Just Pull the Handle

Caution: Cigarette Smoking May be Hazardous to Your Health (1966)

The Nasdaq bubble five years ago and the housing bubble of today bring to mind a story from some twenty years ago. This was back when I smoked cigarettes - a habit which, I am pleased to say, has long since been given up. Having just finished college and just started work at a defense company, like many others at the time, I often smoked at work - in my office, in other people's offices, in hallways, in the break room, in the cafeteria, even sometimes in the restroom.

There was a growing awareness about the dangers of smoking, but few rules to restrict it - it was a different era then, and times have certainly changed (at least in California).

Anyway, there was a standard 1980s style cigarette machine in the break room in the building where I worked - one of about 15 buildings in the complex for several thousand employees. The cigarette machine looked pretty much like this one:

There were two rows of handles and above each handle a little window, through which you could see the packs of cigarettes stacked up inside the machine. I believe there were two stacks behind each handle, maybe ten packs to a stack, so 22 handles x 20 packs = 440 packs of cigarettes, when fully stocked.

A purely mechanical dispensing system, where once the proper amount of money was inserted, all the handles were enabled - but only one could be pulled all the way out. Once a handle was pulled all the way out, one pack of the selected brand would drop to the receptacle at the bottom, while the remaining stack of cigarette packs dropped down one position.

If you'll recall, these cigarette machines made a distinctive, loud sound - Clank-clank! - as the handle was pulled out forcefully, then released, only to snap back to its original position. Pulling forcefully and releasing immediately were necessary to ensure proper operation.

A Funny Thing Happened One Day

One day, someone somehow discovered that it was not necessary to insert money into the machine in order for it to dispense packs of cigarettes. Apparently, either the serviceman had accidentally left a switch in the wrong position, or the machine was broken. In any event, money was no longer required!

This set off a chain of events that I remember vividly two decades later.

My office was near the break room, where the cigarette machine was located, and early that morning I heard a few giggles in the hallway as pairs of women walked by. I didn't think anything of it. Some time later more giggles were heard as people walked by, but immediately before hearing the giggles, I remember hearing the unmistakable sound of the cigarette machine dispensing cigarettes.

Clank-clank! Clank-clank! Clank-clank! Clank-clank!

That was odd - four times in a row?

Not thinking too much about it I went back to work, but this sequence of sounds was heard again several more times as the morning progressed - the cigarette machine dispensing multiple packs of cigarettes at a rapid rate, followed by giggles in the hallway.

Lynn Explains

Finally, after hearing the clanking sound once again and seeing Lynn from Document Control walk by with four packs of cigarettes in her hand and a big smile on her face, I shouted, "Lynn, what's going on in the break room?”

Still with a big smile on her face, she took me over to the cigarette machine and directed me to the Winston Lights, "That's your brand, isn't it?”

I nodded.

She said, "Just pull the handle".

I did, and out came a gold and white pack of Winston Lights that I would otherwise have had to pay good money for later in the day. "Go on, take a few more", she said. I did. It was a strange feeling - exhilarating, dangerous, and rewarding all at the same time. Exhilarating because it was something so out of the ordinary, dangerous because the serviceman or a security guard could walk in at any moment, rewarding because of getting something for nothing.

But most of all it was strange - there was something fundamentally wrong about it, but it felt so good.

It was only mid-morning, and as we left, I peered through the glass and saw that the machine was still almost completely stocked - there were plenty of Winston Lights left. Content with three free packs of cigarettes, I returned to my office, only to hear the Clank-clank! sound off and on for the next hour.

Then I thought to myself, maybe I ought to go get a few more packs - everyone else is doing it. So, I casually strolled back into the break room and in quick succession dispensed five more packs, after which I strolled back to my office, but with a noticeably quicker gait.

Doing this alone was somehow different - even more exhilarating, dangerous, and rewarding.

What's the worst that could happen? Everyone else was doing it.

Momentum Builds - A Blow-Off Top

On the way out to lunch, a quick check of the cigarette machine windows revealed that it was still more than half full. However, upon returning from lunch, the windows above the twenty-two handles looked markedly different.

Obviously, it had been a busy lunchtime in the break room.

Apparently there were more than a few phone calls earlier in the day ending with something like, "OK, I'll come check it out at lunch". A few brands were completely gone and others were running quite low.

At around 2:30, after more sporadic clanking and giggling, Tom from building 40 walked by with what appeared to be about fifteen packs of Newports and Salems arranged in a column, held precariously against his chest between the palm of one hand and his chin. With a big grin he said, "Dude, did you get some cigarettes?” He then asked if I had a bag or something that he could use to more easily carry his booty out of the building.

About an hour or so later, there were furious, sustained clanking sounds emanating from the break room accompanied by muffled laughs and shouts of congratulations - and some not so muffled laughs and shouts. As quickly as the clanking and shouting started, it stopped.

An eerie silence followed.

At about 4:30 I wandered over just to see if there were any Winston Lights left but, alas, the poor machine was completely empty. The last hour of silence was the sound of a mania that had ended - not a single pack of cigarettes remained.

One can imagine that as the 440 packs of cigarettes dwindled down to the last ten or twenty, brands no longer mattered. Those lucky enough to be standing in front of a cigarette machine that was about to stop dispensing free packs of cigarettes no longer cared about the brand - not when there were only ten or twenty packs left.

These latecomers were probably thinking of the people who had been there earlier in the day, and were just happy to have been able to participate.

So, What Does This Have to do with Stocks and Houses?

Well, nothing really.

This is just a simple story about human nature - the idea of getting something for nothing and the power of the herd instinct. Had this been done intentionally, that is, conducted as a controlled experiment where the break room activity was filmed and then later analyzed by trained professionals, it surely would have made for some interesting analysis, interpretations, and conclusions about human behavior.

As it is, I just can't help but think that this event and this behavior have some odd, interesting, and frightening similarities to what has gone on with the stock market boom and the housing boom over the last ten years.