2,000,000,000. The changes in the circulating medium have been even more surprising. There has been deposited in the government Assay Office in this city for smelting into standard bullion during the past three months no less a sum than $211,000,000. This, as you all know, is something altogether unprecedented. I think I am justified in saying at a private meeting called for this purpose that nearly $200,000,000 of this gold was deposited by a single firm. The work of the mints is just as significant. The amount of gold offered for coinage under the Free Coinage Act during the same period{168} has exceeded $170,000,000. Three months ago the amount of gold in actual circulation in the country was $474,000,000; now it has risen, or it will as soon as the mints have finished the task imposed, to $644,000,000. This means an increase in the total circulating medium of fully ten per cent, or nearly three dollars per capita.
“No such radical change can be made in the currency without seriously disturbing the conditions of trade. I admit that the country is to be congratulated upon the enormous addition suddenly made to its wealth, but it has come too rapidly. There is such a thing as too much gold, just as we have found that there can be too much silver. It cannot be assimilated at such a rate. Values outside of the stock market are showing signs of disturbance. A plethora of money, whether in gold or any other form, must invariably bring enhancement of prices. We have seen it in the stock market; we are beginning to see it in other lines. When it begins to affect standard commodities—the necessaries of life—we shall have a serious state of affairs. The people are hard pushed already. Times are very bad in the ordinary sense. None of this new money is going into the pockets of the masses. It will be no less than a calamity, therefore, if the cost of living is suddenly and unnaturally increased at such a moment.{169}
“Pardon me for dwelling upon what may be regarded as the philanthropic side of the question, but in my opinion it is the most important side. To return to the chairman’s suggestion, I agree that the uncertainty of the present situation is its most demoralizing feature. We do not know whence comes this sudden flood of gold; we are ignorant of what still lies at its source. Naturally we are inclined to believe it must be almost exhausted, because no such treasure was ever known to exist in single hands before. But in my opinion it would be very hasty to come to that conclusion. The hand that can pour so vast a sum into the channels of commerce in three short months is not likely to have exhausted its resources. But the great desideratum now is stability and confidence. These can come only of knowledge. A power as great as we know this to be can afford to give us that knowledge, unless its designs are evil. Nay, more, I affirm it solemnly, it is a humane and patriotic duty upon us to remove if possible the unnecessary incubus of uncertainty which is killing trade. This is a matter in which the government is unfortunately powerless to assist. But I do not believe that the man or men in possession of a treasure apparently greater than any ever before in individual control will turn it into an instrument of evil and oppression.{170}”
There was no mistaking the bearing and object of the secretary’s remarks, although he had made no personal application of them. The representative of Strong & Co. seemed to be a bit uncomfortable when the custodian of the national Treasury had finished, but he did not attempt to break the somewhat embarrassing pause which followed. The silence was allowed to continue but a moment or two. The president of one of the largest down-town banks, a man of genial, energetic, offhand manner, set forth the real object of the meeting in a few terse, pointed sentences.
“I think, gentlemen,” he began briskly, in tones of easy good fellowship, “that we should come to the point at once and deal with it frankly and openly. I have no doubt we all share the sentiments which the secretary of the treasury has expressed. Most of us will agree that he has not exaggerated the importance of securing at least a partial solution of the prevailing gold mystery. We have invited here the only man, as far as we know, who has the key to that mystery. We have no intention of asking him to betray confidences or to disclose professional secrets. We have done an unprecedented thing in asking him to come here under such peculiar circumstances. I trust he will credit us with purity of motive. What we desire is simply this—that he will lay before his principal the views{171} which the secretary of the treasury has expressed, and which I assume we all share, and that he will ask him if he will not give us some assurance which will enable us to manage the vast financial interests intrusted to us on a sound basis. Our request is an unusual one, unjustified, perhaps, according to ordinary business ethics, and one which our unknown friend has a perfect right to refuse. But we base it on something broader than the sordid motives of trade, and I hope it will be received in the spirit in which it is sent. I hope we may hear from Mr. Wharton.”
Every one turned to the youngest man present, and the chairman cordially indorsed the invitation just given. John Wharton addressed the assembled magnates of finance rather diffidently. Each one of them was his senior by many years. Most of them were men of world-wide reputation. He had never been placed in a position which made so severe a test of his tact and discretion. But he was quite equal to the situation. He had little to say, and he said it to the point, and with evident sincerity.
“I will not pretend, gentlemen,” he responded, “that the firm of Strong & Co. did not surmise the probable object of this conference. Your request shall be faithfully transmitted to those for whom we have been acting in the important transactions of the{172} last three months. I am here to give you the strongest assurance which words of mine can convey of the absolute good faith and purity of motive back of those transactions.”
The young man spoke with such emphasis and evident candor that his words carried conviction even to these hard-headed and naturally suspicious men of affairs. They interrupted him with hearty applause and exclamations of satisfaction.
“I am authorized to say further,” he went on, “that any suggestions or requests which you may make, far from being resented, will be received with the utmost respect and with a sincere desire to conserve the best welfare of the country.”
Again the men who were listening now with eager interest interrupted the young speaker with applause.
“These general assurances are about all that I am able to give you at this time. Upon three points I am compelled to be reticent—the source of this gold, its total amount, and the identity of its owner or owners. Regarding the first and second, I am as ignorant as you are. Your request for information about further additions to the bullion supply—for that is what the question amounts to—I, personally, do not consider unreasonable. I will deliver it at once to my principals and you shall have the answer promptly.{173}”
“How soon will it probably be ready?” asked the chairman.
“I know of no reason why you should not have it to-morrow.”
“Why should we not discuss it at a quiet dinner at the Waldorf to-morrow night?” suggested the chairman.
“I must return to Washington by the midnight train to-night, unfortunately,” observed the secretary of the treasury. “Let me say right here that I accept Mr. Wharton’s assurances in the fullest sense. What he has already said has relieved me of a great anxiety, and I want to express to him my hearty thanks for the commendable spirit which he and those he represents show in a matter of vital importance to the nation.” The words were uttered with a warm sincerity which manifestly voiced the spirit of all in the room.
“We all join unreservedly in that sentiment,” was the cordial indorsement of the chairman.
“If haste is important,” Wharton interrupted, “there is no reason why I should not be able to communicate the reply to you this evening.”
“Just the thing,” responded two or three. “Let us have the dinner to-night. If the answer is ready, well and good. If not, we can meet again to-morrow.” And so it was arranged.{174}
The party met again at seven o’ clock that evening in one of the finest private dining-rooms of the most sumptuous of modern hotels. It was not the serious gathering of the morning. Millionaires and other magnates are much like other men. Finance was the one subject tabooed while the dinner was before them, Wharton was rather surprised to find that no delicate attempts to sound his secret knowledge were made by any one. Beyond asking him if he had received a reply to the morning request, no word was said about the matter which most concerned all present until the dinner was finished and the last waiter had closed the door behind him. Then, while the fumes of the best tobacco began to fill the air, the general conversation flagged, and the company turned expectantly toward the head of the table where sat the chairman of the bank committee with the secretary of the treasury at his right and John Wharton at his left.
“There are to be no formalities, gentlemen,” remarked the president pleasantly. “We are all anxious to hear Mr. Wharton’s message, and I will ask him to present it to us, if he is willing, without further delay.”
“Gentlemen, I am glad to bring you a response which I hope will be satisfactory,” responded Wharton. “As it is a matter of considerable importance, I have brought it in writing, and with your permission I will read it to you.{175}”
There was silent assent, and Wharton read as follows:
“We have received the request preferred by you through Mr. Wharton, and also his report of the views expressed at this morning’s conference. We are in heartiest accord with all that was said at that meeting. We affirm again what Mr. Wharton there said in our behalf—that it is our sincere desire to promote in every way in our power the best welfare of the financial, commercial, and industrial world. We recognize completely the vital importance of co?peration to that end, and we accept thankfully the implied offer which the sentiments expressed this morning convey.
“Three months ago the country seemed to be on the verge of great financial and other economic disasters. It appeared to us to be a wise thing to ward off the blow by using a large quantity of gold then in our hands to support the general market for stocks and bonds. It also seemed desirable in our judgment to encourage trade by adding liberally to the current supply of ready money. A free purchase of securities was the only feasible way to accomplish this end. The result has been a very substantial rise in prices. We realize as keenly as anybody can do that a return of public confidence is still essential to a sound and healthy improvement of general trade. We cannot supply that lack. It is more in your power to do so than{176} in ours. We have no doubt you will gladly undertake this duty, provided you are convinced of the honesty of our intentions in pending transactions, and of our ability to execute any policy we may adopt.
“There are difficulties in the way of proving our good faith and demonstrating the further strength of our resources, but we hope they are not insuperable. The greatest obstacle lies in the fact that, for personal and other good reasons, we wish to escape the notoriety that attaches to great wealth. This makes it necessary to conceal also the source of that wealth and its exact amount. Reserving these points, we are ready to co?perate heartily in the best policy the situation may demand. It seems to us advisable, for the present at least, to continue the support of the market on about the existing basis. We shall be glad to receive your advice upon this point. To demonstrate our ability to maintain prices, we will deposit at the government Assay Office within the coming week additional gold to the value of one hundred millions of dollars. We note especially the warning of the secretary of the treasury against the dangers of a too rapid increase in the circulating medium. We shall endeavor to avoid doing serious mischief in that way, and we crave your advice upon that point also.
“Finally, as a partial evidence that we have not{177} undertaken to manipulate the stock market for any speculative or other sordid end, we have authorized Messrs. Strong & Co. to place in the hands of any three men you shall name, stocks and bonds amounting in market value to $100,000,000, to be retained in their charge for one year. We reserve only the right to substitute for the securities deposited at any time others of equal market value.
“If, after considering this statement of our position and intentions, the situation appears to you to warrant it, we shall be glad if you will make known in such a manner as seems best your confidence in the present stability of values and the prospect of future improvement in trade conditions.”
When Wharton finished reading there was absolute silence. All had listened with closest attention from the first word. Curiosity changed to amazement as the statement proceeded. When the full significance of the announcement and the offer it contained dawned upon these men of large affairs, they were apparently overwhelmed by emotions quite strange to them in business dealings. Surprise naturally awoke suspicions. A dominant consideration of the public welfare in great financial operations was uncommon, to say the least. They looked for other motives. They did not know how to take this utterance of a financial power, far greater than any they supposed{178} existed. Such was the train of thought reflected in almost every one of the usually impenetrable faces before any one ventured to speak.
At length the secretary of the treasury broke the silence in tones of quiet emphasis.
“Gentlemen,” he said, “I think we should accept this statement literally and in good faith. It indicates the existence of capital under single control amounting to at least $300,000,000. It is a sum so vast that temptation to increase it by illegitimate or unworthy means seems to me to disappear. It is too great a treasure to further excite human ambition and greed, unless in the mind of an Alexander or a C?sar. I do not believe we are dealing with such a character as either of these. Although we have been told just enough to arouse a very natural curiosity, I think we should respect the reticence which withholds the rest. We can all understand and appreciate the motive for seeking to escape the notoriety which is one of the penalties of great wealth in this country. I hope we shall act in sympathy with the suggestions made in the paper which Mr. Wharton has read.”
The spirit in which the secretary of the treasury received the message seemed to be that of all present after a few minutes. Many questions were asked, bearing chiefly upon the $100,000,000 in reserve of which mention had been made. Most of the bankers{179} present, or the institutions which they represented, were money-lenders, and they regarded the great fund thus disclosed as a serious menace to the money market. Wharton gave personal assurances that this gold should not be used to manipulate rates or work demoralization in any way. It was only in case of abnormal and unhealthy conditions arising, such as serious stringency, that it would be used at all in that field.
Various phases of the situation were talked over in an informal way until midnight had long passed. Then it was decided to meet again for the consideration of the means to be employed for strengthening public confidence, and relieving the general suspense. It was eventually decided to accept the offer of a trusteeship for $100,000,000 in securities, and three banks were named for the purpose. The public effort to strengthen faith in the financial situation took the form of a circular to the national banks issued by the Clearing House Committee and indorsed by the bankers who had attended the private conference. Nothing was made known in this circular about the source and nature of the assurances given to the committee. Their guarantee of the soundness of the situation, coupled with the great deposit of gold which was announced, was quite sufficient to change completely the tone of the market. Copies of the{180} circular were given to the press, and it was published broadcast. The pressure to sell on the Stock Exchange diminished, and the market gave promise of soon becoming natural and self-supporting.