He capitalized his knowledge of the game, his experience as an operator and his talents when he sold his services to the Havemeyer brothers, who wanted him to develop a market for the Sugar stocks. He was broke at the time or he would have continued to trade on his own hook; and he was some plunger! He was successful with Sugar; made the shares trading favourites, and that made them easily vendible. After that, he was asked time and again to take charge of pools. I am told that in these pool operations he never asked nor accepted a fee, but paid for his share like the other members of the pool. The market conduct of the stock, of course, was exclusively in his charge. Often there was talk of treachery—on both sides. His feud with the Whitney-Ryan clique arose from such accusations. It is not difficult for a manipulator to be misunderstood by his associates. They don’t see his needs as he himself does. I know this from my own experience.
It is a matter of regret that Keene did not leave an accurate record of his greatest exploit—the successful manipulation of the U.S. Steel shares in the spring of 1901. As I understand it, Keene never had an interview with J. P. Morgan about it. Morgan’s firm dealt with or through Talbot J. Taylor & Co., at whose office Keene made his headquarters. Talbot Taylor was Keene’s son-in-law. I am assured that Keene’s fee for his work consisted of the pleasure he derived from the work. That he made millions trading in the market he helped to put up that spring is well known. He told a friend of mine that in the course of a few weeks he sold in the open market for the underwriters’ syndicate more than seven hundred and fifty thousand shares. Not bad when you consider two things: That they were new and untried stocks of a corporation whose capitalization was greater than the entire debt of the United States at that time; and second, that men like D. G. Reid, W. B. Leeds, the Moore brothers, Henry Phipps, H. C. Frick and the other Steel magnates also sold hundreds of thousands of shares to the public at the same time in the same market that Keene helped to create.
Of course, general conditions favoured him. Not only actual business but sentiment and his unlimited financial backing made possible his success. What we had was not merely a big bull market but a boom and a state of mind not likely to be seen again. The undigested-securities panic came later, when Steel common, which Keene had marked up to 55 in 1901, sold at 10 in 1903 and at 8⅞ in 1904.
We can’t analyse Keene’s manipulative campaigns. His books are not available; the adequately detailed record is nonexistent. For example, it would be interesting to see how he worked in Amalgamated Copper. H. H. Rogers and William Rockefeller had tried to dispose of their surplus stock in the market and had failed. Finally they asked Keene to market their line, and he agreed. Bear in mind that H. H. Rogers was one of the ablest business men of his day in Wall Street and that William Rockefeller was the boldest speculator of the entire Standard Oil coterie. They had practically unlimited resources and vast prestige as well as years of experience in the stock-market game. And yet they had to go to Keene. I mention this to show you that there are some tasks which it requires a specialist to perform. Here was a widely touted stock, sponsored by America’s greatest capitalists, that could not be sold except at a great sacrifice of money and prestige. Rogers and Rockefeller were intelligent enough to decide that Keene alone might help them.
Keene began to work at once. He had a bull market to work in and sold two hundred and twenty thousand shares of Amalgamated at around par. After he disposed of the insiders’ line the public kept on buying and the price went ten points higher. Indeed the insiders got bullish on the stock they had sold when they saw how eagerly the public was taking it. There was a story that Rogers actually advised Keene to go long of Amalgamated. It is scarcely credible that Rogers meant to unload on Keene. He was too shrewd a man not to know that Keene was no bleating lamb. Keene worked as he always did—that is, doing his big selling on the way down after the big rise. Of course his tactical moves were directed by his needs and by the minor currents that changed from day to day. In the stock market, as in warfare, it is well to keep in mind the difference between strategy and tactics.
One of Keene’s confidential men—he is the best fly fisherman I know—told me only the other day that during the Amalgamated campaign Keene would find himself almost out of stock one day—that is, out of the stock he had been forced to take in marking up the price; and on the next day he would buy back thousands of shares. On the day after that, he would sell on balance. Then he would leave the market absolutely alone, to see how it would take care of itself and also to accustom it to do so. When it came to the actual marketing of the line he did what I told you: he sold it on the way down. The trading public is always looking for a rally, and, besides, there is the covering by the shorts.
The man who was closest to Keene during that deal told me that after Keene sold the Rogers-Rockefeller line for something like twenty or twenty-five million dollars in cash Rogers sent him a check for two hundred thousand. This reminds you of the millionaire’s wife who gave the Metropolitan Opera House scrub-woman fifty cents reward for finding the one-hundred-thousand-dollar pearl necklace. Keene sent the check back with a polite note saying he was not a stock broker and that he was glad to have been of some service to them. They kept the check and wrote him that they would be glad to work with him again. Shortly after that it was that H. H. Rogers gave Keene the friendly tip to buy Amalgamated at around 130!
A brilliant operator, James R. Keene! His private secretary told me that when the market was going his way Mr. Keene was irascible; and those who knew him say his irascibility was expressed in sardonic phrases that lingered long in the memory of his hearers. But when he was losing he was in the best of humour, a polished man of the world, agreeable, epigrammatic, interesting.
He had in superlative degree the qualities of mind that are associated with successful speculators anywhere. That he did not argue with the tape is plain. He was utterly fearless but never reckless. He could and did turn in a twinkling, if he found he was wrong.
Since his day there have been so many changes in Stock Exchange rules and so much more rigorous enforcement of old rules, so many new taxes on stock sales and profits, and so on, that the game seems different. Devices that Keene could use with skill and profit can no longer be utilised. Also, we are assured, the business morality of Wall Street is on a higher plane. Nevertheless it is fair to say that in any period of our financial history Keene would have been a great manipulator because he was a great stock operator and knew the game of speculation from the ground up. He achieved what he did because conditions at the time permitted him to do so. He would have been as successful in his undertakings in 1922 as he was in 1901 or in 1876, when he first came to New York from California and made nine million dollars in two years. There are men whose gait is far quicker than the mob’s. They are bound to lead—no matter how much the mob changes.