Something like a gasp of astonishment came from those eight hardened speculators. Then Greenbaum smiled, knowingly, as if that were his programme, memorized and spoken by Sharpe.
“It is also understood,” went on Sharpe, very calmly, “that none of you has any other stock for sale at any price, excepting his proportion in this pool, and that proportion, of course, is not to be sold excepting by me.” No one said a word, and he continued:
“My profit will be 25 per cent of the pool’s winnings, figuring on the stock having been put in at 29. The remaining profits will be divided pro rata among you; the necessary expenses will be shared similarly. I think that’s all. And, gentlemen, no unloading on the sly—not one share.”
“I want you to understand, Mr. Sharpe, that we are not in the habit of—” began Greenbaum with perfunctory dignity. He felt it was his duty to remonstrate before his colleagues.
“Oh, that’s all right, Greenbaum. I know you. That’s why I’m particular. We’ve all been in Wall Street more than a month or two. I simply said, ‘No shenanigan.’ And, Greenbaum,” he added, very distinctly, while his eyes took on that curious, cold, menacing look, “I mean it, every d——d word of it. I want the numbers of all your stock-certificates. Excuse me, gentlemen. I am very busy. Good-afternoon.”
And that is how the famous bull pool in Turpentine came to be formed. They thought he might have been nicer, more diplomatic; but as they had sought him, not he them, they bore with his eccentricities. Each pool manager had his way, just as there are various kinds of pools.
“Sam is not half a bad fellow,” Greenbaum told them, as if apologizing for a dear friend’s weaknesses. “He wants to make out he is a devil of a cynic, but he’s all right. If you humor him you can make him do anything. I always let him have his way.”
On the very next day began the historical advance in Turpentine. It opened up at 30. The specialists—brokers who made a specialty of dealing in it—took 16,000 shares, causing an advance to 32⅛. Everybody who had been “landed” with the shares at higher figures, and had bitterly regretted it ever since, now began to feel hopeful. As never before a stock had been manipulated, with intent to deceive and malice prepense, so did Sharpe manipulate Turpentine stock. The tape told the most wonderful stories in the world, not the less wonderful because utterly untrue. Thus, one day the leading commission houses in the Street were the buyers, which inevitably led to talk of “important developments”; and the next day brokers identified with certain prominent financiers took calmly, deliberately, nonchalantly, all the offerings; which clearly indicated that the aforementioned financiers had acquired a “controlling interest”—the majority of the stock—of the American Turpentine Company. And on another day there was a long string of purchases of “odd” lots—amounts less than 100 shares—by brokers that usually did business for the Greenbaum syndicate, meaning that friends of the syndicate had received a “tip” straight from “the inside” and were buying for investment.
Then, one fine, sunshiny day, when everybody felt very well and the general market was particularly firm, the loquacious tape told the watchful professional gamblers of Wall Street—oh, so plainly!—that there was “inside realizing”; said, almost articulately to them, that the people most familiar with the property were unloading. Sharpe was selling, with intentional clumsiness, stock he had been forced to accumulate during his bull manipulation—for in order to advance the price he had to buy much—and he was not averse to conveying such impressions as would lead to the creation of a short interest, large enough to make it profitable to “squeeze.” He had too much company on the bull side. And sure enough the professional gamblers said: “Aha! They are through with it. The movement is over!” and sold “Turp” short confidently, for a worthless stock had no business to be selling at $46 a share. The price yielded and they sold more the next day. But lo, on the day following, the Board member of a very conservative house went into the “Turp” crowd and bought it—he did not “bid up” the price at all, but bought and bought until he had accumulated 20,000 shares, and the bears became panic-stricken, and rumors of a nearby dividend began to circulate, and the bears covered their shorts at a loss and “went long”—bought in the hope of a further rise—and the stock closed at 52.
And Sharpe reduced very greatly the amount of “Turp” stock he had been obliged to take for manipulative purposes. So far he was buying more than he sold. Later he would sell more than he bought. When the demand exceeds the vendible supply, obviously the price rises; when the supply for sale exceeds the demand, a fall results. But the average selling price of a big line may be high enough to make the operation profitable, even though a decline occurs during the course of the selling.