"No," said Smith; "it didn't. But do you know, sir, that in one way we're not making as much of a profit as we should?"

"In what way do you mean, Richard?" inquired his chief.

"Not in the underwriting," replied the younger man. "I'm not going to suggest increasing our lines or opening up any more than we have. But I don't think it would hurt us if we opened up a little financially."

"How so? In what way?"

"Well, our investments are in high-cla.s.s securities, but they're not liquid enough. We've always bought with the intention of holding what we buy forever. Now, we've got an exceptionally good finance committee; Mr. Griswold in particular is regarded as one of the strongest and shrewdest men in Wall Street."

"Yes; I know he is," Mr. Wintermuth conceded.

"And there's really no good reason why we shouldn't benefit by his judgment. Now, you know as well as any one that the money to be made out of underwriting, pure and simple, is comparatively little. You know that in the long run, even with the most ably managed companies, expenses and losses together just about eat up all the premiums received--that less than a dozen first-cla.s.s companies doing a national business have an underwriting balance on the right side for the last ten-year period."

"I admit that unfortunately such is the case."

"Therefore the only chance a company has to make money is from the use of money--from the use of its premiums between the time they are received and the time they are paid out in losses. And as this is really our only chance, we ought to take every advantage--and make as much of an investment profit as we possibly can."

"I trust you do not mean to suggest that we use the Guardian's a.s.sets for purposes of speculation," Mr. Wintermuth remarked.

"Certainly not--unless it is speculating to take advantage of what foresight and knowledge of conditions our finance committee possesses.

I do not suggest buying on margin or selling what we haven't got. But I do suggest that we carry more liquid a.s.sets and a bigger cash balance than we have ever done, so as to be able to take advantage of opportunities that may present themselves. Now, take our Ninth National Bank stock, for instance. The Duane Trust Company crowd are trying to buy the control, and the stock's higher than it's ever been.

In my opinion the block we hold is worth more to the Duane people than it is to us; I'd let them have it."

"Why, we've had that stock for twenty years!" the President said.

"Well, we've probably had it long enough," said his subordinate, with a smile. "At least I'd like to have Mr. Griswold's opinion on the point.

And you certainly will never lose much by getting out of a security at the highest price it's touched in that entire period."

"Perhaps not. I will speak to Griswold about it," said Mr. Wintermuth.

"I am not a financier, and all this is somewhat outside my province,"

Smith went on; "but I think we ought to follow more closely the trend of modern business methods. We hold far more than we need of solid railroad bonds that net us four per cent on our investment. With very little extra risk I am sure we can secure a good deal larger return."

It was a rather daring speech to make, for four per cent first-mortgage railroad bonds had been Mr. Wintermuth's idea of finance for almost a generation. It spoke well for his confidence in his Vice-President that he did not regard the remark as an impertinence.

"That may be true, Richard," he said mildly, "although I have held to the contrary for twenty years. Still, times change, and to-day you may be right."

"I think I am, sir," returned Smith, respectfully. "At any rate, why shouldn't the question be laid before the directors?"

"We could do that," agreed Mr. Wintermuth, with, it must be confessed, a covert feeling of relief. After all, the a.s.similation of new ideas is not the most painless of processes, whatever the age of the a.s.similator.

"There's no meeting before the January one, is there?"

"No. January fifth--dividend meeting. But that's comparatively soon.

I'll lay it before the board at that time."

"Thank you, sir," said his subordinate, rising; "and I think that at least one person present will approve a little more elastic financial policy for the Guardian."

"Mr. Richard Smith?" inquired the President.

"Oh, yes. But I was thinking of Mr. Griswold."

"Well, we shall see," rejoined Mr. Wintermuth; and the conversation concluded.

The year 1914 dawned clear and cold. There had been an almost daily snowfall in New York during Christmas week; and although the street cleaning squad had labored stoutly, a little dusky whiteness still persisted in the less frequented corners of the city. This had come near to being the undoing of Mr. Jenkins, the main reliance of the Pacific Coast accounts and otherwise of considerable importance in the period of stress and toil known as "statement time."

At the beginning of every year comes this period to every company--the time when the accounts department becomes, instead of an active thorn in the company's flesh, the real, essential hub of the whole wheel; the time when the adding machines are never still and the rooms resound with the rustle and stir of a thousand sheets of figures, swung ceaselessly over by practiced and hasty thumbs; when the lights burn late every night for two weeks on end, and the laboring bookkeepers see their families only by cinematographic glances between newspaper and coffee cup in the cold gray mornings.

This time was now come; and the Guardian's men, under the silent but none the less strenuous urging of Mr. Bartels, had begun the grind which could end only when the annual statement of the company was in the printers' hands with proof initialed and approved by Otto Bartels, Secretary. And this, taken in conjunction with the cold weather and heavy snowfall, had fairly undone the honor and the reputation of Mr.

Jenkins. For the unusual cold and the night work together had betrayed him into potations even beyond his wont, the slippery pavements had proven very baffling to his dignified tread--and the snowy signet upon the back of his topcoat spoke to a delighted office all too plainly that at last the alcoholic equilibrist par excellence had fallen.

This, however, embarra.s.sing as it was to the individual in question, did not seriously delay the work of the department, which was well under way by the time the directors came together in their private office, to declare the semiannual dividend which for many years the Guardian had undeviatingly paid. A trial balance, from gross figures, had been drawn off, so that the President was able to report with reasonable exact.i.tude on the condition of the company. The dividend was promptly declared, and this was followed by a more or less informal discussion among the gentlemen around the big table.

"The increase in our surplus seems due mostly to the rise in value of some of our securities," Mr. Whitehill commented; "but the underwriting showing is much better for the last six months than for the first. I think our friend, Mr. Smith, is to be congratulated; and at the same time I want to ask what he thinks of our prospects for the coming year."

"Well, from the underwriting viewpoint," Smith answered, "there is no reason why this year should not be better than last, and several reasons why it should; but if you will pardon the presumption of my going outside of my own department, I think our chance for an increased profit lies more along financial than insurance lines."

"Mr. Smith thinks," said Mr. Wintermuth, "that there has not been a sufficient flexibility in our investments--that we could do better with a larger cash balance and more liquid--or easily liquidated--a.s.sets."

"And so we could," said Mr. Griswold. He leaned forward with more interest than he had yet shown. "I have felt for some time," he continued, "that our management of our resources was substantial and safe, but--without wishing to reflect on our President, whose conservatism has been a tower of strength to us--I have also felt we were financially just a little old-fashioned."

"What would you suggest that we do?" inquired the President. "My mind is entirely open on the subject."

"Let me see the statement," said Mr. Griswold. He regarded it carefully through his gla.s.ses. "Well," he said, "there are several items on this, representing securities of which I advised the purchase.

This Schuylkill and Susquehanna Railroad and this Ninth National Bank."

"Ninth National--that's the bank the Duane crowd is trying to buy, isn't it?" asked another director.

"Yes. It's higher now than it has been for twenty years," said Mr.

Wintermuth.

"And a great sight more than it's worth," Mr. Griswold commented. "If it were mine, I'd get out at the present price. And I'd get out of Schuylkill and Susquehanna, too. I don't want to be quoted on this, you understand, but there's no reason for its selling at 160 except the expectation of an extra dividend, and in my opinion all this talk of an extra dividend is just rubbish. I believe if we sold what we have to-morrow, we could get it back within six months, if we wanted, at 135."

The gentlemen around the table were visibly impressed, as Mr.

Griswold's reputation for sagacity in such matters was more than metropolitan.

"Well, I move that the Finance Committee be empowered to recommend the sale of any of our securities," said another well-intentioned director.

"And that on their recommendation the securities be sold," he added somewhat lamely.

"The Finance Committee doesn't need any such resolution pa.s.sed," said Mr. Griswold, with a laugh. "If I'm not greatly mistaken, it's always had such powers. But I'm glad to learn that it is now the desire of the directorate that we should use them."

It was only a few days after this that Smith, having stopped on his way home to see a Pittsburgh man who always put up at the Waldorf, met Mr.

Griswold in the lobby of that hotel.

"Well, our Ninth National stock is sold," remarked that gentleman, casually. "Four ninety-two."

"Good!" said the underwriter. "I think we're well out."