human
You have now, said Mr. Cassilis,
gpt
Can't I sell my shares at once, if I please?
human
You certainly can, and so ruin the companies. Consider my undertaking to my friends on the allotment committees.
gpt
Yes, sir.
human
You forget, Mr. Beck, that you are a wealthy man. We do not manage matters in a hole and corner. The bears have sold on expectation of an allotment. Now as they have not got an allotment, and we have, they must buy. When such men as you buy largely, the effect is to run shares up; when you sell largely, you run them down.
gpt
Many companies, perfectly sound in principle, may be ruined by a sudden decrease in the price of shares; a panic sets in, and in a few hours the shareholders may lose all. And if you bring this about by selling without concert with the other favoured allottees, you'll be called a black sheep.
human
It's a hard thing----
gpt
You have thus two things to think of--not to lose your own profit, and not to spread disaster over a number of other people by the very magnitude of your transactions.
human
Then why sell at all? Why not keep the shares and secure the dividend? It's a hard hank, all this money.
gpt
You can certainly do that, if you please, he said slowly.
human
That, however, puts you in the simple position of investor.
gpt
I thought I was that, Mr. Cassilis?
human
Not at all, Mr. Beck. The wise man distrusts all companies, but puts his hope in a rise or fall. You are not conversant with the way business is done. A company is formed--the A B C let us say. Before any allotment of shares is made, influential brokers, acting in the interest of the promoters, go on to the Stock Exchange, and make a market.
gpt
How is that, sir?
human
They purchase as many shares as they can get. Persons technically called 'bears' in London or in New York sell these shares on the chance of allotment.
gpt
Well?
human
To their astonishment they don't get any shares allotted. Millions of money in a year are allotted to clerks, Mr. Beck--to anybody, in fact--a market is established, and our shares figure at a pretty premium. Then begins the game of backing and filling--to and fro, backward and forward--and all this time we are gradually unloading the shares on the public, the real holders of every thing.
gpt
I begin to see,
human
By this time you will perceive, Mr. Cassilis continued,
gpt
And leave the rest in the lurch? No, sir, I can't do that.
human
Then, Mr. Beck, I can advise you no more.
gpt
I hold twenty thousand shares; and if I sell out, that company will bust up.
human
I do not say so much. I say that if you sell out gradually you take advantage of the premium, and the company is left exactly where it was before you joined, to stand or fall upon its merits. But if you will sell your shares without concert with our colleagues in these companies you are in, we shall be very properly called black sheep.
gpt
Then, Mr. Cassilis, said Gilead,
human
Very well; as you please. You have only to give me a power of attorney, and I will dispose of all your shares in the best way possible for your interests. Will you give me that power of attorney?
gpt
Sir, I am deeply obliged to you for all the trouble you are taking.
human
A power of attorney conveys large powers. It will put into my hands the management of your great revenues. This is not a thing to be done in a moment. Think well, Mr. Beck, before you sign such a document.
gpt
I have thought, sir, said Gilead,
human
In that case, I will have the document--it is only a printed form, filled up and sent on to you for signature immediately.
gpt
Thank you, Mr. Cassilis.
human
And as for the shares in the various companies which you have acquired by my advice, I will, if you please, take them all over one with another at the price you gave for them, without considering which have gone up and which down.