Business Adventures

Twelve classic tales from the world of Wall Street.

• The fluctuation — the little crash in ’62
  • The stock market would not be the stock market if it did not have its ups and downs.
  • The cause of the 1962 crisis remains unfathomable; what is known is that it occurred, and that something like it could occur again.
• The fate of the Edsel — A cautionary tale
  • The Ford Motor Company decided to produce a new automobile in what was quaintly called the medium-price range and went ahead and designed it more or less in conformity with the fashion of the day, which was for cars that were long, wide, low, lavishly decorated with chrome, liberally supplied with gadgets, and equipped with engines of a power just barely insufficient to send them into orbit.
  • On November 19, 1959, having lost, according to some outside estimates, around $350 million on the Edsel, the Ford Company permanently discontinued its production.
  • By its preliminary program of promotion and advertising, the Ford Company had built up an overwhelming head of public interest in the Edsel, causing its arrival to be anticipated and the car itself to be gawked at with more eagerness than had ever greeted any automobile before it.
• The federal income tax — its history and peculiarities
  • A good deal of the attention given to the income tax is based on the proposition that the tax is neither logical nor equitable.
  • In the United States it is comparatively easy to raise tax rates and to introduce tax-avoidance devices, and it is comparatively hard to lower tax rates and to eliminate tax-avoidance devices.
  • The evolution of our income tax has been from a low-rate tax relying for revenue on the high income group to a high-rate tax relying on the middle and lower-middle income groups.
  • Low-income taxpayers cannot afford to be shown how to pay less.
  • Certainly no conceivable income-tax law could please everybody, and probably no equitable one could entirely please anybody.
  • The ideal income tax envisioned for the far future by many reformers would be characterized by a short and simple Code with comparatively low rates and with a minimum of exceptions to them. In its main structural features, this ideal tax would bear a marked resemblance to the 1913 income tax — the first ever to be put in effect in the United States in peacetime.
• A reasonable amount of time — insiders at Texas Gulf Sulphur
  • The legislation, the Securities Exchange Act, requires corporate insiders to forfeit to their corporations any profits they may realize on short-term trades in their own firms’ stock.
  • Calls provide the cheapest possible way of gambling on the stock market, and the most convenient way of converting inside information into cash.
• Xerox Xerox Xerox Xerox
  • From the late sixteenth century until Victorian times “copy” and “counterfeit” were nearly synonymous.
  • What was needed for the compulsion to flower into a mania was a technological breakthrough, and the breakthrough came at the turn of the decade with the advent of a machine that worked on a new principle, known as xerography, and was able to make dry, good quality, permanent copies on ordinary paper with a minimum of trouble.
  • A more immediate problem of xerography is the overwhelming temptation it offers to violate the copyright laws.
  • The development of xerography was largely empirical.
  • The success of Xerox was proof that the old ideals of free enterprise still held true, and that the qualities that had made for the company’s success were idealism, tenacity, the courage to take risks, and enthusiasm.
• Making the customers whole — the death of a president
  • The capital reserve of the Haupt firm had fallen below the Exchange’s requirements for member firms, and that he was formally reporting the fact, in accordance with regulations.
  • The Exchange’s man was in the Haupt offices conducting it at the very time the trouble broke.
  • The facts were these: Haupt owed about thirty-six million dollars to a group of United States and British banks; since over twenty million of its assets were represented by warehouse receipts that now appeared to be worthless, there was no hope that Haupt could pay its debts.
• The impacted philosophers — non-communication at GE
  • More and more of whom seems inclined to regard communication, or the lack of it, as one of the greatest problems not just of industry but of humanity.
  • It would appear that a subordinate who received a direct oral order from his boss had to figure out whether it meant what it seemed to or the exact opposite, while the boss, in conversing with a subordinate, had to figure out whether he should take what the man told him at face value or should attempt to translate it out of a secret code to which he was by no means sure he had the key.
• The last great corner — a company called Piggly Wiggly
  • Between spring and midsummer, 1958, the common stock of the E. I. Bruce Company, the nation’s leading maker of hardwood floors, moved from a low of just under $17 a share to a high of $190 a share.
  • It seemed to be entirely the result of a technical stock-market situation called a corner.
  • Finally, this one eventually turned out to be not a true corner at all, but only a near thing.
  • By dint of secretly buying up all its available shares while simultaneously circulating a series of untruthful rumors of imminent bankruptcy to lure the short sellers in, he achieved an airtight trap.
• A second sort of life — David E. Lilienthal, businessman
  • In “Big Business,” Lilienthal argues that not only the productive and distributive superiority of the United States but also its national security depends on industrial bigness; that we now have adequate public safeguards against abuses of big business, or know well enough how to fashion them as required; that big business does not tend to destroy small business, as is often supposed, but, rather, tends to promote it; and, finally, that a big-business society does not suppress individualism, as most intellectuals believe, but actually tends to encourage it by reducing poverty, disease, and physical insecurity and increasing the opportunities for leisure and travel.
• Stockholder season — annual meetings and corporate power
  • Most stockholders are thoroughly dividend-fattened these days.
  • Top executives are finding it necessary to learn how to lessen the adverse impact of the few disrupters on the majority of share-owners, while simultaneously enhancing the positive effects of the good things which do take place in the annual meeting.
  • When the role of dissenter is left to the Fool, there may be trouble ahead for everybody.
• One free bite — a man, his knowledge, and his job
  • “to keep confidential all information, records, and documents of the company of which I may have knowledge because of my employment”
  • Every dog has one free bite. A dog cannot be presumed to be vicious until he has proved that he is by biting someone.
• In defense of Sterling — the bankers, the Pound, and the Dollar
  • Early in 1964, it began to be clear that Britain, which for several years had maintained an approximate equilibrium in her international balance of payments — that is, the amount of money she had annually sent outside her borders had been about equal to the amount she had taken in — was running a substantial deficit.
  • Two questions were on most of the bankers’ minds. One was whether the Bank of England proposed to take some of the pressure off the pound by raising its lending rate. The other question was whether Britain had enough gold and dollars to throw into the breach if the speculative assault should continue.