My Adventures with Your Money

The Rise and Fall of Maxim & Gay

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

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

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

"Buy me a drink," he said.

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

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

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

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

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

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

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

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

THE BIRTH OF AN IDEA TO COIN MONEY

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

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

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

"Here come the entries," said Campbell.

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

The coincidence stirred me.

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

It was supplied. I wrote:

Bet Your Last Dollar On

SILVER COIN

To-day

At New Orleans

He Will Win At 10 to 1

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

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

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

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

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

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

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

Before bidding me adieu, Campbell exclaimed of a sudden:

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

"Watch and see!" I said.

Around to the Morning Telegraph office, then on Forty-second Street, I went.

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

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

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

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

I looked up in amazement.

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

I showed him the letter from Frank Mead.

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

Silver Coin won easily at 10 to 1.

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

THE HIGHER MATHEMATICS OF THE OPERATION

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

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

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

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

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

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

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

"Don't know," I answered.

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

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

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

"Give 'em Annie Lauretta," cried Campbell.

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

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

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

I perused it over and over again.

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

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

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

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

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

"How much do you want?" I asked.

"Ten dollars a day," he said.

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

"What will we do next?" he repeated.

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

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

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

"We've lost!" I cried.

"A-AL-ALPENA first."

There was grim silence.

"Tick-tick--,"

"Here she is!" yelled Campbell.

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

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

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

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

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

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

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

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

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

HOW "THE ONE BEST BET" WAS COINED

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

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

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

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

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

TWO SPOT

Turf Info. Merchant

Terms, $2 Daily; $10 Weekly

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

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

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

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

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

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

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

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

REAL INSIDE TURF INFORMATION

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

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

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

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

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

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

THE PUBLIC ASKS TO BE MYSTIFIED

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Hog-Killing of the Year

Will Come Off at Sheepshead Bay

On Saturday, at 4 O'clock.

Be Sure to Have a Bet Down.

Telegraph Us $5 for the

Information

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

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

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

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

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

A GIGANTIC HOG-KILLING

We have Inside Information of a Long

Shot that Should Win To-morrow at

10 to 1 and Put Half of the Bookmakers

out of Business.

Be Sure to Have a Bet Down on

This One. Terms $5.

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

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

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

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

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

Yours truly,

-- --

PRESTIGE RESTORED BY A CLERK'S RUSE

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

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

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

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

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

The messenger never reached the track.

There were no tips issued.

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

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

A BOASTFUL RACE PLAYER GIVES AID

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

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

"Where did you buy your information?"

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

"At what time?" he was asked.

"A quarter to two," he replied.

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

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

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

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

FORTUNE CHANGES HER MOOD AND SMILES AGAIN

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

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

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

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

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

THE KENTUCKY COLONEL FALLS IN LINE

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

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

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

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

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

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

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

YOU PAY US $5

WE REFUND $6

If the Horse We Name as

THE ONE BEST BET

To-day Does Not Win, We Will Not

Only Refund Our $5 Fee, Which Is

Paid Us for the Information, but Will

Pay Each Client an EXTRA DOLLAR

By Way of Forfeit.

Pay Us $5 To-day for Our One Best

Bet, and if the Horse Does Not Win

We Will Pay You $6 To-morrow.

MAXIM & GAY CO.

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

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

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

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

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

BETTING THE PUBLIC'S MONEY AT GREAT PROFIT

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

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

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

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

"Wait a minute," he muttered.

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

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

"What's the trouble?" I asked.

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

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

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

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

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

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

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

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

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

Yes, always-except once!

$130,000 IS LOST AND WON IN A DAY

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

Something happened.

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

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

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

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

"Thirteen thousand on our selection, Sol."

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

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

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

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

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

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

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

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

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

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

A DISASTROUS NEWSPAPER WINDUP

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

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

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

"Why?" asked I.

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

"But you allow betting at the tracks."

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

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

Returning to the Daily America office, I decided to pay no attention to Mr. Belmont's request, having become convinced that it was conceived in the interest of the Morning Telegraph.

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

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

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

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

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

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

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

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

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

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

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

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

But I didn't.

Mining Finance at Goldfield

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

The first man I met on entering the lobby was W. J. Arkell, formerly one of the owners of Frank Leslie's Weekly and of Judge.

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

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

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

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

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

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

A PARTNERSHIP OF PURE NERVE

"Jack Hornaday" discontinued business.

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

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

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

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

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

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

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

We shook hands and it was a bargain.

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

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

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

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

BUCKING THE TIGER ON THE DESERT

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

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

I looked at him. He looked at me.

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

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

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

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

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

"Three millions!" I exclaimed.

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

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

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

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

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

BIDDING $3,000,000 WHEN BROKE

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

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

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

MILLIONS IN THE VISTA HELD NO CHARMS

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

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

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

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

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

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

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

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

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

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

"A check on what?" I asked.

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

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

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

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

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

"HUMAN INTEREST" VERSUS TECHNICAL MINING

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

Within a week I was discharged for incompetency.

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

My environment became an inspiration.

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

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

BEGINNING THE ADVERTISING BUSINESS

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

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

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

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

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

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

SOME ADVERTISING THAT PAID

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

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

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

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

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

BUILDING GOLD MINES WITH PUBLICITY

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

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

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

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

HAIR-RAISING STORIES FOR DISTANT READERS

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

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

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

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

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

THE MERCURY OF SPECULATION

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

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

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

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

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

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

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

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

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

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

But I am ahead of my story.

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

THE BIRTH OF BULLFROG

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

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

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

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

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

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

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

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

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

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

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

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

ENTER, CHARLES M. SCHWAB

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CHARLES M. SCHWAB

111 BROADWAY

NEW YORK

November 1, 1907.

Mr. Sam C. Dunham,

Editor The Tonopah Miner,

Tonopah, Nevada,

My Dear Mr. Dunham:

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

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

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

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

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

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

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

You wonder why I criticise statements from Nevada.

Respectfully yours,

(Signed) C. M. Schwab

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

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

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

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

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

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

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

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

WHY THE BOTTOM FELL OUT

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

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

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

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

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

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

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

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

Then the psychological moment for Arkell arrived.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW ABOUT THE PUBLIC'S CHANCES?

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

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

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

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

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

Stock Price Odds

Union Pacific $165.00 6 to 5

Reading 155.00 8 to 5

Missouri Pacific 56.00 2 to 1

Erie 28.00 3 to 1

Seyler-Humphrey .25 20 to 1

Manhattan Buffalo .15 30 to 1

Manhattan Combination .10 50 to 1

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

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

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

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

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

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

JUMPING JACK MANHATTAN

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

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

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

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

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

"Well?" said he.

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

"What will I pay?" asked Larry.

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

"What? With this $5,000?"

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

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

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

"Good!" I said.

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

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

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

"Yes, I know him well."

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

* * *

[1]

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

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.