Activate Javascript or update your browser for the full Digital Library experience.
Previous Page
–
Next Page
OCR
60
As at present "constituted, the Exchange is a private club. Its
members do as they like, subject only to the club's restrictions.
"In case of the insolvency of a member, his obligations to other
members take precedence over even the claims of a customer who
has been defrauded." -
The proposal to incorporate the Exchange was greeted with fury
by your members. Your predecessor, Mr. Mabon, pronounced it a
monstrous injustice, and at a dinner members hissed the name of
New York's governor and threatened to remove their organization
from the state.
But when the Pujo Committee recommended that Congress pro-
hibit the use of the mails, telegraph and telephone to your associa-
tion, the Exchange promised to reform. It appointed a press agent,
Mr. “’illiam C. Van Antwerp, at a salary of $15,000 a year-or is
it $25,000?-whose duty it was to make the Exchange popular again.
I received some of these reform promises from the hands of Mr.
Van Antwerp, and as I thought they were earnestly meant, I pub-
lished them.
In view of that fact, Mr. Noble, I am entitled to ask you, How
have those promises been kept?
Today on the Stock Exchange the old game of swindling the
public is in full blast again, but in a form, crueller, meaner and
more contemptible than ever.
You know to what I am referring,-the War Stocks.
What are war stocks?
Since Mr. Morgan the Younger made himself Britain’s munitions
agent, the pro-British Money Trust has jumped in to manufacture
arms and shrapnel for the Allies. They think they will make "fat
money" by selling this material for the purpose of arming savage
mercenaries, through whom England hopes to wipe out the Ger-
manic races of Central Europe, from which more than one-half of
our people have sprung. iVell and good. But the Money Trust
hopes also to make money in another way, namely by foisting upon
the public at high prices, the stocks issued on its war plants.
Among these war stocks I shall pick out a few conspicuous ex-
amples. There are Bethlehem Steel, Crucible Steel, XVestinghouse,
American Coal Products and Pressed Steel Car. There are also
many others.
As I write this, Pressed Steel Car has been manipulated from
$25 to $59;[; a share; Crucible, from $18K; to $92%; VVestinghouse,
from $64 to $115; Coal Products, from $82 to $170%, and Bethle-
hem, from $29V2 to $311.
Those are huge advances. On what are they supposed to be
based? Large cash dividends looming in sight? vMr. Noble, you
know as well as I do that the members of the Money Trust never
share their profits with the people. They will put such profits as
they make into plants, and issue more stock against the latter, un-
loading it at still higher prices through the members of the Stock
Exchange upon the public, which is to be neatly fleeced again.
Mr. Noble, did not the Exchange promise us that such reprehensi-
ble manipulations would be prohibited?
You know far better than I how the hidden machinery of the
stock boomers is being used to stimulate the public appetite for
speculation in war stocks. Paid tipsters float about uptown hotels;
marvellous stories appear in venal newspapers of fortunes coined
by lucky gamblers. Stories of phenomenal war orders from Russia
or Great Britain are impudently invented, such as a $90,000,000 war
contract by American Can, or the 400,000,000 cigarettes supposed to
have been ordered from the P. Lorillard Tobacco Company. In
these two instances, well meaning directors denied the lying stories.
But the rumors augment daily, the faked contracts grow in number
and volume, and the gambling fever is whetted sharper by the
harpies who prey upon the savings of the foolish and credulous.
Now and then a high official of one of the war stock companies
has the courage to step out to try to stem the rising tide of gambling
which always leads to ruin. A member of the Crucible Company
warned the public the other day that the stock was not worth its
selling price. He said that there was outstanding in unpaid scrip
and accumulated dividends on preferred stock $7,300,000, that the
company is guaranteeing $7,800,000 of bonds, and has $2,500,000 to
$3,000,000 of bonds outstanding on its subsidiary companies. He
pointed out that, with these obligations in sight, and with the large
expenditures necessary to finish its new plants, the common stock
could not be expected to pay dividends for years to come. The
THE FATHERLAND
shares of the company at once dropped five points, but impudent
price boosters took up the song of “huge profits" again next day,
and the market plungcrs soon forgot a warning sincerely meant.
Let me give you an example from my personal observation, of
how the public “makes money” out of war stocks. I met in the
ofl-ice of one of the members of your Exchange, a trader who, sev-
eral days before had bought 100 shares of Crucible Steel. It went
up three points, and he took on 200 shares more. I was talking
with him on the morning of Thursday, July 29. Crucible had
opened with a gain of nearly five points, and this trader had again
plunged to the extent of 500 shares. The stock still advanced.
Flushed with the sense of coming riches, he turned to me and said:
“I've already made $3,000 in Crucible, and that'll pay for the killing
of 1,000 Germans. What do I care. Business is biz. I would like
to see us get into the war. Crucible would extend its plants and
get still bigger war contracts from the government. Why you'd
see it jump to $1,000 a share.” , ,
Crucible went to 79 that day. My acquaintance, the trader,
became delirious with speculative fever. You know the symptoms.
Mr. Noble. You are a broker, and make your commission out
of such men. When Crucible went to 79, this man bought 500
additional shares. It went to 83, and he bought 1,000. This was at
about two o'clock in the afternoon, if my memory serves me right-
Then from one of those corrupt sources, which the Exchange
manipulators know so well to use, there came a story that Bethlehem
had bought the Crucible company. Traders reasoned that, since the
news was out, they had better sell. Crucible began to melt until it
declined to 66, only a fraction above the price at which it had closed
the day before.
I met my trader a few days later. In the decline he had lost more
than $20,000 and was in debt even to his broker. He was wander-
ing about like a stricken thing.
He had thought to make money by following the war stock 83m‘
blers. Poor fool! The Money Trust had made short shrift of
him.
Do you ever stop to think, Mr. Noble, what a cruel business your
members are engaged in? Do you not think that at least it ought
to be played fair?
Let me call something to your attention.
In the last five weeks, as I write this, 130,540 shares of Bethlehem
were traded in upon the Exchange, or nearly as much as the entire
outstanding stock in the hands of the public; in Coal Products,
109,898 shares were traded in, or more than all the outstanding
stock; in iVestinghouse, 1,445,490 shares were traded in, or fol"
times the amount of the outstanding stock; in the instance of
Crucible, 1,135,400 shares were traded in, or five times the amount
of the outstanding stock, which aggregates only 245,784 shares.
This undoubtedly indicates that these stocks are “cornered." Th5
war stock gamblers do not sell the stock itself, of which the floating
supply is small, but sell contracts to receive and deliver it.
Mr. Noble, was not one of the reforms promised us, a prohibition
of the “cornering" of stocks? Is stock “cornering" permitted under
the law?
‘Into what deep waters have thy rowers led thee?
The old argument that the Exchange has nothing to bu)’ “mi
nothing to sell, and is only a meeting place for its members, will
no longer hold. The representatives of the Exchange did not make
that plea in Albany, three or four years ago, when they pleaded
against incorporation, and promised honest trading methods for thii
future.
One of the members of your Exchange recently said to me: "we
m9-Y not be doing the right thing, but we hope to get away with it
anyhow." He is mistaken. This time you will not get away with
it. There is an old saying in the financial district: “The men “'h0
drop their money in Wall Street are good losers. They never
squeal.” That is true. The man who has been trimmed in ‘he
Street slinks away from the district. He has been carefully edl"
cated to the fact that it is considered bad form to blow 01155
brains out in a broker’s otiice.
Already the financial district is filling with the stories of the
heart breaks of ruined men, of suicides, of families left penniless
through the work of the war stock gamblers. The public is in 3“
Ugly temper. It is not the same public that rose against the Stock
Exchange in 1912-13. This time you have aroused the anger 05 5‘