In macrocosm, cattle financing formed a well-structured pattern. In microcosm, the individual solutions reveal an imaginativeness that defies compartmentalization. The financial histories of three firms, the Lea Cattle Company, the Day Cattle Company, and the Lance Creek Company, illustrate a few of the highly original responses which cattlemen made to the challenges of cattle financing.
Captain Joseph Lea was born in Tennessee in 1841, served in the Confederate Army, and came to New Mexico in 1876. Attracted by the nutritious grasses in Colfax County, Lea decided to raise sheep and cattle. He gained inspiration from the activities of his neighbor, John Chisum, whose success in ruling the Land of Enchantment has become part of Western folklore. Lea soon began casting about for a partner with the means to finance his ideas. He did not have to look far before he found Horace K. Thurber, partner in the Thurber-Arbuckle wholesale grocery house of New York and the United States Steamship Lines, who had journeyed West to Fort Stanton in 1883. Stimulated by the land of the Chisums, Slaughters, and Waddinghams, Thurber had begun by purchasing a few sections of land. In association with John DeLany, post trader at Fort Stanton, he expanded his holdings: on April 23, 1885, the New York grocer and DeLany incorporated the El Capitan Land and Cattle Company for $300,000 paid-up capital.
In the meantime, Captain Lea had contacted Thurber and outlined his own proposition in forceful language. A month after Thurber and DeLany had filed the El Capitan papers, Thurber and Lea incorporated the Lea Cattle Company with $1,000,000 capital stock. Thurber, displaying all the symptoms of cattle fever syndrome, completed his investments that summer with a $250,000 stock subscription in the Arbuckle Post Percheon Ranch north of Cheyenne and a $10,000 investment in the Teschemacher and deBillier Cattle Company.
Under the Lea Cattle Company agreement, Lea sold 9,000 cattle to the company for $250,000, and Thurber agreed to invest another $500,00 in cattle and $250,000 in obtaining water rights, land, and surplus for operating capital. Captain Lea's aggressiveness in procuring water rights was tattled to everyone by the Las Vegas Optic: "Captain Lea controls fifty miles of river frontage and numerous springs in Lincoln County. With Thurber's blessing, Lea spent company funds at top speed for digging irrigation ditches, planting grain, laying out the town of Roswell, and stocking more cattle. The unending flow of Thurber gold and Lea initiative were to create, as the Optic mellifluously termed it: "a Garden of Eden in what was already paradise."
Two years elapsed before Thurber attempted to call a halt to Lea's profligacy, although from the first year the drought combined with the sad cattle market put the Lea Cattle Company in a precarious state. Lea had a fundamentalist faith in the inexhaustibility of the Thurber millions; he deftly ignored the New York merchandiser's hair-raising communications to stop his drafts. In December 1886, Thurber fretted:
If Thurber's blunt tactics were devised to shock Captain Lea into recognizing the benefits of economy, it did not succeed. A more tempestuous exchange than the Thurber-Lea correspondence of 1888-9 would be difficult to imagine. Thurber had realized only two years of dividends on his entire investment in the New Mexico cattle industry. Sitting in New York watching draft after draft fall on his desk, irritated beyond coherent expression, Thurber erupted with a stringent series of letters. On June 19, 1889, he said:
The Christmas season of 1889 did not soften Thurber; on December 22 he sat behind his ornately carved walnut desk and wearily composed another letter.
The official end of the Thurber interests in New Mexico came with the drought of 1898, although the New York merchant had lost all personal concerns five years before, when he gave up the idea that he would ever recoup the fortune he had sunk in New Mexico. Since he refused to replenish the company's treasuries, both the El Capitan and Lea Cattle Companies limped along. Finally in 1898 the Lea Cattle Company went into liquidation; a year later El Capitan closed its books, and the Thurber name vanished from the shadow of El Capitan Mountain. Few men had sustained greater losses in the range cattle industry. Investing at the peak of the boom and having a prodigal partner-manager who was himself ignorant of the risks involved, Thurber was foredoomed to financial disaster. Of all his investments, only the Arbuckle PO Ranch near Cheyenne proved really profitable; there he recouped his investment and got a handsome dividend.
In May 1889, Captain Joseph Lea married Mrs. Mabel Day, the "Cattle Queen" of Coleman County, Texas. The Captain's bride was an amazingly resourceful young woman. The tale of her struggle to keep the Day estate intact after the death of her first husband in 1881 is unequaled for melodrama in the history of the cattle industry. The husband, W. H. Day, died intestate, leaving his widow and his year-old daughter a large but encumbered inheritance consisting of 77,550 acres enclosed by barbed wire; $33,000 worth of cattle on the trail contracted to his brother, James Munroe Day; and $2,000 in an Austin bank. Against these assets, Mabel Day soon discovered that there were liabilities—first, debts of $35,000 and then, after a year when all the claims had drifted in, of $117,500—an astronomical figure to the widow. The chief debts consisted of sections in the Day pasture which were enclosed but not paid for, and claims of other cattlemen against the estate.
Unfortunately, Mabel Day had not only to contend with pressing claims of her creditors, but also with the rapacity of her brother-in-law and her husband's former business associates. The first year and a half of her fight against these Texas cattlemen reads like a Victorian melodrama complete with Simon Legree villains in tooled boots and a beautiful heroine resplendent in a black lace dress. The astonishing fact is that the melodrama so closely corresponded to reality.
One of the first issues facing Mabel Day was an agreement for the sale of 1,800 yearlings which the administrator of her husband's estate, Mr. Driskill, made with her brother-in-law, James Munroe Day. If this contract was accepted, she stood to lose $9,300, the difference between a higher bid and that of her brother-in-law. After her vigorous protests were ignored, she resolved to borrow the money to pay off Driskill and have the court appoint her executrix of the estate in his stead. Neither step was easily accomplished. A James Taylor willingly consented to loan her the money, but in return he demanded a half interest in the Day cattle when all the claims against the estate were settled. Only after Mabel Day agreed topmost a bond of $150,000 did the court appoint her administratrix, and this left her in charge of her own destiny but of little else. She owed money on the estate to the predatory Texas cattlemen, and somehow she had to pay for the large amount of unpurchased land in the Day enclosure.
After weeks of mulling the problems over, Mrs. Day decided that the only way out was to sell her cattle. But to whom? Certainly not to the Texas gentlemen, who had plagued her at every step; in all her experience with them, she had always had the worst of the bargain. Finally she recalled the wealthy distillers in the bluegrass region of Kentucky, where as a girl she had attended the female academy, Hocker College, at Lexington. She wrote her former professor, J. M. Hocker, frankly stating her problem and requesting his help. Hocker, as he was now in the omnibus business, had obviously exchanged grooming young ladies for horses, a perfectly reasonable switch in Kentucky. In a long and garrulous reply, he predicted that he could and would assist her. Soon afterward, Hocker and William Tarr, a prominent distiller of Lexington, visited the Day ranch. In spite of the drought conditions, the Lexington distiller was impressed with what he saw. At the end of his visit Tarr told Mabel Day that he would have to discuss the matter with his associates, Ephraim Sayre, president of the First National Bank of Lexington, and George White, a fellow distiller. Upon his return to Lexington, Tarr wired Mrs. Day to come immediately to Kentucky to close the negotiations.
The three gentlemen agreed to organize the Day Ranch Company with a capitalization of $200,000. They consented to give Mrs. Day $75,000 immediately to settle the claims against the cattle, on her promise that when she gave title to the cattle they would be absolutely free of any obligations. Mr. Sayre had commented: "We don't want to buy ourselves any law suits." The agreement was struck, and the Lexington businessmen sent a lawyer to Austin to investigate the legal difficulties involved in settling the cattle claims. But these proved so severe that Judge Hunt, the Lexington attorney, did not believe Mabel Day could turn over the title to her cattle without the threat of a lawsuit. Consequently he advised his clients in Kentucky to void the contract. Faced with this new development, Mabel Day composed a diplomatic letter to Mr. Hocker, pleading for time to resolve her debts and asking his assistance in reopening the negotiations. She concluded: "My notes become due the 4th of August, five days off. Well, the darkest hour is just before the day."
Unable to find anyone willing to loan her the needed money, she left for New York City. On September 27, Mrs. Day exultantly reported to an old friend, Colonel Booth, a radical change in her circumstances: "I returned from New York with some money and succeeded in getting Mr. Taylor to settle for $41,915 cash. In doing that, the money I had gotten as an advance on my trade [the $75,000 from the Lexington associates] became available to me and I have succeeded in settling those large debts against my husband's estate and in closing the trade in Kentucky . . . first made."
Mabel Day did not have long to enjoy her triumph, for in Texas a fence war broke out in which large cattle corporations, especially foreign and Northern companies (one and the same in the eyes of many Texans) had miles of their fences torn up. Exasperated by her newest trouble, Mrs. Day told Colonel Booth, "I own all the land within its enclosure and if I want to let 'Northern capitalists' come and make fortunes in a few months or years, it is my affair—not Governor Ireland's." The fence-cutting war subsided in 1884, leaving Mabel Day with miles of fence to repair at a cost which, together with her personal obligations, totaled $29,000. She also owed final payments to the state of Texas for lands in the Day pasture. A newspaper reporter had summed up her previous successes with the phrase: "She emerges triumphantly, a free, independent and happy woman"; but reviewing her debts, Mrs. Day could only lament: "I still own better than $66,000 . . . that's a long way from being free and independent." She never achieved her elusive goal of emancipation from debt, although she always did manage to liquidate her most pressing obligations. Looking over her business affairs at the end of the fence war, she summarized her situation to Colonel Booth: "I hope you will not suffer uneasiness for I am bound to succeed. I will think of nothing else. I will go to the ranch and be so economical till I get out of debt." For the next twenty years she fought to retain her ranch, and at her death she left sizable holdings to her daughter and grandson.
Captain Joseph Lea was born in Tennessee in 1841, served in the Confederate Army, and came to New Mexico in 1876. Attracted by the nutritious grasses in Colfax County, Lea decided to raise sheep and cattle. He gained inspiration from the activities of his neighbor, John Chisum, whose success in ruling the Land of Enchantment has become part of Western folklore. Lea soon began casting about for a partner with the means to finance his ideas. He did not have to look far before he found Horace K. Thurber, partner in the Thurber-Arbuckle wholesale grocery house of New York and the United States Steamship Lines, who had journeyed West to Fort Stanton in 1883. Stimulated by the land of the Chisums, Slaughters, and Waddinghams, Thurber had begun by purchasing a few sections of land. In association with John DeLany, post trader at Fort Stanton, he expanded his holdings: on April 23, 1885, the New York grocer and DeLany incorporated the El Capitan Land and Cattle Company for $300,000 paid-up capital.
In the meantime, Captain Lea had contacted Thurber and outlined his own proposition in forceful language. A month after Thurber and DeLany had filed the El Capitan papers, Thurber and Lea incorporated the Lea Cattle Company with $1,000,000 capital stock. Thurber, displaying all the symptoms of cattle fever syndrome, completed his investments that summer with a $250,000 stock subscription in the Arbuckle Post Percheon Ranch north of Cheyenne and a $10,000 investment in the Teschemacher and deBillier Cattle Company.
Under the Lea Cattle Company agreement, Lea sold 9,000 cattle to the company for $250,000, and Thurber agreed to invest another $500,00 in cattle and $250,000 in obtaining water rights, land, and surplus for operating capital. Captain Lea's aggressiveness in procuring water rights was tattled to everyone by the Las Vegas Optic: "Captain Lea controls fifty miles of river frontage and numerous springs in Lincoln County. With Thurber's blessing, Lea spent company funds at top speed for digging irrigation ditches, planting grain, laying out the town of Roswell, and stocking more cattle. The unending flow of Thurber gold and Lea initiative were to create, as the Optic mellifluously termed it: "a Garden of Eden in what was already paradise."
Two years elapsed before Thurber attempted to call a halt to Lea's profligacy, although from the first year the drought combined with the sad cattle market put the Lea Cattle Company in a precarious state. Lea had a fundamentalist faith in the inexhaustibility of the Thurber millions; he deftly ignored the New York merchandiser's hair-raising communications to stop his drafts. In December 1886, Thurber fretted:
Those cattle notes have got to be paid when due, and the heavy drafts you have been making on me have, as I fully explained to you before, taken all the money that I am willing to invest in Lincoln County, and I want to begin to get some of it back at as early a date as is possible.Annoyed and unrepentant, Lea volunteered to resign, but Thurber backed down, shaken by the thought of trying to run a cattle company from New York. Four days before Christmas in 1888, he was still speaking softly: "Captain, I have the greatest confidence in you—in your energy, honesty and earnestness, and I wish it were in my power to do all you ask of me." But upon receiving Lea's latest group of drafts a few days later, Thurber's confidence melted: "Won't you please tell me the cost you have in regard to your cattle . . . The reason I want this is, I wish to compare your expenses with those of other ranches, I have met so many people here who are in my situation."
If Thurber's blunt tactics were devised to shock Captain Lea into recognizing the benefits of economy, it did not succeed. A more tempestuous exchange than the Thurber-Lea correspondence of 1888-9 would be difficult to imagine. Thurber had realized only two years of dividends on his entire investment in the New Mexico cattle industry. Sitting in New York watching draft after draft fall on his desk, irritated beyond coherent expression, Thurber erupted with a stringent series of letters. On June 19, 1889, he said:
Now, my dear Captain, it is simply impossible; I cannot stand your drafts. I have told you over and over again that I have got to limit where I could go. I have told you that it was not a question of desire, but it was a question of necessity. I have advanced there to you about $800,00 in cash, and it simply is impossible for me to go any further. You tell me that a portion of this work is to be charged to you; suppose it is, that don't help me a bit. There is a large amount of back interest due me from you which I have not asked for, because I knew you could not pay it.Whether Lea was constitutionally unable to curtail expenses or whether he was too committed to be able to retreat is unknown. In any case, Thurber was far from satisfied. In late summer he sent Lea another letter, this time one of mixed sentiments.
Captain, you have gone against my wishes, and simply draw on me, and I have paid and paid until I can go no further; and now I must request you peremptorily to stop all improvements and stop at once, unless you want your drafts returned to you and you be obliged to raise the money there at one enormous rate of interest. . . .
Now my dear Captain, don't think that this is pleasant for me to say to you, but it is necessary for you will certainly have to get along on your own resources there. I must confess to my great disappointment at your going ahead as you have, when I told you for months past that there was a limit beyond which I could not go.
Now, Captain, I want to reiterate, and I want you to believe that I am fully in accord with you and I firmly believe that you have done the best you could. The very large amount of money that I have put down there and so much that I didn't intend to, has put me in such shape that I can't get away. I have simply got to stay here and keep things going so as to pay the money that I have had to pay on those ranches.Part of the Lea Cattle Company's financial difficulty was caused by Captain Lea's inveterate habit of undertaking gigantic improvements. Field and Farm carried an article in November 1889 describing the construction of a six-mile flume conveying water to the desert on the Lea ranch. The irrigated land was to be planted with alfalfa; the cost was reputed to be near $50,000. Earlier in the year, the same newspaper had given space to the Lea Cattle Company's extensive new ditching program which included the novel use of huge V-type scrapers, made to order in Denver. Each scraper, powered by fourteen horses, was to displace "several tons of dirt a day." Considering the magnitude of these expenditures, one can read Thurber's letters with some sympathy. Having already advanced well over three quarters of a million dollars, Thurber lacked rapport with Lea's ambition of "making this the best ranch in New Mexico."
The Christmas season of 1889 did not soften Thurber; on December 22 he sat behind his ornately carved walnut desk and wearily composed another letter.
I have your letter with bill of Messrs. Pow, Lea & Cosgrove, and it just astonished me. My dear Captain, you keep telling me that you will stop drawing and stop these big expenses and yet they keep coming, and I have to pay so much money that I do not know where to get it; and it simply must stop, Captain. Mind you, Captain, I am not blaming you, but I am only trying to impress it upon you that when you are getting $7 or $8 a head for calves a year old, you can't have the same expenses as when you got high prices for cattle.Tired of Thurber's acrimonious letters, Lea insisted throughout the 1890's that the only solution was for Thurber to buy his interests. Thurber just as stubbornly refused to do so, on the ill-founded logic that putting up with a spendthrift Lea was better than having a headless operation or than attempting to train a new manager. "In regard to buying you out, Captain, I haven't the slightest wish to do anything of the kind. How could I get along with that great big property?"
I would like to know to what account to charge these groceries. I would be very glad not to complain, but I simply can't meet your demands, and your improvements have got to go; you have got to let them go by, and I have written you this so many times and I am almost ashamed to write it again.
Now, Captain, to go back to one thing: you are paying the same prices you formerly paid for help and you are paying the same prices for groceries, now when cattle are down in price, that you did when they were high, and it would seem to me that some of you must come to grief (as I have said before), going on that kind of a scale; and either you have got to run your cattle at a lower rate of expense or else there is no profit in it; and it seems to me that all of you men will have to get together and simply put the price of wages down and have less average expense—and that is only a necessity.
The official end of the Thurber interests in New Mexico came with the drought of 1898, although the New York merchant had lost all personal concerns five years before, when he gave up the idea that he would ever recoup the fortune he had sunk in New Mexico. Since he refused to replenish the company's treasuries, both the El Capitan and Lea Cattle Companies limped along. Finally in 1898 the Lea Cattle Company went into liquidation; a year later El Capitan closed its books, and the Thurber name vanished from the shadow of El Capitan Mountain. Few men had sustained greater losses in the range cattle industry. Investing at the peak of the boom and having a prodigal partner-manager who was himself ignorant of the risks involved, Thurber was foredoomed to financial disaster. Of all his investments, only the Arbuckle PO Ranch near Cheyenne proved really profitable; there he recouped his investment and got a handsome dividend.
In May 1889, Captain Joseph Lea married Mrs. Mabel Day, the "Cattle Queen" of Coleman County, Texas. The Captain's bride was an amazingly resourceful young woman. The tale of her struggle to keep the Day estate intact after the death of her first husband in 1881 is unequaled for melodrama in the history of the cattle industry. The husband, W. H. Day, died intestate, leaving his widow and his year-old daughter a large but encumbered inheritance consisting of 77,550 acres enclosed by barbed wire; $33,000 worth of cattle on the trail contracted to his brother, James Munroe Day; and $2,000 in an Austin bank. Against these assets, Mabel Day soon discovered that there were liabilities—first, debts of $35,000 and then, after a year when all the claims had drifted in, of $117,500—an astronomical figure to the widow. The chief debts consisted of sections in the Day pasture which were enclosed but not paid for, and claims of other cattlemen against the estate.
Unfortunately, Mabel Day had not only to contend with pressing claims of her creditors, but also with the rapacity of her brother-in-law and her husband's former business associates. The first year and a half of her fight against these Texas cattlemen reads like a Victorian melodrama complete with Simon Legree villains in tooled boots and a beautiful heroine resplendent in a black lace dress. The astonishing fact is that the melodrama so closely corresponded to reality.
One of the first issues facing Mabel Day was an agreement for the sale of 1,800 yearlings which the administrator of her husband's estate, Mr. Driskill, made with her brother-in-law, James Munroe Day. If this contract was accepted, she stood to lose $9,300, the difference between a higher bid and that of her brother-in-law. After her vigorous protests were ignored, she resolved to borrow the money to pay off Driskill and have the court appoint her executrix of the estate in his stead. Neither step was easily accomplished. A James Taylor willingly consented to loan her the money, but in return he demanded a half interest in the Day cattle when all the claims against the estate were settled. Only after Mabel Day agreed topmost a bond of $150,000 did the court appoint her administratrix, and this left her in charge of her own destiny but of little else. She owed money on the estate to the predatory Texas cattlemen, and somehow she had to pay for the large amount of unpurchased land in the Day enclosure.
After weeks of mulling the problems over, Mrs. Day decided that the only way out was to sell her cattle. But to whom? Certainly not to the Texas gentlemen, who had plagued her at every step; in all her experience with them, she had always had the worst of the bargain. Finally she recalled the wealthy distillers in the bluegrass region of Kentucky, where as a girl she had attended the female academy, Hocker College, at Lexington. She wrote her former professor, J. M. Hocker, frankly stating her problem and requesting his help. Hocker, as he was now in the omnibus business, had obviously exchanged grooming young ladies for horses, a perfectly reasonable switch in Kentucky. In a long and garrulous reply, he predicted that he could and would assist her. Soon afterward, Hocker and William Tarr, a prominent distiller of Lexington, visited the Day ranch. In spite of the drought conditions, the Lexington distiller was impressed with what he saw. At the end of his visit Tarr told Mabel Day that he would have to discuss the matter with his associates, Ephraim Sayre, president of the First National Bank of Lexington, and George White, a fellow distiller. Upon his return to Lexington, Tarr wired Mrs. Day to come immediately to Kentucky to close the negotiations.
The three gentlemen agreed to organize the Day Ranch Company with a capitalization of $200,000. They consented to give Mrs. Day $75,000 immediately to settle the claims against the cattle, on her promise that when she gave title to the cattle they would be absolutely free of any obligations. Mr. Sayre had commented: "We don't want to buy ourselves any law suits." The agreement was struck, and the Lexington businessmen sent a lawyer to Austin to investigate the legal difficulties involved in settling the cattle claims. But these proved so severe that Judge Hunt, the Lexington attorney, did not believe Mabel Day could turn over the title to her cattle without the threat of a lawsuit. Consequently he advised his clients in Kentucky to void the contract. Faced with this new development, Mabel Day composed a diplomatic letter to Mr. Hocker, pleading for time to resolve her debts and asking his assistance in reopening the negotiations. She concluded: "My notes become due the 4th of August, five days off. Well, the darkest hour is just before the day."
Unable to find anyone willing to loan her the needed money, she left for New York City. On September 27, Mrs. Day exultantly reported to an old friend, Colonel Booth, a radical change in her circumstances: "I returned from New York with some money and succeeded in getting Mr. Taylor to settle for $41,915 cash. In doing that, the money I had gotten as an advance on my trade [the $75,000 from the Lexington associates] became available to me and I have succeeded in settling those large debts against my husband's estate and in closing the trade in Kentucky . . . first made."
Mabel Day did not have long to enjoy her triumph, for in Texas a fence war broke out in which large cattle corporations, especially foreign and Northern companies (one and the same in the eyes of many Texans) had miles of their fences torn up. Exasperated by her newest trouble, Mrs. Day told Colonel Booth, "I own all the land within its enclosure and if I want to let 'Northern capitalists' come and make fortunes in a few months or years, it is my affair—not Governor Ireland's." The fence-cutting war subsided in 1884, leaving Mabel Day with miles of fence to repair at a cost which, together with her personal obligations, totaled $29,000. She also owed final payments to the state of Texas for lands in the Day pasture. A newspaper reporter had summed up her previous successes with the phrase: "She emerges triumphantly, a free, independent and happy woman"; but reviewing her debts, Mrs. Day could only lament: "I still own better than $66,000 . . . that's a long way from being free and independent." She never achieved her elusive goal of emancipation from debt, although she always did manage to liquidate her most pressing obligations. Looking over her business affairs at the end of the fence war, she summarized her situation to Colonel Booth: "I hope you will not suffer uneasiness for I am bound to succeed. I will think of nothing else. I will go to the ranch and be so economical till I get out of debt." For the next twenty years she fought to retain her ranch, and at her death she left sizable holdings to her daughter and grandson.
Gene M. Gressley, Bankers and Cattlemen
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