Chapter XXII Summary and Analysis

Livingston is approached by an old friend and colleague, Jim Barnes. Barnes wants him to help a group of investors liquidate a large amount of stock in Consolidated Stove. This was a company that was formed by buying out and combining the stocks of three different companies, in order to be a large enough company to have enough stock to trade on Wall Street, where the prices are higher. A large bank loan is needed to finance the consolidation, which Barnes obtains from his bank. The loan seems like a good bet, since the stock offering is well-advertised, the backers are prominent well-known men, and there is more advance demand for the stock than there is stock.

However, the offerers make mistakes. They do not issue extra stock to cover the demand, and they do not realize they are...