The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1903-11-17
OBSERVATION-DISCLOSURES Ss~*>*<s%*
PlKkS PEAK OR BUST
By EDWIN IEFEVRE

they We're notified. His eyes were not
clear and Ingenious; they were shift
md a bit watery. He had been n Wall
street eight or ten years, and ne over
worked his nerves every Gay from 10
a. ~. TO 3 .. m. on the Stock Exchange.
also from ) p. IN. to midnight at the cafe
OF a big uptown hotel, where Wall street
men gathered TO talk shop. His sys-
TEN craved lstlmulants; gambling ara
liquor were the strongest he knew.
When, after two years, the firm ex-
pired by limitation Colonel Thornton
withdrew. He had had enough OF Hay
wards plunging. To be sure. Sally had
become q shrewd trader" and he had
made So, GEO during the big bull boom:
but he was at heart a trader" which
IS to say a mere gambler in stocks, and
not a desirable commission man.
But Sally, flushed with success ON the
bull side, did not worry when Thornton
refused TO continue the partnership. TIE
slogan was: Buy a. @. T. It's sure to
go up.' the initials standing for Any
Old Thing" The most prosperous per
iod III the Industrial and commercial his
tory Of the United States begot an cpl
dCmic OF speculative madness such as was
never before known and probably never
again viii be. Everybody had mOnev In
abundance and the desire for speculation
IL su~perabundance. Sally formed a new
firm Observation-Disclosures & Co.-with
his cashier as partner.
All mundane things have an end, even
bull markets and bear markets. The
Dull markets saw Hayward & Co. doing
a good business, as did everybody else in
Wall Street. 1t ended, and the firms
customers, after a few bad 'slumps'
n prices, were admonished to turn bears
in order to rccOup their losses. Bears
believe prices are too high and should
go lower; bulls, optimists. believe the
opposite. The public can't sell stocks
short any more than the average man
is left handed. These customers were no
xeepticn, so thy did nothing.
Hayward had "overstayed" the bull
market, though not disastrously; that Is,
he was in error regarding the extent
and duration of the upward movement of
prices. He proceeded to fall into a sim
liar error on the bear or downward side.
The market had been extremely dull
following what the financial writers
called a severe decline" but which
means the loss of millions of dollars by
spectators. HayWard's customers, nike
everybody clse's customers, were not spec
ulating. So he used their money to pro
tect his own speculatlons. Office ex-
pcnses were numerous and heavy anC
commissions few and light.
Hayward was very bearish. He hao
sold stocks, sharing the belief Of the mo
iority Of his fellows that the lowest prices
had not been reached. AS a result he wa.
heavily short and he could not'tcover'
at a profit, because prices had advanced
very slowly, but very steadily.
One day a big gambler in Chicago
bolder or keencr than his Eastern breth
rem, thought the time was ripe for {
bull or upward movement in general
and particularly in Consolidated Stce
Rod Company's stock. He was the chair
man Of the Board of Directors. Mr.
William G.. Dorr decided upon a plan
Whereby tho stock would be made at
~tractive to that class OF speculative III
yestOrs, so to speak, Who liked to buy
stocks making generous disbursements O
profits to their holders. The first stcl
consisted of sending IN large buying or
ders. handled by prominent brokers, ant
Simultaneously the publication in tn,
daily press of various items. all ~rccit3nE
the wonderful prosperity Of the Consol
dated Rod Company and It's phenomena
earnings; also the unutterable cheapncs
OF the stock at the prevailing price. Mr.
Dorr and associates, OF course, had pre-
viously taken advantage Of the biz
%''slump" or fail in values to buy bacl
at - the same stock they had sold t,
the public some weeks before at 20
Having acquired this cheap stock, the.
"manipulated"-by means of further pur
( chase-thc price so that they could sci
| out at a profit.
II so happened. however. that once be
{ fore dividend rumors about Con. Stee
Rod" had been disseminated, with IT,
( connjvance OF Dorr, and they had no
!. cCmc true, to the great dctrimcnt o
r c%reduIous buyers and greater profit Z
the insiders, who were short of thu
stock up to their necks'-a typical bi
j o. stock jobbing whcreat other and NOR,
. artistic stockholders had expressed tn,
greatest Indignation. Instead of putin:
/, the stock on a dividend paying basis tht
/, directors had decided-at the last hou
that it would not be conservative t.
do so, Whereupon the stock had broken
seventeen points. The lambs lost hun
; drcds Of thousands OF dollars; the III
! siders gained as much. 1t was a nc
turn"
! Hayward remembered this and Whc'
=, the stock, after several days of con
s~picuous activity and steady advances
, rose to %, he promptly sold short" ),
600 sharcs-beIieving that the bareface'
manipulation would not raise the stool
: much above that figure and that befort
! long it must decline Only a month pre-
viouSly it had sold at 30 and nobod.
/. wanted any of it. He was all the NOR
decided In his opinion that the top
had been reached by prices, because MI
DOrr, in a Chicago paper, had state
that the stockholders would probably re
coiyc an entire years dividends at On
j fell sWoop by reason OF the unexamplc'
prosperity in the steel rod trade. Suc'
: ar action was unprecedented. 1t Ia,
been talked about at various times i
connection With other stocks, but 1t ha
!, never come true. Why should it com
; true in this instance?
4 Hayward, familiar with Dorr 8 record
promptly ''coppcred" his tip TO buy
banking on DORIS consistent mcndacIt!
But Mr.. William G.. Dorr, ~shrcWdcst an
i boldcst OF all Western stock gamblers
fooled c~verybody-hc actually told tn
t truth. That week the directors did eN