On the top floor of the Salamander office in William Street a man stood silent before a map desk on which was laid an open map of the city of Boston. It was late in the afternoon, and the level rays of the declining sun came in redly at the window. The man standing at the desk did not notice them; he was looking stolidly from map to newspaper, from newspaper to map, as from the hysterical and conflicting accounts of the conflagration he tried to measure the extent of the calamity.
The morning papers had told but little, since they had gone to press when the fire was only a few hours old; and as the day was Sunday, and a holiday, there had been available only a few of the usual flock of evening sheets which begin to appear in New York shortly after breakfast. With one of these by his elbow, in the fading light of the late February day, F. Mills O'Connor stood, stonily and with hard eyes, gazing at ruin.
He was alone in the office, since the one other person who had been with him had, under instructions, departed. This was George McGee, the Salamander's map clerk for New England. There was no reason whatever why George should have visited William Street on a Sunday; nevertheless Mr. O'Connor, on arriving, had found him standing aimlessly and undecided in front of the door.
"What do you want here?" he had said to George, coldly.
"Nothing. That is, I came over from Brooklyn to see if any one wanted anything. I thought maybe somebody would be down, and they'd need some one to help take off the lines, sir."
"Well, I don't need any help. You can go," said the other.
"I didn't know. We've got a lot of business in that part of Boston, sir. I know where all the dailies are filed. You'll need me if you're going to go over the lines, sir."
O'Connor considered.
"Well, come up, then," he said ungraciously. "We'll have to walk up; there's no steam on."
It was then three o'clock. At not later than a quarter to four Mr. O'Connor had definitely determined that unless the report of the conflagration's extent had been exaggerated beyond all human connection with the facts, the Salamander had sustained a loss in Boston which was considerably greater than its resources would permit it to pay. In other words, if the printed account were even remotely true, the Salamander was, as the phrase has it, insolvent. To put it even more shortly, the company was ruined. Facing this fact and its string of entailed consequences, the man most directly interested was silent so long that his youthful assistant became nervous.
"Pretty bad loss, ain't it?" he asked sympathetically.
O'Connor looked at him unseeingly. In his busy mind he was running through an imaginary calculation. It was somewhat as follows: Salamander's net liability in the section of Boston presumably destroyed, $600,000—Salamander's net surplus available for payment of losses, $400,000. Inevitably the problem ended: Salamander's impairment of capital, $200,000. And the fire was still burning. Boston could be rebuilt, but could the Salamander?
He turned on the clerk beside him with the savage and melodramatic gesture of an irritated musical comedy star, and the boy recoiled before him.
"That's all. You can go home," he said curtly.
Two minutes later he was left alone in the silent office.
At the best of times there was in the nature of Mr. Edward Eggleston Murch not overmuch genuine urbanity. Urbanity of the surface he had, of course; he called on it at need in very much the same way that he called on his stenographer. But of true courtesy or consideration Mr. Murch's makeup was singularly and flawlessly free. On the contrary he could, on occasion, summon to his face a congealment and to his eye a steely gleam which nobody admired but which all respected. Ordinarily this was either for his inferiors, or for those unfortunates who had come to cross purposes with him, or for those who had made blunders costly to him that his most glacial manner was reserved; but every one about the Salamander office knew of it, either by hearsay or by actual experience. Mr. O'Connor was removed from all danger of running counter to the Salamander's leading stockholder, so long as the company continued to make money. But what might now happen, Mr. O'Connor did not care to consider—and yet the topic engrossed his attention so deeply that darkness surprised him still adrift on the waters of this sea of doubt.
Not until the swift winter nightfall recalled him to himself did he remember the world around him; and when at last he groped his way down the long flights of dusky stairs to the street, his was the slow and inelastic step of a beaten man.
Mr. Murch had spent the holiday and the week-end at the country place of a fellow financier. To this retired spot news penetrated with decorum and conservatism. One was in no danger, at Holmdale, of acting on premature information, for all information which reached this sequestered Westchester chateau did so in the most leisurely and placid manner. For this very reason Mr. Murch shunned Holmdale and resorted to many a subterfuge to avoid the acceptance of divers invitations to sojourn beneath the medieval roof of its host, who happened to be a man whom even Mr. Murch hesitated to offend. In the present case, when on returning to New York early Monday morning he learned that one of the most terrible losses in fire insurance annals had occurred without his knowledge, it did not tend to sweeten his temper.
He did not go to his own office, but with a grim face started directly for the building of the Salamander. Once within its portals he immediately entered Mr. O'Connor's room. Mr. O'Connor was seated at his desk, with a pile of daily reports before him.
"How much do we lose in Boston?" the visitor demanded.
The President of the Salamander had been in the building during most of the past twenty-four hours, taking off the lines in the burned district on a special bordereau. Neither the Osgood office nor his special agent could be reached on the long distance telephone; and the newspaper accounts, even thus long after the fire, were still painfully vague and somewhat rhetorically hysterical. They talked much of the "devouring element," and the word "lurid" frequently occurred; but no reporter had been sufficiently practical to bound the burned district or to state specifically what buildings had or had not been spared. Still, they told enough. To the meanest intelligence it was patent that a tremendous catastrophe had taken place, that most of the section from School Street south to the railroad was leveled, and virtually everything therein was totally destroyed—except the fireproof buildings, which were still standing, scorched and shaken, stripped clean of combustible contents, but not fatally damaged.
O'Connor had the list in his hand. In his heart now was the calm absence of feeling which marks the man who has abandoned hope.
"I should estimate our net liability in the burned district at about $700,000," he said unemotionally.
Mr. Murch leaned forward in his chair.
"And the net surplus of the company is—?" he asked menacingly.
"You know what it is. It's half a million, roughly."
"Well, will you tell me what in the devil you mean by putting this company in a position to lose more money than it has clear?"
O'Connor, beyond caring now, actually smiled.
"Fortunes of war, Mr. Murch. You wanted a leading position in Boston, if you'll remember. I gave it to you."
"I didn't want any such position as my present one," rejoined Mr. Murch, in frigid tones.
"I didn't either, if you come to that," retorted O'Connor, promptly.
The financier's irritation was increased by this unexpectedly reckless attitude on the part of the man who should, he felt, be abased in sackcloth before him. He regarded the other with surprise, through his indignation.
"You take this remarkably coolly, I should say," he remarked.
"There's no use in getting excited—the eggs are smashed now. But just the same," returned O'Connor, with a flash of spirit, "I'm just as sore about this as if I owned every dollar of Salamander stock there is on the books."
The mention of the unit of currency reminded his companion of something else.
"What do you suppose the market is doing?" he said.
"I haven't the slightest idea," replied the other.
Murch lifted the receiver from the telephone at his elbow.
"Hello: give me Broad nine nine seven six. Is this Atwater and Jenkins? Give me Mr. Atwater—this is Mr. Murch speaking. That you, Billy? How's the market?"
He replaced the receiver with a snap.
"Everything off at the opening. Bad slump in Maryland Traction and P. N. T."
"It ought to go off some more when the fire companies in general start liquidating. There will have to be a big unloading to raise the amount of cash necessary to pay those Boston losses. I suppose, though, the British companies will send the money across—they usually do, and that'll help a little. That's the worst of these fires—they hit you going and coming. Suppose we lose seven hundred thousand; well, before we get through we'll have to sell eight or nine hundred thousand dollars' worth of securities, at present prices, to pay it."
"How much cash have we on deposit?" Mr. Murch inquired.
O'Connor handed him the last weekly statement in silence. The fact that the other man had expressed no definite intention was to him encouraging. It might be that all was not over yet.
"Roughly, our surplus," commented the financier. "Now, how about our other assets? Stocks and miscellaneous securities, $1,500,000. Only it won't be a million and a half by the time we get rid of them. Probably a couple of hundred thousand less. Encouraging, isn't it? In other words, this fire is going to cost us $900,000 before we're through. And the present question is, how are we to get through?"
O'Connor looked him over with an appraising glance.
"Well, the Salamander has paid good dividends for years," he said. "Probably more than most companies would have thought it prudent to pay—they'd have put a larger amount into surplus to take care of such a smash as this. And I've made the company a better money-maker on the underwriting side than it's ever been before—you'll admit that, I think. There's no reason why we shouldn't go on. My suggestion would be to assess the stock."
He awaited the answer nervously, toying with a penholder, not daring to glance at the other man. He did not have to wait long.
"Not much!" said Mr. Murch, coldly. "I'm going to get out of this as fast as I can, and I'm going to stay out, you understand. No more fire insurance business for me. It's the only business I ever made a complete mess of. The Salamander would have done better if they had never issued a policy—if they had merely let me invest their money for them. Now the next question is, how to get out. You are an insurance man and supposed to be a competent one—possibly you can tell me how to set about it."
"Do you mean to liquidate the Salamander—close up the company?"
"Whatever one does to extricate himself from this kind of a hole. What's the usual method?"
"The usual method," replied O'Connor, his face somewhat flushed at the other man's tone, "is for the stockholders to authorize an assessment on their stock, and continue. That apparently does not appeal to you; and if I understand you correctly, you wish to terminate operations and wind up the company."
"Exactly so. You catch my meaning perfectly."
"There are two ways, then," the other said. "One is to let the risks in force expire, paying the losses as they occur; that will take about five years. The other, which is the usual way, is to pay some other company to assume the liability on all our outstanding policies—to reinsure us. We pay a lump sum, and the other company pays the losses as the risks expire, instead of our doing so."
"I see the idea. But what company would do that? And wouldn't it cost a small fortune to get any one to? And isn't this a bad time to approach any company with such a proposition?"
"No, I don't think so. Some company might be glad to get hold of a large amount of cash which it could use to pay its own Boston losses, and then it could pay the losses on our outstanding business, which would come along gradually for several years, out of its own normal profits in that time."
Mr. Murch looked at O'Connor with more respect.
"That sounds plausible. How much would it cost—in round numbers?"
"Our reinsurance reserve is about $1,500,000. I should think a company might be found to take it over for about two thirds of that sum. You see, we have a valuable agency plant and a good business, and although you want to get rid of it, it would be considered by most companies as well worth having. The company that took over our risks wouldn't let them expire; that company would hold on to them and secure them on renewal."
"How can this be arranged?" Mr. Murch inquired.
It was like cutting off his right hand to reply, O'Connor reflected, but he did so.
"Mr. Simeon Belknap usually manages such matters," he said. "Naturally he doesn't manage them for nothing; but he does the trick, and he's much the best man for it. He has probably engineered four fifths of the important reinsurance deals that have gone through in this country. No one has ever discovered why these things gravitate so unerringly to him—but they do. He will undoubtedly be pleased to find you a reinsurer for the Salamander."
He rose from his seat. It was perfectly evident that the game was over, and only the tumult and shouting remained to die away. But Mr. Murch was not entirely through.
"Suppose we ask Mr. Belknap to come and talk it over," he proposed.
O'Connor shook his head.
"Don't do it. It would hurt your market. If he were seen coming in here at this time, the whole Street would know we were in trouble and getting ready to quit. It would be better to make an appointment with him somewhere else."
"As you say," agreed Murch. "Please arrange one for us as soon as possible."
"All right," said the man whom this operation would leave bare of position and prestige alike. "I'll get him on the phone at once."
It was late that afternoon when a three-cornered interview took place in a down-town office somewhat outside the customary espionage of William Street. Most of the talking was done by Mr. Simeon Belknap, who talked crisply and to the point.
"The figures you have given me, Mr. Murch," he said, "indicate that the Salamander's capital is impaired to the probable extent of several hundred thousand dollars. I assume from your coming to me in this way, that you have decided that it is not worth while trying to put the company on its feet. Is that correct?"
"How much would it cost to keep going?" asked the financier, bluntly.
"I should think you would have to assess your stock one hundred and fifty dollars a share. Yes, it would take $750,000 to put the Salamander in a position to continue in business with proper resources."
"Eliminate that possibility from the discussion," said Mr. Murch, tersely; and O'Connor's last faint hope died.
"There remains, then, to find some company willing to take over your outstanding business. Your present reinsurance reserve is about $1,500,000. Your available assets over capital, including your real estate and everything, will bring approximately $1,800,000. Mr. O'Connor tells me you will pay in Boston about $700,000. This leaves you $1,100,000. For this sum, or perhaps a little less, you can probably reinsure all your business now in force, leaving you, let us say, with your capital stock intact and perhaps $100,000 over."
"In other words," said Mr. Murch, "we'll get for our liquidated stock about 120;—stock which sold last week at 210!"
"Precisely. If I can get you a reinsurer on the terms I mentioned. And I think you'll be getting out pretty well. You're impaired right now, you know."
Mr. Murch's financial vanity was touched.
"After all," he said, with an effort, "I probably averaged only 150 for mine. I've got pretty fair dividends on it for some time. That'll get me out pretty nearly even. Well, Mr. Belknap, if you can arrange to reinsure the Salamander on those terms, go ahead."
"The directors of the company—?" said Belknap, suggestively.
"I either own or control a majority of the stock," replied Mr. Murch.
There was no more to be said. The President and the majority stockholder of a corporation whose days were numbered walked back to the office with hardly a word spoken between them.
These were troublous times in William Street. The Salamander was not the only company which had been hard hit in Boston. Many of the smaller underwriting institutions were tottering very close to the wall. Already two failures were known; a dozen others were suspected. But in Boston, where the stricken city lay impatiently waiting, most of the companies already had men on the ground, adjusting and paying claims. The Boston insurance district had fortunately been left untouched, so that the local records were intact, making the work of the adjusters much simpler than it would otherwise have been.
Whence was the money to come—this golden flood which now began to pour from a hundred coffers into the empty pockets of the sufferers? The large companies, for the most part, were paying without discount or delay, and the line of claimants at the Boston offices and adjustment bureaus never ceased. In New York, in London, in Hartford, wherever insurance companies had their home offices, securities were being converted into cash to meet this tremendous demand. And the golden stream that flowed toward Boston knew no stop.
Of all the companies doing a general business in the East, the Guardian had come through least scathed, its withers unwrung. Thanks to the raiding of its Boston business by the Salamander, the Guardian's loss, which was confined wholly to three-year and five-year lines unexpired, would not much exceed, according to Smith's computation, $100,000, even if all its claims were adjusted as total.
Smith's first work on reaching the home office had been to compute the actual liability of the Guardian; his second was a similar calculation for a corporation in which he had no financial interest whatever. He was engaged in this task when Mr. Wintermuth entered the office.
"Ah, Richard," said his chief, "I'm glad to see you safe. An insurance man in a fire is like a duck in a pond; but I'm glad to see you here, just the same. A terrible calamity!—a really terrible calamity! How much did we get? Wagstaff estimated it at one hundred and forty thousand, but of course we can't tell how far the fire actually went."
"He was pretty close to my figures," said Smith, with a smile. "It was a terrible calamity, sir, but not so terrible as if the Guardian had a half a million loss—instead of $107,500 at the outside limit."
"Are those the figures you have there?" inquired the President, glancing at the list on his subordinate's desk.
"No. I sent that list with the daily reports to the loss department. This is another one—even more interesting on some accounts. This is a list of the lines we didn't get."
"Ah! You mean—?" said Mr. Wintermuth.
"These are the lines that we have lost since we went out of the Osgood office."
"Indeed! What is the total?" asked the other man, with interest.
"I haven't quite finished, but I should say it would come close to $350,000."
"Which I suppose the Salamander got. I don't like to rejoice in other men's misfortunes, Richard, but there is a certain element of justice in that," said the older man, gravely.
"What interests me is, how much more than that they got," Smith returned. "Don't forget that Cole is clever, but not the careful underwriter Mr. Osgood is, and that O'Connor was out to make a record for premium income. If the Salamander's loss up there is less than $600,000, I shall be surprised."
"Their surplus isn't as much as that, is it? That will impair them."
"On the first of January their surplus was a little less than half a million."
"Oh, well," Mr. Wintermuth returned, "I suppose they'll assess their stockholders. That man Murch will probably get up an underwriting syndicate to handle it."
"But suppose he doesn't. Suppose they decide to reinsure and quit. Murch has the reputation of being a bad loser," said Smith, slowly.
His chief looked at him.
"Let them reinsure, then. But how does that affect us?" he said.
"Why shouldn't we reinsure them?" said the Vice-President.
"What!" exclaimed Mr. Wintermuth. "What's that you say?"
"I say," returned Smith, "that the Salamander is far more likely to reinsure than to stand a heavy assessment. And we want that business of theirs. We have a little score to settle with the Salamander, sir."
"Yes, yes," admitted the President. "O'Connor has treated us very badly; still, it has worked out very fortunately for us. And at any rate," he added, "I do not believe in allowing personal animus to govern one's business acts or policy."
It was a sounding phrase, although not quite new.
"Neither do I," said Smith, promptly; "but this is more than an act of poetic justice. Of course there's a certain satisfaction in finding that one of the packages stolen from us contained a bomb which blew up the burglar—but how much more appropriate it would be if the same explosion hurled the rest of the stolen property into the hands of the original and rightful owners. And besides that, the Salamander business is well worth putting on our books—and there's a lot of it."
"Yes. Too much, in fact," said his chief. "Our resources are not sufficient to permit our taking on such a load."
"I admit that," replied the younger man. "We will have to increase our capital a half a million. And now's the time to get it. We can issue it at 200, which is rather less than the present stock is selling for, and the premium will take care of our surplus when we take on this new business. I believe our stockholders will back us up. While other companies are asking their stockholders for more money to pay their Boston losses, we are asking ours to put us in the first rank of underwriting institutions in the United States."
Mr. Wintermuth looked at the young man before him, a long, grave look.
"Richard," he said at last, "I am fond of you, and I suppose that having no son of my own to be proud of, I am proud of you, too. But sometimes you make me feel a hundred years old."
"You needn't," answered Smith, affectionately, "for you've taught me almost all I know. If I am a little more aggressive than I might be, perhaps you were too, at my age. The question is, what is to the best interest of the Guardian?"
"That is a question," said Mr. Wintermuth, "for the directors to decide."
"Of course," returned the other. "But I should be surprised if our directorate didn't take a broad and liberal view of it. Immediately following this conflagration, when so much insurance capital has been wiped out, there will be a need for more. We will need our share, for we're going to do a bigger business. Even if we don't take over the Salamander or some other company, we're going to swing a much heavier premium income this year than last."
"Well," said the President, "since you have brought up the question, I should fail in my duty to the company if I should let an opportunity for extending our business pass by without submitting the matter to the directors. If you find that the Salamander business is for sale, and they want us to make a bid for it, I will call a special meeting of the board and lay the facts before our friends."
It was not for some little time that there was any palpable result of the meeting, when secured, for neither Smith nor Mr. Simeon Belknap was a man to hurry a matter to the prejudice of his interests. Following his conference with O'Connor and Mr. Murch, Mr. Belknap spent parts of several days moving quietly and almost imperceptibly about on investigations of his own. It was not every company which had facilities for extending its premiums some three million dollars a year; and besides that, most of them were being kept so busy in Boston that they had no leisure to consider so large a proposition.
Both Smith and Mr. Wintermuth were by this time aware that Mr. Belknap was handling the Salamander's affairs, and the Vice-President kept on that gifted gentleman as close an espionage as he could contrive to keep. After observing him casually engage in conversation three prominent underwriting executives, any one of whom might be supposed to be in a position to take over the Salamander, Smith determined to take the bull by the horns. On the third day after the directors' meeting he took pains to meet Mr. Belknap and similarly to engage him in casual conversation.
When, a little later, they adjourned from the Club to Mr. Belknap's office, the matter was practically settled, subject to the ratification of the directorates of both companies.
The Boston conflagration was not quite two weeks a thing of the past when Mr. Belknap signified that he had succeeded in his task of securing on satisfactory terms a purchaser for the Salamander, and if the necessary executives of that company would be in Mr. Murch's office at two-thirty that afternoon, he would bring the contracts for signature.
Over the telephone Mr. Murch said: "All right. Bring them." To his secretary he said: "Ask Mr. O'Connor to be here at two-thirty this afternoon."
At two-thirty Mr. O'Connor appeared.
"Hello—glad to see you," said Mr. Murch, urbanely. Now that the matter was coming out with such a comparatively favorable color, he saw no reason to abandon the amenities. In the first flush of anger they had suffered somewhat, but that was all over.
"Good-day," returned O'Connor, shortly. He had been out on the Street for three days, trying to catch the scent of some foreign reinsurance company ignorant of his impending change, so that his fall might not seem too humiliatingly flat, when the news should be wired every agent of the Salamander to cease writing. He had met, however, with no success, so he cannot be blamed if his response to Mr. Murch was a trifle lacking in enthusiasm.
"You're prompt," proceeded that gentleman, ignoring his visitor's lack of cordiality. "I'm glad you're on time, for Mr. Belknap just telephoned that he was on his way here with the contracts and the representative of the company that's taking us over."
"Did he say what company it was?" inquired O'Connor, with the first gleam of interest he had shown.
"I don't believe I asked him. There seems to be a lot of secrecy about these deals, and I didn't care a hang, myself, anyway. He said it was a thoroughly responsible company, and our policyholders would be fully protected. They'll be here in a minute."
"I wonder what company it is," the other man said, reflectively, half to himself.
"You'll know in a moment, because, unless I'm wrong, the boy is bringing Belknap's card now."
The boy entered with the card in question.
"Ask them to come in," said Mr. Murch.
O'Connor stood looking out the window. His gaze wandered over the well-known roofs of the buildings along William Street, and a momentary pang shot through him to think that under those roofs to-morrow there would be no place for him, and that his venture was all to begin again. He no longer felt any sense of grievance, any animosity against Murch. He was merely wondering vaguely at Fate, and at this latest whim of hers. So deep was he in his reverie that he scarcely noticed the entrance of the expected callers until he heard a voice that recalled him to actualities.
"Mr. Murch, let me make you acquainted with Mr. Smith," Belknap was saying; and O'Connor turned sharply back from the window.
To Mr. Belknap's courteous greeting he gave little heed, but like a charmed canary before a cobra his look rested on the second man of the pair. This was a young man with level, gray eyes, who nodded slightly and cheerfully said:—
"How do you do, Mr. O'Connor."
No word said O'Connor; his eyes neither lowered nor turned aside their fascinated gaze. Each of the four men stood still, waiting for the little drama to end: a long minute.
"Here are the papers, Mr. Murch," said the intermediary, at last, turning to the financier.
"All right; let me look over them," said the other.
Five minutes later the Salamander had ceased to exist.
