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.
_XXIII_
Speculation in stocks will never disappear. It isn’t desirable that it should. It cannot be checked by warnings as to its dangers. You cannot prevent people from guessing wrong no matter how able or how experienced they may be. Carefully laid plans will miscarry because the unexpected and even the unexpectable will happen. Disaster may come from a convulsion of nature or from the weather, from your own greed or from some man’s vanity; from fear or from uncontrolled hope. But apart from what one might call his natural foes, a speculator in stocks has to contend with certain practices or abuses that are indefensible normally as well as commercially.