THE GATES OFFER
The year the Kansas City Southern was in the receivers hands, and while the reorganization was under way, I was busy preparing for great development of the territory served by the road. We had been promised the payment of the claim of four hundred and seventy-five thousand dollars. I had been assured of the position of president of the reorganized road, and when re-elected I wished a strong trust company back of me in its development. I expected to inaugurate plans at Port Arthur that would have made it three times the size it is now.
So, to carry these plans and provide for the future, and to extend the business, it was arranged to increase the capital from one million to two million, five hundred thousand dollars, and to open an office in Chicago. The increase was voted upon, and a large part taken by the stockholders. Later I went to Chicago to open the office there, and one day met my old St. Louis
acquaintance, John Gates. He asked me what I was doing. I explained my plans to him, and he said: "I will take one hundred thousand dollars in the trust company." This he did, and interested other friends in the company. He asked me if I did not wish him to join me in the reorganization of the Southern. I told him I would be pleased to have him do so, and also to co-operate with me in the joining of the four hundred miles of road north of Kansas City that I was consolidating and connecting by one hundred and fifteen miles of new construction. These roads connected
in Omaha, Quincy and St. Louis with Kansas City.
Mr. Gates bought a large interest in these consolidated roads, and also a considerable holding of bonds and shares of the Southern, depositing them with the Reorganization Committee. Shortly after this, Mr. Gates wished me to have the Philadelphia Reorganization Committee increased, and himself and one or two friends elected on the Committee. We all went to Philadelphia to meet Messrs. Welch, Waterall and others. They at first objected, but as I had been such a help to the Committee they acquiesced; the Board was increased and Mr. Gates and his friends were elected as members. I little thought this move would help in losing me the road. To please Mr. Gates I appointed a friend to find of his, Mr.
Brimson, who was manager of the Northern roads. He was a very capable man--in fact, one of the best men ever connected with me, and, best of all, he was as honorable a man as I ever met. The association was most agreeable. Mr. Brimson was building up the business of their roads. They had a very fair future, and were valuable as connections for the Southern road.
Mr. Gates one day suggested that I take my car and he and some friends would go to Port Arthur with me. This we did. They were more
than pleased at the great business the road was doing, and their amazement at the magnitude and perfection of the land-locked harbor they could hardly express in words.
Messrs. Gates and Elwood bought lots on the lake front and afterwards built very expensive homes there.
That night, at the hotel, Mr. Gates made a speech recounting my wonderful work,
stating that he was glad to be associated with me, and that the people of Port Arthur could be assured I would be president of the road when
reorganized. On the trip back I became better acquainted with Mr. Gates. He was on this trip taking steps to depress the stock of Steel and Wire Company by stopping the
mills when the company had great orders, and thereby make an additional fortune again at the stockholders' expense. I only go fragmentary remarks as Messrs. Gates and Elwood talked this over, but my impression was that Mr. Elwood was doing all in his power to persuade Mr. Gates not to send out this order. This destructive work of stockholders' equities and the newspaper comments afterwards filled me with fear regarding Mr. Gates' business principles, and I did not from that time enjoy his companionship as I had in the past. My fears were more than justified. One day when I was in Chicago at three o'clock I received a
telephone call from Mr. Gates' secretary. He said Mr. Gates wished me to see him at five o'clock at his office. Somehow I had the presentiment of a coming battle.
I called. I did not see him at once, but a little after five o'clock I was asked into his room. There was only one electric light burning, and that was turned full on my face, whle Mr. Gates sat in the shadow.
He said: "Stilwell, do you want to make some big money? I want to make you rich."
"Gates," I replied, "any honest way that I can make money, I shall be bery glad to accept."
He said: "Stilwell, your principles make me sick. I am after the stuff, and everbody knows it. Now, I am going tonight by the Alton special train to St. Louis. At two o'clock a receiver will be appointed for all four of our Northern roads. I want you to go with me. You shall be the receiver. Then you go to these bondholders of the Omaha and St. Louis road and the Quincy road, and tell them there is no future for the road. You know them all, as you got them to accept your plan of reorganization. They will do what you say and will accept any old price. I will supply the money, and we will divide the profits."
"Mr. Gates," I exclaimed, "how dare you suggest such a thing! We have over three hundred thousand dollars in the treasury now, and this, Mr. Brimson says is all we need to bring the roads up to fair condition. Why a receiver at two o'clock in the morning if it is an honest need?"
"Stilwell," he said, "you are a fool. Who said it was an honest need? A receivership is to scare people out--that is what it is for. You are a fool if you do not accept. I can keep you from being re-elected president of the Southern. Do you wish to give up presidency of this road, to also give up a big fee as receiver of the Northern roads, as well as the profit on the deal? Now, will you go or not? The time is up. Don't be a fool.
"Mr. Gates," I said, :"you say the Judge will appoint a receiver at two o'clock. You must have it fixed."
He flew into rage, pounded his desk, and said: "It is all fixed, and I did not let you know
until too late to kick."
I said: "Gates, I can not and will not do it. I started life at twelve hundred a year, and would rather end it that way than make money as you suggest."
At two o'clock the next morning the receivership was granted. Gates joined forces with Thallmann and Harriman to keep me out of the Southern road as president. I did all in my power to keep these bond and share holders from loss, and did prevent his making as much as he expected.
Kountz, Thalmann, Gates and Harriman I now had on the warpath after me, but I did not regret and of my refusals to don their several yokes, and I would today rather be the business exile I am than to own Archbold's millions, and except here or hereafter to reap his harvest.
And I believe there are many young men, sons of rich men, who would prefer to have inherited less wealth, with an intarnished name. To illustrate this point, I quote the following from this morning's Minneapolis Times-Herald:
"MINNEAPOLIS SCORNS GATES' $1,000,000
Minneapolis, Minn., Aug. 29.--Charles G. Gates left Minneapolis a very disappointed man. 'I am sore,' said Mr. Gates, 'and just now I shouldn't wonder if I decided to build in Seattle instead of Minneapolis.'
"Mr. Gates bought large holdings on Lake of the Isles boulevard, and planned to build his Minneapolis residence there. After Mr. Cogan had learned who was the real purchaser of the tract he withdrew from the
contract. Gates had planned to spend $1,000,000."