Omaha daily bee., 1910-02-13
COVERING DEALS IN STOCKS
Fine Art Of Manipulation as Done in
Wall Street.
METHODS THE BROKERS ADOPT
How Large Order Are Executed
without Disturbing Prices
r. Ruin Brought by Blum
I r derinR Manipulation.

the stock exchange are as books for the
blind TO the average individual. The man
who occasionally buys stocks hears a
great deal about manipulation. bVt knows
little or nothing of It. The confirmed
E1seulator with years Of Wall street ex-
p%erience may have a bare smattering of
knowledge. The broker of average exper-
fence knows some Of the tricks, but is still
FAR from the best inside Information None
of the half dozen most expert manlp-
ulators themselves knows all the game.
James r. Keene, master manipulation, adj
mitted that he doesn't know it all. A few
weeks ago when Rock Island common
stock shot up 30 points and dropped back
again, all IN fifteen minutes, Mr.. Keene
spent the greater part OF the day at the
telephone trying to find out how and why
Il was done.
He traced the brokers who had executed
the orders and the broker in charge who
had parceled out the orders to other
brokers, and bombarded them all with
questions. No one thought OF asking why
he was so inquisitive. for every one knew
the answer. He thought some one had
discovered a new wrinkle in stock manip.
ulation and didn't want to drop behind the
times.
"mhA mahAHaAuAANh hNhhhs
Manipulation means sleight of hand TO
the average person who has had no ex-
perience in the security or commodity
markets and who has speculated little in
them. The manipulation is to him as the
shell man is to the young farmer at the
county fair, as the brace dealer is to the
faro player or as the thimblerigger, capper
or confidence man Is to any victim. The
business of the manipulation, i'm his opin-
ion, is to make prices for stocks and shift
them rapidly, in some such underhand and
devious way as the crooked dealer stacks
cards and slips the cut.
A year ago Governor Hughes appointed
a committee to investigate and report on
the ways Of doing business on all the ex-
changes. The committee was composed of
experienced business men and able law
yers of this city, and had as chairman a
journalist long edltor-in-chlef Of a met
ropolitan newspaper which makes a spe-
cialty of market news and gossip. One Of
the first things the did was to
inquire into the methods of the manipu-
lators, and more time was spent on this
branch Of its work than on anything else.
Some of the members started with the
idea that proper and legitimate manipula-
ton was one of those things that don't
exist. In the end all reported to the con-
trary.
The committee learned that much Of the
manipulation was unobjectionable or even
advantageous. 1t dlsapproved of manip-
ulation designed TO serve merely specu-
lative purposes in the endeavor to make
a profit as the result of fluctuations (which
have been planned in advance" On that
which lis resorted to for the purpose OF
- L. IL
ties 1t had this to say:
It Is essential to the organization and
carrying through OF important enterprises,
such as large corporations, that the or
ganizers should be able to raise the money
TO complete them. This can be done only
by the sale of securities. Large blocks OF
securities, such as are frequently issued
by railroad and other companies, cannot
be sold over the counter or directly to the
ultimate investor, whose confidence in
them can, as a rule, be only gradually
They must, therefore, II sold at all, be
disposed of to some syndicate. who will
in turn pass them on to middlemen or
spectators until in the course of time
they find their way into the boxes OF
investors. But prudent investors are not
likely to be induced to buy securities which
are not regularly quoted on some exchange
and which they cannot sell or on which
they cannot borrow money at their pleas
ure. IL the securities are really good and
bids and offers bona fide. open to all SELL
ers and buyers, the operation is armle
1t Is merely a method of bringing new in
into public notice.
One of MIR. Keene's Operations.
So after the organization {. the United
States steel corporation it was necessary
TO establish a market for it's securities.
Manipulation of securities was no new art
then. II had been practised for a half
century. Wall street had got used to talk
ing millions and many a corporation of
manu- unlnlong a., oaAltoIt-o4so, 6oa -
floated on the exchange.
But here was the biggest corporation in
the world, a $1,000. 100000 corporation with
the common and preferred stock and the
bonds included. There was $500, 900, 900 in
common stock alone. Its magnitude stagS
gered even Wall street and most OF the
wlseacres predicted failure for the rea-
son that, they said. no man or group of
men could ever distribute it's securities or
establish and maintain a stable market
for them. Mr.. Keene undertook the task
alone.
Mr.. Keene did his work to the satisfac-
ton of his employers. Ho had behind him
a, syndicate with great financial resources;
otherwise. of course. the market never
could have been established. But even
with this strong financial backing the Sc
curitios could not have been distributed
without resort I'd all the fine arts Of
manipulation.
Even Wall street Doesn't Know
In the unlikely event that Mr.. Keene
leaves an autobiography, the devices he
employed In handling the Steel stocks may
become known after his death. Otherwise
the fine art Of manipulation. as ne has
practiced it. will perish with him. Every
one in Wall street knows 1t Is useless TO
ask any expert just how his operations are
conducted. Every one Of them has secrets
which he guards as closely as would the
inventor OF a process for making gold.
Blu It is known that from the minute the
Steel stocks were launched on the ex.
change there was a free and open market
for them. Any holder could at any time
sell any amount he desired without ma
terlally lowering the price and any pur-
chaser could buy any amount without bid
ding high for his stock,
Spectators were afraid of touching the
stock In the beginning, and for many days
buying by the outside public was very
slack, but from the first day OF trading
transactions I'm It were heavy and the
stock fluetuated backward and forward in
the same manner as II hundreds of buyers
and sellers were responsible for it's move
ments. Its action looked entirely natural