The Wall Street point of view

Chapter I. Page

Wall Street as a Gauge of Business Prosperity i

What it is : its area, population, and institutions. — The difference between natural and artificial conditions, the latter being the false standard of judgment by outsiders. — People decry Wall Street speculation without a correct knowledge of its character. — " The Street " is not a gambler's paradise, but a place where hard, honest work tells. — It is a public benefactor, and once, at least, saved the country, — The center to which the surplus money of the world flows for investment. — This famous street has the life-blood of railroads, upon which millions of people have been enjoying a better living than they could get elsewhere.

CHAPTER II. The Study of the Stock Market 5

The powers of speculative fascination over a large number of people. — Bad results of adopting second-hand opinions. — The laws of speculation and investment must be studied profoundly. — Fact and rumor should be carefully distinguished. — Hard study of facts and real values generally leads to sound and accurate conclusions. — It is also necessary to study the circumstances and events which cause real values to fluctuate. — How natural laws eventually regulate values and reduce inflated ones to their true basis.

Chapter III

Various opinions regarding interest and usury. — Why should not compensation for the use of money be left to the freedom of

iii iv CONTENTS.

PAGE contract untrammeled by restrictive laws ? — Views of Lord Bacon and Lord Mansfield on usury and interest. — The word " interest " not known in Bacon's time. — All laws against usury capable of evasion. — Various rates and the laws of usury pertaining to different states. — Freedom of contract the true doctrine in money-lending and borrowing.

Chapter IV

Present status of railroads, and indispensable reforms in their management. — Legislative requirements. — Railroad business as a gauge of prosperity. — Ten millions of people depending on them for a living. — Suggestions upon consolidation. — Hints for the regulation of directors. — President Ingalls's views on the evils of railroad management.

Chapter V

Management of our Industrial Enterprises .... 26 The relation of the financial management of these institutions to their success or failure. — They should be compelled to make periodical statements of their condition as quasi-public concerns. — The origin of corporations and their beneficent purposes. — They are powerful in the present day, if properly managed, for the production of wealth and the promotion of the best interests of society. — A public and periodical system recommended for the examination of accounts by experts trained for the purpose. — Under proper management, the whole community might share in the great advantages which these industrials are capable of conferring on the public at large.

Chapter VI

Trusts are transformed into corporations and doing business legally. — How corporations with large aggregations of capital make everything cheaper for consumers and purchasers generally. — Amazing decline in prices and railroad rates, while

CONTENTS. V

PAGE

wages are higher than ever and the number of employes increased. — The power of consolidations and corporations for increasing wealth, national and private, and for making everybody more prosperous. — Interesting confession of F. B. Thurber, the ci-devant anti-monopolist. — He gives cogent reasons for his change of heart, and shows the great benefits corporations confer upon the people. — Farmers and cottongrowers more prosperous than ever, and why. — Cooperation the coming power in the competitive struggle, which will also solve the problem of socialism. — Enough of remedial legislation already provided to give relief in almost any supposable case.

CHAPTER VII. The Art of making and saving Money 44

Opportunities for making money numerous. — How to embrace them, and how to begin the work of accumulation. — It is easier to make than to save money. — The small beginnings of prominent millionaires, and how they made their fortunes. — Industry, perseverance, honesty, and thrift must be associated with the methods of all who aspire to success in life. — Necessity has been the great stimulus in the eminent examples here cited. — Prudence, forethought, and sage advice required for successful investment. — Begin right, early in life.

Chapter VIII

How the business prospects of young men of the present day compare with those of twenty-five or fifty years ago. — A much better start in life possible now than then, as proved by historical facts. — The young man of to-day as compared with his grandfather at the same age. — How millionaires of old were made, and how young men now want to become millionaires by jumping over the intermediary steps and omitting the hard work. — Certain delusions about business success criticised, and some cordial advice vouchsafed. — Opinions old and new on college and classical education, and the value thereof in a business career. — Macaulay's views.

vi CONTENTS.

CHAPTER IX. False Men and Methods on the Street 59

Modern and ancient opinion on this subject compared. — How it manifests itself in Wall Street affairs. — The inherent capacity to resist the evil tendency. — Fortunes that are made by degenerates and regenerates contrasted.

Chapter X

The causes which generally give origin to panics described. — How these great upheavals in business and finance may be partially avoided, and their consequences alleviated when they do occur. — Greater elasticity in the methods of banking required to enable the banks to meet emergencies. — These institutions have in recent years done well when not handicapped bylaw. — They should be permitted to make more liberal use of their reserve to relieve financial distress. — How banks and business men should cooperate in times of impending crisis. — The forecast of the panic of 1893.

Part II. Wall Street And The Government

CHAPTER XL

Washington Domination in Finance, Speculation, and -Business 74 Some inquiry into its nature. — Assumes the complexion of a centralizing bureau of financial information with a censorship attachment. — The attempt of the political power to override the financial a failure. — All financial roads lead to Wall Street. — New York destined to be the world's center of finance. — Politics cannot rule finance except on a very broad basis. — Some sapient object lessons from the Constitution in their application to statesmanship, politics, and finance. — Justice Story's opinions of the duties of a President in giving information and counsel to Congress. — The immense power of the President in these matters, and the requisite qualifications to enable him to advise. — His great and varied responsibility. — The " duty of a President" is more than "executive." — A nice distinction be-

CONTENTS. vii

PAGE

tween advice and the power of initiating measures in Congress.

— The object lesson for the people in the Washington domination, and its issue.

Chapter XII

Qualifications indispensable for the highest office in the land.

— Neither a towering genius nor an offensive partisan fit for the position. — The ultimate and crucial test of the popularity of a President, and his consequent success, is the material prosperity of the country. — He has to bear the brunt of bad times, no matter how able and good he may be. — Failure of Webster, Clay, and Calhoun to reach the goal of their ambition. — The nation sensitive on a President's errors in finance and currency. — Parallel between Jackson and Cleveland. — Origin of the national banking system.

CHAPTER XIII. The Cleveland Administration — First Term .... 92

An excellent beginning with the best intentions. — Large promises, but small performances. — Purposes regarding Civil Service Reform. — The theory was Jeffersonian, but the condition was Jacksonian. — The famous "Tariff Message" of Mr. Cleveland. — "A condition, not a theory." — How the purchase of a yard of calico confounds his theory and pet arguments in favor of free trade. — Mr. Cleveland's free-trade principles would bestow our home markets on foreign manufacturers and reduce our own workmen to indigence.

CHAPTER XIV. The Harrison Administration 98

Its influence on some of the consequences of the Baring panic. — The absence of "Jingoism" was a conspicuous feature of the Harrison regime. — Harrison as an orator. — His Western trip compared with the Eastern trip of Bryan. — His astonishing familiarity with all the States and their conditions, arid his magnetic power over audiences, as displayed in Western cities.

— A thorough politician and a far-seeing statesman. — His cooperation with James G. Blaine in devising the wise policy of reciprocity which was spoiled by the Democrats.

viii CONTENTS.

Chapter XV. Page

Mr. Cleveland's Second Administration 103

How Mr. Cleveland acquired the character of an independent candidate. — Success of his fiscal policy, especially regarding the surplus revenue and the depository banks. — Making himself " solid " with bankers and financiers. — How it was that he was beaten by Harrison in 1888, but vanquished him in 1892. — How he lost his popularity by the irreparable errors of the two object lessons. — Remarks on his sound money views and his indomitable perseverance. — Utterly failed to understand the tariff question.

CHAPTER XVI. Ex-President Cleveland Personally considered . . .114

The theory of his potent personality, and an attempt to unravel the secret of his success through this mysterious power and other potentialities. — Striking a balance between his praiseworthy acts and some of his mistakes. — How he is likely to be rated by the future historian and biographer. — His name stamped indelibly on the politics of his own times. — His unflinching advocacy of sound money. — He drew men of all shades of politics after him and was independent of party. — Why he drew so many heterogeneous elements. — Comparison with Macaulay's " Machiavelli." — His prompt and popular action in suppressing the Chicago riots and causing the overthrow of Eugene V. Debs. — His advice to the Democratic party.

CHAPTER XVII. Significance of the Wilson Tariff Law 123

Intended to wipe out every vestige of Republican tariff legislation. — How the law has proved a boomerang, and deprived the Democrats of a return to power for a long period. — How men accustomed only to little places and little interests cannot be expected to deal with big matters.

CONTExNTS. ix

Chapter XVIII. Page

A Batch of Legacies 128

Devised and bequeathed to the Democratic party by the last will and testament of the last Democratic Congress. — The unfinished business of eight years of hard and anxious work in the White House. — Lincoln's views on the Constitution and the tariff.

Chapter XIX

The invaders of our home markets repulsed. — Foreign manufacturers and the products of their pauper labor not in demand. — Definitions of revenue tariff and protective tariff. — The latter fairly provided for in the Dingley Bill, and wool restored to the farmers. — Home markets in preference to foreign. — How McKinley humorously caught the clothier member for Boston on the cheap clothing argument. — Home capital and home labor will get a chance for development, and the time of prosperity has come. — Practical outcome of the protection and free-trade doctrines considered. —The testimony on this subject of two eminent witnesses, James Buchanan and Grover Cleveland.

Chapter XX

The immense showing of our foreign trade for the fiscal year ending June 30, 1898. — Our balance of trade far ahead of that of other years and twice the amount of any previous record. — This has been achieved under a protective tariff which free-traders thought was going to ruin the country. — Flow it tallies with the free-trade doctrine of the Cobden Club and that of its representatives in this country. — The immense increase in the exports of our manufactured goods. — Our wealth increases as our imports diminish, and as our exports increase. — We saved in 1898 an amount of money greater by half a billion of dollars than the national debt at the close of the Civil War by the much maligned protective tariff. — The greatest profitable import to us was gold, of which we had a balance of $105,000,000 for the year.

X CONTENTS.

Chapter XXI. Page

Retrospects and Prospects 155

Certain comments and predictions about free-trade legislation and an answer to charges of pessimism. — Analysis of past legislation in its practical outcome, and the prospective hopes of the operation of the measures now gone into effect.

CHAPTER XXII. The Trans-Missouri Case 160

A ruinous decision of the Supreme Court of the United States. — Destructive influence on values and a blow to general business. — A pool law wanted that will ensure railroad and business prosperity.

CHAPTER XXIII. The Laws relating to Trusts, Corporations, and Railroads 169

A better administration of these laws needed. — Safeguards of corporations, and a comparison of ours with those of foreign countries. — The railroad situation and the Supreme Court decision. — Views on the subject. — The pooling question and business interests. — A new law to regulate railroad rates and to define a violation of railroad law indispensable.

CHAPTER XXIV. Currency Legislation 179

Beneficent effect of the New Currency Law. — Our improved credit shown by our new two per cent, bonds at a premium. — Gold now our unequivocal standard of value. — Baneful effects of previous uncertainty as to our standard. — Advantage to trade and to money-movement of the extension of national banks. — Good effect of the gold enactment on the value of American securities abroad. — The surprising and dazzling era of business prosperity into which the world is entering.

Chapter XXV

A review of the subject prior to the great presidential campaign which resulted in the maintenance of the gold standard.

CONTENTS. xi

PAGE

— Bryan's great coup at the Chicago convention, which he carried by the power of plagiarism from the old play of " Jack Cade." — The deadly parallel of the two comedians. — A decent respect for old plays to be encouraged. — The theory of an international agreement discussed, and the theory of national free coinage of silver shown to be erroneous and fraught with national danger. — The effect upon international trade would be disastrous. — A plan proposed for an international currency that would greatly facilitate business operations in all channels of trade and commerce and vastly aid the progress of prosperity in this country. — What is left of the silver issue to-day.

CHAPTER XXVI. President McKinley's Policy and the Nation's Future . 194

A resume of the policy of the present administration as outlined in the inaugural address of the President speaking for himself and his party. — The keynote of his policy is, first, sufficient revenue to run the government. — Afterward a commission on the currency question. — The wisdom of McKinley's policy in putting revenue and tariff reform before the currency.

— Revision, not revolution, of the tariff. — The government to remain in the banking business, but the currency to be taken out of politics and remodeled without reducing the volume. — Industrial interests and the rights of labor to be guarded against foreign invasion.

Chapter XXVII

No room for jealousy where political equality, by virtue of the Declaration of Independence and of the Constitution, exists. — - Sectional hostilities and class animosities should net be fostered but suppressed. — Erroneous logic of those who want to get rich quickly. — The evil influence of communism and socialism on the body politic. — Geographical discriminations to be repudixii CONTENTS.

PAGE

ated. — George Washington's opinion on the subject. — The question of the distribution of wealth and its rapid progress in the distribution of large fortunes. — If monopolies rule, whose fault is it ? — Accumulation of capital in the hands of a few, and how the socialistic remedy would work. — Advice to those who want to get rich rapidly. — Victims of soaring ambition. — How the Gould and Vanderbilt estates are distributed effectually without the aid of the socialists.

CHAPTER XXVIII. A Question of Good Citizenship 215

How do wealthy men compare with others as good citizens?

— Conditions that antagonize good citizenship. — The character and influence of the money hoarder and the absentee analyzed.

— Decline in the rate of interest and of faith in the security of property one of the most important questions of the day.

CHAPTER XXIX. Labor Unions and Arbitration 222

Even if there should be nothing to arbitrate, the arbitration will satisfy public opinion. — Strikes should be a last resort only against unbearable grievances. — How arbitration works in Stock Exchange affairs. — The public are victims of the quarrels which they are innocent of provoking. — Cooperation the true method of escaping the despotism of " bosses " and improving the condition of labor.

Chapter XXX

Several species of this genus, including socialists, nihilists anarchists, and communists. — A retrospect of their plans and purposes for the regeneration of mankind and the reconstruction of society, after going through a few preliminaries, such as the suppression of rulers and the extinction of capitalists. — According to the programme the scheme will imply wholesale assassinations and universal plunder to begin with. — After purposes indefinite. — A problem for the socialistic reformers as preliminary to success

CONTENTS. xiii

Chapter XXXI. Page

For the regeneration of society. — A closer examination of the remedies which the various destructive fraternities entitled to this common appellation propose for the inequalities complained of, and how they would work in practice. — Where will they get the men to help them to demolish the thrones and break up present political organizations ? — They could put down the present tyranny only by establishing a greater. — Failure of all previous attempts to establish communities. — Our ballot-box and existing laws are ample to maintain the strictest equality, to remedy all wrongs and redress all grievances.

Chapter XXXII

Some reflections on the horrors of war. — How it ruins material prosperity and degrades humanity. — Remarks on the efforts of the six European powers to put Europe on a peace footing. — The favorable influence which the success of the movement would exercise on trade and commerce. — Plans for an Anglo- American reunion discussed. — Captain Mahan's views. — A defensive alliance of all civilized nations against a possible invasion of barbarians.

CHAPTER XXXIII. The Baring Failure 252

The true story of the cause of that astounding collapse told for the first time. — The great Baring boom, and what the scaling down of the interest on British consols had to do with it. — The Duke of Marlborough's hand in it. — Sensational acts of the hypnotic gentleman who captivated the Argentine beauty, and through her captured all the Barings' business in the South American Republic. — Magnificent executive ability displayed xiv CONTENTS.

PAGE

by Mr. Lidderdale in the rehabilitation of the firm. — Amazing gratitude of the benevolent friend who assisted Lord Revelstoke with the five million dollars. — The future money center of the world.

Chapter XXXIV

This panic one of the most far-reaching and most disastrous in its consequences. — It was a surprise, and hence its great power for mischief, especially at a time when prosperity was just under way. — An utter collapse of credit, both foreign and domestic, aggravated by foreign holders returning our securities.

— The Monroe Doctrine, and how President Cleveland construed it. — Simply an outburst of honest but overweening patriotism on his part. — His misapprehensions regarding the nature of so-called international law, and what constitutes a casus belli. — The President's just cause for offense at Salisbury's hauteur, but the Monroe Doctrine not applicable to the case.

— How the message and its consequences played into the hands of the free- silver faction and helped to make the candidacy of Bryan possible.

CHAPTER XXXV. Our Nation's Credit . . . 272

Why should not this credit, as illustrated in the market value of our bonds, be on as high a plane as the credit of other nations? A plea for the Sherman Silver Law, and how it was instrumental in tiding the financial world over the Baring panic.

— A brief retrospect of bond issues and cognate subjects of national interest.

Chapter XXXVI

The influence of our recent victories on the minds and purposes of other nations. — Significance of the Czar's note on disarmament. — Was our war with Spain justifiable? — The part played by the President and Congress in the war. — The problem of our new possessions. — What shall we do with them?

THIS BOOK

Eg IkgpectMlg Engcrtbeli

TO THOSE

ABLE STATESMEN, POLITICIANS, FINANCIERS, AND MEN OF AFFAIRS,

TO WHOSE CONSTANT GUIDANCE IS DUE THE ADVANCEMENT OF OUR COUNTRY ALONG EVER-WIDENING PATHS OF

THE WALL STREET POINT OF VIEW.

Chapter I. Wall Street As A Gauge Of Business Prosperity

What it is : its area, population, and institutions. — The difference between natural and artificial conditions, the latter being the false standard of judgment by outsiders. — People decry Wall Street speculation without a correct knowledge of its character. — The Street is not a gambler's paradise, but a place where hard, honest w T ork tells. — It is a public benefactor and once, at least, saved the country. — The center to which the surplus money of the world flows for investment.

THE district known as Wall Street embraces more wealth in proportion to area than any other space of similar dimensions in the world. Considering even the mere thoroughfare known by that name and extending from Trinity Church to the East River, the same assertion holds good. This latter limit is the one mentally placed by the great majority of our people upon the financial heart of the country, that throbs with the daily ebb and flow of millions, infusing life into all our vast enterprises.

The Wall Street region includes in its wealthy grasp the large majority of New York banks and other financial institutions, including savings banks. It is the great center of the insurance companies, life, fire, and marine ; of the great Trust Companies which command thousands of millions of capital, and are the custodians of many of the largest and most wealthy estates in the country. Finally, the region known as Wall Street has virtually a contingent population of three millions, which is just about the census record of the thirteen original states when they cut loose from Great Britain and asserted their independence. In addition to the financial institutions as above stated, Wall Street has banks with large capital connected with all foreign nations. China, no less that the comparatively contiguous London, is represented by banking institutions here.

It has been the habit of too many people — well-meaning people, too — to decry Wall Street as hurtful to the morals of the country and injurious to our best business interests, — all of which is mistaken. Wall Street has been very aptly described as the " business pulse of the nation," and that is what it is, in the truest sense of the term. As the mercury in the thermometer denotes the degrees of heat and cold, so do the fluctuations in the Wall Street markets show the rise and fall of the business activity of the country. Let there be any activity in mercantile or manufacturing circles, and it is immediately reflected in the Stock Exchange and the other exchanges where values are dependent upon business activity and financial confidence. On the other hand, causes that influence the outside world unfavorably have a depressing effect in Wall Street, and the prices of securities and products take a lower turn. These are the results when natural conditions are allowed to prevail. Of course there are times when speculative syndicates get control, and by their manipulations create artificial conditions and artificial results. Then it is that panics are liable to occur; in fact, I doubt if there has ever been a panic in Wall Street that was not due to the work of such manipulations. Wall Street is a place where the laws of cause and effect are conspicuously potent, and it is as impossible for any combination of men to resist these laws without making trouble as it is for a human being to defy the forces of nature. An irreverent operator in grain speculations, commenting once on the failure of a pool to put up the price of wheat and maintain it in the face of a big crop, said, "It is of no use trying to buck against God Almighty ; he can upset the bulls every time."

To the student of affairs there is more suggestive truth expressed in these few terse words of a disappointed speculator

WALL STREET A GAUGE OF PROSPERITY. 3

than in whole columns of the tirades preached against Wall Street's ways by those ministers who have only a superficial idea of the subject they are talking about. Wall Street is not a gambler's paradise. There is no place in the business world where more hard work, closer calculation, keener insight into affairs, and philosophical and conservative conclusions are required than in the offices of its bankers and brokers ; there is no class of men who watch events more closely than the operators in its markets. In the stress of war times it has been to Wall Street that the government turned for help. It was from Wall Street that the assistance once came which made a continuance of the government even a possibility, and it has always been ready to respond to any call, when financial or business problems were to be met and solved. It is very true that men have taken a gambling advantage of opportunities afforded by this great market, but these are not the men who have made it reflective of the business prosperity, not only of this country but of other countries, — a place where surplus money from all over the world flows for investment in the securities of the corporations which are dependent upon the material development of the United States of America — the greatest land under God's sunlight. No, we cannot do without Wall Street.

How would our one hundred and eighty thousand miles of railroads have been constructed without Wall Street? These great pioneers of development, prosperity, and civilization would have remained exceedingly limited in their extent and scope if the bonds to build them had not been negotiated by Wall Street financiers. Think of the fertile lands that have thus been thrown open to millions from all nations of the globe, and the enormous increase of wealth that has followed this opening of vast national resources. Then again, look at the army of wellpaid employes connected with the railroads themselves, who, together with those who work in the interdependent trades, — railroad building, car building, and railroad supplies of every description, — amount to nearly two millions. While it is unfortunately true, as I have pointed out in my book, " Twenty-eight

Years in Wall Street," and in other publications, that disreputable railroad projectors and managers have, especially through the medium of construction companies, made railroads the means to their dishonest ends ; yet in spite of such abuses this vast railroad system, advanced and supported by Wall Street capital, has been the chief instrument for a national increase which has no historic parallel.

Not only is Wall Street indispensable to this country, but foreign nations also are feeling the benefit of its operations more and more every year. The London Stock Exchange and the Paris and Berlin Bourses would suffer if the New York Stock Exchange were to be closed for a week or even for a day ; the progress of great industries dependent on them would languish just as surely as our own railroad, telegraph, and other enterprises would suffer in the failure of the great financial fountain from which they draw their invigorating tonic. Enterprise everywhere would be depressed as if seized by a sort of financial paralysis. What folly is this enmity toward Wall Street ! Let us condemn and cut off its evil, parasitic growths, but let us recognize and glory in the fact that this great financial center is fast approaching the point at which it is destined to become the enormous clearing house of the world's enterprises and industries. In the course of evolution and a higher civilization we might be able to get along comfortably without Congress, but without Wall Street, never.

Chapter II. The Study Of The Stock Market

The power of speculative fascination over a large number of people. — Bad results of adopting second-hand opinions. —The laws of speculation and investment must be studied profoundly. — Fact and rumor should be carefully distinguished. — Hard study of facts and realities generally leads to sound and accurate conclusions. — It is also necessary to study the circumstances and events which cause real values to fluctuate. — How natural laws eventually regulate values and reduce inflated ones to their true basis.

ANYTHING that is worth doing is worth doing well. In order to do anything well, one must study the subject thoroughly, not necessarily in books, because books are, except as to the laying down of principles, rather unsatisfactory teachers.

The stock market is a most fruitful and fascinating field of study. It attracts more influential and well-to-do men than any other arena of activity in American life, and of course a great deal of study is bestowed upon it. The reasons why the results of so much study are not always commensurate with the labor and time employed are numerous. Some of them are substantially as follows : —

People have preconceived notions. They are not willing to clear their minds of existing theories and bring themselves down to close dealing with facts. They are apt to base their conclusions on the opinions of others. Now, opinions as to the value of anything are sure to differ, and opinions as to future values differ still more widely, just as the spokes of a wheel are wider apart as you travel away from the hub. When you reach out into the future, you are getting away from the hub of the present. People are usually unwilling to act on conclusions that conflict with their desires, and that involve the acceptance of immediate losses. They resemble the wounded man who refuses to let the surgeon cut off his leg when he is told that amputation will probably save his life. They are apt to study in a superficial manner, without thoroughness, using scraps and smatterings of knowledge when even the most exact information is hardly sufficient.

Other reasons could be adduced, but they might be needless. A certain king excused the municipality of a town that neglected to fire a salute in his honor on their giving him the first one of fifty good reasons, — that they had no powder. The other forty-nine were suffered to remain undivulged. Enough reasons have been given here to explain why so many people fail to study the stock market successfully.