Evening star. [volume] (Washington, D.C.) 1854-1972, 1904-09-22
TRICKS h.:.:ST0Cks
Means Traders Use 2 to Inau-
enoa Prices.
a 5 ~
DARK WAYS SS,;oF POOLS
-
SECRETS OF MANIPULATION By
MEN WHO MAKE MARKET"
Making Money by Selling and Buying
at tho Same Time-When to
Get Out.

From the New York Times.
During the bull market Of the last few
weeks much has been heard of active ma
nipulation Of prices. pool operations ana
other speculative methods which. from the
vay they are spoken of, would seem to be
considered as illegitimate offshoots of the
Wall street game They are phrases which
ara generally heard only during an ad-
vance In the market, for when stocks are
declining in unison the news Is generally
of such q kind as to make unnecessary ex-
traordinary efforts to hasten the collapse.
But when general conditions are not ex-
actly glowing, and yet the market takes an
upward swing, or when stock intrinsical-
ly not attractive Is to be distributed" the
genteel term for selling out to the dear
public. then 1t is that the ability of the
manipulation is called on. that pools are
formed to facilitate the bidding up of the
price. and that the other paraphernalia for
booming the market are taken out Of the
closet and busted up
There are. of course. various methods for
| accomplishing these same ends, and to de-
| eide which Of them is the more successful
one must be left to those who have tried
them BOTH In recent years some of the
| biggest men have found it profitable to put
the market up by the sheer force of their
tuying, regardless of the amounts of stocks
they accumulated in the process and rely
liz Ou Lie tTeHleuuOuS following which
their activity attracted to enable them to
take profits. This method, however while
successful In a big, broad bull market, was
found to entail disaster when that market
was deserted by the public and only the
professional element remained on which to
sell out. an element which is generally too
quick to detect such efforts at unloading
to make them profitable. During the pres
ent bull campaign the methods EMPLOYED
were more subtle. following the lines laid
out by Charles Woerishoffer and James r.
Keene.
Formation of the Pool
The way the thing was ACCOMPLISHED was
about like this: In the early summer IT
was found that money was so plentiful that
1t could be borrowed at merely nominal
rates. This being an essential necessity
| preliminary to any bull campaign. further
examination of conditions revealed the fact
that the presidential election for once
would not prove disturbing factor, that
general conditions had improved and that
tnelr continuance seemed assured because
OF the expectancy of good crops With this
oasis those big interests which had been
hampered in many schemes of deyelopment
by the decline in the stock market and the
1npossibility to sell securities at reason
aole prices, decided it was an suspicious
time to make market. Thereupon came
the hrst step In the preparation of the up-
Ward movement, and this was the forma-
tlon or pools In various stocks. These pools
"Cic iiot dll formed with knO Wledge of each
others existence; on the contrary il is
more probable that they were formed indie
| pendently as the result of the same con-
clusion having been reached by different
sets OF men AT any rate they We're
formed, and each one of them took
| from nifty to one hundred thousand and
| more shares out of the market accumulat-
ing them very quietly if they had not been
| involves an agreement among the members
not to sell except when the word is given
| by the manager, for. every pool has it's
operating head, who Is something of an au-
| tocrat and does what he thinks best to Sc
| cure an advance in his stock.
| The formation of the pool having been
| completed, the pool manager began to buy
| openly, making no secret of the purchases
| but taking pains to disguise the identity OF
| the purchaser, for little mystery Is de-
| sirable, as it makes things more attractive
| BY employing brokers who have generally
| been identified with those in control of the
| property, or brokers of some big interests
| whicffmight want to control the property
| this object is accomplished. OF course the
| Dig buying movement requires some ex-
| planauon, and so the rumor mills are start
| ed up, and they grind out stories of acuut-
| sition by other companies, increased div1-
! deEds, rights to shareholders, large earn
| ings, new big orders, acquisition of some
| other valuable property, and a score of
| varied reports all calculated to make the
| higher quotations appear plausible and yet
| not definite enough to invite absolute de-
nlais from the management. a possibility
| Wnlcn is further circumvented by the TAX
| ing into the pool of some influential mem
| Der of the board of directors.
| Quiet Selling.
! While thus advancing the market through
open purchases, the wise manager also sells
| as much as possible In order to avoid the
| accumulation of the entire capital stock in
| the endeaVors to advance the market price.
| This selling, however, Is carried on with as
| much secrecy the buying Is public and
| although every professional in the street
| knows that this is being done, yet every
| one permits himself to be deceived by the
| belief that the pools object has not been
| accomplished, and that prices will advance
| further. Wherefore even the wise profess
| sional element, or the talent, as 1t is some
| times called often gets landed with stock
| when the pool is liquidating.
| The manner in which these purchases are
| managed Is like this: The pool manager
| distributes orders to a series of brokers'
| To one or them he gives an order to buy
| large lot, say ten thousand shares, at the
| best, that is, at the lowest, price he can get.
! Then he distributes stop orders, that is
| orders which must be executed when the
| market reaches given price. or at as
| nearly that price as possible. If the stock
| is quoted at 40, he gives an order to the
first broker to stop 500 shares at H. to an
| other at a, to third at A, and so on up to
| the price which IL is desired to establish for
| the day.
| The broker with the 100O0-share order be-
| gins to bid, and gets his first lot of perhaps
| thousand shares at 40 Not getting any
| more, he bids Is, and, of course, is at once
| joined by the broker withnthe stop order at
that price. Perhaps 900, shares more are
| purchased at that price. when the first bid
| der raises the bid to " and at this figure
| the third broker joins In the bidding. and
| so the price gradually advances the first
| broker bidding all the time and the stop
| order brokers falling in line. until half
| dozen men are bidding for the stock. This
| lively bidding is sure to attract following
| from the traders on the floor who want to
get share of the, profits In the advance,
| and very soon thera Ia an active market
established. rs,,sis
Landing Lambs With Stock.
After this reasonably heavy buying has
lasted few days. long enough to charm
the speculative community. much as the
pied piper charmed the children. they begin
to sell more than they buy. This of course,
would be impossible were 1t not for the
fact that big. broad market had been
| created In the previous days transactions,
| with the public and the spectators eager
| to buy, and In which many thousand shares
could, be sold without overlooking the de-
| mand.
| To prevent the market from selling off in
such a way as to frighten the SPECTATORS.
~ T. arsy ffvvaxa n asalt