Part 22

It is a common habit to speak of Wall street as the financial centre of the Republic; but only those who are acquainted with its transactions can know how true this is. Regarding Wall street and New York as synonymous terms, we find that the street is not only a great power in this country, but that it is one of the great controlling powers of the financial world. Indeed, if the prosperity of the country is as marked in the future as it has been in the past, there is good reason to believe that Wall street will control the whole world of finance. Its geographical location is in its favor. By noon the New York broker has full information of the same day's transactions in London, Frankfort, and Paris, and can shape his course in accordance with this knowledge, while the European broker cannot profit by his knowledge of matters in New York until the next day.

The Stock Exchange of New York numbers over 1000 members, and its aggregate wealth is greater than that of any similar association in the world. The par value of the annual sales made at the regular Boards and "over the counter" is estimated at over $22,000,000,000 annually. The par value of the authorized stocks, bonds, and Governments dealt in by the regular Boards is more than $3,000,000,000, and this vast sum is turned over and over many times during the year. The aggregate of the brokers' commissions on the sales and purchases made by them is estimated by competent authority at $43,750,000 annually. The bulk of this enormous business is in the hands of about 400 houses.

"Out of all the incorporated banks in the United States, there are thirty situated in Wall street and its neighborhood, whose office is not unlike that of the heart in the economy of animal life. Although less than half the full number of banks in the metropolis, these thirty have two-thirds of the capital, and quite two-thirds of the circulation. By a provision of statutory law, all outside National banks, numbering some 1600, are allowed to keep one-half, and many three-fifths, of their reserve balances in New York. In this way our great financial centre is rapidly acquiring the function of a National clearing-house. These temporary deposits bear a small interest, and are subject to be called for at a day's notice. They can only be used, therefore, by the employing banks on the same conditions. The stock market supplies these conditions. Bonds and shares bought to-day and sold to-morrow, endowed with all the properties of swift conversion, and held by men whose training has been one of incessant grappling with the new and unexpected, are the only class of property upon which money can safely be borrowed without a protection against sudden demands. On these securities, therefore, the down-town banks make call loans. The name implies the nature. The money which the thirty receive from without, together with their own reserves, is lent freely to stock-brokers, with the simple provision that it must be returned immediately upon notice, if financial exigencies require it. This vast volume of what may well be styled fluid wealth is difficult of estimate in figures. The published statements of loans made by city banks make no distinction between discounts of commercial paper and what is advanced on securities. In sum total, the thirty banks lend weekly about $165,000,000. Indeed, including all New York banks, the average is nearly $255,000,000. During the week ending September 18, 1868, these banks lent $266,496,024. The real meaning of these last figures will be better understood when it is known that they exceed the entire average loans and discounts of all the national banks of New England and New York State, with the exception, of course, of the city itself. Or, to take a more sweeping view, they surpass the total weekly loans of national banks in Maryland, Virginia, North Carolina, South Carolina, West Virginia, Georgia, Alabama, Texas, Arkansas, Kentucky, Tennessee, Ohio, Nebraska, Kansas, Missouri, Minnesota, Iowa, Wisconsin, Illinois, Michigan, Indiana, Delaware, and New Jersey. Nigh $180,000,000 of the amount cited above were advanced by the down-town banks. What proportion of this was lent on stocks? Probably much over one-third. As many of the other banks also make call loans, we may, perhaps, estimate that from $70,000,000 to $100,000,000 are furnished daily to the brokers and operators of New York.

[Picture: THE PARK BANK, BROADWAY.]

"This, however, is but one element in the lending force of the city. There are five Trust Companies, with capitals amounting in the aggregate to $5,500,000, which lend, at times, $60,000,000 a week. There are also a large number of private banking houses, of which Jay Cooke & Co. may be selected as representatives, that daily loan vast sums of money on security. The foreign houses alone, which, like Belmont & Co., Brown Brothers, Drexel, Winthrop & Co., operate in Wall street, employ not much less than $200,000,000 of capital."

VII. STOCK GAMBLING.

In the good old days gone by Wall street did business on principles very different from those which prevail there now. Then there was a holy horror in all hearts of speculation. Irresponsible men might indulge in it, and so incur the censure of the more respectable, but established houses confined themselves to a legitimate and regular business. They bought and sold on commission, and were satisfied with their earnings. Even now, indeed, the best houses profess to do simply a commission business, leaving the risk to the customer, but those who know the hidden ways of the street hint that there is not a house in it but has its secrets of large or small operations undertaken on account of the firm. The practice of buying and selling on commission is unquestionably the safest, but the mania for wealth leads many clear, cool-headed men into the feverish whirl of speculation, and keeps them there until they have realized their wildest hopes, or are ruined.

It has been remarked that the men who do business in Wall street have a prematurely old look, and that they die at a comparatively early age. This is not strange. They live too fast. Their bodies and brains are taxed too severely to last long. They pass their days in a state of great excitement. Every little fluctuation of the market elates or depresses them to an extent greater than they think. At night they are either planning the next day's campaign, or are hard at work at the hotels. On Sundays their minds are still on their business, and some are laboring in their offices, screened from public observation. Body and mind are worked too hard, and are given no rest.

The chief cause of this intense strain is the uncertainty attending the operations of Wall street. The chances there are not dependent upon the skill or the exertions of the operator. Some powerful clique may almost destroy the securities upon which he relies for success, or may make him wealthy by suddenly running up their value; so that no man who does not confine himself to a strictly legitimate or commission business--and but few do so--can say one week whether he will be a millionaire or a beggar the next. The chances are in favor of the latter result. Nine out of ten who speculate in gold or stocks, lose, especially persons unaccustomed to such operations. Like all gamblers, they are undismayed by their losses, and venture a second time, and a third, and so on. The fascination of stock gambling is equal to that of card gambling, and holds its victims with an iron hand. The only safe rule for those who wish to grow rich is to keep out of Wall street. While one man makes a fortune by a sudden rise in stocks or gold, hundreds lose by an equally sudden fall in the same commodities. Even old and established firms sometimes give way with a crash under these sudden changes.

The legitimate operations of the street and the speculative ventures are becoming more and more concentrated every year in the hands of a few operators and capitalists. These move the market as they please, and fill their coffers, and sweep away younger or weaker men with a remorseless hand. It is useless to oppose them. They are masters of the field in every respect, and when they combine for a common object, their resources are inexhaustible and their power beyond computation. A dozen, or even half a dozen of the great capitalists could ruin the whole street were they so disposed, and once they came near doing so. This is the secret of the cordial hatred that is felt by the majority of Wall street men for Vanderbilt, Drew, and other great operators. They know and dread the power of these men, and would readily combine to destroy them singly.

The mania for stock gambling which now sways such masses of people, may be said to date from the war and the petroleum discoveries. Since then it has rolled over the country in a vast flood. The telegraph is kept busy all day and all night in sending orders for speculations from people in other States and cities to New York brokers. Everybody who can raise the funds, wishes to try his or her hand at a venture in stocks. Merchants, clergymen, women, professional men, clerks, come here to tempt fortune. Many win; more lose.

Fortunes are made quicker and lost more easily in New York than in any place in the world. A sudden rise in stocks, or a lucky venture of some other kind, often places a comparatively poor man in possession of great wealth. Watch the carriages as they whirl through Fifth avenue, going and returning from the park. They are as elegant and sumptuous as wealth can make them. The owners, lying back amongst the soft cushions, are clad in the height of fashion. By their dresses they might be princes and princesses. This much is due to art. Now mark the coarse, rough features, the ill-bred stare, the haughty rudeness which they endeavor to palm off for dignity. Do you see any difference between them and the footman in livery on the carriage-box? Both master and man belong to the same class--only one is wealthy and the other is not. But that footman may take the place of the master in a couple of years, or in less time. Such changes may seem remarkable, but they are very common in New York.

See that gentleman driving that splendid pair of sorrels. He is a fine specimen of mere animal beauty. How well he drives. The ease and carelessness with which he manages his splendid steeds, excites the admiration of every one on the road. He is used to it. Five years ago he was the driver of a public hack. He amassed a small sum of money, and being naturally a sharp, shrewd man, went into Wall street, and joined the "Curb-stone Brokers." His transactions were not always open to a rigid scrutiny, but they were profitable to him. He invested in oil stocks, and with his usual good luck made a fortune. Now he operates through his broker. His transactions are heavy, his speculations bold and daring, but he is usually successful. He lives in great splendor in one of the finest mansions in the city, and his carriages and horses are superb. His wife and daughters are completely carried away by their good fortune, and look with disdain upon all who are not their equals or superiors in wealth. They are vulgar and ill-bred, but they are wealthy, and society worships them. There will come a change some day. The husband and father will venture once too often in his speculations, and his magnificent fortune will go with a crash, and the family will return to their former state, or perhaps sink lower, for there are very few men who have the moral courage to try to rise again after such a fall, and this man is not one of them.

In watching the crowd on Broadway, one will frequently see, in some shabbily dressed individual, who, with his hat drawn down close over his eyes, is evidently shrinking from the possibility of being recognized, the man who but a few weeks ago was one of the wealthiest in the city. Then he was surrounded with splendor. Now he hardly knows where to get bread for his family. Then he lived in an elegant mansion. Now one or two rooms on the upper floor of some tenement house constitute his habitation. He shrinks from meeting his old friends, well knowing that not one of them will recognize him, except to insult him with a scornful stare. Families are constantly disappearing from the social circles in which they have shone for a greater or less time. They vanish almost in an instant, and are never seen again. You may meet them at some brilliant ball in the evening. Pass their residence the next day, and you will see a bill announcing the early sale of the mansion and furniture. The worldly effects of the family are all in the hands of the creditors of the "head," and the family themselves are either in a more modest home in the country, or in a tenement house. You can scarcely walk twenty blocks on Fifth avenue, without seeing one of these bills, telling its mournful story of fallen greatness.

The best and safest way to be rich in New York, as elsewhere, is for a man to confine himself to his legitimate business. Few men acquire wealth suddenly. Ninety-nine fail where one succeeds. The bane of New York commercial life, however, is that people have not the patience to wait for fortune. Every one wants to be rich in a hurry, and as no regular business will accomplish this, here or elsewhere, speculation is resorted to. The sharpers and tricksters who infest Wall street know this weakness of New York merchants. They take the pains to inform themselves as to the character, means and credulity of merchants, and then use every art to draw them into speculations, in which the tempter is enriched and the tempted ruined. In nine cases out of ten a merchant is utterly ignorant of the nature of the speculation he engages in. He is not capable of forming a reasonable opinion as to its propriety or chance of success, because the whole transaction is new to him, and is so rapid that he has no time to study it. He leaves a business in which he has acquired valuable knowledge and experience, and trusts himself to the mercy of a man he knows little or nothing of; and undertakes a transaction that he does not know how to manage. Dabbling in speculations unfits men for their regular pursuits. They come to like the excitement of such ventures, and rush on in their mad course, hoping to make up their losses by one lucky speculation, and at length utter ruin rouses them from their dreams.

Not only do men squander their own money in this way, but they risk and often lose the funds of others committed to their charge. Bank officers, having the use of the deposits in their institutions, take them for speculation, intending of course to return them. Sometimes they are successful, and are able to replace the money in the bank, so that no one hears of their dishonesty. Again, and most commonly, they fail, and they are ruined. Guardians thus misappropriate the funds of their wards. Even the funds of churches are thus used by their trustees. The amount of speculation engaged in by clergymen with their own money would astonish a novice. Some prominent divines in the city are well known in Wall street. Their brokers keep their secrets, but the habitues of the street are adepts at putting this and that together, and these reverend gentlemen, some of whom preach eloquently against the sins of speculation and gambling, become known as regular customers. The street is full of gossip concerning them, and if the stories told of them be true, some of them have made large fortunes in this way, while others have literally "gone to the bad."

It is not necessary that a person speculating in stocks should be master of the entire value of the stocks. If he be known to the broker operating for him as a responsible person, he may employ only ten per cent., or some other proportion, of the stock to be dealt in. By depositing $1000 with his broker, he can speculate to the extent of $10,000. This per centage is called a _margin_, and the deposit is designed to protect the broker from loss in case the stock should fall in value. As the stock depreciates, the customer must either sell out and bear the loss which is inevitable, or he must increase his margin to an extent sufficient to protect his broker. If he fails to increase his margin, the broker sells the stock and uses the money to save himself.

VIII. THE WAYS OF THE STREET.

Like Brette Harte's Heathen Chinee,

"For ways that are dark And tricks that are vain, Wall Street is peculiar."

It takes a clear, cool head, a large amount of brains, and unaltering nerve, to thread one's way through the intricacies of the business of finance as carried on there. It would be interesting to know how many come out of the ordeal untouched by the taint of corruption. Members of the Exchanges are held by a rigid code of laws, but in questions of morality Wall street has a code of its own. Expediency is a prominent consideration in the dealings of the street, and men have come to regard as honest and correct almost anything short of a regular breach of contract. They do not spare their own flesh and blood. Friendships are sacrificed, the ties of kinship are disregarded, if they stand in the way of some bold operation. Every thing must give way to the desire for gain. The great operators plunder and destroy their lesser rivals without a feeling of remorse, and by combinations which they know cannot be resisted blast the prospects and ruin the lives of scores whose greatest fault is an inability to oppose them successfully. Tricks so mean and contemptible that their perpetrator would not be tolerated in social life, are resorted to, and if successful are applauded as evidences of smartness. Every man's hand is against his neighbor. Clerks are bribed to betray the secrets of their employers. The baser their treachery, the larger their reward. We do not propose, however, to discuss the morality of Wall street transactions, and so we drop the subject.

It is said by the gossips of the street that the great Railroad King, Commodore Vanderbilt, is not above using any means at hand to secure the success of his schemes. It is said that he once tried to use his son William in this way. He came to him one day, and advised him that he had better sell his Hudson River stock, as 110 was too high for it. William thanked him, and made inquiries in the market, and found that his father was buying quietly all he could lay his hands upon.

William determined to follow suit. Up jumped the stock to 137. It was a clear twenty-six per cent. in pocket.

When the operation was concluded, the Commodore rode round to the son's office.

"Well, William, how much did you lose?"

"I went in at 110 on 10,000 shares. That ought to make me two hundred and sixty thousand dollars--"

"Very bad luck, William," quoth the father, trying to look extremely troubled,--"very bad luck, this time."

"But then I bought, and so made."

"Hey? What sent you doing that, sir?"

"O, I heard that was your line, and so concluded that you meant long instead of short."

"Ahem!" croaked Vanderbilt _pere_, as he buttoned up his fur overcoat, and stalked out of the open door. He has always had a high opinion of William since that event!

Some years ago Vanderbilt wanted to consolidate the Hudson River and Harlem Railroads, and when the scheme was presented before the Legislature of New York, secured a sufficient number of votes in that body to insure the passage of the bill authorizing the consolidation. Before the bill was called upon its final passage, however, he learned from a trustworthy source that the members of the Legislature who had promised to vote for the bill, were determined to vote against it, with the hope of ruining him. The stock of the Harlem road was then selling very high, in consequence of the expected consolidation. The defeat of the bill would, of course, cause it to fall immediately. The unprincipled legislators at once began a shrewd game. They sold Harlem right and left, to be delivered at a future day, and found plenty of purchasers, every one but those in the plot expecting the consolidation of the roads and a consequent advance in the value of the stock. They let their friends into the secret, and there was soon a great deal of "selling short" in this stock. Commodore Vanderbilt managed to acquaint himself with the whole plot; but he held his peace, and resolved upon revenge. He went into the market quietly, with all the funds he could raise, and bought every certificate of Harlem stock that he could find. These certificates he locked up in his safe. When the bill came before the Legislature on its final passage, it was defeated.

The conspirators were jubilant. They were sure that the defeat of the bill would bring "Harlem" down with a rush. To their astonishment, however, "Harlem" did not fall. It remained stationary the first day, and then to their dismay rose steadily. Those to whom they had sold demanded the delivery of the stock, but the speculators found it impossible to buy it. There was none in the market at any price. In many of these instances Vanderbilt was the real claimant, the brokers

## acting in the transactions being merely his agents. Being unable to

deliver the stock, the conspirators were forced to settle the demands against them in money, and the result was that they were ruined. One of the shrewdest operators in New York lost over $200,000. He refused to pay, and his name was stricken from the list of stockholders. This brought him to his senses, and he made good his contracts. Vanderbilt made money enough out of this transaction to pay for all the stock he owned in the Harlem Road.

Daniel Drew is a great operator. His gains are immense, as are also his losses. He is not popular in the street, and the brokers are fond of abusing him. He has handled too many of them mercilessly to have many friends. They say that he does not hesitate to sacrifice a friend to gain his ends, and that he is utterly without sympathy for those who go down before his heavy blows.

Bogus stock companies appear from time to time in Wall street. An office is rented and fitted up in magnificent style, a flaring programme is issued, and seemingly substantial evidences of the stability and prosperity of the company are exhibited to inquirers. The stock offered is readily taken up by the eager to be rich crowd. A dividend, most hopefully large, is declared and paid, to stimulate investments, and then, when the market has been drained dry, the bubble bursts, the directors disappear, the office is closed, and the shareholders lose their money.