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
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 ramifications—if 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 market—the 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 www.millerrisk.com.