Brian Garfield: Villiers Touch

By now the brokers, bankers, secretaries, corporation potentates and their entourages had long ago hurried into their offices. The streets still flowed with workers and late arrivals, rushing, as thick as pigeons in the Piazza San Marco. In offices looming all around, men would be swiveling toward Quotron tickers and watching their clocks, synchronizing like field generals preparing for battle. In these slow-ticking moments, all over the world, men and women would be drawing their telephones near-waiting, adrenalin flooding in anticipation, for the Market (very capital “M”) to open.

They waited keenly, in offices and homes and hotels, for the Magic Hour when they could dial their stockbrokers, ask “How’s Motors?”, talk about yesterday’s closing Dow-Jones, place buy or sell orders, discuss the weather or the day’s political news with brokers who only wanted to be let alone by the lonely phone callers so they could run their businesses.

All over the United States right now they would be converging into the funeral-parlor board rooms of Stock Exchange member firms: wise investors, ignorant speculators, compulsive gamblers, ticker-tape addicts, retired bored pensioners. In the Far West, to coincide with New York’s exchange hours, brokers’ offices would open as early as seven A.M. The customers would sit for the next five hours with faces studiously guarded against any show of feelings as they watched the boards tick over, watched the stock news chatter by like an endless freight train, pacing off the latest sale price, bid-and-asked, high, low, and close of all active listed stocks…

Hastings went across the street into the old mausoleum-the New York Stock Exchange. Crowds churned through the doors. There were virtually no women in the place-the Street was one of the few masculine preserves left in the world. He had a brief vision of Diane, talking archly: That’s probably what’s wrong with it.

A group preceded him into the visitors’ gallery; the young girl-guide spoke briskly, identifying the shirtsleeved men on the crowded floor below: floor traders, two-dollar brokers, commission house representatives, odd-lot dealers, specialists-“You are looking at the men who do the actual physical trading of listed stocks.” Not true, Hastings thought-not physical. No stock certificates passed these portals. Here it was all word-of-mouth-trading on faith, always assuming the stock certificates which were traded here did, in fact, somewhere, exist.

It was getting on toward ten o’clock. The floor men began to coagulate around the eighteen trading posts. No one ran: the milling crowd must be protected. No one smoked: paper must be safeguarded-the slips on which orders from a few dollars to a few millions were jotted in cryptic symbols, as vital as certified bank checks. But these restrictions would not observably reduce the frenzied bedlam that was about to erupt.

Precisely at ten o’clock the gong on the south wall sounded its brassy doomsday clang.

The New York Stock Exchange was open for another day’s pandemonium.

All noise and confusion, traders clustered at their posts, licked pencils, hurtled their voices against the babble. By the end of the day the floor would be ankle-deep in paper. Overhead, giant boards signaled floor brokers by number on turning metal flaps. Thump, slap. Roar. Trades were made in seconds; the words “We buy from you” were enough to bind a transaction-not even a handshake was needed.

He moved along the rail, looking for Herb Capps’s bald head in the foaming sea below: Herb Capps, floor specialist in Northeast Consolidated Industries stock. Finally Hastings spotted him, at a post near the west wall.

Hastings went downstairs, flashed his identification to the guard, and went onto the floor. He went across like a swimmer pushing against the current; he came up to Capps’s station just as a floor broker approached:

“How’s NCI quoted, Herb?”

“Thirty-two to 32?.”

“Put me down for an odd lot-fifty shares at 32?.”

“Might be a few ahead of you on the list at that price.”

“How many?”

Capps glanced past the broker and grinned at Hastings. “You know I can’t give that out, George. There’s an SEC hawkshaw breathing right over your shoulder.”

The broker turned and shook hands with Hastings. Then he looked at his watch. “I’ve got a buy order too, five hundred shares at the market. You said 32??”

“Right.”

“Okay. We buy from you five hundred.”

Capps nodded his bald head; the broker and Capps checked each other’s badges before they separated to send word to their customers. Hastings waited for Capps to return.

The transaction was completed; if the market’s ticker machinery wasn’t jammed, the trade would appear on the tape within a minute or two, and a new market would be established in NCI stock-up an eighth over the previous close.

Capps came back, amiable and unperturbed by the thunder around him. Hastings said, “NCI’s started to move in the past couple of weeks-what do you think?”

“It keeps me busy.”

“Do you see anything behind it?”

“Not that I know of. From down here you don’t see much anyway. I just execute orders, you know?” Capps was friendly and smiling, but there was something vaguely defensive in his answers; he wheeled to meet a new broker who came up to trade. Hastings watched Capps flip pages in his notebook while the broker talked in characteristic clipped phrases. The floor specialist’s notebook was on a par in value with a top-secret copy of a diplomatic document. Capps would have his buy and sell orders listed on facing pages, written down in the order received: he acted as a one-man auction market, and the knowledge of the listings in his book gave him the insider’s advantage-he knew the volume of buy orders just below the current market, the number of sell orders just above it. Specialists like Capps were forbidden to divulge the contents of their notebooks to anyone but Exchange officers and the SEC.

Of the men on the trading floor, market specialists like Capps made up at least one-fourth of the population. The specialist’s function was to “make a market” for one or more listed stocks. Every stock listed on the Big Board had at least one specialist, sworn to “maintain a fair and orderly market” by buying or selling against the trend of the market.

Regulations were strict: the specialist couldn’t be an officer of any company he handled on the floor; he was not allowed to operate for his own personal account if he had any public bids or offers-they always had to come first-but he was required to trade for his own account when it was necessary to keep the market balanced. The specialist split his commissions with brokers, made his income on profits in trading his own account. It was his duty to execute stop orders for clients-to buy if the stock was rising, or to sell (to prevent further loss) if the stock was falling.

The rules were stringent; but it was not unheard of for a specialist to get nervous when the market started to slide-to start selling fast, to get in ahead of the public, which would keep buying the stock until the news caught up on the tape. Nothing, in this gambling casino, was guaranteed; nothing was certain.

In all this bustle and press, Russ Hastings was supposed to be traffic cop and detective all at once. It was his job, the SEC’s job, not to police the price of shares, but to make sure investors were informed of all activity that might have an effect on stocks. “Full disclosure”-that was the SEC’s aim, and its limitation. The government agency could not prevent an idiot from forming a corporation and selling shares for the express purpose of hijacking airplanes to Cuba. It could only see to it that the corporation openly declared its intent, its assets, its liabilities, and its structure.