A GIANT IN BABY SWEAT
Steadily the American giant grew worse in his mind. There were yet lower depths of insolvency. The passion to touch them was like the impulse to collective suicide in the Dark Ages. Bankruptcy ceased to be a disgrace, there was so much of it. Hope of profit was abandoned. Optimism was believed to be an unsound mode of thought. All of this was a state of feeling, a delusion purely. The country was rich. The unemployed were fed on fine white bread and an unlaundered linen shirt cost fifty cents.
Every catastrophe was bound to happen.
On a rainy Wall Street morning in late December, with no sign or gesture of anguish, the Great Midwestern Railroad gave up its corporate existence and died.
It was a shapeless event.
Ten men sat around the long table in the Board Room smoking, fidgeting, irritably watching the time. These were the eminent directors. They were men whose time nobody could afford to waste,—enterprisers in credit, capital, oil, coal, metals and packing house products. They wished the obsequies to begin promptly and be as brief as possible, for they had many other things to mind. Yet the president, with nothing else to do, had kept them waiting for nearly five minutes. This had never happened before. However, when he came and silently took his place at the head of the table he looked so dismal that they forgave him, and the ceremony might have been brought off with some amiability of spirit but for a disagreeable incident at the beginning.
The disturber was Jonas Gates, a dry, mottled little man, indecorously old and lewdly alert, with a shameless, impish sense of pleasantry. He practiced usury on a large scale as a kind of Stock Exchange pawn broker, lending money to people in difficulties at high rates of interest until they had nothing more to pledge and then cutting them off at the pockets. He knew some of everybody’s secrets and much more than he knew he guessed by the magic formula that he was sure of nothing worse of himself than was generally true of his neighbors. He was hated for his tongue, feared for what he knew and respected for his wealth, which was one of the largest private fortunes of that time.
This Jonas Gates, cupping his hands to his mouth and making his voice high and distant, as one calling to the echoes, inquired at large:
“Are there any stockholders present?”
Everyone was scandalized. Several were without pretense of concealing it. He surveyed their faces with amused impudence. Then spreading his hands at each side of his mouth and making his voice hoarse, like a boy calling into an empty hogshead, he inquired again:
“Are there any stockholders present?”
It was a ghastly joke. There is no law forbidding a director to part with his shares when the omens foretell disaster. It is commonly done in fact in the anonymous mist of the stock market, only you never mention it. The convention is that all stockholders have equal rights of partnership. But as directors are the few who have been elected by many to act as managing partners, and since it is necessary for managing partners to have first access to all information, it follows from the nature of circumstances that they are inside stockholders and that the others are outside stockholders; and it follows no less from the nature of mankind that the outsiders invariably suspect the insiders of selling out in time to save themselves.
“Iss id vor a meeting ov ze directors ve are here, Mr. Presidend?” asked Mordecai. He was the eminent banker. He spoke sweetly and lisped slightly as he always did when annoyed.
“This is a directors’ meeting,” said the president, adding: “The secretary will read the call.”
“Please God!” exclaimed Gates, not yet ready to be extinguished. “Put it on the record. I ask: Are there any stockholders present? No answer. Again I ask: Are there any stockholders present? No answer. Great embarrassment. What is to be done? Idea! This is a directors’ meeting. Bravo! Proceed. On with the stockholders’ business. We are not stockholders. Therefore we shall be able to transact their business impartially.”
There was a distraught silence.
“Proceed,” said Gates. “I shan’t interrupt the services any more.”
What followed was brief. A resolution was offered and passed to the secretary to be read, setting out that owing to conditions which left the directors helpless and blameless, to wit: the depression of trade, the distrust of securities, the rapacity of the tax gatherer, the harassment of carriers by government agencies, et cetera, the Great Midwestern was unable to pay its current debts, wherefore counsel should be instructed to carry out the formalities of putting the property in the hands of the court.
“Is there any discussion?” asked the president.
Horace Potter, of oil, spoke for the first time. He was a sudden, ferocious man with enormous gray eyebrows and inflammable blue eyes.
“Have a glance at Providence,” he said. “We damn everything else. Say the crops are a disgrace. That’s true and it’s nobody’s fault here below.”
“Yes, that should go in,” said the president. He took back the resolution, wrote into it with a short lead pencil the phrase, “and the failure of crops over a large part of the railroad’s territory,” and offered it to be read again. Everybody nodded. He called for the vote. The ayes were unanimous, and the aye of Jonas Gates was the loudest of all.
With that they rose.
The Board Room had two doors. One was a service door opening into Harbinger’s office; it was used only by the secretary and such other subordinate officials as might be summoned to attend a board meeting with records and data. The main door through which the directors came and went was the other one opening into the president’s office. Their way of normal exit therefore was through the president’s office, through the anteroom where I worked, into the reception room beyond and thence to the public corridor.
As the president’s private secretary it was expected of me to see them out. Directly behind me on this occasion came Mordecai, like a biblical image, his arms stiff at his sides, the expression of his face remote and sacrificial. This was his normal aspect; nevertheless it seemed now particularly appropriate. A sacrifice had been performed upon the mysterious altar of solvency and he alone had any solemnity about it. The others followed, helping each other a little with their coats, exchanging remarks, some laughing.
So we came to the door that opened into the reception room. I had my hand on the knob when Mordecai suddenly recoiled.
“A-h-h-h-ch, don’d!” he exclaimed. “Zey are zare.”
Evidently some rumor of the truth had got abroad in Wall Street. The reception room was full of reporters waiting for news of the meeting, and this was unexpected, since nobody save the officials and directors were supposed to know that a meeting was taking place. Mordecai’s fear of reporters was ludicrous, like some men’s fear of small reptiles. He stood with his back to the door facing the other directors. Horace Potter was for pushing through.
“Hell,” he said. “Let’s tell them we’ve let her go and get out. I’m overdue at another meeting three blocks from here.”
He could move through a crowd of clamorous reporters with the safety of an iceberg.
“Ziz vay, all ze gentlemen, b-l-e-a-s-e,” said Mordecai, ignoring Potter’s suggestion. He led them back to the president’s office; he had remembered an unused, permanently bolted door that opened directly from the president’s office upon the main corridor. His thought was to go that way and circumvent the reporters. But they had sensed that possibility. This point of exit also was besieged.
“A-h-h-h-ch!” he said again. “Zey are eferyvare. How iss id zey get ze news?” Saying this he looked at each of his fellow directors severely. Potter frowned, not for being looked at by Mordecai, but from impatience.
“Id iss best zat ze presidend zhall brepare a brief vormal stadement,” said Mordecai. “Ve can vait in ze Board Room. Zen he vill bring zem for ze statement in here. Vhile he iss reading id to zem ve can ze ozer vay ged out.”
“I can’t wait,” said Potter. He bolted into the reception room alone and banged the door behind him. The reporters instantly surrounded him, and we heard him say: “A statement is coming.”
The president turned to me and dictated as follows:
“Certain creditors of the Great Midwestern Railroad Company being about to apply to the court for a receiver to be appointed, the question to be decided at today’s meeting of the directors was whether to borrow a sum of money on the company’s unsecured notes at a high rate of interest and thus temporize with its difficulties or confess its inability to meet its obligations and allow the property to be placed in the hands of the court. After due consideration the directors unanimously resolved to adopt the latter course in order that the assets may be conserved for the benefit of all parties concerned. (Signed.) John J. Valentine, president.”
Turning to the directors, who had been standing in a bored, formless group, he asked: “Does that cover it?”
All of them gave assent save Mordecai. He was gazing at the ceiling, his hands held out, pressing the tips of his fingers together.
“Id iss fery euvonious, Mr. Falentine,” he said. “Conzerved iss a fine vord. A fery good vord. Id iss unvair to ze bankers, iss id not, to zpeak of borrowing ad high rates of interest money? Iss id nod already zat ze company hass borrowed more money vrom id’s bankers zan id can pay?”
“Read it please,” said the president to me. I read it aloud.
“Strike out the phrase, ‘whether to borrow a sum of money on its unsecured notes at a high rate of interest,’ and make it read, ‘the question to be decided at today’s meeting of the directors was whether to temporize with its difficulties, or,’—and so on.”
Mordecai, still gazing at the ceiling, nodded with satisfaction. Then he returned to the plane below and led them back to the Board Room, waiting himself until they were all through and closing the door carefully.
The reporters were admitted. We took care to get all of them in at one time, twenty or more, and held the doors open while the directors, passing through Harbinger’s office, made their august escape.
When the reporters were gone a stillness seemed to rise about us like an enveloping atmosphere. Receding events left phantom echoes in our ears. Valentine, having gazed for some time fixedly at a non-existent object, looked slowly about him, saying:
“The corpse is gone.”
Then he went and stood in one of the west windows. I stood at the other. The rain had congealed. Snow was falling in that ominous, isolating way which produces in blond people a sense of friendly huddling, instinctive memory perhaps of a north time when contact meant warmth and security. It blotted out everything of the view beyond Trinity church and graveyard. There was a surrounding impression of vertical gray planes in the windows of which lights were beginning to appear, for it was suddenly dark. The Trinity chimes proclaimed in this vortex the hour of noon.
“What day of the month is it?” he asked, clearing his voice after speaking.
“The eighteenth.”
“Twenty years, lacking two days, I have been president of the Great Midwestern,” he said. “In that time—” He stopped.... Trinity chimes struck the quarter past. “How it snows,” he said, turning from the window. “Well, you see what the railroad business is like. Shall I ask a place for you on one of the New York papers? I promised to do that, you remember, if anything should happen.”
“If you don’t mind,” I said, “I’ll stay on here to clear things up a bit.”
“I expected you to say that,” he said. “Still, don’t be sentimental about it. Nobody can tell now what will happen. We shall be in the hands of the court. Well, as you like. I have an appointment to keep with counsel. I may not be back today.”
He departed abruptly.
It occurred to me to go about the offices to see what effect the news was having. That would be something to do. Harbinger, leaning over his desk on his elbows, his head clutched in his two hands, was looking at three models of his stamping device.
“How do they take it?”
“Take what?” he asked, not looking up.
“The news.”
“Oh, that! I don’t know. Go ask them yourself.”
John Harrier was sitting precisely as I saw him that first time, perfectly still, staring at an empty desk.
“Well, it appears we are busted,” I said.
“We’ve been busted for about nine months,” he answered, without moving his head. “But now two and two make four again. Thank God, I say. I couldn’t make her look solvent any longer. Arithmetic wouldn’t stand it, and it stands a lot.”
In the large back office the clerks were gathered in small groups discussing it. Work was suspended.
“Hey!” shouted Handbow. “We’re going to celebrate to-night. A little dinner, with, at the Café Boulevard. Will you come?”
The reckless spirit of calamity was catching. I felt it. Even the shabby old furniture took on an irresponsible, vagabond appearance. Solvency, like a scolding, ailing, virtuous wife, was dead and buried. Nobody could help it. Now anything might happen. The moment was full of excitement. There was no boy in the reception room. I sat down at my desk, got up, took a turn about the president’s office, and was thinking I should lock up the place and go out to lunch when I happened to notice that the Board Room door was ajar. In the act of closing it I was startled by the sight of a solitary figure at the head of the long directors’ table. Though his back was to me I recognized him at once. It was Galt. He had slid far down in the chair and was sitting on the end of his spine, legs crossed, hands in his pockets. He might have been asleep. While I hesitated he suddenly got to his feet and began to walk to and fro in a state of excitement. The character of his thoughts appeared in his gestures. His phantasy was that of imposing his will upon a group of men, not easily, but in a very ruthless way.
“Are you running the Great Midwestern?” I asked, pushing the door open.
Starting, he looked at me vaguely, as one coming out of a dream, and said:
“Yes.”
He asked if I had been present at the meeting and was then anxious to know all that had taken place, even the most trivial detail.
“And now,” I said, when I was unable to remember anything more, “please tell me what will happen to the Great Midwestern?”
“Nothing,” he said. “The court will appoint old rhinoceros receiver, and—”
“Mr. Valentine, you mean?”
“That’s customary in friendly proceedings,” he said. “Anyhow, it will be so in this case. The court takes charge of the property as trustee with arbitrary powers. It can’t run the railroad. It must get somebody to do that. So it looks around a bit and decides that the president is the very man. He is hired for the job. The next day he comes back to his old desk with the title of receiver. All essential employes are retained and you go on as before, only without any directors’ meetings.”
“How as before? I don’t understand.”
“That’s the point, Coxey. You can’t shut up a busted railroad like a delicatessen shop. Bankrupt or not it has to go on hauling freight and passengers because it’s what we call a public utility. A railroad may go bust but it can’t stop.”
“Then what is a receivership for?”
“That’s another point. You are getting now some practical economics, not like the stuff old polly-woggle has been filling you up with. The difference is this: When you are bankrupt you put yourself in the hands of the court for self-protection. Then your creditors can’t worry you any more. A railroad in receivership doesn’t have to pay what it owes, but everybody who owes it money has got to pay up because the court says so. It goes along that way for a few months or a year, paying nothing and getting paid, until it shows a little new fat around its bones and is fit to be reorganized.”
“What happens then?”
“Well, then it is purged of sin and gets born again with a new name. The old Great Midwestern Railroad Company becomes the new Great Midwestern Railway Company, issues some new securities on the difference between r-o-a-d and w-a-y, and sets out on its own once more. The receiver is discharged. The stockholders elect a president, maybe the same one as before or maybe not, and the directors begin to hold meetings again.”
The Stock Exchange received the news calmly. It was not unexpected. The directors, as we knew, had been getting out. They read the signs correctly. Under their selling the price of Great Midwestern stock had fallen to a dollar-and-a-half a share. For a stock the par value of which is one hundred dollars that is a quotation of despair. Nothing much more could happen short of utter extinction. Many of the finest railroads in the country were in the same defunct case. You could buy them for less than the junk value of their rails and equipment. But if you owned them you could not sell them for junk. You had to work them, because, as Galt said, they were public utilities. And they worked at a loss.
It happened also on this day that everyone was thinking of something else. That was nothing less than the imminent bankruptcy of the United States Treasury. This delirious event now seemed inevitable.
For several weeks uninterruptedly there had been a run on the government’s gold fund. People were frantic to exchange white money for gold. They waited in a writhing line that kept its insatiable head inside the doors of the sub-Treasury. Its body flowed down the long steps, lay along the north side of Wall Street and terminated in a wriggling tail around the corner in William Street, five minutes’ walk away. It moved steadily forward by successive movements of contraction and elongation. Each day at 3 o’clock the sub-Treasury, slamming its doors, cut off the monster’s head. Each morning at 10 o’clock there was a new and hungrier head waiting to push its way in the instant the doors opened. Its food was gold and nothing else, for it lived there night and day. The particles might change; its total character was always the same. Greed and fear were the integrating principles. Human beings were the helpless cells. It grew. Steadily it ate its way deeper into the nation’s gold reserve, and there was no controlling it, for Congress had said that white money and gold were of equal value and could not believe it was not so. The paying tellers worked very slowly to gain time.
The spectacle was weirdly fascinating. I had been going every day at lunch time to see it. This day the spectators were more numerous than usual, the street was congested with them, because the officers of the sub-Treasury had just telegraphed to Washington saying they could hold out only a few hours more. That meant the gold was nearly gone. It meant that the United States Treasury might at any moment put up its shutters and post a notice: “C L O S E D. Payments suspended. No more gold.”
Never had the line been so excited, so terribly ophidian in its aspect. Its writhings were sickening. The police handled it as the zoo keepers handle a great serpent. That is, they kept it straight. If once it should begin to coil the panic would be uncontrollable.
Particles detached themselves from the tail and ran up and down the body trying to buy places nearer the head. Those nearest the head hotly disputed the right of substitution, as when someone came to take a position he had been paying another to hold. In the tense babel of voices there came sudden fissures of stillness, so that one heard one’s own breathing or the far-off sounds of river traffic. At those moments what was passing before the eyes had the phantastic reality of a dream.
In the throng on the opposite side of the street I ran into Galt and Jonas Gates together. Later it occurred to me that I had never before seen Galt with any director of the Great Midwestern, and it surprised me particularly, as an after thought, that he should know Gates. Just then, however, there was no thinking of anything but the drama in view. Everyone talked to everyone else under the levelling pressure of mass excitement.
“Have you heard?” I asked Galt. “The sub-Treasury has notified Washington that it cannot hold out. It may suspend at any moment.”
“I suppose then eighty million healthy people will have nothing to eat, nothing to wear, no place to go, nothing to do with their idle hands. We’ll all go to hell in a handbasket.”
He spoke loudly. Many faces turned toward us. A very tall, lean man, with a wild light in his eyes and a convulsive, turkey neck, laid a hand on Galt’s arm.
“Right you are, my friend, if I understand your remark. We are about to witness the dawn of a new era. I have proved it. In this little pamphlet, entitled, ‘The Crime of Money—thirty reasons why it should be abolished on earth,’ I show—”
“Don’t jingle your Adam’s apple at me,” said Galt, giving him a look of droll contempt.
The man was struck dumb. Feeling all eyes focused on the exaggerated object thus caricatured in one astonishing stroke he began to gulp uncontrollably. There were shouts of hysterical laughter. In the confusion Galt disappeared, dragging Gates with him.
The sub-Treasury held out until three o’clock and closed its doors once more in a solvent manner, probably, for the last time. Everybody believed it would capitulate to the ophidian thing the next day. There was no escape. Events were in the lap of despair.