Editor's Note: This is the fifth installment of the novel, The Battle for Nashville, which we're serializing every week on our Web site.
Joe Mudge loved the sound of the words so much that they had become his personal mantra, words so relaxing and so intimidating, so all-consuming and fear-inspiring and swift and just and terrible that he never tired of speaking them. "Death Spiral Preferred... Death Spiral Preferred... Death Spiral Preferred..."
Having dropped his loafers off at his secretary's deskthey were still coated in dark mud from the outing that morning on top of that silly hill where he had been trailing Trigg MoseleyMudge whispered the mantra to himself as he wandered down the dark halls of his latest real estate development. "Death Spiral Preferred... Death Spiral Preferred... Death Spiral Preferred." He walked across the chocolate brown, plush pile rug in a pair of black, alligator-skin cowboy boots that he kept in the trunk of his Mercedes sedan for moments when, instead of going directly home at the end of the day, he would go horseback riding at his farm further south of town. Rarely had he had an opportunity to do that recently, considering the pace of his business activity had been so fast, so hot, so urgent. But he didn't mind wearing the boots into his office building rather than the little Italian loafers he had been wearing on the hike. The paper-thin Italian loafers made him feel rich. But the boots made him feel like not wanting to take shit off of anyone.
At the same intersection 10 miles south of Nashville that had caused Sims Moseley to gasp, which was the same ever-widening exurb a mere three miles down the road from Darby Glen, Mudge had developed three office parks in a quarter-mile radius, the last of which was serving as his current base of business operations. The exurb itself was commonly known as Deerlick; Mudge's office buildings were called "Towne Center I, Towne Center II and Towne Center III." Each bore the same design: They were six-story structures with steel and glass skeletons that looked pretty much like any other exurban office building. But the Towne Center building architects had surrounded each structure with 28 mock-plaster, Georgian columns. His architects had explained that when people looked at his creations, they would be reminded of a Louisiana plantation. Mudge liked that.
Mudge had been in on the ground floor of Deerlick, and to have been present from day one of its incarnation was akin to having had a front-row seat at the birth of capitalism itself. To him, Deerlick was proof positive of the inherent beauty of the free markets; it was testament to what can happen when unleashed personal energy meets raw, unbridled opportunity. A mere decade ago, the first development dollars that had broken soil in the corn fields and pasturelands of Deerlick for a shopping mall in the middle of nowhere had, actually, been a bit risky. But when the mall began pulling in customers by the tens of thousands, the adjoining pieces of promising, virgin land became virtual no-brainers. In those early years, Mudge and others involved in the boom watched their investments flourish: the bulldozers plowed through the soil cutting fresh, brown grid works of roads and avenues, the steel and glass collected themselves into the sky, and the billboards and the neon signs and the cell phone towers and WIFI zones brought together all of this chattering and deal-making and conferencing and to-ing and fro-ing and made it all GO, GO, GO. One dollar became two, two became four, and four became eight. Thousands of people were flooding into Deerlick! They were coming from everywhere!
They were coming because there were wide, sweeping roads with cul-de-sacs leading to their brand new homes. Only a short, smooth drive away from these homes was every themed restaurant concept known to mankind. Important feature: Parking. Not just a little parking, but acres upon acres of rolling black asphalt poured by the ton and awaiting thousands of automobiles and their inhabitants. When you drove to wherever you wanted to drive in Deerlick, you never had to walk far after that. Deerlick had everythingthere was a Home Depot and a Circuit City, there was the mall where you went both to shop and to power-walk, and there was a little neighborhood swim and tennis club that let everyone in no matter who they were. If, when you were thinking of moving to Nashville, you wanted a half-million dollar house with five or six bedrooms and a great room for your plasma set and a good public school district for your children populated by children just like yours, then there was never any doubt where you would move. You would move to Deerlick.
It was all so new! Nothing-not the new-concept mega-gas stations with the aisles of DVDs inside or the 10-acre kids' recreation-plexes with the latest video-laser gun zones and climbing walls and go-cart speed tracks and in-line skate parks-was over 5 years old. It was all so brand, spanking recent that sometimes when people who lived in Deerlick went somewhere else, the world looked a little faded and ragged, disappointing even. Aside from a few pointy-headed land planners and environmentalistsand there really weren't many of them living in Nashvillefew people had stopped to reflect on what Deerlick was all about. In the short run, the place was selling, and the money controlled the civilization.
In the middle of this frenzy were developers and bankers from Houston and Dallas, Chicago and Boston, men and women who made it a point to paratroop into the hottest exurbs across the nation, one after another, to assess the prospects of what had most recently worked in test markets elsewhere. These were the front-line corporate troops, young men and women who could tell you where new roads were being cut across the country and where development was likely to explode. With his feet firmly planted in Deerlickhe had grown up only a mile awayMudge laughed as he saw these young troopers in their dark suits pulling up in their rental cars and doing business out of the new Embassy Suites. Whenever he ran across one of these troopers, he would tell them this story: "There's this old man, and he tells his wife, 'Honey, I'll see you later, I'm headed over to the pecker contest.' And she says, 'The pecker contest? Don't show 'em your pecker honey.' Then he says, "Oh, I'm only gonna show 'em enough to win the ham.' " Mudge would then howl out loud, seeing if the young trooper who had probably been to college and maybe even been to graduate school and had been dropped into lush, green, virgin Tennessee development country had even the faintest notion what he was talking about. Nine out of ten times, Mudge was shot back a look that said, "You, sir, are an idiot." But the moral of the story was this: "So long as you think I'm an idiot, I'll probably win the ham." That was how Mudge looked at the competition.
"Death Spiral Preferred... Death Spiral Preferred... Death Spiral Preferred...." The young troopers probably did not know what death spiral preferred was, and fact was a lot of attorneys in Nashville, even some of the brighter ones, didn't know enough to ward off their clients from signing an agreement that provided for Death Spiral Preferred. What Death Spiral Preferred could do, under the right circumstances, was eat its way through a company's capital structure and utterly annihilate it. Only recently had Mudge figured out how Death Spiral Preferred could come to play a role in real estate ventures in Deerlick. Only recently had he placed Darby Glen, which he reckoned to be a critical piece nicely situated at the edge of Deerlickís ever-advancing progression, in the crosshairs of Death Spiral Preferred. He had long coveted Darby Glen, even as a child. He prized it as more than just another development deal. Death Spiral Preferred might one day make it his.
The brutality of Death Spiral Preferred was something Mudge respected, but what made him love it was its legitimacyplenty of highly respected businessmen had gotten rich off of it. A type of stock, it was all perfectly legal and civil, universally respected by the codes of business in every state in the Union. That there was something as lethal as Death Spiral Preferred allowed on the playing fields of business in America made Mudge gleeful. Armed with it, Mudge knew he was impregnable. If someone did not understand that what they were signing provided for the issuance of Death Spiral Preferred when Mudge loaned them money, that was not Joe Mudge's fault. It was a free country. They could read. They didn't have to sign.
Walking from his building's hallway through the massive redwood doors of his office, Mudge sat at his desk and began tearing through the Styrofoam box that contained his lunch. He had ordered to-go in one of the eateries that populated Deerlickís restaurant strip. For some reason, all of the national chains had wanted to be near one another, which, frankly, made it convenient when you didn't quite know what you were in the mood for. As Mudge had driven down the so-called "Restaurant Alley" today on his way to the office, the various cuisine motifs had flown past his window. There was fried catfish served out of what looked like a Canadian hunting lodge; Cajun food dispensed in a ramshackle-looking shack with a tin roof; all-you-can-eat sushi housed in an ultra-modern stainless structure; and a 30-yard fresh pasta bar housed in a beige trattoria with a Romanesque fountain out front. Mudge had gone to Shark's: a San Diego-based seafood concept whose main attraction was its 45,000-gallon aquarium in the middle of the restaurant. Mudge loved the dolphin sandwich, fried.
Tearing open the plastic silverware, Mudge reflected: This is living. He had come so far. He had grown up only a five-minute drive away, down a dirt road, in a farmhouse that had seen better days. It seemed to him so long ago, a different time and space, another world altogether, when Mudge's hands had been greasy black and his only pair of shoes were steel-toed. Those were the days when he worked as a gas station attendant at the family-owned station. He remembered how his father had promised him back then that one day he'd become a mechanic if he worked hard. Mudge had looked forward to that day. Truth was he never had any intention of being a mechanic for the rest of his life.
By the age of 14, as Mudge was spending more and more time at the station, it might have appeared otherwise. Mudge had all but dropped out of school. His father had himself done much the same thinghe had quit school to work at a country gas station and general store. Later, his father had opened his own station, Mudge Motors. All of the Mudge family members were proud of how far the elder Mudge had comeowning one's own station was a huge deal. But even the elder Mudge knew his own accomplishments would one day be surpassed by those of his son. The Mudges were country people who not only serviced cars but made money in a variety of ways: selling summer vegetables, delivering firewood by the truckload, turning a used car for a profit. This was their lifeand it was always enough to get by. But whenever the prospect of generating money was held out to young Joe Mudge, you could see that it was not just about getting by. Whether young Mudge was fixing someone's transmission after hours or teaching himself to weld in the middle of the night, you could tell that to Joe Mudge it was about getting ahead. He flew to money like a bug to a windshield.
The location of Mudge Motors was ideal: It was out West End Avenue, past Vanderbilt University but before the old, wealthy subdivisions, an area clogged with motorists heading in and out of downtown. Mudge knew to keep an eye out for the rich clients. As a teenager, he knew that if he rushed to clean their windows, or filled their tires regularly, tips would come his way. Not only that, but when Fred Milton began coming in for a tank of gas, Mudge knew to cozy up to him for a completely different set of reasons.
Fred Milton was the president of Third National Bank. He was one of the pillars of the business community, a member of the Vanderbilt Board of Trust, and a figure in national Republican Party fundraising circles. Like clockwork, Milton drove to Mudge Motors every Thursday at 6:30 in the evening to fill up his car. Mudge would always keep an eye out for him. To service someone as important as Fred Milton, someone as revered in the Nashville business world, the world of money and riches, was an absolute honor. Inasmuch as the station closed at 6:30, right about the time Milton was usually driving in, Mudge would spend a little extra time going over Milton's car. One week he would check the power steering fluid. Another he would examine the brakes. For reasons that Mudge to this day still did not quite understand, Milton was always happy to dawdle at the gas station and spend a few extra minutes discussing his car. As the weeks went on, they weren't talking about Milton's car at all.
The Thursday get-togethers soon became all about Milton and his life in business. Milton seemed to enjoy having the audience of a grease jockey; he noticed fairly quickly that this young Joe Mudge absorbed what he had to tell. "Listen to me close," Milton said, plopping himself down in an old, rickety chair in the dismal, little garage, his only audience a kid covered in grease. "I ain't proud of what I've done, but it's worked."
It was like throwing metal filings at a magnet. Every single fact, comment, statement, stuck hard on Mudge. To that point, Mudge's life had been simple obligationsminding his father, doing chores at home, and learning the right way to screw on a muffler. But with each successive Thursday, the world as much as cracked open to reveal a pot of fabulous riches in its interior. He learned about deals cut in boardrooms and plans for new businesses. He heard about arguments that had raged in the bank's loan offices or plans to foreclose on someone's property. It was a world of which Mudge knew nothing, a place in the universe he had stumbled upon for the first time.
Mudge learned about the life of a bank president in those days, its ups and downs. Milton told him that contrary to what most people thought, bank presidents didn't make a lot of money. But he said there were plenty of ways to cut deals on the side to make him rich. Milton explained to him that much of banking was a dreary affair involving a lot of sucking up to people whom he ordinarily would not want to be kind to. On the other hand, banking afforded a glimpse into places where ordinary people could not look. Milton explained to Mudge that he had a pretty good guess as to every Nashville family's financial status; he knew when the husbands died, how the trusts would take care of the wives and children and whether the bank would control the trusts. He knew who was in trouble and was much worse off than they looked, and who, on the other hand, still drove a 15-year-old car despite sitting on a fortune. From a bank, Milton explained, came power and knowledge. The trick was in exploiting those circumstances in order to get rich.
Milton explained to Mudge how he, himself, had gotten rich, not that he was especially proud of it even though it was all perfectly legal. He explained that if a deal came to the bankan especially attractive loan proposition for instancethat sometimes the loan committee would kill the loan application because of a simple technicality. Often, when this happened, he would take the loan applicant aside and tell him that the loan was not "bankable." But if, perhaps, the person would like to apply for a loan from Mr. Milton's private venture capital company, then something might be able to be arranged.
"If the bank won't be the bank, then you become the bank," Mudge had concluded as Milton explained his strategy.
"You got it," Milton said. "I became the bank."
Actually, Milton's wholly owned financing arm was called Cumberland Enterprises. Milton explained that after Cumberland Enterprises was founded, the loan committee began to sense which deals Third National might better handle and which Cumberland Enterprises should finance. Contrary to what one might think, it was often the more controversial deals that headed to the established bank. Because of its size, the bank could handle the risk of a controversial deal. But often it was to Cumberland where the no-risk ventures went. The loan committee, which was stacked with many of Milton's friends from childhood, his college buddies and business associates, was more than happy to find a technical bugaboo in the no-risk project. With a wink and a nod, they would explain that, unfortunately, a problem had arisen, but that Cumberland Enterprises might be more than willing to help them. Fred Milton was the man to see.
As he was introduced to this absolutely legal but highly politicized and vague world of finance Mudge soon learned about collateral. Collateral, he was shortly instructed, was all. "Look kid, if I give you $100 on behalf of Cumberland, you gotta promise to give me something if you can't pay me back." Mudge understood that. "I might want you to promise to give me your house if you can't pay me back. Better yet, I might want your business. Now you can write that collateral agreement in any way you want. But the best way to cut a deal is first of all to destroy the person's ability to pay the loan back. That way, you're guaranteed to get something for nothing."
Mudge's eyes grew huge at the thought of it all. So evil and yet so permissible. When he listened to Milton, he could taste the money in his mouth.
At the age of 17, Mudge's father died. Without batting an eye, he bought the gas station from his mother and siblings. As it turned out, Milton financed the deal. Fixing cars went nowhere, Mudge knewthe profit was bigger, but the headaches were immense and good mechanics were hard to come by. Better to sell gas, lots of it, across the city and the state. Better also, to sell food. And so, as the interstate system carved its way across the United States, Mudge Motors became Mudge Country Kitchen and Gas. When it went public with some 560 stations and full-blown convenience stores from Richmond to El Paso, the public equity markets netted Mudge $340 million. As for Milton, he hadn't entirely gone away eitherCumberland Enterprises had taken an early stake in the venture. It had made $20 million simply by guaranteeing $2 million in debt. Mudge knew Milton had made out like a bandit. But he harbored no resentment. He remembered something Milton had once told him: "Only an amateur worries about what the other guy gets." In other words, just worry about yourself. Self-interest in business is everything.
Once his company had gone public, Mudge stepped down from day-to-day operations of the company. He hunted around for a while, looking at deals, playing the stock market, before deciding to make his next base of operations in Deerlick. There, he sniffed a coming wave. There, he knew, another fortune could be made. After completing construction of his Towne Center buildings, and according to plan, Mudge filed the necessary regulatory papers and hung a shingle on the front door of Town Center III. It said: "The Bank of Deerlick, Joe Mudge, Chairman." If Milton had done it, Mudge reckoned, then so could he.
One day 77-year-old Fred Milton decided to drop in on Mudge down in Deerlick, in part because he wanted to see what all the fuss was about down there in the city's new, booming exurb. Milton was pretty much horrified by everything he had seen. Some of his friends had sold their farms nearby and he regretted seeing them developed. As well, he just thought so many of the huge homes were gauche, outsized, in poor taste. That day, nevertheless, Mudge had offered him 10 percent of his new bank at an attractive price. Milton had delivered him a check within an hour. He knew he would never regret the investment. Little did he know.
COPYRIGHT 2004 BY BRUCE DOBIE.