The tax laws, as applied to corporations, he knew very thoroughly indeed. Twenty minutes of serious and uninterrupted work, using an elaborate abacus from twelfth-century China for calculating, produced a most gratifying result. Fifty-one percent of the shares of Westwood Coal could be had for just over three million dollars. Fifty-one percent of the shares of Bickster and Company could be had for perhaps twelve million dollars if he manipulated the bidding rightly —and he was an expert here. A total expenditure then of fifteen millions would make him—or any little syndicate he got together—the majority shareholder of both companies, when a merger could be put through. The merger, involving no more expenditure but merely an exchange of stock, would bring a tax rebate to the combined company of seventeen million dollars—that being the tax credit which had accrued over the gloomy decades of loss to Westwood Coal. This, of course, would not be refunded by the government but would be a credit handsomely reducing the taxes on the profits of Bickster and Company.
Elated, Ted Holleck grabbed a multicolored tam-o’-shanter from an old-fashioned hatrack which stood incongruously in one corner of his office and, entering the elevator, was lowered in this plexiglass cage to the slightly feminine foyer of the office building. He went out into the glittering street, turned left past the sumptuous doors of the Hoddaku Bank and Trust Company and into the discreet and over-English bar of the Golden Lion. The bar was, in fact, the Los Angeles equivalent of Hans's Bar on Wall Street in New York, though physically there was no resemblance. Standing at the bar was not allowed, perhaps because of the size of the martinis served which were gigantic. Customers sat at dark fumed-oak tables in booths upholstered in scarlet leather.
There were framed hunting scenes vaguely reminiscent of Cruikshank around the wall. The floor was of black-and-white imitation marble squares and covered with a mixture which looked like sawdust but was actually plastic. There were spittoons here and there, it being the conviction of the management that while the English had not yet learned not to spit in public they had learned not to spit on the floor. Over the bar was a stuffed fox head, the expression of the creature being one of fixed surprise. At Hans’s Bar in New York, certain positions along the bar were by custom granted to particular members of brokerage companies. At the Golden Lion certain booths were also by custom allocated to particular clients, though the patronage was not made up exclusively of stockbrokers. It was as polyglot as the city, the only requirement being wealth. But at particular booth belonged to Ted Holleck and in this he sat while Charlie, a Mexican, dressed to have a raffish resemblance to an English stable hand, approached his table.
“Glass of acid?” asked Charlie.
“Right,” said Holleck.
“How much money you made today, senor?” asked Charlie when he brought the martini. The management of the Golden Lion encouraged this kind of brashness between the help and its clients.
“Oh, I don’t know,” said Holleck. “Maybe two million. Maybe more.”
“Two million,” echoed Charlie. “In one day, senor?”
“I was tired,” said Holleck. He was aware that several heads had turned in his direction.
“Wow,” said Charlie. “They didn’t clear that in a month with Gone With the Wind ”
“Movies are for little boys,” said Holleck. “The big money is out where the men play. Steel, plastics, rails—chewing gum. No romance, but lots of fun.”
“Chewing gum?” said Charlie.
“Right,” said Holleck, and Charlie knew from the shortness of that reply that the conversation was over. He went back to his post close to the service bar to mull over the exchange with Holleck. The most up-and-coming mod-type stockbroker on the West Coast, the real swinger, was interested in chewing gum. Of course Holleck had also mentioned steel, plastics and rails, but these were quite ordinary commodities for a stockbroker to touch on. No, Ted Holleck was interested in chewing gum and that information should be of interest to a certain party who sent him a ten-dollar bill occasionally for gossip passed on. So that night Charlie, at the Golden Lion in Los Angeles, wrote to Jimmy at Hans’s Bar in New York saying, '‘Hottest rumor around town right now is that Ted Holleck is interested in chewing gum. You know him—he’s the real swinger. Next time you see a twenty-dollar bill, send me the half of it. Always your friend. Charlie.”
When Jimmie got the letter he passed the information on to Hans, who invested a judicious amount in the common stock of gum manufacturing companies. When four days later the price of shares of Bickster and Company, which had been edging up for some time, gained two points on a rumor that a Los Angeles syndicate was buying into the company, Hans sold his shares, collected his profits and gave a twenty-dollar bill to Jimmy.
Jimmy dutifully sent ten dollars to his colleague at the Golden Lion with a brief note saying the weather in New York was cold for the time of year.
Charlie puzzled over this for a while and then mentioned to one or two of his customers that New York was getting excited about the boom in ski equipment. It was the most he could make of it.
13
HOLLECK, for whom the raiding of companies had become an art of which he was the master, had no difficulty in securing a majority of the shares of both Bickster and Company and Westwood Coal. It was said of him, and with some truth, that he could steel the sheet from underneath a sleeping man without the sleeper ever being aware of it. A few telephone calls and telegrams, a rumor adroitly planted here and there —his visit to the Golden Lion had been no mere expression of exuberance at the prospect of a multimillion-dollar gain— a mention in the financial columns of Newsweek, a photograph of himself in Playboy about to pop a stick of chewing gum into his mouth and an insistent denial to all his friends that he was himself acquiring shares in anything—these were but a portion of the forces he organized for the raid on the two companies, which he did not regard as very difficult in any case.
Holleck did not like the business of getting lists of stockholders, canvassing among them, propagandizing them into voting for mergers or throwing out an entrenched management when obtaining his aims. All this was bludgeon work which did not appeal to his nature. In an age of mass and saturation communication, he used mass and saturation communication to spread rumors, true and false, which influenced spending and money flow. He bought shares in tens or in blocks of thousands. Sometimes he staged an obvious raid on one company to divert attention from the fact that he was in fact raiding another. Though he had never studied the military arts he knew by instinct the cardinal rules of fighting, principal among them the injunction to hit hard, fast and where least expected—which was sometimes at the strongest point.
He had no trouble whatever in getting control of Westwood Coal. Mr. Balche had been instructed by Gloriana to sell. He put the shares on the market and Holleck’s syndicate grabbed up 51 percent in one swoop at five and a half, which sent them soaring up to seven for a day when they steadied at six and a quarter as a result of the magic associated with Holleck’s reputation.
Bickster and Company was not so easy but provided no great difficulties. The shares were high priced though not overpriced, and they went up—as Holleck had intended—following the rumors he deliberately sowed. They went up, in fact, first two points and then gained a further two and a half, and at this point Holleck sent an anonymous donation of $50,000 to a research center in Rio de Janeiro to investigate the relationship between skin cancer among North Americans and the national habit of chewing gum. Mention of this line of research and of the large sum privately donated to its investigation soon appeared in the newspapers of Brazil, was transmitted to the newspapers in the United States, and produced a fall in chewing gum sales and a sharper fall in the price of shares.
Having just boosted the shares and then started them on the road downhill, Holleck reaped a harvest from the profit-taking, buying up all the shares offered by those who had decided not to risk a further decline in their price. It is a principle of the stock exchanges of the world that once a run s
tarts on a stock it is hard to stop without big money and the passage of time. People sell and then justify the sale by repeating the reasons for which they sold, thus encouraging others to sell. So Holleck acquired the needed shares in the company, stopping when he and the members of his syndicate had control.
It was easy then to force a merger between the two companies, thereafter gaining a huge tax credit for Bickster. As soon as the news reached the market, the shares of both companies soared. An automatic increase in the profits of Bickster was guaranteed by the tax relief, and the shares of what was now Bickster Chicle and Coal doubled in value on the following day.
By the end of the month they had gone up to 150 percent of their previous values. This was plainly the time for a stock split to cash in on the vast public confidence in Bickster Chicle and Coal.
A two-for-one split brought the value of the shares down to twenty-five dollars, but so avidly was the new issue bought up that the new shares were soon being offered at forty dollars and readily commanding that price. The bewildered Mr. Balche found that in the two months which had lapsed between his instructions from Gloriana to sell the shares in Westwood Coal and the merger of Westwood Coal with Bickster and Company, Grand Fenwick's holdings were now worth forty million dollars.
“That’s a remarkable woman,” exclaimed Balche, watering his geraniums. “How I should like to meet her. Starting with a six-million-dollar investment in a completely worthless company, she has converted her capital into forty million dollars plus a vast share of the enormously increased profits of Bickster Chicle and Coal. She’s the tigress of Wall Street. What cool courage. What disdainful control of the whole situation. And what a remarkable combination—Gloriana the Twelfth of Grand Fenwick and Ted Holleck of Los Angeles. Joan of Arc allied with the Beatles. Upon my word, I have lived to see strange times.”
Mr. Balche, of course, never for a moment doubted that Gloriana was working very closely and secretly with Ted Holleck and never for a moment suspected that neither had heard of the other. He felt at first a little betrayed, a little left out. After all, he was the Duchy’s financial agent in the United States. He might at least, he felt, have been given a hint of this vast and daring financial campaign against Wall Street which was now being launched from parts as diverse as Grand Fenwick and Los Angeles. And yet he knew enough of human nature to admit that any sharing of the secret would be eminently dangerous. He consoled himself with the thought that he could claim, when the whole thing was uncovered, to have played a not so insignificant part. Was he not, after all, the neutral ground on which these two mighty warriors of finance, Gloriana XII and Ted Holleck, met? Wasn’t it to him that Gloriana came when she wished to buy or sell shares? And wasn’t it to him also that Ted Holleck had come when he was seeking shares in Bickster and Company? Yes, indeed. Picking a few dead leaves from among his geraniums, and eying with satisfaction the new growth of fat buds which promised a profusion of flowers in the weeks ahead, he had to admit that he was the essential catalyst which permitted these two dynamic forces to work together ... to interact with such dramatic effect.
Raised in a tradition of discretion and of confidence, Mr. Balche would never dream of mentioning the name of Gloriana to Ted Holleck or the name of Ted Holleck to Gloriana. Whatever their direct correspondence might be with each other (and he was sure there must be much of it), it was plain that when they dealt through him, they wanted their connection kept completely secret. To refer to it at all then would be a blunder on his part of monstrous proportions.
He, Joseph Balche, was the cover for this brilliant combination—the guardian of a secret which he was sure would one day (and that day quite soon) shake the whole financial world to its deepest foundations.
In his correspondence with Gloriana, Mr. Balche was now in something of a quandary as to what attitude to adopt. Surely it would be now entirely gauche and naive to write telling her that her original investment was now worth forty million dollars when he was quite sure that she had made that investment with a cool head and the clearest financial foresight and planning. On the other hand, should he continue to sell stock in the new company? He decided he should not. His last instruction from Her Grace had concerned the selling of stock in the old company, Westwood Coal. That had achieved its end. He had now only to wait further instructions and in the meantime cooperate fully with Ted Holleck in any plans that gentleman (certainly Gloriana’s partner) had to make.
That Ted Holleck was Gloriana’s partner seemed quite confirmed by the curious fact that Holleck had bought only enough shares to give him a firm majority control of Bickster and Company and Westwood Coal—the rest of them remaining in the hands of the Duchess.
When then Mr. Balche received a letter from Gloriana telling him that he was to spend the money realized from the sale of the Westwood Coal shares in the purchase of Rimrock Oil, he assumed that another daring financial raid was being planned. He bought the shares as instructed. They were worth four and an eighth and were declining with the news that Rimrock had obtained an oil concession in Portugal, drilled four wells and got only salt water for its pains.
Ten million dollars were expended on buying up the shares of Rimrock either from dealers or on the open market, and this money did not exhaust what was available to Gloriana from sale of previous holdings plus the four million dollars’ cash gain she had made in acquiring Westwood Coal. The shares were acquired and Mr. Balche waited. Nothing happened. A week went by and then two weeks. By the end of the month, another dry hole having come in, the Rimrock Oil shares were down to two and a half and Mr. Balche decided to write to Gloriana and tell her she had lost about four million on the deal. He had the letter written and was on the point of mailing it when the long anticipated telephone call arrived.
“Holleck here,” said the caller. “I want Rimrock and am directed to you. What are you asking?”
“I have no instructions from my client to sell,” said Balche. “Do you wish to make an offer?”
“Yes,” said Holleck. “A half above the market, whatever it might be.”
“I will contact my client and let you know,” said Mr. Balche. “It will take at least two weeks.”
There was a silence and Holleck said, “I can wait. Call me when to send the money.”
Such confidence that the deal was to be consummated made Mr. Balche smile for it quite confirmed his theory that Holleck and Gloriana were partners. When a letter arrived from Gloriana two weeks later telling him to sell the stock to whoever wanted it, Mr. Balche called Holleck and said he could have all the stock at half a point above the market, which would be one and three quarters.
“Thanks,” said Holleck. “I’m buying fifty-one percent of the shares. No more. I’ll send my check.”
The check, when it arrived, was signed by the treasurer of Sunrise Space. Within a month Sunrise Space announced a merger between Rimrock Oil and Indian Head Petroleum, one of its subsidiaries, with three shares of Rimrock Oil equated at one share of Indian Head. The value of the new shares dipped and suddenly soared with the drilling of a producing well in Portugal. A stock split was announced and a further fifteen million dollars in shares accrued to the account of Gloriana and the Duchy of Grand Fenwick. The total holdings of the young Duchess were now in the neighborhood of fifty-five million dollars.
Things began at this point to happen at a speed which made Mr. Balche dizzy and left him quite confused, for he was made aware only of the results without knowing of the details which led to them. As closely as he could follow what was going on, Bickster Chicle and Coal merged with Monolith Productions (motion pictures) and John and Mary Publishing (school texts)—the diversity was to escape a charge by the Antitrust Department of monopoly—and the three merged companies then took over Western Bank and Trust. What all this was about Mr. Balche could not divine at the time for no immediate profit or increase in share values was apparent from these mergers.
However, the pattern became a little clearer when Western Bank and
Trust was swallowed; for it came out that the bank had lent beyond its strength and held mortgages and other enforceable paper in a transit company, two gold mines, a shipping line, an airline, five massive real-estate developments, and a steel plant. These companies were forced into bankruptcy and their assets seized by the principal creditor— now Bickster Pinot Chicle and Coal Monolith Productions and John and Mary. And out of the whole financial whirlwind emerged, when the dust had settled, a massive complex of companies called Pinot Productions, itself a rival to Sunset Space and the master of a conglomerate ranging from school texts to blast furnaces. Shares in Pinot Productions were worth on the market eighty-five dollars, and behind this financial juggernaut which loomed now over Wall Street and the stock exchanges of the nation was beginning to emerge a young, attractive and mysterious figure whose name was mentioned with awe in financial circles—the Duchess Gloriana XII of Grand Fenwick.
14
THE first million, it is well known, is the hardest to make. Thereafter the second is easier, the third easier still and so on. In Grand Fenwick’s case the first several millions had been donated to the Duchy without any effort on their part. And from then on, no matter what efforts the Duchess Gloriana made to get rid of it, the money continued to pile up in Himalayan proportions. Without planning it in the least, she made the Duchy a major shareholder in the multimillion-dollar Pinot Productions Corporation, and a shareholder of vast power in the equally huge Sunrise Space Enterprises. Her share of the profits from these holdings amounted to further millions of dollars each quarter, and all the time the price of shares held continued to rise so that even Mr. Balche could not tell at any one moment just what was the value of the holdings of the Duchy of Grand Fenwick in American stocks.
The Mouse on Wall Street Page 10
