THE SKETCHER

Otago Witness, Issue 2688, 20 September 1905, Page 78

THE SKETCHER

3 UPS AND» DOWNS OF WAIL STRELT.

GREAT OPERATORS WHO HAVE

GONE BROKE

4j 1 VJT\_/XT-LJ A^JLV\ - 'ii.i-J. jj (By Henri: Clows, Naw York Rock Ex-*-i change, mi Chiunbci's's Jomv.al.) , i ° ' { Tlu mutations and vicissitudes, the mis ,i and down*, «•£ W. .11 btrocfc tan be iilr.s- '! tratcJ, best by ekatdies from life of tiie (! career ;uul experience oi its leading opcaa■j tors, who often,, though not genially, hove j gone, ap like a. rocket and come do-,\ n hks i a stick. j Wo ihnll not begin with those new foe- ! 3}it)sL. m Wall stiect, but go back to Jacob j Little,, ■whotio nane it -»till a household i word' on tin- Stock Kxciiange. ! Hi> died' -vbile ijho -war- uetwoen t.he ! North and South v;.s naming, and graduj ally ceased lo be a povtx- in. the fcta'^eL afnr the. panic of 1857. ; He was an odd fish— siegulai: m app«u'-ij-anoe,. manner, and hu&ijKiSs mat-hods ; but r ior more titan 20- jeais he had a great i name ni Wall street. £Lr was die micl) ce&sov gf Jacob Baiker, of Philadelphia, tho first grcafc leader Wall sUnset had known:- was teamed in hi& ©JKce ; ?nd - begaa as a stock opera-tor urn his own account in 1835. |i! The panic of 1837 made his reputation [I,' and his fortune, lov, being a "bfear," he |j was l«i°.ely .siiorfc of storks. That panic jj swept, the whole United states with tite ■'' besom of destruction/,, am? sent down prices '■ to, sero. Ik lefc cmx w greater hear thaa L3 1 over, a preaehec of distrust and a piophefc | of. f/iiimy?.. He thrived on calamity,, and ].|grew/ richer: ;w)'-f. rich^u- ..during the jcars ! jjof depression* t.Mt foliowssdl that roemoa- | able, revulsion-.. j Frojn.-. 1855^10) WsG> Re was- icu Ms glory land' lias- grime-,, *i«d' no. wn-e disputed Jflis 'leadership/ ht the; world of Wall street-. But then S© met. with a great reverse — j not, however,, ihtough conluvuing to- bear stocks, but through a», bull operation in j Norwich and' Worcester' railroad stock, i With a Boston clique, he attempted to j control this stock, tot- it bulled hard, and j refused to stay up. So he paid the foi v•feit, and sold 1 out at the best prices he could ' g<i\, \osincr a, million dollars, which was looked; upon in those- days as 10 or 2Q millions; Would be now. This was tie only 'large bull operation ~h& ever- engaged to, 'and it confirmed him m his natural bearishness. - He wore; than recovered from titis disasjter,, however, by breakiirg' tihe cornea- in. JEri© stock not long; afterwards-.. He was | largely snort of- it),, and Ml© cornering clique hadi bonghi up all' the &tock on the [markets. Thsy/ put the price higher ard higher.- Horn, day to day; but Jacob Little • rcmaiued' umlerrified'. He fad' <: a card up his sleeve" that the comerers nev-er had suspected, and' jiisfc tribe tr they were ex- ! pecting his surrender- or failure hs pro- ; cftioed a big Bundle oi' now Erie certificates of: stock; and' filled' his contracts by delivering them. These liad* b&sn- issued toibim in exchange for the company's convertible bonds, unknown to the clique ; the issue* of fcli'9 bonds with, the convertible clause also, bsjmg unknown to them. Such a surprise aaid' checkmate Wall street, never had known before, and the corner was broken, with disaster- to the cornering clique, and great profit and eclat to Jacob.. Little. Ho. was a bum; speculator. Speculation whs His daily- bread! 'We liked jfc for its owir sake.-. "His ambition- was to control tie stock market?,, and!" he- was willing to linn -extira hazardous- risks, to> achieve tins end! He. oiico said, 'T care* more for the gaano 1 th'iuv the results,, arid',, winning or losing,, I r like t'» be mi i&."' It- was', this feeling; t-fiiat kept him vi Wall street!, after liis 3 mo»ay-power aajd his prestige of succ-ess; a^ welli as. his iiealth, iia& paswed' away:. He said, "F die poor!'" But from, the arfiets of his esfat© find 1 unsettled accounts his family succeeded in collecting about 150,'JOOdol' which he had' neglected to look after, for- he always, liad been careless and 1 opov- going, and attached little value to money, except as chips in the game of speculation.. 1 It t was- Anthony W. Morse- who' gave tlio finisliinp; stroke to the' career of Jacob Little, for while Little was operatm>g in the early, sixties for a u'eehne in stocks, ■ Morse sprang- into th& speculative nng as a, r»on.pant bull; and bid' up pfkes on :tihe- Storkc ExcHan.ge; in a way tihat astbnisKedl Littla^ amiH tlie other members of tlfe- 1 Hoard' 1 .. Tlieyr considered' him utterly ipekTess.. But L Morse- foresaw that tlio jgi-eattwar,' issues of United! States currency ,, — greenbacks,, as 'hey were called l^ — then Keihg made would 1 inflate* the- prices ol stocks largely, and' He accordingly, meto.Ijjhorically speaking, rushed in whero angels i feared to treadi. And' w.lk> M-a.s he? sligli, fair-eom-iplexioned countiy lad' 1 , who oam<e to New (York. without a dollar, and became a clerk (in a stockbroker's office.. Then he married 'a lady, with- some money, airf induced her toj let. Him 1 Srpeoulate 1 with it, and was sucoessfull ih> making' somebhing, for hi&r, Etind toiwughi f6iv hiinselff tb^ buy ai seat in the Stockc Ekdiangp;. wh'icili> thorn cost only; sDESdbll for tlifio ihiti'atioiv fee^. TEat: wa.s- iin 1862',, up toi whicli time lie ,-was-botli ihsigniflcint and unknown*.. But tlie bVdj. dasliihg- style in wSiiclv Hie immediately b'egam to astonislii fcli'B' natives sh'owedl tliat' Ko was. a. mair. of the timic, fully.' up'; to 1 date-.. He-tii-st' put 1 up- Glevel'and' aaid 1 Pittsburg railway/ stock- witfr tlio N ease* and!, eeleritjr of a 1 mam wh'b> tlioujzlifi ii£ $ mere: fa-ifie to 'fwuidle;. Tlieiii Ee 1 sitcosssively book hold of "Ohio and!' Mississippi; Ebrlt I&land, Erie, and 1 Porft" Wayne raiLway, stocks, and put tliern 1 ug) iir. tiKe faina > pyrot eolini'cal aaid flamboyant! way; lir ona day Ke marked' up Fort Wayne iwm 318, &x> 152! He had unlimited', confidence in. himself, Because j hV saw tliab' Ho \v&s on tli'e right! track, | «nrl WalT street nxd; fclief public followed j him. He ran up Pittsb'urg stock from 65 to; 108' cvgiid. gi-catt exciteanenk«_^uMi, Wds

MOO for the whole capital stock, 'teller j one yeai." He then sold all his Pitts- : Liug at between 96 and 108. His fiim, •Mors and Ccmpjny, was overrun with commission bii&uuss at its large ground Utor office on Wil'i.nn street . New York. By the earl\ put oi 1863 he had pumdad the hcais badly, aad made, it A\as e^timi'ted, .it leas>t a million and i a-qmner, and las caroer of riotous success S ran for just, i/no 1 years, during which fiie was (supposed to have made enormously. There as a iush to join every pool he formed, so great v, as his piestige. His [ fellow-ln'okers in thie board largely folI lowed him. like the lank mid file and rap;. i tag, and bobtail tif the Wall street crowd, b-jcaiiso he always lad been, right. Xevcr. indeed, has a Wall street leadtr. befor? or binc-e, bosn in era blindly follov cd tihan Moise. 5 Mniney was cheap snd abiiiidiUit. ov ing (o tiic- ctu-reney inllation. and speculation ho active that m-any btockbouifCG k<?pt a reliiy of clerks fo- nightwock. M'.vmwhile s[.eciuatioa in gold was as rampant as in scoclc, aad htuxdi-eds of new nih-tng and petroleum companies were launched, and the stocks of ilkese- were actively traded in at high and lapidly-rising prices, while old a.nd worthJ^'S stocks were resuscitated I and boomed with the rest. Clergymen ar.d women were drawn into this whirlpool of speculation... and any t'tock wnh "gold" m its name went oil Jike hot cokes. One stock was considered about :>.s good as another to buy, as all were going up. Mo/se led the ci'^zy multitmle m everything, and aznoug hi.s otJisr achievenients he puc up Rock Island rail way stock from 106 to 149. and in doing s-o bought tihe whole capital V.ock, which then was only 56,000 shaies. Morse's doom was sealerl by Palmon P. Clia.sc, who, ps Sciotf.ry of th" Tieasnry, sought to the wild 'iafi.it ion, md particularly the treiner.dous bull speculation in gold, by rolling gold for currrncy. _aud lockmg up tho currency in the SubTpa^smy, so &s io make a tight m-oney mai'ket. This had the desfa'-ed. effect, for it mad© money so scarce and dear that it forced the large speculative holders oi stock to sell, through the banks calling in their Icvns-, and brought on a panic, just at the tim# when Morse was more heavily loaded with stocks than he ever had been before. Bioken in lieaitli- and appearing weary and haggard, he tried to sell, and prices tumbled from bad to worse under the general rush to ieal;se. Fort Wayne fell at the morning session of the bcxird. on that fatal Monday of the Morse panic, ,April 18, 1864. from 153 to 119. Then Morse itft the ioom for the last time, and, seeing to his office, said to his partner, "The game is up!" Ixea-ding also had fallen that morning 19 per cent., Pittsburg 17, Hudson River "23, and all other active slocks about as mmoh. This nMjneiary tornado, that found Morse overlco.nled with stocks, there and then swept him out of the Stock Es■chOTvae; for, knowing that he was hopelessly ruined, he wrote an announcement of the suspension of Morse and Co. and < sent it to ~i.be board a tew minutes after he h&d left it. The failuro proved to be ■ a, bad one. and the firm was unable to j settle or rpsume. The king had been de- j throned, never to regain his crown or ever to get a fresh start. j Pandemonium reigned during the rest of the day, and! at the evening Exchange trp-te>wn> at night. Speculation had been so widespread and Morse had been so implicitly trusted, as a leader that the collapse ruined thousands, including many women, and a. raving, cursing- mob crowded into the evening Exchange and overflowed into the Fifth Avenue Hotel. There was a nistit, of terror in hundreds of homes. I Morse was upbraided and cursed to his ' Sa.ce, and more tlvm one cf his customers struck him when he was on the street, and blamed him for losing their money. Then for a year Morse disappeared. When. lie retu.ri.ed he was more Laggard than ever, and he died penniless soon afterwards in a cheap boardin2;house. A friend paid the .expenses of Ms funeral. Sic transit gloria mundi. John M. Tobin, who had been a ferry gatekeeper for Commodore Vandcrbilt oil Stateii Island, figured largely as a speculator in the sold boom, and also as a stock operator, during the two 3-ears of the i Morse campaign, and saw many ups and [ down*. He began to loom up 'still more after Morse sank below the horizon in ; 1864. He was known to be the agent of Commodore Vanderbilt in cornering Harlem railway stock, and shone in Vanderbilt's reflected light, although he was a - large operator on his- own account. ' Tho Harlem corner was a memorable event. Through the winter of 1563-64 tlie i stock had been selling at about 60. and • Vanderbilt was a, director and large stock- , holder, and, moreover, determined to make what he called "a big thing' 1 out of it. The raid, however, was considered generally of little account, except for carrying milk. So, in connection with his s>treetrailway projects for improving its value, he engineered the stock up to 117. He counted upon getting a charter from tlie Common Council ; but its members tricked Mm, and a.fter passing a favourable resolution, they sold the stock short, and then rescinded the resolution and it fell to 72. So they mad© money at his expense. He then applied to the Legislature at Albany for a Haiiem frauchise to lay rails en Broadway ; and the legislators saw that there Avas room for stock speculation in tJiis. They made a favourable report on a bill gxautiusT Vanderbilt's application, and on- this Harlem stock rose sharply to 150. Then they and their Mends, including the New York Common Couneilmen, sold it short largely, thinking that they had a. sure thing; and Tobin bought for Vanderbilt all tint was offered. On Marefcl 25, 1864, by pre-arrangemenl. they yqted against the 'bill, and Harkm stodc i fell to 101. I The sellers of Harlem* rejoiced, for *hey i liad large profits on paper ; but Tobin still ! continued to buy the &tock. and under his . n_urchj\s.efi i± raiadbr rccoYwed, The com- J

■ ' modore is determined to punish tliieivn. Within 10 dayc Haiiem w:^ up lo 150 again. A week later it tououed 185, and thereafter, for 10 days., liuctu.itcd between. I 175 and 200. The Morse panic swept ov<_r I it iv April; but sliil it stood up. like a- ! pyramid in the desert, and l^bin. still con- ! tinned buying for Vanderbilt. j In May the price of H-iilem was put lup to 500. It stood at 285 on the day 15.000 shares had to be d'-livercd, and they were s-ettled for at this price. Darnel I ?3rew coinproiii^ed by paying 1.000,000d0l ! to Tobin : but the el aim .•> gainst him was l,70G.000d'o!. However, he threaten'-*.! a •aut for conspirary. Tobin's share of tbe profitia of the corner was about two millons and this made him worth three. Commode-re YTsclprbilt chuckled, and dispowd of the ILvlcra road by leasing it, rt 6 per conr on ibo stock, t-o the New York C-CTtru l ard HuJso'.i. when he got co:-tro! of it. So ITf i lsm proved n bonanza, to him till th; end, and still is one of ti\<* atse\3 of his da»cendants. After the coiner ToVin. bulled gold oai a tremendous scalu in tho face of the Union vietcu-ieo that terminated the war. After that he mX with a succession of disasters in the stock market, and Lost every dollaahe had. Ivsides running into debt wibli his brokei-s. Ho then retired to live with bis sister on o iarm on Stat-en Inland, and never again was >saen in Wall strcel. Addison G. Jerome had a career in Wall j-ti-6sL more brief tfca-n that of Anthony W. Morses-; but he still is well remer-ibered there <i? a shining light. He entered Wall strept as vm operator early in 1863, after being a merchant in the dry-goods trade, and during the rest of that year was called "the Napoleon of the Public Board," so conspicuously active, bold, and successfulhe in Ills operations. He became a brilliant leader, and had a, ho c t of followers, and wos successful m everything he undertook until he bulVd Mic-higar Southern, and. with a clique Mi i r . he forroed, bought ooatrol of it. He put it to high figures, and was sure of It-. But Henry Keep, the treasur'-r of the company, and a keen operator i t stocks, stepped in. and turned Jerome's success into utter and disa«tpous failure. Henry' Keep know something thafe Jerome was niviware of — namely, that a clause in tho Michigan Southern's charter permitted its directors to increase its capital stock. So he called a secret meeting of the board, and an increase of 14,000 shares was voted. Then, with this increase s for future delivery, be sold the stock against it, and borrowed to make his deliveries, whicli made Jerome think Keep was largely short of Michigan Southern. He and his clique, therefore, kept on buying and advancing the price, while Keep kept on selling more and more. The final result was that Jerome called in a.!l his loans of the stock, to as to force the shorts to cover, and to that Keep responded by, delivering the 14,000 shares of 'new stock, ■h hiah caused a fall of 20 per cent, in Michigan Southern in one day. This involved the less of nearly all the tkreie millions of money Jerome had so quickly made, and killed him as a leader, although; he was respected as an honourable man. He took the loss of his fortune and prestige so much to> heart? that he sickened and died in the following year of some obscure disease, a 'virtually ruined man. j But during his nine month? of phenomenal success he had settled enough on his wife to keep the wolf from the door. His ups and downs wei-3 remarkably swift even for Wail street. Leonard W. Jerome, a younger brother of Addison. was prominent in Wall street and sodety. and as the driver of a four-in-Land coach long before the latter generally appeared, and continued in the street long after Addison passed away. His career (visa was marked by memorable upsand downs. Iv 1853 he was a large holder of Hudson railroad stock, w.hich the beara had hammered down to 107. So he formed a strong clique to bull it against the short inter pst, a.nd bought all the stock that was offered, until he had taken nearly all the capital. Then he bid up the pries pradnallv till it reached 175, and mariethe sto:-k so scarce that -he loaned it to the bears to make their deliveries at 5 per cent, a day. The shorts, estimated to represent about 50,000 shares, finding that there was ko help for them, covered at a heavy loss, while Jerome made a greao deal of nionev by squeezing them, presumably two or three millions. His prestige increased with his wealth, and he became a social as well as a financial lion. He had beon watching the Pacific Mail Company sinc^' it succeeded; the Nicaragua Transit Company in 1856. In 1861 its stock fell to 69: but in the next vc-ar its earnings were enoin^ous. and 26.000 of its 40,000 shares were bought by a combination of operatois, mostly its directors, who transferred it to Brown, Bros, and Co., to be held in truM: for their benefit for five years; and they selected Leonard Jerome to bull tlia =tock in thf opp-n mirkeh Under his manipulation it icv-o to 160 in 13 mouths after he becran op&ratinn* for the ring. Thei-e was a large shr-rt interest in it by that time, and, to fr-i-cc tbe sellers to settle it he put it to 200 and kept it there, and they settled. In 1865 Pacific Mail's capital was increased from four millions to ten. and yet. its stock stood at 240, and it paid 20 per cent, a year in dividends. The year after, it was increased to 20 millions, yet it sold at 180. with Jerome still buying. But, in ICS? he met his Waterloo in it. To use his own words, he had ''bitten off more than he could chew." The company's earnings fell off larcrclv. and its report showed assets reduced from 3# to 22 millions ; the Government paper-money issues were being coi'traclcd r-ipidiy, aivd the flood of water injected into the stock was beginning to tell upon it. Move-over, Jerome had ajreed to Viv the old five-yea? combination's stock at 160. Owing to all this, a-ecmn panned by a generally weak <itoek niEulcet. Prcific Mail Mumps broke, vndea- crormoifc snips, from 165 to 115 in* a few days, on bis binds : and he lost prpcticil'i" every thiii g he hod. except some real e-^aip. And beiaa ruined thus by Pacific Mail,