Monday, November 21, 2011

New York Stock Brokers: Ladenburg, Thalmann & Co.

As John Langlois noted in his cancel of the day blog for May 3, 2010, Ladenburg, Thalmann & Co. was founded as a Wall Street securities firm in 1876 by American banker Ernst Thalmann and German banker Adolph Ladenburg. Thalmann maintained the seat on the New York Stock Exchange. Today the firm continues to operate with headquarters in Miami and offices in more than 10 other US cities.  And Ladenburg Thalmann Financial Services is part of the current Russell 3000 Index. 

On its face the broker memo below appears to be a straight forward purchase of 200 shares of Mobile & Ohio Railroad stock by Ladenburg, Thalmann.  Given the stock resale tax rate of 2cts/$100 in original share value, each share had an original value of $100.  That these 200 shares sold for just $48.50 per share, or $9,700, means there was a loss of $10,300 from the $20,000 original value.  But there's more to the story.

I've always enjoyed collecting on-document usages.  Documents provide an historical perspective that stamps alone cannot.  While these cancels provide the name of the firm and the date of the transaction, without the document we'd not have known that the stamps represented the tax on the sale of M&O Railroad stock at such a loss, and we'd further not have been able to speculate that Ladenburg, Thalmann likely turned a significant and immediate profit on this transaction.  And speculate, I believe, is what Thalmann was doing when he purchased these M&O shares.  

Stock Purchase Memo
Ladenburg, Thalmann & Co.
double-line, stamp-like boxed cancel
L. T. & Co./JAN/29/1901

Allowing us to speculate about Thalmann's M&O purchase was having access, via this blog, to a critical mass of M&O stock sales memos.  Earlier this year John blogged about six M&O stock sales memos dated between December 30, 1898 and February 1, 1901 documenting that the stock languished in the low 30s and 40s during 1899 and 1900 until February 1, 1901 when it spiked and sold for as much as $70.50 per share on news that the M&O had agreed to a stock swap offer with the more financially sound Southern Railroad.  So the 200 shares Thalmann purchased for $9,700 at $48.50 on  January 29, 1901 could have been sold for around $14,100, or a tidy profit of $4,400 just three days later! 

The name Johnstone doesn't appear in King's Views of the New York Stock Exchange so presumably the seller wasn't a recognized broker.  Was this simply a serendipidous purchase, or did Thalmann have knowledge of the pending stock swap and go looking for M&O stock in late January 1901?  We'll never know for sure.  Considering M&O had been trading in the 30s and low 40s for the past two years, Johnstone may have been pleased with, and perhaps also may have turned a profit when Thalmann bought at $48.50.  Clearly, documents and the information they provide can offer a sense of historical context and a glimpse into the cultural tapestry of this colorful era.  

All of this also serves to demonstate the great value of the 1898revenues blog and the synergy it creates, where information pooled from numerous sources and participants enhances our capability for understanding, not only the material we choose to collect, but also the socio-economics of the Spanish American War era.  Thank you John for having the foresight to start blogging about 1898 revenues and for all the time and energy you devote to it.

Here's a Ladenburg, Thalmann sales memo documenting the sale of 200 shares of the Southern Pacific Railroad to another New York broker, William B. Wadsworth.    

 Stock Sales Memo
circular cancel
Ladenburg, Thalmann & Co.

Again, given the $4 tax, the initial value of these 200 shares was $20,000, so this sale represents a loss in value of $9,400 or nearly 50% from the initial value of the stock! 

Like the M&O, Southern Pacific shares had been selling in the 30s and 40s during 1900.  The speculation in railroad stocks in advance of the May 9, 1901 Wall Street Panic had run the SP's price up to $67 as of May 1, 1901.  Selling 10 weeks later for $53 represents a 20+% drop from that speculative high. 

Either Ladenburg, Thalmann had two NY offices, or it moved sometime between January 29, 1901 and July 18, 1901, as the purchase memo has them at 46 Wall Street, and the sales memo, a couple of blocks away at 25 Broad Street.  

Not surprising, given Adolph Ladenburg's European banking connections, the firm did business overseas.  The piece shown below is a clip from a foreign bill of exchange.   Enough of the bill remains to indicate it was written in Pounds Sterling so the transaction likely involved a British bank.  The handwritten date on the other side is Jan 25, 1901 so it would appear the year date on the circular cancel wasn't properly updated to 1901.  Assuming the bill was drawn as part of a "set" (the clip does bear the word "FIRST") the tax rate was 2cts/$100 in value.   The bill's value in dollars then had to be between $24,100 and $24,200.                

Clip from Ladenburg, Thalmann Bill of Exchange 

Unlike the stock memos where the Commerce issues were both cut and handstamp cancelled, the dollar Commerce issues used here, as well as the 80cent battleship, were perfin cancelled before being applied to the document. That suggests access to the stamps used for bills of exchange was open to a wider number of employees -- the main purpose of perfins being a security against internal theft. The perfin is most easily read on the enlarged 80 cent battleship issue shown below. 

perfin cancel:
L T Co

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