How High-Frequency Trading Is Changing Wall Street.

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How High-Frequency Trading Is Changing Wall Street

TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

Even if you're not an investor, you may have money in the stock market
through your retirement account. And if you think the market is hard to
decipher, it may be even harder than you think.

Computer code is now responsible for much of the activity on Wall
Street. The image of smart analysts studying annual reports and a stock
exchange floor crowded with men yelling out trades is becoming outdated.

Much of the analysis and trading is now done by computers programmed
with lines of code called algorithms. With these computers, high-
frequency traders, also known as flash traders, can buy and sell
thousands of shares a second.

My guest, Felix Salmon, says this has created a new market - volatile,
unpredictable and impossible for humans to comprehend. Salmon's article,
"Algorithms Take Control of Wall Street," is published in the January
issue of Wired magazine. Salmon writes about the financial world for
reuters.com and the Columbia Journalism Review website. Last year, he
won the Excellence in Statistical Reporting Award from the American
Statistical Association.

Felix Salmon, welcome to FRESH AIR.

Mr. FELIX SALMON (Journalist; Author, "Algorithms Take Control of Wall
Street"): Thank you very much.

GROSS: The way the stock market used to work, I'm told, is that the
individual investor was a brilliant investor at the mutual fund, studied
companies' fundamentals and, based on that, made investing decisions.

But now that Wall Street is ruled by algorithms, the computers are using
different information and a different kind of logic than the individual
investor studying the health of an individual company would.

So what is in these - what are the computers looking for with these
algorithms? What kind of information is feeding them that's different
from, say, if you were making an investment, what you would be looking
at?

Mr. SALMON: Well, let's not romanticize the past too much here because
in the past, the vast majority of investors have always been speculators
of some description. They buy stocks because they think they're going
up, or they sell stocks because they think they're going down, and they
try and make profits.

And there are always traders in the middle of this, people who exist not
to hold stocks as long-term investments but just to buy and sell in the
markets every day and try and make a small profit every day, and they
sell stocks at slightly higher prices than they're selling them for, and
that's where their profits come from.

And now what's happened is that those traders in the middle of the
market have all pretty much been replaced by machines. And a lot of the
fundamental investors, the mutual funds and so forth - who weren't only,
by the way, looking at fundamentals, a lot of them would love what they
called technical analysis, where they look at lines on charts and
extrapolate them and decided now's a good time to buy or sell.

A lot of that activity has now been automated, as well. So you get
investors, the investment decisions being made by the machines and also
the trading decisions being made by machines. And obviously, machines
are going to use more information more quickly than any human ever
could.

So we don't know exactly what information is really moving the market
anymore, but then again, we never really did.

GROSS: So just so I understand this better, it seems like there are
different investment companies and mutual funds that have their own
algorithms, their own set of computational analysis. And these are like
proprietary codes that you don't want anybody else to know about because
this is, like, this is your secret formula to trading and understanding
the market. Is that right?

Mr. SALMON: That's absolutely right. You have hedge funds, virtually all
hedge funds and lots of Wall Street banks have these black boxes with a
lot of code that they spent a lot of time developing. And it's almost
impossible to copyright that code or to patent that code or to make it
public in any way because the minute it becomes public, everyone else is
going to copy it.

So they are very jealously secretive about their code, and they try and
use it to make money in ways that no one else has thought of.

GROSS: So what are the different kinds of trades? What are some of the
different kinds of actions that the computers now, through these
complicated algorithms, are making decisions about? Because it's not
just what to buy and sell, right?

Mr. SALMON: Exactly. I mean, ultimately, every trade that they make is
either a buy or a sell. That's the only thing you can do in the market.
But what they're doing is they're looking at a huge number of data sets.

They're looking at everything from weather forecasts to Twitter streams
to whole areas of data streams which you and I can probably never even
think of, and they're putting them all together, and they're analyzing
them. And what they're doing is they're learning from them in these sort
of algorithmic, almost artificial-intelligence-type ways.

They're looking at one set of data or a whole big stream of data from
many, many different sources, a fire hose, really, which no human could
ever get their head around. They're looking at economic indicators,
they're looking at fundamental indicators, they're looking at technical
indicators, anything you can imagine.

And then they're looking to see what happens in the market as all of
this data comes through, and they're trying to find patterns there. And
then what they are ultimately looking for is a kind of if-then
algorithm, I suppose you could call it.

They can say, if this kind of thing happens in the data stream, then
what you're likely to see is that stocks go up or stocks go down. And
then they use those movements and those predictions to make bets and to
hopefully make money.

But what we're seeing here is so complex, and a lot of the time the
movements are so tiny, they can make money because it costs so little
money to trade in the market these days. They can make money just if a
stock moves a few cents. You don't need to predict a big move in the
stock market. You can make money off such tiny moves that a lot of what
they do just simply is incomprehensible to human minds.

In the article in Wired magazine, we talk about this company over in
Berkeley, California, called Bolion(ph). They don't really know what
they're trading on. They just set their computers loose on a set of data
and say, find a signal in all of this noise and then trade on it. And
somehow, you know, it seems to work.

And through this method, you can make a lot of money if a stock just
moves a few cents because you're buying so many shares. Is that it?

Mr. SALMON: Because you're buying so many shares and because you're
making so many trades. You can make thousands of trades a second. You
can make these bets not just once or twice a day, as people used to do,
but once or twice a millisecond. And when you're trading that
frequently, if you're only making a cent each time, it still adds up
very quickly.

GROSS: Are there algorithms now created to spy on other algorithms, to
crack the codes of other algorithms so that one company will know, you
know, one investment company will know what the other investment
companies are up to and try to outsmart them?

Mr. SALMON: Exactly. That's known as predatory trading, and it's a very
large business. And one of the things they do is they try and trick
other algorithms to think they're, say, buying rather than selling so
that the other algorithms will try and come in and raise the price. It
gets very complicated. It's a spy-versus-spy thing.

One of the people quoted in the article calls it a bit like "The Hunt
for Red October." It's like submarine warfare, where you're pinging out
into the dark, trying to find out where the other trades are, what the
other algorithms are, what they're doing. And they're trying to cloak
themselves and discover each other and basically trying to get one up on
each other.

It's a very, very complex, very, very high-speed, incredibly high-stakes
game. And people can make millions at it if they're good at it.

GROSS: So we've been talking about high-frequency trading and how
algorithms are being used in that. Let's talk about flash trading. Would
you describe what flash trading is?

Mr. SALMON: In the stock market, it's a little bit like journalism in a
way. You want to be faster than anyone, smarter, and smarter than anyone
faster. And so one of the ways that firms compete in the stock market is
they try just simply to compete on speed. They want to be able to make
trades a fraction of a millisecond faster than anybody else.

And so what they do is they take their computers, and they literally
place them right in the same room as the stock exchange, in the same
racks as the stock exchange's computers so that when they place an order
and it moves at the speed of light down the wire, that wire is shorter
than some other wire, which might have to be a couple of miles long.

It's - you wind up having programs written specifically for the
architecture of certain computer chips. And you get computer chip
employees, company employees, being - acting as consultants for quants
and stuff, trying to explain how these computer programs can be written
so that the computer chip can make its decision just a tiny fraction of
a millisecond faster than the other guy.

And so what they're - at this point, you're not trying to crunch
enormous amounts of information and make big trades which might last for
weeks or months. Instead, you're just trying to get into the market and
do what traders have always done.

Human traders have always tried to be fast. They've always been trading
back and forth very, very quickly. But these machines have moved that by
orders of magnitude, many, many orders of magnitude. And you can get
these trades just happening super, super fast, buying and selling
stocks.

They don't really know where the stock is moving or care. They just want
to be in there, right in the middle of the market, making these tiny
little spreads on where the stocks are trading.

GROSS: So let me ask you, if computers are basically running a lot of
the market now, making the decisions, what is happening to the people
who used to make the decisions?

Mr. SALMON: There are many fewer traders on the floor of the stock
exchanges than there used to be. You know the old visions of the men in
bright jackets, all screaming at each other? That doesn't really happen
anymore. It all happens over computers these days.

And in general, what you have is more hedge funds, fewer enormous
brokerages and Wall Street shops trying to just stay on top of the
mechanics of making trades and of clearing trades and of buying and
selling stocks because all of that has become computerized.

It's, you know, a move - Wall Street becomes a slightly different
business and, you know, it does - you get more computer wonks and fewer
old-school traders and screamers in trousers. It's the evolution of the
market.

GROSS: If you're just joining us, my guest is financial journalist Felix
Salmon. He's a blogger for reuters.com and he has an article in the
January edition of Wired called "Algorithms Take Control of Wall
Street." Let's take a short break here, and then we'll talk some more.
This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is Felix Salmon. He's a financial journalist. He's a
blogger for reuters.com, and he has an article in the current edition of
Wired called "Algorithms Take Control of Wall Street."

GROSS: So let's look a little more closely at the flash crash from last
May. Can you explain how this algorithmic approach to investing played a
part in the market dropping 573 points in five minutes?

Mr. SALMON: What happened is there was one relatively obscure mutual
fund company which decided that it wanted to hedge its positions in the
market. It owned a lot of stocks and it wanted to protect against the
eventuality that the stock market would fall.

And so one of the ways that you do that is you sell stock market
futures, it's a natural hedge in the futures market. And they made a
relatively large trade in the futures market and they used an algorithm
to make that trade, like everyone always does these days. And when you
use an algorithm, you can set a whole bunch of different parameters,
including how quickly you want that trade made.

So if I'm selling a million shares of IBM, I might go up to my, you
know, Wall Street bank and say, listen, use your algorithm to sell these
shares and make sure that you do it in the next day.

What this guy did was he used his algorithm. He said, sell these futures
and make sure you do it in the next 20 minutes. And that's a very short
amount of time to do a trade that big. And so the fact that such a large
trade went through the market so quickly is - that fact moved the market
and it sent the stock market futures down substantially.

And that kind of move gets picked up on by all of the other computers.
They see this sudden, unexplained drop in the market and they see the
little uptick in volume and they say, ooh, we've got the signs of a
panic here. We've got the signs of what could be a big drop.

They're looking at all manner of other technical indicators, as well,
but they all seem to come to the same decision that what they should do
is either get out of the market completely or start selling. And there
was almost no one in the market buying.

And in that situation, you can get this massive plunge because you have
pretty much the normal amount of sellers. Most people just stepped back
and said, we don't want any part of this market. But you have no buyers
at all. And when you have no buyers, the price of the market can just
drop precipitously, and that's exactly what happened.

So it is hard to protect against. We have no real mechanism to be able
to stop this from happening. And what we do have is very blunt
instruments about just saying, well, every single stock market in the
entire country should simply close down when the market or a single
stock has moved more than five percent or 10 percent, these things
called circuit-breakers.

They're very blunt instruments and they don't work particularly well,
but for the time being, they're all that we have.

GROSS: Let's get back to the flash crash of last May, where the stock
market lost 573 points. I guess it was the Dow Jones, lost 573 points in
five minutes. And one North Carolina utility company lost 90 percent of
its share price in less than five minutes. Apple share dropped nearly
four percent in 30 seconds. And those two trades were cancelled because
it was...

Mr. SALMON: Actually, in the flash crash, it was interesting. While
everything else was crashing, there was a trade of Apple at $100,000 a
share.

GROSS: Wow, okay. So crazy, right? That's, like, totally out of
proportion.

Mr. SALMON: Insane.

GROSS: And that was canceled, right?

Mr. SALMON: Yes.

GROSS: So is it unusual to have a do-over in the stock market like that?

Mr. SALMON: Yes, it is. And a lot of people were quite unhappy about
that, but it makes sense. When you get something which is so clearly
nonsensical and where the stock market just broke, then you shouldn't be
able to profit off someone else's misfortune.

For instance, let's say that you, Terry Gross, have a margin account at
a stock brokerage, and I would recommend that you don't because it's a
great way of losing money, but you might have a stop-loss order in
there. You might say, I have a bunch of shares of IBM and if they fall
below a certain price, then just sell them because at that point,
something bad is going on and I don't want to lose too much money.

And so you say, okay, so if the stock falls below $30 a share, then I
want to sell. But in something like the flash crash, that stock might
straight from $35 a share to $1 a share with nothing in between. And
then your market order to sell, when it drops below $30 a share, you
suddenly only get $1 a share, and you thought you were protecting
yourself.

You thought that you would just sell at 30 and protect yourself from any
further losses, but in fact what you wound up doing is making all of
those losses by selling at $1 a share instead of doing nothing and
waiting for it to come back. And so - as it did in a matter of a few
minutes.

So what the stock market did when it canceled all of those trades is
basically protect people like that, who'd put in these orders and who
would otherwise have made enormous losses.

GROSS: So are there rules in effect for when to do a do-over?

Mr. SALMON: No.

GROSS: I mean, now that all these algorithms, competing algorithms are
ruling the market and it's hard for any human to make sense of what's
happening, and there's all these, like, positive and negative feedback
loops happening, like, who says when there's a do-over and when there's
not, and when you're protected from kind of nonsensical behavior caused
by these algorithms and when you're not protected?

Mr. SALMON: In the big picture, we're not protected. And it would be
foolish for anyone to expect to be protected. There are no rules saying
that there has to be a do-over if certain actions happen. It's entirely
up to the discretion of the exchanges and the regulators.

And sometimes they will step in and say, you know what, that was a bad
trade. Undo that trade, it never happened. At other times, they won't,
and they'll let that trade stay. And you can't - it's fundamentally
unpredictable and it's not something which people should really take any
solace in.

So it's a good idea, as I say, not to play in the market. This is one of
the good reasons why individual investors should probably avoid having
these margin accounts and putting in these trades because if something
crazy does happen in the market, they might wind up making some insane
trade inadvertently and they might not have that trade rescinded. It's a
very dangerous place, or it can be.

GROSS: When you look at the new shape of Wall Street now, what are some
of the warning signs that you see, some of the dangers?

Mr. SALMON: The main danger about algorithmic trading is that we simply
don't understand it. We don't understand how the stock market works or,
to be precise, how the stock markets work because there's over a dozen
of these things now.

We don't understand the feedback loops between them. We don't understand
what causes individual stocks or entire market indices to move. We have
an incredibly complex system with only the most rudimentary controls.

And we got a hint of what could happen last May, during the flash crash,
but we have no idea what other things might happen. We don't have any
ability to - we don't have a sort of flight simulator for stock markets
where we can run a whole bunch of possible scenarios and see how the
stock markets might react.

We really have no idea how these markets work or how these complex
systems work or how they might just explode one day in a very
unpredictable manner. And so the big problem here is uncertainty.

There's lots of what's known as tail risk. We - most of the time, it
works great. Most of the time, computerized trading and algorithmic
trading makes stock markets more efficient and it makes it easier and
cheaper for investors, both large and small, to trade. And it's a good
thing for everybody.

But every so often, things can go horribly wrong, and we don't know
when, and we don't know how, and we don't know what the consequences
might be. And that huge uncertainty is, I think, the biggest danger in
the markets right now.

GROSS: Felix Salmon, thank you so much.

Mr. SALMON: Thank you very much.

Felix Salmon's article, "Algorithms Take Control of Wall Street," is
published in the January edition of Wired magazine. He writes about the
financial world for reuters.com.

I'm Terry Gross, and this is FRESH AIR.
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Remembering Margaret Whiting: The Voice Of Standards

(Soundbite of music)

GROSS: This is FRESH AIR. I’m Terry Gross.

We're going to listen back to an interview with the jazz and pop singer
Margaret Whiting. She died Monday at the age of 86. She is best known
for her recordings from the '40s and '50s of songs like "Moonlight in
Vermont," "It Might As Well Be Spring" and "That Old Black Magic."

In 2009, her recording of "Time After Time" was used over the closed
credits in the movie "Julie & Julia." Whiting's extended family wrote
many of the songs in her repertoire. Her father, Richard Whiting
composed "My Ideal," "Too Marvelous for Words," "She's Funny That Way"
and "On the Good Ship Lollipop." Composer Jerome Kern was Uncle Jerry to
her. Lyricist Johnny Mercer was like a surrogate father after her father
died. Margaret Whiting made her first records for Mercer's Capital label
when she was a teenager in the 1940s.

I spoke with her in 1987 after the publication of her memoir "It Might
As Well Be Spring." In it she also wrote about her relationship with
Jack Wrangler which had raised a lot of eyebrows. Wrangler was a former
porn star who made his name in gay films. He was more than 20 years her
junior. They were married from 1994 until his death in 2009.

Let's start with the 1977 recording of a song co-written by her father
and Johnny Mercer.

(Soundbite of song, "Too Marvelous for Words")

Ms. MARGARET WHITING (Singer): (Singing) I search for phrases to sing
your praises. But there aren't any magic adjectives to tell you all you
are. You're just too marvelous, too marvelous for words. Like glorious,
glamorous and that old standby, amorous. It's all too wonderful. I'll
never find the words that say enough, tell enough, I mean, they're just
not swell enough.

You're much too much and just too very, very to ever be in Webster's
Dictionary. And so I'm borrowing a love song from the birds to tell you
that you're marvelous, too marvelous for words.

GROSS: Margaret Whiting, I bet you remember when your father wrote that
song.

Ms. WHITING: Well, kind of because I was quite young when he wrote it.
He wrote it with Johnny Mercer and it was for Ruby Keeler in a picture
called "Ready, Willing & Able." It had to be before 1938 and I'm not
sure of the year but I was still young. But I remember going into my
father's studio every day when I came home from school or when my mother
would allow me in and he would always play what he'd written that day,
so I remember hearing it and liking it and I still do.

GROSS: Did you assume that all girls had fathers who stayed at the piano
most of the day writing songs?

Ms. WHITING: Yes, because my girlfriend was Harry Warren's daughter.

(Soundbite of laughter)

Ms. WHITING: And she and I went to school together and what she had I
had. In other words, one day at my house, I might have Jerome Kern,
Uncle Jerry. Or I might have Benny Goodman, who my father did a picture
for. Or, at Harry Warren's, we might have Tommy Dorsey or we might have
Jimmy Dorsey, or we might have Glenn Miller. We might have young Frank
Sinatra or Jack Leonard. So I thought everybody, you know, had the same
kind of bringing up.

I went to school with William Powell's son and Victor McLaughlin's son
and all kinds of people like that, Fanny Brice's daughter and son. So I
just thought well, you know, I mean everybody had a famous parent and we
didn't even think of them as famous. Oh Daddy did this and my daddy
painted that and my father directed this or my mother was in this
picture. And we were all very calm and cool about it, you know, because
we were told not to make a lot of it.

But everybody, as I write in my book, I said I grew up in a factory town
because the studios were like factories. I mean you went to school - if
you were in a motion picture you'd go to the studio at five or six
o'clock in the morning, makeup, hair, whatever else you did in the
picture. The producers would come in early to see a scene, the directors
would come in, of course, early and it was like a factory and it's not
like that anymore. I mean it's serious and work but the whole thing of
Hollywood has changed.

GROSS: Well, you started recording songs when you were a teenager.

Ms. WHITING: Oh yes.

GROSS: And there were songs whose lyrics were pretty sophisticated and
lyrics about love like that old black magic. Were you able to comprehend
what it was you were singing about as a teenager?

Ms. WHITING: Not really, but I was lucky enough, you know, to have
Harold Arlen and Johnny Mercer as the composer of that tell me how to do
it. Rhythmically Harold Arlen wrote such great music. I mean he was
really into blues. He was - he and Gershwin were the two composers that
wrote that kind of music and...

GROSS: So what would he tell you when you were singing one of his songs?

Ms. WHITING: Well, he would tell me to emphasize certain notes and
emphasize certain words and emphasize certain beats.

Like he said, (singing) that old black magic has me in its spell.

He said do it like that; don't go, (singing) that old black magic.

Don't make it legato. Phrase it. (Singing) That old magic has me in its
spell.

And Johnny would say use the word black and emphasize it. (Singing) That
old black magic.

So those men just it's like being in a bind or being in a place where
the walls closed in and there was nowhere to go but the right way
because they were there teaching me.

GROSS: That must have just been great.

Ms. WHITING: Oh, it was marvelous. And to have all those kind of
songwriters around. Johnny and Frank Loesser taught me the importance of
reading a lyric. Johnny Mercer often said to me, Margaret, it's like a
one-act play, each song. Now, if it's a rhythm song, then you have fun
with it and you find the words to really emphasize the important words,
and you do it rhythmically and you have fun. But on a ballad, if it's a
torch song or if it's a story that you want to tell, then you’ve got to
be very careful and you’ve got to find the climax, where it's going and
do it like a play.

GROSS: I want to play a recent recording of a song that was your first
hit, your father's song "My Ideal." You have known this song and have
been singing this song for years.

Ms. WHITING: Many years. Yes.

(Soundbite of laughter)

GROSS: What goes through your mind when you sing it now?

Ms. WHITING: Well, it's, you know, it's one of my favorite songs and it
was my father's favorite song. He would play this before he'd start to
write something else. He adored this song and he would always say oh
God, I hope I can write another one like it. And there's something kind
of special about it. It was my beginning so I try to make it new and
fresh as if I'm singing it for the first time because audiences do not
know me, some of them, audiences do not know the song.

But more important really, is that many people do know and that's one of
their memories of me so I always have to sing it as well or if not
better than any of the other songs because that's a memory song to them,
and they love the fact that my father wrote it and I sang it.

So I try to think of it could be Jack, whom you know that we'll talk
about, that I go with now. It could be a love when I was a kid but it's
an image of someone that could be my ideal and will I recognize him; in
other words, again, reading the lyric and getting that innocent, honest,
first-time-I-ever-sang-it feeling.

GROSS: Let's listen to my guest Margaret Whiting singing a song written
by her father Richard Whiting, this is "My Ideal."

(Soundbite of song, "My Ideal")

Ms. WHITING: (Singing) Long ago my heart and mind got together and
designed a wonderful boy for me. Oh what a fantasy. Though the idol of
my heart can't be ordered a la carte, I wonder if he will be always a
fantasy. Will I ever find the boy on my mind? The one who is my ideal?
Maybe he's a dream and yet he may be just around the corner waiting for
me. Will I recognize that light in his eyes that no other eyes reveal?
Or will I pass him by and never even know that he was my ideal? Will I
recognize that light in his eyes that no other eyes reveal? Although he
may be late, I will trust in fate and so I wait for my ideal, for my
ideal.

GROSS: That's Margaret Whiting recorded in 1977. She died Monday at the
age of 86. We'll hear more of our 1987 interview after a break. This is
FRESH AIR.

(Soundbite of music)

GROSS: We're listening back to a 1987 interview with singer Margaret
Whiting. She died Monday at the age of 86.

I think so many of us grow up with our expectations about what love will
be like - what those expectations shaped by the pop songs that we listen
to.

Ms. WHITING: And the books we read.

GROSS: And the books we read. And the movies.

Ms. WHITING: And the movies we see. And the shows we see. And the
valentines we send.

GROSS: But we sing along with the pop songs and...

Ms. WHITING: Oh certainly.

GROSS: And the lyrics just really become part of our visions. Now you
sang those pop songs professionally when you were young. You sang those
pop songs before you really knew firsthand about love.

Ms. WHITING: Absolutely.

GROSS: Did they shape your idea of what love and romance was supposed to
be like?

Ms. WHITING: Well, I think that we're all born here with a certain group
of rules or a foundation where we would go to school, we would grow up,
we would find our first crush in school probably and it probably
wouldn't work out. And eventually we would meet somebody and we would
get married and we would have children and it would last forever. And
thus is not the case as most of us find out.

GROSS: You are pretty frank in your book. And you even write about
losing your virginity and how you almost wanted to just get it done with
because you'd heard it wasn't so interesting the first time around.

Ms. WHITING: Well, that's right. So that's absolutely true and you're
the first person that's brought that up. But it just was something that
I'd heard, you know, that that's something to get over with and get on
with living. I'm not so sure today if I would say - if I knew today what
I know at that age I wouldn’t have done it that way.

GROSS: But I almost have the feeling reading your book that you were
doing it to get us more of a sense of what the songs were like that you
were singing, to really understand what that was.

Ms. WHITING: I wanted to grow up. I wanted to know what love was and sex
was and all these words that people were throwing around and living that
I wasn't.

GROSS: All the double entendres in the songs.

Ms. WHITING: Sure.

(Soundbite of laughter)

Ms. WHITING: I mean you know, it's interesting but it was very
sophisticated out in Hollywood too. And everybody - the group that you
live with out there, unlike - let's face it, Hollywood is one place.
Hollywood has many people working in many different businesses, bankers,
doctors, lawyers, everything and Los Angeles is a great big city. But in
my group, I was raised with people in show business and it was a certain
way of living and it was much more sophisticated because we were doing
make-believe, we were doing pictures, we were doing television, we were
doing all these things. And it was what everybody dreamed about.

I mean I've had kids come to me and say oh, you came from Hollywood. Is
Hollywood Boulevard golden?

GROSS: So tell me: Did having sex change your interpretation of songs?

Ms. WHITING: I think so. I think I said, oh, that's what it's all about.

GROSS: You came of age professionally during World War II...

Ms. WHITING: Yes. Absolutely.

GROSS: ...and even, I think, toured a few times with Bob Hope.

Ms. WHITING: Oh, I toured with them. I was with him for seven years. So
I toured a lot of places with Bob Hope.

GROSS: What did you learn from those tours, both about show business and
about things like timing?

Ms. WHITING: Oh, everything. When you work with someone like Eddie
Cantor, and I was fortunate enough to work with Eddie and Jack Carson
and then Hope. If you start to move on a line, he grabs you. He says,
never move on a line, because the audience watches the movement.

GROSS: You mean like on a punch line?

Ms. WHITING: Yes. Or anything. If you're going to - you're going to go
back and forth. And if I start moving, whatever he's going to say,
they're going to pay attention to me. They're not going to hear the
punch line. And timing is such an important thing. I learned it from Red
Skelton, learned it from all these marvelous geniuses - Jack Benny that
I worked with.

GROSS: Barry Manilow met you - and this is when he was the music
director for Bette Midler, and when she was playing the baths in New
York. And he took you to see her. He liked your singing, and you were
interested in his songs. And he took you to see her at the baths.

Ms. WHITING: Yeah. I knew him before that. And one night, he said it's
my birthday, and I'd like to go hear Carole King, and we did. Then he
said I'm going to - I've got my band, and we're going for play for a
girl. I'd met Bette before. So we went up to the baths, which was just
where men went. And they were all dressed and towels, and I was put
behind a rope and Bette Midler came out, great as she is, and just
rocked the place. And then she got me up to sing "Moonlight in Vermont,"
and they loved it. So on the way home, I said Barry, I got to tell you
something: Don't lose this woman. She's brilliant, and you're a terrific
combination.

GROSS: We're listening back to a 1987 interview with singer Margaret
Whiting. She died Monday at the age of 86. Here's her 1945 recording of
"Moonlight in Vermont."

(Soundbite of song, "Moonlight in Vermont")

Ms. WHITING: (Singing) Pennies in a stream, falling leaves, a sycamore.
Moonlight in Vermont. Icy finger waves, ski trails on a mountain side,
snow light in Vermont.

Telegraph cables, they swing down the highway and travel each bend in
the road. People who meet in this romantic setting are so hypnotized by
the lovely. Evening summer breeze, warbling of a meadow lark. Moonlight
in Vermont. You and I and moonlight in Vermont.

GROSS: We'll hear more of our 1987 interview with Margaret Whiting after
a break.

This is FRESH AIR.

(Soundbite of music)

GROSS: Let's get back to our interview with singer Margaret Whiting. She
died Monday at the age of 86. I spoke with her in 1987 after the
publication of her memoir in which she wrote, among other things, about
her relationship with former porn star Jack Wrangler. They were married
from 1994 until his death in 2009.

Your life has been changed in the last few years with you her
relationship with Jack Wrangler. And I'd love to hear the story of how
you met him and...

Ms. WHITING: Well, I went into a restaurant one night, and there's a
wonderful place in New York. There was a wonderful place where everybody
would go in show business and everybody else called Backstage. And there
was a piano player there, and we would be introduced by the owner Ted
Hook. And he had introduced this charming gentleman that I was looking
at across a table, but I thought I knew him. And they said his name was
Jack Wrangler and he was doing such and such a picture, and I wasn't
paying much attention. Then they introduced me, and I got up and took a
bow, and then Jack came over to the table. He said I loved your singing,
and I'm an admirer and I think you're terrific. So I said, I knew I knew
him.

Now, I had met him as Jack Stillman, who was a director in Chicago and
doing all the top shows there. But he had gone to a gym and his body had
changed and he changed his hairstyle. So I said I didn't recognize him.
I said: What are you doing here? And he said, well, I'm doing my act. So
I said good. I'd love to see it. He said well, you can come next
Wednesday night. I'll have my stage manager leave tickets. So that was
that, and he left.

And Ted Hook came over to me and said: You said you were going to see
his act? I said yes. He said: Do you know what he does? I said no. He
said, well, he makes porn pictures. I said: You're kidding? He's so
charming. He says, he is charming. I said Ted, I don't understand. A
week ago, you introduced me to Jamie Gillis, and he's in porn pictures.
And I said, a few weeks before you introduced me to Harry Reems. What is
this? He says well, they're all great guys, and they all come to the
restaurant. So anyway, it was too late. I thought about it. And so a
girlfriend of mine and Ted Hook and somebody else went with me. We went
to the theater. Jack couldn't have been nicer. He was very charming.

He got up. He talked about how he got into porn pictures and some of the
funny things that had happened. And he introduced me, and I got up and
took a bow. And then he came to front and said I'd love to see you
again. So we made a date for brunch, and we sat at my house for a while
and went downstairs to brunch. And I found out that he had the same kind
of background I did.

He came from Beverly Hills. He had been a kid star. He won an Emmy for
"Faith of Our Children." And he'd been directing, and then suddenly, I
don't know, he wanted to get out of that. He wanted to go back to
Hollywood and act, and he couldn't get a job. He tried. So he got a job
in a play, and I guess he took his shirt off and then he took his pants
off. He wasn't nude, but somebody came to him and said we want to do
another play. And some film man saw him and said: Would you do this part
in this picture? And he got into it. And that's how we got into it.

GROSS: He made his reputation in gay porn films...

Ms. WHITING: First, and then he went into heterosexual films.

GROSS: It must have been a - it must have seemed a potentially very
treacherous kind of relationship to get involved in.

Ms. WHITING: Yes. Yes. And I had no intention of getting involved, but
we have the same kind of background. We went to the same schools, years
apart, went to the same dancing schools. And then - you've met Jack and
you know the kind of person he is. He's a very fine person. And I
realized that he'd gotten into this somehow, and he didn't know how get
out. But then I talked to Jack, and I said, look. You're a very fine
director and you're a good actor. You've got such a potential. You
should come to New York, where they're far more forgiving and
understanding. And he's done several - well, I say straight plays. I
mean, they have nothing to do with X-rated things at all. And he's just
written a very funny charming play, and it's wonderful. It's called "I
Love You, Jimmy Valentine." And all of this is behind him.

GROSS: There's a 20-year age gap.

Ms. WHITING: Yes.

GROSS: You're 20 years older than he is. And I wonder if being in a
relationship like that has made you feel older or younger.

Ms. WHITING: It's made me feel just as I always feel. I'm Margaret
Whiting. Age has never meant an important thing to me, because I enjoy
good health. I have a wonderful zest for life, and Jack and I have a
terrific time. We work together personally in the act. He'll do my act.
He'll direct my act or find me material, and we've never even worried
about the age.

GROSS: There's one other thing I wanted to ask you about singing. You
grew up the daughter of one of the great American composers, Richard
Whiting. Your extended family were some of the greatest composers,
Jerome Kern and Johnny Mercer. Did you grow up thinking that to sing a
song, you really have to stick to the composer's intentions, stick to
what was on the page, both the lyric and the music? Because a lot of
singers will stray from that and will reinterpret a song.

Ms. WHITING: Well, I reinterpret now, but I certainly did stick to what
they said, because my father said to me, look. Sing the songs the way we
wrote them. Took us a long time. That's our craft. We're professional.
And that stuck with me. And, of course, Johnny and Harold and everybody
said, you know, sing them the way we wrote them or the way we sing them
as we teach them to you. But recently, I've had more of a jazz sound and
gone in a little bit different direction, as has Rosemary Clooney. But I
think we're still singing them traditionally, but in a different way.

I mean, I'm not going to louse up a lyric, because I adore those lyrics.
And I'm certainly not going to - I may bend a note here and there, but
I'm going to give it a different conception, but within the architecture
of the song, the foundation of the song, because that's the way I was
taught. But stylists are the people that take a song the way I sing it
and then do it completely differently, and bravo for them.

GROSS: Well, I want to thank you very much for sharing so much about
your life with us. Thank you for being here.

Ms. WHITING: Well, I had a ball. I really had a ball. I enjoyed it.

GROSS: Margaret Whiting, recorded in 1987. She died Monday at the age of
86.

We'll close with her 1949 recording with Johnny Mercer of "Baby It's
Cold Outside."
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