Fourth Down

Last week Jesse Lauriston Livermore went bankrupt. It was his fourth failure as the most purple, the most fabulous living U. S. stock trader. He listed liabilities of $2,259,212.48, assets of $184,900. mostly life insurance. To a dancer named Lucille Ballantine he had promised to pay $150 per month for five years for keeping him "cheered and amused'' while he was getting his second divorce. One Naida L. Krasnova, once employed in his Chicago office, was suing him for breach of promise. His State and Federal income taxes were over $560,000 in arrears. At 56, Jesse L. Livermore was back where he started at 16.

As a board-boy in Boston's Paine, Weber & Co. in 1893, he was told he must either quit speculating in Boston bucket shops or quit his job. He quit the job. A towheaded greenhorn from West Acton, Mass., he presently began beating the bucket shops at their own game at a profit of $100 per week. In 1903, he bobbed up in New York. An act of God made him rich. He sold Union Pacific short and the San Francisco earthquake promptly shook $250,000 into his lap. But to a panic he owed his professional fame. An Anaconda bull in the copper boom of 1905, he abruptly took a short position just before the tense Thursday in October of 1907 when J. P. Morgan & Co. and other banks poured $25,000,00 into the call money market. While older and wiser traders were wiped out, Jesse Livermore emerged from the shambles with a reputation that was worth as much to him as his $3,000,000 profits. He bought a steam yacht and sailed for Boston, where he spent $200,000 vainly trying to save a brother-in-law from the chair for beating his wife to death. Caring nothing about stocks themselves, only about quotations. Jesse Livermore traded furiously on the theory that he was right 60% of the time, wrong only 40%. Out of the 20% differential he pyramided a fortune. The slightest public knowledge of his activities sometimes affected the entire market. The first time he lost his fortune was in 1915, when he declared himself bankrupt. But his reputation was sufficient to get him a new start, and out of War-boosted steel stocks he made enough to pay off debts of $2,000,000 in two years and buy $1,000,000 in Liberty Bonds to boot.

Back at the top once more, he was hired to push Piggly Wiggly stock. He pushed it 52 points in a single day, accumulating 50,000 shares. When it was discovered that he had a corner, the New York Stock Exchange had to set aside its rules and allow shorts five days to cover. When he began to predict an end of a falling market about 1927 nobody believed him. He quietly bought Mexican Petroleum, pushing its price 75 points. Still nobody believed Trader Livermore was buying. Rumors spread that he had been cleaned out. Suddenly he went off on a vacation with another bull fortune in his pocket. In Florida he chartered a special train to take him from Palm Beach to Jacksonville when he could not get a lower berth.

As the bull market grew bigger, he grew more mysterious, more legendary. He locked himself and his staff of some 20 into a suite of offices in Manhattan's Squibb Building overlooking Central Park. The door, bearing no name, was guarded by a plug-ugly who kept its key locked inside a little green cabinet. No one could leave as long as the market was open; only outgoing telephone calls were allowed. Trader Livermore sat in a jungle of telephone wires, his sharp blue eyes glued to the private board which recorded the minute-to-minute gyrations of his vast paper empire. During trading hours he was nervous, excited, jubilant as a boy. At 3 o'clock, when the ticker went blank, he bit down hard on his cigar, retired in silence to an inner chamber to study his day's trades. Often he stayed until 8.

When the Coolidge market broke, there were angry stories that Jesse L. Livermore had smashed it. As the public began to get out of Wall Street, his fame receded. For the first time in 25 years he did not seem to prosper in a falling market. He gave up the big office over- looking the park. His second wife divorced him in 1932 and promptly married a onetime Federal Prohibition agent. For his third wife he took a brewer's daughter. The great Livermore estate at Great Neck, L. L, where the shrubbery alone was worth $150,000, netted $168,000 at auction. Last December Jesse Livermore was a 27-hour news headliner when he walked out of his Park Avenue apartment one afternoon, lost his bearings, spent the night at a hotel, returned home the next day (TIME, Jan. i).

Perhaps Jesse L. Livermore will come back as he has done three times before. That was what his lawyers had in mind last week when they declared: "Mr. Livermore has made three very large fortunes. ... He has failed three times, on each occasion has paid 100 cents on the dollar with interest, and hopes to do so again."

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