The Second Harlem Corner (1864)
By 1864, the Harlem City Railway stock price had settled down to about $150 per share because the Broadway extension still had not been approved. Vanderbilt was furious with the corruption of the New York City Council. He decided to go directly to the New York State Legislature in Albany to get the extension down Broadway approved for the Harlem City Railway in the form of a state bill. Daniel Drew was mad, too, and wanted revenge against Cornelius. Drew talked state legislators into doing a bull squeeze with him by spreading rumors the bill was going to pass.
The good news drove up the Harlem City Railway stock, and Daniel Drew began selling it short. He had also talked the state legislators into secretly planning to defeat the bill even though they were spreading lies that they w
ere going to pass it. The defeat of the bill forced the stock price down from $150 to $100 in two days.
Vanderbilt was furious…
(he was also known for his bad temper and mean nature) and bought more shares of the Harlem City Railway
then were really in existence. This forcefully restricted the supply of the stock and, as per the law of supply and demand, the share
price skyrocketed. He forced the short sellers to settle at $285, and Daniel Drew lost over a half million dollars again.
– Doc Brown
BIO: Doc Brown is a national expert on the stock market. His courses “How to Make a Million Dollar Portfolio from Scratch” at the Oxford Club is a national bestseller. Dr. Brown’s research appears in some of the most prestigious academic journals in the field of finance. See Journal of Financial Research and Financial Management. Scott is an associate professor of finance in the Graduate School of Business at the University of Puerto Rico.
SURVIVAL RULE: History proves that a few people get so rich from stock scams —- as corporate insiders do today with
ESOs —- that they can buy off politicians and even control the government —- insiders still do this today with inside corporate executive special interest groups on capital hill!
FURTHER READING: Clews, H., 1888, Twenty Years in Wall Street, New York: Irving Publishing Co.
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