Light at Lavelle, page 12
“Sell it.”
“If I sell every single share of Standard Oil you own, it won’t be enough to satisfy your margin, forget about paying back your actual loan.”
“Sell everything else.”
“Hershey is at 86. You bought it at 150. Last Thursday you told me not to sell it when it was at 135.”
“Sell it at 86.”
“Westinghouse we could’ve sold yesterday at 140. Today it’s at 100.”
Finn had bought it at 200.
“Macy’s?”
“Bought at 190, could’ve sold yesterday at 160. Today, 120 if I can get it.”
“Get it. Sell it.”
“You have half a million dollars in DuPont,” Lionel said. “You bought that at 115. Yesterday you could’ve sold it at 150, and actually made some money. Today it’s at 80.”
“Purity Bakery?”
“Bought at 100, now at 55.”
“General Electric?”
“Bought at 220. Yesterday’s low was 250, today it’s at 210.”
“Sell it.” Finn kept himself from exhaling.
“Everything? Even your personal accounts?”
“Everything.”
“Your father’s? Your father-in-law’s?”
“Everything.”
“Your father has ten thousand shares of Montgomery Ward. He bought it at 90. Its high was 150 in September, when I told him to sell some of it, and you and he decided not to. It’s at 22 now.”
“Sell it.” They both groaned. “Sell it all,” Finn said, “before we are completely wiped out. Let’s see what’s left.”
“Nothing, my friend,” said a drained, weakened Lionel. “There will be nothing left.”
18
Gray Ice Over the Charles
IT WAS AFTER EIGHT at night before Finn received the brutal tally from the black ticker tape machine on the walnut desk, got a printout of lows on Thursday, lows on Monday, and lows for today, Tuesday, October 29, 1929.
For an hour he sat at his desk in the tomblike darkness, simply stunned.
Finally, he got up and walked four blocks to Commonwealth Commercial Partners.
The first thing Lionel did was pull out a bottle of his finest whisky.
“I was saving it for the day my daughter got married,” Lionel said. His girl was three. “I thought I was saving it for the best day. Now I know I was saving it for the worst.”
If ever there was a time for drinking, it was tonight.
“No clinking though,” said Finn. “It’s a funeral, not a celebration.”
“I’m sorry, Finn,” Lionel said after three glasses of whisky.
“I’m the one who is sorry,” Finn said. “Why did you listen to me?”
“Because you’ve always been right.”
Finn stared grimly into his empty glass. “We have to figure it out, Lionel. I can’t keep my bank doors closed. I can’t steal my customers’ money.”
“You’re not stealing it,” Lionel said. “You don’t have it.”
“A thief who spends the money is still a thief,” Finn said.
“You didn’t spend it. You lost it.”
“I spent it,” said Finn, sounding as dejected as he had ever felt in his life. “I took it, I invested it, smartly or so I thought, and I lost it. Investing is also spending, Lionel. Spending what isn’t yours.”
“You’re not buying a railroad with it, Finn!”
“Apparently not even one fucking share of a railroad,” said Finn.
No matter how you looked at it, Black Tuesday was the most ruinous day in Wall Street’s history. Sixteen million shares were traded in that single day, another record, dwarfing Monday’s nine million and the thirteen million traded the previous Thursday.
The Dow Jones began that Thursday at 305. It finished Monday at 260 and Tuesday at 230. Since the high of 381 on September 3, the NYSE industrials lost 40 percent of their total value. More than $30 billion was wiped off the companies’ worth in just two days.
There was a rally at the end of trading on Tuesday, as if the sellers were drained by the frenzy, and the bargain basement prices were finally attractive, just as Finn had said—but it was too little and much, much too late. The collapse was so sudden and extreme, it washed fortunes away. It crippled people and institutions. The good and the bad went down together.
Finn, Lionel, Walter, and Finn’s father, the honorable Judge Earl Evans, all went down with them.
Lionel managed to sell Earl’s Montgomery Ward stock for $22 a share, garnering $220,000 in total. Half of the shares had been bought with money borrowed from Lionel, the other half with Earl and Olivia’s life savings. But Earl Evans borrowed $450,000 to buy the shares, and now had a grand total of $220,000 with which to pay it back. Earl still owed Lionel $230,000, and he didn’t even know it. There had been no chance for Finn to speak to his father.
And so it also went across the bank’s accounts, across Finn’s accounts, and across Walter’s. By the time the liquidation was complete, and nearly every single share had been sold and every Adams Bank investment account closed, Finn managed to cover the margins and pay off some of the underlying debt. But just like Earl Evans, he had a red balance and no money left to satisfy it. And at the end of the day, he was still over a million dollars short to Lionel.
“You have to talk to Walter, Finn,” Lionel said at two in the morning, when they had analyzed the numbers for the thousandth time, checking and re-checking their arduous, mind-numbing math. “There’s no way around it.”
“I can’t talk to him. Vanessa told me he had a heart incident yesterday.”
“I don’t mean to be insensitive,” Lionel said, “but is he still breathing? If the answer is yes, you must tell him what’s happened. Because his name is on the title of the bank and the title to his house. What about your brother-in-law Adder? As I recall, he lives in a house that’s also in Walter’s name.”
“My brother-in-law has his own problems,” Finn said. “Last I heard, he was ready to jump into the Charles.”
“Perhaps it’s good then, that there’s gray ice over the Charles,” said Lionel. “I thought you told me he was conservative with his investments?”
“Apparently that was a pile of bullshit,” said Finn. “I can’t solve Adder right now. But why are you talking about our residential properties?”
“Because they must be sold or mortgaged, Finn,” said Lionel. “There is no other way out of this unholy mess. Even if you hock your house and every last one of Walter’s properties, you probably still won’t get to what you need. A million dollars is a lot of scratch. You’ll come close. The bank is an asset. You still have some depositors left, some outstanding loans? I see here on your books there’s a loan of three million dollars to some John Reade, secured with real estate. Is he good for it? As long as your customers keep paying you, the bank won’t lose value.” Lionel raised his eyes to the ceiling, mouthing please, Jesus. “And then you can keep paying me.”
“You want me to go to my father-in-law, who’s just had a heart attack, and tell him I need to mortgage his house, my house, and his bank for the stellar return of not breaking even?”
“You have another plan? I’m all ears, my friend.”
Finn slept on one of the couches in Lionel’s office in the same clothes he’d worn since Monday. Lionel found a dull razor for him in one of the washrooms, and Finn shaved, erratically. He looked worse now, all cut up with patches of facial growth peppering his ashen face as he shook hands with Lionel and left to go speak with Walter in person. He decided to walk to Back Bay—to clear his head, to prepare his words, to steel himself for Walter’s reaction when his father-in-law, in poor health, would learn of the hull of his family’s ship sinking beneath the sea.
It was gray out, cold and drizzly. Massachusetts Avenue in Back Bay was a long way from Congress and State. The leaves were almost gone, and the taupe-colored oaks waved the last of their brown flakes off the branches. Finn’s coat hung open. He wished it was colder. He wanted to sever his emotions, like limbs from frostbite. He desperately didn’t want to have this discussion with Walter. And afterward, Finn would have to face his own father to tell him that not only were his life savings gone but that he needed to mortgage his house to pay back the money he still owed to Lionel’s firm. Finn shuddered. It was hard to overstate how much he did not want to have this conversation with his terse and exacting father. He would rather face Walter twice, and he didn’t want to face Walter at all.
19
The Adams Bank
HIS MOTHER-IN-LAW OPENED THE door, barely made up. “He’s resting, Finn,” Lucy said. “He’s not feeling well. He can’t be disturbed.” She was so anxious about Walter, she couldn’t even be bothered to needle Finn by calling him Esmond.
“Unfortunately,” Finn said, walking in, “this is no time for resting. Is he upstairs?”
“No, he’s in his study. But Finn!”
“But Lucy.”
She grabbed his arm, but he pulled away and strode through the house, without even bothering to take off his coat. Finn knocked on the door of Walter’s study and entered, with Lucy fretting behind him.
“I’m sorry, darling,” she cried. “I told him no, but he wouldn’t listen.”
“Lucy, leave us please,” Finn said, pulling a chair over to the couch on which Walter lay.
“Leave us, darling,” Walter said, his eyes closed.
Sighing, she shut the door. The two men were left alone in the silent study.
“I can’t have this conversation, Finn,” Walter said. “I mean, I physically can’t.” He looked so depleted lying on his sofa covered by a blanket.
“I understand. I don’t want to either. We are going to have to do a lot of things we don’t want to do,” Finn said. “Talking is probably the least of it.”
When Walter didn’t reply, Finn continued. “I haven’t been home since Monday morning. God knows what your daughter must think. But I need to make it right for her and for all of us. I need to make it as right as I can. I want to come home and tell her there’s nothing to worry about.”
“That can’t be true, can it?” A brief flash of what looked like hope crossed Walter’s face, as though he seriously believed it might be.
“Of course it’s not true, Walter,” Finn said, frowning. For a moment he wondered if his father-in-law was in his right mind.
“Did you come to tell me how bad it is? Because I can’t bear to hear it.”
“I won’t tell you how bad it is,” said Finn. “But we need to find a way to come up with $1.15 million, because Commonwealth Capital will fold if we don’t pay them, and we will go under when they sue us to recover their money. We won’t be able to stay in business.”
“What business?” Walter said.
What Finn heard was, You, Finn, destroyed my business.
“Walter, we had record growth, record profits, a record decade,” Finn said. “When I started, your bank was capitalized at less than a million dollars. Last week it was valued at $20 million.”
“Not this week.”
“No business can lose 100 percent of a large part of its assets and not be where we are.”
“The market is up today,” Walter said. “I called Barney myself a few minutes ago.”
“Barney is gone,” Finn said. “He is on a bus to Chicago. You spoke to Terrence, who knows nothing.”
“The market is up,” Walter repeated stubbornly. “We should have ridden this out like I told you—”
“Walter.” Finn said his father-in-law’s name quietly. He didn’t yell it, though he felt like screaming. He clasped his hands, tried not to clench his fists. “It doesn’t matter anymore if the market is up, or down, or sideways. It’s somebody else’s market. It doesn’t concern us anymore.” He paused, trying to get more oxygen into his lungs. “We have no securities left to ride anything out with. We had to fire-sale them all.”
Walter cried out. “Why all? They weren’t all on margin!”
“No, they weren’t, which is the only reason why after total liquidation we owe one million and not six. You told me to ride it out and I did. I rode it all the way to the bottom, to yesterday when the market had no bottom. All it had was a vertical death spiral.”
“Now you decide to listen to me? What about our personal portfolios?”
Finn made a swirling motion with his hands. “All in the same pot, Walter. All gone to pay the piper.”
Walter gasped. “Lionel sold all our stocks?”
“Everything.”
Walter put a hand to his chest, and for a few minutes there was nothing but the sound of his death-rattle breathing.
“And we’re still over a million short?”
“Yes.”
“What about Adder? Call him! He’ll help us. For God’s sake, he’ll help us.”
“Adder is in worse shape than us,” Finn said. “And I didn’t think that was possible. Apparently—and entirely against the rules set by his brokerage house—Adder loaned out his accounts at a 90 percent debt to equity ratio, and three-quarters of them defaulted.”
“He has his own investments. Three million dollars. I know he does. He talked to me about it last week. Call him!”
“Yes, he told me. They’re all under margin.” Finn shook his head. “But unlike us, instead of selling his stock to meet the call, Adder borrowed against his commercial accounts and naked-short-sold three million dollars’ worth of securities, hoping to make back his losses.”
“Oh, my God.” Walter covered his face and then stared at Finn in horror. “Naked short selling is illegal,” he whispered.
“You don’t have to tell me,” Finn said. “Your other son-in-law contracted other people’s money, money he knew wasn’t there, to short-sell thousands of shares in Steel, Standard, and Radio. Also GM and GE. But the shares really had nowhere to go but up. So up they went. The market rallied 14 points this morning.”
Walter wailed. “Poor Adder! What’s he going to do?”
“Poor Adder? Well, he asked me for funds to buy back the shares he sold short.” Finn almost smirked. “He asked me for $3.5 million. I told him I didn’t have ten thousand dollars. He said he was coming here to ask you for it.”
Walter gasped for air.
“The stocks are gone,” Finn said. “We can’t change that. But our bank is not gone. We can salvage it. And we still have our houses.”
“My house, your house, Eleanor’s house, your cottage in Truro, my few other properties are not worth a million dollars in total! If we sold them all, we wouldn’t get it. And who’d buy it now, anyway?”
“No one. We’re not selling our homes,” Finn said. “We have to live somewhere.”
“Mortgaging them will bring in even less.”
“True,” Finn said, “but mortgaging them, plus the bank, will get us close. The bank is an appreciating asset, despite the last few days.”
Walter spoke, his eyes closed, his mouth barely moving. “You’ve never had a mortgage on anything in your life, Finn.”
“That’s true, Walter. I have been very fortunate.” Finn just echoed the words. He did not feel fortunate today.
“Everything has been given to you, paid for you, handed to you. I know you understand what a mortgage is. It’s a loan. The bank that is fool enough to lend you money will need to get paid, every month. And if you don’t pay them, they will take our homes, and our cars, and your summer place on the Cape. They will take the bank that has been my family’s legacy for a hundred years.” Walter sounded like a broken man.
“Why would we not be able to pay the mortgage?”
“On a million dollars? I’ll tell you why. Because a monthly payment on such a sum would be somewhere between ten and fifteen thousand. Maybe more, depending on the interest rate.”
“That’s a lot,” Finn said, trying not to sound broken himself. “But we’ll make it. The Federal Reserve may be able to lend us some money to stay afloat until the market recovers.”
“They lend to their member banks,” Walter said. “We’re not a member bank, Finn.”
“I know,” Finn said, “but Lionel thinks the Fed will loosen the rules to help the banking industry in light of what’s happened. In any case, we’re talking about just a few months of battening down the hatches, and then—”
“You want to ride it out with borrowed money, Finn?” Walter said with quiet bitterness. “That’s what got us into this stew of incontinence in the first place.”
Finn folded and unfolded his hands. “You’ve been in this business a lot longer than I have. You know we’re living through a once-in-a-lifetime debacle.”
“It’s going to get worse before it gets better,” Walter said. “You don’t think what’s happened is going to bounce right down the line to your tailor in North End and to every person who works for us?”
Finn shook his head. “I hope you’re wrong. But about the mortgages . . .”
Walter waved Finn away, covering his face with the crook of his elbow. “Go ahead,” he said. “Sign away what crumbs are left.”
“Your bank is not a crumb,” Finn said. “Our homes are not crumbs.”
Walter spoke again. “Before you put our historic mansions on the auction block,” he said, “I want to tell you something.”
Finn lowered his head. Walter sat up and threw the blanket off his lap, color and passion suffusing his face.
“My great-grandfather, born in 1800, was a poor man,” Walter said. “He was a tenant farmer; he didn’t own his farm, he worked for someone else. But he knew how to do two things. He worked hard, and he saved money. Before others were up, he was already working. After others had left, he was still working. And he spent nothing. He lived long enough to buy the farm after its owner died.
“Years earlier, his wife had given birth to their only child, my grandfather. As he grew up, Grandfather worked the farm the way his father had taught him, but he was not a farmer by nature or temperament. He was not a man of many skills, but he knew how to do two things. He knew how to save money, and he knew how to count money. And he did those two things better than anyone else. His neighbor needed help, and my grandfather loaned him a few dollars. It took the neighbor over a year to pay back the money, but as long as the money was repaid, Grandfather didn’t care how long it took. He took a little interest for his trouble. Not much, but a little.
