Chapter IX: The Web of Fate (2)

Anything to get Betty away from the companionship of that dangerous young Virginian! To divert her with yachting and tennis and lawn-parties and picnics, in the company of sound and wholesome graduates of the Harvard “Gold Coast,” their blood free from the hereditary virus of divorce! But both Cornelia and Betty were obdurate; they were going to stay cooped up in that hot little apartment all July and August, to consult lawyers and organize committees and raise funds for the defense of two anarchist bandits!

XI

The men of the Thornwell family indeed had their hands full that summer. The expected post-war collapse had come--or rather it had been brought about by those who realized that prices had got too high, and that “deflation” was necessary. Naturally, these men wanted to deflate everybody but themselves, and having the power, they did so. The heads of the great banking groups, of whom Rupert Alvin was one of the most careful and conscientious, had devised what they called the “Federal Reserve System,” a chain of banks financed by the government and run by the bankers; its function was to enable the great bankers to save themselves in times of panic, by issuing vast sums of new money, and lending it to the big industries, whose stocks and bonds are the mainstay of banking credit. That meant that when a panic came, it was the little fellows and the outsiders who were “deflated,” while the big bankers and their friends sat on a rock and waited for the storm to blow over.

Having this power in their hands, Rupert and his associates in the course of that summer of 1920 had their Federal Reserve banks suddenly raise the discount rates in the farming country; the result of which was to force the dumping of the country’s farm produce on the market. Prices collapsed to a point where most of the farmers were bankrupt, and in the Northwest there were whole counties with every single farm sold for taxes. Meantime the big industrialists of the East, having bank-credit, were able to hold their products, and close down their plants and wait.

But if Rupert and his Pilgrim National crowd thought they were going to have a happy time riding that storm, they learned a sad lesson. The saying that uneasy lies the head that wears a crown, applies to the kings of modern credit as well as to those of Shakespearean drama. It was as if Rupert were the guardian of a huge honey-pot, and had the job of apportioning its contents to all the flies in New England. They swarmed about him, making a quite terrifying buzzing--and it was a fact that many of them had stings, more or less dangerous, and threatened to use them, and sometimes did. Impossible for a great banker to sleep with all that clamor in his ears! Impossible for any member of his family to sleep--because there were lady-flies as well as gentleman, and they too could buzz and sting!

To drop metaphors, it was a fact that a small group of bankers had to decide, during that panic, which industries of the community were to be saved and which were to go to the wall. And needless to say, in a place like Boston, it was not a question of vulgar material efficiency, it was a question of social status. Who was who, and who was married to whom, and what was the relative blueness of this blood and that? The difference between the attitudes of Boston and New York in this matter are set forth in a story which all financial men delight to tell, about the New York banker who wrote to a Boston friend, saying that he had a position for a capable young man. The Boston banker sent one, with a letter explaining that he was a great-nephew of the late Josiah Quincy Thornwell, a nephew of John Quincy Thornwell and of Rupert Alvin, a cousin of the Cabots, and so on. Whereupon the vulgar New Yorker dismissed the applicant and sent a telegram, reading: “I did not want a young man for breeding purposes, I wanted one for banking.”

The emergency now was the most desperate the Boston bluebloods had faced for a long time. It was no mere play question, like belonging to a Sewing Circle, or getting your daughters into Camp Putnam and the Friday dances, or your sons into the “Porcellian” and the “Alpha Delta Phi.” No, it was a question of your very life-blood, that privilege upon which your family existence was based. So you forgot your good manners, and fought as your ancestors had fought, in the days before they had any manners. You threatened and stormed, and raked up ancient, long-buried family skeletons, and made life miserable for a great banker who had for years been suffering from high blood pressure, and had been warned by Morrow, eminent authority upon diseases of the rich.

Rupert became morose under the strain. His pink and purple bulges, which had seemed to be radiating geniality, now took on the aspect of a threatened explosion. He fell to grumbling about human nature. Nobody cared about anything but money; friendship, family pride, honor, all were gone. He would carry his burden of sorrow for days, and suddenly it would become too heavy, and he would dump it in some quite unsuitable place. An elderly widow, a friend of Cornelia’s, sought him as adviser about the purchase of bonds, and the great and busy head of the Pilgrim National Bank kept the astonished lady for half an hour while he impressed upon her the solemn duty of guarding her property. “Hold on to it! You have nothing else--absolutely nothing! When it is gone you will discover that nobody respects you, your friends have no use for you. Nothing counts to-day but money!” The widow-lady might have had her feelings hurt, but she understood that it was impersonal, a revelation of the banker-soul.

But for the most part Rupert kept his pessimistic thoughts to pour out upon his spouse in the privacy of their chamber, after the lights were out, and they lay in the chaste retirement of their twin beds, under brocaded blue silk counterpanes. He would expatiate upon the abnormal greediness of this one and that, and after he had begun to snore, Deborah would lie still and petition the Lord to soften the hearts of the greedy ones, and spare her good and noble husband, who was sacrificing his very life to preserve sound and conservative banking in New England--which meant, of course, banking under the control of the Pilgrim National group.

XII

There are some whose claims were not to be questioned. Unthinkable that any Thornwell should go to the wall, or any one who could claim kinship, even by marriage. Those huge Thornwell Mills had to have many millions of credit, to enable them to store their manufactured products, and turn off their operatives to starve. And of course they got it; you have only to imagine the hysterics that Clara Thornwell Scatterbridge would have had in the boudoir of Deborah Thornwell Alvin, if Rupert had dreamed of refusing! John Quincy Thornwell needed a small fortune, for a shipping deal he had been putting through on the side; and he got it from Rupert’s bank. Rupert also needed a fortune, for some of those subsidiary plants which he and Henry Cabot Winters had taken away from Jerry Walker, and had kept all to themselves. Rupert got this money from the Fifth National Bank, of which John Quincy Thornwell was president. So these big fellows shifted millions about from their right-hand pockets to their left-hand pockets, and shrewd lawyers like Henry Cabot Winters were there to tell them exactly how to do it, so they need never worry if some spy told on them, and caused a government bank-examiner to drop in.

They knew that their rivals had spies on them, because they had spies on their rivals. And when these spies would bring in reports of what was going on, Henry Cabot Winters and the other legal spiders would be called in to consider how to meet the rivals’ moves. If it was discovered that some little fellow, having less expensive legal talent, had slipped up somewhere, and done something which the law did not allow, then was the time to use your pull with the bank-examiner, whom you had caused to be appointed a few years ago, and whom you were going to make into a bank-president in the course of another year or two--after he had completed the job of putting your rivals out of business.

That was the way the blue-bloods kept the banking industry a strictly blue-blooded affair. The foreigners, and especially the Jews, had got into everything else. For decades they had been boycotted as department-store owners, but now several of the biggest and most successful stores were in the hands of Jews. They had got clothing and wool and leather; they had the theaters, and were breaking into law and medicine--but they were never going to get the banking-business, not if Rupert Alvin and the rest of the “high hats” could prevent it. And they could!

At this time there was a Jewish banker who had broken into the reserve. Simon Swig was his name--which in itself was enough to demonstrate the impropriety of allowing a Jew to become directing head of a bank! He had come into the country as a common immigrant, and now had got hold of the Tremont Trust Company, an honorable institution, and was running it on bargain-day principles--paying five and a half per cent on savings accounts, and advertising the fact, which was unethical, but brought in the business. He was a rascal, so the blue-bloods said, and doubtless it was true, but you had to remember that in high finance rascality is a question of degree. The respectable bankers were breaking any number of laws, but having the banking authorities in their clubs, they were not punished. Neither were they exposed, because they had the newspapers, and their “news bureaus,” run by large stout subsidized “experts”--whose expertness lay in making the public believe whatever Rupert Alvin and men of his sort desired.

In the course of that chain of troubles, the state bank-examiners swooped down one morning and tacked a notice on the door of the Tremont Trust Company, to the effect that it was closed and forbidden to do business. And that was all there was to it--the Tremont Trust stayed closed, and it didn’t do any business. If it had been a “blue-blood” bank, it would have been “tided over”; instead of which it was turned over to a “blue-blood” receiver, and paid its savings depositors a hundred cents on the dollar--which seemed rather to justify the claim of Simon Swig that it had been sound all along.

XIII

What started the trouble that summer was the problem of Charles Ponzi. An Italian immigrant who had come to America about the same time as Vanzetti, and with even less money in his pocket, Ponzi, too, had washed dishes for a living; but he had not wasted his time dreaming about “joostice”--no, he was the sort of immigrant America wants, he had dreamed of making a million dollars in a week, and he had done it. He discovered a curious situation in international exchange, so he said; it was possible to buy postal coupons in Vienna, and sell them at a higher rate in Switzerland, and thus you could turn a thousand dollars into twenty-five thousand. It made good advertising copy, and was no more false than what the big bankers were telling the public about their Federal Reserve System. Anyhow, Ponzi opened a dingy little office in School Street, quite in the correct Boston tradition--for many of the big New England corporations had dingy little offices in some of those two-hundred-year-old houses in dark and narrow streets which had been laid out by cows.

Charles Ponzi advertised that he would sell you a forty-five-day certificate, which you were free to redeem at any time, but if you would wait till the end of the forty-five days, you would get fifty per cent interest. The tidings spread among the million inhabitants of Boston, and all those persons who cherished the dream of getting rich without working came to buy certificates--which meant that Ponzi had approximately a million customers. Such a mob of people tried to get into his dingy office all at once that the police reserves had to be called out to keep them from being crushed to death. In that suffocating room you saw rich ladies in silks and jewels, newsboys, street peddlers, workingwomen with babies in their arms, scrubwomen clutching in their hands the earnings of half a lifetime on their knees. They all wanted to give it to Ponzi, and he took it, and fulfilled the immigrant’s dream by buying himself a palace in the country, with the most expensive custom-built limousine in Boston to bring him to town.

Ponzi was imperiling the savings banks by causing the public to draw out all their money; he was buying into the big trust companies, and in danger of becoming a real banker. Worse yet, he was filling the public mind with unrest, talking recklessly to the newspapers. He kept saying that in making a hundred per cent profit in three months he was merely doing what many big bankers were doing--the difference being that he was giving the public fifty percent, whereas the big bankers gave only five percent. If any one were to say how near to the truth that was, the person would not be believed, so it would be useless to say it.

The bank-examiners and district attorneys got busy, and filled the papers with rumors that Ponzi was about to be arrested. It was difficult to take action because the ex-dishwasher was now worth about twelve million dollars, and actually had five millions cash in Boston banks, and nobody so rich had ever been arrested in New England. Moreover, he had hired a very able lawyer, who was later on disbarred as a “fixer”; he paid that lawyer a million dollars before he got through, and would undoubtedly have got off, had not Rupert and his crowd been so determined to get him out of the way.

As often occurs with financial storms, this one got out of control, and brought down several institutions: the Cosmopolitan Trust, the Prudential Trust, the Fidelity Trust--it was a rollcall of respectability. It so happened that the Commonwealth of Massachusetts had several hundred thousand dollars in these banks, and several counties had as much. The city of Cambridge, the home of Harvard University, just across the river, was stuck for half a million--the greater part having been got by a trick played upon the city treasurer a few months before the crash. All this caused a terrific scandal, and a long train of consequences most distressing to Rupert Alvin and his friends. For the examinations of the banks disclosed that many of the state legislators had been borrowing money without any security, and had used this money to buy stocks in public utilities, while passing a bill to triple their value.

Not so long ago the Pilgrim National crowd had driven the Boston Elevated Railway onto the financial rocks, and taken it over; then, in order to put it back on its feet, they had jammed through the legislature a so-called Public Control bill, whereby the Commonwealth guaranteed dividends to the Elevated stockholders, which made necessary a ten-cent fare. So here was the blue-blooded and high-hatted and in all ways ineffable Rupert Alvin playing Santa Claus and angel to the politicians and legislators of his Commonwealth! The disclosure was half a year in the future, but that only meant the prolonging of Rupert’s worry; for of course he knew what was in the records of the banks, and he knew that when the public has lost a lot of money and become furiously angry, it is much harder to keep news out of the papers.

XIV

Another trouble looming, if possible even more serious! Jerry Walker had come back from his nervous breakdown, and had found out some details of the intrigue by which Rupert and Henry Cabot Winters had persuaded the other bankers to join in taking his ten-million-dollar properties. Jerry had consulted lawyers, and made a deal with one of them, a bristling little bull-dog of a man who had taken many a million away from big bankers on previous occasions. Now, under the law, Jerry had a right to put questions to Rupert, as to what Rupert had done to him, and Rupert was compelled to answer, under penalty of being considered to have admitted his guilt! So there would come to the Pilgrim National crowd and their lawyers long letters full of questions, agonizingly direct and to the point; and there would be conferences of great financial and legal personages, and private conferences in Rupert’s study late at night, in which Rupert and his brother-in-law would go over what they had done to Jerry, and many times wish they had done it a little differently!

Betty Alvin found out about this, because she ran into Lucile Walker in the lobby of one of the hotels. They had not met since Betty’s departure for Europe, more than a year ago; so they rushed into each other’s arms, girl fashion, and then adjourned to the tea-room to talk things over. Lucile had solved her financial and other problems in the good old established way; she was now Mrs. Percy G. Townsend, her husband a manufacturer of some kind of electrical equipment. He was young and enthusiastic, and so was his wife, and they were going to work hard and build up a business, and then some day one of the big banking groups would take it over.

Betty told a little about her adventures in Hungary and Russia and Plymouth, Massachusetts; after which there was an embarrassed pause on Lucile’s part, and she said, “I suppose you know what Papa is doing?” When Betty said she didn’t, Lucile told about the suit that was coming; and when Betty said that she was not taking her father’s side in his business fights, Lucile told more of the story. It was going to mean a dreadful lot of publicity for all of them, because those big State Street bankers would be put on the witness stand and questioned about the deals they had made, and how they had divided Mr. Walker’s properties. Betty said she had told her mother that she would never touch any of that money; just now she was wrestling with the problem whether she ought to take any money at all from her father. She was able to earn her own living, and wanted to--but also she wanted to give her time to organizing a Sacco-Vanzetti defense, and she couldn’t earn a living at that.

Betty went home and told her grandmother; and so when Cornelia happened to meet Henry Cabot Winters, she was able to pose as a woman of the world, in touch with secret news channels. Henry, of course, had no trouble in guessing how she knew, and there developed a curious situation. A couple of years ago he had been indignant at the idea that Jerry Walker might be using Cornelia as a means of getting information from the Thornwells; but now he wanted to use Cornelia to get information as to the plans of Jerry Walker! He went so far as to propose a “swap”: if Cornelia would find out all she could from the Walkers, Henry would use his inside connections to help Cornelia’s beloved bandits. He would get in touch with the officials, and find out what their plans were, and might even be able to find some way to get those rascals off.

Somehow this tickled Cornelia’s funny-bone, and she burst into laughter. “You and Rupert must be badly scared,” she said; and after Henry had made sure that she was not going to talk to the Walkers about it, he admitted that they were. It was not that they had done anything wrong--nobody in Boston ever does that--but it was going to be such a mess, to have the letters and telegrams and confidential memoranda of a great banking project spread out in the newspapers.

“Can’t you clean out your files?” asked Cornelia, with a twinkle in her eye. He answered that it wasn’t so easy as it sounded, because one document referred to the next, and there were copies in a dozen different banks. If you took out very much, your employees were bound to know it, and that exposed you to spying and blackmail. Uneasy lies the head that wears a crown!

XV

Troubles! Troubles! Even in far-off Italy, that summer and fall, people were occupied in making troubles for Rupert Alvin and his associates. The big bankers had filled up their vaults with the gold-embossed and red-sealed financial promises of European governments; and vain was the hope to save themselves by unloading this paper on the public. Because after a bank customer had bought it, he generally came back to leave it as security up to eighty percent of its market value; and how could Rupert refuse to lend money on a bond which he had certified as an investment for widows and orphans? So it had come about that every time a European premier sneezed, Rupert Alvin jumped in his sleep; when the anarchists paraded in Milan or Turin and waved their black flags, Rupert couldn’t sleep at all.

That summer the radical labor unions of Italy made their long expected coup--moving in and taking possession of the principal steel and machine plants of the country. But having got in, they didn’t know what to do next, because they could not turn a wheel of the plants without coal, and the coal had to come from England or America, in English or American ships, upon English or American credit. Were English or American coal men going to extend credit to Italian anarchists, anarcho-syndicalists, communist-anarchists and left-wing socialists? The coal men of England and America, like all the other big business men of those countries, were going to do what their Rupert Alvins told them; and the Rupert Alvins said thumbs down on Reds. So the Italian workers had to make peace with their masters, and give up the plants; and then it was necessary for the masters to organize a counter-revolutionary government, to break up the labor unions and kill off the leaders. To do that they had to have the machinery of reaction and slaughter--and where else should they come for it but to America?

So it happened that Rupert Alvin, in the midst of all his troubles with Ponzi, and Simon Swig, and the half dozen closed banks, and the threatened Elevated Railway scandal, and the hiding of evidence in the Jerry Walker case, and the unhappiness over Betty and Cornelia--with all this nightmare-load riding his shoulders, Rupert Alvin had to interview agents of the banking and manufacturing interests of Italy, and listen to plans for the coup d’état which was to turn that country into a dictatorship of big capital. No possible way to avoid it--unless all the money that had been loaned to Italy during and since the war was to be lost. The bankers of Boston and New York and Philadelphia and Chicago had to get together and do for Italy what they had already done for Hungary and Roumania and Czechoslovakia and Finland and Esthonia and Latvia and Lithuania--so many miserable little bonded states that it gave a hundred percent American a headache to learn the names.

And meantime Bartolomeo Vanzetti paced his cell, in the space eight feet by one and a half allotted him for pacing. He knew what was happening, because his friends brought him a few facts, and he could reconstruct the rest, with that clear mind which understood social forces. He knew that it meant the ruin of all his hopes, all chance of freedom for the peasants and wage-slaves of Italy for years, perhaps decades. He knew what the American bankers would do; he foretold how, when the time came to float the loan, they would have the newspapers bought and the propaganda ready, and would carry the mass of Italian-Americans into reaction with them. Meantime they had Vanzetti in jail, where he was safe--and they were going to see to it that he stayed!