The Go-Go Years The Drama and Crashing Finale of Wall Street’s Bullish 60s John Brooks Contents FOREWORD Michael Lewis I CLIMAX The Day Henry Ross Perot Lost $450 Million II FAIR EXCHANGE The Year the Amex Delisted the Old Guard Romans III THE LAST GATSBY Recessional for Edward M Gilbert IV PALMY DAYS AND LOW RUMBLINGS Early Warnings Along Wall Street V NORTHERN EXPOSURE Early Warnings Along Bay Street VI THE BIRTH OF GO-GO The Rise of a Proper Chinese Bostonian VII THE CONGLOMERATEURS Corporate Chutzpah and Creative Accounting VIII THE ENORMOUS BACK ROOM Drugs, Fails, and Chaos Among the Clerks IX GO-GO AT HIGH NOON The View from Trinity Church X CONFRONTATION Steinberg/Leasco vs Renchard/Chemical Bank XI REVELRY BEFORE WATERLOO The Time of the Great Garbage Market XII THE 1970 CRASH To the Edge of the Abyss XIII SAVING GRACES The Invisible Samaritans of Wall Street XIV THE GO-GO YEARS Notes on Sources Index About the Author Foreword “This may be, conceivably, one of the last books to be written about ‘Wall Street’ in its own time.” Thus John Brooks concludes his famous portrait of Wall Street in the 1960s Well, we all know what happened to that prediction Books about Wall Street in its own time went forth and multiplied You could fill a small library with the books about Wall Street that have been published since The Go-Go Years first appeared in 1973 In the past few years alone I have seen manuscripts, or outlines, or proposals, for books about Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Stearns, George Soros, Michael Steinhardt, and Michael Milkin These days, no book about money is considered too trivial, or ill conceived, to publish Brooks himself is partly to blame for this state of affairs He was one of the first journalists to prove that an outsider could walk into Wall Street and emerge with a long and detailed story that a generally educated but specifically ignorant outsider could read with pleasure The Go-Go Years is such a story The tendency with books about Wall Street is to put them down with a reassuring sigh and say, the more things change, the more they stay the same (Or as Brooks would no doubt put it to his old New Yorker audience, plus ỗa change, plus ỗa la mờme chose.) This book contains plenty in it to justify that response As the stock market chart races to the roof, a cast of characters familiar to observers of the financial 1990s takes the stage In 1960s Fidelity-mutual-fund-guru Gerald Tsai there are echoes of 1990s Fidelity-mutual-fund-guru Jeff Vinik In the detached aloofness of the original hedge fund manager, A W Jones, there is at least a trace of the detached aloofness of his successor, George Soros In the money grubbing of 1960s Market Man there is an echo of the money grubbing of the 1990s Market Man “In America,” writes Brooks, “with its deeply imprinted business ethic, no inherent stabilizer, moral or practical, is sufficiently strong in and of itself to support the turning away of new business when competitors are taking it in As a people we would rather face chaos making potsfull of short term money than maintain order and sanity by profiting less.” But what is mainly interesting today for readers of John Brooks is how different the market of the 1990s feels from the market of the 1960s There is no real equivalent in Brooks’s account to the technology stocks of today, for instance There are no foreign markets, no bonds, almost no computers On the other hand, all those Great White Institutions that these days barely merit a mention in today’s books on Wall Street—the SEC, the NYSE, the Establishment—loom large in Brooks’s account Then there is the moral of the story, or stories The Go-Go Years reduces fairly neatly to a series of morality tales about the most outlandish events of the 1960s: Ross Perot dropping $450 million in one day; Saul Steinberg having the nerve to consider—much less to attempt—a takeover of Chemical Bank; Eddie Gilbert seducing some rich people into investing in his ill-starred ventures before vanishing into Brazil with the other stock market losers How tame they now all seem! At least to this reader they have lost their ability to shock The author clearly considers his subjects engaged in an endless cycle of falls and redemptions But the modern reader is constantly having to remind himself who has fallen, and why he needs to be redeemed These are moralist tales in which the moral has at least in part been lost This may help to explain the most curious thing about The Go-Go Years: its tone of voice Those lovely, long, multipartite sentences, the glorious arch of the authorial eyebrow, Brooks’s palpable feeling that you, gentle reader, are a broadly educated person who instinctively disapproves of these … speculators.… Brooks’s voice is, above all, the voice of the Old Establishment The reader Brooks imagines himself to be speaking to is the same shockable character who has vanished from the financial world over the past thirty years Who on Wall Street these days thinks twice about speculation? Who disapproves of large corporate takeovers? No such person exists, or if he does he’s living on some island so remote that no word of the market will ever reach him In the end, The Go-Go Years is not to be read in the usual manner of Wall Street classics You not read this book to see our present situations reenacted in the past, with only the names changed You read it because it is a wonderful description of the way things were in a different time and place If Brooks’s sense that the end of the Old Establishment would mean the end of Wall Street led him occasionally to get things wrong, at least he got them wrong in an interesting way “Wall Street as a social context is apparently doomed not by reform but by mechanization,” he wrote toward the end of the book “Already in the early nineteen seventies, a significant proportion of stock trading is being conducted not face to face on the floor under a skylight but between men sitting in front of closed circuit television screens in offices hundreds or thousands of miles apart.… Wall Street (is heading) toward transforming itself into an impersonal national slot machine—presumably fairer to the investor but of much less interest as a microcosm of America.” The description was dead-on, but the forecast could not have been more wrong In a mere twentyfive years, Wall Street has become the largest microcosm on earth MICHAEL LEWIS CHAPTER I Climax On April 22, 1970, Henry Ross Perot of Dallas, Texas, one of the half-dozen richest men in the United States, was so new to wealth, at forty, that he was not listed in Poor’s Register and had just appeared for the first time in Who’s Who in America Only a small fraction of his fellow countrymen had ever heard of him Many who had met him by happening to sit next to him on airliners had not found him particularly impressive or interesting Barely five and a half feet tall, with a naïve, straightforward gaze, an unamused smile, a crooked nose, a hillbilly East Texas accent, and a short crewcut tended like a tennis lawn, he was inclined to talk at length and with enthusiasm about things like patriotism and the Boy Scouts of America More than anything else, he seemed to be a nice, promising young man who was probably selling something Yet that day Perot made a landmark in the financial history of the United States and perhaps of the Western world It was hardly a landmark to be envied, but it was certainly one to be remembered That day, he suffered a paper stock-market loss of about $450 million He still had, on paper, almost a billion dollars left afterward, but that wasn’t the point The point was that his one-day loss amounted to more than the total assets of any charitable foundation in the country after the top five; more than the annual welfare budget of any city except New York; and more—not just in figures, but in actual purchasing power—than J Pierpont Morgan was known to be worth at the time of his death in 1913 It was also quite possibly more in actual purchasing power than any man had ever lost in a single day since the Industrial Revolution brought large private accumulations of money into being It was Earth Day; the environment had recently become a national mania, especially among the young, and a group of conservationist leaders headed by Senator Gaylord Nelson of Wisconsin had picked April 22 as a day of national dedication to the cause of eliminating pollution in all its forms (Were preposterously large paper stock-market profits such as Ross Perot had made to be considered a form of pollution? Quite possibly.) In Washington, in front of the Department of the Interior Building, twelve hundred young people milled around shouting “Off the oil!” and “Stop the muck!” to protest government leases to oil producers whose operations were thought to cause pollution There were antipollution rallies of twenty-five thousand or more (watched by the F.B.I., it became known later) in New York, Chicago, and Philadelphia In Bloomington, Minnesota, former Vice President Humphrey urged the United Nations to establish an environmental agency to combat pollution around the world, and at Georgetown University in Washington, Senator Birch Bayh of Indiana called for a national agency “to conquer pollution as we have conquered space.” Interior Secretary Walter Hickel —an authentic hero of environmentalism, since he was a convert soon to be martyred professionally for his views—was in his home state of Alaska, getting a hero’s welcome In New York City, children rode bicycles to school; huge, lighthearted crowds gamboled on an automobile-free Fifth Avenue; at Seventeenth Street people were offered the opportunity to breath “pure air” from the nozzle of a blocklong polyethylene bubble; and so on, as all the artillery of promotion and public relations was turned, momentarily, in an unfamiliar and uncharacteristic direction The same day, the novelist Kurt Vonnegut, after alluding to President Nixon’s statement that he did not propose to be the first American President to lose a war, commented, “He may be the first American President to lose a planet.” All this resolution and high spirits fought upstream against one of the deepest moods of gloom to darken any American April since the Civil War The first My Lai revelations were five months old; the dangerous and disturbing New Haven strike in support of the Black Panthers, which would spread quickly to campuses all over the Northeast, was to begin that same day, April 22; the stunningly unpopular invasion of Cambodia was eight days off, the Kent State University killings of students by National Guardsmen twelve days off The gloom, compounded by signs of an approaching national economic recession, had caused a stock-market panic that, though far from over, was already comparable in a remarkable number of ways to that of October 1929 The Dow-Jones industrial average of common stocks had sunk relentlessly through almost all of 1969; then, after holding fairly firm through the first three months of the new year, it had gone into a sickening collapse that had carried it, by April 22, to a level some 235 points below where it had been at its peak sixteen months earlier Much worse, the Dow did not begin to tell the whole story Interest rates were at near-record highs, strangling new housing construction and making most industrial expansion impractical The dollar was in bad trouble in the international markets, with foreigners holding American currency worth many billions more than the national gold hoard One hundred or more Wall Street broker age firms were near failure As for the Dow, made up as it was of the old blue chips that had long since been deposed as sensitive and accurate market leaders, it was a pale, watered-down reflection of the real stock-market situation A better indication is to be found in the fact that in May 1970, a portfolio consisting of one share of every stock listed on the Big Board was worth just about half of what it would have been worth at the start of 1969 The high flyers that had led the market of 1967 and 1968 —conglomerates, computer leasers, far-out electronics companies, franchisers—were precipitously down from their peaks Nor were they down 25 percent, like the Dow, but 80, 90, or 95 percent This was vintage 1929 stuff, and the prospect of another great depression, this one induced as much by despair as by economic factors as such, was a very real one The visible parallels to 1929, in the business and financial spheres, were enough to make a man agree not merely with Santayana, who said that those who forget history are condemned to repeat it, but with Proust, whose whole great book, read one way, seems to say that man’s apparent capacity to learn from experience is an illusion Before the crash in 1929 the financial sages had insisted repeatedly that there couldn’t be another panic like that of 1907 because of the protective role of the Federal Reserve System; before the crash of 1969–70 a later generation observed repeatedly that there couldn’t be another panic like that of 1929 because of the protective role of the Federal Reserve System and the Securities and Exchange Commission In each case a severe market break had taken place about eight years earlier (in 1921 and 1962, respectively), followed by a period of progressively more unfettered speculation In each case huge, shaky financial pyramids, built on a minimum of cash base, had been erected by financiers eager to take maximum advantage of the public’s insatiable appetite for common stocks Before 1929 they had been called investment trusts and holding companies; now they were called conglomerates In each case there had been a single market operator to whom the public assigned the star role of official seer In the 1920s the man to whom the public ascribed almost supernatural power to divine the future prices of stocks had been Jesse L Livermore In the middle 1960s, it was Gerald Tsai In each case, certain insiders contrived to use privileged information and superior market technique to manipulate stock prices and thus deceive the public; in the 1920s the manipulators had been called pool operators, in the 1960s they were called portfolio managers (It is curious to note that, while the operations of both the pools of the 1920s and the high-performance funds of the 1960s were obviously unfair if not illegal, there was no public disapproval of either so long as people were making money on them.) In each case, the practice of slack ethics started in the untended underbrush on the fringes of Wall Street and moved, sooner or later, to the very centers of power and respectability In 1926 (although it wasn’t known publicly until over a decade later), the future president of the New York Stock Exchange committed the first of a series of embezzlements of funds entrusted to his care; in 1929 the president of the Chase National Bank made a personal profit of $4 million by selling short the shares of his own bank No wrongdoing so melodramatic occurred among the Wall Street leaders of the 1960s—or, at least, none has so far been uncovered But in 1926 a partner of J.P Morgan and Company shocked the financial world, which believed the Morgans sat on the right hand of God, by openly touting a stock, General Motors, in which his firm was substantially interested; and forty years later, in 1966, a not dissimilar shudder went through the Street when it became known that two years earlier a key vice president of J.P Morgan and Company’s successor firm, Morgan Guaranty Trust Company, had bought or caused to be bought ten thousand shares of Texas Gulf Sulphur in less than half an hour, apparently on the basis of privileged information of a great ore strike in Ontario The parallels go down to certain curious details In each case, the market collapse occurred under a Republican President who had been elected on the crest of the preceding boom, and who had a strong pro-business orientation In each case, the crisis was marked by carefully planned and publicized Presidential meetings at the White House with Wall Street leaders Finally, in each case the crash gave rise to an orgy of recrimination and finger-pointing Of course, there were tremendous differences, too—not just the fact that the more recent crash did not lead to a catastrophic national depression (though it did lead to a severe one), but differences in style and nuance and social implication that will be the main subject of this chronicle One might, in comparing 1929 with 1969–70, even find a certain appositeness in Karl Marx’s famous observation that history repeats itself the first time as tragedy, the second time as farce Wall Street, in the geographical sense, was to become an actual battleground that spring, less than three weeks after Earth Day and Ross Perot’s Down-to-Earth Day By Wednesday, May 6, 1970, a week after the Cambodia announcement and two days after the Kent State incident, eighty colleges across the country were closed entirely as a result of student and faculty strikes, and students were boycotting classes at over three hundred more Most New York City schools and colleges were scheduled to be closed that Friday, May 8, in a gesture of protest, and among the student antiwar demonstrations being planned was one to be held in Wall Street On Wednesday the sixth, a small group of white-coated students and faculty members from several medical and nursing schools in the city came to Wall Street to demonstrate for peace on their own There they were greeted warmly by the vigorous, youth-oriented, peace-crusading vicar of Trinity Church, Donald R Woodward In the course of the ensuing conversations, the medical people suggested that it might be a good idea, considering the vast daytime population of the Wall Street area, to establish a noon-hour first-aid center at Trinity Church, which, standing as it has since colonial times right at the head of Wall Street, is at the very heart of the financial district in the physical—though scarcely, it often seems, in the spiritual—sense If Trinity would provide space, the medical people said, they would undertake to set up and man the first-aid center on a volunteer basis The vicar gratefully and enthusiastically accepted the offer The first day that the center was in operation was Friday, May 8—a circumstance that in retrospect seems little less than providential That Friday morning—a damp, drizzly, bone-chilling morning such as New York can often produce in early May— beginning at about seven-thirty, boys and girls by the hundreds began debouching from Wall Street’s two principal subway stations, the Seventh Avenue–Broadway stop at Chase Manhattan Plaza and the Lexington Avenue at Broadway and Wall Most of them were from New York University, Hunter College, and the city’s public high schools, all of those institutions being closed for the day Eventually something like a thousand strong, they jammed into the financial district’s central plaza, the intersection of Broad and Wall, where they milled around under the apprehensive scrutiny of a good-sized cadre of city policemen who had been dispatched there in anticipation of their arrival But the students seemed to be in no mood to cause the police any trouble In light rain, under the columns of Federal Hall, where George Washington had once taken the oath of office as the United States’ first President, and facing the intimidating entrance to the great marble building from which imperial Morgan had once more or less ruled the nation, they spent the morning rallying their spirits and formulating their demands The demands, not too surprisingly, turned out to be the same as those agreed upon a few days earlier by a secret convention of radical youth leaders in New Haven, Chase National Bank, Chemical Bank New York Trust Company, 146, 175, 227, 228, 238–59 Chesapeake and Ohio Railway, 121 Chicago and North Western Railroad, 176 Chicago Board of Trade, 326 Chilean Telephone Company, 179 Christie, Alan T., 119–20 Chrysler, 220, 221 Chrysler, Walter P., 141 Churning, 220–21 Cities Service, 42 City Associates, 143 City Investing, 152 Claflin, Tennessee, 110 Clark, Jack L., 322 Clayton Act, 254 Clermont Towers, 273 Clews, Henry, 109 CMI Corporation, 322 C.N.A Financial Corporation, 148–49 Cogan, Berlind, Weill and Levitt, 325 Cohen, Isidore, 302–3 Cohen (Joseph) and Sons, 303 Cohen, Manuel F., 98, 99, 150, 286–87, 288 Cohen, Milton H., 88 Coleman, Delbert William, 274–78 Collins, Henry, 68, 70, 76 Colson, Charles, 301 “Commercial paper market,” 304 Commonwealth United, 275, 278 Communication Workshop (band), 223 Communism on Wall Street, 111–12 Computer leasing, 232–33 Conglomerates: 4, 152–56, 175–77, 180–81; causes of, 156–58; individualism and, 173–74; power of, 177–80 See also Mergers Connecticut General Life Insurance, 124 Consolidated Cigar, 171 Consolidated Foods, 136 Continental Electronics, 166 Continental Illinois Bank and Trust Company, 245, 282 Control Data, 265, 305 Cony, Ed, 42 Cook, Donald, 188 Copeland, Lammot du Pont, 239, 241, 257, 335 Cornell University Endowment Fund, 282, 285 Corners, 63–64 Cornfeld, Bernie, 140, 270–71, 276, 277, 298, 348, 352 Covington and Burling, 281 Cowdin, J Cheever, 85 Cravath law firm, 253, 258 Cresap, McCormick and Paget, 94–95 Crispus Attucks Foundation, 209 Crockett, Jean, 349 Cummings, Nathan, 135–36 Cunningham, John, 320, 329 Curb Market, 29 Curtiss-Wright Corporation, 85–86 Data Processing Financing and General, 24, 236 Debentures, 160–61, 162 Deemer, Walter, 147 Dempsey-Tegeler, 316, 318 Denny’s Restaurants, 277–78 DeNunzio, Ralph, 319, 337, 346 Desilu Productions, 171 Dewey, Thomas E., Jr., 123 Dillon Read, 287 Dingell, John, 93 Diversification, 154–56 See also Conglomerates D.K.’s, 185 Documentation, Inc., 234 Doeskin Products, 30 Donaldson, Lufkin and Jenrette, 316, 349 Donaldson, W H., 316 Douglas, William O., 89–90, 275, 339 Dow, Charles H., 329 Dow Jones industrial averages, 101, 102–3, 214; 1929 304–5; 1962, 55, 56–57; 1965, 98, 100–1, 139, 353; 1966, 152; 1968 305; 1969, 205, 260, 261; 1969 3, 4; 1970, 3, 292–93, 297, 300–1, 303, 304, 353 Dowd, James, 95 Dressen, Chuck, 33 Drew, Daniel, 13 Dreyfus, Jack, 140 Dreyfus Leverage Fund, 208 Drugs on Wall Street, 200–4, 226 Du Pont, Anthony, 337, 338–45 Du Pont (E I.) de Nemours, 239, 335 Du Pont, Edmond, 334, 335, 337–45 Du Pont, Eleuthère Irénée, 334 Du Pont (F I.) and Company, 155, 334–45, 346 Du Pont (F I.)-Glore, Forgan and Company, 335, 336–45 Du Pont, Francis I., 334 Dudley King and Georgeson, 253 Dun’s Review, 305 Duplan, 211 Dyer, Jim, 34, 35 Eberstadt, Ferdinand, 105 Economics of Crisis, The (Janeway), 214 E.D.S (Electronic Data Systems Corp.), 17–24, 292, 336 Eisenhower, Dwight, 83 Elias, Christopher, 194 Empire Hardwood Flooring, 71, 73 Empire Millwork Company, 58, 60, 61 Empire National, 64–65, 67 Enterprise Fund, 140, 211, 267 Estabrook and Company, 190 Etherington, Edwin D., 53, 188 Ethics, 5, 219–21 Eversharp, 42 Executives: take-overs and, 177; unemployment of, 308 Fails, 185–87, 190, 191, 204–5 Fairchild Camera, 145, 262, 265–66, 305 Fairfield Partners, 143 Faison, John W., 196–99, 218–19 Farr, Francis, 65 Fidelity Capital Fund, 135–36, 146 Fidelity Fund, 130–36, 145, 149 Fidelity Management and Research, 136 “Financial Services Holding Company” (Netter), 234, 235 Finkelstein, Jerry, 67, 77 Finletter, Thomas, 105 Fire-and-casualty companies, 234–35 First Boston Corporation, 85, 246 First Devonshire Corporation, 324, 325, 350 First National Bank of Jersey City, 235, 240 First National City Bank, 106, 121, 124, 248 Fischer, Louis, 142 Flanigan, Peter M., 287, 301 Floor traders, 91, 94, 95–96 Forbes, 349 Ford Foundation, 120, 121, 124, 125 Four Seasons Nursing Centers, 24, 184, 279, 322, 323 Fox Computer Services, 234 Friend, Irwin, 349 Friendly, Henry J., 149 Fringer, Alice, 298–99 Fund of Funds, 271 “Funny money,” 160 Funston, Keith, 93, 96, 97, 188; Cary on, 89; Chemical Bank and, 239, 241, 257; on new issues, 27; as N.Y Stock Exchange president, 85, 86, 151, 152 Galbraith, John Kenneth, 83, 213, 271, 297 Gellinoff, Abraham J., 33 Geneen, Harold S., 135, 179–79, 301 General Council of Congregational Churches, 121 General Electric, 139, 155 General Electric Pension Fund, 282 General Motors, 5, 155, 180, 213, 221, 301; as Dow indicator, 139, 183, 305, 312 Gibbs, Michael A., 233, 235, 239 Gilbert, Edward M., 58–80, 351 Gilbert, Harry, 58, 60–61, 67, 75 Gilpatric, Roswell, 217 Gintel, Robert M., 85–86 “Give-ups,” 150–51 Glen Alden, 169 Glore, Forgan and Staats, 335 Go-go trading, 128 Goings, Russell, Jr., 209 Goldman, Sachs, 264 Golsen, Jack E., 322, 325, 327–28 Goodbody and Company, 329–33, 342–43 Goodrich Tire and Rubber, 176–77, 227 Gordon, Albert H., 346 Graf, Lya, 89 Graham, Donald M., 245 Gramco, 272–74, 348 Grande, Charles A., 33, 42 Green, Hetty, 109–10, 230 Greenberg, Alan C., 327–28 Gregory and Sons, 316 Gulf and Western Industries, 152, 170–73, 175, 181, 237, 305 Gulf Oil, 42 Guterma, Alexander, 30, 31, 51–52 Haack, Robert, 188–90, 296, 301, 317–18, 320, 335, 339–40 Haff, Joe, 35 Halsey, Stuart, 283 Hanna, Mary Cole, 224 Harriman, Averell, 105 Harriman, E H., 65 Hart, Milledge A., III, 16, 17 Hartford Fire, 235 Harvard University Endowment Fund, 282, 285 Haupt (Ira) and Company, 140, 151, 315, 316 Hayden, Stone and Company, 318, 321–24, 325–28, 330 Heaton, Edward, see Gilbert, Edward M Hedge funds, 141–44, 268, 348–49 See also Mutual funds Heinemann, H Erich, 242, 244–45 Heuss, John, 222 Hirsch and Company, 335 Hodes, Robert, 252 Hoffman, Abbie, 11, 215 Hogle, James, 331 Holding companies, See also Conglomerates Hoover, Herbert, 293, 300, 309 Hornblower Weeks, 246 Hubby (C F.) Company, 129 Hughes, Howard, 275 Huntington, Collis P., 109, 110 Huntington, Francis C., 218–21 Hupp, 27 Hutton (W E.), 283 Hyman, Eliot, 349 I.B.M., 231–32, 233, 239, 305 Ideal Leasing Company, 233 Ideal Rubber Products, 231 Incorporated Investors, 130 Insider trading, 5, 85–86, 115–16 Institutional investing, 260, 263–66 Institutional Investor, The (journal), 146–47, 210–11 Interest rates, 3, 152, 261 International Leisure, 279 International Playtex, 169 International Telephone and Telegraph, see I.T.T Interstate Department Stores, 29 Investment, ethics of, 219–21 Investment Company Institute, 89 Investment pools, 141, 143 Investment trusts, See also Conglomerates Investors Diversified Services, 289 Investors Overseas Services (I.O.S.), 271, 276, 277, 298, 348 Irving Trust, 239, 248 Isaacson, Walter, 321 I.T.T., 96, 135, 152, 178–80, 235, 301, 320 Jackson, David S., 37, 38–54 Jacobs (F L.) Company, 51 Jaegerman, Edward, 43 Janeway, Eliot, 214, 292, 300 Jenrette, Richard, 183 Jews: as conglomerateurs, 169–70; on Wall Street, 116–18 Johnson, Edward Crosby, II, 129–139, 145, 149 Johnson, Edward Crosby, III, 134, 138–39, 145 Johnson, Lyndon B., 97, 98–99, 216 Johnson, Raymond, 224 Jones, Alfred Winslow, 142–44 Jones (A W.) and Company, 142–43 Jones and Laughlin Steel, 168 Kahn, Otto, 105 Karr, David, 155 Kennedy, David, 301 Kennedy, John F., 26–29, 56, 82–84, 96–97, 98, 215 Kennedy, Joseph P., 83 Kentucky Fried Chicken, 184 Kickbacks, 150–51 Kidder, Peabody and Company, 85, 217, 283, 319, 346 Klein, Eugene, 173, 174 Kleindienst, Richard G., 320 Kleiner, Bell and Company, 140, 276, 278, 317 Kleiner, Burt, 275–78 Kohlmeier, Louis M., Jr., 84 Korshak, Sidney R., 274–76, 277, 278 Korvette, 29, 96 Krebs Pigment and Chemical, 155 Kreuger, Ivar, 122 Kuhn, Loeb and Company, 116, 121, 123, 246 Lambert and Company, 119–24 Lambert, Jean, 119–20 Lamont, Thomas S., 115–16 Lamont, Thomas W., 105, 115 Landis, James M., 84 Langone, Kenneth, 17–18, 19, 23 Lasker, Bernard J., 287, 293–95, 301, 302, 303, 352; brokerage finances and, 318–47; Nixon and, 295–97, 298–300 Lasker, Stone and Stern, 294 Law, Warren, 161 Lazard Frères and Company, 61, 76, 77, 319 Learson, T Vincent, 239, 241, 257 Leasco Data Processing Equipment Corporation, 175, 227, 305, 349, 353, 354; Chemical Bank and, 238–59; Reliance Insurance and, 233–38, 325 Lefèvre, Edwin, 130 Legislation, 93–94, 253–54, 255–56, 342, 350 Lehman Brothers, 9, 186–87, 193, 217, 250, 251 Lehman, Herbert, 105 Lehman, John R., 217 Lerner Shops, 169 Letter Stock, 267–70 Levine, Lynn, 224 Levy, Gustave, 46, 294, 339 Levy, Leon, 349 Liberty League, 111 Lindsay, John V., 295 Ling Electronics, 165, 166 Ling, James Joseph, 165–68, 170, 174, 298 Ling-Temco-Vought, 24, 261, 353, 354; as conglomerate, 152, 166–67, 175, 181, 298, 305 Lipp, Robert I., 241 “Liquid real estate,” 272 Litt, Solomon, 319 Litton Industries, 27, 135, 153, 261; as conglomerate, 152, 155, 175, 180–81, 305 Livermore, Jesse L., 5, 130, 137 Livingston, Elsie, 129 LM Electronics, 165 Lockheed Aircraft Corporation, 10, 309 Loeb, Gerald M., 27 Loeb, John, Sr., 61, 76, 77 Loews Corporation, 136, 349 Long, Augustus C., 239, 241, 257 Louis, Arthur M., 173 Lovett, Robert, 105 LSB Industries, 322 LTV Tower, 273 Lucayan Beach (hotel), 122 Lufkin, Dan, 349 Lytton, Bart, 112 Lytton Financial Corporation, 112 McCall, Howard, 248, 250, 252 McCarthy, Eugene, 93, 111 McCormick, Edward T., 29, 33–54 McCracken, Paul, 297, 301 McCrory Corporation, 169 McDonnell and Company, 317 McFadden, J A., 241, 243, 252 McLaren, Richard W., 288 MacNaughton, Donald, 301 McSande, Sandy, see Guterma, Alexander Madison Fund, 123 Manhattan Fund, 145–49 Mann, Johnny, 34, 35 Manufacturers Hanover Trust Company, 106, 239, 248 Manufacturers Trust, 106 Margin requirement, 306 Market operators, 4–5 Marquez, Thomas, 16, 17, 20–21 Martial and Company, 65 Martin, William McChesney, Jr., 81–82, 99–100, 102, 253, 351 Mary Carter Paints, 175 Massachusetts Investors Trust, 129 Massachusetts Mutual Life, 124 Mates, Frederick S., 216, 267–70 Mates Investment Fund, 267–70, 353, 354 Maxwell, Elsa, 65 Meehan, Mike, 35 Mergers, 154, 157–58, 227–40, 262–63; of brokerage firms, 317, 325–28, 329–33, 335–45; mechanics of, 160–61; resistance to, 175–77, 240–59 See also Conglomerates Merrill Lynch, 184, 297, 300, 301, 334, 356; back office of, 192, 193; Goodbody merger with, 332–33, 342–43 Merritt Chapman and Scott, 155 Metz, Robert, 177, 242 Meyer, André, 61, 319, 320 Meyerson, Morton H., 346 Michigan Bumper, 170 Minnie Pearl’s Chicken System, Inc., 174 Mitchell, John, 301, 333 Molé, Harvey E., Jr., 120, 121 Montreal Trust Company, 124 Moody, John Wallace, 223–25 Moody’s Investors Service, 121 Mooney, Michael E., 41 Morgan, Campbell Powell, 119, 121–22, 125 Morgan (J.P.) and Company, Morgan, J Pierpont, 2, 65, 89, 105, 111, 116 Morgan Guaranty Trust Company, 5, 115, 121, 239, 248, 282, 285 Morgenstern, Oskar, 167 Morgenthau, Robert M., 82, 195 Motorola, 220 “Multiple flogging,” 243–44 Mutual Broadcasting Company, 31 Mutual-fund management companies, 149 Mutual funds, 58, 101–2, 131, 139–40, 260, 349; letter stock and, 266–70; S.E.C and, 91–92, 151 See also Hedge funds; Names of specific funds NASDAQ(computer system), 21 National Ammonia, 155 National Association of Securities Dealers, 89, 185 National General Corporation, 174, 261 National Power and Light, 155 National Student Marketing Corporation, 280–85, 353, 354 Navarro, Rafael G., 272 Needham, James J., 350 Netter, Edward, 234–35, 236–37 New issues, 27–28, 184, 278–85 New Jersey Zinc Company, 171 New York Hanseatic Corporation, 122 New York Stock Exchange, 89, 188–90, 350–51, 356; blacks and, 209–10; C.C.S and, 194–95; Rule 325 of, 312, 314–15, 323, 345; Rule 394 of, 150, 151; Special Trust Fund of, 315–18, 320, 323, 324–25, 333, 342; Surveillance Committee of, 319–47; volume on, 56–57, 97, 183–84, 190, 205, 216, 261; women and, 208, 210 Newburger, Loeb and Company, 209 Nixon, Richard M.: Lasker and, 295–97, 298–300, 327; S.E.C and, 286–90, 292; Wall Street and, 300–4 Northerlin Company, 78 Northern Miner, The (journal), 118 Northern Pacific, 64, 116 Northwest Industries, 176–77, 227 Norton Company, 308 Nye Committee, 214 Offshore funds, 270–74, 348 Omega Equities, 268–70, 280 Onassis, Aristotle, 66 Onassis, Jacqueline Kennedy, 61 Oppenheimer and Company, 349 Organized crime, stock theft and, 195 Over-the-counter market, 21–22 Overtrading, 220–21 Pacioli, Fra Luca, 159 Pan American Airways, 172, 175, 176, 220, 227 Pantepec Oil, 38, 44 Paramount Pictures, 171, 173 Parvin, Albert, 275 Parvin-Dohrmann, 24, 275–78 Patman, Wright, 243 Patterson, Belknap and Webb, 82 Peace, Wall Street and, 10–11, 213–17 Peck, Stephen, 319 Penn Central Railroad Company, 304, 309 Penn-Texas, 155 Pennsylvania, University of, 121 “People’s capitalism,” 12–13, 101, 353 Performance funds, see Mutual funds Performance Systems, Inc., 174, 280 Pergamon Press, 258 Perot, Henry Ross, 1–2, 14–25, 292, 336–47, 352 Perry, Jay, 264, 266 Pickard and Company, 315–16 Piggly Wiggly Stores, 64 Pittsburgh Plate Glass, 42 Plohn, Charles, 184, 281 Plohn (Charles) and Company, 324, 325, 350 Polaroid, 27, 135, 139, 145, 184, 305 Politics: I.T.T and, 178–80; Wall Street and, 111–12 Pool operators, See also Portfolio managers Portfolio managers, 5, 102, 113 Pressprich (R W.) and Company, 17, 18, 19, 23 Price-to-earnings ratio, 157, 172–73 Princeton University, 121 Privileged information, see Insider trading Project Redeployment, 166 Protestants on Wall Street, 114–16 Prudential Insurance, 301 Putnam, Samuel, 128–29 Quaker Oats, 42 Randell, Cortes Wesley, 280–85 Rapid-American Corporation, 168, 169, 174, 303 Rapid Electrotype, 168 Raskob, John, 141 Re, Gerard A., 31, 32–33, 35–37 Re, Gerard F., 31, 32–33, 35–37 Real estate investing, 272–74 Redemption: of mutual funds, 102; of shares, 269 “Redundant capital,” 234 Regan, Donald, 297, 301, 302, 303, 332, 339, 356 Reilly, Joe, 34, 35, 41–42, 46–50 Reinisch, Hans, 292 Reliance Insurance Company, 235–38, 325 “Reminiscences of a Stock Market Operator” (Lefevre), 130 Renchard, William Shryock, 228–31, 238–59 Report on Regulatory Agencies to the President-Elect (Landis), 84 Resorts International, 175, 176, 227 Responsive Environments, 279 Rhodes Enterprises, 71, 73 Riklis, Meshulam, 168–70, 303 RKO-Stanley Warner Theatres, 169 Roberts, A Addison, 236–38, 250, 252 Robinson and Company, 324–25, 350 Roche, James, 301 Rockefeller, David, 107, 225 Rockefeller, John D., Sr., 293 Rockefeller, Laurance, 255 Rockefeller, Nelson, 253, 255 Rockefeller, Percy, 141 Rohatyn, Felix George, 319–47 Romnes, H I., 239, 241, 257, 301 Roosa, Robert V., 217 Roosevelt, Franklin D., 83, 105, 111 Roosevelt, James, 271 Ropes and Gray, 129–30 Rossant, M J., 71, 76 Rubenstein, Serge, 30 Ruberoid, 72–73, 74 Safire, William, 301 St John, Jill, 276, 278 Salgo, Nicolas, 153 Salinger, Pierre, 273, 348 Salomon Brothers, 263–66 Salomon, William R., 264, 266, 300, 339 Sass, Martin, 211 Sassoon’s Far Eastern Trust, Ltd., 123 Saul, Ralph, 33, 43, 44, 53, 88, 151, 301 Schenley Industries, 169 Schwab, Charles M., 141 Schwabacher and Company, 190 Scudder, Stevens and Clark, 132 Searles, Joseph Louis, III, 209 S.E.C (Securities and Exchange Commission), 83–84, 162, 187–88, 263; actions of, 32–33, 85–86, 87, 115–16, 269, 276–78; brokerage firms and, 190, 312, 314, 331; Cary and, 82–98; Nixon and, 286–90, 292; reports of, 53, 88, 90–92, 151 Secured demand notes, 313 Securities Acts Amendments of 1964 93–94, 98 Securities Exchange Act of 1934 85–86, 159, 307 Securities Investor Protection Corporation, 342, 350 Security Equity Fund, 140, 212 Seeburg (J P.) Corporation, 274, 275 Segal, Andrew, 37, 40–54 Seidler, Lee J., 162, 163–64 Sexism on Wall Street, 108–10, 207–8 Shapiro, Max, 305 Shawano Development Corporation, 51 Shearman and Sterling, 73 Shearson Hammill and Company, 208–9 Shooters, see New issues Shor, Toots, 33 Short sales, 141, 142, 243 Shultz, George, 297 Siebert, Muriel, 208 Silver, David, 43, 45 Simmons, Richard, 253, 254, 256 Sinaiko, A Arlie, 142 Sipic, 342, 350 Slick Corporation, 174 Smith, Barney, 283 Smith, Ben, 35 South Puerto Rican Sugar, 171 Sparkman, John, 253, 256 Speculation, ethics of, 219–21 Sperry-Rand, 27, 305 Spingarn, Heine, 267 Standard Oil of New Jersey, 305 Stans, Maurice, 301 Stanton, Thomas J., Jr., 241 Stardust Hotel-Casino, 276, 278 State Street Fund, 282 State Street Investing Company, 129 Stayman, Sam, 142 Stein, Howard, 111, 140 Steinberg, Saul Phillip, 228, 231–59, 349, 352 Stock certificates, 193–94, 356 Stock Exchange, see American Stock Exchange; Curb Market; New York Stock Exchange; Toronto Stock Exchange Stock manipulation, 5, 141, 243, 262, 276–78 Stock market: 1929 crash, 4–6, 291–92, 297, 305–7, 311–12; 1962 collapse, 55–57; 1970 crash, 4–6, 291–310 Stock specialists, 31–32, 38, 93, 96, 263–64 Stock theft, 185, 191, 195 Stock transfer tax, 151 Stockholders, 12–13, 305, 353–55 Stott, Robert L., Jr., 319 Streit, Clarence, 320 Stuckey and Spear, 283 Subordinated loans, 313–14 “Surplus surplus,” 234 Swan-Finch Oil Corporation, 30, 33 Swift, 42 Swisher, Bill, 322 Swope, Herbert Bayard, 141 Syntex, 145 Take-overs, see Mergers Talley, Madelon, 208 Temco Electronics and Missiles, 166 Tender offers, 160–61 Texaco, Inc., 139, 239 Texas Gulf Sulphur Company, 5, 86, 97, 115, 118 Textron, 152, 153, 155–56 Thompson, Rupert, 153 Thornton, Charles (Tex), 173 Tisch, Laurence, 136, 349 Tobias, Andrew, 280 Toronto-Dominion Bank, 122, 123 Toronto Stock Exchange, 118 Transitron, 27, 261 Trinity Church (New York, N.Y.), 6–9, 218, 222–26 Trujillo, Rafael, 31 Truman, Harry S., 83 Trusts, 128–29, 131 Tsai, Gerald, Jr., 5, 102, 132–40, 145–49, 212, 351–52 Tsai Management and Research, 146–49 Tyson, Robert C., 239, 241, 257 Understanding the Securities Act and the S.E.C (McCormick), 36 Unemployment, 307–9 United Convalescent Homes, 184, 279 United Dye and Chemical Corporation, 51 University Loudspeakers, 166 University of Chicago, 283 U.S Steel, 56, 145, 239 U.S Steel Pension Fund, 120, 121, 124, 125 U.S Trust Company of New York, 217 Utilities and Industries Corporation, 332 Vanderbilt, Cornelius, 64, 110 Viscoloid Company, 155 Voloshen, Nathan, 277 Wall Street (New York, N.Y.), 5, 9, 11, 106–8; antiwar demonstrations on, 6–10, 214–15, 217, 226; blacks on, 110–11, 208–10; changes on, 355–57; communism on, 111–12; drugs on, 200–4, 226; greening of, 222–26; over-extension of, 183–87; political ideology of, 111– 12; social conscience of, 10–11, 12–13; as a social context, 104–6; social revolution on, 206–26; women on, 108–10, 207–8; youth on, 112–13, 195–204, 210–13 Wall Street Ministry, 218–21 “Wall Suite” (play), 225 Walston and Company, 325 War, Wall Street and, 10–11, 213–17 Warburg, Paul M., 117 Warner Brothers Seven Arts, 349 Warrants, 161 WASPs on Wall Street, 114–16 Weight Watchers International, 279 Weiss, Peck and Greer, 319 Welch Scientific Company, 28 Welles, Chris, 231 Westergaard, John, 232–33 White Consolidated, 175 White, Weld and Company, 166, 169, 250, 251 Whitney, Richard, 25, 30, 93, 151, 303; as Exchange chairman, 53, 81, 293–94, 300 Whitney (Richard) and Company, 312 Winchell, Walter, 38 Windels, Paul, Jr., 83 Winthrop, Stimson, Putnam and Roberts, 18 Wolfson, Louis E., 155 Women on Wall Street, 108–10, 207–8 Woodhull, Claflin and Company, 110 Woodhull, Victoria Claflin, 110 Woods, George, 85 Woods, Rose, 298 Woodward, Donald R., 6, 8–9, 223 Xerox, 27, 135, 139, 184, 305 Yale Theatre Ensemble, 225 Youth Against War and Fascism, 214–15 Youth on Wall Street, 112–13, 195–204, 210–13 Zeckendorf, William, 106, 107 Zenith, 220 About the Author John Brooks (1920–1993) was an award-winning writer best known for his contributions to the New Yorker as a financial journalist He was also the author of ten nonfiction books on business and finance, a number of which were critically acclaimed works examining Wall Street and the corporate world His books Once in Golconda, The Go-Go Years , and Business Adventures have endured as classics Although he is remembered primarily for his writings on financial topics, Brooks published three novels and wrote book reviews for Harper’s Magazine and the New York Times Book Review All rights reserved, including without limitation the right to reproduce this ebook or any portion thereof in any form or by any means, whether electronic or mechanical, now known or hereinafter invented, without the express written permission of the publisher Copyright © 1973, 1999 by John Brooks Foreword © 1998 by Michael Lewis Cover design by Andrea Worthington ISBN 978-1-4976-7910-8 This edition published in 2014 by Open Road Integrated Media, Inc 345 Hudson Street New York, NY 10014 www.openroadmedia.com EBOOKS BY JOHN BROOKS FROM OPEN ROAD MEDIA Available wherever ebooks are sold Open Road Integrated Media is a digital publisher and multimedia content company Open Road creates connections between authors and their audiences by marketing its ebooks through a new proprietary online platform, which uses premium video content and social media Videos, Archival Documents, and New Releases Sign up for the Open Road Media newsletter and get news delivered straight to your inbox Sign up now at www.openroadmedia.com/newsletters FIND OUT MORE AT WWW.OPENROADMEDIA.COM FOLLOW US: @openroadmedia and Facebook.com/OpenRoadMedia ... under the rug The members most disturbed were another father -and- son specialist team—or more precisely, a fatherand-son-in-law specialist team They were David S Jackson and Andrew Segal The big.. .The Go-Go Years The Drama and Crashing Finale of Wall Street’s Bullish 60s John Brooks Contents FOREWORD Michael Lewis I CLIMAX The Day Henry Ross Perot Lost $450 Million II FAIR EXCHANGE The. .. crystallization of the whole nation’s tragedy at that moment— professional Wall Street, the Wall Street of finance and law, of power and elegance, seemed to be on the side of the students Perhaps out of common