Frank K. Sturgis

Frank Knight Sturgis was almost the last survivor of the old-time Wall Street group whose habits and avocations are to the present generation purely mythical. A man who had joined the Stock Exchange in 1869, who had been its president when our fathers and grandfathers were its customers, who had helped to steer his commission-house through “Black Friday,” the panic of 1873, the “Grant and Ward failure” of 1884, the break-down of 1893 and the “Northern Pacific corner” of 1901, might be expected to embody traits and eccentricities of whose existence the Wall Street of today has no remembrance. Sturgis in his prime was one of the numerous Wall Street celebrities of that day who followed the market between 10 o’clock and 3, then spent the rest of the afternoon behind a fast trotter or a four-in-hand. Like many of the metropolitan David Harums of the period, he did not merely take the road. He bred horses, managed the Jockey Club and instilled into early horse shows the social distinction which they have never lost, even in this present motor-car era. Nothing was more natural than the fact that the Society for the Prevention of Cruelty to Animals should have leaned heavily on his support.

With his traditions regarding Wall Street and the Stock Exchange what they were, Sturgis could hardly have been expected to take the view which nowadays prevails regarding the ethical duties and responsibilities of those institutions. Probably that was why the astute Samuel Untermyer, conducting at Washington in 1912 the “Pujo committee’s” inquisition into the Stock Exchange’s shortcomings, summoned Sturgis to the stand. The questions and answers at the hearing not only frightened the Stock Exchange but scandalized financial readers, even twenty years ago. Some of them were as follows:

“Is it legitimate for a member of the Exchange to give an order to sell a certain amount of stock to one broker and an order to buy the same amount of the same stock to another broker?” “So long as there is no collusion and the commissions are paid, it is not illegitimate.”

“Do you approve of such transactions?” “You are asking me a moral question. I am answering you as to Stock Exchange questions.”

“What has the fact that the commissions are paid on such a transaction to do with its legitimacy?” “If the commissions are paid, it is not illegitimate.”

“Do you think a manipulated price of a security is as fair an indication of its value as if the market were left free to the real buyers and sellers?” “In the majority of instances, yes. As long as the quotations are in accordance with the rules of the Exchange, it is not the business of the Exchange to know the motive.”

Alexander Dana Noyes
1933 Century Association Yearbook