Nobody paints a more accurate picture of old-time Wall Street than John Ferguson Hume. In the second, and final chapter, of The Art of Investing, Hume doesn’t hold back. He calls Wall Street by many names — a madhouse, a cuttlefish, a devilfish, a bloodsucker — while asking two questions:
Much graver questions grow out of its existence. Is it a harmless institution? Is it a public blessing? Is it a public curse?
The answers have always varied, depending on who you ask.
The market does have its uses but money always attracts nefarious types. Wall Street is infamous for it. And it will never entirely go away.
Scam artists and schemers will always be around in some form, trying to separate you from your money. That’s just the nature of things.
Then there’s the market itself. People are naturally drawn to it. The nature of people is to “invest” money in ways that run counter to success.
Hume attempts to inject some Street smarts, some timeless wisdom, and some history while painting a colorful picture of the seedier, speculative side of the Street.
But why mince matters? Why deal in doubtful phrases? Why not at once declare what the discussion of the subject inevitably leads to — viz., that the New York Stock Exchange, which is the soul, the motive power of Wall Street, is an evil in the land, a danger to private wealth, a disturbing force in general business, and a foe to public morals. A not overdrawn description would picture it as an enormous devilfish with a hundred thousand arms reaching into all parts of the country, and all equipped with suckers more or less powerful, and busy every one of them, in extracting nourishment for the monster to which it belongs. The trouble is that its tentacles are rarely seen. They work in the dark; they have the gift of invisibility. But, oh, how many victims they have crushed!… Most of the injuries inflicted by stock-gambling are unknown, except to the sufferers. Wall Street’s victims, as a rule, do not expose their wounds unless they are mortal. The aggregate tax upon the country for the support of its operations is something enormous. It can not be otherwise when we see how Wall Street lives and flourishes. It maintains a good-sized army of operators, the membership of the Stock Exchange numbering nearly twelve hundred — without counting ” curbstone ” men and other camp-followers — who spend with the lavishness of soldiers of fortune, while some of them take unparalleled fortunes out of the street. And yet Wall Street does not produce a dollar. It creates nothing. It draws its sustenance entirely from outsiders. It is a bloodsucker.
That Wall Street should continue victims, in view of the numerous warnings they have received, would be unaccountable were it not for that feverish desire for sudden riches which pervades the whole country, and which “the street” has been mainly instrumental in producing. It is said of the cuttle-fish that it discharges a fluid which darkens the water all about it, and so blinds its prey that they are helpless against its attacks. The Wall Street monster — the comparison still holds good — by the example of its few conspicuous successes and its general demoralization, so impregnates the atmosphere of the whole country with the speculative mania, that thousands and thousands cannot resist it. There is no village so small or so remote that it may not have its local speculator. No calling or profession escaped the contagion. The accommodations for all are ample. Wall Street has its wire connections with all points, and there are plenty of middlemen to instruct the uninitiated and take their orders for stocks. The ” margin ” feature is the cleverest bait. The fact that, by putting up one thousand dollars in cash, you can buy or sell from ten to twenty thousand dollars in stocks, and take a profit on the larger amount, is to many an irresistible temptation. Then, in theory, it is so easy to win by speculation! To buy at a low figure and sell at a higher, or to sell at a high figure and afterward buy at a lower, seems such a simple operation! It almost looks as if you could go into Wall Street and pick up money from the sidewalks. Those who have made the attempt, however, have found the practice very different from the theory. When the cleverest operators, the trained habitues of the street, so often make shipwreck, what hope is there for the inexperienced? A loss, however, is usually incurred before the real difficulties of the situation are realized, and then, in nine cases in ten, there exists on the part of speculators, out of sheer desperation or from the fascination that attends the game, the determination to try another chance, and in that way good money is thrown after bad until ruin is reached. It is folly to charge upon Wall Street sharpers the seduction of such men. They lose because they want to make money, are not particular how they make it, and flatter themselves that they are sharp enough to win where others have failed. They are their own victims.
And yet they are not the only sufferers, and possibly not the greatest. The man who wins somebody else’s money in Wall Street is far more than likely to lose it, and more with it, at the next venture he makes. And even the few so-called lucky ones who retire with their winnings, are not under all circumstances to be envied. The triumph of the man who victimizes the public with watered stocks, which are no better than adulterated wares or counterfeited coin, is not without alloy. He may rejoice in the money, and in the fleeting importance it gives him, but he knows how he got his wealth, and he knows that others know how he got it. The sensitiveness of pride remains, even if conscience be dead.
But while the writer does not hesitate to arraign the New York Exchange, being the acknowledged center of stock speculation in the country, as an enemy to public morals and general business, he admits that it is not the only culprit of the kind. The Produce Exchange — or Board of Trade, as it is called — of Chicago, is a den of speculators, whose operations are even more pernicious. They affect more far-reaching interests.
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