At all events, the stock was duly listed on the New York Stock Exchange and the price of it duly kept sagging until it nominally stood at 37. And it stood there because Jim Barnes and his associates had to keep it there because their bank had loaned them thirty-five dollars a share on one hundred thousand shares. If the bank ever tried to liquidate that loan there was no telling what the price would break to. The public that had been eager to buy it at 50, now didn’t care for it at 37, and probably wouldn’t want it at 27.
As time went on the banks’ excesses in the matter of extensions of credits made people think. The day of the boy banker was over. The banking business appeared to be on the ragged edge of suddenly relapsing into conservatism. Intimate friends were now asked to pay off loans, for all the world as though they had never played golf with the president.
There was no need to threaten on the lender’s part or to plead for more time on the borrower’s. The situation was highly uncomfortable for both. The bank, for example, with which my friend Jim Barnes did business, was still kindly disposed. But it was a case of “For heaven’s sake take up that loan or we’ll all be in a dickens of a mess!”
The character of the mess and its explosive possibilities were enough to make Jim Barnes come to me to ask me to sell the one hundred thousand shares for enough to pay off the bank’s three-million-five-hundred-thousand-dollar loan. Jim did not now expect to make a profit on that stock. If the syndicate only made a small loss on it they would be more than grateful.
It seemed a hopeless task. The general market was neither active nor strong, though at times there were rallies, when everybody perked up and tried to believe the bull swing was about to resume.
The answer I gave Barnes was that I’d look into the matter and let him know under what conditions I’d undertake the work. Well, I did look into it. I didn’t analyse the company’s last annual report. My studies were confined to the stock-market phases of the problem. I was not going to tout the stock for a rise on its earnings or its prospects, but to dispose of that block in the open market. All I considered was what should, could or might help or hinder me in that task.
I discovered for one thing that there was too much stock held by too few people—that is, too much for safety and far too much for comfort. Clifton P. Kane & Co., bankers and brokers, members of the New York Stock Exchange, were carrying seventy thousand shares. They were intimate friends of Barnes and had been influential in effecting the consolidation, as they had made a specialty of stove stocks for years. Their customers had been let into the good thing. Ex-Senator Samuel Gordon, who was the special partner in his nephews’ firm, Gordon Bros., was the owner of a second block of seventy thousand shares; and the famous Joshua Wolff had sixty thousand shares. This made a total of two hundred thousand shares of Consolidated Stove held by this handful of veteran Wall Street professionals. They did not need any kind person to tell them when to sell their stock. If I did anything in the manipulating line calculated to bring in public buying—that is to say, if I made the stock strong and active—I could see Kane and Gordon and Wolff unloading, and not in homeopathic doses either. The vision of their two hundred thousand shares Niagaraing into the market was not exactly entrancing. Don’t forget that the cream was off the bull movement and that no overwhelming demand was going to be manufactured by my operations, however skillfully conducted they might be. Jim Barnes had no illusions about the job he was modestly sidestepping in my favour. He had given me a waterlogged stock to sell on a bull market that was about to breathe its last. Of course there was no talk in the newspapers about the ending of the bull market, but I knew it, and Jim Barnes knew it, and you bet the bank knew it.
Still, I had given Jim my word, so I sent for Kane, Gordon and Wolff. Their two hundred thousand shares was the sword of Damocles. I thought I’d like to substitute a steel chain for the hair. The easiest way, it seemed to me, was by some sort of reciprocity agreement. If they helped me passively by holding off while I sold the bank’s one hundred thousand shares, I would help them actively by trying to make a market for all of us to unload on. As things were, they couldn’t sell one-tenth of their holdings without having Consolidated Stove break wide open, and they knew it so well that they had never dreamed of trying. All I asked of them was judgment in timing the selling and an intelligent unselfishness in order not to be unintelligently selfish. It never pays to be a dog in the manger in Wall Street or anywhere else. I desired to convince them that premature or ill-considered unloading would prevent complete unloading. Time urged.
I hoped my proposition would appeal to them because they were experienced Wall Street men and had no illusions about the actual demand for Consolidated Stove. Clifton P. Kane was the head of a prosperous commission house with branches in eleven cities and customers by the hundreds. His firm had acted as managers for more than one pool in the past.
Senator Gordon, who held seventy thousand shares, was an exceedingly wealthy man. His name was as familiar to the readers of the metropolitan press as though he had been sued for breach of promise by a sixteen-year-old manicurist possessing a five-thousand-dollar mink coat and one hundred and thirty-two letters from the defendant. He had started his nephews in business as brokers and he was a special partner in their firm. He had been in dozens of pools. He had inherited a large interest in the Midland Stove Company and he got one hundred thousand shares of Consolidated Stove for it. He had been carrying enough to disregard Jim Barnes’ wild bull tips and had cashed in on thirty thousand shares before the market petered out on him. He told a friend later that he would have sold more only the other big holders, who were old and intimate friends, pleaded with him not to sell any more, and out of regard for them he stopped. Besides which, as I said, he had no market to unload on.