My Adventures with Your Money

Following the newspaper "roasts," which helped further to destroy public confidence, two brokers on Logan & Bryan's continental wire system resorted to tactics of a kind to force lower prices. This wire has over one hundred out-of-town broker connections. A report was sent over the wire that Nat. C. Goodwin & Company had failed. Another followed it that the Rawhide Coalition Mines Company was about to go into the hands of a receiver. The Nevada Mining News accused Nat. Boas of San Francisco and J. C. Weir of New York of exchanging messages to this effect over the Logan & Bryan wire systems, so that all correspondents on the wire would have the false reports. Both Boas and Weir were believed to be "short" of the stock. Both were openly operating for a further decline. These and similar tactics resulted in a further easing off in price to 40 cents bid on December 24th, which was the "low" on the movement.

Two weeks after Christmas the stock rallied to 58 bid, 59 asked, and the market was firm again. On January 14 the price bulged to 70. At this point the stock again became the center of attack. By January 20 the price had eased back to 50.

Thus far the net result of Nat. C. Goodwin & Company's various campaigns on Rawhide Coalition was the distribution of some 600,000 shares of stock. The issue had been well exploited. It had a big following and a broad market. Some excellent judges of mine values had become stockholders. The company, however, was still unfinanced for a long period of systematic mine development and mill construction.

We realized very clearly that some arrangement would have to be perfected to avoid a repetition of the trouble which the New York Stock Exchange brokerage firm had made us.

"INSIDE" MARKET SUPPORT

The removal to New York of B. H. Scheftels & Company, Chicago stock brokers, representatives there of Nat C. Goodwin & Company of Reno, and a merging of brokerage and promotion interests of the two firms took place.

There was precedent for the move. There are a thousand other corporation interests in this country that are closely affiliated with Stock Exchange and other brokerage houses, through one or more of their directors or owners being partners in the business. As a matter of fact, it would be difficult to lay your finger on a single big interest of this kind that has not such a representation. These houses, of course, make it a rule to recommend the purchase of stocks in which their principals are interested. Affiliations of this kind are found essential to successful financing of enterprises. A number of New York Stock Exchange houses which are headed or controlled by men who are heavily interested in mining ventures that require financing are exponents of this method in the mining field.

Most of these have succeeded in promoting projects in which they or their associates are heavily interested, with the aid of the banking and brokerage facilities thus afforded. Principally by the use of the market literature and accompanying market manipulation, these houses have placed with their customers the securities of their firm members and associates. They have encompassed this by maintaining a brokerage, banking and promotion business without parading before the public, although never denying, the mixed nature of their business.

For the reader to comprehend the necessity for transacting the business this way, he should understand the underlying principle of financing an enterprise by the route of the listed stock market.

There are two ways of financing any enterprise with other people's money. One is by the primitive method of appealing directly to the public for subscriptions in huckster fashion, taking the money and then refraining from listing the stock or establishing an open market for it. You can't finance an enterprise of consequence these days by any such procedure. It is practically impossible to borrow from banks or from loan-brokers on any security that has no fixed market value. A market must be established, for without a market on which to sell, intelligent investors won't buy.

The method, therefore, in common use, and the only one which has been found effective by financiers, is to create a demand for the security, encourage speculation, establish an active market, and dispose of stock on the market as necessity demands whenever financing is required. This implies and necessitates that the inside interests must support the security in the open market. Therefore, it becomes necessary for the successful marketing of the stock by the promoters, once a demand is created and public buying is under way, that stockholders shall be kept in full touch with the latest transpirations on the property and in the market—be furnished with news concerning their interests so that they may judge the value of their stockholdings. This process is particularly essential during the financing period of the company and the security-digesting period of the public.

In fine, the ultimate purpose in this regard of all the promotion machinery of Wall Street—the machinery that has been putting out billions of dollars' worth of securities to investors—is to place stock where it will "stay put," that is, not come out on the open market again to embarrass the interests that are behind the enterprise, and who for a long period are compelled to support the market.

On the question of the ethics of market support by "the inside," a whole tome could be written. I will not attempt to discuss the subject at length here. Suffice it to say that in my opinion "inside" support of a listed security is not base when it is done with a view to creating a broad market, to stimulate public interest, and to increase the price to a point within the bounds of intrinsic plus reasonable speculative worth. Support of the market to the point of stimulation is moral obliquity, however, when dishonestly performed for the sole benefit of the "inside" and to the hurt of the stockholder. This sort of market support is only a shade less reprehensible than manipulation that has for its purpose the reduction of the market price of a security to beneath its real value, which, in my opinion, is nearly always infamous.

I might place myself on record right here to the effect that only once did I ever "bear" a stock from "the inside," and on that occasion it was a temporary affair, caused by a desire to secure at a reduced price a big block of stock that was pressing for sale from a quarter that I was under no obligation to. Even in that instance I gave the investor much of the benefit my associates secured by letting him have stock at the same figure at which "the inside" secured it. Nor have I ever tried to push the price of a stock to a higher level than that which I considered warranted by the reasonable speculative and demonstrated intrinsic value behind the security.

  CHAPTER X

Enter, B. H. Scheftels & Company

B. H. Scheftels & Company, Incorporated, mining-stock brokers, successors to B. H. Scheftels & Company, for many years stock brokers in Chicago, opened its doors on Broad Street, New York, on January 18, 1909. For a long period B. H. Scheftels & Company of Chicago had been advertised as the Eastern representatives of the corporation of Nat. C. Goodwin & Company of Reno, of which Mr. Goodwin had been president. It was now announced that Nat. C. Goodwin had become vice-president of the new corporation of B. H. Scheftels & Company. Because Mr. Goodwin was by profession an actor and not a stock broker and because of the personal abuse he suffered in unfair newspaper criticism which followed the "break" in the market price of Rawhide Coalition a month before, he was quite willing to serve as vice-president instead of president. Besides, he could not spare the time from his profession to attend closely to the business.

The new corporation of B. H. Scheftels & Company made its bow to the public by at once featuring in its market literature advice to purchase stock of the Rawhide Coalition Mines Company. I became publicity manager for the Scheftels corporation, manager of its promotion enterprises, and was placed in charge of the protection of the corporation's interests in all markets where its stocks were traded in.

Soon I was conducting a fresh campaign with investors that became so hot, so exciting and so big that for nineteen months I labored on an average sixteen hours a day, including Sundays, without being able to complete in a single day a day's accumulated business. The business grew until B. H. Scheftels & Company were actually spending more than $1,000,000 annually for office and publicity expenses. In the nineteen months of its existence it bought, sold and delivered approximately 15,000,000 shares of mining stock. The Scheftels corporation broke every record in this regard that was ever made by a mining-stock brokerage and promotion house in the history of Wall Street. Throughout its career it was viciously attacked from many directions, but it held its own. Through its hold on the mining-stock speculating public, who were getting fairer treatment than ever before, it survived the concerted onslaughts of a number of important interests which it had competed with and antagonized, until one day in September, 1910, on a warrant sworn to singly by one George Scarborough, since permitted to resign, clothed with the office and power of a special agent of the Department of Justice, its offices were raided, its books and papers seized, its property confiscated, and its officers and employees arrested.

The annual expense of B. H. Scheftels & Company was $1,000,000 or more.

Follows a tabulated statement of the expense item. The figures are approximated. The books of the corporation, which are now in the possession of the Department of Justice of the United States Government, will probably show that the annual expense was larger. The books not being readily available, an attempt is made here to be ultra-conservative in setting down figures:

ANNUAL EXPENSE OF B. H. SCHEFTELS & COMPANY

Before the Scheftels corporation was in business a month it became plain that it was "filling a long-felt want." In almost every branch it was performing some function in a manner more satisfactory to mining-stock speculators and investors than were its competitors.

Its Market Letter news service, usually 16 pages, was the prime article. It soon gained a circulation of 34,000 among the highest class and best informed stockholders of mining companies in the country. It was also regularly sent to more than 2,500 stock brokers, including members of the New York Stock Exchange, New York Cotton Exchange, Boston Stock Exchange, New York Produce Exchange, etc.

Before the Scheftels corporation was five months old the work of its Market Letter was supplemented by the Mining Financial News, a weekly newspaper which had been published for a long period at Reno as the Nevada Mining News, latterly as the Mining Financial News, and which removed to New York when the Scheftels company found the mining-stock public was hungry for real live news and the truth regarding the mining propositions of other States as well as those of Nevada. The Mining Financial News and the Scheftels Market Letter, which were published three days apart, were supplied with news from practically the same sources. The newspaper was mailed to all readers of the Market Letter.

The ablest and most reliable mining correspondents obtainable for money in Tonopah, Goldfield, Ely, Rawhide, Cobalt, Butte, Globe and other mining camps, and the most experienced market news-gatherers in the mining-stock-market centers of Salt Lake, San Francisco, Boston, Philadelphia, Toronto and New York, were placed on the pay-roll. Brokers in these and other cities, including Duluth, Seattle and Butte, supplied more news.

Wherever there was mining or market activity, representation of the very highest character was sought. News was always wired, no matter what the cost, whenever it was important to traders in mining shares. Expense was never spared when the information was considered of value to the speculator or investor. In the New York offices of the Scheftels corporation and the Mining Financial News, which adjoined each other, a staff of newspaper men with a mining financial experience of years was gathered. Little that transpired in the mines or the markets ever got away from them. Days before the mining newspapers of the West reached the East the Scheftels Market Letter or the Mining Financial News communicated the news regarding mine developments. They also contained a daily and weekly stock-market diagnosis and prognosis. These were based on the news, as gathered by trained forces and aided from time to time by secret information which filtered into the offices. This service soon obtained an accuracy theretofore unknown on the Street.

There is probably not one stock broker in five hundred that would know a mine underground if he saw one. On the pay-rolls of B. H. Scheftels & Company and the Mining Financial News there were thirty men who had been literally brought up in the mines and who, when they put their pen to paper, knew what they were writing about. The Scheftels company and the newspaper furnished mine and market information of quality to investors who had before been inundated with misinformation, guesses and twaddle. It sought to guide mining-stock speculators right.

It was really a delicate job to handle the Mining Financial News in a manner which would not lead stupid people to believe that it was an entirely independent paper. It was desirable that its independence be maintained to a degree, so that the full value of the Mining Financial News, as a property, might grow. The intention was some day, when the Mining Financial News found itself on a paying basis, to sever the Scheftels alliance.

The Mining Financial News had always been an entity. It had up to then been assisted financially at periods by mining promotion concerns with which I had been identified and was always a quasi house-organ for this reason. But it invariably preserved a certain independence in its news columns and at least such partial independence of ownership as enabled it to stand on its own bottom.

MORE TRUTH ON THE "MINING FINANCIAL NEWS"

WHEN the Mining Financial News removed to New York Mr. Scheftels used much persuasion to get the owners to transfer title to the Scheftels company. Admittedly, if the Scheftels company could boast ownership of the newspaper at the head of its editorial page, it would be a great feather in the Scheftels cap and might lead investors to think that an organization which could own and publish a first-class, metropolitan newspaper of the Mining Financial News variety must for that reason alone be worthy of financial credit.

Thompson, Towle & Company, members of the New York Stock Exchange, print a small sized pattern of such a newspaper, called the News Letter. Hayden, Stone & Company, and Paine, Webber & Company, of Boston and New York, are said to have much influence with the Boston News Bureau, a newspaper which features news of mines and mining share markets. The Boston News Bureau at times has printed no display advertisements and at other times has. It is considered by Boston mining-stock brokers who handle the Michigan and Arizona copper securities as a necessary complement to their market literature. Walker's Copper Letter and the Boston Commercial are other examples. Walker's Copper Letter, which carries no advertising, for years has said the very nicest things about copper securities promoted and fathered by important Boston and New York interests. Needless to state, what Walker's Copper Letter, the Boston Commercial and the Boston News Bureau say about the mining propositions of their friends is as a rule based on fact. The point is that promoters find it necessary that news happenings regarding the markets, the securities and the mines in which they are interested be given broad publicity.

It was the idea of the owners of the Mining Financial News, of which B. H. Scheftels, president and 25 per cent. owner of the capital stock of B. H. Scheftels & Company, was not one, that anybody who would supply the sinews while the paper was getting on its feet and was establishing itself, was entitled to all the publicity which the paper could consistently and honestly give it. With this understanding the Scheftels company assumed to take all of the income of the Mining Financial News and pay all of the running expenses until such period as the newspaper might become self-sustaining.

In doing so it performed a stupendous service to the entire mining industry in that the space devoted to the Scheftels enterprises therein did not average more than one-eighth of the whole, and it spent dollars to supply the news of all stocks where other mining financial publications in its field spent pennies.

To make sure that the public understood the Mining Financial News was the quasi house-organ of the Scheftels company many precautions were taken. No application was made for admission to the mails as second-class matter, and the paper was mailed under one and two-cent postage. The name of Harry Hedrick was lifted to the top of the page as vice-president of the corporation owning the Mining Financial News, Mr. Hedrick being openly employed by the Scheftels company as head of its correspondence department. My own name was later placed at the head of the editorial page as editor, the Scheftels company making no bones about my position as absolute head of its publicity department, its promotion enterprises, and of all markets for the Scheftels promotion stocks. The connection had before been established even closer than this. I had formerly been advertised as vice-president of Nat. C. Goodwin & Company of Reno and vice-president of the Rawhide Coalition Mines Company; and the Scheftels company had advertised that Nat. C. Goodwin was its own vice-president.

Further, the Scheftels company announced in its market literature that it had selfish interests in protecting the market for the stock because of the Nat. C. Goodwin affiliation. Occasionally market articles under the signature of B. H. Scheftels were published on the front page of the Mining Financial News. Whenever anybody made a request for the Scheftels Market Letter a copy of the Mining Financial News was quite regularly mailed to him without cost. Articles under the signature of other officers and employees, formerly of Nat. C. Goodwin & Company of Reno and later of B. H. Scheftels & Company of New York, were very frequently printed in the Mining Financial News.

Probably the most important reason why the Scheftels company made this sort of arrangement with the Mining Financial News was that it could do so with only a very small additional outlay. The Scheftels company found it necessary to employ correspondents in all mining and market centers, and the same correspondents could work for both enterprises. Another economic argument was that an enormous saving could be made in telegraph tolls, all dispatches addressed to the newspaper being sent at press rates. These dispatches were always available to the Scheftels corporation and its clientele.

It was the idea of the Scheftels organization that the mining-stock investing public sorely needed right direction and that any brokerage house which led it right would soon be unable to transact all the business that would be offered to it.

And that is just what happened. Before the Scheftels company was six months old the fifteen men in its accounting department were compelled to work day and night—time and again throughout the night until 6 A.M.—to catch up with their work.

If the Scheftels news service was as nearly perfect as money and brains could make it, its facilities for the execution of orders on the New York Curb, the Boston Curb, San Francisco Stock Exchange, Salt Lake Stock Exchange, Toronto Stock Exchange, and other mining markets were unsurpassed. Its New York and Boston offices were connected with branch offices in Philadelphia, Chicago, Detroit, Milwaukee and Providence by exclusive private wires, and the service to out-of-town offices was almost instantaneous.

The New York offices were located right in front of the Curb market on Broad Street on the ground floor of the big Wall Street Journal building, 50 feet by 200 feet deep—occupying about 10,000 square feet of floor space. The Boston office, occupying two floors, was located within 100 feet of the Curb market in that city. The public wires of the telegraph companies gave quick service between San Francisco, Salt Lake and Toronto, where business was transacted through members of the mining-stock exchanges of those cities. The private wires of the Scheftels company were constantly flooded with rapid quotations and market, mine and company news during every trading hour. In New York the Curb brokers in the Scheftels employ, some on salary and some on commission, rarely numbered less than ten and at one period exceeded twenty.

The correspondence department was presided over for a long period by two of the best posted mining-market men that could be employed for money. From this department were usually graduated the managers of out-of-town offices. In the cashier's cage six men were engaged at an average salary of above $100 a week, registering stocks, receiving stocks, paying money and drawing checks. The payroll of the mailing department, which was operated in conjunction with the Mining Financial News, was comparatively small. Money-saving machinery for the handling of the large output of market letters and newspapers gave excellent and economic service. About ten stenographers were regularly employed in the correspondence department. Occasionally, when a special effort was being made to interest the public in some security in which the corporation was particularly concerned, a force of forty additional typists was pressed into service for short periods.

THE SCHEFTELS PRINCIPLES

When the corporation of B. H. Scheftels & Company opened its doors in New York it had no affiliations with any other Wall Street interests. It had no axes to grind except its own. It was practically a free-lance. It cracked up its own wares, careful always to keep within the facts, and never minced words about the quality of the goods of its contemporaries. The principle of both the Scheftels corporation and the Mining Financial News was to be always right in their market forecasts. The general order to mine and market news-gatherers and market prognosticators was to GIVE THE FACTS.

The law laid down was this: If the news is bad and is likely to injure the interests of our best friends, tell it in the interests of the investor. If it is good and the backers of the stock affected happen to be our worst enemies, tell it. No matter on what side of the market you think B. H. Scheftels & Company is committed in any of its own speculations, give the customer all the news. Put the cause of the mining-stock trader in front of you as the one to further always. Never exaggerate. Eventually, this policy must redound to our credit and profit.

Eventually, this policy resulted in our ruin. Our truth-telling policy was directly responsible for the loss of millions to competing promoters, and they banded together to destroy us.

The publicity, promotion and brokerage activities of the corporation were of such magnitude, and withal so simple, that they at once challenged the attention of the Street. Before the Scheftels corporation was half a year old veterans of the financial game began to opine that some big interest was behind the concern. Its dashing market methods, its mighty publicity measures and its unbridled assurance attracted much notice. From every quarter expert views reached the Scheftels company that its manner of doing things was convincing on the point that it knew the business. But the general opinion of the talent seemed to be that the new corporation was spending too much money and that it could not win out unless a big boom in mining shares ensued.

The market tactics adopted by the Scheftels company in its promotion enterprises were as old as the hills. On the New York Stock Exchange they had been employed in a thousand instances before. The method will probably survive all time. The corporation sought to distribute the stocks of which it became sponsor in turn—first Rawhide Coalition, then Ely Central, later Bovard Consolidated and finally Jumbo Extension—by the approved Wall Street system of establishing public interest and inquiry and causing an active market. The aim was to establish higher prices for the securities, always within the bounds of intrinsic and reasonable speculative value. All efforts were directed this way.

Plans like this are, however, sometimes thwarted. Markets get sick. More stock presses for sale than the "inside" has money to pay for. Stocks break in price. Then the promoter can't make any money and might lose a lot of it. Since money-making is his primary object, and stock distribution secondary, he has got to do some close figuring when markets are subject to the price-breaking habit. That's where B. H. Scheftels & Company, through its brokerage business, found, after a short period, that it held within its grasp the power to insure itself against declining markets.

Without promotion stocks on hand—obtained by wholesale at lower figures than values warranted—in which it could profit to the extent of hundreds of thousands of dollars on a rising market, the million-dollar annual expense of the Scheftels company would not have been justified. Once the market sought lower levels and no profit could be made on the promotions, it meant a discontinuance of the business on the large scale.

The corporation's insurance was the open market in stocks on the general list and its brokerage business.

From time to time it openly shorted tens of thousands of shares of stocks in which it had no promoter's interest whatever, by going out in the open market and selling them to all bidders against future delivery, by borrowing them from brokers and selling them for immediate delivery, and by short sales generally.

Speculators play the market and so did the Scheftels company, but never against its own stocks. Speculators, however, buy mining shares outright or on margin because they want to gamble. The Scheftels company played the market for just the opposite reason. It didn't want to carry its eggs in one basket and wanted insurance against market declines to cover promotion losses that must ensue if a general market slump occurred.

And the Scheftels company did not inaugurate any fake bookkeeping system or otherwise hide behind any bushes in doing this.

Moreover, the corporation didn't take advantage of anybody. The cards were not marked. The deck was not stacked. There was no dealing from the bottom. Market opinion for which the corporation was directly or indirectly responsible was genuine to the last utterance. No news was suppressed on any stock. The corporation divulged to its customers and to the general public every piece of important outside or inside information regarding any stock on the general list that was in its possession. At the very moment when it was going short of stocks in greatest volume its market prognostications were winning for it a reputation for accuracy never before recorded.

If the stocks which the corporation went short of—stocks on the general list and amounting to probably 15 per cent., of the volume of its entire business, the remainder of the transactions being all in "house" stocks (these "house" stocks it could not be short of because of its promoter's options on hundreds of thousands of shares)—if the stocks on the general list thus "shorted" went up in price and the corporation was compelled to go into the market later and "cover" at a great loss, it was always in the corporation's heart to sing a pæan of thanksgiving, for it could well afford to pay the losses sustained by it in the general list out of the greater profits which would be made in the "house" stocks, which must, forsooth, share in the general upswing.

Collateral securities put up by customers as margin for the purchase of other stocks were credited to the customers' accounts and mixed with the company's own securities. In every case proper endorsement of certificates, put up for collateral margin, was required. Every certificate of stock bears on the reverse side a power of attorney, in blank. The signature thereto of the person to whom the certificate was issued makes it negotiable by the broker. It was the rule of the house always to inform those who brought collateral to the offices for margin that the stocks would be used and that they would not receive the identical certificates back again. In a number of cases objection was made. Acceptance of the stock as collateral margin was then promptly refused. If there were any scattering exceptions to this rule, it was contrary to instructions and due to neglect or ignorance. Whenever a customer closed his account and demanded the return of his collateral, stocks of the same description and denomination were recalled and delivery made.

The same rule applied to stocks pledged with the corporation for loans, it being specifically set forth in the promissory note which the borrower signed that the privilege of using the stock was granted to the lender.

This practice is so common and the rule so generally understood by mining-stock traders that objection was rarely made by customers.

To test the general custom, a friend at my suggestion not long ago sent certificates of stock to 17 stockbrokers now doing business on Wall Street. Three of these were members of the New York Stock Exchange and 14 were members of the New York Curb, Boston Curb, or of a mining exchange. A letter substantially as follows was sent to each of the 17:

The 17 orders were executed by the 17 individual houses. A month later when the stock ordered purchased had advanced in the market, the following letter was sent to each of the 17:

It took nearly two months for all of the 17 to make delivery. When they did, not one of them returned the same certificate that had been put up as collateral.

Don't be shocked, dear reader, at this disclosure. It is the custom.

And don't, please, think mining-stock brokers are alone given to the general practice. If you order the purchase of a block of stock on cash margin from any New York Stock Exchange house or send a certificate of stock as collateral in lieu of cash to one of them for the purchase of more stock, you will receive a confirmation slip of the trade which will generally read something like this:

That is, the right is reserved, and actually exercised, of immediately transferring ownership of the certificates to the broker.

Unless a certificate stands in a customer's name and is unendorsed by him, he has no control over it. According to law, a broker has a right to hypothecate or loan securities or commodities pledged with him, for the purpose of raising the moneys necessary to make up the purchase price, and such stocks have no earmarks. In other words, the customer is not entitled to specific shares of stock, so that stocks bought with one customer's money may be delivered to another customer.

As for the Scheftels company laying itself open to the charge of bucketshopping in "shorting" stocks, such a possibility was never dreamed of. The penal law of the State of New York, sections 390 to 394, inclusive, is the only criminal statute covering market operations commonly known as bucketing and bucketshops. In each section and subdivision it is provided that where both parties intend that there shall be no actual purchase or sale, but that settlement shall be made on quotations, a crime has been committed, the language of the statute being, "wherein both parties thereto intend, etc.," or "where both parties do not intend, etc." The Scheftels company was never a party to any such arrangement. And it always made it a practice to make delivery of stocks ordered purchased within a reasonable period after the customer had paid the amount due in full.

Now, neither myself nor the Scheftels corporation is responsible for brokerage conditions as they exist, nor for the laws as written. Custom and practice are responsible. The purpose here is to communicate the exact nature of the business methods of the Street as I found them and to lay particular stress on those that are open to criticism.

THE SCHEFTELS COMPANY AGAINST MARGIN TRADING

The Scheftels company did not encourage margin trading by its customers. In fact, it railed against the practice. Time and again the Mining Financial News, editorially, denounced the business of margin trading. The Weekly Market Letter of the corporation sounded the same note. On several occasions, in large display advertisements published in the newspapers, the Scheftels company decried the practice and urged the public to discontinue trading of this character.

There were selfish reasons for this. In the marketing of its promotions the Scheftels company found that not more than 20 per cent. of the public's orders for these stocks given to other brokers were being executed, or, if executed, that the stocks were at once sold back on the market, the brokers or their allies "standing" on the trade.

Had the Scheftels company been able to destroy the practice by its campaign of publicity, it would undoubtedly have been able, during the nineteen months of its existence, successfully to promote three or four times as many mining companies as it did, and its profits would have been fourfold.

It, however, appealed to the public in vain. Loud, frequent calls to margin traders to pay up their debit balances and demand delivery of their certificates, which would compel every broker to go out in the market and buy the stocks he was short to customers, failed miserably.

The lesson of this experience was that the speculating public did not "give a rap" whether their brokers were short of stocks to them or not. All they wanted, apparently, was to be assured that when they were ready to close their accounts, their stocks, their profits or their credit balances would be forthcoming.

What is the evil of short selling of the kind described herein? The only evil that I could ever discover was that the market is denied the support which the actual carrying of the stock is calculated to afford. This hardship weighs heaviest on the promoter. There appears to be no cure. Even if a broker does buy the stock and does not himself sell it out again, there is no law that denies him the right to borrow on it or loan it to somebody else. And it is to the interest of the broker, because he gets the use of the money, to loan the stock always. Stocks are rarely borrowed by anybody except to make deliveries on short sales.

What about the broker who doesn't execute his order at all but "stands" on the trade from the beginning and sells the stock "short" to his own customer, delaying actual purchase until delivery is demanded? This practice is even less damaging to the customer than the one of actually executing the buying order for the customer at the time the order is given and then selling the stock right back on the market again for the account of the broker or his pal—the usual practice when the object of going short is sought. When a broker buys stocks in the market he must bid for them, and actual purchase generally means a higher cost price to the customer than that at standing quotations.

The rule of the Street is to charge the customer interest on all debit balances. When a broker lends to a "short" seller a stock which he is carrying for his customer, he is paid the full market value, as security for its return. In that case the broker ceases to incur interest charges for the customer, and is actually able, in addition, to lend out at interest the cash marginal deposit put up by the customer.

Maybe you think, dear reader, that a broker who charges his customer interest at the rate of six per cent. per annum on money which he has ceased to advance is crooked. Very well. If that be so, then all members of the New York Stock Exchange must be labelled "crooks." Here is how it works, even among the highest class and most conservative members of that great securities emporium:

John Jones orders the purchase by his broker of 1,000 shares of Steel on margin. He pays down 10 per cent. of the purchase price. Mr. Jones receives a statement at the end of the month charging him with interest at the rate of six per cent. per annum, or more if the call-money market is higher, on the 90 per cent. of the purchase price advanced by the house.

On the same day that the order of John Jones is received, William Smith orders the same house to sell short 1,000 shares of Steel at the market. This order is also promptly filled. Thereupon the broker uses the 1,000 shares of Steel, which he bought for the account of John Jones to make delivery through the Clearing House for the account of William Smith. Sometimes a fictitious William Smith is created, known as "Account No. 1," "A. & S. Account," "E. Account," etc. This is usually done when a broker wants to hide from his bookkeepers that he or an associate is taking the other end of the customer's trade.

The broker is out no money, yet he charges Mr. Jones the regular rate of interest on his debit balance. As a matter of fact, too, the stock bought for Mr. Jones is never even delivered to his broker. The Clearing House, because of the "short" sale, steps in and delivers it to the broker to whom it is due "on balance."

Custom and practice cover a multitude of remarkable transactions—don't they?

You have the framework of the Scheftels structure and of its Wall Street environment outlined in this chapter. Some of the narrative is undoubtedly "dry-as-dust," but its recital has appeared to be necessary to enable the lay reader properly to interpret the chronology of stirring events which forms the concluding installment.

In the foregoing I have endeavored to lay bare many practices that are common to Wall Street. Wherever I have laid them at the door of B. H. Scheftels & Company, I have given that corporation much the worst of it, because in the recital I have omitted to mention a multitude of happenings that were creditable to an extreme to the Scheftels company. Most of these had to do with the experiences of the Scheftels company as publicity agents and promoters. Its wide-open publicity and promotion policy called forth the ire of influential Wall Street pirates and caused the "pressure" at Washington which resulted in the Federal raid of the Scheftels offices.

I have reserved this dramatic series of events for my last chapter.

  CHAPTER XI

A Fight to the Death

In professional quarters the Scheftels corporation was regarded as an interloper from the day it set foot in the financial district.

Its first offense was to reduce its commission rates. This move set the whole Curb against the enterprise. But as the play progressed it proved to have been unimportant in comparison to the unspeakable crime of telling the truth about other people's mining propositions that were candidates for public money. The Scheftels corporation had laid it down as a set rule that an established reputation for accuracy of statement was a great asset for any promoter or broker to have. To gain such prestige the principle was followed in the nation-wide publicity which emanated from the house that, no matter whom the truth hurt or favored, it must be told always, when publishing information regarding the value of any listed or unlisted security. Space in the Scheftels Market Letter or the news columns of the Mining Financial News was unpurchasable.

The enforcement of this rule was a wide departure from prevailing methods. But that didn't make us hesitate. Having felt the speculative pulse for years, I knew its throb. The public, after losing billions of dollars, were becoming "educated." The rank and file of mining promoters—high and low—in Wall Street still believed that "one is born every minute and none dies." But I and my associates didn't. An uneducated public had been unmercifully "trimmed" in scores of enterprises backed by great and respected names. Speculators were ravenous for the truth. We decided to give it to them. We gave it to them straight.

This publicity system brought about the ruin of the Scheftels corporation through the powerful enemies it made. The policy was right all the same. Persisted in, nothing was or is better calculated to strengthen the demand for all descriptions of meritorious securities. The Scheftels corporation was the pioneer in the exploitation of this principle as a fundamental and underlying basis of brokerage and promotion. In pioneering this policy, however, the Scheftels company was sacrificed to the prejudices and wrath of the old school of promoters.

THE FIRING OF THE FIRST GUNS

Before the Scheftels corporation was on the Street three months it almost came a cropper. On the strength of excellent mine news it purchased nearly 300,000 shares of Rawhide Coalition in the open market, up to 71 cents per share. A determined drive was made against the stock by mining-stock brokerage firms which had sold it short. Bales of borrowed stock were thrown on the market by the crowd operating for the decline. The Scheftels company took it all in. Letters and telegrams were sent broadcast by market enemies urging stockholders to sell. A powerful clique had been losing big sums on the rise.

The Scheftels company published advertisements calling upon margin traders to demand delivery of their certificates. This expedient proved of small utility. The brokers continued to hold off deliveries to customers and sold and delivered to us all the stocks that they could borrow or lay hands on. The continued selling finally made inroads on the Scheftels corporation's cash-reserve to a point that forced it one day to stand aside and leave the market to the sharpshooters. That day, in a few hours, approximately half a million shares of Rawhide Coalition changed hands out of a capitalization of 3,000,000 shares. The corporation's loans were called. This forced it to throw large blocks of stock on the market. A sharp break ensued. That was just what was wanted by the interests which were gunning for us. They covered their short sales at great profit.

In the midst of the mêlée the Scheftels company tendered a Stock Exchange house of great prominence, which had loaned it for the account of a Salt Lake firm of brokers $12,500 on 50,000 shares of Rawhide Coalition, the money to take up the loan. A representative of the Stock Exchange house sheepishly stated that his firm had loaned part of the pledged stock to out-of-town brokers. He asked for time. Under threat of dire consequences the Stock Exchange firm bought stock back from us in the open market that afternoon to supply the deficiency, and then made delivery of this stock back to us in lieu of that which they had parted with. It had been specifically stipulated by the Scheftels company when the loan was made that the certificates must be held intact and that the stock must not be loaned out or sold while the money loan was in force.

This experience was repeated frequently during the Scheftels career on the Curb. It cost B. H. Scheftels & Company more than one million dollars, during the nineteen months of its existence, in giving loyal market support, in times of "professional" attack, to the stocks it had fathered or promoted and felt moral responsibility for.

Time and again the Scheftels company found among stocks delivered to it, against purchases made in the open market, the identical certificates it had pledged with loan-brokers as collateral for loans, and which had been hypothecated by it with the specific proviso that the certificates were not to be used. It opened our eyes to one of the most commonplace practices, not only on the Curb, but also on the Stock Exchange. Hardly a failure occurs on any of the Exchanges or on the Curb that does not reveal customers' certificates, which were originally pledged with the understanding that they were not to be "used," in the strong-boxes of others.

The first grievous offense of the publicity forces of the Scheftels corporation against Wall Street's "Oh-let-us-alone" promotion combine was a wallop in April and May, 1909, through the Scheftels market literature, at Nevada-Utah.

The combination which owned control took with bad grace the strictures on the property. We heard an awful underground roar. At that time the price of Nevada-Utah stock was around $3. The Scheftels Market Letter said that there was probably not 30 cents of share value behind the property. The price immediately began to crumble. It has been tobogganing ever since. The stock at the beginning of September of this year was quoted at 37½ to 50 cents.

Such a thing as printing facts which would enlighten stockholders and the public as to the actual value and condition had not before been heard of when such enlightenment ran contrary to the plans of strongly entrenched promoters on the Street.

The campaign against Nevada-Utah, therefore, directed widespread attention to B. H. Scheftels & Company and the Mining Financial News.

Following the Nevada-Utah disclosure, the Daily Market Letter and the Weekly Market Letter of the Scheftels corporation and the Mining Financial News took a good, strong, husky "fall" out of the La Rose Mines Company, capitalized for $7,500,000. The La Rose owns one of the greatest producing mines in the Cobalt silver camp. A market scheme was in progress, with La Rose as the medium, and W. B. Thompson, of Nipissing fame, as a chief manipulator. We called a halt to the game when the price reached a "high" of $8.50, and saved the public a huge sum of money. Under our campaigning the stock declined to $4, a decrease of $6,750,000 in the market value of the capitalization. This made W. B. Thompson and his associates the implacable enemies of the Scheftels company and myself. We didn't worry much. We were catering to the public. Indeed, we were pleased with our work.

Following this incident, the Scheftels Market Letter and the Mining Financial News took a smash at a mining-stock deal in which W. B. Thompson and the Guggenheims were jointly interested. It was the now notorious Cumberland-Ely-Nevada Consolidated merger. Later the merger was enlarged and took in the Utah Copper Company, or rather the Utah Copper Company took in the others, and the Scheftels propaganda found another opportunity to do a great service for the stockholders of Nevada Consolidated.

Our attack hurt the Guggenheim reputation among investors all over the country and contributed to reduce their influence over the large stockholding body—more than 6,000 men and women—of Nevada Consolidated. Though finally successful, the Guggenheims were sore from the lashing and exposures to which they had been subjected. As for the Scheftels company and the Mining Financial News, they had still further established the honesty and value of their publicity service.

A market scheme to balloon the price of Ray Central Copper Company shares to several times their value was a precious enterprise against which we trained our publicity guns and fired several effective broadsides. The effort of the promoters to connect with the public purse here would not have been half so sensational if men of lesser prominence were identified with the operation. In our "bear" publicity on this one we minced no words. In doing so we again hit another powerful interest—the Lewisohns.

Later the exposure by the Mining Financial News and the Scheftels Market Letter of market manipulations of the Lewisohn-controlled Kerr Lake still further "endeared" the members of these two organizations to that powerful faction, and more closely cemented the ties of fellowship between the ruling powers.

Keystone Copper, another Lewisohn "baby," was put through its courses on the Curb while Kerr Lake was being played in a stellar rôle. The deal in Keystone was an unobtrusive little thing, but awful good as far as it went from the one-sided point of view. I turned the searchlight of publicity on Keystone.

The Scheftels Market Letter and Mining Financial News disclosures in the interests of speculators and investors regarding Nevada-Utah, La Rose, Cumberland-Ely, Nevada Consolidated, Utah Copper, Ray Central, and Kerr Lake were sensational enough, but they by no means included all of the work in this line. During 1909 this publicity literature took in practically every important mining company whose shares were traded in on the New York Curb. The unpleasant truths these forces were obliged to tell from time to time touched the delicate sensibilities of many leading lights on the Street. These had grown accustomed to an unvarying diet of sweets.

It would seem that their appetite for saccharine provender would have become cloyed and that a change would be a grateful relief. It was not. The truth was distasteful. It interfered with the noble industry of mining the public and it cut down the profits of that end of the game. In keeping up the record of day-by-day market and mine developments these publicity agents punctured many a rainbow-tinted balloon. Very frequently they gave to the public its first definite and intelligent idea of real value behind promotions and in properties. Where market prices represented an overplus of hopes and expectations the truth was told. The aim was to take mining speculation out of the clouds and plant its feet firmly on earth.

In this laudable effort we ran counter to the plans of the mighty. We also violated the vulgar unwritten rule of some of the Wall Street fraternity—"never educate a sucker." Our publicity work caused a readjustment of judgment and market values, besides those already mentioned, on such stocks as First National, Butte & New York, Trinity Copper, Micmac, Ohio Copper, United Copper, Davis-Daly, Montgomery-Shoshone, Goldfield Consolidated, Combination Fraction, British Columbia, Granby, Cobalt Central, Chicago Subway, and sixty to eighty others.

The live wires of our publicity service blistered the flesh of the Guggenheims, the Thompsons and the Lewisohns, and perturbed their widely diffused affiliations, connections and allies, including John Hays Hammond, J. Parke Channing, and E. P. Earle; also Charles M. Schwab, E. C. Converse, B. M. Baruch, United States Senator George S. Nixon, George Wingfield, Hooley, Learned & Company, many other New York Stock Exchange houses, a group of powerful corporation law firms, a noted crowd of influential politicians, Curb stockbrokers who had grown fat executing manipulative orders for the "inside," bankers who carried on deposit the cash balances of the mining companies, and even J. P. Morgan & Company, who were partners of the Guggenheims in their Alaska ventures and were for a time said to be meditating a merger of the copper companies of the country with those controlled by the Guggenheims as a nucleus.

THE STORY OF ELY CENTRAL

By keeping speculators out of stocks that were selling at inflated prices, the Scheftels corporation and the Mining Financial News became endeared to a great popular moneyed element. The public was saved huge sums of money.

This, however, only carried out the negative end of a grand idea. The affirmative demanded that the Scheftels corporation must put its followers into a stock or stocks where they could actually make money.

The Scheftels corporation was on the eager lookout for a genuinely high-classed copper-mining proposition. It found what it was looking for in Ely Central, a property that is sandwiched in between the very best ground of the Nevada Consolidated, is bordered by the Giroux and occupies a strategic position in the great Nevada copper camp of Ely, birthplace of what is probably the greatest lowest-cost porphyry copper mine of America.

By invading the Ely territory as promoter and annexing Ely Central, the Scheftels corporation committed what was probably, to the interests among whom our publicity work had wrought greatest havoc, an unpardonable crime. We butted into the very heart of the game, and became a disturbing factor in their mining operations.

The Ely Central property consists of more than 490 acres. Years before, in the early days of the camp, it had been passed over by the geologists and promoters who selected the ground for the Nevada Consolidated, Giroux and Cumberland-Ely, because it was covered by a non-mineralized formation called rhyolite. As development work progressed and the enormous value of the surrounding mines was disclosed, it dawned on their owners that they might have made a mistake and that it would be just as well to obtain possession of the Ely Central property.

The ground was especially valuable to the Nevada Consolidated, if for no other reason, as mere acreage to connect up and make compact the properties owned by them. The second demonstration of their bad judgment was the fact that, having planned to mine the Copper Flat ore-body by the steam-shovel method, they overlooked the value of the Ely Central property as affording them the only practical means of access to the lower levels of that pit for operation by the steam shovels.

Investigation had disclosed to me that the evidence which had been adduced by mine developments on neighboring properties was all in favor of copper ore underlying the Ely Central area. The rhyolite, which covered Ely Central, was a "flow," covering the ore, and not a "dyke," coming up from below and cutting it off.

Why was the property idle? Inquiry revealed that the Ely Central Copper Company was $89,000 in debt, and that a pre-panic effort to finance the corporation for deep mine development had failed. The panic of 1907-8 had crimped the promoters and they could not go ahead.

The Scheftels corporation entered into negotiations with the Pheby brothers and O. A. Turner, who held the control, for all the stock of the Ely Central company that was owned by them. During the progress of negotiations, early in July, 1909, I heard that the Guggenheims and W. B. Thompson were very much put out to learn that the Scheftels company was about to finance the company. They had belittled the value of the property, as would-be buyers are prone to do the world over.

Before I entered upon the scene the Pheby brothers had found themselves objects of persistent and mysterious attacks. Their credit was assailed in every quarter and they found themselves ambushed and bushwhacked in every move they made. They were forced into a position where it was believed they would accept anything that might be offered them for their interest in Ely Central. As fate would have it, the Scheftels company entered the race at this psychological moment.

Summed up, the Scheftels company actually contracted for 1,280,571 shares out of 1,600,000, which represented the increased capitalization for a total sum of $1,158,916, or at an average price of 90½ cents per share. The time allowed for the payment of all the money was nine months, stipulated payments being agreed upon at regular intervals in between. The immediate effect of the arrangement was this: A dormant property, in debt and lying fallow, was metamorphosed into a going concern with good prospects of soon becoming a proved great copper mine, with an assured income to defray the expenses of deep mine development on a large scale, and a market career ahead of it that might be expected to match any that had preceded it in the Ely district from the standpoint of public interest.

During the progress of the negotiations the stock sold up to $1 per share. The selling for Philadelphia account of a large block of stock in the open market dropped the price back, of a sudden, to 50 cents. The Scheftels company bought stock on this break and urged its customers to do likewise. On the day the deal was concluded the market had rallied to 75 cents. Fully six weeks before the deal was arranged the Scheftels Market Letter and the Mining Financial News had begun to urge the purchase of the stock. The Scheftels organization was not hoggish. The establishment was willing that the public should get in on the cellar floor. There were nearly 300,000 shares outstanding, which the Scheftels corporation had not corralled in its contract.

Readers of the Market Letter and the Mining Financial News fell over one another to get in on the good thing. Therein they were wise. By early September the price had advanced in the market to $1. The Scheftels publicity was strong in favor of the stock. But it had not yet put on full steam. It was waiting for an engineer's report to make doubly sure it was right.

Col. Wm. A. Farish, a mining engineer of many years' experience and a man with a high reputation throughout the whole of the Western mining country, had been sent by the Scheftels company to make a report on the Ely Central. Years before Colonel Farish had reported on the Nevada Consolidated properties and outlined the very methods now being used for recovering its ores. But Colonel Farish had been ahead of his time, and the capitalists in whose interest he was acting were not prepared for such a radical step in advance of the then-existing methods, nor to believe that copper ores of such low grade could be mined at a profit, especially 140 miles from the nearest railroad. Times and conditions changed, and the 140 miles were spanned by a well-equipped rail connection.

Colonel Farish's opinion verified our fondest expectations. The report set forth that the mine possibilities of Ely Central were nearly as great as those of the Nevada Consolidated itself. On the basis of this report, which was made in September, the project acquired a new significance. Development operations were undertaken to prove up the ground in an endeavor to demonstrate the existence of the 33,000,000 tons of commercial porphyry ore which Colonel Farish indicated in his report would likely be found within the boundaries of the southern part of the Ely Central property.

The prospect fairly took the Scheftels organization off its feet. We were dazzled. We saw ourselves at the head of a mine worth $25,000,000 to $40,000,000. No time was lost in organizing a campaign to finance the whole deal. Having no syndicated multi-millionaires to back it up, the Scheftels corporation went to the public for the money, the same as hundreds of other notable and successful promoters had done. The ensuing publicity campaign to raise capital has been described in hundreds of columns of newspaper space as one of the most spectacular ever attempted in Wall Street.

I had absolute faith in the great merits of Ely Central, a faith that has not been dimmed in the slightest degree by the vicissitudes through which the company, the Scheftels corporation, and myself personally have passed. Within thirteen months the Scheftels corporation caused to be spent for mine development more than $150,000, and on mine and company administration an additional $75,000. When the Scheftels company was raided by the Government on September 29, 1910, and a stop put to further work the expenses at the mine had averaged for the nine months of that year above $15,000 a month. Work was going on night and day. Every possible effort was being made to prove-up the property in short order. Core-drills sent down from the surface had already revealed the presence of ore at depth, and I am sublimely certain that another month or two would have put the underground air-drills into contact with a vast ore-body identical in quality and value with that lying on either side in Nevada Consolidated acreage.

Ely Central was the New York Curb sensation in 1909-1910. I used the publicity forces which had been so successful in protecting the public against the rapacity of multi-millionaire mining-wolves to educate them up to the speculative possibilities of Ely Central.

Up went the price. Between the first of September and the middle of October the market advanced to $2 3-8. On October 13th advices reached us that 30 per cent. copper ore had been struck in the Monarch shaft. The Monarch is an independent working, far removed from the area that is sandwiched in between the main ore-bodies of the Nevada Consolidated. We were highly elated. The prospect looked exceedingly bright to us, and there was no longer any hesitation in strongly advising our following to take advantage of an unusually attractive speculative opening.

The market boomed along in a most satisfactory way. By October 26th the price reached $3; on November 3d it was $4 a share, and three days thereafter $4¼ was paid.

The expenses of the Scheftels company on publicity work at this time amounted to about $1,000 a day. Money for mine development on Ely Central was being spent as fast as it could be employed. We were trying to sell enough stock at a profit over the option price to defray the publicity expenses, keep the mine financed, and meet our payments on the option, but no more. We were not making any effort to liquidate on a large scale, a fact which was reflected in the advancing quotations.

When the price of Ely Central hit $4 in the market, the Scheftels company rated itself as worth from $3,000,000 to $4,000,000. I had visions of leading the Guggenheims and Lewisohns and Thompsons up the Great White Way with rings in their noses. Nat. C. Goodwin, who had a 25 per cent. interest in the Scheftels enterprise, enjoyed similar visions, only his fancy ran to building new theaters for all-star casts.

While Ely Central stock was going skyward and all the speculating world was making money in it, our publicity forces were busily driving the bald facts home regarding La Rose, Cumberland-Ely, Nevada-Utah and other pets of the mighty. Our batteries never let up for a moment. These various attacked interests were getting ready to strike back. If their movements had been directed by an individual general they could not have worked with more community of interest. One day the sky fell in on us. The plans had been beautifully laid for our complete ruin. That we escaped utter annihilation was almost a miracle.

On Wednesday, November 3d, the result of our market operations on the New York Curb was that we quit long on the day nearly 8,000 shares of Ely Central at an average price of $4. On the same day our customers ordered the purchase of nearly twice as much stock as they ordered sold. This indicated to us that the Curb selling was professional. There was nothing very remarkable about this performance because brokers doing business on the Curb very frequently play the market for a fall.

On Thursday, the day following, the Scheftels company was again compelled to purchase stock on the Curb in excess of sales to the extent of 7,600 shares, while on the same day the buy orders of house customers exceeded their orders to sell at least three to one. The professional selling was now accompanied by rumors on the Curb which spread like the smell of fire that trouble of some dire sort was pending for the Scheftels company. Most of this emanated from an embittered brokerage quarter and we paid little attention to it.

On the succeeding day, Friday, November 5th, the professional selling was quieted to a point that compelled the Scheftels company to go long of only 6,600 shares on the day in its Curb market operations. The purchase of so small a block of stock excited no suspicion in the Scheftels camp, although it should have, because Scheftels' customers on this day purchased more than four times as much stock as they ordered sold, pointing conclusively to a great public demand and much shorting by professionals.

Then came the coup de main.

THE ASSAULT ON ELY CENTRAL

The 6th day of November fell on a Saturday. The New York Sun of that morning published under a scare head a vicious attack on the Ely Central promotion. The attack was based on an article which was credited in advance to the Engineering & Mining Journal and appeared in the Sun ahead of its publication in that weekly. The Sun had been furnished with advance proofs. The Ely Central project was stamped as a rank swindle. Everybody identified with it was raked over and I, particularly, was pictured as an unprincipled and dangerous character, entirely unworthy of confidence and at the moment engaged in plucking the public of hundreds of thousands. It was stated that the Ely Central property had been explored in the early days of the Ely camp and found of no value whatsoever from a mining standpoint. The Scheftels corporation was accused of setting out in a cold-blooded way to swindle investors on a bunco proposition.

I was in my apartment at the Hotel Marie Antoinette at 9 A.M. when I read the Sun's story. The Scheftels company had thrown $85,000 behind the market during the three preceding market days to hold it against the attack of professionals.

I called the Scheftels office on the 'phone and gave instructions that a certified check for $40,000 be sent to Wasserman Brothers, members of the New York Stock Exchange, with orders to purchase 10,000 shares of Ely Central at $41/8, which was the quotation at the close on the afternoon before. Orders to buy 15,000 shares more at the same figure were distributed among other brokers. The single order was given to Wasserman Brothers because I thought it good strategy. They are a house of undoubted great responsibility and it seemed to me that their presence in the market on the buying side would have an excellent tonic effect.

During the two hours' session I held the 'phone, receiving five minute reports from the scene of action. Mr. Goodwin was at my side. At ten minutes to twelve the brokers had reported the purchase, on balance, of 24,225 shares. Had they purchased 675 shares more they would have completed the orders that were outstanding and it would have been up to me to decide whether to lend further support or not. By that time my figures showed that the Scheftels corporation had thrown behind the market $200,000 in four days to hold it and I was beginning to have "that funny feeling." During the last few minutes of the Saturday Curb session the selling ceased and it seemed that possibly my fears were unfounded.

On Sunday, the 7th, my hopes went a-glimmering. All the New York papers featured scathing articles, using as authority the Engineering & Mining Journal's attack, which had appeared on the previous afternoon. Dispatches indicated, too, that the papers of Boston, Chicago, Los Angeles and San Francisco had played it up on the front page as the most shocking mining-stock scandal of the century.

By Monday, the whole country had been plastered with the sensation. Of course my early Past, all of which was a family affair and had transpired fourteen years prior, long before I essayed to enter the mining promotion field, was dragged out of the skeleton-closet. It lent verisimilitude to the stories.

After reading the Sunday newspapers, I grasped the meaning of the move and marshalled our forces. It was plain that we had been marked for the sacrifice. It looked as though we hadn't a chance in a million of weathering the onslaught if we lent the market further support. There were about 500,000 shares of Ely Central in the public's hands, and, without close to $2,000,000 in ready cash to throw behind the market, we could not be certain of staying the tide. We didn't have anything like that sum. Personally I did not give up the fight, but the outlook was mighty blue.

All day Sunday trusted clerks of the Scheftels company worked on the books, making a statement of the "stop-loss" orders and "good-till-cancelled" orders of customers. On Monday morning the newspapers contained aftermath stories of the Engineering & Mining Journal's arraignment. The air was surcharged with the impending calamity.