"The next thing I do will be to go up to see him and talk it over. New York's an important factor with us to-day. With a little watching Pennsylvania and Maryland will take care of themselves. New England is safe to hold its own, I think. I believe we've covered the high spots, sir."

"How long have you been Vice-President of the Guardian, Mr. Smith, if I may ask?" inquired the head of the inst.i.tution in a tone of affectionate raillery mixed with genuine pride.

"Oh, about a week," said Smith, laughing; "but I've been sitting around so long, spoiling for a chance to do something, that there's several months' stored-up energy which I've got to get out of my system."

"Well, I hope you get around to the local department pretty soon," said Mr. Wintermuth. "Poor Cuyler has worried himself nearly sick, and the city business has been hit very hard; premiums are away off for the year so far."

"Yes; I want to talk that over with you, too. But I think Mr. Ferguson comes first."

"Very well, Richard; use your own judgment," said his chief. "So far, I think you have done good work for us."

"I'm glad you're satisfied, and I'll try to keep it up, I a.s.sure you,"

said Smith. He hesitated a moment. "But there is one phase of all this thing which I haven't forgotten and which I don't think you have, either, and that is how we came originally to be dragged out of the Conference and exposed to all these attacks."

"I have not forgotten it," said Mr. Wintermuth, stiffly; "but I think there can be no advantage in discussing it."

"I beg your pardon, sir, but I do not agree with you in that--and for this reason," rejoined the other. "Just one man is responsible for most of our trouble. He caused us to resign from the Conference, he tried to steal our agents and our business when we were out and succeeded in some pretty important cases, he got our branch manager away from us, and alienated some of our best local brokers, and--I have no proof of this last and perhaps I should not discredit my predecessor--but I can't help feeling that he induced some mutual friends of yours and his to suggest Mr. Gunterson's name to you."

"No," said the President, shaking his head. "The man who mentioned Gunterson to me is a real friend of mine--it was merely his judgment that was at fault."

"Well, I'm glad to hear it," the other responded. "But the point is this: is O'Connor likely to stop now? That's what we've got to consider."

"It is no particular concern of mine what Mr. O'Connor does or where he stops," said the President, with magnificent but impractical dignity.

"Well, it is of mine," Smith retorted, "because I want to know what he's going to do next. O'Connor has played several very shabby tricks on you and on the Guardian--things that must, even in his own eyes, seem discreditable. The fact that we know what a rascal he is doesn't help us much if we just sit here with our hands folded. And the fact that at last we have begun to defend ourselves will not endear us to him the more--on the contrary it will make him even more vicious toward us. No, he won't stop where he is; we shall hear from him again."

Smith was possibly correct in his conclusion; but for the moment all was very quiet along the Salamander battle front--if battle front it were. So he went off to interview the vigilant and ambitious Ferguson; and for four days the home office saw him no more.

In the many years during which the Guardian had conducted its sane and conservative business life, it had gathered into its grasp a great many desirable adjuncts and aids to the smooth and proper operation of a first-cla.s.s fire insurance company. Its agency plant, while not one of the largest, was second to none in the character and ability of the agents themselves; its force of office and field men was adequate; even its stationery was simple and dignified and well adapted to the ordinary uses of the management.

Perhaps at no time had Mr. Wintermuth's good fortune served him better than when he secured the Guardian's princ.i.p.al reinsurance treaty.

Nearly every large company has contracts with one or more reinsurance companies, usually foreign, and whenever an agent writes a policy for a greater amount than his company thinks it prudent to hazard on the risk in question, it cedes to one or more of these reinsurers such a proportion of the risk as it feels disinclined to retain, paying to the reinsurers an equal proportion of the original premium. The larger the policies a company is willing to write, the higher the esteem in which it is held by its agents, as a rule; and the Guardian had always, thanks to the excellent reinsurance facilities it enjoyed, been able to take care of very liberal lines on all acceptable cla.s.ses of business.

Moreover, since the treaty company paid the Guardian for its proportion of the premium a higher rate of commission than the Guardian paid the agent who wrote the risk, the transaction was profitable to the Guardian. The reinsurance company could afford to pay the higher commission, because it had no expensive agency plant to maintain, it did not need conspicuous offices, it employed no field men or inspectors, and in fact, except for the inevitable losses, this commission paid for the business was its only important expense.

Mr. Wintermuth had, in the mist of years past, discovered on one of his trips abroad a reinsurance company rejoicing in the name of the Karlsruhe Feuer Ruckversicherungs Gesellschaft, or more briefly, the Karlsruhe Reinsurance Company. With the managing director of this worthy inst.i.tution he had taken the unspeakable waters at an almost obsolete German spa, and although the waters did him no good, the reinsurance treaty that he incidentally arranged with Mr. August Schroeder made a very satisfactory termination of the treatment. It was a masterly contract--for Mr. Wintermuth--and its acceptance by Mr.

Schroeder only showed that his experience with American business was very limited or that the waters had sapped his vitality to a degree more than was perceptible. It allowed the Guardian to do almost everything it pleased, restricted it not at all, never protested any action however unexpected, waived every possible right and privilege, paid a liberal commission and a share of the profits besides--in short, it was an ideal treaty and one which was the admiration of those few privileged characters who knew its merits. Nevertheless it had also proved to be a good contract for the Karlsruhe, for such business as the Guardian ceded had paid a modest but unfailing return to its Teutonic connection year after peaceful year.

One can therefore only faintly conjecture Mr. Wintermuth's surprise and genuine anguish upon receiving, one bright April morning, a communication in German, which, being translated by Mr. Otto Bartels with something more than his customary stolidity, proved to read, stripped of all superfluous verbiage, substantially as follows:

"The managing director of the Karlsruhe, in accordance with the conditions of the contract, hereby gives six months' notice of the termination of the reinsurance arrangements now existing between the Karlsruhe and the Guardian."

When, the following day, Smith returned, Mr. Wintermuth's first greeting was silently to hand him this letter. The younger man, with a little a.s.sistance from the President's recollection of Bartels's translation, managed to decipher the tangled German, and sat for a long minute without speaking.

"Why do you suppose they're canceling? And why didn't we get this through their London managers, I wonder?--they're the people we've done business with for the last ten years," he said at length.

"What difference does it make?"

"None, perhaps. Still, it strikes me as rather odd. Almost as though some one had planned that this should look as though it emanated from a point less in touch with William Street than London is."

"Then you think--?"

"Who else could it be but O'Connor? And these German underwriters are perfect babes in the wood--they're just idiotic enough to cancel a profitable contract merely to take on an experimental one with a bigger premium income in its place. Now, n.o.body outside the office knew the conditions of our contract with the Karlsruhe--except O'Connor. No, there's no question about it. He probably offered them a little better commission arrangement and a bigger business--and they fell for it."

"Very likely that is so," agreed Mr. Wintermuth.

"The only question now is: what can we do?" Smith continued.

"Schroeder has been dead six years. And I don't know the present managing director at all; I've never even seen this man that signed the letter."

"It would have done us no good if you had known him," said the younger man, slowly. "This is a cut and dried affair. All we can do now is to look for another treaty. We must try to get a contract as good as the one we have with the Karlsruhe."

"I'm afraid we can never do it," the President responded.

"Perhaps not--and again, perhaps we can. Still, I admit it won't be easy." He fell thoughtfully silent.

"Cuyler tells me he's lost another broker--Spencer and Carrick have begun to drop their expirations with us," remarked Mr. Wintermuth, with an irrelevance that was more apparent than real.

"Does he think the Salamander's getting them?" Smith inquired, his eyes narrowing.

The older man nodded.

The other rose from his chair.

"I think," he said deliberately, "that I will go and see Mr. F. Mills O'Connor. I will give him just one chance to let up in this campaign of his and restrict his energies to ordinary business compet.i.tion; and then, if he refuses, I will ask you and the other directors of the Guardian to let me open things up and fight him on his own ground, if it costs us every dollar of prospective profit for the next three years."

Mr. Wintermuth's face a.s.sumed an expression of manifest concern.

"Don't be hasty, Richard," he said quickly; "the fault with all you younger men is that you're apt to go too fast. I myself have confidence in you, you understand, but I don't know that I could promise the support of the directors for any campaign of reprisals.

I'm afraid the idea of spending three years' prospective profit wouldn't strike them with any degree of favor."

His perturbation was so sincere that Smith turned back in the doorway to rea.s.sure him.

"Well, don't worry," he said lightly. "Probably my remarks will so abash Mr. O'Connor that he will immediately promise to be good. I guess I'll try it on, anyway."

Fresh in his determination, he went straight to the Salamander office, and it was but a moment later that he found himself confronting the man he had come to see.

"Mr. Smith, I believe," said O'Connor, neutrally. "Won't you sit down?"

"Mr. O'Connor, I feel quite sure," said the other, taking the proffered seat.

"Yes. And to what do I owe the pleasure of this call?" responded the President of the Salamander, swinging around in his chair to face his visitor.

"If I can take up a few minutes of your time, there are quite a number of things I'd like to say, and a few that with your permission I will."

O'Connor waved his hand for the desired a.s.sent.

"Go ahead," he said.

"Mr. O'Connor," said Smith, "you owe your position in the fire insurance world to the Guardian of New York more than to any one other influence, and your recent acts seem to show that you've forgotten your obligation. You committed the Guardian to withdrawing from the Eastern Conference, for one thing, and after the company got out, you took advantage of its position to raid its agency plant for the benefit of the Salamander."