Shane opened the Pacific Railroad freight data file for the past three months, his fingertips tracing rows of meticulously recorded numbers. Sunlight filtered through the lingering cigar smoke, casting a pattern of light and shadow across the document.
"We need a pretext," Shane said suddenly, his voice calm but deliberate.
Henry James Hill raised his eyebrows, curiosity flickering in his eyes.
"The freight volume data for Pacific Railroad has been manipulated," Shane continued, pointing to a suppressed section. "Chicago to Omaha shipping costs were deliberately lowered by 23 percent, but someone left a smudged correction factor in pencil."
"These suppressed prices… we can use them as bargaining chips," Shane explained.
Old Henry exhaled a slow smoke ring. "You mean… make Morgan think we've walked into their trap?"
"Exactly." Shane's lips curved slightly. "Let them continue shorting while we quietly accumulate bonds. When the Federal Reserve announces the interest rate cut…"
He didn't need to finish; both understood the implication. The office fell silent except for the ticking of the grandfather clock. Outside, the autumn sun dipped westward, lengthening shadows across the Persian rug.
"There's a problem," Henry said suddenly. "Morgan won't give up without a fight."
Shane pulled out a copy of The Chicago Tribune from his briefcase, tapping a photograph of stranded grain cars caught in a blizzard. "When the market opens tomorrow, we make it appear that the Bank of Canada 'accidentally' discovers these railcars."
Henry considered this, twirling his gold-rimmed glasses and wiping them slowly. "Not enough. We also need the New York Daily News to report that Old Williams commissioned a sapphire necklace for a showgirl on Broadway."
The second preparatory bell at the New York Stock Exchange tolled through the autumn mist. Henry rose, leaving the office for a moment.
Shane moved to the floor-to-ceiling window, surveying the city. Below, clerks and brokers moved like ants, carrying records and reports through the autumn air. He calculated carefully: when should the $160,000 Citibank credit line be deployed?
Henry returned. "The Bank of Canada will discover the stranded grain cars this afternoon, just after the market opens," he said.
Shane retrieved blank trading slips. "I'll establish positions in batches across five different brokers. No more than $50,000 per firm, with leverage capped at eight times."
Henry leaned over, cigar smoke curling across the desk. "Too conservative. Morgan's people might notice."
"Which is why we use backup banks," Shane said, producing three business cards: Madison Trust, First National Bank of Omaha, and St. Louis Savings Bank. "They provide additional collateral, splitting each transaction into twenty smaller operations. Railroad bonds will serve as collateral for re-hypothecation—circular operations."
Henry laughed hoarsely, the coffee trembling slightly. "Brilliant! Using Morgan's own bonds to short them."
"But how do you ensure Morgan won't notice before the interest rate cut?" Henry asked, slamming a hand on the desk.
Shane showed a passage from the September 25 Wall Street Journal: "…when market liquidity is insufficient, the committee tends to act conservatively."
"During the reserve requirement check on the 28th, Morgan's staff will be preoccupied. They won't notice minor fluctuations in the bond market," Shane explained.
When the NYSE afternoon bell rang, the desk was covered in trading slips. Shane double-checked each number. With 20% margin and eight times leverage, Henry's $700,000 credit line became $5.6 million in operating capital—enough to acquire 30% of Union Pacific Railroad's circulating bonds.
"One last question," Henry said, gripping Shane's wrist. "The margin call…"
Shane pulled a sealed Pacific Railroad Company letter from his briefcase: New York Freight Department Special Advisor. It took effect tomorrow. A cold smile appeared on his face. "When bond prices fluctuate more than 20%, the first margin call will be… us."
Henry smiled, relieved. "Very good. You've thought of everything. Proceed—I'll ensure full cooperation."
Shane began the first batch of orders through Bear Stearns and Kidder, Peabody & Co., keeping each transaction under Morgan's internal monitoring threshold. By the NYSE closing bell, the initial positions were acquired.
Telephone rings downstairs sounded like a final symphony for the day's close. Shane counted quietly: Madison Trust 2,000 shares, First National Bank of Omaha 2,000, St. Louis Savings Bank 3,000…
Henry sipped whiskey, picking up a telegram. "Montreal customs seized another batch of refrigerated railcars tied to Morgan's whiskey distillery investments."
October 5th, 8:15 a.m. — Wall Street lay under a thin veil of mist. Shane's leather shoes clicked on damp cobblestones as he pushed open the oak door to Henry's office.
Cigar smoke hit him at once. Telegrams from the Bank of Canada cluttered half the desk.
"Look at this," Henry said, tossing a copy of The Wall Street Journal. The front-page photo showed stranded railcars on the St. Marys River, captioned: 'The Lie of Pacific Railroad's Capacity'.
The telephone rang sharply. Henry answered, smiling. "The Bank of Montreal just refused to honor Morgan's letter of credit. They suspect forged bonds."
Shane retrieved today's trading slips, pen scratching numbers. Sunlight illuminated the sheets.
"The first margin call should be…" he began, but the secretary burst in. "There's a problem at Morgan Mansion."
Henry added ice to his whiskey calmly. "Notify the New York Times. Emphasize that these holding companies' reports can't even cover basic operations."
Shane looked at the trading board. Union Pacific Railroad bond prices wavered. His watch read 9:58 AM—two minutes to the market's official opening.