XVI
Tips! How people want tips! They crave not only to get them but to give them. There is greed involved, and vanity. It is very amusing, at times, to watch really intelligent people fish for them. And the tip-giver need not hesitate about the quality, for the tip-seeker is not really after good tips, but after any tip. If it makes good, fine! If it doesn’t, better luck with the next. I am thinking of the average customer of the average commission house. There is a type of promoter or manipulator that believes in tips first, last and all the time. A good flow of tips is considered by him as a sort of sublimated publicity work, the best merchandising dope in the world, for, since tip-seekers and tip-takers are invariably tip-passers, tip-broadcasting becomes a sort of endless-chain advertising. The tipster-promoter labours under the delusion that no human being breathes who can resist a tip if properly delivered. He studies the art of handing them out artistically.
I get tips by the hundreds every day from all sorts of people. I’ll tell you a story about Borneo Tin. You remember when the stock was brought out? It was at the height of the boom. The promoter’s pool had taken the advice of a very clever banker and decided to float the new company in the open market at once instead of letting an underwriting syndicate take its time about it. It was good advice. The only mistake the members of the pool made came from inexperience. They did not know what the stock market was capable of doing during a crazy boom and at the same time they were not intelligently liberal. They were agreed on the need of marking up the price in order to market the stock, but they started the trading at a figure at which the traders and the speculative pioneers could not buy it without misgivings.
By rights the promoters ought to have got stuck with it, but in the wild bull market their hoggishness turned out to be rank conservatism. The public was buying anything that was adequately tipped. Investments were not wanted. The demand was for easy money; for the sure gambling profit. Gold was pouring into this country through the huge purchases of war material. They tell me that the promoters, while making their plans for bringing out Borneo stock, marked up the opening price three different times before their first transaction was officially recorded for the benefit of the public.
I had been approached to join the pool and I had looked into it but I didn’t accept the offer because if there is any market manoeuvring to do, I like to do it myself. I trade on my own information and follow my own methods. When Borneo Tin was brought out, knowing what the pool’s resources were and what they had planned to do, and also knowing what the public was capable of, I bought ten thousand shares during the first hour of the first day. Its market début was successful at least to that extent. As a matter of fact the promoters found the demand so active that they decided it would be a mistake to lose so much stock so soon. They found out that I had acquired my ten thousand shares about at the same time that they found out that they would probably be able to sell every share they owned if they merely marked up the price twenty-five or thirty points. They therefore concluded that the profit on my ten thousand shares would take too big a chunk out of the millions they felt were already as good as banked. So they actually ceased their bull operations and tried to shake me out. But I simply sat tight. They gave me up as a bad job because they didn’t want the market to get away from them, and then they began to put up the price, without losing any more stock than they could help.
They saw the crazy height that other stocks rose to and they began to think in billions. Well, when Borneo Tin got up to 120 I let them have my ten thousand shares. It checked the rise and the pool managers let up on their jacking-up process. On the next general rally they again tried to make an active market for it and disposed of quite a little, but the merchandising proved to be rather expensive. Finally they marked it up to 150. But the bloom was off the bull market for keeps, so the pool was compelled to market what stock it could on the way down to those people who love to buy after a good reaction, on the fallacy that a stock that has once sold at 150 must be cheap at 130 and a great bargain at 120. Also, they passed the tip to the floor traders, who often are able to make a temporary market, and later to the commission houses. Every little helped and the pool was using every device known. The trouble was that the time for bulling stocks had passed. The suckers had swallowed other hooks. The Borneo bunch didn’t or wouldn’t see it.
I was down in Palm Beach with my wife. One day I made a little money at Gridley’s and when I got home I gave Mrs. Livingston a five-hundred-dollar bill out of it. It was a curious coincidence, but that same night she met at a dinner the president of the Borneo Tin Company, a Mr. Wisenstein, who had become the manager of the stock pool. We didn’t learn until some time afterward that this Wisenstein deliberately manœuvred so that he sat next to Mrs. Livingston at dinner.
He laid himself out to be particularly nice to her and talked most entertainingly. In the end he told her, very confidentially, “Mrs. Livingston, I’m going to do something I’ve never done before. I am very glad to do it because you know exactly what it means.” He stopped and looked at Mrs. Livingston anxiously, to make sure she was not only wise but discreet. She could read it on his face, plain as print. But all she said was, “Yes.”
“Yes, Mrs. Livingston. It has been a very great pleasure to meet you and your husband, and I want to prove that I am sincere in saying this because I hope to see a great deal of both of you. I am sure I don’t have to tell you that what I am going to say is strictly confidential!” Then he whispered, “If you will buy some Borneo Tin you will make a great deal of money.”
“Do you think so?” she asked.