A Stock Exchange house which has been putting out orders in the stock was charged with leading the attack on it yesterday, but members of the firm said that they had been acting merely as brokers for customers in the regular order of business.
Following the newspaper "roasts," which helped further to destroy public confidence, two brokers on Logan & Bryan's continental wire system resorted to tactics of a kind to force lower prices. This wire has over one hundred out-of-town broker connections. A report was sent over the wire that Nat. C. Goodwin & Company had failed. Another followed it that the Rawhide Coalition Mines Company was about to go into the hands of a receiver. The Nevada Mining News accused Nat. Boas of San Francisco and J. C. Weir of New York of exchanging messages to this effect over the Logan & Bryan wire systems, so that all correspondents on the wire would have the false reports. Both Boas and Weir were believed to be "short" of the stock. Both were openly operating for a further decline. These and similar tactics resulted in a further easing off in price to 40 cents bid on December 24th, which was the "low" on the movement.
Two weeks after Christmas the stock rallied to 58 bid, 59 asked, and the market was firm again. On January 14 the price bulged to 70. At this point the stock again became the center of attack. By January 20 the price had eased back to 50.
Thus far the net result of Nat. C. Goodwin & Company's various campaigns on Rawhide Coalition was the distribution of some 600,000 shares of stock. The issue had been well exploited. It had a big following and a broad market. Some excellent judges of mine values had become stockholders. The company, however, was still unfinanced for a long period of systematic mine development and mill construction.
We realized very clearly that some arrangement would have to be perfected to avoid a repetition of the trouble which the New York Stock Exchange brokerage firm had made us.
"INSIDE" MARKET SUPPORT
The removal to New York of B. H. Scheftels & Company, Chicago stock brokers, representatives there of Nat C. Goodwin & Company of Reno, and a merging of brokerage and promotion interests of the two firms took place.
There was precedent for the move. There are a thousand other corporation interests in this country that are closely affiliated with Stock Exchange and other brokerage houses, through one or more of their directors or owners being partners in the business. As a matter of fact, it would be difficult to lay your finger on a single big interest of this kind that has not such a representation. These houses, of course, make it a rule to recommend the purchase of stocks in which their principals are interested. Affiliations of this kind are found essential to successful financing of enterprises. A number of New York Stock Exchange houses which are headed or controlled by men who are heavily interested in mining ventures that require financing are exponents of this method in the mining field.
Most of these have succeeded in promoting projects in which they or their associates are heavily interested, with the aid of the banking and brokerage facilities thus afforded. Principally by the use of the market literature and accompanying market manipulation, these houses have placed with their customers the securities of their firm members and associates. They have encompassed this by maintaining a brokerage, banking and promotion business without parading before the public, although never denying, the mixed nature of their business.
For the reader to comprehend the necessity for transacting the business this way, he should understand the underlying principle of financing an enterprise by the route of the listed stock market.