William, acting for the bank, immediately took over the Brookes estate, which was already insolvent, dissolved it and tried to cut the bank’s losses by selling all the land held in Florida except for two acres on which the family home stood. The bank’s loss still turned out to be over $300,000. Some directors were slightly critical of William’s snap decision to sell off the land, a decision with which Tony Simmons had not agreed. William had Simmons’s disapproval of his actions entered on the minutes and was in a position to point out some months later that if they had held onto the land, the bank would have lost most of its original investment of more than $1 million. This demonstration of foresight did not endear him to Tony Simmons although it made the rest of the board conscious of William’s uncommon perspicacity.
When William had liquidated everything the bank held in Max Brookes’s name, he turned his attention to Mrs. Brookes, who was still under a personal guarantee for her late husband’s debts. Although William always tried to secure such a guarantee on any loans granted by the bank, the undertaking of such an obligation was not a course that he ever recommended to friends, however confident they might feel about the venture, as failure almost invariably caused great distress to the guarantor.
William wrote a formal letter to Mrs. Brookes, suggesting that she make an appointment to discuss the position. He had read the Brookes file conscientiously and knew that she was only twenty-two years old, a daughter of Andrew Higginson, a member of an old and distinguished Boston family and great-niece of Henry Lee Higginson, founder of the Boston Symphony. He also noted that she had substantial assets of her own. He did not relish the thought of requiring her to make them over to the bank, but he and Tony Simmons were, for once, in agreement on the line to be taken, so he steeled himself for an unpleasant encounter.
What William had not bargained for was Katherine Brookes herself. In later life he could always recall in great detail the events of that morning. He had had some harsh words with Tony Simmons about a substantial investment in copper and tin that he wished to recommend to the board. Industrial demand for the two metals was rising steadily and William was confident that a world shortage was certain to follow. Tony Simmons could not agree with him, feeling they should invest more cash in the stock market, and the matter was still uppermost in William’s mind when his secretary ushered Mrs. Brookes into his office. With one tentative smile, she removed copper, tin and all other world shortages from his mind. Before she could sit down, he was around on the other side of his desk, settling her into a chair, simply to assure himself that she would not vanish like a mirage on closer inspection. Never had William encountered a woman he considered half as lovely as Katherine Brookes. Her long fair hair fell in loose and wayward curls to her shoulders, and little wisps escaped enchantingly from her hat and clung around her temples. The fact that she was in mourning in no way detracted from the beauty of her slim figure, and the fine bone structure ensured that she was a woman who was going to look lovely at any age. Her brown eyes were enormous. They were also, unmistakably, apprehensive of him and what he was about to say.
William strove for his business tone of voice. “Mrs. Brookes, may I say how sorry I was to learn of your husband’s death and how much I regret the necessity of asking you to come here today.”
Two lies in a single sentence which would have been true five minutes before. He waited to hear her speak.
“Thank you, Mr. Kane.” Her voice was soft and had a gentle, low pitch. “I am aware of my obligations to your bank and I assure you I will do everything in my power to meet them.”
William said nothing, hoping she would go on speaking. She did not, so he outlined the disposition of Max Brookes’s estate. She listened with downcast eyes.
“Now, Mrs. Brookes, you acted as guarantor for your husband’s loan and that brings us to the question of your personal assets.” He consulted his file. “You have some eighty thousand dollars in investments—your own family money, I believe—and seventeen thousand four hundred and fifty-six dollars in your personal account.”
She looked up. “Your knowledge of my financial position is commendable, Mr. Kane. You should add, however, Buckhurst Park, our house in Florida, which was in Max’s name, and some quite valuable jewelry of my own. I estimate that altogether I’m worth the three hundred thousand dollars you still require, and I’ve made arrangements to realize the full amount for you as soon as possible.”
There was only the slightest tremor in her voice. William gazed at her in admiration.
“Mrs. Brookes, the bank has no intention of relieving you of your every last possession. With your agreement we would like to sell your stocks and bonds. Everything else you mentioned, including the house, we believe should remain in your possession.”
She hesitated. “I appreciate your generosity, Mr. Kane. However, I have no wish to remain under any obligation to your bank or leave my husband’s name under a cloud.” The little tremor again, but quickly suppressed. “Anyway, I have decided to sell the house in Florida and return to my parents’ home as soon as possible.”
William’s pulse quickened to hear that she would be coming back to Boston. “In that case, perhaps we can reach some agreement about the proceeds of the sale,” he said.
“We can do that now,” she said flatly. “You must have the entire amount.”
William played for another meeting. “Don’t let’s make too hasty a decision. I think it might be wise to consult my colleagues and discuss this with you again.”
She shrugged slightly. “As you wish. I don’t really care about the money either way and I wouldn’t want to put you to any more inconvenience.”
William blinked. “Mrs. Brookes, I must confess to have been surprised by your magnanimous attitude. At least allow me the pleasure of taking you to lunch.”
She smiled for the first time, revealing an unsuspected dimple in her right cheek. William gazed at it in delight and did his utmost to provoke its reappearance over a long lunch at the Ritz. By the time he returned to his desk, it was well past three o’clock.
“Long lunch, William,” commented Tony Simmons.
“Yes, the Brookes problem turned out to be trickier than I had expected.”
“It looked fairly straightforward to me when I went over the papers,” said Simmons. “She isn’t complaining about our offer, is she? I thought we were being rather generous in the circumstances.”
“Yes, she thought so, too. I had to talk her out of divesting herself of her last dollar to swell our reserves.”
Tony Simmons stared. “That doesn’t sound like the William Kane we all know and love so well. Still, there has never been a better time for the bank to be magnanimous.”
William grimaced. Since the day of his arrival, he and Tony Simmons had been in growing disagreement about where the stock market was heading. The market had been moving steadily upward since Herbert Hoover’s election to the White House in November 1928. In fact, only ten days later, the New York Stock Exchange posted a record volume of over six million shares in one day. But William was convinced that the upward trend, fueled by the large influx of money from the automobile industry, would result in an inflation of prices to the point of instability. Tony Simmons, on the other hand, was confident that the boom would continue, so when William advocated caution at board meetings he was invariably overruled. However, with his trust money, he was free to follow his own intuition and started investing in land, gold, commodities and even in some carefully selected impressionist paintings, leaving only 50 percent of his assets in stocks.
When the Federal Reserve Bank of New York put out an edict declaring that it would not rediscount loans to those banks that were releasing money to their customers for the sole purpose of speculation, William considered that the first nail had been driven into the speculator’s coffin. He immediately reviewed the bank’s lending program and estimated that Kane and Cabot had more than $26 million out on such loans. He begged Tony Simmons to call in these amounts, c
ertain that, with such a government regulation in operation, stock prices would inevitably fall in the long term. They nearly had a stand-up fight at the monthly board meeting and William was voted down by 12 to 2.
On March 21, 1929, Blair and Company announced its consolidation with the Bank of America, the third in a series of bank mergers that seemed to point to a brighter tomorrow, and on March 25, Tony Simmons sent William a note pointing out to him that the market had broken through to yet another all-time record, and proceeded to put more of the bank’s money into stocks. By then, William had rearranged his capital so that only 25 percent was in the stock market, a move that had already cost him more than $2 million—and a troubled reprimand from Alan Lloyd.
“I hope to goodness you know what you’re doing, William.”
“Alan, I’ve been beating the stock market since I was fourteen and I’ve always done it by bucking the trend.”
But as the market continued to climb through the summer of 1929, even William stopped selling, wondering if Tony Simmons’s judgment was, in fact, correct.
As the time for Alan Lloyd’s retirement drew nearer, Tony Simmons’s clear intent to succeed him as chairman began to take on the look of a fait accompli. The prospect troubled William, who considered Simmons’s thinking far too conventional. He was always a yard behind the rest of the market, which is fine during boom years when investments are going well, but can be dangerous for a bank in leaner, more competitive times. A shrewd investor, in William’s eyes, did not invariably run with the herd, thundering or otherwise, but worked out in advance in which direction the herd would be turning next. William still felt that future investment in the stock market looked risky, while Tony Simmons was convinced that America was entering a golden era.
William’s other problem was simply that Tony Simmons was only thirty-nine years old, which meant that William could not hope to become chairman of Kane and Cabot for at least another twenty-six years. That hardly fitted what at Harvard had been called “one’s career pattern.”
Meanwhile, the image of Katherine Brookes remained clear in William’s mind. He wrote to her as often as he could about the sale of her stocks and bonds: formal typewritten letters that elicited no more than formal handwritten responses. She must have thought he was the most conscientious banker in the world. Then early in the fall she wrote to say she had found a firm buyer for the Florida estate. William wrote to request that she allow him to negotiate the terms of the sale on the bank’s behalf and she agreed.
He traveled down to Florida in early September 1929. Mrs. Brookes met him at the railroad station and he was overwhelmed by how much more beautiful she appeared in person than in his memory. The slight wind blew her black dress against her body as she stood waiting on the platform, leaving a profile that ensured that every man except William would look at her a second time. William’s eyes never left her.
She was still in mourning and her manner toward him was so reserved and correct that William initially despaired of making any impression on her. He spun out the negotiations with the farmer who was purchasing Buckhurst Park for as long as he could and persuaded Katherine Brookes to accept one-third of the agreed sale price while the bank kept two-thirds. Finally, after the legal papers were signed, he could find no more excuses for not returning to Boston. He invited her to dinner at his hotel, resolved to reveal something of his feelings for her. Not for the first time she took him by surprise. Before he had broached the subject, she asked him, twirling her glass to avoid looking at him, if he would like to stay over at Buckhurst Park for a few days.
“A sort of vacation for us both.” She blushed; William remained silent.
Finally she found the courage to continue. “I know this is mad, but you must realize I’ve been very lonely. The extraordinary thing is that I seem to have enjoyed the last few days with you more than any time I can remember.” She blushed again. “I’ve expressed that badly and you’ll think the worst of me.”
William’s pulse leaped. “Kate, I have wanted to say something at least as bad as that for the last nine months.”
“Then you’ll stay for a few days, William?”
“Yes, Kate, I will.”
That night she installed him in the main guest bedroom at Buckhurst Park. In later life William always looked back on these few days as a golden interlude in his life. He rode with Kate and she outjumped him. He swam with her and she out-distanced him. He walked with her and always turned back first, and so finally he resorted to playing poker with her and won $3.5 million in 3.5 hours of playing.
“Will you take a check?” she said grandly.
“You forget I know what you’re worth, Mrs. Brookes, but I’ll make a deal with you. We’ll go on playing until you’ve won it back.”
“It may take a few years,” said Kate.
“I’ll wait,” said William.
He found himself telling her of long-buried incidents in his past, things he had barely discussed even with Matthew—his respect for his father, his love for his mother, his blind hatred of Henry Osborne, his ambitions for Kane and Cabot. She, in turn, told him of her childhood in Boston, her school days in Virginia and her early marriage to Max Brookes.
Seven days later when she said good-bye to him at the station, he kissed her for the first time.
“Kate, I’m going to say something very presumptuous. I hope one day you’ll feel more for me than you felt for Max.”
“I’m beginning to feel that way already,” she said quietly.
William looked at her steadily. “Don’t stay out of my life for another nine months.”
“I can’t—you’ve sold my house.”
On the way back to Boston, feeling happier and more settled than at any other time since before his father’s death, William drafted a report on the sale of Buckhurst Park, his mind returning continually to Kate and the past five days. Just before the train drew into the South Station, he scribbled a quick note in his neat but illegible handwriting.
Kate,
I find I am missing you already. And it’s only a few hours. Please write and let me know when you will be coming to Boston. Meanwhile I shall be getting back to the bank’s business and find I can put you out of my mind for quite long periods (i.e. 10 ± 5 minutes) at a stretch.
Love,
William
He had just dropped the envelope into the mailbox on Charles Street when all thoughts of Kate were driven from his mind by the cry of a newsboy.
“‘Wall Street Collapse!’”
William seized a copy of the paper and rapidly skimmed the lead story. The market had plummeted overnight; some financiers viewed it as nothing more than a readjustment; William saw it as the beginning of the landslide he had been predicting for months. He hurried to the bank and went straight to the chairman’s office.
“I feel the market will steady up in the long run,” Alan Lloyd said soothingly.
“Never,” said William. “The market is overloaded. Overloaded with small investors who thought they were in for a quick profit and are certain to run for their lives now. Don’t you see the balloon is about to burst? I’m going to sell everything. By the end of the year the bottom will have dropped out of this market, and I did warn you in February, Alan.”
“I still don’t agree with you, William, but I’ll call a full board meeting for tomorrow, so that we can discuss your views in more detail.”
“Thank you,” said William. He returned to his office and picked up the interoffice phone.
“Alan, I forgot to tell you. I’ve met the girl I’m going to marry.”
“Does she know yet?” asked Alan.
“No,” said William.
“I see,” said Alan. “Then your marriage will closely resemble your banking career, William. Anyone directly involved will be informed after you’ve made your decisions.”
William laughed, picked up the other phone, put his own major holdings on the market and went into cash. Tony Simmons had just come in. Standing
at the open door, he watched William, thinking he had gone quite mad.
“You could lose your shirt overnight dumping all those stocks with the market in its present state.”
“I’ll lose a lot more if I hold on to them,” replied William.
The loss he was to suffer in the following week, over $1 million, would have staggered a less confident man.
At the board meeting the next day, he also lost—by 8 votes to 6—his proposal to liquidate the bank’s stocks; Tony Simmons convinced the board that it would be irresponsible not to hold out a little longer. The only small victory William notched up was persuading his fellow directors that the bank should no longer be a buyer.
The market rose a little that day, which gave William the opportunity to sell some more of his own stock. By the end of the week, when the index had risen steadily for four days in a row, William began to wonder if he had been overreacting, but all his past training and instinct told him he had made the right decision. Alan Lloyd said nothing; the money William was losing was not his and he was looking forward to a quiet retirement.
On October 22 the market suffered further heavy losses and William again begged Alan Lloyd to get out while there was still a chance. This time Alan listened and allowed William to place a sell order on some of the bank’s major stocks. The following day the market fell again in an avalanche of selling, and it mattered little what issues the bank tried to dispose of, because there were no longer any buyers. The dumping of stock turned into a stampede as every small investor in America put in a sell bid to try to get out from under. Such was the panic that the ticker tape could not keep pace with the transactions. Only when the Exchange opened in the morning, after the clerks had worked all night, did traders know for a fact how much they had lost the day before.
Kane and Abel/Sons of Fortune Page 24
