Business: Boy Plunger

At a table in Manhattan’s noisy Stork Club one night last week sat a tall, thin, aging man and his wife. A society photographer asked the couple whether they minded having their picture taken. “Not at all,” said the thin man. “But it’s the last picture you’ll take, because tomorrow I’m going away for a long time.”

For the rest of the evening Jesse Lauriston Livermore, most fabulous living U. S. stock trader, sat brooding at his table while his wife danced with friends. It was just three years short of half a century since he had made his first play in the market—a $3.12 profit on Burlington Railroad common. He was 15 then, a board boy in Boston’s Paine, Webber & Co. They told him to stay out of the bucket shops or quithis job. He quit. A towheaded greenhorn from West Acton, Mass., son of a poor Yankee farmer, he began beating the bucket shops at their own game until they refused to take his business. With $2,500 in his pocket, 21 years behind him, he lit out for Wall Street.

Wall Street received its country cousin with open arms, and in no time at all relieved him of his bank roll. It was eight years before he caught on to the New York market. Even then, it took an act of God to give him his first big killing. He was vacationing at Atlantic City in the spring of 1906 when a hunch told him to sell Union Pacific short in the face of a roaring bull market. Two days later the San Francisco earthquake shook $250,000 into his lap.

Jesse Livermore had learned that big money could be made only on the big swings. Now he had enough capital to play it that way. Just before the tense Thursday in October of 1907 when J. P. Morgan & Co. and other banks poured $25,000,000 into the call-money market he took a short position. While older & wiser traders were wiped out, Jesse Livermore picked up a cool million or so and a reputation beyond price. Thirty years old, he was again dubbed the Boy Plunger—this time by Wall Street. He bought a steam yacht and sailed for Boston, where he spent $200,000 trying to save a brother-in-law from the chair for killing his wife.

Caring nothing about stocks themselves, only about quotations, Jesse Livermore had a theory: he would be right 60% of the time, wrong 40%, pyramid a fortune out of the 20% differential. In 1908 he discovered the cotton market, was wiped out. He could scarcely have chosen a more unfortunate time to go broke. For four years (1911-1914) the stockmarket couldn’t make up its mind whether to go up or down. For Jesse Livermore that meant starvation. In 1915 he declared himself bankrupt for the first time.

Borrowing a new stake, Jesse returned to the stockmarket. For six weeks he watched World War I boost Bethlehem Steel upward until he knew that it was ripe. The day after he climbed aboard it had jumped 45 points. He was hot. Within two years he bulled and beared himself into a profit of some $5,000,000.

After the war, Trader Livermore was hired to push Piggly Wiggly stock. He pushed it 52 points in a single day and cornered the market; the Stock Exchange had to set aside its rules and allow shorts five days to cover. In the 1925 wheat market ending with the Black Friday crash he bought grain in 5,000,000-bushel lots while the market was rising, turned bear at the top and sold 50,000,000 bushels short for an approximate profit of $10,000,000. Quietly sensing the end of a falling market in 1927, he bought Mexican Petroleum, pushed it up 75 points, suddenly went off on a vacation with another bull fortune in his pocket. Unable to get a lower berth on a Florida train, he chartered a special to take him from Palm Beach to Jacksonville.

As the bull market grew bigger, he barricaded himself and a staff of 20-odd in a suite of offices in Manhattan’s Squibb Building overlooking Central Park. The nameless door was guarded by a plug-ugly who kept its key locked in a little green cabinet. No one could leave while the market was open; only outgoing telephone calls were allowed. Inside, like a grand croupier, sat Jesse Livermore, a bank of telephones at his elbow, his sharp blue eyes on his private board.

When the Coolidge market broke, there were angry stories that Trader Livermore had smashed it. It had, in fact, smashed him. He was short 20,000, long 80,000 shares. Three years later his second wife divorced him and married a onetime Prohibition agent. Later, to satisfy her debts, he sold his $1,350,000 estate at Great Neck, L. I. for $169,000. For his third wife, he took an Omaha, Neb. brewer’s daughter, Mrs. Harriet Metz Noble, in 1933. A year later he was in bankruptcy —his fourth, for $2,259,000. At 56, he was back where he started at 16.

Jesse Livermore undoubtedly would have come back a fourth time and paid his debts if SEC hadn’t changed the rules. By 1937 the market became too strictly regulated for operators of his type. Through all his market days he had never been a real market insider. He never learned that sometimes it was better to take stock than cash, better to get stock control of a business to tide a man over his old age. He was a trader, a gambler—one of the sharpest. When, last spring, he put his system down on paper and reopened his office to trade on commission for customers, it was a sign that he was through. No man who could make money for himself ever told the public how to do it.

The day after his visit to the Stork Club last week, Jesse Livermore turned up for lunch in the bar of the Sherry-Netherland Hotel. Tense, distraught, he took a table by himself, spoke to no one, from time to time took out a little memorandum book and jotted while he ate his lunch. Then he left. At 4:30 that afternoon he was back again. He ordered two old-fashioneds, sipped them slowly. Suddenly he rose from his table and went into the lobby. Ten minutes later an attendant found him slumped in a chair in the ground-floor men’s room. At his feet was a 32-calibre automatic. Blood ran from the hole behind his ear. In the memorandum book police found an eight-page note to his wife. Over & over it repeated: “This is the only way out. … I am tired of fighting. … I am unworthy of your love. … I am a failure.”