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Wall Street History
https://www.gofundme.com/s3h2w8
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05/13/2005
The Wall Street of 1955
I have been attempting to acquire some old books on Wall Street
and came across Martin Mayer’s “Wall Street: Men and Money”
written back in 1955 (and long out of print). This appears to be
his first effort and as many of you know he has written a slew of
books since, the best known of which are on banking and the
Federal Reserve.
So in perusing his thoughts of 50 years ago, I figured you’d
enjoy his description of the atmosphere then, in the days before
super fast operations, for example. But remember, if some of the
comments don’t seem politically correct, don’t shoot me I’m
just the messenger.
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On women on Wall Street:
“Not everyone who works on Wall Street is rich, or even
moderately middle-class. The towers need elevator men, the
Stock Exchange floor must be swept, bank guards must guard the
banks. Upstairs, somebody has to ask visitors who they are, and
answer the telephone, and take dictation, and type letters, and
keep the files in some semblance of order, and help the machines
add figures. Just as the best jobs on Wall Street are among the
most fascinating in the world, the worst are among the dullest.
And while the best jobs enjoy the gambling excitement of
finance, the worst suffer from its resulting insecurity. The Street
has terrible labor relations, because its leaders are literally
incapable of understanding the non-financial man’s desire for
peace and quiet and a steady income.
“They are also prejudiced against women, who are considered
too guileless, too prone to talk and too weak physically to carry
the burdens of financial labor. Nevertheless, the Street is full of
women; early every morning and late every afternoon the narrow
canyons of Wall Street become resonant sounding boxes to
magnify the click-click-clack-clack-click of the high heels
emerging from the subway or the office buildings. More than
half the workers in the financial district are women, and though
they do not have anything resembling equal rights they can be
thankful if they wish that they’re on the Street at all: there were
few females here before the males were drafted into the Army in
1941. Today the best-selling magazines on the newsstands that
rise at every subway entrance are the women’s slicks – but there
is still only one dress shop to compete with the sporting goods
stores for the available space. When the New York Clearing
House celebrated its centenary in 1953, and invited 1,200 bank
executives to a dinner, only one of the guests turned out to be a
woman, and she came from a bank in Trenton, New Jersey.
Except for a few angry feminists, a few lawyers and customer’s
ladies for feminist customers, the women of Wall Street have no
money.”
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Closing Time:
“The banks close at three o’clock (though people can sneak in
until three-thirty if they know the way), the exchanges shut down
at three-thirty. The people who work on the floors of the
exchanges, members and employees, go promptly home, and the
bank tellers follow when their telling is told. Upstairs, in the
banks and the brokerage houses, the accountants, the clerks and
the wonderful calculating machines get down to the difficult part
of it, figuring out how much cash money was involved in all
those verbal contracts made by the men whose word is as good
as their bond. Stocks must be delivered and paid for, numbers
moved around on the customers’ accounts, bills sent out and
collected, checks cleared. Meanwhile, the porters are cleaning
the litter of paper off the floors at the two stock exchanges, the
teletypes are stuttering less frantically in the offices of the over-
the-counter dealers. Executives take a last look at the Dow Jones
ticker and start heading home to the country, fat brief cases in
their hands.
“At the brokerage houses the telephones are at last free of
customers’ calls, and the girls in the wire rooms settle down to
long chats with lady and gentleman friends. Stenographers take
a coffee break before tackling the two hours’ worth of dictation
done by the boss in the half-hour since the market closed; these
letters must be ready for his signature tomorrow very early,
before the market opens. The bright young men pick up lists of
closing prices, make obscure marks on little charts, and vanish
into the library to check their calculations against the history of
the situation.
“Five o’clock sounds, the night lines are plugged into the
telephone switchboard, and most of Wall Street goes home,
lemmings marching to the subway. At some of the larger
brokerage houses a part-time evening clerical staff appears to
clean up the day; at others the clock ticks off time-and-a-half for
the regular help. The stock salesmen and the market spies report
briefly into their offices, and a few of the independent dealers
and minor executives sit happily down to a few hours’ work with
no noise from the goddam telephone. The bars sell much liquor
to men on their way home or back to work, grabbing a quick one.
“Around six-thirty the cleaning women arrive, and the lights
flash on in the towers. By eight o’clock they are going off again,
and by nine even the busiest of the brokerage houses has its
accounts squared away and locks the doors for the night. Now a
few selected lights recur, as the young lawyers, having eaten
steaks on the expense account, get back to their desks or their
firm’s library for night work. The presses roar on the bottom
floors of the Dow Jones building as the Wall Street Journal prints
its Eastern edition, and trucks line up on tiny New Street to take
the papers away.
“At eleven o’clock the young lawyers start packing up for the
day to return to their young wives and the children they have
scarcely if ever seen; the last telephone call of the night
summons home a minor executive of an underwriting house, who
has ducked out of a family dinner party to put the polishing
touches on tomorrow’s deal. By midnight the Street is deserted,
excepting only the night watchmen, the special police who guard
some six billion dollars’ worth of yellow gold in the subterranean
vaults of the Federal Reserve Bank, an occasional city
policeman, a lawyer or two, the night shift of bank clerks
clearing checks, and a few drunks wandering absent-mindedly
from their usual haunts, sleeping it off on the cold stone stoops of
Wall Street.”
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On investing:
“Roger Babson, dean and general oracle of investment analysts,
not long ago announced that in his half-century of experience 90
percent of all investors have lost money on their investments.
Considering the fact that there has been a secular trend upward in
the stock market, at the rate of 3 percent a year, Babson’s figure
was astonishing. [Ed. note: Remember, this is 1955. You had
the Great Depression and market crash to deal with and it
actually took the Dow Jones 25 years to get back to its 1929
high.] But of all the Wall Street professionals to whom the
figure was mentioned, only Merrill Lynch thought it was wrong.
“Such statistics as are available indicate that the public in general
starts buying a stock as it nears the crest of its rise, holds onto it
stubbornly as it drops down the other side of the wave, and then
sells resignedly well before the top of the upswing. Enthusiasm
for a security percolates down from the professionals to the
customer’s men (who are not professionals in the sense of having
a profession) to the public only after the price has risen
substantially; disappointment, or the sentiment that the thing is
now overpriced, percolates down only after the price has
reflected the new attitudes. The individual investor, at the mercy
of his emotions, his incomplete analytical equipment and general
ignorance of economics, will rarely make an accurate decision as
to whether a stock is overpriced or undervalued at the present
market.”
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On advertising:
In discussing Charlie Merrill (of whom I will have more thoughts
next week), Martin Mayer observes
“But the most remarkable contribution of all came from Merrill’s
insistence that the public is intelligent. The hot water in which
Wall Street habitually bathes flows from its disrespect for the
public. Fifteen years ago brokers never advertised, partly
because it was undignified, partly (bigger part) because it cost
money, but mostly because they felt that the public couldn’t
understand sensible ads, anyway. Those that did advertise used
the pattern now used by people like investment adviser Major L.
L. B. Angas: ‘OUR CUSTOMERS HAVE YACHTS.”
“By and large, Wall Street thought the public was a sucker;
Merrill thought Wall Street had suckered the public. He refused
to believe that people who could make money were incompetent
to invest it; he advertised respectfully to them, and to do his
advertising and public relations he hired no less than the
managing editor of Business Week, best of the business
magazines. [This ex-managing editor, Louis Engel, is now a
partner in the firm.] One day a full-page newspaper ad appeared,
eight columns in type so small it was barely legible, explaining
the central facts about stocks and bonds. The ad ran first in the
New York Times, then in other newspapers all over the country,
finally as a three-page slice of Time magazine. There were two
theories behind it: that the public wanted to learn, and that only
those who were willing to do a little work should be encouraged
to become investors. There is no way of telling how many of the
firm’s 150,000 customers came in through that ad; but they are
the best customers a firm could have.
“Finally, Merrill announced that he would keep commissions
low. [The minimum commission that a broker may charge his
customer is set down in the constitution of the Exchange, and the
members may raise or lower this minimum by majority vote.]
Merrill has always thought that brokers ought to cut their costs
rather than raise their commissions; he has fought every
proposed increase. Though the only one he ever beat came back
in modified form and triumphed, he has made it difficult indeed
for the boys to soak the public.
“Fifteen years ago, despite all the laws and all the agitation, the
stock market still hung from riggings. Today the exchanges, and
practically all the rest of Wall Street, stand four square as a free
market. No matter what factors an analyst counts in, a great slice
of the credit must go to Charlie Merrill.”
Wall Street History will return May 20.
Brian Trumbore
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