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Chapter 2 The Boy Plunger On paper, it shouldn’t have been a fair fight. The mustachioed sixty-four-year-old legal lion at the height of his public powers—the national and even international counsel of choice when a host of business titans battled, a graduate of Columbia Law School and a millionaire many times over— moved in for the kill against his youthful prey, a witness who didn’t finish the eighth grade. June 9, 1922 found Pop sitting on a very hot seat. “Why should you do such a thing?” demanded Samuel Untermyer, the Special Assistant Attorney General for the State of New York, as he paced the floor before the witness stand in New York’s City Hall. “For the fun of it?” “Probably to make a living,” shot back twenty-five-year-old Emil Mosbacher. “Do you make a living by gambling?” asked Untermyer, wearing his trademark three-piece suit despite the unseasonably warm eighty-five-degree weather. “If you want to call it such,” returned Pop. “Trading I call it.” At issue this contentious day was not a proposed merger of three steel companies —Inland Steel Company, Midvale Steel and Ordinance Company, and Republic Iron and Steel Company. Rather, Untermyer had zeroed in on the fact that stock traders like Pop were buying and selling shares of the newly merged company, called North American Steel, on the New York Curb Market (the precursor to what today is known as the American Stock Exchange) before the stock actually, technically existed. In keeping with Curb Market rules, Pop had applied to “specialize” in the new North American Steel stock, and had indeed been present at the creation of this new market on Friday, June 2 at Post Number 8. As the stock opened at 1:00 p.m. at $50 per share, Pop testified, excitement ran high. Over the next two hours of frenetic activity, until the close of trading at 3:00 p.m., my father made thirty-five different transactions on the stock—buying 7,672 total shares, and selling 3,400 on that first day (in addition to the trading he did for his own account). By Wednesday of the next week, in fact, he was a total of 6,000 shares “short” of the market—betting that the stock would go down. At nearly $50 a share, Pop was controlling shares worth $300,000. 1. Roughly $3.3 million in 2006 dollars. 20 夝 The Boy Plunger If that wasn’t stressful enough, seven days later, on June 9, he found himself sitting on the witness stand in City Hall getting grilled by one of the best lawyers in the country. The problem, as Untermyer saw it, was the fact that while the North American Steel stock had been authorized for sale, the paper stock was not yet issued —so Curb Market traders like Pop, in essence, were trading stocks that technically didn’t exist yet. As the testimony continued, the verbal combat between Pop and Untermyer became more of a running skirmish. “Isn’t it gambling?” Untermyer demanded. “I call it trading.” “What is the difference between this kind of trading and gambling?” “I don’t know.” “There isn’t any?” “You can tell me that, Mr. Untermyer.” Untermyer had already earned national renown in 1912 when he led a congressional investigation into the concentration of wealth and political power in what Untermyer dubbed the “money trusts.” That investigation led to the Federal Reserve Act, the Federal Trade Commission Act, and other legislation designed to curb excesses in the finance industry. Ten years later, however, Untermyer was examining the steel supply and other issues that contributed to the housing shortage during World War I— not irregularities on the securities markets. The combined resources of North American Steel would produce 10 percent of America’s ingot metal; thus, Untermyer was taking a decidedly curious detour to investigate the Curb Market’s trading on this proposed steel merger. For his part, after Pop dropped out of school in the eighth grade, he started delivering newspapers for the New York Commercial. Fate soon interceded, because his paper route eventually included many of the brokerage houses in lower Manhattan. Pop was captivated by what he saw during his daily rounds—particularly the chaos and commotion caused by the group of men who gathered every trading day outside on Broad Street, regardless of the weather, to flash peculiar hand signals, shout furiously and endlessly among themselves, play...

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