The biggest lesson from the New York Times report about Donald Trump’s tax figures from 1985 through 1994 was that Trump was even broker and phonier at his first peak of fame than people thought he was, and people had already thought he was plenty broke and phony then. The 1040 numbers the Times obtained suggested that he was not just a bumbling businessperson passing himself off as a brilliant businessperson, he was possibly the single worst businessperson in America:
In fact, year after year, Mr. Trump appears to have lost more money than nearly any other individual American taxpayer, The Times found when it compared his results with detailed information the I.R.S. compiles on an annual sampling of high-income earners.
But also, late in the piece, among all the other sub-stories about how Trump burned through more than a billion dollars in what was mostly other people’s money, there was a brief account of how the business world reacted to one piece of his career, when he decided to make money by manipulating the stock market. Here in 2019, when the question on everyone’s mind is what to do about Donald Trump, it seems instructive.
The Times described how the scheme worked:
As losses from his core enterprises mounted, Mr. Trump took on a new public role, trading on his business-titan brand to present himself as a corporate raider. He would acquire shares in a company with borrowed money, suggest publicly that he was contemplating buying enough to become a majority owner, then quietly sell on the resulting rise in the stock price…
An early and profitable gambit came in February 1987, when Mr. Trump started buying stock in the company that owned United Airlines. That April, The Times reported that Mr. Trump was “believed to own 4.9 percent” of United and was “believed to have paid” about $50 a share.
Trump takeover speculation set off a rally in the stock. At the end of the month, Mr. Trump quietly sold nearly all his shares. The next day, The Journal reported that Mr. Trump’s gamble appeared to have netted him $55 million.
It was a gross exaggeration. New Jersey gaming regulators later determined that he had purchased only 2.3 percent of the company and gained $11 million, before interest and commissions.
There was a perfect Trumpishness to the United stunt, making a big show of how he’d jerked everyone around, while accomplishing much less, even for himself, than advertised. Still, $11 million was a nice haul! He racked up more gains, according to the Times, by repeating the plan with “among others, Hilton Hotels, the Gillette razor company and Federated Department Stores,” for a total of $67.3 million in short-term trading gains.
And then? People stopped playing along with his nonsense.
By 1989, investors were less fooled by his moves. That September, he bought a large stake in American Airlines and announced a takeover bid.
“I’m very skeptical of everything this man does,” Andrew Geller, then an airline analyst at Provident National Bank in Philadelphia, told The Associated Press.
Mr. Trump was rebuffed, and the stock price fell sharply. Though at the time his losses were reported to be modest, the new tax return figures show that in 1990, the year he sold his American Airlines stake, Mr. Trump lost $34.9 million on short-term trades, wiping out half his gains from the previous four years.
Another bad deal, for $67.9 million worth of stock in Alexander department stores, lost him $55.5 million. Everything he’d gained from short-term stock trading, the whole beautiful scam he’d worked out, was ruined. All it took was people recognizing what he was doing, directly saying what it was, and refusing to let him do it anymore.