A classic little saying about short selling on Wall Street is: “He who sells what isn’t his’n, must buy it back or go to prison.” The origin of the saying is unknown, but by 1898 it was attributed to financier Daniel Drew (1797-1879).
An older English couplet (dating from the 1830s) and supposedly written by a 14-year-old criminal in chalk on a prison wall is: “Him as prigs wot isn’t his’n, Ven he’s cotch’d, wil go to pris’n.”
“Commodore” Cornelius Vanderbilt (1794-1877) was credited by 1870 with saying a similar proverb—“Never sell what you haven’t got.”
Wikipedia: Short (finance)
In finance, short selling or “shorting” is the practice of selling a financial instrument that the seller does not own at the time of the sale. Short selling is done with intent of later purchasing the financial instrument at a lower price. Short-sellers attempt to profit from an expected decline in the price of a financial instrument. Short selling or “going short” is contrasted with the more conventional practice of “going long” which occurs when an investment is purchased with the expectation that its price will rise.
Typically, the short-seller will “borrow” or “rent” the securities to be sold, and later repurchase identical securities for return to the lender. If the security price falls as expected, the short-seller profits from having sold the borrowed securities for more than he or she later pays for them but if the security price rises, the short seller loses by having to pay more for them than the price at which he or she sold them. The practice is risky in that prices may rise indefinitely, even beyond the net worth of the short seller. The act of repurchasing is known as “closing” a position. Short Selling is often used in hedge funds.
The term “short selling” or “being short” is often also used as a blanket term for strategies that allow an investor to gain from the decline in price of a security. Those strategies include buying options known as puts. A put option consists of the right to sell an asset at a given price; thus the owner of the option benefits when the market price of the asset falls. Similarly, a short position in a futures contract, or to be short on a futures contract, means the holder of the position has an obligation to sell the underlying asset at a later date, to close out the position.
The risk of large potential losses through short selling inspired financier Daniel Drew to warn:
“He who sells what isn’t his’n, must buy it back or go to pris’n”
Wikipedia: Daniel Drew
Daniel Drew (July 29, 1797 – September 18, 1879) was an American financier. He was born in Carmel, New York.
1833 (Vol. 1), The National Standard, pg. 318:
YOUTHFUL GENIUS.—The newspapers report that a little boy, lately committed from Marlborough-street for some trifling theft, inscribed on the wall of the prison (with chalk) the following lines:
“Him as prigs wot isn’t his’n,
Ven he’s cotch’d, vil go to pris’n.”
December 1836, Fraser’s Magazine for Town and Country, pg. 718, col. 2:
“Him as prigs vo isn’t his’n,
Ven he’s kotched must cum to pris’n.”
Foster’s Cabinet Miscellany
By Theodore Foster
New York, NY: Theodore Foster
[The actual rhyme, made by a young lad of 14, when sent to the treadmill for theft, runs thus:—
“He what prigs what isn’t his’n,
Ven he’s cotched, must go to prison!"]
The Comic Latin Grammar
By Percival Leigh and John Leech
London: David Bogue
Him as prigs wot isn’t his’n,
Ven he’s cotch’d ‘ll go to pris’n.
Penn State University Archives
15 May 1872, Tioga County Agitator, pg. 4, col. 2:
Punch gives a hint to brother Jonathan in a cartoon representing a figure of the Tichborne claimant in chains, and inscribed upon his expansive paunch, “He who claims what isn’t his’n, when he’s caught is sent to prison,” as posted upon a wall, upon which gazes Jonathan with affrighted aspect, while John Bull, bill-poster for the nonce, surveys thescene with a waggish air of jollity.
Plays for Young People
By J. Barmby and T. Rogers
London: Simpkin, Marshall & Co.
BEAST: Him as prigs what isn’t his’n, When he’s cotched, will go to prison.
A Story of Wall Street
By James Blanchard Clews
New York, NY: J. S. Ogilvie Publishing Company
At this juncture Caldwell good-naturedly sung out — “See here, Larkins, remember Dan Drew’s words — ‘He who sells what isn’t his’n, will sooner or later go to prison.’”
9 May 1901, The Times (Richmond, VA), “Shorts Caught and Slaughtered,” pg. 3, col. 3:
“He who sells what isn’t his’n
Must either pay or go to prison.”
3 November 1901, New York (NY) Times, “From City Highways and Byways,” pg. SM7:
“It takes money to buy stock, doesn’t it? Well, it takes an equal amount of brains to sell them; or else as old Dan Drew once said, ‘He who sells what isn’t his’n will surely go to prison!’”
The A B C of Stock Speculation
By S. A. Nelson
New York, NY: S. A. Nelson
He who sells what isn’t his’n, must buy it back or go to pris’n.
21 August 1904, New York (NY) Times, “The Wall Street Alphabet and Primer for the Use of Beginners,” pg. FS1:
Q.—What is the punishment for Short Selling?
A.—He who Sells what isn’t his’n, must buy it back when it has ris’n.
The Other Mr. Barclay
By Henry Irving Dodge
New York, NY: Consolidated Retail Booksellers
Presently he said, “Colfax, there’s an old saying in Wall Street that runs something like this:
‘He who sells what isn’t his’n,
must settle up or go to prison.’”
3 February 1908, New York (NY) Tribune, pg. 6, col. 5:
Representative Slayden, of Texas, is reported as quoting, in approval of the President’s message, the classic couplet.
A man who takes what isn’t his’n
Ought to bust and go to prison.
In the interest of literary accuracy we beg leave to suggest once more the desirability of always verifying quotations. Had the gifted but impulsive Texan consulted some anthology hhe would have perceived that the lines run thus:
Him what hooks what isn’t his’n,
When he’s cotched ‘ll go to prison.
The authorized version, it will be observed, is not only more mellifluous and more perfect in rhythm, but also more positive in sentiment, expressing with confidence not merely a pious opinion, or even an earnest desire, but something which is—or should be—an inevitable, universal and eternal fact.
20 September 1908, New York (NY) Tribune, Sunday Magazine, pg. 16, col. 3:
“He what prigs what isn’t his’n, when he’s ketched must go to prison.”
By Julius Bernard Baer and George Percy Woodruff
New York, NY: Harper & Brothers
The most quoted adage about short selling declares that
“He who sells what isn’t his’n
Must buy it back or go to prison.”
Monday, Jun. 07, 1937
He who sells what isn’t his’n
Must buy it back or go to prison
This little ditty, no less than 60 years old, is one of the meatiest definitions of short-selling ever penned. Last week as trading in May grain contracts drew to a close on the Chicago Board of Trade, the economic profundity of the Gould definition was clearly demonstrated once again.
Monday, Nov. 22, 1954
He who sells what isn’t his’n
Must buy it back or go to pris’n.
This old Wall Street jingle is usually reserved for the short sellers (i.e., those who sell stocks they do not own in hopes of buying them cheaper later for delivery). But last week it was the New York Stock Exchange itself that was painfully reminded of the penalties of selling “what isn’t his’n.” It was caught short on a sale of one of its seats: the membership of Broker Edward Platt to Broker W. Allston Flagg for $74,000. Platt promptly protested the sale. He had indeed once asked the exchange to sell his membership, but later changed his mind and formally withdrew the request.
New York City • Banking/Finance/Insurance • (0) Comments • Monday, November 17, 2008 • Permalink