WEBVTT

NOTE X. Heyday

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Chapter 10. Hay Day.

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1. His activities were of increasing complexity.

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A stock exchange ticker was installed, for he meant to keep his eye on the stock market.

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Then, an automatic printing device, on which foreign, domestic and Wall Street news bulletins were flashed by telegraph.

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Then, a private switchboard and a number of direct telephones,

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Not one in twenty who entered asked for Valentine, the President.

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A mixed procession it was, engineers, equipment makers, brokers, speculators, inventors, contractors,

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and persons summoned suddenly out of the sky whose business one never knew.

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Never wasting it himself, never permitting anyone else to waste it, he had time for everything.

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He received impressions whole and instantaneously.

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With people, he was abrupt, often rude.

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He wanted the point first.

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If a man with whom he meant to do business insisted upon talking beside the point, he

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would say, go outside to make your speech and then come back.

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He never read a newspaper.

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He looked at it, sniffed, crumpled it up, and cast it from him, all with one gesture.

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Four or five times a day he ran a yard or two of ticker tape through his fingers and

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glanced in passing at the news printing machine.

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Magazines and books were non-existent matter.

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Yet within the area of his own purposes, no fact, no implication of fact, was ever lost.

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Meanwhile, Great Midwestern stock was slowly rising.

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One effect of this was to relieve the tension in the Galt household.

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Grandma Galt's daily question was no longer dreaded.

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Having asked it in the usual way at the end of dinner one evening, and Galt having told

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her the price, she electrified us all by addressing some remarks to me.

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You are with my son a good deal of the time?

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All day, I said.

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I was looking at her.

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She frowned a little before speaking, wetted her lips with her tongue, and spoke precisely

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in the level, slightly deaf and utterly detached way of old people.

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Do you see that he gets a hot lunch every day?

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I have never attended to that, I said.

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Does he, though? she asked.

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We've been very careless about it, I said.

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Sometimes when he's busy he doesn't get any.

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Please see that he gets a hot lunch every day, she said.

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Cold vitals are not good for him.

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And tea if he will drink it.

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I promised.

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An embarrassed silence followed.

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Have you any great Midwestern stock?

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She asked.

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I have a small amount.

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You must believe in it, she said, adding after a pause.

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We do.

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Then she was through.

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Had she alone in that household always believed in great Midwestern stock, which was to believe

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in him?

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Or had she only, of a sudden, become hopeful?

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Was it perhaps a flash of premonition, some slight exercise of the power possessed by

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her son?

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Long afterward I tried to find out.

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She shook her head and seemed not to understand what I was talking about.

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She had forgotten the incident.

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The next day I ordered a hot lunch to be sent in and put upon Galt's desk.

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He said, huh.

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But he was not displeased and ate it.

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And this became thereafter a fixed habit.

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2.

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The new equipment had only just begun to move on the new rails when he went before the board

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with a proposal to raise one hundred millions for more equipment, more rails, elimination

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of curves and reduction of grades.

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My godman! exclaimed Horace Potter, do you want to nickel-plate this road?

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It will nickel-plate itself if we make it flat and straight, said Galt.

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He was in a stronger position this time.

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His predictions were coming true.

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The flood tide was beginning.

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Everybody saw the signs.

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Great Midwestern's earnings were rising faster than those of any competitor, and at the same

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time its costs were falling because of the character of the new equipment.

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Therefore profits were increasing.

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On the other hand, Valentine now was openly hostile, and Jonas Gates, whom Galt could

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have relied upon was ill.

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There were nine at the board table.

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He argued his case skillfully.

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For the first time he produced his profile map of the road, showing where the bad grades

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were and how, on account of them, freight was hauled at a loss over two divisions of

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the right-of-way.

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To flatten here a certain grade, selected for purposes of illustration, would cost five

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millions of dollars.

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The cost of moving freight over that division would be thereby reduced one-tenth of a cent

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per ton per mile.

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This insignificant sum, multiplied by the number of tons moving, would mean a saving

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of a million dollars a year.

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That was twenty percent on the cost of reducing the grade.

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It was certain.

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Are the contracts let?

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asked Valentine ironically.

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They are ready to be let, said Galt.

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3.

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At this time, Galt was laying the foundation for an undisclosed structure.

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It had to be deep and enduring, for the strain would be tremendous.

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He poured money into the Great Midwestern with a raging passion.

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As the earnings increased, he plowed them in.

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With the assistance of the pessimistic treasurer, he disguised the returns.

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Improvements were charged to expenses, as if they were repairs.

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New property was added in the guise of renewing old.

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This he did for fear the stockholders, if they knew the truth, would begin too soon

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to clamor for dividends.

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We spent money only for essential things, that is, in ways that were productive and

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neglected everything else, until we had, at last, the finest transportation machine in

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the country and the shabbiest general offices.

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The consequences of this policy, when they began to be realized, were incredible.

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In the autumn of 1896, a strange event came suddenly to pass.

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People were delivered from the soft money plague, not by their own efforts as they believed,

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but because maladies of the mind are like those of the body.

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If they are not fatal, you are bound to get well.

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Doctors will take the credit.

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The Republican Party won the election that year on a gold platform, and this is treated

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historically as a sacred political victory for yellow money.

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The white money people were hopelessly overturned.

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and it was wholly a psychic phenomenon still.

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Why all at once did a majority of people vote in a certain way?

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To make a change in the laws, you say.

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Yes, but there the mystery deepens.

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Immediately after this vote was cast, the shape of events began to change with no change

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whatever in the laws.

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The law enthroning gold was not enacted until four years later, in 1900, and this was a

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4.

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After 1896, the flood tide began to swell and roar.

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Galt was a stride of it, a colossus emerging from the mist.

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The Great Midwestern was finished.

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He had rebuilt it from end to end, and now for that campaign of expansion which was adumbrated

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on the map I had studied in his room at home.

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For these operations he required the active assistance of Mordecai, Gates and Potter.

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He persuaded them privately and bent them to his views.

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I began to notice that he went more frequently to the stock ticker.

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His ear was attuned to it delicately.

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A sudden change in the rhythm of its grrring would cause him to leave his desk instantly

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and go on to look at the tape.

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He was continually wanted on those telephones with the unknown terminals.

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Speaking into them, he would say, yes, or no, or how many, or ten more at once.

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One afternoon he turned from the ticker and did a grotesque pirouette in the middle of

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the floor.

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Pig in the sack, Coxie, pig in the sack, not a squeal out of him.

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What pig is that?

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I asked.

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He looked at me shrewdly and said no more.

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Under his direction they had been buying control of the Orient and Pacific Railroad in the

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open market so skillfully that no one even suspected it.

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He had not been a speculator all his life for nothing.

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What set him off at that moment was the sight of the last few thousand shares passing on

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the tape.

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Valentine was in Europe for his annual vacation.

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Galt called a special meeting of the directors.

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He talked for an hour on the importance of controlling railroads that could originate

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traffic.

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The Great Midwestern did not originate its own traffic.

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The Orient and Pacific was a far western road with many branches in a rich freight producing

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area.

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The Great Midwestern had been getting only one third of its eastbound freight, and it

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was a very profitable kind of freight, moving in solid trains of iced cars at high rates.

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The other two thirds had been going to competitive lines.

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It would be worth nearly $15 million a year for the Great Midwestern to own the Orient

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and Pacific and Get All of Its Business.

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A syndicate had just acquired a controlling interest in Orient and Pacific stock, and

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he, Galt, had got an option on it at an average price of $40 a share.

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The Great Midwestern could buy it at that price.

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What was the pleasure of the board?

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The substance was true.

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The spirit was rhetorical.

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The formal pleasure of the board was already prepared.

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The members listening solemnly as to a new thing had assisted in the purchase.

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Galt, Potter, Gates and Mordecai were the syndicate.

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Potter as usual called for the vote and voted aye.

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The rest followed.

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A brief statement was issued to the Wall Street news bureaus.

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It produced a strange sensation.

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An operation of great magnitude had been carried through so adroitly that no one suspected

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20 MINUTES AFTER OUR FORMAL STATEMENT HAD BEEN DELIVERED TO THE WALL STREET NEWS BUREAUS,

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The waiting room was full of newspaper reporters demanding to see the chairman.

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But what do they want? asked Galt, angry and petulant.

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We've made all the statement that's necessary.

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They say they must talk to somebody since it is a matter of public interest.

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The bankers have referred them here.

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There's nobody but you to satisfy them.

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Tell them there's nothing more to be said.

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I've told them that.

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They want to ask you some questions.

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It was his first experience, and he dreaded it.

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We'll have a look at them, he said.

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Let them in.

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As they poured in, he scanned their faces.

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Picking out one, a keen, bald, pugnacious trifle, he asked, Who are you?

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I'm from the Evening Post.

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He put the same question to each of the others, and when they were all identified, he turned

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to the first one again.

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Well, Posty, you look so wise.

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You do the talking.

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What do you want to know?

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Posty stepped out on the mat and went at him hard.

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Why had control of the Orient and Pacific been bought?

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What did it cost?

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How would it be paid for?

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Would the road be absorbed by the Great Midwestern or managed independently?

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Had the new management been appointed?

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What were Galt's plans for the future?

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To the first question, he responded in general terms.

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To the second, he said, Is that anybody's business?

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What's the public's business? said Posty.

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Oh! said Galt.

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Well, I can't tell you now.

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It will appear in the annual report.

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After that, he answered each question respectfully, but really told very little, and appeared

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to enjoy the business so long as Posty did the talking.

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When he was through, the journal reporter said, Tell us something about yourself, Mr.

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Galt.

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You are spoken of as one of the brilliant new leaders in finance.

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That's all, said Galt, repressing an expletive and turning his back.

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When they were gone, he said to me, Don't ever let that journal man in again.

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Posty, though, he's all right.

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All accounts of the interview, so far as that went, were substantially correct.

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In some papers, there was a good deal of silly speculation about Galt.

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The journal reporter went further with it than anyone else, described his person and

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5.

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The Orient and Pacific deal brought on the inevitable crisis.

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Valentine was in Paris.

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An American correspondent took the news to him at his hotel and asked for comment upon

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it.

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He blurted his astonishment.

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He knew nothing about it, he said, and believed it was untrue.

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This was unexpected news.

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The correspondent cabled it to his New York paper together with the statement that Valentine

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would cut his vacation and return immediately.

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Paul Street sent it a row.

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It was rumored that Valentine was coming home to depose Galt.

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Also that the purchase of the Orient and Pacific would be stopped by injunction proceedings.

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Comment unfriendly to Galt began to appear in the financial columns of the newspapers.

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Great Midwestern stock now was very active in the market.

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This gave the financial editors their daily text.

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They spoke of its being manipulated, presumably by insiders, and it filled them with foreboding

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to remember that the man now apparently in command of this important property was formerly

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a stock exchange speculator with no railroad experience whatever.

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We easily guessed what all this meant.

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Galt had no friends among the financial editors.

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He did not know one of them by sight or name.

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Valentine knew them well, and so did those bankers who had lost control of the Orient and Pacific.

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The seed of prejudice is easily sown. There is a natural, herd-like predisposition to think ill

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of a newcomer. That makes the soil receptive. Galt was serene until one day suddenly Jonas

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Gates died of old age and sin and then I noticed symptoms of uneasiness. I wondered if he was

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I was worried about those papers I had witnessed in his private office on the day the Great Midwestern failed.

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The executors, of course, would find them.

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On reaching New York, Valentine's first act was to call a meeting of the Board of Directors.

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He was blind with humiliation.

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First, he offered a resolution so defining the duties and limiting the powers of the Chairman of the Board

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as to make that official subordinate to the President.

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Then he spoke.

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Owing to the sinister aspect of the situation, and to the importance of the interests involved,

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he felt himself justified in revealing matters of an extremely confidential character.

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It had come to his knowledge that there existed between the Chairman and the late Jonas Gates

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a formal agreement by the terms of which Gates pledged himself to support Galt for a place

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on the board of directors, and Galt, on his part, in consideration of a large sum of money,

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undertook first to gain control of the company's affairs and overthrow the authority of its president.

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Would the chairman deny this? But wait, there was more.

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In the same way it had come to his knowledge that two other agreements existed as of the same date.

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One provided that when Galt had gained control of the company's policies,

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he would cause it to buy the Orient and Pacific Railroad,

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Road, in which Gates was then a large stockholder.

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The third was a stipulation that a certain part of Gates' profit on the sale of his

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Orient and Pacific stock to the Great Midwestern should apply on Galt's debt to him.

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Would the chairman deny the existence of these agreements?

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Still not waiting for a reply, not expecting one, in fact, he offered a second resolution,

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Calling for the Resignation of Henry M. Galt as Chairman of the Board.

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His place to be filled at the pleasure of the directors.

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Galt all this time sat with his back to Valentine gazing out the window with a bored expression.

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His onset was dramatic and unexpected.

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With a gesture to circumstances he rose, thrust his hands in his pockets and began walking

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slowly to and fro behind Valentine.

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I hate to do it, he said. I like old dog Trey here, but he won't stay off the track. If

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he wants to get run over, I can't help it. Those agreements he speaks of, without saying

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how he got hold of them, they are true. I had a lot of GM stock when the company went

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busted. The stock records will show it. I was in a tight place and went to Gates for

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money to hold on with. He laughed at me, didn't believe the stock was worth a dollar, he said.

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I spent hours with him, telling him what I knew about the property, showing him its possibilities.

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I had made a study of it.

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I spoke of the Orient and Pacific as a road the GM would have to control.

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That would suit me, he said.

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I've just had to take over a large block of that stock for a bad debt.

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I said, all the better.

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With your stock accounted for, it will be easier to buy the rest.

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And so it was.

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But that's ahead of the story.

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said one trouble with the GM was Valentine. I knew that too. The end of it was that I

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persuaded him. He took everything I had and loaned me the money. The agreement was that

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the stuff I pledged with him for the loan could be redeemed only provided my plans for

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the development of the GM were realized and certain results appeared. Otherwise, he was

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is to keep it.

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It was the devil's own bargain.

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I was in a hole, remember?

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Had the bear in my arms and couldn't let go, and you all knew gates.

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Valentine interrupted.

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He spoke without looking around.

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One of your plans for the development of the Great Midwestern was the elimination of the

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president.

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Exactly, said Galt.

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The president at that time was not president, but receiver.

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He was receiver for a property he had managed into bankruptcy.

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Well, that part of the agreement has been kept.

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There ain't any doubt about who's running the GM.

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I'm running it, subject to the approval of the directors.

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Five minutes after I was elected chairman of this board, I took the traffic manager's

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resignation in that room out there, under threat of having him indicted for theft.

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He was the president's friend.

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I did this without the president's sanction or knowledge.

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The place was rotten with graft.

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We were paying extortionate prices for equipment and materials, because the equipment makers

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and the material men were our friends.

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Our pockets were wide open.

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Listen to this.

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From typewritten sheets he read a wrecking indictment of the old valentine management,

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setting out how money had been lost and wasted and frittered away, how the company had been

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overcharged, underpaid and systematically molted.

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He gave exact figures, names, dates and ledger references.

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She's all right now, he said, clean as a grain of wheat.

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I'm telling you what was.

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I don't intimate that the president took part in plucking the old goose.

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I don't say that.

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He was too busy making public speeches on the miseries of railroads to know what was

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going on.

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Valentine was not crushed.

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He showed no sense of guilt.

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No one believed him guilty, in fact.

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What he represented, tragically and with great dignity, was the crime of obsolescence.

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A stronger man was putting him aside in a new time.

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He started to speak, but Potter spoke instead.

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I moved to strike all this stuff off the record, he said, and let matters rest as they are.

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He pushed back his chair.

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Everyone but Valentine arose.

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There was no vote.

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Officially, nothing had been transacted.

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The president was left sitting there alone, with his resolutions in front of him.

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All that Galtz said was true.

333
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It was probably not the whole truth.

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His transaction with Gates seemed on the face of it too strange to be so briefly and plausibly

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explained.

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One fact at least he left out, which was that Gates hated Valentine with a fixation peculiar

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to Cryptic Old Age.

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Nobody knew quite why.

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He was possibly more interested in revenge upon Valentine than in the future of the Great

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Midwestern.

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It may be surmised also that he had some intuition of Galt's latent power, just as Mordecai had

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and placed a bet on him at long, safe odds.

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It was Galt who took the risk.

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And as for the Orient and Pacific deal, that did not require to be defended on its merits

345
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for there was already a profit in it for the company.

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After this, Valentine should have resigned.

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Instead, he carried the fight outside over all persuasion.

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It became a nasty row.

349
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He publicly attacked the company's purchase

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of the Orient and Pacific, denounced Galt personally,

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and solicited the stockholders for proxies

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to be voted at the annual meeting for directors

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who would support him.

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His acquaintance with the financial editors, several of whom were his warm friends, gave

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him an apparent advantage.

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All the newspapers were on his side.

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But nobody then knew how Galt loved a fight.

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He poured his essence into it and attained to a kind of lustful ecstasy.

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His methods were both direct and devious.

360
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To win by a safe margin did not satisfy him.

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It must be a smashing defeat for his opponent.

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E2 appealed to the stockholders.

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Valentine in one way had played into his hands.

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His complaint was that Galt had seized the management.

365
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Well, if that were true, nobody but Galt could claim credit for the results, and they were

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beginning to be marvelous.

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Great Midwestern's earnings were improving so fast that Galt's enemies must resort to

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malicious innuendo.

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They said he was a wizard with figures, which was true enough, and that possibly the earnings

370
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Proxies were fictitious, which was not the case at all.

371
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Long before the day of the annual meeting, Galt had a large majority of the stockholders

372
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with him.

373
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Nevertheless, he sent me abroad to solicit the proxies of foreign stockholders.

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They were easy to get.

375
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I was surprised to find that the foreigners, who are extremely shrewd in these matters,

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with an instinct for men who have the money-making gift, had already made up their minds about

377
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Galt.

378
00:26:13.760 --> 00:26:18.220
They had been watching his work, and they were buying great Midwestern stock on account

379
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of it.

380
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When it came to the meeting, Valentine had not enough support to elect one director.

381
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His humiliation was complete.

382
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Then he resigned, and Galt was elected in his place, to be both chairman and president.

383
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He was not exultant.

384
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For an hour he walked about the office with a brooding, absent air.

385
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This was his invariable mood of projection. He was not thinking at all of what had happened.

386
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He put on his hat and stood for a minute in the doorway. Looking back, he said,

387
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Hold tight, Coxie, and slam the door behind him.