From legendary short seller to god of American capital

Chapter 405 The Endgame: A Review of the Final Profits from This Market Move

October 10th, Thursday.

A syndicate led by the First National Bank of Illinois began issuing temporary certificates to realize the real proceeds from farmers' wheat sales.

Although the farmers who sold their wheat earlier were happy that they had sold it at a high price, they were still uneasy because they hadn't received the money yet.

Now that the farmers have finally seen the money, they keep praising Mr. Livingston's kindness and trustworthiness. Although none of them have ever met him, the farmers who have benefited are all sincerely praying to God that God will bless him.

On the other hand, Larry also rushed to the Chicago Mercantile Exchange—today is the final delivery day for September wheat. The exchange had already posted a notice that the final settlement for September wheat would be negotiated between long and short positions at $1.16.

In fact, this involved a large number of people and a large amount of capital on both the long and short sides. Larry cannot fully represent the price cost of the long side; Keane is not the short side that lost the most money. But that's how the futures trading system works—the big players set the rules and divide the pie under the table, and the small players can only settle accounts according to the "compromise price" of the big players.

Undoubtedly, many people lost their principal during this major upheaval in the futures market and the massive consolidation of capital, and some even went bankrupt and were liquidated.

But the banking tycoons had already thoughtfully prepared a bankruptcy liquidation package for them.

Cashing out, liquidating, seizing, and settling were all proceeding smoothly, including the establishment of Livingston Trust Bank. However, these were none of Larry's concern—he had to complete his own tasks.

Larry arrived at Stone Company to liquidate Cargill's initial 500 million bushels of wheat.

Previously, Larry spent $50 to buy the disposal rights to 500 million bushels of wheat from Cargill, signing a "forward spot contract." According to this contract, or if both parties agree to acknowledge Larry's selling price and each bear their own losses and profits;

Alternatively, Cargill could collect the full payment at 95 cents.

However, times have changed. Now, the two parties have signed a shareholding restructuring agreement for Cargill, and the company's name will be changed to "Cargill-Livingston". The procedures for changing the company registration are underway, and the two companies are now essentially one.

Therefore, there is no need to use 95 cents to recover the payment.

In Stone's account, the previous sale of 500 million bushels was at an average price of $1.27, and they eventually bought them all back at around $73, earning 54 cents per bushel. The hedging strategy of selling and buying resulted in a difference of $270 million!

Excluding the 0.3% commission paid to Stone and the $45,000 exchange fee of 0.1%, the total profit from this wheat hedging was $2,655,000, leaving 5 million bushels of wheat.

According to the prevailing practice for profit distribution in forward spot contracts at that time, since Larry was the main planner and risk bearer, 70% of the profits, totaling $1,858,500, went to Larry; the old Cargill company received 30%, totaling $796,500.

Since Larry had already paid a $500 deposit for the 50 million bushels of wheat, Cargill was required to return the deposit.

In summary, the final result of the liquidation at Stone was that Larry received $1,858,500 in trading bonuses and got his $500,000 deposit back, bringing his total cash on hand to $2,358,500.

按照约定，拉里将用100万美元入股嘉吉公司，获得35%的普通股、以及15%的优先股。在支付了这100万美元股权投资之后，拉里帐目剩余的资金为135万8500美元。

The second item that needs to be settled is the payment for Larry's two wheat purchases.

Larry purchased a total of 1348 million bushels of wheat in two separate transactions. The purchase price plus operating costs amounted to $1061.4 million. After deducting the $150 million that Larry had previously advanced, he still needed to pay $911.4 million.

The remaining payment for the wheat will be made by the syndicate through the issuance of "temporary credit notes," which will be deducted from Larry's share of the $2000 million registered capital of the "Livingston Trust Bank."

But here's the problem: according to the capital management system of the financial industry at that time, his $2000 million "registered capital" was to be used as "core capital reserves" and "excess capital reserves," serving as the credit foundation of the bank. It couldn't be like the registered capital of other companies, which could be withdrawn after registration and used for whatever purpose.

So, Larry was originally able to pay the amount, but after registering the bank, the $911.4 million became a huge headache for him.

If someone else were in this situation, they would definitely be in trouble. They would either have to find ways to borrow money from various sources or request a reduction in their bank capital reserves. These actions would more or less harm their long-term interests. More importantly, the fact that a newly rich person is "lacking money" makes it easy for them to "show their soft side" in front of outsiders, which would further attract the covetousness of others.

Fortunately, Larry knew a simple truth: for professional matters, find professionals!

During the registration and establishment of Livingston Trust Bank, Larry half-jokingly and half-seriously brought up the matter to President Gage, but the subtext was always that he could handle it, it was just a bit troublesome.

Mr. Gage casually provided a perfect solution, allowing Livingston Trust Bank to make its first transaction by directly lending money to Livingston Food Company to pay for the grain.

Such seemingly related-party transactions, in the United States at that time, would not arouse suspicion from business partners or customers, nor would they cause any other trouble, as long as they went through objective and reasonable procedures—because financial regulatory agencies did not yet exist!

This was a win-win solution, allowing the trust bank to "open for business and generate its first major transaction" while also ensuring that Larry actually repaid the money for the grain.

Most importantly, the trust bank can also obtain financing through internal financing channels of financial institutions, allowing it to complete this substantial loan without having to use much of its own capital.

It was an absolutely brilliant idea, but for the elite of the American financial world, it was just basic operations. Mr. Gage didn't even think that Larry should pay for his idea; it was just a casual suggestion from a "kind senior" to a junior.

But this one move really solved Larry's big problem!

Once the governor officially takes office next year, he will receive an additional $130 million in food subsidies.

Speaking of trust banks, Larry was also pleased with the governor's and Mr. Kennedy's approval—especially after learning that Mr. Gage had agreed to help.

When Larry helped establish Livingston Trust Bank, the two bigwigs said without hesitation that they didn't want money but wanted to invest in Larry's bank.

Of course, the previous agreement remained valid. The two planned to transfer 20% of their profits, totaling $130.4 million, to Larry. Adding to this the additional $268,008 that Larry advanced himself, the final shareholding structure of Livingston Trust Bank was:

Larry Livingston's investment was $13783015.5. This included a 20% profit share for both of them, totaling $130.4.

$26, plus Larry's $8008, "rounded up" to give them a 68.92% equity stake.

The governor and Kennedy each contributed $3,108,492, each accounting for 15.54%.

Larry's money also had to be rounded down from $268,008 to $1,090,500.

Another point worth mentioning is that Larry initially thought he would have to pay a lot of money to the IRS, but after inquiring, he learned that at that time, the main taxes levied by the US federal government were sales tax and customs duties. In the US, there was no concept of capital gains tax; Larry's stock and futures trading, as well as his equity transfers, were not subject to taxation.

During the American Civil War, the U.S. federal government briefly levied personal income tax, but stopped levying it soon after the war.

Instead, in the long wheat delivery on the Chicago Mercantile Exchange, a small sales tax is levied, but it doesn't really matter to Larry.

At this time, big capitalists engaged in unrestricted mergers and monopolies, and were exempt from various taxes. Our revolutionary predecessors were right—the Gilded Age was truly the golden age of "monopoly capital"!

Besides the money in the account, Larry also had a considerable amount of cash on hand.

In St. Louis, Larry earned a total of $2.2 in profit from Dolan and Taylor, not including the $500 he returned to Mr. Dunbar and the expenses of his friends; later, at Taylor's betting shop in Chicago, Larry earned another $13580 with $5000.

Aside from the expenses of the past few days, the money spent on church renovations, and travel expenses for individuals traveling to five major cities in the Midwest, Larry once had $3.4 in cash on hand.

However, Larry later paid a total of $5000, including the $2000 deposit he had previously paid to Debs and the wages and benefits for the workers in the last week. So now Larry actually has $2.9 in his hands.

This money was very important because Larry wanted to reward the brothers who had come to Chicago with him.

On Saturday evening, Larry gathered his six friends at an Italian restaurant for a feast. After drinking and chatting, Larry called Dunbar over and pulled out a wallet full of cash.

Give them money, and it has to be in cash! Because numbers in a bank account don't have the same impact as cash.

The two Italian lads were each given $1500, for a total of $3000.

Tiger Brady and Rattlesnake Cole each received $3000, totaling $6000.

Finally, Mr. Dunbar and Matthew, the two core members, will each receive a reward of $5000, for a total of $1!

Larry still adheres to the principle of "giving more and giving enough at once" in awarding prizes, giving the full amount all at once.

Furthermore, when Larry distributes bonuses, he always explains the recipient's contributions to the operation in person.

Give them full recognition.

Of course, everyone reacts differently after receiving the money.

The two Italian lads' hands were trembling slightly. They had worked with Larry in New York before and knew that following "the boss's boss" would definitely bring good things. But even after receiving the $1500, their hands were still shaking. This amount of money might not be much to the wealthy, but for them, it was enough to allow their families to live well for a few years or to buy a small house in a nice neighborhood in Boston.

Marco blushed, bowed awkwardly but with utmost sincerity, and thanked Larry repeatedly in slightly accented English.

When it was Tiger and Snake's turn to be the two bodyguards, they were noticeably more composed than the younger men, but a sharp glint flashed in their eyes as they looked at the prize money.

As Brady took the money, his feet instinctively tapped, and he gave Larry a slight nod of thanks with an almost military salute. But Larry could see that his hands were tightly gripping the dollars, the veins on the back of his hands bulging, clearly indicating that he was also experiencing inner turmoil.

As Cole took the money, his fingers deftly twirled the banknotes, listening to the pleasant rustling sound they made near his ear. He grinned, revealing a smile that was somewhere between sincerity and slyness. "It's my pleasure to serve you—please call me again if there's another good job like this."

Dunbar chimed in, "Don't spend all your money on bars and women's bellies—leave enough for your wife and kids first!"

Cole smiled and nodded, but made no promises.

When it was Matthew and Dunbar's turn, the two of them maintained their own style.

Dunbar said seriously that he hadn't done anything! He had just accompanied Larry on a trip to Chicago, hadn't even broken a sweat, stayed in nice hotels every day, had good food and drinks, and occasionally did some information gathering. He didn't deserve any "bonus" at all.

But Larry firmly stated his position: you have to accept it whether you want to or not!

Your potential value is far greater than your apparent value.

Besides, Larry also had his own selfish motives—his true security core was Dunbar, this lonely, honest old security guard who was responsible for half of his life.

How could one be stingy with money when it comes to such a close person? Even Emperor Zhu Yuanzhang of the Ming Dynasty knew this – one could beat or kill anyone, but one could not scold the cook.

Matthew looked uncomfortable when he took the money. Of course, it wasn't that he thought it was too little, but he had his own reasons.

"I want to learn from you—how to trade!" Matthew said softly.

Larry forced a smile. "What? Don't want to make guns anymore? Didn't you used to think firearms were much more important?"

Matthew shook his head and said, "It's not about the money, but about the enjoyment I find in the process of exploring, gathering clues, drawing conclusions, and putting them into practice—I suddenly realized that life doesn't necessarily have to be just one path."

"There are many options! But you have to get married first. Miss Winthrop has been waiting for you for a long time!" Larry laughed and patted his elbow. "You need to hurry. Girls in Boston are very conservative, and not many are open to Mormons. As long as the stock market stays open, you might miss out on a good girl—"

Matthew's face flushed slightly.

Larry chuckled and whispered to him, "—No rush, let's go back and draw the candlestick charts first. Our chance is next year—"

After the bonuses were distributed, Larry leaned back in his high-backed chair, his gaze sweeping over each face—excited, complex, and resolute—due to the huge sums of cash and the straightforward recognition.

"The money you received is what you deserve. As for the activity funds previously given to you, whatever amount is left," he paused, then said clearly, "it's all yours. I won't ask about a single penny."

"I brought you to Chicago not to share failure, but to share victory." Larry's voice echoed in the quiet room, calm yet carrying an irresistible force. "This is just the beginning. Our path isn't on this exchange, nor is it limited to the docks of Chicago. Use this money wisely, settle your families, and get your bags ready."

"Gentlemen, this is just the beginning! Follow me, and together we will build a kingdom that belongs to us." Larry held up...

Raise your glasses, "Cheers! Everyone!"

"Cheers!"

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