雙語·股票大作手回憶錄 第九章

I CRUISED off the coast of Florida．The fishing was good．I was out of stocks．My mind was easy．I was having a fine time．One day off Palm Beach some friends came alongside in a motor boat．One of them brought a newspaper with him．I hadn't looked at one in some days and had not felt any desire to see one．I was not interested in any news it might print．But I glanced over the one my friend brought to the yacht，and I saw that the market had had a big rally；ten points and more．

I told my friends that I would go ashore with them．Moderate rallies from time to time were reasonable．But the bear market was not over；and here was Wall Street or the fool public or desperate bull interests disregarding monetary conditions and marking up prices beyond reason or letting somebody else do it．It was too much for me．I simply had to take a look at the market．I didn't know what I might or might not do．But I knew that my pressing need was the sight of the quotation board．

My brokers，Harding Brothers，had a branch office in Palm Beach．When I walked in I found there a lot of chaps I knew．Most of them were talking bullish．They were of the type that trade on the tape and want quick action．Such traders don't care to look ahead very far because they don't need to with their style of play．I told you how I'd got to be known in the New York office as the Boy Plunger．Of course people always magnify a fellow's winnings and the size of the line he swings．The fellows in the office had heard that I had made a killing in New York on the bear side and they now expected that I again would plunge on the short side．They themselves thought the rally would go to a good deal further，but they rather considered it my duty to fight it．

I had come down to Florida on a fishing trip．I had been under a pretty severe strain and I needed my holiday．But the moment I saw how far the recovery in prices had gone I no longer felt the need of a vacation．I had not thought of just what I was going to do when I came ashore．But now I knew I must sell stocks．I was right，and I must prove it in my old and only way—by saying it with money．To sell the general list would be a proper，prudent，profitable and even patriotic action．

The first thing I saw on the quotation board was that Anaconda was on the point of crossing 300．It had been going up by leaps and bounds and there was apparently an aggressive bull party in it．It was an old trading theory of mine that when a stock crosses 100 or 200 or 300 for the first time the price does not stop at the even figure but goes a good deal higher，so that if you buy it as soon as it crosses the line it is almost certain to show you a profit．Timid people don't like to buy a stock at a new high record．But I had the history of such movements to guide me．

Anaconda was only quarter stock—that is，the par of the shares was only twenty-five dollars．It took four hundred shares of it to equal the usual one hundred shares of other stocks，the par value of which was one hundred dollars．I figured that when it crossed 300 it ought to keep on going and probably touch 340 in a jiffy．

I was bearish，remember，but I was also a tape-reading trader．I knew Anaconda，if it went the way I figured，would move very quickly．Whatever moves fast always appeals to me．I have learned patience and how to sit tight，but my personal preference is for fleet movements，and Anaconda certainly was no sluggard．My buying it because it crossed 300 was prompted by the desire，always strong in me，of confirming my observations．

Just then the tape was saying that the buying was stronger than the selling，and therefore the general rally might easily go a bit further．It would be prudent to wait before going short．Still I might as well pay myself wages for waiting．This would be accomplished by taking a quick thirty points out of Anaconda．Bearish on the entire market and bullish on that one stock！So I bought thirty-two thousand shares of Anaconda—that is，eight thousand full shares．It was a nice little flyer but I was sure of my premises and I figured that the profit would help to swell the margin available for bear operations later on．

On the next day the telegraph wires were down on account of a storm up North or something of the sort．I was in Harding's office waiting for news．The crowd was chewing the rag and wondering all sorts of things，as stock traders will when they can't trade．Then we got a quotation—the only one that day：Anaconda，292．

There was a chap with me，a broker I had met in New York．He knew I was long eight thousand full shares and I suspect that he had some of his own，for when we got that one quotation he certainly had a fit．He couldn't tell whether the stock at that very moment had gone off another ten points or not．The way Anaconda had gone up it wouldn't have been anything unusual for it to break twenty points．But I said to him，“Don't you worry，John．It will be all right tomorrow．”That was really the way I felt．But he looked at me and shook his head．He knew better．He was that kind．So I laughed，and I waited in the office in case some quotation trickled through．But no，sir．That one was all we got：Anaconda，292．It meant a paper loss to me of nearly one hundred thousand dollars．I had wanted quick action．Well，I was getting it．

The next day the wires were working and we got the quotations as usual．Anaconda opened at 298 and went up to 302?，but pretty soon it began to fade away．Also，the rest of the market was not acting just right for a further rally．I made up my mind that if Anaconda went back to 301 I must consider the whole thing a fake movement．On a legitimate advance the price should have gone to 310 without stopping．If instead it reacted it meant that precedents had failed me and I was wrong；and the only thing to do when a man is wrong is to be right by ceasing to be wrong．I had bought eight thousand full shares in expectation of a thirty or forty point rise．It would not be my first mistake；nor my last．

Sure enough，Anaconda fell back to 301．The moment it touched that figure I sneaked over to the telegraph operator—they had a direct wire to the New York office—and I said to him，“Sell all my Anaconda，eight thousand full shares．”I said it in a low voice．I didn't want anybody else to know what I was doing．

He looked up at me almost in horror．But I nodded and said，“All I've got！”

“Surely，Mr．Livingston，you don't meant at the market？”and he looked as if he was going to lose a couple of millions of his own through bum execution by a careless broker．But I just told him，“Sell it！Don't argue about it！”

The two Black boys，Jim and Ollie，were in the office，out of hearing of the operator and myself．They were big traders who had come originally from Chicago，where they had been famous plungers in wheat，and were now heavy traders on the New York Stock Exchange．They were very wealthy and were high rollers for fair．

As I left the telegraph operator to go back to my seat in front of the quotation board Oliver Black nodded to me and smiled．

“You'll be sorry，Larry，”he said．

I stopped and asked him，“What do you mean？”

“Tomorrow you'll be buying it back．”

“Buying what back？”I said．I hadn't told a soul except the telegraph operator．

“Anaconda，”he said．“You'll be paying 320 for it．That wasn't a good move of yours，Larry．”And he smiled again．

“What wasn't？”And I looked innocent．

“Selling your eight thousand Anaconda at the market；in fact，insisting on it，”said Ollie Black．

I knew that he was supposed to be very clever and always traded on inside news．But how he knew my business so accurately was beyond me．I was sure the office hadn't given me away．

“Ollie，how did you know that？”I asked him．

He laughed and told me：“I got it from Charlie Kratzer．”That was the telegraph operator．

“But he never budged from his place，”I said．

“I couldn't hear you and him whispering，”he chuckled．“But I heard every word of the message he sent to the New York office for you．I learned telegraphy years ago after I had a big row over a mistake in a message．Since then when I do what you did just now—give an order by word of mouth to an operator—I want to be sure the operator sends the message as I give it to him．I know what he sends in my name．But you will be sorry you sold that Anaconda．It's going to 500．”

“Not this trip，Ollie，”I said．

He stared at me and said，“You're pretty cocky about it．”

“Not I；the tape，”I said．There wasn't any ticker there so there wasn't any tape．But he knew what I meant．

“I've heard of those birds，”he said，“who look at the tape and instead of seeing prices they see a railroad time-table of the arrival and departure of stocks．But they were in padded cells where they couldn't hurt themselves．”

I didn't answer him anything because about that time the boy brought me a memorandum．They had sold five thousand shares at 299 ?．I knew our quotations were a little behind the market．The price on the board at Palm Beach when I gave the operator the order to sell was 301．I felt so certain that at that very moment the price at which the stock was actually selling on the Stock Exchange in New York was less，that if anybody had offered to take the stock off my hands at 296 I'd have been tickled to death to accept．What happened shows you that I am right in never trading at limits．Suppose I had limited my selling price to 300？I'd never have got it off．No，sir！When you want to get out，get out．

Now，my stock cost me about 300．They got off five hundred shares—full shares，of course—at 299?．The next thousand they sold at 299?．Then a hundred at ?；two hundred at ? and two hundred at ?．The last of my stock went at 298?．It took Harding's cleverest floor man fifteen minutes to get rid of that last one hundred shares．They didn't want to crack it wide open．

The moment I got the report of the sale of the last of my long stock I started to do what I had really come ashore to do—that is，to sell stocks．I simply had to．There was the market after its outrageous rally，begging to be sold．Why，people were beginning to talk bullish again．The course of the market，however，told me that the rally had run its course．It was safe to sell them．It did not require reflection．

The next day Anaconda opened below 296．Oliver Black，who was waiting for a further rally，had come down early to be Johnny-on-the-spot when the stock crossed 320．I don't know how much of it he was long of or whether he was long of it at all．But he didn't laugh when he saw the opening prices，nor later in the day when the stock broke still more and the report came back to us in Palm Beach that there was no market for it at all．

Of course that was all the confirmation any man needed．My growing paper profit kept reminding me that I was right，hour by hour．Naturally I sold some more stocks．Everything！It was a bear market．They were all going down．The next day was Friday，Washington's Birthday．I couldn't stay in Florida and fish because I had put out a very fair short line，for me．I was needed in New York．Who needed me？I did！Palm Beach was too far，too remote．Too much valuable time was lost telegraphing back and forth．

I left Palm Beach for New York．On Monday I had to lie in St．Augustine three hours，waiting for a train．There was a broker's office there，and naturally I had to see how the market was acting while I was waiting．Anaconda had broken several points since the last trading day．As a matter of fact，it didn't stop going down until the big break that fall．

I got to New York and traded on the bear side for about four months．The market had frequent rallies as before，and I kept covering and putting them out again．I didn't，strictly speaking，sit tight．Remember，I had lost every cent of the three hundred thousand dollars I made out of the San Francisco earthquake break．I had been right，and nevertheless had gone broke．I was now playing safe—because after being down a man enjoys being up，even if he doesn't quite make the top．The way to make money is to make it．The way to make big money is to be right at exactly the right time．In this business a man has to think of both theory and practice．A speculator must not be merely a student，he must be both a student and a speculator．

I did pretty well，even if I can now see where my campaign was tactically inadequate．When summer came the market got dull．It was a cinch that there would be nothing doing in a big way until well along in the fall．Everybody I knew had gone or was going to Europe．I though that would be a good move for me．So I cleaned up．When I sailed for Europe I was a trifle more than three-quarters of a million to the good．To me that looked like some balance．

I was in Aix-les-Bains enjoying myself．I had earned my vacation．It was good to be in a place like that with plenty of money and friends and acquaintances and everybody intent upon having a good time．Not much trouble about having that，in Aix．Wall Street was so far away that I never thought about it，and that is more than I could say of any resort in the United States．I didn't have to listen to talk about the stock market．I didn't need to trade．I had enough to last me quite a long time，and besides，when I got back I knew what to do to make much more than I could spend in Europe that summer．

One day I saw in the Paris Herald a dispatch from New York that Smelters had declared an extra dividend．They had run up the price of the stock and the entire market had come back quite strong．Of course that changed everything for me in Aix．The news simply meant that the bull cliques were still fighting desperately against conditions—against common sense and against common honesty，for they knew what was coming and were resorting to such schemes to put up the market in order to unload stocks before the storm struck them．It is possible they really did not believe the danger was as serious or as close at hand as I thought．The big men of the Street are as prone to be wishful thinkers as the politicians or the plain suckers．I myself can't work that way．In a speculator such an attitude is fatal．Perhaps a manufacturer of securities or a promoter of new enterprises can afford to indulge in hope-jags．

At all events，I knew that all bull manipulation was foredoomed to failure in that bear market．The instant I read the dispatch I knew there was only one thing to do to be comfortable，and that was to sell Smelters short．Why，the insiders as much as begged me on their knees to do it，when they increased the dividend rate on the verge of a money panic．It was as infuriating as the old“dares”of your boyhood．They dared me to sell that particular stock short．

I cabled some selling orders in Smelters and advised my friends in New York to go short of it．When I got my report from the brokers I saw the price they got was six points below the quotations I had seen in the Paris Herald．It shows you what the situation was．

My plans had been to return to Paris at the end of the month and about three weeks later sail for New York，but as soon as I received the cabled reports from my brokers I went back to Paris．The same day I arrived I called at the steamship offices and found there was a fast boat leaving for New York the next day．I took it．

There I was，back in New York，almost a month ahead of my original plans，because it was the most comfortable place to be short of the market in．I had well over half a million in cash available for margins．My return was not due to my being bearish but to my being logical．

I sold more stocks．As money got tighter call-money rates went higher and prices of stocks lower．I had foreseen it．At first，my foresight broke me．But now I was right and prospering．However，the real joy was in the consciousness that as a trader I was at last on the right track．I still had much to learn but I knew what to do．No more floundering，no more half-right methods．Tape reading was an important part of the game；so was beginning at the right time；so was sticking to your position．But my greatest discovery was that a man must study general conditions，to size them so as to be able to anticipate probabilities．In short，I had learned that I had to work for my money．I was no longer betting blindly or concerned with mastering the technic of the game，but with earning my successes by hard study and clear thinking．I also had found out that nobody was immune from the danger of making sucker plays．And for a sucker play a man gets sucker pay；for the paymaster is on the job and never loses the pay envelope that is coming to you．

Our office made a great deal of money．My own operations were so successful that they began to be talked about and，of course，were greatly exaggerated．I was credited with starting the breaks in various stocks．People I didn't know by name used to come and congratulate me．They all thought the most wonderful thing was the money I had made．They did not say a word about the time when I first talked bearish to them and they thought I was a crazy bear with a stock-market loser's vindictive grouch．That I had foreseen the money troubles was nothing．That my brokers' bookkeeper had used a third of a drop of ink on the credit side of the ledger under my name was a marvellous achievement to them．

Friends used to tell me that in various offices the Boy Plunger in Harding Brothers' office was quoted as making all sorts of threats against the bull cliques that had tried to mark up prices of various stocks long after it was plain that the market was bound to seek a much lower level．To this day they talk of my raids．

From the latter part of September on，the money market was megaphoning warnings to the entire world．But a belief in miracles kept people from selling what remained of their speculative holdings．Why，a broker told me a story the first week of October that made me feel almost ashamed of my moderation．

You remember that money loans used to be made on the floor of the Exchange around the Money Post．Those brokers who had received notice from their banks to pay call loans knew in a general way how much money they would have to borrow afresh．And of course the banks knew their position so far as loanable funds were concerned，and those which had money to loan would send it to the Exchange．This bank money was handled by a few brokers whose principal business was time loans．At about noon the renewal rate for the day was posted．Usually this represented a fair average of the loans made up to that time．Business was as a rule transacted openly by bids and offers，so that everyone knew what was going on．Between noon and about two o'clock there was ordinarily not much business done in money，but after delivery time—namely，2：15 P．M．—brokers would know exactly what their cash position for the day would be，and they were able either to go to the Money Post and lend the balances that they had over or to borrow what they required．This business also was done openly．

Well，sometime early in October the broker I was telling you about came to me and told me that brokers were getting so they didn't go to the Money Post when they had money to loan．The reason was that members of a couple of well-known commission houses were on watch there，ready to snap up any offerings of money．Of course no lender who offered money publicly could refuse to lend to these firms．They were solvent and the collateral was good enough．But the trouble was that once these firms borrowed money on call there was no prospect of the lender getting that money back．They simply said they couldn't pay it back and the lender would willy-nilly have to renew the loan．So any Stock Exchange house that had money to loan to its fellows used to send its men about the floor instead of to the Post，and they would whisper to good friends，“Want a hundred？”meaning，“Do you wish to borrow a hundred thousand dollars？”The money brokers who acted for the banks presently adopted the same plan，and it was a dismal sight to watch the Money Post．Think of it！

Why，he also told me that it was a matter of Stock Exchange etiquette in those October days for the borrower to make his own rate of interest．You see，it fluctuated between 100 and 150 per cent per annum．I suppose by letting the borrower fix the rate the lender in some strange way didn't feel so much like a usurer．But you bet he got as much as the rest．The lender naturally did not dream of not paying a high rate．He played fair and paid whatever the others did．What he needed was the money and was glad to get it．

Things got worse and worse．Finally there came the awful day of reckoning for the bulls and the optimists and the wishful thinkers and those vast hordes that，dreading the pain of a small loss at the beginning，were now about to suffer total amputation—without anaesthetics．A day I shall never forget，October 24，1907．

Reports from the money crowd early indicated that borrowers would have to pay whatever the lenders saw fit to ask．There wouldn't be enough to go around．That day the money crowd was much larger than usual．When delivery time came that afternoon there must have been a hundred brokers around the Money Post，each hoping to borrow the money that his firm urgently needed．Without money they must sell what stocks they were carrying on margin—sell at any price they could get in a market where buyers were as scarce as money—and just then there was not a dollar in sight．

My friend's partner was as bearish as I was．The firm therefore did not have to borrow，but my friend，the broker I told you about，fresh from seeing the haggard faces around the Money Post，came to me．He knew I was heavily short of the entire market．

He said，“My God，Larry！I don't know what's going to happen．I never saw anything like it．It can't go on．Something has got to give．It looks to me as if everybody is busted right now．You can't sell stocks，and there is absolutely no money in there．”

“How do you mean？”I asked．

But what he answered was，“Did you ever hear of the classroom experiment of the mouse in a glass-bell when they begin to pump the air out of the bell？You can see the poor mouse breathe faster and faster，its sides heaving like overworked bellows，trying to get enough oxygen out of the decreasing supply in the bell．You watch it suffocate till its eyes almost pop out of their sockets，gasping，dying．Well，that is what I think of when I see the crowd at the Money Post！No money anywhere，and you can't liquidate stocks because there is nobody to buy them．The whole Street is broke at this very moment，if you ask me！”

It made me think．I had seen a smash coming，but not，I admit，the worst panic in our history．It might not be profitable to anybody—if it went much further．

Finally it became plain that there was no use in waiting at the Post for money．There wasn't going to be any．Then hell broke loose．

The president of the Stock Exchange，Mr．R．H．Thomas，so I heard later in the day，knowing that every house in the Street was headed for disaster，went out in search of succour．He called on James Stillman，president of the National City Bank，the richest bank in the United States．Its boast was that it never loaned money at a higher rate than 6 per cent．

Stillman heard what the president of the New York Stock Exchange had to say．Then he said，“Mr．Thomas，we'll have to go and see Mr．Morgan about this．”

The two men，hoping to stave off the most disastrous panic in our financial history，went together to the office of J．P．Morgan & Co．and saw Mr．Morgan．Mr．Thomas laid the case before him．The moment he got through speaking Mr．Morgan said，“Go back to the Exchange and tell them that there will be money for them．”

“Where？”

“At the banks！”

So strong was the faith of all men in Mr．Morgan in those critical times that Thomas didn't wait for further details but rushed back to the floor of the Exchange to announce the reprieve to his death-sentenced fellow members．

Then，before half past two in the afternoon，J．P．Morgan sent John T．Atterbury，of Van Emburgh & Atterbury，who was known to have close relations with J．P．Morgan & Co.，into the money crowd．My friend said that the old broker walked quickly to the Money Post．He raised his hand like an exhorter at a revival meeting．The crowd，that at first had been calmed down somewhat by President Thomas' announcement，was beginning to fear that the relief plans had miscarried and the worst was still to come．But when they looked at Mr．Atterbury's face and saw him raise his hand they promptly petrified themselves．

In the dead silence that followed，Mr．Atterbury said，“I am authorized to lend ten million dollars．Take it easy ！There will be enough for everybody！”

Then he began．Instead of giving to each borrower the name of the lender he simply jotted down the name of the borrower and the amount of the loan and told the borrower，“You will be told where your money is．”He meant the name of the bank from which the borrower would get the money later．

I heard a day or two later that Mr．Morgan simply sent word to the frightened bankers of New York that they must provide the money the Stock Exchange needed．

“But we haven't got any．We're loaned up to the hilt，”the banks protested．

“You've got your reserves，”snapped J．P．

“But we're already below the legal limit，”they howled．

“Use them！That's what reserves are for！”And the banks obeyed and invaded the reserves to the extent of about twenty million dollars．It saved the stock market．The bank panic didn't come until the following week．He was a man，J．P．Morgan was．They don't come much bigger．

That was the day I remember most vividly of all the days of my life as a stock operator．It was the day when my winnings exceeded one million dollars．It marked the successful ending of my first deliberately planned trading campaign．What I had foreseen had come to pass．But more than all these things was this：a wild dream of mine had been realised．I had been king for a day！

I'll explain，of course．After I had been in New York a couple of years I used to cudgel my brains trying to determine the exact reason why I couldn't beat in a Stock Exchange house in New York the game that I had beaten as a kid of fifteen in a bucket shop in Boston．I knew that some day I would find out what was wrong and I would stop being wrong．I would then have not alone the will to be right but the knowledge to insure my being right．And that would mean power．

Please do not misunderstand me．It was not a deliberate dream of grandeur or a futile desire born of overweening vanity．It was rather a sort of feeling that the same old stock market that so baffled me in Fullerton's office and in Harding's would one day eat out of my hand．I just felt that such a day would come．And it did—October 24，1907．

The reason why I say it is this：That morning a broker who had done a lot of business for my brokers and knew that I had been plunging on the bear side rode down in the company of one of the partners of the foremost banking house in the Street．My friend told the banker how heavily I had been trading，for I certainly pushed my luck to the limit．What is the use of being right unless you get all the good possible out of it？

Perhaps the broker exaggerated to make his story sound important．Perhaps I had more of a following than I knew．Perhaps the banker knew far better than I how critical the situation was．At all events，my friend said to me：“He listened with great interest to what I told him you said the market was going to do when the real selling began，after another push or two．When I got through he said he might have something for me to do later in the day．”

When the commission houses found out there was not a cent to be had at any price I knew the time had come．I sent brokers into the various crowds．Why，at one time there wasn't a single bid for Union Pacific．Not at any price！Think of it！And in other stocks the same thing．No money to hold stocks and nobody to buy them．

I had enormous paper profits and the certainty that all that I had to do to smash prices still more was to send in orders to sell ten thousand shares each of Union Pacific and of a half dozen other good dividend-paying stocks and what would follow would be simply hell．It seemed to me that the panic that would be precipitated would be of such an intensity and character that the board of governors would deem it advisable to close the Exchange，as was done in August，1914，when the World War broke out．

It would mean greatly increased profits on paper．It also mean an inability to convert those profits into actual cash．But there were other things to consider，and one was that a further break would retard the recovery that I was beginning to figure on，the compensating improvement after all that bloodletting．Such a panic would do much harm to the country generally．

I made up my mind that since it was unwise and unpleasant to continue actively bearish it was illogical for me to stay short．So I turned and began to buy．

It wasn't long after my brokers began to buy in for me—and，by the way，I got bottom prices—that the banker sent for my friend．

“I have sent for you，”he said，“because I want you to go instantly to your friend Livingston and say to him that we hope he will not sell any more stocks today．The market can't stand much more pressure．As it is，it will be an immensely difficult task to avert a devastating panic．Appeal to your friend's patriotism．This is a case where a man has to work for the benefit of all．Let me know at once what he says．”

My friend came right over and told me．He was very tactful．I suppose he thought that having planned to smash the market I would consider his request as equivalent to throwing away the chance to make about ten million dollars．He knew I was sore on some of the big guns for the way they had acted trying to land the public with a lot of stock when they knew as well as I did what was coming．

As a matter of fact，the big men were big sufferers and lots of the stocks I bought at the very bottom were in famous financial names．I didn't know it at the time，but it did not matter．I had practically covered all my shorts and it seemed to me there was a chance to buy stocks cheap and help the needed recovery in prices at the same time—if nobody hammered the market．

So I told my friend，“Go back and tell Mr．Blank that I agree with them and that I fully realised the gravity of the situation even before he sent for you．I not only will not sell any more stocks today，but I am going in and buy as much as I can carry．”And I kept my word．I bought one hundred thousand shares that day，for the long account．I did not sell another stock short for nine months．

That is why I said to friends that my dream had come true and that I had been king for a moment．The stock market at one time that day certainly was at the mercy of anybody who wanted to hammer it．I do not suffer from delusions of grandeur；in fact you know how I feel about being accused of raiding the market and about the way my operations are exaggerated by the gossip of the Street．

I came out of it in fine shape．The newspapers said that Larry Livingston，the Boy Plunger，had made several millions．Well，I was worth over one million after the close of business that day．But my biggest winnings were not in dollars but in the intangibles：I had learned what a man must do in order to make big money；I was permanently out of the gambler class；I had at last learned to trade intelligently in a big way．It was a day of days for me．