INTRODUCTION.—THE ORIGIN OF JOINT STOCK COMPANIES AND BROKERS.

As the practice of some readers is to begin in the middle and read a book backwards, I respectfully request those who may open here, to begin at the beginning and read the preface first. In case of any captiousness of disposition on their parts, they may thereby save themselves a good deal of ill nature, and quarrelling with the author. But if any one is perverse, and chooses to go on without taking my advice, I will not hold myself accountable for the preservation of his temper, nor even of this book; for I am not sure but he may throw it in the fire, before he gets through the first or second chapter. But, should he even persevere and go through, until he receives my parting “salaam,” still I request him to turn back and read the preface, that he may see what the writer thinks of his own book.

It is usual with authors, in the outset of their story, to introduce to their readers their Hero and Heroine, with elaborate descriptions of their persons, manners, habits, dress, &c. &c.; all of which is intended, either to prepare the reader’s mind for the very interesting positions which these personages are designed to fill, or to amuse those who are fond of that kind of portraiture. But in this history of “a week in Wall-street,” there is neither hero nor heroine, but a great number and variety of characters, each of whom lives out his sunny hour, and passes again into oblivion. Some there are, it is true, who, from a crawling worm, pass into a chrysalis, and appear to be dead for a time, not only to revive again with new life and beauty, but to soar a lofty height into the world of fashion, and boast the gayest plumage among those who float on the wind of fortune’s fickle favors.

The veritable history of Diedrich Knickerbocker was not a truer story than is every whit of this history of “a week in Wall-street;” but alas for the mutations in all human affairs!—a sad change has come over the waking dreams of the inhabitants of this goodly city, since the days when Petrus Stuyvesant surrendered the government of Niew-Amsterdam to the conquest-loving Briton.

From that day, when first its name was changed to New-York, it has not ceased to be overrun by the stragglers from every country and clime, but especially by those cunning vagabonds from Connecticut, and her sister states, who had well nigh taken in their toils the venerable Petrus and his jolly trumpeter, Antony. And they have now trodden down, or overturned, every remnant of social order, that was so remarkable in the time of the honest Dutchman. In one respect, at least, these interlopers seem to be the favored of heaven—for their seed has multiplied as the sands on the sea shore; and it is shrewdly suspected, by some, that the gambols of the cunning Antony with the lasses of New-Haven, in his famous journey thither, may have had some hand in this, since never was a people known who could blow the trumpet of their own fame, better than these same descendants from the colony of New-Haven.

From their love of continual change—which they call improvement—they had no sooner gained a footing in the city, than they persuaded the honest Dutchmen to break down the city wall, which had hitherto prevented them from robbing the cabbage garden or tapping the hollands of the rich burghers, and which, some have said, was erected partly to prevent their too frequent solace of themselves with the softer beauties concealed by close caps and short petticoats. And they further persuaded them to convert the ground into a street, thence called “Wall-street;” which, being the scene of their first victory over that prejudice which prefers to keep folks honest when they are so, has ever since continued to be the focus of all enterprises undertaken for one’s own benefit, to be accomplished by other peoples’ means. And it is even said, that the projectors of this work, in reality, designed only to gain for themselves unobstructed access to the good living, and the pretty damsels, of Niew-Amsterdam, now New-York. Want of means themselves to perform so great a work, first suggested to them the idea of a Stock Company, for objects of public improvement; the principal virtue of which is, to replenish the fortunes of those who plan and conduct it, as is more than suspected, since most of the money generally stops short of its intended application, and can only be accounted for by mistakes in the original estimates, or expenses preliminary to the commencement of the real work.

The good Dutchmen at first looked astonished at a project so bold and vast; they next smoked a pipe and doubted; but on an explanation being given by Mr. Solomon Single-Eye, of all its advantages, accompanied with a prompt offer to embark HIS whole fortune, and give his services for nothing, the shares were eagerly caught up. And as the scheme rose in public estimation, the shares rose in nominal value, greatly above their subscription price; and such was the clamor for more, that the directors—having nothing in view but the public good—disinterestedly consented to sell out theirs at an advance of only seventy-five per cent., in order to appease public opinion, in respect of their apparent partiality in having retained any for themselves. Still, however, the inquiry for shares was eager and constant, so great was the public confidence in the integrity and shrewdness of the directors, and of Mr. Single-Eye, particularly.

At this juncture, Mr. Jacob Broker opened an office near the wall-street, that was to be, for the sale and purchase of shares.

Mr. Broker was a man of great shrewdness and penetration. His education, to be sure, had been somewhat neglected, having been superintended in his youth by a strolling professor of the “black art,” whom to follow, he ran away from home at the age of fourteen. But his genius was of that universal kind which all men desire and but few possess—and hence the facility with which he adapted himself to his new employment. His initiation into the black art now stood him instead of capital, and made it easy for him to convince the honest Dutchmen of his power to turn “metals of drossiest ore to purest gold.” To him, therefore, they all went, whether to buy or to sell shares in the Wall-street Stock Company. And as he had often learned by the sad vicissitudes of life, the necessity of turning an honest penny for himself, he reasoned as all philosophers would do in the same circumstances, “that if he took not the tide of fortune at its flood, he might again suffer under the same unhappy conviction.” In other words, he thought, and acted accordingly, that if he did not embrace the opportunity to improve his fortune when it offered, it might never present itself again. He shrewdly guessed that he might greatly aid the rise in the value of the shares by appearing to be entirely disinterested—while at the same time he contrived, generally, to be the real purchaser when people employed him to sell, and the seller when they employed him to buy: by which means, as the stock gradually rose in the market,—the commission being considerable, the profit more—and as he bought and sold the whole number of shares several times over, he was enabled to abstract from the pockets of the honest Dutchmen and placing it in his own, in solid cash, nearly the whole amount of the nominal rise in value on all the shares.

He was of course a man of substance, made so by his wits, and at the expense of the burghers of New-York.

That he was a strictly honest man, is quite certain; for his old master of the “black art” is known to have said, that when he paid him a secret visit, and suggested the propriety of manufacturing a few certificates of shares, to meet the urgency of demand, Jacob replied, that “if detected it would spoil the profits of his trade, and therefore, in honor, he could not consent to the proposal.”

He honestly paid his debts, also, for the same reason, and as a man of public spirit, lent his means to assist in building the “old jail,” to confine all those rogues in, who could not pay theirs.

To be sure, he acted on the principle that there is no friendship in trade, and that a bargain is a bargain, however made, and must be fulfilled. What if his customers did pay him a commission? he sold only his services, not his wits; and them he had a right to use for his own benefit. He had long since learned, in his profession of the “black art,” that the measure of success depended on the closeness of his secret, and if people did not know his arts, he thought it but right that they should pay for being amused by them; and following this mode of reasoning, in the scale of progression upward to the higher sciences, he judged rightly, “that if people were ignorant they must pay for instruction.”

Skilfulness in trade was, in his opinion, justly placed at the head of moral science, of which he had now become a professor; and why should he be expected to impart what he knew without a “quid pro quo?” Not he; but rather following the plain dictates of wisdom, he would learn all he could, and impart nothing.

If he knew better how to make a bargain than his customers did, that was their fault, not his. People should look before they leap, and look too with their own eyes, not attempt to borrow his; they should know his mode of business before they came to him; not come and complain afterwards.

These reflections while they clearly show the astuteness of his mind, also suggest the reasons why stock rose rapidly; and point out the means by which Mr. Broker pocketed nearly all the advance himself,—without ever retaining more than ten shares in his hands at any one time.

In time Mr. Broker became a sage, and, as a fruit of his wisdom, left behind him a code of laws which have ever since been the standard of Wall-street.

We shall have frequent occasion to refer to points in this code, but, for the present, will only mention, that he improved upon the great Lacedemonian, who is said to have made a law that placed the crime of stealing only in detection—Mr. Broker placed it only in the punishment. It was of no consequence that a man should be found out in his roguery—that only established his character for shrewdness—a word of modern coinage, which some silly and old fashioned people have supposed to be, only a mitigated term for dishonesty. He never became a criminal until the law reached him with punishment; and the merit of his character, as well as the measure of his success, depended entirely on the length he could go, and the frequency of his exploits, and still escape the lash of the law.—And herein is seen the peculiar virtue and particular wisdom of those contrivances called Corporations, and Joint Stock Companies, of which Mr. Broker was a great encourager. An ingenious device, wherein an imaginary body alone is made accountable for the acts of its members; while the real actors may hide behind it, as long as it has power to protect them, and scamper off without fear, when it has not. It has also this peculiar property, that, when the directors have taken to their heels, like the ignis-fatuus, the farther you pursue it the farther it recedes; and he who follows it long will, very likely, get stuck in the swamp from whose foul vapours it has been generated: and, at most, if fairly got hold of, it is never found to consist of any thing more than a worthless bit of parchment.

We have said that Mr. Broker was a man of universal genius. In proof of which, he essentially improved the vocabulary of English; and in two particulars, conclusively shew that Johnson and Buffon are in error, viz.—that a Bear means a man who has no shares in the Stocks—one stripped—in an em-bar-assed condition, and that a Bull means a man who has more shares than he can keep, and has gored his neighbour to procure them.

His was the first Broker’s office ever established in the city of New York; and from him have descended all the race of brokers which have since congregated in the region round about Wall Street. Whether his posterity have answered Dr. Johnson’s[2] definition of the word broker, viz: “A negotiator between two parties who contrives to cheat both,” will be seen in the course of this history.

When the gallant Col. Nicholls had, in the name of the crown of Great Britain, taken full possession of the city and territory of New Amsterdam, and bestowed upon it the name of his patron the Duke of York; by way of conciliating the Burghers, he left them undisturbed in all their civil and domestic privileges, without embarrassing them with the intricacies of British laws. And in those days of simple legislation, the government had not yet learned the way to purchase power, and make people dishonest, by selling corporate privileges. And demagogues had not yet learned to claim the monopoly, as a reward for their intrigues. Consequently, Mr. Single-Eye, and his coadjutors in the matter of the Wall-street Stock Company, had the power of fixing things all their own way; that is, they made all their own laws, rules, and regulations, without let or hindrance of any kind. And so ingeniously were they contrived, that, by their natural operation, the money which came in by subscription, all leaked out again exactly at the right place and at the right time. Since that time, the wisdom of the Legislators of most of the states has decreed, that people shall not associate in bodies for purposes of roguery, without first buying a licence; and, under the name of Charters, they will sell licences to cheat the public, as the Pope sells plenary indulgences, to replenish a wasted Treasury, (vide the great state of Pennsylvania and the U. S. Bank.)

It is worthy of remark and imitation, that neither the president nor the cashier of the Wall-street Stock Company ever ran away with a dollar of their money; so rigid a surveillance did Mr. Single-Eye keep over its affairs. Although nothing but a director himself, he held the true doctrine, that directors should really be the head of an institution, and that the president and cashier were merely heads of the clerks. Mr. Single-Eye was moreover of opinion, that it was better for a director to hustle the money into his own pocket, and make sure of the gain, than to suffer another to do it, and incur the odium himself. To be sure, he was somewhat at variance with Mr. Broker on this point, but Single-Eye had the power, and there is nothing like that for enforcing a good reason.

And here I cannot forbear to remark on the degeneracy of these days, when directors so often give up all management to the presidents and cashiers, thus leading them into temptation, and provoking them to do that, which they might do themselves with greater safety, because they are less immediately responsible. Alas! how many men, with their families, have been ruined by this cruel lack of vigilance.

I should not have said so much on the origin of stock companies and brokers, but that I thought it necessary, to a more perfect understanding of what shall follow. Having said so much, it is proper that I should make known the fate of this first attempt at stock jobbing. And it is especially necessary that I should do so, for the benefit of those widows and orphans, who have any doubts about the entire safety of investing their little fortunes in the like securities.

Every body has read of the severe reproof once administered, by a Spanish lady, to a gentleman who complained of the indelicacy of their statuary. She told him that, had his own mind been pure, he would never have discovered indelicacy in what was “true to nature.”

It is well known that stock companies, such as banks, insurance companies, trust companies, and the like, are got up entirely by disinterested men, for the purpose of affording an opportunity for ladies of a “certain age,” widows, and orphans, to invest what little funds they have in safety, with the certainty of a moderate income. Accordingly, whenever a company is started, and the stock all subscribed for by the managers, this class of people are particularly favored, in being permitted to purchase some shares at a trifling premium of ten or fifteen per cent., and urged to take an interest before they shall go higher. And then, after two or three years’ refusal to make any dividend, for fear they might spend it imprudently, the same gentlemen who sold the stock, are willing to buy it back again at a discount of only fifty per cent.; and the poor spinster is perfectly satisfied of the safety of her investment, because, having once parted with the money, she can never get it back again. This class of stockholders are also particularly favored and acceptable, because they never want to borrow, and never find fault with the management; and if, by chance, they should suspect themselves to be badly used, a tear shed in secret is the only complaint they ever make.

I will lay it down as a rule, therefore, that whoever distrusts the integrity and good intentions of those gentlemen, who get up a stock company, and collect within its vaults the widow’s mite and the orphan’s support, is no better than the gentleman before alluded to, whose perversion of the luxuries of taste flowed from the impurity of his own mind.

Whenever any company is attempted to be established for purposes of public improvement, it is always a prerequisite of success, that in the programme, the expense should be set down at one half, and the profits and advantages at double—and this mode of stating things, although it varies from the actual result only three hundred per cent., is sure to convince, and the public will eagerly catch at the enterprise. The reason of this necessity is, that if the truth were told in the first place, there would be little chance for management in the stock, and none whatever of its being all taken up. But by this shrewd management, it generally happens that an original subscriber, after having paid up in full his subscription, and two or three assessments beyond, loses all confidence, and suffers all he has paid to be forfeited to the company, rather than pay more. Thus the original subscribers generally lose all their money; the stock is resold by the company to some new comer, and the company, in the end, collect a million capital upon a subscription of half that amount. And whoever subscribes to a new fashioned bank, or a railroad, and does not find the directors awake to this management, may hereafter say with truth that he has caught a weasle asleep—there being no other difference whatever in the vermin, than is expressed by the simple affixes bi and quadru.

Such was the character of Mr. Single-Eye, of the Wall-street Stock Company; and the number of similar institutions which now display their gilded signs there by the same means, can only be told by multiplying some of the numericals.

It so happened, however, that the Dutchmen, from their natural stupidity and ingratitude, as Mr. Single-Eye averred—but, as some suppose, from some lurking doubts of his virtue, and a spice of his own cunning—after having paid seventy-five per cent. premium for their stock, through the agency of Mr. Broker—could not be convinced of the propriety of paying more in the shape of assessments, notwithstanding Mr. Single-Eye, and his partners in the directorship, assured them that all was right, and that the money had all been properly expended.

A committee of examination into the company’s affairs was therefore appointed; whereupon Mr. Single-Eye, being grieved at such indignity offered to his honor, took the “book of minutes” and walked off, leaving the Dutchmen in a state of “confusion worse confounded,” from which they never recovered: thereby establishing a precedent for the tragedy lately enacted in the Water Works Bank, in this city—wherein, if the directors of that institution had consulted the ancient chronicles, they would never have tried to cover their own delinquency, by a contemptible persecution of their late venerable cashier.

The committee of examination, without waiting to come to their senses, adjourned “sine die.” The city wall had been broken down, and its materials were all scattered about in delightful confusion. A complete inroad had been made on the hitherto peaceful and happy homes of the Dutchmen. They had lost all the money invested in the company, with the melancholy satisfaction that it would cost them as much more to clear away the rubbish; and the street was left to the slow progress of time, to assume its present magnificent appearance.

It is remarkable, that such fatal results to the first experiment, should not have proved a death blow to all similar enterprises in future. But the Dutchmen overcame their misfortunes by patience and industry. The memory of their wrongs was all washed away by the soothing lethe of time, and their follies were all buried in the deep dark valley of the land of forgetfulness. Mr. Single-Eye, and Mr. Broker, ever afterwards fared sumptuously every day. They lived long and died lamented; and the tablet to their memory, lately removed from the Garden-street church yard, was inscribed with this motto: “Money is good, fame is good, but to know how to improve the follies of others is better than either.” And their descendants, learning wisdom from this law, have ever since continued to follow their example.

And now, my dear readers, having initiated you into the origin of stock companies and brokers, as well as the phrase and practice of Wall-street, in my next chapter I will give you the history of the “Morrison Kennel”—a company that has exhibited so many of the phases of human nature, that some have said that “old Nick” must have had a hand in it. If you expect that the dogs of this Kennel will prove to be hounds, I will tell you beforehand, that they are the veriest puppies in cowardice, treachery, and meanness, while they are perfect wolves in voracity; as will be proved by the perfectly denuded bones of the dead but stall-fed ass, which they have just forsaken.

If any one is curious to know from whence I got all this information, I will tell him. I received it from a venerable chronicler of the age, who has the old manuscript in his possession, and who now visits Wall-street daily to mark the passing events. He has agreed to meet me there every day for a week, where he will reveal to me the history aforesaid, and such other matters as his experience and observation may suggest.