From legendary short seller to god of American capital

Chapter 400 A Multi-Million Dollar Game: Urinating from the Moral High Ground

October 8, 1892, Saturday, 10 p.m.

The Columbus Room at the Palmer Hotel in the Chicago World's Fair preparation area.

This magnificent hall overlooks Lake Michigan, with crystal chandeliers hanging from the ceiling casting glimpses of opulent light from the windows onto the dark brown walnut-inlaid walls. The air is thick with the distinctive aroma of cigars, expensive perfumes, and power.

As Larry Livingston stepped into the hall, all eyes instantly turned to him, and the pressure of being stared at made it hard to breathe.

Larry steadied himself and walked forward with a calm pace, but he always felt like he was walking into someone else's carefully laid chess game.

There was a huge long table in the Columbus Room, and at this moment, the prominent seats on the table were all occupied.

"Please sit down, Mr. Livingston," Altgerd stood up at the left of the long table, gestured for Larry to sit in the reserved seat, and then introduced Larry to the other attendees.

Seated at the head of the long table was Charles Rush, chairman of the Chicago Mercantile Exchange, who was in charge of the “settlement negotiations” between the bulls and bears.

Seated at the right end of the long table was James Keane, the representative of the short sellers. He was 54 years old, dressed in a dark gray suit, his silver hair slicked back like a sharp blade. He was a top Wall Street trader, known as the Duke.

Upon hearing the name, Larry unconsciously raised his eyebrows, smiled at the other person, and expressed his goodwill.

In fact, Keane was the Wall Street speculator that Larry admired most in the world.

Larry's smile was met with silence, and Larry even felt a sense of absurdity; the other person's tense face twitched for a moment—

Sitting next to Keane was a gentleman named Lyman Gage, who was not yet 60 years old.

"Mr. Gage is the president of First National Bank of Illinois! He is also a key member of the Republican National Financial Committee," the governor introduced.

As the governor introduced them, Gage nodded and smiled at Larry.

Larry smiled and returned the greeting, but he was secretly on guard because the governor had specifically pointed out the other party's senior Republican identity, which must have been for a purpose.

Other guests were mainly prominent figures from both parties, as well as representatives from the Illinois Business Council and the Illinois Business Association.

"You all know Mr. Livingston," the governor said, looking around at the crowd and lightly tapping his fingers on the table. "We are gathered here today to address a pressing issue—the delivery crisis in the September wheat contracts on the Chicago Mercantile Exchange. Currently, there are nearly 36 million bushels of open contracts, while reliable warehouse receipts—"

The governor glanced at Rush, the exchange's board member. "As far as I know, $1000 million?"

Rush cleared his throat and unfolded a document.

"To be precise, the verified and undisputed amount is 687 million bushels, and another 426 million bushels are being processed for storage."

Rush continued, "This means that the Chicago Mercantile Exchange has effectively become unable to deliver physical goods. If forced liquidation is carried out according to the rules, based on the final settlement price of $1.23 for September wheat in Chicago—the collective default of short sellers will trigger a chain of liquidations, and at least six large dealers will go bankrupt, including two exchange members."

After he finished speaking, the hall fell silent.

Altgild broke the silence, "So what is the exchange's proposal?"

"Negotiation settlement." Rush glanced at the governor, then glared at Larry. "The exchange has never seen such a concentrated and disruptive willingness to settle. We recommend a uniform cash settlement price of $1.05 for both long and short positions. This is significantly higher than the spot price, but it avoids a systemic collapse."

"$1.05," Larry repeated the number, his tone flat.

“Yes! Mr. Livingston—” Rush’s tone was resolute, a hint of disgust even appearing on his face, “If you are too greedy, you will drain every river in Chicago dry—”

All eyes were on Larry's face. When he first appeared, everyone was astonished by his youth—

This guy was practically a high school student. If it weren't for his composure and extraordinary demeanor, no one would have believed that he was the mastermind behind this speculative short squeeze.

Furthermore, once everyone confirmed that Larry was the mastermind behind the short squeeze, a sense of contempt inevitably arose. His "legend" was unreliable; he might be someone else's front man—but his age made him undeniably easy to bully.

Now that Rush is attacking him, everyone is happy to see him make a fool of himself.

Of everyone present, only the governor frowned, showing concern. After all, of the initial $260 million in the Larry Foundation fund, $50 each belonged to him and Kennedy.

The pressure felt like an invisible rope around Larry. Larry remained silent for a moment, then looked around at everyone.

"Gentlemen, my position is based on valid manifests and clear rules. The wheat in Cargill's warehouses is real, and my contract is legal."

Larry met their gazes, his tone calm, "—The market has reached this point because of those people at 68..."

The fact that people were desperately shorting wheat they didn't even own, selling it for cents and 60 cents, was the first thing to disrupt the market balance.

They bet that the farmers' wheat would rot in their hands, and that prices would never rise. But I—merely gave the market a chance to discover the true price.

"The real price?" Keane spoke for the first time, his tone subtly metallic. "You've pushed the market price to $1.23 per bushel, double the spot price, and you call that 'real'?"

Larry gave Keane a deep look, nodded, and said, "Mr. Keane! You are a renowned speculator on Wall Street. You must have heard the saying—'Those who sell what doesn't belong to them either buy it back or go to jail!'"

Keane's face stiffened, and he opened his mouth as if to retort, but only a muffled sound came out of his throat, and he couldn't say anything.

This quote comes from Daniel Drew, a legendary and controversial bookmaker on Wall Street in the 19th century.

Mr. Drew made his fortune with "watered-down stocks" and was once the top speculator on Wall Street. He often used his bullish advantage to force short sellers to sell his stocks.

When those short sellers begged him to let them go, old Drew would say something like, "Let the short sellers give up!"

Ironically, when Drew later shorted the Lake Erie Railroad, he was caught by Vanderbilt, the railroad magnate known as "Commodore".

When old Drew pleaded with the brigadier to show mercy and stop the short squeeze, the brigadier, with a grim face, quoted Drew's own famous saying: "Sell what doesn't belong to you, or you'll either buy it back or go to jail."

This famous quote is widely circulated on Wall Street and has almost become a truism. It's also very fitting here, because the short sellers of wheat don't actually own any "wheat"; they're simply shorting because they think the price is high enough.

Alright! Since the short sellers misjudged the situation, and since you've gone in the wrong direction, then you should do as Old Drew said: either buy back your positions and admit defeat, or go to jail and take responsibility.

Previously, Keane had imagined countless possible responses from Larry and made predictions, but he never expected that this would ultimately be the case.

The young man casually uttered a Wall Street proverb that sounded like "common sense," and suddenly found himself feeling uneasy, speechless, and with a thorn in his side.

Keane's eye twitched slightly, and he couldn't speak.

Of the others present, only a very few had heard this phrase before, but sensing the unusual behavior of the legendary playmaker Keane, everyone showed expressions of surprise.

The governor broke the silence with a slight smile. "Mr. Livingston, farmers across the state now see you as a shield—I even saw the front page of the Chicago Tribune today, with the headline 'An Unsung Hero Protects the Wheat Fields.' Your name may not be known to the public, but your actions have helped impoverished farmers in Illinois and throughout the Midwest—they all praise you as a hero."

While the governor spoke, everyone remained silent, because that was indeed what the ordinary people outside were saying—if Livingston were really "forced to liquidate his positions," and this news were then relayed to the public, the consequences would be unimaginable.

Larry nodded slightly and remained silent.

Seeing that no one spoke, the governor smiled and continued, "There's no point in discussing the root of the problem now, gentlemen. What we need is a solution. The key is how to prevent a financial panic that could be triggered by short seller defaults and maintain Chicago's reputation as the national grain pricing center. Isn't that the highest form of stability? I suggest that First National Bank be responsible for the liquidation; that's the most appropriate course of action."

This statement was extremely clever; Altgerd packaged Larry's speculation as a heroic act of fighting against a "Wall Street conspiracy" and maintaining market order.

The key point is that the liquidation was pushed onto Republican bankers. If successful, the credit goes to the "people's heroes" recommended by the Democrats who thwarted Wall Street; if unsuccessful, it's attributed to the miscalculation of the Republican big banks.

The governor will inevitably take sides. Cracking down on Wall Street is a core issue in the Democratic Party's campaign this year, and it would also put pressure on the people at the Chicago Mercantile Exchange, so why not?

Gage paused for a moment, his fingers lightly rubbing the ring on his other hand. After a while, he looked up at Larry. "Mr. Livingston, Governor Altkild has painted an interesting picture. I don't care about your deal, but I need the exact figures—your position, exactly how much at $1.05?"

The important question is, what are your plans for handling this batch of wheat after delivery? I don't need a price frenzy, but a complete, closed loop!

"It can't be $1.05!" Larry said firmly, then looked at Exchange Director Rush. "Mr. Director, your proposed settlement price of $1.05 would cost me millions of dollars in profits. Do you think I'd concede for the sake of 'the bigger picture'?"

The temperature in the room plummeted.

Rush's face flushed. "Mr. Livingston, without the exchange's coordination, if those short sellers collectively defaulted, you might lose even your principal." "Would they default?" Larry's gaze shifted to Keane's face, a slight smile appearing on his lips. "Mr. Keane—I know you're just a representative of Wall Street, but I'd like you to give me a definite answer."

Keane's face stiffened again. After a moment, he said, "Wall Street is known for its integrity. Besides, this isn't just a matter for one company. You should at least give us a number. Tell us your total position and expected price—so-called negotiation must have a concrete figure to weigh."

Larry smiled and nodded. "Alright—in that case, I'll report my positions to everyone—"

As he spoke, Larry stood up, walked to a blackboard that had been specially placed in the hall, picked up a piece of chalk, and quickly wrote on the blackboard: "Starting September 15, we purchased 1.5 million bushels of No. 1 wheat at 84 cents and 5 million bushels at 74 cents per bushel."

In the last week of September, a total of 698 million bushels were acquired, with an average cost of $768,000.

After finishing writing, Larry turned to everyone and said, "This is my position—"

Rush frowned and barked, "Hey! Livingston, I need to remind you—we're talking about your total position on the exchange, not the amount of wheat you've bought offline—"

But Keane, standing to the side, was stunned when he saw this number. He hadn't expected Larry to buy so much wheat on such a large scale to control the market.

"No! This is the number you want! It's the key to the entire power struggle at the meeting—"

Larry looked around at everyone. "I want to emphasize my original intention again—I'm not just doing this for the transaction itself. In fact, I want to use my modest efforts to provide farmers with some security. My purchase price is high, simply to push up prices, but more importantly, to help those destitute farmers."

"That sounds nice!!"

A man at the long table made a sarcastic remark.

"Of course! I swear to God, all my desires come from God's guidance—he said I would take the fat from the greedy and help those who deserve it—and I mean it!"

Everyone fell silent again.

Larry's question was difficult to answer. At this moment, everyone was, at least outwardly, a devout believer in God. Moreover, in a year of abundant wheat harvest and low grain prices, raising wheat prices and buying up farmers' grain at high prices actually seemed like practicing God's mercy.

Larry urinates from his moral high ground, and even if his urine is yellow or forked, everyone else has to open their mouths and drink it.

No one dared to refute it —

Larry looked at everyone, and seeing that they were all silent, he smiled and continued, "If I lose money, it's my own fault."

I might return the grain to the farmers, and then spend all my wealth to compensate them.

But now that I've won the competition, I need all the profits to pay off the farmers' debts! I want to genuinely help the farmers get through this difficult time.

As he spoke, Larry casually tossed aside the chalk and added with a smile, "—You can try defaulting, and then your names will be in the newspapers—the farmers, and even the entire nation of the United States, will know who can't play the game and will cheat! Who—is tearing apart the taxpayers' flesh and blood—I don't have the money to pay them right now anyway."

The crowd's expressions turned serious again. Some even imagined the terrible consequences—not so much that they feared protests or uprisings against tyranny, but that their party would permanently lose the votes of farmers in the Midwest and even ordinary people across the country who sympathized with them!

For both parties—the election is of paramount importance!

Everyone knows that Larry's practice of tying profits to farmers' repayments is a form of moral blackmail.

But who would dare to truly defy this moral consensus?

Only the sound of breathing filled the hall. In this power struggle for power, forged by both Republicans and Democrats, people had assumed that with the right amount of pressure, Livingston would succumb.

But no one expected that Larry held not only thousands of long open positions, but also the "testicles" of many political and business elites.

Throughout the entire room, only the governor struggled to suppress the smile on his face, his fingers digging deeply into his thigh muscles as he tried to hold back his laughter.

Damn it! Livingston! He's a fucking genius!

The governor could even recall the first time the governor visited him; although he looked young and handsome, he spoke with composure and tact.

He's like a born master!

John F. Kennedy from Massachusetts previously said he was optimistic about Durant?! To me, that guy who sabotaged the workers...

That damn guy who failed doesn't even deserve to leash Livingston!

At the same time, Rush, the director of the Gatchicup Exchange, gave a wink—none of them had expected Larry to be so well-prepared.

Keane's face turned from red to white, and sweat seeped from his temples.

At that moment, Gage suddenly laughed.

It was very soft, but everyone heard it.

"Brilliant!" Gage clapped his hands. "So, Mr. Livingston, what exactly do you want? (Really 1.23)"

If it were settled in US dollars—do you know how many families that would bankrupt?

"No! Sir," Larry raised his voice to emphasize, "I only want my share—"

Gage nodded, his gaze towards Larry filled with appreciation and approval. Then, the president of the largest bank in the Midwest spoke what he had been wanting to say for a long time: "Gentlemen! Since you are all at a loss and don't know what to do next—why not listen to my solution?"

o

Everyone unconsciously looked at the highly respected bank president, hoping that he could find a proper and foolproof solution.

Larry's gaze toward him was even more meaningful. From the very beginning, Larry could sense that this man's ambition was far more overwhelming than that of everyone else present.

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