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Up to that time he was known only to a comparatively small circle of powerful men, and of course to large investors; the newspapers had not discovered him. In the winter of 1894-95 the United States Treasury, being swept by the tail of the calamitous panic of '93, fell into extreme difficulties. An extraordinary and unmanageable set of circumstances, in which politics and business were tightly intertwined, resulted in the steady withdrawal of gold from the Treasury for more than a year, until, unquestionably, we faced a suspension of specie payments. Mr. Morgan, August Belmont, and a few other bankers on the one hand saw it coming; and President Cleveland and the Treasury officials, on the other, engaged in a continuous struggle, both to keep the Treasury from. running completely out of gold and to prevent the public from finding out the actual state of affairs. These insiders were convinced that if the situation became generally known the blackest kind of a panic would follow.

Between December 1, '94, and February 13, '95, about eighty millions were drawn out. The last week in January saw the reserve drawn down close to forty millions. At the rate which withdrawals had now reached, that of several millions a day, there was not a week's supply left. Meantime, there was a succession of moves and countermoves between the Treasury officials at Washington and certain bankers in New York. Mr. Cleveland had nothing to do with all this; he depended upon Congress. Knowing the President's attitude, Mr. Morgan at first made no move. In the Street his attitude was a mystery; whenever the subject of gold was mentioned, the question was invariably asked: What is Morgan doing? At last, when the situation became dire, Mr. Morgan went to see the President and offered him a plan to furnish gold. He received little encouragement, and shortly after his return to New York he received a letter from the Secretary of the Treasury informing him that the President had decided to rely upon the action of Congress. In Morgan's judgment, this was a course leading straight to disaster, and he at once decided to see the President once more.

The negotiations with Mr. Morgan had been terminated. There had been no request to him to return to Washington. But he knew, as almost every other banker and every financial expert in the country knew,

and as they knew abroad, that a crash could only be a few hours away. When the market closed and the withdrawals from the Treasury were reported on the news sheets he put on his coat and hat and, calling Bacon, left his office, passing without speaking through the knot of reporters that was gathered outside. Entering a cab, he went over the Cortlandt Street ferry and started for Washington on the Congressional Limited. Of course, the news of his starting was telegraphed to Washington. Just what his plan or purpose was, nobody knew, but, he has since expressed it, he felt that it was his "duty to go down and see the President once more,' although he had not been bidden to do so.

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When he got off the train in Washington, to his surprise he was met by Daniel Lamont, the Secretary of War, who informed him that his coming to Washington had been reported and that whatever his errand was, it was only fair for him to know that the President had not changed his attitude about the responsibility of Congress for the situation; he would not consider a private bond sale and he would not see Mr. Morgan. After Mr. Lamont ceased speaking, Mr. Morgan told him that he had come to Washington to see the President, that he was going to the Arlington Hotel and would stay there until he saw him. Hailing a cab, he jumped into it and drove to the hotel with Bacon.

The news of his arrival was quickly noised around and immediately the Treasury officials, leaders in Congress and others familiar with the situation, came to see him. They all knew the state of the Treasury, and all told the same story about the impossibility of getting any action up at the Capitol. It was the Silverites' opportunity! It was their chance to see gold discredited and (as they thought) in the wreck that would follow, to put into practice their own theories. Every caller dilated on the perils of the situation and unloaded the burden of his own fears on Mr. Morgan; but no one made any suggestions.

All the evening, this sort of reception. went on. Mr. Morgan sat and listened and said nothing. It was after midnight when the last of these callers left, and finally Bacon went to bed, leaving Mr. Morgan still working out a game of solitaire. The people in the hotel said later that his light was not extinguished until after four o'clock.

It was not only a problem involving clubs, spades, and diamonds, that he was engaged in-there was only one day's supply of gold left in the United States Treasury and a plan had to be worked out to save the nation's credit. The morning of the next day was not auspicious. The sky was dark, and there was a big snowstorm blowing. While Mr. Morgan and Mr. Bacon were breakfasting together, about half-past nine o'clock, the financier told his junior partner of the plan that he had evolved the night before over his game of solitaire. He remembered that when he was a young man, during the Civil War, Lincoln had had to face the crisis of an empty Treasury, and that in the emergency Salmon P. Chase, then Secretary of the Treasury, came on to New York and called a conference of the leading bankers to devise ways and means of getting gold for the Government. As a result of these conferences, the Secretary telegraphed the President to try to keep Congress in session until he should return, and he then took the first train back to Washington. When he got there he found that Congress had already adjourned for the day at the time his message was received at the White House, but the next morning President Lincoln submitted the matter to the National Legislature and an act was passed empowering the Secretary of the Treasury to purchase gold whenever the Government needed it, and to pay for it in any authorized obligations of the United States Government, at the best price that the Secretary could make.

Mr. Morgan told Mr. Bacon that as he recalled it, this act, which had been approved by Lincoln, was still on the statute books, and that he had been familiar with its operations in 1862 because gold had been sold to the Government by the house with which he was then connected. He thought the act was, as he expressed it, "Section number four thousand and something of the Revised Statutes," and that if the act had not been repealed or amended by one of the many bills passed in connection with resumption, it might still be in effect and might prove of value in the present emergency.

Before they had finished their meal, they began to receive reports of the opening of business in New York and learned that the run on the Treasury continued. That same information must have been received at the

same time by Secretary Carlisle in the Treasury Department, as well as in the White House. The telephone rang and Mr. Bacon received a message to the effect that the President would see Mr. Morgan. Not even stopping to light his customary afterbreakfast cigar, the financier started with Bacon across Lafayette Square, for the White House. Arriving there, they found that Secretary Carlisle, Attorney-General Olney, and other members of the administrative family had already joined the President.

The President's greeting was very short and formal. Mr. Morgan looked at him and saw that he was not smoking, so he did not light his own cigar. He and Bacon sat down at what was destined to be a memorable conference. The Secretary of the Treasury gave the latest reports of the condition of the Sub-Treasury in New York, where the fight was centered. Mr. Cleveland reiterated his determination not to consent to a sale of government bonds to a syndicate of bankers or otherwise. He discussed the situation with his official advisers while Mr. Morgan and Mr. Bacon sat as spectators to the scene. This discussion lasted for some time. Meanwhile, there were handed to the Secretary of the Treasury bulletins concerning the situation, which he read or turned over to the President.

The minutes grew into hours. What was being told to the group in the White House was known in the banking world. Other firms and individuals might take steps to provide against the apparently inevitable crash, but Mr. Morgan, with all that he had at stake, sat quietly and listened. He was not asked to make any suggestion. The President was striving with his own advisers to find a way out of the difficulty and still held to his determination to do it without assistance from Wall Street, if possible. At last, however, a memorandum taken from a telephone message showed that there were but nine million dollars of gold left in the New York Sub-Treasury. And, at this point, Mr. Morgan broke his silence.

He said: "Mr. President, the Secretary of the Treasury knows of one check outstanding for twelve million dollars. If this is presented to-day, it is all over."

Mr. Carlisle had told him the evening before at the hotel about this check. He had had it in his mind every minute since 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.

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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 elimi nation 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

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