Lights and Shadows of New York Life

J >> James D. McCabe >> Lights and Shadows of New York Life

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The chief cause of this intense strain is the uncertainty attending the
operations of Wall street. The chances there are not dependent upon the
skill or the exertions of the operator. Some powerful clique may almost
destroy the securities upon which he relies for success, or may make him
wealthy by suddenly running up their value; so that no man who does not
confine himself to a strictly legitimate or commission business--and but
few do so--can say one week whether he will be a millionaire or a beggar
the next. The chances are in favor of the latter result. Nine out of
ten who speculate in gold or stocks, lose, especially persons
unaccustomed to such operations. Like all gamblers, they are undismayed
by their losses, and venture a second time, and a third, and so on. The
fascination of stock gambling is equal to that of card gambling, and
holds its victims with an iron hand. The only safe rule for those who
wish to grow rich is to keep out of Wall street. While one man makes a
fortune by a sudden rise in stocks or gold, hundreds lose by an equally
sudden fall in the same commodities. Even old and established firms
sometimes give way with a crash under these sudden changes.

The legitimate operations of the street and the speculative ventures are
becoming more and more concentrated every year in the hands of a few
operators and capitalists. These move the market as they please, and
fill their coffers, and sweep away younger or weaker men with a
remorseless hand. It is useless to oppose them. They are masters of the
field in every respect, and when they combine for a common object, their
resources are inexhaustible and their power beyond computation. A dozen,
or even half a dozen of the great capitalists could ruin the whole street
were they so disposed, and once they came near doing so. This is the
secret of the cordial hatred that is felt by the majority of Wall street
men for Vanderbilt, Drew, and other great operators. They know and dread
the power of these men, and would readily combine to destroy them singly.

The mania for stock gambling which now sways such masses of people, may
be said to date from the war and the petroleum discoveries. Since then
it has rolled over the country in a vast flood. The telegraph is kept
busy all day and all night in sending orders for speculations from people
in other States and cities to New York brokers. Everybody who can raise
the funds, wishes to try his or her hand at a venture in stocks.
Merchants, clergymen, women, professional men, clerks, come here to tempt
fortune. Many win; more lose.

Fortunes are made quicker and lost more easily in New York than in any
place in the world. A sudden rise in stocks, or a lucky venture of some
other kind, often places a comparatively poor man in possession of great
wealth. Watch the carriages as they whirl through Fifth avenue, going
and returning from the park. They are as elegant and sumptuous as wealth
can make them. The owners, lying back amongst the soft cushions, are
clad in the height of fashion. By their dresses they might be princes
and princesses. This much is due to art. Now mark the coarse, rough
features, the ill-bred stare, the haughty rudeness which they endeavor to
palm off for dignity. Do you see any difference between them and the
footman in livery on the carriage-box? Both master and man belong to the
same class--only one is wealthy and the other is not. But that footman
may take the place of the master in a couple of years, or in less time.
Such changes may seem remarkable, but they are very common in New York.

See that gentleman driving that splendid pair of sorrels. He is a fine
specimen of mere animal beauty. How well he drives. The ease and
carelessness with which he manages his splendid steeds, excites the
admiration of every one on the road. He is used to it. Five years ago
he was the driver of a public hack. He amassed a small sum of money, and
being naturally a sharp, shrewd man, went into Wall street, and joined
the "Curb-stone Brokers." His transactions were not always open to a
rigid scrutiny, but they were profitable to him. He invested in oil
stocks, and with his usual good luck made a fortune. Now he operates
through his broker. His transactions are heavy, his speculations bold
and daring, but he is usually successful. He lives in great splendor in
one of the finest mansions in the city, and his carriages and horses are
superb. His wife and daughters are completely carried away by their good
fortune, and look with disdain upon all who are not their equals or
superiors in wealth. They are vulgar and ill-bred, but they are wealthy,
and society worships them. There will come a change some day. The
husband and father will venture once too often in his speculations, and
his magnificent fortune will go with a crash, and the family will return
to their former state, or perhaps sink lower, for there are very few men
who have the moral courage to try to rise again after such a fall, and
this man is not one of them.

In watching the crowd on Broadway, one will frequently see, in some
shabbily dressed individual, who, with his hat drawn down close over his
eyes, is evidently shrinking from the possibility of being recognized,
the man who but a few weeks ago was one of the wealthiest in the city.
Then he was surrounded with splendor. Now he hardly knows where to get
bread for his family. Then he lived in an elegant mansion. Now one or
two rooms on the upper floor of some tenement house constitute his
habitation. He shrinks from meeting his old friends, well knowing that
not one of them will recognize him, except to insult him with a scornful
stare. Families are constantly disappearing from the social circles in
which they have shone for a greater or less time. They vanish almost in
an instant, and are never seen again. You may meet them at some
brilliant ball in the evening. Pass their residence the next day, and
you will see a bill announcing the early sale of the mansion and
furniture. The worldly effects of the family are all in the hands of the
creditors of the "head," and the family themselves are either in a more
modest home in the country, or in a tenement house. You can scarcely
walk twenty blocks on Fifth avenue, without seeing one of these bills,
telling its mournful story of fallen greatness.

The best and safest way to be rich in New York, as elsewhere, is for a
man to confine himself to his legitimate business. Few men acquire
wealth suddenly. Ninety-nine fail where one succeeds. The bane of New
York commercial life, however, is that people have not the patience to
wait for fortune. Every one wants to be rich in a hurry, and as no
regular business will accomplish this, here or elsewhere, speculation is
resorted to. The sharpers and tricksters who infest Wall street know
this weakness of New York merchants. They take the pains to inform
themselves as to the character, means and credulity of merchants, and
then use every art to draw them into speculations, in which the tempter
is enriched and the tempted ruined. In nine cases out of ten a merchant
is utterly ignorant of the nature of the speculation he engages in. He
is not capable of forming a reasonable opinion as to its propriety or
chance of success, because the whole transaction is new to him, and is so
rapid that he has no time to study it. He leaves a business in which he
has acquired valuable knowledge and experience, and trusts himself to the
mercy of a man he knows little or nothing of; and undertakes a
transaction that he does not know how to manage. Dabbling in
speculations unfits men for their regular pursuits. They come to like
the excitement of such ventures, and rush on in their mad course, hoping
to make up their losses by one lucky speculation, and at length utter
ruin rouses them from their dreams.

Not only do men squander their own money in this way, but they risk and
often lose the funds of others committed to their charge. Bank officers,
having the use of the deposits in their institutions, take them for
speculation, intending of course to return them. Sometimes they are
successful, and are able to replace the money in the bank, so that no one
hears of their dishonesty. Again, and most commonly, they fail, and they
are ruined. Guardians thus misappropriate the funds of their wards.
Even the funds of churches are thus used by their trustees. The amount
of speculation engaged in by clergymen with their own money would
astonish a novice. Some prominent divines in the city are well known in
Wall street. Their brokers keep their secrets, but the habitues of the
street are adepts at putting this and that together, and these reverend
gentlemen, some of whom preach eloquently against the sins of speculation
and gambling, become known as regular customers. The street is full of
gossip concerning them, and if the stories told of them be true, some of
them have made large fortunes in this way, while others have literally
"gone to the bad."

It is not necessary that a person speculating in stocks should be master
of the entire value of the stocks. If he be known to the broker
operating for him as a responsible person, he may employ only ten per
cent., or some other proportion, of the stock to be dealt in. By
depositing $1000 with his broker, he can speculate to the extent of
$10,000. This per centage is called a _margin_, and the deposit is
designed to protect the broker from loss in case the stock should fall in
value. As the stock depreciates, the customer must either sell out and
bear the loss which is inevitable, or he must increase his margin to an
extent sufficient to protect his broker. If he fails to increase his
margin, the broker sells the stock and uses the money to save himself.

VIII. THE WAYS OF THE STREET.

Like Brette Harte's Heathen Chinee,

"For ways that are dark
And tricks that are vain,
Wall Street is peculiar."

It takes a clear, cool head, a large amount of brains, and unaltering
nerve, to thread one's way through the intricacies of the business of
finance as carried on there. It would be interesting to know how many
come out of the ordeal untouched by the taint of corruption. Members of
the Exchanges are held by a rigid code of laws, but in questions of
morality Wall street has a code of its own. Expediency is a prominent
consideration in the dealings of the street, and men have come to regard
as honest and correct almost anything short of a regular breach of
contract. They do not spare their own flesh and blood. Friendships are
sacrificed, the ties of kinship are disregarded, if they stand in the way
of some bold operation. Every thing must give way to the desire for
gain. The great operators plunder and destroy their lesser rivals
without a feeling of remorse, and by combinations which they know cannot
be resisted blast the prospects and ruin the lives of scores whose
greatest fault is an inability to oppose them successfully. Tricks so
mean and contemptible that their perpetrator would not be tolerated in
social life, are resorted to, and if successful are applauded as
evidences of smartness. Every man's hand is against his neighbor.
Clerks are bribed to betray the secrets of their employers. The baser
their treachery, the larger their reward. We do not propose, however, to
discuss the morality of Wall street transactions, and so we drop the
subject.

It is said by the gossips of the street that the great Railroad King,
Commodore Vanderbilt, is not above using any means at hand to secure the
success of his schemes. It is said that he once tried to use his son
William in this way. He came to him one day, and advised him that he had
better sell his Hudson River stock, as 110 was too high for it. William
thanked him, and made inquiries in the market, and found that his father
was buying quietly all he could lay his hands upon.

William determined to follow suit. Up jumped the stock to 137. It was a
clear twenty-six per cent. in pocket.

When the operation was concluded, the Commodore rode round to the son's
office.

"Well, William, how much did you lose?"

"I went in at 110 on 10,000 shares. That ought to make me two hundred
and sixty thousand dollars--"

"Very bad luck, William," quoth the father, trying to look extremely
troubled,--"very bad luck, this time."

"But then I bought, and so made."

"Hey? What sent you doing that, sir?"

"O, I heard that was your line, and so concluded that you meant long
instead of short."

"Ahem!" croaked Vanderbilt _pere_, as he buttoned up his fur overcoat,
and stalked out of the open door. He has always had a high opinion of
William since that event!

Some years ago Vanderbilt wanted to consolidate the Hudson River and
Harlem Railroads, and when the scheme was presented before the
Legislature of New York, secured a sufficient number of votes in that
body to insure the passage of the bill authorizing the consolidation.
Before the bill was called upon its final passage, however, he learned
from a trustworthy source that the members of the Legislature who had
promised to vote for the bill, were determined to vote against it, with
the hope of ruining him. The stock of the Harlem road was then selling
very high, in consequence of the expected consolidation. The defeat of
the bill would, of course, cause it to fall immediately. The
unprincipled legislators at once began a shrewd game. They sold Harlem
right and left, to be delivered at a future day, and found plenty of
purchasers, every one but those in the plot expecting the consolidation
of the roads and a consequent advance in the value of the stock. They
let their friends into the secret, and there was soon a great deal of
"selling short" in this stock. Commodore Vanderbilt managed to acquaint
himself with the whole plot; but he held his peace, and resolved upon
revenge. He went into the market quietly, with all the funds he could
raise, and bought every certificate of Harlem stock that he could find.
These certificates he locked up in his safe. When the bill came before
the Legislature on its final passage, it was defeated.

The conspirators were jubilant. They were sure that the defeat of the
bill would bring "Harlem" down with a rush. To their astonishment,
however, "Harlem" did not fall. It remained stationary the first day,
and then to their dismay rose steadily. Those to whom they had sold
demanded the delivery of the stock, but the speculators found it
impossible to buy it. There was none in the market at any price. In
many of these instances Vanderbilt was the real claimant, the brokers
acting in the transactions being merely his agents. Being unable to
deliver the stock, the conspirators were forced to settle the demands
against them in money, and the result was that they were ruined. One of
the shrewdest operators in New York lost over $200,000. He refused to
pay, and his name was stricken from the list of stockholders. This
brought him to his senses, and he made good his contracts. Vanderbilt
made money enough out of this transaction to pay for all the stock he
owned in the Harlem Road.

Daniel Drew is a great operator. His gains are immense, as are also his
losses. He is not popular in the street, and the brokers are fond of
abusing him. He has handled too many of them mercilessly to have many
friends. They say that he does not hesitate to sacrifice a friend to
gain his ends, and that he is utterly without sympathy for those who go
down before his heavy blows.

Bogus stock companies appear from time to time in Wall street. An office
is rented and fitted up in magnificent style, a flaring programme is
issued, and seemingly substantial evidences of the stability and
prosperity of the company are exhibited to inquirers. The stock offered
is readily taken up by the eager to be rich crowd. A dividend, most
hopefully large, is declared and paid, to stimulate investments, and
then, when the market has been drained dry, the bubble bursts, the
directors disappear, the office is closed, and the shareholders lose
their money.

On fine afternoons visitors to the Park do not fail to notice a handsome
equipage driven by a stylish young man, with rosy cheeks and light curly
hair. His face is the perfect picture of happy innocence. He is very
wealthy, and owns a great deal of real estate in the city. The manner in
which he made his money will show how other persons enrich themselves.

A few years ago, he, in company with several others, organized a scheme
for working certain gold mines said to be located in a distant territory.
A company was made up, the country was flooded with flaming descriptions
of the valuable mine, and stock was issued which sold readily. The bonds
were soon taken up, and in a month or two the so-called company commenced
paying handsome dividends. A number of gold bars, bearing the stamp of
the mint, were on exhibition in the company's office, and were
triumphantly exhibited as amongst the first yields of the valuable mine.
For several months the dividends were paid regularly, and the company's
stock rose to a splendid premium. It could hardly be bought at any
price. No one doubted for an instant the genuineness of the affair, and
the lucky company was the envy of all Wall street.

In a few months, all the stock being disposed of, the company ceased
paying dividends. This excited the suspicion of some of the shrewdest
holders of the stock, and the affair was investigated. It was found that
the wonderful mine had no real existence. The gold bars were simply gold
coins melted into that form at the Mint, and stamped by the Government as
so much bullion. The dividends had been paid out of money advanced by
the company, who were simply half a dozen unprincipled sharpers. The
stockholders were ruined, but the company made a profit of a clear half
million of dollars out of the infamous transaction. Legal proceedings
are expensive and tedious when instituted against such parties, and the
stockholders, rather than increase their losses by the outlay necessary
for a lawsuit, suffered the swindlers to go unmolested.

A certain stock broker, anxious to increase his wealth, purchased twenty
acres of land a few years ago in one of the Western States, and commenced
boring for oil. After a few weeks spent in this work, he discovered to
his dismay that there was not the slightest trace of oil on his land. He
kept his own counsel, however, and paid the workmen to hold their
tongues. About the same time it became rumored throughout New York that
he had struck oil. He at once organized a company, and had a committee
appointed to go West and examine the well. In a few weeks the committee
returned in high glee, and reported that the well contained oil of the
very best quality, and only needed capital and improved machinery to
develop its capacity. In support of this assertion, they brought home
numerous bottles containing specimens of the oil. This report settled
the matter in Wall street, and the stock issued by the company was all
sold at a handsome premium. When the sales ceased, it was rumored that
the well had ceased to flow. This was true, for there was no oil
anywhere on the land. That in the well had been bought in Pennsylvania,
and poured into the well by the agents of the owner, and the examining
committee had been paid large sums for their favorable report. The owner
of the well was enriched, as were his confederates of the bogus company,
and the holders of the stock were swindled, many of them being ruined.

Said the New York _Herald_, at a period when speculation was rampant:

"Within the past few days we have seen the most gigantic swindling
operations carried on in Wall street that have as yet disgraced our
financial centre. A great railway, one of the two that connect the West
with the Atlantic seaboard, has been tossed about like a football, its
real stockholders have seen their property abused by men to whom they
have entrusted its interests, and who, in the betrayal of that trust,
have committed crimes which in parallel cases on a smaller scale would
have deservedly sent them to Sing Sing. If these parties go unwhipped of
justice, then are we doing injustice in confining criminals in our State
prisons for smaller crimes.

"To such a disgusting degree of depravity do we see these stock
operations carried, that members of the church of high standing offer,
when 'concerned,' to betray their brother 'pals,' and, in their
forgetfulness of the morality to which they sanctimoniously listen every
Sunday, state that 'all they care about is to look out for number one.'
A manager of a great corporation is requested to issue bonds of his
company without authority, offering 'to buy the bonds if you are caught,
or buy the bonds with the understanding not to pay for them unless you
are caught.' This attempted fiscal operation, however, did not work, and
resulted in a good proof of the old adage that it requires 'a rogue to
catch a rogue.'

"A railroad treasurer boldly states that he has without authority
over-issued stock of the company to a large amount. He offers it to a
broker for sale, with the understanding that all received over a fixed
value is to go into his (the treasurer's) pocket. From the fact that
this man is not arrested for maladministration of the company's property,
we judge this to be a legitimate operation, and that this may hereafter
serve as a model or standard of morals to all presidents, directors,
treasurers and managers of railway and other great corporations."

IX. BLACK FRIDAY.

In the month of September, 1869, one of the most gigantic attempts to run
up the value of gold ever made was attempted by a powerful combination of
Bulls, consisting of a set of unprincipled men whose only object was to
make money. Their scheme came near attaining a success which would have
broken the market utterly, have unsettled values of all kinds, and have
precipitated upon the whole country a financial crisis of the most
terrible proportions. Nothing but the interference of the Secretary of
the Treasury at a critical moment averted this disaster. As it was, the
losses were fearful. Men in Wall street were ruined by the score, and
for several days the best houses in the street were uncertain as to their
exact condition.

An account of this formidable transaction is interesting as revealing the
method of conducting the great operations of the street.

[Picture: SCENE IN THE GOLD ROOM--BLACK FRIDAY.]

"On the 22d of September, 1869, gold stood at 137.5 when Trinity bells
rang out the hour of twelve. By two it was at 139. Before night its
lowest quotation was 141. . . . An advance of three and a half per cent.
in five hours. At the same time the Stock Market exhibited tokens of
excessive febrility, New York Central dropping twenty-three per cent. and
Harlem thirteen. Loans had become extremely difficult to negotiate. The
most usurious prices for a twenty-four hours' turn were freely paid. The
storm was palpably reaching the proportions of a tempest.

"Nevertheless, the brokers on the Bear side strove manfully under their
burden. The character and purposes of the clique were fully known.
Whatever of mystery had heretofore enfolded them was now boldly thrown
aside, and the men of Erie, with the sublime Fisk in the forefront of the
assailing column, assured the shorts that they could not settle too
quickly, since it remained with the ring, now holding calls for one
hundred millions, either to kindly compromise at 150 or to carry the
metal to 200 and nail it there. This threat was accompanied by
consequences in which the mailed hand revealed itself under the silken
glove. The movement had intertwisted itself deep into the affairs of
every dealer in the street, and entangled in its meshes vast numbers of
outside speculators. In borrowing or in margins the entire capital of
the former had been nearly absorbed, while some five millions had been
deposited by the latter with their brokers in answer to repeated calls.
When Thursday morning rose, gold started at 141-5/8, and soon shot up to
144. Then the clique began to tighten the screws. The shorts received
peremptory orders to increase their borrowing margins. At the same
moment the terms of loans overnight were raised beyond the pitch of
ordinary human endurance. Stories were insidiously circulated exciting
suspicion of the integrity of the Administration, and strengthening the
belief that the National Treasury would bring no help to the wounded
Bears. Whispers of an impending lock-up of money were prevalent; and the
fact, then shrewdly suspected, and now known, of certifications of checks
to the amount of twenty-five millions by one bank alone on that day, lent
color to the rumor. Many brokers lost courage, and settled instantly.
The Gold Room shook with the conflict, and the battle prolonged itself
into a midnight session at the Fifth Avenue Hotel. The din of the tumult
had penetrated to the upper chambers of journalism. Reporters were on
the alert. The great dailies magnified the struggle, and the Associated
Press spread intelligence of the excitement to remote sections. When
Friday opened clear and calm, the pavement of Broad and New streets soon
filled up with unwonted visitors. All the idle population of the city
and its neighborhood crowded into the financial quarter to witness the
throes of the tortured shorts. Blended with the merely curious were
hundreds of outside speculators who had ventured their all in the great
stake, and trembled in doubt of the honor of their dealers. Long before
9 A.M. these men, intensely interested in the day's encounter, poured
through the alley-way from Broad street, and between the narrow walls of
New street, surging up around the doorways, and piling themselves densely
and painfully within the cramped galleries of the Room itself. They had
made good the fresh calls for margins up to 143, the closing figure of
the night before. The paramount question now was, How would gold open?
They had not many minutes to wait. Pressing up to the fountain, around
which some fifty brokers had already congregated, a Bull operator with
resonant voice bid 145 for twenty thousand. The shout startled the
galleries. Their margins were once more in jeopardy. Would their
brokers remain firm? It was a terrible moment. The Bears closed round
the aggressors. Yells and shrieks filled the air. A confused and
baffling whirl of sounds ensued, in which all sorts of fractional bids
and offers mingled, till '46 emerged from the chaos. The crowd within
the arena increased rapidly in numbers. The clique agents became
vociferous. Gold steadily pushed forward in its perilous upward movement
from '46 to '47, thence to '49, and, pausing for a brief twenty minutes,
dashed on to 150.5. It was now considerably past the hour of regular
session. The President was in the chair. The Secretary's pen was
bounding over his registry book. The floor of the Gold Room was covered
with 300 agitated dealers and operators, shouting, heaving in masses
against and around the iron railing of the fountain, falling back upon
the approaches of the committee-rooms and the outer entrance, guarded
with rigorous care by sturdy door-keepers. Many of the principal brokers
of the street were there,--Kimber, who had turned traitor to the ring;
Colgate, the Baptist; Clews, a veteran government broker; one of the
Marvins; James Brown; Albert Speyer, and dozens of others hardly less
famous. Every individual of all that seething throng had a personal
stake beyond, and, in natural human estimate, a thousand-fold more dear
than that of any outside patron, no matter how deeply or ruinously that
patron might be involved. At 11 of the dial gold was 150.5; in six
minutes it jumped to 155. Then the pent-up tiger spirit burst from
control. The arena rocked as the Coliseum may have rocked when the gates
of the wild beasts were thrown open, and with wails and shrieks the
captives of the empire sprang to merciless encounter with the ravenous
demons of the desert. The storm of voices lost human semblance.
Clenched hands, livid faces, pallid foreheads on which beads of cold
sweat told of the interior anguish, lurid, passion-fired eyes,--all the
symptoms of a fever which at any moment might become frenzy were there.
The shouts of golden millions upon millions hurtled in all ears. The
labor of years was disappearing and reappearing in the wave line of
advancing and receding prices. With fortunes melting away in a second,
with five hundred millions of gold in process of sale or purchase, with
the terror of yet higher prices, and the exultation which came and went
with the whispers of fresh men entering from Broad street bearing
confused rumors of the probable interposition of the Government, it is
not hard to understand how reason faltered on its throne, and operators
became reckless, buying or selling without thought of the morrow or
consciousness of the present. Then came the terrific bid of Albert
Speyer for any number of millions at 160. William Parks sold instantly
two millions and a half in one lot. Yet the bids so far from yielding
rose to 161, 162, 162.5. For five minutes the Board reeled under the
ferocity of the attack. Seconds became hours. The agony of Wellington
awaiting Blucher was in the souls of the Bears. Then a broker, reported
to be acting for Baring & Brothers, at London, sold five millions to the
clique at the top price of the day. Hallgarten followed; and as the
shorts were gathering courage, the certain news that the Secretary of the
Treasury had come to the rescue swept through the chamber, gold fell from
160 to 140, and thence, with hardly the interval of one quotation, to
133. The end had come, and the exhausted operators streamed out of the
stifling hall into the fresh air of the street. To them, however, came
no peace. In some offices customers by dozens, whose margins were
irrevocably burnt away in the smelting-furnace of the Gold Board,
confronted their dealers with taunts and threats of violence for their
treachery. In others the nucleus of mobs began to form, and, as the day
wore off, Broad street had the aspect of a riot. Huge masses of men
gathered before the doorway of Smith, Gould, Martin & Co., and Heath &
Co. Fisk was assaulted, and his life threatened. Deputy-sheriffs and
police officers appeared on the scene. In Brooklyn a company of troops
were held in readiness to march upon Wall street.