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The Golden Age of Wall Street: Part III


Ross M. Miller
Miller Risk Advisors
July 26, 2004

Graphic Scanning had not changed much between when I left it in September 1971 and when I returned in June 1972, but I had changed a great deal. My freshman year at Caltech had exposed me to many positive influences and a few pernicious ones. But, in the end, I had survived and that's what mattered most.

My freshman training, no doubt strongly influenced by the inescapable aura of the great Feynman, included advanced seminars in breaking and entering everything from student house rooms to password-protected computers. My application of this arcane knowledge was limited by Caltech's prime directive: "No member of the Caltech community shall take unfair advantage of any other member of the Caltech community." (Oddly, the phrase "unfair advantage" would arise again when I worked at the company that served as the inspiration for GFF in my novel Rigged. There, only research projects that provided the company with an "unfair advantage" over its competition were deemed worthy of funding. I'm not making this up.) One popular interpretation of this Honor Code among undergrads was that "insiders" were protected, but "outsiders" were fair game. Just ask McDonald's.

Fortunately for me, the only summer employee (we were never referred to as "interns" because we were real workers and were treated that way) who outranked me at Graphic Scanning, the kid from Reed College who I'm calling "Barry Jr." for my own protection, did not understand the distinction between insiders and outsiders. One of Barry Jr.'s first assignments in the summer of 1972 was to set up the new time clock for the company. Graphic Scanning did not have many rules, but one rule that was taken seriously was the proper clocking of time. In the process of setting up the new time clock, Barry Jr. had managed to figure out how to hack the time clock so that he could clock in early and clock out late. Quite possibly, he shared this knowledge with others. When Barry Yampol, Chairman and founder of Graphic Scanning, discovered what Barry Jr. had done, he was fired on the spot and I became the ranking summer employee.

Rising to the top did not raise my hourly pay rate, which still hovered above the minimal wage, but it did carry with it an extremely valuable option. (At the time, Black and Scholes were still having their colleagues lobby the Journal of Political Economy to publish their pioneering paper on options and the CBOE was still in the planning phase, so Wall Street did yet appreciate the power of options.) That option was to work overtime on Sundays to keep an eye on things at the office. It was a lonely job, but it was quite remunerative because it paid time-and-a-half on top of time-and-a-half, which makes two-and-a-quarter time. I could read between the occasional phone call (most of them from Barry) and make almost an additional half-week's pay in a single day.

The other major benefits of my exalted rank were that people almost treated me like a human being and I got to do interesting work in the company's front office, which was divided into two sections. One section housed the company's senior executives. While I did only the occasional errand for them, they were exceptionally nice to me. The other section handled Graphic Scanning's international communications and was the incubator for new businesses.

As I mentioned in the first part of this series, Graphic Scanning made its money by skimming the cream of the telecommunications business. Its core business at the time that I worked there was financial communications, particularly those related to securities offerings. It was easy for the company to establish a presence in Manhattan and the handful of American cities that were financial centers, but it did not even attempt to have an international presence. This was not a big problem back then; however, because most offerings stayed inside the United States. Graphic Scanning was willing to handle international communications if that was what the sender wanted them to do. In that case, all they did was to forward the message to an international common carrier and bill the sender for something like 500% of what it cost them to send the message. Brokerage firms and investment banks learned to route only their domestic traffic to Graphic Scanning. Once, however, while I was there, an investment banker mistakenly (so he says) sent several international messages through Graphic Scanning and was very unhappy when the bill came. As I remember it, one thing led to another and this incident literally turned into a federal case that Graphic Scanning went on to win and established a precedent for forcing common carriers to carry the traffic of their competitors. (That's my understand of the legal ramificationsif you want a real legal opinion, contact a lawyer, not me.)

I spent most of my time on two particular projects. The first project was the development of a primitive type of word processor designed to automate the creation and printing of Graphic Scanning's standard "We are all sold" message. The "word processor" consisted of a smart CRT terminal connected to a bulky computer printer. The smart terminal was smart enough to have both protected and addressable fields. My job was to "program" the terminal to have the standard message text in the protected fields and then allow the operator to tab from one addressable field to another to enter the information specific to the message. When the message was complete, it was send to the printer with a single keystroke. It was clever, but I'm not sure that it was cost-effective given the low cost of semi-skilled typists back then.

The second project was Graphic Scanning's entrance into its second major marketthe wiring of funds to truckers at truck stops. Barry Yampol hired a real trucking guy to head up this business. Part of my freshman education at Caltech included the screening of "On the Waterfront," so I knew what this sort of guy might be capable of and I stayed out of his way. (Caltech had already started to go Hollywood in the early 1970s and my freshman humanities course "reading list" contained both books and films. My professor for this course, Robert Rosenstone, would later work with Warren Beatty to adapt his biography of John Reed into the movie Reds.) I felt sorry for the truckers who were stuck inside of Mobile, penniless, and had to rely on me to get them some cash.

For all that went on at Graphic Scanning during the summer of 1972, the greatest influence on my future came from the book that I read every day on the commuter and PATH trains to work and back. In the next (and likely last) installment of this series, I'll write about the book that changed my life and the other things that went on outside the office.

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