Sharing an Interesting story of transaction between Mr. Tiffani and Mr. J. P. Morgan, that determines the method deployed to determine fair value of a Diamond pin

1) Famous jeweler Charles Lewis Tiffany knew John Pierpont Morgan (JPMorgan), had a thing for necktie pins. One fine day, Mr. Tiffany found a diamond one, particularly uncommon and extraordinarily beautiful.

2) As was the custom at that time in 1900, he sent a messenger to Mr. Morgan’s office with the pin fancily wrapped in a box and the following note: “Dear Mr. Morgan, knowing how much you appreciate necktie pins, I’m sending you this rare and exquisite piece for your consideration. Due to its rarity, the price is US$ 5,000. If you choose to accept it, please, send a messenger to my office tomorrow with your check for US$5,000. If you choose not to accept it, you can send your messenger back with the pin.”

3) The next day, a Mr. Morgan’s messenger arrived at Tiffany’s with the same box in a new package and a different envelope. In this envelope there was a note that read: “Dear Mr. Tiffany, the pin is really magnificent. However, US$5,000 is a little over the top. So, enclosed is a check for US$4,000. If you accept it, please send my messenger back with the box. If not, return the check and he will leave the box with you.”

4) Tiffany looked at the check for several minutes. It was actually a lot of money. However, he was sure the pin was worth the US$5,000 he had asked for. Finally, he told the messenger: “You can return the check to Mr. Morgan. My price is firm.” And thus, the messenger took the check back and put the gift-wrapped box on Mr. Tiffany’s table. Tiffany sat down for a minute thinking about the check he had returned and then he unwrapped the box to get the pin out.

5) Upon opening the box, he didn’t find the pin. He found a check for US$5,000 from Morgan and a note with just one sentence: “JUST CONFIRMING THE PRICE”.