Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1892-02-15
THE COAL CYCLONE.
Matthew Marshall Finds in 1t a Good
Deal to Consider, Just Now.
THE LITTLE FISH GOT CAUGHT,
But There Is Some Consolation in the Fact
That They We're
IN TIE VERY BEST KIND OF COMPANY
SPECIAL TELEGRAM TO THE DISPATCH,

Coal Stocks" is the subject selected by Mat
thew Marshall for his article for tomorrow
San, which reads as follows:
When 1 wrote, last Monday, OF the Indus
trial securities that they were no more dan
gerous to play with than any others on the
list of the stock exchange, had no idea
that my remarks would be so speedily Illus
trated as they were by the cyclone in the
Reading, Delaware, Lackawanna and West
ern, New Jersey Central, and New York and
New England Railroad stocks. 1 have seen
100 much of Wall street to be astonished al
anything that happens there, and though
on this occasion l was surprised at the sud
0enness and the violence of the commotlon
on the market few moments Thought was
sufficient to satisfy me that it differed in eN-
tent only, and neither in its causes nor in Its
mode OF manifestation, from hundreds OF
previous outbreaks of the same general
character.
Little as / approve, upon moral grounds,
of such operations, l cannot withhold my
need ofinteIleetual admiration of the clever
ness. boldness and success with which this
one was managed Like every affair in
which that able and astute fnancier, Jupi-
ter Morgan takes an active part, it was
most skillfully contrived and brilliantly
executed. How many dollars lie and his as
SOCiates have won from the OUTSIDE ppDlc
donot consider. Whether the amount OF
their gains be recl1oned by thousands or by
millions does not affect the character or
their exploit. That its victims were for the
most part professional stock gamblers is the
feature in it which somewhat reconciles me
TO its heard-hearted cruelty, and if. along
with them. a number of amateurs have like
wise suffered. they NAV console themselves
with the reflection that they have lost their
money il good company.
Little Action Cpon Calculation
What the whole business more prominent
ly illustrates, to my mind, is the great fact
upCn which have more than once insisted,
that the movements of the Stock Exchange
on exciting occasions are governed more by
psychological than by intellectual influ-
ences. The crowd of buyers who rushed
into the arena on Thursday morning and
hid for million or more Of the shares of
the companies which it was supposed were
going TO be benefited by the arrangements
made public the previous afternoon did not
actupOn calculation of the extent and the
qsrmanency of the expected Improvement.
Some perhaps, were cool-headed enough to
neTceiVe the fimSineSS of the ground upon
which they proceeded and trusted-wisely,
rs the event proVed-tO the contagious en-
thusiasm oil their companions TO relieve
them OF the burdens which they assumed
but the majority bought in obedience to
blind impulse, generated and stimulated by
the atmosphere that surrounded them.
! remember once standing near the
"ticker" in the office of a broker friend, and
heal ing a well-knowE and cputedlysuccess-
-ul oNeratOr give an order, after looking at
the quotations on the tape to buy 100 shares
Of stock with which / entirely un-
familiar. l Immediately atterward heard
-Oicc behind me eXclaiE: Buy me a hun
Gred, too l turned and saw gentleman
Of my acquaintance, and with the free
masonry OF the brokers' cflice / asked him
upon what he based his buying. Nothing"
ne answered, except that ] heard Smith
ave an order tor 100 and l have faith in his
Judgment"
Reason Lost to Imitation.
1 am pleased to be able to say that my
rather impertinent inquiry led the gentle
man TO revoke his order. and. rs it turned
out, lie thereby saved some hundreds OF dol
lars which he would have lost had he allowed
It to De executed, but his giving it at all
exemplities the principle upon which the
majority of stock exchange transactions are
conducted. Men are carried away by a
spirit OF lmitativencsS and entirely forego
the exercise of their reason.
The occurrence speak of took place in the |
comparative tranq utility OF small Office, |
with only a lew persons present. Transfer
ghe scene to the floor OF the stock Exchange |
with its thousand or more of members, ali |
eager and alert to catch the fluctuations of /
fhe market and it l. easy to comprehend |
now the transient movement of my hasty |
friend may become, as it does, a tumultous |
frenzy. The case is similar to that or a |
negro campmeeting revival. where each one |
OF the crowd vies with his fellows in the ex- |
preston OF his iergOr until they all become,
Tor the moment, lunatics-the only differ
enCe being that on the stock Exchange the |
moving force il the desire of ma king money.
\ broker or his customer at the ticker |
sees the price of Il stock jumping up whole |
point or more at 4 time and he hastens to |
buy before the next jump comes so that he |
can take advantage OF it, even ii he has to |
pay more than was paid a moment before, |
and so the game goes on, till a revulsion OF |
n
prices.
Play Upon Human Nature.
The engineers of the coal stock cyclone |
were evidently familiar with this trait of |
human nature, and utilized it to the utmost. |
For some weeks il had been well known that |
the demand for anthracite coal was slack |
and that a reduction of the price of it was |
quite probable. This encouraged q number |
of bear operators to sell the stocks of the |
coal companies short, and they were led on |
70 do 1t to the full extent of their ability |
When their contracts had reached the de- |
fired limit, rumors of the impending cou-
AlnauOn Of the companies began to be circu- |
gated, Al first vaguely indefinite, but increas-
1nE in particularly from day to day. |
lhcreuUlous of the truth, the bears con-
tlnUed their selling until, when the whole |
arrangement was finally promulgated, it |
Was discovered that most of the coal stock /
on the market, and good deal beside was |
1n the hands OF the promoters of the move
sold the stocks short had to buy them in at a |
high figure. The speculating public. seeing |
the rise, FASTENED to profit by it, and thus, |
between the bears and the public, the |
previous purchasers at low prices were able |
TO dispose OF their holdings at a very hand |
some advance,
Now that the excitement has in a measure |
subsided, the buyers of Reading and Lackn- |
wanna stocks at the top OF the move are |
asking themselves what shey shall do with |
them. They do not want to hold them as in |
"a fl.gN- a.
them at loss. SO far as can see they must |
choose one or the other horn of the dilemma
but a fresh upward movement NAV vet float |
them of from the rock on which they are |
stranded and free them from their embar- |
rassment.
An Argument Against Prophecies.
know that it is asserted with great conf |
dence by those whose opinion / have no \
right to disparage that under the new CON- |
bination all the stocks affected bv it-incIud- |
Guiding New fork and New England, which |
l. only remotely concened-wiIl be worth |
the highest prices they sold for last week. |
and more, too, as dividend-paying invest /
ments are after all, the final test OF stock |
values, and by it the anthra cite /
coal stocks must in the long run stand |
or fall. Bat admitting that the new
combination is able for a year or so to in
crease the dividends on Lackawanna to 10 /
per cent per annum, or, what amounts to the I
same thing, make it pay 5per cent per an
mum on the doubled ca nital which is talked
about; that New Jersey Central will be a /
dead sure7 per cent investment like Morris
and Essex, and Lehigh Valley an equally |
sure per cent, what is to guarantee the per
of these rates? The leading COM
pany, it is asserted will earn not only its /
guaranteed Jersey Central and Lehigh Val
Icy dividends, but dividends for itself; but
considering that since its reorganization it |
has not been able to meet more than half
the preference charges ahead of its common