The Sunday Oregonian., July 11, 1909, SECTION TWO, Page 2, Image 14

TIIE -SUNDAY OREGOXIAN. PORTLAND, JULY 11, -1909.
How George Westinghouse Was Nearly Driven fj
to the Wall, and All for Lack of a Paltry $50,000,
Now Told for the First Time "Vanderbilt
Fortune Was Saved From Probable Serious
Impairment by. Some Very Quick Action.
How the Huntington Fortune Was Saved from
Disaster by Demand for Loan of $2,000,000
Gould Fortune Put on Exhibit to Overcome a
Crucial Moment Memorable Week in Whitney
Fortune, WTien It Vas Saved by Mr. Morgan.
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EIGHTY MILLION OF DOLLARS
or a dollar for every man. woman
and child In this country that Is to
day the sum total of the exceedingly ac
tive fortune left by Jay Gould to Ills six
children, share and share alike.
fcThe strong boxes of the various living
Tanderbllts hold enough money, or its
equivalent, to put in the pocket of every
nephew and niece of Uncle Sam the tidy
little sum of J2.25. The William C. Whit
ney fortune, now Increasing rapidly under
the administration of Harry Payne Whit
ney, is one-6ixth that of the combined
Yanderbllt fortunes, or J10.000.000. It Is
equaled in size by the present-day Hunt
ington fortune, which is ten millions
larger than George Westinghouse's per
sonal possessions, the same amount less
than the H. H. Rogers fortune, and twice
that figure smaller than the sum which
Q. II. Harrlman calls his own. Taken
collectively, a head to head distribution
of these fortunes would mean approxi
mately $3.38 for each and every one of us.
And yet, truly amazing and suggestive
of enormous power as these brief figures
will appear to any one giving them a
little thought, it is a fact that each of the
great American fortunes here mentioned,
and world-famed today, has had Us cru
cial moment. Then the fate of that for
tune trembled in the balance. A false
move on the part of its possessor, a turn
of luck, and, presto! in the place of
-ianuin-liKe riches an empty pocketbook,
prhaps, to eay nothing of the loss of rep
utation as a money King.
But these are not the only great for
tunes of the day that are always more or
less in the public eye which have had
their crucial moments. There is probably
no great lortune based upon stock mar
ket securities which has not at one time
o another been in peril of being either
seriously curtailed or absolutely lost. And
a long as it is so based this peril Is ever
before its owner or owners. Indeed, the
only - great American fortunes of today
wnicn are secure are those of which the
Kreat real estate possessions of the Astors
and the Goelets are Illustrations. Panic
cannot run away with land; its owner
cannot be driven to the wall in the stock
markets of the world.
'Were they to speak frankly, it Is doubt
lees true that practically every possessor
of a big American fortune would agree
with old Commodore Vanderbilt when he
said, mainly, that It is easier to make a
big fortune than to keep it after it has
been made, Kven of John D. Rockefeller
it has been said that he walked the floor
of his room night after night at a time
when it seems as though the Standard
Oil structure which he had created would
b swept out of existence.
IIow $30,000 Saved Westinghouse.
1 As for the personal fortune of one of
the greatest Industrial captains that this
country has ever known, there was a
time when it came near to total or partial
dissolution because its owner, with mil
lions of gilt-edged securities in his pos
session, found himself In dire need of
only $00,000 In ready cash. This truly
unique crucial moment, experienced by
Oeorge Westinghouse in lSy3. is here told
about In print for the first time.
In the interest of his great manufactur
ing establishment, Mr. Westinghouse had
made a loan of $.".0,000 from a bank In
Poughkeepslo, N. Y. With the spread of
the panic over the country the bank made
an Imperative demand on him to take up
the little loan. But unfortunately for the
borrower, he was in the position of the
thirsty man upon the ocean who saw
water, water everywhere, but not a drop
to drink. He had securities of intrinsic
value of many millions of dollars his
pockets fairly bulsed with them as he
went from bank to bank seeking to put
them up as collateral for real money to
the extent of his Poughkeepsie loan. But
In that time of currency, famine no one
would loan him (or any one else) actual
money, even upon the best of securities.
So Mr. Westinghouse was squarely con
fronted with the grave danger of having
the paper of his great manufacturing es
tablishment go to protest, involving at
least temporary bankruptcy and the con
sequent impairment of the large personal
fortune which he had created by the ex
ercise of his genius.
In dire extremity, Mr. Westinghouse
finally sought out a friend who, unknown
to Mr. Westinghouse, had a cash deposit
considerably in excess of $50,000 in a cer
tain New York City bank. As he told of
the crucial moment before him, and asked
if his listener knew where he stood a
ghost of a chance of securing the desired
real money, Mr. Westinghouse's pockets
fairly bulged with securities that in nor
mal times would have been a sufficient
pledge for more than a million dollars.
The friend listened attentively to what the
Inventor had to say; then he replied In
the matter-of-fact way that was charac
teristic of him: "I will see to it that your
property and your credit are protected. If
I can't do it In any other way, I will ac
tually draw out of the bank In which I
have sufficient money deposited all that
you need to take up this trifling amount
of paper."
At that time, remember, everybody who
had real money was holding on to it like
grim death. Nevertheless, the friend,
true to his word, and by the exercise of
such personal Influence as he was able to
Dring in certain quarters, secured for Mr.
Westinghouse the $50,000 that Btood be
tween him and financial disaster. But for
a full 24 hours the man whose creation of
Industrial apparatus had increased the
wealth of the country toy hundreds of mil
lions was apparently doomed to behold
his own riches scattered In whole or In
part.
Fourteen years later Mr. Westinghouse's
fortune underwent its second crucial pe
riod, an event which well illustrates the
statement that no great fortune of today
which is not Invested almost entirely in
real estate Is ever wholly safe. This crisis
occurred when one of the great Westing
house works became embarrassed by rea
son of the currency famine of 1907. Its
assets were large, but not Immediately
available, and It was necessary to seek
the protection of the courts. Then began
a work of reconstruction and of quicken
lng directed by Mr. Westinghouse, which
was continued for the greater part of a
year, and Involved as brilliant financial
generalship as that which has made the
reorganization of some of our railway
systems possible. But though this critical
period stretched over a much longer period
of time than its predecessor, it Is doubt
less true that the first crisis stands out
much more vividly in the mind of the
principal figure in each event.
When Vanderbilt Fortunes Were
Threatened.
Here, too, is told for the first time
VO?&. 2Ma7A' jOjSWiS
that idea, and determined to sell these
securities. In the aggregate they rep
resented a very larg amount of money.
Mr. Vanderbilt summoned his cousin,
the late Samuel Barton, who was a
broker, and very expert in marketing
securities that required delicate ma
nipulation. Mr. Vanderbilt said: "Sam,
I want you to sell for me all my
New York & New England and the old
Boston, Hartford & Erie stock which
I carry." Mr. Barton replied: "Well,
Cousin Will, that'll have to be done In
a very careful way, because we don't
want to break the market. I think I
know how It can be done, without
causing the price to drop."
He went on to tell Mr. Vanderbilt
how he planned marketing these se-
urities, and the plan was accepted.
Then, with his customary skill, Mr.
Barton executed the commission, and
called upon Mr. Vanderbilt for the se
curities, so that he might deliver. A
moment's scrutiny of them -was suffi
cient to reveal a fatal', although purely
technical, defect. They lacked proper
Indorsement, and for that reason were
not what the stock exchanges call "a
good delivery."
"kviiat am I to do?" Mr. Vanderbilt
asked. "Is there time enough to cor
rect this mistake?"
It will take two or three days to get
proper indorsement upon these securi
ties, and you've got to make delivery
tomorrow," Mr. Barton replied.
Why, I shall be caught selling
short!" exclaimed Mr. Vanderbilt. "I
can't deliver the stock. What's to be
done? It will never do to have it said
that William H. Vanderbilt was cor
nered, and has been caught selling
short, and no one can tell what the
effect will be upon our other securi
ties."
'Can't you borrow? There's a lot of
this stock in Albany, and a good deal
In Boston, and some in Hartford, If we
how the Vanderbilt fortunes were con
fronted with an exceedingly grave
emergency in the days when they were
controlled as one by W. H. Vander
bilt- Tday the ninety millions that
he passed on to his heirs have be
come twice that amount.
lias emergency was all, due to an
error or judgment or an oversight on
the part of Mr. Vanderbilt himself, and
that was something which he rarely
committed.
There came to Mr. Vanderbilt from
the estate of his father a large block
of Boston, Hartford & Erie Railroad
securities. This railroad property was
afterward embodied In the New York
& New England system, which is now
in the possession of the New York, New
Haven & Hartford Railroad. Mr. Van
derbilt contemplated, as his father had
earlier done, the purchase of this rail
way system. It bisected New England
and had valuable terminals in the
Vicinity, oi tJOfcion. jiut he save up
could only get it here by tomorrow
morning," Mr. Barton suggested.
Instantly Mr. Vanderbilt summoned
the railway superintendent and also
wrote a number or telegrams. A spe
cial train was made up, consisting of a
locomotive, one car and a baggage car
at the rear to steady the train, with
instructions to make record time for
Albany, and another train , was under
negotiation to make the run from Bos
ton to New York and stop at Hartford.
For once in his life Mr. Barton saw his
cousin lose control of his nerve. Mr.
vanderbilt stood anxiously by the tele
graph instrument waiting for replies to
his telegrams or nervously paced back
and forth across the floor of his office.
.tie was rearrul that tne chances were
against sufficient accumulation of bor
rowed shares of stock in time for a good
delivery the next morning. But good
luck was with him. From Albany, Bos.
ton. Providence and Hartford came re-
plies to his messages containing promises
to lend him the Etock. It was stated by
the superintendent that it would be pos
Bible to bring the special trains back to
the Grand Central Station late that night
and sure enough, at the time appointed
there did come puffing Into the station
those trains, each of which had made
record time between Albany and New
York and Boston and New York, bring
ing the borrowed shares.
Next morning Mr. Barton made a de
livery of the borrowed stock, and In due
time Mr. Vanderbilt made good these bor
rowed shares by utilizing the stock wThich
he owned, and upon which he secured
proper Indorsements. His prestige was
saved, he had not been caught short, and
whatever danger there was of impair
ment, even temporarily, of the Vander
bilt fortune, was not known until years
had passed, except to Mr. Vanderbilt and
Mr. Barton.
In a manner equally dramatic, the cre
ator and builder of the present-day Col-
lis P. Huntington fortune of some $30,-
000,000 surmounted an Intensely critical
moment in the history of the fortune.
And the story of how he did it Is also
here told for the first time.
It was in the panic days of 1S93 that
Mr. Huntington found himself facing the
situation that, unless he obtained a large
amount of cash very speedily, tho great
fortune which he had built up through
his association with tle Southern Pacific
Railway system would be in grievous
peril, and possibly lost. Mr. luntington
was carrying large obligations, or had se
cured heavy loans in the name of the
Southern Pacific. A friend found him In
his office in New York bending over his
books and papers, black skullcap on his
head, from which depended his white
hair, which was of luxurious growth.
matching his heavy white beard. Ho
looked like the conventional pictures of
Faust, as Faust appeared before he had
been transformed by Mephistopheles'
magic to the young gallant.
Mr. Huntington, looking up from his
nooks and papers, said: "I have got to
have a large amount of money before
noon tomorrow, or there will be serious
happenings for myself and for the South
ern Pacific. I have got securities by the
cartload, but I can't borrow any money
on them. I am going to a bank today,
and I am going to say that I have got to
have something like $2,000,000 in cash, and
I am going to say it in a way that will
show that I mean it."
Mr. Huntington was Interested in a cer
tain bank in the Wall-street district. This
Institution had built up a large business
by cultivating Western correspondence;
in fact, the greater part of its deposits
were represented by the funds that had
come to it from Western institutions. But
no bank Ir. those perilous days was payin?
any money over the counter if it could
possibly be helped. Payments were "mide
by drafts through the Clearing-Hous1?,
and by various other subterfuges. Never
theless, Mr. Huntington went to his .ba-ik.
and he said to the president: "I must
have so much money" naming tho
amount, approximately $2,000,000.
"But how can we give you as much
money as that, Mr. Huntington?" was thj
reply.
"You've got it here. I have securities
good for 10 times the amount, and I have
got to have the cash to save my own
property and the Southern Pacific R.H
road." Mr. Huntington had an imperious, and,
when he was very much in earnest, an
autocratic way with him, and as he was
of considerable authority in that institu
tion, he at last had his way, securing the
funds needed to protect his own credit
and property and the Southern Pacific
Railroad. If the bank had declined to
lend him the actual cash no one could tell
how serious the consequences might have
been for him and for his possessions. But
while Mr. Huntington's credit and prop
erty were protected, this one transaction
was of such grievous consequence to the
bank that it found its business shriveling.
and was at last obliged to liquidate, al
though doing that without Involving any
bankruptcy proceedings.
Gould Fortune on Exhibition.
While there has never been a time when
George J. Gould has found the great for
tune left to him and his five brothers and
sisters seriously threatened, there was
time when Jay Gould, in order to sur
mount a crucial moment in his fortune
building,, exposed actual evidences of his
riches, such as cash, stocks, bonds and
mortgages, to the gaze of outsiders. Until
he did this thing, more than 30 years ago
no man of wealth ever dreamed of over
coming a critical period In his career by
this highly spectacular method.
Mr. Gould was In the midst of the dee
perate battle that he was waging for the
control of the Western Union Telegraph
Company. Witli his own money he had
begun the construction of a rival tele
graph line. It had established many of
fices. Mr. Gould insisted that it was his
purpose to build up a great rival to the
monopoly secured by the oldest telegraph
company.
At once there began various attacks in
tended to affect the credit of Jay Gould.
It was an everyday occurrence for some
broker or speculator to beckon slyly to a
friend, take him into a corner, and mys
teriously whisper to him, "Jay Gould is
on the ragged edge." Or the report would
be varied by saying, "Jay Gould has
staked everything on the success of his
telegraph company, and it Is going to ruin
him." These reports, followed by more
secretive and even more dangerous at
tacks, did affect seriously Mr. Gould
possessions; for come weeks it appeared
as though they hung In the balance, and
there must have been grave danger or
else Mr. Gould would not have taken the
extraordinary step which he did.
One day he summoned to an office at
the comer of Wall and Broad streets.
which he at that time occupied, a few of
his more intimate friends. They did not
knw for what reason they had been
asked to meet him there, and when they
entered the office they found the little
man standing before several boxes.
He caused clerks or office servants to
bring several other boxes into the room
This having been done, he opened the
boxes and began to take out bundles of
securities, displaying them, a gorgeous
and glittering array of the evidences of
wealth, to the wondering eyes of the rich
men whom he had summoned before him.
Mr. Gould rapidly fingered and turned
over the various sheets of parchment
paper upon which were printed t-he de
nominations and descriptions of the- se
curities. He counted them with quick
fingers, and when he had finished this
wealth revealing work, he said to his
friends:
'They say I am ruined. I hear all sorts
of reports that I cannot meet my obliga
tions. Of course, stories of that kind, if
they are not denied or proved false, do
damage. So I just wanted to show you
what I do possess, so that you can tell
any one who asks you about me that Jay
Gould is amply able to take care of him
self and his property."
They went away wondering, not
merely at tho magnitude of Gould's
wealth, but at his audacity and abso
lutely original method of denying re
ports that were seriously affecting his
credit. It was never known exactly how
many millions, par value, Mr. Gould
displayed to that wondering group.
One report fixed the amount at $50,-
000.000. another at $40,000,000, but there
was no report that told of less than
$3S.000.000.
That strategy was sufficient. New
credit was injected Into the Gould se
curities. The moment of doubt and
suspense passed. Jay Gould was
stronger than ever. The peril to his
fortune was ended, and in a short time
he was able so to use his telegraph
company as to batter down all opposi
tion to his majority oontrol of the
Western Union, one of the three pub
lic utilities constituting the bulk of
the Gould fortune today.
Eventful Week for Whitney Millions
tiaM-:.;--.-:V V., "a. "-.til,) ifr-V- 'Ikim i V .-..-- V
CCRTISS AEROPLANE FLIES LIKE A BIRD.
NEW YORK, July 10. (Special.) Glenn H. Curtiss got his aeroplane In the air recently on the -old
Morris Park racetrack grounds and gave a short exhibition to some members of the Aeronautic Society after
8 o'clock in the evening. The total flight of the machine was about 2000 feet, and it was In the air some
what less than a minute. This aeroplane comes nearer being like a bird than any other flying machine yet
seen. It is fitted with a 25-horsepo wer 4-cylinder motor, and the entire machine, with operator, weighs but
boO pounds, almost half of the weight of the Wright machine. It has flown two miles on several occasions
at Hammondsport.
Perhaps the most memorable period
In the history, down to date, of the
Whitney fortune of about $30,000,000
was that week back In the last year
of the last century when one morning
Mr. Whitney saw probable financial
ruin ahead, and a few days later was
able to plan a move that shortly there
after Increased his fortune by several
million dollars. The story of Mr.
Whitney's great danger has been hinted
at once or twice in print; the story of
his subsequent great good luck has
never been told before.
The crucial moment came as a result
of a deliberate attempt on the part
of Mr. Whitney's enemies to wreck his
fortune, impair his prestige and drive
him Into retirement. These enemies
hoped thereby to keep him from getting
the controlling hold on the lighting
companies of New York, and also to
take revenge for a business quarrel.
To this end the manipulators of the
money market had so perfected their
plans that upon a certain day late in
the Fall the rates charged for money
would be very high. It was expected
that great difficulty would be met with
in obtaining loans by all who sought
them.
Now, Mr. Whitney had borrowed sev
eral million dollars of a firm of private
bankers and brokers who were recog
nized as among the larger of the op
erators In Wall street. To secure the
loan he had pledged several millions
in money value of the securities of
which he was the owner. He was sud
denly called upon at 10 o'clock one
morning to take up the loan. As he
walked thoughtfully down Nassau
street, pleasantly greeting his ac
quaintances, no one would have dreamed
that he was at that moment under the
tremendous strain which probable loss of
his fortune, and perhaps complete ruin
upon that day, caused him.
He entered the office of the brokers
from whom he had obtained the loan.
casually glancing at the Stock Exchange
ticker as he did so. His expert eye at
once told him that something like panic
was in progress on the floor of the Ex
change. He saw that the prices of the
securities of the corporations in which he
was interested were rapidly depreciating.
What was he to do? He offered the
brokers securities in double the amount of
the securities he had already pledged with
them for the loan. They apologized pro
fusely over their Inability to accept them.
But Mr. Whitney discovered under tlia
feigned tones of sympathy and regret thai
set purpose to sell him out upon the floor
of the Stock Exchange.
Still there was no excitement in his
manner. He walked out of that office as)
calmly as though but a moment before
he had put a small commission Into thai
hands of these brokers. He went slowly
to the banking house of J. P. Morgan Sc.
Co. There, in a few words, he told these,
bankers that his brokers had just called a.
large loan; that the money market was in.
such condition that he was unable to bor
row elsewhere, and that unless the loan
could be taken up he would be sold out
upon the floor of the Exchange.
Instantly there came a revelation of the
power that Is In great financial resources
and of the capacity, for swift and effi
cient strategy, which is one of the qual
ities of a successful banker. Word was
immediately sent from Mr. Morgan's of
fice to the brokers to take from their
vaults the securities which Mr. Whitney
had deposited with them for the loan.
Furthermore, the brokers were instructed
to prepare a release and to receive a cer
tified check for the entire amount of tha
loan.
Meanwhile, some of the group In Mr.
Morgan's office, quickly reading the tick
er, realized that a desperate drive against
the so-called Whitney securities was being
made as a part of the plot to ruin Mr.
Whitney and at the same time to maka
large amounts of money through selling
i Bhort the securities with which he was
identified.
Within half an hour the loan was taken
up. But when the brokers saw that Mr
Whitney had good friends who were will
ing to help him they intimated that they
had decided to let the loan run. Never
theless, there was a successful peremp
tory demand for the securities, and at tha
same time the good friends of Mr. W"hit
ney entered the Stock Exchange and be
gan to give support to the Whitney secur
ities. In such manner his fortune and his"
prestige were saved.
The next day, or It may have been two
or three days after this, Mr. Whitney's
daughter-in-law, who was one of tha
daughters of Cornelius Vanderbilt, re
ceived a check for $1,000,000 from the ex
ecutors of her father's estate. This check
passed through the New York Clearing
House, so those who saw it say, indorsed
over to William C. Whitney. With thia
million dollars he was In a position that
made him absolutely independent of the
money market. He was able to go to Rus
sell Sage and agree to pay spot cash for
the block of gas company stock which Mr.
Sage held, and which was the key to tha'
control and consolidation of the metropol
itan lighting companies, both gas and
electric. With this block of stock in his
ownership Mr. Whitney battered down all
opposition, and out of the control of these
corporations increased his fortune by sev
eral million dollars. Y'et in the moment
of victory he was as serene as on tha
evening following his narrow escape from
financial doom, when he was heard quiet
ly to discuss certain changes in the man
agement of the . Metropolitan Opera,
House, one of his hobbies.
How the fortune that Patten, the wheat
king, has made out of wheat hung in tha
balance day after day; how E. H. Harrl
man, in the panic of 1SS3. begged the chair
man of the New York Clearing-House As
sociation to come to his assistance with.
Clearing-House certificates, that his for
tune might be saved; how H. H. Rogers,
in order to protect his great coal road in
Virginia during the panic of two years
ago. was compelled to put up for a loan
of $10,000,000 much the greater part of all
the gilt-edged securities he possessed,
worth many millions all these crucial mo
ments in the history of these great work
ing fortunes of today have been told from
time to time.
(Copyright. 1909. by E. J. Edwards.)
TABLET TO 1812 VETERANS
Champlaln Celebration' Brought to
Close in Burlington.
BURLINGTON, Vt., July 10. The un
veiling of a tablet to the memory of the
soldiers who served in the War of 1S13
closed the Champlain tercentenary pro
gramme in this city today.
The tablet was placed on the main
building of the University of Vermont,
which was used as a barracks for troops
in the second war against England.
The Society of the Daughters of 1812
erected the tablet. Major-General O. O.
Howard, U. S. A., retired, delivered tha
chief address.
DAYTON OUTDOES SEATTLE
Ohio Town Shows 4 0 Per Cent In
crease in Postal Business.
WASHINGTON. July 10. Enormous
Increases in postal receipts for tha
month of June, 1909, compared with
June, liuS, at 50 of the largest post
offices are reported in a statement Is
sued by the department today.
Dayton, O., leads with an increase of
40 per cent. Seattle, Wrash., is next,
with an increase of 32.20 per cent.
Solons Ask Co-operation.
MILWAUKEE. July 10. Co-operation
by employers and industrial workers in
the framing of industrial insurance leg
islation was proposed at a meeting of tha
special committee of the Wisconsin Leg
islature on industrial insurance, held ia
Milwaukee, today.
4