From legendary short seller to god of American capital

Chapter 401 Gage's Endgame Plan: Larry's Millions in Profits

Under everyone's gaze, Lyman Gage slowly stood up, his movements unhurried, as if what he was about to propose was not a solution that could resolve the ownership of millions of dollars and the fate of countless people, but just an ordinary bank memorandum.

He walked over to Larry, smiled at him, then picked up another piece of chalk and stood in front of the blackboard.

The light from the crystal chandelier fell on his meticulously styled gray hair and impeccably tailored suit, giving him a calmness and confidence that set him apart from all the other politicians present.

"Gentlemen!" Gage's voice was very calm, with a magnetic tone that bankers possessed, which involuntarily quieted people down. "We have become embroiled in an argument driven by emotions, morality, and short-term interests, forgetting the fundamental purpose for which we are sitting here: to uphold Chicago's credibility as the nation's center for food and capital pricing."

As he spoke, Gage looked at everyone, his gaze finally settling on Chairman Rush.

"Credit! Gentlemen, is not built on forced liquidation or political slogans. It is built on enforceable contracts, clear rules, and ultimate solvency."

Once trust is broken, whether it's the exchange defaulting on its payments or stakeholders who can't get their money leaking the reasons to the media—Chicago, as the most important commodity market in the United States, will face the risk of liquidation overnight!

A low sigh and a murmur of approval rippled through the crowd.

That's the real issue. The key to this wheat short squeeze isn't who wins or loses, but how to navigate a crisis...

Even under these circumstances, they can still hold onto their jobs.

Gage deliberately left some time for everyone to digest the information before drawing three areas on the blackboard with chalk.

"Question one: Mr. Livingston's profits and farmers' debts; Question two: the short sellers' solvency and the impact on the market; Question three: the exchange's systemic risk and future reputation—these three are interconnected, and forcibly separating any one of them would lead to a complete collapse."

Larry stood closest to the camera. Looking at Gage's three large circles, he silently nodded. This guy really has something in him. To be able to sit in the top seat of the bank in Chicago and even the Midwest, he must have something special.

Then, Gage wrote the number "1348 million bushels" under Larry's name on the blackboard, and added the total cost of the acquisition after that number.

1061 million US dollars.

"Mr. Livingston insists on using his profits first to repay farmers! This is business integrity and wisdom in life. None of us can or should oppose him. Anyone who does is going against the will of the entire Midwest!"

As he spoke, he looked at Altgerd, who nodded repeatedly in response.

"But right now, the short sellers can't pay out such a huge sum of cash. So I have a plan—" Gage turned around again and wrote a line on the blackboard: "Temporary liquidation certificate."

"Gentlemen! I plan to form a provisional clearing syndicate, led by my company, First National Bank of Illinois, together with four major institutions including Chicago Trust Bank and Continental National Bank."

The syndicate will issue a tranche of special clearing certificates to Mr. Livingston with a total face value of US$1100 million. These certificates are fully backed by the syndicate's credit and are redeemable in full cash at any member bank or for fee payment five trading days later.

A low murmur arose in the conference room.

"This means—" Gage continued, "that Mr. Livingston can immediately deliver this certificate to Cargill, which can then use it to make payments and provide guarantees to the anxious farmers. The farmers have received convertible bank credit certificates, alleviating their immediate crisis."

And Mr. Livingston wouldn't have to suffer a significant discount due to forced liquidation—a win-win-win situation for the farmers, Mr. Livingston, and market stability.

The governor stared at the blackboard with a gleam in his eye. He had his own reasons for setting up the fund to protect Larry, the key being to align with the Democratic Party's and his own political narrative of "protecting farmers," while also shifting the burden of payments to Republicans.

Now, Gage's words are exactly what the governor wanted to hear.

On the other side, the exchange's chairman, Rush, quickly asked, "Then, what are the guarantees for the syndicate?"

Gage pointed his chalk at the first area, a faint, hunter's smile appearing on his face.

"Good question, Mr. Rush. The guarantee lies in the real and reliable assets that Mr. Livingston owns—those 13..."

48 bushels of wheat.

He paused, waiting until everyone understood the significance of this transfer, before continuing, "Mr. Livingston must pledge all ownership of these warehouse receipts to the clearing syndicate as collateral for the $1100 million in vouchers. Until all vouchers are fully redeemed or cashed, the legal right to dispose of this wheat belongs to the syndicate."

People began to discuss it again, approving of his ingenious plan to use the existing wheat as collateral to turn the repayment activity into a new business for the bank.

Larry, however, had a feeling that Gage's purpose went far beyond that, but he was not familiar with banking and could not immediately discover the banker's true intentions.

However, regardless of his original intention, this operation was very beneficial to him—because the exchange's goal was to "hedge positions" and quickly resolve these issues.

However, the bankers' proposal would protect these core assets to the greatest extent possible because this batch of wheat is currently used as collateral by the syndicate to realize the farmers' profits.

Or to put it another way, Gage has voluntarily joined Larry's camp, and now they are facing the "payment problem" of Wall Street short sellers together.

This is tantamount to putting a thick layer of financial armor on Larry's most vulnerable spot market. While we don't yet know his true intentions, it's certainly not a bad thing.

Sure enough, Gage continued, "However, this only solves one end of the problem for Mr. Livingston and the farmers. On the other end of the market, those huge short positions still hang there like the Sword of Damocles."

If settled at $1.23, many short sellers will be insolvent, and the asset sell-off triggered by bankruptcy liquidation will sweep across other sectors.

The market—in this situation, the bulls will actually lose out—Mr. Livingston won't get his money.

Gage glanced at Larry and explained with a smile, "Of course, if we force a price of $1.05, it would come at the cost of harming the legitimate interests of long positions and trampling on the rules, destroying the very foundation of the Chicago Board of Trade's future—"

so----"

He turned around and wrote the second core principle on the blackboard: orderly debt restructuring and tiered settlement.

"My suggestion is to use $1.16 as the base price for the final cash settlement," Gage said, turning around and offering his answer.

"1.16?" Keane frowned.

"Give me a reason! Why this number!" Exchange Chairman Rush pressed.

"This is 7 cents lower than the extreme market price, reflecting considerations for market stability and counterparty solvency; but it is 11 cents higher than the exchange's initial proposal, ensuring reasonable profits for long positions and maintaining the seriousness of the rules," Gage explained.

In fact, he didn't need to explain at all, because this was just a middle ground for bargaining. It was just that he, a "seemingly neutral" person, proposed it at this time, leaving room for both the bulls and the bears—everyone knew this.

"So, how should the short sellers pay?" Keane pressed.

"This is the meaning of orderly reorganization —"

Gage's chalk traced the word "reorganization" on the blackboard as he continued, "All short positions, calculated at the settlement price of $1.16, do not require a one-time payment of total losses. Our liquidation syndicate will intervene to tier the losses based on the short sellers' asset status and willingness to pay."

Gage glanced at everyone, his gaze settling on Keane, and continued to explain, "For Tier 1, those with the ability to pay must complete the fund transfer within five trading days. For Tier 2, those with sufficient funds but insufficient liquidity can be provided by a clearing syndicate with secured bridge loans."

Regarding interest rates—frankly, they're not very friendly, but enough to keep them afloat. Loan collateral can be their assets in other markets, or even certain intangible rights—"

As he spoke, Gage gave Keane a deep look. Only Keane knew the meaning behind that look—the voting rights of the Wutong Society.

"The third level is for institutions that are indeed insolvent, but whose bankruptcy would trigger a significant chain reaction." Gage's voice turned cold. "The exchange should initiate emergency procedures to conduct orderly forced liquidation and distribution of their remaining assets and positions under the supervision of a syndicate, prioritizing repayment to creditors and minimizing market impact as much as possible. As for personal bankruptcy, it should be handled according to legal procedures."

This plan avoids both short sellers (thus avoiding moral hazard) and a drastic, one-size-fits-all approach that could trigger systemic collapse. It seems perfect!

But those attending this meeting were all seasoned business elites, and they immediately realized that the syndicate would subsequently facilitate various acquisitions and mergers—devouring large, insolvent companies. Banks, like vultures, had long smelled the blood and corruption.

The battle between bulls and bears resulted in casualties, but it became a feast for vultures and hyenas.

Everyone present was a participant; a few tacit glances conveyed everything without words.

"Agreed! A very good suggestion."

"Mr. Gage has a very far-sighted view; our bank is willing to participate in the clearing syndicate—"

"As the most important broker, we will do everything in our power to guarantee repayments, and when we need bridging funds—we'll do anything to keep us alive!"

All parties began to hurriedly express their opinions, but they basically agreed with Mr. Gage's settlement proposal.

Gage smiled and looked at everyone, his gaze finally settling on Rush's face, as if to say—as a director of the exchange, what do you think?

Rush cleared his throat and asked, "So, what do the exchange and the syndicate get?"

Rush asked the most crucial question because he didn't believe Gage was a philanthropist.

Gage finally showed his first obvious, personal smile of the day. "The exchange will receive a new clearing and payment mechanism template that has been proven in crisis and led by a professional banking syndicate."

In the future, the clearing and settlement of commodity transactions can rely more on this model to improve efficiency and reduce risks.

First National Bank and its partners, in addition to collecting reasonable clearing service fees and loan interest, and profiting from the disposal of collateralized assets—more importantly, we have demonstrated that, within a regulatory framework, professional financial instruments can resolve market crises and safeguard the operation of the real economy.

As he spoke, Gage looked at the crowd again, smiling as he explained, "These, gentlemen, are far more valuable than short-term money!"

Then, he drew several lines on the third part of the blackboard.

A buzzing sound filled the conference room.

Gage put down the chalk, gently placed his hands on the table, and scanned the room. "I've finished presenting my proposal. Who agrees?"

Who objects?

The meeting room fell silent instantly.

The governor slowly smiled and took the lead in applauding.

Immediately afterwards, several Democrats and business representatives also applauded.

This plan almost perfectly satisfies the surface demands of all parties while implicitly containing deep-seated exchanges of interests and transfers of power.

Keane's face was ashen, but he knew he had no choice. He could either accept this "orderly reorganization," potentially losing some hidden power but at least saving his life; or he could resist to the bitter end, but now he faced not only Livingston, but also First National Bank, the Illinois state government, and even the angry public opinion.

The choice is crystal clear!

Exchange chairman Rush also remained silent.

Gage's proposal effectively relinquished some of the exchange's clearing and pricing power to a more professional consortium of banks. However, he couldn't oppose it, as it was currently the only solution that could simultaneously appease market sentiment and achieve political compromise.

Finally, Gage's gaze fell on Larry.

Larry Livingston, smiling, walked up to Gage and extended his hand. "Mr. Gage, your proposal is flawless. I accept!"

Their hands clasped tightly together, and in that instant, Gage lowered his voice and said to Larry, "Mr. Livingston, you've stirred up a storm. If I may, I'd like to express my admiration for you in person!"

"Thank you! I'd love to." Larry said with a smile.

The settlement agreement was thus reached. In the presence of witnesses and professional lawyers, representatives from both the long and short positions, as well as the exchange's chairman, Rush, jointly signed the settlement agreement.

In this multi-million dollar game, the biggest winner was Gage and his syndicate. Because the banks didn't actually spend real money, they created credit-issued instruments and earned substantial fees. There were also pledged warehouse receipts and assets surrendered by short sellers—

It can be said that through this battle, Mr. Gage established his leading position as a crisis savior and financial solution provider.

Of course, he obtained this through the capital of local banks and his position on the Republican National Committee—

The one who truly achieved legendary status was Larry Livingston, who was previously unknown. Before that, almost no one had heard of him, but from then on, from New York to San Francisco, from Chicago to Miami—

Wherever capital exists, his name is known to everyone.

After the public questioning and coordination, only a few people remained in Columbus Hall: Chairman Rush, the Governor, Banker Gage, and representatives from both the bulls and bears.

The final item on the agenda for this meeting was to determine Mr. Livingston's "real profit," which was in everyone's interest.

This was also the part that everyone was most curious about and most interested in. Apart from the exchange chairman, Rush, everyone was curious about just how large Larry's position was to have completed this most famous "short squeeze" in 19th-century Chicago.

At this moment, Bode, the fund's actual trader and a veteran trader, was summoned into the now somewhat empty hall to report on Larry's specific position size.

The moment Chairman Rush saw Bode, his pupils dilated violently, then he looked at the governor—

The veteran trader nodded to Larry and took out the settlement documents that had been prepared in advance.

「帐户之前共有资金262.43万美元，9月26日周一，共买入9月小麦多单855手，尾盘平掉了425手，剩余430手的平均成本是61.5美分。

—The second batch of purchases totaled 2673 lots, with an average transaction price of 56.5 cents—

The average cost of the third batch was 67 and 1/4 cents, totaling 3191 lots.

至此，本机构席位最终持有9月小麦合约总多头头寸为：430+2673+3191=6294手。」

Larry nodded in agreement.

Mr. Bode didn't need to be so explicit. The first batch, on Monday, was a trial position he initiated by pushing up the price. He closed out half of it at the end of the day, realizing $269,625. He still had 430 lots left.

The second batch consisted of long positions taken on Tuesday to buy at the bottom. These 2600 lots were bought at a very low price and represent Larry's main profit-taking position.

The third batch is divided into two parts. One part is the support funds in the early morning market opening, with most of them costing around 62 cents:

One part of the positions were those from the high-level battle after Larry granted traders "unlimited firing rights" in the afternoon. These were the largest and highest-priced positions throughout the entire trading process.

Because of their presence, the average cost was driven up to 67.25 cents on Wednesday. But it was precisely the strength of these positions that ultimately led to the market reversal, overwhelming the short sellers like a tsunami.

After the veteran trader finished his report, apart from Chairman Rush, who already knew the details, a collective gasp filled the room, and everyone's faces showed barely suppressed shock.

Especially Keane, whose eyes narrowed into two black dots as he stared intently at Larry, as if he harbored deep resentment towards him—but his mind was completely filled with shock at that moment!

6294 hands!

Despite being mentally prepared, the sheer volume and scale of the position being laid bare still shocked Keane.

He had made a huge, fatal mistake, losing over 2800 short positions—Keane originally thought he had paid a heavy price for his opponent, but he hadn't expected that his losses were insignificant compared to the opponent's profits.

This wasn't Livingston's war against James Keane, but his war against everyone!

6294 long positions, equivalent to 3147 million bushels of wheat!

At the same time, he also acquired 1300 million bushels of spot wheat.

My God! His move was far too ambitious!

The other people had different expressions. The governor thought of his profits—although he hadn't calculated them clearly, he knew they were no small sum!

Gage, with a look of admiration and a hint of surprise, smiled at Larry. "Congratulations, Mr. Livingston! That's an impressive profit—oh, the final confirmed price is $1.16. Please calculate your final account profit!"

Bode nodded. "Now, calculate the final profit and loss for Mr. Livingston's controlled account."

He picked up his pen and began quickly calculating on the paper. Meanwhile, Larry had already closed his eyes slightly, mentally calculating numbers rapidly, and soon arrived at the answer—

However, Larry waited for Mr. Bode to finish the reckoning with his voice.

Three minutes later, Mr. Bode picked up the settlement statement.

"The account managed by Mr. Livingston has accumulated a profit of $16899537.5!"

Mr. Bode looked up, surveyed the deathly silent room, and added, "This doesn't even include other closed-out profits in the account."

Account principal and applicable fees to be deducted!

"What if we include that!" the governor urged hurriedly.

Bode glanced at Larry, his eyes asking whether he should answer the presumptuous question in person.

Larry nodded without hesitation.

This is not only because the old trader is one of the governor's men, and he will find out about this number sooner or later—but also because, at this moment, his own profit is a deterrent in itself!

Ultimately, the capital market is a winner-takes-all business. Larry is naturally worried about attracting unwanted attention or threats from those with more money, but to grow bigger, he must overcome this hurdle.

So instead of being coy, it's better to just say it openly.

「————抛开交易佣金和交易所规费6万500美元，加上周一盈利26万9625美元以及原始本金2624300美元，最终帐户资产为19731992美元！」博德先生公布了最后答案。

The hall fell silent once again.

>