[Archive of 53 Letters and Documents from Stock and Exchange Brokers, John E. Fox & Co. of Philadelphia, to investor Henry A. Kelker, 1866 –1873].

Valuable manuscript archive of Philadelphia Stock Exchange history

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Valuable Philadelphia Stock Exchange history. An archive of letters and documents, most concerning railroad investments during the years 1866–187. Presents an opportunity to study the transactions of a single stock market investor, active on the Philadelphia Stock Exchange in the years after the close of the American Civil War. The archive demonstrates the importance of timely information for stock market investors and shows that even insider information, sometimes unethically transmitted, was available.

The brokerage house, John E. Fox & Company writes to Henry A. Kelker concerning transactions, advice given, and current market reports and investments made mostly in Pennsylvania railroad stocks. The post-Civil War years witnessed a boom in railroad investment and construction. The dates of these letters and documents parallel this period of investment and speculation which lasted until the Panic of 1873 that began in September of that year.

The brokerage firm of John E. Fox & Co. was one of the oldest and well-respected members of the Philadelphia Stock Exchange. John E. Fox (1817–1880) established his brokerage business in Philadelphia in 1843. The trading of railroad and canal stocks was a significant part of the Philadelphia Stock Exchange, so it is no surprise that Fox’s death was reported in the magazine Railway World.

The Fox Company’s investor, Henry Anthony Kelker (1825–?) was born in Harrisburg, Pennsylvania and attended Marshall College, (Franklin & Marshall). In 1846, Kelker returned Harrisburg and entered into the hardware business in partnership with his brothers Rudolph and Immanuel. Henry A. Kelker was also an officer or director in a number of businesses in Harrisburg, including banks, gas works, manufactories, telephone companies, and railways.

Kelker’s investments on the Philadelphia Stock Exchange were focused on communications and railroads. The letters from brokers Fox & Company show Kelker buying and selling shares in Western Union Telegraph and in the following railroads: the Philadelphia & Erie, the Oil Creek & Allegheny River Railway, the Northern Central, and the Pittsburgh, Cincinnati and St. Louis Railway.

The 35 letters and 5 partially-printed transaction statements from John E. Fox & Co., are composed in a similar way: they usually report on the day’s sell or buy transaction by Kelker, current share or bid prices on railroad stocks, discuss dividends, propose buying strategies, and close with a report on the general mood of the stock market in Philadelphia that day. For example:

The market has been in such a panicky state all day, owing to the foreign news [the threat of a Franco-Prussian war], that it was almost impossible to get a bid for anything. Read[in] g [Railroad] open’d @ 50½. sold as low as 49, revived again to 49 7/8 … We have been trying to sell the 100 P&E [Philadelphia & Erie Railroad] all day, but there was nobody disposed to make a bid for it…( July 15, 1870)

Three letters from Fox & Company are accompanied by Philadelphia Stock Exchange quotations/sales lists. These lists of bank, railroad, canal, and other stocks show bid and asked prices and report on railroad bond prices and government securities. A detailed chronology of railroad stock prices throughout the day is included on the recto and suggests that Fox & Company specialized in these stocks.

News of the market is vital to investors, but the obtaining of inside, non-public information might lead to unethical insider trading, which is today illegal. In one letter in the archive, Fox & Company raises the issue of the manipulation of the market:

We have made persistent inquiry in regard to the manipulation going on between the PRR [Pennsylvania Railroad] & Read[in]g [Railroad], but up to this writing have been unable to get any facts in the case.

In another letter, internal company information, of interest to an investor, is passed along to Kelker:

Mr. Wright who is one of the Directors told the writer this A.M. that the road [railroad] was doing a first rate business — for the month of May they ship’d on their road 208,000 barrels of crude oil & 40,000 refined…” ( June 29, 1871)

A curious pair of letters addressed to Kelker, were written by a man whose mutual relative, the Philadelphia printer, Andrew G. De Armond, was in debt to Kelker. They document the conscious transmission of insider information and come closer to the line of unethical, insider trading; the writer appears to be ingratiating himself with Kelker on behalf of his indebted relative.

Writing on the letterhead of the Auditor’s Department of the Pennsylvania Canal Company and addressing Kelker formally, W. C. De Armond writes benignly:

Your favor of yesterday is at hand; I can only say in reply, that as yet there has been nothing transpired to the public, excepting what you saw published in the Ledger. ( June 2, 1871)

This letter was followed by another sent later that same day and written to “Dear Cousin Henry.” De Armond writes:

[M]y [previous] note was written while a number of persons were in my office, so I send this by way of a post script. The Reading Rail Road Company have been buying up a number of shares of stock in the Susquehanna Canal, and are endeavoring to get the balance of power on their hands; the Penn[sylvani]a. Rail Road Company are also large stock holders in the same company. it is thought that they (the Pa. R. R. Co) will try and increase their number of shares, in order to benefit the Penna. Canal Co. Thus increasing the value of the stock of the Susquehanna Canal Co. This theory is not an official one, though it comes from a good source. I give it to you as I received it, and in confidence. ( June 2, 1871)

The archive’s final letter from John E. Fox & Company was written on October 7, 1873, just at the outset of a stock market panic followed by a prolonged financial depression. Perhaps responding to Kelker’s request, Fox & Company wrote:

We examined your Pittsburg Cin[cinnati] & St. Louis [Railway] bonds and find the mortgage is recorded as follows. ‘This bond is issued upon the security of a mortgage upon the railroad of said company, its property, franchises, privileges, appurtenances, from South side of the Manongahela [sic] River opposite the City of Pittsburgh in Penna to the City of Columbus in Ohio…’ [Kelker’s bonds may not have been as secure as he thought.]

A significant archive of Philadelphia Stock Exchange history from a single stock brokerage to a single investor in railroad stocks reveals the transactions, strategies, and gathering of information in the immediate post-Civil War boom years leading up to the Panic of 1873.

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