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The
Wall Street of 1955
Brian
Trumbore
President/Editor, StocksandNews.com
I have been attempting to acquire some
old books on Wall Street and came across Martin Mayer's
"Wall Street: Men and Money" written back in 1955
(and long out of print). This appears to be his first
effort and as many of you know he has written a slew
of books since, the best known of which are on banking
and the Federal Reserve.
So
in perusing his thoughts of 50 years ago, I figured
you'd enjoy his description of the atmosphere then,
in the days before super fast operations, for example.
But remember, if some of the comments don't seem politically
correct, don't shoot me?I'm just the messenger.
---
On
women on Wall Street:
"Not
everyone who works on Wall Street is rich, or even
moderately middle-class. The towers need elevator
men, the Stock Exchange floor must be swept, bank
guards must guard the banks. Upstairs, somebody has
to ask visitors who they are, and answer the telephone,
and take dictation, and type letters, and keep the
files in some semblance of order, and help the machines
add figures. Just as the best jobs on Wall Street
are among the most fascinating in the world, the worst
are among the dullest. And while the best jobs enjoy
the gambling excitement of finance, the worst suffer
from its resulting insecurity. The Street has terrible
labor relations, because its leaders are literally
incapable of understanding the non-financial man's
desire for peace and quiet and a steady income.
"They
are also prejudiced against women, who are considered
too guileless, too prone to talk and too weak physically
to carry the burdens of financial labor. Nevertheless,
the Street is full of women; early every morning and
late every afternoon the narrow canyons of Wall Street
become resonant sounding boxes to magnify the click-click-clack-clack-click
of the high heels emerging from the subway or the
office buildings. More than half the workers in the
financial district are women, and though they do not
have anything resembling equal rights they can be
thankful if they wish that they're on the Street at
all: there were few females here before the males
were drafted into the Army in 1941. Today the best-selling
magazines on the newsstands that rise at every subway
entrance are the women's slicks - but there is still
only one dress shop to compete with the sporting goods
stores for the available space. When the New York
Clearing House celebrated its centenary in 1953, and
invited 1,200 bank executives to a dinner, only one
of the guests turned out to be a woman, and she came
from a bank in Trenton, New Jersey. Except for a few
angry feminists, a few lawyers and customer's ladies
for feminist customers, the women of Wall Street have
no money."
---
Closing
Time:
"The
banks close at three o'clock (though people can sneak
in until three-thirty if they know the way), the exchanges
shut down at three-thirty. The people who work on
the floors of the exchanges, members and employees,
go promptly home, and the bank tellers follow when
their telling is told. Upstairs, in the banks and
the brokerage houses, the accountants, the clerks
and the wonderful calculating machines get down to
the difficult part of it, figuring out how much cash
money was involved in all those verbal contracts made
by the men whose word is as good as their bond. Stocks
must be delivered and paid for, numbers moved around
on the customers' accounts, bills sent out and collected,
checks cleared. Meanwhile, the porters are cleaning
the litter of paper off the floors at the two stock
exchanges, the teletypes are stuttering less frantically
in the offices of the over- the-counter dealers. Executives
take a last look at the Dow Jones ticker and start
heading home to the country, fat brief cases in their
hands.
"At
the brokerage houses the telephones are at last free
of customers' calls, and the girls in the wire rooms
settle down to long chats with lady and gentleman
friends. Stenographers take a coffee break before
tackling the two hours' worth of dictation done by
the boss in the half-hour since the market closed;
these letters must be ready for his signature tomorrow
very early, before the market opens. The bright young
men pick up lists of closing prices, make obscure
marks on little charts, and vanish into the library
to check their calculations against the history of
the situation.
"Five
o'clock sounds, the night lines are plugged into the
telephone switchboard, and most of Wall Street goes
home, lemmings marching to the subway. At some of
the larger brokerage houses a part-time evening clerical
staff appears to clean up the day; at others the clock
ticks off time-and-a-half for the regular help. The
stock salesmen and the market spies report briefly
into their offices, and a few of the independent dealers
and minor executives sit happily down to a few hours'
work with no noise from the goddam telephone. The
bars sell much liquor to men on their way home or
back to work, grabbing a quick one.
"Around
six-thirty the cleaning women arrive, and the lights
flash on in the towers. By eight o'clock they are
going off again, and by nine even the busiest of the
brokerage houses has its accounts squared away and
locks the doors for the night. Now a few selected
lights recur, as the young lawyers, having eaten steaks
on the expense account, get back to their desks or
their firm's library for night work. The presses roar
on the bottom floors of the Dow Jones building as
the Wall Street Journal prints its Eastern edition,
and trucks line up on tiny New Street to take the
papers away.
"At
eleven o'clock the young lawyers start packing up
for the day to return to their young wives and the
children they have scarcely if ever seen; the last
telephone call of the night summons home a minor executive
of an underwriting house, who has ducked out of a
family dinner party to put the polishing touches on
tomorrow's deal. By midnight the Street is deserted,
excepting only the night watchmen, the special police
who guard some six billion dollars' worth of yellow
gold in the subterranean vaults of the Federal Reserve
Bank, an occasional city policeman, a lawyer or two,
the night shift of bank clerks clearing checks, and
a few drunks wandering absent-mindedly from their
usual haunts, sleeping it off on the cold stone stoops
of Wall Street."
---
On
investing:
"Roger
Babson, dean and general oracle of investment analysts,
not long ago announced that in his half-century of
experience 90 percent of all investors have lost money
on their investments. Considering the fact that there
has been a secular trend upward in the stock market,
at the rate of 3 percent a year, Babson's figure was
astonishing. [Ed. note: Remember, this is 1955. You
had the Great Depression and market crash to deal
with and it actually took the Dow Jones 25 years to
get back to its 1929 high.] But of all the Wall Street
professionals to whom the figure was mentioned, only
Merrill Lynch thought it was wrong.
"Such
statistics as are available indicate that the public
in general starts buying a stock as it nears the crest
of its rise, holds onto it stubbornly as it drops
down the other side of the wave, and then sells resignedly
well before the top of the upswing. Enthusiasm for
a security percolates down from the professionals
to the customer's men (who are not professionals in
the sense of having a profession) to the public only
after the price has risen substantially; disappointment,
or the sentiment that the thing is now overpriced,
percolates down only after the price has reflected
the new attitudes. The individual investor, at the
mercy of his emotions, his incomplete analytical equipment
and general ignorance of economics, will rarely make
an accurate decision as to whether a stock is overpriced
or undervalued at the present market."
---
On
advertising:
In
discussing Charlie Merrill (of whom I will have more
thoughts next week), Martin Mayer observes?
"But
the most remarkable contribution of all came from
Merrill's insistence that the public is intelligent.
The hot water in which Wall Street habitually bathes
flows from its disrespect for the public. Fifteen
years ago brokers never advertised, partly because
it was undignified, partly (bigger part) because it
cost money, but mostly because they felt that the
public couldn't understand sensible ads, anyway. Those
that did advertise used the pattern now used by people
like investment adviser Major L. L. B. Angas: 'OUR
CUSTOMERS HAVE YACHTS."
"By
and large, Wall Street thought the public was a sucker;
Merrill thought Wall Street had suckered the public.
He refused to believe that people who could make money
were incompetent to invest it; he advertised respectfully
to them, and to do his advertising and public relations
he hired no less than the managing editor of Business
Week, best of the business magazines. [This ex-managing
editor, Louis Engel, is now a partner in the firm.]
One day a full-page newspaper ad appeared, eight columns
in type so small it was barely legible, explaining
the central facts about stocks and bonds. The ad ran
first in the New York Times, then in other newspapers
all over the country, finally as a three-page slice
of Time magazine. There were two theories behind it:
that the public wanted to learn, and that only those
who were willing to do a little work should be encouraged
to become investors. There is no way of telling how
many of the firm's 150,000 customers came in through
that ad; but they are the best customers a firm could
have.
"Finally,
Merrill announced that he would keep commissions low.
[The minimum commission that a broker may charge his
customer is set down in the constitution of the Exchange,
and the members may raise or lower this minimum by
majority vote.] Merrill has always thought that brokers
ought to cut their costs rather than raise their commissions;
he has fought every proposed increase. Though the
only one he ever beat came back in modified form and
triumphed, he has made it difficult indeed for the
boys to soak the public.
"Fifteen
years ago, despite all the laws and all the agitation,
the stock market still hung from riggings. Today the
exchanges, and practically all the rest of Wall Street,
stand four square as a free market. No matter what
factors an analyst counts in, a great slice of the
credit must go to Charlie Merrill."
Brian
Trumbore
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