The Lore and Legend of the Bulls and Bears
“Nothing is more admirable than the fortitude with which millionaires tolerate the disadvantages of their wealth.”
— Rex Stout, Mystery Novelist (1886-1975)
After gold was discovered at Sutter’s Mill in California, instant wealth was for the taking and all across America men made the decision to go west. Many sought and some found fortune in a camp called Hangtown, which at that time rivaled San Francisco.
Among the diversions sought by the miners on a Sunday afternoon was the bullfight that had long been a part of California’s development under Mexican rule. The bullfight, which had been introduced to Spain by the Moors in the 11th century, was brought to Mexico by the Spanish and was part of the fiesta held regularly at the mission-presidio complexes established between 1536 and 1832. The Mexicans added a wrinkle of their own by arranging fights between Spanish bulls, first brought to the new world by Columbus, and the native grizzly bear that roamed the California coast.
The Spanish longhorn cattle were brought to Mexico in quantity in 1521 and virtually ran wild until Texas became a state in 1845. The longhorn had a keenly developed sense of survival and often encountered the grizzly in the wild.
The game that entertained the miners in Hangtown was to chain a 1,000-pound grizzly to a huge stake in the middle of an arena and then turn the bull into the same arena. The fights were short and violent with the bull sometimes winning by impaling the bear, but mostly the bear won by meeting the charge between the horns and using his enormous paws to wrestle the 1,500-pound bull down to the ground, often breaking its neck in the process.
Since the gold discoveries created a flood of trading in mining shares, both in San Francisco and New York the terms “bull” and “bear” were introduced in the investment jargon to describe opponents in setting market direction. The analogy had been used before by the Spanish writer Don José de la Vega in 1688, but the active Civil War markets established the terms for all time.
The first person to be called a bear or bull was Jacob Little, who made his mark by introducing short selling in the panic of 1837. He made and lost four fortunes in the years that preceded the Civil War and was dubbed “The Little Bear” by fellow traders. One time he escaped a corner in Erie Railroad by buying convertible bonds that had been sold in England, unbeknown to the bulls, and he converted the bonds to cover his short position.
The two combatants that focused the terms for all time were the bear, Daniel Drew, and the bull, Cornelius Vanderbilt. The analogy fit perfectly the gigantic struggles between these two titans that went on for 30 years over steamboats and railroads.
Vanderbilt was as straightforward and optimistic as a bull, while Drew was devious, without scruples, and always trying to wrestle the market lower. These two bumped heads continually with a fight over Harlem Railroad during the Civil War producing a typical encounter.
Vanderbilt had been accumulating shares of the road for a number of years and introduced improvements to the line. Uncle Daniel was attracted when the stock started to move and joined in the buying to give the price an artificial boost from $8 to $100. He then cooperated with the politician “Boss” Tweed to mount a massive bear attack on the road. They went heavily short the stock, and Tweed used his influence to get Harlem’s right-of-way rescinded.
Vanderbilt let them “operate” until the stock dropped to $72. They had sold 137,000 shares, even though only 110,000 shares were outstanding. Vanderbilt then began soaking up the shares held by others and advanced the price to $179, forcing the bears to terms with the Commodore.
But then Drew attacked again, selling the stock down to $100 before Vanderbilt began to squeeze again. He raised the price to $285 and offered to settle again. Drew, hat in hand, pleaded with the Commodore and was finally excused with a $500,000 loss.
Vanderbilt advised Drew, “After this, never sell what you haven’t got, Dannie.” Which prompted Dan’l to compose his famous couplet, “He who sells what isn’t his’n, must buy it back or go to prison.”
In the gold camps, the bear defeated the bull in most fair fights. On Wall Street, the smart money follows the bull. Daniel Drew died broke, unable even to fulfill pledges to his church (he was short there too!), while Commodore Vanderbilt left his son William a fortune of $80 million——the only son he didn't disowned because he was as ruthless in business as his father and the one Cornelius believed capable of maintaining the business empire.
- Mack Frankfurter, Managing Director
— Rex Stout, Mystery Novelist (1886-1975)
After gold was discovered at Sutter’s Mill in California, instant wealth was for the taking and all across America men made the decision to go west. Many sought and some found fortune in a camp called Hangtown, which at that time rivaled San Francisco.
Among the diversions sought by the miners on a Sunday afternoon was the bullfight that had long been a part of California’s development under Mexican rule. The bullfight, which had been introduced to Spain by the Moors in the 11th century, was brought to Mexico by the Spanish and was part of the fiesta held regularly at the mission-presidio complexes established between 1536 and 1832. The Mexicans added a wrinkle of their own by arranging fights between Spanish bulls, first brought to the new world by Columbus, and the native grizzly bear that roamed the California coast.
The Spanish longhorn cattle were brought to Mexico in quantity in 1521 and virtually ran wild until Texas became a state in 1845. The longhorn had a keenly developed sense of survival and often encountered the grizzly in the wild.
The game that entertained the miners in Hangtown was to chain a 1,000-pound grizzly to a huge stake in the middle of an arena and then turn the bull into the same arena. The fights were short and violent with the bull sometimes winning by impaling the bear, but mostly the bear won by meeting the charge between the horns and using his enormous paws to wrestle the 1,500-pound bull down to the ground, often breaking its neck in the process.
Since the gold discoveries created a flood of trading in mining shares, both in San Francisco and New York the terms “bull” and “bear” were introduced in the investment jargon to describe opponents in setting market direction. The analogy had been used before by the Spanish writer Don José de la Vega in 1688, but the active Civil War markets established the terms for all time.
The first person to be called a bear or bull was Jacob Little, who made his mark by introducing short selling in the panic of 1837. He made and lost four fortunes in the years that preceded the Civil War and was dubbed “The Little Bear” by fellow traders. One time he escaped a corner in Erie Railroad by buying convertible bonds that had been sold in England, unbeknown to the bulls, and he converted the bonds to cover his short position.
The two combatants that focused the terms for all time were the bear, Daniel Drew, and the bull, Cornelius Vanderbilt. The analogy fit perfectly the gigantic struggles between these two titans that went on for 30 years over steamboats and railroads.
Vanderbilt was as straightforward and optimistic as a bull, while Drew was devious, without scruples, and always trying to wrestle the market lower. These two bumped heads continually with a fight over Harlem Railroad during the Civil War producing a typical encounter.
Vanderbilt had been accumulating shares of the road for a number of years and introduced improvements to the line. Uncle Daniel was attracted when the stock started to move and joined in the buying to give the price an artificial boost from $8 to $100. He then cooperated with the politician “Boss” Tweed to mount a massive bear attack on the road. They went heavily short the stock, and Tweed used his influence to get Harlem’s right-of-way rescinded.
Vanderbilt let them “operate” until the stock dropped to $72. They had sold 137,000 shares, even though only 110,000 shares were outstanding. Vanderbilt then began soaking up the shares held by others and advanced the price to $179, forcing the bears to terms with the Commodore.
But then Drew attacked again, selling the stock down to $100 before Vanderbilt began to squeeze again. He raised the price to $285 and offered to settle again. Drew, hat in hand, pleaded with the Commodore and was finally excused with a $500,000 loss.
Vanderbilt advised Drew, “After this, never sell what you haven’t got, Dannie.” Which prompted Dan’l to compose his famous couplet, “He who sells what isn’t his’n, must buy it back or go to prison.”
In the gold camps, the bear defeated the bull in most fair fights. On Wall Street, the smart money follows the bull. Daniel Drew died broke, unable even to fulfill pledges to his church (he was short there too!), while Commodore Vanderbilt left his son William a fortune of $80 million——the only son he didn't disowned because he was as ruthless in business as his father and the one Cornelius believed capable of maintaining the business empire.
- Mack Frankfurter, Managing Director
posted by Cervino Capital Management LLC at 12/07/2006
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