“It’s smarter than that. Morgan didn’t threaten them—he made them better offers. If they had capital that they were looking to invest during the crisis, he let them know they would be safer putting it into one of his companies. The Northern Pacific Railway. A few others. He offered them favorable terms. Much better than anything you could have given them.”
“He exploited their greed. Not their fear.” Paul could not deny the ingenuity. “But how did he know who I was going to see? How did he get to them first?”
“I don’t know. He’s J. P. Morgan. At this game, he’s the best in the world.” What she left unsaid was that this was precisely why Morgan and Edison would win in the end. Their kind always did. Manhattan would reward its own. And it would, at long last, cast Paul away. Far from Washington Square, far from Wall Street, far from Broadway, and very far from Agnes.
From the depth of Paul’s sadness came an iron resolve. “We’ve found a few investors. I will find more. I won’t give up.”
Agnes smiled. “I know you won’t,” she said. “From the moment I first met you, I knew you never would.”
And with that, it was time for her to go. He would need to begin looking for investors far outside New York. Would it make a difference? He didn’t know. But at least she’d given him a better path to go down.
They lingered for a moment at the doorway. He reached out to take her hand. But the instant he felt her fingers touch his, he knew he couldn’t bear it.
She pulled her hand away first. Was this just as difficult for her as it was for him?
She turned, leaving without another word.
It took Paul a moment before he was able to return to his desk.
I’m convinced that about half of what separates the successful entrepreneurs from the unsuccessful ones is pure perseverance.
—STEVE JOBS
AS THE HUMID summer of 1889 cooled into fall, the tectonic plates beneath the global banking system began to shift. The rumor of the Baring Brothers’ disastrous speculation into Argentinian bonds hardened into admitted fact, and the debt that Edward Baring had built up over the years was revealed to be ever more precarious. A panic set in. The flowing pools of capital that streamed the very lifeblood of finance were poisoned. In September the Bank of England stepped in to secure the Barings’ losses in the hopes of averting a worldwide depression. But by October even the Bank of England’s backing appeared insufficient. The British government lacked the capital necessary to bail out Sir Edward. Fortunately, Lord Rothschild added his family’s muscle to the cause. He scolded the Chancellor of the Exchequer as if he were an immature child.
But thankfully, as the November winds swept across the East Coast and stiffened the collars of its bankers, New York held firm against London’s downward pull. Wall Street was buoyed by a record summer of wheat production. Exports reached unprecedented highs.
Even so, by the first frost of December, the three-card monte that Paul had been playing as he shuffled Westinghouse’s debts from investor to investor was revealing itself for the cheap trick that it had been. Doors that had opened to them in August were now closed. As fewer and fewer investments seemed safe, money had tightened. What little of it trickled across Manhattan would not make it all the way to Pittsburgh. And what larger pools might be available were closed off by the dam that was J. P. Morgan.
The safety of alternating current was becoming more and more an accepted fact, and ever-larger municipalities were choosing Westinghouse generators over Edison’s. But what precious revenue was generated by the wiring of Elmira, New York, and even Baltimore, Maryland, did not come close to covering the company’s expenses. The A/C royalties they continued paying to Tesla’s attorney, in the inventor’s absence, only widened the gulf between the company and profitability. Financial schemes they had once mocked soon appeared necessary. The Westinghouse coffers leaked their last dimes, and in the face of corporate penury Paul felt the unavoidable word slowly forming on his lips.
Hughes said it first. Not in the dim evening of one of their emergency conferences, but on a crisp morning as he first walked in the door. There was no preamble; there was no explanatory broaching of the subject. He just said it.
“We must start to plan for the bankruptcy.”
Before Paul even knew what he was doing, he was saying it too. “I’ve been looking over the procedures,” replied Paul instantly. “The ’74 revisions to the ’67 Bankruptcy Act are a bit Byzantine, but I know my way around them by now.” It was as if they’d skipped over the agony of making a terrible decision and jumped straight to the mechanics of carrying it out.
They spent all that morning developing a plan of action. The Westinghouse Electric Company’s debts were numerous and their creditors varied. Of paramount importance was maintaining the distinction between Westinghouse’s highly profitable rail business and his exceedingly unprofitable electrical endeavors. Westinghouse’s air brakes would generate a healthy revenue for decades; the goal was to see that this could be leveraged into some manner of support for Westinghouse’s other holdings. They sought to arrange things such that he might hold on to his home.
It took less than a week to lay out the basic structure of the operation. It was an unemotional ordeal. The carving up of the Westinghouse corpse was performed with a clinical disassociation. Paul could devote himself to the complexity of the task and thus ignore its larger implications.
Hughes’s wife—Carter’s daughter—was due to give birth to her first child before the new year. Paul’s senior partners would move on to new cases, established careers, and full lives. What would happen to Paul was far less certain.
It was a bright and clear Tuesday morning when Paul and his partners finished. The tired men surveyed the delicate paper stacks before them. New York was waking up, Paul thought, as they were finally ready to put Westinghouse to bed. Paul cradled the warm china cup in his hands, taking small sips of black coffee. Carter smoked. Hughes stared out the window as if somewhere in the bricks of the neighboring buildings was a place he’d rather be.
“Well then,” said Carter as he rested his cigar on the table. “Who’s going to tell him?”
Many of life’s failures are people who did not realize how close they were to success when they gave up.
—THOMAS EDISON
IT WAS A long train ride to Pittsburgh. He’d made this trip many times over the past year and a half, but this journey felt infinitely longer. The gray Pennsylvania prairie stretched on endlessly. Paul felt that he was being delivered, ever so slowly, to the gallows. And what he felt as he approached the gilded noose, more than anything else, was shame.
He kept imagining Westinghouse’s face. Westinghouse had done everything right. He’d made the big gambles, and he’d gambled correctly: first on electrical light, then again on alternating current. He’d identified a future market, he’d identified the technological problems that would need solving in order to serve this market, and he’d then designed and manufactured the best product in the world to fill this niche. What more could one ask of a businessman?
One could ask for a better attorney. If Carter had been in charge from the beginning, would they still be in this position? Could Hughes have negotiated their way out of it if he’d been given a chance? Could anyone? Why had George Westinghouse done something so foolish as to entrust the future of his company to Paul?
Paul had been called a prodigy when he’d signed Westinghouse as his client, but he had not felt like one. And only now, as he came to the end of his brief career as a lawyer, was he aware of the extent of his previous accomplishments. Now that it no longer mattered, he realized what a marvel his early work had been. He’d made it far. How many people could claim that?