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Title: Don Quixote in Finance, or Has Canada a Medici?
   A Tale of Treasons, Stratagems and Spoils.
Author: Jarvis, William Henry Pope (1876-1944)
Date of first publication: probably 1920; no later than 1923
Edition used as base for this ebook:
   [No publisher, place of publication, or date.
   Jarvis dates his preface "Toronto, March, 1920."
   The library stamp on the physical copy used
   to create this ebook gives the acquisition date as
   "JAN 18 1923".  Presumably the first edition.]
Date first posted: 11 February 2013
Date last updated: 11 February 2013
Project Gutenberg Canada ebook #1043

This ebook was produced by
Iona Vaughan, Nicole Henn-Kneif, Mark Akrigg
& the Online Distributed Proofreading Canada Team
at http://www.pgdpcanada.net

This file was produced from images generously made available
by the Internet Archive/University of Toronto - Robarts Library






                              DON QUIXOTE
                               IN FINANCE

                                   OR

                          HAS CANADA A MEDICI?



                         _A Tale of Treasons,
                       Stratagems and Spoils_


                                   BY
                            W. H. P. JARVIS

    Author of "Letters of a Remittance Man," "The Great Gold Rush,"
                          "As Others See Us."


               _For Circulation amongst the Legislators
                             of Canada._





PREFACE


In the minds of all men the individual holds a duty to his fellows: in
fact, the State holds obligations to the individual. And, undoubtedly,
justice for the individual is in the self-interests of the many. Modern
cant promulgates the philosophy that questions of State only lie in the
general interest; when one man is wronged does not his neighbour ask:
"May I not be next?" Should the doctrine obtain that the State holds no
duty to the individual, whither shall we drift?--for the State is really
the individual and his brother!

The pages that go into this pamphlet tell the story of one
who--according to his lights--has tried to hew to line. The astounding
lesson to be drawn from the tale is that, not only are the hearts of our
real rulers, our money-barons, impregnable against the call of justice,
but that the law, always precarious, is much more elusive than one bred
to the spirit of British moral sense, was wont to believe.

By our processes in the courts trained minds are necessary to one's
guidance; indeed it has been said that the man who takes his own case
before a judge has a fool for a client. If then one is compelled, in the
pursuit of justice, to place his fortunes and his very soul in the
keeping of another, and if justice is the very basis of civilization,
then may we fear for our institutions when we feel that one's counsel
may be subjected to intimidation or one's solicitors forced into being
party to shifty compromises, wherein their client is not considered.

I hold that the general unrest throughout the world is due to the
realization that popular government has been tried and found wanting.
This may be called Bolshevism, and if I am called a Bolshevist I would
point out that I have no desire to unwrongfully dispossess any man of
his property, that I do not wish to kill anybody, that I have no
ill-will towards His Majesty, our King. I am of complete United Empire
Loyalist descent, and so strong is my affection for the British Throne
that I believe in extending its powers rather than curtailing them.

To-day we have whole orders of rulers, all of whom must be satisfied at
the cost of the public. Let us go to humbler fields for light. A Grand
Trunk Railway conductor was once "had up" on "the carpet" for "knocking
down" fares. He told his chiefs that he was guilty, but pleaded that now
he had a house and everything he wanted in life and was inclined to
remain honest for the remainder of his days, whereas, if he were
dismissed and another put in his place, the new man would have to get
all these things. So it is with our rulers: If one man were dictator and
he were held in his position by the will of the people, then we would
have only one to satisfy, whereas, to-day, we have scores of vampires
and parasites, backed by the press and supported by interests, who must
be fed and who are daily becoming more rapacious.

Many of my strongest impressions were gained during my stay in the
Klondike. The generality of the men who essayed that wilderness in those
days were virile in the extreme, yet each band of miners on the trail
elected to its head a boss, who to all intents and purposes was king.
The history of the Yukon bears this lesson: in the very early days, when
the Mounted Police, under Captain Constantine, held despotic rule, title
was given to an immense amount of the richest land, and not one word of
scandal grew out of it; but when the politicians took the country over
and "Democracy" held sway, official life became one grand carnival of
wine, women and song.

Stock Exchange circles should be explored and laid open: the brokers
should be made to display to the public the amounts lost through their
offices--there is a constant stream of Canadian money flowing to New
York Stock Exchange. Canadian Exchanges do not appeal to the speculator,
because their committees are too tricky: the slogan of the Canadian
Broker is that a sucker is born every day. This is a false doctrine.

In 1814, Sir Thomas Cochrane, "known as Lord Cochrane," and several
others were tried on a charge of "spreading false news, thereby to raise
the price of the public funds, and thence to enable the principal
conspirators to enrich themselves and their meaner agents to be
benefitted and rewarded for their respective parts which they had taken
in the nefarious transaction."

By a most elaborate and picturesque conspiracy these men had spread the
story that Bonaparte had been torn to pieces by Cossacks. They were
sentenced each to a fine of one thousand pounds, twelve calendar months
in goal and to stand for an hour in the pillory before the Royal
Exchange. In sentencing Cochrane, His Lordship spoke of his great regret
at finding one of his high rank and one who had been rewarded by His
Majesty for distinguished service abroad, allied to a "banditti of
depredators of the worst and foulest kind." This "banditti" of
"depredators" would be considered clever business men in Canadian
Stock-Exchange circles, and the crime of which Lord Cochrane was guilty
our exchanges in 1914 closely paralleled and held themselves up as
patriots for so doing.

In 1916, a Canadian financier was denounced in Parliament for stating
falsely that his company was making 100 per cent. on a munition
contract. No criminal proceedings were taken against him: is this
progress?

When the young man, entering financial life, learns the rampant
dishonesty of our financiers, and sees them exalted by the press, he
feels that ideas of honour are a mistake and that, if Sir Camouflage
This or Sir Camouflage That has made his money outside law and decency,
he may do the same: no doubt but that the press would be equally as
servile when he could afford to pay. And then he imbibes the doctrine
that one must live--without work--and that one cannot remain honest and
succeed.

It is time that our middle classes, those who comprise the decent
element in our land and from whose ranks are recruited the
self-sacrificing, should organize. They are between the mill-stones.
They have been taught that their duty to themselves is to mind their own
business and that patriotism is limited in its call to resistance of
aggression from without and the maintainance of the status quo within.
Our middle classes should realize, on the principle that charity begins
at home, that it is the duty of a man to fight wrong wherever he sees
it.

It is well to hold to constitutional methods and such, but, if our press
and our Parliament are in the power of the money cult, how long will it
be before they can be ousted, if the middle classes don't organize to
obtain basic facts? Let us take the case of Sir Thomas White! There is
no doubt but that this man entered Parliament for the particular purpose
of serving--not his country--but his friends, of loading the Canadian
Northern incubus on the broad shoulders of the Canadian People: that his
name should be advanced as a candidate for the premiership is
bluff--capitalistic effrontery.

To my mind the greatest enemy that a land may have is he who corrupts
its government. Such a man is a traitor: he is a traitor to that greater
thing called Civilization. When a people elect a government as a choice
between two evils, there is the element of chance as to what the
muddlers will do, and being of sporting instincts we are prepared to
take what is given us; but when the muddlers are swayed by blackmail or
bribes, or both, then should our virility be aroused.

Our education teaches us to seek a living without work and, as the ranks
of the educated increase, the premium on brains is lost and is carried
to those who labour with their hands. So the labouring man finds himself
a power, and so he may talk freely and think. And he has made the
discovery that money-getting ability is not an endowment of Heaven, but
an inspiration of evil, that capital is shifty and that most capitalists
are not wizards, but plain crooks.

If the money-cult blocks investigation into its ways, perverts the
workings of our processes of law, in short, does everything it
can--stopping at nothing--then it can hold sway and rule as it has been
ruling.

If the great middle class is wise it will turn the limelight on the ways
of our money-lords; it will not be dissuaded by Sir Camouflage This or
Sir Camouflage That being a savant of Art: it will remember that Modern
Paris is largely the work of that scoundrel Napoleon, that the late
Emperor of Germany had a genuine interest in archaeology, and that
Rameses II., the Pharaoh who oppressed the Israelites, had such an
appreciation of art that he scored the names of his predecessors from
much of the Temple of Karnack, and substituted his own, a piece of
effrontery that remained unrivalled until a Canadian Financier caused a
practiced writer to compile a volume and stamped it with his own name as
eye-witness to the war.

The capitalist has learned to commercialize public regard; he will put
through a rascally deal, which he knows will be recognized by many, and
then by a gift to a charity, seek to gain more than he has lost; so he
runs a process of debit and credit. To the politician and the capitalist
it is the plaudits of the mob that is the thing.

If a rising against our capitalistic government occurs, and we are
drifting to it, and our people begin to kill, the trouble is that things
will be carried to excess. My own idea is that the man who bribes a
politician should be hanged, and, from what I feel I know of our
capitalists, I could see some of them shot and feel no regret, but with
passions turned loose an undue number of people would suffer.

There is no doubt but that the capitalist would rather see our country
torn by civil strife than give up his practice of corrupting
governments. He is like the Jew of whom a story is told. When the
Islander struck among the Alaskan Islands and passengers were rushing to
the boats, this Jew ran to his cabin for his gold. When he arrived on
deck the boats had pushed from the ship's side; he jumped into the
water, still holding to his gold--and sank.

As to the Stock Exchange! Our people should take warning by the attempt
recently made to steal from the taxpayers of the City of Toronto some
$20,000,000 by inducing them to buy the Toronto Street Railway assets
for $40,000,000. The basis of this deal was to be the price at which
Toronto Rails sold at in the market, and this price was undoubtedly
fraudulent.

It has long been my opinion that more than one of our banks has been
interested in the fortunes of Mackenzie and Mann. In the Street Railway
purchase campaign five out of six of Toronto's papers were brought into
line to betray their patrons, and it is unreasonable to believe that one
bank could effect this.

The workings of our mining companies demand very thorough looking into.

These pages have been hurriedly put together, and they are not issued
with any idea that they hold literary merit. Indeed, my story has been
abridged, but, with the knowledge that this might have been made
stronger, the reader may judge of all things.

             Toronto,                                  W. H. P. J.
               March, 1920.





                         DON QUIXOTE IN FINANCE




                                Book I.

                             The Maelstrom.


HOW IT HAPPENED.

One evening, in the Autumn of the year 1909, I met the newly-appointed
editor of a Toronto weekly journal, the "Saturday Night," leaving a
theatre, and we exchanged greetings. He asked me concerning Crown
Reserve Mining Stock, and I said that it was rotten. I asked him if he
would care to have something on it, and he replied that he would. I then
began to write, first over the name of "Cobalt," and later over the nom
de plume "Shepherd," a series of articles that were to make me a marked
man.

The "Saturday Night" was, at that time, an innocuous society paper of
very good repute. Crown Reserve Mining Stock was at the height of its
boom, selling around six dollars per share. Recently I had shorted in
the market a thousand shares, by instinct. When I began to figure out my
position I found it outstandingly good; thus I wrote in the columns of
the "Saturday Night" for Nov. 13th, 1909:

     "Crown Reserve may be summed up as follows: About $1,000,000 in
     liquid assets, or about 50 cents per share on the $2,000,000 issued
     capitalization. Take 50 cents from its present price ($5.50) and
     you have $5 per share, or $10,000,000 in clear profits to be dug
     out of the ground. As ten per cent. goes to the Government (Crown
     Reserve paid the Government a royalty of ten per cent.), that adds
     another million-odd necessary.

     "But the ordinary individual is not satisfied to tie up his money
     for five years for nothing; he wants a profit. Suppose we add
     $5,000,000 for profit, that makes $16,000,000. Now, something for
     getting out the ore, say $4,000,000, or $20,000,000, which is
     approximately the amount of ore which must be taken from the mine
     in the next four years to justify the present price, that is unless
     it has an extraordinary life."

How sound this reasoning was many a tenacious holder of the stock has
since had reason to judge; when the dividend was finally cut, the
morning after the President of the company was greeted at his office by
a long queue, seeking to learn what had become of their fortunes; but
this is much in anticipation of my story.

On Nov. 19th, I wrote as follows:

     "The most (ore-in-sight) the Crown Reserve people claim is
     $7,000,000, which is one-third of what is required. Consequently
     Crown Reserve is worth only one-third of what it is selling at,
     accepting the insiders' statement of reserves."


DIPPING FURTHER.

So much did the soundness of my argument impress me that I took a trip
to Montreal to investigate the story that the insiders were acquiring
the shares, a fable scattered abroad to aid the market. At the transfer
agents' I was refused access to the books, so I went to the Secretary's
office. Here I was given no information along the lines I was
investigating, but I was shown a piece of ore from the 200-foot level of
the mine. This consisted of a piece of smaltite (cobalt ore) through
which ran a seam of massive silver. To anyone unfamiliar with Cobalt
Camp and mining generally, this ore would have told a tale of enormous
riches, but to any who knew it conveyed the information that it had been
mined at a point close upon the contact between the Huronian and the
Keewatin rocks, and that the bottom of the mine, if precedent counted
for anything, had been reached. It will be remembered by mining men that
early in Cobalt's history Dr. W. G. Miller, Provincial Mineralogist for
Ontario, set forth the theory that when the veins in Cobalt Camp ran
through the Huronian, in which they chiefly occurred, into the
underlying Keewatin, they would lose their values. The ore taking on the
character I have mentioned indicated that this point of transition had
been reached.

Had I been imbued with the cunning that is generally the complement of a
villainous nature, I would have affected glad surprise at the richness
of the sample and the prospects of the mine generally. But I frankly
told the Secretary my opinion of the mine, with the result that when, in
Toronto on the following morning, I wished to short several thousand
more shares, I had trouble in getting rid of them, the market falling
like a punctured balloon.

The insiders were very angry at their loss of market, or at me, and it
took them some time to regain their nerve. Some person in their interest
had recourse to the well-worn method of creating a man of straw and
indignant denials of the story that the mine had been flooded were
printed in the press. Had anyone circulated such a story he would have
been guilty of an indictable offence and liable to seven years in gaol,
for such is the law. In the meantime, the astute in the market divined
that I was the writer in the "Saturday Night," and that I was short of
the market. This was not particularly clever of them, as I made no
effort to hide my identity.


HOW IT IS DONE.

For the reader to follow this narrative it is necessary that something
should be said about the process of shorting the market, or "selling a
bear," as it is termed in England. There are two ways of going short of
the market; one is by selling for future delivery, the other is by
borrowing stock and selling it for cash. The ordinary man is ready to
comprehend the first method, that of selling stock delivery in sixty
days in the hope of purchasing it in the interim at advantage, but that
of borrowing for delivery is beyond him; he does not comprehend it, and
he is ready to believe it to be dishonest, as there are many who would
have him do.

Let us illustrate the process in a humble walk of life: Jones and Smith
are two brick-makers, both producing their wares. But Jones is selling
his bricks as fast as he is turning them out, and Smith is hoarding his
for higher prices. Jones has more orders than he can fill, and if he can
secure temporary possession of some bricks he feels that he can replace
them at a future date, at advantage. So he goes to Smith and borrows
what he desires, and sells them for cash. And he gives Smith the amount
realized as security for the return of the bricks. Obviously, if his
reckoning is good, he makes money; if at fault, he loses.

To any one with the most rudimentary knowledge of finance it will be
apparent that the possession of the money by Smith is of advantage to
him, so as a matter of equity he should allow interest on it. When such
a transaction occurs between traders in the stock market this is
generally done.

But stocks bear interest--carry dividends--and when a trader lends his
stock it passes out of his name and he loses this money: the obvious
thing is for the borrower to pay the dividends, which he does.

This is all perfectly simple, quite legal and clearly not immoral; any
number of enquiries have been made into the process, and all tribunals
have endorsed it, and some have said that it is a clear protection to
the public, in that it has a tendency to mitigate against inflation.


WHAT ABOUT IT?

Some people have said that it was dishonest in me that I disparaged
stocks in whose fall I was interested. To this I will say that I wrote
in favour of stocks I held--such as Hollinger, when it first appeared on
the market at $3.50. One may write after two manners: one may deal in
facts or one may advance arguments. If I wrote falsely about stocks,
with intent to mislead, I was guilty of an indictable offence, a public
mischief and a remedy lay in a warrant. If one advances false arguments
they generally show their character.

But suppose I had been wrong in my argument that Crown Reserve was worth
only two dollars, and not six as it once reached on the market, and
suppose I had been the cause of its selling below its value, the harm I
did the seller would be no greater than the benefit I did the purchaser;
if one could, by his writings, cause eggs to sell at ten cents the
dozen, there would be few others than the producers of eggs to call him
an enemy of mankind--though he well might be. Again, in the particular
case of Crown Reserve: there were many who had purchased their holding
in this issue as low as ten cents per share--if I spoiled the market for
such it was a case of money they did not make. But when I dissuaded from
buying at high prices those who otherwise would have done so, I saved
them from losing money garnered in hard fields.

People who posed as the possessors of altruistic minds were loud in
their condemnation of my position and my writings and, it must be
confessed, they had much in tradition to support them. By the custom of
the ages the market is the privilege of the seller: if one sees a dealer
making a sale of a spavined horse to a tenderfoot for $100 and one steps
in and spoils the deal, pointing out that the horse is worth only $75,
the benefit one does the buyer is equal to the harm one does the seller,
obviously. But in such a case one finds that, while the tenderfoot will
give scant thanks, the dealer will hold spite to eternity and, more
remarkable than all else, the public will afford one scant recognition.


RIGGING THE MARKET.

And now it is well for us to pass on to the greatest question of ethics
that springs from the stock market--manipulation. How does a stock sell
for six dollars when it is worth only two? This is enigma to the
ordinary man. The answer is: manipulation. There is not, I believe, a
great financier in the land who has not practiced, inspired, been party
to or benefitted by it. It has been estimated that it makes up
nine-tenths of the business on the exchanges, and so, if we satisfy
ourselves as to the morals of it, we satisfy ourselves as to the morals
of the exchanges. It goes by different names: in books of English Law it
is called "Rigging the Market," and in this country the processes that
go into it are known as "washing sales," "matching orders" or "making a
market." The difference between these first two processes is drawn in
that "washing sales" is simply marking sales on the board without a
transfer of stock, and "matching orders" is buying with one hand and
selling with the other. In America, "making a market" means rigging the
market. In England the term indicates that a man offers to buy at one
price and sell at another, quite a legitimate process. While many
brokers admit that washing sales is bad, the majority of them believe
that matching orders is quite legitimate.

As a matter of fact it is an abominable fraud. Judicial pronouncement on
the process has been rendered in the findings of the Court of Appeal in
the case of Scott v. Brown, 2nd. Queens Bench, 1892, page 724. Here Lord
Lindley says:

"I am quite aware that what the plaintiff has done is very commonly
done; it is done every day. But this is immaterial. Picking pockets and
various forms of cheating are common enough, and are nevertheless
illegal." Lord Lopes says: "Is such a transaction illegal? I am of
opinion that it is and might be made the subject of an indictment for
conspiracy." Justice Wright says: "I can say that if persons, for their
own purposes of speculation, create an artificial appearance in the
market by transactions that are not real, but are made at a nominal
premium merely for the purpose of inducing the public to buy, they are
guilty of as gross a fraud as ever has been committed, and of a fraud
that can be brought home to them in the criminal courts."

The report of the Pujo Commission that, a few years back, inquired into
the workings of the New York Stock Exchange, mentions the case of the
Hocking Coal deal, by which the market for the shares was, by
manipulation, advanced from $24 to $90, and it afterwards fell to $2.
One who was induced to buy at $90 by such criminal processes, that which
was worth only $2, was despoiled as criminally as if he had had his
pockets picked, yet there are those who say that the business of the
Stock Exchange cannot be carried on without it; as regards some people's
business, the statement is no doubt correct--but is it necessary that
they should carry on the business?


BUCKING UP.

The Crown Reserve shareholders recovered from their panic; it is
interesting to note how tenacious they were in the face of what, to-day,
appears the soundest philosophy. On February 5th, 1910, I wrote:

     "The Crown Reserve directors met and the shareholders were assured
     that dividends at the rate of 60% per annum would be paid during
     the year. So far as the newspaper accounts of the meeting went
     there is no statement of the ore reserves. A mine's reserves are
     its sinking fund, yet the stockholders are assured of only sixty
     cents against a stock value of $4 in the market. . . . Crown
     Reserve is particularly a one-vein mine, the Carson vein passes
     from the Silver Leaf and enters the Kerr Lake, distance 250 feet.
     200  250 is the block of ore called upon to guarantee a value of
     $8,000,000. This block of ore has already produced $2,000,000 at a
     loss of over 25%; in fact, probably over 50% of its value. . . .
     The situation is that the directorate of the Crown Reserve is
     hoping beyond hope that it will find other assets in the property.
     Two Carson veins on one 23 acres of land are too much to expect."

While this did not jar loose from holders their stock, it must have
given the possible purchaser pause, and I was hated the more; but it was
clean argument and would have been passed as such by any engineer. It
was not until 1914 that the final crash came, and the widows and the
orphans foregathered at the office of the company to learn where lay
their fortunes. But not one word of commendation did I ever receive for
my efforts in behalf of the unwary.


AT THE WINDMILL.

Many of my acquaintances in the financial district now began to look
askance at me; I was spoiling the game: the gullibility of the public
was their chief asset. The members of the Stock Exchange learned to hate
me with an increasing hate. But it was not until I took a tilt at Cobalt
Lake that general opprobrium became virulent. I was viewed as one who
had peached on his pals, but it was overlooked that I had never been a
pal, that I had never had a hand in a stock promotion. That one might
have a prejudice to that sort of thing was enigma to them; all peoples
believe their callings to be respectable. This extends to pick-pockets
and cracksmen.

The history of Cobalt Lake is, in many ways, an object lesson; it speaks
of outstanding financial daring on the one hand, and the wide borders of
credulity on the other.


WATER.

When it was announced that the mining rights under Cobalt Lake were to
be sold by the Government, great interest was manifested all over
Ontario, particularly in the Ottawa Valley. Syndicates were formed
without number: I subscribed to one at $1,000 per share. The promoters
of the different syndicates met in Toronto, where, instead of bidding
separately, their subscriptions were merged and thrown at Queen's Park,
the hand of Sir Henry Pellatt being chosen for the work. This was late
in 1906. One million and eighty-five thousand dollars was paid for a
property that it would have been difficult at the time to find an
engineer who would have recommended it at the $85,000, without the
million. For myself, I may say that I looked with apprehension on the
deal and, consistent with such attitude, I sold my share at the first
opportunity. Not so others. There came a veritable boom in the shares,
and a company was formed. In this company, if I remember rightly, three
hundred thousand shares were allocated to Sir Henry Pellatt as
commission for his having acted in the purchase, and he was made
President.

It is very hard to understand how so large a sum as $1,085,000 came to
be paid for the mining rights under Cobalt Lake for, the syndicate being
merged, competition was largely eliminated and, certainly, no individual
would put any large sum into such a wild gamble. Mr. George E. Drummond,
of Montreal, told me that his bid was $32,000. Had $100,000 been bid for
the property it would have, no doubt, been effective. It would have been
well had this been done and the balance of the subscriptions returned to
the subscribers to the several syndicates, sufficient money being
retained to furnish a reasonable working capital. The files of the
Department will, no doubt, contain a record of the other bids for the
property, and can furnish evidence of what real miners thought of it.


THE COBALT LAKE MINING COMPANY.

The company was capitalized at $5,000,000, and the dollar shares were
issued at 85 cents; that is, the public was invited to enter the project
on the basis of around $4,000,000 for the property.

Such an issue was, of course, foredoomed to failure, and the shares
rapidly sank on the market until they reached below ten cents a share,
while the mine went into the serious struggle for existence: in other
words, to produce payable ore before its treasury of $185,000 was
exhausted. I have been told that it once was in debt to the extent of
$40,000.

After a most precarious existence over some years it struck ore of a
body found for it by the McKinley-Darragh, at the south end of the lake.
Close upon this, and before the news became generally known, followed
the most astounding adventure ever essayed in Canadian finance, and here
is where I again caused myself to earn the resentment of the financial
interests.


A DOUBLE SHUFFLE.

The Cobalt Lake Mining Company applied to the Provincial Legislature for
powers to buy in its stock with its own treasury, a process, in the
ordinary course of events, that is a criminal act. Nobody but a complete
fool would have failed to look upon this proposal with suspicion, and it
was opposed in committee by W. D. Macpherson and W. F. Nickle.
Notwithstanding the opposition of these, with others, the bill became
law. I did hear that the lawyer who lobbied it through, when asked
whether he thought such legislation possible, said that he could get
anything through the Ontario Legislature; he evidently did not make a
vain boast.

Not only was the enterprise worthy of the most acute suspicion, but it
was obviously unfair to the bears in the market, and on such grounds
alone it should have been severely discountenanced by the exchanges; a
bear has no chance when confronted by such legislation. Of the news I
wrote:

     "The startling announcement has been made public that Sir Henry
     Pellatt, President of the Cobalt Lake Mining Company, intends to
     ask the shareholders for authority to purchase 1,500,000 of Cobalt
     Lake stock with a view to lessening the capital. As the Cobalt Lake
     Mine has spent about $150,000 more than it has earned in the last
     three years the question naturally arises, where is the money to
     come from?"

     "The possibilities of Cobalt Lake as a mining venture seems to have
     appealed to the people of Ottawa more strongly than to others and,
     when outsiders saw that the price paid made the proposition
     hopeless they sought a market in Ottawa. Civil servants and
     Government grafters, and even those who wished they had a graft,
     raided their savings accounts, they mortgaged their homes and their
     life insurance to buy stock in the most impossible wild-cat born of
     Cobalt. As a mining proposition it was hardly second to Frank Law's
     "Silver Bird" in impossibility. Law never left several hundreds of
     thousands of dollars in Silver Bird's treasury."

     "It would seem that if the Cobalt Lake shareholders desired only to
     lessen their capitalization they would do so with a new issue of
     stock; as the capitalization is $5,000,000 they might cut it in
     half by giving one new share for every two held, or they might give
     two for three or even one for five."

     "When the writer speaks with assurance on the impossibility of
     Cobalt Lake he bases his judgment on the limitations the deposits
     seem to have as regards depth and the presence of the lake above
     its area. . . ."

I may say that when the Government sold Cobalt Lake, a condition of the
sale was that the water was not to be drained; the subsequent setting
aside of this stipulation doubtless rendered possible the measure of
half success the mine has attained over the last few years. I was
justified in considering the lake an incubus.

The quotation I have made from my writings in "Saturday Night" might
have been worded more carefully; it was not good journalese, but it is
hard to find in it justification for the paroxism of hate it engendered
in the Stock Exchange. Perhaps it was the comparison of Cobalt Lake with
Silver Bird that hurt: the promoter of Silver Bird received five years
in gaol for fraud.

Cobalt Lake's President wrote an angry letter of protest to the
"Saturday Night." This communication, after being censored, was
published. The lines deleted claimed that I was short of the market,
which was to explain all things. The communication, as it appears in the
files of "Saturday Night," is a long one. I shall give the most potent
points:

     "It is the intention of the Company to reduce its capital
     stock--that is a matter for the directors of the company and the
     shareholders to decide upon. It is also a fair matter of comment
     whether such a step is for the benefit of the company, or
     otherwise."

The application of the last sentence in the above quotation is not quite
clear, at least to me.

Again:

     "If he knows anything he knows that it is no crime to leave stock
     in the treasury, yet he imputes wrong-doing."

This last well illustrates how far asunder divergent views may carry
people; my mind was that of a miner--that of Sir Henry Pellatt that of a
stock broker and promoter. The only inference I wished to convey was
that had Law left $150,000 in the treasury of Silver Bird, the
expenditure of the money might have made a mine out of the property to
equal Cobalt Lake. And who can say that the suggestion was not
pertinent? Again: I have no doubt but that Sir Henry Pellatt regards
stock market manipulation quite worthy and a quite legitimate
enterprise, and that those who oppose it are, at best, cranks who would
clog the wheels of progress or, at the worst, crooks who would seek
profit in the decline. I regard stock market manipulation as one of the
crying evils of the day, one of the processes by which are amassed those
great fortunes which make possible the display that breeds the
syndicalist--besides, it is a crime.


THE WILD-CAT.

Perhaps it was that Sir Henry Pellatt was distressed at Cobalt Lake
being called a wild-cat, and it would be well to learn what a wild-cat
is. In this connection I cannot do better than quote from the
after-dinner speech of an old Klondike friend:

     "I have been asked by the president to propose the toast of mines
     and mining. Now, I should know something about mines, having been
     to that town called Rossland, where, as you know, there are many
     mines. There are two kinds of mines, gentlemen, if you follow me;
     there is the mine and there is what is known as the wild-cat mine.
     The wild-cat mine is particularly distinguished by a total absence
     of mettaliferous ores, and this, gentlemen, is what makes the
     animal so very wild."

The above, quoted in a very affected voice, is generally calculated to
bring a laugh; it also carries about the best definition of a wild-cat
mine. And Cobalt Lake qualified its requirements completely; at its
inception it suffered from a total lack of ore, and how anyone could
stand on its shores and visualize the extraction from beneath its water
of the fifteen or twenty million dollars necessary to justify its
capitalization, I don't know; I cannot believe that any one could. What
is certain is that it never has, and its history has all but been
written.


THE HEART OF THE SPECULATOR.

My opinion is that the majority of those who buy boom stocks are
themselves thoroughly immoral; they are indifferent as to the value of
what they buy so long as they can see themselves unloading it on someone
else at a higher price. Such people deserve no sympathy, and did the
wild-cat promoter prey only upon them one could look upon him with less
disfavour. In the Autumn of 1917, while in London on my way from France,
I was talking to a London broker, and he complained bitterly at the
action of the Stock Exchange in throwing "Chaffers" off the board and
refusing it further settlements. A friend of his had loaded up with the
stock and he could not find a market for it.

"But," objected I, "he has the stock, has he not?"

"Yes, but what good is the stock, he can't sell it." The man's mind did
not travel far enough to realize that the stock his friend would sell at
a profit must eventually come to rest in the hands of somebody.

They do such things in London; when manipulation becomes too flagrant
they stop dealing in the issue. No action to correspond has ever been
taken in regard to a stock in Canada, and some of our issues have been
grossly manipulated.

On the other hand, a great many innocent people are robbed through the
false pretence that goes with stock-market rigging. Many a woman who has
earned her dollars over a washtub or at the churning, has put her money
into an issue because she has deemed a market quotation an index of
value. Why should any institution be tolerated whose members abide such
practices, even if they can prove that, in theory, their trade is
honest, and that in practice it is fully ten per cent. honest. If one is
put upon by a man of greater strength and is robbed, all civilization
rushes to his rescue; if one is defrauded by one of greater strength--or
dexterity of mind--he has but poor recourse. It is futile to say that
the law makes little difference between fraud and robbery; _caveat
emptor_--let the buyer beware--is the slogan to-day, in commercial
circles.


THE MEDDLER'S REWARD.

As I have said, the attack I made on Cobalt Lake made me many enemies
among the financial crowd, and I soon began to feel how wide are the
ramifications into which penetrate the moneyed interests, and how much
one takes his commercial and his social life in his hands when he
crosses them. My experience may be of value to those who have the
guidance of youth and may, in some minds, call to question the policy of
hewing to line and letting the chips drop where they may.

I was asked by a member to join the Arts and Letters Club, one of the
best of Toronto's social organizations. My book, "The Letters of a
Remittance Man to His Mother," was not then forgotten; it had been one
of the two successful books published by Canadians in the year 1908. My
name was put up; nothing came of it.

I am hardly eligible for membership in the Arts and Letters Club, for I
do not make my living by my writings; very properly the club has
demanded as chiefest qualification to membership that the candidate
finds his living in the craft of which he is an exponent. But several
years later, at a friend's house, I met an artist who had been a member
of the committee when my name came up.

"Oh," said he, "your name's Jarvis! Are you the chap who wrote the
'Letters of a Remittance Man?'"

I replied that I was.

"Your name came up before our board and you were objected to on the
grounds of something you had written in 'Saturday Night.'"

I had been invited to join this club; I had never sought the
distinction, and yet I was rejected. A blacker smirch could hardly be
put upon one's character. There is no question as to the reason why I
had been turned down: it was because of what I had written in "Saturday
Night." What had I written? It is all available in the files of the
paper.

A club is perfectly within its rights in refusing membership to any man,
and give no reason; but when a reason is given, those to whom it is
advanced should be perfectly sure that it is sound. A club should not
allow itself to be made an instrument for the wreaking of vengeance of
any man or body of men who are unwilling or unable to seek redress in an
action for libel. I may find a panacea to my injured feelings in the
realization that it is now widely understood that to debar a man from a
club he would enter is, in Canada, a common process of satisfying
personal spite. As instruments of blackmail, our clubs will cease to be
operative when this fact becomes generally understood.

Again there is a sequel. Some years afterwards, while in London, I was
invited by a friend to the Savage Club, one of the most, if not the
most, distinguished clubs in the world. It has in affiliation with it
the Arts and Letters Club of Toronto, an expression of the Imperial
unity idea.

"Why," inquired my friend, "do you not join the Arts and Letters Club of
Toronto, and then you could come here as a matter of course when in
London?"

Imagine my feelings!

But this well illustrates how far-flung are our social frontiers, and
the dreadful responsibility one takes in giving ear to scandal. I am
quite sure that no mining engineer of repute would find in my writings
in "Saturday Night" anything but fair mining criticism, some of which,
in the light of to-day, appears to have carried the soundest philosophy.

My experience gives token to the tendency there is among many whose
diurnal habitat lies in the vicinity of the corner of King and Yonge
Streets, Toronto, to take their opinions ready-made. A word is passed
and it becomes law, and most words that go into circulation in the
precincts I mention have their origin in a common source, the money
cult. The Arts and Letters Club had one member whose opinion on my
writings would be of value, but his word was not invoked. The mind of
the average artist or writer--and I do not make an exception in the case
of the financial editors to our newspapers--is as little qualified to
judge of mining matters as mine is to pass on the comparative merits of
Constable and Turner. However, as I have intimated, the committee of the
club was willing to take its opinions ready-made.


THE "SLOUGH OF DESPOND."

The subsequent history of Cobalt Lake as an individual mine was lost as
it became merged into the Canadian Mining Corporation. First, a Cobalt
Lake flotation was launched in London: those who held the old stock were
given one new share for ten. In England the market underwent the most
palpable rigging, and there the new shares were lifted above twelve
dollars; I know, because I sold the English shares, and did well by
doing so. An apparent anomaly lies in the fact that while ten Canadian
shares went into one English share, the English shares sold in London at
twenty times the value of the Canadian shares. This is explained in that
to get new shares the stockholder had to agree to pool[1] his stock for
three years. The next shuffle was the Canadian Mining Corporation,
which, to date, has not been re-shuffled.

[Footnote 1: Refrain from selling.]


WHAT THE CRAFT SAYS.

As the question may stick in the mind as to the real reason why the
original company sought powers to buy in its own stock, and as Col. Sir
Henry Pellatt did not think it necessary to explain further than that it
was his desire, it may be of interest to learn what a mining engineer
told me not many months ago. We were discussing Cobalt Mines and the old
days, and Cobalt Lake came into our gossip.

"What was the real reason for the buying in of its shares by Cobalt
Lake?" I asked.

"I don't know," was the reply, "but I have heard that when the stock
dropped to around thirteen cents per share, after the necessary
legislation was secured, the insiders loaded up with it and later sold
it out to the company when the price mounted to around thirty cents per
share."

I don't suggest that this tale has foundation in fact, but I tell the
story for what it is worth, and as a suggestion to our legislators of
the danger that lies in giving bizarre legislation at the call of
promoters. It should be possible to trace the buyers of Cobalt Lake
stock when it fell immediately following the passing of the purchasing
legislation, and to whom the shares went, that is if a judicial enquiry
is ever held over the Stock Exchange and the doings of our brokers.

The next time I fell foul of important Stock Exchange interests was when
a corner was rigged in Trethewey stock and, as it had for a sequel
similar to that which was my reward for my criticisms on Cobalt Lake, it
is well that it goes into this narrative.


TRETHEWEY ENCORE.

In 1907 or 1908 the second Trethewey deal took place: the control of the
stock was purchased by a group of financiers identified with one of our
leading Stock Exchange firms, the chief of which is a bank president and
a director of a great railway, etc., etc. The identity of these people
was carefully camouflaged from the public at large by guinea-pig
directors. Some say--and there is some ground, I believe, for the
assertion--that the enterprise was undertaken during a drunken frolic.
In any case, the control of the mine was, I believe, bought without
technical advice, so that the capabilities of the market were evidently
solely held in view.

In due course manipulative processes were undertaken, and Trethewey
stock was advanced on the exchanges: from seventy-five cents it advanced
to $1.60.

To suggest how deceptive is market-rigging, I will recount that one of
my brokers visited me in the Toronto General Hospital, where I was
convalescing from a serious operation, and strongly advised me to buy
Trethewey. "But," said I, "the stock is not worth it; there are no
reserves to justify the price."

The broker was persistent:

"I know," said he, "by the people who are buying it on the Exchange that
it must be good."

This suggested that a discovery had been made and not divulged.

After much argument I gave a reluctant consent and became the possessor
of several thousand shares. Fortunately, my better judgment asserted
itself and I got rid of the stuff and cut my loss to around three
hundred dollars.

When the gang found that the public was not coming in, it withdrew its
support, and the stock fell on the market, without their being able to
dispose of their holdings.


BY A HIDDEN WAY.

Some years later, in 1912, some of the larger holders of the stock,
evidently the pool, gave an option to one of the most notorious riggers
in Toronto, covering a quantity of the stock: in any case he became
interested in it, and it is unreasonable to suppose that he bought for
any legitimate purpose. As this narrative is intended to be instructive,
it is well that this process of giving options should be explained and
an opportunity be given to form an estimate of its ethics. When
legitimate and semi-legitimate methods have failed, and specially
discreditable methods are to be employed, an option of purchase covering
a number of shares is given to some adept at market rigging--who has no
reputation to lose--and he is left to do the rest. This is what
happened. Trethewey stock was again advanced until it appeared an
attractive short sale. Many sold bears, and then the prices were marked
up and many of the loans called, at least loans of stock were refused,
so the stock was cornered. Of course, were one to ask the brokers, they
would say that they did not possess the stock, or that they had scruples
against lending it, the latter a most specious excuse: the thing was
that they were more or less in conspiracy.

As the screws were being put on and the shorts forced to pay
extortionate prices for the stock, there appeared in one of the Toronto
papers an advertisement asking to borrow fifty thousand shares of
Trethewey stock. Of course, this told all the discerning that a corner
existed. The stock immediately became free and fell in the market. The
only reason for this is that the publicity placed the machinations of
the original gang too much in the limelight. The authorship of the
advertisement was credited to me.


THE ADDER.

Some years afterwards I went up for election to the Albany Club, and I
failed. My application was signed by D. S. Cassels and W. D. Macpherson.
Mr. Cassels told me that the reason of my non-success was that I was
suspected of placing the advertisement mentioned in the press. What
story the gang told Mr. Macpherson I do not know; he failed to recognize
me when next he met me on the street, so evidently it was pretty bad,
and he believed it.

Viewing this advertisement in its worst light,--besides assuming that I
had been the author of it--that it was really a fake and that the
advertiser had no desire to borrow the stock, what harm was there in it?
All it did was to intimate to all and sundry that a criminal conspiracy
existed in the stock and to warn the unwary against buying it. The whole
circumstance suggests that our stock-jobbers take themselves too
seriously--besides suffering from a woeful lack of humour. It will also
suggest to our moral reformers--and to our rag-tag and bob-tail--that
the life of one who jibes our financiers is not made easy. A club is
very necessary to the business man. If one would succeed in Toronto's
business world one must lick the right boots, and lick them assiduously.


NO LAUGHING MATTER.

All this is very serious and calls for the deepest consideration by
every honest man who has the future of civilization at heart. England is
not England because of its gentle topography--there are lands as fair;
nor because of its climate, there are better climates; nor because of
its hedge-rows and its lanes. England is England because of the sense of
equity engendered in its people. By the ethics of our race, right should
be maintained; as a matter of fact we are degenerating into a race of
Jesuits in all but the ritual of our religious services. It is a fact
that one finds hard to reconcile with reason that men who will
cheerfully face the enemy's bullet in battlefields lack stamina to run
foul of our money-lords at home. Lying, cheating and false pretence are
practiced daily in our financial world, yet few there are who will raise
their voices in protest. In our banks and financial institutions honest
men stick half-way on the ladder of progress.


MR. BRUIN.

There is no doubt but that the ordinary stock market follower regards
the bear trader as a sort of jackal, against whom any means is
permissible. But let us consider some expert evidence. Henry G. S.
Noble, a member of the New York Stock Exchange, giving evidence before
the "Committee on Banking and Currency, Sixty-third Congress," had this
to say:

     "The effect of the short seller in the market is that, as the
     market rises, he sells and restrains the rise, and having sold it
     is necessary for him to buy to fill his contract; and if the market
     declines, he buys to cover his contract and restrains the decline.
     Therefore, he acts as a balance wheel on the market. He prevents it
     from running to extremes. He keeps fluctuations within much more
     reasonable bounds than they would be if they were removed."

     "It has been erroneously supposed by some people that the effect of
     short selling is to depress prices. This is not the case for the
     reason that the minute a man enters into a contract to sell
     something which he has sold short, he has got to be a buyer, and he
     is the best kind of a buyer you can possibly have in the market,
     for the ordinary buyer--that is, the investment buyer or the
     speculative buyer--is a free agent. He can withdraw his order to
     purchase. He can change his mind. He is not bound to buy. His
     support may disappear from the market at any time. But the man who
     has sold short is a compulsory buyer. Having made this contract to
     deliver he has got to buy, and if a large number of dealers have
     sold short at more or less the same time, their competition to buy
     creates a support to the market, so that it is well known, in the
     parlance of Wall Street, that a security is considered in a
     particularly strong position if there is a large short interest in
     it, for they know that those buyers are all in it and that they
     have got to cover their commitments."

On this subject of short selling, which at all times, in stock market
circles, is so much a matter of controversy, I feel it well to give
further evidence in support of it. My observation is that market riggers
often, when their own chickens come home to roost, when the lambs are
fleeced, seek to lay the blame on the bear trader. The Hughes
Commission (New York State), in reference to short selling, said:

     "We have been strongly urged to advise the prohibition or
     limitation of short selling, not only on the theory that it is
     wrong to sell what one does not possess, but that such sales reduce
     the market price of the securities involved. We do not think that
     it is wrong to sell that which one does not possess but expects to
     get later. Contracts to sell and deliver in the future property
     which one does not possess at the time of the contract are common
     in all kinds of business. . . . No other means of restricting
     unwarranted marking up and down of prices has been suggested to
     us."

My own idea is that nine-tenths of the rottenness on the exchanges in
this country is the work of the bulls, and that the bear really enters
the list in behalf of the poor man against the promoter.


"CLUBS" OR "BLUDGEONS."

From the evidence of Mr. Noble and the findings of the Hughes
Commission, it would appear that there is no breach of morals in selling
a bear. The members of the Albany Club have the right to object to
incorporate anyone, even for no greater reason than that the colour of
the neckties he habitually wears does not please the members, or that he
has a habit of spitting tobacco juice on the boots of all with whom he
comes in contact. But one may wonder if the general membership would
care to have the patronage of their society used to wreak the personal
spite of a cult of stock-jobbers.


THE BEAR TRAP.

The next experience I had which will carry instruction was being caught
in a "bear trap."

J. Thomas Reinhardt was a crook who eventually came to grief in the
Marconi boom down in New York--if I remember rightly, he fled between
days. But he first became known to Toronto stock market circles through
Porcupine Central and other issues, to which the name of our great gold
camp was affixed. Porcupine Central was a bait by which he caught
me--besides many others who have a tendency to sell bears in the market.

Reinhardt kept passing his Porcupine Central through the exchanges for
some time, at around ninety cents per share. One day he gave it a sudden
rise: when it got to $1.20 I sold 2,000 shares. When it reached $1.25 I
sold through 2,000 more shares. In a day or two the stock was selling at
$1.50, and I knew that I was caught, that no real stock was on the
market, and that Reinhardt had been selling with one hand and buying
with another. With the broker who had made the sales for me, I called at
Reinhardt's office, for the purpose of getting a settlement. I offered
$1,500. But the glib young gentleman in charge told me that there was no
corner, that he would lend me all the stock that I required. This did
not impress me, and I said so, and I said further that if he would not
take the settlement I offered he could fight. We fought. Reinhardt
bought in the stock and entered suit for $8,000.

But the case never came to court--it was finally settled by each party
paying his own costs, and mine came to just $200. But others, members of
the different exchanges, were mulched in heavy amounts, for stock
exchanges will not allow members to default in delivery, no matter how
palpable the fraud. The stock was not worth a cent a share. Its top
price was about eight dollars per share. The bear trap is the most
vicious of manipulative processes, and is the real "rig." Needless to
say, it is a crime.


HOW LONDON PROTECTS.

In London, on the exchange, statements showing that the public is in
possession of a certain proportion of the capitalization of a company
are necessary before the shares are granted a settlement. The same is
true as regards New York, but in Canada the exploitation of the "rig" is
looked upon as the highest grade of art. The Hughes Commission
recommended that the committees of stock exchanges exercise the power of
declaring when a corner existed in a stock, "so as to relieve innocent
persons from the injury or ruin that may result therefrom. The mere
existence of such a rule would tend to prevent corners."


WHAT IS A STOCK BROKER?

The moral sense of all stock exchanges and the vast majority of stock
brokers is of a very low order and, needless to say, they do not wish to
introduce any new rule that will hurt business. Probably 25% of the
manipulation that constitutes 90% of the business of the exchanges is
directed towards the creation of corners. On the question of the ethics
of the stock broker we will consider the following from the record of
the evidence given before the U. S. Senate Committee, previously
referred to:

     "This same gentleman said that the most heinous offence that could
     be committed on the stock exchange was the splitting of
     commissions, and the record of the punishments shows that it is the
     most heinous offence.

     "Senator Nelson: In what way?

     "Mr. Untermyer: If he allows his customer part of his commission.
     The uniform rate of commission is 12 cents a share.

     "Senator Hitchcock: Would he be a scab?

     "Mr. Untermyer: He is no longer scabbing, because he is expelled
     and put on the outside.

     "Senator Hitchcock: He breaks the union rule?

     "Mr. Untermyer: He is put out. He is expelled; he loses his right
     to do business and to a livelihood. The records of the exchange
     that have been put in evidence show the discipline that has been
     inflicted on the members, and that, while brokers who split
     commissions or who hired high-salaried clerks to aid them in
     getting business and who were held thus to have tried to evade the
     commission rule, are suspended for long terms, three or four or
     five years; a broker who was convicted of obvious fraud was
     suspended for 30 or 60 days. Sixty days, I think, was the term."

And this was in the New York Stock Exchange, which is supposed to be an
inspiration to the Canadian exchanges! No case has ever come to my
notice wherein a Canadian broker was penalized by his committee for
fraud: I do not believe that one has ever so suffered. The Canadian
stock exchange broker seems to look upon the traffic in which he is
engaged as a game in which "wit is matched to wit, and subtle villainy
is played against its fellow," and that those who are robbed and
complain at their lot have merely been worsted, and show themselves poor
losers and poor sports. I know one who dealt upon the exchanges and did
not contemplate fraud or following those who perpetrated fraud, and that
is myself. I am perfectly willing to answer for every deal I made, to
have all my brokers' accounts looked into and co-ordinated, and to
answer for all that I have written on mining and our mines. I challenge
the Toronto Stock Exchange, and its members, to make any such offer, and
mean it.

The attitude of the Canadian broker is hard to realize, and harder to
define: he seems to view his business as a necessary evil, an under-life
in the financial world that is a support to the well-being and progress
of our land, but, by no means must its inwardness be explained. While
books on English law are full of cases growing out of the stock
exchange, and there are a great many semi-technical books on the
subject, it is a remarkable fact that little is written save as
apologia, for popular consumption. The curricula of our colleges carry
nothing on it and, in Canada, our law courses do not seem to embrace
stock exchange law. All this is very hard to understand, and it is hard
to believe that such absence of instruction is by oversight. Those who
deal in speciosities may say that it were well to hide such knowledge
from youth, but my idea is that the more one knows of the depravity and
falsity perpetrated through our exchanges, the less one would be
inclined to go into them or trust his substance with the ordinary
stockbroker. My idea of Toronto brokers, as a whole, is that 25% of them
are pilfering thieves, 25% of them are outside the law, and the
remainder are more or less shifty and quite willing to be made the tool
of the market rigger and the manipulator, concerning themselves only
that they be paid for their services. This attitude is set out by
evidence given before the Pujo Commission. The Mr. Untermeyer, who
interrogates, was counsel for the commission, and the examinee was Mr.
Frank P. Sturgis, "who was a former President of the exchange, . . . of
Strong, Sturgis & Co., for many years a governor of the exchange, and
one of the most reputable, well-known men in New York."

     "Mr. Untermeyer: Very well, then; that is an answer. How do you
     justify as legitimate the transaction of a pool or syndicate in
     giving out buying and selling order to brokers for the purpose of
     lifting the price of stock or of depressing it?"

     "Mr. Sturgis: These are the acts of individuals. I cannot be
     responsible for what thousands of people throughout the country
     do."

     (The Hughes Commission reports that manipulation is generally
     apparent to trained observers.)

     "Mr. Untermeyer: Do you seek to justify it?"

     "Mr. Sturgis: It depends entirely upon circumstances. I have
     already said that under certain conditions, orders given out,
     commissions paid, no collusion whatsoever, the broker who buys not
     having the slightest knowledge where the order comes from that the
     broker executes to sell--I say it is not an illegitimate
     transaction."

     "Mr. Untermeyer: Will you be good enough to answer that question?
     Is not the operation at times resorted to to depress prices and at
     other times to lift prices?"

     "Mr. Sturgis: Yes; I can consistently answer that."

     "Mr. Untermeyer: You approve of these transactions, do you?"

     "Mr. Sturgis: I approve of transactions that pay their proper
     commissions and are properly transacted. You are asking me a moral
     question and I am answering you a stock exchange question?"

     "Mr. Untermeyer: What is the difference?"

     "Mr. Sturgis: They are very different things."

     "Mr. Untermeyer: I thought so. There is no relation between a moral
     question, then, and a stock exchange question?"

     "Mr. Sturgis: Sometimes."

Another witness who was called, not a stock exchange broker, Mr. Morse,
being asked who was the middleman, testified as follows:

     "He is the gentleman who manipulates the stock, giving the buying
     and selling orders. (Morse rec., 710.)"

     "If he merely wishes the stock to appear active he gives buying and
     selling orders in about equal volume; if he wishes to put up the
     price he gives an excess of buying orders; if he wishes to depress
     he gives an excess of selling orders."

Would it not appear that some of our purists who set their faces against
tobacco and inveighed against the dissipations of the men of our Army in
France might turn their attention to our stock exchanges which, as
suggested by the evidence above, have their being independent of morals?
Stock exchange men will tell you that they and their institution are
necessary to the well-being of the state, yet, when the world's
civilization was face to face with the gravest crisis in history, stock
exchanges the world over, either shut down of their own volition or were
closed by the government under whose authority they lay. And yet, with
our exchanges closed, Canada organized the first expeditionary force
with outstanding despatch. One may well wonder wherein lies the
necessity of the stock exchange, especially the dishonesty of it. And I
fancy that 99 out of every hundred, possibly 999 out of every 1,000 of
our people cannot recall any inconvenience felt during the closed
period, nor did they experience any relief when our exchanges opened
again.

But the stock exchange has an economic use, and the ideas of Edward D.
Page--a member of the Hughes Commission--on the subject of speculation,
are interesting.

     "Mr. Page: There are two classes of men, Senator Hitchcock, who
     speculate. The first class are men who have a knowledge of the
     things in which they speculate--farmers, for instance. Every farmer
     is, more or less, a speculator. A speculator is any person who
     purchases or carries commodities with the expectation of finding a
     better market to sell them on than the present market. Every farmer
     who raises a crop of wheat judges as to the best time he had best
     market his products. He may borrow money to enable him to carry
     that product until he markets it. That is the essence of
     speculation; and speculation in stocks is no different from
     speculation in commodities. So, I answer you that the man who
     speculates with intelligence, as the farmer does with his wheat
     ordinarily, knows his article, knows just what it costs, knows just
     what it will probably bring, knows when is the right time to sell
     it--that is to say he knows when it will be most in demand--he is
     an intelligent speculator and is of benefit to the public."

     "Senator Pomerene: The bucketshop-keeper is a speculator, too?"

     "Mr. Page: Not the bucketshop-keeper, but the man who trades in the
     bucketshop. The bucketshop-keeper is a gambler who is playing with
     loaded dice.

     "Let me say a word, too, about the other class of men who
     speculate, the man who sees that intelligent speculation is
     rewarded, as all public services are, with gain, but who knows
     nothing about the commodity in which he is speculating, and simply
     buys it on his feeling or on somebody else's tip, or something of
     that kind. He is certain in the long time, nine times out of ten,
     to lose his money, because he is not performing a public service in
     an intelligent way. The consequence is that those people come under
     your class of those who are unfortunate in their speculations. But
     the aleatory instinct is absolutely founded on human nature and, so
     long as the seasons alternate from hot to cold, and so long as
     conditions at one time are good and at another time are bad, just
     so long is human nature susceptible to the desire to make money
     through their knowledge of conditions. That is my impression about
     speculation."

     "Therefore I think that you cannot avoid speculation. As to
     borrowing money to speculate, it is just as right to borrow money
     to carry 1,000 bushels of wheat or 1,000 shares of stock as it is
     to borrow money to carry a house."

We may, and I do, question the soundness of Mr. Page's last statement,
but I am thoroughly in accord with him in what he says about the
necessity of knowing the business one would speculate in through issued
shares. I know I have seldom made a mistake in a mine, twice only, I
think.


THE DOUBLE BLUFF.

The first one was Kerr Lake, the great Cobalt producer. This mine had
connected with it the Lewisohns, of New York, of whom the Pujo
Commission speaks in scathing terms.

For several years the report on the Kerr Lake mine spoke of the quantity
of the ore in the mine, and not of the quality: "we have twice as much
ore as we had last year," and such assertions. It is unthinkable that a
rightly managed mine should not disclose to its management the value of
the ore it had in sight, as well as its quantity. Now ore is anything
that is dug out of the ground, while high-grade ore on the Kerr Lake ran
up to $4,000 to the ton: rock need not even pay treatment charges to be
ore. So the statements of the Kerr Lake Mine, to the trained observer,
seemed so much equivocation, and made him look upon the mine with
suspicion. This was, apparently, what the directors needed in their
business, as a certain class of manipulator always desires to have a
short interest in his stock. On the other hand, the statement would
satisfy the less exacting. The history of the mine shows that, while
these statements were being put out, the ore reserves were quite strong.

The deal over which the Pujo Commission slated the Lewisohns was that of
the Hocking Pool, of which Mr. Untermyer says:

     "Another of the notorious instances of manipulation in the recent
     history of the exchanges was that of the Hocking Pool in 1909, of
     which the late James R. Keen was manager, the operations of which
     will be found described on 47-49 of the report. The stock, which
     was earning only  of 1 per cent., was forced up from $24 to $92.50
     per share. The entire number of shares listed was 69,304. In a
     single month (March) when the pool operations began 143,400 shares
     were traded in. Upon the termination of the pool operations the
     stock declined to $2 per share and then disappeared.

     "More remarkable than even the neglect of the authorities to stop
     this operation when they knew that it was going on was the theory
     on which they inflicted 'punishment' after the pool collapsed. Of
     the ten firms engaged in the pool only the three that failed were
     punished. They were expelled from the exchange. The others were
     neither expelled nor suspended, they were merely 'censured.' Thus
     the punishment was inflicted not for the character of the
     operations, since all were equally guilty in that respect, but for
     becoming insolvent in consequence of dealing beyond one's means.
     This was admitted by Mr. Sturgis (Rec., 846):

     "Q. I would like to know why you should expel two members of a pool
     out of seven stock-exchange firms for doing the same thing that the
     other five did simply because those two happened to fail at it. A.
     Because they went away beyond their means.

     "Q. Do you mean to say that the things these firms did were not
     punishable under the constitution? A. No, they were not punishable.

     "Q. Do you think that they ought to be? A. We have not thought so
     heretofore.

     "Q. Do you not think so? A. I do not think so, no."

Thus it is seen that market rigging is not a crime in the eyes of the
stock exchange, though an English judge has pronounced it "as base a
fraud as has ever been committed."


OUR FINANCIAL ADVISERS.

If our stock exchange men were a body apart, their morals would not be
such a pertinent question, but they stand at the head and front of our
nation, our government goes to them for advice. In talking to a friend
one day I ventured the opinion that Sir Robert Borden was a weak
character, one thoroughly imbued with the spirit of the money-lender
(not the usurer), he having been nurtured by the banks. "Oh, no," said
my friend, "Sir Robert Borden goes to ---- for advice." "Yes," I
replied, "when ---- has served the ---- Bank, the ---- Railway, the ----
Company, and the firm of ---- & ---- he may have a mind for his country,
but only then." In the guise of giving financial advice, our big bankers
rule the country, and when we consider the rotten school of
stock-jobbery in which many of them are nurtured, we may well question
their ability to place their own interests in the background when
questions of state come up. It would seem that some of our wealthy men
might well give up the pursuit of dollars that they might serve their
country--for their country has served them well over the last few
years--but, apparently, they would rule rather than serve, and they rule
by giving what they desire to appear advice, but which is, rather,
instructions: their advice is a delineation of policy rather than an
expression of principle.


"ALL IN IT."

I have said enough and quoted sufficiently to compromise the morals of
our stock-market men: I will now relate an experience with an amateur.
The man to whom I refer is a lawyer, solicitor to a great mining
company. Among his friends he poses as a religious man, and I have no
doubt he goes to church very regularly. He was made solicitor for a new
mining company, the stock of which was to be placed on the market, and
he was given some of the shares to sell; in fact, the marketing of the
shares was placed in his hands. He came to me and asked me to help him
sell shares. I was shown a very favorable report as to the mine's
physical condition, and I agreed to advise my friends to buy the stock.
In the course of my travels I came upon a man who gave me a very
adverse report on the mine. I then sought the manager and questioned
him. He told me that he had made a rosy report that his director might
show it to the man who was putting up the money for development. On
receiving this word I immediately advised my friends to cancel their
applications for shares, and I went to the company's solicitor and told
him. This man turned aside the tale I would tell and seemed annoyed that
I should question the legitimacy of the promotion. Some days afterwards
he met me and he told me that two brokers who had also been employed to
sell the stock had come to him and asked him for some shares to "put
through" and he wished my opinion. I told him that the process was
illegal, false pretence and a crime generally. This seemed to annoy him
very much, and he left me, his head in the air.

I am quite sure that this solicitor did lend shares that they might be
used in washing sales, for the stock afterwards rose on the market to
40% above the issue price. Since then it has fallen to 40% of the issue
price, or to a figure around 25% of its high figure. In an investigation
it would be quite easy to trace the sales of this stock on the exchange,
and to judge of their legitimacy. Needless to say, the lawyer vendor,
and the whole stock-jobbing fraternity, their touts and their toadies,
would strenuously oppose such an enquiry.




Book II.

"Patriotism--The Last Refuge of the Scoundrel."


CONSPIRACY.

I will now turn to the episode through which and by which our own market
riggers were guilty of one of the most despicable crimes ever committed
in finance since the days of Medici. The tale I am able to tell will tax
the credulity of the ordinary man. Though I have studied the
circumstances from every possible angle--and I have entered two suits
against stock exchange firms and so have gained access to facts--and
though the stock exchange people have been given every opportunity to
explain, I have found nothing that could be seized by the most prodigal
charity in extenuation of their actions: so far as the exchanges are
concerned, the most charitable explanation is that they were blackmailed
by a coterie of virulent financiers into doing what they did.


THE HUN AT THE GATE.

At the panic immediately preceding the outbreak of the Great War, the
Montreal, and then the Toronto Exchange closed down. Mr. Gordon Osler,
son of Sir Edmund Osler, President of the Dominion Bank, stock exchange
man for the firm of Osler and Hammond, in an interview given to the
"Mail and Empire" for July 29th, 1914, said that he could not open his
mouth to bid for stocks but that they were thrown at him. Prices were
dropping very sharply, and the stock exchange closed, and the committee
claims that their action was based on the public interest.

This claim requires very careful looking into. The "public" is a name
given to the common or garden citizen, the working man and the
wage-earning class. In stock exchange panics, when prices drop suddenly,
the opportunity of the wage-earner appears, for he is the man with
savings bank account who can buy bargains. So it cannot be said that the
stock exchanges closed for the benefit of the working man! For whose
benefit did they close?

In the market there are three factors, the investor who has bought and
paid for his stock; the bull who has bought what he cannot pay for, and
the bear who has sold what he did not possess. The exchanges could not
have closed out of regard for the bear, for the lower prices went the
greater his profit. Nor would it seem that they closed out of
consideration for the investor: if a holder saw defeat for the British
Empire, why not let him sell?--or he might wish to realize to put his
house in order before joining the Canadian Army! So we come to the bull.
He has bought what he cannot pay for: the broker has bought for him,
taken his 10% margin, added 10% to it and placed it with the bank. If
the stock suffered severe decline, and the bull and the broker were
wiped out, became insolvent, the bull would lose his 10%, the broker
would lose his 10%, and the bank would lose the balance, to the limit of
the decline. On the other hand, if the man with cash had been able to
buy stocks at 25% of their real value, he would profit to the extent of
the other's loss: Horace Greeley propounded the very sound philosophy
that money is never lost, it merely changes hands.


AS IT WOULD APPEAR.

What really happened was this: the Government issued orders to the banks
to increase their reserves and to lend no more money. This effectually
placed the bulls at the mercy of the bears, for the bulls could get no
more money, while the bears could keep on borrowing stock and selling
it, causing margins to be wiped out and more stock to be thrown on the
market. Doubtless this would have been hard lines for the bulls, but it
would have been an excellent thing for the bear, the public--the
butter-woman, the working man, and the county doctor. Knowing what I do
of stock brokers, I feel that, if they acted by their own volition, they
did so to save their own skins.

But that they did so at the bidding of the banks is more than probable.
As has been pointed out, the ultimate loss in a slump falls on the
banks, besides which so many of the banks have on their directorates
company promoters and stock-jobbers. A debacle in the stock market might
well uncover deals which had received undue support from the banks.

That the banks did coerce the exchanges would be indicated by the
following:

After my return from France I issued a writ against O'Hara & Co., for
the return of stock and money held by them at the outbreak of the war
and funds received subsequently. Shortly after the launch of the suit
the firm assigned. On meeting an acquaintance, a member of the Toronto
Stock Exchange, on the street, I said:

"You fellows forced O'Hara to do as he did, and my suit has put him to
the bad!"

"We could not help ourselves!"

"Do you mean to say that the Government told you to do as you did?"

"The banks did--same thing, isn't it?"

This would also bear out the dictum: "There is one government in Canada
and that is the Bankers' Association--and it never goes out of power."

Again, in letters that will follow--from Sir Edmond Osler and Mr.
milius Jarvis--the theory that the banks inspired the whole wretched
business is practically stated in so many words.

In the columns of the "Globe" for July 29th, 1914, there appears an
interview with Mr. Gordon Osler, in which he said that the exchange
might not be open for a week: this certainly implied that the exchange
would be open at the end of a week. On this promise, for so I regarded
it, we who were heavily short of the market were content to wait. There
had never been any precedent for a stock exchange closing at the
outbreak of war, but, as the bulls were in a tight corner, under
distressing circumstances, the action of the exchanges was not protested
against. Certainly no one of my acquaintance sought to compromise the
brokers by the issuance of a writ, a forebearance that was destined to
cost me dear, as will appear.

On the 31st of July the London Stock Exchange ceased trading. The
dispatches read as if the action had been voluntary: as a matter of fact
it was by orders of the Government. It will be remembered that war was
not declared by Britain until August 4th, so reason is apparent why the
hand of authority should not have been indicated.

There are a great many reasons why the London Stock Exchange should
close, over the Canadian Exchanges. During the days preceding the war a
courier could leave Germany one day, be in London the next, sell his
securities and be back in neutral Holland that night. Again, and much
more potent, the London Stock Exchange is the market for the funds of
the world, indeed it came into being in the trading in Consols, as the
funds were the first securities on the market. In Canada, previous
to the war, no Government security was on the local markets.

The London Exchange, having ceased operations during the interim of Mr.
Gordon Osler's week, suggested, no doubt, a precedent to the local
people, and they remained closed: if they sought advice it is probable
that their lawyer, having learned that the London Exchange had closed,
judged that the process had been looked into and was quite legal, and
that his clients might do the same. But, as has been said, the London
Exchange was closed by orders of the Government, indeed the declaration
of a moratorium in Great Britain had the effect of relieving brokers of
obligations contracted previously to the panic which, doubtless, was the
real reason for the closing of our local exchanges.

At the closing of our exchanges the banks agreed not to call loans: of
this there can be no doubt as, in matter of fact, they did not call
loans. If an agreement such as this is made it must have a beginning and
an end, but, while there is no doubt as to when this agreement began,
there is no knowledge when it ended, as will appear.


UNDER THE X-RAY.

From documents produced in the case of Jarvis v. Jaffray and Jarvis v.
O'Hara, it appears that, from time to time, the Stock Exchange Committee
issued so-called new rules or instructions, marked "Confidential." But,
while these documents were taken as bearing upon the contracts made on
the stock exchange, amending such contracts, their contents were not
given to the clients, or to the public generally. This meant that a
client, having entered into a contract under the rules and regulations
of the stock exchange, that contract might be amended by an alteration
of the rule of the exchange. So far as "short sales" are concerned or
the contract under which stocks are borrowed, are not made on the floor
of the exchange and do not come under the jurisdiction of the exchange.
In any case, a stock exchange may not alter a contract by the alteration
of its rules, as has been demonstrated by the very celebrated case of
Union Corporation v. Charrington (1902, 19 T. L. R. 129; 8 Com. Cas.
99). How anyone could conceive that such a process would stand in law is
hard to understand, for by it the whole law against criminal trade
conspiracy could be evaded.

When the week passed, Mr. Gordon Osler's week, and the exchange was not
opened, it was given out that it would be closed "until further notice."
Such notice was never given.

In England, in due course, the moratorium was replaced by an agreement
arrived at between the Treasury, the banks and the brokers, which was
clear-cut and definite. By it all stocks were to be carried to the end
of the war; those contracts carrying 10% margin were to bear 7%, and
those without margin 8%. Short stock was deliverable when the price of
that stock reached the "last making-up price" preceding the closing,
which meant, practically, the market price a day or two before the
closing.


HOW THE TRAP WAS BAITED.

The report was assiduously circulated in Canadian Stock Exchange circles
that a similar agreement was being reached between the Canadian banks,
the stock exchange and the Government for the carrying of Canadian
accounts. There is no doubt in my mind that, so far as the banks and the
brokers were concerned, such an agreement was made: such is evidenced by
the banks not calling loans in the first instance. But to find brokers
who now know anything of this agreement is very hard. By it long stocks
were to be carried to the end of the war, and short stock were
deliverable "when the stock exchange opened," notice of which was to be
given.

As I was carrying, in different brokers' offices, nearly ten thousand
shares of Hollinger (forty thousand new shares), this was attractive to
me: many of my Hollinger shares were finally sold during my absence in
France.

The position of the bulls in industrial stocks was deemed hopeless over
the first few months of the war: thousands of men were out of
employment, and Canada had assumed the tremendous responsibility of
organizing an army of over 30,000 men. Again the Canadian Northern
Railway hung as the sword of Damocles over the financial world; the Nova
Scotia Steel Co.'s stock was a market joke, and Dominion Steel was
little better: in other words, the country was hastening to financial
ruin. That the bulls would ever be able to meet their obligations seemed
impossible.


ANOTHER WAY TO THE SAME END.

While the stock exchange was closed there was an active market in the
street. Nova Scotia Steel, which had closed around $42, was selling at
$25, and Montreal Power, which had closed at $211, was selling around
$175.

As has been said, a short sale is not a stock exchange transaction. I
had the right to buy my shorts in the street and present the stock for
delivery. Surely one must have been offered an inducement not to have
done this?


THE METHOD IN IT.

The first quarrel I had with the brokers was in the matter of interest:
the rate for funds was very high, reaching 20%, and stock exchange
brokers charged as high as 8%. Not only did the brokers claim to have
the right to refuse to take delivery of the stock, but they claimed to
have the right to retain the balance held as security against the
delivery of short stock and to retain it at pre-war rate of interest: in
other words, at from two to three per cent.

The method that lies in this is readily seen: I had some $100,000 up as
security, which the brokers refused to give me in exchange for the
stock, and on which they allowed me, at the most, 3% and in some cases
nothing at all. This money they were employing with long customers and
charging as high as 8%. They were making out of my account alone $5,000
per year, which, as W. G. Jaffray told me, they claimed they had the
right to do. I am ready to believe that the stock exchange committee
will repudiate the action of Messrs. Jaffray and Messrs. O'Hara, but I
believe it could be brought home to them.


EASY MONEY.

The comparatively large amount that the brokers made out of me during
the closed period is an index of the revenue derived by the fraternity,
and it is a point earnestly demanding legislation. A man buys stock
through a broker under an agreement that he shall pay  of 1% over bank
rate of interest. Later the broker finds an opportunity of securing a
loan at a much lower rate of interest, sometimes for nothing, and he
takes the stock from the bank and "lends" it to the needy one. According
to the sworn statement of one of the defendants to one of my several
suits, this is quite the custom, and is defended on the grounds that,
when taking on a client, the custom is to make him sign a statement
giving power to lend the stock. As a matter of fact this clause is
sandwiched in among a long list of reasonable clauses, like the "joker"
on the back of an insurance policy, and its significance escapes the
uninitiated. I am quite sure that the point I have made has escaped the
vast majority of those who are in the habit of carrying stocks on
margin.


CONTANGO.

I do not say that selling short should be abolished; in fact I believe
that the bear should be given every protection and facility: the bear
trader is the friend of the small investor--who seldom buys on
margin--against the promoter, the capitalist. But I do claim that when
the broker is able to arrange a loan at terms that are more favorable
than the purchasing client had in mind when he gave the order, the
benefit should go to the client. When a broker places a client's stock
in the bank, it is the client's stock, and in case of the failure of the
broker, it can be followed. But when a broker lends it, surely the
ultimate purchaser could not be made to give it up? Of course, there
would be less incentive for a broker to lend stock were he limited in
profit to  of 1% in doing so, but then there is no reason why the
English system should not be introduced into Canada--that of bi-weekly
settlements. It is much the better system for the client, though
correspondingly less profitable for the broker. By the English system
the buyer buys for the next settlement, and the seller sells for the
next settlement: the buyer pays the carrying charge, or contango, and
the seller receives this amount, and the broker is limited to his
commission. All clear and above board. If one has sold a bear and
desires to maintain his position he, at the settlement, buys in the
stock and sells out for next settlement and the price at which this is
done is fixed by the committee appointed for the purpose.


A CHANGE IN THE WIND OF FORTUNE.

As I was waiting for some announcement of definite policy by the Stock
Exchange, an unlooked-for change was coming over the situation. Munition
orders were coming in, finding an echo in strange rumours that
circulated through the street. Needless to say, the exchange committees,
through their affiliation with bank directorates, learned of the
soundness of the rumours--for payment for munitions ordered was being
deposited in the banks: we on the outside knew not what to believe.

Evidently the stock exchange men, finding the public amenable to their
specious cries of "in the public interest," decided to wait and see.
They did nothing: they would do nothing. We could not find out where we
were at: but they began to know. The banks were being filled with money
from Britain, France and Russia, for munitions and supplies.

As a first sign of life the committee gave out that the exchanges would
be open for limited trading, that the first buying power would be used
to take up weak accounts carried by brokers: the inference to be drawn
was that after the lame ducks had been eliminated the exchanges would be
open and short stock deliverable. Incidentally they had called from the
members statements showing the accounts carried in each office,
including short accounts--of which the exchange has nothing to do. This
is set forth in the "rules" produced in the Jaffray and in the O'Hara
case. Just what right the committee had to ask their members to furnish
accounts of their client's business--especially that outside of stock
exchange business--or just what right the stock exchange members had to
furnish such accounts, is not quite clear, but I believe that my
business was divulged to the stock exchange committee. It is true that a
committee of a stock exchange has the right to examine members' books,
but this is supposed to be only exercised in a process of determining
fraud: that they had the right to make the demand they did is much to be
questioned. It points to the intention of an agreement on the lines of
the English carrying over agreement.

The exchange opened for limited trading, the market being under-pinned
by minimum prices. Things began to get much better, the rise in the New
York market aiding, as many losses by those who traded in both markets
were regained. Nova Scotia Steel, the erstwhile stock market joke, rose
from where it had gone, $25 to $35 per share, and one could not but
believe the stories of orders given by the Russian Government with the
company for cars and railway equipment generally and, more important, of
money deposited in Canadian banks to pay for the same. I went to W.
G. Jaffray and asked him, as a special favour, if he could not take the
Nova Scotia Steel and carry it till the party from whom he had borrowed
it would take it; he said that he could not, that the stock exchange
would not allow him to take it back. I then asked him if he considered
that he had the right to hold my money at 2% while he employed it at 8%,
and he said that he had. I have no doubt but that the stock exchange
committee told him that he had, but if they did, those astute beings
were careful not to put it on paper. Finally, about the first of April,
1915, the stock exchange was declared to be open for limited trading,
brokers being allowed on the floor.

Immediately stocks began to mount very high and the brokers found that
there was no great tendency on the part of the public to sell, as, I
believe, there never had been from the first days of the panic. One
would have thought that, this condition being shown, the minimum prices
would have been eliminated and the regulations against the lending of
stocks and making short sales removed. Such had been the course of the
New York Stock Exchange.

But the Toronto and Montreal people not only wished the stocks not to go
down, but they wished them to go up, so they maintained their
regulations against short selling and the lending of stocks, while they
told the bears, those on whose forbearance and good nature they had
thrown themselves a few months before, that they were now ready to
receive the short stock. Montreal Power, of which Sir Herbert Holt,
President of the Royal Bank, is President, a 10% stock, sold up to $240
and $250, against $211, at which it had closed, and Nova Scotia Steel
went to $150, against a low price of $25. Over this time Canadian
Pacific, Canada's premier security, a 10% stock, sold from $126 to $190.
Why the investor should pay $250 to get the same return as he would have
from C. P. R. at, say, $150, is not quite clear: as a successful
speculator I must say that Montreal Power stock never appealed to me in
any shape. By no stretch of the imagination could it be deemed a
"munition stock." The answer, of course, is manipulation.


WHAT IT MEANT.

When it is remembered that the Hughes Commission stated that the selling
by bears was the only protection that the public enjoyed against the
undue fluctuation of stocks, it will be realized that the elimination of
the process made manipulation particularly easy and inexpensive and, I
have no doubt, this was the intention. The brokers may say what they
will, but the impartial man must be convinced that the brokers were
guilty of treachery in the most atrocious villainy; for myself I believe
that a charge of conspiracy in restraint of trade could be brought home
to them. They had in their possession reports telling them who was short
and to what extent, and they must have known that no one would stay
short did he contemplate the maintainance of such a market.

When the market advanced above minimum prices my brokers were called
upon for margins, or mark-ups on the stock on which I had been short at
the closing of the exchanges. I told them that the prices were a
creation of a rigged market, and that they had no right to pay out my
money: but they did. Evidently the case would go to court. A law suit is
never a pleasant thing, and it is seldom profitable. So I wrote Sir
Thos. White, Minister of Finance, that the exchanges were not treating
me fairly. I received the following reply:


"PASSING THE BUCK."

                                             Ottawa, April 10th, 1915.

     Dear Sir:--

     I have yours of the 6th instant with reference to the course of
     dealing with certain stock exchange firms and their clients. As the
     case relates to property and civil rights it would seem to come
     within the exclusive jurisdiction of the Provinces, and
     consequently neither myself nor any other member of the Federal
     Government has any status to, in any way, interfere. The rights of
     the parties in the instance set forth in your letter would seem to
     me to depend upon Provincial or common law.

                              Yours truly,
                                                     (Sgd.) W. T. WHITE.

To this letter I replied that I believed that it must have been with his
consent that the stock markets had been closed. His further reply is
interesting.

To my second letter I received the following:

                                              Ottawa, April 13th, 1915.

     Dear Sir:--

     Replying to yours of the 12th inst., no consent on my part was
     required for the closing of the Canadian stock exchanges. As a
     matter of fact, I was absent from Canada at the time and was not
     aware that they were about to close until the announcement was made
     in the press. They are entirely local institutions; and not in any
     way under Federal jurisdiction; therefore, as I stated in my
     previous letter, I have no status to interfere in their affairs. It
     is perfectly clear that as far as their transactions concern
     property and civil rights they are under the exclusive authority of
     Provincial legislation.

                              Yours truly,
                                                            W. T. WHITE.

These two letters left me with little hope of gaining any aid towards
justice from the Federal Government but, as I was impressed with the
inequity of the deal that had been accorded me, I felt that Parliament
might take an interest in the matter. So I entered into correspondence
with Mr. A. K. Maclean, who was then in the opposition. Mr. Maclean
expressed interest, but thought that the time was not opportune, though
he seemed to admit that a general enquiry was overdue. In connection
with this latter idea it may be said that Great Britain enquired into
the London Stock Exchange in 1877, and that, in more recent years, the
United States had two commissions and several committees make such an
investigation. Canada has never had such an enquiry: I am ready to
believe that the members of our exchanges would look upon one as an
invasion of their rights.


IN RETROSPECT.

Some may accuse me of negligence, that, being thoroughly acquainted with
the processes of market rigging, I should have anticipated what the
committee would do. To this I will reply that the circumstances of a
whole stock exchange lending itself to a rig in the market is without
precedent: a man may buy a stock with the expectation that it will go
up, or he may sell it with the expectation that it will go down, but he
never speculates with the expectation that the rules of the exchange
will be altered to affect the market. All the books of rules dealing
with the stock exchange the world over are completely lacking in any
rule that deals with the market; rules bear upon the mode sales are to
be made and the conditions under which stocks are to be delivered. No
rule of any exchanges bears upon the market. Again, it is a rule among
civilized people that the man who throws up his hands shall stay
surrendered: the Hun who shoots in the back the man who has succored him
is execrated the world over. There may exist among Canadian brokers the
honour that is to be found among thieves, but it would appear that our
brokers have no code of honour obtaining in their traffic with those out
of whom they make their living. It is hard to see how their actions have
paid them: my business was worth from three to five thousand dollars a
year--in which they all shared--and they have lost it and, I fancy, that
of a number of other traders.


SOME ADVICE.

The next move I made was prompted by a rumour of a rather amusing
occurrence that reached my ears. This story was to the effect that, in
the panic preceding the war, two callow youths in charge of a bond house
in Toronto sold out everything that they had. Shortly afterwards, and
after the brokers had defaulted in respect to their short sales, the
proprietor of the concern, an ennobled politician and financier of
London, he of whom it was said, "he cemented the Empire," arrived on the
scene. He, it is said, repudiated the action of his employees but, as
the thing had been done, he employed Mr. Norman Tilley to see that the
brokers met their obligations. Hearing this story, I determined to find
out the truth of the matter so, with my then solicitor, J. R. L. Starr,
K.C., I called on Mr. Tilley on the plea of consulting him on my case.
As I should have known, I got nothing out of Mr. Tilley as regards the
facts of this story, but the advice he gave me is very interesting. He
told me, in the presence of Mr. Starr, that I should have taken the
stock and tendered it, and having failed to do this, my case was
hopeless. I suggested the possibility of bringing a suit for damages
against the Committee of the Toronto Stock Exchange, based on
conspiracy. "The Toronto Stock Exchange can do what it pleases," said
Mr. Tilley. "It is a free body."

I have it on the authority of one of the world's leading barristers, a
gentleman of the Middle Temple who makes a specialty of stock exchange
law, that a stock exchange may not close and, as for the idea that such
an institution may do as it pleases, we have only to suggest the
position growing out of a stock exchange committee hiring an assassin:
could the committee escape on any plea that not one of them was guilty
as an individual? To the ordinary mind this does not suggest itself as
being in keeping with the common sense on which our common law is based.
But if our stock exchange may do all that was done by it, circulate
false rumours, prompt and stimulate its members to misappropriate my
funds and disburse them against my direction and in defiance to my
orders, then the quicker some action is taken to limit and define such
powers the better.


A TRUST.

The position of a broker is clearly defined in law, the money he holds
for a client is fiduciary, that is it is trust money, and he can have no
authority to deal with that money save by direction by the client. It
may be said that, at the closing of the exchanges, I owed certain
stocks, but here again the law says that, the party to whom goods are
deliverable under contract, announcing that he will not accept delivery,
he loses the right to claim under that contract. Again: the law says
that on a client dying, having open contracts with a broker, the broker
shall immediately close those contracts, the theory being that one being
dead he can give no further authority, and one does not speculate for
his heirs. In view of this it would seem reasonable that, a broker
having made a contract for a client in a certain market and that market
subsequently ceasing to exist, the broker should secure new authority
before he made further disbursements in connection with such contracts.
No such case has ever been tried, for no exchange has ever attempted to
do what our exchange has done.

Mr. Tilley told me further that, if I brought a charge of conspiracy
against the stock exchange committee that all the defendants would have
to do would be to bring Sir Edmond Osler to the stand and that, on this
gentleman telling the court that the actions of the brokers was in the
public interest, decision would go against me. This idea caused me some
perplexity, and so I wrote Sir Edmond Osler. The exact text of this
letter I do not know, but I believe I started it with a preamble to the
effect that it was the part of gentlemen to deal justly by their
enemies. Whatever the contents of the letter were the recipient does
not wish to disclose them as, to the following letter I was not given a
reply of any sort:

                                 31 Oriole Road, Toronto, 9th May, 1919.

     My Dear Sir:--

     According to a letter I have from you it appears that I wrote you
     on November 13th, 1915. Would you be good enough to lend me this
     communication as I desire to copy it. I engage to return the
     original to you.

                         Yours very faithfully,
                                                 (Sgd.) W. H. P. JARVIS.

     Sir Edmond Osler.

But that there was a letter of the 13th of November, 1915, is evidenced
by the following:

                      21 Jordan Street, Toronto, Canada, Nov. 16, 1915.

     Dear Sir:--

     I have your letter of the 13th inst.

     I cannot gather from your leter what your grievance is, but I shall
     be glad to see you at any time, and if I can help you in any way
     will be glad to do so.

     The members of the Stock Exchange have very stringent rules at the
     present time, and there is no doubt that these in cases do work a
     hardship, but they have been adopted for the general good and have
     the sanction and approval of all the banks.

                           Yours very truly,
                                                     (Sgd.) E. B. OSLER.

The statement that the Stock Exchange rules had the "sanction and
approval of all the banks" is highly interesting; possibly some of those
who purchased Nova Scotia Steel around the $150 mark as the result of
market rigging may have trouble in seeing the philosophy in it; but that
the banks were in collusion with, or under a common coercion with the
stock exchange in these rules, is most strongly indicated. None may
speak louder on behalf of the Canadian Banks than Sir Edmond Osler.


AN APPEAL TO CSAR.

Of course, I replied to Sir Edmond Osler's letter, stating my case. I
closed with the following appeal:

     "If, at the time of the panic, an injunction was placed upon the
     bears and their rights taken away from them for the benefit of the
     bulls, now that, apparently, the tables are turned, the bears
     should receive some consideration.

     "Some bears, at the close of the exchanges, sought legal advice and
     forced a compromise. The fact that I did not, through a sense of
     decency, should not operate against me."

                        Yours very respectfully,
                                                 (Sgd.) W. H. P. JARVIS.

     Sir Edmond Osler.

In the body of the letter I pointed out that I was getting only 2% on
the money held against bear sales, and other points within the reader's
knowledge. That it was quite within the meaning of the Stock Exchange
that I only should get such 2% is suggested by the following:

                   21 Jordan Street, Toronto, Canada, Nov. 24th, 1915.

     Dear Mr. Jarvis:--

     I have your letter of the 19th inst., which I have read carefully,
     and I have been making enquiries as to the rules which govern the
     dealing in stocks since the beginning of the war, and so far as I
     can make out nothing except in conformity with these rules and
     regulations has happened in your case.

     As I told you, I have not been on the stock exchange for many
     years, and I was not in the country when the war broke out, and
     when all these arrangements were made, so I am not familiar with
     them from the beginning, but from what I can learn I think that
     your case has not been treated on any different basis from that of
     all who were selling and buying stocks at the time.

                           Yours very truly,
                                                     (Sgd.) E. B. OSLER.

In this there was scant consolation. It will be noticed that the
injustice that had been worked against me did not gain me a champion in
the man whose voice could sound above all others on the Toronto Stock
Exchange: nor did he try to justify the operation of the so-called rules
and regulations that had the endorsation of all the banks.

What power the banks and the Stock Exchange had to make rules, which
amounted to nothing more than a delineation of policy to make one set of
traders the prey of another, is very hard to conceive: the workings of
these "rules and regulations" was nothing more than the perpetration of
a conspiracy, and a very low and mean conspiracy at that. Were their
action legal and outside the criminal law, then they have shown the way
to the open working of a trade conspiracy. Trade conspiracies are,
to-day, as every one knows, rampant throughout the world; the question
is to bring them home. This Bankers-Stock-Market conspiracy is blatant,
and it is to be proved out of their own mouths.

Were it beyond doubt that the action of the Stock Exchange was in good
faith, that its motives were for the public good solely, then I or any
one else who harassed the committee would be open to general execration:
but if, as I claim, the committee, after saying: "we are acting only
under patriotic motives," used the license afforded them to hatch a
conspiracy against those on whose chivalry they had cast themselves,
then the doors of prison should close on them. What are the facts?


ARE FINANCIERS WIZARDS?

The ability of anyone to prophesy on financial matters is much to be
questioned. If our late war were to break out again, with the knowledge
we have now, the stocks that were most under pressure at the end of
July, 1914 would boom. Once, while in the drawing room of an aged lady
relative, I heard an old man talking, loudly, as is the custom with
those in advanced years. The name of one of our most prominent
financiers came up: I may say the name of our most prominent financier.
The old gentleman said: "---- once came to me and asked me to take
charge of his office. I asked the privilege of looking over his books.
This was accorded me, and I found so many losses that I refused to have
anything to do with the business."

The stock broker referred to is regarded by the public as a veritable
Bayard, and is he to whom I referred when I told of a friend saying that
Sir Robert Borden sought able advice. It would be interesting to know
whether the report of the old man was true, whether an examination of
the books of this pseudo-magician, or the stock exchange firm of which
he is chief, would show a long list of losses, for, if it is to be
presumed that the clients in a brokerage office are under its guidance
in their speculations, one may wonder how the country may hope to
prosper where the individual fails. The United States has looked into
this matter, and it has been found that no brokerage office has a
speculative account over three years. In other words, brokers rear their
fortunes at the cost of those who trust them.


ANOTHER PILGRIMAGE.

About the time I took up correspondence with Sir Edmond Osler, I, in
company with my solicitor, called on Mr. J. Tower Fergusson, then
President of the Toronto Stock Exchange. I thought that some fair
settlement might be brought about in my case. Mr. Fergusson, we found,
quite philosophical about the matter and suggested that the courts were
open to me: moreover, that it would be very interesting to have the
point tried as to whether the Stock Exchange had the power to do what it
did. An injustice that had been done to me did not appear to appeal to
him. I suggested that if I were compelled to enter suit against Messrs.
O'Hara and Messrs. Jaffray & Co., these firms might not appreciate the
development, that they were friends, and that I wished an amicable
settlement. If I could gather anything from Mr. Fergusson's attitude, it
was to the effect that the position taken and the deeds done by the
exchange had been the result of coercion or intimidation by outside
forces. I am very ready to believe this, as I have been very creditably
informed that, at the time of the closing of the exchanges, a great many
of the brokers were not in accord with the move at all.


THE POWER OF MONEY.

The control of credit is one of the forces, probably the greatest force
to-day. Money is very often and very aptly called "the munitions of
war," and the man who has no credit is much handicapped in the battle of
life as it obtains in the commercial and financial world, and
half-a-dozen men control or can influence the nation's wealth, have the
power, which they wield, to coerce practically every business man in the
country. The member of Parliament who comes from the uttermost ends of
the land is most often in continuous need of money and, if the banks
will not lend it to him he is a cripple, commercially. Again, our
country itself is a persistent borrower, and must get on its knees to
the money-lender.

There is no one who is a more persistent borrower than a broker, with
the consequence that there is no one who can less afford to offend our
money-lords than a stock exchange man, or with whom popularity with the
bankers is so necessary: credit is the stock broker's stock-in-trade.
The result is that the word of the president of a great bank is law to
the stock exchange committee as well as to Parliament. As an
illustration of the power of our bankers over our legislators, it is
only necessary to point to the occurrence wherein the former issued a
mandate to Parliament to deliver up to Mackenzie and Mann forty-five
millions of dollars, and had their demand complied with overnight. This
shows what a mockery our Parliament is of all that it is supposed to be.
Our governing machine, or what is supposed to be our law shop, may give
away forty-five millions of our country's funds to two adventurers, to
whom Sir Adam Beck has very aptly given the name of, "blights upon the
public life of Canada," and this without the semblance of a discussion.


THE SOUL OF MONEY.

Some thirty-five years ago a party of engineers was scrambling along a
mountain-side, in the process of building the Canadian Pacific Railway.
The chief was a young man. At the head of the procession was one of the
staff, carrying a small axe, the property of the young engineer and
worth about seventy-five cents. As the little band progressed he with
the axe stepped out upon some loose rock: in a moment the mountain-side
sprang into life, thousands of tons of detritus were on the move--the
man with the axe was sliding to his doom. The others stood spellbound,
all--save the young engineer--felt their hearts in their mouths as they
saw their comrade being carried to his death. The apprehension of the
young--and brilliant--engineer had a different source. As his trinket
tinkled over the precipice, companion to his struggling fellow-creature,
he was heard to exclaim: "My God: there goes my axe!"


HOW TO "GIVE" MONEY.

He of whom this story is told is to-day one of Canada's wealthiest men,
the president of a bank whose assets figure over $500,000,000, a
director of a great railway, reputed to be a remorseless stock-gambler,
and, I am ready to believe, the inspirator of a great measure of our
market-rigging, as he is also the president of a company, the high
price of whose shares is one of the anomalies of our markets.

Some years ago I was travelling to Europe, and on the great Cunarder in
which I had taken passage was also this man. One day, in the
Mediterranean, he opened his heart to me. He told me of his givings,
and, more important, he told me how money might be given to gain the
greatest recognition. When the war came the bank of which this man was
President was noted for being the hardest on the small shopkeeper and
the farmer; this opens up, by suggestion, the danger that lies in having
the command of hundreds of millions of the nation's wealth in the
control of such a man. He will favour the broker-creditor at the expense
of the small merchant and the farmer.

And then there is suggested the danger that lies in our being beholden
to the financiers for the support of our charities. I believe that
virtues and sins often lack correlation; the most exemplary husband and
father is often the greatest crook in the city, while the profligate is
often scrupulously honest in money matters. The corner-loafer, the rowdy
and the thief have responded to the call of true patriotism, and many
such lie on our battlefields in Europe--we honour them, not as they
lived, but as they died. The unthinking do associate virtues and the
washerwoman, seeing in the press that so-and-so, president of this or
that institution, has given so much money to a charity, feels that he
must be a very Godly man and, therefore, she trusts her savings to his
hands. The subscription list might well be done away with, letting the
responsibility for our charities fall upon the taxpayer: those who would
give might well do so anonymously, not letting the left hand know, etc.


PUBLICITY.

One might well ask why I did not air my troubles in the press, the stock
exchange being a public institution.

That the press was either chloroformed or lent itself, voluntarily, to
the conspiracy is more than suggested by an article that appeared in the
Toronto "Globe" for April 2nd, 1918. This screed, evidently inspired,
was filled with mean insinuation and full of untruths: it tried to make
virtue out of a crime, going better by one than the man who would make
virtue out of necessity.


COMPOUNDING A FELONY?

The press I regard as one of the enemies of civilization and, to
illustrate the depths to which it will delve at the bidding of the
capitalist, I will tell an experience. In 1907 or thereabouts, Silver
Leaf stock was being manipulated by a gang who ranked among the most
vicious in Toronto, which is the same as saying that they were as
crooked as well might be.

Concurrently there appeared in several of the Toronto papers,
particularly in one evening paper that poses as the friend of the
working man, accounts of a strike of ore on the mine. This discovery,
which had no occurrence in fact, was mined to depth, and vivid accounts
were printed as to the ore taken out. One day, in Cobalt, I fell to
declaiming against this sort of thing, when one of the local sports took
me up: we made a wager on the lines that we should hire a rig, go and
review the reported strike, and if silver could be found I should pay
for the expedition; if no ore could be found, the cost was to be borne
by the other side. I did not pay!

Not long afterwards, when in Toronto, I met the financial editor of the
paper I have referred to. I knew him.

"Why," asked I, "do you print such stuff?" I referred to the false
stories concerning mining operations on Silver Leaf.

"Oh," said he, "we have to; those people rent offices from us, and we
have to."

He might also have said that they rented advertising space from his
paper. At least my little story will tell how little real interest the
"democratic" press takes in the welfare of its readers, its true
patrons. Of course, were a criminal charge of aiding and abetting fraud
laid against these newspaper men they would plead that they acted in
good faith. But who can conceive that a financial editor believes
one-tenth of the "dope" he turns loose on an unsophisticated public?


REALITY.

The thing is that the newspaper men collect enormous revenue from the
advertisements of the brokers. In one morning paper, published in this
city, I noticed the advertisements of no less than six firms I verily
believe to be bucket-shops. The thing is that the newspapers collect
their news out of the brokers' offices rather than pay correspondents,
and they will print most anything that is offered them. On the other
hand, the editors would find discrediting the brokers poor business, so
it is not done. At a guess I would say that at least 50% of the
financial advertisements appearing in our daily journals have a
dishonest origin--why not investigate and see? They do such things in
England and the United States!


A CREATURE OF JUDAS.

To me it is a great regret that I have not copies of the letters to the
newspapers I wrote in criticism of the action of the Canadian exchanges
at the time of closing. They would be an object lesson of the
subservience of the press. It would be of great public interest if
everyone who wrote letters to the public journals would keep copies,
that those refused publication might be collected and printed in book
form: by such means an estimation of the value of the press as a pillar
of liberty might be gained. My idea of the press is that it has been
perverted into an instrument of oppression, a tool of the money-lender
and the capitalist.


FROM THE FIELD OF HONOUR.

From France I wrote Mr. milius Jarvis:

                                             France, March 20th, 1917.

                                                  (Without prejudice).

     Dear Mr. Jarvis:--

     I write you for a little expression of friendship. I base my
     request on the slight acquaintance existing between us, as our
     blood affinity is negligible.

     My trouble is in the stock exchange and grows out of the stock not
     delivered at the closing at the end of July, 1914. Two accounts I
     had with Toronto stock exchange houses have been closed out during
     my absence, and I am advised to take action against the members of
     the committee individually on the ground of conspiracy, and against
     the brokers on the ground that having refused to take delivery they
     forfeited right. This latter, I believe, is well established in
     law. The former is not--at least I believe there is no precedent.
     But what I would like to ask you: do you believe there is any
     chance of doing anything with the exchanges without the use of the
     heavy guns of the courts?

     At the closing I played the game and made no complaint at the stock
     exchange rulings, save that I felt, when money was in such demand,
     that interest allowance should be in full.

     My idea of conspiracy lies in the opening of the exchange under new
     rules. Now, Lord Reading says that rigging the market is
     conspiracy. The question is: is my contention right that moving
     against selling short and the establishment of minimum prices
     constitutes market rigging?

     These are days when great latitude is demanded in dealings between
     men, and so far was I from trying to depress prices at the closing
     that I advised a friend not to enter in a stock auction on the
     ground that he would outrage public opinion.

     It appears to me that it will not pay the exchanges, Montreal and
     Toronto, to have such a suit as I am advised to bring against their
     committees go forward. It would mean much acrimony and an unending
     amount of worry and trouble, especially if I made some of the
     companies whose stocks I shorted party to the suit. After unending
     strife the judge would probably recommend that I be compromised
     with.

     I can't get out of this. The Government needs me here. The
     outstanding fact is that my substance has been taken over during my
     absence at the front. The public will see it this way.

     Mind, I am not thinking, at the present at any rate, of entering
     suit against the exchanges for shutting down. They did this to save
     the larger section of their clients. There is no doubt about this.
     They acted apparently in conspiracy to affect the market price of
     shares, and the newspapers, in support, refused to print
     advertisements of stocks. I had been a regular customer and had
     been on the books of one broker for nearly ten years. I entered
     into a deal relying on facilities which were taken away from me to
     prevent me making a profit.

     Even were it legal, was it just?

     ---- ---- forced the issue by threat of a writ. I acted trusting in
     good treatment.

     I know that I am not popular, and some, no doubt, claim my ways are
     devious. But I acted square.

     If I fight and lose I am ruined. If I fight and win I get damages
     for about $200,000--possibly more--possibly less--and the case will
     damage the exchanges for ever more.

     If I come out of this alive I will certainly fight, and fight hard.
     Popular feeling will be with the soldier against the profiteer. Why
     not suggest to Senators Nichols, Holt and Cantley that they make it
     up? The stock exchange closed to serve them, and the new rules, no
     doubt, benefitted them. I have the right to enjoin them. Can they
     face public opinion in the matter? ---- may have ambitions for a
     peerage!

     Show this letter to Mr. Morrow, with the reservation that it is not
     used against me. It was written without legal advice and is not
     intended to libel anyone, or make any threats.

     What excuse can the stock exchange have for maintaining minimum
     prices after they had been passed--and the rule against short
     selling?

     I trust this has not wearied you too much. Do not bother if you
     consider that I am barking up the wrong tree.

     Kind regards. My address is: c/o Second Divisional Supply Column,
     Canadians, France. Give my regards to Mr. Morrow.

                         Yours very obediently,
                                                 (Sgd.) W. H. P. JARVIS.

                                                                1262252.


MY DREAM.

I was ingenuously optimistic of the capitalists fearing public opinion.
They had long previously learned that, with the control of the press,
they can make public opinion: this, by the way, was the creed of Von
Jagow, chief of the Huns.


A LETTER FROM HOME.

                                            Toronto, April 16th, 1919.

     My Dear Jarvis:--

     Why do you say that our ties of blood are negligible? They are very
     real. Did we not come from the same great-great-grandfather? We are
     third cousins, and when a relationship is definitely known, why
     should you say that the blood affinity is negligible? I have always
     regarded it as very real.

     Now, with regard to your trouble with the stock exchange, this is
     the first time I have heard of the trouble, and, as you do not go
     into its origin or give me any names, I am afraid that I cannot
     give you much advice. However, as a rule, law-suits are anything
     but profitable, and if it is based on the broad principle that the
     stock exchange placed minimum prices on shares at the outbreak of
     war was wrong, there is ample precedent and authority for such,
     because in the general interest a panic may often depreciate the
     value of a stock far below its intrinsic worth, and it was largely
     due to the banks themselves that this was done in order that they
     would not have to call up margins when they knew that time would
     right itself. Rest assured that if it comes in my power to help you
     I shall be glad to do it, and if you will write me, stating
     definitely what it is you want of me, I will do my utmost.

     I think it was a splendid thing of your going to the front, as you
     were not in the first blush of youth, and I know that you have at
     times suffered from ill-health.

     You will be sorry to hear--(The balance of the letter was made up
     of gossip and news.)

                             Your kinsman,
                                                  (Sgd.) MILIUS JARVIS.

This very kind letter, besides breathing the best of good-will, is
additional evidence that the banks were concerned, not only in the
closing of the exchanges, but in their opening up under minimum prices.
Mr. Jarvis was slightly in error in his letter, the minimum prices were
made several months after the closing of the exchanges, and the process
was one of aiding the exchanges in opening, not in closing.


WHY BE AN OSTRICH?

An asset is an asset only insofar as it commands a market: to destroy a
market does not make a commodity which was handled in it of any more
value. A bank is trustee for its depositors' funds, which it may lend on
a security quoted on the market, but it is much to be questioned if,
when a slump is on, trusteeship is to be served by burying one's head in
the sand and refusing to see. In fact, one might suggest that the
reverse was the case. Had the banks been satisfied that the securities
they held were really worth what they had advanced against them, then
they could have said so, asked Parliament for authority to consider them
so--which Parliament would have given--and let the market do what it
would. To the holder of stock, the closing of the exchanges did little
service for, unless he was satisfied to sell on the street market he
might not sell at all. It must be remembered that the stock the bank
holds is the stock of the bull who has bought what he can't pay for, and
is as much of a gambler as is the bear. One may, I think, claim that the
banks seeking to interfere with the market for securities against which
they have lent money constitutes a most dangerous precedent, and one
which the courts should be very slow to endorse. If one were to meddle
with an assayer's scales or to doctor his solutions to obtain undue
valuation of bullion, one would think he should be reckoned a candidate
for the penitentiary--yet, wherein lies the difference?


LET US BE FAIR.

I responded to the encouragement I received from Mr. Jarvis. I wrote him
an exhaustive statement of my case, and then I made my appeal:

     "I am over here in a land where death travels by night and at all
     other times. I don't think I shall be called to run great risks,
     but should I go under I should be glad to have the doors of justice
     opened to my family--and my memory. I have considerable
     correspondence, and my case is set down pretty fully here. . . . In
     case of my death I would be glad to have my case arbitrated before,
     say Judge ---- ----, if he could be induced to act, or some other
     judge. I hold that I have been damaged in loss of credit, worry and
     misrepresentation to the extent of $150,000, besides the loss of
     money wrongfully paid out. . . ."

     "Now, you have my authority, if you care to champion so unpopular an
     individual as myself, to send a copy of this letter to the
     committee of each exchange and ask them to investigate and find out
     what statements are objected to. . . . Then they are requested
     whether, in case of my death, they are willing to arbitrate this
     case on the grounds of law and equity."

To this letter I received the following reply:

                                             Toronto, July 10th, 1917.

     My Dear Jarvis:--

     I have your several letters, together with your brief, so to speak,
     of your case. I am very distressed indeed at your losses, but fear
     that you have a slim chance of a recovery. The point that strikes
     me is, were you or were you not cognizant? . . . (Here follows an
     hypothesis.)

     You will excuse the brevity of this letter after the volumes you
     have written, but remember I am not in the hospital and have not
     got any leisure time. In fact, I am driven off my feet. . . .

     With kind regards, believe me,

                             Your kinsman,
                                                  (Sgd.) MILIUS JARVIS.

What was the cause of the change in tone discernible in Mr. Jarvis'
second letter? My request for an arbitration, which was the whole theme
of my letter, was not touched on by him!

It is not probable that a man who would write the first letter he wrote
to me would fail to make at least a tentative effort at having my
request complied with: the theory that suggests itself to me is that he
did so and found the stock exchange committee incorrigible.

There are fifty thousand Canadian graves in France and Flanders which
mark the resting place of men, and, in a few cases, women, dead in a
cause that, incidentally, made good the hoardings of our money lords,
who, on their part, would not accord the family and the memory of one of
these common justice! Does this not beggar history? And yet we are told
that we fought for justice!


IN ACTION.

On my return from France I entered suit against Messrs. O'Hara and
Messers. Jaffray, and I wrote Mr. A. K. Maclean the following letter:

                            Toronto, 31 Oriole Road, 17th Sept., 1918.

     The Hon. A. K. Maclean, M.P.,
     Ottawa, Ontario.

     Dear Sir:--

     You will remember that, two or three years ago, you had a little
     correspondence with me concerning the Canadian stock exchanges, and
     what they did at the time of the panic at the outbreak of war. I
     wrote you from France several times, but received no reply to my
     letters.

     Why I did not, I do not know. In any case, since my return I have
     entered two suits: Jarvis v. Jaffray, and Jarvis v. O'Hara. Over
     the last few days O'Hara has assigned.

     I now command much more evidence than I did when I first wrote you.
     It appears that the stock exchanges received orders from the banks
     to do as they did. So far as O'Hara is concerned, he has paid out
     my money and I feel that I shall never recover. My suit runs into
     something like $70,000. What Jaffray will do I do not know. But the
     thing is that my money with O'Hara went to the banks, or for their
     benefit. My solicitors tell me that I had O'Hara. What chance I
     have of following my funds as fiduciary I do not know, but they
     were paid, ostensibly, by direction of the banks. Whether I shall
     be able to launch a suit against the stock exchange and the banks
     for conspiracy I do not know. My solicitors tell me that it will
     take too much money.

     The thing is that the banks and the companies listed on the
     exchanges benefitted by these acts, which appear to be thoroughly
     illegal and, in effect, piracy. They were also thoroughly mean and
     contemptible. The papers deny any publicity to the circumstances.

     I learned in London that the exchange there was closed by order of
     the Government, and supported by Act of Parliament. In any case the
     modes employed bear no parallel, and if any person tells you that
     the exchanges did here what was done in London, the statement is
     not true.

     I do not want you to be put off with the statement that I desire
     the downfall of the market. I am not in the market, and at no time
     did I wish to secure such profit. The thing is that the brokers,
     evidently on orders from the banks, plundered my accounts for the
     benefit of other brokers, and so the banks.

     These people who benefitted so much by what was done at the time,
     and who subsequently profitted so much by the war should be made to
     do the right thing. O'Hara had nothing to gain, so far as I know,
     by the closing of the exchanges. He has been forced into
     bankruptcy, and Jaffray will suffer or follow suit. The difference
     in what London did and what was done here is very great, and I am
     ready to go into it if you care to have the facts. I was told in
     London by a great lawyer of the Middle Temple that a stock exchange
     cannot close. Ours did so. The people who instigated this business
     are those who should be made to suffer.

     My suit must go on unless pressure is brought to bear on those who
     benefitted to do the right thing. The interest of the country
     demands that it should be made impossible for men to do such
     things.

     Do not think that I hope for any aid from the Government. This
     letter is chiefly to bring this matter to your notice.

     I have the honour to remain, sir,

                         Yours very obediently,
                                                 (Sgd.) W. H. P. JARVIS.

I did not receive any reply to this communication, so some time
afterwards, I had a copy of it sent through the Great War Veterans, to
be handed to Mr. Maclean. This was done. In due time I was sent the
following:

                                    (Copy) Ottawa, January 18th, 1919.

     W. E. Turley, Esq.,
     Provincial Secretary, G.W.V.A.,
     907 Kent Building,
     Toronto, Ont.

     Comrade W. H. P. Jarvis,

     Dear Sir and Comrade:--

     Further to my letter of January 14th, with reference to a letter of
     the marginally noted submitted to the Honourable A. K. Maclean,
     M.P., I am informed by the above gentleman as follows:

     "Without reference at the moment, the reply which I made to this
     communication, I think in a general way that he (Comrade Jarvis)
     call upon Sir Thomas White some time in Toronto, and take the
     matter of his complaint up with him. If anything can be done in
     this matter it properly pertains to the Department of Finance.

     "I shall be very glad if you will favour me with a call some day at
     my office, so that we might discuss the matter referred to by Mr.
     Jarvis."

     I am awaiting your pleasure in this matter.

                           Yours fraternally,
                                                       (Sgd.) E. GROVES,

                            For Secretary-Treasurer, G.W.V.A. of Canada.

Mr. Maclean's idea of bringing the knights of high finance under control
seems to have been of short life. His idea that he sent me to Sir Thomas
White is, I believe, pure hallucination. I commend the circumstances to
those who admire politicians.


A DISCLOSURE.

At the meeting of creditors that followed the assignment of Messrs.
O'Hara, I asked the assignee, Mr. G. T. Clarkson, if any money had been
lost in the office by speculation. I was told, in the presence of about
twenty witnesses, that the bookkeeper and the junior partner had lost
forty thousand dollars by speculating and bucketting orders. On this
disclosure I felt that the arrest of the guilty ones would follow as a
matter of course. But the days passed and the youths, who, according to
Mr. Clarkson, had dissipated the funds of their clients, still walked
the streets. This caused me some perplexity, and the idea I finally
adopted was that the stock exchange interests did not wish the men
arrested, as their trial would cause too much public attention to be
drawn towards themselves, and their principals, the bankers.

I always have been impressed with the idea that a broker, paying out a
client's money against his interest and direction, was really guilty of
theft, and, as such had been done with my funds during my absence in
France by the O'Haras, I felt that the country owed it to me to give me
all the aid in its power. I sought out Mr. Corley, Crown Prosecutor, and
suggested that he lay an information against those Mr. Clarkson had
named. He admitted that I had made a very interesting point when I
suggested that the paying out of my money against my interest and
instruction was really theft, and suggested that I get my solicitors to
make out my case. I pointed out to him that my lawyers were specialists
of sorts in Stock Exchange law, and that the more dishonest brokers
were, the more grist would come to their mill and the easier its
grinding, and that it was unreasonable to expect them to invoke the
criminal law. Notwithstanding this argument, Mr. Corley failed to act.
Some time later I addressed the following letter to Mr. Kingsford,
Police Magistrate:

                            31 Oriole Road, Toronto, 10th Feby., 1919.

     R. E. Kingsford, Esq.,
     Toronto, (Police Magistrate.)

     Dear Sir:--

     I think it would be well for me to lay the case I have in mind
     before you in writing, rather than accept your kind offer of an
     interview. I may say that I have consulted Mr. Corley on this
     matter, and he admits that it would make an interesting case, but
     requests that I obtain a recommendation from my solicitors for its
     prosecution. My solicitors object to do this, saying that if the
     case is not made out, Mr. Corley will blame them for having
     prompted it.

     On the 28th day of July, 1914, the Toronto Stock Exchange closed
     down in panic. On that day I had with Messrs. O'Hara and Co., of
     this city, some eight hundred shares of Hollinger stock, fully
     paid, besides funds in cash and credit balances. On that day O'Hara
     refused to deliver more than two hundred shares of Hollinger he
     held for me. And he refused to give me any money.

     On November 2nd, 1914, by letter of that date, I withdrew authority
     from O'Hara to deal with a certain sale of Montreal Power stock,
     yet in spite of this letter, O'Hara continued to pay out my money
     to meet the demands made by Messrs. L. G. Forget & Co., of
     Montreal. By letter dated 20th December, 1915, from his (my)
     solicitors I again repudiated O'Hara's dealing with Forget and
     other brokers in regard to several alleged sales of stock by
     O'Hara, but notwithstanding such repudiation, O'Hara continued to
     pay out my money.

     On May 9th, 1916, I called on O'Hara and asked him to close out a
     sale in United States Steel open in my account. This O'Hara refused
     to do. I then wrote him protesting against this action, pointing
     out that it was plain plunder. Notwithstanding this letter, O'Hara
     continued to pay out my money.

     In the autumn of 1918 O'Hara assigned to Messrs. Clarkson, with
     liabilities of approximately a hundred thousand dollars.

     At the meeting of creditors Clarkson told me that forty thousand
     dollars had been lost by the bookkeeper and junior partner
     speculating and bucketting orders. Since then I learn on the best
     of authority that the bookkeeper by the use of dummy accounts,
     etc., was responsible for practically the whole of the insolvency
     of the firm. This man is by name ----.

     It is a principle of law that:

     1st. A client's money in a broker's hands is fiduciary.

     2nd. A broker has no authority to deal with a client's money save
     by direction of that client.

     I feel that in doing as ---- did should be theft. He was in
     complete charge of the office by my observation.

     On the 16th of May, 1916, I went overseas in the Canadian Army, and
     a good deal of my losses through O'Hara occurred while I was away.
     I feel that if the payment of my money by O'Hara can be made theft
     that the Court may order restitution, therefore I ask that mine be
     made a separate case, and I feel that I am entitled to official
     sympathy. The man to see in Clarkson's is ----, an accountant.
     There is no doubt in my mind but that O'Hara or his man ---- is a
     criminal on other counts.

     I have the honor to remain, sir,

                      Your very obedient servant,
                                                 (Sgd.) W. H. P. JARVIS.

In due course I received the following reply:

                          18 St. Joseph St., Toronto, 18th Feb., 1919.

     Dear Sir:--

     I have spoken to Mr. Corley and shown him your letter. He tells me
     he asked you for details of the transactions you complain of which
     your solicitor might supply. He also told you to see the
     Attorney-General.

     As soon as the particulars required and you have seen the
     Attorney-General Mr. Corley will look into your case.

     It seems to me that you would be wise to let your solicitors supply
     the Crown Attorney in a professional way with the full details
     required. If a summons is asked for it must be requested in writing
     with sufficient material to enable the Crown Attorney to come to a
     satisfactory conclusion.

     One thing you will have to face is the way you continued to deal
     with the firm so long after you had reason to distrust them--also a
     criminal court cannot be used for purposes of compelling
     restitution of misappropriated funds.

                           I am, Yours truly,
                                                 (Sgd.) R. E. KINGSFORD.

Mr. Corley was in error when he said that he had advised me to see the
Attorney-General. I did try to see the Attorney-General, but he tried
equally hard not to see me, and he prevailed. What is apparent is that
both the Crown Prosecutor and a Police Magistrate were made acquainted
with the charge that two men had been guilty of misappropriating a large
amount of other people's money, and that neither of them acted.


TO THE PRIME MINISTER.

I also wrote a long article, containing much that has appeared in these
pages, including the allegations made against the O'Haras and, through
the Great War Veterans, sent a copy to Sir William Hearst, and another
copy to the Attorney-General (Mr. Lucas). The receipt of these documents
was acknowledged, but there it ended. I then brought the allegations
against the O'Haras to the notice (by letter) of the editor of the
Toronto Telegram.




Book III.

In the Crucible.


THE TRIAL.

In early October, 1919, my case against Messrs. Jaffray came to trial.
Naturally, as I was under the impression that, when I had consulted Mr.
Norman Tilley, I had done so with such an action in prospect, I resented
his appearance as counsel for the defence. During my cross-examination I
gave him a dig on the point. "What did you do next?" was a question he
asked. A. "I consulted a man called Norman Tilley, who told me that I
had no case, but whether he believed what he said or not, I do not
know." "My Lord," spoke up Mr. Tilley, "it is not true; it was not on
this case that he consulted me, or I would not have undertaken it." His
Lordship, Mr. Justice Lennox, said that he quite understood, and
reproved me for questioning the honesty of counsel.

Of course, I felt myself thoroughly discredited and, as I believed that
Mr. Tilley had consulted Mr. Starr and found that he had forgotten the
circumstances of our joint interview with him, and that he was thus able
to say what he pleased, I concluded that the further I would go the
deeper the water in which I would find myself.

On the morning of the second day of the trial I was called from the
stand and told that I must settle the case, that I was calling these
people thieves--the stock exchange committee and the gang generally--and
that they "had" something on me which they would "let drop." I accepted
this as a threat of imprisonment on a trumped-up charge. Then I was told
that a message had been sent by his Lordship in a round-about way that I
had better settle.

The man with a knowledge of life will ask why anyone should be
frightened by such a threat. My answer is: I am thoroughly of the
opinion that the influence of what I call the "Hidden Hand," the money
cult, is so strong and at the same time so unscrupulous, that it will
stand at nothing to save its proteges from loss. This may be an
obsession on my part, but it is, nevertheless, my mind--and, I fancy,
there are those who will see me justified. It will suggest itself to the
reader that, had I won my case, the stock exchange members would
probably be inundated with suits and put to the cost of, possibly,
millions. My own idea is that the stock exchange had guaranteed Jaffray
against loss. I do not think that any member of the Jaffray firm would
stoop to the low method of intimidation, and to sending me such a
message as was brought me.

For the reason that I believed myself thoroughly discredited before his
Lordship by Mr. Tilley giving me the lie, and his Lordship accepting his
word, and because of the message that came to me, ostensibly from his
Lordship, and for another reason which I regard as blackmail, I settled
the suit for a paltry sum.

A few days after the trial I gained an interview with Mr. Justice
Lennox, and was told by him that he had sent me no message.

I have among my papers the following:

                                               Toronto, June 12th, 1916.

     Messrs. Starr, Spence, Cooper & Fraser,
     Canada Life Building,
     Toronto.

     In Account With

                      THOMPSON, TILLEY & JOHNSON.

     re JARVIS.

     To Mr. Tilley's fee advising $50


MAN.

It is a mixed compliment to say that a man is as honest as he can afford
to be; it is a trite saying that no one is any more honest than he can
afford to be. Herein is the philosophy that lies in the support of the
Farmer-Labour Government. The farmer and the workingman are the only two
who can afford, in these days, to be honest. There are exceptions in the
doctors and a few others; in the aggregate not a political influence.
The workingman, in his union, has a champion against the vengeance of
the capitalist. The farmer is independent; he fears no man. But the army
of the clerical classes in the cities live by favour or suffrance. Boys
are reared and enter life to the slogan: "Do not make enemies for
yourself." And my experience has shown how far-reaching is the vengeance
of the capitalist, the market-rigging broker and the banker.


OUR BANKERS.

The bank president who commands the patronage of five hundred millions
of other people's money has greater power than the King of Great
Britain: He can make or break more men. He seems to be above and beyond
criminal processes by our courts. He is followed by the toady, the
boot-licker and the parasite; to the vassal who renders faithful service
he can make bounteous reward.

The love of power, which a Socialist has described as the greatest of
all intoxicants, prompts men to excesses to hold such a place as bank
president. The capacity required to hold the position is the ability to
save the bank from loss. To save a bank from loss the easiest way is to
have the government take over its lame ducks: the taking over of
Canadian Northern Railway being a case in point. The bankers will argue
that the bankruptcy of the Canadian Northern Railway would have ruined
Canada's credit abroad: it might have ruined their capacity to sell
bonds--not quite the same thing. As long as the foreign investor can be
persuaded that the Canadian Government will take over the lame ducks--in
the vernacular, "hold the baby"--of the promoter so long will he buy
them: who wouldn't?

Had the slump that preceded the outbreak of war been permitted to run,
besides allowing the holders of ready money, the farmers and the
workingman, to obtain bargains in the market, it might have uncovered
the market-jobbery of some of our bank directors. Possibly the enigma
that lies in the high price of Montreal Power might have been uncovered!

Kings have done strange things to win or hold a throne.

The patronage of five hundred millions is a kingdom!


WHO ARE OUR FINANCIERS?

I have heard the story of how only one bank president made his money.
This man made his money by adulterating his port wine. But of the
others? They are largely "financiers." Financier is an ambiguous term;
our literature holds nothing on how to be a financier. But much has been
written on "stock-jobbery." We know how Charlie Chaplin, Sir Harry
Lauder and Henry Ford made their money. We may behold the film-king do
it, in a movie show; the gramophone will tell us how Harry Lauder does
it; and we may see Henry Ford do it on our roads and in our streets. But
none of us know how any of our bank presidents have done it; they live
in a world of camouflage. Why?

Sir Joseph Flavelle, Bart., made a fortune by the working of the law of
supply and demand: many of our bankers saved their fortunes and their
commercial necks by staying the process of supply and demand.
Incidentally they prevented the proletariat from making money by buying
in a cheap market. As director in a bank in which he is associated with
some really high financiers, Sir Joseph Flavelle, Bart., may possibly,
actively or passively, have had to do with the prevention of the decline
in securities at the outbreak of war. If such should prove the case, he
would seem to be a shining example of the inconsistency of human nature.

As a matter of fact, all Canada's wealth, several thousands of millions
of dollars, is in the control of half a dozen men who, apparently, will
stop at nothing to save themselves from downfall. Their own wealth is
but a cipher of that which they control. They have placed manacles about
the limbs of our people, fashioned from our own gold. Canada has a
chance of an honest government when Canada has the savings of her people
in her own hands: we should nationalize our banks. The privileges now
enjoyed by our banks, and which should belong to the people, would make
an important national asset.


THE RETURNED SOLDIER.

The men who placed their flesh and blood between civilization and the
devastating Hun have a right to demand that the basis of
civilization--justice--shall be maintained, that our institutions shall
be held inviolate: the fact is that the organized money power of our
country has perverted the institution of popular government until it has
become a travesty. Loyalty to our King and country does not mean that we
should be loyal to the system of government to which the name "Popular"
is given--a name is but a name. It may be a principle of British life
that the right of government lies in the will of the governed, but we
know that the will of the people does not find expression in our
Parliaments. Popular government is based on the theory that all men are
honest and that truth has only to be voiced to be recognized. We know
that the vast majority of men are susceptible to purchase, intimidation,
blackmail, fear of ridicule, the desire for a "respectable" living, the
hope of a fair name. Unless a man is impervious to these forces and is
content to live by his hands, he is not a safe man to send to
Parliament. And we know that it is the most difficult thing in the world
to bring people to recognize the truth: the popular mind is to be
blinded by prejudice, such as the call of "Democracy," and befogged by
illusions. A tenet of democracy is that a man who is not susceptible to
a money bribe must, of necessity, be honest. The most dangerous
politician is he in whom the love of money is replaced by a consuming
vanity; those who use him as a tool set him on a pedestal of commercial
honesty before the people and while he, blinded by the adulation of the
hierarchy, and seeing not the infamy about him, holds the public gaze,
they carry on their rascalities.

The returned soldier has the right to demand that our money-lords keep
their hands off Parliament.

The returned soldier has the right to demand that some sort of morals
should obtain among our lawyers. "If you have a grievance, the courts
are open to you," says the financier, glibly. The assumption is that our
courts are infallible, and that our lawyers are above suspicion. But the
lawyer is open to blackmail, purchase, intimidation, as other men; he is
only human. And the capitalist has much to offer the lawyer! If he licks
the right boots he may be made a director on this or that company, and
draw a salary for taking a responsibility without exercising it. Anyone
who has much to do with lawyers knows that they tend towards shifty
compromises, in which they resemble politicians. When they rise high in
the regard of the money-lords they have special privileges: I have been
told that there are only two counsel in Toronto who can misquote
evidence in court and get away with it. The inference to be drawn from
this is that two men have such privilege. And this becomes more
interesting when it is said that the two counsel named to me are leading
men in Toronto, and in the habit of receiving retainers from the
money-lords.

Any lawyer who displays outstanding ability is immediately taken hold of
by the money-lords; he becomes solicitor for a bank, or a trust company,
or an insurance concern, or what not, and is so put in a position where
to take a case against the financiers is to quarrel against his bread
and butter--which no man is expected to do.

It is said that a man who takes his own case into court has a fool for a
client; but what is to be done if one may not trust his lawyer?

Rufus Isaacs, Lord Reading, was a stock broker on the London Exchange.
Through no fault of his own he was declared a bankrupt. The injustice
put upon him made him determine to study law and go after the brokers.
He did so and he won so many suits against them and established such a
reputation, that he ended as Lord Chief Justice of England.


THE STOCK EXCHANGE.

The stock exchange occupies a far greater place in our economy than most
people realize. It is largely the kindergarten of our real governors,
our bankers. It is, in a way, the trustee for our bank depositors. A
bank president may also be the president of any flotation. The danger
that lies in this condition is illustrated by the following: Suppose a
bank president floats a company for $10,000,000 capital and, by
manipulation, inflates the stock to 100% above par; then, by the use of
dummies and guinea-pig directors, he may extract anything up to six or
eight million dollars of the trust funds in his hands, and escape gaol;
in fact, gaol seems to have gone out of fashion for Canada's high
financiers. Our Attorneys General don't seem to function where they are
concerned. Cases have been known where insiders have waived their
dividends so that great returns may be made on outstanding capital to
justify its price in the market.

It is preposterous that the member of a stock exchange firm should be a
director, not to say president, of one of our chartered banks. He knows
when money will be tight, or he can make it tight, and he sells stocks.
He knows when money will be easy, or he can make it easy, and he buys
stocks; what chance has the outside speculator got against him?

There is a sign of method in the great antagonism of Toronto brokers
against the bear: if they were merely brokers they would cherish the
short seller, because they make their chief (legitimate) income out of
him. But the Canadian broker is also a promoter, and very often he is a
banker or the associate of a banker. With the bear eliminated, he can
carry on his market rigging and extract the bank's funds into his own
pocket, and escape gaol--the real desideratum.


THE STOCK BROKER IN HISTORY.

Samuel Johnson defined a broker as, "a mean wretch." "In 1719 appeared a
rabid work entitled: 'The Anatomy of Exchange Alley, or a System of
Stock Jobbing. Proving that scandalous trade, as it is now carried on,
to be knavish in its private practice and treason in its public.' The
writer was described as a jobber, but it was Defoe." (Duguid's "Stock
Exchange," page 19.) Lady Dorothy Neville, in her diary, describes the
struggle stock brokers had to get into society, and when the modern
English novelist desires a vulgar character, he almost invariably takes
the stock broker. In "Milestones" Arnold Bennett puts into the mouth of
one of his characters the words, "dirty stock broker."

It is hard to understand why the place and station occupied by the stock
broker in Canada. He is looked upon as a wizard, one endowed by
Providence with an acumen for making money. On the point I believe my
opinion to be of value, and that is to the effect that brokers and
financiers don't make their money by stock market speculation: their
mode is stock market rigging--not the same thing--and promoting,
watering stock and like tricks of the trade. The ignorant and confiding
invest their money through a wealthy stock broker in the idea that he
will show them the way to fortune: these people are victims of misplaced
confidence. The wizard is, most often, a plain crook, playing with other
people's money.


REFORM.

That there is a public demand for stock market reform in this country is
evidenced by the incipient legislation advanced by Mr. Lucas,
Attorney-General, at the last meeting of the Legislature. A potent lobby
was effective in passing this over, futile as blue laws are known to be.
What is needed is an investigation, and the more this idea is opposed
the stronger should be the public demand: does the honest man care who
searches his house?

In closing this narrative, I will express the wish that all honest men
who desire that their sons may have a chance for comfortable existence
in our land shall read "Other People's Money," a book written by Louis
D. Brandeis. This is a very able dissertation on the power of money, and
its conclusions have been drawn on the basis of information gleaned by
the Pujo Commission. All the evils of interlocking directorates are
there shown up. The ways of the financier of the United States are the
ways of our financiers. If the people of the United States are less
subservient than our people, and are able to learn the ways of the
money-lords, so should we play the X-ray on our banks and stock
brokering offices. If a returned soldier may not enter our courts and
trust to justice, if one such may be cheated as I was cheated, then is
our country open for anarchy; for, while it is the duty of the good
citizen to protect the state, it is the duty of the state to protect the
citizen.

The charge that religion and patriotism are being used by the
capitalists as the basis of appeals to the maintainance of a form of
government especially plastic under their influence, has much ground.
And the plea that if our present form of government is replaced by some
other, it would mean that ravishing hoards would carry rapine and murder
through the country, is merely token of capitalistic dishonesty. Anyone
who would suggest that the returned soldier would be less liable to
uphold justice in his own land than abroad is a creature of ingratitude.
But if our money-lord living in Montreal or Toronto shows that his heart
is that of the erstwhile war-lord whose habitat was Berlin, then we
might be excused if we sought the same methods of eradicating the other
as we did the one. One may not believe in Socialism, which calls for the
division of property and is in antagonism to the scheme of the Universe,
and yet maintain that the game of life should be played within the laws
of decency.




Transcriber's Note:

Words with missing or damaged letters have been corrected.

Untermyer and Untermeyer were used interchangeably and have been
standardized to "Untermeyer".

The following changes were made to the original text:
Page 07: "Governmnt" ==> "Government"
Page 10: "opprobium" ==> "opprobrium"
Page 12: "...in goal for fraud" ==> "...in gaol for fraud"
Page 15: "...Cobalt Lake " I asked. ==> "...Cobalt Lake?" I asked.
Page 17: "permissable" ==> "permissible"
         "partcularly" ==> "particularly"
Page 20: "excutes" ==> "executes"
Page 22: "I would like to know why..."
     ==> "Q. I would like to know why..."
Page 31: "employes" ==> "employees"
Page 32: "Would you be be good enough..."
     ==> "Would you be good enough..."
         "leter" ==> "letter"
Page 33: "...July, 1914. would boom"
     ==> "...July, 1914 would boom"
Page 34: "semblence" ==> "semblance"
Page 35: "anomolies" ==> "anomalies"
Page 38: "An assest is an asset..."
     ==> "An asset is an asset..."
         "excanges" ==> "exchanges"
         "I case of my death..."
     ==> "In case of my death..."
Page 39: "...more evidence that I did"
     ==> "...more evidence than I did"
Page 40: (Sgd. W. H. P. JARVIS.
     ==> (Sgd.) W. H. P. JARVIS.
Page 41: "...by letter of that date, withdrew..."
     ==> "...by letter of that date, I withdrew..."
Page 44: "far-raching" ==> "far-reaching"




[End of Don Quixote in Finance, by W. H. P. Jarvis]
