GOOD BIG FISH VS. BAD LITTLE FISH
Ask the casual newspaper reader to define offhand the compound adjective Get-Rich-Quick and he will tell you it is applied solely to professional promoters who employ flamboyant advertising methods, promise great speculative profits, use other devices which are calculated to separate the public from its money, and are in every instance dishonest. That is the idea which powerful "interests" have inculcated in the public mind by subtle, insistent press-agenting.
Time and again during the progress of "My Adventures with Your Money" I have endeavored to show that the really dangerous Get-Rich-Quick forces are the men in high places who, by the artful and insidious use of the news columns of "friendly" publications and others which copy from them, divorce the public from millions upon millions.
I said in my foreword the following:
The more dangerous malefactors are the men in high places who take a good property, overcapitalize it, appraise its value at many times what it is worth, use artful methods to beguile the thinking public into believing the stock is worth par or more, and foist it on investors at a figure which robs them of great sums of money. There are more than a million victims of this practice in the United States.
No man has right to assume that a promoter who sells stock by means of display advertising in the newspapers is per se a Get-Rich-Quick operator. There are honest professional promoters of the display advertising variety and there are dishonest ones, just as there are honest promoters of the multimillionaire kind and dishonest ones.
The on-the-level, trumpet-tongued mining promoter, who believes in newspaper advertising and successfully finances companies by appealing uproariously to the speculative investing public, performs an actual service and is entitled to a place among honorable men. Indeed, he is the hero of the prospector and "poor" mine owner of the West. He alone stands between these men and grasping monopoly.
Mine men, stockholders, and financiers the country over understand this, although the Eastern newspaper-reading public has been taught to believe that this type of promoter must be a Get-Rich-Quick operator.
A broker in Wall Street who speculates in the securities of the New York Stock Exchange for his own account is considered unsafe. E. H. Gary, Chairman of the Executive Board of the Steel Trust, stated under oath at Washington in June that J. P. Morgan never speculates. Ask the average member of the New York Stock Exchange what chances the stock-gambler has. If he is frank, he will shrug his shoulders and reply something like this:
"If the game could be beaten, do you think I would be a broker? Wouldn't I be a player?"
The aggregate market value of seats on the New York Stock Exchange is nearly $100,000,000. It costs more than a hundred million dollars more every year to gather and transact through offices and branch offices the speculative business which forms the bulk of the transactions of the members. The "kitty," or "rake-off," is enormous. Who pays it? You hear of the stockbroker going to Europe in his yacht every Summer. How many of his trading customers travel that way?
Who pays the freight? Can a game be beaten where so many multimillionaires are created among those who are on the "inside" and where so large a percentage of the speculator's money must come out every year to pay the enormous cost of maintaining a vast system of stock-brokerage offices, stock exchanges, telegraph and telephone wires, newspapers, publicity bureaus, yachts, Fifth Avenue palaces, huge contributions to national and State political campaigns, etc.?
You hear a hue and a cry against bucketshops. There is no Federal embargo against bucketshopping. Yet somehow or other the machinery of the Government's Department of Justice is used to crush out this sort of gambling institution. Now, what is the difference in principle between gambling on margin on fluctuations of stocks in a bucketshop and doing the same through a New York Stock Exchange house?
This is the unimportant difference:
The bucketshop-keeper takes the other end of the play, pays you out of his pocket when the market goes your way and keeps your money when it goes against you. He never delivers any stocks.
The New York Stock Exchange member is expected to buy your stocks for you and carry them—some of them do and most of them don't, as is shown farther on—but in this case also no stocks are delivered to you.
The transaction is the same in principle as the one in the bucketshop, so far as the gambling feature is concerned. The only real difference is that when you gamble on market fluctuations through the bucketshops no contribution is made to the New York Stock Exchange "kitty."