Show remark that cost a fortune how carnegles words dissuaded from making an investment that would have been immensely profitable in what baa passed into history by the name of the rich mans panic of 1902 a ellent panic in which the market value of securities of all kinds greatly depreciated the common stock of the united states steel cor por atlon was quoted as low as 9 and a fraction a share many persons were of the opinion that the quotation tor this stock would drop so low that at last it would be practically nothing 4 others wondered whether there might not be an opportunity tor some gain it this stock was bought outright at nine plus among those who were thus persuaded were two brothers men of large wealth but who had not been conspicuously associated with the securities market the older of the brothers said to the other don t you think it would be an even chance it we were to buy outright now a block of say shares of this common stock that in the course ot a few months or a year or two there would come a reaction which might considerably appreciate the market price of this block 1 I have been thinking of that very thing replied the younger brother 1 I think we can afford to risk a nun decd thousand dollars with that amount of money we can buy about ten thousand shares of the stock you know said the older brother that john S kennedy Is a very good friend of ours and that he has never given us any unwise counsel so I 1 sug gest that before we buy the stock we talk with so the brothers sought out john S kennedy the canny new york bank er of scotch nativity who backed james J hill in his early railroad en in the northwest thereby making a colossal fortune most of which he left to charity at his death in 1909 and after a brief conversation with him saw that he was inclined to recommend the purchase of a conald erable block of steel common insist ing however that it it were bought it should be paid for in full and not bought on a margin dut said mr kennedy before you do anything wait until I 1 see mr carnegie and get bis opinion about the transaction A day or two later the brothers met mr kennedy by request well I 1 saw mr carnegie we are good friends and always have been reported the shrewd old financier I 1 asked him if he thought there would be any real danger of loss it a conald erable block of steel common stock were bought outright at the prevailing quotations mr carnegie hesitated for a few moments and at last he told me that be bad made it a rule never to give any advice to anyone respect ing the purchase or sale of stocks dealt in on the stock exchange that he said was the only safe rule he could follow but added mr carnegie 1 I will tell you this I 1 have bonds aggregating about secured by the properties of the steel company and the way things are now going it sometimes occur to me tha I 1 may possibly be obliged 0 o foreclose upon those bonds now it seems to me continued mr kennedy that it mr carnegie thinks he may possibly be compelled to foreclose the mortgage by which his bonds are secured it would be the wiser pan not to buy any of the corn mon stock of this company acting upon this advice the broth ers did not make the purchase hut when some years later the market price of this stock reached 80 and they realized that they could have sold the block of stock they were going to buy at a profit of they were tempted to ask mr kennedy if he thought andrew carnegie was still wondering whether he might not have to foreclose the mortgage which secured his united states steel corpora lm bonds copyright 1911 by E 3 edward AH rights nei erred |