Evening star. [volume] (Washington, D.C.) 1854-1972, 1905-11-05
THE INSIDE OF
WALL STREET
By EDWIN LEFEyRE.

IL WILL - / AEE J
IL By EDWIN LEFEvRE.
The speculative community is pretty well
| enlightened these days in the matter OF
stock manipulation The place which 1t
more or less legitimately occupies is fairly
well understood. 1t may be contended that
| manipulation is like graft and that since
there Is no such thing as honest graft there
can be no such thing as legitimate manipu-
lation, because Its objective point is always
the public pocket and few men profit dis
preportionately II indeed not altogether lille
gally. Nevertheless. reduced to it's bare
bones. stock manipulation is merely adver-
| Using through the medium Of the ticker. II
a department store advertises that It's s.
shoes are worth 81 when 1t Is not true-the
shoe being worth really but $2.5O-it Is not
essentially different from the manipulation
who by means Of stock market devices sets
the Imagination and the hopes of stock
gamblers at work. stimulating these to buy
his wares in order to sell them later at the
profit the ticker so plausibly promises. Bear
in mind that manipulation moreover is not
necessarily transformation.
However. It cannot be denied that both
the word and the process have been abused
In Wall street to such extent that
manipulation sounds as unpleasant as
graft" does in politics. The prevalence of
the belief that all the high f1nancers ma
niIulate" stocks fnclines the average pro-
fessional to the suspicion that any big
movement in any stock, when 1t occurs at
time when the rest Of the market Is not
moving equally rapidly in the same direc-
ton, is due to nothing else but ''manipula-
ton" In the past week or two series of
precisely such movements have been wit
messed. That certain cliques manipulated
certain stocks was as plain as day. because
professional Wall street could think Of no
other reason why those same stocks should
have risen ten points or more while stand
ard railway stocks rose one or two not
at all. The talk of big earnings which in
variably accompanied the advances was
considered conventional, perfunctory, pro-
duced by the desire to capture the sucker
vote, etc.
1t is not possible at this stage of the
game to show whether any of these ad-
vances was '1egitimate"-that is, based on
merit. In none has the first chapter been
written yet Some of the advances may be
due to nothing mors than the efforts of
pools to distribute" their holdings, but
while skepticism toward good things is nat
ural, logcal, and. oftener than not, profit
abba In Wall street, 1t is at least prudent to
bear in mind that one Of the sentimental
conditions skillful manipulation Is apt to
reckon on Is precisely this skeptical attitude
OF the average Wall street man. To tell
the truth in order to divert suspicion has
been a successful device more than once in
the past and therefore 1t must be used. IL
at all, very artstically. The great stock
market leaders in point of fact use 1t so
very often with malice prepenSe that to
one-half of the speculative community
they are truthful men, and to the other
half Machiavelian manipulators- The
quintessence of genius is probably to say
nothing at all. but stock market taciturnity
is next door to impossible, in the first place
because If the general in chief does not talk
his lieutenants and his allies will, and then
because there are very few men who can
be chemically discreet. the rarest form Of
discretion being absolute silence. 1t was
when Richard Croker began to talk back
not only to talk but to talk for publication
that his usefulness to himself as the boss
of Tammany Hall became impaired and
upon his relapse into common sense he re-
tired from ahe leadership. In Wall street
there are not many manipulators who can
resist the temptation to talk and to let the
ticker do all the explaining and the prom
ising. The more the manipulation Is silent
the more talk there will be-by everybody
else 40
These reflections arise from the attitude
of the street toward such instances of
manipulation as were thrust upon its
notice in the past fortnight. In the case
of American Smelling. for example. the
talk of insiders that their company is
second Standard OIL" etc. excited not
only incredulity but derision and the rea-
son 1Or II was pndI tine advance was TOO
abrupt. too violent too suspiciousiy I'M
ladylike. Without pretending to accurate
or inside" knowledge OF the forces OR
cliques at work, the assertion may be ven
tured here that the young man who 10y
common consent engineered the rise in the
stock is doubtless prompted by his knowl
edge of the company's present and pros
pective prosperity. The coterie which man
ages and controls the company itself are
thoroughly informed as to the stock value.
They have told the young man in question
the truth. the whole truth and nothing but
the truth. But his temperament is moro
buoyantly optimistic than that of his '.in-
side friends. and he argues that IL on
merit that stock ought to sell at 200 In
1906, he may see no reason why he should
not try to reach as near that figure as he
can in 1905. The stock is up. Anybody
that holds any OF 1t can sell 1t, II he
wishes. There Is no compulsion to hold
and no compulsion to sell: and there is the
market.
"a
The really interesting point about such
an advance. whether manipulated" by
insiders or by outsiders. is ethical rather
than financial. There are available to the
public and to outside stockholders no sta
tistics, no reports, no knowledge, in other
words. that the stock is today intrinsically
worth what the ticker apparently says 1t
Is. Therefore, the temptation to sell is we'll
nigh irresistible. In so doing stockholders
who chung Loyalty to the company when
the price was low may not stay with 1t
long enough to reap the full prosperity
which the future-or. II may be- even the
present-holds. No insider." no director.
no officer OF any company should apply his
exclusive knowledge OF the real condition
In order to profit in stock gambling The
usual argument of such men is that they
do tell the public that the company Is
doing well, and that the public does not be-
lieve them. or thinks they say so in order
to be able themselves to unload on the
creduious. and that. moreover. IL stock