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Up to that time he was known only to a com and as they knew abroad, that a crash could paratively small circle of powerful men, and only be a few hours away. When the marof course to large investors; the newspapers ket closed and the withdrawals from the had not discovered him. In the winter of Treasury were reported on the news sheets 1894-95 the United States Treasury, being he put on his coat and hat and, calling swept by the tail of the calamitous panic of Bacon, left his office, passing without speak'93, fell into extreme difficulties. An extraor ing through the knot of reporters that was dinary and unmanageable set of circum gathered outside. Entering a cab, he went stances, in which politics and business were over the Cortlandt Street ferry and started tightly intertwined, resulted in the steady for Washington on the Congressional Limwithdrawalof gold from the Treasury for more ited. Of course, the news of his starting than a year, until, unquestionably, we faced was telegraphed to Washington. Just what a suspension of specie payments. Mr. Mor his plan or purpose was, nobody knew, but, gan, August Belmont, and a few other he has since expressed it, he felt that it was bankers on the one hand saw it coming; and his “duty to go down and see the President President Cleveland and the Treasury offi once more," although he had not been cials, on the other, engaged in a continuous bidden to do so. struggle, both to keep the Treasury from When he got off the train in Washington, running completely out of gold and to pre to his surprise he was met by Daniel vent the public from finding out the actual Lamont, the Secretary of War, who instate of affairs. These insiders were con formed him that his coming to Washington vinced that if the situation became gener had been reported and that whatever his ally known the blackest kind of a panic errand was, it was only fair for him to would follow.

know that the President had not changed Between December 1, '94, and February his attitude about the responsibility of 13, '95, about eighty millions were drawn Congress for the situation; he would not out. The last week in January saw the consider a private bond sale and he would reserve drawn down close to forty millions. not see Mr. Morgan. After Mr. Lamont At the rate which withdrawals had now ceased speaking, Mr. Morgan told him that reached, that of several millions a day, there he had come to Washington to see the Presiwas not a week's supply left. Meantime, dent, that he was going to the Arlington there was a succession of moves and counter Hotel and would stay there until he saw him. moves between the Treasury officials at Hailing a cab, he jumped into it and drove Washington and certain bankers in New to the hotel with Bacon. York. Mr. Cleveland had nothing to do The news of his arrival was quickly noised with all this; he depended upon Congress. around and immediately the Treasury offiKnowing the President's attitude, Mr. Mor- cials, leaders in Congress and others familiar gan at first made no move. In the Street with the situation, came to see him. They his attitude was a mystery; whenever the all knew the state of the Treasury, and all subject of gold was mentioned, the question told the same story about the impossibility was invariably asked: What is Morgan of getting any action up at the Capitol. doing? At last, when the situation became It was the Silverites' opportunity! It was dire, Mr. Morgan went to see the President their chance to see gold discredited and (as and offered him a plan to furnish gold. He they thought) in the wreck that would received little encouragement, and shortly follow, to put into practice their own theoafter his return to New York he received a ries. Every caller dilated on the perils of letter from the Secretary of the Treasury the situation and unloaded the burden of informing him that the President had de his own fears on Mr. Morgan; but no one cided to rely upon the action of Congress. made any suggestions. In Morgan's judgment, this was a course All the evening, this sort of reception leading straight to disaster, and he at once went on. Mr. Morgan sat and listened and decided to see the President once more. said nothing. It was after midnight when

The negotiations with Mr. Morgan had the last of these callers left, and finally been terminated. There had been no re Bacon went to bed, leaving Mr. Morgan still quest to him to return to Washington. But working out a game of solitaire. The peohe knew, as almost every other banker and ple in the hotel said later that his light was every financial expert in the country knew, not extinguished until after four o'clock.

It was not only a problem involving clubs, same time by Secretary Carlisle in the spades, and diamonds, that he was engaged Treasury Department, as well as in the in-there was only one day's supply of gold White House. The telephone rang and Mr. left in the United States Treasury and a Bacon received a message to the effect that plan had to be worked out to save the the President would see Mr. Morgan. Not nation's credit. The morning of the next even stopping to light his customary afterday was not auspicious. The sky was dark, breakfast cigar, the financier started with and there was a big snowstorm blowing. Bacon across Lafayette Square, for the While Mr. Morgan and Mr. Bacon were White House. Arriving there, they found breakfasting together, about half-past nine that Secretary Carlisle, Attorney-General o'clock, the financier told his junior partner Olney, and other members of the adminisof the plan that he had evolved the night trative family had already joined the before over his game of solitaire. He re President. membered that when he was a young man,

The President's greeting was very short during the Civil War, Lincoln had had to and formal. Mr. Morgan looked at him and face the crisis of an empty Treasury, and saw that he was not smoking, so he did not that in the emergency Salmon P. Chase, light his own cigar. He and Bacon sat then Secretary of the Treasury, came on to down at what was destined to be a memoNew York and called a conference of the rable conference. The Secretary of the leading bankers to devise ways and means Treasury gave the latest reports of the conof getting gold for the Government. As a dition of the Sub-Treasury in New York, result of these conferences, the Secretary where the fight was centered. Mr. Clevetelegraphed the President to try to keep land reiterated his determination not to Congress in session until he should return, consent to a sale of government bonds to a and he then took the first train back to syndicate of bankers or otherwise. He disWashington. When he got there he found cussed the situation with his official advisers that Congress had already adjourned for while Mr. Morgan and Mr. Bacon sat as the day at the time his message was re spectators to the scene. This discussion ceived at the White House, but the next lasted for some time. Meanwhile, there morning President Lincoln submitted the were handed to the Secretary of the Treasmatter to the National Legislature and an ury bulletins concerning the situation, which act was passed empowering the Secretary he read or turned over to the President. of the Treasury to purchase gold whenever The minutes grew into hours. What was the Government needed it, and to pay for being told to the group in the White House it in any authorized obligations of the was known in the banking world. Other United States Government, at the best firms and individuals might take steps to price that the Secretary could make. provide against the apparently inevitable

Mr. Morgan told Mr. Bacon that as he crash, but Mr. Morgan, with all that he recalled it, this act, which had been ap had at stake, sat quietly and listened. He proved by Lincoln, was still on the statute was not asked to make any suggestion. The books, and that he had been familiar with President was striving with his own adits operations in 1862 because gold had been visers to find a way out of the difficulty and sold to the Government by the house with still held to his determination to do it withwhich he was then connected. He thought out assistance from Wall Street, if possible. the act was, as he expressed it, “Section At last, however, a memorandum taken number four thousand and something of the from a telephone message showed that there Revised Statutes," and that if the act had were but nine million dollars of gold left in not been repealed or amended by one of the New York Sub-Treasury. And, at this the many bills passed in connection with point, Mr. Morgan broke his silence. resumption, it might still be in effect and He said: “Mr. President, the Secretary might prove of value in the present emer of the Treasury knows of one check outgency

standing for twelve million dollars. If this Before they had finished their meal, they is presented to-day, it is all over." began to receive reports of the opening of Mr. Carlisle had told him the evening business in New York and learned that the before at the hotel about this check. He run on the Treasury continued. That same had had it in his mind every minute since information must have been received at the that time. The Secretary confirmed this

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lent and inactive that morning at the White House. When he began to speak, he talked rapidly. He told the President of his recollection of that “Section number four thousand and something" of the United States Statutes. He explained that he did not know whether it was still in force and that he had not seen it or read it for probably thirty years, but that if it was still effective, then it gave Secretary Carlisle the same power that Secretary Chase had had and would prove of equal benefit to the Government in its present distress.

At a word from the President, Attorneygeneral Olney stepped out of the room and in a moment returned with the book of Revised Statutes. He told the President that what Mr. Morgan had said was perfectly true, that this act was known as “Section No. 3700,” and that from a casual examination he thought it was still in force. Mr. Cleveland quietly took the book from his hand and with deep concentration read the act to himself. Here it is, as it was passed on March 17, 1862:

“The Secretary of the Treasury may purchase coin with any of the bonds or notes of the United States authorized by law, at such rates and upon such terms as he may deem most advantageous to the public interest."

Every one in the room sat in the silence of deep suspense. When the President had concluded the reading of the section, he laid the book slowly on his desk and then his face lighted up with almost a smile of relief and he said: “Mr. Morgan, I think the act is ample for our needs and that it will solve the situation.”

The tension was broken.

In the rapid fire of question and answer that followed, the President with Mr. Morgan became the center of a discussion with his official family as to the steps that should be taken to secure the benefit of the act. All had gone well up to a certain point, when the President's face suddenly became very grave.

He said: “How about this drain of gold abroad? Suppose the Government does purchase this gold from the bankers and it is immediately withdrawn from the Treasury and sent abroad. Can you guarantee that such a thing will not happen?”

There was no time for Mr. Morgan to consult with any members of his proposed syndicate. It was evident from the Presi

dent's tone that he considered some such guaranty essential to the success of the plan. Could Mr. Morgan stop the foreign exchange houses from taking their profit by exporting gold? He, and he alone, had to decide that question then and there, and without a moment's hesitation he said:

"Mr. President, I will so guarantee."

“All right," said the President. “It is now two o'clock, and you gentlemen had better all go out and get some lunch, while I formulate the terms of the plan for transmission in a message to Congress, so as to send it up to the Capitol without delay.”

As all rose from their seats, some one said: “Mr. Morgan, what is that brown powder on your trousers and clothes and all around your chair?” He looked down quickly. It was his after-breakfast cigar that he had been holding in his hand unlighted as he entered the room and which, as he had sat there, he had unconsciously ground to pieces. The President laughed, and reaching for a box of cigars, told Mr. Morgan that it was time for him to have a smoke.

The Government having done its part, Mr. Morgan returned at once to New York to take up the important task of stopping the outflow of gold. His plan was to offer the men who were shipping the gold an equal or a better profit by refraining from shipments and participating in the bond issue. How a combination of financial forces, engineered throughout by the brain of Morgan, gained control of the exchange market, and, through a period of eight or nine months, retained control and continued to pile up a reserve in the Treasury, thus insuring the solvency of the currency and the safety of business, is, perhaps, a matter too recondite to prove generally interesting. When the syndicate wound up its business affairs in the autumn, the gold reserve stood well over the required hundred millions, and the object had been attained.

The charge has so often been made that Mr. Morgan gained an enormous personal profit in this transaction, that almost any other man would have spoken in his own defense. Whenever the subject was alluded to in his presence, it simply irritated him. He never thought of meeting the public halfway with an explanation. When a newspaper accused him of having made millions out of the Government, he would toss the paper aside contemptuously without a remark.

Six years later Mr. Morgan created the United States Steel Corporation; the flotation of the "billion dollar trust,” as it was called, caught the eye of the public the world over.

It was, and remains still, the greatest and most characteristic Morgan enterprise; an enormously complicated piece of business in the beginning, of which only the motive for doing it was simple and uncomplicated. The motive was the elimination of Carnegie from the steel industry, This was the starting-point of the whole enormous transaction.

Carnegie wanted some one to buy him out, as he had made up his mind to retire; but instead of sitting down and waiting for offers, he dashed out and built bonfires all around the enemy's camp. It has been said that millionaires, when they are frightened, run to Morgan like chickens to the mother hen. Something of the sort certainly took place upon this occasion. He was the only man able to deal with a situation of this kind. He had the brain and he had the money; not his own money, but money as good as his, which would instantly flow to him

out of respect for the workings of that master brain.

Mr. Morgan was not the originator of the idea out of which developed the United States Steel Corporation. His early relation to the proposition was chiefly that of a banker, but a banker upon a scale without Copyrighted by the American Press Association

precedent in the history of industry. Up to this time he had had no experience with

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