Chapter VI: Part 6

In cotton I was very successful in my trading for a long time. I had my theory about it and I absolutely lived up to it. Suppose I had decided that my line would be forty to fifty thousand bales. Well, I would study the tape as I told you, watching for an opportunity either to buy or to sell. Suppose the line of least resistance indicated a bull movement. Well, I would buy ten thousand bales. After I got through buying that, if the market _went up ten points over my initial purchase price, I would take on another ten thousand bales_. Same thing. Then, if I could get twenty points’ profit, or one dollar a bale, I would buy twenty thousand more. That would give me my line--my basis for my trading. But if after buying the first ten or twenty thousand bales, it showed me a loss, out I’d go. I was wrong. It might be I was only temporarily wrong. But as I have said before _it doesn’t pay to start wrong in anything_.

What I accomplished by sticking to my system was that I always had a line of cotton in every real movement. In the course of accumulating my full line I might chip out fifty or sixty thousand dollars in these feeling-out plays of mine. This looks like a very expensive testing, but it wasn’t. After the real movement started, how long would it take me to make up the fifty thousand dollars I had dropped in order to make sure that I began to load up at exactly the right time? No time at all! _It always pays a man to be right at the right time._

As I think I also said before, this describes what I may call my system for placing my bets. It is simple arithmetic to prove that it is a wise thing to have the big bet down only when you win, and when you lose to lose only a small exploratory bet, as it were. If a man trades in the way I have described, he will always be in the profitable position of being able to cash in on the big bet.

Professional traders have always had some system or other based upon their experience and governed either by their attitude toward speculation or by their desires. I remember I met an old gentleman in Palm Beach whose name I did not catch or did not at once identify. I knew he had been in the Street for years, way back in Civil War times, and somebody told me that he was a very wise old codger who had gone through so many booms and panics that he was always saying there was nothing new under the sun and least of all in the stock market.

The old fellow asked me a lot of questions. When I got through telling him about my usual practice in trading he nodded and said, “Yes! Yes! You’re right. The way you’re built, the way your mind runs, makes your system a good system for you. It comes easy for you to practice what you preach, because the money you bet is the least of your cares. I recollect Pat Hearne. Ever hear of him? Well, he was a very well-known sporting man and he had an account with us. Clever chap and nervy. He made money in stocks, and that made people ask him for advice. He would never give any. If they asked him point-blank for his opinion about the wisdom of their commitments he used a favorite race-track maxim of his: ‘You can’t tell till you bet.’ He traded in our office. He would buy one hundred shares of some active stock and when, or if, it went up 1 per cent he would buy another hundred. On another point’s advance, another hundred shares; and so on. He used to say he wasn’t playing the game to make money for others and therefore he would put in a stop-loss order one point below the price of his last purchase. When the price kept going up he simply moved up his stop with it. On a 1 per cent reaction he was stopped out. He declared he did not see any sense in losing more than one point, whether it came out of his original margin or out of his paper profits.

“You know, a professional gambler is not looking for long shots, but for sure money. Of course long shots are fine when they come in. In the stock market Pat wasn’t after tips or playing to catch twenty-points-a-week advances, but sure money in sufficient quantity to provide him with a good living. Of all the thousands of outsiders that I have run across in Wall Street, Pat Hearne was the only one who saw in stock speculation merely a game of chance like faro or roulette, but, nevertheless, had the sense to stick to a relatively sound betting method.

“After Hearne’s death one of our customers who had always traded with Pat and used his system made over one hundred thousand dollars in Lackawanna. Then he switched over to some other stock and because he had made a big stake he thought he need not stick to Pat’s way. When a reaction came, instead of cutting short his losses he let them run--as though they were profits. Of course every cent went. When he finally quit he owed us several thousand dollars.

“He hung around for two or three years. He kept the fever long after the cash had gone; but we did not object as long as he behaved himself. I remember that he used to admit freely that he had been ten thousand kinds of an ass not to stick to Pat Hearne’s style of play. Well, one day he came to me greatly excited and asked me to let him sell some stock short in our office. He was a nice enough chap who had been a good customer in his day and I told him I personally would guarantee his account for one hundred shares.

“He sold short one hundred shares of Lake Shore. That was the time Bill Travers hammered the market, in 1875. My friend Roberts put out that Lake Shore at exactly the right time and kept selling it on the way down as he had been wont to do in the old successful days before he forsook Pat Hearne’s system and instead listened to hope’s whispers.

“Well, sir, in four days of successful pyramiding, Roberts’ account showed him a profit of fifteen thousand dollars. Observing that he had not put in a stop-loss order I spoke to him about it and he told me that the break hadn’t fairly begun and he wasn’t going to be shaken out by any one-point reaction. This was in August. Before the middle of September he borrowed ten dollars from me for a baby carriage--his fourth. He did not stick to his own proved system. That’s the trouble with most of them,” and the old fellow shook his head at me.

And he was right. I sometimes think that speculation must be an unnatural sort of business, because I find that the average speculator has arrayed against him his own nature. The weaknesses that all men are prone to are fatal to success in speculation--usually those very weaknesses that make him likable to his fellows or that he himself particularly guards against in those other ventures of his where they are not nearly so dangerous as when he is trading in stocks or commodities.

_The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear._ In speculation when the market goes against you you hope that every day will be the last day--and you lose more than you should had you not listened to hope--to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out--too soon. _Fear keeps you from making as much money as you ought to._ The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. _Instead of hoping he must fear; instead of fearing he must hope._ He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. _It is absolutely wrong to gamble in stocks the way the average man does._

I have been in the speculative game ever since I was fourteen. It is all I have ever done. I think I know what I am talking about. And the conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market! A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market. It’s like the track. A man may beat a horse race, but he cannot beat horse racing.

If I knew how to make these statements stronger or more emphatic I certainly would. It does not make any difference what anybody says to the contrary. I know I am right in saying these are incontrovertible statements.

_XI_

And now I’ll get back to October, 1907. I bought a yacht and made all preparations to leave New York for a cruise in Southern waters. I am really daffy about fishing and this was the time when I was going to fish to my heart’s content from my own yacht, going wherever I wished whenever I felt like it. Everything was ready. I had made a killing in stocks, but at the last moment corn held me back.

I must explain that before the money panic which gave me my first million I had been trading in grain at Chicago. I was short ten million bushels of wheat and ten million bushels of corn. I had studied the grain markets for a long time and was as bearish on corn and wheat as I had been on stocks.

Well, they both started down, but while wheat kept on declining the biggest of all the Chicago operators--I’ll call him Stratton--took it into his head to run a corner in corn. After I cleaned up in stocks and was ready to go South on my yacht I found that wheat showed me a handsome profit, but in corn Stratton had run up the price and I had quite a loss.

I knew there was much more corn in the country than the price indicated. The law of demand and supply worked as always. But the demand came chiefly from Stratton and the supply was not coming at all, because there was an acute congestion in the movement of corn. I remember that I used to pray for a cold spell that would freeze the impassable roads and enable the farmers to bring their corn into the market. But no such luck.

There I was, waiting to go on my joyously planned fishing trip and that loss in corn holding me back. I couldn’t go away with the market as it was. Of course Stratton kept pretty close tabs on the short interest. He knew he had me, and I knew it quite as well as he did. But, as I said, I was hoping I might convince the weather that it ought to get busy and help me. Perceiving that neither the weather nor any other kindly wonder-worker was paying any attention to my needs I studied how I might work out of my difficulty by my own efforts.

I closed out my line of wheat at a good profit. But the problem in corn was infinitely more difficult. If I could have covered my ten million bushels at the prevailing prices I instantly and gladly would have done so, large though the loss would have been. But, of course, the moment I started to buy in my corn Stratton would be on the job as squeezer in chief, and I no more relished running up the price on myself by reason of my own purchases than cutting my own throat with my own knife.

Strong though corn was, my desire to go fishing was even stronger, so it was up to me to find a way out at once. I must conduct a strategic retreat. I must buy back the ten million bushels I was short of and in so doing keep down my loss as much as I possibly could.

It so happened that Stratton at that time was also running a deal in oats and had the market pretty well sewed up. I had kept track of all the grain markets in the way of crop news and pit gossip, and I heard that the powerful Armour interests were not friendly, marketwise, to Stratton. Of course I knew that Stratton would not let me have the corn I needed except at his own price, but the moment I heard the rumors about Armour being against Stratton it occurred to me that I might look to the Chicago traders for aid. The only way in which they could possibly help me was for them to sell me the corn that Stratton wouldn’t. The rest was easy.

First, I put in orders to buy five hundred thousand bushels of corn every eighth of a cent down. After these orders were in I gave to each of four houses an order to sell simultaneously fifty thousand bushels of oats at the market. That, I figured, ought to make a quick break in oats. Knowing how the traders’ minds worked, it was a cinch that they would instantly think that Armour was gunning for Stratton. Seeing the attack opened in oats they would logically conclude that the next break would be in corn and they would start to sell it. If that corner in corn was busted, the pickings would be fabulous.

My dope on the psychology of the Chicago traders was absolutely correct. When they saw oats breaking on the scattered selling they promptly jumped on corn and sold it with great enthusiasm. I was able to buy six million bushels of corn in the next ten minutes. The moment I found that their selling of corn ceased I simply bought in the other four million bushels at the market. Of course that made the price go up again, but the net result of my manœuvre was that I covered the entire line of ten million bushels within one-half cent of the price prevailing at the time I started to cover on the traders’ selling. The two hundred thousand bushels of oats that I sold short to start the traders’ selling of corn I covered at a loss of only three thousand dollars. That was pretty cheap bear bait. The profits I had made in wheat offset so much of my deficit in corn that my total loss on all my grain trades that time was only twenty-five thousand dollars. Afterwards corn went up twenty-five cents a bushel. Stratton undoubtedly had me at his mercy. If I had set about buying my ten million bushels of corn without bothering to think of the price there is no telling what I would have had to pay.

A man can’t spend years at one thing and not acquire a habitual attitude towards it quite unlike that of the average beginner. The difference distinguishes the professional from the amateur. It is the way a man looks at things that makes or loses money for him in the speculative markets. The public has the dilettante’s point of view toward his own effort. The ego obtrudes itself unduly and the thinking therefore is not deep or exhaustive. The professional concerns himself with doing the right thing rather than with making money, knowing that the profit takes care of itself if the other things are attended to. A trader gets to play the game as the professional billiard player does--that is, he looks far ahead instead of considering the particular shot before him. It gets to be an instinct to play for position.

I remember hearing a story about Addison Cammack that illustrates very nicely what I wish to point out. From all I have heard, I am inclined to think that _Cammack_ was one of the ablest stock traders the Street ever saw. He was not a chronic bear as many believe, but he felt the greater appeal of trading on the bear side, of utilizing in his behalf the two great human factors of hope and fear. He is credited with coining the warning: “Don’t sell stocks when the sap is running up the trees!” and the old-timers tell me that his biggest winnings were made on the bull side, so that it is plain he did not play prejudices but conditions. At all events, he was a consummate trader. It seems that once--this was way back at the tag end of a bull market--Cammack was bearish, and J. Arthur Joseph, the financial writer and raconteur, knew it. The market, however, was not only strong but still rising, in response to prodding by the bull leaders and optimistic reports by the newspapers. Knowing what use a trader like Cammack could make of bearish information, Joseph rushed to Cammack’s office one day with glad tidings.

“Mr. Cammack, I have a very good friend who is a transfer clerk in the St. Paul office and he has just told me something which I think you ought to know.”

“What is it?” asked Cammack listlessly.

“You’ve turned, haven’t you? You are bearish now?” asked Joseph, to make sure. If Cammack wasn’t interested he wasn’t going to waste precious ammunition.

“Yes. What’s the wonderful information?”

“I went around to the St. Paul office to-day, as I do in my news-gathering rounds two or three times a week, and my friend there said to me: ‘The Old Man is selling stock.’ He meant William Rockefeller. ‘Is he really, Jimmy?’ I said to him, and he answered, ‘Yes; he is selling fifteen hundred shares every three-eighths of a point up. I’ve been transferring the stock for two or three days now.’ I didn’t lose any time, but came right over to tell you.”

Cammack was not easily excited, and, moreover, was so accustomed to having all manner of people rush madly into his office with all manner of news, gossip, rumors, tips and lies that he had grown distrustful of them all. He merely said now, “Are you sure you heard right, Joseph?”

“Am I sure? Certainly I am sure! Do you think I am deaf?” said Joseph.

“Are you sure of your man?”

“Absolutely!” declared Joseph. “I’ve known him for years. He has never lied to me. He wouldn’t! No object! I know he is absolutely reliable and I’d stake my life on what he tells me. I know him as well as I know anybody in this world--a great deal better than you seem to know me, after all these years.”

“Sure of him, eh?” And Cammack again looked at Joseph. Then he said, “Well, you ought to know.” He called his broker, W. B. Wheeler. Joseph expected to hear him give an order to sell at least fifty thousand shares of St. Paul. William Rockefeller was disposing of his holdings in St. Paul, taking advantage of the strength of the market. Whether it was investment stock or speculative holdings was irrelevant. The one important fact was that the best stock trader of the Standard Oil crowd was getting out of St. Paul. What would the average man have done if he had received the news from a trustworthy source? No need to ask.

But Cammack, the ablest bear operator of his day, who was bearish on the market just then, said to his broker, “Billy, go over to the board and buy fifteen hundred St. Paul every three-eighths up.” The stock was then in the nineties.

“Don’t you mean sell?” interjected Joseph hastily. He was no novice in Wall Street, but he was thinking of the market from the point of view of the newspaper man and, incidentally, of the general public. The price certainly ought to go down on the news of inside selling. And there was no better inside selling than Mr. William Rockefeller’s. The Standard Oil getting out and Cammack buying! It couldn’t be!

“No,” said Cammack; “I mean buy!”

“Don’t you believe me?”

“Yes!”

“Don’t you believe my information?”

“Yes.”

“Aren’t you bearish?”

“Yes.”

“Well, then?”

“That’s why I’m buying. Listen to me now: You keep in touch with that reliable friend of yours and the moment the scaled selling stops, let me know. Instantly! Do you understand?”

“Yes,” said Joseph, and went away, not quite sure he could fathom Cammack’s motives in buying William Rockefeller’s stock. It was the knowledge that Cammack was bearish on the entire market that made his manœuvre so difficult to explain. However, Joseph saw his friend the transfer clerk and told him he wanted to be tipped off when the Old Man got through selling. Regularly twice a day Joseph called on his friend to inquire.

One day the transfer clerk told him, “There isn’t any more stock coming from the Old Man.” Joseph thanked him and ran to Cammack’s office with the information.

Cammack listened attentively, turned to Wheeler and asked, “Billy, how much St. Paul have we got in the office?” Wheeler looked it up and reported that they had accumulated about sixty thousand shares.

Cammack, being bearish, had been putting out short lines in the other Grangers as well as in various other stocks, even before he began to buy St. Paul. He was now heavily short of the market. He promptly ordered Wheeler to sell the sixty thousand shares of St. Paul that they were long of, and more besides. He used his long holdings of St. Paul as a lever to depress the general list and greatly benefit his operations for a decline.

St. Paul didn’t stop on that move until it reached forty-four and Cammack made a killing in it. He played his cards with consummate skill and profited accordingly. The point I would make is his habitual attitude toward trading. He didn’t have to reflect. He saw instantly what was far more important to him than his profit on that one stock. He saw that he had providentially been offered an opportunity to begin his big bear operations not only at the proper time but with a proper initial push. The St. Paul tip made him buy instead of sell because he saw at once that it gave him a vast supply of the best ammunition for his bear campaign.

To get back to myself. After I closed my trade in wheat and corn I went South in my yacht. I cruised about in Florida waters, having a grand old time. The fishing was great. Everything was lovely. I didn’t have a care in the world and I wasn’t looking for any.

One day I went ashore at Palm Beach. I met a lot of Wall Street friends and others. They were all talking about the most picturesque cotton speculator of the day. A report from New York had it that Percy Thomas had lost every cent. It wasn’t a commercial bankruptcy; merely the rumor of the world-famous operator’s second Waterloo in the cotton market.

I had always felt a great admiration for him. The first I ever heard of him was through the newspapers at the time of the failure of the Stock Exchange house of Sheldon & Thomas, when Thomas tried to corner cotton. Sheldon, who did not have the vision or the courage of his partner, got cold feet on the very verge of success. At least, so the Street said at the time. At all events, instead of making a killing they made one of the most sensational failures in years. I forget how many millions. The firm was wound up and Thomas went to work alone. He devoted himself exclusively to cotton and it was not long before he was on his feet again. He paid off his creditors in full with interest--debts he was not legally obliged to discharge--and withal had a million dollars left to himself. His comeback in the cotton market was in its way as remarkable as Deacon S. V. White’s famous stock-market exploit of paying off one million dollars in one year. Thomas’ pluck and brains made me admire him immensely.

Everybody in Palm Beach was talking about the collapse of Thomas’ deal in March cotton. You know how the talk goes--and grows; the amount of misinformation and exaggeration and improvements that you hear. Why, I’ve seen a rumor about myself grow so that the fellow who started it did not recognize it when it came back to him in less than twenty-four hours, swollen with new and picturesque details.

The news of Percy Thomas’ latest misadventure turned my mind from the fishing to the cotton market. I got files of the trade papers and read them to get a line on conditions. When I got back to New York I gave myself up to studying the market. Everybody was bearish and everybody was selling July cotton. You know how people are. I suppose it is the contagion of example that makes a man do something because everybody around him is doing the same thing. Perhaps it is some phase or variety in the herd instinct. In any case it was, in the opinion of hundreds of traders, the wise and proper thing to sell July cotton--and so safe too! You couldn’t call that general selling reckless; the word is too conservative. The traders simply saw one side to the market and a great big profit. They certainly expected a collapse in prices.

I saw all this, of course, and it struck me that the chaps who were short didn’t have a terrible lot of time to cover in. The more I studied the situation the clearer I saw this, until I finally decided to buy July cotton. I went to work and quickly bought one hundred thousand bales. I experienced no trouble in getting it because it came from so many sellers. It seemed to me that I could have offered a reward of one million dollars for the capture, dead or alive, of a single trader who was not selling July cotton and nobody would have claimed it.

I should say this was in the latter part of May. I kept buying more and they kept on selling it to me until I had picked up all the floating contracts and I had one hundred and twenty thousand bales. A couple of days after I had bought the last of it it began to go up. Once it started the market was kind enough to keep on doing very well indeed--that is, it went up from forty to fifty points a day.

One Saturday--this was about ten days after I began operations--the price began to creep up. I did not know whether there was any more July cotton for sale. It was up to me to find out, so I waited until the last ten minutes. At that time, I knew, it was usual for those fellows to be short and if the market closed up for the day they would be safely hooked. So I sent in four different orders to buy five thousand bales each, at the market, at the same time. That ran the price up thirty points and the shorts were doing their best to wriggle away. The market closed at the top. All I did, remember, was to buy that last twenty thousand bales.

The next day was Sunday. But on Monday, Liverpool was due to open up twenty points to be on a parity with the advance in New York. Instead, it came fifty points higher. That meant that Liverpool had exceeded our advance by 100 per cent. I had nothing to do with the rise in that market. This showed me that my deductions had been sound and that I was trading along the line of least resistance. At the same time I was not losing sight of the fact that I had a whopping big line to dispose of. A market may advance sharply or rise gradually and yet not possess the power to absorb more than a certain amount of selling.

Of course the Liverpool cables made our own market wild. But I noticed the higher it went the scarcer July cotton seemed to be. I wasn’t letting go any of mine. Altogether that Monday was an exciting and not very cheerful day for the bears; but for all that, I could detect no signs of impending bear panic; no beginnings of a blind stampede to cover. And I had one hundred and forty thousand bales for which I must find a market.

On Tuesday morning as I was walking to my office I met a friend at the entrance of the building.

“That was quite a story in the _World_ this morning,” he said with a smile.

“What story?” I asked.

“What? Do you mean to tell me you haven’t seen it?”

“I never see the _World_,” I said. “What is the story?”

“Why, it’s all about you. It says you’ve got July cotton cornered.”

“I haven’t seen it,” I told him and left him. I don’t know whether he believed me or not. He probably thought it was highly inconsiderate of me not to tell him whether it was true or not.

When I got to the office I sent out for a copy of the paper. Sure enough, there it was, on the front page, in big headlines:

JULY COTTON CORNERED BY LARRY LIVINGSTON

Of course I knew at once that the article would play the dickens with the market. If I had deliberately studied ways and means of disposing of my one hundred and forty thousand bales to the best advantage I couldn’t have hit upon a better plan. It would not have been possible to find one. That article at that very moment was being read all over the country either in the _World_ or in other papers quoting it. It had been cabled to Europe. That was plain from the Liverpool prices. That market was simply wild. No wonder, with such news.

Of course I knew what New York would do, and what I ought to do. The market here opened at ten o’clock. At ten minutes after ten I did not own any cotton. I let them have every one of my one hundred and forty thousand bales. For most of my line I received what proved to be the top prices of the day. The traders made the market for me. All I really did was to see a heaven-sent opportunity to get rid of my cotton. I grasped it because I couldn’t help it. What else could I do?

The problem that I knew would take a great deal of hard thinking to solve was thus solved for me by an accident. If the _World_ had not published that article I never would have been able to dispose of my line without sacrificing the greater portion of my paper profits. Selling one hundred and forty thousand bales of cotton without sending the price down was a trick beyond my powers. But the _World_ story turned it for me very nicely.

Why the _World_ published it I cannot tell you. I never knew. I suppose the writer was tipped off by some friend in the cotton market and he thought he was printing a scoop. I didn’t see him or anybody from the _World_. I didn’t know it was printed that morning until after nine o’clock; and if it had not been for my friend calling my attention to it I would not have know it then.

Without it I wouldn’t have had a market _big_ enough to unload in. That is one trouble about trading on a large scale. You cannot sneak out as you can when you pike along. You cannot always sell out when you wish or when you think it wise. You have to get out when you can; when you have a market that will absorb your entire line. Failure to grasp the opportunity to get out may cost you millions. You cannot hesitate. If you do you are lost. Neither can you try stunts like running up the price on the bears by means of competitive buying, for you may thereby reduce the absorbing capacity. And I want to tell you that perceiving your opportunity is not as easy as it sounds. A man must be on the lookout so alertly that when his chance sticks in its head at his door he must grab it.

Of course not everybody knew about my fortunate accident. In Wall Street, and, for that matter, everywhere else, any accident that makes big money for a man is regarded with suspicion. When the accident is unprofitable it is never considered an accident but the logical outcome of your hoggishness or of the swelled head. But when there is a profit they call it loot and talk about how well unscrupulousness fares, and how ill conservatism and decency.

It was not only the _evil-minded shorts_ smarting under punishment brought about by their own recklessness who accused me of having deliberately planned the coup. Other people thought the same thing.

One of the biggest men in cotton in the entire world met me a day or two later and said, “That was certainly the slickest deal you ever put over, Livingston. I was wondering how much you were going to lose when you came to market that line of yours. You knew this market was not big enough to take more than fifty or sixty thousand bales without selling off, and how you were going to work off the rest and not lose all your paper profits was beginning to interest me. I didn’t think of your scheme. It certainly was slick.”

“I had nothing to do with it,” I assured him as earnestly as I could.

But all he did was to repeat: “Mighty slick, my boy. Mighty slick! Don’t be so modest!”

It was after that deal that some of the papers referred to me as the Cotton King. But, as I said, I really was not entitled to that crown. It is not necessary to tell you that there is not enough money in the United States to buy the columns of the New York _World_ or enough personal pull to secure the publication of a story like that. It gave me an utterly unearned reputation that time.

But I have not told this story to moralize on the crowns that are sometimes pressed down upon the brows of undeserving traders or to emphasize the need of seizing the opportunity, no matter where or how it comes. My object merely was to account for the vast amount of newspaper notoriety that came to me as a result of my deal in July cotton. If it hadn’t been for the newspapers I never would have met that remarkable man, Percy Thomas.

_XII_

Not long after I closed my July cotton deal more successfully than I had expected I received by mail a request for an interview. The letter was signed by Percy Thomas. Of course I immediately answered that I’d be glad to see him at my office at any time he cared to call. The next day he came.

I had long admired him. His name was a household word wherever men took an interest in growing or buying or selling cotton. In Europe as well as all over this country people quoted _Percy Thomas’_ opinions to me. I remember once at a Swiss resort talking to a Cairo banker who was interested in cotton growing in Egypt in association with the late Sir Ernest Cassel. When he heard I was from New York he immediately asked me about Percy Thomas, whose market reports he received and read with unfailing regularity.

Thomas, I always thought, went about his business scientifically. He was a true speculator, a thinker with the vision of a dreamer and the courage of a fighting man--an unusually well-informed man, who knew both the theory and the practice of trading in cotton. He loved to hear and to express ideas and theories and abstractions, and at the same time there was mighty little about the practical side of the cotton market or the psychology of cotton traders that he did not know, for he had been trading for years and had made and lost vast sums.

After the failure of his old Stock Exchange firm of Sheldon & Thomas he went it alone. Inside of two years he came back, almost spectacularly. I remember reading in the _Sun_ that the first thing he did when he got back on his feet financially was to pay off his old creditors in full, and the next was to hire an expert to study and determine for him how he had best invest a million dollars. This expert examined the properties and analysed the reports of several companies and then recommended the purchase of Delaware & Hudson stock.

Well, after having failed for millions and having come back with more millions, Thomas was cleaned out as the result of his deal in March Cotton. There wasn’t much time wasted after he came to see me. He proposed that we form a working alliance. Whatever information he got he would immediately turn over to me before passing it on to the public. My part would be to do the actual trading, for which he said I had a special genius and he hadn’t.

That did not appeal to me for a number of reasons. I told him frankly that I did not think I could run in double harness and wasn’t keen about trying to learn. But he insisted that it would be an ideal combination until I said flatly that I did not want to have anything to do with influencing other people to trade.

“If I fool myself,” I told him, “I alone suffer and I pay the bill at once. There are no drawn-out payments or unexpected annoyances. I play a lone hand by choice and also because it is the wisest and cheapest way to trade. I get my pleasure out of matching my brains against the brains of other traders--men whom I have never seen and never talked to and never advised to buy or sell and never expect to meet or know. When I make money I make it backing my own opinions. I don’t sell them or capitalise them. If I made money in any other way I would imagine I had not earned it. Your proposition does not interest me because I am interested in the game only as I play it for myself and in my own way.”

He said he was sorry I felt the way I did, and tried to convince me that I was wrong in rejecting his plan. But I stuck to my views. The rest was a pleasant talk. I told him I knew he would “come back” and that I would consider it a privilege if he would allow me to be of financial assistance to him. But he said he could not accept any loans from me. Then he asked me about my July deal and I told him all about it; how I had gone into it and how much cotton I bought and the price and other details. We chatted a little more and then he went away.

When I said to you some time ago that a speculator has a host of enemies, many of whom successfully bore from within, I had in mind my many mistakes. I have learned that a man may possess an original mind and a lifelong habit of independent thinking and withal be vulnerable to attacks by a persuasive personality. I am fairly immune from the commoner speculative ailments, such as greed and fear and hope. But being an ordinary man I find I can err with great ease.

I ought to have been on my guard at this particular time because not long before that I had had an experience that proved how easily a man may be talked into doing something against his judgment and even against his wishes. It happened in Harding’s office. I had a sort of private office--a room that they let me occupy by myself--and nobody was supposed to get to me during market hours without my consent. I didn’t wish to be bothered and, as I was trading on a very large scale and my account was fairly profitable, I was pretty well guarded.

One day just after the market closed I heard somebody say, “Good afternoon, Mr. Livingston.”

I turned and saw an utter stranger--a chap of about thirty-five. I could not understand how he’d got in, but there he was. I concluded his business with me had passed him. But I didn’t say anything. I just looked at him and pretty soon he said, “I came to see you about that Walter Scott,” and he was off.

He was a book agent. Now, he was not particularly pleasing of manner or skillful of speech. Neither was he especially attractive to look at. But he certainly had personality. He talked and I thought I listened. But I do not know what he said. I don’t think I ever knew, not even at the time. When he finished his monologue he handed me first his fountain pen and then a blank form, which I signed. It was a contract to take a set of Scott’s works for five hundred dollars.

The moment I signed I came to. But he had the contract safe in his pocket. I did not want the books. I had no place for them. They weren’t of any use whatever to me. I had nobody to give them to. Yet I had agreed to buy them for five hundred dollars.

I am so accustomed to losing money that I never think first of that phase of my mistakes. It is always the play itself, the reason why. In the first place I wish to know my own limitations and habits of thought. Another reason is that I do not wish to make the same mistake a second time. _A man can excuse his mistakes only by capitalising them to his subsequent profit._

Well, having made a five-hundred dollar mistake but not yet having localised the trouble, I just looked at the fellow to size him up as a first step. I’ll be hanged if he didn’t actually smile at me--an understanding little smile! He seemed to read my thoughts. I somehow knew that I did not have to explain anything to him; he knew it without my telling him. So I skipped the explanations and the preliminaries and asked him, “How much commission will you get on that five hundred dollar order?”

He promptly shook his head and said, “I can’t do it! Sorry!”

“How much do you get?” I persisted.

“A third. But I can’t do it!” he said.

“A third of five hundred dollars is one hundred and sixty-six dollars and sixty-six cents. I’ll give you two hundred dollars cash if you give me back that signed contract.” And to prove it I took the money out of my pocket.

“I told you I couldn’t do it,” he said.

“Do all of your customers make the same offer to you?” I asked.

“No,” he answered.

“Then why were you so sure that I was going to make it?”

“It is what your type of sport would do. You are a first-class loser and that makes you a first-class business man. I am much obliged to you, but I can’t do it.”

“Now tell me why you do not wish to make more than your commission?”

“It isn’t that exactly,” he said. “I am not working just for the commission.”

“What are you working for then?”

“For the commission and the record,” he answered.

“What record?”

“Mine.”

“What are you driving at?”

“Do you work for money alone?” he asked me.

“Yes,” I said.

“No.” And he shook his head. “No, you don’t. You wouldn’t get enough fun out of it. You certainly do not work merely to add a few more dollars to your bank account and you are not in Wall Street because you like easy money. You get your fun some other way. Well, same here.”

I did not argue but asked him, “And how do you get your fun?”

“Well,” he confessed, “we’ve all got a weak spot.”

“And what’s yours?”

“Vanity,” he said.

“Well,” I told him, “you’ve succeeded in getting me to sign on. Now I want to sign off, and I am paying you two hundred dollars for ten minutes’ work. Isn’t that enough for your pride?”

“No,” he answered. “You see, all the rest of the bunch have been working Wall Street for months and failed to make expenses. They said it was the fault of the goods and the territory. So the office sent for me to prove that the fault was with their salesmanship and not with the books or the place. They were working on a 25 per cent commission. I was in Cleveland, where I sold eighty-two sets in two weeks. I am here to sell a certain number of sets not only to people who did not buy from the other agents but to people they couldn’t even get to see. That’s why they give me 33⅓ per cent.”

“I can’t quite figure out how you sold me that set.”

“Why,” he said consolingly, “I sold J. P. Morgan a set.”

“No, you didn’t,” I said.

He wasn’t angry. He simply said, “Honest, I did.”

“A set of Walter Scott to J. P. Morgan, who not only has some fine editions but probably the original manuscripts of some of the novels as well?”

“Well, here’s his John Hancock.” And he promptly flashed on me a contract signed by J. P. Morgan himself. It might not have been Mr. Morgan’s signature, but it did not occur to me to doubt it at the time. Didn’t he have mine in his pocket? All I felt was curiosity. So I asked him, “How did you get past the librarian?”

“I didn’t see any librarian. I saw the Old Man himself. In the office.”

“That’s too much!” I said. Everybody knew that it was much harder to get into Mr. Morgan’s private office empty handed than into the White House with a parcel that ticked like an alarm clock.

But he declared, “I did.”

“But how did you get into his office?”

“How did I get into yours?” he retorted.

“I don’t know. You tell me,” I said.

“Well, the way I got into Morgan’s office and the way I got into yours are the same. I just talked to the fellow at the door whose business it was not to let me in. And the way I got Morgan to sign was the same way I got you to sign. You weren’t signing a contract for a set of books. You just took the fountain pen I gave you and did what I asked you to do with it. No difference. Same as you.”

“And is that really Morgan’s signature?” I asked him, about three minutes late with my skepticism.

“Sure! He learned how to write his name when he was a boy.”

“And that’s all there is to it?”

“That’s all,” he answered. “I know exactly what I am doing. That’s all the secret there is. I am much obliged to you. Good day, Mr. Livingston.” And he started to go out.

“Hold on,” I said. “I’m bound to have you make an even two hundred dollars out of me.” And I handed him thirty-five dollars.

He shook his head. Then: “No,” he said. “I can’t do that. But I can do this!” And he took the contract from his pocket, tore it in two and gave me the pieces.

I counted two hundred dollars and held the money before him, but he again shook his head.

“Isn’t that what you meant?” I said.

“No.”

“Then, why did you tear up the contract?”

“Because you did not whine, but took it as I would have taken it myself had I been in your place.”

“But I offered you the two hundred dollars of my own accord,” I said.

“I know; but money isn’t everything.”

Something in his voice made me say, “You’re right; it isn’t. And now what do you really want me to do for you?”

“You’re quick, aren’t you?” he said. “Do you really want to do something for me?”

“Yes,” I told him, “I do. But whether I will or not depends what it is you have in mind.”

“Take me with you into Mr. Ed Harding’s office and tell him to let me talk to him three minutes by the clock. Then leave me alone with him.”

I shook my head and said, “He is a good friend of mine.”

“He’s fifty years old and a stock broker,” said the book agent.

That was perfectly true, so I took him into Ed’s office. I did not hear anything more from or about that book agent. But one evening some weeks later when I was going uptown I ran across him in a Sixth Avenue L train. He raised his hat very politely and I nodded back. He came over and asked me, “How do you do, Mr. Livingston? And how is Mr. Harding?”

“He’s well. Why do you ask?” I felt he was holding back a story.

“I sold him two thousand dollars’ worth of books that day you took me in to see him.”

“He never said a word to me about it,” I said.

“No; that kind doesn’t talk about it.”

“What kind doesn’t talk?”

“The kind that never makes mistakes on account of its being bad business to make them. That kind always knows what he wants and nobody can tell him different. That is the kind that’s educating my children and keeps my wife in good humor. You did me a good turn, Mr. Livingston. I expected it when I gave up the two hundred dollars you were so anxious to present to me.”

“And if Mr. Harding hadn’t given you an order?”

“Oh, but I knew he would. I had found out what kind of man he was. He was a cinch.”

“Yes. But if he hadn’t bought any books?” I persisted.

“I’d have come back to you and sold you something. Good day, Mr. Livingston. I am going to see the mayor.” And he got up as we pulled up at Park Place.

“I hope you sell him ten sets,” I said. His Honor was a Tammany man.

“I’m a Republican, too,” he said, and went out, not hastily, but leisurely, confident that the train would wait. And it did.

I have told you this story in such detail because it concerned a remarkable man who made me buy what I did not wish to buy. He was the first man who did that to me. There never should have been a second, but there was. You can never bank on there being but one remarkable salesman in the world or on complete immunization from the influence of personality.

When Percy Thomas left my office, after I had pleasantly but definitely declined to enter into a working alliance with him, I would have sworn that our business paths would never cross. I was not sure I’d ever see him again. But on the very next day he wrote me a letter thanking me for my offers of help and inviting me to come and see him. I answered that I would. He wrote again. I called.

I got to see a great deal of him. It was always a pleasure for me to listen to him, he knew so much and he expressed his knowledge so interestingly. I think he is the most magnetic man I ever met.

We talked of many things, for he is a widely read man with an amazing grasp of many subjects and a remarkable gift for interesting generalization. The wisdom of his speech is impressive; and as for plausibility, he hasn’t an equal. I have heard many people accuse Percy Thomas of many things, including insincerity, but I sometimes wonder if his remarkable plausibility does not come from the fact that he first convinces himself so thoroughly as to acquire thereby a greatly increased power to convince others.