Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1890-03-23

of a confidence operation. Mr.. Gould may
want some line that connects with one OF ms
roads. He will create new issue OF the
stock of his own road called common stock
to take up or purchase the stock of the con-
Meeting line The stock thus secured IS put
in the treasury of his road "for the purpose
Of control"
THE ORIGINAL STOCK
of his road is called "preferred'' stock. The
earnings of both roads go into one treasury.
II they are only sufficient to pay DIVIDENDS
on the preferred stock, the holders OF the
common have to whistle for their expected
revenue.
Stock dividends form another and very
prevalent way of lining the pockets OF the
owners of railroads. Instead of dividend
in cash, one in new or additional stock IS
declared. If the market price Of the stock
can be maintained by manipulation in Wall
street, and the extra stock sold, the owner
of it is so much ahead inasmuch as it has
cost him nothing. It is the custom in or
ganIzing railroads to build the lines with
the proceeds from the sales of the bonds.
The stock is given away; that is, it is offered
as bonus to the purchasers OF bonds. The
purpose is to induce capitalists TO invest
their money. Projectors of a railroad often
buy the bonds themselves and obtain the
stock for nothing. Subsequently the stock
Is sold and the amount secured Tor 1t Is
pocketed as clear gain. The interest on the
bonds must be paid whether there is money
for dividends on the stock or not. If the in
terest on the bonds is not paid the mortgage
which they represent is foreclosed and the
stock is wiped out of existence. The road is
reorganized and new bonds are issued to
take the place of the ones with which goes
another bonus of stock to be disposed OF as
before.
JAY GOULD BUNKoED.
Jay Gould was "bunkoed" once. A broker
came to him with the information that q
certain railroad stock was to be advanced in
price. He told, with elaborate circumstan-
tiality, how it was to be done. The man
ayers of the road were to make report
showing that it was earning far more than
had been supposed and were to increase the
amount of the dividends. Mr.. Gould went
ahead and bought the stock in large quanti-
ties. Suddenly the price dropped like
plummet and Mr.. Gould found out that he
had been hoodwinked. The managers of the
road wanted 10 unload their stock and Sc
lected Mr.. Gould as their victim, utilizing
the broker as "bunko steerer."
Gould was very angry over the trick and
threatened to prosecute the broker for OBJ
tanning money by false pretenses, but he
changed his mind. This is the only instance
when he was ever known to have been
caught by any such operation.
Mr.. Gould himself ''bunkoed" the late
William H. Vanderbilt out of 500 600, 900.
1t is hardly fair to call it "bunkoing," but
the fact is Mr.. Gould induced Mr.. Wander
bilt to go into an operation which cost the
lot Tlo vnf
by any means, secure all the money that
Vanderbilt lost. The stock market had be-
come very shaky and a general collapse was
threatened.
GOULD coNceCTED A SCHEME.
Gould got up a scheme to avert the disas-
ter by which Mr.. Vanderbilt was to support
his stocks while he was to do the same with
his own. Mr.. Gould's idea, as he presented
it. was that an exhibition of such tremen-
dous power. would inspire the outside public
with confidence, and it would come into the
market and buy. As it turned out, the
public when it learned that the market
would take stocks, rushed to sell its hold
ings. Mr. Gould either saw how things
were going. or knew beforehand how they
would 60, and promptly unloaded on Van
derbilt. This was the time of the famous
"pegging" operation. Lake Shore was
"pegged" at 120, New York Central at 130,
and Northwest at 1876. Vanderbilt awoke
to realization of his situation when the
Gould and other stocks began tumbling all
around him, leaving him all alone with his
stocks far above the rest of the market. He
finally let go and his stocks dropped 40 to so
points. He never had anything to do with
Mr.. Gould after that. Vanderbilt told the
correspondent of THE DISPATCH about a
call that Mr.. Gould made at his house sub
sequently, at which the latter was very
formally received"
Robberies are never heard Of in Wall
street nowadays, or at any rate only at ex-
ceedingly rare intervals. The correspond
ent was passing through Wall street the
other day when he saw q weli-dressed man
step up to pedestrian, touch him on the
shoulder and say "Get out of here"
oBEYED WITH ALACRITY.
Gall right" replied the pedestrian, who
promptly hurried out of sight up Nassau
street. The pedestrian who would have at
tracted no attention in crowd was pro-
fessional thief. and the well-dressed man a
detective. Inspector Byrnes keeps detec-
tives in the 'street" all the time. They are
fne-looking men who wear silk hats, cut
away coats, overcoats with silk facings, dia-
mond rings and bosom studs, carry gold
watches, and smoke imported cigars. It is
necessary that they should look as we'll as
the brokers with whom they mingle. There
is "danger line'' for thieves. 1t crosses
Broadway at Fulton street. seven blocks
above Wall street, and the thief who ven
lures below it is liable to be arrested and
imprisoned as suspicious character"
Forgery is the principal thing that Wall
street has to guard against. The brokers
generally use special designs of checks, and
so many precautions are taken at the banks
that forgery is almost instantly detected.
Every bank has detective in the lobby to
look out for sneak thieves and suspicious
individuals generally. The cashiers are in
covered ''cages," and even if there were no
detectives the thieves could not get at the
money.
BUCKET-sHoP METHODS.
The police have recently been raiding the
bucket shops in Wall street. and not with
out reason. There are two or three honest
bucket shops, but the others are absolute
swindles The average dealer in bucket
shop puts up SIS to go 'long" or "short" of
five shares of stock. That sum repre-
sents margin of 1 per cent. An
"eighth each way" is charged by
the shop on the transaction. To be
more explicit, if the speculator buys stock
Tor rise he is charged Is of per cent for
the purchase, and again Is OF per cent when
the stock is sold. Thus he has only q of /
per cent "margin" let. This is called play
ing on a thin margin" and the first few
quotations may wipe out the speculator's in
yestment.
If the speculator loses, the bucket shop
gets the entire s., for there has been no
actual purchase of stock. The transaction
amounts, simply, to bet on the quotations.
The Stock Exchange tries to keep the bucket
shop from obtaining its quotations, and this