Mrs. Fanny heard from her brother at last. He hadn’t been able to close out his pool; the bears had had everything their own way. But prices were sure to rally in the morning. Uncle Horace had invested a couple of million dollars on a twenty-point margin; that is, he had bought ten million dollars’ worth of stocks. If the price continued to drop, his brokers would call for another ten percent, so he would have to have a million dollars in a hurry; better be on the safe side and have it ready. Would Fanny get her share to him the first thing in the morning?
Fanny didn’t have it, and came to Irma, who said: “Of course,” and wrote a check for five thousand dollars. Irma didn’t often write checks, it was too much trouble. She had promised Mr. Slemmer, her business manager, that she would never write a check of any size without letting him know; he kept no large balance, because the banks paid only two percent on checking-accounts, whereas good investments paid six or more. Mr. Slemmer was a very careful man, and insisted on saving money for Irma, whether she wished him to or not. The girl said to Lanny: “It’s a nuisance, but I promised him, so you’d better phone him.”
Lanny called the manager’s home, on the Shore Acres estate, and was told that he had gone to the city and hadn’t returned. Lanny left the message, and Irma remarked: “I wonder if he’s in the market, too.” She said it casually, rather taking it for granted that he would be. Everybody was.
They talked about little else but stocks. Irma couldn’t understand panics, and Lanny had to explain them. It was hard for the Barnes heiress to comprehend why everybody didn’t have plenty of money, and why, if more was needed, the government didn’t print it. Absurd for people to be in want! Lanny tried to explain that if it were not for the poverty of the poor, the riches of the rich wouldn’t be of much use to them. Irma said: “Lanny, you’re just trying to make me a Pink like yourself!”
Anyhow, she didn’t approve of panics; everybody worrying and rushing about, trying to get money in a hurry. She refused to have anything to do with them, even as a spectacle, like a storm on the ocean, to be watched. Uncle Joseph had suggested that Lanny might be interested to come down some day and see the Stock Exchange in action, and now Lanny said: “Tomorrow would be a good day. Wouldn’t you like to be there at ten o’clock, to see what happens when the gong sounds? It ought to be a show.”
“For heaven’s sake!” exclaimed Irma. “Get up and go downtown at that hour, just to see a lot of brokers buying and selling stocks?” She was being fitted with her winter wraps, and that was important. However, she said, obligingly: “You go, if you really want to see it, and I’ll have them wait until you get back. You won’t stay long, I’m sure.”
“I’ll take the subway,” he replied. “They tell me it’s a lot quicker.”
Irma declared that he’d have the breath crushed out of him; but Mrs. Barnes said no, the laboring classes traveled at seven, the clerks at eight, the businessmen at nine, and by nine-thirty the subway was quite comfortable. Many impatient people rode down for a nickel instead of using their cars. She had done it herself.
Thus reassured, Lanny called Uncle Joseph at his home, and that obliging gentleman agreed to meet him in front of the Exchange building promptly at five minutes to ten. Incidentally he said: “I hope that Horace isn’t in the market too deep, for things look very serious.” Then he added: “Irma and Fanny will be glad that the estate is not involved.”
Lanny answered: “They ought to be!” He had to be careful not to reveal any secret from one clan to the other.
Uncle Joseph said: “Be sure to be on time. I’ll have the admission cards ready.”
Lanny hung up the receiver, smiling. More pieces of paper! What would they do when they got to the pearly gates, and St. Peter asked them for their admission cards?
39
Humpty Dumpty Had a Great Fall
I
The large and splendid building of the New York Stock Exchange on Broad Street had a great crowd in front of it that Thursday morning: persons who had no way to get cards of admission, but must be content to stand in the street and try to imagine what was going on inside. The visitors’ gallery was large, and crowded by several hundred selected persons. One of the first whom Lanny saw was the Honorable Winston Churchill, a pudgy but energetic gentleman whom he had first come to know at the Peace Conference, where he had labored to persuade the Allies to make an end of Bolshevism and the Bolsheviks.
The gallery looked down into a vast hall, having on one side so many tall windows that it was practically a wall of glass. The north and south walls had giant blackboards divided into squares, one for each of more than twelve hundred brokers; each broker kept one eye on his square, and when his number showed up he knew that his office wanted him on the phone. Under the board behind brass rails was an enormous telephone exchange with a row of operators; it was not supposed ever to happen that a broker would not be able to reach his office at once. Fortunes were at stake, and the fraction of a second might mean the difference between success and failure.
The obliging Mr. Joseph Barnes explained the mechanism of this great institution. On the trading-floor had once stood what were called “posts,” at which certain stocks were dealt in. In those days a broker had made his memoranda in a notebook; but now the business had grown so that each broker had to have a clerk, and trading-posts had been replaced by horseshoe-shaped booths, with a shelf inside at which clerks could work recording orders. These clerks were required to wear uniforms, so that by no possibility could any one of them ever impersonate a broker. There were great numbers of boys serving as messengers, but they weren’t big enough to impersonate anything except monkeys, said Uncle Joseph.
Nowadays the greater part of the trading was in the hands of so-called “specialists,” men who stayed at one trading-booth and dealt in one particular stock. That made it easier for everybody, because you knew where to make a bid or to look for one. You could tell the specialists because each carried under his arm a peculiar sort of book, eighteen inches long and only three inches wide. Its pages were numbered according to the prices of the stock in which he traded; if U.S. Steel moved to 205, the specialist would turn to that page and see instantly what customers had ordered him to buy or to sell at that price. Steel might stay there for only a second or two, but that was longer than it took to act: the calling of an offer by one man and a sign of acceptance from another.
Ordinarily the elderly and more important brokers sent their subordinates to the trading-floor, but now everybody sensed a crisis, and the big men were on hand. The floor was crowded; every eye was on the great clock; you could see the hand slowly moving, and when it neared the moment, people seemed to hold their breath. Suddenly there was the crash of a gong; then—Lanny had read many times about “pandemonium breaking loose,” but the first time he ever saw it was at ten o’clock on the morning of the twenty-fourth of October in the year 1929. More than twelve hundred men leaped into action at the same instant, all yelling at the top of their lungs. The sound of it shot up to the visitors’ gallery, hit the high ceiling and bounced back, and from that time on there were millions of sound waves, clashing, mingling, beating one another to pieces. It was like no other volume of sound in the world; it couldn’t be compared to a stormy ocean, because there are different waves and you hear each one, but you never heard any particular shout, no matter how loud it might be. The medley did not diminish while Lanny stayed in the gallery, and when he went out into the street he heard it there, though all doors and windows of the building were closed, the ventilation being from the roof.
Swarms of men jammed around each of the trading-booths, all raising their hands and waving them, dancing about. They were offering either to buy or to sell stocks; and of course whatever one bought, another had to sell, and vice versa. If buyers and sellers were equal in number, sales could be made quickly, and without excitement or strain. The frenzy meant a great excess of buyers over sellers, or the converse. Which was it? Not merely those in the visitors’ gallery
but all America waited for the answer.
At five places on the floor sat men at a sort of overgrown typewriter, and the moment a sale was made the clerk carried a record of it to one of these men, who typed it on his machine, and by an ingenious mechanism the results of all five of these typings were combined in one stream of figures on a ticker tape. Three underground floors of this great building were full of electrical apparatus of unbelievable complexity, whereby this precious stream of figures was sent out with the speed of lightning to three thousand places in the financial district,’ and by Western Union to four thousand other places scattered over the United States. Above the call board in the trading-hall was a big translucent screen, and the figures appeared here, so that both brokers and visitors could see them. The first sales were big, and the first prices were down; somebody was dumping blocks of ten and twenty thousand shares onto the market.
Twenty thousand shares of some “blue-cuip” stock which is selling at 400 is eight million dollars, and that is big business on any trading-floor in the world. It couldn’t be the bootblacks and messenger boys, the maidservants and farmers’ wives who traded through the “odd lot” houses; it could only be the great banks seeking to protect their position, the operators who had got a fright, the investment trusts, of which there were five hundred, grown overnight like mushrooms, all assuring the public that their function was to “stabilize the market” and protect investors by spreading their holdings among the best stocks. Now they were dumping their stocks, and it was a panic.
II
The specialist in U.S. Steel who had orders to sell “at the market” had no choice; he had to go on offering. He shouted 200, and if no one answered he had to shout 199, and then 198; it seemed like the end of the world to him, but presently he would be shouting 190, and no takers. The specialist would hardly dare to open his book, for he knew that he had “stop loss” orders by the score and perhaps by the hundreds at those different prices, and what was he going to do with them all? When he made a sale, he could see that it didn’t appear on the Translux; he saw there sales that he had made ten minutes ago, half an hour ago, so he knew that the ticker was over-whelmed by the rush of selling. He no longer knew where he was or what was happening; it was like having the earth drop out from under his feet.
The ticker designated the different stocks by key letters: X for U.S. Steel, R for Radio, GM for General Motors, WX for Westinghouse, and so on. The sales recorded showed that Radio had lost one-sixth of its value in the first hour; General Electric, which had been over 400 a few weeks ago, was dropping under 300. Uncle Joseph shouted into Lanny’s ear: “I never saw anything like this in my life.” Lanny shouted back: “What is going to happen?” The answer was: “I can’t imagine.”
Irma had said that it would be monotonous, listening to brokers shouting; and so it was after a while. There was no change, except that the clamor grew even louder, the signs of confusion greater. There was no way to find out the prices actually prevailing on the floor. Lanny began thinking: “What is happening to Robbie?” He shouted: “Let’s go,” and they went out, and right away there was a mob around them, crying for news of what was going on. They answered as well as they could, and pushed their way onward.
“The worst panic in Wall Street’s history,” said Joseph Barnes; “at any rate, the most sudden.”
“I must call my father,” said the younger man. “Shall we go to the office?”
The street was so packed that it was a job getting through, even in the middle. Lanny, being more active, said: “Excuse me if I run.” Others were doing the same, without making any excuses. He arrived breathless at the estate office, where everybody fell upon him. “What is happening?” They were all excited, whether they were “in” or not.
Lanny put in a phone call for his father’s office, and got the reply: “The line is busy.” It was that way everywhere, Mr. Keedle said; you couldn’t get anything in Wall Street, you could hardly get a broker’s office anywhere in the United States.
It was easy to imagine what was happening. Wall Street had built the most perfect machine in the world to enable the American people to buy stocks, and now the American people were turning the machine around and using it to sell stocks—or to try to. The opening prices had appeared on many thousands of ticker tapes and illuminated screens; they had gone out over scores of radios. There were three hundred million shares of stock held on margin, and most of the owners had the same impulse at the same instant—to pick up the phone or rush to the telegraph office and put in an order: “Sell at the market!”
Uncle Joseph arrived, breathless. He had just learned from a friend that Telephone was below 270—the stock which Robbie Budd had been so happy to get for 287 and a half. Lanny tried again, and was told that the trunk lines to Newcastle were all busy. He decided that there was no use sitting there waiting, what was needed was action; his father might be wiped out in the next few minutes. The brokers called on you for more margin, and if you didn’t put it down on the counter, they sold you out. In a time such as this, influence, even friendship, counted for nothing; either you went down or your broker did, and no brokers were going to fail in this panic.
Lanny wrote out a message for his father. “I have three hundred thousand dollars in the bank and I am going to get a certified check and take it to your brokers’ office in the Ritzy-Waldorf and have them notify your Newcastle office that they have it. Also take my stocks which you have. Borrow on them or sell them if you need to.” Uncle Joseph promised to deliver this message as soon as the call came through.
III
Lanny made a dash for the subway, glad enough of this plebeian, five-cent form of transportation. The money he had was what Zoltan had deposited from the picture sales, after deducting his own commission. By right only one-third of it was Lanny’s, but he had the handling of it, and he would act first and justify afterward. When the subway train came to Grand Central station he darted out, and into a taxi which took him to the bank. He gave the driver a dollar, and said: “Wait for me,” ran into the bank, wrote the check payable to the brokers, and presented it to be certified. It was a world in which you wrote three hundred thousand dollars or three million as casually as you wrote three; the bank officer would step to the books to make sure you had it, and then write the bank’s certification on it, and it was as good as U.S. currency. “Pretty wild times, Mr. Budd,” the man remarked, sympathetically. Lanny, having been in New York for three weeks, replied: “You said it!” and was gone.
“Ritzy-Waldorf,” he ordered the taximan, and gave him another dollar and dashed to the brokers’ office. The place was packed to the doors; if he had been an acrobat he could have gone all the way to his goal on the shoulders or the heads of other men and a good many women. Prices were being shouted in horrified tones. The market level was down twenty points and some stocks had lost thirty to forty. Radio had lost a full third of its value. It occurred to Lanny that there might be a private entrance to the brokers’ office—he was used to being taken in at such places. He found it and banged and kicked until it was opened; then he put his foot in it and waved his check—another piece of paper, and a good one. He asked for the manager, and went right after him without waiting for permission. Easy to recognize him by the fact that he sat at a desk with five telephones, trying to use them all at once.
Lanny slapped the check in front of the man and said: “I am Robert Budd’s son and this is for my father’s account. All I want is for you to notify your Newcastle branch that you have this money.”
“I’ll do my best, Mr. Budd,” replied the man, who had beads of perspiration dropping from his brow.
“That isn’t enough,” declared Lanny. “You’ve got to do it.”
“Here,” replied the man, in between sentences of another conversation. He shoved Lanny a phone which didn’t happen to be ringing. Lanny took it and put in a call for Newcastle, and for at least half an hour he sat there, worrying the operator, and between times learning about
the life of a branch manager of a brokers’ office. It consisted of saying: “I am sorry, we had to sell you out,” or else: “I am sorry, we will have to sell you out unless you produce more margin before noon.”
The telephone operator kept saying: “All trunk lines busy, sir.” Apparently she wasn’t allowed to say anything but a formula, no matter how mad you got or what you said. Whatever panics might do to Telephone stock, they were not permitted to affect telephone service.
Finally she said: “I’ll give you the supervisor,” and Lanny fussed at this official, who promised to try for him. So finally he got the brokers’ office in Newcastle, and Lanny demanded the manager, and told his story, wondering if this man also was talking through five phones at once. He got the two managers together, and heard the New York one state that he had three hundred thousand dollars for the account of Robert Budd. That was all; they didn’t tell him anything about the state of Robbie’s account. “I hope everything is all right,” said the New York man, and then started saying into the telephone: “I am terribly sorry, Mrs. Archbald. You will have to have a twenty-percent margin here in the next half-hour, and be prepared to put up another twenty percent if the market continues to drop. We may be demanding seventy-five-percent margins before closing time. This is the worst in my experience and we can make no exceptions.”