In professional quarters the Scheftels corporation was regarded as an interloper from the day it set foot in the financial district.

Its first offense was to reduce its commission rates. This move set the whole Curb against the enterprise. But as the play progressed it proved to have been unimportant in comparison to the unspeakable crime of telling the truth about other people's mining propositions that were candidates for public money. The Scheftels corporation had laid it down as a set rule that an established reputation for accuracy of statement was a great asset for any promoter or broker to have. To gain such prestige the principle was followed in the nation-wide publicity which emanated from the house that, no matter whom the truth hurt or favored, it must be told always, when publishing information regarding the value of any listed or unlisted security. Space in the Scheftels Market Letter or the news columns of the Mining Financial News was unpurchasable.

The enforcement of this rule was a wide departure from prevailing methods. But that didn't make us hesitate. Having felt the speculative pulse for years, I knew its throb. The public, after losing billions of dollars, were becoming "educated." The rank and file of mining promoters—high and low—in Wall Street still believed that "one is born every minute and none dies." But I and my associates didn't. An uneducated public had been unmercifully "trimmed" in scores of enterprises backed by great and respected names. Speculators were ravenous for the truth. We decided to give it to them. We gave it to them straight.

This publicity system brought about the ruin of the Scheftels corporation through the powerful enemies it made. The policy was right all the same. Persisted in, nothing was or is better calculated to strengthen the demand for all descriptions of meritorious securities. The Scheftels corporation was the pioneer in the exploitation of this principle as a fundamental and underlying basis of brokerage and promotion. In pioneering this policy, however, the Scheftels company was sacrificed to the prejudices and wrath of the old school of promoters.

THE FIRING OF THE FIRST GUNS

Before the Scheftels corporation was on the Street three months it almost came a cropper. On the strength of excellent mine news it purchased nearly 300,000 shares of Rawhide Coalition in the open market, up to 71 cents per share. A determined drive was made against the stock by mining-stock brokerage firms which had sold it short. Bales of borrowed stock were thrown on the market by the crowd operating for the decline. The Scheftels company took it all in. Letters and telegrams were sent broadcast by market enemies urging stockholders to sell. A powerful clique had been losing big sums on the rise.

The Scheftels company published advertisements calling upon margin traders to demand delivery of their certificates. This expedient proved of small utility. The brokers continued to hold off deliveries to customers and sold and delivered to us all the stocks that they could borrow or lay hands on. The continued selling finally made inroads on the Scheftels corporation's cash-reserve to a point that forced it one day to stand aside and leave the market to the sharpshooters. That day, in a few hours, approximately half a million shares of Rawhide Coalition changed hands out of a capitalization of 3,000,000 shares. The corporation's loans were called. This forced it to throw large blocks of stock on the market. A sharp break ensued. That was just what was wanted by the interests which were gunning for us. They covered their short sales at great profit.

In the midst of the mÊlÉe the Scheftels company tendered a Stock Exchange house of great prominence, which had loaned it for the account of a Salt Lake firm of brokers $12,500 on 50,000 shares of Rawhide Coalition, the money to take up the loan. A representative of the Stock Exchange house sheepishly stated that his firm had loaned part of the pledged stock to out-of-town brokers. He asked for time. Under threat of dire consequences the Stock Exchange firm bought stock back from us in the open market that afternoon to supply the deficiency, and then made delivery of this stock back to us in lieu of that which they had parted with. It had been specifically stipulated by the Scheftels company when the loan was made that the certificates must be held intact and that the stock must not be loaned out or sold while the money loan was in force.

This experience was repeated frequently during the Scheftels career on the Curb. It cost B. H. Scheftels & Company more than one million dollars, during the nineteen months of its existence, in giving loyal market support, in times of "professional" attack, to the stocks it had fathered or promoted and felt moral responsibility for.

Time and again the Scheftels company found among stocks delivered to it, against purchases made in the open market, the identical certificates it had pledged with loan-brokers as collateral for loans, and which had been hypothecated by it with the specific proviso that the certificates were not to be used. It opened our eyes to one of the most commonplace practices, not only on the Curb, but also on the Stock Exchange. Hardly a failure occurs on any of the Exchanges or on the Curb that does not reveal customers' certificates, which were originally pledged with the understanding that they were not to be "used," in the strong-boxes of others.

The first grievous offense of the publicity forces of the Scheftels corporation against Wall Street's "Oh-let-us-alone" promotion combine was a wallop in April and May, 1909, through the Scheftels market literature, at Nevada-Utah.

The combination which owned control took with bad grace the strictures on the property. We heard an awful underground roar. At that time the price of Nevada-Utah stock was around $3. The Scheftels Market Letter said that there was probably not 30 cents of share value behind the property. The price immediately began to crumble. It has been tobogganing ever since. The stock at the beginning of September of this year was quoted at 37½ to 50 cents.

Such a thing as printing facts which would enlighten stockholders and the public as to the actual value and condition had not before been heard of when such enlightenment ran contrary to the plans of strongly entrenched promoters on the Street.

The campaign against Nevada-Utah, therefore, directed widespread attention to B. H. Scheftels & Company and the Mining Financial News.

Following the Nevada-Utah disclosure, the Daily Market Letter and the Weekly Market Letter of the Scheftels corporation and the Mining Financial News took a good, strong, husky "fall" out of the La Rose Mines Company, capitalized for $7,500,000. The La Rose owns one of the greatest producing mines in the Cobalt silver camp. A market scheme was in progress, with La Rose as the medium, and W. B. Thompson, of Nipissing fame, as a chief manipulator. We called a halt to the game when the price reached a "high" of $8.50, and saved the public a huge sum of money. Under our campaigning the stock declined to $4, a decrease of $6,750,000 in the market value of the capitalization. This made W. B. Thompson and his associates the implacable enemies of the Scheftels company and myself. We didn't worry much. We were catering to the public. Indeed, we were pleased with our work.

Following this incident, the Scheftels Market Letter and the Mining Financial News took a smash at a mining-stock deal in which W. B. Thompson and the Guggenheims were jointly interested. It was the now notorious Cumberland-Ely-Nevada Consolidated merger. Later the merger was enlarged and took in the Utah Copper Company, or rather the Utah Copper Company took in the others, and the Scheftels propaganda found another opportunity to do a great service for the stockholders of Nevada Consolidated.

Our attack hurt the Guggenheim reputation among investors all over the country and contributed to reduce their influence over the large stockholding body—more than 6,000 men and women—of Nevada Consolidated. Though finally successful, the Guggenheims were sore from the lashing and exposures to which they had been subjected. As for the Scheftels company and the Mining Financial News, they had still further established the honesty and value of their publicity service.

A market scheme to balloon the price of Ray Central Copper Company shares to several times their value was a precious enterprise against which we trained our publicity guns and fired several effective broadsides. The effort of the promoters to connect with the public purse here would not have been half so sensational if men of lesser prominence were identified with the operation. In our "bear" publicity on this one we minced no words. In doing so we again hit another powerful interest—the Lewisohns.

Later the exposure by the Mining Financial News and the Scheftels Market Letter of market manipulations of the Lewisohn-controlled Kerr Lake still further "endeared" the members of these two organizations to that powerful faction, and more closely cemented the ties of fellowship between the ruling powers.

Keystone Copper, another Lewisohn "baby," was put through its courses on the Curb while Kerr Lake was being played in a stellar rÔle. The deal in Keystone was an unobtrusive little thing, but awful good as far as it went from the one-sided point of view. I turned the searchlight of publicity on Keystone.

The Scheftels Market Letter and Mining Financial News disclosures in the interests of speculators and investors regarding Nevada-Utah, La Rose, Cumberland-Ely, Nevada Consolidated, Utah Copper, Ray Central, and Kerr Lake were sensational enough, but they by no means included all of the work in this line. During 1909 this publicity literature took in practically every important mining company whose shares were traded in on the New York Curb. The unpleasant truths these forces were obliged to tell from time to time touched the delicate sensibilities of many leading lights on the Street. These had grown accustomed to an unvarying diet of sweets.

It would seem that their appetite for saccharine provender would have become cloyed and that a change would be a grateful relief. It was not. The truth was distasteful. It interfered with the noble industry of mining the public and it cut down the profits of that end of the game. In keeping up the record of day-by-day market and mine developments these publicity agents punctured many a rainbow-tinted balloon. Very frequently they gave to the public its first definite and intelligent idea of real value behind promotions and in properties. Where market prices represented an overplus of hopes and expectations the truth was told. The aim was to take mining speculation out of the clouds and plant its feet firmly on earth.

In this laudable effort we ran counter to the plans of the mighty. We also violated the vulgar unwritten rule of some of the Wall Street fraternity—"never educate a sucker." Our publicity work caused a readjustment of judgment and market values, besides those already mentioned, on such stocks as First National, Butte & New York, Trinity Copper, Micmac, Ohio Copper, United Copper, Davis-Daly, Montgomery-Shoshone, Goldfield Consolidated, Combination Fraction, British Columbia, Granby, Cobalt Central, Chicago Subway, and sixty to eighty others.

The live wires of our publicity service blistered the flesh of the Guggenheims, the Thompsons and the Lewisohns, and perturbed their widely diffused affiliations, connections and allies, including John Hays Hammond, J. Parke Channing, and E. P. Earle; also Charles M. Schwab, E. C. Converse, B. M. Baruch, United States Senator George S. Nixon, George Wingfield, Hooley, Learned & Company, many other New York Stock Exchange houses, a group of powerful corporation law firms, a noted crowd of influential politicians, Curb stockbrokers who had grown fat executing manipulative orders for the "inside," bankers who carried on deposit the cash balances of the mining companies, and even J. P. Morgan & Company, who were partners of the Guggenheims in their Alaska ventures and were for a time said to be meditating a merger of the copper companies of the country with those controlled by the Guggenheims as a nucleus.

THE STORY OF ELY CENTRAL

By keeping speculators out of stocks that were selling at inflated prices, the Scheftels corporation and the Mining Financial News became endeared to a great popular moneyed element. The public was saved huge sums of money.

This, however, only carried out the negative end of a grand idea. The affirmative demanded that the Scheftels corporation must put its followers into a stock or stocks where they could actually make money.

The Scheftels corporation was on the eager lookout for a genuinely high-classed copper-mining proposition. It found what it was looking for in Ely Central, a property that is sandwiched in between the very best ground of the Nevada Consolidated, is bordered by the Giroux and occupies a strategic position in the great Nevada copper camp of Ely, birthplace of what is probably the greatest lowest-cost porphyry copper mine of America.

By invading the Ely territory as promoter and annexing Ely Central, the Scheftels corporation committed what was probably, to the interests among whom our publicity work had wrought greatest havoc, an unpardonable crime. We butted into the very heart of the game, and became a disturbing factor in their mining operations.

The Ely Central property consists of more than 490 acres. Years before, in the early days of the camp, it had been passed over by the geologists and promoters who selected the ground for the Nevada Consolidated, Giroux and Cumberland-Ely, because it was covered by a non-mineralized formation called rhyolite. As development work progressed and the enormous value of the surrounding mines was disclosed, it dawned on their owners that they might have made a mistake and that it would be just as well to obtain possession of the Ely Central property.

The ground was especially valuable to the Nevada Consolidated, if for no other reason, as mere acreage to connect up and make compact the properties owned by them. The second demonstration of their bad judgment was the fact that, having planned to mine the Copper Flat ore-body by the steam-shovel method, they overlooked the value of the Ely Central property as affording them the only practical means of access to the lower levels of that pit for operation by the steam shovels.

Investigation had disclosed to me that the evidence which had been adduced by mine developments on neighboring properties was all in favor of copper ore underlying the Ely Central area. The rhyolite, which covered Ely Central, was a "flow," covering the ore, and not a "dyke," coming up from below and cutting it off.

Why was the property idle? Inquiry revealed that the Ely Central Copper Company was $89,000 in debt, and that a pre-panic effort to finance the corporation for deep mine development had failed. The panic of 1907-8 had crimped the promoters and they could not go ahead.

The Scheftels corporation entered into negotiations with the Pheby brothers and O. A. Turner, who held the control, for all the stock of the Ely Central company that was owned by them. During the progress of negotiations, early in July, 1909, I heard that the Guggenheims and W. B. Thompson were very much put out to learn that the Scheftels company was about to finance the company. They had belittled the value of the property, as would-be buyers are prone to do the world over.

Before I entered upon the scene the Pheby brothers had found themselves objects of persistent and mysterious attacks. Their credit was assailed in every quarter and they found themselves ambushed and bushwhacked in every move they made. They were forced into a position where it was believed they would accept anything that might be offered them for their interest in Ely Central. As fate would have it, the Scheftels company entered the race at this psychological moment.

Summed up, the Scheftels company actually contracted for 1,280,571 shares out of 1,600,000, which represented the increased capitalization for a total sum of $1,158,916, or at an average price of 90½ cents per share. The time allowed for the payment of all the money was nine months, stipulated payments being agreed upon at regular intervals in between. The immediate effect of the arrangement was this: A dormant property, in debt and lying fallow, was metamorphosed into a going concern with good prospects of soon becoming a proved great copper mine, with an assured income to defray the expenses of deep mine development on a large scale, and a market career ahead of it that might be expected to match any that had preceded it in the Ely district from the standpoint of public interest.

During the progress of the negotiations the stock sold up to $1 per share. The selling for Philadelphia account of a large block of stock in the open market dropped the price back, of a sudden, to 50 cents. The Scheftels company bought stock on this break and urged its customers to do likewise. On the day the deal was concluded the market had rallied to 75 cents. Fully six weeks before the deal was arranged the Scheftels Market Letter and the Mining Financial News had begun to urge the purchase of the stock. The Scheftels organization was not hoggish. The establishment was willing that the public should get in on the cellar floor. There were nearly 300,000 shares outstanding, which the Scheftels corporation had not corralled in its contract.

Readers of the Market Letter and the Mining Financial News fell over one another to get in on the good thing. Therein they were wise. By early September the price had advanced in the market to $1. The Scheftels publicity was strong in favor of the stock. But it had not yet put on full steam. It was waiting for an engineer's report to make doubly sure it was right.

Col. Wm. A. Farish, a mining engineer of many years' experience and a man with a high reputation throughout the whole of the Western mining country, had been sent by the Scheftels company to make a report on the Ely Central. Years before Colonel Farish had reported on the Nevada Consolidated properties and outlined the very methods now being used for recovering its ores. But Colonel Farish had been ahead of his time, and the capitalists in whose interest he was acting were not prepared for such a radical step in advance of the then-existing methods, nor to believe that copper ores of such low grade could be mined at a profit, especially 140 miles from the nearest railroad. Times and conditions changed, and the 140 miles were spanned by a well-equipped rail connection.

Colonel Farish's opinion verified our fondest expectations. The report set forth that the mine possibilities of Ely Central were nearly as great as those of the Nevada Consolidated itself. On the basis of this report, which was made in September, the project acquired a new significance. Development operations were undertaken to prove up the ground in an endeavor to demonstrate the existence of the 33,000,000 tons of commercial porphyry ore which Colonel Farish indicated in his report would likely be found within the boundaries of the southern part of the Ely Central property.

The prospect fairly took the Scheftels organization off its feet. We were dazzled. We saw ourselves at the head of a mine worth $25,000,000 to $40,000,000. No time was lost in organizing a campaign to finance the whole deal. Having no syndicated multi-millionaires to back it up, the Scheftels corporation went to the public for the money, the same as hundreds of other notable and successful promoters had done. The ensuing publicity campaign to raise capital has been described in hundreds of columns of newspaper space as one of the most spectacular ever attempted in Wall Street.

I had absolute faith in the great merits of Ely Central, a faith that has not been dimmed in the slightest degree by the vicissitudes through which the company, the Scheftels corporation, and myself personally have passed. Within thirteen months the Scheftels corporation caused to be spent for mine development more than $150,000, and on mine and company administration an additional $75,000. When the Scheftels company was raided by the Government on September 29, 1910, and a stop put to further work the expenses at the mine had averaged for the nine months of that year above $15,000 a month. Work was going on night and day. Every possible effort was being made to prove-up the property in short order. Core-drills sent down from the surface had already revealed the presence of ore at depth, and I am sublimely certain that another month or two would have put the underground air-drills into contact with a vast ore-body identical in quality and value with that lying on either side in Nevada Consolidated acreage.

Ely Central was the New York Curb sensation in 1909-1910. I used the publicity forces which had been so successful in protecting the public against the rapacity of multi-millionaire mining-wolves to educate them up to the speculative possibilities of Ely Central.

Up went the price. Between the first of September and the middle of October the market advanced to $2 3-8. On October 13th advices reached us that 30 per cent. copper ore had been struck in the Monarch shaft. The Monarch is an independent working, far removed from the area that is sandwiched in between the main ore-bodies of the Nevada Consolidated. We were highly elated. The prospect looked exceedingly bright to us, and there was no longer any hesitation in strongly advising our following to take advantage of an unusually attractive speculative opening.

The market boomed along in a most satisfactory way. By October 26th the price reached $3; on November 3d it was $4 a share, and three days thereafter $4¼ was paid.

The expenses of the Scheftels company on publicity work at this time amounted to about $1,000 a day. Money for mine development on Ely Central was being spent as fast as it could be employed. We were trying to sell enough stock at a profit over the option price to defray the publicity expenses, keep the mine financed, and meet our payments on the option, but no more. We were not making any effort to liquidate on a large scale, a fact which was reflected in the advancing quotations.

When the price of Ely Central hit $4 in the market, the Scheftels company rated itself as worth from $3,000,000 to $4,000,000. I had visions of leading the Guggenheims and Lewisohns and Thompsons up the Great White Way with rings in their noses. Nat. C. Goodwin, who had a 25 per cent. interest in the Scheftels enterprise, enjoyed similar visions, only his fancy ran to building new theaters for all-star casts.

While Ely Central stock was going skyward and all the speculating world was making money in it, our publicity forces were busily driving the bald facts home regarding La Rose, Cumberland-Ely, Nevada-Utah and other pets of the mighty. Our batteries never let up for a moment. These various attacked interests were getting ready to strike back. If their movements had been directed by an individual general they could not have worked with more community of interest. One day the sky fell in on us. The plans had been beautifully laid for our complete ruin. That we escaped utter annihilation was almost a miracle.

On Wednesday, November 3d, the result of our market operations on the New York Curb was that we quit long on the day nearly 8,000 shares of Ely Central at an average price of $4. On the same day our customers ordered the purchase of nearly twice as much stock as they ordered sold. This indicated to us that the Curb selling was professional. There was nothing very remarkable about this performance because brokers doing business on the Curb very frequently play the market for a fall.

On Thursday, the day following, the Scheftels company was again compelled to purchase stock on the Curb in excess of sales to the extent of 7,600 shares, while on the same day the buy orders of house customers exceeded their orders to sell at least three to one. The professional selling was now accompanied by rumors on the Curb which spread like the smell of fire that trouble of some dire sort was pending for the Scheftels company. Most of this emanated from an embittered brokerage quarter and we paid little attention to it.

On the succeeding day, Friday, November 5th, the professional selling was quieted to a point that compelled the Scheftels company to go long of only 6,600 shares on the day in its Curb market operations. The purchase of so small a block of stock excited no suspicion in the Scheftels camp, although it should have, because Scheftels' customers on this day purchased more than four times as much stock as they ordered sold, pointing conclusively to a great public demand and much shorting by professionals.

Then came the coup de main.

THE ASSAULT ON ELY CENTRAL

The 6th day of November fell on a Saturday. The New York Sun of that morning published under a scare head a vicious attack on the Ely Central promotion. The attack was based on an article which was credited in advance to the Engineering & Mining Journal and appeared in the Sun ahead of its publication in that weekly. The Sun had been furnished with advance proofs. The Ely Central project was stamped as a rank swindle. Everybody identified with it was raked over and I, particularly, was pictured as an unprincipled and dangerous character, entirely unworthy of confidence and at the moment engaged in plucking the public of hundreds of thousands. It was stated that the Ely Central property had been explored in the early days of the Ely camp and found of no value whatsoever from a mining standpoint. The Scheftels corporation was accused of setting out in a cold-blooded way to swindle investors on a bunco proposition.

I was in my apartment at the Hotel Marie Antoinette at 9 A.M. when I read the Sun's story. The Scheftels company had thrown $85,000 behind the market during the three preceding market days to hold it against the attack of professionals.

I called the Scheftels office on the 'phone and gave instructions that a certified check for $40,000 be sent to Wasserman Brothers, members of the New York Stock Exchange, with orders to purchase 10,000 shares of Ely Central at $41/8, which was the quotation at the close on the afternoon before. Orders to buy 15,000 shares more at the same figure were distributed among other brokers. The single order was given to Wasserman Brothers because I thought it good strategy. They are a house of undoubted great responsibility and it seemed to me that their presence in the market on the buying side would have an excellent tonic effect.

During the two hours' session I held the 'phone, receiving five minute reports from the scene of action. Mr. Goodwin was at my side. At ten minutes to twelve the brokers had reported the purchase, on balance, of 24,225 shares. Had they purchased 675 shares more they would have completed the orders that were outstanding and it would have been up to me to decide whether to lend further support or not. By that time my figures showed that the Scheftels corporation had thrown behind the market $200,000 in four days to hold it and I was beginning to have "that funny feeling." During the last few minutes of the Saturday Curb session the selling ceased and it seemed that possibly my fears were unfounded.

On Sunday, the 7th, my hopes went a-glimmering. All the New York papers featured scathing articles, using as authority the Engineering & Mining Journal's attack, which had appeared on the previous afternoon. Dispatches indicated, too, that the papers of Boston, Chicago, Los Angeles and San Francisco had played it up on the front page as the most shocking mining-stock scandal of the century.

By Monday, the whole country had been plastered with the sensation. Of course my early Past, all of which was a family affair and had transpired fourteen years prior, long before I essayed to enter the mining promotion field, was dragged out of the skeleton-closet. It lent verisimilitude to the stories.

After reading the Sunday newspapers, I grasped the meaning of the move and marshalled our forces. It was plain that we had been marked for the sacrifice. It looked as though we hadn't a chance in a million of weathering the onslaught if we lent the market further support. There were about 500,000 shares of Ely Central in the public's hands, and, without close to $2,000,000 in ready cash to throw behind the market, we could not be certain of staying the tide. We didn't have anything like that sum. Personally I did not give up the fight, but the outlook was mighty blue.

All day Sunday trusted clerks of the Scheftels company worked on the books, making a statement of the "stop-loss" orders and "good-till-cancelled" orders of customers. On Monday morning the newspapers contained aftermath stories of the Engineering & Mining Journal's arraignment. The air was surcharged with the impending calamity.

With a line of defense carefully outlined, I approached the fray. First, the Scheftels corporation placed with reliable brokers written orders to sell at the opening the stocks that were specified in the stop-loss and good-till-cancelled orders of customers. Not an order to sell a share of inside stock was given. It was also decided not to place any supporting orders until after the market opened and it could be determined with some degree of accuracy what the volume of stock amounted to that was pressing for sale.

Just before the market opened I could see from my office window a dense crowd of brokers assembled around the Ely Central specialists. Although ominously silent, they were struggling for position and were tensely nervous. It was plain that the over-Sunday anti-Scheftels newspaper publicity had racked Ely Central stockholders and created a panicky movement to liquidate, which was about to find vent in violent explosion. It was evident that the Scheftels corporation would have to conserve every resource if the day was to be saved.

The market opened. Instantly there was terrific action. Hundreds of hands were waving wildly in the air. Everybody wanted to sell and nobody wanted to buy. The chorus was deafening. Screams rent the air. The tumult was heard blocks away. Every newspaper had a man on the spot. Brokers from the New York Stock Exchange left their posts and came to see the big show; the Stock Exchange was half emptied. The spectacle had been advertised widely and everybody was keenly awake and wrought up to a high pitch of excitement over what had been scheduled to occur.

Had the Scheftels brokers been supplied with orders to buy one-quarter of a million shares of stock at the closing market price of the Saturday before, $4 1-8, it was very apparent that they would have been unable to hold the market. The opening sale was at $4. Downward to the $3 point the stock traveled, breaking from 25 to 50 cents between sales. Through $3 and on down to the $2 point the price crashed. Blocks of 10,000 shares were madly thrown into the vortex of trading. The Curb was a struggling, screaming, maddened throng of brokers. Every trader appeared to be determined to crush the market structure. At $2 a share there was a temporary check in the decline, but the bears renewed their onslaught, gaining confidence by the outpour of selling orders. Within less than an hour after the opening the stock hit $1 1-2 a share. At this juncture the Scheftels broker in Ely Central reported that he had executed all the stop-loss and good-till-cancelled orders entrusted to him with the exception of 19,000 shares.

"The Scheftels company will take the lot at $1 1-2," I said.

In lending succor at $1 1-2 per share I was really stretching a point, although at this figure the net market shrinkage of the Ely Central capitalization was in excess of $3,000,000. This melting of market value was awful to contemplate. On the other hand the newspaper agitation was unmitigated in its violence, stockholders were convulsed, a break of serious proportions was certain, and it was up to me to conserve every dollar. The moment the Scheftels bid of $1.50 a share made its appearance on the Curb and the selling from the same source for the account of customers was discontinued, it was seen that the force of the drive had spent itself, at least for the time being. Support now came from the "shorts." They started to cash their profits on their short sales of the days previous. Crazed selling was transformed to frantic buying.

The scene at this juncture was dramatic. It was the momentary culmination of a cumulative, convulsive cataclysm. In refraining from selling for its own account the Scheftels corporation violated one of the sacred rules and privileges not only of the New York Curb but of the New York Stock Exchange. In both of these markets it is the custom, where brokers have advance information of an impending calamity, to beat the public to the market and get out their own lines first, leaving customers to take care of themselves.

By deftly feeding stock to bargain hunters and to the "shorts" at intervals and buying stock when it pressed for sale from frightened holders at other periods the Scheftels company was able to support the market that afternoon to a close with sales recorded at $2 a share. The cash loss of the Scheftels company on its Curb transaction in Ely Central that day was $60,000. This fresh sacrifice was needed to steady the market.

Tuesday, the following day, the daily newspapers belched forth further tirades of abuse and calumny. The market crash in Ely Central was held up to the public as proof positive that the project was a daring swindle. The raid on the stock in the market was renewed. A Johnstown flood of liquidation ensued. Fluctuations were violent. Opening at $2, the price was forced down to $1. It afterward rebounded to $2, but the waters would not subside, the stock was hammered again and it closed at $1 per share. To meet the oncoming emergencies the Scheftels corporation was obliged to fortify its cash reserve in the only one way that offered. It was compelled to convert a large part of its reserves of securities into cash and it had to sell on a declining market. Many accounts were withdrawn by timid customers, and the Scheftels company was further called upon to give stability to Rawhide Coalition and Bovard Consolidated, other stocks which it had been sponsoring in the markets. Loans were called by brokers with whom the Scheftels company was carrying stocks, deliveries were frantically tendered to the Scheftels company of stocks it had purchased at previous high levels, and a financial onslaught made generally that would undoubtedly have sunk the Scheftels' ship but for the fact that we had backed-up in the nick of time, had measured our distance, had gone just so far and not too far, and had kept on the firing-line.

An exceedingly gratifying feature of the sensational day was the way in which our friends stood by us. The venom and selfishness of the overwhelming assaults that had been made upon us convinced many of the public that we were being made the victims of a special attack, and with the natural impulse that governs honorable men they gave testimony to their confidence in us.

On Wednesday the campaign terminated. Ely Central weakened an eighth from the $1 point, the closing of the day before, recovered to sales at $1¾ and closed at $1½ bid; $15/8 asked.

All day long our offices were thronged with newspaper reporters and with pale-faced and agitated customers. Our clients felt their helplessness in such a tumult of warring forces. The only thing they could do was to stand by and watch developments as the battle waged. It was a proud moment for me when, at the end of the day's market, I mounted the platform in the Scheftels customers' trading-room, gave voice to a shrill cheer of triumph and wrote on the blackboard the following:

"We have not closed out a single margin account! We are carrying everybody!"

The scene which followed warmed the cockles of my heart. I was literally mobbed, but it was a friendly mob. We all joined in a season of noisy rejoicing. That we should have been able to survive the three-days' siege with minimum losses to customers and without sacrificing a single margin account was a signal achievement. I doubt if there are many cases like it in the history of Wall Street.

Scores of telegrams were received from out-of-town customers to whom the margin respite was wired. One of these read:

Another one was to this effect:

Hundreds of letters of a similar tenor poured in upon us. Many of these came from the camp of Ely itself, where large blocks of the stock were held by mining men on the ground.

Thursday the stock closed at $1¾; Friday it advanced to sales at $17/8 and hung there.

The Scheftels organization now drew its first long breath. Friends and enemies alike marveled how the corporation had managed to survive. We had held the fort, but at murderous cost.

I got busy with the publicity forces at my command. Through the Scheftels Market Letter and the Mining Financial News the story was told of the whole dastardly campaign.

The Weekly Market Letter of the Scheftels company on November 13, 1909, devoted 24 columns to the story of the raid.

That the Guggenheim-managed Nevada Consolidated was well pleased with the publication of the Engineering & Mining Journal's attack seemed clear to me. The reason was this: In its attack the Engineering & Mining Journal stated that two drillholes put down by the Nevada Consolidated in the immediate vicinity of Ely Central had failed to show better than nine-tenths of one per cent. copper ore which, the article said, was below commercial grade. (At this late date, October, 1911, they are mining ore in the steam-shovel pit of the Nevada Consolidated that will not average more than eight-tenths of one per cent. copper transporting it to the concentrator, more than twenty miles away, and treating it at a profit. But this is not the point.) An engineer of international prominence telegraphed the Scheftels company from Ely as follows:

I could write a book in reply to the Engineering & Mining Journal's tirade, showing the utter flimsiness of the statements it made. Limited space forbids anything more than an outline.

Charles S. Herzig was employed to report confidentially on the property. Mr. Herzig's report was later checked up by Dr. Walter Harvey Weed, a great copper geologist of known high standing who was formerly one of the principal experts of the United States Geological Survey and was himself a frequent contributor to the Engineering & Mining Journal. Dr. Walter Harvey Weed wired to the C. L. Constant Company, the metallurgists and mining engineers, from Ely, as follows:

The Engineering & Mining Journal said in its article that the northern portion of Ely Central showed the Arcturus limestone of the district. It stated that in this limestone at various places there is a little mineralization but never during the history of the district were any profitable results obtained. As against this, Engineers Farish, Herzig and Weed reported that the limestone areas on Ely Central would likely show the presence of mines. As a matter of fact, Giroux, neighbor of Ely Central, had sunk through this limestone and opened one of the richest bodies of copper ore ever disclosed.

The Engineering & Mining Journal said that in representing that pay ore is likely to exist in the area of Ely Central sandwiched in between the two big mines of Nevada Consolidated, the Scheftels company was practicing deception. Not only did Messrs. Farish, Herzig and Weed report in favor of the likelihood, but it is now a commonly accepted fact that, unless all known geological indications are deceptive, Ely Central has the ore in this stretch of territory. A report made as late as September, 1911, by engineer Richard T. Pierce, for the reorganization committee of Ely Central, expresses the opinion that an area 1,300 feet by 1,900 feet at the south-east end of the Eureka workings "will be found to contain mineralized porphyry, with reasonable assurance that commercial ore will be had in it."

Mr. Herzig's first telegram from Ely after examining the Ely Central property was to this effect:

What probably convinced me more than anything else of the inaccuracy of the statement regarding the Ely Central property by the Engineering & Mining Journal was the attitude of Charles S. Herzig. He is my brother.

Up to within thirty days of the appearance of the attack in the Engineering & Mining Journal I had not set eyes on him in fifteen years. A graduate of the Columbia School of Mines, he had in the interim examined mining properties in South Africa, Egypt, Australia, the East Indies, Siberia, every European country, Canada, Mexico, Central America, South America and the United States in the interests of some of the world's greatest financiers. These expert examinations had covered deposits of gold, silver, copper, lead, zinc, coal and other minerals. In the engineering profession he is known as an expert who has his first failure yet to record. His standing is unquestioned as an engineer and a mine-valuer.

I had heard some criticism of the Farish report, made by engineers of the modern school, in which it was pointed out that Colonel Farish had failed to give scientific reasons for all of his deductions. I asked Captain W. Murdoch Wiley, then a member of the C. L. Constant Company, assayers, metallurgists and mining engineers, whether he could induce my brother to make an examination. I did not approach Charles myself, because we had been estranged. So it was that when he returned from Europe after an absence of many years, he had not even looked me up. Captain Wiley arranged for a meeting at the Engineers' Club. I went there, and was formally introduced by Captain Wiley to my brother across a table.

"What will you take to make a report on Ely Central?" I asked in the same matter-of-fact way I would have addressed a stranger.

"What's the purpose of the report?"

"The Scheftels company wants confidential, expert information such as you are qualified to give as to the value and prospects of the property," I answered.

"I'll take $5,000," he said, "but only on one condition. I am going to the Ely and Ray districts to report for English capitalists, and I can take your property in at the same time. My report is not to be published and I reserve the right to make a verbal instead of a written one. If you really want to know what I think of the property, I am quite willing to give it a careful examination and let you know. Because of the stock-market campaign you are making, I would not accept your offer if, did I report favorably, your idea would be to make use of the report in the market."

The bargain was struck. A few days later Mr. Herzig received $2,500 from the Scheftels company, on account, and a check for traveling expenses. He left for Ely.

On the Saturday morning when the New York Sun article appeared containing the excerpts from the Engineering & Mining Journal's onslaught, I wired my brother substantially as follows:

An hour later I followed it up with another message telling him not to wire any report. I set forth that because he was my brother, it might prove of little avail, now that the publication had been made, and that it might only tend to do him personal damage in the profession because of the unqualified manner in which the Engineering & Mining Journal had taken a stand against the property. In reply he wired Captain W. Murdoch Wiley the short but decisive report already quoted herein, regarding the geological reasons why Ely Central should have the ore, which afterward was fully verified by Dr. Walter Harvey Weed in the message also reproduced in the foregoing. In a letter from Ely to Captain Wiley confirming the message, the original of which is in my possession, Mr. Herzig said:

The same day he wired Captain Wiley to buy for his account 2,500 shares of Ely Central at the market price, which order was executed through the Scheftels company.

Editor Ingalls of the Engineering & Mining Journal and my brother had been friends for years. My brother had been employed early in his career by the Lewisohns, Guggenheims and the Anaconda Copper Company, and later in Europe, Australia and India by mine operators of even higher class. Up to the time when the Engineering & Mining Journal's attack appeared he had not committed himself on Ely Central. When he did commit himself it was with the foreknowledge that in doing the unselfish and courageous thing his name would be besmirched if under development Ely Central turned out to be what the Engineering & Mining Journal had declared probable. In that event his relationship with me would be held up as positive proof of duplicity and it would look bad for him. The fact that under all these circumstances he jumped into the breach satisfied me that the attack of the Engineering & Mining Journal was unjustified.

A BOMBSHELL IN THE ENEMY'S CAMP

As soon as the Scheftels corporation was able to obtain a copy of the corroborative report of Dr. Walter Harvey Weed, which the great copper geologist made to the C. L. Constant Company, it filed a libel suit against the Engineering & Mining Journal for $750,000 damages. Simultaneously Mr. Scheftels filed another suit for an additional $100,000 in his own behalf.

The filing of the Scheftels libel suits against the Engineering & Mining Journal was a bombshell. It was formal notice to the forces arrayed against us that we did not propose to be made victims of an unholy hostility and that we were determined to proceed along old lines and not abate in the slightest our wide-open publicity measures. It was also noticed that we proposed to go through with the Ely Central deal.

After it became evident that we intended to keep on fighting, the Scheftels offices were openly visited and inspected in detail one day by the late Police Inspector McCafferty. In a bullying manner this police official let it be known that we were in official disfavor with him. His manner could hardly have been more offensive if he had been invading a den of counterfeiters. Mr. McCafferty did not specify just what he was after or just what he expected to find, but he made it plain to us that we were marked and that he had it in for us. He stalked scowlingly through the entire establishment and made vague threats of what was in store for us.

Late that night I learned that the Inspector had invaded the living-rooms of my associate, Nat. C. Goodwin, where he delivered himself somewhat as follows:

"What are you fellows trying to do, anyway? What are you trying to put across on us? Do you think we are going to stand for any such newspaper notoriety as you are getting and watch it with our arms folded? Do you think we are fools or crazy, or what? I want you to understand that you fellows have got your nerve with you. Get busy or the police will be on your backs to-morrow!"

I told Mr. Goodwin that our enemies had evidently sicked the Inspector on to us, but that I didn't think any action would be taken. We were victims and not culprits, and unless, indeed, the United States was Russia, nothing untoward could happen.

I promised Mr. Goodwin, however, that I would attend to the matter without delay. I laid all of the facts regarding the newspaper attack before a prominent citizen who promised forthwith to convey the information in person to the Inspector or one of his superiors. He did so. That was the last we heard of the matter.

The Engineering & Mining Journal's lawyers addressed themselves to customers of the Scheftels company, who had lost money in the market break in Ely Central from $4 to $1.50. By letter they urged them to send on a full statement of facts and suggested that they might be of service, and without charge.

Letters of this character were sent to large numbers of our customers, many of whom simply sent them to us. In some cases, however, customers who had read the attack in the Engineering & Mining Journal or quotations from it in widely circulated daily newspapers, needed but the letter from the lawyers to induce them to come forward with a complaint.

On the whole, this fishing expedition must have been something of a water-haul and a disappointment, for the attorneys of the Engineering & Mining Journal.

The Post-office Department at New York, in January and February, sent letters broadcast to readers of the Scheftels Weekly Market Letter, asking whether the business carried on was satisfactory—the usual form that is used where a firm is under investigation. Scores of these letters were forwarded to us by customers with remarks to the effect that evidently "somebody was after us." An inquiry of this sort is calculated to do terrible damage to the reputation and standing of any house that does a quasi-banking business. Our attorneys complained to Inspector Mayer of the New York division of the Post-office that an injustice was being done. No more letters of the character described were sent out, because the early replies that were received by the Inspector to his circular letter brought forth no serious complaints. However, it was afterward disclosed that the investigation did not cease here and that the Post-Office Department continued to conduct a searching inquiry only finally to abandon its enterprise.

Enters upon the scene an associate of the Engineering & Mining Journal's lawyers defending that publication against our suit for libel. He called at the Scheftels offices and demanded from Mr. Scheftels information with regard to the account of C. H. Slack of Chicago. He got it. It showed that Mr. Slack had purchased 50,000 shares of Bovard Consolidated at 10 cents per share, for which he had paid cash, and that Mr. Slack had purchased an additional 100,000 shares at 14¼ and 14¾ cents per share; and that Mr. Slack had refused, after the market declined to below the purchase price, to pay the balance due, because of delayed delivery.

The delay in delivery was accidental. The Scheftels company actually had in its possession two million shares of the stock or more, and the delivery would have been tendered earlier but for the fact that the raid on Ely Central had piled up so much work for the clerical force that everything was set back. We knew of no legitimate excuse for Mr. Slack, because he could have ordered the stock sold at any time, delivery or no delivery. The Slack transaction receives amplification here, because later, when the Scheftels corporation was raided by a Special Agent of the Department of Justice, it figured as one of the cases cited by the Agent in the warrant sworn to by him against B. H. Scheftels & Company as proving the commission of crime.

Another case about which Mr. Scheftels was asked to give full information was that of D. J. Szymanski, a corn doctor at 25 Broad Street. Mr. Scheftels had urged the Doctor to buy Ely Central when it was selling at 75 cents before the rise. Later, when the advance was well under way, above the $3 point, the Doctor bought some stock through the Scheftels corporation. When the price hit $4 he was urged to take profits. He refused to do so. When the attack began and the price broke badly the Doctor saw a big loss ahead.

He called at the Scheftels' office and begged for the return of the money he had lost in his Ely Central speculation.

The investigation was heralded among the brokers and caused much market pressure on the stocks fathered by the Scheftels company. We were not dismayed. To strengthen our position and to give added token of our good faith we increased our development operations at the mines. Our expenses in that quarter were swelled to the limit of working capacity on our underground explorations, as I realized that our salvation might depend on making good in quick order with Ely Central from a mining standpoint. We knew the ore was there and that it was up to us to get it before our enemies got us.

A GOVERNMENT RAID IS RUMORED

Out of a blue sky late in the month of June came news to the Scheftels office that a newspaper reporter on the New York American had stated that he had seen a memorandum in the city editor's assignment-book to watch out for a Scheftels raid by the United States Government. The information was reliable and it gave us a shock. Yet the thought that the powers of a great government like the United States could be used to crush us without giving us a hearing seemed unbelievable.

To be on the safe side Mr. Scheftels, accompanied by an attorney of high standing, visited Washington. They went direct to the Department of Justice, where Attorney-General Wickersham's private secretary, after a friendly conversation, referred them to the chief clerk. He reported, after a search of twenty-five minutes' duration, that there was no charge against B. H. Scheftels & Company. He even volunteered the information that he did not know that such a firm was in existence.

It afterward developed that at the very time Mr. Scheftels and the attorney were at the Department of Justice a special rubber-shoe investigation was on under the dual direction of a young Washington lawyer on Attorney-General Wickersham's personal staff, and a Special Agent of the Department of Justice. The latter had been given extraordinary powers as a special agent of the Department of Justice, ostensibly to "clean out Wall Street."

Satisfied they were in the wrong place, Mr. Scheftels and the counsellor departed from the Attorney-General's office for the Post-Office Department. They were referred to Chief Inspector Sharp. The lawyer requested that the Scheftels corporation be given a hearing before any action was taken on any complaints that might reach the department. Mr. Sharp agreed to this on condition that the attorney would agree for the Scheftels company that an inspection of the books of the corporation would be permitted on demand at any time. There was a ready assent. A memorandum to this effect was left with Inspector Sharp.

Mr. Scheftels left the Department with positive assurance that no snap judgment would be taken. Edmund R. Dodge of Nevada, personal counsel of B. H. Scheftels & Company, then addressed a letter to U.S. Senator Newlands with the request that he take the matter up direct with the Postmaster-General.

Senator Newlands, under date of July 2, wrote Mr. Dodge that he had addressed a letter to the Postmaster-General with the request that notice be given to Mr. Dodge in case any complaint or information was lodged against the Scheftels corporation. A few days later Senator Newlands sent Mr. Dodge a letter from Theodore Ingalls, Acting Chief Inspector of the Post-Office Department, in which Mr. Ingalls said it was the practice of the Department in case of alleged use of the mails for fraudulent purposes to give individuals against whom complaint has been made full opportunity to be heard either through person or counsel, should adverse action be contemplated as a result of the investigation of such allegation.

Feeling that our house had been securely safeguarded against surprise parties, I at this junction took a trip to Nevada, where urgent business matters required my attention. While I was in the West telegrams were sent me that the premier mail-order mining-stock bucket-shop firm on Broad Street was flooding the mail and burdening the telegraph wires with urgent appeals to stockholders of Rawhide Coalition, one of our specialties, to sell out their holdings, as a severe break in the price of the shares was impending. Forewarned of this attack, I telegraphed instructions from Reno to meet the onslaught with a notice in the Mining Financial News addressed to investors, telling them to be on their guard.

My trip to the West made a pocketful of money for investors by my purchase of the control in the Jumbo Extension company on a monthly payment plan. The price of the stock tripled in the market. My re-entrance into the Goldfield camp was especially distasteful to the Nixon-Wingfield interests. Before I left Goldfield I was actually warned that the vengeance wreaked on the Sullivan Trust Company would be visited on the Scheftels company for daring to reinvade the Goldfield district.

Late in August the Scheftels company endured what was probably the most severe strain it had been put to since its incorporation. We had been making heroic efforts to rally the price of our specialties on the New York Curb market. We were meeting with unusual resistance from professional sources. At the period of which I narrate, Ely Central had registered a low quotation of 62½ cents and we had successfully strengthened it to around $1. All the way up we met with heavy sales. One day deliveries crowded in so fast that three cashiers working in the "cage" were unable to keep up with the transactions. The business of the corporation had been heavy in the general list as well as in the house specialties. There was more than sufficient money on hand to finance all the transactions that day, but not, however, unless deposits were made in bank as rapidly as our own deliveries were made and collected for by our messengers.

About 2 o'clock in the afternoon a report reached the Curb that the bank checks of B. H. Scheftels & Company were not being promptly certified. As this rumor gained currency the excitement on the Curb increased. The Curb concluded that we were at last "busted." Motley throngs began to assemble in front of the offices. The fierce yells of brokers could be heard bidding for and offering Scheftels checks below their face value. A throng of the riffraff of the Street swarmed in front of the building.

One or two individuals, implacable enemies who had repeatedly led the market onslaught against the Scheftels stocks, offered Scheftels checks for small sums at as low as 50 cents on the dollar. These were licked up by our friends who had been assured that we were financially all right and that some mistake must have been made at the bank.

Investigation showed that dilatory message service was responsible for the bank's delay in certifying. Our deposits did not reach the bank as promptly as they should have. As a special favor to us that afternoon, while the tumult in front of our doors was greatest, the bank continued to certify checks until 3:30 o'clock, extending the closing time 30 minutes. Then they reported that a comfortable cash balance was still on hand.

The next morning the newspapers started a jamboree. First-page, last-column, double-leaded, scare-head stories greeted every New Yorker for breakfast, telling him about the panic among Curb brokers to sell the Scheftels checks the afternoon before. Needless to say it was the kind of notoriety that was likely to do greatest injury to the House of Scheftels. If anything half as bad had been printed about the strongest bank in New York, that bank would have been forced to close its doors before the day was half over.

Nor did I for a moment underrate the danger of our position. Between two suns I managed to assemble $50,000 in addition to our cash reserves, with promises of as much more as was needed. We easily held the fort. At the end of the day's business I created a diversion by appearing in the Scheftels board-room, flourishing a handful of $1,000 bills before the newspaper men. The scribes found the Scheftels corporation meeting all demands, and, at the end of the session, with a small bale of undeposited money in its possession.

The strain, however, was great. Confidence was again impaired. Many accounts were withdrawn by customers. We were compelled to ease our load by selling accumulated stocks at a loss. The price of Ely Central and other Scheftels promotions dropped. The decline was assisted by general weakness in other Curb stocks.

Peculiarly enough, at the time when the market for Ely Central shares was lowest, during the latter part of September, fourteen months after the Scheftels company had taken hold of the proposition, mine reports were most favorable. Underground development work and churn drilling had set at rest for all time the question of whether or not mineralized porphyry underlies the rhyolite cap or flow extending eastward through Ely Central ground from the steam-shovel pit of the Nevada Consolidated. Upward of $240,000 had been paid out for administration, mine equipment and for miners' wages to make this demonstration.

The Scheftels company was now informed that the Nevada Consolidated was actually meditating a trespass on the Juniper claim of the Ely Central company, in order to secure an outlet from the lower levels of its giant steam-shovel pit. Warning in writing had already been served on the Nevada Consolidated officials against such a course. On September 25th attorneys of the Ely Central Copper Company secured from a Nevada court an order restraining the Nevada Consolidated from proceeding with this trespass and citing it to show cause why it should not cease to trespass on other Ely Central ground.

The attorney telegraphed to New York that a bond was required before the injunction could be made operative. On September 27th and 28th telegrams were exchanged between the Ely Central offices in New York and the Nevada attorneys of the company at Reno as to providing sureties for the bond.

The sureties never qualified. A catastrophe befell us and brought to an earthquake finish the house of B. H. Scheftels & Company and all its ambitious plans.

The constant turmoil in which the House of Scheftels had found itself, from the day the Engineering & Mining Journal's attack appeared, had made it impossible for the Scheftels company to hold the markets for Ely Central and Rawhide Coalition. Impairment of credit, money stringency and a general declining market were partly responsible. But there was another important factor. Because of the time-limit of its options, the Scheftels company was forced, from time to time, to throw stock on the market at prices which showed an actual loss.

It had one market winner which showed customers and the corporation itself a large profit, namely, Jumbo Extension. I held an option on approximately 450,000 shares of this stock at an average price of 35 cents, which I had turned over to the corporation. The market advanced to 70. Following the tactics employed in Ely Central at the outset of that deal, the Scheftels corporation had urged all its customers to buy Jumbo Extension at the very moment when I was negotiating for the option in Goldfield, with the result that purchases were made in the open market by readers of our market literature at from 25 cents up, with accompanying profit-making.

As the price soared, a short interest of 150,000 shares of Jumbo Extension had developed among brokers in San Francisco and New York, and it was very apparent from the demands of stock for borrowing purposes that it would be impossible for the short interests to cover excepting upon our terms. The Scheftels company was making ready for a "squeeze" of the shorts such as had not been administered before in the history of the Curb. At the very moment of victory, however, when we were making ready to execute a magnificent market coup in Jumbo Extension in the markets of San Francisco and New York, we were plunged without warning to complete ruin.

THE RAID ON B. H. SCHEFTELS & CO.

The destruction of the Scheftels structure was consummated on the 29th day of September, 1910. I was standing on the front stoop of the Scheftels offices, watching the markets for the Scheftels specialties. A broker with San Francisco connections made me a bid of 68 cents for 10,000 shares of Jumbo Extension. I promptly refused. At that very moment my attention was called to the violent slamming of a door behind me. Turning to a Scheftels employee who was standing by my side, I learned that a number of strangers had filed into the customers' room without attracting any particular attention. I tried to get in. The door was locked. Undoubtedly something serious was transpiring. I walked a full block through the hallway to the New Street entrance of the building where the offices of the Mining Financial News adjoined those of the Scheftels corporation. I tried the door there with similar result. It was locked against me.

That settled it. I concluded that the ax had fallen.

The shock of realization that our offices were being raided by the Government did not for a moment throw me off my balance or put fear in my heart, nor did the sense of the outrage affect me at the moment. There was but one sickening thought—the ruin of the edifice I and my associates had labored day and night for so many months to build and the fate of our customers who had invested their money in the companies we had promoted.

In three seconds I was on my way to the place where I thought succor could be found—the offices of the Scheftels attorneys. I walked across the street to the New Street entrance of a building that extends from Broadway to New Street, ambled across to the Broadway side, jumped on a surface car, rode three blocks to Broadway and Cedar Street, jumped into an elevator, and in a few minutes entered the offices of House, Grossman & Vorhaus.

"Go over to the Scheftels offices," I said, "and be quick! I think we are being raided."

In a moment two members of the law firm were on their way. Within ten minutes after the raiders had entered the offices the lawyers were on the spot. They were denied admittance and had to content themselves with waiting outside the door until the prisoners were taken out.

The moment the lawyers left their offices I began to use the 'phones to provide for the release on bail of the men arrested. I found it necessary to go in person and so I left the lawyers' offices and walked down Broadway. My attention was attracted by the clanging of the bell of the police-patrol wagon. As it wheeled past me on the run I could see my associates huddled together in the Black Maria on their way to the bastile.

For the moment, I lost full sense of the gravity of what was transpiring and was overcome by a feeling of joy that I had been spared that ignominy. That self-felicitating slant of an intensely serious situation passed. My associates were in trouble and it was up to me to help them. I was at large and I knew that I could do more for my friends and myself by not immediately surrendering.

I returned to the lawyer's office, where I remained. All this time the thought never entered my mind that we were in any sense guilty of any intent to defraud anybody, or that we had committed any offense against law or the rules of fair conduct. The one consuming and controlling idea in my mind was that somebody had put one over on us and that it was up to me to organize for defense against the abominable outrage.

What transpired behind the closed doors while the Scheftels lawyers were attempting to gain an entrance for the instruction of the corporation, its officers and employees as to their rights, beggars description. Gentle reader, you would not conceive the reality to be possible. Armed with a warrant which conferred upon him the right to arrest, seize, search and confiscate, the Special Agent of the Department of Justice had secured from the local police headquarters a detail of fifteen heavily armed plain-clothes men.

Once inside the Scheftels establishment, the doors were locked and egress barred. The main body of invaders then took possession of the front offices, while others searched through the back rooms and boisterously commanded everybody to remain where they were until given permission to depart. The establishment was under seizure, every foot of it, and every person found within its doors was held prisoner. The Special Agent took pains to impress upon everybody within hearing that he was in supreme command. Leaving police guards in the front room, he stalked into the telegraph-cage where two or three operators were sitting at tables.

Pressing the muzzle of a revolver into the face of Chief Operator Walter Campbell—a quiet and inoffensive man—the Special Agent commanded:

"Cut off that connection!"

Mr. Campbell didn't at first see the gun because it was pointed at his blind eye. When he got his first peep he concluded that a maniac had invaded his sanctum and he almost expired with apoplexy on the spot.

Returning to the front office, the Agent entered the cashier's cage and took possession of the company's pouch containing its securities.

He gave no receipt to any responsible employee of the Scheftels company for anything. When Mr. Stone, one of the cashiers, suggested to him that he was there to safeguard the securities, he thundered,

"Come out of there!"

"What authority have you for this?" demanded Mr. Stone. The Agent thereupon showed his badge.

A moment later one of the deputies pried open the cash-drawer. The Special Agent was at his elbow.

"Oh, look what's here!" cried the deputy.

Thereupon the Agent of the Department of Justice impounded the contents of the cash-drawer, without counting the cash, checks, money-orders, etc., or giving any member of our firm a receipt for them.

Turning to the Scheftels officers and employees who had been placed under arrest, he ordered them removed from the room.

It was about as raw a performance as was ever witnessed in a peaceful brokerage firm's banking-room.

Bookkeepers were ordered to close up books. United States mail in the office was impounded, including mail that had been received in the office for delivery to others.

The Scheftels employees were commanded to stand in their places with arms folded. The desperadoes among them—those for whom a warrant had been issued and who had been jerked out and huddled together in the outer room—were then searched for deadly weapons. One penknife and the stub of a lead-pencil were found on their persons. The deadly knife was hardly sharp enough to serve the purpose of nail-manicuring. Not one of the men under arrest would have known how to use a revolver if it had been placed in his hands.

The men taken into custody were: Mr. Scheftels, aged 54, quiet and inoffensive, rounding out an honorable business career without a blemish of any kind on his character or standing; Charles F. Belser, one of the cashiers of the corporation and a 32d degree Mason, who never before in his life had been so much as charged with the violation of the spirit of a minor ordinance; Charles B. Stone, aged 60, another cashier whose sons and sons-in-law had served their country in the army and who, himself, was as peaceful as a class leader in a Sunday-school; John Delaney, Clarence McCormick, William T. Seagraves and George Sullivan, clerks of the establishment, who were as likely to offer resistance that would require gun-play to combat as were a quartette of psalm-singing children.

Mr. Scheftels protested in a dignified and self-respecting way against the brutal demonstration. He asked to see the authority for the raid. This was refused until after he and the other desperate characters were collected in another room. His demand to see the officers' warrant was met by a vulgar exclamation from the Special Agent, to the effect that, "If you don't shut up, we will put the irons on you! If you are looking for any trouble, you —— —— stiff, you will get what you are looking for!"

The absurdity of the armed invasion appealed to everybody but the ringleader of the raiders. It was a ludicrous situation from a service viewpoint. There had been no time up to the moment of the raid when a single man armed with proper authority could not have accomplished with decency and in good order everything and more than was done by the "rough house" and brutal invasion of the armed band.

Private papers were grabbed and bundles of certificates of stock, packages of money, checks, receipts and everything that came in sight were carried away. No complete record was made at the time of the raid of the documents and other valuables seized. The temporary receiver for B. H. Scheftels & Company, before his discharge later on, was able to gather together and take an accounting of part of the seized assets of the corporation, but I have no doubt that many thousands of dollars worth of securities and money were hopelessly lost.

When the wreck was complete the prisoners were driven like malefactors out of the front entrance, down the steps and loaded into the Black Maria. Five thousand people witnessed the act. The prisoners pleaded in vain to be allowed to pay for taxicabs to convey them before the United States Commissioner. They urged that as yet they had had no hearing and were innocent in the eyes of the law, and until convicted of some offense they were entitled to decent treatment. This request was refused. The delay in the start to the Federal building was just long enough to give the dense crowd that had filled the block time to insult the victims of the atrocity to the fullest extent. Friends of the arrested men boiled over with indignation and several fights occurred. Men were knocked down, trampled upon and the clothing torn from their backs in the desperate mÊlÉe. The scene was disgraceful.

An army of newspaper reporters, attended by a camera brigade, were on the spot and snapshotted the prisoners as they entered the Black Maria. With bells clanging and whips lashing, a start was made up Broad Street to Wall. Then the vehicle turned up Broadway and ding-donged on to the Federal building. There the men were arraigned. Bail aggregating $55,000 was demanded. Later several of the men taken into custody in this brutal manner were not even indicted.

Called upon to identify the prisoners, the Special Agent of the Department of Justice was unable to point out any of them except Mr. Scheftels. A stenographer in the employ of the corporation was forced to single them out.

The warrant proved to have been sworn to by the Special Agent and had been granted on his affidavit that the corporation had committed crimes against some few of its customers. Two of them have already been mentioned in this article as Slack and Szymanski, whose statements had been furnished to the attorneys of the Engineer & Mining Journal.

From the Court House to the Tombs, the Scheftels desperadoes, in shackles, were escorted up Broadway. Later in the day when bail was ready and the prisoners were sent for, they were handcuffed again and marched in parade up streets and down avenues of the densest section of New York City.

I had worked all afternoon in the lawyers' offices with one object in view, namely, the securing of bail for the imprisoned men. I succeeded. I now got busy with my own bail, the court having fixed it in advance at $15,000. In the morning I walked from my lawyers' offices to the Post-Office Building and surrendered myself, being immediately released on surety which was waiting in the office of the United States Commissioner. As I left the building I recognized scores of Scheftels customers. Several grasped my hand.

My indignation grew as the circumstances came up under review and I had time to connect and collate the facts. Gradually the whole truth revealed itself. I can relate only part of it. The full, detailed story would extend itself into a volume, and the space here at my command is limited. I learned that from the moment the Special Agent had been put on the scent with permission to put us out of business he had never slackened his effort to turn the trick.

His efforts attracted the attention of sundry newspaper editors with Wall Street affiliations and also enemies generally who hastened to coÖperate with him. His office as a Special Agent of the Department of Justice gave to his statements weight which would not have been given to them had he as an individual sponsored the charges. His official position imparted exaggerated importance to his statements in the eyes of newspaper men, and, after the raid, to the public.

A person whom we shall characterize as the Tool now appears on the scene with alleged information which he placed at the service of the Special Agent to back him up before the Assistant United States attorneys in New York with testimony since recanted over the signature of the false witness.

In the preceding chapter I called attention to some of the atrociously false statements that were published on the day following the raid. I gave only an inkling. The newspapers declared that Ely Central had cost the Scheftels company 5 cents per share, that the capital stock was over-issued, and that the property was worthless. Jumbo Extension, which has since distributed $95,000 in dividends to its stockholders, has still a treasury reserve of $100,000 and is selling to-day in the markets at a share valuation of about one-quarter of a million dollars for the property, was also described as a "fake stock." Rawhide Coalition, which has produced upward of $400,000 in bullion, and which is to-day recognized as one of the substantial gold mines of the Far West, was labeled plain junk. Bovard, which represented an investment of nearly $100,000 for property account and mine development and which had been promoted at 10 cents per share on representations that it was a "prospect," was stated to be a raw steal.

The Scheftels corporation was said to have got away with millions of dollars by selling "fake mining stocks." It was also stated that I had profited to the extent of millions for my personal account. The Scheftels mailing-list was described as a regulation "sucker list," notwithstanding the fact that the principal names that were on it were stockholders in Guggenheim companies.

The ringleaders were pictured as myself—"a man with an awful Past"—and the "notorious character," "Red Letter" Sullivan. Mr. Sullivan was styled as the facile letter-writer who had addressed the "suckers" and hypnotized them, principally widows and orphans, to withdraw their money from the savings-banks and send it to the Scheftels sharks. "Red Letter" Sullivan was also referred to as a man with a "Past."

The true facts regarding Mr. Sullivan's connection with the Scheftels company were these: A few months before, he had applied for a position. He was then employed as manager of a Boston stock-brokerage office. He was awarded the job of time-clerk in the stenographers' department.

His job, while employed with the Scheftels company, was to see that the stenographers reported on time, did their work properly and were not paid for any services they did not render. He had little or nothing whatever to do with the correspondence department. He never dictated any answers to letters received by the Scheftels company. Never was he employed in an executive capacity by the Scheftels company. We knew little or nothing of the "Red Letter" title with which he had been decorated. The first we learned of it was in the newspapers after the raid. Investigation revealed that ten years before, while a broker in Chicago, he had issued a weekly market letter which was printed on red paper.

I have thus far not given space to one of the greatest wrongs connected with this disgraceful proceeding—the wrong and damage inflicted upon a multitude of helpless stockholders. While the Special Agent of the Department of Justice and his armed followers were wrecking the Scheftels offices and terrorizing the place, the Scheftels group of mining stocks was being savagely raided on the Curb and enormous losses were inflicted on the public. Thousands of margin accounts were wiped out in less time than it takes to tell of the massacre. Declines in Ely Central, Jumbo Extension, Rawhide Coalition and Bovard Consolidated exceeded $2,000,000. This loss was distributed among approximately fourteen thousand shareholders of record and as many more not of record.

This large army of innocent shareholders was helpless. From such species of confiscation the law affords no relief or recourse, except actual acquittal of the arrested persons, in whom lies the confiding investor's only chance for the market rehabilitation of his securities.

A TOOL'S CONFESSION

The signed confession of the Tool of the Special Agent, who appeared before Assistant Attorneys Dorr and Smith at the United States Attorney's office in New York, which says he gave false testimony, and the voluntary statement of John J. Roach, a stock broker who was employed by the now defunct firm of Frederick Simmonds, regarding the relations between the Special Agent and that firm, while Special Agent of the Government, reveal the weak foundations of the Government's charges.

The Tool, prior to the raid, had been in the Scheftels employ. For a few months he had been a traveling business-getter for the firm. Then he was discharged. He associated himself with Frederick Simmonds, a member of the Consolidated Stock Exchange. Mr. Simmonds was badly in debt. The Tool had no money. The Agent, when he was trying to get the United States Attorney's office in New York to agree that the information collected was sufficient to warrant a raid, prevailed upon the Tool to appear before the assistant attorneys and give testimony.

In this story the chief value of the Tool himself is that he has no value. He made his statements against us to Mr. Dorr, assistant U.S. district attorney. Then he gave me a statement, signed in the presence of witnesses, recanting the statements made to Mr. Dorr. To this he later added a written postscript enforcing his recantation. Then he re-recanted and said that a large part of his first recantation, signed by him and initialed by him on each page with his initials was false. The reader is left to judge just which one of the Tool's three positions is the one in which he tells the truth. It is obvious that he must be lying in the two others, and it is not impossible that he may be lying in all three—except that some of the stuff in his first recantation, which he later denies in his second, has been verified from other sources.

Here is the main point to bear in mind concerning the Tool,—the sovereign power of seizure, search and confiscation brought into play by our great Government without due process of law, was based in part on the flimsy testimony of such a person. Thousands of investors suffered from the blow, as well as myself and associates.

It would appear from the Roach statement that he was largely instrumental in bringing about the crisis that resulted in the suspension of the Simmonds firm and in the disclosures of the Special Agent's relations therewith. These facts have become, in most instances, matters of public record. They came out during the hearings before the receiver for the bankrupt concern. It was found that the liabilities of the "busted" firm were $85,000 and the assets 100 shares of cheap mining stock and between $1,500 and $2,000 in cash. It was at this conjunction that the Special Agent was allowed to resign from the Department of Justice. The Tool he had foolishly used had proved to be a two-edged one. The Agent had been "hoist by his own petard."

THE GUGGENHEIMS

Probably the most surprised branch of the Government at the time of the Scheftels raid was the Post-Office Department. The crime charged was misuse of the mails. Why, if the Scheftels aggregation were guilty, didn't the Post-Office Department do the raiding? Why didn't it issue a fraud order? The Scheftels company has since been declared solvent by the courts and the temporary receiver discharged. To this day no fraud order has been issued. Only a short period before the raid, a presentation on the part of the Post-Office Department of all of the evidence in the case had been met with a decision that there was no ground for action.

That the Guggenheim interests did not fail to take advantage of the plight of the House of Scheftels immediately after the raid finds conclusive proof in the transpirations in the Ely mining camp. Soon after the Special Agent descended on the Scheftels offices, an application in Ely was made for a receiver to take charge of the assets of the Ely Central Copper Company. The attorneys making the application were Chandler & Quale, attorneys for the Nevada Consolidated Copper Company, a Guggenheim enterprise. When the court appointed a receiver he named this firm as attorneys for the receiver. Attorney J. M. Lockhart for the Ely Central made a protest that these lawyers, because of their connection with the Nevada Consolidated were not the proper persons to protect the interests of the now defenseless Ely Central stockholders. Then the court appointed another attorney, named Boreman.

Shortly after the receiver was appointed, he applied to the courts for permission to sell to the Nevada Consolidated for $30,000, which represented the entire cash indebtedness so far as the receiver knew, the surface rights to a large acreage of Ely Central and the rights through Juniper Canyon. This, if accomplished, would have given to the Nevada Consolidated a railroad right of way that would have solved the problem confronting it of the transportation of the ores from the lower levels of the steam-shovel pit. Without such an outlet these ores could not have been handled without great expense and much difficulty. The benefits that would have accrued to Nevada Consolidated were almost incalculable. At the same time, such action would effectually cut the Ely Central property into two parts. According to the petition it was stipulated that in selling the surface rights the Ely Central should cede to the Nevada Consolidated practical ownership, because it was specified that Ely Central could not interfere in its mining operations with any rights granted. Attorney Lockhart of Ely Central fought the receiver and his attorneys and won a victory. The Ely Central property was saved intact for the stock-holders.

Later, an application was made to the court to sell the entire property of the Ely Central for $150,000. This was believed to be in the interests of the Nevada Consolidated. In answer, a petition was filed to discharge the receiver on the ground that the court originally appointing him had no jurisdiction. The court finally decided that it was without jurisdiction, because neither fraud nor incompetency had been proved, and the property had not been abandoned. The receiver was discharged.

What has been the attitude of the Department of Justice since the raid was made? Since the raid the Government has spent several hundred thousand dollars to disclose sufficient evidence from the books to make a case of any kind. One stand after another has been taken only to be abandoned after exhaustive research for evidence to sustain the original excessive pretenses. Grand Jury after Grand Jury has thrashed over masses of evidence presented them. Armies of accountants have worked day and night for weeks and months in an effort to substantiate the action of the authorities who were led into the commission of a grave wrong.

The charge that the Scheftels corporation sold fake mining stocks has fallen to the ground. Government examinations of the properties have revealed them to be all that they were cracked up to be. Careful and industrious reading of the mass of market literature sent through the mails by the Scheftels corporation has failed to disclose deliberate misrepresentation regarding the potentialities of any of the mining properties.

The Scheftels corporation transacted considerable margin business with its customers in the stocks which it sponsored—Ely Central, Jumbo Extension, Rawhide Coalition and Bovard Consolidated. If the Scheftels corporation was run by rascals wouldn't they have been tempted frequently to throw their weight on top of the market and endeavor to break the price of stocks to wipe out the margin traders? Did the Government find any evidence of this in the books? No. It found evidence—overwhelming and cumulative—that on nearly all occasions the Scheftels corporation actually exhausted its every resource to support the market in its stocks and hold up the price in the interests of stockholders. Evidence was also found in quantity that the Scheftels company discouraged the practice of margin-trading.

The superseding indictment handed down by the Grand Jury late in August, 1911, eleven months after the raid, eliminated the charge of mine misrepresentation regarding the Scheftels promotions and reduced it practically to one of charging commissions and interest without earning them.

Not less than 85 per cent. of the total brokerage transactions of the Scheftels corporation were in their own stocks, and at nearly all times in the Scheftels history it had on hand, put up on loans or in banks under option, anywhere from three million to seven million shares of these securities. It actually bought, sold and delivered in this period over fifteen million shares of stock!

As already stated, the Scheftels corporation made it a practice to sell stocks on the general list as an insurance against declines in the market which might carry down the price of its own securities, and this, in the finality, was what the Government, after the expense of hundreds of thousands of dollars and the employment of the wisest of counsel, was compelled to tie to in order to justify in the eyes of the great American public the use of the rare power of seizure, search and arrest and of its denial of a prayer for a hearing to the victims which was made before the arbitrary power was used.