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Reminiscences of a Stock Operator
As time went on the banks' excesses in the matter of extensions of credits made people
think. The day of the boy banker was over. The banking business appeared to be on the
ragged edge of suddenly relapsing into conservatism. Intimate friends were now asked
to pay off loans, for all the world as though they had never played golf with the
president.
There was no need to threaten on the lender's part or to plead for more time on the
borrower's. The situation was highly uncomfortable for both. The bank, for example,
with which my friend Jim Barnes did business, was still kindly disposed. But it was a
case of "For heaven's sake take up that loan or we'll all be in a dickens of a mess!"
The character of the mess and its explosive possibilities were enough to make Jim
Barnes come to me to ask me to sell the one hundred thousand shares for enough to pay
off the bank's three-million-five-hundred-thousand-dollar loan. Jim did not now expect
to make a profit on that stock. If the syndicate only made a small loss on it they would
be more than grateful.
It seemed a hopeless task. The general market was neither active nor strong, though at
times there were rallies, when everybody perked up and tried to believe the bull swing
was about to resume.
The answer I gave Barnes was that I'd look into the matter and let him know under what
conditions I'd undertake the work. Well, I did look into it. I didn't analyse the company's
last annual report. My studies were confined to the stock-market phases of the problem.
I was not going to tout the stock for a rise on its earnings or its prospects, but to dispose
of that block in the open market. All I considered was what should, could or might help
or hinder me in that task.
I discovered for one thing that there was too much stock held by too few people that is,
too much for safety and far too much for comfort. Clifton P. Kane & Co., bankers and
brokers, members of the New York Stock Exchange, were carrying seventy thousand
shares. They were intimate friends of Barnes and had been influential in effecting the
consolidation, as they had made a specialty of stove stocks for years. Their customers
had been let into the good thing. Ex-Senator Samuel Gordon, who was the special
partner in his nephews' firm, Gordon Bros., was the owner of a second block of seventy
thousand shares; and the famous Joshua Wolff had sixty thousand shares. This made a
total of two hundred thousand shares of Consolidated Stove held by this handful of
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