leading stocks.

If the public comes in, the market is widened. If the public does not come in, the manipulators discontinue their efforts to make a market after a few days and wait for a more opportune time.

"The rule for the public ought to be essentially the rule which is followed by professional traders. When a stock is made active, consider it first with reference to its value. If it is intrinsically cheap, it can ordinarily be traded in as long as it is kept active. But it is generally wise to sell when activity ceases. If the stock is apparently above its value, a good deal more caution ought to be exercised about going in, and stop orders should be used to guard against severe drops.

"Generally speaking, manipulation in a new property is for the purpose of selling; in an established property, bull manipulation is usually discounting some favorable news which insiders are holding back. Bear manipulation in perhaps eighty per cent. of cases is the discounting of something which is unfavorable. In twenty per cent. perhaps, it is for the purpose of accumulating stock with reference to a succeeding rise.

"As a whole, however, bear manipulation is founded on knowledge that the stock under treatment is intrinsically dear. It is not, as a rule, good judgment to buy stocks which are under attack until the attack ceases and there are indications of a rally on the short interest which may have been made by those who followed the decline.”

And again discussing a campaign in stocks, Mr. Dow says:

"The stock market alternates between periods of activ

ity and periods of rest. Its periods of activity are usually started by manipulation and continued by a mixture of manipulation and public buying. Professional traders and the public usually try to follow the lead of some individual or clique which is apparently advancing some particular stock or stocks.

"The main difference between manipulators and general traders is that the manipulator endeavors to take advantage of conditions which he thinks will exist in the future. He believes that the condition of money or change in the value of a particular stock or something else will cause a given security to be worth more three months hence than it is now. He buys stocks quietly and then advances the price slowly or rapidly, as the case may be, with the expectation that the public will take his stock off his hands when it sees what he saw at the beginning. Whether the public does this or refuses to do it determines the success of the campaign.

"In a majority of cases, a well sustained advance supported by large trading will bring enough outside buying to enable a manipulator to unload a substantial line of stock. The speculative public always buys on advances and seldom on declines, in which respect it differs from the investing public which buys on declines and sells on advances. One of the most skillful manipulators in Wall Street says that any stock possessing merit and having some influential fact to be made the basis of a campaign can be marketed at an advance in price, if the manipulating interest is willing to pay the cost of such a campaign, which would perhaps average $250,000.

"This cost is chiefly applied to the creation of a market. The rules of the Stock Exchange do not permit A to tell B to buy stock from C at a given price, but it does not prohibit A from telling B to buy 10,000 shares of a given stock and at the same time telling C to sell 10,000 shares of the same stock. The results of such an operation would show that many brokers had participated in the trading, through a wish to take either the buying or the selling side, and that on the whole the market, although artificial in one sense, had been legitimate in the sense that anybody had a chance to step in and buy or sell at the price established.

"A bull campaign in the market is a far bigger undertaking than a campaign in one stock, because many stocks have to be moved. On the other hand, it is sometimes easier because it invites co-operation from many sources, and sometimes a very small amount of encouragement in a stock is sufficient to induce its friends to do all that is required to promote an active speculation.

"The general progress in a bull market is for the manipulating interest to take two or three prominent stocks, and by making them active and higher attract attention to the fact that a campaign has been started. It is customary to take stocks of the best class, in which there is a large investment interest and where the supply of floating stock liable to come on the market is known not to be large. This is why St. Paul is so often used as a leader, and why closely held stocks like Rock Island, Northwest and others of that class are frequently advanced materially at the beginning of a bull campaign.

"After stocks of this kind have been put up from 5 to 10 points, it is customary to shift the trading to stocks of the middle class on the idea that the public will not buy where there has been very large advances or where prices are very high, but will buy the cheaper stocks, even if they are intrinsically dearer. After stocks of this kind have been carried up a few points, it is customary to take up stocks of still lower price. It was considered for many years that when manipulators moved Erie, the end of a period of rising prices was at hand, because Erie was regarded as of next to no value and putting it up was considered diversion of the public, while other stocks were being sold.

"In a prolonged bull campaign, after the manipulators have moved the low priced stocks, they sometimes go back and move the others all over again, following the same order-the high priced stocks first, stocks of the middle class next, and then the cheapest on the list."

CHAPTER XXXI.

THE RECORD OF FIVE PANICS.

Recorded below are the movements of a few active stocks in the panics of 1873, 1884, 1893, 1895 and 1901. The figures include the high prices prevailing shortly before the panic, in some cases those the day previous, and in others several days prior thereto. The low prices are the low points in the panic. The recovery given is to prices established within a week or the low point in the panic, coming in some cases within a few days and others not until nearly a week afterwards.

We are accustomed to think of the panic of 1873 as a very serious event. It was sufficiently serious to compel the closing of the Stock Exchange, but the decline outside of Lake Shore and Western Union, seems singularly small in view of losses which have been seen since. The panic itself was the culmination of a feverish market which had lasted all the week, the final break coming on Saturday. The average decline in that panic for nine active stocks was 10.32 per cent. Figures follow: