Reminiscences of a Stock Operator
did not recognize it when it came back to him in less than twenty-four
hours, swollen with new and picturesque details.
The news of Percy Thomas’ latest misadventure turned my mind from the
fishing to the cotton market. I got files of the trade papers and read
them to get a line on conditions. When I got back to New York I gave
myself up to studying the market. Everybody was bearish and everybody
was selling July cotton. You know how people are. I suppose it is the
contagion of example that makes a man do something because everybody
around him is doing the same thing. Perhaps it is some phase or variety
in the herd instinct. In any case it was, in the opinion of hundreds
of traders, the wise and proper thing to sell July cotton--and so safe
too! You couldn’t call that general selling reckless; the word is too
conservative. The traders simply saw one side to the market and a great
big profit. They certainly expected a collapse in prices.
I saw all this, of course, and it struck me that the chaps who were
short didn’t have a terrible lot of time to cover in. The more I
studied the situation the clearer I saw this, until I finally decided
to buy July cotton. I went to work and quickly bought one hundred
thousand bales. I experienced no trouble in getting it because it
came from so many sellers. It seemed to me that I could have offered
a reward of one million dollars for the capture, dead or alive, of a
single trader who was not selling July cotton and nobody would have
claimed it.
I should say this was in the latter part of May. I kept buying more
and they kept on selling it to me until I had picked up all the
floating contracts and I had one hundred and twenty thousand bales. A
couple of days after I had bought the last of it it began to go up.
Once it started the market was kind enough to keep on doing very well
indeed--that is, it went up from forty to fifty points a day.
One Saturday--this was about ten days after I began operations--the
price began to creep up. I did not know whether there was any more July
cotton for sale. It was up to me to find out, so I waited until the
last ten minutes. At that time, I knew, it was usual for those fellows
to be short and if the market closed up for the day they would be
safely hooked. So I sent in four different orders to buy five thousand
bales each, at the market, at the same time. That ran the price up
thirty points and the shorts were doing their best to wriggle away. The
market closed at the top. All I did, remember, was to buy that last
twenty thousand bales.
The next day was Sunday. But on Monday, Liverpool was due to open up
twenty points to be on a parity with the advance in New York. Instead,
it came fifty points higher. That meant that Liverpool had exceeded
our advance by 100 per cent. I had nothing to do with the rise in that
market. This showed me that my deductions had been sound and that I
was trading along the line of least resistance. At the same time I was
not losing sight of the fact that I had a whopping big line to dispose
of. A market may advance sharply or rise gradually and yet not possess
the power to absorb more than a certain amount of selling.
Of course the Liverpool cables made our own market wild. But I noticed
the higher it went the scarcer July cotton seemed to be. I wasn’t
letting go any of mine. Altogether that Monday was an exciting and not
very cheerful day for the bears; but for all that, I could detect no
signs of impending bear panic; no beginnings of a blind stampede to
cover. And I had one hundred and forty thousand bales for which I must
find a market.
On Tuesday morning as I was walking to my office I met a friend at the
entrance of the building.
“That was quite a story in the _World_ this morning,” he said with a
smile.
“What story?” I asked.
“What? Do you mean to tell me you haven’t seen it?”
“I never see the _World_,” I said. “What is the story?”
“Why, it’s all about you. It says you’ve got July cotton cornered.”
“I haven’t seen it,” I told him and left him. I don’t know whether he
believed me or not. He probably thought it was highly inconsiderate of
me not to tell him whether it was true or not.
When I got to the office I sent out for a copy of the paper. Sure
enough, there it was, on the front page, in big headlines:
JULY COTTON CORNERED BY LARRY LIVINGSTON
Of course I knew at once that the article would play the dickens with
the market. If I had deliberately studied ways and means of disposing
of my one hundred and forty thousand bales to the best advantage I
couldn’t have hit upon a better plan. It would not have been possible
to find one. That article at that very moment was being read all over
the country either in the _World_ or in other papers quoting it. It had
been cabled to Europe. That was plain from the Liverpool prices. That
market was simply wild. No wonder, with such news.
Of course I knew what New York would do, and what I ought to do. The
market here opened at ten o’clock. At ten minutes after ten I did not
own any cotton. I let them have every one of my one hundred and forty
thousand bales. For most of my line I received what proved to be the
top prices of the day. The traders made the market for me. All I really
did was to see a heaven-sent opportunity to get rid of my cotton. I
grasped it because I couldn’t help it. What else could I do?
The problem that I knew would take a great deal of hard thinking to
solve was thus solved for me by an accident. If the _World_ had not
published that article I never would have been able to dispose of my
line without sacrificing the greater portion of my paper profits.
Selling one hundred and forty thousand bales of cotton without sending
the price down was a trick beyond my powers. But the _World_ story
turned it for me very nicely.
Why the _World_ published it I cannot tell you. I never knew. I suppose
the writer was tipped off by some friend in the cotton market and he
thought he was printing a scoop. I didn’t see him or anybody from the
_World_. I didn’t know it was printed that morning until after nine
o’clock; and if it had not been for my friend calling my attention to
it I would not have know it then.
Without it I wouldn’t have had a market _big_ enough to unload in. That
is one trouble about trading on a large scale. You cannot sneak out as
you can when you pike along. You cannot always sell out when you wish
or when you think it wise. You have to get out when you can; when you
have a market that will absorb your entire line. Failure to grasp the
opportunity to get out may cost you millions. You cannot hesitate. If
you do you are lost. Neither can you try stunts like running up the
price on the bears by means of competitive buying, for you may thereby
reduce the absorbing capacity. And I want to tell you that perceiving
your opportunity is not as easy as it sounds. A man must be on the
lookout so alertly that when his chance sticks in its head at his door
he must grab it.
Of course not everybody knew about my fortunate accident. In Wall
Street, and, for that matter, everywhere else, any accident that makes
big money for a man is regarded with suspicion. When the accident is
unprofitable it is never considered an accident but the logical outcome
of your hoggishness or of the swelled head. But when there is a profit
they call it loot and talk about how well unscrupulousness fares, and
how ill conservatism and decency.
It was not only the _evil-minded shorts_ smarting under punishment
brought about by their own recklessness who accused me of having
deliberately planned the coup. Other people thought the same thing.
One of the biggest men in cotton in the entire world met me a day or
two later and said, “That was certainly the slickest deal you ever put
over, Livingston. I was wondering how much you were going to lose when
you came to market that line of yours. You knew this market was not big
enough to take more than fifty or sixty thousand bales without selling
off, and how you were going to work off the rest and not lose all your
paper profits was beginning to interest me. I didn’t think of your
scheme. It certainly was slick.”
“I had nothing to do with it,” I assured him as earnestly as I could.
But all he did was to repeat: “Mighty slick, my boy. Mighty slick!
Don’t be so modest!”
It was after that deal that some of the papers referred to me as the
Cotton King. But, as I said, I really was not entitled to that crown.
It is not necessary to tell you that there is not enough money in the
United States to buy the columns of the New York _World_ or enough
personal pull to secure the publication of a story like that. It gave
me an utterly unearned reputation that time.
But I have not told this story to moralize on the crowns that are
sometimes pressed down upon the brows of undeserving traders or to
emphasize the need of seizing the opportunity, no matter where or
how it comes. My object merely was to account for the vast amount of
newspaper notoriety that came to me as a result of my deal in July
cotton. If it hadn’t been for the newspapers I never would have met
that remarkable man, Percy Thomas.
_XII_
Not long after I closed my July cotton deal more successfully than I
had expected I received by mail a request for an interview. The letter
was signed by Percy Thomas. Of course I immediately answered that I’d
be glad to see him at my office at any time he cared to call. The next
day he came.
I had long admired him. His name was a household word wherever men took
an interest in growing or buying or selling cotton. In Europe as well
as all over this country people quoted _Percy Thomas’_ opinions to me.
I remember once at a Swiss resort talking to a Cairo banker who was
interested in cotton growing in Egypt in association with the late Sir
Ernest Cassel. When he heard I was from New York he immediately asked
me about Percy Thomas, whose market reports he received and read with
unfailing regularity.
Thomas, I always thought, went about his business scientifically. He
was a true speculator, a thinker with the vision of a dreamer and the
courage of a fighting man--an unusually well-informed man, who knew
both the theory and the practice of trading in cotton. He loved to hear
and to express ideas and theories and abstractions, and at the same
time there was mighty little about the practical side of the cotton
market or the psychology of cotton traders that he did not know, for he
had been trading for years and had made and lost vast sums.
After the failure of his old Stock Exchange firm of Sheldon &
Thomas he went it alone. Inside of two years he came back, almost
spectacularly. I remember reading in the _Sun_ that the first thing he
did when he got back on his feet financially was to pay off his old
creditors in full, and the next was to hire an expert to study and
determine for him how he had best invest a million dollars. This expert
examined the properties and analysed the reports of several companies
and then recommended the purchase of Delaware & Hudson stock.
Well, after having failed for millions and having come back with more
millions, Thomas was cleaned out as the result of his deal in March
Cotton. There wasn’t much time wasted after he came to see me. He
proposed that we form a working alliance. Whatever information he
got he would immediately turn over to me before passing it on to the
public. My part would be to do the actual trading, for which he said I
had a special genius and he hadn’t.
That did not appeal to me for a number of reasons. I told him frankly
that I did not think I could run in double harness and wasn’t keen
about trying to learn. But he insisted that it would be an ideal