ever that may be, this combination was caught with its hand in the till and was obliged to make abject confession, hurried restitution, and an extremely awkward and humiliating exit from the premises. When the man in your community that has prated most about law, order, the welfare of society, and the sublimity of honesty is discovered some night in somebody else's chicken coop, he presents a very unseemly spectacle, and so did certain gentlemen of the syndicate. When with much good-will they kicked the obdurate Kling out of the American Surety Company, they never dreamed what was in store for them. And when Kling, who had been watching all the time from a crack in the coop, suddenly leaped at them out of the dark with a constable, there was a shriek of agony and such genuine terror that it was literally a trembling syndicate the constable held up to the world's scornful gaze.

But what was it that the gentlemen were so much afraid of?

Let us not consider too curiously of this, but fix our admiring attention on the services to society and the ability, energy, and foresight involved in breaking the law, evading prosecution, and divert

ing to our own profit the money entrusted to us by others. For therein lies much instruction concerning the golden palace and other subjects pertinent to this inquiry.

CHAPTER X

TOBACCO AND HIGH FINANCE

ABILITY, energy, foresight! Upon this blessed trinity we believe to rest the beautiful palaces, the spacious pleasures, the vast and swelling fortunes of the 10,000; from this origin comes the golden tide on which so gloriously they sail. Ability, energy, foresight! Precious qualities, for the lack whereof the 1,500,000 flat-dwellers and the 2,000,000 below them must be condemned forever and irretrievably to their respective stations.

So we are accustomed to think. Perhaps we shall understand more clearly the difference between flat-dweller and palace-builder if we consider impartially the history of a very successful and in some ways a typical instance of the centralizing of capital, the American Tobacco Trust.

This institution dates back to 1890, and really owes its existence to the growth of the cigarette habit that infected this country after the Centennial

Exposition of 1876, when the cigarette was obligingly exhibited to us by some of our admired foreign visitors. By 1885 many houses were engaged in supplying the rapidly growing demand. These houses competed-and, in the end, extravagantly, so that none of them could make money. Five of the leading cigarette-making firms, to wit: W. Duke, Sons & Co., of Durham, N. C.; Allen & Ginter, of Richmond; Goodwin & Co., and the Kinney Tobacco Company, of New York; W. S. Kimball & Co., of Rochester, N. Y., and Oxford, N. C., met in New York in January, 1890, to consider ways of limiting competition. With no intention to speak unfairly or disparagingly, I suppose it was as commonplace a lot of men as ever got together. Some of them had been moderately prosperous, some had been in business a very long time and had little to show for it, and at least one of them was hard upon the shoals and had out the kites of many notes.

But they met and stumbled upon a plan of organization, modeled baldly upon a hundred other such combinations then and now in existence. This American Tobacco Company was launched (congenially) in New Jersey, where it put to sea January 31, 1890. Capital, $25,000,000; assets,

chiefly speculative and paper; investment, nothing -literally nothing, for the men that formed the company did not contribute one cent of money to it. They put in their respective and unprofitable businesses, but these, while important to the total cigarette product of the country, were trifling compared with the total tobacco manufacture. Of the capital stock, $2,000,000 was set aside for what were called the "live assets" of the five combining firms. Nobody ever knew what "live assets" meant; for the total real estate, free and otherwise, of all the firms (if you will believe me) amounted to no more than $400,000, and the value of all the real estate, machinery, tobacco and cash was, according to one statement, about $1,000,000.

Of the remaining stock a little less than $23,000,000 was distributed among the firms. If a sworn statement subsequently made be true we may derive from these proceedings a pleasing illustration of ability, energy and foresight, because according to this statement the apportionment was effected by the gentlemen present writing figures on slips of

paper that were deposited in a hat, shaken and drawn out. According to another, and an ex-parte statement, the apportionment was reached after "hard bargaining." However this may be, the