"What is the use of putting it that way, Lawson?" he replied angrily. "You know I mean nothing of the sort. You know I want you to keep every one you can from selling, and simply supply the legitimate demand that can be worked up among the subscribers all over the country. If worked as you can work it, this ought to clean up our stock without any one's being hurt."

I understood perfectly. If Mr. Rogers and I had been on terms of flippancy instead of dignity, at this stage we should have given each other the wink. Just what he wanted done I knew. He knew I knew what he wanted, and I knew he knew I knew, and yet we were pretending not only that we knew nothing but that there was really nothing to know.

Fortunately, at this stage of the duel Mr. Rogers' secretary arrived with my checks and stock, and while we were verifying these, I had time to study my mental chess-board for the next move. The papers were all passed at last and then I entered into some explanation of my own intentions. I told Mr. Rogers that for the time being I would hold all my stock, but that I intended to borrow a stack of money on it from Stillman through my brokers, for I fully intended to support the market, as my belief in the stock was absolute.

I could have sworn Mr. Rogers inwardly chuckled at my fatuity, but I went right on:

"If Mr. Rockefeller has decided that your share and his of the allotment must, in whole or in part, be turned into money before the second section is tackled, there's nothing for it but to go ahead, and I will put in great work for you (I didn't add, "my work, if I can make it, will keep you in as long as the public have a share"), because," said I, "my one ambition now is to complete the second section and get things in such shape that those people I have had locked-in so long can get out, if they care to."

It was an intricate problem that was thus settled, for Mr. Rogers well knew that it would be useless to attempt to sell big quantities of Amalgamated without my detecting it, and he dared not ask me to have a hand in his plot without including my own stock. When he saw I intended to stand by my baby, and yet was so anxious to get to the second section that I would accede to Mr. Rockefeller's wishes, he perceived that the situation was ideal for his purposes.

"Let me glance over that subscription list," I said; and I opened up the book, for book it really was.

My readers may surmise how intense was my interest in scanning the results of my work. This great stack of bank sheets before me was the official list of the subscription, stitched together in seventeen sections of twenty pages each; twenty-eight names, with city, State, street number addresses, and amounts subscribed to a page, all in ink in longhand.

"Better take them with you to the hotel and go carefully over the names and amounts," put in Mr. Rogers. "It certainly is a long job, but one that you must tackle some time, and the sooner the better."

Here was the missing link in my chain of evidence, delivered directly into my hands without a word of persuasion or cajolery. Providence played that hand for me surely. I concealed my jubilance by rattling along vociferously:

"I shall have to work over this a heap, sending out circulars and what not. It would have been better to have had it in typewriting, but I suppose Stillman didn't dare intrust it to the machine people. However, I can divide up the seventeen sections among different people and none will know the whole story. I will keep it in Boston with the other papers, and—gracious! what's this?"

"What is it?" he asked, smiling at my excitement.

In front of me was the section beginning with the "Mc's," and the largest subscription on the page was 6,000 shares—1,200 allotment. I followed the line back to the name. It was that of Hugh McLaughlin, then the big "boss" of Brooklyn, who, like all the other big bosses of New York State, was a trusted lieutenant of "Standard Oil." I put my finger on the amount and said:

"You have taken care of your friend across the river, I see. No wonder all the politicians were so anxious to get in, for they know you would not put this old gentleman into anything that is not pretty sure."

Mr. Rogers nodded wisely:

"Yes, I told the old stalwart he had better have about half a million, but he went $100,000 better, I see. I sent the word around to the others, too, but have not had a chance to go over the list carefully. Have they all gone in under their own names?"

I ran over page after page, looking for names as he called them off, but most of them had disguised their ventures through dummies. We had no trouble in putting our fingers on their allotments, however; Mr. Rogers commenting in his sage and caustic way on men and politics. It was growing late, and at a natural stopping-place in our talk I sent for paper and string, with my own hands tied up the book, and—with all the airs of extreme leisureliness—literally bolted.

No school-boy with a three-pound trout caught in a deep hole under a big willow bearing the sign, "Any one fishing here will be prosecuted," no burglar with an unexpected fat swag, was ever in such a fever to lug his booty to a concealed place as I to get that infinitely precious bundle to the Waldorf. At last I landed it in my room and began to scan the interesting pages. My first thought was to look for our own big dummy subscription. As I supposed, it was not there. Roughly I added the totals of the different sheets and compared them, with the 412 millions we had given the public, which was now indelibly, the world over, a matter of record. Again I stopped to congratulate myself on my good fortune in securing this first-hand evidence of the fraud that had been practised on the people.

I leaned over the thick pages with their various inscriptions. The names and addresses carried me into every corner of the United States and into the great cities of Europe as well. Set down there were towns and villages I had never heard of, and my mind made pictures for me of fathers, mothers, and children, beguiled by my pledges and promises, embracing the opportunity to add to their scanty hordes. But it was not a moment to indulge in scares, so I slipped over the people's mites and fixed my mind on the millions.

The Lewisohns were down for eleven millions, and Mr. Rogers' old cronies, John Moore's firm, were represented by a subscription of between six and seven millions. As I ran over the names I found million after million down to Mr. Rogers' friends, which told me that he had spared no one. All the lieutenants and the queer people who do the confidential business of the "System," and invariably turn up at melon-cutting time, were down for round amounts. Conspicuous among the rest was the name of that rising votary of the "System" who won notoriety, while Comptroller of the Currency under President Cleveland, as manipulator of the slick bond deal which has gone into American history as among the queerest performances of its period. Loaded up with Government banking secrets, this young man subsequently became a prize for whom the various organizations of the "System" competed valorously. There he was, in three places—James H. Eckels, President of the Commercial Bank of Chicago, 6,000, 2,000, and 2,000 shares—or a million dollars altogether.

Another name caught my eye: "Bay State Gas Co., J. Edward Addicks, 20,000 shares"—two millions of dollars. I leaned back and laughed as I thought of this wary old fox, with the bruises and scars of the "System's" hopper thick all over his body, dutifully bringing his contribution to his old enemy, Rogers. And Rogers, disdainful and contemptuous of the man, found his $400,000 good. This, I said to myself, is a case of spider eat spider with a vengeance; and I wondered if experience is really as good a teacher as the text-book says.

Hour after hour I pondered over that list, "sizing up" each subscriber and questioning what his financial condition might be. At last I dropped it, swearing to myself to use every effort to protect these thousands of people who had ventured so much money on the strength of my pledges.

Two days later the allotments were officially announced; in a few days more the receipts were issued and Amalgamated was fairly out in the world on its own feet. It was not listed on any of the exchanges yet, but it was very much in the mouths of people, and in the papers. And every day grew the ominous feeling that something was wrong. It was a contradictory situation and no one could put a finger on the trouble. Rumors one heard, but no definite derogatory statements. The truth was that those who knew what was wrong had good reasons for saying nothing, while all who had to do with stock affairs and surmised the evil, were themselves loaded up with the stock and hoping against hope that our promises of great profits would yet be fulfilled.

It was my part to keep up these anticipations and by hook or crook prevent Rogers and Rockefeller from unloading. I bought and bought to steady the market when no one else apparently would buy; and when I found others whom I could induce to venture, I had them relieve those who were faltering and who must sell. When Mr. Rogers took me to task, I invented all manner of excuses to account for my tardiness in creating a market on which he could unload his holdings. He listened impatiently and incredulously, and I felt that sooner or later he would take the bit in his teeth.

In spite of my efforts the price of Amalgamated dropped and dropped and it was all I could do to prevent a quick crash. My profits—the immense sum of money I had obtained at the settlement—had been used up, together with the great sums I had borrowed on my own allotment of shares. At intervals I stopped long enough to make brief excursions into sugar or other stocks, out of which I captured additional hundreds of thousands, but every cent of such gains went toward staying the avalanche. These indeed were days of desperation and black despair, all the more trying because I had to look happy and talk hopefully; all the more difficult because my enemies came out of their holes and did their share to balk my efforts; all the more painful because the public were beginning to doubt whether the second section was coming—and whether it had best come—and our Boston "Coppers" had begun to drop in value.

During all this time I had troubled myself but little about the Flower pool, which had been set going soon after the conversation in which Mr. Rogers had told me that he and Mr. Rockefeller intended to unload their stock. I concluded that the pool would surely get a share of what they had to sell, and showed no inclination to join in with it. But at last Mr. Rogers said to me:

"As every one is going into the pool, Lawson, it will seem strange if you are missing, so you had better send Flower your check and I will see you get it back later."

"For how much?" I asked him.

"A hundred thousand will be about right," he answered, and I sent it, and that was all I had heard of the subject until one day after the stock had been weaker than usual I received by mail a brusk notice from Flower & Co. to mail them another hundred thousand dollars. Immediately I called up the banking-house, and learned to my horror and astonishment that the pool had accumulated over 225,000 shares. I went at once to Mr. Rogers with Flower's call and said:

"I know nothing whatever of this affair, Mr. Rogers, and as I have not been unloading any of my stock and have all I can do to keep up my end anyway, you will look after it, of course."

He took the notice and said: "I will attend to it." Remembering his intentions to unload, after what I had heard of the pool's accumulations I was not surprised at Mr. Rogers' willingness to take care of this matter of mine. It is of interest now, in looking back over our affairs, to recall that though there were several periods later when the sledding was hard, and I needed all the money I could lay hands on, he never offered to return me that hundred thousand, not even after the pool had liquidated, as will be shown later. In spite of this fact, in his readiness to hurl any charge or insult at me, he had his hireling, Denis Donohoe, recently make the accusation that I alone of all its members refused to keep up my payments to the Flower pool.



CHAPTER XXXIII

A RETROSPECT AND A MORAL

The crime of Amalgamated and its immediate consequences are before my readers. I have fulfilled the promise made in my foreword to expose to the people of America the manner in which they have been plundered and the methods by which the "System" habitually cheats them out of their savings. Robbery conducted on so gigantic a scale as I have pictured must necessarily simulate the natural processes of finance, and to understand the deep devices of the schemers requires a knowledge of banking and commercial practices which the average man has no chance to attain. If I had begun my story by stating exactly what constituted the crime of Amalgamated, my readers would not have grasped its heinousness. In the chapters that I have devoted to leading up to it they have been educated in the piratical practices of finance and financiers, and have acquired familiarity with the jugglery of corporations and the multiplication and division of stock certificates through which most of the great American fortunes have been created.

Depending still on the ignorance of its blinded dupes, the "System" again raises its brazen face from among the poison rushes of Wall Street and hisses, "Listen to what he calls a great crime—a simple business transaction. It is no crime, but a common practice of modern finance and by no means unusual or extraordinary."

No crime to take by a trick from thousands of the people thirty-six millions of the results of our great country's prosperity? Think of what this vast sum represents—the revenues of a year's work of 36,000 men earning each $1,000. Think of it, ye millions who dig and delve and bear heavy burdens that your mothers, wives, and children may in exchange have a bite to eat and a couch to sleep upon!

The crime of Amalgamated, as I have explained it, constitutes a specific breach of the banking laws of the State and nation. But the legal aspects of the offence are trivial in comparison with the great moral crime which was consummated by Henry H. Rogers and James Stillman, in the National City Bank on that night in May, 1899. Through false representations and specious pledges and the credit of the names of "Standard Oil" and the National City Bank, thousands of people were beguiled into investing their savings in this Amalgamated Copper Company. Because of the promise of great gains other thousands mortgaged their homes, appropriated their wives' savings, even their employers' funds, and embarked in this fair-seeming enterprise. The greatest bank in America aided and abetted the conspiracy by the loan of its funds to lure the victims deeper into the toils. All in, the trap is sprung; the thousands are despoiled of their savings by familiar devices of finance, and throughout the land is spread a wave of misery, madness, and despair.

The crime of Amalgamated, a critical correspondent writes me, is purely a Wall Street offence, important to bankers and capitalists but of no consequence to the working men, the farmers, or the toiling millions who have no savings to invest in stocks. "Of what concern is it to us," says this writer, "how one section of the rich robs another of its hoardings?"

Poor fool! A few men cannot deprive even a few thousands of so great a sum as $36,000,000 without working untold injury upon the entire body of the people. Such a stupendous sum looted from the coffers of the many and piled in the vaults of three or four men unbalances the whole economic structure of the nation. The consequences of that act do not end in the series of defalcations and bankruptcies, imprisonments and suicides, in the ruined homes and wrecked careers that follow in its immediate wake. In the grip of these plunderers intrenched in the stronghold of finance each of these filched millions becomes a new weapon of oppression. Because of the crime of Amalgamated every pound of food that goes to sustain life in the American people, every shingle on every roof that shelters the American people, every mile of transportation for man or freight in America; in fact, every necessity and every luxury of the American people has had added to its cost some fractional increase, representing in the aggregate tens and tens of millions annually, which, flowing into the coffers of the "System," strengthen and extend its stupendous grip on the property of the nation.

Our country for a generation has been prosperous beyond the dreams of man, yet what have the masses of our people to show for it? A better, a higher, and a MORE EXPENSIVE standard of living—that is all. That this prosperity which is our national boast will last forever is incredible. Sooner or later will come one of the times when Nature frowns and sends her floods, her droughts, and her epidemics of disease. Is the American people prepared by its long-sustained prosperity to bridge over that period of want and suffering?

The truth is that the mass of our population has not sufficient surplus laid by to last over thirty days of such a calamitous interval. All the unearned increment of national prosperity the "System" has captured and capitalized. Not only have the people been deprived of the profits of their labor, but this capitalized prosperity is the stern instrument by which new burdens are laid on their shoulders and new tithes are exacted from their wages. But for the plundering "System" the great mass of our people would be able to sit in their tents in the shade of their husbanded harvests and laugh to scorn the frowns of fortune. Now, I say, God help the nation when Nature, tired from her great work, rests, and the people, too, are compelled to rest—for then will come an awful awakening. When the millions face famine and realize for the first time that their gigantic storehouses, filled to bursting with the surplus of the past, are the property of the few who cannot even count the contents, much less use them—when they realize that these hoarded treasures are as far beyond their starved reach as are the violets and daisies beyond the picking of the galley-slave, then they will appreciate how much deeper and more damnable are the crimes of the "System," such crimes as Amalgamated and its like, than even such national tragedies as the assassinations of Lincoln, Garfield, and McKinley, at each of which all the people held aloft their hands in horror.

Why is it that the millions of intelligent, able-bodied Americans, who could crush the tribe of Rockefeller as elephants crush snakes, rise with each sun and dig and delve and suffer that a Rogers may wallow in wealth and an Armour gain a greater income than the Rothschilds? Why are they so easily hoodwinked into imagining that the elaborate reports detailing the immense and growing wealth of the country represent their own well-being and affluence? Because the wise men of the "System" know human nature, know that most men and women accept unquestioningly the conditions they find surrounding them. Each day it is pounded into the heads of the people through a hundred agencies that it is the greatest and most flourishing of peoples and that the laws and customs which regulate its lives and rights are the best in all the world. How shall the people know that these glowing rumors, these propitious tidings, are but the siren songs of the "System" under the spell of which it is despoiled of its savings?

Ask yourselves, my friends, how much you know about those familiar things which are part of your lives as are the sunshine, the grass, and the flowers—your Bible, your money, your playing-cards. Each is an institution so consecrated by custom that you accept it exactly for what it meant to your father just as he took it from his own father a generation before. That the Holy Book is God's message to His children, the human race, we know because we have the words of our ancestors therefor; the stamped silver and gold we take for granted as we do shoes and clothes, because money is an essential factor in the social fabric and the form in which it comes to us seems as inevitable as the moon or our ten fingers; humanity has gone on for hundreds of years considering the knave of greater value than the ten-spot and the ace of higher worth than all the rest of the pack, because it is content to believe that the rules that have been handed down apportioning these values are the best that could be devised. With a hundred other elements and details of our daily life, it is the same—we accept unreasoningly what we are told or what is given us, with no look forward or back, and, engaged with the thousand new toys and problems which Fate, the conjurer, shakes out of his hat, we become bound by habit and blinded by precedent.

The love men have for the formulas and conventions of their daily lives is the "System's" opportunity for plunder, and it is this fundamental principle of humanity that makes my work so difficult. It would be as easy to convince the masses that their playing-cards are all wrong and that the ace is really of lower value than the two-spot as it is to awaken them to the terrors of the conditions that are confronting them; to compel them to realize that a despotism of dollars is being organized among them; that the cherished institutions of generations are the instruments by which a few daring schemers are concentrating into their own hands the money of the nation, and that this concentration can have no other result than the abject slavery of the American people.

END OF VOLUME



LAWSON AND HIS CRITICS

I

THE INSURANCE CONTROVERSY

In the July, 1904, number of Everybody's Magazine I announced that I proposed to give to the world a story concerned with events which had taken place in real life—a true story.

I outlined it, giving the names of the persons and events it would deal with.

These things happened:

The edition of the magazine was sold out in three days; my chapter was printed in part or in full in nearly all the papers and periodicals of the United States and Canada; many of the representative journals, even in England, published long editorials on the subject, and with but few exceptions, editorials and news comments were favorable.

I was urged to continue. My second chapter appeared.

The magazine, with an additional 100,000 copies, was sold out in two days. The press took hold of the matter with even greater interest than it had accorded my first chapter.

The third chapter met with a still more cordial reception. The edition of the magazine, although increased another 100,000, sold out as before, and my mail expanded to a degree that surprised me. In addition to thousands of press notices and criticisms, I received ever so many letters from all classes of Americans and Canadians—teachers of the Word of God, and members of the flocks who are taught, earnest statesmen and insincere politicians, millionnaires and paupers, anarchists, socialists, municipal-ownershipists, and the hundred and one travelers on the beaten highways and lowways of life, who, spurred by ambition or unrest, pantingly seek a chance to blaze a way for the trudging millions of the future to that goal of all ambitious and restless dreamers—a people's Utopia. Nearly all appealed to me to give them the word as to the ultimate intention of "Frenzied Finance"—"Is it only to point to the sores, or will it prick them with its long sharp point and will its double edge cut the flesh in which they are rooted?" Others required further information or explanation about the subjects I had treated; another section questioned my statements and found fault with my disclosures. The volume of these communications and criticisms finally became so large and they were so urgent in tone that I made up my mind it was necessary to devise some fair and intelligent way to remove the writers' difficulties and resolve their doubts. The modern surgeon finds the preparation of a patient who is to go under the knife as important as the operation itself. My readers, unacquainted with the intricate details of finance and confused by the angry outcries and denials of those I had attacked, required education en route to be able to absorb and digest the hard facts and strong statements I was dealing out to them in monthly instalments. My publishers agreed with me as to the necessity of dealing in some radical way with the emergency, and devoted to my service additional pages in the back of Everybody's Magazine. Here I decided to begin a department to be called "Lawson and His Critics" in which I would solve the knotty problems my correspondents presented to me, set right their misunderstandings, and reply fully to those critics who had aspersed my motives or were attempting to discredit my message.

I began the department in October, 1904, and though I have been most seriously pressed for time, and in many instances have dealt imperfectly with the problems treated, I must say that the task I set myself has proved interesting and agreeable, and the letters the department evoked have been a tremendous source of inspiration and encouragement to me along the hail-stony road I had set myself to travel.

The bulk of the department during the months of 1904 was devoted to the subject of insurance. In an early chapter of my story I said that the three great insurance corporations, the New York Life, the Equitable, and the Mutual Life of New York, were an integral part of the "System," and especially instanced the New York Life as one of the most pliable tools of the "Made Dollar" makers. This statement, so mild and so vague in view of subsequent developments, was the first move in the historic controversy that has resulted in the extraordinary exposures that are being made as this book goes to press. When that first pebble was thrown, the surface of the insurance pond was as placid as a mountain lake, unruffled by a ripple, and in it were reflected the benignant faces of the noble philanthropists who consented to spend their days conserving the interests of the widows and the orphans of America. The people had grown so accustomed to regarding the McCalls, the Perkinses, the Hydes, the McCurdys, and the Alexanders, whose eminent physiognomies looked out at them from their insurance policies, as lofty and generous souls far removed from thoughts of pelf or self-aggrandizement, that my assertion caused consternation such as would occur in a Chinese temple if some rough intruder struck the idol, before whom a congregation was worshipping, with a stone. At once an avalanche of letters—protests, demands for further facts, anxious appeals from policy-holders—poured in upon me, and frankly I took up the subject, giving my readers exactly what they desired.

NEW HAMPSHIRE TRACTION

In order that the controversy may be unfolded in the manner in which it was first given to the public, I give here the first letter of the series, and then follow directly along with those passages from succeeding numbers that are devoted to the subject:

BUFFALO, N. Y., August 25, 1904.

MR. THOMAS W. LAWSON, Boston, Mass.

Dear Sir: I have been astounded beyond measure at the revelations you make in your second article regarding the New York Life Insurance Company, because I have two policies in that concern which I am keeping up for the protection of my family. My confidence in the company has been shaken by your revelations, and I wonder if much more can be said. Perhaps it is best for clean life insurance to tell all now—the rest will be the better for it. Do you really believe the officers of the company personally profited from using the "cash on hand" of the company? Go on in your exposure; you are doing a meritorious work, and we poor devils, plodders, will never cease to thank you for your work. Should like to have you intimate if anything more about New York Life is coming.

Yours truly, —— ——

To this I replied: I desire to emphasize that the New York Life Insurance Company, which I cited, is no different from the Equitable and the Mutual Life, or many of the other large companies. They are links in the chain of the "System"—necessary links in the device by which dollars are "made," by which the savings of the people are sucked from the people to the "System," the "Private Things."

I will, later in my story, dwell upon this tremendous phase of this stupendous question, and will only say at the present time, as an answer to such questions as "Buffalo's": The insurance companies use the billions the people have placed with them to buy or create banks and trust companies, the stocks of which are a large part of their assets. They then use these banks and trust companies, which exist because of the people's savings, in stock gambling enterprises, speculations as unsafe and as frenzied as those of the wildest plunger of Wall Street. I will give one illustration:

The New York Life Insurance Company's directors and managers created the New York Security and Trust Company. $1,000,000 capital; $500,000 surplus—in all, $1,500,000. $150 per share, of which the insurance company held about two-thirds. The Trust Company soon secured deposits to the extent of about $50,000,000, and these it loaned out by "financing" new and old enterprises. Among them was the New Hampshire Traction. The Trust Company flourished. Its stock advanced in price to over $1,300 per share, or over $13,000,000, and its different speculative ventures prospered exceedingly. New Hampshire Traction kept pace with the rest and simultaneously with them bounded upward in value until the amount of this stock owned by the Trust Company represented a value of between $5,000,000 and $6,000,000. There came a time when the directors of the New York Life Insurance Company decided to dispose of their stock in the Trust Company, and did so to a syndicate composed of their own members, headed by John D. Rockefeller, at $800 per share. Afterward the stock disposed of at $800 per share advanced to over $1,300, or, with the third which had not been owned by the insurance company but by the "insiders" and their friends, to a total of over $13,000,000. Then came the slump, and the price of the New Hampshire Traction fell to twenty-five cents on the dollar, and the Trust Company's stock to less than $600.

If in all the histories of the wildcats of the wild catteries of Wall Street a wilder case of "frenzied finance" can be discovered, I don't know it, and yet this is only one of many I could quote, selected at random. Boiled down, it means that what was bought at $150 went to $1,400 and back to $590, and that it changed hands at $800 before it got to $1,400, and that the plunger in this transaction, which made this plunging possible, was one of the most conservative life insurance companies in America.

I will answer "Buffalo's" question by asking another:

Suppose all the insurance companies have been doing business on the same scale, and have tied up billions of the people's money in such schemes as New Hampshire Traction, and the people, learning these facts, should demand their savings to the extent of the $9,000,000,000 which they have deposited in banks and trust companies, what would happen? What would happen to the undigested securities, the insurance companies, the people's savings, and the policies such as "Buffalo" says he has purchased for the benefit of his family?

* * * * *

This statement precipitated a perfect flood of letters and queries, growing more urgent as the month wore on. It was impossible to answer all of them. I contented myself with replying to the letter of a prominent Philadelphia church-man, a policy-holder in the New York Life, who wrote as follows:

PHILADELPHIA, September 23, 1904.

MR. THOMAS W. LAWSON, Boston, Mass.

My Dear Sir: I have just finished reading the current article on "Frenzied Finance," and like "Buffalo" I am astounded at your statements regarding the "New York Life." I, too, have a policy in that company and have been led to believe that I was not only insured in the best and most conservative company, but that I had a first-class and perfectly safe investment as well. This particular company claims that not a dollar of its assets is invested in stocks of any kind, and yet, to quote from your article:

"The insurance companies use the billions the people have placed with them to buy or create banks and trust companies, the stocks of which are a large part of their assets."

Either you are manifestly unfair or else the company is guilty of deliberate falsehood for the purpose of deceiving the public.

As a policy-holder and prospective sharer in the surplus of the "New York Life," I am much interested in knowing whether its statements in regard to its investments are to be relied upon.

Will you take just a moment to answer the following question? Is the "New York Life" telling a falsehood when it states that not a dollar of its assets is invested in stocks of any kind?

Very respectfully yours, —— ——

I replied: The transaction in regard to the New York Security Company and the New Hampshire Traction stocks was exactly as I set it forth. I can imagine no one but an absolute idiot who would dare to set it forth unless he knew he was dealing with facts.

Your high position in the church should, in my opinion, peculiarly fit you to answer fairly your question, "Is the New York Life telling a falsehood when it states that not a dollar of its assets is in stocks of any kind?" when I unqualifiedly state the fact that the New York Life owned the millions of the New York Security Company's stock; that it paid $150 a share for them and sold them to a syndicate of its own directors at $800 per share, and that the stock afterward sold at over $1,300 per share, and still afterward dropped to less than $600 per share. I did not wish to be unfair to the New York Life, or I should have stated, what I shall endeavor to show before my story is ended, that at the time the New York Life parted with these shares to their own directors at $800 per share they were actually worth and could have been sold for hundreds of dollars per share more.

THE HONESTY OF THE ONE MAN

At this the big insurance companies uncovered their guns, and soon the air, the newspapers, and my mail were full of underwriting explosions. It was necessary then to line up my forces and to go at the attack seriously. So, having carefully thought out a campaign which my knowledge of the men whom I was antagonizing taught me would bring results, I began, in December, as follows:

When I began to write "Frenzied Finance" I specifically stated that I should not concern myself with men, but with principles. I held that to put an end to the plundering of the people required more than the denunciation of individual criminals; that the real peril lay in the financial device through which the plundering was done and the "machine" developed for their operation. The "machine" is the tremendous correlation of financial institutions and forces that I call the "System," and the most potent factor in the "System" is the life insurance combine—the three great insurance companies, the New York Life, Mutual Life, and Equitable, with their billion of assets and the brimming stream of gold flowing daily into their coffers. That I should have to discuss the relation between the "System" and these great institutions was inevitable; but, knowing how vitally interested the public is in the preservation of the gigantic structures its savings have erected, I had thought to treat this phase of my subject later on, when my readers should be absolutely convinced by what had preceded it of the honesty and fairness of my purpose. Moreover, it did not seem possible to touch on life insurance conditions without involving the men who direct the three great companies, and whom policy-holders and the people at large have been taught to regard as men of wellnigh miraculous sagacity, integrity, and beneficence. With these men I have had none but the pleasantest relations, and determined as I am on the performance of my task, I go about it with the reluctance a surgeon feels when, in order to save a friend's life, he must amputate his limb.

A contingency has now arisen which compels me to depart from my rule and to discuss much more frankly than I had purposed at this juncture, the New York Life Insurance Company, the system which controls it, and its president, John A. McCall, the "System's" representative.

In reply to the inquiries of an anxious policy-holder, who had taken alarm at my statement that the funds of these great corporations were under the control of the "System," I stated in the October issue of Everybody's Magazine that the New York Life was, as well as its so-called competitors, the Equitable and the Mutual, as much a participant in the frenzied speculation of the period as were the plunging Wall Street stock gamblers; but in giving an illustration of its methods (the New York Security and Trust Company and the New Hampshire Traction Company) I selected a case which would not unnecessarily alarm nervous people, for the transaction showed an enormous profit as the result of a wild stock plunge, instead of an enormous loss—some of the New York Life's other deals were much less fortunate. When I stated that the New York Life disposed of its interest in the Security Trust Company to its directors for four millions of dollars, which represented a gain of over $3,000,000 on its original investment, I was careful not to state that the shares for which they paid $800 each were worth at the time $1,300 each, or $7,000,000 for what was sold for $4,000,000—particularly careful to state that they were afterward worth this additional amount.

Policy-holders in the three great life-insurance companies may argue: "The man who is known to us policy-holders as the real head of the New York Life is John A. McCall, its president. All that you may say about the 'System's' votaries being in control may be so, but we depend on the integrity and the character of this one man to protect our interests. He is our representative, not the 'System's,' and our savings are surely safe in his strong hands."

There is the point. In the great insurance corporations that are "one-man run," the hundreds of thousands of policy-holders have but one protection. This, notwithstanding the protection of the State laws, the guardianship of the Insurance Department of the various States, and the provisions of the company's charter and by-laws.

However impregnable may seem the safeguards which the law has built round the administration of our great insurance companies, the fact absolutely is that the honesty of "the one man" is the one potent protection policy-holders may depend on. The others may be juggled with as are the rules of the Stock Exchange, which say in thunder tones, "All within our sacred walls is honest and honorable," when in reality if the microbes of dishonor and dishonesty generated within Stock-Exchange walls each busy week of every year should be collected and disseminated throughout the land, they would give typhoid of the soul to our eighty millions of Americans. So it becomes the duty of every policy-holder to find out by such tests as he can apply, "Is 'the one man' who runs our company an honest man or is he a dishonest man?" If "the one man" stands their tests, if he emerges from their ordeal clean, strong, honest, as they believed, then they may rest awhile in patience. But if he is revealed as dishonest, then it behooves the policy-holders of that company to take measures for the protection of their interests. The welfare and happiness, perhaps the very lives of their mothers, their wives, and their children depend on their action.

I was recently waited upon by an important man.

"Lawson, what are you doing in life insurance?" he asked.

"Giving facts about the life-insurance branch of a 'System' which is foully plundering the people," I answered.

"What are you trying to do?"

"Educate the millions of life-insurance policy-holders to their present peril; after they are educated, arouse them to quick, radical action."

"What are you going to do?" he asked.

"I am going to cause a life-insurance blaze that will make the life-insurance policy-holders' world so light that every scoundrel with a mask, dark-lantern, and suspicious-looking bag will stand out so clearly that he cannot escape the consequences of his past deeds, nor commit new ones."

"Have you figured the consequences to yourself?"

"Having no interest in what the consequences may be to myself in performing what I have decided is a sacred duty, I have not."

"Let me show them to you. First let me ask, do you intend to confine your criticisms to the New York Life Insurance Company?"

"I intend to bring out the facts, particularly as to the New York Life, the Mutual Life, and the Equitable Life; and, so far as in my power lies, as to every other life-insurance company in America that is connected with the 'System.'"

"Are you actuated by any selfish motives—gain, revenge, or friendly interest in certain life-insurance companies or banks or trust companies?"

"My only interest is to perform a duty in righting a startling wrong, and I would not undertake the terrible task if I could possibly avoid it."

"I am sent to ask you these questions, to find out whether, if you are only seeking to serve the policy-holders, and the insurance companies can absolutely prove to you that your making public your facts will cause terrible destruction to policy-holders' interests, you will consent to forego the life-insurance branch of your story?"

"I know the facts. I have calmly, and I believe intelligently, reviewed the effects of their being given to the world, and have concluded that the damage to policy-holders and the people would, in any circumstances or conditions, be greater because of my not doing what I have decided to do than by my doing it. Therefore I will not in any circumstances consent to stop until I have laid before the world those things I consider it should know."

"Well and good. Let me show you what you are up against. The Equitable, the New York Life, and Mutual Life Insurance Companies, and their affiliated institutions and individuals, are to-day by all odds the greatest power in the world, greater by all odds than any power that can possibly be gathered together from those outside themselves, a power so great that the effort of no man nor party of men outside themselves can possibly prevail against their wishes."

"Stop where you are for a minute," I answered, "and let me run over to you what I know I am up against, and then you can judge whether I appreciate the difficulties of my task:

"First, the three companies I have named have absolute possession of property and money in the form of assets of over $1,000,000,000—more than half the combined assets of all the insurance companies of America—and indirectly, through their affiliated institutions, of an additional sum, the aggregate of which is much greater than the assets of all the national banks of America and the great financial institutions of Europe, such as the Banks of England, France, and Germany. The three have a ready cash surplus of almost $200,000,000, which is greater than the combined capital of the four greatest institutions of Europe—the Banks of England, Russia, France, and Germany. The income of these three companies is, each year, $100,000,000 greater than the combined capitals of the Banks of England, Russia, France, and Germany—or about $250,000,000, $200,000,000 of which is taken each year from their policy-holders in the form of premiums. Yet from out of this income there is returned to their policy-holders each year in dividends less than $15,000,000, and in total payments of all kinds not over $100,000,000. And yet these three companies pay out each year in what they call expenses to keep the concerns running $50,000,000, paying to the officers of the companies $3,000,000 in salaries, almost $1,000,000 to their lawyers, and a number of millions in various forms of advertising.

"Second, the three companies are absolutely steered and controlled from a common centre, and the men who do the steering and controlling are the 'System's' foremost votaries, Henry H. Rogers, William Rockefeller, James Stillman, and J. Pierpont Morgan through George W. Perkins, a partner in J. Pierpont Morgan & Co. Mr. Rogers, vice-president of the Standard Oil Company, is a trustee of the Mutual Life and a director in one of the largest trust companies owned by the three great insurance companies, the Guaranty Trust Company of New York. William Rockefeller, vice-president of the Standard Oil Company, is a trustee of the Mutual Life and director in the National City—the 'Standard Oil'—Bank. James Stillman is a trustee of the New York Life, and president of the National City—the 'Standard Oil'—Bank of New York. George W. Perkins, partner of J. Pierpont Morgan & Co., is vice-president and trustee of the New York Life and a director in the National City—the 'Standard Oil'—Bank; while John A. McCall, the president of the New York Life, is a director in the National City—the 'Standard Oil'—Bank.

"These great institutions own a majority of the capital stock or have absolute control of a number of the leading banks and trust companies of New York and elsewhere; and such ownership shows conclusively the linking together of the three great insurance companies. For instance, the Equitable owns more than a majority of the stock of the Mercantile Trust Company of New York, of a book value of about $4,500,000 and a market value of almost $13,000,000; and of the Equitable Trust of New York, of a book value of $5,500,000 and a market value of $9,000,000; and of the Bank of Commerce of New York, of a book value of about $8,000,000 and a market value of over $9,000,000; and in the directory of the Mercantile Trust of New York and Equitable Trust is E. H. Harriman, one of the leading 'Standard Oil' men and one of the active votaries of the 'System,' while in the directory of the Bank of Commerce are the president of the Mutual Life and seven other trustees of the Mutual Life and three of the trustees of the New York Life.

"The Mutual Life owns stock of the Bank of Commerce, of a book value of $4,500,000 and a market value of $7,500,000; of the United States Mortgage & Trust Company, of a book value of $2,000,000 and a market value of $4,500,000; and of the Guaranty Trust Company of New York, of a book value of $1,250,000 and a market value of $5,500,000. The directors of the United States Mortgage & Trust Company consist of eight trustees of the Mutual Life, including its president, and two trustees of the Equitable Life, while in the Guaranty Trust directory is the president of the Mutual Life, Henry H. Rogers, and E. H. Harriman, 'Standard Oil' votary and director in the Equitable.

"In addition to these financial institutions, the Mutual Life has about $20,000,000 of its funds invested in the stock of twenty-five other trust companies and national banks, while the Equitable has about $10,000,000 invested in some fifteen other trust and banking institutions.

"Third, the absolute control of the three great companies, and through them of their subsidiary financial institutions, while supposed to be in the hands of the policy-holders, is entirely beyond their regulation, as all policy-holders of the three companies give over complete control of their companies to the 'System' through the following machinery: The control of the New York Life rests absolutely in President McCall, that of the Mutual Life with President McCurdy. Originally these men were elected to office by policy-holders' proxies, voted by the great general agents; but so immeasurable has been the growth of these corporations that only rebellion among policy-holders on an international scale could oust from power the McCalls and the McCurdys. The control of the Equitable Life rests in the $100,000 of capital stock which is almost entirely owned by the men who elect themselves to manage the company.

"Therefore you will see that I fully comprehend that this power, which you claim to be, and which undoubtedly is, the greatest on earth, is absolutely, for all practical purposes, in the hands of three men, and that any one who attempts to do anything contrary to what this power allows will find himself opposed by practically unlimited money, which can be used first to corrupt all sources of help, including State insurance-law enforcers, and then to keep such corruptions from the policy-holders by subsidizing the press. In other words, you see that I fully comprehend that I, or any man or any body of men, would be absolutely helpless in an attempt to correct present evils unless we could do two things: First, show to the policy-holders of the great insurance companies that they are absolutely in the hands and at the mercy of 'one man,' and next, that this 'one man' is unscrupulous."

In other and different ways I had it forcibly impressed upon me that I must go no further in connecting the life-insurance companies with "frenzied financiering"; that while the "Standard Oil"-Amalgamated-City Bank crowd might bide their time for reprisal and vengeance, the great insurance companies must at any cost instantly squelch those rash souls who dared to cross their paths. To all such warnings I replied that a life-insurance company, especially great institutions with hundreds of thousands of policy-holders, must be as far above suspicion as Caesar's wife; that the security of the immense funds in their possession must be as unassailable as the United States Constitution; but that immunity from criticism could be secured only by honesty of purpose, honesty of method, and honesty of results; and that I would follow "frenzied finance" wherever it might lead, even if the exposure brought every life-insurance concern in the country down to the ring-bolt of making public confession of complicity. But with all my knowledge of the "System's" weakness, I never dreamed of the condition of fatuity into which the past few years of unbridled "frenzied finance" have plunged its votaries. If the correspondence that follows here correctly represents the purposes and the methods of great American life-insurance companies, I ask my readers what quick, sharp, effective means should be taken to call a halt and rescue the billions of the people's savings before it is too late. And I ask all policy-holders in the great insurance companies to weigh carefully what follows, that from it they may decide the question.

As soon as it became fixed in the minds of the different interested parties who had communicated with me that my purpose was unalterable, queer things happened:

First, there appeared in the press of the country, under large, black headlines, the startling confession of the editor of a New York financial paper, who, conscience-stricken, admitted that he had been engaged in the systematic blackmail of insurance companies and officials and Wall Street institutions such as banks and trust companies. It was a curious document, and even the casual reader must have wondered at the mysterious lack of detail. The paper, I found out later, was one of the innumerable swarm of journalistic insects generated, like mosquitoes, in the financial swamps of Wall Street, destined to live a day and die as they deliver their sting, and the attention given it was curiously out of proportion to its importance. Among other queer things, the editor announced that after printing his confession he would disappear; no names were mentioned nor a fact printed which identified any one or anything. All this could not happen without a motive, and I said to myself, "The 'System' is planting a mine for some one." Not another word appeared. I awaited developments. On October 8th I received the following letters, which tell their own story:

FREMONT, OHIO, October 6, 1904.

MR. THOMAS W. LAWSON, Boston, Mass.

My Dear Sir: I have followed with intensest interest your discussion of "Frenzied Finance." The expose of the "System," and its Machiavellian performances, was highly interesting to me. I was associated with Attorney-General Monnett in his effort to get testimony and the inside facts concerning the trust and its operations in his prosecution against that corporation for violating the Ohio anti-trust law. At that time the books of the company were burned in Cleveland, and, as stated in your article, the company now relies upon the superior memory of Standard Oil.

I was well aware of the connection of certain life-insurance companies with Morgan and the Rockefellers, but until your public charge, was not familiar with the details. As I had considerable money invested myself in New York Life Insurance I wrote John A. McCall a bitter letter. In this age of commercialism sentimental benevolence gets little place. The common sentiments of humanity and appreciation of responsibility admonish one in moderate circumstances or even in affluence to invite the co-operation of others in providing for those dependent upon the individual hazard of life and fortune. Life insurance has come to be a sacred thing. It is the substantial token and expression of responsibility which a reasonable man dying leaves to those dependent upon him. I so wrote Mr. McCall, and told him that if the head of a great institution like the New York Life Insurance Company would be guilty of such perfidy as charged by you, the organization which would retain him in a position of responsibility was undeserving of confidence or patronage.



I enclose for your inspection Mr. McCall's reply. This is doubtless a sample of the sort of campaign waged throughout the country by the "System."

I enclose stamped envelope for the return of the McCall letter, as I purpose continuing the correspondence until I force him to an issue.

You will observe the very palpable evasion of the issue. I asked him if the details of the transaction described in Everybody's, in which the New York Life Insurance figured conspicuously, were true. He answered by saying that he made money out of the trust company venture and retired. The fact that New York Life money is so deposited as to suit the convenience of the "System" in its heads—I win, tails—you lose, operation, is a matter which has escaped the attention of the astute financier. I have written him further, calling his attention to the fact that his letter conveys no information not heretofore made public in circular but that my inquiry was directed to the particular transaction alluded to in Everybody's, and requesting a flat affirmation or denial.

Trusting that these facts may be of assistance to you, I am,

Yours very truly, (Signed) H. C. DERAN.

I shall spare my readers the enclosures. They were newspaper slips, printed on fairly thick paper, reproduced from unknown publications, and obviously put forth to discredit me by implication. One, headed "A Frenzied Financial Blackmailer," from the Vigilant, New York City, September 30, 1904, presented the confession, previously referred to, made by the editor of the United States Investors' Guardian, and an editorial denouncing the blackmail of financial corporations. Another slip was "Stamp out the Fake Financial Newspaper Publisher" from the Fourth Estate, New York City, October 1, 1904, in which the wickedness of the aforesaid editor came in for further moral castigation.

At once, as I read these letters and ran over the printed slips pinned to Mr. McCall's, I realized the purpose of the blackmail editor's confession and just how so much space came to be given it in the daily papers. Insurance corporations are large advertisers[20] and enjoy great popularity in the business offices of great newspapers. It is not said in these clippings that either Mr. Lawson or Everybody's Magazine belongs to that lowest order of criminal, the self-confessed black-mailer, but the suggestion is obvious. Every policy-holder throughout the world who received these enclosures attached to letters from the greatest insurance president in America would instantly supply the connection—"'Frenzied finance black-mailer'—that's intended for Lawson, surely; 'Frenzied financial journal'—Everybody's Magazine, beyond question."

Will my readers weigh carefully this awful charge:

"Thomas W. Lawson, in addition to being a frenzied financial black-mailer, is attacking the New York Life Insurance Company because he tried to secure insurance from that company, and that company would not give it to him. His attack is made in the interest of some competing company."

Again, I ask that it be kept in mind that all this is not said by an insignificant and irresponsible trickster, but is deliberately put forth by the greatest insurance president in America, over his signature, to his policy-holder No. 826,152 and 957,006.

Soon afterward, in its issue of October 20th, a well-known organ of the insurance companies, The Spectator, published in New York, had a long article dealing with malicious attacks on our great insurance corporations, specifically mentioning my accusation against the New York Life. "Mr. Lawson was actuated by the meanest motives," says The Spectator.

Extract from The Spectator, October 20, 1904:

Mr. Lawson, in the hypocritical role of a would-be-reformed-speculator, is a figure calculated to stir the risibilities of all who have watched his antics and read his articles, especially when each one of the companies he mentions has repeatedly rejected him for insurance.

Letters to policy-holders from the New York Life Insurance officers poured in on me from different parts of the country, all containing the same defence and the same accusations as the one above, and signed by vice-presidents of the company as well as President McCall, showing conclusively that this great corporation as a corporation had deliberately adopted this method of meeting my serious yet conservatively put business accusations.

President McCall's defence of the New York Life Insurance Company and his reply to my accusations are now completely before my readers. Let us see if there is not a chance here to determine the grave question, "Is 'the one man' who runs each of our great insurance companies honest?"

The facts are: During the past twenty years I have been importuned, begged, and hounded by the several great insurance companies of the United States to take out policies with them almost upon any terms I might name. Of this statement I could present more photographic proof than would fit in any one issue of this magazine, but most of it would have no bearing on the point at issue.

In the present year (1904)—to go no further back—John A. McCall has repeatedly urged me to come into the New York Life Insurance Company. Absolute evidence of the truth of this assertion is presented below. Mr. McCall's letter reproduced here would be accepted as complete proof in any court of justice. In the correspondence that follows this first letter it will be seen that Mr. McCall left no stone unturned in his effort to get me into the New York Life Insurance Company. A duplicate of the communication sent to my residence went on the same date to my office. To quote his own words, "I hope you may" and "I may have the pleasure of welcoming you either to new or increased membership in this great mutual insurance investment." Then, his anxiety being so great, after waiting four days for a reply he sent his special agent to argue with me, and, on the following day, his Boston manager to urge me further.



Is it any wonder that I called the history I am writing "Frenzied Finance"? The man who wrote the letter practically saying that I was a black-mailer and that my reason for attacking the New York Life was my anger because he would not take me into his company, and the man who wrote the ones begging me to come in, are one and the same; and he absolutely controls directly $400,000,000 of the people's savings in the New York Life, and indirectly unnumbered millions in affiliated institutions!

I think the case is complete. The policy-holders of the New York Life have an opportunity to decide whether the "one man" who runs the great institution in which their savings are invested is honest. In making up their minds, I implore them not at the present time, or at least until the question has been more fully ventilated, to allow their policies to lapse. Under any and all circumstances they should keep up the payment of their premiums, for the one thing especially desired and schemed for by some of the "frenzied finance" insurance companies is a wholesale lapse of policies.

Some few years ago the financial world learned with great interest of a new and very useful invention in finance. A group of individuals who had been buying large quantities of a certain stock at a low price, found they could not, on account of the fact of its overcapitalization having become known to the public, resell it; and they were, to use the stock-gambling term, "hung up" with it because it was too water-logged to float. It became necessary to disguise its identity. Here's how they did it: They formed a "syndicate," to which they "turned over" their stock at a good profit; the "syndicate" in its turn put it "in trust" by simply depositing the stock certificate with a trust company, which in its turn issued against the stocks thus held a new security, which it called a "bond." For these a ready market was found, for the word "bond" is still a term to conjure with in the world of finance.

This seemed such a serviceable arrangement that the originators soon had many imitators. Many "syndicates" were formed, and many so-called "bonds" were put on the market. In most cases the stocks were purchased at a low price, turned into "trusts" at double their cost, and then paid for by means of these certificates, dubbed "bonds." As one stock after another was converted into syndicate certificates—"bonds"—the familiarity of the procedure robbed it of its novelty and these "bonds" were quoted and dealt in much as other and more tangible securities bearing the same name. Perhaps this is why the startling announcement of the New York Life Insurance Company made about this time, that it proposed to sell all its stocks and thereafter hold nothing but bonds, created so much less of a sensation than was anticipated. The term "bond" had become vulgarized.

This excellent example would undoubtedly have had many followers but for the humor of the Tobacco Trust. This robust institution, with an immense amount of watered stock, audaciously poured it all but a small amount into bonds, $157,000,000 of them, and with a fine trumpet-blast proclaimed these "bonds" safe investments for widows, orphans, and insurance companies. Even Wall Street, with its frenzied votaries and its frenzied environment, was staggered. The culmination of these conversion performances was the brilliant plan evolved by George W. Perkins, the junior partner in the firm of J. Pierpont Morgan & Co., vice-president of the New York Life Insurance Company and expert investor of its vast surplus, to have the United States Steel Trust purchase some $200,000,000 worth of its own water-logged stock and convert the same into more "absolutely safe bonds"; for its most valuable services in the turning-over process the Morgan firm was to have a commission of some forty millions of dollars. At this juncture "frenzied finance" became gagged with its own froth, and I have not space here to go further into the subject.

The New York Life Insurance Company declares to its agents, policy-holders, and prospective policy-holders that it no longer holds stock securities. In its last report to the Insurance Commissioners there are set forth stock securities of the kind I have described above, to the amount of fifty millions of dollars. I will give one illustration:

"Northern Pacific—Great Northern—C., B. & Q. collateral 4s, book value—$12,057,132.59, market value—$11,375,000."—(From the official report to Insurance Commissioners.)

Now, these bonds are nothing more nor less than Chicago, Burlington and Quincy stock of a par value of $100 per share, which shares were purchased by individuals, and had "bonds" issued against them at $200 per share. (Northern Pacific and Great Northern stock in about the same proportion.) In the sense in which the public look upon the old bonds of railroads this "bond" is no more a bond than it is a Government bond. It is nothing more nor less than a stock security, and yet President McCall says in his letter printed above and sent by him to policy-holder DeRan that the New York Life does not and cannot invest its surplus in stock securities.

THE TRUE STORY OF HOW I WAS "BLACK-LISTED"

The publication of President McCall's letter and the charges which accompanied it attracted so much attention that the "Big Three" were flooded with letters from policy-holders demanding information. In the January, 1904, issue of Everybody's Magazine, I continued the controversy. After reviewing the conditions of the previous month's argument, I went on:

In entering upon the exposure of the most powerful body of men in the world, I knew quite well what I was "up against," and deliberately decided that in the conduct of my fight I would use such strategy as I believed proper to outwit so strong and so unscrupulous an adversary. One can hang a dog as well with a cord as with a hawser, and in proving my assertions I am quite willing that the insurance companies should believe each play is my best card. I decline, however, to show my hand.

In reply to the charge that I was attacking the New York Life because I had been refused insurance by that company, as positively stated in Mr. McCall's letter, I reproduced a letter written and signed by President John A. McCall, dated 1904, soliciting me to take out insurance in his company. I printed parts of three other letters, one directed to my office, also signed by Mr. McCall, another from the special agent, and a third from the Boston agent of the New York Life, supplementing Mr. McCall's letter and requesting the privilege of an interview.

This correspondence was put forth with a thorough understanding of its nature. The publishers of Everybody's Magazine and my own lawyers, to whom I submitted it, both pointed out that the insurance companies would undoubtedly take the ground that the McCall letter was no more than a circular that had been sent out to a number of capitalists and had gone to me by mistake. I replied that such a rejoinder would practically amount to an admission that the statement and signature of the highest officials of the New York Life were valueless and without significance, which would place President McCall in an untenable position. If his signature were valueless and without significance when appended to a letter addressed to me, why not in other instances if the interests of his corporation seemed to require such a disclaimer? Considering my argument, would not such a confession have a pregnant bearing on the proposition—is the "one man" honest, especially as I was equipped with additional documents to offset further attempts on the part of the insurance companies to show me up as a disappointed seeker after their policies?

Here, specifically, are the details of my encounter with the life-insurance institutions, and I pledge my word to my readers that they constitute all the facts in this connection. They are well known to the prominent men associated with the great companies whose duty it is to keep track of just such transactions. Whoever knows by experience of the incessant pursuit of business by the important insurance corporations need not be told that a man in my position has had his share of importuning by agents great and small. I have never sought life insurance, for it has not appealed to me as an investment, but on three separate occasions I have yielded to the persuasions of a friend connected with one of the big institutions and have considered the subject. The first time was in 1887, following a breakdown from overwork. This illness my friend used as an argument to induce me to take out insurance, and I went so far as to agree to submit to a private medical examination by the leading physicians of his company for the purpose of ascertaining if my breakdown, which for a brief time had left a trace of paralysis in my left side, would bar me. This examination was at my own expense, and it was expressly understood that, being private, it should not constitute a record. The physician pronounced me a perfect risk, but advised against going further inasmuch as a rigid rule of the company precluded them from granting insurance to any one who had suffered from this form of illness until seven years after the attack. I was not disappointed except on account of my friend.

Five years later his solicitation was renewed and I was assured that the officials of his company were so eager to have me that they would waive the seven-year rule, which still had two years to run. This time I went up before another medical examiner, and after the usual tests, was asked the stereotyped question if I had ever previously been rejected for life insurance. My friend replied for me—no. I, however, in spite of his protests stated fully the conditions of my previous examination, which the doctor assured me did not constitute an official rejection, and the application was filled out. In the conversation that ensued, the doctor said that it was safer to await the expiration of the seven years, and I being still indifferent, except to my friend's interest, accepted the apologies of the several people concerned for the trouble I had taken and let it go at that.

Four years later, in 1896, after the attack of appendicitis which I described in the December, 1904, instalment of "Frenzied Finance," again my good friend the agent came to me and used the incident of my narrow escape from death to impress upon me once more the desirability of having a large policy of life insurance. Those who have read the "System's" disclaimer, will remember that I had been blacklisted since 1892. There were the usual consultations with high officials of the corporation, and when all preliminary bargains had been arranged, I underwent a thorough examination in New York. This time, the seven-year term having expired, I was pronounced a perfect risk. But my latest illness had brought me up against another waiting rule, and once more the subject was abandoned after the usual expressions of regret and good-will. Since 1896 my connection with life-insurance companies has been about the same as that of a molasses barrel with the industrious flies in summer.

The interviews of 1892 and 1896 are both matters of record. My position in each instance was well understood, and several insurance officials who know the facts as well as I do have, since the publication of the company's statement, come to me and offered to back up my assertions with their own. American manhood is certainly not extinct when men are willing to sacrifice their careers to set a wrong right.

The manner in which the great companies have met my rejoinder to President McCall will afford my readers an excellent illustration of how the "System" goes after a man who has excited its antagonism.

A few days after the publication of the December issue of Everybody's Magazine, containing my fac-simile of President McCall's letter to policy-holder DeRan and his two letters to me, the Life Insurance Underwriters met and "resoluted" that I had applied for insurance in the New York Life Insurance Company in 1892, and being asked if I had ever been refused insurance, had replied in the negative. Investigation showed that I had been refused four years before by two other companies, whereupon my application was rejected and I was practically black-listed, and so could not secure life insurance in any American company. By way of corroborating this plausible story two letters, purporting to have been written by agents of the two companies to their head officers without my knowledge, were incorporated in the resolution. The letters stated that the writers could secure me for a large amount of insurance if the companies would accept the risk. The virtuous corporations were alleged to have replied that Mr. Lawson had been refused life insurance before, and for good reasons was not desired as a risk. This resolution was then published throughout the press of America in the news columns, and to all but those initiated in the desperate practices of the "System" and its votaries, it was conclusive evidence that an unprincipled man had been convicted, red-handed, of fraud.

You who read this statement of mine doubtless found the resolutions in your own paper, and thought it ordinary news-matter printed because of its public interest. This notice was an advertisement disguised as news, and inserted through the "System's" professional character assassinator, whose head-quarters are in Boston, a person who will occupy a prominent part in the chapters of my story wherein I treat of the crimes of Amalgamated. The publication cost the insurance companies $2.50 per line of the policy-holders' money, while advertisements that I insert in the course of my private business cost me but 75 cents per line.

HOW THE "SYSTEM" MAKES ITS PROFITS

It appeared that I had sinned still further, for had I not questioned the virtue and integrity of the New York Life's securities? To policy-holder DeRan, Mr. McCall had stated, over his own signature, that the New York Life did not and could not own stock securities. (See the DeRan letter on page 428.) I proved from the regular insurance reports that millions of the New York Life's bonds were no more than disguised stock securities, created by the new device of depositing stocks with a trust company at an inflated price and issuing against them a receipt which is arbitrarily called a "bond." I mentioned, as an illustration, the Northern Pacific-Great Northern-C., B. & Q. Collateral 4s, created out of the stock of the Chicago, Burlington & Quincy and other railroads. I could have selected a much worse type of security, just as, instead of the typewritten letter of Mr. McCall, I might have published others of a more personal nature.

Against me out sallied 2d Vice-President Perkins, brother of George W. Perkins, 1st Vice-President of the New York Life (J. Pierpont Morgan's partner), and at a banquet in Philadelphia boldly answered my aspersions by declaring that the bonds I named "are printed in the list of holdings which the company publishes in detail, and has published for the last five years, in order that its policy-holders may be informed of its affairs in the minutest detail." The convincing logic of this rejoinder the dullest will appreciate, but for a moment I must stop to remind Mr. Perkins that the publicity on which he plumes himself is really not an expression of the New York Life's individual frankness, but merely an observance compelled by the law.

All this recapitulation has been for a purpose. My readers will bear in mind before taking hold of my next exhibit that the great insurance companies have published me as a falsifier, who since 1892 has been refused insurance and black-listed for good reasons, and have claimed that Mr. McCall's letters were circulars sent me by mistake. We are still considering the problem—are the men who run our great insurance companies honest? Well, look at the reproduction on page 442 of a document that is now in my possession and has always been since the date when it was delivered to me by one of the three great representatives of the "System," the Equitable Life Insurance Company.

This document speaks for itself. My readers are aware of the negotiations and investigations which precede the making of an insurance contract. To them and to the "System's" votaries I recommend the exhibit and the underwriters' resolutions as a simple lesson in frenzied finance.

My charge that the directors of the great life-insurance corporations of America use the funds of the companies they control in stock speculation for their personal benefit is but one contention in my argument against the character of their management. Here I formally add another charge: It is that in the placing of loans, in the purchase of properties and securities, and in the underwriting of enterprises, there are enormous profits made, directly and indirectly, which are pocketed by individuals and are never shown on the books of the corporation.

The basis of life insurance is security. A policy-holder pays his premium to enable the corporation accepting it to make good its contract with him when death or time matures it. The vast sums in the possession of the three great companies are accumulated to safeguard their policy-holders, and should be invested only in securities of tried and solid worth, which will bring in no more nor less than the going rate of interest. There must be no experiments and, above all, no speculation. But what do we find? The positions of managers and manipulators of these huge hoards of the people's money have become the greatest financial prizes of the day. New and ingenious methods of graft have been devised in connection with them. The vast revenues of the insurance companies have become the "System's" most potent instrument in working its will in the stock world.



Their investments, largely in the securities of properties or corporations in which the "System's" votaries have large interests, are fertile sources of profit to the "insiders." The groups of banks and trust companies affiliated with them are the medium through which access to the coveted insurance funds is obtained, for these institutions are allowed by law to use money for speculative purposes, which the insurance concerns are prohibited from doing.

The immense opportunities for profit afforded by the control of these great money hoards are taken advantage of in various ways. Let me illustrate one or two of them. Rogers, Rockefeller, Stillman, and Morgan buy the capital stock of three railways at a fair valuation, say, $20,000,000 apiece, $60,000,000 for the three. Owning all, or nearly all, the stock, they can put its price on the stock-exchanges to any figure they desire, say, $60,000,000 for each railway, or $180,000,000 in all. They proceed to deposit the stocks of the three roads in a trust company, issuing against them $180,000,000 of what they call "bonds." An "underwriting" syndicate is then organized. This is composed of certain individuals and corporations who agree that when these bonds are offered to the public at $180,000,000, the portion the public does not buy, they (the "underwriters") will purchase on the basis of $120,000,000; in other words, they guarantee the sale of the bonds at $180,000,000. In return they "make" on all the bonds sold the difference between the price to them, $120,000,000, and the price the public pays, $180,000,000. Let us assume that the public takes up the issue greedily and the full price, $180,000,000, has been secured. The original owners, Rogers, Rockefeller, etc., have made $60,000,000, the difference between the first cost and $120,000,000, the cost to the "underwriters," while the "underwriters" have made $60,000,000, the difference between $120,000,000 and the $180,000,000, the cost to the people. In looking over the list of subscribers to these bonds, you will note that the largest purchases have been made for the great insurance corporations and the banks and trust companies owned or controlled by them and "The System." If, in the instance I am using for illustration, a president or vice-president of one of the great insurance companies is known to be willing to subscribe for, say, $10,000,000 for his insurance company; $5,000,000 for his principal trust company, which is owned by the insurance company; $1,000,000 apiece for five other banks and trust companies, also owned or controlled by the insurance company; and can influence five other affiliated institutions to subscribe for $1,000,000 apiece, he controls, as will readily be seen, a purchasing power of $25,000,000, and is sought for as an underwriter, if he is not already an owner. For this $25,000,000 which his institutions buy he "draws down," as his personal profit, 33-1/3 per cent. "underwriters'" commission, or over eight millions of dollars.

In taking this amount, he is not robbing his insurance company, in the common acceptance of the term in this era of "frenzied finance," though he has absolutely appropriated to himself a profit which belongs to it and not to him.

It must not be supposed that such transactions as this I have outlined are conducted in the simple ABC fashion I have set down here for purpose of illustration. No "one man" appears through any deal. The purchases and sales are usually made through dummies, and the final recipient of the "made millions" carefully conceals all the phases of his participation.

Let us take another type of transaction. An insurance company owns two adjoining pieces of unimproved city real estate, for which it paid $250,000 apiece, but which are now worth $500,000 each. The directors of the corporation formally decide to dispose of these holdings, and sell the first piece to a trust company, which is owned or controlled by the insurance company. One of the "System's" dummies or an officer or director of the corporation agrees to take the other at the same price. This is a perfectly legitimate transaction, and the insurance company shows a half-million profit on its investment. The next step is this. On its piece the trust company erects a two-million-dollar building, procuring the money from the insurance company at a low rate of interest. Thereupon the value of the adjoining piece bought by the "System's" votary jumps fifty per cent., so he has made $250,000 without risking a dollar. At the same time there have been several other profitable transactions between institutions and individuals. The agent who disposed of the two pieces of real estate and who is "in" the transaction receives a generous commission for making the sales; the trust company's representative has his own "draw-down," and there are further commissions to the agents who borrow and loan the money and control the erection of the building.

My readers may well ask, Are these merely illustrations, or do such things really take place? I unqualifiedly reply that deals similar to these have occurred repeatedly and that the principle and procedure set forth are the rule and not exceptional. Here is a minor episode of which I have personal knowledge. A well-known man made direct application to the Mutual Life Insurance Company for a loan of $400,000 on a valuable city business block which he owned. He was told that the corporation had no funds available for that purpose. The refusal was authoritative and definite. A few days later a lawyer and real-estate agent came to his office and said to him: "I'm informed that you want $400,000 on your property. I can let you have it, or $500,000 if you need that much."

"Good," said the would-be borrower, "I will take it. Whose money is it?"

"The Mutual's."

"My dear fellow," said the would-be borrower, "how can that be? I was there at the office a few days ago and was assured I could not have the money."

"That's all right," was the answer. "Of course you could not get the money. The right party did not see the right party. D'ye understand?"

He understood.

A recent issue of the Insurance Register, of Philadelphia, in criticizing my comments on President McCall and life insurance, makes the following significant admissions in regard to the conduct of these great corporations:

While riding on the train on my way to my office this morning a lawyer told me the following story: A client of his, a real-estate agent, represented a corporation owning and wishing to sell a valuable Chestnut Street property. The price asked was $750,000. A representative of a New York corporation called upon him and agreed to take the property, but stipulated that the price named in the deed and receipted for should be $850,000, the difference covering his commission of $100,000. The Philadelphian, finding it impossible to induce his clients to make this concession, and the New York agent insisting upon it as indispensable to the purchase, made a trip to New York to see the principal, acquaint it with the facts, and find out whether or not some arrangement could be made by which the buyer could take care of its agent's commission. He was received by the manager of the New York corporation, but when he stated that he represented the owner of the Philadelphia property he was instantly bowed out of the office, with the assurance: "We never interfere with business in the hands of our agent." The outcome was that the sale was not consummated, because the officers of the Philadelphia corporation would not receipt for $850,000 when they were to receive only $750,000, for the reason that they could not square the transaction with their stockholders, and the buyer's agent would not consummate the deal without such a receipt, because he could not square with his client and its stockholders the payment of $850,000 with the consideration of $750,000 mentioned in the deed. This story was told to illustrate the proposition that every action has its prompting motive, and my fellow-passenger imparted to me his conclusion that the motive of the manager of the New York corporation for refusing to listen to his client was that "the scoundrel was in cohoots with the agents to share in the commission and cheat his own company." The public will in time come to look for motives, and we, fellow-editors, and the managers of mutual life-insurance companies, will be judged by what seems the most apparent motive for our actions....

Any alliance between life insurance and this modern speculative frenzy cannot be too deeply deprecated, nor too strongly reprobated. Every true friend of honest life insurance among insurance journals will demand that this great business, of all businesses, must be kept free from the contagion of corruption that has shamed finance, is covering commerce with a blighting mildew, and threatens our whole land with disaster as well as dishonor.

All this is preliminary to treating the case of the Prudential Insurance Company. I want to say here that I do not know the corporation, any of its officers, nor any one interested in the control or management of it, and personally have never had the slightest connection with its officers. I desire to prove through an outsider, some one of unquestioned authority, that the great insurance companies are part of the "System" and are engaged in manipulating the stock-market with the funds their policy-holders put in their hands as a sacred trust. In so far as the Prudential is concerned, rank and unsound as are the transactions I am about to speak of, my investigations have proved to me that this insurance corporation is only as a baby-carriage to a runaway automobile compared with the three great representatives of the "System," the New York Life, the Mutual, and the Equitable. Certain critics have accused me of being unduly emphatic in my strictures on the doings of the corporations of which I am treating. I will confess to a secret amusement at being able, in this instance, to quote the language of one of the most conservative insurance officials in America, Frederick L. Cutting, for many years Insurance Commissioner for the State of Massachusetts.