














Transcriber's Note: Minor typographical errors have been corrected
without note. Irregularities and inconsistencies in the text have
been retained as printed. Words printed in italics are noted with
underscores: _italics_.



MY ADVENTURES WITH YOUR MONEY


BY GEORGE GRAHAM RICE


RICHARD G. BADGER
THE GORHAM PRESS
BOSTON

Copyright, 1911, by The Ridgway Company

Copyright, 1913, by Richard G. Badger

All rights reserved

THE GORHAM PRESS, BOSTON, MASS., U.S.A.




To The American Damphool Speculator, surnamed the American Sucker,
otherwise described herein as The Thinker Who Thinks He Knows But
Doesn't--_greetings_!

This book is for you! Read as you run, and may you run as you read.

G. G. R.

NEW YORK, March 15, 1913.




CONTENTS


                                                                 PAGE

   I THE RISE AND FALL OF MAXIM & GAY                              11

    _The Birth of an Idea to Coin Money._
    _The Higher Mathematics of the Operation._
    _How "The One Best Bet" Was Coined._
    _Real Inside Turf Information._
    _The Public Asks to Be Mystified._
    _Prestige Restored by a Clerk's Ruse._
    _A Boastful Race Player Gives Aid._
    _Fortune Changes Her Mood and Smiles Again._
    _The Kentucky Colonel Falls in Line._
    _Betting the Public's Money at Great Profit._
    _$130,000 Is Lost and Won in a Day._
    _A Disastrous Newspaper Wind-up._


  II MINING FINANCE AT GOLDFIELD                                   46

    _A Partnership of Pure Nerve._
    _Bucking the Tiger on the Desert._
    _Bidding $3,000,000 When Broke._
    _Millions in the Vista Held No Charms._
    _"Human Interest" Versus Technical Mining._
    _Beginning the Advertising Business._
    _Some Advertising that Paid._
    _Building Gold Mines with Publicity._
    _Hair-Raising Stories for Distant Readers._
    _The Mercury of Speculation._
    _The Birth of Bullfrog._
    _Enter, Charles M. Schwab._
    _Why the Bottom Fell Out._
    _How About the Public's Chances?_
    _Jumping Jack Manhattan._


 III THE BREWING OF A SATURNALIA OF SPECULATION                    89

    _Trying It on the Stray Dog._
    _Advertising for Thinkers._
    _Yes, "Business Is Business."_
    _Fortunes that Were Missed._
    _The Tale of Bullfrog Rush._
    _Prize Fights and Mining Promotion._
    _The Year of Big Figures._
    _The Story of Goldfield Consolidated._
    _At the Height of the Frenzy._


  IV THE GREENWATER FIASCO                                        133

    _Getting Into the Game._
    _All the Copper in the World._
    _The Collapse of Greenwater._
    _The Shame and the Blame._


   V ON THE EVE OF THE GREAT GOLDFIELD SMASH                      144

    _The Rise of Wingfield and Nipon._
    _The Winnings of a Tenderfoot._
    _I Am Landed High and Dry._
    _The Beginning of the Raid._
    _Some Pertinent Personalities._
    _The Time When Money Talks._
    _Clouds in the Western Sky._
    _From Credit to Crash._
    _Down with the Sullivan Trust Company._
    _Some Hindsight that Came Too Late._


  VI NIPISSING AND GOLDFIELD CON                                  179

    _An Orgy in Market Manipulation._
    _The Guggenheims Enter Nipissing._
    _Nipissing on the Toboggan._
    _Who Got the $75,000,000?_
    _The Wonder Mining-Camp Stampede._
    _Teague Attacks Senator Nixon._
    "_Calling for a Show-Down._"
    _Manipulating Goldfield Con._
    _Enter, Nat. C. Goodwin & Co._
    _The Story of the Goldfield Labor "Riots."_
    _The Death of Governor Sparks._


 VII RAWHIDE                                                      219

    _Real Gold at Rawhide._
    _The Rawhide Coalition Mines Company._
    _A Race of Gamblers._


VIII THE PRESS AGENT AND THE PUBLIC'S MONEY                       227

    _Publicity via Elinor Glyn._
    _"Al" Miller's Siege._
    _The Funeral Oration for Riley Grannan._
    _Among the "Big Fellows."_
    _The Reverse English._
    _The Power of the Public Print._
    _Rawhide Again._


  IX THE WALL STREET GAME                                         264

    _Good Big Fish vs. Bad Little Fish._
    _Righteous Wall Street and the "Sucker" Public._
    _The Marketing of Mining Stock._
    _I Buck the Wall Street Game._
    _The "Double-Crossing" of Rawhide Coalition._
    _"Inside" Market Support._


   X ENTER, B. H. SCHEFTELS AND COMPANY                           288

    _More Truth on the "Mining Financial News."_
    _The Scheftels Principles._
    _The Scheftels Company Against Margin Trading._


  XI A FIGHT TO THE DEATH                                         308

    _The Firing of the First Guns._
    _The Story of Ely Central._
    _The Assault on Ely Central._
    _The Clash of Battle._
    _A Bombshell in the Enemy's Camp._
    _A Government Raid Is Rumored._
    _The Raid on B. H. Scheftels and Co._
    _A Tool's Confession._
    _The Guggenheims._


 XII THE LESSON OF IT ALL                                         362




FOREWORD


You are a member of a race of gamblers. The instinct to speculate
dominates you. You feel that you simply must take a chance. You can't
win, yet you are going to speculate and to continue to speculate--and
to lose. Lotteries, faro, roulette, and horse-race betting being
illegal, you play the stock game. In the stock game the cards
(quotations or market fluctuations) are shuffled and riffled and
STACKED behind your back, AFTER the dealer (the manipulator) knows on
what side you have placed your bet, and you haven't got a chance. When
you and your brother gamblers are long of stocks in thinly margined
accounts with brokers, the market is manipulated down, and when you
are short of them, the prices are manipulated up.

You are on guard against the Get-Rich-Quick man, and you flatter
yourself that you can detect his wiles at a glance. You can--one kind
of Get-Rich-Quick operator. But not the dangerous kind. Modern
Get-Rich-Quick Finance is insidious and unfrenzied. It is practised by
the highest, and you are probably one of its easy victims.

One class of Get-Rich-Quick operator uses crude methods, has little
standing in the community, operates with comparatively small capital,
and caters to those who do not think and have only small resources. He
is not particularly dangerous.

The other uses scientific methods--so scientific, indeed, that only
men "on the inside" readily recognize them; occupies a pedestal in the
community; is generally a man of excellent financial standing, a
member of a stock exchange; employs large capital; appeals to thinkers
or those who flatter themselves that they know the difference between
a gold bar and a gold brick, and seeks to separate from their money
all classes and conditions of men and women with accumulations large
or small.

The United States Government during the past few years, at the behest
of the big fellow, who seeks a monopoly of the game, has been raiding
the little fellow--the crude operator whose power to injure is as
nothing compared to the ravages that have been wrought by the
activities of his really formidable prototype.

I have a message to communicate to every investor and speculator, a
story to tell of my experience through the great Goldfield, Bullfrog,
Manhattan and Greenwater mining booms in Nevada of 1905-1908, in which
the public lost upwards of $200,000,000, and of a series of great
mining-stock promotions in Wall Street and other American financial
centers, in which the public sank $350,000,000 in 1910. The narration
of the facts demonstrates that the Government's Get-Rich-Quick crusade
has made it less easy for some of the small offenders to thrive, but
that the transcendentally greater culprits are at this very moment
plucking the public to a fare-you-well, and that the Government has
not lifted a finger against them.

No man, except a common thief, ever started out to promote a mining
company or any other company that he was convinced at the outset had
no merit; and the work of common thieves is quickly recognized and the
offenders are easily apprehended.

The more dangerous malefactors are the men in high places who take a
good property, overcapitalize it, appraise its value at many times
what it is worth, use artful publicity and market methods to beguile
the thinking public into believing the stock is worth par or more, and
foist it on investors at a figure which robs them of great sums of
money. There are more than a million victims of this practice in the
United States.

After years of experience behind the scenes, the conclusion is forced
upon me that the instinct to speculate is so strong in American men
and women that they choose to "take a chance" regardless of the fact
that at the outset they already half-realize they eventually must
lose.

Myself, in boyhood, a victim of the instinct to speculate, I, years
afterward, at the age of 30, learned to cater to the insatiable desire
in others. I spent fortunes for advertising and wrote my own
advertisements. I constructed on big lines powerful dollar-making
machinery that succeeded in getting the money for my enterprises, and
I was generally my own manager. Ten years of hard work in a field in
which I labored day and night has disclosed to me that the instinct to
gamble is all-conquering among women as well as men--the rich and the
poor, the young and the old, the wise and the foolish, the successful
and the unsuccessful.

Worse, if you have lost some of your hard-earned money in speculation,
your case is undoubtedly incurable, because you have a fresh
incentive, namely, to "get even." Experience, therefore, will teach
you nothing. The professional gambler's aphorism, "You can't kill a
sucker," had its genesis in a recognition of this fact, and now stock
promoters and manipulators of the multi-millionaire class subscribe to
its truth and on it predicate their operations.

Nearly everybody speculates (gambles); few win. Where does the money
go that is lost? Who gets it?

Are you aware that in catering to your instinct to "invest," methods
to get you to part with your money are so artfully and deftly applied
by the highest that they deceive you completely? Could you imagine it
to be a fact that in nearly all cases when you find you are ready to
embark on a given speculation, ways and means that are almost
scientific in their insidiousness have been used upon you?

What are these impalpable yet cunningly devised tricks that are
calculated to fool the wisest and which landed YOU? I narrate them
herein.

What are your chances of winning in any speculation where you play
another man's game? HAVE YOU ANY CHANCE AT ALL?

In playing the horse races in years past you had only one chance if
you persisted--YOU COULD LOSE.

In margin-trading on the New York Stock Exchange, New York Curb,
Boston Stock Exchange, Boston Curb, Chicago Board of Trade, Chicago
Stock Exchange, New York Cotton Exchange and kindred institutions,
experience among stock-brokers proves that if you stick to the game
you have only one chance--YOU CAN LOSE.

In railroad, industrial and mining-stock speculation, where you buy
the shares outright and hold them for stock market profits, you have
two chances; if you are of the average and your operations are for a
period continuous--YOU CAN BREAK EVEN IF YOU ARE VERY LUCKY, OR LOSE
IF YOU ARE NOT; and in justice to myself I must be allowed to explain
that I had a much better opinion of the public's chances ten years ago
than I have now, and that experience on the inside has taught me this.

The moral to the investor and speculator is "Never Again!" And yet you
WILL speculate again. Experience teaches that so long as the chance of
speculative gain exists in any enterprise, so long will the American
public continue in its efforts to appease its speculative appetite.

G. G. R.




MY ADVENTURES WITH YOUR MONEY




CHAPTER I

THE RISE AND FALL OF MAXIM & GAY


The place was New York. The time, March, 1901. My age was thirty. My
cash capital, tightly placed in my pocket, was $7.30, and I had no
other external resources. I was a rover and out of a job.

Since August of the year before I had been loafing. My last position,
seven months before, was that of a reporter for the New Orleans
_Times-Democrat_. My last newspaper assignment was the great Galveston
cyclonic hurricane in which 15,000 lives were lost and $100,000,000 in
property was destroyed. I covered that catastrophe for the New York
_Herald_ and other journals as well as for the New Orleans newspaper.
It was a "beat" and I netted a big sum for a few days' hard work, but
the money had all been spent for subsistence.

At the corner of Fortieth Street and Broadway I met an old-time
racetrack friend, Dave Campbell. His face wore a hardy, healthful hue,
but he bore unmistakable evidence of being down on his luck.

"Buy me a drink," he said.

"I've got thirty cents in change and I must have a cigar," I answered,
"and you know I like good ones."

"Well, I'll take a beer," he said, "and you can buy yourself a
perfecto."

No sooner said than done. The cigar and the drink were forthcoming. We
sat down. It was a café with the regulation news-ticker near the lunch
counter.

"Do you still bet on the horses?" asked Campbell.

"No, I haven't had a bet down in more than a year," I answered.

"Well, here's a letter I just received from Frank Mead at New Orleans,
and it ought to make you some money," he said.

"There's a 'pig' down here named Silver Coin," the letter said, "that
has been raced for work recently. I think he's fit and ready and that
within the next few days they will place him in a race that he can
win, and he will bring home the coonskins at odds of 10 to 1."

I had seen letters like that before, but my interest was aroused. I
picked up a copy of the New York _Morning Telegraph_ from the table.
Turning the pages, I noticed a number of tipsters' advertisements, all
claiming they were continually giving the public winners on the races.


THE BIRTH OF AN IDEA TO COIN MONEY

"Do these people make money?" I asked Campbell.

"Yes, they must," he answered, "because the ads have been running
every day for months and months."

"Well, if poorly written ads like these can make money, what would
well-written ads accomplish, and particularly from an information
bureau which might give real information?" I queried. A moment later
the ticker began its click, click, click.

"Here come the entries," said Campbell.

He went to the tape and ejaculated, "By Jiminy! Here's Silver Coin
entered for to-morrow."

The coincidence stirred me.

"I've got an idea for an advertisement," I said. "Get me a sheet of
paper."

It was supplied. I wrote:

    +---------------------------+
    |  Bet Your Last Dollar On  |
    |      SILVER COIN          |
    |          To-day           |
    |      At New Orleans       |
    |  He Will Win At 10 to 1   |
    +---------------------------+

And then I faltered. "I must have a name for the signature," I said.

I picked up the newspaper again and turned to the page containing the
entries for that day at the New Orleans races. A sire's name was given
as St. Maxim.

"Maxim!" I said. "That's a good name. I'll use it. Now for one that
will make euphony."

"Gay!" said Campbell. "How's that? It's sporty."

Thereupon I created the trade-mark of Maxim & Gay.

In a postscript to this advertisement I stated that the usual terms
for this information were $5 per day and $25 per week, and that the
day after next Maxim & Gay would have another selection, which would
not be given away free.

"Maxim & Gay" were without an address. Half a block away on Broadway,
at a real estate office, we were informed that upstairs they had some
rooms to let. I engaged one of these for $15 a month--no pay for a
week. Two tin signs were ordered painted, bearing the inscription,
"Maxim & Gay." One was placed at the entrance of the building and the
other on the door upstairs. The sign-painter extended credit.

Before bidding me adieu, Campbell exclaimed of a sudden:

"By golly! I can't understand that scheme. How can you make any money
giving out that Silver Coin tip for nothing?"

"Watch and see!" I said.

Around to the _Morning Telegraph_ office, then on Forty-second Street,
I went.

"Insert this ad and give me $7 worth of space," I said, as I shelled
out my last cent.

When the advertisement appeared the next morning, its aspect was
disappointing. The space occupied was only fifty-six agate lines, or
four inches, single-column measure. It looked puny. Would people
notice it?

That afternoon Campbell and I took possession of the new office of
Maxim & Gay. Luckily, a former tenant had left a desk and a chair
behind, in lieu of a settlement for rent. In walked a tall Texan.

"Hey there!" he cried. "Here's $5. It's yours. Keep it. Answer my
question, and no matter what way you answer it, it don't make any
difference. The $5 is yours."

I looked up in amazement.

"Give me the source of your information on Silver Coin," he said. "I
bet big money. If your dope is on the level, I'll bet a 'gob.' If it
ain't, your confession will be cheap at $5, which will be all the
money I'll lose."

I showed him the letter from Frank Mead.

"That's good enough for me," he said, turning on his heel.

Silver Coin won easily at 10 to 1.

The betting was so heavy in the New York pool-rooms that, at post
time, when 10 to 1 was readily obtainable at the race-track, 6 to 1
was the best price that could be obtained in New York. It is history
that the New York City pool-rooms at that time controlled by "Jimmy"
Mahoney were literally "burned up" with winning wagers. Pool-room
habitués argued it thus: "If the tip is not 'a good thing,' what
object in the world would these people have for publishing the ad? If
the horse loses, the cost of the advertisement is certainly lost. The
only way they can win is for the horse to win." It was good logic--as
far as it went.


THE HIGHER MATHEMATICS OF THE OPERATION

But it was really sophistry. If the horse lost, the inserter of the
Maxim & Gay advertisement would be out exactly $7. If the $7 was used
to bet on the horse, the most that Maxim & Gay could win would be $70.
I was taking the same losing risk as the bettor, with a greater chance
for gain. By investing $7 in the advertisement, it was possible for me
to win much more money from the public by obtaining their patronage
for the projected tipping bureau.

I recall that the experimental features of the advertisement appealed
to me strongly and struck me as being a splendid test of the
possibilities of the business. If the horse won and there were few
responses to the advertisement it would be convincing on the point
that there was no money in the tipster branch of the horse-racing
game. I argued that if the racing public would not believe that an
Information Bureau was what it cracked itself up to be, in the face of
a positive demonstration, how could it be expected to believe the
lurid claims of the fakers whose advertisements crowded the sporting
papers daily and in which they claimed _after_ the races were run
that they named in advance the winners at all sorts of big odds?

The next morning about ten o'clock, Campbell called at my home and
said that he had received another "good thing" by telegraph from Mead
and that the name of the horse was Annie Lauretta, with probable odds
of 40 to 1.

"Jiminy!" he exclaimed. "If we only get a few customers to-day and
this one wins, what will happen?"

Leisurely we walked to the office. "If we get ten subscribers to-day
to start with, we'll make a fine beginning," I said.

As we approached the Hotel Marlborough, which is opposite the building
on Broadway in which the Maxim & Gay Company had its modest little
office, our attention turned abruptly to a crowd of people who were
being lined up by half a dozen policemen.

"What theater has a sale of seats to-day?" Campbell asked.

"Don't know," I answered.

As we approached the office, we found that the line extended into our
own office building. As we ambled up the rickety stairs, we passed the
crowd in line, one by one, until we discovered, to our great
astonishment, that the line ended at our door.

We turned the key, walked in, locked the door, and stood aghast.

Holding up both hands, I gasped, "In heaven's name, what have we
done?" I was appalled.

"Give 'em Annie Lauretta," cried Campbell.

"But suppose Annie don't win," I expostulated.

"Smokes!" exclaimed Campbell. "Are you going to turn down all those $5
bills?"

"Let's see that telegram," I faltered.

I perused it over and over again.

"Mead's judgment on Silver Coin is good enough reason to warrant
advising people to put a wager on another one of his choices,"
Campbell argued. I agreed.

How to convey the information in merchantable form was the next
question. A typist in the Hotel Marlborough, across the way, was sent
for and asked to strike off the name "Annie Lauretta" 500 or 1,000
times on slips of paper. Envelopes were bought and a typed slip was
placed in each. The line increased until it was a block and a half
long.

When all was ready, the door was opened. Campbell passed the envelopes
out as each man handed me $5. I stuffed the money in the right-hand
drawer of the desk, and when that became choked, I stuffed it in the
left-hand drawer. Finally, the money came so thick and fast that I
picked up the waste-paper basket from the floor, lifted it to the top
of the desk and asked the buyers to throw their money into the
receptacle. When a man wanted change, I let him help himself.

For two and a half hours, or until within fifteen minutes of the
calling of the first race at New Orleans, the crowd thronged in and
out of our office. When the last man passed out we counted the money
and found the day's proceeds to be $2,755.

"What will we do next?" asked Campbell. "What's my job, and what do I
get?"

"How much do you want?" I asked.

"Ten dollars a day," he said.

Thereupon he got possession of the $10 and he admitted it was more
money than he had seen in a month.

"What will we do next?" he repeated.

"Let us take a walk," I said. "Lock the office until after the fourth
race, when we see what Annie Lauretta does."

We hied ourselves to a nearby resort and stood by the news ticker to
see what would happen to Annie. It was half an hour since the third
race had been reported.

"Fourth race--tick--tick--tick," it came. "A--Al----,"

"We've lost!" I cried.

"A--AL--ALPENA first."

There was grim silence.

"Tick--tick----,"

"Here she is!" yelled Campbell.

"A-N-N-I-E LAURETTA second--40--20--10" (meaning that the odds were 40
to 1, first, 20 to 1, second, and 10 to 1, third, and that those who
had played "across the board" had won second and third money at great
odds).

I boarded a Broadway car, rode down to the Stewart building and rented
one of the finest suites of offices in its sacred purlieus. I ordered a
leading furniture dealer to furnish it sumptuously. At night I walked
over to the _Morning Telegraph_ office, laid $250 on the counter,
ordered inserted a flaring full-page ad. announcing that Maxim & Gay
had given Annie Lauretta at 40, 20 and 10, second, and previously
Silver Coin at 10 to 1, won, and were ready for more business.

A telegram was sent to Frank Mead, instructing him to spend money in
every direction with a view to getting the very best information that
could be obtained from handicappers, clockers, trainers and every
other source he could reach. Mead continued to wire daily the name of
one horse, which we promptly labeled and thereafter advertised daily
as "The One Best Bet." Soon "One Best Bet" became a term to conjure
with.

The success of this enterprise was phenomenal. In the course of two
years it earned in excess of $1,500,000. There were some weeks when
the business netted over $20,000 profits. At the height of its career,
in the summer of 1902, at the Saratoga race meeting, when the
pool-rooms in New York were open, our net profits for the meeting of a
little less than three weeks were in excess of $50,000.

We established an office in Saratoga and our average daily sales on
race days were 300 envelopes at $5 each. In New York the average was
just as large, and, in addition, we had a large clientele in distant
cities to whom we sent the information by telegraph. The wire
business, in fact, increased to such an extent that it became
necessary to call upon the Western Union and Postal Telegraph
companies to furnish our office in the Stewart building with direct
loops.

I spent the money as fast as I made it. I believed in our own
information and made the fatal error of plunging on it. My error, as I
afterwards concluded, was in not risking the same amount on every
selection. Had I done this, I would not have suffered serious losses.
The trouble was that every time a horse on which I wagered won, I was
encouraged to bet several times as much on the next one, and by
doubling and trebling my bets, I played an unequal game.

The expense of gathering this information within a few weeks increased
to upwards of $1,000 a week, and it was not only our boast, but an
actuality, that the Bureau did really give more than value received.

Undoubtedly, the evil of the venture was the gambling it incited; but
the effort to secure reliable information was honest, and what young
man of my age and of my experiences, having indulged in a lark of the
Silver Coin variety, could withstand the temptation of seeing the
thing through?

Among the leading patrons of the Maxim & Gay Company were soon
numbered important horse owners on the turf, leading bookmakers and
many leaders of both sexes in the smart set. Maxim & Gay made it a
rule to sell no information of any kind to minors and often excluded
young men from the offices for this reason.


HOW "THE ONE BEST BET" WAS COINED

Our methods of advertising were unique. We used full pages whenever
possible, and it was a maxim in the establishment that small type was
never intended for commercial uses. We used in our big display
advertisements a nomenclature of the turf that had never before been
heard except in the vicinity of the stables, and we coined words and
phrases to suit almost every occasion. The word "clocker," meaning a
man who holds a watch on horses in their exercise gallops, was
original with us, and has since come into common use, as has the
phrase, "The One Best Bet," which we also coined.

It was our aim, in using the language of horsemen, to be technical
rather than vulgar, the theory being that, if we could convince
professional horsemen that we knew what we were talking about, the
general public would quickly fall in line.

One morning we were alarmed to see in the _Morning Telegraph_, on
the page opposite our own daily effort, the advertisement of a new
tipster who called himself "Dan Smith." Dan went Maxim & Gay "one
better" in the use of race-track terminology. He evidently employed a
number of negro clockers, for the horse lingo which he used in his
advertisements smelled of soiled hay and the manure pile. It was
awful! But it made a hit with race-goers, and before a week had passed
we recognized "Smith" as a dangerous competitor.

We were loth to believe that the use of this horsy language was
entirely responsible for Smith's success, for we knew that his tips
were not so good as ours. We investigated. His trick was this: In the
sheet that he sent out to his customers, he would name for every race
at least five horses as having a chance to win. He advised his
clients, in varying terms, to bet on every one of them, and if any one
of them won, he would print next morning what he had said on the
preceding day regarding the winner alone, leading the public to
believe that the only horse he had fancied was the actual winner.

I decided to organize another Bureau to knock out Dan Smith. The
intention was "to go" our competitor "a few better" in the use of
vulgar horse-racing colloquialisms and exaggerated claims, and thus
nauseate the betting public and "put the kibosh" on Dan. We created a
fictitious advertiser whom we named "Two Spot," and the next morning
there appeared at our instigation in the _Morning Telegraph_ a large
display advertisement, headed substantially as follows:

    +-----------------------------+
    |          TWO SPOT           |
    |     Turf Info. Merchant     |
    | Terms, $2 Daily; $10 Weekly |
    +-----------------------------+

Following the style which Dan Smith had adopted in his racing sheets,
"Two Spot" mentioned in his first advertisement, as a sample of his
line of "dope," four or five horses to win each race, each one in more
grandiloquent terms than the other, but these were selected because
they, in reality, appeared to be the most likely losers of all the
entries.

A woman was sent over to the newly-organized office of "Two Spot" to
take charge of the salesroom. I was completely taken off my feet the
next day when she informed me that the receipts, as a result of the
first advertisement, were in excess of $300, and that the public not
only did not read between the lines, but had actually fallen for the
hoax.

To cap the climax, on the second day one of the "outsiders" which "Two
Spot" named derisively as the one best bet "walked in" at 40 to 1!

Next day "Two Spot" did a land-office business, and within a few days
we figured that the "Two Spot" venture would net $1,000 a week if
continued. "Two Spot" then went after the game hammer and tongs and
endeavored to gage the full credulity of the public.

The distinctive difference between "Two Spot" and Maxim & Gay was
this: Maxim & Gay, except in one instance, which is chronicled herein,
never pretended to have selected a winner when it had not, while "Two
Spot" enjoying the same source of information as Maxim & Gay, worded
his daily advices to clients so artfully as to be able to claim the
next morning in his advertisements à la Dan Smith, the credit of
having said something good about every winner.

The profits of Dan Smith's venture, I was informed, exceeded a quarter
of a million dollars the first year, and the profits of "Two Spot,"
whose career was cut short within a month by a realization on our part
that we could not afford to be identified with such an enterprise, was
divided among the employees of the "Two Spot" office. "Two Spot" had
been brought into being for the purpose of killing opposition and not
for profit-making. The scheme failed of its purpose.

To give an idea of the character of some of the raw kind of
advertising put out by "Two Spot," and for which the public fell, I
recall this excerpt from one of his tipping sheets:

    I am my own clocker. I have slept under horse-blankets for thirty
    years. I understand the lingo of horses. Last night, when I was
    taking my forty winks in the barn of Commando, I heard him whinny
    to Butterfly and tell her to keep out of his way to-day because he
    was going to "tin-can" it from start to finish, and if Butterfly
    tried to beat him, he would "savage" her. That makes it a cinch
    for Commando. Bet the works on him to win.


REAL INSIDE TURF INFORMATION

Maxim & Gay repeated the "Silver Coin" method of advertising only once
during the entire career of the company. This happened in the spring
of 1902, when John Rogers, trainer for William C. Whitney, sent to the
post a mare named Smoke. Our information was that the mare would win,
and our selections for the day named her to win--and she did. Two days
later, she was again entered, against an inferior class of horses, and
the handicap was entirely in her favor. Notwithstanding this, we
inserted an advertisement which appeared in the newspapers on the
morning of the race, reading substantially as follows:

    "_Don't bet on Smoke to-day. She will be favorite, but she will
    not win. Rockstorm will beat her._"

Sure enough, Smoke opened up favorite in the betting. The betting
commissioners of Mr. Whitney placed large wagers on the horse with the
bookmakers. The bulk of the public's money, however, went on
Rockstorm, and before post time thousands of dollars of the "wise"
money followed suit.

Rockstorm won the race. Smoke led into the stretch, when up went her
tail and she "blew up."

Immediately I was cross-questioned by messengers from the judges'
stand. They asked our reason why we were so positive that Smoke would
lose. Mr. Whitney, I was informed, was actually suspicious that his
mare had been "pulled." The reason for the reversal of form, as I
explained at the time, was this:

William Dozier, our chief clocker at the race-track, who had witnessed
the preparation which Smoke received for the races, was of the opinion
that her training had been rushed too fast, and that her first race,
instead of putting her on edge, had caused a setback. Her first race,
in fact, had "soured" her. Being a veteran horseman, he was positive
that Smoke would lose. I afterwards learned that the training of Smoke
had been left to an understrapper, and that Mr. Rogers himself was not
responsible for her condition.


THE PUBLIC ASKS TO BE MYSTIFIED

The judges were apparently satisfied, but the public could not readily
understand the truth, and we didn't point it out in our
advertisements, because our policy was always to appear as mysterious
as possible as to the source of our information.

Mystery played an important rôle in our organization, and it would
have been better had we never succeeded in the Smoke coup. Up to this
time my personal identity had not been revealed at the race-track, and
even the bookmakers did not know who was the guiding spirit of Maxim &
Gay. "Jimmy" Rowe, trainer for James R. Keene; Peter Wimmer, trainer
for Captain S. S. Brown of Pittsburg, and John Rogers, trainer for
William C. Whitney, were at this early period at various times the
rumored sponsors for Maxim & Gay. The bookmakers and "talent"
generally conceived the idea that nobody but a very competent trainer
in the confidence of horse owners could possibly be responsible for so
much exact information regarding the horses. Of course, the track
officials who made it their business to know everything knew of my
connection with the organization. No sooner, however, did their
messengers ask an interview with me than the fact became public
property around the race-track and the mask was off.

The effect for a while was very bad, for our business fell off
considerably. "Bismarck" Korn, the well-known German bookmaker, put it
to me this way on the day of the Smoke incident:

"You are the first horse tipster I effer saw dat vore eyeclasses,
sported a cane, und vore tailor-made cloding. You look like a
musicianer--not like a horseman. You're a vonder!"

Gottfried Walbaum, another old-time bookmaker, chimed in: "Dat vas
obdaining money under false bredenses. I gafe your gompany dwendy-fife
dollars a veek for two months alreaty. You gif me my money pack! You
are a cheater!"

Riley Grannan, the plunger, said, "Got to hand it to you, kid! Any
time you can put one over on the Weisenheimers that have been making a
living on race-tracks for twenty years you are entitled to medals!"

The attitude of "Bismarck" and of Walbaum was amusing, that of Grannan
flattering. But it was poor business, because most of these
professional race-track people ceased for a while to subscribe for the
Maxim & Gay service.

For months I had purposely kept myself in the background, fearing a
dénouement of this very description. I recalled that in the late 80's,
in a town of northern Vermont, when John L. Sullivan was advertised to
appear in a sparring exhibition, his manager met him at the train,
and, although it didn't rain and the sun didn't shine, an umbrella was
raised to cover John L. while walking from the train to a waiting
landau. No sooner did Sullivan enter the vehicle than the blinds were
drawn. When the carriage reached the hotel, it stopped before a side
door. The manager alighted before Sullivan, again quickly raised the
umbrella and whisked the heavy-weight champion past the crowds and up
to his room without exposing him to the view of anybody whatsoever.

Throughout the day Sullivan was screened from public gaze. His face
was not seen by a single citizen of the town until he appeared on the
stage that night.

I asked the manager why he was so very careful to shield Sullivan from
the popular view prior to his appearance before the footlights. I
recall that he said:

"If the public thought John L. was just an ordinary human being with
black mustaches and a florid Celtic face, they wouldn't go to see him.
The public demand that they be mystified, and to have shown people off
the stage that Mr. Sullivan is just a plain, ordinary mortal would
disillusion them and keep money out of the house."

That piece of showman's wisdom was fresh in mind during the early
career of Maxim & Gay; and so long as Maxim & Gay kept race-track men
guessing as to who was directing its destinies, the organization was a
howling success. Its good periods were mixed with bad periods after
the mystery of sponsorship was cleared up to the satisfaction of the
professionals by the inquiry of the race-track judges into the Smoke
affair.

A few weeks after the Smoke coup, our chief clocker informed us that
the entries for a big stake race which would be run on the following
Saturday had revealed to him a "soft spot for a sure winner," as he
expressed himself, and he said we could advertise the happening in
advance with small chance of going wrong. This we proceeded to do.

Money poured in by telegraph from distant cities for the "good thing"
on Saturday. Our advertisement on the Thursday previous to the race
read like this:

    +---------------------------------+
    |   The Hog-Killing of the Year   |
    | Will Come Off at Sheepshead Bay |
    |   On Saturday, at 4 O'clock.    |
    |   Be Sure to Have a Bet Down.   |
    |     Telegraph Us $5 for the     |
    |           Information           |
    +---------------------------------+

One of our constant patrons resided in Louisville. He was among the
first to whom we telegraphed the information on Saturday morning. The
race was run and the horse _lost_.

About 4:30 P.M. we received a dispatch from our Louisville customer,
reading as follows: "The hog-killing came off on schedule time--here in
Louisville. I was the hog."

Another message from a pool-room habitué reached us, reading: "Good
game. Have sent for more money."

We were often in receipt of messages of similar character on occasions
when our selections failed to win and our customers lost their money;
but these communications were generally in good spirit.

On one occasion we had what we believed to be first-hand information
regarding a horse which was being prepared for a big betting coup by
Dave Gideon, one of the cleverest horsemen in the country. Following
our customary method of using vividly glowing advertisements, with the
blackest and heaviest gothic type in the print shop, we announced:

    +----------------------------------------+
    |         A GIGANTIC HOG-KILLING         |
    |  We have Inside Information of a Long  |
    |    Shot that Should Win To-morrow at   |
    | 10 to 1 and Put Half of the Bookmakers |
    |           out of Business.             |
    |      Be Sure to Have a Bet Down on     |
    |           This One. Terms $5.          |
    +----------------------------------------+

The _argument_ of the advertisement, which appeared beneath these
display lines, was couched in the most glowing terms, and made it very
plain that our information came from a secret source, and, further,
that we had spent legitimately a snug sum of money to secure the
information. We also pointed out that the owner was one of the
shrewdest betting men on the turf and seldom went astray when he put
down a "plunge" bet on one of his own entries.

Next day the race was run. The horse did not finish "in the money."

The following day we received many letters, as we always did when one
of our heavily advertised "good things" lost. One of the most unique
of these epistles contained a remonstrance from a Philadelphia
subscriber. He wrote in this vein:

    Dear Sir:--You have been advertising for some days that you would
    have a gigantic hog-killing to-day. I was tempted by your
    advertising bait and fell--and fell heavily with my entire
     bank roll. My bucolic training should have warned me that
    "hog-killings" are not customary in the early Spring, but I fell
    anyway.

    Permit me to state, having recovered my composure, that Armour
    or Swift need have no fear of you as a competitor in the
    pork-sticking line, for far from making a "hog-killing," you did
    not even crack an egg. Pardon me. Thanks. Good-by.

    Yours truly,

    ---- ----


PRESTIGE RESTORED BY A CLERK'S RUSE

In the Summer of the second year of Maxim & Gay's great money-gathering
career, the Information Bureau was "out of luck" and the patronage of
the Bureau fell away to almost nothing. At this period I was seriously
ill and confined to my home. A man in my office decided to take
advantage of my absence from the scene to improve business a bit on
his own hook.

It was the habit of our track salesmen, dressed in khaki, to appear
at the office at noon every day and receive a bundle of envelopes
containing the tips on the races, and then immediately to proceed to
the race-track, stand outside of the gates and vend them at $5 per
envelope.

One day these men, without their knowledge, were supplied with
envelopes containing blank sheets of paper instead of the mimeographed
list of tips. When a handful of town customers reached the office, they
were informed that the selections would be late that day and would be
on sale at the track only.

At about half-past one o'clock the 'phone bell rang, and word came
from the track messengers that apparently a mistake had been made, as
their envelopes contained blanks. They were being compelled to refund
money. They asked what to do.

"Wait," they were told. "We will send a messenger immediately with the
tips."

The messenger never reached the track.

There were no tips issued.

On that day May J. won at odds of 200 to 1.

The next morning, the newspapers contained full-page advertisements
announcing that Maxim & Gay had tipped May J. at 200 to 1 as the day's
"One Best Bet." It could not have been done without a "come-back" if
any tips had been issued.


A BOASTFUL RACE PLAYER GIVES AID

I was not present, but I learned as soon as I became convalescent that
on the afternoon of the day the advertisement appeared claiming credit
for May J. at 200 to 1, the office was thronged with new customers who
enrolled for weekly subscriptions at a rate that put new life into the
business. A few of the customers expressed some doubt as to whether
Maxim & Gay gave out the 200 to 1 shot or not.

That afternoon there appeared on the scene a race player who, laying
$5 down on the desk, said, "Give me your good things. I played May J.
yesterday at 200 to 1 and I am rolling in money."

"Where did you buy your information?"

"From your man at the entrance to the track," he answered.

"At what time?" he was asked.

"A quarter to two," he replied.

"Say, young man, there were a lot of people who came in here this
morning who said they were not sure we gave out that selection at all.
Would you make an affidavit that you bought the information from us?"

"You bet I will!" he said; and thereupon a notary public was called in
and the caller swore that he had bought the Maxim & Gay tips at the
entrance to the race-track and that they contained May J. at 200 to 1.

That affidavit was posted in the office during the remainder of the
day. When the clerk who performed this stunt was asked for more
information as to how he came to secure such an affidavit, he gave
absolute assurance that he did not offer the customer the smallest
kind of bribe to make it, and that nothing but an innate desire to
call himself "on top" had influenced the man to perjure himself.

But I could not tolerate the misleading advertising that had been done
as a result of misplaced energy, and the man responsible for it did
not remain with the company.


FORTUNE CHANGES HER MOOD AND SMILES AGAIN

Peculiarly enough, the May J. advertisement was followed by a series
of brilliant successes for Maxim & Gay in the selection of winners at
big odds, and, within a month our net earnings again reached $20,000
per week. Horse owners, horse trainers and society people who
frequented the club-house at the race-track were our steadiest
patrons.

The women particularly were most loyal to our bureau. The wife of a
young multi-millionaire of international prominence was one of our
most ardent followers. She would never think of putting down a bet
without first consulting Maxim & Gay's selections. On a notable
occasion, this lady arrived at the gate of the Morris Park race-track
with her husband, in their automobile, and took the long stroll to the
club-house. They were a trifle late for the first race; the horses
were already going to the post up the Eclipse chute.

Suddenly the lady discovered she had forgotten to purchase Maxim &
Gay's selections. Hastily calling her husband, she gave him a sharp
berating for not reminding her to buy the selections. They had a short
but earnest interview, which was suddenly terminated by the young man
doing a sprint of a quarter of a mile down the asphalt walk from the
club-house to the main entrance where the tips were sold by the
uniformed employees of Maxim & Gay.

Those who witnessed the sprint of the young financier attested to the
fact that he never showed as much swiftness of foot in his early
college days; but even his unusual speed failed to get him back on
time to acquaint his wife with the name of the horse selected by Maxim
& Gay for the first race, the race having been run and the Maxim & Gay
selection having won. The gentleman thereupon got a curtain lecture
from his better half that astonished and amused the society patrons on
the club-house balcony. Thereafter, he never forgot to get the Maxim &
Gay selections. In fact, he made assurance doubly sure by engaging the
colored attendant in charge of the field-glasses to deliver the
selections to him daily immediately upon his arrival at the course.

Our popularity with racehorse proprietors was mixed. Among the horse
owners with whom we transacted business was Colonel James E. Pepper,
the late noted distiller and owner of a big breeding farm and a stable
of runners. He was an ardent lover of horses, and maintained that his
native Kentucky knowledge of thoroughbreds afforded him an opportunity
to pick probable winners of horse-races better than any of "them ----
faking tipsters." He had great confidence in his judgment for a while.


THE KENTUCKY COLONEL FALLS IN LINE

After separating himself from much cash, while one of his very
intimate friends was "cleaning up" plenty of money on our selections,
he finally strolled into our office one morning and sheepishly stated
that one of his "fool friends" had asked him to step in and get our
"fool selections" for him. We explained that it was against our rule
to give out our choices before 12:30 P.M., whereat he grew exceedingly
wroth. He finally agreed to our conditions, paid his money and was
given an order to get the selections at the track-entrance from one of
our messengers.

Nearly all of our choices won that day. Colonel Pepper came in the
following morning and paid for another subscription, this time for a
week's service. We were "in our stride," the majority of our
selections winning from day to day, and Colonel Pepper had cause for
exultation. On one of these days we divulged, on our racing sheet, the
name of a "sleeper" that we were confident would win at 10 to 1, a big
betting coup having been planned by that Napoleon of the turf, John
Madden. The horse won at big odds, and Colonel Pepper made a "killing"
on the information.

For the next day, our clockers had spotted another horse that had been
got ready by the light of the moon, and we spread it pretty strong in
our advertisements that the horse we would name could just fall down,
get up again and then "roll home alone." The horse did not fall down;
but he won; he "rolled home alone" by about ten lengths. He belonged
to Colonel Pepper. It was anticipated that about 20 to 1 would be laid
against this fellow, but on account of our strong tip, he opened at 10
to 1 and was played down to 3 to 1. The bookmakers were badly crimped.

The next day, as soon as the office opened, Colonel Pepper, hotter
under the collar than even his name might indicate, stamped into the
outer room. Slamming his cane down on the big mahogany table, he
demanded in stentorian tones: "What in the ---- does this ----
business mean? Here I come and subscribe my good money to your ----
fool tips, and you-all are so low-down mean as to give my hoss for the
good thing yesterday! What does it mean, suh; what does it mean?"

The use of considerable diplomacy was necessary to calm down the irate
Colonel, who had no compunctions in winning a big bet on Mr. Madden's
"sleeper," but "---- it, suh, it is outrageous to treat _me_ so."

The Colonel never got over that incident, and while he won a big bet
on his own horse, he always claimed that Maxim & Gay had ruined the
betting odds for him and that but for the vigilance of our clockers
his winnings would have been twice as large. This was true, and time
and again we ruined the price for many another owner who thought he
was going to get away with something on the sly.

Bookmakers as a rule are very much self-satisfied about their
knowledge of the mathematics of the game. In order to show them that
they didn't know all about it, the Maxim & Gay Company inserted an
advertisement one day reading substantially as follows:

    +---------------------------------------+
    |             YOU PAY US $5             |
    |                                       |
    |              WE REFUND $6             |
    |                                       |
    |        If the Horse We Name as        |
    |                                       |
    |            THE ONE BEST BET           |
    |                                       |
    |    To-day Does Not Win, We Will Not   |
    |    Only Refund Our $5 Fee, Which Is   |
    | Paid Us for the Information, but Will |
    |    Pay Each Client an EXTRA DOLLAR    |
    |           By Way of Forfeit.          |
    |                                       |
    |   Pay Us $5 To-day for Our One Best   |
    |   Bet, and if the Horse Does Not Win  |
    |     We Will Pay You $6 To-morrow.     |
    |                                       |
    |            MAXIM & GAY CO.            |
    +---------------------------------------+

Our receipts that day were approximately $5,000. The horse did not win.
We refunded $6,000 next day, and netted a considerable sum of money on
the operation.

It happened to be a two-horse race. Our horse was at odds of 1 to 6
in the betting, that is to say, the bookmakers laid only one dollar
against every six bet by the public. The other horse ruled at odds of
5 to 1, meaning that here the bookmakers laid five dollars against the
public's one.

The Maxim & Gay Company sent to the track $1,000 out of the $5,000 paid
in by its customers and wagered the $1,000 on the contending horse at
odds of 5 to 1, drawing down $4,000 in winnings. From this money it
paid its clients the thousand-dollar forfeit, netting $4,000 on the
operation, after of course returning to them their own $5,000.

Had the 1 to 6 shot won, the clients who had received the winning tip
would have been happy, while the Maxim & Gay Company would not have
been compelled to refund any money and would have been ahead $4,000 on
the operation, the $1,000 wagered and in that event lost in the betting
ring on the other horse being subtracted from the $5,000 paid in by its
customers. No matter which horse won our gain was sure to be $4,000 and
we had here the ideal of a "sure thing."

It was a case of "taking candy from a baby"; and yet many of the wise
bookmakers could not at first figure it out. Nearly all of them
subscribed for the information. As for the public, they did not seem to
catch on at all.


BETTING THE PUBLIC'S MONEY AT GREAT PROFIT

The Eastern racing season was about to close and it was decided to
remove the entire force of clerks to New Orleans for the Winter and
there to depart from the usual practice of selling tips only, and to
bet the money of the American public on the horses at the race-track in
whatever sums they wished to send. The company employed Sol
Lichtenstein, then the most noted bookmaker on the American turf, to
bet the money, and made him part of the organization, giving him an
interest in the profits.

The Maxim & Gay Company at this time had made close to $1,000,000, and
recklessly and improvidently I had let it slip through my fingers. It
was "easy come and easy go." As I review that period in my career, I
recall that the whole enterprise appeared to me in the light of an
experiment--just trying out an idea, and having a lot of fun doing it.
Because of its dazzling success I became so confident of my ability to
make money at any time that I didn't take serious heed whether I
accumulated or not. Besides, I had never loved money for money's sake.
All the pleasure was in the accomplishing.

The races at New Orleans were advertised to start on Thanksgiving Day.
On the 15th of October I ordered $20,000 worth of display advertising
to run in thirty leading newspapers in the United States four days a
week, until Thanksgiving. Credit was extended for the bill by one of
the oldest advertising agencies in America.

The advertisements told the public to send their money to Maxim & Gay,
Canal Street, New Orleans. On my arrival there, two days before
Thanksgiving, I called at the post-office, and asked if there was any
mail for Maxim & Gay. The post-office clerk appeared to be startled. He
gazed at me as if he were watching a burglar in the act. His demeanor
was almost uncanny. He didn't talk. He didn't even move. He just
looked. Finally I asked, "What is the matter?"

"Wait a minute," he muttered.

He left the window. He did not return. Instead, what appeared to me to
be a United States deputy marshal ambled up to my side and said, "See
here; the Postmaster wants to see you."

I was escorted into a secluded chamber in the post-office building, and
a few minutes later a post-office official, along with three or four
assistants, came into the room.

"What's the trouble?" I asked.

"You bring us a recommendation as to who you are and what you are and
all about yourself before we will answer any of your questions as to
how much mail there is here for you," the official said.

I smiled. The advertising, then, was a success.

Having been employed as a newspaper man in New Orleans a few years
before, I knew one of the leading lawyers of the city and several bank
officials. Within thirty minutes I had lawyer and bank men before the
Postmaster, vouching for my identity. Thereupon I was informed that
there were 1,650 pieces of registered mail, evidently containing
currency, and, in addition, twelve sacks of first-class mail matter,
which contained many money-orders, checks and inquiries. The official
said that in the money-order department they had notices of nearly
2,000 money-orders issued on New Orleans for the Maxim & Gay Company.

I sent a wagon for the mail, and notwithstanding the fact that a force
of four men under me opened the letters and stayed with the job for two
days, the task was not completed when the first race was called on
Thanksgiving Day. On adding up the receipts, we found a little over
$220,000.

The meeting continued 100 days, and our total receipts for the whole
period were $1,300,000.

Maxim & Gay's system of money-making at New Orleans was as follows:

We charged each client $10 per week for the information. We charged 5
per cent. of the net winnings in addition, and we further contracted to
settle with customers only at the closing odds for bets placed,
retaining for ourselves the difference between the opening odds and the
closing odds. The profit averaged approximately $7,000 a day for 100
days--to us.

As a guarantee of good faith, the Maxim & Gay Company agreed with its
clients that each day it would deposit in the post-office and mail to
them a letter bearing a postmark prior to the hour of the running of
the race, naming the horse their money was to be wagered on; and this
was always done. An honest effort, too, was always made to pick a horse
that was likely to win, for even a child can see that if we did not
intend to bet the money and wanted to pick losers, all we would have
had to do was to make book in the betting ring at the race-track and
not spend thousands of dollars in advertising for money to lay against
ourselves.

Did we invariably bet the money of our clients on the horse we named?

Yes, always--except once!


$130,000 IS LOST AND WON IN A DAY

That incident is not easily forgotten by several. On this day the entry
which we selected was one of Durnell & Hertz's string. The horse was
known to be partial to a dry track. The "dope" said he could not win in
heavy going. It was a beautiful sunshiny morning when we selected this
horse to win, and at noon the envelopes containing the name of the
horse were mailed in the post-office, as usual.

Something happened.

Half an hour before the race was run it began to rain in torrents and
the track became a sea of mud. Durnell & Hertz, realizing that they
were tempting fate to expect their horse to win under such conditions,
appeared in the judges' stand and asked permission to scratch their
entry. The judges refused. I asked Sol Lichtenstein, who had the
wagering of our client's money in charge, what he proposed to do about
betting on the horse under the changed conditions. He exclaimed, "Bet?
Do you want to burn up the money?"

"Well, if he wins," I replied, "we will have to pay, because if he wins
and you don't bet and we say we changed the selection on account of the
rainstorm, they will not believe us and we will have trouble."

"Very well," he said. "You bet my book all the money, and we will, for
the first time, book against our own choice. It's fair, because we must
pay if we lose, and there is no way out of it. But don't burn up that
money." I agreed.

The opening odds against the horse were 2 to 1. Had it been a dry
track, he would have opened a hot favorite at 4 to 5 or so. Slowly the
odds lengthened to 10 to 1, which was the ruling price at the close.
Durnell & Hertz bet on another horse to win. Standing before Sol
Lichtenstein's book, I said:

"Thirteen thousand on our selection, Sol."

"One hundred and thirty thousand to $13,000," he answered. "Here's your
ticket."

Sol and I repaired to the press-stand to see the race. Durnell &
Hertz's entry got off in the lead. At the quarter he was in front by
two lengths. At the half the gap of daylight was five lengths. At the
turn into the stretch the horse was leading by nearly a sixteenth of a
mile. Then I heard a noise behind me as if a miniature dynamite bomb
had exploded. Sol's heavy field-glasses had dropped to the floor.

Sol did not wait to see the finish. The horse won in a gallop.

At the office of Maxim & Gay accounts were figured and checks signed
for the full amount of our obligations, and they were immediately
mailed to all subscribers.

At midnight I met Sol in the lobby of the St. Charles Hotel. He looked
worn.

"I guess that will hold us!" he moaned.

"Hold us?" I answered. "Nothing better ever happened. It'll make us!"

"You poor nut!" he exclaimed. "Lose $130,000 in a day and it will make
you! Stop your noise!"

"Listen!" I rejoined. "At an expense of $3,000 for tolls I have
telegraphed a full-page ad to fifty leading city newspapers, telling
the public that we tipped this horse to-day at 10 to 1 and that we
mailed checks to our customers to-night for $130,000. The gain we will
reap in prestige and fresh business will repay our loss on the horse."

The next day the Western Union Telegraph Company found it necessary to
assign three cashiers to the work of issuing checks to the Maxim & Gay
Company for money telegraphed by new customers. Some individual
remittances were as high as $2,000. The money telegraphed us amounted
to about $150,000, and within ten days eighty per cent. of our own
dividend checks were returned to us by our customers, indorsed back to
us with instructions to double their bets, and within two weeks we were
able to figure that in the neighborhood of $375,000 was sent us as a
result.


A DISASTROUS NEWSPAPER WINDUP

During the progress of the New Orleans meeting, I purchased a
controlling interest in the New York _Daily America_--a newspaper
patterned after the _Morning Telegraph_--from a group of members of
the Metropolitan Turf Association, who had sunk about $75,000 in the
enterprise. The _Morning Telegraph_ was in the hands of a receiver. I
calculated that, by transferring the Maxim & Gay advertisements from
the _Morning Telegraph_ to the _Daily America_, I could make the _Daily
America_ pay and force the _Morning Telegraph_ out of the field. Later,
the late William C. Whitney, who was a shining light on the turf as
well as in finance, was induced to purchase the _Morning Telegraph_.
Then trouble began to brew for me.

One morning I was summoned to the offices of August Belmont on Nassau
Street.

"For the good of the turf, you must omit your Maxim & Gay
advertisements from the _Daily America_ and other newspapers
hereafter," declared Mr. Belmont on my entering his room.

"Why?" asked I.

"They flagrantly call attention to betting on the races," he replied.

"But you allow betting at the tracks."

"Yes," he replied, "but public sentiment is beginning to be aroused
against betting, and an attack is bound to result."

It occurred to me that at that very time Mr. Whitney was engaged in
disposing of his stock in various traction enterprises in New York to
Mr. Belmont and his syndicate, and that in all probability Mr. Whitney
had sought the assistance of Mr. Belmont to put the _Daily America_ out
of business in this way. It was apparent that the _Daily America_ would
lose money fast without the Maxim & Gay advertising. Maxim & Gay, too,
would practically be compelled to close up shop if it could not
advertise. I promised to consider.

Returning to the _Daily America_ office, I decided to pay no attention
to Mr. Belmont's request, having become convinced that it was conceived
in the interest of the _Morning Telegraph_.

A few days later I was again summoned over the 'phone to Mr. Belmont's
office. When I was ushered into Mr. Belmont's presence he said:

"If you don't quit advertising the Maxim & Gay Company in the _Daily
America_, I will see William Travers Jerome, and he will stop you."

Mr. Jerome was then District Attorney, and the idea of doing anything
that Mr. Jerome considered illegal appalled me.

"If Mr. Jerome sends word to me that the Maxim & Gay advertising is
illegal, I will discontinue it," I said.

I did not hear from Mr. Jerome, and so went on with the advertising.

Within a few weeks the Washington race meeting opened at Bennings.
When the Maxim & Gay staff reached there, we were all informed that
the Post-office department was about to begin an investigation into
our business affairs, and all of our staff voluntarily appeared before
the inspectors and underwent an examination. Our books were also
submitted. This investigation, coming on the heels of Mr. Belmont's
threat, convinced me that the influence of Mr. Belmont and Mr. Whitney
reached all the way to Washington, and I concluded that if I did not
discontinue the Maxim & Gay advertising in the _Daily America_, and
then, of course, discontinue the _Daily America_, they would make
serious trouble. So I hung out the white flag. I announced my
retirement from the Maxim & Gay Company and offered to sell my
newspaper to Mr. Whitney.

My exchequer was low. Nearly every dollar I had made in the Maxim & Gay
enterprise had been lost by me in plunging on the races myself.

During the following week Mr. Whitney received me at his palatial home
on Fifth Avenue just after his breakfast hour. He interviewed me for
about an hour, obtained my price on the paper, which was what I had put
into it, namely $60,000, and promised to cable to Colonel Harvey, then,
as now, the distinguished editor of the Harper publications, who was in
Paris, asking his advice, saying that Colonel Harvey advised him in all
newspaper matters. I did not hear from Mr. Whitney again; but I did
discover that my business manager was in close communication with Mr.
Whitney and that the state of my financial condition every evening was
being religiously reported to him.

A few weeks later I was compelled to put the paper in the hands of a
receiver, and a representative of Mr. Whitney bought it for $6,500, or
about 10 cents on the dollar, and put it to sleep, leaving the field
to the _Morning Telegraph_. From that moment the _Morning Telegraph_,
which for a short period had been refusing all tipster advertising,
resumed the acceptance of such business and has continued that policy
up to this day.

A year after I retired from Maxim & Gay, Attorney-General Knox decided
that racehorse tipping is an offense against the old lottery law, and
those who now advertise tips instruct that no money be sent by mail.

Having lost the _Daily America_ and having "blown" the Maxim & Gay
Company, I was again broke. But my credit was good, particularly among
race-track bookmakers. That Summer, 1904, I became a race-track
plunger, first on borrowed money and then on my winnings. By June I had
accumulated $100,000. In July I was nearly broke again. In August I was
flush once more, having recouped to the extent of about $50,000. Early
in September I went overboard; that is to say, I quit the track losing
all the cash I had and owing about $8,000 to a friendly bookmaker.

Disgusted with myself, I longed for a change of atmosphere. I stayed
around New York a few days, when the yearning to cut away from my
moorings and to rid myself of the fever to gamble became overpowering.
I bought a railroad ticket for California and, with $200 in my clothes,
traveled to a ranch within fifty miles of San Francisco, where I hoed
potatoes, and did other manual labor calculated to cure race-trackitis.
In less than six weeks I felt myself a new man, and decided to stick to
the simple life forevermore--away from race-tracks and other forms of
gambling.

But I didn't.




CHAPTER II

MINING FINANCE AT GOLDFIELD


I had never visited San Francisco. Being close to the city of the
Golden Gate--within fifty miles--I decided to "take a look." So one
evening, in the late Fall of 1904, I packed my grip and within two
hours was comfortably housed in the old Palace Hotel.

The first man I met on entering the lobby was W. J. Arkell, formerly
one of the owners of _Frank Leslie's Weekly_ and of _Judge_.

"Hello, Bill!" I exclaimed. "What are you doing here?"

"Same as you," he answered. "Morse trimmed me in American Ice, and I'm
broke. I am in hock to the hotel. They think I am worth $2,000,000. I
haven't 20 cents."

During the evening we consoled each other over a series of silver gin
fizzes, several of which Arkell paid for with the stub of a pencil. My
companion promulgated a scheme for the quick putting on their feet of
two Eastern rovers adrift in the big Coast city, and that night there
was formed the W. J. Arkell Advertising Agency. Then the horse-tipping
firm of "Jack Hornaday" was established. I declared that I preferred to
have little to do with it except to show "Willie" how it had been done
in New York by Maxim & Gay.

"I will do it for you, Bill," I said; "but no more for me--I've had
enough."

"Jack Hornaday" advertisements appeared daily in all the San Francisco
papers. Capable clockers and handicappers were hired and some excellent
information was obtained. Race-goers got a run for their money.

But something happened. The race-track trust, which enjoyed a big pull
in the San Francisco _Examiner_ office, soon realized that somebody
outside of the inner circle was getting the public's money, and every
day that "Jack Hornaday" tipped a loser the _Examiner_ carried on its
sporting page a notice to the effect that "Jack Hornaday's" tip had
resulted very disastrously to his clients.


A PARTNERSHIP OF PURE NERVE

"Jack Hornaday" discontinued business.

I began to like San Francisco and the Coast. Being thrown among
Arkell's associates in the Palace Hotel lobby, from time to time I
naturally heard a great deal of talk about the new Nevada mining camp
of Tonopah.

"Rice," said Arkell one evening, "come with me up to Tonopah and be my
press agent. We will get hold of a mining property up there, promote a
company and make a barrel of money."

"What do you know about mines?" I asked.

"Well, I've lost enough in 'em to know a great deal," he answered.

"I don't know a mine from a hole in the ground, and I know nothing
about the stock-brokerage business; so I don't see how I can be of any
assistance," I said.

"Don't let that bother you," he replied. "I'll show you how. You come
with me."

"I will go on one condition," I said. "I am in for half on anything you
do."

We shook hands and it was a bargain.

We went to the depot. I had a trifle less than $150 in my pocket.
Arkell had $75.

"Suppose we get stranded out there, what will happen?" I propounded.

"Oh, forget it!" he answered. "How can a couple of Easterners like us,
wide awake and with phosphorus brains, get stranded in a place where
they dig silver and gold out of the ground?"

We journeyed to Tonopah--a thirty-six-hour ride. The altitude is 6,000
feet, and it was cold, nasty, penetrating Winter weather. During the
last hundred miles of our journey across the mountainous desert we
looked out of the car window and saw trainload after trainload of what
was said to be ore coming from the opposite direction, and we decided
that Tonopah was a sure-enough mining camp and that some of the
sensational stories about bonanza mines that we had heard were really
true.


BUCKING THE TIGER ON THE DESERT

Arriving In Tonopah after dusk, we sought hotel accommodations. The
best we could get was a bed in a forbidding looking one-story annex,
walled with undressed pine and roofed with tarpaulin. It was located
100 feet to the rear of the hotel, which was already crowded with
miners and soldiers of fortune drawn from all quarters of the world by
the mining excitement. Its aspect was so inhospitable that Arkell and I
decided not to retire for a little while. We gravitated out toward the
barroom, where the click of the roulette wheel caught our ears.

We sat down to watch the game. Soon we were buying stacks of checks and
ourselves bucking the tiger excitedly. In an hour the remnants of my
$150 passed to the ownership of the man behind the game, and Arkell had
put his last two-bit piece on the black and lost.

I looked at him. He looked at me.

"Umph!" he grunted. "Better hit the feathers!"

Meekly I followed him to the annex. When we got under the soiled gray
woolen blankets, I remarked: "I've got a cane and an umbrella and three
suits of clothes. Do you think we can sell them in the morning for
enough to provide breakfast money?"

"Oh, come off!" exclaimed my partner. "Wait till I present my card
around this burg in the morning; then we will get all the breakfast we
want."

We awoke hungry, as all men have a habit of doing when they are broke.

"I am going over to the Montana-Tonopah Mining Company's office," said
Arkell. "A mining engineer by the name of Malcolm Macdonald makes his
headquarters over there and he wants to sell some mining properties at
Goldfield and in other parts of the State for about three million
dollars."

"Three millions!" I exclaimed.

"Yes," said Arkell. "I'll get the facts and wire them to my friend Joe
Hoadley in New York."

"Say, Bill," I remonstrated, "they have a privately-owned jerkline
telegraph in this town, and if you send any 'phony' telegrams over the
wire, they'll be on to you. So don't do any of that kind of business."

"Nothing of the kind!" replied he promptly. "Any message I send to
Hoadley he'll answer."

"I guess you have it fixed on the other end," I remarked. He laughed.

We strolled over to the State Bank and Trust Company building, across
the street, and there met Malcolm Macdonald, a mining engineer from
Butte, Montana, and his friend, Mr. Dunlap, who was at the time
secretary of the Montana-Tonopah Mining Company. The conversation was
not more than five minutes old when Arkell suggested that he would like
to eat breakfast, but "didn't want any restaurants in his," intimating
that he would like to have some good, old-fashioned home cooking. Mr.
Dunlap remarked modestly that the camp was too young to boast of much
home cooking, but that if we would be his guests he would guarantee to
make arrangements for some special cooking at the Palace restaurant.


BIDDING $3,000,000 WHEN BROKE

After breakfast, which consisted of mountain trout, the flavor of which
was more delicious than anything I had tasted in many years--probably
because of the artificial hunger which an empty purse had created--we
returned to the office of the bank. There Arkell explained to Mr.
Macdonald that he wanted "a big mining proposition or nothing." He said
he represented big Eastern capital and that he was prepared to pay from
one to three millions for the right kind of property. Mr. Macdonald
named some mines and prospects which he said he was willing to
sacrifice for $3,000,000.

One of them was the Simmerone, of Goldfield, which Mr. Macdonald
offered for $1,000,000. We afterward learned that he had paid $32,000
for it. At that time there was a six-foot hole in the ground, and the
whole property contained less than five acres. A stockade had been
built around the workings on account of the extreme richness of the ore
that had been opened at grass-roots.

Mr. Macdonald also offered for sale a lead property at Reveille and a
lead-silver property at Tybo, both situated about 70 to 100 miles from
a railroad. (Later these properties, along with some others, were
promoted by Charles Minzesheimer & Company, a New York Stock Exchange
house, as the Nevada Smelters & Mines Company and passed on to the
public at a valuation of $5,000,000. The market value of the entire
capitalization of this company is now less than $10,000.) These "mines"
were to be put into the deal at $1,000,000 each.


MILLIONS IN THE VISTA HELD NO CHARMS

Arkell wrote a dispatch to the East in the presence of our newly-made
friends, describing the offering. Then he and I held a consultation,
and he vouchsafed the information that we would certainly get a free
automobile ride to Goldfield and have a chance to see there the new
boom mining camp.

I got "cold feet." Arkell's talk of visionary millions in that bleak
environment of snow-clad desert and wind-swept mountain didn't enthuse
me at all. I protested against the proposed trip to Goldfield, and
insisted that I should be allowed to telegraph to relatives for money
with which to return to the Coast.

But Arkell persisted. He declared that the expense of the trip to
Goldfield and back to Tonopah would be borne by the vendors of the
mines and that our return trip to San Francisco would be delayed only
one day. I left my grip, umbrella and cane in Tonopah, intending to
return the same evening, and boarded the automobile for Goldfield.

Arrived in Goldfield, we were escorted to the Simmerone. Arkell
appeared to be very much impressed, although he remarked to me a few
minutes later that he would not give $34 for the whole layout. And
therein he was wise. The Simmerone was later capitalized for 1,000,000
shares, each share of a par value of $1, ballooned on the San Francisco
and Goldfield stock exchanges to $1.65 a share, and then allowed to
recede to nothing bid, one cent per share asked. The rich ore "petered
out."

There was an indefinable something in the atmosphere of Goldfield--a
new, budding mining camp, at an altitude of 5,000 feet and on the
frontier--that stirred me, and I decided to stay awhile.

Arkell determined that he would go back to Tonopah and get an option on
the control of a mining company known as the Tonopah Home, which Mr.
Dunlap had mentioned to him in the automobile en route to Goldfield. He
said he would then go to San Francisco to promote it. The reason why he
decided to handle the Tonopah Home, I afterward discovered, was that it
was already incorporated and stock certificates had been printed,
thereby eliminating the delay and expense incident to preparing
something for the immediate consumption of the San Francisco public.

"How am I going to subsist here for a few days until I can begin to
make a living?" I asked Arkell.

"How am I going to get back to Tonopah and from there to San
Francisco?" Arkell asked me.

At that moment we stood in front of the Goldfield Bank and Trust
Company's building--a tin bank literally as well as figuratively. It
was constructed of corrugated iron and tin. A few months later, when
the bank went up the flume, the cash balance found in the safe
aggregated 80 cents.

"You take me into this bank and introduce me and I will cash a check,"
he said.

"A check on what?" I asked.

"On my bank in Canajoharie, New York," he said. "I was born and brought
up there, and they wouldn't let one of my checks go to protest.
Besides, I can get back to 'Frisco and protect it by telegraph, if
necessary, before it reaches Canajoharie."

We entered the bank. I introduced myself to the cashier as an Eastern
newspaper man, and then introduced W. J. Arkell as the former publisher
of _Leslie's Weekly_, _Judge_, and so on.

After a brief parley, Arkell exchanged his paper for real money to the
amount of $50. On leaving the bank, I said:

"Now, Bill, come across! I'm flat broke, on the desert."

He handed me $15. I was satisfied, because he needed all of the $35 to
get back to civilization.


"HUMAN INTEREST" VERSUS TECHNICAL MINING

After Arkell's departure for Tonopah I went to the office of the
Goldfield _News_ and asked for a job. I got it, at $10 a day. My first
assignment was to interview an old miner named Tom Jaggers. I wrote
what I considered a first-class human-interest story, and handed it to
the owner and editor, "Jimmy" O'Brien. He thought it was fair writing,
but not the sort of matter the Goldfield _News_ wanted. It wanted
technical mining stuff. Of course I didn't know a winze from a
windlass, nor a shaft from a stope, and some of the weird yarns I
handed in about mine developments certainly did make Mr. O'Brien jump
sideways at times.

Within a week I was discharged for incompetency.

I was not at all appalled at losing my job on the Goldfield _News_. I
had begun to like the life and was convinced there were some real gold
mines in the camp. I was a tenderfoot and knew little or nothing about
the mining business, but the visible aspect of shipment upon shipment
of high-grade ore leaving the camp by mule-team was convincing. What
probably impressed me most was the evident sincerity of the
trail-blazers who had been on the ground since the day the camp was
born. These men had suffered all kinds of hardships to hold their
ground and make a go of the camp which, when discovered, was situated
100 miles from a railroad station and at least 25 miles from a known
water-supply. Tradition said that men had died of thirst on the very
spot where Goldfield was now adding daily to the world's wealth.

My environment became an inspiration.

There were a few penny-mining-stock brokerage firms doing business with
the outside world, and the idea of starting an advertising agency
appealed to me strongly. Here was an opportunity for the great American
speculating public to take "a flyer" on something much more tangible
and lasting than a horse-race, I determined.

Failing to locate a furniture store I ordered a long, rough, pine board
table made by a carpenter, rented desk-room from the Goldfield Bank and
Trust Company right in front of the cashier's counter, and secured the
services of an expert male stenographer from Cripple Creek. The
Goldfield-Tonopah Advertising Agency was born.


BEGINNING THE ADVERTISING BUSINESS

The idea of applying to the American Newspaper Publishers' Association
for recognition did not occur to me. I did not know that such was the
practise of agents. I did believe, however, from my ad-writing
experience with the Maxim & Gay Company, in New York, that I could
write money-getting advertising copy. Further, my experience in making
contracts with advertising agents for the publication of Maxim & Gay's
advertising in the newspapers throughout the land had, it seemed,
conveyed to me sufficient information regarding that end of the
business to fortify me in my new field.

Next morning I entered the office of the Mims-Sutro Company, a newly
established brokerage firm, and urged advertising.

"We are already spending about $100 a month," said the manager.

"One hundred dollars a month!" I exclaimed. "Why, you ought to be
spending that much every hour!"

At first they thought me a fanatic on the subject, but within a
fortnight I succeeded in inducing them to spend $1,000 in a single day
for advertising. It was not, however, until after I had shown them how
to follow up their correspondence successfully that they began to
believe in me. I wired to nearly all of the important city newspapers
throughout the country for rates. After obtaining their replies I
decided to spend $500 in the Chicago Sunday _American_, and $500 in
the San Francisco _Examiner_ in one issue. I forwarded the copy with
the money, and it appeared promptly. The results were good--so good,
indeed, that within two months the Mims-Sutro Company was spending at
the rate of from $5,000 to $10,000 a week for advertising, and my
commissions amounted to thousands.

My contracts with the advertisers required them to pay me one-time
rates, and my contracts with the publishers permitted me to send in
copy at long-time rates, and the profit was about 45 per cent. And
inasmuch as I always sent cash with the order, my copy was in great
demand. Indeed, my agency was fairly inundated day after day with blank
contracts from newspapers all over the country, the managers of which
were clamoring for the Goldfield business. In addition to the
Mims-Sutro account, I soon had many others; in fact, I had all the
others. Within six months after my arrival in Goldfield my agency
netted me $65,000.


SOME ADVERTISING THAT PAID

My second best customer was January Jones, the noted Welsh miner, and
later, when the corporation of Patrick, Elliott & Camp swung into
business as promoter, I placed its advertising. I held it, too, until
the death of C. H. Eliott, when the control of that firm fell into
other hands and it ultimately went out of business. In the course of
three years my advertising agency inserted in the neighborhood of
$1,000,000 worth of advertising in the newspapers of the United States,
chiefly those of the big cities, and all of the advertising made money.
It simply had to make money, because the brokers who did the
advertising had little or nothing to begin operations with except the
mines, and the mines were not their property.

The most remarkable feature of that advertising campaign to me was that
I had never been a stock-broker, had never been a mine-promoter, and
had never been in a mining camp before; but still, despite my utter
lack of knowledge, to begin with, of the technical end of the business,
my advertisements pulled in the dollars.

I was an enthusiast. I believed in the merits of the camp, and my
enthusiasm undoubtedly carried itself to the readers of my
advertisements. But the quality of the advertising copy did not
entirely explain my success in bringing the money into Goldfield. The
stock offerings undoubtedly _struck a popular chord_. Tens of
thousands of people who for years had been imbibing the daily
financial chronicles of the newspapers, but whose incomes were not
sufficient to permit them to indulge in stock-market speculation in
rails and industrials, found in cheap mining stocks the thing they
were looking for--an opportunity for those with limited capital to
give full play to their gambling, or speculative, instinct.

Time and again promotions were almost completely subscribed by
telegraph in advance of mail responses reaching Goldfield; and it
frequently needed but the publication of a half-page advertisement in
40 or 50 big city newspapers, of a Sunday, to bring to Goldfield by
wire before Monday night sufficient reservations to guarantee
oversubscription in a few days.

It was easy to give full play to my penchant for experimenting, in the
evolution of mining-stock promotion in Goldfield. The old system, and
the one which recently has enjoyed much vogue among financial
advertisers, was the endeavor first to get names of investors rather
than immediate results from the advertisements, and to follow them up
by correspondence. In spending the first $1,000 appropriated for
advertising from Goldfield, I split the money between two newspapers on
one day. I constructed large display advertisements and appealed for
direct, quick replies. This succeeded.


BUILDING GOLD MINES WITH PUBLICITY

A little later I organized a news bureau as an adjunct of the
advertising agency.

It is acknowledged that this news bureau accomplished much for Nevada.
As a matter of fact, it is generally conceded by Goldfield pioneers and
by mining-stock brokers throughout the country that the news bureau was
directly responsible for bringing into the State of Nevada tens of
millions of dollars for investment, and was indirectly responsible for
the opening up of the Mohawk and other great gold mines of the
Goldfield camp and of the State.

The prospectors who located Goldfield were without means. George
Wingfield, the man who is now president of the merged Goldfield
Consolidated, came into the mining camps with only $150. No funds of
consequence were available from home sources. The money that later made
Goldfield the "greatest gold camp on earth" came from the outside, and
the news bureau secured it by focusing the attention of the American
public on the great speculative possibilities of investments in the
mining securities and leases of the camp. One of the leases, known as
the Hayes-Monnette, operated with Chicago money, afterward opened up
the great Mohawk ore deposit at a period when there was no money in the
treasury of the Mohawk Mining Company to do its own development work.
And there are scores of other instances which bear me out.

I was head of the news bureau, and the news bureau was Nevada's
publicity agent. I have always considered my work in this direction in
the light of an achievement. No one contributed a dollar to the news
bureau except myself.


HAIR-RAISING STORIES FOR DISTANT READERS

That news bureau, with its headquarters on the desert, at a time when
water was commanding $4 a barrel in Goldfield and coal could not be
obtained in the camp for love or money, was operated with as much
calculating judgment as it could have been were it subsidized by the
most powerful interests in America. Human-interest stories that were
written around the camp, its mines and its men, were turned out every
day by competent newspaper men. These were forwarded to the daily
newspapers in the big cities of the East and West for publication in
the news columns.

Most of the stories were accepted and published. Whenever hesitancy was
observed, publishers were tempted by the news bureau with large
advertising copy to continue to give the camp publicity.

Of such great assistance in arousing public interest did I find this
work that noted magazinists like James Hopper were imported to camp and
pressed into service by the news bureau to write readable stories. At
times, when public interest appeared to lag, the wires were used by the
camp's newspaper correspondents to obtain publicity for all kinds of
sensational happenings that were common on the desert. Reports of gold
discoveries, high play at gambling-tables, shooting affrays, gamblers'
feuds, stampedes, hold-ups, narrow escapes, murders, and so forth, were
used to rouse the public's attention to the fact that a mining camp
called Goldfield was on the horizon.

I felt confident that the speculating public was going to make a great
big "killing" in Goldfield. Tonopah, twenty-six miles to the north, was
making good in a wonderful way. It had already enriched Philadelphia
investors to the extent of millions. I could see no reason why
Goldfield should not at least duplicate the history of Tonopah. Never
in my life had I lived in an environment that inspirited me as this
one. The visages of those around me were, as a rule, roughly hewn; the
features of many were marked with all the blemishes that had been put
upon them by time, by sleepless nights, by anxiety and by contact with
the elements; but courage, sincerity and honesty of purpose were
written in every line of their faces.

I became imbued with the idea that investors who put their money into
Goldfield stocks were not only going to get an honest run for their
money, in that the mines were going to be developed and many would make
good, but that the opportunity for money-making, if embraced by the
public at that time, would earn a great reputation for the man who
educated the public to a full understanding of the situation.


THE MERCURY OF SPECULATION

Mining-stock speculators and investors at a distance who responded to
the red-hot publicity campaign which marked those early days of
Goldfield rolled up enormous profits, and I made no mistake. Terrific
losses came eighteen months later, as a result of a madness of
mining-stock speculation which followed on the heels of the great
Mohawk boom and the merger of various Goldfield producers into a
$36,000,000 corporation. This was taken advantage of by "wild-catters"
in every big city of the country, and the public was fleeced to a
finish. But of this more and a plenty later.

In those early days my agency advertised Goldfield Laguna at 15 cents
per share in order to finance the company for mine operations. Within
a year thereafter Goldfield Laguna sold at $2 a share on the San
Francisco Stock Exchange, and was absorbed by the Goldfield
Consolidated at that figure. And there were many others which
duplicated or exceeded the performance of Laguna.

At the time of which I tell, when Laguna was promoted at 15 cents,
Goldfield was about a year old. A population of about 1,500 had
gathered there from all sections of the country. There were mining
experts from Salt Lake, San Francisco and Colorado, and miners from
every part of the Western mining empire; saloon-keepers from Alaska and
Mexico; real-estate brokers from practically every Western State and a
scattering of "tin-horns." It was about as motley a gathering as one
could find anywhere in the world, but compositely they were a sturdy
lot.

The camp was enjoying its maiden boom. In sixty days real-estate values
had jumped from $25 for a lot on Main Street to $5,500. Roughly
constructed business houses banked the main thoroughfare for two or
three blocks. The heavy traffic incident to hauling in supplies from
Tonopah had ground the dirt of the street into an impalpable mass of
dust to the depth of fifteen inches, and the unchecked winds of the
desert, sweeping from the Sierra Nevadas to the high uplifts east of
Goldfield, whipped the dust into blinding clouds that daily made life
almost unendurable.

Practically the entire population was housed in tents that dotted the
foothills. At night-time these presented the appearance of an army
encampment. Provisions were scarce and barely met the requirements. The
principal eating-place was the Mocha Café, which consisted of a 14 by
18 tent with an earthen floor and a roughly constructed lunch-counter.
Here men stood in line for hours, waiting to pay a dollar for a dirty
cup of coffee, a small piece of salty ham and two eggs that had long
survived the hens that laid them.

The popular rendezvous was the Northern saloon and gambling house,
owned and managed by "Tex" Rickard and associates. Here fully
seventy-five per cent. of the camp's male population gathered nightly
and played faro, roulette and stud-poker, talked mines and mining, sold
properties, and shielded themselves from the blasts that came with
piercing intensity from the snow-capped peaks of the Sierras. The
brokers of the camp gathered every night in the Northern and held
informal sessions, frequently trading to the extent of 30,000 or 40,000
shares of the more active stocks.


The mining stocks which were advertised through my agency in those
early Goldfield days were generally of the 10, 20 and 30-cent per share
variety. The incorporators of the companies were enthusiastic on the
point of their "prospect" making good, but I argued to myself that if
the chances of any mining prospect of this character proving to be a
mine were only about one in 25 or one in 50, and my agency advertised
25 or 50 companies of the average quality, and one of them made good in
a handsome way, he who purchased an equal number of shares in each
would at least "break even" with the profits from the one winner.

Later this principle was "knocked into a cocked hat" for conservatism
by Mohawk of Goldfield advancing from 10 cents to $20 a share, proving
that if Mohawk had been one among 50 companies, the shares of which
were purchased by an investor at 10 cents, he would have gained
handsomely. Early purchasers of Mohawk gathered 200 to 1 for their
money, many times more than could usually be won on a long shot at the
horse-races, and not so very much less than was formerly won by lucky
prize-winners in the Louisiana Lottery. And Mohawk was only one of a
dozen of the early ones which advanced in price on the exchanges and
curb markets more than 1,000 per cent.

At this early stage in Goldfield, "wild-catting" was not indulged in
from the camp, unless this long-shot gambling in shares of "prospects"
can by a grave stretch of imagination be termed such, the
promoter-brokers being able to offer stocks of close-in properties.
Among the prizes were Red Top, which advanced within two years
thereafter from 8 cents to $5.50 per share; Daisy, which sky-rocketed
from 10 cents to $6; Goldfield Mining, which soared from 10 cents to
$2; Jumbo, which improved from 50 cents to $5; Jumbo Extension, which
rose from 15 cents to above $3; Great Bend, which jumped from 20 cents
to around $2.50; Silver Pick, which moved up from 10 cents to $2.65;
Atlanta, which was promoted at 10 and 15 cents and sold up to $1.25;
Kewanas, which was lifted from 25 cents to $2.25, and others.
"Wild-catting" in a small way was prosecuted in Goldfield's fair name
even in those days, with Denver as the headquarters of the swindlers.


_Eighteen months later, when the Mohawk mine of Goldfield was in the
midst of its greatest half-year of production, at the rate of
$1,000,000 a month, and the consolidation of the important mining
companies of the camp was in progress, "wild-catting" became general
from office buildings in the large cities. There were more than 2000
companies incorporated during this last period, not one of which made
good, and the public lost from $150,000,000 to $200,000,000 as the
result of this operation alone. Fully $150,000,000 more was lost by the
ballooning to levels unwarranted by mine showings of listed Goldfield
stocks on the New York Curb and the San Francisco Stock Exchange, at
the same time._


But I am ahead of my story.

It was late in the Spring of 1905. I had been at work in Goldfield more
than six months, and my campaign of publicity was beginning to gather
momentum. The mines, however, were not at the moment keeping lively
pace. The Mohawk was yet undiscovered.


THE BIRTH OF BULLFROG

At this juncture the new mining camp of Bullfrog, 65 miles south of
Goldfield, was born. My publicity facilities were sought by owners of
properties in Bullfrog "to put the camp on the map."

C. H. Elliott, a Goldfield pioneer, put an automobile at the disposal
of myself and my stenographer, and we departed for Bullfrog. Elliott
and his associates had staked out a townsite which they called
Rhyolite. I was presented with seven corner lots on my arrival, to help
along my enthusiasm.

There, on the saloon floor of a gambling house, which was the chief
place of resort in the camp, I met for the first time George Wingfield,
then the principal owner of the Tonopah Club at Tonopah, a gambling
house which had lifted him from the impecunious tin-horn gambler class
to the millionaire division; United States Senator George S. Nixon,[1]
his partner; T. L. Oddie, later elected Governor of Nevada; Sherwood
Aldrich, now one of the principal owners of the Chino and Ray
Consolidated mines, and worth millions, and others who have since
accumulated great riches.

          [1] On the death of Mr. Nixon in Washington, D.C., in June,
          1912, Mr. Wingfield was appointed his Successor as U.S.
          Senator by Governor Oddie. Mr. Wingfield's Goldfield
          newspaper felicitated its owner and pronounced the
          appointment to be logical and deserved. Mr. Wingfield,
          however, after hearing from Washington as to the manner
          in which the news of his appointment was received by members
          of the Senate, notified Governor Oddie three weeks later
          that he must decline the honor. He gave other reasons.

They were on the ground and buying properties. Mr. Aldrich purchased
the controlling interest in the Tramps Consolidated for about $150,000.
It was incorporated for 2,000,000 shares of a par value of $1 each, a
year later boomed to $3 a share on the New York Curb, and is now
selling at 3 cents, without ever having paid a dividend.

Mr. Elliott had a large stock interest in the Amethyst mine and the
National Bank mine, which were capitalized for 1,000,000 shares
respectively, and he presented me with 10,000 shares of stock in
each. He and his partner sold the control of the Amethyst to
Malcolm Macdonald of Tonopah. Later, when Amethyst's neighbor,
Montgomery-Shoshone, was selling at $20 per share, the market price of
Amethyst was pushed up to above $1 a share on the San Francisco Stock
Exchange, and I took my profit. The Amethyst has since turned out to be
a rank mining failure, as has practically every other property in the
camp, not one ever having earned a dividend.

The Bullfrog National Bank stock, representing another property that
looked for a while as if it would make good, I disposed of on the San
Francisco Stock Exchange at 40 cents a share, and I sold the town lots
at figures which netted me, in all, in excess of $20,000 for my one
day's trip to Bullfrog.

During my stay in Bullfrog I became very much impressed with the
Montgomery-Shoshone mine. This property, in fact, was the powerful
magnet which attracted everybody to the camp.

I was escorted through a tunnel seventy feet long. On each side as I
walked were walls of talc. I was told these assayed in places anywhere
from $200 to $2,000 a ton. Information was also forthcoming that the
width of the ore-body was more than seventy feet. (It afterward turned
out that the tunnel had been run along the ore-body and not across it,
and that the ore-body was about 10 feet wide.) Some specimen ore was
given me to assay, and the returns were staggering, running all the way
from $500 to $2,500 a ton.

In my enthusiasm I wrote stories about the property for publication
which must have induced the reader to believe that when all the riches
of that great treasure-house were mined, gold would be demonetized. As
a matter of fact, the stories from my news bureau, picturing the riches
of that Golconda, are said to have been indirectly responsible for the
purchase of control of the property by Charles M. Schwab and his
associates.

The history of the Montgomery-Shoshone is mournful but highly
instructive. For purposes of exposition of pitfalls in mining-stock
speculation it possesses striking qualifications. Here are the facts:

Malcolm Macdonald, mining engineer, acquired a half interest in the
mine from Tom Edwards, a Tonopah merchant, for $100,000, on time
payments. On the strength of the showing in the 70-foot tunnel an
effort was made to sell the control to the Tonopah Mining Company at a
profit. It did not succeed. Oscar Adams Turner, of New York and
Baltimore, the promoter of the highly successful Tonopah Mining
Company, which to date has paid back to the original stockholders $16
for every $1 invested, examined the Montgomery-Shoshone, and turned it
down because the property did not show him any well-defined veins or
other marks of permanency, and the ore-body appeared to him to be only
a superficial deposit of no great extent.

Many a good "prospect" has been condemned by mining men of the highest
standing, and has afterwards made good, particularly in Nevada. Mr.
Turner's turn-down did not daunt the owners.


ENTER, CHARLES M. SCHWAB

Engineer Macdonald incorporated a company for 1,250,000 shares of the
par value of $1 each, to own and operate the mine. Investors were
permitted by him to subscribe for small blocks of treasury stock at $2
per share. Shortly afterward Mr. Macdonald and the owner of the other
half interest, Bob Montgomery, sold a controlling interest to Mr.
Schwab and associates for a sum which has never been made public. Mr.
Schwab at once reorganized the company, took in two adjoining
properties that were undeveloped, and changed the capitalization to
500,000 shares of the par value of $5 each. He, in turn, permitted his
friends and the public to subscribe for the new stock at $15 per share.
Later the shares advanced to $22 on the New York Curb.

Undoubtedly Mr. Schwab thought well of the proposition, for he loaned
the company $500,000 to build a reduction works on the ground.

To date the mine has failed to pay for its equipment. Work on the
property has been abandoned and the mill has been advertised for sale.


_The company still owes Mr. Schwab about $225,000, the net profits on
the ore in six years being insufficient to repay his loan to the
company. In fact, the enterprise has proved to be one of the sorriest
failures in Nevada. The mine in six years produced $2,000,000 GROSS,
and although mine and mill were operated in an economical way, the net
proceeds from the ores were insufficient to pay off the Schwab debt.
Recently the shares have been nominally quoted at from 2 to 5 cents on
the New York Curb. The public's loss mounts into millions._


Investigation proves to me that Mr. Schwab was merely a mining
"come-on" and allowed his enthusiasm to run away with him, but the
public suffered just as much as if Mr. Schwab had perpetrated a
cold-blooded swindle.

I have heard the question propounded by a stockholder, "What possible
excuse could a man, with a good business head like that of Mr. Schwab,
have for promoting the Montgomery-Shoshone at a valuation of $15 a
share, or $7,500,000 for the property, afterward allowing the stock to
be quoted up to $22 a share on the New York Curb, or at a valuation of
$11,000,000 for the property, when, as a result of six years of mine
operations, the company is practically insolvent?"

An excuse acceptable to mining men might be offered were the
Montgomery-Shoshone property situated in a nest of other great mines,
intrinsically worth many times the valuation placed on the
Montgomery-Shoshone at the time of its promotion. "Prospects" of this
variety, according to approved mining experience, are sometimes
entitled to appraisement of great prospective value when neighboring
mines have demonstrated deep-seated enrichment. But there was no such
excuse in this case, because the deepest hole in the ground in the
entire camp was less than 200 feet at the time the Montgomery-Shoshone
was promoted by Mr. Schwab, and there was not a proved mine in or near
the camp.


I was present in Reno about three years ago when Mr. Schwab passed
through the divorce city en route to California. At that time
Montgomery-Shoshone had already cracked in price to around $3 a share,
and stories were being published in Nevada that Mr. Schwab had been
snubbed by members of an exclusive Pittsburg club for recommending
Montgomery-Shoshone for investment. Mr. Schwab, in hurriedly discussing
the matter at the railroad station, was quoted to the effect that the
property had been grossly misrepresented to him. This statement was
widely published in Nevada. Thereupon, Don Gillies, Mr. Schwab's
engineer in Nevada, who, with Malcolm Macdonald, was believed to be Mr.
Schwab's mining adviser, telegraphed Mr. Schwab and asked point-blank
whether he referred to him. Mr. Schwab answered that he did not. This
denial was also given wide publicity. There was only one reasonable
corollary, then, and that was that Mr. Schwab referred to Mr.
Macdonald.

In fine, it appears that Mr. Schwab may have actually purchased the
Montgomery-Shoshone on the sole representations of the vendor, the
interested party, and may have actually promoted the property on the
strength of the unverified representations of the vendor. It might be
that the vendor did not misrepresent at all; he may have been too
enthusiastic only, and communicated his enthusiasm to Mr. Schwab.

Possibly Mr. Schwab relied on newspaper accounts, and promoted the
property on the strength of them. A letter from Mr. Schwab, which
appears farther on, lends some color to this idea.

Even before this time Mr. Schwab had been in the mining game at
Tonopah. His Tonopah venture was the Tonopah Extension. The control of
the Tonopah Extension Mining Company was bought by John McKane, later a
member of the English House of Commons, from Thomas Lockhart at 15
cents per share. The capitalization was 1,000,000 shares. John McKane
interested Robert C. Hall, a member of the Pittsburg Stock Exchange, in
the proposition. He, in turn, made a deal with Mr. Schwab. The stock
was then sky-rocketed to above $17 a share on the San Francisco and
Pittsburg stock exchanges and the New York Curb. Afterward the price
was allowed to recede to around 65 cents per share. During the past
half-year it has maintained an average quotation of $2.00 per share.

Although the market price of the shares at the time Mr. Schwab was
believed to own the control was allowed to be advanced to a valuation
for the mine of $17,000,000, the company has since failed to pay as
much as $1,000,000 in dividends, and a quite recent appraisement by
Henry Krumb, a noted engineer, of the net value of the ore in sight in
the mine did not place it at so much as $1,000,000. The accuracy of
this report is disputed, on the ground that the ore-exposures at the
time did not permit of fair sampling. This allows for a discrepancy,
but hardly of $16,000,000.

After Tonopah Extension declined from around $17 a share to below $1.00
a share, it was alleged by Tonopah stockholders that Mr. Schwab and his
associates had unloaded at the top. Mr. Schwab replied that he owned
just as much stock after the market collapse as he did when he went
into the enterprise. This was met with an allegation by some
stockholders that while Mr. Schwab could probably prove that his
interest was as large at the later period as it had been at the outset,
it did not mean that Mr. Schwab and his _confrères_ had not unloaded at
the top and bought back at the bottom.

The following letter from Mr. Schwab to Sam C. Dunham, formerly U.S.
Census Commissioner to Alaska, afterward editor of the Tonopah
_Miner_, and later mining editor of the _Mining Financial News_ of New
York when I was managing editor, denies personal guilt, although it
leaves the reader free to believe that if Mr. Schwab personally did
not unload his stock at high prices, his associates might have done
so.

    CHARLES M. SCHWAB
    111 BROADWAY
    NEW YORK

    November 1, 1907.

    Mr. SAM C. DUNHAM,
    Editor _The Tonopah Miner_,
    Tonopah, Nevada,

    MY DEAR MR. DUNHAM:

    My attention has been called to your issue of Saturday, October 26,
    1907. To such criticisms as that issue contained of me, I generally
    do not reply, as it is useless and only leads to further
    discussion. But your paper heretofore has been so uniformly kind to
    me, so fair in every respect, and as I have always regarded you as
    a friend, our relations having been so pleasant, it makes me feel
    that I would like to make a short reply to the criticisms
    mentioned, as showing the consistency of my position.

    The only thing I criticised about Nevada was the inaccuracy of
    statements emanating from Nevada. You seem to attack me because of
    this statement, and the strength of my position is fully confirmed
    by your article because little, if anything, stated therein is true
    or accurate.

    I will take up your statements one by one. You say I bought from
    John McKane $25,000 worth of stock of the Tonopah Extension Mining
    Company at 15 cents per share. This is absolutely untrue.

    You say I bought 100,000 shares of Extension stock from Robert C.
    Hall at $6 per share, and paid for this stock with paper mill
    stock. No single part of that statement is correct. I never gave
    Mr. Hall any paper mill stock, nor did I buy 100,000 shares from
    him. The amount purchased from him was 60,000 shares. The price
    which you state I paid him for the stock is not correct, and, as I
    stated, I gave no paper mill stock in exchange.

    You say further that at the last annual meeting of Tonopah
    Extension stockholders, held in Pittsburg last May, it developed
    that I had disposed of all the stock I purchased from Mr. Hall and
    over two-thirds of my original holdings of 166,000 shares. This is
    absolutely untrue. I am holding to-day exactly the amount I held
    after all purchases were made by me, and from the beginning,
    aggregating some 285,000 shares, and I think if you take the
    trouble to look up the records you will find my statement in this
    connection to be true. When I originally bought Extension there was
    also some stock in my name belonging to others, which I
    subsequently transferred to them, leaving my own holdings of
    285,000 shares where they now remain, intact, in my personal
    possession.

    Going on down the article, you say that I purchased control of
    Shoshone and Polaris for less than $2 per share. This statement of
    yours is inaccurate. You say I sold a large block of Shoshone stock
    at $20 per share. This is also without any truth whatever. The fact
    is that 3,000 shares were sold at this figure, $20, and these 3,000
    shares came from the treasury of the company, all of which you will
    find a matter of record.

    It is true that I have loaned the company nearly $500,000 to build
    the new mill, and I shall be glad to have any other stockholder in
    the company assume his pro rata share of this amount.

    You wonder why I criticise statements from Nevada.

    Respectfully yours,

    (_Signed_) C. M. Schwab

The general impression in Nevada, as I have gathered it, is that Mr.
Schwab's mining enterprises have been great disappointments to him, but
that he did not lose any very large sum of money, and that the public
did. His enemies go so far as to allege that he, his brother, and his
brother-in-law, Dr. M. R. Ward, made millions out of the public.

I have an opinion, and I may be allowed to express it. Mr. Schwab, at
the time he became a promoter of Nevada mines, was an expert
steelmaker. He knew little or nothing about silver, gold and copper
mines. The fact that friends in Philadelphia, who knew as little about
the game as he did, had made a fortune in Tonopah (on the advice of a
man who did know) should not have influenced him. Because the Mizpah
mine at Tonopah, promoted by Oscar A. Turner as the Tonopah Mining
Company, had made good in a phenomenal way, Pennsylvania stockholders
had rolled up fabulous profits in the venture. Under this hypnotism Mr.
Schwab "fell" for Tonopah Extension.

Later, when Tonopah Extension showed a market enhancement of more than
$16,000,000, Mr. Schwab was in an ideal frame of mind to succumb to
Montgomery-Shoshone.

And when Montgomery-Shoshone in the Bullfrog boom showed a market
enhancement of $8,000,000, it did not take much argument to get him
into Greenwater, another "bloomer," which is described further on.

Market profits were evidently alluring to Mr. Schwab. He failed to
realize that his own great name was in large measure responsible for
the rise in price of his securities.

Sam C. Dunham has informed me that Mr. Schwab told him he refunded
to his personal friends in Pittsburg, who subscribed for
Montgomery-Shoshone stock on his recommendation, between $2,000,000 and
$3,000,000. This ought to be convincing that Mr. Schwab was guiltless
of any intent to profit at the expense of others.


Mr. Schwab's lack of caution, however, is instructive to the losing
speculator. It furnishes a startling example of the danger in banking
alone on an honored name for the success of an enterprise, and it also
drives home the truth of the adage, "Every shoemaker should stick to
his last."

Incidentally, Mr. Schwab's mining career points another moral. It is
this: Don't think, Mr. Speculator, because a promoter represents the
chances of profit-making in a mining enterprise to be enormous, and you
later find his expectations are not realized, that the promoter is
_ipso facto_ a crook. Big financiers are apt to make mistakes and
so are little ones. Undoubtedly grave misrepresentations are made every
day, and insidious methods are used to beguile you into forming a
higher opinion regarding the merit of various securities than is
warranted by the facts. But mine promoters are only human, and honest
ones not infrequently are carried away by their own enthusiasm and
themselves lose their all in the same venture in which they induce you
to participate.


WHY THE BOTTOM FELL OUT

When Montgomery-Shoshone was enjoying its market hey-day the Bullfrog
Gold Bar Mining Company was promoted at around 15 cents a share on the
usual million-share capitalization. A year later the price jumped to
$2.65 on the San Francisco Stock Exchange, and the stock was widely
distributed among investors. Recently the company was in the sheriff's
hands. The biggest losers in this venture were Alabama people, who had
great confidence in the promoters.

Other Bullfrog derelicts in which the public lost vast sums of money
were Gibraltar, Bullfrog Steinway, Shoshone National Bank, Bullfrog
Homestake, Bullfrog Extension, Denver Rush Extension, Mayflower, Four
Aces, Golden Scepter, Montgomery Mountain, Original Bullfrog, etc.,
etc.

Mining-stock brokers of the cities went into ecstasies over Bullfrog
during the height of the boom in that camp. Philadelphia mining-stock
brokers fed Tramps Consolidated of Bullfrog to their clients. Pittsburg
brokers recommended Montgomery-Shoshone. Butte brokers placed large
blocks of Amethyst. Gold Bar was distributed by brokers of the South.
New York brokers were behind Gibraltar, Four Aces, Denver Rush,
Montgomery Mountain, Eclipse, Golden Scepter, National Bank and a score
of others.

Practically every dollar of the millions invested in Bullfrog stocks
has been lost.

The cause of the failure of the Bullfrog district to make good was not
the absence of gold-bearing rock, for there is much of it in the
district, but it has been found that the per ton values are too low to
make the mines a commercial success. Bullfrog is situated on the desert
and has no timber and but very little water. Promoters and investors
did not realize this until mills were constructed. Then it was too
late. If the camp were situated on the timbered shores of the Hudson
River, the stocks of many of the mines of the district would probably
be in great demand at above par.

Probably the most remarkable fact regarding Bullfrog is that its
securities were more strongly recommended by Eastern brokers than the
Goldfield issues and became more fashionable at this early period in
Goldfield's history. Eastern brokers then had little confidence in
Goldfield; and at the very time when the stocks of Goldfield
representing inside properties, which later made good in an
extraordinary way, were being offered, they advised their customers not
to buy. The general cry then was that it was a fly-by-night offshoot of
the first great Tonopah boom, and the idea prevailed in the East,
because of the ascending influence of George Wingfield, then principal
owner of Tonopah's leading gambling hell, that Goldfield was a haven
for gambler's and wildcatters.

It was during the early days of the Bullfrog boom that my friend W. J.
Arkell's career as a mining promoter came to a sudden end. It will be
remembered that when he left Goldfield to go to Tonopah to make the
Tonopah Home deal his cash capital was $35. He closed the transaction
for the option on the million shares of Tonopah Home's capitalization
at a price around five cents a share. Then our "partnership," of three
days' duration, came to an end. Arkell journeyed back to San Francisco
and there declared me out.

Arkell was a prominent figure for a while as a San Francisco
mining-stock promoter. He listed Tonopah Home on the San Francisco
Stock Exchange. Then he started in to sky rocket the price. The rise
continued until the stock sold at 38 cents, an advance of about 700 per
cent, in a few months.

Then the psychological moment for Arkell arrived.

It leaked out that he had been financing his stock-market campaign by
buying reams of his own stock on one-third margin and at the same time
selling it, in like quantity, for all cash through other brokers. This
was equivalent to borrowing 66 2-3 per cent. of the market value. The
brokers and banks did the carrying. When Arkell's tactics were
discovered, indiscriminate short-selling by market sharp-shooters
ensued. Arkell's own hypothecated stock was used to make deliveries.

In order to hold his ground and to get the floating supply of the stock
off the market, Arkell engineered a consolidation. The Tonopah Home
Consolidated was incorporated, and holders of Tonopah Home stock were
invited to exchange their original certificates for shares in the
consolidated company.

Just then somebody threw a brick. The names of United States Senator
George S. Nixon and Hon. T. L. Oddie, later Governor of Nevada, had
been published as directors of the new company, and when these
gentlemen saw the half-page display advertisements in which their names
were used, and were informed that Arkell appeared to be on the ragged
edge, they telegraphed to the San Francisco Stock Exchange denying
connection.

Tonopah Home broke wildly on the announcement in the Exchange to
something like 3 cents a share. Then it dropped to nothing. Arkell's
methods were too "raw," and I knew the smash had to come, sooner or
later.

'Twas late in October, 1905. Bullfrog was still in its hey-day.
Goldfield's initial boom seemed to be flickering. Work was going on day
and night in the mines, but for want of fresh discoveries the camp was
being deserted by some of the late-comers.

Out-of-town newspaper correspondents came upon the scene, and stories
and pictures of the camp, labeled "A Busted Mining-Camp Boom," etc.,
soon appeared in the Los Angeles and San Francisco newspapers.
Goldfield mine-owners were accused of beguiling the public. Promoters
were gibbeted as common bunco men. Peculiarly enough, Bullfrog, younger
sister of Goldfield, which has since proved to be such a graveyard of
mining hopes, was immune. There men of substance were in control, the
writers said, while Goldfield was portrayed as a stamping ground for
gamblers and "wild-catters." The stories had their effect even in
Goldfield. Leading men of the camp began looking about for new fields
to conquer. The majority of Goldfield mine-owners had not "fallen" for
Bullfrog, but the success of the Bullfrog stock company promotions in
the East inspirited them.

The great mining-camp boom of Manhattan, 80 miles north of Goldfield,
which followed, owes much of its success to these fortuitous
circumstances. I was one of the first to get the Manhattan fever.

W. F. ("Billy") Bond, a Goldfield broker-promoter whose ear was always
glued to the ground, showed me a specimen of ore literally plastered
with free gold. He said it came from Manhattan and that Manhattan was
another Cripple Creek. It was only the night before that I had lost a
good many thousand dollars "bucking the tiger." Faro was the pastime of
practically everybody in Goldfield in those days, and I played for want
of some other means of recreation and lost heavily.

I was as broke as the day I entered the camp. I bought blankets, a suit
of canvas clothes lined with sheep-skin, and a folding iron cot, all on
credit. I packed the outfit off to Tonopah. There I climbed aboard an
old, rickety stage-coach of the regulation Far-Western type, and
started for Manhattan. We rode over a snow-clad desert, up mountains
and down canyons--a perilous journey that I would not care to
duplicate. The $10 I had in my pocket, after paying my fare, was
borrowed money. When I arrived that night at Manhattan, situated in a
canyon at an altitude of 7,000 feet, I set up my cot on the snow,
wrapped myself in my blankets and slept in the open. There were only
three huts and less than a score of tents in the camp.

The next morning I strayed through the diggings. Sacks of ore in which
gold was visible to the naked eye were piled high on every side. The
Stray Dog, the Jumping Jack and the Dexter were the three principal
producers. They honeycombed one another. I questioned some of the
prospectors as to the names of the single claims adjoining the Stray
Dog, Jumping Jack and Dexter. They informed me that there was one group
of claims adjoining that could be bought for $5,000. With $10 in my
pocket I proceeded to purchase it. I gave a check for $100, signed a
contract to pay the balance of $5,000 in 30 days or forfeit the $100,
and immediately started back to Goldfield to induce the president of
the bank to honor my check on presentation. He did.

When I returned to Goldfield I carried with me many specimens of
high-grade ore. They were placed on display in a jewelry store. There
was great excitement, and before night a stampede from Goldfield to
Manhattan ensued which in magnitude surpassed the first Goldfield rush.

A few days later I returned to Manhattan and sold my option for $20,000
cash. While I was there I met C. H. Elliott. Mr. Eliott had "cleaned
up" in Bullfrog. He told me that he had formed a corporation
partnership in Goldfield with L. L. Patrick, one of the owners of the
great Combination mine--which was later sold to the Goldfield
Consolidated for $4,000,000--and Sol. Camp, a mining engineer from
Colorado. The name of the concern was Patrick, Elliott & Camp, Inc. It
was organized to promote mining companies. Mr. Patrick is now president
of the First National Bank of Goldfield.

Mr. Elliott asked me to stay in camp for another day until he could
pick up a good property. He made a deal with some cowboys for a large
acreage embracing the April Fool group of claims, scene of the original
gold discovery. Twenty leases on this property were in operation, and
the surface showings were promising. If the ore "went down," the mine
would prove to be a bonanza. Mr. Elliott incorporated a company known
as the Seyler-Humphrey to own and operate the ground.

We returned to Goldfield. My publicity bureau telegraphed the news of
the Manhattan discoveries to a long chain of newspapers East and West.
Then I put out a big line of "display" advertisements in the big
cities, offering for sale stock of the Seyler-Humphrey. The entire
issue of 1,000,000 shares of Seyler-Humphrey was oversubscribed at 25
cents a share within two weeks. This was the result of $15,000 worth of
advertising, and the profits of the firm were $100,000. In quick
succession Mr. Elliott promoted the Manhattan Combination and the
Manhattan Buffalo. Within six weeks the firm's promotion profits
amounted to approximately $250,000.


HOW ABOUT THE PUBLIC'S CHANCES?

I asked Mr. Elliott one evening, shortly after Patrick, Elliott & Camp
earned their first $250,000 from their three Manhattan promotions,
whether he did not think the public was entitled to subscribe for this
stock at a lower price and at a smaller profit to his corporation.

I recall that he said: "The article we sell is something that somebody
wants and is willing to pay for. What we have sold them is worth what
we have charged. The fact that we are on the ground and have endured
hardships entitles us to a good profit, provided the gold showings on
the surface of the properties are not exaggerated. The sale of the
stocks has been accelerated by your gift of presentation through
advertisements. Big department stores and advertising specialists in
the cities pay from $15,000 to $30,000 a year for that kind of talent,
and we on the desert also have a right to avail ourselves of it."

"But suppose the properties don't make good?" I queried.

He answered: "It is not a case of excessive optimism for one to expect
that Manhattan properties will make into mines, in the presence of such
wonderful surface showings; and so long as we are not knowingly guilty
of deception, no harm is done. If the Manhattan stocks we have promoted
make good, $5 will be a reasonable price for them, and if they don't
make good, one cent will be too high for them. So why question the
ethics of charging 25 cents per share for Seyler-Humphrey when we might
have sold it for 15 cents and still have made money; or of charging 15
cents for Manhattan Buffalo when we could have sold it at a profit for
10 cents? The public knows it is gambling. If people want to buy stocks
where they won't lose all of their investment under any circumstances,
they know they can buy Union Pacific, Pennsylvania Railroad or New York
Central. The profits there, however, are limited, just like the losses.
In the case of mining stocks, representing prospects under actual
development, the public can lose or gain tremendously."

Mr. Elliott, who confessed to me that he often played the horse-races
when in San Francisco, then wrote out a list of stocks and prices,
representing what he said was a "book" on stocks, comparable to a
gambler's book on the horse-races, reading substantially as follows:

        Stock                   Price        Odds

    Union Pacific              $165.00      6 to 5
    Reading                     155.00      8 to 5
    Missouri Pacific             56.00      2 to 1
    Erie                         28.00      3 to 1
    Seyler-Humphrey                .25     20 to 1
    Manhattan Buffalo              .15     30 to 1
    Manhattan Combination          .10     50 to 1

"There," said Mr. Elliott, "you have the different prices on railroad
and mining securities with their chances of winning for the speculator
marked against them. When a man goes to a horse-race and plays the
favorite, he does exactly what the man does who gives his broker an
order to buy Union Pacific for him at current quotations. It is about 6
to 5 against the investment making a profit over current quotations on
any given day, although the investor will hardly gain 6 for his 5 if
the stock enjoys its highest probable advance. It is about 20 to 1
against the man buying Seyler-Humphrey making money, but he will gain
20 for his one if the mine proves to be a bonanza. However, the rail is
an investment and the mining a speculation."

"Do you mean to say that the odds against a man making money on Union
Pacific on any given day are only 6 to 5 when he buys the stock _on
margin_?"

"Not on your life!" he said. "A margin trader on the New York Stock
Exchange, unless he has sufficient capital behind him to hold out
against 'inside' manipulation, which has for its purpose the 'shaking
out' of the speculator, has not got _any_ chance! He is bound to lose
his money in the end. I am talking about people who buy stocks, pay for
them in full and get possession of their certificates and 'sit tight'
with them."

Mr. Elliott was a plunger and lost large sums in the gambling-houses of
Goldfield and Tonopah. He lost $20,000 in a night's play in the Tonopah
Club, then owned by George Wingfield and associates. When asked to
settle he tendered a check for $5,000 and a certificate for 100,000
shares of Goldfield Laguna Mining Company stock, then selling at 15
cents. This was accepted. Within a year Laguna sold freely at $2 a
share.

This incident illustrates how the foundations were laid for some of the
big fortunes which were amassed in the Goldfield mining boom. When
George Wingfield came to Tonopah in 1901 he brought with him $150,
borrowed from George S. Nixon, then president of a national bank at
Winnemucca, Nevada, and later United States Senator. Mr. Wingfield's
fortune is now conservatively estimated at between $5,000,000 and
$6,000,000.


Success having been won by the Patrick Elliott & Camp promotions, I was
considering whether or not much of the money-making that was being done
by the promoters around Goldfield was not due to my own peculiar
ability to reach the public, and I even meditated on my fitness to
become a promoter on my own account. The best properties in Manhattan,
by common consent, were the Stray Dog, the Jumping Jack and the Dexter.
These were sure-enough producers of the yellow metal. They were
shippers and were held in high esteem by mining men. I found it
impossible to purchase the Dexter because the company was already
promoted and the stock widely distributed at around $1 a share. George
Wingfield was then and is still interested in the Dexter. The Jumping
Jack was unincorporated. The stock of the Stray Dog was practically
intact in the hands of the owners. The price asked for the Jumping Jack
was $85,000. Stray Dog was held at $500,000.


JUMPING JACK MANHATTAN

I was again in funds as the result of my profits in the Manhattan boom,
and it was again my wont, for want of any other pastime, to play faro
at night. I found myself gossiped about with men like January Jones,
Zeb Kendall, C. H. Elliott, Al. Myers and others who rolled in money
one day and were broke the next.

The second largest gambling-house in Goldfield was owned by "Larry"
Sullivan and Peter Grant, both from Portland, Oregon. Sullivan claimed
that he was attracted to Goldfield by the stories which appeared in the
Sunday magazine section of a Coast newspaper, the copy for which had
been carefully and methodically written in the back room of our
Goldfield news bureau. Sullivan and Grant were making money, and plenty
of it. I patronized the Sullivan house, of occasion, and Sullivan
usually presided over the games when I was there. One evening I cashed
in $2,500 of winnings. The money was piled on the table in $20
gold-pieces by the dealer. As I was about to place it in a sack to
store away in the safe of the house until the morrow, Sullivan began to
josh me like this:

"Say, young feller, why don't you cut me in on some of your mining
deals? I'm game!"

"Are you? Well, stack up $2,500 against that money, and I'll see if you
are."

He went to the safe and lugged to the table a big canvas sack
containing $20 gold-pieces. Stacking the money on the table in piles of
$400 each, he matched my stake.

"Well?" said he.

"Put that money in a sack," said I, "and go and get that big coonskin
coat of yours, take a night ride by automobile to Tonopah, and in the
morning go by stage to Manhattan. When you get there look up the owner
of the Jumping Jack mine. I have met him. He is a member of the Ancient
Order of Hibernians. An Irishman can buy that property from him much
cheaper than anybody else. You go and buy it."

"What will I pay?" asked Larry.

"He wants $85,000, but get it as cheap as you can," I replied.

"What? With this $5,000?"

"Yes," said I. "Pay him the $5,000 down and sign a contract to pay the
balance in 60 or 90 days; but fetch him back to Goldfield, and have him
bring the deeds."

A few days later Sullivan returned to Goldfield, aglow with excitement.
Climbing out of the stage-coach, he pulled me into his private office.

"Say," he said, "I've got that guy with me and he's got the deeds. I
bought the Jumping Jack for $45,000. He'll do anything you want him to
do."

"Good!" I said.

The owner was introduced to me, and I turned him over to my lawyer, the
late Senator Pyne. Mr. Pyne drew up a paper by which the transferred
title of the property to the Jumping Jack Manhattan Mining Company,
capitalized for 1,000,000 shares, 300,000 shares of which were placed
in the treasury for mining purposes, and 700,000, representing
ownership stock, put in escrow, to be delivered to Sullivan and myself
on the payment of 6-1/2 cents a share. A board of directors was
selected.


At this juncture Sullivan, who knew as much about the mining promotion
and mining-brokerage business as an ostrich knows about ocean tides,
inquired what my next move would be. Sullivan seemed to be bewildered,
yet full of faith. My situation was this: I had conceived a
rip-snorting promotion campaign for the best property that had yet been
offered the public from Manhattan, but I had no cash to present it.
Turning to Sullivan I said:

"Do you know the Goldfield manager of the Western Union Telegraph
Company?"

"Yes, I know him well."

"Call him up by 'phone or send word to him that you will guarantee
payment of any telegrams I file here to-night or during the next three
days; I want to send some wires," said I.

"I'll do it," said Sullivan, and within a few minutes I was advised
that Sullivan's credit was unquestioned.

I returned to the news bureau and there drafted a 300-word telegram,
setting forth the merits of the Jumping Jack Manhattan property and
offering short-time options on big blocks of the stock. The message was
sent to practically all of the well-known brokerage houses in the
country which handled mining stocks. The bill for telegraph tolls was
$1,200. When Sullivan learned of its size he nearly collapsed.

"How far do you intend to go?" he gasped.

"Well," said I, "how can you lose? Your friend, Frank Golden, president
of the Nye & Ormsby County Bank, has accepted the presidency of the
company at our request, and the other officers we have secured are all
representative citizens of this community, and, besides, the Nye &
Ormsby County Bank has agreed to receive subscriptions. Can you beat
that for a layout? Never in my experience in this camp, with all the
promotions I have advertised, has the public had a dish quite so
palatable offered to it--a producing mine, in the first place; a
high-class directorate headed by a bank president, in the second place;
and a real bank as selling agent, in the third and last place. And it
will go like wildfire!"

I labored all that night in my advertising agency on some
strongly-worded advertising copy recommending to the public the
purchase of stock in Jumping Jack Manhattan. In the morning I induced
Sullivan to advance $10,000 to pay the advertising bills. The copy was
dispatched by first mail to the important daily newspapers of the
country, with instructions to publish on the day following receipt of
copy.

Within six days all of the advertising had appeared. The effect was
magical. The display advertisements assisted the brokers in the various
cities, who had asked for reservations of the stock, to dispose of
their allotments in a few days. Within ten days after the initial
offering of the promotion by telegraph to the Eastern brokers, Sullivan
showed me telegraphic orders for 1,280,000 shares of Jumping Jack
Manhattan stock at 25 cents a share, an oversubscription of 280,000
shares. Before the stock certificate books were printed and delivered
from the local printing office, we were, in fact, oversold.

That week and the next, Sullivan gave me _carte blanche_ to speculate
in local mining stocks with partnership money, and within a fortnight
we had made another small fortune from Manhattan securities. These were
advancing in price on the San Francisco Stock Exchange by leaps and
bounds.


I recall one overnight winning that we made, amounting to about
$12,000, which came so easy I felt almost ashamed to take the money.
Manhattan Seyler-Humphrey stock, promoted by Patrick, Elliott & Camp at
25 cents per share, was now listed on the Goldfield and San Francisco
stock exchanges. It was in fair demand at 30 cents.

A dispatch reached Goldfield from New York, purporting to be signed by
John W. Gates, reading as follows:

"At what price will you give me an option good 48 hours on 200,000
shares of Manhattan Seyler-Humphrey? Answer to Hotel Willard,
Washington, to-night."

This was to Patrick, Elliott & Camp. Within half an hour a half-dozen
similar messages reached other Goldfield brokers.

I happened to be in the office of Patrick, Elliott & Camp when the
first telegram was received, and I lost no time in going out on the
street and annexing all the Goldfield offerings of the stock at current
quotations. At first Lou Bleakmore, manager for Patrick, Elliott &
Camp, "smelled a rat," but when he learned that I was buying the stock
he became convinced that I believed John W. Gates really wanted some
Seyler-Humphrey, and he shot buying orders for his own firm into San
Francisco.

Personally I considered the message a snare. Somebody in the East, I
guessed, had bitten off a block of Seyler-Humphrey at around 25 cents
when it was promoted a few weeks prior and had made up his mind that he
would turn a trick. The Goldfield brokers having received telegrams, I
assumed that the same message had been sent to brokers in San
Francisco, where the stock was also listed. It seemed to me that an
advance would certainly be recorded on the following day. Sure enough,
the next morning the stock advanced to 38 cents a share, and the market
boiled. At this figure, and a little higher, I unloaded in the
neighborhood of 100,000 shares in Goldfield and San Francisco. A good
deal of this stock had been picked up by me the night before. But I
recall that one block of 10,000 shares had been allotted to me weeks
before at the brokers' price of 20 cents, and another block of 10,000
shares had been given me as a bonus for my publicity measures.

After turning over to the treasury of the Jumping Jack Manhattan Mining
Company the amount netted from the sale of treasury stock, and paying
off the amount still due on the original purchase price, Sullivan and
I, within three weeks of my little dare, had cleaned up a net profit of
$250,000.

"Do you want a cut?" I asked Sullivan when our joint profits reached
the quarter-million mark.

"No, I'm game. Stay with it," he returned.

Next day the L. M. Sullivan Trust Company, destined to make and lose
millions in the great Goldfield boom that followed and to mold for me
an exciting career as a promoter, was formed with a paid-up capital of
$250,000. Sullivan was made president and I vice-president and general
manager.




CHAPTER III

THE BREWING OF A SATURNALIA OF SPECULATION


Mr. Sullivan's gambling-house affiliation was not considered a drawback
to the trust company. George Wingfield, vice-president and heaviest
stockholder of the leading bank in Goldfield, was a gambler and Mr.
Wingfield also owned extensive interests in the mines. His mines were
making good, too. Owners of the gambling places now stood as much for
financial solidity in Goldfield as did savings-bank directors in the
East.

As for myself, I was unafraid. I vowed I would henceforth prove an
exception to the mining-camp rule and quit all forms of gambling. My
new position demanded this. And I found it easy to obey the
self-imposed inhibition. Soon the stock-market operations of the trust
company gave my speculative instinct all the vent it could possibly
have craved under any circumstances.

A few days later the sobering sense which impelled me to resolve that I
must absent myself from gaming tables evolved into a stern ambition to
accomplish big things for the trust company. I went about my business
like a man who sees dazzling before him a golden scepter and who is
imbued with the idea that if he exerts the power he can grasp the
prize. It had been agreed that the trust company would specialize in
the promotion of mining companies, and I determined that the trust
company should conduct its business as a trust company ought.

John Douglas Campbell, known on the desert as plain "Jack" Campbell,
was engaged by the trust company as its mining adviser and mine
manager. We agreed to pay him a salary of $20,000 a year, with a bonus
of stock in every new mining company we promoted, a stipend which was
later found to be equivalent to $50,000 a year.

Mr. Campbell had been identified with Tonopah and Goldfield mining
interests for three years, and was favorably known. For eight years
before coming to Tonopah he was employed as a mining superintendent in
Colorado by Sam Newhouse, the multi-millionaire mine operator of Utah.
In Colorado Mr. Campbell's reputation had been good. On coming to
Tonopah he was employed by John McKane, then associated with Charles M.
Schwab. Later he was placed in charge of the Kernick and
Fuller-McDonald leases on the Jumbo mine of Goldfield from which,
during a year's time, $1,000,000 in gold was taken out. After that Mr.
Campbell took hold of the Quartzite lease at Diamondfield, near
Goldfield, and he produced $200,000 in a few months from that holding.
He followed this up by a record production from the famous Reilly lease
on the Florence mine of Goldfield, amounting to $650,000 in two months.
It was within thirty days of the date of expiry of the Reilly lease
that Mr. Campbell was induced to take charge of the mining department
of the trust company.


Mr. Campbell's advent as our mine manager was immediately reflected in
the stock market by the advance of Jumping Jack Manhattan Mining
Company shares, which were now regularly listed on the San Francisco
Stock & Exchange Board, to 40 cents per share, up 15 points from the
promotion price. The sharp rise wrought an undoubted sensation in
stock-market circles. Brokers in the cities who had sold Jumping Jack
to their customers clamored for a new Sullivan promotion. Any new
mining venture for which the trust company would stand sponsor was
assured of heavy subscription and a broad public market.


TRYING IT ON THE STRAY DOG

The Stray Dog Manhattan mine was furnishing daily sensations in the way
of frequent strikes of fabulously rich ore. I urged that, no matter how
small the profit, the Sullivan Trust Company should begin its corporate
career with the promotion of a property as good as the Stray Dog. The
Stray Dog was for sale--at a price. One interest, of 350,000 shares,
owned by Vermilyea, Edmonds & Stanley, the law firm of highest standing
in Goldfield, could be acquired at 45 cents a share, and another
interest, of 350,000 shares, owned by prospectors who had located the
ground, could be had at 20 cents a share, all or none. The remainder of
the stock was in the treasury of the company. The total demanded for
700,000 shares of ownership stock was $227,500, all cash. A likely
property adjoining the Stray Dog, known as the Indian Camp, could be
purchased for $50,000 in its entirety. We knew that as soon as it
should become known that we had bought the Stray Dog, the value of
Indian Camp ground would double, and we therefore decided to annex the
Indian Camp at the same time we took over the Stray Dog.

The proposed outlay amounted to more money than we had, and I looked
about for assistance. Henry Peery, a Salt Lake mining man of substance,
had been negotiating for the Stray Dog in the interest of Utah bankers.
We agreed that Mr. Peery should be allowed to participate on the basis
of a one-third interest for him, and a two-thirds interest for the
trust company. Besides supplying his quota of the cash needed to swing
the deal, Mr. Peery agreed to furnish a president for the company, who,
he said, interested himself very frequently in mining enterprises. This
was Henry McCornick, the Salt Lake banker, son of the head of the firm
of McCornick & Company, reputed to be the richest private bankers west
of the Mississippi River. The deal was made.

We immediately proceeded to promote the Stray Dog Manhattan Mining
Company at 45 cents per share, the average cost to us of the stock
being 32-1/2 cents. It was impossible for any huge profit to accrue in
Stray Dog on any such margin as 12-1/2 cents per share between our cost
price and the selling price, because the expense of promotion appeared
bound almost to equal this. We figured that any promotion profits must
come out of the Indian Camp. The Indian Camp was capitalized for
1,000,000 shares, 650,000 of which were paid over to the trust company
and to Mr. Peery for the property. The remaining 350,000 shares were
placed in the treasury of the company to be sold for purposes of mine
development. The average per share cost to the trust company of its
ownership stock was a fraction less than 8 cents. We decided that as
soon as the Stray Dog was promoted we would offer Indian Camp shares on
a basis of 20 cents per share net to the brokers and 25 cents to the
public, and looked forward, if successful, to gaining about $75,000 net
on both ventures.


Immediately on taking over the control of Stray Dog and Indian Camp the
trust company purchased treasury stock in each of these companies, and
put a large force of men to work to open up the properties. Within
thirty days of the incorporation of the trust company Gold Hill in
Manhattan, on which were located the Stray Dog, Jumping Jack and Indian
Camp, swarmed with miners. The orders given to Engineer "Jack" Campbell
were to put a man to work wherever he could employ one, and to be
unsparing in expense so long as he could obtain results. Towering
gallows-frames and 25-horse-power gasoline engines were installed and
other necessary mining equipment ordered shipped to the properties.
Blacksmith shops, bunk-houses and storehouses were erected on the
ground. Day and night shifts of miners were employed. In order to
guarantee the constant presence on the properties of the engineer in
charge, the Sullivan Trust Company built for the engineer's use a
$6,000 dwelling house on Indian Camp ground.

Having convinced the natives that we were in dead earnest about our
mine-making intentions, we busied ourselves offering Stray Dog stock
for subscription at 45 cents per share. It was well known around the
camp that we had paid 45 cents per share for one block of 350,000
shares, and mining-camp followers were among the first to subscribe for
the stock. Then an effort was made to dispose of quantities of it to
the Eastern public by advertising and through mining-stock brokers.

That advertising campaign was approached with considerable caution. In
the first place, the subscription price of Stray Dog, 45 cents, was 80
per cent. higher than that of any other advertised promotion which had
yet been made from either the Goldfield or Manhattan camps; and in the
second place, the conduct of a mining-stock promotion campaign by a
Trust company appeared to me to justify more than ordinary care. There
were other factors that entered for the first time in Goldfield, too.

The initial successes of the big display advertising campaigns directed
from Goldfield appeared to have been due to the fact that the American
public had greeted mining-stock speculation as filling a long-felt
want, namely, a channel for speculation in which they could indulge
their gambling spirit with comparatively limited resources--resources
that were insufficient to give them a "look-in" on the big exchanges
where the high-priced rails and industrials are traded in.


ADVERTISING FOR THINKERS

Having "tried on the dog" my methods of advertising for nearly two
years, that is to say, having conducted an advertising agency for mine
promoters, and learned the business with their money, I had passed
through the experimental stage and now marshalled a cardinal principal
or two that I decided must guide me in the operations in which I had
become more directly interested.

I resolved never to allow an advertisement to go out of the office that
was unconvincing to a thinker. If my argument convinces the man of
affairs, I determined, it will certainly win over the man of no
affairs.

Dogmatically expressed, the idea was this:

Never appeal to the intelligence of fools, no matter how easily they
may part with their money. Turn your batteries on the thinking ones and
convince them, and the unthinking will to follow.

That principle was applied to the _argument_ of the advertisement.

The headlines were constructed on an entirely different principle,
namely, to be positive to an extreme.

The Bible was my exemplar. It says, "It is" or "It was," "Thou shalt"
or "Thou shalt not," and the Bible rarely explains or tells why.

The strength of a headline lies in its positiveness.

The logic which directed that the flaring headline of my big display
advertising copy embrace a very positive statement, and that the
_argument_ which followed in small type be convincing to the thinker,
was based on a recognition of the fact, that, while boldness of
statement invariably attracts attention, analysis is the final resort
of the thinker before becoming convinced.

More circumspection was used also in the process of selecting media for
the advertising. Newspapers that did not publish in their news-columns
mining-stock quotations of issues traded in on the New York Curb, the
Boston Stock Exchange, the Boston Curb, the Salt Lake Stock Exchange or
the San Francisco Stock Exchange were taboo, on the theory that by this
time trading in mining stocks had grown sufficiently popular to command
a regular following, and that it was easier to appeal to those who had
some experience in mining-stock speculations than to those who had
never before ventured.

Subsequent advertising campaigns were always conducted from this
viewpoint. I did not set the ocean on fire with my Stray Dog promotion,
the advertising campaign of which was conducted on these lines, but
this was due to circumstances which I explain further on. Later, when
the Sullivan Trust Company grew and prospered, and afterward when I
reached the East and learned more and more of the inside mechanism of
the big Wall Street promotion game in rails and industrials as well as
mining stocks, I found that my publicity principles were comparable to
those accepted by the Street generally.

_The mighty powers of Wall Street recognize the fact that it is not
in the nature of things that fools should have much money, and
thinkers, not fools, are the quarry of the successful modern-day
promoter, high or low, honest or dishonest._

_A little knowledge is a dangerous thing, and the man who thinks he
knows it all because he has accumulated much money in his own pet
business enterprise is a typical personage on whom the successful
modern-day multi-millionaire Wall Street financier trains his
batteries._

_The honest promoter aims at both the thinker who thinks he knows but
doesn't, and the thinker who really does know. He is compelled to
appeal to both classes because the membership of the first outnumbers
that of the second in the proportion of about 1,000 to 1._

_In fine, for every dollar of "wise" money which is thrown into the
vortex of speculation_, $1,000 is "unwise," or considered so.

The initial Stray Dog and Indian Camp promotion campaign was only half
successful at the outset. About 650,000 shares of Stray Dog and 350,000
shares of Indian Camp had been disposed of when the Manhattan boom
began to lose its intensity. Promotions had been made a little too
rapidly for public digestion. There were more miners at work than ever
in the Manhattan camp, but the demand for securities was not keeping
pace with the supply. Manhattan's initial boom appeared to be
flattening out just as Goldfield's first boom had.

We met with a setback from another direction. Henry McCornick's banking
connections in Salt Lake objected to the use of his name as president
of the Stray Dog. At the very height of our advertising campaign Mr.
McCornick resigned. We elected our engineer, "Jack" Campbell,
president, but damage was done.


YES, "BUSINESS IS BUSINESS"

The offices of the trust company were furnished on an elaborate scale,
resembling the interior of a banking institution of a large city. The
offices became the headquarters of Eastern mining-stock brokers
whenever they arrived in camp.

One morning J. C. Weir, a New York mining-stock broker, whose firm held
an option from the trust company on 100,000 shares of Stray Dog stock,
was ensconced in one of the two luxuriously furnished rooms used as
executive offices. Mr. Weir's firm was one of our selling agents in New
York. He was the dean of mining-stock brokers in New York City. In
those early days the telephone service of Goldfield was not yet
perfected, and it was only necessary for a person, in order to overhear
any talk over the telephone in our offices, to lift the receiver from
the nearest hook and listen. It was reported to me that Mr. Weir had
been availing himself of this method of learning things at first hand.

"Say, Rice," said Mr. Sullivan one morning, "Weir hears your messages
every time you are called on the 'phone. He takes advantage of you. I
wish you would let me fix him."

"All right; what do you want to do?" I answered.

"Say," said Mr. Sullivan, "Campbell, our engineer, is in Manhattan.
I'll call him up from the public station and tell him to 'phone you
some red-hot news about mine developments on Stray Dog, and I'll see to
it that Weir is in his office at the time you get the message. If Weir
don't steal the news and grab a big block of Stray Dog on the strength
of it, I'm a poor guesser."

All of our options to brokers were to expire on the 15th of March and
this was the 13th.

At four o'clock in the afternoon I was in my room. Mr. Weir was at the
desk in the room opposite. The 'phone bell rang.

"Hello," I said, "who is this?"

"Campbell, at Manhattan," was the response.

"What's the news, Jack?" I asked.

"We've just struck six feet of $2,000 ore! It's a whale! Never saw a
mine as big as this one in my life! Don't sell any more Stray Dog under
$5 a share!" shouted Mr. Campbell.

"Bully, Jack," I said, "but keep that information to yourself. Don't
tell your mother, and don't let any more miners go down the shaft.
Close it up until I am able to buy back some of the stock I sold so
cheap."

Fifteen minutes later Mr. Sullivan and I met Mr. Weir leaving the room.

"Weir," said I, "your option on Stray Dog expires on the 15th at noon.
So far, your New York office has ordered only 85,000 shares of the
100,000 that were allotted to you. We have decided to close
subscriptions on the moment and wish you would wire your New York
office not to sell any more."

"You are wrong," said Mr. Weir; "why, when I left New York we had
oversold our entire allotment! If the office has not notified you of
this, it has been a slip. We will, in fact, need at least 25,000 shares
more."

"You can't have them," said I.

"Not in a thousand years!" put in Mr. Sullivan.

Mr. Weir sent a bunch of code messages to New York. All the next day
Mr. Sullivan spent with Mr. Weir. He allowed Mr. Weir to cajole him
into letting him have the entire block of stock. Finally, it was agreed
between Mr. Weir and Mr. Sullivan that Mr. Sullivan would give him the
additional stock whether I consented or not. Surreptitiously, according
to Mr. Weir's idea, Mr. Sullivan was yielding to him, without my
knowledge and against my wishes.

Next day the Sullivan Trust Company shipped to Mr. Weir's firm in New
York 25,000 shares of Stray Dog attached to draft at 45 cents a share.
The draft was paid. The avenging angel kept hot on Mr. Weir's trail,
for right on the heels of the New York broker's Stray Dog purchase came
a calamity which almost obliterated the market values of Nevada mining
stocks and particularly those of the shares of Manhattan mining
companies. San Francisco was destroyed by earthquake and fire. Not less
than half of the capital invested in Manhattan stocks had come out of
the city of San Francisco. The earthquake was fatal to Manhattan.

The San Francisco Stock Exchange, which was the principal market for
Manhattan mining shares, was compelled to discontinue business for over
two months. Brokers and transfer companies lost their records, and the
Coast's property and money loss was so appalling that no more money was
forthcoming from that direction for mining enterprises. Every bank in
Nevada closed down, just as every California bank did, the Governors of
both States declaring a series of legal holidays to enable the
financial institutions to gain time. Nevada banks, as a rule, had
cleared through San Francisco banks, and practically all of Nevada's
cash was tied up by the catastrophe.

The Sullivan Trust Company faced a crisis. I had decided it was good
business to lend support to Jumping Jack in the stock market when the
Manhattan boom began to relax from its first tension, and had
accumulated several hundred thousand shares at an average of 35 cents.
The Trust company had only $8,000 in gold in its vaults on the day of
the 'quake. Moneys deposited in bank were not available. Of the $8,000
in gold coin, $6,500 was paid two days after the earthquake to the
Wells-Fargo Express Company for an automobile which was in transit at
the time, and for which Wells-Fargo demanded the coin. It was
impossible to hypothecate mining securities of any description in
Nevada or San Francisco. With the Sullivan Trust Company's funds tied
up in closed-up banks, and with an unsalable line of securities in its
vaults, it was "up against it."

For a period it looked as if we must go to the wall. For two months we
eked out a bare subsistence by the direct sale of Manhattan securities
at reduced prices to the Eastern brokers. This purchasing power came
largely from brokers who were "short" of stocks to the public on
commitments made at a much higher range of prices and needed the actual
certificates for deliveries.

It took the Nevada banks and the San Francisco Stock Exchange more than
sixty days to rehabilitate themselves. No sooner did the San Francisco
Stock Exchange open for business than it became possible for the
Sullivan Trust Company to borrow some much needed cash on Manhattan
securities, of which it had a plethora. Through members of the San
Francisco Stock Exchange, it obtained in this way in the neighborhood
of $100,000. Goldfield banks supplied another $100,000 a little later
by the same process. Then the clouds rolled by.


FORTUNES THAT WERE MISSED

Soon the Mohawk of Goldfield began to give unerring indications of
being the wonderful treasure-house it has since proved to be. Hayes and
Monnette, who owned a lease on a small section of the property, had
struck high-grade ore and were producing at the rate of $3,000 per day.
A few weeks later it was reported that the output had increased to
$5,000 a day.

The Mohawk being situated only a stone's throw from the Combination
mine, the idea that the Mohawk might turn out to be another Combination
was common in Goldfield. Hayes and Monnette were startled--almost
frightened--at their success. Yielding for the moment to the warning of
friends, who urged upon them the possibility of the ore soon pinching
out, Hayes and Monnette called at the offices of the Trust Company and
offered to sell their lease, which had six months to run, for $200,000
cash and $400,000 to be taken out of the net proceeds of the ore. My
gambling instinct was aroused.

"I will take it," I said.

I sent over to the State Bank & Trust Company, and had a check
certified for the $200,000. I was about to close the deal when Mr.
Sullivan and "Jack" Campbell protested.

"I ought to have fifteen days to examine the mine," urged Mr. Campbell.

"It is too big a chance to take," declared Mr. Sullivan.

When appealed to, Hayes and Monnette said that to allow a fifteen-day
examination would mean practically to shut down the property for that
period and would result in a positive loss to them because of the
limited period of their lease. The extent of the loss, if the deal fell
through, was too large to contemplate, and they refused.

Day by day, as Mr. Campbell and Mr. Sullivan dilly-dallied, the output
of the lease increased, and when, a fortnight later, all three of us
were unanimously in favor of the proposition, Hayes and Monnette flatly
refused to sell. Within half a year that lease on the Mohawk produced
in the neighborhood of $6,000,000 worth of ore gross, and netted the
leasers about $4,500,000. The Sullivan Trust Company certainly
"overlooked a bet" there.

During this period I spent an evening with Henry Peery and W. H.
("Daddy") Clark. Mr. Clark, like Mr. Peery, hailed from Salt Lake. Mr.
Clark had successfully promoted the Bullfrog Gibraltar. Seated around a
table in the Palm Restaurant, the conversation turned to new camps.

"Rice," said Mr. Clark, "I expect to be able to put you in on a
townsite deal in a couple of weeks that will make you some money if you
undertake to give the camp some publicity."

"Good," said I.

"I am having some assays run," he said, "of some samples which were
brought into camp last night by a couple of prospectors, and if they
turn out to be what the prospectors claim, or anything near it, we'll
need your services to put a new camp on the map."

That night Mr. Peery learned from the assayer that the lowest assay of
16 samples was $86, and the highest $475, per ton. Next morning Mr.
Peery informed me that he had remained all night with Mr. Clark to
learn where the ore came from. Mr. Peery said that Mr. Clark had told
him, in the wee sma' hours, that the place was Fairview Peak, fifty
miles east of Fallon.

"Rice," said Mr. Peery, "let's beat him to it. He's going to trek it
across the desert by mule team with a camp outfit to-morrow, and it
will take him a week to get there."

"Billy" Taylor, who was interested with Mr. Peery in a Bullfrog
enterprise, joined the party, and we each gave Mr. Peery a check for
$500, forming a pool of $1,500 to send a man to Fairview to buy
properties there. Mr. Peery wired the Bank of the Republic at Salt Lake
to pay Ben Luce $1,500, and instructed Mr. Luce by wire to take the
money, go to Fairview and do business.

It was nearly two weeks before we heard of either Mr. Clark or Mr.
Luce. Mr. Clark returned to camp and said he had purchased from a group
of itinerant prospectors the Nevada Hills property, scene of the big
find, for $5,000, and that it was a "world-beater."

"Did you meet any outsiders there?" queried Mr. Peery.

"Yes," said Mr. Clark, "I met a man named Luce who almost got ahead of
me. In fact, he did buy the property before I got there, but he had no
money, and they would not take his check for $500, which was the
deposit required. I had the gold with me, and that settled it."

A few days afterward, Mr. Luce came to Goldfield.

"I didn't get the big one," he said, "but I bought the Eagle's Nest,
near by, for $7,000, of which $500 was demanded to be paid down, and
there is ore in it and it looks good to me. I had no money with me when
I arrived in Fairview. They refused my check for the Nevada Hills, but
the Eagle's Nest boys took it for their first payment of $500."

Mr. Luce was not at home when Mr. Peery's despatch was delivered in
Salt Lake. When it reached him the bank was closed. In order to catch
the first train he was compelled to leave the money behind. He arrived
in Fairview minus the $1,500, and thereby lost the Nevada Hills for Mr.
Peery, Mr. Taylor and the Sullivan Trust Company.

Mr. Clark and his partners incorporated the Nevada Hills for 1,000,000
shares of the par value of $5 each and accepted subscriptions at $1 per
share.

Within a few months the Nevada Hills paid $375,000 in dividends out of
ore, and soon thereafter, at the height of the Goldfield boom, it was
reported that the owners of the control refused an offer of $6,000,000
for the property. The mine has turned out to be a bonanza. The stock of
the company sold recently on the New York Curb and San Francisco Stock
Exchange at a valuation for the mine of $3,000,000, and it is believed
by well-posted mining men to be worth that figure. George Wingfield,
president of the Goldfield Consolidated who followed the Sullivan Trust
Company into Fairview and bought the Fairview Eagle, which is
sandwiched in between the Nevada Hills and the Eagle's Nest, is now
president of the Nevada Hills. Treasury stock of the Fairview Eagle was
sold in Goldfield at 40 cents per share. Recently the Nevada Hills and
Fairview Eagle companies were merged.

"Jack" Campbell reported favorably on the Eagle's Nest, and we decided
to organize and promote a company to own and develop the property.

The Sullivan Trust Company bought Mr. Taylor's interest in the Eagle's
Nest for $8,000, Mr. Luce's for $8,000 (he had been awarded a quarter
interest for his work), and Mr. Peery's for $30,000. It made the
property the basis for the promotion of the Eagle's Nest Fairview
Mining Company, capitalized for 1,000,000 shares of the par value of $5
each. Governor John Sparks accepted our invitation to become president
of the company. The entire capitalization was sold to the public
through Eastern and Western stock brokers within thirty days at a
subscription price of 35 cents per share. After paying for the
property, our net profits were in the neighborhood of $150,000.

The Eagle's Nest deal enabled the trust company to repay most of the
money it had borrowed after the San Francisco earthquake and put the
company on Easy Street again.


THE TALE OF BULLFROG RUSH

Following the Eagle's Nest promotion, the Sullivan Trust Company became
sponsor for Bullfrog Rush. I had met Dr. J. Grant Lyman, owner of the
property, on the lawn of one of the cottages of the United States Hotel
in Saratoga a few years before, where he raced a string of horses and
mixed with good people, and I knew of nothing that was to his
discredit. Dr. Lyman bought the Bullfrog Rush property for $150,000. I
was present when he paid $100,000 of this money in cash at John S. Cook
& Company's bank in Goldfield. The Bullfrog Rush property was of large
acreage, enjoyed splendid surface showings, and was situated contiguous
to the Tramps Consolidated, which was then selling around $3 a share.
It looked like a fine prospect.

Dr. Lyman incorporated the company for 1,000,000 shares of the par
value of $1 each. The services of the Sullivan Trust Company were
employed to finance the enterprise for mine development. The Trust
company obtained an option on the treasury stock of the company at 35
cents per share, and proceeded to dispose of it through Eastern brokers
and direct to the public by advertising, at 45 cents per share to
brokers and 50 cents per share to investors. We sold 200,000 shares,
realizing $90,000 in less than thirty days, retained $20,000 for
commission and expenses, and turned into the treasury of the Bullfrog
Rush company $70,000, all of which was placed at the disposal of the
company for mine development.

Half a dozen tunnels were run and several shafts were sunk. Down to the
400-foot level the mine appeared to be of much promise. It was then
learned that the shaft at the 400-foot point had encountered a bed of
lime. It appeared that all the properties on Bonanza Mountain, where
the Bullfrog Rush was situated, including the Tramps Consolidated,
which was then selling in the market at a valuation of $3,000,000, were
bound to turn out to be rank mining failures. The entire hill,
according to our engineer, was a "slide," and below the 400-point ore
could not possibly exist.

We thereupon notified Dr. Lyman that we would discontinue the sale of
the stock until such time as the property gave better indications of
making a mine.

A few weeks later Dr. Lyman entered my private office unannounced. At
this period Jumping Jack, Stray Dog, Indian Camp, and Eagle's Nest were
all selling on the San Francisco Stock Exchange at an average of 35 per
cent. above promotion prices. The L. M. Sullivan Trust Company was
"making good" to investors. Bullfrog Rush had not yet been listed, and
we were afraid to give it a market quotation.

"I have formed here in Goldfield the Union Securities Company," Dr.
Lyman said, as he sat down close to my desk, "and I am going into the
promotion business myself. I don't believe a word of the reports you
have that the Bullfrog Rush is a failure. I am going on with the
promotion."

I protested. "We shall not permit it," I said. "Governor Sparks, who is
the best friend the Sullivan Trust Company has, accepted the presidency
of the Bullfrog Rush on our assurance that the property was a good one.
John S. Cook, the leading banker of this town, accepted the
treasurership on the same representations. Mr. Sullivan, president of
this trust company, is vice-president of the Rush. We are 'in bad'
enough as the matter already stands. Don't dare go on with the
promotion at this time."

Dr. Lyman left the office without uttering a word.


Two days later I received a dispatch from Governor Sparks saying that
a full-page advertisement of the Union Securities Company had appeared
in the _Nevada State Journal_ at Reno, offering Bullfrog Rush stock
for subscription. The Governor protested vigorously against the sale
of the stock. We had previously informed him as to the new conditions
which prevailed at the mine.

I sent Peter Grant, one of Mr. Sullivan's partners in the Palace, to
Dr. Lyman to protest. The answer came back that the _Nevada State
Journal_ advertisement was about to be reproduced in all the
newspapers of big circulation throughout the East, and that the orders
for the advertisements would not be canceled. Half an hour later Dr.
Lyman entered the office with Mr. Grant. Mr. Grant looked nettled. Dr.
Lyman glowered.

I bade Dr. Lyman take a chair.

"If you move a finger to stop me," he said, as he sat himself down
before me, "I'll expose every act of yours since you were born and show
up who the boss of this trust company is!"

Dr. Lyman was tall as a poplar and muscled like a Samson. He was fresh
from the East, red-cheeked and groomed like a Chesterfield. I was
cadaverous, desert-worn, office-fagged, and undersized by comparison.
In a glove fight, Dr. Lyman could probably have finished me in half a
round. But the disparity did not occur to me. The sense of injustice
made me forget everything except Dr. Lyman's blackmailing threat. I
jumped to my feet. Dr. Lyman backed up to the glass door. I aimed a
blow at him. He backed away to dodge it. In a second he had collided
with the big plate-glass pane, which fell with a crash. In another
instant he recovered his feet, turned on his heel and ran. His face was
covered with scratches, the result of his encounter with the broken
plate glass. Several clerks who followed him, thinking he had committed
some violent act, reported that he didn't stop running until he reached
the end of a street 600 feet away.


"Oh," he gasped, "I never want to see such a look in a man's eyes
again. I thought I saw him reach for a gun."

Such an idea was farthest from my mind, although I was very angry.
Conscience had made a coward of the doctor.

I was quick to decide upon a course of action.

The position of the trust company was this: With the exception of
Bullfrog Rush, we had a string of stock-market winners to our credit
with the public. If we allowed Dr. Lyman to go ahead with his promotion
of Bullfrog Rush, we should, unless we abandoned our rule to protect
our stocks in the market, be compelled some day to buy back all of the
stock he sold. The truth about the mine was bound to come out, and we
stood before the public as its sponsors.

I decided that the trust company should refund the money paid in by
stockholders of Bullfrog Rush and prevent Dr. Lyman from selling more
stock.

To the brokers, through whom we had sold much of the stock to the
public, we telegraphed that we would refund the exact amount paid us by
the brokers on delivery back to us of the certificates. We also wired
to Governor Sparks and asked his permission to insert an advertisement
in the newspapers over his signature, announcing that the property had
proved to be a mining failure and advising the public not to buy any
more shares. This pleased the Governor immensely, for he promptly wired
back his O.K. with congratulations over the stand we took.

That night a broadside warning to the public, bearing the signature of
Governor John Sparks, and a separate advertisement of the Sullivan
Trust Company, offering to refund the money paid for Bullfrog Rush
shares, were telegraphed to all the leading newspapers of the East.
Next day both of these announcements appeared side by side with the
half-page and full-page advertisements of Dr. Lyman's Union Securities
Company of Goldfield offering Bullfrog Rush for public subscription.
The newspapers, peculiarly enough, performed this stunt without a
quiver.

The public didn't buy any more Bullfrog shares.

The Bullfrog Rush incident cost the Sullivan Trust Company a little
less than $90,000, which was refunded to stockholders, and the
additional sum that was expended for advertising our denouncement of
the enterprise. Dr. Lyman was stripped of his entire investment in the
property. The newspapers lost many thousands of dollars, representing
Dr. Lyman's unpaid advertising bills. A number of mining-stock brokers
also forfeited some money; they were compelled to refund their
commissions.

J. C. Weir, the New York mining-stock broker, who does business under
the firm name of Weir Brothers & Company, had sold in the neighborhood
of 100,000 shares of Bullfrog Rush to his clients, and he took violent
exception to our decision not to refund an amount in excess of the net
price paid to us. He held that his firm ought not to be compelled to
disgorge its profits. We stood pat and argued that he ought to be proud
to share with us the glory of "making good" in such an unusual way to
stockholders. It was the first time in the history of Western mining
promotions that a thing like this had ever been done, and we pointed
out to Mr. Weir that it would gain reputation both for himself and the
trust company. For a period Mr. Weir carried on an epistolary warfare
with the trust company. For nearly two months he refused to yield.
Finally, we received a letter from Mr. Weir saying that since we
refused to come to his terms he would accept ours, and that he had
drawn on us for $4,500, with one lot of 10,000 shares of Bullfrog Rush
stock attached. On receipt of the letter I gave instructions to the
cashier promptly to honor the draft.

An hour later the cashier reported that the draft had been presented
and that an examination of the stock certificates showed that not a
single one of them had been sold by the trust company through Mr.
Weir's firm, and, in fact, had never been disposed of by the trust
company to anybody. A hurried examination of the stock-certificate
books of the Bullfrog Rush Company, which were in the hands of the
company's secretary in Goldfield, a clerk of Dr. Lyman, revealed the
fact that a large number of blank certificates had been torn out of the
certificate books without any entry appearing on the stubs.

The certificates returned to us by Mr. Weir bore dates of several
months prior, and our immediate assumption was that Dr. Lyman, at the
very moment when we were marketing the treasury stock under a binding
contract which forbade him or any one else to dispose of any Bullfrog
Rush stock under any circumstances, was clandestinely getting rid of
these shares. Mr. Weir, it appeared, had neglected to segregate Dr.
Lyman's certificates from those shipped him by the trust company.
Another hypothesis was that those certificates had never been sold at
all, but had merely been received from Dr. Lyman to be reforwarded to
us in order to claim a refund for what we had never been paid for.

Of course, we returned the draft unpaid. But that didn't end the
incident. My partner, Mr. Sullivan, took it upon himself to wire his
sentiments to Weir Brothers & Company, as follows: "You are so crooked
that if you swallowed a ten-penny nail and vomited, it would come out a
corkscrew." That was "Larry's" homely way of expressing his opinion.

Goldfield's year of wind and dust had brightened into the glow of
Summer. The still breath of August was diffused through the thin mild
air of the high altitude. This thin air, which nearly two years before
had prompted a camp wit to comment on the birth of my news bureau to
the effect that "the high elevation was ideal for the concoction of the
visionary stuff that dreams are made of," appeared unprophetic. There
was plenty of concrete evidence of the yellow metal to be seen.
Production from the mines was increasing daily and money from
speculators was pouring into the camp from every direction.

A mining-stock boom of gigantic proportions was brewing. Mohawk of
Goldfield, which was incorporated for 1,000,000 shares of the par value
of $1 each, and which in the early days went begging at 10 cents a
share, was now selling around $2 a share on the San Francisco Stock
Exchange, the Goldfield Stock Exchange and the New York Curb. Other
Goldfields had advanced in proportion. Combination Fraction was up from
25 cents to $1.15. Silver Pick, which was promoted at 15 cents a share,
was selling at 50 cents. Jumbo Extension advanced from 15 to 60. Red
Top, which was offered in large blocks at 8 cents per share two years
before, was selling at $1. Jumbo advanced from 25 cents to $1.25.
Atlanta moved up from 12 to 40. Fifty others, representing prospects,
enjoyed proportionate advances.

The Sullivan stocks were right in the swim. Jumping Jack was in hot
demand on the San Francisco Stock Exchange and New York Curb at 45
cents, Stray Dog at 70 cents, Indian Camp at 80 cents, and Eagle's Nest
at 50 cents. Subscribers to Indian Camp could cash in at a profit of
more than 200 per cent.

The country gave indications of going "Goldfield crazy." My Goldfield
publicity bureau was working overtime. James Hopper, the noted fiction
writer and magazinist, ably assisted by Harry Hedrick and other
competent mining reporters, was "on the job" and doing yeoman service.
The news-columns of the daily papers of the country teemed with stories
of the Goldfield excitement.

People began to flock into the camp in droves. The town was a scene of
bustle and life. Motley groups assembled at every corner and discussed
the great production being made from the Mohawk and the terrific market
advances being chronicled by mining stocks representing all sorts and
descriptions of Goldfield properties. Whenever Hayes and Monnette,
owners of the Mohawk lease, appeared on the streets, they were followed
by a mixed throng of the riffraff of the camp, who hailed them,
open-mouthed, as wonders.

The madness of speculation in mining shares in the camp itself was
beginning to exceed in its intensity the exciting play at the gaming
tables. There was a contagion of excitement even in the open spaces of
the street.

At each meeting of the Goldfield Stock Exchange the boardroom was
crowded. The sessions were tempestuous. Every step and every hallway
leading to the room was jammed with men and women over whose faces all
lights and shades of expression flitted. The bidding for mining issues
was frantic. Profits mounted high. Everybody seemed to be buying and no
one appeared to be willing to sell except at a substantial rise over
the last quotations. Castle-building and fumes of fancy usurped reason.

Bank deposits were increasing by leaps and bounds. The camp was rapidly
becoming drunk with the joy of fortune-making.

Manhattan now shone mostly in the reflected glory of Goldfield, but
Manhattan stocks were booming. This enabled the Sullivan Trust Company
to dispose of nearly all of its Manhattan securities which had been
carried over after the San Francisco catastrophe and to pile up a great
reserve of cash.

A big demand was developing for shares in Fairview companies. Nevada
Hills of Fairview was selling on the stock exchanges and curbs at $3
per share, or a valuation of $3,000,000 for the mine. Only a few months
before it had fallen into Goldfield and Salt Lake hands for $5,000.
Fairview Eagle's Nest, for which subscriptions had been accepted at 35
cents per share by the Sullivan Trust Company, was selling at 70 cents
on the San Francisco Stock Exchange.

The Sullivan Trust Company announced the offering of 1,000,000 shares,
embracing the entire capitalization of the Fairview Hailstone Mining
Company, at 25 cents. The stock was purchased by us at 8 cents. We sold
out in a week. San Francisco and Salt Lake were the principal buyers,
and it was unnecessary even to insert an advertisement offering the
stock. The brokers fell over one another to underwrite the offering by
telegraph.


PRIZE FIGHTS AND MINING PROMOTION

For a fortnight there was a lull in news of sensatorial gold
discoveries, but the approaching Gans-Nelson fight, which was arranged
to be held in Goldfield on Labor Day, September 3, furnished sufficient
exciting reading matter for the newspapers throughout the land to keep
the Goldfield news pot boiling. The Sullivan Trust Company had
guaranteed the promoters of the fight against loss to the extent of
$10,000, and other camp interests put up $50,000 more. Gans, the
fighter, was without funds to put up his forfeit and make the match,
and the Sullivan Trust Company had also advanced the money for that
purpose. Mr. Sullivan became Gans' manager. When Gans arrived in town
Mr. Sullivan interviewed him to this effect:

"Gans, if you lose this fight they'll kill you here in Goldfield;
they'll think you laid down. I and my friends are going to bet a ton of
money on you, and you must win."

Gans promised he would do his best.

"Tex" Rickard and his friends wagered on Nelson. The cashier of the
Sullivan Trust Company was instructed to cover all the money that any
one wanted to bet at odds of 10 to 8 and 10 to 7 on Gans, we taking the
long end. A sign was hung in the window reading: "A large sum of money
has been placed with us to wager on Gans. Nelson money promptly covered
inside." Mr. Sullivan was in his glory. Prize-fighting suited his
tastes better than high finance, and he was as busy as a one-armed
paper-hanger with the itch.

An argument arose about who should referee the fight. "Tex" Rickard
nominated George Siler, of Chicago, and Battling Nelson promptly
O.K.'d the selection. Mr. Sullivan openly objected. He thought it good
strategy. He sent for the newspaper men and gave out an interview in
which he declared that Mr. Siler was prejudiced against Gans because he
was a negro, and he did not believe Mr. Siler would give Gans a square
deal.

"Rice," whispered Sullivan after the newspaper men left the office, "I
am four-flushing about that race-prejudice yarn, but it won't do any
harm. Siler needs the job. He's broke and I'll make him eat out of my
hand before I'll agree to let him referee the fight. They've already
invited Siler to come here, and I won't be able to get another referee,
but I'll beat them at their own game. When Siler gets here I'll thrash
matters out with him and agree to his selection, but first I want him
to know who's boss."

Mr. Siler arrived. An hour later he was closeted with Mr. Sullivan in
one of the back rooms of the trust company offices. The dialogue which
ensued was substantially as follows:

_Mr. Siler._ You've got me dead wrong, Sullivan. I want to referee
this fight, and I want you to withdraw your objections.

_Mr. Sullivan._ Well, I've heard from sources which I can't tell you
anything about that you don't like Gans, and I can't stand for you.

_Mr. Siler._ I need this fight, and I've come all the way from
Chicago in the expectation of refereeing it. I couldn't give Gans the
worst of it if I wanted to. He is a clean fighter and I would not have
an excuse.

_Mr. Sullivan._ Gans is a clean fighter, but Nelson isn't; he uses
dirty tactics and he is a fouler for fair.

_Mr. Siler._ If he does any fouling in this fight I'll make him quit or
declare him out.

_Mr. Sullivan._ What guarantee have I got that you won't give Gans
the worst of it?

_Mr. Siler._ Well, I'll tell you, Sullivan, if you withdraw your
objections I'll guarantee you that I'll be this fair. If Nelson uses
foul tactics, or if he don't, I'll show my fairness to Gans by giving
him the benefit of every doubt. Now, will that satisfy you?

_Mr. Sullivan._ Yes, it'll satisfy me, but, remember, if you don't
keep your word you'll have just as much chance of getting out of this
town alive as Gans will have if he lays down! You understand?

_Mr. Siler._ Yes.


On the afternoon of the fight the Sullivan Trust Company cast accounts
and found that it had wagered $45,000 on Gans against a total of
$32,500 put up by the followers of Nelson.

Mr. Sullivan, after talking it over with me, had accepted the honorary
position of announcer at the ringside. Though not of aristocratic mien,
"Larry" was of fine physique, with a bold, bluff countenance, and I
felt confident that his cordial manner would appeal to that Far Western
assemblage.

Just before the prize-fighters entered the ring, "Larry" jumped into
the arena. Standing above the mass of moving heads and holding up both
hands, he hailed the great crowd thus:

"Gentlemen, we are assembled in this grand _areno_ to witness a square
fight. This fight is held under the auspices of 'Tex' Rickard, a man of
great _accumulations_----"

"Larry" did not get much farther. The audience laughed, and then jeered
and hooted until it became hoarse. His words were drowned in the
tempest of derision. I was informed by friends who were close to the
ringside that he went on in the same rambling way for a few minutes
more, but I can't testify to that fact from my own knowledge because
"acclumuations" and "areno" overcame me and I stopped up my ears.

The fight progressed for twenty rounds or more, when I began to doubt
the ability of Gans to win. Mr. Sullivan had a commissioner at the
ringside, who, up to this time, had been betting anybody and everybody
all the 10 to 6 that was wanted against Nelson. I hailed Mr. Sullivan
at the ringside.

"This doesn't look like the cinch for Gans you said it would be," I
whispered.

"Wait a minute," Mr. Sullivan replied, "I'll go to Gans' corner as soon
as this round is over and find out what's doing with him."

Mr. Sullivan went over to Gans' corner and came back.

"Gans says he can't win this fight, but he won't lose. He's a good
ring-general and he'll pull us out. Don't bet any more money. I'm going
to stay close to the ringside. Watch close."

It was apparent during the next ten rounds that Gans was availing
himself of every opportunity to impress upon the audience that Nelson
was inclined to use dirty fighting tactics, and soon Nelson was being
hooted for foul fighting. Gans, on the other hand, appeared to be
fighting fair and like a gentleman. Soon it was evident that Gans had
won the sympathy and favor of the audience.

The fight had continued through the fortieth round, when Mr. Sullivan
again repaired to Gans' corner and held another animated whispered
conversation with him.

In the forty-second round Gans of a sudden went down, rolled over and,
holding his hand under his belt, let out a yell of anguish that
indicated to the excited multitude that Nelson had fouled him
frightfully.

In another instant Mr. Sullivan had clambered into the ring. Confusion
reigned. The audience was on its feet. Pushing his fist into the
referee's face, Mr. Sullivan cried: "Now, Siler, you saw that foul,
didn't you? It's a foul, isn't it? Gans wins, doesn't he?"

All of this happened quick as a flash. Mr. Siler, pale as a ghost,
whispered something inaudibly.

Mr. Sullivan, turning to the assemblage and raising both arms to the
skies, yelled:

"Gentlemen, the referee declares Gans the winner on a foul!"

The audience acclaimed his decision with salvos of applause. There did
not appear to be a man in the crowd who doubted a foul had been
committed, although Nelson at once protested his innocence.

Next day Mr. Sullivan told me that in or near the twenty-fourth round
Gans had broken his wrist and knew he could not win the fight by a
knockout. He also said that Gans went down in the forty-second round in
order to save the day.

"_I_ won that fight," said Mr. Sullivan. "I told Gans while he was
in his corner after the fortieth round that if he lost he would be
laying down on his friends, that he had the audience with him, and that
it was time to take advantage of Nelson's foul tactics."

This was my first experience in prize-fighting, and my last. My
sympathies were, however, with the winner. Gans' tactics throughout up
to the last round were gentlemanly and those of Nelson unfair. Even the
partisans of Nelson who had wagered on him agreed after the fight that
the battle put up by the negro up to the forty-second round was a white
man's fight and he was entitled to win.

Nelson had been guilty of foul tactics in almost every round, but the
probabilities are that Gans was not disabled by a foul blow in the
forty-second round and that he took advantage of the sentiment in his
favor, which had been created by his manly battle up to that time, to
go down at a psychological moment.

I saw Mr. Siler after the contest, and he appeared pleased that his
decision was so well received, but he assured me that if he was invited
to referee another bout in any mining camp he would decline the job.


The Sullivan Trust Company, of course, won a big bet on the result, but
it lost a bigger one as an outcome of the battle on the very next day.
The impression created by Announcer Sullivan's attempt to reach lofty
flights of eloquence in his speech to the fight-audience was bad for
the trust company, and it required the use of over $100,000 on the day
following to meet the flood of selling orders in Sullivan stocks which
poured into the San Francisco Stock Exchange.


THE YEAR OF BIG FIGURES

I soon recouped these stock-market losses. At about four o'clock one
afternoon, a few days afterward, a miner who had been at work during
the day on the Loftus-Sweeney lease of the Combination Fraction, called
at the office of the trust company and asked me to buy 1,000 shares of
Combination Fraction stock for him. He divulged to me that just as he
was coming off shift he had learned that a prodigious strike of
high-grade ore had been made at depth. Combination Fraction had closed
that afternoon on the San Francisco Stock Exchange with sales at $1.15.
I went out on the street and proceeded to buy all the Combination
Fraction in sight. In half an hour I had corralled about 60,000 shares
at an average of $1.30. An hour later the owners of the lease obtained
the information on which I was working, and by eight o'clock that
night, when the Goldfield Stock Exchange began its evening session, the
price had jumped to $1.85. Within a week thereafter the price
sky-rocketed to $3.75, and at this figure I took profits of nearly
$150,000. Had I held on a little longer I could have doubled that
profit, for Combination Fraction a few weeks later sold at higher than
$6.

The Combination Fraction strike was followed by a number of others, and
the boom gathered force. By October, Goldfield Silver Pick had advanced
to $1 per share, up 600 per cent. Goldfield Red Top was selling at $2,
Jumbo at $2, and Mohawk at $5, showing profits of from 2,000 to 5,000
per cent. Others had gained proportionately. In fact, there were over
twenty Goldfield securities listed on the exchange that showed the
public a stock-market profit of anywhere from 100 per cent. to 5,000
per cent.

Mining machinery of every description was being shipped into camp, and
for half a mile around the Combination mine the landscape of assembled
gallows-frames resembled a great producing oil field. There were signs
of mining activity everywhere. For four miles east of the Combination
mine and six miles south every inch of ground had been located. Claims
situated miles away from the productive area were changing hands hourly
at high figures.

The Sullivan stocks kept pace in the markets with the other booming
securities, and it was plain that the trust company was riding on a
tidal wave of success. Our profits exceeded $1,500,000 at this period,
and we were just eight months old.

In a single fortnight the Sullivan Trust Company promoted the Lou
Dillon Goldfield Mining Company at 25 cents per share, a valuation of
$250,000 for the property, which cost $50,000; and the Silver Pick
Extension, which cost $25,000, at the same figure, netting several
hundred thousand dollars' profit on these two transactions. Options to
purchase the Lou Dillon and Silver Pick Extension, which were situated
within 500 feet of the Combination mine, had been in possession of the
Sullivan Trust Company for months, and had increased in value to such
an extent that on the day the subscriptions were opened in Goldfield
for Lou Dillon at 25 cents per share, a prospector named Phoenix, who
had received $50,000 from the Sullivan Trust Company for the entire
property, subscribed for 100,000 shares, or a tenth interest in the
enterprise, paying $25,000 therefor.

It was the rule of the Sullivan Trust Company to open subscriptions in
Goldfield on the day its advertising copy left the camp by mail for the
East. Newspaper publishers were always instructed to publish the
advertisements, which were generally of the full-page variety, on the
day following receipt. In the case of Lou Dillon it became necessary to
telegraph all newspapers east of Chicago not to publish the
advertisement because of oversubscription before the copy reached them,
and in the case of Silver Pick Extension the orders to publish the
advertisements were canceled by telegraph before the mail carrying the
copy reached Kansas City. San Francisco, Los Angeles and Salt Lake
subscribed for 50 per cent. of the entire offering of Lou Dillon and
Silver Pick Extension, and Goldfield for 25 per cent. As a matter of
fact, had we desired, we could have sold the entire offerings in
Goldfield, Tonopah and Reno without inserting any advertisements, so
great was the excitement in the State itself.

At this period the combined monthly payrolls of the mining companies
promoted by the Sullivan Trust Company totaled in excess of $50,000,
and excellent progress was being made in opening up the properties.


It was early Autumn in Goldfield, warm, dry and dusty, and never a
cloud in the sky. I was at my desk eighteen hours a day, and liked my
job. Things were coming our way.

The Sullivan Trust Company was in politics. Mr. Sullivan was popular
with the miners, and Governor Sparks was a large asset of the trust
company because he had been allowing the use of his name as president
of all the mining companies promoted by it. Nevertheless, when the
State election approached, the Governor had no money for campaign
expenses. He telegraphed the trust company from Carson:

"I will not stand for renomination."

We replied: "You are certain to be elected, and you will be renominated
by acclamation if you accept."

"I won't run unless you guarantee my election," he telegraphed.

We answered: "We guarantee."

The Governor was renominated by the Democrats. The Republicans placed
in nomination J. F. Mitchell, a mining engineer and mine owner, who was
very popular among mine operators.

There were thousands of miners domiciled in Goldfield. The Western
Federation of Miners dominated.

"Sullivan," I said, "isn't it a certainty that the miners will vote the
Democratic ticket because Mitchell has been put forward by the mine
owners? Is it necessary to spend any money with the Western
Federation?"

"Not a dollar!" replied Mr. Sullivan. "There's a meeting of the
executive committee to-morrow. I'm going to be around when they meet.
Without spending a cent I'll bring home the bacon. Watch me!"

Sullivan reported to me the next day that he had succeeded in his
mission.

"I didn't attend the meeting," he said, "but I did see the main
'squeeze.' He told me that a contribution to the Miner's Hospital would
be gratefully accepted, but that even that was not necessary, and that
Sparks would win in a walk."

The only campaign money advanced by the Sullivan Trust Company was
given to Mr. Sullivan to go to Reno. He asked for $1,000, and he used
it in conducting open house on the first floor of the Golden Hotel,
meeting people and greeting them. Reno appeared to be a Republican
stronghold, and Mr. Sullivan, by baiting the Catholics against the
Protestants, succeeded in holding down the Republican majority to an
extent that was wofully insufficient to overcome the Democratic
majority rolled up in Goldfield with the aid of the miners. Governor
Sparks was reëlected by a handsome majority. Had the occasion demanded
it, we would have "tapped a barrel." But it was not necessary.


THE STORY OF GOLDFIELD CONSOLIDATED

Rumors were rife in Goldfield of a merger of mammoth proportions which
was said to be on the tapis. Great as were the gold discoveries in
camp, they did not justify the terrific advances being chronicled in
the stock-market, and it was apparent that something extraordinary must
be hatching to justify the market's action.

George Wingfield, who had enjoyed a meteoric career, rising within five
years from a faro dealer in Tonopah to the ownership of control in the
Mohawk and many other mining companies and to part ownership of the
leading Goldfield bank, John S. Cook & Company, which was then credited
with having $7,000,000 on deposit, was said to be engineering the deal.
The names of the properties were not given, nor the figures. It
occurred to me that in any merger that was made the Jumbo and Red Top,
because of their central location, must be included. I sought out
Charles D. Taylor, who with his brother, H. L. Taylor, and Capt. J. B.
Menardi, owned the control of these properties. He asked $2.50 per
share for his stock and that of his partners--all or none. Mr. Taylor
had walked into the camp as a prospector. Most of his nights were spent
at the gaming tables, and he was reported to be an easy mark for the
professionals. His losses were constant and heavy. I put Mr. Sullivan
on his trail. Mr. Sullivan reported to me that Mr. Wingfield was
hobnobbing with Mr. Taylor.

"Get an option on these properties from Taylor and be quick," I told
Mr. Sullivan.


Next morning I met Mr. Sullivan. He held in his hands 20,000 shares of
Jumbo, selling at $1.75 per share on the Goldfield Stock Exchange.

"I won it in a poker game last night with Taylor and Wingfield," he
said. "I have an oral option on the property good for three days at
$2.50, but if you leave it to me, I'll win these properties from him
playing cards."

I did not see Mr. Sullivan again for a week. Next I heard of him he had
"fallen off the water-wagon" and was reported to be celebrating the
event in Tonopah. While Mr. Sullivan was "kidding" himself about his
poker-playing ability, Mr. Wingfield had come to terms with Mr. Taylor
and had bought the control of Jumbo and Red Top at an average price of
$2.10 per share. That explained Mr. Sullivan's lapse. However, I blamed
myself. Mr. Sullivan was no match for Mr. Wingfield. In any game from
stud-poker to marketing mining stock Mr. Wingfield can outwit,
outmaneuver and outgeneral a hundred like "Larry."

Both companies had been capitalized for 1,000,000 shares. The sale
required that a fortune be paid over. Mr. Wingfield paid a small sum
down, and Mr. Taylor placed the stock of both of these companies in
escrow in the John S. Cook & Company bank, the balance to be paid a
month later.

The purchase of control of the Jumbo and Red Top by the firm of
Wingfield and Nixon signalized the beginning of a stock-market campaign
for higher prices that stands unprecedented for audacity and intensity
in the history of mining-stock speculation in this country since the
great boom of the Comstock lode in 1871-1872.

The market for all listed Goldfield stocks was made to boil and sizzle
day in and day out until Jumbo and Red Top had been ballooned from $2
to $5 per share, Laguna from 40 cents to $2, Goldfield Mining from 50
cents to $2, and Mohawk from $5 to $20. Within three weeks the advance
in market price of the issued capitalization of this quintet alone
represented the difference between $8,000,000 and $26,500,000.

A few days before top prices were reached, it was officially announced
that the merger of Mohawk, Red Top, Jumbo, Goldfield Mining and Laguna
into the Goldfield Consolidated Mines Company had been made on the
basis of $20 for each outstanding share of Mohawk, $5 for Red Top, $5
for Jumbo, $2 for Goldfield Mining, and $2 for Laguna. It was also
given out that the promoters, Wingfield and Nixon, had allotted
themselves $2,500,000 in stock of the merged companies as a promoters'
fee. Right on top of this came an announcement that the Combination
mine had been turned into the merger for $4,000,000 in cash and stock,
and it was learned that go-betweens had made a profit of $1,000,000 on
the deal by securing an option on the property for $3,000,000.

In short, a merger was put through of properties and stocks, the issued
capitalization of which was selling in already inflated markets on the
day the merger was conceived for $11,000,000, at a valuation of
$33,000,000, and in addition the promoters received a $2,500,000 bonus.
Had the properties been merged on the basis of their selling prices
three weeks prior, the equivalent value of the 3,500,000 shares of
merger stock would have been a fraction above $3. As it stood, under
the ballooning process, the market value was $10, which was the par.

At the time of the merger these were the conditions that ruled at the
mines:

The Mohawk, appraised at $20,000,000, had produced under lease in the
neighborhood of $8,000,000, of which less than $2,000,000 had found its
way into the treasury of the Mohawk Mining Company, the balance going
to the leasers. The leasers had "high-graded" the property to a
fare-you-well, and less than $1,000,000 worth of high-grade remained in
sight, although it was conceded on every side that the leasers had not
attempted, nor were they able during the period of their leasehold, to
block out systematically and put into sight all of the ore in the mine.
Large, but indefinite, prospective value therefore attached to Mohawk
in addition to the tonnage in sight.

The Laguna, for which $2,000,000 had been paid in stock, did not have a
pound of ore in sight, and had cost Wingfield and Nixon less than
$100,000.

Goldfield Mining, scene of a sensational production during the early
days of the camp, appraised at $2,000,000 more, had fizzled out as a
producer.

Jumbo, taken in for $5,000,000, for a year previous had produced little
or no ore, most of the time being exhausted by the management in
sinking a deep shaft, and it had less than $500,000 in sight.

Red Top, valued at another $5,000,000, had in excess of $2,000,000
worth of medium grade ore blocked out.

Wingfield and Nixon were also heavily interested in Columbia Mountain,
Sandstorm, Blue Bull, Crackerjack, Red Hills, Oro, Booth, Milltown,
Kendall, May Queen, and other Goldfield stocks. No sooner did the five
stocks forming the merger begin to show such startling market advances
than the ballooning tendency manifested itself in Wingfield and Nixon's
miscellaneous list, and all of them showed phenomenal gains. Soon the
entire list of Goldfield, Tonopah, Manhattan, Bullfrog, and other
Nevada mining securities listed on the San Francisco Stock Exchange and
traded in on the exchanges and curbs of the country, felt the force of
the terrific rises, and sympathetically they skyrocketed to unheard-of
levels.

To convey an idea as to how far the prices of these stocks were moved
up beyond their intrinsic worth, as a result of the ballooning process
of the merger, I give some comparisons.

Columbia Mountain sold during the boom at above $1.50; it is now
selling at 5 cents. Blue Bull, Crackerjack, Oro, Booth, Red Hills,
Milltown, Kendall, Conqueror, Hibernia, Ethel, Kewanas, Sandstorm and
May Queen sold at an average of 75 cents during the boom; they are now
selling at an average of less than 5 cents. A hundred other Goldfield
securities, which were in eager demand at the zenith of the spectacular
movement at prices ranging from 50 cents to $2.50 can now be purchased
at from 1 to 5 cents per share, while many others that were hopefully
bought by an over-wrought public at all sorts of figures are now not
quoted at all.


AT THE HEIGHT OF THE FRENZY

The difference between the market price of listed Nevada stocks on
November 15, 1906, and that of to-day is in excess of $200,000,000. A
fair estimate of the public's real-money loss in the listed division is
$150,000,000.

Nor was this all of the damage that was done. When excitement in
Goldfield's listed stocks reached a frenzy, wild-catters operating from
the cities got into harness, and within three months in the
neighborhood of 2,000 companies, owning in most instances properties
situated miles from the proved zone in Goldfield, or in unproved camps
near Goldfield, were foisted on the public for $150,000,000 more.

The fact that Mohawk, which in the early days of Goldfield could have
been purchased at 10 cents, had advanced to $20 and had shown
purchasers a profit of 20,000 per cent.; that Laguna had advanced in
less than two years from 15 cents to $2; that Jumbo and Red Top,
selling at $5, could have been purchased a year or two before at around
10 cents; that Goldfield Mining, which had in the early days been
peddled around the camp at 15 cents, had moved up to $2, etc., gave the
wild-catters an argument that was convincing to gulls in every town and
hamlet in the Union. And the harvest was immense. Not one of the 2,000
wild-cats has made good, and every dollar so invested has been lost.

It will be noted from the reckoning as given that about as much money
was lost in the listed stocks of the camps as in the unlisted "cats and
dogs."

As a matter of fact, veteran mining-stock buyers, in camp and out of
the camp, lost as much hard cash as did the unsophisticated. San
Francisco, which owes its opulence of years gone by to successful
mining endeavor, was probably hit as hard as any other city in the
Union. San Francisco thought it knew the game, and it confined its
operations to the stocks listed on the exchange where the Comstocks are
traded in. But San Francisco did not know the inside of the merger deal
as it is now known to every schoolboy in Nevada.

The operation on the inside was this. Wingfield and Nixon owned the
John S. Cook & Company bank in Goldfield, and they owned the control of
nearly a score of mining companies which were of little account as well
as having acquired the control of the biggest mine in camp. During the
height of the boom, which they engineered to swing the merger, they
disposed of millions of shares of an indiscriminate lot of companies,
and used the many millions of proceeds to take over Jumbo, Red Top and
their outstanding contracts in Mohawk and other integrals of the
merger. They likewise were able during the ballooning process to
dispose of much Mohawk at from $15 to $20, much Jumbo at from $4 to $5,
much Red Top at from $4 to $5, that cost them very considerably less
than this, and in this way were enabled to finance their deal to a
finish.

I have just pointed out that in order to accomplish the merger it was
necessary that the market in all Goldfield securities, in which the
promoters were interested, be stimulated in order to enable unloading
by the insiders before some of the very large payments became due. This
being accomplished, and the payments having been made, the promoters
sought to establish a market for merger shares at or around par. In
order to accomplish this the Goldfield bank, in which the promoters
were heavily interested, stimulated speculation and managed to spread a
feeling of security by announcing its willingness to loan from 60 to 80
per cent. par on merger shares.

All Goldfield fell for this, and the camp went broke as a result.

Within eighteen months thereafter Goldfield Consolidated sold down to
$3.50 in the markets, and margin-traders and borrowers who had put up
the stock as collateral to purchase more were butchered. Loans were
foreclosed by the bank as rapidly as margins were exhausted. The
carnage was awful.

It must be evident that Wingfield and Nixon, both of whom became
multimillionaires as the result of their mining-stock operations in
Goldfield, were directly and indirectly important factors in the loss
by the public of $300,000,000, as set forth above. It is admitted that
less than $7,000,000 worth of ore had been developed as a reserve at
the time $35,000,000 worth of stock in the merger was issued and a
market manufactured to dispose of the stock at this fictitious
price-level. It is not of particular interest that Goldfield
Consolidated, by reason of sensationally rich mine developments at
depth, has since given promise of returning to stockholders an amount
almost equal to par for their shares, and that it now appears that
those who were able to weather the intervening declines may in the end
be out only the interest on their money.

    _This fact stands out: Although Goldfield Consolidated owned at
    the outset a bonanza gold mine, stockholders had just two chances.
    They could break even or lose--break even on their investment if
    the mine made good in a sensational way, which was a big gamble at
    the time, or lose if the mine didn't. They could not win._

Mr. Nixon was a United States Senator from Nevada. He was also
president of the Nixon National Bank of Reno, Nevada. He held both of
these positions at the time the merger was made, and it was largely
because of Mr. Nixon's political and financial position that the daring
ballooning market operations, which were staged as a curtain-raiser for
the merger, proved so successful.

In the _Nevada Mining News_ of May 25, 1907, circulation 28,000,
an interview appeared with United States Senator Nixon of Nevada,
vouched for as follows:

    The manuscript of the interview was submitted to, and approved by,
    the Senator. Unchanged by one jot or tittle, it is printed just as
    it came from his hands. Even now the Senator holds a carbon of the
    original manuscript and may brand us with it if we have broken the
    faith we pledged.

I quote from the Senator's interview, as it appeared in that issue of
the _Nevada Mining News_:

    "What do you estimate the ultimate earnings of Goldfield
    Consolidated will be?" was asked.

    "Consolidated will be a bigger producer, I should say, three or
    four years from now than it will be one year from now," Senator
    Nixon replied, "and I believe I am conservative when I say that
    the property will be eventually earning $1,000,000 net monthly."

    "_Then, as an investment, the stock is easily a $20 stock?_"

    "_That is a minimum estimate of its future value, I should say_,"
    _was the response._

As to that interview:

Mr. Nixon said that within three or four years (the time limit is up),
$20 would be a minimum price for the shares. They touched $10 only once
since then, or one-half of his estimate. Shortly after the interview
was given they sold down as low as $3.50. Recently the market quotation
was $4.

He said, further, that the mines would ultimately earn at the rate of
$1,000,000 a month. This statement also has fallen far short of
fulfillment.

Soon after George S. Nixon, as president of the Goldfield Consolidated
Company, gave out this interview for public consumption he, according
to his own later admissions, disposed of all of his holdings, and at an
average price, it is believed, of less than $8 a share.

This is only a superficial rendering of the big event in Goldfield's
history, but it is sufficient to furnish an example of the effect of
Get-Rich-Quick influences that radiate from high places and separate
the public from millions upon millions, without being called to
account.

The dear American public has been falling for this kind of insidious
brand of Get-Rich-Quick dope for years. It is being gulled into losing
millions through its fetish worship of promoters with millions, who are
really the Get-Rich-Quicks of the day that are very dangerous.

Greenwater, a rich man's camp, in which the public sank $30,000,000
during three months that marked the zenith of the Goldfield boom, is
another case in point where a confiding investing public followed a
deceiving light and was led to ruthless slaughter.




CHAPTER IV

THE GREENWATER FIASCO


When the excitement was at fever-heat in Goldfield over the stupendous
rises in market value of Goldfield securities which were being
chronicled hourly, news came to town of the successful flotation in
New York of the Greenwater & Death Valley Mining Company. The
capitalization was 3,000,000 shares of the par value of $1 each. The
stock had been underwritten at $1 a share by New York and Pittsburg
Stock Exchange houses, had been listed on the New York Curb, and
had climbed to around $5.50, or a valuation for the property of
$16,500,000. Among the officers of this company were M. R. Ward,
brother-in-law of Charles M. Schwab; T. L. Oddie, now Governor of
Nevada, and Malcolm Macdonald, later president of the Nevada First
National Bank of Tonopah.

Greenwater is situated about 150 miles south of Goldfield, across the
State line in California. No one ever went to or fro without passing
through Goldfield. If there was a Greenwater boom, how was it that we
in Goldfield, who were in touch with all Nevada mining affairs, did
not know about it? Goldfield promoters soon began to give attention.
Shortly they caught the infection. A stampede from Goldfield into
Greenwater ensued. In fact, people flocked to Greenwater from every
direction. A bunch of Tonopah money-getters, headed by the indomitable
Malcolm Macdonald, were grabbing the money on Greenwaters in New York,
and Goldfield was not in the play.

The reports that came from Greenwater as a result of the first stampede
from Goldfield were of doubtful variety. Greenwater & Death Valley
was described as a raw prospect not worth over 10 cents per share.
Goldfield people shook their heads. There was no gainsaying the fact,
however, that Greenwater & Death Valley appeared to be a giant success
in the Eastern stock markets. Charles M. Schwab was reported to be
behind the flotation of Greenwater & Death Valley. Montgomery-Shoshone
and Tonopah Extension, two other Schwab enterprises, were selling at
hundreds of per cent. profit in the stock markets. The fact that Mr.
Schwab was interested in the camp was an argument that appealed with
great force to Nevada promoters, for the fraternity had learned to
attach just as much significance to having a market as to having a mine
before commencing promotion operations.

The Sullivan Trust Company not having had a failure of any kind on the
market, I hesitated to commit the trust company to any issue in the new
camp. Not to be entirely out of it, however, I sent our engineer,
"Jack" Campbell, into the district to report on all the properties.

News came thick and fast from the New York market as to the success of
the Greenwaters in the East. Furnace Creek Copper Company, originally
promoted by "Patsy" Clark of Spokane at 25 cents per share, with a
million-share capitalization, was reported to be getting the benefit of
Mr. Clark's personal market handling on the New York Curb, and the
shares soon reached a high quotation of $5.50. John W. Gates had been
let in by "Patsy" at around 50 cents and was reported to have unloaded
400,000 shares at all sorts of prices from $1 up to $5.50, and down
again.

On the heels of this advance came word of the successful promotion
of the United Greenwater Company, with C. S. Minzesheimer & Company,
members of the New York Stock Exchange, acting as fiscal agents for
the company. The promoters were named as Malcolm Macdonald, Donald B.
Gillies and Charles M. Schwab. J. C. Weir, the New York mining-stock
broker, who was conducting through the mails a nation-wide
market-letter campaign in favor of Greenwater, was reported to have
sold 150,000 or 200,000 shares at the subscription price of $1. The
offering was said to have been oversubscribed twice. The price then
shot up to $2.50 on the New York Curb. The market boiled.

Philadelphia was reported to be Greenwater-mad. When United Greenwater
had reached $1.50 on its way up and Greenwater & Death Valley had
passed the $4 point, the Schwab crowd announced the formation of
the Greenwater Copper Mines & Smelters Company to consolidate the
Greenwater & Death Valley and United Greenwater companies. This new
parent company was capitalized for $25,000,000, with 5,000,000 shares
of the par value of $5 each, and the East was reported to be eating up
the new stock "blood raw." The president of this company was Charles R.
Miller, who was president of the Tonopah & Goldfield Railroad Company,
and the vice-president was M. R. Ward, the redoubtable brother-in-law
of Charles M. Schwab. The directorate included Mr. Schwab; John W.
Brock, who represented Philadelphia interests on the directorate of the
very successful Tonopah Mining Company; Malcolm Macdonald, the champion
"lemon" peddler of Nevada; Frank Keith, general manager of the Tonopah
Mining Company, and others. It was a "swell" directorate.

It was learned that the stock of the new company had been underwritten
by New York Stock Exchange houses, principally those with Philadelphia
and Pittsburg branches where the Schwab crowd was influential, at $1.80
per share, and that large blocks were being sold to the public at up to
$3.25 on the New York Curb, a valuation for the "properties" of more
than $16,000,000.


GETTING INTO THE GAME

The birth of the $25,000,000 merger, to take in two properties that had
not yet matriculated even in the baby-mine class and were actually
suspected at the outset by mining men in Goldfield to be wildcats,
was the signal for an outpouring in quick succession of Greenwater
promotions from all centers, of which the annals of the industry in
this country chronicle no counterpart.

At the height of the boom there was promoted out of Los Angeles and
New York the Furnace Creek Consolidated Copper Company, with a
capitalization of $5,000,000.

From Butte, home of the copper-mining industry, the Furnace Creek
Extension Copper Mining Company was promoted, with a capitalization
of $5,000,000, and also the Butte & Greenwater, capitalized for
$1,500,000. Malcolm Macdonald the "hero" of Montgomery-Shoshone at
Bullfrog, hailed from Butte. He it was who interested the Schwab crowd
in Greenwater, as he did in Tonopah and Bullfrog.

"Patsy" Clark, the noted mine operator of Spokane, having prospered
marketwise with his Furnace Creek Copper Company, promptly headed a
new one, the Furnace Valley Copper Company, with a capitalization of
$6,250,000. These shares were listed on the Spokane, Butte and Los
Angeles Stock Exchanges, but did not appear on the New York Curb.


A San Francisco crowd of brokers and stock-market operators organized
the Greenwater Bimetallic Copper Company. "They let her go Gallagher"
with a capitalization of $1,000,000.

The C. M. Sumner Investment Securities Company of Denver opened
subscriptions for the Greenwater-Death Valley Copper Company. (The
title of this company was a play on the name of the Greenwater & Death
Valley Copper Company.)

Tonopah citizens, not to be outdone, sallied forth with the Greenwater
Calumet incorporated for $1,500,000. Hon. T. L. Oddie, later Governor
of Nevada, then of Tonopah, and his brother, C. M. Oddie, followed the
lead and headed the Greenwater Arcturus Copper Mining Company, with a
capitalization of $3,000,000.

The Consolidated Greenwater Copper Company was fed to the hungry public
out of a Pittsburg trough, with general offices in the Keystone Bank
Building, and with a high-class Tonopah crowd on the directorate.
Eugene Howell, cashier of the Tonopah Banking Corporation, of which
United States Senator Nixon was president, was treasurer. John A.
Kirby, of Salt Lake City, until recently associated with George
Wingfield in the ownership of Nevada Hills, was president.

Arthur Kunze, who had sold the control of the Greenwater & Death Valley
Copper Company to Malcolm Macdonald, who in turn had interested the
Schwab coterie in the organization, put out a new one called the
Greenwater Copper Mining Company, with a capitalization of $5,000,000.

H. T. Bragdon, formerly president of the Goldfield Mining Company,
which is one of the integrals of the Goldfield Consolidated, headed the
Greenwater Black Jack Copper Mining Company, with a capitalization of
$1,000,000.


ALL THE COPPER IN THE WORLD

UNITED STATES Senator George S. Nixon of Nevada lent his name, along
with H. H. Clark, William Bayley and H. J. Woollacott, as a director of
the Greenwater Furnace Creek Copper Company, with a capitalization of
$1,500,000. The prospectus of this company announced that the ores were
"melaconite, azurite, chalcocite, and occasionally chrysocolla,
averaging 18 to 36 per cent. (copper) tenor."

"Taking the lowest percentage of ore reported by the company," says
Horace Stevens in the _Copper Handbook_ of 1908, "and the company's
own figures as to the size of its ore-bodies, the first 100 feet in
depth on this wonderful property would carry upward of 20,000,000 tons
of refined copper, worth, at 13 cents per pound, the comparatively
trifling sum of five billion, two hundred million dollars."

Mr. Stevens goes on: "The fact that a Major is manager of this company,
and a United States Senator is vice-president, will prove a great
consolation to the shareholders. It is indeed lamentable to note that
this magnificent mine, which carries, according to the company's own
statements, more copper than all the developed copper mines of the
world, is idle, and present office address a mystery."

Donald Mackenzie, of Goldfield, promoter of the successful
Frances-Mohawk Mining & Leasing Company at Goldfield, which netted over
$1,500,000 from Mohawk ores, and distributed all of 20 per cent. of
this amount to stockholders in the shape of dividends, pushed out the
Greenwater Red Boy Copper Company and the Greenwater Saratoga Copper
Company, with a capitalization of $1,000,000 each. Thomas B. Rickey,
president of the State Bank & Trust Company of Goldfield, Tonopah and
Carson City, was president of both of these companies, and J. L.
("God-Bless-You") Lindsey, cashier of the State Bank & Trust Company,
was treasurer.

Greenwater Consolidated, Greenwater Copper, Furnace Creek Oxide Copper,
Greenwater Black Oxide Copper, Greenwater California Copper, Greenwater
Polaris Copper, Greenwater Pay Copper, Pittsburg and Greenwater Copper,
Greenwater Copper Range, Greenwater Ely Consolidated, Greenwater
Sunset, New York & Greenwater, Greenwater Etna, Greenwater Superior,
Greenwater Victor, Greenwater Ibex, Greenwater Vindicator, Greenwater
Prospectors', Greenwater El Captain, Greenwater & Death Valley
Extension, Greenwater Copper Queen, Greenwater Helmet, Tonopah
Greenwater, Furnace Creek Gold & Copper, and Greenwater Willow Creek
were the names of a score of others with capitalizations ranging all
the way from $1,000,000 to $5,000,000 each.

Among these the Greenwater Willow Creek Copper Company boasted of the
fanciest directorate. George A. Bartlett, Nevada's lone Congressman,
was president, and Richard Sutro, then head of the world-known New
York banking house of Sutro Bros. & Co., was advertised as first
vice-president. Henry E. Epstine, the popular Tonopah broker, was
second vice-president, and Alonzo Tripp, general manager of the Tonopah
& Goldfield Railroad, was a director.

Did I fall for Greenwater? Yes, and at the eleventh hour.

On the half-hearted recommendation of the trust company's engineer,
"Jack" Campbell, the L. M. Sullivan Trust Company paid $125,000 for a
property in Greenwater that boasted of two ten-foot holes. On two sides
it adjoined the property of the Furnace Creek Copper Company, the
original location in the camp. Our engineer reported that if "Patsy"
Clark's Furnace Creek Copper Company, shares of which were selling in
the market at a valuation of $5,500,000 for the property, had any ore,
we certainly could not miss it. No matter which way the veins trended,
our ground must be as good as "Patsy's," because the identical vein
formation passed through both properties.

The Sullivan Trust Company thereupon incorporated the Furnace Creek
South Extension Copper Company to operate the property. The
capitalization was 1,250,000 shares of the par value of $1, of which
500,000 shares were placed in the treasury of the company to be sold
for purposes of mine development.

New York Stock Exchange houses having the call as purveyors of this
particular line of goods, the Sullivan Trust Company tendered the
selling agency of Furnace Creek South Extension treasury stock to E. A.
Manice & Company, members of the New York Stock Exchange, whose
officers are located in the same building in New York as J. P. Morgan &
Company. We offered for public subscription 100,000 shares of treasury
stock at par, $1, through E. A. Manice & Company, and this firm
advertised the offering in New York newspapers over their own
signature. The Sullivan Trust Company paid the bills.


THE COLLAPSE OF GREENWATER

THE offering turned out to be a "bloomer," the first the Sullivan Trust
Company had met with. E. A. Manice & Company did not dispose of as many
as 30,000 shares. Neither did the stock offered later by the Sullivan
Trust Company through brokers in other cities sell freely. Just at the
moment when we announced our offering of Furnace Creek South Extension
the Greenwater boom began to crack.

Oscar Adams Turner, who promoted the Tonopah Mining Company of Nevada,
which has paid $8,000,000 in dividends on a capitalization of
$1,000,000, is responsible for the early bursting of the bubble. Mr.
Turner had invested in the Greenwater camp on the reports of an
engineer. He organized the Greenwater Central Copper Company. Then he
decided that it was advisable for him to take a look at the property
for himself. He visited Greenwater. Two hours after arriving in camp he
sent a telegram to Philadelphia reading substantially as follows:

    Stop offering Greenwater Central. Make no more payments on the
    property. Do not use my name any further. There is nothing here.

The tenor of the message leaked out. Indiscriminate selling ensued by a
noted bank crowd in Philadelphia who were loaded up with Greenwaters.
Others followed suit. The market became sick.

At the first sign of a market setback inquiries began to pour into
Nevada from all over the East, and noted copper experts from Montana,
Arizona, California and other points came piling into the Greenwater
camp to examine the properties. Soon a chorus of adverse opinion found
its way into every financial center. Market values crumbled as rapidly
as they had risen. Paper fortunes evaporated in thin air.

I make a conservative statement when I say that the American public
sank fully $30,000,000 in Greenwater in less than four months.

Not all of the Greenwater promotions were over-subscribed--not half,
not a quarter--and the American public may well congratulate itself
that the boom "busted" when only approximately $30,000,000 had passed
into the pockets of the promoters.

What of the camp?

It exists no more. All mine development work ceased long ago. There are
green-stained carbonates on the surface, but there are no copper
ore-bodies. The "mines" have been dismantled of their machinery and
other equipment, and not even a lone watchman remains to point out to
the desert-wayfarer the spot on which was reared _the monumental
mining-stock swindle of the century_. Every dollar invested by the
public is lost. The dry, hot winds of the sand-swept desert now chant
the requiem.

Fix the responsibility here if you can. The job is not easy. Let me
attempt it. The buccaneers who took Greenwater & Death Valley down to
New York and allowed the public to subscribe for it with the name of
Charles M. Schwab as a lure, at a valuation for the property of more
than $3,000,000, and then ballooned the price on the curb until the
shares sold at a valuation of $16,500,000 for the property, without an
assured mining success in sight in the entire camp--these men, in my
opinion, were criminally responsible. They have never been called to
account.

Members of the New York Stock Exchange who aided and abetted them by
lending their names to the transaction, and Charles M. Schwab, who
permitted the use of his name and that of his brother-in-law, are
morally responsible. Not for an instant do I entertain the thought that
the Stock Exchange crowd and Mr. Schwab realized that the mines of the
company were absolutely valueless, but I do maintain that men of their
standing and prestige have opportunities which men of smaller caliber
do not enjoy and that their conduct for this reason was reprehensible
to an extreme.


THE SHAME AND THE BLAME

I CITE the instance of the Sullivan Trust Company "falling" for
Greenwater, after hesitating about embarking on the enterprise for
weeks, and I am convinced that others fell the same way. The Sullivan
Trust Company did not touch a Greenwater property until its clients and
its clientele among the brokers throughout the Union had burned up the
wires with requests for a Greenwater promotion, and when it did finally
"fall" it lost its own money, the only other sufferers being a handful
of investors who at the tail-end of the boom subscribed for a
comparatively small block of treasury stock.

Not all of the promoters "fell" innocently, however. There were
half-baked promoters and mining-stock brokers in almost every city in
the Union who had witnessed the enhancement in values during the
Goldfield boom, and whose palms had itched for the "long green" that
for so long came the way of men on the ground. These, at the first
signal that the Greenwater boom was on, with Charles M. Schwab in the
saddle, lost no time in annexing ground in the district with the single
view of incorporating companies and retailing the stock to the public
at thousands of per cent. profit.

The Greenwater mining-boom fiasco stands in a class by itself as an
example of mining-stock pitfalls. The only Greenwater stock which at
this time has a market quotation is Greenwater Mines & Smelters, which
reflects the true state of the public mind regarding all Greenwaters by
actually selling at a valuation of less than the amount of money in the
company's treasury--6 cents per share on an outstanding issue of
3,000,000 shares--there being $189,000 in the treasury along with an
I.O.U. of C. S. Minzesheimer & Company, the "busted" New York Stock
Exchange house, for $71,000, of which the company will realize 27 cents
on the dollar through the receiver.




CHAPTER V

ON THE EVE OF THE GREAT GOLDFIELD SMASH


It was early in November, 1906. Indian Summer held Goldfield in its
soft embrace. Nature wore that golden livery which one always
associates with the idea of abundance. The mines of the district were
being gutted of their treasures at the rate of $1,000,000 a month.
Under the high pressure of the short-term leasing system new high
records of production were being made. The population was 15,000. Bank
deposits totaled $15,000,000. Real estate on Main Street commanded
$1,000 a front foot. The streets were full of people. Every one had
money.

In years gone by men had died of thirst on that very spot. Three years
before there were no mines and the population numbered only a
corporal's guard. The transformation was complete. Within three years
the dreams of the lusty trail-blazers, who had braved the perils of the
desert to locate the district, had become a towering reality. The camp,
which two years before was dubbed by financial writers of the press as
a "raw prospect" and a "haven for wildcatters and gamblers," had
developed bonanza proportions. The early boast of Goldfield's press
bureau, that Goldfield would prove to be the greatest gold camp in the
United States, was an accomplished fact.

Listed Goldfield mining issues showed an enhancement in the markets of
nearly $150,000,000. Stocks of neighboring camps had increased in
market value $50,000,000 more. The camp rode complacently on the crest
of the big boom, than which history chronicles no greater since the
famous old days of Mackay, Fair, Flood and O'Brien on the Comstock.

There was no premonition that a climax must be reached in climbing
values at some period, and that a collapse might be near.

Goldfield Consolidated shares were selling on the exchanges at above
par, $10, or at a market valuation of more than $36,000,000 for the
issued capitalization of the company. You could have bought all of the
properties of this company for less than $150,000 when the camp was
first located. A score of leases were operating the Consolidated's
properties. The leases were soon to expire. Much market capital was
made of the fact that the company would presently "come into its own."

More than 175 stocks of Goldfield and near-by camps were listed on the
exchanges and curbs. All of these were selling at sensational prices
and enjoyed a swimming market. The successful merging by Wingfield and
Nixon of the principal producing properties of Goldfield at a
$36,000,000 valuation, more than four times the value of the known
ore-reserves, stimulated the whole list.

Columbia Mountain, promoted by the mergerers of Goldfield Consolidated,
but excluded from the merger because not contiguous to the other
integrals and because it had no ore, had been ballooned to $1.35 per
share on a million-share capitalization, and stood firm in the market
regardless of the fact that it was still only an unpromising
"prospect." The issued stock of a dozen other companies in control of
the promoters of the merger was selling at an aggregate value of many
millions more. The most despised "pup" in this particular group was
Milltown, of not even prospective value; yet it easily commanded a
per-share price that gave the "property" a market valuation of
$400,000.

Silver Pick, capitalized for 1,000,000 shares of the par value of $1
each, had scored an uninterrupted advance from 15 to $2.65 a share
without a pound of ore being found on the property. The market price
did not waver.

Kewanas, another million-share company, was in big demand at $2.25 per
share, a valuation of $2,250,000 for the property and an advance of
2,250 per cent. over the promotion price. Kewanas's gain was also made
despite the fact that mine developments had failed to open up pay ore
in commercial quantities. Eight months earlier the entire acreage had
been offered to me for $35,000 and I had refused to buy.

Goldfield Daisy, promoted by Frank Horton, a faro dealer in George
Wingfield's Tonopah gambling joint, had been ballooned from 15 cents to
$6 a share on a capitalization of 1,500,000 shares. It had never earned
a dollar for stockholders, but was actually selling in the open market
at a valuation of $9,000,000. The price showed no sign of weakening.

Combination Fraction, owning a few acres of ground, which was promoted
at 20 cents a share on a capitalization of 1,000,000 shares, had risen
rapidly, because of ore discoveries and contiguity to the Mohawk, to
$8.50 a share. Stockholders gave no sign of a tendency to unload.

Great Bend, situated in the Diamondfield section of the Goldfield
district, four miles from the productive zone, had been carried up from
10 cents a share to $2.50 without a mine being opened up, establishing
a market valuation for the property of $2,500,000.

These are but a few of the more striking instances of price
appreciations. All of these stocks, excepting Goldfield Consolidated,
are now selling for a few pennies per share each, the average not being
so much as ten cents. There were over a hundred other Goldfield stocks
that also enjoyed spectacular market careers, on which it is now
impossible to get any quotation at all.


THE RISE OF WINGFIELD AND NIXON

ANY one in Goldfield who was willing to admit that stocks were selling
too high at the time was decried as a "knocker." You could borrow
freely on all listed Goldfield stocks at John S. Cook & Company's bank,
owned by the promoters of the Goldfield Consolidated, and the men of
the camp for that reason felt that there must be concrete value behind
nearly all of them. Brokers in Eastern cities reported that few of
their customers were willing to take profits even at the prices to
which stocks had been skyrocketed. Most mining-stock brokers of the
cities had "knocked" the stocks of the camp in the early days before
the advance. At this stage, when prices had reached undreamed-of
levels, the brokers did not advise their customers that values had been
worked up far beyond intrinsic worth. Indeed, they actually waxed
enthusiastic in their recommendations to buy. Every one was a bull.

Sessions of the Goldfield Stock Exchange reflected the extent of the
craze. Outside of the exchange the stridulous, whooping, screeching,
detonating voices of the brokers that kept carrying the market up at
each session could be heard half a block away. Later, did you find your
way into the crowded board-room, the half-crazed manner in which
note-books, arms, fists, index fingers, hats and heads tossed and
swayed approached in frenzy a scene of violence to which madness might
at once be the consummation and the curse.

George Wingfield and his partner, George S. Nixon, were the heroes of
the hour. Less than five years before, Mr. Wingfield had come into
Tonopah with a stake of $150, supplied by Mr. Nixon, whose home was in
Winnemucca, Nevada. Mr. Wingfield had formerly been an impecunious
cowboy gambler. Born in the backwoods of Arkansas, and later of Oregon,
he hailed from Golconda, Nevada. Mr. Nixon, at the time he staked Mr.
Wingfield and until his election as a United States Senator in 1904,
was known as the "State Agent" of the Southern Pacific Company for
Nevada, having succeeded on the job the notorious "Black" Wallace, who
for many years handled the "yellow-dog" fund for the Huntington régime
when franchises were hard to get and legislatures had to be bought. Mr.
Nixon was also president of a bank in Winnemucca, which was a way
station on the Southern Pacific Railroad.

Mr. Wingfield had signalized his money-getting prowess by running Mr.
Nixon's $150 into $1,000,000 as principal owner of the Tonopah Club,
the biggest gambling house in Tonopah, and later "parleying" the money
for himself and partner into ownership of control of the merged
$36,000,000 Goldfield Consolidated, which was their corporate creation.

Mr. Wingfield was said to be behind the market. He was looked upon as
boss of the mining partnership, and Mr. Nixon as a circumstance. Mr.
Wingfield was a conspicuous figure at nearly all the sessions of the
Goldfield Stock Exchange, of which he was a member. In the early
evenings, when informal sessions were held on the curb, he could also
be seen in the thick of the tumult. He was on the job at all hours.


At that time Mr. Wingfield was about thirty years old. Of stinted,
meager frame, his was the extreme pallor that denoted ill health, years
of hardship, or vicious habits. His eyes were watery, his look
vacillating. Uncouth, cold of manner, and taciturn of disposition, he
was the last man whom an observer would readily imagine to be the
possessor of abilities of a superior order. In and around the camp he
was noted for secretiveness. He was rated a cool, calculating, selfish,
surething gambler-man-of-affairs--the kind who uses the backstairs,
never trusts anybody, is willing to wait a long time to accomplish a
set purpose, keeps his mouth closed, and does not allow trifling
scruples to stand in the way of final encompassment. Among stud-poker
players who patronized gaming tables in Tonopah, Goldfield and
Bullfrog, he was famed for a half-cunning expression of countenance
which deceived his opponents into believing he was bluffing when he
wasn't. In card games he was usually a consistent winner.

His partner, George S. Nixon, looked the part of the dapper little
Winnemucca bank manager and confidential State Agent of the Southern
Pacific that he was before becoming Senator. He was considerably below
middle weight, and above middle girth at that part of his anatomy which
a political enemy once described as seat of his thoughts and the
tabernacle of his aspirations. His steel-gray eyes were absolutely
without expression. Newly-rich, his money and his Southern Pacific
connections had gained him a toga, but he did not carry himself like a
man upon whom the honors had been thrust. Around Goldfield he strutted
with the pride and gravity of a Spanish grandee.

The pair were in control of the mine, bank and market situation.
Brokers, bank men and officers of mining companies waited upon them and
did their bidding. At night, in the Montezuma Club, where leading
citizens were wont to congregate, Mr. Wingfield would on occasion
ostentatiously offer to wager that Goldfield Consolidated "would sell
at $15 before $9," etc. Men with money who had flocked to the camp from
every direction listened in rapt attention. At a later hour they
secretly wired the news to their friends in the East. Next morning the
market would reflect more public buying and still higher prices.
Goldfield itself was blindly following the lead of the twain. It was
indeed easier for these men to mark prices up than to put them down.


THE WINNINGS OF A TENDERFOOT

What about me? Where did I stand and what was my position at this
conjuncture? Did I have foresight? Did I realize that stocks were
selling at much higher prices than were warranted by intrinsic worth
and speculative value? Was not the fact that the mergerers and waterers
of Goldfield Consolidated were in command of the mine, market and bank
situation sufficient to make me suspect that possibly the cards might
be stacked and that maybe cards were being dealt from the bottom of the
deck? Was I, in fact, wise to the exact situation and did I realize a
smash was bound to ensue? 'Tis a pity hindsight were not foresight, for
only in that event could I laurel-wreath myself.

I had been on the ground for more than two years. In reality I was
still a tenderfoot. My experiences had been unique--all on the
constructive side. I had mastered the first rudiments of the game, but
only the first. Intrinsic value didn't figure as the only item in my
conception of the worth of a Goldfield mining issue. The millionaires
of the camp were not miners by profession and their judgment of the
value of any mining property would not have influenced a Guggenheim, a
Ryan or a Rothschild to extend so much as $4 on the development of any
piece of likely mineral ground. Goldfield was a poor man's camp. And it
was making good despite the croakings of school-trained engineers who
had turned the district down in the early days, as they did Tonopah.

At this period I was living frugally. I never touched a card. I worked
at my desk on an average of sixteen hours a day, including Sunday, and
I never relaxed. Although I had arrived in the camp broke, had I been
offered $2,000,000 for my half interest in the L. M. Sullivan Trust
Company I think I should have refused it.

I liked my job. The leaven of my environment appealed directly to my
perceptions. I was saturated with the traditions of Western "mining
luck" and also with the optimism of my sturdy neighbors. These men had
stood their ground in the early period of the camp's days of "trial and
tribulation." They had triumphed like their forebears on the Comstock,
just as did the hardy pioneers of Leadville and Cripple Creek and as
their brethren of Tonopah did. Their influence over me was unbounded. I
relished the work, anyhow. As a matter of fact, I had little use for
money except for the purposes of business. _And never a suggestion
came to me that it was time for a "clean up."_

The L. M. Sullivan Trust Company, of which I was vice-president and
general manager, was doing remarkably well. The stocks of the mining
companies that were organized and promoted by the trust company were
listed on the San Francisco Stock Exchange and New York Curb and showed
a market appreciation of $3,000,000 above the promotion prices. Indian
Camp, promoted at 25 cents, was selling freely at $1.30. Jumping Jack,
for which subscriptions were originally accepted at 25 cents, was in
hot demand at 62 cents. Stray Dog, sold to the public originally at 45
cents, was active around 85 cents. Lou Dillon, put out less than a
month before at 25 cents, had worked its way up to 64 cents. Silver
Pick Extension, which was oversubscribed at 25 cents and commanded 35
cents two hours after we announced that subscriptions were closed, was
selling on the exchanges and curbs of the country at 49 cents. Eagle's
Nest Fairview, which original subscribers got into at 35 cents, was
very much wanted at 65 cents. Fairview Hailstone, floated at 25 cents,
was in constant demand at 40 cents.

Governor John Sparks was now president of all of these companies.


You could have sold big blocks of the Sullivan stocks at these
profit-making prices on any of the mining exchanges and curb markets of
the country without reducing the price a cent, so constant was the
public demand and so broad was the market. With the exception of
Bullfrog Rush, for which the Sullivan Trust Company had refunded the
money to subscribers when the mine under development proved to be a
"lemon," every promotion of the trust company showed investors a
handsome stock-market profit. In the aggregate the promotion price of
the seven Sullivan mining companies figured $2,000,000 for the entire
capitalization. The market price of these was now $5,000,000, or an
average gain of 150 per cent.

It was a record to be proud of, and I _was_ proud of it, not alone
because I was vice-president and general manager of the trust company,
but also because a firm of expert accountants, recommended by the
American National Bank of San Francisco to examine the books of the
trust company, had reported that our assets were $3,000,000 in excess
of liabilities, all of which had been gathered in about ten months'
time. About $1,000,000 of this represented promotion profits. The
remainder was earned by the appreciation in price of mining securities
carried or accumulated through the boom.

It was the common boast of the camp that George Wingfield had
"parleyed" or "pyramided" $1,000,000 which represented the profits of
his gambling place in Tonopah, into ownership of control along with his
partner Nixon, of the $36,000,000 Goldfield Consolidated. As heretofore
related, I had experienced a lot of hard luck in missing by a hair's
breadth, ownership of the Hayes-Monnette lease on the Mohawk and the
Nevada Hills mine, which would have increased our profits $8,000,000
more, but I felicitated myself that I had done very well by pyramiding
$2,500 into a half interest in a flourishing $3,000,000 trust company.
I was vain enough to believe that my achievement was as unique as that
of Mr. Wingfield, because he had had the influence of a United States
Senator and the money deposited in a chain of newly established banks
in Goldfield, Tonopah and other points to aid him in his operations.
Against this I had not only been compelled to rely on my own resources,
but was actually required to combat the work of black-mailers who from
time to time attempted to levy tribute. On my failure to "come through"
(I never did) they rarely hesitated to take a malevolent smash in print
at the Sullivan Trust Company, because in years gone by its active head
happened to have had a very youthful Past, even though they knew that
Past was no longer his and he had passed it like milestones on the way.


I AM LANDED HIGH AND DRY

The Nevada State election took place in November. The Democratic
ticket, headed by "Honest" John Sparks for Governor and Denver S.
Dickerson for Lieutenant-Governor, was victorious. The Republican
ticket, headed by J. F. Mitchell, a mining promoter and engineer,
backed by United States Senator Nixon, the Republican political boss,
suffered humiliating defeat.

Denver S. Dickerson was the candidate of the labor unions. During a
former labor war in Cripple Creek Mr. Dickerson had been confined in
the "bull-pen" when the Government intervened to quell the labor riots
there. Goldfield miners to a man very naturally voted for him. Governor
Sparks had accepted the renomination at the urgent request of the L. M.
Sullivan Trust Company, and his victory, as well as the complexion of
the ticket, was credited largely to the activities in politics of the
trust company.

The trust company, while not a banking institution in the sense that it
accepted deposits of cash from citizens of the town, having confined
its operations to the financing of mining enterprises, loomed large on
the political and business horizon because of its increasing financial
and political power. The trust company carried all of its moneys in
banks that were not affiliated with the Wingfield-Nixon confederacy and
worked at cross-purposes with it in this particular, too.

The Wingfield-Nixon crowd had pyramided a gambling house in Tonopah and
a little one-horse bank in Winnemucca into ownership of control of the
$36,000,000 Goldfield Consolidated; into ownership of John S. Cook &
Company's bank in Goldfield, which was credited with deposits
aggregating $8,000,000; into a new bank in Tonopah, known as the
Tonopah Banking Corporation, and into a newly formed bank in Reno,
called the Nixon National. In politics it had succeeded in seating Mr.
Nixon in the United States Senate, placing at his command the Federal
patronage which goes with that exalted office.

The confederacy was reaching out.

In Goldfield it had overcome such strong banking opposition as the Nye
& Ormsby County Bank and the State Bank & Trust Company, both of which
were in business before John S. Cook & Company were dreamed of. It had
accomplished this by loaning large sums of money to Goldfield brokers
and other citizens on mining stocks of the camp at a time when this
class of securities was not so readily accepted by the other banks as
good collateral. In Tonopah the newly-established Nixon bank, known as
the Tonopah Banking Corporation, was making gradual headway against
both the Nye & Ormsby and the State Bank & Trust Company, which still
carried about 75 per cent. of the business of that camp. In Reno the
Nixon National found it hard to compete with such old institutions as
the Bank of Nevada, the Washoe County Bank and the Farmers & Merchants
National, but rumors were already in the air that the Nixon bank was
soon to buy out and consolidate with the powerful Bank of Nevada.

In Goldfield the power of the confederacy was strongest in all lines
except politics. There it already had its grasp on the throat of the
mining and financial business of the camp, and through the out-of-town
draft collection department of its bank held its finger on the pulse of
the mining-share markets. Its sore spot was politics.

Wingfield and Nixon's market operations were clouded in mystery. No one
knew exactly where they stood. Brokers in Goldfield and San Francisco,
who had compared notes, were convinced that the two had unloaded many
millions of shares of the smaller companies not included in the merger,
and had raked in not less than $10,000,000 during the boom as the
result of this selling. The disposal of huge blocks of stock by
Wingfield and Nixon, however, was not interpreted as meaning that
stocks were selling too high. The general idea prevailed that the
proceeds were used to enable the confederacy to finance its stock
purchases in the integral companies that were turned over in the making
of the merger and to finance its new chain of banks.


About the middle of November the market for Goldfield securities took a
turn for the bad. Prices gave indication of having reached a stopping
place. Goldfield promoters began to complain that they were compelled
to lend strong support to the market because of selling from many
quarters that could not be explained. There was much market pressure.
In a few days the market became unsteady, then soft, then wobbly again.
In camp Wingfield and Nixon were reported still bullish.

The securities of the Sullivan Trust Company were under attack in all
markets. Salt Lake and San Francisco were reported to be spilling
stock. Great blocks were being thrown over.

I gave support in a jiffy.

There was no surcease.

_Within ten days I was forced to throw all of a million dollars
behind the market to hold it._

This didn't faze me. I was getting stock certificates for the money,
and I believed they were worth the price.

But I was puzzled to determine what it was all about.


THE BEGINNING OF THE RAID

Soon it was reported to me that Senator Nixon was advising people at
all points who held Sullivan stocks, or knew of anybody who held them,
to unload. From San Francisco came word that a clique of brokers was
operating for the decline.

On the following Monday the market on the San Francisco Stock Exchange
opened strong and buoyant, and it looked for a moment as if the selling
movement had collapsed. I felt relieved.

My 'phone bell rang. A stock broker of Tonopah called me on the long
distance.

"Offer you 10,000 Lou Dillon at 48," he said. "Do you want them?"

Lou Dillon was a Sullivan stock that had been promoted at 25; 48 was
now a point under the market, however.

"We'll take 'em," I said. "What's the matter?"

"Rumored up here that your books are under inspection by the
Post-office Department. You have had five new men on your books for the
past few weeks, and some one has spread a story here that Nixon has
sicked the Government on to you."

I denied it, of course. The five men in question were the experts who
had been sent up from San Francisco by the firm of accountants
recommended to us by the American National Bank, and they were there at
our own behest. The story was a raw canard.

Throughout the day the Sullivan Trust Company was called upon to stand
behind the San Francisco market and take in nearly all of the big
blocks of Sullivan stocks owned in the camps of Tonopah and Manhattan.
Before our denials could reach the sellers the damage had been done.
And it took $250,000 a day for four days to hold the market against
this fresh onslaught.

Color had been lent to the wild rumors about a Postal investigation by
the fact that an attack had been made on me in the columns of the
_Denver Mining Record_ a year before. Rumor said the dose was going to
be repeated. In the early days of the camp, when I was at the head of
the Goldfield-Tonopah Advertising Agency, I had represented the
_Denver Mining Record_ in Goldfield. As its agent I had secured
advertising contracts for it which netted my agency in the
neighborhood of $10,000 a year in commissions. The owners of the
newspaper conceived the idea that I was making too much money on a
commission basis and sent Wing B. Allen, formerly of Salt Lake, to the
scene to take my place. Mr. Allen worked for smaller pay. He wanted me
to divide my commission on standing business, and I refused. The
publishers took Mr. Allen's part. As a result I withdrew all the
advertising from the columns of the _Denver Mining Record_ for which
my agency had been responsible, and the _Denver Mining Record_ was
never able to regain the lost ground.

A short time before the raid on our stocks began Mr. Allen had been
arrested in Goldfield on a warrant sworn out by L. M. Sullivan, tried
before Judge Bell on the charge of extortion and bound over to the
Grand Jury. At the hearing before Judge Bell the Sullivan Trust Company
submitted evidence that Mr. Allen had threatened, if we did not give
his paper a slice of the promotion advertising of the Sullivan Trust
Company, that the _Denver Mining Record_ would commence to attack
me personally in its columns, and, because of my early Past, would do
the trust company serious damage.

At the hearing despatches were submitted which were filed at the
Goldfield office of the Western Union Telegraph Company by Mr. Allen,
in which he had informed his paper that it had better proceed with the
attack, because neither Mr. Sullivan nor myself gave indication of
yielding. At the hearing, under oath and in a crowded courtroom, I
openly denounced Mr. Allen and his newspaper as blackmailers of the
very vilest type, and so did Mr. Sullivan. Judge Bell, on the
submission by the Western Union of Mr. Allen's despatches to his paper,
promptly held him for the Grand Jury.

On the advice of former Governor Thomas, of Colorado, to whom the
Sullivan Trust Company paid a retainer as counsel, and who later
became chief counsel for the Goldfield Consolidated, I employed
Christopher C. Clay of Denver to commence suit against the owners of
the _Denver Mining Record_. As a result I secured from them a
settlement by which they agreed not to mention my name again in their
paper. I was harassed at the time, or I would not have compromised.
The stuff printed by the _Denver Mining Record_, which has been
rehashed by every blackmailer who ever attempted to levy on me, was
about two-tenths true and eight-tenths false. It was a literal copy of
an anonymous publication put out by a set of blackmailers who had
tried to circulate it years before in New York when I was head of the
Maxim & Gay Company. I had spent thousands of dollars to run down the
authorship then, but without avail. The lawyers had succeeded in
seizing thousands of copies of the publication, and had made an
arrest, but they failed to prove authorship of the screed and
ownership of the paper, and the culprits therefore were not punished.
In Denver when Mr. Clay applied for criminal warrants, he was asked
first to furnish proof of authorship, which was impossible for us, the
articles having been unsigned.


SOME PERTINENT PERSONALITIES

The same stuff has recently appeared without signature in a Goldfield
paper which originally came into possession of George Wingfield through
foreclosure proceedings, and in a Reno evening paper which is
controlled by Senator Nixon, who owns a large slice of the paper's
mortgage. It has also appeared in other papers "friendly" to Wingfield
and Nixon. Tens of thousands of copies of the Goldfield publication
containing the anonymous libel have been sent broadcast.

Other newspapers have reproduced the libelous stuff, some innocently
and some for sordid reasons, but of this more later. My career is
fraught with instances of recourse by enemies to blackmail and
attempted blackmail. If I should undertake to tabulate the cases where
men and interests, ranging from impecunious newspaper reporters to
financial-newspaper publishers and mining-stock brokers and market
operators who, from the background, publish market letters or furnish
the capital for mining publications, have attempted to levy tribute or
to club me into submission by the use of so vile a weapon, I should be
compelled to write a big book on the subject.

And right here I should like to place myself on record to the effect
that seemingly the principal shortcoming that has marked my
mining-financial career has been that I had a youthful Past--a Past
which during the last decade has never been taken into serious
consideration by men who have held close business relations with me,
but which, of course, is a thorn in the sides of men and interests
whose bidding I have failed to obey.

I defy any man to cite a single instance where I was guilty of
crookedness in a mining transaction or a business transaction of any
kind in my entire career as a promoter. I have been fearless--too much
so. I have been a rabid enthusiast. I have tried to build. I have given
quarter, but have never taken any. I have been honest. Were I really
dishonest, I could have prevented every publication of an attack of
consequence on me by lending myself in advance to the base purposes of
my traducers, and I would have millions now for having compromised with
them. It is heaven's own truth that in nine cases out of ten, when I
have been attacked in print, the motive of the attacking party has been
base and the facts have been so distorted or misrepresented that the
fabric was a lie. Nor has the cruelty of the operation stayed any one's
hand.


At the very moment in Goldfield when I knew that the _Denver Mining
Record_ would not assault the Sullivan Trust Company again because of
the settlement of the libel suit by my lawyers out of court, fresh
rumors were spread that the _Denver Mining Record_ was getting ready
for another attack and that tens of thousands of copies of that
newspaper were to be circulated. But you can't stop a rumor by the
declaration of the truth, and the Sullivan Trust Company decided that
it would be unwise to make a denial in print, for by so doing it would
communicate to all stockholders the news that the Sullivan stocks were
actually under attack and thus cause more "frightened selling."

Sight drafts from brokers in New York, Chicago, Salt Lake and San
Francisco, drawn on the Sullivan Trust Company, with large bundles of
Sullivan stocks attached, were pouring into our office through the
local banks for presentation. John S. Cook & Company made a specialty
of this department of banking, and most of the drafts on us were
cleared through the Wingfield-Nixon bank. It was reported to me that
Senator Nixon was openly discussing the enormous volume of stocks
coming in on us and was questioning our ability to stem the tide. As a
strategic measure, the Sullivan Trust Company decided to "cross" sales
on the San Francisco Stock Exchange so that it might ship out of the
camp, through the banks, large blocks of stock with draft attached
against San Francisco brokers and thus convey to the minds of local
bankers that we were selling large blocks of stock as well as buying
them. The volume of the "cross" trades caused some talk in San
Francisco, and was magnified by brokers operating for the decline.


THE TIME WHEN MONEY TALKS

Some of our brokers in San Francisco now demanded an independent bank
guaranty that the drafts on us would be honored. We asked for a line of
credit at the State Bank & Trust Company. It was promptly given. As
fast as the brokers asked for a guaranty, the State Bank & Trust
Company telegraphed them formally that it would honor our paper to the
extent of $20,000 or $30,000 in every case. To protect the bank and in
order to be able to borrow a large sum of money, should we need it in
the event of another selling movement starting in, we deposited stocks
of a market value of $1,500,000 with the State Bank & Trust Company,
which signed a paper that this collateral was to stand against loans
for any amount which the State Bank & Trust Company might make to us on
open account.

A few days later we borrowed from the bank $300,000 in cash, and it was
agreed that should we need $300,000 more on the same collateral, it
would be promptly placed at our disposal. We did not yet need the
money, but I realized the desirability of assembling cash in an
exigency such as that. Nor was this an unusual proceeding. There was a
time during the Manhattan boom when the overdraft of the Sullivan Trust
Company in the Nye & Ormsby County Bank was $695,000. The bank held
against this overdraft Sullivan stocks at the promotion price. Nearly
all of these stocks at that early period were as yet unlisted.

The idea of withdrawing support and letting the market go to smash did
not occur to me at all. As already stated, I believed the stocks were
worth the money. But that was not the chief reason for my stubborn
market position. I took great pride in the fact that every listed stock
of the Sullivan Trust Company showed a big profit to stockholders. I
considered the greatest asset of the trust company to be, not its
money, but its prestige, and I entertained big ideas as to a future I
had mapped out for the corporation. I did not suspect that an organized
campaign was on to destroy us and that the dominant interests of the
camp were reaching out for everything in sight. Nor did I have any use
for money for hoarding purposes. The only thing that seriously nettled
me was the fact that the Sullivan Trust Company had been compelled to
turn borrower.

Before the first selling movement started in, our assets were
$3,000,000 more than our liabilities. But this $3,000,000 was not all
cash. In fact, it was represented in part by stocks which we had
purchased in the market with the idea that they were good stocks to own
and would show the trust company a big profit, as they had. We could
have cleaned up $3,000,000 in cash, but we had not done so. Now, within
a month, all of our available cash had been put into fresh lines of our
own securities, we had been compelled to sell other lines out, and the
corporation was a borrower. I was stubborn--too stubborn for a man who
boasted of so little experience in such a big game. It was a pet belief
of mine that obstacles create character. I was in the heat of a battle
and fighting my way against tremendous odds. I rather liked the
sensation.

Another dominant trait which, deep down, has in recent years been the
keynote of my actions is the fact that my philosophy teaches me that
you can't down the truth, that a lie can't live, and that _justice will
be finally done_. Had I always put the accent on the "finally" and
mixed with my philosophy a little "dope" to the effect that while
justice is always _finally_ triumphant, injustice is often victorious
_for a while_, I might have fared better.

In a previous chapter I stated that "Wall Street deals for suckers" and
that "thinkers who think they know, but don't" are the suckers for
which Wall Street casts its net. I also stated that Wall Street
promoters realized that "a little knowledge is a dangerous thing" and
that this "little knowledge" leads astray this particular kind of
sucker. In "falling" in Goldfield for the philosophy that "justice is
always triumphant in the end," by swallowing it whole, and in making no
allowance for the fact that justice is sometimes tardy, even though it
does prevail in the end, I here decorate myself with a medal as a
top-notcher in the _sucker_ class--in the academic sense--which I
have described, and which is the usual sense in which I use the term
"sucker."

Again the selling ceased, and it looked as if the Sullivan Trust
Company would be compelled to wait only for a general turn in the
market to relieve itself of money-pressure by disposing of some of the
large blocks of stock it had accumulated during the periods of heavy
liquidation.


CLOUDS IN THE WESTERN SKY

A new black cloud showed itself on the horizon. A labor war was
threatened in Goldfield. It was very apparent, from the conduct of
George Wingfield, that he was baiting the miners, and it appeared to be
the general opinion of the people of Goldfield that he was trying to
precipitate trouble. The miners had asked for higher wages. The
Sullivan Trust Company, which was operating seven properties with a
monthly pay-roll of $50,000, was the first to express a willingness to
grant the terms. Wingfield and Nixon refused. The miners asked for
arbitration. It was refused. The mines were then shut down for a few
days and the terms of the leases were extended.

Heavy selling in all Goldfield stocks took place during the shut-down.
Rumors could now be heard on every side that Wingfield and Nixon were
dumping overboard big blocks of stock. Could it be possible that they
themselves were scuttling the ship that had given them such glorious
passage?

Again the Sullivan Trust Company was called upon to stand behind the
market.

Soon a cry of distress was heard in the camp from investors and stock
brokers who had overloaded themselves with securities and who were in
debt to the banks to the extent of millions, with stock of the camp put
up as collateral. Inquiry revealed the fact that all Goldfield and
Tonopah banks were overloaded. This condition had been brought about by
the liberal terms which had been granted by the Wingfield-Nixon banks
during the "ballooning" of Goldfield Consolidated, when the
confederacy, according to common belief, was unloading millions of
dollars' worth of stocks in the small companies and was using the
proceeds to finance their purchase of the stock of several of the
integrals that formed the big merger.

I began to get next to myself and to "smell a rat." I had never had so
much as an argument with either Mr. Wingfield or Mr. Nixon, had never
been engaged in any business transactions with them, and the campaign
against the trust company, which I felt sure had been conceived at the
outset in the interests of the Republican political machine, I now
suspected was part of a general scheme to get hold of anything and
everything that was valuable in the camp. By smashing the Sullivan
Trust Company they could hurt the Democratic party of the State, with
which we were affiliated, and for which it was currently believed we
were supplying the sinews of war. By smashing us they might also
cripple the bank with which we were doing business, and which in both
Goldfield and Tonopah, particularly Tonopah, was a formidable
competitor of their banking interests. And thus they might also
facilitate a decline in the market which would shake out of their
holdings borrowers at their banks.

I figured it out this way: Wingfield and Nixon knew that we had
foolishly attempted to support the market for our stocks, that other
promoters in Goldfield had done likewise, and that investors and
brokers in Goldfield had borrowed heavily from all of the banks. John
S. Cook & Company were calling for more collateral from their
customers, and real estate was being added to the pledges of mining
securities. What more easy, even though diabolical, than to "bear" the
market, shake out the stockholders in various important mines of the
camp, take their stocks away from them by foreclosure, and get
possession again, at bankrupt-sale prices, of the millions of dollars'
worth of securities which they had unloaded during the boom?

If this was the scheme of Wingfield and Nixon, what transpired could
not have been patterned more perfectly.

Mr. Wingfield walked the streets day and night, armed to the teeth, and
openly dared any of the miners to "get him." He threatened another
shut-down, a reduction of wages, the installation of change-rooms at
the mines and other dire things, all seemingly calculated to rouse the
ire of the mine-workers.

The miners fell for the bait, became belligerent and nasty and did
things with which the community was not in sympathy. Day by day the
situation became more critical.

During one of the shut-downs which ensued, Senator Nixon revealed his
hand by convening a meeting of the executive committees of the two
Goldfield stock exchanges. He insisted that the exchanges close,
arguing that the prices of stocks should be allowed to recede in
sympathy with the labor troubles. No thought was his for the men of the
camp who were committed to the long side of the market at boom prices
and who had worked day and night to create the boom which had thrown
into the laps of Wingfield and Nixon riches far beyond the dreams of
avarice. The brokers refused to close the exchanges.


Goldfielders were slow to grasp the real import of what was
transpiring. Things were very much unsettled. Optimism would rule
to-day on apparently inspired rumors that the differences between the
mine owners and the miners were about to be patched up. The next day
gloom would pervade the camp because of the unfavorable action by the
union on the peace plans. Nightly conferences were held. It was
impossible to get an accurate line on the situation. Crowds gathered
about Miners' Union Hall, where the meetings were held, and everyone
sought something tangible on which to base his market operations. The
officers of the union were in and out of the market, taking advantage
of their official positions to anticipate every favorable or
unfavorable development.

It was a critically sensitive market situation. The drift, however, was
unmistakably downward. Values began to melt like snow in a Spring thaw.

Through it all the Sullivan Trust Company stood valiantly behind its
securities in all markets where they were traded in--to the limit. I
was bull-headed. I had never before been through a mining-camp boom of
such proportions, and I failed to recognize that a reaction must ensue,
whether it was forced by Wingfield and Nixon or not. Tens of thousands
of shares of Sullivan stocks were thrown at our brokers on the San
Francisco Stock Exchange and New York Curb from day to day, and we took
them all in, refusing to allow the market to yield to the pressure.


FROM CREDIT TO CRASH

To convey an idea as to the standing of the L. M. Sullivan Trust
Company during this crucial period, I cite an instance. Logan & Bryan,
members of the New York Stock Exchange, Chicago Stock Exchange, Chicago
Board of Trade, New Orleans Cotton Exchange and all other important
exchanges, who conduct a leased-wire system from coast to coast at a
cost of $300,000 per annum, and who have over 100 correspondents in
nearly as many cities, all of high standing as stock brokers, made a
tentative offer to the Sullivan Trust Company early in December to
connect their wire system with our office in Goldfield and to give us
the exclusive wire connection for Nevada at an annual rental of
$100,000. This offer would not have been made if the credit of the
Sullivan Trust Company had not been maintained at high notch, or if I,
personally, had not convinced men of substance that I was strictly on
the level, "Past" or no "Past."

Ben Bryan, the active member of this firm, was in Goldfield at the
time. He asked as to our finances. There was present Cashier J. L.
Lindsey of the State Bank & Trust Company.

"How much would your bank loan the Sullivan Trust Company on its
unindorsed paper and at a moment's notice?" I asked Mr. Lindsey.

"A quarter of a million or more," answered Mr. Lindsey.

This apparently satisfied Mr. Bryan.

Our rating in Bradstreet's and Dun's was "AA1." A private statement
issued by Bradstreet was to the effect that while our rating was only
$1,000,000 and we claimed a capital and surplus of only $1,000,000 at
the time the rating was given, it was believed in Goldfield that we
were worth much more, and that we had actually understated our
resources because we considered it bad policy to divulge the great
profits in the promotion business.

By December 15 the condition of the Sullivan Trust Company had become
about as follows:

Our $3,000,000 surplus had been reduced to $2,000,000 and all of this
$2,000,000, plus the loss, was represented by our own bought-back
stocks. We had no money, except about $50,000, remaining of the
$300,000 borrowed from the State Bank & Trust Company. We were
committed in excess of this $50,000 to brokers for stocks in transit,
but by the "crossing" process we were able to maintain a chain that
kept intact our reduced cash balance. We figured that a fresh loan of
$300,000, additional to the $300,000 already obtained from the State
Bank & Trust Company, would enable us to take up all of our paper and
to discontinue the "cross" trades. We promptly arranged for the loan,
which Cashier Lindsey of the State Bank & Trust Company informed us
would be immediately credited to our account whenever we required the
money. Interest charges were at the rate of 1 per cent. a month in the
camp at that time, and for that reason I did not ask that we be at once
credited with the amount. I sent over to the State Bank & Trust Company
another big batch of stocks, to be held as collateral against the
promised loan, and got a receipt for it stating that it was accepted as
collateral on our "open loan" account.

The market in Sullivan stocks had now steadied itself and it appeared
that it would be impossible for any further selling of consequence to
take place. We had bought back in the open market fully 50 per cent. of
all the stocks promoted by the trust company. Distribution of the
stocks of our early promotions had originally taken place in such a
broad way that it now appeared as if selling must necessarily become
scattered. We felt somewhat crippled, but in no danger, and were "still
in the ring."


DOWN WITH THE SULLIVAN TRUST COMPANY

By this time I was "all in" physically. I had a cyst, of fifteen
years' growth, on the back of my head. It had become infected. I was
threatened with blood-poisoning. I suffered much pain. I had been on
the desert for nearly three years, without leaving it for a day. My
associates insisted that I go to Los Angeles immediately for treatment
and a rest. Believing that the trust company was secure, I made
preparations to go. Before leaving I busied myself with the
preparation of a dozen full-page reading-matter advertisements on
Sullivan properties, which the Salt Lake _Tribune_ and Salt Lake
_Herald_ had contracted to publish in their New Year's Day editions.
These are an annual feature of those newspapers. I decided to "make"
Salt Lake on my return trip from Los Angeles and be there on New
Year's Day with our mailing-list, to superintend the mailing of the
papers to all stockholders in Sullivan properties. On account of the
great value which we attached to the mailing-list, I would not trust
anybody but myself with the job. I spent Christmas in Los Angeles and
arrived in Salt Lake on New Year's Day, ready for work.

I was busy in the Salt Lake _Herald_ office next day when affable
Peter Grant, a partner of Mr. Sullivan, with whom Mr. Sullivan had at
the outset divided his interest in the Sullivan Trust Company, walked
in. I asked Mr. Grant, who had remained at the helm with Mr. Sullivan
while I was away from Goldfield, about business. He assured me that the
loan from the State Bank & Trust Company would not only be forthcoming,
as needed, but that Cashier Lindsey had informed him that we could have
$500,000 instead of $300,000 additional, if we actually had to have it,
and that the bank would back us to the extent of a million in all, if
necessary.

On calling next morning at the office of James A. Pollock & Company,
our Salt Lake correspondents, I was astounded to learn that rumors had
been telegraphed to them from San Francisco that our paper was being
held up in Goldfield.

"That's nonsense!" said Mr. Grant. "Why, Lindsey has given me his word,
and there can't be a question about it."

"Maybe he has 'laid down' on us," I said, "and that would be ----!"

"Nonsense!" said Mr. Grant. "I'll telegraph him that in addition to
honoring our Goldfield paper with the money we have borrowed from him,
he must wire $150,000 to our credit in San Francisco, and you and I can
jump on the train to-day and go to San Francisco and support the market
right on the ground. If those rumors have spread around San Francisco a
lot of short-selling will take place and the market will need support."

I agreed.

So confident were Mr. Grant, James A. Pollock & Company, and I that
everything was right with us that we gave and they accepted a big
supporting order to be used on the San Francisco Stock Exchange during
the succeeding day while Mr. Grant and I should be on the train to the
Coast city.

We arrived in San Francisco late at night. A number of brokers met us
and conveyed the news that the State Bank & Trust Company had "laid
down" on us. In the meantime despatches to us from the cashier of the
Sullivan Trust Company had piled up at the hotel. He explained the
situation, which was this:

All the trains carrying drafts in the mail to Goldfield had been
stalled by snowstorms two days before New Year's. The next day was
Sunday. Monday was New Year's Day, a legal holiday. Thus five days'
mail had accumulated, and on Tuesday the delayed drafts were presented,
all in a bunch.

L. M. Sullivan, president of the trust company, who was supposed to be
on deck at Goldfield, was in Tonopah, where he was reported to be in
imminent danger of arrest on the charge that during a New Year's brawl
he had nearly brained a chauffeur with a butt-end of a revolver.

The bank people became alarmed.

In requisitioning the $300,000 we had stated that we would call for it
piecemeal, as had been our custom in the past. The five days' mail had
piled up drafts totaling nearly the entire amount. I was absent from
Goldfield. Mr. Grant was away, and so was Mr. Sullivan. Employees were
running the business. Cashier Lindsey concluded that we were
"overboard." On top of it all, Donald Mackenzie, the heaviest depositor
of the State Bank & Trust Company, had that very morning drawn out a
large sum, said to aggregate $400,000, and had it transferred to San
Francisco. Our wires from Goldfield stated he had been frightened by
rumors that the Sullivan Trust Company was in trouble and that the
State Bank & Trust Company would be involved.

That settled it. The enterprise that I had built up from such a meager
beginning into a $3,000,000 trust company crumbled in a heap and left
us stranded on the financial shoals of an over-boomed mining camp.


SOME HINDSIGHT THAT CAME TOO LATE

I attribute the destruction of the Sullivan Trust Company to six
factors, namely, (1) politics; (2) blackmail; (3) lack of wide
distribution of our later promotions, we having sold most of these
stocks in large blocks during the exciting boom days through brokers to
speculators instead of disposing of them in small lots direct to
investors; (4) my lack of knowledge of markets and inexperience in
market manipulation; (5) my own stubborn pride and optimism, and (6)
the failure of the State Bank & Trust Company to keep its pledge of
assistance.

It is conceded in Nevada by all honest men that, without exception, all
of the properties promoted by the L. M. Sullivan Trust Company had
merit, and that money was lavishly provided for mine development as
long as the trust company was in existence. The properties were
selected with great care. They were very much higher in quality than
the average. Those at Manhattan are yielding treasure to this very day,
and may make good yet in a handsome way from a mining standpoint. Those
at Fairview bid fair to duplicate the performance. Had I kept out of
politics, been a good market general, and taken cognizance of the fact
that the law of supply and demand is as inexorable in mining-stock
markets as in every other line of human endeavor, I could have saved
myself and associates from financial ruin.

It would have been the better part of valor to have emulated Bob
Acres--back up and "live to fight another day." Instead, I attempted
the impossible in my endeavor to stem the tide of liquidation, and
exhausted our resources to the last dollar in buying back the Sullivan
stocks at advanced figures over the promotion prices. I didn't know
then, as I know now, that the accepted practice of the successful
market operators is to go with the crowd--to help along an advance when
the public is buying, and, with equal facility, to further a decline
when everybody wants to sell. It was my first experience, and, like so
many beginners, I was overconfident, lacking in judgment, and fatally
ignorant of the finer points of the game.

The complete collapse of the financial structure I had labored so hard
to construct came as an overwhelming blow to the camp and marked the
beginning of the end of the great Goldfield mining-stock craze.

Our enemies had overshot the mark. Public confidence was irreparably
shattered by the smash of the trust company, and it would have been
better for Goldfield and Nevada had Wingfield and Nixon possessed
sufficient foresight to go to our rescue instead of facilitating our
destruction. Money that had poured into the camp without cessation
month after month for mine development started to flow the other way.

Less than a year later, when Wall Street's financial cataclysm put a
quietus on market activities of every sort, the great fortunes of
Wingfield and Nixon themselves hung in the balance, and had it not been
for a quick transaction by which the United States Mint at San
Francisco forwarded by express to Reno and Goldfield $500,000 in gold,
the failure of Wingfield and Nixon and their chain of banks might have
happened as a fitting climax to the scheme of aggrandizement which they
had fostered.

It was rumored at the time that this money had either been obtained
from the Government as a deposit for the Nixon National Bank in Reno or
was obtained at great sacrifice from Wall Street bankers, and that only
by virtue of Mr. Nixon's position as Chairman of the Committee on
National Banks of the United States Senate was he able to get the
Sub-Treasury in New York to instruct the Mint at San Francisco to
supply the gold at this crucial period when fiat money was current in
the East. Whether it was a Government deposit or not, Senator Nixon got
it--and he needed it.

Even to this day Wingfield and Nixon are engaged in an effort to shift
the responsibility to me for the destruction of the great mining camp
of Goldfield, which to-day marks the graveyard of a million blighted
hopes.

On the eve of the Wall Street panic of 1907, every bank in Goldfield
and Tonopah that had existed through the mining boom with the exception
of those of Wingfield and Nixon, went to the wall, and every Goldfield
broker, with one or two exceptions, went broke. The business interests
of the camp suffered the same experience. Wingfield and Nixon succeeded
in annexing the remnants of the Goldfield banking business, along with
the control of nearly all of the Goldfield properties for which they
had been seemingly gunning. Wingfield and Nixon are, in fact, to-day in
control of the political as well as the banking and precious-metal
mining industry of the State. They have triumphed, but Goldfield,
except for the big mine and one or two others of little consequence
which they do not own, has been throttled and is dying the death. Had
Wingfield and Nixon played a broad gauged game, the camp would
undoubtedly still be on the map and, instead of having only two or
three mines, might now boast of thirty.


As quickly as possible I convened a meeting of the creditors of the
Sullivan Trust Company, all of whom happened to be either Western
brokers or banks. The market had gone to smash and our liabilities were
$1,200,000. The assets, calculated at the low market price of the
securities that was reached after the embarrassment was publicly
announced, were still in excess of the liabilities. The creditors
agreed in jig time that if we would turn over all of the securities
they would accept 80 per cent. of the net proceeds as full payment of
our obligation and return the other 20 per cent. to the trust company.

Thomas B. Rickey, president of the State Bank & Trust Company, was
appointed manager of the pool, and was also elected president of the
Sullivan Trust Company, which exists in moribund state to this day. Mr.
Rickey had even a higher opinion of the value of the securities than we
had, and he refused to sell any of them at the prices which then
prevailed. He held on. During the bankers' panic of 1907 the State Bank
& Trust Company failed for about $3,000,000. The Sullivan mines were
compelled to shut down. Mr. Rickey still held on. Manhattan, the mining
camp, struck the toboggan. The boom in Goldfield securities collapsed
at the same moment. The Sullivan stocks shriveled, like the rest of the
list, to almost nothing.

As far as I can learn, neither the bank or broker-creditors nor any of
the members of the Sullivan Trust Company have ever received a dollar
as a result of the settlement. Had the securities been disposed of
immediately after the embarrassment, the trust company would have paid
dollar for dollar. Those of the public who did not sell their holdings
in the Sullivan companies when we were supporting the market to the
extent of more than $3,000,000, lost most of their investment. Those
who did sell--most of them--made money. The market value of these
securities, at the height of the boom, was in excess of $5,000,000. The
price paid for them by the public, as already stated, was in the
neighborhood of $2,000,000.

After settling with the creditors of the Sullivan Trust Company on the
basis just outlined, I departed from Goldfield as broke as when I
arrived there three years before. The only money I or my partners had
drawn from the business during the life of the trust company was about
$5,000, just sufficient to pay living expenses. My expenses to New
York, where I went to have my head operated on--are you
surprised?--were supplied by the proceeds of the sale of my seat on one
of the Goldfield stock exchanges, from which I netted $400. I landed
back in the big city with $200 in my pocket, the exact sum with which I
had left town three years before.

My reward for three years of untiring work on the desert was a big fund
of Experience. Believe me, I thought it would hold me for a while! But
it didn't.




CHAPTER VI

NIPISSING AND GOLDFIELD CON


The embarrassment of the L. M. Sullivan Trust Company, was disastrous
to Goldfield, The decline and fall of the camp dated from that very
hour.

The _Goldfield News_, of nation-wide circulation in those days and
up to then unshackled, sought to stem the tide. It published a
double-leaded editorial, in full-face type, setting forth that the
Sullivan Trust Company had gone down with its flag nailed to the
masthead of a declining market and had lost its last dollar supporting
its own stocks.

The camp took courage. Soon it became evident that the initial smash in
stock-market values was not sufficient to convince the natives that the
death-knell of the market for its long line of mining securities had
been sounded.

The population of Goldfield was 15,000. Its life could not be snuffed
out in a day. Great was the depreciation in the market price of
Goldfield mining issues, but not to an extent as yet that indicated the
almost complete annihilation of values which followed. Final
destruction for the general list, with some scattering exceptions, came
only after a "starving-out" siege on the part of investors, who refused
to commit themselves farther and gradually resorted to liquidation.

Listed Goldfield securities, nearly 200 in number, and valued in the
markets at above $150,000,000 during the boom, had within two months
shown a falling off of $60,000,000 in market value, but the list on the
average was still quoted higher than the promotion prices.

On January 18, 1907, fifteen days after the newspapers throughout the
land carried front-page stories of the failure of the Sullivan Trust
Company, the stocks promoted by the trust company were still in demand
in all mining-share markets of the country at an average price not
below that at which original subscriptions were accepted from the
public.

Jumping Jack, promoted at 25 cents, was quoted at 30 cents bid. Stray
Dog Manhattan, promoted at 45 cents, was in demand at 49 cents. Lou
Dillon, promoted at 25 cents, was still wanted at 26. Indian Camp, sold
originally to the public at 25, was quoted at 85 bid. Silver Pick
Extension, promoted at 25, was 21 bid, a loss of 4 cents from the
promotion price. Eagle's Nest Fairview was quoted at 25, off 10 cents
from the promotion figure. These prices represented terrific losses
from the "highs" that had been reached during the height of the
Goldfield boom, yet the average market price was still above the
subscription price of the shares at which the public was first allowed
to participate. A remarkable part of this demonstration was that for
twenty days no inside support had been lent to these stocks. The
Sullivan Trust Company being in trouble, the markets had been left to
the mercy of short-sellers and market sharp-shooters generally.

Having settled the trust company's liabilities of $1,200,000 by tying
up in trust all of its securities and the other assets, of which the
creditors agreed to accept in full quittance 80 per cent. of the
proceeds and to turn back to the trust company 20 per cent., I returned
to New York during the last week in January. I was again out of a
job--and broke.

I visited the officers of mining-stock brokers in Wall Street and Broad
Street. Wherever I went a hearty handclasp was extended. Not one of the
Eastern stock brokers was involved to the extent of a single dollar in
the Sullivan Trust Company failure.

The brokers were convinced that the embarrassment was honest. The trust
company's credit had always been good. Had the failure been meditated,
I could have involved Eastern brokers for at least $1,000,000. Because
I didn't, New York brokers were not slow to express their good feeling.
A number of them offered to extend a helping hand did I wish to embark
on a new enterprise.


Peculiarly enough--or shall I say, naturally--after tossing off the
trust company's millions, of which half were mine, in a vain endeavor
to support the market for its stocks, I was as full of spirit as the
month of May. I had been broke before, and the sensation was not new to
me. Withal, I had profited. A new fund of experience was mine. Even
though I had not gathered shekels as a result of my hard work in
Goldfield, I had learned something--I had acquired the rudiments of a
great business.

Goldfield had been the mining emporium--the security factory. New York
was the recognized market center. Market handling had been my weak
spot. I now had a chance to witness the performance of some
past-masters in the art of market manipulation, and I tried to make the
best of the opportunity.

I watched intently the daily sessions of the New York Curb. I was in
and out of brokerage offices hourly. Nothing that transpired escaped
me.

Within a month I heard enough and saw enough to convince me that,
daring as were the operations of the mergerers and waterers of
Goldfield Consolidated, in that they ballooned the price of their
security at its inception some $29,000,000 (400 per cent.) above the
accepted intrinsic worth and were able to get the public in at top
prices, their activities were but amateurish when compared with the
stock-market campaign in Nipissing, which was now transpiring on the
New York Curb.

In the Nipissing campaign tens of millions of the public's money went
glimmering, several great promoters' fortunes were reared as by magic,
some big names and big reputations were tarnished, and dollars in
$1,000,000 blocks were juggled like glass balls under the touch of
sleight-of-hand performers.


AN ORGY IN MARKET MANIPULATION

This market melodrama was well staged. It had a sensational start-off,
and action was at high tension every minute. The performance had
covered a period of seven months when I arrived in New York, and was
reaching its climax. It was a wild orgy in market-manipulation and
money-fleecing that had no parallel in history from the early Comstock
days up to and including Greenwater. As a mining-stock boom it was a
dizzy, bewildering success--full of red fire and explosions to the last
curtain climax.

W. B. Thompson, Montana mine promoter and money-getter; Captain Joseph
R. Delamar, famed as a daring adventurer on land and sea, and recently
a highly successful financier, mine-owner, stock-market operator and
art collector; John Hays Hammond, mining engineer, promoter, politician
and ambitious society leader; A. Chester Beatty, millionaire mining
engineer, and the seven Guggenheim brothers, were in the all-star cast.
Mr. Thompson, by reason of the fact that he was market manager, was
most under the spotlight, although at times he was obscured by the
others.

Mr. Thompson was a product of Butte, Montana. Early in the game he had
learned the Wall Street lesson that "stocks are made to sell." Born and
reared in Butte without the aid of a silver spoon, he had never been
"in the money" before coming East. The great pay-streak in the East
apparently looked better to him than the pay-streaks that some of his
Butte neighbors had missed in their deep-mine operations. He was an
ideal man for the Nipissing job, as subsequent events in his career
thoroughly confirm. Of a school that believes money in hand to be worth
more than mining certificates in the box, Mr. Thompson's route from
Montana to Broad Street was via Boston, where he made his first visible
stake by marketing stock in the Shannon group of mines.

When the Cobalt excitement was in its infancy Mr. Thompson took a run
up to the camp. The Nipissing mine was about the best thing in sight.
It was producing real silver. The company was owned by a little club
consisting of E. P. Earle, specialist in rare metals, Captain Delamar,
millionaire soldier of fortune, E. C. Converse, banker and steel
magnate, Ambrose Monnell, R. M. Thompson, Joseph Wharton, since
deceased, of Philadelphia, and Duncan Coulson, a rich Canadian lawyer.
Considerable silver was being produced. The veins, however, were
exceedingly narrow, not more than a few inches wide. It was impossible
to block out ore to an extent that would warrant any opinion as to the
real measure of the mine's riches. The gentlemen owners were not averse
to giving Mr. Thompson an option on 100,000 shares of treasury stock of
the 1,200,000 five-dollar shares ($6,000,000), at $2 a share, when he
made the proposition, and another 100,000 shares at $2.50. Later, they
sold him a call on 50,000 or 100,000 shares around $7. All of this
happened in the Summer of 1906, six months before I reached New York
and at a time when the country was giving indication of going
mining-stock crazy, Nevada stocks having advanced on the New York Curb
in the Goldfield boom hundreds per cent.


After the Goldfield boom had gained terrific headway, during the Fall
of 1906, when Mohawk was climbing from 10 cents per share toward the
$20 mark, which it reached during the climax, the Cobalt mining-stock
excitement spread like wildfire. A sudden demand sprang up for
Nipissing shares. Mr. Thompson, about this time, connected himself with
the old established and conservative banking house of C. Shumacher &
Company on Wall Street. The affiliation was calculated to give the
promoter of Nipissing stock much standing. The move served well its
purpose. The public grabbed at the shares. The price jumped to $4.50 in
a jiffy. Mr. Thompson began to let go of stock after the $4 point was
reached. He was making a killing, but fed out his optional stock very
cautiously at the rate of about 5,000 shares daily, each day at an
advance. By the time the price reached $7 Mr. Thompson got suspicious.
There was something about the play he could not understand. He had not
found it necessary to do much "laundry" work on the Curb market. Every
time he offered stock it was lapped up silently and completely. Every
time his brokers opened their mouths to sell the certificates they were
gobbled.

Mr. Thompson stopped putting out any more stock and streaked it up to
Cobalt to see what was going on. He had a hard time laying hold of the
inside facts, but learned enough to satisfy himself that rich ore had
been encountered at depth. He discovered on his return to New York that
Captain Delamar had been buying that cheap stock through S. H. P. Pell
& Company and was even then the heaviest individual holder, a position
contested only once during the whole campaign, and that by a rank
outsider operating through Eugene Meyer, Jr., whose name has never been
publicly mentioned as having anything to do with the gamble. This
"unknown" was a quiet, mild-spoken, college-bred gentleman. He pulled
down $1,500,000 in Nipissing--and kept it.

Upon the return of Mr. Thompson from Cobalt the promoters warmed up to
their job. The manipulation which had been begun in a comparatively
modest way now showed the spirit of the gambler who plays "the ceiling
for the limit." New market-boosting accessories were called into use.
They did their work. The game waxed hotter and hotter.


THE GUGGENHEIMS ENTER NIPISSING

Boom! Boom! Boom! went Nipissing. By the time the price crossed $20 the
gamblers and speculators of two continents were on fire with
excitement. Presently it became noised about that the Guggenheim family
had taken an option on 400,000 shares of Nipissing stock at $25 a
share, making the investment $10,000,000, and putting a valuation of
$32,000,000 on the property. Furthermore, it was announced that the
deal had been made on the report and advice of John Hays Hammond, the
international mining engineer, crony of Cecil Rhodes and famed as the
head of the profession. As a part and parcel of the remarkable story,
it was authoritatively stated that the Guggenheims had paid $2,500,000
cash for the option. W. B. Thompson was said to have negotiated the
transaction.

Confirmation of the deal set the gamblers crazy. There could be no risk
in following such leadership as the Guggenheims', endorsed by the
eminent Hammond. The market boiled up to $30 and then majestically
boomed to $33.25. Transactions in this single issue totaled hundreds of
thousands of shares a day. Waiters, bar-keepers, tailors, seamstresses
and tenderloin beauties competed with bankers, merchants, professionals
on the regular exchanges, and even ministers of the Gospel, for the
privilege of buying Nipissing shares on a valuation of more than
$40,000,000 for the mine.

On the way up the original bunch of insiders floated out of their
holdings. Most of them had cashed in under $20. Some of them stayed
out; others went back, and, like the moth, got burned. W. B. Thompson,
it is said, parted with the bulk of his 250,000 to 300,000 shares at
from $24.50 up, cleaning up for personal account between $4,500,000 and
$5,000,000, according to the estimates of close friends then in his
confidence. Never was there a cleaner case of "finding" money for Mr.
Thompson. The manipulative campaign, of which he was made manager, was
a giant success. The only ability or skill needed, after the Guggenheim
deal was made--brilliant deal from a market standpoint!--was the sense
to hold on to his optioned stock until his associates, the Guggenheim
following, and the public made a rich, ripe and juicy market for it.

Mr. Thompson subsequently participated in Cumberland-Ely, El Reyo,
Inspiration, La Rose, Utah Copper, Mason Valley, and other mining
promotions, and is now rated at $10,000,000 to $12,000,000. He is
generally prominent at the nutritious or selling end when a good market
exists and is now head of a New York Stock Exchange brokerage and
mining promotion firm which publishes its own newspaper.

But what happened to Nipissing? Plenty, and then some, happened. As
noted, the stock mounted by flying leaps to $33.25, stayed well above
$30 for quite a while, and began slowly to recede. Complacent in the
consciousness that they had the biggest silver mine in the world, the
Guggenheims allowed all of their friends to share in their good
fortune.

Of a sudden, stock from mysterious sources began to press on the
market. It came in great quantity and without let-up. Suspicion was
aroused in the Guggenheim camp. They despatched A. Chester Beatty, one
of their very best expert engineers, and a former protege of John Hays
Hammond, to Cobalt to smell out the trouble. The text of his report was
never printed. It didn't have to be. The facts beat it in.

Much of the showy mineral, on which glowing reports as to the fabulous
value of the property had been based, contained little or no silver. It
was _smaltite_, an ore of the metal cobalt, closely resembling many of
the silver ores.

The story was given out that Mr. Beatty had reported adversely on
account of the unfavorable showing made by mine developments carried
out subsequent to Mr. Hammond's report. The miners had run into
non-productive calcite a few hundred feet down, it was said.

As a matter of fact, because of the limited amount of all underground
development in the interim, there could have been no condition
observable in the property as a whole when Mr. Beatty made his
examination that was not equally apparent when Mr. Hammond made his
report.

The talent jumped to the conclusion that the mine was a "deader."

Many millions in silver bullion have been taken from the property since
then, and it is still a great producer, but this is another and more
prosaic story. This deals with the stock-gambling feature of the
record.

Scenes of the wildest disorder were witnessed on the Curb in those days
of 1907 soon after my return from Goldfield. The Guggenheims "laid
down" on their option, getting out as best they could. According to
published reports, they charged to profit and loss the $2,500,000
originally put up, besides paying the $1,500,000 to $2,000,000 in
losses of personal friends for whose misfortune they felt personally
responsible. Be that as it may, the Guggenheims emerged from the
campaign with damage to their market reputation and standing from which
they have never fully recovered. Previous to their acquaintance with
the Cobalt bonanza, they had a blindly idolatrous following that would
have invested hundreds of millions on a tip from them. They have never
regained the position in this respect they then held.


NIPISSING ON THE TOBOGGAN

The price of Nipissing tobogganed from $33 to under $6 with terrific
speed. W. B. Thompson and his associates, who had unloaded their
holdings on the way up, were reported to have taken advantage of the
Beatty report and to have sold the market short on the way down, making
another "clean-up" of millions. The stock hit a few hard spots on the
descent, but when the wreckage was cleared away and the dead and
wounded assembled, there wasn't hospital or morgue space to accommodate
half of them. The final carnage and mutilation was shocking beyond
description.

_The public had once more been landed with the goods. It had eaten up
Nipissing stock on a $43,000,000 valuation which broke to $7,000,000 or
$8,000,000 within the space of a few days. This $35,000,000 slaughter
represents only a fraction of the actual losses, for fabulous amounts
were sacrificed in marginal accounts. The daily aggregate of open
accounts in Nipissing during the months of keenest excitement probably
averaged not less than five times the total capitalization. Actual
losses were therefore far larger than would appear from a merely
superficial calculation. The public contributed $75,000,000 to
$100,000,000 to its Nipissing experience fund._

There has always been more or less mystery as to just what John Hays
Hammond said orally to the Guggenheims to lead them into the crowning
humiliation of their business career. It did not appear in his written
and published report, for in that document is to be found a neat little
hedge to the effect that "if" conditions as revealed to him were
maintained, the values would be, etc., etc. That little "if" was the
Hammond saving clause, although it did not save that $1,000,000-a-year
job of his, about which some of his admirers have liked to talk in
joyous chorus, nor did it save the public from massacre.


Another Nipissing mystery is the sustained professional and personal
cordiality still existing between the eminent John Hays Hammond and the
scarcely less eminent A. Chester Beatty. For a little while after Mr.
Beatty had to turn down his chief their relations appeared to have been
strained. But this was not for long. Mr. Beatty also severed
connections with the Guggenheim pay-roll, and the two great engineers
were soon again, and are now, on the best of terms.

On rainy days when the tickers drone along and there is no exciting
news, evil-minded derelicts of the memorable Nipissing campaign are
prone to figure how much a man might have made in the market with a
foreknowledge of the two adverse reports and to figure on the sporting
chances for a "double cross" that such a situation would hold.

Scandal mongers, too, who have watched closely the friendship which
exists between W. B. Thompson and John Hays Hammond often ask unkindly
what has cemented the bond between the two. Recently, when the Rocky
Mountain Club needed a new club-house, Messrs. Hammond and Thompson
subscribed an equal amount--a goodly sum it was--to build it.

They are seen much together in public and seem to have many tastes in
common. Mr. Thompson, whose strangely fortunate campaign in Nipissing
on the New York Curb was helped to a triumphant promotion climax by the
Hammond report to the Guggenheims, bears Mr. Hammond no ill-will for
that--and who would blame him for the kindly feeling?


WHO GOT THE $75,000,000?

But what of the public? It played $75,000,000 to $100,000,000 into the
game, and has never yet learned who got it. Who did get it? Some of the
details of the grand separation scheme have been set forth in the
foregoing, but nothing like enough to satisfy the curiosity of the
public who footed the bill, paid the freight, contributed sucker-toll
for the whole prodigious sum.

Did the author of the report on the strength of which tens of millions
were plunged on Nipissing by an army of deluded investors and
speculators ever suffer in fortune by the mischance or misshot, or
whatever name you may give the "come-on" document? Not that you could
notice. True, he gave up his alleged $1,000,000 job with the
Guggenheims. But is he not a heavy contributor to the Republican
national campaign fund, a close personal friend of the Administration,
and did he not represent this great Government as Special Ambassador at
the Coronation of England's King? Was he not talked of as running mate
for Mr. Taft, and did he not organize the National League of Republican
Clubs two years ago? He is tremendously rich and round-shouldered under
a mountain-high burden of honors.

Every mother's son of the old Nipissing crowd is at this very hour up
and at it in regions where the public's money flows. Many of them still
have a grip on the property. It was a good old cow to milk. E. P.
Earle, who was president of Nipissing in 1906, headed the company four
years later. Captain Delamar slipped down and away (he's now in on the
extravagantly touted Porcupine Dome Mines Company), and so did E. C.
Converse, whose time is all taken up managing the Stock Exchange
banknote engraving monopoly and a couple of banks and trust companies.
W. B. Thompson, who came into the Nipissing directory in 1907, still
sticks in spite of the awful experience of 1906-07.

Has an outraged Government ever raised hue and cry against these
eminent captains of industry? Not yet, nor soon.

What difference is there between the respectable multi-millionaire
bankers putting across a losing promotion and the little fellow? Both
may be equally honest or equally crooked, yet in equity both are
entitled to the same treatment and the same consideration. Their
operations differ only in degree. The aim of each is to get the
public's money. And the big fellow is more dangerous by a hundred
thousand degrees.

Where does real tangible evidence of a conspiracy to defraud in
Nipissing exist? Does _any_ exist? Now I venture to say that you
could put on the scent any young man who is a graduate of the public
schools, and within thirty days he would obtain enough evidence to
prove to any jury in the land that the manipulators of that stock used
improper measures to get the public's money.

A scrutiny of the files of the newspapers during the progress of the
malodorous Nipissing campaign reveals many strange happenings. It
shows, among other things, most remarkable willingness on the part of
financial writers for the press of that day to say every possible good
word for the manipulators and to feed the public appetite for
sensational gossip concerning the gamble.

How this was done is easily understood by those familiar with Wall
Street publicity. It was an open secret on the Street at that time that
many writers for the press were subjected to strongest temptations to
lend their hand to the game of publicity. The columns of the daily
newspapers carry in themselves evidence to show that the attempts were
not always in vain.


One little story will illustrate the methods employed. The business
manager of a widely known and reputable daily financial publication was
stopped one day by a man active in Nipissing and told he had been put
into 500 shares of the Nipissing stock at the market price when the
stock was still selling under $10 and at the time when it was being
groomed for the terrific rise which followed and which did not
culminate until $33 had been passed. The newspaper man was not above
making a turn in the Street, but he objected to taking it that way. He
politely turned down the proposition, saying that he did not wish any
part of it.

The tempter then went to him on another tack, agreeing to carry the
stock for him, so that he would have no risk whatever, at the same time
remarking that, in turn for the favor, generous recognition in the news
columns of the publication, in support of the Curb campaign, would be
expected. Again the newspaper man declined, this time with unmistakable
emphasis. He intimated cannily that while he might be taken on he might
not be told when to get off, adding that he might be discharged if he
fell for anything of that sort.

When the market price toppled from $33 back to around $6 this man's
newspaper did not carry any front-page story denouncing the outrage
upon the public.

I do not know that the manipulators of Nipissing "got to" his
employers, but I do know of some newspapers in New York which pose
before the public as embodying the very highest type of newspaper
morality and which have at their head, either as part owners or as
editors, men who were taken in hand by Wall Street magnates at a period
when they were dependent for their daily livelihood on their weekly
wage, and were lifted into the millionaire division by being put into
"good things." Do you suppose newspapers presided over by those men are
going to say a word against the enterprises of their benefactors?
Conversely, if their benefactors happen to be bothered by any man whose
business purposes run contrary to theirs, how far, do you think, these
gentlemen of the press would go in their own news columns to poison the
public mind against the enterprise of their patron's enemy?

When I witnessed the climax of W. B. Thompson's marvelously successful
campaign in Nipissing on the New York Curb, I was fresh from Goldfield.
My recollection is that my chief thought at that time, with the
Goldfield Consolidated swindle fresh in my mind, was simply that the
Western multi-millionaire highbinder promoter didn't class with his
Eastern prototype. Indeed, the two appeared to be of different species,
as different as the humble but noisy coyote from the Abyssinian
man-eating tiger.

The late Spring of 1907 found me back in Nevada. I selected Reno as a
central point for residence and decided to locate there. Eastern stock
markets appeared to be beyond my ken. It seemed quite apparent that the
Western game, as compared with the Eastern, was one of marbles as
against millions. In New York's financial mart I felt like a minnow in
a sea of bass. Without millions for capital, Nevada appealed to me as a
more likely field of usefulness. I believed in Nevada's mineral
resources. Having seen Goldfield evolve from a tented station on the
desert with a hundred people into a city of 15,000 inhabitants; from a
district with a few gold "prospects" into a series of mines producing
the yellow metal at the rate of nearly $1,000,000 a month, I was
enthused with the idea that there were other goldfields yet unexplored
in the battle-born State and that opportunity was bound to come to me
if I pitched my tent on the ground.


THE WONDER MINING-CAMP STAMPEDE

I was back in Nevada just a week when a stampede into a new mining camp
called Wonder took place. I was quick to join in the rush. The
Philadelphia crowd who owned control of the big Tonopah mine had
annexed a property there which they named the Nevada Wonder. It boasted
of a big tonnage of low-grade silver-gold ore.

On arrival at Wonder, I found my former Goldfield partner, L. M.
Sullivan, on the ground. He entreated me to allow him to cut in on any
deal I made. A bargain was struck. He agreed to advance all the money
and I was to receive half of the profits for my work. The corporation
of Sullivan & Rice was formed. We purchased the Rich Gulch group of
claims, a likely piece of ground with a well defined ledge, and
incorporated the Rich Gulch Wonder Mining Company. A company with the
usual million-share capitalization was formed to operate the property.
A high-class directorate was secured. T. F. Dunnaway, vice-president
and general manager of the Nevada, California & Oregon Railroad,
accepted the presidency. Hon. John Sparks, Governor of Nevada, became
first vice-president. U. S. Webb, Attorney General of California,
accepted the second vice-presidency. D. B. Boyd, for twenty-five years
successively Treasurer of Washoe County, Nevada, was made treasurer.

The first advertised offering of treasury stock of the Rich Gulch
Wonder carried the names of forty leading mining-stock brokers,
situated in various cities stretching from New York to Honolulu, who
had signified over their signatures their willingness to undertake the
sale of treasury stock at 25 cents per share on a basis of 20 per cent.
commission. The first thousand shares of treasury stock at 25 cents was
sold to Superintendent McDaniel of the Nevada Wonder mine. This
convinced us that we had a good "prospect."

I had my doubts about the successful promotion of any Nevada mining
company at this period, because of the terrific slump which was
transpiring in Goldfield issues and also because of the smack in the
face that mining-stock investors had just received in Nipissing. It was
my idea that if the Rich Gulch Wonder made any money for us the cashing
would have to be delayed until mills were erected and the property
became a producer. I was willing to go ahead on that basis.

The sale of treasury stock was slow, but sufficient was disposed of to
warrant the expense for mine development of at least $2,000 a month for
six months, and that appeared far enough to provide for in advance.


Pending the making good of this proposition in a financial way, I
determined I would help finance a newspaper publication at Reno which
would give to mining-stock speculators an unbiased statement of mining
and market conditions as they existed. In the mining camps it was
considered tantamount to financial suicide for the home publication to
reflect on the merits of any locally owned property. Strictures were
looked upon as "knocks," and "knockers" are taboo in mining camps.
Moreover, mining-camp papers could hardly make both ends meet at the
time without support from inside interests, and unprejudiced statements
of fact that were detrimental to a local property could hardly be
expected.

Merrill A. Teague was made editor of the new publication, which was
called the _Nevada Mining News_. Mr. Teague had just blown into Reno
from Goldfield where he had been connected with the Nevada Mines News
Bureau, a daily market sheet. Before coming to Nevada he had served in
an editorial capacity on the _Baltimore American_ and the _Philadelphia
North American_. Mr. Teague is the possessor of a facile pen. At $50 a
week, which was his stipend at the beginning, I was convinced that the
_Nevada Mining News_ had a cheap editor. When news was scarce he could
write more about nothing than any man I ever met before. Incidentally,
he could go further without finding a stopping place in a crusade than
any man I had ever bumped up against. That was his drawback. However,
compared with the work of other newspaper men then employed in Nevada,
his stuff was in a class by itself and was commercially very valuable.


TEAGUE ATTACKS SENATOR NIXON

Mr. Teague was on the job just a week when he cut loose with an attack
on United States Senator George S. Nixon of Nevada in a front-page
story headed "Goldfield in the Grasp of Wall Street Sharks." The
article declared that Senator Nixon, needing $1,000,000 to conclude the
merger plans of the Goldfield Consolidated, had got it through B. M.
(Berney) Baruch of the New York Stock Exchange, factotum of Thomas F.
Ryan, at terrible cost. The loan was made at a time when Goldfield
Consolidated was selling around $10 per share. In consideration for the
loan, Senator Nixon, acting for the company, gave Mr. Baruch an option
on 1,000,000 shares of treasury stock of the Goldfield Consolidated at
$7.75 per share. At the time Mr. Teague commenced his onslaught
Goldfield Consolidated shares had slumped from $10 to $7.50. Mr. Teague
alleged that the market on the stock was being juggled and speculators
were being milked. Mr. Baruch, he asserted, had sold the stock down to
$7.50 per share on the strength of his option, and was now tempted to
break the market, sell the stock short and cover all at much lower
prices.

Within two weeks after the publication of Mr. Teague's exposé of the
terms of the outstanding option to Mr. Baruch, Goldfield Consolidated
shares dropped to under $6. The story evidently had its effect.

The issue of the paper which chronicled the break to $6 contained an
editorial headed "Nixon in the Rôle of Brutus." It demanded of Senator
Nixon that he stand behind the stock and support the market, and also
called upon him to declare the payment of dividends which he had
promised to stockholders in his annual report dated two months prior.

People in Nevada began asking, "Who is Teague?" Mr. Teague caused
the publisher of the _Nevada Mining News_, who was Hugh Montgomery,
formerly business manager of the _Chicago Tribune_, to explain over
his signature that Mr. Teague had been the political editor of the
_Baltimore American_, later an editorial writer for the _Philadelphia
North American_, and that while on the _Philadelphia North American_ he
had crusaded against get-rich-quick swindlers who had headquarters in
Philadelphia, with the result that the Storey Cotton Company, the
Provident Investment Bureau, the Haight & Freese Company and other
bucketshop concerns were put out of business. On evidence furnished by
him, it was stated, Mr. Teague secured the conviction by the United
States Government of Stanley Frances and Frank C. Marrin as chief
conspirators in the $400,000 Storey cotton swindle. Finally, the
article said, Mr. Teague was engaged by a far-famed magazine to expose
bucketshop iniquities in the United States. This series of articles had
appeared in 1906.

The biographical sketch seemed to satisfy readers that they were
getting their "dope" straight on Goldfield Consolidated. My name at
this time did not appear in connection with the publication except as
part of the aggregation of Sullivan & Rice who advertised therein, but
I was openly accused by Messrs. Nixon and Wingfield of dictating the
policy of the paper. This was a half-truth. My sympathies were with the
stockholders of Goldfield Consolidated--that's all.

The story is told in Nevada that when Senator Nixon received the check
for $1,000,000 from Berney Baruch, after having executed notes of the
Goldfield Consolidated, signed by himself as president and endorsed by
him as an individual, he took luncheon at the Waldorf-Astoria in New
York. When the waiter presented the bill the Senator ostentatiously
tendered the $1,000,000 check in payment. The waiter put it all over
the Senator by politely stating that if he wished to pay his dinner
check out of the proceeds, Proprietor Boldt would undoubtedly attend to
the matter for him. The Senator was forced to tell the waiter he was
"only joking."

The _Nevada Mining News_ appeared to be catching on and was now
printing 28,000 copies weekly. Sample copies were sent in every
direction with the idea of acquainting investors with its existence.

A day after the issue appeared containing the editorial in which
Senator Nixon was accused of playing the rôle of Brutus, I was stopped
on the street by the editor of the _Reno Gazette_, a newspaper which is
loyally attached to the Senator and his friends.

"The Senator wants to see you, Rice. Better go over to the bank right
away. If you know what's good for you, you'll do it," the _Gazette_ man
said.

"I will, like ----!" I replied. "My office is up in the Clay Peters
Building, and if the Senator has anything to say to me he can give me a
call. I am not one of his sycophants, and I am not going."

I didn't go.

An hour afterward the editor of the _Gazette_ met me again. "Senator
Nixon wants to see you at his office right away," he said bluntly.

"About what?" I inquired.

"About articles which have appeared in the _Nevada Mining News_," he
answered.

"Very well," I replied, "I'll send the editor over."

Turning to Mr. Teague, I said, "I have no business with Senator Nixon,
and if he has anything to communicate regarding the newspaper you, the
editor, are the man for him to say it to."

Mr. Teague went over to the Nixon National Bank and entered the
directors' room. My stenographer accompanied him as far as the door and
took a seat outside, in the banking room.

As Mr. Teague entered, Senator Nixon jumped to his feet. He looked
black as thunder. He quivered with rage.

"Why don't Rice come over here himself, eh? He daren't! I've got his
record from boyhood jacketed in these drawers. While I have not read
it, I know the story, and I am going to have it published in a bunch of
newspapers so the world can know who is holding me up to public scorn!"
the Senator spluttered.

In relating what transpired Mr. Teague later informed me that the
Senator's wrathful indignation appealed to him as so grotesquely comic
he felt like laughing, but he thought it a poor newspaper stunt to
incense him further at a moment when it looked as if, by appeasing him,
he could tempt him into volubility. Soon Mr. Teague had the Senator at
ease, pouring forth a long interview, full of acrimony and affectation,
which Mr. Teague promised to publish in the _Nevada Mining News_.

Mr. Teague reported to me that the Senator construed his pacifying
attitude as meaning that I would undoubtedly "listen to reason" and
that his threat would most certainly accomplish its purpose.


"CALLING FOR A SHOW-DOWN"

When Mr. Teague finished narrating to me what had transpired I was
beside myself. Presently I gave him these instructions: "Write out the
interview with the Senator. Have two carbon copies made. When finished,
take the three copies over to the Senator and have him read them and
put his O.K. on them. After you have done that, give the Senator one
copy, give the printer a copy, and put the other copy in the safe. As
soon as the copy of the interview is in the printer's hands, sit down
and write an editorial. Head it 'A United States Senator with a
Blackmailing Mind.' Publish my record in full. Tell of everything of
any consequence I ever did, good or bad. Parallel my record with the
Senator's record. Tell the people of Nevada all the facts about the
Senator's threat. Say to them nobody can blackmail me, and ask them to
choose between us."

On May 25, 1907, the editorial, headed "Nixon a Senator with a
Blackmailing Mind," appeared. It was a passionate denouncement,
calculated to stir the blood. Also there appeared Senator Nixon's
interview in full.

In the interview the Senator had made an effort to disentangle himself
from a seemingly inextricable network in which he was enmeshed, and the
paper contained still another editorial lambasting him in amplitude for
trying to practise on the credulity of the newspaper's readers. The
editor accused him of equivocation, artful dodging, false coloring,
exaggeration, suppression of truth, cupidity and knavery.

The arraignment wrought an undoubted sensation.

The effect on the Nevada public was unmistakable. It reminded me more
of the motionless and breathless attitude of an audience at the
third-act climax of a four-act drama, than anything else. The Senator
was not seen on the streets of Reno for two months afterwards. For a
fortnight afterward he didn't even call at the offices of the bank.
When he did finally resume his visits to the bank he came in his
automobile. He was whisked to the door of the building, immediately
secreted himself in the directors' room and was not get-at-able.

Leading citizens, including the directors of a number of banks in Reno,
made clandestine calls at my office, shook my hand, felicitated me over
the stand I took, and went away. Even George Wingfield, the Senator's
partner, it was reported (and I afterward corroborated this from the
lips of George Wingfield himself), backed me up in the stand I had
taken. The general sentiment in the State appeared to be that the
threat was a lowdown trick, and that of the two I had the less to be
ashamed of.

When the Senator read the article headed "Nixon a Senator with a
Blackmailing Mind" it is said he telegraphed to former Governor Thomas
of Colorado, his counsel, and asked him to come to Reno.

"If I don't say something in answer to this awful attack, I'll choke!"
cried the Senator as he nervously walked the floor.

"Did you sign that interview which they published?" asked Governor
Thomas.

"Yes," said the Senator.

"Well, then, if you say anything at all now, _they'll_ choke _you_,"
answered Governor Thomas.

During the course of our attacks on Senator Nixon in the _Nevada
Mining News_ which followed at various intervals, the newspaper
accused him of making promises of early dividends to Goldfield
Consolidated stockholders which he knew he could not keep; of having
been the State Agent in Nevada of the Southern Pacific Company at $150
per month during the Huntington régime when legislatures were bought;
of having bilked the investing public out of millions in Goldfield; of
having carved his fortune, that made possible the acquisition by him
and his partner of control of the Goldfield Consolidated, out of a
gambling house in Tonopah; of having gathered his first mining
property and mining-stock interests in Goldfield from prospectors who
lost money and surrendered their mining claims and stock certificates
to the gambling house in lieu of the cash; and of being generally a
financial and political freebooter of the most despicable sort. And
the Senator never sued for libel nor proceeded in the courts in any
way whatsoever to obtain a retraction.


MANIPULATING GOLDFIELD CON

About a week after the publication of the editorial headed "Nixon a
Senator with a Blackmailing Mind," when Goldfield Consolidated stock
had slumped to around $7, the _Nevada Mining News_ in big bold-faced
type urged its readers to place their buying orders for Goldfield
Consolidated at $4 a share, saying that New York mining-stock brokers
advised their clients that the stock would almost certainly go down to
that figure because of the Senator's mistakes in the financial
management of the company. That edition contained another editorial on
Senator Nixon, headed "Branding a Bilker." It accused him of saying in
his annual report a few months previous that payments of dividends on
a regular basis would commence within a short time, and contrasted
this statement with the signed interview published in the _Nevada
Mining News_, in which he said dividends would be paid "whenever the
trustees thought it wise to do so _and not before_."

Within a day thereafter the stock "busted" wide open to $5-1/8 bid,
$5-1/4 asked, and the whole Goldfield list smashed farther in sympathy.
By June 8th Goldfield Consolidated had crashed to $4.50.

On the dip from $7.50 to $4.50 an opportunity had been offered to
Berney Baruch and his associates to buy back in the open market all of
the stock they might have sold on the way down from $10 to $7.75, which
was the option price. Then the stock was promptly manipulated back to
$7. On the way back to $7, the outstanding short interest (of other
traders who had accompanied the decline with their selling orders) was
forced to cover.

To help along the covering by outsiders up to the $7 point a report was
circulated by lieutenants of Senator Nixon in Reno that a dividend
would be declared before the end of June, and almost simultaneously the
general manager of the mining company in Goldfield put forth a similar
tip. As the market began to recover toward the $7 point, Senator Nixon
went to San Francisco and was seen often at the sessions on the floor
of the San Francisco Stock and Exchange Board. On the day before the
bulge to $7 he was quoted in a San Francisco newspaper as saying that
Goldfield Consolidated was such a good thing he would not take $20 per
share for his stock.

When the stock hit $7 and the shorts were being squeezed the hardest,
Senator Nixon was quoted as saying in still another interview that a
dividend was not far away. This interview was carried over the
telegraph wires to all market centers by the Associated Press. At the
same time a story was printed in the New York _Times_ saying that
it was reported on the Street that J. Pierpont Morgan, acting for the
Baruch-Ryan crowd, had taken over the control of the Goldfield
Consolidated. The shorts were successfully driven to cover. Then the
price eased off again in a day from $7 to $6-1/8.

A month later Mr. Teague became editor in chief of the _Nevada State
Journal_ and severed his connection with the _Nevada Mining News_. I
succeeded Mr. Teague as editor and my name appeared at the head of
the editorial columns. At about the same time the Sullivan & Rice
enterprise was abandoned. I discovered that most of the money Mr.
Sullivan had put into the corporation had been borrowed by him from a
member of my own family with whom he had hypothecated most of his
stock in the company. A rumpus ensued which ended in the shutting up
of the $1-3/4shop.

By August Goldfield Consolidated had been manipulated back to $8.37-1/2
a share. Mr. Baruch's option could certainly prove of little value to
him unless the stock sold higher at periods than $7.50. But he now
evidently found it a hard job to hold the stock above $7.50. By
September it had receded again to $7.40. At this period it was reported
in Reno that George Wingfield, sick of his partner's bad bargain, was
beginning to assert himself and demanded that the Baruch option be
cancelled at whatever cost.

The erratic price movement of the stock was causing the loss of public
confidence. The manipulation appeared to be raw. Without any important
transpiration except the news of the Baruch option and the varying
statements put out by Senator Nixon from time to time regarding the
plans of the company, which was now awaiting the erection of a huge
mill before going on a regular producing basis, the stock had dropped
from $10 to $4.50, recovered to $7 and eased off to $6-1/8, rallied to
above $8, and was again tumbling.

The option to Mr. Baruch was conceded to be practically a flat failure
from a company standpoint, only 20,000 shares of stock having been
purchased by Mr. Baruch from the treasury of the company in nine
months. The impression prevailed that Mr. Baruch was milking the market
and held the option principally as a club to accomplish his market
designs. Moreover, nearly every broker, investor and speculator
residing in Goldfield by this time had gone broke because of the
vagaries of this stock in the market, and the losses in bad loans and
unsecured overdrafts incurred by John S. Cook & Company's bank,
controlled by Messrs. Nixon and Wingfield, was said to total nearly
$2,000,000 as a result of the almost general smash in market values.
The entire Goldfield list, with the exception of Goldfield
Consolidated, was now selling at 25 cents on the dollar compared with
boom prices of less than a year before, and it was a rather ordinary
"piker" sort of broker or speculator in Goldfield who at this time
could not boast of being in "soak" to John S. Cook & Company's bank
anywhere from $15,000 to $100,000.


On September 23 the Goldfield Consolidated directorate met at
Goldfield. After the meeting it was officially announced that the
option held by Mr. Baruch on 1,000,000 shares at $7.75 had been
canceled and that Mr. Baruch had been given sufficient of the optional
stock to liquidate the $1,000,000 obligation of the company, leaving
the company free of debt and with a cash reserve of nearly $2,000,000.
It was stated that Mr. Baruch had originally been given the option for
services in securing the loan of $1,000,000 from J. Kennedy Todd &
Company of New York for 13 months with interest at the rate of 6 per
cent., and that the price of $7.75 was an "average" one, indicating
that Mr. Baruch held an option on stock at varying figures on a scale
up from a considerably lower price than $7.75, which he might have
exercised in whole or in part.

It was also disclosed that a large block of Goldfield Consolidated
stock had been put up as collateral for the note. Because the officials
of the company declared by resolution that the "unused certificates
shall be canceled" it was generally believed that the entire 1,000,000
shares under option to Mr. Baruch had been put up as security.

The official statement of the company said that the option had been
turned back to the company "on a satisfactory basis." No figures were
given out. Dispatches from San Francisco to the _Nevada Mining News_,
which I promptly published, alleged that Mr. Baruch was given 200,000
or more shares of Goldfield Consolidated in settlement of the loan to
the corporation of $1,000,000 and for the surrender of his option on
1,000,000 shares at an average price of $7.75.

_The 200,000 shares of stock was taken out of the collateral at the
rate of $5 per share on a day when Goldfield Consolidated was selling
around $7.50, after the stock had been manipulated to a fare-ye-well
and against a market price of $10 for the stock on the day the option
was given._

No denial was ever published. My opinion, based on private
investigation and on analysis of the company's reports, is that Mr.
Baruch fared even better than as outlined above.

The giving of the option had made it dangerous for anybody except Mr.
Baruch to attempt to hold the stock above $7.75 per share after the
option had been given, and the company in addition was now mulcted for
the difference between the low price per share at which settlement was
made with Mr. Baruch and the price at which the stock could have been
sold had it been quietly disposed of on the market during the period of
nine months which had preceded the date of cancellation. As a matter of
fact, there was no necessity at all for settling the loan with stock,
the company having in its treasury more than sufficient to repay the
loan, and the money was not due. The real purpose, apparently, was to
shroud in darkness the exact amount given to Mr. Baruch to release the
company from the option and to keep Messrs. Nixon and Wingfield's
Goldfield bank, which was the depositary of the mining company, in
funds.

Instead of quieting the stockholders the surrender of the option again
thrust into the limelight the entire transaction and proved to be an
exacerbation.

The immediate effect was that Goldfield Consolidated began to slump
again, and in a few days sold down to $6.50. From this point it kept on
tobogganing during a period of weeks down to the $3.50 point--a
depreciation in market price for the capitalization of the company,
within a year of its promotion at $10 a share, of $23,400,000--before
rallying once.


ENTER, NAT. C. GOODWIN & CO.

A mining partnership between Nat. C. Goodwin, the actor, and Dan
Edwards had been formed at Reno a little before this time. Dan Edwards
was a hustling young mining man who had engaged in the business of
"turning" properties to promoters. In August, when Goldfield
Consolidated was selling around $7.50, Mr. Edwards had asked me to give
him a good market tip. I told him to sell Goldfield Consolidated short.

When it hit $6.50 around October 1st he saluted me thus, "Got to hand
it to you. I have been trying to make my new firm stick, but it don't
seem to work. I guess I don't know how to handle the situation in times
like this. How would you like to join us?"

"How much capital have you got?" I asked.

"Five thousand of Nat's money," he answered.

"Get another man with $5,000," I said, "and I'll talk to you."

A young Easterner engaged in mining, named Warren A. Miller, was
stopping at the Riverside Hotel. Within an hour Mr. Edwards had him
lined up. A week later Nat. C. Goodwin & Company was incorporated with
Nat. C. Goodwin president, Mr. Miller vice-president and general
manager, and Dan Edwards secretary. The new corporation engaged to give
me a salary for showing it how and an interest for other substantial
considerations.

Within a fortnight the corporation of Nat. C. Goodwin & Company was
making money, not as promoters, however, but as demoters. Instead of at
first promoting a mining company and earning its profits on the
constructive side of the market, it turned the tables and made money on
the destructive side--of Goldfield Consolidated.


During the first half of 1907 I had felt the country's speculative
pulse from day to day with the promotion literature of the Sullivan &
Rice corporation. Although its new mining company, the Rich Gulch
Wonder, had boasted of a very high-class directorate and the property
was conceded to have merit, the public refused to enthuse. Instead of
subscribing for large blocks, scattering purchases had been made, and
money in dribs and drabs had been grudgingly paid over. The Wonder
mining camp boom had "died abornin'." Investors seemed to have had
enough of mining-stock speculation for a while.

Prices of listed Nevada issues were crumpling like seersuckers in the
rain. By this time the awful mess that had been made of Goldfield
affairs through the mistakes of Messrs. Nixon and Wingfield had
resulted in a depreciation in market value of more than $100,000,000 in
listed Nevada issues. This in itself was sufficient to kill a world of
buying sentiment.

You have to be a rainbow-chaser by nature to be a successful promoter,
but even I, despite my chronic optimism, began to feel the influence of
what was transpiring. I made a flip-flop and turned bear on the whole
market.

On October 17th the Heinze failure occurred in New York. Five days
later the embarrassment of the Knickerbocker Trust Company was
announced. I glued my ears to the ground.

Nat. C. Goodwin & Company "shorted" the mining-stock market so far as
its limited capital would permit. On the day Mr. Heinze went overboard
the company was already short 2,000 shares of Goldfield Consolidated at
around $6. On hearing that the Knickerbocker Trust Company was in
trouble it promptly shorted 2,000 shares more at a lower figure.

On the afternoon when the news reached Reno of the Knickerbocker Trust
Company's embarrassment I received a private telegram from Chicago
stating that the paper of the State Bank & Trust Company of Goldfield,
Tonopah and Carson City had gone to protest in San Francisco. This set
my blood tingling. I knew that meant a general Nevada "bust."

Next morning Nat. C. Goodwin & Company shorted 2,000 shares more of
Goldfield Consolidated at about $5-1/8. Later in the day the failure of
the State Bank & Trust Company was announced. A run followed on the Nye
& Ormsby County Bank and its branches in Reno, Carson City, Tonopah,
Goldfield, and Manhattan, and in two hours that institution, too,
closed its doors.

Goldfield Consolidated promptly broke to $4 a share. Around this point
Nat. C. Goodwin & Company covered its short sales, at discretion.

All of the Nixon banks in Nevada experienced runs as a result of the
failure of the two Nevada banking institutions. So did the other banks.

Governor Sparks was appealed to by Nevada bank officials between two
suns to come to the rescue. Without hesitation he declared a series of
legal holidays to enable the banks of the State which were still
standing on their feet to catch their breath. These banks finally threw
open their doors, but when they did, those of Reno met depositors'
withdrawals with asset money instead of legal tender. The only bank in
Reno which had refused to take advantage of the enforced legal holidays
was the Scheeline Banking & Trust Company. And when asset money was
finally resorted to as a makeshift, M. Scheeline, the president, was
made custodian of the bonds which were put up by the associated Reno
banks to secure payment. This restored confidence.

It was believed in Nevada at the time of the failure of the mining-camp
banks, the State Bank & Trust Company and the Nye & Ormsby County, that
the Nixon institution in Goldfield would have found it hard to weather
the storm but for the fact that the Goldfield bank was believed to have
upward of $2,000,000 of the Goldfield Consolidated Mines Company's
money on deposit.

When the State Bank & Trust Company went to the wall Senator Nixon, in
an interview published in his Reno newspaper, charged the failure of
the State Bank & Trust Company to me. He alleged that the State Bank &
Trust Company lost $375,000 by the failure of the Sullivan Trust
Company ten months before, and that I had broken the bank. The
liabilities of the bank were $3,000,000, and its Sullivan Trust Company
loss was only "a drop in the bucket." The Senator didn't fool anybody,
not even himself. His effort was an ill-concealed attempt to prepossess
the public against me, and was received by Nevada people as such.

Senator Nixon indulged in some more "interview" with a view to stemming
the tide of liquidation in Goldfield Consolidated. Notwithstanding the
fact that the company had only recently resorted to the sale of
treasury stock for money-raising purposes, he asserted that a quarterly
dividend, payable January 25th, would probably be declared. Beyond a
question this statement was made for market purposes at a time when the
Senator was sweating money-blood.

The stock promptly tobogganed farther on the strength of the dividend
forecast. The Senator's interviews had now become a standing joke in
the community. Speculators and brokers had learned the wisdom of
"coppering" anything the Senator said.


THE STORY OF THE GOLDFIELD LABOR "RIOTS"

A large force of miners was discharged from the Goldfield Consolidated
properties. The action of the company in laying off its men at such a
distressful period was denounced. It was alleged that Senator Nixon's
Goldfield bank could not afford to pay out the money on deposit to the
credit of the company because it was required for bank purposes. The
money was apparently being hoarded during the money stringency to help
the bank out of a tight place. After-events appeared fully to confirm
this theory.

Right in the teeth of the panic, during the depressed and troublous
days of the latter part of November;--when current finance was deeply
affected; when Goldfield Consolidated was selling below the $4 point
and the entire Nevada share list had suffered an average depreciation
of about 85 per cent. from the "highs" reached during the Goldfield
boom of the year before; when the State of Nevada was racked from end
to end by the serious losses incurred by citizens through the failure
of the Nye & Ormsby County's and the State Bank & Trust Company's chain
of banks, totaling nearly $6,000,000, and it appeared that the credit
of the State had already been shattered almost beyond repair--a fresh
blow was administered.

Government troops were reported to be en route to Goldfield from San
Francisco "to preserve the law." It had been represented to the
President of the United States that Goldfield was in a state of
anarchy. Goldfield wasn't. As a matter of fact, the situation in
Goldfield with the miners, from the standpoint of law and order, was
never good, but it was as good then as it had been in eighteen months.
True, there had been some lawlessness, but no riot, and the sheriff of
the county had made no call whatsoever on the Governor for any aid.

During the first days of the panic Nixon and Wingfield's Goldfield
bank, John S. Cook & Company, had tendered the miners the bank's
unsecured scrip in lieu of money for the payment of wages. The miners
refused acceptance. They were willing to take time-checks of two, three
or four months, bearing the mining company's signature, but balked at
the idea of becoming creditors of the bank.

It has been stated to me by a number of Goldfield brokers who were
present in the camp at the time that the miners had even decided to
concede this point, when an outsider secured by intrigue and money
sufficient voting power at a meeting of the executive committee of the
Miners' Union to pass a resolution objecting to the bank's scrip. The
refusal to accept the bank's scrip was at once made an excuse by the
Goldfield Mine Owners' Association, which was dominated by George
Wingfield, to determine upon a lockout and simultaneously to demand
Federal intervention.

If Messrs. Nixon and Wingfield's bank needed money, as the tender of
unsecured scrip indicated all too plainly, the complete shutdown which
left with the bank as available resources approximately $2,000,000 in
the account of the Goldfield Consolidated Mines Company, was a perfect
stop-gap; and the need of the presence of troops was a fine
coincidental excuse for the shutdown. Incidentally, it would rid
Goldfield of the Miners' Union, which voted to a man against Senator
Nixon's Republican candidates for office, and would permit the
importation of foreign labor, an expedient which was afterward
successfully resorted to.

Senator Nixon brought pressure to bear at Washington. He invoked the
good offices of Uncle Sam and urged that Federal troops be sent to the
State. He was assisted by Congressman Bartlett in laying the matter
before the departments. The wires between Goldfield, Reno, Carson City
and Washington were kept hot with an interchange of views. President
Roosevelt finally informed the Senator he could not send the soldiers
unless the Governor of Nevada wired that a state of anarchy actually
existed which the State itself was powerless to put down.

Governor Sparks, honest as the day was long and unsuspecting of any
trickery or jobbery, listened to a Goldfield committee and permitted a
dispatch to be sent to Washington over his signature representing that
such conditions existed.

Thereupon Brigadier-General Funston, at the head of two thousand
troops, was ordered to Goldfield. The State being without any militia
and the representations made by Governor Sparks in his dispatches being
strong on the point that a state of anarchy actually existed in
Goldfield, the President finally succumbed.

The maneuver was as swift as it was unexpected. Nevada people at first
could not understand what it was all about. Dispatches from Goldfield
to Reno said the town was quiet. The nearest approach to an overt act
of recent occurrence that had been chronicled was the alleged theft a
few days before of a box or two of dynamite, about 300 feet of fuse and
a quantity of caps that were said to have been clandestinely removed
from the Booth mine in Goldfield. The theft, if theft there was, was
charged to the miners, but proof was lacking.

On the arrival of the troops in Goldfield the Goldfield Consolidated
announced a new wage scale, reducing the miners' wages from $5 to $4
and in some cases from $5 to $3.50. This was a new move, calculated to
rouse the ire of the wage workers and to prolong the lockout. Messrs.
Nixon and Wingfield's bank in Goldfield announced at the same time that
it would thereafter discharge all of the pay-rolls of the company in
gold. But there were no pay-rolls of any consequence then, the mines
being shut down.


General Funston on his arrival in Goldfield interviewed mine operators,
union miners and citizens generally with a view to determining the
necessity for maintaining Government troops there. He discovered that
the Administration had been buncoed. The General wired the President
his opinion. President Roosevelt quickly dispatched a commission to
Goldfield to conduct a public inquiry. This commission consisted of
Charles B. Neal, Labor Commissioner; Herbert Knox Smith, Commissioner
of Corporations, and Lawrence O. Murray, Assistant Secretary of the
Department of Commerce and Labor. They heard testimony day and night
for a week.

They reported to President Roosevelt that there was no occasion for the
presence of troops in Goldfield and that the statements telegraphed to
President Roosevelt by Governor Sparks, indicating the existence of a
state of anarchy, were without justification. The report was given to
the Associated Press and received wide publicity. The President also
issued a broadside backing up the findings, which was telegraphed far
and wide.

Eastern editorial writers poured out torrents of abuse on Governor
Sparks. Senator Nixon went unscathed.


THE DEATH OF GOVERNOR SPARKS

Feeling under a weight of obligation to Governor Sparks, who had
headed nearly all of the Sullivan Trust Company promotions as
president, I tried editorially in the _Nevada Mining News_ to justify
the Governor's action. But it was a wee voice drowned in an ocean of
adverse opinion and was entirely without echo. It didn't even soothe
the Governor.

The Governor, honest, simple old man, broken in purse, in health and in
spirit, grieved over the President's denouncement, took to bed, and
died of a broken heart.

At his imposing funeral pageant in Reno, which was attended by
thousands of mourners, who had come from all parts of the State to pay
homage to the grand old man and who followed the hearse to the
cemetery, Senator Nixon and his partner, George Wingfield, were
conspicuous by their absence.

Even at the moment when the grave closed over his remains the troops
were leaving Goldfield.

"It's the 'Dead March,'" said one of the bereaved.

The bringing of Federal troops to Goldfield accomplished its purpose.
The Miners' Union was destroyed and sufficient time was gained to
enable the financial atmosphere to clarify. By the time the troops
departed, Goldfield Consolidated had rallied to $5 per share. The panic
was over. Money was comparatively easy again.

I ask the reader's indulgence for having devoted so much space to the
facts bearing on the appearance in Nevada of United States troops at a
time when there was no valid occasion for their presence. I feel that
it is an important chapter of my experiences and is fraught with
interest to the general reader, because it illustrates how easy it is
to direct the powerful machinery of our great Government so as to carry
out the machinations of evil-minded men.

You might think, after this demonstration of the lengths to which
Senator Nixon went to accomplish a set purpose, and after witnessing
the success which attended his efforts, that a poverty-stricken
individual like myself, who had had the hardihood to conduct a
newspaper campaign in the Senator's own home town against his financial
and political activities, would judge it the better part of valor to
emigrate from the State. Well, I didn't. I stayed right on the spot.
That I would hear from Washington later I had no doubt, but I stuck,
just the same, until my business interests called me away.

I wasn't wrong in my deductions. Within a few months thereafter there
came a visit to my office in Reno by a postal inspector, who was
apparently "sicked on to the job," and but for the quick intercession
by telegraph of United States Senator Francis B. Newlands of Nevada
with the Postmaster General at Washington, I am certain that potent
influences even at that early day would successfully have "started
something." But of this more at another time, I am ahead of my story.




CHAPTER VII

RAWHIDE


Because Rawhide, the new Nevada gold camp, was born during the
financial crisis of 1907, I couldn't see any future ahead of it from
the promoter's coign of vantage--not "through a pair of
field-glasses." It requires capital to develop likely-looking gold
"prospects" into dividend-paying mines, and I could not imagine where
the money was going to come from. Eastern securities markets were in
the doldrums. Time money commanded a big premium. Prices for all
descriptions of mining stocks had flattened out to almost nothing.
Investors were at their wits' end to protect commitments already made.
Financiers everywhere were depressed. A revulsion of sentiment toward
speculation had set in, seemingly for keeps. Only a hair-brained
enthusiast of the wild-eyed order could hope at such a time possibly to
succeed in the marketing of new mining issues.

A financial panic has no terrors, however, for gold-seekers. The lure
of gold is irresistible. Money stringency serves only to strengthen the
natural incentive. By the first week in January, 1908, fully 2,000
people were reported to be in Rawhide. At the end of January the
population had grown to 3,000.

The camp easily held the center of the mining stage in Nevada.

Many of the Rawhide pioneers hailed from Tonopah and Goldfield. Without
exception the opinion of these veterans appeared to be that the surface
showings of the new district excelled those of either of the older
camps. Never before in the history of mining in the West had there been
discovered a quartz deposit so seemingly rich in the yellow metal at or
near the surface which at the same time embraced so large an area of
auriferous mineralization. Goldfield, at the same early age, had been a
mere collection of prospectors' tents, while Rawhide was a thriving,
bustling, populous camp with more than a hundred leasing outfits
conducting systematic mining operations.

News was brought to Reno of a phenomenal strike made on Grutt Hill in
Rawhide. Specimen rock taken from a seam of ore assayed $300,000 to the
ton. The Kearns lease on Balloon Hill reported 15 feet of shipping ore
on the 65-foot level which assayed from $300 to $500 to the ton.

There was full verification of this. Also regular shipments were being
made to the Goldfield reduction works.

Samples of rock were received in town that were studded with free gold.
I was thrilled. Statements made by camp "boosters" that a part of
Balloon Hill was "gold with a little rock in it," were not
exaggerations, judging from the specimens that were placed in my
possession.

My apathy began to melt away. Against my earlier judgment, I now began
to change my attitude.

The camp looked like "the real thing," panic or no panic.

Why should not the American public, even in these tough financial
times, enthuse about a gold camp with possibilities for money-making
such as are offered here, I asked myself. Don't drowning men grasp at
straws? Is it not the habit of horse-race players when they lose five
races in succession to make a plunge bet on the sixth with a view to
getting out even? This panic had impoverished hundreds of thousands.
What more natural than that those who were hit hard should now fall
over one another to get in on the good things of Rawhide? If the camp
makes good, I reasoned, in the same measure that Goldfield did, early
investors will roll up millions in profits.

I visited the camp. What I saw electrified me. Soon I was under the
magic spell.


REAL GOLD AT RAWHIDE

Half a day's tramp over the hills seemed sufficient to convince anybody
that the best of the practical miners of Nevada had put the stamp of
their approval on the district. Most of the hundred or more operating
leases of Rawhide were owned by these hard-rock miners. More than half
a dozen surface openings on Grutt Hill showed the presence of masses of
gold-studded quartz. At the intersection of Rawhide's two principal
thoroughfares a round of shots in a bold quartz outcrop revealed
gold-silver ore that assayed $2,700 a ton. A gold beribboned dyke of
quartz-rhyolite struck boldly through Grutt Hill's towering peak. I
walked along its strike and knocked off, with an ordinary prospector's
pick, samples worth $2 to $5 a pound.

Across Stingaree Gulch to the south Balloon Hill's rugged hog-back
formed a connection link between Grutt and Consolidated hills. The
Kearns Nos. 1 and 2 leases on Balloon Hill were scenes of strikes of
such extraordinary richness that they alone would have started a
stampede in Alaska. The Murray lease on Consolidated Hill was rated as
a veritable bonanza. There I saw quartz that was fully one-third gold.

Along the southern slope of Hooligan Hill several sets of leasers were
mining ore so rich that guards were maintained through the night to
prevent loss from theft. At the Alexander lease on Hooligan Hill the
miners were crushing the richer quartz from their shaft and washing out
gold to the value of $20 a pan.

These were the three principal centers of activity, but they by no
means embraced the productive area of the district. Tall, skeleton-like
gallows-frames dotted the landscape for miles in every direction. The
soughing of gasoline engines suggested the breathing of some spectral
Titan in the throes of Herculean effort. I was forcefully impressed,
too, with the class of miners at work.

It seemed to me there was no longer any room for cavil as to the
fortune-making possibilities of investors who put their money into the
camp. Less than a half year old, Rawhide loomed up as the most active
mining region I had ever seen at anything like the same age.

It required nearly three years for Goldfield to make as good a showing,
I reasoned.

During my earlier efforts at press-agenting Southern Nevada's mining
camps I had to conjure in my mind's eye what the reality would be if
half the hopes of camp enthusiasts were fulfilled. Here was apparently
a fulfillment rather than a promise. At the threshold of the first
stage of its development era Rawhide could boast of more actual
producers and nearly as many operating properties as Goldfield could
claim at the age of three years.

I recalled that Cripple Creek had been panic-born but had lived through
the acute period of 1893-96 to take rank with the greatest gold camps
of the world.

I was more than convinced. Effervescent enthusiasm succeeded my earlier
skepticism. History is about to repeat the record of Cripple Creek, I
concluded.


THE RAWHIDE COALITION MINES COMPANY

Grutt Hill, Hooligan Hill, a part of Balloon Hill, and the intervening
ground, forming a compact group of eight claims, 160 acres, were owned
by a partnership of eight prospectors. The area formed the heart and
backbone of the whole mining district.

I soon "tied up" this property for Nat. C. Goodwin & Company of Reno,
with whom I was identified. A company, with 3,000,000 shares of the par
value of $1 a share, was incorporated to take title. It was styled the
Rawhide Coalition Mines Company.

Of its entire capitalization, 750,000 shares were turned into the
treasury of the Rawhide Coalition Mines Company. Nat C. Goodwin &
Company became agents for the sale of treasury stock, and were given an
option by the company on 250,000 shares, to net the treasury $57,500
for purposes of administration and mine development. The Goodwin
company also purchased 1,850,000 shares of the 2,250,000 shares of
ownership stock, amounting to $443,500 more, or at the rate of 23.3
cents per share plus a commission of $12,500 to be paid to a
go-between.

The ownership stock that was retained by the original owners, and the
residue of treasury stock, amounting in all to 900,000 shares, were
placed in pool.

When I made this deal the cash in bank of Nat. C. Goodwin & Company
amounted to about $15,000. It was up to me to finance the undertaking.
I did.

The contract I made called for only $10,000 in cash and the balance on
time payments. Nat C. Goodwin & Company didn't borrow money from any
bank or individual, nor did anybody identified with the concern tax his
personal resources to the extent of a single dollar to go through with
the deal. The money was raised, first for the Coalition's treasury and
later for the vendors, by appealing directly to the speculative
instinct of the American investing public. The public, too, paid the
expense that was incurred in reaching them. It did this by paying Nat
C. Goodwin & Company an advance in price on Coalition stock purchases,
over and above the cost price.

Nat. C. Goodwin & Company had agreed to net a fraction more than 23
cents per share to both the treasury and the vendors without any
deductions whatsoever. All of the advertising expense and other outlays
of promotion, it was stipulated, must be borne by Nat. C. Goodwin &
Company and none by the mining corporation.

What was the system? How was it done?


A RACE OF GAMBLERS

Prior to the birth of Rawhide I had for seven years catered to the
speculative (gambling) instinct of the American public, chiefly in
building mining camps and financing mining enterprises. I now realized
that in order to make a success of the undertaking before me, namely,
to put the new camp of Rawhide on the investment map, I must again
appeal loudly to the country's gambling instinct.

Maybe you think, dear reader, that a man who caters to the gambling
instinct of his fellow men, be his intentions honest or dishonest, is a
highly immoral person. Is he?

Do you know that the gambling instinct is responsible for the wonderful
growth of the mining industry in the United States? Would you believe
that without the gambling instinct the development of the great natural
resources of this country would be almost impossible?

With rare exceptions every successful mining enterprise in the United
States has been financed in the past by appealing directly to the
gambling instinct. In the decade antedating this year considerably more
than a billion dollars was raised and invested in this way.

Conservative investors who are satisfied with from three to six per
cent. on their money do not buy mines or mining stocks. Speculators
(gamblers) who are willing to risk part of their fortune in the hope of
gaining fivefold or more in a year or a few years--these are the kind
who invest in mines and mining stocks.

There are legions of these. Not less than 500,000 men and women in the
United States, according to the best statistical information
obtainable, are stockholders of mining companies.

In fact, the gambling instinct finds employment in the mining industry
long before a property has reached the stage where it can be classed as
even a prospect worthy of exploration. The prospector who follows his
burro into the mountain fastnesses or across the desert wastes often
gambles his very life against the success of his search; those who
grub-stake him gamble their money.

The gambling instinct seems bound to continue to play an important rôle
in the mining industry for all time, or until either the
fortune-hunting instincts of man are eradicated or all the treasures of
the world shall have been mined.

Now, if the practice of catering to the gambling instinct is baneful,
I'm a malefactor. So, too, would then be such lofty-pinnacled
financiers as Messrs. Rothschild, Rockefeller, Morgan, the Guggenheims
and others. My own thought is that it is _custom_ and the times
which are responsible for the maintenance of the great game, and not
individuals.

The truth is, we are a race of gamblers and _we allow the captains of
industry to deal the game for us_.


Next to money and political power, publicity is recognized by all
"doers" as the most powerful lever to accomplish big things. Not
infrequently publicity will accomplish what neither money nor political
power can. Generally, publicity can be secured and controlled by either
money or political power.

When Rawhide was born I had neither money nor political power. The camp
needed publicity. I had nothing to secure publicity with but my wit. I
promptly requisitioned what wit I had, and used all of it.

There is an important difference between owning a series of excellent
gold-mine prospects, which have tremendous speculative possibilities,
and the public recognizing them to be such. It is one thing for a
manufacturer to be himself assured that his article is a better product
for the money than that of his competitor. It is another thing for the
consumer to be convinced. Therein lies the value of organized
publicity.

To focus the attention of the great American investing public on the
camp of Rawhide was the proposition before me. How was this to be
accomplished? Display advertising in the newspapers is costly and
requires large capital; the purchase of reading notices in publications
which accept that class of business, even more so.

One major fact stood out from my early experience as a publicity agent
in Goldfield. Few news editors have the heart to consign good copy to
the waste-paper basket, particularly if it contains nothing which might
cause a come-back.

I resolved to "press-agent" the camp.




CHAPTER VIII

THE PRESS AGENT AND THE PUBLIC'S MONEY


Probably the most scientifically press-agented camp in Nevada had been
Bullfrog. Bullfrog was born two years after Goldfield. The Goldfield
publicity bureau by this time had greatly improved its art and its
efficiency.

When the Bullfrog boom was still young the late United States Senator
Stewart, an octogenarian and out of a job, traveled from Washington, at
the expiration of his term, to the Bullfrog camp. There he hung out his
shingle as a practising lawyer. Immediately the press bureau secured a
cabinet photo of the venerable lawmaker and composed a story about his
fresh start in life on the desert. The yarn appealed so strongly to
Sunday editors of the great city dailies throughout the country that
Bullfrog secured for nothing scores of pages of priceless advertising
in the news columns.

The Senator built a home, the story said, on a spot where, less than a
year before, desert wayfarers had died of thirst and coyotes roamed.
The interior of the house on the desert was minutely described.
Olive-colored chintz curtains protected the bearded patriarch, while at
work in his study, from the burning rays of the sun. Old Florentine
cabinets, costly Byzantine vases, and matchless specimens of Sèvres,
filled his living-rooms. Silk Persian rugs an inch thick decked the
floors. Venetian-framed miniature paintings of former Presidents of the
United States and champions of liberty of bygone days graced the walls.
Costly bronzes and marble statuettes were strewn about in profusion.
Visitors could not help deducing that the Senator thought nothing too
good for his desert habitat. _The name of Bullfrog exuded from every
paragraph of the story; also the name of a mine at the approach to
which this desert mansion was reared and in the exploitation of which
the press-agent had a selfish interest._

The remarkable part of this tale, which was printed with pictures of
the Senator in one metropolitan newspaper of great circulation and
prestige to the extent of a full page on a Sunday and was syndicated by
it to a score of others, was that the only truth contained in it
happened to be the fact that the Senator had decided to make Bullfrog
his home with a view to working up a law practise. But it was a good
story from the Bullfrog press-agent's standpoint and from that of the
Sunday editor, and even the Senator did not blink at it. He recognized
it as camp "publicity" of the highest efficiency, as did other
residents of Bullfrog.


During the Manhattan boom, which followed that of Bullfrog, the
publicity bureau became more ambitious. It made a drive at the news
columns of the metropolitan press on week days, and succeeded.

At that time the Sullivan Trust Company of Goldfield was promoting the
Jumping Jack-Manhattan mining Company. James Hopper, the gifted
magazinist, wrote a story in which the names "Jumping Jack" and
"Sullivan Trust Company" appeared in almost every other line. It was
forwarded by mail to a great daily newspaper of New York and promptly
published as news. The yarn told how the man in charge of the gasoline
engine at the mouth of the Jumping Jack shaft had gone stark mad while
at work and how but for the quick intervention of the president of the
Sullivan Trust Company, who happened to be on the ground, a tragedy
might well have been the result.

The miner, the story said, stepped into the bucket at the head of the
shaft and asked the man in the engine-house to lower him to a depth of
300 feet. Quick as a flash the bucket was let down. When the 200-foot
point was reached there was a sudden stop. With a rattle and a roar the
bucket was jerked back to within 50 feet of the surface. Thereupon it
was again lowered and quickly raised again, and the operation
constantly repeated until the poor miner became unconscious and fell in
a jangled mass to the bottom of the bucket.

Hearing the miner's early cries, Mr. Sullivan had gone to the rescue.
He knocked senseless the man in the engine-house and pinioned him. Then
he brought up the bucket containing the almost inanimate form of the
miner.

Turning to the demon in charge of the engine, who had now recovered
consciousness, Mr. Sullivan cried,

"How dare you do a thing like this?"

The man responded, "His name is Jack, ain't it?"

"Well, what of it?" roared Mr. Sullivan.

"Oh, I was just _jumping the jack_!" chuckled the "madman."

This nursery tale was conspicuously printed in a high-class New York
newspaper's columns as real news. Undoubtedly the reason why the
editors allowed it to pass was that it was believed to be true, but
above all was cleverly written.


I was too busy during the early part of the Rawhide boom to do any
writing of consequence or even to suggest particular subjects for
stories. It seemed to me that the exciting events of every-day
occurrence during the progress of the mad rush would furnish the
correspondents with enough matter to keep the news-pot constantly
boiling. I assembled around me the shining lights of the Reno newspaper
fraternity and put them on the pay-roll.

For weeks an average of at least one column of exciting Rawhide
stampede news was published on the front pages of the big Coast
dailies. The publicity campaign went merrily on. I kept close watch on
the character of the news that was being sent out and was pleased in
contemplating the fact that very little false coloring, if any, was
resorted to. A boisterous mining-camp stampede, second only in
intensity to the Klondike excitement of eleven years before, was in
progress, and there was plenty of live news to chronicle almost every
day.

After returning from one of my trips to Rawhide I became alarmed on
reading on the front page of the leading San Francisco newspapers a
harrowing two-column story about the manner in which Ed. Hoffman, mine
superintendent of the Rawhide Coalition, had been waylaid the day
before on a dark desert road and robbed of $10,000 in gold which he was
carrying to the mines for the purpose of discharging the pay-roll.

I had just left Mr. Hoffman in Rawhide and he had not been waylaid.

I sent for the man who was responsible for the story.

"Say, Jim," I said, "you're crazy. There is a come-back to that yarn
that will cost you your job as correspondent for your San Francisco
paper. It is rough work. Cut it out!"

"Gee whillikins!" he replied. "How can I? Here's an order for a
two-column follow-up and I have already filed it."

"What did you say in your second story?" I inquired.

"Well, I told how a posse, armed to the teeth, were chasing the robbers
and explained that they're within three miles of Walker Lake in hot
pursuit."

"You're a madman!" I protested. "Kill those robbers and be quick; do it
to-night so that you choke off the demand for more copy, or you're a
goner!"

Next day the correspondent wired to his string of newspapers that the
posse had chased the robbers into Walker Lake, where they were drowned.

At the point in Walker Lake where the correspondent said the robbers
had found a watery grave it was known to some Reno people that for
three miles in both directions the lake was shallow and that the
deepest water in that vicinity was less than four feet. This caused
some snickering in Reno. Still there was no come-back. The newspapers
never learned of the deception. The correspondent had been canny enough
in sending the story to keep the local correspondents of all other
out-of-town newspapers thoroughly informed. They had sent out
practically the same story, and therefore did not give the snap away.

In the early days of the Rawhide boom a rumor reached the camp that
Death Valley "Scotty," the illustrious personage who had been
press-agented from one end of the land to the other as the owner of a
secret Golconda, was about to start a stampede into some new diggings.
The news bureau decided to kill off opposition. Newspapers of the land
were queried as follows:

    "Scotty's lair discovered in Death Valley. It is a cache containing
    a number of empty Wells-Fargo money-chests. Scotty has apparently
    been looting the loot of old-time stage robbers. How many words?"

The newspapers just ate this one up. Column upon column was telegraphed
from Nevada. The source of Scotty's wealth being cleared up to the
satisfaction of readers of the "yellow," Scotty's value as a mine
promoter became seriously impaired.


When I chided the Reno correspondent for sending out the fake story
regarding the robbery of Rawhide Coalition's mine manager, I recall
that he argued he had made a blunder in one direction only. He said he
should have seen to it that the mine manager was actually robbed! That,
he said, would have eliminated the danger of a come-back.

Years ago in New York the public was startled by reading of an actress
taking her bath in pure milk. A few weeks later newspaper readers were
convulsed by stories of another star in the theatrical firmament
performing her morning ablutions in a tub of champagne.

"If you don't believe it," said the lady press-agent to a lady
newspaper reporter who was sent to cover the story, "I will give you a
chance to see the lady in the act."

This was done and, of course, the newspapers were convinced that it was
no idle press-agent's dream. Of course, neither of these women had been
in the habit of bathing in milk or in champagne. A tub of milk costs
less than $10 and a tub of champagne less than $200, but you could not
have bought this kind of publicity for these performers at anything
like such absurdly low figures if you used the display advertising
columns of the newspapers. Nor would the advertising have been nearly
so effective. The absurd milk story scored a "knockout" with newspaper
readers and earned a great fortune for the actress.


PUBLICITY VIA ELINOR GLYN

At this early stage in Rawhide's history the reigning literary
sensation of two continents was "Three Weeks." Nothing, reasoned the
correspondents, would attract more attention to the camp than having
Mrs. Elinor Glyn at Rawhide, particularly if she would conduct herself
while there in a manner that might challenge the criticism of church
members.

Sam Newhouse, the multimillionaire mining operator of Utah, famous on
two continents as a charming host, especially when celebrities are his
guests, was stopping at the Fairmont Hotel in San Francisco. Mrs. Glyn
was in San Francisco at the same time. Mr. Newhouse and Ray Baker, a
Reno Beau Brummel, clubman, chum of M. H. De Young, owner and editor
of the San Francisco _Chronicle_, and scion of a house that represents
the aristocracy of Nevada, were showing Coast hospitality to the
distinguished authoress.

A message was sent to Mr. Baker reading substantially as follows:
"Please suggest to Mr. Newhouse and Mrs. Glyn the advisability of
visiting Rawhide. The lady can get much local color for a new book. If
you bag the game, you will be a hero."

Ray was on to his job. Within three days Mrs. Glyn, under escort of
Messrs. Newhouse and Baker, arrived in Rawhide after a thirty-eight-hour
journey by railroad and auto from San Francisco.

The party having arrived in camp at dusk, it was suggested that they go
to a gambling-house and see a real game of stud poker as played on the
desert.

They entered a room. Six players were seated around a table. The men
were coatless and grimy. Their unshaven mugs, rough as nutmeg-graters,
were twisted into strange grimaces. All of them appeared the worse for
liquor. Before each man was piled a mound of ivory chips of various
hues, and alongside rested a six-shooter. From the rear trousers'
pocket of every player another gun protruded. Each man wore a belt
filled with cartridges. Although an impromptu sort of game, it was well
staged.

A man with bloodshot eyes shuffled and riffled the cards. Then he dealt
a hand to each.

"Bet you $10,000," loudly declared the first player.

"Call that and go you $15,000 better," shouted the second as he pushed
a stack of yellows toward the center.

"Raise you!" cried two others, almost in unison.

Before the jack-pot was played out $300,000 (in chips) had found its
way to the center of the table and four men were standing up in their
seats in a frenzy of bravado with the muzzles of their guns viciously
pointed at one another. There was enough of the lurking devil in the
eyes of the belligerents to give the onlookers a nervous shiver.

When the gun-play started, Mrs. Glyn and Messrs. Newhouse and Baker
took to the "tall and uncut."

As the door closed and the vanishing forms of the visitors could be
seen disappearing around the opposite street corner, all of the men in
the room pointed their guns heavenward and shot at the ceiling, which
was of canvas. The sharp report of the revolver-shots rang through the
air. This was followed by hollow groans, calculated to freeze the blood
of the retreating party, and by a scraping and scuffling sound that
conveyed to the imagination a violent struggle between several persons.

Fifteen minutes later two stretchers, carrying the "dead," were taken
to the undertaker's shop. Mrs. Glyn and Mr. Newhouse, with drooped
chins, stood by and witnessed the dismal spectacle.

Of course, the "murder" of these two gamblers, during the progress of a
card-game for sensationally high stakes and in the presence of the
authoress of "Three Weeks," made fine front-page newspaper copy.
Rawhide suggested itself in every paragraph of the stories as a
mining-center that was large enough to attract the attention of a
multimillionaire mine magnate of the caliber of Sam Newhouse and of an
authoress of such world-wide repute as Elinor Glyn. The camp got yards
of free publicity that was calculated to convince the public it was no
flash in the pan, which was exactly what was wanted.

The next night Elinor Glyn, having recovered from the shock of the
exciting poker-game, was escorted through Stingaree Gulch. The lane was
lined on both sides with dance-halls and brothels for a distance of two
thousand feet. Mrs. Glyn "sight-saw" all of these.

Rawhide scribes saw a chance here for some fine writing:

The wasted cheeks and wasted forms of frail humanity, as seen last
night in the jaundiced light that was reflected by the crimson-shaded
lamps and curtains of Stingaree Gulch, visibly affected the gifted
English authoress. They carried to Mrs. Glyn an affirmative answer to
the question, so often propounded recently, whether it is against
public morality to make a heroine in "Three Weeks" of a pleasure-palled
victim of the upper set. It was made plain to Mrs. Glyn that her
heroine differed from the Stingaree Gulch kind only in that her cheeks
were less faded than her character.

That's the kind of Laura Jean Libby comment on Mrs. Glyn's tour of
Stingaree Gulch that one of the Rawhide correspondents wired to a
"yellow," with a view to pleasing the editor and to insuring positive
acceptance of his copy.

Later in the night a fire-alarm was rung in. The local fire-department
responded in Wild-Western fashion. The conflagration, which was started
for Mrs. Glyn's sole benefit, advanced with the rapidity of a tidal
wave. It brought to the scene a mixed throng of the riffraff of the
camp. The tumult of voices rose loud and clear. The fire embraced all
of the deserted shacks and waste lumber at the foothills of one of the
mines. The liberal use of kerosene and a favoring wind caused a fierce
blaze. It spouted showers of sparks into the darkness and gleamed like
a beacon to desert wayfarers. The fierce yells of the firemen rang far
and wide. Of a sudden a wild-haired individual thrust himself out of
the crowd and sprang through the door of a blazing shack. He
disappeared within the flames. Three feet past the door was a secret
passage leading to shelter in the tunnel of an adjoining mine. Mrs.
Glyn, of course, did not know this. She acclaimed the act as one of
daring heroism.

Water in the camp was scarce, so there was a resort to barreled beer
and dynamite. Soon the flames of the devouring fire were extinguished.
Again the newspapers throughout the land contained stories, which were
telegraphed from the spot, regarding the remarkable experiences of the
much-discussed authoress of "Three Weeks" in the new, great, gold camp
of Rawhide. The press agent was in his glory.


"AL" MILLER'S SIEGE

Elinor Glyn's experiences in Rawhide were by no means the most
interesting that newspaper readers of the United States were privileged
to read during the course of the press-agenting of the camp.

"Al" Miller was one of the first experienced mining operators to get
into Rawhide. He landed in camp in the early part of 1907. After a
thorough inspection of the mine showings throughout the district, he
hit upon the Hooligan Hill section of the Rawhide Coalition property as
a likely-looking spot to develop pay ore. Mr. Miller had been mining
for a great many years and had been identified with some important
mining projects in Colorado. When he applied for a lease on that
section of the Coalition property embracing a good part of Hooligan
Hill it was granted to him without parley.

Mr. Miller financed his project right in the camp of Rawhide. He
interested five other mining men. A syndicate was formed. Each of these
six took an equal interest. All agreed to subscribe to a treasury fund
to meet the expense of development.

A shaft was started on a very rich stringer of gold ore. When it had
reached a depth of about 40 feet the Miller lease was regarded as one
of the big "comers" of the camp. In fact, a good grade of ore was
exposed on all sides and in the bottom of a 4-1/2×7-1/2 foot shaft.
Specimens assayed as high as $2,000 a ton.

At this stage of the enterprise an operating company was formed. Those
who had formed the original syndicate divided the ownership stock among
themselves. Mr. Miller was given full charge and allowed a salary for
his services. Day after day you could see him on the job, sharpening
steel, turning a windlass to hoist the muck from the bottom of the
shaft after each round of shots had been fired, and making a full hand
as mine-manager, blacksmith, mucker and shift-boss.

One day I was sitting in my office at Reno when I received a telephone
message that there was a big fight on over the control of the Miller
lease. Mr. Miller and a big Swede who was working for him had
barricaded themselves at the mine. They threatened death to any one who
approached. We had, for a day or two, been hungering and thirsting for
some live news of the camp. My journalistic instinct got busy. I
queried our Rawhide correspondent. He advised that the situation really
looked serious and that a genuine scrap threatened. Mr. Miller had
installed a good-sized arsenal at the mine and laid in about three
days' provisions. He declared that he was prepared to hold out for an
indefinite period.

I wired our correspondent at Rawhide instructions to file a story up to
1,000 or 1,500 words. Naturally excitement ran high in the camp. Soon
hundreds of people gathered at points of vantage along the crest of
Hooligan Hill and surrounding uplifts. Every one was expectantly
awaiting interesting developments. To the casual onlooker it seemed as
though possibly a score or more who stood ready to storm the mine might
become involved. In fact, no one could tell how soon hostilities would
break loose.

Using the telegrams I had received from camp, one of my men dictated a
story containing the facts and sent it over to the Reno correspondent
of the Associated Press. It was put on the wire without a moment's
hesitation.

Mr. Miller had formed a rampart about the collar of the shaft. Sacked
ore was piled up to a height of about five feet. The gold-laden stuff
surrounded the shaft on all sides but one, the exception being to the
northwest. There Hooligan Hill slanted upward at an angle of less than
twenty degrees from vertical. It was from this approach that Mr. Miller
was forced to guard constantly against attack. He found it necessary,
according to our dispatches, to keep a constant vigil in order to
preclude the possibility of a surprise. He and his Swede companion
alternated in keeping the lookout. Occasionally the fitful soughing of
the gasoline engine exhausts from the mining plants on Balloon Hill and
Grutt Hill were interspersed by the sharp report of a six-shooter as
the besieged parties either actually or mythically observed a
threatened approach of the enemy.

Although the principals cast in this little mimic war were limited to
perhaps less than a score, every incident or detail was provided to
make up a very threatening and keenly interesting situation, with
several lives hanging in the balance. There is no doubt that Mr. Miller
at least, and perhaps his Swede companion, would have resisted any
attempt to take "Fort Miller," as we styled it, even to sacrificing his
life, for he was known as a man of action who had been in numerous
critical situations without showing the slightest exercise of the
primal instinct. The fact that Rawhide was saved from an episode that
might have measured up to the tragic importance of a pitched battle and
caused the loss of a number of lives was undoubtedly due to the patient
willingness of Mr. Miller's partners and their supporters to satisfy
themselves with a siege and to starve out the two men in possession of
the mine rather than undertake to rout them.

The story went like wildfire and we were besieged for others and for a
follow-up on the original story. For three days we kept the yarn alive
and the wires burdened with details of the siege and unsuccessful
storming of Camp Miller, Hooligan Hill, Nevada.

I venture to say that Mr. Hearst, with his well-known facility for
serving up hot stuff to a sensation-loving following, never surpassed
in this particular the stories that were scattered broadcast over the
United States foundered upon this interesting episode in the mining
development of Rawhide.

The story promised to be good for at least a week when we were somewhat
surprised to hear that Mr. Miller had capitulated. It seems that in
storing his fort with provender he had supplied only one gallon of
whisky and when this ran low, on the second or third day, he attempted,
single-handed, a foraging expedition in search of a further supply of
John Barleycorn. During his absence his Swede companion hoisted a flag
of truce, and when Miller returned to the scene of action he found his
mine in the possession of his enemies.


Charles G. Gates, son of John W. Gates, the noted stock-market plunger,
visited Rawhide twice. He spent his time by day inspecting the numerous
mine workings, of which there were not less than seventy-five in full
blast. At night he was a frequent winner at the gaming-tables. His
advent in Rawhide was telegraphed far and wide and contributed to
excite the general interest.

A young woman of dazzling beauty and fine presence was discovered in
camp unchaperoned. She had been attracted to the scene by stories of
fortunes made in a night. Under a grilling process of questioning by a
few leading citizens she divulged the fact that she had run away from
her home in Utah to seek single-handed her fortune on the desert. In
roguish manner she expressed the opinion that if allowed to go her own
way she would soon succeed in her mission. But she would not divulge
the manner in which she proposed to operate. She confessed she had no
money. There was a serene but settled expression of melancholy in her
eyes that captivated everybody who saw her.

Many roving adventurers of the better class in the district who had
listened to the call of the wild yet would have felt as much at home in
the salon of a Fifth Avenue millionaire as in the boom-camp, pronounced
her beauty to be in a class by itself. There was no law in the camp
which would warrant the girl's deportation, yet action appeared
warranted. Within a few moments $500 was subscribed as a purse to
furnish the girl a passage out of camp and for a fresh start in life.
The late Riley Grannan, race-track plunger, Nat. C. Goodwin, the noted
player, and three others subscribed $100 each. She refused to accept
the present. Next day she disappeared.

There was a corking human interest story here. Newspapers far and wide
published the tale. Two years later this girl's photograph was sent
without her knowledge to the judges of a famous beauty contest in a Far
Western State. The judges were on the point of voting her the prize
without question when investigation of her antecedents revealed her
Rawhide escapade. The award was given to another.

When the camp was four months old and water still commanded from $3 to
$4 a barrel, the standard price for a bath being $5, a banquet costing
$50 a plate was served to one hundred soldiers of fortune who had been
drawn to the spot from nearly every clime. The banqueters to a man
played a good knife and fork. The spirit of _camaraderie_ permeated the
feast. There was much libation, much postprandial speechifying, much
unbridled joyousness. _Bon mots_ flew from lip to lip. Song and jest
were exchanged. The air rang with hilarity. Nat. C. Goodwin warmed up
to a witty, odd, racy vein of across-the-table conversation. Then
he made a felicitous speech. Others followed him in similar vein.
Luxuriant and unrestrained imagination and slashiness of wit marked
most of the talks. The festivities ended in a revel.

The correspondents burned up the wires on the subject of that banquet.
In the memory of the most ancient prospector no scene like this had
ever been enacted in a desert mining camp when it was so young and at a
time when the country was just emerging from a panic that seemed for a
while to warp its whole financial fabric.


THE FUNERAL ORATION FOR RILEY GRANNAN

In April, 1908, Riley Grannan, the noted race-track plunger, died of
pneumonia in Rawhide, where he was conducting a gambling house. He was
ill only a few days and his life went out like the snuff of a candle.
When all the gold in Rawhide's towering hills shall have been reduced
to bullion and not even a post is left to guide the desert-wayfarer to
the spot where was witnessed the greatest stampede in Western mining
history, posterity will remember Rawhide for the funeral oration that
was pronounced over the bier of Mr. Grannan by H. W. Knickerbocker,
wearer of the cloth and mine-promoter.

The oration delivered by Mr. Knickerbocker on this occasion was a
remarkable example of sustained eloquence. Pouring out utterances of
exquisite thought and brilliant language in utter disregard of the
length of his sentences and without using so much as a pencil
memorandum, Mr. Knickerbocker with a delicacy of expression pure as
poetry urged upon his auditors that the deceased "dead game sport" had
not lived his life in vain. Soon the crowd, who listened with rapt
attention, was in the melting mood. As Mr. Knickerbocker progressed
with his discourse his periods were punctuated with convulsive bursts
of sorrow.

Rawhide correspondents reorganized the full value of the occasion from
the press-agent's standpoint. Mr. Grannan had been a world-famous
plunger on the turf, and the correspondents burned the midnight oil in
an effort to do their subject justice.

Some other lights and shadows of Rawhide press-agenting are contained
in the following dispatch, which appeared in a San Francisco newspaper
in the early period of the boom:

    GOLDFIELD, February 19.--W. H. Scott of the Goldfield brokerage
    house of Scott & Amann, who returned from Rawhide this morning,
    expresses the opinion that within a year that camp will be the
    largest gold-producer in the State. "When a man is broke in
    Rawhide," said Mr. Scott, "he can always eat. All he has to do is
    to go to some lease and pan out breakfast money. There is rich ore
    on every dump, and every man is made welcome."

H. W. Knickerbocker sent this one to a Reno newspaper:

    Gold, Gold, Gold! The wise men of old sought an alchemy whereby
    they could transmute the base metals into gold. It was a fruitless
    quest then; it is a needless quest now. Rawhide has been
    discovered! No flowers bloom upon her rock-ribbed bosom. No
    dimpling streams kiss her soil into verdure, to flash in laminated
    silver 'neath the sunbeam's touch. No flowers nor food, no beauty
    nor utility on the surface; but from her desert-covered heart
    Rawhide is pouring a stream of yellow gold out upon the world which
    is translatable, not simply into food and houses and comfort, but
    also into pictures and poetry and music and all those things that
    minister in an objective way to the development of a full-orbed
    manhood.

Joseph S. Jordan, the well-known Nevada mining editor, filed this
dispatch to the newspapers of his string on the Coast:

    Right through what is now the main street of Rawhide, in the days
    of '49, the makers of California passed on their way to the new
    Eldorado. They had many hardships through which to pass before
    reaching the gold which was their lure, and thousands that went
    through the hills of Rawhide never reached their goal. They were
    massacred by the Indians, or fell victims to the thirst and heat of
    the desert, and for many years the way across the plains was marked
    by the whitening bones of the pathfinders. And here all the while
    lay the treasures of Captain Kidd, the ransoms of crowns.

Harry Hedrick, the veteran journalist of Far Western mining camps, sent
his newspaper this:

    To stand on twenty different claims in one day, as I have done; to
    take the virgin rock from the ledge, to reduce it to pulp and then
    to watch a string of the saint-seducing dross encircle the pan; to
    peer over the shoulder of the assayer while he takes the precious
    button from the crucible--these are the convincing things about
    this newest and greatest of gold camps. It is not a novelty to have
    assays run into the thousands. In fact, it is commonplace. To
    report strikes of a few hundred dollars to the ton seems like an
    anticlimax.

There were scores of actual happenings in Rawhide that make it possible
for me to say in reviewing the vigorous publicity campaign which marked
its first year's phenomenal growth, that ninety per cent. of the
correspondence, including the special dispatches sent from the camp and
from Reno, which was published in newspapers of the United States, was
not only based on fact but was literally true in so far as any
newspaper reporter can be depended upon accurately to describe events.


Ask any high-class newspaper owner or editor to express his sentiments
regarding the "faking" which formed about ten per cent. of the Rawhide
press work described herein and he will tell you that such work is a
reproach to journalism. Maybe it is, but we are living in times when
such work on the part of press-agents is the rule and not the
exception. The publicity-agent who can successfully perform this way is
generally able to command an annual stipend as big as that of the
President of the United States. There was nothing criminal about the
performance in Rawhide, because there was no intentional
misrepresentation regarding the character or quality of any mine in the
Rawhide camp. Correspondents were repeatedly warned to be extremely
careful not to overstep the bounds in this regard.

Confessedly there are grades of "faking" which no press-agent would
care to stoop to.

Somewhere in De Quincey's "Confessions of an Opium Eater" he describes
one of his pipe-dreams as perfect moonshine, and, like the sculptured
imagery of the pendulous lamp in "Christabel," _all carved from the
carver's brain_. Rawhide and Reno correspondents were guilty of very
little work which De Quincey's description would exactly fit. There was
a basis for nearly everything they wrote about, even the alleged
discovery of Death Valley Scotty's secret storehouse of wealth, that
story having been in circulation in Nevada, although not theretofore
published, for upward of eighteen months. Unsubstantial, baseless,
ungrounded fiction had been resorted to, it is true, during the
Manhattan boom, in a single story about the madman in charge of the
hoist on the Jumping Jack, but this was an exception to the rule and
the story was harmless.


AMONG THE "BIG FELLOWS"

If you don't think the character of the press-agent's work during the
Rawhide boom was comparatively high class and harmless, dear reader,
you really have another "think" coming. At a time when Goldfield
Consolidated was wobbling in price on the New York Curb and the market
needed support, just prior to the smash in the market price of the
stock from $7 to around $3.50, the New York _Times_ printed in a
conspicuous position on its financial page a news story to the effect
that J. P. Morgan & Company were about to take over the control of that
company. That's an example of a _harmful_ "fake," the coarse kind
that Wall Street occasionally uses to catch suckers.

Here is another:

Thompson, Towle & Company, members of the New York Stock Exchange,
issue a weekly newspaper called the _News Letter_. Much of its space
is given over to a review of the copper situation, at the mines and in
the share markets. W. B. Thompson, head of the firm, he of Nipissing
market manipulation fame, is interested to the extent of millions in
Inspiration, Utah Copper, Nevada Consolidated, Mason Valley and other
copper-mining companies. On January 25, 1911, when both the copper
metal and copper share markets were sick, and both the price of the
metal and the shares were on the eve of a decline, which temporarily
ensued, the _News Letter_, in an article headed "Copper," said:

    Every outcrop in the country has been examined and it is not known
    where one can look for new properties.

The readers of the _News Letter_ were asked to believe that no more
copper mines would be discovered in this country and that, because of
this and other conditions which it mentioned, the supply of the metal
must soon be exhausted and the price of the metal and of copper
securities must advance.

The statement in the _News Letter_ that every outcrop in the country
has been examined and that it is not known where one can look for new
properties--well, if the whole population of North America agreed in a
body to accept the job of prospecting the Rocky Mountains and Sierra
Nevada Mountains alone they could hardly perform the job in a
lifetime.

The use of the automobile has undoubtedly been responsible in the past
few years for an impetus to the discovery of mines which is calculated
to double the mineral product of this country in the next two decades,
and who shall say what the flying-machine will accomplish in this
regard? Further, new smelting processes and improved reduction
facilities generally are daily reducing the cost of treatment of ores
and are making commercially valuable low-grade ore-bodies heretofore
passed up as worthless.

The best opinion of mining men in this country is that our mineral
resources have not yet been "skimmed" and that the mining ground of the
Western country has not yet been well "scratched."

Therefore, the statement made in a newspaper which is supposedly
devoted to the interests of investors, that it need not be expected
that more copper mines are going to be discovered, is a snare
calculated to trap the unwary.

The foregoing is an example of a very harmful but comparatively crude
fake, employed by some promoters in Wall Street of the multimillionaire
class when their stocks need market support.

Here is a specimen of the _insidious_ brand of get-rich-quick fake. On
March 7, 1911, the New York _Sun_ printed in the second column of its
front page the following dispatch:

    TACOMA, Wash., March 6.--F. Augustus Heinze has struck it rich
    again; this time it's a fortune in the Porcupine gold fields in
    Canada.

    Charles E. Herron, a Nome mining man, who has just returned from
    the new gold fields, is authority for the statement that Heinze is
    "inside the big money." He has bought the Foster group of claims,
    adjoining the celebrated Dome mine, from which it is estimated that
    $25,000,000 will be gleaned this year and for the development of
    which a railroad is now under construction.

    The Porcupine gold field, according to Herron, is one of the
    wonders of the age. One prospector has stripped the vein for a
    distance of fifty feet and polished it in places, so that gold is
    visible all along. His trench is three feet deep and he asks
    $200,000 cash for it as it stands.

    A party of Alaskans offered the owner of this claim $50,000 a shot
    for all the ore that could be blown out with two sticks of
    dynamite, but he refused.

Press-work like the foregoing is more than likely to separate the
public wrongfully from its money.

The item serves as an excellent example of one of "the impalpable and
cunningly devised tricks that fool the wisest and which landed you"
that I promised, at the beginning of "My Adventures with Your Money,"
to lay bare. I said in my foreword:

    Are you aware that in catering to your instinct to gamble, methods
    to get you to part with your money are so artfully and deftly
    applied by the highest powers that they deceive you completely?
    Could you imagine it to be a fact that in nearly all cases where
    you find you are ready to embark on a given speculation, ways and
    means that are almost scientific in their insidiousness have been
    used upon you?

The New York _Sun_ article says it is estimated that $25,000,000 will
be gleaned this year from the Dome mine in Porcupine. The truth is, no
engineer has ever appraised the ore in sight in the entire mine,
according to any statements yet issued, at anything like half of that
amount gross, and the mine itself can not possibly produce so much as
$100,000 this year.

A mill of 240 tons per diem capacity has been ordered by the
management and it is expected will be in operation by October first,
but no sooner.[2] The ore, according to H. P. Davis's _Porcupine Hand
Book_, an accepted authority, "has been stated to average from $10 to
$12 a ton." The lowest estimated cost of mining and milling is $6. A
fair estimate of profits would, therefore, be $5 per ton, not allowing
for any expenses of mine-exploration in other directions on the
property or other incidental outlay, which will undoubtedly amount to
$1 per ton on the production. The production of 240 tons of ore per
day at $4 per ton net profit would mean net returns of $28,800 per
month. If the mill runs throughout October, November and December of
this the company will "glean" $86,400 during 1911, and not
$25,000,000, as the New York _Sun_ article suggests.[3]

          [2] The fire of July will delay installation until a later
          date.

          [3] In arriving at these figures I am more than fair. Recent
          estimates of the average value of the ores is $8, and I know
          of some estimates by very competent mining men that are as
          low as $4. Some engineers say justification is lacking for
          even a $4 estimate. The Dome is by no means a proved
          commercial success as yet from the mine standpoint, although
          the possessor of much ore, because of the uncertain average
          values.

How great an exaggeration the New York _Sun's_ $25,000,000 estimate is
may be gathered from the statement that to glean $25,000,000 in one
year from any mine where the ore assays $11 on an average, and the
cost of mining, milling and new development is $7, the gross value of
the tonnage in the mine that is milled during the one year must be at
least $53,571,000. Further, to reduce such a quantity of that quality
of ore to bullion in a single year would require the erection of mills
of 17,260 tons per day capacity. As mentioned, the actual per diem
capacity of the mill now under construction is 240 tons.[4]

          [4] It has been destroyed by the July fire and must be
          replaced.

Undoubtedly the Dome mining company flotation will soon be made and the
public will be "allowed" to subscribe for the shares or buy them on the
New York Curb at a figure agreeable to the promoters. This seems
certain, for otherwise why this raw press-work?[5]

          [5] The foregoing comment on the Porcupine situation has been
          more than justified by developments after the date of this
          writing. The first battery of forty stamps in the first stamp
          mill was not in operation till April, 1912, more than a year
          from the date of the prediction that $25,000,000 would be
          gleaned in 1911.

The article says that a number of Alaskans offered money at the rate of
$50,000 a shot for all the ore that could be blown out with two sticks
of dynamite, but were refused. There never was a statement made by any
wild-catter now behind prison bars in any literature I ever saw that
could approach this one in flagrant misrepresentation of facts. All the
ore that could be displaced in one shot with two sticks of dynamite
would not exceed four tons. In order to repay the investor it would be
necessary, therefore, that this ore average better than $12,500 per
ton. The New York _Sun's_ story says that notwithstanding this offer
the owner was willing to sell the whole property for $200,000. Imagine
this: There are four tons of rock on the property worth $12,500 per
ton, for a distance of 50 feet the gold shimmers on the surface, and
there are hundreds of thousands of tons of rock in the same kind of
formation on the same property, but still the owner is willing to
dispose of all of it for $200,000! The statement is preposterous and
outrageous. It is the kind described by De Quincey as "all carved from
the carver's brain."


THE REVERSE ENGLISH

Now, about the "reverse English" in this line of press-work. Similar
ways and means, dear reader, that are just as scientific in their
insidiousness have been used upon you to poison your mind _against_ the
value of mining investments of competing promoters, when it has been
found to the interest of powerful men to bring this about.

When the offices of B. H. Scheftels & Company, with which I was
identified, were raided in seven cities by Special Agent Scarborough
(since permitted to resign) of the Department of Justice of the United
States Government, in September, 1910, two of the men who had been
active in bringing about the raid assembled in the parlor of the Astor
House the newspaper men assigned to cover the story by New York and
Brooklyn newspapers. There they gave out the information that Ely
Central, which I had advised the purchase of at from 50 cents per
share up to $4 and down again, was actually under option to me and my
associates in large blocks at 5 cents. As a matter of fact, the
average price paid over for this option stock in real hard money by my
people was in excess of 90 cents per share, without adding a penny to
the cost for expenses of mining engineers, publicity or anything else.
My people had also partly paid for a block bought at private sale at
the rate of $3 a share, besides buying tens of thousands of shares in
the open market at $4 and higher. The New York _Times_ and the New
York _Sun_, two newspapers which make capital of the rectitude of both
their news and advertising columns, published this statement, along
with forty others that were just as false, if not more so. So did the
New York _American_ and the other Hearst newspapers of the United
States.

The New York _Times_ story related how I had personally cleaned up
in fifteen months not less than $3,000,000 as the result of my market
operations. As a matter of fact, I and my associates had impoverished
ourselves trying to support the stock in the open market against the
concerted attacks of rival promoters and other powerful interests on
whose financial corns we had tread. Every well-informed person in Wall
Street knows this.

The New York _Times_ stated that every man connected with B. H.
Scheftels & Company had tried to obtain membership on the New York
Curb and that all of the requests were turned down. No application was
ever made for membership because, first, the rules of the Curb forbade
corporation memberships, and, second, the Scheftels company already
employed several members on regular salary and more than a dozen
members on a commission basis.

It was also stated that B. H. Scheftels & Company applied to the Boston
Curb for membership and that their application was rejected. This was
also a lie made out of whole cloth.

In three months, the New York _Times_ said, no less than 400,000
letters had been received in reply to circulars sent out by B. H.
Scheftels & Company. This is an average of over 5,000 letters for each
business day during the period of three months. The exaggeration here
was about 5,000 per cent.

All of the properties promoted by the Scheftels company were stated
in the New York _Times_ article to be "practically worthless." This
was utter rubbish and so misleading that had I been accused of
pocketpicking the effect could not have been more harmful.

Rawhide Coalition had produced upward of $400,000 in gold bullion, had
probably been "high graded" to the extent of nearly as much more,
according to the judgment of well-posted men on the ground, and not
less than five miles of underground development work had been done on
the property. Development work and production had never ceased for a
day. Besides, when the Rawhide camp was still in its swaddling-clothes,
I had originally purchased the controlling interest for Nat. C. Goodwin
& Company at a valuation of $700,000 for the mine.

The control of Ely Central had been taken over by B. H. Scheftels &
Company and paid for at a valuation well in excess of a million dollars
for the property, and upward of $200,000 had been spent in mine
development during the fourteen months of the Scheftels quasi-control.
Jumbo Extension was a famous producer of Goldfield. Subsequent to the
raid one-twentieth of its acreage was sold to the Goldfield
Consolidated for $195,000. On July 15th of the current year the company
disbursed to stockholders $95,000 in dividends, being 10 per cent. on
the par of the issued capitalization. Bovard Consolidated, which was
promoted at 10 cents a share as a speculation, had turned out to be a
"lemon" after a period of active mine development, the values in the
ore pinching out at depth, but B. H. Scheftels & Company had
immediately informed stockholders to this effect.


The New York _Times_ stated that B. H. Scheftels & Company sold Ely
Central stock to the amount of five or six millions in cash and made a
profit of $3,000,000 on the transactions. The books of the Scheftels
company show that the company not only made no money on the sale of
Ely Central but actually lost vast sums.

The New York _Times_ said that it had been advertised that a carload
of ore had been shipped from the Ely Central mine as a sample, but
that the Government had not been able to find out to whom this carload
of ore was consigned. The truth was that the consignment had been made
to the best-known smelter company in the United States, that the ore
averaged seven per cent. copper, and that it could not have been
shipped out of camp except over a single railroad which has the
monopoly--an easy transaction to trace.

B. H. Scheftels & Company were accused by the New York _Times_ of
clearing up nearly $600,000 in three months on the promotion of the
South Quincy Copper Company. The facts were that, after receiving
$30,000 in subscriptions and returning every subscription on demand
because of the slump in metallic copper, the Scheftels company
abandoned the promotion and never even applied for listing of the stock
in any market. A large sum was lost by the Scheftels company here.

Even in stating the penalty for misuse of the mails, which was the
crime charged by the Government agent who afterwards resigned as a
consequence of conduct objectionable to the Government, the New York
_Times_ stated that the punishment was five years in prison, which
was more hop-skip-and-go-merry mistaking. The crime is a misdemeanor
and the maximum penalty for an offense is eighteen months.

I have counted not less than five hundred unfounded and misleading
statements of this kind regarding myself and associates that have been
made in the past year by newspapers and press associations. The shadow
has been taken for the substance.

Now, the Scheftels raid, I shall prove in due time, was the culmination
of as bitterly waged a campaign of misrepresentation and financial
brigandage as has ever been recorded. Chronologically an introduction
of the subject is out of place here. The effect, however, of the
press-agenting which formed a part of the campaign of destruction is
pertinent to the topic under consideration.

The immediate result was that thousands of stockholders in the various
mining companies that had been sponsored by the Scheftels company were
robbed of an aggregate sum amounting into millions, which represented
the ensuing decline in market value of the stocks.

The newspaper campaign of misrepresentation and villification was
essential to the plans and purposes of the men who sicked the
Government on to me. The final destruction of public confidence in the
securities with which I was identified became necessary to justify the
whole proceeding in the public mind.

On the surface of the play it was made to appear that the Government of
the United States had reached out righteously for the suppression of a
dangerous band of criminals. The story in the New York _Times_ and
other newspapers on the day after the raid was justification made to
this end.

The fact that tens of thousands of innocent stockholders might lose
their all, as a result of the foul use of powerful maladroit
publicity-machinery, did not stop the conspirators for a moment. I had
a youthful past and, therefore, the newspapers took little chance in
publishing anything without investigation and proof that might be
offered. And they went the limit, particularly those newspapers that
are in the habit of permitting the use of their news columns from time
to time to help along the publicity measures of powerful interests.

Contrasted with the comparatively harmless "faking" that characterized
Rawhide's press-agenting, the raw work of the newspapers just described
is as different as angel-cake from antimony. If you are not yet
convinced, hearken to this:


THE POWER OF THE PUBLIC PRINT

In the _Saturday Evening Post_ of December 31, 1910, there appeared an
article headed, "Launching a Corporation. How the Pirates and
Merchantmen of Commerce Set Sail. By Edward Hungerford," from which I
quote, without the omission or change of so much as a comma.
Referring, in my opinion to Ely Central, promoted by myself and
associates, Mr. Hungerford says:

    Here is a typical case--a mining property recently exploited on the
    curb market, the shipyard of many of these pirate craft: a prospect
    located not far from one of the bonanza mines of the West was
    capitalized by a number of men who, after they had convinced
    themselves that it would not pay, dropped it and gave little
    thought to the company they had organized.

    One day they received through a lawyer an offer of four thousand
    dollars for the even million shares of stock they had prepared to
    issue at a face value of five dollars a share. They were told that
    a wealthy young man was willing to take a four-thousand-dollar
    flier on the property, on the outside chance that it might develop
    ore. The deal was made. Soon after a well-known man was named as a
    part owner of the mine, which "promised" to enrich all those
    interested in it.

    That was not the first time that the marketable value of a name
    that is known had been used to exploit a corporation. Any man of
    standing has many such offers.

    The shares of stock that had been purchased for four cents each
    were peddled on the curb at fifty cents. Then they were advanced to
    sixty cents. Soon a "market"--so called--was made and the stock
    found a ready sale. Point by point it was advanced until it
    actually was eagerly sought by investors, who were not only willing
    but eager to pay four dollars a share for it.

Mr. Hungerford states in the foregoing: "This mine was capitalized by a
number of men who dropped out after they convinced themselves that it
would not pay." The statement is false if it refers to Ely Central, as
I believe it does. The chief owners and organizers attempted to promote
it through a New York Stock Exchange house on the New York Curb at
above $7 per share, or at a valuation of more than $8,000,000 for the
mine, but the bankers' panic of 1907-8 intervened, and for _that
reason_ they quit. The stock sold in 1906 at above $7.50 a share on
the New York Curb, two years before I became identified with it.

Mr. Hungerford says that one day these men _received through a lawyer
AN OFFER OF $4,000 FOR A MILLION SHARES OF STOCK, and they sold_.

How cruelly false this statement is nobody can feel more than myself.
The average price paid by my associates in hard money for the
controlling interest in the 1,600,000 shares of capitalization, as
already mentioned, was above 90 cents, or considerably more than one
million dollars in all. An additional $600,000 or more was used to
protect the market for the stock, making our cost, without adding a
cent for promotion expenses, about $1.50 per share instead of four
cents--more than $2,000,000 for the property and not $5,000.

Line by line and word for word I could analyze the statement of Mr.
Hungerford and show that 95 per cent. of it is false both in premise
and deduction. But this would be only cumulative on the one point. My
excuse for mentioning the item is to give a striking example of the
startling force and power which attaches to insidious newspaper
publicity of the kind quoted from the New York _Times_. Mr. Hungerford
"fell" for it, and innocently lent himself to the purposes of the men
who sponsored the story by himself passing it on to the readers of the
_Saturday Evening Post_.

The purpose here has been to show the imposition on the American public
which is being practiced every day in the news columns of daily
newspapers and other publications, but I have been able to convey to
the reader only the barest kind of suggestion as to the depths to which
this perception is practiced. Limitations of space prohibit further
encroachment, or I would fain extend my list of examples indefinitely.

We hear much these days about the abuses of journalism. Much of the
criticism is leveled at publishers who lend the use of their columns
for "boosting" that is calculated to help their advertisers. But little
attention is paid to that other evil namely, the use of the news
columns for the purpose of destroying business rivals, political rivals
and enemies generally of men who wield sufficient influence to employ
the method.

This ramification of the subject appeals to me as of at least as much
consequence to citizens as is the one of inspired puffery. I believe
the public is going to hear much more of this feature of newspaper
abuse in the future than it has in the past. The community is waking up
and is manifesting a desire to learn more about the heinous practice.


RAWHIDE AGAIN

To return to Rawhide. As a result of the "scientific" press-agenting
which the camp received, a frenzied stampede ensued. The rush was of
such magnitude that it stands unparalleled in Western mining history.
Not less than 60,000 people journeyed across the desolate, wind-swept
reaches of Nevada's mountainous desert during the excitement. Not less
than 12,000 of these remained on the ground for a period of several
months.

Mining-camp records were broken. The maximum population of Goldfield
during the height of its boom was approximately 15,000, but it had
taken more than three years and the discovery of the world's highest
grade gold mine to attract this number of people. Cripple Creek for two
years after its discovery was little more than a hamlet. Leadville
during its first year was hardly heard of.

The scenes enacted in Rawhide when the boom was at its height beggar
description. Real estate advanced in value in half a year in as great
degree as Goldfield's did in three years. Corner lots on the Main
Street sold as high as $17,000. Ground rent for plots 25×100 feet
commanded $300 a month. During the day as well as at night the
gaming-tables of the pleasure-palaces were banked with players, and the
adventuresome were compelled literally to fight their way through the
serried ranks of onlookers to take a hand in the play. The miners were
flush. Many assay offices, accessories of "high-graders," were turning
out bullion from extraordinarily rich ore easily hypothecated by a
certain element among the men working underground.

The opening of "Tex" Rickard's gambling-resort in Rawhide was
celebrated by an orgy that cut a new notch for functions of this kind
in Southern Nevada. The bar receipts aggregated over $2,000. The games
were reported to have won for Mr. Rickard $25,000 on the first day.
Champagne was the common beverage. Day was merged into night and night
into day. Rouged courtesans of Stingaree Gulch provided the dash of
¯
On the densely crowded streets fashionably tailored Easterners,
digging-booted prospectors, grimy miners, hustling brokers, promoters,
mine operators and mercantile men, with here and there a scattering of
"tin horns," jostled one another and formed an ever shifting
kaleidoscopic maelstrom of humanity.

In the environing hills could be heard the creak of the windlass, the
clank of the chain, and the buzz and chug of the gasoline hoist,
punctuated at frequent intervals by sharp detonations of exploding
dynamite.

Outgoing ore-laden freighters, hauled by ten-span mule teams, made
almost impassable the roads connecting the camp with near-by points of
ingress. Coming from the opposite direction, heavily laden wagons
carrying lumber and supplies, and automobiles crowded to the guards
with human freight, blocked the roadways.

Rawhide's publicity campaign from a press-agent's standpoint was a
howling success. From the standpoint of the promoter, however, results
were mixed. Nat. C. Goodwin & Company were enabled to make more than a
financial stand-off of their promotion of the Rawhide Coalition Mines
Company, but they did not profit to the extent they might have, had the
times been propitious.

I was not long in discovering that my first deductions, made at the
inception of the Rawhide boom, namely, that the country was in no
financial mood to consider favorably the claims to recognition of a new
mining camp, were right, and that it would have been better had the
birth of Rawhide been delayed for a period or until the country could
catch its financial breath again. Crowds came to Rawhide, but few with
money. Flattering as was the extent of the inrush, it was easy to see
that if the publicity campaign had been suppressed for a while, the
result in harvest would have been immeasurably greater. Had financial
conditions been right, the effort to give the camp "scientific"
publicity would undoubtedly have been crowded with results for "the
inside" of a character that would have meant much larger sums of money
in the bank.

Nat. C. Goodwin & Company recognized, too, that they had been working
at a great disadvantage by attempting to finance a great mining
enterprise at so great a distance from Eastern financial centers as
Reno. We were hardly a match for the Eastern promoter who, because of
the handy location of his offices, was enabled to keep in close
personal contact with his following.

The usual happening in mining took place at Rawhide. The extraordinary
rich surface deposits opened up into vast bodies of medium and
low-grade ore at depth. Rawhide's one requirement appeared to be a
railroad, and a milling plant of 500 or 600 tons a day capacity. It was
decided that I should come East and attempt to finance the company for
deep mine development, mill and railroad construction, and also to go
through with the deal made with the vendors of the controlling
interest. The time period for payments had been extended for Nat. C.
Goodwin & Company, and the option to purchase was now valued by the
Goodwin company at a fortune.

In New York, over the signature of Nat. C. Goodwin the firm for a
while, under my direction, conducted a display advertisement newspaper
campaign in favor of the issue, which was now listed on the New York
Curb. Hayden, Stone & Company, bankers, of Boston and New York, who
have since successfully financed the Ray Consolidated and Chino copper
companies, undertook to send their engineer to Rawhide to make an
examination of the property with a view to financing the company for
railroad and milling equipment amounting to upward of a million
dollars. Under the impetus of this news and the Nat. C. Goodwin
advertising campaign the market price of the shares shot up to $1.46,
or a valuation in excess of four million dollars for the property.

A few weeks later a sharp market break occurred. Some one got the news
before Nat. C. Goodwin & Company did that the million-dollar financing
proposition had been acted upon adversely by the engineer. The company
had done no systematic underground development work. An enormous amount
of work had been done, but it was accomplished under the leasing
system. The leasers, who, because of lack of milling facilities, were
unable to dispose of a profit of ore that assayed less than $40 per
ton, had bent all of their efforts toward bringing to the surface
high-grade shipping ore and had made no effort at all to block out and
put into sight the known great tonnages of medium and low-grade.
Engineers take nothing for granted and this one reported that the
proposition of spending a million dollars should be turned down because
a commensurate tonnage had not been blocked out and put in sight.

To this day the camp has struggled along without adequate milling
facilities, but has been practically self-sustaining. From a physical
standpoint the mines to-day are conceded to be of great promise. The
company is honestly and efficiently managed. The president, from the
day of incorporation to this hour, has been E. W. King, formerly
president of the Montana Society of Mining Engineers, a director of a
number of Montana banks, and recognized as one of the ablest gold-mine
managers of the West. M. Scheeline, president of the Scheeline Banking
& Trust Company of Reno, who ranks as the oldest and most conservative
banker in the State of Nevada, has been treasurer from the outset.

The history of Rawhide is still in the making and its final chapter has
not yet been written by any manner of means. Nor is it within the pale
of possibility that such latent productive potentialities as have been
established at Rawhide can long remain in great part dormant.

In Wall Street Nat. C. Goodwin & Company's deal with the venders of the
control of Rawhide Coalition was later financed to a successful finish.
It was done by appealing to the speculative instinct of that class of
investors who habitually gamble in mining shares. The effort to finance
the mining company itself, to a point where it might take rank with the
great dividend-paying gold mines of the West, was not so successful.




CHAPTER IX

THE WALL STREET GAME


A man who thinks he knows what happened to me in Wall Street, and
_why it happened_, suggests that the New York section of "My
Adventures With Your Money" be prefaced with the following:

    This is the story of an energetic, self-confident, aggressive,
    optimistic, enthusiastic, nervy, fearless, imprudent,
    uncompromising, presumptuous _fool_.

    Maybe he was worthy of a following in that he would cast his own
    fortunes with those whom he asked to follow him, but withal he was
    a dangerous leader because he could not see the rents in his own
    armor and lacked caution, prudence and discretion. He could see a
    goal ahead and would lead the rush, but always failed to take into
    his reckoning one circumstance in his youth that left a blot on his
    escutcheon and placed in the hands of unfair opponents an envenomed
    weapon ready for use. He failed to see the necessity of making
    friends of his competitors and of placating his critics as he
    progressed. Indeed, he reckoned these elements not at all. He made
    many enemies and few allies. He never compromised. Naturally, he
    met with disastrous defeat for himself and the loyal ones who
    placed their faith in him.

I disagree. I was not a fool. I refused to be a knave, and I am not
sorry. I have in mind a man of parts who as a stockholder has been
doing the dirty work of unscrupulous multimillionaire Wall Street
mining promoters for years. Dishonest in his expressed opinions and a
sycophant in his every action, the interest of the Wall Street man of
power is always his as against that of the unprotected investor. I look
upon this man as a vile person. I could not do as he does if my very
existence depended upon such conduct. I would rather be out of business
and broke for the rest of my life than be he. For me to serve the base
purposes of high-class crooks just because they have money and power,
would be for me to barter away my soul and lose my peace of mind. I
would not sell either for all the money in the world.

Honesty is the best policy. The type of man I have described can not
thrive for long. He must evidently suffer total eclipse. The business
of this world is founded and builded upon individual integrity. The
business man who allows himself to be used to carry out the base
purposes of men in high places forfeits the respect of those whom he
serves, is forever afterwards mistrusted by them, and loses caste in
the very set he tries to gain favor with.

I charge that powerful, dishonest interests on Wall Street found it
necessary for selfish reasons that I be put out of business. I declare
that they bided their time until newspaper clamor against so-called
Get-Rich-Quick promoters had been fostered, aroused and stimulated to a
point where citizens became imbued with the idea that all promoters who
use the advertising columns of newspapers are crooks. And I aver that
when the Government used upon me and my associates its rare power of
seizure, search and confiscation, it was with no evidence that any
Government statute had been violated. In this and the concluding
chapter of "My Adventures with Your Money" I state the facts which I
believe prove these statements to the last syllable.


GOOD BIG FISH VS. BAD LITTLE FISH

Ask the casual newspaper reader to define offhand the compound
adjective Get-Rich-Quick and he will tell you it is applied solely to
professional promoters who employ flamboyant advertising methods,
promise great speculative profits, use other devices which are
calculated to separate the public from its money, and are in every
instance dishonest. That is the idea which powerful "interests" have
inculcated in the public mind by subtle, insistent press-agenting.

Time and again during the progress of "My Adventures with Your Money" I
have endeavored to show that the really dangerous Get-Rich-Quick forces
are the men in high places who, by the artful and insidious use of the
news columns of "friendly" publications and others which copy from
them, divorce the public from millions upon millions.

I said in my foreword the following:

    The more dangerous malefactors are the men in high places who take
    a good property, overcapitalize it, appraise its value at many
    times what it is worth, use artful methods to beguile the thinking
    public into believing the stock is worth par or more, and foist it
    on investors at a figure which robs them of great sums of money.
    There are more than a million victims of this practice in the
    United States.

No man has right to assume that a promoter who sells stock by means of
display advertising in the newspapers is _per se_ a Get-Rich-Quick
operator. There are honest professional promoters of the display
advertising variety and there are dishonest ones, just as there are
honest promoters of the multimillionaire kind and dishonest ones.

The _on-the-level_, trumpet-tongued mining promoter, who believes in
newspaper advertising and successfully finances companies by appealing
uproariously to the speculative investing public, performs an actual
service and is entitled to a place among honorable men. Indeed, he is
the hero of the prospector and "poor" mine owner of the West. He alone
stands between these men and grasping monopoly.

Mine men, stockholders, and financiers the country over understand
this, although the Eastern newspaper-reading public has been taught to
believe that this type of promoter must be a Get-Rich-Quick operator.


A broker in Wall Street who speculates in the securities of the New
York Stock Exchange for his own account is considered unsafe. E. H.
Gary, Chairman of the Executive Board of the Steel Trust, stated under
oath at Washington in June that J. P. Morgan never speculates. Ask the
average member of the New York Stock Exchange what chances the
stock-gambler has. If he is frank, he will shrug his shoulders and
reply something like this:

"If the game could be beaten, do you think I would be a broker?
Wouldn't I be a player?"

The aggregate market value of seats on the New York Stock Exchange is
nearly $100,000,000. It costs more than a hundred million dollars more
every year to gather and transact through offices and branch offices
the speculative business which forms the bulk of the transactions of
the members. The "kitty," or "rake-off," is enormous. Who pays it? You
hear of the stockbroker going to Europe in his yacht every Summer. How
many of his trading customers travel that way?

Who pays the freight? Can a game be beaten where so many
multimillionaires are created among those who are on the "inside" and
where so large a percentage of the speculator's money must come out
every year to pay the enormous cost of maintaining a vast system of
stock-brokerage offices, stock exchanges, telegraph and telephone
wires, newspapers, publicity bureaus, yachts, Fifth Avenue palaces,
huge contributions to national and State political campaigns, etc.?


You hear a hue and a cry against bucketshops. There is no Federal
embargo against bucketshopping. Yet somehow or other the machinery of
the Government's Department of Justice is used to crush out this sort
of gambling institution. Now, what is the difference in principle
between gambling on margin on fluctuations of stocks in a bucketshop
and doing the same through a New York Stock Exchange house?

This is the unimportant difference:

The bucketshop-keeper takes the other end of the play, pays you out of
his pocket when the market goes your way and keeps your money when it
goes against you. He never delivers any stocks.

The New York Stock Exchange member is expected to buy your stocks for
you and _carry_ them--some of them do and most of them don't, as
is shown farther on--but in this case also no stocks are delivered to
you.

The transaction is the same in principle as the one in the bucketshop,
so far as the gambling feature is concerned. The only real difference
is that when you gamble on market fluctuations through the bucketshops
no contribution is made to the New York Stock Exchange "kitty."


RIGHTEOUS WALL STREET AND THE "SUCKER" PUBLIC

The New York Stock Exchange member will tell you that the evil of
bucketshopping is that the bucketshopper is tempted when the public is
long on stocks to depress the market by heavy short sales. On the other
hand, the bucketshopper urges upon you that his business is gambling
against fluctuations which he has no hand in making and that the
financial powers of Wall Street resort to the same trick that he is
occasionally accused of. The "interests" know at every hour in the day
approximately how many shares of stocks have been borrowed for delivery
against "short" sales or are being carried on margin for the long
account. They know what the public's short interest or long interest
is, and they, too, have it in their power to shake out the public at
any moment they choose. Worse, it is common knowledge that this
practice is continually resorted to. Stocks are put up and held up on
bad news and marked down and held down on good news or no news at all.
News is withheld and is manufactured to suit occasions. For years the
market has been thimble-rigged to a frazzle. Margin-trading "suckers"
have been milked to a finish. George E. Crater, Jr., writes:

    Margin trading on the New York Stock Exchange is the most dangerous
    and destructive form of gambling known, because, being "legal"
    and therefore "respectable," it allures hundreds of thousands of
    people who would never think of risking their money at "faro,"
    "rouge-et-noir," "roulette," or any of the other games of chance.
    Statistics show that more people are ruined physically, morally
    and financially by stock gambling than by all the other forms of
    ordinary gambling combined. Monte Carlo is a Christian philanthropy
    compared with "Wall Street." You have quite as good, if not a
    better chance to win a fortune at Monte Carlo than you have by
    putting up "margins" against Stock Exchange bulling and bearing,
    and if you ruin yourself at Monte Carlo the proprietor will at
    least refund enough of your money to pay your way home. The man who
    "goes broke" on "margins" finds no relief at his service on the
    Stock Exchange or among the brokers. There would not be so many
    millionaires in this country if there were not so many fools ready
    to throw their money away on margins.

A howl of condemnation is raised against horse-racing. Newspapers,
periodicals, politicians, enthusiasts, crusaders, and charlatans in
every walk of life, are encouraged to make a big noise. Horse-racing,
like bucketshopping, is an avenue for speculation--gambling--and it
keeps much money out of Wall Street. Fakirs, who are the tools of Wall
Street, collect from Wall Street for their services and at the same
time make moral or political capital of their zealousness in crusading
against such Wall Street gambling competition.

The small fry mining promoter, who is not a member of the Stock
Exchange, pays no toll to the big game, is beyond the discipline and
control of the governing body of the New York Stock Exchange and is not
a part of the machinery, sets up a competitive business which caters to
the gambling instinct in the way of fluctuating mining stocks. The
speculating public gets action, likes it, and invests money that might
have been used in margin-trading on the New York Stock Exchange or for
"investment" in the constantly fluctuating low-priced industrials or
higher-priced mining stocks that are sponsored by big interests with
New York Stock Exchange affiliations.

Promptly the machinery of Wall Street is used to crush him. Column
upon column is printed in the magazines and newspapers about
Get-Rich-Quicks. A conviction for crime is obtained of a real
Get-Rich-Quick offender--a little fellow who is guilty, but no more
so than his "licensed" brother higher up, who is doing infinitely
greater damage. The _one_ that a coterie of high-class Wall Street
thimbleriggers are really "after," because he thwarted them in their
swindling operations by exposing them in his newspaper, but against
whom they can not make a case, has a skeleton in his closet. They
bring it forth, dangle it in the air, make the public think he, too,
must be a scoundrel, and he is raided by a Government agent during
the uproar; and they "get away" with it. The "righteous" crusade
against "Get-Rich-Quicks" is press-agented to the limit. The public
"falls" for the "dope." At last the Government has acted to protect
investors!

Wouldn't it wilt you?

Were P. T. Barnum to be reincarnated and his hum-bugging mind by some
miracle expanded a million times, it would still be impossible for him
to conceive such a gigantic faking of the American public as it has
been put to in the last few years.

And the public isn't "on." Shrewd schemers on Wall Street keep pulling
the wool over the eyes of the "sucker-public," and not only see no
reason why they should discontinue the practice but find it very
lucrative to continue doing it.


THE MARKETING OF MINING STOCK

As a rule, it takes much money to make a paying mine out of a promising
prospect. Later on in the mine's progress, through the constructive
period, other very large sums are generally required to pay for the
blocking out of an ore reserve and to supply milling facilities for the
reduction of the ores.

The peripatetic mining prospector of our Western mining empire--the
dauntless finder of mines who laughs at hardship and ridicules the
thought of danger, who makes companions of Gila monsters and the desert
rattler, whose only relief from the everlasting silence of the
untrodden reaches of arid wastes is the sex-call of the coyote--has the
choice of just two markets for the sale of his "find." He may either
accept a comparatively small sum from the agent of a powerful mining
syndicate for his prospect or he may receive a fair speculative price
from the professional promoter.

The great mine financiers of this country rarely compete with one
another for the purchase of any mining property. This is particularly
true if one of the others happens to be operating in the district where
the small mine owner's property lies.

As a rule, the original owner, whose entire fortune is perhaps tied up
in the property, then finds himself in the position where he must
either accept the first offer, however small, which is made to him by
one of these dominant interests, or find that market closed to him.

His alternative, as mentioned, is a sale to the independent mine
promoter of comparatively small means, who incorporates a company to
own and develop the property and finances the operation from start to
finish by selling stock in the enterprise to the general public.

The method of this class of professional promoter--the hope of the
small mine owner--in marketing stock, usually involves the liberal use
of the advertising columns of newspapers. He lacks "pull" or power
sufficient to get his stock and mine talked of favorably in financial
literature of the day to a degree that will excite public interest, and
so he must construct his own publicity forces.

Advertising costs money and the public foots the toll. But if the
promoter is honest, this item of cost is not in itself an argument in
favor of stock offerings of the multi-millionaire mine capitalist who
does not patronize the display advertising columns of the newspapers.
Nor does it establish a case against the wares of the promoter who
does. The promotion expenses incurred by the advertising promoter do
not nearly approach in their totality the difference between cost price
and the price at which the magnate promoter usually invites the public
to participate in similar enterprises.

For example: A few years ago a certain man bought a certain mine for
$1,000,000 on time payments. He has been making a market for the stock
of that mine on the New York Curb at an average of above $8 per share,
or more than $8,000,000 for the property. His firm, members of the New
York Stock Exchange, have been advising people in their widely
circulated market literature to buy the stock at this figure. And yet
the property is without a reduction works, will need $2,500,000 to
$3,000,000 in excess of money now in the company's treasury to erect
one, which money must yet be raised somewhere and somehow, and the
producing era of the company can not possibly begin for two years yet
at the very earliest. I could cite many such instances.


When Nat. C. Goodwin & Company of Reno purchased the control of Rawhide
Coalition, during the exciting Rawhide camp boom early in 1908, the
valuation agreed upon for the property was $700,000. This was
considerably more than the original owners could obtain for it at that
time from any big interest. It, too, needed milling facilities.

As a matter of fact, but for the success of mine promoters of the Nat.
C. Goodwin & Company and B. H. Scheftels & Company class, the great
Comstock lode, which produced over $600,000,000 in gold and silver
bullion, would have likely remained undeveloped. The big public demand
in the early 70's for Comstock mining shares of all descriptions was
created by a series of flamboyant flotations and aggressive
stock-market campaigns. If the Con. Virginia mine had not opened up
into a bonanza ore-body at a depth of 1,400 feet, the frenzy of
speculation in Comstock shares might have gone down in history as
another South Sea bubble.

The "brass-band" promoter, be it understood, is therefore not without
honor in the Far West. Deprive the mine prospector of the services of
this style of enterprise projector, with his operating machinery,
namely, facilities for appealing to the speculating-investing public,
and you hit the small Western mine man a solar-plexus blow. Conversely,
every obstacle placed in the way of the mine promoter of loud methods
and moderate means is an added cause for rejoicing on the part of the
Wall Street multi-millionaire mine capitalist.

When B. H. Scheftels & Company, with whom I was identified, were raided
by the United States Government in September, 1910, a wail went up from
the Western mine operator to his Representative in Congress. The best
sentiment of the Far West, as I was able to gather it, favored the idea
that the last hope of the small Western mine owner had been shattered.
During the short period of B. H. Scheftels & Company's activity in New
York it raised directly nearly $2,000,000 for Western mining properties
and indirectly influenced in that direction at least $10,000,000 more.

The raid was a body-blow to the small Western mine owner who needs
capital to develop his properties and has no affiliations with
capitalists. Since the raid I do not know of a mine owner of any of the
great Far Western States who has successfully financed a mining
proposition in the East except by delivering his property in its
entirety into the hands of some big interest, which has taken it over
for a sum insignificant by comparison with what the public may
ultimately be expected to pay for it when the stock is finally marketed
on the curbs and exchanges.


I BUCK THE WALL STREET GAME

After I had conducted the big camp publicity campaign of Rawhide, which
I had done with a view to centering the attention of the American
investing public on the speculative possibilities of the stock of the
Rawhide Coalition Mines Company, and in that way endeavored to finance
the proposition--after I had failed by this method, in the teeth of the
bankers' panic of 1907-8, to dispose of enough stock to finance the
company for deep mine development, mill equipment and the payment to
the original owners of the price for the control agreed upon, I came to
New York, late in October, 1908, bent on trying to succeed in the
encompassment of my original purpose both by direct appeal to the
public through display advertisements in the newspapers and by making a
deal for part of the enterprise with the "big" fellows.

I found Rawhide Coalition stock listed on the Curb, and the market
quiescent. Public interest in the East had been aroused to some degree,
but the market was not absorbing stock. An effort to induce leading
stock brokers to mention the issue favorably in their market letters
failed. Those who were willing to give the stock some publicity exacted
either a "call" on stock at a low price or an out-and-out reduction
below the market quotation for such stock as they disposed of.

Such concessions were not to be thought of. It was the intention of
Nat. C. Goodwin & Company to support a rising market for Rawhide
Coalition. My Goldfield experience with mining-stock brokers convinced
me that few might be expected to protect the shareholders' interest in
such an enterprise. Commission mining-stock brokers of that period, who
put their customers into a stock at, say, 30, were tempted to advise
profit-taking when the price advanced to, say, 50, because by the
operation they made another commission and often earned an additional,
or third, commission by getting their customers out of the stock at a
profit and into another one, levying a commission on each transaction.

Nat. C. Goodwin & Company decided to "try it on" direct with
mining-stock speculators by appealing to them through the advertising
columns of the newspapers, asking them to purchase the stock on the New
York Curb through their own brokers. Also, Hayden, Stone & Company, the
Boston and New York banking firm, were induced to agree to raise
$1,000,000 for the company for railroad and mill purposes, if their
engineer would report favorably.

Provided with money with which to buy advertising space and furnished
with stock certificates to supply the market, Nat. C. Goodwin & Company
inaugurated an active campaign on the New York Curb.

What happened will be found instructive to the reader in several
particulars; among them these:

(1) The free-lance mining promoter does not always "get the money" when
he succeeds in creating a buoyant market for his stock.

(2) Some stock brokers of seemingly high standing would just as soon
"skin" a mining promoter of this order as they would an ordinary
speculator. They play no favorites.

(3) Be a mine promoter ever so honest, without New York Stock Exchange
affiliations his motives are bound to be misconstrued if he makes an
error. The "big" fellows will sick on to him the newspapers or
newspaper men whom they control or influence. Dust will be thrown into
the eyes of the public so they'll buy the big fellow's wares,
principally for sale on the New York Stock Exchange, and may forever be
prejudiced against the little fellow's.


The campaign in Rawhide Coalition made good progress. It was early in
November, 1908. For six weeks I had been supporting the market for the
stock on the New York Curb for Nat. C. Goodwin & Company of Reno. My
office was an apartment in a Fifth Avenue hotel; our brokers were
members of the New York Stock Exchange. For a month we had used, every
day, display advertisements in the financial columns of New York City
daily newspapers, signed by Nat. C. Goodwin, to boom the stock. About
600,000 shares of the stock were in the hands of the public. The
market, which was on the New York Curb, was "real." Speculative buying
had carried the price from 40 cents up to $1 a share. Mine reports were
rosy. Wide distribution of the stock was taking place.

The public evinced deep interest. The Nat. C. Goodwin advertisements
set forth that $2 ought to look reasonable for the stock by Christmas
day. There were reasons. Several very promising mines had been opened
up. An engineer of high rank was examining the property. If his report
should be favorable, a deal was practically assured that would involve
the expenditure of $1,000,000 for deep mine development, a railroad,
and adequate milling facilities. This, in turn, would mean early
dividends for stockholders. Experienced, conservative mining men had
expressed the opinion that the property bore the unmistakable earmarks
of a big producer.

The stock became the feature of the Curb market. It easily occupied the
center of the stage. Not less than 20 brokers could be counted in the
crowd executing orders at almost any hour during the daily session. The
fact that a New York Stock Exchange house was executing the supporting
orders from the "inside" impressed the "talent." Public buying through
other New York Stock Exchange houses further convinced Curb veterans
that the stock was "the goods." Up went the price under the impulse of
public buying. Curb brokers themselves caught the infection. By
December 7th the price soared to $1.40 per share. This was an advance
of 500 per cent. over the "low" for the stock of half a year prior.


THE "DOUBLE-CROSSING" OF RAWHIDE COALITION

At the close of the day's business on December 7th, our brokers, a
single firm, members of the New York Stock Exchange, reported the
purchase of 17,100 shares in the open market at an average price of
about $1.39, and the sale of 1,800 shares at a little above this
average. For the first time in the campaign there appeared to be
selling pressure. We had quit "long" 15,300 shares. The sum of $21,000
in cash was required to pay for the "long" stock.

On December 8th, the day following, the same firm of brokers reported
that they had purchased 17,800 shares at an average price of $1.37-1/2,
and the sale of 12,800 shares at an average price of $1.40--"long" on
the day 5,000 shares.

On December 9th our purchases through this firm aggregated 16,800
shares at an average price of $1.40, while our sales totalled only
6,400 shares at a slight advance.

Nat. C. Goodwin & Company were now "long" on the three days'
transactions 30,700 shares and had been called upon to throw $43,000
behind the market to hold it. This was a comparatively small load to
carry and did not alarm us. We considered the stock worth the money. We
were curious, however, to learn the reason for the selling.

Nat. C. Goodwin & Company had placed most of the outstanding stock
direct from Reno with the investing public at from 25 cents to $1 per
share, and early buyers were reaping a harvest. But this did not appear
to be the explanation for all of the selling. Interest in the stock was
now widespread. There was free public buying and for every actual
profit-taker there appeared to be a new purchaser. Apparently, somebody
was selling the stock "short."

Late that night a member of our brokerage firm which had been executing
our supporting orders, called on me at my apartment. I inquired of him
what protective orders he thought the stock would need the next morning
to guard against professional attack. He replied:

"I think if you will give us a buying order for 5,000 shares at $1.35
there will be no difficulty."

My understanding was that he wanted to handle the market for me the
next morning and that he would, of course, give me quick notice if
further supporting orders were needed.

The order was given. It was a very ordinary precaution, for there is
hardly a stock on the list that would not be raided by professionals if
supporting orders were not known to be in the market. As Saturday is
only a short two hours' session, I really fell in with the idea.

Retiring late that night, I left a call for 11 A.M. Next morning at
about 10:45 I was awakened by my valet. He said Nat. C. Goodwin wanted
me on the long distance. Mr. Goodwin was in Cincinnati, where he was
playing a week's engagement.

"Hello," said Mr. Goodwin. "Did they get you? Shall I wire the
Knickerbocker Trust Company to pay you $25,000 to support the market?
Reported here they have you in a hole."

"What's up?" I inquired.

"Why, brokers here say the stock broke to 60 cents on the Curb soon
after the opening," he said. This was news to me.

"I do not need more money," I answered. "I have been asleep. Our
brokers have been on the job. I will see what is doing and let you know
in a little while. Don't worry." And I rang off.

I 'phoned our brokers and they reported that they had bought 5,000
shares of stock at $1.35 at the opening and had withdrawn support. "Too
much stock was pressing for sale," they said.

"This is hell. You should not have permitted the market to break that
way. Support the stock!" I said. "Buy 7,500 shares at the market!"

In a few moments this firm of brokers reported that they had rallied
the market to $1.16. The recovery was only temporary, however. Another
drive broke the stock to 60 cents.


Our brokers had bought 7,000 shares at from $1 to $1.16 and then
stopped. The member of their firm who had been handling our orders
throughout this campaign said the purchase of this fresh block of stock
exhausted our cash balance on deposit with his firm. They had a number
of drafts out for collection, attached to stocks sold to Western
brokers, that had not yet been credited to us. There was also a big
block of Coalition stock due us from them. This was the stock they had
bought on our supporting orders. They refused, however, to consider
either the drafts or the stocks as a credit.

We had cash on deposit and credit with a number of other brokers. I
promptly telephoned several of them to buy large blocks of the stock at
a limit of 95 cents. This was 35 points above the quotation that was
given me. Not a single share was reported bought on these orders.

I jumped into a taxi and rode to the office of the brokers who had been
handling our orders.

The situation was critical. I realized fully that a sharp break of this
character in the market price of a stock that had been so widely
exploited must prove shocking to investors. I feared that public
confidence would be shattered completely.

"This is an outrage!" I protested. "Buy 5,000 shares at 95!" I tendered
five $1,000-bills as payment in advance.

It was five minutes to twelve when I gave the order. At noon they
reported that they had purchased 2,000 shares, for which I gave them
the money. The market closed 95 bid for a "wagon load."

On the face of things it appeared that the market had rallied from 60
to 95 on the purchase of 2,000 shares. This was another convincer that
there must somewhere be much that was rotten about the play.

Investigation satisfied me that I had been "double crossed."

The one firm of brokers, members of the New York Stock Exchange, who
had been handling our orders, had acted as our clearing-house, holding
our stocks and our money. They had an advantage, which stock brokers
understand well. Having executed most of our supporting orders, their
agents on the Curb were also in a position accurately to judge the
professional and lay speculation pulse. It was easy for somebody to
"put one over" on us.

Shortly after noon I learned that Hayden, Stone & Company's engineer
had turned down the proposition of advancing $1,000,000 for railroad
and mill construction. A sufficient tonnage of ore had not been blocked
out in the mine. Beyond a question this information was in the
possession of brokers early in the day.

While I slept damage had been done to the market that was irreparable.
By the time the price hit $1 on the way down trading had reached huge
proportions. One clique of Curb brokers were reported to have been
persistent sellers throughout. Their identity made it very plain that
the double-crossing process had been employed to a fare-you-well.

I accused our broker of not protecting our interests--the interests of
stockholders. I raised a howl. He telegraphed another member of his
firm who was away on a hunting-trip, to come back to town. Next night
both of these men, Nat. C. Goodwin and myself met in my apartments
behind closed doors. Their firm agreed to charge to their own account
3,000 of the 5,000 shares reported purchased for us at $1.35. Some
other minor concessions were made.

On the day after the "break" New York newspapers reeked with
sensational flubdub about the causes of the smash in the price of the
stock. In the preceding few months not less than a dozen other
securities had "busted" wide open at various times on the New York Curb
and New York Stock Exchange, but Stock Exchange houses were sponsors
for these and the newspaper kept mum. Never on these occasions was
there a hint in the newspapers that possibly somebody had separated the
public from its money.

Nat. C. Goodwin and I were wrongfully accused of willfully smashing
the market to shake the public out. The New York _Sun_ printed an
account of the "break" on the front page, top of last column. It began
in a strain that indicated to confiding readers that chorus girls had
lost their savings through the recommendations of Mr. Goodwin.

The _Sun_ printed the list of officers of the Rawhide Coalition Mines
Company and emphasized the fact that I "of Sullivan Trust Company
fame" was second vice-president.

The _Sun_ made no mention of the "double cross." Nor did any of the
other newspapers, with the exception of one.

The New York _Tribune_ said:

    A Stock Exchange house which has been putting out orders in the
    stock was charged with leading the attack on it yesterday, but
    members of the firm said that they had been acting merely as
    brokers for customers in the regular order of business.

Following the newspaper "roasts," which helped further to destroy
public confidence, two brokers on Logan & Bryan's continental wire
system resorted to tactics of a kind to force lower prices. This wire
has over one hundred out-of-town broker connections. A report was sent
over the wire that Nat. C. Goodwin & Company had failed. Another
followed it that the Rawhide Coalition Mines Company was about to go
into the hands of a receiver. The _Nevada Mining News_ accused Nat.
Boas of San Francisco and J. C. Weir of New York of exchanging
messages to this effect over the Logan & Bryan wire systems, so that
all correspondents on the wire would have the false reports. Both Boas
and Weir were believed to be "short" of the stock. Both were openly
operating for a further decline. These and similar tactics resulted in
a further easing off in price to 40 cents bid on December 24th, which
was the "low" on the movement.

Two weeks after Christmas the stock rallied to 58 bid, 59 asked, and
the market was firm again. On January 14 the price bulged to 70. At
this point the stock again became the center of attack. By January 20
the price had eased back to 50.

Thus far the net result of Nat. C. Goodwin & Company's various
campaigns on Rawhide Coalition was the distribution of some 600,000
shares of stock. The issue had been well exploited. It had a big
following and a broad market. Some excellent judges of mine values had
become stockholders. The company, however, was still unfinanced for a
long period of systematic mine development and mill construction.

We realized very clearly that some arrangement would have to be
perfected to avoid a repetition of the trouble which the New York Stock
Exchange brokerage firm had made us.


"INSIDE" MARKET SUPPORT

The removal to New York of B. H. Scheftels & Company, Chicago stock
brokers, representatives there of Nat C. Goodwin & Company of Reno, and
a merging of brokerage and promotion interests of the two firms took
place.

There was precedent for the move. There are a thousand other
corporation interests in this country that are closely affiliated with
Stock Exchange and other brokerage houses, through one or more of their
directors or owners being partners in the business. As a matter of
fact, it would be difficult to lay your finger on a single big interest
of this kind that has not such a representation. These houses, of
course, make it a rule to recommend the purchase of stocks in which
their principals are interested. Affiliations of this kind are found
essential to successful financing of enterprises. A number of New York
Stock Exchange houses which are headed or controlled by men who are
heavily interested in mining ventures that require financing are
exponents of this method in the mining field.

Most of these have succeeded in promoting projects in which they or
their associates are heavily interested, with the aid of the banking
and brokerage facilities thus afforded. Principally by the use of the
market literature and accompanying market manipulation, these houses
have placed with their customers the securities of their firm members
and associates. They have encompassed this by maintaining a brokerage,
banking and promotion business without parading before the public,
although never denying, the mixed nature of their business.

For the reader to comprehend the necessity for transacting the business
this way, he should understand the underlying principle of financing an
enterprise by the route of the listed stock market.

There are two ways of financing any enterprise with other people's
money. One is by the primitive method of appealing directly to the
public for subscriptions in huckster fashion, taking the money and then
refraining from listing the stock or establishing an open market for
it. You can't finance an enterprise of consequence these days by any
such procedure. It is practically impossible to borrow from banks or
from loan-brokers on any security that has no fixed market value. A
market must be established, for without a market on which to sell,
intelligent investors won't buy.

The method, therefore, in common use, and the only one which has been
found effective by financiers, is to create a demand for the security,
encourage speculation, establish an active market, and dispose of stock
on the market as necessity demands whenever financing is required. This
implies and necessitates that the inside interests must support the
security in the open market. Therefore, it becomes necessary for the
successful marketing of the stock by the promoters, once a demand is
created and public buying is under way, that stockholders shall be kept
in full touch with the latest transpirations on the property and in the
market--be furnished with news concerning their interests so that they
may judge the value of their stockholdings. This process is
particularly essential during the financing period of the company and
the security-digesting period of the public.

In fine, the ultimate purpose in this regard of all the promotion
machinery of Wall Street--the machinery that has been putting out
billions of dollars' worth of securities to investors--is to place
stock where it will "stay put," that is, not come out on the open
market again to embarrass the interests that are behind the enterprise,
and who for a long period are compelled to support the market.

On the question of the ethics of market support by "the inside," a
whole tome could be written. I will not attempt to discuss the subject
at length here. Suffice it to say that in my opinion "inside" support
of a listed security is not base when it is done with a view to
creating a broad market, to stimulate public interest, and to increase
the price to a point within the bounds of intrinsic plus reasonable
speculative worth. Support of the market to the point of stimulation is
moral obliquity, however, when dishonestly performed for the sole
benefit of the "inside" and to the hurt of the stockholder. This sort
of market support is only a shade less reprehensible than manipulation
that has for its purpose the reduction of the market price of a
security to beneath its real value, which, in my opinion, is nearly
always infamous.

I might place myself on record right here to the effect that only once
did I ever "bear" a stock from "the inside," and on that occasion it
was a temporary affair, caused by a desire to secure at a reduced price
a big block of stock that was pressing for sale from a quarter that I
was under no obligation to. Even in that instance I gave the investor
much of the benefit my associates secured by letting him have stock at
the same figure at which "the inside" secured it. Nor have I ever tried
to push the price of a stock to a higher level than that which I
considered warranted by the reasonable speculative and demonstrated
intrinsic value behind the security.




CHAPTER X

ENTER, B. H. SCHEFTELS & COMPANY


B. H. Scheftels & Company, Incorporated, mining-stock brokers,
successors to B. H. Scheftels & Company, for many years stock brokers
in Chicago, opened its doors on Broad Street, New York, on January 18,
1909. For a long period B. H. Scheftels & Company of Chicago had been
advertised as the Eastern representatives of the corporation of Nat. C.
Goodwin & Company of Reno, of which Mr. Goodwin had been president. It
was now announced that Nat. C. Goodwin had become vice-president of the
new corporation of B. H. Scheftels & Company. Because Mr. Goodwin was
by profession an actor and not a stock broker and because of the
personal abuse he suffered in unfair newspaper criticism which followed
the "break" in the market price of Rawhide Coalition a month before, he
was quite willing to serve as vice-president instead of president.
Besides, he could not spare the time from his profession to attend
closely to the business.

The new corporation of B. H. Scheftels & Company made its bow to the
public by at once featuring in its market literature advice to purchase
stock of the Rawhide Coalition Mines Company. I became publicity
manager for the Scheftels corporation, manager of its promotion
enterprises, and was placed in charge of the protection of the
corporation's interests in all markets where its stocks were traded in.

Soon I was conducting a fresh campaign with investors that became so
hot, so exciting and so big that for nineteen months I labored on an
average sixteen hours a day, including Sundays, without being able to
complete in a single day a day's accumulated business. The business
grew until B. H. Scheftels & Company were actually spending more than
$1,000,000 annually for office and publicity expenses. In the nineteen
months of its existence it bought, sold and delivered approximately
15,000,000 shares of mining stock. The Scheftels corporation broke
every record in this regard that was ever made by a mining-stock
brokerage and promotion house in the history of Wall Street. Throughout
its career it was viciously attacked from many directions, but it held
its own. Through its hold on the mining-stock speculating public, who
were getting fairer treatment than ever before, it survived the
concerted onslaughts of a number of important interests which it had
competed with and antagonized, until one day in September, 1910, on a
warrant sworn to singly by one George Scarborough, since permitted to
resign, clothed with the office and power of a special agent of the
Department of Justice, its offices were raided, its books and papers
seized, its property confiscated, and its officers and employees
arrested.


The annual expense of B. H. Scheftels & Company was $1,000,000 or more.

Follows a tabulated statement of the expense item. The figures are
approximated. The books of the corporation, which are now in the
possession of the Department of Justice of the United States
Government, will probably show that the annual expense was larger. The
books not being readily available, an attempt is made here to be
ultra-conservative in setting down figures:

    ANNUAL EXPENSE OF B. H. SCHEFTELS & COMPANY

    Establishment of main office and six branch offices
      (furniture, fixtures, etc.)                        $ 40,000

    Office rentals                                         35,000

    Private wire system connecting branch offices in
      six cities with New York                             25,000

    Telephones                                              5,000

    Telegraph tolls                                       100,000

    Salaries (all offices)                                200,000

    Daily and Weekly Market Letter (printing and
      postage)                                            100,000

    General office expense, etc.                          100,000

    Miscellaneous postage                                  25,000

    Miscellaneous printing and stationery                  25,000

    Advertising, publicity, etc.                          200,000

    Expert accountants                                     15,000

    Commissions and salaries to Curb brokers               50,000

    Mining examinations, engineers' fees, legal fees,
      etc.                                                 50,000

    Interest charges                                       30,000
                                                      -----------
    Total                                              $1,000,000

Before the Scheftels corporation was in business a month it became
plain that it was "filling a long-felt want." In almost every branch it
was performing some function in a manner more satisfactory to
mining-stock speculators and investors than were its competitors.

Its Market Letter news service, usually 16 pages, was the prime
article. It soon gained a circulation of 34,000 among the highest class
and best informed stockholders of mining companies in the country. It
was also regularly sent to more than 2,500 stock brokers, including
members of the New York Stock Exchange, New York Cotton Exchange,
Boston Stock Exchange, New York Produce Exchange, etc.

Before the Scheftels corporation was five months old the work of its
Market Letter was supplemented by the _Mining Financial News_, a
weekly newspaper which had been published for a long period at Reno as
the _Nevada Mining News_, latterly as the _Mining Financial News_, and
which removed to New York when the Scheftels company found the
mining-stock public was hungry for real live news and the truth
regarding the mining propositions of other States as well as those of
Nevada. The _Mining Financial News_ and the Scheftels Market Letter,
which were published three days apart, were supplied with news from
practically the same sources. The newspaper was mailed to all readers
of the Market Letter.

The ablest and most reliable mining correspondents obtainable for money
in Tonopah, Goldfield, Ely, Rawhide, Cobalt, Butte, Globe and other
mining camps, and the most experienced market news-gatherers in the
mining-stock-market centers of Salt Lake, San Francisco, Boston,
Philadelphia, Toronto and New York, were placed on the pay-roll.
Brokers in these and other cities, including Duluth, Seattle and Butte,
supplied more news.

Wherever there was mining or market activity, representation of the
very highest character was sought. News was always wired, no matter
what the cost, whenever it was important to traders in mining shares.
Expense was never spared when the information was considered of value
to the speculator or investor. In the New York offices of the Scheftels
corporation and the _Mining Financial News_, which adjoined each other,
a staff of newspaper men with a mining financial experience of years
was gathered. Little that transpired in the mines or the markets ever
got away from them. Days before the mining newspapers of the West
reached the East the Scheftels Market Letter or the _Mining Financial
News_ communicated the news regarding mine developments. They also
contained a daily and weekly stock-market diagnosis and prognosis.
These were based on the news, as gathered by trained forces and aided
from time to time by secret information which filtered into the
offices. This service soon obtained an accuracy theretofore unknown on
the Street.

There is probably not one stock broker in five hundred that would know
a mine underground if he saw one. On the pay-rolls of B. H. Scheftels &
Company and the _Mining Financial News_ there were thirty men who had
been literally brought up in the mines and who, when they put their pen
to paper, knew what they were writing about. The Scheftels company and
the newspaper furnished mine and market information of quality to
investors who had before been inundated with misinformation, guesses
and twaddle. It sought to guide mining-stock speculators right.

It was really a delicate job to handle the _Mining Financial News_ in
a manner which would not lead stupid people to believe that it was an
entirely independent paper. It was desirable that its independence be
maintained to a degree, so that the full value of the _Mining Financial
News_, as a property, might grow. The intention was some day, when the
_Mining Financial News_ found itself on a paying basis, to sever the
Scheftels alliance.

The _Mining Financial News_ had always been an entity. It had up to
then been assisted financially at periods by mining promotion concerns
with which I had been identified and was always a quasi house-organ for
this reason. But it invariably preserved a certain independence in its
news columns and at least such partial independence of ownership as
enabled it to stand on its own bottom.


MORE TRUTH ON THE "MINING FINANCIAL NEWS"

WHEN the _Mining Financial News_ removed to New York Mr. Scheftels
used much persuasion to get the owners to transfer title to the
Scheftels company. Admittedly, if the Scheftels company could boast
ownership of the newspaper at the head of its editorial page, it would
be a great feather in the Scheftels cap and might lead investors to
think that an organization which could own and publish a first-class,
metropolitan newspaper of the _Mining Financial News_ variety must
for that reason alone be worthy of financial credit.

Thompson, Towle & Company, members of the New York Stock Exchange,
print a small sized pattern of such a newspaper, called the _News
Letter_. Hayden, Stone & Company, and Paine, Webber & Company, of
Boston and New York, are said to have much influence with the _Boston
News Bureau_, a newspaper which features news of mines and mining share
markets. The _Boston News Bureau_ at times has printed no display
advertisements and at other times has. It is considered by Boston
mining-stock brokers who handle the Michigan and Arizona copper
securities as a necessary complement to their market literature.
_Walker's Copper Letter_ and the _Boston Commercial_ are other
examples. _Walker's Copper Letter_, which carries no advertising, for
years has said the very nicest things about copper securities promoted
and fathered by important Boston and New York interests. Needless to
state, what _Walker's Copper Letter_, the _Boston Commercial_ and the
_Boston News Bureau_ say about the mining propositions of their friends
is as a rule based on fact. The point is that promoters find it
necessary that news happenings regarding the markets, the securities
and the mines in which they are interested be given broad publicity.

It was the idea of the owners of the _Mining Financial News_, of which
B. H. Scheftels, president and 25 per cent. owner of the capital stock
of B. H. Scheftels & Company, was not one, that anybody who would
supply the sinews while the paper was getting on its feet and was
establishing itself, was entitled to all the publicity which the paper
could consistently and honestly give it. With this understanding the
Scheftels company assumed to take all of the income of the _Mining
Financial News_ and pay all of the running expenses until such period
as the newspaper might become self-sustaining.

In doing so it performed a stupendous service to the entire mining
industry in that the space devoted to the Scheftels enterprises therein
did not average more than one-eighth of the whole, and it spent dollars
to supply the news of all stocks where other mining financial
publications in its field spent pennies.

To make sure that the public understood the _Mining Financial News_ was
the quasi house-organ of the Scheftels company many precautions were
taken. No application was made for admission to the mails as
second-class matter, and the paper was mailed under one and two-cent
postage. The name of Harry Hedrick was lifted to the top of the page as
vice-president of the corporation owning the _Mining Financial News_,
Mr. Hedrick being openly employed by the Scheftels company as head of
its correspondence department. My own name was later placed at the head
of the editorial page as editor, the Scheftels company making no bones
about my position as absolute head of its publicity department, its
promotion enterprises, and of all markets for the Scheftels promotion
stocks. The connection had before been established even closer than
this. I had formerly been advertised as vice-president of Nat. C.
Goodwin & Company of Reno and vice-president of the Rawhide Coalition
Mines Company; and the Scheftels company had advertised that Nat. C.
Goodwin was its own vice-president.

Further, the Scheftels company announced in its market literature that
it had selfish interests in protecting the market for the stock because
of the Nat. C. Goodwin affiliation. Occasionally market articles under
the signature of B. H. Scheftels were published on the front page of
the _Mining Financial News_. Whenever anybody made a request for the
Scheftels Market Letter a copy of the _Mining Financial_ News was quite
regularly mailed to him without cost. Articles under the signature of
other officers and employees, formerly of Nat. C. Goodwin & Company of
Reno and later of B. H. Scheftels & Company of New York, were very
frequently printed in the _Mining Financial News_.

Probably the most important reason why the Scheftels company made this
sort of arrangement with the _Mining Financial News_ was that it could
do so with only a very small additional outlay. The Scheftels company
found it necessary to employ correspondents in all mining and market
centers, and the same correspondents could work for both enterprises.
Another economic argument was that an enormous saving could be made in
telegraph tolls, all dispatches addressed to the newspaper being sent
at press rates. These dispatches were always available to the Scheftels
corporation and its clientele.


It was the idea of the Scheftels organization that the mining-stock
investing public sorely needed right direction and that any brokerage
house which led it right would soon be unable to transact all the
business that would be offered to it.

And that is just what happened. Before the Scheftels company was six
months old the fifteen men in its accounting department were compelled
to work day and night--time and again throughout the night until 6
A.M.--to catch up with their work.

If the Scheftels news service was as nearly perfect as money and brains
could make it, its facilities for the execution of orders on the New
York Curb, the Boston Curb, San Francisco Stock Exchange, Salt Lake
Stock Exchange, Toronto Stock Exchange, and other mining markets were
unsurpassed. Its New York and Boston offices were connected with branch
offices in Philadelphia, Chicago, Detroit, Milwaukee and Providence by
exclusive private wires, and the service to out-of-town offices was
almost instantaneous.

The New York offices were located right in front of the Curb market on
Broad Street on the ground floor of the big _Wall Street Journal_
building, 50 feet by 200 feet deep--occupying about 10,000 square feet
of floor space. The Boston office, occupying two floors, was located
within 100 feet of the Curb market in that city. The public wires of
the telegraph companies gave quick service between San Francisco, Salt
Lake and Toronto, where business was transacted through members of the
mining-stock exchanges of those cities. The private wires of the
Scheftels company were constantly flooded with rapid quotations and
market, mine and company news during every trading hour. In New York
the Curb brokers in the Scheftels employ, some on salary and some on
commission, rarely numbered less than ten and at one period exceeded
twenty.

The correspondence department was presided over for a long period by
two of the best posted mining-market men that could be employed for
money. From this department were usually graduated the managers of
out-of-town offices. In the cashier's cage six men were engaged at an
average salary of above $100 a week, registering stocks, receiving
stocks, paying money and drawing checks. The payroll of the mailing
department, which was operated in conjunction with the _Mining
Financial News_, was comparatively small. Money-saving machinery for
the handling of the large output of market letters and newspapers gave
excellent and economic service. About ten stenographers were regularly
employed in the correspondence department. Occasionally, when a special
effort was being made to interest the public in some security in which
the corporation was particularly concerned, a force of forty additional
typists was pressed into service for short periods.


THE SCHEFTELS PRINCIPLES

When the corporation of B. H. Scheftels & Company opened its doors in
New York it had no affiliations with any other Wall Street interests.
It had no axes to grind except its own. It was practically a
free-lance. It cracked up its own wares, careful always to keep within
the facts, and never minced words about the quality of the goods of its
contemporaries. The principle of both the Scheftels corporation and the
_Mining Financial News_ was to be always _right_ in their market
forecasts. The general order to mine and market news-gatherers and
market prognosticators was to GIVE THE FACTS.

The law laid down was this: If the news is bad and is likely to injure
the interests of our best friends, tell it in the interests of the
investor. If it is good and the backers of the stock affected happen to
be our worst enemies, tell it. No matter on what side of the market you
think B. H. Scheftels & Company is committed in any of its own
speculations, give the customer all the news. Put the cause of the
mining-stock trader in front of you as the one to further always. Never
exaggerate. Eventually, this policy must redound to our credit and
profit.

_Eventually, this policy resulted in our ruin. Our truth-telling
policy was directly responsible for the loss of millions to competing
promoters, and they banded together to destroy us._

The publicity, promotion and brokerage activities of the corporation
were of such magnitude, and withal so simple, that they at once
challenged the attention of the Street. Before the Scheftels
corporation was half a year old veterans of the financial game began to
opine that some big interest was behind the concern. Its dashing market
methods, its mighty publicity measures and its unbridled assurance
attracted much notice. From every quarter expert views reached the
Scheftels company that its manner of doing things was convincing on the
point that it knew the business. But the general opinion of the talent
seemed to be that the new corporation was spending too much money and
that it could not win out unless a big boom in mining shares ensued.

The market tactics adopted by the Scheftels company in its promotion
enterprises were as old as the hills. On the New York Stock Exchange
they had been employed in a thousand instances before. The method will
probably survive all time. The corporation sought to distribute the
stocks of which it became sponsor in turn--first Rawhide Coalition,
then Ely Central, later Bovard Consolidated and finally Jumbo
Extension--by the approved Wall Street system of establishing public
interest and inquiry and causing an active market. The aim was to
establish higher prices for the securities, always within the bounds of
intrinsic and reasonable speculative value. All efforts were directed
this way.

Plans like this are, however, sometimes thwarted. Markets get sick.
More stock presses for sale than the "inside" has money to pay for.
Stocks break in price. Then the promoter can't make any money and might
lose a lot of it. Since money-making is his primary object, and stock
distribution secondary, he has got to do some close figuring when
markets are subject to the price-breaking habit. That's where B. H.
Scheftels & Company, through its brokerage business, found, after a
short period, that it held within its grasp the power to insure itself
against declining markets.

Without promotion stocks on hand--obtained by wholesale at lower
figures than values warranted--in which it could profit to the extent
of hundreds of thousands of dollars on a rising market, the
million-dollar annual expense of the Scheftels company would not have
been justified. Once the market sought lower levels and no profit could
be made on the promotions, it meant a discontinuance of the business on
the large scale.

The corporation's insurance was the open market in stocks on the
general list and its brokerage business.

From time to time it openly shorted tens of thousands of shares of
stocks in which it had no promoter's interest whatever, by going out in
the open market and selling them to all bidders against future
delivery, by borrowing them from brokers and selling them for immediate
delivery, and by short sales generally.

Speculators play the market and so did the Scheftels company, but never
against its own stocks. Speculators, however, buy mining shares
outright or on margin because they want to gamble. The Scheftels
company played the market for just the opposite reason. It didn't want
to carry its eggs in one basket and wanted insurance against market
declines to cover promotion losses that must ensue if a general market
slump occurred.

And the Scheftels company did not inaugurate any fake bookkeeping
system or otherwise hide behind any bushes in doing this.


Moreover, the corporation didn't take advantage of anybody. The cards
were not marked. The deck was not stacked. There was no dealing from
the bottom. Market opinion for which the corporation was directly or
indirectly responsible was genuine to the last utterance. No news was
suppressed on any stock. The corporation divulged to its customers and
to the general public every piece of important outside or inside
information regarding any stock on the general list that was in its
possession. At the very moment when it was going short of stocks in
greatest volume its market prognostications were winning for it a
reputation for accuracy never before recorded.

If the stocks which the corporation went short of--stocks on the
general list and amounting to probably 15 per cent., of the volume of
its entire business, the remainder of the transactions being all in
"house" stocks (these "house" stocks it could not be short of because
of its promoter's options on hundreds of thousands of shares)--if the
stocks on the general list thus "shorted" went up in price and the
corporation was compelled to go into the market later and "cover" at a
great loss, it was always in the corporation's heart to sing a pæan of
thanksgiving, for it could well afford to pay the losses sustained by
it in the general list out of the greater profits which would be made
in the "house" stocks, which must, forsooth, share in the general
upswing.

Collateral securities put up by customers as margin for the purchase of
other stocks were credited to the customers' accounts and mixed with
the company's own securities. In every case proper endorsement of
certificates, put up for collateral margin, was required. Every
certificate of stock bears on the reverse side a power of attorney, in
blank. The signature thereto of the person to whom the certificate was
issued makes it negotiable by the broker. It was the rule of the house
always to inform those who brought collateral to the offices for margin
that the stocks would be used and that they would not receive the
identical certificates back again. In a number of cases objection was
made. Acceptance of the stock as collateral margin was then promptly
refused. If there were any scattering exceptions to this rule, it was
contrary to instructions and due to neglect or ignorance. Whenever a
customer closed his account and demanded the return of his collateral,
stocks of the same description and denomination were recalled and
delivery made.

The same rule applied to stocks pledged with the corporation for loans,
it being specifically set forth in the promissory note which the
borrower signed that the privilege of using the stock was granted to
the lender.

This practice is so common and the rule so generally understood by
mining-stock traders that objection was rarely made by customers.

To test the general custom, a friend at my suggestion not long ago sent
certificates of stock to 17 stockbrokers now doing business on Wall
Street. Three of these were members of the New York Stock Exchange and
14 were members of the New York Curb, Boston Curb, or of a mining
exchange. A letter substantially as follows was sent to each of the 17:

    Enclosed please find ...... shares of ...... stock to be used as
    collateral margin for the purchase of an additional block of
    ...... shares. Please buy at the market and report promptly.

The 17 orders were executed by the 17 individual houses. A month later
when the stock ordered purchased had advanced in the market, the
following letter was sent to each of the 17:

    Please sell the ...... shares of ...... stock which you purchased
    for me a month ago at the market and return to me the certificate
    of stock which I sent you as collateral with check for my profits.

It took nearly two months for all of the 17 to make delivery. When they
did, not one of them returned the same certificate that had been put up
as collateral.

Don't be shocked, dear reader, at this disclosure. It is the _custom_.

And don't, please, think mining-stock brokers are alone given to the
general practice. If you order the purchase of a block of stock on cash
margin from any New York Stock Exchange house or send a certificate of
stock as collateral in lieu of cash to one of them for the purchase of
more stock, you will receive a confirmation slip of the trade which
will generally read something like this:

    We reserve the right to mix this stock in our general loans, etc.

That is, the right is reserved, and actually exercised, of immediately
transferring ownership of the certificates to the broker.

Unless a certificate stands in a customer's name and is unendorsed by
him, he has no control over it. According to law, a broker has a right
to hypothecate or loan securities or commodities pledged with him, for
the purpose of raising the moneys necessary to make up the purchase
price, and such stocks have no earmarks. In other words, the customer
is not entitled to specific shares of stock, so that stocks bought with
one customer's money may be delivered to another customer.

As for the Scheftels company laying itself open to the charge of
bucketshopping in "shorting" stocks, such a possibility was never
dreamed of. The penal law of the State of New York, sections 390 to
394, inclusive, is the only criminal statute covering market operations
commonly known as bucketing and bucketshops. In each section and
subdivision it is provided that where both parties intend that there
shall be no actual purchase or sale, but that settlement shall be made
on quotations, a crime has been committed, the language of the statute
being, "wherein _both parties_ thereto intend, etc.," or "where _both
parties_ do not intend, etc." The Scheftels company was never a party
to any such arrangement. And it always made it a practice to make
delivery of stocks ordered purchased within a reasonable period after
the customer had paid the amount due in full.

Now, neither myself nor the Scheftels corporation is responsible for
brokerage conditions as they exist, nor for the laws as written. Custom
and practice are responsible. The purpose here is to communicate the
exact nature of the business methods of the Street as I found them and
to lay particular stress on those that are open to criticism.


THE SCHEFTELS COMPANY AGAINST MARGIN TRADING

The Scheftels company did not encourage margin trading by its
customers. In fact, it railed against the practice. Time and again the
_Mining Financial News_, editorially, denounced the business of margin
trading. The Weekly Market Letter of the corporation sounded the same
note. On several occasions, in large display advertisements published
in the newspapers, the Scheftels company decried the practice and urged
the public to discontinue trading of this character.

There were selfish reasons for this. In the marketing of its promotions
the Scheftels company found that not more than 20 per cent. of the
public's orders for these stocks given to other brokers were being
executed, or, if executed, that the stocks were at once sold back on
the market, the brokers or their allies "standing" on the trade.

Had the Scheftels company been able to destroy the practice by its
campaign of publicity, it would undoubtedly have been able, during the
nineteen months of its existence, successfully to promote three or four
times as many mining companies as it did, and its profits would have
been fourfold.

It, however, appealed to the public in vain. Loud, frequent calls to
margin traders to pay up their debit balances and demand delivery of
their certificates, which would compel every broker to go out in the
market and buy the stocks he was short to customers, failed miserably.

The lesson of this experience was that the speculating public did not
"give a rap" whether their brokers were short of stocks to them or not.
All they wanted, apparently, was to be assured that when they were
ready to close their accounts, their stocks, their profits or their
credit balances would be forthcoming.

What is the evil of short selling of the kind described herein? The
only evil that I could ever discover was that the market is denied the
support which the actual carrying of the stock is calculated to afford.
This hardship weighs heaviest on the promoter. There appears to be no
cure. Even if a broker does buy the stock and does not himself sell it
out again, there is no law that denies him the right to borrow on it or
loan it to somebody else. And it is to the interest of the broker,
because he gets the use of the money, to loan the stock always. Stocks
are rarely borrowed by anybody except to make deliveries on short
sales.

What about the broker who doesn't execute his order at all but "stands"
on the trade from the beginning and sells the stock "short" to his own
customer, delaying actual purchase until delivery is demanded? This
practice is even less damaging to the customer than the one of actually
executing the buying order for the customer at the time the order is
given and then selling the stock right back on the market again for the
account of the broker or his pal--the usual practice when the object of
going short is sought. When a broker buys stocks in the market he must
bid for them, and actual purchase generally means a higher cost price
to the customer than that at standing quotations.


The rule of the Street is to charge the customer interest on all debit
balances. When a broker lends to a "short" seller a stock which he is
carrying for his customer, he is paid the full market value, as
security for its return. In that case the broker ceases to incur
interest charges for the customer, and is actually able, in addition,
to lend out at interest the cash marginal deposit put up by the
customer.

Maybe you think, dear reader, that a broker who charges his customer
interest at the rate of six per cent. per annum on money which he has
ceased to advance is crooked. Very well. If that be so, then all
members of the New York Stock Exchange must be labelled "crooks." Here
is how it works, even among the highest class and most conservative
members of that great securities emporium:

John Jones orders the purchase by his broker of 1,000 shares of Steel
on margin. He pays down 10 per cent. of the purchase price. Mr. Jones
receives a statement at the end of the month charging him with interest
at the rate of six per cent. per annum, or more if the call-money
market is higher, on the 90 per cent. of the purchase price advanced by
the house.

On the same day that the order of John Jones is received, William Smith
orders the same house to sell short 1,000 shares of Steel at the
market. This order is also promptly filled. Thereupon the broker uses
the 1,000 shares of Steel, which he bought for the account of John
Jones to make delivery through the Clearing House for the account of
William Smith. Sometimes a fictitious William Smith is created, known
as "Account No. 1," "A. & S. Account," "E. Account," etc. This is
usually done when a broker wants to hide from his bookkeepers that he
or an associate is taking the other end of the customer's trade.

The broker is out no money, yet he charges Mr. Jones the regular rate
of interest on his debit balance. As a matter of fact, too, the stock
bought for Mr. Jones is never even delivered to his broker. The
Clearing House, because of the "short" sale, steps in and delivers it
to the broker to whom it is due "on balance."

Custom and practice cover a multitude of remarkable transactions--don't
they?

You have the framework of the Scheftels structure and of its Wall
Street environment outlined in this chapter. Some of the narrative is
undoubtedly "dry-as-dust," but its recital has appeared to be necessary
to enable the lay reader properly to interpret the chronology of
stirring events which forms the concluding installment.

In the foregoing I have endeavored to lay bare many practices that are
common to Wall Street. Wherever I have laid them at the door of B. H.
Scheftels & Company, I have given that corporation much the worst of
it, because in the recital I have omitted to mention a multitude of
happenings that were creditable to an extreme to the Scheftels company.
Most of these had to do with the experiences of the Scheftels company
as publicity agents and promoters. Its wide-open publicity and
promotion policy called forth the ire of influential Wall Street
pirates and caused the "pressure" at Washington which resulted in the
Federal raid of the Scheftels offices.

I have reserved this dramatic series of events for my last chapter.




CHAPTER XI

A FIGHT TO THE DEATH


In professional quarters the Scheftels corporation was regarded as an
interloper from the day it set foot in the financial district.

Its first offense was to reduce its commission rates. This move set
the whole Curb against the enterprise. But as the play progressed it
proved to have been unimportant in comparison to the unspeakable
crime of telling the truth about other people's mining propositions
that were candidates for public money. The Scheftels corporation
had laid it down as a set rule that an established reputation for
accuracy of statement was a great asset for any promoter or broker
to have. To gain such prestige the principle was followed in the
nation-wide publicity which emanated from the house that, no
matter whom the truth hurt or favored, it must be told always, when
publishing information regarding the value of any listed or unlisted
security. Space in the Scheftels Market Letter or the news columns of
the _Mining Financial News_ was unpurchasable.

The enforcement of this rule was a wide departure from prevailing
methods. But that didn't make us hesitate. Having felt the speculative
pulse for years, I knew its throb. The public, after losing billions of
dollars, were becoming "educated." The rank and file of mining
promoters--high and low--in Wall Street still believed that "one is
born every minute and none dies." But I and my associates didn't. An
uneducated public had been unmercifully "trimmed" in scores of
enterprises backed by great and respected names. Speculators were
ravenous for the truth. We decided to give it to them. We gave it to
them straight.

This publicity system brought about the ruin of the Scheftels
corporation through the powerful enemies it made. The policy was right
all the same. Persisted in, nothing was or is better calculated to
strengthen the demand for all descriptions of meritorious securities.
The Scheftels corporation was the pioneer in the exploitation of this
principle as a fundamental and underlying basis of brokerage and
promotion. In pioneering this policy, however, the Scheftels company
was sacrificed to the prejudices and wrath of the old school of
promoters.


THE FIRING OF THE FIRST GUNS

Before the Scheftels corporation was on the Street three months it
almost came a cropper. On the strength of excellent mine news it
purchased nearly 300,000 shares of Rawhide Coalition in the open
market, up to 71 cents per share. A determined drive was made against
the stock by mining-stock brokerage firms which had sold it short.
Bales of borrowed stock were thrown on the market by the crowd
operating for the decline. The Scheftels company took it all in.
Letters and telegrams were sent broadcast by market enemies urging
stockholders to sell. A powerful clique had been losing big sums on the
rise.

The Scheftels company published advertisements calling upon margin
traders to demand delivery of their certificates. This expedient proved
of small utility. The brokers continued to hold off deliveries to
customers and sold and delivered to us all the stocks that they could
borrow or lay hands on. The continued selling finally made inroads on
the Scheftels corporation's cash-reserve to a point that forced it one
day to stand aside and leave the market to the sharpshooters. That day,
in a few hours, approximately half a million shares of Rawhide
Coalition changed hands out of a capitalization of 3,000,000 shares.
The corporation's loans were called. This forced it to throw large
blocks of stock on the market. A sharp break ensued. That was just what
was wanted by the interests which were gunning for us. They covered
their short sales at great profit.

In the midst of the mêlée the Scheftels company tendered a Stock
Exchange house of great prominence, which had loaned it for the account
of a Salt Lake firm of brokers $12,500 on 50,000 shares of Rawhide
Coalition, the money to take up the loan. A representative of the Stock
Exchange house sheepishly stated that his firm had loaned part of the
pledged stock to out-of-town brokers. He asked for time. Under threat
of dire consequences the Stock Exchange firm bought stock back from us
in the open market that afternoon to supply the deficiency, and then
made delivery of this stock back to us in lieu of that which they had
parted with. It had been specifically stipulated by the Scheftels
company when the loan was made that the certificates must be held
intact and that the stock must not be loaned out or sold while the
money loan was in force.

This experience was repeated frequently during the Scheftels career on
the Curb. It cost B. H. Scheftels & Company more than one million
dollars, during the nineteen months of its existence, in giving loyal
market support, in times of "professional" attack, to the stocks it had
fathered or promoted and felt moral responsibility for.

Time and again the Scheftels company found among stocks delivered to
it, against purchases made in the open market, the identical
certificates it had pledged with loan-brokers as collateral for loans,
and which had been hypothecated by it with the specific proviso that
the certificates were not to be used. It opened our eyes to one of the
most commonplace practices, not only on the Curb, but also on the Stock
Exchange. Hardly a failure occurs on any of the Exchanges or on the
Curb that does not reveal customers' certificates, which were
originally pledged with the understanding that they were not to be
"used," in the strong-boxes of others.

The first grievous offense of the publicity forces of the Scheftels
corporation against Wall Street's "Oh-let-us-alone" promotion combine
was a wallop in April and May, 1909, through the Scheftels market
literature, at Nevada-Utah.

The combination which owned control took with bad grace the strictures
on the property. We heard an awful underground roar. At that time the
price of Nevada-Utah stock was around $3. The Scheftels Market Letter
said that there was probably not 30 cents of share value behind the
property. The price immediately began to crumble. It has been
tobogganing ever since. The stock at the beginning of September of this
year was quoted at 37-1/2 to 50 cents.

Such a thing as printing facts which would enlighten stockholders and
the public as to the actual value and condition had not before been
heard of when such enlightenment ran contrary to the plans of strongly
entrenched promoters on the Street.

The campaign against Nevada-Utah, therefore, directed widespread
attention to B. H. Scheftels & Company and the _Mining Financial
News_.

Following the Nevada-Utah disclosure, the Daily Market Letter and the
Weekly Market Letter of the Scheftels corporation and the _Mining
Financial News_ took a good, strong, husky "fall" out of the La Rose
Mines Company, capitalized for $7,500,000. The La Rose owns one of the
greatest producing mines in the Cobalt silver camp. A market scheme was
in progress, with La Rose as the medium, and W. B. Thompson, of
Nipissing fame, as a chief manipulator. We called a halt to the game
when the price reached a "high" of $8.50, and saved the public a huge
sum of money. Under our campaigning the stock declined to $4, a
decrease of $6,750,000 in the market value of the capitalization. This
made W. B. Thompson and his associates the implacable enemies of the
Scheftels company and myself. We didn't worry much. We were catering to
the public. Indeed, we were pleased with our work.

Following this incident, the Scheftels Market Letter and the _Mining
Financial News_ took a smash at a mining-stock deal in which W. B.
Thompson and the Guggenheims were jointly interested. It was the now
notorious Cumberland-Ely-Nevada Consolidated merger. Later the merger
was enlarged and took in the Utah Copper Company, or rather the Utah
Copper Company took in the others, and the Scheftels propaganda found
another opportunity to do a great service for the stockholders of
Nevada Consolidated.

Our attack hurt the Guggenheim reputation among investors all over the
country and contributed to reduce their influence over the large
stockholding body--more than 6,000 men and women--of Nevada
Consolidated. Though finally successful, the Guggenheims were sore from
the lashing and exposures to which they had been subjected. As for the
Scheftels company and the _Mining Financial News_, they had still
further established the honesty and value of their publicity service.

A market scheme to balloon the price of Ray Central Copper Company
shares to several times their value was a precious enterprise against
which we trained our publicity guns and fired several effective
broadsides. The effort of the promoters to connect with the public
purse here would not have been half so sensational if men of lesser
prominence were identified with the operation. In our "bear" publicity
on this one we minced no words. In doing so we again hit another
powerful interest--the Lewisohns.


Later the exposure by the _Mining Financial News_ and the Scheftels
Market Letter of market manipulations of the Lewisohn-controlled Kerr
Lake still further "endeared" the members of these two organizations
to that powerful faction, and more closely cemented the ties of
fellowship between the ruling powers.

Keystone Copper, another Lewisohn "baby," was put through its courses
on the Curb while Kerr Lake was being played in a stellar rôle. The
deal in Keystone was an unobtrusive little thing, but awful good as far
as it went from the one-sided point of view. I turned the searchlight
of publicity on Keystone.

The Scheftels Market Letter and _Mining Financial News_ disclosures
in the interests of speculators and investors regarding Nevada-Utah,
La Rose, Cumberland-Ely, Nevada Consolidated, Utah Copper, Ray
Central, and Kerr Lake were sensational enough, but they by no means
included all of the work in this line. During 1909 this publicity
literature took in practically every important mining company whose
shares were traded in on the New York Curb. The unpleasant truths
these forces were obliged to tell from time to time touched the
delicate sensibilities of many leading lights on the Street. These
had grown accustomed to an unvarying diet of sweets.

It would seem that their appetite for saccharine provender would have
become cloyed and that a change would be a grateful relief. It was not.
The truth was distasteful. It interfered with the noble industry of
mining the public and it cut down the profits of that end of the game.
In keeping up the record of day-by-day market and mine developments
these publicity agents punctured many a rainbow-tinted balloon. Very
frequently they gave to the public its first definite and intelligent
idea of real value behind promotions and in properties. Where market
prices represented an overplus of hopes and expectations the truth was
told. The aim was to take mining speculation out of the clouds and
plant its feet firmly on earth.

In this laudable effort we ran counter to the plans of the mighty. We
also violated the vulgar unwritten rule of some of the Wall Street
fraternity--"never educate a sucker." Our publicity work caused a
readjustment of judgment and market values, besides those already
mentioned, on such stocks as First National, Butte & New York, Trinity
Copper, Micmac, Ohio Copper, United Copper, Davis-Daly,
Montgomery-Shoshone, Goldfield Consolidated, Combination Fraction,
British Columbia, Granby, Cobalt Central, Chicago Subway, and sixty to
eighty others.

The live wires of our publicity service blistered the flesh of the
Guggenheims, the Thompsons and the Lewisohns, and perturbed their
widely diffused affiliations, connections and allies, including John
Hays Hammond, J. Parke Channing, and E. P. Earle; also Charles M.
Schwab, E. C. Converse, B. M. Baruch, United States Senator George S.
Nixon, George Wingfield, Hooley, Learned & Company, many other New York
Stock Exchange houses, a group of powerful corporation law firms, a
noted crowd of influential politicians, Curb stockbrokers who had grown
fat executing manipulative orders for the "inside," bankers who carried
on deposit the cash balances of the mining companies, and even J. P.
Morgan & Company, who were partners of the Guggenheims in their Alaska
ventures and were for a time said to be meditating a merger of the
copper companies of the country with those controlled by the
Guggenheims as a nucleus.


THE STORY OF ELY CENTRAL

By keeping speculators out of stocks that were selling at inflated
prices, the Scheftels corporation and the _Mining Financial News_
became endeared to a great popular moneyed element. The public was
saved huge sums of money.

This, however, only carried out the negative end of a grand idea. The
affirmative demanded that the Scheftels corporation must put its
followers into a stock or stocks where they could actually make money.

The Scheftels corporation was on the eager lookout for a genuinely
high-classed copper-mining proposition. It found what it was looking
for in Ely Central, a property that is sandwiched in between the very
best ground of the Nevada Consolidated, is bordered by the Giroux and
occupies a strategic position in the great Nevada copper camp of Ely,
birthplace of what is probably the greatest lowest-cost porphyry copper
mine of America.

By invading the Ely territory as promoter and annexing Ely Central, the
Scheftels corporation committed what was probably, to the interests
among whom our publicity work had wrought greatest havoc, an
unpardonable crime. We butted into the very heart of the game, and
became a disturbing factor in their mining operations.

The Ely Central property consists of more than 490 acres. Years before,
in the early days of the camp, it had been passed over by the
geologists and promoters who selected the ground for the Nevada
Consolidated, Giroux and Cumberland-Ely, because it was covered by a
non-mineralized formation called rhyolite. As development work
progressed and the enormous value of the surrounding mines was
disclosed, it dawned on their owners that they might have made a
mistake and that it would be just as well to obtain possession of the
Ely Central property.

The ground was especially valuable to the Nevada Consolidated, if for
no other reason, as mere acreage to connect up and make compact the
properties owned by them. The second demonstration of their bad
judgment was the fact that, having planned to mine the Copper Flat
ore-body by the steam-shovel method, they overlooked the value of the
Ely Central property as affording them the only practical means of
access to the lower levels of that pit for operation by the steam
shovels.

Investigation had disclosed to me that the evidence which had been
adduced by mine developments on neighboring properties was all in favor
of copper ore underlying the Ely Central area. The rhyolite, which
covered Ely Central, was a "flow," covering the ore, and not a "dyke,"
coming up from below and cutting it off.

Why was the property idle? Inquiry revealed that the Ely Central Copper
Company was $89,000 in debt, and that a pre-panic effort to finance the
corporation for deep mine development had failed. The panic of 1907-8
had crimped the promoters and they could not go ahead.

The Scheftels corporation entered into negotiations with the Pheby
brothers and O. A. Turner, who held the control, for all the stock of
the Ely Central company that was owned by them. During the progress of
negotiations, early in July, 1909, I heard that the Guggenheims and W.
B. Thompson were very much put out to learn that the Scheftels company
was about to finance the company. They had belittled the value of the
property, as would-be buyers are prone to do the world over.

Before I entered upon the scene the Pheby brothers had found themselves
objects of persistent and mysterious attacks. Their credit was assailed
in every quarter and they found themselves ambushed and bushwhacked in
every move they made. They were forced into a position where it was
believed they would accept anything that might be offered them for
their interest in Ely Central. As fate would have it, the Scheftels
company entered the race at this psychological moment.

Summed up, the Scheftels company actually contracted for 1,280,571
shares out of 1,600,000, which represented the increased capitalization
for a total sum of $1,158,916, or at an average price of 90-1/2 cents
per share. The time allowed for the payment of all the money was nine
months, stipulated payments being agreed upon at regular intervals in
between. The immediate effect of the arrangement was this: A dormant
property, in debt and lying fallow, was metamorphosed into a going
concern with good prospects of soon becoming a proved great copper
mine, with an assured income to defray the expenses of deep mine
development on a large scale, and a market career ahead of it that
might be expected to match any that had preceded it in the Ely district
from the standpoint of public interest.


During the progress of the negotiations the stock sold up to $1 per
share. The selling for Philadelphia account of a large block of stock
in the open market dropped the price back, of a sudden, to 50 cents.
The Scheftels company bought stock on this break and urged its
customers to do likewise. On the day the deal was concluded the market
had rallied to 75 cents. Fully six weeks before the deal was arranged
the Scheftels Market Letter and the _Mining Financial News_ had begun
to urge the purchase of the stock. The Scheftels organization was not
hoggish. The establishment was willing that the public should get in on
the cellar floor. There were nearly 300,000 shares outstanding, which
the Scheftels corporation had not corralled in its contract.

Readers of the Market Letter and the _Mining Financial News_ fell
over one another to get in on the good thing. Therein they were wise.
By early September the price had advanced in the market to $1. The
Scheftels publicity was strong in favor of the stock. But it had not
yet put on full steam. It was waiting for an engineer's report to make
doubly sure it was right.

Col. Wm. A. Farish, a mining engineer of many years' experience and a
man with a high reputation throughout the whole of the Western mining
country, had been sent by the Scheftels company to make a report on the
Ely Central. Years before Colonel Farish had reported on the Nevada
Consolidated properties and outlined the very methods now being used
for recovering its ores. But Colonel Farish had been ahead of his time,
and the capitalists in whose interest he was acting were not prepared
for such a radical step in advance of the then-existing methods, nor to
believe that copper ores of such low grade could be mined at a profit,
especially 140 miles from the nearest railroad. Times and conditions
changed, and the 140 miles were spanned by a well-equipped rail
connection.

Colonel Farish's opinion verified our fondest expectations. The report
set forth that the mine possibilities of Ely Central were nearly as
great as those of the Nevada Consolidated itself. On the basis of this
report, which was made in September, the project acquired a new
significance. Development operations were undertaken to prove up the
ground in an endeavor to demonstrate the existence of the 33,000,000
tons of commercial porphyry ore which Colonel Farish indicated in his
report would likely be found within the boundaries of the southern part
of the Ely Central property.

The prospect fairly took the Scheftels organization off its feet. We
were dazzled. We saw ourselves at the head of a mine worth $25,000,000
to $40,000,000. No time was lost in organizing a campaign to finance
the whole deal. Having no syndicated multi-millionaires to back it up,
the Scheftels corporation went to the public for the money, the same as
hundreds of other notable and successful promoters had done. The
ensuing publicity campaign to raise capital has been described in
hundreds of columns of newspaper space as one of the most spectacular
ever attempted in Wall Street.

I had absolute faith in the great merits of Ely Central, a faith that
has not been dimmed in the slightest degree by the vicissitudes through
which the company, the Scheftels corporation, and myself personally
have passed. Within thirteen months the Scheftels corporation caused to
be spent for mine development more than $150,000, and on mine and
company administration an additional $75,000. When the Scheftels
company was raided by the Government on September 29, 1910, and a stop
put to further work the expenses at the mine had averaged for the nine
months of that year above $15,000 a month. Work was going on night and
day. Every possible effort was being made to prove-up the property in
short order. Core-drills sent down from the surface had already
revealed the presence of ore at depth, and I am sublimely certain that
another month or two would have put the underground air-drills into
contact with a vast ore-body identical in quality and value with that
lying on either side in Nevada Consolidated acreage.

Ely Central was the New York Curb sensation in 1909-1910. I used the
publicity forces which had been so successful in protecting the public
against the rapacity of multi-millionaire mining-wolves to educate them
up to the speculative possibilities of Ely Central.

Up went the price. Between the first of September and the middle of
October the market advanced to $2 3-8. On October 13th advices reached
us that 30 per cent. copper ore had been struck in the Monarch shaft.
The Monarch is an independent working, far removed from the area that
is sandwiched in between the main ore-bodies of the Nevada
Consolidated. We were highly elated. The prospect looked exceedingly
bright to us, and there was no longer any hesitation in strongly
advising our following to take advantage of an unusually attractive
speculative opening.


The market boomed along in a most satisfactory way. By October 26th the
price reached $3; on November 3d it was $4 a share, and three days
thereafter $4-1/4 was paid.

The expenses of the Scheftels company on publicity work at this time
amounted to about $1,000 a day. Money for mine development on Ely
Central was being spent as fast as it could be employed. We were trying
to sell enough stock at a profit over the option price to defray the
publicity expenses, keep the mine financed, and meet our payments on
the option, but no more. We were not making any effort to liquidate on
a large scale, a fact which was reflected in the advancing quotations.

When the price of Ely Central hit $4 in the market, the Scheftels
company rated itself as worth from $3,000,000 to $4,000,000. I had
visions of leading the Guggenheims and Lewisohns and Thompsons up the
Great White Way with rings in their noses. Nat. C. Goodwin, who had a
25 per cent. interest in the Scheftels enterprise, enjoyed similar
visions, only his fancy ran to building new theaters for all-star
casts.

While Ely Central stock was going skyward and all the speculating world
was making money in it, our publicity forces were busily driving the
bald facts home regarding La Rose, Cumberland-Ely, Nevada-Utah and
other pets of the mighty. Our batteries never let up for a moment.
These various attacked interests were getting ready to strike back. If
their movements had been directed by an individual general they could
not have worked with more community of interest. One day the sky fell
in on us. The plans had been beautifully laid for our complete ruin.
That we escaped utter annihilation was almost a miracle.

On Wednesday, November 3d, the result of our market operations on the
New York Curb was that we quit long on the day nearly 8,000 shares of
Ely Central at an average price of $4. On the same day our customers
ordered the purchase of nearly twice as much stock as they ordered
sold. This indicated to us that the Curb selling was professional.
There was nothing very remarkable about this performance because
brokers doing business on the Curb very frequently play the market for
a fall.

On Thursday, the day following, the Scheftels company was again
compelled to purchase stock on the Curb in excess of sales to the
extent of 7,600 shares, while on the same day the buy orders of house
customers exceeded their orders to sell at least three to one. The
professional selling was now accompanied by rumors on the Curb which
spread like the smell of fire that trouble of some dire sort was
pending for the Scheftels company. Most of this emanated from an
embittered brokerage quarter and we paid little attention to it.

On the succeeding day, Friday, November 5th, the professional selling
was quieted to a point that compelled the Scheftels company to go long
of only 6,600 shares on the day in its Curb market operations. The
purchase of so small a block of stock excited no suspicion in the
Scheftels camp, although it should have, because Scheftels' customers
on this day purchased more than four times as much stock as they
ordered sold, pointing conclusively to a great public demand and much
shorting by professionals.

Then came the _coup de main_.


THE ASSAULT ON ELY CENTRAL

The 6th day of November fell on a Saturday. The New York _Sun_ of that
morning published under a scare head a vicious attack on the Ely
Central promotion. The attack was based on an article which was
credited in advance to the _Engineering & Mining Journal_ and appeared
in the _Sun_ ahead of its publication in that weekly. The _Sun_ had
been furnished with advance proofs. The Ely Central project was
stamped as a rank swindle. Everybody identified with it was raked over
and I, particularly, was pictured as an unprincipled and dangerous
character, entirely unworthy of confidence and at the moment engaged
in plucking the public of hundreds of thousands. It was stated that
the Ely Central property had been explored in the early days of the
Ely camp and found of no value whatsoever from a mining standpoint.
The Scheftels corporation was accused of setting out in a cold-blooded
way to swindle investors on a bunco proposition.

I was in my apartment at the Hotel Marie Antoinette at 9 A.M.
when I read the _Sun's_ story. The Scheftels company had thrown
$85,000 behind the market during the three preceding market days to
hold it against the attack of professionals.

I called the Scheftels office on the 'phone and gave instructions that
a certified check for $40,000 be sent to Wasserman Brothers, members of
the New York Stock Exchange, with orders to purchase 10,000 shares of
Ely Central at $4-1/8, which was the quotation at the close on the
afternoon before. Orders to buy 15,000 shares more at the same figure
were distributed among other brokers. The single order was given to
Wasserman Brothers because I thought it good strategy. They are a house
of undoubted great responsibility and it seemed to me that their
presence in the market on the buying side would have an excellent tonic
effect.

During the two hours' session I held the 'phone, receiving five minute
reports from the scene of action. Mr. Goodwin was at my side. At ten
minutes to twelve the brokers had reported the purchase, on balance, of
24,225 shares. Had they purchased 675 shares more they would have
completed the orders that were outstanding and it would have been up to
me to decide whether to lend further support or not. By that time my
figures showed that the Scheftels corporation had thrown behind the
market $200,000 in four days to hold it and I was beginning to have
"that funny feeling." During the last few minutes of the Saturday Curb
session the selling ceased and it seemed that possibly my fears were
unfounded.

On Sunday, the 7th, my hopes went a-glimmering. All the New York
papers featured scathing articles, using as authority the _Engineering
& Mining Journal's_ attack, which had appeared on the previous
afternoon. Dispatches indicated, too, that the papers of Boston,
Chicago, Los Angeles and San Francisco had played it up on the front
page as the most shocking mining-stock scandal of the century.

By Monday, the whole country had been plastered with the sensation. Of
course my early Past, all of which was a family affair and had
transpired fourteen years prior, long before I essayed to enter the
mining promotion field, was dragged out of the skeleton-closet. It lent
verisimilitude to the stories.

After reading the Sunday newspapers, I grasped the meaning of the move
and marshalled our forces. It was plain that we had been marked for the
sacrifice. It looked as though we hadn't a chance in a million of
weathering the onslaught if we lent the market further support. There
were about 500,000 shares of Ely Central in the public's hands, and,
without close to $2,000,000 in ready cash to throw behind the market,
we could not be certain of staying the tide. We didn't have anything
like that sum. Personally I did not give up the fight, but the outlook
was mighty blue.

All day Sunday trusted clerks of the Scheftels company worked on
the books, making a statement of the "stop-loss" orders and
"good-till-cancelled" orders of customers. On Monday morning the
newspapers contained aftermath stories of the _Engineering & Mining
Journal's_ arraignment. The air was surcharged with the impending
calamity.


THE CLASH OF BATTLE

With a line of defense carefully outlined, I approached the fray.
First, the Scheftels corporation placed with reliable brokers written
orders to sell at the opening the stocks that were specified in the
stop-loss and good-till-cancelled orders of customers. Not an order to
sell a share of inside stock was given. It was also decided not to
place any supporting orders until after the market opened and it could
be determined with some degree of accuracy what the volume of stock
amounted to that was pressing for sale.

Just before the market opened I could see from my office window a dense
crowd of brokers assembled around the Ely Central specialists. Although
ominously silent, they were struggling for position and were tensely
nervous. It was plain that the over-Sunday anti-Scheftels newspaper
publicity had racked Ely Central stockholders and created a panicky
movement to liquidate, which was about to find vent in violent
explosion. It was evident that the Scheftels corporation would have to
conserve every resource if the day was to be saved.

The market opened. Instantly there was terrific action. Hundreds of
hands were waving wildly in the air. Everybody wanted to sell and
nobody wanted to buy. The chorus was deafening. Screams rent the air.
The tumult was heard blocks away. Every newspaper had a man on the
spot. Brokers from the New York Stock Exchange left their posts and
came to see the big show; the Stock Exchange was half emptied. The
spectacle had been advertised widely and everybody was keenly awake and
wrought up to a high pitch of excitement over what had been scheduled
to occur.

Had the Scheftels brokers been supplied with orders to buy one-quarter
of a million shares of stock at the closing market price of the
Saturday before, $4 1-8, it was very apparent that they would have been
unable to hold the market. The opening sale was at $4. Downward to the
$3 point the stock traveled, breaking from 25 to 50 cents between
sales. Through $3 and on down to the $2 point the price crashed. Blocks
of 10,000 shares were madly thrown into the vortex of trading. The Curb
was a struggling, screaming, maddened throng of brokers. Every trader
appeared to be determined to crush the market structure. At $2 a share
there was a temporary check in the decline, but the bears renewed their
onslaught, gaining confidence by the outpour of selling orders. Within
less than an hour after the opening the stock hit $1 1-2 a share. At
this juncture the Scheftels broker in Ely Central reported that he had
executed all the stop-loss and good-till-cancelled orders entrusted to
him with the exception of 19,000 shares.

"The Scheftels company will take the lot at $1 1-2," I said.

In lending succor at $1 1-2 per share I was really stretching a point,
although at this figure the net market shrinkage of the Ely Central
capitalization was in excess of $3,000,000. This melting of market
value was awful to contemplate. On the other hand the newspaper
agitation was unmitigated in its violence, stockholders were convulsed,
a break of serious proportions was certain, and it was up to me to
conserve every dollar. The moment the Scheftels bid of $1.50 a share
made its appearance on the Curb and the selling from the same source
for the account of customers was discontinued, it was seen that the
force of the drive had spent itself, at least for the time being.
Support now came from the "shorts." They started to cash their profits
on their short sales of the days previous. Crazed selling was
transformed to frantic buying.

The scene at this juncture was dramatic. It was the momentary
culmination of a cumulative, convulsive cataclysm. In refraining from
selling for its own account the Scheftels corporation violated one of
the sacred rules and privileges not only of the New York Curb but of
the New York Stock Exchange. In both of these markets it is the custom,
where brokers have advance information of an impending calamity, to
beat the public to the market and get out their own lines first,
leaving customers to take care of themselves.

By deftly feeding stock to bargain hunters and to the "shorts" at
intervals and buying stock when it pressed for sale from frightened
holders at other periods the Scheftels company was able to support the
market that afternoon to a close with sales recorded at $2 a share. The
cash loss of the Scheftels company on its Curb transaction in Ely
Central that day was $60,000. This fresh sacrifice was needed to steady
the market.

Tuesday, the following day, the daily newspapers belched forth further
tirades of abuse and calumny. The market crash in Ely Central was held
up to the public as proof positive that the project was a daring
swindle. The raid on the stock in the market was renewed. A Johnstown
flood of liquidation ensued. Fluctuations were violent. Opening at $2,
the price was forced down to $1. It afterward rebounded to $2, but the
waters would not subside, the stock was hammered again and it closed at
$1 per share. To meet the oncoming emergencies the Scheftels
corporation was obliged to fortify its cash reserve in the only one way
that offered. It was compelled to convert a large part of its reserves
of securities into cash and it had to sell on a declining market. Many
accounts were withdrawn by timid customers, and the Scheftels company
was further called upon to give stability to Rawhide Coalition and
Bovard Consolidated, other stocks which it had been sponsoring in the
markets. Loans were called by brokers with whom the Scheftels company
was carrying stocks, deliveries were frantically tendered to the
Scheftels company of stocks it had purchased at previous high levels,
and a financial onslaught made generally that would undoubtedly have
sunk the Scheftels' ship but for the fact that we had backed-up in the
nick of time, had measured our distance, had gone just so far and not
too far, and had kept on the firing-line.

An exceedingly gratifying feature of the sensational day was the way in
which our friends stood by us. The venom and selfishness of the
overwhelming assaults that had been made upon us convinced many of the
public that we were being made the victims of a special attack, and
with the natural impulse that governs honorable men they gave testimony
to their confidence in us.


On Wednesday the campaign terminated. Ely Central weakened an eighth
from the $1 point, the closing of the day before, recovered to sales at
$1-3/4 and closed at $1-1/2 bid; $1-5/8 asked.

All day long our offices were thronged with newspaper reporters and
with pale-faced and agitated customers. Our clients felt their
helplessness in such a tumult of warring forces. The only thing they
could do was to stand by and watch developments as the battle waged. It
was a proud moment for me when, at the end of the day's market, I
mounted the platform in the Scheftels customers' trading-room, gave
voice to a shrill cheer of triumph and wrote on the blackboard the
following:

"We have not closed out a single margin account! We are carrying
everybody!"

The scene which followed warmed the cockles of my heart. I was
literally mobbed, but it was a friendly mob. We all joined in a season
of noisy rejoicing. That we should have been able to survive the
three-days' siege with minimum losses to customers and without
sacrificing a single margin account was a signal achievement. I doubt
if there are many cases like it in the history of Wall Street.

Scores of telegrams were received from out-of-town customers to whom
the margin respite was wired. One of these read:

    You may look for a tidal wave of business. Your princely action
    warrants 21 guns for the House of Scheftels.

Another one was to this effect:

    The whole situation was greased for your descent. It was a
    shoot-the-chutes and a bump-the-bumps proposition. Congratulations
    on your survival.

Hundreds of letters of a similar tenor poured in upon us. Many of these
came from the camp of Ely itself, where large blocks of the stock were
held by mining men on the ground.

Thursday the stock closed at $l-3/4; Friday it advanced to sales at
$1-7/8 and hung there.

The Scheftels organization now drew its first long breath. Friends and
enemies alike marveled how the corporation had managed to survive. We
had held the fort, but at murderous cost.

I got busy with the publicity forces at my command. Through the
Scheftels Market Letter and the _Mining Financial News_ the story
was told of the whole dastardly campaign.

The Weekly Market Letter of the Scheftels company on November 13, 1909,
devoted 24 columns to the story of the raid.

That the Guggenheim-managed Nevada Consolidated was well pleased with
the publication of the _Engineering & Mining Journal's_ attack seemed
clear to me. The reason was this: In its attack the _Engineering &
Mining Journal_ stated that two drillholes put down by the Nevada
Consolidated in the immediate vicinity of Ely Central had failed to
show better than nine-tenths of one per cent. copper ore which, the
article said, was below commercial grade. (At this late date, October,
1911, they are mining ore in the steam-shovel pit of the Nevada
Consolidated that will not average more than eight-tenths of one per
cent. copper transporting it to the concentrator, more than twenty
miles away, and treating it at a profit. But this is not the point.)
An engineer of international prominence telegraphed the Scheftels
company from Ely as follows:

    Two drill holes mentioned in _Engineering & Mining Journal_
    article were completed only last week. Results must have been
    telegraphed to New York.

    These holes gave great trouble on account of caving ground. I heard
    drill runners say they were stopped on that account and were in ore
    in bottom. In any case, it is not conclusive of unpayable ore in
    vicinity. This condition often occurs.

I could write a book in reply to the _Engineering & Mining Journal's_
tirade, showing the utter flimsiness of the statements it made. Limited
space forbids anything more than an outline.

Charles S. Herzig was employed to report confidentially on the
property. Mr. Herzig's report was later checked up by Dr. Walter
Harvey Weed, a great copper geologist of known high standing who was
formerly one of the principal experts of the United States Geological
Survey and was himself a frequent contributor to the _Engineering &
Mining Journal_. Dr. Walter Harvey Weed wired to the C. L. Constant
Company, the metallurgists and mining engineers, from Ely, as follows:

    After making a most thorough examination my opinion is Southern
    part Ely Central property is covered by rhyolite capping.
    Geological evidence demonstrates that the porphyry extends eastward
    (through Ely Central) from steam-shovel pit and with excellent
    chance of containing commercial ore beneath a leached zone. A well
    defined strong Fault separates steam-shovel ore from rhyolite area
    and this Fault Plane may carry copper glance (very rich copper ore)
    of recent origin, due to descending solutions. The iron-stained
    jasperoid croppings in the limestone areas give promise of making
    ore in depth on Ely Central property as they do in Giroux.

The _Engineering & Mining Journal_ said in its article that the
northern portion of Ely Central showed the Arcturus limestone of the
district. It stated that in this limestone at various places there is a
little mineralization but never during the history of the district were
any profitable results obtained. As against this, Engineers Farish,
Herzig and Weed reported that the limestone areas on Ely Central would
likely show the presence of mines. As a matter of fact, Giroux,
neighbor of Ely Central, had sunk through this limestone and opened one
of the richest bodies of copper ore ever disclosed.

The _Engineering & Mining Journal_ said that in representing that
pay ore is likely to exist in the area of Ely Central sandwiched in
between the two big mines of Nevada Consolidated, the Scheftels company
was practicing deception. Not only did Messrs. Farish, Herzig and Weed
report in favor of the likelihood, but it is now a commonly accepted
fact that, unless all known geological indications are deceptive, Ely
Central has the ore in this stretch of territory. A report made as late
as September, 1911, by engineer Richard T. Pierce, for the
reorganization committee of Ely Central, expresses the opinion that an
area 1,300 feet by 1,900 feet at the south-east end of the Eureka
workings "will be found to contain mineralized porphyry, with
reasonable assurance that commercial ore will be had in it."

Mr. Herzig's first telegram from Ely after examining the Ely Central
property was to this effect:

    There is no question that the rhyolite was deposited in Ely Central
    after the enrichment of the porphyry. The Fault that limits the
    rhyolite in the Nevada Consolidated pit is indicated by several
    feet thickness of crushed mineralized porphyry-rhyolite ore, which
    is a positive evidence that the porphyry was enriched before the
    faulting. The limestone and contact areas owned by the company, in
    my opinion, have great potential value. The indications are in
    every way similar to Bisbee. Rich carbonate ore has been
    encountered on the Clipper and Monarch claims of Ely Central and I
    look forward to seeing big ore bodies opened up at these places.

    Reports of both these engineers, many thousand words in length,
    made later, confirm these messages.

What probably convinced me more than anything else of the inaccuracy of
the statement regarding the Ely Central property by the _Engineering
& Mining Journal_ was the attitude of Charles S. Herzig. He is my
brother.

Up to within thirty days of the appearance of the attack in the
_Engineering & Mining Journal_ I had not set eyes on him in fifteen
years. A graduate of the Columbia School of Mines, he had in the
interim examined mining properties in South Africa, Egypt, Australia,
the East Indies, Siberia, every European country, Canada, Mexico,
Central America, South America and the United States in the interests
of some of the world's greatest financiers. These expert examinations
had covered deposits of gold, silver, copper, lead, zinc, coal and
other minerals. In the engineering profession he is known as an expert
who has his first failure yet to record. His standing is unquestioned
as an engineer and a mine-valuer.

I had heard some criticism of the Farish report, made by engineers of
the modern school, in which it was pointed out that Colonel Farish had
failed to give scientific reasons for all of his deductions. I asked
Captain W. Murdoch Wiley, then a member of the C. L. Constant Company,
assayers, metallurgists and mining engineers, whether he could induce
my brother to make an examination. I did not approach Charles myself,
because we had been estranged. So it was that when he returned from
Europe after an absence of many years, he had not even looked me up.
Captain Wiley arranged for a meeting at the Engineers' Club. I went
there, and was formally introduced by Captain Wiley to my brother
across a table.

"What will you take to make a report on Ely Central?" I asked in the
same matter-of-fact way I would have addressed a stranger.

"What's the purpose of the report?"

"The Scheftels company wants confidential, expert information such as
you are qualified to give as to the value and prospects of the
property," I answered.

"I'll take $5,000," he said, "but only on one condition. I am going to
the Ely and Ray districts to report for English capitalists, and I can
take your property in at the same time. My report is not to be
published and I reserve the right to make a verbal instead of a written
one. If you really want to know what I think of the property, I am
quite willing to give it a careful examination and let you know.
Because of the stock-market campaign you are making, I would not accept
your offer if, did I report favorably, your idea would be to make use
of the report in the market."

The bargain was struck. A few days later Mr. Herzig received $2,500
from the Scheftels company, on account, and a check for traveling
expenses. He left for Ely.

On the Saturday morning when the New York _Sun_ article appeared
containing the excerpts from the _Engineering & Mining Journal's_
onslaught, I wired my brother substantially as follows:

    Savage attack in _Engineering & Mining Journal_ on Ely Central. If
    your report on property is favorable, I beg you to let us have it
    by wire and allow the use of it to counteract.

An hour later I followed it up with another message telling him not to
wire any report. I set forth that because he was my brother, it might
prove of little avail, now that the publication had been made, and
that it might only tend to do him personal damage in the profession
because of the unqualified manner in which the _Engineering & Mining
Journal_ had taken a stand against the property. In reply he wired
Captain W. Murdoch Wiley the short but decisive report already quoted
herein, regarding the geological reasons why Ely Central should have
the ore, which afterward was fully verified by Dr. Walter Harvey Weed
in the message also reproduced in the foregoing. In a letter from Ely
to Captain Wiley confirming the message, the original of which is in
my possession, Mr. Herzig said:

    I have formed a very favorable opinion of the property. I feel that
    it has the making of a big mine, and under the circumstances I am
    willing to stand a little racket for a time.

The same day he wired Captain Wiley to buy for his account 2,500 shares
of Ely Central at the market price, which order was executed through
the Scheftels company.

Editor Ingalls of the _Engineering & Mining Journal_ and my brother
had been friends for years. My brother had been employed early in his
career by the Lewisohns, Guggenheims and the Anaconda Copper Company,
and later in Europe, Australia and India by mine operators of even
higher class. Up to the time when the _Engineering & Mining Journal's_
attack appeared he had not committed himself on Ely Central. When he
did commit himself it was with the foreknowledge that in doing the
unselfish and courageous thing his name would be besmirched if under
development Ely Central turned out to be what the _Engineering &
Mining Journal_ had declared probable. In that event his relationship
with me would be held up as positive proof of duplicity and it would
look bad for him. The fact that under all these circumstances he
jumped into the breach satisfied me that the attack of the
_Engineering & Mining Journal_ was unjustified.


A BOMBSHELL IN THE ENEMY'S CAMP

As soon as the Scheftels corporation was able to obtain a copy of the
corroborative report of Dr. Walter Harvey Weed, which the great copper
geologist made to the C. L. Constant Company, it filed a libel suit
against the _Engineering & Mining Journal_ for $750,000 damages.
Simultaneously Mr. Scheftels filed another suit for an additional
$100,000 in his own behalf.

The filing of the Scheftels libel suits against the _Engineering &
Mining Journal_ was a bombshell. It was formal notice to the forces
arrayed against us that we did not propose to be made victims of an
unholy hostility and that we were determined to proceed along old lines
and not abate in the slightest our wide-open publicity measures. It was
also noticed that we proposed to go through with the Ely Central deal.

After it became evident that we intended to keep on fighting, the
Scheftels offices were openly visited and inspected in detail one day
by the late Police Inspector McCafferty. In a bullying manner this
police official let it be known that we were in official disfavor with
him. His manner could hardly have been more offensive if he had been
invading a den of counterfeiters. Mr. McCafferty did not specify just
what he was after or just what he expected to find, but he made it
plain to us that we were marked and that he had it in for us. He
stalked scowlingly through the entire establishment and made vague
threats of what was in store for us.

Late that night I learned that the Inspector had invaded the
living-rooms of my associate, Nat. C. Goodwin, where he delivered
himself somewhat as follows:

"What are you fellows trying to do, anyway? What are you trying to put
across on us? Do you think we are going to stand for any such newspaper
notoriety as you are getting and watch it with our arms folded? Do you
think we are fools or crazy, or what? I want you to understand that you
fellows have got your nerve with you. Get busy or the police will be on
your backs to-morrow!"

I told Mr. Goodwin that our enemies had evidently sicked the Inspector
on to us, but that I didn't think any action would be taken. We were
victims and not culprits, and unless, indeed, the United States was
Russia, nothing untoward could happen.

I promised Mr. Goodwin, however, that I would attend to the matter
without delay. I laid all of the facts regarding the newspaper attack
before a prominent citizen who promised forthwith to convey the
information in person to the Inspector or one of his superiors. He did
so. That was the last we heard of the matter.


The _Engineering & Mining Journal's_ lawyers addressed themselves
to customers of the Scheftels company, who had lost money in the market
break in Ely Central from $4 to $1.50. By letter they urged them to
send on a full statement of facts and suggested that they might be of
service, and without charge.

Letters of this character were sent to large numbers of our customers,
many of whom simply sent them to us. In some cases, however, customers
who had read the attack in the _Engineering & Mining Journal_ or
quotations from it in widely circulated daily newspapers, needed but
the letter from the lawyers to induce them to come forward with a
complaint.

On the whole, this fishing expedition must have been something of a
water-haul and a disappointment, for the attorneys of the
_Engineering & Mining Journal_.

The Post-office Department at New York, in January and February, sent
letters broadcast to readers of the Scheftels Weekly Market Letter,
asking whether the business carried on was satisfactory--the usual form
that is used where a firm is under investigation. Scores of these
letters were forwarded to us by customers with remarks to the effect
that evidently "somebody was after us." An inquiry of this sort is
calculated to do terrible damage to the reputation and standing of any
house that does a quasi-banking business. Our attorneys complained to
Inspector Mayer of the New York division of the Post-office that an
injustice was being done. No more letters of the character described
were sent out, because the early replies that were received by the
Inspector to his circular letter brought forth no serious complaints.
However, it was afterward disclosed that the investigation did not
cease here and that the Post-Office Department continued to conduct a
searching inquiry only finally to abandon its enterprise.

Enters upon the scene an associate of the _Engineering & Mining
Journal's_ lawyers defending that publication against our suit for
libel. He called at the Scheftels offices and demanded from Mr.
Scheftels information with regard to the account of C. H. Slack of
Chicago. He got it. It showed that Mr. Slack had purchased 50,000
shares of Bovard Consolidated at 10 cents per share, for which he had
paid cash, and that Mr. Slack had purchased an additional 100,000
shares at 14-1/4 and 14-3/4 cents per share; and that Mr. Slack had
refused, after the market declined to below the purchase price, to pay
the balance due, because of delayed delivery.

The delay in delivery was accidental. The Scheftels company actually
had in its possession two million shares of the stock or more, and the
delivery would have been tendered earlier but for the fact that the
raid on Ely Central had piled up so much work for the clerical force
that everything was set back. We knew of no legitimate excuse for Mr.
Slack, because he could have ordered the stock sold at any time,
delivery or no delivery. The Slack transaction receives amplification
here, because later, when the Scheftels corporation was raided by a
Special Agent of the Department of Justice, it figured as one of the
cases cited by the Agent in the warrant sworn to by him against B. H.
Scheftels & Company as proving the commission of crime.

Another case about which Mr. Scheftels was asked to give full
information was that of D. J. Szymanski, a corn doctor at 25 Broad
Street. Mr. Scheftels had urged the Doctor to buy Ely Central when it
was selling at 75 cents before the rise. Later, when the advance was
well under way, above the $3 point, the Doctor bought some stock
through the Scheftels corporation. When the price hit $4 he was urged
to take profits. He refused to do so. When the attack began and the
price broke badly the Doctor saw a big loss ahead.

He called at the Scheftels' office and begged for the return of the
money he had lost in his Ely Central speculation.

The investigation was heralded among the brokers and caused much market
pressure on the stocks fathered by the Scheftels company. We were not
dismayed. To strengthen our position and to give added token of our
good faith we increased our development operations at the mines. Our
expenses in that quarter were swelled to the limit of working capacity
on our underground explorations, as I realized that our salvation might
depend on making good in quick order with Ely Central from a mining
standpoint. We knew the ore was there and that it was up to us to get
it before our enemies got us.


A GOVERNMENT RAID IS RUMORED

Out of a blue sky late in the month of June came news to the Scheftels
office that a newspaper reporter on the New York _American_ had
stated that he had seen a memorandum in the city editor's
assignment-book to watch out for a Scheftels raid by the United States
Government. The information was reliable and it gave us a shock. Yet
the thought that the powers of a great government like the United
States could be used to crush us without giving us a hearing seemed
unbelievable.

To be on the safe side Mr. Scheftels, accompanied by an attorney of
high standing, visited Washington. They went direct to the Department
of Justice, where Attorney-General Wickersham's private secretary,
after a friendly conversation, referred them to the chief clerk. He
reported, after a search of twenty-five minutes' duration, that there
was no charge against B. H. Scheftels & Company. He even volunteered
the information that he did not know that such a firm was in existence.

It afterward developed that at the very time Mr. Scheftels and the
attorney were at the Department of Justice a special rubber-shoe
investigation was on under the dual direction of a young Washington
lawyer on Attorney-General Wickersham's personal staff, and a Special
Agent of the Department of Justice. The latter had been given
extraordinary powers as a special agent of the Department of Justice,
ostensibly to "clean out Wall Street."

Satisfied they were in the wrong place, Mr. Scheftels and the
counsellor departed from the Attorney-General's office for the
Post-Office Department. They were referred to Chief Inspector Sharp.
The lawyer requested that the Scheftels corporation be given a hearing
before any action was taken on any complaints that might reach the
department. Mr. Sharp agreed to this on condition that the attorney
would agree for the Scheftels company that an inspection of the books
of the corporation would be permitted on demand at any time. There was
a ready assent. A memorandum to this effect was left with Inspector
Sharp.

Mr. Scheftels left the Department with positive assurance that no snap
judgment would be taken. Edmund R. Dodge of Nevada, personal counsel of
B. H. Scheftels & Company, then addressed a letter to U.S. Senator
Newlands with the request that he take the matter up direct with the
Postmaster-General.

Senator Newlands, under date of July 2, wrote Mr. Dodge that he had
addressed a letter to the Postmaster-General with the request that
notice be given to Mr. Dodge in case any complaint or information was
lodged against the Scheftels corporation. A few days later Senator
Newlands sent Mr. Dodge a letter from Theodore Ingalls, Acting Chief
Inspector of the Post-Office Department, in which Mr. Ingalls said it
was the practice of the Department in case of alleged use of the mails
for fraudulent purposes to give individuals against whom complaint has
been made full opportunity to be heard either through person or
counsel, should adverse action be contemplated as a result of the
investigation of such allegation.

Feeling that our house had been securely safeguarded against surprise
parties, I at this junction took a trip to Nevada, where urgent
business matters required my attention. While I was in the West
telegrams were sent me that the premier mail-order mining-stock
bucket-shop firm on Broad Street was flooding the mail and burdening
the telegraph wires with urgent appeals to stockholders of Rawhide
Coalition, one of our specialties, to sell out their holdings, as a
severe break in the price of the shares was impending. Forewarned of
this attack, I telegraphed instructions from Reno to meet the onslaught
with a notice in the _Mining Financial News_ addressed to investors,
telling them to be on their guard.

My trip to the West made a pocketful of money for investors by my
purchase of the control in the Jumbo Extension company on a monthly
payment plan. The price of the stock tripled in the market. My
re-entrance into the Goldfield camp was especially distasteful to the
Nixon-Wingfield interests. Before I left Goldfield I was actually
warned that the vengeance wreaked on the Sullivan Trust Company would
be visited on the Scheftels company for daring to reinvade the
Goldfield district.


Late in August the Scheftels company endured what was probably the most
severe strain it had been put to since its incorporation. We had been
making heroic efforts to rally the price of our specialties on the New
York Curb market. We were meeting with unusual resistance from
professional sources. At the period of which I narrate, Ely Central had
registered a low quotation of 62-1/2 cents and we had successfully
strengthened it to around $1. All the way up we met with heavy sales.
One day deliveries crowded in so fast that three cashiers working in
the "cage" were unable to keep up with the transactions. The business
of the corporation had been heavy in the general list as well as in the
house specialties. There was more than sufficient money on hand to
finance all the transactions that day, but not, however, unless
deposits were made in bank as rapidly as our own deliveries were made
and collected for by our messengers.

About 2 o'clock in the afternoon a report reached the Curb that the
bank checks of B. H. Scheftels & Company were not being promptly
certified. As this rumor gained currency the excitement on the Curb
increased. The Curb concluded that we were at last "busted." Motley
throngs began to assemble in front of the offices. The fierce yells of
brokers could be heard bidding for and offering Scheftels checks below
their face value. A throng of the riffraff of the Street swarmed in
front of the building.

One or two individuals, implacable enemies who had repeatedly led the
market onslaught against the Scheftels stocks, offered Scheftels checks
for small sums at as low as 50 cents on the dollar. These were licked
up by our friends who had been assured that we were financially all
right and that some mistake must have been made at the bank.

Investigation showed that dilatory message service was responsible for
the bank's delay in certifying. Our deposits did not reach the bank as
promptly as they should have. As a special favor to us that afternoon,
while the tumult in front of our doors was greatest, the bank continued
to certify checks until 3:30 o'clock, extending the closing time 30
minutes. Then they reported that a comfortable cash balance was still
on hand.

The next morning the newspapers started a jamboree. First-page,
last-column, double-leaded, scare-head stories greeted every New Yorker
for breakfast, telling him about the panic among Curb brokers to sell
the Scheftels checks the afternoon before. Needless to say it was the
kind of notoriety that was likely to do greatest injury to the House of
Scheftels. If anything half as bad had been printed about the strongest
bank in New York, that bank would have been forced to close its doors
before the day was half over.

Nor did I for a moment underrate the danger of our position. Between
two suns I managed to assemble $50,000 in addition to our cash
reserves, with promises of as much more as was needed. We easily held
the fort. At the end of the day's business I created a diversion by
appearing in the Scheftels board-room, flourishing a handful of $1,000
bills before the newspaper men. The scribes found the Scheftels
corporation meeting all demands, and, at the end of the session, with a
small bale of undeposited money in its possession.

The strain, however, was great. Confidence was again impaired. Many
accounts were withdrawn by customers. We were compelled to ease our
load by selling accumulated stocks at a loss. The price of Ely Central
and other Scheftels promotions dropped. The decline was assisted by
general weakness in other Curb stocks.

Peculiarly enough, at the time when the market for Ely Central shares
was lowest, during the latter part of September, fourteen months after
the Scheftels company had taken hold of the proposition, mine reports
were most favorable. Underground development work and churn drilling
had set at rest for all time the question of whether or not mineralized
porphyry underlies the rhyolite cap or flow extending eastward through
Ely Central ground from the steam-shovel pit of the Nevada
Consolidated. Upward of $240,000 had been paid out for administration,
mine equipment and for miners' wages to make this demonstration.

The Scheftels company was now informed that the Nevada Consolidated was
actually meditating a trespass on the Juniper claim of the Ely Central
company, in order to secure an outlet from the lower levels of its
giant steam-shovel pit. Warning in writing had already been served on
the Nevada Consolidated officials against such a course. On September
25th attorneys of the Ely Central Copper Company secured from a Nevada
court an order restraining the Nevada Consolidated from proceeding with
this trespass and citing it to show cause why it should not cease to
trespass on other Ely Central ground.

The attorney telegraphed to New York that a bond was required before
the injunction could be made operative. On September 27th and 28th
telegrams were exchanged between the Ely Central offices in New York
and the Nevada attorneys of the company at Reno as to providing
sureties for the bond.

The sureties never qualified. A catastrophe befell us and brought to an
earthquake finish the house of B. H. Scheftels & Company and all its
ambitious plans.


The constant turmoil in which the House of Scheftels had found itself,
from the day the _Engineering & Mining Journal's_ attack appeared,
had made it impossible for the Scheftels company to hold the markets
for Ely Central and Rawhide Coalition. Impairment of credit, money
stringency and a general declining market were partly responsible. But
there was another important factor. Because of the time-limit of its
options, the Scheftels company was forced, from time to time, to throw
stock on the market at prices which showed an actual loss.

It had one market winner which showed customers and the corporation
itself a large profit, namely, Jumbo Extension. I held an option on
approximately 450,000 shares of this stock at an average price of 35
cents, which I had turned over to the corporation. The market advanced
to 70. Following the tactics employed in Ely Central at the outset of
that deal, the Scheftels corporation had urged all its customers to buy
Jumbo Extension at the very moment when I was negotiating for the
option in Goldfield, with the result that purchases were made in the
open market by readers of our market literature at from 25 cents up,
with accompanying profit-making.

As the price soared, a short interest of 150,000 shares of Jumbo
Extension had developed among brokers in San Francisco and New York,
and it was very apparent from the demands of stock for borrowing
purposes that it would be impossible for the short interests to cover
excepting upon our terms. The Scheftels company was making ready for a
"squeeze" of the shorts such as had not been administered before in the
history of the Curb. At the very moment of victory, however, when we
were making ready to execute a magnificent market coup in Jumbo
Extension in the markets of San Francisco and New York, we were plunged
without warning to complete ruin.


THE RAID ON B. H. SCHEFTELS & CO.

The destruction of the Scheftels structure was consummated on the 29th
day of September, 1910. I was standing on the front stoop of the
Scheftels offices, watching the markets for the Scheftels specialties.
A broker with San Francisco connections made me a bid of 68 cents for
10,000 shares of Jumbo Extension. I promptly refused. At that very
moment my attention was called to the violent slamming of a door behind
me. Turning to a Scheftels employee who was standing by my side, I
learned that a number of strangers had filed into the customers' room
without attracting any particular attention. I tried to get in. The
door was locked. Undoubtedly something serious was transpiring. I
walked a full block through the hallway to the New Street entrance
of the building where the offices of the _Mining Financial News_
adjoined those of the Scheftels corporation. I tried the door there
with similar result. It was locked against me.

That settled it. I concluded that the ax had fallen.

The shock of realization that our offices were being raided by the
Government did not for a moment throw me off my balance or put fear in
my heart, nor did the sense of the outrage affect me at the moment.
There was but one sickening thought--the ruin of the edifice I and my
associates had labored day and night for so many months to build and
the fate of our customers who had invested their money in the companies
we had promoted.

In three seconds I was on my way to the place where I thought succor
could be found--the offices of the Scheftels attorneys. I walked across
the street to the New Street entrance of a building that extends from
Broadway to New Street, ambled across to the Broadway side, jumped on a
surface car, rode three blocks to Broadway and Cedar Street, jumped
into an elevator, and in a few minutes entered the offices of House,
Grossman & Vorhaus.

"Go over to the Scheftels offices," I said, "and be quick! I think we
are being raided."

In a moment two members of the law firm were on their way. Within ten
minutes after the raiders had entered the offices the lawyers were on
the spot. They were denied admittance and had to content themselves
with waiting outside the door until the prisoners were taken out.

The moment the lawyers left their offices I began to use the 'phones to
provide for the release on bail of the men arrested. I found it
necessary to go in person and so I left the lawyers' offices and walked
down Broadway. My attention was attracted by the clanging of the bell
of the police-patrol wagon. As it wheeled past me on the run I could
see my associates huddled together in the Black Maria on their way to
the bastile.

For the moment, I lost full sense of the gravity of what was
transpiring and was overcome by a feeling of joy that I had been spared
that ignominy. That self-felicitating slant of an intensely serious
situation passed. My associates were in trouble and it was up to me to
help them. I was at large and I knew that I could do more for my
friends and myself by not immediately surrendering.

I returned to the lawyer's office, where I remained. All this time the
thought never entered my mind that we were in any sense guilty of any
intent to defraud anybody, or that we had committed any offense against
law or the rules of fair conduct. The one consuming and controlling
idea in my mind was that somebody had put one over on us and that it
was up to me to organize for defense against the abominable outrage.

What transpired behind the closed doors while the Scheftels lawyers
were attempting to gain an entrance for the instruction of the
corporation, its officers and employees as to their rights, beggars
description. Gentle reader, you would not conceive the reality to be
possible. Armed with a warrant which conferred upon him the right to
arrest, seize, search and confiscate, the Special Agent of the
Department of Justice had secured from the local police headquarters a
detail of fifteen heavily armed plain-clothes men.

Once inside the Scheftels establishment, the doors were locked and
egress barred. The main body of invaders then took possession of the
front offices, while others searched through the back rooms and
boisterously commanded everybody to remain where they were until given
permission to depart. The establishment was under seizure, every foot
of it, and every person found within its doors was held prisoner. The
Special Agent took pains to impress upon everybody within hearing that
he was in supreme command. Leaving police guards in the front room, he
stalked into the telegraph-cage where two or three operators were
sitting at tables.

Pressing the muzzle of a revolver into the face of Chief Operator
Walter Campbell--a quiet and inoffensive man--the Special Agent
commanded:

"Cut off that connection!"

Mr. Campbell didn't at first see the gun because it was pointed at his
blind eye. When he got his first peep he concluded that a maniac had
invaded his sanctum and he almost expired with apoplexy on the spot.


Returning to the front office, the Agent entered the cashier's cage and
took possession of the company's pouch containing its securities.

He gave no receipt to any responsible employee of the Scheftels company
for anything. When Mr. Stone, one of the cashiers, suggested to him
that he was there to safeguard the securities, he thundered,

"Come out of there!"

"What authority have you for this?" demanded Mr. Stone. The Agent
thereupon showed his badge.

A moment later one of the deputies pried open the cash-drawer. The
Special Agent was at his elbow.

"Oh, look what's here!" cried the deputy.

Thereupon the Agent of the Department of Justice impounded the contents
of the cash-drawer, without counting the cash, checks, money-orders,
etc., or giving any member of our firm a receipt for them.

Turning to the Scheftels officers and employees who had been placed
under arrest, he ordered them removed from the room.

It was about as raw a performance as was ever witnessed in a peaceful
brokerage firm's banking-room.

Bookkeepers were ordered to close up books. United States mail in the
office was impounded, including mail that had been received in the
office for delivery to others.

The Scheftels employees were commanded to stand in their places with
arms folded. The desperadoes among them--those for whom a warrant had
been issued and who had been jerked out and huddled together in the
outer room--were then searched for deadly weapons. One penknife and the
stub of a lead-pencil were found on their persons. The deadly knife was
hardly sharp enough to serve the purpose of nail-manicuring. Not one of
the men under arrest would have known how to use a revolver if it had
been placed in his hands.

The men taken into custody were: Mr. Scheftels, aged 54, quiet and
inoffensive, rounding out an honorable business career without a
blemish of any kind on his character or standing; Charles F. Belser,
one of the cashiers of the corporation and a 32d degree Mason, who
never before in his life had been so much as charged with the violation
of the spirit of a minor ordinance; Charles B. Stone, aged 60, another
cashier whose sons and sons-in-law had served their country in the army
and who, himself, was as peaceful as a class leader in a Sunday-school;
John Delaney, Clarence McCormick, William T. Seagraves and George
Sullivan, clerks of the establishment, who were as likely to offer
resistance that would require gun-play to combat as were a quartette of
psalm-singing children.

Mr. Scheftels protested in a dignified and self-respecting way against
the brutal demonstration. He asked to see the authority for the raid.
This was refused until after he and the other desperate characters were
collected in another room. His demand to see the officers' warrant was
met by a vulgar exclamation from the Special Agent, to the effect that,
"If you don't shut up, we will put the irons on you! If you are looking
for any trouble, you ---- ---- stiff, you will get what you are looking
for!"

The absurdity of the armed invasion appealed to everybody but the
ringleader of the raiders. It was a ludicrous situation from a service
viewpoint. There had been no time up to the moment of the raid when a
single man armed with proper authority could not have accomplished with
decency and in good order everything and more than was done by the
"rough house" and brutal invasion of the armed band.

Private papers were grabbed and bundles of certificates of stock,
packages of money, checks, receipts and everything that came in sight
were carried away. No complete record was made at the time of the raid
of the documents and other valuables seized. The temporary receiver for
B. H. Scheftels & Company, before his discharge later on, was able to
gather together and take an accounting of part of the seized assets of
the corporation, but I have no doubt that many thousands of dollars
worth of securities and money were hopelessly lost.

When the wreck was complete the prisoners were driven like malefactors
out of the front entrance, down the steps and loaded into the Black
Maria. Five thousand people witnessed the act. The prisoners pleaded in
vain to be allowed to pay for taxicabs to convey them before the United
States Commissioner. They urged that as yet they had had no hearing and
were innocent in the eyes of the law, and until convicted of some
offense they were entitled to decent treatment. This request was
refused. The delay in the start to the Federal building was just long
enough to give the dense crowd that had filled the block time to insult
the victims of the atrocity to the fullest extent. Friends of the
arrested men boiled over with indignation and several fights occurred.
Men were knocked down, trampled upon and the clothing torn from their
backs in the desperate mêlée. The scene was disgraceful.

An army of newspaper reporters, attended by a camera brigade, were on
the spot and snapshotted the prisoners as they entered the Black Maria.
With bells clanging and whips lashing, a start was made up Broad Street
to Wall. Then the vehicle turned up Broadway and ding-donged on to the
Federal building. There the men were arraigned. Bail aggregating
$55,000 was demanded. Later several of the men taken into custody in
this brutal manner were not even indicted.

Called upon to identify the prisoners, the Special Agent of the
Department of Justice was unable to point out any of them except Mr.
Scheftels. A stenographer in the employ of the corporation was forced
to single them out.

The warrant proved to have been sworn to by the Special Agent and had
been granted on his affidavit that the corporation had committed crimes
against some few of its customers. Two of them have already been
mentioned in this article as Slack and Szymanski, whose statements had
been furnished to the attorneys of the _Engineer & Mining Journal_.

From the Court House to the Tombs, the Scheftels desperadoes, in
shackles, were escorted up Broadway. Later in the day when bail was
ready and the prisoners were sent for, they were handcuffed again and
marched in parade up streets and down avenues of the densest section of
New York City.


I had worked all afternoon in the lawyers' offices with one object in
view, namely, the securing of bail for the imprisoned men. I succeeded.
I now got busy with my own bail, the court having fixed it in advance
at $15,000. In the morning I walked from my lawyers' offices to the
Post-Office Building and surrendered myself, being immediately released
on surety which was waiting in the office of the United States
Commissioner. As I left the building I recognized scores of Scheftels
customers. Several grasped my hand.

My indignation grew as the circumstances came up under review and I had
time to connect and collate the facts. Gradually the whole truth
revealed itself. I can relate only part of it. The full, detailed story
would extend itself into a volume, and the space here at my command is
limited. I learned that from the moment the Special Agent had been put
on the scent with permission to put us out of business he had never
slackened his effort to turn the trick.

His efforts attracted the attention of sundry newspaper editors with
Wall Street affiliations and also enemies generally who hastened to
coöperate with him. His office as a Special Agent of the Department of
Justice gave to his statements weight which would not have been given
to them had he as an individual sponsored the charges. His official
position imparted exaggerated importance to his statements in the eyes
of newspaper men, and, after the raid, to the public.

A person whom we shall characterize as the Tool now appears on the
scene with alleged information which he placed at the service of the
Special Agent to back him up before the Assistant United States
attorneys in New York with testimony since recanted over the signature
of the false witness.


In the preceding chapter I called attention to some of the atrociously
false statements that were published on the day following the raid. I
gave only an inkling. The newspapers declared that Ely Central had cost
the Scheftels company 5 cents per share, that the capital stock was
over-issued, and that the property was worthless. Jumbo Extension,
which has since distributed $95,000 in dividends to its stockholders,
has still a treasury reserve of $100,000 and is selling to-day in the
markets at a share valuation of about one-quarter of a million dollars
for the property, was also described as a "fake stock." Rawhide
Coalition, which has produced upward of $400,000 in bullion, and which
is to-day recognized as one of the substantial gold mines of the Far
West, was labeled plain junk. Bovard, which represented an investment
of nearly $100,000 for property account and mine development and which
had been promoted at 10 cents per share on representations that it was
a "prospect," was stated to be a raw steal.

The Scheftels corporation was said to have got away with millions of
dollars by selling "fake mining stocks." It was also stated that I had
profited to the extent of millions for my personal account. The
Scheftels mailing-list was described as a regulation "sucker list,"
notwithstanding the fact that the principal names that were on it were
stockholders in Guggenheim companies.

The ringleaders were pictured as myself--"a man with an awful
Past"--and the "notorious character," "Red Letter" Sullivan. Mr.
Sullivan was styled as the facile letter-writer who had addressed the
"suckers" and hypnotized them, principally widows and orphans, to
withdraw their money from the savings-banks and send it to the
Scheftels sharks. "Red Letter" Sullivan was also referred to as a man
with a "Past."

The true facts regarding Mr. Sullivan's connection with the Scheftels
company were these: A few months before, he had applied for a position.
He was then employed as manager of a Boston stock-brokerage office. He
was awarded the job of time-clerk in the stenographers' department.

His job, while employed with the Scheftels company, was to see that the
stenographers reported on time, did their work properly and were not
paid for any services they did not render. He had little or nothing
whatever to do with the correspondence department. He never dictated
any answers to letters received by the Scheftels company. Never was he
employed in an executive capacity by the Scheftels company. We knew
little or nothing of the "Red Letter" title with which he had been
decorated. The first we learned of it was in the newspapers after the
raid. Investigation revealed that ten years before, while a broker in
Chicago, he had issued a weekly market letter which was printed on red
paper.

I have thus far not given space to one of the greatest wrongs connected
with this disgraceful proceeding--the wrong and damage inflicted upon a
multitude of helpless stockholders. While the Special Agent of the
Department of Justice and his armed followers were wrecking the
Scheftels offices and terrorizing the place, the Scheftels group of
mining stocks was being savagely raided on the Curb and enormous losses
were inflicted on the public. Thousands of margin accounts were wiped
out in less time than it takes to tell of the massacre. Declines in Ely
Central, Jumbo Extension, Rawhide Coalition and Bovard Consolidated
exceeded $2,000,000. This loss was distributed among approximately
fourteen thousand shareholders of record and as many more not of
record.

This large army of innocent shareholders was helpless. From such
species of confiscation the law affords no relief or recourse, except
actual acquittal of the arrested persons, in whom lies the confiding
investor's only chance for the market rehabilitation of his securities.


A TOOL'S CONFESSION

The signed confession of the Tool of the Special Agent, who appeared
before Assistant Attorneys Dorr and Smith at the United States
Attorney's office in New York, which says he gave false testimony, and
the voluntary statement of John J. Roach, a stock broker who was
employed by the now defunct firm of Frederick Simmonds, regarding the
relations between the Special Agent and that firm, while Special Agent
of the Government, reveal the weak foundations of the Government's
charges.

The Tool, prior to the raid, had been in the Scheftels employ. For a
few months he had been a traveling business-getter for the firm. Then
he was discharged. He associated himself with Frederick Simmonds, a
member of the Consolidated Stock Exchange. Mr. Simmonds was badly in
debt. The Tool had no money. The Agent, when he was trying to get the
United States Attorney's office in New York to agree that the
information collected was sufficient to warrant a raid, prevailed upon
the Tool to appear before the assistant attorneys and give testimony.

In this story the chief value of the Tool himself is that he has no
value. He made his statements against us to Mr. Dorr, assistant U.S.
district attorney. Then he gave me a statement, signed in the presence
of witnesses, recanting the statements made to Mr. Dorr. To this he
later added a written postscript enforcing his recantation. Then he
re-recanted and said that a large part of his first recantation, signed
by him and initialed by him on each page with his initials was false.
The reader is left to judge just which one of the Tool's three
positions is the one in which he tells the truth. It is obvious that he
must be lying in the two others, and it is not impossible that he may
be lying in all three--except that some of the stuff in his first
recantation, which he later denies in his second, has been verified
from other sources.

Here is the main point to bear in mind concerning the Tool,--the
sovereign power of seizure, search and confiscation brought into play
by our great Government without due process of law, was based in part
on the flimsy testimony of such a person. Thousands of investors
suffered from the blow, as well as myself and associates.

It would appear from the Roach statement that he was largely
instrumental in bringing about the crisis that resulted in the
suspension of the Simmonds firm and in the disclosures of the Special
Agent's relations therewith. These facts have become, in most
instances, matters of public record. They came out during the hearings
before the receiver for the bankrupt concern. It was found that the
liabilities of the "busted" firm were $85,000 and the assets 100 shares
of cheap mining stock and between $1,500 and $2,000 in cash. It was at
this conjunction that the Special Agent was allowed to resign from the
Department of Justice. The Tool he had foolishly used had proved to be
a two-edged one. The Agent had been "hoist by his own petard."


THE GUGGENHEIMS

Probably the most surprised branch of the Government at the time of the
Scheftels raid was the Post-Office Department. The crime charged was
misuse of the mails. Why, if the Scheftels aggregation were guilty,
didn't the Post-Office Department do the raiding? Why didn't it issue a
fraud order? The Scheftels company has since been declared solvent by
the courts and the temporary receiver discharged. To this day no fraud
order has been issued. Only a short period before the raid, a
presentation on the part of the Post-Office Department of all of the
evidence in the case had been met with a decision that there was no
ground for action.

That the Guggenheim interests did not fail to take advantage of the
plight of the House of Scheftels immediately after the raid finds
conclusive proof in the transpirations in the Ely mining camp. Soon
after the Special Agent descended on the Scheftels offices, an
application in Ely was made for a receiver to take charge of the assets
of the Ely Central Copper Company. The attorneys making the application
were Chandler & Quale, attorneys for the Nevada Consolidated Copper
Company, a Guggenheim enterprise. When the court appointed a receiver
he named this firm as attorneys for the receiver. Attorney J. M.
Lockhart for the Ely Central made a protest that these lawyers, because
of their connection with the Nevada Consolidated were not the proper
persons to protect the interests of the now defenseless Ely Central
stockholders. Then the court appointed another attorney, named Boreman.

Shortly after the receiver was appointed, he applied to the courts for
permission to sell to the Nevada Consolidated for $30,000, which
represented the entire cash indebtedness so far as the receiver knew,
the surface rights to a large acreage of Ely Central and the rights
through Juniper Canyon. This, if accomplished, would have given to the
Nevada Consolidated a railroad right of way that would have solved the
problem confronting it of the transportation of the ores from the lower
levels of the steam-shovel pit. Without such an outlet these ores could
not have been handled without great expense and much difficulty. The
benefits that would have accrued to Nevada Consolidated were almost
incalculable. At the same time, such action would effectually cut the
Ely Central property into two parts. According to the petition it was
stipulated that in selling the surface rights the Ely Central should
cede to the Nevada Consolidated practical ownership, because it was
specified that Ely Central could not interfere in its mining operations
with any rights granted. Attorney Lockhart of Ely Central fought the
receiver and his attorneys and won a victory. The Ely Central property
was saved intact for the stock-holders.

Later, an application was made to the court to sell the entire property
of the Ely Central for $150,000. This was believed to be in the
interests of the Nevada Consolidated. In answer, a petition was filed
to discharge the receiver on the ground that the court originally
appointing him had no jurisdiction. The court finally decided that it
was without jurisdiction, because neither fraud nor incompetency had
been proved, and the property had not been abandoned. The receiver was
discharged.

What has been the attitude of the Department of Justice since the raid
was made? Since the raid the Government has spent several hundred
thousand dollars to disclose sufficient evidence from the books to make
a case of any kind. One stand after another has been taken only to be
abandoned after exhaustive research for evidence to sustain the
original excessive pretenses. Grand Jury after Grand Jury has thrashed
over masses of evidence presented them. Armies of accountants have
worked day and night for weeks and months in an effort to substantiate
the action of the authorities who were led into the commission of a
grave wrong.

The charge that the Scheftels corporation sold fake mining stocks has
fallen to the ground. Government examinations of the properties have
revealed them to be all that they were cracked up to be. Careful and
industrious reading of the mass of market literature sent through the
mails by the Scheftels corporation has failed to disclose deliberate
misrepresentation regarding the potentialities of any of the mining
properties.

The Scheftels corporation transacted considerable margin business with
its customers in the stocks which it sponsored--Ely Central, Jumbo
Extension, Rawhide Coalition and Bovard Consolidated. If the Scheftels
corporation was run by rascals wouldn't they have been tempted
frequently to throw their weight on top of the market and endeavor to
break the price of stocks to wipe out the margin traders? Did the
Government find any evidence of this in the books? No. It found
evidence--overwhelming and cumulative--that on nearly all occasions the
Scheftels corporation actually exhausted its every resource to support
the market in its stocks and hold up the price in the interests of
stockholders. Evidence was also found in quantity that the Scheftels
company discouraged the practice of margin-trading.

The superseding indictment handed down by the Grand Jury late in
August, 1911, eleven months after the raid, eliminated the charge of
mine misrepresentation regarding the Scheftels promotions and reduced
it practically to one of charging commissions and interest without
earning them.

Not less than 85 per cent. of the total brokerage transactions of the
Scheftels corporation were in their own stocks, and at nearly all times
in the Scheftels history it had on hand, put up on loans or in banks
under option, anywhere from three million to seven million shares of
these securities. It actually bought, sold and _delivered_ in this
period over fifteen million shares of stock!

As already stated, the Scheftels corporation made it a practice to sell
stocks on the general list as an insurance against declines in the
market which might carry down the price of its own securities, and
this, in the finality, was what the Government, after the expense of
hundreds of thousands of dollars and the employment of the wisest of
counsel, was compelled to tie to in order to justify in the eyes of the
great American public the use of the rare power of seizure, search and
arrest and of its denial of a prayer for a hearing to the victims which
was made before the arbitrary power was used.




CHAPTER XII

THE LESSON OF IT ALL


What is the lesson of my experience--the big broad lesson for the
American citizen? This is it:

Don't speculate in Wall Street. You haven't got a chance. The cards are
stacked by the "big fellows" and you can win only when they allow you
to. The information that is permitted to reach you as to market
probabilities through the financial columns of the daily newspapers is,
as a rule, poisoned at its fountain. It has for its major purpose your
financial undoing. Few financial writers dare to tell the whole
truth--even on the rare occasions when they are able to learn it. Most
of them are, indeed, subsidized to suppress the truth and to accelerate
public opinion in the channels that mean money in the pockets of the
securities sellers. As for the literature of stock brokers it is
generally even more misleading. Few brokers ever dare to tell the whole
truth for fear of embittering the interests and being hounded into
bankruptcy and worse.

As for myself, what excuse have I had for catering to the gambling
instinct? This is it: I thought the promoter and the public could both
win. I now know that this happens only rarely. As the game is now
generally played by the big fellows, the public hasn't got a chance.

I have not got a dollar. Who profited?

The answer is: If anybody, the aggregate. The world has been the
gainer. It is richer for the gold, the silver, the copper, and other
indestructible metals that have been brought to the surface, as a
result of this endeavor, and added to the wealth of the nation.

But for the gambling instinct and the promoter who caters to it, the
treasure-stores of Nature might remain undisturbed and fallow and the
world's development forces lie limp and impotent.


THE END







