Part 50

After Wolff and Kane and Gordon told me that they had formed their syndicate to put up six millions in cash there was nothing for me to do but wait for the money to come in. I had urged the vital need of haste. Nevertheless the money came in driblets. I think it took four or five installments. I don’t know what the reason was, but I remember that I had to send out an S O S call to Wolff and Kane and Gordon.

That afternoon I got some big checks that brought the cash in my possession to about four million dollars and the promise of the rest in a day or two. It began to look as though the syndicate might do something before the bull market passed away. At best it would be no cinch, and the sooner I began work the better. The public had not been particularly keen about new market movements in inactive stocks. But a man could do a great deal to arouse interest in any stock with four millions in cash. It was enough to absorb all the probable offerings. If time urged, as I had said, there was no sense in waiting for the other two millions. The sooner the stock got up to 50 the better for the syndicate. That was obvious.

The next morning at the opening I was surprised to see that there were unusually heavy dealings in Consolidated Stove. As I told you before, the stock had been waterlogged for months. The price had been pegged at 37, Jim Barnes taking good care not to let it go any lower on account of the big bank loan at 35. But as for going any higher, he’d as soon expect to see the Rock of Gibraltar shimmying across the Strait as to see Consolidated Stove do any climbing on the tape.

Well, sir, this morning there was quite a demand for the stock, and the price went up to 39. In the first hour of the trading the transactions were heavier than for the whole previous half year. It was the sensation of the day and affected bullishly the entire market. I heard afterwards that nothing else was talked about in the customers’ rooms of the commission houses.

I didn’t know what it meant, but it didn’t hurt my feelings any to see Consolidated Stove perk up. As a rule I do not have to ask about any unusual movement in any stock because my friends on the floor--brokers who do business for me, as well as personal friends among the room traders--keep me posted. They assume I’d like to know and they telephone me any news or gossip they pick up. On this day all I heard was that there was unmistakable inside buying in Consolidated Stove. There wasn’t any washing. It was all genuine. The purchasers took all the offerings from 37 to 39 and when importuned for reasons or begged for a tip, flatly refused to give any. This made the wily and watchful traders conclude that there was something doing; something big. When a stock goes up on buying by insiders who refuse to encourage the world at large to follow suit the ticker hounds begin to wonder aloud when the official notice will be given out.

I didn’t do anything myself. I watched and wondered and kept track of the transactions. But on the next day the buying was not only greater in volume but more aggressive in character. The selling orders that had been on the specialists’ books for months at above the pegged price of 37 were absorbed without any trouble, and not enough new selling orders came in to check the rise. Naturally, up went the price. It crossed 40. Presently it touched 42.

The moment it touched that figure I felt that I was justified in starting to sell the stock the bank held as collateral. Of course I figured that the price would go down on my selling, but if my average on the entire line was 37 I’d have no fault to find. I knew what the stock was worth and I had gathered some idea of the vendibility from the months of inactivity. Well, sir, I let them have stock carefully until I had got rid of thirty thousand shares. And the advance was not checked!

That afternoon I was told the reason for that opportune but mystifying rise. It seems that the floor traders had been tipped off after the close the night before and also the next morning before the opening, that I was bullish as blazes on Consolidated Stove and was going to rush the price right up fifteen or twenty points without a reaction, as was my custom--that is, my custom according to people who never kept my books. The tipster in chief was no less a personage than Joshua Wolff. It was his own inside buying that started the rise of the day before. His cronies among the floor traders were only too willing to follow his tip, for he knew too much to give wrong steers to his fellows.

As a matter of fact, there was not so much stock pressing on the market as had been feared. Consider that I had tied up three hundred thousand shares and you will realize that the old fears had been well founded. It now proved less of a job than I had anticipated to put up the stock. After all, Governor Flower was right. Whenever he was accused of manipulating his firm’s specialties, like Chicago Gas, Federal Steel or B. R. T., he used to say: “The only way I know of making a stock go up is to buy it.” That also was the floor traders’ only way, and the price responded.

On the next day, before breakfast, I read in the morning papers what was read by thousands and what undoubtedly was sent over the wires to hundreds of branches and out-of-town offices, and that was that Larry Livingston was about to begin active bull operations in Consolidated Stove. The additional details differed. One version had it that I had formed an insiders’ pool and was going to punish the over-extended short interest. Another hinted at dividend announcements in the near future. Another reminded the world that what I usually did to a stock I was bullish on was something to remember. Still another accused the company of concealing its assets in order to permit accumulation by insiders. And all of them agreed that the rise hadn’t fairly started.

By the time I reached my office and read my mail before the market opened I was made aware that the Street was flooded with red-hot tips to buy Consolidated Stove at once. My telephone bell kept ringing and the clerk who answered the calls heard the same question asked in one form or another a hundred times that morning: Was it true that Consolidated Stove was going up? I must say that Joshua Wolff and Kane and Gordon--and possibly Jim Barnes--handled that little tipping job mighty well.

I had no idea that I had such a following. Why, that morning the buying orders came in from all over the country--orders to buy thousands of shares of a stock that nobody wanted at any price three days before. And don’t forget that, as a matter of fact, all that the public had to go by was my newspaper reputation as a successful plunger; something for which I had to thank an imaginative reporter or two.

Well, sir, on that, the third day of the rise, I sold Consolidated Stove; and on the fourth day and the fifth; and the first thing I knew I had sold for Jim Barnes the one hundred thousand shares of stock which the Marshall National Bank held as collateral on the three-million-five-hundred-thousand-dollar loan that needed paying off. If the most successful manipulation consists of that in which the desired end is gained at the least possible cost to the manipulator, the Consolidated Stove deal is by all means the most successful of my Wall Street career. Why, at no time did I have to take any stock. I didn’t have to buy first in order to sell the more easily later on. I did not put up the price to the highest possible point and then begin my real selling. I didn’t even do my principal selling on the way down, but on the way up. It was like a dream of Paradise to find an adequate buying power created for you without your stirring a finger to bring it about, particularly when you were in a hurry. I once heard a friend of Governor Flower’s say that in one of the great bull-leader’s operations for the account of a pool in B. R. T. the pool sold fifty thousand shares of the stock at a profit, but Flower & Co. got commissions on more than two hundred and fifty thousand shares and W. P. Hamilton says that to distribute two hundred and twenty thousand shares of Amalgamated Copper, James R. Keene must have traded in at least seven hundred thousand shares of the stock during the necessary manipulation. Some commission bill! Think of that and then consider that the only commissions that I had to pay were the commissions on the one hundred thousand shares I actually sold for Jim Barnes. I call that some saving.

Having sold what I had engaged to sell for my friend Jim, and all the money the syndicate had agreed to raise not having been sent in, and feeling no desire to buy back any of the stock I had sold, I rather think I went away somewhere for a short vacation. I do not remember exactly. But I do remember very well that I let the stock alone and that it was not long before the price began to sag. One day, when the entire market was weak, some disappointed bull wanted to get rid of his Consolidated Stove in a hurry, and on his offerings the stock broke below the call price, which was 40. Nobody seemed to want any of it. As I told you before, I wasn’t bullish on the general situation and that made me more grateful than ever for the miracle that had enabled me to dispose of the one hundred thousand shares without having to put the price up twenty or thirty points in a week, as the kindly tipsters had prophesied.

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.