Reminiscences of a Stock Operator
It isn’t uncomfortable to lose when the loss is not accompanied by a
poignant vision of what might have been. That was precisely what I
could not keep my mind from dwelling on, and of course it unsettled me
further. I learned that the weaknesses to which a speculator is prone
are almost numberless. It was proper for me as a man to act the way I
did in Dan Williamson’s office, but it was improper and unwise for me
as a speculator to allow myself to be influenced by any consideration
to act against my own judgment. _Noblesse oblige_--but not in the stock
market, because the tape is not chivalrous and moreover does not reward
loyalty. I realise that I couldn’t have acted differently. I couldn’t
make myself over just because I wished to trade in the stock market.
But business is business always, and my business as a speculator is to
back my own judgment always.
It was a very curious experience. I’ll tell you what I think happened.
Dan Williamson was perfectly sincere in what he told me when he first
saw me. Every time his firm did a few thousand shares in any one stock
the Street jumped at the conclusion that Alvin Marquand was buying or
selling. He was the big trader of the office, to be sure, and he gave
this firm all his business; and he was one of the best and biggest
traders they have ever had in Wall Street. Well, I was to be used as a
smoke screen, particularly for Marquand’s selling.
Alvin Marquand fell sick shortly after I went in. His ailment was early
diagnosed as incurable, and Dan Williamson of course knew it long
before Marquand himself did. That is why Dan covered my Chesapeake &
Atlantic stock. He had begun to liquidate some of his brother-in-law’s
speculative holdings of that and other stocks.
Of course when Marquand died the estate had to liquidate his
speculative and semispeculative lines, and by that time we had run
into a bear market. By tying me up the way he did, Dan was helping the
estate a whole lot. I do not speak boastfully when I say that I was a
very heavy trader and that I was dead right in my views on the stock
market. I know that Williamson remembered my successful operations
in the bear market of 1907 and he couldn’t afford to run the risk of
having me at large. Why, if I had kept on the way I was going I’d have
made so much money that by the time he was trying to liquidate part
of Alvin Marquand’s estate I would have been trading in hundreds of
thousands of shares. As an active bear I would have done damage running
into the millions of dollars to the Marquand heirs, for Alvin left only
a little over a couple of hundred millions.
It was much cheaper for them to let me get into debt and then to pay
off the debt than to have me in some other office operating actively on
the bear side. That is precisely what I would have been doing but for
my feeling that I must not be outdone in decency by Dan Williamson.
I have always considered this the most interesting and most unfortunate
of all my experiences as a stock operator. As a lesson it cost me a
disproportionately high price. It put off the time of my recovery
several years. I was young enough to wait with patience for the strayed
millions to come back. But five years is a long time for a man to be
poor. Young or old, it is not to be relished. I could do without the
yachts a great deal easier than I could without a market to come back
on. The greatest opportunity of a lifetime was holding before my very
nose the purse I had lost. I could not put out my hand and reach for
it. A very shrewd boy, that Dan Williamson; as slick as they make
them; farsighted, ingenious, daring. He is a thinker, has imagination,
detects the vulnerable spot in any man and can plan cold-bloodedly to
hit it. He did his own sizing up and soon doped out just what to do to
me in order to reduce me to complete inoffensiveness in the market.
He did not actually do me out of any money. On the contrary, he was
to all appearances extremely nice about it. He loved his sister, Mrs.
Marquand, and he did his duty toward her as he saw it.
_XIV_
It has always rankled in my mind that after I left Williamson & Brown’s
office the cream was off the market. We ran smack into a long moneyless
period; four mighty lean years. There was not a penny to be made. As
Billy Henriquez once said, “It was the kind of market in which not even
a skunk could make a scent.”
It looked to me as though I was in Dutch with destiny. It might have
been the plan of Providence to chasten me, but really I had not been
filled with such pride as called for a fall. I had not committed any of
those speculative sins which a trader must expiate on the debtor side
of the account. I was not guilty of a typical sucker play. What I had
done, or, rather, what I had left undone, was something for which I
would have received praise and not blame--north of Forty-second Street.
In Wall Street it was absurd and costly. But by far the worst thing
about it was the tendency it had to make a man a little less inclined
to permit himself human feelings in the ticker district.
I left Williamson’s and tried other brokers’ offices. In every one
of them I lost money. It served me right, because I was trying to
force the market into giving me what it didn’t have to give--to wit,
opportunities for making money. I did not find any trouble in getting
credit, because those who knew me had faith in me. You can get an idea
of how strong their confidence was when I tell you that when I finally
stopped trading on credit I owed well over one million dollars.
The trouble was not that I had lost my grip but that during those
four wretched years the opportunities for making money simply didn’t
exist. Still I plugged along, trying to make a stake and succeeding
only in increasing my indebtedness. After I ceased trading on my
own hook because I wouldn’t owe my friends any more money I made a
living handling accounts for people who believed I knew the game well
enough to beat it even in a dull market. For my services I received a
percentage of the profits--when there were any. That is how I lived.
Well, say that is how I sustained life.
Of course, I didn’t always lose, but I never made enough to allow me
materially to reduce what I owed. Finally, as things got worse, I felt
the beginnings of discouragement for the first time in my life.
Everything seemed to have gone wrong with me. I did not go about
bewailing the descent from millions and yachts to debts and the
simple life. I didn’t enjoy the situation, but I did not fill up with
self-pity. I did not propose to wait patiently for time and Providence
to bring about the cessation of my discomforts. I therefore studied
my problem. It was plain that the only way out of my troubles was by
making money. To make money I needed merely to trade successfully. I
had so traded before and I must do so once more. More than once in the
past I had run up a shoestring into hundreds of thousands. Sooner or
later the market would offer me an opportunity.
I convinced myself that whatever was wrong was wrong with me and not
with the market. Now what could be the trouble with me? I asked myself
that question in the same spirit in which I always study the various
phases of my trading problems. I thought about it calmly and came to
the conclusion that my main trouble came from worrying over the money
I owed. I was never free from the mental discomfort of it. I must
explain to you that it was not mere consciousness of my indebtedness.
Any business man contracts debts in the course of his regular business.
Most of my debts were really nothing but business debts, due to
what were unfavourable business conditions for me, and no worse than
a merchant suffers from, for instance, when there is an unusually
prolonged spell of unseasonable weather.
Of course as time went on and I could not pay I began to feel less
philosophical about my debts. I’ll explain: I owed over a million
dollars--all of it stock-market losses, remember. Most of my creditors
were very nice and didn’t bother me; but there were two who did bedevil
me. They used to follow me around. Every time I made a winning each of
them was Johnny-on-the-spot, wanting to know all about it and insisting
on getting theirs right off. One of them, to whom I owed eight hundred
dollars, threatened to sue me, seize my furniture, and so forth. I
can’t conceive why he thought I was concealing assets, unless it was
that I didn’t quite look like a stage hobo about to die of destitution.
As I studied the problem I saw that it wasn’t a case that called for
reading the tape but for reading my own self. I quite cold-bloodedly
reached the conclusion that I would never be able to accomplish
anything useful so long as I was worried, and it was equally plain that
I should be worried so long as I owed money. I mean, as long as any
creditor had the power to vex me or to interfere with my coming back by
insisting upon being paid before I could get a decent stake together.
This was all so obviously true that I said to myself, “I must go
through bankruptcy.” What else could relieve my mind?
It sounds both easy and sensible, doesn’t it? But it was more than
unpleasant, I can tell you. I hated to do it. I hated to put myself
in a position to be misunderstood or misjudged. I myself never cared
much for money. I never thought enough of it to consider it worthwhile
lying for. But I knew that everybody didn’t feel that way. Of course I
also knew that if I got on my feet again I’d pay everybody off, for the
obligation remained. But unless I was able to trade in the old way I’d
never be able to pay back that million.
I nerved myself and went to see my creditors. It was a mighty difficult
thing for me to do, for all that most of them were personal friends or
old acquaintances.
I explained the situation quite frankly to them. I said: “I am not
going to take this step because I don’t wish to pay you but because,
in justice to both myself and you, I must put myself in a position to
make money. I have been thinking of this solution off and on for over
two years, but I simply didn’t have the nerve to come out and say so
frankly to you. It would have been infinitely better for all of us if
I had. It all simmers down to this: I positively cannot be my old self
while I am harassed or upset by these debts. I have decided to do now
what I should have done a year ago. I have no other reason than the one
I have just given you.”
What the first man said was to all intents and purposes what all of
them said. He spoke for his firm.
“Livingston,” he said, “we understand. We realise your position
perfectly. I’ll tell you what we’ll do: we’ll just give you a release.
Have your lawyer prepare any kind of paper you wish, and we’ll sign it.”
That was in substance what all my big creditors said. That is one
side of Wall Street for you. It wasn’t merely careless good nature
or sportsmanship. It was also a mighty intelligent decision, for it
was clearly good business. I appreciated both the good will and the
business gumption.
These creditors gave me a release on debts amounting to over a million
dollars. But there were the two minor creditors who wouldn’t sign off.
One of them was the eight-hundred-dollar man I told you about. I also
owed sixty thousand dollars to a brokerage firm which had gone into
bankruptcy, and the receivers, who didn’t know me from Adam, were on
my neck early and late. Even if they had been disposed to follow the
example set by my largest creditors I don’t suppose the court would
have let them sign off. At all events my schedule of bankruptcy
amounted to only about one hundred thousand dollars; though, as I said,
I owed well over a million.
It was extremely disagreeable to see the story in the newspapers. I