BETWEEN SPRING and midsummer, 1958, the common stock of the E. L. Bruce Company, the nation’s leading maker of hardwood floors, moved from a low of just under $17 a share to a high of $190 a share. This startling, even alarming, rise was made in an ascending scale that was climaxed by a frantic crescendo in which the price went up a hundred dollars a share in a single day. Nothing of the sort had happened for a generation. Furthermore—and even more alarming—the rise did not seem to have the slightest bit of relation to any sudden hunger on the part of the American public for new hardwood floors. To the consternation of almost everyone concerned, conceivably including even some of the holders of Bruce stock, it seemed to be entirely the result of a technical stock-market situation called a corner. With the exception of a general panic such as occurred in 1929, a corner is the most drastic and spectacular of all developments that can occur in the stock market, and more than once in the nineteenth and early twentieth centuries, corners had threatened to wreck the national economy.
The Bruce situation never threatened to do that. For one thing, the Bruce Company was so small in relation to the economy as a whole that even the wildest gyrations in its stock could hardly have much national effect. For another, the Bruce “corner” was accidental—the by-product of a fight for corporate control—rather than the result of calculated manipulations, as most of the historic corners had been. Finally, this one eventually turned out to be not a true corner at all, but only a near thing; in September, Bruce stock quieted down and settled at a reasonable level. But the incident served to stir up memories, some of them perhaps tinged with nostalgia, among those flinty old Wall Streeters who had been around to see the classic corners—or at least the last of them.
In June of 1922, the New York Stock Exchange began listing the shares of a corporation called Piggly Wiggly Stores—a chain of retail self-service markets situated mostly in the South and West, with headquarters in Memphis—and the stage was set for one of the most dramatic financial battles of that gaudy decade when Wall Street, only negligently watched over by the federal government, was frequently sent reeling by the machinations of operators seeking to enrich themselves and destroy their enemies. Among the theatrical aspects of this particular battle—a battle so celebrated in its time that headline writers referred to it simply as the “Piggly Crisis”—was the personality of the hero (or, as some people saw it, the villain), who was a newcomer to Wall Street, a country boy setting out defiantly, amid the cheers of a good part of rural America, to lay the slick manipulators of New York by the heels. He was Clarence Saunders, of Memphis, a plump, neat, handsome man of forty-one who was already something of a legend in his home town, chiefly because of a house he was putting up there for himself. Called the Pink Palace, it was an enormous structure faced with pink Georgia marble and built around an awe-inspiring white-marble Roman atrium, and, according to Saunders, it would stand for a thousand years. Unfinished though it was, the Pink Palace was like nothing Memphis had ever seen before. Its grounds were to include a private golf course, since Saunders liked to do his golfing in seclusion. Even the makeshift estate where he and his wife and four children were camping out pending completion of the Palace had its own golf course. (Some people said that his preference for privacy was induced by the attitude of the local country club governors, who complained that he had corrupted their entire supply of caddies by the grandeur of his tips.) Saunders, who had founded the Piggly Wiggly Stores in 1919, had most of the standard traits of the flamboyant American promoters—suspect generosity, a knack for attracting publicity, love of ostentation, and so on—but he also had some much less common traits, notably a remarkably vivid style, both in speech and writing, and a gift, of which he may or may not have been aware, for comedy. But like so many great men before him, he had a weakness, a tragic flaw. It was that he insisted on thinking of himself as a hick, a boob, and a sucker, and, in doing so, he sometimes became all three.
This unlikely fellow was the man who engineered the last real corner in a nationally traded stock.
THE game of Corner—for in its heyday it was a game, a high-stakes gambling game, pure and simple, embodying a good many of the characteristics of poker—was one phase of the endless Wall Street contest between bulls, who want the price of a stock to go up, and bears, who want it to go down. When a game of Corner was under way, the bulls’ basic method of operation was, of course, to buy stock, and the bears’ was to sell it. Since the average bear didn’t own any of the stock issue in contest, he would resort to the common practice of selling short. When a short sale is made, the transaction is consummated with stock that the seller has borrowed (at a suitable rate of interest) from a broker. Since brokers are merely agents, and not outright owners, they, in turn, must borrow the stock themselves. This they do by tapping the “floating supply” of stock that is in constant circulation among investment houses—stock that private investors have left with one house or another for trading purposes, stock that is owned by estates and trusts and has been released for action under certain prescribed conditions, and so on. In essence, the floating supply consists of all the stock in a particular corporation that is available for trading and is not immured in a safe-deposit box or encased in a mattress. Though the supply floats, it is scrupulously kept track of; the short seller, borrowing, say, a thousand shares from his broker, knows that he has incurred an immutable debt. What he hopes—the hope that keeps him alive—is that the market price of the stock will go down, enabling him to buy the thousand shares he owes at a bargain rate, pay off his debt, and pocket the difference. What he risks is that the lender, for one reason or another, may demand that he deliver up his thousand borrowed shares at a moment when their market price is at a high. Then the grinding truth of the old Wall Street jingle is borne in upon him: “He who sells what isn’t his’n must buy it back or go to prison.” And in the days when corners were possible, the short seller’s sleep was further disturbed by the fact that he was operating behind blank walls; dealing only with agents, he never knew either the identity of the purchaser of his stock (a prospective cornerer?) or the identity of the owner of the stock he had borrowed (the same prospective cornerer, attacking from the rear?).
Although it is sometimes condemned as being the tool of the speculator, short selling is still sanctioned, in a severely restricted form, on all of the nation’s exchanges. In its unfettered state, it was the standard gambit in the game of Corner. The situation would be set up when a group of bears would go on a well-organized spree of short selling, and would often help their cause along by spreading rumors that the company back of the stock in question was on its last legs. This operation was called a bear raid. The bulls’ most formidable—but, of course, riskiest—counter-move was to try for a corner. Only a stock that many traders were selling short could be cornered; a stock that was in the throes of a real bear raid was ideal. In the latter situation, the would-be cornerer would attempt to buy up the investment houses’ floating supply of the stock and enough of the privately held shares to freeze out the bears; if the attempt succeeded, when he called for the short sellers to make good the stock they had borrowed, they could buy it from no one but him. And they would have to buy it at any price he chose to ask, their only alternatives—at least theoretically—being to go into bankruptcy or to jail for failure to meet their obligations.
In the old days of titanic financial death struggles, when Adam Smith’s ghost still smiled on Wall Street, corners were fairly common and were often extremely sanguinary, with hundreds of innocent bystanders, as well as the embattled principals, getting their financial heads lopped off. The most famous cornerer in history was that celebrated old pirate, Commodore Cornelius Vanderbilt, who engineered no less than three successful corners during the eighteen-sixties. Probably his classic job was in the stock of the Harlem Railway. By dint of secretly buying up all its available shares while simultaneously circulating a series of untruthful rumors of imminent bankruptcy to lure the short sellers in, he achieved an airtight trap. Finally, with the air of a man doing them a favor by saving them from jail, he offered the cornered shorts at $179 a share the stock he had bought up at a small fraction of that figure. The most generally disastrous corner was that of 1901 in the stock of Northern Pacific; to raise the huge quantities of cash they needed to cover themselves, the Northern Pacific shorts sold so many other stocks as to cause a national panic with world-wide repercussions. The next-to-last great corner occurred in 1920, when Allan A. Ryan, a son of the legendary Thomas Fortune Ryan, in order to harass his enemies in the New York Stock Exchange, sought to corner the stock of the Stutz Motor Company, makers of the renowned Stutz Bearcat. Ryan achieved his corner and the Stock Exchange short sellers were duly squeezed. But Ryan, it turned out, had a bearcat by the tail. The Stock Exchange suspended Stutz dealings, lengthy litigation followed, and Ryan came out of the affair financially ruined.
Then, as at other times, the game of Corner suffered from a difficulty that plagues other games—post-mortem disputes about the rules. The reform legislation of the nineteen-thirties, by outlawing any short selling that is specifically intended to demoralize a stock, as well as other manipulations leading toward corners, virtually ruled the game out of existence. Wall Streeters who speak of the Corner these days are referring to the intersection of Broad and Wall. In U.S. stock markets, only an accidental corner (or near-corner, like the Bruce one) is now possible; Clarence Saunders was the last intentional player of the game.
SAUNDERS has been variously characterized by people who knew him well as “a man of limitless imagination and energy,” “arrogant and conceited as all getout,” “essentially a four-year-old child, playing at things,” and “one of the most remarkable men of his generation.” But there is no doubt that even many of the people who lost money on his promotional schemes believed that he was the soul of honesty. He was born in 1881 to a poor family in Amherst County, Virginia, and in his teens was employed by the local grocer at the pittance that is orthodox for future tycoons taking on their first jobs—in his case, four dollars a week. Moving ahead fast, he went on to a wholesale grocery company in Clarksville, Tennessee, and then to one in Memphis, and, while still in his twenties, organized a small retail food chain called United Stores. He sold that after a few years, did a stint as a wholesale grocer on his own, and then, in 1919, began to build a chain of retail self-service markets, to which he gave the engaging name of Piggly Wiggly Stores. (When a Memphis business associate once asked him why he had chosen that name, he replied, “So people would ask me what you just did.”) The stores flourished so exuberantly that by the autumn of 1922 there were over twelve hundred of them. Of these, some six hundred and fifty were owned outright by Saunders’ Piggly Wiggly Stores, Inc.; the rest were independently owned, but their owners paid royalties to the parent company for the right to adopt its patented method of operations. In 1923, an era when a grocery store meant clerks in white aprons and often a thumb on the scale, this method was described by the New York Times with astonishment: “The customer in a Piggly Wiggly Store rambles down aisle after aisle, on both sides of which are shelves. The customer collects his purchases and pays as he goes out.” Although Saunders did not know it, he had invented the supermarket.
A natural concomitant of the rapid rise of Piggly Wiggly Stores, Inc., was the acceptance of its shares for listing on the New York Stock Exchange, and within six months of that event Piggly Wiggly stock had become known as a dependable, if unsensational, dividend-payer—the kind of widows’-and-orphans’ stock that speculators regard with the respectful indifference that crap-shooters feel about bridge. This reputation, however, was shortlived. In November, 1922, several small companies that had been operating grocery stores in New York, New Jersey, and Connecticut under the name Piggly Wiggly failed and went into receivership. These companies had scarcely any connection with Saunders’ concern; he had merely sold them the right to use his firm’s catchy trade name, leased them some patented equipment, and washed his hands of them. But when these independent Piggly Wigglys failed, a group of stock-market operators (whose identities never were revealed, because they dealt through tight-lipped brokers) saw in the situation a heaven-sent opportunity for a bear raid. If individual Piggly Wiggly stores were failing, they reasoned, then rumors could be spread that would lead the uninformed public to believe that the parent firm was failing, too. To further this belief, they began briskly selling Piggly Wiggly short, in order to force the price down. The stock yielded readily to their pressure, and within a few weeks its price, which earlier in the year had hovered around fifty dollars a share, dropped to below forty.
At this point, Saunders announced to the press that he was about to “beat the Wall Street professionals at their own game” with a buying campaign. He was by no means a professional himself; in fact, prior to the listing of Piggly Wiggly he had never owned a single share of any stock quoted on the New York Stock Exchange. There is little reason to believe that at the beginning of his buying campaign he had any intention of trying for a corner; it seems more likely that his announced motive—the unassailable one of supporting the price of the stock in order to protect his own investment and that of other Piggly Wiggly stockholders—was all he had in mind. In any case, he took on the bears with characteristic zest, supplementing his own funds with a loan of about ten million dollars from a group of bankers in Memphis, Nashville, New Orleans, Chattanooga, and St. Louis. Legend has it that he stuffed his ten million-plus, in bills of large denomination, into a suitcase, boarded a train for New York, and, his pockets bulging with currency that wouldn’t fit in the suitcase, marched on Wall Street, ready to do battle. He emphatically denied this in later years, insisting that he had remained in Memphis and masterminded his campaign by means of telegrams and long-distance telephone calls to various Wall Street brokers. Wherever he was at the time, he did round up a corps of some twenty brokers, among them Jesse L. Livermore, who served as his chief of staff. Livermore, one of the most celebrated American speculators of this century, was then forty-five years old but was still occasionally, and derisively, referred to by the nickname he had earned a couple of decades earlier—the Boy Plunger of Wall Street. Since Saunders regarded Wall Streeters in general and speculators in particular as parasitic scoundrels intent only on battering down his stock, it seemed likely that his decision to make an ally of Livermore was a reluctant one, arrived at simply with the idea of getting the enemy chieftain into his own camp.
On the first day of his duel with the bears, Saunders, operating behind his mask of brokers, bought 33,000 shares of Piggly Wiggly, mostly from the short sellers; within a week he had brought the total to 105,000—more than half of the 200,000 shares outstanding. Meanwhile, ventilating his emotions at the cost of tipping his hand, he began running a series of advertisements in which he vigorously and pungently told the readers of Southern and Western newspapers what he thought of Wall Street. “Shall the gambler rule?” he demanded in one of these effusions. “On a white horse he rides. Bluff is his coat of mail and thus shielded is a yellow heart. His helmet is deceit, his spurs clink with treachery, and the hoofbeats of his horse thunder destruction. Shall good business flee? Shall it tremble with fear? Shall it be the loot of the speculator?” On Wall Street, Livermore went on buying Piggly Wiggly.
The effectiveness of Saunders’ buying campaign was readily apparent; by late January of 1923 it had driven the price of the stock up over 60, or higher than ever before. Then, to intensify the bear raiders’ jitters, reports came in from Chicago, where the stock was also traded, that Piggly Wiggly was cornered—that the short sellers could not replace the stock they had borrowed without coming to Saunders for supplies. The reports were immediately denied by the New York Stock Exchange, which announced that the floating supply of Piggly Wiggly was ample, but they may have put an idea into Saunders’ head, and this, in turn, may have prompted a curious and—at first glance—mystifying move he made in mid-February, when, in another widely disseminated newspaper advertisement, he offered to sell fifty thousand shares of Piggly Wiggly stock to the public at fifty-five dollars a share. The ad pointed out, persuasively enough, that the stock was paying a dividend of a dollar four times a year—a return of more than 7 percent. “This is to be a quick proposition, subject to withdrawal without prior notice,” the ad went on, calmly but urgently. “To get in on the ground floor of any big proposition is the opportunity that comes to few, and then only once in a lifetime.”
Anyone who is even slightly familiar with modern economic life can scarcely help wondering what the Securities and Exchange Commission, which is charged with seeing to it that all financial advertising is kept factual, impersonal, and unemotional, would have had to say about the hard sell in those last two sentences. But if Saunders’ first stock-offering ad would have caused an S.E.C. examiner to turn pale, his second, published four days later, might well have induced an apoplectic seizure. A full-page affair, it cried out, in huge black type:
OPPORTUNITY ! OPPORTUNITY !
It Knocks! It Knocks! It Knocks!
Do you hear? Do you listen? Do you understand?
Do you wait? Do you act now?…
Has a new Daniel appeared and the lions eat him not?
Has a new Joseph come that riddles may be made plain?
Has a new Moses been born to a new Promised Land?
Why, then, asks the skeptical, can CLARENCE SAUNDERS … be so generous to the public?
After finally making it clear that he was selling common stock and not snake oil, Saunders repeated his offer to sell at fifty-five dollars a share, and went on to explain that he was being so generous because, as a farsighted businessman, he was anxious to have Piggly Wiggly owned by its customers and other small investors, rather than by Wall Street sharks. To many people, though, it appeared that Saunders was being generous to the point of folly. The price of Piggly Wiggly on the New York Stock Exchange was just then pushing 70; it looked as if Saunders were handing anyone who had fifty-five dollars in his pocket a chance to make fifteen dollars with no risk. The arrival of a new Daniel, Joseph, or Moses might be debatable, but opportunity certainly did seem to be knocking, all right.
Actually, as the skeptical must have suspected, there was a catch. In making what sounded like such a costly and unbusinesslike offer, Saunders, a rank novice at Corner, had devised one of the craftiest dodges ever used in the game. One of the great hazards in Corner was always that even though a player might defeat his opponents, he would discover that he had won a Pyrrhic victory. Once the short sellers had been squeezed dry, that is, the cornerer might find that the reams of stock he had accumulated in the process were a dead weight around his neck; by pushing it all back into the market in one shove, he would drive its price down close to zero. And if, like Saunders, he had had to borrow heavily to get into the game in the first place, his creditors could be expected to close in on him and perhaps not only divest him of his gains but drive him into bankruptcy. Saunders apparently anticipated this hazard almost as soon as a corner was in sight, and accordingly made plans to unload some of his stock before winning instead of afterward. His problem was to keep the stock he sold from going right back into the floating supply, thus breaking his corner; and his solution was to sell his fifty-five-dollar shares on the installment plan. In his February advertisements, he stipulated that the public could buy shares only by paying twenty-five dollars down and the balance in three ten-dollar installments, due June 1st, September 1st, and December 1st. In addition—and vastly more important—he said he would not turn over the stock certificates to the buyers until the final installment had been paid. Since the buyers obviously couldn’t sell the certificates until they had them, the stock could not be used to replenish the floating supply. Thus Saunders had until December 1st to squeeze the short sellers dry.
Easy as it may be to see through Saunders’ plan by hindsight, his maneuver was then so unorthodox that for a while neither the governors of the Stock Exchange nor Livermore himself could be quite sure what the man in Memphis was up to. The Stock Exchange began making formal inquiries, and Livermore began getting skittish, but he went on buying for Saunders’ account, and succeeded in pushing Piggly Wiggly’s price up well above 70. In Memphis, Saunders sat back comfortably; he temporarily ceased singing the praises of Piggly Wiggly stock in his ads, and devoted them to eulogizing apples, grapefruit, onions, hams, and Lady Baltimore cakes. Early in March, though, he ran another financial ad, repeating his stock offer and inviting any readers who wanted to discuss it with him to drop in at his Memphis office. He also emphasized that quick action was necessary; time was running out.
By now, it was apparent that Saunders was trying for a corner, and on Wall Street it was not only the Piggly Wiggly bears who were becoming apprehensive. Finally, Livermore, possibly reflecting that in 1908 he had lost almost a million dollars trying to get a corner in cotton, could stand it no longer. He demanded that Saunders come to New York and talk things over. Saunders arrived on the morning of March 12th. As he later described the meeting to reporters, there was a difference of opinion; Livermore, he said—and his tone was that of a man rather set up over having made a piker out of the Boy Plunger—“gave me the impression that he was a little afraid of my financial situation and that he did not care to be involved in any market crash.” The upshot of the conference was that Livermore bowed out of the Piggly Wiggly operation, leaving Saunders to run it by himself. Saunders then boarded a train for Chicago to attend to some business there. At Albany, he was handed a telegram from a member of the Stock Exchange who was the nearest thing he had to a friend in the white-charger-and-coat-of-mail set. The telegram informed him that his antics had provoked a great deal of head-shaking in the councils of the Exchange, and urged him to stop creating a second market by advertising stock for sale at a price so far below the quotation on the Exchange. At the next station, Saunders telegraphed back a rather unresponsive reply. If it was a possible corner the Exchange was fretting about, he said, he could assure the governors that they could put their fears aside, since he himself was maintaining the floating supply by daily offering stock for loan in any amount desired. But he didn’t say how long he would continue to do so.
A week later, on Monday, March 19th, Saunders ran a newspaper ad stating that his stock offer was about to be withdrawn; this was the last call. At the time, or so he claimed afterward, he had acquired all but 1,128 of Piggly Wiggly’s 200,000 outstanding shares, for a total of 198,872, some of which he owned and the rest of which he “controlled”—a reference to the installment-plan shares whose certificates he still held. Actually, this figure was open to considerable argument (there was one private investor in Providence, for instance, who alone held eleven hundred shares), but there is no denying that Saunders had in his hands practically every single share of Piggly Wiggly then available for trading—and that he therefore had his corner. On that same Monday, it is believed, Saunders telephoned Livermore and asked if he would relent long enough to see the Piggly Wiggly project through by calling for delivery of all the shares that were owed Saunders; in other words, would Livermore please spring the trap? Nothing doing, Livermore is supposed to have replied, evidently considering himself well out of the whole affair. So the following morning, Tuesday, March 20th, Saunders sprang the trap himself.
IT turned out to be one of Wall Street’s wilder days. Piggly Wiggly opened at 75½, up 5½ from the previous days’ closing price. An hour after the opening, word arrived that Saunders had called for delivery of all his Piggly Wiggly stock. According to the rules of the Exchange, stock called for under such circumstances had to be produced by two-fifteen the following afternoon. But Piggly Wiggly, as Saunders well knew, simply wasn’t to be had—except, of course, from him. To be sure, there were a few shares around that were still held by private investors, and frantic short sellers trying to shake them loose bid their price up and up. But by and large there wasn’t much actual trading in Piggly Wiggly, because there was so little Piggly Wiggly to be traded. The Stock Exchange post where it was bought and sold became the center of a mob scene as two-thirds of the brokers on the floor clustered around it, a few of them to bid but most of them just to push, whoop, and otherwise get in on the excitement. Desperate short sellers bought Piggly Wiggly at 90, then at 100, then at 110. Reports of sensational profits made the rounds. The Providence investor, who had picked up his eleven hundred shares at 39 in the previous autumn, while the bear raid was in full cry, came to town to be in on the kill, unloaded his holdings at an average price of 105, and then caught an afternoon train back home, taking with him a profit of over seventy thousand dollars. As it happened, he could have done even better if he had bided his time; by noon, or a little after, the price of Piggly Wiggly had risen to 124, and it seemed destined to zoom straight through the lofty roof above the traders’ heads. But 124 was as high as it went, for that figure had barely been recorded when a rumor reached the floor that the governors of the Exchange were meeting to consider the suspension of further trading in the stock and the postponement of the short sellers’ deadline for delivery. The effect of such action would be to give the bears time to beat the bushes for stock, and thus to weaken, if not break, Saunders’ corner. On the basis of the rumor alone, Piggly Wiggly fell to 82 by the time the Exchange’s closing bell ended the chaotic session.
The rumor proved to be true. After the close of business, the Governing Committee of the Exchange announced both the suspension of trading in Piggly Wiggly and the extension of the short sellers’ delivery deadline “until further action by this committee.” There was no immediate official reason given for this decision, but some members of the committee unofficially let it be known that they had been afraid of a repetition of the Northern Pacific panic if the corner were not broken. On the other hand, irreverent side-liners were inclined to wonder whether the Governing Committee had not been moved by the pitiful plight of the cornered short sellers, many of whom—as in the Stutz Motor case two years earlier—were believed to be members of the Exchange.
Despite all this, Saunders, in Memphis, was in a jubilant, expansive mood that Tuesday evening. After all, his paper profits at that moment ran to several million dollars. The hitch, of course, was that he could not realize them, but he seems to have been slow to grasp that fact or to understand the extent to which his position had been undermined. The indications are that he went to bed convinced that, besides having personally brought about a first-class mess on the hated Stock Exchange, he had made himself a bundle and had demonstrated how a poor Southern boy could teach the city slickers a lesson. It all must have added up to a heady sensation. But, like most such sensations, it didn’t last long. By Wednesday evening, when Saunders issued his first public utterance on the Piggly Crisis, his mood had changed to an odd mixture of puzzlement, defiance, and a somewhat muted echo of the crowing triumph of the night before. “A razor to my throat, figuratively speaking, is why I suddenly and without warning kicked the pegs from under Wall Street and its gang of gamblers and market manipulators,” he declared in a press interview. “It was strictly a question of whether I should survive, and likewise my business and the fortunes of my friends, or whether I should be ‘licked’ and pointed to as a boob from Tennessee. And the consequence was that the boastful and supposedly invulnerable Wall Street powers found their methods controverted by well-laid plans and quick action.” Saunders wound up his statement by laying down his terms: the Stock Exchange’s deadline extension notwithstanding, he would expect settlement in full on all short stock by 3 P.M. the next day—Thursday—at $150 a share; thereafter his price would be $250.
On Thursday, to Saunders’ surprise, very few short sellers came forward to settle; presumably those who did couldn’t stand the uncertainty. But then the Governing Committee kicked the pegs from under Saunders by announcing that the stock of Piggly Wiggly was permanently stricken from its trading list and that the short sellers would be given a full five days from the original deadline—that is, until two-fifteen the following Monday—to meet their obligations. In Memphis, Saunders, far removed from the scene though he was, could not miss the import of these moves—he was now on the losing end of things. Nor could he any longer fail to see that the postponement of the short sellers’ deadline was the vital issue. “As I understand it,” he said in another statement, handed to reporters that evening, “the failure of a broker to meet his clearings through the Stock Exchange at the appointed time is the same as a bank that would be unable to meet its clearings, and all of us know what would happen to that kind of a bank.… The bank examiner would have a sign stuck up on the door with the word ‘Closed.’ It is unbelievable to me that the august and all-powerful New York Stock Exchange is a welcher. Therefore I continue to believe that the … shares of stock still due me on contracts … will be settled on the proper basis.” An editorial in the Memphis Commercial Appeal backed up Saunders’ cry of treachery, declaring, “This looks like what gamblers call welching. We hope the home boy beats them to a frazzle.”
That same Thursday, by a coincidence, the annual financial report of Piggly Wiggly Stores, Inc., was made public. It was a highly favorable one—sales, profits, current assets, and all other significant figures were up sharply over the year before—but nobody paid any attention to it. For the moment, the real worth of the company was irrelevant; the point was the game.
ON Friday morning, the Piggly Wiggly bubble burst. It burst because Saunders, who had said his price would rise to $250 a share after 3 P.M. Thursday, made the startling announcement that he would settle for a hundred. E. W. Bradford, Saunders’ New York lawyer, was asked why Saunders had suddenly granted this striking concession. Saunders had done it out of the generosity of his heart, Bradford replied gamely, but the truth was soon obvious: Saunders had made the concession because he’d had to. The postponement granted by the Stock Exchange had given the short sellers and their brokers a chance to scan lists of Piggly Wiggly stockholders, and from these they had been able to smoke out small blocks of shares that Saunders had not cornered. Widows and orphans in Albuquerque and Sioux City, who knew nothing about short sellers and corners, were only too happy, when pressed, to dig into their mattresses or safe-deposit boxes and sell—in the so-called over-the-counter market, since the stock could no longer be traded on the Exchange—their ten or twenty shares of Piggly Wiggly for at least double what they had paid for them. Consequently, instead of having to buy stock from Saunders at his price of $250 and then hand it back to him in settlement of their loans, many of the short sellers were able to buy it in over-the-counter trading at around a hundred dollars, and thus, with bitter pleasure, pay off their Memphis adversary not in cash but in shares of Piggly Wiggly—the very last thing he wanted just then. By nightfall Friday, virtually all the short sellers were in the clear, having redeemed their indebtedness either by these over-the-counter purchases or by paying Saunders cash at his own suddenly deflated rate of a hundred dollars a share.
That evening, Saunders released still another statement, and this one, while still defiant, was unmistakably a howl of anguish. “Wall Street got licked and then called for ‘mamma,’” it read. “Of all the institutions in America, the New York Stock Exchange is the worst menace of all in its power to ruin all who dare to oppose it. A law unto itself … an association of men who claim the right that no king or autocrat ever dared to take: to make a rule that applies one day on contracts and abrogate it the next day to let out a bunch of welchers.… My whole life from this day on will be aimed toward the end of having the public protected from a like occurrence.… I am not afraid. Let Wall Street get me if they can.” But it appeared that Wall Street had got him; his corner was broken, leaving him deeply in debt to the syndicate of Southern bankers and encumbered with a mountain of stock whose immediate future was, to say the least, precarious.
SAUNDEES’ fulminations did not go unheeded on Wall Street, and as a result the Exchange felt compelled to justify itself. On Monday, March 26th, shortly after the Piggly Wiggly short sellers’ deadline had passed and Saunders’ corner was, for all practical purposes, a dead issue, the Exchange offered its apologia, in the form of a lengthy review of the crisis from beginning to end. In presenting its case, the Exchange emphasized the public harm that might have been done if the corner had gone unbroken, explaining, “The enforcement simultaneously of all contracts for the return of the stock would have forced the stock to any price that might be fixed by Mr. Saunders, and competitive bidding for the insufficient supply might have brought about conditions illustrated by other corners, notably the Northern Pacific corner in 1901.” Then, its syntax yielding to its sincerity, the Exchange went on to say that “the demoralizing effects of such a situation are not limited to those directly affected by the contracts but extends to the whole market.” Getting down to the two specific actions it had taken—the suspension of trading in Piggly Wiggly and the extension of the short sellers’ deadline—the Exchange argued that both of them were within the bounds of its own constitution and rules, and therefore irreproachable. Arrogant as this may sound now, the Exchange had a point; in those days its rules were just about the only controls over stock trading.
The question of whether, even by their own rules, the slickers really played fair with the boob is still debated among fiscal antiquarians. There is strong presumptive evidence that the slickers themselves later came to have their doubts. Regarding the right of the Exchange to suspend trading in a stock there can be no argument, since the right was, as the Exchange claimed at the time, specifically granted in its constitution. But the right to postpone the deadline for short sellers to honor their contracts, though also claimed at the time, is another matter. In June, 1925, two years after Saunders’ corner, the Exchange felt constrained to amend its constitution with an article stating that “whenever in the opinion of the Governing Committee a corner has been created in a security listed on the Exchange … the Governing Committee may postpone the time for deliveries on Exchange contracts therein.” By adopting a statute authorizing it to do what it had done long before, the Exchange would seem, at the very least, to have exposed a guilty conscience.
THE immediate aftermath of the Piggly Crisis was a wave of sympathy for Saunders. Throughout the hinterland, the public image of him became that of a gallant champion of the underdog who had been ruthlessly crushed. Even in New York, the very lair of the Stock Exchange, the Times conceded in an editorial that in the minds of many people Saunders represented St. George and the Stock Exchange the dragon. That the dragon triumphed in the end, said the Times , was “bad news for a nation at least 66⅔ per cent ‘sucker,’ which had its moment of triumph when it read that a sucker had trimmed the interests and had his foot on Wall Street’s neck while the vicious manipulators gasped their lives away.”
Not a man to ignore such a host of friendly fellow suckers, Saunders went to work to turn them to account. And he needed them, for his position was perilous indeed. His biggest problem was what to do about the ten million dollars that he owed his banker backers—and didn’t have. The basic plan behind his corner—if he had had any plan at all—must have been to make such a killing that he could pay back a big slice of his debt out of the profits, pay back the rest out of the proceeds from his public stock sale, and then walk off with a still huge block of Piggly Wiggly stock free and clear. Even though the cut-rate hundred-dollar settlement had netted him a killing by most men’s standards (just how much of a killing is not known, but it has been reliably estimated at half a million or so), it was not a fraction of what he might have reasonably expected it to be, and because it wasn’t his whole structure became an arch without a keystone.
Having paid his bankers what he had received from the short sellers and from his public stock sale, Saunders found that he still owed them about five million dollars, half of it due September 1, 1923, and the balance on January 1, 1924. His best hope of raising the money lay in selling more of the vast bundle of Piggly Wiggly shares he still had on hand. Since he could no longer sell them on the Exchange, he resorted to his favorite form of self-expression—newspaper advertising, this time supplemented with a mail-order pitch offering Piggly Wiggly again at fifty-five dollars. It soon became evident, though, that public sympathy was one thing and public willingness to translate sympathy into cash was quite another. Everyone, whether in New York, Memphis, or Texarkana, knew about the recent speculative shenanigans in Piggly Wiggly and about the dubious state of the president’s finances. Not even Saunders’ fellow suckers would have any part of his deal now, and the campaign was a bleak failure.
Sadly accepting this fact, Saunders next appealed to the local and regional pride of his Memphis neighbors by turning his remarkable powers of persuasion to the job of convincing them that his financial dilemma was a civic issue. If he should go broke, he argued, it would reflect not only on the character and business acumen of Memphis but on Southern honor in general. “I do not ask for charity,” he wrote in one of the large ads he always seemed able to find the cash for, “and I do not request any flowers for my financial funeral, but I do ask … everybody in Memphis to recognize and know that this is a serious statement made for the purpose of acquainting those who wish to assist in this matter, that they may work with me, and with other friends and believers in my business, in a Memphis campaign to have every man and woman who possibly can in this city become one of the partners of the Piggly Wiggly business, because it is a good investment first, and, second, because it is the right thing to do.” Raising his sights in a second ad, he declared, “For Piggly Wiggly to be ruined would shame the whole South.”
Just which argument proved the clincher in persuading Memphis that it should try to pull Saunders’ chestnuts out of the fire is hard to say, but some part of his line of reasoning clicked, and soon the Memphis Commercial Appeal was urging the town to get behind the embattled local boy. The response of the city’s business leaders was truly inspiring to Saunders. A whirlwind three-day campaign was planned, with the object of selling fifty thousand shares of his stock to the citizens of Memphis at the old magic figure of fifty-five dollars a share; in order to give buyers some degree of assurance that they would not later find themselves alone out on a limb, it was stipulated that unless the whole block was sold within the three days, all sales would be called off. The Chamber of Commerce sponsored the drive; the American Legion, the Civitan Club, and the Exchange Club fell into line; and even the Bowers Stores and the Arrow Stores, both competitors of Piggly Wiggly in Memphis, agreed to plug the worthy cause. Hundreds of civic-minded volunteers signed up to ring doorbells. On May 3rd, five days before the scheduled start of the campaign, 250 Memphis businessmen assembled at the Gayoso Hotel for a kickoff dinner. There were cheers when Saunders, accompanied by his wife, entered the dining room; one of the many after-dinner speakers described him as “the man who has done more for Memphis than any in the last thousand years”—a rousing tribute that put God knew how many Chickasaw chiefs in their place. “Business rivalries and personal differences were swept away like mists before the sun,” a Commercial Appeal reporter wrote of the dinner.
The drive got off to a splendid start. On the opening day—May 8th—society women and Boy Scouts paraded the streets of Memphis wearing badges that read, “We’re One Hundred Per Cent for Clarence Saunders and Piggly Wiggly.” Merchants adorned their windows with placards bearing the slogan “A Share of Piggly Wiggly Stock in Every Home.” Telephones and doorbells rang incessantly. In short order, 23,698 of the 50,000 shares had been subscribed for. Yet at the very moment when most of Memphis had become miraculously convinced that the peddling of Piggly Wiggly stock was an activity fully as uplifting as soliciting for the Red Cross or the Community Chest, ugly doubts were brewing, and some vipers in the home nest suddenly demanded that Saunders consent to an immediate spot audit of his company’s books. Saunders, for whatever reasons, refused, but offered to placate the skeptics by stepping down as president of Piggly Wiggly if such a move “would facilitate the stock-selling campaign.” He was not asked to give up the presidency, but on May 9th, the second day of the campaign, a watchdog committee of four—three bankers and a businessman—was appointed by the Piggly Wiggly directors to help him run the company for an interim period, while the dust settled. That same day, Saunders was confronted with another embarrassing situation: why, the campaign leaders wanted to know, was he continuing to build his million-dollar Pink Palace at a time when the whole town was working for him for nothing? He replied hastily that he would have the place boarded up the very next day and that there would be no further construction until his financial future looked bright again.
The confusion attendant on these two issues brought the drive to a standstill. At the end of the third day, the total number of shares subscribed for was still under 25,000, and the sales that had been made were canceled. Saunders had to admit that the drive had been a failure. “Memphis has fizzled,” he reportedly added—although he was at great pains to deny this a few years later, when he needed more of Memphis’ money for a new venture. It would not be surprising, though, if he had made some such imprudent remark, for he was understandably suffering from a case of frazzled nerves, and was showing the strain. Just before the announcement of the campaign’s unhappy end, he went into a closed conference with several Memphis business leaders and came out of it with a bruised cheekbone and a torn collar. None of the other men at the meeting showed any marks of violence. It just wasn’t Saunders’ day.
Although it was never established that Saunders had had his hand improperly in the Piggly Wiggly corporate till during his cornering operation, his first business move after the collapse of his attempt to unload stock suggested that he had at least had good reason to refuse a spot audit of the company’s books. In spite of futile grunts of protest from the watchdog committee, he began selling not Piggly Wiggly stock but Piggly Wiggly stores—partly liquidating the company, that is—and no one knew where he would stop. The Chicago stores went first, and those in Denver and Kansas City soon followed. His announced intention was to build up the company’s treasury so that it could buy the stock that the public had spurned, but there was some suspicion that the treasury desperately needed a transfusion just then—and not of Piggly Wiggly stock, either. “I’ve got Wall Street and the whole gang licked,” Saunders reported cheerfully in June. But in mid-August, with the September 1st deadline for repayment of two and a half million dollars on his loan staring him in the face and with nothing like that amount of cash either on hand or in prospect, he resigned as president of Piggly Wiggly Stores, Inc., and turned over his assets—his stock in the company, his Pink Palace, and all the rest of his property—to his creditors.
It remained only for the formal stamp of failure to be put on Saunders personally and on Piggly Wiggly under his management. On August 22nd, the New York auction firm of Adrian H. Muller & Son, which dealt in so many next-to-worthless stocks that its salesroom was often called “the securities graveyard,” knocked down fifteen hundred shares of Piggly Wiggly at a dollar a share—the traditional price for securities that have been run into the ground—and the following spring Saunders went through formal bankruptcy proceedings. But these were anticlimaxes. The real low point of Saunders’ career was probably the day he was forced out of his company’s presidency, and it was then that, in the opinion of many of his admirers, he achieved his rhetorical peak. When he emerged, harassed but still defiant, from a directors’ conference and announced his resignation to reporters, a hush fell. Then Saunders added hoarsely, “They have the body of Piggly Wiggly, but they cannot have the soul.”
IF by the soul of Piggly Wiggly Saunders meant himself, then it did remain free—free to go marching on in its own erratic way. He never ventured to play another game of Corner, but his spirit was far from broken. Although officially bankrupt, he managed to find people of truly rocklike faith who were still willing to finance him, and they enabled him to live on a scale only slightly less grand than in the past; reduced to playing golf at the Memphis Country Club rather than on his own private course, he handed out caddy tips that the club governors considered as corrupting as ever. To be sure, he no longer owned the Pink Palace, but this was about the only evidence that served to remind his fellow townsmen of his misfortunes. Eventually, the unfinished pleasure dome came into the hands of the city of Memphis, which appropriated $150,000 to finish it and turn it into a museum of natural history and industrial arts. As such, it continues to sustain the Saunders legend in Memphis.
After his downfall, Saunders spent the better part of three years in seeking redress of the wrongs that he felt he had suffered in the Piggly Wiggly fight, and in foiling the efforts of his enemies and creditors to make things still more unpleasant for him. For a while, he kept threatening to sue the Stock Exchange for conspiracy and breach of contract, but a test suit, brought by some small Piggly Wiggly stockholders, failed, and he dropped the idea. Then, in January, 1926, he learned that a federal indictment was about to be brought against him for using the mails to defraud in his mail-order campaign to sell his Piggly Wiggly stock. He believed, incorrectly, that the government had been egged on to bring the indictment by an old associate of his—John C. Burch, of Memphis, who had become secretary-treasurer of Piggly Wiggly after the shakeup. His patience once more exhausted, Saunders went around to Piggly Wiggly headquarters and confronted Burch. This conference proved far more satisfactory to Saunders than his board-room scuffle on the day the Memphis civic stock-selling drive failed. Burch, according to Saunders, “undertook in a stammering way to deny” the accusation, whereupon Saunders delivered a right to the jaw, knocking off Burch’s glasses but not doing much other damage. Burch afterward belittled the blow as “glancing,” and added an alibi that sounded like that of any outpointed pugilist: “The assault upon me was made so suddenly that I did not have time or opportunity to strike Mr. Saunders.” Burch refused to press charges.
About a month later, the mail-fraud indictment was brought against Saunders, but by that time, satisfied that Burch was innocent of any dirty work, he was his amiable old self again. “I have only one thing to regret in this new affair,” he announced pleasantly, “and that is my fistic encounter with John C. Burch.” The new affair didn’t last long; in April the indictment was quashed by the Memphis District Court, and Saunders and Piggly Wiggly were finally quits. By then, the company was well on its way back up, and, with a greatly changed corporate structure, it flourished on into the nineteen sixties; housewives continued to ramble down the aisles of hundreds of Piggly Wiggly stores, now operated under a franchise agreement with the Piggly Wiggly Corporation, of Jacksonville, Florida.
Saunders, too, was well on his way back up. In 1928, he started a new grocery chain, which he—but hardly anyone else—called the Clarence Saunders, Sole Owner of My Name, Stores, Inc. Its outlets soon came to be known as Sole Owner stores, which was precisely what they weren’t, for without Saunders’ faithful backers they would have existed only in his mind. Saunders’ choice of a corporate title, however, was not designed to mislead the public; rather, it was his ironic way of reminding the world that, after the skinning Wall Street had given him, his name was about the only thing he still had a clear title to. How many Sole Owner customers—or governors of the Stock Exchange, for that matter—got the point is questionable. In any case, the new stores caught on so rapidly and did so well that Saunders leaped back up from bankruptcy to riches, and bought a million-dollar estate just outside Memphis. He also organized and underwrote a professional football team called the Sole Owner Tigers—an investment that paid off handsomely on the fall afternoons when he could hear cries of “Rah! Rah! Rah! Sole Owner! Sole Owner! Sole Owner!” ringing through the Memphis Stadium.
FOR the second time, Saunders’ glory was fleeting. The very first wave of the depression hit Sole Owner Stores such a crushing blow that in 1930 they went bankrupt, and he was broke again. But again he pulled himself together and survived the debacle. Finding backers, he planned a new chain of grocery stores, and thought up a name for it that was more outlandish, if possible, than either of its predecessors—Keedoozle. He never made another killing, however, or bought another million-dollar estate, though it was always clear that he expected to. His hopes were pinned on the Keedoozle, an electrically operated grocery store, and he spent the better part of the last twenty years of his life trying to perfect it. In a Keedoozle store, the merchandise was displayed behind glass panels, each with a slot beside it, like the food in an Automat. There the similarity ended, for, instead of inserting coins in the slot to open a panel and lift out a purchase, Keedoozle customers inserted a key that they were given on entering the store. Moreover, Saunders’ thinking had advanced far beyond the elementary stage of having the key open the panel; each time a Keedoozle key was inserted in a slot, the identity of the item selected was inscribed in code on a segment of recording tape embedded in the key itself, and simultaneously the item was automatically transferred to a conveyor belt that carried it to an exit gate at the front of the store. When a customer had finished his shopping, he would present his key to an attendant at the gate, who would decipher the tape and add up the bill. As soon as this was paid, the purchases would be catapulted into the customer’s arms, all bagged and wrapped, by a device at the end of the conveyor belt.
A couple of pilot Keedoozle stores were tried out—one in Memphis and the other in Chicago—but it was found that the machinery was too complex and expensive to compete with supermarket pushcarts. Undeterred, Saunders set to work on an even more intricate mechanism—the Foodelectric, which would do everything the Keedoozle could do and add up the bill as well. It will never corner the retail-store-equipment market, though, because it was still unfinished when Saunders died, in October, 1953, five years too soon for him to see the Bruce “corner”, which, in any case, he would have been fully entitled to scoff at as a mere squabble among ribbon clerks.