Part 4
An accurate list of the buyers and sellers was sent in every day by his lieutenants, for all but the most skilful operators invariably betray themselves when they attempt to sell a big block of stock. He scanned it very carefully now, and put two and two together; and he made certain inquiries and put four and four together—four names and four other names. He saw through the time-worn device of the fictitious short selling. He knew the only people who would dare sell such a large amount must be his colleagues. He also was convinced that their breach of faith was not a concerted effort, because if they had discussed the matter they would have sold a smaller quantity. He knew where nearly every share of the stock was. It was his business to know everything about it.
“Two,” he said to his secretary, “may play at that game.” And he began to play.
By seemingly reckless, plunging purchases he started the stock rushing upward with a vengeance-–63, 64, 65, 66, four points in as many minutes. The floor of the Stock Exchange was the scene of the wildest excitement. The market—why, the market was simply Turpentine. Everybody was buying it, and everybody was wondering how high it would go, Greenbaum and the other seven included. It looked as if the stock had resumed its triumphant march to par.
Then Sharpe called in all the stock his brokers were loaning to the shorts, and he himself began to borrow it. This, together with the legitimate requirements of the big short interest, created a demand so greatly in excess of the supply that Turpentine loaned at a sixty-fourth, at a thirty-second, at an eighth, and finally at a quarter premium over night. It meant that the shorts had either to cover or to pay $25 per diem for the use of each 100 shares of stock they borrowed. On the 31,400 shares that the syndicate was borrowing it meant an expense of nearly $8,000 a day; and in addition the stock was rising in price. The shorts were losing at the rate of many thousands a minute. There was no telling where the end would be, but it certainly looked stormy for both the real and the fictitious shorts.
Mr. Sharpe sent a peremptory message to Greenbaum, Lazarus & Co.; I. & M. Wechsler; Morris Steinfelder’s Sons; Reis & Stern; Kohn, Fischel & Co.; Silberman & Lindheim; Rosenthal, Shaffran & Co.; and Zeman Bros. It was the same message to all:
“_Send me at once all your Turpentine stock!_”
There was consternation and dismay, also admiration and self-congratulation, among the recipients of the message. They would have to buy back in the open market the stock they had sold a few days before. It would mean losses on the treasonable transactions of fully a quarter of a million, but the pool “stood to win” simply fabulous sums, if Mr. Sharpe did his duty.
There were some large blocks of stock for sale at 66, but Sharpe’s brokers cleared the figures with a fierce, irresistible rush, whooping exultantly. The genuine short interest was simply panic-stricken, and atop it all there came orders to buy an aggregate of 31,400 shares—orders from Messrs. Greenbaum, Wechsler, Lindheim, Steinfelder, Reis, Fischel, Shaffran, and Zeman. The stock rose grandly on their buying: 4,000 shares at 66; 2,200 at 66⅜; 700 at 67⅝; 1,200 at 68; 3,200 at 69½; 2,000 at 70; 5,700 at 70½; 1,200 at 72. Total, 31,400 shares bought in by the “Skindicate.” Total, 31,400 shares sold by Samuel Wimbleton Sharpe to his own associates in the great Turpentine pool. In all he found buyers for 41,700 shares that day, but it had taken purchases of exactly 21,100 to “stampede the shorts” earlier in the day, and in addition he held 17,800 shares acquired in the course of his bull manipulation, which had not been disposed of when he discovered the breach of faith, so that at the day’s close he found himself not only without a share of stock manipulatively purchased, but “short” for his personal account of 2,800 shares.
The newspapers published picturesque accounts of the “Great Day in Turpentine.” A powerful clique, they said, owned so much of the stock—had “cornered” it—that they could easily mark up the price to any figure. They called it a “memorable squeeze.” It was hinted also that Mr. Sharpe had been on the wrong side of the market, and one paper gave a wealth of details and statistics in bold, bad type to prove that the wily bear leader had been caught short of 75,000 shares, and had covered at a loss of $1,500,000. A newspaper man whose relations with Sharpe were intimate asked him, very carelessly: “What the deuce caused the rise in Turpentine?” and Sharpe drawled: “I don’t know for a certainty, but I rather imagine it was inside buying!”
On the next day came the second chapter of the big Turpentine deal. Mr. Sharpe, having received the pool’s 114,400 shares, divided it into three lots, 40,000 shares, 50,000 shares, and 24,400 shares. The market had held fairly strong, but the lynx-eyed room traders failed to perceive the usual “support” in “Turp” and began to sell it in order to make sure. There was enough commission-house buying and belated short-covering to keep it moderately steady. Then the room traders redoubled their efforts to depress it, by selling more than there were buying orders for; also by selling it cheaper than was warranted by the legitimate demand for the stock. It was a favorite trick to offer to sell thousands of shares lower than people were willing to pay, in order to frighten the timid holders and make them sell; which in turn would make still others sell, until the movement became general enough to cause a substantial fall.
Slowly the price began to yield. All that was needed was a leader. Whereupon Mr. Sharpe took the first lot of pool stock, 40,000 shares, and hurled it full at the market. The impact was terrible; the execution appalling. The market reeled crazily. The stock, which after selling up to 72¾ had “closed” on the previous day at 71⅞, dropped twenty points and closed at 54. The newspapers said that the corner was “busted”; that the “squeeze” was over. Hundreds of people slept ill that night. Scores did not sleep at all.
On the next day he fired by volleys 50,000 shares more at the market. The stock sank to 41¼. Such a break was almost unprecedented.
The Street asked itself if it were not on the eve of a crash that would become historic in a district whose chronology is reckoned by big market movements.
Greenbaum rushed to Sharpe’s office. The terrible break gave him courage to do anything. A Wall Street worm will turn when the market misbehaves itself.
“What’s the matter?” he asked angrily. “What are you doing to Turpentine?”
Sharpe looked him full in the face, but his voice was even and emotionless as he replied: “Somebody has been selling on us. I don’t know who. I wish I did. I was afraid I might have to take 100,000 shares more, so I just sold as much as I could. I’ve marketed most of the pool’s stock. If it had not been for the jag of stock I struck around 60 and 62, Turpentine would be selling at 85 or 90 to-day. Come again next week, Greenbaum; and keep cool. Did you ever know me to fail? Good-by, Greenbaum; and don’t raise your voice when you speak to me.”
“This has gone too far,” said Greenbaum, hotly. “You must give me an explanation or by Heaven I’ll——”
“Greenbaum,” said Mr. Sharpe, in a listless voice, “don’t get excited. Good-by, Greenbaum. Be virtuous and you will be happy.” And he resumed his caged-tiger pacing up and down his office. As by magic, Mr. Sharpe’s burly private secretary appeared, and said: “This way, Mr. Greenbaum,” and led the dazed Trust-maker from the office. On his return Sharpe told him: “There is no need to accuse those fellows of breach of faith. They’d deny it.”
The next day Mr. Sharpe simply poured the remaining 25,000 shares of the pool’s stock on the market as one pours water from a pitcher into a cup. The bears had it all their own way. The loquacious tape said, ever so plainly: “This is nothing but inside liquidation, all the more dangerous and ominous since it is at such low figures and is so urgent in its character. Heaven alone can tell where it will end; and there is no telephone communication thither.”
Everybody was selling because somebody had started a rumor that the courts had dissolved the company for gross violation of the Anti-Trust law, and that a receiver had been appointed. Having sold out the last of the pool’s stock, Mr. Sharpe “took in” at $22 a share the 2,800 shares which he had put out at $72, a total profit on his small “line” of $140,000.
Turpentine stock had declined fifty points in fifteen business hours. It meant a shrinkage in the market value of the company’s capital stock of $15,000,000. The shrinkage in the self-esteem of some of the pool was measurable only in billions.
Sharpe notified his associates that the pool had completely realized—_i.e._, had sold out—and that he would be pleased to meet them at his office on Monday—this was Thursday—at eleven A.M., when he would have checks and an accounting ready for them. He refused himself to Greenbaum, Wechsler, Zeman, Shaffran, and others who called to see what could be done to save their reputations from the wreck of Turpentine. The stalwart private secretary told them that Mr. Sharpe was out of town. He was a very polite man, was the secretary; and an amateur boxer of great proficiency.
Failing to find Sharpe, they hastily organized a new pool, of a self-protective character, and sent in “supporting” orders. They were obliged to take large quantities of stock that day and the next in order to prevent a worse smash, which would hurt them in other directions. They found themselves with more than 50,000 shares on their hands, and the price was only 26 @ 28. And merely to try to sell the stock at that time threatened to start a fresh Turpentine panic.
They met Sharpe on Monday. His speech was not so short as usual. He had previously sent to each man an envelope containing a check and a statement, and now he said, in a matter-of-fact tone:
“Gentlemen and Greenbaum, you all know what I did for Turpentine on the up-tack. Around 62 I began to strike some stock which I couldn’t account for. I knew none of you had any for sale, of course, as you had pledged me your honorable words not to sell, save through me. But the stock kept coming out, even though the sellers borrowed against it, as if it were short stock, and I began to fear I had met an inexhaustible supply. It is always best on such occasions to act promptly, and so, after driving in the real shorts, I sold out our stock. The average selling price was 40. If it had not been for that mysterious selling it would have been 80. After commissions and other legitimate pool expenses, I find we have made nine points net, or $1,029,600, of which 25 per cent., or $250,000, come to me according to the agreement. It is too bad some people didn’t know enough to hold their stock for 90. But I find Wall Street is full of uncertainties—there is so much stupidity in the district. I trust you are satisfied. In view of the circumstances, I am. Yes, indeed. Good-day, gentlemen; and you too, Greenbaum, good-day.”
There was nothing tigerish about him. He was affable and polished; they could see that he seemed pleased to the purring point. He nodded to them and went into his inner office.
They blustered and fumed among themselves and gained courage thereby and tried Sharpe’s door and found it locked. They knocked thereon, vehemently, and the ubiquitous private secretary came out and told them that Mr. Sharpe had an important engagement and could not be disturbed, but that he was authorized to discuss any item of the statement, and he had charge of all the vouchers, in the shape of brokers’ reports, etc. So they expressed their opinions of the private secretary and of his master rather mildly, and went out, crestfallen. Outside they compared notes, and in a burst of honesty they confessed. Then, illogically enough, they cursed Sharpe. The pool was not “ahead of the game.” They had so much more stock on their hands than they desired, that in reality they were heavy losers!
And as time wore on they had to buy more “Turp”; and more “Turp”; and still more “Turp.” They thought they could emulate Sharpe and rush the price up irresistibly, at any rate up to 50. They declared a dividend of 2 per cent on the stock. But they could not market Turpentine. Again and again they tried, and again and again they failed. And each time the failure was worse because they had to take more stock.
It is now quoted at 16 @ 18. But it is not readily vendible at that figure; nor, indeed, at any price. Opposition distilleries are starting up in all the turpentine districts, and the trade outlook is gloomy. And the principal owners of the stock of the American Turpentine Company, holding among them not less than 140,000 out of the entire issue of 300,000 unvendible shares, are the famous “Greenbaum Skindicate.”
THE TIPSTER
Gilmartin was still laughing professionally at the prospective buyer’s funny story when the telephone on his desk buzzed. He said: “Excuse me for a minute, old man,” to the customer—Hopkins, the Connecticut manufacturer.
“Hello; who is this?” he spoke into the transmitter. “Oh, how are you?—Yes—I was out—Is that so?—Too bad—Too bad—Yes; just my luck to be out. I might have known it!—Do you think so?—Well, then, sell the 200 Occidental common—You know best—What about Trolley?—Hold on?—All right; just as you say—I hope so—I don’t like to lose, and—Ha! Ha!—I guess so—Good-by.”
“It’s from my brokers,” explained Gilmartin, hanging up the receiver. “I’d have saved five hundred dollars if I had been here at half-past ten. They called me up to advise me to sell out, and the price is off over three points. I could have got out at a profit, this morning; but, no sir; not I. I had to be away, trying to buy some camphor.”
Hopkins was impressed. Gilmartin perceived it and went on, with an air of comical wrath which he thought was preferable to indifference: “It isn’t the money I mind so much as the tough luck of it. I didn’t make my trade in camphor after all and I lost in stocks, when if I’d only waited five minutes more in the office I’d have got the message from my brokers and saved my five hundred. Expensive, my time is, eh?” with a woful shake of the head.
“But you’re ahead of the game, aren’t you?” asked the customer, interestedly.
“Well, I guess yes. Just about twelve thousand.”
That was more than Gilmartin had made; but having exaggerated, he immediately felt very kindly disposed toward the Connecticut man.
“Whew!” whistled Hopkins, admiringly. Gilmartin experienced a great tenderness toward him. The lie was made stingless by the customer’s credulity. This brought a smile of subtle relief to Gilmartin’s lips. He was a pleasant-faced, pleasant-voiced man of three-and-thirty. He exhaled health, contentment, neatness, and an easy conscience. Honesty and good-nature shone in his eyes. People liked to shake hands with him. It made his friends talk of his lucky star; and they envied him.
“I bought this yesterday for my wife; took it out of a little deal in Trolley,” he told Hopkins, taking a small jewel-box from one of the desk’s drawers. It contained a diamond ring, somewhat showy but obviously quite expensive. Hopkins’ semi-envious admiration made Gilmartin add, genially: “What do you say to lunch? I feel I am entitled to a glass of ‘fizz’ to forget my bad luck of this morning.” Then, in an exaggeratedly apologetic tone: “Nobody likes to lose five hundred dollars on an empty stomach!”
“She’ll be delighted, of course,” said Hopkins, thinking of Mrs. Gilmartin. Mrs. Hopkins loved jewelry.
“She’s the nicest little woman that ever lived. Whatever is mine, is hers; and what’s hers is her own. Ha! Ha! But,” becoming nicely serious, “all that I’ll make out of the stock market I’m going to put away for her, in her name. She can take better care of it than I; and, besides, she’s entitled to it, anyhow, for being so nice to me.”
That is how he told what a good husband he was. He felt so pleased over it, that he went on, sincerely regretful: “She’s visiting friends in Pennsylvania or I’d ask you to dine with us.” And they went to a fashionable restaurant together.
Day after day Gilmartin thought persistently that Maiden Lane was too far from Wall Street. There came a week in which he could have made four very handsome “turns” had he but been in the brokers’ office. He was out on business for his firm and when he returned the opportunity had gone, leaving behind it vivid visions of what might have been; also the conviction that time, tide and the ticker wait for no man. Instead of buying and selling quinine and balsams and essential oils for Maxwell & Kip, drug brokers and importers, he decided to make the buying and selling of stocks and bonds his exclusive business. The hours were easy; the profits would be great. He would make enough to live on. He would not let the Street take away what it had given. That was the great secret: to know when to quit! He would be content with a moderate amount, wisely invested in gilt-edged bonds. And then he would bid the Street good-by forever.
Force of long business custom and the indefinable fear of new ventures for a time fought successfully his increasing ticker-fever. But one day his brokers wished to speak to him, to urge him to sell out his entire holdings, having been advised of an epoch-making resolution by Congress. They had received the news in advance from a Washington customer. Other brokers had important connections in the Capital and therefore there was no time to lose. They dared not assume the responsibility of selling him out without his permission. Five minutes—five eternities!—passed before they could talk by telephone with him; and when he gave his order to sell, the market had broken five or six points. The news was “out.” The news-agencies’ slips were in the brokers’ offices and half of Wall Street knew. Instead of being among the first ten sellers Gilmartin was among the second hundred.
II.
The clerks gave him a farewell dinner. All were there, even the head office-boy to whom the two-dollar subscription was no light matter. The man who probably would succeed Gilmartin as manager, Jenkins, acted as toastmaster. He made a witty speech which ended with a neatly turned compliment. Moreover, he seemed sincerely sorry to bid good-by to the man whose departure meant promotion—which was the nicest compliment of all. And the other clerks—old Williamson, long since ambition-proof; and young Hardy, bitten ceaselessly by it; and middle-aged Jameson, who knew he could run the business much better than Gilmartin; and Baldwin, who never thought of business in or out of the office—all told him how good he had been and related corroborative anecdotes that made him blush and the others cheer; and how sorry they were he would no longer be with them, but how glad he was going to do so much better by himself; and they hoped he would not “cut” them when he met them after he had become a great millionaire. And Gilmartin felt his heart grow soft and feelings not all of happiness came over him. Danny, the dean of the office boys, whose surname was known only to the cashier, rose and said, in the tones of one speaking of a dear departed friend: “He was the best man in the place. He always was all right.” Everybody laughed; whereupon Danny went on, with a defiant glare at the others: “I’d work for him for nothin’ if he’d want me, instead of gettin’ ten a week from anyone else.” And when they laughed the harder at this he said, stoutly: “Yes, I would!” His eyes filled with tears at their incredulity, which he feared might be shared by Mr. Gilmartin. But the toastmaster rose very gravely and said: “What’s the matter with Danny?” And all shouted in unison: “He’s all right!” with a cordiality so heartfelt that Danny smiled and sat down, blushing happily. And crusty Jameson, who knew he could run the business so much better than Gilmartin, stood up—he was the last speaker—and began: “In the ten years I’ve worked with Gilmartin, we’ve had our differences and—well—I—well—er—oh, DAMN IT!” and walked quickly to the head of the table and shook hands violently with Gilmartin for fully a minute, while all the others looked on in silence.
Gilmartin had been eager to go to Wall Street. But this leave-taking made him sad. The old Gilmartin who had worked with these men was no more and the new Gilmartin felt sorry. He had never stopped to think how much they cared for him nor indeed how very much he cared for them. He told them, very simply, he did not expect ever again to spend such pleasant years anywhere as at the old office; and as for his spells of ill-temper—oh, yes, they needn’t shake their heads; he knew he often was irritable—he had meant well and trusted they would forgive him. If he had his life to live over again he would try really to deserve all that they had said of him on this evening. And he was very, very sorry to leave them. “Very sorry, boys; very sorry. _Very_ sorry!” he finished lamely, with a wistful smile. He shook hands with each man—a strong grip as though he were about to go on a journey from which he might never return—and in his heart of hearts there was a new doubt of the wisdom of going to Wall Street. But it was too late to draw back.
They escorted him to his house. They wished to be with him to the last possible minute.
III.
Everybody in the drug trade seemed to think that Gilmartin was on the high road to Fortune. Those old business acquaintances and former competitors whom he happened to meet in the streetcars or in theatre lobbies always spoke to him as to a millionaire-to-be, in what they imagined was correct Wall Street jargon, to show him that they too knew something of the great game. But their efforts made him smile with a sense of superiority, at the same time that their admiration for his cleverness and their good-natured envy for his luck made his soul thrill joyously. Among his new friends in Wall Street also he found much to enjoy. The other customers—some of them very wealthy men—listened to his views regarding the market as attentively as he, later, felt it his polite duty to listen to theirs. The brokers themselves treated him as a “good fellow.” They cajoled him into trading often—every one-hundred shares he bought or sold meant $12.50 to them—and when he won, they praised his unerring discernment. When he lost they soothed him by scolding him for his recklessness—just as a mother will treat her three-years-old’s fall as a great joke in order to deceive the child into laughing at its misfortune. It was an average office with an average clientele.
From ten to three they stood before the quotation board and watched a quick-witted boy chalk the price-changes, which one or another of the customers read aloud from the tape as it came from the ticker. The higher stocks went the more numerous the customers became, being allured in great flocks to the Street by the tales of their friends, who had profited greatly by the rise. All were winning, for all were buying stocks in a bull market. They resembled each other marvellously, these men who differed so greatly in cast of features and complexion and age. Life to all of them was full of joy. The very ticker sounded mirthful; its clicking told of golden jokes. And Gilmartin and the other customers laughed heartily at the mildest of stories without even waiting for the point of the joke. At times their fingers clutched the air happily, as if they actually felt the good money the ticker was presenting to them. They were all neophytes at the great game—lambkins who were bleating blithely to inform the world what clever and formidable wolves they were. Some of them had sustained occasional losses; but these were trifling compared with their winnings.