Livermore and Cutten

Livermore and Cutten—Rarer than Lions in Tennessee

Livermore and Cutten

Edwin Lefevre’s, Reminiscences of a Stock Operator, is possibly the greatest book on the stock market ever written. But while every trader knows it by repute, most of us fail to appreciate its lessons. It was first published in The Saturday Evening Post appearing in 11 issues between May 1922 and June 1923. It was illustrated with amusing cartoons, and shortly after republished in book form by the small eclectic publishing house, Doran. This was someway through the great bull market; the crowds were flocking to the Street searching for the next mark up, for the next big pool to ride on the coat tails. They believed Livermore could teach them how; they believed that they too could hang at the bar in millionaire’s row. He attracted a dedicated audience, and today it remains a lasting tribute; one of the very few published works on the market continually in print over ninety years.

To be fair, at first glance the first edition might be considered somewhat unprepossessing. It was published in a light tan cloth, with the lettering on the upper cover strangely indented. The text has been altered and the illustrations deleted. It’s always been a tough book to locate and I consider myself lucky to have handled three. I know of only a couple of copies with the dust wrapper, which unfortunately I have never had the chance to buy, beg, borrow, or acquire. Rare as angel dust, but what a pleasure to own.

You might ask why anyone would pay thousands of dollars when an ebook or a paperback can suffice? Who cares about typography any more? Who cares about texture?

Well, even in poor condition you would care greatly if you were in proud possession of an original Reminiscences. It would feel different; you would have had to cut the pages to open them, to gain access to their secrets. You would notice the lettering, its unevenness, the host of differences in every copy, so slight the mind might not articulate, but the eye would register and relish age’s imperfections.

This first incarnation would make you feel as if you were at Livermore’s elbow, watching his stocks on the big board chalked up in front of him, or glancing at the ticker. Today with a paperback, or an ebook, I almost guarantee the words would go straight through you, they would resonate less, make a lesser impression, like a coin too rubbed, the features worn.

So you have bought your copy. You are reading about the bucket shops.  You are reading about Jesse’s many up and downs, his uncanny trades, before the San Francisco earthquake in 1906, when he made his first fortune. However you might not have noticed Jesse Livermore is called Larry Livingston, and although the book reads like an autobiography, it was written by Edwin Lefevre after a series of interviews.

Mr E. Lefevre was an astute market observer. He had written rather a good book of fiction, Wall Street Stories, first published in 1901 in which several of the characters were also based on real life players, James R Keene, and Daniel Drew. Westbrook, a literary critic described him as having, “A journalist’s eye for realism, and a novelist’s penchant for romance.” True, but scant praise.

Westbrook obviously lived in academia. He never realized Reminiscences is part one of an epic tale from ancient Greece, heroic in its victories, terrible in its tragedy, one on which the gods would finally frown. As we know, in 1940 Livermore shot himself in the Sherry Netherland hotel, New York. In his notebook he had left a note for his last wife, Harriet, “I am truly sorry but this is the only way out for me.”

It was a dreadful end to a rollercoaster life. He had lost everything, and this time he knew, he could never recover. This was the speculator who J.P. Morgan prevailed upon to stop shorting the market in the crash of 1907 for otherwise he would have taken down Wall Street. This was the man who seven years later lost his fortune, $4 million on a bad bet on cotton, and regained the lot shortly after.

However without Lefevre’s coaxing, without his gifts for description, we would, I believe be poorer. We would still know many of the facts, but such insights into trading, such lively brushstrokes, would have escaped us. The irony is so secretive a player in the markets, was so candid in his interviews. Together they made a perfect team, Wall Street’s answer to Boswell and Dr Johnson.

In the pits in Chicago or on Wall Street there were many others duking it out. But another lone operator stands head and shoulders above the rest, “The dirt farmer from Guelph” as he liked to style himself - Arthur Cutten. That name doesn’t ring many bells but he was master of the wheat pits before heading to Wall Street for the 20’s bull market. In 1928 his holding in Montgomery Ward was worth $36 million alone. Time Magazine put him on the front cover, with a photo holding a tethered prize bull. A clever take, for if Livermore was often bearish, Cutten usually took the bull tack.

They often clashed, famously over wheat in 1924. Livermore knew Cutten was building a big line, over 20 million bushels, and jumped on the bandwagon. Everyone joined in, until Livermore sold, out of the blue, smashing the price.

Cutten held on and made millions of dollars; Livermore took a much smaller but not insubstantial profit.

When it came to living, the similarities finish. Livermore was cast the tragic hero in an epic drama. Subject of two biographies by Sarnoff (1967) and Smitten (2001), he was, with his wives and showgirls, fortunes lost and then regained, palaces for houses, indoor shooting ranges and sea-going yachts, in many senses a perfect candidate for The Great Gatsby.

Arthur Cutten, was more careful in every sense. He died rich, having held on to his fortune through the 30’s. He was dogged in his trading, and dogged in pursuit of the government over taxes, with the Grain Futures Administration for restricting his operations in wheat.

He too, like Livermore had his story written. It was titled The Story of a Speculator. Unlike Reminiscences, it has pretty much sunk without trace. It was commissioned by The Saturday Evening Post, and was published in four issues during November and December, 1932. Perhaps the editors thought they were onto a winner after the success of Livermore? They chose a well known business author of the day, Boyden Sparkes to do the donkey work, and enliven the story. He was no Lefevre. Perhaps the material defeated him; perhaps Cutten was too stubborn, as most of the book describes his endless battles with the government, with tracking down the burglars who had robbed him. If you’re interested in the history of speculation, it is a curious backwater, mostly dry, dull, and once again very dogged. Even the illustrations in The Saturday Evening Post, reproductions from old photos of grain elevators out West, and the wheat pit in Chicago, look and feel tired, like nondescript wall paper. After the magazine series no publisher would take it on, apart from Arthur Cutten!

He republished a private edition in 1936. You might imagine he would have spent some real money on the production and made it his heirloom. At least he could have dressed up the binding in finest calf, with gilt edges, and a gilded spine. The light green cloth, the paper label on the front, makes it look impersonal. This is the great irony. Because it is so lackluster in every sense, it has disappeared from the market. Perhaps most of the copies disappeared after he and his wife died, (they were childless).

I was lucky to purchase one copy many years ago from a private collection. Finding another would be like tripping over angel dust, no less rewarding than finding a copy of Reminiscences in the dust wrapper. Although the works are so different, one so redolent, one so meagre, to a true collector rarity alone suffices. For that reason both have become two great prizes, which is only fair when you consider whose stories they told, Livermore and Cutten, two of the greatest speculators ever to sit down and play at the No Limit table.

Christopher Dennistoun collects and deals in rare books on the stock market, and if you're interested, can be reached at [email protected]

Below you will find some images IFA has obtained of the Saturday Evening Post: