CHAPTER XXI
JAMES WHEATON MAKES A COMPUTATION
Porter's vacation was not altogether wasted. As he lounged about andphilosophized to the Bostonians on Western business conditions, hisrestless mind took hold of a new project. It was suggested to him by theinquiries of a Boston banker, who owned a considerable amount ofClarkson Traction bonds and stock which he was anxious to sell. Portergave a discouraging account of the company, whose history he knewthoroughly. The Traction Company had been organized in the boom days andits stock had been inflated in keeping with the prevailing spirit of thetime. It was first equipped with the cable system in deference to theClarkson hills, but later the company made the introduction of thetrolley an excuse for a reorganization of its finances with an even moregenerous inflation. The panic then descended and wrought a diminution ofrevenue; the company was unable to make the repairs which constantlybecame necessary, and the local management fell into the hands of aseries of corrupt directorates.
There had been much litigation, and some of the Eastern bondholders hadthreatened a receivership; but the local stockholders made plausibleexcuses for the default of interest when approached amicably, and whenmenaced grew insolent and promised trouble if an attempt were made todeprive them of power. A secretary and a treasurer under oneadministration had connived to appropriate a large share of the dailycash receipts, and before they left the office they destroyed orconcealed the books and records of the company. The effect of this wasto create a mystery as to the distribution of the bonds and the stock.When Porter came home from his summer vacation, the newspapers weredemanding that steps be taken to declare the Traction franchise forfeit.But the franchise had been renewed lately and had twenty years to run.This extension had been procured by the element in control, and theforeign bondholders, biding their time, were glad to avail themselves ofthe political skill of the local officers.
Porter had been casually asked by his Boston friend whether there wasany local market for the stock or bonds; and he had answered that therewas not; that the holders of shares in Clarkson kept what they hadbecause they could no longer sell to one another and that they were onlywaiting for the larger outside bondholders and shareholders to assertthemselves. Porter had ridden down to Boston with his brother banker andwhen they parted it was with an understanding that the Bostonian was tocollect for Porter the Clarkson Traction securities that were held byNew England banks, a considerable amount, as Porter knew; and he wenthome with a well-formed plan of buying the control of the company. Timeswere improving and he had faith in Clarkson's future; he did not believein it so noisily as Timothy Margrave did; but he knew the resources ofthe tributary country, and he had, what all successful business men musthave, an alert imagination.
It was not necessary for Porter to disclose the fact of his purchases tothe officers of the Traction Company, whom he knew to be corrupt andvicious; the transfer of ownership on the company's books made nodifference, as the original stock books had been destroyed,--a factwhich had become public property through a legal effort to levy on theholdings of a shareholder in the interest of a creditor. Moreover, if hecould help it, Porter never told any one about anything he did. He evenhad several dummies in whose names he frequently held securities andreal estate. One of these was Peckham, a clerk in the office of Fenton,Porter's lawyer.
Wheaton had not long been an officer of the bank before he began to beaware that there was considerable mystery about Porter's outsidetransactions. Porter occasionally perused with much interest severalsmall memorandum books which he kept carefully locked in his desk. Thepresident often wrote letters with his own hand and copied them himselfafter bank hours, in a private letter-book. Wheaton was naturallycurious as to what these outside interests might be. It had piqued himto find that while he was cashier of the bank he was not consulted inits larger transactions; and that of Porter's personal affairs he knewnothing.
One afternoon shortly after Porter's return from the East, Wheaton, whowas waiting for some letters to sign, picked up a bundle of checks fromthe desk of one of the individual bookkeepers. They were Porter'spersonal checks which had that day been paid and were now being chargedto his private account. Wheaton turned them over mechanically; it wasnot very long since he had been an individual bookkeeper himself; he hadentered innumerable checks bearing Porter's name without giving them athought. As the slips of paper passed through his fingers, he accountedfor them in one way or another and put them back on the desk, face down,as a man always does who has been trained as a bank clerk. The last ofthem he held and studied. It was a check made payable to Peckham,Fenton's clerk. The amount was $9,999.00,--too large to be accounted foras a payment for services; for Peckham was an elderly failure at the lawwho ran errands to the courts for Fenton and sometimes took charge ofsmall collection matters for the bank. Wheaton paid the attorney feesfor the bank; this check had nothing to do with the bank, he was sure.The check, with its curious combination of figures, puzzled andfascinated him.
A few days later, in the course of business, he asked Porter whatdisposition he should make of an application for a loan from a countrycustomer. Porter rang for the past correspondence with their client, andthrew several letters to Wheaton for his information. Wheaton read themand called the stenographer to dictate the answer which Porter hadindicated should be made. He held the client's last letter in his hand,and in concluding turned it over into the wire basket which stood on hisdesk. As it fell face downwards his eye caught some figures on the back,and he picked it up thinking that they might relate to the letter. Thememorandum was in Porter's large uneven hand and read:
303 33 ---- 909 909 ---- 9999
The result of the multiplication was identical with the amount ofPeckham's check. Again the figures held his attention. Local securitieswere quoted daily in the newspapers, and he examined the list for thatday. There was no quotation of thirty-three on anything; the nearestapproach was Clarkson Traction Company at thirty-five. The check whichhad interested him had been dated three days before, and he looked backto the quotation list for that date. Traction was given at thirty-three.Wheaton was pleased by the discovery; it was a fair assumption thatPorter was buying shares of Clarkson Traction; he would hardly be buyingforeign securities through Peckham. The stock had advanced two pointssince it had been purchased, and this, too, was interesting. Clearly,Porter knew what he was about,--he had a reputation for knowing; and ifClarkson Traction was a good thing for the president to pick up quietly,why was it not a good thing for the cashier? He waited a day; Tractionwent to thirty-six. Then he called after banking hours at the office ofa real estate dealer who also dealt in local stocks and bonds on a smallscale. He chose this man because he was not a customer of the bank, andhad never had any transactions with the bank or with Porter, so far asWheaton knew. His name was Burton, and he welcomed Wheaton cordially.He was alone in his office, and after an interchange of courtesies,Wheaton came directly to the point of his errand.
"Some friends of mine in the country own a small amount of Tractionstock; they've written me to find out what its prospects are. Of coursein the bank we know in a general way about it, but I suppose you handlesuch things and I want to get good advice for my friends."
"Well, the truth is," said Burton, flattered by this appeal, "the bottomwas pretty well gone out of it, but it's sprucing up a little just now.If the charter's knocked out it is only worth so much a pound as oldpaper; but if the right people get hold of it the newspapers will letup, and there's a big thing in it. How much do your friends own?"
"I don't know exactly," said Wheaton, evenly; "I think not a great deal.Who are buying just now? I notice that it has been advancing for severaldays. Some one seems to be forcing up the price."
"Nobody in particular, that is, nobody that I know of. I asked BillyBarnes, the secretary, the other day what was going on. He must know whothe certificates are made out to; but he winked and gave me the laugh.You know Barnes. He don't cough up very easy; and h
e looks wise when hedoesn't know anything."
"No; Barnes has the reputation of being pretty close-mouthed," repliedWheaton.
"If your friends want to sell, bring in the shares and I'll see what Ican do with them," said Burton. "The outsiders are sure to act soon.This spurt right now may have nothing back of it. The town's full ofgossip about the company and it ought to send the price down. Yourfriend Porter's a smooth one. He was in once, a long time ago, but heknew when to get out all right." Wheaton laughed with Burton at thistribute to Porter's sagacity, but he laughed discreetly. He did notforget that he was a bank officer and dignity was an essential in thebusiness, as he understood it.
Within a few days two more checks from Porter to Peckham passed throughthe usual channels of the bank. By the simple feat of dividing theamount of each check by the current quotation on Traction, Wheaton wasable to follow Porter's purchases. The price had remained pretty steady.Then suddenly it fell to thirty. He wondered what was happening, but thenewspapers, which were continuing their war on the company, readilyattributed it to a lack of confidence in the franchise. Wheaton met thebroker, apparently by chance, but really by intention, in the club oneevening, and remarked casually:
"Traction seems to be off a little?"
"Yes; there's something going on there that I can't make out. I imaginethat the fellows that were buying got tired of stimulating the market,and have thrown a few bunches back to keep the outsiders guessing."
"Right now might be a good time to get in," suggested Wheaton.
"I should call it a good buy myself. I guess that franchise is allright. Better pick up a little," he said, tentatively.
"To tell the truth," said Wheaton, choosing his words carefully, "thoseout of town people I spoke to you about have written me that they'dlike a little more, if it can be got at the right figure. You might pickup a hundred shares for me at the current price, if you can."
"How do you want to hold it?"
"Have it made to me," he answered. He had debated whether he should dothis, and he had been unable to devise any method of holding the stockwithout letting his own name appear. Porter would not know; Porter wasconcealing his own purchases. Wheaton could not see that it made anydifference; he was surely entitled to invest his money as he liked, andhe raised the sum necessary in this case by the sale of some railroadbonds which he had been holding, and on which he could realize at onceby sending them to the bank's correspondent at Chicago. He might havesold them at home; Porter would probably have taken them off his hands;but the president knew that his capital was small, and might have askedhow he intended to reinvest the proceeds.
"Of course this is all confidential," said Wheaton.
"Sure," said Burton.
"And when you get it, telephone me and I'll come up and settle," saidWheaton.
A few days later Burton sent for Wheaton to come to his office. Onehundred shares had been secured from a ranchman. Wheaton carried thepurchase money in currency to Burton's office; he was as shrewd asWilliam Porter, and he did not care to have the clerks in the bankspeculating about his checks.
He locked his certificate, when Burton got it for him, in his privatebox in the vault, and waited the rebound which he firmly expected in theprice of the stock. His sole idea was to make a profit by the purchase.He felt perfectly confident that Porter had bought Traction stock with adefinite purpose; he still had no idea who were the principal holders ofTraction stock or bonds, and he was afraid to make inquiry. A man whowas as secretive as Porter probably had confidential sources ofinformation, and it was not safe to tap Porter's wires. His consciencewas easy as to the method by which he had gained his knowledge ofPorter's purchases; he certainly meant no harm to Porter.
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