Chapter 16

24 min

Tips! How people want tips! They crave not only to get them but to give them. There is greed involved, and vanity. It is very amusing, at times, to watch really intelligent people fish for them. And the tip-giver need not hesitate about the quality, for the tip-seeker is not really after good tips, but after any tip. If it makes good, fine! If it doesn’t, better luck with the next. I am thinking of the average customer of the average commission house. There is a type of promoter or manipulator that believes in tips first, last and all the time. A good flow of tips is considered by him as a sort of sublimated publicity work, the best merchandising dope in the world, for, since tip-seekers and tip-takers are invariably tip-passers, tip-broadcasting becomes a sort of endless-chain advertising. The tipster-promoter labours under the delusion that no human being breathes who can resist a tip if properly delivered. He studies the art of handing them out artistically.

Tips! How people want tips! They crave not only receiving them but giving them, too. Both greed and vanity are involved. At times, it is very amusing to watch truly intelligent people fish for tips. And the person giving a tip need not worry about its quality. The person seeking a tip is not really looking for a good one, but for any tip. If it works out, fine! If it doesn’t, better luck with the next one. I am thinking of the average customer at the average brokerage firm. There is a type of promoter or market manipulator who believes in tips first, last, and always. He considers a steady stream of tips a refined form of publicity, the best sales tactic in the world. After all, people who seek and accept tips always pass them on. So spreading tips becomes a kind of endless-chain advertising. The tip-giving promoter mistakenly believes that no person alive can resist a tip if it is delivered properly. He studies the art of handing out tips skillfully.

I get tips by the hundreds every day from all sorts of people. I’ll tell you a story about Borneo Tin. You remember when the stock was brought out? It was at the height of the boom. The promoter’s pool had taken the advice of a very clever banker and decided to float the new company in the open market at once instead of letting an underwriting syndicate take its time about it. It was good advice. The only mistake the members of the pool made came from inexperience. They did not know what the stock market was capable of doing during a crazy boom and at the same time they were not intelligently liberal. They were agreed on the need of marking up the price in order to market the stock, but they started the trading at a figure at which the traders and the speculative pioneers could not buy it without misgivings.

I get hundreds of tips every day from all sorts of people. I’ll tell you a story about Borneo Tin. Do you remember when the stock was first offered? It was at the height of the boom. The promoter’s pool took the advice of a very clever banker. Instead of letting an underwriting syndicate take its time, the pool decided to offer the new company’s stock directly on the open market. It was good advice. The pool members’ only mistake came from inexperience. They didn’t know what the stock market could do during a crazy boom. At the same time, they weren’t generous enough in a sensible way. They agreed that they needed to raise the price to sell the stock. But they started trading at a price that made traders and early speculators uneasy about buying it.

By rights the promoters ought to have got stuck with it, but in the wild bull market their hoggishness turned out to be rank conservatism. The public was buying anything that was adequately tipped. Investments were not wanted. The demand was for easy money; for the sure gambling profit. Gold was pouring into this country through the huge purchases of war material. They tell me that the promoters, while making their plans for bringing out Borneo stock, marked up the opening price three different times before their first transaction was officially recorded for the benefit of the public.

By rights, the promoters should have been stuck with the stock. But in the wild bull market, their greed turned out to be downright conservative. The public was buying anything that came with a convincing tip. Nobody wanted investments. They wanted easy money, a sure profit from gambling. Gold was pouring into this country because of huge purchases of war material. I’m told that, as the promoters planned to bring out Borneo stock, they raised the opening price three times. They did that before their first transaction was officially recorded for the public to see.

I had been approached to join the pool and I had looked into it but I didn’t accept the offer because if there is any market manoeuvring to do, I like to do it myself. I trade on my own information and follow my own methods. When Borneo Tin was brought out, knowing what the pool’s resources were and what they had planned to do, and also knowing what the public was capable of, I bought ten thousand shares during the first hour of the first day. Its market début was successful at least to that extent. As a matter of fact the promoters found the demand so active that they decided it would be a mistake to lose so much stock so soon. They found out that I had acquired my ten thousand shares about at the same time that they found out that they would probably be able to sell every share they owned if they merely marked up the price twenty-five or thirty points. They therefore concluded that the profit on my ten thousand shares would take too big a chunk out of the millions they felt were already as good as banked. So they actually ceased their bull operations and tried to shake me out. But I simply sat tight. They gave me up as a bad job because they didn’t want the market to get away from them, and then they began to put up the price, without losing any more stock than they could help.

I had been asked to join the pool, and I looked into it. But I turned down the offer because, if there is any market maneuvering to do, I like to do it myself. I trade on my own information and follow my own methods. When Borneo Tin was introduced, I knew what resources the pool had and what its members planned to do. I also knew what the public was capable of, so I bought ten thousand shares during the first hour of the first day. The stock’s market debut was successful at least to that extent. In fact, demand was so strong that the promoters decided it would be a mistake to part with so many shares so soon. They found out I had bought ten thousand shares. Around the same time, they realized they could probably sell every share they owned just by raising the price twenty-five or thirty points. They concluded that my profit on the ten thousand shares would take too big a chunk out of the millions they felt were already as good as banked. So they actually stopped pushing the price up and tried to shake me out. But I simply held on. They gave up on me because they didn’t want the market to get away from them. Then they began raising the price, while parting with as few shares as they could.

They saw the crazy height that other stocks rose to and they began to think in billions. Well, when Borneo Tin got up to 120 I let them have my ten thousand shares. It checked the rise and the pool managers let up on their jacking-up process. On the next general rally they again tried to make an active market for it and disposed of quite a little, but the merchandising proved to be rather expensive. Finally they marked it up to 150. But the bloom was off the bull market for keeps, so the pool was compelled to market what stock it could on the way down to those people who love to buy after a good reaction, on the fallacy that a stock that has once sold at 150 must be cheap at 130 and a great bargain at 120. Also, they passed the tip to the floor traders, who often are able to make a temporary market, and later to the commission houses. Every little helped and the pool was using every device known. The trouble was that the time for bulling stocks had passed. The suckers had swallowed other hooks. The Borneo bunch didn’t or wouldn’t see it.

They saw how wildly other stocks had risen and began thinking in billions. Well, when Borneo Tin reached 120, I sold them my ten thousand shares. That slowed the rise, and the pool managers eased up on their efforts to push the price higher. During the next general rally, they again tried to create an active market for Borneo Tin. They sold quite a bit, but selling the stock proved rather expensive. Finally, they pushed the price up to 150. But the bull market had lost its shine for good. So the pool had to sell what stock it could as the price fell. The buyers were people who love to buy after a good drop. They mistakenly believe that a stock that once sold at 150 must be cheap at 130 and a great bargain at 120. The pool also passed the tip to floor traders, who can often create a temporary market, and later to commission houses. Every little bit helped, and the pool used every trick it knew. The trouble was that the time for pushing stocks higher had passed. The suckers had swallowed other hooks. The Borneo bunch couldn’t or wouldn’t see it.

I was down in Palm Beach with my wife. One day I made a little money at Gridley’s and when I got home I gave Mrs. Livingston a five-hundred-dollar bill out of it. It was a curious coincidence, but that same night she met at a dinner the president of the Borneo Tin Company, a Mr. Wisenstein, who had become the manager of the stock pool. We didn’t learn until some time afterward that this Wisenstein deliberately manœuvred so that he sat next to Mrs. Livingston at dinner.

I was in Palm Beach with my wife. One day I made a little money at Gridley’s. When I got home, I gave Mrs. Livingston a five-hundred-dollar bill from my winnings. By a curious coincidence, she met the president of the Borneo Tin Company at dinner that same night. His name was Mr. Wisenstein, and he had become the manager of the stock pool. We didn’t learn until some time later that Wisenstein had deliberately arranged to sit next to Mrs. Livingston at dinner.

He laid himself out to be particularly nice to her and talked most entertainingly. In the end he told her, very confidentially, “Mrs. Livingston, I’m going to do something I’ve never done before. I am very glad to do it because you know exactly what it means.” He stopped and looked at Mrs. Livingston anxiously, to make sure she was not only wise but discreet. She could read it on his face, plain as print. But all she said was, “Yes.”

He went out of his way to be especially nice to her and was very entertaining. Finally, he told her in a very confidential tone, “Mrs. Livingston, I’m going to do something I’ve never done before. I’m very glad to do it because you know exactly what it means.” He stopped and looked anxiously at Mrs. Livingston, making sure she was not only smart but discreet. She could read his concern on his face, as clearly as if it were printed there. But all she said was, “Yes.”

“Yes, Mrs. Livingston. It has been a very great pleasure to meet you and your husband, and I want to prove that I am sincere in saying this because I hope to see a great deal of both of you. I am sure I don’t have to tell you that what I am going to say is strictly confidential!” Then he whispered, “If you will buy some Borneo Tin you will make a great deal of money.”

“Yes, Mrs. Livingston. It has been a great pleasure to meet you and your husband. I want to show you I mean that, because I hope to see a lot of both of you. I’m sure I don’t have to tell you that what I’m about to say is strictly confidential!” Then he whispered, “If you buy some Borneo Tin, you’ll make a lot of money.”

“Do you think so?” she asked.

“Just before I left the hotel,” he said, “I received some cables with news that won’t be known to the public for several days at least. I am going to gather in as much of the stock as I can. If you get some at the opening to-morrow you will be buying it at the same time and at the same price as I. I give you my word that Borneo Tin will surely advance. You are the only person that I have told this to. Absolutely the only one!”

“Just before I left the hotel,” he said, “I received some cable messages with news that won’t be public for several days at least. I’m going to buy as much of the stock as I can. If you buy some when the market opens tomorrow, you’ll be buying at the same time and price as I am. I give you my word that Borneo Tin will definitely rise. You’re the only person I’ve told about this. Absolutely the only one!”

She thanked him and then she told him that she didn’t know anything about speculating in stocks. But he assured her it wasn’t necessary for her to know any more than he had told her. To make sure she heard it correctly he repeated his advice to her:

She thanked him and told him she knew nothing about speculating in stocks. But he assured her she didn’t need to know more than he had told her. To make sure she heard him correctly, he repeated his advice:

“All you have to do is to buy as much Borneo Tin as you wish. I can give you my word that if you do you will not lose a cent. I’ve never before told a woman—or a man, for that matter—to buy anything in my life. But I am so sure the stock won’t stop this side of 200 that I’d like you to make some money. I can’t buy all the stock myself, you know, and if somebody besides myself is going to benefit by the rise I’d rather it was you than some stranger. Much rather! I’ve told you in confidence because I know you won’t talk about it. Take my word for it, Mrs. Livingston, and buy Borneo Tin!”

“All you have to do is buy as much Borneo Tin as you want. I give you my word that if you do, you won’t lose a cent. I’ve never before told a woman, or a man, for that matter, to buy anything. But I’m so sure the stock will reach at least 200 that I’d like you to make some money. I can’t buy all the stock myself, you know. And if someone else is going to benefit from the rise, I’d rather it were you than a stranger. Much rather! I’ve told you in confidence because I know you won’t talk about it. Take my word for it, Mrs. Livingston, and buy Borneo Tin!”

He was very earnest about it and succeeded in so impressing her that she began to think she had found an excellent use for the five hundred dollars I had given her that afternoon. That money hadn’t cost me anything and was outside of her allowance. In other words, it was easy money to lose if the luck went against her. But he had said she would surely win. It would be nice to make money on her own hook—and tell me all about it afterwards.

He was so earnest that she began to think she had found an excellent use for the five hundred dollars I had given her that afternoon. The money hadn’t cost me anything, and it was extra, on top of her allowance. In other words, it was easy money to lose if luck went against her. But he had said she would surely win. It would be nice to make money on her own and tell me all about it afterward.

Well, sir, the very next morning before the market opened she went into Harding’s office and said to the manager:

Well, sir, the very next morning, before the market opened, she went to Harding’s office and said to the manager:

“Mr. Haley, I want to buy some stock, but I don’t want it to go in my regular account because I don’t wish my husband to know anything about it until I’ve made some money. Can you fix it for me?”

“Mr. Haley, I want to buy some stock, but I don’t want it in my regular account. I don’t want my husband to know about it until I’ve made some money. Can you arrange that for me?”

Haley, the manager, said, “Oh, yes. We can make it a special account. What’s the stock and how much of it do you want to buy?”

Haley, the manager, said, “Oh, yes. We can make it a special account. What stock do you want to buy, and how much?”

She gave him the five hundred dollars and told him, “Listen, please. I do not wish to lose more than this money. If that goes I don’t want to owe you anything; and remember, I don’t want Mr. Livingston to know anything about this. Buy me as much Borneo Tin as you can for the money, at the opening.”

She gave him the five hundred dollars and said, “Please listen. I don’t want to lose more than this money. If I lose it, I don’t want to owe you anything. And remember, I don’t want Mr. Livingston to know anything about this. Buy me as much Borneo Tin as you can with the money when the market opens.”

Haley took the money and told her he’d never say a word to a soul, and bought her a hundred shares at the opening. I think she got it at 108. The stock was very active that day and closed at an advance of three points. Mrs. Livingston was so delighted with her exploit that it was all she could do to keep from telling me all about it.

Haley took the money and promised her he would never tell a soul. He bought her a hundred shares when the market opened. I think she got them at 108. The stock was heavily traded that day and closed three points higher. Mrs. Livingston was so delighted with what she had done that she could barely keep from telling me all about it.

It so happened that I had been getting more and more bearish on the general market. The unusual activity in Borneo Tin drew my attention to it. I didn’t think the time was right for any stock to advance, much less one like that. I had decided to begin my bear operations that very day, and I started by selling about ten thousand shares of Borneo. If I had not I rather think the stock would have gone up five or six points instead of three.

I had been growing more and more bearish on the overall market. The unusual trading activity in Borneo Tin caught my attention. I didn't think it was the right time for any stock to rise, much less one like Borneo Tin. I had decided to start betting against the market that very day. I began by selling about ten thousand shares of Borneo. If I hadn't, I think the stock would probably have risen five or six points instead of three.

On the very next day I sold two thousand shares at the opening and two thousand shares just before the close, and the stock broke to 102.

The very next day, I sold 2,000 shares at the opening and another 2,000 just before the close. The stock fell to 102.

Haley, the manager of Harding Brothers’ Palm Beach Branch, was waiting for Mrs. Livingston to call there on the third morning. She usually strolled in about eleven to see how things were, if I was doing anything.

On the third morning, Haley, the manager of Harding Brothers’ Palm Beach branch, was waiting for Mrs. Livingston to stop by. She usually came in around eleven to see how things were going and whether I was doing anything.

Haley took her aside and said, “Mrs. Livingston, if you want me to carry that hundred shares of Borneo Tin for you you will have to give me more margin.”

Haley took her aside and said, “Mrs. Livingston, if you want me to keep holding those hundred shares of Borneo Tin for you, you’ll need to put up more margin.”

“But I haven’t any more,” she told him.

“But I don’t have any more,” she told him.

“I can transfer it to your regular account,” he said.

“No,” she objected, “because that way L.L. would learn about it.”

“No,” she objected, “because then L.L. would find out about it.”

“But the account already shows a loss of—” he began.

“But the account already shows a loss of...” he began.

“But I told you distinctly I didn’t want to lose more than the five hundred dollars. I didn’t even want to lose that,” she said.

“But I told you clearly that I didn’t want to lose more than five hundred dollars. I didn’t even want to lose that much,” she said.

“I know, Mrs. Livingston, but I didn’t want to sell it without consulting you, and now unless you authorise me to hold it I’ll have to let it go.”

“I know, Mrs. Livingston, but I didn’t want to sell it without asking you first. And now, unless you authorize me to hold it, I’ll have to let it go.”

“But it did so nicely the day I bought it,” she said, “that I didn’t believe it would act this way so soon. Did you?”

“But it did so well the day I bought it,” she said, “that I didn’t think it would act this way so soon. Did you?”

“No,” answered Haley, “I didn’t.” They have to be diplomatic in brokers’ offices.

“No,” Haley answered, “I didn’t.” People have to be diplomatic in brokers’ offices.

“What’s gone wrong with it, Mr. Haley?”

“What’s wrong with it, Mr. Haley?”

Haley knew, but he could not tell her without giving me away, and a customer’s business is sacred. So he said, “I don’t hear anything special about it, one way or the other. There she goes! That’s low for the move!” and he pointed to the quotation board.

Haley knew, but he could not tell her without revealing my secret. And a customer’s business is confidential. So he said, “I haven’t heard anything special about it, one way or the other. There it goes! That’s the lowest price for this move!” He pointed to the quotation board.

Mrs. Livingston gazed at the sinking stock and cried: “Oh, Mr. Haley! I don’t want to lose my five hundred dollars! What shall I do?”

Mrs. Livingston watched the stock price fall and cried, “Oh, Mr. Haley! I don’t want to lose my five hundred dollars! What should I do?”

“I don’t know, Mrs. Livingston, but if I were you I’d ask Mr. Livingston.”

“I don’t know, Mrs. Livingston, but if I were you, I’d ask Mr. Livingston.”

“Oh, no! He doesn’t want me to speculate on my own hook. He told me so. He’ll buy or sell stock for me, if I ask him, but I’ve never before done trading that he did not know all about. I wouldn’t dare tell him.”

“Oh, no! He doesn’t want me to speculate on my own. He told me so. He’ll buy or sell stocks for me if I ask him to. But I’ve never traded without him knowing all about it. I wouldn’t dare tell him.”

“That’s all right,” said Haley soothingly. “He is a wonderful trader and he’ll know just what to do.” Seeing her shake her head violently he added devilishly: “Or else you put up a thousand or two to take care of your Borneo.”

“That’s all right,” Haley said soothingly. “He’s a wonderful trader, and he’ll know exactly what to do.” When she shook her head violently, he added mischievously: “Or you can put up a thousand or two to take care of your Borneo.”

The alternative decided her then and there. She hung about the office, but as the market got weaker and weaker she came over to where I sat watching the board and told me she wanted to speak to me. We went into the private office and she told me the whole story. So I just said to her: “You foolish little girl, you keep your hands off this deal.”

The alternative made up her mind right then. She lingered around the office, but the market kept getting weaker. She came over to where I sat watching the board and said she wanted to speak to me. We went into the private office, and she told me the whole story. So I just said to her: “You foolish little girl, keep your hands off this deal.”

She promised that she would, and so I gave her back her five hundred dollars and she went away happy. The stock was par by that time.

She promised she would, so I gave her back her five hundred dollars. She left happy. By then, the stock was at par.

I saw what had happened. Wisenstein was an astute person. He figured that Mrs. Livingston would tell me what he had told her and I’d study the stock. He knew that activity always attracted me and I was known to swing a pretty fair line. I suppose he thought I’d buy ten or twenty thousand shares.

I saw what had happened. Wisenstein was a sharp man. He figured Mrs. Livingston would tell me what he had told her, and I’d study the stock. He knew trading activity always attracted me, and I was known to take sizable positions. I suppose he thought I’d buy ten or twenty thousand shares.

It was one of the most cleverly planned and artistically propelled tips I’ve ever heard of. But it went wrong. It had to. In the first place, the lady had that very day received an unearned five hundred dollars and was therefore in a much more venturesome mood than usual. She wished to make some money all by herself, and womanlike dramatised the temptation so attractively that it was irresistible. She knew how I felt about stock speculation as practised by outsiders, and she didn’t dare mention the matter to me. Wisenstein didn’t size up her psychology right.

It was one of the most cleverly planned and skillfully promoted tips I’ve ever heard of. But it went wrong. It had to. For one thing, the lady had received an unearned five hundred dollars that very day. So she was feeling much more adventurous than usual. She wanted to make some money all by herself. And, as women do, she made the temptation seem so appealing that she couldn’t resist it. She knew how I felt about outsiders speculating in stocks, and she didn’t dare mention it to me. Wisenstein had misjudged her psychology.

He also was utterly wrong in his guess about the kind of trader I was. I never take tips and I was bearish on the entire market. The tactics that he thought would prove effective in inducing me to buy Borneo—that is, the activity and the three-point rise—were precisely what made me pick Borneo as a starter when I decided to sell the entire market.

He was also completely wrong about what kind of trader I was. I never act on tips, and I was bearish on the entire market. He thought the trading activity in Borneo and its three-point rise would persuade me to buy it. But those were exactly the reasons I chose Borneo as the first stock to sell when I decided to sell the entire market.

After I heard Mrs. Livingston’s story I was keener than ever to sell Borneo. Every morning at the opening and every afternoon just before closing I let him have some stock regularly, until I saw a chance to take in my shorts at a handsome profit.

After I heard Mrs. Livingston’s story, I was more eager than ever to sell Borneo. Every morning at the opening and every afternoon just before closing, I sold him some stock. I kept this up until I saw a chance to cover my short positions at a handsome profit.

It has always seemed to me the height of damfoolishness to trade on tips. I suppose I am not built the way a tip-taker is. I sometimes think that tip-takers are like drunkards. There are some who can’t resist the craving and always look forward to those jags which they consider indispensable to their happiness. It is so easy to open your ears and let the tip in. To be told precisely what to do to be happy in such a manner that you can easily obey is the next nicest thing to being happy—which is a mighty long first step toward the fulfilment of your heart’s desire. It is not so much greed made blind by eagerness as it is hope bandaged by the unwillingness to do any thinking.

It has always seemed to me downright foolish to trade on tips. I suppose I am not made like someone who takes tips. Sometimes I think tip-takers are like drunkards. Some cannot resist the craving and always look forward to the binges they consider essential to their happiness. It is so easy to open your ears and listen to a tip. Being told exactly how to be happy, in a way you can easily follow, is the next best thing to happiness. That is a mighty big first step toward getting what your heart desires. It is not so much greed blinded by eagerness as hope blinded by an unwillingness to do any thinking.

And it is not only among the outside public that you find inveterate tip-takers. The professional trader on the floor of the New York Stock Exchange is quite as bad. I am definitely aware that no end of them cherish mistaken notions of me because I never give anybody tips. If I told the average man, “Sell yourself five thousand Steel!” he would do it on the spot. But if I tell him I am quite bearish on the entire market and give him my reasons in detail, he finds trouble in listening and after I’m done talking he will glare at me for wasting his time expressing my views on general conditions instead of giving him a direct and specific tip, like a real philanthropist of the type that is so abundant in Wall Street—the sort who loves to put millions into the pockets of friends, acquaintances and utter strangers alike.

It is not just the general public who are chronic followers of tips. Professional traders on the floor of the New York Stock Exchange are just as bad. I know that countless traders have mistaken ideas about me because I never give anyone tips. If I told the average man, “Sell five thousand shares of Steel!” he would do it immediately. But if I tell him I am bearish on the entire market and explain my reasons in detail, he has trouble listening. When I finish, he glares at me for wasting his time with my views on general conditions. He thinks I should have given him a direct, specific tip, like a real philanthropist. Wall Street is full of that kind of philanthropist. They love putting millions into the pockets of friends, acquaintances, and complete strangers alike.

The belief in miracles that all men cherish is born of immoderate indulgence in hope. There are people who go on hope sprees periodically and we all know the chronic hope drunkard that is held up before us as an exemplary optimist. Tip-takers are all they really are.

The belief in miracles that all people cherish comes from indulging too much in hope. Some people go on hope binges from time to time. And we all know the chronic hope drunkard held up to us as a model optimist. All they really do is follow tips.

I have an acquaintance, a member of the New York Stock Exchange, who was one of those who thought I was a selfish, cold-blooded pig because I never gave tips or put friends into things. One day—this was some years ago—he was talking to a newspaper man who casually mentioned that he had had it from a good source that G.O.H. was going up. My broker friend promptly bought a thousand shares and saw the price decline so quickly that he was out thirty-five hundred dollars before he could stop his loss. He met the newspaper man a day or two later, while he was still sore.

I know a member of the New York Stock Exchange who thought I was a selfish, cold-blooded pig. He thought so because I never gave tips or helped friends get into investments. One day, some years ago, he was talking to a newspaper reporter. The reporter casually mentioned that he had heard from a good source that G.O.H. was going up. My broker friend promptly bought a thousand shares. The price fell so quickly that he lost $3,500 before he could stop his loss. He met the reporter a day or two later, while he was still upset.

“That was a hell of a tip you gave me,” he complained.

“What tip was that?” asked the reporter, who did not remember.

“What tip was that?” asked the reporter, who didn’t remember.

“About G.O.H. You said you had it from a good source.”

“About G.O.H. You said you heard it from a good source.”

“So I did. A director of the company who is a member of the finance committee told me.”

“So I did. A company director who serves on the finance committee told me.”

“Which of them was it?” asked the broker vindictively.

“Which one was it?” the broker asked, wanting revenge.

“If you must know,” answered the newspaper man, “it was your own father-in-law, Mr. Westlake.”

“If you must know,” the reporter replied, “it was your own father-in-law, Mr. Westlake.”

“Why in Hades didn’t you tell me you meant him!” yelled the broker. “You cost me thirty-five hundred dollars!” He didn’t believe in family tips. The farther away the source the purer the tip.

“Why the hell didn’t you tell me you meant him!” the broker yelled. “You cost me thirty-five hundred dollars!” He didn’t believe in tips from family. The farther away the source, the more reliable the tip.

Old Westlake was a rich and successful banker and promoter. He ran across John W. Gates one day. Gates asked him what he knew. “If you will act on it I’ll give you a tip. If you won’t I’ll save my breath,” answered old Westlake grumpily.

Old Westlake was a wealthy and successful banker and promoter. One day, he ran into John W. Gates. Gates asked him what he knew. “If you’ll act on it, I’ll give you a tip. If you won’t, I’ll save my breath,” old Westlake replied grumpily.

“Of course I’ll act on it,” promised Gates cheerfully.

“Of course I’ll act on it,” Gates promised cheerfully.

“Sell Reading! There is a sure twenty-five points in it, and possibly more. But twenty-five absolutely certain,” said Westlake impressively.

“Sell Reading! You’re sure to make twenty-five points, and possibly more. But twenty-five is absolutely certain,” Westlake said emphatically.

“I’m much obliged to you,” and Bet-you-a-million Gates shook hands warmly and went away in the direction of his broker’s office.

“Thank you very much.” Bet-you-a-million Gates shook hands warmly and headed toward his broker’s office.

Westlake had specialized on Reading. He knew all about the company and stood in with the insiders so that the market for the stock was an open book to him and everybody knew it. Now he was advising the Western plunger to go short of it.

Westlake specialized in Reading stock. He knew all about the company and was close to the insiders. So he understood the market for the stock completely, and everybody knew it. Now he was advising the Western speculator to sell Reading stock short.

Well, Reading never stopped going up. It rose something like one hundred points in a few weeks. One day old Westlake ran smack up against John W. in the Street, but he made out he hadn’t seen him and was walking on. John W. Gates caught up with him, his face all smiles and held out his hand. Old Westlake shook it dazedly.

Well, Reading never stopped going up. It rose about one hundred points in a few weeks. One day, old Westlake ran into John W. on Wall Street. But Westlake pretended not to see him and kept walking. John W. Gates caught up with him, smiling broadly, and held out his hand. Old Westlake shook his hand, looking dazed.

“I want to thank you for that tip you gave me on Reading,” said Gates.

“Thanks for the tip you gave me on Reading,” said Gates.

“I didn’t give you any tip,” said Westlake, frowning.

“Sure you did. And it was a Jim Hickey of a tip too. I made sixty thousand dollars.”

“Sure you did. And it was a Jim Hickey of a tip, a really great one. I made sixty thousand dollars.”

“Made sixty thousand dollars?”

“Sure! Don’t you remember? You told me to sell Reading; so I bought it! I’ve always made money coppering your tips, Westlake,” said John W. Gates pleasantly. “Always!”

“Sure! Don’t you remember? You told me to sell Reading, so I bought it! I’ve always made money by doing the opposite of what you recommend, Westlake,” said John W. Gates pleasantly. “Always!”

Old Westlake looked at the bluff Westerner and presently remarked admiringly, “Gates, what a rich man I’d be if I had your brains!”

Old Westlake looked at the blunt Westerner. After a moment, he said admiringly, “Gates, how rich I’d be if I had your brains!”

The other day I met Mr. W. A. Rogers, the famous cartoonist, whose Wall Street drawings brokers so greatly admire. His daily cartoons in the New York Herald for years gave pleasure to thousands. Well, he told me a story. It was just before we went to war with Spain. He was spending an evening with a broker friend. When he left he picked up his derby hat from the rack, at least he thought it was his hat, for it was the same shape and fitted him perfectly.

The other day I met Mr. W. A. Rogers, the famous cartoonist. Brokers greatly admire his drawings of Wall Street. For years, his daily cartoons in the New York Herald delighted thousands of readers. Well, he told me a story. It happened just before we went to war with Spain. He was spending an evening with a broker friend. When he left, he picked up his derby hat from the rack. At least he thought it was his hat, because it was the same shape and fit him perfectly.

The Street at that time was thinking and talking of nothing but war with Spain. Was there to be one or not? If it was to be war the market would go down; not so much on our own selling as on pressure from European holders of our securities. If peace, it would be a cinch to buy stocks, as there had been considerable declines prompted by the sensational clamorings of the yellow papers. Mr. Rogers told me the rest of the story as follows:

At the time, Wall Street was thinking and talking about nothing but war with Spain. Would there be a war or not? If there was a war, the market would fall. That would be less because of our own selling than because Europeans holding our securities would sell them. If there was peace, buying stocks would be an easy bet. Stocks had fallen considerably because of the sensational outcry in the yellow newspapers. Mr. Rogers told me the rest of the story as follows:

“My friend, the broker, at whose house I had been the night before, stood in the Exchange the next day anxiously debating in his mind which side of the market to play. He went over the pros and cons, but it was impossible to distinguish which were rumors and which were facts. There was no authentic news to guide him. At one moment he thought war was inevitable, and on the next he almost convinced himself that it was utterly unlikely. His perplexity must have caused a rise in his temperature, for he took off his derby to wipe his fevered brow. He couldn’t tell whether he should buy or sell.

“My friend, the broker, was at the Exchange the next day. I had been at his house the night before. He was anxiously trying to decide which side of the market to take. He weighed the pros and cons, but he couldn’t tell rumors from facts. He had no reliable news to guide him. One moment he thought war was inevitable. The next, he had almost convinced himself it was completely unlikely. His confusion must have raised his temperature, because he took off his derby hat to wipe his fevered brow. He couldn’t tell whether to buy or sell.

“He happened to look inside of his hat. There in gold letters was the word WAR. That was all the hunch he needed. Was it not a tip from Providence via my hat? So he sold a raft of stock, war was duly declared, he covered on the break and made a killing.” And then W. A. Rogers finished, “I never got back that hat!”

“He happened to look inside his hat. There, in gold letters, was the word WAR. That was all the hunch he needed. Wasn’t it a tip from Providence through my hat? So he sold a lot of stock short. War was duly declared, and he bought the stock back when prices fell, making a fortune.” Then W. A. Rogers finished, “I never got that hat back!”

But the prize tip story of my collection concerns one of the most popular members of the New York Stock Exchange, J. T. Hood. One day another floor trader, Bert Walker, told him that he had done a good turn to a prominent director of the Atlantic & Southern. In return the grateful insider told him to buy all the A. & S. he could carry. The directors were going to do something that would put the stock up at least twenty-five points. All the directors were not in the deal, but the majority would be sure to vote as wanted.

But the best tip story in my collection concerns J. T. Hood, one of the most popular members of the New York Stock Exchange. One day, another floor trader, Bert Walker, told Hood he had done a favor for a prominent director of the Atlantic & Southern. In return, the grateful insider told Walker to buy as much A. & S. stock as he could afford to hold. The directors were going to do something that would raise the stock price by at least twenty-five points. Not all the directors were in on the deal, but the majority would be sure to vote as the deal required.

Bert Walker concluded that the dividend rate was going to be raised. He told his friend Hood and they each bought a couple of thousand shares of A. & S. The stock was very weak, before and after they bought, but Hood said that was obviously intended to facilitate accumulation by the inside clique, headed by Bert’s grateful friend.

Bert Walker concluded that the dividend rate was going to rise. He told his friend Hood, and they each bought a couple of thousand shares of A. & S. The stock was very weak both before and after they bought it. But Hood said the weakness was obviously meant to help the inside group buy up shares. Bert’s grateful friend headed that group.

On the following Thursday, after the market closed, the directors of the Atlantic & Southern met and passed the dividend. The stock broke six points in the first six minutes of trading Friday morning.

The following Thursday, after the market closed, the directors of the Atlantic & Southern met and voted not to pay the dividend. The stock fell six points in the first six minutes of trading Friday morning.

Bert Walker was sore as a pup. He called on the grateful director, who was broken-hearted about it and very penitent. He said that he had forgotten that he had told Walker to buy. That was the reason he had neglected to call him up to tell him of a change in the plans of the dominant faction in the board. The remorseful director was so anxious to make up that he gave Bert another tip. He kindly explained that a couple of his colleagues wanted to get cheap stock and against his judgment resorted to coarse work. He had to yield to win their votes. But now that they all had accumulated their full lines there was nothing to stop the advance. It was a double-riveted, lead-pipe cinch to buy A. & S. now.

Bert Walker was furious. He went to see the grateful director, who was heartbroken about what had happened and very sorry. The director said he had forgotten that he had told Walker to buy. That was why he had failed to call Walker when the dominant faction on the board changed its plans. The remorseful director was so eager to make amends that he gave Bert another tip. He kindly explained that a couple of his fellow directors wanted to buy cheap stock. Against his advice, they had resorted to crude tactics. He had to give in to win their votes. But now all of them had bought as much stock as they wanted, so nothing could stop the price from rising. Buying A. & S. now was an absolutely sure thing.

Bert not only forgave him but shook hands warmly with the high financier. Naturally he hastened to find his friend and fellow-victim, Hood, to impart the glad tidings to him. They were going to make a killing. The stock had been tipped for a rise before and they bought. But now it was fifteen points lower. That made it a cinch. So they bought five thousand shares, joint account.

Bert not only forgave him but warmly shook hands with the powerful financier. Naturally, Bert hurried to tell his friend Hood, who had also been a victim, the good news. They were going to make a killing. They had bought the stock before, after a tip that it would rise. But now the stock was fifteen points lower. That made it a sure thing. So they bought five thousand shares in a joint account.

As if they had rung a bell to start it, the stock broke badly on what quite obviously was inside selling. Two specialists cheerfully confirmed the suspicion. Hood sold out their five thousand shares. When he got through Bert Walker said to him, “If that blankety-blank blanker hadn’t gone to Florida day before yesterday I’d lick the stuffing out of him. Yes, I would. But you come with me.”

As if a bell had signaled the start, the stock price plunged on what was obviously inside selling. Two specialists cheerfully confirmed the suspicion. Hood sold all five thousand shares. When he finished, Bert Walker said to him, “If that blankety-blank blanker hadn’t gone to Florida the day before yesterday, I’d beat the stuffing out of him. Yes, I would. But you come with me.”

“Where to?” asked Hood.

“To the telegraph office. I want to send that skunk a telegram that he’ll never forget. Come on.”

“To the telegraph office. I want to send that skunk a telegram he’ll never forget. Come on.”

Hood went on. Bert led the way to the telegraph office. There, carried away by his feelings—they had taken quite a loss on the five thousand shares—he composed a masterpiece of vituperation. He read it to Hood and finished, “That will come pretty near to showing him what I think of him.”

Hood went along. Bert led the way to the telegraph office. There, carried away by his feelings (they had taken quite a loss on the five thousand shares), he wrote a masterpiece of abuse. He read it to Hood and finished, “That will come pretty near to showing him what I think of him.”

He was about to slide it toward the waiting clerk when Hood said, “Hold on, Bert!”

“What’s the matter?”

“I wouldn’t send it,” advised Hood earnestly.

“I wouldn’t send it,” Hood said earnestly.

“Why not?” snapped Bert.

“It will make him sore as the dickens.”

“It will make him really angry.”

“That’s what we want, isn’t it?” said Bert, looking at Hood in surprise.

“That’s what we want, isn’t it?” Bert said, looking at Hood in surprise.

But Hood shook his head disapprovingly and said in all seriousness, “We’ll never get another tip from him if you send that telegram!”

But Hood shook his head in disapproval. He said seriously, “We’ll never get another tip from him if you send that telegram!”

A professional trader actually said that. Now what’s the use of talking about sucker tip-takers? Men do not take tips because they are bally asses but because they like those hope cocktails I spoke of. Old Baron Rothschild’s recipe for wealth winning applies with greater force than ever to speculation. Somebody asked him if making money in the Bourse was not a very difficult matter, and he replied that, on the contrary, he thought it was very easy.

A professional trader actually said that. So what’s the point of talking about gullible people who follow tips? Men do not follow tips because they are fools. They do it because they like those hope cocktails I mentioned. Old Baron Rothschild’s recipe for getting rich applies to speculation more than ever. Someone asked him if making money on the Bourse was very difficult. He replied that, on the contrary, he thought it was very easy.

“That is because you are so rich,” objected the interviewer.

“That’s because you’re so rich,” the interviewer objected.

“Not at all. I have found an easy way and I stick to it. I simply cannot help making money. I will tell you my secret if you wish. It is this: I never buy at the bottom and I always sell too soon.”

“Not at all. I’ve found an easy way, and I stick to it. I simply can’t help making money. I’ll tell you my secret if you want. Here it is: I never buy at the bottom and I always sell too soon.”

Investors are a different breed of cats. Most of them go in strong for inventories and statistics of earnings and all sorts of mathematical data, as though that meant facts and certainties. The human factor is minimised as a rule. Very few people like to buy into a one-man business. But the wisest investor I ever knew was a man who began by being a Pennsylvania Dutchman and followed it up by coming to Wall Street and seeing a great deal of Russell Sage.

Investors are a different kind of animal. Most of them put great stock in inventories, earnings statistics, and all kinds of mathematical data. They treat the numbers as if they provided facts and certainty. As a rule, they give little weight to the human factor. Very few people like to invest in a one-man business. But the wisest investor I ever knew started out as a Pennsylvania Dutchman. He went on to come to Wall Street and spend a lot of time with Russell Sage.

He was a great investigator, an indefatigable Missourian. He believed in asking his own questions and in doing his seeing with his own eyes. He had no use for another man’s spectacles. This was years ago. It seems he held quite a little Atchison. Presently he began to hear disquieting reports about the company and its management. He was told that Mr. Reinhart, the president, instead of being the marvel he was credited with being, in reality was a most extravagant manager whose recklessness was fast pushing the company into a mess. There would be the deuce to pay on the inevitable day of reckoning.

He was a great investigator, a tireless Missourian. He believed in asking his own questions and seeing things for himself. He had no use for another man’s glasses. This was years ago. It seems he owned quite a bit of Atchison stock. Soon he began to hear troubling reports about the company and its management. He was told that Mr. Reinhart, the president, was not the marvel people claimed he was. In fact, he was an extremely extravagant manager whose recklessness was quickly pushing the company into trouble. There would be hell to pay when the inevitable day of reckoning came.

This was precisely the kind of news that was as the breath of life to the Pennsylvania Dutchman. He hurried over to Boston to interview Mr. Reinhart and ask him a few questions. The questions consisted of repeating the accusations he had heard and then asking the president of the Atchison, Topeka & Santa Fe Railroad if they were true.

This was exactly the kind of news that the Pennsylvania Dutchman lived for. He rushed to Boston to interview Mr. Reinhart and ask him a few questions. He repeated the accusations he had heard and asked the president of the Atchison, Topeka & Santa Fe Railroad if they were true.

Mr. Reinhart not only denied the allegations emphatically but said even more: He proceeded to prove by figures that the allegators were malicious liars. The Pennsylvania Dutchman had asked for exact information and the president gave it to him, showing him what the company was doing and how it stood financially, to a cent.

Mr. Reinhart strongly denied the allegations, but he went further. He used figures to prove that the accusers were malicious liars. The Pennsylvania Dutchman had asked for exact information, and the president gave it to him. He showed him what the company was doing and exactly where it stood financially, down to the cent.

The Pennsylvania Dutchman thanked President Reinhart, returned to New York and promptly sold all his Atchison holdings. A week or so later he used his idle funds to buy a big lot of Delaware, Lackawanna & Western.

The Pennsylvania Dutchman thanked President Reinhart and returned to New York. He promptly sold all his Atchison holdings. About a week later, he used his idle funds to buy a large block of Delaware, Lackawanna & Western stock.

Years afterward we were talking of lucky swaps and he cited his own case. He explained what prompted him to make it.

Years later, we were talking about lucky trades, and he mentioned one he had made. He explained what had prompted him to make the trade.

“You see,” he said, “I noticed that President Reinhart, when he wrote down figures, took sheets of letter paper from a pigeonhole in his mahogany roll-top desk. It was fine heavy linen paper with beautifully engraved letterheads in two colors. It was not only very expensive but worse—it was unnecessarily expensive. He would write a few figures on a sheet to show me exactly what the company was earning on certain divisions or to prove how they were cutting down expenses or reducing operating costs, and then he would crumple up the sheet of the expensive paper and throw it in the waste-basket. Pretty soon he would want to impress me with the economies they were introducing and he would reach for a fresh sheet of the beautiful notepaper with the engraved letterheads in two colors. A few figures—and bingo, into the waste-basket! More money wasted without a thought. It struck me that if the president was that kind of a man he would scarcely be likely to insist upon having or rewarding economical assistants. I therefore decided to believe the people who had told me the management was extravagant instead of accepting the president’s version and I sold what Atchison stock I held.

“You see,” he said, “I noticed something about President Reinhart. When he wrote down figures, he took letter paper from a compartment in his mahogany roll-top desk. It was fine, heavy linen paper with beautifully engraved letterheads in two colors. It was not only very expensive but, worse, unnecessarily expensive. He would write a few figures on a sheet to show me exactly what the company was earning in certain divisions. Or he would use the figures to prove how they were cutting expenses or reducing operating costs. Then he would crumple up the expensive paper and throw it in the wastebasket. Soon he would want to impress me with the savings they were making. He would reach for a fresh sheet of that beautiful paper with its engraved letterhead in two colors. A few figures, and bingo, into the wastebasket! More money wasted without a thought. It struck me that if the president was that kind of man, he would hardly insist on having economical assistants or reward them. So I decided to believe the people who had told me the management was extravagant, rather than accept the president’s version. I sold the Atchison stock I held.

“It so happened that I had occasion to go to the offices of the Delaware, Lackawanna & Western a few days later. Old Sam Sloan was the president. His office was the nearest to the entrance and his door was wide open. It was always open. Nobody could walk into the general offices of the D.L.&W. in those days and not see the president of the company seated at his desk. Any man could walk in and do business with him right off, if he had any business to do. The financial reporters used to tell me that they never had to beat around the bush with old Sam Sloan, but would ask their questions and get a straight yes or no from him, no matter what the stock-market exigencies of the other directors might be.

“A few days later, I happened to visit the offices of the Delaware, Lackawanna & Western. Old Sam Sloan was the president. His office was closest to the entrance, and his door was wide open. It was always open. In those days, nobody could enter the general offices of the D.L.&W. without seeing the company president at his desk. Anyone who had business with him could walk in and deal with him right away. Financial reporters used to tell me they never had to beat around the bush with old Sam Sloan. They could ask their questions and get a straight yes or no, regardless of the other directors’ stock market needs.

“When I walked in I saw the old man was busy. I thought at first that he was opening his mail, but after I got inside close to the desk I saw what he was doing. I learned afterwards that it was his daily custom to do it. After the mail was sorted and open, instead of throwing away the empty envelopes he had them gathered up and taken to his office. In his leisure moments he would rip the envelope all around. That gave him two bits of paper, each with one clean blank side. He would pile these up and then he would have them distributed about, to be used in lieu of scratch pads for such figuring as Reinhart had done for me on engraved notepaper. No waste of empty envelopes and no waste of the president’s idle moments. Everything utilised.

“When I walked in, I saw that the old man was busy. At first, I thought he was opening his mail. But when I got closer to his desk, I saw what he was doing. I learned afterward that he did it every day. After the mail was sorted and opened, he had the empty envelopes collected and brought to his office instead of throwing them away. In his spare moments, he would tear each envelope all the way around. That gave him two pieces of paper, each with one clean, blank side. He would stack the pieces and have them distributed for use as scratch paper. People could use them for calculations like the ones Reinhart had done for me on engraved notepaper. No waste of empty envelopes and no waste of the president’s idle moments. Everything put to use.

“It struck me that if that was the kind of man the D.L.&W. had for president, the company was managed economically in all departments. The president would see to that! Of course I knew the company was paying regular dividends and had a good property. I bought all the D.L.&W. stock I could. Since that time the capital stock has been doubled and quadrupled. My annual dividends amount to as much as my original investment. I still have my D.L.&W. And Atchison went into the hands of a receiver a few months after I saw the president throwing sheet after sheet of linen paper with engraved letterheads in two colors into the waste-basket to prove to me with figures that he was not extravagant.”

“It occurred to me that if the D.L.&W. had that kind of president, the company was run economically in every department. The president would make sure of that! Of course, I knew the company paid regular dividends and owned a good property. I bought all the D.L.&W. stock I could. Since then, the capital stock has doubled and quadrupled. My annual dividends now equal my original investment. I still own my D.L.&W. stock. And Atchison went into receivership a few months after I saw its president throw sheet after sheet of linen paper into the wastebasket. The paper had letterheads engraved in two colors. He was using figures to prove to me that he was not extravagant.”

And the beauty of that story is that it is true and that no other stock that the Pennsylvania Dutchman could have bought would have proved to be so good an investment as D.L.&W.

The beauty of the story is that it is true. And no other stock the Pennsylvania Dutchman could have bought would have been as good an investment as D.L.&W.