Chapter 13

Chapter 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,

but because I like to know all the facts of the case. By letting a man

have his say in full you are able to decide at once. It is a great

time-saver. It averts debates and prolonged discussions that get

nowhere. Nearly every business proposition that is brought to me can be

settled, as far as my participation in it is concerned, by my saying

yes or no. But I cannot say yes or no right off unless I have the

complete proposition before me.

Dan Williamson did the talking and I did the listening. He told me he

had heard a great deal about my operations in the stock market and how

he regretted that I had gone outside of my bailiwick and come a cropper

in cotton. Still it was to my bad luck that he owed the pleasure of

that interview with me. He thought my forte was the stock market, that

I was born for it and that I should not stray from it.

“And that is the reason, Mr. Livingston,” he concluded pleasantly, “why

we wish to do business with you.”

“Do business how?” I asked him.

“Be your brokers,” he said. “My firm would like to do your stock

business.”

“I’d like to give it to you,” I said, “but I can’t.”

“Why not?” he asked.

“I haven’t any money,” I answered.

“That part is all right,” he said with a friendly smile. “I’ll furnish

it.” He took out a pocket checkbook, wrote out a check for twenty-five

thousand dollars to my order, and gave it to me.

“What’s this for?” I asked.

“For you to deposit in your own bank. You will draw your own checks. I

want you to do your trading in our office. I don’t care whether you win

or lose. If that money goes I will give you another personal check. So

you don’t have to be so very careful with this one. See?”

I knew that the firm was too rich and prosperous to need anybody’s

business, much less to give a fellow the money to put up as margin.

And then he was so nice about it! Instead of giving me a credit with

the house he gave me the actual cash, so that he alone knew where

it came from, the only string being that if I traded I should do so

through his firm. And then the promise that there would be more if that

went! Still, there must be a reason.

“What’s the idea?” I asked him.

“The idea is simply that we want to have a customer in this office who

is known as a big active trader. Everybody knows that you swing a big

line on the short side, which is what I particularly like about you.

You are known as a plunger.”

“I still don’t get it,” I said.

“I’ll be frank with you, Mr. Livingston. We have two or three very

wealthy customers who buy and sell stocks in a big way. I don’t want

the Street to suspect them of selling long stock every time we sell

ten or twenty thousand shares of any stock. If the Street knows that

you are trading in our office it will not know whether it is your

short selling or the other customers’ long stock that is coming on the

market.”

I understood at once. He wanted to cover up his brother-in-law’s

operations with my reputation as a plunger! It so happened that I had

made my biggest killing on the bear side a year and a half before, and,

of course, the Street gossips and the stupid rumor-mongers had acquired

the habit of blaming me for every decline in prices. To this day when

the market is very weak they say I am raiding it.

I didn’t have to reflect. I saw at a glance that Dan Williamson was

offering me a chance to come back and come back quickly. I took the

check, banked it, opened an account with his firm and began trading. It

was a good active market, broad enough for a man not to have to stick

to one or two specialties. I had begun to fear, as I told you, that I

had lost the knack of hitting it right. But it seems I hadn’t. In three

weeks’ time I had made a profit of one hundred and twelve thousand

dollars out of the twenty-five thousand that Dan Williamson lent me.

I went to him and said, “I’ve come to pay you back that twenty-five

thousand dollars.”

“No, no!” he said and waved me away exactly as if I had offered him a

castor-oil cocktail. “No, no, my boy. Wait until your account amounts

to something. Don’t think about it yet. You’ve only got chicken feed

there.”

There is where I made the mistake that I have regretted more than any

other I ever made in my Wall Street career. It was responsible for long

and dreary years of suffering. I should have insisted on his taking the

money. I was on my way to a bigger fortune than I had lost and walking

pretty fast. For three weeks my average profit was 150 per cent per

week. From then on my trading would be on a steadily increasing scale.

But instead of freeing myself from all obligation I let him have his

way and did not compel him to accept the twenty-five thousand dollars.

Of course, since he didn’t draw out the twenty-five thousand dollars he

had advanced me I felt I could not very well draw out my profit. I was

very grateful to him, but I am so constituted that I don’t like to owe

money or favours. I can pay the money back with money, but the favours

and kindnesses I must pay back in kind--and you are apt to find these

moral obligations mighty high priced at times. Moreover there is no

statute of limitations.

I left the money undisturbed and resumed my trading. I was getting on

very nicely. I was recovering my poise and I was sure it would not be

very long before I should get back into my 1907 stride. Once I did

that, all I’d ask for would be for the market to hold out a little

while and I’d more than make up my losses. But making or not making

the money was not bothering me much. What made me happy was that I was

losing the habit of being wrong, of not being myself. It had played

havoc with me for months but I had learned my lesson.

Just about that time I turned bear and I began to sell short several

railroad stocks. Among them was Chesapeake & Atlantic. I think I put

out a short line in it; about eight thousand shares.

One morning when I got downtown Dan Williamson called me into his

private office before the market opened and said to me: “Larry, don’t

do anything in Chesapeake & Atlantic just now. That was a bad play of

yours, selling eight thousand short. I covered it for you this morning

in London and went long.”

I was sure Chesapeake & Atlantic was going down. The tape told it to

me quite plainly; and besides I was bearish on the whole market, not

violently or insanely bearish, but enough to feel comfortable with a

moderate short line out. I said to Williamson, “What did you do that

for? I am bearish on the whole market and they are all going lower.”

But he just shook his head and said, “I did it because I happen to know

something about Chesapeake & Atlantic that you couldn’t know. My advice

to you is not to sell that stock short until I tell you it is safe to

do so.”

What could I do? That wasn’t an asinine tip. It was advice that came

from the brother-in-law of the chairman of the board of directors. Dan

was not only Alvin Marquand’s closest friend but he had been kind and

generous to me. He had shown his faith in me and confidence in my word.

I couldn’t do less than to thank him. And so my feelings again won over

my judgment and I gave in. To subordinate my judgment to his desires

was the undoing of me. Gratitude is something a decent man can’t help

feeling, but it is for a fellow to keep it from completely tying him

up. The first thing I knew I not only had lost all my profit but I owed

the firm one hundred and fifty thousand dollars besides. I felt pretty

badly about it, but Dan told me not to worry.

“I’ll get you out of this hole,” he promised. “I know I will. But I

can only do it if you let me. You will have to stop doing business on

your own hook. I can’t be working for you and then have you completely

undo all my work in your behalf. Just lay off the market and give me a

chance to make some money for you. Won’t you, Larry?”

Again I ask you: What could I do? I thought of his kindliness and

I could not do anything that might be construed as lacking in

appreciation. I had grown to like him. He was very pleasant and

friendly. I remember that all I got from him was encouragement. He kept

on assuring me that everything would come out O.K. One day, perhaps

six months later, he came to me with a pleased smile and gave me some

credit slips.

“I told you I would pull you out of that hole,” he said, “and I have.”

And then I discovered that not only had he wiped out the debt entirely

but I had a small credit balance besides.

I think I could have run that up without much trouble, for the market

was right, but he said to me, “I have bought you ten thousand shares

of Southern Atlantic.” That was another road controlled by his

brother-in-law, Alvin Marquand, who also ruled the market destinies of

the stock.

When a man does for you what Dan Williamson did for me you can’t say

anything but “Thank you”--no matter what your market views may be. You

may be sure you’re right, but as Pat Hearne used to say: “You can’t

tell till you bet!” and Dan Williamson had bet for me--with his money.

Well, Southern Atlantic went down and stayed down and I lost, I forget

how much, on my ten thousand shares before Dan sold me out. I owed him

more than ever. But you never saw a nicer or less importunate creditor

in your life. Never a whimper from him. Instead, encouraging words and

admonitions not to worry about it. In the end the loss was made up for

me in the same generous but mysterious way.

He gave no details whatever. They were all numbered accounts. Dan

Williamson would just say to me, “We made up your Southern Atlantic

loss with profits on this other deal,” and he’d tell me how he had sold

seventy-five hundred shares of some other stock and made a nice thing

out of it. I can truthfully say that I never knew a blessed thing about

those trades of mine until I was told that the indebtedness was wiped

out.

After that happened several times I began to think, and I got to look

at my case from a different angle. Finally I tumbled. It was plain that

I had been used by Dan Williamson. It made me angry to think it, but

still angrier that I had not tumbled to it quicker. As soon as I had

gone over the whole thing in my mind I went to Dan Williamson, told

him I was through with the firm, and I quit the office of Williamson &

Brown. I had no words with him or any of his partners. What good would

that have done me? But I will admit that I was sore--at myself quite as

much as at Williamson & Brown.

The loss of the money didn’t bother me. Whenever I have lost money

in the stock market I have always considered that I have learned

something; that if I have lost money I have gained experience, so that

the money really went for a tuition fee. A man has to have experience

and he has to pay for it. But there was something that hurt a whole lot

in that experience of mine in Dan Williamson’s office, and that was the

loss of a great opportunity. The money a man loses is nothing; he can

make it up. But opportunities such as I had then do not come every day.

The market, you see, had been a fine trading market. I was right; I

mean, I was reading it accurately. The opportunity to make millions was

there. But I allowed my gratitude to interfere with my play. I tied

my own hands. I had to do what Dan Williamson in his kindness wished

done. Altogether it was more unsatisfactory than doing business with a

relative. Bad business!

And that wasn’t the worst thing about it. It was that after that there

was practically no opportunity for me to make big money. The market

flattened out. Things drifted from bad to worse. I not only lost all I

had but got into debt again--more heavily than ever. Those were long

lean years, 1911, 1912, 1913 and 1914. There was no money to be made.

The opportunity simply wasn’t there and so I was worse off than ever.

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.