Hostname: page-component-78c5997874-ndw9j Total loading time: 0 Render date: 2024-11-10T09:20:21.645Z Has data issue: false hasContentIssue false
  • English
  • Français

Price manipulation at the NYSE and the 1899 battle for Brooklyn Rapid Transit shares

Published online by Cambridge University Press:  05 November 2013

Timothy A. Kruse  and
Steven K. Todd
Timothy A. Kruse*
Affiliation:
Xavier University
Steven K. Todd*
Affiliation:
Loyola University Chicago
*
Corresponding author: T. Kruse, Department of Finance, Xavier University, 3800 Victory Parkway, Cincinnati, OH 45207-5162, USA, kruset@xavier.edu.
S. K. Todd, Department of Finance, Loyola University, 820 North Michigan Avenue, Chicago, IL 60611, USA, stodd@luc.edu.
Get access Rights & Permissions [Opens in a new window]

Abstract

In 1899, James Keene, a prominent bear, and Roswell Flower, a well-known bull, both attempted to manipulate the share price of Brooklyn Rapid Transit (BRT), a young commuter railway company. Flower and Keene were stock ‘operators’, who used pools of cash from like-minded investors to push share prices higher or lower. In their efforts to garner profits, BRT operators claimed insider status, planted rumors in the press, used leverage to accumulate large positions, manipulated borrowing costs and camouflaged trades. The events of 1899 can shed light on current market dynamics, and we draw parallels between the predatory trading strategies used in 1899 and those of today.

Keywords

financial market historystock operatorsbull manipulationbear raid

JEL classification

G10: General G01: Financial Crises N41: U.S. • Canada: Pre-1913 N21: U.S. • Canada: Pre-1913
Type
Articles
Information
Financial History Review , Volume 20 , Issue 3 , December 2013 , pp. 279 - 303
Copyright
Copyright © European Association for Banking and Financial History e.V. 2013 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aggarwal, R. and Wu, G. (2006). Stock market manipulations. Journal of Business, 79, pp. 1915–53.CrossRefGoogle Scholar
Allen, F., Litov, L. and Mei, J. (2006). Large investors, price manipulation, and limits to arbitrage: an anatomy of market corners. Review of Finance, 10, pp. 645–93.CrossRefGoogle Scholar
Allen, W. and Moessner, R. (2012). The international propagation of the financial crisis of 2008 and a comparison with 1931. Financial History Review, 19, pp. 123–47.Google Scholar
Amihud, Y. (2002). Illiquidity and stock returns: cross-section and time-series effects. Journal of Financial Markets, 5, 31–56.CrossRefGoogle Scholar
Ben-david, I., Franzoni, F., Landier, A. and Moussawi, R. (forthcoming). Do hedge funds manipulate stock prices? Journal of Finance.Google Scholar
Carhart, M., Kaniel, R., Musto, D. and Reed, A. (2002). Leaning for the tape: evidence of gaming behavior in equity mutual funds. Journal of Finance, 57, pp. 661–93.CrossRefGoogle Scholar
Clews, H. (1908). Fifty Years in Wall Street. New York: Irving Publishing Company.Google Scholar
Comerton-forde, C. and Putnins, T. (forthcoming). Stock price manipulation: prevalence and determinants. Review of Finance.Google Scholar
Cowing, C. (1957). Market speculation in the muckraker era: the popular reaction. Business History Review, 31, pp. 403–13.CrossRefGoogle Scholar
Hirota, S. and Sunder, S. (2007). Price bubbles sans dividend anchors: evidence from laboratory stock markets. Journal of Economic Dynamics & Control, 31, pp. 1875–1909.CrossRefGoogle Scholar
Jiang, G., Mahoney, P. and Mei, J. (2005). Market manipulation: a comprehensive study of stock pools. Journal of Financial Economics, 77, pp. 147–70.CrossRefGoogle Scholar
Lawson, T. (1905). Frenzied finance: the story of Amalgamated. Everybody's Magazine, 13, pp. 363–71.Google Scholar
Lefevre, E. (1902). Captains of industry: James R. Keene. The Cosmopolitan, 34, pp. 91–5.Google Scholar
Leinweber, D. (2009). Nerds on Wall Street: Math, Machines and Wired Markets. New York: Wiley.Google Scholar
Meeker, J. (1922). The Work of the Stock Exchange. New York: Ronald Press Company.Google Scholar
Moody, J. (1906). The Art of Wall Street Investing. New York: The Moody Corporation.Google Scholar
Nelson, S. (1900). The ABC of Wall Street. New York: The Business Historical Society, Inc.Google Scholar
New York Stock Exchange (1956). Fact Book. New York: New York Stock Exchange.Google Scholar
Noyes, A. (1905). Wall Street. The Independent, 58, pp. 179–86.Google Scholar
Noyes, A. (1909). Forty Years of American Finance: A Short Financial History of the Government and People of the United States since the Civil War, 1865–1907. New York: G. P. Putnam's Sons.Google Scholar
Owens, R. and Hardy, C. (1930). Interest Rates and Stock Speculation: A Study of the Influence of the Money Market on the Stock Market. Washington, DC: The Brookings Institution.Google Scholar
Poor's (1899). Poor's Manual of the Railroads of the United States, 32. New York: H. V. & H. W. Poor.Google Scholar
Pratt, S. (1912). The Work of Wall Street: An Account of the Functions, Methods and History of the New York Money and Stock Markets. New York and London: D. Appleton and Company.Google Scholar
Rollo Tape (1908). Market lectures. The Ticker, 1(4), pp. 33–5; 1(5), pp. 33–5; 1(6), pp. 3–6; 2(1), pp. 10–15.Google Scholar
Simon, C. (1989). The effect of the 1933 Securities Act on investor information and the performance of new issues. American Economic Review, 79, pp. 295–318.Google Scholar
Sobel, R. (1965). The Big Board: A History of the New York Stock Market. New York: Free Press.Google Scholar
Stedman, E. (1905). The New York Stock Exchange: Its History, Its Contribution to National Prosperity, and Its Relation to American Finance at the Outset of the Twentieth Century. New York: Stock Exchange Historical Company.Google Scholar
Thomas, D. (1967). The Plungers and the Peacocks: 170 Years of Wall Street. New York: Texere.Google Scholar
Van antwerp, W. (1913). The Stock Exchange from Within. New York: Doubleday, Page & Company.Google Scholar