Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-04-30
The Inside of Wall Street.

rated ASSOCIATION OF muIt1-mltIOndlTeS
whose life is one prolonged indulgence In
financial graft or in buncoing the public
through manipulation. This week. for ex-
ample, the stock market had what great
hunorist first called 'healeny reaction"
1t has since become a favoca.e phrase of
solid banking interests, wh) use 1t in
all seriousness. utterly oblivious of the
fact that it is almost an admission OF
guilt.
The intelligent reader will imagine the
thoughts of the man who has been wiped
out by a ten-point decline when he hears
the tragedy called healthy. He. at least,
finds it impossible to escape the convic-
ton that the men to whom such thing
IS healthy must have caused it in order to
profit by it. Similarly, it is assumed that
they are powerful enough to do any
thing. When they buy, every wise man
must do likewise. They" are bully good
fellows when everything goes we'll and the
wise little gamblers are winning. Hu.
they" are mercless villains when they
shake out the poor ignorant public. And
yet, even if they" were all that fancy
paints them, 1t would all be part OF the
game.
Psychology Of Stock Gambling.
/ knowledge is power everywhere. They
are apt to have 1t, by reason of their posi-
ton, their brains and their wealth, and
they apply it. They do not have to
form conspiracies, but they know the
psychology of stock gamblers. 1t is as
much a part of their business to know it
as 1t is to know the industrial, commercial
and financial conditions. 1t is probably
true that often not their manpula-
tive operations in the stock market have
for an object the sale of securities to spec
ulators, and that those securities, If the
manipulation is successful, are sold for
more than they cost. But they" also must
appeal to the investor and they have to
look years ahead.
They give advice to investors. but what
the Spectator gets. and gets because it is
what he seeks, is tips. The men who are
they often give good tips. Their advice
to buy is usually followed by a rise, but
the trouble with the lamb is that there is
Ecbody to advise him when to sell. 1t Is
asking too much to expect that. A capital
of a million dollars properly used is enough
to gut up stock, let US say, ten points.
But two millions could not keep that same
stock from declining twenty points, con-
ditons favorirg. The desire to repurchase
al low prices stocks sold to the public at
high Is natural enough and it therefore
happens that efforts to check decline are
not strenuously made until 1t becomes evil
dent that passiv.ty in the matter may lead
to a. panic.
In many respects the business they"
carry on is that of manufac turers. only
they do their own selling, wholesale and
retail. They make the securities and
they sell them dear they to
whomever they" can. They" are not par
ticularly truthful, but they are not more
mendacious than other merchants and
stocks are not the only goods that are not
as good or as cheap they are advertised
to be.
But the point to bear in mind is that
they don't plan every stock market move
ment or cause every fiuctuation. They
cannot make good crops, they cannot cause
prosperity, though they" take advantage
of it. Neither do they" bring about hard
times in furtherance of a carefully studied
campaign to make people sell out their
frenZied financial fiction is responsible for
widespread belief, to be sure mostly
among credulous people. that Wall street
is run by gangs of rich thugs each many
times worse than the other. and all of them
capable of moving the market up and down
at Will They are not half as bad as the
game. and the difference between them
and lesser operators is of degree
Mr.. Morgan is certainly in the they
class. He, indeed is in the uppermost level
With all his vast resources and his prestige
and his good intentions, he could not pre-
vent Shrinkage of nearly half-billion in
the market value of his pet United States
Steel shares in 1903, compared with the
market value just before the Northern Pa
cl1c panic. 1t was not a healthy reaction
for him any more than it for the poor
public. He did his best time and again to
stem the tide, but he could not, because
no man can fight conditions. Every man
who has ever tried to do it in the stock
market or in the wheat pit has failed He
had great faith in the property and 1t
never has been shaken. And yet when Steel
common was selling at 10 cents on the
dollar and the preferred at 50 it was sur
pfislng how many people said and sin
ceIely thought he was afraid to buy back
what he had sold at exorbitant prices
his is what they" are always supposed
to do. During the big boom in the spring
OF 1901 Mr.. Keene was conducting the
manipulation of the Steel stocks for Mr.
Morgan-in other words, creating a mar
ket for them. The capitalization of the
company was in excess of a billion dollars
But Mr. Keene had conditions with him.
The iron trade was booming and the public
was stock mad and rich. He was able to
sell huge blocks of the new securities In
the open market. He had every reason to
feel proud according to his lights And vet
Mr. keene said at the time that Mr. Nor
gan thought he had sold too much of the
common around so and of the preferred
around 100
Mr. Morgan was vexed He really be-
HeVeo they were worth more. He was look
ing ahead several years. But the tide
turned. Earnings fell off because business
was dull Mr.. Morgan throughout had
confidence in the future. The common is
above 30 and the preferred above 100 now.
But 1t is not Mr.. Morgans fault that they
sold at 10 and so, and 1t is not alone be-
cause of his manipulation that they are
selling SO much higher today. They are
no. always to blame for such things