My Adventures with Your Money

H. Schefte

tatives of the corporation of Nat. C. Goodwin & Company of Reno, of which Mr. Goodwin had been president. It was now announced that Nat. C. Goodwin had become vice-president of the new corporation of B. H. Scheftels & Company. Because Mr. Goodwin was by profession an actor and not a stock broker and because

rchase stock of the Rawhide Coalition Mines Company. I became publicity manager for the Scheftels corporation, manager of its promotio

ce it bought, sold and delivered approximately 15,000,000 shares of mining stock. The Scheftels corporation broke every record in this regard that was ever made by a mining-stock brokerage and promotion house in the history of Wall Street. Throughout its career it was viciously attacked from many directions, but it held its own. Through its hold on the mining-stock speculating public, who were getting fairer treatment than ever before

. H. Scheftels & Compan

in the possession of the Department of Justice of the United States Government, will probably show that the annual expense

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lling a long-felt want." In almost every branch it was performing some function in a man

lass and best informed stockholders of mining companies in the country. It was also regularly sent to more than 2,500 stock brokers

erly as the Mining Financial News, and which removed to New York when the Scheftels company found the mining-stock public was hungry for real live news and the truth regarding the mining propositions of other States as well as thos

ing camps, and the most experienced market news-gatherers in the mining-stock-market centers of Salt Lake, San Francisco, Boston, Philadelphia,

corporation and the Mining Financial News, which adjoined each other, a staff of newspaper men with a mining financial experience of years was gathered. Little that transpired in the mines or the markets ever got away from them. Days before the mining newspapers of the West reached the East the Scheftels Market Letter or the Mining Financial Ne

re were thirty men who had been literally brought up in the mines and who, when they put their pen to paper, knew what they were writing about. The Scheftels company and the newspaper

y independent paper. It was desirable that its independence be maintained to a degree, so that the full value of the Mining Financial News, as a

concerns with which I had been identified and was always a quasi house-organ for this reason. But it invariably preserved a cert

THE "MINING

ls company could boast ownership of the newspaper at the head of its editorial page, it would be a great feather in the Scheftels cap and might lead investors to think that a

advertisements and at other times has. It is considered by Boston mining-stock brokers who handle the Michigan and Arizona copper securities as a necessary complement to their market literature. Walker's Copper Letter and the Boston Commercial are other examples. Walker's Copper Letter, which carries no advertising, for years has said the very nicest things about copper securities promoted and fa

ho would supply the sinews while the paper was getting on its feet and was establishing itself, was entitled to all the publicity which the paper could consistently and honestly give it. With this

the Scheftels enterprises therein did not average more than one-eighth of the whole, and it spent dolla

of the corporation owning the Mining Financial News, Mr. Hedrick being openly employed by the Scheftels company as head of its correspondence department. My own name was later placed at the head of the editorial page as editor, the Scheftels company making no bones about my position as absolute head of its publicity department, its promotion enterprises,

re of B. H. Scheftels were published on the front page of the Mining Financial News. Whenever anybody made a request for the Scheftels Market Letter a copy of the Mining Financial News was quite regularly mailed to him withou

tels company found it necessary to employ correspondents in all mining and market centers, and the same correspondents could work for both enterprises. Another economic argument was that an enormou

blic sorely needed right direction and that any brokerage house which led it rig

the fifteen men in its accounting department were compelled to work day and ni

an Francisco Stock Exchange, Salt Lake Stock Exchange, Toronto Stock Exchange, and other mining markets were unsurpassed. Its New York and Boston offices were connected w

hin 100 feet of the Curb market in that city. The public wires of the telegraph companies gave quick service between San Francisco, Salt Lake and Toronto, where business was transacted through members of the mining-stock exchanges of those cities. The private wires of the Sche

stering stocks, receiving stocks, paying money and drawing checks. The payroll of the mailing department, which was operated in conjunction with the Mining Financial News, was comparatively small. Money-saving machinery for the handling of the large output of market letters and newspapers gave excellent and econom

FTELS PR

ly a free-lance. It cracked up its own wares, careful always to keep within the facts, and never minced words about the quality of the goods of its contemporaries. The principle of both the Scheft

tock affected happen to be our worst enemies, tell it. No matter on what side of the market you think B. H. Scheftels & Company is committed in any of its own speculations, give the cust

ng policy was directly responsible for the loss of millions t

game began to opine that some big interest was behind the concern. Its dashing market methods, its mighty publicity measures and its unbridled assurance attracted much notice. From every quarter expert views reached the Scheftels company that its man

time. The corporation sought to distribute the stocks of which it became sponsor in turn-first Rawhide Coalition, then Ely Central, later Bovard Consolidated and finally Jumbo Extension-by the approved Wall Street system of establ

money and might lose a lot of it. Since money-making is his primary object, and stock distribution secondary, he has got to do some close figuring when markets are subject to the price-breakin

eds of thousands of dollars on a rising market, the million-dollar annual expense of the Scheftels company would not have been justified. Onc

open market in stocks on the gener

interest whatever, by going out in the open market and selling them to all bidders against future delive

ht or on margin because they want to gamble. The Scheftels company played the market for just the opposite reason. It didn't want to carry its

ate any fake bookkeeping system or otherw

esponsible was genuine to the last utterance. No news was suppressed on any stock. The corporation divulged to its customers and to the general public every piece of important outside or inside information regarding any

short of because of its promoter's options on hundreds of thousands of shares)-if the stocks on the general list thus "shorted" went up in price and the corporation was compelled to go into the market later and "cover" at a great loss, it was always in

he signature thereto of the person to whom the certificate was issued makes it negotiable by the broker. It was the rule of the house always to inform those who brought collateral to the offices for margin that the stocks would be used and that they would not receive the identical certificates back again. In a number of cases objection was made. Ac

it being specifically set forth in the promissory note which the borrowe

enerally understood by mining-stock traders

doing business on Wall Street. Three of these were members of the New York Stock Exchange and 14 were members of th

as collateral margin for the purchase of an additional block o

onth later when the stock ordered purchased had advanced in

for me a month ago at the market and return to me the certificate

delivery. When they did, not one of them returned th

reader, at this discl

ck on cash margin from any New York Stock Exchange house or send a certificate of stock as collateral in lieu of cash to one of th

to mix this stock in

ly exercised, of immediately transferring

oan securities or commodities pledged with him, for the purpose of raising the moneys necessary to make up the purchase price, and such stocks have no earmarks.

bucketing and bucketshops. In each section and subdivision it is provided that where both parties intend that there shall be no actual purchase or sale, but that settlement shall be made on quotations, a crime has been committed, the language of the statute being, "wherein both parties

he laws as written. Custom and practice are responsible. The purpose here is to communicate the exact nature of th

COMPANY AGAINS

editorially, denounced the business of margin trading. The Weekly Market Letter of the corporation sounded the same note. On several occasions, in large d

than 20 per cent. of the public's orders for these stocks given to other brokers were being executed, or, if exe

d undoubtedly have been able, during the nineteen months of its existence, successfully to promot

p their debit balances and demand delivery of their certificates, which would compel every b

were short of stocks to them or not. All they wanted, apparently, was to be assured that when they were

This hardship weighs heaviest on the promoter. There appears to be no cure. Even if a broker does buy the stock and does not himself sell it out again, there is no law that denies him the right to borrow on it o

less damaging to the customer than the one of actually executing the buying order for the customer at the time the order is given and then selling the stock right back on the market again for the account of the broker or his pal

is carrying for his customer, he is paid the full market value, as security for its return. In that case the broker ceases to incur inte

ich he has ceased to advance is crooked. Very well. If that be so, then all members of the New York Stock Exchange must be label

se price. Mr. Jones receives a statement at the end of the month charging him with interest at the rate of six per cent.

es the 1,000 shares of Steel, which he bought for the account of John Jones to make delivery through the Clearing House for the account of William Smith. Sometimes a fictitious William Smith is created, k

a matter of fact, too, the stock bought for Mr. Jones is never even delivered to his broker. The Clearing

a multitude of remarkabl

. Some of the narrative is undoubtedly "dry-as-dust," but its recital has appeared to be necessary to enable

use in the recital I have omitted to mention a multitude of happenings that were creditable to an extreme to the Scheftels company. Most of these had to do with the experiences of the Scheftels company as publicity age

ramatic series of even