Fifty years in Wall Street
I will not begin with those now foremost in the Wall Street arena, but
go back to Jacob Little, whose name is still a household word on the
Stock Exchange.
He died in the sixties, while the war between North and South was
raging, and he had gradually ceased to be a power in the Street after
the panic of 1857. He remained a bear on the rising tide of currency
inflation following the outbreak of the war, and was submerged and wiped
out.
He was an odd fish—singular in appearance, manner, and business methods,
but for more than twenty years he had a great name in Wall Street. To
speak colloquially, he was the cock of the walk by self-assertion and
common consent.
He was the successor of Jacob Barker, who came from Philadelphia, and
was the first great leader Wall Street had known. He was trained in his
office, and began as a stock operator on his own account in 1835.
The panic of 1837 made his reputation and his fortune, for, being
naturally a bear, he was largely “short” of stocks. That panic swept the
whole United States with the besom of destruction, and sent prices down
to zero. It left him a greater bear than ever, a preacher of distrust
and a prophet of failure. He thrived on calamity, and grew richer and
richer during the years of depression that followed that memorable
revulsion.
From 1835 to 1846 he was in his glory and his prime, and no one disputed
his leadership in the world of Wall Street. But then he met with a great
reverse, not, however, through continuing to “bear” stocks, but through
a “bull” operation in Norwich and Worcester Railroad stock. He
attempted, with a Boston clique, to control it, and personally bound
himself to the clique, in the sum of $25,000, not to sell his stock
below 90.
He went to work to put it up, but it “bulled hard,” and refused to stay
up. So he paid the forfeit, and sold out at the best prices he could
get, losing a million, which was looked upon in those days as ten or
twenty millions would be now. This was the only large bull operation he
ever engaged in, and it confirmed him in his natural bearishness.
He more than recovered from this disaster, however, by breaking the
“corner” in Erie stock not long afterwards. He was largely “short” of
it, and the cornering clique had bought up all the stock on the market.
They put the price higher and higher from day to day, but Jacob Little
remained unterrified, and refused to “cover” his contracts. He was the
only one “short” who stood out against the cornerers, and made no effort
to buy in his stock. The eyes of all Wall Street were watching him, and
the prevailing opinion was that he would be forced to “cover” at a
ruinous loss, or fail.
But he had “a card up his sleeve” that the cornerers had never
suspected, and just when they were expecting his surrender, or failure,
at the maturity of his contracts to deliver, he produced a big bundle of
new Erie certificates of stock and filled his contracts by delivering
them. These had been issued to him in exchange for the company’s
convertible bonds, unknown to the clique, the issue of the bonds with
the convertible clause being also unknown to them.
Such a surprise and checkmate Wall Street had never known before, and
the “corner” was broken, with resulting demoralization and disaster to
the cornering clique, and great profit and eclat to Jacob Little. But
subsequently he failed several times on the “bear” side, yet always
managed to pay in full out of later successes. He was equally generous
as a creditor, and compromised on easy terms, so as to give his debtors
a chance to recuperate. Hence he was liked and respected notwithstanding
his aggressiveness and the havoc he often wrought among speculators on
the opposite side of the market.
He was a born speculator. Speculation was his daily bread. He liked it
for its own sake. His ambition was to control the stock market, and he
was willing to run extra hazardous risks to achieve this end. He once
said: “I care more for the game than the results, and, winning or
losing, I like to be in it!”
It was this feeling that kept him in Wall Street after his money power
and his prestige of success, as well as his health, had passed away. He
was out of debt, but without money in any considerable amount. He was a
mere shadow of what he had been, a name and nothing more. Nevertheless,
he risked his small operations with zest. But his health gave way more
and more, and he fainted one morning in the board room, in Lord’s Court,
and his end came not long afterwards.
He said, “I die poor!” But from the ashes of his estate and unsettled
accounts his family succeeded in collecting about $150,000, which he had
neglected to look after, for he had always been careless and easy-going
in money matters, and attached little value to money except for its use
in speculation. He was the very reverse of a miser, for he had never
cared to hoard.
It was Anthony W. Morse who gave the finishing stroke to the career of
Jacob Little, for, while Little was operating for a decline in the early
sixties, Morse sprang into the speculative ring as a rampant bull, and
bid prices up on the Stock Exchange, while it was still in Lord’s Court,
in a way that astonished him and the other fossils of the board. They
considered him utterly reckless. But Morse foresaw that the great war
issues of United States currency—greenbacks as they were called—then
being made would inflate the prices of stocks largely, and he
accordingly, metaphorically speaking, rushed in where angels feared to
tread.
He became the storm center, the hub, the pivotal point, in the wildest
riot of stock speculation this country has ever known, or probably ever
will know again; and who was he? A slight, fair-complexioned country
lad, he came to New York without a dollar, and became a clerk in a
stockbroker’s office. Then he married a woman with some money, and
induced her to let him speculate a little for her, and was successful in
making something for her, and enough for himself to buy a seat at the
Stock Exchange, which then cost only $500, the initiation fee.
That was in 1862, up to which time he was both insignificant and
unknown. But the bold, dashing style in which he immediately began to
astonish the natives and rattle the dry bones of the fossils, by his
rapidly advancing bids for railway stocks, showed that he was a man of
the time, fully up to date. Had he not proved to be right on the market
he would have been ruined at the start, but the market went with him,
and it went with a rush that made the old fogies of the board say:
“Well, well! this young fellow got the start of us—we are not in it!”
He first put up Cleveland & Pittsburg with the ease and celerity of a
man who thought it a mere trifle to handle. Then he successfully took
hold of Ohio & Mississippi, Rock Island, Erie, and Fort Wayne, and put
them up in the same pyrotechnical and flamboyant way. He, in one day,
marked Fort Wayne up from 118 to 152. He had unlimited confidence in
himself, because he saw that he was on the right track, and the Street
and the public followed him. He ran Pittsburg up from 65 to 108 amid
great excitement, and bid 100 for the whole capital stock, “seller one
year.” He then sold all his Pittsburg between 96 and 108. His firm,
Morse & Co., were overrun with commission business at their large
ground-floor office in William Street. By the early part of 1863 he had
punished the bears badly, and made, it was estimated, at least
$1,250,000, and his career of riotous success ran for just two years,
during which he was supposed to have made enormously. There was a rush
to join every pool he formed, so great was his prestige. Men crowded the
sidewalk in front of his office trying to find out what he said, or what
he was doing, so that they might do likewise; and if he gave a “bull”
point on any stock, nearly all who heard of it acted upon it, feeling
confident that it was a dead certainty. His fellow-brokers in the board
largely followed him, like the rank and file, and rag, tag, and bobtail
of the Wall Street crowd, because he had been always right. Never indeed
was a Wall Street leader, before or since, more blindly followed than
Morse. The whole country joined in the mad speculation there, and he was
on the crest of the wave.
One night at the Evening Exchange Morse bid 112 for 10,000 shares of
Erie stock, and Daniel Drew sold them. Then he bid the same price for
20,000 more, and Drew sold them. A day or two later Drew “covered” at a
heavy loss. When Morse took hold of Ohio & Mississippi he jumped it from
49 to 69 in a couple of days.
Money was cheap and abundant, owing to the currency inflation, and
speculation so active that many stock houses kept a relay of clerks for
night work. Meanwhile speculation in gold was as rampant as in stocks,
and hundreds of new mining and petroleum companies were launched, and
the stocks of these were actively traded in at high and rapidly rising
prices, while old and worthless stocks, like Bucks County Lead, were
resuscitated and boomed with the rest.
Clergymen and women were drawn into this whirlpool of speculation, and
any stock with “gold” in its name went off “like hot cakes.” One stock
was considered about as good as another to buy, as all were going up.
Morse led the crazy multitude in everything, and, among his other
achievements, he put Rock Island up from 106 to 149, and, in doing so,
bought the whole capital stock, which was then only 56,000 shares.
Morse’s doom was sealed by Mr. Salmon P. Chase, who as Secretary of the
Treasury sought to stop the wild inflation, and particularly the
tremendous bull speculation in gold, by selling gold for currency, and
locking the currency up in the Sub-treasury, so as to make a tight money
market. This had the desired effect, for it made money so scarce and
dear that it forced the large speculative holders of stocks to sell,
through the banks calling in their loans, and brought on a panic, just
at the time when Morse was more heavily loaded with stocks than he had
ever been before.
Broken in health, and looking weary and haggard, he tried to sell, and
this set every one of his followers selling like a flock of sheep, and
prices tumbled from bad to worse under the general rush to realize. Fort
Wayne fell at the morning session of the board on that fatal Monday of
the Morse panic, on the 18th of April, 1864, from 153 to 119. Then Morse
left the room for the last time, and, going to his office, said to his
partner, “The game is up!” Reading had also fallen that morning nineteen
per cent.; Pittsburg, seventeen; Hudson River, twenty-three; and all
other active stocks about as much.
This monetary tornado, that found Morse overloaded with stocks, there
and then swept him out of the Stock Exchange, for, knowing that he was
hopelessly ruined, he wrote an announcement of the suspension of Morse &
Co., and sent it to the board a few minutes after he had left it. The
failure proved a very bad one, and the firm was unable to settle or
resume. Morse was no longer the leader of Wall Street, and many of his
customers, in a semifrantic condition, rushed in upon him and denounced
him bitterly. The king had been dethroned, never to regain his crown,
nor ever to get a fresh start.
Pandemonium reigned during the rest of the day, and at the Evening
Exchange uptown at night Speculation had been so widespread, and Morse
had been so implicitly trusted as a leader, that the collapse ruined
thousands, including many women, and a raving, cursing mob crowded into
the Evening Exchange and overflowed into the Fifth Avenue Hotel. There
was a night of horror in hundreds of homes. Morse was upbraided and
cursed, and many of his customers, as is usual when they lose their