Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-09-03
THE INSIDE OF
WALL STREET
By EDWIN LErEvRE.


Whenever you tell Wall street profess
sional that the game Of the ticker Is to
a great extent psychological he smiles. He
proceeds to inform you that what he de-
sires is facts. all the facts, and nothing
but the facts. He includes In the category
of facts all except the most important. He
thinks that when he says facts he means
statistics. trustworthy reports on basic
trade conditions. etc. Curiously enough he
recognizes the bearing that sentiment has
on speculation and he constantly reckons
with 1t as a market factor OF the utmost
Importance. Yet since the study of senti-
ment Is essentially the study Of the human
mind. and Of the SPECTATORS soul, 1t OBJ
viously is a psychological study. The mind
Of the average speculator works along GER
tain more or less clearly understood lines.
The public Is that same Spectator multi
piled by hundred thousand great
operator must be a keen psychologist If
he would be a great dollar winner at the
game. Mr.. Keene is that in stocks; Mr..
Theodore II. Price Is that in cotton: Mr..
Norman B. Ream is, or was, that In wheat.
They understand the human equation
well as statistics, value-making conditions
and other facts" The average Spectator
does not pay enough attention to this very
important part of his business. The pro-
fessionals neglect 1t incredibly; when they
bear 1t In mind 1t is in a haphazard way,
as 1t were; in an utterly unsystematic and
unscientific manner. because experience
teaches them to look for certain effects
from certain causes, just as three thousand
years ago men knew the moon and the tides
did business together in some way or an
other; observation rather than analysis in
other words Even some Of the great finan-
ciers are not good psychologists. If they
were they would be less unpopular. Mr.. H.
H. Rogers is, but Mr.. Rockefeller is not,
and because of that Mr.. Rogers is far
better speculator than his Weather asso-
ciate. Mr.. E. H. Hartman was an active
stock broker before he became a railroad
magnate, hence as an individual trader in
stocks, either his own or others, he is far
more adroit than any other railroad mag
nate The same thing has helped Thomas
r. Ryan immensely in his big operations
Kuhn. Loeb & Co. are very successful bank
ers because among the partners are men
who are extremely discerning judges of
human nature. OF the big men of the
street. Mr.. Rockefeller is one of the few
who does not have to make money for 9TH
ers in order to make 1t for himself and
that is because his individual resources are
so great that he does not need allies yet
he loses too often to be agreeable to his
temperament. 1t also tends to explain why
his personal popularity is what ii Is. Mr.
George J. Gould Is suffering just now from
his lack Of psychological insight. which
makes him negectful Of the very obvious
fact that financial friendships must be paid
in dollars. The Gould stocks are probably
the Iuost Unpopular group or securities on
the list of the stock exchange simply be-
cause neither the Wall street professionals
nor the public has been able to make any
money out OF them. The result is that Mr.
Is no reason to doubt what Is common Cos
sip in the street, that In the last few
speculative operations Jointly conducted in
Missouri Pacific by Messrs. Gould and
money were the brokers who were en-
ployed as manipulators- in-chief. If the
methods OF the brokers in question were re-
sponsible for the unpopularity of the Gould
stocks then 1t Is the fault of Mr.. Gould for
employing such brokers. At all events the
point Is that other things besides trade sta
tistics, earnings and other such facts
must be considered II the game is to be
played successfully. Personally, I am in
clned to think that Mr.. Morgan is a man
OF such strong conviction that he is not
exactly q subtle psychologist. as, for ex-
ample. Mr.. James Stillman undoubtedly Is
But he Is man Of such broadness Of Wis
Ion, who is so much more interested in the
work itself than in the determination of the
precise financial reward to exact, that he
thinks less of pleasing people than of doing
the work thoroughly. But Mr.. Morgan's
judgment is good and his prestige great
And his prestige is great fully much be-
cause his associates nearly always make
money in his syndicates or because he has
done big things in finance.
The greater part Of the foregoing has
been written merely to show how the aver
looked up to by the outside mob is apt to
play the game by which he makes his liv-
Ing strangely unscientifcally. The profess
sional is cynical because at some time or
another he has been the victim of some
big man or has seen others victimized His
reading OF sentiment" Is childish You
find traders selling stocks one day because
the public Is buying them-"getting land
ed"-and on the next because the public Is
not buying-the big men unable to dispose
Of the goods" They have formulated GER
tain rules OF conduct in trading" When
the rules work, and there is profit. they
are all right. When they don't, and there
is loss. the rules would have worked had
It not been for something unexpected. At
they call definite trend" None of the
rules work practically we'll. But then all
signs fail in dry weather Incidentally,
there have been so many draughts in Wall
street that a complete code for use on such
occasions should long ago have been COM
piled, but it hasn't. Therefore they seek to
apply what rules they know to all occasions.
One Of the illuminating incidents" was
the way in which the professional specu-
lators received the news from Portsmouth
A few days before, on the mere reports
that the peace outlook was bright, the
market had boiled and prices had risen
quite sharply. Then came the days of
doubt and of pessimism. When the news
that treaty OF peace had been agreed
upon came with downright dramatic sud-
denness it was quarter Of an hour be-
fore the observant and shrewd traders real
lied that there was money in the Japa-
nese bonds. They had the news and did
nothing, and 1t was obvious that every
minute was Of Importance. To be sure the
market had been heavy and sentiment was
not optimistic. SO that nobody was sus-
ceptible to good news as If they had been
in a more cheerful frame of mind. But
sentiment sentiment, there was no
question of the inevitable effect of the
news on the Japanese bonds, whatever 1t
might be st. Paul or New York Cen
| trail.
| Much the same thing happened at the
| time of Mr.. Cleveland's famous Venezuelan
| message. The ticker apparently was deaf
| The professionals read 1t and asked what
| 1t meant A few people thought London
| would not like 1t, and prices for American
| stocks there would be little lower the
next day. Even the sagaoious Mr.. Keene
| did not realize what 1t meant until a news
paper man with nothing but the news In
stinct' told him 1t meant serious trouble.