The Bookmaker of Business: A Financial Tale

Acknowledgments

This book is dedicated to the readers who were kind
enough to purchase it, and to the millions of people around the world who truly
want a better life for themselves and who understand that a better life can
only be achieved by bettering the lives of others.

This book is a work of fiction. Names, characters,
places and incidents are either the product of the author’s imagination or are
used fictitiously. Any resemblance to actual persons, living or dead, or to
actual events or locales is entirely coincidental.

Edited by
Jennifer Ciotta
.

Cover design by
Michael Graham
.

ISBN: 978-1-63315-610-4

Copyright © 2014 by
Murray H. Williams
. All
rights reserved, including the right to reproduce this book, or portions
thereof, in any form.

For my mother, family, friends and everyone else
who believed in me and helped me during difficult times.

Contents

Chapter One

The Rich Get Richer

Chapter Two

Wall Street

Chapter Three

Compound Interest

Chapter Four

What Should I Invest In?

Chapter Five

How Do Banks Make Loans?

The Bookmaker of Business

A Financial Tale

By

Murray H.
Williams

1

The Rich Get Richer While the Poor Get Poorer.

That was the headline of the
New York Times
article
Sean was reading about the disparity of wealth in the United States. The
article went on:

“Despite the worst depression the world has ever seen, there
are still filthy rich people in New York City living in the lap of luxury.
These people continue their ostentatious display of wealth despite the masses
of people losing their jobs, their homes, and their savings due to the market
crash and bank failures of the past few years. When will the government finally
do something about this obscene income disparity?”

Sean removed the sports section and tossed the rest into the
trash bin. The date of the paper was November 1, 1932.

As Sean walked down the street, he lit a cigarette. It was
his last one. He didn’t have enough money for a new pack, so he wanted to enjoy
it. Besides, he was getting hungry and needed to spend his money on food. As he
walked past the unemployment office, he noticed that the line was around the
block.
Same as yesterday
. He continued and then stopped in front of a
deli. The smell of food was intoxicating. He wanted a sandwich but thought it
better to save his money so he could place another successful wager with his
bookmaker. He’d been on a roll.

He made his way to the local soup kitchen and got in line.
The line was also around the block. He was so hungry that he started feeling
lightheaded and weak. He knew he could buy some food at the local deli without
waiting, but he could eat for free at the soup kitchen. He decided to save his
money for betting instead. Four hours later, he left content. Sean always felt
better after a good meal.

A newsboy was peddling papers on a street corner. “Extra!
Extra! Read all about it!” the boy shouted. Sean bought a copy of the
Post
as
he knew this boy was an orphan and wanted to help him. His face lit up as Sean
handed him the money. He liked helping people.

As he approached his home neighborhood, he had mixed
feelings. On the one hand, he didn’t like the squalor and poverty the people of
his neighborhood endured. Most of them were just like him, barely scratching
out a living and struggling to find work from day to day. On the other hand, it
was home. It was familiar to him. He knew and grew up with a lot of the people
here and they liked him, although he couldn’t say the same for many of them.
Most of his childhood buddies were either in jail or on their way there due to
the lifestyles they had chosen. Some had died. They were seduced by the lure of
illicit riches, and got mixed up with the wrong crowd. Prohibition had no doubt
contributed to this, and many of his friends were so desperate that they went
for the quick buck even if it meant possible incarceration or death.
Fortunately for Sean, his mother beat it into him (literally) from an early age
that it was better to be poor and free than rich and in jail.

Sean took a longer route home this time because there was a
certain street corner where the neighborhood kids would gather to play
stickball. Crack! He loved hearing the sound of the ball against the stick
because it reminded him of his own childhood. The kids waved to him. They liked
Sean because sometimes he gave them an instructional at-bat just for fun.

For a moment he watched the entertaining game until he felt
the cool evening air. He had to get home. As he walked away, he mulled over
this young group. Engrossed in their game, they seemed happy, which was unlike
most adults he knew.

Kids are eternal optimists
, he thought. When they are
young their futures seem bright. Life is a clean slate. But something happens
when they grow up. Many lose their starry-eyed optimism and become burdened by
the pressures of life. Money, or the lack thereof, becomes the principal
concern and all of one’s actions are influenced by it, directly or indirectly.

As Sean ascended the fire escape of his tenement dwelling,
it made a creaking sound. He preferred this entrance since he could skip the
musty smell of the hallways, and because he could come and go as he pleased
without his landlord’s interference. He also enjoyed watching the young women
hang their laundry on the clotheslines. There was one in particular he cared for
whom he hoped to marry someday, if her father permitted it.

Before entering his abode for the night, he witnessed the
beautiful sunset across the Hudson River. The clouds were stained a
pinkish-purple color. As he enjoyed the sky-art, which he believed God painted
on the canvas of the heavens to enrich mankind, he remembered his mother. She
always said before she passed on, that a pretty sunset meant something good
would happen to you the next day. He hoped this was the case.

The next day, Sean found Colby the bookmaker. Colby was a
rough character who Sean knew was in the mob and had even survived an
assassination attempt two years ago. But he didn’t mind considering he liked
Colby, and that he didn’t know anywhere else in his neighborhood to make sports
bets. He was smoking a cigar when Sean entered his shop. Sean could tell by the
aroma that the cigar was of high quality.
Like fine incense
, he thought.
Colby smiled as he recognized him instantly.

“Hi ya, kid!”

Sean removed his flat cap and replied, “What’s up Colby?”

“You tell me.”

“Not too much. Just tryin’ to make a living, ya know. So
what’re you makin’ books on today?”

“Well, baseball season’s over. But there’s always pro
football.”

“Don’t know much about that. Baseball is my game. But who’s
playing?”

“The only game I’m taking bets on right now is the
Giants—Bears game.”

“Who?”

“The New York Giants versus the Chicago Bears.”

“Ya mean we actually have a football team?” Sean said
jokingly. He knew New York had a team, but football was so unpopular compared
to baseball that few followed it.

“So what’s the line on the game?”

“Bears are favored by three and a half.”

“I wanna put ten bucks on the Giants. I think they’re gonna
cover the spread.”

“Ten bucks? That’s a lot of money for you, pal. You sure you
can swing that?”

“Sure. I’m on a roll. I knew the Yanks would win the series.
That bet made me a lotta dough. I still can’t believe how The Babe pointed to
the stands and actually hit to that spot. That was incredible!”

“Yep. It was like he called his shot.”

“Wish I could’ve been there.”

“Yeah. It was even better in person,” Colby said.

“You were in Chicago for the game?”

“Front row.”

“Must be nice having that kind of money.” 

“Doesn’t hurt.”

“I guess the rich get richer and the poor get poorer,” Sean said
nonchalantly.

“What did you say?”

Sean could sense annoyance in Colby’s voice. He knew that he
kept a tommy gun behind the counter, so he didn’t want to cause any trouble. He
handed Colby his ten dollars and Colby pulled out a betting slip, recorded the
bet, and gave it to him.

“Ya got any smokes back there? I’m out.”

“Let’s see.” Colby looked around and found a pack of Lucky
Strikes. He handed Sean two cigarettes. Sean put one in his mouth and the other
behind his right ear.

“Thanks,” he said as he rummaged through his pockets
searching for a match. Colby pulled out a lighter.

“It’s true,” he said as he lit Sean’s cigarette.

“What’s true?”

“That the rich get richer and the poor get poorer.”

Colby smiled as he took a puff of his cigar and blew a smoke
ring.

“But why do the rich get richer and the poor get poorer? Do
you know the answer?” Sean was interested.

“Yep, but I don’t think you want to hear it.”

“Of course I do. Tell me.”

“No.”

“Why not?”

“Because you can’t handle it. The truth reveals, cause and
effect, why some people grow rich while most stay poor. And it might be painful
for you to hear since it could expose your own shortcomings. You’ll probably
get upset and I’ll lose your business. And that wouldn’t benefit me since
you’re one of my best customers.”

“C’mon, man. Gimme a clue. You just said I’m one of your
best customers. It’s the least you can do.”

“Are you really serious about learning this kinda stuff? And
do you promise not to get mad and make your bets somewhere else?”

“I promise.”

“All right. You asked for it. The reason why the rich get
richer and the poor get poorer is because the rich know how to play our
capitalist system, whereas the poor do not. If poor people simply learned and
did what the rich do they can become rich too. It’s as simple as that.”

“I always thought the capitalist system was stacked against
guys like me. That it takes money to make money.”

“Yes and no. It does take money to make money, but the
system isn’t stacked against anyone. In our free market system anybody can
succeed. The product that delivers the greatest value wins. And even if you’re
broke you can still earn money through labor. Truth is, the rich must’ve
acquired the right knowledge before they made their money. Unless they inherited
their wealth, they must’ve learned how to create it. In other words, they
must’ve learned the laws of increase.”

Sean had never heard Colby talk like this before. His words
were articulate and refined.

“And even people who inherit money, if they don’t observe
the laws of increase, will quickly lose it. A fool and his money are soon
parted.”

“What are the laws?”

“Do you know how bookies make money?”

“Well, I know that you take bets from both sides and through
odds-making keep a little for yourself.”

“That’s exactly right. But the thing to remember is that no
matter whether the bets win or lose, I always get my cut. All I gotta do is
find people who want to make bets. The more wagers I take the more dough I
make. Unlike my customers, the odds are always in my favor. With this system
it’s just a matter of time before I make a small fortune. And the rich play our
capitalist system the same way.”

“I get it. You play the percentages. Maybe I should be a
bookie like you.”

Colby chuckled. “Personally, I don’t think you should become
a bookie because, well, you’re too nice. And bookies sometimes need to use a
little leverage to get deadbeats to pay up when they lose.”

“Leverage huh?”

“Muscle. You know what I mean.”

“I know. That’s why I always give you my wager up front.”

“Smart boy. But if you’re serious about learning why the
rich get richer and the poor get poorer, I know just the man you need to talk
to. He taught me everything I know.”

“Who’s that?”

“A very wise man. And he loves sharing his wisdom with guys
like you. Guys who are truly seeking knowledge and are ready to receive it.”

“Who is he?”

“I can’t tell you just yet, but I can tell you his
profession is similar to mine. He plays the percentages, as you say, and knows
the odds are in his favor.”

“What is his profession?”

“I like to call him
the bookmaker of business
.”