Part 27

“Don’t you believe me?”

“Yes!”

“Don’t you believe my information?”

“Yes.”

“Aren’t you bearish?”

“Yes.”

“Well, then?”

“That’s why I’m buying. Listen to me now: You keep in touch with that reliable friend of yours and the moment the scaled selling stops, let me know. Instantly! Do you understand?”

“Yes,” said Joseph, and went away, not quite sure he could fathom Cammack’s motives in buying William Rockefeller’s stock. It was the knowledge that Cammack was bearish on the entire market that made his manœuvre so difficult to explain. However, Joseph saw his friend the transfer clerk and told him he wanted to be tipped off when the Old Man got through selling. Regularly twice a day Joseph called on his friend to inquire.

One day the transfer clerk told him, “There isn’t any more stock coming from the Old Man.” Joseph thanked him and ran to Cammack’s office with the information.

Cammack listened attentively, turned to Wheeler and asked, “Billy, how much St. Paul have we got in the office?” Wheeler looked it up and reported that they had accumulated about sixty thousand shares.

Cammack, being bearish, had been putting out short lines in the other Grangers as well as in various other stocks, even before he began to buy St. Paul. He was now heavily short of the market. He promptly ordered Wheeler to sell the sixty thousand shares of St. Paul that they were long of, and more besides. He used his long holdings of St. Paul as a lever to depress the general list and greatly benefit his operations for a decline.

St. Paul didn’t stop on that move until it reached forty-four and Cammack made a killing in it. He played his cards with consummate skill and profited accordingly. The point I would make is his habitual attitude toward trading. He didn’t have to reflect. He saw instantly what was far more important to him than his profit on that one stock. He saw that he had providentially been offered an opportunity to begin his big bear operations not only at the proper time but with a proper initial push. The St. Paul tip made him buy instead of sell because he saw at once that it gave him a vast supply of the best ammunition for his bear campaign.

To get back to myself. After I closed my trade in wheat and corn I went South in my yacht. I cruised about in Florida waters, having a grand old time. The fishing was great. Everything was lovely. I didn’t have a care in the world and I wasn’t looking for any.

One day I went ashore at Palm Beach. I met a lot of Wall Street friends and others. They were all talking about the most picturesque cotton speculator of the day. A report from New York had it that Percy Thomas had lost every cent. It wasn’t a commercial bankruptcy; merely the rumor of the world-famous operator’s second Waterloo in the cotton market.

I had always felt a great admiration for him. The first I ever heard of him was through the newspapers at the time of the failure of the Stock Exchange house of Sheldon & Thomas, when Thomas tried to corner cotton. Sheldon, who did not have the vision or the courage of his partner, got cold feet on the very verge of success. At least, so the Street said at the time. At all events, instead of making a killing they made one of the most sensational failures in years. I forget how many millions. The firm was wound up and Thomas went to work alone. He devoted himself exclusively to cotton and it was not long before he was on his feet again. He paid off his creditors in full with interest--debts he was not legally obliged to discharge--and withal had a million dollars left to himself. His comeback in the cotton market was in its way as remarkable as Deacon S. V. White’s famous stock-market exploit of paying off one million dollars in one year. Thomas’ pluck and brains made me admire him immensely.

Everybody in Palm Beach was talking about the collapse of Thomas’ deal in March cotton. You know how the talk goes--and grows; the amount of misinformation and exaggeration and improvements that you hear. Why, I’ve seen a rumor about myself grow so that the fellow who started it did not recognize it when it came back to him in less than twenty-four hours, swollen with new and picturesque details.

The news of Percy Thomas’ latest misadventure turned my mind from the fishing to the cotton market. I got files of the trade papers and read them to get a line on conditions. When I got back to New York I gave myself up to studying the market. Everybody was bearish and everybody was selling July cotton. You know how people are. I suppose it is the contagion of example that makes a man do something because everybody around him is doing the same thing. Perhaps it is some phase or variety in the herd instinct. In any case it was, in the opinion of hundreds of traders, the wise and proper thing to sell July cotton--and so safe too! You couldn’t call that general selling reckless; the word is too conservative. The traders simply saw one side to the market and a great big profit. They certainly expected a collapse in prices.

I saw all this, of course, and it struck me that the chaps who were short didn’t have a terrible lot of time to cover in. The more I studied the situation the clearer I saw this, until I finally decided to buy July cotton. I went to work and quickly bought one hundred thousand bales. I experienced no trouble in getting it because it came from so many sellers. It seemed to me that I could have offered a reward of one million dollars for the capture, dead or alive, of a single trader who was not selling July cotton and nobody would have claimed it.

I should say this was in the latter part of May. I kept buying more and they kept on selling it to me until I had picked up all the floating contracts and I had one hundred and twenty thousand bales. A couple of days after I had bought the last of it it began to go up. Once it started the market was kind enough to keep on doing very well indeed--that is, it went up from forty to fifty points a day.

One Saturday--this was about ten days after I began operations--the price began to creep up. I did not know whether there was any more July cotton for sale. It was up to me to find out, so I waited until the last ten minutes. At that time, I knew, it was usual for those fellows to be short and if the market closed up for the day they would be safely hooked. So I sent in four different orders to buy five thousand bales each, at the market, at the same time. That ran the price up thirty points and the shorts were doing their best to wriggle away. The market closed at the top. All I did, remember, was to buy that last twenty thousand bales.

The next day was Sunday. But on Monday, Liverpool was due to open up twenty points to be on a parity with the advance in New York. Instead, it came fifty points higher. That meant that Liverpool had exceeded our advance by 100 per cent. I had nothing to do with the rise in that market. This showed me that my deductions had been sound and that I was trading along the line of least resistance. At the same time I was not losing sight of the fact that I had a whopping big line to dispose of. A market may advance sharply or rise gradually and yet not possess the power to absorb more than a certain amount of selling.

Of course the Liverpool cables made our own market wild. But I noticed the higher it went the scarcer July cotton seemed to be. I wasn’t letting go any of mine. Altogether that Monday was an exciting and not very cheerful day for the bears; but for all that, I could detect no signs of impending bear panic; no beginnings of a blind stampede to cover. And I had one hundred and forty thousand bales for which I must find a market.

On Tuesday morning as I was walking to my office I met a friend at the entrance of the building.

“That was quite a story in the World this morning,” he said with a smile.

“What story?” I asked.

“What? Do you mean to tell me you haven’t seen it?”

“I never see the World,” I said. “What is the story?”