Chapter 22

Chapter XXII

One day Jim Barnes, who not only was one of my principal brokers but

an intimate friend as well, called on me. He said he wanted me to do

him a great favour. He never before had talked that way, and so I asked

him to tell me what the favour was, hoping it was something I could do,

for I certainly wished to oblige him. He then told me that his firm was

interested in a certain stock; in fact, they had been the principal

promoters of the company and had placed the greater part of the stock.

Circumstances had arisen that made it imperative for them to market a

rather large block. Jim wanted me to undertake to do the marketing for

him. The stock was Consolidated Stove.

I did not wish to have anything to do with it for various reasons.

But Barnes, to whom I was under some obligations, insisted on the

personal-favour phase of the matter, which alone could overcome my

objections. He was a good fellow, a friend, and his firm, I gathered,

was pretty heavily involved, so in the end I consented to do what I

could.

It has always seemed to me that the most picturesque point of

difference between the war boom and other booms was the part that was

played by a type new in stock-market affairs--the boy banker.

The boom was stupendous and its origins and causes were plainly to

be grasped by all. But at the same time the greatest banks and trust

companies in the country certainly did all they could to help make

millionaires overnight of all sorts and conditions of promoters and

munition makers. It got so that all a man had to do was to say that

he had a friend who was a friend of a member of one of the Allied

commissions and he would be offered all the capital needed to carry out

the contracts he had not yet secured. I used to hear incredible stories

of clerks becoming presidents of companies doing a business of millions

of dollars on money borrowed from trusting trust companies, and of

contracts that left a trail of profits as they passed from man to man.

A flood of gold was pouring into this country from Europe and the banks

had to find ways of impounding it.

The way business was done might have been regarded with misgivings by

the old, but there didn’t seem to be so many of them about. The fashion

for gray-haired presidents of banks was all very well in tranquil

times, but youth was the chief qualification in these strenuous times.

The banks certainly did make enormous profits.

Jim Barnes and his associates, enjoying the friendship and confidence

of the youthful president of the Marshall National Bank, decided to

consolidate three well-known stove companies and sell the stock of the

new company to the public that for months had been buying any old thing

in the way of engraved stock certificates.

One trouble was that the stove business was so prosperous that all

three companies were actually earning dividends on their common stock

for the first time in their history. Their principal stockholders did

not wish to part with the control. There was a good market for their

stocks on the Curb; and they had sold as much as they cared to part

with and they were content with things as they were. Their individual

capitalisation was too small to justify big market movements, and that

is where Jim Barnes’ firm came in. It pointed out that the consolidated

company must be big enough to list on the Stock Exchange, where the

new shares could be made more valuable than the old ones. It is an

old device in Wall Street--to change the colour of the certificates

in order to make them more valuable. Say a stock ceases to be easily

vendible at war. Well, sometimes by quadrupling the stock you may make

the new shares sell at 30 or 35. This is equivalent to 120 or 140 for

the old stock--a figure it never could have reached.

It seems that Barnes and his associates succeeded in inducing some

of their friends who held speculatively some blocks of Gray Stove

Company--a large concern--to come into the consolidation on the basis

of four shares of Consolidated for each share of Gray. Then the Midland

and the Western followed their big sister and came in on the basis of

share for share. Theirs had been quoted on the Curb at around 25 to 30,

and the Gray, which was better known and paid dividends, hung around

125.

In order to raise the money to buy out those holders who insisted upon

selling for cash, and also to provide additional working capital for

improvements and promotion expenses, it became necessary to raise a few

millions. So Barnes saw the president of his bank, who kindly lent his

syndicate three million five hundred thousand dollars. The collateral

was one hundred thousand shares of the newly organised corporation. The

syndicate assured the president, or so I was told, that the price would

not go below 50. It would be a very profitable deal as there was big

value there.

The promoters’ first mistake was in the matter of timeliness. The

saturation point for new stock issues had been reached by the market,

and they should have seen it. But even then they might have made a fair

profit after all if they had not tried to duplicate the unreasonable

killings which other promoters had made at the very height of the boom.

Now you must not run away with the notion that Jim Barnes and his

associates were fools or inexperienced kids. They were shrewd men. All

of them were familiar with Wall Street methods and some of them were

exceptionally successful stock traders. But they did rather more than

merely overestimate the public’s buying capacity. After all, that

capacity was something that they could determine only by actual tests.

Where they erred more expensively was in expecting the bull market

to last longer than it did. I suppose the reason was that these same

men had met with such great and particularly with such quick success

that they didn’t doubt they’d be all through with the deal before the

bull market turned. They were all well known and had a considerable

following among the professional traders and the wire houses.

The deal was extremely well advertised. The newspapers certainly were

generous with their space. The older concerns were identified with the

stove industry of America and their product was known the world over.

It was a patriotic amalgamation and there was a heap of literature in

the daily papers about the world conquests. The markets of Asia, Africa

and South America were as good as cinched.

The directors of the company were all men whose names were familiar

to all readers of the financial pages. The publicity work was so well

handled and the promises of unnamed insiders as to what the price was

going to do were so definite and convincing that a great demand for the

new stock was created. The result was that when the books were closed

it was found that the stock which was offered to the public at fifty

dollars a share had been oversubscribed by 25 per cent.

Think of it! The best the promoters should have expected was to

succeed in selling the new stock at that price after weeks of work and

after putting up the price to 75 or higher in order to average 50.

At that, it meant an advance of about 100 per cent in the old prices

of the stocks of the constituent companies. That was the crisis and

they did not meet it as it should have been met. It shows you that

every business has its own needs. General wisdom is less valuable

than specific savvy. The promoters, delighted by the unexpected

oversubscription, concluded that the public was ready to pay any price

for any quantity of that stock. And they actually were stupid enough

to underallot the stock. After the promoters made up their minds to be

hoggish they should have tried to be intelligently hoggish.

What they should have done, of course, was to allot the stock in full.

That would have made them short to the extent of 25 per cent of the

total amount offered for subscription to the public, and that, of

course, would have enabled them to support the stock when necessary

and at no cost to themselves. Without any effort on their part they

would have been in the strong strategic position that I always try to

find myself in when I am manipulating a stock. They could have kept the

price from sagging, thereby inspiring confidence in the new stock’s

stability and in the underwriting syndicate back of it. They should

have remembered that their work was not over when they sold the stock

offered to the public. That was only a part of what they had to market.

They thought they had been very successful, but it was not long before

the consequences of their two capital blunders became apparent. The

public did not buy any more of the new stock, because the entire market

developed reactionary tendencies. The insiders got cold feet and did

not support Consolidated Stove; and if insiders don’t buy their own

stock on recessions, who should? The absence of inside support is

generally accepted as a pretty good bear tip.

There is no need to go into statistical details. The price of

Consolidated Stove fluctuated with the rest of the market, but it never

went above the initial market quotations, which were only a fraction

above 50. Barnes and his friends in the end had to come in as buyers

in order to keep it above 40. Not to have supported that stock at the

outset of its market career was regrettable. But not to have sold all

the stock the public subscribed for was much worse.

At all events, the stock was duly listed on the New York Stock Exchange

and the price of it duly kept sagging until it nominally stood at 37.

And it stood there because Jim Barnes and his associates had to keep it

there because their bank had loaned them thirty-five dollars a share

on one hundred thousand shares. If the bank ever tried to liquidate

that loan there was no telling what the price would break to. The

public that had been eager to buy it at 50, now didn’t care for it at

37, and probably wouldn’t want it at 27.

As time went on the banks’ excesses in the matter of extensions

of credits made people think. The day of the boy banker was over.

The banking business appeared to be on the ragged edge of suddenly

relapsing into conservatism. Intimate friends were now asked to pay off

loans, for all the world as though they had never played golf with the

president.

There was no need to threaten on the lender’s part or to plead for

more time on the borrower’s. The situation was highly uncomfortable

for both. The bank, for example, with which my friend Jim Barnes did

business, was still kindly disposed. But it was a case of “For heaven’s

sake take up that loan or we’ll all be in a dickens of a mess!”

The character of the mess and its explosive possibilities were

enough to make Jim Barnes come to me to ask me to sell the

one hundred thousand shares for enough to pay off the bank’s

three-million-five-hundred-thousand-dollar loan. Jim did not now expect

to make a profit on that stock. If the syndicate only made a small loss

on it they would be more than grateful.

It seemed a hopeless task. The general market was neither active nor

strong, though at times there were rallies, when everybody perked up

and tried to believe the bull swing was about to resume.

The answer I gave Barnes was that I’d look into the matter and let him

know under what conditions I’d undertake the work. Well, I did look

into it. I didn’t analyse the company’s last annual report. My studies

were confined to the stock-market phases of the problem. I was not

going to tout the stock for a rise on its earnings or its prospects,

but to dispose of that block in the open market. All I considered was

what should, could or might help or hinder me in that task.

I discovered for one thing that there was too much stock held by too

few people--that is, too much for safety and far too much for comfort.

Clifton P. Kane & Co., bankers and brokers, members of the New York

Stock Exchange, were carrying seventy thousand shares. They were

intimate friends of Barnes and had been influential in effecting the

consolidation, as they had made a specialty of stove stocks for years.

Their customers had been let into the good thing. Ex-Senator Samuel

Gordon, who was the special partner in his nephews’ firm, Gordon Bros.,

was the owner of a second block of seventy thousand shares; and the

famous Joshua Wolff had sixty thousand shares. This made a total of

two hundred thousand shares of Consolidated Stove held by this handful

of veteran Wall Street professionals. They did not need any kind

person to tell them when to sell their stock. If I did anything in the

manipulating line calculated to bring in public buying--that is to say,

if I made the stock strong and active--I could see Kane and Gordon

and Wolff unloading, and not in homeopathic doses either. The vision

of their two hundred thousand shares Niagaraing into the market was

not exactly entrancing. Don’t forget that the cream was off the bull

movement and that no overwhelming demand was going to be manufactured

by my operations, however skillfully conducted they might be. Jim

Barnes had no illusions about the job he was modestly sidestepping in

my favour. He had given me a waterlogged stock to sell on a bull market

that was about to breathe its last. Of course there was no talk in the

newspapers about the ending of the bull market, but I knew it, and Jim

Barnes knew it, and you bet the bank knew it.

Still, I had given Jim my word, so I sent for Kane, Gordon and Wolff.

Their two hundred thousand shares was the sword of Damocles. I thought

I’d like to substitute a steel chain for the hair. The easiest way,

it seemed to me, was by some sort of reciprocity agreement. If they

helped me passively by holding off while I sold the bank’s one hundred

thousand shares, I would help them actively by trying to make a

market for all of us to unload on. As things were, they couldn’t sell

one-tenth of their holdings without having Consolidated Stove break

wide open, and they knew it so well that they had never dreamed of

trying. All I asked of them was judgment in timing the selling and an

intelligent unselfishness in order not to be unintelligently selfish.

It never pays to be a dog in the manger in Wall Street or anywhere

else. I desired to convince them that premature or ill-considered

unloading would prevent complete unloading. Time urged.

I hoped my proposition would appeal to them because they were

experienced Wall Street men and had no illusions about the actual

demand for Consolidated Stove. Clifton P. Kane was the head of a

prosperous commission house with branches in eleven cities and

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

and Gordon--and possibly Jim Barnes--handled that little tipping job

mighty well.

I had no idea that I had such a following. Why, that morning the buying

orders came in from all over the country--orders to buy thousands of

shares of a stock that nobody wanted at any price three days before.

And don’t forget that, as a matter of fact, all that the public had to

go by was my newspaper reputation as a successful plunger; something

for which I had to thank an imaginative reporter or two.

Well, sir, on that, the third day of the rise, I sold Consolidated

Stove; and on the fourth day and the fifth; and the first thing I

knew I had sold for Jim Barnes the one hundred thousand shares of

stock which the Marshall National Bank held as collateral on the

three-million-five-hundred-thousand-dollar loan that needed paying

off. If the most successful manipulation consists of that in which the

desired end is gained at the least possible cost to the manipulator,

the Consolidated Stove deal is by all means the most successful of my

Wall Street career. Why, at no time did I have to take any stock. I

didn’t have to buy first in order to sell the more easily later on.

I did not put up the price to the highest possible point and then

begin my real selling. I didn’t even do my principal selling on

the way down, but on the way up. It was like a dream of Paradise to

find an adequate buying power created for you without your stirring

a finger to bring it about, particularly when you were in a hurry. I

once heard a friend of Governor Flower’s say that in one of the great

bull-leader’s operations for the account of a pool in B. R. T. the pool

sold fifty thousand shares of the stock at a profit, but Flower & Co.

got commissions on more than two hundred and fifty thousand shares and

W. P. Hamilton says that to distribute two hundred and twenty thousand

shares of Amalgamated Copper, James R. Keene must have traded in at

least seven hundred thousand shares of the stock during the necessary

manipulation. Some commission bill! Think of that and then consider

that the only commissions that I had to pay were the commissions on the

one hundred thousand shares I actually sold for Jim Barnes. I call that

some saving.

Having sold what I had engaged to sell for my friend Jim, and all the

money the syndicate had agreed to raise not having been sent in, and

feeling no desire to buy back any of the stock I had sold, I rather

think I went away somewhere for a short vacation. I do not remember

exactly. But I do remember very well that I let the stock alone and

that it was not long before the price began to sag. One day, when the

entire market was weak, some disappointed bull wanted to get rid of his

Consolidated Stove in a hurry, and on his offerings the stock broke

below the call price, which was 40. Nobody seemed to want any of it. As

I told you before, I wasn’t bullish on the general situation and that

made me more grateful than ever for the miracle that had enabled me to

dispose of the one hundred thousand shares without having to put the

price up twenty or thirty points in a week, as the kindly tipsters had

prophesied.

Finding no support, the price developed a habit of declining regularly

until one day it broke rather badly and touched 32. That was the lowest

that had ever been recorded for it, for, as you will remember, Jim

Barnes and the original syndicate had pegged it at 37 in order not to

have their one hundred thousand shares dumped on the market by the bank.

I was in my office that day peacefully studying the tape when Joshua

Wolff was announced. I said I would see him. He rushed in. He is not a

very large man, but he certainly seemed all swelled up--with anger, as

I instantly discovered.

He ran to where I stood by the ticker and yelled, “Hey? What the

devil’s the matter?”

“Have a chair, Mr. Wolff,” I said politely and sat down myself to

encourage him to talk calmly.

“I don’t want any chair! I want to know what it means!” he cried at the

top of his voice.

“What does what mean?”

“What in hell are you doing to it?”

“What am I doing to what?”

“That stock! That stock!”

“What stock?” I asked him.

But that only made him see red, for he shouted, “Consolidated Stove!

What are you doing to it?”

“Nothing! Absolutely nothing. What’s wrong?” I said.

He stared at me fully five seconds before he exploded: “Look at the

price! Look at it!”

He certainly was angry. So I got up and looked at the tape.

I said, “The price of it is now 31¼.”

“Yeh! Thirty-one and a quarter, and I’ve got a raft of it.”

“I know you have sixty thousand shares. You have had it a long time,

because when you originally bought your Gray Stove----”

But he didn’t let me finish. He said, “But I bought a lot more. Some of

it cost me as high as 40! And I’ve got it yet!”

He was glaring at me so hostilely that I said, “I didn’t tell you to

buy it.”

“You didn’t what?”

“I didn’t tell you to load up with it.”

“I didn’t say you did. But you were going to put it up----”

“Why was I?” I interrupted.

He looked at me, unable to speak for anger. When he found his voice

again, he said, “You were going to put it up. You had the money to buy

it.”

“Yes. But I didn’t buy a share,” I told him.

That was the last straw.

“You didn’t buy a share, and you had over four millions in cash to buy

with? You didn’t buy any?”

“Not a share!” I repeated.

He was so mad by now that he couldn’t talk plainly. Finally he managed

to say, “What kind of a game do you call that?”

He was inwardly accusing me of all sorts of unspeakable crimes. I sure

could see a long list of them in his eyes. It made me say to him: “What

you really mean to ask me, Wolff, is, why I didn’t buy from you above

50 the stock you bought below 40. Isn’t that it?”

“No, it isn’t. You had a call at 40 and four millions in cash to put up

the price with.”

“Yes, but I didn’t touch the money and the syndicate has not lost a

cent by my operations.”

“Look here, Livingston--” he began.

But I didn’t let him say any more.

“You listen to me, Wolff. You knew that the two hundred thousand shares

you and Gordon and Kane held were tied up, and that there wouldn’t be

an awful lot of floating stock to come on the market if I put up the

price, as I’d have to do for two reasons: The first to make a market

for the stock; and the second to make a profit out of the call at 40.

But you weren’t satisfied to get 40 for the sixty thousand shares you’d

been lugging for months or with your share of the syndicate profits, if

any; so you decided to take on a lot of stock under 40 to unload on me

when I put the price up with the syndicate’s money, as you were sure

I meant to do. You’d buy before I did and you’d unload before I did;

in all probability I’d be the one to unload on. I suspect you figured

on my having to put the price up to 60. It was such a cinch that you

probably bought ten thousand shares strictly for unloading purposes,

and to make sure somebody held the bag if I didn’t, you tipped off

everybody in the United States, Canada and Mexico without thinking

of my added difficulties. All your friends knew what I was supposed

to do. Between their buying and mine you were going to be all hunky.

Well, your intimate friends to whom you gave the tip passed it on to

their friends after they had bought their lines, and the third stratum

of tip-takers planned to supply the fourth, fifth and possibly sixth

strata of suckers, so that when I finally came to do some selling I’d

find myself anticipated by a few thousands of wise speculators. It was

a friendly thought, that notion of yours, Wolff. You can’t imagine

how surprised I was when Consolidated Stove began to go up before I

even thought of buying a single share; or how grateful, either, when

the underwriting syndicate sold one hundred thousand shares around 40

to the people who were going to sell those same shares to me at 50 or

60. I sure was a sucker not to use the four millions to make money for

them, wasn’t I? The cash was supplied to buy stock with, but only if I

thought it necessary to do so. Well, I didn’t.”

Joshua had been in Wall Street long enough not to let anger interfere

with business. He cooled off as he heard me, and when I was through

talking he said in a friendly tone of voice, “Look here, Larry, old

chap, what shall we do?”

“Do whatever you please.”

“Aw, be a sport. What would you do if you were in our place?”

“If I were in your place,” I said solemnly, “do you know what I’d do?”

“What?”

“I’d sell out!” I told him.

He looked at me a moment, and without another word turned on his heel

and walked out of my office. He’s never been in it since.

Not long after that, Senator Gordon also called. He, too, was quite

peevish and blamed me for their troubles. Then Kane joined the anvil

chorus. They forgot that their stock had been unsalable in bulk when

they formed the syndicate. All they could remember was that I didn’t

sell their holdings when I had the syndicate’s millions and the stock

was active at 44, and that now it was 30 and dull as dishwater. To

their way of thinking I should have sold out at a good fat profit.

Of course they also cooled down in due time. The syndicate wasn’t out

a cent and the main problem remained unchanged: to sell their stock. A

day or two later they came back and asked me to help them out. Gordon

was particularly insistent, and in the end I made them put in their

pooled stock at 25½. My fee for my services was to be one-half of

whatever I got above that figure. The last sale had been at about 30.

There I was with their stock to liquidate. Given general market

conditions and specifically the behaviour of Consolidated Stove, there

was only one way to do it, and that was, of course, to sell on the way

down and without first trying to put up the price, and I certainly

would have got stock by the ream on the way up. But on the way down

I could reach those buyers who always argue that a stock is cheap

when it sells fifteen or twenty points below the top of the movement,

particularly when that top is a matter of recent history. A rally is

due, in their opinion. After seeing Consolidated Stove sell up to close

to 44 it sure looked like a good thing below 30.

It worked out as always. Bargain hunters bought it in sufficient volume

to enable me to liquidate the pool’s holdings. But do you think that

Gordon or Wolff or Kane felt any gratitude? Not a bit of it. They are

still sore at me, or so their friends tell me. They often tell people

how I did them. They cannot forgive me for not putting up the price on

myself, as they expected.

As a matter of fact I never would have been able to sell the bank’s

hundred thousand shares if Wolff and the rest had not passed around

those red-hot bull tips of theirs. If I had worked as I usually

do--that is, in a logical natural way--I would have had to take

whatever price I could get. I told you we ran into a declining market.

The only way to sell on such a market is to sell not necessarily

recklessly but really regardless of price. No other way was possible,

but I suppose they do not believe this. They are still angry. I am not.

Getting angry doesn’t get a man anywhere. More than once it has been

borne in on me that a speculator who loses his temper is a goner. In

this case there was no aftermath to the grouches. But I’ll tell you

something curious. One day Mrs. Livingston went to a dressmaker who had

been warmly recommended to her. The woman was competent and obliging

and had a very pleasing personality. At the third or fourth visit, when

the dressmaker felt less like a stranger, she said to Mrs. Livingston:

“I hope Mr. Livingston puts up Consolidated Stove soon. We have some

that we bought because we were told he was going to put it up, and we’d

always heard that he was very successful in all his deals.”

I tell you it isn’t pleasant to think that innocent people may have

lost money following a tip of that sort. Perhaps you understand why I

never give any myself. That dressmaker made me feel that in the matter

of grievances I had a real one against Wolff.