Six Days in October by Karen Blumenthal

Author:Karen Blumenthal
Language: eng
Format: epub
Publisher: Atheneum Books for Young Readers

Almost since they began, stock and bond markets have attracted professional investors ready to take tremendous financial risks in the hopes of making a fortune. Often called “speculators” or “plungers,” these market pros are willing to borrow heavily to buy large quantities of stocks or bonds. The nation’s first treasury secretary, Alexander Hamilton, was so appalled at one early investor that he wrote in 1792, “’Tis time there should be a line of separation between honest Men & knaves, between respectable Stockholders and dealers in the funds, and more unprincipled Gamblers.”

Wall Street has long struggled to find that proper line. In the heady days of the late 1920s, some of the biggest plungers openly used manipulation and deceit to turn a profit. They formed pools, or groups of wealthy investors, to buy a certain stock.

Pool members hoped to get the public so excited about a stock that smaller investors would buy the stock, pushing up the price. Often the pool hired promoters to talk about the stock on the radio or write glowing articles for newspapers. The public did not know that the information had been purchased; they only heard a man on the radio talking about Maxwell Motors or read glowing stories about Superior Oil Corporation. In exchange for publishing stories provided by publicity men, financial writers from dozens of respected newspapers, including The New York Times and The Wall Street Journal, accepted payments of cash or stock.

Little investors, reading in stock gossip columns about a pool’s interest in a company, tried to play along. If smart professionals were buying, they should be buying too, they figured. But the pools had one piece of information that small investors didn’t have: when to sell. One big Wall Street trader predicted the result to The New York Times: “Stock Exchange history pretty well proves that this sort of traders, who have no business in the market in the first place, usually have the stocks and some one else has the money when all the excitement is over.”

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