Chapter 10. Hay Day.
1. His activities were of increasing complexity.
A stock exchange ticker was installed, for he meant to keep his eye on the stock market.
Then, an automatic printing device, on which foreign, domestic and Wall Street news bulletins were flashed by telegraph.
Then, a private switchboard and a number of direct telephones,
Not one in twenty who entered asked for Valentine, the President.
A mixed procession it was, engineers, equipment makers, brokers, speculators, inventors, contractors,
and persons summoned suddenly out of the sky whose business one never knew.
Never wasting it himself, never permitting anyone else to waste it, he had time for everything.
He received impressions whole and instantaneously.
With people, he was abrupt, often rude.
He wanted the point first.
If a man with whom he meant to do business insisted upon talking beside the point, he
would say, go outside to make your speech and then come back.
He never read a newspaper.
He looked at it, sniffed, crumpled it up, and cast it from him, all with one gesture.
Four or five times a day he ran a yard or two of ticker tape through his fingers and
glanced in passing at the news printing machine.
Magazines and books were non-existent matter.
Yet within the area of his own purposes, no fact, no implication of fact, was ever lost.
Meanwhile, Great Midwestern stock was slowly rising.
One effect of this was to relieve the tension in the Galt household.
Grandma Galt's daily question was no longer dreaded.
Having asked it in the usual way at the end of dinner one evening, and Galt having told
her the price, she electrified us all by addressing some remarks to me.
You are with my son a good deal of the time?
All day, I said.
I was looking at her.
She frowned a little before speaking, wetted her lips with her tongue, and spoke precisely
in the level, slightly deaf and utterly detached way of old people.
Do you see that he gets a hot lunch every day?
I have never attended to that, I said.
Does he, though? she asked.
We've been very careless about it, I said.
Sometimes when he's busy he doesn't get any.
Please see that he gets a hot lunch every day, she said.
Cold vitals are not good for him.
And tea if he will drink it.
I promised.
An embarrassed silence followed.
Have you any great Midwestern stock?
She asked.
I have a small amount.
You must believe in it, she said, adding after a pause.
We do.
Then she was through.
Had she alone in that household always believed in great Midwestern stock, which was to believe
in him?
Or had she only, of a sudden, become hopeful?
Was it perhaps a flash of premonition, some slight exercise of the power possessed by
her son?
Long afterward I tried to find out.
She shook her head and seemed not to understand what I was talking about.
She had forgotten the incident.
The next day I ordered a hot lunch to be sent in and put upon Galt's desk.
He said, huh.
But he was not displeased and ate it.
And this became thereafter a fixed habit.
2.
The new equipment had only just begun to move on the new rails when he went before the board
with a proposal to raise one hundred millions for more equipment, more rails, elimination
of curves and reduction of grades.
My godman! exclaimed Horace Potter, do you want to nickel-plate this road?
It will nickel-plate itself if we make it flat and straight, said Galt.
He was in a stronger position this time.
His predictions were coming true.
The flood tide was beginning.
Everybody saw the signs.
Great Midwestern's earnings were rising faster than those of any competitor, and at the same
time its costs were falling because of the character of the new equipment.
Therefore profits were increasing.
On the other hand, Valentine now was openly hostile, and Jonas Gates, whom Galt could
have relied upon was ill.
There were nine at the board table.
He argued his case skillfully.
For the first time he produced his profile map of the road, showing where the bad grades
were and how, on account of them, freight was hauled at a loss over two divisions of
the right-of-way.
To flatten here a certain grade, selected for purposes of illustration, would cost five
millions of dollars.
The cost of moving freight over that division would be thereby reduced one-tenth of a cent
per ton per mile.
This insignificant sum, multiplied by the number of tons moving, would mean a saving
of a million dollars a year.
That was twenty percent on the cost of reducing the grade.
It was certain.
Are the contracts let?
asked Valentine ironically.
They are ready to be let, said Galt.
3.
At this time, Galt was laying the foundation for an undisclosed structure.
It had to be deep and enduring, for the strain would be tremendous.
He poured money into the Great Midwestern with a raging passion.
As the earnings increased, he plowed them in.
With the assistance of the pessimistic treasurer, he disguised the returns.
Improvements were charged to expenses, as if they were repairs.
New property was added in the guise of renewing old.
This he did for fear the stockholders, if they knew the truth, would begin too soon
to clamor for dividends.
We spent money only for essential things, that is, in ways that were productive and
neglected everything else, until we had, at last, the finest transportation machine in
the country and the shabbiest general offices.
The consequences of this policy, when they began to be realized, were incredible.
In the autumn of 1896, a strange event came suddenly to pass.
People were delivered from the soft money plague, not by their own efforts as they believed,
but because maladies of the mind are like those of the body.
If they are not fatal, you are bound to get well.
Doctors will take the credit.
The Republican Party won the election that year on a gold platform, and this is treated
historically as a sacred political victory for yellow money.
The white money people were hopelessly overturned.
and it was wholly a psychic phenomenon still.
Why all at once did a majority of people vote in a certain way?
To make a change in the laws, you say.
Yes, but there the mystery deepens.
Immediately after this vote was cast, the shape of events began to change with no change
whatever in the laws.
The law enthroning gold was not enacted until four years later, in 1900, and this was a
4.
After 1896, the flood tide began to swell and roar.
Galt was a stride of it, a colossus emerging from the mist.
The Great Midwestern was finished.
He had rebuilt it from end to end, and now for that campaign of expansion which was adumbrated
on the map I had studied in his room at home.
For these operations he required the active assistance of Mordecai, Gates and Potter.
He persuaded them privately and bent them to his views.
I began to notice that he went more frequently to the stock ticker.
His ear was attuned to it delicately.
A sudden change in the rhythm of its grrring would cause him to leave his desk instantly
and go on to look at the tape.
He was continually wanted on those telephones with the unknown terminals.
Speaking into them, he would say, yes, or no, or how many, or ten more at once.
One afternoon he turned from the ticker and did a grotesque pirouette in the middle of
the floor.
Pig in the sack, Coxie, pig in the sack, not a squeal out of him.
What pig is that?
I asked.
He looked at me shrewdly and said no more.
Under his direction they had been buying control of the Orient and Pacific Railroad in the
open market so skillfully that no one even suspected it.
He had not been a speculator all his life for nothing.
What set him off at that moment was the sight of the last few thousand shares passing on
the tape.
Valentine was in Europe for his annual vacation.
Galt called a special meeting of the directors.
He talked for an hour on the importance of controlling railroads that could originate
traffic.
The Great Midwestern did not originate its own traffic.
The Orient and Pacific was a far western road with many branches in a rich freight producing
area.
The Great Midwestern had been getting only one third of its eastbound freight, and it
was a very profitable kind of freight, moving in solid trains of iced cars at high rates.
The other two thirds had been going to competitive lines.
It would be worth nearly $15 million a year for the Great Midwestern to own the Orient
and Pacific and Get All of Its Business.
A syndicate had just acquired a controlling interest in Orient and Pacific stock, and
he, Galt, had got an option on it at an average price of $40 a share.
The Great Midwestern could buy it at that price.
What was the pleasure of the board?
The substance was true.
The spirit was rhetorical.
The formal pleasure of the board was already prepared.
The members listening solemnly as to a new thing had assisted in the purchase.
Galt, Potter, Gates and Mordecai were the syndicate.
Potter as usual called for the vote and voted aye.
The rest followed.
A brief statement was issued to the Wall Street news bureaus.
It produced a strange sensation.
An operation of great magnitude had been carried through so adroitly that no one suspected
20 MINUTES AFTER OUR FORMAL STATEMENT HAD BEEN DELIVERED TO THE WALL STREET NEWS BUREAUS,
The waiting room was full of newspaper reporters demanding to see the chairman.
But what do they want? asked Galt, angry and petulant.
We've made all the statement that's necessary.
They say they must talk to somebody since it is a matter of public interest.
The bankers have referred them here.
There's nobody but you to satisfy them.
Tell them there's nothing more to be said.
I've told them that.
They want to ask you some questions.
It was his first experience, and he dreaded it.
We'll have a look at them, he said.
Let them in.
As they poured in, he scanned their faces.
Picking out one, a keen, bald, pugnacious trifle, he asked, Who are you?
I'm from the Evening Post.
He put the same question to each of the others, and when they were all identified, he turned
to the first one again.
Well, Posty, you look so wise.
You do the talking.
What do you want to know?
Posty stepped out on the mat and went at him hard.
Why had control of the Orient and Pacific been bought?
What did it cost?
How would it be paid for?
Would the road be absorbed by the Great Midwestern or managed independently?
Had the new management been appointed?
What were Galt's plans for the future?
To the first question, he responded in general terms.
To the second, he said, Is that anybody's business?
What's the public's business? said Posty.
Oh! said Galt.
Well, I can't tell you now.
It will appear in the annual report.
After that, he answered each question respectfully, but really told very little, and appeared
to enjoy the business so long as Posty did the talking.
When he was through, the journal reporter said, Tell us something about yourself, Mr.
Galt.
You are spoken of as one of the brilliant new leaders in finance.
That's all, said Galt, repressing an expletive and turning his back.
When they were gone, he said to me, Don't ever let that journal man in again.
Posty, though, he's all right.
All accounts of the interview, so far as that went, were substantially correct.
In some papers, there was a good deal of silly speculation about Galt.
The journal reporter went further with it than anyone else, described his person and
5.
The Orient and Pacific deal brought on the inevitable crisis.
Valentine was in Paris.
An American correspondent took the news to him at his hotel and asked for comment upon
it.
He blurted his astonishment.
He knew nothing about it, he said, and believed it was untrue.
This was unexpected news.
The correspondent cabled it to his New York paper together with the statement that Valentine
would cut his vacation and return immediately.
Paul Street sent it a row.
It was rumored that Valentine was coming home to depose Galt.
Also that the purchase of the Orient and Pacific would be stopped by injunction proceedings.
Comment unfriendly to Galt began to appear in the financial columns of the newspapers.
Great Midwestern stock now was very active in the market.
This gave the financial editors their daily text.
They spoke of its being manipulated, presumably by insiders, and it filled them with foreboding
to remember that the man now apparently in command of this important property was formerly
a stock exchange speculator with no railroad experience whatever.
We easily guessed what all this meant.
Galt had no friends among the financial editors.
He did not know one of them by sight or name.
Valentine knew them well, and so did those bankers who had lost control of the Orient and Pacific.
The seed of prejudice is easily sown. There is a natural, herd-like predisposition to think ill
of a newcomer. That makes the soil receptive. Galt was serene until one day suddenly Jonas
Gates died of old age and sin and then I noticed symptoms of uneasiness. I wondered if he was
I was worried about those papers I had witnessed in his private office on the day the Great Midwestern failed.
The executors, of course, would find them.
On reaching New York, Valentine's first act was to call a meeting of the Board of Directors.
He was blind with humiliation.
First, he offered a resolution so defining the duties and limiting the powers of the Chairman of the Board
as to make that official subordinate to the President.
Then he spoke.
Owing to the sinister aspect of the situation, and to the importance of the interests involved,
he felt himself justified in revealing matters of an extremely confidential character.
It had come to his knowledge that there existed between the Chairman and the late Jonas Gates
a formal agreement by the terms of which Gates pledged himself to support Galt for a place
on the board of directors, and Galt, on his part, in consideration of a large sum of money,
undertook first to gain control of the company's affairs and overthrow the authority of its president.
Would the chairman deny this? But wait, there was more.
In the same way it had come to his knowledge that two other agreements existed as of the same date.
One provided that when Galt had gained control of the company's policies,
he would cause it to buy the Orient and Pacific Railroad,
Road, in which Gates was then a large stockholder.
The third was a stipulation that a certain part of Gates' profit on the sale of his
Orient and Pacific stock to the Great Midwestern should apply on Galt's debt to him.
Would the chairman deny the existence of these agreements?
Still not waiting for a reply, not expecting one, in fact, he offered a second resolution,
Calling for the Resignation of Henry M. Galt as Chairman of the Board.
His place to be filled at the pleasure of the directors.
Galt all this time sat with his back to Valentine gazing out the window with a bored expression.
His onset was dramatic and unexpected.
With a gesture to circumstances he rose, thrust his hands in his pockets and began walking
slowly to and fro behind Valentine.
I hate to do it, he said. I like old dog Trey here, but he won't stay off the track. If
he wants to get run over, I can't help it. Those agreements he speaks of, without saying
how he got hold of them, they are true. I had a lot of GM stock when the company went
busted. The stock records will show it. I was in a tight place and went to Gates for
money to hold on with. He laughed at me, didn't believe the stock was worth a dollar, he said.
I spent hours with him, telling him what I knew about the property, showing him its possibilities.
I had made a study of it.
I spoke of the Orient and Pacific as a road the GM would have to control.
That would suit me, he said.
I've just had to take over a large block of that stock for a bad debt.
I said, all the better.
With your stock accounted for, it will be easier to buy the rest.
And so it was.
But that's ahead of the story.
said one trouble with the GM was Valentine. I knew that too. The end of it was that I
persuaded him. He took everything I had and loaned me the money. The agreement was that
the stuff I pledged with him for the loan could be redeemed only provided my plans for
the development of the GM were realized and certain results appeared. Otherwise, he was
is to keep it.
It was the devil's own bargain.
I was in a hole, remember?
Had the bear in my arms and couldn't let go, and you all knew gates.
Valentine interrupted.
He spoke without looking around.
One of your plans for the development of the Great Midwestern was the elimination of the
president.
Exactly, said Galt.
The president at that time was not president, but receiver.
He was receiver for a property he had managed into bankruptcy.
Well, that part of the agreement has been kept.
There ain't any doubt about who's running the GM.
I'm running it, subject to the approval of the directors.
Five minutes after I was elected chairman of this board, I took the traffic manager's
resignation in that room out there, under threat of having him indicted for theft.
He was the president's friend.
I did this without the president's sanction or knowledge.
The place was rotten with graft.
We were paying extortionate prices for equipment and materials, because the equipment makers
and the material men were our friends.
Our pockets were wide open.
Listen to this.
From typewritten sheets he read a wrecking indictment of the old valentine management,
setting out how money had been lost and wasted and frittered away, how the company had been
overcharged, underpaid and systematically molted.
He gave exact figures, names, dates and ledger references.
She's all right now, he said, clean as a grain of wheat.
I'm telling you what was.
I don't intimate that the president took part in plucking the old goose.
I don't say that.
He was too busy making public speeches on the miseries of railroads to know what was
going on.
Valentine was not crushed.
He showed no sense of guilt.
No one believed him guilty, in fact.
What he represented, tragically and with great dignity, was the crime of obsolescence.
A stronger man was putting him aside in a new time.
He started to speak, but Potter spoke instead.
I moved to strike all this stuff off the record, he said, and let matters rest as they are.
He pushed back his chair.
Everyone but Valentine arose.
There was no vote.
Officially, nothing had been transacted.
The president was left sitting there alone, with his resolutions in front of him.
All that Galtz said was true.
It was probably not the whole truth.
His transaction with Gates seemed on the face of it too strange to be so briefly and plausibly
explained.
One fact at least he left out, which was that Gates hated Valentine with a fixation peculiar
to Cryptic Old Age.
Nobody knew quite why.
He was possibly more interested in revenge upon Valentine than in the future of the Great
Midwestern.
It may be surmised also that he had some intuition of Galt's latent power, just as Mordecai had
and placed a bet on him at long, safe odds.
It was Galt who took the risk.
And as for the Orient and Pacific deal, that did not require to be defended on its merits
for there was already a profit in it for the company.
After this, Valentine should have resigned.
Instead, he carried the fight outside over all persuasion.
It became a nasty row.
He publicly attacked the company's purchase
of the Orient and Pacific, denounced Galt personally,
and solicited the stockholders for proxies
to be voted at the annual meeting for directors
who would support him.
His acquaintance with the financial editors, several of whom were his warm friends, gave
him an apparent advantage.
All the newspapers were on his side.
But nobody then knew how Galt loved a fight.
He poured his essence into it and attained to a kind of lustful ecstasy.
His methods were both direct and devious.
To win by a safe margin did not satisfy him.
It must be a smashing defeat for his opponent.
E2 appealed to the stockholders.
Valentine in one way had played into his hands.
His complaint was that Galt had seized the management.
Well, if that were true, nobody but Galt could claim credit for the results, and they were
beginning to be marvelous.
Great Midwestern's earnings were improving so fast that Galt's enemies must resort to
malicious innuendo.
They said he was a wizard with figures, which was true enough, and that possibly the earnings
Proxies were fictitious, which was not the case at all.
Long before the day of the annual meeting, Galt had a large majority of the stockholders
with him.
Nevertheless, he sent me abroad to solicit the proxies of foreign stockholders.
They were easy to get.
I was surprised to find that the foreigners, who are extremely shrewd in these matters,
with an instinct for men who have the money-making gift, had already made up their minds about
Galt.
They had been watching his work, and they were buying great Midwestern stock on account
of it.
When it came to the meeting, Valentine had not enough support to elect one director.
His humiliation was complete.
Then he resigned, and Galt was elected in his place, to be both chairman and president.
He was not exultant.
For an hour he walked about the office with a brooding, absent air.
This was his invariable mood of projection. He was not thinking at all of what had happened.
He put on his hat and stood for a minute in the doorway. Looking back, he said,
Hold tight, Coxie, and slam the door behind him.