ENTER, B. H. SCHEFTELS & COMPANY
B. H. Scheftels & Company, Incorporated, mining-stock brokers,
successors to B. H. Scheftels & Company, for many years stock brokers
in Chicago, opened its doors on Broad Street, New York, on January 18,
1909. For a long period B. H. Scheftels & Company of Chicago had been
advertised as the Eastern representatives of the corporation of Nat. C.
Goodwin & Company of Reno, of which Mr. Goodwin had been president. It
was now announced that Nat. C. Goodwin had become vice-president of the
new corporation of B. H. Scheftels & Company. Because Mr. Goodwin was
by profession an actor and not a stock broker and because of the
personal abuse he suffered in unfair newspaper criticism which followed
the "break" in the market price of Rawhide Coalition a month before, he
was quite willing to serve as vice-president instead of president.
Besides, he could not spare the time from his profession to attend
closely to the business.
The new corporation of B. H. Scheftels & Company made its bow to the
public by at once featuring in its market literature advice to purchase
stock of the Rawhide Coalition Mines Company. I became publicity
manager for the Scheftels corporation, manager of its promotion
enterprises, and was placed in charge of the protection of the
corporation's interests in all markets where its stocks were traded in.
Soon I was conducting a fresh campaign with investors that became so
hot, so exciting and so big that for nineteen months I labored on an
average sixteen hours a day, including Sundays, without being able to
complete in a single day a day's accumulated business. The business
grew until B. H. Scheftels & Company were actually spending more than
$1,000,000 annually for office and publicity expenses. In the nineteen
months of its existence it bought, sold and delivered approximately
15,000,000 shares of mining stock. The Scheftels corporation broke
every record in this regard that was ever made by a mining-stock
brokerage and promotion house in the history of Wall Street. Throughout
its career it was viciously attacked from many directions, but it held
its own. Through its hold on the mining-stock speculating public, who
were getting fairer treatment than ever before, it survived the
concerted onslaughts of a number of important interests which it had
competed with and antagonized, until one day in September, 1910, on a
warrant sworn to singly by one George Scarborough, since permitted to
resign, clothed with the office and power of a special agent of the
Department of Justice, its offices were raided, its books and papers
seized, its property confiscated, and its officers and employees
arrested.
The annual expense of B. H. Scheftels & Company was $1,000,000 or more.
Follows a tabulated statement of the expense item. The figures are
approximated. The books of the corporation, which are now in the
possession of the Department of Justice of the United States
Government, will probably show that the annual expense was larger. The
books not being readily available, an attempt is made here to be
ultra-conservative in setting down figures:
ANNUAL EXPENSE OF B. H. SCHEFTELS & COMPANY
Establishment of main office and six branch offices
(furniture, fixtures, etc.) $ 40,000
Office rentals 35,000
Private wire system connecting branch offices in
six cities with New York 25,000
Telephones 5,000
Telegraph tolls 100,000
Salaries (all offices) 200,000
Daily and Weekly Market Letter (printing and
postage) 100,000
General office expense, etc. 100,000
Miscellaneous postage 25,000
Miscellaneous printing and stationery 25,000
Advertising, publicity, etc. 200,000
Expert accountants 15,000
Commissions and salaries to Curb brokers 50,000
Mining examinations, engineers' fees, legal fees,
etc. 50,000
Interest charges 30,000
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Total $1,000,000
Before the Scheftels corporation was in business a month it became
plain that it was "filling a long-felt want." In almost every branch it
was performing some function in a manner more satisfactory to
mining-stock speculators and investors than were its competitors.
Its Market Letter news service, usually 16 pages, was the prime
article. It soon gained a circulation of 34,000 among the highest class
and best informed stockholders of mining companies in the country. It
was also regularly sent to more than 2,500 stock brokers, including
members of the New York Stock Exchange, New York Cotton Exchange,
Boston Stock Exchange, New York Produce Exchange, etc.
Before the Scheftels corporation was five months old the work of its
Market Letter was supplemented by the _Mining Financial News_, a
weekly newspaper which had been published for a long period at Reno as
the _Nevada Mining News_, latterly as the _Mining Financial News_, and
which removed to New York when the Scheftels company found the
mining-stock public was hungry for real live news and the truth
regarding the mining propositions of other States as well as those of
Nevada. The _Mining Financial News_ and the Scheftels Market Letter,
which were published three days apart, were supplied with news from
practically the same sources. The newspaper was mailed to all readers
of the Market Letter.
The ablest and most reliable mining correspondents obtainable for money
in Tonopah, Goldfield, Ely, Rawhide, Cobalt, Butte, Globe and other
mining camps, and the most experienced market news-gatherers in the
mining-stock-market centers of Salt Lake, San Francisco, Boston,
Philadelphia, Toronto and New York, were placed on the pay-roll.
Brokers in these and other cities, including Duluth, Seattle and Butte,
supplied more news.
Wherever there was mining or market activity, representation of the
very highest character was sought. News was always wired, no matter
what the cost, whenever it was important to traders in mining shares.
Expense was never spared when the information was considered of value
to the speculator or investor. In the New York offices of the Scheftels
corporation and the _Mining Financial News_, which adjoined each other,
a staff of newspaper men with a mining financial experience of years
was gathered. Little that transpired in the mines or the markets ever
got away from them. Days before the mining newspapers of the West
reached the East the Scheftels Market Letter or the _Mining Financial
News_ communicated the news regarding mine developments. They also
contained a daily and weekly stock-market diagnosis and prognosis.
These were based on the news, as gathered by trained forces and aided
from time to time by secret information which filtered into the
offices. This service soon obtained an accuracy theretofore unknown on
the Street.
There is probably not one stock broker in five hundred that would know
a mine underground if he saw one. On the pay-rolls of B. H. Scheftels &
Company and the _Mining Financial News_ there were thirty men who had
been literally brought up in the mines and who, when they put their pen
to paper, knew what they were writing about. The Scheftels company and
the newspaper furnished mine and market information of quality to
investors who had before been inundated with misinformation, guesses
and twaddle. It sought to guide mining-stock speculators right.
It was really a delicate job to handle the _Mining Financial News_ in
a manner which would not lead stupid people to believe that it was an
entirely independent paper. It was desirable that its independence be
maintained to a degree, so that the full value of the _Mining Financial
News_, as a property, might grow. The intention was some day, when the
_Mining Financial News_ found itself on a paying basis, to sever the
Scheftels alliance.
The _Mining Financial News_ had always been an entity. It had up to
then been assisted financially at periods by mining promotion concerns
with which I had been identified and was always a quasi house-organ for
this reason. But it invariably preserved a certain independence in its
news columns and at least such partial independence of ownership as
enabled it to stand on its own bottom.
MORE TRUTH ON THE "MINING FINANCIAL NEWS"
WHEN the _Mining Financial News_ removed to New York Mr. Scheftels
used much persuasion to get the owners to transfer title to the
Scheftels company. Admittedly, if the Scheftels company could boast
ownership of the newspaper at the head of its editorial page, it would
be a great feather in the Scheftels cap and might lead investors to
think that an organization which could own and publish a first-class,
metropolitan newspaper of the _Mining Financial News_ variety must
for that reason alone be worthy of financial credit.
Thompson, Towle & Company, members of the New York Stock Exchange,
print a small sized pattern of such a newspaper, called the _News
Letter_. Hayden, Stone & Company, and Paine, Webber & Company, of
Boston and New York, are said to have much influence with the _Boston
News Bureau_, a newspaper which features news of mines and mining share
markets. The _Boston News Bureau_ at times has printed no display
advertisements and at other times has. It is considered by Boston
mining-stock brokers who handle the Michigan and Arizona copper
securities as a necessary complement to their market literature.
_Walker's Copper Letter_ and the _Boston Commercial_ are other
examples. _Walker's Copper Letter_, which carries no advertising, for
years has said the very nicest things about copper securities promoted
and fathered by important Boston and New York interests. Needless to
state, what _Walker's Copper Letter_, the _Boston Commercial_ and the
_Boston News Bureau_ say about the mining propositions of their friends
is as a rule based on fact. The point is that promoters find it
necessary that news happenings regarding the markets, the securities
and the mines in which they are interested be given broad publicity.
It was the idea of the owners of the _Mining Financial News_, of which
B. H. Scheftels, president and 25 per cent. owner of the capital stock
of B. H. Scheftels & Company, was not one, that anybody who would
supply the sinews while the paper was getting on its feet and was
establishing itself, was entitled to all the publicity which the paper
could consistently and honestly give it. With this understanding the
Scheftels company assumed to take all of the income of the _Mining
Financial News_ and pay all of the running expenses until such period
as the newspaper might become self-sustaining.
In doing so it performed a stupendous service to the entire mining
industry in that the space devoted to the Scheftels enterprises therein
did not average more than one-eighth of the whole, and it spent dollars
to supply the news of all stocks where other mining financial
publications in its field spent pennies.
To make sure that the public understood the _Mining Financial News_ was
the quasi house-organ of the Scheftels company many precautions were
taken. No application was made for admission to the mails as
second-class matter, and the paper was mailed under one and two-cent
postage. The name of Harry Hedrick was lifted to the top of the page as
vice-president of the corporation owning the _Mining Financial News_,
Mr. Hedrick being openly employed by the Scheftels company as head of
its correspondence department. My own name was later placed at the head
of the editorial page as editor, the Scheftels company making no bones
about my position as absolute head of its publicity department, its
promotion enterprises, and of all markets for the Scheftels promotion
stocks. The connection had before been established even closer than
this. I had formerly been advertised as vice-president of Nat. C.
Goodwin & Company of Reno and vice-president of the Rawhide Coalition
Mines Company; and the Scheftels company had advertised that Nat. C.
Goodwin was its own vice-president.
Further, the Scheftels company announced in its market literature that
it had selfish interests in protecting the market for the stock because
of the Nat. C. Goodwin affiliation. Occasionally market articles under
the signature of B. H. Scheftels were published on the front page of
the _Mining Financial News_. Whenever anybody made a request for the
Scheftels Market Letter a copy of the _Mining Financial_ News was quite
regularly mailed to him without cost. Articles under the signature of
other officers and employees, formerly of Nat. C. Goodwin & Company of
Reno and later of B. H. Scheftels & Company of New York, were very
frequently printed in the _Mining Financial News_.
Probably the most important reason why the Scheftels company made this
sort of arrangement with the _Mining Financial News_ was that it could
do so with only a very small additional outlay. The Scheftels company
found it necessary to employ correspondents in all mining and market
centers, and the same correspondents could work for both enterprises.
Another economic argument was that an enormous saving could be made in
telegraph tolls, all dispatches addressed to the newspaper being sent
at press rates. These dispatches were always available to the Scheftels
corporation and its clientele.
It was the idea of the Scheftels organization that the mining-stock
investing public sorely needed right direction and that any brokerage
house which led it right would soon be unable to transact all the
business that would be offered to it.
And that is just what happened. Before the Scheftels company was six
months old the fifteen men in its accounting department were compelled
to work day and night--time and again throughout the night until 6
A.M.--to catch up with their work.
If the Scheftels news service was as nearly perfect as money and brains
could make it, its facilities for the execution of orders on the New
York Curb, the Boston Curb, San Francisco Stock Exchange, Salt Lake
Stock Exchange, Toronto Stock Exchange, and other mining markets were
unsurpassed. Its New York and Boston offices were connected with branch
offices in Philadelphia, Chicago, Detroit, Milwaukee and Providence by
exclusive private wires, and the service to out-of-town offices was
almost instantaneous.
The New York offices were located right in front of the Curb market on
Broad Street on the ground floor of the big _Wall Street Journal_
building, 50 feet by 200 feet deep--occupying about 10,000 square feet
of floor space. The Boston office, occupying two floors, was located
within 100 feet of the Curb market in that city. The public wires of
the telegraph companies gave quick service between San Francisco, Salt
Lake and Toronto, where business was transacted through members of the
mining-stock exchanges of those cities. The private wires of the
Scheftels company were constantly flooded with rapid quotations and
market, mine and company news during every trading hour. In New York
the Curb brokers in the Scheftels employ, some on salary and some on
commission, rarely numbered less than ten and at one period exceeded
twenty.
The correspondence department was presided over for a long period by
two of the best posted mining-market men that could be employed for
money. From this department were usually graduated the managers of
out-of-town offices. In the cashier's cage six men were engaged at an
average salary of above $100 a week, registering stocks, receiving
stocks, paying money and drawing checks. The payroll of the mailing
department, which was operated in conjunction with the _Mining
Financial News_, was comparatively small. Money-saving machinery for
the handling of the large output of market letters and newspapers gave
excellent and economic service. About ten stenographers were regularly
employed in the correspondence department. Occasionally, when a special
effort was being made to interest the public in some security in which
the corporation was particularly concerned, a force of forty additional
typists was pressed into service for short periods.
THE SCHEFTELS PRINCIPLES
When the corporation of B. H. Scheftels & Company opened its doors in
New York it had no affiliations with any other Wall Street interests.
It had no axes to grind except its own. It was practically a
free-lance. It cracked up its own wares, careful always to keep within
the facts, and never minced words about the quality of the goods of its
contemporaries. The principle of both the Scheftels corporation and the
_Mining Financial News_ was to be always _right_ in their market
forecasts. The general order to mine and market news-gatherers and
market prognosticators was to GIVE THE FACTS.
The law laid down was this: If the news is bad and is likely to injure
the interests of our best friends, tell it in the interests of the
investor. If it is good and the backers of the stock affected happen to
be our worst enemies, tell it. No matter on what side of the market you
think B. H. Scheftels & Company is committed in any of its own
speculations, give the customer all the news. Put the cause of the
mining-stock trader in front of you as the one to further always. Never
exaggerate. Eventually, this policy must redound to our credit and
profit.
_Eventually, this policy resulted in our ruin. Our truth-telling
policy was directly responsible for the loss of millions to competing
promoters, and they banded together to destroy us._
The publicity, promotion and brokerage activities of the corporation
were of such magnitude, and withal so simple, that they at once
challenged the attention of the Street. Before the Scheftels
corporation was half a year old veterans of the financial game began to
opine that some big interest was behind the concern. Its dashing market
methods, its mighty publicity measures and its unbridled assurance
attracted much notice. From every quarter expert views reached the
Scheftels company that its manner of doing things was convincing on the
point that it knew the business. But the general opinion of the talent
seemed to be that the new corporation was spending too much money and
that it could not win out unless a big boom in mining shares ensued.
The market tactics adopted by the Scheftels company in its promotion
enterprises were as old as the hills. On the New York Stock Exchange
they had been employed in a thousand instances before. The method will
probably survive all time. The corporation sought to distribute the
stocks of which it became sponsor in turn--first Rawhide Coalition,
then Ely Central, later Bovard Consolidated and finally Jumbo
Extension--by the approved Wall Street system of establishing public
interest and inquiry and causing an active market. The aim was to
establish higher prices for the securities, always within the bounds of
intrinsic and reasonable speculative value. All efforts were directed
this way.
Plans like this are, however, sometimes thwarted. Markets get sick.
More stock presses for sale than the "inside" has money to pay for.
Stocks break in price. Then the promoter can't make any money and might
lose a lot of it. Since money-making is his primary object, and stock
distribution secondary, he has got to do some close figuring when
markets are subject to the price-breaking habit. That's where B. H.
Scheftels & Company, through its brokerage business, found, after a
short period, that it held within its grasp the power to insure itself
against declining markets.
Without promotion stocks on hand--obtained by wholesale at lower
figures than values warranted--in which it could profit to the extent
of hundreds of thousands of dollars on a rising market, the
million-dollar annual expense of the Scheftels company would not have
been justified. Once the market sought lower levels and no profit could
be made on the promotions, it meant a discontinuance of the business on
the large scale.
The corporation's insurance was the open market in stocks on the
general list and its brokerage business.
From time to time it openly shorted tens of thousands of shares of
stocks in which it had no promoter's interest whatever, by going out in
the open market and selling them to all bidders against future
delivery, by borrowing them from brokers and selling them for immediate
delivery, and by short sales generally.
Speculators play the market and so did the Scheftels company, but never
against its own stocks. Speculators, however, buy mining shares
outright or on margin because they want to gamble. The Scheftels
company played the market for just the opposite reason. It didn't want
to carry its eggs in one basket and wanted insurance against market
declines to cover promotion losses that must ensue if a general market
slump occurred.
And the Scheftels company did not inaugurate any fake bookkeeping
system or otherwise hide behind any bushes in doing this.
Moreover, the corporation didn't take advantage of anybody. The cards
were not marked. The deck was not stacked. There was no dealing from
the bottom. Market opinion for which the corporation was directly or
indirectly responsible was genuine to the last utterance. No news was
suppressed on any stock. The corporation divulged to its customers and
to the general public every piece of important outside or inside
information regarding any stock on the general list that was in its
possession. At the very moment when it was going short of stocks in
greatest volume its market prognostications were winning for it a
reputation for accuracy never before recorded.
If the stocks which the corporation went short of--stocks on the
general list and amounting to probably 15 per cent., of the volume of
its entire business, the remainder of the transactions being all in
"house" stocks (these "house" stocks it could not be short of because
of its promoter's options on hundreds of thousands of shares)--if the
stocks on the general list thus "shorted" went up in price and the
corporation was compelled to go into the market later and "cover" at a
great loss, it was always in the corporation's heart to sing a pæan of
thanksgiving, for it could well afford to pay the losses sustained by
it in the general list out of the greater profits which would be made
in the "house" stocks, which must, forsooth, share in the general
upswing.
Collateral securities put up by customers as margin for the purchase of
other stocks were credited to the customers' accounts and mixed with
the company's own securities. In every case proper endorsement of
certificates, put up for collateral margin, was required. Every
certificate of stock bears on the reverse side a power of attorney, in
blank. The signature thereto of the person to whom the certificate was
issued makes it negotiable by the broker. It was the rule of the house
always to inform those who brought collateral to the offices for margin
that the stocks would be used and that they would not receive the
identical certificates back again. In a number of cases objection was
made. Acceptance of the stock as collateral margin was then promptly
refused. If there were any scattering exceptions to this rule, it was
contrary to instructions and due to neglect or ignorance. Whenever a
customer closed his account and demanded the return of his collateral,
stocks of the same description and denomination were recalled and
delivery made.
The same rule applied to stocks pledged with the corporation for loans,
it being specifically set forth in the promissory note which the
borrower signed that the privilege of using the stock was granted to
the lender.
This practice is so common and the rule so generally understood by
mining-stock traders that objection was rarely made by customers.
To test the general custom, a friend at my suggestion not long ago sent
certificates of stock to 17 stockbrokers now doing business on Wall
Street. Three of these were members of the New York Stock Exchange and
14 were members of the New York Curb, Boston Curb, or of a mining
exchange. A letter substantially as follows was sent to each of the 17:
Enclosed please find ...... shares of ...... stock to be used as
collateral margin for the purchase of an additional block of
...... shares. Please buy at the market and report promptly.
The 17 orders were executed by the 17 individual houses. A month later
when the stock ordered purchased had advanced in the market, the
following letter was sent to each of the 17:
Please sell the ...... shares of ...... stock which you purchased
for me a month ago at the market and return to me the certificate
of stock which I sent you as collateral with check for my profits.
It took nearly two months for all of the 17 to make delivery. When they
did, not one of them returned the same certificate that had been put up
as collateral.
Don't be shocked, dear reader, at this disclosure. It is the _custom_.
And don't, please, think mining-stock brokers are alone given to the
general practice. If you order the purchase of a block of stock on cash
margin from any New York Stock Exchange house or send a certificate of
stock as collateral in lieu of cash to one of them for the purchase of
more stock, you will receive a confirmation slip of the trade which
will generally read something like this:
We reserve the right to mix this stock in our general loans, etc.
That is, the right is reserved, and actually exercised, of immediately
transferring ownership of the certificates to the broker.
Unless a certificate stands in a customer's name and is unendorsed by
him, he has no control over it. According to law, a broker has a right
to hypothecate or loan securities or commodities pledged with him, for
the purpose of raising the moneys necessary to make up the purchase
price, and such stocks have no earmarks. In other words, the customer
is not entitled to specific shares of stock, so that stocks bought with
one customer's money may be delivered to another customer.
As for the Scheftels company laying itself open to the charge of
bucketshopping in "shorting" stocks, such a possibility was never
dreamed of. The penal law of the State of New York, sections 390 to
394, inclusive, is the only criminal statute covering market operations
commonly known as bucketing and bucketshops. In each section and
subdivision it is provided that where both parties intend that there
shall be no actual purchase or sale, but that settlement shall be made
on quotations, a crime has been committed, the language of the statute
being, "wherein _both parties_ thereto intend, etc.," or "where _both
parties_ do not intend, etc." The Scheftels company was never a party
to any such arrangement. And it always made it a practice to make
delivery of stocks ordered purchased within a reasonable period after
the customer had paid the amount due in full.
Now, neither myself nor the Scheftels corporation is responsible for
brokerage conditions as they exist, nor for the laws as written. Custom
and practice are responsible. The purpose here is to communicate the
exact nature of the business methods of the Street as I found them and
to lay particular stress on those that are open to criticism.
THE SCHEFTELS COMPANY AGAINST MARGIN TRADING
The Scheftels company did not encourage margin trading by its
customers. In fact, it railed against the practice. Time and again the
_Mining Financial News_, editorially, denounced the business of margin
trading. The Weekly Market Letter of the corporation sounded the same
note. On several occasions, in large display advertisements published
in the newspapers, the Scheftels company decried the practice and urged
the public to discontinue trading of this character.
There were selfish reasons for this. In the marketing of its promotions
the Scheftels company found that not more than 20 per cent. of the
public's orders for these stocks given to other brokers were being
executed, or, if executed, that the stocks were at once sold back on
the market, the brokers or their allies "standing" on the trade.
Had the Scheftels company been able to destroy the practice by its
campaign of publicity, it would undoubtedly have been able, during the
nineteen months of its existence, successfully to promote three or four
times as many mining companies as it did, and its profits would have
been fourfold.
It, however, appealed to the public in vain. Loud, frequent calls to
margin traders to pay up their debit balances and demand delivery of
their certificates, which would compel every broker to go out in the
market and buy the stocks he was short to customers, failed miserably.
The lesson of this experience was that the speculating public did not
"give a rap" whether their brokers were short of stocks to them or not.
All they wanted, apparently, was to be assured that when they were
ready to close their accounts, their stocks, their profits or their
credit balances would be forthcoming.
What is the evil of short selling of the kind described herein? The
only evil that I could ever discover was that the market is denied the
support which the actual carrying of the stock is calculated to afford.
This hardship weighs heaviest on the promoter. There appears to be no
cure. Even if a broker does buy the stock and does not himself sell it
out again, there is no law that denies him the right to borrow on it or
loan it to somebody else. And it is to the interest of the broker,
because he gets the use of the money, to loan the stock always. Stocks
are rarely borrowed by anybody except to make deliveries on short
sales.
What about the broker who doesn't execute his order at all but "stands"
on the trade from the beginning and sells the stock "short" to his own
customer, delaying actual purchase until delivery is demanded? This
practice is even less damaging to the customer than the one of actually
executing the buying order for the customer at the time the order is
given and then selling the stock right back on the market again for the
account of the broker or his pal--the usual practice when the object of
going short is sought. When a broker buys stocks in the market he must
bid for them, and actual purchase generally means a higher cost price
to the customer than that at standing quotations.
The rule of the Street is to charge the customer interest on all debit
balances. When a broker lends to a "short" seller a stock which he is
carrying for his customer, he is paid the full market value, as
security for its return. In that case the broker ceases to incur
interest charges for the customer, and is actually able, in addition,
to lend out at interest the cash marginal deposit put up by the
customer.
Maybe you think, dear reader, that a broker who charges his customer
interest at the rate of six per cent. per annum on money which he has
ceased to advance is crooked. Very well. If that be so, then all
members of the New York Stock Exchange must be labelled "crooks." Here
is how it works, even among the highest class and most conservative
members of that great securities emporium:
John Jones orders the purchase by his broker of 1,000 shares of Steel
on margin. He pays down 10 per cent. of the purchase price. Mr. Jones
receives a statement at the end of the month charging him with interest
at the rate of six per cent. per annum, or more if the call-money
market is higher, on the 90 per cent. of the purchase price advanced by
the house.
On the same day that the order of John Jones is received, William Smith
orders the same house to sell short 1,000 shares of Steel at the
market. This order is also promptly filled. Thereupon the broker uses
the 1,000 shares of Steel, which he bought for the account of John
Jones to make delivery through the Clearing House for the account of
William Smith. Sometimes a fictitious William Smith is created, known
as "Account No. 1," "A. & S. Account," "E. Account," etc. This is
usually done when a broker wants to hide from his bookkeepers that he
or an associate is taking the other end of the customer's trade.
The broker is out no money, yet he charges Mr. Jones the regular rate
of interest on his debit balance. As a matter of fact, too, the stock
bought for Mr. Jones is never even delivered to his broker. The
Clearing House, because of the "short" sale, steps in and delivers it
to the broker to whom it is due "on balance."
Custom and practice cover a multitude of remarkable transactions--don't
they?
You have the framework of the Scheftels structure and of its Wall
Street environment outlined in this chapter. Some of the narrative is
undoubtedly "dry-as-dust," but its recital has appeared to be necessary
to enable the lay reader properly to interpret the chronology of
stirring events which forms the concluding installment.
In the foregoing I have endeavored to lay bare many practices that are
common to Wall Street. Wherever I have laid them at the door of B. H.
Scheftels & Company, I have given that corporation much the worst of
it, because in the recital I have omitted to mention a multitude of
happenings that were creditable to an extreme to the Scheftels company.
Most of these had to do with the experiences of the Scheftels company
as publicity agents and promoters. Its wide-open publicity and
promotion policy called forth the ire of influential Wall Street
pirates and caused the "pressure" at Washington which resulted in the
Federal raid of the Scheftels offices.
I have reserved this dramatic series of events for my last chapter.