Arthur T. Vanderbilt II

“Look how the Harlem’s stock has risen! If that franchise were, perchance, to be rescinded, think how fast the stock would drop! If the aldermen were to sell the Harlem short—if they were to speculate on an anticipated drop in the stock’s price by borrowing shares they did not own, selling them, and then buying them back at a much lower price to replace the borrowed shares—think how much money there was to be made as the stock plummeted! What he said made eminent sense to the honorable aldermen. Led by Drew, they each borrowed as much money as possible and began shorting the Harlem’s stock, selling, selling, always selling. Learning of the scheme, the Commodore began buying. When the council repealed the ordinance on June 25 and the court of common pleas issued an injunction to prohibit construction of the new Harlem line along Broadway to the Battery, the aldermen gleefully sat back and waited for the stock to dive. As it fell from 110 to 72, they cheered. Their glee, however, turned to terror the next day when, inexorably, inexplicably, horribly, the stock began rising. The Commodore had cornered the market—had bought every outstanding share of the Harlem. By June 26, the stock was at 97lA. The next day it rose again, up to 106. In a panic, the august aldermen repealed their repeal of the franchise to placate the Commodore. That didn’t help. The stock continued to rise. All the while, they begged the Commodore to stop, to allow them to buy the stock back from him to cover their short positions. No, the Commodore said. It was important for them to learn their lesson. The stock continued to rise: to 150, to 170, to 179. There was no limit to their losses. The higher the stock rose, the more money they were losing. The only way to stop these terrible losses was to buy back stock to replace their borrowed shares, but there was not a single share available.”
― Arthur T. Vanderbilt II, Fortune's Children: The Fall of the House of Vanderbilt