The Best Policy

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.”