Reminiscences of a Stock Operator
customers by the hundreds. His firm had acted as managers for more than
one pool in the past.
Senator Gordon, who held seventy thousand shares, was an exceedingly
wealthy man. His name was as familiar to the readers of the
metropolitan press as though he had been sued for breach of promise by
a sixteen-year-old manicurist possessing a five-thousand-dollar mink
coat and one hundred and thirty-two letters from the defendant. He had
started his nephews in business as brokers and he was a special partner
in their firm. He had been in dozens of pools. He had inherited a large
interest in the Midland Stove Company and he got one hundred thousand
shares of Consolidated Stove for it. He had been carrying enough to
disregard Jim Barnes’ wild bull tips and had cashed in on thirty
thousand shares before the market petered out on him. He told a friend
later that he would have sold more only the other big holders, who were
old and intimate friends, pleaded with him not to sell any more, and
out of regard for them he stopped. Besides which, as I said, he had no
market to unload on.
The third man was Joshua Wolff. He was probably the best know of all
the traders. For twenty years everybody had know him as one of the
plungers on the floor. In bidding up stocks or offering them down he
had few equals, for ten or twenty thousand shares meant no more to him
than two or three hundred. Before I came to New York I had heard of him
as a plunger. He was then trailing with a sporting coterie that played
a no limit game, whether on the race track or in the stock market.
They used to accuse him of being nothing but a gambler, but he had real
ability and a strongly developed aptitude for the speculative game. At
the same time his reputed indifference to highbrow pursuits made him
the hero of numberless anecdotes. One of the most highly circulated of
the yarns was that Joshua was a guest at what he called a swell dinner
and by some oversight of the hostess several of the other guests began
to discuss literature before they could be stopped.
A girl who sat next to Josh and had not heard him use his mouth except
for masticating purposes, turned to him and looking anxious to hear the
great financier’s opinion asked him, “Oh, Mr. Wolff, what do you think
of Balzac?”
Josh politely ceased to masticate, swallowed and answered, “I never
trade in them Curb stocks!”
Such were the three largest individual holders of Consolidated Stove.
When they came over to see me I told them that if they formed a
syndicate to put up some cash and gave me a call on their stock at a
little above the market I would do what I could to make a market. They
promptly asked me how much money would be required.
I answered, “You’ve had that stock a long time and you can’t do a thing
with it. Between the three of you you’ve got two hundred thousand
shares, and you know very well that you haven’t the slightest chance
of getting rid of it unless you make a market for it. It’s got be some
market to absorb what you’ve got to give it, and it will be wise to
have enough cash to pay for whatever stock it may be necessary to buy
at first. It’s no use to begin and then have to stop because there
isn’t enough money. I suggest that you form a syndicate and raise six
millions in cash. Then give the syndicate a call on your two hundred
thousand shares at 40 and put all your stock in escrow. If everything
goes well you chaps will get rid of your dead pet and the syndicate
will make some money.”
As I told you before, there had been all sorts of rumours about my
stock-market winnings. I suppose that helped, for nothing succeeds like
success. At all events, I didn’t have to do much explaining to these
chaps. They knew exactly how far they’d get if they tried to play a
lone hand. They thought mine was a good plan. When they went away they
said they would form the syndicate at once.
They didn’t have much trouble in inducing a lot of their friends to
join them. I suppose they spoke with more assurance than I had of the
syndicate’s profits. From all I heard they really believed it, so
theirs were no conscienceless tips. At all events the syndicate was
formed in a couple of days. Kane, Gordon and Wolff gave calls on the
two hundred thousand shares at 40 and I saw to it that the stock itself
was put in escrow, so that none of it would come out on the market
if I should put up the price. I had to protect myself. More than one
promising deal has failed to pan out as expected because the members
of the pool or clique failed to keep faith with one another. Dog has
no foolish prejudices against eating dog in Wall Street. At the time
the second American Steel and Wire Company was brought out the insiders
accused one another of breach of faith and trying to unload. There had
been a gentlemen’s agreement between John W. Gates and his pals and
the Seligmans and their banking associates. Well, I heard somebody in
a broker’s office reciting this quatrain, which was said to have been
composed by John W. Gates:
_The tarantula jumped on the centipede’s back
And chortled with ghoulish glee:
“I’ll poison this murderous son of a gun.
If I don’t he’ll poison me!”_
Mind you, I do not mean for one moment to imply that any of my friends
in Wall Street would even dream of double-crossing me in a stock deal.
But on general principles it is just as well to provide for any and all
contingencies. It’s plain sense.
After Wolff and Kane and Gordon told me that they had formed their
syndicate to put up six millions in cash there was nothing for me to do
but wait for the money to come in. I had urged the vital need of haste.
Nevertheless the money came in driblets. I think it took four or five
installments. I don’t know what the reason was, but I remember that I
had to send out an S O S call to Wolff and Kane and Gordon.
That afternoon I got some big checks that brought the cash in my
possession to about four million dollars and the promise of the rest
in a day or two. It began to look as though the syndicate might do
something before the bull market passed away. At best it would be no
cinch, and the sooner I began work the better. The public had not been
particularly keen about new market movements in inactive stocks. But
a man could do a great deal to arouse interest in any stock with four
millions in cash. It was enough to absorb all the probable offerings.
If time urged, as I had said, there was no sense in waiting for the
other two millions. The sooner the stock got up to 50 the better for
the syndicate. That was obvious.
The next morning at the opening I was surprised to see that there were
unusually heavy dealings in Consolidated Stove. As I told you before,
the stock had been waterlogged for months. The price had been pegged at
37, Jim Barnes taking good care not to let it go any lower on account
of the big bank loan at 35. But as for going any higher, he’d as soon
expect to see the Rock of Gibraltar shimmying across the Strait as to
see Consolidated Stove do any climbing on the tape.
Well, sir, this morning there was quite a demand for the stock, and the
price went up to 39. In the first hour of the trading the transactions
were heavier than for the whole previous half year. It was the
sensation of the day and affected bullishly the entire market. I heard
afterwards that nothing else was talked about in the customers’ rooms
of the commission houses.
I didn’t know what it meant, but it didn’t hurt my feelings any to see
Consolidated Stove perk up. As a rule I do not have to ask about any
unusual movement in any stock because my friends on the floor--brokers
who do business for me, as well as personal friends among the room
traders--keep me posted. They assume I’d like to know and they
telephone me any news or gossip they pick up. On this day all I heard
was that there was unmistakable inside buying in Consolidated Stove.
There wasn’t any washing. It was all genuine. The purchasers took all
the offerings from 37 to 39 and when importuned for reasons or begged
for a tip, flatly refused to give any. This made the wily and watchful
traders conclude that there was something doing; something big. When a
stock goes up on buying by insiders who refuse to encourage the world
at large to follow suit the ticker hounds begin to wonder aloud when
the official notice will be given out.
I didn’t do anything myself. I watched and wondered and kept track of
the transactions. But on the next day the buying was not only greater
in volume but more aggressive in character. The selling orders that had
been on the specialists’ books for months at above the pegged price of
37 were absorbed without any trouble, and not enough new selling orders
came in to check the rise. Naturally, up went the price. It crossed 40.
Presently it touched 42.
The moment it touched that figure I felt that I was justified in
starting to sell the stock the bank held as collateral. Of course I
figured that the price would go down on my selling, but if my average
on the entire line was 37 I’d have no fault to find. I knew what the
stock was worth and I had gathered some idea of the vendibility from
the months of inactivity. Well, sir, I let them have stock carefully
until I had got rid of thirty thousand shares. And the advance was not
checked!
That afternoon I was told the reason for that opportune but mystifying
rise. It seems that the floor traders had been tipped off after the
close the night before and also the next morning before the opening,
that I was bullish as blazes on Consolidated Stove and was going to
rush the price right up fifteen or twenty points without a reaction, as
was my custom--that is, my custom according to people who never kept my
books. The tipster in chief was no less a personage than Joshua Wolff.
It was his own inside buying that started the rise of the day before.
His cronies among the floor traders were only too willing to follow his
tip, for he knew too much to give wrong steers to his fellows.
As a matter of fact, there was not so much stock pressing on the market
as had been feared. Consider that I had tied up three hundred thousand
shares and you will realize that the old fears had been well founded.
It now proved less of a job than I had anticipated to put up the stock.
After all, Governor Flower was right. Whenever he was accused of
manipulating his firm’s specialties, like Chicago Gas, Federal Steel or
B. R. T., he used to say: “The only way I know of making a stock go up
is to buy it.” That also was the floor traders’ only way, and the price
responded.
On the next day, before breakfast, I read in the morning papers what
was read by thousands and what undoubtedly was sent over the wires to
hundreds of branches and out-of-town offices, and that was that Larry
Livingston was about to begin active bull operations in Consolidated
Stove. The additional details differed. One version had it that I had
formed an insiders’ pool and was going to punish the over-extended
short interest. Another hinted at dividend announcements in the near
future. Another reminded the world that what I usually did to a stock
I was bullish on was something to remember. Still another accused the
company of concealing its assets in order to permit accumulation by
insiders. And all of them agreed that the rise hadn’t fairly started.
By the time I reached my office and read my mail before the market
opened I was made aware that the Street was flooded with red-hot tips
to buy Consolidated Stove at once. My telephone bell kept ringing and
the clerk who answered the calls heard the same question asked in
one form or another a hundred times that morning: Was it true that
Consolidated Stove was going up? I must say that Joshua Wolff and Kane