The San Francisco Call. Newspaper, February 14, 1904, Page 8

when he applicants ng i almost ng much money The air e for the in- securiti eye. t to ascer- k such items ight have some There was no brokers pic the glamour of the his scruples r business. And so when- i th he boys’ ¢ in a New of ten 7 he would speculate n a larger scale and profit propor Now, the position of telephone boy is rea rtant, in that it requires not witted but a trustworthy place, the is buying ust ex- in the matter of orders should the board happen to be un- the boy receives the or- ternational Pipe A man in Tracy er. For example: Ir t 108. corral” hix to the firm' say, “at the at the ruling market & Middleton immediately r their private line to the ange to their board member res of International Pipe The telephone boy re- elves the message and “puts up” Mr Middieton’s number, which means that the multi-colored, checkered strip on the frieze of the New street wail Mr. Middleton’s number, 611, appears by means‘of an electrical device. The moment Mr. Middleton sees that his number is “up” he hastens to the tele- phone booth to see what is wanted Now, if Mr. Middleton delays In an- ewering his number the telephone boy knows he is'absent and gives the order to one of the “two-dollar” brokers, who aiways hover about the booths looking for orders. He does the same if he knows that Mr. Middleton is very busy executing some other order, or if in his judgment the order calls for immediate execution. Young Hayward attepded to his busi- ness closely, and when Mr. Middleton was absent from the floor or busy he impartially distributed the firm's tele- phoned buying or selling orders among the two-dollar brokers, for Tracy & Middleton did a very good commission iness indeed. He was a nice look- ng and nice aeting little chap was Hayward—clean faced, polite and ami- able. The brok ked him and they ‘remembered” him at Christmas. The best memory was possessed by Jacobs, who gave him $25 uated that he would like to do more of Tracy & Middleton's business than n getting ut,” said Sally. to give the ker I found fir * said Jacobs. oleaginously, “I ver too busy to take orders from such a nice young fellow as yourself if you take the trouble to find me: and I'll do something nice for you. Look here,” in a whisper, “if you give me plenty of business T'll ‘give you 35 a week.” An@hé dived into the mob that yelling itself hoarse about the Gotham Gds post Hayward’s first impulse was to tell his irm about it, because he feit vague- that Jaéobs would not have offered $5 a week if he had not expected on “the firm said I order to whichever something dishonorable in return. Be- fore the market closed. however. he spoke to Willie' Simpson, ‘McDuff & Wilkinson's boy, whose telephone was & Middleton’s. Sure ed great indigna- like that old skunk.” said ive dollars a week. when he an make $100 out of the firm. Don't you do it, Sally. Why, Jim Burr, who had the place before you, used to get $20 a week from old man Grant and $50 2 month from Wolff. You've got 2 cinch if you only know how to work Why. they are supposed to give 50 cents 2 hundred.” Willie had been in the business for two years, and he was a very well dressed youth, indeed. Sally now un- derstood how he managed it on & sgl- ary of $12 a week. He did not say anything to the firm that day. nor any other day. And he didn’t say anything to Jacobs in re- turn, but by Willie's sage advice con- / ALMOST _SWw/ ouT STOCK EXCHA FOP THE LA tented himself with merely withhold- ing all orders from that glvuginous personage until Mr. Jacobs Was moved to'remonstrate. And Sally, who had learned a great deal in a week under Willie’s tuition, . answered curtly: “‘Business is very bad; the firm is do- ing hardly anything.” “But Watson told me,” said Jacobs, angrily,’ “that he w; doing a great deal of business for Tracy & Middle- ton. share or I'll speak to Middleton and find out what the trouble is.” “Is that so?” said Sally 6 calmly. “You might also tell Mr. Middleton that you offered me $5 a week to give you the bulk of our business.” Jacobs came down to business at once. “I'll make it $8,” he sald con- ciliatingly. “Jim Burr, who had the position before me,” expostulated Sally indig- nantly, “told me he received 325" a week from Mr. Grant, with an extra $10 thrown in from time to time, when Mr. Grant made some lucky turn, to say nothing of what the other men did for him.” “You must be crazy,” said Jacobs angrily. *Why, I never get much more than a thousand shares a week from Tracy & Middleton, and usually less. Say, you ought to be on the floor. You are wasting your talent in the telephone business, you are. Let's swap places, you and L” ccording to our books,” said Sal- ly to the irate broker, having been duly coached by William Simpson, *“the last week you did business for us you did 3000 shares and received $76.” “That was an exceptional week. I'll make it'$10,” said Jacobs. “Pwenty-five,” whispered Sally de- terminedly. “I'll give you $15 a week, but you must see that 1 get at least 2500 shares a week.” I'll do the best 1 can for “Al) right. “you, Mr. Jacobs.” And he did, for the other brokers gave him only 25 cents, or.at the most 50 cents per hundred shares. In the course of a month or two Sally was in possession of an income of $40,a week. And he was only 18. Time passed. As it had happened with his predecessor. =o did it happen now with Sally. He began by specu- Jating, wildly at first.. more carefully "' later on. From the bucket:shops he went to the Consolidated Exchange. Then he asked Jacobs and the other two-dollar brokers to let him deal in a small way with them, which they did out of personal liking for him, until he had three separate,accounts and could “swing a line” of several hundred shares. h AND HE WALKED SLOWLY ERINGLY OF THE NEW YO I want you to see that I get my" T™™E At last the Rlow fell which Sally had 80 long dreaded—he was ' “promoted” to a clerkship in Tracy & Midgleton's office. Thegfirm meant to reward him for his devotion to his work, for his brightness and quickness. From $15 a week they raised ~his salary to $25, which they considered quite genérous, especially in view of his youth and that he had started three years before with $8. He was only 20 now. But Sally, knowing it meant the abandonment of ‘his lucrative perquisites as- telephone * “boy,” bemoaned his undeseryed fate. He took the money he had made to Mr. Tracy and.told him aninteresting story of a rich aunt and a legacy, and asked him to let'him open an account in the office. Tracy congratulated his young clerk, took the $6500, and there- after Sally was both an employe and a customer of Tracy & Middleton, Sally lpecu}n!.ed ° with, varying suc- cess, running ‘up his winnings to $10,- 000 and seeing them dwindle later to $6000. But, in addition to becoming an inveterate speculator, he gained much Vvaluable experience. He became friend- ly and even familiar with Tracy Middleton’s clients, among whom were some very wealthy men, for a stock- broker's office is a democratic place. dleton’s conditign, which 'led to Within less than' . & o sain He really was a bright, amiable fel- low. very obliging—he was pald for it by the firm—and he made the most of his opportunities. The customers grew to»like him exceedingly well and to think with respect of his. judgment, market-wise. One day W. _Basl Thornton, one of the wealthiest and: boldest custoniers of the firm, com-- plained of the difficulty of “beating. the game” with the heavy handicap of the large brokerage eommission. g Jestingly, yet hoping “to be taken seriously, ‘Sally said: *“Join the New York Stock Exchange, or buy-me a . seat, and start the firm of Thornton &. ‘Hayward. Just think, . cojonel, we would have your trade, and you could - bring some friends, and I ¢ould bring mine, and 1 think many' of these”— pointing to:Tracy & :Middleton’s cus- tomers—"“would come ovet to us. They - - all-‘think a. lot,” -diploma , ot your opinions on the market.”% - Thornton was favorably impressed with the idea, and’ Sally saw it.,. From that moment on he worked hard the colonel's ~confidence. It was he who gave . Thornton the first hint of Tracy & Mid- the withdrawal of Thornton's account and his own from the office. It was a violation of confidence and of business ethics,-but Thornton was very grateful when, two months later, Tracy & Mid- dleton fafléd’ ‘under - circumstances which were far from . creditable and which were discussed at great lenzth by the street. He showed his grati- tude by adding a round sum to Sally's $11,500, and Willis N. Hayward became a member of the New York Stock Ex- change. Shortly afterward the firm of Thornton & Hayward, bankers and brokers, was formed. Sally,then in his twenty-fifth year, had become a sea- soned ‘Wall street man. From the start the new firm did well. Colonel Thornton and two or three friends who. followed him from Tracy & Middleton’s offife, all of them “‘plung- ers,” were almost enough to keep Hay- ward busy on the exchange executing orders, ‘@nd;;.moreover, new mers were coming in. / Thornton was a rich man, and tected his own speculations m amply. He noticed the develo] t of his young ner’s gambling procliv- ities and remonstrated with him in a kindly, paternal sort of way. Sally vowed he would stop. three months he \ had broken his promise twice, and his unsuccessful operations in Alabama Coal at one time threatened seriously to embarrass the firm. Colonel Thornten came to the rescue. -Sally promised with & solemnity born of sincere fear never to do It again. - But fright lasts only a little spacej and memory Is equally short lived. . Wall street has no room for men with an excess of timidity or of recollection. He had gambled before he joined-the New YorkeStock Exchange. And then, too, Willis N. Hayward, the board member of Thornton & Hay ward, was a very different person from Sally, the nice ‘little telephone boy of Tracy & Middleton's. His cheeks were not pink; they were mottled. His eyes were not clear and ingenuous; they were shifty and a bit watery. He had s been in Wall street eight or ten years, and he overworked his nerves every day from 10 a. m. to 3 p. m. on the Stock Exchange: algo from 5 p. m. to mid- night at the cafe of a big uptown hotel, where Wall street men gathered to talk hop. His system craved stimulants; mbling and liquor were the strongest he knew. ‘When, after' two years, the firm ex- pired by limitation Colonel Thornton withdrew. He had had enough of Hay- ward's plunging. To be sure Sally had become a shrewd “trader,” and he had made $75,000 during the big bull boom; but he was dt heart a “trader,” which is to say a mere gambler in stocks, and not a desirable commission man. But Sally, (flushed with success on the bull side, did not worry when Thornton refused to continue the part- nership. The slogan was: “Buy A. O. T. It's sure to go up!" the initials standing for “Any Old Thing!” The most prosperous period in the indus- trial and commercial history of the United States begot an epidemic of speculative madness such as was never before known and probably never again will be. Everybody had money i abundance and the desire for specu- lation in superabundance. Sally formed a new firm immediately— Hayward & Co.—with his cashier as partner. All mundane things have an end, even bull markets and bear markets. The bull markets saw Hayward & Co. doing a good business, as did every- body else in Wall street. It ended and the firm’s customers, after a few bad “slumps” in prices, were admoi ed to turp bears in order to recouy their losses, - Bears believe high and should go lower; bulls, .op- fimists, believer the opposite. public can't sell stocks “short” any more ‘than the average man is left handed. These customers were no ex- ception, so they did nothing, Hayward had “overstaved'™ithe bull market, 4hough not disastrousty; that 18, 'he .was in error regarding the ex- tent and ‘duration of the upward move- ment of prices.. He prdeeeded fo fall fntb: & similar érror on ‘the bear ‘or downward: sides/The market had been extrémely dull: following what the financial writers called a. “severe de- ciine,” but which meant the loss of millions of dollars by speculators. Hayward's customers, like everybody else’s customers, were not speculating. So he used their money to protect his awn * speculations. Office expenses were numerous and heavy and com- missions few and light. Hayward was very bearish. He had sold stocks, sharing the belief of the majority of his fellows that the lowest prices had not been reached. As a result he was heavily “short” and he could not “cover” at a profit, because prices had advanced very slowly, but very steadily. One day a blg gambler in Chicago. bolder or keener than his. Eastern brethren, thought the time“was ripe for a “bull” or upward movement in general; ‘and particularly in Consoli- dated Steel Rod Company’s stock. He was-the chairman of the board of di- rectors. William G. Dorr decided upon a plan . whereby the stock could be made attractive to that class of spec- ulative investors, so to speak, who liked to buy stocks making strenuous disbursements of profits to their hold- ers. Mr. Dorr’s plan was kept a se- cret. The first step consisted of send- ing in large buying orders, handled by -prominent_brokers, and synchron- ously the publication in the _daily press of various items, all recitifig the wonderful prosperity of the Consoli- dated Steel Rod Company and its phe- nomenal earnings; also the unutter- able cheapness of the stock at the pre- ling price. Mr. Dorr and asso- ciates, of course, had previously tak- en advantage of the big “slump” or fall in values to buy back at 35 the same stock they had sold to the pub- lic some weeks hefore at 70. 'Having acquired this cheap stock, they “man- ipulated”—by means of further pur- chase—the price so that they could sell out at a profif. 1t so happened, however, that once before dividend rumors about “Con. % Steel Rod” had been disseminated, with the connivance of Dorr, and they had not come true, to the great detri- ¢ ment of credulous buyers and greater profit of the insiders, who were “short” of the stock “up to their necks”—a typical bit of stock jobbing whereat other and more artistic stock jobbers had expressed the. greatest indignation. : Instead of putting the stock on a dividend paying basis the directors decided—at the last hour— that it would not be conservative to do so, whereupon the stock had “bro- ken” seventeen points. The lambs lost hundreds of thousands of dollars; the insiders gained as much. It was a “nice turn.” Hayward remembered this, and when the stock after several days of conspic- uous activity and steady advances rose to 52, he promptly sold “short™ . shares—believing that the barefaced <~manipulation would not raise the stock much above that*figure and that before long it must decline. “Only a month previously it had sold at 35 and nobody wanted any of it. He was all the more decided in his opinion that the “top” had been reached by prices because Mr. Dorr in a Chicago paper had stated that the stockholde¥s would probably receive an entire year's dividends at one fell swoop by reason of the unex- ampled prosperity in . the steel rod ‘ trade. Such an action was unprecedent- ed.. It had been talked about at various times in connection with other stoeks, but it had never come true. Why should it come true in this instance? ‘Hayward, familiar with Dorr’s record, promptly “coppered” his tip to buy, banking 'S gamblers, fooled everybody—he vricés ‘are too’ 5000 the truth. That week the ar- i’{cttrojlg did actually as he ;vr‘fld{cted- When a speculator of his caliber lies 3 -half—the foolish haif he fools vnly one-hal ro —of the street. When he tells the (r\m he deceives everybody. Before V .?.1 street could recover from the shock the price of the stock was up me'pumu. Which meant that Hayward was out $25,000 on that deal alone. But in addi- tion the general list was carried Ly ward sympathetically.y Money rates and bear hopes fell; ‘sibck values and bull courage rose. Ha;‘w:ard began “covering” Steel Rod. He “bought in 5000 shares. and after he had finished he lost 326,760 by the deal. He was still “short” about 12,000 shares of other stocks on which his “paper” losses at the last quoted prices were over $35.000, but if he tried to buy back such a large amount of stock in a market so sensi- tive to amy kind of bull impetus he would send prices upward in a jiffy, in- creasing his own losses very materi- ally. He went to his office that morning in a tremor. He consuited the cashler, and found he had only 352,000 at the bank. of which two-thirds belonged to his customers. He was already, moral- 1y speaking, an embezzler. He was ruined if he didn’t cover, and he was ruined if he did. His “seat” on the Stock Exchange was worth possibly $49,000, not a cent more; and as he per- sonally owed his out-of-town corre- spondents nearly $33,000 he could not avold being hopelessly ruined. Mors- over, his bankruptcy would not be an “honest” failure, for, as he told him- self bitterly, after the harm was done, ~I had no business to speculate on my own hook with other people’s money Now he was face to face with the question that every gambler dread: “If 1 stood to lose all, how desperats & risk would I take-in order to get It back?"" As he left his office to go to the “board room” he put to himseif the fateful query. But heé would not let himself answer it until he had stopped at_“Fred’s,” the official barroom of the Stock Exchange, and had taken a stiff drink of raw whisky. Then the answer came. He was ruined anyhow. If he failed without further ado, that is, without increasing his llabilities, he would be cursed by twenty-five of his customers and by fifteen of his fellow brokers who were “lending” stocks to him. But if"he made one last desperate effort he might pull out of the hole; or, at the worst, why, the number of cursing customers would remain the same, but the fellow brokers would rise to twenty o thirt: He took another «tiff drink. The mar- ket had become undoubtedly a bull market. The bears had been fighting the advance, and there still' remained a stubborn short interest in certain stocks. as, for exampie, in American Sugar , Company stock. Now if that short interest could be stampeded It miight mean an eight or ten point ad- vance. If he bought 10,000 or 15,000 shares and scld them at an average profit of four or five points, he would put off the disaster, and if he ma ten points he would be a great operator. He had, to be sure, no business-to buy even 1000 shares of sugar; but then he had no business to be on the verge of Bankruptcy. The liqugr was potent. Sally said to himself aggrievedly: “1 might as well be hung for a flock as for one measly old mutton.” He walked a trifle unsteadily from “Fred's” across the narrow asphalted New street to the Stocks Exchange. He paused at the entrance. There was no escape. Unless he could make a lucky strike he would fall ignomini- ously. “Pike’s Peak or bust!”™ he muttered to himself, and walked into the bix room. “Good morning, Mr. Hayward.” sald the doorkeeper. Hayward nodded ab- sently. caught himself repeating, ‘“Pike’s Peak or bust!” and walked straight toward the sugar post. He began to bid for stock. Onme thou- sand shares at 116; he got it. Another thousand; it was forthcoming at 118%. So far, so bad. Then he bid 117 for 2000 shares, and it was promptly sold. But when he bil “117. for any part of 5000!"" the crowd hesitated, the brokers were not altogether sure Hayward was “good for it”; his ability to pay for the stock was not undoubted. So Sally. taking advantage of the hesitation, bid 117% and 117% for 5000 Sugar, at which price “Billy” Thatcher, a two-dallar broker, sold it to him. It made 10,- 500 shares Hayward had bought and the stock had risen only 1% points, The shorts were not frightened a wee bit. But Sally was. He rushed out of the crowd to his telephone and made a _pretense of “reporting” the transac- tions of his office, as he would have fdone had they been bona fide pur- chases. He was followed by a hun- dred sharply curious—and curiously sharp—eyes. They saw him hold the telephone receiver to his ear with an expression of great interest, as if he were listening to an important mes- sage. But the only message he heard was that of his heartbeats, that seemed to say, almost artichlately, “You have played and you have lost; yvyou have played and you have lost. Therefore, you are that much worse off than be- fore. You must play again, and not loge!™ He left his telephone and rushed back to the Sugar crowd. He was less excited, less like a drunken man; his face was no longer flushed, but pale. And anon there flashed upon him the words, “Pike’s ‘ Peak or bust.” But Pike’s Peak glowed dully, feebly, while the alternative was of a Jurid splendor. And he biinked his eyes and made a curious impatient motion with his hand, as one waves away an an- noying insect. He gave an order for 5000 Sugar to his friend Newton Hartley. “Is this for yourself, Sally?" Hartley. “No. It's for one of in the street. Newt. solutely 0. K And thus reassured, Hartley bought the stock. The price was 118. The seller would hold Hartley responsible for the purchase money if Hayward *“laid down”—refused to pay. Sally wiped his forehead twice, quite unnecessarily. The shorts were not stampeding. Any attempt to sell out the 15,000 shares he had bought would result only in depressing the price five points at least.. It was worse than bad the outlook for him. He gave another to buy 5000 shares to “Billy” Lansing. an old reliable two- dollar broker, but Lansing declined it. He tried another, but the order was not accepted They mistrusted him, but he could not even bluster, for they excused themseives on the ground of :‘vlb:‘d important orders elsewhers. So e recourse to another friend—J. G. Thompson. o “Joe, buy 5000 Sugar.” asked e biggest men It's all right. Ab-