Читать книгу All in a Life-time - Henry Morgenthau Morgenthau - Страница 6

The company was so successful that its president began to intrigue for its control. The president was an Englishman, the treasurer a Dane, the secretary an American, and most of the rest Germans. Themselves densely ignorant of the manipulations of corporations, they finally feared that the president was in a fair way to get the company away from them, whereupon those representing over 70 per cent. of the stock held a hurried meeting, but they could not agree on a common policy because each mistrusted the others. I proposed that they all give their proxies to one man who should obligate himself faithfully to represent the interests of all against the president; they replied that this was excellent, but they could not agree on the one man.

Then Behning spoke:

“What’s the use of fencing any longer? The only one we all trust is Henry. Let’s give him all our proxies.”

They did so, slated me for secretary, and as I wanted to prevent any mischief until the next annual meeting, I called on the president, told him I had the proxies of 70 per cent. and, with the audacity of my years, warned him that, if he did anything improper for the remainder of his term, I would bring him into court.

He asked me:

“Are you going to be an officer?”

“I am to be secretary,” I said.

“Will you protect my interest, and see that I get my proportionate share of the profits?”

I went back to the others and obtained the authority to give him this assurance, which I did.

“All right,” he declared, “make out my proxy to you and I’ll sign it.”

I had bearded a lion in his den and brought a lamb out with me. My connection with this concern, in one capacity or another, continued through two decades, and I was its president when I left it.

This adventure in celluloid put me in a position where it was possible to realize my ambition to stop clerking and start for myself.

It was settled most unexpectedly. During my attendance at Law School, Abraham Goldsmith, Wilbur Larremore, son of Judge Larremore, and I used to hold weekly quizzes at my house. In that way I had renewed my friendship with Goldsmith, who had been my classmate in the City College. One evening, early in December, 1878, Goldsmith called and informed me that Samson Lachman and he contemplated starting a law firm. I had always been very fond of Goldsmith, and Samson Lachman had won my unlimited admiration when I listened to his Commencement Day oration and saw him receive eleven prizes, which were about all that one man could take. Hence, Goldsmith found me very receptive, and before we separated that evening, our partnership was an accomplished fact. We both agreed that Lachman was entitled to head the firm. As Goldsmith expressed indifference as to his position, and as Lachman, Morgenthau & Goldsmith sounded more euphonious, that order was adopted. We agreed to start on January 1, 1879. Our average ages were twenty-three. We hired offices at No. 243 Broadway at an annual rental of $400. Our net receipts for the year 1879 were $1,500.

Our practice, as well as our income, grew steadily, but I shall abstain from relating many details, as most of the matters involved were not of public interest.

A rather interesting affair, because some of the participants are well known to the public, was the dissolution in February, 1893, of the firm of Wechsler & Abraham, of Brooklyn. We represented Wechsler, and William J. Gaynor, afterward Mayor of the City of New York, represented Abraham. Their partnership agreement contained a very peculiar dissolution clause. They were to meet on February 1, 1893, and bid for the business, and a bid was to be final only if the non-bidding partner had failed to increase it during a term of twenty-four hours. When we met, I drew attention to the fact that if we acted under the contract, either side could prolong the matter indefinitely, and recommended that we amend the agreement by reducing the limit to one hour. This was agreed to on condition that both parties would deposit $500,000 as an earnest of their intentions to complete their bid, the unsuccessful bidder to have his check returned to him. Isidor Straus pulled out a certified check of $500,000 and I instructed Wechsler to make out his check. When Wechsler admitted that he did not have that much in the bank, I showed them an underwriting that I had secured from the Guaranty Trust Company and the Title Guarantee & Trust Company, to finance our purchase to the extent of $1,000,000. The auction then proceeded, and both factions were cautiously watching each other. Gaynor, Abraham, and the Strauses several times retired to the other end of the room for conference, Nathan Straus constantly pulling at one of his big cigars and pretending that they had about reached the limit of their bidding. I had arranged definitely with Wechsler that we would bid an amount that would produce $500,000 for the good will of the business. So, finally, when they came within reach of about $100,000 of it, I bid the exact amount that would produce the desired result. They saw what I meant, and, as it turned out, had their last conference, which lasted about ten minutes, and raised us $100. I then informed them that we would take our hour. We (Wechsler, Mr. MacNulty, who was the manager of the store, and myself) went to an adjoining restaurant to discuss the matter. Wechsler devoted fully forty minutes of the hour in trying to persuade me to reduce the fee that he had agreed to pay me. He and I had agreed that if he purchased the property, and we had to complete the financing of it, my firm’s fee was to be $25,000, while if Abraham bought him out, we were to receive $10,000. Wechsler thought we had earned it too quickly, and begged for a reduction. I was absolutely firm and finally told him the story of the dentist who, with his modern methods, had painlessly extracted two teeth for a farmer in two minutes, and when he demanded his fee of $2.50, the exorbitancy of the charge was objected to by the farmer, who stated that when he had his last tooth extracted, the dentist had pulled him around the room for half an hour, and then only charged him 50 cents for all that work. I said to Wechsler that I could have protracted this matter for thirty days, and this delay would have been most injurious to him on account of his diabetic condition. He wanted me to bid another $10,000 so that Abraham would have had to pay the fee, and he would have a net $250,000 for his good will. I was firm in my advice that he was unwise to run the business alone and should not risk securing it. We returned before the hour had expired, got Wechsler’s check back, and his half interest in the business became the property of Isidor and Nathan Straus, for whom Abraham had in reality been bidding. Immediately thereafter they dropped Wechsler’s name and created the well-known firm of Abraham & Straus.

Incidentally it may be of interest to the public to know that, when Isidor and Nathan Straus divided their interests, Isidor and his sons secured the business of R. H. Macy & Co., which they owned in common, while Nathan and his sons secured the half interest in Abraham & Straus. No doubt a good share of Nathan Straus’ munificent charities are financed to-day by his share of the profits from that business.

One of the greatest surprises in our practice was when Judge Horace Russell retained me as a business lawyer to advise him what to do about the affairs of Hilton, Hughes & Company, who had succeeded to the business of A. T. Stewart & Company, and who, in turn, were later succeeded by John Wanamaker. Judge Russell’s brother-in-law, Mr. Hilton, had been increasing the volume of the business rapidly, but his expense ratio was increasing much faster in proportion, so that, at the end of the year, he showed a tremendous loss. Some of the biggest banks in New York were refusing to renew the notes, even though Judge Hilton was willing to endorse them. They said they felt safe on all the paper they had then with Judge Hilton’s endorsement and collateral, but they feared that if they permitted the losses to continue much longer, it might even engulf Judge Hilton in the unavoidable catastrophe. I finally advised him that he should sell out the business and take his loss. He retained Mr. Elihu Root as counsel. The three of us went over the whole situation. I explained that, owing to the very large general expenses due primarily to the excessive salaries which Hilton had agreed to pay under five-year contracts to his buyers, heads of departments, and even the superintendent of the engine room, and the bad credit in which the firm then stood, the only wise course was to sell out the business. We concluded to do so, but in the meantime decided that it would be necessary to make a general assignment to preserve the assets and secure a reasonable settlement with the men who held long contracts. When the assignment was finally prepared, it had to be executed the following day, and Root, Russell, and I first dined together, and then remained in Russell’s office until five minutes past midnight, when young Hilton, in our presence and that of Mr. Wright, the assignee, and a notary, executed the document.

While waiting, Mr. Root told us of several cases in which he had recently been retained, where the younger generation dissipated big fortunes in a very short time. He laid particular stress on the case of Cyrus W. Field, who, in his lifetime, prided himself that he had an income of $1,000 a day, which at that time was enormous. I also recall Root telling me that night that it was unwise for any lawyer to devote himself entirely to politics, that he should, when called upon, render a public service, complete it, and then return to his profession, but be ready for any further calls that might be made upon him. Root has pursued that course most successfully.

I felt a strange sensation to be present at this midnight dénouement of the great business of A. T. Stewart & Company. I could not help but think of the causes. Judge Hilton had offended the Jews in America because his hotel, the “Grand Union” in Saratoga, had refused to accommodate Joseph Seligman, whom both the New York Chamber of Commerce and Union League Club honoured by electing as one of their vice-presidents. Hilton did not then realize that this act not alone involved the loss of his Jewish customers, but it would also influence a great many of his Christian patrons who would resent such discrimination, and withdraw their custom from his firm. Most of this trade went to the rising firms of B. Altman & Co. and Stern Bros. and so strengthened them that they became great competitors of Hilton, Hughes & Company, and precipitated their downfall. John Wanamaker bought the lease and stock of goods. I remember distinctly with what satisfaction, when the transaction was closed, he told me that this was the first time that he had ever heard of so valuable a franchise being given away for nothing. Wanamaker shrewdly disregarded the short existence of Hilton, Hughes & Company, and advertised John Wanamaker as the successor of A. T. Stewart & Company.