Wall Street Raid
In the early 1920s Saunders began construction of a pink marble mansion in Memphis. Then, in early 1923, a group of franchised outlets in New York failed. Merrill Lynch and other speculators on Wall Street attempted a bear raid on the price of Piggly Wiggly stock, gambling the price would fall. With a loan of $10 million from a number of Southern bankers, plus a bit of his own money, Saunders counteracted with a corner, buying large amount of Piggly Wiggly stock in hopes of driving up the price. He flamboyantly declared his intent in newspaper ads. Saunders bought Piggly Wiggly stock until he had orders for 196,000 of the 200,000 outstanding shares. The firm's share price went from a low of $39 in late 1922 to $124 by March 20th, 1923. Pressured by the ‘bears’, the New York Stock Exchange declared a ‘corner’ existed (see cornering the market), and gave the ‘bears’ five days rather than 24 hours to deliver the stock Saunders had bought. The additional time meant "a flood of stock poured from distant points and gave the shorts opportunity to deliver." In addition, Saunders’ bank and his friends were pressured and the price was driven back down. Saunders had to sell his stock at a loss and battle cost him $3 million, forcing him into bankruptcy. Afterwards, Saunders had no further association with the company.
Because of this financial reversal, Saunders was forced to sell his partly completed Memphis mansion to the city. The mansion, nicknamed the Pink Palace eventually became the city's historical and natural history museum. Today, the Pink Palace includes a walk-through model of the first Piggly-Wiggly store, complete with 2¢ packets of Kellogg's Cornflakes and 8¢ cans of Campbell's Soup. Some of the grounds of the mansion were sold off to developers who built an upscale residential development, Chickasaw Gardens.
Read more about this topic: Clarence Saunders (grocer)
Famous quotes containing the words wall, street and/or raid:
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