Transcriber’s Notes
The eponymous street of the title appears in three guises:
“wall-street” (once), “Wall Street” (twice) and most commonly
“Wall-street”.
“Mr. Jacob Broker opened an office near the wall-street”, describing
the street built on land where the old city wall was knocked down.
His descendant brokers, the author writes, have “since congregated
in the region round about Wall Street”, the name which is also used
in the book’s title. In all other places in the text it appears as
“Wall-street”.
In the text that follows, italic text is denoted by _underscores_
around the text. Small capitals in the printed works have been
transcribed as ALL CAPITALS.
See the end of this document for a full list of corrections and changes.
* * * * *
A WEEK
IN
WALL STREET.
BY
ONE WHO KNOWS
NEW-YORK:
PUBLISHED FOR THE BOOKSELLERS.
1841.
Entered according to the Act of Congress, in the year 1841,
BY FREDERICK JACKSON,
In the Clerk’s office of District Court of the Southern District of
New-York.
TABLE OF CONTENTS.
CHAPTER I.—Introduction—The origin of Joint Stock
Companies, and Brokers.
CHAPTER II.—The History of the Morrison Kennel—Nicholas
the 1st.—A Stock Speculation.
CHAPTER III.—State Stocks—History of the Morrison Kennel
continued—Introduction of new characters—The
U. S. Bank.
CHAPTER IV.—How Stocks are bought and sold—How Brokers get
out of a bad Speculation—How money is sometimes
made by doing a losing business—How Discounts
are made and obtained.
CHAPTER V.—The Defaulter.
CHAPTER VI.—A Panic.
PREFACE.
The following pages were written during leisure hours of the last six
or eight weeks, of which “the times” have thrown rather too many upon
the writer’s hands; and the statement of this fact, I conceive to be a
tacit admission, that such hours might have been better employed.
They were originally composed for the writer’s own amusement; to
beguile the tediousness of otherwise idle time. And not the least
motive for this indulgence was a desire to abstract the mind from too
near a contemplation of the dark side of that picture, which I have
described as a panic. They were not written in the first place, with
any view to publication, but as each chapter was successively read in
the presence of friends, and principally for amusement, those friends
at length advised their publication; and with their advice they have
been submitted to the press, in the original manuscript, almost without
correction.
The writer has no claims to literary qualifications, and of course he
seeks no reward of literary reputation. Were it otherwise the reader
would at once convict him of his presumption.
Those persons who are acquainted with the business of Wall-street,
will be able to judge for themselves of the truth of the descriptions;
and those who have not that opportunity of judging, are respectfully
requested to consider the reflections and moralizing, occasionally
introduced, as made in seriousness, and the rest as the truth in
burlesque.
That there is existing, at the present time, a demoralised condition of
principle, feeling, and practice, pervading the country throughout, in
regard to pecuniary transactions and engagements, deserving a severe
castigation, will not I believe be denied by any one; and for the
vindication of good faith and honesty, the writer could wish that the
subject had been taken in hand, by some one more skilful than himself
in the use of the scourge.
The proper correction of public morals is public opinion; but so long
as public opinion is indifferent to the innovations that have grown
up, and so long as pecuniary credit, and the posts of honor, trust and
profit, are so frequently accorded to the most successful in their
negotiations or their intrigues, without regard to the principles, or
practices, that have placed them where they are—so long we may expect
nothing but the increase of those mischiefs, of which so many now
complain.
I confess, that were I to write the same pages over again, with a view
to publication, I would alter, amend, and expunge much that is here.
But as I am now engaged in something that will afford more pleasure
in its pursuit, and more profit if attained, I have not time for this
purpose at present. And since the present is a time, when men’s minds
are alive to the subjects which I have endeavored to bring out in
ridicule, I submit the whole for what it is worth.
The introduction of vulgar wit may serve to amuse some, but it is not
a passport to men’s good sense; and, although it may sometimes make a
book sell, it is not, in my opinion, the best way to convince of the
truth. And the only excuse for indulging in it is, that the subjects
of remark, and the slang frequent in Wall-street, are not of that
character which cultivate the delicate sensibilities—nor can they be
pourtrayed to the life, by such language or figures, as should grace
the conversation and writings of a gentleman.
The practice of making a book personal, is, and ought to be condemned;
and, if it is objected that, in this, I have called persons by their
right names, or pointed too clearly at individuals, the answer is,
that, except in the case of one martial spirit, the notable Major
Downing,[1] whom I have shorn of a little of his patriotism and
courage, I have in “no instance made allusions which have not been
directly applied, and treated with much greater asperity, by all
the newspapers of the day.” And this fact, I conceive, has given me
licence, since it would be folly to wing a shaft of invective or
ridicule, if it aimed at no object.
The major, I must suppose, will not consider himself aggrieved,
because, from his position, he was the only person whom I could
conveniently make tributary to the information I wish to give;
and, since he has so often asserted his courage, without fairly
acknowledging his identity, he has no cause to complain at being
assailed on that point.
The remark will generally hold true, that whatever requires to be
explained, or excused, is always wrong; but, in this case, I think it
will not apply. I would therefore be understood as excusing only the
faults of the book, and not the object at which it is aimed.
And, lastly, the writer cannot help saying that, in the face of
the trite remark that, “those who live in glass houses should not
throw stones,” he will not deny, that, in the expressive language of
Wall-street, he has himself been “flunked;” and, with this candid
acknowledgement, which will, perhaps, satisfactorily account for
the production of the book, in the minds of those who may please to
consider it an effusion of spleen,—he subscribes himself—
Respectfully,
THE AUTHOR.
FOOTNOTE:
[1] We intend to refer to Major 2nd., the bosom friend of General
Jackson, not the original major, down east.
N. B. It is perceived that a considerable number of errors have escaped
notice and correction, in the following pages; but as they affect only
the orthography and the grammar, without detracting from the truth,
or the moral of the story, I have thought it best to leave their
correction to the intelligent and good humored reader, rather than mar
a page with a formidable list of errata—except, that, in one instance,
as a mere friendly suggestion, I would request the substitution, on
129th page, 7th line, of “_stewardship_” for “_friendship_.”
CHAPTER I.
INTRODUCTION.—THE ORIGIN OF JOINT STOCK COMPANIES AND BROKERS.
As the practice of some readers is to begin in the middle and read a
book backwards, I respectfully request those who may open here, to
begin at the beginning and read the preface first. In case of any
captiousness of disposition on their parts, they may thereby save
themselves a good deal of ill nature, and quarrelling with the author.
But if any one is perverse, and chooses to go on without taking my
advice, I will not hold myself accountable for the preservation of his
temper, nor even of this book; for I am not sure but he may throw it
in the fire, before he gets through the first or second chapter. But,
should he even persevere and go through, until he receives my parting
“salaam,” still I request him to turn back and read the preface, that
he may see what the writer thinks of his own book.
HOW BOOKS ARE WONT TO BE MADE.
It is usual with authors, in the outset of their story, to introduce
to their readers their Hero and Heroine, with elaborate descriptions
of their persons, manners, habits, dress, &c. &c.; all of which is
intended, either to prepare the reader’s mind for the very interesting
positions which these personages are designed to fill, or to amuse
those who are fond of that kind of portraiture. But in this history of
“a week in Wall-street,” there is neither hero nor heroine, but a great
number and variety of characters, each of whom lives out his sunny
hour, and passes again into oblivion. Some there are, it is true, who,
from a crawling worm, pass into a chrysalis, and appear to be dead for
a time, not only to revive again with new life and beauty, but to soar
a lofty height into the world of fashion, and boast the gayest plumage
among those who float on the wind of fortune’s fickle favors.
The veritable history of Diedrich Knickerbocker was not a truer
story than is every whit of this history of “a week in Wall-street;”
but alas for the mutations in all human affairs!—a sad change has
come over the waking dreams of the inhabitants of this goodly city,
since the days when Petrus Stuyvesant surrendered the government of
Niew-Amsterdam to the conquest-loving Briton.
HOW NEW-YORK BECAME SO POPULOUS.
From that day, when first its name was changed to New-York, it has not
ceased to be overrun by the stragglers from every country and clime,
but especially by those cunning vagabonds from Connecticut, and her
sister states, who had well nigh taken in their toils the venerable
Petrus and his jolly trumpeter, Antony. And they have now trodden down,
or overturned, every remnant of social order, that was so remarkable
in the time of the honest Dutchman. In one respect, at least, these
interlopers seem to be the favored of heaven—for their seed has
multiplied as the sands on the sea shore; and it is shrewdly suspected,
by some, that the gambols of the cunning Antony with the lasses of
New-Haven, in his famous journey thither, may have had some hand in
this, since never was a people known who could blow the trumpet of
their own fame, better than these same descendants from the colony of
New-Haven.
THE OLD WALL BROKEN DOWN.
From their love of continual change—which they call improvement—they
had no sooner gained a footing in the city, than they persuaded the
honest Dutchmen to break down the _city wall_, which had hitherto
prevented them from robbing the cabbage garden or tapping the hollands
of the rich burghers, and which, some have said, was erected partly
to prevent their too frequent solace of themselves with the softer
beauties concealed by close caps and short petticoats. And they further
persuaded them to convert the ground into a street, thence called
“Wall-street;” which, being the scene of their first victory over that
prejudice which prefers to keep folks honest when they are so, has
ever since continued to be the focus of all enterprises undertaken
for one’s own benefit, to be accomplished by other peoples’ means.
And it is even said, that the projectors of this work, in reality,
designed only to gain for themselves unobstructed access to the good
living, and the pretty damsels, of Niew-Amsterdam, now New-York. Want
of means themselves to perform so great a work, first suggested to
them the idea of a Stock Company, for objects of public improvement;
the principal virtue of which is, to replenish the fortunes of those
who plan and conduct it, as is more than suspected, since most of the
money generally stops short of its intended application, and can only
be accounted for by mistakes in the original estimates, or expenses
preliminary to the commencement of the real work.
MR. SOLOMON SINGLE-EYE.
The good Dutchmen at first looked astonished at a project so bold and
vast; they next smoked a pipe and doubted; but on an explanation being
given by Mr. Solomon Single-Eye, of all its advantages, accompanied
with a prompt offer to embark HIS _whole fortune_, and give his
services for nothing, the shares were eagerly caught up. And as the
scheme rose in public estimation, the shares rose in nominal value,
greatly above their subscription price; and such was the clamor for
more, that the directors—having nothing in view but the public
good—disinterestedly consented to sell out theirs at an advance of
only seventy-five per cent., in order to appease public opinion,
in respect of their apparent partiality in having retained any for
themselves. Still, however, the inquiry for shares was eager and
constant, so great was the public confidence in the integrity and
shrewdness of the directors, and of Mr. Single-Eye, particularly.
At this juncture, Mr. Jacob Broker opened an office near the
wall-street, that was to be, for the sale and purchase of shares.
MR. JACOB BROKER.
Mr. Broker was a man of great shrewdness and penetration. His
education, to be sure, had been somewhat neglected, having been
superintended in his youth by a strolling professor of the “black
art,” whom to follow, he ran away from home at the age of fourteen.
But his genius was of that universal kind which all men desire and but
few possess—and hence the facility with which he adapted himself to
his new employment. His initiation into the black art now stood him
instead of capital, and made it easy for him to convince the honest
Dutchmen of his power to turn “metals of drossiest ore to purest gold.”
To him, therefore, they all went, whether to buy or to sell shares
in the Wall-street Stock Company. And as he had often learned by the
sad vicissitudes of life, the necessity of turning an honest penny
for himself, he reasoned as all philosophers would do in the same
circumstances, “that if he took not the tide of fortune at its flood,
he might again suffer under the same unhappy conviction.” In other
words, he thought, and acted accordingly, that if he did not embrace
the opportunity to improve his fortune when it offered, it might
never present itself again. He shrewdly guessed that he might greatly
aid the rise in the value of the shares by appearing to be _entirely
disinterested_—while at the same time he contrived, generally, to be
the real purchaser when people employed him to sell, and the seller
when they employed him to buy: by which means, as the stock gradually
rose in the market,—the commission being considerable, the profit
more—and as he bought and sold the whole number of shares several
times over, he was enabled to abstract from the pockets of the honest
Dutchmen and placing it in his own, in solid cash, nearly the whole
amount of the nominal rise in value on all the shares.
HONESTY AND DISINTERESTEDNESS.
He was of course a man of substance, made so by his wits, and at the
expense of the burghers of New-York.
That he was a strictly honest man, is quite certain; for his old
master of the “black art” is known to have said, that when he paid
him a secret visit, and suggested the propriety of manufacturing
a few certificates of shares, to meet the urgency of demand, Jacob
replied, that “if detected it would spoil the profits of his trade, and
therefore, in honor, he could not consent to the proposal.”
He honestly paid his debts, also, for the same reason, and as a man of
public spirit, lent his means to assist in building the “old jail,” to
confine all those rogues in, who could not pay theirs.
PRINCIPLES OF TRADE.
To be sure, he acted on the principle that there is no friendship in
trade, and that a bargain is a bargain, however made, and must be
fulfilled. What if his customers _did_ pay him a commission? he sold
only his services, not his wits; and them he had a right to use for
his own benefit. He had long since learned, in his profession of the
“black art,” that the measure of success depended on the closeness of
his secret, and if people did not know his arts, he thought it but
right that they should pay for being amused by them; and following this
mode of reasoning, in the scale of progression upward to the higher
sciences, he judged rightly, “that if people were ignorant they must
pay for instruction.”
MORAL REFLECTIONS.
Skilfulness in trade was, in his opinion, justly placed at the head of
moral science, of which he had now become a professor; and why should
he be expected to impart what he knew without a “quid pro quo?” Not he;
but rather following the plain dictates of wisdom, he would learn all
he could, and impart nothing.
If he knew better how to make a bargain than his customers did, that
was their fault, not his. People should look before they leap, and look
too with their own eyes, not attempt to borrow his; they should know
his mode of business before they came to him; not come and complain
afterwards.
These reflections while they clearly show the astuteness of his
mind, also suggest the reasons why stock rose rapidly; and point
out the means by which Mr. Broker pocketed nearly all the advance
himself,—without ever retaining more than ten shares in his hands at
any one time.
In time Mr. Broker became a sage, and, as a fruit of his wisdom, left
behind him a code of laws which have ever since been the standard of
Wall-street.
VIRTUE OF CORPORATIONS.
We shall have frequent occasion to refer to points in this code,
but, for the present, will only mention, that he improved upon the
great Lacedemonian, who is said to have made a law that placed the
crime of stealing only in detection—Mr. Broker placed it only in the
punishment. It was of no consequence that a man should be found out
in his roguery—that only established his character for shrewdness—a
word of modern coinage, which some silly and old fashioned people have
supposed to be, only a mitigated term for dishonesty. He never became
a criminal until the law reached him with punishment; and the merit of
his character, as well as the measure of his success, depended entirely
on the length he could go, and the frequency of his exploits, and still
escape the lash of the law.—And herein is seen the peculiar virtue
and particular wisdom of those contrivances called Corporations, and
Joint Stock Companies, of which Mr. Broker was a great encourager. An
ingenious device, wherein an imaginary body alone is made accountable
for the acts of its members; while the real actors may hide behind it,
as long as it has power to protect them, and scamper off without fear,
when it has not. It has also this peculiar property, that, when the
directors have taken to their heels, like the ignis-fatuus, the farther
you pursue it the farther it recedes; and he who follows it long will,
very likely, get stuck in the swamp from whose foul vapours it has been
generated: and, at most, if fairly got hold of, it is never found to
consist of any thing more than a worthless bit of parchment.
DISCOVERY IN NATURAL HISTORY.
We have said that Mr. Broker was a man of universal genius. In proof of
which, he essentially improved the vocabulary of English; and in two
particulars, conclusively shew that Johnson and Buffon are in error,
viz.—that a Bear means a man who has no shares in the Stocks—one
stripped—in an em-bar-assed condition, and that a Bull means a man
who has more shares than he can keep, and has gored his neighbour to
procure them.
His was the first Broker’s office ever established in the city of
New York; and from him have descended all the race of brokers which
have since congregated in the region round about Wall Street. Whether
his posterity have answered Dr. Johnson’s[2] definition of the word
broker, viz: “A negotiator between two parties who contrives to cheat
both,” will be seen in the course of this history.
SIMPLICITY OF THE GOVERNMENT.
When the gallant Col. Nicholls had, in the name of the crown of Great
Britain, taken full possession of the city and territory of New
Amsterdam, and bestowed upon it the name of his patron the Duke of
York; by way of conciliating the Burghers, he left them undisturbed
in all their civil and domestic privileges, without embarrassing them
with the intricacies of British laws. And in those days of simple
legislation, the government had not yet learned the way to purchase
power, and make people dishonest, by selling corporate privileges. And
demagogues had not yet learned to claim the monopoly, as a reward for
their intrigues. Consequently, Mr. Single-Eye, and his coadjutors in
the matter of the Wall-street Stock Company, had the power of fixing
things all their own way; that is, they made all their own laws,
rules, and regulations, without let or hindrance of any kind. And so
ingeniously were they contrived, that, by their natural operation, the
money which came in by subscription, all leaked out again exactly at
the right place and at the right time. Since that time, the wisdom of
the Legislators of most of the states has decreed, that people shall
not associate in bodies for purposes of roguery, without first buying
a licence; and, under the name of Charters, they will sell licences to
cheat the public, as the Pope sells plenary indulgences, to replenish a
wasted Treasury, (_vide the great state of Pennsylvania and the U. S.
Bank._)
WHAT A DIRECTOR SHOULD BE.
It is worthy of remark and imitation, that neither the president nor
the cashier of the Wall-street Stock Company ever ran away with a
dollar of their money; so rigid a _surveillance_ did Mr. Single-Eye
keep over its affairs. Although nothing but a director himself, he
held the true doctrine, that directors should really be the head of an
institution, and that the president and cashier were merely heads of
the clerks. Mr. Single-Eye was moreover of opinion, that it was better
for a director to hustle the money into his own pocket, and make sure
of the gain, than to suffer another to do it, and incur the odium
himself. To be sure, he was somewhat at variance with Mr. Broker on
this point, but Single-Eye had the power, and there is nothing like
that for enforcing a good reason.
DEGENERACY OF OUR DAYS.
And here I cannot forbear to remark on the degeneracy of these days,
when directors so often give up all management to the presidents and
cashiers, thus leading them into temptation, and provoking them to
do that, which they might do themselves with greater safety, because
they are less immediately responsible. Alas! how many men, with their
families, have been ruined by this cruel lack of vigilance.
I should not have said so much on the origin of stock companies
and brokers, but that I thought it necessary, to a more perfect
understanding of what shall follow. Having said so much, it is proper
that I should make known the fate of this first attempt at stock
jobbing. And it is especially necessary that I should do so, for the
benefit of those widows and orphans, who have any doubts about the
entire safety of investing their little fortunes in the like securities.
Every body has read of the severe reproof once administered, by a
Spanish lady, to a gentleman who complained of the indelicacy of their
statuary. She told him that, had his own mind been pure, he would
never have discovered indelicacy in what was “true to nature.”
STOCK COMPANIES.
It is well known that stock companies, such as banks, insurance
companies, trust companies, and the like, are got up entirely by
disinterested men, for the purpose of affording an opportunity for
ladies of a “certain age,” widows, and orphans, to invest what little
funds they have in safety, with the certainty of a _moderate_ income.
Accordingly, whenever a company is started, and the stock _all_
subscribed for by the managers, this class of people are particularly
favored, in being permitted to purchase some shares at a trifling
premium of ten or fifteen per cent., and urged to take an interest
before they shall go higher. And then, after two or three years’
refusal to make any dividend, for fear they might spend it imprudently,
the same gentlemen who sold the stock, are willing to buy it back
again at a discount of only fifty per cent.; and the poor spinster is
perfectly satisfied of the safety of her investment, because, having
once parted with the money, she can never get it back again. This class
of stockholders are also particularly favored and acceptable, because
they never want to borrow, and never find fault with the management;
and if, by chance, they should suspect themselves to be badly used, a
tear shed in secret is the only complaint they ever make.
EVIL TO HIM WHO EVIL THINKS.
I will lay it down as a rule, therefore, that whoever distrusts the
integrity and good intentions of those gentlemen, who get up a stock
company, and collect within its vaults the widow’s mite and the
orphan’s support, is no better than the gentleman before alluded to,
whose perversion of the luxuries of taste flowed from the impurity of
his own mind.
A DIRECTOR A WEASLE.
Whenever any company is attempted to be established for purposes of
public improvement, it is always a prerequisite of success, that in
the programme, the expense should be set down at one half, and the
profits and advantages at double—and this mode of stating things,
although it varies from the actual result only three hundred per
cent., is sure to convince, and the public will eagerly catch at the
enterprise. The reason of this necessity is, that if the truth were
told in the first place, there would be little chance for management
in the stock, and none whatever of its being all taken up. But by this
_shrewd_ management, it generally happens that an original subscriber,
after having paid up in full his subscription, and two or three
assessments beyond, loses all confidence, and suffers all he has paid
to be forfeited to the company, rather than pay more. Thus the original
subscribers generally lose all their money; the stock is resold by
the company to some new comer, and the company, in the end, collect a
million capital upon a subscription of half that amount. And whoever
subscribes to a new fashioned bank, or a railroad, and does not find
the directors awake to this management, may hereafter say with truth
that he has caught a weasle asleep—there being no other difference
whatever in the vermin, than is expressed by the simple affixes _bi_
and _quadru_.
Such was the character of Mr. Single-Eye, of the Wall-street Stock
Company; and the number of similar institutions which now display their
gilded signs there by the same means, can only be told by multiplying
some of the numericals.
It so happened, however, that the Dutchmen, from their natural
stupidity and ingratitude, as Mr. Single-Eye averred—but, as some
suppose, from some lurking doubts of his virtue, and a spice of his
own cunning—after having paid seventy-five per cent. premium for their
stock, through the agency of Mr. Broker—could not be convinced of the
propriety of paying more in the shape of assessments, notwithstanding
Mr. Single-Eye, and his partners in the directorship, assured them that
all was right, and that the money had all been properly expended.
COMMITTEE OF INVESTIGATION.
A committee of examination into the company’s affairs was therefore
appointed; whereupon Mr. Single-Eye, being grieved at such indignity
offered to his honor, took the “book of minutes” and walked off,
leaving the Dutchmen in a state of “confusion worse confounded,” from
which they never recovered: thereby establishing a precedent for the
tragedy lately enacted in the Water Works Bank, in this city—wherein,
if the directors of that institution had consulted the ancient
chronicles, they would never have tried to cover their own delinquency,
by a contemptible persecution of their late venerable cashier.
The committee of examination, without waiting to come to their senses,
adjourned “sine die.” The city wall had been broken down, and its
materials were all scattered about in delightful confusion. A complete
inroad had been made on the hitherto peaceful and happy homes of the
Dutchmen. They had lost all the money invested in the company, with the
melancholy satisfaction that it would cost them as much more to clear
away the rubbish; and the street was left to the slow progress of time,
to assume its present magnificent appearance.
HONORABLE END OF SINGLE-EYE.
It is remarkable, that such fatal results to the first experiment,
should not have proved a death blow to all similar enterprises in
future. But the Dutchmen overcame their misfortunes by patience and
industry. The memory of their wrongs was all washed away by the
soothing lethe of time, and their follies were all buried in the deep
dark valley of the land of forgetfulness. Mr. Single-Eye, and Mr.
Broker, ever afterwards fared sumptuously every day. They lived long
and died lamented; and the tablet to their memory, lately removed from
the Garden-street church yard, was inscribed with this motto: “Money is
good, fame is good, but to know how to improve the follies of others is
better than either.” And their descendants, learning wisdom from this
law, have ever since continued to follow their example.
THE MORRISON KENNEL.
And now, my dear readers, having initiated you into the origin of
stock companies and brokers, as well as the phrase and practice of
Wall-street, in my next chapter I will give you the history of the
“Morrison Kennel”—a company that has exhibited so many of the phases
of human nature, that some have said that “old Nick” must have had a
hand in it. If you expect that the dogs of this Kennel will prove to be
hounds, I will tell you beforehand, that they are the veriest puppies
in cowardice, treachery, and meanness, while they are perfect wolves in
voracity; as will be proved by the perfectly denuded bones of the dead
but stall-fed ass, which they have just forsaken.
If any one is curious to know from whence I got all this information,
I will tell him. I received it from a venerable chronicler of the
age, who has the old manuscript in his possession, and who now visits
Wall-street daily to mark the passing events. He has agreed to meet
me there every day for a week, where he will reveal to me the history
aforesaid, and such other matters as his experience and observation may
suggest.
FOOTNOTE:
[2] See Boswell’s posthumous edition.