Chapter 3 No.3

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? cents. It was impossible for any huge profit to accrue in Stray Dog on any such margin as 12? 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 re?lected 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.