New York - The Novel

commanding eyes like the headlights of an oncoming train, Mr. J. P. Morgan was becoming a legend in his own time. It was J. P. Morgan and a few men like him who were the kings of Wall Street now, and because of them, even a substantial merchant like Frank Master no longer felt comfortable there. For the bankers’ deals and industrial combinations were growing so large, the sums of money involved so vast, that fellows like Master weren’t of much account any more. The bankers didn’t buy and sell goods; they bought and sold businesses. They didn’t finance voyages; they financed wars, industries, even small countries.
    Oh, Morgan might serve on the same vestry; Frank might meet him socially in the same New York houses. But Morgan’s game was too big for him, and they both knew it. Frank found the fact humbling. And no man cares to be humbled.
    But bankers were interested in railroads. Railroads were big enough.
    Mr. Morgan himself was active in railroads—he’d placed huge quantities of the best railroad stock with London investors.
    But now, Mr. Morgan had decided that it was time to sort out the chaos. Like a monarch faced with a land of barbarian warlords, he had called the railroad men to his house to try to end the warfare and bring order to the competing lines. And he was beginning to make progress. There was still time, however, for the unruly railroad barons to make some spectacular raids.

    “I’ve reason to believe that there’s going to be a fight for control of the railroad,” Master explained. “If there is, one of the parties is going to try to buy more shares. But unless I sell, there won’t be enough out there in the market for him to buy. And that shortage will drive the price of my shares up.”
    “Sounds good to me,” said his son.
    “I’m intending to do nothing. Let the price rise. But if it gets high enough, I may sell—at least some of them.”
    “You don’t care who controls the railroad?”
    “I don’t give a damn. Question is, am I breaking any laws?”
    Tom Master considered. “From what you’ve told me, I’d say it’s fine. Is there anything else I need to know?”
    “One of the parties wants me to hold off selling, to drive the market up. He wants the other fellow to buy him out, but for a high price.”
    “Hmm. Is he paying you?”
    “No.”
    “Then I’d say it depends what else he does, and what else you know. There are rules in the game these days.” Tom smiled. “We bankers are trying to bring some order to the market.”
    We bankers: Tom was so proud of being a banker. He worshipped Morgan—even had a roll-top desk like his hero. But you couldn’t blame him. And if the bankers were taking the moral high ground and telling everyone how to behave, you couldn’t deny that they had a point.
    The fact was, Frank thought, when you looked back over the last few decades, for most of his own lifetime really, the New York Stock Exchange had hardly been a respectable place. If the railroad show had been a big attraction, the stock market had been the fairground. You could get away with almost anything.
    The easiest ploy was to control a company. Men like Jay Gould would cheerfully issue new stock without even telling existing shareholders, taking new money from new shareholders while diluting the stock values of the old ones. Watering the stock, they called it. You could set up new companies to buy the old ones until nobody knew what the hell they had. You could buy politicians to vote for concessions that would favor your business, and give them shares for doing it. Above all, you could manipulate the price of the stock of your own company, and then speculate in its shares.
    But solid men like Morgan were insisting on new rules, now. The market was being cleaned up—slowly.
    “The thing that’s most frowned upon at the moment,” said Tom, “is companies manipulating their own stock. For instance, a company offers to sell you a parcel of its stock at a discounted price. Then, by whatever manipulations, the company deliberately makes its own stock seem worthless. So it can satisfy your order by buying its own stock at a rock-bottomprice. A week later, the artificial panic’s over, and the company’s made an extra profit. Some companies have done that sort of thing again and again. And of course, when brokers start placing bets on stock-price movements, they can get badly burned by these games. Gabriel Love is one of the great offenders. Do you know