VOObyM

Reminiscences of a Stock Operator
following in a deal of that kind. Remember that in any event the broker is playing
absolutely safe by reason of the put. If he can get his public to follow he will be able to
dispose of his entire line at a big profit in addition to his regular commissions.
I have in mind the exploits of an "insider" who is well-known in Wall Street.
He will call up the head customers' man of a large brokerage house. At times he goes
even further and calls up one of the junior partners of the firm. He will say something
like this:
"Say, old man, I want to show you that I appreciate what you have done for me at
various times. I am going to give you a chance to make some real money. We are
forming a new company to absorb the assets of one of our companies and we'll take over
that stock at a big advance over present quotations. I'm going to send in to you 500
shares of Bantam Shops at $65. The stock is now quoted at 72."
The grateful insider tells the thing to a dozen of the headmen in various big brokerage
houses. Now since these recipients of the insider's bounty are in Wall Street what are
they going to do when they get that stock that already shows them a profit? Of course,
advise every man and woman they can reach to buy that stock. The kind donor knew
this. They will help to create a market in which the kind insider can sell his good things
at high prices to the poor public.
There are other devices of stock-selling promoters that should be barred. The Exchanges
should not allow trading in listed stocks that are offered outside to the public on the
partial payment plan. To have the price officially quoted gives a sort of sanction to any
stock. Moreover, the official evidence of a free market, and at times the difference in
prices, is all the inducement needed.
Another common selling device that costs the unthinking public many millions of
dollars and sends nobody to jail because it is perfectly legal, is that of increasing the
capital stock exclusively by reason of market exigencies. The process does not really
amount to much more than changing the color of the stock certificates.
The juggling whereby 2 or 4 or even 10 shares of new stock are given in exchange for
one of the old, is usually prompted by a desire to make the old merchandise more easily
vendible. The old price was $1 per pound package and hard to move. At 25 cents for a
- 254 -