The Golden Age of Wall Street: Part I

by

Ross M. Miller
Miller Risk Advisors
www.millerrisk.com
July 12, 2004

If you walked to just the right spot on Morris Avenue—maybe a hundred yards past where the man in the broken-down bus used to sell hot donuts for five cents each to the kids in the neighborhood until the health department got wise to him—you could see the two towers rising in the distance. Morris Avenue began at the Elizabeth train station and headed so far into the heart of New Jersey that it seemed to me like it went on forever.

For two summers, I took the train from Elizabeth into Newark's Penn Station and then caught the PATH train into the temporary World Trade Center (WTC) stop. Only one WTC tower was open when I started work on Monday, June 21, 1971 and the concourse in which the "permanent" station would reside would not be built for years. Indeed, it was watching the PATH trains coming into the current makeshift station at Ground Zero on a recent visit to a friend whose new office overlooks the site (and whose old office was in it) that got me thinking about the old days.

I worked on the 11th floor of 11 Broadway, across from Bowling Green Park, a verdant sliver that fronted the Customs House. It was typical of many of the older buildings in the Wall Street area and it is still standing. It was good that the walk from the PATH station to the office was downhill because I would not discover coffee for three years—the closest that I came to coffee during the twice-daily coffee breaks were the Drake's coffee cakes to which I had become mildly addicted. I have the distinct impression that they tasted better back then.

One might say that my mother got me this job. She placed a classified ad on my behalf that appeared on page 22 in the June 15, 1971 issue of the Wall Street Journal. The ad, which appears among the ads below, is largely truthful. I was not yet a Caltech student (I would start my freshman year in September) and my mother must have estimated my typing speed using a form of nonparametric statistics that I have yet to reconstruct.

I remember only a single call in response to the ad (I think that there may even been one or two others) and that was from a company called the Graphic Scanning Corporation. I went in for an interview, passed their typing test, and was hired on the spot. I cut my final week of high school classes and was fortunate that both class day and graduation were held in the evening. My hourly pay was $1.75, a stunning fifteen cents more than the minimum wage.

Although Graphic Scanning was not an investment bank or brokerage house, it was very much at the center of what was happening on Wall Street in the days leading up to the Dow's first breach of 1000 in late 1972. Graphic Scanning handled virtually all of the communications involved with public offerings—both initial and secondary. The "tombstones" for these offerings took up a good chunk of the real estate in a thirty-two page issue of the Wall Street Journal. Graphic Scanning sent out all the paperwork associated with the offerings and received all the confirmations from syndicate members that they had sold their allotted shares. Traditionally, this business had gone to Western Union, but through specialization, Graphic Scanning could provide faster and better service than WU and undercut their prices.

The heart of Graphic Scanning was a room roughly ten-by-fifteen feet that held dozens of that marvel of modern technology—the "graphic scanner"—known back then as the facsimile machine and now just the fax machine. They were slow—a single page dense with text took several minutes to transmit—but they were effective when they weren't being repaired, which was often. I had never seen a fax machine before and would not see another one for several years after I stopped working at Graphic Scanning. Caltech, which had every high-tech toy imaginable, did not have fax machines around where students could see them.

It should be noted that back in the early 1970s, very few college students had summer jobs on Wall Street. The only ones that I had every heard of were my colleagues at Graphic Scanning. Even my Harvard contemporary, Bill Gates, with all his connections couldn't swing a summer job on Wall Street (not that he even thought of trying). Bill's mother may have had clout, mine had chutzpah). Understandably or not, Wall Street firms were reluctant to hire "smart" college kids, much less let them near their computers. Anyway, with one or two exceptions, brokers and investment bankers used computers to send out statements, not to make investment decisions.

Graphic Scanning was the brainchild of Barry Yampol. The company was essentially a cream-skimming operation. Barry would find a profitable segment of the telecommunications business and go after it. His initial thrust was to take away Western Union's Wall Street business and he would go on to become a pioneer in the cell phone industry. My coworkers told me that his previous venture was a company that made socks.

In later years, I would meet several people who were just like Barry—all of them hedge fund managers. Barry appeared to live at the office along with his wife (who did things like manage the payroll) and his son. Barry also "adopted" the other college student who was working at the company when I arrived. He was a Reed College math student and I have forgotten his name, so I'll call him "Barry Jr." Both Barry and Barry Jr. were short and ambitious. I was tall and a bit of a slacker back then even though the word had not yet been invented.

Graphic Scanning had a caste structure. The lowest class was the messenger class. The messengers, many of them my age but not my ethnicity, hung out in a holding room and would smoke pot in the men's room. The office manager was a crusty ex-Marine named Nat. (I think of his last name as being Hentoff, but that's someone else). Nat biggest job was to keep the messengers in line. The fistfights that frequently broke out between Nat and the messengers provided entertainment to the other workers. Messenger turnover was high.

On the next rung up the ladder were the guys in the fax room who looked like older security guards who had been fired for inattentiveness. They would spend day and night wrapping one page after another around each fax machine's drum. These guys were human page feeders.

Above the fax guys were the phone girls. They came from Brooklyn and Queens and were not yet old enough to be "old maids," a term that the incipient feminism of the time had not erased from the language. They would write each message on a sheet of paper. The typical message was: "To Drexel Firestone. WAAS 500 NSM. White, Weld." Our phone gals knew all the brokerage guys calling in with the messages and I was under the impression that some primitive form of phone sex was going on. Developing a good relationship with customers is important to a growing business.

The next class up was where I started out. As a message typist. We took what the phone gals scribbled down and turned it into presentable messages. For example, "WAAS" meant "We are all sold" and there were other standard abbreviations. The typists were more skilled (or less skilled, depending on how you look at it) versions of the phone girls along with a smattering of college kids like me.

The key to being a fast and efficient typist was not raw typing speed, but a good memory. The more addresses you could memorize, the fewer that you had to look up. (The phone girls never wrote down the address unless it was from an irregular syndicate member.) My favorite brokerage name was "duPont Glore Forgan" for which I coined the phrase "the average forgan has three legs and harbles." (The etymology of the word "harbles" can be traced back to a coinage of the "Podmind," an actual Southern Californian cited in Rigged. Further details will have to wait until my Caltech memoirs.) Financial regulations, scandals, etc., eliminated most of the firms that I memorized. Back then, there were two Huttons—E.F. and W.E.—now there are none.

The more complicated typing tasks, including the full text of securities offerings, belonged to the next class up. They consisted entirely of message typists who hung on long enough without being fired. While I was there, long enough was about six weeks.

All of these castes worked in Graphic Scanning's back office. In the front office, the two highest castes resided. The lower of the two did "special projects." Barry Jr. worked there until he was fired and I would work there during my second summer at Graphic Scanning. The highest caste was Graphic Scanning's executives with the exception of Barry, who was a caste unto himself.

With all this background out the way, I can start getting down to real business next week.

Copyright 2004 by Miller Risk Advisors. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to www.millerrisk.com.