VIII. THE WAYS OF THE STREET.
Like Brette Harte’s Heathen Chinee,
“For ways that are dark
And tricks that are vain,
Wall Street is peculiar.”
It takes a clear, cool head, a large amount of brains, and unaltering nerve, to thread one’s way through the intricacies of
the business of finance as carried on there. It would be interesting to know how many come out of the ordeal untouched by the taint of corruption. Members of the Exchanges are held by a rigid code of laws, but in questions of morality Wall street has a code of its own. Expediency is a prominent consideration in the dealings of the street, and men have come to regard as honest and correct almost anything short of a regular breach of contract. They do not spare their own flesh and blood. Friendships are sacrificed, the ties of kinship are disregarded, if they stand in the way of some bold operation. Every thing must give way to the desire for gain. The great operators plunder and destroy their lesser rivals without a feeling of remorse, and by combinations which they know cannot be resisted blast the prospects and ruin the lives of scores whose greatest fault is an inability to oppose them successfully. Tricks so mean and contemptible that their perpetrator would not be tolerated in social life, are resorted to, and if successful are applauded as evidences of smartness. Every man’s hand is against his neighbor. Clerks are bribed to betray the secrets of their employers. The baser their treachery, the larger their reward. We do not propose, however, to discuss the morality of Wall street transactions, and so we drop the subject.
It is said by the gossips of the street that the great Railroad King, Commodore Vanderbilt, is not above using any means at hand to secure the success of his schemes. It is said that he once tried to use his son William in this way. He came to him one day, and advised him that he had better sell his Hudson River stock, as 110 was too high for it. William thanked him, and made inquiries in the market, and found that his father was buying quietly all he could lay his hands upon.
William determined to follow suit. Up jumped the stock to 137. It was a clear twenty-six per cent. in pocket.
When the operation was concluded, the Commodore rode round to the son’s office.
“Well, William, how much did you lose?”
“I went in at 110 on 10,000 shares. That ought to make me two hundred and sixty thousand dollars—”
“Very bad luck, William,” quoth the father, trying to look extremely troubled,—“very bad luck, this time.”
“But then I bought, and so made.”
“Hey? What sent you doing that, sir?”
“O, I heard that was your line, and so concluded that you meant long instead of short.”
“Ahem!” croaked Vanderbilt père, as he buttoned up his fur overcoat, and stalked out of the open door. He has always had a high opinion of William since that event!
Some years ago Vanderbilt wanted to consolidate the Hudson River and Harlem Railroads, and when the scheme was presented before the Legislature of New York, secured a sufficient number of votes in that body to insure the passage of the bill authorizing the consolidation. Before the bill was called upon its final passage, however, he learned from a trustworthy source that the members of the Legislature who had promised to vote for the bill, were determined to vote against it, with the hope of ruining him. The stock of the Harlem road was then selling very high, in consequence of the expected consolidation. The defeat of the bill would, of course, cause it to fall immediately. The unprincipled legislators at once began a shrewd game. They sold Harlem right and left, to be delivered at a future day, and found plenty of purchasers, every one but those in the plot expecting the consolidation of the roads and a consequent advance in the value of the stock. They let their friends into the secret, and there was soon a great deal of “selling short” in this stock. Commodore Vanderbilt managed to acquaint himself with the whole plot; but he held his peace, and resolved upon revenge. He went into the market quietly, with all the funds he could raise, and bought every certificate of Harlem stock that he could find. These certificates he locked up in his safe. When the bill came before the Legislature on its final passage, it was defeated.
The conspirators were jubilant. They were sure that the defeat of the bill would bring “Harlem” down with a rush. To their astonishment, however, “Harlem” did not fall. It remained stationary the first day, and then to their dismay rose
steadily. Those to whom they had sold demanded the delivery of the stock, but the speculators found it impossible to buy it. There was none in the market at any price. In many of these instances Vanderbilt was the real claimant, the brokers acting in the transactions being merely his agents. Being unable to deliver the stock, the conspirators were forced to settle the demands against them in money, and the result was that they were ruined. One of the shrewdest operators in New York lost over $200,000. He refused to pay, and his name was stricken from the list of stockholders. This brought him to his senses, and he made good his contracts. Vanderbilt made money enough out of this transaction to pay for all the stock he owned in the Harlem Road.
Daniel Drew is a great operator. His gains are immense, as are also his losses. He is not popular in the street, and the brokers are fond of abusing him. He has handled too many of them mercilessly to have many friends. They say that he does not hesitate to sacrifice a friend to gain his ends, and that he is utterly without sympathy for those who go down before his heavy blows.
Bogus stock companies appear from time to time in Wall street. An office is rented and fitted up in magnificent style, a flaring programme is issued, and seemingly substantial evidences of the stability and prosperity of the company are exhibited to inquirers. The stock offered is readily taken up by the eager to be rich crowd. A dividend, most hopefully large, is declared and paid, to stimulate investments, and then, when the market has been drained dry, the bubble bursts, the directors disappear, the office is closed, and the shareholders lose their money.
On fine afternoons visitors to the Park do not fail to notice a handsome equipage driven by a stylish young man, with rosy cheeks and light curly hair. His face is the perfect picture of happy innocence. He is very wealthy, and owns a great deal of real estate in the city. The manner in which he made his money will show how other persons enrich themselves.
A few years ago, he, in company with several others, organized a scheme for working certain gold mines said to be located in a distant territory. A company was made up, the country was flooded with flaming descriptions of the valuable mine, and stock was issued which sold readily. The bonds were soon taken up, and in a month or two the so-called company commenced paying handsome dividends. A number of gold bars, bearing the stamp of the mint, were on exhibition in the company’s office, and were triumphantly exhibited as amongst the first yields of the valuable mine. For several months the dividends were paid regularly, and the company’s stock rose to a splendid premium. It could hardly be bought at any price. No one doubted for an instant the genuineness of the affair, and the lucky company was the envy of all Wall street.
In a few months, all the stock being disposed of, the company ceased paying dividends. This excited the suspicion of some of the shrewdest holders of the stock, and the affair was investigated. It was found that the wonderful mine had no real existence. The gold bars were simply gold coins melted into that form at the Mint, and stamped by the Government as so much bullion. The dividends had been paid out of money advanced by the company, who were simply half a dozen unprincipled sharpers. The stockholders were ruined, but the company made a profit of a clear half million of dollars out of the infamous transaction. Legal proceedings are expensive and tedious when instituted against such parties, and the stockholders, rather than increase their losses by the outlay necessary for a lawsuit, suffered the swindlers to go unmolested.
A certain stock broker, anxious to increase his wealth, purchased twenty acres of land a few years ago in one of the Western States, and commenced boring for oil. After a few weeks spent in this work, he discovered to his dismay that there was not the slightest trace of oil on his land. He kept his own counsel, however, and paid the workmen to hold their tongues. About the same time it became rumored throughout New York that he had struck oil. He at once organized a company, and had a committee appointed to go West and examine the well.
In a few weeks the committee returned in high glee, and reported that the well contained oil of the very best quality, and only needed capital and improved machinery to develop its capacity. In support of this assertion, they brought home numerous bottles containing specimens of the oil. This report settled the matter in Wall street, and the stock issued by the company was all sold at a handsome premium. When the sales ceased, it was rumored that the well had ceased to flow. This was true, for there was no oil anywhere on the land. That in the well had been bought in Pennsylvania, and poured into the well by the agents of the owner, and the examining committee had been paid large sums for their favorable report. The owner of the well was enriched, as were his confederates of the bogus company, and the holders of the stock were swindled, many of them being ruined.
Said the New York Herald, at a period when speculation was rampant:
“Within the past few days we have seen the most gigantic swindling operations carried on in Wall street that have as yet disgraced our financial centre. A great railway, one of the two that connect the West with the Atlantic seaboard, has been tossed about like a football, its real stockholders have seen their property abused by men to whom they have entrusted its interests, and who, in the betrayal of that trust, have committed crimes which in parallel cases on a smaller scale would have deservedly sent them to Sing Sing. If these parties go unwhipped of justice, then are we doing injustice in confining criminals in our State prisons for smaller crimes.
“To such a disgusting degree of depravity do we see these stock operations carried, that members of the church of high standing offer, when ‘concerned,’ to betray their brother ‘pals,’ and, in their forgetfulness of the morality to which they sanctimoniously listen every Sunday, state that ‘all they care about is to look out for number one.’ A manager of a great corporation is requested to issue bonds of his company without authority, offering ‘to buy the bonds if you are caught, or buy the bonds with the understanding not to pay for them unless you are
caught.’ This attempted fiscal operation, however, did not work, and resulted in a good proof of the old adage that it requires ‘a rogue to catch a rogue.’
“A railroad treasurer boldly states that he has without authority over-issued stock of the company to a large amount. He offers it to a broker for sale, with the understanding that all received over a fixed value is to go into his (the treasurer’s) pocket. From the fact that this man is not arrested for maladministration of the company’s property, we judge this to be a legitimate operation, and that this may hereafter serve as a model or standard of morals to all presidents, directors, treasurers and managers of railway and other great corporations.”