THE

STOCK

MARKET

BAROMETER
A Study oflts Forecast
Charles

H.

Price

Value

Dow's

Theory

Movement.

With

Analysis
and

of

the

Its

Based
of the
an

Market

History

Since

1897

By
PETER

WILLIAM
Editor

HARPER

of The

Wall

fcf BROTHERS
NEW

YORK

HAMILTON
Street Journal

PUBLISHERS
AND

LONDON

on

THS

BABOMETKB

MARKET

STOCK

1922

Copyright,

By

"

Harper

the

in

Printed

B-A

Ninth

Printing

Brothers

U.

S.

A.

To

Old

My

Friend

BANCROFT

HUGH

without

suggestion

whose

this

Colleague

and

and

encouragement

would

book

have
not

been

written

LIST

OF

CONTENTS

PAGE

CHAPTER

I.

CYCLES

II.

WALL

III.

CHARLES

IV.

Dow's

THEORY,

V.

MAJOR

MARKET

VI.

VII.

MANIPULATION

VIII.

MECHANICS

IX.

"WATER"

X.

"A

STREET

Dow,

UNIQUE

APPLIED

30
40

FORECAST

49

PROFESSIONAL

TRADING

60

MARKET

THE

73

BAROMETER

THE

LITTLE

FORECASTING

21

SPECULATION

TO

OF

AND

IN

XII.

THEORY

SWINGS

OF

THE

His

AND

QUALITY

87

OUT

CLOUD

HAND""

RECORDS

MOVIES....

THE

OF

H.

XI.

MARKET

STOCK

AND

SEA,

THE

OF

LIKE

1906
CYCLE

XIV.

1909,

XV.

XVI.

AN

EXCEPTION

XVII.

ITS

GREATEST

"LINE"

SECONDARY

OF

SOME

AND

1908-1909

128

"

USES

AND

115

MARKET

BULL

NATURE

DEFECTS

AND

SWINGS
HISTORY

OF

EXAMPLE"

AN

PROVE

TO

142*

THE

VINDICATION

154

1914

172

RULE

185

1917

196

"

XVIII.

WHAT

XIX.

REGULATION
STUDY

XX.

SOME

XXI.

RUNNING

XXII.

SOME

DID

TO

OUR

MANIPULATION

IN

RAILROADS

208

1900-1

221

"

CONCLUSIONS

1910-14

237

"

APPENDIX

TRUE
THOUGHTS

MAN'S
101

UNPUNCTURED

XIII.

FORM"

TO

250

SPECULATORS

FOR

RECORD

1922-1925

OF

THE

DOW-JONES

262

AVERAGES

281

PREFACE

preface

is

of

explanation
book

requires

itself

W.

is

made

for

permission

to

Renken,

here

compiler
used

in

of

financial

rade
com-

my

Charles

F.

charts

the

for

those

to

old

to

work,

newspaper

and

Co.,

indispensable

the
use

averages,

Street

Wall

Clarence

great

and

stock-price
in

"

that

explain
edgment
acknowl-

to

Jones
of

This

to

But

manager

service,

Dow-Jones

fails

it

gratefully

Dow,

an

clear.

author.

the

most

of

Cashman,

Joseph

of

that

president

if

and

best

at

or

sufficiently

be

apology,

be

Barron,

news

should

no

must

apology,

an

what

fault

the

often

too

averages,

illustration.

W.

P.

H.

THE

STOCK
MARKET
BAROMETER

THE
STOCK

MARKET

BAROMETER
I

Chapter
CYCLES

AND

English
AJ always

STOCK

economist

made

connection

He

between
human

the

then

the

on

in its heart

believed

in

if there

care

because

ago

early in

said

on

there
the
in

1905,

while

that

sun.

cycleof panic and

were
enough spots

ment
com-

Wall
perity,
proson

the

is temerarious
straight flush. Youth
have
been
irreverent.
more
Perhaps it would

to

make

polite to
proved

say

that

nothing,

the
like

with

elections

accidental
the

exact

leap

Cycles and
Many
men

entirely
mercial
ugly com-

of spots

Times

Jevons theory,

it did not

and

York

dence
coinci-

is

rather

centuries

two

justifyingnumber

in the New

Writing

It

on

beginning

apparent

an

he belittled

spots

the

phenomena.

two

of

from

showing

century,

squeeze

sun

humanity

and

panics

series of dates

likable that

and

not

commercial

gave

of the seventeenth

Street

unaffected

whose

him

between

sun.

were

RECORDS

remarkably readable, the late

Stanley Jevons, propounded the theory of a

William

the

MARKET

teachers

without

of

periodic association
coincidence

Poets

economics,

dential
presi-

years.

the

pretension even

of

to

and

the

more

many

business

modest

title

THE

STOCK

of student, have

cyclein

MARKET

profound

the affairsof

men.

BAROMETER

and

reasonable

It does

need

not

faith in
an

standing
under-

to see
theory of relativity
that the world cannot
possiblyprogress in a straight
line in its moral development. The movement
would
be at least more
likelyto resemble the journey of our
satellite around
the sun, which, with all its planetary
the constellation of
attendants, is moving toward
Vega. Certainlythe poets believe in the cycletheory.
There
is a wonderful
in Byron's "Childe
passage
Harold"
should be read from
which, to do it justice,
the precedingapostrophe to Metella's Tower.
This
was
Byron's cycle:

of

"Here

Einstein

the

is the moral

'Tis but the

of all human

rehearsal of the past ;

that fails
then glory; when

same

First freedom

tales,

and

Wealth, vice,corruption,barbarism
And
Hath

with all her volumes

history,
but one
page."

at

last,

vast,

cycleof panicsand of times of

prosperity. Anyone with a working knowledge of
modern
historycould recite our panic dates
1837,
1857, *866 (Overend-Gurney panicin London), 1873,
1884, 1893, 1907, if he might well hesitate to add the
able
deflation year of 1920.
Panics,at least,show a variThere

seems

to

be

"

interval between
with the intervals

them, from

ten

to

fourteen years,

apparentlytending to grow longer.

In a subsequentchapter we
shall analyze this cycle
theory,to test its possibleusefulness.

CYCLES

AND

STOCK

MARKET

RECORDS

Periodicity
But

the

pragmatic basis for the theory,a working

hypothesisif nothingmore, lies in human nature itself.
to excess, and repentance for
Prosperitywill drive men
the consequence
of those excesses
will produce a corresponding
depression. Following the dark hour of
absolute panic,labor will be thankful for what it can
slowlyout of smaller wages, while
get and will save
with small profitsand quick
capitalwill be content
There will be a period of readjustmentlike
returns.
that which
the reorganizationof most
of the
saw
American
railroads after the panic of 1893.
ently
Preswe

of

wake

up

to

find that

expenditure,that

our

income

is in

excess

cheap, that the

spiritof adventure is in the air. We proceed from
dull or quiet business times to real activity.This
gradually develops into extended
speculation,with
and other familiar
high money
rates, inflated wages
After a period of years of good times the
symptoms.
our

strain of the chain

is on

money

is

its weakest

link.

There

is

that of 1907, a depressionforeshadowed

in the stock market
and in the price of commodities,

collapselike
followed
increase

by extensive unemployment, often an actual

in savings-bank deposits,but a complete

absence of money

available for adventure.

Need

Barometer

Byron'slines again and see if the parallel

suggestive.What would discussion of business

Read
is not

for a

over

THE

be worth

STOCK

if

MARKET

could

BAROMETER

bring at least a littleof the

crises
poet'simaginationinto it? But unfortunately
are
brought about by too much imagination. What
need are
soulless barometers, price indexes and
we
to tell us where
we
are
going and what we
averages
best, because the most
impartial,
expect. The
may
of these barometers, is the
remorseless
the most
recorded
of prices in the stock exchange.
average
With varying constituents and, in earlier years, with a
but continuously
smaller number
of securities,
these
service for
have been kept by the Dow-Jones news
thirtyyears or more.
There
of reading them which has been
is a method
fruitful of results,
sion
although the reading has on occadispleasedboth the optimistand the pessimist.
A barometer
predictsbad weather, without a present
cloud in the sky. It is useless to take an axe
to it
merelybecause a flood of rain will destroythe crop of
cabbagesin poor Mrs. Brown's backyard. It has been
in print for many
lot to discuss these averages
my
years past, on the tested theory of the late Charles H.
It
Dow, the founder of The Wall Street Journal.
might not be becoming to say how constantlyhelpful
of the pricemovement
the analysis
proved. But one
ometer,
that discussion,
who reads that barwho ventures
on
learns to keep in mind the natural indignation
againsthimself for the destruction of Mrs. Brown's
cabbages.
Dow's
Theory
Dow's

we

not

simple. He
theory is fundamentally

that there are,

three
simultaneously,

showed

movements

in

CYCLES

progress

AND

STOCK

MARKET

in the stock market.

movement,

The

like the bull market

the re-election of

McKinley

RECORDS

major is the primary

which

set

in with

in 1900 and culminated in

but not
stopped by the

1902, checked
famous stock market panicconsequent on the Northern
in 1901;
Pacific corner
the primary bear market
or

September,

which

developed about
June-August, 1921.
It will be shown

October, 1919,

that this

primary

culminating
tends

movement

period of at least a year and is generally

of
much
longer. Coincident with it,or in the course
it,is Dow's secondarymovement,
representedby sharp
and sharp reactions
rallies in a primary bear market
in a primary bull market.
A striking
example of the
latter would be the break in stocks on May 9, 1901.
In like secondary movements
the industrial group
(taken separatelyfrom the railroads)may recover
much more
sharplythan the railroads,or the railroads
lead, and it need hardly be said that the twenty
may
active railroad stocks and the twenty industrials,
ing
movwill not advance pointfor pointwith each
together,
In the long
in the primary movement.
other even
advance which preceded the bear market
beginning
October, 1919, the railroads worked lower and were
cause
comparatively inactive and neglected,obviously beat that time
through government
they were,
of the specuout
ownership and guaranty, practically
lative
normal
influence on
field and not exercising
a
Under
the resumption of
barometer.
the speculative
privateownership they will tend to regain much of
their old significance.
to

run

over

THE

STOCK

MARKET

The

BAROMETER

Theory'sImplications

with
Concurrently

the

ment
primaryand secondarymoveof the market, and constant
throughout,there
obviouslywas, as Dow
pointed out, the underlying
fluctuationfrom day to day. It must here be said that
in individual
the average is deceptive
for speculation
would have happened to a speculator
stocks. What
who
due in
believed that a secondaryreaction was
May, 1901, as foreshadowed by the averages, if of all

the stocks to sell short

Pacific?

Northern

that belief he had

on

did, and they were

luckyif they covered at sixty-five
pointsloss.
Dow's
tions.
implicatheory in practicedevelopsmany

traders

of the best tested of them

One

is that the two

other, and that there is

ment,
a primary movement,
rarelya secondarymoveof the averwhere they do not agree.
age
Scrutiny
will show that there are periodswhere the
figures
corroborate

averages
never

Some

chosen

fluctuationsfor

each

number

of weeks

are

within

narrow

for instance,
where the industrials do not
railsell below seventy or above seventy-four,
and the roads

range;

as,

seventy-seven or below seventy-three.

This is technically
called "making a line,"and experience
above

shows
or

that it indicates a

of accumulation.

tion
periodeither of distribu-

When

the two

averages

rise

line,the indication is
in a
a secondaryrally
stronglybullish. It may mean
of a
bear market; it meant, in 1921, the inauguration
primarybull movement, extendinginto 1922.
If,however, the two averages break through the
above

77

the

high point of

the

THE

STOCK

MARKET

affects

which

everything

the

represents
Street

the

weather.

The

price

Wall

of

knowledge

aggregate

ment
move-

of

knowledge

aggregate

all, its

above

and,

BAROMETER

ing
com-

events.

in

Nobody
known

what
in

crowd,"

the

on

wrong

the

thing

one

thing

to

to

know

Wall

Street

used

to

stock

stocks

Street
the

Senator

Journal
bloodless

all

Dolliver

once

editorial

in

verdict

act

of

the

that

and
it.

upon

knows,

the

market

United

in

another

market
lieves,
be-

hopes,
sifted

knowledge
called,

The

quoting
States

place.

is

It

together.

years

information"

will

Oil

consistently

Rogers,

everybody

with

anticipates,
what

"inside

have
how

for

have

"Standard

the

H.

Henry

everything.

called

market

everything

represents

to

be

of

days

knows

down

Wall

Senate,

WALL

STREET

shall

WE

the

stock

the

price

than

year

interruption in
and

the

based

do

rallies,as

or

We

shall
the

upon

of the

morality

with
and

of

sum

be ;

may

that

than

precession

they

daily

movements

Street's

country;

manipulation

that

secondary

case

all these

Wall

the

less

always present

but

that

see

the

major

from

their

more;

theory

the

extending

or

years

over

Dow's

examine

downwards,

or

reactions

of the business
to

shall

we

tested
of

aid

the

relativelyunimportant

fluctuation.
are

With

three

to

MOVIES

barometer,

movement

upwards

market

years.

swings

THE

by strict analysis, the fidelityof

prove,

long period of
of

OF

knowledge

have

no

of

more

the

noxes,
equi-

materially deflect

cannot

the barometer.
Movies

But,
case

that

to

not

Wall

Street
It has

point

to

inhuman,
to

be
does

do

record

But

the

of my

not

of

the

the

how

into

come

in

with

the

occasional

of

every

market

scandals

proportion of people who

The
9

has

clean

aging
discour-

least
the

almost

nothing
which

the

alleged

with

dispassionate,

for

think, overwhelming.

it is

court
at

past,

market

the

correspondence,
because

argued,

seemed,
out

Melodrama

some

even

movement

the

who

judge from

must

hands.

and

ever
what-

disfigure

anything

anywhere.

feel

is,to those

only
former

are

in such

THE

io

STOCK

MARKET

concession

majoritythat
as

think

soon

of Greenwich.

To

Cleveland's

Grover

be

must

made

to

though
them, al-

apologizefor the stock market.

of apologizingfor the meridian

I stilldecline to

I should

BAROMETER

quote
useful

of

of the best known

one

it is a condition
platitudes,

theory which confronts us.

In the popular imaginationthere is a fearful and
wonderful
pictureof Wall Street
something we may
call the Wall Street of the movies.
the English
What
and

not

"

is

call the cinema

melodrama

substitute for the

modern

our

of

grandfathers.

our

ventional
con-

Its characters

the same.
Its villains and vampires
curiously
not like anything in real life;but they behave
are
as
consistent villains or vampires ought to behave if they
to satisfycritics who
are
a
never
saw
specimen of
either. Many years ago Jerome K. Jerome wrote
a
chapteron stage law. He showed that on the English
ficate
marriage certistage the loss of a three-and-six-penny
invalidated the marriage. In the event of death
are

the property

of the testator

could

possessionof

died

secure

without

on

the stage.

sleuth,and
it

The

went

detective looked

financier looked
to

hurt

Financiers
modern

the person
who
If the rich man
to

financier

on

so

like

like

the nearest

like

days lawyers looked

seemed
positively

Our

the will.

will the property

villain. In those

to

went

lawyers
gimlet-eyed
"

financier that

his face.

of Fiction
the

But
in the "close-ups."
especially

screen

looks like that,

he is no

new

creation.

WALL

STREET

OF

THE

MOVIES

1 1

I remember

readinga magazine story, a score of years

ago, of a stock market
coup by a great "manipulator,"
of the type of James R. Keene.
The illustrationswere
well drawn and even
In one
of them Keene,
thrilling.
his prototype, was
or
depicted bending dramatically
Consolidated
Stock Exchange ticker!
It is
over
a
to be presumed that he was
smashing the market with
ten-share lots. Only a Keene
could do it,and only a
Keene

of the movies

at

that.

Doubtless

the author

of

the story, Mr.

Edwin
Lefevre, who was
dissipating
his talents in hazy financial paragraphs for the New

York

Globe

at

that

frustrated.

tically
time, felt that he had been artis-

perhaps he had himself to

thank.
Here
is his own
descriptionof such a manipulator.
It is in a short story publishedin 1901, called
The Break in Turpentine:
But

The art
"Now, manipulators of stocks are born, not made.
is most
for stocks should be manipulated in such wise
difficult,
that they will not look manipulated. Anybody can
buy stocks
or

can

sell them.
time

same

But

every

one

can

sell stocks and

the impression that he is

convey

that pricestherefore

boldness and
stock

not

market

must

inevitably
go

at

buying them,

the
and

higher. It requires
nical
techjudgment, knowledge of

consummate

much

conditions,infinite ingenuity and

absolute familiarity
with human
agility,
of the curious psychological
phenomena

nature,

of

mental

careful

gambling

and

study
long

experiencewith the Wall Street public and with the wonderful

people; to say nothing of knowing
imagination of the American

thoroughlythe
limitations and

That
true

and

is

various brokers

employed,their capabilities,
personaltemperaments;
also,their price."
to

be

fiction,
and, incidentally,
more
professedly
than the product of the,
art
as
respectable

THE

12

STOCK

MARKET

BAROMETER
i

melodrama

the

or

It

screen.

lays no

stress

the

on

deeper knowledge of values and business conditions

to

necessary

which

alone

makes

manipulation possible. Truth is

fiction,and perhaps harder to write,

stranger than

remark

is open

Silk Hats

and

althoughthe

Not

the existence of the kind of market

assure

long

there

ago

to

obvious

an

Strained

appeared

retort.

Faces
letter to

popular

be called the antinotorious for what may

newspaper,
Wall Street complex. It professedto give,in a series

of gasps, the impressionsof a Western

stranger on
Wall Street. One of these "flashlights"
visiting
was,
"silk hats
have

seen

Mayor

Seth

J-owopened

wear

when

reduced

leather shoes.
would

be like

infer,as

Only
scandal

to

A
an

Street.

the

Stock

new

egg

be

It

exact.

when

was

Exchange in

without

there

hurt

in

market

except
sell the thing short.
was

salt. We

patentsilk hat

was

stock

had

few

wise
other-

cannot

egg.

for Soup"

Back

Long Way

true

wore

required,that he is a bad

few years ago

a "corner"
over
no

rags,

financier without

for which

and

penury

screen

are

we

"A

to

me

stenographer,bless her honest heart, said

real stylish.But financiers of the movies tend
silk hats, just as the heroes in melodrama,

it was

even

in Wall

silk hat

Let

My

1901.

to

strained faces."

and

severelylocalized
called Stutz Motor,
a

been

established.

who
speculators
They paid up without

body
Nochose

whin-

WALL

ing.

STREET

it formed

But

OF

an

THE

MOVIES

irresistibletext

for

attack upon Wall Street. One of the New

said that the incident was
only in
"the

Metropolitan Traction

Haven
it

wreckers, the Rock

called,with

13

popular

York

papers
news-

piecewith
the New
corruptionists,
a

Island wreckers, and"

what

free

rendering of history,"the life

insurance corruptionists."This was
in a newspaper
It did not tell its readers that
professingto sell news.
the last of the Metropolitan Street Railway financing
happened twenty years before. Even the foolish and
indefensible capitalization
of the surface lines of New
then called the InterYork, unloaded on what was
borough MetropolitanCompany, was fifteen years old.
life insurance
The
which, incidentally,
investigation,
neither charged nor
proved "corruption,"went back
Even the last essay in misjudged New
sixteen years.
Haven
a
curred
financing,
comparativelyminor matter, ocfullyeleven years earlier ; that of Rock Island,
nineteen
before; while that favorite charge
years
of the Chicago
againstWall Street,the recapitalization
carried through in 1899 and not a soul
" Alton, was
I suppose
I
with it until 1907.
saw
anything wrong
write myself down
a
hopelessreactionist when I say
that,with the fullest knowledge of the facts,I cannot
in it now.
see
anythingreprehensible
a

Widows

and

Orphans

spectacularas the Northern

Pacific corner, with the purelystock market panicwhich
it produced,cannot
be pleaded as an example of a kind
Even

an

incident

so

THE

14

STOCK

MARKET

BAROMETER

of

manipulationwhich would disable our barometer.

That particular
of a pripanic occurred in the course
mary
bull market.
It produced merely a severe
dary
seconresumed
reaction,for the upward movement
was
culminate until sixteen months

and

did not

That

ing,
incident of 1901, however, is stillalive and kickfar as the politicians
who denounce
Wall Street
so
It is remarkable

concerned.

are

afterwards.

all the

that

stock

affected in these

bygone incidents is alleged to have

been held by widows
and orphans. I wish somebody
that widow
and adopt, or even
would
spank,
marry
of the
the orphan. After
depriving their trustees
business sense
commonest
they have no rightto come
in this indelicate way
and remind
There is a lucrative engagement

around

crimes.
them

elsewhere

Dow's
Let
law

be

us

that

us

of

our

waitingfor

in the movies.

"

Theory

True

serious,and

of

get back

to

our

text.

The

of the stock market,

the movement

governs

Stock Market

any

here, would be equallytrue of the London

the Berlin
Stock Exchange, the Paris Bourse
or
even
The
But we
Boerse.
underlying
principles
may
go further.
formulated

law

that
and
would

come

would

true

if those

Stock

changes
Ex-

wiped out of existence. They

into operationagain,automaticallyand

ours

with
inevitably,

were

the re-establishment

averages

of

free market

Capital.So far as I know,

a record
correspondingto the Dowfinancial
kept by any of the London

in securities in any
there has not been

Jones

be

great

THE

STOCK

the

inside.

from
market

is

MARKET

Just
than

BAROMETER
it will be shown

as

that the

the

manipulator,bigger than
all the financiers put together,so it is true that the
stock market
is in a way
barometer
bigger than the
stock market
itself. A modern
ton,
writer,G. K. Chesterhas said that the fact without the truth is sterile,
bigger

that the fact without

not

until Charles

the

price movement

made

to

elicitand

H.

the truth

Dow
that

set

is

even

false.

any

real attempt

had

forth the truth contained

Can

for the

brings him into

whose

was

propounded his theory of

fact of the stock market.

man

It

business

we

make

it

been

in the

possible

the midst

of that

whirlingmachinery to understand the power

which moves
it,and even
something of the way that
is generated? Apparently the only picture
power
which has hitherto reached
the popular retina is the
distorted image which we
have called the Wall Street
of the movies.

Homage

Vice

Pays

to

Virtue

ize
swindlingoil-stock promoter circularhis victims from some
reputable address in the
all sorts of inducements
financial district,
and use
to
table
get his stock quoted in the financial columns of repuhe do that if
metropolitannewspapers? Would
the public he addresses, the investor and the speculator,
the investor in embryo,
reallybelieved that
which the country
the sink of iniquity
Wall Street was
the
truly the case
depicts? If that were
politician
shady promoter would seek other quarters. But he

Why

"

does the

"

WALL

OF

credit and

for

vice pays

Wall

to
as

Indeed, if the financial district

were

use

the

as

demagogues

problem

no

for them

All
the

were

the

case

be

not

and

charged

subdued

dyer'shand,

theory

rupt
cor-

as

be

would

it there

center

its

own

trary
yet if the exact conof the stock-market

stillbe valid.

Rhodes

It will

tithe

to

this is true, and

would

movement

himself.

as

one

abuse

would

He

propound. The money

States would fall to piecesof

of the United
rottenness.

who

risy
Hypoc-

virtue.
rotten

its

that

knows

he

Street

no

17

the best in the world.

are
integrity

is the tribute which

have

MOVIES

THE

financial district because

the

uses

STREET

Morgan

that

is like the

trations
in,if his illus-

he works

what

to

writer

the

mainly from the financial

district. There is a Wall Street engaged upon
tasks so
tion
inclinathat it has neither time nor
serious,so exacting,
have

to

been

chosen

be crooked.

nobody

If it is true,

influence the stock-market

of

have

far

and

lift you

When

not

an

end

was

with Cecil

most

obvious

as

any
some

who

means

to

larger

in itself.

following my

Africa, a quarter of
contact

it is true,

of this scuffleof petty criticism

their
When
they are rich men

the
is incidental,

ends, but

time

one

out

recrimination.

wealth

any

that
personalexperience,
knowledge than others. The men

more

reallyknow

movement,

at

that

seen,

from

record

can

us

have

we

all the facts which

know

can

as

John

profession in South
in

century ago,

Rhodes.

had definiteideas

He

was

thrown

THE

i8

STOCK

MARKET

BAROMETER

and

far above
largeconceptions,
Money was necessary to
money.

his ideas,to

the extension

the
the

of white

making of
carryingout of

mere

civilization from

the

Cape to Cairo, with a railroad as the outward and

visible sign of something of even
significance.
spiritual
In the respect of intuitive intelligence
I have met
only
like him
the late J. Pierpont Morgan.
It
one
man
was
impossibleto follow the rapidityof their mental
There was
something phenomenal about it,
processes.
like the performances of mathematicallygifted children
who can give you the square root of a number
in
"

thousands
Other

with

few

well-known

men

point of view of
processes

of
Edward

much

like

industryI
H.

our

first-ratethinker.

seemed

"

have

have

mental

of the great captains

like James J. Hill and

met,
had

to

the

Most

own.

Harriman,

calculation.

speaking perhaps from

"

reporter

of mental

moments

qualityessential

They could eliminate

to

the irrelevant.

They could grasp the fundamental fact in a page of

verbiage. But Rhodes and Morgan could do more.
often startling
but sound conclusion
to an
They could reason
before you could state the premises.
Not

And

these

men

were

rich,almost fortuitously.
They
accomplish,and it was
necessary

great tasks to
that they should have
had

achievement
heard

of them

Indescribable

the financial means

made

the past few years we

have
"ideals,"and found that most

possible.In

great deal about

were

which

half-digested
opinions.

But

there is

WALL

Wall

STREET

Street with

OF

THE

ideal.

MOVIES

19

usuallybeen,
and I hope there always will be, the rightman
to take
the right objectiveview at the right moment.
Not
long ago I heard a lecturer settingforth what he called
the "indescribable"
beauties of the Grand
Canyon of
the Colorado.
he

an

There

In the space

of

that
proved conclusively
at

Milton

could

least

far

so

he

and

hour

an

beauties

those

as

has

quarter

were

concerned.

was

scribable
indeBut

them, or the Psalmist.

could give you
Perhaps any reasonablyintelligent
man
idea of that natural wonder
if he set forth simply
an
the spiritual
truth in the physicalfact before him.
have

described

The

Unchangeable

I feel I have
read

said before, perhaps in editorials you

to-day,and forgetto-morrow, what I am saying

now.

The

problems

human

nature

of

humanity

is what

it has

do

not

been

cause
change, beas

far back

"Cycles" are as old as organized

humanity. The changes we see are superficial,
where sincere and intelligent
so
men
especially
legislate
that they may
the better live together in peace
and
heart is essential to all proggood will. The human
ress.
Reform
starts
there, and not in the halls of
legislation.
The Bells of Trinity
human

record

Facing

the western

as

shadow

from

the

tells.

end

of Wall

settingsun

upon

section of

and

least understood

the

spireof Trinity. We

have

Street,castingits
the most

criticized

great nation,stands
often heard its bells

THE

20

the

ringing

be

It

glory of

bells, the
round

about

make

men

is

form

of

of

exalteth

government,

truly

governs

We

have

truth

would

remain

United

Wall

Such

the

past

righteousness

only
as

well

goodness

the

foundation

spirit

parallel,

in

that

that

to

There

its

none

knows

are

in

that

surely
if

the

as

and

tice
jusall

of

alone

people

had

in

of

is

the
a

something

letter

become

and

of
an

the

sense

their

divine.

Constitution

study

authors

because

of

never

truth

this

which

permanent

writings

arc

in

And

interesting

surviving

is permanent
the

studying

are

we

self-evident.

there

the

laws

the

axiomatic,

foundation

element

love

do

can

contented.

that

its critics

and

said

archeologist,
classical

laws

is

Street

shine

itself.

States

were

said

because

fundamental,

higher

those

manner

that

There

be

of

hearing

some

more

or

past.

nation.

good

little

seated

to-day, without

not

sacrifice

and

the

the

disinterested

most

is

government
in

in

herds
shep-

all

again,

that,

be

shall

richer

or

it could

which

Lord

The

hymns.

flocks

well

There

happier

warning,

and

their

may

the

us.

BAROMETER

Christmas

watching

ground.

the

no

familiar

old

will
on

MARKET

STOCK

of

the

for

the

day

our

dreamed.
has

in it

III

Chapter
CHARLES

TO

H.

judge from
from

theory of

DOW,

AND

large

number

readers
the

of

cycles generally,that
in the
Wall

Street.

It may

resemblance

to

and

H.

financial

of the

Dow

and

service
of

December,

1902,

The

once

it bears

of

no

ing
beat-

ligence
intel-

more

of

one

I read

founder

of

the

them

Street

Journal.

fifty-secondyear.

Bowles,

the

Dow

with

an

theory?"

Dow-Jones

New

and

He

died

He

was

early

editor

great

was

his

founder

York, and

reporter,

SpringfieldRepublican.

that

More

and

can

in New

experienced newspaper

in

money

system

or

thing
some-

make

this, and

Man,

Wall

be

reply.

where

in his

Samuel

than

the

was

first editor

to

prosperity
to

questions show

extended

an

Dow,

news

under

at

Newspaper

was

Charles

said

understanding

A
"Who

way

"martingale"

Some

least deserves

at

assumed

sure

be

any

bank.

the

Dow's

on

and

panic

on

theory is

of

nature

of letters received

discussions

past
and

averages,

THEORY

HIS

an

ing
train-

of

the

Englander,

ultra-conservative; and
intelligent,self-repressed,
almost
knew
his business.
He
judiciallycold
was
the

of

consideration
discussion.

never

saw

him

of any
It would
angry

subject,whatever
be

less than

never
ai

saw

the

just to
him

in

even

he
in

fervor

say

that

excited.

BAROMETER

MARKET

STOCK

THE

22

and good
perfectintegrity

His

in Wall Street,at
confidence of every man
few efficient newspaper
men
there were
financial section,and

knowledge
on

in
an

time when

covering the
stillfewer with any deep

of these

advantage of some
the Stock Exchange.

the

the floor of

from

over

Quaker

and

Dublin

years

It

an

to

honor

to

about

came

Wall
As

America.

ence
experi-

Goodbody,

late Robert

The

rather curious way.

Irishman,

came

of finance.

also had

Dow

the

commanded

sense

Street,

the

New

shall
Exchange requiresthat every member
his
became
be an American
citizen,Charles H. Dow
for Robert Goodpartner. During the time necessary
change
body to naturalize,Dow held a seat in the Stock ExYork

Stock

and executed

orders

body became an American

the Exchange and returned

on

the floor.

citizen Dow
to

his

more

When

withdrew

Goodfrom

paper
congenialnews-

work.
Dow's

Knowing

and

Caution,and

His

Theory

I worked
in
likingDow, with whom
the last years of his life,I was
of
often, with many
his friends,exasperated by his overconservatism.
It
showed itself particularly
in his editorials in The Wall
Street Journal,to which it is now
to allude
necessary
because they are
the only written record
of Dow's
He
would
write a
theory of the price movement.
strong, readable and convincingeditorial,
on
a public
finance and business,and in the last
questionaffecting
paragraph would add safeguards and saving clauses
which not merely took the stingout of it but took the

THE

24

four

to

STOCK

MARKET

BAROMETER

six years,"
rarelythree years and

oftener less

than two.

for what he said,and

always had a reason
him
those who
knew
his intellectual honesty assures
based
It was
that it was
at least an
arguablereason.
of financial
his profound belief in the recurrence
upon
by recorded
crises,at periodicintervals (as shown
than ten years.
financial history),of a little more
assumed for that period one primary bull market
Dow
and one
primary bear market, and therefore splitthe
rather like the little
ten-year period in half. It was
mitted
arctic animals, subten
boy who, being asked to name
"five seals and five polar bears I"
But Dow

Panic

Dates

of Jevons

In the

openingchapterwe spoke of historic panics,

of Professor
necting
StanleyJevons, and of his theory consuch crises with the
sun

and

their assumed
I said that the

recurrence

influence upon

of spots on
the weather

the
and

about as good
reasoningwas
elections with leap years.
as
associating
presidential
But here are
the dates of commercial
crises in England
recorded by Jevons, and it is fair to say that
as
theyare sufficiently
impressive.These years are 1701,
1711,
1712,
1731-32,
1742,
1752, 1763, 1772-3,
^S.
1793. 1804-5, 1815, 1825, 1836, 1847, 1857,
1866, and 1873.
As Dow
editorial quoting these dates,
says in an
publishedin The Wall Street Journal on July 9, 1902 :
crops.

CHARLES

"This

H.

makes

HIS

AND

DOW,

THEORY;

25

good showing for the ten-year theory

and is supported,to a considerable extent, by what has occurred
in this country during the past century."
Dow's

very

of the successive crises in this country

account

(he had personalexperienceof three of them

1873,
that it
so
1884 and 1893) was
good and interesting
is well worth quoting here.
So far as Jevons'sdates
are
concerned, it is curious to note that he omitted
the beginningof his list. That
serious crisis near
one
occurred in 1715, and was
precipitated
by the Scottish
invasion of England in that year to restore
the Stuarts
It is rather human
of Jevons
to the English throne.
to omit it,if,as I suspect, there were
not enough spots
the sun in that year to fitthe parallel.
on
"

Dow
is Dow's

Here
"The

on

Our

Own

of

account

firstcrisis in the United

own

crises:

States during the nineteenth

precipitatedby the capture of

Washington by the British on the 24th of August in that year.
York
banks suspended payments,
The
Philadelphia and New
The
difficulties leading
and for a time the crisis was
acute.
the great fallingoff in foreigntrade
to this period were
up
of 1808, the
caused by the embargo and non-intercourse
acts
of publicexpendituresover
and the creapublic receipts,
tion
excess
of state banks taking the place of the
of a large number
States Bank.
old United
Many of these state banks lacked
capitaland issued currency without sufficient security.
century

came

in

1814, and

our

Crises

was

1819, 1825, and

"There
of

was

tremendous

near

approach to

1837
crisis in

1819

contraction of bank circulation.

as

The

the result

previous

caused

serious fall in the prices of commodities

This, however,

estate.
causes

European

progress

"The
there
and

than
year

money

real

and

panic as far

as

its

diminished

demand

to

lower

reversal of conditions.

1837 brought

commercial

caused

pricesand some
money
become
did
not
situation,however,
of an interruptionto
in the nature

more

was

abundant

was

ahead
were

led

The

stringencyin 1826.
serious and

1825

crisis in

productsand

for American

very

purely a

was

tion
contrac-

concerned.

were

"The

prompted speculation,the

issues had

increase of bank

BAROMETER

MARKET

STOCK

THE

26

cause.

growth, with

of the time.

panic,for which
great commercial
There
had been rapid industrial
a

Crops

multitude
were

lished
estabof enterprises

and breadstuffs
deficient,

the
refusal of the government
to extend
States Bank had caused a radical change

imported. The

charter of the United

banking business of the country, while the withdrawal

of public depositsand their lodgment with state
banks had
given the foundation for abnormal speculation.
in the

1847, 1857, and

1866

"The

panic in Europe in 1847 exerted but littleinfluence in

this country, althoughthere was
and the
a serious loss in specie,
Mexican
had some
effect in checking enterprises.These
war
neutralized somewhat
however, were
effects,
by large exports of
breadstuffs and later by the discovery
of gold in 1848-9.
"There was
a panic of the firstmagnitude in 1857, following
the failure of the Ohio

Life Insurance

and

Trust

Company in
August. This panic came
unexpectedly,although prices had
been fallingfor some
months.
There
had been very
large
railroad building,and the proportion of specieheld by banks
small in proportionto their loans and deposits. One
of the features of this period was
the great number
of failures.
The banks generallysuspended payments
in October.
was

very

"The

London

panic in 1866, precipitatedby the failure of

Overend, Gurney " Co., was
followed by heavy fall in prices
in the Stock Exchange here. In April there had been a corner

CHARLES

H.

Michigan Southern
which the relapse
was
in

HIS

AND

DOW,

THEORY

27

from
speculation
generally,
rampant
rather more
than normal.
and

1873, 1884, and

1893

well
as
a commercial
panic of September, 1873, was
of an enormous
It was
the outcome
as a Stock Exchange panic.
conversion
of floatinginto fixed capital. Business had been
expanded on an enormous
scale,and the supplyof money became
"The

insufficientfor the demands

and

made

collapsed,

Credit

it.

upon

the depressionwas

"The

year

extremely serious.
1884 brought a Stock Exchange

crisis. The

commercial
Bank

and

smash

failure of the Marine

"

Grant

Ward

in May

but

was

accompanied

standard

the outcome

was

had

lasted

of

number

of

causes

"

the currency
the withdrawal
situation,
and the fear of radical tariff legislation.

anxiety in regard

was

felt

was

of the factors in this period.

one

uncertaintyin regard to
of foreign investments
The

politan
Bank, Metro-

by a large fall in prices and a general check which

The
Trunk
Line war, which
throughout the year.
for several years, was
"The panic of 1893

not

undoubtedlythe

to

the maintenance

of the gold

chief factor,as it bore upon

many

others."

A
With

caution

New

Weak

Prediction

predictionwhich is not merely

almost Scottish,Dow, in a typical
in

England but
final paragraph, goes

on

to

say

the past and by the developments of the last

that we
six years, it is not unreasonable
to suppose
get at
may
least a Stock Exchange flurryin the next
few years."

"Judging by

not
even
being unreasonable, it was
It was
than a "flurry"in 1907,
a daring guess.
more
the New
York
five years after,when
banks resorted
to
clearing-housecertificates and the stock market

So

far

from

THE

28

BAROMETER

MARKET

STOCK

panicby a bare five minutes. But the prediction

made duringa primary upward swing which
was
three
in September of the year
culminated
1902,
grazed

months

before Dow

died.

five-yearprimary
disproved Dow's
the assumed
ten-year
swings,arrived at by splitting
cyclein half. There was a primary bear market from
A primary
September, 1902, lastingnearly a year.
bull market
originatedin September, 1903, becoming
marked
definitely
by June, 1904, and culminatingin
a
January, 1907
period of three years and four
lowed
months; while the primary bear market which folit and covered the period of the crisis of 1907
lasted until the following December
a
period of
Events

soon

"

"

eleven months.
Nelson's
All

that Dow

Book

on

Speculation

printed is in The Wall Street

Journal,and only by search through the preciousfiles
of Wall
Street's Bible can
his theory of the stock
market
be reconstructed.
But at the
pricemovement
end of 1902 the late S. A. Nelson
and published
wrote
an
unpretentiousbook called The A B C of Stock
Speculation. It is long out of print,but may occasionally
be pickedup from the second-hand
booksellers.
He tried to persuade Dow
to write the book, and,
that,he incorporatedin it all that he could find
failing
of what
Dow
had said on
stock speculationin The
Wall Street Journal.
Of the thirty-five
chapters in the
book, fifteen (Chapters V to XIX
torials,
ediare
inclusive)
some
slightly
abridged,from The Wall Street
ever

CHARLES

H.

DOW,

covering

Journal,

such

"Methods
of

of
and

Trading"

Reading

swings

29

'Scientific

tion,"
Specula"Methods

Market,"

all of

generally

them

"

entire

for

be

will

they

THEORY

as

the

suitable

not

although

here,

HIS

subjects

market

but

interesting

AND

reproduction
in

sufficiently quoted

sequent
sub-

chapters.
Nelson's
He

is

was

and

take

not

conscientious

loved

we

him

his

lies

copy

of

dying

was

seriously

as

pathetic

died

Wall

but

Street,

it

Theory."

"Dow's
which

is

Dow

recognized

it
"

in

was

practical

was

an

the

Dow
way.

in

great
who

and

first

His
I

and

write,

read

his
of
from

honorable

traceable

could

himself.

evolved

for

one

"

can

face

he
"

away

who

fully entitled;

"

trade

he

was

It

meaning

market

stock

far

man

strained

morality

the

after,

long

not

as

"

on

as

earnest,

tuberculosis

book.

reporters

took

he
me

and

little

young

as

before

figure

discussions
He

sensible
for

at,

little

sensible

and

and

laughed

autographed
see

conscientious

if

rather

ventional
con-

speculation.
beloved

his
the

of

name

ascription,
many

people
in

movements

useful
formulated

barometer
those

to

had
the

of
ideas

IV

Chapter
DOW'S

have

WE

of

The

market
all

going

running from

two

four

led

to

covering

at

least four

been

who

or

he

In

in

says,

of

short

; the

swing,

third

his third

and

less than

much

approximately five

divide
into

years

That,

main
Dow's

to

attempt

an

is the

in its duration."

years

exaggeration.

each

however,

a
successfully formulated
of the highest value,
movements

Dow

after

is the

ments,
movenarrow

panic cycle theory

the

of

three

first is the

more

that

also how

and

had

synchronized

came

month

shown

unconscious

had

the

sentences.

having

as

second

theory of the market

and

The

to

years,

is immaterial.

that

1900,

The

time.

same

day.

to

bull market

an

19,

be considered

to

the

period

ten-year
and

December

complete itself in

may

assumed

in three

up

weeks

already

movement

bear

at

day

movement,

It has

always

on

from

movement

the

is

theory

Journal:

Street

Wall

"The

main

be summed

published

editorial

an

of Dow's

price movement

stock-market

the

SPECULATION

in past discussions

seen

of it could

essence

TO

APPLIED

THEORY,

those

him

movements

could

that

so

construct

those

business

barometer.
The

This

is the

hardly be

Truth

of

essence

said that

Beneath

he

Dow's

did
30

not

Speculation
theory,
see,

or

and

live

to

it need
see,

all

THE

32

BAROMETER

MARKET

STOCK

of

high point
a bear period when
lower than the previouslow points. It is

the average
exceeds that of previoushigh points. It is

"It is a bull periodas long

the low

point becomes

often difficultto
because the

as

judge whether

the end of

advance

an

of pricesis that which

movement

tendency had changed. Yet, it may

pronounced secondary movement."

one

would

only be

main

has

if the

occur
an

come

unusually

both the idea

contains,by implication,
of "double
(which I
tops" and "double bottoms"
franklyconfess I have not found essential or greatly
row
useful)and the idea of a "line,"as shown in the narfluctuation of the averages
over
a
recognized
either of accumulation
tributio
disone
or
period,necessarily
This

passage

This
service in

showing
or

the

movement,

so

movement,

of

has been

found

the further

possibletermination

new

of

the

dary
secon-

apt to be mistaken for the initiation

I shall,in a later chapter,
trend.

major
analyze such a "line,"made
a

be of the greatest
of the main
persistence
to

in the

stock

in

market

1914.
Forecast
Successful

In

subsequentdiscussions there will be no difficulty

in showing,from the various studies in the pricemovement
since 1902, standing for record in the columns
of The Wall
Street Journal, that the method
for a
forecast of the main
discrimination
had

been

market
between

movement

that

and

and

for

rect
cor-

the

secondary
theory, and

provided in Dow's
that it has been used with surprising
accuracy.
in Wall
prophet, especially
Street,takes his life
his hands.
If his predictions
are
always of the ros
movement

A
in

DOW'S

whatever
at

worst

THEORY

APPLIED

facts of the situation may

be merely called a fool for his
the

charge againsthim will be far more

that a boom
and
nas
overrun
itself,
bearish

33

and

right he will

be

be, he will

pains.

The

serious if he

sees

says

so.

If he

is

of

accused

unworthy
motives.
He
will even
be held contributoryto the
decline which
he foresaw, although his motives may
have been of the highestand he may
have not a penny
of interest in the market

either way.

"Recalling"a Prophet
Is the American
and

Cassandras

It does

not

Colonel

C.

publicso ungratefulto
as

like

this?

Yes, indeed, and

unpleasant truths.

McD.

its Micaiahs

Townsend

of

the

more

so.

In

1912, when
United
States

with a brilliant record then

Engineers,an army man
and since,was
mission,
River Compresidentof the Mississippi
the height of the water
he predicted,from
in the upper
of the greatest Mississippi
rivers,one
the cityof New
floods. He warned
Orleans that the
ing
flood might be expectedin a month's
time, recommendthe most
vigorous and immediate
steps to lessen
zens
Orleans grateful? Its citithe calamity. Was
New
from
held an
indignationmeeting to demand
President
Taft the recall of this "calamity howler"
tically
and
"dangerous alarmist." Mr. Taft characterisnot
was
kept his head, and Colonel Townsend
A good deal of property in the Mississippi
removed.
Valleywas "removed," and it is needless to record that

New

Orleans

did not

escape.

The

railroads and great

MARKET

STOCK

THE

34

BAROMETER

to be affected,
theywere likely
selves.
took the warning seriously,
with advantage to themof New
The
Orleans
subsequently
mayor
rescinded the resolution,with an
apology. Anyone

where

industrial concerns,

who

knows

of the ablest and

one

in the United
that

previousmass

stand
Army will readilyunderand
the
Townsend
regarded the mayor
meeting with equal indifference.

It has been
to

be

the game.
but Dow
I

regarded as
Any trader

himself

never

testifyfrom many
writingthe stock market
service

and

The

days, and it was, of

thoroughlyunderstand
the market

Movement

theory is in no
for beating
a gambler'ssystem
would disregardit at his peril,
it in that light,as
considered

said before

that Dow's

discussions with him.

can

news

gineers
en-

States

Synchronizingthe Price

sense

least advertised

paragraphs of
Wall
course,
so

Street

was

Dow-Jones

the

in those

Journal

essential that

I should

scientifica method

of chronizin
synin Wall

Many men
Street knew Dow
and set their experience
at his service.
His mind was
cautious to a fault,but logicaland
I did not
honest.
intellectually
always agree with
him and he was
oftener right than I. When
he was
it was
data such
clearlyfrom lack of accurate
wrong
as

is now

movement.

available.

Necessary Knowledge
It would

perhaps be well to point out

of
knowledge of the major movement

here
the

that

market,

DOW'S

THEORY

APPLIED

3*

down, is necessary for the successful

flotation of any largelycapitalized
enterprise.In a
future discussion itwill be convenient and highlyinteresting
sions,
admisfrom James R. Keene's own
to illustrate,
how
he distributed Amalgamated Copper to an
oversanguinepublicat a time when the Boston News
Bureau, to its everlastinghonor, was
warning New
England investors to have nothing to do with that
property at anything like the pricesasked, or allow
whether

or

up

themselves

\Y-2.
per

to

cent

retained

was

be deceived

by

and

per

at

half

time when

openly callingthe
showing, as the Boston

was

neither

quarterlydividend of

cent

The

That

extra.

rate

Street Journal

Wall

"blind pool," and

a
company
had shown, that
News
Bureau

conditions

of

trade nor
the
copper
itself justified
the flotation price. But
capitalization
Keene

the

the

could

never

have

the

distributed

the

stock except

during the known major swing of a great bull market.

He
had exactlythe same
condition to help him in the
much
tributin
more
formidable, and creditable,task of disthe enormous
of the United
capitalization
have
States Steel Corporation. That stock could never
have
been
been sold, and its sale would
tempted,
atnever
in the subsequentbear market
of 1903.
An
It would

Instructive Editorial

be unfair to

Dow

if the reader

were

not

given the opportunityof extractingfor himself some

of his theory,or
lighton Dow's own
application
any

rate

some

idea of his method

at

in the series of

MARKET

STOCK

THE

36

editorials which, as I have

said

before, dealt primarily

such and only incidentally

as
speculation

stock

with

BAROMETER

with rules for reading the market.

an

rial,
edito-

full,publishedon July 20, 1901, only

after the panic which
the
resulted from

weeks

At

Pacific corner.

Northern

is

in

almost
ten

Here

the time

he did

he wrote

of a major
that it was
not
a culmination
clearly
violent secondary reaction in a
swing but a peculiarly
He
speaks first of individual
primary bull market.
not

see

stocks

"There

is what

is called the book

method.

Prices

are

set

down, giving each change of one point as it occurs, forming

therebylines having a generalhorizontal direction but running
There come
into diagonalsas the market moves
up and down.
stock with a good degree of activitywill stay
times when
a
of prices,say two
within a narrow
points,until there
range
has formed quite a long horizontal line of these figures. The
formation

of such

accumulated

line sometimes

suggests

that stock has been

and this leads other people to buy

distributed,
sell at the same
Records
of this kind kept for the
time.
or
last fifteen years seem
tion
to support the theory that the manipulato acquirestock is oftentimes detected in this way.
necessary
"Another
method
is what is called the theory of double tops.
Records of tradingshow that in many
when
cases
a stock reaches
decline and then go back again to
top it will have a moderate
the highestfigures.If after such a move,
the priceagain
near
distance.
recedes,it is liable to decline some
"Those, however, who attempt to trade on this theory alone
find a good many
times when
exceptions and a good many
not
signals
are
given.
or

Trading
"There
true

are

that in

those who

trade

Averages

on

on

the

theoryof

averages.

considerable period of time the market

It is

has about

DOW'S

days of advance as
series of days of advance,
balancingdays of decline.
as

trouble with

37
If there

it has of decline.

many

"The

APPLIED

THEORY

this system

the

surelycome

there will almost

come

is that the small

swings are
while the tendency of

always part of the largerswings, and

events
equallyliable to happen is always toward

it
equality,

is

possibleis liable to occur, and

there frequentlycome
long swings, or, in the case of stock
trading,an extraordinarynumber of days of advance or decline
which
fit properlyinto the theory when
regarded on a long
scale,but which are calculated to upset any operationsbased on
the expectationof a series of short swings.
"A much more
practicabletheoryis that founded on the law
of action and reaction.
It seems
to be a fact that a primary
also

that every

true

in the market

movement

in the

movement.

likelyto

have

If
a

hold good

to

of twenty

pointsor

will

ment
generallyhave a secondarymoveof the
opposite direction of at least three-eighths

primary
seems

combination

stock advances

relapse of
no

pointswill

how

matter
not

four

points,it is

ten

points or

The

more.

far the advance

infrequently
bring a

goes.

very

law
A

decline of

rise

eight

more.

"It is impossibleto tell in advance

the

lengthof

any

primary

but the further it goes, the greater the reaction

movement,
when
hence the more
it comes,
certaintyof being able to trade
on
successfully

"A

that reaction.

method

that of

employed by some
operators of largeexperience is
The theory involved is this: The market is
responses.

always under
is seekingto

less manipulation. A

largeoperator who
advance the market does not buy everythingon the
but puts up two
three leadingstocks either by legitimate
list,
or
buying or by manipulation. He then watches the effect on
the other stocks. If sentiment is bullish,and people are
posed
disthis rise in two or three stocks
to take hold, those who
see
immediately begin to buy other stocks and the market rises to
This is the public response, and is an indication
a higher level.
that the

more

or

leadingstocks

generalmarket

will be

will follow.

given another

lift and

that the

MARKET

STOCK

THE

38

BAROMETER

"If,however, leading stocks are advanced and others do not

follow,it is evidence that the publicis not disposedto buy. As
to advance
this is clear the attempt
pricesis generally
as
soon
is employed more
discontinued. This method
particularlyby
But it can
the tape.
be read at the close of
the day in our record of transactions by seeingwhat stocks were
hours and whether
the general market
put up within specified
The
best way
is to
of reading the market
followed or not.
watch

those who

read
a

from

the standpoint of values.

market

balloon plunging hither and thither in the wind.

serious,well-considered

it represents

sightedand

well-informed

as

The

exist

or

future.

which

are

men

to

effort

is
As

not
a

like

whole,

the part of faradjustpricesto such values

on

expected to exist in the

not

too

remote

The

thought with great operators is not whether

a
pricecan be advanced, but whether the value of property which
to buy will lead investors and
speculatorssix
they propose
months hence to take stock at figures
from ten to twenty
points
above present prices.
"In reading the market, therefore,the main point is to discover
what a stock can
be expected to be worth three months
hence and then to see whether
manipulators or investors are
advancing the price of that stock toward those figures. It is
often possibleto read movements
in the market very clearlyin
this way.
To know
values is to comprehend the meaning of
movements

There

in the market."

assumptionshere to which modifications

It would be
might be offered,but there is no need.
impossibleto show, except by the research of records
coveringat least half a century, that there are as many
days of advance as of decline. The information would
be valueless if obtained.
It amounts
to
saying that
heads and tails will equalizethemselves if a coin is
are

of times.
spun a sufficientnumber
But what may
be commended
is Dow's

and
clarity

MARKET

MAJOR

IT

said, in continuing the

be

may

Charles

of

The

H.

of

Dow

stock

price

it must

be

the
and

averages,

devising
and

actual

records
of

and

even

how

to

The

Averages
alone

nation's

prosperity,"
with
of

the

represent

the

sum

immediate

of
averages,

of

Dow's

of

and

transactions
of all Wall
and

future.

the
as

some

in

the

There

statisticians
4*

the

applied
is

no

country's,

theory

sufficient

shows

need

reason.

of

source

not

Street's

remote,

ness
busi-

Theory.

the

muddy

need

we

ticker

Themselves

for

"the

actual

lies its great

that

question-begging adjectives.

tendency

past,

In

barometer

called

eter
thermom-

essentially the

SufficientIn

been

practical

stock

the

as

value

in this respect,

sciously
con-

was

records

world's, business, and

it.

has

it is

predict.

is the

read

Street

just

lies the

that

of the

It stands

Wall

to

market

stock

he

the

the

by

for

thermometer

But

prices.

in

that

between

moment,

barometer

value, and
The

The

the

at

temperature

shown

as

emphasized,

columns

well-known

now

movement

difference

the

barometer.

his

on

in the

scientific barometer

Remember

use.

Journal,

of what

discussion

actually published

Street

Wall

theory

SWINGS

concern

The

Stock

selves
our-

Exchange

the
to

do, elaborate

and

sum

knowledge
to

the

add

of the

ing
discountto

the

compila-

MARKET

MAJOR

SWINGS

41

ings,
commodity price index numbers, bank clearfluctuations in exchange, volume of domestic and
foreigntrade or anythingelse. Wall Street considers
all these things. It properlyregards them
as
ence
experiof the past, if only of the immediate
past, to
be used for estimatingthe future.
They are merely
of the weather
creatingcauses
predicted.
It is a common
exemplifiedin the Pujo
superstition,
Committee's
inquiryinto some
supposed supercontrol
of banking and finance,that "powerful interests" in
Wall Street exist which have a sort of monopoly of
nefarious
ends.
knowledge and use it to their own
The
stock market
is bigger than all of them, and the

tions of

financial interests of Wall

except
1907.

of the stock market.

combined

seldom

often wrong
in their estimate
In the days of H. H. Rogers and

are

supposedly all-powerfulactivities

called the
group

are

momentarily to stop a panic,as in the crisisof

Taken
in temporary
ance,
alliseparately,or even
these interests

the

Street

Oil

Standard
on

wrong

I have

group,

stocks for

of

months

what

known

and

was

that

even

years

shrewder
no
together. There was
judge of business
conditions as affecting
than Henry
great enterprises
H. Rogers, but I have heard him argue seriously
that
it

not

was

and

the

he

that

sum

wrong

but

the

stock

market

headstrong public.
Bigger

In the

was

Than

pricemovements,

of every

scrap

of

Manipulation

any
as

Dow

knowledge

correctlysaw,
available

to

the

Wall

42

THE

Street is reflected
Street

in Wall

as

far ahead

see.

can

BAROMETER

MARKET

STOCK

The

as

the clearest vision

market

is not

the condition of business is

to-day.

will be months

ahead.

that condition

It is

but

sayingwhat
saying what

Even

with

nipulation,
ma-

several

leading
thing, and is
stocks, the market is saying the same
bigger than the manipulation. The manipulatoronly
foresees values which he expects and hopes, sometimes
wrongly, the investingpublic will appreciatelater.
mary
Manipulation for the advance is impossiblein a pribear market.
Any great instances of designed
occurred
manipulation and they are few in number
in a primary bull market, necessarily
because
the
so
market
than the manipulator. A personal
more
sees
experienceof not only Wall Street but other great
markets has taught that manipulationin a falling
market
non-existent.
The bear trader carries
is practically
his own
letter of marque,
and fights
for his own
hand.
A major bear swing has always been amply justified
in 1917, by terrifying
as
by future events, or for exception,
future possibilities.
embracing

not

one

"

"

Writing in
Startingfeeblynear
small volume
pitifully
before

the

re-election

developedwhich
six months.

covered

This

was

Bull Market

the end

of

June, 1900, with a

of transactions,four months
of McKinley, a bull market
than twentya periodof more
interruptedby the May panic

of 1901,

Pacific corner,
arisingout of the Northern
proving to be only a secondary downward
swing of

if violent,kind.
typical,

this bull market

freelymade
theory. He
and

use,

It

that Dow

Street Journal

Wall

SWINGS

MARKET

MAJOR

to

during the

was

of

course

the editorials in The

wrote

which

43

has here

reference

been

they contain the substance of his

for practical
designed a barometer

because
had

it is characteristic of the

he

that

man

ceeded
pro-

apply it,to find out if it had the vital quality

of dependable forecast. It is a pitythat he could not
to

have

lived

which

to

it in the twelve months'

test

followed.

All

subsequentmarket

bear

market

swings,up

or

down, have proved the value of his method.

his forecasts were
Throughout that bull market
remarkably accurate, if necessarilygeneral and not
He was
stocks or small groups.
appliedto particular
in the essential matter
of the adjustment of
correct
lished
pubpricesto values. His concludingeditorials were
In
in July, 1902, not long before his death.
those he foresaw that priceswere
outrunning values,
would begin
and that within a few months
the market
in railroad earnings,at least
to predicta contraction
slower development in the great industrial groups,
a
and

contraction of trade

Primary
It will be well
the time

which

Dow

to

wrote

culminated

elsewhere.

Movements

give here
to

in 1921.

the

the
end

They

major swings from

of the bear

are

as

1.

Up.

June,

1900,

to

2.

Down.

Sept.,1902,

to

3.

Up.

to

4.

Down.

Sept.,1903,
Jan., 1907,

to

market

follows:

Sept.,1902.
Sept.,1903.
Jan.,
Dec.,

1907.

1907.

STOCK

THE

44

on

BAROMETER

1907,

to

Aug., 1909.

1909,

to

1910.

1910,

to

July,
Oct.,

1912,

to

Dec.,

1914.

1914,

to

Oct., 1916.
Dec., 1917.

5.
6.

Up.
Down.

Dec.,
Aug.,

7.

Up.

July,

8.

Down.

9.

Up.

Oct.,
Dec.,

10.

Down.

Oct., 1916,

to

11.

Up.

1917,

to

12.

Down.

Dec.,
Nov.,

1919,

to

13.

Up.

1921,

to

14.

Down.

Aug.,
Mar.,

1923,

to

15.

Up.

Oct., I9238

to

If the late
bull

MARKET

1912.

Oct.-Nov., 1919.
June-Aug., 1921.
Mar., 1923.
Oct., 1923.

J. PierpontMorgan said that he

the United

was

States," this exhibit confirms

"a
his

periodof twenty-three
years the bull
markets lasted rather less than twice as long as the bear
The
duration of seven
markets.
major bull
average
tion
months; while the average duraswings is twenty-five
of seven
major bear swings is fifteen months.

judgment. In

that

It will be noted

from

the

table that

the

longest
September 22,

that from
major swing upward was
The
actual top of the
1903, to January 5, 1907.
was
January 22, 1906, with a subsequent
averages
and a like irregular
months
irregulardecline of some
all within the year
1906, to a figureclose
recovery,
to the old high point. This
is therefore taken as the
end of that primary movement,
although t'he secondary
swing of 1906 was by far the most extended of which
have any record. This exceptional
we
year, of which the
San Francisco earthquakewas
the feature,will be fully
discussed in a subsequentchapter. The other five bull
markets show periodsof from something over
nineteen
months to a few days less than twenty-seven months.

MARKET

MAJOR

SWINGS

45

Predictions
Startling

longestof the six bear markets here illustrated

extended
to nearly twenty-seven
months, includingthe
and the hundred
ing
outbreak of the Great War
days'closof the Stock Exchange, culminatingimmediately
That was
before Christmas, 1914.
a black Christmas,
of us may
as
some
happen to remember; but it was
boom
in the
followed, in 1915, by the tremendous
in a war
production of material for the combatants
The

America

which

had

beginningto
year,

grasp

its significance.

of these six bear

Two
one

of them

of them
less than

material

which

boom

"

the greatest accuracy

of the country was
hardly

the business

time when

entered

predictedwith

the stock market

at

then

not

here

did

markets

less than

month

fifteen months.
to

that

say

last

not

and

more,

There

one

cient
suffi-

seems

market

bear

quite a

is

mally
nor-

appreciablyshorter than a bull market; perhaps

as
swings in a primary rising
secondary downward
short and sharp, with a haltingrecovery
are
average
consuming a longer time than the decline.
The

Market

Always Right

Is

"

later stage

throughout
it was
these great market
movements
possiblefrom
valuable
barometer
the stock market
to predict,
some
distance ahead, the development of the business of the
It will be

shown

at

that

These discussions would fail in their purpose

country.
the subjectclear to the unfinanif they did not make

cial layman

"

to
interesting

the

man

who

never

bought

MARKET

STOCK

THE

46

BAROMETER

stock in his life. A barometer

speculative
for all vessels at sea, from the smallest
is a necessity
as much,
coastingschooner to the Aquitania. It means
of Kipling's
and even
to the "Bolivar"
ballad,
more,
"swamping in the sea," watching,in dispair,
a

share

of

"Some
as

liner's lights
go

damned

it does

the

to

by, like a grand hotel"

navigating officers

on

the

liner's

bridge. There is no business so small that it can afford

barometer.
to disregardthe stock market
Certainly
there is no business so large that it dare disregardit.
Indeed

serious mistakes

the most

of great business have

navigatorsof
to

take heed

market

come

from

in the management
a

failure of these

of commerce
the great liners of the sea
disinterested stock
when
the passionless,

called their attention

"

and

Never

to

bad

weather

ahead.

Thanked

When, in the United States Senate,the late Senator

nal,
Dolliver,readingan editorial of The Wall Street Joursaid, "Listen to the bloodless,verdict of the
market
place,"he saw the merciless accuracy of that
verdict; because it is,and necessarily
must
be, based
all the evidence,even
when givenby unconscious
upon
and unwillingwitnesses.
No
wonder
the rural politician
can
so
easilymake
Wall Street the scapegoat for depressingconditions,
his farmer constituents no more
than the rest
affecting
of

Wall

Street is guiltyin their eyes, for they are

for a
willing
enough to hold Wall Street responsible
us.

THE

48

when

knew

more

And

sell

farmer

had

but

thinks

he

an

break

to

Chicago

the

ago,

at

her

grain

What

Orleans

New

the

was

who

paid

The

Germans

thing

the

empire,
saw,

on

the

it in

advance

learned

have
British
with

exactly

old

always
the
that

widest

and
of

out
to

let

knew,
commerce

knowledge.

and

Wall
and

self.

man
Congress-

grain

the

of

He

is

trade

in

the

cotton

Twenty

years

broke

Germany

legislation.

destructive

plan,

save

system

his

York.

She

to

prejudiced

farmers,

consequence?
on

for

her

with

barometer,

barometer

new

of

demand

out,

get

blames

barometers

New

wheat.

barometer.

of

the

and

and

He

the

barometers

the

price

getting

by

break

Minneapolis,

and
in

it all

to

axe

and
to

and

pound,

banking

deluded

own

cents

then

time.

Reserve

change

can

take

to

trying

his

him

for

wheat

cotton

market

yet

was

Federal

the

about

the

at

there

forty

telling

was

he

and

everyone

the

while

Street

trade

than

what

himself

He

cotton

his

pooling

for

his

barometer

that

BAROMETER

insanely

was

and

bushel

to

farmer

the

$3

MARKET

STOCK

had
it

the

was

their
free

construct

to

farmers

pockets.

own

alone,

markets

built
the

up

the

world

est
greatever

Chapter
A

UNIQUE

THERE
is the

QUALITY

Wall

out

of

Wall

Street

of

of

Street

the Wall

Street

characters

no

old-fashioned
caricatures

melodrama

revival
felt that
that

our

have

second

of

militated

market

astonishing

and

moving-picture

of

market

authority

than

intimacy

in

Bourse

with

Wall

and

gold shares,
in

1895.

But

that

writer

even

"Between

of

which

the

that

claims

more

no

Stock

of

years

by

tical
prac-

Exchange,

wildly speculative market

the

in all that

can

tive
authorita-

twenty-six

London

stock

manipulation

Street, preceded

the

to

of the movies.

otherwise

from

come

was

devoted

be

usefulness

the

The

acquaintance with
Paris

Street

movements

may

It

Unmanipulated

belief

is the

ligent
unintel-

screen.

well

the

those

"

misconceptions, that

against

instructive.

and

stark

Are

greatest
most

sational
sen-

of

types
ago

chapter might

barometer,

falsify stock

the

an

Movements

the

the

fifty years

popular misconception, Wall

One

of

Street

interpretation,whose
than

of
had

the

on

Major

has

real

more

which

other

popularity-hunting politicians
;

of

of false dramatic

are

Wall

nition
defi-

at

The

misconception.

is

them

fact, slowly arriving

fiction;the

newspapers,

of

One

Streets.

of

chaos

FORECAST

OF

Wall

two

are

the

VI

Chains,"

in

experience,

burg
Johannes-

for

what

it

BAROMETER

MARKET

STOCK

THE

50

singleinstance
which depended for its
of a major market
movement
for its genesis,upon
manipulation.
impetus, or even
in vain if they have
discussions have been made
These
and
failed to show
that all the primary bull markets
primary bear market have been vindicated, in
every
of their development and before their close,
the course
much
overby the facts of generalbusiness,however
tended
have
to
speculationor over-liquidation
may
as
they always do, in the last stage of the
excess,
primary swing.
to recall
be worth, it is impossible

may

This
of

is

Financial

sweeping

its fundamental

Impossibility
but

statement,

truth.

When

convinced

am

R.

James

Keene

took up the task of marketing two

and twenty
hundred
thousand
of Amalgamated
shares
Copper, for the

people who
had

in the
at

He

been

not

had

able

to

about

hundred

seven

amalgamation

that

float the stock,it is estimated

of distribution

course

least

brought

he

thousand

have

must

shares

but

that

traded

in

of that stock.

priceto above par to realize a net of

for his employers. This was
a
ninetyto ninety-six
small stock capitalization;
but let us assume
relatively
that some
syndicate,larger than any that the stock
market
has ever
operation
necessarilyinvolvingthe coseen,
of all the great banking institutions,
took
underthe general bull market
without
to manufacture
carried the

which

Keene's

wasted.

afford

Let
to

us

efforts would
concede

have

that this

ignore the large number

been

worse

than

could
super-syndicate
of active securities

UNIQUE

QUALITY

outside of the

fortyactive

industrial averages
opinion. Let us assume
and

FORECAST

OF

stocks taken

in

our

51
railroad

defy all trained public

for
that they had accumulated
rise,againstall their previous practiceand conviction,
without, by some
miracle,arousing suspicion,

the

not

two

but

hundred

hundred

Anybody
that two

and

and

and

twenty thousand
times that number.

who

learned
make

two

shares

of stock,

in the littlered school

four must

that

see

we

are

house
here

leading ourselves into an arithmetical impossibility.

with
This syndicatewould
presumably not be content
less than a forty-point
and its actual trades,
net
profit,
before it had established a broad generalmarket
even
equivalentto that Keene established for Amalgamated
to something
Copper, alone would therefore amount
like

one

hundred

taking them

and

at

par,

twenty million shares, which,

would
involve financingto the

of many
billions of dollars
so
in fact,that the great banks concerned
amount

"

much

would

financing,
ably
presum-

relinquishall their other business and confine

themselves
to the syndicate
operationsalone. Such a
syndicatecould not have done this,or a tithe of this,
national banking
at any time during the existence of our
Does
anybody think it would be possible
system.
such a panic-breeding
to undertake
operation with the
Reserve
assistance of the Federal
system?
Manipulation Was

Where

To

state

where

the

corresponding bear operation,

of the syndicateis
wealthy member

terms

every

of

Possible

MARKET

STOCK

THE

52

BAROMETER

necessarilyalready a large holder in stocks, bonds,

reduce
and industrial production, would
real estate
mind
the whole thing to the wildest absurdity. My
it. Keene, in a broad
bull
refuses even
to
grasp
of shares amounting
market, to distribute a number
of the common
stock alone of the
to one-twenty-fifth
United
States Steel Corporation,had behind
him all
influence of the powerful Standard
the wealth and
common

the

he

When

Oil group.

distributed United

preferred he had behind

banking influences
great Morgan

every

and

group

that

came

into

Steel

States
him

not

but

those

only
of

steel combination,

that

generalapproval of a publicwhich correctly

and
even
recognized a wonderful
unprecedented
with
But even
expansion in production and trade.
that backing could he have
multipliedhis efforts a
The
hundredfold?
facturer
merchant, the banker, the manu-

with the

who
reference

studies the stock market

with

barometer

major swings, can dismiss from his

mind
altogetherthe idea that they are falsified by
manipulation.
to

the

Roger
But
here to

W.

Babson's

the idea is widelyheld.

arouse

or

of
depreciation
to Mr.

Babson

is no

intention

controversy, and if I take

and his book
W. Babson
on

example from Roger

Business
Barometers, he
that

There

encourage

an

understand

Theory

it is not

his
to

will, I

am

intended

highlysincere work.
say, also,that the

sure,

in

readily

criticism

or

It is only fair
extract

give

here

UNIQUE

published in

was

FORECAST

OF

QUALITY

53

(the italics

1909

Mr.

are

Babson's):
"A

that the ablest specusuallymeans

ulators
future a period of depression in
near
that
slowly risingmarket usuallymeans

slowlysaggingmarket
the

in

expect

general business

; and

business conditions may be expected,unless the decline

rise is artificial
and caused by manipulation. In fact,if it

prosperous
or

not

were

for

could

manipulation,merchants

stock market

almost

the

relyon

barometer, and let these large market

stand the expense
of collecting
the data necessary for
operators
conditions.
determiningfundamental
Unfortunately,however,
it is impossibleby studying the stock market alone to distinguish
between artificialmovements
and natural movements
; therefore,
alone

although bankers

as

and

merchants

watch

may

of the barometers,yet they should

one
of weight."
proportionalamount
"

Business

Money

Barometers

by Roger W.

Mr.

What
to
too

make

allowances

short, or

stock

market

for

Babson's

for
a

in

give to it only a
the

as

fair and

Accumulation

of

Babson; second edition,1910.

of barometer

sort

delicate and

Used

the stock market

Chart

should

we

have

if

we

had

that was
of mercury
general lack of accuracy in the
a

tube

sensitive mechanism
barometer

of the aneroid?

The

perfect,or, to put it
the adolescent science of reading it is
more
correctly,
far from having attained perfection. But it is not
Mr. Babson
It
here assumes.
imperfectin the sense
does dischargeits function of prediction,
when
viewed
reasonable
over
length of time, with almost
any
Let us take a few examples from
uncanny
accuracy.
Mr.
Babson's
own
picture chart, those composite
"plots"above and below a consistently
risingline repis

not

MARKET

STOCK

THE

54

BAROMETER

resentingthe steady increase in

wealth, and
each
to

shall

we

see

before

of them

how

growing country's

the stock

Mr.

in the squares
To
those who

them

draw

strikingchart.
it may
so
interesting
publication

Babson

had

dicted
pre-

the material

of his instructive and

are

with

unfamiliar

be said that he divides

for each month

his chart with columns

market

of the year

tically,
ver-

completes his squares horizontallywith

covered
lines showing the area
numbered
by all the
factors of business,above or below a graduallyrising
the chart representing
the growing
middle line across
and

wealth

of the country.

How

the Stock

It will be observed

they

tend

to

Market

that where

become

broader

Predicted
these

areas

in time

are

low
shal-

consumed,

is less the
complete the area
depressionor expansionis deeper or higher,as the case
above or below being assumed
be, the black areas
may
of
to balance each other, at least approximately. One
these black areas
of depressionshown
in the Babson
chart began in 1903,
only developing recognizable
and

space

where

the time

to

in the latter part

of that year, and continued

finally
emerging above the line of

throughout 1904,
growing wealth in the earlier part of 1905. The stock
market
of business depression,
anticipatedthis area
for a primary bear swing began in September, 1902,
and ran until the correspondingmonth
of 1903.
Mr.
Babson's area
of depressionwas
still rulingwhen
the
market became mildlybullish,
in September, 1903, and

STOCK

THE

56

MARKET

To

for the future.

is

barometer

market

use

word

BAROMETER

much-abused

unique. You
which

takes

word, the stock

will remember

that

tive.
qualifyingadjecis not rather unique,or almost
Our barometer
unique. There is just one of it,
unique,or virtually
be duplicated. It does predict,as this
and it cannot
simpleillustrationhas shown, the condition of business
tion
months
ahead, and no other index, or combinamany
do that.
Our
of indices,can
to
assume
highly
"unique" is

scientificand

go

assumed

radical

It does

not

often

plodes
ex-

change
pretend

in
to

glacialage. It tells us that there have

droughts and hard winters before, coming at

back

been

any

conditions.

general weather

Bureau

Weather

competent

fallacyof

the

no

uncertain

to

the

incalculable intervals.

and

When

it attempts

from its immense

specific
prophecy a singleparticular
collection of generals it is merely guessing. Does
anybody who happened to be in Washington at the
"

"

time

remember

the

"fair

and

warmer"

weather

the Taft inauguration? I went

over
prophesiedover
the PennsylvaniaRailroad on the followingday, when
the storm
had leveled every telegraphpole between
York
and Philadelphia. It was
said that
New
even
of the special
trains had so far missed the parade
some
that they were
in Washington then.
Even
the
not
aneroid barometer
can
only forecast a limited number
of hours ahead, accordingto the atmosphericpressure.

Cycles
There

are

other

will be
University

Overestimated

and
compilations,

noticed in

more

that of Harvard

appropriateplace.

UNIQUE

inclined

am

cycle theory,

the

to

H.

Charles

cycle into
market

of

does
stock

A
of

bull

1901;

his

that

Mr.

But

expansion
but

five years

two

sarily
point of time, do not necestops off in a final explosion and that
not
sion.
drop out of his period of depres-

three

in

crisis may

market

near-panic,with

that

seen

of

areas

Pacific

radical, may

development

in the

occur

middle

in the

occur

market, like the Northern

or

and

have

we

inflation,
extending not
their

the bottom

as

five-yearbull market.

tell you

less than

blow

much

force

much

too

splittingthe favored ten-year

but non-existent
five-yearbear

similar

would

or

years

all attach

57

in

assumed

an

even

that

very

did

Dow

and

Babson
and

think

to

FORECAST

OF

QUALITY

ous
seri-

more

of

course

panic of
a

major

BabMr.
swing in the stock market, as in 1907.
followed
that the latter was
correctlyshows
by
shadowed
business
depression that had already been fore-

bear
son
a

in the
If

all

panics

downward

industrial

and
could

market

crises

arose

movement.

from

the

predictedwith the suggested

rythmical certainty,they would never
happen because
sounds
This
thing
somealways be foreseen.
they would
same

and

stock

causes

like

Irish

of the

statement

said that

respect

an

an

that

be

"bull," but it may

fact.

Was

Irish bull differed

it

from

an

stand

Irishman

other

stock

market

as

who

bulls in the

always pregnant? I do not

this question of cycles,because

was

deeply into
abundantly clear that the
by any such consideration.
go

it not

well

here
it is

is little moved

MARKET

STOCK

THE

58

Order

BAROMETER

Is Heaven's

First Law

lection
general reservoir for the colof liquidcapital,
of the country'stinystreams
house for all the tinycontributions to
it is the clearing

Street is the

If Wall

the
be

of truth about the facts of business.

sum

often

too

repeatedthat

the

represents

deductions

the stock market

from

the

It cannot
movement

accumulation

of

buildingand real
business failures,
tions,
condiestate, bank clearings,
money
commodity
foreign trade, gold movements,
prices,investment markets, crop conditions, railroad
factors and social conditions,
but all
earnings,
political
that

truth, includingthe facts

of these

with

things,each

an

almost

on

limitless number

having its tiny trickle of

of

stock

other
market

effect.
It will be
made

in

an

seen

from

this how

earlier discussion

was

true

when

the
it

postulate
was

said

that

nobody in Wall Street knows all the facts,to say

nothing of the meaning of all the facts. But the
market
barometer
records them
impartial,
passionless
of mercury
records
the
as
certainlyas the column
There
is nothing fortuitous
atmospheric pressure.
about
shown

the stock market

that it

movement,

and

I think I have

be perextent
profitable
verted
be laws
to the ends of deception. There
must
governing these things,and it is our present purpose
if we
formulate them usefully. Many
to see
cannot
call
"What
George W. Cable said:
we
years
ago
chance may be the operationof a law so vast that we
only touch its orbit once or twice in a lifetime." There
cannot

to

any

is

no

UNIQUE

need

lose

to

Confession

after

thing

is

order
in

society,
to

in

that

obey

intelligence

the

is

not

by

the

first

Heaven's

law

great

that

law,

Exchange
even

enough

if

the
to

life
shall

we

just

all

elsewhere,

one

nize
recogized
organ-

will

individual

unaided
grasp

is

that

and

or

tion
predestina-

Westminster

the

But

59

of

mazes

saying

another.

Stock

FORECAST

reduce

or

absurdity

to

that

tend

ourselves

foreordination,

and

damned

OF

QUALITY

it.

VII

Chapter
AND

MANIPULATION

of

able

able

to

ourselves
in progress

he

major

case

market.

definite

he said

there

its

within
"line"

from

narrow

that

examples
range

what

"

for

of

gaining significanceas the number

accumulation
days increases,can only mean
whether

that

the

subsequent price

the market

with

an

has

become

the

we

have

preceding

swing

is

been

able

article

justifiedby

country's general
received

poses
purcan

of

ing
trada

trading
tion,
distribushows

movement

rated
satu-

or

oversupply.
True

But

or

of stocks

bare

our

as

called

have

"

and

sional
occa-

We

period

we

"

reaction,

largely negligible,daily fluctuation.

satisfyourselves

are

market

downwards;

secondary rally or
the incalculable,and

of

satisfied

that

in the

or

have

basis

have

be ; and

may

We

been

we

sound

movements

swing, upwards

suspension by
the

the

pause

have

we

inference

our
on

well

may

much

right when

was

three

of

starting

prove,

that

how

much

how

theory of the stock

Dow's

the

of

count

infer, and

to

been

take

to

TRADING

preceding chapters

READERS
here

PROFESSIONAL

Form

to

to

go

alone
the

we

It has

The
60

market

than
that

see

subsequent

business.

manipulation.

further

this.

major

every

condition

neither

From

of

needed

consequently

the
nor

has

PROFESSIONALS

often seemed

only for

what

has

to

the

counter

run

to

61

but
business conditions,

fulness.
represents its greatest useIt is then fulfilling
its true function of diction.
preIt is telling
what business is to-daybut
not
us

is

news

ceased

to

instance

of

which

reason

future

the

known

MANIPULATION

AND

of

course

discounted.
be

What

market

will be.

News

everybody

knows

business

factor,except in the

rare

is conthe stock market

fessedly
panic, when
taken by surprise.
these articles appeared in serial form in BarWhen
lowing
ron's,the national financial weekly,I included the folthe reading of our
inference,based upon
barometer, on September 18, 1921, the date when the
vember
written.
It appeared on Noquoted paragraph was
a

5, 1921.
sound
from
the

change in

"There

is

was

no

but

guess,

the main

scientificdeduction

direction of the market.

been

I have

test

in the action of the

challenged to

the predictionvalue of the stock market

offer proof of

barometer.

With

the

finance,the disaster to the

the unprincipled
crop, the uncertainties produced by deflation,
and tax-imposers,all the
opportunism of our lawmakers

demoralized
cotton

correctlyannounced

premises, and

pertinentinstance and

market.

current

It

of

aftermath
in coal

condition

war

of European

inflation

mining and

unemployment,
railroading with all
"

"

the business of the country

stock market has acted as if there were

at

uneconomic
these

wages

things

hanging
over-

the present moment,

the
better thingsin sight. It

saying that the bear market which set in at the end

of October
and the beginning of November, 1919, saw
its low
point on June 20, 1921, at 64.90 for the twenty industrials and
has been

65.52 for

the twenty

railroad stocks."

A
the

At

it looked

Contemporary Example

beginningof
of

the establishment
But

remembering

other, The

the last week

if the bear

as

BAROMETER

MARKET

STOCK

THE

62

Wall

of

market

might
low pointsin

new

that the averages

must
Street Journal said,on

August,

1921,
be resumed
by
both

averages.

confirm

each

August 25th:

the averages
concerned, they are far from
are
encouraging to the bull,but they do not yet jointlyindicate a
bear movement."
definite resumption of the main

"So

far

as

stocks

railroad

The

after

time, and

were

technical

forming

of

break

"line"

at

fraction

that
of

resumed, and
point through on the lower side it was
definite resumption of
low point,indicating
no
new
a
the main bear movement,
was
given. On September
2

ist, after

remarkable

continuance

of

the

line of

firmatory
probableaccumulation in the railroad stocks and a conrally in the industrials,The Wall Street
Journal's
said:
"Study in the Price Movement"

"It is beside the point to say that we are facing a hard winter.
The stock market is meaningless if it does not look beyond such

contingencies.It
better

seems

generalbusiness

stage for

to

be forecasting
a solid foundation

for

in the

spring. It may well be that the

primary bull market is being set."

By that time both the industrials and the railroads

had well-developed
lines of presumed accumulation, and
the former had significantly
made
a higher point than
that of the previousrally. The Wall Street Journal's
analysisof October 4th said:
"By

the

averages,

well-tried

only a

methods

of

reading the stock

decline of eightpointsin the industrial

market
average,

64

their backs

well

as

BAROMETER

MARKET

STOCK

THE

their faces.

as

Many

ago

years

not
talkingfor
Henry H. Rogers, who was
said to me : "The sensational newspapers,
publication,
which are alwaysattacking
John D. Rockefeller and his
associates for their wealth, have put millions into the
Oil Company.
You
and I
treasury of the Standard
know that we are not omniscient or all-powerful.
But,
by editorial innuendo and suggestionin cartoons, the
people who hold us up to popular envy and hate have
created
everybody
exactlythat impression. When

the late

who

have

may

advance
an

that

business

dictate

can

we

invaluable

do

to

business

with

our

asset."

us

in

assumes

own

terms,

The

same

we

have

agitation

brought about the dissolution of the Standard Oil into

its thirty-three
constituent companies. That
operation
trebled

the value

of

Standard

Oil

dentally
shares, and, inci-

priceof gasoline. Perhaps these

holders of the stock.
proprietorswere
the

was

before

may

have

the

rich

the

era

assumed

of the Ford
that it was

of

owner

motor

car,
a

That

however, and they

publicservice

car

paper
news-

pay

more

to

make

for

his

gasoline.
A

Speculator's
Reasoning

Assumption of an unfair advantage for the professional

is absolutely
baseless.
The reasoningof a professional
like JesseLivermore
is merely the reasoning
backed
presented in this and preceding articles,
by a
He
said on
October
study of generalconditions.
3,
1921, that he had been buying, and, giving him the
credence
of ordinarycourtesy for such a voluntary

PROFESSIONALS

it is clear that he

statement,
his

mind

own

would

think

This

MANIPULATION

AND

is

what
at

trying to shape in
public
investingand speculating

the

date

as

was

far ahead

manipulation.

not

65

he could

as

see.

speculatorsare
deceptiveappearance

These

creatingany false market or

lure the public into the game,
like the
of activity
to
"barker"
outside a Midway
October
On
show.
3d
of Barwas
Jesse Livermore
quoted in the columns
based
ron's as saying that "all market
movements
are
sound
on
can
anticipate
reasoning. Unless a man
ited."
future events
is limhis ability
to speculate
successfully
And
he went
add:
to
on
"Speculationis a
It is
business.
It is neither guesswork nor
a gamble.
hard work and plentyof it."
not

Dow's
Let

Dow

in The

Wall

In the editorial of
"The

market

Definition

this with the words

compare

us

Clear

is not

of Charles

Street Journal

July 20,
like

twenty years
1901, he said:

balloon

plunging hither

H.

before.

and thither

ered
whole, it represents a serious,well-consideffort on the part of farsightedand well-informed
to
men
adjust pricesto such values as exist or which are expected to
As

in the wind.

exist in the

not

too

remote

whether

future.

The

thought

with

great
be advanced, but whethei

price can
ors
to buy will lead investthe value of property which they propose
hence to take stock at figures
and speculatorssix months
from ten to twenty points above present prices."
operators

is

Observe

not

deftlyexpressedthought
nition
the more
perfectlyshaped defiparallels
Dow.
Berdetached and dispassionate

how

of Livermore
of the

the

none

too

66

THE

nard

M.

STOCK

MARKET

Baruch, after the

BAROMETER

war,

gave

evidence before

Congressionalcommittee as to a market operation

by which he had largelyprofited.He showed in the
that he had merely analyzed a known
simplestmanner
effect.
and foreseen clearlyits probable market
cause
him would quesHe showed, what nobody who knows
tion,
a

that he had

"inside information,"

employee

and

that

had

sold the

no

such secrets

no

as

secrets

in

called,

Washington department

of his office. Wall

of littlevalue.

so

They

may

Street holds

givean

unfair

advantage so far as individual stocks are concerned,

but they could be entirely
neglectedwith imperceptible
if the secret were
worthless
not generally
loss,even
as
as

the seller of it.

A
What

is there that

Good
was

Loser
done

"

by James

R. Keene

or

other great maror

ket
Jay Gould, by Addison Cammack
figureof the past, which could not have been done,
in the fairest way, by men
gence,
of equal brains and intelliwillingto pay the price of arduous study for
the knowledge necessary
is there
What
to success?
that JesseLivermore
M. Baruch
Bernard
do which
or
is open to criticism? They pay the seller his price,
but
they do not accept stock sold "with a stringto it."
for selling
The vendor
thinks his reasons
as
good as
theirs for buying what he sells. If he were
a jobber in
the woolen
trade, sellinghis investment in American
Woolen
United States Steel
stock, or a banker selling
the devastatingforeigncompetitionwhich
common
on
he thinks he foresees,he would
consider
his own

PROFESSIONALS

AND

67

of information

sources

better than those of the lators.

specutake the same
risks that he does.
They

They
often

are

MANIPULATION

but

wrong,

I have

known

many

heard

them

whine

when

do

they

whimper

not

about

it.

operators of this kind, and I never

when
they lost,or boast greatly

they won.
and

"

Bad

the little gambler who

But

One

takes the gutter view

of

pits his wits against trained minds, not

merely those of the speculatorsand the professional
the floor of the Stock Exchange, but the
traders on
business requiresthem
minds
whose
of men
to study
This kind of gambler is a bad
business conditions.
loser, and is often highly articulate. He, or those
dependent upon him, is lucky if he receives such a

Wall

Street

lesson

his first venture

at

relation with Wall

Street

by

him

people like

or

credit of the country,

it is not.

Refusing
H.

Charles

to

denouncing it

we

based
values.

his

may

who

tested

sufficient stock

to

the

that

show

bling
gamwere

the

Jay

Gould

Jay Gould

knew
as

any

his

whether

man

pendence,
indeincorruptible

stock market
market

well and

newspaper

of his editorials

one

positionin

He

everlasting
that
assume
confidently

enjoyed his confidence as much

of the time, largelybecause of
in

To

him.

PartnershipWith

Dow,

says

as

be all that if the stock market

hell. It would
made

confines his future

that he

with
there

that

Gould

primarilyon
purchases of
a
was
public

BAROMETER

MARKET

STOCK

THE

68

foreseen the public

correctly
of values which he thought he had recogappreciation
nized.
what
he expectedhe
If the response
not
was
would not hesitate to take loss after loss of a point or
from a detached
so, in order to reconsider his position
point of view. Some years ago there was a pathetic
derelict in New
Street,one of the unlovelyfringeof
market, who could truthfully
say that
any speculative
been offered a partnershipby Jay Gould.
he had once
response

he

ago

years

many

his face in

missed

I have

he had

whether

"

was

recent

but not

years,

promising young

great

of

member

Exchange. His execution of orders on the

floor was
ing
remarkably good. It is a difficultand exactIt requiresabout that combination
task.
of instanta
judgment and action which would mark a
star
player in big-leaguebaseball.
To this broker a number
of Jay Gould's orders were
No broker, it is needless to say, saw
entrusted.
all of
them.
Gould was
so
pleasedwith the way his business
the Stock

was

done

him

it

partnership.To

limited

refused.

was

Gould, I have
and

you

That
see

at

to
a

to

and

man

Gould's

offered

surprise,

actuallysaid:

of your
great many
make
losses than
more

"Mr.
orders

business I want

that his vision

to

share."

restricted

He

profits.

could

not

only one side of

many-sided activities. Opportunity knocked

his door

showed

tried

"

that he

administrative
as

me

Mr.

broker

The

executed

seem

is not

Gould's

for the young

that he sent

indeed it

was

to

could

kick it in

"

do

only one

to

but

the young

man

thing well. His

been worthless,

judgment would have

afterwards proved, for he drifted

out

of

PROFESSIONALS
the Stock
I suppose,

few

AND

Exchange into New Street

into oblivion. Truly, many
An

for the

69

and

from

are

there,

called but

chosen.

are

Rare

MANIPULATION

IntelligentTrader

talent of any

kind

that it is

reason

the market

great rewards

commands
The

rare.

who

amateur

gards
re-

He holds
gamble starts wrong.
he is losingand takes small profits,
when
on
to his
continuingregret, when the market is going his way.
The
speculatorshe envies, those he charges with
cogging the dice and marking the cards,exactlyreverse
his process.

they run
them
may

or

as

However

strong their conviction may

quicklywhen the market does

the inferences they have
justify

be, as Gould
One

of the

often was,

too

not

agree

drawn.

far ahead

of the

be

with

They
ket.
mar-

I ever
in
met
men
intelligent
Wall Street,not long dead, was
teacher and
a former
fine classical scholar,whose
a
hobby was
collecting
coins but whose
business was
rare
speculation.He
saved no market turns or broker's commissions
by partnership
in a Stock Exchange house.
He
was
justa
before a customers' board
or
near
speculator,
sitting
And yet that man,
a stock ticker.
by judgment,study,
nerve
tempered by caution and, above all,a readiness
his error
made
less than $30,000
to see
never
quickly,
tune
fora year ; dying at a good age, leavinga comfortable
coins which brought excellent
and a collection of rare
prices.
He
would select his stocks on analyzed value and
He would buy with constudy the market movement.
most

STOCK

THE

70

MARKET

BAROMETER

He would
always well within his means.
two-pointloss on a thousand shares of stock

fidencc but
take

hesitation

without

if the

market

did

not

his

move

discouragement happened he said

that he could not form
correct
a
judgment unless he
view.
He had originally
got out and took an objective
which would have been necessary
to
about the capital
for the education of a doctor or a lawyer, or to
pay
in business.
He gave
his undivided
but by
start them
no

that

When

way.

selfish attention

means

He

business.

what

to

had

he

his

made

always long of stocks earlyin

its last stages he generallymade

was

bull

a trip
market, and in
He was
to Europe to add
to his collection of coins.
others like him.
no
solitaryinstance. I could name
But I am
if he
to speculate,
not advisingany man
even
has the moral stamina to comply with the same
ing
exactrequirements. If you have a business that you
like,one which keeps you comfortably with a margin
for the unforeseen,why speculatein stocks?
I don't.

The

Some

Dial

and
intelligent

of

the Boiler

irrelevant

many

questionshave

been put since these discussions

which
has something of both
economic
am

not

necessityfor
to

be drawn

and
I
it is and

am

into

stillless into

discussion of academic

one

the
describing

the great and

is necessary,

the

began, and one of them,

qualities,
disputesthe
professional
speculator.I
of abstract

stock market

useful service it

to explainits by
therefore,

nomics
eco-

ethical tions.
quesbarometer
as

performs.

no

means

com-

It

THE

72

to

that

end

useful

extending

be

would
But

altogether.
understand

MARKET

STOCK

it.

long

Perhaps

suggestions
its

so

to

for

usefulness.

BAROMETER

eliminate

as

in

it

the

it is

exists

so

improving

doing
the

Exchange

Stock

we

business

our

may

barometer

to

develop
and

Chapter VIII
MECHANICS

been

shown

ITmanipulation
has

main

the
as

OF

that, for

has, and

primary

or

the

But

of

theory,

forces

third

other

is

time, there

in individual

only

or

in

be.

may

it forces

or

This

in evidence

in

few

market,

It

the
on

and

traders

shows

that

stocks.

There

is

even

oil

the

upon

out

cover,

too

special
weak

some

the

as

case

or

good

reasons.

Gambler

bear, tends

or

say,

many
a

for

"

the

the bull side ;

crowd"

but

easily have

may

to

goes

with

groups,

shakes

bears

in

or

professional "scalping" is often

Trader

As

company

the

or

in it, with

account

Every primary market, bull

much

market

raid

secondary swing

The

itself.

beyond

manipulation,

in small

Petroleum,

of

sort
a

bear

or

of Dow's

bear

for

or

effect.

striking temporary
holders

bear

Mexican

to

market,

and

bull

room

stocks,

the

upon

attention

stock

movements

well-recognized leading issue.

group,

the

in

effect

(the daily fluctuation)which

movement

all the

on

real

above

corresponding secondary rally in

the

no

primary bull

are

reaction

secondary

In

in the

practicalpurposes,

have,

movement

actuating

manipulation.

all

can

reflected in the averages.

market

MARKET

THE

there

gets

to
to

run
over-

be

too

conversely, the "loan

shorts

premium

for

are

borrowing

lending them,

74

THE

MARKET

STOCK

BAROMETER

is called

correspondingto what

in

"backwardation"

is the

He buys
chance.
professional's
in a market
which is oversold or, with testingsales,
which has been
he tries out the strengthof a market
bought not wiselybut too well. The small speculator,
the small gambler, suffers at the
and more
particularly
hands of the professional.He is a follower of "tips"
He
has made
real study of the
and "hunches."
no
thingsin which he trades. He takes his information
ity
without discrimination at second hand, lackingthe abilto distinguish
good from bad. He has no business
in the market, in the firstplace,and it could get along
This

London.

well without

very

that it is
Stock

him.

he,

or

It is

great mistake to suppose

people like him, who keep the
a

Every one of these

will tell you that their customers
are
becoming better
all the time.
informed
if ignorantpeople
Of course
will sit in a game
requiringexpert knowledge, against
others who
understand
the game
perfectly,
they can
blame
their losses on no
but themselves.
one
They
do, in fact,audiblyblame Wall Street. A substantial
Exchange

houses

in business.

in probrokers is consumed
part of the time of most
tecting
people from themselves. It is a thankless job.
A

fool and

his money

Giving
But
main

it must
current

relation
to

the

to

are

soon

Dog

be obvious
of

that

parted.
Bad

that this is

speculation.It
current

primary market

Name

that the
movement.

bears

no

part

about

of the

the

dailyfluctuation
There

same

does

are,

of

MECHANICS

OF

MARKET

THE

75

varying degrees of knowledge, but it is a vital

mistake to suppose
in stocks (for the
that speculation
rise at least)is a sort of gamble in which no one
can
win unless there is an equivalent
loss by somebody else.
course,

There
weak

need

be

holders who
miss

have

movement,

get hurt.
So far
have

more

blaming Wall

become

case

The
hanging him.
pleadssomething of
contracts
court

asks him

for
He

account.

slow horses,or

actions
secondary re-

people who
possibilitie

great many

tion
the culmina-

are

on

to

Street is concerned,it seems

and
givinga dog a bad name
defaultingbank employee usually
the kind.

All his transactions

of record; but how

an

says

exact

statement

seldom

and
the

of his speculative

nothing about fast

women

and

other devious ways

of spending
He
pleads that he was
people'smoney.

other
"robbed

in the

The

of

matters

are

bull market.

buying on
latent hope that they may
unload
than themselves, are
covetous
apt

the

as

out

and, in
profits;

lost sightof values and

only,with
somebody

to

shaken

are

part of their

of such

loss in

such

no

the many

in Wall

Street,"and sentimental people take

him back to their hearts, registering
horror
at the
whose
temptations of the wicked financial district,
simplestfunctions they have not been at the pains to
understand.
A

small

and

unsuccessful

speculator,chagrined at

in the stock market

but
to make
inability
money
the real reason, picksup a vocabulary
to understand
failing
of technical phraseswhich is apt to delude people

his

who

know

even

less of the stock market

than

himself.

THE

76

MARKET

STOCK

BAROMETER

and
the
denouncing the "specialist"
He
classes them with the croupiers
"floor trader."
of a gambling house, and says that they are not even
that because their dealer's chance is
as
as
respectable
extortionately
larger. To take the floor trader first,
it may be pointedout that his small but real advantage
only stands him in good stead againstthe novice who
is tryingto snatch quickprofits
in an active market
by
the merest
guessing. No competent broker encourages
the outsider to do anythingof the kind,and the brokers
of my
fairlyexhaustive acquaintancein Wall Street

is fond

He

of

do

their best to get rid of

be

rather
liability

than

asset, and

an

is apt to

who

customer

is

always

nuisance.
The

There
the

Floor

is

no

Trader

and

intention

here

practiceof Wall

There

Street

Turn

the Market
to

and

write

textbook

the Stock

on

Exchange.

coveringthat field. All that

is necessary
clear the mechanics
is to make
sufficiently
of our
those thingswhich
barometer, and especially
be assumed, rightlyor wrongly, to influence it.
may
It is sufficient to say, therefore,that a "floor trader"
of the Stock Exchange, and is
is necessarily
a member
He
affectedly
unusually a partner in a brokerage house.
excellent books

are

operates

for himself.

He

commission, and he is at an advantage

of the market
speculatorin the matter
of course,
the difference between
The
more
pricein the market.

closer this

turn

is,but it may

be

the

pays
over

himself

no

the outside

turn, which
bid

and

asked

active the stock

averaged at

is,
the

quarter

MECHANICS
of

OF

MARKET

THE

77

Assuming that the price of United

States steel common
is 90%
bid and gol/2 asked, the
who
customer
gives an order to sell cannot
expect to
get better than 90^4, while, if he wishes to buy, he
one

must
turn

cent.

per

903/2. The floor trader can

not, of
part of it for himself

often

pay
or

He

be able to deal

may

90^

at

this

againsta

course,

"

customer.

save

or

even

to

sell at the asked

he does has its effect

price. Whatever
in the dailyfluctuation. In practice
it means
that the
floor trader can
afford to trade for a quickturn where
the outsider cannot.
In dailycustom
the trader goes
home
at the close with his book
to
not hesitating
even,
take an occasional loss,or glad to come
out even.

"Bucketing"
It is obvious
turn

of

point or

tried
of

as

odds

on

would
of such
customers

do

so,

have

gamble,
him

he

cent

to

do

the broker's
each

way

missions
com-

against

quarter per cent; so

would be bettingheavy
a

chance.

establishment
all the

of

turn

even-money

encourage
an

an

legaleighth per

mere
an

has

trader,snatchinga
tomer
advantage. If the cus-

it he would

the market

him, with
that,

to

that the floor

then

"bucket

that, because

works

on

them
time, fleecing

the
as

the

shop"
keeper

theory of new
thoroughlyas

possiblewhile he has the chance. None of his orders

self
is reallyexecuted in the stock market; so that he himpocketsthis extortionate dealer's chance. But we
are
consideringthe Stock Exchange itself,and its
market
as
a trade barometer.
Bucketingis
speculative

THE

78

of

part

no

STOCK

BAROMETER

Stock

Exchange's business, and

if they choose.
stop it elsewhere

policecan

the

the

"

Old

much

to

and

both

Commission
amount

MARKET

Customers
Satisfied
ways

and

if the customer

the market

do

turn

is

buying on
to pay
ability

not

values,

for his
ample margin, or with the
stock outright,
togetherwith the tested belief that the
stock he has bought bids fair to look attractive at
much
higher figures. He is the sort of customer
the Stock Exchange houses strive to serve.
A house
in continuous
business since 1870 has rewhich was
cently
It had
at least one
tomer
cuschanged its name.
who had been on the books for fifty
years, and
for twenty years
and longer. This
does not
many
look as if the outsider always lost money
in Wall

with

Street,or

as

if the conditions

of business

made

losses

inevitable.
A
to

like any other business,works

clients all the time, exactlyas a paper
or

brokerage house,

get

new

subscribers.
But the experienced
get new
broker
will tell you that while advertising
ested
will bring the customers,
nothingbut disinter-

magazine works
methods

to

service will

keep

them.

I have

often

noticed

in Wall
Street is curiously
reallysuccessful man
inarticulate. Experiencehas taught him to keep

that the

his tongue between his teeth,and he is not

The
unsuccessful seem
to be

at

all

municative.
com-

unable

keep their losses to themselves,in most cases,

is usuallyfound that they are thus articulate

and
from

to

it
a

THE

8o

STOCK

Transactions

on

MARKET

the

of
the passage
of witnesses.

without
presence

BAROMETER

floor
a

written
The

of mouth,

by word

are

contract

or

of the

honor

the

even

partiesis

hardly recall a case where it was

be occacalled in question. There
must
sional
necessarily
but these are
referred
for
misunderstandings,
The specialist
could not
adjustmentin the usual way.
I

absolute, and

can

stay in business if he did

brokers who employ him
agent in

like

in business

not
as

much

at

position. His very

depend upon it.

ProfessionalTrader's

heart

as

Limited

averages? It is negligibleso

far

as

at times, in
swings and mainly influential,

stocks

in the least considerable

fluctuation.

the

ing
stand-

movement,

trader

on

major
secondary
particular
the daily

the

eter
operationsdo not affect our barommember
degree worth serious consideration. ReSuch

in any
the character
and

other

Influence

is concerned, a small factor in the

movement

any

livingand

is the influence of the active bear

What
the

the interests of the

have

twenty

of the twenty

industrials used

railroad

in the two

stocks

averages.

Every one of them complieswith the stringentlisting

requirementsof the New York Stock Exchange. Each
concerned publishes
the fullestpossible
figures
company
of its operation,
at frequentintervals. There
are
no
"inside secrets,"of market
value,which could by any
affect more
than a singlestock out of forty.
possibility
It may
of them unexpectedlypasses or
be that one
increases its dividend. The effectupon that particular

MECHANICS

OF

MARKET

THE

in the
stock,if there is any real surprise
is

recall any

stocks of the

(which
spread over
I do

group.

same

matter

highly doubtful),is negligiblewhen

the other nineteen

not

useful illustrative instance; but suppose

expected
undividend action produced a fluctuation of ten
It would

only make a daily difference in the

of half a point,which would
stantl
inbe almost
average
if the dividend action presaged no
recovered
broad generalchange in business conditions.
If there
had been any such change we may
be entirely
that
sure
it would
have alreadybeen reflected in the stock market,
points.

which
or

any

would

far

about

more

it than

that,

of directors.

board
Short

know

SellingNecessary and Useful

discussion

moralityof short sellingwould

be utterlyout of place here.
It is true that the bear
cannot
profitexcept where another loses,while the
bull at the worst
a
profitwhich another man
reaps
might perhaps have made if he had been attending
free market
But every
for
to his business.
strictly
than hurt by traders willing
anything is helped far more
this liberty
to sell short.
not
If,indeed,there were
the result would
be a most
dangerous market, liable
to
an
unsupported panic break at any stage of its
Voltaire

progress.

God

it would

must

have

have

been

became
in

on

the

said that if there

had

been

invent

long ago,

the London

Jordan's Coffee
invented.
was
selling

necessary

in the
Stock
House

to

not

been
one.

It

ward
days when what afterness
Exchange did its busioff Cornhill,that bear

THE

82

It
that

soon
some

BAROMETER

MARKET

STOCK

became

patent necessity;and

of the most

serious breaks

it is curious

in the London

occurred, not in the wildly speculative

the English law
but in bank stocks,where
securities,
prohibitsshort selling.It was unsupported pressure
the Baring
bank stocks which helped to make
in some
market

have

crisis of 1890

serious.

so

There

is

no

such

valuable

bear
the uncovered
as
fallingmarket
stance
init is absent, as in this particular
When
account.
hastily
nothing but a bankers' combination
improvisedcan check the devastatingdecline. As the
Stock Exchange was
London
reorganized in 1922 on
further government
its old basis,without
meddling
Parliament
will repeal this law and
and regulation,
substitute (as a protectionto bank
plete
stocks,that comand constant
which is always the public's
publicity

support

best

for

safeguard.
Protection

When

Charles

H.

of ListingRequirements
Dow

speculationgenerally,and

wrote,

twenty years

of
incidentally

his

ago,

of

theory
of the market movement,
of the industrial stocks,
some
included in the average
and traded in freelyon
the
floor of the Stock Exchange, were
in what
then
was
called the unlisted department. It would
be difficult
Street Journal speakingto-dayof
to imagine The Wall
of the industrials in the Dow-Jones average
one
as
a
blind pool. But it did not
hesitate to apply that
to the American
epithet,editorially,
Sugar of Henry
O. Havemeyer's day. The
elimination of the New

MECHANICS

York

Stock

the most
It

OF

THE

MARKET

83

Exchange'sunlisted department is one

creditable

from

instances of reform

of

within.

conservative members
bitterly
opposed by some
of the Stock Exchange, mainly those who
profited
largelyby that vicious vested interest. An ex-president
of that institution,
now
dead, took upon himself
to berate me
loudly,in the presence of his customers,
for advocatingthat eminentlynecessary
reform.
He
said that such agitatorswere
driving business away
from the Wall Street in which they earned their living.
was

He
the

of his office the newspaper

and
and am
service with which I was

threw

financial

out

news

connected.
But

his

own

made

customers

him

reinstate both,

gamated
humiliatingcelerity.American Sugar and Amalties
Copper and the other formerlyunlisted securistilldealt in on the floor of the Exchange.
are
that they laid their management
Those companies saw
under
the gravest suspicionby a refusal to comply
of publicity
with the terms
so
wholesomely exacted
from reputablecompanies. Stock Exchange houses
vocated
are
naturallyinclined to look askance at reforms ad-

with

from
of them

even

outside.

But

I have

never

heard

one

suggest the restoration of the unlisted

department.
Federal
It

was

further

without
which

said in

might

an

be done

Incorporation

earlier discussion that

for the

the enactment

of any

only embarrass

honest

something
protectionof the public,
of these "blue-sky"laws
enterprisewithout seri-

THE

84

BAROMETER

MARKET

STOCK

operationsof the crook.

and
set forth the sane
discussion I can briefly
and
method
which protects the speculator
in Great

Britain.

Under

of

everythingelse

has been

Stock
1908 the London
in any security
the moment
That
House, London.
until the fullest possible

made.

that the

be, the speculator

After that,under
caveat

emptor
prevails.It is properlyheld

buyer beware
buyer can protect himself,as
"

and

adventurous

rule of

this statute, the old common-law

let the

commissions

However

of the company
the purposes
may
knows
all about them from the start.

"

investor

of

contracts,

purposes,

ful
success-

panies
is there called the Com-

what

(Consolidation)Act
Exchange is enabled to deal
it is registeredat Somerset
be made
cannot
registration
disclosure

In this

the

ously impeding

should,when
find out all about the property, its originand
he can
its present conduct,for the fee of a shilling,
set
at Somerhe

House.
There
to

would

doubtless be all sorts

Federal

law enforced
in the

and

use

of

ignorantopposition

incorporationof this kind, with the

tion
the publicprotectedthrough limita-

of the mails.

But

am

convinced

that

it

might well be done, and should, of course, be done

in a strictly
of its
non-partisanspirit.To the utmost
Stock Exchange protects its
York
abilitythe New
members
Curb

and

Market

their

Association

in itself. I have
is not

But

customers.

is simplyan
no

reason

to

the

New

York

unlisted department
believe that its

capableand honest, and I have

to say againstits membership. But sooner
a word
later it is calculated to prove a source
of danger
government

not
or

and

MECHANICS
scandal.

If any

OF

of

THE

MARKET

85

its members

imagine that they

have something to lose, in the settingforth of the
absolute and originalfacts about everythingin which
mistake
they deal, they are making exactlythe same
that ill-advised members
made

when

of the New

York

Stock

change
Ex-

disagreeabletask
of compelling a number
of industrial corporations
to comply with the listing
requirements,on pain of
being stricken from the list.they shirked

Real
Let

the

Reform from Within

crusaddisclaim,however, the intention of ing,

bent toward
that blatant and ignorant
or
any
"reform"
which has made
such costlyexperimentsin
In my
recent
experienceof it the standards
years.
of the Stock Exchange have steadily
improved, to the
advantage of the investor and of the small
permanent
who is,after all,only an investor in embryo.
speculator,
in Dow's
Practices were
day which would
customary
not

me

be

tolerated

In

now.

any

future

bull market

the scale of

James R. Keene, when

practic
he distributed Amalgamated
Copper, would be imthat the publicitynow
for the reason
of
requiredby the Stock Exchange, in the accounts
it impossibleto persuade
would make
such a company,
that the prospects
reckless privatespeculator
the most

manipulationon

of the
book

"wash

new

combination

value, on
sales"

any
were

made

expert

it worth

test.

Even

four

in those

largely a figment of

imagination,and "matched

orders"

were

times its

days
the public
declined by

THE

86

suspected.

is

transactions
not

have

Stock

The

obeyed

letter

mere

been

forty

years

of

his

strength.

was

if

repute

Exchange
in
in

even

industry

American

BAROMETER

of

house

brokerage

any

MARKET

STOCK

rule

spirit
those

ago,

only

their

against
in

and

days,
when

nature

was

fictitious
It

word.
it

whatever
the

infant

awakening

to

was

might

giant
ness
conscious-

of

THE

88

STOCK

MARKET

BAROMETER

long before the war, very few have not passed

due to
through a stage of financial reorganization,
watered labor in construction,
long before rents began
The stock market
has a short and simple
to advance.
of dealing with water
in stocks. It exists for
method
of squeezingthat water
the purpose
The process
out.
does not involve a receivership.
The
"water"
begs the question. You
very word
of an
call the capitalization
industrial flotation
may
"water" because you do not see the potentialvalues
of a great creative organization. But with justice,
and better knowledge, the late J. Pierpont Morgan
ticipated
anmight have called that capitalization
intelligently
it may
be
and I shall
growth. Whatever
give an example from the most strikinginstance,the
of the United States Steel Corporation
capitalization
is forever adjustingprices to
the stock market
set

in

"

"

values.

The

water

evaporates.

soon

Squeezing Out

the Water

To

are
we
studyingthe stock market
recapitulate,
barometer, having established the fact of its known
and orderlymovements
the long primary swing, the
secondary reaction or rally,and the dailyfluctuation;
of two
and to do this we
are
taking the averages
"

groups

of stocks

"

twenty active industrials and twenty

adjustmentsof the pricesof these

stocks individually
must
primarily be based upon
values.
the Stock Exchange
For all practical
purposes
is an open market, and the business of such a market
active railroads.

All

"WATER"

IN

BAROMETER

THE

89

estimates to a common
basis,
adjustconflicting
is expressed in the price. By manipulation,
which
James R. Keene advanced the priceof Amalgamated
Copper twenty years ago to one hundred and thirty,
of financierswhich offered the
and obviouslythe group
stock at par originally,
assumed
without success,
one
is

to

hundred
make

as

its

which

value

for it. The

adjustmentsin

stock market

day. But,

over

brief in retrospect, it knocked

one
pointsoff the highestfigureAmalgamated
seems

attained in

generalbull

not

period
dred
hun-

per
Cop-

market.

This is the business of the stock market.

consider both basic values and prospects.

of

does

It has to
At

the close

ket,
mara primary bear
major downward
movement,
priceswill have passed below the line of values.
The causes
of the liquidation
will have been so serious
ings
that people have been compelled to realize their holdtheir normal
at less than
worth; less,indeed,
of the company's
the worth
than their book value
of productivecapacityand
assets, that is,irrespective
good will. The pricesof the standard stocks will be
affected by the pricesof "cats and dogs"
injuriously
of them of such a
dealt in on the Curb market, many
a

"

that any bank would refuse them as collateral

the banks are
in its loans. When
compelled to call

character

loans

made

on

the
Exchange securities,
propertiescompetentlyand

Stock

of tested worth, of

stocks
tably
repu-

managed, will be the first to suffer because it is

those stocks which
are
pledged in bank loans. The
constantlyrecruited Curb group is highlyspeculative,
but tradingthere is always limited,
and indeed safe-

THE

90

to

stocks.

Curb

carry

is necessary

large margin which

the

guarded,by

BAROMETER

MARKET

STOCK

Profitsand

Stock

Tax

Income

Conversely,a bull market starts with stocks much

below their real value,certain to be helped in anticipation
business
by the generalimprovement in the country's
the stock

which
In the
and

discounts.

foresees and

market

long advance values will be graduallyovertaken,

the close of the

toward

advance

an

uninformed

public,incapableof recognizingthe bargains which

were
started,is buying
offeringwhen the movement
on
prospects only. Experiencedtraders in Wall Street
say that when the elevator boy and the shoeblack are
askingfor bull tipson the market it is time to sell and
I sailed for Europe earlyin October,
go fishing.When
1919,

to

report

on

financial conditions

Germany, the market

of a long bull movement.
then

in the last

was

The
It

curious.

in Britain

and

sanguine stage

inflationbull argument
that the

people who
had largeprofits
would not sell,and could not sell,
because in turning those paper profits
into cash they
would show such a large earning of income
for the
that the tax-gatherer
take a prohibitive
would
year
share of the profits.We
in the
analyzed this fallacy
smoking saloon of the Mauretania, and at least some
was

most

of the business
with

Uncle

men

Sam.

because
itself,

it

bull

account

was

glaringly
up

on

The

was

board

argument

picturedthe

that it would
to

concluded

be

most

to

divide up

preposterous in
vulnerable kind of

was

possibleto conceive.

It

be shot at, and the poorest marks-

"WATER"

IN

THE

BAROMETER

could fillit full of holes.

man

five of the Mauretania's

apparatus

days

of
we

begun

to

that

out

of commission
When

voyage.

learned

Rough seas
and put
lifeboats,

that

in

the wireless

for the last three

we

arrived

the stock market

free the bulls of stocks from

of

stove

at

bourg
Cher-

itself had
the

rassment
embar-

They had
much
about in that respect by the end
not
to worry
of the year, for the paper
profitshad been rapidly
extinguished.
paying excessive income

Well-Distributed

tax.

Holdings

permanentlyholdingup artificial
One great
pricescreated by an overbought market.
protectionto the publicis in widely distributed stock
in Wall Street owns
a single
ownership. When
group
all of the stock in a property like Stutz
practically
Motor, that group can call the market priceanything
it chooses.
It will not be the "market"
pricebecause
Abraham
Lincoln pointed
there will be no real market.
that you could not talk five legs onto
a
out long ago
dog by renaming its tail. All the stocks in the average
have shared in the wide and healthy distribution of
securities. The
holding of Pennsylvania
average
of any of the
(which has the greatest capitalization
railroads in our
average) or of the five and a half
There

is no

million shares
near
as

the

one

way

of

of United
hundred

States Steel

common

shares for each holder.

ing
is nothSo

far

publicis concerned, there is,indeed,safetyin

numbers.

92

THE

MARKET

STOCK

"Valuation"
To
who
what

Market

and

Prices

quoted at the beginningof this article,

inquirer
about water?"
well,
we
asks,"What
answer,
may
the

it?

about

We

averages.

show

cannot

nominal

He

us

any

Commerce

water,

the

the
a

For

by

state
of the Inter-

committee

of

month

that he

could be instituted

could

pricesof

normal

tell him

pricesand not at
Stock Exchange list.

by

out

in the

water

any

at

Commission

market

us

further and

valuation which

carried

Congress and

taken in

go

in the whole

par,

the

show

cannot

may

the railroads,no

with

BAROMETER

begin to

compare

securities themselves,

normal

year,

with

the

flated
pricesnot inflated on overestimated prospects or deby forced liquidation,
brought about largelyto
not
receipts
protect unsalable securities and warehouse
associated with the railroads

or

the standard

industrial

companies in any way.

and knowledge available,
Every scrap of intelligence
uninfluenced in any real degree by manipulation,has
been brought to bear in the adjustment of the stock
market
prices. Reproductionvalue, real estate value,
franchises,
rightof way, good will everythingelse
have been brought into the free-market estimate in a
gress
which no valuation committee
appointedby Conway
"

"

could

ever

Commission's
worth

attain.

The

valuation of
"

if it has

any.

Interstate

railroad
As

has

before

it is

merely
estimate

true

of fixing
it were
the property, if the method
it is
just,it is out of date the moment

indeed,months

Commerce

printed.

torical
hisof

commonly
printed,or,

But

the

Stock

"WATER"

Exchange price records

from

month
to
to

other

any

advance

year

to

day

year,

day,

to

from

bull

bear

civilized country accept that valuation and

real money
on
it,without reference to the

arbitraryestimate

The

It is

from

the value

month, from

$3

of Jevons'scycle
market, from one
and
another; and the bankers of America

market
dates

to

BAROMETER

THE

IN

of the Interstate Commerce

Fetish

of

astonishingto what

mission.
Com-

Stock

Watered

depths of foolishness

the

fetish of watered

stock has carried this country.

The
in stocks and bonds
of its railroads,
capitalization

allegedto represent

water,

is not

one-fifth that of the

railroads of the British Islands,mile for mile.

It is

less per mile than that of any European country or

railroad in
of any government
or
privatelyowned
I am
Britain's self-governing
colonies.
afraid to
not
go

on

record

railroads

with

the

statement

that

the American

their
on
uneconomicallyundercapitalized,
real value. The charge of watered stock made
against
the listed industrial corporationsis equally absurd.
than squeezed out the
The stock market had far more
in that capitalization
at the Stock
water
Exchange
pricescurrent in 1921. It had squeezedblood.
As this is written,United
States Steel common
is
sellingunder $80 a share. But stringentanalysisof
industrial corporationoffering
the most
exhaustive
an
in the world givesa book
figuresof any like company
value

to

are

the

twenty years

common

of its

stock of $261

share.

In the

historyit has put upwards of

STOCK

THE

94

MARKET

BAROMETER

billion dollars into the property in

in the
and so littleis this watered

construction,
capitalthat this
investment out of earningsis representedin propnew
erty
account
by only$275,000,000. The quick assets,
largelycash, are over $600,000,000 alone,something
like $120 a share with the whole concern
scrapped.
A
is the water?
stock capitalof
Where
common
but itis onlyrelatively
large.
$550,000,000 looks large,
Was
not
Morgan right if he called this intelligentl
anticipatedgrowth? If his spiritcould revisit the
ished
pale glimpsesof the moon,
surelyhe would be astonat

And
common

of

his

own

new

moderation.

yet the distribution of the United States Steel

and preferredstocks,made
in the major swing
great bull market,

brought about largelyby

the most
ever
stupendous manipulation the market
under the direction of the late James R. Keene.
saw,
And
the end of that manipulation? It was
what was
stock at fifty
and the preferredstock
to sell the common
If the people who bought at those pricesput
at par.
the stock away
after paying for it,would they have
at the low market
anythingto regret even
pricesof
August, 1921, attained after a major bear swing of
unusuallylong duration?
a

was

Buying
Probably some

one

on

will

Values

charge me

with

about Steel common,

because
bull argument
simpleillustrationbefore the public. There

have

the

inveterate

writinga
I set this

prejudiceagainstWall

again we
Street.

1 "

I 9

02

"

"

COMPARISON

"

07

OF

"

01

THE

"

MOST

11

ACTIVE

"

IZ

1CK"

1913

UNITED

It

STATES

1"t"

"1"

"1

STEEL

HI

"

COMMON

"

"

II

1"11l1"2"

Itlll

1!

'"!""

Ili

ill

It

Ui

"

"

"WATER"

IN

facts I have

The

BAROMETER

THE

stated

95

of record, accessible

are

to

well known
of the people
to some
anybody, perfectly
Steel common
in 1921.
But
at least who
were
selling
they were
sellingthe stock because they needed the
at

money,

time

when

of

most

When

the Rothschild

before

the result of that battle

British consols
he

could

buy

uncertain.
consols

at

would

such

money.

days of Waterloo,
was

known,

friend
a
fifty-four,

with

He

of the

needed

us

confidence

him

how

outlook

an

said that if the outlook

buying

was

asked

on

week

so

certain

were

be

He
knew
sellingat fifty-four.
that with that uncertainty
be selling
theymust necessarily
below their value. Everybody needed money
at
the same
of the few peoplewho
time, and he was
one
had

not

I suppose
will ever
know how Russell
no
one
did it,but he could lay his hands upon more
real

any.

Sage

panicthan anybody in Wall Street. He

believed in quick and liquidassets, short-time paper
maturing all the time, call loans and deposits everything
in

money

"

which
but

could

be

buy freelywhen
values were
selling.

All

sorts

Story of

of stories

Russell

ever

least

saw
a

miser.

him, when

younger
somethingabout

to

lost

hoard

sightof

Sage

is not

I call it

would

nor

anythingbut

was

use;

not

told of Russell

are

That
frugality.
extraordinary

I would

had

peoplewho

to

into cash,

turned

was

Sage and his

exactlythe word

for he
miserliness,

I remember
a

young

the last time

reporter,

or

at

tryingto find out

reporter. I was
a railroad property in which he was

with another

dominant

BAROMETER

MARKET

STOCK

THE

96

to

say

that the other financier had

calculated

let

to

deceive

me

riety,
noto-

is seldom

which

reputation.Lying is a word
(or needed) in Wall Street,-and
or

used

wide

financier of nation

it would

be better

given me
myself if

mation
inforI

was

the idea, therewide-awake.

fore,
With
exceptionally
tude
of seeing if Mr.
Sage's terminologicalinexactihis comrade's, with enough
differ from
would
enable me
deduce
to
to
something from
significance
the pointsupon which the two fairytales did not agree,
I went
to see
over
Sage, who was
always accessible to
not

the newspaper
men.
He greeted me
in the most

friendlyway, as indeed
visit had nothing to do with
he did anybody whose
I put my
questionand he rapidly changed
money.
the subject.He said: "Do
anythingabout
you know
estly
suspenders?" I was
exasperated,but I repliedmodthat I did
any

other

not

know

any

"What

wearer.

do

about

more

think

you

them

than

of these?"

said Uncle

a
Russell,handing me over
pair certainly
inferior to those worn
by reporters, who are not, or
not
at that time, given to undue
agance
extravwere
certainly

in such
them?"
said

I asked.

Sage; "I
I

said

was

the

even
:

an

poor

"You

Street for

"Well, what

was

do you

"What

about

think of them?"

for those."
cents
thirty-five
littlevindictive,having failed to
gave

information

I had

robbed.

You

"I don't believe it,"he said.

It

attire.

come

to

haps
Persecure

seek.

get better in Hester

quarter." Sage looked at me doubtfully.

were
a

article of

not

the

can

But

he

difference of

was

ten

bled.
reallytrou-

cents, and

"WATER"

would
It

have

not

the

was

IN

sworn

Values

Sage
and
be

the Hester

to

there you have

dealt had value.

and

had

to

by knowing them when

apparent to other people that
The

$70,000,000.

His

thingsin

it was

than

quotation.
judgment of

Averages

it. The
He

97

Street

principleof the thing.

been impugned.

values had

And

BAROMETER

THE

stock

Russell

which

values,

those

know

they had ceased

he died worth
market

to

more

barometer

prospectivevalues. It is necessary
in reading it to judge whether
has
a
long movement
carried the average
pricesbelow that line or above it.
In lookingback over
the various analysesof the stock
market
as
a
guide to general business, publishedin
shows

The

present and

the

at

Street Journal

Wall
end

of

applicationof

1902,

since Charles

I find

Dow

typicalinstance

which

the averages

H.

may

died,
of the
able
remark-

seem

although I regard it as the merest

There
is no one
so
common
sense.
unpopular as the
is always telling
who
man
you that he "told you so,"
but the illustration is impersonal.
to

the reader,

A
No

Cautious
test

severer

but

could

Correct

be taken

in what
of the averages
the transition periodbetween

The
1902,

bear
saw

Forecast
than

might
a

the

almost

bear and

tion
interpretabe called

bull market.

developed from September,

lowing
its low pointsin the September of the fol-

market

year,

and

which

it is weeks

or

even

months

after-

THE

98

before

wards

the

BAROMETER

MARKET

STOCK

change

in the

major swing

can

be

asserted.
But on
December
definitely
5, 1903, The
tally
Wall Street Journal, after a review of the fundamensound tendency of business in then recent
years,
said:

"Considering the extraordinaryadvance in wealth of the

States during that period, considering that railroad
United
mileage has not increased in anything like the ratio of increase
in surplus earnings,and finally
considering that the ratio of
increase in surplusearnings available for dividends has been at
all times in excess
of the rise in market pricesand at the present
time shows
market
a
larger percentage
on
price than at any
time since the former boom
started,the question may well be
asked whether
is at least

the decline in stocks has not

evidence

some

in favor

of

an

culminated.
affirmative

answer

There
to

that question."

Bull

Market

Confirmed

It would
have
it

was

and

be easy to say that such an opinioncould

been given without the help of the averages,
but
given with the pricemovement
clearlyin view

at

the main

time when

there

was

an

easy

that
possibility

It correctly
might be resumed.
foresaw the bull market, allowing for the caution
in such a predictionand, indeed, for
necessary
the fact that analysisof the market
movement
was
still in its infancy. The
bull market
then foreseen
minated
ran
throughout 1904, and can be said to have ternine months
only in January, 1907. But some
after this editorial analysisof the business situation,
judged by the averages, was written, The Wall Street
Journal tackled the almost equallydifficultquestionof
bear

movement

THE

ioo

for

STOCK

much

how

and
the

soon

when
been

set

explicit

more

condition

forth.

MARKET

its
stock
Dow's

prospects.
market
sound

BAROMETER

of

statements

It

is

sufficient

barometer
method

the

proved
of

reading

market's

to

record
its
it

fulness
use-

had

Chapter
"A

LITTLE

CLOUD

OUT

OF

THE

HAND"
discussions

IN

such

objectionsand

There

is

nothing
hypothesis which
that

of

sort

able

seems

the

proved

established

what

movement
or

able

stock
to

market

that

recognize
any

barometer

should

exception

San

The

i'he year

It is the

movement

or

that
to

major
overrun

Francisco

the
bull

way

markets

themselves.

it would
oninis.cfcnt

look
and
If

protect
101

are

we

cocksure, and

too

the

an

to

tion,
excep-

rule.

in

interestingproblem

an

problem

you

But

Earthquake

accentuated

an

reading the

rule without

no

reaction

of it have

out

of

method

prove

1906 presents

this way.

to

is

there

has
have

We

secondary

the

against being

while

time

after

constituted.

so

of

theory of the price

Dow's

working

Out

inadequate.

or

than

arises,which

dogma

its existence

unsound

ourselves

guard

pate
antici-

well.

and
daily,fluctuation"

evolve

to

discrepancies.

too

obstinate

much

major swing,

the

to

together

is called

the

"

rally,and

been

holds

theory

MAN'S

deceptively fascinating

continue

to

it is necessary

explain apparent

more

theory

1906

"

these

as

LIKE

SEA,

of

arrested

an

secondary
at

it.

the

stock

itself

bull

reaction,

It has

markets

bear

main

cording
ac-

been

said

alike

tend

market

against this

were

over-

THE

102

STOCK

BAROMETER

MARKET

it automatically
as
over-liquidation,
tects
proit can
itself againsteverythingwhich
possibly

inflation

or

foresee.

(But we

have

concede

for the further

allowed

stock market

must

represents the

about the conditions

affect

which
what

it

it
business^
foresee.

cannot

that,

established

fact that the

the influences

protect itself

cannot

It could

not

foresee

Francisco

earthquake of April 18, 1906,

devastatingfire.

If you

we

of all available knowledge

sum

of business and

Call

Tactful to

when

even

it

or

against
the San

sequent
the sub-

Fire

somewhat

strident

yourselfpopular with that

individual,the California "native

son," you

will

even

to

want

not

make

allude

earthquake. In California
to do anything of the
there

is the

admits

of

no

fire.

For

Francisco

San

it is considered
sort.

our

argument.

the

to

ners
man-

All that is conceded

purpose

Chronic

bad

the

earthquake

California

boosters,

general impression that

there might be, for instance, another
earthquake in
San Francisco as bad as the last. A fire,
the other
on
tractin
hand, might occur
to any
city,anywhere, without defrom
those natural
advantages of climate
and other things of which
California is so proud.
There
is nothing more
charming than the naivete
of the Los Angeles native,who
says "It is a fine day,
if I say so myself." But earthquakes are
different.
and a
They put the Pacific coast in a class by itself,
however,

class

not

permit

cannot

at

all

to

the taste

of

the inhabitants.

As

A LITTLE

CLOUD

OUT

OF

THE

SEA

103

Beau

Brummell, the great Englishdandy of the early

years

of last century, said:

accident which could

of

an

but

darn

happen to
is premeditatedpoverty."
Efect

the

But

hole may

"A

be the result

gentleman,

any

the Stock Market

on

Francisco

earthquake came
up in
ket
alreadyreactionarystock mar-

San

clear

sky, and took an

the clause in the
by surprise.You will remember
which
Lloyds ship insurance policies
excepts "the act
of God
and the King's enemies."
This aberration of
Nature
was
an
exception,and it went far to explain
an
exceptional
year in the record of the stock-market
There

barometer.

was

an

bull market

undoubted

ary,
September, 1903, reachinga high point in Janusion;
1906. It did not hold that point without recesbe said that as a generalrule there
and it may
is often no marked
warning line of distribution at the
that bull
when
top of a major bull swing, especially
itself,as, for instance,it did in
swing has overrun
in the springof 1906 was
The market
declining,
1919.
such precipitancy
to indicate the bull
but with no
as
from

would

market

not

overbought when
remember
set

of

how
up

be resumed,
the

or

had

been

even

earthquake occurred.

serious the losses

We
The

were.

fire in the ruins of the immense

collapsedhouses

or

those

shaken

to

much
must

sion
convulnumber

their foundations,

the proportions
rapidlyassumed
of what the insurance companies call a conflagration.
The American
companies, without exceptionof conand

this fire

104

THE

STOCK

and

sequence,

MARKET

the

BAROMETER

English companies, paid up

sufferers,
although they had an
the earthquake itself.
over

promptly, to help the

excellent fightingcase
We
methods
might have learned a little of German
from the action of Hamburg
companies, who adopted
the oppositepolicyand repudiatedtheir liability.
It
ods
methmight have taught us something of the German
in the conduct
of war
and diplomacy, of the
German
of a contract
and of
conceptionsof the spirit
ance
sportsmanship. At least after that time the fire insurlittle insurance in
companies of Hamburg wrote
America.

Sound
When
there is
The

Prediction

the stock market

a

of

Difficulties

is taken

surprise
break closely
akin to that of a panic.
panic,when analyzed, is essentially

violent

basis

Under

such

by

of
be said that the stock market
surprise.It cannot
But
1906, in the last days of April,got out of hand.
The
serious.
the decline had been sufficiently
twenty
railroad stocks which sold at 138.36 on January 22,
eighteenpoints;
1906, on May 3d had declined over
the

twelve

one

hundred

the

industrials

later date.
which

records

three

and

There
obtains

then
on

seems

had

used

January I9th
to

in breaks

be

from

reacted
to

86.45

sort

some

like this.

on

of uniformity

Experience

of part of the panic break, with a

slower decline which reallytests
much

recovery

subsequent and
the strength of
Street Journal

the stock market.

of

In

July 6, 1906, called

fact,The
attention

Wall
to

this

LITTLE

OUT

CLOUD

THE

OF

fact,in predictinga general recovery

of the averages.
"It is a uniform
have been
of from
an

from

105

the showing

It said:
the years when such averages
panic decline is followed by a sharp rally

experience,over

kept,that
cent

40 per

SEA

60 per

to

of the movement,

cent

and then

by

irregularsag ultimatelycarrying the price to about

the old

the weak

holders

low

point. It

who

to

seems

helped over

were

the break

the San

on

need

this

to

the panic.
Francisco

bale

out

hardly be said that

exactlyof the panic

It could

disaster

was

and the market

in rallyingrecovered to 131.05 in the case
class,
of the railroad stocks,
which is only 1.61 below the priceat which
the earthquake decline started. The rally,
however, does represent
about 60 per cent of the decline since January 22d, and the
since has been curiouslyparallelto the
of the market
course
fair to infer
observed after a panic rally. It seems
movement
of very much
that liquidation
the same
kind as that following a
panic has been necessary."

Seriousness
At

this distance

serious the San

of

of time

Francisco

Disaster

the

we

easilyforgethow

may

disaster

The

was.

The

loss direct
Fire

has been

estimated

Insurance

Company admitted that the conflagration

If that was
the
it the savings of fortyyears.

had

cost

effect
United
how

at

$600,000,000.

the strongest

on

States,and
must

severe

one

have

fire insurance

Aetna

company

in the

of the strongest in the world,

been

the

consequences

where.
else-

well for the shallow, halfall very

made
worn
taught optimistto say that broken windows
It

for

was

you

glaziersand manufacturers
something to put in a new

you

spent

on

it would

have

been

of

glass. But it

pane,

and

spent

on

cost

the money

something

THE

io6

BAROMETER

MARKET

STOCK

else,while, as Bastiat said,you would stillhave your

of reasoning were
If that sort
window.
good, the
all
quick road to prosperitywould be to burn down
the cities in the United
We
the

see

States.

that the railroad

industrials,and

stocks suffered

should

than

more

that

remember

they
in a higher class,both relatively
and positively.
were
But in a sudden
and demoralizingbreak people sell
in order
market
the things for which there is some
for which

protect those

to

The

Wall

we

Street

Journal

put it

at

panic is

scare,

and

first decline in

slower

is the

decline

is

there

demonstration

confidence;" going on to
of the market
on
July 2d, that the

shock

to

well below
were

the line of values

and

market.

no

that
the
of

time:

As
"The

second

and

the

general
say, in speaking
line of priceswas

that the indications

bullish.

Rally From
This

inference
which

Break

proved

is followed

in

Bull

correct, and
in these

Market
it has

been

the

to consider
discussions,
which began in September, 1903,
the bull market
as
actuallyterminating and turning to the bear side,
in January, 1906, but in December
of the same
not
At the time the bullish inference quoted was
year.
publishedthe market was making a line which proved,
the analystcorrectly
as
surmised, to be one of accumulation.
The forecast was
and on August
soon
verified,
Street Journal
The
Wall
2 ist
again discussed the
There
market from the pointof view of the averages.

custom,

THE

io8

right51

MARKET

STOCK

per

cent

said it. He

must

necessary.

The

BAROMETER

of the time.
found

have

balance

I don't believe he
much

ever

largerpercentage

in his favor

would

have

not

paid operating costs, to say nothing of keeping a

racing stable. But the deductions from the evidence
of the pricemovement
have been right,as the printed
record

searching both

the

find

of

no

instance

record
a

of

most

and

radical

of the barometer.

meaning
its

the

much

proves,

the

time.

conscience

my

After
I

of
misinterpretation
The

can

the

studies based

upon
anticipatewhat the

uniformly able to
publicwas
thinkingabout business before the public
its own
knew
curred,
thoughts. The errors, where any ocof
were
mainly due to the almost impossibility
of the market.
forecastingthe secondary movement
This is reallymuch more
difficultthan the interpreting
of the major swing,justas it is easier for the Weather
than
it
Bureau
for a large area
to forecast weather
use

were

is to say whether

it will rain in New

York

to-morrow

morning.
Initiation
Near

in the

1906,

that

Bear

line should

be

had

there

active

twenty

of
possibility

Market

"line,"especially

stocks, and

that

the

through the lower level of the

considered as indicating
the warning of

break

coming decline. This

than
to anything more
been

been

railroad

forecast did

had

the top of this bull market

The Wall
Street
It pointed out, on ber
uttered a caution.
Decem-

Journal
15,

of

for three years

not

commit

possiblebear swing in
a
primary bull market.

itself
what
It

LITTLE

CLOUD

OUT

OF

THE

SEA

109

In
altogether too early to call the actual turn.
alized
the beginning of 1907, large railroad earnings,materiin the case
of the spectaculardividend
policy
for the Harriman
announced
roads during 1906, were
off against high money
set
soon
rates, which, as we
the market, and
were
already beginning to warn
saw,
business generally,of that severe
crisis brought about
was

later in the year

when

the

of the old national

reserve

to
banking system virtuallywent
pieces,call money
became
unobtainable
at unparalleledrates,
practically
and the banks
resorted
to
clearing-housecertificates
for the first time since the panic of 1893.
In the month
of January, 1907, the active professional
traders were
sellingstocks. Political meddling
investors, and before the year
was
beginning to scare

there

out

was

capital.

The

was

decline

what

amounted

to

it is

market

because

that

of

already started,
the elapsed time taken
swing had replaced the

in stocks

had

interestingto trace
that a major bear
decide
to
preceding long-continued bull movement.
of prices in January is always disturbing to
and

strike

is

time

of

year

decline

the stock

when,

other

things being equal, the tendency is oftenest bullish.

of
and the reinvestment
It is a time for cheap money,
It is a time, morethe profitsof the preceding year.
over,
it is peculiarlyunpopular to talk bearish
when
The prophet of evil,as I have already
in Wall Street.
frequently demonstrated, is totallywithout honor in
that part

of the country.

THE

1 10

MARKET

STOCK

Times

Boom

and

BAROMETER

FallingBarometer

long bull market there had been an unusually

then that the
issues,and it was
large emission of new
late J. Pierpont Morgan originatedthe phrase about
loves a good phrase,
undigested securities. America
Industrial earnings,and
and that one
caught hold.
those of the United
States Steel Corporation,
especially
continued remarkably good. The railroads were
making an excellent showing of both gross and net.
in January made
But the sharp decline in the averages
in declining
commentator
our
most
cautious, particularly
much
ing
less assume
that nothto predicta rally,
than a secondary reaction had been established.
more
It was
be positive
to
altogethertoo soon
decline
about the major movement.
In fact the severe
ords
kept everybody guessing;but it appears from the recthat early in March
the existence of a primary
In the

bear

market

like any
cheer up

Journal, very
all it could

conceded

was

to

Some
But
the

the market

They

of

were

15,

Bearish

Street

doing

These

1907,

and

Influences^

looking at
of

bear

all the

some

of them

read

were

given
curiouslynow.

arguments

they

facts,and
were

"i.

Excessive

prosperity.

"2.

High

of

was

newspaper,

far-reachingconsequences
March

Wall

the

was

reflected in stocks.
on

other

The

investor with
dispirited
features.
genuinelysatisfactory

of the

statement

and

cost

due largelyto the effectupon

living,

great gold production.

prices

"3.
"4.

LITTLE

CLOUD

Readjustment of

OUT

values

to

OF

THE

the higher

SEA

rates

1 1 1

of interest.

Speculationin land absorbing liquidcapitalthat might

otherwise be available for commercial enterprises.
"5. Roosevelt and his policyof government
regulationof
the corporations.
"6. Anti-railroad agitationin the various states.
"7. Progress of socialisticsentiment and demagogic attacks
on

wealth.

"8.

Harriman

of
investigation

exposure

of bad

practicesin

high finance.
between
"9. War
big financial interests.
"10.
Over-production of securities.
"u.

Effect of San Francisco

There

quoted of only momentary

in which possiblebear manipulationwas
consequence,
put last. It has been said already that there never
which was
not
was
a bear market
justified
by the facts
subsequentlydisclosed. Are we not entitled to say
that
an

other

earthquake."

were

of

these

causes

influences became

to
permanent,
which even
could not sibly
the stock market
extent
posforesee,concedingthat it is,at least theoretically,
some

of

longer and largervision than any of

of
events
proved, the over-regulation
alone was
sufficientto justifyinvestors
the consequences
themselves, whatever
market
might be.
An

Abnormal

Money

most

warnings.

instructive.

I wish

the
in
to

As

railroads

protecting
the

to

me

stock

the most

Street,and perhaps

It is full of lessons

that the scope

after

Market

In retrospect, the year 1907 seems

I have ever
interesting
spent in Wall
the

us

and

of these discussions

MARKET

STOCK

THE

1 1 2

BAROMETER

of it in greater detail. There

is
ander
better story of it for the student than that of AlexDana
Noyes in his Forty Years of American

permitteda
no

Finance.
Post

treatment

He

financial

was

I remember

that time.

at

of

editor
that

of the year, when industrywas

and net earnings were
gross

the
the

at

Evening
beginning
railroad

booming, when
making about

the

best

showing on record, when the stock market was

only
recedinga little from three years of advance, where
at least on
prices,
moreover,
paper, had not overtaken
values, he was
struck, as I was,
by the abnormal
money

market.

should

be

That

is the time
it

cheap, and

February. The
it long before we

of year when
money
almost painfullytight in

was

meaning of
the major bear swing of 1907

stock market

did,as

foresaw

the

showed.
No

There
face

Bigger Than
a

was

comes

up

of Wall

terms

and

his

was

an

of that

before

me

he
a

friend.

He

bears

time, since dead, whose

well above

lover of music, and

He

performance

The

was

talked

He

average.

much

the

ent
rever-

more

speaking to
title role

He

me

one

"Elijah"
taken
by

artist of all time, the late Charles

dramatic
of the

of

stock

"their frantic efforts

to

had

appealed to my
ered
priestsof Baal being "cornElijah controlled," and of

story

talked
the

the

in

vivid

were

of Mendelssohn's

heard, with

once

the greatest oratorio

Santley.

Hand

I write.

as

sounded.

had

Man's

Street, but his illustrations

educated

day about
that he

broker

was
intelligence

than

cover

their shorts."

He

was

"3

impressedwith the way Elijahhad, as he expressed it,

"joshed" them in their extremity,
suggestingthat their
god was
taking a nap or was, peradventure, "on a
a
journey." There was
phrase that had stuck in his
mind
which
describes the condition at the beginning
of 1907:
"Behold, there ariseth a little cloud out of
lowed
the sea, like a man's
hand."
The
"great rain" folin the

autumn

Not

of the year 1907.

the collapsein business

only was
developed with

It

breath

our

Samuel

Rea,

the
now

president of the
and

carried

the United

then

suddenness

At

away.

traveling on

the

tremendous.

simply

which

close

of

the

year

took
was

Pennsylvania railroad with Mr.

the presidentand then the firstviceroad.
The
Pennsylvania carries
tenth of the railroad freightof
a
"

"

States.

Mr.

they were
only a month
load, apparentlyable to

Rea
away

said that
from

at

the

time when

peak

of their

the crop movement

and the industrial traffic,
both ways, of the Pittsburgh
business seemed
like a jackknife,
to shut up
district,
count

upon

almost

in
could see
the empty
cars
overnight. We
the stub-end sidings and yards all along the system
between
Philadelphiaand Pittsburgh,at a time of year
railroads are normally using everythingbut the
when
cripplesin the repairshops.

The

Deadly

Hand

of

Politics

nothing like it since the collapseof

of economic
l$93" when that Congressionalmonument
Silver Purignoranceand sectional folly,the Sherman
There

had

been

seemed
lean

For

in

to

anything

of

lose
foresaw

what

frt

It

country.
n

with

my

the

country

stock

market

some

of

may

also

business,
the
the

that

already

underlying

encouraging.

in

is

or

foreshadowed

of

Congress

by
demand

return

some

at

and
been

has

past

impending

the

is the

war,

consequences

in

and

fool

present

foreseeing
It
in

averages

and

in

bonds,

sanity,
are

the

that

politics.

shown
to

of

matter

improvement
the

intelligent
un-

wandering

not

what

no

knew

business

the

am

largely

years

investment

foresees

if I

me,

thing
any-

who

man

pensive
ex-

there

had

who

for

But

year

meddling

do

war

two

further

be

indications

this

now,

for

the

market

would
to

the

man

bureaucratic

seems

that

text,

of

Every

1907

highly

that

end

to

around.

dog

Every

terrified.

was

regulation
tl e

the

the

into

previous

resumed

who

those

Lord

the

years

fully

capital.

and

of

business

before

and

strike

had

they

year

sport,
was

the

The
almost

the

panic, with

prosperous

quit kicking

had

that

ten

That

lawgivers.

our

fear

the

alizing
demor-

most

saw.

railroads

the

finally put

them,

to

the

ever

we

that

of

bankruptcy

politicians.
they

lesson

followed

which

years

served

been

have

to

universal

panic

far-reaching

and

in

grisly harvest

its

reaped

Act,

chase

BAROMETER

MARKET

STOCK

THE

14

even

anything

if the
but

1 1

THE

But

the

not

down.

MARKET

STOCK

BAROMETER

theory of the longer rhythmical cycle will

It

to

seems

be

almost

an

of my readers and critics. None

have analyzed his belief in it in any

many

obsession
of them

with
seems

searchingway.
The
general impressionis that there is "something
in" the idea; that if it is not proved true
it should
cate
indibe true; that the world's panic dates themselves
a
that, given such
strikingdegree of periodicity;
in the past, we
periodicity
anticipatesomething
may
like it in the future ; that men
will always be as stupid
in the conduct of their own
business as they seem
to
have been when judged by the records of history.
to

Basis

of

the

Cycle Theory

Probably this unwillingnessto analyze the panic

theory arises from the fact that in the eighteenth
exactly ten
century, accordingto Jevons, there were
noteworthy crises at an average of ten years apart. I
that
the one
content
am
to waive
Jevons omitted
of 1715, when
the Scots invaded
England because
there were
not
enough spots on the sun in that year
to establish his daring theory of the relation between
the two
phenomena. We may note that Jevons gave
1793 and 1804"5 as crisis years, while it is of record
that our
first panic of the nineteenth century was
own
the British capture of the city of
consequent upon
Washington in 1814 an event which no cyclecould
have predicted,unless we
that the cycle
to assume
are
theorycould have predictedthe late war.
ing
But, count1814, and what Dow calls the "near approach to
"

"

"

THE

crisis" in 1819, there

the nineteenth

Let
word

see

us

between

ten

were

117
crises in

American

century.
how

the

approaches the

"

CYCLE

UNPUNCTURED

cyclist if that is the

subject. The ten-year

correct

"

the British crisis of

1804-5

and

him

serious and nation wide

crises of 1837 and

at

first.

of

own

our

And

1814 might stimulate

interval

the

really

1857 would

recall
He would
great deal of confidence.
had up
the ten-year intervals of Jevons, and that we

give him

to

1837 recorded

of

the

at

each

four crises of sorts, in four

decades

greatly share the

panic in Europe in 1847, although it was
sufficiently
serious there to impressitself upon American
memory.
But when
real panic in
the cycleenthusiast found
a
the
discovered
have now
We
1857, ne cried "Aha!
There
is a twenty-year cycle,
secret.
with a big crisis
now

this

new

century.

end, and

We

did

not

littlecrisis in the middle.

confidentlyset about
beautiful theory."

humoring

the

We
facts

may
to

fit

MisfittingDates
On

showing there should have been another

in
first-classpanic, with nation wide
consequences,
1877. But apparentlythe machinery slippeda cog, for
the panic came
in 1873. From
the devastatingfolly
of overtrading on
a
greenback basis, it would have
in 1872 but for the accident that we
had in that
come
wheat
an
enormous
year
crop, which brought splendid
pricesin the world market because of the almost total
contraction
Here, then, was
a
crop failure in Russia.
that

1 1

STOCK

THE

MARKET

of the interval between

deflated

theory was

great crises.

The

twenty-year

sixteen,and it is hard

to

from

consolation

much

BAROMETER

the

fact that

derive

to

Overend-

the

in 1866 had marked

date
a
Gurney failure in London
between
don
Lonthe two
conveniently
great crises. The
accompanied by a heavy fall
panic of 1866 was
Stock Exchange. In April of that
in pricesin our
and
there was
in Michigan Southern
a
corner
year
speculation.The truthful but cautious Dow
rampant
than
says that the relapsefrom this "was rather more
normal."
But

the three

something

to

twenty-year

revive

The

theorists.

crises of almost

first and

sixteen years
crises occurringin 1857 and

fortuitous,or

at

the
the

ten

last

and
were

wide

reachingconsequences.
between

of

magnitude and equallyfarOur cyclists

said: "That
up
slip-

world

in the reduction

confidence

the

1893 did

1873, 1884 and

panicyears

to

least

shall be

we

for

the

1873

was

able

to

interval

merely
explainit

only a littlemore
the
about the laws which govern
these things." And
are
prophesied, saying: "There
twenty-year cyclists
eter
1873 and 1893. Our baromtwenty years between
is gettinginto shape. There
will be a minor crisis
round about 1903
and a major panic in 1913, or not
later than 1914."

when
satisfactorily

we

Lost
What
be made
that?

is the

use

deduced

in Transit

of the

the basis for

But between

have

at

theory,indeed,
least

as

1893 and 1907

much
we

have

unless

it can

prophecy
an

as

interval

THE

CYCLE

UNPUNCTURED

of fourteen

Has

years.

We

see

that there

ume
Indeed, the vol1913.
business was
not
large
speculative

"

of the world's
make

to

certain

crisis in those

that

sufficiently
high to
What

cannot
so

in fact
for

make

been

noise when

of all this

as

it topplesover.

that it has any.

concessions
takes
"

that

it

ceases

to

have

constructed

forecast

ably
reason-

brought about

be

cannot

see

many
"

It is

years.

speculationhas

is the value
I

make

smash

edifice of

an

reason
slightest
by
presumably anticipated

the

not

was

for any crisis in the years

the cycletheorist
or
1903

to

tracted,
period con-

the twenty-year

ten-year period expanded, to fourteen

Is there any dependable periodicity
about the

years?
thing?

unless

19

the

or

enough

more

The
so

ness?
for busi-

theory has
ing,
humor-

much

than

value

sweeping conclusions
based upon
the cycleassumption had to be changed
that is reallyuseful
again and again. Does much
remain?
I am
anythingbut a sceptic;but this whole
of playing the cycleslooks to me
method
absurdly
like cheatingyourselfat solitaire. I can
understand
rules,
stringentrules, arbitraryrules, unreasonable
We

record.

see

that

the

in any game.
mind
fails to grasp
But my
where you change the rules as you go along.

Are
And
"action

what

becomes

and

reaction

is little real
recorded

human

evidence

game

They Equal?
of that
are

imposing premise that

equal?" Are they? There
the assumption, in
to
prove

affairs. Of

course

the holders

of that

BAROMETER

MARKET

STOCK

THE

120

theorymay respond,"Well, if they are not equalthey

ought to be." I cannot even see why they ought to be.
ity
holdinga Christian faith in the perfectibilCertainly,
of human
see
why crises should
nature, I do not
how
be eliminated altogether. It is easy to see
not
them at least seem
the periodsbetween
to have grown
longer. The interval between
1893 and 1907 was
fourteen years, and 1920 was
no
panicyear.
Unless

we

are

force

to

the

construction

of what

panic until we actuallydistort it,we can

of 1920
as
a
hardly regard the deflation liquidation
with the
typicalcrisis. It could not begin to compare
damaging effects of 1893, I873" 1857, or 1837. Ifchad
of the earmarks
of a panic year.
I dare say I
none
shall believe,in five years'time, that the drastic contraction
and deflation were
about the best thing that
could have happened to us.
They should certainly

constitutes

discount

all

sorts

A
There

of

trouble

Business
be

must

future.

Pathology Needed
sort

some

in the

of scientificpathology of

business

affairs,
or
perhaps it might be better to call
it morbid
psychology. I have suggested in another
chapter how utterlyinadequatethe records of history
are

in the vital
to

it.

of

matter

But

we

commerce
are

and

all that

tributes
con-

beginning to1 acquire a

scientific knowledge of the symptoms

of the diseases
which afflictit. In this respect we
have probablymade
more

advance

all the

years

in the past quarter of a century than in

since Carthage sold the purple weaves

THE

of

Tyre

UNPUNCTURED

Rome.

CYCLE

121

velopin
hope that we are demethod of diagnosingthe symptoms
a scientific
of business disease. There was no such method
in 1 893,
bcause there were
such records as we have today.
no
But why need we
that once
assume
every ten years
gent
intellior
twenty years, or any other period,the most
loses its head and forgetsall
part of mankind
the lessons of the past? One
thingis certain about a
Are
foreseen.
if it were
occur
panic. It could never
of knowledge and an
not
we
working toward a sum
safe
of analysis
which
will,in a sufficiently
accuracy
to

foresee

measure,

of God

act

and

The

We

well

may

the

"the

risks

all but the non-insurable

"

King's enemies?"

Federal

Reserve

Safeguard

and many
politics,
great deal too much
defects,in the Federal Reserve banking system. But
I

can

see

that system it is hard to imagine a set of

which would
force the country to resort

under

as
certificates,
clearing-house

to

more

and

1893.

It would

pass

perfectbanking system
would

to

one

But

the progress
the Federal

to

tremendous
has

ever

must

and

what

would

in 1907

devise

to

man

once

perfect

seem

utterlyinadequate to another.
the old national banking system

appear

from

Reserve

system represents
which
stride in business practice

the

most

the

try
coun-

system itself an
factor for the cycletheorist to consider?

seen.

new
entirely

It

the wit of

it did

ditions
con-

not

Is

not

be assumed

crises in the future may

the Reserve

for

moment

be dismissed

that

from

possible

considera-

THE

122

STOCK

On

tion.

MARKET

the contrary,

BAROMETER

they are

certain

to

But

come.

hope that, with fuller knowledge, they

will be at least in part anticipated
and, in their most
dangerous effects,radicallymitigated?

may

not

we

Teaching
If these studies have

the

shown

Teacher
the

takes

who

man

an

if not
financial interest in Wall
even
a
intelligent,
Street, that knowledge will protect him there as it
will anywhere else,the educational
design has been
largelyaccomplished. Certainlyone of the desirable
educative
writer
movement

himself
essence

with

services of this series has been

how

much
which

there
he

had

was
never

about

before

in any useful fashion.

The
of such a propositionis

it from

the

way

show

to

stock

market

formulated
to

get

pragmatic
"

the

at
to

to

the
live

day. The stock market problem,

considered in the lightof Dow's
Theory, is essentially
simple. It can be set forth in a thoroughlyuseful way,
provided only that the teacher is neither a crank nor
Harvard
a quack, a
gambler or a crook.
University
is performing a greatlyneeded
service in putting out
tabulations and index charts on general business conditions
which are above suspicion.
The compilershave
tied themselves
down
not
to
dangerous assumptions.
"medial
line" of
They are not lashed to an assumed
national wealth
with a constant
upward tendency at
the same
of speed in good times or bad, which
rate
loses its certaintyin face of the grim facts of war,
and hysterically
changes its course.

day

to

STOCK

THE

124

MARKET

and

Extent

Certainlythe
of the kind.

BAROMETER

Duration

stock market
There

is

Incalculable
barometer

no

shows

ing
noth-

approximation to

the

regularityof the pendulum, either in the arc of the

swing or its velocity.We see a bear market declining
fortypoints,a bull market advancingfiftypointsover
than twice the period,a bear market
declining
more
nearly sixtypoints,a bull market
recoveringfortylive points,a bear market
decliningless than thirty
than
points,a major swing upward of not much more
advancing nearly sixty
twenty points,a bull market
pointsin the industrials with a simultaneous advance
of less than thirtyin the railroads, and a different
period for each successive swing. This, in approximate
is the record for a quarter of a century.
figures,
There
such
about
is, obviously,a rough periodicity
But if we
movements.
begin to twist them into some
mathematicallycalculable,
regularlyrecurring"cycle,"
the

next

main

movement,

up

adrift,with nothing to hold

and

an

empty

or
on

down, will leave

to

but

an

empty

us

all

theory

purse.

Sham

Mysteries

dogmatize about this,although I

a
am
scientificall
tryingto make what is essentially
treated subjectpopularly interesting,
if, indeed, sermons
are
ever
popular. One trouble of all teaching,
moral
and
a
danger to every teacher, is that the
authoritynecessarilyaccorded to the instructor leads
him to make
something of a mystery of his trade. His
I do

not

want

to

UNPUNCTURED

THE

unconscious

CYCLE

desire to eliminate

leads him

125

tion
embarrassingcompeti-

exaggeration of the difficultiesto be

in acquiringa sound
encountered
knowledge of the
affairs run, there
subject. In a brief time, as human
will be a sort of cult amplifyingand complicatingan
otherwise
simple thesis. Every religionbreeds a
priesthood,where sacerdotal succession becomes more
defended,
important,or at least much more
jealously
than
law

to

salvation.

mere

and

the

law

canon

referred

to

into your

house

Both

in the

handicrafts

mysteries. The

as

English common
were

plumber

sometimes
who

comes

likes you to believe that his elaborate

dence
and the general mess
he makes, are evipreparations,
of the

"

of the task he has accomplished

difficulty
as
a
difficulty
layman are entirelyunable to
you

measure

bill he

"

and

sufficient pretext for the extortionate

renders.

Tipsters and

Insiders

people connected with

what
are
agencies. There is a
franklystock-tipping
for what they supply,and they are necessarily
market
excellent judges of human
nature.
They are never
bearish on the stock market.
ful
They are often successand prosperous
that
in a bull market, and I suppose
the savingsof the fat years support them in the lean
ones.
They tell the unscientific speculatorwhat he
times
Somewants
to know, but not what he needs to know.
the guessingis good, and alwaysthere is the suggestion
that there is a mystery about reading the stock
I have

known

some

likable

market

If this is true

movement.

generalmarket,

the

on

With

stocks.

it is stillmore

far oftener

were

As

are

conduct

They

far

are

always buying.

many

insiders,

speculatorthey

right.

too

of

the real business

busy to spend their

too

vidual
indi-

of fact these so-called insiders,the real

matter

who

men

than

wrong

about

true

"insiders"

them

they teach

of what

In my
experienceI have known
for every purpose
of the small

and

are

BAROMETER

MARKET

STOCK

THE

126

time

limited,too

corporation,

the stock ticker.

over

restricted

their ticular
parof the
turn

to

good judges of the

market.
They are normallybullish on their own property,
in the respect that they believe it to be a growing
tions
with great possibilities.
But of the fluctuaconcern
of business which will affect their stock, together
trade,

with the

rest

and
view
truth

is

be

in the

same

group

industrial stocks

limited.
singularly

to

say

anybody
That

to

that

in Wall

is not

all the other

or

in the
It is

same

not

mere

road
rail-

market, their

cynicismbut

sufficient inside information

can

ruin

Street.
but it is an

excellent

thingthat
it is true.
Of course
the executive officers of large
corporationsshould have a sound generalknowledge
of conditions outside their own
sphere. They should
be well instructed.
They might read this book with
advantage,if it only taught them to take a more
tive
objecview.
But even
with the basis of a general education,
such as is requiredin a good university
of the
intends afterwards
who
in law or
to
man
specialize
their very
occupationunduly affects their
surgery,
of proportion.
sense
onlytrue,

THE

Our

This

is
It

and

to

makes

is

value

Few

of

residue
us

be

can

set

necessarily

make

false

stock

claims.

limitations.
it has
record

But
a

It

quality
yet

every

devised

of

day

barometer

as

of

his

it

forecast
even

"an

uhich

chart.

it is

will

help

life.
It
and

and

This
makes

obvious

honestly
no

sible
pos-

which

future

human

is, it

bushel

But

his

its

up-to-

can

does.

highly

has

and

the

of

of

prices

pictorial

which

rules

admits

such

in

the

of

good,

conditions

forecast

market

is

Newtons.

or

working
that

the

it forth

sifts

estimate

the

industrious

business

real

the

showing

winnowing

most

Keplers

in

man

any

is what

that

and

the

the

general

formulate

must

If

all

resultant

reflects

possible

trading

day's

the

together

is

it

reflects

every

market

before
of

student

information

If

prices.

long

the

and

useful,

are

movement

chaff.

the

in lower

protect

no

the

poor,

to

he

market

available,

advance

of

fads.

common

or

they

able.
valu-

so

interesting

systems,

or

inferences
as

is

barometer

cycles

scrap

The

from

grain

of

127

Guide

market

far

so

other

knowledge

up

all

every

collect.

date

little

them

wheat

stock

well-grounded

uses

with

Trustworthy

the

why

even

It

CYCLE

UNPUNCTURED

other

claim
ness
busi-

closely approached.

XII

Chapter
A

FORECASTING

MARKET

BULL

and, indeed, vital

the

important
CONTINUING
subject
prediction
of

the

if

barometer,

theory of
stock
The

the

market
Wall

upon

my

Journal
are

they

At

late Sereno

S. Pratt,

have
the

sterling character
man,

The

Street

Wall

of

and

Journal

personal

themselves
the

1907

year

edge,
knowl-

economic

York

New

of

chair

dignified and

the

less

Chamber

Commerce.

Apart

from

the fact that

editorials
than

have

Editorials

they

less of

far

not

are

any

signed,

paper
news-

personal quality

The
politiciansassume.
or
public supposes
is, of course,
personally responsible for them,

the

editor

only

the

to

criminally

proprietors of

under

checked, when
who

the

editorial

the

the

to

Impersonal

not

is

mitted.
sub-

here

exceptional ability as

for

of secretary

exacting post

of

of sound

relinquished

newspaper

be

impressed

end

man

Dow's

analyses of the
irregularperiods in

1907-8 may
of record, and there

memory.

ket
mar-

the

in

should

stock

validityof

the

prove

published at

averages

why

reason

to

are

price movement,

These

of the

value

we

Street

1908-1909

"

"cover"

the

law.

necessary,

but

the paper
His

editorials

own

by the experts

particularsubjects,and
128

civillyand

what

of

the

arc

paper

they write

BULL

is
editorially
Several

in turn

competent

editorial
paper.

but it is
not

were

MARKET"

1908-1909

the editor's revision.

subjectto
have

persons

it appears,
I succeeded
Pratt at

and

seen

before

criticized

At

any

well-conducted

any

the

beginningof 1908,

if the
impossiblefor me to say, even
in some
to what
degree confidential,

method

unconsciously
impress themselves
Pratt

rate

of

reading the

inherited from

and

Detecting the

of

were

of

mind

one

extent
matter

of

It will be remembered, from

Bear

an

his staff.
in the

the paper
its founder.

Dow,

End

upon

matter

which

averages

Charles H.

an

in

the editorial discussions of the averages

were
of individual thought, although the methods
editor

129

had

Swing

preceding article,
short but severe
that there was
a
major bear swing
vember
lastingthroughout 1907, reallyculminatingon Nothe

of that year.
In the last week
the industrial stocks rallied sharply,as
2 1 st

equallyhave
bear

in

done

market; and

the

problems,that

of

itself.

On

Journal

of November

they might
secondaryupward swing in a
difficult of all barometer

most

callingthe
December

of the market, sented

preStreet
5th The Wall

turn

said:

"Since November

2ist, when

the average

priceof twenty

road
rail-

81.41, its lowest point, there has been an

the record at the close of
advance of 7.70 to 89.11, which was
During these ten days there have
yesterday's
strong market.
been only two days of decline. This is a very substantial rally,
and perhaps it is too rapid,all thingsconsidered,
althoughit still
stocks touched

130

THE

leaves

priceson

trade contraction

23d

December

there

The

of the week.

been

asserted

than

rather

rash

the

predict,and

to

was

seem

to

discount

in

large

of the future."

incidental reference

an

in the discussion

the averages

to

BAROMETER

would

basis which

part the reasonable

On

MARKET

STOCK

of the

writer

opments
general develto

seems

change, which

have

it would

felt
have

said:

"It will be noticed that there has been quite

ment
typicalmove-

of the average
priceof railroad stocks. It declined twentyIt rallied nine
six points from
2ist.
July 2Oth to November
reacted four points in the next
points in the followingfortnight,
This is
ten
days, and has rallied two points in the past week.

swing of the pendulum,

reallythe shortened
equilibrium."
A

Before

we

about

our

further

go

it is necessary

the

present purposes.

followingthe rallyfrom

the bear

market

the movement

was

to

of

checked

before

thing
some-

say

which

this

instance,sufficient
that the

It will be observed

reaction

low, and

approaches

Self-CorrectingBarometer

secondary movement
paragraph gives a simple,concrete
for

it

as

the low

points of

it reached

the old

for purposes
of record it may
be said that
of the twelve industrial stocks then used

in the average

roughly paralleland confirmatory.

"in the paragraph quoted is
Perhaps the last sentence
the most
if it were
intended
to
develop
illuminating
in this article the meaning and function of the secondary
swing. It may be said that in that way our
barometer
of a
tends to adjust itself. At the turn
bear market there is a chaos of knowledge of all kinds,
was

THE

132

STOCK

BAROMETER

MARKET

momentarily active.
It is fair to say that he was
within his rights
entirely
and a member
of the Exchange. The
as
a floor trader
until
market
did not begin to gain strength or volume
of the presidential
weeks
the last few
campaign.
then on the rightside and followed the
Wormser
was
I suspect he even
fancied he was
market
leading
up.
it. For three days after the election stocks were
very
convinced
so
strong that he was
strong. They were
the bull movement
had sufficiently
discounted
the reelection
of McKinley. He
turned bearish, and probably
lost in a few days all he may
the
have made
on
bull side in the precedingfive months.
That bull market,
until Sepculminate
have shown, did not
tember,
as
we
of
1902, in spiteof the serious interruption
Pacific corner
is an
the Northern
and panic. This
excellent example of a speculatorwho
saw
only one
there

of

the

stock which

in any

was

factors

many

them, and who

where

not

was

was

the

content

to

market

saw

all of

the barometer.

trust

It may, indeed,have been that Wormser's

prominence
in a restricted market, a relatively
large frog in a

small
means
as

puddle, had given him

that he alone
singular,

he sometimes

had

Returning
which

The
to

to

the

constituted

in the dull

Courageous

Street

foresee, on

said, "We

have

seen

rise.

Prediction

Journal

December

no

the market,

days precedingthe

the bull market

Wall

impression,by

of 1908 and
was

1909,

ning
evidentlybegin-

paper
25, 1907, that newsthe low price for the

MARKET"

BULL

1908-1909

133

in all

probability."On January 10, 1908, when

the country was
stillquiveringfrom the shock of the
cates
developments of 1907, when the clearing-housecertifivivid reality,
Street Journal,
The
Wall
were
a
able
alone, was
manifestlyjudging by the barometer
record a significant
to
rally. Speaking of this preliminary
it says that it gives "the impression
movement,
that it is one
of those sharp fluctuations which
follow an extreme
low point and precede,at greater
less distance,a permanent
in the tide." That
or
turn
and clear as a prediction,
and
seems
fairlycourageous
of exactlythe conservative kind business men
one
were
being led to expect from the generalconsideration of
the stock market
barometer.
Let us keep in mind
that Dow's
theoryis not a system devised for beating
the speculative
infallible method
of playing
an
game,
the market.
The averages,
indeed,must be read with
a
singleheart. They become deceptiveif and when
the wish is father to the thought. We
have all heard
that when
the neophyte meddles
with the magician's
year

wand

he is apt

raise the devil.

to

Reviewing
Prediction
the

of

was

bull market

comfortable

which

nobody

task in
at

that

less forecast with any degree

earlier chapterof this series great

concede, much

certainty.In

stress

Collapse

anything but

was

beginningof

time would

the

laid

on

an

the suddenness

with which

business

Street Journal
recalls
The
Wall
collapsedin 1907.
the conditions,
and the startling
change,in its editorial
of January 24, 1908:

THE

134

STOCK

BAROMETER

MARKET

"Consider, for instance, the rapiditywith which

in this country

of business has swung

prostration. Almost

great

to

from

changed

situation

in

extreme

one

from

the pendulum

extreme

single night the

after

Even

another.

to

perity
pros-

through Wall Street with terrific force a

the fact that
high officialof a leading railroad commented
upon
the traffic of his line had the day before touched
high-water
Three
weeks later the same
mark.
official reported that the
of this
business of the line had fallen off abruptly. Anecdotes
kind could be multiplied indefinitely.
since the panic started in Wall
"It is only three months
Street,and yet that time has been sufficient to produce what
the

panic had

amounts

to

swept

revolution

Three
months
country.
the freight. Now
move

freightcars

empty

months

in
ago

there

there
are

its activity.It took only five or

and

to

close mills.

reduction

in iron

it would

make

were

not

several

tens

steel trade

If

and

was

were

the very

to

cut

Three

height of

describe

to

perpendicular line, so

of

off the demand

steel production in the past

almost

to

of thousands

at

drawn

the

enough

cars

in the terminals.

six weeks

chart

of

conditions

economic

the sidingsand

on

the iron and

ago

the

the

weeks,

ten

sudden

and

has been the contraction."

extreme

A
These

Bull

Market

Recognized

trasted
supplemented by and conwith the uniformly bullish inferences drawn
from
the stock market
barometer
during the winter
and springof 1908, when
the business of the country
apparently,in the deepest stage of depression.
was,
The
depressionwas
recognized; but the fact that the
stock market
was
acting not upon the things of the

moment
see

but upon

them,

will be

could

extracts

seen

was

all the facts,as

allowed

never

that

be

The

Wall

to

far ahead
become

Street

as

it could

obscure.

Journal

set

It

forth

the known

MARKET"

1908-1909

135

facts in the paragraphs

well-known
that

at

BULL

chart

showed

time

and

begin its ensuingarea

its

did

not

A
quoted above.
lowest point of depression

line, to

its medial

cross

expansion,until the following

November.
But the stock market
anticipatedthat
record by a clear twelve
months, and the faithful
barometer
predicted the recovery when there was
parentl
apthe horizon.
not
a patch of clear sky on

Reprobating
Looking back
it is
sound

matter

Wall
he

to

back

in the

is wrong.

can

never

The

me

In

the

be

Recovery

days of earlyresponsibility,

of thankfulness

criticism.

Street

"Frivolous"

the

those

on

theory to

virulent

of

to

me

of

mind

at

had

Dow's

unbelievably
the demagogue
being rightwhen

face of

forgivenfor

country

have

that

time

full of all

was

agitationfor the curbing,controlling,regulating

and general bedevilingof business.
Discontent
winter of unemployment.
a
was
general,and it was
tude
of the letters received,in which this bullish attiSome
kinds

of

of the
unmeasured

stock
terms,

market
would

was

sound

denounced

funny

in the
now,

most

although

anythingbut funny then. We seemed to be

they were
in the positionof the "coon"
at the country fair who
puts his head through a hole in a sheet as a target
for those willingto pay their nickels for the privilege
that
of a shot at him.
The
lightestaccusation was
while Rome
Wall Street was
was
burning."
"fiddling
The general charge took the form that guiltymanipulation
by gamblers was in progress.

THE

i36

If you

will refer back

the recorded

would

to

chart
twenty-five-year
that

an

a market
indicating

have

the

earlier discussion you will note

sales at that time were
the lowest

publishedwith
1904,

BAROMETER

MARKET

STOCK

been

so

wasted

that

narrow

if it had

even

since

manipulation
been possible.

charge is always made in a bear market and

in the transition period between
a
major decline and
If I had not already
its succeeding
upward movement.
But

that

advanced

so

to

arguments

many

prove

what

an

consid
in-

manipulationreallyis,the volume
of sales itself would
be sufficient to make
point.
my
But these sturdy protestants thought otherwise, and
fill my
continued
wastebasket
with revilingsfor
to
For a time at least,a bull
months
to come.
many
market
was
unpopular.
positively
factor

Relevance
It is worth

of

while

the

to

Volume

note

of Trading

here

that the volume

of

than in a
trading is always larger in a bull market
bear market.
It expands as pricesgo up and contracts
as
they decline. A moment's
thought will reveal the
the market has been under long depresWhen
reason.
sion
actuallyand on
people have lost money,
many
and the fund
for speculationor
speculative
paper,
investment is correspondingly
contracted.
On the advance,
ally
however, many
people are making money, actuand on paper, and the wellnighuniversal experience

that in the last stages of a bull market

trade in stocks beyond their real resources.
This
has been

they
is uniformly true

of

major

bull

swings,but is subject

BULL

MARKET"

great modification

to

sharp reaction

in

in the

of this in the

137
A

secondarymovements.

bull market

of business.

the volume

1908-1909

There

stimulate

will often

is a

example
picturesque

spectacularreaction of the kind.

The
monthly sales in May, 1901, have not
average
been closely
than
more
approached since. They were
million eighthundred
cludin
thousand
shares a day, inone
Saturdays,when there is only two hours of
ern
trading,and it was on the 9th of May that the NorthPacific panic took place. There
will be an opportunity
detail
to take up the secondary swing in some
in a future discussion,
for our
and it is not necessary
the subjectnow.
to expand upon
purpose
most

An
Not

Unbiased

be

tedious,but
saying "I told you so," on
to

has been
use

necessary

to

of the stock

to
ex

Mind
counter

charge

of

post facto evidence, it

offer these
market

the

examples of

barometer.

indeed, little in these predictionsto

excite

the tical
pracThere
is,

boasting.

student of the averages

who
has once
Any intelligent
grasped the principleof the stock market barometer
for himself, provided he
draw
such deductions
can
An interest
bringsto the task a reallyunbiased mind.
in the stock market

would

be almost

certain

to

weaken

to foresee what
judgment. It is only human
you
hope and, indeed, what you expectedwhen you bought
stocks for the rise or sold them short.
But the analyst
of the price movement,
writing for the guidance of
all
disinterested. There
are
others,must be absolutely

his

THE

i38

STOCK

of traps

sorts

MARKET

catch him

to

BAROMETER

if he is not,

if
particularly

himself to inferences not

previouslycommitted
by the premises. Sheer pride of
clearly justified
ket
speculatorsin the stock maropinionhas ruined more
than all other causes
put together.

he has

An

of the shortest ways of

indication by one
average

One
an

Guess

Unfortunate

clearlyconfirmed

by the

is

going wrong
which

has

to

accept
been

not

On

other.

May 10, 1921,

York
American
the New
ventured
into prophecy on
To reinforce its prediction
caster
its financial page.
its forepublished a reproductionof the Dow-Jones
the chart and
the accompanying figures
As
chart.
without
taken
were
acknowledgment, altruists who
believe that ill-gotten
gains do not prosper will hear
with satisfaction that the author
article did
he

what

had

its limits,a

understand

even

appropriated.
industrial

for the

movement

in the

not

of the Hearst

He

the

while

expressedit,"marked

the

time."

railroad
was

for the industrials declined

guess,

far

railroads,so

from

nate
unfortu-

most

further

he

as

teen
thir-

June; while
marking time, also showed

their

points,making

stocks,
a

bull

prescribing
unsuspected

stocks, even

It

meaning of

announced

degree of prophecy hitherto

barometer;

can
Ameri-

new

low

in

the
a

substantial reaction.

Averages
This
a

was

bullish

Must

case

indication

where

Confirm
the

given

Each

observer

in the

Other
was

misled

by

industrial average

THE

I4o

MARKET

STOCK

BAROMETER

been

kept this rule has proved entirely

dependable. It is not only true of the major swings
of the market
but it is approximatelytrue of the secondary
have

averages

reactions

rallies.

and
dailyfluctuation,

the

far

so

and

it might be

individual stocks

as

of

It would

are

not

be

utterlymisleading

concerned.

singleaverage can, and do, look

like the real thing,as I have discovered
I find,upon
cost; for in that way
analysisof
written long ago, that I more
than once
went
for the value of

from

came

trustingit too

been

stock

the

recoveries
have
of

my

1907.

tively
seduc-

Our

suggested that

than

to

my

articles
wrong.

that

error

much.

too

Text
I

should

discuss

the

of
major movements
market
the depressionsin business, the
and the allegedor real overexpansion. I
of the panic
own
opinion about the causes

which

causes

barometer

our

little rather

Stickingto
It has

cations
indi-

The

It says much

of

true

related

were

to

the

"

I do

not

agree

with

writers

rated

as

petent
com-

myself,who ascribe it to E. H. Harriman

railroads
and the "overexpansion" of the American
from
to
1906; who choose to think that the
1901
advance in the Bank of England rate to the sufficiently
figureof 7 per cent at the end of 1906 was
startling
stocks by Mr.
a direct result of gambling in railroad
And
Roosevelt's
"malefactors of great wealth."
by
as

no

stretch of faith
a

another

can

I believe

that Harriman

duced
pro-

panic in Alexandria, Egypt, in April, 1907;

the London
in Japan within a month; what

BULL

Economist
had

MARKET"

called

"the

overtaken

October;

the
still

and

1908-1909

financial

biggest

city

since

another

preceding

"

crisis

own

that

me

the

at

the

should

almost

suspended

of

for

be

no

of

freight
But

the

all

in

have

been,

history.
here

these

at

the

the

H.
the

ment,
develop-

billion-dollar-

in

but

1906,

much

ownership

reciprocal

There

plans.
with

there,

to

was

serious

more

Harriman's

public

to

protect

state
Inter-

the

through

us

rates.

this

is

beside

not

fourteen

were

E.

railroad

Commission

barometer,

queerly

was

our

seemed

has

of

suggested

than

to

menace

Commerce
the

Hill

country

stocks

on

gone

entirely,

the

railroad

could

J.

It

paralysis

have

James

rate

matter

October.

subsequent

which

a-year

of

end

in

Hamburg

all

Chile

that

disaster
in

1857"

in

141

to

But

about

the

at

where

discussions

to

know

least

the

is

will

who

to

stick

to

might
part

review
the

who

those

to

extent,

necessary

still

reads

History

facts,

the

about

writing

am

event

modest

it

weather.

after

years

position

point.

the

text.

even

of

that

history

Chapter XIII
NATURE

AND

USES

resuming
BEFORE
effectiveness

of

been

has

is

there

of
have

diagnose

of

the

have

theory

of

in

and,

fluctuation.

investor

than

market

to

the
to

of

turn

say

there

when
are

no

those

market

the

in

that
the

this

the
a

to

Call

the

Turn

or

secondary

that

movement

insuperable difficulties

the

and

to

will

embryo
stock

business.

if it is hard

bull market

14*

market

using the

warning

bear

bull

speculator or

and

once

the

secondary

discussion

guide

at

is

movements

market;

bear

the

containing

as

down

or

But

by analysis

proved

consider

who

sions
discus-

Theory

conceded

to

more

as

great

be

sideration
con-

Previous

reactions
in

rallies

How

be

some

incipientstages.

up

by

It may

barometer

It may

for

simultaneous

way,

swing

be addressed

to

seem

represented

corresponding

daily

in its

sions,
discus-

recent

possible successfullyto

was

We

primary

great

movement,

and

the

distinct

most

our

barometer

postulated in Dow's

matter.

correctness

"

it

movement

different

three

how

major swing

market

stock

swing.

secondary

shown

secondary
a

the

the

of

demonstration

opportunity here

good

historical

subject of

the

SWINGS

SECONDARY

the

the

which

OF

to

call

it is still harder
is due,

in the way

although
of show-

SECONDARY

ing

the

termination

resumption of
dogmatize about

the

duration

of

the

the main
the

143

secondary movement
market

depth
We

extent.

or

SWINGS

of

have

trend.
such

We

cannot

in

movements,

from

seen,

and

study of

reallya secondary reaction in a bull market

aggravated by the San Francisco
calamity in 1906,
that such a reaction can
look deceptively
like the real
thing the development of a new
major swing. It
look so vigorous and convincing,
in the case
of
can
as
Pacific panic of 1901, that even
the Northern
enced
experitraders will rashly assume
that the bull market
what

was

"

is

over.

Dow

estimated

movement
length of a counter
at from
fortyto sixtydays, but subsequent experience
has shown
that this longer range
is exceedinglyrare
be appreciablyless than
and that the duration
may
siderable
forty days. The daily fluctuation might be so conto constitute almost
as
a
secondary reaction

if the
in itself,

When
take

of

secondary
as

this.

was

of it were

known

in

over

movements

It is

all

we

ing.
consider-

were

that the government

the end of December,

would
1917,

single day in the railroad

have
six points. There
been
true

advance

an

was

average

extent

the railroads,at

over

there

it

the

which

did

tried rule,which

not

even

carry

so

far

will

in

help to guide us
that the change
is abrupt,
market

studyingthe secondary movement,

in the broad general direction of the
is apprewhile the resumption of the major movement
ciably
latter is frequentlyforetold by a
slower.
The
line of accumulation
tribution in

bear

in

market.

bull market

or

line of dis

THE

144

MARKET

STOCK

Meteors

More

is

BAROMETER

foresee

Than

Stars

It seems
to
sharp break?
depend upon a set of causes
altogetherdifferent from
is the main
the adjustment of pricesto values, which
intent of the major swing. It reprefunction
and
sents
condition more
than a summing
a technical market
It means,
and reflection of general knowledge.
up
the professionals
much
pany
comas
say, that there is too
the bull side; or, conversely,that people are
on
ishing
sellinga bear market short, regardlessof the dimindeclined in
I have
floatingsupply of stocks.
than one
to speculate.
more
place to advise any man
That
virtuous attitude is easy and cheap, but it will
if I do not presume
to advise
acquiremore
significance
citizen feels
where
a free American
againstspeculating
for success
he has the qualities
and, more
ticularly
parnecessary

Who

to

if he
That

Wall

than

the

is the kind

is the

of

stand

can

of all tests, in other

severest

Street.

who

man

There

have

been

many

sky, but few fixed stars.

of the market
secondary movement
has a real and abiding advantage

cess.
suc-

places
meteors

in the financial
In the

It is

amateur.

experience tells.
sense,

and

man

"Tape
on

if he has

real

the floor
most

aptitudefor

in which
There

the
are

reading"

amateur

many

can

is

sort

feel

over

of

change

There

is better
in which

he

than
seems

sixth
ing
com-

reader

accomplished tape
his work.

the

his technical

in which

emergency

better than the

even

games

the

an

the professional

are

the
at

some

fessional
pro-

least

SWINGS

SECONDARY

145

good. But in the long run, in nearly all games,

the professional
will win oftener than the amateur.
able
He
will win more
when
there is anything consideras

at

stake

and

he

losses

will lose less when

are

inevitable.

Advantage of
Some

authorities
cards

good

in the game.

win,

and

even

An

80

win

to

bridge
cent

per

indifferent

continue

Expert

auction

on

constitute

the

or
over

of

estimate

that

the

advantage
unsound
player can
extended period,
an

if he holds

than average
good hands, enjoysrather more
luck and is messed
But the
with good partners.
the vital difference
remaining 20 per cent makes
between
the incurablymediocre
player and the expert.
sufficient period of time to
a
Playing constantlyover
of chance, the first-class player
the element
average
win.
He will win, moreover,
without any unfair
must
advantage. If, indeed, he depended upon collusive
information from his partner, for instance,he would
be merely a sharper and
a
never
reallyfirst-class
player. The advantage of the crook has always been
overestimated.
His mentalityis at some
tive,
point defecor
a

few

both
are

he would

be

crook.

few
surprisingly
the professionaland
"

soon

eliminated
the

not

"

detected, and

they find

heap. Nemo
they amount

to

crooks
the

with

their level

repente

I have

in Wall

amateur

their
at

fallen in with

the

Street, in

class.
sole

They
advantage

very

bottom

fitturpissimus;and, in

little.

of

tice,
prac-

THE

i46

MARKET

STOCK

BAROMETER

Graduating/Professionals
speculatorswho fightfor
their own
hand, like Hal o' the Wynd, those who, not
of the Stock Exchange or partners in
being members
therefore
cede
obliged to conany brokerage house, are
Of

successful

the many

the broker's
sooner

commission

and

the market

turn, all

later become, in every intent,professionals.

the business of speculationexactly
devote
to
or

They
the jealouslyexclusive attention which
man
gives to any kind of business. The
takes only "an occasional flutter" in the
however

successful

outsider who
stock market,

be, will
may
in the secondaryswings,where he is pitted

shrewd

lose money
against the

and

well

informed

he

recognize the
professional.He cannot
tude;
change in movement
quicklyenough to adapt his attifrom taking a
he is usually
averse
constitutionally
loss where
he has previouslybeen right. The
fessional
prothe shortest notice,and reactions
acts
upon
ralliesgive littlenotice.
or
Wall

Street

Normally

Bullish

is on
all fours with the
amateur
intelligent
come
bull market
has reacted and bewhen
a
professional
Street formulated
dull. In the old days Wall
But

the

number

"Never

of maxims
sell

of these was,
It is bad advice in a

for itself,
and

dull market."

one

swing, for the market then will become

and experiencedtraders will
dull after a sharp rally,
accordinglyput out their shorts again. But Wall
major bear

THE

i48

BAROMETER

MARKET

STOCK

subsequently
by his purchases of securities which
enjoyed his intimate
appreciatedin value. I never
acquaintance.It is not unfair,at this distance of time,
with responsibilities
do not
to say that newspaper
men
cultivate intimacywith largeprofessional
speculators.
be misconstrued,however
innocent
Such intimacycan
the personalrelations may
be, and easilyresults (for
Street is reeking with gossip and scandal) in
Wall
givingthe reporter an undesirable reputationfor being
the interested mouthpiece of that particular
operator.
This, of course, is a condition which no clean newspaper
could
This

should

or

is not

to

of those

most

say

who

inaccessible suite
officein Broad

good

were

at

tolerate.

that the newspaper

had the entree
to
his

for

reasons

not

bandit

ideas of financiers gathered from

had

word,
him

and

if he
failed

was

to

admiring affection
love of
ever

did

by no
people,with

some

the scarehead

the

even

to

him

merciless

keep

to

theirs.

for his

There

was

moving-picturescreen, have
attractive qualities,
and he was
a

or

He

who

likingKeene,

the cold and bloodless

means

highly
J. Taylor's

of honor.

men

even

Keene's

Talbot
son-in-law,

Street,were

or

men,

supposed.
man

those who
All

of

papers
news-

us

of his

dealt with
liked

his

fine horse.

his man's
sportsLittle that his enemies

in the stock

market

son

Foxall,and

"

and

that

was

plenty hurt him like the death of his favorite Sysonby, a horse he bred himself and one of the greatest
looked
that ever
three-year-olds
through a bridle.
could afford to know
who
men
Among the newspaper
Keene
York
Edwin
was
Lefevre, then on the New
"

SECONDARY

Globe.

But

less

was

it is no

than

more

friend than

SWINGS

justto

connoisseur

149
say that Lefevre

He

of Keene.

him, in a highly amusing way, for use in his

cynicalbut effective Wall Street Stones, in Samson
Rock
of Wall Street,The Golden Flood and other
tales of a like character,now
of date
somewhat
out
but interesting
ent
reading for those who knew the differstudied

Wall

Street of twenty
Addis

There

is another

on

ago.

years

Cam

mack

why bear operators are

credited with more
ing"
"wreckand market
short selling
conceived.
than they ever
performed or even
Such an operator can
bull stocks and keep himself in
the bear side
the background, while a campaign on
is usuallydramatic, with the principal
figurevery much
in the spotlight.Addison
rather
Cammack's
era
was
before my
time, but people who knew him well say
that his bear campaigns were
ful
successshort, sometimes
and
soon

had
more

sometimes

ruined
not

not, and
driven

or

been

reason

an

interested

that he would

into other

big money
at

$7

environment

been
if he

excellent

judge of values, and much

in the growth and prosperfinancially
ity

of the country than in efforts

his

have

to

check

it. He

Pacific,
on
buying Northern
He
share.
probably had

made

tion,
reconstrucmore

real

belief in the greatness of the United

States than some
of those critics who
are
so
ready to impugn Wall

Street's patriotism. Keene

his abortive bull

campaign in

was

right,if premature,

Southern

Pacific.

in

THE

150

MARKET

STOCK

BAROMETER

SellingCommodities
few

Short

friends,because

not
obviouslyhe canunless other people lose it. It is
make
money
that this feeling
illogical
curiously
againsthim extends

bear

the

to

even

has

the short

on

stocks for tions

operaside in commodities
like wheat
or
he forsakes

where

cases

nothing incompatiblewith a
bull positionin stocks and a bear positionin wheat.
There is nothingantagonistic
to the greater prosperity
of the country in believingthat such prosperitywill
be enhanced
if the humble
consuming worker can get
lower
flour or bread
at
more
prices. It would be
of
utterlyimpossibleto synchronize the movements
But

cotton.

wheat

or

cotton

there

is

with

those of stocks. These

often decline when

not

the

securities

general opinion,but it seems

of wheat

who

breaks

are

ties
commodi-

advancing. It is
to

me

in that

that

bear

commodity,
if his end is selfish,
is performing something in
even
of a publicservice.
the nature
Such an opinionas this,of course,
will be unpopular
with the farmer
and still more
unpopular with the
farmer's political
wheat
at
friends, to whom
$5 a
bushel looks like prosperity,
with wealth
beyond the
dreams
of avarice.
It might well mean
famine
and
widespread destitution. The farmer and his friends
have become
sensitive since their own
wheat pool (not
different morally from any other attempted corner
in
the staff of life),
the price
formed
in 1919
to carry
of wheat above $3 a bushel, collapsed
under
the futile
of the Non-Partisan
leadership
League and the moral
a

corner

SECONDARY
of

support

SWINGS

of the members

some

151

of what

now

stitutes
con-

States
"bloc" in the United
agricultural
That
corner
failed,and it is no unkindness

the

Senate.

the farmer

to

to

stock market

of

say

that it deserved

to

fail.

The

warning him that such a

pool could not succeed,in ample time for him to have
realized all his wheat at priceswell over
$2 a bushel.
How

We
the

are

cotton

not
or

1920

was

the Barometer

AdjustsItself

wandering from
grainmarkets may

our

text.

have

Weakness

much

to

in

do with

only for
the financial commitments
involved.
ments,
Secondarymoveindeed,are influenced by much more
transitory
conditions than any of those which govern
the major
ages
asked,"Do the averswing. The questionis pertinently
predict a secondary reaction in any dependable
way?" There would be such a prediction,
naturally,
of a major bull swing,the market made
if,in the course
line in both averages,
and then a pricebelow the
a
line to indicate that saturation pointhad been reached;

secondary reactions

and

the

converse

in the stock market, if

would

be

true

in

bear

market.

it is,
experiencetells us that when the line occurs
before but after a secondary break or
not
generally,
rally. This line,then, is most useful to the speculator
who
has previouslysold and wants
to
get into the
market again,because a bull indication after a line of
accumulation
would
figure
point the way to a new
higher than that from which the secondary decline
took its origin. Such a new
top would be conclusive
evidence,on all our records,that the bull movement
But

had been resumed.

But

discussions

these

for

than

those

barometer

market

as

real

If
said

be

it may
unlike

we

device

designed less for speculators

who
wish
to
study the stock
guide to the general business
students

allowed
the

of

secondary

sometimes

our

is

movement

not

for

used

of you have
seen
circles in the harbor, and

passes.
adjustingcomscribin
ship'slaunch de-

wondered

it

what

metaphor is anything
but perfect,but it is clear that the secondary movement
of correcting our
the valuable
serves
purpose
Our guide is,to that extent
barometer.
at least,selfmeant.

well

is

what

secondary
metaphor,

the

mix

to

Many

well ask

may

usefulness

are

that

BAROMETER

are

and

purpose

movement.

These

of the country.
the

MARKET

STOCK

THE

152

am

adjusting.

Remember

such certain element

that
as

know

propertieswe
barometer

that the

aware

we

The

conceivable

is

taking every
includingthat most

stock

and

itself. We

therefore,expect the mechanical

market

thing into

fluid,inconstant
nature

no

in the tube, whose

the mercury
all about.

element, human

dealing with

are

exactness

of

count,
ac-

culable
incal-

cannot,

physical

science.
Not

We

Good

to

might well be disposed

if it were

of

Too

too

exact.

Our

Be
to

True
suspect

our

attitude would

eter
barombe that

police evidence, when

city magistrate toward
story in the
every policewitness tells exactlythe same
Such evidence is altogethertoo good to
words.
same
be true.
I am
repeatedly asked if I am
quite sure
about the low or high point of a given turningdate;
a

SECONDARY

whether, for
from

which

1921,

are

we

be

not

take

confirm

must

averages

it that way

allow

means

shown

the

bear

reallyJune,

was

in relation

said

been

the

to

alone, in

industrials

has

market

the

that

other, but if you like to

it suits your
habit of mind, by
each

where

latitude.

much

material

any

figurecharts

from

the

yourself that

that it makes

see

been

and

of

considered

point, scored by
following August. It

the

153

emerging

now

low

new

all

instance,the low

should

or

SWINGS

difference.
bear

I have

bull

and

not
can-

ments,
move-

singleconstantlyactive
stock like United
States Steel common,
were
sedly
profesexactness.
predicted with mathematical
They
have not
inspiredme, and I do not believe that they
could stand the long years
of test to which our
eter
baromhas been subjected.
There
far less kindly and with no
other critics,
are
find no
in picking
real desire to help, who
difficulty
holes in our
theory because they do not wish to be
convinced.
They are merely contentious.
They can,
of course,
find plenty of movements,
secondary
especially
failed to
which
they think the barometer
ones,
What

forecast.
as

accuracy

and
the present
be

trusted

about

the

of

course

of

it?

they demand
indeed, I do
with

such
smash

not

be

think

of

human

that

any

any

such

bility,
impossiof

us,

in

development, could
a
certainty. One way to bring
be for some
would
thoroughly

well-intentioned altruist
of the hands

instrument

would

stage of man's

world

planetout

An

to

moral

take the management

of its Creator.

of the

XIV

Chapter
AND

1909,

SINCE

have

we

market

by

We
and

this series
has

not,

But

if

is

of

look

we

established

"

deduced

or

barometer

distance

It

from
reactions
a

few

to

succeeding
it

shows

roller
be

swing, although

from
of

three

downward,

or

its

the

for

154

say

time

law

natural

up

by

tending
ex-

secondary

be, lasting from

may

further

long

ments
move-

daily fluctuation.
much

as

recessions, although

wave

permissible to

has

years;

and

but

theory

our

simultaneous,

comes

suspends

quality

market

case

weeks;
are

tide

might

the

only

not

barometer

know

three

balance.

have

we

reader

price movement,

upward

to

many

movements

advancing

should

of

reading
bank

invaluable

swing
year

the

in the

if the

workable

stock

rallies,as

or

days

These

movement

the

its broad

"

of

the

We

is that

that

maining.
re-

overcome.

not

mere

mental

see

with

forecast.

heart.

can

theory

the

his

still

by looking

run,

achievement

to

we

we

be

to

not

already

race

stock

the

are

ourselves

that

say

added

of

obstacles

have

we

is any

back

Dow's

constructed
it

studies

thereby,

hearten

is in the
to

we

fancied

and

much

not

HISTORY

goal,

our

always

reward

This

OF

understanding

as

real

the
can

the

prize.

the

set

seeing how

Perhaps

DEFECTS

barometer

discouraged
back

SOME

the

that
the

beach.
the

each
haps
Per-

secondary

great

is still in

the

primary

force

even

THE

156

ings and

STOCK

MARKET

for

dividends

BAROMETER

period of ten years past.

There
fundamental
a
was
change in conditions, aggravated
by an ill-judged
change in policy,and the
losses.
people who bought that stock suffered severe
How

would

of such

present holder

Sugar, for instance,have

the

common

stock in 1920

stock

ican
Amer-

as

fared if he had

bought

its dividend record?

on

Premises
Insufficient
It
a base.
Reasoning of that kind has too narrow
lacks foresight.It is like saying that a patientwill
of his symptoms,
because he has
irrespective
recover,
enjoyed good health for ten years past. This is an
example of reasoningfrom insufficient premises. No
doubt the possibilities
of changes in management
and
other things,which
with
sometimes
wreck
concerns
a
previouslygood dividend record, are averaged in
the total of a recordingagency'stables.
But even
when these thingsare averaged they are a record and
not

barometer.

The

data

of the Weather

Bureau

of the

highestvalue, but they do not pretend to

You
mild winter.
and I
or
a
predicta dry summer
know
in
from personal experiencethat the weather
York
is likelyto be cold in January and hot in
New
July. We could infer that much without assistance
That
from the Weather
bureau can
Bureau.
give us
tell us
only an inadequatelyshort view. It cannot
for our
that there will be fine weather
picnicthe day
are

after to-morrow.
the temperature

Still less
and

can

it tell the farmer

humidity of

the

coming

that

summer

SOME

DEFECTS

will be such
It

corn.

that he
show

can

the farmer

must

use

chances

on

mar

picnic.

our

We

have

plant potatoes instead of

but
the records and probabilities;
his own
judgment; while we take

predict. It

of weather

Little the Best

shows

what

us

or

Knows

Man

will

will make

that

that the stock market

seen

157

should

the kind

How

HISTORY

OF

barometer

happen

to

the

does

general

volume

of business many
It even
ahead.
months
goes
further and warns
of the danger of international
us
which

events

based

on

could

upset

all

the

course

of business

It

cannot

be

records.

stock market

barometer

too

ordinary
as

often

calculations
from

the

repeated that

the

inferred

edge
actingupon all the knowlavailable.
I recentlyasked one
of the greatest
financiers in Wall Street,often credited,by sensationloving journals,with the most
searchingknowledge
of financial conditions and their influence upon coming
of percentage of the available knowledge
He
said, "I have never
supposed he had.

what

events,

he
worked

am

than

sort

But

that out.

knowledge
I

other

if I had

50 per cent
is reflected in the movement

which

confident
any

is

I would

that
man

in Wall

be

far better

Street."

This

of all the
of stocks

equipped
was

from

financingof great railroads

and industrial corporations,
whose
foreignconnections
of the very highestclass. When
he could confess
are
he would
be
this without false modesty to one
not
foolish enough to deceive,how
absurd must
be the
a

banker

who

handles

the

THE

158

STOCK

MARKET

of

omniscience

assumed

of

fond

is so
politician

BAROMETER

have

barometer

come

based

upon

octopus" the

parading1

A Needless
We

"financial

the

Accuracy

long way

in the

Dow's

Theory.

reading of
We

have

"line" in the average

succession of
a
sufficient number
of days for
a
prices,over
that

"

of

volume

tradingwithin

either

accumulation
of

narrow

range

closing
a

distribution; and

or

fair
cate
indi-

must

"

seen

that

price out of that line,

downward
or
upward, will confidentlyindicate a
change in the generalmarket direction of at least a
secondaryand even a primary character,which we can
depend upon where either average is confirmed by the
a

movement

the

the

average

other.

We
must

have

also satisfied ourselves

that the averages

each other, althoughthey may not break

confirm

out

of their

same

week.

lines
respective

should

day. All
with

we

the

same

day

in the

or

It is sufficientif

It is by
that the low

on

means

no
or

the

be

made

assume

tion.
directhey take the same
shows,
necessary, as experience
ment
high point of a primary movein both
is that

averages
the market

on

the

has

same

turned,

even
confirming,
although one
of the averages
makes
low point
a
new
subsequently
or
a new
highpoint,but is not confirmed by the other.
The
previouslows or highs made by both averages
of the
best be taken as representing
the turn
may

the two

averages

market.
i

SOME

This
a

DEFECTS

number

be

to

seems

of

not

expect

an

from

the averages,
claim, if only for the

to

needed.

One

159

which is stillpuzzling
difficulty

people who

accuracy

be the last

HISTORY

OF

absolute
such
reason

critic believes that I

am

matical
mathe-

I would

as

it is

that

in

wrong

assuming that the low pointof the last bear movement

in June, 1921,
because
the industrials made
was
a
lower point in the followingAugust. But that lower
confirmed
not
point was
by the railroad average.
from our
Consequently,it is negligible
point of view,
of that gentleman's
although if it adds to the sum
if he dates his
certaintyhe will not go far wrong
from
upward movement
August and not from June.
A

Double

Top

in

igog

In the present discussion it will be useful to

the turn of the market
to the bear side in 1909.
is

likelyto

be

confusingto

meticulous

our

show
This

cause
becritics,

high for the preceding

bull movement
at
134.46 in August, 1909;
the
while the industrials made
at
a
high of 100.12
ber,
end of the followingSeptember, 100.50 earlyin Octoand 100.53, the highestof the year, at the beginning
of November.
The
last high, taken with that
preceding,is an example of what is called a double
but is often useful;
infallible,
top. It is by no means
that when the market makes
has shown
and experience
the railroad

double

top

or

stocks made

their

in the averages
there
that the rise or decline
for suspecting
double

bottom

is strong

reason

is over.

If,however, I say that

bull market

saw

its

THE

160

top in
from

August,

that

be

cannot

beginningof
combine

that the bear market

said

November.

from

study of

in

set

bear

the

in until the

set

does

exhibited

that

me

have

to

What

the condition

learned

have

and

1909,

BAROMETER

date, somebody will tell

movement

we

MARKET

STOCK

If

it matter?

then with

what

we

the line of distribution

accumulation,we shall see that distribution preceding

an
dary
important downward
turn, possiblyseconbut proving to be primary in this case, had been

or

in progress

and
at

firstweek's

had
rate

any

That

to

seems

indication

before

the

tradingof November,

as

about

me

dare

we

Well

of Stocks

Bulls

its inevitable

established

as

completion of

the

1909.

Warned

adequate a

expect from

sequences,
con-

barometrical

gauge

which

has

of human
fallibility
itself. Never was
the bull of stocks given such
nature
at the top,
repeatedchances as in 1909 to take profits
few pointsbelow it. In a previousdiscussion I
or
a
have said that the bull market
which
originated in
almost unpopular. The
December, 1907, was
actually
previousbear market had predictedan era of corporation
baiting,originatedby President Roosevelt, who
could never
have foreseen the absurd lengthsto which
take

to

his

into consideration

animadversions

wealth"

would

which

ignorantand
The

all the

upon

be carried,or

would

be

drawn

"malefactors

of

great

devastatingimplications
by people much more

the

far less sincere than himself.

bull market

of 1908-9 did

not

pleasea

number

SOME

DEFECTS

To

HISTORY

OF

Criticize

161

Critic

of

highly respectableand competent critics. I have

elsewhere Forty Years
appreciatedand recommended
His
D. Noyes.
of American
Finance,by Alexander
review appears
to have been carried only to the beginning
of 1909, to judge by his concluding paragraph.
He
then in progto reprehend the bull market
seems
ress.
He certainly
failed to see that it would continue
in force up to August, so far as the railroads were
shown by the industrial
concerned, up to November
as
and

average,

railroads

that, at the end

would

be

lower

no

of the year 1909,

hundred
than one

the
and

and
hundred
thirtyon December
3ist, as against one
in the middle
of August, and the industrials
thirty-four
a bare
point away from the top. Mr. Noyes
can
says, in speaking of the bull market, with what
in
unsuccessful
fairlybe called a somewhat
essay
prophecy :

"The

end of this

with the opensingulardemonstration came

ing
of 1909, when
facts were
suddenly recognized,when prices
for steel and other commodities
the
came
down, and when
Stock Exchange demonstrations
ended.
With
the closing of
the year 1908, this historymay
properly close;for it marked
the ending of a chapter."

But

we

that the

Noyes

have

seen,

chapter was

assumed.

the bull market

or

in

November,

We
had
as

from
not

may

of the averages,
summarily as Mr.

the record

closed
say,

so

for convenience, that

spent its force in August, 1909

choose to look at it. But the
we
"

THE

62

STOCK

bear market

which

MARKET

foresaw

BAROMETER

the next

sion
period of depresdid not
begin to "hit on all cylinders"until
Here
January, 1910.
again we see a profound and
able observer influenced by acceptinga record for a
barometer.

A Record
To

student

of

Too

Brief

history and the writer modestly

claims to be something of the kind himself
it is
of unceasingregret that there is relatively
so
source
little real historyto study. Our table of averages
is
a
only truly effective for rather over
quarter of a
a

"

"

we
century. When
say that the twenty active railroad
confirm the twenty industrials it seems
stocks must
to
that this implies,at least in part, that less than
me

inclusive picture
give a sufficiently
sion,
of the market.
I might, in some
subsequent discusoffer a partial
and incompleterecord of the years
from
1860 to 1880, with an average
high and low,
month
by month, of fifteen miscellaneous stocks. I

fortystocks

do

not

well say now

that I do
conclusive teachingvalue;

not

as

may
any

or

think

that

it has

that if it had

been

of that time,
kept contemporaneouslywith the events
and not
compiled years after, it would have given
cations
business anythinglike the thoroughlytrustworthy indiwhich we
read in the more
perfectdoublecan
of to-day.
barometer
average
How
But
the

mere

my

History Records

the

Wrong

Things

historygoes much further than

records of which we
are
treating.It is that
criticism of

BAROMETER

MARKET

STOCK

THE

64

year'saccountingof a typicalCarthaginian
would
We
merchant
engaged in foreign trade.
have
more
practicalknowledge, applicableto the
that single merchant's
problems of to-day, from
only

one

of

books
the

the

year

and

Decline

than

B.C.

250
Fall

of

the

it

How

in tin from
had

Cornwall

and

correspondentsall
from

then extended
Did

east.

he,

or

of

over

the

he, for the tin

He

dealt

Tyre.

He

to

India

or

he
dyestuffs

in coined gold or
received,pay exclusively
may

say

world, which

known
west

and

in

commerce

dyestuffsfrom

Britain in the
could

Empire,
Carthage, to

do his business ?

did that merchant

from

get

can

Roman

incidentallysays about
nothing of the practicalconduct
those days.
all

we

in the

silver ?

He

for
of his commodities
exchanged one
did he
How
something else for both.

well have

another,

pay?
bills of

or

How

did he settle his balances?

Did

he have

exchange ? I am inclined to think that he did,

form
whatever
have
taken, although no
they may
But historydoes
or
parchment has survived.
papyrus
tell us the one
How
did
not
to know.
thing we want
the Carthaginians adjust their international
trade
balances?
The
chants
merThey necessarilyhad them.
of Joppa or Sidon or Alexandria
kept books, or
their equivalent. They had
of what
record
a
they
imported from Carthage and what they exported there
elsewhere.
and
Rome
owed
Carthage balances in
transactions which must
have required
account, in triangular
some
knowledge of double entry, with more
less regular exchange quotationsto balance one
or

SOME

DEFECTS

OF

HISTORY

165

national

does history
What
coinageagainstanother.
tell us about all this ? Absolutelynothing. And
yet
that knowledge would
be of infinitely
greater value to
save
us
more
mistakes, than Xenophon's
us, would

deathless story of the

Who

Heaven

forbid

of the

retreat

Financed

that

Xerxes?
should

we

thousand.

ten

lose

inspiring

the

lesson of

Thermopylae. We have seen, in the Great

stillcapableof rising
to the heroism
War, that men
are
of the fated three hundred.
fed and

who
men"

in the

mountains
the

on

look

sea," and
of the

cost

of

army

other, until the

the

clothed

But
and

Marathon

on

they
crack

ship'sstores

Xerxes?

"The

Marathon

looks

looking at each
without
tellingus

continue

may

of

and

"

tors
contrac-

the "five million

armed

victorious

the

of the

what

doom,
consumed

in the fleet which

"You
have
the
transported the defeated Persians.
Pyrrhic dance as yet, where is the Pyrrhic phalanx
gone?" We could dispensewith the dance if we knew
three square
how the Pyrrhicphalanx got its necessary
meals a day, and from whence
its food was
imported.
I am
far from endorsing the Henry Ford criticism of
history it is not "bunk"; but what would we not
sequences
give for a trustworthyanalysisof the economic conof Diocletian's price-fixing
edicts, in the
"

year

301?

Where
were

Was

did the Greeks

they assembled?
it in coined money,

buy their naval

How
or

was

in

the

? How

stores

settled?

account

draft written

on

parch-

THE

66

STOCK

MARKET

ment,

one
transferring

order

to

left

balance

the

of classical

out

history. It

modern

nineteenth

BAROMETER

merchant's
books

of

debt
third?

history,and
was

not

century that Green

another

to

is

All

this is

sadly lacking in

until the middle

wrote,

in

of the

historyof
History of The
not

kings of England, but A Short

all too short; and the most
English People. It was
loftily
important part of the English people was
minimized
that respectable
but inarticulate element
business and
which goes about attendingto its own
would
of the papers." No
to "keep out
one
manages
the

"

belittle the record

of the events

led up

which

to

the

But if I am
not
signingof Magna Charta.
greatly
interested in King John, I want
much
to know
more
than historyrecords about those useful mercantile and
financial figurespersonified
by Walter Scott in Isaac
of York.
The
tooth outtortured Jew's extracted
weighs,
in real historical value, the sceptre of the
Plantagenetking.

What

The

of the Banking

more

we

the

more

search
we

are

the

in the Middle

of

work

astonished

Ages?

the
at

torians
earlier his-

their

inability

almost
for they were
thing so self-evident,
icle,
invariablydrawn from the class they failed to chrondevotes
except where it touched politics.Froude
chaptersof a volume of his historyto the divorce of
Catherine
of Aragon.
tells us nothing of value
He
to

see

about

the

financial transactions

simplematter

as

the collection and

involved

payment

in

such

of Queen

SOME

Catherine's

DEFECTS

dowry

HISTORY

OF

I have

Henry VIII.

to

167
heard

perienced
ex-

interesting
is a good
news
never
gets into the papers." There
deal of cynicaltruth in that remark, and certainly
the
newspaper

men

"The

say,

most

instructive historical facts seldom

most

get into the

histories.
That

is

why the diary of Samuel Pepys, not written

for publication,
tells us more
of the real things we
ten,
been writthan anythingwhich has ever
want
to know
contemporaneouslyand since,about the period of
Restoration.

the

begin to get
like, and
London

it

how

far

from

date

that

we

banking was
in the great cityof

conducted

was

and

half

centuries

available records

as

that

familiar idea of what

some

two
so

It is almost

are

edge,
knowl-

Our

ago.

concerned, hardly,

in any real sense,

of the
antedates the incorporation
of England, at the end of the seventeenth
Bank
tury.
cenThe

banking of the
earlier financiers
almost
are
hopelessly wanting.
There
have been such records arisingout of the
must
colonial expansion of Holland, Spain and Portugal or,
working back through the years, in the trade of the
But these highlyrespectGenoese
and the Venetians.
able
records

historians

king's bastard
of

an

avenue

branch

to

think

that

the

important than

more

of trade, with the creation

necessary

How
am

and

commerce

seemed
was

machinery

of

for its

New

Is

crediblyinformed
banking,has

been

use

the

of

opening

of the financial

development.

Credit?

that

in

birth

banking,
in China

and

for

at

even

least

thousand

two

with

years,

if in

banking machinery,
be

also

must

drafts, credits and

admitted

much

that

to

the

know

we

be

may

interest,and

coinage meant
broking; nor
was
is

received
now,

than
line

but

allusions

the

Bible

the

to

interest
It

banking

evidence

some

the

exchange.

as

There

merely

be

because

trading of
history. The
Venice
But
was
largelybarter.
it was
all barter.
Not
not
only

law

many

meant

usury

that

canon

have

works

and

sure

Church

the

it would

But

little about

so

Carthage, Genoa
we

of

structure

great

that it is all modern,

assume

It

simplifiedform.

modern.
to-day'scredit is essentially

absurd

usual

the

that

of

the

itself and

sin of

credit, just
all pawn-

not

the
same

But

usury.

meant
was

like

Middle

Ages.

people

both

and

then
The
merchant,
as
paid interest.
probably had a good deal more
practicalsense
the theologian,and certainlya clearer idea of the
The
between
ble
troulegitimateinterest and usury.

is that
influenced

historians, up

to

late

date, have

by the ecclesiastical attitude

toward

been
money

exasperatingly dogmatic on the

I am
inclined to
they don't know.
the early Middle
not
Ages that
suspect that it was
I am
posed
dis"dark"
but only the historians.
even
were
friend Dr. James J. Walsh
with my
to
agree
that, in point of real civilization and attainment, both
the thirteenth
artistic and literary,
century in Europe
And
he has
even
favorably with our own.
compares
been unable
about
to elicit anything of real usefulness
lending. They
things they admit

the

mechanics

And

of

are

commerce.

if this is the

sum

of

our

knowledge

of the his-

SOME

DEFECTS

Socialism's

tory of the
of the

HISTORY

OF

False

Assumption

vital part of human

most

169

affairs,the history

made
who
paid the taxes and the men
the taxes possible; the historyof those who
took the
bare product of labor and fructified it tenfold
how
difficultis it for us to gather together enough particulars
the
from
to frame
a
trustworthy generalization
tabulation
of trade,
of the records
wholly modern
industryand finance! There has recentlybeen published
book
tory,
a
by H. G. Wells, The Outline of Hiswho

men

"

which

persuading a
have

number

But

that

assumption
rather blindly,
in

socialism.

"

Is there

the

people to
reading in

"outline"

fallacious
way,

had

of

little serious

done

lives.

least has

at

excellent

course

is devoted

that

men

history who

read
the

of their

proving a
groping their
to

are

the direction

effect of

of

international

quate
singlerecord in all the inadevolumes of history,
which Mr. Wells and
upon
ourselves necessarily
we
depend, which indicates anything
of the kind?
ment
Everything pointsto the developof the efficient individual. There
is nothing in
the Wells inference which does not ignore the factor
of management
dominant
and dominant
in production,
now
learned to save
always,from the time when man
something out of his harvest, to keep himself and
others through the coming winter, and exchange for
what he could not produce.
A

With

Sound

regard

of the market

to

one

and
the

Conservative
use

in 1909,

Forecast

of the barometer
The

Wall

in the turn

Street Journal

on

MARKET

STOCK

THE

170

BAROMETER

after the railroads

September nth, a month

their high, said:
"The

has

which

of the average

movement

The

swing.
whatever

marked

often

the

that all the

'now

look

commencement

bad

was

one

downward

doubtedly
unout,' the averages
they have done in a long

is

news

bearish

more

of

as

think

may

Thursday's break

on

corded
re-

but
authoritative,
yet is not
very
about a resumption of the bull movement,

indication

we

had

than

period.
has

"Pessimism

been

never

the

policy of this

but

paper,

when
the market
plea for conservatism
the top.
at
Nothing has occurred since which has not
was
emphasized the positiontaken."

published an

it

that time

From
have

we

seen,

modified

forward, although the market, as

remarkably firm, showing only

was

secondary

the end

to

earnest

to

downward

of the year, The Wall

Street Journal continued
draw lessons of warning from the averages.

On

October

of

the

it said,after

28th

rally necessary

market

swings practically
up

re-establish

to

old

the

bull

"There

is no

pretense

here

to

any

other point of view

upon

the

experience of the price

record

of

many

than

years,

an

pass

from

average

the extent

pointingout

opinion upon

purelytechnical

movements

but

the market

as

one,

shown

based
in the

ometer,
the depression in the barof

here evidenced,is well worthy of the consideration

thoughtful traders."

Growing Effectivenessof
Remarking how
1910

was

then

widely the

held

The

the

idea of

Wall

Barometer

Street

bull market
Journal

in
was

Chapter XV
"LINE"

AND

AN

EXAMPLE

"

1914

past discussions of the stock market barometer

the record by dailyaverages of the closing
"bid"
"

pricesof

number

stocks,taken in
each
is called

other

of selected industrial and railroad

firm
separate groups to check and conemphasishas been laid upon what

two
"

"line."

of value

It is needless

river. The

from

say that

no

ence
infer-

ing.
singleday'stradHowever
large the transactions may be, they
show the generaltrend. This dailyfluctuation
cannot
is merely the third and least importantmovement
defined in Dow's theoryof the averages.
If we could
ment
imaginesuch a thingas an irregular
dailytidal moveit is justthat. The generallevel of the sea is
not changed by an abnormally
high tide in the Bay of
Chinese
Fundy or a tidal bore in the mouth of some
can

be drawn

to
a

ocean's real encroachments

and

recessions

take time.
A

Definition

line,therefore,may be considered as often

precedingan appreciable
recovery in a primary bear
market or a well-defined reaction in a primary bull
market, and, rarely,
as the possible
turningof a major
The

movement.

for all our

It

can

purposes

almost
that

be

set

down

line is and must

as

axiomatic

necessarily

"LINE"

be either
For

AN

EXAMPLE"

of accumulation

one

time

AND

or

one

1914

173

of distribution.

the

buying and sellingpower are in equilibrium

There
lines in the
are
some
most
significant
historyof the averages to which reference has already
been

made.

the
Predicting/

To

show

War

the

specialvalue of the averages

as
a
barometer
Street itself
Wall
forecastingwhat even
in any general sense
does not
know
at
or
any rate
does not realize,the extraordinary
line made
by both
industrials and railroads,in the months
of
averages,
May, June and July,1914, preceding the outbreak of
the Great
No
test
War, is here submitted.
severer
of the averages
could be chosen.
The
came
as
war
Did the stock market
a
surpriseto the whole world.
foresee
had

it?

It may

be

predictedit,or
crossed

Let

it be

trouble

of the

that it did, and

most

momentous

July,while the German

into Belgium on August 3d" 4th.
remembered
that a primary bear movement

character, before
army

fairlyclaimed

the end

of

in the stock market

in progress
In May, 1914, both averages
since October, 1912.
ations
started to make
a line of unusual
length. The fluctuhad

then

been

in the railroads
three and

one

hundred

were

and

between
one,

and

one

hundred

and

in the industrial

eighty-oneand seventy-nine.Only once, or

June 25th, did the railroads give a warning at one
This was
taken back the followingday with
hundred.

between

continuance

of the line in both

averages

up

to

July

THE

174

STOCK

8th in the

of

BAROMETER

MARKET

the

railroads

and

July 27th in the

of the industrials. At the latter date, eight days
case
before
the German
trials
invaded Belgium, the indusarmy
the warning the railroads
confirmed
had given.
1

case

Definition of
The
I, 1914,

April

months,
no

recorded

of accumulation

one

been

"Line"

accompanying figure chart,

to July 3Oth, answers
many

line,like others
of

the

bear

and

there

war

market
is fair

this would

followed

was

distribution.

had

May

questions. The

in the averages,
or

from

taken

continued

ably
presumthe

At
for

conjecture that
have proved a line

nineteen

had

of

end

there

lation,
accumu-

which
actually
by the bull market
started in the ensuing December,
after the Stock
soon
Exchange reopened for business.
This
chart
also the questions as
the
to
answers
dimensions
of a line,which, of course,
in
breadth
or
be prolonged indefinitely
in this instance
and
theory may
had
over
actually extended
sixty-sixtrading
in the railroads.
days in the industrials and seventy-one
It will be seen
the extreme
that three pointswas
range
in the industrials
four
and
points that in the more
line proved to have
stable railroad stocks.
The
been
of distribution,
and indeed the market
had become
one
that
with
stocks
the Stock
saturated
Exchange
so
closed its doors
for the first time since the gold panic
of

1873.

AVERAGES
TO

FROM

CLOSING

OF

figurerepresents the

Each

twelve

THE

i, 1914

EXCHANGE

STOCK

closingbid priceof twenty

a
complete trading day.

average
stocks,and

industrial

MAY

railroad

stocks

and

RAILROADS
MAY

103
IO2

102

IO2

IO2

IO2

IO2

IO2

IO2

IO2

IOI

101

IOI

103 103 103

IO2

IO2

103

103

103

103

103

103
IO2

IO2

-JUNE

-JULY103
102

102

I O2

102

102

102

IOI

IOI

IOI

IOI
100

100

100

100

98

98

98

97

97

97

96
"

"

"

"

94

93
INDUSTRIALS
-MAY-

80

79

80

79

79

79

79

79

80

SI

81

80

80

Si

81

81

81

80

80

81

Si

81

81

81

Si

81

Si

81

80

79

JUNE
80

Si

Si

81

81

81

Si

"

81

81

81

Si

81

Si

80

"

81
80

80

80

80

80

79

JULY
81

80

80

81

81

81

81

81

81

81

80

80

80

80

80

80

80

80

80

79

79

79

76

76

THE

176

STOCK

MARKET

What
had

What

this would

have

holders

been

If there
absorbed

of American

European
had

by

been

the

no

bankers
war

American

all

vestor
in-

the

unrepresentativelow prices prevailing

bear market
which in July,1914, had been operative
at

in

German

the best informed

sold in this market.

had

Happened?

happened?

and

stocks

Had

BAROMETER

for twenty-two months.

absorbed
All of it was
the American
The
investor in the followingyear.

by
supply from

Europe then, and subsequently,as the

loans
forced foreignholders to realize,and war
war
of other investments, took
compelled the liquidation
the place of the normal
investment
supply of new
securities which it is the duty of Wall Street to create
through concentration of opportunity and of savings
and the bringing of the two
things together. Overrecognized to have
regulationof the railroads,now
been an
economic
crime, had paralyzed their power
The public
to create
new
capitallong before the war.
for five years before that
of it,like the
industrial opportunity,some

attention had

been

diverted

calamityto
inflation period, of a
shady oil promotions of our
eign
the forWithout
character.
dangerouslyspeculative
sales of American
securities and the war,
turning
us

in effect from

debtor

to

creditor

nation, there

capitalopportunity; and
break late in July
this is why after the all-revealing
small decline on the
the market
made
only a relatively
diately
reopeningof the Stock Exchange, in December, immeswinging into one of its great bull periods.

would

have

been

dearth

of

"LINE"

AND

AN

Relation

Knowledge is
what

do

EXAMPLE"

to

valuable

177

1914

Volume

merely

not

for

tellingus

for

but

Inside
what
to avoid.
us
telling
information,so called,is a dangerous commodity in
Wall Street, especially
if you
trade upon
it,but at
least it guards you againstthe rumors
which cannot
will
possiblybe so.
Diligentstudy of the averages
show where
sufficiently
a
"line,"having proved to be
of accumulation,has given definite information,
one
not
merely useful to the trader but valuable to those
who

to

look

upon

the stock market

the trend
is

Here

an

as

means

of forecasting

of the

country'sgeneralbusiness.
appropriate opportunity for adding

is
of sales.
This volume
something about volume
much
less significant
than is generallysupposed. It is
purely relative,and what would be a large volume in
of the market
state
one
supplymight well be negligible
If the line means
in a greatlyactive market.
tion,
absorpthis aosorption sums
the market
supply,
up
whether

it be three

million.

Showers

duration.
the air

it covers

But

hundred

thousand

shares

or

three

and
of rain vary in intensity,
area
they all result from the moisture in

reaching saturation point.Rain is rain whether

five days.
or
a state, in five hours
a county or

How

to

Know

Bull

Market

might well be asked, how are we to tell when a

secondary swing,upward for instance,has developed
It

into

primary bull

market?

The

result is

seen

in

178

THE

STOCK

the averages

in

BAROMETER

succession

secondary swing
be

MARKET

reacts

of

littleafter what

its culmination

would

narily
ordi-

primary bear market

but does not
decline to the old low figures,
sequentl
and subto pointsbetter than the new
recovers
high
established on
with
the earlier rally,
assume
we
may
confidence that a primary bull market
of indefinite
length has been established. It is,of course, impossible
for the barometer
of the
to predictthe duration
movement,

October

any

in

If the

zig-zagsteps.

the aneroid

than

more

3"Dth what

the weather

tell

can

will be

us

on

Election

on

Day.
Barometrical

There
aneroid

is

no

need

to

expect

barometer, which,

takes back

as

omniscience
we

its predictions
and would

guide for
true

Limitations

of the

stock

the mariner

know,
be

if it did

from

frequently

most
not.

barometer, which

market

an

worthy
untrust-

This
must

is
be

read.
intelligently
Surgeons and physiciansin our
time have been greatlyhelped,to the lastingadvantage
of human
life and comfort, by the X-ray photograph.
But

these

medical

men

will tell you

that

the

be read by an expert; that to

photograph itself must
the mere
its
to
general practitionernot accustomed
or
frequent use it may be unintelligible
misleading.
The
results of an
X-ray to disclose, for instance,
of the teeth would
pyorrhea "pockets" at the roots
be meaningless to the layman and perhaps even
to
some

dentists.

But

any

dentist could

qualifyhimself

our

childhood

now

our

called

great wheat

remained

have

MARKET

STOCK

THE

i8o

"the
and

BAROMETER

great

American

desert,"

corn-producingstates, would

desert for all we

knew

the contrary.

to

Rudyard Kiplingonce said that if the British army

for supports the British Empire
had always waited
The
would have stopped at Margate beach.
lator
specuin the stock market, or any free market, is a fact
and not a theory. He is the embryo investor who does
It will be a bad day for this
wait for supports.
not
it has
country, and a sign that having ceased to grow
begun to dwindle, when it abandons free markets and
the free speculation
entail.
which they necessarily
But
Difficult

It is not

true

loses money

say

Unfair

that the outside

in Wall

ways
speculatoral-

Street if he continues

lating
specu-

long enough, as the present writer (who does

trade on margin himself) can
from numerous
testify

not

instances
to

to

Not

hold

his

to
own

the contrary. But the man

who means
in an
encounter
requiringcapital,

judgment, caution, and arduously acquired

information
from study must
devote the same
tion
atten-

courage,

to

that business that he would

So

of

one.

game

But

far

as

Wall

of chance
it may

to

any

other

ness.
busi-

Street is concerned, the simile

is

always

be said that

to

bad

and

those who

misleading
will

not

or

comply with the conditions of the game when

playingagainstexpert exponents of it,trading in Wall
Street is a sheer gamble, with a deadly percentage in
favor of the dealer (who does not need to be di"cannot

"LINE"

AND

AN

EXAMPLE"

181

1914

honest) and against such a player. No one would

play auction bridge against scientificplayerswithout
ences
inferlearning how to bid and how to draw correct
in the play. He would
refrain, if only out of
for his prospectivepartner.
who
But the man
mercy
will not risk his own
in that
and his partner'smoney
will not hesitate to speculatein Wall Street.
Is
way
it surprising
that he loses his money?
Who

This

seems

which

"Who

an

may

makes

Makes

the Market?

appropriateplace to

be said

to

the market?"

go to the root

The

answer

of the

tion
ques-

matter.

manipulators?

The

securities to
banking houses of issue with new
The
professionaltraders on the floor of the
Stock Exchange?
The
large individual "operators"
who
talk to newspaper
and
reporters of their profits
tell Congressionalcommittees
how
they made them,
but never
about their losses?
Certainly
say a word
The
is made
market
not.
by the saving,investing
last and all
publicof the whole United States,first,
the time.
There
is no possiblefinancial combination
which
can
manipulate a bull market, by propaganda
in any other way, when
the combined
or
intelligence
of the investingpublicsees
that it is time to curtail
their commitments
of a coming decline in
in view
prices,earnings and the volume of trade. The most
do is to stimulate activity
an
expert manipulator can
in a particularstock, or a small group
in a market
which is alreadyrisingon its merits,with the approval
great
float?

82

THE

STOCK

MARKET

BAROMETER

of

hear
We
publicsentiment.
manipulation of the market, in
or
Amalgamated Copper, by the

the

about
United

successful

States

Steel

James R. Keene
in 1901
and 1902;
but we
hear
nothing of almost
innumerable
attempts to manipulate for distribution
because the general trend of the market
abandoned
the operationprofitless
made
and dangerous. The
houses are
normally sellers of
great private financing
securities because

late

it is their business

them, in the promotion of

manufacture

to

enterprises,and the
direction of the great reservoir of publiccapitalinto
such channels.
Individual Wall
Street capitalists
buy
the
for private investment, and I could
tell, from
wills filed for
of

judgment

probate,of

new

of this kind made

by men
the late J. Pierpont Morgan
as
or
Harriman, to name
only two of many.
Sound
Speculation's
It has

in
America

said before

been
a

that

about

its

own

errors

well informed

the

late

E.

H.

Basis

the

market

aggregate

resents,
rep-

of all

tally,
business, and, inciden-

a
neighbors. When
finds his jobbing trade or
his factory showing
man
invest that surplusin easilynegoa surplushe tends to
tiable
securities. If this improvement is general it is
all reflected and anticipatedin the market, for he can
buy in July and carry on ample margin what he knows
he can
he divides profits
at the
pay for outrightwhen

about

the business

end of the year.

He

does

of

so

the stock

form,
crystallized

knows

minor

the unbelievable

not

its

wait tillthe end of the

year,

"LINE"

because
in

AND

EXAMPLE"

AN

he realizes that the

July will by

property, and

that time

will have

knowledge

he

become

common

have

in the

discounted

been

183

1914

sesses
pos-

price.
for

He

materials
buys ahead justas he buys the raw
his factoryahead, at a time when
the securities or
materials

raw

that
comes

the

look

cheap.

It is

this is, in the very best sense,

from
the Latin verb sentire
senses

and

the mind,

to

important to

note

sentiment, which
"to

"

perceiveby

feel,to think."

anythingbut sentimentalism,which
in Wall

the

is

not

is

This

encouraged

Street.

Sentiment

Wall

Street knows

what

sentiment

is. It is

thing

high emprise, of adventure, of noble effort to a

It carried Boone
the Appalaacross
chians,
worthy end.
and the Argonauts of 1849 through the passes
inherit
It is something we
of the Rocky Mountains.
of Shakespeare'stime.
It is
from
forefathers
our
what they brought with them
when
they put out upon
the trackless sea, defying the galleons of Spain, and
continent after
named
a
plantationon an unknown
their Virgin Queen.
Virginia is still here but, as
Austin Dobson
sings,and Admiral Dewey might have
ment
asked, where are the galleonsof Spain? This sentiin national growth, not
is a life-giving
principle
of

to

be confused
state

sentimental

flower," with

"smile

statutes

weeks"

for
and

"an

cial
offi-

slop-over

days." In the English-speakingrace

perceptionwhich greatly survives for great

"mothers'
a

with

it is
occa-

THE

84

STOCK

It

sions.

to

which

its

hold

and

of

declaration
two

minutes

of

London,

the
A

of

individual

more

is

contact,

"How
How

in

very
very

to

City

moving
the

is

It
least

Wall

to

choice,
a

Street

the

small

the

very
very

or

far

thing
who

one

weak

ordained

the

not

individual

leadership.
at

the

tears

the

eyes

reporter.

movement

enlightened

in

was

voice

exalted

those

It

bring

newspaper

price

after

Corner,

1919.
could

its

minute,

spent

It

race.

still

the

House

it

the

London

November,

kingly

Abbey,

saved

to

year,

Mansion

when

impressive,

personal

all

gave

Westminster

had

armistice.

the

hardened

great

who

one

the

in

indeed,

sight,
of

at

in

made

breath,

first

stone

Soldier

sentiment

was

which

memorial

Unknown

the

BAROMETER

sentiment

was

and

funeral,

MARKET

greater

out,

wise,
great

are."

of

even

learned,

has

and

come
out-

and
from

Chapter
AN

EXCEPTION

PROVERB

the

controversialist
it

wit

of

finds

the

that

us

if it is trite.

even

would
in

especially

is

de

regulam
the

the

Our

back

stock
many

averages
to

each

of

market

in

rule

have

rule, and
that
set

by
But

there
more

up.
185

probat
But

what

be

may
averages.

stocks

industrial
to

ence
infer-

any

The

history
going

averages,

that

was

the

two

tion
excep-

one

valuable

exception which

suits

exception

market

conclusively

it is the

it is the

these

rule,

want.

we

movement.

shown

proves

and

tions
excep-

best

"Exceptio

stock

out
with-

new

the

give weight

to

price

together.

move

this

as

in the

of
a

about

true,

rule

no

which

what

not

railroad

other
the

years,

purpose
we

exception

from

drawn

Coke's

startlingly true

even

is

that

says

osopher
phil-

presumably

number

proverb

exceptis" is

averages

confirm

the

is

great

two

must

the

calls

he

fallacious,

formulate

to

the

French
are

there

sufficient

many

when

is

that

which

that

rebus

proverb

called

truism

rule, although

the

proves

truism.

generalizations

economics,

purpose

our

or

as

of

wisdom

inconvenient,

proverb

it necessary

make

the

RULE

Sometimes,

one.

But

but

THE

called

It is said

exception,

an

all

this one."

"including

PROVE

been

glitteringgenerality

told

of

TO

has

and

XVI

for

proves

our

the

THE

i86

MARKET

STOCK

Some

It adds

BAROMETER

Necessary History

the interest of the

to

that it is necessary

make

to

study of this subject

into contemporary

excursions

ment,
historyto explainthe meaning of the pricemoveoften only fullyapparent after the movement
for many
In 1918, for
has been under way
months.

nine months

some

both

primary

secondary reaction

the Great

entered

had

we

showed

averages

strong

after

bull market

War,
with

of that year.
stocks fullyshared that
the end

over

During that year the railroad

sold off,making almost
upward swing but subsequently
a

bear

were

the
which
for

of their

market

in 1919,
Letters
were

own

strongest.
serial publicationof

this well-known

rejectingthe
But

if

fact

the

trials
indus-

written

ing
dur-

when

these

discussions, in

adduced

was

as

reason

ages.
theory based upon the averexceptionproved the rule this

entire

ever

an

that

the

does.

one

Remember

industrial

and

railroad

stocks

speculative.Only
essentially
to a
are
they held for fixed income by
people to whom
safetyof the principalshould be the
main
constantly
consideration, and their holders are
not
they would be
speculative
changing. If they were

used

in the averages
limited extent

useless for

why railroad
bull market

are

market

stock
stocks

in

during

in the industrials

real

sense

1919
was

did

not

reason

share

that, through

the
ernment
gov-

and

they
guaranty,
government
ceased, for the time at least,to be

ownership
had

The

barometer.

speculative. They could

not

advance

in any

market,

EXCEPTION

bull

bear,

or

value

enough

187

discount

to

the

mated
esti-

of that guaranty.

An

Thus

than

more

RULE

THE

PROVES

for

Impaired Barometer

year

their usual value

half, for the

as

or

the

more

barometer,

essential confirmation

of

corresponding

half

less than

indeed

or

industrials lacked

in the

movement

had

averages

the

movement

in the

clear
speculativerailroad stocks. It is made
by the accompanying chart that during that period the
railroads followed not the speculative
market
but the
yond
market
for bonds.
They had nothing to expect bethe

sighted

government
holders
of

destruction

unless, indeed, far-

guaranty,
them

could

foreseen

have

the

of

earning capacity resultingfrom the

colossal waste
of government
sequent
ownership and its subcollapse. It will be shown that the railroad
stocks during the period of that ownership paralleled
the speculativeindustrials accidentally
ent
and for differonly so far as to discount the supposed
reasons,
value of a government
ered
relapsed,and recovguaranty;
with an ensuing price movement
tially
governed essenby the totallydifferent conditions which are
compelling in the case of bonds.
An

There

is

some

difference between

Important Distinction
need
a

to

bond

here

point

out

and

stock.

while
partnershipobligation,

the bond

essential

the

The

is

stock
a

is

debt,

THE

88

mortgage,

STOCK

bondholder
has

BAROMETER

liability
ranking

stockholder

The

MARKET

is

is

ahead

of

in the business,while

partner

creditor

lent the

stock.

the

of the company.
his money
concern

The
on

the

holder
bond-

the

fixed

the manuor
facturer's
assets, such as the railroad's real estate
mills. But the essence
of the bond is that its

speculativefeature

to

non-existent.

even

the

holder

It is held

is subordinate,

for

its income

or

return.

The

pricefluctuates strictly
ing
accordingto the purchasof the income.
The priceof the bond will
power
be high when
the necessaries of life are
low, and the
investment bond
will decline in price as the cost of
It would be easy, but constantly
necessaries advances.
misleading,to say that the priceof bonds is regulated
The
interest rate
fluctuates
by the value of money.
from day to day, and only by the issue terms
of longtime
bonds
can
we
get any idea of the quotationfor
over
a
long period of years, which is at the
money
best an estimate,and often wrong.
A

It is
for

Definitionfor

simplestto

fixed income

living. If
other

the

say

that the

is in inverse
latter is

securities held

their apparent
If the cost of

the

Layman

priceof
ratio

securities held

to

the

cost

high the price of bonds

for fixed income

will be low

of
or

and

in dollars,will be large.
measured
yield,
livingis low the priceof securities held
for fixed income will be high and the apparent income,
representedby the yieldin dollars,will be correspondingly
less.

EXCEPTION

Effectsof Government
It is
of

plain,then, that with

minimum

return,

based

RULE

THE

PROVES

189

Guaranty
guaranty

government

the

upon

ings
earn-

average

of three years ended June 30, 1917, the railroads

entered the fixed income class. If they had continued
with no government
speculative,
guaranty and no government
ownership,their fluctuations would not have
been governed by the cost of living
but by their earning
pacity;
capacity,and chiefly
by their prospectiveearning cafor it cannot
be too often repeated that the
stock market
is not
conditions as they are
reflecting
to-day but conditions as far ahead as the combined
see
foreof the country there concentrated
can
intelligence
them.
Let

us

consider the

affected the
war,

in the

railroad

stocks.

and

stockholders

It

was

not

Christmas, 1917, that the

would
was

period as it

war

When

entered

we

the

between
1917, the arrangement
the railroads was
purelytentative.

still speculative,
and
trend.

the

springof

the government
So far as the
were

historyof

be

made.

knew,
these

The

followed

until late

on

stock

over

market

the

the

lative
specu-

day

after

roads
that the rail-

announcement

taken
definitely

investments

their

by the
had

not

ment
govern-

time

to

ownership on that day, but on Uie

price of
followingday, December
27th, the average
discount

the

new

the twenty active railroad stocks closed at 78.08

an
the closing
advance
of no less than 6.41 points from
"

than two
For not more
pricesof the day before.
days
previouslywas the idea that the roads would be per-

MARKET

STOCK

THE

190

manently taken
although it had

BAROMETER

considered

over

been

in
seriously

expected for

the

time past that

for maturing

some

would advance the money

the government
and capitalimprovements. On
obligations
of the
York

day

of the

had
take

announcement

story

the roads

to

the

for

the

ing
morn-

of the

one

in the confidence

newspapers,

Street,

of the Wilson
effect that

the

New

ministra
Ad-

plan

compensation based
of five years'net earnings. It is imthe average
possibl
on
Wilson's
to plumb the depths of Mr.
mind,
but this new
assumed, then and for
ownership was
ship
ownerlong afterwards, to be permanent government
to

was

for all intents and

How

From
in the
which

the

over

purposes.

Averages Diverged

accompanying chart it
rally throughout 1918 from
the

had

followed

will be
the

the firstbull market

seen

that

swing

bear

of the Great

road
the railculminating in October, 1916
had
accompanied the industrials in a
averages
the time when
But from
the fate
steady advance.
of the stockholders
became
dominated
by government
and guaranty
the two
parted
management
averages
roads
The
in railhigh point of the movement
company.
made
in October, 1918, while the bull
was
War

"

market

that

in the industrial stocks did

November,
year

break

"

Toward

1919.

the railroads

had

followingthe
guaranty.

made

not

midsummer
some

from

that

until

of the latter

recovery,

first impetuous

But

culminate

after

buying on government
point they steadily

EXCEPTION
declined

while

PROVES

RULE

THE

the

in the industrials
advance
principal
made, continuingto do so while the preliminary

was

of the great

movement

In

decline of

in ress.
progtrials,
the fallingindus-

1920

was

to
they ran counter
the way
on
crossing the
up actually
the way
of 1920.
on
down, in the autumn
in
simultaneouslya confirmatory
recovery

1920

The

It will be
and

1919
movement

seen

Esch-Cummins

in those years.

deflation of the
summer

There

was

bonds.

Act

that the decline in the railroads

closelythis corresponded
and

industrials

in

the recovery
in 1920 virtually
the
paralleled
of the average
dailypricesof forty representative
bonds

in

191

of

cost

1919,

to

of

while

It will be noticed
the inflation and

living.During
Mr.

Wilson

the

was

how

quent
subse-

spring
absent

appoint
frequentlyreported that he was diswith the unexpected costliness and inefficiency
of government
ownership,and that he would seek an
earlyopportunityfor a return of the railroads to their
is reason
There
to believe that he
private owners.
them
about
did expect, or
least hope, to return
at
that Congress would have
August i, 1919, anticipating
gress
Conby that time.
passed appropriatelegislation
bill,now
was
working on the Esch-Cummins
called the TransportationAct, which dragged through
and autumn
the summer
i6th, the
until,on November
It
of Representativespassed the measure.
House
dent
at that time, or
was
earlyin December, that the Presithe roads
declared that he would return
positively

Europe, it was

THE

192

January

on

MARKET

STOCK

But

ist.

BAROMETER

the Senate

did

not

bill until late in

Cummins
the

President

had

fixed

by

February,
compelled to extend

was

the Esch-

pass
1920;

the

so

that

limit

he

months.

two

Selling "Ex-Control"
But
when
of

more

than

nine

the railroad

months

average

was

before, in May,
making

the

1919,

first figure

"double

top,"completed in July, The Wall Street

Journal
said that the strength of these stocks in the
face of discouragingreports of earnings might be due
trol."
to the fact that they were
beginning to sell "ex-conthe
There
is no questionthat the decline from
point of the further (July) rally to the early low of
due to the appallingdamage inflicted by gov1920 was
ernment
had
ownership,which actually,in most
cases,
raised the operatingcost above the operating revenue.
The
principalitem, wages, had been advanced
beyond
all reason,
which was
rather
by a management
political
than financial,
and the cost of everythingthe railroads
tion
administraconsumed
had been multiplied. The
war
had actually
bid up railroad ties in Maine
against
each to
the only buyer, from
cents
itself,
thirty-seven
$1.40. It is noteworthy also that at that time the large
the
but absolutely
increase in rates
to render
necessary
railroads self-supporting
under
privateoperationwas
in fact not
It was
only being discussed.
granted by
the

Interstate

Commerce

of its usefulness

had

Commission

passed.

until the

time

THE

194

STOCK

!// Sense

There

is

for

need

regard it in

to

enthusiast

for any
you

fad.
can

see

surrounding objects. If
eye

and
you

its relation

to

those

exaggerated, and
can

see

attempt

to

die for

the

the

false

from

the
at
to

bring it too close to the

distorted
objectswill become
can

you

hold

the

it

forbid

Heaven

the stock market

distance

our

perspective of

of economists
wabbles

world

close

so

the eye

barometer
that

we

at

shall

that

that I should

prepared to
along on a
for disciples.
of a school,

There
is no cry here
theory of averages.
We can forgivea great deal to the founder
but we
Let
seldom
can
forgive the school.
hold

with

you

school

thesis that

fall in love

If you hold a silver dollar

relation
it in its correct

nothing else.
found

to

us

of Humor

and

"

no

length

BAROMETER

of Proportion

theory or
arm's

MARKET

such
not

fore,
there-

us,
a

able
read-

consider

it
important than the weather
have sound
predicts. We
theory to go upon, or this
and the preceding chapters have been written in vain.
let us overwork
Don't
statisticians do.
it,as so many
inclined to worship
the greatest, are
Scientists,
even
their hypotheses, with humiliating results.
Herbert
said to
Spencer, the great syntheticphilosopher,once
the late Professor
Huxley: "You may hardly believe
the beginning and
at least the
it,but I, myself,wrote
framework
of a tragedy." "I can
quite believe it,"
said Huxley.
"I know
the plot. It was
how
a
perfectlybeautiful theory was murdered
by an ugly little
the

barometer

fact."

more

EXCEPTION

PROVES

Our

Is

Some
H.

Material

disappointmenthas
said

Dow

little that

so

theory of the market

few

RULE

THE

195

Modern

Mostly

expressedthat

been

Charles

definite upon
his own
able to draw
or
was

was

movement,

of the inferences which

implicitin that
theory, to say nothing of the practicaland useful
truths developed from its application.The wonder
is
so

that he got

were

far with the scanty materials then available.

In the latter part of 1902, when Dow
died, but
so

six of the twenty industrial stocks now

in the average
in the average
of such
were
then, and the number
stocks

used

stocks

to

Ten
before, it
only twelve.
years
would
have been impossibleto find a sufficient number
of representative and
consistentlyactive industrial

and

was

make

I wish I

an

able

were

back

to

all.

old averages,
examples of the market

at

average

show

as

far

to

include Western

The

1860, with

least

single
for fifteen stocks, had not the advantage of
average
their present double
form.
how
portant
We
see
vitallyimit is to have two
firming
correctingand conaverages
each other.
But when
McKinley was re-elected

movement

it was

necessary

railroad

averages,

in
activity
belittle the
had

work

which

sincere.

for lack of

sufficient number

at

Union

in the

even

consistent

of stocks.

We

degree of
need

not

pioneers,or overpraisethem.
sarily
They necesbreak
and improvise
to
ground for themselves

their
benefit of

as

own

their
is

tools, while

we,

experience,only too
certainlyless creative

with
often
and

all
turn

often

the
out

less

XVII

Chapter
ITS

had

there

IF

the

GREATEST

would

and

it is

intelligencerepresented by
empiric,

were

should

based

or

said

have

that

unable

reason,

of

the

that

United

it

of

view
been

have

turnips

1916,

bear

called

the

Uncertainty of
One
grasp

of
the
"

those

that

stock

market

asked

why

of the
and

the

findings might

than

the

fluctuations

in

chain

of

for

from

But

barometer's

which

year

greatest

tion.
vindica-

Outlook

War

who

has

failed

in these

in the
196

upon

year

1917

future
made

to

cussions
dis-

of the

analyzed triplemovement
bearing

there

November,

constantly repeated

its

market

link.

following

the

the

our

October"

precipitate critics

principle so

tive
self-protec-

Its

its weakest

of

plain

affairs.

grocery,

swing

borders

the

and

sane

prehensible
incom-

some

seemed

have

premises.

beyond

would

taking

as

movement

for

was,

look

more

December

justly be

may

little

strong

as

major
until

of

crossroads

the

reasoning is
was

It

international

worth

at

to

States.

incapable

was

market

should

knowledge

market

the

insufficient

upon

the

of

sum

of discussions

prepared.
the

in

stocks

this series

that

been
from

in

market

probable

inferences

1917

"

bear

have

never

felt that

have

been

not

1917

year

VINDICATION

events
a

warn-

"

ITS

GREATEST

ing major
continued

VINDICATION"

bear

although

movement

show

197

1917

business

charts

of practical
large volume
perity,
prosthen and in the followingyear; while Babson's
familiar black area
of good business was
once
never
below his amended
line of growth, from the latter part
of 1915 to near
tuted
the end of 1920?
But what constithe excess
business during
volume
of American
the earlier war
it not
making supplies
years? Was
for the combatants?
Were
not
we
feedingthem and
Have
arming them, and takingpayment in I O U's?
billions of the I O U's outstanding,
not
we
some
many
of them never
likelyto be paid?
These
thingsare important to remember, but there
in
market
was
a specific
reason
a bear
why there was
the fact that the stock market
kept
1917, apart from
its head, and did not treat
war
profitsas a complete
offset to the destruction of our
past and future foreign
to

For

customers.

the
did

war

in doubt.

was

The

final German

preclude a

not

of that year the issue of

of market
knowledge
sum

the whole

victory.

of 1917 did the stock market

predictthat the allies would win.

the end

barometer

to

The

which
the

born

was

armistice

Germany's last
bravelywe
in 1917,
which

then

one

was

the

tremendous

to

concluded
teach

can

kind

sanest

of that year
months, and the

of

of

drive

by

anticipated
failure

six months.

of

ever
How-

rightmust triumph, the wish,

the thought. The
bear market

believe

father

was

It

eleven

begin

bull market

in December

by

until

Not

had

been

little to

those

measure

who

"prosperity"from

all stock

market

of insuranc

cannot

another.

movements.

tinguish
disIt
It

THE

198
offers
than

of the market's

demonstration

anythingwe

BAROMETER

MARKET

STOCK

have

readers

higher

previouslyanalyzed.
Had

// Germany
Many

vision

have

must

Won

themselves

asked

what

happened to the world if Germany and

her allies had won.
have dismissed
must
Many more
the possibility
dreadful to contemplate. Conditions
too
as
But
in all conscience.
bad enough now,
are
gium
what would
they have been with France crushed, Belof anarchy, Great
enslaved, Italy in $ state
Britain ruined, bankrupt and unable to feed herself,
would

have

with

her

have

been

should

Caribbean?

marine

we

would

of billions of

the world?
laid upon
liked her for a neighbor in the

would
have

There

What

destroyed?

of the hundreds

burden

the

Germany

ransom

How

merchant

have

has

been

disintegrationof

perhaps a rebirth of nationalities (some

possiblyspurious),which has produced sufficiently
have happened
But what would
grave
consequences.
if the British Empire had been brought
to the world
nations, or

to

irrecoverable wreck?
Such

might well
possibility

daunt

the staunchest

It asked
heart,but the stock market faced it,in 1917.
itself exactlythese questions. Admiral
Sims has told
the
since how
the condition which
us
desperatewas
allies at that time confidentially
admitted.
It was
not
until the end

of that year that

effective,
although we had gone
in the

spring.

The

assistance became

our

to

stock

war,

prepared,
largelyun-

market

did

not

ITS

know

GREATEST
then

be

not

might
the

too
save

market

failed

to

save

(for

VINDICATION"

no

late.

man

There

1917
whether

knew)

little

was

199

should

we

questionthat

we

the business of
skins,but it was
insure against the consequences
if we
to
the allies. It has been said,in an earlier

our

own

discussion,that the stock market

into

takes

account

other

lation
thingsin addition to those chosen for tabuand analysis
by the most
complete information
bureau.
Honest
compilersof such records would be
the last to contend that the warning movement
of the
stock market
is limited in its application
to
mere
a
reflection of the coming business of the United
States
only.
many

Britain's National

Debt

It will be

cussion
highlyinstructive to treat in another disof the quietyears of contracted business which
followed the bull market
of 1908"9 and preceded the

great
between

war

boom.
the bear

There
market

is

before

manifest
the

connection
and

war

which, nevertheless,upset all calculations.

now
we
thing so vast that even
precedents in history,although
ones
followingthe long quarter

which

We

culminated

at

are

there
of

It

loss

are

was

to

find

incomplete

century

with the battle of Waterloo

event

an

of

war

in 1815.

there than some

probably get a better parallel
observers
have
supposed, if we accept length as to
and take the relative
some
degree offsetting
intensity,
size of the conflicts compared with population and
national wealth.
is one
There
illustration
significant
can

THE

200

MARKET

STOCK

which has

offered

been

not

BAROMETER

elsewhere,so far

as

I know.

It is that of the British national debt after the immense

losses of the

Great Britain's debt

Napoleonic wars.
that time
at
(1815-16) represented3il/2 per cent
of her estimated
national wealth.
Throughout the
greater part of the century, and during the long reign
of Queen
Victoria,the debt was
graduallypaid off,
War
until, previous to the Boer
(1899-1902) it
amounted

to

estimated

much

not

than

more

debt

the Boer
figures,
billion dollars,and

national

to

cent

per

of the

wealth.

In round
about

to

of

wealth
at

33

of about

1902

raised

the

6 per

over

y2

1914,

Great

Britain

proportion of
cent.

In

the

in

British debt

The

1899.

of the national

cent

per

and

cost

spiteof the steady

increase in the cost of livingand the growth of taxation,
the British national debt was
again declining,
althoughit did not reach the low proportionto national
years

between

wealth

War

cent

per

wealth, or

than that

more

is estimated

now

at

proportion

the conclusion

Napoleonic wars, which had lasted, with a

three-yearinterregnum,from 1793 to 1815. No doubt
it is a formidablyhigh proportion. But it is far from
this is a basic reason
a hopelessproportion;and
why,
the
of all the money
units depreciatedin the conflict,
in exBritish pound sterling
change
approximatesrespectably
of

the

credit

In
would

1917

the American

to

Our

One

of

the

stock

happen

to

Own

dollar.
Liabilities

asking itself what

and everything
the pouad sterling,
market

was

THE

202

In

earlier

an

MARKET

STOCK

chapter,that
alluded

I have

BAROMETER

on

"Water

in the Barometer,"

compar
being inmore
deadly than watered capital. How
billions of our
national debt might not
have
many
been deducted, as never
incurred, if there had been no
Mr. -Piez, director-generalof the
such dilution?
mated
Emergency Fleet Corporation during the war, estiof labor had been dangerously
that the efficiency
reduced
through smaller individual output and larger
the latter only excused by the higher pricesfor
wages,
commodities
been

of

which

the automatic

"Labor

to

those

cause.

labor

watered

He

wages

as

themselves

had

said:

In the
slack during the war.
deliberately
Atlantic Coast shipyardsworkmen
received $2 for the same
time
that a year ago (1916) brought only $i, but that the individual
only two-thirds of what it had been a year before."
output was

had

been

Walker, in The Things That Are

Guy Morrison
Piez, says that
Caesar's, quoting Director-General
the unit of cost
share in the
production during our
at the beginning
war
was
only one-third what it was
national
debt
of hostilities.
at
Estimating our
it all, up
and
to
deducting from
$24,000,000,000
rowed
owed
$11,000,000,000,
by the allied nations who borfrom
which

labor.
to

the

$13,000,000,000, of
large part, possiblyhalf, constitutes watered

But

there

us,

we

are

allies,which

necessaries

of war,

to
were

remains

remember
made

of which

that in the advances

not

labor

in cash
was

but in the

the

costliest

ITS

GREATEST

item, the

was

was

shirking and
which

has

bad

have

not

our

If

of

out

tions.
propor-

slacking,

the

labor

stock market,

which

upon

to

century

and

we

children's children must

water

talizat
corporationcapishould

we

lessly
shame-

anythingnearlyapproachingthe

sum

for half

same

203

all the

took

we

squeezed

the remorseless

watered
and

work.

been

ever

by

1917

also present in the

less the cash wages
than

water

It

VINDICATION"

continue

children

our

to

est
inter-

pay

come.

Paying for

Bad

Work

largelynominal
character of "water"
in capitalization.
How
relatively
seldom
has it represented any real loss,to anybody,
compared with the irreparablelosses from watered
the industrial
labor!
How
seem
unsatisfyingmust
of the five years of
recorded
and commercial
activity,
in graphicstatistical tabulation,when we have
the war
from
it the tripleprice for that prosperity
deducted
for which from henceforth we
have to pay.
Everyone
It has not

of those

been

sham

difficultto show

dollars

must

be

the

met

in real

dollars.

Every wasted hour of bad work or shirked work

hour of good work.
to be paid for in an

Secondary Inflation And

"

If I had

to

in stocks, and

forecast
the

area

likelyto be much
obvious, I
sufficiently
vears

which

followed

has

After

coming major bull swing

tion,
of a possiblesecondary infla-

the

less than
would

that

compare

of the
it with

the battle of Waterloo

war

but

the six
in Great

THE

204

STOCK

Britain.

It

back

MARKET

in 1821

was

BAROMETER

that

of

England
premium upon

the Bank

gold basis,and the

gold disappeared. A self-deluded House of Commons
admitted
in 1819 that the famous
Bullion
Report
then
And
was
right,and that fiat money
was
wrong.

went

followed
levels

was

the years in which

the deflation of the war
taken in hand
by a nation in which every

sixth person
that we
in

Dare
we
registeredpauper.
pose
supshall not pay our
lighterbill
relatively
later?
It is less
such way
as
or
this,sooner

some

was

four years

than

upon

since the armistice.

The

bull market

in progress
while this is written may
not
or
carry
may
in Europe.
to a date correspondingto that of 1821
us

We

desperatecondition as Great Britain

then.
But our
have an almost
was
foreigncustomers
It is not
a
incalculably
greater reckoning to meet.
It
problem which can be solved by quack remedies.
indeed, be settled only by throwing the quack
can,
remedies
out of the window, for the patienthas been
doped to the danger point.
in

are

no

such

Unsuspected Qualitiesof
But

sufficientunto

stock market

the

barometer

the Barometer

day is the
is enough

evil thereof.
for

that it records,well in advance, the

and

clear

to

of

more

1922.

ahead
are

averages

business will be
summer

track

The

predict the duration

and

more

barometer
of

have

we

the

saying now

active and

such

purpose

in

periodsof depression

prosperityalike,giving,as

signalfor a
danger. The

our

The

seen,

warning of
that general

cheerful
does

the

in the

profess
prosperity,although
not

ITS

GREATEST

close

scrutinyit

VINDICATION"

205

1917

cations
give tolerablyclear indiof the character of the boom
or
depression
which it forecasts. The business depression
of 1908-9,
predictedby the bear market of 1907, was deep rather
than long. The period of prosperity
of the latter part
on

of 1909

and

it

and

1910

was

while its range was

of the
true
business

extended

more

the market

also slower

was

to

seems

bull

which

movement

and

longer than the

less.
correspondingly

lower
shal-

preceded

bear

market,

This

is strikingly

later fluctuations,
both

narrower

in the stock market, with

and

but much

in

the latter characteristi

precedingthe former. It was only in the

war
years that the precedingmajor swings of the stock
market became
the developmentsin our
as vigorousas
trade.
It is also
of

noteworthy that during those quietyears

fluctuations before

narrow

transactions

in

the

stocks,as shown
also.

chart, contracted

The

in

war
our

average

the volume

of

twenty-five-year
tions
monthly transacfavorably
whole, rather un-

in volume, upon
the
with those precedingthe re-election of Mc-

compare

Kinley in
1914

show

in the years
1899 made
than

The

1900.

volume

1911, 1912,
1913, and
of trading below that recorded
years

1897, 1898, 1899, and 1900; and the year

better showing in the average
tions
transaca
any

one

of the later years

here

taken

for

comparison.
Forecasting the War
We
in

may
measure

say,

therefore,that the stock market

foresee,althoughprobably in

way

does
not

definite
sufficiently
the

character, and

predicts. One
knowledge could, was
it

it

that

of much

the

itself.

war

was

It will be
1912

bear

remembered

movement

intensitycompared
of the past and

that

most

that
stock

those
especially

of

in the

latter part

to

which

movements

an

1914

given

have

we

of business

area

which

could

of the prepartly convincingjustification

ceding
major bear swing. But there can be little doubt
the decline was
also influenced
by liquidationof
held by those who
realized
the dangerous possibilitie

have

must

the

with

dence.
coinci-

as

in the German
This

market

mere

of the bear

There
particularconsideration.
was
depression of no great depth in
be offered

bear

in, of decidedly mild

set

with

knew

Somebody

the
and
livelypossibility,
accident or
no
preceded the war
was

which

of

be

practicalusefulness,
the dimensions, of the thing
even
thing it foresaw, so far as human
to

Kiel

the

It may

attitude

started

toward

somewhere

other

about

the

Canal, strategically
connecting

North

Sea

through German

nations.

opening

the

Baltic

territory.

justlyclaimed that the bear market, quite

in business, was
predicting a contraction
apart from
also discountingthe possibilities
of war.
In a previous
in
study, referring to the line of distribution made
1914,

be

before

the outbreak

of hostilities,
it

was

shown

responsible for turning

foreign liquidationwas
would
what
normally have been a line of accumulation
into a line of distribution,during the period of almost
three months
of equilibriumso represented. To those
dissatisfied that the major
who
profess themselves
stock market
not
movements
are
always immediately
that

ITS

adjustable
be

may

That

is

where

said

them.

test

we

to

the

the

that

confirm
We
to

vindicate

its

war

and
had

the

in

come

that
the

of

the

its

top

of

the

triumphantly

more

prescience

both

conflict.
bull

worse

severe

be

they

the

much

would

the

facts

therefore,

more

It

of

course

at

so

the

usefulness.
value

the

If,

deductions,
found

barometer.

our

international

of

not.

barometer

our

in

not

it

charts,

business

note

do

our

have

overestimate

war

takes

tabulations

apply
it

and

is

207

1917

current

fault

the

universal,

inadequately
for

various

the

to

those

does

VINDICATION"

GREATEST

market?

difficult
before
What

if

Chapter
WHAT

REGULATION

as,

for

is

equal

instance, "the
to

however

degree
requires
but

youngest
embodies

Harvard

at

idea

the
been

of

the

in successful

its allied

familiar

will recollect
"

line of

business.

use

that

with
it uses

This

in

previous
records,

and

only

good

for

the

With

the

208

adapts

which

has

Journal

and

years.

economic

service

lines in its business

line of
to

twenty

casting
fore-

Forecast

Harvard

three

itself

it

that

Street

past

of
search.
Re-

of

method

reason

Wall

records
service

barometer,

The

the

Economic

in

statement

is the

on

offer

does

speculation,a

business

our

Committee

by

Chart

It commits

of

market

publications
A

Those

stock

is

that

truism

be

business

records,

forecast.

the

triangle

because
qualification,

scientific

business, for

proof;

of any

said

have

But

some

chart

It would

own

it would

best

at

University's
Its index

angles

forecasts.

most

its

containing
Or

qualification

no

things.

tabulated

are

least

RAILROADS

two

of the

that

quality of

and

stating.

presented,

minor

of

one

sum

criticism

necessary

which

worth

OUR

requiring

right angles."

two

greatly

not

be

probably

axiom, self-evident

an

TO

assertion

would

be

DID

SWEEPING

XVIII

no

banking

and

chart
line

of

floundering attempt

THE

210

BAROMETER

MARKET

STOCK

precedingits

line of distribution for the three months

outbreak.

Movement

Greater

But there is another

Than

Major

the

Swing

givenby the averages

which, while of the greatest importance to-day, has
been largelyunrecognized. We
that the
have seen
railroad stocks,where
for
free market
there was
a
them, in the years under privateownership,shared the
minatin
major swings; and that we had a bull market culin 1909,

indication

market

bear

in the

determined

followingyear, a greatlyrestricted and hesitatingbull

in the railroad stocks,carryinginto
market, especially

minatin
culthe latter part of 1912, and another bear market
immediatelyafter the reopeningof the Stock

Exchange
weeks

of

in

December,

is

historical

trend

of the very
of
downward

1906

to

warning

which

June,

than
than
a

following eighteen

war.

There

wider

1914,

the
any

significancea
first importance in
the pricesof railroad

1921.

"

"

This

is

major swings but

of

these

assumed

previous discussion

lesson
the

and

general

stocks from

only

movement

not

even

able
consider-

more

cycleperiods with

dealt.

It has

extended

but as nearly
nearlysixteen years. It is not onlylikely
certain as anything merely human
be, that the
can
the average
railroad stocks on
will improve in the
But there is a radical reason
coming year 1922.
why
they will not, in any near
period of time, attain the
old freedom
and buoyancy which they enjoyed in the

REGULATION

RAILROADS

AND

211

"x.

later lifetime of great

Hill

Edward

and

railroad

railroad

H.

like

builders

Harriman.

James J.

condition

enterprisehas been established which

only taken

stocks but much

condition

of the

much

of the permanent

which

emasculated

value
speculative

and

has

left

value

the

as

has

for
not

of the

out

well.

It is a

themselves

railroads

weak, with their virile creative power

removed.

Roosevelt

Theodore

If

and

Roosevelt

the Railroads

could

foreseen

have

the

agitationagainstrailroad
he inaugurated;if he could have
realized that he was
not
applying temporary checks
to temporary
evils,that his policies,
so
called,carried
to their logical
terprise
conclusion,would cripplerailroad enfor incalculable years to come,
and perhaps
forever,in order to punish a few who had abused the
successful enterwhich
prise
to
accrues
necessarily
power
of the

deadly consequences
corporationswhich

we

"

may

The

be

he would

sure

publicpower

to

have

reform

acted far otherwise.

has been

construed,

in the past fourteen years, as the power

to
Railroad
development,which in the past has

destroy.
not
only
accompanied the increase in populationbut, on this
moribund
continent at least,has preceded it,is now
or
dead.
No
new
capitalhas been forthcoming for the
greatlyneeded extension of railroad facilities to parts
of the country that do not enjoy them, to say nothing
of

greater
are

terminal

the

very

facilities. Lines

arteries of

of

tion
communica-

civilization.

But

the

theories
rather
the
adaptation of the Roosevelt
or
dore
misconception of those theories,the ascriptionto Theo"

in

the

Roosevelt

of

ideas

hardening

of

those

arteries,in

heart

which

central

great

An

the

can

ten-year

census.

eight

of

weakening

lifeblood

the

pumps

We

been

irreducible

two

and

and

thirty miles

of

of

not

nearly

hundred

25

per

the railroad
a

1920,

have

has

had

we

of

mileage

If

had

of

census

in the

with

hundred

have

ourselves

contemporaneously

double

than

more

miles.

resulted

taken

increase

an

"

should
the

has

"

Development

fact for

States

thousand

and

Arrested

the

see

United

in 1910

held

never

them.

through

We

he

of

each

forty

railroad

since

cent

mileage

in

1900
8 So"we

in
continuing increase, shown
much
as
ninety thousand
as
one-sixth

had

fifteen

less than

of

it.

thousand

The

crease
in-

miles, the

justenough to keep the railroads

alive.
A "craven
fear of being great" has possessed
politicians.They have paralyzed the growth of
our
most
our
important industryrather than permit a few
conspicuous individuals to grow rich by the turning of
minimum,

ideas

great

rich when

to

their

rich

because

wealth

the

of

one

was

needs.

necessary

But
of

the

Harriman

and

them

almost

fortuitous.

have

financial
Harriman
railroads

Hill

both, and

I knew

they could

independent.
stock

died.

they

that

without

great

were

I know

They were
done
nothing creative
them
strength to make
never

he

controlled

directed.

He

the
was

deservedly trusted by the stockholders.

He
had
Pacific,
never
a
voting majority in Southern
Union
and
Pacific or
He
even
Chicago " Alton.
their own
Hill, incidentally
to
fort,
wealth, brought comaffluence,to millions of Americans
competence,
The
they never
saw.
period of railroad development
so
clearly set forth in the record and chart of our
and
implicitly

barometer
to

era,

from
the

1907,

the whole

upon

and

the

We

have

theory

of

seen

period

Cycle of
and

most

greatest,

in

Human

proved

the

reconstruction

the destruction

beginning of

creative

most

of

1897, the end

era,

was

ful
deservedly successAmerican
history.

Folly

the correctness

of Dow's

know
that the
We
price movement.
stock market
has simultaneously a major swing upward
or
downward, a secondary reaction or rally,and
almost
But
not
a
daily fluctuation.
might we
go
further and establish a sort of cycle of our
not
own,
related in the least to those cycleswhich we
have previously
considered, with their imposing and instructive
lists of panic dates?
The
Harvard
University chart
far as is wise and profitable. Its series is
ventures
as
"Depression," "Revival," "Prosperity," "Strain,"
"Crisis,"without assuming absolute length for any of
these states, and
and
"Crisis,"
taking "Strain"
even
or

in

the

"Crisis"
some

which
which

cases
we

can

could

and

"Panic,"
coincident.

deduce
almost

from
be

"Strain"

or

there

But
our

called

"Panic,"

is another

as

cycle

of the averages,
cycle of human
folly.

records
a

and

THE

2i4

STOCK

MARKET

BAROMETER
,

It could

only occur in a democracy such as ours, where

themselves
too
to govern
a
people with the power
and misconstrue
the greatest privilege
rashly assume
of such a democracy
their own
the power
to make
"

mistakes.

Coxey's Army
It will
the

not

be difficult to

show

what

mean.

In

1890, with a Republican President and a

full of uncertainty
Republican Congress, the air was
and sectionalism;and legislation,
is always in
which
some
degree a compromise, had become an immoral
cessfully
can
compromise. A true statesman
compromise sucyear

non-essentials with

on

no

real sacrifice of vital

Silver Purchase
Act was
principles.But the Sherman
which brought about the gravest
a sacrifice of principle
consequences,

of

because

financial system.

our

the very lifeblood

great and inevitable

it adulterated
The

panic,due to consequent
tion,might well have come

inflation and

overspecula-

1892 had it not been

had
that, in that year, we
large
an
extraordinarily
wheat
with a complete failure
harvest coincidentally
national
of the crop of Russia, our
only considerable intertherefore,
competitor. The
panic came,
in

in

1893.
For

much

four years
the

same

after the country

kind

of

Populism

was

which

full of very
is so rife at

Coxey'sArmy started from Masillon, Ohio,

to
march
on
Washington in 1894. Coxey's main
postulate that prosperitycould be restored with the

present.

"

REGULATION

AND

RAILROADS

215

unlimited issue of fiat money

the United
it. The

celebrated
Kansas?"

dreadful
but

The

years,

few

Middle

of the tide

turn

White's
With

States.

West

all

editorial,"What's

the

over

with

rotten

was

by William

marked

was

Railroad

Allen
Matter

during those
in the last depths of despair. All

were

and

strong

As

marching

was

"

much

managers,

sound

roads

into bankruptcy.

went

road
country'srailmileage in 1896 was in receivership.Only with
the first election of McKinley did the country emerge
into a state of sanityand light.

87

as

Ten
It had
all the

tried

rest

Prosperous
the

out

of them

at

years, between

of

politicswas

United

that time

was

It

decade

Politicians

were

For

enactments.

1897 and 1907, the paralyzinghand

We

or

they pointed in

that

bankruptcy.

from

removed

States.
before

was

found

the results of their rash

ten

free silver and

"

and

"

Years

Populistfollies

the direction of national

terrified

of the

cent

per

had

never

since.

greater
which

The
than
saw

such

railroad
it had
the

of

business

the

ever

the

period of prosperity,
development in
been

broadest

before.

and

most

the
amalgamations, of which
United
States Steel Corporation is the outstanding
the cost of livingwas
time when
a
example. It was
risingin the latter
upon the whole low, although it was
a time when
part of the ten-year period. It was
wages
as
were
expressed in
good, not merely in their amount
dollars and cents, but in their purchasingpower.
beneficent

industrial

MARKET

STOCK

THE

216

"And

BAROMETER

Waxed

Jesurun

Fat, and

Kicked"

"Jesurun waxed

it be
Can
fat, and kicked."
stand prosperity? Or is there
that democracies
cannot
wide an
still no
need to make
so
assumption? We
that labor agitationreaches its maximum,
have seen
But

in the

not

lean

when

years,

unions

non-existent,but in the fat years,

premium

funds

union
not,

and

as

so

the leaders
than

many

they

of

us

can

have

are

when

impotent
labor

is

at

or
a

their

disposalmore
wiselyspend. Agitation is

have

at

assumed, the result of trade

depression. It is,indeed, the kickingof the national

fat.
The
tion
dangerous foundaJesurun when he waxes
of the Populism which ineffaceably
marked
the
laid in the years before.
be running into such an era of Populism

nineties had
to

We

been

has, of

thrown

once

seem
more.

possible"cycle"
of kilter,but the evil fertilization of the impresout
sionable
against
publicmind, implantedby the agitation
personal property, is bound to bear its noxious fruit

The

war

in the years

to

Public

course,

any

come.

Opinion'sSecond

Thoughts

ket
extendingthe purpose of the stock marbarometer, and the design of these discussions
if I ventured upon a forecast
beyond their proper field,
based upon
this cycleof popular folly. We
can
see
far behind us the golden ten-year period of true
how
the peak of it. We
saw
prosperityis. We can name
its sudden and dramatic collapse
The feverin 1907.

It would

be

THE

2 1

STOCK

MARKET

BAROMETER

if,at that time, there had been in operationa federal

law to "recall" officers federally
elected,it is well
of probability
within the bounds
that Lincoln might
have

been recalled and

not

re-elected.

It

not

was

until

the

followingyear that his re-election to the presidency

and there are
readers of these
was
a certainty,
discussions old enough to remember
the moral depression
of 1863 and its effect upon the publicmind.

Paying for
It

can

second

Government

Meddling

be seen, from this instance of many,

that the
mind was
right,where
thought of the American

its first impressionmay

well have

been

wrong.

Look

created in the Middle

West
recently
by the Non-Partisan
League, with its half grain of
Dare
truth and its bushel of quackery or fraud.
we
that poison from
that we
have extruded
our
assume
system? Hardly a week passes that a bill for the
at

the enthusiasm

under
of billions of fiat money,
one
pretext
another, is not introduced into the Congress of the

creation
or

United

States.

If there is one

lesson which

should

have

been burned

in upon
the publicmind
in the past decade, it is that
interferes with privateenterprise,
when
government
even

of
and

is directed to the development

enterprise
it can
do incalculable harm
a
publicutility,
little good. The
people who develop the

where

very

that

railroads and

the natural

of the country are

ownershipis,in a way, more

resources

only ourselves. Railroad

than ever
representative
Congress can

be.

It includes

REGULATION

RAILROADS

AND

219

depositorin the savingbanks, every holder

insurance policy,and, indirectly,
holder
every
United
States bond, so long as the interest on
bond
is dependent on
taxation largelyderived
railroad enterprise.
every

Legislating
Everybody
It

be admitted

must

the averages

as

that this

barometer

discussions would

our

lesson of that record

an

of

that
from

Poor

chapter is less

about

record.

But

than

as

incompleteif

be

of

the

most

for the

overlooked

were

portant
im-

ten
that it is writreason
easilyunderstood
psychological
in such large letters across
the sky. Look
at the
of the railroad averages
the twenty-five-year
course
on
than sixteen years ago the twenty active
stocks made
the highest point on
record, at

More

chart.

railroad

138.36, on January
figureagain,but came
it in August, 1909,

pointsbelow
recession

134.46. The

reached

1912, at 124.35
On the
the record.

was

only

109.43

share
have

112.28,

an

the

of the war,
on

the bull market

devoted

next

than
advance

next

January

on

rally. Even

firstbull market
to

pointsof
high point

four

more

"

October
of

earlier

fourteen
the

net

average

the top of
in the
recovery,

31, 1914,
next

only carried the

4, 1916. They

1919,

that

saw

still further,while the railroad

half-hearted

stocks

never

less than

in October,

was

within
at

They

1906.

22,

as

chapter

to

railroad
did

know, for

we

the

study of

not
we

the

reason.

To-day

the

pointsbelow
priceis fifty

the

record,and

THE

220

MARKET

STOCK

less

than

25,

1898

this

steady

points

fourteen

than

more

"

decline

include

to

over

over

the

period

and

1857

1873

line

declining
medial

line
of

some

of

values

nation

to

its greatest

into
we

the

in

people

the

we

more

is

one

how

it

is

thing

possible

the

it, from

legislate

to

added

built,

know,

idea

that

legislate everybody

Are
ing
allow-

or

the

that

make

other

ought

or

rich.

everybody
to

industry
this

as

will

We

politicians

greatest

some

the

Can

its

allow

fathers

our

in

postulated

stupidly

and

steadily
assumed

charts.

its

of

longer

cent

belittles

to

and

happier?

example

the

the

stockholders

cannot

exceed

how

wealth

afford

squander

to

and

that

here

the

least

"

per

business

steadily

railroad

richer

know,

and

national

world

as

away

politicians
of

mocks

at

those

panics

See

cycle.

investment

ground

throwing

ruin

the

to

60

versity
Uni-

Harvard

enough

time

better-known

the

the

greatest

our

growing

richest
run

of

ten-year

of

of

cient
suffi-

years,

Research

long

covering

"

Jevons

the

than

than
two

sixteen

July

Analyze

ago.

of

cycle

of

figure

years

Economic

on

between

low

the

period

simple

more

"

above

twenty-three

Committee
twice

BAROMETER

of

Russia,

poor.

to

But

of

XIX

Chapter
A

has

STUDY

been

IN

MANIPULATION

in

shown

unimportant

But

history presents
and
decades

two

was

back

which

to-day.
of

bounds
stocks

they

as

stock

possibilityto

years

merely

offered

example,

that

am

I remember

was

it,with

H.

Charles

Dow)

The

Amalgamated

in sin and

in
of

be

to

assumed

There

all the

are

was

of

an

mated
Amalganow.

even

freedom
time

the

at

the
it

in progress.

Conceived

for

R.

stocks

two

all over,

allowed,

to-day

by James

distribution
hot

the
Steel

the

distribution

parity.

me

I criticized

that

(and

the

makes

which

Copper
law

about

impudence

arrogant

of

ated
toler-

or

either

it is not

and

on

ulation,
manip-

Street

feasible

These

ago.

them

Wall

manipulated

twenty-one

placing

for

Copper

Keene

be

manipulate

undoubtedly
for

of

instance, be within

for

not,

is.

manipulation

in the

not

tively
rela-

how

striking instances
would

It would

were

market

possible

Amalgamated

or

previous discussions

some

much

1900-!

"

under

born

subscription with
1899, and
that

year.

the
A

in

Copper
similar
a

Sin

Company
auspices.

capital

of

subscription books
number

of
221

conceived

was

It

offered

was

early

$75,000,000
closed

on

"newspapers,"

May
of

4th
kind

THE

222

STOCK

BAROMETER

MARKET

happilydefunct,reportedthat

now

oversubscribed!"

"five times
with
than
down
the

News

the stock
The

month.

the stock had

It did

sound

not

been

able,
probin less

at a heavy discount
selling
generalstock market was

the

on

of
grade then. It did not turn until the summer
Of
all the contemporary
ments
comfollowingyear.
that disreputable
on
exploitthose of the Boston
refused to be humbugged,
Bureau, which flatly
about

were

the

publishedless

than
On

is

vitriolic. Here

most
a

month

June

I,

of them,

one

after the fivefold "oversubscripti

1899, the Boston

News

said:

Bureau
"The

the
Amalgamated Copper stock which was
feature of the trading in outside securities yesterday,was
ticularly
parthe general railway
appropriate at this time when
list is on
the down
grade. Many shrewd observers in Wall
Street contend that the formation of the Amalgamated Copper
Company was the red flagwhich warned conservative investors
and speculatorsaway
from
the securitymarket; that a blind
scribed
pool calling for a capitalof $75,000,000 should be oversub-

drop

in

five times

an

was

indication

the better element

to

speculatorsthat the public lost its head and

not

the crash

of

would

be far distant.

"One

features of the whole

of the worst

National

City Bank,

in this country,

which

should

is the

have

case

is that the

largestinstitution of

stood sponsor

for such

its kind
tion,"
transac-

etc., etc.

Amalgamated
It will be
about
a

lated
that,in spiteof all the flubdub circuthe flotation had been
"oversubscription,"
seen

failure. The
upon

Copper

Boston

"'The

News

Bureau

Amalgamated

continued

to

ment
com-

Fiasco," "Promises

MANIPULATION"

and

1900-1

223

Predictions

"The
Humor
and
Against Realities,"
of Copper Promises," in an acridlyhumorous
In the same
of June there were
month
rumors

Pathos
vein.
that

control of the Anaconda

company

had

been

chased
pur-

by the organizers of Amalgamated Copper,

for something like $45 a share, though it was
quoted
at $70 a share by the time Amalgamated
floated,
was
and was
said to be going into the new
Amalgamated
company

at

$100

share.

The

same

Boston

article

points out that the $75,000,000 capitalof Amalgamated

Copper should have been sufficient to pay for
the
entire
capital of the constituent companies,
although only a control,presumably 51 per cent, was
declared to have been acquired. The
whole transaction
that in the better Wall Street of to-day
was
so
raw
it

seems

almost

unbelievable.

Keene's

In

Part

the latter part

manipulated

of

in Distribution

1904, three years

distribution of the stock by

after

the

James

R.

place,that eminent operator wrote

letter,which became
a
public,in which he admitted
of Henry H.
"for the account
that he distributed,
Rogers and associates,"$22,000,000 of Amalgamated
Copper (two hundred and twenty thousand shares) at
In that letter
pricesranging from ninetyto ninety-six.
he indicated the period of distribution with sufficient
clearness.
In the followingJanuary I published,in
of what he had
The Wall
Street Journal, an analysis
by the recorded sales,under the title
done, as shown
Keene

had

taken

THE

224

STOCK

BAROMETER

MARKET

of "A

did not
Study in Manipulation." That analysis
deal with the ethical question. You
cannot
say much
about the ethics of peoplewho seem
to have none.
By
taking the sales of Amalgamated Copper stock, as
of the
recorded on the ticker,
togetherwith the names
brokers executingorders as reported from
the Stock
Exchange, and by comparing periods of activityit
seemed
possibleto dot Mr. Keene's "i's" and cross
his "t's."
It had

the

making me
Street,although,to do James

Wall
I do

not

that

we

think he
were

was

intimate.

never

R. Keene
I have

of them.

one

But

he

say seemed

books.

at

me

that I had
As

various

had

not

some

Wall

own

business,made

to
to

vince
con-

his

suspicious.His
habitually

Keene

incompletein the respect

it hard to believe a simple truth where
of anybody.
upon the unsupported word
some

Keene

analysis

illicitaccess

mentalitywas

whom.

tunities
oppor-

have leaked."
he put it,"Somebody must
of his
Street of that time, and the nature

The

and

justice,

made

published,and nothingI could

see

in

said before

after that

him

men,

enemies

some

times

to
was

result of

children,know
was

not

when

great

DifferenceBetween

to

that

found

he

depended
Reallygreat
it

believe

"

and

man.

Steel and

Copper

Leaving all questionsof ethics apart, there was

probably nothing more
ably done in its day than the
distribution of Amalgamated
Copper in the stock
market.
Keene's handlingof United States Steel com-

THE

226

STOCK

MARKET

BAROMETER

publicas had reallysubscribed for Amalgamated Copper

were
originally
unloadingon the promoters of the
enterprise.Certain "court circulars" of the time were
rightfor
talkingboldlyof "inside buying." They were
Insiders were
once.
buying because they could not help
themselves.
much
against
They were
"accumulating,"
of
their will,to judge from the downward
movement
the stock. With a knowledge of the backs of the cards
well as the faces,the "Standard
which
Oil crowd"
as
the company
could not conceal their crude and
the moveWe may here recapitulate
ments
clumsy methods.
hatched

and

total sales

during this period:

The

96
openingpriceDecember
3, 1900, was
Sales from
December
3d to December
160,000
I3th were
from
The fluctuation in that period was
96 to 90^
Sales from December
uary
14, 1900, to Jan295,000

n,

1901, were
fluctuation in that

period was from 89^

all this stimulation the closingpriceon
With
only giy".
II, 1901, was

The

First

Keene's
Keene's

then, and
would

first appearance
he

was

much

be necessary
before he put it to

to
a

break

9^
uary
Jan-

Appearance
seems

too

to

to

clever

have

not

to

the market

level which

would

speculativepublic. The next record is:

Opening priceJanuary 12, 1901....
Sales from
January I2th to January
I9th

been
see

made
that it

for the stock

attract

the

91

70,000

MANIPULATION"
Fluctuation

227

1900-1

in that

period from
92^
ClosingpriceJanuary I9th
Sales from
January 2Oth to January

y"
90^

to

26th

90

88,000

Fluctuation

in that

period from
92 to 83^4
ClosingpriceJanuary 26th
89
This closingprice of January 26th is a tribute to
Keene's ability.It was
real pricethan
a much
more
the ninety-six
momentarily established by the fatuous
"insiders" in the previousDecember.
The
beginning
of Keene's
operationsis characteristic. There were
transactions averagingfrom twenty thousand
to thirty
thousand
shares daily in the third week
of January,
the 2Oth of the month, the pricewas
1901, when, on
hammered
fluctuated between
to eighty-six,
83^ and
89 on the followingday, and tended to settle down
able
the day after. The gossipobtainat 8854 on
stolidly
at

the time

was

beneath

contempt

from

news

point of view, but was well calculated to stimulate the

avarice of the public. Everything tended
show
to
that,if Keene was in the market at all,he was raiding
the stock
too

trouble
that

to

But

so

turn

on

side.

the bear

It is

not

turing
ven-

far to say that he had previouslytaken no

cover
up his tracks,in order to create exactly

impression.
What

was

for

the

Major

McKinley

well under

way.

Bull

Swing

boom

Made

in the

Stocks

but
violentlyinterrupted,

were

not

Possible

broadening market
in that great swing,
terminated, by the

THE

228

Pacific

Northern

and

corner

He

Oil stock."

admits

panic of

the

suited Keene

have

it believed that he

have

BAROMETER

MARKET

could

Nothing

May.
to

STOCK

was

of

short

following

better
a

than

"Standard

having sold all the stock

pricesfrom ninetyto ninety
to

Rogers pool, at
hundred
and
six,shortlybefore the advance to one
twenty-eight.That advance did not take place until
the middle of the followingApril,but early in March
I
the stock was
already sellingwell above par.
that
assumed, when writingin 1905, that Keene meant
the $22,000,000
of stock was
credited to Rogers
not
and his friends at one
price,but perhaps in
average
a series of largeblocks of stock averagingfrom
ninety
after allowingfor the cost of manipulato ninety-six,
tion.
of it was,
Some
of course,
sold much
higher,
sold
but we
of it was
have
already seen that some
below eighty-four.
of the

Keene's

Keene
it

was

where
of

not

was

the

Second

man

to

Stage
the market

press

his way,
and there followed
allowed to
stock was
judiciously

going
the

with occasional
itself,

sentiment.

Transactions

stimulus
were

when

period

take

care

cultivate bullish

to

in relatively
ume.
lightvol-

fluctuation was
period the extreme
less than five points,but it is noteworthy that the
the prevailingpricewhen
see
we
higher figurewas
Keene's hand
again:
Sales January 26th to February 23d.
110,000
Fluctuation in that period
to
92^
87^4
In the

next

MANIPULATION"
In this
real

some

1900-1

quietperiod of a month
stock but certainly
never

have sold
he may
the
forced it on

market.

It is difficultto say how many

dealt in that he might distribute
It

229

so

shares he

ally
actu-

large a

tity.
quan-

possiblyultimatelythree times the stock

he had to sell. In the earlystages he was
employing
brokers on both sides of the market, even
if they did
know
that they were
orders.
not
executingmatched
That was,
and is,againstthe Stock Exchange rules,
and we can afford,at this distance of time, to give them
the benefit of the doubt.
As the market
improved,
manipulationof that kind probably grew less,and of
the
course
as
public took hold it disappeared
altogether.
was

Keene's

What

may

Final

Distribution

be called the third movement

final distribution

of the

shows

the

stock:

92^
Opening priceFebruary 28th
Sales February 28th to April 3d
780,000
Fluctuation in that period from
92 to 103^
100^
Closing priceApril 3d
It is in this period that Keene
probably distributed
the

of

bulk

shares.

He

his

two

admitted

satisfiedwith my

answer

hundred
that much
to

his

and
to

thousand

twenty
me,

and

was

questionas

to

never

how

knew.
It is
that
was

one

of the discreditable facts of that

throughout this trading Amalgamated

8 per cent basis. It was
an
on
practically

period
Copper
declar-

THE

230

STOCK

BAROMETER

MARKET

with a half per cent extra ;

ing i y*,per cent quarterly,
and its directors,
with that extraordinaryfatuityfor
which the publicultimately
convinced
that
paid, were
definit
they could hold up the world priceof the metal inOne
of the items of gossip in the early
part of the Keene
of

decline

the

free

world's
checked

metal

in

market

as

some

was

and

had

not

But it was

so.

the

the

now

last been

copper,

at

as

of that curious

rumors

before

years

the effect that the

London, then

for

of the

any

to

was

It was
effectually.

the truth
It

movement

near

time.

competing copper

magnate,
with the

Augustus Heinze, reached a settlement

Amalgamated Copper people,but such a settlement
of the
the rumors
and one
then exploited,
was
among
principalbull arguments.
The

As
Keene
a

himself.
in

one

for the
It

at

was

least twice

February or March,
to

hundred

two

case,

and

to

with

almost

shares

broad

as

as

as

it had

dailytransactions

fourteen

and

much

on

thousand

been

ing
amount-

shares

several other

in

days

compared with the

activities,of seventy-seven
tuation
flucMarch
6th, with an extreme

It
during that month.
record, during Keene's
thousand

Boom

manipulationhere detailed
firstfortnight
of April,1901, created
stock which may well have surprised

had, in the

market

Own

result of the

net

Public's

on

should

be

of

nearly three points.

It may be taken that the subsequent tradingshowed
all obstacles removed
from
the stock's pathway to
the top:

MANIPULATION"

231

900-1

Sales from

April 4th to April i6tH.

1,275,000
Advance
in price from
loi^i to 128^
The
stock of the Rogers pool had been marketed
and, indeed,greedilyeaten up in the enthusiasm of a
generalbull market.
.

Their
It is
human

Gold

have

gold brick. It is of record

of the man
quitein the manner

that he

Keene
had

that "the stock

received

indictment

who

had

to

of

called in

believe in their

Henry H. Rogers,

that

has "heard

who

friend of his who

the

begun

own

from

in

that the "insiders"

actuallyto

seem

informed

Brick

humiliatingexhibit

nature

Keene

Own

knows

an

thing
some-

insider,"

going to advance ;
letters from
partieswho were
he suggestedMr. Keene should
was

going to buy, and that

It is needless to say that the
joinin the movement."
net
was
vainlyspread in the sightof that wary old
bird.
But the stock certainly
advanced
some
twenty
when
pointsbeyond the priceat which it was selling
Keene

finished his distribution.

had

It is also
which

is

not

in the study of an
significant,
at all likelyto recur,
that, in

trading,houses

which

brokers"

be called "Keene
than

felt flattered in those

in the

much

were

earlier time

when

more

the

incident
the later

days to
uous
conspic-

real

Keene

Mr. Keene's name,

to judge
tradingwas in progress.
at the time,was
only mentioned
by the gossipcurrent
when he had safelycompleted his selling.What
pened
hapto know, but
subsequentlywould be interesting
there is not

the

same

evidence

to

go upon.

THE

232

STOCK

MARKET

Petroleum
There

is no

and

"Standard

BAROMETER

Swelled

Head

Oil crowd"

lionaire
mil-

The

now.

who

to the
new
comprised that group were
possessionof great wealth. They believed themselves
invincible,
up to the time of the issue of Amalgamated
Copper. They made many mistakes, then and after,
but as time went
and got out of
on
they learned sense
the stock market.
so
They were
overwhelmingly
Standard
Oil,
rightabout petroleum,and particularly
that they could afford to risk enormous
losses in other
directions.
Some day some
will unkindlytell the
one
Mr. John D. Rockefeller,and his venture
^tory of young
in "Little Leather."
with a
Only a young man
reallywell-to-do father could afford to spend so much
There
his education.
is good reason
to
on
suppose
in the school
that his expensivepost-graduate
course
admirable effect.
of experience
had permanent
and even
I have
told, in earlier discussions,how
heartily
Henry H. Rogers could be, and how his pride
wrong
of opinionlaid all the blame
the ignorantstock
upon
"arket,which, in the last showdown, is always right.
worth $50,000,000, and
he died in 1908 he was
When
twice
it is possiblethat his estate would have shown

that

had

amount

of his work

was

he

lived another

good, and

Virginian Railroad was

originalconstruction,ever
in the
its

United

States.

two

calculated
the

best

years.
to endure.

built road,

undertaken

It almost

broke

and
the

Some
The
in its

completed
heart

godfather that, with his financial backing and

wealth, he was
compelled to borrow money

of
sonal
per-

in

234

STOCK

THE

BAROMETER

MARKET

pie are no longer deceived by the mystery talk which

bility
infalliThe
decades ago.
two
was
peddled as news
of the "insider" has been utterly
exploded. The
stock market
barometer, based upon Dow's
theory of
of the market, has
the triplesimultaneous
movement
increased in dependability
the years have gone by.
as
Certainlyit is in no real danger from manipulation,
and on that topicI have something further to add.
A

Shiftof Bad

Manipulation in
times for
method

which

of

the stock market

it occurs.

once

has

Collection

of

taken

not

stock

market

trouble

the

in Wall

news

is reportedtwenty

It is the inefficientreporter's

accountingfor

he

Reporting

movement

understand.

to

Street is difficult,
but

of
impossible. It requiresa higher average
than news
collection anywhere else,and,
done properly,entails unremittinghard work.

workers

hard

are

not

much

the newspaper
business than elsewhere.
reporter is tempted by the fact that he

not

gence
intelliif it is

remittin
Unin

commoner

The

financial

take

refuge
in technical terms
understood
not
or
correctlyappreciated
by his employers. Except in such a responsible
the Dow-Jones service,whose
news
as
very
agency
existence depends upon the integrity
of what it gathers
and sells,
financial reportingis apt to become
tory,
perfuncalthough it is improving.
Always
This
because

is
some

Reason,

matter

of my

which

and

can

Always

News

interests
particularly

earliest work

in Wall

Street

me

was

MANIPULATION"

235

19001

writing the stock market paragraphs for the Dowservice.

The
far as
aim was
Jones news
to get, as
if only a tentative reason,
for all
possible,a reason,
individual
and
general fluctuations in the market.
Mere
generalities
not
were
accepted,and I could tell
stories,ranging from pathos to wild absurdity,
many
of the gatheringof news
which might be stale in half
an

hour's

time.

highest value

to

Such
the

news

active

houses, servingas it did

They
news

to

of

course,

brokerage and

of

whose

Even

at

an

appetitefor
interval

humbled

the

banking

sustain interest in the

customers

insatiable.

was

all had

was,

ket.
mar-

such

of twenty
of the

by the crudityof some

I had to give,especially
I was
reasons
evolving a
as
of nothing. But at least it was
method
out
genuine
and not
news
collecting,
guessing. I look back on
nothing in my life with greater pleasure than the
friendlyexpressionsof regret I received from the
active houses in Wall Street when
that
I relinquished
nerve-rackingtask to take up the editorshipof The
Wall Street Journal.
Almost
a reporter's
necessarily,
yards are those of the tinker's donkey
"more kicks
than ha' pence." He has, for compensation,the most
it so.
if he likes to make
work in the world
interesting
Here
is a chief reason
lation
why the part of the manipuhas been so absurdlyexaggeratedin the public
in the stock market
has a
mind.
Every movement
involves
valid explanation.To get at that explanation
much
research, with a comparison of the
intelligent
in
of the people concerned
carefullysifted expressions
years

am

"

"

the actual market

movement

"

those who

executed

the

THE

236

STOCK

orders

on

them.

The

source

of

floor, and,

the

research
the

the

to

of

the

stocks

is, "There

of
is

with

except

market
is

comments
or

for

items
will

the

which
take

refuge

"traders
other

accept

and

simply

will

turn

morning
in

in such

fudge
as

which

the

world.

inexhaustible.

any

it.

get

for

the

newspapers,

press

evening

Oil

as

my

and

all

proprietors

is

the

he

"manipulation,"

buying,"

collection
in

over

warm

"slips,"

news

newspaper

News

to

content

financial

Street

greatly improved

eral
gen-

it, in
and

out

paragraphic

expressions

Wall

news.

get

true,

not

justify
of

these

perfunctory

the

some

It is

plenty

only

out

market

finds

and

news,

of

One

to

less

or

more

market."

selling," "Standard

of

center

he

maxims

"dope."

bull

reporter
to

of

qualifications

is

the

on

even

in

many

content

and

Public

the

is called

news

the

ther,
fur-

traced

selling stocks,

or

Protects

number

There

if

he

no

be

can

original

the

to

gave

involved.

what

too

rule.

If

has

back

news

buying

News

Street
nature

the

for

reasons

Honest

Wall

and

carried

who

those

preferably,

be

can

orders

particular

the

BAROMETER

MARKET

financial
there

time, but

has
the

the
still

news

ily
stead-

field

is

Chapter
SOME

"""T

7E

of

and
writer

series

of

of

subject

It has

led

of

what

compiled,

tell

and

have

reached

not

only

of

not

not
an

method

also

advertised

to

of

We

know,

beating

the

of

system

stock

intelligently
the

national
or

past,
and

at

world

estimate,

barometer
now

when

appreciated.

dependable

market

stock

ries
theo-

much

how

us

were

know

upon

examination

an

shown

records

fair and

the

movement.

pretentious

in

the

of

price

little understood

its limitations.
a

the

has

we

ing
illuminat-

been

profitably said

some

commerce

so

what

of

which

little

of

was

of

publication

realize, when

not

"cycles";

if the

us

how

We

is

called

authorities

development

of

analysis

From

certainly instructed

be

theory

an

importance

but

could

had

It

did

he

much

are

could

history

for

Dow's
to

us

of historical

the

how

serial

of papers

interesting.

them,

began,

their

of

discussions

our

Barometer.

during

this series

widely

of

end

Market

Barren's

that

gathered

the

Stock

1910-14

"

the

nearing

The

readers

the

CONCLUSIONS

are

XX

does,
it

least, that

speculative

market

"

trading, guaranteed

against loss.

Speculation's
So

far

this

from

limiting

really expands

Prediction

the

that

V alue

usefulness
usefulness

of

the

further

eter,
barom-

than

238

THE

could

have

STOCK

been

MARKET

BAROMETER

expectedwhen

started

analyze
of the market
the triple
its major swing
movement
its secondary reaction
downward;
or
upward or
ebb and flow of the daily
rally; and the never-ceasing
fluctuation. At least we
have evolved something of
real value to the man
business is sufficiently
whose
extended
it necessary
foresee the general
to make
to
we

to

"

of trade.

current
on

to

1914

Economic

calculation

such
the

reach

of its

market

from

as

in the

and

in its construction,

from

recorded

lightof

conservatism

extreme

the barometrical

averages

considered

years

banking and business. This is

correctlyextracted after the event, and
adjustmentsmade

never

market

mittee
Com-

lines of

numerous

will

Research, for the

chart, because

of the Harvard

1903
the line of speculation
is shown
inclusive,
as

precedingthe
a

In the chart

Dow's

value

of the stock

day to day, when

theory of the triple

movement.

Prophet

Who

Knows

When

to

Stop

livingby givingtipson the stock

market
active and conspicuouswhen
the market
are
itself shows
similar activity.In dull times they are
depressingfolk to listen to unless you have a patient
the
of humor.
In those quiet years between
sense
Those

who

culmination

make

of the bear

of the Great
to

me

market

his

market

War

one

of 1910 and
of them
often

to predict market
inability

which

But

our

has

ceased

barometer

to

break
out-

deplored
in

tions.
profitablefluctuanothing to take back

show

has

movements

the

SOME

It is almost

1910-14

239

only prophet of to-day

From
stops talkingwhen he has nothing to say.
studies in the pricemovement
publishedfrom time

regret.

or

who
the
to

CONCLUSIONS"

time in The
that

Wall

the

bear

clearlyforeseen
took

the

Street Journal
market

offered evidence

I have

in stocks

of

1910

was

in the latter part of 1909.

The
for the better after June, 1910.

turn

Although the recovery was slow

general trend was
upward. There
reaction of recognizabledimensions

ket
mar-

hesitatingthe
a
secondary
was
about midsummer,
The top of the main movement,
however, was
1911.
in the latter part of 1912, and what is most
interesting
about the four years before the war
is the relatively
small

extent

from

market

of 1910

was

of

any

of

the

and

fluctuations.

The

bear

the latter part of 1909 until the middle

well defined,but in both averages
was

of

ket
barelyhalf the extent of the precedingbear marin the panic year of 1907.
The
following bull
market, if it attains quite that dignity,for it was
anythingbut a boom, showed scarcelya third of the
of the precedingbull market
which held from
range

the

the end
1907 to near
in these instructive years, we

autumn

of

dwindling movement.
for those

years

Examination

will show

of
can

of

gether,
Alto-

1909.
see

general

business

that there

was

ords
recresponding
cor-

in trade, not amounting

slowingup of activity
but rather to a dull level of business ;
to depression
without the improvement to be expectedfrom the
not
country'snatural growth; but in no way conspicuous,
of
or
strong enough to stimulate any large volume
speculation.

THE

240

STOCK

PredictingSmall
Here

again we

barometer.
forecast the

well

as

major

Movements

of

valuable function

do, in this

movements

almost

and

extent

Large

as

another

see

The

BAROMETER

MARKET

the duration

our

sense,

of the

ing
com-

the severity,
improvement, or the depth,and even
of the impending business depression. Our
sions
discusof selected periods covered
in our
twenty-fivethis sufficiently
clear, as anyone
year chart have made
for himself by comparing the price-movement
can
see
velopme
analyses in previous articles with the subsequent dein trade.
It may
be broadly said that

business

became

dull in 1910
its activity,
in any sense

in the
the

by

market,
speculative

and

that

it did

not

cover
re-

ing
anticipat-

greatlyworth
until the boom

created

war.

Here

is

culty
raise a diffito
period,then, which seems
for the compilers of business charts, where
a
certain rhythm is postulatedas
normal
condition
a
of business.
Action and reaction can
hardly be called
equal in these instructive years, unless it may be the
action and reaction of the pendulum of a clock which
is running down.
Perhaps that is not a bad simile of
what
took placebefore the war.
It may
be said that
a

for

the

demand

our

business clock when

This

is

anythingbut

idea which
But
could

from

material

war

the

plot what
bear
justice,
a

it seemed

accurate;

is useful if

of all kinds

not

too

wound

up

slowing down.
but it givesa pictorial
rigidlyapplied.
to

be

top of the stock market

in 1909

might be termed, with some

market
lastingnearly five

show
years.

we

of
It

THE

242

by

STOCK

MARKET

BAROMETER

period of depressionmuch longerthan

in the break in stocks, although there

that

pied
occu-

were

rowing
nar-

fluctuations up and down

which, if charted,
look strikingly
like those of the years following

would

the strong

stock market

rallyculminatingin 1909.
Here
have
we
a
uniformitywhich suggests at least
similar laws, governing a movement
broader than that
the major swing which
of even
have been able to
we
deduce by the application
of Dow's
theory of the stock
market
a

of months

task

where

We

movement.

it has

but

of years

been

once

least

at

can

to

it is

that

see

not

confidence

restore

assailed.
successfully

ContractingVolume

Its

and

Bearing

pointed out already that business in

than in
stocks is always far lighterin a bear market
Our
chart, recording
a bull market.
twenty-five-year
it does the monthly average
of dailystock trading,
as
tells us that speculative
business,in the years 1911 to
It has

been

1914

inclusive,
was

than

in the

The

McKinley.

years

later

followed

was

preceding the re-election of

eration,
period,here under our considevent
boom, an
by the war

upset all calculations.

which

Economic

on

four

Research
it does

representingas
abnormal

as

an

better in volume

littleif any

very

does
a

The
not

set

earthquake

Committee

Harvard
even

chart

that

period,

of world

conditions

or

such

some

as

natural

phenomenon.
and the culmination
since the war,
in
be called the deflation bear market

And
may

of what

June-Au

SOME

CONCLUSIONS"

the volume

gust, 1921,
contraction.
and least
any

We

are

record.

recovery

nine

points in

two-thirds

had

extended

the

of which

movements

Of

marked

of the slowest

one
experiencing

of these
be

in

no

market,

articles when
of doubt.

manner

April,1922,

industrials and

have

we

the fact of the bull

than one
anticipatedin more
there can
published serially,
The

243

of business has shown

spectacularbull

authentic

1910-14

rather

to

twentythan

more

in the

much

with typicalsecondary
railroads,
In a strong primary swing the
movements.
is correspondingly
secondarymovement
vigorous. It
is noteworthy that neither the upward major swing
the secondary movement
of 1922
has shown
nor
a
ness,
which is,as yet, propheticof a boom
in busivirility
as
distinguishedfrom a conservative recovery.
The
is due,
barometer
is saying that some
recovery
as

but that it will

come

slowly and will

take

than

more

predictionis
rather of a bull market
which will not carry pricesto
new
high records, to put it mildly,than a spectacular
adventurous
which foreshadows
movement
a largeand
development of our industrial resources.
the usual

time

establish itself.

to

The

Throttling the Railroads

Readers
downward

of

Chapter XVIII, in which

of sixteen years

why

was

barometer

even

at

its recovery,
least,the twenty
on

period
easilyrecognize

stocks

considered, will

conservatism

the extreme

present,

of railroad

movement

the the broad

over

of the stock market

is

justified.In

active railroad

at
our

stocks

244

THE

STOCK

represent one-half of

MARKET

BAROMETER

material and record.

speculative
Our railroads represent the largestsingleinvestment
of capitalin this country, exclusive of farming.
The status
of these railroads is anythingbut reassurvexatious
ring. There is nothing to show that more
regulationmay not still further restrict their wealthcreatingcapacity.
We
have falsely
and foolishly
assumed, through our
of
that 6 per cent
is the very maximum
legislators,
holder;
earningswhich should be permittedto a railroad stockwhile he is to take the risk of anything less,
down
to a receivership.
Obviously capitalwill never
on
go into the development of transportation
any such
couragi
But we cannot
establish such utterlydisterms
as this.
conditions for one-half of the speculative
field without injuriously
the other half. Who
affecting
foresee what politics
not bring forth if we
are
can
may
condition which
marked
running into that populistic
the middle nineties?
We
are
regulatingcapitalout of
is to say that this
publicutilities of all kinds. Who
of capital
interference with the earningpower
will not
be extended to the great industrial corporations?
our

Politics in

This
It

is

no

idle surmise.

Industry
It has

been

so

extended.

certainlyhas not been so exercised with any gain

the action of the Department of
to the public. But
Justiceagainst the United States Steel Corporation
if the
be done
(now abandoned) shows what can
dangeroustheories of the demagogue are to be forced

SOME

business.

upon

CONCLUSIONS"

It is all very

of modern

191014

245

well to say that the tendency

is toward
concentration,

production
and that commodities
will ultimately
be cheaper under
like that of the Steel Corporation,
one
management,
than under
the score
or
more
separate enterprises
comprised in that great and beneficent organization.
But if the politician's
size is in
assumption that mere
itself an

offense is

accepted,as it has undoubtedlybeen

accepted in responsiblequarters in the past, we may

well look upon

the course
of business in the
decade with serious misgiving.

Mr.

It
saw

must

have

Taft's Inherited
been

President Taft

half-

Policies

early in
House.

1910
I

that I

pointed

toward
the
unrelentinghostility
tion
backed up as it had been by the Administrarailroads,
itself,
was
paralyzingrailroad development,and
how our regulatorybodies were
adding to the business
handicap. Mr. Taft was
sympathetic,but cautious.
He
could no
contended
that we
longer expect the
rapid growth of the past, based though it had been
speculative
hope made true by great endeavor.
upon
out

But

to

he

him

in 1909 or
at the White

next

how

the

said that he

was

inclined

to

believe

that this

the pricewhich
be paid for the
must
necessarily
securityof the publicthrough the regulationof these
ited
the "policy"he inhergreat corporations.This was
from
Roosevelt, and yet it did not satisfythe
not
a
long interview,
Progressivesin 1912! It was
the end of it. When
Mr. Taft, with
and that was

was

THE

246

MARKET

STOCK

BAROMETER

his

unimpeachablehonesty,could take that view, what

in the
to be expectedof all the little politicians,
was
and the state regulatorybodies, who
state legislatures
were
paying off old grudges against the railroads,
regardlessof the cost to the public?
Our

is the worth

What

assumed?

have

Fetters

Voluntary
of

voluntary fetters

these

Is it contended

that railroad

we

service

those

improved by all this meddling? There is

dining car to-day which givesmeals as good as
provided by Harvey for the Atchison twenty

years

ago.

has

been

not

by Mr.

The

is recalled like

McAdoo,
The

victims.

railroads

level of service.
York

Central

New

York

time

has

Both

once

and
now

have
the

recovered

not

to

cut

Chicago to sixteen
lengthened to twenty

Are

the

cars

were?

Are

the

railroad

obliging? When
employee for not
interminable

nightmare by its

any

the

the

more

time

and

any

railroads

between
But

hours.

that

twenty-two

comfortable

servants

keeping a car
inquirybefore

the

old

the New

Pennsylvania and

able

were

hours.

an

railroad meal," established

"standard

than

more

they

civil and

could

discharge an
clean without risking
the Labor
Board, the
have legislatedand

kept clean. But we

regulatedthe spiritof service out of the railroads.
ing
Only in a half-hearted way are they competing in mak-

cars

were

their

own

route

more

attractive than

that

of their

roads
is there for the railinducement
neighbors. What
in developingsuch attractions?
to spend capital

SOME

Congress

has

from

return

CONCLUSIONS"

said

that

wise

so

they will

investment

an

arbitraryfigureof 6 per
real provisionfor growth
A

We

True

not

are

shown

in

out

robbed

be

if it exceeds
which

one

"

of the

of
a

any

purely

makes

no

earnings.

Condition
Psychological

wandering

of the

tracingone

cent

247

1910-14

causes

our

from

of the

averages.

the
most

You

point. We are
ment
movesignificant
roads
hit the rail-

cannot

without

hittingeverything else, because the

manufacturers
of railroad supplies,
as
represented in
the imposing list of the Railway Business Association,
try
constitute a part of our
national manufacturingindusso
large that it swings all industrywith it. If
there is one
word
which has grown
wearisome, from
of quackery from
and misuse in the era
constant
use
which we
are
chology
onlyslowlyemerging,that word is "psycondition.
But here is a true psychological
We

have

lost

trust

in ourselves.

We

have

meddled

with the law of supply and demand

disastrously
that we
cannot
bring ourselves to the radical step of
it alone.
letting
so

You

have

you
so

have

real freedom

freedom

in business.

cannot
no

hard, because

none

so

,as
stupid,

in

country where

There
that of

is no

tyranny

bureaucracy.

sylvania,
singleillustration : President Rea of the Pennnot
so
long ago, asked me how many reports
ington,
I supposed his railroad made
to departments in Washsion,
Commisthe Interstate Commerce
principally
in a single
ample that railyear ? Knowing how
Fake

THE

248

STOCK

MARKET

I said that it might be safe

road's reports are,

a

that basis,an

estimate

singleyear.

Mr.

"Last

we

year

And

that

of

Rea

made

reports for

that

take

to

reallyneeded,
year, as all that were
multiplythat figureby twenty; and ventured, on

five hundred
and

BAROMETER

laughed ruefully. He
hundred

one

lines

our

Reform

or

all the railroads

by

bureaucratic
service

red tape

and

of

east

said,

fourteen

sand
thou-

Pittsburghalone

one

railroad!

in the country and see what

do in tyingup a great utility's

can

have
We
impairing its efficiency.
begun, thanks to General Dawes, to import a
into Washington business methods.
common
sense
manifestlyhe has only scratched the surface.
which

1"

Multiply

and

reform

Revolution?,

for part of

was

reports for

thousand

ten

is needed

almost

amounts

to

just
little
But
The

tion,
revolu-

Department of
Commerce
and the Department of Labor, to name
for more
lightand
only two, are making their demands
wasted
time,
more
more
figures,
stationeryand more
for

upon

the

we

to

remember

Handicap

that the

of the country.

Its

and

Consequences

self-imposedhandicap. We
thank.

President
years

to

generalbusiness

One

It is

are

ago.

ofi Sinbad's

Taft's

Who

Look

at

what

acceptance
is

to

shoulders?

take

How

of

I have
the

the Old
can

have

we

selves
only our-

recorded

of

positiontwelve
Man

of the Sea

expect

general

XXI

Chapter
TRUE

RUNNING

the
of

It

assignment.
of

of

of

the

Line

and

submitted

to

different

or

Barren's,

of the

out

It

myself

would

to

Dow's
with

call

This

is

of

editor

intention

an

incurable

newspaper

Barren's

ter
charac-

curiously true
the

That

1914."

"

of

theory

of the

extent,

some

book

the

what

was

the

ters
chap-

fifteenth,

article

with

was

entirely

an

line for illustration.

"Line"

in the

accumulation;

above
of

or

the

their

in Illustration

of the averages

"line"

scarcityhas

many

order

of

study

itself.

Example

the

All students

or

of

important chapters,

rule that

the

criticism.

most
an

columns

start

not

partook,

contemporary

one

"A

of
like

man

newspaper

this

did

book

the

first appeared

subsequent publication of

price movement
making

Barometer

of 1921,

Indeed,

used.

1922-1925

Market

part

in the

adopted
not

FORM,

serially in

in the latter

mostly

was

Stock

The

WHEN

TO

come

below
future

that

about
the

after

the

movement

line

gives
of

movement

advance

days' trading

indicates

daily average
and

above
and

all within
250

the broad

will remember

either
of

saturation
the

ages
aver-

important

an

the

"line"
a

tion
distribu-

market.

dicatio
inviously,
Ob-

representing

range

of

three

RUNNING

pointsor

TRUE

exhausted

in order

to

familiar

tempt

floating
supplyof

market,

that

point, where

into rain.

in the

251
stocks

that it is necessary
to bid up
of selling. Conversely,
volume
new

below

saturation

themselves

1922-1925

and

movement

FORM,

indicates that the

so

been

has

TO

There

line indicates
the

follows

clouds
a

the

resolve

marked

sion
reces-

pointwhere stocks
become
attractive to buyers.
That fifteenth chapter was
submitted to
of Barren's at the bottom
of a major bear

movement.

The

that which

to*

line first chosen

then

for

illustration

was

once

more

the editor

making. He considered such prediction

altogethertoo daring, although I was
willing
enough to put Dow's theory and my conceptionof it

was

to

in the

the hazard

been

of such

remarkable

test.

The

vindication of the

result would

theory.

But

have
sels
coun-

of

prudence prevailed and the illustrative line

taken shows the action,or rather the inaction,of stocks
break
during May, June and July of 1914, before the outof the World
War.
There
be no
can
question
that the illustrationchosen was
the rightone, both for
historical purposes
and for the subsequentauthority
of the book, which has, to my gratification,
assumed
a
positionof its own, with several times the circulation
which the cautious publishers
anticipated.
What
is true enough to have become
familiar and,
therefore

is that the book itself applied

unimpressive,
Dow's theory to an actual market and predicted,
in the
which set
most
positiveway, the major bull movement
in during the time of publication,
umns
in the colserially,
of Barren's.
I have been asked to bringthe topic

252

STOCK

THE

MARKET

BAROMETER

edition,
pointingout how the
theory has been verified,or modified, in the three years
Stock Market
eter
Baromwhich have elapsed since The
esting
first published. The
was
topicshould be interof
and useful,and I hope that a lifelong
sense
from indulgingin boasts about my
humor
will keep me
if it is necessary
to
inspirationas a prophet, even
from
furnish a few illustrations,
these- columns
and
those of The Wall Street Journal,of the way
in which
the application
of Dow's
theory has been successsfully
date for this new

down

to

made

since 1922.

Some
Since the
the

SuccessfulForecast

of The Stock
publication
market
has experienced a

Market

eter
Barom-

major upward

in which
the industrials,between
(bull) movement
61
over
Aug. 24, 1921, and March
20, 1923, advanced
vanced
points,while the railroads between June 20, 1921, adfrom 65.52 to 93.99 on Sept.n, 1922, or 28.47
points,and had only lost about three points of this
when
recorded in
the high point of the industrials was
the followingMarch.
and
Street Journal
The
Wall
Barren's
both entirely
clear on
this bull movewere
ment,
the former saying,on Feb. n, 1922: "At present
the major swing of the market
is upwards." The final
paragraph of that study is significant:
"The

inquirers,
therefore,is that we are stillin a
bull market and that it should run
much
further,possiblywell
into 1923,
and certainlyfor a time well beyond the improvement
in generalbusiness which it forecasts,"
answer

to

TRUE

RUNNING

TO

FORM,

1922-1925

253

not merely as regards

sufficiently
explicit,
of the stock market
the movement
interpreted
by the
ness
Dow
theory but upon the improvement in generalbusi-

That

was

which, in due
26

points,or

is

no

the twenty industrials had advanced

said : "There
in the followingJune, it was
that the present bull market
of its culmination."
Remember
that

to

reason

suppose

months

reallyran

the bull movement

of

presence

line

bearish inference

noted

was

was

"well

continuance
that in

an

into

March,

May 8,

drawn.

resumption of the bull

note

rise in the

When

barometer.

is within

the

followed

course,

On

movement

1922,

the 22nd
was

1923.

The

althoughno
of May the

noted, while its

again inferred.
1923" was
interview given in Boston
on
June
into

I
16

repeated the conviction that the stock market was

likelyto run further in the upward direction and that
it would
be all the better for the secondary reaction
had
A tendency to
which
occurred
about that time.
check in the railroad averages
noted in the "Study
was
in the Price Movement"
publishedJuly 8, but it was
then said: "With
this proviso it may
be said that the
is distinctly
indication in the averages
bullish."
I

'A

It has been

Secondary Reaction

said elsewhere

in these

pages

that the

predictionof secondary reactions is a chancy sort of

business and is not here encouraged although in September
The
looked
This

for

may

Wall
a

Street Journal

and

Barren's

reaction,recognizingit on

be called

merely a good

guess,

rather

September 19.
by the scoffer,

THE

254

MARKET

STOCK

BAROMETER

the market, but at any

if he was
on
especially
wrong
rate
September 30 the industrials had reacted nearly
on
the high of the bull movement
and
six points from
the railroads
the

"Study in

four

than

more

points. On

the Price Movement"

October

18

said:

typicalsecondary reaction,
is pointingclearlyto the resumption of the major upward movement
which developed in August, 1921."
"The

stock market

It would

today, after

be wearisome

to

recall all such

predictions.

ence
prefer to call them inferences. The bullish inferAs late as
was
again drawn on November
3.
Jan. 16, 1923, the "extended but by no means
cedented
unprediscussed,but the
secondary reaction" was
shown stillto dominate.
was
primaryupward movement

For

swing

bearish

and

Movement

all
it is

in March,

reached

was

"Study in

Taken

Bear

of convenience the short major bear

purposes
be said to have set in after the top of the
may

industrials
the

Short

the Price Movement"

indication

from

the

through,the bear
noteworthy that

Price Movement"

1923.

On

April 4

called attention
line of

market
while

did
the

to

distribution.
not

last

studies

long,

in "the

slow to concede
they were
the primary reaction,evidentlyinfluenced by the
fact that the previous bull movement
cidedly
had been de-

slow.
a

The

decline continued

secondary reaction
worked

bearish

were

out

to

in
20

to

bull market.

look rather like

The

total

cession
re-

culpoints in the industrials,

TRUE

RUNNING

minating Oct. 27,

concerned, while

TO

1923,

as

FORM,
far

as

1922-1925
the industrials

that date the railroads

at

255

were

down

were

points,although the actual low

for
had been early in the previousAugust. Rather
of record this conspicuouslyshort bear
convenience
has been taken as primary, but a plausible
movement
case
might be put up for datingthe present bull market
rather

than

more

from

the

in

turn

Barometer

17

when

1921,

The

Stock

appearing seriallyand
bullish.
charged with being indelicately
was

Influence
of
What
stock

market

had

Congress had been in session all

The

29, 1923,

of

the

way

business,had
the

very

and

surtax

Wall

Street Journal

Wall

barometers

of business

then

were

is a

influence in the

and

summer

had

averages.

Aug.
careful study
on

politics,
by dangerous interference with
to a large extent
falsified,
neutralized,
or

Street Journal

"There

new

itself felt in the

made

even

was

Taxes

a
unquestionably

was

Market

reason

at

said

their

Income

highestpointsand

tax

The

the barometer

why

itself.

in the past few months

has been
bull

deflected by an
felt before in a major
influence not
market.
This
influence undoubtedly is the cumulative

effect of the income

"Brokers

surtax.

tell how

steadilythe dividend-payingcommon
stocks,representingthirty out of the forty taken in the two
have been sold by large holders on
development
averages,
any
of comparative strength. It is correct
factor,
to call this a new
it
has been germinating since the bull market
started
although
in the autumn

can

of 1921.

The

whole

theoryof the stock market

MARKET

STOCK

THE

256

is based

barometer

BAROMETER

the assumption that

upon

stocks

on

pressure

coming liquidation of general business. But

here, for the firsttime in the historyof the averages, is a pressure
only

can

forecast

of stock for sale which bears

"It is as though a hot coal
the bulb of

to

Congress

return

beyond

lump

much

too

cure

but only
itself,

about fiftyshares
"A
him

rich

than

cent,

afford

half of the

to

its cost.

on

to

applied
hope that

over

dition
con-

period

as

the stock of the

holding is round

stockholder.

cannot

man

six per

per

been

stage will be reached

railroad common
stocks

one

every

events.

That

of the twenty
active
industrials is as widely held
and the twenty
Pennsylvania Railroad, where the average
when

coming

sanity in taxation,this is

calculation.

present

to

of ice had

If it is

to

will nevertheless

which
of time

or

thermometer.

see

may

reference

no

hold

Not

deducted

return

stock returning
only is he liable to see more
by the taxgatherer; such a
a

common

all his other income.

on
holding pulls up the tax he must
pay
months
He, therefore,has been a steady seller for many
past,
with a vengeance.
and this is 'inside'selling
It is well informed
but obviousy it need not predict the general
in a way,
selling,
of business. Congress, in imposing impossibletaxes, has
course
not
merely laid a handicap on the country'sbusiness. It has

falsifiedthe very

That
far

so

must

barometer

temporary
as

have

influence is now

Congress
not

some

wished

I had

It is

be

true

regret the way

but

the

State

taxes

Bull Market

written
to

of removal

course

effect.
entirely
negligible

to
hypocritical

never

in

is concerned

rA New
It would

of business."

say

in which

The

that
crude

say

that

Stock
I have

I have

Market

really
eter.
Barom-

witnessed

with

adaptations of Dow's
ket
complete theory have been taken by tipstersand marconclusions,
quacks to bolster up their unsound
drawn
from an incompleteunderstandingof the prin-

MARKET

STOCK

258 THE
Davis,

they

"

openly

were

BAROMETER

twelve

to

one

before

the

pansion
"good news" was reallythe resumed exeter
of generalbusiness which the market baromhad been predicting.

election

the

"

TA

is

There

Changed Technical
a

technical condition

Condition

which

has

developed

in the present bull market and one

which did not exist
before.
Here
is substantially
what I have had to say
about

it in another

place:
well
Studies of the stock market, based upon Dow's
closed
disknown
as
theory of the triplemarket movement
by the average pricesof the industrials and the
railroads taken separatelyfor comparison,have been
astonishingly
right in forecastingthe broad upward
of the stock market
and indicating
its conmovement
tinuance.
The present major bull market, however, is
subjectto a condition which did not exist before, and
it is important to consider the bearing of that limitation.
While

the

Exchange Governing Committee

has been strengthening
its control over
the conduct of
business for a good many
since
years past and certainly
the time when
the unlisted department was
abolished,
the more
recent
stringentregulationhas been of entirely
development. It has only been in the past year
or

two

that

strongest

Stock

the

governors

brokerage

houses

have

assumed

how

much

of

to

tell the

an

account

they may carry on their capital.In the not very old

days a Stock Exchange house took all the sound busi-

RUNNING

TRUE

TO

FORM,

259;

1922-1925

trustingto its own

ingenuityto find a
in a big bull
carryingan expanded account

it could get,

ness

of

means

market.
has been

This

that

secret

open

houses

drastically
changed, and
considerable

carryingfor

are

number

it is
of

now

an

brokerage

all the stock the Exchange's

customers

positionis eminentlysafe,
but their policyis obviouslychanged. The
to
way
in a bull market
is to buy what you can
make
money
is fairly
afford when the upward movement
pand
assured, exlaw allows.

Their

hold on
to the
profits,
larger part of your interest,sellingin periods of
and making up to the proportionyou
marked
strength,
afford in the inevitable secondary reactions.
can
But this is not the kind of customer
a Stock Exchange
It means
the tying up of a substantial
house wants.
with commissions
for purchases or
of capital,
amount
broker
The
sales only earned
in a few weeks.
once
though
commissions
likes the customer
to pay
day, alevery
it is anything but profitable
cause
to the latter,bethe attempt to guess the dailyfluctuation is faf
like gambling than speculation.
more
bull

your

One

own

on

the

result of the broker's

stock
cash

account

in small
and

that

bull

account

of the country

some

uncertaintyas

because
orders

there
all

at

limitations

is that

has been widely bought for

quantities
are
financingtheir
wealthy customers
bankers
in many
through their own

parts

but also

new

outside
to

New

the real

hitherto unknown

is less likelihood
one

time.

York.
extent

This

leaves

of the bull

count,
ac-

degree of stability,
of a flood of selling

MARKET

STOCK

THE

260

of evolution the result will

In the natural way

be

with

each

much

is at least

condition
nothing in the new
rules for reading the stock market

change the

to

What

necessary.

has

is

is that there

certain

fewer

among

probably
houses,

larger working capitalthan

considered

been

hitherto

business

concentrate

to

BAROMETER

barometer.

Barometrical

be

It would

timid

to

Indications

conclude

sayingwhat I think of
writing in August, 1925.

this discussion without

the barometrical
There

is

bull account,

distributed

indications

obviouslya strong

and

well

and

there

is absolutely

has

indication in the averages

that the bull market
culminated.
Counting from the end of the short
no

bear
the

market in the latter part of 1923, the duration

long and there are still

stocks which are demonstrablyselling
below the
many
I think this assumption,if we
line of values.
could
calculate an average
line of values, would
be true of

major swing

the railroad
in

spiteof

and

has

of

not

been

of the industrial groups,

partlytrue

their considerable

All indications

advance.
further

upward movement
carryinginto next year, although secondary reactions
of substantial proportions
would be very much in order.
of
Nothing has developed since the firstpublication
The

Stock

pointto

Market

the great utility

of
the pricemovement.

Barometer
a

common-sense

It may
stocks,except that these do

to

shake

my

faith in

of
interpretation

be valueless for individual

not

commonly make

serious

RUNNING

TRUE

advances
is

The

upwards.

lag

behind

and

the

but

am

had

of

to

the

some

general

trend

up.

its
It

that

has

weight,

drawn

business

been
but

freely
continued

has
of

the

the

country.

may

terested
in-

Wall

in

speculate

attention

market

greatly

not

am

to

gratified

the

of

speculator

the

by

people

humbly

guide.

barometrical

service

catch

never

has

country

authorities

chosen

one

261

1922-1925

general

the

encouraging

in

Street,

when

except

FORM,

TO

of

business
such

to

by

criticised
its

useful

XXII

Chapter
THOUGHTS

SOME

MANY

years

which

which

law
where
that

than

the

in those

It

days.

from

prisoners, while
had
not

of

of

said:
the

game

convince

lawyer

with

his

that

As

the

to

the

them

jury

that

seemed

will
for

euchre

is

Game

not

of

eminently fair,
accordingly

the

locked
26z

way,

for

the
ents"
cli-

was

men
gentle-

the

selves,
them-

defense

the

demonstrate

to

time

it

incredulity.

for

me

the

game

with

formalities

that

and

counsel

short

in

"unfortunate

court

allow

and

euchre

counsel

received
the

breach

law

of

out

said

be

smaller

the

playing

dignity, when

was

honor

your

were

enforce

chance

of the

one

considered

however,

Not

This

in the

overburdened

chance.

contention

"If

honored

men

admitting

daunted,

Nothing

hardly

jury habitually played

the
the

It need

to

not

of

games

playing euchre, submitted

been

game

was

states,

identified, had

sheriff of

young

not

were

departure

of

party

Courts

barn.

The

determined

however,
a

"more

was

Southern

of

playing

involved.

was

foolish

so

the

otherwise

the

observance."

captured

or

stake

law

towns,

be

not

prohibited

any

of

one

ago

need

SPECULATORS

FOR

am

sure

can

of chance."

game

Chance

and
up

the

jury

the

and

together.

In

SOME

THOUGHTS

time

short
borrow

various members

of the

little change from

hour

or

court

with

SPECULATORS

FOR

so

of

263

jury sent

their friends.

out

After

to
an

"demonstration," the jury returned

the unanimous

verdict that euchre

was

to
not

of chance.

game

complete if I did not

and, incidentally,
give
say something about speculation
counsel to the speculator.Speculation
some
practical
It is
involves a large element of chance.
necessarily
himself who too often makes
the speculator
it a sheer
gamble. I do not know what the Southern lawyer in
the story did to convince the jury of the certainties
if the
underlyingthe game of euchre. But certainly,
is to come
into Wall Street and "speculate"
amateur
with the stupidity
he so frequently
exhibits,the professionals
there can
him that his kind of speculashow
tion
is not a game
of chance, and they will not havt!
These

to

cheat

articles would

to

do

be

so.

Real

It

not

Protection

in the Barometer

often

said that Dow's

be

theory of
is not
the stock market
movement
a
"system" for
scheme
which
a
get-rich-quick
beating the market
cannot

too

"

converts

the Wall

Street district into

sort

of Tom

with a few dollars

ground, where any man
for margin can
pick up gold and silver. But if the
intelligent
speculatorof to-day (who in many cases is
find
investor of to-morrow) cannot
the intelligent
himself in the stock market
of protecting
means
by an
earnest
study of the stock market barometer, then
Tiddler's

THE

264

STOCK

BAROMETER

MARKET

chaptershave, in that respect, failed. He has

alreadygained something tangibleif he has correctly
If he comes
into
understood
the major movement.
Wall Street on a mere
tip from somebody he trusts
about a stock of which he never
heard before,without
is in an upwhether
the general market
ascertaining
ward
lent
or
a downward
major swing, he stands an excelof
of losing all he brings in the way
chance
margin, without a fair "run for his money." But if
these

he has learned what

the market

movement

and

means

the opportunity
appreciates
given to him in the dulness
after a typicalreaction in a bull market, he stands
than an even
chance of making a profit.That
more
of considerations which,
will depend on a number
profit
do not enter into the minds of many
apparently,
people
who
Street only to lose money,
to Wall
come
ing
spendchange
the rest of their lives denouncing the Stock Exas
a gambling hell.

Speculationand Gambling
To
not

these

alike.

people all stocks look alike. But they are

So far as well-protected
is concerned,
speculation

there is all the difference in the world

such

stock

as

well-established

widely held
floated
The

on

"

United
market

and

the

States
"

Steel common,

with

stock well distributed

the latest motor

Curb

between

for the

purpose

or

oil

and

proposition

of distribution.

good, but it is at least untested,

not
only as regards the business the new
company
doing,but in the market aspect of its stock.
purposes
latter may

be

THE

266

STOCK

MARKET

BAROMETER

Selectinga Stock
Let

us

ered
then, that the outsider has consid-

suppose,

of the

the character
of the

stock

select his stock.

major

market.

Here

His

again the

and

movement

business

next

is

who

amateur,

dency
tento

wants

quick action
to

inform

for his money,

will not take the trouble
himself properlyupon the stock in which he
risk his small

to

purposes

It is

good standingrule
market

permanent

no

capital.

which

has

that in

been

stock for which

created

"

tion
flota-

new

is stillnotoriously,
by

ings,
majorityholdin control of the people who
dictate the policies
of the corporation the small speculatorshould not
trade on margin at all. This is,of course,
of
a counsel
but at least he should make it a rule to take
perfection,
onlya small risk in such a venture and to buy onlywhat
or

one

"

he

in

can

By

some

finance himself

way

the time

if necessary.

stock is listed in the Stock

there is
times

generallya dependable market

although here the danger of too

Exchange

for it
much

at

most

ship
owner-

Motor, still
exists. Such stocks are
good to let alone; and only
business gives
of the speculator's
the nature
where
own
should he embark
him access
to specialinformation
then
his money
in stocks of such a character,and even
in few

his

margin

hands,

should

On

in the

case

be of the

most

as

the Matter

of Stutz

ample

kind.

of Margin

plete
bringsus to the questionof margins. A commisunderstandingof what constitutes a sufficient

This

SOME

THOUGHTS

FOR

SPECULATORS

267

for many
needless losses in Wall
margin is responsible
Street.
Brokers
are
looking for business, and they
tell the tyro that ten pointsmargin is good enough if
ations.
he can
againstfluctuguarantee the firm that amount
This

would

shares of stock

at

mean

That

par.

$1000

hundred

one

on

margin is not enough, or

nearlyenough. Writing twenty-one years ago, Charles

H. Dow
dred
who
pointed out that "the man
buys a hunshares on
a
10
margin, and stops his
per cent
loss at 2 per cent, has lost (with commissions) nearly
one-quarter of his capital." Obviously it does not
take long to wipe him out.
Dow
ultra-cautious,
was
but he
such

have

been

wide

not

was

had

man

able

of the mark

begun with
to

see

when

ten-share

he said that if

lots he

substantial loss and

would

yet have

averaged his purchases to yieldhim an ultimate profit,

in his first surmise that the
correct
granting he was
stock was
sellingmuch below its value. Certainlya
trader
start

with

with
at

Steel

a
a

common

$1000,
hundred
very

and

no

more,

has

no

business

shares of stock unless it be

to

thing
some-

low

time when
a
price. There was
could have been bought below
$10 a

share.

Little

Another
should

delusion

Traders

of

the

and

small

Large
trader

is that

he

adding
buy part of the quantityhe contemplates,
each point of decline until he
to his holdingson
he thinks he can
But
completes the amount
carry.
why not buy it all at the last price? If he proposes to

THE

268

buy

STOCK

hundred

MARKET

shares

BAROMETER

in

pects
twenty-sharelots,and exthat there will be a decline of five pointsin the
the assumptionupon
market, he is reallycontradicting
which he originally
decided to trade.
He has not considered

one

all the facts of the

If the stock

case.

can

go

five

down

pointsthe purchase is not so good a one as

he supposed. It is quite true
that great operators,
like Jay Gould, did buy stock in that way.
But they
not
were
tradingon margin, except in the respect that
they financed their stocks mostly through their own
And
banks.
they were
buying upon considerations
which would
the small
to
seem
hopelesslyremote
speculatorwho wishes to test his judgment in Wall
Street.
could
Such a man
as
Jay Gould, moreover,
himself give value to the things he purchased. He
during the
might well start to buy into a company
of a major bear swing,knowing that he could
course
get all the stock he wanted

not

The

small

in

devote

to

purposes

take any such

such exclusive attention

afford

cannot
speculator

view, unless he

bull market.

to

trading as he would give to any other

business. There are plentyof peoplewho do that, and
I have in previousdiscussions given instances of their
of the man
who
But we
are
success.
talkingnow
speculateson his judgment while interested in some
is no reason
other business. There
why a speculator
to

stock

of this class should

chance
common

in the market
sense

first casual

than

more

if he would

bear.

to

friend

shares of A. O.

have

not

who

T., and

But

ask

no

even-money

only bring

if he

tells him

an

will listen

to

little
the

"buy a hundred
and risks
questions,1'
to

SOME

his

THOUGHTS

dollars in

only thousand
if he loses.
would

He
dollars

the

to

in the open

He

is

have

air and

July

on

"If

n,

much

would

cannot
not

plain
com-

lator.
specu-

if he took

fun

more

find the

have

racehorse

his

healthy day
much

more

the ticker.

Dow

publishedin

The

Charles

H.

1901,

269

doing so, he
gambler and

Quotation from

editorial

an

He

races.

than
amusing spectacle

In

SPECULATORS

FOR

Wall

Street Journal

Dow

said:

look
people with either large or small capitalwould
trading in stocks as an attempt to get 12 per cent per

upon
annum

on

their money
instead of 50 per
a good deal better in the long

cent

weekly,they would

Everybody knows
this in its applicationto his private business,but the man
who is prudent and careful in carrying on a store, a factoryor
out

come

real

estate

should
from

business,seems
be

to

run.

think that

ods
different methtotally

employed in dealingin stocks. Nothing

is further

the truth."

In

the

article Dow

same

went

on

to

say

that

the

tying himself up in a financial

knot at the outset
by keepinghis transactions down to a
limit which, compared with his capital,
leaves his judgment
clear and affords ample ability
to cut loss after
speculatorcan

avoid

loss short;

double

to

stock,and generallyto

up;

to

switch

to

some

other

instead
easilyand fearlessly
of under the constraint which comes
from a knowledge
that his margin of safety is so small as to leave no
for anything except a few anxious gasps before
room
the

account

is closed.

act

THE

270

This

STOCK

is

Written.

as

The

learn

have

said before

Wall

Street

any

other

that it is

that

from

more

into Wall

was

Street

quickly. I

them
has

money

it

day

lost in

been

sheer

case.

You

cannot

are

under

long as you
capital. You
so

all your
view unless you

consider

of

the terror

cannot

see

take

partial
im-

them

losing

clear,unbiased
tively.
get out and look at the thing objectied up in a losingspeculation
When
are
you
in the positionof the man
lost in the forest

are

who

the

pride of opinion than from

If you buy a stock and find
singlecause.
fallingrapidly,you have not considered all

the facts of the

you

BAROMETER

as
on
now
good sense
speculatorwho comes
take losses,and take

must

to

MARKET

cannot

for the

the wood

trees.
.

Avoiding
Readers
who

man

Gould

Inactive

Stocks

the story I told of the young

partnershipoffered to him by Jay

will remember
refused

because, in executingGould's

of the Stock

nothing but

Exchange, Gould
losses.

He

orders

seemed

to

on

him

the floor
to

make

broad

enough to see
that these unsuccessful attempts were
merely testing
purchases, and that Gould probably employed some
that he had
other broker
he was
when
quite sure
is where
Here
the
caught the turn of the market.
active becomes
purchase of a stock only occasionally
so
dangerous. The broker may be able to carry it
well to-day,although inactive stocks are
not
very
looked
But

upon

with

the broker

favor

was

not

in bank

himself

does

loans.
not

know

whether

he

SOME

can

THOUGHTS
the stock

carry

SPECULATORS

FOR

so

271
The

to-morrow.
conveniently

peculiarcircumstances

the

started

which

movement

in that stock may

be fullydiscounted in a few days'
active trading,and the event
will be a market without
where the seller
singletransaction for days together,
is obligedto make
concessions to find a buyer generally
who
a professional,
charges all the traffic will
a

"

for such

bear

carried
is in
the

at

intimate

some

textile

Bethlehem
is

Such

all. But

connection

industrymay

there

active

Steel

the

stock should

with the steel trade

well take hold

or

American

of Steel

or

mon
com-

Woolen,
if

market

permanent

business

whose

man

be

not

not

feeling
always an

one.

I have

Street.
than

margin

on

or

that

service.

ten

Word

for

the Consolidated

friends in the New

many

also

friends

I have

The

odd-lot brokers, of whom

there

in
specializing

in lots of less than

Consolidated

York

elsewhere

but

firms

Exchange

that way, make

hundred
shares.

Stock

change,
Ex-

in Wall
are

fewer

the
But

ket
mar-

the

Exchange makes a regularmarket

all the time.
It is in every
for those small quantities
whose
members
a
are
reputableinstitution,
open
way
to the same
scrutinythe speculatorought to apply to
small amateur
trader
he employs. Our
any broker
the Consolidated
do his business just as well on
can
Exchange, provided he chooses reallyactive stocks.
tribute
"seasoned"
and thoroughly well disSuch stocks are
and

Stock

this is

not

true

of those which

make

up

STOCK

THE

272

BAROMETER

MARKET

the listof the Curb

Association.

am

sayingone

not

againstthe latter,but the securities in which it

deals are
seldom popular in bank loans, and I should
have the strongest suspicions
of a Curb
house which
indiscriminately
professedto trade for its customers
on
a 10
per cent margin.
By all means
get the idea of such a margin out of
head.
The
margin should be as good as you
your
make
it. If you are engaged in business or living
can
income
from investments
with people depenan
dent
upon
should be
losses in speculation
upon
you, your
word

limited

to

an

compunction.

not

cause

you

serious

probably heterodox to say so, but

in the proposition
that gambling
sense
risk what we
cannot
reallyafford to

beginswhere we
gain something we
A

can

will

It is

there is common

How

which

amount

have

Glance

the

stock

earned.

not

at

Short

market

Selling
barometer

help

the

In many
He
cannot
expect any
ways.
unusual
stock, except under most
circumstances,to
advance
of the
profitably
againstthe general current

speculator?

market.
an

He

almost

must

be

most

instinctive reader

unusuallywell informed,
of the market, if he

can

the occasional rallies which

on
speculatesuccessfully
take placein a major downward
swing. I am saying
little about short selling.The
who
tries short
man
in a bull market
is merely guessing at the secondary
selling

reactions,and unless he is a trader

or

devotingall his

attention

to

on

the business of

the floor

specula-

THE

274

STOCK

MARKET

BAROMETER

lished the successful

comes
purchase of stocks for a rise befeasible proposition. If on
the completion
a
of his purchase a stock reacts, carried down
by a
similar reversal of movement
in the general market,
should take his loss without hesitation
the speculator
and wait for that inevitable periodof dulness which develops
after a secondaryreaction in a major bull swing.
Here
again he may buy his stock, and instead of
purchasingon the way down, on the fallacious assumption
I exposed earlier in this article,
well add
he may
his holdings as the market
rises. Each
advance
to
adds to his margin of safety,
and, providedhe does not
"pyramid" too much, and concedingthat his holdings
not

are

be

overextended

so

that his

own

account

would

tempting object of attack, the speculatormay

orders,
well, if he protects himself with "stop-loss"
make
substantial than he at first
profitsmuch more
expected. We hear a great deal about people who
a

lost money
who
made

Street but very little about those

The latter,as a
substantial profits
there.
in Wall

experience;and a man
seldom
ascribe his prosperityto successful
to
cares
investment.
speculation.He prefersto call it judicious
There is littledifference between a purchaseof a house
and a purchaseof stocks on margin, proon
mortgage
vided
his contracts.
In these
the purchasercan
meet
everybody is minding
great upliftingtimes, when
I am
stilldisposedto say that
everybody else's affairs,
it is nobody's business how
our
speculatorcarries his
stocks so long as he does so out of his own
resources,
which include his borrowingcredit at the bank.

class,are

in
inarticulate,

my

SOME

THOUGHTS

SPECULATORS

FOR

275

Ways of Losing Money

There

is another

who
the market
he

asks

him

me

what

all too common,

speculator,
loses money
by forgetting
why he went into
in the firstplace. Knowing me
personally,
I tell
opinion of Atchison common.
my

class of

the road's

prospects

and
margin may be over
generalrailroad outlook
He

concludes

that

above

are,

what

the dividend, and

is

of

protect his broker

If he

margin, or

would

pay

But

he

cheap, and buys himself

for the stock

he would

and
outright,

probably make

listens

the

in that part of the country.

Atchison
common
(here chosen

merely for example)

it.

the earned

some

with

ample
tuations
ignore fluc-

money.

gossip,particularly
stories of "traders selling,"
tion,"
"Congressionalinvestiga"threatened strikes,""crop failures,"and all
the rest of it. He
forgetsthat the market has made
allowance for everything of the kind in the broad
estimate of the prospectivevalue of the stock.
He
becomes
minor
takes a loss
fluctuation,
nervous
on
a
and decides never
to ask my
opinionagain. At least
I wish he would so decide ; but,unfortunately,
he does
He
not.
to me
comes
again to see if I cannot
say
something to upset what he calls his judgment, based,
this time, upon the opinionof somebody else.
to

Another
Take

another

every

Way

bit of

of Losing Money
of

in Wall
losingmoney
of a
Street. The
speculatoris informed, correctly,
coming quick movement,
perhaps coveringfour points
easy

way

276
in

THE

STOCK

MARKET

BAROMETER

stock.
He
notices that the stock has
particular
been active,without paying much
attention to the fact
that a point and a half of the expectedfour pointsis
already shown in the advance of the price. After
hesitation he buys,when
is almost
the movement
some
and then the stock
completed. He sees a small profit,
dull. The
is over.
The
becomes
specialmovement
attention of the professionals
is turned to some
other
and his own
stock sags with the market
or
security,
its head off in interest. But he is still fatuously
eats
holding on instead of realizingthat he has missed
his opportunityand has had what, if he would look
instructive
is reallya cheap and most
at it sensibly,
a

lesson.
Here

bought the
again he forgetswhy he originally
stock, justas he did when he purchased on permanent
value.
If the special
he anticipated
fails to
movement
materialize he should take his loss,or his disappointingly
small profit,
But
and wait for another chance.
the trouble with most
of the speculatorsof my
quaintance
acis that they lack not only memory
but the
be dabbling all the
virtue of patience. They must
later they get tied up with an
time; and sooner
or
extended

account,
to

have

market

It is

to

their full resources,

which

aground, with the generalcurrent

swingingpast it.
run

"Where

do

common

mistake

broker

makes

his

the Gentiles

to

of the

Get It?"

that the table

repuof what his customer

suppose

out
profits

seems

SOME

THOUGHTS

loses.

The

FOR

broker

stays in business

that his customers

them

to

make

help them do
losingmoney.

SPECULATORS

pay.

but he does

money,
so, or, at

the worst,

out

277
of the

missions
com-

only wants
everythinghe can to
He

to

not

from

prevent them

It is

only the bucket shop which wants

customer
a new
every day, to fleece thoroughlybefore
the market
closes. All the reputablebrokers of my
who have
are
acquaintance
proud to pointto customers
been employing them
for many
years, in good times
and bad, extendingin at least two
instances I can recall,
to nearlyhalf a century.
In writingthis I have necessarily
outlined a patient,
and level-headed speculator in fact,a man
intelligent
of exceptionalcoolness and poise. But that is the
kind of speculatorfor whom
I am
writing. I am
change.
not
certainly
drumming up business for the Stock Ex"

These

stories of the continual losses of the

publicin Wall Street always remind me of the

Jew who said to his wealthy parent: "Father,
young
take
where
do the gentiles
that we
get all the money
from
them?"
Where
does the public get ail
away
this money
which Wall Street is supposed to take from
it in speculation? Is the broker's commission
sort
a
of middleman's
profittaken out of the whole business
it is; but not to
of the country? To a certain extent
anything like the extent the people who do not love
outside

Wall

Street

assume.

Wall

for small, trickling

streams

would
market

be

for the

free market

Street is the great reservoir

of capital. Great corporations

not
a
impossibleif there were
interchange of their securities.

is in itself

an

element

of value.

free
The

If

we

278

THE

could

imagine

two

every

respect,

the

and
to

market

that

with

one

the

Wall

This

brings

of

the

on

my

to

stock

conscience

of

parting
respect
of

they
the

at

his
of

free

allowed

would

make

United
would

did

is

to

choose
show

feel

least
money

the

compel

not

run.

but

him.

to

him

that
that

do
how

not

he

only
has

All

so.

he

of

all

earned

he

still that
laws

if,

even

business

in Wall

Street
tried

have

to

himself,
a

fair

prize

at

as

of
law

any

had
the

sorts

imagine

protect

can

has

that

imagine

the

trade

to

in

impossible,

cannot

man

least

has

can

paralyzed

we

inevitable

the

he

We

weakling

any

spite

legislation,

they
But

In

it

have

not

At

money.

speculation

States.

would

day,

agent.

to

certainly would,

which

here

is

by

discussions

my

encouraged

his

regulatory

freedom

which

I had

from

man

personally

expedited,

fool

every

much

he

had

or

of

conclusion

barometer.
that

free

this

Thought

the

to

me

five

from

exactly

is

evitably
in-

would

market

anything

It

in

provides.

Final

market

gamble,

sell

other.

Street

free

the

properly,

above

exactly equal merit

of

securities

most

points

ten

BAROMETER

MARKET

STOCK

run

the

if
do
and
for
end

APPENDIX

282:

Changes have been made as follows:

In July, 1898, Metropolitan Street Railway,Union
Pacific

and

common

substituted for

Lake

Northern

Pacific

common

were

Shore, New

York, Ontario "

and Northern
Pacific preferred.
Western
In July, 1899, Brooklyn Rapid Transit, Denver
"
Rio Grande
preferred and Norfolk " Western preferred
substituted for Metropolitan Street Railway,
were
Reading and Erie.
In July,1900, Southern
Pacific common
and Union
substituted for Wabash
Pacific preferred were
ferred
preand Norfolk " Western
preferred.
In June, 1901, Baltimore
" Ohio, Illinois Central,
and
Southern
Pennsylvania were
Railway common,
substituted for Burlington,Southern Pacific common,
Pacific
Southern
Railway preferred and Northern
common.

Pacific,
Reading, Canadian
and Minneapolis" St. Lous were
" Hudson
Delaware
" Texas
substituted for Missouri, Kansas
preferred,
Rock Island,Chesapeake " Ohio and JerseyCentral.
stituted
subOn May 18, 1904, Southern Pacific common
was
for Minneapolis " St. Louis.
politan
On June 27, 1904, Wabash
preferred and Metrosubstituted for C., C., C.
Street Railway were
" St. Louis and Denver
preferred.
On April 12, 1925, Erie was
substituted for Wabash
preferred.
folk
and NorPacific common
In May, 1905, Northern
In

September,

"
Union

Western
Pacific

1902,

were

substituted for Manhattan

preferred.

and

APPENDIX

283

stituted
1906, Twin City Rapid Transit was subfor Metropolitan Street Railway.
On April 25, 1912, Rock
Island and Lehigh Valley
substituted for Brooklyn Rapid Transit and Twin
were
City Rapid Transit.
On December
12, 1914, Chesapeake " Ohio, Kansas
were
City Southern and N. Y., N. H. " Hartford
substituted for Chicago " North
Western, Missouri
On

May

Pacific and
On

4,

Rock

April 10,
were

Island.

D., L. " W.

1924,

St. Louis

and

substituted for Kansas

western
South-

City Southern and

Lehigh Valley.
The

railroad

list now

Atchison
Bait. "
Canadian

Ohio

Reading
St. L. Southwestern

Chesapeake " Ohio

New

Haven

Del.

Norfolk

Nash.

"

Western

Northern

Erie

Pennsylvania
Basis

Pacific

of Calculation

Originallyquotationswere
13, 1915,

stocks should

sell on

the Stock
a

St. Paul
Southern Pacific
Southern Railway
Union Pacific

Central

Del., Lack. " W.

October

lows:
1925) is as fol-

Louisville "
York

Hudson

31,

Illinois Central
New

"

Pacific

(August

all in percentages.
On
Exchange ruled that all

dollar-share

basis. For

the sake

continuitythe averages of Pennsylvania,

Reading
and Lehigh Valley, all having $50 par values, have
since been computed on a percentage basis,which
ever
obtained
was
by doubling their market
quotation.
to
Lehigh having been dropped, it is now
necessary
double the quotationonly in the cases
of Pennsylvania
of

APPENDIX

284
of

and

Reading, all the railroad stocks being adjusted

this arrangement

by

to

both

the dollar

and

the percentage

basis.

Industrial Stocks
twelve industrial stocks used

The

in

January,1897,

were:

American

Cotton

Oil

American

National

American

SpiritsMfg.
Sugar

American

Tobacco

Standard Rope " Twine

Tennessee Coal " Iron
U. S. Leather pref.

Laclede

Lead

Pacific Mail

Chicago Gas
General

Gas

Electric

Changes have been made as follows :

In November, 1897, PeoplesGas was
substituted for
Chicago Gas.
In September, 1898, U. S. Rubber common
stituted
subwas
for General

Electric.

In

April, 1899, Continental Tobacco, Federal Steel,

General
tuted
substiSteel " Wire
Electric,American
were
for American
Tobacco,
SpiritsMfg., American
Laclede

Gas

and Standard

Rope " Twine.

In June, 1901,
Amalgamated Copper, American
Smelting " Refining,International Paper preferred,
U. S. Steel common
and U. S. Steel preferredwere
substituted for American
Cotton
Oil, Federal Steel,
Steel "
General Electric,Pacific Mail and American

Wire.
In

January, 1902,

Colorado
Tobacco

Fuel " Iron

and

American
were

International

Car

"

Foundry

and

substituted for Continental

Paper preferred.

APPENDIX
In

In

stituted
April,1905, U. S. Rubber 1st preferredwas subfor U. S. Leather preferred.
November, 1907, General Electric was substituted

for Tennessee

In

May,

" Iron.

Coal

Central

1912,

for Colorado

July 31,

1914,

Leather

because

the Stock

of the war,

Amalgamated Copper
Car " Foundry
American
American
Smelting
American
Sugar

March,

for U.

In

1915,

S. Rubber

ist

was

stituted
sub-

Exchange closed

on

was:

Lead
Peoples Gas
U. S. Rubber com.
U. S. Rubber ist pref.
U. S. Steel com.
U. S. Steel pref.
National

Central Leather
General Electric

In

common

Fuel " Iron.

when
list,
therefore,

The

In

285

General

Motors

was

substituted

preferred.

substituted for Amalgawas

July,1915, Anaconda
mated
Copper.
all
September, 1916, a list of twenty industrials,

common,

was

substituted for

the old list of twelve.

National

Lead, Peoples Gas, General Motors

Steel preferred were
dropped and twelve
were

American
American
American

added.

The

Beet Sugar
Can

Car "

Foundry

American
Locomotive
American
Smelting
American
Sugar
American Tel. " Tel.
Anaconda
Copper
Baldwin Locomotive

Central Leather

and U. S.
new

panies
com-

list became:
General Electric
Goodrich
Republic Iron " Steel
Studebaker
Texas Co.
U. S. Rubber
U. S. Steel
Utah

Copper

Westinghouse
Western

Union

286

APPENDIX

rAll Quotationson
At this time

(1916) Stock Exchange quotationswere

all in dollars instead

Utah

had

caused

of $10 and

par

However, in order
averages,

of percentages,

immediate

no

to

figuredbackward

make

the

December

that the present

twenty

of

after the

par

new

of $50

averages.

the industrial
stocks

new

reopening
1914,

12,

in the

for
continuity

of the

to

the fact that

so

Westinghouse

confusion

the records

on

Basis

Dollar

the
war

were

Stock

so
closing,

published record

of averages
is as
above had been quoted

the twenty stocks mentioned

the dollar basis from
that date.

Changes
On

since made

March

for American
On

Mack
Corn

January
Trucks

change
Ex-

i,

1920,

Beet

as

Corn

follows

on

products was

substituted

Sugar.
1924,

22,

and

are

if

American

Sears-Roebuck

Tobacco, du Pont,
were

substituted

Products, Central Leather, Goodrich

and

for

Texas

Co.
On

Vas

February 6,

1924,

Standard

Oil of California

substituted for Utah.

and WoolMay 12, 1924, Studebaker non-par

and
substituted for old Studebaker
worth
$25 par were
Republic Iron " Steel.
After the change from twelve to twenty industrials,
Co. reduced its par from
in 1916, Texas
$100 to $25.
Locomotive
American
Then
changed from $100 par to
old share.
shares for one
new
issuingtwo
non-par,
Studebaker
changed from $100 par to non-par, issuing

On

APPENDIX

and

two

half shares of

arisingfrom

Texas

Co. and

so

was

Products
retained

scheme

closingprices on

average

at

of

the

97.41

stocks

new

was

American

Car

American

Locomotive

Sears-Roebuck

American

Smelting

Standard

American

Sugar

Studebaker

American

Tel. "

American

Tobacco

the old

97.23,

all

as

lows:
fol-

Trucks

Mack

Oil of California

U.

S. Rubber

U.

S. Steel

Woolworth

Baldwin

Westinghouse
Western

Pont

were

Electric

Anaconda

du

on

July,1924,

General

Tel.

1924,

basis.

Can

Foundry

tion.
quota-

new

quotations'that while the

American

"

ment.
adjust-

new

January 22,

the industrial list for

made

plication
com-

Locomotive

the actual

Tuesday averaged
on

The

ican
dropped. Amer-

were

on

the dollar

being figuredon
This

of old.

one

Texas, American

changes,made

fitted into the

stocks, the

the

Corn

Locomotive
These

for

new

changes brought about

Studebaker

and

287

Union

August 31, 1925, General Motors, International

Harvester, Kennecott, Texas Co. and U. S. Realty
for Anaconda,
substituted
Baldwin, du Pont,
were
On

Standard

Oil

of California

and

Studebaker

in the in-

288

APPENDIX

dustrial list. These

changes made

ference
appreciabledif-

no

in the averages.

industrial list now

The

(August

American

Can

American

Car

American

Locomotive

Sears-Roebuck

American

Smelters

Texas

American

Sugar

U.

S. Realty

American

Tel.

U.

S. Rubber

American

Tobacco

TeL

"

U. S. Steel
Western

General

Motors

Westinghouse

used

the

last year

"

Foundry

lists

are

stocks.

common

capitalreadjustments of
and

new

quotation. To

the

Union

Woolworth

in both

stocks

the issue of two

averages

it is necessary

Foundry

and

and

Co.

Electric

Car

lows:
fol-

Trucks

Mack

Foundry

"

General

Within

as

Kennecott

International Harvester

All

1925) is

31,

Tobacco,

American

shares

for each

maintain
to
as

Tobacco
old

ican
Amer-

resulted in

share, splitting

the

consistencyof the
the price of Car "
double
in the case
of Pennsylvania

Reading.

compiled from closingprices. In

there is no sale of a particular
stock, the last precase
vious
close is used.
total sum
of the closingquoThe
tations
for the twenty
rails,with Pennsylvania and
Reading doubled,is then divided by twenty. The total
The

averages

are

APPENDIX

290

f"5 N
VO
"i".ioir"

HI

co

tx

is.

q oq

'

"

f)

^O

co

CO
co

PO

HI

""*"

t" q\

u-"

O
"*

CO

"? q vq

"*5

"*3 IX

COCO

c\oq

""? "^^q

0) 00

"p^q

'T

VO
"-

HI

oq

"o

-f" *

"1
!_,

Q
"

*Sc"*
0

2r"o

JT

"^f*

"*

"*" ""*""*M:?

10

vd

q f
t""od oo 06

"

oo

(X

r^oo'

ON

d\ S^-t"*

MMMPiMMMMMM^MMMM

lOVO
2? "T'e
ro

.".

l-i

~
"-i

O*

CI OO

CO

to

CO

VOOOVO
"

"

OO
OO
"2
"2
^O

CO
W
VO
O
^"vgOtOVO
C*l vO

ON

co\o

TJ-to "^j"* ^" cvjco

COCO

looq

O
"*" 10

oj"? "?cq

"

POOO
VO
TJ- w
H.

(| Cl
5-1"

"

r" "

WIN

HI

^"*

fOVQ

HI

\o

\q

co

"

o\wwwcioi*

CO

VO

OO

txOO

MVO

cq

txcd
*?iS

Mww^-wd*

tt,

10

IOOO
vpfOtooOHiO
MV.J
VO
fO
tXfc io

lOVO

"^j"
co

txCOfO

dpodHli-;*

"u*

io

HI

tx

"

"

"

CO

"OVO

O\^?

OO

Os

d ^*

VO

HI

'J'"?

co

to

TJ-

VO

CO

CO

VO

"-1

O\00

"

"

IN.CO

O\

1000
")CO
tx.vo

tovO

to

HI

"

COO

"?

"

CO

"OVO

tNCO

OX

HI

"

CO
CVJ co

C^

rf

lOVO

O
O
io

VO VO
coo"

oitx

coj"".vqqq\
S "^ *o 51 *
S! "
**

C*

o^r

Og
O

co

txvO

"*

"OVO

HiCjpssSS

cl jy "

co*

"

Cf

DOOI-IOOGOO
OJOOHiCpCQO
Tf
tx. tx, tx

co

OO"wH""l"

p? t"i-.

co"oc^'wi-;

wWC^OJCsH

C^
CO

-"J-q

r" t"

"-"Hli-IoicofOcooXrt
;""" ^O
P4"N"Xcq"W"M

J=
HI

"

H*l-i

Mio'lvqrt-q

d"

"

txOO
N.M

O\

O^

HI
"

fe*

.2P ;

""-

APPENDIX

^8

Sgg"88*

"8^

"^00*0
^

OO

""""""*"""

"

"g

'SS^SS'S

BOSS'S

"288Sb*

gSSSls*

S'SSSSS*

8 ^OoVo ^ S?

O-

O\C*S *J*~')^

(-?,""

291

""

fx.i?^ 3- ^
.

CO

HI

HI

"S8
S28

ON

---

Oil

rri

P4 ."
l"

O^CC

"

Op

5.

5-,X

^i^0.
OO

CO

OO

j,.

JN

"^00

"1

"

CO

fx

txvD

rx

ro

^
O

"

0\

rx\o

"M_

"^ ^^

IX.OO

tx,

rroo

OHI
OO'*
ts!/v^

lx.O\O-"i-Hilx,

co

oqqwiocqro

tx,ioqqTj-io

lx.00cn

fxnrtry^*

OO

CS

c^

ocor^rx*r'Hi
^^
ON O

tx

ix.

rx

f^

txr^rv"^rv^*

OOO

n"q"
XvvX

"
"
x,T^,^
*i* "P

"i^j^i-"

^"ii

^O

^^q

NO

-vHiT^irjuio
t-i

"r^t^f^^^

J"^5ONON

i-i

Ix. tx.\o

OoO.J"

NOvONvo^Tt

*-

tx

lOVO

lOiooOvqqNH,

S222~22*

S0^1^

S00

^*

Oo0*

OO

ONON

""

o.

rvnr,

NO

vd

ro

"0

tj.t"*

rK

ON
ON

r^

vqcoroiotxtx
TJ-to -4 ^f co'
io
ONONONONONON

d\ d\ o\
ONO\ONONONON

txod

o\*

"*~

d d

o\

OOOOiON

b^oq
P^^tx
'1'1u?u?r?Ttr?
2' 2 ^oo oo C'** o\oo*od od od od *
OONONO\ON

^J

OO

VO^iiHiOfO
ro

ONONCNONONON

2j"*-"
d\qo *

*~" 'fjt

HI

Tt-Cqoq

q^

tx^o

rf OO
o

ON

VOoOHito

fOVO

NO

ONON'-^ONONON

8"

oo

^^^"ptx^.

ix

f*5 rovo
iO
C^

xo

C1^ O

"P^^l
**?'"?'''.
od od d\od od ^

2 92

j"

V
03

A"^^

C^l fj

IONO

txOO

ON

HI

"*5

Tf

lOVO

!*r"

ONONQNCNONI"

txOO

ON

**5 "'t'^OVO

txOO

Ov

^*

tl.^P

"i~

APPENDIX

292
Tf

"
O

"""

NO

"?^

"""

1-1

ro

i-

dddM"w*

VO
tx Ttvo
O OO
ON tx

"*5 to

tx

f*5

1-1

NO

NO

"""

H-.5oqup

oq

r-o"*"ir" rf rf ui*

00

OMO

TJ-*

-"toO
M

ui txqo

NO

OO

"o

ONOO

"*)

"^t"*",u?"H

"*"

*f O

**

'

*"

^H"?"?'

OOOOOp*

tx

oq q

OOO"

""^

"-"

"voq

C\dd'*~i""-"*

O\*

cKOOOOv

OOO

"00m

fT" *r"

intxNvovq"o

UOON^O

"O

^-

fx

HI

S*

*:

rJ-OO "*

Tttxr*?'-"i-"T;t

"-*2l"'?"dc*"

ON

"x
"

^;

fONO

Tf txOO

y
"u

"n\o

oo"oo\Nf*5"o

vooof^o^i-itx

ix vo

q\qt"otx

M_q\"-jrxq\o\
"i "4 w M "3 *
w
""*"~-"i-Tfd'-'Q'*

r?t"T?-

8 8*

3B8

"P,
ro*

^^

M^r^POPr)

oo

foqo

SSS

"^

vo

". "*.^". '".QQ

r6 3" "4 -^-to ro*

^o

q^"
ci

f*5

OOO

OO

Q"

bO"-;oq
5 Ol'oi*

"J

"

IX

O\CO

r"iN

C1

f! N

"-"

OOO

"". P ^q

p; "P^

wupirjrotxq

TJ-*

CiwwWTJ-

tx

"*5

O"

**5OO

^ ^ "700 oqup
-"fi/" 1/5 TJ-ro fO*

"*5 IX

TfvO

irjinNvq1-""
eo

ro

ro

"?"?
"/" "-"

""*""O*

C1

CO

J
v!3

oo

moo

v-

"o

\o

"s

-"i-"r)^-T}-

OMO-^-VO

OH

^"

ON Q\

C\

Ov

O\

ON

O\

1000

Ov

O\

wvoo\oovo

oovomoo"

foo

lOTj-oqoq
O\

O\

OsOO

iO

Oi

"*

o" txvo

fo-ttrovq

ON

C\

ON

tf"

ONO\"ONO"O

rx

O\00

CO

ro

rf

qoq

"

-too
M
to

O"

vd

o\

CO

ji

QS

J2.*
^

torOM"-"OO"

lOfOO

"-iqtxT}-i-"ir"
d\*
d"-Qdd\

Mvoqi-"vqoq
ooNNNoi*

ON

,"

ON

Ov

C\OO

fO

10

Tj-vo

g^ioinpovsq

qoqwcqtxtx

^ONONONONON

ONONONONONON

"

"-

v-i

OS
rj-

OOmtnwtn
1-4

tn

to

rx

txod

tx

ON

ONONONONOvON

oo

tx

t-ivo

p-"i-"i-"dcd*

"**"

tOOO
OO
10
ON

Tf
ON

NO

rf

"^" W

to

IONO

ON

NO

ON

ON

Tf
O

fONO
d
rf

"O

tx

tx

ON ON

ON

tx
ON

JX
tx
NO

tx
ON

f^NO

CNJ

ON

C\

ONONON

"oio

CN

C\

txOO
COONIOTJ-

vdvd^c

OOONiOCJOOO
O NO
NO

C\

^T"

NO

tONO
NO NO NO NO
ON ON ON ON ON
ON

"

OO

CN

CN

OO

CN

ONOO

*H

N
ON

ON

ONOvONONON

oj

ON

O\

ON

co

ix

IOVO
ON
ON

rf

\o

food

iifO

"^T;t ^^q
rx\d NQ tx

txCO
ON
ON

"-"

qoq"o

ON

tx*

OOfOfOONH"O
tx
lOOO
P4 W
tx
ON

ON

O\OO

VO"O"OONN

oq
tx

ON

ONOO

vq

Tfoo

towvqqNioc*
-^-co pi oi
10

tx
ON

tx

10*

OiONONON

ON

ON

OOOOOvONONOi

tx

"^

oSd'ood*
ON

NO
"

ON

^j-10 ir"* vd

OMOPO
ONNOVO

OvOO

VQVQNO

00000

qs

ON

"r"

ww^^ioq

\qNqoqoqoqtx

tx,od coco*

"

qqcoONNoq

do*

"M

IOVO

*o

OONfJ^MN

ON

ONONONONONON

COOOwONOOO

*"oq

tx

"

ONONONONONON

"*5

OOONONON

"oq"ocioqq

M.
oo

i-iNOO1'*'
CNiorxro

OO

wi-iOO
TJ-SO

up

tx*

.Orf
.Q

fo*

ONONONOiONO"

O\O\ONONOvO\

OO

OOfOOMO

oq"9irjtx-*"o
"o^of6p6"r"

^O

*-*

O"

ON

O*
O^

O NO
^J"NO

NO
NO

PO

\o
Ov

OO
00

"".

5*"

"?

rt

^ 5

^" *^3.y

ON

ON

*/3

coffi
"?.".*"*"
"^

c*j Tj* u"?VD

txCO

O^ O

APPENDIX

293
/

5 O0

O
C"!vo

""

q
txod
N

Qvdvd
O"

O"

ON

O"

-"VO

O
"*

CO

HI

rx

tx*

Oi

ON

dodod*

,ii "*"~ o

"

tx
QQ

CO

d"od od

|^

J""oo

"j^

""

o
"

00

*J"

to

q* q

to

in

to

tx*

txod d\d\d\CN*
O\

q\

O"

O"

O"

"O

to
W
fOVO

Tf
O

rOOO
O\OO

OOOO

ON

O\

VO

"^vdvovd

C^

d" d\*

ON

O
r^

^J*

tx

1O

O\

HH

txododod

00

ON*

vo

IN

tooo

HI

10

VO

*""

^1" co
^t" ON

ON

O\

ON

vd

tx

txvd

ix

tx*

^P ^

txc$ ododod*

"x

oo

rj
OO

Osoo

'"J^^

to

txqooowc^'-;
dSdvo
ooo

dod

ONO
OOON

xooo

*^

OO

OO

OO

OO

00

OO

^f ^

O\

10

to

O\OO

loco

"^"OOvq
OO

OO

vq

ON

O\OO

VO^OCO
**? P "".
.

ONONONo'dd*

OOOOOOOOOOOO

OOOOOOOOOOOO

*-"

O\

rovo

ONOOOO
oooooooooo

CNOdddd*

ON

od

ON*

ON

Os

"5 1/"
CV1 to

^"

lOtXOOO"-*

"?^

1O

OOC\OvO\O\O\

woOOOOOON

votxNcoOMO
*

OO

tx"-itxONtow

ON

od

ON

tooO

Q
O^

"^vq to wp tx
txod o\i/S

O\O\

oooooooooooo

o\ d" d\ ON
OOOOOOOOOOOO

tooo
CO
W

tx

H"

txod*

oooooooooo

ONOO

tx"Q ci
oq
txod "*""od od
OvCsOi

VOlXtOOVO

O
ON

oo

C\ rxVO

vo

txVO

OS

wOOtO

ON

ON

i-ivoTt-ciq

^}
txtx*

ON

H_I

ON

O\

IM

tovd *"vd

to
"

OOOOOOOOOOOO

VO

tx

00

*OOO

*fi

jv^ f^

00

rn

HI

ON

HH

tooo

ONOO

N
Q

tx

CO"O

to

louSvd

O\

O\

OOOO

O\OO

ON

tx

oooooooo
oooooooooooo

o\o\oooo

*"

tx

VO

^7"?^:^f^P

*j Ni-iO\qN

Od

u""OO

vdvd

OtoOO
OJ
OO

*O
4O

CO

ON
ON

"O

OOOOOOONO\ON

",

3*

*S

rocn'"*''"i-iO "O*
oooooooooooo

oi"N"^NN*

oooooooooooo

xo
^
T}- to
oooooooooooo

Ml

10

oooooo

I
""

*T

fOOO

S4 \o ^-

OS"^
M

OO'-*OO'^f-'O"-"
ONOO
\r" txoo

10

OOOO

OO

"*!"
PO CO
^-OOO'?"?
"

fO

|4
OO

OO

OO

tO

00

OO

mrx"N^o

"-!*

dddHH"w*

oo

HI

"*5

N.

"**"

"I N. "f M. "*? vN

KHI-Hl-il-iwM*
OOOOOOOOOOOO

HI

NiT)O\O

vqvqtoq

T"?
tOO
OOOO

OOl-"
OOOOOO

woOOC\inir"

O\

VOWM

"

qroT}-wqq\

wi-Jwwi-ii-!*

wi-Ji-Hi-ii-id*

fOOO

ro"O

^^O

qqiriri-rj-CN

q "o
"-"^io

oooooooooooo

oooooooooooo

oooooooooooo

uoOvO

fOOi-iroOvO

mvo

"

tO^O^W
OOOOOOOO

u?
M*

lOOO

OV

f? q vq

10

OO

c5d"-""-"'-"Hi*

"/v3- tx -5-tx

ON^

l-ll-ir|WCV)H*

OOOOOOOO

"O

"rioo

OOOOOOOOOOOO

\oo\otoTj-to

"-iOOOvOQ'"lvo

ro

"

uptxMvq
Od"-"l-"

OOOOOOOOOOOO

oooooooooooo

"""0

m^fO^

O'-'OO

txVO

INCil-t'-'Ml-H*

MioO'-'OOi

ro

oe"^.0u?^)

tO*

"-l

OOOOOOOOOOOO

OOOOOOOOOOOO

00

1M

TfC1txC\

OOoOvo

txOO

uptxqoooqrofo

"ivo

hHM(H"-4"4l-"*

WMM*

"

OO

oOfOOMxtxtn
tx

rOQO

to

oooooo

VOOOOOOOQ

q\t"vq

wvqvqqto

"JO
vq w

upq

oooooooooooo

oo

O"\VO
txtxOtO

1-1

ro

O
OO
to\O
JxO\OOOtovo

O"

oooooooo

oooooooo

oo

ro

"OOO

C\CO

tx
'

O
vo
txOO

ON
Ix

d*
OO

"

"

"o

^t "nvo

tsoo

ON o

oo

oooooooooo

rx OVO
tnvo
CO
txvq OO

O\

upOO

oo

VO
HI

to

CXX3

dddd"w*""-;)-;"
OOOOOOOOOOOO

C\vo
O
q
ro

OOOOOOOOOOOO

""
vq
o

"O

C'g

APPENDIX

294
cS

tt-OO

"O

"G M
(2 PO*

\o

vo

c*iIN
O\ O\

"

od

oo'd"*

rj- O

"

C"

PO

O~\ O\

CN*-

oq vq

"0*

PO

ON

dv d

irj

vo

oq ovoq oq

PO

Os

ON

"

tx.

ON C\

O\

"

ON

Ov

f"

vOVO^O'-'"*5

P"5
ci

q vq vq
u=) ro ro

*
"

PO
o"

3" TJ-rj-uS*

O\O\

ON*

q u?vq
TJ-CO rj*
ON

ON

ON

"

"

wOO

^r

vq

4'^~

vo

o\

JO

Ni-i

"

"?o

"" "? uj*

O"

C\

ON

ON

O"

cj*

g^ "*~ ^

LO

uj CJ

ON

ON

ri

oo

^9"^

N*J^N

^w

*?^

^*

^^

"
""" ""l "t
O\CT\CVOOOOOO

Nr""op"N
ovOOsOON

COo\

P
O*

O"

'f *f

"

"

("od

cvod

oo

1 "? "0 *0 o*"Q

d\ r^-oo oo (". j".

*0#

06

oocxJoooooooo

oooooooooOOO

Ef "Svp*.

OO

OOOOOO

OO

OOOOO9NCNGN

O\!7vO\

vorhrl-OOOOO

tooOVOtxVOtO

OOOOOOOOOOOO

CVOO

OO

OO

OO

OOO

?s

^J

"M

VO

Sooo1"

wOto

(t

vo

OO

OV

**

Ov

Ov

ti

OO

OOOOOO

ooo"o*"o'"o"

ooho1oho"o"

Ovoo

to

o\

vo

oo

to

ONOO

PJMpitOtO

oo

PJtOtO

OO

OoO

OO

PJOO
O"3\

vo

o'o'o'o'o'o1

vovo"v

vomlxtow

fJMMMQl-i

to

vn

OOtxtxoOOOCTv
OvOvOvOvCvON

txoo
Ov"vOvOvONOv

OOVO

8"?o

oo'o'o

tx"o

Ol"O

OM

tOpj

PtpitO

tO*x
v"
O

txtxtxtxoOtxS

txtx

^o

""oo

tx

Ov

OOCTvOOoOtx
OvOv^OvOv

i_,

MpipjpJwM

txi"toOooP"

tow"""AP"O

rJ'tXOOO'v
*"*"

VO

OOOOOO

^toxAiw

O
M

OO

txtxOv^^S-S

OvO\OvON"Vc"S

ffvOvONOvON^

cg^
"

P"

to

Tj- uivo

txoo

ON

"

P"

to

^J- "^vo

txoo

Ov

"

to

rf- lovo

txoo

Ov

"

"S, "

+~

APPENDIX
O
vOOO
VOCOOQ^JO
c\
04 oq

CO
jj
M
"

X5

fO

""*

tx

r-pcq txvq

txoo

oo

MOO

lo^-vo

ddnlMwi-;*

*0 T
ON

"

5^

\0

"

"2

^'r-k

ooS

oo

TJt".tXMOOOO

t^""x? ^^

ONOO

Q^oo^ptotoN
oVoxoVddc"t".

oooooo

iS-OO

txtx

OO

OO

Cx

gg:"i^i:*"^|"g

gg^i^J*

^^tR?:*

j:^

^P;

-"

o\

oooooo

^t^txt^txtx

"

"-;""" i.;

.J

tOMVOV-ir)vt
.

"

iOtx-^iONft

"M

R^oSSo?^'* "g"l":

oooooocooooo

oocoooooootx

.-.

wooSvo

oq

vor-xinoMoo

c\*

dw"-"'dd

o"l""c\ooo*
oo

tx

""*

o
ooo
o
o
u^cviotxCNOO

Pj_*"*q"?

ps c\*

o
QO

Tj-vq

cSojoocooBcg*eg'SSSSS*

^Si'SP00

J?

SJ?!?
9^^,

rt-

oONrf-o^ttx

'TwM/iOto

vq cq

"

ooooooioccoo

oo

^
5
ii;

295

o
c"
1

"

ON

"i

^f *?#

Ji "

^"S"S

06

oo

oo

s" sif*
2

oo

oo

ON

""*" o

"*

t^^

^^P.r'SvS, ""R^S8"
06

oo

oo

oo

oo

oo

do"

-^

o
"o
""*" "*"

"

"

"

ON

ONOO

"" o?"oT oT oo 0?

Th

""

"^t

"5^^

19.9

i"

"

OOOOOOOOOOOO

'S^Jffff
to

rn

000?

^S^^S^*

Jot

ot

^^^N^HTv^H?
" ",00"

5g?^*^"^5???^'!5"^^iW^'
oo*oo"oo

VO^OOT
TJ-N

?S"RS%.
SS

o^^SS^S*

S^i?^^^*

""?o?^SS

"

5o?"g"SSa"

""""""

SS.S^^ot

b"?2^S.
06

^"S.,100!
"**

*0 "" *" ^'v"

"OM"Q"

oovaaoaeaoM*

2""2SV2.V2.

c3
3

"""

^t

"-T ~*

oo

oo

oo'ob'oo

"

vo

to

O^OO

ON

ON

ON

v"

"OVO

to

tovo

""

O"

to

HI

t",

cj

""

Ooovootr

OrxMVOtotx

to^

"*

*J- rj- ^-

"O

296
,

to

APPENDIX
M

co

10

oo

10

""" oo

ON

co

to

*i-

to

P"

oo

p"

""-

H-

9 *J *!

f--

ro

ft

to

*^""

298

APPENDIX

,.

OO

OO

ON

OO

ON

ONOO

ON

vo

"

oo

oo

oo

oo

oo

oo

oo

vo

vo

tx
c"oo

tx

^TQ

O\O"rt"nv"H-

wvONvn^CT\

txvo

vo

CO

"^1^
oo

VO

ONOO

ON

O\

oo

tx

vo

vo

vo

lx

00

00

00

00

oo

tx

tx

"""

00

tx

"*

OO

OO

tx

oo

to

Odd

"

txoo

vo

OO
oo

tx\o

ooooootxtxtx

OO

txrhMi-irxto

OONN^PJN^
rxooooooooo\

OOoooo
OO

tx"O
M

IH

e^dscvoooooo

"OOO

vo

ir"

OO

CNtx

APPENDIX

vn

u-l^

to

vrt

"i- 4- *t- *i-**" ^}-

vA, \o

vo

"*

tooo

*C* "0

c*

oo

to

rl

"

oo

tntn

to

"

bs

P} f^OO

^-

to\O

to

to

oo

Ooooo

uioo

"""

t"" N

t^~"". t^"",

*"

to

*t-\o

i*

^r

to

^OOO

oo

to

\o

to

vo

to

\o

to

\c

v*5'?

to

VOfi

OOONOO

"

**

Q ^
rn

^^O'J"*
fifit'it')

"n

OOM

""

299

O^O

00

^J'T1^^'?^*

rj-

t^

U1

O"O

tOTt-tntororo

"^

t1*

Ts"?'fltIH

^"C1^^^1^*
NNNCO^-TJ-

^T

rj-tnt*"Tt-TJ-

^M

Sr T

*!

5^"u^^'

OC^OW

CO'O

"

tOOOMOMM

",
(3

jk

VO

"*O

00
"^

CT\

tO^

to

00

VO

O^

ON

Cv
OO

VO
jk

to

VO
C4

'i to

VS

to

w%

-4-to

l~l

VO

tO^

to
OO

VO

"^00

T^1

SO

"O

toO

tONtOtOtOtO

00
tO

^t

MOO

't'"
6 6

OOP"VONO
to
TJ- u-,
N
OX.J
*Jvr""A^}-^*j-

JO

3 "?2
tx

tx

tx

"*
*^3

,
"

APPENDIX

300
O

oo

ti.t^. t".

NO

"A

00

"I

*f

00

ON NO

NO

"i- CO

"NJ

00

00

00

00

00

00

ON

ON

1
T}-tO

VI

NO

00

"""* ONON

ON

to

00

00

00

*t" *^ *$"1

to

co

U"^NtoqvO0

J?

**" N

NO

*0
N

NO

NO

00

00

t*

MO\OONt^NO

00

OO

00

ONOO

oo

"

00

00

ON

ON

ON

ON

ON

ONOO

\O

tO

WN

tO

"*

fxNO

W"

"O^
ON

OO

00

00

t^.N.NO

4-

"A rj-to

00

00

00

t^.ON

"0"A

00

00

00

00

00

NO

NO

00

00

000000000000

000000000000

000000000000

ON

"

"""

ON

ON

ON

ON

ONOO

OO

OO

""

CTV"O,4

OO

OO

OO

VH

00

00

OO

OO

00

00

00

00

ONOO

H
Q *t Q O
QNNooNONtNj^
"WN
B

ON

***

"^t-fNjo"ON^
ON

C"\OtooO"100

"AloO"rtt^ON

toNOONVOO
M

ri

"

to

to

^ T
*^^
MMMMriM

"

OS

ON

ON

ON

ON

ON

ON

ON

ON

ON

ON

to

ON

"

""

^*

tO

VN

t"l OO

tO

ON*

tM

ON

ON

ON

ON

ON

ON

ON

(?"

ON

ON

ONOO

ON

to

-+-NO

"*"

t"

'I"*

0*00*0

"r"

trt^

"ri

to

ON

OO

"NI

OO

ON

ON

*^"*
OO

O"O

U^NONO

*}"t1

***

odd

wodddd

ON

*"

*^"

ON

ON

ON

ON

"oQ
ON

ON

ON

"o

"t"OO

ON

XJ^

OO

t^ooto"ovovo

i^

NO
_

to

*""-"

^"NO ON

PJ

to

*OO

tNjMINT^^rj-

l"-t^.ON

ONO\ONONO\O\

ONO\ONONONON

MNOtOOV^f*

9^^

"O
ONOO

tO^
ON

oo

ONNO

rj-

W^

ON

TJ- t""A

IM

"^l

to

p"

T*-^

^^O

ddfNJCOCOtO

TJ-tod^"OtO

OOOOOO

*t- r".

NO

NO

tNJNtNJ^K
OOOOON

"ON

"*
O

ON

"8'**OOO\
""

"

OO

ON

ON

00

ON

ON

ON

t-^.
t^.t-.VO

OOOOOO

ON

NO

ON

^-^NtOMN

fitONfilHJNi

tOrfeoto-4-toON"

OOOOOO

OOOOOO

OOOOdOOO

M
^*
ON O
to
N
KNNNNiNCNjCNIPJNNeo

V"NO

r^

oo

ON

J3
tyD P

to-"

APPENDIX
".

oo

^#

wise

ao

1s0.

to

p"

*" *" *" T*

to

*"^

o\

301

to

so

co

"*

*r"0"

"I00, "0*^*

to

r^N"

to

'"-t"

OOOOOQOOOOOO

OO

oo

oo

d
oo

"*

txoo

OOOOCOU-"OT+tx

vo

co

ONVO

lxtotxtotOHi_vor*'Mlxf"

w"

OO

ON

xj *t"j|f T0?
*XlX

ONVO

ft

CT'10U?VO.*

txtXlxtxtxtX

txOO

O"

VO

vo

OO

txtxtXlXtxtx

t"

"'fvo VO

vo

O^jj

OO

txVO

vo
**

to

va

vo

ui

invoONvooo

OOOOOOOOOOOO

d
oo

VO

OO

^-

IxlxlXtXlxlX

N
f*

ON
(V)

ON
txoo

d
oo

IH

oo

MIX
oo

lx

APPENDIX

302

fj
*"

*^" t**

4* 4d

J5

oo

OX
N
*$" to

Os.

f"" t""

***

t"""so
to

to

"^

"""l OS

tA"*

OS

\o

vi

txso

to

o\""
"

oo

"~*

VI

oo

os

oo

oo

"

os

v\

t^.oo *

oo

OS.

p"

fr,

M
*J tf **
oV i^-sooo
rC.od
OOOOQO

tOp|p"oOfxto

"A tAi ti 4-

SO

"J

oo

os

oo

\A

4-*

SO

to

t-,

V*

ON

*o

*"*

*^"

"A K. t^. to

NO

NO

**?
oV

to

ooOtotONnO
*

4-sd

to

"^- t^-oo oo

oo

MMHMMMM

"^

os

00

*^v*:
t""*~ to to*

MMMMHH

"H

txso

oo

*OOO
so

OO

to*

so

so

OOOOOO

OOO

o\ o\ d
OOw"O"H

""*

OO

P. 't

t"-

OO

OOOOO

OS

"

sdotj"^^.

oooosdso*

O"+-sd

4- 4-*

to"**""As6

to

WMWWWM

OS

to

t^so

t"

t^

to

"^*

"*~"

ir\

SO

so

"f".

**

W"OX"rt

v"

"Aso

tO

U-l

so

NN"*"to4-

^MHMM

oo

"0

O
\r\

^"1""ONO\

NONO^O

"5

O
t"

"^^"^
U1*

MWMjH

J3"Z.OOO'

oo

r".sd

'ft"H!V
o\"*~oo r". l".

tjMiNood*

oo

so

^M

.%

Xt

60

t"*

OOOOOO'*'

"

"0
so

"

hs

"A

tO

to

*^

t-voo

so

so

oOOOOw

os.

4-

MO

WM

MMMM^M

MMIH

L^
toso

c/3

"j

"--

osoo

w"vo

"n

u-v

toso

"o

so

wioo

tort-MQoor^

soui'i-wi

oo

oo

osto
^"l-

"^NO

2,*

7
N

",soOoo
1

.lit

-j*-

sooo"Noot--O

totots.wir"o

SOVIMOS
.

"

*"J#

"

OS

Os

OOOSMMMM

*V
Q

OO

"

Os

Os

t~-

t".OO

-.

OS

txSO

"0

oooooot^t^t^

OOOOOO

t^oo

OOOOOOOOoOOO

oooooo

00

00

00

00

Os

Os

ON

rj- SO

OooOO
.

h"

^OO

boo

OO

U^SO

SO

oo

00

00

oo

oo

OO

ON

"O

O"

oo

OOOOOO

^9.
O

OO
SO

oo

"

OO

to
.

t"-

oo

t^OQ

Qr

t*^
A

ti.00 tC. ONOO

oo

oo

OO

OO

t^-00 00

oo

*1*"1^*

OO

OO

ftSO
SO

"

"

V*i

OO

OO

"

Os

t*

^t1

VN

*+"

ON

4"

oo

oOOOOOOOoOOOt^T3.

II
J=
NMNNNNNNNCO

to";

"CM

K.

"!-

303

gH^3$"^*$iSi"

t^

*?n3**"

SSSL.**.

'g.^g.JtKji:r1*^^*

""""""

oo

oo

jvj d

oo

sp^as,?

**44-*-L

"v

to

to

oo

oo

"vd

to
00

OO

OO

OO

OO

OvVO

co#

*J *""O

*J *T

oo

oo

oo

oo

oo

oo

OO

t^

"

tO

to

,..

HIHoVd^

6
00

OO

VO

txoO

00

OO

OO

00

f-.

CO

Q
"

3vdvdvd"^
""

""-"-25.i"?9??*
oo" Q

0\

oo

"oo

oo

oo

OOOOOOOOOOOO

0\00

0000

ON"*~*oioioTo^oioi*
"2'S.
tlvo^
d v2
00

OOOOOOOOOOOO

ONQO

OOOOOOOO

i
ri

"OV

MOOVN"OP"VO

c*
OOOOOOOOOOOO

l^n """"-""

s^1OIO\O
00

OO

r^
OO

00

3 ""

^^??^"*

t^t^J^\o

vo

r^

SS,'i9oovri'H

vnOv

"". *0 *" M. 0"^*

"

WW^^MpjN

~*

"5"
^ "

oooooo

'T

0000

vj

tO'*4-'*-44
oooooooooooo

*2.

OO

CTVONOO

""

""_;

OOOOOOOOOOOO

"

000000

"vo

tooNvo-j

00

T*~

"

vo

00

vo

"oo"tS""2

"

VO

00

oo
g.
MdwNPJN

vo

T"~

000000

fitOtOtotO

tOtOtOtO"(vi
oooooooooooo

CM

OvOO

ff?a"^.w

OOvoo\"i-

"T*

000000

+Z

r*

00

DOOM

^oOj^ooo

^J^rS^^^
OOOOOOOOOOOO

SSSJ^R.
/^

rv

r^

OOOOOOOO

00

,u

^vi

OOOOOOOOOOOO

p.^. vov5
Np"

oooo

00

APPENDIX

304

""*

"

".

-4

^fc"

"*!

f"

OOOOOOOOOOOO
OO
OO
OO.

ir"
I 00

""1

tvj pi

OO

jjt*"tn
"^

VN

00

OtO

*f
OO

OO

^
OO

^-

","

-I"0?

*n
OO

so

00

00

00

\o

^"

OO

tOVO

^
OO

"^"

*0

totOtoNN

OO

OJ

VO

oo

oo

so

t".oo

oo

OO

(^

oo

vo

vo

00

00

OO

OO

f*)

f^

"

{*)

00

^OO

tovo

"?

*?

00

f^

"^

to

Tf-

VI

tO

"s

00

00

^-

so

1^

OO

OV

oo

to

tx

QQ

j^

QQ

CO

t*"

""

vrs

Os

OO

Os

OO

t^*1

OO

t^"

^J-VO

"^

00

t^so

"

to

to

VO

tO

to

WOO

w-i

ONjj

oo

O\p
*o

oo

oo

vrioo

^-oo

oooooooooooo

oo

oo
"

tx

r-^

t".

to

OOOv

^1

^"

4*d

QQ

tOVO

*f-

OC

00

OO

OS

r*

OO
r"

OO

Ov

co

r^

OO

t""

"TOO

t^-oo

t""

MMO\MO"0

"^M

^NO^,

^NOOWVO

00

tx

ON

00

OO

oooooooooooo

r--#
tx

to

5-8'

*o

NNNNXX
t^-oo

^vo

oooooooooooooooo

OOMU-"C"WO\

oo

OO

oooooooooooo

*^

t^"vo

4-"? VCJ"^"0"?*VO
fipi"s5p"4'to

VN

t^

OO

OOOOOOOOOOOO

"*-OThrJ-tOio

t"

\o

fs^toOv^Pto
t^

T*

OO

ood1

osoo

oo

"

OO

00

00

to

r)

OO

OM

OOOOOOOOOOOO

^/^

O
"

to

to

OOOOOOOOOOOO

OO

"ovo

OO

wlxxxvnt^^

oooooooooooo

VO

OO

t^OO

t".oo

osxd

OOOOOOOOOOOO

QQ

00

OOOOOOOOOOOO

'f "? ^^
xxxMwf}

''J ^J"*
0000

00

_f.

"^"4'4'toNx

to

Ox
00

"o

so

so

-t- O

OOOOOOOOOOOO

O\

^*

OO

"""

00

i"

..

toNVONOoo*

OO

oooooooooooo

..-.,

"Avo

"^

"I

*o
.

-j.

"I

so

xxQ
00

"

OOOOOOOOOOOO

r^totoxoo

ov'^'o^^'oo*

*-"

"

OOOOOOOOOOOO

t".

vo

00

00

OO

00

"s

*n

Os

tx

tx

"x

t^

r^

OsOO

*""

to

so

oo

f7-f7-'^P*
t^t^"

t"oo

oo

"OP'J

1^00

oo

oo

OO

*?"

wri"d

OOOOOsd

_OO
os

oo

oo

so

00

\n

to

*"

ts.

"

"

d
ps

"O

tx

APPENDIX

306

oo

l*

i*

00

.WI

^-

'*-'O

avr*
totONOw.4
oo

oo

oo

"*"

tj. to^

O""
oo

oo

rx

ootx

oo

r^

t^oo

NO

so
oo

vx.

oo

oo

oo

oo

oo

ox^.jf

oo

."

oo

txxO

-J.XO
OC

oo

(""

to

"$" N

ONOO

Oxoo

CN

to

oo

oc

oo

"^

OX

w"

vo

vo

"

oo

oc

"^"

"r

oo

"l

vo

tx

U"IXO

*$-Q

*^

oo

fi

""I

*"*

oo

VO

"

"ONOOONO

ON

ONONONONONON

ONONONONONON

"1

OOoovOoO

ft

to

wvo

tow^N

oo

Wwt^

tOinON^-OvO

O^N^
*? O
otC.ON

OO

OO

OO

"

t^)^

||r

^,00

VO

OO

^.j,

VO

WioOVO

VON

VO"tx

I^VOVOMO
ON

ON

ON

NNNQOH

^MMMN

to'i-to

ONONONONONON

ON.ONONONON

ONOXON

W
_.

NN
ONON

"^

ONO~OO

ONON

*noo

"-l

'*-l-o^10'*'o"5

ONONONONONON

ONONONOxOX

ON

oo

oo

oo

Ox

oo

oo

oo

oc

t1^

""

"ONM
ON

O-

ox

^J
M

oooo

oo

oo

oo

\O\O

APPENDIX

307

O\

5*2 = as

s.

ztzisi,

uiooooooooO

W\ON"-lTj-

V"

OOSOtOMt

"f" y"

v"

"

**

VO

-J-VO

tO

t*"
^-4totototo*
to
-

IH

SO
O
OO
^Otowooti.

S^'t^q1^^*0';1^^"**

00000

OOOOOO

WMWWW

HMMMMM

oo

"o

t~-

in
rov/-,4"ri'i-4*
to
"

OOOOoo
pppqoo

rxoo

l~~ """. O VO
ij- Tj- M

Cn'ow^4w
VO
O OO

SCot-^P.

444444*

to^NiAN

Os

..

b
."_

ooooo-orH

000
oooooo

SWM

MMW"WM

u^^o

ui

"HMWMW

C*T;

O
'^

""
w

APPENDIX

308
O

.!-."-"

NO

NO

tovo

"*"

t^

eo

"1't"t7i'}'10vf;

oo

"*

"/"" M

ON

t".

"*"

""

oo

SC"

NO

OO

rV*"~so r"

^*

"o-o

"""

tooo

"NJ ON

ZOOOO

ON

to

*J- N
0
lx

N
rs.

r"tNo

NO

"*"

OOOO

oo

"*"

rn

"n

rj-N
O

ON
ON

t*.

ON

N.

oo

ON

ON

"*"*

O*JON

OOt"\

vo

ON

ON

ON

""""so

ON

O"o
"rtoo
*! ""I^J

4-*

ON

ON

to

'f ^

r^oo

so

P *"''!'"!
ooti"oO"A

ON

P, ?*

""

oo

w"

^
"

ON*

ON

"

"*"7"

"

ir,

4- ^

ON

ON

ON

to

fs,

'T1
tC. VTN"

4- 4- ^

*j"\r"

4-*

OOOOOO

4- 4- "Aoo
OOOCT"

OOOOO

""

*-

W)

3
",

to

**"

tooo

w"oo
oo

"\
oo

w^

oo

oo

oo

oo

.2.00

^^

ON
OO

ON

ONOO

O\

oo

-f"

^OO

to

Ov

t^.ri-

in^

oooodddd

oooooo

oo

"^ ^

#
00

OO

CN

e^^

C7\

O\

OMMNNW

OO

Os

CA

t^. t^.NO
OO

OO

OO

*o

"

tn

NO
OO

ro

O\

vo

oo

\o

tncoww

t^.N.

N.

OO

OO

to

oo
N

NO

OOO

rn*

"NNN*;"
OOOOOO

""""

"o

oo

""oOoO

OOoOO"

i,

O"

r"\o

to

4- Q
O

"

to

^T^t^l*

00

OO

OO

O\

ON
OO

O\

O\

ON

ON
OO

O"

ON

OO

OO

00

00

00

00

00

OO

OQ

OO

OO

OO

Ov
OO

SO

ONOO

M
_

"~'e"

7
SOMOOOO^-M

^ONM

2*

^-*

"

CN

Ov
^

oo

oc

oo

oo

mr^rtvooOM
M
w
CN

"n

CO

tO-j

Tj-cn^Tt-coto

""*"

cK

*/1

C?N

9\

ON

oo

N
PI

t^\

t^* "

I1** ^hit

ON

^^

Os"NON"^ONO\

O\

oo

t^oo

"^oo
^O

oo

O\

0s-

ON

V1*

ON*

ON

o
ON

^*

Cs

ON

ON

tx

^*

oo

oo

OO

OO

ON
O

vo

|.

Ov^
^

OO

OO

t**. O

NO

*^

t-^NO

ON

vnoo

O\

ONOO

"

"

4-4-"Avov6

,wt""-"*""'"

faO\O\O"ONON

ON

ON

^-"*r"
~"

"n

ON

CN

|, "

"

"

""

OO

vc

""

"A

"""
w
t^
4- 4/ 4- 4-

ON

o\b^wMt^v"

*OA

^OO*^^^"

*''**

"""

"A\0

f^\o
NO

IN.OO

ON

^O

T-J"
4-

"J" T"?

O\

O\O\ONO\

"

vo

\o

*"
ON

vooo

f^

4-f'*'*"r"

r^-^rONON1^^
t"*VO

oo

^
oo

(sj

v"

SNONONONONON"V

^nQoo*^
w

tn

u^OO

^t1 OS

"\

OO

ONONONONONON

ONONONONONON

o\

OO

^^^"
ONONONONONON

9^

t^-^O t"-^

t^*oo

t*-*oo
OO

OO

"noo
N

"

OooN.^*nm

VNO^OOOQ^
v*

Ot

O\OsOsO\OvOv

"ovo

"-t-^ O ^

^"oe*"wM"^

tnooooowO

"JONNMOO

ij 'O

ON

OO

"o

invo

'T

ON

tx

oo

^^

ON

""

APPENDIX
OS
"

"

so

f**so
N
Os r^ """
......"

V*
so

W..0

"o

ON

"o

fx

o\Ol^t^N*o

Os

to

309

to

tv

OO

fO

to

**"

co

wi

ui

os

frs f*

tA

wc4^"M

^^....*Cj0

......

,|,

to

w*o

|, j|

....

*O

t*

"

"" O

to^o
**" "* N

*$" O
rnOso""

NO

"

qs

d"*~dd(jv

OddOd
^WNiwS

l^so

to

U"i

so

Hlt7"p{1Hodfi
od rx l^-od O od

o\*

"o

oVod

OS

f"

od

IM

1^.00 od

NO

t/1

co

"^ 1

*^"""
ti. t^-t"

"?
^

t"

OOO

OOOOOO

OOOO'-'O

MI-IQO

I'fQ'OPP
*

to

O
(" ""

CTvOO

"J*

o\d

efsOpJooMM*

t^-oo
"4-

4-

T"- r".oo
so

NO

so

"r"\o

t^

"A

vtOO

CTV "*

OO

OOSOtnOr^r**

*"

N"O"^tN,wOs

Nt^"p"OO"i-p|

SOW

oooooo

oooooo

vr"so

"r)

^-

**"

"O

Ofl
OO

OsOO
OsSO

oooooo

oooooo

SOW^

^-WOO^-V^l^.

WMCOOst^OO

Ort"'^'^SMM

ONMSOSO

OOwOw1-1

OOOOOO

OOOOOo

Os

NO

^TI^QO
*^"*1XC|H;'*'*
t".od odod*odoVdoVdO

od od

os

^-TJ-totototn*

"o\A"OT}-4-4-*

sdrisoso*sd"A"A'}-'A"Ai*

xo*sd-""

^O

OsOO

cf\"l~oo b\*

to

"joogoo

"^t^

"T"O^

^OoOtON^

^OVONNO^IH^

"A" vn*

OOOOO

"

OsrJ-

t~"so

"n

to*^.to

"

"-"

"

ri

OspJNTj-OOu^

OO

o""" ^o

d
M

""

SOso.OO
rj-so

*" o"*"

*o "o

o^"?'o *o

Nt^NNtO

"*"

XO^^oosOoo

MMsoOto

WNN""HM*

MNrito

vo
t"

P"

"oso

oo

00

o" ?

o" o

to

t^

*^so

to"*~"*

ij-oo

SlSoIooo

t"

t^so

OO^^N

l^so

t^

OsOsONOOs

to*

NpitototOfi*

ripiwuMtoQ*

OOOOOO

OOOOOOO

OOOOOO

ooooo

y"

0080

^OOOO

SO

r-v

fitotototo

MMMMHM*
OOOOOO

2dd**6*

OOOC

000800

oooooo

T-

3OOOOO

u,

o"* o""" o* o' o1 o1* ?

so

"M"N

";o

o"

dt5

""^"""^Os

sotooot^to^

OvO*r"N'f"
*

"^Oso*o

^to^w^oot^

*^"

ripJwMMW*

W-^MMIKM*

oooooo

Ow

too

"w

tow

oo

osop

5"ooooo

H-,

oooooo

oootjrS

oooooo

oooooo

J=
fcJO S
.

K
*-

_.
M

j.
tt

b%oo

.AVM
"rv\o

"rtso
"^~"/^O"N"or^
t"oo
v7sMMMMMMMWMMgNNN^NNNNNW

os

to

T"- i^vo

txoo

Os

W.S'

"H

H-

APPENDIX

3io

"o

\J
"

so

\ft

'M

OSOO

HI

NriNtovovo

SO

SO

VO

OS

\O
to

OO

toso

so

VO
NO

so

^^
NO

SO

SO

SO

OsOO
so

so

"*"!

w^*

"

"

"

so

so

so

^-

SO

t^

Wrf

so

so

so

so

so

"^~

*^"A
.

....

SO7J-Tj-f"SOO

VOvoNVO

so

^r
.

so

so

4"

t^

NO

ON

SO

"

sc

so

so

VO^-tOO

to

A
w

CO

^"-

so

lx

""oo

oo

s"

NO

so

OO

so

so

NO

so

^
j

pj

VONO

ju
OOO"ONOsO"Os

tooo

d^dniVO

______

iov"to"o"ovsj

"ow"to"ovovn,

sosososovo

to

APPENDIX

MMMM

MMMMMM

4T"

"
O

"

S."SX"V"
1

._

^^

?iri

^2

MMMMMM

"

"0

OS

*0

""Ntxur,oOOO

MMMMM

"1

t^VO

vr^NsTv^qoO

WIVO
vnt^M

U1

Qw,
OOtx

QVO

OOSO
NN

5-io

irfitriirll*il

?si?i?

ONc^Soo

^ONOV

311

oqqo

i?

ooo'o'oo

oqpqqo

o" o^

bb'

moo

"A

vA

"

oot-*"*

ON

ON

ON

O\

S "?* ^"""?q

rt

ojv"

"^oo

("

ts.,

^SSSS00^1^
5

00

00

00

00

00

00

^- q ON
OOocj*^^

0"

OVOO

vo

OVOO

i".^ o^"^ur,^-oo

c,

o-.o\oVCT"bv("\
00

OOOOOOOOOOOO

Jo

q ypoo o^
f| M ti

ONONOVONOXON

lo"

"o

"oNpi"o^
OS

OX

0\

0"00

APPENDIX

3i2

"^

so
o
i".so

"i^o

os

so

""

T"-

"".

so

w"oo

so

vioo

*""^ON"

Exchange closed

of War

account

on

er\CT"
*"

"oo

oo

oooo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

00

00

oo

oo

vooof"u""*r"f*
ft

"00

""

OO

00

OO

OO

OO

00

00

00

00

vo

i^

r^

"

**

Q(

oo

oo

00

"

"^NNNN

"

oo

"

oo

oo

oo

oo

oo

O
00

r"

00

"n

"

00

00

oo

oo

00

00

00

00

00

00

00

00

00

OO

OO

to

oo

oo

co

oo

oo

oo

oo

t".

*0

so

MOO

00

00

OO

OO

MMM
co

00

00

00

*"

t^OO

tnu^o

00000000

00000000

00

vo

00

oo

?* *?-i*-T"
fif"w"
w
t

00

00

00

00

00

00

00

00

00

00

00

00

"o

00

rooo

00

00

00

so

00

01

00

"$"

00

00

APPENDIX

jj ""

*f

ON
tx

vo

"0

-^

*"

to

^vo

IH

vo

vo

ui

t".

vn

*j-oo

"?]}

OO

OO

t^

ddOMw

ti

MMriNNto

00*0000000

"O

-v

"*"

oo

VO

f"

oo

oo

^o

""oo

r^

tx

NtoNNfiri
oo

VO

oo

tOOO

oo

oo

"OVO

oo

oo

oo

*t

c*

oo^togOtoON
*^A

^*vo
oo

t^

t^

to

oo

Ov

ONOO
t*x t^

tx

toNcJNMM
oo

oo

oo

NH

"""""*"

oo

voONOwO0

ON
ON
t".

oo

CO

*J

oo

oo

*^

NO

t^

to
oo

o^oo

oo

oo

oo

r"
t*"

toO

"O
oo

^j- O

t*^ t*^ oo

oo

oo

oo

""VO

!"(-"
OOOOOOOOOO

C/3

"j

p
Q

tXOO

"

O^MOOOOfJ

t".t^MOO

1 ^

V"

*? *! "^t

0s

to

II

tOMOOtoQOO

OOM"OHX"O

"O

"n"

ONOO

t".M

ON

"*"'7VO)(I *"NtoONr",N^OO

'it

^4-

""!"

totx

-t

c\

txN^Oto ^O

rj

VON

""vo

"?

'Tf?

^"

OO

OO

OO

OO

OO

OO

OO

OO

OO

OO

OO

00

"O

OO

OO

OO

OO

OO

OO

OO

OO

OOOOOOOOOOOOOO-T3..4

5 "o

3
co

Jfl
ON

*"

ON
N

"

to

to-"

K.

bfi ?
o

I" I

APPENDIX

U-l

ON

U^

VO

C"

ON

IH

HI

Pj

00

ON

to

4
"*

4
T$-

" " " "g "

4*

oooo

tO

co
tn
to"otoN"

ST
O

"

tx

"''OO

oo"cri7-

"f

*" *? t^-""

"^VO

OS

"". i

pj *

pi
M
MNcototo

OOOOOO

"""
p|

"1VO

HI

to

co

to

eo

OO

H-

Tj-

OX

P"

00

VO

*J- "*" t~,

UI

"

"

"

ff
o

co

wi

'

i-**'*****

S1 "*

8 8 8 8

VI
0
^J-00

Up

HI

00

000

VO
p"

to*
to*

to

to

to

p"

p"

Ox

Ox

u-i

to"*"

co

to

PI

vo

vo

p)

oo

oo

co

OO

OOO

OOOOOO

co

TT^ vJ

^?
.

"f tO
ooooo

tO*

CO

rj-

UI

to
oo

rf TJ- ^-*
odddd

oooooo

q
vovovovovovo*
"oo

"u*"tn^

HI

CO

q up
t^vovdvo*

vdvdvd

i^,"*""* ^

t^-iC.iN.K"vovo*

t".vo

oooooo

oooooo

ooooo

oo

MMMMHIHI

MMHIHHI

HIM

Hi

MMHIHIHIM

MM

*".

t"^

uS

HI

OOOOOO

OO

y-" *

jo

to

to*

HI

to

ro

TJ-"

co

^o

VO

HI

00

to

to

to

4*

to444to

oooooo

oooooo

oooooo

tO

tO

O^OOOOOOOOOO*
OOOOOO

**.

"^MtxOSQt^
N

C?*f".
.

t-oo
"

"

"

MHIW

pj

to

rj- "n\O

9 *?""

MMHlMHlM

MMMMMM

MMHIMMM

Ox

2 JJ

VO

t"

00

00

00

6s*

H? M" M1*0 M"^H

tO

Ox

Tj-VO

uS

u-"

"

t^. l"

OSOO

u-i

"
4*

Tj-VO

Mt^

OS

t"f**TU?'*"^'i
4
M,

HlMMHIMM
MHMHMM

oo

OOOO

vd u1! TJ.^j.^j.rj-* ^

^^^-."^.^i

txOO

00

OOOOOO

OOOQO

OOVO

""

00

OOOOt^-t^OO

to

Tj-

-OO

OOOOOOT

to

u-i

uS

u-i

M"M

u-iOO
M

"\

4
M

%?

4?

"6
*B

CA

MMMMnMHin"

ft

to

"*" u^vo

J^oo

OS

M^M

APPENDIX

316
O

"ANO

"*"

00

u^ootoqoooooo^
t^ tN.
Q d O\ tx
OO
OO
OO
Q
ONOO
ON

""""_-

-j "!*"
o

*-"

ON
.

tO

j^

to-

Os

^K

11

ON

OO

ON

ON

ON

t~.^

ON

QS

ON

ON

O-

OO

"i

os

"

ON

d ^

-+-00

""
.

ON

ON

ON

Os

ONONONONON

VIOOVNOO1^!

t^OOMOSfs.

t~.tO^fO"nTt-^

O^"t~.NOOS

NO

C"OOt~.tOtOW

to

OO

f"

c^"" t
*fv?rT'?"crvoo.#
'^'C'T'T

f7-r*t*ri|H'^"
t7"1'oril-"*
ONoXosONONO*

"

ON

ONOsONONONON

MP"Mf"soON

^ 1 "^ *J 1
Nr^-NOsMM^
1
odddVo\o\

Os

ONWOOt/"t~,O
Nt^'X'htx

j
T^

OO

NO
"

"t- r"

tf|

VN

oo

fx

ooefsosodd

oo

**

"ONO

v^l

^^

tO

**

NO
OO
-f **?
"^
t* 'f

t-" "^
M
**
NO
*I
0
*

dodddd

""

T*- toNO
.

[.

NO

OO
oo

ui

t^OO 0
t^.oo

ddwdd
00

OOOOOOOOOOOO

NooOOrhOvo

-I

ON

ON

ONONONONOSON

ON

."..*.i|l-?".
O
^
O
Os

OO

00

OO

OO

OO

OO

osOtorhO"nj.oOtoso

ON

ON

t".

oo

l~.

t~.t~.tx

t~.*oOtoMr"

""

Os

ON

ON

^'t~"OONO^~NO
"
O
O
1H

tO^

IO

OOOOOO

topji-j^

tx

NO
N

"$"

W1

"0

to

tx

t".

tx

VTINO

Os NO

os

ONONONON

JJ

NO

NO

t^

txoo

NO

f"
N

w"

OO

NO

OOOOOOOOOOOO

ON

oo

"A

ooONOQ

ON

|,___
oo
oo

*:

f""

to

"^"t"Q*
[, q^

t".

oo

NO

.,

.JWINOOC*

rx#

so

"ONO

NO

"N" M
N
N

00
"

NO
OOOOOOOOOOOO

QtO
NO

NO

O"00

".U^ONM

_^"

ON

ON

CSflO

ON

WNOO

..".."v

ON

ON

to

"""""

T1^

"

q
NO

!"".
NO

ON
N

to

00

00

OO

"n""oo

Q
q

t*

ww
00

CO

tooo

OO

Osvo

OO

"s"

CO

00

00

00

00

00

00

OOootO'J'Ot^

e
-"

3
0)

ft

^
"

-i-

APPENDIX
O

VS

4-

co

O*

Os

4*

rj-co

CO

so

so

OO

OO

OO

CO

so

oo

w"t

Vi

SO

"H

so

vi*

so

so

f*J

so

so

Wi

SO

IH

oo

so

vs

u-\

l^

so

t^"

^O

VI

CO

oo
so

"**~

so

VS

OO

*$" "st
so

so

OO

so

"""

U-)

CO

t""

"ocoo
O
co

cooo
"o

IN

'

oo

*o

oo

'"soO
Ostow

t-"

*
"

O
O
w

""**"

osco

ift^

t^-oo

"

ft

fi

ft

oo-ui

Ovv"3

"

"

p ^
rj N

"9^

""*"

to*

to

*I ^

co

^-

to

to

"";

,0*

"C1 "t"1

*ic?Ql^"H""

^""

cocofoNNN

WNNMN

"""

NtsJ"N"sirs!

oo
so

-;

--

QQoocn'i-

t". vri\O

O
so

NpjNMM

NNN

VI

Os
sooo

VSsO

OO

"**"

*7 *0
"*

"

"

O
t)

""*

"A

OO

oo

soosw

^*Tj-ts.OsO

ro

VA,

't'^O

^-COM

OO^^^OOO

d"dd"""!"*

dddddd*

t^tHOMpJiH

NMNNXW

NNNMNN

MNNNNN

..

WMMr"

VT|

c
C3

^^

t4o"

NM
MN

NM

CO^

(SjCOwOOOOt^.

tOl^CO

OOOv

")f"toOvOsO

00

VO"*

^}-Ncovow^

cooo

vnso

Ofs^OOOHtrf-

COOsOOt^^-O^

"""^CTvd"*"d

.OOQ
"lOSOs

00

00

00

00

O
oo

CO

rj-

"o

t".

t^.

(^.soso^Oso*

"*

U^OO

IH

COOONCOtO

v,Noo"noo

"o

tA*

v"

q
so

q p

"^

lA

"C^

so^itovnvn

ja

O
.

"

"o

rj-

Os

"

co

"

60*

b.

fc

"*-

APPENDIX

*!"

.MOO
toso

J\
["4

.;

OO
OO

OO

OO

O"
so

"jr

t^V)

^~*

1""

P"

^" "?oo

t^.

OsoO

"

t""

O
OO

rt- OS

to

to

to

T^-JU to

"^so

ON

oo
"*-,!(

pj

**

PI

pi

Os
r". t^

Os
Os.
t". l".

**" P"
M
"#

Os

5^^

to#

t-1

OOOOOOOOOOOO

OO

O
00
t"" OO

ON
tx

00
00
tv" t""

Os

t^oo

IH

t-.OO

"*

^OO
"

"

"

.^

OO

OO

to

P"

"

p"

"-t"*-t"

OO

OO

OO

OO

OO

OO

OO

OQ

Q *; T

*? ^

OO

OO

OO

OO

"
""!"

I-

p"

OO

OO

OS
t".

OO

tOWt^SOlHt^

OSSOA

._

-t^

t-" O

"

."

ur

"'^i
OO

1-

OO

TT

OO

ri

OO

r"

00

OO

oo
dO

Ol OO

oo

oo

OO

P" so
P)
SO
PI
PJ

oo

OO

OO

OO

OO

OO

P4

tO

OO

t^

pj
PJ

OO

OS

PI
^^

to

OOOOOOOOOOOO

oo

00

t^

tO

t^

V\

**^

^*

^"

^jt

00

00

00

00

00

PJ
PI

OS SO
p"
"SJ OS

*^

to

Pt

t^"

Os^

OOOOOOOOOOOO

OO

1"*OO
^
PI

00

O?

g
to

f
Q
z

pi
OO

OO

OO

OO

00

OO

p"
00

p5
OO

o\so

to

PI

00

00

pi

to

OO

oo

oo

oo

oo

oo

oo

so

so

00

00

to

p"

""^

ci,T"

"?oo

Tltr

Os

so

10

00

00

"

*^SO

**"

^J ^

PlPtplpitOtO

oooooooooooo

f^ O

OO

"^

q:
pJMMHMM

toso

OO

OsSO

.TO

l^"so
**"" w*\

so

jk

p"
to

tOM

oooooooooooo

oo

oo

oo

oo

totoNw

N.^

00

00

toto'ftototo
!

00

00

00

00

00

00

00

OOOOOOOOOOOO

t^

oo

"A, vA
00

OO

OO

OO

OOOOOOOOOOOO

00

00

Os

OSOO

^-

"n

vo

\fi

00

00

so

OO

uiso
"

tvoo

00

00

f"

p"

Os

O
\r\

00

tr"

"r"

"Ai4-4
00

00

00

oo

oo

oo

oo

Os

Pt

4*^
00

00

to

to

"*" u-iso

t^oo

hfi

APPENDIX
rJ-OO

v"

Ov

OO

tx

"$"

tx

00

ix

lx

tx

tx

to

\o

ON

OO

"*

to

Ix

tx

v\

COVO

*1 *? ^" ^

"C1 *C*

MMMMMM

P ^-t" ^
MpJfJ
to

**

.O

"lM

I-"U^OOVOMO

NOoOnoo

t-O

t^-t^vo'fo\q
ModcScJM*

"t"t^"o'^1C'c1

"";"".

OOC^OOM

r}-^

-"

00

*
M

\o

co

*"*

"

Q3(4

""

"N

"^

OO

ffvOO

OO

"*oo

^-"OOMM

^om

^Mu^Mvoto

I'O^T0^0'?*
*} "O "J""n t"

l*?^^0"?^*
P-f" P ^ P P
WMp5rJ*NNNNMN
pi

to

Ntn"'iOo""*

Tl"!""!*ff1v^*
enMtONNci*"o"oiN

P"^P

NNNN

NNNNNM

NNNNMN

"NNNNN

NNM

MHMM

MMMMMM

MMMMMM

MHIHHHH

**

l-"

o\

O
...

WVOO

VO

"O

t"l

HI

\O

""

MOOO

^VO

OvHIHIVOtx

V"OH"HIU1M

OO

MM

c"PvClcClci
f-J

*ooo\dddM*

cyv""c"oooooooooooooooo

fcjoo
",

tx*

wM

"i-O"^H"NN

ooN"Mr^r-"

i^oo

oo

oo

P
oo

tx\O

oo

t". rx

NO

VO

"^OO

"^Tjo

vo

WOO
*

vo

^"O
f^. ti. tx

oo

*0
oo

OrJ-

VO

OOflooOu^OO

Tj-QMOOto'*'

^ltO

*" T
oo

\o

^J. N
tx

tx*

OO
vo

VO

txvo

VOPJfjON
M

tx

OO

tx

CV

^.*

CO

OO

OO
OO

OO
oo

..

OO

2*

""

41

"

ffi

APPENDIX

320
O

to

Qw

r^
d

O
oo

O
O

t^

"*-vO

oo

oo
*O

"*"

txoo

oo

oo

"I
"f N
^ "". *
"I"00.
5rxo"rt"A"^"rt

";

'-1

oo

"2

oo

so

"

oo

""

^
M

v"

tC.oo

M
oo

oo

00

00

ui

oo

so

oo

oo

tO

**

to

OO

ov

"o

Wl

oo

oo

oo

oo

oo

oo

f^

"""

"*

'f*

oo

c^.oo

oo

^N

C^

oo

oo

I*.

t^OO

OO

"*

"1

"*"",

NO

oo

oo

"Ai"

oo

oo

oo

OO

oo

oo

oo

oo

oo

Vt

oo

06

oo

oo

""

"0

rntoN

^-

l-^OO

to

^*

^* ^oo

oo

oo

oo

oo

OO

OO

**"*

Os

00

00

"^

*0

""

*l

oo

oo

oo

t*"

O\OO

"*

**^

^o

^"

**

O^

""

f,

oo

^o

txtN.JxtxlN.tx

OO

oo

"$"
w

^o

txtxtxOOtN.

*J

^oo
"*"o
N.\O
lx(".txtN.t",tNi

OOOOOOOOOOOO

00

06

^k ^

oo

d^"^txt".

00

ooo

*N

O"OO

SO

oo

"?\

GO

ooooootxtxtx

00

00

*? tn*

-I"

"4--i-iA

oo

oo

"H

oooooooooooo

oo

OOOOOOOOOOOO

00

i-i

Mddww"
oo

to

oo

oo

^,

CJ" *"- to^j,

JN.

t^vo

^\ cKoo

oo

""*

oooooooooooo

oo

oo^

""

00

^j.^.xAiJ.trv'A

oo

oo

M'M

**"""

*o

oo

txtxtxtxtxOO

oo

,00

oo

""

AMflM

oo

't'^

*0 *0 """*

"

to

oo

tf d

O",

oo

r-^oo

**" N

M
oooooooooooo

ddoOM

OM
""ico

I"

r^.

*^+-

l"*"

tx
tx
"^Ol".t^t"it"txt".

O\

oooo

oo

**?

"*t^

oo

"vo

*t-

^"0

oo

"A

oo

OO
***

O
O

oooooooooooo

t-"

oo

oo

oo

^.vo
O

oo

O
""

CKQ.0

oo

ve

00

00

00

to

oo

00

t".

00

00

SB

7
"%
18

S.

MCtMNMf)

tomflNNtO

*0 *t* ^
^^
**"

"

2
'^

fx\e
fx

vo

oo

oooooooooooo

oo

rj-vo

OONVOM

T
oo

oo

oo

CTV*

oooooooooooo

oo

oo

oo

oo

ov

c"

oo

oooooooooooo

oo

c"

oo

-r

rv

tx^O

oo

"

ooo

tooo
OO

""

o
oo

u^

so

tO

tO

"-i o

rj

ri

rj

IN

MMQOc^d

CTS

CA

o\o\o"

"n

N
tfloo
CTVVO
tXJ.

^"^^v^tOraM

N
-"

^oo

"*

"*"

o--oo

ON

to\e

OM

M(J\tOH*tXW^

tOtOtO

tOMMNMM

NMMM

vo

IN.

oo

oo

oo

*"
odoooovotv^o
oo

oo

oo

oo

oo

oo

NOO

oooo

oo

oo

oo

^"OvOf"tN,t"-

fTQ^^0?*
OO

OO

ri. t"" tC. tA.

O*

O
r".

ddd"

oo

CTv"rtf"'*-

IT

oo

oo

"^^

oo

Ov"o

WVO

O"

CTV

"?"

o\

o\OvO9"

t"(^Tp!'*'
to

J-*

tOtoNtOTj-rt-

CTS

Ovc\

oo

tx

O
OOO

0s

oo

"o

tx

*O

O\

*4" (^

OO

fl

SI

P ^

toONMl^N

^.

OQO

"t^to
tog

Ii

""A

ON

Ooo

OO^OOvNKff
*^"

oo

ooo

oo

^ON'?^^*?

"Op"w""vWr"

"^^^l^*
tx\O

NN"-"*
.

"t

e?v ^t"

NMI^MVO^.
*O

OO

qvoo\M"(

^^

-"

oo

'

"9"C* oo

'*-v"

t^

|N.^"

"*

*T

T*

^\O

T^

INOOQ

APPENDIX

322
oo

NO

oo

NO

NO

0*6^
ON

ON

ON

+-

'-'ON

NO

_.

"f' o

ex

"n

ee

*? 1
r^-oo
ON

Os

to

o\

"-r

oc

r}-q
H"M

ON

to

oo

r".

MI

**"**"*.

NO

w
oo

oo

ON

OS

Os

l^oo

t".

oo

vo

bVoo

ON

Os

Os

t"- b"NO

oo
OS

oo
Os

IH

oo
Os

""i

ON

oo

ON

"f-

to

*f "? T"

't **?*"*"*?"*!*

T1 1

Os

osod

ON

osOsbVQ"OQ

Os
Os

ON

Os

Os

o\

Os

ON

"NJ tOOO

t^

O1^

I*. "*"

4JfTl"C"

"^Q^^jPH*

"vOQ

O^OOOOOOOO

oo

Os

oo
ON

""

^"1^
VO

u-ivo

Os

oo

ON

oo
Os

"*" r^

"j.

"

os

9tOvc3'"0.00,P"0'?00.00.vnv^.f-"

oo

oo

Os

Os

"N)

oo

"0 *? *? P
Os

oo

Os

Os

"""

to

to

oo

^ ^

oo

oo

Os

Os

to

"o

oo

c?-, o-

o-

Os

Os

Os

ON

ON

e"

to

ON

Os

c"_t7-oo)oo

"P00,

00"^NMNO

'^"Q'C1*0*

*^HtQHlw?f^

VOOOOOOQ

OO

OO

OO

OO

"J"i

^O

ONVO

"*"

**9 P

****

VN.

*f*

"3N"*^
^^

"^

"5

"J

t)

OS

*"

*i* O
w^Ov1'^^*.

tnvo
r._

t.

O10

^O

*o

ON

ON

tnoo

^"ooO^O(H^

O^

CN

ON

ON

ON

,_

ON

ON

ON

ON

ON

O^

ON

ON

ON

ON

C^

tO

t^ O^NO
ON

ON

ON

^N

O\

Ow^cStoMtv.t-^oo

^^-^rt-tnTfON

ON

NMOMf^o^^N

to^O^N

to^O^^t^f^A

t^N*'**^^*^

cototocjN
ON
O\ O\

ON

__

CO

oo
ON

ON

OON

NOV"O

oc

oc

""""*""*"*

**"
_

_^"

vo

*"^*

N"

*!

o"

OOvON

03

oo

P, 1 ^

oo

ON

^'4-T^\rvvo^Ov^N
ON

ON

ON

ON

o^

ON

O^

ON

^^S ^
f*5. ". M.

""

N
Os

N
Os

"*

*f

Os

ON

z
""N
M

t?

"t-"^OOONtOPJ

NONNtOO^O

to^,

t^.N
*O

OO

^^OO

to

"

"S O

^J-iri^
M

"Tl-NOl-IOOU^M

ONONOSONONON

OOOOOOONONON

NC

"^f*Pt^'o^ei0."oo.tn't'oo.H!vo4|f
d^^OMH
M
**
Q O Q
B

OO

t^

"JN"

vo

"0

ONOO

OO

t^
ON
i
osr^j_j_"

"

wU^rt-MiONO*

"

OO

OO

OO

NOOOOOsOw

OO

..__._._

*OO

to

to

NMMMpjN
OOOOOOOOOOOO

SNtONWNN
OOOOOOOOOOOO

to

*"" OsNO

*~"

oo

oooooooooooo

"I *?
M

OO

OSOO

ON
N

torftotoON

00

""NO

Oto

NO

tONO

OO

*? T

oo

oo

00

OO

OO

"n
OO

MOsNN^t-

1 ^

*"*

*i

"S

U1NO

00

oo

CO

00

*! ^
NO

00

00

NM

M*t~."i-"'"

t^oo

oooooooooooo

OO

OOr*-NNOtO

OOOOOOOOOOOO

oooooooooooo

oooooooooooo

OC

tONtOtOtO""-

toN

oo

OOOOOOOOOOOO

MNM^NMts)
OOOOOOOOOOOO

oooooooo

oooooooooooo

I-

WNOW^NO^-tHON

-_-_-___

OOOOOOOOOOOO

OO

*1"T#

j3

.|. t

t^-oo

OO

OO("

OO

__

OO

OOOONO

w~

MMMM(Nt
ONOSOSONON

ONONONONONON

O"ON

Jjf "A

OO

^"O^^t

oo

oo

oo

t-"

oooooooooooo

Si-J

APPENDIX
"n "s "?^",

0
*^

iX

'zj

vA

JJ 2 ^" ""

r"L ^^

""!

r**i*j

M2222

M*

OQ

""

""

"

OQ

toooooooMfn

CTN

o'0v^)it ^
M*''*

0**

"

CT^

CTN

"

N'SN*

"

'C1'?"^^

p|

MMMMMM

,|"

2 9 Y?^

"*(

oo

ON

"f

O1^

22222

j^"

3
.

^"^^J
tq

vo

ov

q PJ vo
"","" ^

L 5" 5S"

P"

P"

Pt

^oo

""

JN

OVMI^I

"i""5

MMMMM

sj"vo^-toM
""

vovo

\ooo

T? ST"
MM

^U

""

MM

MM

pj^j-iovooovo

^topjtopJPl
MMMMMM

NP4NPJNN

"*^d

MMMMMM

MM

"^

^*

00

b\To

o,

oo

oo

00

VO

t~.

tx

0X00

NNNNNM
MMMMMM

NP1PJNNN

t^.oo

^vo'oo'o^

oVoo

oo

MMMMMM

to

^^

222?M1M12

9"2'f?''^*"p}

NNNNNPI

MMMM

O\

q
oo

"

...

"*"*

0V

000*

MM

MMM

yj

...

O\

MMM

Ntotoro
MMMM

2.P2

"\*^

5T"S"StS"S1 {?""""

15

^"P"o

"*

*c

"

O1^ Q\

MMMMMM

tototototoco

oo
"

^^

2 2 2 2 2 JT

2^
2
MMMMMM

MMMM

"
"

OO

*t

ao

*
"

OQ

222222

s"1"?
2 2 2*

oo

323

ooOO

oooooo*

1".
o\oVd

oo

M"".

p"p"""tototo"ow
MMMMMMMM

p"toO"Ato"o

v^

PINNPIPIP)

P"P"P"N"N"iNPlprN"

MMMMMM

MMMMMM

oop"

tf"

^5p"

MMM

MM

to

^j

^m

NNNNNPI

NP"P"PI

vot^vovoM

"*pjpjp"pjp"p}p}''"
MM"

MMMM

.OOOMVOVOVO

i0^

^^

NNNNPIN'

""J"N^Nto"

p"Ntotot^

IOM

MMMMMM

MMMMMM

MMMMM

MM

tooo

"^vo

^Jvot^votovdvo^votovotAvovo*
X

""MMMMMM

o\

"n

"ovo

"ovo

"ovdtxt^vovo'*oo"".ooodooox*

f"

MMMMMM

MMMMMM

PJ

MMMMMM

MMMMMM

MMMMM

OoOMVO
oo

t^-txvoosvoio

t^-od oo"**""1"*

\oto

rvM3

oo

oo"*

tooo

^
o,

oV osod

oooo

Mvovorjpito

OVONMVO

^-

TJ-VO

PJ

PI

1-1

OO

t^ tx*

"^ip""^r"p"N

vifiatoMto

toto

qtx"?o^toto

pjMtotoooo\

"^^""^"

OlHN'n'*wlverx00"*v2*Nr**n'*vrive*"oooxOMM
MMMMMMMMMM""NN"N""'S""0

ir,

OOMMVO

MMMMMM

""^^r-^ovu

C""

to

MMMMMM

tooo

O,VO

(A. t-.*

tO-^

APPENDIX

324

00

00

j"

t*

Q
*

ZN

t"" **" OV

f^

tooo

00

OO

00

00

00

00

*C*"

"6

OO

j|

"

^-oo

"o

00

SO

IN

Os

tx

Os

voooc

O\O6
u-iso

"

vo

so

vo

vo

so

t^

odos

o\

SO

so

^ ^

U1

00

00

OO

OO

OO

OO

OO

OO

00

00

OO

OO

tO

**^

"a"

vot^N.

00

OO

"*

t~~ *f\

T1^

i".

r".t".

OON
00

00

00

0000

00

00

*r

"

vo

OOOOOOOOOOOOOOt-*

to

OO

"".

"?s to

oo

oo

oo

so

so

so

so

"n

t^oo
vo

r^

tooo

b*

so

so

os^

00

so

so

00

""

00

00

OsCJc5v"s
VO

ts- so

"s" oo

vo

00

00

oo

oocfsdos

tooo

so

VO

OsMQ^MVO

Ol"-

C^- t"kVO

t^so

OS

"i-

HI

tooo

t".

so

so

so

so

so

so

so

"

(4fiNNNl'"s7s

tOtONWMM
so

o*OQTt7'0^v"?

h!fiHlT'?t"*

4-"'l"'l'"i-'i-'iso

so

to

00

00

ooo6o"OvC)

odo\o

'^"J'fl^'f*
so

"-

00

00

00

*f.j_.j_0

oo

^- "o
^
^}-"Ad

"n^

'-"NNCO^-'i'
00

00

00

00

OO

voot-"

""o"rt'J-ovo

o\

osq^oooM

oo^-^-Ovto"O

^Tt7"l09f!"
MlHlNtOfO^so

OO

OO

"*

00

OO

V^NM^OX^

Wf^t^
\o

OO

00

to

Ovoo

(si"

so

f^

"*

*^o

q **oo so r". 'f^

tC.t^ r^.oo oo oo

rC.rC. rC.

OV

"^O^O^^O^'AMN^
citONNNN
vo^^-topjw

00

00

OS

oooooo

*r

**""*

00

00

00

ex,oo oo

"

"*

t".

OO

to

Q"OI^I-IOOM

r"tnr^O"oo\

O"t^

^i

00

OO

OO

oooooooooo

cooooooooo

00

00

"/t

OO

OO

oo

00

00

OO

00

00

OO

t^

^^
^^"j
t^K.vovd'o^o

"

t""OO

Os

00

*?P"

rxt^.t".t^oooo
00

"*"

vo

OS

"sl OO

^"0"^

OOOQOOQO

00

OO

"". *? t?"*
-f ^ '^ r^-

""

.-t"

00

00

SO

SOSOSOvovosOvn

OO

NNtO

Os

"*

J3
tD

tO'-

*
.

APPENDIX

oo
'

fj q

co

t^oo

v"

vo

to

t""

-t-

"

oo

rj-oo

f".

oo

"*

to

w"

"

q
d

q
d

'"

"

tnoON
ri-vo

vo

"\oo

to

"

.wvowi

"g

to

to

'"?v

._
O"1"

325

f"oo
o

*o

to

OOOOOO

so

vo

t^oo

oooooo

t".oo

vo

vo

vo

to

tooo

t" *" ""} T

OOOOOO

OOOOOO

"ovo

r^vo

"",WIOOM"O"-!O

OMOO'-'O'-'O

vovdvovovovo

vo

oooooo

""

p"

t.v

"*"

'T-qoTi-iHtn

t--oo

vovo

^. Wv\d

ds

oo

oooooo

oooooo

ooo

**i

oo

r~

(8

oo

O
oo

"ovo
w

o"o
t".

VOV"J(^ti.tC.ON
o""
oo
oo
oooooooooooo

f^s

t^i

'i-^

MtoOoooo"*w
O

t".

toOMOoo"o
H

oo

oo

Od^MtHp}

QQ

r"\

ON

ON

wu-"ONN^

^^

(4

ON

"4

("

tovo

0\

OOO

OO

OOOO

OOOOOO

vo

rJ-0

ONVO

oo

tON
ONO

OOOOONO

OX

ON

vo

MooOii^tOto4to4tO

o\

t^VO

OOO

f*

OOOOOOOOOO

dd

wwdNpito

4v'"iA4"A"'"

OO"

OOOOOOX

OOOOOO

OOO

T3

.2

"5

326

APPENDIX

"j

VO

vo

Ov O
U1VO

ov

t". rx

C/J

i")

"3

vo

vo

*J ^
6
M

*"

too

oo

t".

{". "x

"

"f

ovoo

N.VO

oo

oo

vo

oo

h-

M
oc

oo

O\00

""

"flji,

r~.

""

r^oo

ox

to

.9

T0

txvo

oo

ox

oo

-H*

"

f^oo

oo

"

....

ovoo

oo

vo

oo

r"

"wo

oo

Ov

vo

"ovo

oo

oo

Ov

ON

*oo

i".oo

"ooo

MM

""iu-iu^

9''t'l"!r!99"vo,9

"?'!" *0

oo

^J"o

\o

tx

^j-ju

(VlMOOOM

(VI
oo

00

"

*?"f

Ktv.iJ-Mwvo

""N

"

ts. f"

vo

v"

rp^_oo

tx

Ovoo

*t"+- *?*?**? *t
oo

..("'.Ooo

"S

"

oo

"0 *?*

"

."

f"

tft

t^vo
""" t~.

MOONMVNM

t*!^

h;CJv"^MNrj^(

MMOOMM
oo

O\

oo

oo

Ovoo

oo

00

oo

lx

O^t^Nt^

tr"

MOOOO

MQMMMM
oo

oo

t^.00

oo

oo

oo

oo

Q
oo

oo

oo

oo

oo

"noo

Ov
t^

(4 OO

OO

tx

r^oo

txOvOOOO

00txt",tv

oovovi

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

oo

[,"'
1

5
^*

oo

oo

oo

06

060006060000

Q.^

oo^ot^^o*^^

9N OO

OO

OO

OO

OO

*Avcs"i"^'OMt'"
OO

OO

060600000000

000606000000

OO

OO

OO

l**"OO

OO

OO

OO

OO

OO

OO

0606

oo

^^i^t^-ooo

oo

t^"* t**- C^

(-".

oo

Si.**^
C*1 t-*

t^s OO

dder"O
Ov

v"OO

O\

II
M

"| "|

4"

"rt"O

txoo

Ov

"o

"

Ov

x
.

'

APPENDIX

ox
00

VO

*$"

"*"

PI

ON

t-. r~"
00

t^-vo

00

00

00

00

00

t^

t".
CO

"O

NO

vo

00

00

327

t-" t^oo
00

00

*""

00

tOOO

ox

oo

00

00

OS

r^oo
OOOOOO

t-"
00

P"

00

ON

o\oo

oo

00

tO

tO

vo

CMSO

I*

'

00

OO

00

00

00

00

00

00

00

00

00

CO

00

00

00

C-

"^

,.^0

"Sdd*
^MM

f^Qf"

iHrj-N
*

oo

't *
""o

"

00

00

00

OO

OOOOOO

OO

M-"-ciMfiN*
M

MMMM

OO

00

OO

OO

00

00

OO

"".i;^
dcJs

"
.

O\OON"O*
SMMMMM

OO

OO

00

'

"1"

NMOO

*-oo

t".oo

MMMM

vn

\r"

\f"

v\

to*

P"P"MP"MM
NNMNcoN-o.;;

"

MMMMMM

G"Q

ON

"

fc

C^coeogo

^3

c/"

-I-

APPENDIX

328

.,;O

oo

goo

PI

to

tx
,

r-"
M

p"

Ovo ON

vo

T^

vo

vo

ON

ON

ON

ON

ON

P"

to

to

ON

ON

ON

ON

ON

"

*0"

""

*7"*^

-^

H^

t"

ON

""

"*^oo

"^"

"n

*$"

t~- O

oo

oo

oo

OO

IH

"? ^*

vo

vo

vo

^" ^"

ON

ON

OO

"5

OO

OQ

O\ON
OO

"o

to

t^

wi

*0"

vo

vo

"o

^-

*" 9
^ vo

ON

ON

ON

ON

ON,

ON

*? 'I T

ON

ON

ON

ON

vo

"o^

oo

iA""A

"*" O
"nvo

ON

ON

tooo

t-"

'J 4"

*?

vo

vo

vo

ON

OO

t-^oo

NOON

O
"^"0
vo"A

to

ON

"!

ON

ON

oo

oo

to

^
to

ON

vo

1*1
NNM
ON

NO

9*

^2 *f 9

to

*O

vo

ON

ON

ON

vo

*? "^"^

QwNOO
ON

ON

ON

oo

O^t^vovooo

QvnvONOpjvo

OPINfO^Oto

NtOtotOpipj

ONONONONONON

ONONONONONON

NNNNtoto
ONONONONONON

OO

IH

Q,

ON

QT^^lQ

Os

ON

ON

ON
OO

oo

t** OO
oo

oo

vo

lx
OO

t^" Is**
oo

ONON
P)NO

NIH"H^"i-"H^

t^OOOPlTj-M*OOO^Ot^^""

t^NO
OO

ON

**" N

"^ O
"j-vo

"nT(-t^rxOO

oo

ooooNOwwto

rtOlH^t-Ot^*

N
*

ON

IH

*? 9
ON

ON

txO"n

rp PJ oo

d^to^ovooovo,
Q

ON

O\(^OSO\O\O\

vo

ON

ON

O\O\O\O\O\

ON

oo

ON

4-"ovri"Ai"Aivo

9 f*
^* "^

c^MTt-TJ-^j-

oo

tD

NtnTJ-^^io

I^^O

C/i

"1 ^

wr".toNO

to

VONO

tO^

to

ON

vo

**"

to

ON

oo

NO

t^
vo

to

"ooo

""$"

NO

gtfH

"

\5

T}-*J-

ON

ON

oo

..

vo^
l^x t^

toto

to

ONON

ON

vo

^t"

toNO
ONOO

i"

S,"

ONOO

ON

NO

rioo

t4 t^.t".vo

ON

ON

ON

ON

ON

ON

ONOr*-ONtoO

ONONtOtO

N.

VOM

VO

ON

tONO

OO

txOO

MM

vo

VOOO

t~. VO

-"

*0*" t*

9t?v^w?eTt"*4"

910?*?1?*

TPIn

"*"

OOONONONON

OONONONON

ONONON

ON

COM
yO'roo)i(
"*

"

vovo"^vor^
O\ONONONON

t^NO

oooqqpi
ON

ON

ON

ON

ON

t^

"ONO

OO'HpitoN*

T'C' "0^
NNNPINIH*

OOOOOO

OOOOOO

t^-^ ^^^^x*^*

oot^-ooONOoN

VONrJ-toQ

NONOt^

VONO

NO

"/"?

"-

APPENDIX

330

""*"N

"
^

OO

OO

OO

to

OO

oo

Os

tONO

^^^WMM
", OO 00

fsiwNpj

to

OO

co

OO

SO

OO

CO

"*
O
N
OOOOOOOOOOOO

OO

t^.~

"s|

00

CNOO
"

ri i^

jfc

10

T^'*

t".t-"!t^t^

t^.

Ct
OO

d
00

Os

^"^

i/*,

Ov

inNO

t"" "o

OO

OO

vs

toso

.fc

f*NNP"NN
OOOOOOOOOOOO

"") N
00

Os
OO

O\

t^

It

ft

ft

Osso

ON

Os

tO

rj-

in^

,5*dwM"H
"R.I

(5

OO

NO

*l

t^t^

.00

to

Os

oo

o\

\n

"ooo

OO

00

ON

t^

OO

t^

oo

to

voov"itot".N

OON

t~.#

tooo

Nt^OsMoOt^

P"i-i^-Nt".Os

NI-IOOOOWN^

O"^'f'*N00*

tO

O
OO

tO

NO

MNNNtOtO

rf-so

fv^

VO

(NJto^u

00"^tOP"tO

^.

^- "^"NO ON
totototo^-

jjj

OO

TfwSO

ON

tC1(^'^0^N;
"A"A
lAisoNO

"^" j.

w.oo

OO

ON

VO"A

NO

,,.

tp
"

"^""t^NOOOs
OO

^-11

4-vAi

4od

OOtoQ'^NNN
ONOO

ON

NO

t^i

f*

CO

OOOOOOOOOOOO

4-

OO

'

t^t^l^t-"t^l^

vnm

J3

Os

OO

vo

d^oOVO

(4
CO

oo
to

WINO

wtOT^-t^Ow*
(t
CO

OOOOOOOOOOOO

oo

"*"

OOOOOOOOOOOO

'*"'*"

u-"

ri -i
00

(^

to

r)

OO

to

00

"$"to

"7

t^

to

VOW

M"J*
sod

odd

Nososo^t".r^.

to

toso

r^

*"" t^No

oo

"S3

II
Os
^to

J3
OC

".

tO.2? f

APPENDIX

to

8
""

OX*

3toN

"

vo

OX

"!" "n
to
0

ox
ON

t^tot--vn

pj

"*~

""

"""

OX

*:

totototototo

totototototo

"*ioo

OO

OX

rt-ao

vn

"("

to

to*

tova

oo
N

t^"OX
M

"^'^*"qpJv*ic*v*T

tooo

MNMNKM*

-"

d""dc5"d*

ddd6"N*

NNNMHO

MNNO

totototototo

totototototo

totototototo

totototo

\a"ou^OO""

NOvi".Nto

'f *0 Q

""""

towtoo\to

torj-OMtoox
**" "C1^

"^

r-~ t^oo

*T T

OX

*!*
T
fJt^.

NMH*"*1

totototototo

oo

vn

tO

t-%M

MNMMMO*

toN

votorj-

Qvovn

tx

txO\dOxdd*

to*

to

tototototo

ox

OOxbvOO*

"

vn

oxtoq

^-vo

tPtnvTe!A"0ViJ
tO

t?^

Ixoe
"*"

rs. ox

MOrow

"00"""^

\---v

^
"j*

MNNNNW*

*
M

Ntototototo

"toNTt-Tt"

Ov

*j-oe

vrt M
OO

vo

OX

33i

"^ 1

\o

tooo

t"

to

T"^

r^

o^oo

"o

to

"n

Kl

*T T

to

"

wirj-o

tooo

tjvo

"o

u-"

00

QTl
,

"J

""

oo

to

^oo

VH

in

t".\O
10

v\

to

t^-oo

dd""dd

wMpipjiHiN*

NNNNtOeo

totototototo

totototototo

MNMOvNtA
tOtotONtON

WMM"MW

MMHH"M

HIMWWWM

"000

to

1*. t^

00

P"

4-

4- vn*

0\

"r"woo*VO"A

to

vnvnvnvnTJ-N*

tototo

ON

"JJM

00

JOV9

00

Os

"%tovoo

W5

t^.t'.rit^.dd*

D"A\Avovd^s*

"NNNNN
M

to\o
ootowNN

oorl-"O

t^oo

totototototo

totototototo

NNNtototo

ooootot^Mt^
oo

tooo

r)

^- "**" T*-*

r*-"*~*

to*

^.N
*^M

vn

to

^-vo

"

NNNN

NNNNNN

NNNNNN

NN"NNN

MMMM

WMMMMM

MMMMMM

MMMMMM

'

vo

"22
MMM

"

iH.M*

fS

M"

Sr*

N
i"

1
O

J^OO vo'?WONtO
M

ft

00

"*1y"5

v"^

"?~

oo-*-

4-5-jivovovo*

"^""o\^vovn*

o\*

oxo

t/"t"""'*'t"

OOtO"T*-OXOO

VO^NtoO'*

t^oo' oo' o\
5;o\do\t^o";oo-*
^Q
MMMMN

tototowoo
vn

vo

oo

in

"n

oo

M
"

oo

^t* oo

to

rt" O

tx*

t""

oo

^OMNM*

"M(4NNN*-1-NNNNf5*

faNNNN

NNNNMN

NNNNN

N
NN

MMMMMM

MMMMM

MM

MMMM

OvoNooto

in

cd*
cd *
""

"

*H~
T"

-^

oo

oo

"frq

oo

^Li*L*

MVOtoOOHT ": ^. ^

vnvntJ-MvoOx

'TT^Noxrt"^.frC.t^t".KLoo*

oo

oc

oo

oo

to"1"

rj-

vn

vn

oo

oxo\*

oo

vn

vn

to

MM

MMM

*f "1

to

O\vo

tx

"*

*0 1

*; *?-

"? P

q q

txt^oo

OxO

rh

txco

oo

yn
M

S-

MMM
MMM

"

to

rf

vnvo

t^oo

MMMMMMMMMM"c"N"C"OI"MMNtO

ox

("

"o

vnvo

ox

tog

",
C3

33*

APPENDIX
tO
j

"

P"
N
N
(N. t~- t-~.

w*

*^i

tO

OO
N
(N"VO

FN"

w
00

to

ON

VO

"".

4*

t^*

VOVO

VOVOts,

C" VO
IN. M
"o
r". txoo

4" 4-

\O

q n
1^-00 CX5

vo

VO

**

vo

VO

VO

VO

V""

00

t^

tx
00
M2

"H

4-

^*
00

00

VO

VO

00

OS

*^oo
VO

VO

00
vo

ON
vo

CTs
\O

Os

t".\o

toVO

"N

\O

vo.

oo

to

03

"?"

"

vo

oot^ovovoN

r". t-"

9ivovoq"^

cl*!";1^*
300000000

oo

oo

oo

oo

^
Ov

OO

O-.OO

"

"

"ovo

*"

**"

to

"

op

oo

^-

to"vo

"

oo

oo

oo

t-, r~,

r^.

^^"^"^"^"^

ooONQoooNvn

OOOOOO

QvowON

oo

oo

t"

t"" t^ts

^^"^B

vooo

t^-oo

VO

tO

Js,

ON

tO

VO

VO

r"

to

oo

VO

CV)

NNN

O*'

^- 4.

t-5

N.

VO

Oc?vCr"
t^-vo vo

t"

wNqqvoNt-.
ON

*"h;'HpvoO"vooooo

H"

t^OO

ONOO
SO

oo

oo

4. 4. 4. 4- "vj

APPENDIX

""oo

r-^*

so

so

so

oo

to

to

4sd

333

so

so" vd

"A "A-I-*

"o

too

t.

ox

to

MMMMMH
M

"

"

so

to

vooo

r*.

t-"

t^. T}-

o\

2" *f ^ JT !?
2MMMMM 2 2 2 2

-7
"

OXSO

v"!,
" 2*

S"

^^
if
M
M

MMMM

tOOO

2s 21

"

OOxOOM
M

N
ox

"O

N
ox

to

to

oo

r^so

c"22

tx

oo

voso

v,

so

"^

H-

t"

"

O\

ON

MM

MMM

MM

M
to

VO

N
N

to*

to

ON

ON

OX

5-vo^vo^.

ON

to

to

to

oxoo
oo

i^

scs

oo

t^

r""

OO

4*

*""

"n*

tO

to

t%*

to

vooo

''i

"ovo

ON

to

"*

vo

f*.vd

to

to

"C1 *

to*

4- 4

"n

r".

t^*oo

to

oo

vA

Z
ox

OOM

^.
oo

^.

to

06

"o

oo

OtowO"*

"" "f"t" "0

4 "A "A vn*

^"?"1^"?
vd "A "Aivd

ooooo

NT^MV^MVO

OO'^^Mf^

Mf^pJM^fNJ*

MO

OOOOOO

OOOxOOO

ONONONONOXOX

to
MMM

oooooo

OxOOOOO

to

MMQ

(or^NOoo

cj"q
tx*
vo

OOMO""O

OOM

ooooo

^-^v

q oo M
4 to 4
dooooo

QOOOM

OXONOXOXONOX

O
so

to

to

VOOM

tlvodo5-N ("

oooooo

"
vo

to*

OX

OXOXONONON

OX

vn

OO

voOoxOOXM
OX

OO

oo

MMM

tovo
ON

ON

MM

22S200

too
to
ON

to

oo

MM

ox

so

oo

MMM

"A

MMVOt^
ON oo

tx
"

f*
N
oo

MMM

MMMMMM

tovof^^to

OO

*?"
ti.tC.*
O

+"

MMMMMM

300

t"**

M*

"?
so

MMMMMM

ff.

r^

MMMMMM

MMNcjro

to

tivd

MMMMMM

t^oo

os

^
"*

MMMMMM

OOO"AOX

"sjto

5s2!JI!""
"^o

"o

t^.sd t^,*

MMMMMM

22222

.O'^osOMQ
bt N oo

so

4 4- 4
w"^HIMM

NMootort

.MW

vd r^sd

odddf*

"

topjoo^ooq

"?"".

MMMMMM

S* ^C1^

xd

(4

2^

N
t*.

to

1"?9C1S"C?"

OO

"

C*

to

MMHMMM

^to
*

ON

OXONONONONON

"*5 t",
OO\

OXON

ONOXOXOX

OXONONONONON

vo

vo

ON

jj

OXONONOXONOX

so

so

ON

so

t**"so
ts"vo
ONONONONONON

vooo

os

vo

vo

so

vd

so

vo

ONOXOXOXONOX

vo

vd vd

vo

vo

MVOOOOt'"O

"*OU^ONO""

4"'"1'i444

"ovd

OXOXONOXONOX

OXOXOXOXOXOX

OXONONONONON

ONONONOXONOx

vo

ON

O". OX

voso

")
t.
cxososoxoxox

voso

fNOO

OX

**"

OX

OXONOXOXOXOX

tovo

tooxtx"""MO

r^vo

t.

vo

(x

MOO

so

OXONO\O\OXOX

oo

tovo

t-oo
oo
OXOSOXOXONOX

vo

"ooo

Ox

ox

ox

f"

to

tovo

oo

Tt- tOVO

vd vd vd

oo

to

oo
ox
oxosoxoxosox

tO

"OVQ

OX

"O

r^

VOVO

(XOO

OX

fxoo

to

",
oo

l".

o\ vr"
oxON

J3
**

OsOX

OX

ONOXONOXOX

toMvo

so

to

t^.vo
ONOX

OXOXONONOXOX

Mtoto4tovo

tOMSOtO

Moovoto

vo

vo

so

ONOXON

MQtOVOMOO

t^SO

feONONONONONON

vo

so

OXONOXONOX

NNririiHM

MOO

voso

"~"

so

ONONONONONOX

SNNNtoN
OXONONONOX
O

t^

OXONONONOXON

OX

M_ b"

"

APPENDIX

334
"""

o
NO

NO

"

..

*?

(C.tC. tC.NO NO

NO

OO^M

NO

"

i
_

P
10

""vo

vo

T}- "^NO

'T'00."". *?"*i

"

\r"

v-t

SO

to

to

tO

00

OX

OX

OX

OX

4-

"

V\

"

NO

NO

NO

NO

NO

veoO'ooxu""

"rt^rtotoMto

*"TJ-

U^TT"

m""vrixn^"-u^t^f"

^^"^.^.j-^-^-a.

OOOX

MMWQO

"3

OO

OO

OO

eo

oo

"4"

"

OO

(v, t~.NO

NO"A

OO

00

*"r"t".OtoO

oo'i-u^t^iios
OOOOXOXSOOO*

MOOM

"-, OO

OXOO

vo

00

"*"'"""

(X.VO

NO

NO

*oo

"o

Wl

XNNNVOMOO

I^^OOOOOQ^

WOXtO^H^Wjj
NO^}-^^Ti-^}-

\T1NO

MVOQt^t^ooO
O"HMOOOOOV

cJwNO^O^

H
CO

t^
*o

oo

covo
m

sc

so

Ox^
so

"

t** to
-1-so

*^
w"

oo

c"

Oxoo

OO

NO

oo

NO

"n

so

NO

OX

p"
N

p"

b^

^-

rj-

tONO

N.

OX

fi

NONONONO

iSOVONOSO

NO
NO

so

so

so

so

so

so

so

so

so

so

VOVONONO

so

rj-

tO

so

l^-oo w t
4 "^ T^
NO

NO

NO

so

so

so

so

so

NO

oo

NONONOVO

.?$*?"?
r^- txvd
NO

O"*

"

NONO^

oooototo"H"""
tooo

r^toNOO^vo

WOxotoOx

oxOOt"-

trtoo

Oxoo

*oooOA

"*" *

""NO

*OMQoototo*

tx

NO

NO

NO
NO

ONOt^

NO
NO

vnvo
oxtotoi/^oxxtow

oo

to

ox

,^

^"2*

""

to--

bd

"

CA

ffi

"

4-

APPENDIX

335
000

00

""

w"

VO

Ov

*f *T"^0

4J

Q *t* ^ *i
MINWO^^
*

OMNW

OC

oo

OO

"^""

3vo

"iwiHtoNO

1"

""

O^OCT\OS"

Tf^

^^o

oo

oo

c?s

10*

Oi

*o

IN

oo

0^

^"

""

oo

^00
oo

oovo"*"
oo

oo

oo

Cs

CT\

^o

oo

to

^ijj

CO

Ot-~"""
p"

o\

"o*

OvOCT\"i""Os

vo

^^

OsOSOs^OvO\CNQO

oood"ovdvovo

OON.

Ne^f^NNN^Ov

OOOsCsO\O\O\

9 "". T

"o
N

^.

^-

OO^WtOM

to^o

*" "C^
^f*

tf*

t^

K.

HOOVOU^M

Wi^O"Os^

T0"?

Cv

*J *0

O*rop"OO

t~*
.

OO

00
"""

Ov

O*l_"^t^'^
Q t100.*
1
"

bO *?*

OX

^ *"o **"* 1^*00

""c"^d\WM

C\CTN^v""iONoo

LJVV^NWN

"x

NO

"

OO

*T"o

t~

"~en

OO

""'1-O

Nwootowvo
"/i ""*"f"

vor^.

oo

os

""!- w^

li

r^"o

iv.

oo

oo

oo

"7\

s
i"

"

I? o

SSoIoo'o'

VO^-NlOO

ffv^v ^voo
OO

^"wri-Ntnw*

f^vo

^o

t^fc \OOV"""'""'V*H"
vd rC. "r"vo ^d"o
r^,t",
OOOOOO

OOOOOO

nMMw

**^ oo

*t- N

o1 o" o""?"o o1

o"

"*

c%

t".

o""1

O\

rh

oo!

*^

"n"o^-'f"'"
OOOOO

U^xOONOxOM
t^tONfOOW^OO^t**

"^O

000008

oooooo

**)

OONOOO

OxONO^
"

o" 2 o1

^vU%"r"NO
t^xovxoo

f*

^"oo'"o

Ox

ox*

^f^

oo

MO*

Ox

*oo

"

"n

"II

APPENDIX

336
f"
("

too

ft

f"t

fi N
N

so

so

so

"

oo

OiA
2 SO

so

to

"+

"siN

so

so

so

vo

""

t^

ox

""

"*"

*J ^ti

rf^^i-N

r*-00

V"

VO

HI

so

Oso"O\oiri
so
so
so

so

so

"o

t"" M

o"

ox

ox

*nvo

so

so

SO

SO

o"

*T a^^". "J1^.*
d M
M
9 Q M

*J "? ^ P
TJ-w
"j-vn

"^ *^**

t-. o

so

so

so

oo

"

ox

so

t*"

t^

rsi "N

t^.OO ^j
"i-ro
SO

SO

so

so

""5^
so

so

C5

"H

ox

to

to

SO

so

^"*?

so

so

so

"Ai^

SO

so

so

'sO

ox

*o

'i'-f-1

so

so

^^
"^ *t"f
vo"A"A"A"soso
so

so

so

so

so

"^"

*t-

so

so

"

"O

so

so

"^

CO

so

t"

"

"O

so

so

so

OX.

-i-4-

so

tOSO

""

SO

SO

so

OX

"+"

"O

so

so

so

SO

so

so

so

so

tx

*f

'*"*}'*}"'}"

so

*O

so

so

SO

so

"c

so

so

*O

so

^D

"""

"

*?*

sO

'

so

so

so

so

so

so

"T

"

SO

*#"

'

so

so

so

so

SO

SO

T
SO

*4- O

sO

so

so

SO

so

so

OX

""$"OX

to

-4- -f

"A tOso

SO

SO

so

SO

SO

SO

SO

SO

so

so

so

so

so

so

so

so

so

so

to

so

t^

*"

so

**"

t^SO,OO

'T

"

so

*
VAOO

votA^iosovoto
SO

OX

SO

h"

"^ ^?

^
tod

""

("N

t~. "*

OOO

COM
V"

"^" M
so

NN"

^}-vo"nsosOv"3
so

*(" r"- 1^

o"

r"w"Nr"N

t".Nt^O^O

r)-OO VOsOlJ-

f"

"rt

so

so

so

*04~
SO

tj ^

""*

so

lv.sO

SO

so

so

so

SO

so

SO

*l

SO

00

SO

in

"

so

SO

OO

"O
so

t".
so

**"*

"}"
SO

a
H
CO

""

t"

o*

f*.

so

t^so

SO

W1

9
vt

t^

^5

so

IO

so

"OSO
so

"S

so

so

SO

SO

so

v.

so

so

to
.

so

so

"

so

so

so

SO

toso

to^

so

so

so

so

4"

so

so

"^
so

so

so

so

so

so

so

oo

so

SC

so

ox^OvriNM
N

so

to

so

OX

*O

^^A

SO

so

tO

SO

to

so

SO

to

so

to

"

so

sor^

*i ^

*"1

to

SO

tO

SO

SO

oo

oo

so

SO

SO

SO

MJ

so

so

so

so

so

Mtvx

OO'l'4'fto
t".so

*r

so

so

toso

t^"^

m
so
Tt-t"N

oo

*O

t-"

to

tO

to

t^tooooo^-oOjn

so*tr"M

*too

^"

^*

toso

to

*t-

1 ^"."". 9

"rso
so

so

so

so

SO

QMIOW
O
to

so

so

so

so

oo

ti

to

to

so

ill

so

SO

t"-

"'

TT^O
so

to

^^J"^~
so so

r"

P
SO

so

to

so

so

""

("" f*

oo

"o

*A

toso

so

M
t

so

so

so

so

OO

wso

HI

^" "? *? *"*

*O

MO

*A

to

V\

*O

t*

t~.oo

SO

ox.

"^"^
*O

tooxoxOtooo^

so

so

O
*

ox^

so

OX^

*O

"""

SO

Vi

wr*oosoooOx
w
tooo

"

p"

"^ "^ Q

*O

**"**"""

so

so

so

1
SO

tooo
^xOx"H

so

tO

os

so

so

OX

^T^r^T^*o^
so

so

soo

so

OX

so

so

SO

"tt

so

SO

soso

SO

f^SO

*o

s 4"

SO

so

so

oo

t^ txso
tOt^OXHltosO*

SO

**"*

so

SO

txso

to

oo

so

ClJM^
i"5

HI

V^SO

so

SO

.;O^""N"*

HN

oo

*O

OOtosO'J-

eat^l*
^H

ox

*?"" *".

"n

^MOXVO

S!

so

fi""^t?"J"
SO

so

*o

so

so

ts.se

^
so

tn*
so

so

so

so

*"f ^*
so so

*o

so

*o

so

to

so

"o

so

^t
so

*"* *vv"
*"i'*'M'*19L
*
i.**_i.'_i.

OXP"TJ-

t
SO

to

so

SO

so

so

so

SO

SO

SO

SO

SO

*"" "^

*^

**"

".

i-iA,p5""ca

so

SO

SO

so

SO

"Q

"
SO

1^00

OS

tO

IOSO

txOO

OX

tO

"f

"OSO

tXOO

OX

Ol

J=5
Ml

CO
*
.,

72

1
HL,

+*

APPENDIX

338
"" fx

P"

NO

XH

r^

NO

NO

NO

^OO

txOO

9 ^ 'f *?*$""
t"NO"A'*'^}-tn
Q NO NO NO NO NO
*J

*"""

IxNO

NOSO

NO

NO

^-

NO

t*l*O

vim
NO VO

NO

NO

*? ?

*""^ 1

NO

*?*
wlt"tn

V
NO

NO

NO

NO

NO

*"

MM

NO

NO

tx

tx

oso

N")

f^OO

NO

NO

NO

VO

NO

NO

SO

SO

W^VO

so

vo

NO

N"

rxOO

pj

pj

NO

VO

p)

NO

NO

so

NO

SO

NO

NO

NO

NO

NO

NO

NO

W*

I~.OO

NO

NO

txso

nO

pj

"

NO

NO

NO

IrtSO

"*"

'foo TJ-q
^- .f ^- ^-NO

NO

so

NO

to

PJ

NO

NO

MSOVO"^

**
"t 1 Q
^^
"o"o"'""A"A)"A
NO

tx

toso

NO

NO

NVO\O^-O"CTN

"" T "^ "! ^T01?*

"Aiir"ri-l'""r""A

NO

SOSONONONONO

""

Q"

"r"

OOtxu^M^N

"*" p" NO

NO

to

NO

NO

NO

S3

oo

tx

NO

RNO

SOSOSOSO

txNO

1X00

OS

"c,N""r,""c"NWW;g^

"S fe

T3

"

B!

*"!

APPENDIX

oo

pJ

to

ve

"

o"

"? *? *? ^

Q*

to

co

"

"A

vivo
vo

^"

*4" *$" N

",,

t^.^

to

,_
*^"

vo

?* Q

"0 *""

vo

to

ui

ri- ""*" co

oo

vo

to

w"

"JV00,""; c*00, "^"

p" "-i pj pi
M

tv

w"

t-%

r^oo

oo

*}"N.J^ ""J"^ *} "

"""
pi pi
to
to

MVOQoOMrt-

u??'?ver1'^' *?*

oo

to

totOto^

^-tOtopitotO

r^i

ro

TJ-u-i

\ft

l^i

pj o-"^
-4-

f"OO

t^""

p"

^"^^t'

"^

moo

ui

oo

oo

^"

*t*

""".

ft

^J'^

q
O

""
to

*AW

OO

to

Q^

oo

t".

t^vo

OO

PJ

OO

to

l^^to^-vo^
ti

.^.vci

vo

vo

vo

"joo"o

to

ON

^.

oo

o"oo

00*0000

^O

2 o"o "" "o

to

t*

COOONO'-IW

MI

OO

tO

O^

*O

oqoor^vooo^vovtsq^-Of*
ooddddd
oVdwdw^o
O^5MSwO
o""5SM

OOgOOO

oooooo

H? )? 2"

OO

CTvvo^ooOHi^
ooooooooosoV

000000

O000o"0

Ptot"fi*

^MvowinVo
o

tOMOeooow^

339

S S

O* O*^ S'o'o'

S "''o

So

'OO'O'M'O'

^-"( u\

u-i

"rt

10

"n

^f "f TJ-VO'vo* t"""

*f *

t".vo

vo" vo

^vovnt^oONO

oo

"5 o1 o

oo

ON

o"

o""

to

to

o' o"o

o"o

5^

to

to

tOju

OtS-l^n"NO

.M

Osvo
c

to

j_

t^vo

P. ^^

OO

"rt

i".

"o

't- r^OO

'foo

t"-vo

"A

t-."""tovoOvf^"

meow

d"rfvot^dd*ooc?"cvoooooo

tod

t*"\o 4"

vo

'

^^

oo

"

"

"

^0",

^0

to

P"

^j-

^"vo

o\

os

os

Ov

M'

*0""

4)

"

M'^

oo

*"

"

"

os

ONOO

os

os

os

os

os

VO

"So"

^" 'f "C1 P

"

^"jj

"flVO

irt

oo

^
-

VO

os

ox

^'*

"osP? woo

"^"
11

5"

MOO"O

od^d"*~fil"."""

tO

Ov

VO

OS

""

t^.^

*"*"q"oovo

os

o\

"OOO

os

o\

ON

"tVO

.^

^
ov

os

*O

S"

g"
"**

"o
a

APPENDIX

340
10

tn

"*

wi

t*" p*ao

T*

*?" T

vo

r-

(_j

"

""

NO

*j

o\

vo

so

fooo

vo

t~"
""

oo

vo

4"

so

NO

NO

to

NO

10
so

*i"" f

so

to

to

^o
vo
os

r"
N

^t4- oo\

vo

r^

os

"n
oo

"^
oo

""

WOO

to

oo

M^

*^ P

"

.o

so

so

rv

*?"1 *". *! *^** "", P

oo

tx

i".

T* ^t~T

"""

to

os

os

t^oo

*J"*

*"^1i.

"j

oo

oo

OO

oo

tx.

oo

SO

^3

so

"

oo

-t^o-

so

*o

"s)

"ooo

~"

to

f ^

so

so

oo

*j

ovoo

*? *0

vo

""

NO

to

"ioo

*i*1

*r

*"" "*"

",

v*

*? 'f"00,*0 "?t

?"

r""

oo

oo

tx

Os

(^

tx

OO

OO

OsoO

I" I

I
oo

c/3

J-j

CJ

O
z

""

"^OO
i

OONONM
l~-oo
OS
"^- O" VOSO

vovo

tovowx^r*
*"
w
O

^n

""

"

'J'^f

NO

SO

t^-OO

ON

tO

NO

vo

vovovovovovo

tovotovovnvo

vovovovovoio

tovovotovovo

oooo

ooowiototo

SOOOONIOMOO
tOSO
OS O

vo

o\dsd
o\dsdoooo
vo

vo\O

^
(^

OS

10

vo

Os

*se

t".^

OO

so

oo

to

"J*t". ri "C.

oo

oo

UM

NO

^O

c*

so

NO

NO

"*-so

so

so

NO

NO

t^. tisd
so

NO

NO

tOOO

ON

so
.,

NO

so

so

so

NO

SO

so

MwwtoNw
NO

NO

NO

NO

OO

Os

VO^

oo

NO

NO

NO

NO

sdo

NO

VOVO

SOM"SJtN.ONN"sJM

P^^PTPP11?

^^PP^^i*

""s"q^-OO
so

NO

NO

MVOOOVOI^SO

t".sd t".sd

^^t^0^*
sd^*i-to*j-T}-

^^I^P*
oosdtxNONd
so

II

toOOvrfooso^

JJtOoooo^
NO

to

OO

NO

WOOtOMMQ

NCxtOONMOO

NO

NO

"wM"tsid
NO

so

so

so

NO

vo"osio

-r-

so

NO

NO

^-Ti-^j-^-iOT}so

so

so

NO

so

so

so

NO

NO

tototo
so

so

so

io"iNO

NO

_rt
"

t"o

r*- "^so
VONO
"r

6C

APPENDIX

APPENDIX

342

to

OS

O"

in

in

to

to

tx

Ix

tx

tx

tx, tx

vo
;

Ir

**^

f^

*n

OV
tx
oxxo

^- "nv6

tx
tx
vo vo

IxVO

vo

vo

to"

06

vo

Vivo

vo

Ov
O

Ix, txOO

f"

*^#

oqooMqxjfVOTj-wtoq

JJVO

VOtxtxtxtxtx

tx\O

O^OtO^O

**"

""

5* "A

t!

"*

|x

vovovn4-toto

pi^j-in"nvovo

^-vo

**

to

v\

ON

tx^

OtTj-NVOMM^OOONOXtxNq^

ov

(4

^oo

\o

tovo

vi

ui

ix

o\vo

rh

ox

to

tx

^^

PI

vo

vo

vo

vo

VO

vo

vo

vo

vo

vo

CN
vo

oo

to

OV
VO

too*

tx

tx

tx

tx

tx\O

tO

oo

IxVO

rf

xC

ox
vo
txoo

._

VOVO

ox

ooO

tovo
o^oo
MNOOVr"O\

tx^

WMMrJNN
vo VO VO

MMMHMM

H-"

r*- ^J-oo

'J- ^

"n

Ov^

tOOO

NfiNtO^t-

tOMNNN
VOVOVOVOVO

tx

00

VO

tnvov

oo

OO

vo

txtxtxtx

VOVO
o" to

to^

tooo

*nvo

*n

JO

tx

Ov

,1.

OXOO

tx

tx

in^

...

"

to

to

rj-^, tx

"*i

f"

to

to

"n^

txtxtx

"H

I"*

to

OO

tx

to.[T

tx

oo

tx

oo

vc

oo

qtoq

VO

VO

\o

VO

vo

vo

""

VO

VOVOVOVO

vo

*O

"
J3
to

"i- mvo

"x.oo

f^

to

^-

invo

txOO

co

^+

invo

pn

*^

ft

^^^tni

NHtOtO^*T^
VO

pv

VOVO

tooo

oo
ox

txoo

Ox

""*

b"

6.
i"

"-

"o

en

"

"

+~

APPENDIX

"

os

o"

""?
^i

to

"SJMH(MOO

oo

oo

ON

oo

***
oo

ao

tx

to

343
O

tx,oo

oo

OQ

tx

v\

tovo

Ixoo

to

so

tO^w^fr"|NJeo

ONONIX.OOOSSO

^i-sovOls.^

topi

oooooooooooo

to

"*""

ui

VN.VO

ON

to

to

vn

-^- o

coootou^ooso

Ou^vsoooovn

d^OOOsOs

ONONQOOO
is.

tx

00

00

oo

00

00

00

00

00

""

00

"r Q *

00

6
00

to

o-

so

't

O
*

00

00

t1-

*t

pj
00

t"

'f

oo

"

oo

"0

dOH

IH

000000

00

""

^5

OOOOOOtH

tOOO

oo

tOtOtOOV

NMtOtOtOtO
OOOOOOOOOOOO

fv.00

to

*" ?

ft m
M
OOOOOOOOOOOO
"n

vi

t^oo

OOOOOOOOOOOO

OOtOHQ^ts.
"*

v-iwirj-ri-Ti-

C5d"*"M""

OOOOOOOOt^tx

XJtvONVO
^ *? * 1

to

"ooo

"

OOOOOO

OOOOOOt^OOt-.

oo

o.
5*

"s

^-

t~,
oo

^o

to\o

to

to

P "0^
1*0^*
is.^ovo'OTt-T^

IH

to

OOOOOOOOOOOO

VO""

vivo'o"'i"A"Ai
oooooooooooo

oooooooooooo

OOOOOOOOOOOO

OOOOOOOOOOOO

"

"

00

T}- 4"*" 4
oo

oo

8"^,

oo

'

OC

00

00

00

ooo

\og^o

r"M
*

"

O^M

"OMO"WTj-^

tOMMtxtOO

r"voto"rh

OOvOooQto

o\

ooo

wvovo^^d'NO

oooooooooooo

OO

*r

^j-vovd\d^o^o

0000000*0000

OOOOOQOO

"

^PPP"

"

*
OC

VO
""

QQ

ft

APPENDIX

344
VOrJ-VO

vo

00

OO

00

T^
\

OO
vo

OO
vo

OO
vo

vo

vo

vo

vo

vo

ON

r^.ON"
4-

*J- vd

9"

Ov

vo

vovo

t""

to

*?-|" "? Q
"A

IN

OO

Ox

OVOO

vo

vo

vo

xo

vo

oo

*~
tx

"*"

"""

vd

"^^o

l""

"OOO

OO

q ov
t^vo

"".

*JOO
vo

OO

OO
vo

f*
Ooo
t". vooo

f"

to

OV

OX

O\

vo

vo

vovo

vo

t^
o*

r^

VO

vo

|,

o\
VOVO

et

"^ ""
d oo
vo

vo

ON

"^-oo

w^,

OK

"

vo

in

l".^-

vdvot^.

vd"o

**

ON

h"O

r".

vovdvd

vo'Ovo^o

"T?

rtvV^o^ooQr'*
oo
r".

jjn

vo

^9

t""oo
N

M"OM
^*"o"f^oovJ

to

oo

oo

"noo

"

SV^

oo
vo ^e
oo^o"ou"w
"

"". vooo

"

w-i^ym^rv^"o

"

r--^

OOVONNOO

NO^

"o

"o

in

"n

".

T*-IXJ

"*

"o"o"o"n"o"'"

O
.3

oo

*"

"

oo

oo

w"

N
o

"-i"n"A"A
v%"o"'i"'""o
O

.^

^ fi
Jl"

"o

I
"2

OO

S(

IH
^j

"o

lr'"i"n

vn

r^

-"

i g^

^oVONONONd

x^t

*.

N
VO

VO

VO

OO

dONOxdO

'i'
M
^

tx

to

vo

*^
""

t"Ovo

'*"
*

APPENDIX

to
i

Tj-

to

to

MM

(NJ

'

00

00

00

00

t-"

ON

OO

to

"N"

ON

ON

ON

ON

VI

tO

ON

OO

Tf- P"

t-N

"

vo

ON

tv.

"V

OV

tO

ON

OO

DON

"0

"N) OO

Vl'S-

v^*nvn*riiri\o

-vo

r"

vt

"

oo

oo

vo

r^vo

v"

^ to^
Tf-vi"AiviviVi
tovo

c*

v^vvv^v^vjto

"*" O
00

"*

vi

t^

vo
NO

o
""j-vo

to

oo

vi

"o

'f to^,

tn

ON

"

Tt-NtotoNN

ri

"OIOI/^VN

ON

to

"ovo

"O

VI

VI

ON

CS

ON

ON

_._..*:*
.

ONONON

ONOO

OO

ON

OV

ts,

NO

tooo
M

"*"""*"""*""*""""""*"

*'*"

OVVO

^_

ON

Tf

Ov

oo
vi

OV

ov

oVoo

vi,.

ON

OV

f^

6 6
O
't' T*- Tf

vNVNjV^vri1^*^

o
p"
l^OO

OOONONONONON

'

.#

NNMMWQ

lo1^

J?

VO

tj-oo

....

II

NO

tO

OO

TfOOO"*NfNj)"OONON.j_t".MJ|lOOTt-

O'l-fr-VOT^T*^*?'"!'"!.'"!*

*J- Ov

VI

OO

oo

00

ON

-t"
ONOO

NO
ov

ON
tO

t"

Ntoc"NNpj

""

ON

'"a
I""OO
000

f"

to

**" V"NO

fxoo

Ok

ON
ON|HWMMHMMMMWWNNNNNNNNNW)

"

"*""*" VINO

KOO

bfi fe

APPENDIX
ve
Tf-vo oo
ONVO
ON PI
u

"

vo

d
vo

.T*-

""
Z

**"

vo

Tj- O

"i- ON
^

vo

VO

*o

vo

vo

vo

vn

to

"T Q

O*

O^

vnvo

"?*
oV

"? *0

9 1

O^

ON

ON

ON

ON

ON

vn

vn

vn

vn

vn

vn

vn

"n

vnvovo

ONOO
vo

ON

ON

t~- vn

'*U?1C|V?P!

l^.OO

vnvnvovn

vo

vn

't ""!*

"/"

to

ON

VOVO

PJ

PJ

PJ

t^

PI
vo

P"

N
vo

vo

N
vo

t~s

O
vo

""

ON

P "?

^^

oo

"^-nOOtovn

QM

to

to

vo

to

vo

NO

PI N
vo
vo

ONj"*0, 1^1*
tioo
ON
ON

J2d

O
ON.

oo

d
vo

347

*" *^ t

*i 1i

II

TJ-

*"*?

\OVONONOVO

'S

ON

C3 JK

f"OO

ooOeovitow
OO
t'OO NO

,[.

Ovnwoowto
N

j||

Mt^ooO

"

"^

"^

'

*f"
"

wTfuoo
i^"O

OootoMQ
O

vo

tovo

vn
to

tooo

vo

vn^

Tfoo

ON

tovo

"

PJ

vn

'

to

'

("
l-l
*~^

PI vo vnvo
vo
tooo
N
^i *C
f
*^

e
C

!",

Th

vo

vo

vn

to, #
f

v*" vo

ON

tot".q

""

^Ot*-toOM

"toto

t".VO

VOOO

*"*

T0^*0^^

""?"

vo

"*" *^
^

.VOONPlPjut^
P"
*f O

o-oo

rx^

tOWVO
vnvo

^tototopipipi

vovnvn

t^"

"--"

vovovovovovo

ON
ON

vn

TJ

"0s4?

vn

vr.

"O

vo

OO

vn

VO

vo

vn

to

vo

OO

*1 9

rj- ON

l^VO

oo

ON

'? *f *""*"*

vovnooQuoo

O^ "f ^J-^
TJ-TJ-tOtOtOtO

vn^

4~

ON

vovovovnvovo

-j-

vo

*" 9

J-"H
jnoo
t". vr" js. N

tONWWwO

"o

vn

t".^

Nt-~oowONO"VOMOtoON
JiJ^MwN

Jo

"0 c^"". T

jn

t^.

vo

fevnvovnvnvnvo

j_

MVOOvOts.O

O"-"ONP"

c?l"!1tt"'!"ri*

pipipj

to

totototototo

"

ji

oon^"(

"?'"; "^vo vn^

fcJfipiMNto

vovovovovovV;

CTS

TJ-

oo

vn

T"-#

vn

vn

vn

Noovovotw
oo
^

i^

-."

.p

".-.

^,
f-

tow

P"NP"PIP"to

totOtOtOPIN
vnvnvnvnvovn

vovo73.^

vovovovovovo

jg-H

ffi
4|(

fj
txOO

ON

"

"o

T*- VOVO

t^OO

ON

"

bC

"

""",3

INDEX
"A.

B.

C.

Aetna

of Stock

Fire

Speculation,"28

Co., 105

Adamson

201
Law,
Agriculture, Department

Alexandria,

Egypt,

of,

panic

47

1907,

140

Amalgamated

Copper,

35, 50,

89,

221

Anaconda

Copper, 223
Bridge chances, 145
Stock
See
Averages,
Averages
Babson, Roger
W., 52, 197,
theory, 53
Auction

Barrens,
Baruch,
Bear

237, 250,

His

251, 253

Bernard, M., 66
Markets, 45, 254

Boston

News

British

Company

British

National

Bureau,

35,

Debt,

222,

233

84

Law,

199,

2OO

Dow,
Dow,

tops,

Reserve

H., 21, His

of any
market,

Charles

4; True
first description, 23;

His

theory,
14;

His

panic

dates, 25, 269

Economist, London,
141
112
Elijah, Mendelssohn's,
Bank
England,
of, 167
Act,

Farmers',
pool,
Street, 47

121

193

Jerome,

K.,

Jerome
Jesurun, "waxes
Jevons, William
Keene,
James

"Line,"

of

10

fat," 216

Stanley, I, 116
R., 94, 107, 147,

l82, 221
Lefevre, Edwin,

148

II,

accumulation

6,

32,

or

82, 172,

Lincoln, Abraham,

bution,
distri-

250

217

Listing, 82
London
82
Exchange,
McKinley
Election, 82
minor
Manipulation,
importance,
cannot

49;

50;

make
Where

primary movement,
possible, 50,

234

165
Marathon,
266
Margins,
Marx,
Karl, 163
"Matched
Orders," 85, 229
Southern
Michigan
corner,
J. Pierpont, 17
Morgan,
Daily, 6
Movement,
Major,
5, 40;
"

Il8

dates,

43-44

191

48;

System,

Flood, Mississippi,33
Floor
trader, 76
Fluctuation, Daily, 6
Ford, Henry, 165
Forecast, successful, 32, 252
Gamblers, 67
and
Gambling
morals, 265
George III, anecdote, 79
Gould, Jay, anecdote, 67 ; 268, 270
Greeks, 165
Hamburg
panic 1907, 141
Edward
Harriman,
H., 18, 212
Harvard
Chart, 122, 208, 238
Hill, James
H., 18, 141, 212
Huxley, Prof. T., 194
Interstate
Commerce
Commission,

51,

32

Jones Averages,

Esch-Cummins

Incorporation, 83

Federal

192,

Bucketing, 77
Bull
Market, 31, 32, 44, 256
Addison, 149
Cammack,
Carthage, 163
Chile panic 1907, 141
China, banks, 167
Clearing House
Certificates, 121
Consolidated
Stock
Exchange, 271
Coolidge, Calvin, 257
Coxey's Army, 214
Curb
Market,
84
78,
Customers,
259
Davis, John W., 257
Definition
of the Market, 65
Dolliver, Senator, 8, 46
Double

Federal

and

Wall

Primary,
"

see

Secondary, 5

major

National

Bank,

City

Nelson,

S.

28,

A.,

Non-Partisan

29

Stock

League,

Alexander

Noyes,
Overend,

26,

panic,

41

161

12,

ure,
Fail-

118
Panic

Years,

dates,

2;

113,

256

Theory,

S., 128

Sereno

Prediction,
all

98,

1903,

knowledge

99;

Business

42;

138

bad,

Rea,

Association,"

Samuel,
Cecil

Rockefeller,

J.,
John

Roosevelt,

D.,

Unlisted

102,
Silver

ii3,
Short

Sims,

94

Act,

all

Steel,

United

averages

194

Group,

8,

41,

States

themselves,
barometer,
56

Exchange,

closing

232

4;

ficient
Suf-

40;

of, 174

Journal,

255,

169

G.,

Allen,

Woodrow,
War,

191

251

Louis,
Xenophon,
165
165
Xerxes,
Wormser,

contains

8,

223,

2O2

56

Bureau,
William

28;
269

Barometer,"

the

H.

edge,
knowl-

J., 168

87,

Labor,

White,
World

The,

257,

James
Sales, 85

Wells,
Wilson,

Steel

explained,

in

64,

its

58

47,

Dr.

in

205

202

of

theories,

253,

Weather

70

232

Extent

Dow's

"Water

Oil

unique

Street

Watered

professional,

see

46,
Wall

Wash

84

Herbert,

greatest,

Morrison,

Street,

Walsh,

Speculator,

Stock

105

272

79

Spencer,

56

136, 177,

trading,

Guy

44,

Loss,

Purchase

Specialists,

Standard

theory's

Railroad,
of

Wall

94

198

House,

244;

225,

Barometer,

to

the

Walker,

103;

8l,

Selling,

no

52,

82

Stock,

252,

Admiral,

191

93

Vindication

Volume

214

Somerset

Stock

21

Earthquake,

Fire,

Sherman

231;

Steel,

applied

Virginian
160,

anecdote,

Francisco

232

223,

1920,

IQ

196

anecdote,

Russell,

lOi;

Jr.,
41,

Theodore,

Rothschild,

value,

Unique,

of

securities,

States

17

Henry
Rogers,
H., 8,
63
Anecdote,
164
Rome,

San

Church,

Undigested

fessional,
pro-

74

of, 36
Act

Transportation

its

113

69;

advantages,

methods

United

Rhodes,

Sage,

his

Trinity

247

238

intelligent,

an

Trading

and

165

on

available,

61, 62, 63;

163
War,

"Railway

based

Dow

see

Tipsters,

and

Trader,

correct,
Punic

Tips

202

dates

40;

Dow's,

45

12

corner,

Thermopylae,

165
Piez, Director-General,
Persians,
Pratt,

Motor,

Swings,
major,
duration,
43-44

24

Railroad,

Pennsylvania

Stutz

pulation,
mani-

right,

always
46

thanked,

never

than

bigger

Market,

2l8

150,

D.,

Gurney

mittee,
Com-

Governing

Exchange
258

236

Collection,

News

Stock

222

131

215

87