'Tis a very good world to live in,
To lend or to spend or to give in;
But to beg or to borrow or get a man's own, 'Tis the very worst world that ever was known.
It was through my sojourn in South Africa in 1896 that I came to know the world of modern finance, where millions sometimes are made or lost in a day by speculation. It was in Johannesburg that I first got acquainted with this characteristic of the time.
Long before meeting him, I had heard of Barney Barnato: every one in the Rand Club knew the sturdy little middle-aged man, who was said to be worth twenty millions and was considered by many to be the true rival of Rhodes and Beit. Ten or twelve years before he had landed in Kimberley with the proverbial five pound note. How had he made such a fortune in so short a tune? His presence and speech were against him; he was commonly dressed and spoke like an uneducated Cockney, dropped his "h's" and made grammatical howlers in almost every sentence. Rhodes after all was "someone," while Barnato was plainly a rank "outsider," to use the ordinary English phrase.
It was said of Barney that in early days at Kimberley he had got a living by showing off as a fighter: he would put a square of carpet on the ground and bet that no one could stand up to him on it for five minutes. One rough miner after the other used to take on the job, but they soon found that little Barnato was really hard to beat, and they usually lost their money and took a good deal of punishment into the bargain.
Barnato soon bought claim after claim in Kimberley, and working as he had fought, with all his heart, quickly became one of the richest men in the camp.
From the beginning he was inconceivably mean: he never paid for a drink- always pretended that he had no loose cash about him. A story was told of him that always seemed to me to paint him to the life. Going to the Kimberley races once, he answered some jest made at his expense by saying that he would bet he could make a thousand pounds before the evening.
Several people bet with him. When he got to the race course, Barnato went up to a woman who was selling lemonade and drinks and asked her how much she expected to make during the day. She said, "Perhaps ten pounds."
"I'll give you twenty," he said, "for your stock, and five for yourself-is it a deal?"
The woman consented and Barnato began to sell her stock, and he did it with such humor and such understanding of almost every miner who came up that he soon had a great crowd about him and sold out at fabulous prices, getting higher and higher sums toward the end of the day; and finally achieved his aim and made his clear thousand pounds, besides the bets he had also won.
His common cockney English endeared him to the ordinary miner, but his knowledge of life and men was extraordinary; his energy extraordinary, too, as was his self-confidence. I have told the story how Rhodes and Beit bought him out at Kimberley; but Barnato soon established himself in Johannesburg as one of the great mine owners and made another huge fortune. Yet he only gambled when he was sure to win. I was once at a game of baccarat in his house where nearly a quarter of a million changed hands in two hours while Barney, having shed his boots, dozed on a sofa in the room.
I remember his telling me once that he was worth twenty-five millions. "My boy," he added, "I have made three millions in one day." I always thought that that was the day when he sold his claims in Kimberley to Rhodes and Beit.
I am giving no portrait of him, and yet I liked Barney Barnato, for he was really likable in spite of his meanness about petty sums. He told me one day how he had given one hundred pounds for his first claim in the diamond mine of Kimberley: he worked day and night at it with his niggers, and when he got down, a month later, to the blue ground where the stones were found, he made ten thousand pounds in the first hour. "Thirty good diamonds," he said.
"I could hardly believe my ears when I was offered eight thousand pounds for them; but I didn't sell them till I got the round ten thousand-about half their real worth, I should think."
"The week after, I bought three adjoining claims and since then my bank balance has grown pretty rapidly; I'm not complaining. I remember on my first day on the carpet in Kimberley, I had to fight like a wildcat with a big miner, and all for five quid-a change, eh?"
Every one knows how Barney Barnato bucked against the falling market in Johannesburg, brought about by Rhodes's schemes. He was said to have lost a million. I met him once near the end when he told me how Rhodes and Beit had kept him out and how he had bought on a f ailing market and lost his money. "My dear Barney," I said, "one of these days you will make another fortune. What's a million to you?"
"A million!" he snarled, "A million to me-it's ten hundred thousand pounds, you-!" There was something mad in his glare. It suddenly came to me that Barney had worn his mind out, and when he hurried into an inner room, muttering to himself, I felt sure that if he didn't soon win to self-control, he would come to grief. I perhaps read Barney correctly because I, too, had suffered from nerves and knew how essential it was to cure them. I may say here that constant change of scene and companionship, and the determination to take life easy for awhile are the best cures; but poor Barnato stuck to his work till the last.
A little later, on his way to England, he threw himself off the steamer into the sea; his body was recovered and brought to Southampton.
Woolfie Joel, his nephew, told me that Barney had worn himself out. Woolfie Joel had many of the fine qualities that Barney Barnato lacked. He hadn't the genius of his uncle, but he was far better educated and of a generous and kindly nature. I always had a great liking for Woolfie Joel.
It is the development of a man, the growth of him, that is of supreme interest to his fellows: whoever can tell this story is sure of hearers; but how much more sure when the story is that of the master of millions in a day when all would be rich if they could.
It was in Alfred Beit's house in Park Lane in '97 or '98 that I put him to the question. We were seated in the room which was at once a sort of rockery and palm garden: a room of brown rocks and green ferns and tesselated pavement-an abode of grateful, dim coolness and shuttered silence, silence made noticeable, as it were, framed off by the vague hum of the outside world.
We had been talking of Kimberley and his early days there and his first successes, and I was eager to learn how, even in the race for wealth, he had outstripped a man like Barney Barnato, who had reached Kimberley years before him, and who had never cared for anything in his life but money, and had sought it night and day with the meanness of avarice which collects pennies and saves crusts; or, better still, which dines sumptuously at someone else's expense, inspired by the insane Jew greed which finds a sensual delight in the mention of gold and silver, and diamonds and pearls, and rubies- above all, rubies, hued like pigeon's blood, and more precious than a thousand times their weight in refined gold. In spite of his savage greed and oriental garishness, Barney Barnato had a touch of genius in him, and wasn't easily beaten at his own game.
In person Beit was not very remarkable: he was short-shorter even than Barney Barnato-and plump; in later days the plumpness became fat. But even in his prime he seemed to have "run to head"; the great round ball appeared too large for the little body and small limbs; but it was excellently well-shaped, the forehead very broad, and high-domed to reverence and idealism, like a poet's; the rest of the face was not so good; the nose fairly large, but slightly beaked, not noticeably fleshy-a good rudder; the chin rather weak than strong-no great courage or resolution anywhere. After the forehead the eyes and mouth were the two noteworthy features: the eyes prominent, large, brown, the glance at once thoughtful and keen; the mouth coarse and ill-cut, the lower lip particularly heavy. It reminded me of Rhodes's face; but Rhodes's mouth was coarser and more cruel than Beit's; his nose, too, larger and more beaked; his chin and jaw much more massive — altogether a stronger face, though not so intellectually alert.
Beit's manner was nervous, hesitating: he had a tiny dark moustache and a curious trick of twirling at it with the right hand, though he seldom touched it; the embarrassed nervousness of a student, rather than the assurance of a man of affairs accustomed to deal with men; but the nervousness was chiefly superficial, due perhaps to weak health, for as soon as he began to talk business he came to perfect self-possession.
Beit did not seem to wish to talk of Barney Barnato; he admitted his gifts, but evidently did not like him. But if Beit disliked being compared with Barnato, nothing flattered him more than to be compared with Rhodes. He had a profound and pathetic admiration for Rhodes, the admiration which only a born idealist could keep through many years of ultimate companionship.
And in connection with Rhodes, he had no disinclination to talk about himself; the phrase of Goethe, paraphrased at the beginning of this portrait, seemed to touch him.
"Yes," he said, "that's the good time of a man's life, if he only knew it, the Entwicklungsperiode."
"It is the beginning," I went on, "that is supremely interesting; how from nothing you won the first fifty thousand pounds, that interests everyone; but how afterwards you turned the fifty thousand into twenty millions is much less interesting."
"Well," said Beit, "I was one of the poor Beits of Hamburg; my father found it difficult even to pay for my schooling, and you know that is cheap enough in Germany; I had to leave before I had gone through the Real-schule. Of course, in Hamburg at that time everyone was talking about the discovery of diamonds in South Africa, and so, after helping my father for a little time, he made up his mind to send me to Amsterdam to learn all about diamonds. I went there and spent two years, and in that time got to know a good deal about diamonds."
"Of course," I interjected, "hi that time you must also have learnt Dutch."
"No," replied Beit; "no. I just did my work, and wasted my spare time like other young men. A little later my father had some interest with the house of Jules Forges in Paris, and I was sent out by him to Kimberley. I got my passage money and three hundred pounds for the first year. When I reached Kimberley, I found that very few people knew anything about diamonds; they bought and sold at haphazard, and a great many of them really believed that the Cape diamonds were of a very inferior quality. Of course, I saw at once that some of the Cape stones were as good as any in the world; and I saw, too, that the buyers protected themselves against their own ignorance by offering for them one-tenth part of what each stone was worth in Europe. It was plain that if one had a little money there was a fortune to be made, and I remember I wrote to Forges, offering to give up my position and pay him back my passage money if he would let me off my engagement to work for him for a year; but he would not let me off, so I went on working.
"I wrote to my father frequently, long letters, telling him all about Kimberley; how incredibly rich the ground was; how easy it was to make money with a little capital; and I begged him to send me as much as he could get together by the end of the year, and I promised him to return whatever money he lent me with good interest within a year.
"Before the end of my time with Forges, my father got together a couple of thousand pounds and sent it to me; but I did not use it in buying diamonds, as I should have done if he had sent it to me in the first six months. Kimberley was growing so fast that the demand for houses was extraordinary, so I bought a bit of land and put up twelve or thirteen offices, corrugated iron shanties, of which I kept one for myself. I let out these twelve or thirteen shanties, and I got eighteen hundred pounds a month for them."
"Eighteen hundred pounds a month!" I said. "How long did that continue?"
"For years and years," said Beit. "Twelve or thirteen years, I think, and then the pit had grown so large that my ground was wanted, and I sold the ground on which the shanties were built for a fair sum-I think it was about two hundred and sixty thousand pounds. I got something for the dwellings, too, I think," and he laughed. "Not a bad speculation!"
"No," I said, "indeed; that solves the question of how you came from poverty to riches."
While getting a subscription once for a charity, I came across a curious trait in his character-he seemed to over-estimate the value of small sums of money. If you spoke to him of two or three pounds, or twenty-two or twentythree, he was always eager to show you how thirty shillings could do in the one case, and how it was possible to attain the desired end with half the amount in the other. But the moment you spoke in thousands, he seemed to treat them as counters. He would jump from five thousand to fifty thousand as if there were no intervening figures. The truth was, of course, that Beit had learned the value of small sums of money when he was young and poor in Hamburg and Amsterdam, and no one knew better than he did how much could be done with a pound. But when you talked in thousands you were speaking to Beit the millionaire, who made fifty thousand in an afternoon, and did not attach precise importance to either sum.
Beit went into the Jameson Raid at Rhodes's request, but he protested against every stage of that mad and stupid enterprise. Indeed, the story of Jameson's Raid would only show that Beit was intensely loyal to Rhodes, even when he believed him to be entirely in the wrong. Beit was a good type of business man. He had an instinctive aversion to politics and raidings, and was chiefly interested in such enterprises as could be shown in a profit and loss account.
But there was another side of his nature: like many Jews, he had a real love and understanding of music; and he admired pictures and bronzes, too, though he was anything but a good judge of them. At bottom Beit was a sentimentalist, and did not count or reckon when his feelings were really touched. This was the fine side of the man, the side through which Rhodes used him, the side which, by contrast with his love of money, showed the breadth and height of his humanity. Of all the millionaires I had chanced to meet, Beit was the best. He had a great deal of the milk of human kindness in him, quick and deep sympathies, too, sympathies even with poverty, perhaps through his own early struggles; and if any plan of a social Utopia had been brought forward in his time, no one would have detected its weakness more quickly that Beit, no one would have seen its good points more clearly or been more willing to help it to accomplishment.
After Cecil Rhodes's death, I had written an article about him and about his will, in which I declared that posthumous benefactions seemed to me no proof of benevolence because they lacked the savor of sacrifice, and, to use Bacon's phrase, "were but the painted sepulchre of alms." Beit expressed his astonishment at this criticism, and thought there was a great deal of unselfish nobility shown in Rhodes's will, and added that he only hoped to make as good use of whatever he might possess when he died. Indeed, when Beit died in 1906, he left over two million pounds to charity.
It was in the late summer of 1896, after my return from South Africa, that A.
M. Broadley called on me one day in the office of the Saturday Review and brought a new interest into my life. I had known Broadley for a good many years and had long been convinced of his business ability, as well as his journalistic skill. He told me that he was making a good deal of money with Ernest Terah Hooley, whom I had just heard of as the successful promotor of the Dunlop Company. Broadley offered to bring me up to see him, suggesting that I should find it to my profit to help him in his financial schemes. Nothing loath, I went with Broadley and was introduced to Hooley at the Midland Grand Hotel. To my surprise, I learned that the financier had taken the whole of the first floor of the Midland Grand Hotel for his offices. I don't know how many rooms there were, but I believe there were certainly fifty; and from ten o'clock in the morning until six at night, almost every room was filled with people who had axes to grind. Hooley flitted from room to room, always good humored and decisively quick in dealing with the most heterogeneous projects.
At one moment he was discussing the raising of a loan of sixteen millions with Li Hung Chang on the security of the Chinese customs, and with him was Sir Robert Hart, the Englishman who knew more about China than any other living westerner. In Hooley's private room, one would meet Arthur du Cros who had more to do with the successful Dunlop promotion than any other member of his family, and who afterwards became a member of Parliament and was knighted, I believe, for this achievement: an alert, intelligent man, a good organizer, but intensely combative. In another room a nobleman who had come to sell Hooley the Prince's yacht Britannia; in still another room, a persuasive Spaniard, who appeared with the news that sugar had been made from sea water, and all he wanted was a million for the discovery. From room to room went Hooley, a rather tall, well-made man with black hair, black beard, black moustache, a long beaked Jewish nose, and long half-closed Jewish eyes, well dressed and always polite without a particle of "side," too earnestly busy to show any conceit. He told me at once that Broadley had been very useful to him and he hoped that I should be. I replied that I was quite willing to follow my friend Broadley's lead; and after two minutes' talk Hooley hurried away to another room.
From that time on I went up to the Midland Grand Hotel practically twice a week, and soon became conversant with Hooley's financial methods and with many of Hooley's ideas. He certainly knew more about the value of land in England than any one I had ever seen, and he had a perfectly open mind for any and every scheme, and was most easy of access. In his bankruptcy two years afterwards, the official receiver proved that Hooley had made over six millions of hard cash in just these two years. Hooley himself always said that he had made a million and a half over the Dunlop promotion alone. His astounding success can only be explained by the fact that he was lifted on the most astonishing wave of prosperity that perhaps has ever been known in any country-never in my thirty years of residence has London known so prosperous a period; and Hooley was an optimist to the fingers' tips, suited perfectly to the time, without a suspicion that there could be a change in feeling or a slump in finance.
When I got to know him pretty well, I found to my amazement that he had a man named Martin Rucker for a partner, who never helped him in any way; and it was months before I learned that Rucker had been a bicycle agent and had put some money in with Hooley at the very beginning and had remained with him as a sort of deadweight ever afterwards. It was he, in fact, who brought about Hooley's first fall.
I soon got the idea that the best companies to promote would be those which had spent most in advertising in the past and were therefore widely known. I put this idea to Hooley, and he accepted it at once. "You ought to turn Bovril into a company," I said, "because every one knows of it and it would go like wildfire; and Schweppe's soda water, too."
"Go to it," said Hooley; "get me an option on any such concern, bring it to me, and you can count on a fair deal."
I immediately went to work to get to know the owners of Bovril: it was really in the hand of one person, a Mr. Johnson, I think. Coming from Hooley, I was admirably received and soon found that the company was making something over a hundred thousand pounds a year, and that they wanted a good deal over a million for it. I went with the news to Hooley, who told me to go ahead if the figures were correct. I returned and began to bargain; the seller wanted about a million and a half, and I wanted to bring him to a million and a quarter. We had practically decided on a million and three hundred and fifty thousand pounds, when one day he laughed at me and told me that he had accepted an offer of two millions that day, that it was all settled and that Hooley was the purchaser. I drove immediately to the Midland Grand Hotel to see Hooley and found it was all true.
"You were too slow, my boy," he said, "much too slow: another man told me he could get it for two millions and I told him to put it through, and I gave him a check as deposit."
"You have done me out of the ten percent which you promised me," I said,
"because I was trying to get it under a million and a half, and it was practically settled."
"Don't talk like that: " cried Hooley, "do you wish to show your brains? In that room there are twenty financiers, all rich men; you know more about Bovril than almost any one; you have been at it over a fortnight; go in and persuade them that two millions is a fair price and I will give you ten thousand at once.
Is it a deal?"
"I'll do my best," I said.
Hooley opened the door and introduced me to a crowded room with the words, "Frank Harris has been looking into Bovril for a month, knows all about it, and is prepared to show you that two millions is a low price for it." A large man thrust himself forward at once, whom I afterwards knew as Nocton, a very able solicitor. "Have we the figures correct," he said, "that Bovril has never made one hundred and fifty thousand pounds in a year? If so, it ought to be capitalized at about a million and a half at the very outside. Why should two millions be given for it?"
"The growth of the business in the last five years," I said, "since they began to advertise widely, has been most extraordinary: the income has more than doubled, has practically grown from fifty thousand a year to one hundred and forty thousand; it is only fair to suppose that it will grow in the same proportion in the next five years, and even more, for as a Hooley promotion it will be advertised everywhere and should therefore be cheap at three millions. Besides, it has no competitors and it has become a household name in Great Britain. Given a proper prospectus, every one will take shares in Bovril."
"You are evidently the man to write it," said Nocton. And from that time we were friends, for Hooley backed up the idea at once.
I got away as soon as possible, seeing that I was not wanted. In ten minutes Hooley came to me in another room. "You have done the trick, my boy; a cool million has been subscribed on my terms, and I owe you ten thousand. Will you have it in cash or shares?"
"Half cash, half shares," I said.
"Good for you," he said, and then and there wrote me a check for five thousand pounds and a note to say that I should have five thousand shares when the Bovril promotion was completed. While he was writing, another thought came into my head: "Why not let me sketch out the prospectus, as Nocton suggested?"
"You are trenching on Broadley's domain," he said, "and I have almost promised it to someone else: still, there is five thousand pounds in it-go to it-if your argument is the best, you will probably get it."
"Thanks," I said, and away I went.
The greater part of my scheme appeared later as the Bovril prospectus. I had taken pains to study the law and to keep within it in every particular.
I won't attempt to describe all my further financial ventures with Hooley; it is enough to say that I took a small part in several of his promotions, like the rest of his supporters. I would put in, say, five thousand pounds in cash, on condition that I got ten thousand in cash or shares if the deal came off successfully. I remember particularly taking such a share in the Schweppe promotion, which was not one of his great successes, and he left some three thousand pounds unpaid to me.
His failure was astonishingly sudden. Martin Rucker, his partner, wanted to buy an estate and become a country gentleman, and finally settled with Hooley for a million pounds cash for his half share. Hooley gave him the million cash, although Broadley and I both protested that it was madness to strip himself of so great a sum in cash; but Hooley was not to be argued with or persuaded. He gave the million and Rucker was seen no more. But almost immediately the financial tide which had so far been on the flow began to ebb. Hooley involved himself in Manchester in the Trafford Park scheme, and suddenly became in need of cash: the banks, as usual scenting necessity, drew in their credits, and Hooley, though several times a millionaire on paper, was soon in financial difficulty.
He explained all this to Broadley and myself at some length, and it occurred to me that I might be able to interest Beit in his schemes and so float Hooley over his difficulty. I went to Beit and talked the Trafford Park scheme at some length. It was really a great enterprise: Beit, seeing it, at once promised his support on conditions. "We will go in as partners," he said, "on an even footing; I will put up five hundred thousand pounds and so must Hooley, and the scheme shall be developed by him, and we will divide afterwards."
Greatly excited, I hurried back to Hooley and told bun how I had succeeded; he too was delighted. We were to meet Beit on the following Monday for lunch at the Savoy Hotel, and the provisional partnership would then be concluded. But on the Thursday Hooley came to me and told me that he could only raise three hundred and fifty thousand pounds in cash, that his banks had refused him the other one hundred and fifty thousand, and therefore he would put up shares for double the amount. I begged him not to alter the agreement in any way; I felt certain that as soon as the cooperation was whispered, a dozen of Beit's friends would be dead against his participation with Hooley.
Hooley went again to the banks and returned to me on the Saturday saying,
"It is impossible; I can put up four hundred thousand, but the last one hundred thousand must be made up by shares."
I begged him to use every effort, and he said that he had-it was impossible, so I went to the lunch with Beit alone to tell him Hooley's latest decision. The moment I described his position, Beit said, "That settles it; my partner has been terribly against the whole business. Wernher won't hear of Hooley, and now as I can get out without breaking my word, I won't go on."
I went back and told Hooley and found him in a strange mood. He didn't care what happened; it didn't matter, for they couldn't take away his ability to make money. The Trafford Park scheme was the best in the world; he would work it through somehow: Beit's aid was not so important.
"Beit," I said, "could put ten millions cash on the table if he wanted to; with his backing, you would have been the strongest financial force in England, that is to say, in the world today. I am very sorry."
A little later Hooley announced coolly that he was going into bankruptcy. "It seems to me to be pure madness," I said to Broadley. But Hooley went on like a naughty child, who, having wet one toe by chance, would wade into the gutter to his neck. He made himself a bankrupt and shortly afterwards was sent to Brixton Prison for a year, apparently to teach him that to lose six million in England was a crime.
Of course, he often exaggerated and talked wildly; it was part of the optimistic nature of the man and a consequence of his astonishing success; but I don't believe that Hooley ever tried to cheat any one dishonorably (sic) in his life. I have done business with a great many men in London, and think Hooley as honest, perhaps even more honorable, than most of the men I have worked with.
When he came out of prison, I met him by chance in the Strand and of course held out my hand and greeted him as of old. "You know," he said, "I have just come out of Brixton?"
"Yes," I replied, "but that doesn't alter my opinion of you. When will you dine with me?"
He was very much obliged to me, he said, but he was going back to Risley Park, which he had settled on his wife after his Dunlop success. He told me that I was one of the few people who hadn't altered to him. Away he went, and I have not seen him since, though I understand that his book describing his career has been a best seller.
One curious thing happened which tinged my liking for Hooley with a shade of doubt. Broadley declared that he was not fair to us, and I found out that that was the case. When I sent my claim in for the three thousand pounds unpaid over Schweppe's to the official receiver, I got a letter from him that made me gasp. He asked me to define the debt and how it had been incurred.
I told him that I had put up five thousand pounds in the Schweppe promotion on Hooley's undertaking to pay ten thousand cash or shares, as I might decide after the promotion. I had received seven thousand in cash and no more. The official receiver answered me, saying that he was very sorry to question my word, but could I get any proof that I had put up the five thousand pounds. I went at once to my bank-Coutts's-got the original check endorsed by Hooley and took it to the official receiver in person and asked him for an explanation; I thought his request extraordinary. The moment he saw the check his manner altered; he became cordial. "You have no idea," he said. "I have got claims from a dozen journalists, but no one else except yourself helped Hooley with the cash. Here is Mr. So and So who is asking for twenty thousand, yet he never advanced a penny. Please forgive me if I thought that you were like the rest, claiming money without having risked any."
The thought came to me afterwards that Hooley had misrepresented me, as Broadley said; but I imagine that it was only because he classed all journalists together in a lump. He was careless, but not malevolent.
For some reason or other the Daily Mail was always against me, and in this matter of Hooley's bankruptcy it more than hinted that I was trying to get money without having done anything for it. Curiously enough, the result of the investigation of the official receiver cleared me and established the fact that the Daily Mail correspondent was one of those who had claimed money without having given any quid pro quo. Harry Marks, too, of the Financial News, was astonished to hear that I had put up money with Hooley.
"I am claiming twenty thousand pounds from his estate," he said, "but I never gave him any money. He never asked me for it."
Hooley's example taught me the value of company promoting, and I resolved sooner or later to market the twenty-odd thousand shares I still possessed in the Saturday Review.