Edwin had felt the call of nature. He walked a little distance from camp and urinated. As he did so, he couldn’t help noticing a peculiar black boulder that had clearly rolled into the valley floor from the slopes above. Being a man and a miner, he idly swung his pick at the stone, thinking no more than that stones were there to be hit and picks had been made to do the hitting. He struck the stone. A chipping flew off and glinted. The rock was – or seemed to be – loaded with gold.
The Morgan brothers believed they had almost literally stumbled on a mountain of money, but they knew they needed help. Legal help, to stake a robust claim. Financial help, to bring capital to bear in exploiting the find. Technical help, to extract rock from the mountain and gold from the rock. Commercial help, to sort out hiring and transport and markets and sales. Their first stop had been the bank, the second stop D’Arcy’s office. (And perhaps it’s worth noting here that there are various different versions of the story in circulation, though the gist of them all is the same.)
Now for just a moment, stop there. Had you been sitting at D’Arcy’s desk that day, gazing out at a dusty street, hearing a commotion outside in the anteroom, seeing these three unconventional clients enter your office, listening to their tale and fingering a tiny chipping of black and gold stone – what would you have done? What would you have said? How would you have proceeded?
Let’s be realistic. At a very minimum, you’d have noticed that you had the scope to charge your services at premium rate. There weren’t so many lawyers in Rockhampton and these three clients were in no position to haggle. If the ore in the rock was gold, then these clients would pay you, and pay you royally, for your legal expertise. That kind of reasoning, however, is amply consistent with being slave to the Toad. No one will pass up a little extra cash, if they don’t have to put anything at risk. So you charge your time at a premium rate, but what else? Do you commit significant time and energy to the project, unsure of whether you’ll receive a penny in exchange? Do you put some of your own money into it and if so, how much?
To answer the question accurately, you need to be careful about details. You are not wealthy. You have a young wife to support. Your start in life accustomed you to a high standard of living and in Rockhampton, Queensland, cash is hard to acquire and easy to lose. I suggest you would do roughly what I would do. Be interested, but evasive. Seek out as many facts as I could, knowing that time is always ticking by and that my main advantage lies in having been just the fifth person in the world to see and handle that little black stone. I’d talk with my wife. Discuss our own capital position, how much we need for the baby, how much we need for our security. Identify a sum that we can afford to gamble. Find a balance between maintaining a regular weekly income and investing time in a scheme that might be hare-brained or might be the best thing we ever did.
I’d speculate, but sensibly.
That’s not how D’Arcy did it. He went in big. Huge. Together with two Queensland entrepreneurs, Thomas Hall and William Pattison, and the miners themselves, he formed a syndicate. The Morgan brothers contributed their mineral rights; the other three would provide a crushing mill for the extraction of the gold. D’Arcy didn’t have huge funds at this point, but he threw his all at the project. He gambled. His future. His wife’s future. Their baby’s future. Everything.
We know this story for one reason and one reason only. The bet paid off. The hill from which that black boulder had tumbled – Morgan Mountain, as it became – was truly a mountain of gold. The entire six man syndicate made a fortune, but D’Arcy made himself richest of all. He returned to England one of the richest men in the world. At its peak, and in present day terms, his wealth ran to several billion pounds. He bought a grand home in town and a magnificent country estate. After his first wife separated from him and then died, he married again and entertained on a prodigious scale.
Character and a moment of risk. Three rough men and a wild story. The spin of a geological wheel. A dazzling outcome.
But perhaps you’re not convinced. You’re there in that Rockhampton office, gazing out at that dusty street. Perhaps you would have gone in big. Perhaps anyone would. Perhaps it’s got nothing to do with character, just a question of being in the right place at the right time. A matter of luck, not temperament.
You might think so, but I haven’t played quite straight with you. There’s more to tell. D’Arcy was a gambler. A provincial solicitor in back of beyond Queensland doesn’t generally have much cash at his disposal. That D’Arcy had enough to make the investment possible at all was because he had already speculated, heavily and successfully, in land. He only possessed the means to bet on Mount Morgan because his appetite for such bets was already strongly evident.
Move the clock forward to the young man’s triumphant return to London. He had no financial need to stake anything on anything. He could have bought art, wined and dined, moved in society, held balls, indulged whims – done whatever he wanted. Yet horses and the racetrack still fascinated him. There were only two private boxes at Epsom race course. He owned one and the Queen owned the other. The thunder of horses’ hooves did what the clatter of a miner’s pick had once done. He needed risk to feel alive.
And one last thing. The main thing. The reason why D’Arcy is an important name and not merely a colonial chancer who came good. In 1900, an emissary from Persia came searching for ‘a capitalist of the highest order’ to invest money in the hunt for Persian oil. The geology was favourable. The oil business had already made fortunes for Rockefeller in the United States and for Marcus Samuel of Shell in Britain. The idea wasn’t crazy and D’Arcy was interested.
Twice already, he had spun the wheel. In land first, then in gold. The horse racing in Britain fed a compulsion but hardly offered stakes large enough to satisfy a gambler’s spirit and Persia offered the largest stakes of them all. A businessman, a real one, the kind used to managing complex corporations and large capital investments, might have looked harder before leaping. D’Arcy certainly made a show of thinking hard. He enquired after the geology, he ordered maps and took advice; but the badness of the advice he was given suggests that there was only one answer he’d ever have accepted.
From the Shah of Persia, he purchased a sixty-year concession to search for oil. The cost was £20,000 up front and a further £20,000 worth of shares in the venture. The cost of the bribes spent to gain the Shah’s agreement was more again. Even the eunuch who brought the Shah his morning coffee got his baksheesh. The cost of drilling two exploratory wells was estimated at £10,000. Real money, even for a prodigiously wealthy man.
His advisers, however, did not spend much time discussing the cultural complexities of the region: the Shiite hatred for political authority, for Christian interlopers, for foreigners. They did not pause to take account of certain technical challenges: the entire country boasted only a few hundred miles of road; the territories which looked most promising for oil lay across wild and mountainous countryside; and the local labour possessed so few technical skills that few of them had even seen a hammer. They did not allow much of a contingency reserve for the mounted tribesmen who would sweep down from the mountains demanding gold to protect the incomers from bandits – that is to say, from themselves. They did not make full allowance for the fact that Persia was so far away from anywhere with anything that the nearest dentist was to be found in Karachi.
When D’Arcy’s men came to drill, the cost of those first two wells was more like £200,000 than the £10,000 predicted. The venture bled money. Drilling started in 1902. In extremely challenging conditions, the equipment continually broke down. As early as 1903, D’Arcy’s overdraft stood at £177,000, or a few tens of millions of pounds in today’s money.* His bankers had demanded shares in the Mount Morgan mine by way of collateral and, to make matters worse, those shares had fallen to about one eighth of their peak value. Tough times on Easy Street.
Then, in 1904, relief. The drilling team struck oil. The would-be oilman used the news to scour Europe and the United States for new investors, but the well, that had started so promisingly, ran dry. He was advised to shift the exploration effort miles to the southwest. His overdraft grew still further. His bank started to demand the concession itself as collateral. Everything seemed lost.
As things