The Capital Of Capitalism


American speculators were not necessarily aware of all the precedents; such ideas occur naturally to any inventive minds focused on stock trading. But New Yorkers seized the opportunities more often and with more gusto than their European counterparts. In 1835 Jacob Little engineered one of the first famous market corners, in the stock of the Morris Canal and Banking Company. It was a hybrid firm with so many troubles that its shares had no known value but merely served as convenient means of speculation. Such stocks were known as fancies. Little also became the first man to break a market corner by secretly acquiring convertible bonds and changing them for stock just when his opponents thought they had rounded up all the floating supply. Surviving two panics in his first years on the Street, Little took such a dim view of permanent prosperity that he became the first Great Bear.

To be a bear meant not only to expect a stock’s price to go down but also to help the process along by planting rumors that something was wrong with the company or by arranging for financial reporters to question its prospects in print. Bulls correspondingly puffed a stock by giving out favorable news, true or not, and whispering that the “big men” were buying. Part of the fun was to pretend to be a bear and encourage others to sell a stock short, all the while secretly buying it up. Then you could turn around and bull the stock. With your efforts and the buying of dismayed shorts trying to cover their contracts before the price got too high, the stock would certainly go up, and you could sell out at a nice profit.

Naturally, while the bulls or bears were staging a raid on the market someone had to lose money. These were the “lambs.” They ranged from small investors to petty speculators who hung around Wall Street, making a precarious existence following tips and rumors. “In common with others, Mr. Broker very properly regards them as sheep for the slaughter; and although not devoid of benevolence, makes no scruple of sacrificing a score of them at a time. Why should he? They will certainly be killed and eaten by somebody,” a “reformed gambler” explained from bitter experience.

Little, the pure speculator, was the first of a breed that existed right up through 1929. He was not an organizer of companies like gruff Commodore Vanderbilt, the ferryboat captain who rose to rule a railroad empire. Though a crafty stock tactician, the Commodore also ran companies with some success. Even Jay Gould, as shrewd a man as the Street has ever known, and the famous plunger John (“Bet-a-Million“) Gates carried on corporate duties. But Little had no interest in business per se. “I care more for the game than the results, and winning or losing, I like to be in it,” he said.

In Little’s day it was not quite respectable to devote all one’s energies to playing the market, but the men who followed in his footsteps during and after the Civil War were socially prominent, frequented the Racquet and the Union League clubs, and patronized the arts. One of them was William R. Travers, a wit who kept Wall Street laughing even while heading a group of bears to drive prices down. Then there were Addison Jerome and his brother Leonard, the grandfather of Winston Churchill; German-born Charles F. Woerishoffer, known as the Baron, a Great Bear of the seventies and eighties; and James R. Keene, the Silver Fox, who named his son after his most successful racehorse. Even after he had made himself a millionaire, Keene continued to mastermind important pools for others. “The spirit of speculation is born in me,” he said.

In the nineteen-twenties boom, the Little tradition was carried on by men like Arthur Cutten, Jesse Livermore, and Michael Meehan, who ran multimillion-dollar operations with such shrewdness and nerve that their names became bywords, though by then market manipulators were showing more diffidence about public acclaim.

Some of the wizards of Wall Street have gone down in history because panics were named after them. Anthony Morse, who began as a penniless clerk, became such a dashing operator that crowds stood around outside his office, trying to pick up tips from the messenger boys. During the Civil War he loaded up on stocks as a hedge against the possible deflation of northern currency. When the Secretary of the Treasury moved to curb speculation by releasing gold and calling in greenbacks, stock prices broke, producing “Morse’s Panic,” in which the chief victim was Morse himself.


The Civil War spelled the end of Jacob Little’s career. Having unwisely turned bullish just before the panic of 1857, he then went bearish just as the market took off into the wildest boom it had ever known. The Board of Brokers got a good deal less dignified during the war, and the several other exchanges that sprang up, to deal in gold, petroleum, and high-risk mining stocks, were often scenes of wild activity. When Wall Street closed down at the end of the day, stock trading was continued in uptown hotel rooms. Enterprising men sent agents to accompany the armies and send back speedy news of victory or defeat; they even planted spies in military headquarters to find out about battle plans that might affect the market.