this very office in nineteen-nineteen, and I’ve been here ever since. Of course I have vivid memories of Black Thursday. October the twenty-fourth, nineteen-twenty-nine. The big fellows had gone to the well once too often, and confidence was cracking all over-you’d be amazed how many of us did see it coming, and got out well ahead of the crash. I was out of the market entirely by the end of September, and then I just sat back and watched. You could hear the bear traders’ artillery start to rumble, and the news spread like wildfire-the specialists on the floor were forced to execute whole notebooks full of stop-loss orders at a rate so fast it dumped millions of shares on the market. I was in the arena that day, and you couldn’t believe it. The floor was flooded up to my eyebrows with paper that got cheaper by the minute. Everybody decided to sell, and of course when that happens, there is no market any longer-no such thing as a market, just a junkyard, a dumping ground. And as prices go down, people who hold stock on margin are forced to sell into the new lows to pay off their margins, and that pushes prices down even faster. Once a crash starts, you can’t stop it. Of course, we all pretend Black Thursday was the big one, there’ll never be another like it, but it can happen again, and it very well may. On the twenty-eighth of May in nineteen-sixty-two we had a crash with a paper loss of twenty-one billion dollars in one day’s trading-that was double the loss of Black Thursday, it was the greatest dollar loss of any single day’s trading in the history of Wall Street. There was nothing your SEC boys could do about it-there never will be. And in the meantime we’ve got stocks selling at a hundred times earnings, new issues skyrocketing within twenty-four hours of going public. Do you know what ‘one hundred times earnings’ means? It’s like buying a building for one thousand dollars and being forced to rent it out at ten dollars a year. But people go right on buying it. They’re just crazy. All the golden, beautiful paper profits don’t produce a single new tangible object. There’s no creation here, no productivity, no material advance-only inflation. And now, with our foreign exchange snarled up and our domestic financial policies all out of line with this rate of spending, there’s a very good chance the entire international monetary system will collapse.
“Add it all up, and what do you get? You could easily have a stock-market debacle like nobody’s ever seen before. You’ll see Dow-Jones drop to ground zero. It’ll be like Weimar. The world economy will crumble to powder. It’ll be a blight, a disappearance.”
The old man’s smile was sly. “I paint a grim picture, no? It’s only one side of the coin, you know, but you need to be aware of it. On the other side, what can I say that you don’t know? You can get very rich very fast here, everybody knows that. Right now two new millionaires come into existence for every hour of every working day, did you know that? Six thousand new millionaires in this country every year. Most of them do it in the stock market, and most of them will never get around to spending the fortunes they make. Like me. They don’t enjoy the money- money’s just a symbol of victory down here, nobody actually uses it. There isn’t time. That’s a shame, isn’t it?”
The wistfulness of his tone made Hastings smile. Saul Cohen shook his head. “It makes odd mathematics, I know, but you will find there are more horses’ asses than there are horses.”
“That happens everywhere, Saul-not just down here.”
“We exaggerate it. Take the basics, which nobody stops to think about. A stock is selling at X dollars. Why? What makes it worth X dollars today and X plus two or X minus five tomorrow? The value of a share depends not on its real worth but on what one fool thinks another fool is willing to pay for it. Most often that judgment comes not from rational appraisal but from whispered tips and floating rumors that have less reliability than a tout’s tip at Aqueduct. And the euphemisms, I ask you. Does a broker ever admit the market is falling? No. It makes readjustments, it eases, it makes technical corrections, it retrenches. It never falls.”
“Wall Street’s got no monopoly on rose-colored glasses. When did you last hear a Pentagon general admit we hadn’t won the war in Vietnam?”
“What are you, Russ, a cynic or an optimist?”
It made him grin. “Both. I’m as inconsistent as the next guy. But my job doesn’t include indicting investors because they’re horses’ asses. It’s my job to enforce the full-disclosure provisions of the law. Truth in securities-if there is any such thing. See that nobody manipulates prices. Investigate unusual activity, weed out fraud, nail manipulators. That much I can do, Saul. But I can’t keep people from making fools of themselves. That’s up to them.”
The old man twinkled. “You’ve always been earnest, Russ. But from the champing-at-the-bit look on your face, I doubt you’ve learned the limitations of your power yet. You’re in the most frustrating of professions-they’ll give you a tough job to do, and then they’ll prevent you from doing it. Why? Because the private interests have strong lobbies, and the public doesn’t. If you don’t move fast enough, you’re accused of lying down on the job, and if you do, you’re accused of ruining the whole financial barrel just to get at a couple of rotten apples. How can you win? The best you can do is avoid losing.” The smile was more pained than ever.
Hastings said, “Maybe that’s enough. That’s the world we live in. Nobody tries to win wars anymore, either. You just try to keep from losing them.”
“You’re incorrigible,” Saul Cohen snapped. “All right, then, you’ve got something on your mind. You came to Delphi to consult the oracle, and the oracle has monopolized the conversation. I apologize. What can I do for you?”
Hastings shifted his seat and examined a fingernail; he said, “I believe in intuition, Saul, I always have. And my intuition tells me there’s something stirring in Northeast Consolidated.”
An eyebrow went up; the old man didn’t smile. “Elliot Judd’s organization. Is that why you’re interested?”
“That may be why it attracted my attention.”
“What sort of hints have you found?”
“It’s hard to pin down. There’s a bit of activity, people buying the stock, quite a few Canadian orders and Swiss numbered accounts.”
“But nothing’s happened visibly, has it? I’ve watched the stock-I don’t recall seeing anything queer.”
Hastings said, “If anybody’s maneuvering in the dark, he’s being discreet. But there are dummies buying into it. I want to find out what they’re after and who they’re fronting for.”
The old man rearranged the wrinkles of his face into an agony of thoughtfulness. “I’m not sure I can help. Of course, the market for NCI is so broad, anybody could put half a million dollars into the stock without forcing it- they’re trading twenty, thirty thousand shares a day. So unless there’s a massive manipulation, you won’t see it reflected in the price. And anything less than massive would not be to anyone’s advantage.”
“I thought you might be able to tell me what I ought to be looking for.”
“To know what to look for, you must first know why you’re looking. What do you suspect?”
“Nothing-everything. I don’t know.”
“Do you have any reason to believe someone might challenge Elliot Judd for control? One of the large stockholders, perhaps? Someone who thinks Judd isn’t running the company as well as it should be run? Any indications of a proxy war shaping up?”
“Nothing like that.”
“Have you asked Elliot Judd?”
“No.”
“Why don’t you?”
Hastings said, “I don’t think I ought to upset him unless I’ve got something concrete to show him.”
“It could be a fight for control from inside, you know. If one of the top men in the company wanted to take it over, he might use dummies to buy stock for him, to avoid alerting Judd. Or it might be an outsider.”
“A raider.”
“He’d have to be big. Very big. A Howard Hughes would have trouble buying control of NCI.”
“There are other ways to get control of a company. You don’t have to buy it.”
“Hard to do, with a strong company,” the old man said. “Has it occurred to you there may be dummies buying the stock on behalf of an insider who knows something exciting is going to happen within the company-something that will raise the price of the stock? A new contract, perhaps? An oil discovery?”
“NCI doesn’t deal in oil very much. And as far as I know, they’re not getting ready to announce any big news. That’s what intrigues me. Somebody has a reason to buy big chunks of the stock through front men, and all the reasons I can think of are the ones we’ve just ruled out.”
“Then either one of your assumptions is wrong, or you’ve missed something.”
“Sure,” Hastings said. “I was hoping you’d spot it for me.”
“I’m sorry, my boy. I’m only a broker, not an oracle, after all.” Saul Cohen began to smile; his telephone
