The organization of the Securities Exchange Company was a very simple matter. In those days, there were no blue-sky laws to contend with. Not in Massachusetts, at any rate. Because the socalled Securities Act was not enacted until 1921. Which, by the way, insofar as I was concerned, was like locking the stable after the horse had been stolen.

Simple as it was, the matter of organization presented a few minor problems. A corporate form was out of the question. I did not know how to draw up the articles of incorporation. I did not care to take the usual run of lawyers into my confidence. Those I might trust, I couldn't afford. Those I might afford, I couldn't trust. Then, the incidental cost of the corporation was more than I cared to incur.

Since I had decided not to operate under my own name, a partnership was found to be the only alternative. After a little study of the situation, I found it inadequate. Desirable partners were beyond my reach. Undesirable ones, I did not want. There was nothing left for me to do, but to devise some new form of organization. Something that would fill the bill and cost no money. A "partnerless" partnership was the outcome.

The legal status of such a partnership may be a debatable question. However, that point was never raised during the litigation that followed the collapse of my venture. The Securities Exchange Company was treated as a "one-man-company". Evidently, it must be technically possible at law for a man "to keep company with himself". Honestly, there are more freaks at law than in a dime museum. And they are not all on the bench, either.

When an obliging clerk at the Boston City Hall furnished me with the necessary registration blank, I discovered that I was required to fill in the names of the various members of my company. I put myself down as manager. So as to gain time. And do some quick thinking. Had I hesitated, what would the clerk have thought?

The name of John S. Dondero came to my mind. He was my uncle by marriage. A reputable man. The registration was only a formality after all. I did not anticipate any consequence. So, I put him down as one of the partners. Confident that he would never know. If he did, I could explain the unauthorized use of his name.

The second name which occurred to me was that of a man I had known in Italy. A man I thought dead. But it developed later that the report of his demise had been "slightly exaggerated". Like Mark Twain's death. He was very much alive. Not knowing that, I put his name down with a chuckle. He, at least, would never know or care!

That was my conception of a "partnerless" partnership. A most ideal form of organization. Silent. Unobtrusive. Yet, sufficient to cover the law. Had I known then what was to come, I would have made it still more ideal. By putting another dead man in my uncle's place. That would have saved him a lot of undeserved trouble. And given me greater security. Dead men cause no dissension. Neither are they reached by court writs. Nor cited for contempt.

The Securities Exchange Company began its business career under the most favorable auspices. True, it had no capital. But it had no black eye either. And no liabilities. For a wonder. The total cost of organization had set me back a trifle. Only about the price of three and one-third packages of cigarettes and a coupon for the same price.

After the registration, my company was officially existent. But that was about all. It had an address. Some furniture and equipment. But no letter-heads and other essential stationery. I still needed about 50 bucks to be actually ready for business. With a budget showing a steady deficit, like the national budget. I could not have saved fifty dollars in fifty months. In fact, I couldn't have lasted that long, anyway.

Things looked bad. It seemed as if there were no fifty dollars in the whole of Boston. Except, perhaps in some of the big banks where they generally have on hand at least fifty bucks. To make matters worse, some of my creditors began to pester me for installments due, past due and over-due. I couldn't plug a hole fast enough that another one would spring a leak. It was the most diuretic situation I ever met with.

One of the creditors made his appearance quite regularly. He was a furniture dealer from the North End. His specialty—everything in household goods for newlyweds. From non-squeaking bedsprings to rolling pins. I owed him for my office furniture. Some white-pine desks and chairs they had palmed off on me for quartered oak.

He was in an ugly mood when he called that day. But for his size, he might have looked dangerous. Since he was only a little runt, like me, I didn't get alarmed. I invited him to sit down and he hesitated.

"For the love of Mike, sit down!" I urged him. "That chair is still yours and won't place you under any obligations."

He sat down and started to pull some papers out of his pocket. Mortgage, bills, receipts, and so forth. I waived the presentation of the evidence. None was necessary to remind me of what I couldn't forget. Namely, what I owed him.

He was determined to get some money out of me that day. Either that or the furniture. The money was not worrying me. I didn't have it and that settled it and he couldn't draw blood out of a turnip. But I didn't want to lose the furniture. The idea of having to sit on the window sill, did not appeal to me at all. I am sort of funny that way.

I had to capitulate. Having no cash, I offered him the next best thing to it. A promissory note.

"Of what good is your note to me? he asked with a certain inflection of contempt. "I have your mortgage now."

"I know you have," I told him, "but this is something else. Listen." I kept on trying to be convincing, "I am going to make you a proposition, but first you have to answer me a few questions. You have a bank account, of course?"

"I have," he admitted.

"Is your credit standing at the bank good enough so that you can discount some notes now and then?"

"It is," he answered.

"Would you have any trouble in discounting, let us say, a 200 dollar note?" was my next question.

"No I don't think so," he said.

"Well, now," I insisted, "if I should give you a 60-day note for 200 dollars, you could take it to the bank and get your money on it, couldn't you?"

"I could," he acknowledged.

"All right. Not then, if you could apply that money, or any part of it, to the payment of my bill, it wouldn't make a particle of difference to you where the money came from, would it?" I pressed on.

"No. Of course, not. So long as the note was paid at maturity," he conceded.

"Exactly. Now, my proposition is this," I stated. "I will give you a 60-day note for $200. You will discount it at your bank and credit my account for $100. The balance you will hold at my disposal. I will draw against it as I need."

"You will have to show me first how you are going to take that note up at maturity," he said.

"Certainly," I agreed. "I shall do that right now."

For the next fifteen minutes I talked to him on international reply coupons. I gave him the whole story. From the treaty of Rome in 1907 to date. I showed him a coupon. Told him to keep it and exchange it at the post-office. I made him read the United States Official Postal Guide at page 37. Then I explained to him to him the market quotations on foreign exchange. In other words, I gave him the works. And when I got through, he was entirely sold on the proposition. He accepted the note.

Incidentally, my only agreement with him was to redeem that note at maturity with the usual interest. I kept my part of the agreement. Not only had I redeemed that note, but I also settled his bill in full. And dismissed the matter from my mind.

Five months later, out of a clear sky, I found myself the defendant in a million dollar suit brought by the same fellow. On the strength of that promissory note, he claimed a half interest in the Securities Exchange Company. He sued. And it cost me $50,000 to get out of it. But, more of this later.

With sufficient money for the printing of stationery and other minor expenses, I completed my plan of operation. I decided to borrow from the public at large. In amounts from $10 up. Against the promissory notes of the Securities Exchange Company. The proceeds were to be used in the purchase of coupons. The notes were to be payable in 90 days and carry a 50% interest. Actually, I adopted the practice of taking up my notes at 45 days from date. Thus paying interest at the rate of 400% a year.

The moment I found myself equipped for business, I began to look for investors. Calling here and there. Talking about my company. Its notes. The coupons. But never really soliciting investments. I knew that curiosity would eventually lead to further inquiry and to my office.

In fact, one day I had a caller. My first caller. He had heard about my proposition and wanted to know more about it. I told them all there was to know.

I can't say that he was convinced by my representations. He understood the thing, allright. But he appeared more impressed by the 50% feature than by the technique of my plan. Evidently, he was no "connoisseur" of art. I could see from the expression on his face that he was doing some mental figuring. Probably, pyramiding some imaginary investment. Whatever passed through his mind left him enough caution to resist temptation. He did not invest. Said he could not afford it.

The realization that I was about to lose my first sale, and with it, probably a certain amount of confidence in myself, urged me to offer him an agency. It was a brand new idea. The result of impulse. Rather than of sober consideration. But impulse and nerve constituted then about nine-tenths of my assets.

When I told him that, by explaining my proposition to his friends, he could earn a ten-per-cent commission on whatever money they might invest, he accepted the agency. I gave him no credentials. He needed none. But I gave him a one-lesson course in salesmanship and psychology. He needed that. Especially, in view of my new ideas on the subject.

I had a good thing. There was no doubt in my mind about that. Being a good thing, it needed no high pressure salesmanship. No unnecessary stress upon its advantages. I was selling my dollars for 66 cents. That's all there was to it. And they were good dollars. Any attempt to force them upon a prospective investor would have been to create suspicion, rather than confidence. Therefore, I told him that, in order to be successful, he should never crowd a prospect. Never go beyond the mere details of the coupon transaction. Once those were grasped, people could not fail to invest.

And they didn't fail. Later events proved I was right. That I knew human nature. That I was a better salesman by instinct than others by training. In those days, any proposition connected with foreign exchange was more popular than a gold mine. I counted upon that to obtain attention. To give me an opening for further details. The 50% feature would have done the rest. It would have struck a responsive chord in the heart of every man and woman. And it did. Because we are all gamblers. We all crave easy money. And plenty of it. If we didn't, no get-rich-quick-scheme could be successful.

My proposition was decidedly tempting. Apparently, fool proof. It could be tested with a ten-dollar bill. It might have looked economically unsound as an investment. But it was extremely attractive as a gamble.

People gambled with me as I thought they would. They gave me ten dollars as a lark. When they received fifteen at the end of 45 days, all sense of caution left them. They plunged in for all they were worth. They brought their friends along. The legion of my investors grew by leaps and bounds. Each satisfied customer became a self-appointed salesman. It was their combined salesmanship, and not my own, that put the thing over. I admit that I started a small snow ball down hill. But it developed into an avalanche by itself.

My first salesman was the snow ball. Up to January 1, 1920, he rounded up exactly 18 investors. For a total amount of $1,770. The snow ball had started its way down hill. It gained momentum when, about the second week of February, I paid to my early investors $2,478 on their original investment of $1,770.

From then on, the number of investors grew rapidly and steadily. By the end of July, there were exactly 30,219. They held notes of the Securities Exchange Company for nearly $15,000,000. The snow ball had attained the proportions of an avalanche. Which might have travelled much further before striking bottom. But for my own excess of confidence in men and fate. And caused a different story to be written.