Read on Twitter
1/ I am taking a break from my regular sports technology content to do my best @SahilBloom impersonation.
Let me tell you the story of how 100 years ago the Big Banks took advantage of the little guys in a manner not so different from today...
Let me tell you the story of how 100 years ago the Big Banks took advantage of the little guys in a manner not so different from today...
2/ Clarence Saunders was born on August 9 1881 in Amherst County, Virginia to Abram Warwick and Mary Gregory
From a young age Clarence was no stranger to financial hardship
From a young age Clarence was no stranger to financial hardship
3/ At the age of 5 his mother passed away and his father, a member of the confederacy under Stonewall Jackson during the war, struggled to put food on the table for his family
4/ In order to provide for his family, Abram moved the group to Montgomery County, Tennessee where he worked as a laborer and sharecropper on a plantation to provide for his family.
It was there that Clarence first got his taste for hard work.
It was there that Clarence first got his taste for hard work.
5/ From an early age he too toiled away on the plantation with his father, taking on the mantle of co-provider in the absence of his mother.
6/ By the age of 11, Clarence had taken up work in the local sawmill and had picked up shifts at the limestone kiln during the summer as well.
He even sacrificed his free time during those years, spending his holidays working at the local general store
He even sacrificed his free time during those years, spending his holidays working at the local general store
7/ By the age 14, Clarence had only received two years of formal education. Given his circumstances, he abandoned the endeavor of schooling altogether in order to work full time at the general store.
8/ Unfortunately for Clarence, it quickly became clear that without any real form of education it was going to be difficult for him to achieve the life he sought for himself.
10/ From the ages of 14-19 he worked odd jobs relating to the saw mill, general store, and night watch duties in order to simply help his family get by.
11/ With no opportunity or access to formal education, Clarence took matters into his own hands, taking the time to teach himself to be a prolific reader
At 19 he moved to Clarksville, Tennessee to start work in the wholesale grocery business - a move that would change his life.
At 19 he moved to Clarksville, Tennessee to start work in the wholesale grocery business - a move that would change his life.
12/ After several years of experience in the industry, Clarence moved to Memphis in 1903 where he took up jobs working for the largest wholesale grocers at the time. By 1913 he created United Stores Inc. providing him his first big win
13/ in 1919 Clarence changed the game forever. He launched a self-service grocery store revolutionizing the grocery industry by introducing the concept of customers purchasing their own merchandise in store
14/ Prior to Saunders concept, individuals were forced to bring a list of groceries to their outlet, give the list to a clerk, and wait for the clerk to bring them their groceries
15/ Saunders self-checkout model was revolutionary.
By 1921 there were 615 stores in 200 cities and 40 states and by 1923 the Piggly Wiggly Chain had grown to 1,267 stores.
By 1921 there were 615 stores in 200 cities and 40 states and by 1923 the Piggly Wiggly Chain had grown to 1,267 stores.
16/ The store's rampant success led to many imitators in the space and ultimately led to the company going public on the NYSE in 1922 with 50,000 new shares at $43 dollars a share.
In a word. Life was good.
In a word. Life was good.
17/ In 1922, however, an issue arose.
Of the +1,200 stores nationwide several of them were franchised meaning that independent citizens owned and operated them. Some of the operators of stores in the Northeast started going out of business due to poor management
Of the +1,200 stores nationwide several of them were franchised meaning that independent citizens owned and operated them. Some of the operators of stores in the Northeast started going out of business due to poor management
18/ Bankers began shorting Piggly Wiggly stock while spreading rumors of systemic problems throughout the company, not just the franchises.
Clarence Saunders did not take too kindly to these rumors. He was a man of action and knew something had to be done.
Clarence Saunders did not take too kindly to these rumors. He was a man of action and knew something had to be done.
19/ Saunders action would take the form of a $10mm loan to fund an attack on the banks trying to short his company. Armed with the money he hopped a train to NYC
The plan?
Buy enough shares of Piggly Wiggly to ruin the bankers short positions by cornering the market.
The plan?
Buy enough shares of Piggly Wiggly to ruin the bankers short positions by cornering the market.
20/ Pause for definition: Short
Borrowing stock assuming the price will go.
If the price goes up instead of the short seller goes into the market and buys shares at a higher price than intended to close their position. When the price 
it is considered a short squeeze.
Borrowing stock assuming the price will go
.If the price goes up instead of
the short seller goes into the market and buys shares at a higher price than intended to close their position. When the price it is considered a short squeeze.
21/ Pause for definition: Corner
Cornering the market is one step further. When one person gathers all of the shares in the market the short seller is then left at their bidding.
The person cornering the market has the ability to set the price of the shares (simple terms).
Cornering the market is one step further. When one person gathers all of the shares in the market the short seller is then left at their bidding.
The person cornering the market has the ability to set the price of the shares (simple terms).
22/ A corner was Saunders' plan. At the time of his arrival in New York there were ~200k shares of Piggly Wiggly stock outstanding at ~$40/share. And thus his purchasing began.
23/ From late 1922 to March of 1923 Saunders was able to accumulate roughly 196K shares of the stock giving him the ultimate control over the share price. Or so he thought...
24/ On March 20, 1923 Saunders called his shot and unveiled his master plan to the masses.
That morning he called for delivery of all of his 196k shares of Piggly Wiggly stock (at that point trading at $60/share).
That morning he called for delivery of all of his 196k shares of Piggly Wiggly stock (at that point trading at $60/share).
25/ On the morning of the 21st (the day that shares were owed to Saunders) the stock price rose from $60/share to $124/share due in large part to the illiquidity in the market. Saunders was set to make a fortune off the bankers who had bet against him. Until...
26/ The NYSE changed the rules of the game. Instead of having to settle within 24 hours as was custom, the banks were granted an extension of 5 days while all trading of Piggly Wiggly were halted.
This “rigging of the game” would prove to be the nail in Saunders coffin
This “rigging of the game” would prove to be the nail in Saunders coffin
27/ With the extra time and the trading halt, the short sellers were able to find the shares they needed to pay Saunders back in stock instead of cash.
This meant that Saunders was saddled with shares that had become worthless and $10mm in debt that he was now unable to repay
This meant that Saunders was saddled with shares that had become worthless and $10mm in debt that he was now unable to repay
28/ Saunders valiant effort to take on the industry was ultimately thwarted by the establishment.
He had found a way to win the game, until the rules were ultimately changed.
He had found a way to win the game, until the rules were ultimately changed.
29/ Sources:
My dad for brining the story to my attention.
https://wiki2.org/en/Clarence_Saunders_(grocer)
https://www.energyandcapital.com/articles/the-greatest-short-squeeze-ever-occurred-in-1922/98272 https://www.smithsonianmag.com/smart-news/bizarre-story-piggly-wiggly-first-self-service-grocery-store-180964708/
My dad for brining the story to my attention.
https://wiki2.org/en/Clarence_Saunders_(grocer)
https://www.energyandcapital.com/articles/the-greatest-short-squeeze-ever-occurred-in-1922/98272 https://www.smithsonianmag.com/smart-news/bizarre-story-piggly-wiggly-first-self-service-grocery-store-180964708/
