From legendary short seller to god of American capital

Chapter 404 Showdown: $2000 Million to Establish a Bank

On Sunday evening and Monday morning, Larry received two invitations from Mr. Gage—inviting him to discuss in person how to redeem the farmers' "temporary credit certificates".

Larry made every opportunity to decline, because he was waiting for a crucial call back.

Around 11 a.m. on Monday, a reply finally arrived from Mr. Porter in New York.

The telegram devoted considerable space to analyzing the motives and methods of Mr. Gage, the president of the First National Bank of Illinois, and reached a conclusion that was similar to Larry's previous analysis: he wanted to create a kind of currency-like credit instrument, still using Larry's credit.

But at the end of the telegram, Mr. Porter gave his own judgment, which he had reached after investigating the New York banking sector and thinking deeply over the past two days:

The one printing the vouchers is the clerk; the one running the bank is the boss. The only banker a banker can truly fear is another bank.

Instead of trying to gain more benefits from Mr. Gage's design, it would be better to ask for cooperation to build a new table—that is, to establish a new, independent trust bank.

Mr. Porter's words instantly elevated Larry's thinking to a new level—Larry's previous plan was to force the other party to concede more profits, but after Mr. Porter's reminder, Larry suddenly realized, why not take the opportunity to establish his own bank?

Mr. Porter's telegram also provided a detailed analysis of the various conditions and advantages for establishing a commercial bank in the United States at that time.

The disadvantage was practically a direct warning to Larry: instead of passively waiting for allocations, he should take advantage of this opportunity to proactively create his own bank.

Larry held his long telegram in deep thought—half an hour later, Larry replied.

"I have heeded your teachings. When I return to New York, I'll treat you to dinner!"

That afternoon, Larry received his third formal invitation – a letter bearing the First National Bank's emblem was delivered to the Palmerhouse Hotel.

In the letter, Lyman Gage invited him to "finalize the specific details of the liquidation of the syndicate." The letter was polite and restrained, but Larry sensed an undeniable air of authority within it.

Clearly, Gage was in a great hurry to place the final piece on the chessboard he had designed.

Larry nodded in acceptance of the invitation. "Okay, I'll go! What time is it?"

The messenger's assistant, not expecting Larry to agree so readily this time, hurriedly said, "Right now! If you don't mind, take my company's carriage and come back to the bank with me."

Larry nodded in agreement, then called Matthew and Dunbar, and the three of them got into a carriage and headed to the First National Bank of Illinois.

The assistant climbed into the driver's seat and drove the carriage with the coachman.

Sitting in the carriage, Larry noticed Matthew was looking at him strangely and couldn't help but ask, "What's wrong? Why are you looking at me like that?"

Dunbar also turned to look at Matthew.

Matthew took a deep breath and said softly to Larry, "Taylor is dead—I just saw it in the paper."

Dunbar paused, then asked, "Which Taylor?"

"That guy—Taylor from St. Louis, the one Larry made a lot of money off of," Matthew explained.

Dunbar frowned and asked, "How did he die?"

This question struck a chord with Matthew. He took a deep breath and said, "A carriage accident—Taylor and several of his accomplices' escort carriage encountered a mishap on the bridge, the horses got spooked, and the entire carriage fell into the river and drowned—not a single one survived!"

"How could this be?" Dunbar thought the reason was absurd.

Larry, however, seemed unconvinced.

Matthew was actually struggling with this point because Larry had previously said that Mr. Taylor's arrest meant the matter was completely over! No one would investigate this matter anymore, and our involvement would be erased.

At the time, Matthew didn't understand Larry's true meaning, but it was clear that what had happened had answered Larry's earlier judgment.

Since everyone on the bus lost their lives in an "accident," naturally no one will investigate who harmed the workers or who the mastermind behind it all was.

"How utterly absurd!" Dunbar exclaimed, his eyes wide with anger. "Isn't this treating people like idiots? This is blatant cover-up—"

"Yes, but—after handling it this way, no one can say anything!" Matthew sighed.

Larry laughed. "This is a satisfactory explanation for all parties. It's not like Mr. Taylor was shot eight times in the back and the autopsy report says it was suicide."

"How is that possible? Larry, what you're saying is even more absurd! No one, not even the most brainless person, could be so stupid as to fool the masses!" Dunbar retorted.

"Hahaha! I hope not!" Larry laughed and shook his head.

Matthew didn't laugh. He stared at Larry, a strange feeling suddenly rising in his heart—the higher the social circles Larry came into contact with, the more he seemed to thrive, as if he could foresee the future!

This is truly a puzzling phenomenon.

The meeting was held in the boardroom on the top floor of the First National Bank. When Larry stepped into the meticulously constructed room, he immediately sensed the deliberately created atmosphere of power.

Twelve high-backed leather chairs surround a huge mahogany table. Oil portraits of past bank presidents hang on the two walls, and a line of gilded characters is engraved on the wall at the head of the table: "Order is the first law of heaven!"

I can't speak for other things, but Larry does know the origin of this saying, because it was one of the most popular proverbs among American Puritans in the 19th century.

The original quote comes from Alexander Pope's famous philosophical poem "On Man," written in the 18th century. It was considered by the Puritans at the time to be a statement of "divine order." Lincoln quoted this in a speech in 1860.

Larry stared at the line of text, unconsciously recalling Mr. Potter's telegram—the clerk prints the vouchers, the banker is the boss.

What Gage wanted was never to "maintain order," but to become order itself.

Mr. Porter's proposal shares the same core idea: rather than fighting for petty gains, we should seize this opportunity to transform order itself.

Larry looked at the line of gold lettering and smiled.

Just then, footsteps sounded outside the door, and Mr. Gage walked in with two assistants, who were carrying a stack of documents.

"Oh, thank God! I've finally met you, Mr. Livingston!" Gage warmly shook hands and exchanged pleasantries with Larry, as if they were old friends who hadn't seen each other for years. "I know you're concerned about those farmers who haven't received their payments, and I'm very anxious too. I want to get your authorization as soon as possible so we can fulfill your promises to those poor farmers!"

"Thank you for your kindness! It's my fault, I'm always tied up with all sorts of things," Larry replied with a smile.

"It's alright! Now that you're here, let's get this sorted out quickly!" Gage cheerfully summoned his assistant, who laid out the authorization documents, grain mortgage documents, and other legal documents that had been prepared beforehand on the table. At the same time, he took out his glasses and put them on his nose.

Noticing Larry's curious gaze, Mr. Gage said with a self-deprecating laugh, "Oh—heh heh, getting old! Now I need reading glasses to see everything."

"This is also the result of your accumulated experience and wisdom," Larry complimented with a smile.

Gage smiled. "Handsome young man! You're quite the smooth talker. Alright, here! This is the final draft of the syndicated loan agreement. All you need to do is sign it, and the credit certificate can be printed tomorrow!"

Larry smiled and took the documents from Gage, then began to read them carefully.

Five minutes passed, then ten minutes passed!

Larry watched intently, while Gage stood by with a smile, displaying perfect patience and showing no sign of urgency.

Finally, Larry finished reading all the documents, placed them on the table, and turned to look at Gage with a warm smile on his face.

"Before I sign, President Gage, there are a few questions that need to be clarified."

"Of course. Please go ahead!" Gage nodded slightly, his expression impeccable.

"The first question," Larry leaned forward, placing his hands on the table and tapping his fingers on the documents, "is essentially creating a regional quasi-legal tender system in an era without a central bank."

currency.

You issued these certificates using my wheat warehouse receipts and the liquidation rights of this long-short battle as collateral, and then let them circulate in Illinois and throughout the Midwest—they can be used to pay for freight, buy agricultural supplies, and even pay taxes. That's brilliant! Really.

As Larry spoke, Gage's eyes flickered slightly for the first time, but he remained silent.

Larry continued, "What's even smarter is that you're actually playing the role of 'lender of last resort.' You've essentially created $2000 million in credit certificates out of thin air, and you're using my credit. You're not just solving the immediate settlement crisis, you're building a network that will control the financial clearing in the Midwest in the future."

There was silence in the conference room.

The faint sound of horse-drawn carriages drifting from the streets of Chicago outside the window only amplified the heaviness of the silence inside.

"I understand your good intentions. After all, the United States of America doesn't have a Bank of England, and what you're doing is actually helping to increase local monetary liquidity and establish a new order—" Larry said slowly, a smile playing on his lips, adding at the end, "Of course, the above analysis is just my humble opinion, please don't take offense—"

Finally, Gage slowly leaned back in his chair, the perfect banker's smile fading from his face, replaced by a sharp scrutiny.

"I must say, Mr. Livingston, you always surprise me!"

Gage squinted at Larry through his glasses.

Even a fool may have a stroke of genius.

Larry smiled and continued in a questioning tone, "I've made a discovery, Mr. Gage. In this game you designed, everyone gets something—farmers get a payment commitment, short sellers get a breather. The exchange can avoid systemic collapse—"

And you will receive three gifts. First, actual control over my 1348 million bushels of wheat in the spot market;

Second, the pilot experience in issuing private quasi-currency; third, the future dominant position in the interbank clearing system in the Midwest.

Larry paused, making sure every word reached Gage's ears clearly, "But the question is, what did I get in this game? Apart from not having to be forced to liquidate for the time being, I actually pledged all my assets—that wheat—to you, and all I got in return was a pile of paper you printed."

The circulation and acceptance of these papers will ultimately reinforce your and your banking alliance's interpretation, not mine.

The room fell silent again. Gage slowly removed his glasses, his fingers trembling slightly.

This scene looks familiar!

Larry's heart skipped a beat, fearing that Larry's next words would be, "I come from North Carolina—"

Mr. Gage simply rubbed the bridge of his nose. "Hmm—what are your conditions? You can say so now!"

As he spoke, Gage slowly turned his head and gently waved to his two assistants.

The two assistants tacitly left the meeting room, leaving only Larry and Gage inside.

Larry nodded and slowly gave his answer, "Mr. Gage, as you know, the final figure in my institutional account is $19731992 — this is not a loan, nor is it fundraising, but capital that belongs entirely to me."

Personally, I love rounding things up. I plan to add $268,008 to make it a round twenty million.

"Hmm, very good, and then?"

"Let's start my own Livingston Trust Bank!" Larry said with a laugh.

Gage's eyes flashed, his gaze sharp as he looked at Larry. "Trust Bank?"

"Yes! Just a trust bank!" Larry emphasized the word "just".

Gage nodded slowly, signaling Larry to continue.

Larry calmly adjusted his posture, his gaze steady yet firm as he looked at Gage. "Sir," he said, "you must be familiar with the famous saying of our sage Thomas Jefferson—'I believe that banking institutions pose a greater threat to our freedom than enemy armies.' I wholeheartedly agree."

My understanding is that Mr. Jefferson was not telling us to throw the baby out with the bathwater and abandon the power of finance. Rather, he was admonishing us to wield this power with the utmost prudence and wisdom, ensuring that it serves the long-term interests of the nation, rather than becoming a privilege monopolized by a few.

Gage didn't speak.

"My insistence on establishing Livingston Trust Bank was based on this very prudence. Under your outstanding leadership, the national banking system, like the nation's regular army, has maintained the stability of financial sovereignty and the solidity of the foundation of credit—for which I have the utmost respect."

Furthermore, my trust bank will never covet or challenge the core business areas of First National Bank and its syndicate. We do not engage in deposit and loan business as our main business.

Gage remained silent.

"My goal is simply to fill the gaps that the existing system cannot adequately cover. According to Section 24 of the National Bank Act of 1863 and the following year, the National Bank can only hold government bonds, state bonds, and municipal bonds, and is strictly prohibited from holding corporate stock."

However, trust banks can more flexibly hold real assets, issue specific bonds, and provide medium- to long-term project financing for certain industrial projects. Livingston Trust Bank will focus on industry consolidation and innovation incubation, becoming a dedicated bridge connecting financial capital and the real economy. This is not duplication of construction or competition with your syndicate, but rather functional complementarity and ecosystem improvement.

Gage remained silent—but his gaze towards Larry flickered slightly. Clearly, he was beginning to seriously consider this possibility in his mind.

Finally, Larry concluded, "Mr. Gage, my ambition is not to become another traditional banking giant and compete with you on the existing battlefield."

On the contrary, I hope to establish a financial instrument focused on the development of the real economy, whose success will in turn strengthen the financial power of the entire region and bring more abundant and stable cash flow and business demand to the mainstream clearing system you lead.

We are not adversaries, but friends who can form a powerful synergy. What I need is your recognition and strategic guidance as the most senior commander, not competition.

Larry finished speaking, his tone sincere and candid.

Gage remained silent for a full two minutes, his gaze shifting back and forth between the documents in front of Larry and his face, his mind racing as he calculated the various possibilities and the gains and losses.

Finally, Mr. Gage spoke again, "Mr. Livingston, could you please answer a question for me from my perspective? If I were to grant your presumptuous request, what do you think would be my reason?"

Larry curled his lip. "Oh, you must be doing this out of kindness—thinking it's too ostentatious for a young guy to have $2000 million, and as a banker, you have to help me keep this money safe!"

Ha ha ha ha!!

Mr. Gage suddenly laughed, a hearty laugh that echoed throughout the conference room, and tears streamed down his face.

After a while, Mr. Gage nodded slowly, his smile gradually fading.

"You know, Mr. Livingston—"

Gage turned and pointed to the inscription on the wall behind him, "Order is the first law of God," and said, "In 1864, when the bill was drafted, I happened to be a clerk in the Office of the Currency. I personally copied Article 24..."

strip----"

As he spoke, he turned again to look directly at Larry, his eyes no longer probing, but filled with a sharp, scrutinizing light. "Kid! You not only understand the rules, but you also understand why the rules exist—that's 10000 times more terrifying than making money. Excellent! The Chicago Consortium welcomes someone like you to join us!"

Larry was somewhat dazed; he hadn't heard anyone call him "kid" in a long time.

Gage loudly summoned his two assistants and then solemnly instructed, "Cancel the syndicate's authorization signing meeting. Notify the legal department: immediately begin drafting the bylaws of the Livingston Trust Bank and apply to the state government for a charter to establish the trust bank."

Gage then explained to his assistant his ideas, details, and precautions regarding assisting Mr. Larry Livingston in establishing a trust bank with a registered capital of $20 million.

The assistant was astonished, but he faithfully recorded Mr. Gage's request and hurriedly went to carry it out.

Larry watched Mr. Gage's retreating figure, a sense of pride rising within him—he had used the profits from a futures trading battle as ammunition to finally breach the gates of one of the most fortified fortresses of America's Gilded Age—the banking industry.

And the gatekeeper himself opened the gate—

After his assistant left, Mr. Gage turned to Larry, his expression relaxed. "Establishing your bank is a long process; it can't be rushed—"

You know, Mr. Livingston, when I was 16, I went to Iowa to earn money by carrying sacks of wheat. I admire your attitude towards farmers—although I know you were more interested in a successful short squeeze.

Larry smiled sincerely and said, "I've heard a saying: 'Do not do evil because it is small, and do not neglect good because it is small.'"

I think that makes a lot of sense.

Upon hearing this, Mr. Gage was taken aback—

He wanted to emphasize that he had done what Larry expected and hoped that Larry would swear that he would keep his promise in the future.

But after hearing Larry's words, Mr. Gage suddenly felt that there was no need to repeat his request.

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