Fifty years in Wall Street
of the President in some way or other, in order that they might make use
of the Executive influence to help accomplish their great speculative
purpose. But as the Garfield Committee truly said in its report: “The
wicked and cunningly devised attempt of the conspirators to compromise
the President of the United States or his family utterly failed.”
The scheme might have succeeded if Fisk had been possessed of the
coolness and penetration of his partner, but his impetuosity, anxiety
and enthusiasm aroused suspicion and partially spoiled the plot.
Fisk was so eager to be satisfied that Grant was all right that he
overdid the thing by urging Corbin to write Grant a letter to stand firm
and not to permit the Treasury to sell gold under any consideration. The
outcome of this afforded clear proof, if any were wanting, that Grant
had no guilty knowledge of the base purposes for which he was being
used. Fisk had this letter from Corbin sent by a special messenger from
Pittsburgh, who rode twenty-eight miles on horseback, and delivered it
in person to the President. He read the letter, and had his suspicions
at once aroused. He said laconically to the messenger, “It is
satisfactory; there is no answer.” He began to see through the game, and
at once desired Mrs. Grant to write to Mrs. Corbin requesting her
husband to have nothing more to do with the Gould-Fisk gang.
Mrs. Grant wrote to Mrs. Corbin to say that the President was greatly
troubled to learn that her husband had been speculating in Wall Street,
and that she should desire him to disconnect himself immediately with
the party who were attempting to entrap the President.
Corbin hastened to obey the mandate from Little Washington. He was
greatly agitated, but the ruling passion of avarice was strong; in
bidding Gould farewell, and before taking his final adieu of the clique,
he requested the arch plotter to hand him over his share of the profits.
Referring to this incident, Gould said: “I told him I would give
$100,000 on account, and that when I sold, if he liked, I would give him
the average of my sales. I did not feel like buying any gold of him
then.”
This was the denouement of the plot against the President, who
immediately hastened to big Washington.
Now, let me again ask the reader to turn his attention for a moment to
the concluding scenes in the speculative drama in Wall Street on Black
Friday. How the clique tried to manipulate Assistant-Secretary
Butterfield was kept as profoundly secret as possible, and as it turned
out, he did not have as much power over the events of that great day as
was expected. When somebody charged Fisk with tapping the telegraph
wires, however, to obtain information from the Government, he replied:
“It was only necessary to tap Butterfield to find out all we wanted.”
This was very likely a vain boast of Fisk.
On Wednesday, the 22d September, two days preceding Black Friday, the
clique, it is believed, owned several millions more gold than there was
in the city outside the vaults of the Sub-Treasury. Belden bought about
eight millions of gold on that day, while Smith, Gould, Martin & Co.
were also heavy purchasers. The clique held a caucus in the office of
William Heath & Co., in Broad street, and concluded that it had gold
enough to put the price to 200, if it could carry the gold without
lending and compel the “shorts” to purchase. But the idea of finding a
market for over thirty millions of gold was also a gigantic problem, and
they felt the risk of being ground between the upper and the nether
millstones of their scheme.
On the morning of Thursday another council of war was held in the office
of Belden & Co., on Broadway. At this meeting, Gould, Fisk, Henry N.
Smith and William Belden were present. The proceedings of this meeting
were kept a profound secret, but one result of it was that Belden gave
his clerk the famous order to put gold to 144 and keep it there. On that
day Belden purchased about twenty millions of gold, the price opening at
141½ and closing at 143½.
The chiefs of the Cabal had another private meeting up town that
evening. The great question of closing up the transactions on the
following day was the chief topic of discussion. These operators held
contracts for over $100,000,000 in gold. Gould said that the “short”
interest was $250,000,000. The total amount of gold in the city did not
exceed $25,000,000, and the difference between this and the aggregate
amount of the contracts of the clique was the enormous amount that would
have to be settled in the event of a “corner.”
Fisk proposed that the clique show its hand, publish the state of
affairs, and offer to settle with the shorts at 150. His plan was
rejected by his brother conspirators.
On the morning of the fatal day, Belden and William Heath had an early
breakfast together at the Fifth Avenue Hotel, and repaired immediately
to their offices. Belden announced that gold was going to 200. “This
will be the last day of the Gold Room,” he added. Moved by Belden’s
threat, a large number rushed to cover. In the language of Henry N.
Smith, “They came on with a rush to settle.” He was settling in the
office of Smith, Gould & Martin, at 150 to 145, while Albert Speyer,
acting as broker for Fisk and Gould, was bidding up to 160 for a million
at a time. It was only when the price came down to 133 that Speyer
realized the humorous absurdity of his position. He had then bought 26
millions since morning at 160.
A voracious demand for margins about midday brought the work to a
crisis. The scene at the office of Heath was indescribable when Belden
went there to see Gould and his confederates, to find out what was to be
done next with the frenzied purchasers. An eye-witness thus describes
the scene at Heath’s office: “I went outside while Belden went in. I
walked up and down the alley-way waiting for him to come out. Deputy
sheriffs, or men appearing to be such, began to arrive and to mount
guard at Heath’s office to keep out visitors. After waiting a prodigious
long time, as it seemed to me, Jay Gould came creeping out of the back
door, and looking round sharply to see if he was watched, slunk off
through a private rear passage behind the buildings. Presently came
Fisk, steaming hot and shouting. He took the wrong direction at first,
nearly ran into Broad street, but soon discovered his error, and
followed Gould through the rear passage. Then came Belden, with hair
disordered and red eyes, as if he had been crying. He called: ‘Which way
have they gone?’ and, upon my pointing the direction, he ran after them.
The rear passage led into Wall Street. At its exit the conspirators
jumped into a carriage and fled the Street.”
They did not fly the Street, however, but went to the Broad street
office of Smith, Gould & Martin, where the crowd assembled, evidently
with riotous intent, apparently bent upon an application to Judge Lynch
for justice; and had any of the gentlemen appeared outside the confines
of the front wall, the chances were that the lamp-post near by would
have very soon been decorated with a breathless body. To ensure their
safety inside, however, a small police force kept guard outside, which
made the barricade complete. These gentlemen remained under this shelter
until the small hours of the morning, busily endeavoring to find out
where they stood in the result of the gold deal, and the more they
pondered over it, the greater grew the doubt in their minds whether they
were standing on their heads or their heels.
Although the Black Friday “corner” was a temporary calamity, perhaps it
was worth all it cost, in teaching us a useful lesson in financial and
speculative affairs. In my chapter on “Panics, and How to Prevent Them,”
I think I have made several points clear that can be utilized by
financiers, speculators and investors to advantage, in ease of an
impending panic or “corner.”
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CHAPTER XXI.
CAUSES OF LOSS IN SPECULATION.
INADEQUATE INFORMATION.—FALSE INFORMATION.—DEFECTS OF NEWS
AGENCIES.—INSUFFICIENCY OF MARGINS.—DANGERS OF PERSONAL
IDIOSYNCRASIES.—OPERATING IN SEASON AND OUT OF SEASON.—NECESSITY OF
INTELLIGENCE, JUDGMENT AND NERVE.—AN IDEAL STANDARD.—WHAT MAKES A
KING AMONG SPECULATORS?
As there is always a class of speculators whose operations, in the long
run, leave a net result of loss rather than profit, it may not be amiss
if I state what experience has taught me as to the causes of this want
of success.
Undoubtedly, many who enter the arena of speculation are in every way
unfitted to take the risks against such wily opponents as they must
encounter. They are either too ignorant or too wise, too timid or too
bold, too pessimistic or too sanguine, too slow or too hasty, too
diffident or too conceited, too confiding or too incredulous. These are
constitutional defects, any one of which may easily cost an operator a
fortune. And yet self-knowledge, with self-control, may prevent these
natural disqualifications from seriously interfering with success. There
is no mental discipline more severe and exacting than that of
speculation. There is no pursuit in which a man can less afford to
indulge in whims, or prejudices, or pet theories, than that of staking
his money against the prospective changes in financial values. He must
be as calm and as impartial as a judge, not less in respect to the risks
he incurs than in regard to the integrity of his own judgment. I should
lay it down as the first rule necessary to success, that the judgment be
not warped by any natural idiosyncrasies; this being secured, a man may
succeed in spite of his constitutional defects.
Singular as it may seem, there are no advantages beset with greater
dangers than information—the one thing most largely sought after and
most highly prized. Very naturally, most men object to taking a risk
without possessing some knowledge of the conditions that determine the
risk; and yet how few take care that their knowledge is adequate enough
or certain enough for the formation of a safe judgment. In some cases,
knowledge is unattainable and the operation must be a leap in the dark;
and in such instances a man is unwise to step in unless his experience
satisfies him that he is uncommonly sagacious in guessing.
Many speculators lose because the information on which they base their
operations is _insufficient_; more because it is _false_; and others
because, while their information is correct, they do _not know how to
turn it to account_.
Between one or other of these difficulties in the use of information
must be distributed a very large proportion of the losses incurred in
speculation. Incomplete or insufficient information is especially
dangerous. One-sided knowledge is nowhere so deceiving as here. A
railroad, for instance, may report an increase of gross earnings which
is construed as making its stock worth two or three per cent. more than
its current price; but the improvement may be due to transient special
causes, and the road’s current expenses may be growing at a rate which
makes the net increase show a decrease. A financially embarrassed
company may announce an assessment of its stockholders, upon which there
is a rush to sell the stock; a little further explanation shows that the
proceeds of the assessment will so improve the facilities of the
company, or so enable it to reduce its fixed charges, as to make the
stock intrinsically far more valuable than it was before; this discovery
causes a sharp advance in the shares, and the “short” sellers have to
cover their sales at a loss. A stock is bought up freely at New York
because London is taking large amounts of it; a day or two later, the