CHAPTER XIII

THE ORGANIZATION OF THE
UNITED & MEXICAN TRUST CO.

     The morning of November 30, 1900, Judge Trimble came to my office and said, "Mr. Stilwell, you were correct. The unexpected has happened; the court has put the Guardian Trust Company in receivership and appointed Judge Black as receiver. It's a judicial mistake, but it's done."

     I had been prepared for it and never left my chair until I had drawn up the prospectus of the United States & Mexican Trust Co. I headed the subscription paper for ten thousand dollars, and at once went to see my great friend, Dr. Woods. He subscribed and gave me the use of a desk near the door, and he and Mr. Rule helped me get subscribers all that day, and when evening came we had thirty-five subscribers. Telegrams and letters from far and near and cables from Europe in a few days gave me two hundred thousand dollars in subscriptions, and in a few weeks the company was started. At once it built up a good business, and has been a very successful company from that day to this. The contract for financing the road through the Guardian Trust Company was revoked and the new trust company undertook this work. For a time it looked as if this blow might influence my work in Mexico, but when I next went to that republic I found my friends just as strong as ever, and the new trust company was legalized in that republic.

     Judge Black, the receiver of the Guardian, started to liquidate the company. No more honest man ever lived, but he went in with his mind poisoned regarding me and expected to unearth any number of cases where I had enriched myself at the company's expense. He had no idea of the value of assets and had never had any business training. The first sale he made was a property in Texas for one hundred and forty-two thousand dollars. The purchaser of this within ninety days refused an offer that would have given him a profit of over five hundred thousand dollars.

     The company owned thirty-eight thousand shares of the United States & British Columbia Mining Company's stock carried on the books at a dollar a share. These he sold for this price. That company since paid in dividends on these thirty-eight thousand shares nearly five hundred thousand dollars, or nearly sixteen times the amount received from the sale.

     The stock of the Western Union Land Company he sold the price at which it was carried on the books, and sixty days later the dividends paid just equaled the amount the stock brought. I then went and remonstrated with him for making these sales, and he said, "Stillwell, the granting of this receivership was a great mistake. I have had all the transactions of the company gone over from the day it was started, and I am positive that never before has a company had a cleaner management than this company. It is honest to the core, and I was to apologize for the stand I took towards you from the start. I am a poor man. This pays me fifteen thousand per year, but I shall at once give my finding to the court, and ask that the receiver he discharged." This he did, and the business was put back into the stockholders' hands, its business wrecked by an application for a receiver and its assets dissipated, and by as honest a man as ever lived. I never fail to tell of my appreciation of Judge Black. He did as well as he could with the light he had.

     The company could not go back into business, as the lawsuit of the Southern did not permit of it. A few years later I was elected Chairman of the Board. Mr. Prescott, of Kansas City, has been nine years doing all in his power to force the Southern case to settlement, so that the company's long suffering stockholders can get the money due to them. Oh! the years and years of waiting for Judge Phillips to act in this case! I doubt if any such travesty on justice has ever before occurred. How dare men like Harriman, Stillman, Gates, Thalmann and others repudiate their printed promise to pay a debt, a promise given to all bond and share holders. The bonds and shares that gave them power and made their plan operative were deposited with this promise to pay made and the day set for payment after the members of the Reorganization Committee had approved of it.
But watch and see if again retributive justice does not, in the Kansas City Southern case, make this unjust delay cost the stockholders of this road five times what it would have cost them if the payment had been made according to the reorganization agreement.

     Here I wish to make a prophecy, and in a few months you can see if I have read alright the handwriting on the wall.
Few stockholders of the Kansas City Southern are aware of the claim of the Guardian Trust Company. They are not aware of the nearness of the case to final verdict. That verdict if in favor of the Trust Company, as I expect it to be, will find the road less prepared to pay it than it was when the road was reorganized and the payment was due. The payment of this debt may cause the passing of a dividend. This in turn will cause the stock and bonds to be depressed and the total loss in market value will be five times or more the total of the debt. And the endeavor of the first directors to keep me from my own, to prevent me in my work of building the Orient road, may prove to be a costly luxury for these innocent stockholders of the Kansas City Southern Railroad, whose directors went back on sacred promises in order to hinder and hurt the creator of the road for which they were security holders.

     "The mills of God grind slowly but they grind exceeding small."

 

Arthur Edward Stilwell, Visionary

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