The dictionary definition of manipulation includes corners. Now, a corner might be the result of manipulation or it might be the result of competitive buying, as, for instance, the Northern Pacific corner on May 9, 1901, which certainly was not manipulation. The Stutz corner was expensive to everybody concerned, both in money and in prestige. And it was not a deliberately engineered corner, at that.
As a matter of fact very few of the great corners were profitable to the engineers of them. Both Commodore Vanderbilt’s Harlem corners paid big, but the old chap deserved the millions he made out of a lot of short sports, crooked legislators and aldermen who tried to double-cross him. On the other hand, Jay Gould lost in his Northwestern corner. Deacon S. V. White made a million in his Lackawanna corner, but Jim Keene dropped a million in the Hannibal & St. Joe deal. The financial success of a corner of course depends upon the marketing of the accumulated holdings at higher than cost, and the short interest has to be of some magnitude for that to happen easily.
I used to wonder why corners were so popular among the big operators of a half-century ago. They were men of ability and experience, wide-awake and not prone to childlike trust in the philanthropy of their fellow traders. Yet they used to get stung with an astonishing frequency. A wise old broker told me that all the big operators of the ’60’s and ’70’s had one ambition, and that was to work a corner. In many cases this was the offspring of vanity; in others, of the desire for revenge. At all events, to be pointed out as the man who had successfully cornered this or the other stock was in reality recognition of brains, boldness and boodle. It gave the cornerer the right to be haughty. He accepted the plaudits of his fellows as fully earned. It was more than the prospective money profit that prompted the engineers of corners to do their damnedest. It was the vanity complex asserting itself among cold-blooded operators.
Dog certainly ate dog in those days with relish and ease. I think I told you before that I have managed to escape being squeezed more than once, not because of the possession of a mysterious ticker-sense but because I can generally tell the moment the character of the buying in the stock makes it imprudent for me to be short of it. This I do by common-sense tests, which must have been tried in the old times also. Old Daniel Drew used to squeeze the boys with some frequency and make them pay high prices for the Erie “sheers” they had sold short to him. He was himself squeezed by Commodore Vanderbilt in Erie, and when old Drew begged for mercy the Commodore grimly quoted the Great Bear’s own deathless distich:
_He that sells what isn’t hisn Must buy it back or go to prisn._
Wall Street remembers very little of an operator who for more than a generation was one of its Titans. His chief claim to immortality seems to be the phrase “watering stock.”
Addison G. Jerome was the acknowledged king of the Public Board in the spring of 1863. His market tips, they tell me, were considered as good as cash in bank. From all accounts he was a great trader and made millions. He was liberal, to the point of extravagance and had a great following in the Street--until Henry Keep, known as William the Silent, squeezed him out of all his millions in the Old Southern corner. Keep, by the way, was the brother-in-law of Gov. Roswell P. Flower.
In most of the old corners the manipulation consisted chiefly of not letting the other man know that you were cornering the stock which he was variously invited to sell short. It therefore was aimed chiefly at fellow professionals, for the general public does not take kindly to the short side of the account. The reasons that prompted these wise professionals to put out short lines in such stocks were pretty much the same as prompts them to do the same thing to-day. Apart from the selling by faith-breaking politicians in the Harlem corner of the Commodore, I gather from the stories I have read that the professional traders sold the stock because it was too high. And the reason they thought it was too high was that it never before had sold so high; and that made it too high to buy; and if it was too high to buy it was just right to sell. That sounds pretty modern, doesn’t it? They were thinking of the price, and the Commodore was thinking of the value! And so, for years afterwards, old-timers tell me that people used to say, “He went short of Harlem!” whenever they wished to describe abject poverty.
Many years ago I happened to be speaking to one of Jay Gould’s old brokers. He assured me earnestly that Mr. Gould not only was a most unusual man--it was of him that old Daniel Drew shiveringly remarked, “His touch is Death!”--but that he was head and shoulders above all other manipulators past and present. He must have been a financial wizard indeed to have done what he did; there can be no question of that. Even at this distance I can see that he had an amazing knack for adapting himself to new conditions, and that is valuable in a trader. He varied his methods of attack and defense without a pang because he was more concerned with the manipulation of properties than with stock speculation. He manipulated for investment rather than for a market turn. He early saw that the big money was in owning the railroads instead of rigging their securities on the floor of the Stock Exchange. He utilised the stock market of course. But I suspect it was because that was the quickest and easiest way to quick and easy money and he needed many millions, just as old Collis P. Huntington was always hard up because he always needed twenty or thirty millions more than the bankers were willing to lend him. Vision without money means heartaches; with money, it means achievement; and that means power; and that means money; and that means achievement; and so on, over and over and over.
Of course manipulation was not confined to the great figures of those days. There were scores of minor manipulators. I remember a story an old broker told me about the manners and morals of the early ’60’s. He said:
“The earliest recollection I have of Wall Street is of my first visit to the financial district. My father had some business to attend to there and for some reason or other took me with him. We came down Broadway and I remember turning off at Wall Street. We walked down Wall and just as we came to Broad or, rather, Nassau Street, to the corner where the Bankers’ Trust Company’s building now stands, I saw a crowd following two men. The first was walking eastward, trying to look unconcerned. He was followed by the other, a red-faced man who was wildly waving his hat with one hand and shaking the other fist in the air. He was yelling to beat the band: ‘Shylock! Shylock! What’s the price of money? Shylock! Shylock!’ I could see heads sticking out of windows. They didn’t have skyscrapers in those days, but I was sure the second- and third-story rubbernecks would tumble out. My father asked what was the matter, and somebody answered something I didn’t hear. I was too busy keeping a death clutch on my father’s hand so that the jostling wouldn’t separate us. The crowd was growing, as street crowds do, and I wasn’t comfortable. Wild-eyed men came running down from Nassau Street and up from Broad as well as east and west on Wall Street. After we finally got out of the jam my father explained to me that the man who was shouting ‘Shylock’ was So-and-So. I have forgotten the name, but he was the biggest operator in clique stocks in the city and was understood to have made--and lost--more money than any other man in Wall Street with the exception of Jacob Little. I remember Jacob Little’s name because I thought it was a funny name for a man to have. The other man, the Shylock, was a notorious locker-up of money. His name has also gone from me. But I remember he was tall and thin and pale. In those days the cliques used to lock up money by borrowing it or, rather, by reducing the amount available to Stock Exchange borrowers. They would borrow it and get a certified check. They wouldn’t actually take the money out and use it. Of course that was rigging. It was a form of manipulation, I think.”
I agree with the old chap. It was a phase of manipulation that we don’t have nowadays.
_XX_
I myself never spoke to any of the great stock manipulators that the Street still talks about. I don’t mean leaders; I mean manipulators. They were all before my time, although when I first came to New York, _James R. Keene, greatest of them all_, was in his prime. But I was a mere youngster then, exclusively concerned with duplicating, in a reputable broker’s office, the success I had enjoyed in the bucket shops of my native city. And, then, too, at the time Keene was busy with the U.S. Steel stocks--his manipulative masterpiece--I had no experience with manipulation, no real knowledge of it or of its value or meaning, and, for that matter, no great need of such knowledge. If I thought about it at all I suppose I must have regarded it as a well-dressed form of thimble-rigging, of which the lowbrow form was such tricks as had been tried on me in the bucket shops. Such talk as I since have heard on the subject has consisted in great part of surmises and suspicions; of guesses rather than intelligent analyses.