PART III: THE PARADOXICAL PANIC
Wall STREET was suffering from its worst disease—dullness. The public—the only genuine octopus—did not find the menu printed on the ticker-tape at all appetizing. It was hard at work in its office, miles away from the Stock Exchange, out of hearing of the ticker, scanning the financial pages of the newspapers only on the street-cars to pass away an irksome half-hour. Months before, the fumes of the wine of gambling had gone to its head; and then the public had been made sober suddenly by the “shrinkage in quoted values,” otherwise the shearing. Since then the public had grown a new fleece, though it was not yet itself aware of it.
It was a delicate task, before the president of the Metropolitan National Bank. He was a resourceful stock-market manipulator, though he would have resented being called a thief not half so hotly as being called a speculator, because that sounded worse in a bank president. He desired the public to buy bonds; not necessarily at high prices, but at any prices. It was purely philanthropy on the face of it. That is why the task was delicate. You can disarm suspicion if you are bad, in Wall Street. But, if you are good, the hopelessness of it is appalling. Moreover, there was no time for finesse or subtle strategy or ingenious experiments with the elemental psychology of stock gamblers. The occasion called for broadly-painted effects.
The first thing he did was to offer bonds to savings-banks and trustees of estates all over New England and New York, at concessions too slight to arouse suspicion, but substantial enough to tempt purchasers. This through the best bond “drummers” in the land. Then he sought the Stock Exchange.
The bond-market, which had slumbered profoundly for months, suddenly awoke. Gilt-edged issues were pressed for sale, not violently at all, but insistently. They came from many sources, the Street thought, not knowing the full contents of the huge strong box of the richest man in the world. The fortunes of the ordinary multi-millionaires grow faster in the newspapers and in club-comers than in reality. This fortune was even greater than the gossip of it. Mellen spent time in making people look at his wealth through a reversed telescope, that it might be diminished in the public’s estimate. That is all he had ever done to diminish it, being a practical man.
The bond “specialists” felt faintly alarmed; then they became exultantly busy. It might be unwise to buy stocks the future market-career of which was problematical; but everybody knew what Pennsylvania Central first mortgage fives were. Not to buy them under 125 was to sin regrettably. The bonds sold at 122. To abstain from purchasing them at 120 was lunacy. And at 115 passivity became a crime against one’s family. Many bought, but not enough; and because the supply was greater than the demand the price shrank further.
The Street held its breath and waited for stocks to follow. But, simultaneously with the sales of the best bonds of the best railways in the United States, came purchases of the stocks of the same railways, and though prices of bonds declined, stocks did not. The Street felt that to “trade” in such a market was like playing rouge-et-noir in an utterly dark room. What was the sense of betting on the black if the bettor could not tell, because of the darkness, whether his chips were on it or on the red?
The newspapers, being puzzled, printed dozens of columns and hundreds of explanations, all of them highly ingenious and uniformly incorrect. In his Monday morning article, Philip King, of The Sun, compared the bond-market to the old story of the great psychologist who, dressed as a pedlar, offered on a Broadway sidewalk to sell five-dollar gold-pieces, warranted genuine, to the passers-by at $3.98. Never a fool so foolish, in the passing thousands, as to shake hands with fortune on the psychologist’s coin-laden tray. Now they would not buy bonds.