Part 16

What could I do? That wasn’t an asinine tip. It was advice that came from the brother-in-law of the chairman of the board of directors. Dan was not only Alvin Marquand’s closest friend but he had been kind and generous to me. He had shown his faith in me and confidence in my word. I couldn’t do less than to thank him. And so my feelings again won over my judgment and I gave in. To subordinate my judgment to his desires was the undoing of me. Gratitude is something a decent man can’t help feeling, but it is for a fellow to keep it from completely tying him up. The first thing I knew I not only had lost all my profit but I owed the firm one hundred and fifty thousand dollars besides. I felt pretty badly about it, but Dan told me not to worry.

“I’ll get you out of this hole,” he promised. “I know I will. But I can only do it if you let me. You will have to stop doing business on your own hook. I can’t be working for you and then have you completely undo all my work in your behalf. Just lay off the market and give me a chance to make some money for you. Won’t you, Larry?”

Again I ask you: What could I do? I thought of his kindliness and I could not do anything that might be construed as lacking in appreciation. I had grown to like him. He was very pleasant and friendly. I remember that all I got from him was encouragement. He kept on assuring me that everything would come out O.K. One day, perhaps six months later, he came to me with a pleased smile and gave me some credit slips.

“I told you I would pull you out of that hole,” he said, “and I have.” And then I discovered that not only had he wiped out the debt entirely but I had a small credit balance besides.

I think I could have run that up without much trouble, for the market was right, but he said to me, “I have bought you ten thousand shares of Southern Atlantic.” That was another road controlled by his brother-in-law, Alvin Marquand, who also ruled the market destinies of the stock.

When a man does for you what Dan Williamson did for me you can’t say anything but “Thank you”--no matter what your market views may be. You may be sure you’re right, but as Pat Hearne used to say: “You can’t tell till you bet!” and Dan Williamson had bet for me--with his money.

Well, Southern Atlantic went down and stayed down and I lost, I forget how much, on my ten thousand shares before Dan sold me out. I owed him more than ever. But you never saw a nicer or less importunate creditor in your life. Never a whimper from him. Instead, encouraging words and admonitions not to worry about it. In the end the loss was made up for me in the same generous but mysterious way.

He gave no details whatever. They were all numbered accounts. Dan Williamson would just say to me, “We made up your Southern Atlantic loss with profits on this other deal,” and he’d tell me how he had sold seventy-five hundred shares of some other stock and made a nice thing out of it. I can truthfully say that I never knew a blessed thing about those trades of mine until I was told that the indebtedness was wiped out.

After that happened several times I began to think, and I got to look at my case from a different angle. Finally I tumbled. It was plain that I had been used by Dan Williamson. It made me angry to think it, but still angrier that I had not tumbled to it quicker. As soon as I had gone over the whole thing in my mind I went to Dan Williamson, told him I was through with the firm, and I quit the office of Williamson & Brown. I had no words with him or any of his partners. What good would that have done me? But I will admit that I was sore--at myself quite as much as at Williamson & Brown.

The loss of the money didn’t bother me. Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went for a tuition fee. A man has to have experience and he has to pay for it. But there was something that hurt a whole lot in that experience of mine in Dan Williamson’s office, and that was the loss of a great opportunity. The money a man loses is nothing; he can make it up. But opportunities such as I had then do not come every day.

The market, you see, had been a fine trading market. I was right; I mean, I was reading it accurately. The opportunity to make millions was there. But I allowed my gratitude to interfere with my play. I tied my own hands. I had to do what Dan Williamson in his kindness wished done. Altogether it was more unsatisfactory than doing business with a relative. Bad business!

And that wasn’t the worst thing about it. It was that after that there was practically no opportunity for me to make big money. The market flattened out. Things drifted from bad to worse. I not only lost all I had but got into debt again--more heavily than ever. Those were long lean years, 1911, 1912, 1913 and 1914. There was no money to be made. The opportunity simply wasn’t there and so I was worse off than ever.

It isn’t uncomfortable to lose when the loss is not accompanied by a poignant vision of what might have been. That was precisely what I could not keep my mind from dwelling on, and of course it unsettled me further. I learned that the weaknesses to which a speculator is prone are almost numberless. It was proper for me as a man to act the way I did in Dan Williamson’s office, but it was improper and unwise for me as a speculator to allow myself to be influenced by any consideration to act against my own judgment. _Noblesse oblige_--but not in the stock market, because the tape is not chivalrous and moreover does not reward loyalty. I realise that I couldn’t have acted differently. I couldn’t make myself over just because I wished to trade in the stock market. But business is business always, and my business as a speculator is to back my own judgment always.

It was a very curious experience. I’ll tell you what I think happened. Dan Williamson was perfectly sincere in what he told me when he first saw me. Every time his firm did a few thousand shares in any one stock the Street jumped at the conclusion that Alvin Marquand was buying or selling. He was the big trader of the office, to be sure, and he gave this firm all his business; and he was one of the best and biggest traders they have ever had in Wall Street. Well, I was to be used as a smoke screen, particularly for Marquand’s selling.

Alvin Marquand fell sick shortly after I went in. His ailment was early diagnosed as incurable, and Dan Williamson of course knew it long before Marquand himself did. That is why Dan covered my Chesapeake & Atlantic stock. He had begun to liquidate some of his brother-in-law’s speculative holdings of that and other stocks.

Of course when Marquand died the estate had to liquidate his speculative and semispeculative lines, and by that time we had run into a bear market. By tying me up the way he did, Dan was helping the estate a whole lot. I do not speak boastfully when I say that I was a very heavy trader and that I was dead right in my views on the stock market. I know that Williamson remembered my successful operations in the bear market of 1907 and he couldn’t afford to run the risk of having me at large. Why, if I had kept on the way I was going I’d have made so much money that by the time he was trying to liquidate part of Alvin Marquand’s estate I would have been trading in hundreds of thousands of shares. As an active bear I would have done damage running into the millions of dollars to the Marquand heirs, for Alvin left only a little over a couple of hundred millions.

It was much cheaper for them to let me get into debt and then to pay off the debt than to have me in some other office operating actively on the bear side. That is precisely what I would have been doing but for my feeling that I must not be outdone in decency by Dan Williamson.

I have always considered this the most interesting and most unfortunate of all my experiences as a stock operator. As a lesson it cost me a disproportionately high price. It put off the time of my recovery several years. I was young enough to wait with patience for the strayed millions to come back. But five years is a long time for a man to be poor. Young or old, it is not to be relished. I could do without the yachts a great deal easier than I could without a market to come back on. The greatest opportunity of a lifetime was holding before my very nose the purse I had lost. I could not put out my hand and reach for it. A very shrewd boy, that Dan Williamson; as slick as they make them; farsighted, ingenious, daring. He is a thinker, has imagination, detects the vulnerable spot in any man and can plan cold-bloodedly to hit it. He did his own sizing up and soon doped out just what to do to me in order to reduce me to complete inoffensiveness in the market. He did not actually do me out of any money. On the contrary, he was to all appearances extremely nice about it. He loved his sister, Mrs. Marquand, and he did his duty toward her as he saw it.

_XIV_

It has always rankled in my mind that after I left Williamson & Brown’s office the cream was off the market. We ran smack into a long moneyless period; four mighty lean years. There was not a penny to be made. As Billy Henriquez once said, “It was the kind of market in which not even a skunk could make a scent.”

It looked to me as though I was in Dutch with destiny. It might have been the plan of Providence to chasten me, but really I had not been filled with such pride as called for a fall. I had not committed any of those speculative sins which a trader must expiate on the debtor side of the account. I was not guilty of a typical sucker play. What I had done, or, rather, what I had left undone, was something for which I would have received praise and not blame--north of Forty-second Street. In Wall Street it was absurd and costly. But by far the worst thing about it was the tendency it had to make a man a little less inclined to permit himself human feelings in the ticker district.

I left Williamson’s and tried other brokers’ offices. In every one of them I lost money. It served me right, because I was trying to force the market into giving me what it didn’t have to give--to wit, opportunities for making money. I did not find any trouble in getting credit, because those who knew me had faith in me. You can get an idea of how strong their confidence was when I tell you that when I finally stopped trading on credit I owed well over one million dollars.

The trouble was not that I had lost my grip but that during those four wretched years the opportunities for making money simply didn’t exist. Still I plugged along, trying to make a stake and succeeding only in increasing my indebtedness. After I ceased trading on my own hook because I wouldn’t owe my friends any more money I made a living handling accounts for people who believed I knew the game well enough to beat it even in a dull market. For my services I received a percentage of the profits--when there were any. That is how I lived. Well, say that is how I sustained life.

Of course, I didn’t always lose, but I never made enough to allow me materially to reduce what I owed. Finally, as things got worse, I felt the beginnings of discouragement for the first time in my life.

Everything seemed to have gone wrong with me. I did not go about bewailing the descent from millions and yachts to debts and the simple life. I didn’t enjoy the situation, but I did not fill up with self-pity. I did not propose to wait patiently for time and Providence to bring about the cessation of my discomforts. I therefore studied my problem. It was plain that the only way out of my troubles was by making money. To make money I needed merely to trade successfully. I had so traded before and I must do so once more. More than once in the past I had run up a shoestring into hundreds of thousands. Sooner or later the market would offer me an opportunity.

I convinced myself that whatever was wrong was wrong with me and not with the market. Now what could be the trouble with me? I asked myself that question in the same spirit in which I always study the various phases of my trading problems. I thought about it calmly and came to the conclusion that my main trouble came from worrying over the money I owed. I was never free from the mental discomfort of it. I must explain to you that it was not mere consciousness of my indebtedness. Any business man contracts debts in the course of his regular business. Most of my debts were really nothing but business debts, due to what were unfavourable business conditions for me, and no worse than a merchant suffers from, for instance, when there is an unusually prolonged spell of unseasonable weather.

Of course as time went on and I could not pay I began to feel less philosophical about my debts. I’ll explain: I owed over a million dollars--all of it stock-market losses, remember. Most of my creditors were very nice and didn’t bother me; but there were two who did bedevil me. They used to follow me around. Every time I made a winning each of them was Johnny-on-the-spot, wanting to know all about it and insisting on getting theirs right off. One of them, to whom I owed eight hundred dollars, threatened to sue me, seize my furniture, and so forth. I can’t conceive why he thought I was concealing assets, unless it was that I didn’t quite look like a stage hobo about to die of destitution.

As I studied the problem I saw that it wasn’t a case that called for reading the tape but for reading my own self. I quite cold-bloodedly reached the conclusion that I would never be able to accomplish anything useful so long as I was worried, and it was equally plain that I should be worried so long as I owed money. I mean, as long as any creditor had the power to vex me or to interfere with my coming back by insisting upon being paid before I could get a decent stake together. This was all so obviously true that I said to myself, “I must go through bankruptcy.” What else could relieve my mind?

It sounds both easy and sensible, doesn’t it? But it was more than unpleasant, I can tell you. I hated to do it. I hated to put myself in a position to be misunderstood or misjudged. I myself never cared much for money. I never thought enough of it to consider it worthwhile lying for. But I knew that everybody didn’t feel that way. Of course I also knew that if I got on my feet again I’d pay everybody off, for the obligation remained. But unless I was able to trade in the old way I’d never be able to pay back that million.

I nerved myself and went to see my creditors. It was a mighty difficult thing for me to do, for all that most of them were personal friends or old acquaintances.

I explained the situation quite frankly to them. I said: “I am not going to take this step because I don’t wish to pay you but because, in justice to both myself and you, I must put myself in a position to make money. I have been thinking of this solution off and on for over two years, but I simply didn’t have the nerve to come out and say so frankly to you. It would have been infinitely better for all of us if I had. It all simmers down to this: I positively cannot be my old self while I am harassed or upset by these debts. I have decided to do now what I should have done a year ago. I have no other reason than the one I have just given you.”

What the first man said was to all intents and purposes what all of them said. He spoke for his firm.

“Livingston,” he said, “we understand. We realise your position perfectly. I’ll tell you what we’ll do: we’ll just give you a release. Have your lawyer prepare any kind of paper you wish, and we’ll sign it.”

That was in substance what all my big creditors said. That is one side of Wall Street for you. It wasn’t merely careless good nature or sportsmanship. It was also a mighty intelligent decision, for it was clearly good business. I appreciated both the good will and the business gumption.

These creditors gave me a release on debts amounting to over a million dollars. But there were the two minor creditors who wouldn’t sign off. One of them was the eight-hundred-dollar man I told you about. I also owed sixty thousand dollars to a brokerage firm which had gone into bankruptcy, and the receivers, who didn’t know me from Adam, were on my neck early and late. Even if they had been disposed to follow the example set by my largest creditors I don’t suppose the court would have let them sign off. At all events my schedule of bankruptcy amounted to only about one hundred thousand dollars; though, as I said, I owed well over a million.

It was extremely disagreeable to see the story in the newspapers. I had always paid my debts in full and this new experience was most mortifying to me. I knew I’d pay off everybody some day if I lived, but everybody who read the article wouldn’t know it. I was ashamed to go out after I saw the report in the newspapers. But it all wore off presently and I cannot tell you how intense was my feeling of relief to know that I wasn’t going to be harried any more by people who didn’t understand how a man must give his entire mind to his business--if he wishes to succeed in stock speculation.

My mind now being free to take up trading with some prospect of success, unvexed by debts, the next step was to get another stake. The Stock Exchange had been closed from July thirty-first to the middle of December, 1914, and Wall Street was in the dumps. There hadn’t been any business whatever in a long time. I owed all my friends. I couldn’t very well ask them to help me again just because they had been so pleasant and friendly to me, when I knew that nobody was in a position to do much for anybody.

It was a mighty difficult task, getting a decent stake, for with the closing of the Stock Exchange there was nothing that I could ask any broker to do for me. I tried in a couple of places. No use.

Finally I went to see Dan Williamson. This was in February, 1915. I told him that I had rid myself of the mental incubus of debt and I was ready to trade as of old. You will recall that when he needed me he offered me the use of twenty-five thousand dollars without my asking him.

Now that I needed him he said, “When you see something that looks good to you and you want to buy five hundred shares go ahead and it will be all right.”

I thanked him and went away. He had kept me from making a great deal of money and the office had made a lot in commissions from me. I admit I was a little sore to think that Williamson & Brown didn’t give me a decent stake. I intended to trade conservatively at first. It would make my financial recovery easier and quicker if I could begin with a line a little better than five hundred shares. But, anyhow, I realised that, such as it was, there was my chance to come back.

I left Dan Williamson’s office and studied the situation in general and my own problem in particular. It was a bull market. That was as plain to me as it was to thousands of traders. But my stake consisted merely of an offer to carry five hundred shares for me. That is, I had no leeway, limited as I was. I couldn’t afford even a slight setback at the beginning. I must build up my stake with my very first play. That initial purchase of mine of five hundred shares must be profitable. I had to make real money. I knew unless I had sufficient trading capital I would not be able to use good judgment. Without adequate margins it would be impossible to take the cold-blooded, dispassionate attitude toward the game that comes from the ability to afford a few minor losses such as I often incurred in testing the market before putting down the big bet.

I think now that I found myself then at the most critical period of my career as a speculator. If I failed this time there was no telling where or when, if ever, I might get another stake for another try. It was very clear that I simply must wait for the exact psychological moment.

I didn’t go near Williamson & Brown’s. I mean, I purposely kept away from them for six long weeks of steady tape reading. I was afraid that if I went to the office, knowing that I could buy five hundred shares, I might be tempted into trading at the wrong time or in the wrong stock. A trader, in addition to studying basic conditions, remembering market precedents and keeping in mind the psychology of the outside public as well as the limitations of his brokers, must also know himself and provide against his own weaknesses. There is no need to feel anger over being human. I have come to feel that it is as necessary to know how to read myself as to know how to read the tape. I have studied and reckoned on my own reactions to given impulses or to the inevitable temptations of an active market, quite in the same mood and spirit as I have considered crop conditions or analysed reports of earnings.