Flower Elliott
The Best Policy
Dear Mrs. Wentworth: After a conference with our physician we decided that a small risk on Mr. Wentworth would be justified, and the matter was closed up yesterday afternoon just previous to his death. As a result of my close personal relations with him, I know that he left his affairs in rather a complicated condition, so, as it will take a little time to file the necessary proofs and get the money from the company, I am taking the liberty of sending you my personal check for the amount of the policy, one thousand dollars, and I hope that you will not hesitate to call on me for any service that is in my power to render. With the deepest sympathy, I am,
Very sincerely yours,David Murray.
“A lie,” he muttered, referring to the insurance item; “a cold, deliberate lie, but I feel better for telling it.”
AN INCIDENTAL SPECULATION
Just when the Interurban Traction Company thought the successful culmination of its plans in sight it woke up to the fact that there had been a miscalculation or an oversight somewhere. It had the absolute or prospective control of all the principal lines embraced in its elaborate scheme of connecting various towns and cities by trolley, which means that it had bought a good deal of the necessary stock and had options on most of the rest; but there was one insignificant little road that it had left to the last. This road had been a losing venture from its inception, and its stock was quoted far below par, with no buyers. As a matter of business policy, the more successful roads should be secured first, for the moment the secret was out their stocks would soar. They represented the larger investments, and their stock-holders could hold on, if they saw the advisability of it, without making any financial sacrifice; they were in a position to “hold up” the new company in the most approved modern style. But the Bington road was weak and unprofitable, valuable only as a connecting link in the chain.
“Of course,” said Colonel Babington, who was at the head of the new venture, “we’re sure to be held up somewhere on the line, and these people can hold us up for less than any of the others. They haven’t much as a basis for a hold-up, and they can’t afford to go on losing money. We can buy their road cheap the first thing, but the discovery of the purchase will give our plans away and add a million dollars to the cost of carrying them out. Any fool would know that we were not buying that road for itself alone. Why, the mere rumor that negotiations were opened would add fifty or a hundred per cent. to the value of the other stocks we want. We can’t afford even to wink at that road until we get control of the others.”
So they went about their work very secretly, hoping so to conceal their design that they would be able to get the last link at the bed-rock price; but, when the time came, entirely unexpected difficulties were encountered. The stock-holders might have been tractable enough, but the stock-holders themselves had been fooled.
“Why, there was a young fellow here last week,” they explained, “and he got a sixty-day option on enough stock to control the road.”
“Who was he?” asked the startled Colonel Babington.
“His name is Horace Lake,” they told him.
“I’ll have to look Horace up,” remarked the colonel thoughtfully.
Meanwhile, Horace was congratulating himself on having done a good stroke of business, and further amusing himself by figuring his possible profit.
“I’ve been looking for just such a chance as this,” he told Dave Murray, the insurance man.
“Have you got the money to carry it through?” asked the practical Murray.
“I had enough to put up a small forfeit to bind the option and convince them that I mean business, and I don’t need any more,” returned Lake.
“Once in a great while,” said Murray, “a man makes a good lot of money on a bluff, but even then he usually has some backing. It takes money to make money, as a general rule. You will find that most successful men, even those who are noted for their nervy financiering, got the basis of their fortunes by hard work and rigid economy. Wind may be helpful, but it makes a poor foundation.”
“This is one of the times when it is about all that is necessary,” laughed Lake. “I got a little inside information about the Interurban Traction Company’s plans in time to secure an option on one link in its chain of roads, and it has simply got to do business with me before it can make its line complete. For twenty thousand dollars, paid any time within sixty days, I can control the blooming little line, and the option to buy at that price is going to cost the traction company just twenty-five thousand dollars, which will be clear profit for me.”
“It sounds nice,” admitted Murray, “but, if I were in your place, I’d feel a good deal better if I had the money to make good. If they don’t buy, you lose your forfeit, which represents every cent you could scrape up.”
“They will buy,” asserted Lake confidently.
“They may think it cheaper to parallel your line,” suggested Murray.
“I’m not worrying,” returned Lake confidently. “I’m just waiting for them to come and see me, and they’ll come.”
Lake’s prophecy proved correct. They came – at least Colonel Babington came, he being the active manager of the company’s affairs. But Colonel Babington first took the precaution to learn all he could of Horace Lake’s financial standing and resources. This convinced him that it was what he termed a “hold-up,” but, even so, it was better to pay a reasonable bonus than to have a fight.
“We will give you,” said Colonel Babington, “a thousand dollars for your option on the majority stock of the Bington road.”
“The price,” replied Lake, “is twenty-five thousand dollars.”
“My dear young man,” exclaimed the colonel, when he had recovered his breath, “you ought to see a specialist in mental disorders. You are clearly not right in your mind.”
“The price,” repeated Lake, “is twenty-five thousand dollars now, and, if I am put to any trouble or annoyance in the matter, the price will go up.”
“A bluff,” said the colonel, “is of use only when the opposing party does not know it is a bluff. We happen to know it. You haven’t the money to buy that road, and you can’t get it.”
“You speak with extraordinary certainty,” returned Lake with dignified sarcasm.
“The road,” asserted the colonel, “is valuable only to us, and we can parallel it, if necessary. No conservative capitalist is going to advance you the money to buy it in the face of such a risk as that, so we have only to wait until your option expires to get it from the men who now own it, and I may add that we have taken a second option at a slightly higher price. Therefore, your only chance to get out of the deal with a profit is to let us acquire the road under the first option at something less than the second option price. To avoid any unnecessary delay, we might be willing to pay you a bonus of two thousand dollars.”
“The price,” said Lake, “is now twenty-six thousand.”
“Sixty days – less than fifty now, as a matter of fact – is not such a long time,” remarked the colonel. “We will wait.”
Lake told Murray later that he “had them in a corner,” but Murray was inclined to be doubtful; fighting real money with wind, he said, was always a risky undertaking, and the Interurban Traction Company had plenty of real money. Lake, however, being in the “bluffing” line himself, was inclined to think all others were doing business on the same basis, and he confidently expected the colonel to return in a few days. But the colonel came not.
Then Lake made another trip to Bington, to look the ground over, and he was disturbed to find that the colonel had been sounding the people on a proposition to put a line through the town on another street. This was only a tentative plan, to be adopted in case of failure to get the existing line, but it showed that the company was not disposed to be held up without a fight. Fortunately, the people did not take kindly to the idea. The principal shops were on the line of the trolley now, and the proprietors did not wish to have travel diverted to another street.
Lake devoted several days to missionary work in Bington, pointing out the great depreciation of property that would follow such a move, and he finally left with a feeling that the company would have an extremely difficult time getting the necessary legislation from the town officials. Still, he was not entirely at ease, for officials are sometimes “induced” to act contrary to the wishes of the people they are supposed to represent. But he believed he had made the situation such that Babington would come back to him. Surely, it would be cheaper to deal with him than to buy an entire town board.
Thirty of the sixty days slipped away, and Lake grew really anxious. The Interurban Traction Company could not be a success without a connecting link between the two main stretches of its line, and Lake had not believed that it would dare to proceed with its plans until this was assured. Consequently, he had expected all work to stop, pending negotiations with him. But work did not stop. There were two or three trifling gaps at other places, and the company was laying the rails to bridge them, in addition to improving the road-beds of the lines it had bought. It even began to build a half-mile of track to reach one terminus of his little road. Clearly, there was no anticipation of trouble in ultimately beating him.
“It’s my lack of money,” he soliloquized. “I’ve got the basis of a good thing, if I only had the money to make it good, but I haven’t, and they know it. Murray was right.”
His thoughts being thus turned to Murray, he went to see him, in the faint hope that he might interest him in the plan. Murray had money to invest. But Murray deemed the risk too great in this instance.
“They can beat you,” said Murray. “They have unlimited resources, and they’ll certainly get through Bington on another street, if you persist in making your terms too stiff. Very likely, they would have given you three thousand or possibly even five thousand for your option when they first came to you, and they may do it now.”
“I tell you, it’s a good thing,” insisted Lake.
“If it’s really as good a thing as you think it is,” said Murray, “you will have no difficulty in getting somebody with money to take it off your hands at a good margin of profit to you, but I can’t see it.”
In this emergency, Lake recalled a man of considerable wealth who had known him as a boy and had taken an interest in him. It was humiliating not to be able to put the scheme through himself, after all his planning and confident talk, but it was better to turn it over to some one else than to fail entirely. So he went to see Andrew Belden.
“There is a remote chance of success,” declared Belden, “but I would not care to risk twenty thousand on it.”
“The company can’t get through Bington, except on that franchise,” insisted Lake.
“That may be so,” admitted Belden, “but I have learned not to be too confident in forecasting the action of public officials and corporations. The company could make a strong point by threatening to cut out Bington entirely and carry its line to one side of it.”
“That would make a loop in their road that would be costly in building and in the delays it would occasion,” argued Lake. “They can’t make any circuits, if they are to do the business.”
“Nevertheless,” returned Belden, “their actions show that they are very sure of their ground.”
“Simply because I haven’t the ready cash,” said Lake bitterly. “Will you loan it to me, Mr. Belden? If you won’t go into the deal yourself, will you loan me the money to put it through? I’ll give you the stock as security, and I think you know me well enough to know that I’ll repay every cent of it as rapidly as possible.”
“My dear Horace,” exclaimed Belden with frank friendliness, “I haven’t the least doubt of your integrity, but I have very serious doubts of your ability to repay any such sum, and it is more than I care to lose. You never have had a thousand dollars at one time in your life, and I may say, without intending to be unkind, that it isn’t likely you ever will. As for the security, its value depends entirely on the success of your plans: if you fail, it won’t be worth ten cents. Now, if you had any real security, upon which I could realize in case anything happened to you, I would cheerfully let you have the money for as long a time as you wish. Although your plan does not appeal to me, I am sincerely anxious to be of assistance to you as far as possible, but I can’t make you a gift of twenty thousand dollars. Convince me that it will be repaid ultimately – no matter in how long a time – and I will let you have it.”
Lake departed, discouraged. He had no security of any sort to offer, and had only asked for the loan as a desperate last resort, without the slightest expectation that he would get it. The company, he decided, had beaten him, just because no one else was clear-headed enough to see the opportunity, and he might as well get what little profit he could while there was still time. With this object in view, he went to see the colonel.
“I have decided,” he said, “to let you have the road for a bonus of five thousand dollars.”
“That is very kind of you,” returned the colonel, “but we can get it cheaper. You see,” he explained, with the disagreeable frankness of one who thinks he holds the winning hand, “the minority stock-holders were a little disgruntled when they learned of your deal – thought they had been left out in the cold – and they were ready to make very favorable terms with us. As we have a second option on the majority stock, at a somewhat higher figure, we have only to wait until your option expires and then take the little we need to give us control.”
“I’ll let you have my option for the two thousand you offered a month ago,” said Lake in desperation.
“It’s not worth that to us now.”
“One thousand dollars.”
“Why, frankly, Mr. Lake,” said the colonel still pleasantly, “we men of some experience and standing in the business world don’t like to have half-baked financiers interfering with our plans, and we aim to discourage them as effectually as possible whenever possible.” Then, with a sudden change of tone: “We won’t give you a damn cent for your option. You were too greedy.”
“Of course, you men of money and high finance are not greedy at all,” retorted Lake sarcastically.
Lake was too depressed to see it at the moment, but later it began to dawn on him that the colonel, usually astute, had made a grievous mistake. In his anxiety to impress upon the young man the futility of his avaricious schemes, in the face of such wise and resourceful opposition, he had mentioned the fact that the minority stock had been brought within their reach. Had they already bought it, or had they only secured options on it? If already purchased, the purchase price would prove a dead loss, unless they were able to get enough more to secure control. To parallel the road would be to kill a company in which they were financially interested, in addition to incurring the considerable expense necessary for a new connecting link.
Lake went to Bington that afternoon, and returned the following morning. The game was his, if he could raise the money; they had bought most of the minority stock outright, being unable to get options on it. He was sure of victory now, if he could raise the money. He no longer wished to turn the deal over to any one else on any terms: he wished to carry it to the conclusion himself. But the money, the money!
He tried Belden again, but Belden still considered the security utterly inadequate for a loan of twenty thousand dollars. In truth, although Belden considered the outlook a little more promising now, he doubted the young man’s ability to handle such a deal, and it would take very little to upset all calculations. The company’s investment was not sufficient to prevent the abandonment of the road in some very possible circumstances, although it was ample evidence of a present plan to use it. Murray took the same view of the situation.
“It begins to look like a good speculation,” said Murray, “but I haven’t the money to invest in it, and I never was much of a speculator, anyway. I have discovered that, as a general thing, when the possible profit begins to climb very much over the legal rate of interest, the probability of loss increases with it. However, if you want to take the risk, that’s your affair, provided you have the money.”
“But I haven’t,” complained Lake; “that’s the trouble.”
“Too bad you’re not carrying enough insurance to be of some use,” remarked Murray.
“What good would that do?” asked Lake.
“Why, then you’d only have to convince your wife that you have a safe investment, and it’s always easier to convince your wife than it is to convince some coldblooded capitalist. Insurance ranks high as security, but of course the beneficiary has to consent to its use.”
“I never had thought of insurance as a factor in financiering,” said Lake. “I had regarded it more as a family matter.”
“It plays an important part in the business world,” explained Murray, “and it might even play a part in speculation. There is partnership insurance, you know.”
“I may have heard of it, but I never gave it any consideration.”
“It’s not a speculation, but a business precaution,” said Murray. “The partners are insured in favor of the firm. If one of them dies, it gives the firm the ready cash to buy his interest from the widow, without infringing on the business capital. Partnership insurance may sometimes prevent a failure; it may prevent several. Many interests may depend temporarily upon the operation of one man, and his sudden death might spell ruin for a number of people, unless they were protected by insurance. The policy is playing a more important part in the business world every day. There are lots of strange things that can be done when you fully understand it.”
“But that doesn’t help me,” asserted Lake impatiently.
“No,” returned Murray, “I don’t see how insurance could help you just now, unless you were to die. A policy won’t be accepted as security for a sum in excess of the premiums paid, for you might default.”
“I’m not the kind of man who dies to win,” said Lake rather sharply.
“Of course not,” replied Murray. “I was merely considering the financial possibilities of policies.” All insurance questions being of absorbing interest to Murray, he straightway forgot all about Lake’s predicament, and busied his mind with his own speculations. “There is so much that can be done with insurance,” he went on, “but I guess it’s just as well the public doesn’t know it all. Do you remember the case of Rankin, the banker who committed suicide?”
“Yes.”
“Well, Rankin couldn’t have done anything with our company, because the element of premeditation is assumed if death by suicide occurs within two years from the time the policy is issued. After that the manner of death cuts no figure, for the courts have held that an insurance company takes a risk on the mind as well as the body of a policy-holder, and, anyway, competition has cut out the old suicide restrictions. But there are companies that issue policies incontestable after the date of issue. Suppose Rankin, when he found his affairs in such shape that he no longer dared to face the world, had gone to one or more of these companies. A hundred thousand dollars – very likely less – would have protected his bank and provided for his family. He had already decided to kill himself, for his operations had been such that he could not hope to escape the penitentiary when discovery came, but he was ostensibly still a prosperous man. Many men of his standing insure themselves for extraordinarily large sums, to protect legitimately their business interests as well as their families.
“Not so very long ago we issued a paid-up policy for fifty thousand dollars on the life of one man, who died within three years, and we thought nothing of it. He was taking a risk on his own life then, for he thought he was going to live long enough to make a paid-up policy cheaper than the aggregate of annual payments, whereas there would have been a saving to his estate of a good many thousands of dollars if he had followed the other plan. However, that has nothing to do with this case; I mention it only to show that a man of Rankin’s apparent standing could have got insurance to any amount without creating comment. And, with an incontestable-after-date-of-issue policy, he could have protected his business associates and his family by the very culmination of his overwhelming disgrace. Why, a defaulter could use part of his stolen money in this way to provide for his family when the moment of discovery and death shall come, or a dishonest business man, facing ruin, could use his creditors’ money to make such provision, for insurance money is something sacred, that can not be reached like the rest of an estate. Oh, there are great dramatic possibilities in this business, Lake – tragedies and comedies and dramas of which the public knows nothing.”
“How does that help me?” demanded Lake gloomily, and the question brought Murray back to the realities of the moment.
“It doesn’t help you,” Murray replied, “but it’s an intensely interesting subject to one who gives it a little time and thought.”
Yet it did help Lake, although not at that moment. It was a new field, and Lake liked to explore new fields. A novelty that taxed his ingenuity appealed to him especially. True, he had enough to occupy his mind without entering upon idle speculation, but, when every other avenue to success seemed closed, his thoughts would revert to insurance.
“If it holds out such opportunities for others, why not for me?” he asked. “If others have entirely overlooked the possibilities, why may not I be doing the same thing?”
He met the colonel on the street occasionally, and the way the colonel smiled at him was maddening. There could be no doubt that the colonel considered the game won, but he was not a man to take chances: he had Lake watched, and the latter’s every move was reported to him. Even when Lake made another trip to Bington and endeavored to arrange a shrewd deal with some of the majority stock-holders, the colonel promptly heard of it.
“Accept my notes in payment for the stock,” Lake urged on that occasion, “and I’ll let you in on the profits of the deal. The traction company has got to get this road, but you can’t hold it up for a big price, because you were foolish enough to give it a second option. I can do it, however. Let me have the stock, and you can divide up among yourselves half of all I get in excess of the option price. My notes will be paid, and you will have a bonus of twelve or fifteen thousand dollars.”
But the stock-holders were conservative and cautious men, and the very fact that Lake could not command the money that he needed made them suspicious. As matters stood, they were sure of getting out of a losing venture with a small profit – at least, so it seemed to them – and they preferred that to the risk of losing everything in an effort to secure a larger profit. Furthermore, they were now on the side of the colonel, for his option was at a larger price. And the colonel was very confident – so confident that work was being rushed on details that would prove valueless without the Bington road. This was what made Lake desperately angry; it was humiliating to be treated as a helpless weakling.
As valuable time passed, his mind reverted again to the insurance field. His opportunity – the opportunity of a lifetime – was almost lost. The colonel, wishing to lose no time, had arranged for a meeting with certain of the majority stock-holders the day the first option expired. The option expired at noon, and the colonel would be ready to take over what stock he needed at one minute after the noon hour. This would not be very much, in view of the minority stock he already held, but the sanguine stock-holders did not know this: they expected him to take all of it.
“Some of them are going to find they’re tricked, just as I am,” Lake grumbled. “If I could only convince Belden of the ultimate absolute security of a loan! He wants to help me; he’s ready to be convinced; but – ”
People passing saw this moody, depressed young man stop short in the street and his eye light with sudden hope.
“By thunder!” he exclaimed. “Of course, I can protect him against unforeseen disaster, if he has confidence in my integrity!”
He was almost jubilant when he entered Belden’s office.
“Got the money?” asked Belden.
“No; but I know how to get it,” replied Lake. “You believe in my honesty, don’t you?”
“Implicitly.”
“You merely doubt my ability?”
“Your financial ability,” explained Belden. “You will do what you agree to do – if you can. I have no earthly doubt of your willingness, even anxiety, to repay every obligation you may incur, but, added to other risks, there is the possibility of accident.”
“If I eliminate that?”
“You may have the money.”
“On long time?”
“The time and the terms are immaterial.”
“I’ll come for it later,” announced Lake, and he departed, leaving Belden puzzled and curious.
Once outside, Lake stopped to do a little mental figuring before taking up the other details of his plan.
“I advanced five hundred to bind the option,” he reflected. “That leaves nineteen thousand five hundred necessary to put the deal through. Twenty thousand from Belden will give me just the margin I need.”
Murray was as much puzzled and surprised by the change in the man as Belden had been, and Murray, like Belden, was anxious to help him in any reasonably safe way.
“Am I good for five hundred for thirty days, if I give you my positive assurance that I know exactly how I am going to pay it in that time?” asked Lake.
“Why, yes,” replied Murray. “On short-time figuring you’re a pretty safe man.”
“Draw me a check for it, and I’ll give you my thirty-day note,” said Lake, “and my verbal assurance that it’s a cinch.”
Murray noted the confidence of Lake’s tone and manner, and drew the check.
“What are you going to do with it?” he asked.
“Pay a life insurance premium,” laughed Lake. “Give me an application blank and round up a medical examiner. I want a twenty-year endowment policy for twenty thousand dollars, and I want it put through like a limited express that’s trying to make up time.”
“I suppose you know what you’re doing,” said Murray doubtfully.
“You bet I do!” Lake spoke confidently.
“Oh, very well,” remarked Murray. “I don’t see how I can refuse business for the company, even if I stand to lose.”
“You won’t lose,” declared Lake with joyous enthusiasm. “I’m going to show you a new trick in the line of insurance financiering.”
After that, Lake haunted Murray’s office, and grew daily more anxious. He was a good risk, but certain formalities were necessary, and these took time, although Murray did his utmost to shorten the routine. Lake’s nervousness increased; he had Murray telegraph the home office; he grew haggard, for he had not counted on this delay; but finally, in the moment of almost utter despair, the policy was delivered to him. An hour later he was in Belden’s office.
“I want twenty thousand at four per cent., payable at the rate of one thousand a year, with interest!” he cried. “I’ll pay it, to a certainty, within sixty days, but I’m trying to make it look more reasonable, to satisfy you. You believe I can pay one thousand a year, don’t you?”
“If you live.”
“If I don’t,” exclaimed Lake, “there is insurance for twenty thousand in my wife’s favor, and duly assigned to you,” and he banged the policy down on the desk in front of the astonished Belden. “You can trust me to take care of the premiums, can’t you?”
“Your integrity I never doubted,” replied Belden, “and that obligation should be within your means.”
“My rule of life shall be: the premiums first, the payments on the note next,” declared Lake. “If I fall behind in the latter, the security will still be good. I only ask that anything in excess of what may be due you, in case of my death, shall go to my wife, and she, of course, becomes the sole beneficiary the moment you are paid. But, for the love of heaven, hurry!”
Instead of hurrying, Belden leaned back in his chair and looked at the young man with bewildered admiration.
“Such ingenuity,” he said at last, “ought not to go unrewarded. As a strict business proposition, your plan would hardly find favor with a conservative banker, but, as a matter of friendship and confidence – ” He reached for his check-book. “Such a head as yours is worth a risk,” he added a moment later.
Lake reached the office of the Bington road at 11:30 on the day his option expired. The colonel was already there, waiting. So were some of the majority stock-holders. The colonel was confident and unusually loquacious.
“Now that the matter is practically settled,” he remarked with the cheerful frankness of a man who has won, “I may admit that the young man had us up a tree. He succeeded in putting the other route through Bington practically beyond our reach, and forced us to take the risk of doing business with the minority stock-holders at a possible dead loss. But we knew he didn’t have the money, so we went ahead with our plans and our work without delay. A little ready cash – ”
It was then that Lake entered and deposited a small satchel on the long table.
“I will take the stock under my option,” he announced briefly to such of the majority stock-holders as were present. “I think I have got all I need, with the exception of what is represented by you gentlemen. It has been a pretty busy morning for me.” He emptied the stock certificates already acquired and some bundles of bank-notes on the table. “Colonel,” he said with a joyous and triumphant laugh, “you’d better sit up and begin to take notice.”
The colonel’s attitude and air of easy confidence already had changed, and his look of amazement and dismay was almost laughable.