Reminiscences of a Stock Operator
at one and a half points and confided to the office that the New
York climate was too benign for fur coats. They were unhealthy and
ostentatious. The rest of the fellows jeered. But it was not long
before one of them bought some Union Pacific to pay for the coat. He
lost eighteen hundred dollars and said sables were all right for the
outside of a woman’s wrap, but not for the inside of a garment intended
to be worn by a modest and intelligent man.
After that, one after another of the fellows tried to coax the market
to pay for that coat. One day I said I would buy it to keep the office
from going broke. But they all said that it wasn’t a sporting thing to
do; that if I wanted the coat for myself I ought to let the market give
it to me. But Ed Harding strongly approved of my intention and that
same afternoon I went to the furrier’s to buy it. I found out that a
man from Chicago had bought it the week before.
That was only one case. There isn’t a man in Wall Street who has
not lost money trying to make the market pay for an automobile or a
bracelet or a motor boat or a painting. I could build a huge hospital
with the birthday presents that the tight-fisted stock market has
refused to pay for. In fact, of all hoodoos in Wall Street I think the
resolve to induce the stock market to act as a fairy godmother is the
busiest and most persistent.
Like all well-authenticated hoodoos this has its reason for being.
What does a man do when he sets out to make the stock market pay for
a sudden need? Why, he merely hopes. He gambles. He therefore runs
much greater risks than he would if he were speculating intelligently,
in accordance with opinions or beliefs logically arrived at after a
dispassionate study of underlying conditions. To begin with, he is
after an immediate profit. He cannot afford to wait. The market must
be nice to him at once if at all. He flatters himself that he is not
asking more than to place an even-money bet. Because he is prepared
to run quick--say, stop his loss at two points when all he hopes to
make is two points--he hugs the fallacy that he is merely taking a
fifty-fifty chance. Why, I’ve known men to lose thousands of dollars
on such trades, particularly on purchases made at the height of a bull
market just before a moderate reaction. It certainly is no way to trade.
Well, that crowning folly of my career as a stock operator was the
last straw. It beat me. I lost what little my cotton deal had left me.
It did even more harm, for I kept on trading--and losing. I persisted
in thinking that the stock market must perforce make money for me in
the end. But the only end in sight was the end of my resources. I went
into debt, not only to my principal brokers but to other houses that
accepted business from me without my putting up an adequate margin. I
not only got in debt but I stayed in debt from then on.
_XIII_
There I was, once more broke, which was bad, and dead wrong in my
trading, which was a sight worse. I was sick, nervous, upset and unable
to reason calmly. That is, I was in the frame of mind in which no
speculator should be when he is trading. Everything went wrong with me.
Indeed, I began to think that I could not recover my departed sense of
proportion. Having grown accustomed to swinging a big line--say, more
than a hundred thousand shares of stock--I feared I would not show good
judgment trading in a small way. It scarcely seemed worthwhile being
right when all you carried was a hundred shares of stock. After the
habit of taking a big profit on a big line I wasn’t sure I would know
when to take my profit on a small line. I can’t describe to you how
weaponless I felt.
Broke again and incapable of assuming the offensive vigorously. In
debt and wrong! After all those long years of successes, tempered by
mistakes that really served to pave the way for greater successes, I
was now worse off than when I began in the bucket shops. I had learned
a great deal about the game of stock speculation, but I had not learned
quite so much about the play of human weaknesses. There is no mind
so machinelike that you can depend upon it to function with equal
efficiency at all times. I now learned that I could not trust myself to
remain equally unaffected by men and misfortunes at all times.
Money losses have never worried me in the slightest. But other
troubles could and did. I studied my disaster in detail and of course
found no difficulty in seeing just where I had been silly. I spotted
the exact time and place. A man must know himself thoroughly if he is
going to make a good job out of trading in the speculative markets. To
know what I was capable of in the line of folly was a long educational
step. I sometimes think that no price is too high for a speculator
to pay to learn that which will keep him from getting the swelled
head. A great many smashes by brilliant men can be traced directly to
the swelled head--an expensive disease everywhere to everybody, but
particularly in Wall Street to a speculator.
I was not happy in New York, feeling the way I did. I didn’t want to
trade, because I wasn’t in good trading trim. I decided to go away
and seek a stake elsewhere. The change of scene could help me to find
myself again, I thought. So once more I left New York, beaten by the
game of speculation. I was worse than broke, since I owed over one
hundred thousand dollars spread among various brokers.
I went to Chicago and there found a stake. It was not a very
substantial stake, but that merely meant that I would need a little
more time to win back my fortune. A house that I once had done business
with had faith in my ability as a trader and they were willing to prove
it by allowing me to trade in their office in a small way.
I began very conservatively. I don’t know how I might have fared had I
stayed there. But one of the most remarkable experiences in my career
cut short my stay in Chicago. It is an almost incredible story.
One day I got a telegram from Lucius Tucker. I had known him when he
was the office manager of a Stock Exchange firm that I had at times
given some business to, but I had lost track of him. The telegram read:
Come to New York at once.
L. TUCKER.
I knew that he knew from mutual friends how I was fixed and therefore
it was certain he had something up his sleeve. At the same time I had
no money to throw away on an unnecessary trip to New York; so instead
of doing what he asked me to do I got him on the long distance.
“I got your telegram,” I said. “What does it mean?”
“It means that a big banker in New York wants to see you,” he answered.
“Who is it?” I asked. I couldn’t imagine who it could be.
“I’ll tell you when you come to New York. No use otherwise.”
“You say he wants to see me?”
“He does.”
“What about?”
“He’ll tell you in person if you give him a chance,” said Lucius.
“Can’t you write me?”
“No.”
“Then tell me more plainly,” I said.
“I don’t want to.”
“Look here, Lucius,” I said, “just tell me this much: Is this a fool
trip?”
“Certainly not. It will be to your advantage to come.”
“Can’t you give me an inkling?”
“No,” he said. “It wouldn’t be fair to him. And besides, I don’t know
just how much he wants to do for you. But take my advice: Come, and
come quick.”
“Are you sure it is I that he wishes to see?”
“Nobody else but you will do. Better come, I tell you. Telegraph me
what train you take and I’ll meet you at the station.”
“Very well,” I said, and hung up.
I didn’t like quite so much mystery, but I knew that Lucius was
friendly and that he must have a good reason for talking the way he
did. I wasn’t faring so sumptuously in Chicago that it would break my
heart to leave it. At the rate I was trading it would be a long time
before I could get together enough money to operate on the old scale.
I came back to New York, not knowing what would happen. Indeed, more
than once during the trip I feared nothing at all would happen and that
I’d be out my railroad fare and my time. I could not guess that I was
about to have the most curious experience of my entire life.
Lucius met me at the station and did not waste any time in telling me
that he had sent for me at the urgent request of Mr. Daniel Williamson,
of the well-known Stock Exchange house of Williamson & Brown. Mr.
Williamson told Lucius to tell me that he had a business proposition
to make to me that he was sure I would accept since it would be very
profitable for me. Lucius swore he didn’t know what the proposition
was. The character of the firm was a guaranty that nothing improper
would be demanded of me.
Dan Williamson was the senior member of the firm, which was founded by
Egbert Williamson way back in the ’70’s. There was no Brown and hadn’t
been one in the firm for years. The house had been, very prominent
in Dan’s father’s time and Dan had inherited a considerable fortune
and didn’t go after much outside business. They had one customer who
was worth a hundred average customers and that was Alvin Marquand,
Williamson’s brother-in-law, who in addition to being a director in
a dozen banks and trust companies was the president of the great
Chesapeake and Atlantic Railroad system. He was the most picturesque
personality in the railroad world after James J. Hill, and was the
spokesman and dominant member of the powerful banking coterie known as
the Fort Dawson gang. He was worth from fifty million to five hundred
million dollars, the estimate depending upon the state of the speaker’s
liver. When he died they found out that he was worth two hundred and
fifty million dollars, all made in Wall Street. So you see he was some
customer.
Lucius told me he had just accepted a position with Williamson &
Brown--one that was made for him. He was supposed to be a sort of
circulating general business getter. The firm was after a general
commission business and Lucius had induced Mr. Williamson to open a
couple of branch offices, one in one of the big hotels uptown and the
other in Chicago. I rather gathered that I was going to be offered a
position in the latter place, possibly as office manager, which was
something I would not accept. I didn’t jump on Lucius because I thought
I’d better wait until the offer was made before I refused it.
Lucius took me into Mr. Williamson’s private office, introduced me to
his chief and left the room in a hurry, as though he wished to avoid
being called as witness in a case in which he knew both parties. I
prepared to listen and then to say no.
Mr. Williamson was very pleasant. He was a thorough gentleman,
with polished manners and a kindly smile. I could see that he made
friends easily and kept them. Why not? He was healthy and therefore
good-humored. He had slathers of money and therefore could not be
suspected of sordid motives. These things, together with his education
and social training, made it easy for him to be not only polite but
friendly, and not only friendly but helpful.
I said nothing. I had nothing to say and, besides, I always let the
other man have his say in full before I do any talking. Somebody
told me that the late James Stillman, president of the National City
Bank--who, by the way, was an intimate friend of Williamson’s--made
it his practice to listen in silence, with an impassive face, to
anybody who brought a proposition to him. After the man got through Mr.
Stillman continued to look at him, as though the man had not finished.
So the man, feeling urged to say something more, did so. Simply by
looking and listening Stillman often made the man offer terms much more
advantageous to the bank than he had meant to offer when he began to
speak.
I don’t keep silent just to induce people to offer a better bargain,