The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1909-04-20

would be tighter in the autumn to
come. but rates would be somewhat
relaxed during the summer, and, more
over. there was the Union ~Paclflc
treasury to fall back upon.
The Union Pacific Company at that
time had an enormous cash tuna, re-
sulting from the sale Of its holdings
of Northern Pacific and Great North
ern stocks, and was lending its cash
balances on call in Wall Street-to
Mr.. Hartman and his associates. They
believed that they had provided
against all contingencies, and SO they
had-against all which could be fore
seen: but in the spring came the San
Francisco disaster, which SO upset
things tina they were thrown back at
least two months in their plans. That
made it impossible for them to exc
cute their campaign during the sum-
mer, as they had intended, and they
were obliged to recast it. The risks
were enormously increased by having
to carry it into the early autumn,
when none would again become very
tight. They brought out their news
(the Union Pacific and Southern Pa
cific dividends) in August, and car
ried prices very high during the first
fortnight of September. The conse-
quences are historic.
There is nothing more sordid in
Wall Street than the use that is
made in the stock market by in
siders directors, bankers, and their
like) of information accessible only
to themselves. They have the first
information of changes in earnings;
they are able to anticipate dividend
changes months ahead; they now
VIA financial transactions are inn
pending, as, for instance, an increase
of stock. If they made use Of their
knowledge in q direct way, as by buy
ing on favorable developments or SELL
ing on those Of an ~unfavorable nature,
that would be bad enough. But when,
being in possession of favorable knOWl-
edge, they begin by manipulating the
stock down to induce others to sell
that they ma buy more easily. or,
on ~unfavorable knowledge, pursue the
opposite tactics, it is indefensible.
This sort Of thing, however, is SO
much taken for granted that profess
siOnal Stock Exchange traders habit
ually sell a stock on any favorable an
nouncement which the insiders must
have known was coming. Why? Be
cause the insiders have probably
loaded up with stock at lower prices
and will now be willing to sell. Hence
the axiom: Sell on good news; the
insiders have discounted it. Buy on
bad news, and for the same reason"
To be right the odd time in five
is all that any experienced Spectator
hopes for. The margin between profit
and loss is very slender. No less an
authority than James r. Keene has
aid With all the money I spend
for information and with all the exper-
fence | have. the best that J can do is
to be right four times in seven. If I
could be right three times in five, I
would have more money than | should
know what to do with The differ
~ VA o{"- - fA,-, -
average, and three times in five, which
was more than he could expect, is
once in thirty-five times.
Ponder this Well, ye who wonder
why you lose money in Wall Street.
What chance have you for the odd
time in five, which satisfies the pro
fessional, against men who command
the machinery Of manipulation, have
all the information first, and a great
deal OF the time control the news that
macs prices go up and down.
The enginery Of manipulation con
sists largely Of telephones. On sec
ing the interior of a big manipula-
tors plant for the first time. one
might believe that it consisted wholly
of telephones. Two small rooms. one
furnished with some chairs, a ia ble
"a stock ticker, a news ticker, and a
shelf of Financial Chronicles which
are never opened: and one furnished
with telephones-that is all the plant
any operator needs. de would not
know what to 10 with more. With
the telephones there is room for a
b~ook-keeper or two. The telephones.
twenty Of them, thirty Of them.
MAYBE more, run in a row around the
wall. They communicate directly with
the brokers' who receive and execute
the manipulator's orders.
Ponder this matter of the telephones
and you get the key to the whole
thlng. The capacity of one telephone
is practically unlimited if you desire
merely to buy Or sell stocks in a di-
lect, simple just think how
much. stock you could buy or sell ouer
n wire in the course of the day if