Fifty years in Wall Street
stocks would jump up a notch higher. The ex-governor preached
Americanism and confidence, until everybody believed that if a stock was
only grounded, and the property located in America, you could buy it at
any price and still be on the safe side.
That a terrible panic did not grow out of this boom was due only to one
fact: Mr. Flower’s sudden death. Had he lived thirty days longer, the
bubble must have been pricked, and the result would have been
disastrous. Mr. Flower went to the country for a day’s rest, ate freely
of ham and radishes and washed his frugal meal down with a copious
supply of ice water; he naturally, in consequence, died in a few hours
afterwards of an attack of acute indigestion; his death alone saved the
Street.
The Rockefellers, the Vanderbilts and his other wealthy friends rushed
into the market with millions and sustained values. They were in a
position to attribute the threatened reaction to his death and pointed
out the absurdity of letting such an incident affect the value of
stocks. They discounted the break that must have come in the natural
course of events under the forcing process that was going on. Reasoning
such as this spread broadcast through the papers stopped the break.
Where the bottom would have fallen out entirely there was only virtually
a moderate break all along the line; why it was not worse was due to the
market being bolstered up by the Standard Oil Combination and others
with them coming to the rescue just in time to prevent a big smash. The
small speculators operating on moderate margins were of course all wiped
out almost to a man, but many of the big fellows were saved. It is
probably the only instance on record where the death of a big operator
saved a general smash. Those hurt were numerous politicians and small
fry operators who instead of getting away with snug fortunes in the
shape of profits, lost their all.
An interesting circumstance of the Flower boom was developed
involuntarily by young Joe Leiter. Leiter himself, although he had gone
to the wall some time previously, indirectly had brought about certain
conditions that served Mr. Flower’s purpose admirably. These conditions
were the general release of hundreds of millions of dollars on mortgages
on farm lands. When Leiter began to corner wheat, it was ruling down in
the neighborhood of sixty cents a bushel. He lifted it to considerably
over a dollar before he went broke. This enabled thousands of farmers to
realize on their crops at the dollar figure and above, which brought
prosperity almost over night to the wheat growing belt. With the money
realized from their wheat the farmers paid off their mortgages to the
extent of two or three hundred million dollars. These mortgages were
generally held in the East. This released that much Eastern capital,
causing that vast volume of money to seek investment. The men
controlling this money were overjoyed when Mr. Flower made an opening
for them through the Wall Street boom, and hence it was a comparatively
easy matter for a time to push up values.
J. Pierpont Morgan, now a noted character, was trained as a clerk in the
one-time famous banking house of Duncan, Sherman & Co. Later he made a
connection with Anthony J. Drexel, probably the wealthiest banker in his
time in America. Out of this grew the house of Drexel, Morgan & Co.,
with Mr. Morgan as the managing partner in New York. When Mr. Drexel
died, Mr. Morgan absorbed the entire business, and a few years later
when his father died, Mr. Morgan became the head of the London house of
J. S. Morgan & Co. as well. This put him in a very prominent position.
He soon thereafter demonstrated his influence by reorganizing the
bankrupt Richmond & West Point Terminal Railway & Warehouse Co.,
changing its name to the Southern Railway Co. A number of small roads
were added to it, many of which were in financial straits, and
practically all of them had been badly managed. He combined them into
one system under the one head. This railroad combination is now one of
the great properties of this country. Mr. Morgan next turned his
attention to the reorganization of the Reading and the Erie roads, which
were in a bad way. He soon produced order out of chaos there, and that
resulted in a boom in railroad stocks all along the line. He had several
sharp tussles, however, with some of the big stock holders, who tried to
stand out against him on account, as they thought, of his plans being
too drastic; and during these tussles he not infrequently resorted to
the usual methods to break values, buying at the reduced prices so as to
strengthen his control.
The people who followed Mr. Morgan’s lead in these transactions
generally made money.
A different sort of deal was engineered a few years before by S. V.
White, popularly known as Deacon White, because of his position as
deacon in Plymouth Church. Mr. White is one of the oldest operators in
the Street, and one of the most striking figures. He has made half a
dozen great fortunes in speculation and lost them, but he is as
undaunted as ever, and in spite of the fact that he is now over seventy
years old, he is still active daily in the market.
Probably one of the most unique stock deals ever carried out in the
Street resulted from the transaction of Joseph Bannigan when President
of the Rubber Trust. The history of this deal which for a time resulted
in a great boom in industrials, has never been told, and is known to but
very few persons, most of whom, by the way, were its victims.
Bannigan was an uneducated Irishman who could hardly read and write. He
commenced life in a New England rubber factory and worked for $1.50 per
day and died worth five million dollars. He was shrewd and bright and
knew the value of money. He saved to such good purpose that when the
Rubber Trust was formed he was at the head of one of the biggest
factories in the country, located in Providence. His knowledge of the
trade was so thorough that despite the fact that he almost invariably
used small i’s in writing a letter, he was made President of the Trust,
his holdings amounting to about forty thousand shares. When matters had
been moving along for some time, Bannigan made up his mind that the
other men in the trust, the big fellows, were not treating him right,
and that the best thing he could do was to get out. So he packed his
stock certificates in a grip sack, left Providence on the night boat,
landed in New York bright and early, had his breakfast and then made a
bee line for a stock brokers’ office. He had assured himself in advance
that this stock broker was to be relied on and told him frankly what he
intended to do.
“I want to sell out bag and baggage,” he said. “I want to get rid of
every one of my forty thousand shares. Here they are, put them on the
market and sell them.” The stock broker told him that that would never
do. If he wanted to realize full value for his holdings he would have to
go about it in a different way, for if he threw his forty thousand
shares into the market it would knock the bottom out and he would get
little or nothing for his stock. Mr. Bannigan saw the point, and asked
what he was to do.
“Buy,” said the broker.
“But I don’t want to buy; I have got more now than I want.”
“That is all right; buy anyway, that will make a market for the stock,
and then you can unload when the time comes.”
“How much must I buy?”
“Oh, about $250,000 worth.”
“But I have not got $250,000 in cash to go and buy Rubber stock.”
“Well, you can borrow it; a man in your position, Mr. Bannigan, would
have no difficulty in borrowing $250,000.”
Much against his will the old man was finally persuaded to do as he was
told. About two weeks later the broker wrote to him that he must buy
some more, this time, $200,000 worth. Mr. Bannigan used rather strong
language, but finally yielded as he had before. He borrowed $200,000,
and turned it over. With this additional capital to work on, the brokers
continued to manipulate the market. The insiders soon discovered that
some strong party was buying; but they did not know who, Bannigan having
carefully kept himself in the background. His brokers operated skilfully
in the stock, one day buying, the next, selling to keep the stock
active. The brokers after awhile commenced to borrow large amounts of
the stock. This convinced the insiders that there was a big short
interest somewhere, and they got together in order to squeeze the
shorts. The inside holders who held most of the stock, who had combined
to squeeze the shorts out, as they thought, put the price up to 61, and
at about that figure Bannigan’s was all unloaded. Bannigan now found
himself full of money and the other fellows had his stock. They never
awakened to the fact that the President had sold out on them until his
shares were delivered against their purchases, as they thought, of short
stock. Rubber soon thereafter did not stop tumbling until it had gone
from 61 to 16. This deal had all the elements of a comedy-drama and the
playwright who can do it justice will find material there which will
make him an everlasting fortune and reputation. I have touched but
lightly on a few of the important incidents. It is not often, however,
that newcomers in the Street fare as well as this in the end. For a time
they will go on merrily enough, and send things booming; but in the end
many get the worst of it. A. B. Stockwell is a good illustration of the
truth of this. He is still around the Street somewhere, but is one of
the “has beens,” like numerous other former conspicuously large and
supposed to be brilliant operators. At one time he was worth many
millions of dollars. To-day, he is upside down. His start in life was as
purser on a Lake Erie steamboat; his father, it is said, kept a livery
stable in Cleveland. On one of his trips, Stockwell was in a position to
show considerable attention to Elias Howe, the inventor of the eye at
the upper end of the sewing machine needle. Mr. Howe was accompanied by
his daughter. Stockwell made himself agreeable to Miss Howe also, and
with such good effect that he managed to win her affections and soon
thereafter married the young lady. When Mr. Howe died, Mrs. Stockwell
came into possession of her father’s millions. With this nest egg
Stockwell started in Wall Street, and before anyone realized what had
happened he was the most talked of man in the district. He put all his
wife’s millions into Pacific Mail stock, and secured entire control of
the Company. He came into the Street as plain Stockwell, then as the
news of his liberality and good fellowship spread, he became Mr.
Stockwell; after he got hold of Pacific Mail he was Commodore Stockwell,
by common consent. Everybody bowed and scraped to him and no man was so
high and mighty that he was not proud to shake his hand. Stockwell took
hold of Pacific Mail at about 40 and sent it up to 107. It was at this
period that he was worth over fifteen million dollars; but he found,
unfortunately, when it was too late to retreat, that while Pacific Mail
was up to 107, it was not worth that figure when the unloading
commenced. He was landed high and dry with it all and the Street told
him he was welcome to it. He tried to sell, and found that there was no
market. Then came violent demands on him to pay up his numerous call
loans, and in order to respond thereto, he had to sell regardless of
price and thus created a whirlpool, which finally sent the stock down to
the price at which he commenced his original purchase at 40. In this one
upset, he lost all his paper profits and his wife’s millions besides.
This catastrophe not only stripped him of all his worldly possessions,
but reduced him to the position of being plain Stockwell again, and